EQUITY PURCHASE AND COMMITMENT AGREEMENT
Exhibit
99.2
APPENDIX A
EXECUTION COPY
THIS EQUITY PURCHASE AND COMMITMENT AGREEMENT (this “Agreement”), dated as of March
16, 2007, is made by and between Deutsche Bank Securities Inc., a Delaware corporation (the
“Investor”), and Xxxxx Lemmerz International, Inc., a Delaware corporation (the
“Company”). Capitalized terms used in this Agreement have the meanings assigned thereto in
the sections indicated on Schedule 1 hereto.
WHEREAS, the Company proposes to conduct a rights offering by distributing to each holder of
record (as of a certain record date) of its shares of Common Stock, par value $0.01 per share (the
“Common Stock”), at no charge, non-transferable rights (the “Rights”), for each
share of Common Stock held by such stockholder, to purchase shares (“Shares”) of Common
Stock that have an aggregate value of $180.0 million (the “Aggregate Offering Amount”),
rounded to the nearest whole share (the “Rights Offering”);
WHEREAS, each holder of a Right will be entitled to purchase up to its pro rata portion of
55,384,615 Shares (the “Basic Subscription Privilege”) at a price of $3.25 per Share (as
adjusted for any stock split, combination, reorganization, recapitalization, stock dividend, stock
distribution or similar event, the “Exercise Price”);
WHEREAS, each holder of Rights who exercises in full its Basic Subscription Privilege will be
entitled, on a pro rata basis, to subscribe for additional Shares at the Subscription Price
(the “Over-Subscription Privilege”), to the extent that other holders of Rights do not
exercise all of their respective Basic Subscription Privileges;
WHEREAS, in order to facilitate the Rights Offering, the Investor is willing, upon the terms
and subject to the conditions set forth herein, to purchase at the Exercise Price, upon expiration
of the Rights Offering, such number of Shares that are not purchased by stockholders pursuant to
the exercise of Rights;
WHEREAS, the Company wishes to grant the Investor the right to purchase Shares directly from
the Company and to reduce the size of the Rights Offering commensurately as set forth herein; and
WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has
determined that the Rights Offering, this Agreement and the transactions contemplated hereby are
advisable and in the best interests of the Company.
NOW, THEREFORE, in consideration of the mutual promises, agreements, representations,
warranties and covenants contained herein, each of the parties hereto hereby agrees as follows:
1. Rights Offering.
(a) On the terms and subject to the conditions set forth herein, the Company will distribute,
at no charge, a number of Rights to each holder of record of Common Stock (each, an
A-1
“Eligible Holder”) for each share of Common Stock held by such holder as of the close
of business on a record date (the “Record Date”) to be set by the Board of Directors, which
number will be equal to 55,384,615 divided by the number of shares of Common Stock outstanding on
the Record Date (as adjusted pursuant to the terms hereof, the “Rights Ratio”), provided
that no fractional Shares will be issued and the Exercise Price multiplied by the aggregate number
of Shares offered shall not exceed the Aggregate Offering Amount. Each such Right shall be
non-transferable. Each Right will entitle the holder to purchase at the Exercise Price, at the
election of the holder thereof, one Share.
(b) The Rights (including the Basic Subscription Privilege and the Over-Subscription
Privilege) may be exercised during a period (the “Rights Exercise Period”) commencing on
the date on which Rights are issued to Eligible Holders (the “Rights Offering Commencement
Date”) and ending at 5:00 p.m. Eastern Daylight Time on a Business Day that shall not be less
than twenty (20) days after the Rights Offering Commencement Date, subject to extension at the
reasonable discretion of the Board of Directors, provided, however, that the Rights
Exercise Period shall not be more than thirty (30) Business Days without the prior written consent
of the Investor (the “Expiration Time”). “Business Day” means each Monday,
Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York
City are generally authorized or obligated by law or executive order to close.
(c) Each Eligible Holder who wishes to exercise all or a portion of its Rights shall (i)
during the Rights Exercise Period return a duly executed document to a subscription agent (the
“Subscription Agent”) electing to exercise all or a portion of the Rights held by such
Eligible Holder and (ii) pay an amount equal to the full Exercise Price of the number of Shares
that the Eligible Holder elects to purchase pursuant to the instructions set forth in the Rights
Offering Registration Statement by a specified date to an escrow account established for the Rights
Offering. On the Closing Date, the Company will issue to each Eligible Holder who validly
exercised its Rights the number of Shares to which such Eligible Holder is entitled based on such
exercise and, in the event of the exercise by the Investor of the right set forth in Section
1(j), the excess funds paid by that Eligible Holder as the Subscription Price for the Shares
not issued will be returned to such Eligible Holder without interest or deduction
(d) Each Eligible Holder who exercises in full its Basic Subscription Privilege will be
entitled to subscribe for additional Shares at the Exercise Price up to an amount equal to the
number of Shares such Eligible Holder is entitled to purchase under its Basis Subscription
Privilege pursuant to the instructions set forth in the Rights Offering Registration Statement to
the extent that other Eligible Holders elect not to exercise all of their respective Rights in the
Basic Subscription Privilege. If the number of Shares remaining after the exercise of all Basic
Subscription Privilege is not sufficient to satisfy all requests for Shares under the
Over-Subscription Privileges, the Eligible Holders who exercised their Over-Subscription Privileges
will be allocated such remaining Shares in proportion to the number of Shares they have purchased
through the Basic Subscription Privilege.
(e) If the pro rata allocation exceeds the number of Shares requested in the
Over-Subscription Privilege, then each Eligible Holder only will receive the number of Shares
requested, and the remaining Shares from such Eligible Holder’s pro rata allocation
will be divided among other Eligible Holder exercising their Over-Subscription Privilege. If the
pro rata
A-2
allocation is less than the number of Shares requested in the Over-Subscription Privilege,
then the excess funds paid by that Eligible Holder as the Subscription Price for the Shares not
issued will be returned to such Eligible Holder without interest or deduction.
(f) The Company will pay all of its expenses associated with the Rights Offering Registration
Statement, the Initial Registration Statement and the Rights Offering, including, without
limitation, filing and printing fees, fees and expenses of any subscription and information agents,
its counsel and accounting fees and expenses, costs associated with clearing the Shares for sale
under applicable state securities laws and listing fees.
(g) The Company shall notify, or cause the Subscription Agent to notify the Investor and the
Principal Additional Investor, on each Friday during the Rights Exercise Period and on each
Business Day during the five Business Days prior to the Expiration Time (and any extensions
thereto), or more frequently if reasonably requested by the Investor, of the aggregate number of
Rights known by the Company or the Subscription Agent to have been exercised pursuant to the Rights
Offering as of the close of business on the preceding Business Day or the most recent practicable
time before such request, as the case may be.
(h) The Company hereby agrees and undertakes to give the Investor and the Principal Additional
Investor by electronic facsimile transmission the certification by an executive officer of the
Company of either (i) the number of Shares elected to be purchased by Eligible Holders pursuant to
validly exercised Rights, the aggregate Exercise Price therefor, the number of Unsubscribed Shares
and the aggregate Exercise Price therefor (a “Purchase Notice”) or (ii) in the absence of
any Unsubscribed Shares, the fact that there are no Unsubscribed Shares and that the commitment set
forth in Section 1(k) is terminated (a “Satisfaction Notice”) as soon as
practicable and, in any event, within two (2) Business Days after the expiration of the Rights
Offering (the date of transmission of confirmation of a Purchase Notice or a Satisfaction Notice,
the “Determination Date”).
(i) No later than twelve noon EDT on the second Business Day immediately following the
Expiration Time, the Company will provide a Purchase Notice or a Satisfaction Notice to the
Investor as provided above, setting forth a true and accurate determination of the aggregate number
of Unsubscribed Shares, if any; provided, that on the Closing Date, on the terms and
subject to the conditions in this Agreement, the Investor will purchase, and the Company will sell,
only such number of Unsubscribed Shares as are listed in the Purchase Notice, without prejudice to
the rights of the Investor or the Company .to seek later an upward or downward adjustment if the
number of Unsubscribed Shares in such Purchase Notice is inaccurate.
(j) The Investor will have the right, but not the obligation, by providing written notice to
the Company at any time prior to 5:00 P.M. EDT on the second Business Day immediately following the
Expiration Time, to subscribe for and purchase on the Closing Date, and the Company agrees to issue
and sell on the Closing Date, up to 5,538,462 shares of Common Stock (the shares subscribed for by
the Investor, the “Direct Subscription Shares”) at price equal to the Exercise Price per
share. In the event that the Investor exercises the right set forth in this Section 1(j),
the Rights Ratio shall be reduced for each Eligible Holder by multiplying such Rights Ratio by
difference between (x) one and (y) a fraction, the numerator of
which shall be the number of Direct Subscription Shares and the denominator of which shall be
55,384,615.
A-3
(k) The Investor shall purchase on the Closing Date, and the Company agrees to issue and sell
on the Closing Date for the Exercise Price per Share (i) that number of Shares issuable pursuant to
the aggregate number of Rights that were not properly exercised by the Eligible Holders thereof
during the Rights Offering (such Shares in the aggregate, the “Unsubscribed Shares”) and
(ii) the “Direct Subscription Shares” (such shares, together with the Unsubscribed Shares,
the “Investor Shares”).
(l) The Investor shall have the right to arrange for one or more of its Affiliates (each, a
“Affiliated Purchaser”) to purchase Investor Shares, by written notice to the Company at
least two (2) Business Days prior to the Closing Date, which notice shall be signed by the Investor
and each Affiliated Purchaser, and shall contain a confirmation by the Affiliated Purchaser of the
accuracy with respect to it of the representations set forth in Section 4. In no event
will any such arrangement relieve the Investor from its obligations under this Agreement. The term
“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 under the Securities
Exchange Act of 1934 in effect on the date hereof.
(m) The Investor shall have the right, with the prior written consent of the Company, which
consent may not be unreasonably withheld or delayed, to enter into one or more agreements (the
“Additional Investor Agreements”) with certain persons and entities (collectively,
“Additional Investors”) pursuant to which the Investor may arrange for one or more
Additional Investors to purchase certain of the Investor Shares; provided, however,
that each Additional Investor Agreement shall be in a form reasonably acceptable to the Company,
and provided further that without the prior written consent of the Company, no Additional Investor,
other than the Principal Additional Investor (as defined below), may acquire Investor Shares that
would result in such Additional Investor owning beneficially or of record more than 15% of the
issued and outstanding Common Stock of the Company on the Closing Date. A single Additional
Investor (the “Principal Additional Investor”) may acquire Investor Shares pursuant to an
Additional Investor Agreement, in the form of agreement annexed hereto as Exhibit C (the
“Principal Additional Investor Agreement”), that would result in such Principal Additional
Investor owning beneficially or of record more than 15% but, not more than 30%, of the issued and
outstanding Common Stock of the Company on the Closing Date. Each Additional Investor Agreement
shall contain a confirmation by such Additional Investor of (i) the accuracy with respect to it of
the representations set forth in Section 4 and (ii) that it is not an “affiliate” or
“associate” of the Investor or any other Additional Investor (as such terms are defined in the
Exchange Act) and that it is not acting in concert with nor is it a member of a “group” which
includes the Investor or any Additional Investor other than by reason of the fact that it
beneficially owns securities of the Company. In no event will any such arrangement relieve the
Investor from its obligations under this Agreement, nor will any breach of the Principal Additional
Investor Agreement by either the Investor or the Principal Additional Investor relieve the Investor
with respect to its obligations hereunder.
(n) Notwithstanding the foregoing, the Investor’s obligation to acquire and pay for Investor
Shares is limited to the maximum number of shares that the Investor may acquire without acquiring
beneficial ownership of more than 45% (after giving effect to the sale of all
A-4
Investor Shares that the Investor has agreed to sell to the Principal Additional Investor
pursuant to the terms of the Principal Additional Investor Agreement) of the issued and
outstanding Common Stock of the Company on the Closing Date.
(o) The closing of the purchase of the Shares to be purchased in the Rights Offering and the
Investor Shares to be purchased by the Investor hereunder will occur at 10:00 a.m., New York City
time, on the fourth (4th) Business Day following the Expiration Time (the “Closing Date”),
for the Exercise Price, in the manner, and on the terms and conditions of the Rights Offering as
will be set forth in the Rights Offering Registration Statement. Delivery of the Investor Shares
will be made by the Company to the account of the Investor (or to such other accounts, including
the account of an Affiliated Purchaser or an Additional Investor, as the Investor may designate in
accordance with this Agreement). The documents to be delivered on the Closing Date by or on behalf
of the parties hereto and the Investor Shares will be delivered at the offices of White & Case LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing Date.
(p) All Investor Shares will be delivered with any and all issue, stamp, transfer, sales and
use, or similar Taxes or duties payable in connection with such delivery duly paid by the Company.
2. The Commitment; Fees and Expenses.
(a) On the basis of the representations and warranties herein contained, the Company shall pay
the following fees to the Investor, as the case may be:
(i) a stand-by commitment fee equal to $3,150,000 (the “Stand-By Commitment
Fee”) to be paid to the Investor on the date of the execution of this Agreement;
and
(ii) a take-up commitment fee equal to $2,250,000 million (the “Take-Up Fee”
and, together with the Stand-By Commitment Fee, the “Rights Offering Fees”)
to be paid to the Investor on the Closing Date, if any, only if the Closing occurs.
(b) Payment of the Rights Offering Fees will be made by wire transfer of immediately available
funds in U.S. dollars to the account specified by the Investor to the Company at least 24 hours
prior to such payment. The Rights Offering Fees will be nonrefundable and non-avoidable when paid.
The provision for the payment of the Rights Offering Fee is an integral part of the transactions
contemplated by this Agreement and without this provision the Investor would not have entered into
the Agreement.
(c) Unless the Investor is in breach of any of its representations, warranties or covenants in
this Agreement at the date of termination, which breach had materially delayed or materially or
adversely impacted, or would reasonably be expected to materially delay, or materially and
adversely impact, the Investor’s performance of its obligations under this Agreement, the Company
will promptly reimburse or pay, as the case may be, on the Closing Date, the out-of-pocket costs
and expenses reasonably incurred by the Investor and the Principal Additional Investor to the
extent incurred on or before the Closing Date (and thereafter
A-5
reasonable post-closing costs and expenses relating to the closing incurred within three
months of the Closing Date), including reasonable fees, out-of-pocket costs and expenses of counsel
to the Investor and the Principal Additional Investor, and including, the filing fee, if any,
required to be paid in connection with any filings required to be made by the Investor, the
Principal Additional Investor or their Affiliates under the HSR Act or any other competition laws
or regulations which shall be paid by the Company on behalf of the Investor, the Principal
Additional Investor or their Affiliates, as the case may be, when filings under the HSR Act or any
other competition laws or regulations are made, together with all expenses of the Investor, the
Principal Additional Investor or their Affiliates incurred to comply therewith and the reasonable
fees, out-of-pocket costs and expenses incurred by the Investor and the Principal Additional
Investor in connection with the Rights Offering Registration Statement and the Initial Resale
Registration Statement (collectively, “Transaction Expenses”); provided, that the
aggregate amount of such Transaction Expenses payable by the Company shall not exceed $1.5 million.
The provision for the payment of the Transaction Expenses is an integral part of the transactions
contemplated by this Agreement and without this provision the Investor would not have entered into
this Agreement.
3. Representations and Warranties of the Company. The Company represents and warrants to,
and agrees with the Investor, as set forth below. Except for representations, warranties and
agreements that are expressly limited as to their date, each representation, warranty and agreement
is made as of the date hereof and as of the Closing Date after giving effect to the transactions
contemplated hereby:
(a) Organization and Qualification. The Company and each of its Significant
Subsidiaries has been duly organized and is validly existing in good standing under the laws of its
respective jurisdiction of incorporation, with the requisite power and authority to own its
properties and conduct its business as currently conducted. Each of the Company and its
Subsidiaries has been duly qualified as a foreign corporation or organization for the transaction
of business and is in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification, except to the
extent that the failure to be so qualified or be in good standing has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. For
the purpose of this Agreement, “Material Adverse Effect” means (i) any material adverse
effect on the business, condition (financial or otherwise) or results of operations of the Company
or its Subsidiaries, taken as a whole, or (ii) any material adverse effect on the ability of the
Company, subject to the approvals and other authorizations set forth in Section 3(g), to
consummate the transactions contemplated by this Agreement. For the purposes of this Agreement,
(x) a “Subsidiary” of any person means, with respect to such person, any corporation,
partnership, joint venture or other legal entity of which such person (either alone or through or
together with any other subsidiary), owns, directly or indirectly, more than 50% of the stock or
other equity interests, has the power to elect a majority of the board of directors or similar
governing body, or has the power to direct the business and policies, and (y) a “Significant
Subsidiary” is a Subsidiary that satisfies the definition contained in Article 1, Rule 1-02 of
Regulation S-X promulgated pursuant to the Securities Act of 1933, as amended (the “Securities
Act”).
(b) Corporate Power and Authority. The Company has or, to the extent executed in the
future, will have when executed the requisite corporate power and authority to enter into,
A-6
execute and deliver this Agreement and each other agreement to which it will be a party as
contemplated by this Agreement (this Agreement and such other agreements collectively, the
“Transaction Agreements”) and, subject to stockholder approval, to perform its obligations
hereunder and thereunder, including the issuance of the Rights and Investor Shares. The Company
has taken or will take all necessary corporate action required for the due authorization,
execution, delivery and performance by it of this Agreement, including the issuance of the Rights,
the Shares and Investor Shares.
(c) Execution and Delivery; Enforceability. Each Transaction Agreement has been, or
prior to its execution and delivery will be, duly and validly executed and delivered by the
Company, and each such document will constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(d) Authorized and Issued Capital Stock. The authorized capital stock of the Company
consists of (i) 100,000,000 shares of Common Stock, and (ii) 1,000,000 shares of preferred stock,
par value $.01 per share. At the close of business on March 12, 2007 (the “Capital Structure
Date”), (i) 39,528,426 shares of Common Stock were issued and outstanding, (ii) no shares of
preferred stock were issued or outstanding, (iii) 957,447 shares of Common Stock were reserved for
issuance upon exercise of the Company’s Series B Warrants (the “Warrants”), (iv) 773,331 shares of
Common Stock were reserved for issuance upon exchange of the Series A Cumulative Redeemable
Exchangeable Preferred Stock, par value $1.00 per share, of HLI Operating Company, Inc., a Delaware
corporation and indirect subsidiary of the Company, (v) no shares of Common Stock were held by the
Company in its treasury, and, (vi) 2,993,251 shares of Common Stock were reserved for issuance upon
exercise of stock options and other rights to purchase shares of Common Stock and vesting of
restricted stock units (each, an “Option” and, collectively, the “Options”) granted
under any stock option or stock-based compensation plan of the Company or otherwise (the “Stock
Plans”). Except with respect to Xxxxx Lemmerz-Inci-Jant-Sanayi, A.S., Jantas Jant Sanayi ve
Ticaret A.S., Kalyani Lemmerz Limited, Siam Lemmerz Co., Ltd. and MGG Group B.V., issued and
outstanding shares of capital stock of the Company and each of its Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable, and are not subject to any
preemptive rights. Except as set forth in this Section 3(d), at the close of business on
the Capital Structure Date, no shares of capital stock or other equity securities or voting
interest in the Company were issued, reserved for issuance or outstanding. Since the close of
business on the Capital Structure Date, no shares of capital stock or other equity securities or
voting interest in the Company have been issued or reserved for issuance or become outstanding,
other than shares described in this Section 3(d) that have been issued upon the exercise of
outstanding Options granted under the Stock Plans or Warrants and other than the shares to be
issued hereunder. Except as described in this Section 3(d) and with respect to Xxxxx
Lemmerz-Inci-Jant-Sanayi, A.S., Jantas Jant Sanayi ve Ticaret A.S., Kalyani Lemmerz Limited, Siam
Lemmerz Co., Ltd. and MGG Group B.V., neither the Company nor any of its Subsidiaries is party to
or otherwise bound by or subject to any outstanding option, warrant, call, subscription or other
right (including any preemptive right), agreement or commitment which (w) obligates the Company or
any of its Subsidiaries to issue, deliver, sell or transfer, or repurchase, redeem or otherwise
acquire, or cause to be issued, delivered, sold or transferred, or repurchased, redeemed or
otherwise acquired, any shares of the capital stock of, or other equity or voting interests in, the
Company or any security convertible or exercisable for or exchangeable into any capital stock of,
or other equity or voting interest in, the
A-7
Company, (x) obligates the Company or any of its Subsidiaries to issue, grant, extend or enter
into any such option, warrant, call, right, security, commitment, contract, arrangement or
undertaking, (y) restricts the transfer of any shares of capital stock of the Company or (z)
relates to the voting of any shares of capital stock of the Company.
(e) Issuance. The Investor Shares to be issued and sold by the Company to the
Investor or any Affiliated Purchaser or Additional Investor hereunder, when such Shares are issued
and delivered against payment therefor by the Investor hereunder, will be duly and validly
authorized, issued and delivered and fully paid and non-assessable, free and clear of all Taxes,
liens, preemptive rights, rights of first refusal, subscription and similar rights.
(f) No Conflict. The distribution of the Rights, the sale, issuance and delivery of
the Shares upon exercise of the Rights, the consummation of the Rights Offering by the Company and
the execution and delivery by the Company of the Transaction Agreements and compliance by the
Company with all of the provisions hereof and thereof and the consummation of the transactions
contemplated herein and therein (including compliance by the Investor with its obligations
hereunder and thereunder) (i) provided that the Company amends or refinances the Credit Agreement
(as defined below), will not conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute a default under (with or without notice or lapse of time, or both),
or result, in the acceleration of, or the creation of any lien under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any
of the property or assets of the Company or any of its Subsidiaries is subject, (ii) will not
result in any violation of the provisions of the Certificate of Incorporation or Bylaws of the
Company or any of its Subsidiaries, and (iii) will not result in any violation of, or any
termination or impairment of any rights under, any statute or any license, authorization,
injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or any of their properties, except
in any such case described in subclause (i) and (iii) for any conflict, breach, violation, default,
acceleration, lien, termination or impairment which has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(g) Consents and Approvals. No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their properties is required for the distribution of
the Rights, the sale, issuance and delivery of Shares upon exercise of the Rights or the Investor
Shares to each Investor hereunder and the consummation of the Rights Offering by the Company and
the execution and delivery by the Company of the Transaction Agreements and performance of and
compliance by the Company with all of the provisions hereof and thereof and the consummation of the
transactions contemplated herein and therein, except (i) the registration under the Securities Act
of the issuance of the Rights and the Shares pursuant to the exercise of Rights, (ii) filings with
respect to and the expiration or termination of the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any other comparable
laws or regulations in any foreign jurisdiction relating to the sale or issuance of Investor Shares
to the Investor, and (iii) such consents, approvals, authorizations, registrations or
qualifications (x) as may be required under state securities or Blue Sky laws in connection with
the purchase of the Investor Shares by the Investor or the distribution of the
A-8
Rights and the sale of Shares to Eligible Holders, (y) pursuant to the rules of the Nasdaq
Stock Market, Inc., including the approval of the Company’s stockholders of the Rights Offering,
including the issuance of Investor Shares to the Investor, or (z) the absence of which will not
have or would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(h) Arm’s Length. The Company acknowledges and agrees that the Investor is acting
solely in the capacity of an arm’s length contractual counterparty to the Company with respect to
the transactions contemplated hereby (including in connection with determining the terms of the
Rights Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or
any other person or entity. Additionally, the Investor is not advising the Company or any other
person or entity as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Investor shall have no responsibility or liability to the Company, its
Affiliates, or their respective stockholders, directors, officers, employees, advisors or other
representatives with respect thereto. Any review by the Investor of the Company, the transactions
contemplated hereby or other matters relating to such transactions will be performed solely for the
benefit of the Investor and shall not be on behalf of the Company, its Affiliates, or their
respective shareholders, directors, officers, employees, advisors or other representatives and
shall not affect any of the representations or warranties contained herein or the remedies of the
Investor with respect thereto.
(i) Company SEC Documents. Since June 3, 2003, the Company has filed or submitted all
required reports, schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) (“Company SEC Documents”) with the Securities and
Exchange Commission (the “Commission”). As of their respective dates, each of the Company
SEC Documents complied in all material respects with the requirements of the Securities Act or the
Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to
such Company SEC Documents. The Company has filed with the Commission all “material contracts” (as
such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act) that are required
to be filed as exhibits to the Company SEC Documents. No Company SEC Document filed after January
31, 2006, when filed, or, in the case of any Company SEC Document amended or superseded prior to
the date of this Agreement, then on the date of such amending or superseding filing, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. Any future Company SEC Documents filed with the Commission prior to the
Closing Date, when filed, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they are made, not misleading.
(j) Financial Statements. The financial statements and the related notes of the
Company and its consolidated Subsidiaries included or incorporated by reference in the Company SEC
Documents, and to be included or incorporated by reference in the Rights Offering Registration
Statement and the Rights Offering Prospectus, comply or will comply, as the case may be, in all
material respects with the applicable requirements of the Securities Act,
A-9
the Securities Exchange Act of 1934, as amended, and the rules and regulation of the
Commission thereunder (the “Exchange Act”), as applicable, and present fairly in all
material respects the financial position, results of operations and cash flows of the Company and
its Subsidiaries as of the dates indicated and for the periods specified, subject, in the case of
the unaudited financial statements, to absence of disclosure normally made in footnotes and to
customary year end adjustments which shall not be material; such financial statements have been
prepared in conformity with U.S. generally accepting accounting principles (“GAAP”) applied
on a consistent basis throughout the periods covered thereby (except as disclosed in the Company
SEC Documents filed prior to the date hereof), and the supporting schedules included or
incorporated by reference in the Company SEC Documents, and to be included or incorporated by
reference in the Rights Offering Registration Statement and the Rights Offering Prospectus, present
fairly the information required to be stated therein; and the other financial information included
or incorporated by reference in the Company SEC Documents, and to be included or incorporated by
reference in the Rights Offering Registration Statement and the Rights Offering Prospectus, has
been or will be derived from the accounting records of the Company and its Subsidiaries and
presents fairly or will present fairly the information shown thereby; and the pro
forma financial information and the related notes included or incorporated by reference in
the Company SEC Documents, and to be included or incorporated by reference in the Rights Offering
Registration Statement and the Rights Offering Prospectus, have been or will be prepared in all
material respects in accordance with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and the assumptions underlying such pro forma
financial information are reasonable and are set forth in the Company SEC Documents and will be set
forth in the Rights Offering Registration Statement and the Rights Offering Prospectus.
(k) Rights Offering Registration Statement and Rights Offering Prospectus. The Rights
Offering Registration Statement or any post-effective amendment thereto, as of the Securities Act
Effective Date, will comply in all material respects with the Securities Act, and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and as of the applicable filing
date of the Rights Offering Prospectus and any amendment or supplement thereto and as of the
Closing Date, the Rights Offering Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading.
On the Distribution Date and the Expiration Date, the Investment Decision Package will not contain
an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Each Issuer Free Writing Prospectus, at the time of use thereof,
when considered together with the Investment Decision Package, will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading. Each Preliminary Rights Offering Prospectus, at the time of filing thereof, will
comply in all material respects with the Securities Act and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Company makes no representation and warranty with
respect to any statements or omissions
A-10
made in reliance on and in conformity with information relating to the Investor or the
Additional Investors furnished to the Company in writing by the Investor or the Additional
Investors expressly for use in the Rights Offering Registration Statement and the Rights Offering
Prospectus and any amendment or supplement thereto.
For the purposes of this Agreement, (i) the term “Rights Offering Registration Statement”
means the Registration Statement on Form S-3 to be filed with the Commission relating to the Rights
Offering, including all exhibits thereto, as amended as of the Securities Act Effective Date, and
any post-effective amendment thereto that becomes effective; (ii) the term “Rights Offering
Prospectus” means the final prospectus contained in the Rights Offering Registration Statement
at the Securities Act Effective Date (including information, if any, omitted pursuant to Rule 430A
and subsequently provided pursuant to Rule 424(b) under the Securities Act), and any amended form
of such prospectus provided under Rule 424(b) under the Securities Act or contained in a
post-effective amendment to the Rights Offering Registration Statement; (iii) the term
“Investment Decision Package” means the Rights Offering Prospectus, together with any
Issuer Free Writing Prospectus used by the Company to offer the Shares to Eligible Holders pursuant
to the Rights Offering, (iv) the term “Issuer Free Writing Prospectus” means each “issuer
free writing prospectus” (as defined in Rule 433 of the rules promulgated under the Securities Act)
prepared by or on behalf of the Company or used or referred to by the Company in connection with
the Rights Offering, (v) the term “Preliminary Rights Offering Prospectus” means each
prospectus included in the Rights Offering Registration Statement (and any amendments thereto)
before it becomes effective, any prospectus filed with the Commission pursuant to Rule 424(a) under
the Securities Act and the prospectus included in the Rights Offering Registration Statement, at
the time of effectiveness that omits information permitted to be excluded under Rule 430A under the
Securities Act; and (vi) “Securities Act Effective Date” means the date and time as of
which the Rights Offering Registration Statement, or the most recent post-effective amendment
thereto, was declared effective by the Commission.
(l) Free Writing Prospectuses. Each Issuer Free Writing Prospectus will conform in
all material respects to the requirements of the Securities Act as of the date of first use or as
otherwise provided for in Rule 433 under the Securities Act, and the Company will comply with all
prospectus delivery and all filing requirements applicable to such Issuer Free Writing Prospectus
under the Securities Act. The Company has retained in accordance with the Securities Act all
Issuer Free Writing Prospectuses that were not required to be filed pursuant to the Securities Act.
(m) Absence of Certain Changes. Since January 31, 2006, other than as disclosed in
the Company SEC Documents filed prior to the date hereof, and except for actions to be taken
pursuant to the Transaction Agreements:
(i) there has not been any change in the capital stock from that set forth in
Section 3(d) or any material change in long-term debt of the Company or any
of its Subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock;
A-11
(ii) no event, fact or circumstance has occurred which has had or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect;
(iii) neither the Company nor any of its Subsidiaries has paid, discharged, waived,
compromised, settled or otherwise satisfied any material Legal Proceeding, whether
now pending or hereafter brought, (A) at a cost in excess of $20 million of the
amount accrued or reserved for it in the Company SEC Documents filed prior to the
date hereof or (B) on a basis that reveals a finding or an admission of a material
violation of law by the Company or its Subsidiaries; and
(iv) other than in the ordinary course of business, neither the Company nor any of
its Subsidiaries has (A) made, changed or revoked any material Tax election, (B)
entered into any settlement or compromise of any material Tax liability, (C) filed
any amended Tax Return with respect to any material Tax, or (D) entered into any
closing agreement relating to any material Tax, in each case, which has had an
adverse effect in excess of $50 million on the amount accrued or reserved for Tax
liabilities in the Company SEC Documents filed prior to the date hereof.
(n) Descriptions of the Transaction Agreement. The statements in the Rights Offering
Registration Statement and the Rights Offering Prospectus insofar as they purport to constitute
summaries of each of the Transaction Agreements or the terms of statutes, rules or regulations,
legal or governmental proceedings or contracts, will constitute accurate summaries in all material
respects.
(o) No Violation or Default; Compliance with Laws. Neither the Company nor any of its
Significant Subsidiaries is in violation of its charter or by-laws or similar organizational
documents. Neither the Company nor any of its Subsidiaries is in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any
of the property or assets of the Company or any of its Subsidiaries is subject, except for any such
default that has not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is, or has
been at any time since January 31, 2006, in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory authority, except for
any such violation that has not had and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(p) Legal Proceedings. Except as described in the Company SEC Documents filed prior
to the date hereof, there are no legal, governmental or regulatory actions, suits, proceedings or,
to the knowledge of the Company, investigations pending to which the Company or any of its
Subsidiaries is a party or to which any property of the Company or any of its Subsidiaries is the
subject that, individually or in the aggregate, has had or, if determined adversely to the Company
A-12
or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect. The
Company has not received written notice of any pending, threatened or contemplated
investigations by any governmental or regulatory authority or by others. There are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are required under the
Exchange Act to be described in the Company SEC Documents or the Rights Offering Registration
Statement or Rights Offering Prospectus that are not or will not be so described, and there are no
contracts or other documents that are required under the Exchange Act to be filed as exhibits to
the Company SEC Documents or the Rights Offering Registration Statement or Rights Offering
Prospectus or described in the Company SEC Documents or the Rights Offering Registration Statement
or Rights Offering Prospectus that are not so filed or described.
(q) Independent Accountants. KPMG LLP, the Company’s public accountants, are
independent public accountants with respect to the Company and its Subsidiaries as required by the
Securities Act.
(r) Labor Relations. Except as set forth in the Company SEC Documents filed prior to
the date hereof:
(i) the Company and each of its Subsidiaries is in compliance in all respects with
all applicable laws (domestic and foreign), agreements, contracts, and policies
relating to employment, employment practices, wages, hours, and terms and conditions
of employment, and is not engaged in any material unfair labor practice as
determined by the National Labor Relations Board (or any foreign equivalent) except
where the failure to comply or such practice has not had or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect; and
(ii) there are no current and, the Company has not received written notice of any
threatened, organizational activities or demands for recognition by a labor
organization seeking to represent employees of the Company or any Subsidiary and no
such activities have occurred during the past 24 months except to the extent such
activities or demands have not had or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(s) Title to Intellectual Property. The Company and its Subsidiaries own or possess
valid and enforceable rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, “Intellectual Property”)
used in the conduct of their respective businesses other than such rights in Intellectual Property,
which the failure to own or possess, has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth in the Company
SEC Documents filed prior to the date hereof, the registrations with and applications to
governmental or regulatory authorities in respect of such Intellectual Property are valid and in
full force and effect, have not, except in accordance with the ordinary course practices of the
Company and its Subsidiaries, lapsed, expired or been abandoned (subject to the vulnerability of a
registration for trademarks to cancellation for lack of use), except to the extent that such lapse,
A-13
expiration, or abandonment has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The consummation of the
transaction contemplated hereby will not result in the loss or impairment of any rights to use such
Intellectual Property or obligate the Investor to pay any royalties or other amounts to any third
party in excess of the amounts that would have been payable by Company and its Subsidiaries absent
the consummation of this transactions. Except as set forth in the Company SEC Documents filed
prior to the date hereof, (i) the Company and its Subsidiaries have taken reasonable security
measures to protect the confidentiality and value of its and their trade secrets (or other
Intellectual Property for which the value is dependent upon its confidentiality), and no such
information, has been misappropriated or the subject of an unauthorized disclosure, except to the
extent that such misappropriation or unauthorized disclosure has not had and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) the
Company and its Subsidiaries have not received any notice that it is or they are, in default (or
with the giving of notice or lapse of time or both, would be in default) under any contract
relating to Intellectual Property except to the extent that such default has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as set forth in the Company SEC Documents, the conduct of the businesses of the Company and
its Subsidiaries will not conflict in any respect with any Intellectual Property rights of others,
and the Company and its Subsidiaries have not received any notice of any claim of infringement or
conflict with any such rights of others which has had or would in any such case be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
(t) Title to Real and Personal Property. The Company and its Subsidiaries have good
and marketable title to all real property owned by the Company and its Subsidiaries and good title
to all other tangible and intangible properties (other than Intellectual Property covered by
Section 3(s)) owned by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except such as (i) are imposed
or otherwise permitted pursuant to the Credit Agreement or (ii) individually and in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse Effect. All of the
leases and subleases to which the Company or its Subsidiaries are a party are in full force and
effect and enforceable by the Company or such Subsidiary in accordance with their terms, and
neither the Company nor any Subsidiary has received any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the
leases or subleases mentioned above, or affecting or questioning the rights of the Company or such
Subsidiary to the continued possession of the leased or subleased property by under any such lease
or sublease, except where any such claim or failure to be enforceable would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(u) Investment Company Act. As of the date hereof, the Company is not and, after
giving effect to the consummation of the transactions contemplated by this Agreement, including the
offering and sale of the Investor Shares and Shares upon exercise of Rights, and the application of
the proceeds thereof, will not be required to register as an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder.
(v) Licenses and Permits. The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
A-14
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities
that are necessary for the ownership or lease of their respective properties or the conduct of
their respective businesses as described in the Company SEC Documents except any such licenses,
certificates, permits or authorization the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Except as described in the
Company SEC Documents filed prior to the date hereof and except as, individually and in the
aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or authorization or has any knowledge that
any such license, certificate, permit or authorization will not be renewed in the ordinary course.
(w) Compliance with Environmental Laws.
(i) The Company and its Subsidiaries have complied, since June 3, 2003, and are in
compliance with all applicable federal, state, local and foreign laws, rules,
regulations, decisions and orders, including all civil and common law, relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, “Environmental
Laws”);
(ii) the Company and its Subsidiaries have (a) received and are in compliance with
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, (b) are not subject to
any action to revoke, terminate, cancel, limit, amend or appeal any such permits,
licenses or approvals, and (c) have paid all fees, assessments or expenses due under
any such permits, licenses or approvals; and
(iii) the Company and its Subsidiaries have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or release
of hazardous or toxic substances or wastes, pollutants or contaminants, or for any
violation of Environmental Laws.
except, in the case of each of the foregoing, as disclosed in the Company SEC Documents
filed prior to the date hereof, as have been, as of the date of this Agreement, adequately
provided for in accordance with GAAP in the financial statements of the Company included in
the Company SEC Documents filed prior to the date hereof, or as, individually and in the
aggregate, has not had and would not reasonably be expected to have a Material Adverse
Effect.
(x) Tax Matters. Except as described in the Company SEC Documents filed with the
Commission prior to the date hereof and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect:
(i) the Company has timely filed or caused to be timely filed (taking into account
any applicable extension of time within which to file) with the appropriate taxing
authorities all material tax returns, statements, forms and reports (including
elections, declarations, disclosures, schedules, estimates and
A-15
information Tax
Returns) for Taxes (“Tax Returns”) that are required to be filed
by, or with respect to, the Company and its Subsidiaries on or prior to the Closing
Date. The Tax Returns accurately reflect all material liability for Taxes of the
Company and its Subsidiaries for the periods covered thereby;
(ii) all material Taxes and Tax liabilities due by or with respect to the income,
assets, payments or operations of the Company and its Subsidiaries for all taxable
years or other taxable periods that end on or before the Closing Date have been or
will, prior to the Closing, be timely paid in full or accrued and fully provided for
in accordance with GAAP on the financial statements of the Company;
(iii) neither the Company nor any of its Subsidiaries has received any written
notices from any taxing authority relating to any material issue that has not been
adequately provided for in accordance with GAAP in the financial statements of the
Company included in the Company SEC Documents filed prior to the date hereof; and
(iv) the Company has not been a “United States real property holding corporation”
within the meaning of Section 897(c)(2) of the Code at any time during the five-year
period ending on the date hereof.
For purposes of this Agreement, “Taxes” shall mean all taxes, assessments, charges,
duties, fees, levies or other governmental charges, including, without limitation, all
federal, state, local, foreign and other income, franchise, profits, gross receipts,
capital gains, capital stock, transfer, property, sales, use, value-added, occupation,
property, excise, severance, windfall profits, stamp, license, payroll, social security,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by withholding and
whether or not requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any liability for
such amounts as a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any person or other entity.
(y) Employee Benefit Plans.
(i) For purposes of this Agreement, “Company Plan” means material domestic and
foreign benefit and compensation plans, programs, contracts, commitments, practices,
policies and arrangements, whether written or oral, that have been established,
maintained or contributed to (or with respect to which an obligation to contribute
has been undertaken) or with respect to which any potential liability is borne by
the Company or any of its Subsidiaries, including, but not limited to, “employee
benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), and deferred compensation, stock
option, stock purchase, restricted stock, stock appreciation rights, stock based,
incentive and bonus plan.
A-16
(ii) Except as described in the Company SEC Documents filed prior to the date
hereof: (A) each Company Plan, other than any “multiemployer plans”
within the meaning of Section 3(37) of ERISA (“Multiemployer Plans”), is in
substantial compliance with ERISA, the Internal Revenue Code of 1986, as amended
(the “Code”), and other applicable laws; (B) each Company Plan that is
intended to be a qualified plan under Section 401(a) of the Code has received a
favorable determination letter from the IRS covering all Tax law changes prior to
the Economic Growth and Tax Relief Reconciliation Act of 2001 or has applied to the
IRS for such favorable determination within the applicable remedial amendment period
under Section 401(b) of the Code, and the Company is not aware of any circumstances
likely to result in the loss of the qualification of such Company Plan under Section
401(a) of the Code; (C) no liability under Subtitle C or D of Title IV of ERISA has
been or is reasonably expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated “single-employer
plan,” within the meaning of Section 4001(a)(15) of ERISA (“Single-Employer
Plan”) currently maintained or contributed to (or with respect to which an
obligation to contribute has been undertaken), or the Single-Employer
Plan of any
entity which is considered one employer with the Company under Section 4001 of ERISA
or Section 414 of the Code (a “Company ERISA Affiliate”); (D) the Company
and its Subsidiaries have not incurred any withdrawal liability (including any
contingent or secondary withdrawal liability) with respect to a Multiemployer Plan
under Subtitle E of Title IV of ERISA (regardless of whether based on contributions
of a Company ERISA Affiliate) that has not been satisfied in full and no condition
or circumstance has existed that presents a risk of the occurrence of any withdrawal
from any such Multiemployer Plan; (E) no notice of a “reportable event,” within the
meaning of Section 4043 of ERISA has occurred or is expected to occur for any
Company Plan or by any Company ERISA Affiliate; (F) all contributions required to be
made under the terms of any Company Plan have been timely made or have been
reflected in the financial statements of the Company included in the Company SEC
Reports filed prior to the date hereof; (G) there has been no amendment to,
announcement by the Company or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any Company Plan which would increase the
expense of maintaining such plan above the level of the expense incurred therefor
for the most recent fiscal year; (H) neither any Company Plan nor any
Single-Employer Plan of a Company ERISA Affiliate has an “accumulated funding
deficiency” (whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and neither the Company nor any of its Subsidiaries nor any
Company ERISA Affiliate has, during its most recently completed fiscal year, applied
for or obtained a funding waiver; (I) required minimum contributions to any Company
Plan under Section 412 of the Code will not be materially increased by application
of Section 412(l) of the Code; (J) neither the Company nor any of its Subsidiaries
during the immediately preceding two year period has provided, or is required to
provide, security to any Company Plan or to any Single-Employer Plan of a Company
ERISA Affiliate pursuant to Section 401(a)(29) of the Code, and any such security
previously so provided has
A-17
been
released; (K) none of the execution or delivery of
this Agreement, stockholder approval of this Agreement nor the consummation of the
transactions
contemplated hereby, including, without limitation, the Rights Offering (either
alone or together with any additional or subsequent events), constitutes an event
under any Company Plan, loan to, or individual agreement or contract with, any
current or former employee or director of the Company or its Subsidiaries that may
result in any material payment (whether of severance pay or otherwise), restriction
or limitation upon the assets of any Company Plan, restriction or limitation on the
right of the Company and/or its Subsidiaries to merge, amend or terminate any
Company Plan, acceleration of payment or vesting, increase in benefits or
compensation, or required funding, with respect to any such employee or director, or
the forgiveness of any loan or other commitment of any such employees or directors;
(L) no Company Plan provides for post-employment or retiree welfare benefits, except
as required by Section 4980B of the Code and part 6 of subtitle B of Title I of
ERISA; and (M) there are no actions, suits, arbitrations, inquiries, audits,
investigations or other proceedings (other than routine claims for benefits) pending
or, to the Company’s knowledge, threatened, with respect to any Company Plan, except
for any of the foregoing that do not and would not reasonably be expected to result,
individually or in the aggregate, in a material liability of the Company and its
Subsidiaries.
(z) Internal Control Over Financial Reporting. Except as set forth in the Company SEC
Documents filed prior to the date hereof, the Company and its Subsidiaries (i) make and keep books
and records that accurately and fairly represent the Company’s transactions, and (ii) maintain and
have maintained effective internal control over financial reporting as defined in Rule 13a-15 under
the Exchange Act and a system of internal accounting controls sufficient to provide reasonable
assurance that: (A) transactions are executed in accordance with management’s general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset
accountability; (C) access to assets is permitted only in accordance with management’s general or
specific authorization; and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has disclosed, based on the most recent evaluation of its chief executive
officer and its chief financial officer prior to the date hereof, to the Company’s auditors and the
audit committee of the Company’s board of directors (i) any significant deficiencies in the design
or operation of its internal controls over financial reporting that are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report financial
information and has identified for the Company’s auditors and the audit committee of the Company’s
board of directors any material weaknesses in internal control over financial reporting and (ii)
any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
(aa) Disclosure Controls and Procedures. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, the Company maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures
are effective to ensure that information required to be disclosed by the Company is recorded and
reported on a timely basis to the individuals responsible for the preparation of the Company’s
filings with the Commission and other public disclosure documents.
A-18
(bb) Insurance. The Company and its Subsidiaries have insurance covering their
respective properties, operations, personnel and businesses, including business interruption
insurance, which insurance is in amounts and insures against such losses and risks as are customary
for companies whose businesses are similar to the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries has received written notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or necessary to be made to
continue such insurance except such capital improvements or expenditures as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(cc) No Unlawful Payments. Neither the Company nor any of its Subsidiaries nor, to
the knowledge of the Company, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any of its Subsidiaries has: (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment in each case other than clause (iii) that has
been or would reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(dd) Compliance with Money Laundering Laws. The Company and its Subsidiaries are and
have been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Bank Secrecy Act, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency (collectively, the
“Money Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to Money Laundering Laws is pending. Neither the Company nor any of its
Subsidiaries has received written notice regarding any threatened action, suit or proceeding
involving the Company or any of its Subsidiaries with respect to any Money Laundering Laws.
(ee) Compliance with Sanctions Laws. Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the
Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”). The Company
will not directly or indirectly use the proceeds of the Rights Offering or the sale of the Investor
Shares, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other person or entity, for the purpose of financing the activities of any
person that, to the Company’s knowledge, is currently subject to any U.S. sanctions administered by
OFAC.
A-19
(ff) No Broker’s Fees. Except for Lazard Frères & Co. LLC, neither the Company nor
any of its Subsidiaries is a party to any contract, agreement or understanding with any person
(other than this Agreement) that would give rise to a valid claim against the Investor for a
brokerage commission, finder’s fee or like payment in connection with the Rights Offering or
the sale of the Investor Shares.
(gg) No Registration Rights. Except (x) pursuant to that certain registration rights
agreement, dated July 1, 2004, by and between the Company and AP Wheels, LLC, (y) as provided for
pursuant to the Registration Rights Agreements of even date herewith by and between the Company and
the Investor (the “Registration Rights Agreement”), no person has the right to require the
Company or any of its Subsidiaries to register any securities for sale under the Securities Act by
reason of the filing of the Rights Offering Registration Statement with the Commission or in
connection with Rights Offering or the sale of the Investor Shares.
(hh) No Stabilization. The Company has not taken and will not take, directly or
indirectly, any action designed to or that would reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Shares.
(ii) Margin Rules. Neither the issuance, sale and delivery of the Rights or the
Shares in connection with Rights Offering or the sale of the Investor Shares nor the application of
the proceeds thereof by the Company as to be described in the Rights Offering Registration
Statement and the Rights Offering Prospectus will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(jj) Forward-Looking Statements. No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Company SEC
Documents has been made or reaffirmed, and in the case of the Rights Offering Registration
Statement and the Rights Offering Prospectus, will be made or reaffirmed, without a reasonable
basis or has been disclosed other than in good faith.
(kk) Takeover Statutes; Charter. The Board of Directors of the Company has taken all
necessary action to approve, for purposes of Section 203(a)(i) of the General Corporation Law of
the State of Delaware (“Section 203”), the acquisition of the Investor Shares by the
Investor and the Principal Additional Investor pursuant to the terms of this Agreement and the
Principal Additional Investor Agreement, respectively. Except for Section 203, no other “fair
price,” “moratorium,” “control share acquisition”, “business combination” or other similar
anti-takeover statute or regulation (a “Takeover Statute”) is applicable to the Company,
the Common Stock, the Shares, the sale and issuance of the Investor Shares or the other
transactions contemplated by this Agreement and the Transaction Agreements.
(ll) No Solicitation. Neither the Company nor any agent acting on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or
any part of the Shares to any Person or Persons so as to bring the sale of such Shares to the
Investors within the registration provisions of the Securities Act or any state securities laws.
A-20
4. Representations and Warranties of the Investor. The Investor represents and warrants and agrees with the Company as set forth below. Each such
representation, warranty and agreement is made as of the date hereof and as of the Closing Date.
(a) Incorporation. The Investor has been duly organized and, if applicable, is
validly existing as a corporation in good standing under the laws of the jurisdiction of its
incorporation.
(b) Corporate Power and Authority. The Investor has the requisite corporate power and
authority to enter into, execute and deliver this Agreement and to perform its obligations
hereunder and has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of this Agreement.
(c) Execution and Delivery. This Agreement has been duly and validly executed and
delivered by the Investor and constitutes its valid and binding obligation, enforceable against it
in accordance with its terms.
(d) No Registration. The Investor understands that the Investor Shares have not been
registered under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Investor’s representations as
expressed herein or otherwise made pursuant hereto.
(e) Investment Intent. Except as provided in Sections 1(l) and 1(m)
hereof, the Investor is acquiring the Investor Shares for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in connection with, any distribution
thereof not in compliance with applicable securities laws, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing the same, except in
compliance with applicable securities laws.
(f) Securities Laws Compliance. The Investor Shares will not be offered for sale,
sold or otherwise transferred by the Investor except pursuant to a registration statement or in a
transaction exempt from, or not subject to, registration under the Securities Act and any
applicable state securities laws.
(g) Sophistication. The Investor has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its investment in the
Investor Shares being acquired hereunder. The Investor is a “qualified institutional buyer” within
the meaning of Rule 144A under the Securities Act. The Investor understands and is able to bear
any economic risks associated with such investment (including, without limitation, the necessity of
holding the Investor Shares for an indefinite period of time). Without derogating from or limiting
the representations and warranties of the Company, the Investor acknowledges that it has been
afforded the opportunity to ask questions and receive answers concerning the Company and to obtain
additional information that it has requested to verify the information contained herein.
(h) Legended Securities. The Investor understands and acknowledges that upon the
original issuance thereof, and until such time as the same is no longer required under any
A-21
applicable requirements of the U.S. Securities Act or applicable state securities laws, the
Investor Shares shall be represented by a certificate bearing the following legend:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING
SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY PURSUANT TO (1) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (2) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.”;
(i) No Conflict. The execution and delivery by the Investor of each of the
Transaction Agreements to which it is a party and the compliance by the Investor with all of the
provisions hereof and thereof and the consummation of the transactions contemplated herein and
therein (i) will not conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute a default under (with or without notice or lapse of time, or both), or
result, in the acceleration of, or the creation of any lien under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Investor is a party or by which
the Investor is bound or to which any of the property or assets of the Investor or any of its
Subsidiaries is subject, (ii) will not result in any violation of the provisions of the certificate
of incorporation or bylaws or similar governance documents of the Investor, and (iii) will not
result in any material violation of, or any termination or material impairment of any rights under,
any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation
of any court or governmental agency or body having jurisdiction over the Investor or any of their
properties, except in any such case described in subclause (i) for any conflict, breach, violation,
default, acceleration or lien which has not and would not reasonably be expected, individually or
in the aggregate, to prohibit, materially delay or materially and adversely impact the Investor’s
performance of its obligations under this Agreement.
(j) Consents and Approvals. No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body having jurisdiction over the
Investor or any of its properties is required to be obtained or made by the Investor for the
purchase of the Investor Shares hereunder and the execution and delivery by the Investor of this
Agreement or the Transaction Agreements to which it is a party and performance of and compliance by
the Investor with all of the provisions hereof and thereof and the consummation of the transactions
contemplated herein and therein, except filings with respect to and the expiration or termination
of the waiting period under the HSR Act or any comparable laws or regulations in any foreign
jurisdiction relating to the purchase of Investor Shares and except for any consent, approval,
authorization, order, registration or qualification which, if not made or obtained, has not and
would not reasonably be expected, individually or in the aggregate, to prohibit, materially delay
or materially and adversely impact the Investor’s performance of its obligations under this
Agreement.
(k) Arm’s Length. The Investor acknowledges and agrees that the Company is acting
solely in the capacity of an arm’s length contractual counterparty to the Investor with respect to
the transactions contemplated hereby (including in connection with determining the terms of the
Rights Offering). Additionally, without derogating from or limiting the representations and
warranties of the Company, the Investor is not relying on the Company for any legal, tax,
A-22
investment, accounting or regulatory advice, except as specifically set forth in this
Agreement. Without derogating from or limiting the representations and warranties of the Company,
the Investor shall consult with its own advisors concerning such matters and shall be responsible
for making its own independent investigation and appraisal of the transactions contemplated hereby.
(l) No Violation or Default; Compliance with Laws. The Investor is not in default,
and no event has occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Investor is a party or by which the Investor is bound or to which any of the property or assets of
the Investor is subject, individually or in the aggregate, that would prohibit, materially delay or
materially and adversely impact the Investor’s performance of its obligations under this Agreement.
The Investor is not in violation of any law or statute or any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority, except for any such violation
that has not and would not reasonably be expected, individually or in the aggregate, to prohibit,
materially delay or materially and adversely impact the Investor’s performance of its obligations
under this Agreement.
(m) Legal Proceedings. There are no actions, suits or proceedings to which the
Investor is a party or to which any property of the Investor is the subject that, individually or
in the aggregate, has or, if determined adversely to the Investor, would reasonably be expected to
prohibit, materially delay or materially and adversely impact the Investor’s performance of its
obligations under this Agreement and Investor has not received written notice that any such
actions, suits or proceedings are threatened by any governmental or regulatory authority or
threatened by others that has or would reasonably be expected, individually or in the aggregate, to
prohibit, materially delay or materially and adversely impact the Investor’s performance of its
obligations under this Agreement.
(n) No Undisclosed Written Agreements. The Investor has not entered into any material
written agreements with an additional Investor directly relating to Investor Shares or the
performance of the Transaction Agreements, and any such written agreement hereafter entered into
will be disclosed promptly to the Company.
(o) Share Ownership. Based on the methodology for calculating shares beneficially
owned by the Investor which methodology is disclosed in its Schedule 13G filings filed with the
Commission with respect to the Company’s Common Stock prior to the date of this Agreement, the
Investor beneficially owns 2,127,604 shares of Common Stock as of the date of this Agreement.
5. Additional Covenants of the Company. Without derogating from the obligations of the
Company set forth elsewhere in this Agreement, the Company agrees with the Investor as set forth
below.
(a) Registration Statements and Proxy Statement.
(i) As promptly as practicable following the date of this Agreement, the Company
shall prepare and file no later than 5:30 pm Eastern Time on March 16,
A-23
2007 (x) the Rights Offering Registration Statement, (y) a registration statement on
Form S-3 registering offers and sales of Investor Shares by the Investor, any
Affiliated Purchasers and any Additional Investors pursuant to Rule 415 under the
Securities Act (the “Initial Resale Registration Statement”), and (z) a
proxy statement soliciting the approval of the Company’s stockholders of this
Agreement and the transactions contemplated hereby pursuant to the rules of the
Nasdaq Stock Market, Inc. and certain other matters, which shall include a
recommendation of the Board of Directors that the stockholders vote to approve the
transactions contemplated hereby, including the Rights Offering and the issuance of
Investors Shares to the Investor and the Principal Additional Investor (the
“Proxy Statement”).
(ii) The forms of the Proxy Statement, the Rights Offering Registration Statement
and the Initial Resale Registration Statement (the “SEC Transaction
Documents”) filed with the Commission shall be substantially consistent in all
material respects with the last forms of such documents provided to the Investor and
its counsel to review prior to the execution of this Agreement. The Company shall:
(x) provide the Investor with a reasonable opportunity to review any SEC Transaction
Document that is amended prior to its initial filing, and shall duly consider in
good faith any comments of the Investor and its counsel; (y) advise the Investor
promptly of the time when each of the SEC Transaction Documents has been filed or
when each of the Rights Offering Registration Statement or Initial Resale
Registration Statement has become effective or any Rights Offering Prospectus or
Rights Offering Prospectus supplement has been filed and shall furnish the Investor
with copies thereof; and (z) advise the Investor promptly after it receives notice
of any comments or inquiries by the Commission (and furnish the Investor with copies
of any correspondence related thereto), of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any SEC Transaction
Document, of the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing any SEC
Transaction Document or for additional information, and in each such case, provide
the Investor with a reasonable opportunity to review any such comments, inquiries,
request or other communication from the Commission and to review any amendment or
supplement to any SEC Transaction Document before any filing with the Commission,
and to duly consider in good faith any comments consistent with this Agreement and
any other reasonable comments of the Investor and its respective counsel and in the
event of the issuance of any stop order or of any order preventing or suspending the
use of an SEC Transaction Document or suspending any such qualification, to use
promptly its reasonable best efforts to obtain its withdrawal.
(iii) The Company shall use its reasonable best efforts to have the Proxy Statement,
the Rights Offering Registration Statement and the Initial Resale Registration
Statement cleared or declared effective, as the case may be, by the Commission as
promptly as practicable after such filing. The Company shall take all action as may
be necessary or advisable so that the Rights Offering and the
A-24
issuance and sale of the Investor Shares and the other transactions contemplated by
this Agreement will be effected in accordance with the applicable provisions of the
Securities Act and the Exchange Act and any state or foreign securities or Blue Sky
laws.
(iv) The Company shall cause the Proxy Statement to be mailed to the Company’s
stockholders as promptly as practicable and, in any event, within three (3) Business
Days after the Proxy Statement is cleared by the Commission. Subject to applicable
law, the Company shall take all action necessary, in accordance with and subject to
the General Corporation Law of the State of Delaware and its certificate of
incorporation and by-laws, to duly call, give notice of and convene and hold a
special meeting of its stockholders to consider and vote upon the transactions
contemplated hereby as promptly as practicable, to the extent required by applicable
law or regulations or the rules of the Nasdaq Stock Market, Inc. The Company shall
use its reasonable best efforts to obtain the requisite stockholder approval of this
Agreement and the transactions contemplated hereby.
(v) If at any time prior to the Expiration Time, any event occurs as a result of
which the Investment Decision Package, as then amended or supplemented, would
include an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary to amend or
supplement the Investment Decision Package to comply with applicable law, the
Company will promptly notify the Investor of any such event and prepare an amendment
or supplement to the Investor Decision Package that is reasonably acceptable in form
and substance to the Investor that will correct such statement or omission or effect
such compliance.
(b) Listing. The Company shall use its commercially reasonable efforts to list and
maintain the listing of the Common Stock on the Nasdaq Global Market.
(c) Rule 158. The Company will generally make available to the Company’s security
holders as soon as practicable an earnings statement of the Company covering a twelve-month period
beginning after the date of this Agreement, which shall satisfy the provisions of Section 11(a) of
the Securities Act.
(d) HSR. The Company shall use its reasonable best efforts to promptly prepare and
file all necessary documentation and to effect all applications and seek all approvals or consents
that are necessary or advisable under the HSR Act and any comparable laws or regulations in any
foreign jurisdiction so that any applicable waiting period shall have expired or been terminated
thereunder with respect to the purchase of Investor Shares hereunder, and shall not take any action
that is intended or reasonably likely to materially impede or delay the ability of the parties to
obtain any necessary approvals required for the transactions contemplated by this Agreement. The
Company shall file, to the extent that it is required to file, the Notification and Report Form
required under the HSR Act with respect to the transactions contemplated by this Agreement with the
Antitrust Division of the United States Department of Justice and the United States
Federal Trade Commission no later than twenty one (21) days following the execution of this
Agreement.
A-25
(e) Clear Market. If the Investor (including any Affiliated Purchaser), the Principal
Additional Investor and any other Additional Investor purchases 7,476,923 or more Shares in the
aggregate (excluding the Shares purchased by the Investor or the Principal Additional Investor
pursuant to Section 1(j)) on the Closing Date, for a period of 90 days after the Closing Date (the
“Restricted Period”), the Company will not (i) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose
of, directly or indirectly, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for capital stock of the Company or (ii) enter into
any swap or other agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the capital stock of the Company, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of capital stock of the Company or such other
securities, in cash or otherwise, without the prior written consent of the Investor, except for (A)
Rights and Common Stock issuable upon exercise of Rights, and (B) shares of Common Stock issued
upon the exercise of any stock options outstanding as of the date hereof. Notwithstanding the
foregoing, if (i) during the last 17 days of the Restricted Period, the Company issues an earnings
release or material news or a material event relating to the Company occurs or (ii) prior to the
expiration of the Restricted Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Restricted Period, the restrictions
imposed by this Agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the material news or
material event.
(f) Use of Proceeds. As promptly as practicable following the Closing Date, the
Company will apply the net proceeds from the sale of the Rights and the Investor Shares, together
with any other funds of the Company as may be necessary, to repurchase and cancel all of the
Company’s 101/2 % Senior Notes due 2010 using the optional redemption provision of such notes and to
any pay any required fees and expenses related to the transactions contemplated hereby.
(g) No Stabilization. The Company will not take, directly or indirectly, any action
designed to or that would reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Shares.
(h) Actions Regarding Conditions. During the period from the date of this Agreement
to the Closing Date, the Company shall not take any action or omit to take any action that would
reasonably be expected to result in the conditions to the Agreement set forth in Section 8
not being satisfied.
(i) Access to Information. At any time (a)(i) prior to the Closing Date, or (ii)
after the Closing Date but prior to the second anniversary of the Closing Date, provided solely
with respect to clause (ii) that the Investor or Principal Additional Investor, as the case may be,
holds at least 14,236,956 shares of Common Stock (excluding any shares of Common Stock held by the
Investor or the Principal Additional Investor prior to the date hereof or purchased by the
A-26
Investor or the Principal Additional Investor pursuant to Section 1(j) of this Agreement), and
(b) provided that the Investor or Principal Additional Investor, as the case may be, has executed a
confidentiality agreement mutually agreeable to the Company and the Investor or Principal
Additional Investor, as the case may be, the Company shall (and shall cause its Subsidiaries to)
furnish promptly to the Investor or Principal Additional Investor, as the case may be, such
information concerning its business, properties and personnel as may reasonably be requested by the
Investor or Principal Additional Investor, as the case may be; provided, that the Investor
or the Principal Additional Investor, as the case may be, may not trade in the Company’s securities
while it is in possession of material non-public information and, provided,
further, that the foregoing shall not require the Company in its reasonable judgment (i) to
permit any inspection, or to disclose any information, that in the reasonable judgment of the
Company would cause the Company or any of its Subsidiaries to violate any of its obligations with
respect to confidentiality to a third party, (ii) to disclose any privileged information of the
Company or any of its Subsidiaries, (iii) to violate any laws or (iv) to publicly disclose any such
information.
(j) Amendment or Refinancing of Credit Agreement. The Company shall use its
reasonable best efforts to either (i) amend the Company’s Amended and Restated Credit
Agreement, dated as of April 11, 2005 by and among HLI Operating Company, Inc., as Borrower, Xxxxx
Lemmerz International, Inc., the Lenders and Issuers listed therein, Citicorp North America, Inc.,
as First Lien Agent, Second Lien Agent and Collateral Agent, Xxxxxx Commercial Paper, Inc., as
Syndication Agent, and General Electric Capital Corporation, as Documentation Agent (the
“Credit Agreement”) to permit the repurchase of the Notes or (ii) refinance the Credit
Agreement to permit the repurchase of the Notes, in either case, as soon as is reasonably
practicable, but in no event later than Closing; provided, however, that any such
amendment or refinancing of the Credit Agreement will permit incremental third-party debt outside
the United States in an amount of at least $125 million.
(k) Disclosure of Information. Except with respect to information provided by the
Company pursuant to Section 5(i), the Company shall disclose publicly any “Confidential
Information” (as such term is defined in the Confidentiality Agreement, dated February 27, 2007,
executed by the Investor) provided to the Investor and the Principal Additional Investor that is
material non-public information under the federal securities laws upon the earlier to occur of (1)
the filing by the Company of its Annual Report on Form 10-K for the fiscal year ended January 31,
2007 or (2) April 16, 2007. By disclosing to the Investor and the Principal Additional Investor, as
the case may be, any Confidential Information, the Company shall be deemed to have confirmed the
foregoing obligations with respect to such Confidential Information. In the event that the Company
fails to make such disclosure, upon prior written notice from the Investor or the Principal
Additional Investor, as the case may be, to the Company, the party providing such notice shall be
permitted to make such disclosure unilaterally if the Company does not file with the Securities and
Exchange Commission a Form 8-K making such disclosure within one (1) business day following such
notice.
(l) Reasonable Best Efforts. The Company shall use its reasonable best efforts (and
shall cause its Subsidiaries to use their respective reasonable best efforts) to take or cause to
be taken all actions, and do or cause to be done all things, reasonably necessary, proper or
advisable on its or their part under this Agreement and applicable laws to cooperate with the
Investor and to consummate and make effective the transactions contemplated by this Agreement,
including:
A-27
(i) preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party or governmental entity;
(ii) defending any lawsuits or other actions or proceedings, whether judicial or
administrative, challenging this Agreement or any other agreement contemplated by
this Agreement or the consummation of the transactions contemplated hereby and
thereby, including seeking to have any stay or temporary restraining order entered
by any court or other governmental entity vacated or reversed; and
(iii) executing, delivering and filing, as applicable, any additional ancillary
instruments or agreements necessary to consummate the transactions contemplated by
this Agreement and to fully carry out the purposes of this Agreement and the
transactions contemplated hereby and thereby, including, without limitation, a
Standstill Agreement (the “Standstill Agreement”) between the Company and
the Investor, in the form attached hereto as Exhibit A.
6. Additional Covenants of the Investor. The Investor agrees with the Company:
(a) Information. To provide the Company with such information as the Company
reasonably requests regarding the Investor for inclusion in the SEC Transaction Documents.
(b) HSR Act. To use reasonable best efforts to promptly prepare and file all
necessary documentation and to effect all applications and to obtain all authorizations, approvals
and consents that are necessary or advisable under the HSR Act and any comparable laws or
regulations in any foreign jurisdiction so that any applicable waiting period shall have expired or
been terminated thereunder and any applicable notification, authorization, approval or consent
shall have been made or obtained with respect to the purchase of Investor Shares hereunder, and not
to take any action that is intended or reasonably likely to materially impede or delay the ability
of the parties to obtain any necessary approvals required for the transactions contemplated by this
Agreement; provided, however, that notwithstanding anything to the contrary
contained herein, neither the Company, the Investor nor the Principal Additional Investor (nor
their respective ultimate parent entities, as such term is used in the HSR Act), shall be required
to disclose to any other party to this Agreement, any information contained in its HSR Notification
and Report Form which such party, in its sole and reasonable discretion, deems confidential. The
Investor shall file, to the extent required to do so, the Notification and Report Form required
under the HSR Act with respect to the transactions contemplated by this Agreement with the
Antitrust Division of the United States Department of Justice and the United States Federal Trade
Commission no later than no later than twenty one (21) days following the execution of this
Agreement.
(c) Reasonable Best Efforts. The Investor shall use its reasonable best efforts to
take all actions, and do all things, reasonably necessary, proper or advisable on its part under
this Agreement and applicable laws to cooperate with the Company and to consummate and make
effective the transactions contemplated by this Agreement, including executing, delivering and
filing, as applicable, any additional ancillary instruments or agreements necessary to
A-28
consummate the transactions contemplated by this Agreement and to fully carry out the purposes
of this Agreement and the transactions contemplated hereby and thereby, including:
(i) preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party or governmental entity;
(ii) defending any lawsuits or other actions or proceedings to which the Investor
has been named a party, whether judicial or administrative, challenging this
Agreement or any other agreement contemplated by this Agreement or the consummation
of the transactions contemplated hereby and thereby, including seeking to have any
stay or temporary restraining order entered by any court or other governmental
entity vacated or reversed; and
(iii) executing, delivering and filing, as applicable, any additional ancillary
instruments or agreements necessary to consummate the transactions contemplated by
this Agreement and to fully carry out the purposes of this Agreement and the
transactions contemplated hereby and thereby, including, without limitation, the
Standstill Agreement.
(d) No Stabilization. The Investor will not take, directly or indirectly, any action
designed to or that would reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Shares.
(e) Share Acquisition. Between the date hereof and the Closing Date, the Investor
shall not acquire beneficial ownership of any shares of Common Stock, other than pursuant to the
transactions contemplated hereby.
7. Additional Joint Covenant of Company and the Investor. Without limiting the generality
of the undertakings pursuant to Sections 5(d) and 6(b), the Company and the Investor shall each use
their respective reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary under the HSR Act and any comparable laws or regulations in
any foreign jurisdiction to consummate and make effective the transactions contemplated by this
Agreement and the other Transaction Agreements, including furnishing all information required by
applicable law in connection with approvals of or filings with any governmental authority, and
filing, or causing to be filed, as promptly as practicable, any required notification and report
forms under other applicable competition laws with the applicable governmental antitrust authority.
The parties shall consult with each other as to the appropriate time of filing such notifications
and shall agree upon the timing of such filings. Subject to appropriate confidentiality
safeguards, each party shall (i) respond promptly to any request for additional information made by
the antitrust agency; (ii) promptly notify counsel to the other party of, and if in writing,
furnish counsel to the other party with copies of (or, in the case of material oral communications,
advise the other party orally of) any communications from or with the antitrust agency in
connection with any of the transactions contemplated by this Agreement; (iii) not participate in
any meeting with the antitrust agency unless it consults with counsel to the other party in advance
and, to the extent permitted by the agency, give the other
A-29
party a reasonable opportunity to attend and participate thereat; (iv) furnish counsel to the other
party with copies of all correspondence, filings and communications between it and the antitrust
agency with respect to any of the transactions contemplated by this Agreement; and (v) furnish
counsel to the other party with such necessary information and reasonable assistance as may be
reasonably necessary in connection with the preparation of necessary filings or submission of
information to the antitrust agency. The Parties shall use their reasonable best efforts to cause
the waiting periods under the applicable competitions laws to terminate or expire at the earliest
possible date after the date of filing.
Notwithstanding anything in this Agreement to the contrary, nothing shall require any Investor
or its Affiliates or the Company or its Subsidiaries to dispose of any of its or its respective
Subsidiaries’ or its Affiliates’ assets or to limit its freedom of action with respect to any of
its or its respective Subsidiaries’ businesses, or to consent to any disposition of the Company’s
or the Company Subsidiaries’ assets or limits on the Company’s or the Company Subsidiaries’ freedom
of action with respect to any of its or the Company Subsidiaries’ businesses, or to commit or agree
to any of the foregoing, and nothing in this Agreement shall authorize the Company or any Company
Subsidiary to commit or agree to any of the foregoing, to obtain any consents, approvals, permits
or authorizations to remove any impediments to the transactions contemplated hereby or by any
Transaction Agreement relating to antitrust or competition laws or to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order or other order in any action
relating to antitrust or competition laws.
8. Conditions to the Obligations of the Parties.
(a) The obligations of the Investor hereunder to consummate the transactions contemplated
hereby shall be subject to the satisfaction prior to the Closing Date of each of the following
conditions (which may be waived in whole or in part by the Investor in its sole discretion),
provided that the failure of the condition set forth in Section 8(a)(xiv) to be satisfied
may not be asserted by the Investor if such failure results from the failure of the Investor to
provide the representation letter set forth in Section 7(h)(i) of the Registration Rights
Agreement:
(i) Registration Statement Effectiveness. The Rights Offering Registration
Statement and the Resale Registration Statement shall each have been declared
effective by the Commission and shall continue to be effective and no stop order
shall have been entered by the Commission with respect thereto.
(ii) Rights Offering. The Rights Offering shall have been conducted in all
material respects in accordance with this Agreement and the Expiration Time shall
have occurred.
(iii) Purchase or Satisfaction Notice. The Investor shall have received a
Purchase Notice from the Company, dated as of the Determination Date, certifying the
number of Unsubscribed Shares to be purchased or a Satisfaction Notice.
(iv) Antitrust Approvals. All terminations or expirations of waiting
periods imposed by any governmental or regulatory authority necessary for the
A-30
consummation of the transactions contemplated by this Agreement, including under the
HSR Act and any comparable regulations in any foreign jurisdiction, shall have
occurred and all other notifications, consents, authorizations and approvals
required to be made or obtained from any competition or antitrust authority shall
have been made or obtained for the transactions contemplated by this Agreement.
(v) Consents. All other governmental and third party notifications,
filings, consents, waivers and approvals required for the consummation of the
transactions contemplated by this Agreement shall have been made or received.
(vi) Stockholder Approval. All Company stockholder consents and approvals
required for the consummation of the transactions contemplated by this Agreement
have been received.
(vii) No Legal Impediment to Issuance. No action shall have been taken and
no statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority, and no judgment,
injunction, decree or order of any federal, state or foreign court shall have been
issued, that prohibits the implementation of the Rights Offering or the transactions
contemplated by this Agreement.
(viii) Good Standing. The Investor shall have received on and as of the
Closing Date satisfactory evidence of the good standing of the Company in its
jurisdiction of organization, in writing or any standard form of telecommunication
from the appropriate governmental authorities of such jurisdiction.
(ix) Representations and Warranties. The representations and warranties of
Company contained in this Agreement shall be true and correct (disregarding all
qualifications and exceptions contained therein relating to materiality, Material
Adverse Effect or similar qualifications, other than such qualifications contained
in Sections 3(i) and 3(j)) as of the date hereof and as of the
Closing Date after giving effect to the transactions contemplated hereby with the
same effect as if made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall be true and correct only as of
the specified date), except where the failure to be so true and correct,
individually or in the aggregate, has not had, and would not reasonably be expected
to have, a Material Adverse Effect, other than with respect to the representations
in Sections 3(b), 3(c), 3(e), and 3(m)(ii) and
3(kk), which shall be true and correct in all respects.
(x) Covenants. The Company shall have performed and complied with all of
its respective covenants and agreements contained in this Agreement and in any other
document delivered pursuant to this Agreement (including in any Transaction
Agreement) through the Closing Date.
A-31
(xi) Certificates. The Company shall have furnished to the Investor a
certificate, dated the Closing Date, of an officer of the Company, on behalf of the
Company, confirming the matters set forth in subsections (ix) and (x).
(xii) Standstill Agreement. The Company shall have executed and delivered
to the Investor the Standstill Agreement.
(xiii) Opinion of Counsel. The Company shall have furnished the Investor
and any Affiliated Purchaser or Additional Investor with a favorable opinion, dated
the Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and of the Company’s
General Counsel or Assistant General Counsel in the form attached hereto as
Exhibit B the other provisions of which shall be customary and in form and
substance reasonably satisfactory to the Investor; provided that the “10b-5
statement” therein shall only be required to be furnished if the comfort letter
referred to in Section 8(a)(xiv) is delivered to the Investor.
(xiv) Comfort Letter. The Company shall have caused KPMG LLP, its
independent registered public accounting firm, to have furnished the Investor and
any Affiliated Purchaser or Additional Investor, with respect to the Initial Resale
Registration Statement, with a comfort letter, dated the Closing Date covering such
matters of the type customarily covered by comfort letters as the Investor
reasonably requests.
(xv) Fees and Expenses. The Company shall have paid all fees, costs and
expenses payable to the Investor or the Principal Additional Investor, as the case
may be, pursuant to Section 2.
(xvi) No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any changes or events that, individually or in the aggregate
would reasonably be expected to result in a Material Adverse Effect.
(xvii) Material Customer. The Company shall have not lost any Material
Customer during the twelve months ending on the last day of the fiscal quarter
ending immediately prior to the Closing Date. For purposes of this Agreement, a
“Material Customer” shall mean a customer of the Company or any Subsidiary
which accounted for 4% or more of the Company’s revenues on a consolidated basis
during the twelve months ended on the last full fiscal quarter immediately preceding
the Closing Date.
(xviii) No Market Adverse Event. There shall not have occurred (i) a
material adverse change in the financial markets in the United States, any outbreak
of hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international political,
financial or economic conditions, in each case the effect of which is such as to
make it, in the judgment of the Investor, impracticable or inadvisable to conduct or
close the transactions contemplated hereby, or (ii) a suspension or material
limitation on trading, or minimum or maximum prices for trading have been fixed,
A-32
or maximum ranges for prices have been required, by any securities exchange or by
such system or by order of the SEC, the NASD or any other governmental authority, or
(iii) a material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(xix) Indebtedness. The Company shall not have in excess of $750 million of
Indebtedness. For the purposes of this agreement, “Indebtedness” shall
mean: all indebtedness for borrowed money or capital lease obligations that is
required to be classified as debt in Company’s financial statements in accordance
with GAAP, and shall not include indebtedness under securitization and other
accounts receivable factoring and financing programs.
(xx) Nasdaq. The Company shall have complied with the requirements of the
Nasdaq Stock Market, Inc., for the listing of the shares of Common Stock offered in
the Rights Offering on the Nasdaq Global Select Market.
(xxi) Financial Results and Guidance. The Company shall have reported
Adjusted EBITDA of at least $180 million for the one-year period ended January 31,
2007 and shall have provided guidance of Adjusted EBITDA minus capital expenditures
of not less than $95 million for the one-year period ending January 31, 2008, and
such guidance shall have been publicly affirmed by a method compliant with
Regulation FD prior to the Closing Date. The calculation of Adjusted EBITDA and
capital expenditures shall be consistent with the methodology previously used by the
Company for the calculation of such amounts in the Company SEC Documents filed or
submitted prior to the date of this Agreement.
(xxii) Refinancing. The Company shall have refinanced or otherwise amended
the Credit Agreement in accordance with Section 5(j).
(b) The obligation of the Company to issue and sell the Investor Shares are subject to the
following conditions (which may be waived in whole or in part by the Company in its sole
discretion), provided that the failure of a condition set forth in Sections 8(b)(v) or
(b)(viii) to be satisfied may not be asserted by the Company if such failure results from a
breach by the Company of an obligation hereunder:
(i) Antitrust Approvals. All terminations or expirations of waiting periods
imposed by any governmental or regulatory authority necessary for the consummation
of the transactions contemplated by this Agreement, including under the HSR Act and
any comparable regulations in any foreign jurisdiction, shall have occurred and all
other notifications, consents, authorizations and approvals required to be made or
obtained from any competition or antitrust authority shall have been made or
obtained for the transactions contemplated by this Agreement.
A-33
(ii) No Legal Impediment to Issuance. No action shall have been taken and
no statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority, and no judgment,
injunction, decree or order of any federal, state or foreign court shall have been
issued, that prohibits the implementation of the Rights Offering or the transactions
contemplated by this Agreement.
(iii) Representations and Warranties. The representations and warranties of
the Investor, each Affiliated Purchaser and each Additional Investor contained in
this Agreement or pursuant to Sections 1(l) or 1(m) shall be true
and correct (disregarding all qualifications and exceptions contained therein
relating to materiality or material adverse effect on the Investor’s performance of
its obligations or similar qualifications) as of the date hereof and as of the
Closing Date with the same effect as if made on the Closing Date (except for the
representations and warranties made as of a specified date, which shall be true and
correct only as such specified date), except with respect to the Investor’s
representations in all Sections other than Sections 4(b) and 4(c)
where the failure to be so true and correct, individually or in the aggregate, has
not and would not reasonably be expected, to prohibit, materially delay or
materially and adversely impact the Investor’s performance of its obligations under
this Agreement.
(iv) Covenants. The Investor shall have performed and complied with all of
its covenants and agreements contained in this Agreement and in any other document
delivered pursuant to this Agreement (including in any Transaction Agreement)
through the Closing Date, including, without limitation, entering into the
Standstill Agreement.
(v) Rights Offering. The Rights Offering shall have been conducted in all
material respects in accordance with this Agreement and the Expiration Time shall
have occurred.
(vi) Registration Statement Effectiveness. The Rights Offering Registration
Statement and the Resale Registration Statement shall each have been declared
effective by the Commission and shall continue to be effective and no stop order
shall have been entered by the Commission with respect thereto.
(vii) Stockholder Approval. All Company stockholder consents and approvals
required for the consummation of the transactions contemplated by this Agreement
have been received.
(viii) Refinancing. The Company shall have refinanced or otherwise amended
the Credit Agreement in accordance with Section 5(j).
9. Indemnification and Contribution.
(a) Whether or not the Rights Offering is consummated or this Agreement is terminated or the
transactions contemplated hereby, the Company (in such capacity, the “Indemnifying Party”)
shall indemnify and hold harmless the Investor and the Additional
A-34
Investors, their respective Affiliates and their respective officers, directors, employees,
agents and controlling persons (each, an “Indemnified Person”) from and against any and all
losses, claims, damages, liabilities and reasonable expenses, joint or several, arising out of
circumstances existing on or prior to the Closing Date (“Losses”) to which any such
Indemnified Person may become subject arising out of or in connection with any claim, challenge,
litigation, investigation or proceeding (“Proceedings”) instituted by a third party with
respect to the Rights Offering, this Agreement or the other Transaction Documents, the Rights
Offering Registration Statement, any Preliminary Rights Offering Prospectus, the Rights Offering
Prospectus, any Issuer Free Writing Prospectus, the Investment Decision Package, any amendment or
supplement thereto or the transactions contemplated by any of the foregoing and shall reimburse
such Indemnified Persons for any reasonable legal or other reasonable out-of-pocket expenses
incurred in connection with investigating, responding to or defending any of the foregoing;
provided that the foregoing indemnification will not apply to Losses to the extent that
they resulted from (a) any breach by such Indemnified Person of this Agreement, (b) gross
negligence or willful misconduct on the part of such Indemnified Person or (c) statements or
omissions in the Rights Offering Registration Statement, any Preliminary Rights Offering
Prospectus, the Rights Offering Prospectus, any Issuer Free Writing Prospectus or any amendment or
supplement thereto made in reliance upon or in conformity with information relating to such
Indemnified Person furnished to the Company in writing by or on behalf of such Indemnified Person
expressly for use in the Rights Offering Registration Statement, any Rights Offering Preliminary
Prospectus, the Rights Offering Prospectus, any Issuer Free Writing Prospectus or any amendment or
supplement thereto. If for any reason the foregoing indemnification is unavailable to any
Indemnified Person (except as set forth in the proviso to the immediately preceding section) or
insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Person as a result of such Losses in such proportion as is
appropriate to reflect not only the relative benefits received by the Indemnifying Party on the one
hand and such Indemnified Person on the other hand but also the relative fault of the Indemnifying
Party on the one hand and such Indemnified Person on the other hand as well as any relevant
equitable considerations. It is hereby agreed that the relative benefits to the Indemnifying Party
on the one hand and all Indemnified Persons on the other hand shall be deemed to be in the same
proportion as (i) the total value received or proposed to be received by the Company pursuant to
the sale of the Shares and the Investor Shares contemplated by this Agreement bears to (ii) the
Rights Offering Fee and the value of the Direct Investment Option, if exercised, calculated by
multiplying the maximum number of shares subject to Direct Investment Option by the difference
between the Exercise Price and the closing price of the Common Stock as of the date of this
Agreement paid or proposed to be paid to the Investor. The indemnity, reimbursement and
contribution obligations of the Indemnifying Party under this Section 9 shall be in
addition to any liability that the Indemnifying Party may otherwise have to an Indemnified Person
and shall bind and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Indemnifying Party and any Indemnified Person.
(b) Promptly after receipt by an Indemnified Person of notice of the commencement of any
Proceedings with respect to which the Indemnified Person may be entitled to indemnification
hereunder, such Indemnified Person will, if a claim is to be made hereunder against the
Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement
thereof; provided that (i) the omission so to notify the Indemnifying Party will not
relieve the Indemnifying Party from any liability that it may have hereunder except to the
A-35
extent it has been prejudiced by such failure and (ii) the omission so to notify the
Indemnifying Party will not relieve it from any liability that it may have to an Indemnified Person
otherwise than on account of this Section 9. In case any such Proceedings are brought
against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof,
the Indemnifying Party will be entitled to participate therein, and, to the extent that it may
elect by written notice delivered to such Indemnified Person, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person; provided that if the defendants
in any such Proceedings include both such Indemnified Person and the Indemnifying Party and such
Indemnified Person shall have concluded that there may be legal defenses available to it that are
different from or additional to those available to the Indemnifying Party, such Indemnified Person
shall have the right to select separate counsel, which selection shall be subject to the reasonable
approval of the Indemnifying Party, to assert such legal defenses and to otherwise participate in
the defense of such Proceedings on behalf of such Indemnified Person. Upon receipt of notice from
the Indemnifying Party to such Indemnified Person of its election so to assume the defense of such
Proceedings and approval by such Indemnified Person of counsel, the Indemnifying Party shall not be
liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection
with the defense thereof (other than reasonable costs of investigation) unless (i) such Indemnified
Person shall have employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood, however, that the
Indemnifying Party shall not be liable for the expenses of more than one separate counsel in any
jurisdiction, approved by the Investor (or the Principal Additional Investor if the Investor is not
an Indemnified Person), representing the Indemnified Persons who are parties to such Proceedings),
(ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to such
Indemnified Person to represent such Indemnified Person within a reasonable time after notice of
commencement of the Proceedings or (iii) the Indemnifying Party shall have authorized in writing
the employment of counsel for such Indemnified Person.
(c) The Indemnifying Party shall not be liable for any settlement of any Proceedings effected
without its written consent (which consent shall not be unreasonably withheld). If any settlement
of any Proceeding is consummated with the written consent of the Indemnifying Party or if there is
a final judgment for the plaintiff in any such Proceedings, the Indemnifying Party agrees to
indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason
of such settlement or judgment in accordance with, and subject to the limitations of, the
provisions of this Section 9. The Indemnifying Party shall not, without the prior written
consent of an Indemnified Person (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened Proceedings in respect of which indemnity has been sought
hereunder by such Indemnified Person unless (i) such settlement includes an unconditional release
of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all
liability on the claims that are the subject matter of such Proceedings and (ii) such settlement
does not include any statement as to or any admission of fault, culpability or a failure to act by
or on behalf of any Indemnified Person.
10. Survival of Representations and Warranties. The representations and warranties made in
this Agreement will survive the execution and delivery of this Agreement, notwithstanding any
investigation at any time made by or on behalf of any party hereto until the date that is thirty
(30) days after the later of the filing of the Company’s Annual Report on Form 10-K for the year
A-36
ended January 31, 2008 and the filing of any amendment thereto and the covenants shall survive in
accordance with their specific terms; provided, however, the representations and warrants contained
in Sections 3(b), (c), (e) and (g) and Sections 4(b) and
(c) shall survive indefinitely.
11. Termination. This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of the Company, on the one hand, and the Investor, on the other
hand;
(b) by the Company, at any time, in its sole discretion;
(c) by the Investor,
(i) if the Proxy Statement, the Rights Offering Registration Statement and the
Resale Registration Statement have not been filed with the Commission by the time
period required by Section 5(a) hereof;
(ii) if the Company has not paid the Stand-by Commitment Fee to the Investor as
provided in Section 2(a)(i) within one (1) Business Day of the date of this
Agreement;
(iii) if there has been a breach of any covenant or a breach of any representation
or warranty of the Company, which breach would cause the failure of any condition
precedent set forth in Section 8(a), provided, that any such breach
of a covenant or representation or warranty is not capable of cure on or prior to
June 29, 2007;
(iv) upon the occurrence of any event which results in a failure to satisfy any of
the conditions set forth in Section 8(a), which failure is not capable of
cure on or prior to June 29, 2007;
(v) if Rights Offering Registration Statement or the Initial Resale Registration
Statement have not been declared effective by the Commission and the Rights Offering
Commencement Date has not occurred by May 31, 2007; or
(vi) after June 29, 2007; provided, that the Closing Date has not occurred
by such date.
(d) In addition to any other rights or remedies any Investor may have under this Agreement
(for breach or otherwise), if this Agreement is terminated pursuant to (i) Section
11(c)(iv) in connection with the conditions set forth in Sections 8(a)(xvi), the
Company shall pay to the Investor a termination fee equal to $1.8 million (the “Partial
Termination Fee”), or (ii) Section 11(b) (provided that there was no breach of any
representations, warranties or covenants in this Agreement by the Investor at the date of
termination, which breach had materially delayed or materially or adversely impacted, or would
reasonably be expected to materially delay, or materially and adversely impact, the Investor’s
performance of its obligations under this Agreement), or Section 11(c)(ii),
(c)(iii) or (c)(iv) other than in connection with the conditions
A-37
set forth in Section 8(a)(i), (a)(iv), (a)(v), (a)(vii),
(a)(xvi), (a)(xvii) or (a)(xviii), the Company shall pay to the Investor a
termination fee equal to $3.6 million (the “Termination Fee”). In addition, if this
Agreement is terminated, provided that there was no breach of any representations, warranties or
covenants in this Agreement by the Investor at the date of termination which breach had materially
delayed or materially or adversely impacted, or would reasonably be expected to materially delay,
or materially and adversely impact, the Investor’s performance of its obligations under this
Agreement, the Company shall pay to the Investor any Transaction Expenses and any other amounts
certified by the Investor to be due and payable hereunder that have not been paid theretofore.
Payment of the amounts due under this Section 11(d) will be made no later than the
close of business on the third (3rd) Business Day following the date of such termination
by wire transfer of immediately available funds in U.S. dollars to an account specified by the
Investor to the Company. The provision for the payment of the Termination Fee is an integral part
of the transactions contemplated by this Agreement and without this provision the Investor would
not have entered into this Agreement.
(e) Upon termination under this Section 11, all rights and obligations of the parties
under this Agreement shall terminate without any liability of any party to any other party except
that (x) nothing contained herein shall release any party hereto from liability for any willful
breach and (y) the covenants and agreements made by the parties herein in Section 2, and
Sections 9 through 17 will survive indefinitely in accordance with their terms.
Notwithstanding the foregoing, upon termination of this Agreement in accordance with this Section
11, the Company shall not be liable for any amount in excess of the Partial Termination Fee or the
Termination Fee, as the case may be, and the Transaction Expenses to the extent applicable.
12. Notices. All notices and other communications in connection with this Agreement will
be in writing and will be deemed given (and will be deemed to have been duly given upon receipt) if
delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express courier (with confirmation) to
the parties at the following addresses (or at such other address for a party as will be specified
by like notice):
(a)
|
If to: | |
Xxxxx Lemmerz International, Inc. | ||
00000 Xxxxxxxxxx Xxxxx | ||
Xxxxxxxxxx, XX 00000 | ||
Facsimile: (000) 000-0000 | ||
Attention: Xxxxx X. Xxxx and Xxxxxxx Xxxxxx | ||
with a copy to: |
A-38
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP | ||
Xxx Xxxxxx Xxxxxx | ||
X.X. Xxx 000 | ||
Xxxxxxxxxx, XX 00000 | ||
Facsimile: (000) 000-0000 | ||
Attention: Xxxxxx X. Xxxxxx | ||
(b) If to: | ||
Deutsche Bank Securities Inc. | ||
00 Xxxx Xxxxxx, 00xx Xxxxx | ||
Xxx Xxxx, XX 00000 | ||
Facsimile: (000) 000-0000 | ||
Attention: Xxx Xxxxx and Xxxxxxx X. Xxxxxxxx | ||
with a copy to: | ||
White & Case LLP | ||
0000 Xxxxxx xx xxx Xxxxxxxx | ||
Xxx Xxxx, XX 00000-0000 | ||
Facsimile: (000) 000-0000 | ||
Attention: Xxxxxx Xxxx and Xxxxx Xxxxxxx |
13. Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned by any of the parties (whether by
operation of law or otherwise) without the prior written consent of the other parties, except to an
Additional Investor or to a Affiliated Purchaser pursuant to Sections 1(l) and
1(m). Notwithstanding the previous sentence, subject to the provisions of Sections
1(l) and 1(m): this Agreement, or the Investor’s obligations hereunder, may be
assigned, delegated or transferred, in whole or in part, by any Investor to any Affiliate of such
Investor over which such Investor or any of its Affiliates exercise investment authority,
including, without limitation, with respect to voting and dispositive rights; provided, that any
such assignee assumes the obligations of such Investor hereunder and agrees in writing to be bound
by the terms of this Agreement in the same manner as such Investor. Notwithstanding the foregoing
or any other provisions herein, no such assignment will relieve the Investor of its obligations
hereunder if such assignee fails to perform such obligations. Except as provided in Section
1(g), Section 1(h), the first two sentences of Section 1(m), and Sections
2, 3(kk), 5(a), 5(d), 5(e), 5(i), 5(k),
5(l), and 7 in each case, with respect to the Principal Additional Investor, and in
Section 9 with respect to the Indemnified Persons, this Agreement (including the documents
and instruments referred to in this Agreement) is not intended to and does not confer upon any
person other than the parties hereto any rights or remedies under this Agreement. The Principal
Additional Investor and any Indemnified Persons, respectively, shall be entitled to enforce and
rely on the provisions listed in the immediately preceding sentence as if they were a party to this
Agreement.
14. Prior Negotiations; Entire Agreement. This Agreement (including the agreements
attached as exhibits to and the documents and instruments referred to in this Agreement constitutes
the entire agreement of the parties and supersedes all prior agreements, arrangements
A-39
or understandings, whether written or oral, between the parties with respect to the subject matter
of this Agreement, except that the parties hereto acknowledge that any confidentiality agreements
heretofore executed among the parties will continue in full force and effect.
15. GOVERNING LAW; VENUE. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF, AND VENUE IN, THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
16. Counterparts. This Agreement may be executed in any number of counterparts, all of
which will be considered one and the same agreement and will become effective when counterparts
have been signed by each of the parties and delivered to the other party (including via facsimile
or other electronic transmission), it being understood that each party need not sign the same
counterpart.
17. Waivers and Amendments. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only
by a written instrument signed by all the parties or, in the case of a waiver, by the party waiving
compliance. In addition, the Investor shall not enter into any amendment to or waiver under the
Principal Additional Investor Agreement which will adversely affect the rights or obligations of
the Company under this Agreement or with respect to the Principal Additional Investor Agreement,
without the prior written consent of the Company, nor shall the Investor permit the termination of
the Principal Additional Investor Agreement. No delay on the part of any party in exercising any
right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any
waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor
will any single or partial exercise of any right, power or privilege pursuant to this Agreement,
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement
are cumulative and are not exclusive of any rights or remedies which any party otherwise may have
at law or in equity.
18. Adjustment to Shares. If, prior to the Closing Date, the Company effects a
reclassification, stock split (including a reverse stock split), stock dividend or distribution,
recapitalization, merger, issuer tender or exchange offer, or other similar transaction with
respect to any shares of its capital stock, references to the numbers of such shares and the prices
therefore shall be equitably adjusted to reflect such change and, as adjusted, shall, from and
after the date of such event, be subject to further adjustment in accordance herewith.
A-40
19. Headings. The headings in this Agreement are for reference purposes only and will not
in any way affect the meaning or interpretation of this Agreement.
20. Publicity. The Company and Investor each shall consult with each other prior to
issuing any press releases (and provide each other a reasonable opportunity to review and comment
upon such release) or otherwise making public announcements with respect to the transactions
contemplated by this Agreement, and prior to making any filings with any third party or any
governmental entity (including any national securities exchange or interdealer quotation service)
with respect thereto, except as may be required by law or by the request of any governmental
entity.
[Signature Page Follows]
A-41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
respective officers thereunto duly authorized, all as of the date first written above.
XXXXX LEMMERZ INTERNATIONAL, INC. |
||||
By: | /s/ Xxxxx X. Xxxx | |||
Name: | Xxxxx X. Xxxx | |||
Title: | Vice President, Finance and Chief Financial Officer |
|||
DEUTSCHE BANK SECURITIES INC. |
||||
By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxxx | |||
Title: | Vice President | |||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Managing Director |
A-42
SCHEDULE 1
Defined Term | Section | |
Additional Investors
|
Section 1 (m) | |
Additional Investor Agreements
|
Section 1 (m) | |
Affiliate
|
Section 1 (l) | |
Affiliated Purchaser
|
Section 1 (l) | |
After-Acquired Shares
|
Section 1 (n) | |
Aggregate Offering Amount
|
Recitals | |
Agreement
|
Recitals | |
Basic Subscription Privilege
|
Recitals | |
Board of Directors
|
Recitals | |
Business Day
|
Section 1 (b) | |
Capital Structure Date
|
Section 3 (d) | |
Closing Date
|
Section 1 (o) | |
Code
|
Section 3 (y)(ii) | |
Commission
|
Section 3 (i) | |
Common Stock
|
Recitals | |
Company
|
Recitals | |
Company ERISA Affiliate
|
Section 3 (y)(ii) | |
Company Plans
|
Section 3 (y)(i) | |
Company SEC Documents
|
Section 3 (i) | |
Credit Agreement
|
Section 5 (j) | |
Determination Date
|
Section 1 (h) | |
Direct Subscription Shares
|
Section 1 (j) | |
Eligible Holder
|
Section 1 (a) | |
Environmental Laws
|
Section 3 (w)(i) | |
XXXXX
|
Xxxxxxx 0 (x)(x) | |
Xxxxxxxx Xxx
|
Section 3 (j) | |
Exercise Price
|
Recitals | |
Expiration Time
|
Section 1 (b) | |
GAAP
|
Section 3 (j) | |
HSR Act
|
Section 3 (g) | |
Indemnified Person
|
Section 9 (a) | |
Indemnifying Party
|
Section 9 (a) | |
Initial Resale Registration Statement
|
Section 5 (a)(i) | |
Intellectual Property
|
Section 3 (s) | |
Investment Decision Package
|
Section 3 (k) | |
Investor
|
Recitals | |
Investor Shares
|
Section 1 (k) | |
Issuer Free Writing Prospectus
|
Section 3 (k) | |
Losses
|
Section 9 (a) | |
Material Adverse Effect
|
Section 3 (a) | |
Material Customer
|
Section 8 (a)(xvii) | |
Money Laundering Laws
|
Section 3 (dd) | |
Monthly Financial Statements
|
Section 5 (k) |
A-43
SCHEDULE 1
Page 2
Page 2
Defined Term | Section | |
Multiemployer Plans
|
Section 3 (y)(ii) | |
OFAC
|
Section 3 (ee) | |
Option
|
Section 3 (d) | |
Options
|
Section 3 (d) | |
Over-Subscription Privilege
|
Recitals | |
Partial Termination Fee
|
Section 11 (d) | |
Preliminary Rights Offering Prospectus
|
Section 3 (k) | |
Principal Additional Investor
|
Section 1 (m) | |
Principal Additional Investor Agreement
|
Section 1 (m) | |
Proceedings
|
Section 9 (a) | |
Proxy Statement
|
Section 5 (b)(i) | |
Purchase Notice
|
Section 1 (h) | |
Record Date
|
Section 1 (a) | |
Registration Rights Agreement
|
Section 3 (gg) | |
Restricted Period
|
Section 5 (e) | |
Rights
|
Recitals | |
Rights Exercise Period
|
Section 1 (b) | |
Rights Offering
|
Recitals | |
Rights Offering Commencement Date
|
Section 1 (b) | |
Rights Offering Fees
|
Section 2 (a)(ii) | |
Rights Offering Prospectus
|
Section 3 (k) | |
Rights Offering Registration Statement
|
Section 3 (k) | |
Rights Ratio
|
Section 1 (a) | |
Satisfaction Notice
|
Section 1 (h) | |
SEC Transaction Documents
|
Section 5 (a)(ii) | |
Section 203
|
Section 3 (kk) | |
Securities Act
|
Section 3 (a) | |
Securities Act Effective Date
|
Section 3 (k) | |
Shares
|
Recitals | |
Significant Subsidiary
|
Section 3 (a) | |
Single-Employer Plan
|
Section 3 (z)(ii) | |
Stand-By Commitment Fee
|
Section 2 (a)(i) | |
Standstill Agreement
|
Section 5 (l)(iii) | |
Stock Plans
|
Section 3 (d) | |
Subscription Agent
|
Section 1 (c) | |
Subsidiary
|
Section 3 (a) | |
Takeover Statute
|
Section 3 (nn) | |
Take-Up Fee
|
Section 2 (a)(ii) | |
Taxes
|
Section 3 (x) | |
Tax Returns
|
Section 3 (x)(i) | |
Termination Fee
|
Section 11 (d) | |
Transaction Agreements
|
Section 3 (b) | |
Transaction Expenses
|
Section 2 (c) | |
Unsubscribed Shares
|
Section 1 (k) | |
Warrants
|
Section 1 (d) |
A-44
Exhibit A
Form of Standstill Agreement
THIS STANDSTILL AND DIRECTOR NOMINATION AGREEMENT (this “Agreement”), dated as of
, 2007, is made by and between Xxxxx Lemmerz International, Inc., a Delaware corporation
(the “Company”), and Deutsche Bank Securities, Inc., a Delaware corporation
(“DBSI”). Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the EPCA (as defined below).
RECITALS
WHEREAS, DBSI and the Company have entered into that certain Equity Purchase and Commitment
Agreement, dated as of March 16, 2007 (the “EPCA”);
WHEREAS, DBSI has entered into a Principal Additional Investor Agreement with SPCP Group, LLC,
a Delaware limited liability company (the “Principal Additional Investor”) which obligates
the Principal Additional Investor to purchase fifty percent (50%) of the aggregate amount of the
Unsubscribed Shares to be purchased pursuant to the EPCA; and
WHEREAS, as a condition to the closing of the EPCA, DBSI is required to enter into this
Agreement and the Principal Additional Investor is required to enter into a Standstill and Director
Nomination Agreement, in each case, with the Company (the “Principal Additional Investor
Standstill Agreement”).
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained
herein and in the EPCA, and intending to be legally bound hereby, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, such Person; provided
that, for the purposes of this definition, “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
“Common Stock” shall mean the common stock of the Company, par value $0.01 per share
or any other class of capital stock of the Company which is issued with respect to the Common Stock
or in substitution thereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Person” shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a limited liability partnership, a trust or an
incorporated organization.
A-45
Exhibit A
Page 2
Page 2
“SEC” shall mean the Securities and Exchange Commission.
“Shares of Then Outstanding Capital Stock” shall mean, at any time, the issued and
outstanding shares of the Common Stock of the Company at such time.
ARTICLE II
RESTRICTIONS ON ACQUISITIONS AND DISPOSITIONS
Section 2.1 Standstill.
For the period commencing on the date hereof and ending on the date which is two years and six
months from the date hereof, subject to earlier termination pursuant to Section 2.2 hereof (the
“Standstill Period”), neither DBSI nor any of its controlled Affiliates shall, without the prior
written consent of the Company:
(a) directly or indirectly, acquire, agree to acquire or make any proposal to acquire
beneficial ownership of Shares of Then Outstanding Capital Stock or any securities convertible into
or exchangeable for Shares of Then Outstanding Capital Stock, if after giving effect to such
acquisition, DBSI would beneficially own (as defined in Rule 13d-3 under the Exchange Act) more
than forty-five percent (45%) of the Shares of Then Outstanding Capital Stock, whether by purchase,
tender offer or exchange offer, through the acquisition of control of another Person, by joining a
partnership, limited partnership, syndicate association or other “group” (within the meaning of
Section 13(d)(3) of the Exchange Act); provided, however, notwithstanding the
provisions of this Section 2.1(a), DBSI shall not be required to dispose of any of its holdings of
Shares of Then Outstanding Capital Stock if (i) the number of shares constituting Shares of Then
Outstanding Capital Stock is reduced or if the aggregate ownership of DBSI is increased solely as a
result of a recapitalization of the Company and as a result of such transaction, DBSI’s ownership
exceeds forty-five percent (45%) of the Shares of Then Outstanding Capital Stock or (ii) a majority
of the members of the Board of Directors of the Company (other than any director appointed pursuant
to Article III hereof) approve a transaction pursuant to which DBSI’s ownership exceeds forty-five
percent (45%) of the Shares of Then Outstanding Capital Stock;
(b) propose to enter into, directly or indirectly, any merger or similar business combination
involving the Company or any of its subsidiaries;
(c) propose that the Company or any of its subsidiaries enter into any plan of liquidation or
dissolution or engage in any recapitalization transaction or sell all or substantially all of its
assets;
(d) make, or in any way participate, directly or indirectly, in any “solicitation” of
“proxies” (as such terms are used in the proxy rules of the SEC or consents to vote, or seek to
advise or influence any Person with respect to the voting of any voting securities of the Company
or initiate, propose or otherwise “solicit” shareholders of the Company for the approval of
shareholder proposals, whether made pursuant to Rule 14a-8 under the Exchange Act or otherwise,
induce or attempt to induce any other Person to initiate any such shareholder proposal, or
otherwise communicate with the shareholders of the Company or others pursuant to
the rules governing the solicitation of proxies promulgated by the SEC under the Exchange Act
with respect to any such proposal;
A-46
Exhibit A
Page 3
Page 3
(e) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3)
of the Exchange Act) with respect to any voting securities of the Company;
(f) deposit any of the voting securities of the Company in any voting trust or subject any
such voting securities to any agreement or other arrangement with respect to the voting of any such
voting securities;
(g) execute any written consent as a stockholder with respect to the voting securities of the
Company;
(h) otherwise act, alone or in concert with others, to seek to control or influence the
management, Board of Directors or policies of the Company;
(i) seek, alone or in concert with others, (I) to call a meeting of stockholders of the
Company, (II) representation on the Board of Directors of the Company except as provided in Article
III hereof, or (III) the removal of any member of the Board of Directors of the Company;
(j) take any action or publicly announce any plan or intent to take any action, inconsistent
with the foregoing;
(k) publicly request any amendment or waiver of any provision of this Agreement; or
(l) advise, assist or encourage any Person in connection with any of the foregoing.
provided that the mere voting, tender or exchange of any Shares of Then Outstanding Capital
Stock held by the Investor shall not constitute a violation of any of clauses (a) through (l)
above.
Section 2.2 Termination of Standstill. The restrictions contained in Section 2.1 shall terminate upon the earliest to occur of (i)
the public announcement by the Company to the effect that it is soliciting, directly or indirectly,
proposals to effect a change of control transaction; (ii) the acquisition by any third Person or
group other than DBSI or the Principal Additional Investor or any of their Affiliates or associates
(an “Offeror”) of beneficial ownership of Shares of Then Outstanding Capital Stock, which,
when combined with all other Shares of Then Outstanding Capital Stock beneficially owned by the
Offeror, represents more than twenty-five percent (25%) of the voting power represented by all
Shares of Then Outstanding Capital Stock; (iii) the entry by the Company into a definitive
agreement with any Offeror with respect to a transaction which, if consummated, would result in a
“change of control,” (iv) the issuance by the Company to an Offeror of Shares of Then Outstanding
Capital Stock, which, when combined with all other Shares of Then Outstanding Capital Stock
beneficially owned by such Offeror, represents more than fifteen percent (15%) of
the voting power represented by all Shares of Then Outstanding Capital Stock, if the Company and
such Offeror do not enter into a
A-47
Exhibit A
Page 4
Page 4
standstill agreement for a time period and upon terms
substantially similar to the provisions of Section 2.1; (v) a sale of all or substantially all of
the assets of the Company (other than to a wholly owned subsidiary of the Company); (vi) a
liquidation or dissolution of the Company; (vii) receipt by the Company of a bona fide proposal
from an Offeror with respect to a change of control transaction, which is not made in violation of
Section 2.1 hereof and which the Company’s Board of Directors does not reject within (A) 10
business days following commencement of any tender or exchange offer with respect to a proposal
subject to Section 14(d) of the Exchange Act or (B) 30 business days, with respect to any other
proposal; or (viii) at such time as DBSI beneficially owns less than fifteen percent (15%) of the
Shares of Then Outstanding Capital Stock; provided, however, that the restrictions
contained in Section 2.1 shall not terminate pursuant to this subsection (viii) unless and until
DBSI shall have furnished to the Company a certificate of a duly authorized officer of DBSI
certifying that as of the date thereof, DBSI beneficially owns less than fifteen percent (15%) of
the Shares of Then Outstanding Capital Stock and setting forth therein, the number of Shares then
beneficially owned by DBSI and a calculation of the percentage of the Shares of Then Outstanding
Capital Stock represented by such amount.
Section 2.3 Voting Agreement. During the Standstill Period and so long as the Company is not in breach of its obligations
under Article III hereof. DBSI shall vote or cause to be voted all shares of Common Stock which it
beneficially owns in favor of the slate of directors nominated by the Board of Directors at the
Annual Meetings of the Company’s Stockholders to be held in 2007 and 2008.
Section 2.4 Change of Control. For purposes this Agreement, a “change of control” shall mean (i) a merger or consolidation to
which the Company is a party and as a result of which the Persons who were stockholders of the
Company immediately prior to the effective date of such merger or consolidation beneficially own
(as defined in Rule 13d-3 under the Exchange Act) less than fifty percent (50%) of the voting stock
of the surviving parent entity outstanding immediately following the effectiveness of such merger
or consolidation; (ii) a sale of all or substantially all of the Company’s assets (other than to a
wholly-owned subsidiary of the Company); or (iii) a liquidation or dissolution of the Company.
ARTICLE III
BOARD REPRESENTATION
Section 3.1 Number of Board Members. The Company shall use its commercially reasonable efforts to cause its Certificate of
Incorporation to be amended to increase the number of members on the Board of Directors of the
Company to accommodate any additional directors, including, without limitation, the Investor
Nominee, to be designated by DBSI pursuant to the terms hereof and/or the Principal Additional
Investor pursuant to the Principal Additional Investor Standstill Agreement.
Section 3.2 Board Appointment Rights. (a) In the event that immediately following the consummation of the transactions contemplated
by the EPCA, DBSI and its Affiliates beneficially own fifteen percent (15%) or more (excluding any
shares of Common Stock held by DBSI and its Affiliates prior to the date hereof) of the Shares of
Then Outstanding
A-48
Exhibit A
Page 5
Page 5
Capital Stock, DBSI shall have the right to designate a nominee (the “DBSI
Nominee”) to serve on the Board of Directors of the Company; provided, however, such DBSI Nominee
must be (i) “independent”, as defined within the meaning of the NASDAQ Marketplace Rules, (ii) not
employed by or affiliated with DBSI or the Principal Additional Investor and (iii) approved by a
majority of the members of the Board of Directors of the Company. The Board of Directors of the
Company shall promptly appoint such DBSI Nominee to serve as a director of the Company for the
remainder of the term of such class of directors in which such nominee is appointed.
(b) In the event that immediately following the consummation of the transactions contemplated
by the EPCA, either (i) DBSI and its Affiliates or (ii) the Principal Additional Investor and its
Affiliates beneficially own thirty percent (30%) or more (excluding any shares of Common Stock held
by DBSI and its Affiliates or the Principal Additional Investor and its Affiliates prior to the
date hereof) of the Shares of Then Outstanding Capital Stock, the DBSI Nominee and the Silver Point
Nominee (as defined in the Principal Additional Investor Standstill Agreement) shall jointly have
the right to designate an additional nominee who meets the requirements set forth in the proviso to
Section 3.2(a) above (the “Investor Nominee”) to serve on the Board of Directors of the
Company. Notwithstanding the foregoing, in the event that the Principal Additional Investor owns
less than fifteen percent (15%) of the Shares of Then Outstanding Capital Stock immediately
following the consummation of the transactions contemplated by the EPCA, such Investor Nominee
shall be designated by DBSI, subject to the proviso set forth in Section 3.2(a) above. The Board
of Directors of the Company shall promptly appoint such Investor Nominee to serve as a director of
the Company for the remainder of the term of such class of directors in which such nominee is
appointed.
(c) The provisions of this Article III shall be of no further force or effect (A) with respect
to the right to designate any Nominee, unless (x) the identity of the Nominee and (y) all
reasonable information concerning the Nominee requested by the Company is provided to the Company
no earlier than 75 days nor later than 90 days following the date hereof and (B) on and after the
date that all Nominees which are entitled to be appointed to the Board pursuant to this Article III
have been so appointed.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All notices and other communications in connection with this Agreement will be in writing and
will be deemed given (and will be deemed to have been duly given upon receipt) if delivered
personally, sent via electronic facsimile (with confirmation), mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as will be specified by
like notice):
If to the Company:
Xxxxx Lemmerz International, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx and Xxxxxxx X. Xxxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx and Xxxxxxx X. Xxxxxx
A-49
Exhibit A
Page 6
Page 6
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
If to DBSI:
Deutsche Bank Securities Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: [ ]
Attention: Xxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: [ ]
Attention: Xxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxxx
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx and Xxxxx Xxxxxxx
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx and Xxxxx Xxxxxxx
Section 4.2 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations under this Agreement
will be assigned by any of the parties (whether by operation of law or otherwise) without the prior
written consent of the other party hereto. This agreement (including the documents and instruments
referred to in this Agreement) is not intended to and does not confer upon any person other than
the parties hereto any rights or remedies under this Agreement.
Section 4.3 Prior Negotiations; Entire Agreement. This Agreement (including the agreements attached as exhibits to and the documents and
instruments referred to in this Agreement constitutes the entire agreement of the parties and
supersedes all prior agreements, arrangements or understandings, whether written or oral, between
the parties with respect to the subject matter of this Agreement, except that the parties
hereto acknowledge that any confidentiality agreements heretofore executed among the parties will
continue in full force and effect.
Section 4.4 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE. THE INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN,
THE CHANCERY COURT IN AND FOR NEW CASTLE COUNTY IN THE STATE OF DELAWARE AND WAIVE ANY OBJECTION
BASED ON FORUM NON CONVENIENS. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT
A-50
Exhibit A
Page 7
Page 7
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
Section 4.5 Specific Performance. DBSI acknowledges that the Company would not have an adequate remedy at law for money damages
in the event that the agreements and covenants set forth herein were not performed in accordance
with their terms and therefore agrees that the Company shall be entitled to specific enforcement
of, and injunctive relief to prevent any violation of the terms hereof, in addition to any other
remedy or relief available at law or in equity.
Section 4.6 Counterparts. This Agreement may be executed in any number of counterparts, all of which will be considered
one and the same agreement and will become effective when counterparts have been signed by each of
the parties and delivered to the other party (including via facsimile or other electronic
transmission), it being understood that each party need not sign the same counterpart.
Section 4.7 Waivers and Amendments. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the
terms and conditions of this Agreement may be waived, only by a written instrument signed by all
the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege pursuant to this Agreement will operate as a
waiver thereof, nor will any waiver on the part of any party of any right, power or privilege
pursuant to this Agreement, nor will any single or partial exercise of any right, power or
privilege pursuant to this Agreement, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege pursuant to this Agreement. The rights and
remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or
remedies which any party otherwise may have at law or in equity.
Section 4.8 Headings. The headings in this Agreement are for reference purposes only and will not in any way affect
the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
A-51
Exhibit A
Page 8
Page 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
respective officers thereunto duly authorized, all as of the date first written above.
XXXXX LEMMERZ INTERNATIONAL, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
DEUTSCHE BANK SECURITIES INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
By: | ||||
Name: | ||||
Title: |
A-52
EXHIBIT B1
Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
1. The Company has been duly incorporated and is validly existing in good standing
under the laws of the State of Delaware.
2. The Company has requisite corporate power and authority to execute and deliver the
Transaction Agreements and perform its obligations thereunder.
3. The execution and delivery by the Company of the Transaction Agreements, and the
performance by the Company of its obligations thereunder, have been duly authorized by all
necessary corporate action of the Company.
4. The Shares have been duly authorized by the Company and, when delivered to and paid for by
the Investor in accordance with the terms of the Equity Agreement, will be validly issued, fully
paid and nonassessable.
5. No Governmental Approval, which has not been obtained or taken and is not in full force and
effect, is required to authorize, or is required for, the execution or delivery of the Equity
Agreement by the Company or the performance by the Company of its obligations thereunder.
6. The Company is not and, solely after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Prospectus, will not be an
“investment company,” as such term is defined in the Investment Company Act of 1940.
7. The Registration Statement, at the time it became effective, the Prospectus, as of its
date, and the Form 10-K for the year ended January 31, 2007, as of its date, appeared on their face
to be appropriately responsive in all material respects to the requirements of the Act and the
Rules and Regulations (except that in each case we do not express any view as to the financial
statements, schedules and other financial information included or incorporated by reference therein
or excluded therefrom).
8. Assuming (i) the accuracy of the representations and warranties of the Company set forth in
Section 3(ll) of the Equity Agreement and of you in Section 4 of the Equity Agreement; and (ii) the
due performance by the Company of the covenants and agreements set forth in Section 4 of the Equity
Agreement, the offer, sale and delivery of the Shares to you in the manner contemplated by the
Equity Agreement does not require registration under the Securities Act, it being understood that
we do not express any opinion as to the any subsequent reoffer or resale of any the Shares.
9. The execution and delivery by the Company of the Transaction Agreements and the performance
of the Company’s obligations thereunder, including the issuance and sale of the Shares in the
Rights Offering and the Investor Shares, and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption “Use of Proceeds,” will not violate or
conflict with, or result in any contravention of Applicable Law or any Applicable Order.
A-53
Exhibit B1
Page 2
Page 2
In addition, we have participated in conferences with officers and other representatives of
the Company [,representatives of the independent registered public accountants of the Company] and
you and your counsel at which the contents of the Registration Statement and the Prospectus and
related matters were discussed. We did not participate in the preparation of the Incorporated
Documents but have, however, reviewed such documents and discussed the business and affairs of the
Company with officers and other representatives of the Company. We do not pass upon, or assume any
responsibility for, the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement or the Prospectus and have made no
independent check or verification thereof.
On the basis of the foregoing, no facts have come to our attention that have caused us to
believe that the Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus, as of its date and
as of the date contained or contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that in each case we do not
express any view as to the financial statements, schedules and other financial information included
or incorporated by reference therein or excluded therefrom or the statements contained in the
exhibits to the Registration Statement.
As of the date hereof, the Company had authority to issue 200,000,000 shares of Common Stock
and 1,000,000 shares of Preferred Stock, each having a par value of $0.01 per share.
A-54
EXHIBIT B2
Opinion of Company’s General Counsel or Assistant General Counsel
1. The Company has the requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration Statement and Prospectus.
2. Other than pursuant to the Registration Rights Agreement between the Company AP Wheels, LLC
dated July 1, 2004, and the Registration Rights Agreement, there are no persons with registration
or similar rights to have any securities registered by the Company.
3. To my knowledge, there is not pending, or threatened in writing, any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary is a party, or to
which the property of the Company or any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which would reasonably be expected to materially
and adversely affect the consummation of the transactions contemplated by the Transaction
Agreements or the performance by the Company of its obligations thereunder, or which , except as
disclosed in the Registration Statement and the Prospectus, would reasonably be expected to result
in a Material Adverse Effect.
4. The execution and delivery by the Company of the Transaction Agreements and the performance
by the Company of its obligations thereunder, including the issuance and sale of the Shares in the
Rights Offering and the Investor Shares, and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption “Use of Proceeds,” do not and will not
conflict with (i) any of the terms and provisions of the Company’s Certificate of Incorporation or
bylaws or (ii) whether with or without the giving of notice or lapse of time or both, conflict with
or constitute a breach of, or default or any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any subsidiary (a “Repayment Event”) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to any of its contracts (except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances that would not reasonably be expected to have a
Material Adverse Effect).
A-55