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EXHIBIT 2.1a
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT ("Agreement") is
executed as of August 31, 1999, by and among SIMULA, INC., an Arizona
corporation ("Simula"), and a wholly-owned subsidiary of a wholly-owned
subsidiary of Simula, COACH AND CAR EQUIPMENT CORPORATION, an Arizona
corporation ("Seller"), and COACH AND CAR ACQUISITION CORP., a Nevada
corporation ("Purchaser"), and Purchaser's affiliated corporation under common
control, BEACON INDUSTRIES, INC., a Nevada corporation ("Beacon").
PRELIMINARY STATEMENT
I. Seller owns and operates a business engaged in the manufacturing and
sale of rail and mass transit transportation seating, located at 0000 Xxxxxx
Xxxxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx (the "Business").
II. Purchaser desires to purchase the Business and related assets, and
Seller desires to sell such assets, all on the terms and conditions hereinafter
set forth.
III. In connection with, and as conditions to, the purchase and sale of
the assets of the Business:
(a) Purchaser will buy certain assets of Seller including
personal property, equipment, accounts receivable, and inventory, and will
continue to operate the Business as a going concern;
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(b) Purchaser will assume certain liabilities of Seller; and
(c) Purchaser and certain employees may enter into employment
or consulting agreements to provide for continuity of management and operations.
IV. Seller and Purchaser wish to amend the Asset Purchase Agreement
executed between them on June 30, 1999.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties herein set forth, it is agreed by the parties as
follows:
SECTION 1
SALE AND TRANSFER OF ASSETS
1.1 PURCHASE OF ASSETS. Subject to the terms and provisions of this
Agreement, at the Closing (as hereafter defined), Seller shall sell, transfer,
assign and deliver to Purchaser, and Purchaser shall purchase and acquire from
Seller, the following assets of Seller:
(a) the tangible personal property owned by Seller and used in
connection with the Business, as listed on Schedule 1.1(a), including, without
limitation, all equipment, furniture, fixtures, machinery, office furnishings,
leasehold improvements, and all rights in all warranties of any manufacturer or
vendor with respect thereto (the "Personal Property");
(b) all of Seller's rights to all licenses, certificates,
accreditations and registrations and other licenses or permits issued in
connection with the operation of the Business,
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including, without limitation, those described in Schedule 2.7 (the "Licenses");
(c) all of Seller's interest in and to those real property and
personal property leases related to the Business described in (i) Schedule
1.1(c)-A in respect of real property leases; and (ii) Schedule 1.1(c)-B in
respect of personal property leases (all of such leases being referred to
collectively as the "Leases");
(d) all of Seller's interest in and to those contracts,
including back log, and agreements relating to the Business, all as set forth in
Schedule 1.1(d) (the "Contracts");
(e) all inventories, including raw materials and parts,
work-in-process and finished goods presently utilized in the Business with such
additions and deletions thereto as may arise in the ordinary course of business,
and all inventories of manufacturing, assembling and office supplies and other
disposables and consumables owned by Seller used in connection with the Business
and all rights in all warranties of any manufacturer or vendor with respect
thereto (the "Inventories");
(f) all accounts receivable and other rights to receive
payments as arise in the normal course of business and in existence on the
Closing date and, except as reimbursed to Seller pursuant to Section 6.6 of this
Agreement, all deposits, prepayments, bonds, refunds, and all securities owned
by Seller, if any, as set forth on Schedule 1.1(f), and any indemnity payable to
Seller from its predecessors including, but not limited to, any environmental
indemnity;
(g) all documents, records, operating manuals, files and
computer software which pertain to the Business (excluding tax and employee
records, but with reasonable access to such records after the Closing),
including, without limitation, all procedures manuals, all vendor and supplier
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lists, customer lists, ledgers, journals and general operational business and
financial books and records necessary to the uninterrupted conduct of business;
(h) all intangibles including the patents listed on Schedule
1.1(h) copyrights, intellectual property, drawings, formula and rights;
(i) (i) the trade name "Coach and Car Equipment Corporation"
and all uses and derivatives thereof, (ii) the trade name "Artcraft" for use in
the rail business and all uses and derivatives thereof, including "Artcraft
Upholstery," and (iii) all trademarks, logos, symbols, service names and trade
identifications used or associated with the Business, whether registered or not,
and the goodwill of the Business; and
(j) any and all other assets utilized in the Business,
wheresoever situated, except as specifically excluded in Schedule 1.1(j).
The assets to be conveyed to Purchaser by Seller as provided in this
Section 1.1 are hereinafter referred to collectively as the "Assets."
1.2 PURCHASE PRICE AND PAYMENT FOR COVENANTS. At closing, Purchaser
shall purchase the Assets for ten million dollars ($10,000,000). The purchase
price will be paid by Purchaser's promissory note in the amount of Nine Million
Nine Hundred Ninety Six Thousand Dollars ($9,996,000). The principal amount of
the note reflects a One Hundred Thousand Dollar ($100,000) credit for xxxxxxx
money paid and a Ninety Six Thousand Dollar ($96,000) debit pursuant to Section
6.6(a). The note in the form of Exhibit "A" attached hereto (the "Note") will
have a term of forty-five (45) days and will bear an annual interest rate of
8-1/2% payable upon maturity. The Note shall be
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secured by a Security Agreement and lien on the Assets in the form of Exhibit
"B-1," by pledges by Beacon's and Purchaser's controlling shareholder of the
common stock held by such shareholder, evidenced by a Pledge and Proxy Security
Agreement in the form of Exhibit "B-2" attached hereto, and a guarantee of
Beacon Industries, Inc., in the form of Exhibit "B-3."
1.3 ALLOCATION OF PURCHASE PRICE; FORM 8594. The Purchase Price shall
be allocated by Purchaser and Seller on the basis of an assessment of value of
the Assets made by the parties and their accounting representatives. Seller
shall cooperate in providing the information necessary for the completion and
filing of Form 8594, Asset Acquisition Statement, under Section 1060 of the
Internal Revenue Code of 1986, as amended, and the parties shall agree to the
contents of, and within forty five (45) days after Closing execute and deliver
Form 8594 appearing as Exhibit "C" hereto.
1.4 ILLINOIS SALES OR TRANSACTION TAX. Purchaser shall pay any and all
state and local sales or transaction taxes in connection with the sale of the
Assets.
1.5 ASSETS FREE AND CLEAR; ASSUMPTION OF LIABILITIES.
(a) The Assets shall be sold, transferred and delivered free
and clear of all liabilities, liens, defects, security interests, rights,
charges and encumbrances, except for Seller's liabilities expressly agreed to be
assumed by Purchaser in an Assignment and Assumption in the form attached hereto
as Exhibit "D" (the "Assignment and Assumption").
(b) The liabilities, obligations, Contracts, and Leases to be
assumed by Purchaser pursuant to the terms hereof shall be reflected in the
Assignment and Assumption.
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1.6 CLOSING; PAYMENT. The sale, purchase and other activities provided
for herein (the "Closing") shall take place at Seller's office at 5:00 p.m.
Pacific Standard Time, on August 31, 1999. The date of the Closing is referred
to herein as the "Closing Date" or "Closing". At the Closing:
(a) Seller shall deliver to Purchaser documents necessary to
transfer title to the Assets as more fully described in Section 1.7 hereof;
(b) Purchaser and Seller shall execute and deliver to each
other the Assignment and Assumption;
(c) Purchaser shall deliver the executed Note to Seller;
(d) Purchaser shall execute and deliver the Security
Agreement;
(e) Beacon shall deliver the executed Pledge and Proxy
Security Agreement to Seller;
(f) Beacon shall deliver the executed Guarantee to Seller; and
(g) All other agreements and documents described in or
contemplated in Sections 5 and 6 hereafter and all other documents reasonably
agreed by counsel to be required to be delivered and/or executed at or prior to
Closing pursuant to this Agreement shall be delivered and/or executed.
1.7 INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the date of Closing,
Seller shall
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deliver to Purchaser (i) a Xxxx of Sale substantially in the form attached
hereto as Exhibit "E" (the "Xxxx of Sale"), (ii) the Assignment and Assumption,
(iii) certificates of title to vehicles, (iv) patent assignments in the form
attached hereto as Exhibit "F" and (v) other good and sufficient endorsements,
assignments and instruments of conveyance and transfer, and releases of liens,
in form and substance reasonably satisfactory to Purchaser's counsel, as shall
be effective to vest in Purchaser or Purchaser's designee title to the Assets to
be sold, transferred and delivered hereunder, free and clear of all liabilities,
liens, defects, encumbrances, security interests, charges and rights, all as
provided in and simultaneously with such delivery, all such steps will be taken
as may be reasonably required to put Purchaser in actual possession and
operating control of the Assets and the Business.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SELLER AND SIMULA
Neither Seller nor Simula makes any representations or warranties
except as expressly provided in this Section 2. Neither Seller nor Simula makes
any representations or warranties as to pro forma information and forecasts
except that they were prepared in good faith. Purchaser acknowledges that it has
relied upon its due diligence and that of its agents in valuing the Assets,
specifically including, but not limited to, tangibles and intangibles,
contracts, inventory, fixed assets, and trade accounts receivable. Seller and
Simula, jointly and severally, represent, warrant and agree as of the Closing as
follows:
2.1 ORGANIZATION AND STANDING. Each of Seller and Simula is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arizona. Seller is duly qualified and in good standing as a
foreign corporation in all jurisdictions where the nature of the property owned
or leased by it, or the nature of the business conducted by it, makes such
qualification necessary and the absence of such qualification would have a
material adverse effect on the business or financial
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condition of Seller. Seller has all requisite power and authority to carry on
its business as it is now being conducted and to own the properties and assets
it now owns. Seller has heretofore delivered to Purchaser complete and correct
copies of its Articles of Incorporation and Bylaws together, in each case, with
all amendments thereto which have been adopted.
2.2 AUTHORITY FOR AGREEMENT. The Board of Directors of Seller and
Simula have taken all actions required by law, their respective Articles of
Incorporation and Bylaws or otherwise to authorize the execution and delivery on
behalf of Seller and Simula of this Agreement, the performance by Seller and
Simula of their obligations hereunder and the consummation of the transactions
contemplated hereby.
2.3 DEFAULTS; NO VIOLATION. Neither Seller nor Simula is in default
under, nor has any event occurred which, with the lapse of time or action by a
third party, would result in a material default under, any of the Leases or
Contracts or any other outstanding agreement, default under which could result
in any lien on any of the Assets except as disclosed on Schedule 2.3. Except as
disclosed on Schedule 2.3, neither the execution and delivery of this Agreement,
nor the performance by Seller or Simula of their respective obligations
hereunder nor the consummation of the transactions contemplated hereby will (a)
violate any provision of its Articles of Incorporation or Bylaws or financing or
other agreements; (b) violate, or be in conflict with, or constitute a default
under, or permit the termination of any of the Leases or Contracts, or cause the
acceleration of the maturity of any obligation of Seller thereunder or result in
the creation or imposition of any lien upon any of the Assets; (c) require the
agreement or consent of any other party; or (d) violate any material statute or
law or any judgment, decree, order, regulation or rule of any court or
governmental authority to which Seller is subject.
2.4 TAXES. Seller has filed all federal, state, employment, corporate
franchise and local tax returns or information returns required to be filed by
it with respect to which a failure to do so would
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result in any lien on any of the Assets. All of such returns have been prepared
and filed in accordance with the applicable laws and regulations. Seller has
paid or accrued for all taxes and assessments (including, without limitation,
income, excise, unemployment, worker's compensation, social security,
occupation, franchise, property, sales and use taxes, import duties or charges,
and all penalties and interest in respect thereof) due and payable with respect
to which a failure to do so would result in any lien on any of the Assets.
Seller has not been audited by any taxing authority, nor is Seller aware that
any taxing authority contemplates such an audit, nor has Seller signed any
extension agreement with any taxing authority.
2.5 LITIGATION. There is no investigation, audit, litigation or
proceeding pending or, so far as is known, threatened against Seller at law or
in equity before any court or other governmental agency, which if adversely
decided could, except as set forth on Schedule 2.5: (i) result in any liability
for Purchaser; (ii) result in any lien on any of the Assets; (iii) have an
adverse effect on Seller's ability to perform its obligations under the
Agreement; or (iv) have an adverse effect on the Business; provided that, in any
event, Seller shall retain the defense of any such claims pursuant to, and in
accordance with, the terms of Section 7.
2.6 COMPLIANCE WITH LAW AND REGULATIONS. To the best of its knowledge,
Seller is in compliance with all material requirements of law, federal, state
and local, and all material requirements of all governmental bodies or agencies
having jurisdiction over Seller relating to the conduct of the Business and the
use of the Assets.
2.7 LICENSES. Seller has obtained, and is subject only to, the material
licenses necessary to the conduct of its business appearing as Schedule 2.7.
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2.8 OWNERSHIP OF PROPERTIES; CONDITION; INVENTORIES. Seller does not
own any real property. Except as set forth on Schedule 2.8 and Schedule 2.12,
Seller has good and marketable title to the Assets owned by it and good and
valid leasehold estates in all of the Assets leased by it, free and clear of
liabilities, liens (including UCC, landlord, tax and judgment liens), security
interests, defects, rights, charges and encumbrances. All equipment and other
Personal Property of Seller are in good operating condition and repair, ordinary
wear and tear excepted.
(a) Schedule 2.8.1. is a list of all inventories and open shop
orders (including work-in-process) to be purchased and sold, and are reflected
in the Financial Statements. The Inventories reflected in the Financial
Statements and held by Seller on the date hereof are in good, merchantable and
usable condition and have been reflected on such Financial Statements on the
basis of generally accepted accounting principles.
(b) All material documents, books, records, software and other
data necessary for the conduct of the Business are located at the Business.
2.9 COMMITMENTS. Schedule 2.9 is a complete and correct list as of the
date hereof of all agreements and commitments of the following types to which
Seller is a party or by which it or any of its property is bound as of the date
hereof:
(a) notes, loans, credit agreements, mortgages, indentures,
security agreements and other agreements and instruments relating to the
borrowing of money by, or the extension of credit to, Seller;
(b) written employment and consulting agreements;
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(c) written sales agency, representative, broker or
distributorship agreements;
(d) written agreements, orders or commitments for the purchase
by Seller of raw materials, supplies or finished products exceeding $5,000; and
(e) written agreements, orders or commitments for the purchase
by Seller of services exceeding $5,000.
Seller has delivered or made available to Purchaser complete and
correct copies of all written agreements, contracts and commitments, together
with all amendments thereto, listed above. Except as described in Schedule 2.9,
Seller does not have, and at the Closing date will not have, any agreements or
commitments, including, but without limiting the generality of the foregoing,
any agreement or obligations, contingent or otherwise, under any contract or
agreement (1) of indebtedness, (2) for the purchase of supplies, services or
other items in excess of $5,000, or (3) for the purchase of any equipment or
machinery involving in excess of $5,000.
2.10 CONTRACTS TO PROVIDE GOODS AND SERVICES. Schedule 2.10 is a
complete and correct list as of the date hereof of all agreements, contracts and
information of the following types to which Seller is a party as of the date
hereof:
(a) agreements or commitments for the sale to customers of
goods or services including open purchase orders, arrangements or understandings
with customers related to manufacture, assembly, acceptance and sale of rail and
seats, other vehicle seats, components and related equipment or modifications,
and replacement parts; and
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(b) all other material agreements or obligations to provide
goods or services to customers or others.
Seller has delivered or made available to Purchaser complete and
correct copies of all written agreements, contracts and commitments, together
with all amendments thereto listed above. Except as provided on Schedule
2.10(b), all contracts are assumable by Purchaser according to their terms and
all assignments thereof have been approved or consented to by third parties as
required thereunder.
2.11 FINANCIAL STATEMENTS. The Financial Statements of Seller for the
years ended December 31, 1996, 1997, and 1998, and for the three months ended
March 31, 1999 and six months ended June 30, 1999, all as set forth in Schedule
2.11 (collectively, the "Financial Statements") are complete in all respects,
and fairly present the financial condition of Seller as of the dates thereof and
the result of the operations of Seller for the periods covered thereby; the
Financial Statements have been prepared, as appropriate, in accordance with the
percentage of completion accounting method or generally accepted accounting
principles and practices consistently applied as disclosed in Schedule 2.11; the
Financial Statements reflect or adequately provide for all claims against, and
all debts and liabilities of, Seller, fixed or contingent, existing at the dates
thereof. Seller has advised Purchaser of interim financial results from June 30,
1999 through August 30,1999 reflecting operating losses. Except for the
operating losses and matters disclosed in Schedule 2.5, to the best of Seller's
knowledge, there has not been any change between the date of the latest
Financial Statements and the date of this Agreement, and will not be any such
change between the date of this Agreement and the Closing, which has had or will
have a material adverse effect on the financial position or results of
operations of Seller.
2.12 NO OTHER LIABILITIES OR ADVERSE CONDITIONS. With the exception of
the liabilities set
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forth on the Financial Statements and on Schedule 2.12 hereto, and liabilities
incurred in the ordinary course of the business of Seller since the date of the
Financial Statements, to the best of Seller's knowledge, Seller has no
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
or whether due or to become due, in excess of $10,000 in the aggregate, and
there is no basis for the assertion against Seller of any such liability.
2.13 ACCOUNTS RECEIVABLE. Schedule 2.13 is a list of all accounts
receivable with the balances due Seller as of the dates indicated. Accounts
receivable as reflected on the books of Seller on the date hereof, net of
applicable reserves, are collectible in the ordinary course. Except in the
ordinary course of business, Seller has no obligation to accept returns from, or
to extend credit terms to, its customers and has no policy, custom or practice
of accepting returns or extending credit, whether or not legally obligated to do
so, other than in the ordinary course of business.
2.14 ACCOUNTS PAYABLE. Schedule 2.14 is a true and correct list of all
accounts payable of Seller and any collateral or security applicable to the
indebtedness owed to each of these creditors. Except as set forth on Schedules
2.8 and 2.12 no person has a security interest in Seller's accounts receivable
or inventory.
2.15 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval or authorization of, or declaration, filing or registration with, any
governmental, quasi-governmental, or regulatory authority is required to be made
or obtained by Seller in connection with the execution, delivery and performance
of this Agreement by Seller, except as set forth in Schedule 2.15. Seller has
filed all reports and returns heretofore required by federal, state or municipal
authorities and all reports and returns to the various governmental authorities
which control, directly or indirectly, the Business, and has paid all sums
heretofore due with respect to such reports and returns.
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2.16 LABOR, EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFITS PROGRAMS.
Schedule 2.16-A includes a copy of Seller's collective bargaining agreement with
the United Electrical Workers dated August 1, 1998, with all modifications and
amendments thereto ("Collective Bargaining Agreement"). Schedule 2.16-A also
includes a list of all union complaints, grievances, arbitrations or other
related actions since the date of the Collective Bargaining Agreement, and a
description of the status or disposition of each. Attached as Schedule 2.16-B is
a list of all written personnel employment agreements, policies, procedures,
practices and employee rules and manuals, which are, or have in the past been
provided to employees, whether or not legally binding, including but not limited
to policies with respect to hiring, compensation, disability, sick leave
(including maternity leave), vacation, leaves of absence, tuition reimbursement,
relocation and termination. Schedule 2.16-C is a list of all group insurance,
group hospitalization and other employee insurance benefit plans. True and
correct copies, certificates or descriptions of the materials listed on Schedule
2.16-B and Schedule 2.16-C have been delivered to Purchaser. Purchaser
acknowledges that it is not assuming Seller's benefit plans. Seller shall retain
all costs and expenses, including self-insurance, in connection with benefits
provided to Seller's employees prior to the Closing.
(a) Except as set forth on Schedule 2.16(a), Seller has no
material obligations, contingent or otherwise, written or oral, under any
employment contract, collective bargaining agreement, pension or retirement
plan, bonus plan, or other employee contract or non-terminable agreement,
expressed or implied, except (i) normal salary or wage accruals, and (ii) paid
vacations and sick leave accruals.
(b) The names and current aggregate annual compensation rates
as of the date hereof of each employee of the Seller receiving regular
compensation, and designations as a union or non-
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union employee, are set forth in Schedule 2.16(b).
(c) The names and current accrued vacation and sick day
allowances due to each employee on the date hereof are listed on Schedule
2.16(c).
(d) There is no unfunded employee benefit plan obligation for
plans established or maintained for employees of Seller, or to which
contributions have, must, or may be made by Seller, which is subject to Tile IV
or Part 3 of Subtitle B of Title I of the Employee Retirement Income Security
Act of 1974, as amended and in effect, and the plans are adequately funded to
meet accrued obligations. Copies of the plans are attached as Schedule 2.16(d).
(e) Seller has obtained Form I-9 from all of its employees and
Seller is in compliance with all rules and regulations of the U.S. Immigration
and Naturalization Service.
2.17 ENVIRONMENTAL MATTERS. Seller is in compliance with all material
rules and regulations (and applicable standards and requirements) of the United
States Environmental Protection Agency (the "EPA") and the agencies and
authorities of the City of Elk Grove Village, County of Xxxx, State of Illinois,
and any other political subdivision in which it conducts the Business, which
have jurisdiction over environmental matters. Seller has received no notice of,
and, to its best knowledge, has not during its operation of the Business made
any act or omission that would result in, (i) potential responsibility or
liability for environmental damage, or (ii) any suit, claim, action or
proceeding before any court, governmental agency or board or other forum, nor is
any such action threatened by any person or entity or any basis for such suit,
claim, action or proceeding, for (x) noncompliance by Seller with any
environmental law, rule or regulation, (y) personal injury, wrongful death or
other conduct relating to materials, commodities or products used, sold,
transferred, disposed or manufactured by Seller, or (z)
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relating to the presence in or release into the environment by Seller of any
toxic or hazardous material, substance, or waste generated by Seller whether or
not occurring at or on a site owned, leased or operated by Seller. Schedule 2.17
includes all manifests respecting the storage, transportation or disposal of all
hazardous materials of Seller in the 12-month period preceding the Closing date.
2.18 INSURANCE. A complete and correct list and an accurate summary
description (including premiums, exclusions, deductible and coinsurance amounts,
broker and carrier) of all insurance policies maintained by or on behalf of
Seller has previously been provided to Purchaser, and Seller has delivered to
Purchaser complete and correct copies of all such policies together with all
riders and amendments thereto. Such policies are in full force and effect, all
premiums due thereon have been paid, and Seller has complied in all material
respects with the provisions of such policies. Purchaser is not assuming
Seller's insurance plans.
2.19 PRODUCT WARRANTIES. The products and services provided by Seller
are in compliance with and meet the standards of all material federal, state and
local laws and regulations and Seller has either disclaimed or complied with any
express or implied warranty relative to its products or services, including
without limitation any express warranty or any implied warranty of
merchantability or of fitness for any particular purposes. Except as set forth
on Schedule 2.19, Seller has received no notice of any product or service
warranty or liability claims for a material dollar amount, nor is any such claim
threatened against Seller or in respect of products or services leased or sold
by it. Seller has adequately reserved on its Financial Statements for reasonable
estimates for warranty obligations.
2.20 BANKS. Schedule 2.20 is a true and complete list, as of the date
hereof, of each bank or other financial institution, trust company or brokerage
firm in which Seller has an account or safe deposit box, the account number, and
the names of all persons authorized to draw thereon, have access
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thereto or transact business therewith.
2.21 PATENTS AND INTELLECTUAL PROPERTY. Schedule 2.21-A is a list of
all patents and patents pending ("Patents"), trade names, and trade marks
utilized in the business ("Marks"). Seller owns the Patents and Marks. Except as
set forth on Schedule 2.21-B, Seller is not aware, after due diligence, of any
rights of third parties to or infringements of any of the Patents or Marks.
Seller is not aware of any pending or threatened action, suit, proceeding or
claim by others, either domestically or internationally, that alleges that
Seller is violating any patents, copyrights, trademarks or license agreements.
2.22 CERTAIN TRANSACTIONS. Except as set forth in Schedule 2.22, no
director, officer or employee of Seller or Simula, or any relative by blood or
marriage, affiliate or associate of any of the foregoing, is presently a party
to any material transaction with Seller or Simula (other than for services as
employees, officers, and directors) including without limitation, any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from, any such person, or any corporation, partnership,
trust or other entity in which any Stockholder or any such director, officer, or
employee has a substantial interest or is a director, officer, partner, or
trustee.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND BEACON
Purchaser and Beacon represent and warrant as of the Closing as
follows:
3.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Purchaser has full power and
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authority to carry on its business as now conducted and as contemplated by this
Agreement. Beacon is a corporation duly, organized, validly existing and in good
standing under the laws of the State of Nevada.
3.2 AUTHORITY FOR AGREEMENT. The Board of Directors of each of
Purchaser and Beacon have taken all actions required to authorize the execution
and delivery on behalf of Purchaser of this Agreement and the performance by
Purchaser and Beacon of the obligations hereunder and the consummation of the
transactions contemplated hereby.
3.3 CONSENTS. The execution and performance of this Agreement by
Purchaser and Beacon will not violate any provision of, or result in the breach
of, or constitute a default under, or require any consent under any law, or any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal, or any contract, agreement or instrument by which
Purchaser is bound.
SECTION 4
COVENANTS
4.1 SELLER'S AND SIMULA'S COVENANTS.
(a) If, prior to the Maturity Date set forth in the Note, Purchaser
obtains an asset based loan from a third party lender in an amount no less than
$6 Million, no less than $3.5 Million of the proceeds from which Purchaser
agrees to apply against the Note, Seller and Simula will negotiate in good faith
to do the following:
(i) accept the cash proceeds applied against the Note;
(ii) enter into good faith negotiations with Purchaser to
refinance the Note on mutually agreeable terms, which terms may include
(A) a reduction in the principal amount of the
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Note to the extent of the cash proceeds applied against it, (B) an
extension of the term of the remaining indebtedness represented by the
Note, and (C) the representation of the remaining indebtedness by one
or more notes with one or more maturity dates (a "Refinancing Note");
and
(iii) guarantee, as an accommodation to Purchaser, up to
seventy percent (70%) of the amount described in Section 4.1(a)(ii)(A)
above to Purchaser's third party lender on terms and conditions
satisfactory to Simula.
If Purchaser and Seller are unable to agree in good faith to refinance the Note
as described in this Section 4.1(a), then the Note shall remain in full force
and effect in accordance with its terms.
(b) Seller shall enter into an agreement with Airline Interiors, Inc.
("AI") pursuant to which AI will buy from Purchaser (as successor to the Assets)
the materials represented by Seller's open purchase order with Xxxxx Metals.
Such agreement will provide that AI: (i) will buy the raw materials directly
from the vendor and extinguish the account payable relating thereto; or (ii)
will buy, after the Closing, finished parts from Purchaser (as successor to the
Assets) on reasonable terms and conditions for the cost of the materials plus
Purchaser's allocation of reasonable overhead, or with a reasonable profit to
Purchaser. To the extent Purchaser incurs expenses under the purchase order due
to Seller's failure to enter into such an agreement, Purchaser's obligations
under the Note or any Refinancing Note if it has a later maturity, shall be
reduced to the extent of such expense.
(c) Within forty-five (45) days after Closing, Seller shall file an
Amendment to Seller's Articles of Incorporation with the Arizona Corporation
Commission to change Seller's corporate name to eliminate the term "Coach & Car
Equipment" therefrom.
(d) To the extent not provided free and clear at Closing, Seller and
Simula shall continue to use their best efforts to obtain all consents to
assignment and releases necessary to deliver the Assets free and clear to
Purchaser.
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4.2 PURCHASER'S COVENANTS.
(a) Prior to the Maturity Date set forth in the Note, Purchaser will
use its best efforts to obtain an asset based loan from a third party lender in
an amount no less than $6 Million and to apply no less than $3.5 Million of the
proceeds of such loan against the Note. In connection with such third party
loan, Purchaser will enter into good faith negotiations with Seller to refinance
the Note on mutually agreeable terms, which terms may include (A) a reduction in
the principal amount of the Note to the extent of the cash proceeds applied
against it, (B) an extension of the term of the remaining indebtedness
represented by the Note, and (C) the representation of the remaining
indebtedness by one or more notes with one or more maturity dates. Purchaser
acknowledges that if Purchaser and Seller are unable to agree in good faith to
refinance the Note as described in this Section 4.2(a), then the Note shall
remain in full force and effect in accordance with its terms. During the term of
the Note or any Refinancing Note Purchaser will provide Seller with monthly
financial statements related to the Business and shall promptly deliver any
additional information related to the Business reasonably requested by Seller.
(b) Purchaser will assume Seller's liability to Simula, Inc. or
subsidiaries for advances made to Seller from the date of the Asset Purchase
Agreement dated June 30, 1999, in accordance with the terms and conditions of
the certain Post-Agreement Intercompany Revolving Loan Agreement dated effective
as of July 1, 1999, which is attached hereto as Exhibit "L."
4.3 JOINT COVENANTS OF SELLER AND PURCHASER.
(a) Seller and Purchaser shall cooperate in issuing any press releases
or otherwise making public statements with respect to the purchase and sale and
the other transactions contemplated by this Agreement. No such public statement
shall be made without first consulting the other party; provided that Buyer
shall have a reasonable opportunity, not to exceed fifteen (15) days from the
date hereof, to notify its vendors, suppliers and creditors of such transactions
prior to the making of any public statement by Seller and Purchaser.
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(b) In the event Purchaser and Seller are unable to obtain the lessors'
written approval to the assignment and assumption to each of the Leases
described in Sections 1.1(c), then both parties shall continue to seek, and
shall assist each other in all reasonable attempts to obtain, each
non-consenting lessor's written approval to an assignment and assumption after
the Closing until such approval is granted. With respect to each Lease listed on
Schedule 1.1(c)-B, Seller shall sub-lease to Purchaser the equipment covered by
such Lease, on terms and conditions identical to those imposed on Seller under
such Lease, while Seller and Purchaser seek the lessor's approval, as described
in the preceding sentence.
(c) To accommodate Purchaser's assumption and initial operation of the
Business, Seller may, in its sole discretion, provide post-Closing payroll,
payroll services, employee benefits, or other transitional services for up to a
period not to exceed twenty (20) days after Closing. Purchaser shall reimburse
and indemnify Seller for all such transitional services including without
limitation all costs, expenses, claims, liabilities, insurance premiums, self
insurance payments, and fees, incurred and/or paid by Seller post-Closing.
Reimbursement and payment shall be made within five (5) days of Seller's
presentation of invoice for payment. Purchaser's reimbursements of any payments
pursuant to this Section 4.3(c) shall not be considered as an adjustment to the
purchase price and Purchaser's indemnification obligations hereunder shall not
be subject to the limitations set forth in Section 7.3.
(d) Effective as of the Closing, Seller shall terminate the employment
of all its employees. Subject to Section 6.5, Purchaser intends and will use its
best efforts to re-employ substantially all of such employees on terms
satisfactory to Purchaser.
4.4 BEACON'S COVENANTS.
(a) In connection with the letter delivered to Seller pursuant to
Section 6.9, Beacon directly or indirectly will obtain equity financing from a
third party to be utilized as working capital by Purchaser of at least One
Million Dollars ($1,000,000) by September 13, 1999 and an additional One Million
Dollars ($1,000,000) within forty-five (45) days of Closing.
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(b) Prior to the Maturity Date set forth in the Note, Beacon
will use its best efforts to directly or indirectly obtain an asset based loan
from a third party lender in an amount no less than $6 Million and to apply no
less than $3.5 Million of the proceeds of such loan against the Note. In
connection with such third party loan, Beacon will enter into good faith
negotiations with Seller to directly or indirectly refinance the Note on
mutually agreeable terms, which terms may include (A) a reduction in the
principal amount of the Note to the extent of the cash proceeds applied against
it, (B) an extension of the term of the remaining indebtedness represented by
the Note, and (C) the representation of the remaining indebtedness by one or
more notes with one or more maturity dates. Beacon acknowledges that if Beacon
and Seller are unable to agree in good faith to refinance the Note as described
in this Section 4.4(a), then the Note shall remain in full force and effect in
accordance with its terms. During the term of the Note and any Refinance Note,
Beacon will provide Seller with monthly financial statements related to the
Business and to Beacon and shall promptly deliver any additional information
related to the Business and Beacon reasonably requested by Seller, and appoint
to its Board of Directors a member of Simula, Inc. executive management.
(c) In connection with the letter delivered to Seller pursuant
to Section 6.10, Beacon will use its best efforts to complete a private or
public offering of debt or equity securities within one (1) year after Closing
and will apply the proceeds to the repayment of any indebtedness to Seller
and/or Simula, Inc.
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SECTION 5
CONDITIONS TO CLOSING BY PURCHASER
Purchaser shall not be obligated to consummate the transactions
contemplated hereby unless each of the following conditions is fulfilled or
performed (unless waived by Purchaser) prior to or at the Closing.
5.1 COMPLIANCE AND UPDATING. All of the representations and warranties
of Seller contained in Section 2 of this Agreement shall be true as of the time
of the Closing, and Seller shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
Seller prior to or at the Closing. All Schedules hereto shall be updated as of
the date of Closing.
5.2 LICENSES. All necessary licenses, certifications, permits and
approvals from federal, state and local governmental units, including, but not
limited to the Licenses on Schedule 2.7, shall have been issued to Purchaser in
form and substance satisfactory to Purchaser, and Purchaser shall have received
confirmation in form and substance satisfactory to it that Purchaser is, and
will remain after consummation of the transactions contemplated hereby, approved
on such terms as are generally then existing in the industry.
5.3 NO ACTION. No action or proceeding shall have been brought, or to
the knowledge of Seller be threatened, before any court or administrative agency
to prevent the consummation of, or to seek damages in a material amount by
reason of the transactions contemplated hereby, and no governmental authority
shall have asserted that these transactions constitute a violation of law or
give rise to liability on the part of Purchaser.
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5.4 PATENT ASSIGNMENTS. The Seller shall have delivered patent
assignments to Purchaser in form and substance satisfactory to Purchaser and its
counsel.
5.5 LIEN SEARCH REPORT. Seller shall have delivered at Closing a lien
search report by a recognized reporting service with respect to UCC liens,
judgment liens, tax liens, and other mortgages and encumbrances of record as
filed in the pertinent city, county or State of Illinois, as the case may be,
representing all the liens of record to which Seller's Assets are subject, which
such report shall be dated no more than sixty (60) days preceding the date of
Closing. Seller shall, within sixty (60) days after Closing and the application
of the Purchase Price proceeds to the payment of secured creditors, deliver in
connection therewith lien releases with respect to all of the liens so
evidenced.
5.6 SELLER'S RESOLUTION. Seller shall deliver at Closing a copy
certified by the Corporate Secretary of Seller evidencing the resolution of the
Board of Directors authorizing the sale of the business and the consummation of
this Agreement, the Assignment and Assumption and other documents of transfer,
and further evidencing the due approval by all of the stockholders of the Seller
with respect to the sale of all or substantially all of the assets of the
Seller, consistent with the requirements of Arizona law.
5.7 ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENT. Purchaser shall have
assumed the collective bargaining agreement with the United Electrical Workers
with respect to the employment of personnel at the Seller's Elk Grove Village,
Illinois, facility, which collective bargaining agreement shall be on terms and
conditions satisfactory in the sole judgment of the Purchaser.
5.8 LEASE. Purchaser shall have assumed from Seller, and Seller shall
have assigned to
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Purchaser, Seller's rights and obligations with respect to the administrative
and manufacturing facility premises located in Elk Grove Village, Illinois under
the Lease attached hereto as Exhibit "G," with the written consent of Lessor (as
defined in the Lease); provided that if Purchaser and Seller are unable to
obtain Lessor's consent to an assignment and assumption of the Lease prior to
the Closing, then Purchaser shall have entered into a sub-lease with Seller, on
terms and conditions as set forth in the Lease. Such sub-lease will include an
undertaking by Purchaser for post-closing assignment and assumption of the Lease
as provided in Section 4.3(b).
5.9 LEGAL MATTERS. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to Purchaser, and such counsel
shall have been furnished with all such opinions, documents and instruments as
they shall have reasonably requested in connection with the transactions
contemplated herein.
5.10 OPINION OF COUNSEL. Purchaser shall have been furnished with the
opinion of counsel to Seller, dated the Closing date, to the effect that:
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Arizona with full power and
authority to enter into and perform its obligations under this Agreement.
(b) All proceedings required to be taken on the part of the
Seller to authorize it to enter into, carry out and fully comply with the
provisions of this Agreement, the Assignment and Assumption, the Xxxx of Sale,
the Patent Assignments, and the Non-Competition Agreements, and to transfer and
deliver the Assets, have been duly, validly and properly taken. The execution,
delivery and
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performance of the foregoing agreements of Seller do not violate any provision
of the Articles of Incorporation or Bylaws or financing documents of Seller or
any other agreement or other instrument to which Seller or its stockholders are
a party or by which it or they may be bound, or the Assets may be subject.
(c) The Agreement, the Assignment and Assumption, the Patent
Assignments and the Xxxx of Sale are the valid and legally binding obligations
of Seller enforceable in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the rights and remedies
of creditors generally and by the general principles of equity.
(d) Except as to the matters described in Schedule 2.5, Seller
is not a party to any pending or, to the knowledge of such counsel, threatened
litigation, proceedings, claim or governmental investigation or audit which may
either (1) materially or adversely affect the Assets or impair the Purchaser's
right or ability to operate the Business in the manner presently conducted by
Seller, or (2) seek to prevent, restrain or interfere with the performance by
Seller of this Agreement.
(e) The Xxxx of Sale, Assignment and Assumption, Patent
Assignments, and other documents of transfer effectively convey and assign to
Purchaser good and marketable title to the Assets free and clear of liens and
encumbrances except as provided in the Agreement.
5.11 [INTENTIONALLY OMITTED]
5.12 NO COMPETE AGREEMENT. Seller shall have entered into and executed
a No Compete Agreement in the form attached hereto as Exhibit "I."
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5.13 EXECUTION OF SUB-LEASE AGREEMENT FOR MILWAUKEE FACILITY. Purchaser
and Seller shall have entered into a Sub-Lease Agreement for the Artcraft
Milwaukee facility in the form attached hereto as Exhibit "J-1."
5.14 SOFTWARE INSTALLATION CONSULTING AGREEMENT. Purchaser and Seller
shall have entered into a consulting agreement wherein Seller shall provide
reasonable consulting assistance to Purchaser in the installation of DataWorks'
MANFACT software in the form attached hereto as Exhibit "K."
5.15 DELIVERY OF DOCUMENTS; ACKNOWLEDGMENT OF RECEIPT. Seller shall
have delivered all documents referenced in the Schedules attached hereto.
Closing shall constitute conclusive evidence of Purchaser's receipt and
acknowledgment of such documents.
SECTION 6
CONDITIONS TO CLOSING BY SELLER
Seller shall not be obligated to consummate the transactions
contemplated hereby unless each of the following conditions is fulfilled or
performed (unless expressly waived in writing by Seller) prior to or at the
Closing:
6.1 COMPLIANCE. All of the representations and warranties made by
Purchaser contained in Article 3 of this Agreement shall be true as of the time
of Closing; Purchaser shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
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6.2 CONSENT OF BANK. Bank One shall have agreed and consented to the
purchase and sale and other transactions contemplated by this Agreement within
ten (10) days of Closing pursuant to the Simula, Inc. Senior Credit Agreement
with Bank One.
6.3 NO ACTION. No action or proceeding shall have been brought or
threatened before any court or administrative agency to prevent the consummation
of, or to seek damages in a material amount by reason of, the transactions
contemplated hereby, and no governmental authority shall have asserted that
these transactions constitute a violation of law or give rise to liability on
the part of Seller.
6.4 [INTENTIONALLY OMITTED]
6.5 NEW COLLECTIVE BARGAINING AGREEMENT. Purchaser shall have concluded
the negotiation and assumption of the collective bargaining agreement, ratified
pursuant to the current requirements of the union, with the United Electrical
Workers with respect to the employment of bargaining unit employees at Seller's
Elk Grove Village, Illinois, facility and Seller shall be satisfied that the
collective bargaining agreement is no terms and conditions sufficient to
terminate continuing obligations of Seller with respect thereto.
6.6 LEASE. Purchaser shall have assumed from Seller, and Seller shall
have assigned to Purchaser, Seller's rights and obligations with respect to the
administrative and manufacturing facility premises located in Elk Grove Village,
Illinois under the Lease attached hereto as Exhibit "G," with the written
consent of Lessor (as defined in the Lease); provided that if Purchaser and
Seller are unable to obtain Lessor's consent to an assignment and assumption of
the Lease prior to the Closing, then Purchaser shall have entered into a
sub-lease with Seller, in the form set forth as Exhibit "J-2."
(a) To secure Purchaser's right to assume or sub-lease, on or
about July 15, 1999, Seller
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paid the landlord the sum of $96,000 representing a security deposit and prepaid
1999 and 2000 real estate taxes, which Purchaser shall reimburse to Seller on
the Closing Date.
6.7 BENEFIT PLANS. Purchaser shall have made arrangements acceptable to
Seller regarding the termination (without liability to Seller) of Seller's
employee benefit plans.
6.8 [INTENTIONALLY OMITTED]
6.9 INVESTMENT LETTER. Prior to Closing, Purchaser will deliver to
Seller a letter from a third party investor in form satisfactory to Seller
evidencing such investor's intent to invest at least Two Million Dollars
($2,000,000) equity in Beacon or Purchaser within sixty (60) days of Closing to
be applied as Purchaser's working capital.
6.10 UNDERWRITING LETTER. Prior to Closing, Purchaser will deliver to
Seller a letter from a third party investment banker confirming its intent to
underwrite a public offering of securities for Beacon, on customary terms and
conditions, to be completed within one (1) year of Closing.
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SECTION 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER AND SIMULA. Seller and Simula shall,
jointly and severally, indemnify and hold harmless Purchaser and each officer,
director, employee or agent thereof, and their respective estates, successors,
and assigns, in respect of any and all claims, losses, damages, liabilities and
expenses except as disclosed in this Agreement and the Schedules hereto
(including, without limitation, settlement costs and any legal or other expenses
for investigating or defending any actions or threatened actions) reasonably
incurred by such indemnitees as a result of each and all of the following or any
claims or allegations with respect thereto ("Loss"):
(a) Any misrepresentation or breach of any warranty made by
Seller in this Agreement.
(b) The nonfulfillment or breach of any covenant, agreement or
obligation of Seller contained in this Agreement, the Assignment and Assumption,
or any of the other documents executed pursuant to this Agreement.
(c) Any contract, tort, employment or other claim based upon
an occurrence prior to the Closing attributable to the actions of Seller or the
conduct of Business by the Seller.
(d) Any litigation, the basis for which is conduct of the
Business by the Seller prior to the Closing.
(e) Any environmental claim with respect to Section 2.17.
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7.2 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and hold
harmless Seller and each officer, director, employee or agent thereof, and their
respective estates, successors, and assigns, in respect of any and all claims,
losses, damages, liabilities and expenses (including, without limitation,
settlement costs and any legal or other expenses for investigating or defending
any actions or threatened actions) reasonably incurred by such indemnitees as a
result of each and all of the following or any claims or allegations with
respect thereto ("Loss"):
(a) Any misrepresentation or breach of any warranty made by
Purchaser in this Agreement.
(b) The nonfulfillment or breach of any covenant, agreement or
obligation of Purchaser contained in this Agreement, the Assignment and
Assumption, or any of the other documents executed pursuant to this Agreement.
(c) Any contract, tort or other claim based on an occurrence
after the Closing attributable to the actions of Purchaser or conduct of the
Business by Purchaser.
7.3 LIMITATIONS ON OBLIGATIONS TO INDEMNIFY.
(a) Except based upon fraud neither Seller nor Purchaser shall
have any obligation to indemnify the indemnitee in respect of any Loss or Losses
to the extent such Losses total less than One Hundred Thousand Dollars
($100,000).
(b) No party shall have any obligation to indemnify the other
party in respect of
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(i) Losses exceeding Ten Million Dollars ($10,000,000) less, in the event Seller
or Simula is the indemnifying party, the amount of any indebtedness then owing
from Purchaser to Seller, or (ii) Losses a claim for which has not been made
hereunder within three (3) years of the Closing Date.
(c) If any party to this Agreement is of the opinion that it
has a claim against another party for indemnification hereunder, it shall notify
said party of the facts and circumstances of such claim. Such notice shall
furnish sufficient information to enable the other party to evaluate reasonably
the facts or claims and Losses arising therefrom. The assertion of a claim shall
be made in good faith.
(d) Promptly after receipt by an indemnitee of any notice of
claim or commencement of any action, such party shall provide a copy of such
claim, process or other pleadings to the indemnifying party. Such indemnifying
party may request the right to defend, at its own expense and by its own
counsel, any such matter asserted. In any event, the indemnitee and the
indemnifying party and its counsel shall cooperate in the compromise of, or
defense against, any such asserted liability and both parties shall have the
right to participate in the defense. In the event that the indemnifying party
shall decline to participate in or assume the defense, the indemnitee must
supply the indemnifying party with a copy of the final court judgment or decree
showing liability. The indemnitee shall have the right to settle any claim
against it subject to the prior written approval of the indemnifying party.
7.4 DEFENSE OF ACTIONS. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party, at its sole cost and expense, may, upon written notice to the indemnitee,
assume the defense of such claim or legal proceeding, to the extent that the
indemnifying party admits in writing its liability to the indemnitee with
respect to all material elements thereof. If the
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indemnifying party assumes the defense of any such claim or legal proceeding,
the obligations of the indemnifying party hereunder as to such claim or legal
proceeding shall be limited to taking all steps necessary in the defense or
settlement thereof and to holding the indemnitee harmless from and against any
losses, damages, expenses or liability caused by or arising out of any
settlement approved by the indemnifying party or any judgment in connection with
such claim or legal proceeding. Each indemnitee agrees that it will cooperate
with the indemnifying party in the defense of any such action, the defense of
which is assumed by the indemnifying party. Except with the consent of the
indemnitee, which consent will not be unreasonably withheld, the indemnifying
party shall not consent to the entry of any judgment arising from any such claim
or legal proceeding which, in each case, does not include as an unconditional
term thereof the delivering by the claimant or the plaintiff to the indemnitee
of a release from all liability in respect thereof, unless the indemnifying
party has actually paid to the indemnitee the full amount of such judgment or
settlement. If the indemnifying party does not assume the defense of any claim
or litigation, the indemnitee may defend against such claim or litigation in
such manner as it may deem appropriate, including, but not limited to, settling
such claim or litigation, after giving notice of the same to the indemnifying
party, on such terms as the indemnitee may deem appropriate. The indemnifying
party will promptly reimburse the indemnitee in accordance with the provisions
hereof for all damages, costs and expenses incurred by such indemnitee.
7.5 PAYMENT; OFFSET; ARBITRATION. All indemnification hereunder shall
be effected as provided below:
(a) With respect to matters for which an indemnitee has a
claim for indemnification, such indemnification and the payment therefore shall
be upon mutual agreement by the parties and paid by cash or on other terms in
the amount of the indemnification liability as mutually agreed by the parties;
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(b) With respect to any indemnification under this Section 7
not resolved pursuant to subparagraph (a) above, the parties shall submit the
dispute to binding arbitration. With respect to disputes that are not resolved
by the mutual agreement by the parties, each party shall name an arbitrator
within twenty (20) days after either party notifies the other in writing that
there is a dispute and the two arbitrators shall name a third arbitrator. If
either party fails to select an arbitrator within twenty (20) days as required
herein or if the two arbitrators fail to select a third arbitrator within twenty
(20) days as required herein, then the presiding judge of the Maricopa County
Arizona Superior Court shall appoint such arbitrator or arbitrators. The
arbitrators shall render a decision within sixty (60) days after their
appointment and shall conduct all proceedings pursuant to Arizona Revised
Statues, Section 12-1501 through Section 12-1517 and the rules of the American
Arbitration Association governing commercial transactions then existing, to the
extent that such rules are not inconsistent with statues and this Agreement.
Judgment upon the reward rendered under arbitration may be entered in any court
having jurisdiction. The cost of the arbitration procedure shall be borne by the
losing party or if the decision is not clearly in favor or one party or the
other then the costs shall be borne as determined by such arbitration
proceeding. If any proceeding or action shall be brought to recover any amount
under this provision the prevailing party shall be entitled to recover from the
other party as part of the prevailing party's costs, reasonable attorney's fees,
the amount of which shall be fixed by the arbitrators. The provisions for
binding arbitration shall pertain solely to matters of indemnification under
Section 7, and shall not pertain to the resolution of legal disputes among the
parties generally.
7.6 TALGO LITIGATION INDEMNIFICATION. Notwithstanding the limitation to
indemnification provided under Section 7.3(a), Seller shall indemnify and hold
harmless Purchaser from any and all claims, losses, damages, liabilities and
expenses (including without limitation, settlement costs and any legal or other
expenses for investigating or defending any actions or threatened actions)
arising out of
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Seller's dispute with Talgo, Inc. described on Schedule 2.5 and Schedule 2.19
(the "Talgo Dispute"). Seller shall, at its own cost and expense, defend against
any claim or counterclaim brought by Talgo, Inc. relating to the Talgo Dispute.
Both Seller and Purchaser shall reasonably agree to any settlement with Talgo,
Inc. related to the Talgo Dispute. In the event Purchaser has not recovered the
full amount of the trade account balance payable from Talgo, Inc. related to the
Talgo Dispute by the maturity date as defined in the Note or a Refinancing Note,
as the case may be, the principal amount of the Note or Refinancing Note if it
has a later maturity, shall be reduced by the amount of such non-collection.
SECTION 8
TERMINATION
8.1 TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(a) By mutual written consent of Purchaser and Seller;
(b) By any party if it reasonably determines that the purchase of the
Assets has become impractical by reason of the institution by state, local or
federal governmental authorities, or by any other person, or entity of any
material litigation, arbitration, grievance or other proceedings relating to
this transaction against any of the parties, and notifies the other parties in
writing of such determination;
(c) By Seller for any reason on or after August 31, 1999; or
(d) By Seller, at its election, if Bank One has not agreed and
consented to the purchase
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and sale and other transactions contemplated by this Agreement within ten (10)
days of Closing. If Seller elects to so terminate this Agreement, the Agreement
shall be terminated and rescinded, the Business and Assets returned to the
possession and control of Seller, all transactions effected hereunder shall be
reversed, and the respective rights and obligations of all parties hereto and
Simula, Inc. shall be restored to pre-Closing status, all without any further
obligations to or among any parties hereunder.
SECTION 9
MISCELLANEOUS
9.1 UPDATING SCHEDULES. The Seller agrees to update the Schedules
through the Closing.
9.2 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered or mailed, first class postage prepaid, to the parties at their
respective addresses reflected on Schedule 9.3 hereto.
9.3 EXPENSES. Except for liabilities assumed by Purchaser in the
Assignment and Assumption, Purchaser and Seller shall each pay their own costs
and expenses (including, without limitation, the fees and expenses of their
counsel, auditors and accountants and any finders' fees) incidental to the
preparation and carrying out of this Agreement and the transactions contemplated
hereby.
9.4 FINDERS' FEES. Each of the parties represents and warrants to the
other that, to the extent it has engaged any broker, finder or other person who
is entitled to a brokerage or other fee or commission in respect of the
execution of this Agreement and the consummation of the transactions
contemplated hereby, such fee is the sole responsibility of such party.
Purchaser shall indemnify and hold Seller harmless against and in respect of any
and all claims, liabilities and/or expenses which may be
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asserted against Seller by any such broker or other person on the basis of any
arrangement or agreement made or alleged to have been made by Purchaser, its
agents or employees; and Seller shall indemnify and hold Purchaser harmless in
respect of any and all claims, liabilities and/or expenses which may be asserted
against Purchaser by any such broker or other person on the basis of any
arrangement or agreement made or alleged to have been made by Seller, its agents
or employees.
9.5 INTEGRATION AND AMENDMENT. This Agreement supersedes any and all
previous agreements between the parties with respect to the subject matter
herein and may not be amended other than by a written instrument executed by
Purchaser and Seller.
9.6 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
9.9 ASSIGNMENT. No party hereto shall assign this Agreement without
first obtaining the written consent of the other parties.
9.10 LANGUAGE CONSTRUCTION. The language in all parts of this Agreement
shall be
-37-
38
construed, in all cases, according to its fair meaning, and not for or against
any party hereto. The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement.
9.11 GOVERNING LAW; VENUE. This Agreement and any interpretation hereof
and the resolution of any dispute hereunder shall be governed by the laws of the
State of Arizona, and any action to enforce any provision of this Agreement or
to obtain any remedy with respect hereto may be brought in the Superior Court,
Maricopa County, Arizona, and for this purpose each party hereto hereby
expressly and irrevocably consents to the jurisdiction of said Court.
-38-
39
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first set forth above.
SIMULA, INC.
By /s/ Xxxx Xxxxx
-----------------
Its Executive Vice President
------------------------
COACH AND CAR EQUIPMENT CORPORATION
By /s/ Xxxx Xxxx
----------------
Its President
---------
COACH AND CAR ACQUISITION CORP.
By /s/ Xxxxx Xxxxxx
----------------
Its President
---------
BEACON INDUSTRIES, INC.
By /s/ Xxxxx Xxxxxx
----------------
Its President
---------
-39-
40
SCHEDULE 1.1(a)
TANGIBLE PERSONAL PROPERTY
Document Number Document Description
27 CCEC Fixed Asset List Summary (as of 12/31/98)
27-A CCEC Fixed Asset List Summary (as of 6/1/99)
28 Office Furniture & Equipment
29 Computer Equipment
30 Machinery & Equipment (as of 12/31/98)
30-A Machinery & Equipment (as of 6/1/99)
31 Vehicles
32 Leasehold Improvements
33 Tooling at Vendors
34 Production Dies & Fixtures
110-A Artcraft Fixed Asset List (as of 6/1/99)
41
SCHEDULE 1.1(c)-A
REAL PROPERTY LEASES
Document Number Document Description
00 Xxxxxxxx Xxxxxxx Apartment Lease Agreement with
Royce Renaissance Village
22 Elk Grove Village Building Lease Agreement with
Xxxxxx Xxxxx, Trustee Under Trust Agreement
22-A Amendment to Elk Grove Village Building Lease
Agreement
23 New York Building Lease Agreement with Northeastern
Industrial Park, Inc.
42
SCHEDULE 1.1(c)-B
PERSONAL PROPERTY LEASES
Document Number Document Description
5 CCEC Equipment Lease List
6 1997 Ford Taurus Installment Contract with Xxxxx Xxxxxx Ford
7 Sharp Copy Machine Lease Agreement with CDP, Inc.
8 Mazak Vertical Machining Center Lease Agreement with M&I First
National Leasing Corp.
9 Piranha/Allsteel Hydro-Mechanical Press Brake Lease Agreement
with M&I
10 Mori Seiki Horizontal Machining Center S/N 317 with Yamazen,
Inc.
11 Mori Seiki Horizontal Machining Center S/N 299 with Yamazen,
Inc.
12 Minuteman Model 320 Scrubber Lease Agreement with M&I
13 Modular ICS Telephone System Lease Agreement with M&I
14 Mazak Vertical Machining Center Lease Agreement with Norwest
Equipment Finance
15 Lease for 2 Mazak Vertical Machining Centers and three Memory
Boards with Norwest
16 Lease for New Johnford Vertical Machining Center and Xxxx
Drill and Tap Center with Norwest
17 Xxxxx Xxxxx 110-Ton Punch Press Lease Agreement with M&I
19 1998 Freightliner Truck Lease and Service Agreement with
Xxxxxxx Leasing Corp.
20 Postage Meter Lease Agreement with Neopost Leasing
105 Master Software/Equipment Lease Agreement for SolidWorks
Power-Pak Plus Bundle with LPI Software Funding Group, Inc.
43
SCHEDULE 1.1(d)
SALES CONTRACTS
Document Number Document Description
41 Siemens/Tri-Met Job Number 242A
42 Talgo/Amtrak Job Number 346
43 JPB/Nippon Sharyo Job Number 347
44 Northern Virginia/Kawasaki Job Number 348
45 Siemens/LACMTA Job Number 620
46 Kawasaki/LIRR Job Numbers 992 and A992
47 Kawasaki/LIRR Spares Agreement
48 Amtrak Lounge Cafe Job Number 5561
49 Breda/MBTA Job Number 4331
50 GDLS Job Numbers 5470-5477
51 DART/Artcraft/Kinkisharyo Job Number 5384
52 Artcraft/CTA/TTA Job Numbers 5627-5630
53 DART/Option Job Number 5716
90 Purchase Order Number XESQ46625 with Caterpillar, Inc.
91 Open Shipping Backlog Report as of 1/26/99
91-A Open Shipping Backlog Report as of Closing
113 Purchaser Order Number 2109052 with Bombardier, Inc.
114 Purchase Order Number D2AC-1 with Kinkisharyo (USA), Inc.
115 Purchase Order Number 266098 with TTA for the CTA 2600-97
Program
116 Purchase Order Number 30914 with NICTD
117 Purchase Order Number VB006153 REV with Kawasaki
118 Miscellaneous Customer Purchase Contracts
119 Backlog - Open Purchase Orders
44
SCHEDULE 1.1(f)
ACCOUNTS RECEIVABLE, PREPAYMENTS, DEPOSITS
BONDS AND REFUNDS AND ALL SECURITIES
ACCOUNTS RECEIVABLE
Document Number Document Description
24 Detailed, Aged Accounts Receivable as of 12/31/98
106 Detailed, Aged Accounts Receivable as of 12/31/98
24-A Detailed, Aged Accounts Receivable at Closing
24-B Detailed Other Accounts Receivable at Closing
DEPOSITS AND PREPAYMENTS BY CCEC
Document Number Document Description
200-A Deposits as of 6/18/99
BONDS, REFUNDS AND SECURITIES
None.
45
SCHEDULE 1.1(h)
INTANGIBLES
See Schedule 2.21-A.
46
SCHEDULE 1.1(j)
EXCLUDED ASSETS
All assets associated with the Artcraft Industries Corp. (Milwaukee)
airline soft goods business have been eliminated from all schedules and
documents as updated and/or supplemented.
47
SCHEDULE 2.3
DEFAULTS WHICH COULD RESULT IN LIENS UPON THE ASSETS; CONSENTS
DEFAULTS
See Schedule 2.5.
CONSENTS
Seller has requested necessary assignment consents under the equipment
leases and production contracts. Such consents have not been received as of
Closing.
48
SCHEDULE 2.5
LITIGATION
PENDING
1) XXXXX X. XXXXX, ILLINOIS DOCKET NO. 98 L 12775
Xx. Xxxxx was injured in an automobile accident that Xx. Xxxxx claims
involved an employee of Seller. Seller has tendered the defense of this suit to
its insurance company. The liability of Seller, if any, will be assumed by
Seller and its insurance carrier.
2) XXXXXXXX X. COACH AND CAR EQUIPMENT CORPORATION, ILLINOIS DOCKET NO. 98 L
4952
Xx. Xxxxxxxx was injured while operating a vehicle incorporating a
product of Seller's. Seller has tendered the defense of this suit to its
insurance company. The liability of Seller, if any, will be assumed by Seller
and its insurance carrier.
STAYED
1) TALGO, INC. V. COACH AND CAR EQUIPMENT CORPORATION, WASHINGTON DOCKET NO.
99-2-03748-1 SEA
Seller entered into a new seat design and manufacturing contract with
Talgo, Inc. dated April 7, 1998. Seller's performance under the contract was
challenged by Talgo on the grounds of late delivery and product conformance to
specification. Talgo instituted litigation in Washington State Superior Court.
The litigation was stayed based on a negotiated Settlement Agreement dated March
16, 1999. See document numbers 205 and 206. Under the Settlement Agreement,
Seller is required to complete agreed upon repairs and final shipment and Talgo
is required to remit the balance of $461,206 owing on the contract. Seller has
substantially performed under the Settlement Agreement. To date, Talgo has paid
approximately $140,000 on the remaining balance under the Settlement Agreement.
Seller intends to reopen the litigation and counterclaim against Talgo for
payment of the balance.
2) XXXXX V. COACH AND CAR EQUIPMENT CORPORATION, ILLINOIS DOCKET NO. 99 M3
1623
Seller's landlord for the Elk Grove, Illinois premises instituted legal
action against Seller for delinquent rent and possession of the premises. Seller
and its landlord subsequently entered into a Lease Amendment dated June 15,
1999. See document 22-A. Under the terms of the Lease Amendment, the litigation
will be dismissed on or before July 31, 1999.
THREATENED
XXX XXXXXX
Xx. Xxxxxx was discharged from employment with Seller as a result of
reduction in workforce. Xx. Xxxxxx has claimed retaliatory discharge. Seller
intends to vigorously defend this claim as Seller believes Xx. Xxxxxx' claim has
no merit.
Purchaser is not assuming, and Seller shall retain, all liability
resulting from litigation relating to Seller's operation of the Business.
49
SCHEDULE 2.7
NECESSARY MATERIAL LICENSES
See Schedule 2.15.
50
SCHEDULE 2.8
PROPERTY ENCUMBERED
Lien of Bank One Arizona under Loan Agreement dated February 12, 1999
to be released at or after Closing.
51
SCHEDULE 2.8.1
INVENTORIES, OPEN SHOP ORDERS, WIP
Document Number Document Description
93-A Inventory Reconciliation Report as of 6/23/99
93-B Inventory as of Closing
52
SCHEDULE 2.9
COMMITMENTS
NOTES, LOANS, CREDIT AGREEMENTS, MORTGAGES, INDENTURES AND SECURITY AGREEMENTS
Document Number Document Description
6 '97 Ford Taurus Installment Contract with Xxxxx
Xxxxxx Ford
WRITTEN EMPLOYMENT AND CONSULTING AGREEMENTS
Document Number Document Description
62 Truck Seat Product Development/Marketing Agreement
with Xxxxx Gaza
WRITTEN SALES AGENCY, REPRESENTATIVE, BROKER OR DISTRIBUTORSHIP AGREEMENTS
None.
WRITTEN AGREEMENTS, ORDERS OR COMMITMENTS FOR PURCHASE OF RAW MATERIALS
Document Number Document Description
92-A Purchase Order Commitment Report as of 6/23/99
92-B Purchase Order Commitment Report as of Closing
201 Agreement with Xxxxx Metal dated 3/5/98 for the
supply of 2024 aluminum
WRITTEN AGREEMENTS FOR PURCHASE OF SERVICES
Document Number Document Description
18 PTC Software Annual Maintenance Agreement with
Parametric Technology Corporation
53
SCHEDULE 2.10
CONTRACTS AND AGREEMENTS TO SELL
See Schedule 1.1(d).
54
SCHEDULE 2.10(b)
CONTRACTS REQUIRING APPROVAL OR CONSENTS
Seller has or will request necessary assignment consents under the
equipment leases and production contracts. Such consents have not been received
as of Closing.
55
SCHEDULE 2.11
FINANCIAL STATEMENTS
Document Number Document Description
39 CCEC percentage of completion basis accounting for
year ended 12/31/96
111 Artcraft percentage of completion basis accounting
for year ended 12/31/96
40 CCEC percentage of completion basis accounting for
year ended 12/31/97
112 Artcraft percentage of completion basis accounting
for year ended 12/31/97
40-A CCEC and Artcraft combined financial statements
prepared under percentage of completion basis
accounting throughout the year ended 12/31/98 and
adjusted to shipment basis accounting at 12/31/98
40-B CCEC and Artcraft combined shipment basis
accounting for quarter ended 3/31/99
40-C Financial Statements for the quarter ended 6/30/99
56
SCHEDULE 2.12
OTHER LIABILITIES
None.
57
SCHEDULE 2.13
ACCOUNTS RECEIVABLE
Document Number Document Description
24 CCEC Detailed, Aged Accounts Receivable as of
12/31/98
106 Artcraft Detailed, Aged Accounts Receivable as of
12/31/98
24-A Detailed, Aged Accounts Receivable as of Closing
58
SCHEDULE 2.14
ACCOUNTS PAYABLE
Document Number Document Description
25 CCEC Detailed, Aged Accounts Payable as of 12/31/98
108 Artcraft Detailed, Aged Accounts Payable as of
12/31/98
25-A Detailed, Aged Accounts Payable as of Closing
59
SCHEDULE 2.15
CONSENT/APPROVALS REQUIRED BY GOVERNMENTAL AUTHORITIES
Document Number Document Description
81 Illinois EPA Air Pollution Equipment Operating
Permit
60
SCHEDULE 2.16-A
UE BARGAINING AGREEMENT, UNION COMPLAINTS, GRIEVANCES, AND ARBITRATIONS
BARGAINING AGREEMENT
Document Number Document Description
67 Collective Bargaining Agreement with United
Electrical, Radio, and Machine Workers of America
67-A Addition of Sewer and Upholstery Assembler Jobs
to Collective Bargaining Agreement
UNION COMPLAINTS AND GRIEVANCES
DATE DESCRIPTION DISPOSITION
1/22/99 Employee bumping rights issue Dropped by Union
2/5/99 (2) Complaint that management engaged in production Dropped by Union
5/19/99 Issue regarding wages for cutters Pending
6/14/99 Complaint that written warning was too severe for a Pending
particular infraction
ARBITRATIONS
None.
61
SCHEDULE 2.16-B
PERSONNEL RELATED DOCUMENTS
WRITTEN PERSONNEL AGREEMENTS
None.
POLICIES, PROCEDURES, AND EMPLOYMENT MANUALS
Document Number Document Description
87 CCEC Employee Handbook
88 Affirmative Action Plan
62
SCHEDULE 2.16-C
GROUP INSURANCE, HOSPITALIZATION, AND OTHER
EMPLOYEE INSURANCE BENEFIT PLANS
See Schedule 2.16(d).
63
SCHEDULE 2.16(a)
OBLIGATIONS RELATED TO WORKFORCE
None.
64
SCHEDULE 2.16(b)
EMPLOYEE ANNUAL COMPENSATION AND UNION/NON-UNION DESIGNATION
Document Number Document Description
79 Employees and Compensation List (Annualized)
79-A Employees and Compensation List as of 6/22/99
65
SCHEDULE 2.16(c)
ACCRUED VACATION AND SICK DAY ALLOWANCES DUE TO EMPLOYEES
Document Number Document Description
202 Non-salaried Accrued Vacation as of 6/22/99
203 Salaried Accrued Vacation as of 6/23/99
66
SCHEDULE 2.16(d)
EMPLOYEE BENEFIT PLANS
Document Number Document Description
84 Benefits Summary for Office Employees as of
1/19/99
84-A Benefits Summary for Office Employees as of
6/1/99
85 Benefits Summary for Plant Employees as of
1/18/99
85-A Benefits Summary for Plant Employees as of
6/1/99
Simula self-insures its medical plan and purchases excess liability
reinsurance protection.
67
SCHEDULE 2.17
MANIFESTS RESPECTING STORAGE, TRANSPORTATION, AND
DISPOSAL OF HAZARDOUS MATERIALS
Document Number Document Description
204 Hazardous Materials Related Manifests
68
SCHEDULE 2.19
NOTICES OF PRODUCT/SERVICE WARRANTY OR LIABILITY CLAIMS
No material warranty claims are outstanding.
See Schedule 2.5, Talgo, Inc. v. Coach and Car Equipment Corporation.
69
SCHEDULE 2.20
LIST OF BANKS UTILIZED BY THE COMPANY
1) American National Bank
000 Xxxxx Xx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Account #: 00000000
17983800
18039685
18039448
5330051266
2) Trustco Bank
000 Xxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Account #: 00-000-000
3) Fleet Bank
X.X. Xxx 000000
Xxxxxxxx, Xxxxxxxxxxx 00000
Account #: 009-934-1154
Seller's account at Fleet Bank is a facilitating account to effect the
payment of health insurance claims paid as part of Seller's self-insurance
health plan.
70
SCHEDULE 2.21-A
LISTING OF PATENTS & OTHER INTELLECTUAL PROPERTY
PATENTS ISSUED:
1. Walkover Seat with Inertial Latch
Patent No. 5,149,171
Issued 9/22/92
2. Seat with Adjustable Back
Patent No. 4,372,611
Issued 2/8/83
3. Seat with Back Cushion Attachment
Patent No. 4,365,840
Issued 12/28/82
4. Wheelchair and Occupant Restraining Apparatus
Patent No. 4,369,995
Issued 1/25/83
PROVISIONAL PATENT APPLICATIONS ON FILE:
1. CCE-103 Tray Table for Passenger Seat filed: 3/4/99
2. CCE-104 Self Stowing Footrest for Passenger Seat filed: 3/4/99
3. CCE-105 Energy Absorbing Passenger Seat filed: 3/17/99
PROVISIONAL PATENT APPLICATIONS BEING PREPARED:
CCE-102 Cradle Recline Passenger Seat
TRADEMARK ISSUED:
2. "Safe Stop"
Registration No.1,759,142
Issued: 3/16/93
TRADEMARK APPLICATIONS ON FILE:
1. CCE-101 "Comfort Cruiser" filed: 12/16/98
71
SCHEDULE 2.21-B
PATENT & OTHER INTELLECTUAL PROPERTY DISPUTES
Seller is the owner of U.S. Patent No. 5,149,171 entitled Walkover Seat
with Inertial Latch which is incorporated in Seller's "walk-over" seat product.
Seller has challenged the use by a competitor, Admiral Seating, Inc., of a
similar mechanism. Periodically since 1992, Seller has asserted infringement by
Admiral; Admiral has denied infringing Seller's patent. No litigation has been
instituted and none is currently contemplated.
72
SCHEDULE 2.22
CERTAIN TRANSACTIONS WITH DIRECTORS, OFFICERS AND EMPLOYEES OF SELLER
Seller currently provides housing for Xxxx Xxxx at the Oakbrook Terrace
Apartment Building. See Schedule 1.1(c)-A, document number 21.
73
SCHEDULE 9.3
ADDRESSES
SELLER:
Coach & Car Equipment Corporation
0000 Xxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxx
With copy to:
Simula, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx
BUYER:
Coach and Car Acquisition Corp.
000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
