STOCK PURCHASE AGREEMENT
AMONG
JPE, INC.,
DAYTON PARTS, INC.
AND
THE STOCKHOLDERS OF
BRAKE, AXLE AND TANDEM COMPANY
Dated
April 16, 1997
STOCK PURCHASE AGREEMENT
Agreement entered into on April 16, 1997, by and among JPE, Inc., a Michigan
corporation ("JPE"), Dayton Parts, Inc., a Michigan corporation ("Buyer"), and
Xxxxxx Xxxx, Xxxx Xxxxxx Xxxx, Xxxxx Xxxx, Xxxxxx Xxxx and X. X. Xxxxxx
(collectively the "Sellers"). The Buyer and the Sellers are referred to
collectively herein as the "Parties."
The Sellers in the aggregate own all of the outstanding capital stock of Brake,
Axle and Tandem Company, a Texas corporation (the "Company").
This Agreement contemplates a transaction in which the Buyer will purchase from
the Sellers, and the Sellers will sell to the Buyer, all of the outstanding
capital stock of the Company in return for cash and contingent payments.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys'
fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms the basis for any specified
consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2.4 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the Non-Voting Common Stock, par value
$0.10 per share, and the Voting Preferred Stock, par value $12.00 per
share, of the Company and the rights thereto.
"Confidential Information" means any information concerning the business
and affairs of the Company and its Subsidiary that is not already generally
available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Disbursing Agent" has the meaning set forth in Section 2.2 below.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan,
(b) qualified defined contribution retirement plan or arrangement which is
an Employee Pension Benefit Plan, (c) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan (including
any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material
fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous,
or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 4.7 below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 7.4 below.
"Indemnifying Party" has the meaning set forth in Section 7.4 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever
form or medium).
"Intercompany Transaction" has the meaning set forth in Treas. Reg. Section
1.1502-13.
"Knowledge" means actual knowledge after reasonable inquiry of Xxx
Xxxxxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxx Xxxxx.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section 4.7
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4.7
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.7
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or
political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"Purchase Price" has the meaning set forth in Section 2.2 below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of
Business and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a
majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added. alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 7.4 below.
2. PURCHASE AND SALE OF COMPANY SHARES.
2.1 Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from each of the Sellers, and
each of the Sellers agrees to sell to the Buyer, all of his or its
Company Shares for the consideration specified below in this Section
2.
2.2 Purchase Price. The purchase price (the "Purchase Price") will consist
of and JPE shall cause Buyer to pay to Xxxx Xxxxxxxxxxx, as disbursing
agent for the Sellers ("Disbursing Agent"), as follows:
(a) Cash Payment. At the Closing, cash in the amount of $2,250,000.
(b) Covenant Note to Compete. Payment of $250,000 in cash at closing
to Xxxxxx Xxxx for a covenant not to compete in the form of
Exhibit 2.2(b).
(c) Severance Agreements. Assumption of (i) severance obligations,
but not the one-time incentive bonus, contained in agreements
with Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxx Xxxxx,
attached hereto as Exhibit 2.2(c)(i), (ii) severance obligations
with other employees as generally described in Exhibit
2.2(c)(ii), provided that such employees do not voluntarily leave
the employ of the Company prior to their specified termination
date, and (iii) the severance agreement dated December 20, 1996
with Xxxxxx Xxxx including the reimbursement to Sellers of the
amount, if any, paid to Xxxxxx Xxxx prior to Closing; provided
that the total obligation created by Xxxxxx Xxxx'x xxxxxxxxx
agreement does not exceed $100,000 in the aggregate, and that the
remaining payments continue to be made in equal amounts on a
monthly basis.
(d) Contingent Payments. Subject to the adjustments provided in
Section 2.3, contingent payments (the "Contingent Payments")
based on annual sales (net of cash discounts and returns but
before rebates and freight) of the product line categories as
described in Exhibit 2.2(d)(1) in excess of the target sales
("Target Sales"), as set forth below, by Buyer or its affiliates,
including, but not limited to, the Company.
The Contingent Payments to Sellers shall be made for the first to
occur of sales through June 30, 2002 or Contingent Payments in
the aggregate of $4 million. The Contingent Payments shall be
made on August 15 of each year at the following rates and for the
five (5) consecutive twelve month periods starting with the
twelve-month period July 1, 1997 through June 30, 1998, as
follows:
Period July 1 Target Sales Percentage
through June 30 ($ in millions) Rate on Excess Sales
--------------- --------------- --------------------
Year 1 30.6 7%
Year 2 30.978 10
Year 3 31.367 8
Year 4 31.768 7
Year 5 32.181 6
An example of the Contingent Payment calculation is set forth on
Exhibit 2.2(d)(3). Such example is provided as a forecast only,
and Buyer does not represent or guarantee that the sales numbers
reflected on Exhibit 2.2(d)(3) can or will be achieved and shall
have no liability to Sellers for such forecast.
On a quarterly basis, concurrent with JPE, Inc.'s public
reporting requirements, Buyer shall furnish a designated Seller a
report of sales of the Company's products for such quarter.
No more than once per year, Sellers may audit Buyer's records
supporting the sales for the Contingent Payments. Such audit
shall be performed during Buyer's normal business hours and upon
reasonable notice to Buyer. Sellers' audit shall be conducted at
Sellers' sole cost and expense; provided, however, in the event
such audit results in a variance in the sales number of greater
than ten percent (10%), Buyer shall be responsible for the
reasonable expenses of Sellers' audit.
(e) Other. Such other payments as may be set forth in Exhibit 2.2(e).
2.3 Adjustments to the Purchase Price. Subject to the adjustments provided
in this Section, the Purchase Price, based upon the December 28, 1996
audited balance sheet attached as Exhibit 2.3 as adjusted for the
consolidation of the Tufco assets (the "Balance Sheet"), the
Contingent Payment portion of the Purchase Price will be adjusted as
follows:
(a) Adjustment. Post closing, Buyer shall cause a balance sheet of
the Company as of the April 15, 1997 (the "Closing
Date Balance Sheet") to be prepared based upon the taking of a
physical inventory of the Company and its Subsidiary, starting
prior to Closing and completed promptly following Closing. Buyer
may, if it chooses, at its sole expense, have its auditors
observe the taking of the physical inventory, and, at its sole
discretion and expense, have the Closing Date Balance Sheet
reviewed by its auditors ("Buyer's Accountants"). The Company's
accounting department shall prepare the Closing Date Balance
Sheet in accordance with United States Generally Accepted
Accounting Principles ("GAAP") consistently applied, utilizing
the same accounting principles and past practices used by the
Company in preparing the Financial Statements, as adjusted for
the consolidation of the Tufco assets and liabilities, and,
following review by Buyer's Accountants, Buyer shall deliver
final copies thereof to Sellers within ninety (90) days following
the Closing. Sellers agree to cooperate with Buyer in connection
with their preparation of the Closing Date Balance Sheet as is
customary and appropriate in the preparation of a balance sheet.
Sellers shall have thirty (30) days following their receipt of
the Closing Date Balance Sheet in which to object thereto. Any
objection shall be accompanied by a letter from Sellers'
Accountants specifying in reasonable detail the basis for
Sellers' objections and attesting to the fact that such objection
is reasonable. If Sellers and Buyer are unable to agree to a
resolution of the differences within thirty (30) days after such
objection, the Closing Date Balance Sheet will be submitted to a
neutral arbitrator (the "Arbitrator"), who shall be a partner of
a "Big Six" accounting firm with an office in Dallas, Texas, for
a final and binding arbitration. The Arbitrator's fees and
expenses shall be allocated by the Arbitrator between Sellers and
Buyer in the Arbitrator's sole discretion.
(b) Final Purchase Price. The "Final Purchase Price" shall be the
Purchase Price adjusted, upwards or downwards, by the difference
between the net of the Assets less the liabilities reflected in
the Closing Date Balance Sheet (as finally agreed upon by Seller
and Buyer or as determined by the Arbitrator) and the comparable
numbers shown on the Balance Sheet.
(c) Payments. The Contingent Payment amount otherwise owed by Buyer
to Sellers shall be reduced, starting with the payment due on
August 15, 1998 and continuing each year thereafter until such
reductions as required by Section 2.3(b) above are paid in full.
Buyer shall pay to the Disbursing Agent any increase in the
Purchase Price as calculated pursuant to Section 2.3(b) above, in
full, in U.S. funds on August 15, 1998.
2.4 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx,
Hardt, Kopf, Xxxx & Xxxxx, P.C. in Dallas, Texas, commencing at 9:00
a.m. local time upon the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date
as the Buyer and the Sellers may mutually determine (the "Closing
Date"); provided, however, that the Closing Date shall be no later
than April 16, 1997.
2.5 Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 6.1 below, (ii) the Buyer will
deliver to the Sellers the various certificates, instruments, and
documents referred to in Section 6.2 below, (iii) each of the Sellers
will deliver to the Buyer stock certificates representing all of his
or its Company Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the
Disbursing Agent the consideration specified in Section 2.2 above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
3.1 Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in
this Section 3.1 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement through this Section 3.1) with respect to
himself only, except as set forth in the Disclosure Schedule (as
defined below) attached hereto.
(a) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform
his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions. The Seller need not
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(b) Brokers' Fees. Except for the fees of Xxxx, Xxxxxxx & Xxxxx,
Inc., the Seller has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the
Buyer could become liable or obligated.
(c) Company Shares. The Seller holds of record and owns beneficially
or the rights to acquire the number of Company Shares set forth
next to his or its name in Section 4.2 of the Disclosure
Schedule, free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims and
demands. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment that could
require the Seller to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than this Agreement). The
Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any
capital stock of the Company.
3.2 Representations and Warranties of the Buyer and JPE. The Buyer and JPE
represent and warrant to the Sellers that the statements contained in
this Section 3.2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3.2).
(a) Organization of the Buyer and JPE. Each of the Buyer and JPE is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Michigan.
(b) Authorization of Transaction. Each of the Buyer and JPE has full
power and authority (including full corporate power and authority
and authorizing resolutions of its Board of Directors) to execute
and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Buyer and JPE, enforceable in
accordance with its terms and conditions. Neither the Buyer nor
JPE need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which either the Buyer or JPE is subject or any
provision of its charter or bylaws or (ii) result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement, to which either
the Buyer or JPE is a party or by which it is bound or to which
any of its assets is subject.
(d) Brokers' Fees. Neither the Buyer nor JPE has any Liability or
obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this
Agreement for which any Seller could become liable or obligated.
(e) Investment. Buyer (i) understands that the Company Shares have
not been, and will not be, registered under the Securities Act,
or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for
transactions not involving a public offering; (ii) is acquiring
the Company Shares solely for its own account for investment
purposes, and not with a view to the distribution thereof; (iii)
is a sophisticated investor with knowledge and experience in
business and financial matters; (iv) is able to bear the economic
risk and lack of liquidity inherent in holding the Company
Shares; and (v) is an Accredited Investor.
(f) Financing. Buyer has adequate cash resources or commitments for
financing to perform its obligations under this Agreement.
(g) Litigation. There are no suits, actions or legal, administrative,
arbitration or other proceedings or governmental investigations
against either Buyer or JPE pending or, to either Buyer's or
JPE's knowledge, threatened, which (i) if determined adversely to
either Buyer or JPE, could be expected to result in a material
adverse effect on the financial condition or results of
operations of Buyer and JPE taken as a whole, or (ii) seek to
prevent the consummation of the transaction.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND BRAKE, AXLE AND
TANDEM COMPANY CANADA INC. ("SUBSIDIARY"). The Sellers represent and
warrant to the Buyer that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout
this Section 4), except as set forth in the disclosure schedule delivered
by the Sellers to the Buyer on the date hereof and initialed by the Parties
(the "Disclosure Schedule"). Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty
made herein, however, unless the Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 4.
4.1 Organization, Qualification, and Corporate Power. Each of the Company
and its Subsidiary is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and its Subsidiary is duly
authorized to conduct business and is in good standing under the laws
of each jurisdiction where such qualification is required except where
the lack of such qualification would not have a material adverse
effect on the business, financial condition, operations, results of
operations, or future prospects of the Company and its Subsidiary
taken as a whole. Each of the Company and its Subsidiary has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
Section 4.1 of the Disclosure Schedule lists the directors and
officers of each of the Company and its Subsidiary. The Sellers have
delivered to the Buyer correct and complete copies of the charter and
bylaws of each of the Company and its Subsidiary (as amended to date).
The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board
of directors), the stock certificate books, and the stock record books
of each of the Company and its Subsidiary are correct and complete.
Neither of the Company nor its Subsidiary is in default under or in
violation of any provision of its charter or bylaws.
4.2 Capitalization. The entire authorized capital stock of the Company
consists of 500,000 shares of Non-Voting Common Stock, of which 88,000
shares are issued and outstanding and 12,000 shares are held in
treasury and 500,000 shares of Voting Preferred Stock, of which one
(1) share is issued and outstanding, 93,999 rights to acquire shares
and 6,000 rights to acquire shares are held in treasury. All of the
issued and outstanding Company Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record
by the respective Sellers as set forth in Section 4.2 of the
Disclosure Schedule. Except as described above, there are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to issue,
sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to
the Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of
the Company.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company or its Subsidiary is subject or any provision of the
charter or bylaws of the Company or its Subsidiary or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement
to which the Company or its Subsidiary is a party or by which it is
bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets) except
where the violation, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a
material adverse effect on the business, financial condition,
operations, results of operations, or future prospects of the Company
and its Subsidiary taken as a whole. Neither the Company nor its
Subsidiary needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement except where the failure
to give notice, to file, or to obtain any authorization, consent or
approval would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company and its Subsidiary taken as a whole.
4.4 Brokers' Fees. Except as provided in Section 3.1(b), neither the
Company nor its Subsidiary has any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
4.5 Title to Assets. The Company and its Subsidiary have good and
indefeasible title to, or a valid leasehold interest in, the
properties and assets used by them, located on their premises other
than personal property owned by employees or officers, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free and
clear of all Security Interests, except for properties and assets
disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
4.6 Subsidiary. Section 4.6 of the Disclosure Schedule sets forth for the
Subsidiary (i) its name and jurisdiction of incorporation, (ii) the
number of shares of authorized capital stock of each class of its
capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and
the number of shares held by each such holder, and (iv) the number of
shares of its capital stock held in treasury. All of the issued and
outstanding shares of capital stock of the Subsidiary have been duly
authorized and are validly issued, fully paid, and nonassessable. The
Company holds of record and owns beneficially all of the outstanding
shares of the Subsidiary, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. There are no outstanding or authorized options, warrants,
purchase rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to sell,
transfer, or otherwise dispose of any capital stock of the Subsidiary
or that could require the Subsidiary to issue, sell, or otherwise
cause to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation,
or similar rights with respect to the Subsidiary. There are no voting
trusts, proxies, or other agreements or understandings with respect to
the voting of any capital stock of the Subsidiary. Neither the Company
nor its Subsidiary controls directly or indirectly or has any direct
or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary of the
Company.
4.7 Financial Statements. Attached hereto as Exhibit 4.7 are the following
financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, changes
in stockholders' equity, and cash flow as of and for the fiscal years
ended December 31, 1994, December 31, 1995, and December 28, 1996 (the
"Most Recent Fiscal Year End") for the Company and its Subsidiary; and
(ii) unaudited consolidated balance sheets and statements of income,
changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the three months ended March 29,
1997 (the "Most Recent Fiscal Month End") for the Company and its
Subsidiary. The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the
financial condition of the Company and its Subsidiary as of such dates
and the results of operations of the Company and its Subsidiary for
such periods, are correct and complete, and are consistent with the
books and records of the Company and its Subsidiary (which books and
records are correct and complete); provided, however, that the Most
Recent Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack
footnotes and other presentation items.
4.8 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change
in the business, financial condition, operations, or results of
operations of the Company and its Subsidiary taken as a whole. Without
limiting the generality of the foregoing, since that date:
(a) neither the Company nor its Subsidiary has sold, leased,
transferred, or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary
Course of Business;
(b) neither the Company nor its Subsidiary has entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving
more than $5,000 or outside the Ordinary Course of Business;
(c) no party (including the Company and its Subsidiary) has
accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $5,000 to
which the Company or its Subsidiary is a party or by which any of
them is bound, except in the Ordinary Course of Business;
(d) neither the Company nor its Subsidiary has imposed any Security
Interest upon any of its assets, tangible or intangible;
(e) neither the Company nor its Subsidiary has made any capital
expenditure (or series of related capital expenditures) either
involving more than $5,000 or outside the Ordinary Course of
Business;
(f) neither the Company nor its Subsidiary has made any capital
investment in, any loan to, or any acquisition of the securities
or assets of, any other Person (or series of related capital
investments, loans, and acquisitions);
(g) neither the Company nor its Subsidiary has issued any note, bond,
or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized
lease obligation either involving more than $2,000 singly or
$25,000 in the aggregate;
(h) neither the Company nor its Subsidiary has delayed or postponed
the payment of accounts payable and other Liabilities beyond
sixty (60) days from the date of the invoices;
(i) neither the Company nor its Subsidiary has canceled, compromised,
waived, or released any right or claim (or series of related
rights and claims) either involving more than $2,500 or outside
the Ordinary Course of Business;
(j) neither the Company nor its Subsidiary has granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(k) there has been no change made or authorized in the charter or
bylaws of either the Company or its Subsidiary;
(l) neither the Company nor its Subsidiary has issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(m) neither the Company nor its Subsidiary has declared, set aside,
or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(n) neither the Company nor its Subsidiary has experienced any
damage, destruction, or loss (whether or not covered by
insurance) to any of its material property;
(o) neither the Company nor its Subsidiary has made any loan to, or
entered into any other transaction with, any of its directors,
officers, employees and shareholders;
(p) neither the Company nor its Subsidiary has entered into any
employment contract or collective bargaining agreement, written
or oral, or modified the terms of any existing such contract or
agreement;
(q) neither the Company nor its Subsidiary has granted any increase
in the base compensation of any of its directors, officers, and
employees;
(r) except as contemplated by Section 5.5, neither the Company nor
its Subsidiary has adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to
any other Employee Benefit Plan);
(s) neither the Company nor its Subsidiary has made any other change
in employment terms for any of its directors, officers, and
employees;
(t) neither the Company nor its Subsidiary has made or pledged to
make any charitable or other capital contribution;
(u) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving either the Company or its
Subsidiary; and
(v) neither the Company nor its Subsidiary has committed to any of
the foregoing.
4.9 Undisclosed Liabilities. Neither the Company nor its Subsidiary has
any Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet
(or in any notes thereto), (ii) Liabilities which have arisen after
the Most Recent Fiscal Month End in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation or law), (iii) Liabilities
disclosed in the Disclosure Schedule or (iv) Liabilities under
contracts, purchase orders and other agreements or arrangements of the
type required to be disclosed on a schedule hereto but because of the
dollar amount or other qualification are not required to be listed.
4.10 Legal Compliance. Each of the Company and its Subsidiary has complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to comply.
4.11 Tax Matters.
(a) Each of the Company and its Subsidiary has filed all Tax Returns
that it was required to file, and has paid all Taxes shown
thereon as owing. All such Tax Returns were correct and complete
in all respects. All other Taxes owed by the Company and its
Subsidiary have been paid. Neither the Company nor its Subsidiary
currently is the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company or its Subsidiary
does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests on
any of the assets of the Company or its Subsidiary that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) Each of the Company and its Subsidiary has withheld and paid all
Taxes required to have been withheld and paid, in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) There is no dispute or claim concerning any Tax Liability of the
Company or its Subsidiary either (i) claimed or raised by any
authority in writing or (ii) as to which any of the Sellers and
the directors and officers of the Company and its Subsidiary has
Knowledge based upon personal contact with any agent of such
authority. Section 4.11 of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with
respect to the Company and its Subsidiary for taxable periods
ended on or after December 31, 1993, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Sellers have delivered to
the Buyer correct and complete copies of all federal, state,
local and foreign income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the
Company or its Subsidiary since December 31, 1993.
(d) Neither the Company nor its Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(e) Neither the Company nor its Subsidiary has filed a consent under
Code Section 341(f) concerning collapsible corporations. Neither
the Company nor its Subsidiary has made any payments, is
obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G.
Each of the Company and its Subsidiary has disclosed on its
federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662. Neither the Company nor
its Subsidiary is a party to any Tax allocation or sharing
agreement. Neither the Company nor its Subsidiary (i) has been a
member of an Affiliated Group filing a consolidated federal
income Tax Return (other than a group the common parent of which
was the Company) or (ii) has any Liability for the Taxes of any
Person (other than the Company and its Subsidiary) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or
otherwise.
(f) The unpaid Taxes of the Company and its Subsidiary (i) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for
Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Balance Sheet
(or in any notes thereto) and (ii) will not exceed that reserve
as adjusted for operations and transactions through the Closing
Date in accordance with the past custom and practice of the
Company and its Subsidiary in filing their Tax Returns.
4.12 Real Property.
(a) The Company and its Subsidiary own no real property.
(b) Section 4.12(b) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to either the
Company or its Subsidiary. The Sellers have delivered to the
Buyer correct and complete copies of the leases and subleases
listed in Section 4.12(b) of the Disclosure Scheduled (as amended
to date). With respect to each lease and sublease listed in
Section 4.12(b) of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(iii) the Company is not, and to the knowledge of Sellers, no
other party to the lease or sublease has been in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration
thereunder;
(iv) the Company is not, and to the knowledge of Sellers, no
other party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above
true and correct with respect to the underlying lease;
(vii )neither the Company nor its Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in connection with
the Company's operation thereof and, to the knowledge of
Sellers, have been operated and maintained in accordance
with applicable laws, rules, and regulations; and
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the
operation of said facilities.
4.13 Intellectual Property.
(a) The Company and its Subsidiary own or have the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the business
of the Company and its Subsidiary as presently conducted. Each
item of Intellectual Property owned or used by either the Company
or its Subsidiary immediately prior to the Closing hereunder will
be owned or available for use by the Company or the Subsidiary on
identical terms and conditions immediately subsequent to the
Closing hereunder. Each of the Company and its Subsidiary has
taken all necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
(b) Neither the Company nor its Subsidiary has interfered with,
infringed upon, misappropriated, or violated any Intellectual
Property rights of third parties, and none of the Sellers and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company and its Subsidiary
has ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation,
or violation (including any claim that either the Company or its
Subsidiary must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of any of
the Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company
and its Subsidiary, no third party has interfered with, infringed
upon, misappropriated, or violated any Intellectual Property
rights of either the Company or its Subsidiary.
(c) Section 4.13(c) of the Disclosure Schedule identifies each
registered trademark, trade name or unregistered trademark used
by either the Company or its Subsidiary in connection with any of
its businesses. With respect to each item of Intellectual
Property required to be identified in Section 4.13(c) of the
Disclosure Schedule:
(i) the Company and its Subsidiary possess all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of the Company and its Subsidiary,
threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(iv) neither the Company nor its Subsidiary has ever agreed to
indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with
respect to the item.
(d) Section 4.13(d) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that
either the Company or its Subsidiary uses pursuant to license,
sublicense, agreement, or permission. The Sellers have delivered
to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be
identified in Section 4.13(d) of the Disclosure Schedule:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full
force and effect;
(ii) the license, sublicense agreement, or permission will
continue to be legal, valid, binding, enforceable, and in
full force and effect on substantially similar terms
following the Closing;
(iii) the Company is not, and to the knowledge of Sellers, no
other party to the license, sublicense, agreement, or
permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) the Company is not, and to the knowledge of Sellers, no
other party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(v) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(vi) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge
of any of the Sellers and the directors and officers of the
Company and its Subsidiary, is threatened which challenges
the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(vii) neither the Company nor its Subsidiary has granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
4.14 Tangible Assets. The Company and its Subsidiary own or lease all
buildings, machinery, equipment, and other tangible assets necessary
for the conduct of their businesses as presently conducted. Each such
tangible asset is free from defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used.
4.15 Inventory. The inventory of the Company and its Subsidiary consists of
raw materials, packaging materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is slow-moving, obsolete, damaged, or
defective, subject only to the reserve for inventory writedown set
forth on the fact of the Most Recent Balance Sheet (or in any notes
thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Company and its
Subsidiary.
4.16 Contracts. Section 4.16 of the Disclosure Schedule lists the following
contracts and other agreements to which either the Company or its
Subsidiary is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease
payments in excess of $5,000 per annum;
(b) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of
more than one year, result in a material loss to either the
Company or its Subsidiary as they currently operate, or involve
consideration in excess of $5,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$5,000 or under which it has imposed a Security Interest on any
of its assets, tangible or intangible having a purchase price in
excess of $5,000;
(e) any agreement concerning noncompetition;
(f) any agreement with any of the Sellers and their Affiliates (other
than the Company and its Subsidiary);
(g) any profit sharing, stock options, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits
in excess of two (2) weeks' pay;
(j) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees outside the
Ordinary Course of Business;
(k) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, or results of operations of
either the Company or its Subsidiary; or
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
The Sellers have delivered to the Buyer a correct and complete copy of
each written agreement listed in Section 4.16 of the Disclosure
Schedule (as amended to date) and a written summary setting forth the
material terms and conditions of each oral agreement referred to in
Section 4.16 of the Disclosure Schedule. With respect to each such
agreement: (i) the agreement is legal, valid, binding, enforceable,
and in full force and effect; (ii) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect in
all material respects following the consummation of the transactions
contemplated hereby; (iii) the Company has not, and to the knowledge
of Sellers, no other party is in breach or default, and no event has
occurred, which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration,
under the agreement; and (iv) the Company has not, and to the
knowledge of Sellers, no other party has repudiated any provision of
the agreement.
4.17 Notes and Accounts Receivable. All notes and accounts receivable of
the Company and its Subsidiary are reflected properly on their books
and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in
accordance with their terms at their recorded amounts, subject only to
the reserve for bad debts set forth on the face of the Most Recent
Balance Sheet (or in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiary.
4.18 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of either the Company or its Subsidiary.
4.19 Insurance. Section 4.19 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which
either the Company or its Subsidiary has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within
the past three years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage; and
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (i) the policy is legal,
valid, binding, enforceable, and in full force and effect; (ii) the
policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of
the transactions contemplated hereby; (iii) neither the Company or its
Subsidiary nor, to the Knowledge of the Sellers and the directors and
officers (and employees with responsibility for insurance matters),
any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no
event has occurred which, with notice or lapse of time, would
constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (iv) the Company
has not, and to the knowledge of Sellers, no party to the policy has
repudiated any provision thereof; and all losses incurred but not
reported have been disclosed to Buyer. Section 4.19 of the Disclosure
Schedule describes any self-insurance arrangements affecting the
Company and its Subsidiary.
4.20 Litigation. Section 4.20 of the Disclosure Schedule sets forth each
instance in which the Company and its Subsidiary (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is a party or, to the Knowledge of any of the Sellers and the
directors and officers of the Company and its Subsidiary, is
threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
4.21 Product Warranty. Each product manufactured, sold, leased, or
delivered by the Company and its Subsidiary has been in conformity
with all applicable contractual commitments and all express and
implied warranties, and neither the Company nor its Subsidiary has any
Liability for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty
claims set forth on the face of the Most Recent Balance Sheet (or in
any notes thereto) as adjusted for operations and transactions through
the Closing Date in accordance with the past custom and practice of
the Company and its Subsidiary. No product manufactured, sold, leased,
or delivered by the Company or its Subsidiary is subject to any
guaranty, warranty, or other indemnity, beyond the applicable standard
terms and conditions of sale or lease. Section 4.21 of the Disclosure
Schedule includes copies of the standard terms and conditions of sale
or lease for each of the Company and its Subsidiary (containing
applicable guaranty, warranty, and indemnity provisions).
4.22 Product Liability. No person has asserted any claim, or to the
knowledge of Sellers, has threatened to assert a claim, which, if
successful, would result in a Liability for the Company or its
Subsidiary out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company or its Subsidiary prior to the
Closing Date.
4.23 Employees. To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for employment
matters) of the Company and its Subsidiary, no executive, key
employee, or group of employees has any announced plans to terminate
employment with either the Company or its Subsidiary. Neither the
Company nor its Subsidiary is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices, or other collective
bargaining disputes within the last three (3) years. Neither the
Company nor its Subsidiary has committed any unfair labor practice
where the result of such activity would have a material adverse effect
on the Company and its Subsidiary, taken as a whole. None of the
Sellers and the directors and officers (and employees with
responsibility for employment matters) of the Company and its
Subsidiary has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with
respect to employees of the Company or its Subsidiary.
4.24 Employee Benefits.
(a) Section 4.24 of the Disclosure Schedule lists each Employee
Benefit Plan that the Company and its Subsidiary maintains or to
which either the Company or its Subsidiary contributes.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements
of ERISA, the Code, and other applicable laws.
(ii) All required reports or descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed
with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Section 4980B have been met with respect to each
such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all contributions for any
period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and
practice of the Company and its Subsidiary. All premiums or
other payments for all periods ending on or before the
Closing Date have been paid with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan has received a favorable determination letter
from the Internal Revenue Service that it meets Section
401(a) of the Code.
(v) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than
any Multiemployer Plan) equals or exceeds the present value
of all vested and nonvested Liabilities thereunder
determined in accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
(vi) The Sellers have delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the
Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that either the
Company, or its Subsidiary, maintains or ever has maintained or
to which any of them contributes, ever has contributed, or ever
has been required to contribute, an Employee Benefit Plan which
is an Employee Pension Benefit Plan:
(i) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge
of any of the Sellers and the directors and officers (and
employees with responsibility for employee benefit matters)
of the Company and its Subsidiary, threatened.
(ii) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the
assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any
of the Sellers and the directors and officers (and employees
with responsibility for employee benefit matters) of the
Company and its Subsidiary, threatened. None of the Sellers
and the directors and officers (and employees with
responsibility for employee benefit matters) of the Company
and its Subsidiary has any Knowledge of any Basis for any
such action, suit, proceeding, hearing, or investigation.
(c) None of the Company, its Subsidiary, and the other members of the
Controlled Group of Corporations that includes the Company and
its Subsidiary (i) contributes to, ever has contributed to, or
ever has been required to contribute to any Multiemployer Plan or
has any Liability (including withdrawal Liability) under any
Multiemployer Plan or (ii) maintains or contributes to or has
ever maintained or contributed to a qualified pension plan
subject to the minimum funding requirements of ERISA and the
Code.
(d) Neither the Company nor its Subsidiary maintains or ever has
maintained or contributes, ever has contributed, or ever has been
required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
4.25 Guaranties. Neither the Company nor its Subsidiary is a guarantor or
otherwise is liable for any Liability or obligation (including
indebtedness) of any other Person.
4.26 Environmental, Health, and Safety.
(a) Each of the Company and its Subsidiary, and their respective
predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging
any failure so to comply. Without limiting the generality of the
preceding sentence, each of the Company, its Subsidiary, and
their respective predecessors and Affiliates has obtained and
been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required
under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) Neither the Company nor its Subsidiary has any Liability (and
none of the Company, its Subsidiary, and their respective
predecessors and Affiliates has handled or disposed of any
substance, arranged for the disposal of any substance, exposed
any employee or other individual to any substance or condition,
or owned or operated any property or facility in any manner that
could form the Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand against either the Company or its Subsidiary giving rise
to any Liability) for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal
injury to any employee or other individual, or other individual,
or for any reason under any Environmental, Health, and Safety
Law.
(c) All properties and equipment used in the business of the Company,
its Subsidiary, and their respective predecessors and Affiliates
have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
4.27 Certain Business Relationships with the Company and Its Subsidiary.
None of the Sellers has been involved in any business arrangement or
relationship with the Company or its Subsidiary within the past 12
months, and none of the Sellers owns any asset, tangible or
intangible, which is used in the business of the Company or its
Subsidiary.
4.28 Tufco. On or prior to the Closing, all tooling assets and vehicles of
Tufco, Inc. shall have been transferred to the Company and the Company
shall have valid title, free from any liens or security interests to
such assets. Such assets include the tooling as described on Exhibit
4.28, which shall include the physical location of each tool.
4.29 Expenses. Each of the Buyer, JPE, the Company, and its Subsidiary will
bear his or its own costs and expenses (including legal fees and
expenses) incurred in connection with this agreement and the
transactions contemplated hereby. The Sellers agree that neither the
Company nor its Subsidiary has borne or will bear any of the Sellers'
costs and expenses (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated
hereby.
4.30 Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements and information contained in this Section 4 not misleading.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
5.1 General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 7 below). The Sellers
acknowledge and agree that from and after the Closing the Buyer will
be entitled to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to
the Company and its Subsidiary. Buyer agrees that from and after the
Closing Date, the Sellers shall have reasonable access to all
documents, books, records (including Tax records), agreements and
financial data of the Company but only to the extent the same are
reasonably required in connection with the period up to and including
the Closing Date.
5.2 Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date involving
either the Company or its Subsidiary, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section
7 below).
5.3 Transition. Except as otherwise agreed between Buyer and any of the
Sellers, until December 31, 1997, each of the Sellers agrees that he
will not take any action that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of either the Company or its Subsidiary from
maintaining the same business relationships with the Company or its
Subsidiary after the Closing as it maintained with the Company or its
Subsidiary prior to the Closing; provided however, in the event the
Company or Buyer terminates the employment of Xx. Xxxxxx (without the
other entity immediately hiring him), Xx. Xxxxxx shall be released
from the obligations created by this sentence. Each of the Sellers
will refer all customer inquiries relating to the businesses of the
Company and its Subsidiary to the Buyer from and for a period of one
year after the Closing; provided, however, in the event Xxx Xxxxxx
ceases to be an employee of either the Company or Buyer, Xx. Xxxxxx
shall be released from the obligations created by this sentence. Buyer
agrees that prior to December 31, 1997 it will not (i) change Mr.
Garners' base rate of compensation of $71,656; (ii) change the company
provided vehicle he is currently driving, or (iii) require Xx. Xxxxxx
to relocate. Buyer's failure to comply with any such covenants shall
release Xx. Xxxxxx from all obligations set forth in this Section 5.3.
5.4 Confidentiality. Each of the Sellers will treat and hold as such all
of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyer or destroy, at the request and option of
the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in his or its possession. In the
event that any of the Sellers is requested or required (by oral
question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Seller
will notify the Buyer promptly of the request or requirement so that
the Buyer may seek an appropriate protective order or waive compliance
with the provisions of this Section 5.4. If, in the absence of a
protective order or the receipt of a waiver hereunder, any of the
Sellers is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Seller shall use his
or its reasonable best efforts to obtain, at the reasonable request of
Buyer, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to
be disclosed as the Buyer shall designate. The foregoing provisions
shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
5.5 Termination of 401(k) Plan. In the event the Brake, Axle and Tandem
Company Profit Sharing Plan has not been terminated on or before the
Closing, Sellers shall terminate such plan promptly following the
Closing and Buyer shall assume no responsibility for such termination
or any obligations of such plan. In addition, the Company shall have
made any and all payments and deposits due and owing to such plan.
5.6 Employees. For employees of the Company who become employees of Buyer,
Buyer shall recognize service with the Company for purposes of vesting
of benefits, but not accrual. All other employees who are terminated
by the Company after the Closing Date and who are employed with the
Company through their respective termination dates, as determined by
the Company, shall receive severance as determined either (i) by
written agreement between the Company and such employee or (ii) as
generally outlined on Exhibit 5.6.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3.1 and
Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(b) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(c) the Company and its Subsidiary shall have given any notices to
third parties and shall have procured all of the third party
consents that Buyer reasonably may have requested in connection
with the matters referred to in Section 4.3 above, except (i) a
waiver from the landlord of the Dallas warehouse for the benefit
of Comerica Bank, as agent, with regard to the Company's assets
and (ii) a consent from such landlord to any assignment of lease
deemed to occur as a result of the Closing;
(d) no action, suit, or proceeding shall be pending or, to the
Knowledge of Sellers, threatened before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent any Seller's consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, (iii) affect adversely the right of the
Buyer to own the Company Shares and to control the Company and
its Subsidiary, or (iv) affect adversely the right of either the
Company or its Subsidiary to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(e) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section
6.1(a)-(d) is satisfied, with respect to himself, in all
respects;
(f) Buyer shall have entered into an employment and non-compete
agreement with Xxxx Xxxxxx Xxxx for a period of five (5) years
with an annual non-compete payment in the amount of $70,000 and
upon the terms and conditions as set forth in Exhibit 6.1(f);
(g) Xxxxxx Xxxx shall have entered into a five year covenant
not-to-compete agreement with Buyer in the form of Exhibit
2.2(b);
(h) Each Seller shall have delivered to Buyer a General Release in
the form of Exhibit 6.1(h);
(i) Sellers shall have delivered to Buyer a General Release from Xx
XxXxxxx;
(j) The Company shall have entered into severance agreements with
each of Xxxxxx, Xxxxxx and Xxxxx in the form of Exhibit 6.1(j),
which shall replace the severance agreements entered into by such
employees in 1996;
(k) The Company shall have entered into a severance agreement with
Xxxxxxxx in the form of Exhibit 6.1(k), which shall replace the
severance agreement dated October 31, 1996;
(l) the Buyer shall have received from counsel to the Sellers an
opinion in form and substance as set forth in Exhibit 6.1(l)
attached hereto, addressed to the Buyer, and dated as of the
Closing Date;
(m) the Buyer shall have received the resignations, effective as of
the Closing, of each director and officer of the Company and its
Subsidiary; and
(n) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 if its
executes a writing so stating at or prior to the Closing.
6.2 Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in Section 3.2 above
shall be true and correct in all material respects at and as of
the Closing Date;
(b) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending or, to the
knowledge of either Buyer or JPE, threatened before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect); or (iii) adversely
affect the ability of either Buyer or JPE to perform its
obligations under the Agreement or transactions contemplated by
the Agreement;
(d) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in Section
6.2(a)-(c) is satisfied in all respects;
(e) Buyer shall have entered into an employment and non-compete
agreement with Xxxx Xxxxxx Xxxx for a period of five (5) years
with an annual non-compete payment in the amount of $70,000 and
upon the terms and conditions as set forth in Exhibit 6.1(f);
(f) Simultaneous with the Closing, Buyer shall pay all amounts owing
by the Company to Creekwood Capital Corporation and obtain
releases from Sellers' guaranties to Creekwood;
(g) the Sellers shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit 6.2(f)
attached hereto, addressed to the Sellers, and dated as of the
Closing Date; and
(h) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 6.2 if
they execute a writing so stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
7.1 Survival of Representations and Warranties. All of the representations
and warranties of the Sellers contained in Section 4.1, Sections
4.3-4.10, Sections 4.12-4.23, Section 4.24 except with respect to the
Brake, Axle and Tandem Company Profit Sharing Plan which
representations and warranties shall not terminate, Section 4.25, and
Sections 4.27-4.28 shall survive the Closing hereunder (except as
specifically disclosed on the Disclosure Schedules or Annexes, even if
the Buyer knew or had reason to know of any misrepresentation or
breach of warranty at the time of Closing) and continue in full force
and effect for a period of eighteen (18) months thereafter. All of the
other representations and warranties of the Parties contained in this
Agreement (including the representations and warranties of the Sellers
contained in Section 4.11 above) shall survive the Closing (except as
specifically disclosed on the Disclosure Schedules or Annexes, even if
the damaged Party knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing) and continue in full
force and effect forever thereafter (subject to any applicable
statutes of limitations).
7.2 Indemnification Provisions for Benefit of the Buyer and JPE.
(a) In the event any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the
Sellers has breached) any of their representations, warranties,
and covenants contained herein (other than the covenants in
Section 2.1 above and the representations and warranties in
Sections 3.1 and 4.2 above), and, if there is an applicable
survival period pursuant to Section 7.1 above, provided that the
Buyer or JPE makes a written claim for indemnification against
any of the Sellers pursuant to Section 8.8 below within such
survival period, then each of the Sellers agrees to indemnify the
Buyer and JPE from and against the entirety of an Adverse
Consequences the Buyer or JPE may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences the Buyer or JPE may suffer after the end of any
applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the
alleged breach); provided, however, that the Sellers shall not
have any obligation to indemnify the Buyer or JPE from and
against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or
alleged beach) of any representation or warranty of the Sellers
contained in Section 4.1-4.10 and Section 4.12-4.28 above until
the Buyer and/or JPE has suffered Adverse Consequences by reason
of all such breaches (or alleged breaches) in excess of a $25,000
aggregate threshold (at which point the Sellers will be obligated
to indemnify the Buyer or JPE from and against all such Adverse
Consequences relating back to the first dollar). Sellers'
indemnification of Buyer and JPE shall be recovered by Buyer and
JPE solely by amounts due, if any, under Section 2.2(d). Further
provided that Buyer's or JPE's right to recovery under this
provision shall not be impaired or affected in any way by
Sellers' allocation of the Purchase Price.
(b) In the event any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the
Sellers has breached) any of his or its covenants in Section 2.1
above or any of his or its representations and warranties in
Sections 3.1 and 4.2 above, and, if there is an applicable
survival period pursuant to Section 7.1 above, provided that the
Buyer or JPE makes a written claim for indemnification against
the Seller pursuant to Section 8.8 below within such survival
period, then such Seller agrees to indemnify the Buyer and JPE
from and against the entirety of any Adverse Consequences the
Buyer or JPE may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Buyer
may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach by such Seller only),
not to exceed such Seller's share of the Purchase Price.
7.3 Indemnification Provisions for Benefit of the Sellers. In the event
the Buyer breaches (or in the event any third party alleges facts
that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained herein, and, if
there is an applicable survival period pursuant to Section 7.1 above,
provided that any of the Sellers makes a written claim for
indemnification against the Buyer pursuant to Section 8.8 below within
such survival period, then the Buyer agrees to indemnify each of the
Sellers from and against the entirety of any Adverse Consequences the
Seller may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach).
7.4 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 7, then the
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of
its choice satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of
the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Party from and against the entirety of any
Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature or, or caused by
the Third Party Claim, subject to the limitations set forth in
Sections 7.1 and 7.2, (ii) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party
Claim involves only money damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish
a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (v)
the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 7.4(b) above,
(i) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third
Party Claim, (ii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 7.4(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 7 and subject to the limitations
set forth in Sections 7.1 and 7.2.
7.5 Determination of Adverse Consequences. All indemnification payments
under this Section 7 shall be deemed adjustments to the Purchase
Price.
7.6 Other Indemnification Provisions. Indemnification pursuant to the
provisions of this Section 7 shall be the exclusive remedy of the
Parties for any breach of a representation or warranty of this
Agreement. The only legal action which may be asserted by any Party
hereto against any other Party hereto with respect to any matter which
is the subject of Section 7 of this Agreement shall be a contract
action to enforce, or to recover damages consistent with, this Section
7. Without limiting the generality of the preceding sentences, no
action sounding in contribution, tort or strict liability may be
maintained by any Party hereto against any other Party hereto with
respect to any matter that is the subject of Section 7 of this
Agreement. Nothing in this Section shall limit the rights of a Party
hereto under this Agreement to seek and obtain injunctive relief.
8. MISCELLANEOUS.
8.1 Nature of Certain Obligations.
(a) The covenants of each of the Sellers in Section 2.1 above
concerning the sale of his or its Company Shares to the Buyer and
the representations and warranties of each of the Sellers in
Section 3.1 above concerning the transaction are several
obligations. This means that the particular Seller making the
representation, warranty, or covenant will be solely responsible
to the extent provided in, and subject to the limitation of,
Section 7 above for any Adverse Consequences the Buyer may suffer
as a result of any breach thereof.
(b) The remainder of the representations and warranties contained in
Article 4, and covenants set forth in Section 5.5 in this
Agreement are joint and several obligations. This means that each
Seller will be responsible to the extent provided in Section 7
above for the entirety of any Adverse Consequences the Buyer may
suffer as a result of any breach thereof, subject to the
limitations of Section 7 of this Agreement.
8.2 Press Releases and Public Announcements. No Seller shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of JPE.
8.3 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
8.4 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by
or among the Parties, written or oral, including the letter of intent
dated March 19, 1997, to the extent they related in any way to the
subject matter hereof. No warranty or representation shall be deemed
to have been made by Sellers except for the warranties and
representations set forth in this Agreement, the exhibits, schedules
and certificates delivered pursuant thereto
8.5 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of the Buyer and the
Sellers; provided, however, that any Seller may assign his right to
receive payments under Section 2.2(d) above to heirs and assigns and
that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or
more of its Affiliates to perform its obligations hereunder (in any or
all of which cases the Buyer nonetheless shall remain responsible for
the performance of all of its obligations hereunder). Further provided
that Buyer's and JPE's obligations created by this Agreement shall be
assumed by any successor in interest to the business of Buyer either
directly or indirectly by any successor in interest to the business of
JPE.
8.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
8.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.8 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Sellers: Xxxxxx Xxxx
00000 Xxxx Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
With a copy to: Xxxxxxx Xxxxxxxxxxxx, Esq.
Xxxxxx, Hardt, Kopf, Xxxx & Dinan
0000 Xxxxxxxx Xxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
If to the Buyer: JPE, Inc.
000 Xxxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention:
With a copy to: Xxxxx X. Xxxxx
Vice President, General Counsel
and Secretary
JPE, Inc.
000 Xxxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving
effect to any choice or conflict of law provision or rule (whether of
the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Texas.
8.10 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the Buyer and the Sellers. No waiver by any Party of any
default, misrepresentation, or breach of warranty, or covenant
hereunder, whether intentional or not, shall be deemed to extent to
any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
8.11 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
8.12 Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of
proof shall arising favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference
to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty,
or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of
the first representation, warranty, or covenant.
8.13 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
8.14 Dispute Resolution. Neither party shall institute a proceeding in any
court or administrative agency to resolve a dispute between the
parties before that party has sought to resolve the dispute through
direct negotiation with the other party. If the dispute is not
resolved within three (3) weeks after a demand for direct negotiation,
the parties shall attempt to resolve the dispute through mediation. If
the parties do not promptly agree on a mediator, or if the mediator is
unable to facilitate a settlement of the dispute within a reasonable
period of time, as determined by the mediator through a written
statement to that effect, the aggrieved party may then seek relief
through arbitration in a neutral location administered by the American
Arbitration Association under its commercial arbitration rules,
provided that the persons eligible to be selected as arbitrators shall
be persons who (i) are on the AAA's commercial panel and (ii) have
specialized in either general commercial litigation or general
corporate and commercial matters. The arbitrators shall base their
award on applicable laws and judicial precedent and include in such
award a statement of the reasons upon which the award is based.
Judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written.
JPE, INC. DAYTON PARTS, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------ ---------------------------------
Title: V.P.-C.F.O. Title: V.P.-C.F.O.
The Stockholders of Brake, Axle and Tandem Company
/s/ Xxxxxx Xxxx /s/ Xxxxxxx X. Xxxx
--------------------------------- ------------------------------------
Xxxxxx Xxxx Xxxxxxx X. Xxxx
/s/ Xxxx Xxxxxx Xxxx /s/ Xxxxxxxxx X. Xxxx
--------------------------------- ------------------------------------
Xxxx Xxxxxx Xxxx Xxxxxxxxx X. Xxxx
/s/ Xxx Xxxxxx
---------------------------------
Xxx Xxxxxx
/s/ Xxxxx Xxxx /s/ Xxxx X. Xxxx
--------------------------------- ------------------------------------
Xxxxx Xxxx Xxxx X. Xxxx
/s/ Xxxxxx Xxxx /s/ Xxxxx X. Xxxx
--------------------------------- ------------------------------------
Xxxxxx Xxxx Xxxxx X. Xxxx
STOCK PURCHASE AGREEMENT
AMONG
JPE, INC.,
DAYTON PARTS, INC.
AND
THE STOCKHOLDERS OF BRAKE, AXLE AND TANDEM COMPANY
Exhibit Description
------- -----------
2.2(b) Covenant Not to Compete for Xxxxxx Xxxx
2.2(c)(i) Agreements with Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx and
Xxx Xxxxx concerning severance arrangements
2.2(c)(ii) Description of severance arrangements with other employees
2.2(d)(1) Current product line categories of BATCO
2.2(d)(3) Example of Contingent Payment calculation
2.2(e) Letter agreement among JPE, Dayton Parts and the shareholders of
BATCO regarding other payments
2.3 December 28, 1996 audited balance sheet of BATCO
4.7 Financial Statements of BATCO and its Subsidiary
4.28 Tufco Tooling
5.6 Outline of severance arrangements for employees terminated by
BATCO after the Closing Date
6.1(e) Certificate of Sellers re satisfaction of the conditions
specified in Sections 6.1(a)-(d) of Stock Purchase Agreement
6.1(f) Employment and non-compete agreement with Xxxx Xxxxxx Xxxx
6.1(h) General Release from each Seller
6.1(i) General Release from Xx XxXxxxx
6.1(j) Severance Agreements to be entered into with Xxxxxx, Xxxxxx and
Xxxxx
6.1(k) Severance Agreement to be entered into with Xxxxxxxx
6.1(l) Opinion of counsel to Sellers
6.2(d) Certificate of Buyer re satisfaction of the conditions
specified in Sections 6.2(a)-(c) of the Stock Purchase Agreement
6.2(f) Opinion of counsel to Buyer
Disclosure Schedules:
---------------------
Exceptions to representations and warranties concerning the Company and its
Subsidiary
