EXHIBIT 1.
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 9, 1995,
between HI-SHEAR INDUSTRIES INC., a Delaware corporation (the
"Seller"), and GFI INDUSTRIES S.A., a societe anonyme organized
under the laws of the Republic of France (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell and transfer to the
Purchaser and the Purchaser desires to purchase from the Seller,
all of the issued and outstanding shares of capital stock (the
"Shares") of HI-SHEAR CORPORATION, a Delaware corporation and a
wholly owned subsidiary of the Seller (the "Company"), all as
more specifically provided herein,
WHEREAS, simultaneously with the execution and delivery
hereof, the Purchaser and certain significant stockholders of
Seller are entering into a stockholders agreement (the
"Stockholders Agreement"),
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein, and subject to and
on the terms and conditions herein set forth, the parties hereto
agree as follows:
ARTICLE I
Purchase and Sale of the Shares
1.1 Purchase and Sale of the Shares. The Purchaser
agrees to purchase from the Seller, and the Seller agrees to sell
to the Purchaser, the Shares, which constitute all of the issued
and outstanding shares of capital stock of the Company, for the
consideration specified in Section 1.2 hereof.
1.2 Purchase Price. (a) The initial purchase price
for the Shares is the sum of U.S. $46 million (the "Initial
Purchase Price") which the Purchaser will pay to the Seller at
the Closing (as defined in Section 1.3 hereof), as provided in
Section 1.3.
(b) Immediately after the Closing, Seller shall
prepare, and thereupon cause its independent accountants to
commence reviewing at Seller's expense, a consolidated balance
sheet of the Company and the Subsidiaries (as defined in Section
2.1(A) hereof) as at the Closing Date. Such balance sheet shall
be prepared in accordance with generally accepted accounting
principles in the United States ("GAAP") consistently applied,
except as noted below and in Section 1.2(b) of the Seller's
Disclosure Schedule delivered herewith, and shall reflect all
liabilities of the Company and the Subsidiaries required to be
reflected on a balance sheet prepared in accordance with GAAP so
applied. Such balance sheet (i) shall reflect the fact that the
amount of any intercompany payables or receivables between the
Company or any Subsidiary, on the one hand, and the Seller or any
subsidiary of the Seller (other than the Company or any
Subsidiary), on the other hand, shall be satisfied in full as of
the Closing Date, (ii) shall reflect the adjustments listed in
Section 1.2(b) of the Seller's Disclosure Schedule delivered
herewith, (iii) shall determine the amount of inventory as of the
Closing Date in the manner described in Section 1.2(b) of the
Seller's Disclosure Schedule, (iv) shall reflect $4.028 million
(which is the amount shown on the Company's consolidated,
adjusted May 1995 balance sheet previously delivered to the
Purchaser) as the amount of the Company's liability with respect
to its retirement plans, and shall reflect the current value of
the assets of the SERPs (as defined in Section 3.13 below)
determined in a manner consistent with the Company's usual
practice (including recognizing the net cash surrender value of
related life insurance policies not recognized for FASB 87
presentations) and (v) shall not reflect as a liability or a
reserve any amount with respect to the matters described in
Section 5.2(a)(ii) and (iii) hereof. Representatives of the
Purchaser and/or the Purchaser's auditors shall be entitled to
accompany the Seller's representatives during any inventory count
conducted in connection with, and to review the work papers,
schedules, memoranda and other documents used by the Seller in,
the preparation of such balance sheet.
The Seller shall deliver to the Purchaser such balance
sheet and the report of the independent accountants with respect
thereto, and thereafter the Purchaser shall have ten (10)
business days within which to deliver to the Seller a letter
setting forth in reasonable detail the Purchaser's proposed
adjustments, if any, to the balance sheet.
In the event that the Seller disagrees with any
proposed adjustments set forth in the Purchaser's letter, within
ten (10) business days of the receipt of such letter, the Seller
shall deliver to the Purchaser a written statement in reasonable
detail of the Seller's objections. If the Purchaser and the
Seller cannot resolve any disputed items within ten (10) business
days thereafter, a "Big Six" firm of independent public
accountants jointly selected by the Purchaser and the Seller
(other than the Seller's and the Purchaser's respective regular
accounting firms) shall resolve the dispute and determine the
consolidated net worth of the Company and the Subsidiaries as at
the Closing Date. The determination of such firm shall be
binding on the Purchaser and the Seller. The Purchaser and the
Seller shall share equally the fees and expenses of such firm of
independent public accountants.
(c) If the consolidated net worth of the Company
and the Subsidiaries as at the Closing Date, as finally
determined in accordance with clause (b) above, is greater than
$38 million, the Purchaser shall promptly pay to the Seller, by
wire transfer of immediately available funds to such account as
the Seller shall direct, an amount equal to the excess, with
interest thereon from the Closing Date to the date of payment of
such excess at the prime rate of interest of Citibank, N.A. as in
effect from time to time during such period.
(d) If the consolidated net worth of the Company
and the Subsidiaries as at the Closing Date, as finally
determined in accordance with clause (b) above, is less than $38
million, the Seller shall promptly pay to the Purchaser, by wire
transfer of immediately available funds to such account as the
Purchaser shall direct, the shortfall, with interest thereon from
the Closing Date to the date of payment of such shortfall, at the
rate of interest specified above.
(e) Following the Closing Date, the Purchaser
shall cause the Company and the Subsidiaries to afford the Seller
and its accountants reasonable access during normal business
hours to the books, records, facilities and employees of the
Company and the Subsidiaries and shall cooperate reasonably with
the Seller and its accountants, to enable the Seller and its
accountants to prepare the consolidated balance sheet of the
Company and the Subsidiaries as at the Closing Date and to
resolve any dispute with respect thereto between the Purchaser
and the Seller.
(f) The Initial Purchase Price as increased or
decreased pursuant to paragraph (c) or (d) above, as applicable,
is hereinafter referred to as the "Purchase Price".
1.3 Closing. The closing of the sale and purchase of
the Shares contemplated hereby (the "Closing") shall take place
at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 beginning at 10:00 A.M. on a date (the
"Closing Date") to be specified by the parties, which shall be no
later than the fifth business day after satisfaction or waiver of
the latest to occur of the conditions set forth in Article IV of
this Agreement. At the Closing, the Seller shall deliver to the
Purchaser certificates representing the Shares (together with all
rights then or thereafter attaching thereto), with valid stock
powers attached; and the Purchaser shall deliver the Initial
Purchase Price to the Seller by wire transfer of immediately
available funds to an account designated by the Seller at least
two (2) business days in advance of the Closing Date.
ARTICLE II
Representations and Warranties
2.1 Representations and Warranties of the Seller. The
Seller represents and warrants to and agrees with the Purchaser
that, except as set forth in the Seller's Disclosure Schedule
delivered herewith (which specifically references in such
Disclosure Schedule the lettered paragraph of this Section 2.1 to
which any such exceptions relate, it being understood and agreed
that, with respect to any particular exception, such exception
shall be deemed disclosed only for purposes of the paragraph or
paragraphs so referenced and shall not be deemed disclosed for
purposes of any other paragraph (unless cross referenced to
another paragraph)):
(A) Organization of the Company and the
Subsidiaries. Each of the Company and Hi-Shear Automotive Corp.,
Hi-Shear Holdings Limited, and Hi-Shear Fasteners Europe Limited,
each a subsidiary of the Company (individually a "Subsidiary" and
collectively the "Subsidiaries"), is duly incorporated, validly
existing and, to the extent applicable, in good standing under
the laws of the jurisdiction of its incorporation, with the full
corporate power and authority to own its properties and assets
and to carry on its business as currently conducted, and is duly
qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except such
jurisdictions, if any, where any failures to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the business, financial condition or results of
operations of the Company and the Subsidiaries. The copies of
the Company's and each Subsidiary's certificate of incorporation
and by-laws, or other charter documents, previously delivered to
the Purchaser are complete and correct. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its
certificate of incorporation, by-laws or other charter documents.
(B) Organization and Authority of the Seller.
The Seller has been duly organized, is validly existing and is in
good standing under the laws of the State of Delaware, has the
full corporate power and authority to enter into this Agreement
and to consummate the transactions herein contemplated and
otherwise to carry out its obligations hereunder. Except for the
approval of the holders of a majority of the outstanding shares
of common stock of the Seller, this Agreement has been duly
authorized by all necessary corporate action on the part of the
Seller. This Agreement has been duly executed and delivered by
the Seller and constitutes a valid and legally binding agreement
of the Seller, enforceable against it in accordance with its
terms. The Board of Directors of the Seller has (i) determined
that this Agreement and the transactions contemplated hereby are
in the best interests of the stockholders of the Seller, (ii)
resolved, subject to their fiduciary duties under applicable law,
to recommend that the stockholders of the Seller approve this
Agreement and the transactions contemplated hereby and (iii)
taken all action necessary with respect to the transactions
contemplated hereby so as to render inapplicable to such
transactions, including, without limitation, the purchase of the
Shares pursuant hereto, the restrictions on business combinations
contained in Section 203 of the Delaware General Corporation Law
and the supermajority voting requirements contained in Section 13
of Seller's Certificate of Incorporation. Lazard Freres & Co.
LLC has delivered to the Board of Directors of the Seller its
opinion dated October 7, 1995 to the effect that, as of the date
of such opinion, the Purchase Price is fair to Seller from a
financial point of view.
(C) Capital Stock; Subsidiaries. The authorized,
issued and outstanding capital stock of the Company and each of
the Subsidiaries is set forth in the Seller's Disclosure
Schedule. The Shares are the only issued and outstanding capital
stock of the Company. The Shares and all of the issued and
outstanding shares of capital stock of the Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable.
Neither the Company nor any Subsidiary has any authorized, issued
or outstanding shares of preferred stock. There are no existing
options, calls or commitments of any character relating to the
authorized and unissued capital stock of the Company or any
Subsidiary or to any securities or obligations convertible into
or exchangeable for, or giving any person any right to subscribe
for or acquire, any shares of capital stock of the Company or any
Subsidiary, and no such convertible or exchangeable securities or
obligations are outstanding. All of the Shares are owned by the
Seller, and all of the issued and outstanding shares of capital
stock of the Subsidiaries are owned by the Company or a
Subsidiary, in each case beneficially and of record, free and
clear of all liens, pledges, voting agreements, restrictions,
encumbrances or claims. The Company has no subsidiaries, other
than the Subsidiaries.
(D) Financial Statements; SEC Reports. The
consolidated balance sheet of the Company and the Subsidiaries as
of May 1995 and 1994, and the consolidated statement of income
for the twelve months ended May 28, 1995, May 27, 1994 and
May 30, 1993 relating thereto (for purposes of this Agreement,
all references to such balance sheets and statements of income
shall include, with respect to financial statements as of or for
the twelve months ended May 28, 1995, May 29, 1994 and May 30,
1993, reference to the notes thereto), copies of which have been
delivered by the Seller to the Purchaser, have been prepared in
conformity with GAAP consistently applied and fairly present in
all material respects the consolidated financial position of the
Company and the Subsidiaries at such dates and the results of
their operations for such periods in accordance with GAAP. The
consolidated balance sheet of the Company and the Subsidiaries as
of August 1995, and the related consolidated and consolidating
statement of income for the three-month period ended August 27,
1995, together with the notes thereto, copies of which have been
delivered by the Seller to the Purchaser, have been prepared
(except for normal year-end closing and audit adjustments) in
conformity with GAAP consistently applied and fairly present in
all material respects the consolidated financial position of the
Company and the Subsidiaries at such date and the results of
their operations for such period in accordance with GAAP. The
Seller has filed with the Securities and Exchange Commission (the
"SEC") all forms, reports and documents required to be so filed
since May 31, 1993. The Seller has made available to the
Purchaser, in the form filed with the SEC, copies of (i) the
Seller's Annual Reports on Form 10-K for the fiscal years ended
May 31, 1995, 1994 and 1993, (ii) all proxy statements relating
to meetings of the Seller's stockholders which have been held
since May 31, 1993, in the form distributed to the Seller's
stockholders and (iii) all other reports or registration
statements filed by the Seller with the SEC since May 31, 1993
(collectively, the "SEC Reports"). The SEC Reports were
prepared, in all material respects, in accordance with all
applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). As of the respective dates of
the SEC Reports, none of the SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(E) Absence of Undisclosed Liabilities. Except
as disclosed in the consolidated balance sheet of the Company and
the Subsidiaries as of August 1995, there are no debts,
liabilities or obligations (absolute, accrued, contingent or
otherwise) of the Company or the Subsidiaries of a kind required
by GAAP to be reflected in a consolidated balance sheet of the
Company and the Subsidiaries, other than debts, liabilities and
obligations which arose after May 31, 1995 in the ordinary course
of the business consistent with past practice of the Company and
the Subsidiaries or which would not, individually or in the
aggregate, have a material adverse effect on the business,
financial condition or results of operations of the Company and
the Subsidiaries.
(F) Absence of Certain Changes or Events. Since
May 31, 1995, each of the Company and the Subsidiaries has
conducted its business in the ordinary course, and there has not
been (i) any amendment to its charter or by-laws, (ii) any
issuance or sale of any shares of capital stock of the Company or
any Subsidiary, or securities convertible into, or options with
respect to, or warrants to purchase or rights to subscribe to,
any such shares, or any agreements obligating the Company or any
Subsidiary to do any of the foregoing, (iii) any dividends
(whether in cash or property) declared, set aside, paid or made
with respect to the capital stock of the Company, (iv) any
material adverse change in the business, financial condition or
results of operations of the Company and the Subsidiaries, other
than any change related to or caused by the Purchaser's actions
in connection with this Agreement or the transactions
contemplated hereby, (v) any damage, destruction or other
casualty loss (whether or not covered by insurance) materially
adverse to the business, financial condition, or results of
operations of the Company and the Subsidiaries, (vi) any increase
in the compensation payable or to become payable by the Company
or any Subsidiary to any of its officers, employees or directors
or any increase in any bonus, insurance, pension or other
employee benefit plan, agreement, payment or arrangement made by
the Company or any Subsidiary for or with any such officers,
directors or employees, except for increases in the ordinary
course of business consistent with past practice, (vii) any labor
dispute affecting the Company and the Subsidiaries, other than
routine labor matters, (viii) any transaction between the Company
or any Subsidiary on the one hand, and the Seller or any
affiliate of the Seller (other than the Company and the
Subsidiaries), on the other hand, other than transactions in the
ordinary course of business consistent with past practice, (ix)
any commitment or transaction entered into by the Company or any
Subsidiary other than in the ordinary course of its business
consistent with past practice, (x) any change by the Company or
the Subsidiaries in accounting principles or methods, except
insofar as may be required by a change in GAAP, or (xi) any other
event or condition of any character which materially adversely
affects the business, financial condition or results of
operations of the Company and the Subsidiaries.
(G) Title to Properties; Absence of Liens and
Encumbrances, etc. Each of the Company and the Subsidiaries has
good, valid and marketable title to all of the real and personal
property owned by it, free and clear of any liens, charges and
encumbrances (except for liens in respect of taxes not yet due
and payable, and immaterial title defects and encumbrances that
do not interfere with the use of the property subject thereto or
affected thereby). All material leases under which the Company
or any Subsidiary is the lessee of real property are listed in
the Seller's Disclosure Schedule and, to the knowledge of the
Seller, are valid, subsisting and enforceable leases. There is
no material default by the Company or any Subsidiary or, to the
Seller's knowledge, any landlord, under any such lease. Neither
the Company nor any Subsidiary has received any notice of any
proposed condemnation of any such property.
(H) Litigation. There are no actions, suits,
proceedings or investigations (including those related to product
liability claims) pending or, to the Seller's knowledge,
threatened (i) against the Company or any Subsidiary at law, in
equity or otherwise, in, before, or by, any court or governmental
agency or authority which, if decided adversely to the Company or
any such Subsidiary, would have a material adverse effect on
their business, financial condition or results of operations or
(ii) as of the date hereof, against the Seller, the Company or
any Subsidiary which seeks to question, delay or prevent the
consummation of the transactions contemplated hereby. There are
no unsatisfied judgments or material outstanding injunctions,
decrees, or awards against the Company or any Subsidiary or
against any of their assets, business or properties.
(I) Compliance with Law. The businesses of the
Company and the Subsidiaries are not being and have not been
conducted in violation of any law or regulation of any federal,
state, local or foreign governmental entity or of any
governmental approvals, permits, registrations and licenses
necessary to the conduct of their businesses, except for any
violations which would not, individually or in the aggregate,
have a material adverse effect on the business, financial
condition or results of operations of the Company and the
Subsidiaries. The representation and warranty contained in this
Section 2.1(I) do not apply to any law or regulation regulating
pollution or protection of the environment or to occupational
health and safety.
(J) Contracts and Leases. Neither the Company
nor any Subsidiary is as of October 5, 1995 a party to, or bound
by, any contract to be performed after the Closing Date pursuant
to which the Company or such Subsidiary is obligated to expend
more than $100,000 in any twelve-month period and which is not
subject to cancellation by it, on not more than 30 days' notice
without penalty or increased cost. Neither the Company nor any
Subsidiary is a party to or bound by any agreement, contract or
lease that was entered into outside the ordinary course of its
business or which restricts the ability of the Company or any
Subsidiary to compete with any person or in any geographic area.
There is no default by the Company or any such Subsidiary to any
agreement, contract or lease, or to the Seller's knowledge, any
other party thereto, which defaults could, individually or in the
aggregate, materially adversely affect their business, financial
condition or results of operations. Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or
similar agreement with any labor organization or any employment
contract or severance agreement with any employee.
(K) Insurance. All property and casualty
insurance policies which currently insure the Company and the
Subsidiaries are listed in the Seller's Disclosure Schedule and,
by their terms, will remain in full force and effect at least up
to the Closing Date.
(L) Employee Benefit Plans. The Seller's
Disclosure Schedule contains an accurate and complete list of
each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay,
hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, savings,
stock bonus, pension, or retirement plan, program, agreement or
arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to
or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"),
that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder ("ERISA"), for the benefit
of any employee, director, former employee or former director of
the Company (the "Benefit Plans"). The Seller's Disclosure
Schedule identifies each of the Benefit Plans that is an
"employee welfare benefit plan" or an "employee pension benefit
plan" as such terms are defined in Sections 3(1) and 3(2) of
ERISA, respectively, (such plans being hereinafter referred to
collectively as the "ERISA Plans") and subject to ERISA. Neither
the Company nor any ERISA Affiliate has any formal plan or
commitment to create any additional Benefit Plan or modify or
change any existing Benefit Plan that would affect any employee,
director, former employee or former director of the Company or
any ERISA Affiliate. Copies of all such written Benefit Plans
have been delivered or made available to the Purchaser. With
respect to the Benefit Plans: (i) each Benefit Plan is and has
been in material compliance with all applicable laws, and, if
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received or
timely applied for, a favorable determination letter from the
Internal Revenue Service, (ii) no Benefit Plan is a multiemployer
plan, as defined in Section 3(37) of ERISA and neither the
Company nor any ERISA Affiliate has contributed to, or has been
obligated to contribute to, a multiemployer plan during the six
year period ending on the date hereof, (iii) no Benefit Plan
provides medical, health, dental or life insurance coverage
beyond termination of employment except as required by Section
4980B of the Code, (iv) to the knowledge of the Company, no event
has occurred with respect to a Benefit Plan or trust which would
subject the Company, any ERISA Affiliate, any Benefit Plan, or
any trustee or administrator thereof to a material civil penalty
assessed pursuant to Sections 409 or 502(i) of ERISA or a
material tax under Sections 4975, 4976 or 4980B of the Code, (v)
all employee benefit plans or programs covering foreign employees
have been maintained in material compliance with applicable laws
and are adequately funded in accordance with their respective
terms and applicable laws, (vi) no material liability under Title
IV of ERISA has been incurred by the Company or any ERISA
Affiliate since the effective date of ERISA that has not been
satisfied in full, and to the knowledge of the Seller, no
condition exists that presents a material risk to the Company or
an ERISA Affiliate of incurring a material liability under such
Title, other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will
be made when due, (vii) the PBGC has not instituted proceedings
to terminate any of the ERISA Plans and, to the knowledge of the
Seller, no condition exists that presents a material risk that
such proceedings will be instituted, and (viii) with respect to
each of the ERISA Plans that is subject to Title IV of ERISA, the
present value of accrued benefits under such ERISA Plan, based
upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such ERISA Plan's
actuary with respect to such ERISA Plan, did not, as of its
latest valuation date, exceed the then current value of the
assets of such plan allocable to such accrued benefits. Full
payment has been made, or will be made in accordance with Section
404(a)(6) of the Code, of all amounts that the Company or any
ERISA Affiliate is required to pay under the terms of each of the
ERISA Plans and Section 412 of the Code, and all such amounts due
and properly accrued through the Closing Date with respect to the
current plan year thereof will be paid by the Company or the
Seller on or prior to the Closing Date; and none of the ERISA
Plans or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date hereof. No lien imposed under the
Code or ERISA exists on account of any ERISA Plan. No amounts
payable under the Benefit Plans or any other agreement or
arrangement to any employee, director, former employee or former
director of the Company in effect as of the Closing will, as a
result of the transaction contemplated hereby, fail to be
deductible for federal income tax purposes by virtue of Section
280G of the Code.
(M) Completeness of Assets. The assets and
properties owned by the Company and the Subsidiaries are, in
accordance with past practice, suitable and sufficient for the
conduct of their businesses as heretofore conducted and will
provide the Purchaser with the capability to manufacture, use and
sell the products and conduct the businesses of the Company and
the Subsidiaries in substantially the same manner as they have
been conducted heretofore.
(N) Related Party Interests. As of the date
hereof neither the Seller nor any subsidiary of the Seller (other
than the Company or a Subsidiary):
(i) has any cause of action or other claim against the
Company or any Subsidiary or the assets or properties of the
Company or any Subsidiary, or owes any material amount to, or is
owed any material amount by, any of them;
(ii) is a party to any material contract, lease,
agreement, arrangement or commitment used in or related to the
business of the Company or any Subsidiary;
(iii) receives from or furnishes to the Company or any
Subsidiary, any goods or services (with or without
consideration), other than managerial assistance and supervision;
or
(iv) owns, directly or indirectly, any debt, equity or
other interest or investment in any corporation, firm or other
entity which is a material competitor, lessor, lessee, customer
or supplier of the Company, except securities of any
publicly-held corporation which do not exceed five percent (5%)
of the outstanding voting securities of such corporation.
(O) Warranties, etc. (i) All products
manufactured or sold by the Company have been in substantial
conformity with the applicable contractual commitments and
specifications.
(ii) There are no recalls of products produced by the
Company or any Subsidiary pending or threatened and, to the
Seller's knowledge, there is no basis for any material recall of
any such products.
(P) Illegal Payments. No payment or contribution
has been made by or on behalf of the Company or any Subsidiary
which is in violation of any applicable federal, state or foreign
law.
(Q) Non-Contravention. The execution and
delivery of this Agreement by the Seller and the consummation of
the sale of the Shares contemplated hereby will not (i) violate
any provision of the Certificate of Incorporation or By-Laws of
the Seller, or (ii) violate any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after
the filing of notice or lapse of time or both) any obligation
under, or constitute (with or without due notice or the lapse of
time or both) a default under, or give rise to any right of
termination, cancellation or amendment under, or result in the
creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon the assets and properties of
the Company and the Subsidiaries pursuant to any provision of,
any agreement, lease, mortgage or instrument, or (iii) violate
any law, regulation, order, arbitration award, judgment or decree
to which the Seller, the Company or any Subsidiary is a party or
by which any of them is bound except, in case of the preceding
clauses (ii) and (iii), for such violations, accelerations,
defaults, terminations, cancellations, amendments, liens,
charges, pledges, security interests and encumbrances which would
not, individually or in the aggregate, have a material adverse
effect on the business, financial condition or results of
operations of the Company and the Subsidiaries.
(R) Consents and Approvals. The only
authorizations, consents, approvals of or notices to or filings
with any federal, state or foreign court, agency, commission or
other regulatory body or official required to be obtained or made
by the Seller in connection with the transactions contemplated
hereby are (i) the notification to the Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and the rules promulgated pursuant thereto (the "HSR Act"); (ii)
the notification to the Committee on Foreign Investment in the
United States ("CFIUS") under the Exon-Xxxxxx Amendment ("Exon-
Xxxxxx"); (iii) any required filings or approvals under federal
or state securities laws; and (iv) authorizations, consents,
approvals, notices and filings which, if not obtained or made,
would not, individually or in the aggregate, have a material
adverse effect on the business, financial condition or results of
operations of the Company and the Subsidiaries.
(S) Tax Matters. All (i) Tax Returns (as
hereinafter defined) that are required to be filed by or with
respect to the Company, any Subsidiary or any "affiliated group"
(as defined in Section 1504(a) of the Code) (the "Affiliated
Group") of which the Company or any Subsidiary is or was a member
have been duly filed and all such Tax Returns are true, correct
and complete in all material respects, (ii) all Taxes (as
hereinafter defined) shown to be due on such Tax Returns have
been paid, (iii) such Tax Returns have been examined by the
Internal Revenue Service or the appropriate state, local or
foreign taxing authority, or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be
filed has expired, (iv) all deficiencies asserted or assessments
made as a result of such examinations have been paid, (v) no
material issues that have been raised in writing by the relevant
taxing authority in connection with the examination of any Tax
Returns are currently pending, (vi) none of the Company or any
Subsidiary is currently being audited or examined by any taxing
authority or has received notice of any such audit or
examination, (vii) no waivers of statutes of limitation have been
given or requested by or with respect to any Taxes of the
Company, any Subsidiary or any Affiliated Group of which the
Company or any Subsidiary is or was a member, (viii) all amounts
that are required to be collected or withheld by the Company or
the Affiliated Group with respect to Taxes have been duly
collected and withheld, and all such amounts that are required to
be remitted to any taxing authority, including any applicable
interest and penalties, have been remitted on a timely basis, and
(ix) the Company is a member of the Affiliated Group of which the
Seller is the parent.
For purposes of this Agreement, (i) "Taxes" shall mean
all taxes, charges, fees, levies or other assessments of any kind
whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) and (ii) "Tax Return" shall mean
any return, report, information return or other document
(including any related or supporting information) with respect to
Taxes, including, without limitation, consolidated, combined and
unitary returns.
(T) Trademarks and Patents. The Company and the
Subsidiaries have, or have rights to use, all material patents,
patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses, computer software and
rights (collectively, the "Intellectual Property Rights") which
are necessary for use in connection with their businesses. The
Seller's Disclosure Schedule contains a list of all material
patents, patent applications, trademarks, trademark applications
and trade names owned by or licensed to the Company or any
Subsidiary (and any material licenses thereof from the Company or
any such Subsidiary) and a description of the Company's practice
regarding copyrights. To the Seller's knowledge, (i) the use of
the Intellectual Property Rights by the Company and the
Subsidiaries does not conflict with the intellectual property
rights of any other person and no other person's operations
conflict with the use and registration of the Intellectual
Property Rights and (ii) each material patent and application
therefor owned by the Company or any Subsidiary is in proper
form, not disclaimed and has been duly maintained. There are no
suits pending or, to the Seller's knowledge, threatened against
or by the Company or any Subsidiary claiming a conflict by the
Company or any such Subsidiary with any intellectual property
rights of any other person or a conflict by any other person with
any of the Intellectual Property Rights.
(U) Environmental Liability. The Company and the
Subsidiaries are in compliance with all Environmental Laws,
except for any failures to so comply that would not, individually
or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the
Company and the Subsidiaries. To the Seller's knowledge, no
events have occurred and no conditions exist that reasonably
could be expected to give rise to liability for the use,
handling, generation, treatment, storage, disposal or
transportation of Hazardous Substances, which individually or in
the aggregate would have a material adverse effect on the
business, financial condition or results of operations of the
Company and the Subsidiaries. The Company and the Subsidiaries
have obtained, hold and are in compliance with all registrations,
permits, licenses and approvals required under any Environmental
Law necessary for the operations of the Company and the
Subsidiaries as currently conducted, except for any failures to
so obtain, hold or comply that would not, individually or in the
aggregate, have a material adverse effect on the business,
financial condition or results of operations of the Company and
the Subsidiaries.
As used in this Section 2.1(U), (i) the term
"Environmental Laws" shall mean all applicable federal, state, or
local laws, statutes, rules, regulations or ordinances in effect
at the date hereof that govern (a) hazardous or toxic materials,
substances or wastes, (b) emissions to the air, land, surface
water or ground water, or (c) the protection of the environment;
and (ii) the term "Hazardous Substances" shall mean any hazardous
or toxic materials, substances or wastes as defined in any
applicable Environmental Law.
(V) Proxy Statement. The proxy statement to be
prepared by the Seller in connection with the stockholders'
meeting referred to in Section 3.11 hereof (or any amendment
thereof or supplement thereto) will, at the date mailed to such
stockholders and at the time of the meeting of such stockholders,
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
except that no representation is made by the Seller with respect
to statements made therein based on information supplied by the
Purchaser in writing for inclusion in such proxy statement. Such
proxy statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder.
2.2 Representations and Warranties with Respect to the
Purchaser. The Purchaser represents and warrants to and agrees
with the Seller that:
(A) Organization and Authority of the Purchaser.
The Purchaser has been duly organized, is validly existing and is
in good standing under the laws of the Republic of France, has
the full corporate power and authority to enter into this
Agreement and to consummate the transactions herein contemplated
and otherwise to carry out its obligations hereunder. This
Agreement has been duly authorized by all necessary corporate
action on the part of the Purchaser, has been duly executed and
delivered by the Purchaser and constitutes a valid and legally
binding agreement of the Purchaser, enforceable against it in
accordance with its terms.
(B) Litigation. As of the date hereof, no
action, suit, proceeding or investigation is pending or, to the
knowledge of the management of the Purchaser, threatened against
the Purchaser which seeks to question, delay or prevent the
consummation of the transactions contemplated hereby.
(C) Non-Contravention. The execution and
delivery of this Agreement by the Purchaser and the consummation
of the purchase of the Shares contemplated hereby will not (i)
violate any provision of the charter documents of the Purchaser,
or (ii) violate any provision of, or result in the acceleration
of or entitle any party to accelerate (whether after the filing
of notice or lapse of time or both) any obligation under, or
constitute (with or without due notice or the lapse of time or
both) a default under, or give rise to any right of termination,
cancellation or amendment under, or result in the creation or
imposition of any lien, charge, pledge, security interest or
other encumbrance upon the assets and properties of the Purchaser
pursuant to any provision of, any agreement, lease, mortgage or
instrument, or (iii) violate any law, regulation, order,
arbitration award, judgment or decree to which the Purchaser is a
party or by which it is bound except, in case of the preceding
clauses (ii) and (iii), for such violations, accelerations,
defaults, terminations, cancellations, amendments, liens,
charges, pledges, security interests and encumbrances which would
not, individually or in the aggregate, prevent the Purchaser from
purchasing the Shares pursuant hereto.
(D) Consents and Approvals. The only
authorizations, consents or approvals of or notices to or filings
with any federal, state or foreign court, agency, commission or
other regulatory body or official required to be obtained or made
by the Purchaser in connection with the transactions contemplated
hereby are (i) the notification to the FTC and the Antitrust
Division pursuant to the HSR Act; (ii) the notification to CFIUS
under Exon-Xxxxxx; (iii) any required filings or approvals under
federal or state securities laws; and (iv) authorizations,
consents, approvals, notices and filings which, if not obtained
or made, would not, individually or in the aggregate, prevent the
Purchaser from purchasing the Shares pursuant hereto.
(E) Securities Act of 1933. The Purchaser is
acquiring the Shares solely for its own account, for the purpose
of investment only and not with a view to, or for sale in
connection with, any distribution thereof.
(F) Availability of Financing. The Purchaser has
and will have sufficient financing to pay the Purchase Price in
accordance with the terms of this Agreement and all fees and
expenses incurred in connection with the transaction contemplated
hereby for which the Purchaser is responsible.
(G) Purchaser Not an "Interested Stockholder".
Except to the extent that they may be deemed such by virtue of
this Agreement and the Stockholders Agreement, neither the
Purchaser nor any of its affiliates is an "interested
stockholder" of the Seller within the meaning of Section 203 of
the Delaware General Corporation Law.
ARTICLE III
Additional Agreements of the Parties
3.1 Ordinary Course of Business. Prior to the Closing
Date, and except as otherwise expressly contemplated by this
Agreement or as set forth in Section 3.1 of the Seller's
Disclosure Schedule, or approved in writing by the Purchaser, the
Seller covenants and agrees that:
(A) The Company and each of the Subsidiaries will
maintain itself at all times as a corporation duly organized and
validly existing under the laws of the jurisdiction under which
it is incorporated;
(B) The Company and each of the Subsidiaries will
carry on its respective business in the ordinary course
substantially in the manner carried on as of the date hereof, and
neither the Company nor any Subsidiary will engage in any
activity or transaction or enter into any agreement or commitment
other than in the ordinary course of its business as heretofore
conducted;
(C) Neither the Company nor any Subsidiary will
declare, authorize or pay any distribution or dividend or redeem,
purchase or otherwise acquire, or agree to redeem, purchase or
otherwise acquire, any shares of its stock or issue, sell,
pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire,
any share of its capital stock;
(D) Other than as may be provided in any of the
Company's or any Subsidiary's existing Benefit Plans, employment
contracts or arrangements, neither the Company nor any Subsidiary
will pay or obligate itself to pay any compensation, commission,
severance or retirement payment or bonus to any current or former
director, officer or employee, other than in the ordinary course
of business consistent with past practice;
(E) The Company and each of the Subsidiaries will
use its reasonable efforts to preserve its business organization
intact, to keep available to the Purchaser the services of its
employees and to preserve for the Purchaser its relationships
with suppliers, licensees, distributors and customers and others
having business relationships with it;
(F) Neither the Company nor any Subsidiary will
sell or otherwise dispose of or pledge or otherwise encumber
(unless resulting from actions beyond the Company's or any such
Subsidiary's control, of a governmental authority or of another
party to a contract to which the Company or any such Subsidiary
is a party) any of its assets except in the ordinary course of
its business;
(G) The Company and the Subsidiaries will
maintain their facilities, machinery and equipment as a whole in
good operating condition and repair consistent with past
practice, subject only to ordinary wear and tear;
(H) Neither the Company nor any Subsidiary will
amend its Certificate of Incorporation or By-Laws or other
charter documents;
(I) Neither the Company nor any Subsidiary will
amend any of its employment contracts;
(J) Without limiting the foregoing, the Seller
will consult with the Purchaser regarding all material
developments, transactions and proposals relating to the
businesses of the Company and the Subsidiaries;
(K) Neither the Company nor any Subsidiary shall
modify, amend or terminate any of its material contracts or
waive, release or assign any material rights or claims, except in
the ordinary course of business and consistent with past
practice;
(L) Neither the Company nor any Subsidiary shall
permit any material insurance policy naming it as a beneficiary
or a loss payable payee to be cancelled or terminated without
notice to the Purchaser, except in the ordinary course of
business and consistent with past practice;
(M) Neither the Company nor any Subsidiary shall:
(i) incur or assume any long-term debt, or except in the ordinary
course of business, incur or assume any short-term indebtedness
in amounts not consistent with past practice; (ii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business
and consistent with past practice; or (iii) make any loans,
advances or capital contributions to, or investments in, any
other person (other than to the Company or any Subsidiary of the
Company or customary loans or advances to employees in accordance
with past practice);
(N) Neither the Company nor any Subsidiary shall
pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, (i) in the ordinary
course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and the Subsidiaries, (ii) incurred
in the ordinary course of business and consistent with past
practice or (iii) which are legally required to be paid,
discharged or satisfied;
(O) Neither the Company nor any Subsidiary will
adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Subsidiary;
(P) Seller will not sell, assign, transfer or
otherwise dispose of any Shares, or subject any Shares to any
liens, pledges, voting agreements, restrictions, encumbrances or
claims; and
(Q) None of the Seller, the Company or any
Subsidiary will take, or agree to commit to take, any action that
is intended to make any representation or warranty of the Seller
contained herein inaccurate in any respect at the Closing Date.
3.2 Purchaser's Actions. The Purchaser will not take,
or agree to commit to take, any action that is intended to make
any representation or warranty of the Purchaser contained herein
inaccurate in any respect at the Closing Date.
3.3 Other Tax Matters.
(a) Section 338(h)(10)
(i) Election. The Seller and the Purchaser shall make
a joint election under Section 338(h)(10) of the Code with
respect to the purchase of the Shares and under any similar
provisions of state, local or foreign law (the "Election"). On
the Closing Date or promptly thereafter, the Seller and the
Purchaser shall exchange completed and executed copies of
Internal Revenue Service Form 8023, required schedules thereto,
and any similar state, local and foreign forms. If any changes
are required in these forms as a result of information which is
first available after the Closing Date, the parties shall
promptly agree on such changes.
(ii) Allocation of Purchase Price. In connection with
the Election, the Seller and the Purchaser, as soon as
practicable and in any event prior to the Closing Date, shall act
together in good faith to agree on the Aggregate Deemed Sales
Price (as defined under applicable Treasury Regulations) and the
allocation of such Aggregate Deemed Sales Price among the assets
of the Company and the Subsidiaries.
Such allocation of the Aggregate Deemed Sales Price
shall be made in accordance with Section 338(b) of the Code and
any applicable Treasury Regulations. As among the Seller, the
Purchaser, the Company and the Subsidiaries, the valuations of
the Assets listed in such allocation shall be conclusive and
binding.
If the Purchaser and the Seller are not able to agree
on such allocation, such dispute shall be resolved by a "Big Six"
firm of independent public accountants jointly selected by the
Purchaser and the Seller (other than the Seller's and the
Purchaser's respective regular accounting firms) whose fees and
expenses shall be paid equally by the Purchaser and the Seller.
The Purchaser and the Seller shall use the asset allocation for
purposes of all reports and returns with respect to Taxes,
including Internal Revenue Service Form 8594 or any equivalent
statement, and shall take no position inconsistent with such
allocation in any tax return, any proceeding before any taxing
authority or otherwise. In the event that such allocation is
disputed by any taxing authority, the party receiving such notice
shall promptly notify and consult with the other party concerning
resolution of such dispute.
(b) Liability for Taxes and Related Matters.
(i) Seller's Liability for Taxes. Notwithstanding
anything in this Agreement to the contrary, but subject to
paragraph (c) of this Section 3.3, the Seller shall be liable for
and shall indemnify the Purchaser for all Taxes not reflected on
the balance sheet prepared in accordance with Section 1.2(b)
hereof which are (a) imposed with respect to any taxable year or
period on any member of any Affiliated Group of which the Company
or any Subsidiary was a member for any taxable year or period
ending on or before the Closing Date (other than the Company or
such Subsidiary), and (b) imposed on the Company or any
Subsidiary or for which the Company or such Subsidiary may
otherwise be liable for any taxable year or period that ends on
or before the Closing Date and, with respect to any taxable year
or period beginning on or before and ending after the Closing
Date, the portion of such taxable year ending on and including
the Closing Date. Except as set forth in clause (v) below, the
Seller shall be entitled to any refund of Taxes of the Company or
any Subsidiary received for such periods.
(ii) Purchaser's Liability for Taxes. The Purchaser
shall be liable for and indemnify the Seller for the Taxes of the
Company and the Subsidiaries for any taxable year or period that
begins after the Closing Date and, with respect to any taxable
year or period beginning on or before and ending after the
Closing Date, the portion of such taxable year or period
beginning after the Closing Date. The Purchaser shall be
entitled to any refund of Taxes of the Company or any Subsidiary
received for such periods.
(iii) Taxes for Short Taxable Year. For purposes of
paragraphs (b)(i) and (b)(ii), whenever it is necessary to
determine the liability for Taxes of the Company or a Subsidiary
for a portion of a taxable year or period that begins on or
before and ends after the Closing Date, the determination of the
Taxes of the Company or such Subsidiary for the portion of the
year or period ending on, and the portion of the year or period
beginning after, the Closing Date shall be determined (x) in the
case of income, franchise, sales and similar Taxes, pursuant to
an interim closing of the books method by assuming that the
Company or such Subsidiary had a taxable year or period which
ended at the close of the Closing Date, except that exemptions,
allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned on a
per diem basis and (y) in the case of other Taxes, by prorating
the Taxes owed for the taxable year or period on a per diem
basis.
(iv) Adjustment to Purchase Price. Any payment by the
Purchaser or the Seller under this Section will be an adjustment
to the Purchase Price.
(v) Refunds from Carrybacks. If the Seller becomes
entitled to a refund or credit of Taxes for any period for which
it is liable under Section 3.3(b)(i) to indemnify the Purchaser
and such Taxes are attributable solely to the carryback of
losses, credits or similar items from a taxable year or period
that begins after the Closing Date and attributable to the
Company or any Subsidiary, the Seller shall promptly pay to the
Purchaser the amount of such refund or credit together with any
interest received thereon. In the event that any refund or
credit of Taxes for which a payment has been made is subsequently
reduced or disallowed, the Purchaser shall indemnify and hold
harmless the Seller for any tax liability, including interest and
penalties, assessed against the Seller by reason of the reduction
or disallowance.
(vi) Tax Returns. The Seller shall file or cause to be
filed when due all Tax Returns with respect to Taxes that are
required to be filed by or with respect to the Company and the
Subsidiaries for taxable years or periods of the Company and the
Subsidiaries ending on or before the Closing Date and shall pay
any Taxes due in respect of such taxable years or periods, and
Purchaser shall file or cause to be filed when due all Tax
Returns with respect to Taxes that are required to be filed by or
with respect to the Company and the Subsidiaries for taxable
years or periods ending after the Closing Date and shall pay any
Taxes due in respect of such taxable years or periods. With
respect to any such Tax Return for a taxable period that begins
on or before and ends after the Closing Date, the Purchaser shall
deliver a copy of such Tax Return to the Seller at least forty-
five (45) calendar days prior to the due date (giving effect to
any extension thereof), accompanied by an allocation between the
pre-closing period and the post-closing period of the Taxes shown
to be due on such Tax Return. Such Tax Return and allocation
shall be final and binding on the Seller, unless, within fifteen
(15) calendar days after the date of receipt by the Seller of
such Tax Return and allocation, the Seller delivers to the
Company a written request for changes to such Tax Return or
allocation. If the Seller delivers such a request, then the
Seller and the Purchaser shall undertake in good faith to resolve
the issues raised in such request prior to the due date
(including any extension thereof) for filing such Tax Return. If
the Seller and the Purchaser are unable to resolve any issue by
the earlier of (i) ten (10) calendar days after the date of
receipt by the Company of the request for changes, or (ii) ten
(10) calendar days prior to the due date (including any extension
thereof) for filing of the Tax Return in question, then Seller
and the Purchaser shall engage jointly an independent accounting
firm to determine the correct treatment of the item or items in
dispute. Each of the Seller and the Purchaser shall bear and pay
one-half of the fees and other costs charged by the independent
accounting firm. The determination of the independent accounting
firm shall be final and binding on the parties hereto. The
Seller shall pay the Purchaser the Taxes for which the Seller is
liable pursuant to Section 3.3(b)(i) but which are payable with
Tax Returns to be filed by the Purchaser pursuant to the previous
sentence within the later of (a) 10 calendar days prior to the
due date (including extensions thereof) for the filing of such
Tax Returns or (b) five calendar days of the resolution of any
dispute regarding the allocation of Taxes pursuant to the
procedure described above.
(vii) Contest Provisions. Each Party shall promptly
notify the other in writing upon receipt by such party, or any of
its affiliates of a notice of any pending or threatened Tax
audits, claims or assessments (a "Tax Claim") which may affect
the Tax liabilities of the Company or any Subsidiary for which
the receiving party would be required to indemnify the notifying
party pursuant to this Section 3.3(b)(i), provided that failure
to comply with this provision shall not affect the notifying
party's right to indemnification hereunder so long as the other
party's position is not actually and materially prejudiced
thereby. With respect to any Tax Claim which might result in an
indemnity payment to the Purchaser pursuant to Section 3.3(b)(i),
the Seller shall have the sole right to represent the Company's
or any such Subsidiary's interests in any Tax audit or
administrative or court proceeding relating to taxable periods
ending on or before the Closing Date, and to employ counsel and
accountants of its choice at its expense. Notwithstanding the
foregoing, the Seller shall not be entitled to settle, either
administratively or after the commencement of litigation, any
claim for Taxes which would adversely affect the liability for
Taxes of the Purchaser, the Company or any Subsidiary for any
period after the Closing Date without the prior written consent
of the Purchaser. Such consent shall not be unreasonably
withheld, and shall not be necessary to the extent that the
Seller has fully indemnified the Purchaser against the effects of
any such settlement.
The Seller shall be entitled to participate at its
expense in the defense of any Tax Claim for the portion of the
year or period ending on the Closing Date which may be the
subject of indemnification by the Seller pursuant to Section
3.3(b)(i) and, with the written consent of the Purchaser, and at
its sole expense, may assume the entire defense of such Tax
claim. Neither the Purchaser nor the Company nor any Subsidiary
may agree to settle any Tax claim for the portion of the year or
period ending on the Closing Date which may be the subject of
indemnification by the Seller under Section 3.3(b)(i) without the
prior written consent of Seller, which consent shall not be
unreasonably withheld.
(viii) Termination of Tax Allocation Agreements. Any
tax allocation or sharing agreement or arrangement, whether or
not written, that may have been entered into by the Seller, or
any member of the affiliated group of which the Seller is a
member, and the Company and the Subsidiaries shall be terminated
as to them as of the Closing Date.
(c) Transfer Taxes. Notwithstanding any other
provision of this Agreement to the contrary, the Purchaser and
the Seller shall each be liable for one-half of all transfer,
sales, use, recording or similar taxes arising from the sale of
the Shares.
(d) Assistance and Cooperation. After the Closing
Date, each of the Seller and the Purchaser shall and shall cause
their respective affiliates to:
(i) assist the other party in preparing any Tax
Returns or reports which such other party is responsible for
preparing and filing in accordance with this Section 3.3;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of
the Company or any Subsidiary;
(iii) make available to the other and to any taxing
authority as reasonably requested all information, records, and
documents relating to Taxes of the Company and the Subsidiaries;
(iv) provide timely notice to the other in writing of
any pending or threatened tax audits or assessments of the
Company or any Subsidiary, for taxable periods for which the
other may have a liability under this Section 3.3; and
(v) furnish the other with copies of all
correspondence received from any taxing authority in connection
with any tax audit or information request with respect to any
such taxable period.
(e) Survival of Tax Provisions. The obligations of
the parties set forth in this Section 3.3 shall be unconditional
and absolute and shall remain in effect until sixty days
following the expiration (with valid extensions) of all statutes
of limitations applicable to the collection or assessment of the
Taxes at issue. Notwithstanding the foregoing sentence, if the
Seller makes a request for prompt assessment pursuant to Section
6501(d) of the Code or any similar provision of state, local or
foreign law with respect to any period which may be the subject
of indemnification by the Seller under Section 3.3(b)(i), the
payment by Seller of any Taxes assessed as a result of such
request shall terminate the Seller's obligations under Section
3.3(b)(i) with respect to such period.
3.4 Access Prior to Closing. The Seller shall afford
the Purchaser and its representatives (including, without
limitation, its independent public accountants and counsel)
reasonable access during regular business hours from the date
hereof until the Closing Date to any and all of the premises,
properties, contracts, books, records and data of or relating to
the Company and the Subsidiaries for the purpose of enabling the
Purchaser to confirm the accuracy of the Seller's representations
and warranties, and its compliance with its covenants, contained
in this Agreement and to keep itself apprised of the business,
affairs, operations and financial results of the Company and the
Subsidiaries, but not to permit the Purchaser to participate in
the management of the business of the Seller, the Company or the
Subsidiaries.
3.5 Preservation of Records. The Purchaser agrees
that it shall preserve and keep the records of the Company and
the Subsidiaries delivered to it hereunder for a period of three
(3) years from the Closing Date, and shall make such records
available to the Seller or its representatives, at the Seller's
expense, as may be reasonably required by the Seller. In the
event the Purchaser wishes to destroy such records after that
time, it shall first give thirty (30) days' prior written notice
to the Seller and the Seller shall have the right, at its option
and at its expense, to take possession of said records within
sixty (60) days thereafter. If, following the Closing, the
Seller retains any records relating to the business of the
Company and the Subsidiaries, the Seller shall preserve and keep
such records, shall make such records available to the Purchaser
and shall give the Purchaser the right to take possession of such
records, to the same extent as indicated above with respect to
records held by the Purchaser.
3.6 Confidentiality. The terms of the letter
agreement dated as of March 6, 1995 (the "Confidentiality
Agreement") between the Seller and the Purchaser are herewith
incorporated by reference and shall continue in full force and
effect until Closing and shall terminate as of the Closing;
provided that if this Agreement is terminated for any reason, the
Confidentiality Agreement shall remain in full force and effect
after such termination. The Seller covenants that, after the
Closing, it will not, and will not permit any of its affiliates
to, without the prior written consent of the Purchaser, disclose
to any person confidential information relating to the business
of the Company or any Subsidiary (the "Confidential
Information"), except to their respective officers, directors,
employees and representatives who need to know such information
for purposes of Taxes, accounting, pending litigation and other
matters necessary in respect of the Seller's ownership, prior to
the Closing Date, of the Company and the Subsidiaries, unless in
the opinion of the Seller's counsel, disclosure is required to be
made under the Securities Act, the Exchange Act, other applicable
law or the regulations of the New York Stock Exchange. In the
event that the Seller or any of its affiliates is requested or
required by documents subpoena, civil investigative demand,
interrogatories, requests for information, or other similar
process to disclose any Confidential Information, the Seller will
provide the Purchaser with prompt written notice of such request
or demand or other similar process so that the Purchaser may seek
an appropriate protective order or, if such request, demand or
other similar process is not mandatory, waive the Seller's
compliance with the provisions of this Section 3.6, as
appropriate. As used herein, the term "Confidential Information"
does not include information which becomes generally available to
the public other than as a result of disclosure by the Seller or
any of its affiliates.
3.7 Regulatory and Other Authorizations. Each of the
parties will use its reasonable efforts to obtain the
authorizations, consents, orders and approvals of federal, state
and foreign governmental bodies and officials that may be or
become necessary for the performance of its obligations pursuant
to this Agreement and the consummation of the transactions
contemplated hereby and will cooperate reasonably with each other
in promptly seeking to obtain such authorizations, consents,
orders and approvals as may be necessary for the performance of
their respective obligations pursuant to this Agreement. The
parties shall use their reasonable efforts to file promptly, with
the FTC, the Antitrust Division and CFIUS, the required
notification and report forms and documentary material which
comply with the provisions of the HSR Act and Exon-Xxxxxx, and
will promptly file any additional information reasonably
requested as soon as practicable after receipt of the request
from the FTC, the Antitrust Division or CFIUS.
3.8 Further Assurances. At any time and from time to
time after the Closing, the parties agree to cooperate with each
other, to execute and deliver such other documents, instruments
of transfer or assignment, files, books and records and do all
such further acts and things as may be necessary or desirable to
carry out the transactions contemplated hereunder.
3.9 Intercompany and Other Obligations. On or prior
to the Closing Date, the Seller shall cancel, cause to be
cancelled, or contribute to the capital of the Company or the
Subsidiaries, the net amount of all intercompany debt (the
"Intercompany Debt") between the Seller or any subsidiary of the
Seller (other than the Company or any Subsidiary), on the one
hand, and the Company or a Subsidiary, on the other. Until the
Closing Date, all amounts, including principal, interest and
penalty, if any, owed by or to, as the case may be, the Company
and the Subsidiaries, on the one hand, and owed to or by, as the
case may be, the Seller and its other subsidiaries, on the other
hand, shall be paid in the ordinary and regular course consistent
with past practice in accordance with the terms of such
obligations. On or prior to the Closing Date, the Seller will
(i) repay or cause to be repaid all amounts outstanding under the
Company's credit agreement with The CIT Group/Credit Finance,
Inc. and Hi-Shear Fasteners Europe Limited's credit facility with
Barclays Bank PLC and all other indebtedness for borrowed money
(other than Intercompany Debt) of the Company or any Subsidiary,
in each case including, without limitation, all penalties,
premiums and fees associated with such repayment, and cause all
necessary action to be taken as promptly thereafter as
practicable to cause all liens and security interests related
thereto to be terminated and (ii) if the Purchaser so requests,
assign (to the extent assignable) to the Company, and cause the
Company to assume, any or all contracts (including, without
limitation, insurance policies) to which Seller or any of its
subsidiaries (other than the Company and the Subsidiaries) is a
party which are primarily related to the business of the Company
and the Subsidiaries (or, in the case of any such contract which
is not exclusively related to the business of the Company and the
Subsidiaries, such portion of such contract as the parties shall
agree in good faith is appropriate and reasonable).
3.10 Insurance. In the event that, on or prior to the
Closing Date, any material property owned or leased by the
Company or any Subsidiary suffers any material damage,
destruction or allied loss, the Seller shall surrender to the
Purchaser (i) any insurance proceeds received by the Seller with
respect to such damage or loss and (ii) all rights of the Seller
with respect to any causes of action, whether or not litigation
has commenced on the Closing Date, in connection with such damage
or loss.
3.11 Seller Stockholder Approval. The Seller covenants
and agrees, as promptly as practicable, to take all actions
necessary duly to call, give notice of, convene and hold a
meeting of its stockholders as soon as practicable for the
purpose of adopting and approving this Agreement and the
transactions contemplated hereby and, if the Seller so elects, to
approve the dissolution of the Seller. The Board of Directors of
the Seller shall, subject to its fiduciary duties under
applicable law, recommend to its stockholders the approval of
this Agreement and the transactions contemplated hereby and will
use its best efforts to obtain such approval. In connection with
such stockholder meeting, the Seller covenants and agrees, as
promptly as practicable, to prepare and file with the SEC a
preliminary proxy or information statement relating to, inter
alia, this Agreement and the transactions contemplated hereby and
use its best efforts to obtain and furnish the information
required to be included by the SEC in such proxy statement and,
after consultation with the Purchaser, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement to be mailed to
its stockholders.
3.12 Non-Solicitation. The Seller shall not, nor
shall it authorize or permit any of its subsidiaries or any of
its or their respective officers, directors or employees or any
investment banker, financial advisor (including the financial
advisor named in Section 2.1(B)), attorney, accountant or other
representative retained by it to, solicit or encourage any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, a Competing Transaction (as
defined in Section 7.1 below), or, except in the circumstances
described below, participate in any discussions or negotiations,
or provide third parties with any nonpublic information, relating
to any such inquiry or proposal. Nothing contained in this
Section 3.12 or in any other provision of this Agreement shall,
however, prohibit the Seller or its Board of Directors or its
representatives or agents from making such disclosures to its
stockholders as are required under applicable law or by rules of
the New York Stock Exchange or of any other exchange on which the
Seller's securities may be listed for trading. Notwithstanding
the foregoing, nothing contained in this Section 3.12 or
elsewhere in this Agreement shall prohibit the Board of Directors
of the Seller from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes
a bona fide written proposal for a Competing Transaction if: (A)
the Board of Directors of the Seller, after consultation with its
legal counsel and financial advisors, determines in good faith
that such Competing Transaction is economically superior to the
transactions contemplated hereby and that such action is
necessary or required for the Board of Directors of the Seller to
comply with its fiduciary duties to the Seller's stockholders
under applicable law, (B) before furnishing such information to,
or entering into discussions or negotiations with, such person or
entity, the Seller discloses to the Purchaser that it is
furnishing information to, or entering into discussions or
negotiations with, such person or entity, which notice shall
describe in reasonable detail the terms thereof (including the
identity of the person or entity making the offer), and (C) prior
to furnishing such information to such person or entity, the
Seller receives from such person or entity an executed
confidentiality agreement, with terms no less favorable to the
Seller than those contained in the Confidentiality Agreement.
Subject to compliance with the provisions of Section 7.1 and the
preceding sentence, the Board of Directors of the Seller may
approve and recommend to the Seller's stockholders a Competing
Transaction.
3.13 Certain Benefit Matters. On or prior to the
Closing Date, the Seller shall take all steps necessary and
appropriate to assign to the Company, and cause the Company to
assume, the insurance policies and all related agreements and
contracts implemented in connection with the Company's
supplemental executive retirement plans (collectively, the
"SERPs") with respect to employees and former employees of the
Company who participate in, or are entitled to benefits under,
the SERPs as of the Closing Date. The Seller shall honor and
shall use its best efforts to cause its insurance carriers to
honor all claims for benefits incurred prior to the Closing Date
under the employee welfare benefit plans (as such term is defined
in Section 3(1) of ERISA) maintained by the Seller on behalf of
the employees of the Company or its Subsidiaries in accordance
with the terms of such welfare plans, without interruption as a
result of the consummation of the transactions contemplated by
this Agreement.
3.14 Estoppel Certificates. The Seller shall use
reasonable efforts to obtain and deliver to the Purchaser at or
prior to the Closing an estoppel certificate, in form and
substance reasonably satisfactory to the Purchaser and the
Seller, with respect to each of the leases described in Section
2.1(G) of the Seller's Disclosure Schedule.
ARTICLE IV
Conditions to Closing
4.1 Conditions to Obligations of the Seller. The
obligations of the Seller to consummate the sale of Shares to be
sold hereunder are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions, unless waived
by the Seller:
(i) Regulatory Authorizations. All authorizations,
consents, orders and approvals of federal, state and foreign
regulatory bodies and officials necessary for the performance by
the Seller of this Agreement and the consummation by the Seller
of the sale and purchase of the Shares hereunder shall have been
obtained and the applicable waiting period under the HSR Act and
shall have expired or been terminated, there shall be in effect
no preliminary or permanent injunction or other order of a court
or governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated herein, or any of
them, not be consummated (collectively, an "Order") and either
(A) CFIUS shall have determined not to investigate the
transactions contemplated by this Agreement under Exon-Xxxxxx
(either by action or inaction) or (B) if CFIUS shall have
determined to make such an investigation, such investigation
shall have been completed or the President shall have determined
(by action or inaction) not to take any action under Exon-Xxxxxx
with respect to the transactions contemplated by this Agreement.
(ii) Representations and Warranties. The
representations and warranties of the Purchaser contained in this
Agreement shall be true and correct at and as of the Closing
Date, with the same force and effect as if made at and as of the
Closing Date, except for any representation and warranty made or
given as of a specified date, which shall have been true and
correct as of such date; and the Purchaser shall have performed
or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
(iii) Certificate. The Purchaser shall have delivered
to the Seller a certificate, dated the Closing Date, of the Chief
Executive Officer or the Chief Financial Officer of the Purchaser
to the effect that the conditions specified in paragraph (ii) of
this Section 4.1 have been satisfied.
(iv) Seller Stockholder Approval. This Agreement and
the transactions contemplated hereby shall have been approved by
the stockholders of the Seller.
4.2 Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to consummate the purchase of the
Shares provided for herein is subject to the fulfillment, prior
to or on the Closing Date, of each of the following conditions,
unless waived by the Purchaser:
(i) Regulatory and Other Authorizations. All
authorizations, consents, orders and approvals of federal, state
and foreign regulatory bodies and officials necessary for the
performance by the Purchaser of this Agreement and the
consummation by the Purchaser of the sale and purchase of the
Shares hereunder shall have been obtained and the applicable
waiting period under the HSR Act shall have expired or been
terminated, there shall be no Order in effect and either (A)
CFIUS shall have determined not to investigate the transactions
contemplated by this Agreement under Exon-Xxxxxx (either by
action or inaction) or (B) if CFIUS shall have determined to make
such an investigation, such investigation shall have been
completed or the President shall have determined (by action or
inaction) not to take any action under Exon-Xxxxxx with respect
to the transactions contemplated by this Agreement.
(ii) Representations and Warranties. The
representations and warranties of the Seller contained in this
Agreement shall be true and correct at and as of the Closing Date
with the same force and effect as if made at and as of the
Closing Date, except for any representation and warranty made or
given as of a specified date, which shall have been true and
correct as of such date; and the Seller shall have performed or
complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
(iii) Certificate. The Seller shall have delivered to
the Purchaser a certificate, dated the Closing Date, of the Chief
Executive Officer or the Chief Financial Officer of the Seller to
the effect that the conditions specified in paragraph (ii) of
this Section 4.2 have been satisfied.
(iv) Share Certificates. The Seller shall have
delivered to the Purchaser all certificates representing the
Shares, together with all necessary stock powers and transfers,
and all other documents reasonably requested by the Purchaser to
effect the transfers of the Shares.
(v) Resignations of Directors. Each director of the
Company or any Subsidiary, who is also an officer or a director
of the Seller, shall have delivered to the Purchaser a duly
executed resignation effective as of the Closing Date.
ARTICLE V
Survival of Representations and Warranties;
Indemnification
5.1 Survival; Waiver of Claims. (a) The
representations and warranties of each of the Seller and the
Purchaser contained in this Agreement or in any certificate or
other document delivered pursuant hereto shall survive the
Closing and expire on March 31, 1997, and no action or claim may
be brought or raised at any time with respect to any
representation and warranty or with respect to the covenants and
agreements contained in Sections 3.1(Q) and 3.2 (other than any
action or claim under such Sections 3.1(Q) or 3.2 based on the
taking of any action intended to cause any representation or
warranty to be inaccurate) after such date unless prior thereto
the party seeking indemnification shall have notified in writing
the party from whom indemnification is sought in reasonable
detail of such claim. Except as provided in the preceding
sentence, the covenants and agreements contained herein shall
survive in accordance with their respective terms.
(b) Notwithstanding anything herein to the contrary,
in the event the Purchaser is notified in writing at least 20
business days prior to the Closing Date (and the Closing Date and
the date specified in Section 7.1(c), to the extent necessary,
shall be extended to allow for such 20 business day period of
notice) of an inaccuracy in any representation or warranty of the
Seller contained herein or a non-performance of or non-compliance
with any covenant or agreement contained herein required to be
performed or complied with by the Seller at or before the
Closing, (i) if the Purchaser nevertheless consummates the
Closing hereunder, the Purchaser hereby agrees that it shall be
deemed to have waived (x) such inaccuracy, non-performance or
non-compliance as a condition of its obligation to close
hereunder and (y) any and all rights, remedies or other recourse
whatsoever against the Seller, including, without limitation, any
indemnity pursuant to this Article V, to which the Purchaser
might otherwise be entitled in respect of such inaccuracy,
non-performance or non-compliance (but the Purchaser shall not be
deemed to have waived any right to receive an adjustment to the
Purchase Price pursuant to Section 1.2(c) or 1.2(d) which may
result from such inaccuracy, non-performance or non-compliance),
and (ii) if the Purchaser terminates this Agreement pursuant to
Section 7.1(b)(i), the Purchaser further agrees that it shall be
deemed to have waived any and all rights, remedies or other
recourse against the Seller to which the Purchaser might
otherwise be entitled in respect of such inaccuracy, non-
performance or non-compliance; provided, however, that if such
inaccuracy, non-performance or non-compliance existed on the date
of the execution and delivery of this Agreement or was the result
of a deliberate violation of the covenant contained in Section
3.1(Q), the Seller shall reimburse the Purchaser for up to
$300,000 of the reasonable out-of-pocket expenses incurred by the
Purchaser prior to the date of such termination in connection
with the transactions contemplated by this Agreement. In the
event the Purchaser is entitled to reimbursement of its expenses
pursuant to the preceding sentence and to a fee pursuant to
Section 7.5(b) hereof, any amounts paid pursuant to the preceding
sentence shall be credited towards the fee payable pursuant to
Section 7.5(b) and in no event shall the amount the Purchaser is
entitled to receive pursuant to the preceding sentence and
Section 7.5(b) exceed the amount set forth in Section 7.5(b).
5.2 Indemnification. (a) The Seller hereby agrees to
indemnify and hold harmless the Purchaser from and against any
losses, claims, damages, liabilities, costs and expenses,
including, without limitation, taxes, interest, penalties and
attorneys' fees and expenses (collectively "Damages"), asserted
against, resulting to, imposed upon or incurred by the Purchaser,
directly or indirectly, by reason of or resulting from a breach
or violation of any covenant or agreement in this Agreement or
any breach of a representation or warranty of the Seller
hereunder, except to the extent the same are reflected on the
balance sheet prepared in accordance with Section 1.2(b) hereof
or in the notes thereto. The provisions of Section 3.3(b) shall
govern the indemnification for Taxes to the extent inconsistent
with the provisions of this Section 5.2. Notwithstanding the
foregoing, the Seller shall have no obligation to indemnify the
Purchaser for any Damages arising from (i) any aged or surplus
inventory other than any increase in the amount of surplus
inventory for the items listed on the Company's Special Inventory
Report Number LH168R002, as of April 30, 1995 (run date May 31,
1995), the Report Summary of which is attached as Attachment
5.2(a) to the Seller's Disclosure Statement, from the amount of
such surplus as of April 30, 1995, as shown on such Report; (ii)
the terms of the February 15, 1993 contract between the Company
and Boeing Commercial Airplane Group or the July 27, 1992
contract between the Company and Textron Aerostructures (a
division of Avco Corporation); (iii) any groundwater, soil or
other subsurface contamination at the Company's facility located
at 0000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx as described or
identified in (A) a report by Blasland, Xxxxx & Xxx ("BBL")
titled "Estimated Costs for Site Characterization and Soil and
Ground-Water Remediation, Hi-Shear Corporation Facility, 0000
Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx," dated May 1992, including
any document reviewed or cited therein (the "BBL Report"); (B) a
letter dated September 15, 1992, from Xxxxx X. Xxxxxx of BBL to
Xxxxxxx Xxxxx of the Company regarding "Status Report for the Hi-
Shear Facility Located at 0000 Xxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx. BBL Project No.: 66202" (the "Status Report"); (C) a
letter dated October 15, 1993, from Xxxxx X. Xxxxxx of BBL to
Xxxxxxx Xxxxx of the Company regarding "Tasking, Cost Estimates
and Schedule for Remedial Design Activities at Hi-Shear Torrance
Facility. BBL Project No.: 66202" (the "Tasking Report"); (D) any
and all ground-water monitoring reports submitted to the Company
by BBL (the "Monitoring Reports"), including, but not limited to
the draft "Second Quarter 1995 Ground-Water Monitoring Report,
Hi-Shear Corporation, 0000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx"
dated August 1995 or as would be described or identified in any
additional investigations or studies undertaken pursuant to
recommendations made in the BBL Report, the Status Report, the
Tasking Report or the Monitoring Reports (collectively, the
"Reports") or as would be required by a governmental agency with
respect to the contamination described or identified in the
Reports; or (iv) the absence of any reserve or other provision
for any of the foregoing in any financial statement or notes
thereto with respect to the Company referred to herein or in the
Seller's Disclosure Statement. For the avoidance of doubt, the
preceding sentence shall not create any implied obligation of the
Seller to indemnify the Purchaser for any Damages relating to any
other matters disclosed on the Seller's Disclosure Schedule.
(b) The Purchaser hereby agrees to indemnify and hold
harmless the Seller from and against any Damages asserted
against, resulting to, imposed upon or incurred by the Seller,
directly or indirectly, by reason of or resulting from a breach
or violation of any covenant or agreement in this Agreement or
any breach of a representation or warranty of the Purchaser
hereunder.
(c) Solely for determining the Purchaser's right to
indemnification hereunder for any breach of the Seller's
representations and warranties or the Seller's covenant contained
in Section 3.1(Q) hereof, and not for purposes of determining
whether the conditions to closing set forth in Article IV hereof
have been satisfied (including, without limitation, the
conditions set forth in Section 4.2(ii)) or for any other purpose
whatsoever, it is understood and agreed that "material" is
defined to mean any inaccuracy or inaccuracies in the
representations and warranties set forth in any one lettered
paragraph of Section 2.1 hereof which have a cumulative net
adverse effect of more than $250,000 on the business, financial
condition or results of operations of the Company and the
Subsidiaries taken as a whole.
(d) Promptly after receipt by the indemnified party of
notice of the commencement of any action, suit or proceeding or
the written assertion of any claim, demand or Tax deficiency, the
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 5.2,
notify the indemnifying party in writing of such notice, but the
omission so to notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may otherwise
have to the indemnified party unless the indemnifying party's
rights are materially prejudiced thereby. In case any such
action, suit, proceeding, demand, Tax deficiency or claim shall
be brought or asserted against the indemnified party (or the
Company or any Subsidiary if the Purchaser is the indemnified
party) and it shall notify the indemnifying party of the
commencement or assertion thereof, the indemnifying party shall
notify the indemnified party within 30 days of such notice as to
whether or not the indemnifying party desires to participate
therein. If the indemnifying party elects to participate in the
defense of such matter, all decisions relating thereto (except as
provided in Section 3.3 above) shall be decided jointly by the
indemnified party and the indemnifying party, including but not
limited to settlements and appeals. The parties shall use all
reasonable efforts to minimize the amount of any loss resulting
from any such matter and shall fully cooperate with one another
in regard thereto, including, without limitation, delivering
copies of all pleadings, documents, reports and correspondence to
the other party, and acting reasonably in all matters in which
joint decisions are required.
(e) After the Closing, the Purchaser will make, and
will cause Hi-Shear Fasteners Europe Limited to make, reasonably
diligent efforts to collect the POUND190,000 receivable of Hi-Shear
Fasteners Europe Limited referred to in Section 2.1(D) of the
Seller's Disclosure Schedule; provided, however, that,
notwithstanding anything in this Agreement to the contrary, to
the extent such receivable is not paid on or prior to March 31,
1997, the Seller shall pay the Purchaser the unpaid amount
thereof upon demand after such date, and the Purchaser and Hi-
Shear Fasteners Europe Limited thereupon shall assign in writing
to the Seller all of their respective rights to receive, and the
Seller shall be subrogated to all rights of the Purchaser and Hi-
Shear Fasteners Europe Limited to receive, payment of all unpaid
amounts due with respect to such receivable. The Purchaser and
Hi-Shear Fasteners Europe Limited shall thereafter reasonably
cooperate with the Seller, at the cost and expense of the Seller,
in the Seller's efforts to collect the payment of such amount.
Any amount due the Purchaser from the Seller pursuant to the
first sentence of this paragraph (e) shall not be subject to, or
credited against, the limitations on claims set forth in Section
5.3 of this Agreement. For purposes of preparing the
consolidated balance sheet of the Company and the Subsidiaries as
at the Closing Date referred to in Section 1.2(b) of this
Agreement, such receivable shall be valued at POUND190,000.
5.3 Limit on Claims. No claim or claims with respect
to breaches of representations and warranties of the Seller or of
the Seller's covenant contained in Section 3.1(Q) hereof shall be
asserted by the Purchaser pursuant to the indemnification
provisions provided for pursuant to this Article V, unless the
amount of the Damages with respect to breaches of representations
and warranties and such covenant is at least U.S. $250,000 in the
aggregate and then only to the extent such Damages exceed U.S.
$250,000. In no event shall the Seller be liable to the
Purchaser for more than an amount equal to the Purchase Price in
the aggregate with respect to any claim or claims for
indemnification pursuant to this Article V.
5.4 Remedies. The parties hereto agree that
irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof
and that, unless and until this Agreement is properly terminated
in accordance with the provisions of Section 7.1 hereof, the
parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in equity.
5.5 Remedies Exclusive. The remedies provided herein
shall be exclusive and shall preclude the assertion by any party
hereto or any other rights or the seeking of any other remedies
against the other party hereto for claims arising under this
Agreement at common law, in equity (including rights of specific
performance), under any statute, rule or regulation or otherwise.
5.6 Certain Distributions. The Seller covenants and
agrees that until March 31, 1997, it will retain and not
distribute to its stockholders (including, without limitation, by
means of a dividend, dissolution, stock redemption or stock
repurchase) at least $3 million of the Purchase Price (the
"Retained Amount"). The Purchaser agrees that, subject to the
Seller's compliance with the covenant and agreement set forth in
Section 3.9(i) of this Agreement, the Seller may distribute to
its stockholders the balance of the Purchase Price at such times
prior to or after March 31, 1997 and in such manner as the Board
of Directors of the Seller may deem appropriate, and solely for
such purpose, the Board of Directors of the Seller shall be
entitled to proceed as if the Seller's liability to the Purchaser
under this Agreement and in respect of the transactions
contemplated hereby is in no event greater than $3 million.
After March 31, 1997, the Seller may distribute the Retained
Amount to its stockholders; provided, however, that if on or
prior to March 31, 1997, the Purchaser shall have notified the
Seller of a claim for indemnification in accordance with this
Article V, and such claim shall remain unresolved as of such
date, the Seller shall retain and not distribute to its
stockholders a portion of such Retained Amount which the Seller
and the Purchaser shall agree, or a panel of arbitrators referred
to in Section 8.3(b) shall determine, to be sufficient to enable
the Seller to satisfy such claim for indemnification to the
extent it may be obligated with respect thereto. Upon final
resolution of such claim, or at such earlier time as the
Purchaser and the Seller may agree or such a panel of arbitrators
may determine, the Seller may distribute to its stockholders the
balance of such Retained Amount. The Purchaser, for the benefit
of itself, its successors and assigns, hereby irrevocably waives
and agrees it will not assert against the Seller, any subsidiary
of the Seller or any officer, director, employee, expert or
stockholder of the Seller or any such subsidiary, any claim for
the recovery of any such distribution permitted hereby, or for
Damages for, or for other legal or equitable relief in respect
of, the declaration, payment, making or receipt of any such
distribution permitted hereby under any federal, state, local or
foreign law, statute or regulation (including, without
limitation, any applicable bankruptcy, insolvency, fraudulent
conveyance or other law affecting or protecting the rights of
creditors or the Delaware General Corporation Law), at common
law, in equity or otherwise, notwithstanding the fact that as a
result of any such distributions, the Seller may not have funds
sufficient to indemnify the Purchaser in respect of any claim for
Damages asserted hereunder or otherwise.
ARTICLE VI
Fees Relating to this Transaction
6.1 The Seller's Fee. The Seller has not entered into
any agreement with any other party and is not responsible for
claims by any other party for brokerage or other commissions
related to this Agreement or the transactions contemplated
hereby, except that the Seller has retained as its financial
adviser and the Seller is responsible for, and shall indemnify
the Purchaser against, any obligations with respect to the fee of
Lazard Freres & Co. LLC.
6.2 The Purchaser's Fee. The Purchaser has not
entered into any agreement with any other party and is not
responsible for claims by any other party for brokerage or other
commissions related to this Agreement or the transaction
contemplated hereby, except that the Purchaser has retained as
its financial adviser, and the Purchaser is responsible for, and
shall indemnify the Seller against, any obligations with respect
to the fee of Banexi International Financial Services (North
America) Corp.
ARTICLE VII
Termination And Amendment
7.1 Termination. This Agreement may be terminated at
any time, whether before or after approval of this Agreement and
the transactions contemplated hereby by the stockholders of the
Seller:
(a) by mutual written consent of the Purchaser and the
Seller;
(b) by either the Purchaser or the Seller if (i) there
has been a breach of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement
which breach has not been cured within five business days
following receipt by the breaching party of notice of such
breach, or (ii) if any permanent injunction or other order of a
court or other competent authority preventing the consummation of
the transactions contemplated hereby shall have become final and
non-appealable;
(c) by either the Purchaser or the Seller if, for any
reason, the Closing shall not have occurred on or before May 31,
1996; provided, however, that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to any
party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of
the Closing to have occurred on or prior to such date;
(d) by either the Purchaser or the Seller if the
approval of the stockholders of the Seller of this Agreement and
the transactions contemplated hereby shall not have been obtained
by reason of the failure to obtain the required affirmative vote
at a duly held meeting of stockholders or at any adjournment
thereof;
(e) by the Seller, if the Board of Directors of the
Seller shall have recommended a Competing Transaction to its
stockholders and shall have determined, after consultation with
the Seller's legal counsel and financial advisors, that such
Competing Transaction is economically superior to the
transactions contemplated hereby and that such action is
necessary or required for the Board of Directors to comply with
its fiduciary duties to the Seller's stockholders under
applicable law; or
(f) by the Purchaser, if (i) the Board of Directors of
the Seller withdraws, modifies or changes its recommendation of
this Agreement or the transactions contemplated hereby in a
manner adverse to the Purchaser or shall have resolved to do so,
or (ii) the Board of Directors of the Seller shall have
recommended to the stockholders of the Seller any Competing
Transaction or resolved to do so, or (iii) a tender offer or
exchange offer for all of the outstanding shares of capital stock
of the Seller (other than any such shares "beneficially owned"
(within the meaning of Rule 13d-3 under the Exchange Act) by the
person or "group" (within the meaning of Rule 13d-5(b) under the
Exchange Act) making such tender or exchange offer) is commenced,
and the Board of Directors of the Seller, within ten (10)
business days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders or takes no
position with respect to the acceptance of such tender offer or
exchange offer by its stockholders.
For purposes of this Agreement, "Competing Transaction"
shall mean any of, or a proposal to effect any of, the following
(other than the transactions contemplated by this Agreement): (i)
any merger, consolidation, business combination, or other similar
transaction with respect to the Seller or the Company; (ii) any
sale, transfer or other disposition of the Shares or of all or
substantially all of the assets of the Company and the
Subsidiaries; or (iii) any tender offer or exchange offer for all
the outstanding shares of capital stock of the Seller (other than
any such shares "beneficially owned" (within the meaning of Rule
13d-3 under the Exchange Act) by the person or "group" (within
the meaning of Rule 13d-5(b) under the Exchange Act) making such
tender or exchange offer) or the filing of a registration
statement under the Securities Act in connection therewith.
7.2 Effect of Termination. In the event of
termination of this Agreement by either the Seller or the
Purchaser as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or
obligation on the part of the Purchaser or the Seller or their
respective officers or directors except (y) with respect to
Sections 3.6, 6.1, 6.2, 7.5 and this Section 7.2 and (z) to the
extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
7.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval of this
Agreement and the transactions contemplated hereby by the
stockholders of the Seller, but, after any such approval, no
amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.4 Extension; Waiver. Any party may: (a) extend the
time for the performance of any of the obligations or other acts
of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with
any of the agreements, covenants or conditions contained herein.
Except as provided in Section 5.1(b) hereof, any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf
of such party, and no such extension or waiver shall be construed
as an extension or waiver of any other obligation, inaccuracy or
compliance with any other provision.
7.5 Fees and Expenses. (a) Except as otherwise
expressly provided herein, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense.
(b) The Seller agrees that (i) if the Seller shall
terminate this Agreement pursuant to Section 7.1(e), (ii) if the
Purchaser or the Seller shall terminate this Agreement pursuant
to Section 7.1(d) due to the failure of the Seller's stockholders
to approve this Agreement and the transactions contemplated
hereby, and (A) at the time of such failure so to approve this
Agreement there shall exist or have been proposed a Competing
Transaction and (B) within one year following such termination,
the Seller or any of its subsidiaries shall have consummated a
Competing Transaction, (iii) if the Purchaser or the Seller shall
terminate this Agreement pursuant to Section 7.1(c), a vote of
the stockholders of Seller at a duly held meeting with respect to
this Agreement and the transactions contemplated hereby shall not
have occurred and been certified prior to such termination and
(A) at the time of such termination there shall exist or have
been proposed a Competing Transaction and (B) within one year
following such termination, Seller or any of its subsidiaries
shall have consummated a Competing Transaction, or (iv) if the
Purchaser terminates this Agreement pursuant to Section 7.1(f)(i)
or (ii), then the Seller shall pay to the Purchaser an amount
equal to $1.3 million, which sum the Seller and the Purchaser
agree is reasonable under the circumstances since it would be
impracticable and extremely difficult to fix the amount of actual
damages to the Purchaser in the case of such a termination.
(c) The Seller and the Purchaser each agree that the
payment provided for in Section 7.5(b) shall be the sole and
exclusive remedy of the Purchaser upon any termination of this
Agreement as described in Section 7.5(b) and such remedies shall
be limited to the sum stipulated in Section 7.5(b), regardless of
the circumstances (including willful or deliberate conduct)
giving rise to such termination.
(d) Any payment required to be made pursuant to
Section 7.5(b) shall be made to the Purchaser not later than two
business days after delivery to the Seller of notice of demand
for payment, and shall be made by wire transfer of immediately
available funds to an account designated by the Purchaser in the
notice of demand for payment delivered pursuant to this Section
7.5(d).
ARTICLE VIII
Miscellaneous
8.1 Public Disclosure. The parties agree that, except
as may be required to comply with the requirements of applicable
law or the rules of any stock exchange or any interdealer trading
system upon which their shares may be listed or quoted for
trading, no press release or similar public announcement or
communication will be made or caused to be made concerning the
execution or performance of this Agreement unless reviewed in
advance by both parties.
8.2 Governing Law. This Agreement shall be deemed to
be made in and in all respects shall be interpreted and
construed, and it and the rights of the parties with respect to
the transactions contemplated hereby shall be governed, by and in
accordance with the law of the State of New York (including the
law of such State with respect to the authority of arbitrators to
make awards of punitive damages), without regard to the conflicts
of law provisions thereof.
8.3 Dispute Resolution; Jurisdiction.
(a) Negotiation. (i) In the event of any
dispute, controversy or claim (a "Dispute") arising out of or
relating to this Agreement (including any provision of any
Disclosure Schedule, Exhibit, document or certificate) or the
breach, termination or validity thereof, but with the exception
of any disputes arising under Section 1.2(b) of this Agreement
which shall be resolved in the manner provided therein, upon the
written request of either party to this Agreement (a "Party"),
the matter shall immediately be referred to senior officers of
each Party for resolution. The senior officers shall meet
promptly and attempt in good faith to negotiate a resolution of
the Dispute.
(ii) If the parties are unable to resolve the Dispute
within 10 business days after a Party's written request for a
meeting was made, then either Party may submit the Dispute to
arbitration as the exclusive means of resolving it in accordance
with the procedures set forth in Section 8.3(b) hereof.
(b) Arbitration. (i) Any unresolved Dispute shall be
finally settled by arbitration in accordance with the Arbitration
Rules of the International Chamber of Commerce (the "ICC") then
in effect (the "Rules"), except as modified herein. The
arbitration shall be held in New York, New York. The arbitration
proceedings shall be conducted, and the award shall be rendered,
in the English language, and to the extent the arbitrators are
required to apply the laws governing contracts, the laws of the
State of New York shall govern.
(ii) There shall be three arbitrators of whom each
Party shall select one in accordance with the Rules. The two
Party-appointed arbitrators shall select a third arbitrator to
serve as Chair of the tribunal within 30 days of the selection of
the second arbitrator. If any arbitrator has not been appointed
within the time limits specified herein and in the Rules, such
appointment shall be made by the ICC Court of Arbitration upon
the written request of either Party.
(iii) The hearing shall be held no later than 150 days
and the award shall be rendered no later than 180 days following
the appointment of the last of the three arbitrators.
(iv) The Parties hereby waive any rights of
application or appeal to the courts of the United States and of
the Republic of France to the fullest extent permitted by law in
connection with any question of fact or law arising in the course
of the arbitration or with respect to any award made except for
actions to enforce an arbitral award and actions seeking interim,
interlocutory or other provisional relief in any court of
competent jurisdiction.
(v) The award shall be final and binding upon the
Parties, and shall be the sole and exclusive remedy between the
Parties regarding any claims, counterclaims, issues, or
accounting presented to the arbitral tribunal.
(vi) Any monetary award shall be made and promptly
payable in U.S. dollars free of any tax (except to the extent
required by law), deduction or offset, and the arbitral tribunal
shall be authorized in its discretion to grant pre-award and
post-award interest at commercial rates. Any costs, fees, or
taxes incident to enforcing the award shall, to the maximum
extent permitted by law, be charged against the party resisting
such enforcement.
(vii) This Agreement and the rights and obligations of
the Parties shall remain in full force and effect pending the
award in any arbitration proceeding hereunder.
(viii) All notices by one party to the other in
connection with the arbitration shall be in accordance with the
provision of Section 8.4 hereof.
(ix) This agreement to arbitrate shall be binding upon
the successors and assigns of each Party.
(x) If at any time there are pending two or more
arbitrations hereunder, any party to any such arbitrations may
apply for consolidation of any two or more of such arbitrations.
Such application shall be made to the arbitral tribunal in the
arbitration that, among the arbitrations sought to be
consolidated, was the first commenced under this Agreement (the
"Primary Tribunal"). Arbitrations may be consolidated, in whole
or in part, if there are significant common issues of law or fact
or one or more common parties between the arbitrations sought to
be consolidated. In determining whether and to what extent to
order consolidation, the Primary Tribunal shall consider the
extent to which consolidation would facilitate efficiencies and
economies in the arbitration process, and the desirability of
avoiding possibly conflicting results under different
arbitrations. The consolidated arbitration shall be held before
the Primary Tribunal. If there are more than two parties to any
arbitration consolidated hereunder, the Primary Tribunal may
interpret and supplement the Rules in their application to the
consolidated arbitration as may be necessary or appropriate to
accommodate the multi-party nature of the arbitration and to
ensure the just, expeditious, economical and final determination
of the dispute. The award in any arbitration under this Section
8.3(b), or in any arbitration consolidated hereunder, shall be
final and binding on all of the parties hereto and on all other
persons (whether or not they participated in the consolidated
arbitration) that were given an opportunity to participate fully
in such arbitration.
(c) New York Jurisdiction. Each of the parties to
this Agreement hereby irrevocably and unconditionally (i)
consents to submit to the jurisdiction of the federal and state
courts located in the County of New York for any proceeding
arising in connection with this Agreement or with respect to the
rights of the parties under this Agreement or in connection with
the transactions contemplated hereby (and each such party agrees
not to commence any such proceeding, except in such courts), (ii)
agrees that process in any such proceeding may be served upon it
in the same manner as notice may be given to it as provided in
Section 8.4 of this Agreement with the same legal force and
validity as if served upon such party personally, (iii) waives
any objection to the laying of venue of any such proceeding in
the federal and state courts located in the City, County and
State of New York, and (iv) waives, and agrees not to plead or to
make, any claim that any such proceeding is brought in an
improper or otherwise inconvenient forum. The parties agree
that, whether or not personal jurisdiction can be obtained
against the Seller, the Company, any Subsidiary or any other
affiliate of any of them in the Republic of France, no proceeding
will be brought against the Seller, the Company, any Subsidiary
or any affiliate of any of them in any court or before any
tribunal in the Republic of France.
8.4 Notices. Any notices or other communications
required under their Agreement shall be in writing, shall be
deemed to have been given and received when delivered in person
or by telecopy, or if sent by overnight express courier service,
shall be deemed to have been received on the first business day
thereafter, and
(a) if to the Seller, addressed to:
Hi-Shear Industries Inc.
0000 Xxx Xxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Chairman of the Board and
Chief Executive Officer
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(b) if to the Purchaser, addressed to:
GFI Industries S.A.
Espace Vauban-BP 000
Xxxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx
Xxxxxx 00000
Telecopy: 011-33-84-57-02-00
Telephone: 000-00-00-00-00-00
Attention: Chairman of the Board and
Chief Executive Officer
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
or at such other place or places or to such other person or
persons as shall be designated in writing by the parties to this
Agreement in the manner herein provided.
8.5 Section Headings. The section and paragraph
headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
8.7 Assignment. Except as provided in the following
sentence, this Agreement may not be assigned, by operation of law
or otherwise. The Purchaser may assign its rights under this
Agreement in whole or in part to a subsidiary of the Purchaser
which will take title to the Shares and will assume all
obligations of the Purchaser hereunder; provided, however, that
in such event, the Purchaser will remain fully liable for the
fulfillment of all such obligations. As a condition of such
assignment, the assignee in writing shall make all of the
representations and warranties of the Purchaser hereunder and
otherwise agree to perform all of the obligations of the
Purchaser hereunder. This Agreement shall be binding upon and
inure to the benefit of successors and permitted assigns of the
parties hereto.
8.8 Limitation on Rights. In no event shall the
Purchaser, by reason of the consummation of the transactions
contemplated by this Agreement, be deemed to have acquired any
interest in or rights with respect to (i) the claims the Seller
and its subsidiaries (other than the Company and the
Subsidiaries) have against the United States Navy or (ii) any net
operating losses that the Seller and its subsidiaries (other than
the Company and its Subsidiaries to the extent required by
applicable Tax law) may have.
8.9 Miscellaneous. This Agreement (a) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties, with
respect to the subject matter hereof, provided, however, the
Confidentiality Agreement shall remain in full force and effect
until Closing; and (b) is not intended to confer upon any other
persons, including, but not limited to, employees of the Seller,
the Company or any Subsidiary, any rights or remedies hereunder.
In case any provision in this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or
impaired thereby. Wherever the phrase "to the Seller's
knowledge" appears in this Agreement, the parties intend that
such phrase be construed to mean that the Seller has made due
inquiry of the appropriate officers of the Company and the
Subsidiaries with respect to such matter. Subject to Section
5.2(c), wherever the word "material" is used with respect to (i)
a party and/or any subsidiary of a party or its business,
financial condition or results of operations, the parties intend
that it shall be construed to mean material to the business,
financial condition or results of operations of such party and
its subsidiaries taken as a whole and (ii) the Company and/or any
Subsidiary or any of their businesses, financial condition or
results of operations, the parties intend that it shall be
construed to mean material to the business, financial condition
and results of operations of the Company and the Subsidiaries
taken as a whole.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
HI-SHEAR INDUSTRIES INC.
By /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
GFI INDUSTRIES S.A.
By /s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx
Chairman of the Board and
Chief Executive Officer
