1
Exhibit 10.1
RECAPITALIZATION AGREEMENT AND
PLAN OF MERGER AND STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇ ▇▇▇▇▇▇▇ HOLDINGS CORP.,
THE LS SELLING STOCKHOLDERS,
SAFELITE GLASS CORP.,
LSNWY CORP.,
L.S. ACQUISITION CORP.
and
LITE ACQUISITION CORP.
Dated as of November 8, 1996
2
Table of Contents
-----------------
ARTICLE I
TRANSACTIONS
1.01. Safelite Stock Sale ................................................... 1
1.02. The Closing ........................................................... 2
1.03. Safelite Merger ....................................................... 2
1.04. Certificate of Incorporation and By-Laws .............................. 3
1.05. Directors and Officers ................................................ 3
1.06. Conversion of Shares; Closing of Transfer Books ....................... 3
1.07. Aggregate Merger Consideration ........................................ 5
1.08. Indebtedness Payment and Certain Closing Deliveries ................... 8
1.09. Dissenters' Rights .................................................... 9
1.10. Certain Corporate Actions ............................................. 10
1.11. ▇▇▇▇ ▇▇▇▇▇▇▇ Sale ..................................................... 10
1.12. Note Payment .......................................................... 11
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.01. Capitalization ........................................................ 12
2.02. Subsidiaries .......................................................... 13
2.03. Organization .......................................................... 14
2.04. Financial Statements .................................................. 14
2.05. Absence of Certain Changes or Events .................................. 15
2.06. Title to Assets ....................................................... 16
2.07. Patents, Trademarks, Etc .............................................. 17
2.08. Power and Authority; Effect of Agreement .............................. 17
2.09. Commitments ........................................................... 18
2.10. Undisclosed Liabilities ............................................... 20
2.11. Litigation ............................................................ 20
2.12. Compliance with Laws .................................................. 21
2.13. Taxes ................................................................. 23
2.14. Employee Benefit Plans ................................................ 26
2.15. Consents .............................................................. 29
2.16. Insurance ............................................................. 29
2.17. Labor Matters ......................................................... 30
i
3
2.18. Fees .................................................................. 31
2.19. Disclaimer ............................................................ 31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LSAC AND NEWCO
3.01. Organization .......................................................... 32
3.02. Power and Authority; Effect of Agreement .............................. 32
3.03. Litigation ............................................................ 33
3.04. Availability of Funds ................................................. 34
3.05. Consents .............................................................. 34
3.06. Fees .................................................................. 34
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Cooperation by the Company ............................................ 35
4.02. Conduct of Business ................................................... 35
4.03. Access ................................................................ 38
4.04. No Solicitation ....................................................... 39
4.05. Tax Returns ........................................................... 40
4.06. Stockholder Approval .................................................. 40
ARTICLE V
COVENANTS OF LSAC AND NEWCO
5.01. Cooperation by LSAC and Newco ......................................... 40
5.02. Indemnification; Insurance ............................................ 41
5.03. Employee Benefits ..................................................... 45
5.04. Bridge Financing ...................................................... 46
5.05. Insurance ............................................................. 46
5.06. ▇▇▇▇ ▇▇▇▇▇▇▇ Dividend and Asset Transfer Restrictions ................. 47
5.07. Solvency Letters ...................................................... 47
5.08. Offering Documents .................................................... 48
5.09. Restriction on Merger, Etc. ........................................... 49
ii
4
ARTICLE VI
CONDITIONS TO LSAC'S AND NEWCO'S OBLIGATIONS
6.01. Representations, Warranties and Covenants of the Company .............. 49
6.02. No Prohibition ........................................................ 50
6.03. Consents .............................................................. 50
6.04. Escrow Agreement ...................................................... 50
6.05. FIRPTA Certificate .................................................... 50
6.06. Financing ............................................................. 50
ARTICLE VII
CONDITIONS TO THE LS SELLING STOCKHOLDERS' AND THE
COMPANY'S, SAFELITE'S AND LSNWY'S OBLIGATIONS
7.01. Representations, Warranties and Covenants of LSAC and Newco ........... 51
7.02. No Prohibition ........................................................ 52
7.03. Consents .............................................................. 52
7.04. Insurance ............................................................. 52
7.05. Solvency Letters ...................................................... 52
7.06. Escrow Agreement ...................................................... 52
ARTICLE VIII
TERMINATION
8.01. Termination ........................................................... 52
8.02. Effect on Obligations ................................................. 53
ARTICLE IX
MISCELLANEOUS
9.01. Survival .............................................................. 53
9.02. Knowledge ............................................................. 54
9.03. Entire Agreement ...................................................... 54
9.04. Successors and Assigns ................................................ 54
9.05. Parties in Interest ................................................... 55
9.06. Headings .............................................................. 55
9.07. Amendment ............................................................. 55
iii
5
9.08. Waivers ............................................................... 56
9.09. Expenses .............................................................. 56
9.10. Notices ............................................................... 56
9.11. Transfer Taxes ........................................................ 58
9.12. Access to Certain Records ............................................. 58
9.13. Governing Law, Etc. ................................................... 59
9.14. Public Announcements .................................................. 59
9.15. Counterparts .......................................................... 59
iv
6
RECAPITALIZATION AGREEMENT AND
------------------------------
PLAN OF MERGER AND STOCK PURCHASE AGREEMENT
-------------------------------------------
This Recapitalization Agreement and Plan of Merger and Stock Purchase
Agreement, dated as of the 8th day of November, 1996, by and among ▇▇▇▇ ▇▇▇▇▇▇▇
Holdings Corp., a Delaware corporation (the "Company"),' the LS Selling
Stockholders (as defined in Section 1.11), Safelite Glass Corp., a Delaware
corporation ("Safelite"), LSNWY Corp., a Delaware corporation ("LSNWY"), L.S.
Acquisition Corp., a Delaware corporation ("LSAC"), and Lite Acquisition Corp.,
a Delaware corporation ("Newco").
ARTICLE I
TRANSACTIONS
------------
1.01. SAFELITE STOCK SALE. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date (as defined in Section 1.02 hereof), LS
Panners, ▇▇▇▇ ▇▇▇▇▇▇▇ Panners, Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership-II and Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership-III (individually, a "Pannership
Seller" and collectively, the "Partnership Sellers") shall sell to stockholders
of Newco designated by Newco, and Newco shall cause such designated stockholders
to purchase from the Partnership Sellers, all of the shares of Class A Common
Stock, par value $.01 per share, of Safelite ("Safelite Class A Common Stock")
and Class B Common Stock, par value $.01 per share, of Safelite ("Safelite Class
B Common Stock") then held by the Partnership Sellers, in exchange for payment
in cash of $13.40 per share of Safelite Class A Common Stock (the "Class A Share
Merger Consideration") and $0.01 per share of Safelite Class B Common Stock. At
the request of the Partnership Sellers, concurrently with the purchase from the
Partnership Sellers, the designated stockholders shall purchase up to 7,115
shares of Safelite Class A Common Stock from other
7
stockholders of Safelite designated by the Partnership Sellers (other than
LSNWY) at a price per share equal to the Class A Share Merger Consideration.
1.02. THE CLOSING. Upon the terms and subject to the conditions of this
Agreement, including, without limitation, the satisfaction or waiver of the
conditions contained in Article VI and Article VII, the closing of the
transactions contemplated by Section 1.01 hereof(the "Safelite Sale Closing")
shall take place at 9:00 a.m., local time, on December 20, 1996, at the offices
of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New York Plaza, New York, New
York, or at such other time, date and place as Newco and the Company may agree.
The date on which the Safelite Sale Closing occurs is hereinafter referred to as
the "Closing Date."
1.03. SAFELITE MERGER. Prior to the Effective Time, Safelite's Amended and
Restated Certificate of Incorporation shall be further amended (i) to create an
authorized class of preferred stock having such attributes of which Newco has
previously advised Safelite in writing, and (ii) to increase the number of
authorized shares of Safelite Class A Common Stock as directed by Newco in
writing. Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined below), Newco shall be merged with and into Safelite
(the "Merger") in accordance with this Agreement and the Delaware General
Corporation Law (the "DGCL"). Following the Merger, Safelite shall continue as
the surviving corporation (sometimes hereinafter referred to as the "Surviving
Corporation") and the separate corporate existence of Newco shall cease. The
Merger shall have the effects set forth in the DGCL. On the Closing Date, the
parties hereto shall cause a Certificate of Merger meeting the requirements of
Section 251 of the DGCL (the "Certificate of Merger") to be properly executed
and filed immediately following Safelite Sale Closing in accordance with such
Section 251. The Merger shall become effective at the time of filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL (the "Effective Time").
2
8
1.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and By-Laws of Safelite in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation as of the Effective Time, until duly amended in accordance
with applicable law; PROVIDED THAT the provisions set forth in Annex A hereto
shall be included in such Certificate of Incorporation and By-Laws.
1.05. DIRECTORS AND OFFICERS. The directors and officers of Newco
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation as of the Effective Time.
1.06. CONVERSION OF SHARES; CLOSING OF TRANSFER BOOKS. At the Effective
Time, by virtue of the Merger and without any action on the part of any party:
(a) each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of Safelite Class A Common Stock, so that after
the Effective Time the stockholders of Newco shall hold shares of Safelite
Class A Common Stock with a per share cost basis equal to the Class A Share
Merger Consideration;
(b) each share of preferred stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of preferred stock, par value $.01 per share, of
the Surviving Corporation;
(c) each share of capital stock of Safelite (the "Safelite Common
Stock") issued and outstanding immediately prior to the Effective Time
(each, an "Outstanding Share" and collectively, the "Outstanding Shares")
except for
3
9
Dissenting Shares (as defined in Section 1.09), if any, shall be converted
in the following manner:
(i) each Outstanding Share of Preferential Common Stock, par
value $.01 per share, of Safelite (the "Safelite Preferential Common
Stock") shall be converted into the right to receive the amount,
without interest, in cash, which would be allocable to such
Outstanding Share of Safelite Preferential Common Stock (the
"Preferential Share Merger Consideration"), pursuant to Safelite's
Amended and Restated Certificate of Incorporation, in the event of a
dissolution, liquidation or winding up of affairs of Safelite,
assuming the assets available for distribution in respect of all
Outstanding Shares aggregate an amount equal to the Aggregate Merger
Consideration (as defined in Section 1.07(a)) less the sum of (1) the
product of(A) the number of shares of Safelite Class A Common Stock
issued and outstanding immediately prior to the Effective Time
multiplied by (B) the Class A Share Merger Consideration plus (2) the
product of (A) the number of shares of Safelite Class B Common Stock
issued and outstanding immediately prior to the Effective Time
multiplied by (B) the Class B Share Merger Consideration; and such
Outstanding Share of Safelite Preferential Common Stock shall
otherwise cease to be outstanding, shall be cancelled and retired and
shall cease to exist;
(ii) each Outstanding Share of Safelite Class A Common Stock
shall be converted into the right to receive the Class A Share Merger
Consideration, without interest, in cash; PROVIDED, HOWEVER, that in
lieu of such conversion, each holder of shares of Safelite Class A
Common Stock may instead, at its option, elect, by execution and
delivery to Newco or the Surviving Corporation of a Notice of
Election, to have all or any portion of
4
10
the shares of Safelite Class A Common Stock held by it remain
outstanding after the Effective Time (the "Stock Election"); each
Outstanding Share of Safelite Class A Common Stock (other than shares
with respect to which a Stock Election has been made as aforesaid to
remain outstanding after the Effective Time) shall otherwise cease to
be outstanding, shall be canceled and retired and shall cease to
exist; and
(iii) each Outstanding Share of Class B Common Stock shall be
converted into the right to receive the greater of (x) the amount, if
any, without interest, in cash, which would be allocable to such
Outstanding Share of Safelite Class B Common Stock pursuant to
Safelite's Amended and Restated Certificate of Incorporation, in the
event of a dissolution, liquidation or winding up of affairs of the
Company, assuming the assets available for distribution in respect of
all Outstanding Shares aggregate an amount equal to the Aggregate
Merger Consideration, or (y) $0.01 (the "Class B Share Merger
Consideration"); and such Outstanding Share of Class B Common Stock
shall otherwise cease to be outstanding, shall be canceled and retired
and shall cease to exist.
1.07. AGGREGATE MERGER CONSIDERATION. (a) The Aggregate Merger
Consideration shall be an amount equal to (x) $301,315,206 plus (y) the Class A
Net Merger Consideration less (z) the Bridge Expenses (each of the foregoing
terms as defined in Section 1.07(b)).
If the amount of the Aggregate Merger Consideration which is payable in
cash (the "Cash Merger Consideration") to LSNWY is not paid on the Closing Date
in sufficient time for LSNWY to earn interest thereon for the day on which the
Closing Date occurs, the Cash Merger Consideration shall be increased by an
amount equal to the
5
11
interest which otherwise would have been earned on the portion of the Cash
Merger Consideration payable to LSNWY had the Cash Merger Consideration been
held overnight at Chase Manhattan Bank ("Chase").
(b) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) The "Class A Net Merger Consideration" shall mean the product of
(x) the Class A Share Merger Consideration multiplied by (y) the difference
between (1) the number of issued and outstanding shares of Safelite Class A
Common Stock and (2) 498,180.
(ii) "Bridge Expenses" shall mean (A) if the Bridge Facility (as
defined in Section 5.04) is not required to be drawn upon, or if the
Closing Date is later than December 20, 1996, the amount of the commitment
fees paid by the Surviving Corporation to obtain the Bridge Facility up to
a maximum amount of $1.5 million, or (B) if the Bridge Facility is required
by either the Partnership Sellers or the Surviving Corporation to be drawn
upon on the Closing Date and the Closing Date occurs on or before December
20, 1996, then "Bridge Expenses" shall mean the lesser of(x) $3 million and
(y) the commitment fee (up to $1.5 million) plus the facility fees of the
Bridge Facility to the extent such fees exceed 3% of the principal amount
drawn upon from the Bridge Facility.
(c) The portion of the Aggregate Merger Consideration, if any, payable to
each holder of a certificate or certificates ("Certificates") which immediately
prior to the Effective Time represented Outstanding Shares in respect of such
holders Outstanding Shares shall be payable by the Surviving Corporation. Each
holder of a Certificate which immediately prior to the Effective Time
represented Outstanding Shares constituting Safelite Preferential Common Stock
will be entitled to receive, upon
6
12
surrender to the Surviving Corporation of such Certificate for cancellation, and
in accordance with the terms of this Agreement, cash in an amount equal to the
product of the number of Outstanding Shares constituting shares of Safelite
Preferential Common Stock previously represented by such Certificate multiplied
by the Preferential Share Merger Consideration. Each holder of a Certificate
which immediately prior to the Effective Time represented Outstanding Shares
constituting Safelite Class A Common Stock will be entitled to receive, upon
surrender to the Surviving Corporation of such Certificate for cancellation, and
in accordance with the terms of this Agreement, cash in an amount equal to the
product of the number of Outstanding Shares constituting shares of Safelite
Class A Common Stock previously represented by such Certificate multiplied by
the Class A Share Merger Consideration, PROVIDED that to the extent the holder
of such Certificate has made a Stock Election, each Outstanding Share of
Safelite Class A Common Stock subject to such Stock Election shall remain
outstanding unchanged after the Effective Time. Each holder of a Certificate
which immediately prior to the Effective Time represented Outstanding Shares
constituting Safelite Class B Common Stock will be entitled to receive, upon
surrender to the Surviving Corporation of such Certificate for cancellation and
in accordance with the terms of this Agreement, cash in an amount equal to the
product of the number of Outstanding Shares constituting shares of Safelite
Class B Common Stock previously represented by such Certificate multiplied by
the Class B Share Merger Consideration. All payments to holders of Certificates
shall be subject to any required withholding of taxes. No interest shall accrue
or be paid on the cash payable upon the surrender of Certificates. If payment is
to be made to a person other than the person in whose name the surrendered
Certificates are registered, it shall be a condition of payment that the
Certificates so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the surrendered Certificates or establish to the
satisfaction of the
7
13
Surviving Corporation that such tax has been paid or is not applicable. Neither
the Surviving Corporation nor any party hereto shall be liable to a holder of
Outstanding Shares for any cash or interest thereon delivered to a public
official pursuant to any applicable abandoned property, escheat or similar laws.
If any Certificates shall not have been surrendered within five years after the
Effective Time (or immediately prior to such earlier date on which any payment
in respect hereof would otherwise escheat to or become the property of any
governmental unit or agency), the payment in respect of such Certificates shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto. As soon as practicable (but in any event within five business
days) after the Effective Time, the Surviving Corporation will mail to each
record holder of Certificates a letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Surviving
Corporation) (the "Letter of Transmittal") and instructions for use in effecting
the surrender of the Certificates for payment therefor, together with a Notice
of Election to each record holder of a Certificate representing Safelite Class A
Common Stock who has not previously delivered a Notice of Election.
(d) LSNWY covenants and agrees that it will not make a Stock Election in
connection with the Merger.
1.08. INDEBTEDNESS PAYMENT AND CERTAIN CLOSING DELIVERIES. (a) For purposes
of this Agreement, "Indebtedness Payment" shall mean an amount equal to, as of
the Closing Date, the outstanding principal of, accrued and unpaid interest on,
any prepayment penalties or premiums on, and any other amounts payable with
respect to, all indebtedness of Safelite and its subsidiaries under the Credit
Agreement, dated as of August 11, 1994, among Chase, as agent, and the financial
institutions party thereto, as amended (the "Credit Agreement"), but not
including any undrawn amounts under
8
14
outstanding letters of credit. Immediately after the Effective Time, the
Surviving Corporation shall pay to Chase (for the benefit of the financial
institutions party to the Credit Agreement), by wire transfer of immediately
available funds, an amount in cash equal to the Indebtedness Payment.
(b) Immediately after the Effective Time, the Surviving Corporation shall
replace all then outstanding letters of credit under the Credit Agreement.
1.09. DISSENTERS' RIGHTS. Notwithstanding any provision of this Agreement
to the contrary, any Outstanding Shares that are held immediately prior to the
Effective Time by a holder who has neither voted in favor of the Merger nor
consented thereto in writing and who has demanded and perfected the right, if
any, for appraisal of such Outstanding Shares within 20 days after the date of
mailing of ▇▇▇▇▇▇.▇▇ such holder of the effective date of the Merger (the
"Stockholder Notice") in accordance with the provisions of Section 262 of the
DGCL and has not withdrawn or lost such right to such appraisal ("Dissenting
Shares") shall not be convened into or represent a right to receive an allocable
portion of the Aggregate Merger Consideration represented thereby, but the
holder of such Outstanding Shares shall only be entitled to such appraisal
rights as are granted by the DGCL. If a holder of Outstanding Shares who demands
appraisal of such Outstanding Shares under the DGCL shall thereafter effectively
withdraw or lose (through failure to perfect or otherwise) the right to
appraisal with respect to such Outstanding Shares, then, as of the occurrence of
such event, such Outstanding Shares shall be deemed to have been convened into
and represent only the right to receive such Outstanding Shares' allocable
portion of the Aggregate Merger Consideration, without interest, upon the
surrender of the Certificate or Certificates representing such Outstanding
Shares and upon delivery of a duly executed Letter of Transmittal. In accordance
with the provisions of Sections 228(d) and 262(d)(2) of the DGCL, not later than
the fifth business day following the Closing Date, and simultaneously with the
9
15
mailing by the Surviving Corporation of the Letters of Transmittal to the
record holders of Certificates, the Surviving Corporation shall mail to all
holders of Outstanding Shares notice of the Merger as required by the DGCL.
1.10. CERTAIN CORPORATE ACTIONS. Concurrently with the Effective Time, the
Company shall cause all directors and officers of the Company and its
subsidiaries, except for those directors and officers as advised by Newco to the
Company by prior written notice, to resign their positions as directors or
officers of the Company or any of its subsidiaries.
1.11. ▇▇▇▇ ▇▇▇▇▇▇▇ SALE. Immediately after the Effective Time, and upon the
terms and subject to the conditions of this Agreement, the Partnership Sellers
shall sell to LSAC, and LSAC shall purchase from the Partnership Sellers, all of
the shares of Preferential Common Stock, par value $.01 per share, of the
Company (the "LS Preferential Common Stock"), Class A Common Stock, par value
$.01 per share, of the Company (the "LS Class A Common Stock"), and Class B
Common Stock, par value $.01 per share, of the Company (the "LS Class B Common
Stock"; together with the LS Preferential Common Stock and the LS Class A Common
Stock, the "▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock") held by the Partnership Sellers, as set
forth opposite the name of each Partnership Seller on Exhibit 1.1 l(a) hereto.
Each of the Partnership Sellers covenants and agrees that it shall assert its
rights under the various subscription and stockholders agreements with the
holders of LS Class B Common Stock, and otherwise use its best efforts, to cause
such holders to comply with the provisions of such agreements requiring such
holders to sell their shares upon the sale of all of the shares of LS Class A
Common Stock held by the Partnership Sellers; PROVIDED, HOWEVER, that such best
efforts shall not include the commencement of Litigation or any payment to any
stockholder in excess of $.01 per share of LS Class B Common Stock. The
stockholders of the Company who sell their shares of LS Preferential Common
Stock or of LS Class A Common Stock or of LS
10
16
Class B Common Stock pursuant to this Section 1.11 are hereinafter referred to
as the "LS Selling Stockholders" and are listed in Exhibit 1.1 l(a) hereto, as
Exhibit 1.1 l(a) may be amended by the Company prior to the Closing Date to
include additional sellers (together with the Partnership Sellers and the
holders of Safelite Common Stock immediately prior to the Merger, the "Seller
Group"). Payment for such shares shall be comprised of a note (the "Note") of
LSAC to LS Partners as representative for and for the benefit of the LS Selling
Stockholders (the "Representative"), which shall be in the form of Exhibit 1.11
(b) hereto, with an aggregate principal amount equal to the portion of the
Aggregate Merger Consideration received by LSNWY in the Merger in respect of its
shares of Safelite Common Stock. The Note shall be held by the Representative on
behalf of the LS Selling Stockholders. The closing of the transactions
contemplated by this Section 1.11 shall be referred to herein as the "LSH
Closing."
1.12. NOTE PAYMENT. On the Closing Date, immediately following the LSH
Closing, LSAC shall pay the Note by payment of cash in the amount of its
obligations under the Note by wire transfer of(i) $39,800,000 in accordance with
the Escrow Agreement in the form attached as Exhibit 1.12 hereto (the "Escrow
Agreement"), and (ii) the balance to the Representative for the benefit of the
LS Selling Stockholders. The proceeds of the Note (including any amounts
released from escrow in accordance with the Escrow Agreement) (the "Note
Proceeds") shall be allocated among the outstanding shares of ▇▇▇▇ ▇▇▇▇▇▇▇
Common Stock in accordance with the Company's Amended and Restated Certificate
of Incorporation as though there were a dissolution, liquidation or winding-up
of the Company, assuming the assets available for distribution in respect of
such outstanding shares of ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock were equal to the amount of
the Note Proceeds.
11
17
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to LSAC and Newco as follows:
2.01. CAPITALIZATION. (a) As of the date hereof, the authorized capital
stock of the Company consists of 583,000 shares of ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock,
divided into three classes consisting of(i) 210,000 shares of Preferential
Common Stock, of which 207,000 shares are issued and outstanding, (ii) 272,000
shares of Class A Common Stock, of which 169,000 shares are issued and
outstanding, and (iii) 101,000 shares of Class B Common Stock, of which 97,420
shares are issued and outstanding. Schedule 2.01(a) hereto sets forth the
record owners of the ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock and the number of shares held by
each as set forth in the records of the Company. All of the issued and
outstanding shares of ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock are validly issued, fully paid
and non-assessable. As of the date hereof, there are outstanding Options to
acquire (or, in the case of Stock Appreciation Rights, in respect of) 3,000
shares of Class A Common Stock and 4,900 shares of Class B Common Stock. Except
as set forth in this Section 2.01(a) or in the disclosure schedule delivered by
the Company to LSAC and Newco in connection herewith (the "Disclosure
Schedule"), there are outstanding no securities convertible into, exchangeable
for, or carrying the right to acquire, or any voting agreements with respect to,
any equity securities of the Company, or subscriptions, warrants, options,
rights or other arrangements or commitments obligating the Company to issue or
acquire any of its equity securities or any ownership interest therein. On the
Closing Date, all of the outstanding Options will be terminated without cost to
the Company and the Company will have no further obligations to the holders
thereof with respect thereto.
12
18
(b) As of the date hereof, the authorized capital stock of Safelite
consists of 4,600,000 shares of Safelite Common Stock, divided into three
classes consisting of(i) 3,300,000 shares of Preferential Common Stock, of which
3,245,251 shares are issued and outstanding, (ii) 1,250,000 shares of Class A
Common Stock, of which 1,105,910 shares are issued and outstanding, and (iii)
50,000 shares of Class B Common Stock, of which 40,991 shares are issued and
outstanding. Schedule 2.02 hereto sets forth the record owners of the Safelite
Common Stock and the number of shares held by each as set forth in the records
of Safelite. All of the issued and outstanding shares of Safelite Common Stock
are validly issued, fully paid and non-assessable. As of the date hereof, there
are outstanding Options to acquire the shares of Class A Common Stock and Class
B Common Stock as set forth on Schedule 2.02. Except as set forth in this
Section 2.01 (b) or in the Disclosure Schedule, there are outstanding no
securities convertible into, exchangeable for, or carrying the right to acquire,
or any voting agreements with respect to, any equity securities of Safelite, or
subscriptions, warrants, options, rights or other arrangements or commitments
obligating Safelite to issue or acquire any of its equity securities or any
ownership interest therein. on the Closing Date, all of the outstanding Options
issued under the Safelite Stock Option Plan (1989) will be terminated and
Safelite will have no further obligations to the holders thereof with respect
thereto. The Safelite Employees Stock Option Plan (1993) will be continued by
the Surviving Corporation.
2.02. SUBSIDIARIES. The Disclosure Schedule sets forth a list, as of the
date hereof, of all direct or indirect subsidiaries of the Company other than
those which individually or in the aggregate would not constitute a "Significant
Subsidiary" as defined in Rule 1-02(w) of Regulation S-X (the "Subsidiaries").
Except as set forth in the Disclosure Schedule, the Company owns, either
directly or indirectly through one or more Subsidiaries, all of the capital
stock of the Subsidiaries free and clear of any mortgage,
13
19
pledge, hypothecation, lien, security interest or other encumbrance (each an
"Encumbrance"). All of the issued and outstanding shares of capital stock of the
Subsidiaries are validly issued, fully paid and non-assessable. Except as set
forth in the Disclosure Schedule, there are outstanding no securities
convertible into, exchangeable for, or carrying the right to acquire, or any
voting agreements with respect to, any equity securities of any of the
Subsidiaries, or subscriptions, warrants, options, rights or other arrangements
or commitments obligating any Subsidiary to issue or acquire any of its equity
securities or any ownership interest therein.
2.03. ORGANIZATION. The Company and each of the Subsidiaries are
corporations duly organized and validly existing under the laws of their
respective jurisdictions of incorporation and have all requisite corporate power
and authority to carry on their businesses as they are now being conducted. The
Company and each of the Subsidiaries are duly qualified to do business and are
in good standing as foreign corporations in all jurisdictions where the nature
of the property owned or leased by them, or the nature of the business conducted
by them, makes such qualification necessary and the absence of such
qualification would, individually or in the aggregate, have a material adverse
effect on the business, assets, results of operations or financial condition of
the Company and the Subsidiaries taken as a whole or on the business, assets,
results of operations or financial condition of Safelite and its subsidiaries
taken as a whole (a "Material Adverse Effect"). True and complete copies of the
Certificates of Incorporation and By-Laws of the Company and each of the
Subsidiaries have previously been made available to LSAC and Newco.
2.04. FINANCIAL STATEMENTS. The Company has delivered to LSAC and Newco (a)
an audited consolidated balance sheet and an audited consolidated statement of
operations of the Company and its Subsidiaries as of and for the years ended
December 31, 1994 and December 31, 1995, (b) an unaudited consolidated balance
sheet
14
20
and an unaudited consolidated statement of operations of the Company and its
Subsidiaries as of and for the eight months ended August 31, 1996, (c) an
audited consolidated balance sheet and an audited consolidated statement of
operations of Safelite and its subsidiaries as of and for the years ended
December 31, 1994 and December 31, 1995 and (d) an unaudited consolidated
balance sheet and an unaudited consolidated statement of operations of Safelite
and its subsidiaries as of and for the eight months ended August 31, 1996
(collectively, the "Financial Statements"), a copy of each of which is included
in the Disclosure Schedule. The Financial Statements present fairly, in all
material respects, the consolidated financial position and the results of
operations of the Company and its Subsidiaries and of Safelite and its
subsidiaries, respectively, as of their respective dates and for the respective
periods then ended in conformity with generally accepted accounting principles
except as set forth in the footnotes thereto or in the Disclosure Schedule, and
except that the unaudited financial statements were prepared on an interim
basis, are subject to normal year-end adjustments and do not contain all of the
footnote disclosures required by generally accepted accounting principles.
2.05. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Disclosure Schedule or permitted or contemplated by this Agreement, since August
31, 1996, neither the Company nor any of the Subsidiaries has (a) suffered any
damage, destruction or casualty loss to its physical properties which,
individually or in the aggregate, has a Material Adverse Effect; (b) incurred or
discharged any obligation or liability or entered into any other transaction
except in the ordinary course of business and except for obligations,
liabilities and transactions that do not individually or in the aggregate have a
Material Adverse Effect; (c) suffered any changes which individually or in the,
aggregate have a Material Adverse Effect; (d) increased the rate or terms of
compensation payable or to become payable by the Company or any of its
Subsidiaries to any of their respective directors, officers or key employees, or
increased the rate or terms
15
21
of any bonus, pension or other employee benefit plan covering any of their
respective directors, officers or key employees, except in each case increases'
occurring in the ordinary course of business in accordance with their respective
customary practices (including normal periodic performance reviews and related
compensation and benefit increases) or as required by any pre-existing
Commitment (as defined in Section 2.09); (e) declared or paid any dividend or
made any other distribution on or with respect to any shares of its capital
stock or redeemed, purchased or otherwise acquired any outstanding shares of its
capital stock; (f) incurred any long-term indebtedness for borrowed money
(including capital lease obligations) or issued any debt securities or assumed,
guaranteed or endorsed the obligations of any other firm other than in the
ordinary course of business; (g) sold, transferred or otherwise disposed of any
of its material properties or assets; or (h) created any Encumbrance (other than
Permitted Encumbrances (as defined in Section 2.06)).
2.06. TITLE TO ASSETS. The Company and the Subsidiaries have good (and, in
the case of real property, marketable) title to all of the assets and properties
which they purport to own (except for assets and properties sold, consumed or
otherwise disposed of in the ordinary course of business since August 31, 1996)
and which are material to the business, assets, results of operations or
financial condition of the Company and the Subsidiaries taken as a whole or to
Safelite and its subsidiaries taken as a whole ("Material"), free and clear of
Encumbrances, except (a) as set forth in the Disclosure Schedule, (b) liens for
taxes not yet due or being contested in good faith by appropriate proceedings
for which adequate reserves have been established on the books and records of
the Company and its Subsidiaries to the extent required by the Company's
accounting practices, and (c) Encumbrances which individually or in the
aggregate do not have a Material Adverse Effect (collectively, the "Permitted
Encumbrances").
16
22
2.07. PATENTS, TRADEMARKS. ETC. The Disclosure Schedule sets forth a list,
as of the date hereof, of all Material registered United States and foreign
patents, trademarks, trade names, copyrights and applications therefor which are
used by the Company or any of the Subsidiaries in the conduct of the business of
the Company and the Subsidiaries (the "Patent and Trademark Rights"). Except as
set forth in the Disclosure Schedule, (a) the Company and the Subsidiaries own
or possess adequate licenses or other valid rights to use all Patent and
Trademark Rights; (b) to the Company's knowledge, the conduct of the business of
the Company and the Subsidiaries as now being conducted does not conflict with
any valid patents, trademarks, trade names or copyrights of others in any way
which, individually or in the aggregate, has a Material Adverse Effect; and (c)
to the Company's knowledge, none of the Patent and Trademark Rights is being
infringed upon by others in any way which, individually or in the aggregate, has
a Material Adverse Effect.
2.08. POWER AND AUTHORITY: EFFECT OF AGREEMENT. (a) The Partnership
Sellers, the Company, Safelite and LSNWY each has all requisite partnership or
corporate (as the case may be) power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Partnership Sellers, the
Company, Safelite and LSNWY of this Agreement and the consummation by each of
them of the transactions contemplated hereby have been duly authorized by their
respective general partners or Boards of Directors (as the case may be) and, in
the case of Safelite, immediately following the execution and delivery of this
Agreement, will be authorized by the holders of a majority of the outstanding
shares of capital stock of Safelite. No other partnership or corporate action on
the part of the Partnership Sellers, the Company, Safelite or LSNWY (other than
any notice to stockholders which may be required under Section 228(d) of the
DGCL) or its partners or stockholders (as the case may be) is necessary to
authorize this
17
23
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Partnership Sellers, the Company,
Safelite and LSNWY and, assuming the due authorization, execution and delivery
by LSAC and Newco, constitutes a valid and binding obligation of each of them,
enforceable against each of them in accordance with its terms, except to the
extent that such enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and (ii) is subject to general principles of equity.
(b) The execution, delivery and performance by the Company, Safelite and
LSNWY of this Agreement and the consummation by each of them of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, subject to obtaining any required consents, approvals,
authorizations, exemptions or waivers referred to in Section 2.15, (i) violate
any provision of law, rule or regulation to which the Company or any Subsidiary
is subject, (ii) violate any order, judgment or decree applicable to the Company
or any of the Subsidiaries, or (iii) conflict with or result in a breach or
violation of the provisions of, or constitute a default under, (A) the
Certificate of Incorporation or By-Laws of the Company, Safelite or LSNWY, or
(B) any agreement reflecting obligations of the Company, Safelite or LSNWY for
borrowed money, except in the case of clause (i), (ii) or (iii)(B) of this
Section 2.08(b), for violations, conflicts, breaches or defaults which
individually or in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby or have a Material Adverse
Effect.
2.09. COMMITMENTS. The Disclosure Schedule sets forth a list, as of the
date hereof, of each contract or agreement to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries is
bound (collectively, the "Commitments") (a) which provides for future payments
thereunder of
18
24
more than $250,000 per year, including, without limitation, all such Commitments
which are (i) Commitments for capital expenditures, (ii) distribution, dealer or
sales agency Commitments, (iii) guarantees of third party obligations, and (iv)
Commitments for the sale of any assets, but excluding purchase orders or other
Commitments for the purchase of raw materials, components or supplies and sales
orders or other Commitments for the sale of finished goods entered into in the
ordinary course of business; (b) which restricts the kinds of businesses in
which the Company or any of the Subsidiaries may engage or the geographical area
in which any of them may conduct their business; (c) which is an indenture,
mortgage, loan agreement or other Commitment for the borrowing of money or a
line of credit; (d) which is a collective bargaining agreement; (e) which is a
Material license (whether as licensor or licensee) or similar agreement
permitting the use of any Material Patent and Trademark Rights; (f) which is a
brokerage or finder's.agreement; (g) which is a joint venture, partnership or
similar agreement; (h) which is a stock purchase agreement, asset purchase
agreement or other acquisition or divestiture agreement; (i) which is a written
agreement between the Company or any Subsidiary, on the one hand, and any
stockholder, or any affiliate partnership or general partner thereof, director
or officer, on the other hand (which agreements, if they are between the Company
or any Subsidiary and any of the Partnership Sellers or any affiliated.
partnership or any of their general partners, will be terminated as of the
Closing Date (other than (i) agreements, if any, relating to insurance or
indemnification, (ii) the Release referred to in the Disclosure Schedule and
(iii) this Agreement and any agreement entered into in connection herewith but
including the Warrant to Purchase 4,929 shares of Class A Common Stock, dated
June 15, 1992)); or (j) which is not of the foregoing type and is Material.
Except as set forth in the Disclosure Schedule, each of such Commitments is a
valid and binding obligation of the Company or a Subsidiary and is enforceable
against the Company or a Subsidiary in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or
19
25
other similar laws relating to creditors' rights generally and is subject to
general principles of equity and neither the Company nor any Subsidiary nor, to
the knowledge of the Company, any other party, is in default under any
Commitment, except in each case for such failures to be valid, binding and
enforceable and for such defaults which, individually or in the aggregate, would
not have a Material Adverse Effect.
2.10. UNDISCLOSED LIABILITIES. The Company and its subsidiaries do not have
any liabilities of any nature that would be required by generally accepted
accounting principles to be reflected on a balance sheet or in the notes thereto
of the Company and its subsidiaries or of Safelite and its subsidiaries, other
than (i) liabilities that are reflected in the Financial Statements; (ii)
liabilities disclosed or referred to in the Disclosure Schedule (including
liabilities for present or future performance under any of the documents listed
in the Disclosure Schedule); (iii) liabilities as to which no disclosure is'
required pursuant to this Article II (for example, because the making of the
representation and warranty is disclaimed or because the liability involves an
amount which is less than the threshold above which disclosure is required);
(iv) liabilities arising since August 31, 1996 in the ordinary course of
business; and (v) liabilities which individually or in the aggregate are not
Material.
2.11. LITIGATION. Except as set forth in the Disclosure Schedule, there is
no action, litigation or proceeding in any court or before any governmental
authority ("Litigation") pending or, to the Company's knowledge, threatened
against the Company or any of the Subsidiaries or any Company Benefit Plan (as
defined in Section 2.14) (i) with respect to which there is a reasonable
likelihood of a determination which, individually or in the aggregate, would
have a Material Adverse Effect or (ii) which seeks to enjoin or obtain damages
in respect of the consummation of the transactions contemplated hereby. Except
as set forth in the Disclosure Schedule, the Company has not been notified in
writing of any Litigation involving any property or rights of the
20
26
Company or any of its Subsidiaries with respect to which there is a reasonable
likelihood of a determination which, individually or in the aggregate, would
have a Material Adverse Effect. Except as set forth in the Disclosure Schedule,
neither the Company nor any of the Subsidiaries is subject to any outstanding
injunctions, orders, rulings, judgments or decrees that, individually or in the
aggregate, have a Material Adverse Effect.
2.12. COMPLIANCE WITH LAWS. Except as set forth in the Disclosure Schedule,
the Company and the Subsidiaries are in compliance with all applicable federal,
state, local and foreign laws, rules and regulations currently in effect,
including, without limitation, those relating to Environmental Matters (as
defined below) and equal employment opportunity practices, except where the
failure to comply therewith, individually or in the aggregate, does not have a
Material Adverse Effect. The Company and the Subsidiaries have all governmental
permits, licenses and authorizations necessary for the conduct of their
businesses as presently conducted, except where the absence thereof,
individually or in the aggregate, does not have a Material Adverse Effect.
Except as set forth in the Disclosure Schedule, in the twelve months prior to
the date hereof (a) no notice, citation, summons or order has been issued, (b)
no complaint has been filed to commence any Litigation, (c) no penalty has been
assessed and (d) no formal investigation is pending or threatened, in each case
by any governmental or other entity and of which the Company or any Subsidiary
has received written notice with respect to any (i) alleged violation by any of
the Company or the Subsidiaries of any laws regarding Environmental Matters; or
(ii) alleged failure by any of the Company or the Subsidiaries to have any
permit relating to Environmental Matters; or (iii) use, possession, generation,
treatment, storage, recycling, transportation or disposal (collectively,
"Management") or release of any hazardous, toxic or polluting substance, waste,
pollutant or contaminant, including petroleum products and radioactive materials
("Hazardous Substances"), by or
21
27
on behalf of the Company and any Subsidiaries except, in the case of each of
clause (i), (ii) and (iii) of this sentence, where the cost of such violations,
failures, Management or releases, individually or in the aggregate, would not
have a Material Adverse Effect. To the Company's knowledge, except as set forth
in the Disclosure Schedule, no Hazardous Substance has been treated, stored,
disposed of, discharged or released into 'the environment on or from the
premises of the Company or any of the Subsidiaries, which is currently required
by applicable law, rule or regulation to be remediated by or at the expense of
the Company or of any of the Subsidiaries where the cost of such remediation,
individually or in the aggregate, would have a Material Adverse Effect. Except
as set forth on the Disclosure Schedule, neither the Company nor any Subsidiary
has received any request for information, notice of claim, demand or
notification, in each of the foregoing cases, in writing, that it is or may be
potentially responsible with respect to any investigation or clean-up of any
threatened or actual release of any Hazardous Substance where the cost of such
investigation or cleanup, individually or in the aggregate, would have a
Material Adverse Effect. Except as set forth in the Disclosure Schedule, to the
knowledge of the Company and the Subsidiaries, (i) no polychlorinated byphenyls
("PCBs") or asbestos containing materials are or have been present at any of the
premises of the Company or any Subsidiary which presence, individually or in the
aggregate, would have a Material Adverse Effect, and (iii) there are no
underground storage tanks, active or abandoned, at any of said premises the
presence of which, individually or in the aggregate, would have a Material
Adverse Effect. To the knowledge of the Company and the Subsidiaries, (i) there
are no environmental liens on any of the premises of the Company, which liens,
individually or in the aggregate, would have a Material Adverse Effect, and (ii)
no government actions have been taken or are in process or pending which could
subject any of such premises to such liens, which liens, individually or in the
aggregate would have a Material Adverse Effect. The parties hereto agree that
the only representations and warranties of the Company made herein as to any
Environmental
22
28
Matters are those contained in this Section 2.12. As used herein, the term
"Environmental Matter" means any matter arising out of or relating to the
environment, safety or health or the production, storage, handling, use,
emission, release, discharge or disposal of any substance, product or waste
which is hazardous or toxic or which is regulated by law.
2.13. TAXES. (a) Except as set forth in the Disclosure Schedule, all
Material federal, state, local and foreign Tax Returns required to be filed with
respect to the Company and the Subsidiaries have been filed in a timely manner
(taking into account all extensions of due dates). Such Tax Returns are correct
and complete in all respects, except (i) where the failure to be correct and
complete would not have a Material Adverse Effect and (ii) that, except as
provided in subsection (j) of this Section 2.13, no representation or warranty
is made with respect to any item which could affect any net operating losses of
the Company or any of the Subsidiaries.
(b) The Company and the Subsidiaries have paid, or reserved for on the
Financial Statements, all Taxes that are due whether or not shown on the Tax
Returns described in Section 2.13(a), above, other than (i) Taxes the nonpayment
of which would not have a Material Adverse Effect and (ii) Taxes which the
Company or the Subsidiaries are contesting in good faith and that are set forth
in the Disclosure Schedule.
(c) Except as set forth in the Disclosure Schedule, no waivers of statutes
of limitation are in effect in respect of federal income Taxes for the Company
or any of the Subsidiaries.
(d) Except as set forth in the Disclosure Schedule, no deficiencies for any
income or franchise Taxes have been asserted or assessed in writing against the
Company or any of the Subsidiaries which remain Unpaid and which individually or
in the aggregate are Material.
23
29
(e) Neither the Company nor any of the Subsidiaries has, with respect to
any assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), which consent is currently in effect.
(f) Except as set forth in the Disclosure Schedule, no claim has been made
in writing at any time during the five-year period beginning five years prior to
the date hereof by any taxing authority in a jurisdiction where the Company or
its Subsidiaries do not file Tax Returns that they are or may be subject to
taxation by that jurisdiction.
(g) Except as set forth in the Disclosure Schedule, the Company and the
Subsidiaries each has withheld and paid all Material Taxes required to have been
withheld and paid by them in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(h) Schedule 2.13 of the Disclosure Schedule lists all federal income Tax
Returns filed with respect to any of the Company and its Subsidiaries for open
taxable periods, indicates all such returns that have been audited and indicates
those income Tax Returns that currently are the subject of an audit. The Sellers
have made available to LSAC and Newco complete copies of all federal, state,
local and foreign Tax Returns, examination reports, closing agreements, waivers
of statutes of limitations on assessment and/or collection of Taxes and
statements of deficiencies assessed against or agreed to by any of the Company
and the Subsidiaries for all open taxable periods.
(i) The Company and the Subsidiaries have not agreed, and are not required,
to make any Material adjustment under Section 481 of the Code by ▇▇▇▇▇ of a
change in accounting method.
24
30
(j) Since July 1, 1989, there has not been an ownership .change (within the
meaning of Section 382 of the Code) with respect to the Company or the
Subsidiaries (other than by reason of the transactions contemplated hereby).
(k) The tax basis of LSNWY in its shares of Safelite as of December 20,
1996 will be, in the aggregate, at least $310 million. There is no Material
deferred gain or loss allocable to the Company or the Subsidiaries arising out
of any deferred intercompany transaction under Treasury Regulations Section
1.1502-13 or 1.1502-14, nor any Material excess loss account (as defined in
Treasury Regulation Section 1.1502-19) of the Company or any of the
Subsidiaries, that would be triggered as a result of the sale of Safelite, the
Company or any other transaction contemplated hereby.
For purposes of this Agreement, "Tax" means all federal, state, local and
foreign taxes, levies, deficiencies or other assessments and other charges of
whatever nature (including income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental,
capital stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated) imposed by
any taxing authority, as well as any obligation to contribute to the payment of
Taxes determined on a consolidated, combined or unitary basis with respect to
the Company or any affiliate, including any interest, penalty (civil or
criminal), or addition thereto, whether disputed or not, and "Tax Return" means
any federal, state, local and foreign return, declaration, report, claim for
refund, amended return, declarations or estimated Tax or information return or
statement relating to Taxes, and any schedule or attachment thereto, filed or
maintained, or required to be filed or maintained in connection with the
calculation, determination, assessment or collection of any Tax, and including
any amendment thereof, as well as, where elected or required,
25
31
combined or consolidated returns for any group of entities that include the
Company or any Subsidiary.
2.14. EMPLOYEE BENEFIT PLANS. (a) The Disclosure Schedule lists (i) each
employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which provides for
payments in excess of $50,000 annually, and (ii) each stock purchase, stock
option, restricted stock, incentive, severance, employment, change in control,
disability, deferred compensation, retiree medical, or other employee benefit
plan, program, or arrangement which is maintained or contributed to by the
Company or any of the Subsidiaries or for which the Company or any of the
Subsidiaries has any liability or contingent liability and, in each case, which
provides for payments in excess of $50,000 annually (the "Company Benefit
Plans"). The Company has provided to LSAC and Newco (i) true and complete copies
of all Company Benefit Plans (or to the extent no such copy exists, an accurate
description thereof); (ii) the most recent annual actuarial evaluation, if any,
prepared for each Company Benefit Plan; (iii) the most recent annual report
(series 5500), if any, required under ERISA with respect to each Company Benefit
Plan; (iv) the most recent determination letter received from the Internal
Revenue Service (the "IRS"), if any, and any Summaries of Material Modifications
thereto, for each Company Benefit Plan; and (v) the most recent Summary Plan
Description, if any, required under ERISA with respect to each Company Benefit
Plan.
(b) Except as set forth in the Disclosure Schedule, (i) with respect to
each Company Benefit Plan that is intended to be qualified under Section 401(a)
of the Code, and is maintained by the Company or any of the Subsidiaries for any
of their employees, (x) the Company or such Subsidiary has obtained a favorable
determination letter from the IRS, (y) there are no amendments to any such plans
which are not the subject of a favorable determination letter, and (z) to the
Company's knowledge, nothing
26
32
has occurred which could cause the loss of such qualification that cannot be.
corrected without liability to the Company that would have a Material Adverse
Effect; (ii) the Company and the Subsidiaries are not, and have not been, and to
the Company's knowledge no other person is, or has been, engaged in a
transaction prohibited by Section 4975 of the Code or Section 406 of ERISA, or
breached any fiduciary duty under ERISA, which would result in a liability to
the Company and the Subsidiaries which would, individually or in the aggregate,
have a Material Adverse Effect; (iii) each Company Benefit Plan has been
operated in accordance with its terms and in all respects with ERISA, the Code,
and all other applicable law except for any non-compliance that would not
individually or in the aggregate have a Material Adverse Effect; and (iv) none
of the Company Benefit Plans is, to the knowledge of the Company, the subject of
any investigation, examination, or audit by the Internal Revenue Service, united
States Department of Labor, or any other governmental agency which would have a
Material Adverse Effect.
(c) Except as set forth in the Disclosure Schedule, (i) each Company
Benefit Plan which is subject to Part III of Subtitle B of Title I of ERISA or
Section 412 of the Code has been maintained in compliance with the minimum
funding standards of ERISA and the Code except for any .failure to comply which
would not, individually or in the aggregate, have a Material Adverse Effect;
(ii) no reportable event, within the meaning of Section 4043 of ERISA, has
occurred with respect to any Company Benefit Plan which is subject to Title IV
of ERISA, other than reportable events with respect to which notice has been
waived by the Pension Benefit Guaranty Corporation ("PBGC") or which would not,
individually or in the aggregate, have a Material Adverse Effect; (iii) no
Company Benefit Plan has incurred any "accumulated funding deficiency" (as
defined by Section 302 of ERISA or Section 412 of the Code), whether or not
waived; (iv) the PBGC has not instituted or, to the knowledge of the Company,
threatened to institute
27
33
proceedings to terminate any Company Benefit Plan, and no condition exists that
presents a Material risk that such proceedings will be instituted; (v) none of
the Company Benefit Plans provides for any unpredictable contingent event
benefit (as that term is defined in Section 302(d)(7)(B) of ERISA or Section
412(l)(7)(B) of the Code); (vi) the Company and its Subsidiaries have made all
required premium payments when due to the PBGC; (vii) neither the Company or any
of its Subsidiaries is subject to any liability to the PBGC for any plan
termination occurring on or prior to the date hereof; (viii) no amendment has
occurred which has required or could require the Company or any Subsidiary to
provide security pursuant to Section 307 of ERISA or Section 401(a)(29) of the
Code; (ix) no Company Benefit Plan is a plan described in Section 4063(a) of
ERISA; and (x) none of the Company or any of its Subsidiaries has engaged in a
transaction which could subject it to Material liability under Section 4069 of
ERISA.
(d) Except as set forth in the Disclosure Schedule, with respect to any
multiemployer plan (within the meaning of Section 400l(a)(3) of ERISA) to which
the Company, or any of its Subsidiaries, has any liability or contingent
liability, or contributes (or has at any time within the past five years
contributed or had an obligation to contribute): (i) the Company and its
Subsidiaries, and to the knowledge of the Company, all other members of the
"▇▇▇▇ ▇▇▇▇▇▇▇ Affiliated Group" (as defined in Section 5.03 of this Agreement),
will make, or as of the Effective Time will have made, all contributions to each
such multiemployer plan required by the terms of such multiemployer plan or any
collective bargaining agreement; (ii) none of the Company or any Subsidiary has
incurred any Material withdrawal liability under Title IV of ERISA that has not
been paid in full; (iii) to the knowledge of the Company, no such multiemployer
plan is in reorganization or insolvent (as those terms are defined in Sections
4241 and 4245, respectively, of ERISA); and (iv) none of the Company or any
28
34
Subsidiary has engaged in a transaction which would subject it to liability
under Section 4212(c) of ERISA.
(e) Without regard to any agreements made or any actions taken after the
Effective Time, none of the Company and its Subsidiaries has made any payments,
is obligated to make any payments, or is a party to any agreement that could
obligate it to make any payment that will not be deductible under Section 280G
of the Code or that would be subject to an excise tax under Section 4999 of the
Code.
(f) Except as set forth in the Disclosure Schedule, other than coverage
mandated by applicable statute, none of the Company or any Subsidiary is under
any obligation or liability to provide medical benefits or death benefits
(including through insurance) to retirees or any group of former employees,
officers, or directors of the Company, any Subsidiary, or any member of the ▇▇▇▇
▇▇▇▇▇▇▇ Affiliated Group, or their respective dependents, the provision of which
benefits would have a Material Adverse Effect.
2.15. CONSENTS. Except as set forth in the Disclosure Schedule, no consent,
approval or authorization of, or .exemption by, or filing with, any governmental
authority, other than pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act"), and the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, is required in connection with the execution,
delivery and performance by the Company of this Agreement or the taking by it of
any other action contemplated hereby, excluding, however, consents, approvals,
authorizations, exemptions and filings, if any, which LSAC or Newco is required
to obtain or make.
2.16. INSURANCE. The Disclosure Schedule sets forth a list, as of the date
hereof, of all Material casualty, general liability and other insurance
maintained by the
29
35
Company or any of the Subsidiaries (the "Insurance Policies"). Each of the
Insurance-Policies is in full force and effect and no written notice has been
received by the Company or any of the Subsidiaries from any insurance carrier
purporting to cancel coverage under any of the Insurance Policies which
cancellation would have, individually or in the aggregate, a Material Adverse
Effect. Except as set forth in the Disclosure Schedule, there are no pending
Material claims against the Insurance Policies by the Company or any of the
Subsidiaries as to which the insurers have denied liability by written notice to
the Company or a Subsidiary. The Company and the Subsidiaries have made timely
premium payments with respect to all of the Insurance Policies. The Company
makes no representation or warranty that insurance coverage under the Insurance
Policies will be continued or is continuable after the Safelite Stock Sale
Closing.
2.17. LABOR MATTERS. Except as set forth in the Disclosure Schedule,
neither the Company nor any of the Subsidiaries is a party to any collective
bargaining agreement nor does any labor union or collective bargaining agent
represent any of the employees of the Company or any of the Subsidiaries. Except
as set forth in the Disclosure Schedule, there is no labor strike, slow-down,
stoppage or union organizing effort pending or, to the Company's knowledge,
threatened by the employees of the Company or any of the Subsidiaries. The
Company and its Subsidiaries are in compliance with all applicable laws relating
to employment and employment practices, terms and conditions of employment and
wages and hours except for any noncompliance which, individually or in the
aggregate, would not have a Material Adverse Effect, and, to the Company's
knowledge, the Company and its Subsidiaries are not engaged in any unfair labor
practice with respect to their employees, except for any such practice which,
individually or in the aggregate, would not have a Material Adverse Effect.
There is no unfair labor practice, complaint, charge or other matter against or
involving the Company
30
36
or any of its Subsidiaries pending before the National Labor Relations Board,
the Equal Employment Opportunity Commission or any other governmental agency or
regulatory body except for any such practices, complaints, charges or other
matter which, individually or in the aggregate, would not have a Material
Adverse Effect.
2.18. FEES. Except for the fees payable to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., neither
the Company nor any of the Subsidiaries has employed any broker, finder or
intermediary paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions contemplated
hereby.
2.19. DISCLAIMER. THE COMPANY SHALL NOT BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY OTHER THAN AS EXPRESSLY MADE BY THE COMPANY IN
SECTIONS 2.01 THROUGH 2.18 HEREOF. IN ANY EVENT, THE COMPANY MAKES NO WARRANTY
OF MERCHANTIBILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY,
WITH RESPECT TO ANY OF THE TANGIBLE ASSETS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR
WARRANTY REFERRED TO IN SECTION 2-312 OF THE NYS UNIFORM COMMERCIAL CODE OR THE
UNIFORM COMMERCIAL CODE OF ANY OTHER JURISDICTION OR IN ANY STATUTE APPLICABLE
TO REAL PROPERTY), AND LSAC AND NEWCO SHALL RELY UPON ITS OWN EXAMINATION
THEREOF. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AND NOTWITHSTANDING
ANY OTHERWISE EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY IN
SECTIONS 2.01 THROUGH 2.18 HEREOF, THE COMPANY MAKES NO REPRESENTATION OR
WARRANTY WITH RESPECT TO ANY PROTECTIONS, ESTIMATES OR BUDGETS
31
37
HERETOFORE DELIVERED TO OR MADE AVAILABLE TO LSAC OR NEWCO OF FUTURE REVENUES,
EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF OPERATIONS OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LSAC AND NEWCO
------------------------------------------------
LSAC and Newco hereby represent and warrant to the Company as follows:
3.01. ORGANIZATION. LSAC and Newco are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, and have all requisite corporate power and authority to carry
on their businesses as they are now being conducted. LSAC and Newco are
corporations newly formed for the purpose of consummating the transactions
contemplated hereby. Neither LSAC nor Newco has any assets, other than those
held, or any liabilities, other than those incurred, in connection with the
transactions contemplated hereby.
3.02. POWER AND AUTHORITY: EFFECT OF AGREEMENT. (a) Each of LSAC and Newco
has all requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by LSAC and by Newco of this Agreement and the
consummation by each of them of the transactions contemplated hereby have been
duly authorized by the respective Boards of Directors of LSAC and Newco and by
the sole stockholder of each of them, and no other corporate action on the part
of LSAC and Newco or any of their respective stockholders or affiliates is
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by LSAC and by Newco and, assuming the due authorization, execution
and delivery thereof by the Company and
32
38
the other parties hereto, constitutes a valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' fights generally and (ii) is subject to general principles of equity.
(b) The execution, delivery and performance by LSAC and by Newco of this
Agreement and the consummation by .each of them of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, subject to obtaining any required consents, approvals, authorizations,
exemptions or waivers referred to in Section 3.05, (i) violate any provision of
law, rule or regulation to which LSAC or Newco is subject, (ii) violate any
order, judgment or decree applicable to LSAC or Newco or any of their
subsidiaries, or (iii) conflict with or result in a breach of the provisions of,
or constitute a default under, (A) the Certificate of Incorporation or ByLaws of
LSAC or Newco, or (B) any agreement reflecting obligations of LSAC or Newco or
any of their subsidiaries, for borrowed money, except in the case of clause (i),
(ii) or (iii)(B) of this Section 3.02(b), for violations, conflicts, breaches or
defaults which individually or in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby.
3.03. LITIGATION. There is no Litigation pending or threatened against LSAC
or Newco (i) with respect to which there is a reasonable likelihood of a
determination which would, individually or in the aggregate, have a material
adverse effect on the ability of LSAC or Newco to perform its obligations under
this Agreement, or (ii) which seeks to enjoin or obtain damages in respect of
the consummation of the transactions contemplated hereby. Neither LSAC nor Newco
is subject to any outstanding orders, rulings, judgments or decrees which,
individually or in the aggregate,
33
39
would have a material adverse effect on the ability of LSAC or Newco to perform
its obligations under this Agreement.
3.04. AVAILABILITY OF FUNDS. Subject to the fulfillment of any conditions
contained in the commitment letters to be provided to the Company no later than
November 13, 1996, for senior and senior subordinated indebtedness, LSAC and
Newco or the Surviving Corporation Will have available on the Closing Date
sufficient funds, including equity from the ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund III, L.P.
and its affiliates, to enable them to consummate the transactions contemplated
by this Agreement.
3.05. CONSENTS. Except as set forth in the Disclosure Schedule, no consent,
approval or authorization of, or exemption by, or filing with, any governmental
authority, other than pursuant to the HSR Act and the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, is required in
connection with the execution, delivery and performance by LSAC or Newco of this
Agreement, or the taking by them of any other action contemplated hereby,
excluding, however, consents, approvals, authorizations, exemptions and filings,
if any, which the Company or any other party is required to obtain or make.
3.06. FEES. Except for fees payable in connection with the financing
described in Section 3.04, neither LSAC, Newco nor any of their affiliates has
employed any broker, finder or intermediary or paid or become obligated to pay
any fee or commission to any broker, finder or intermediary in connection with
the transactions contemplated hereby.
34
40
ARTICLE IV
COVENANTS OF THE COMPANY
------------------------
The Company hereby covenants and agrees with LSAC and Newco as follows:
4.01. COOPERATION BY THE COMPANY. From the date hereof and prior to the LSH
Closing, the Company shall use its best efforts, and will cooperate with LSAC
and Newco, to secure all necessary consents, approvals, authorizations,
exemptions and waivers from third parties as shall be required in order to
enable the transactions contemplated hereby to be effected, and shall otherwise
use its best efforts to cause the consummation of such transactions in
accordance with the terms and conditions hereof. The Company shall file with the
Department of Justice and the Federal Trade Commission a Pre-Merger Notification
and Report Form pursuant to the HSR Act in respect of the transactions
contemplated hereby within five business days of the date of this Agreement.
4.02. CONDUCT OF BUSINESS. (a) Except as may be otherwise contemplated by
this Agreement or required by any of the documents listed in the Disclosure
Schedule or except as LSAC or Newco may otherwise consent to in writing (which
consent shall not be unreasonably withheld), from the date hereof and prior to
the LSH Closing, the Company shall, and shall cause each of the Subsidiaries to,
(i) in all material respects, conduct its business only in the ordinary course;
(ii) use its reasonable efforts to preserve intact its properties, assets and
business organization; (iii) maintain its properties, machinery and equipment in
sufficient operating condition and repair to enable it to conduct its business
in all material respects in the manner in which its business is currently
conducted, except for maintenance required by reason of fire, flood, earthquake
or other acts of God; (iv) continue all Material existing insurance policies (or
35
41
comparable insurance) in full force and effect; (v) use its reasonable efforts
to keep available until the LSH Closing the services of its present officers,
employees and agents (as a group); (vi) not increase the rate or terms of
compensation payable or to become payable by the Company or any of its
Subsidiaries to any of their respective directors, officers or key employees,
and not increase the rate or terms of any bonus, pension or other employee
benefit plan covering any of their respective directors, officers or key
employees, except in each case increases occurring in the ordinary course of
business in accordance with their respective customary practices (including
normal periodic reviews and related compensation and benefit increases); and
(vii) use its reasonable efforts to preserve its relationships with its Material
lenders, suppliers, customers, licensors and licensees and others having
Material business dealings with the Company and the Subsidiaries such that its
business will not be Materially impaired.
Without limiting the generality of the foregoing, and except as may be
otherwise contemplated by this Agreement or required by any of the documents
listed in the Disclosure Schedule, neither the Company nor any of its
Subsidiaries will, prior to the LSH Closing, without the prior written consent
of LSAC or Newco (which consent shall not be unreasonably withheld):
(i) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of, (x) additional shares of capital stock of any class
(including ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock or Safelite Common Stock), or
securities convertible into or exchangeable for any such shares, or any
rights, warrants or options to acquire any such shares or other convertible
securities, other than the issuance of ▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock or shares
of Class A Common Stock of Safelite pursuant to the exercise of options
outstanding on the date hereof or (y) any other securities in respect of,
in lieu of, or in substitution for, shares outstanding on the date hereof;
36
42
(ii) declare or pay any dividend or distribution on any shares of
capital stock;
(iii) redeem, purchase or otherwise acquire any outstanding shares of
capital stock;
(iv) propose or adopt any amendment to the Restated Certificate of
Incorporation or By-Laws of the Company or Safelite;
(v) except for revolving loans incurred in the ordinary course of
business pursuant to the terms of the Credit Agreement, (x) incur any
indebtedness for borrowed money (including capital lease obligations) or
issue any debt securities, or assume, guarantee or endorse the obligations
of any other person except in the ordinary course of business or (y) repay
any indebtedness for borrowed money;
(vi) (x) increase the rate or terms of compensation of any of its
directors, officers or other employees, except such increases as are
granted in the ordinary course of business in accordance with customary
practice (including normal periodic performance reviews and related
compensation increases) or as required by any pre-existing Commitment, (y)
pay or agree to pay any pension, retirement allowance or other employee
benefit not required by any existing employee benefit plan or other
Commitment to any such director, officer or employee, whether past or
present, or (z) enter into or amend any employment, bonus, severance or
retirement contract or adopt any employee benefit plan;
(vii) (i) sell, transfer or otherwise dispose of any of its Material
property or assets or (ii) create any Material Encumbrance (other than
Permitted Encumbrances) on any of its Material property or assets;
37
43
(viii) accelerate payment of receivables, delay payment of payables or
liquidate inventory, except in the ordinary course of business consistent
with past practice;
(ix) make any Material capital expenditure or commitment other than as
provided in the capital expenditure budget previously delivered to LSAC and
Newco; or
(x) make any loans, advances or capital contributions, except in the
ordinary course of business consistent with past practice;
(xi) enter into other Material Commitments except Commitments made in
the ordinary course of business consistent with past practice; or
(xii) agree in writing to take any of the foregoing actions.
(b) Without limiting any rights of Newco or LSAC under Section 6.01, the
Company shall not be liable to Newco or LSAC for the breach of any covenant or
agreement contained in Section 4.02(a) with respect to any action taken or
omitted to be taken by the Company or any Subsidiary unless such action was
taken or omitted to be taken at the written direction or written concurrence of
the Partnership Sellers or the management of the Company located in Florham
Park, New Jersey.
4.03. ACCESS. From the date hereof and prior to the LSH Closing, the
Company shall, and shall cause the Subsidiaries to, provide LSAC and Newco with
such information as LSAC and Newco may from time to time reasonably request with
respect to the Company and the Subsidiaries and the transactions contemplated by
this Agreement (including without limitation all information reasonably required
by Newco to enable Newco to complete the financing for the Merger), and the
Company shall, and shall cause the Subsidiaries to, provide LSAC and Newco and
their representatives reasonable access during regular business hours and upon
reasonable notice to the
38
44
properties, books and records of the Company and the Subsidiaries as LSAC and
Newco may from time to time reasonably request; PROVIDED that the Company and
the Subsidiaries shall not be obligated to provide LSAC or Newco with any
information which would violate any law, rule or regulation or term of any
Commitment, or if the provision thereof would adversely affect the ability of
the Company or any of the Subsidiaries or any of their respective affiliates to
assert attorney-client, attorney work product or other similar privilege. Any
disclosure whatsoever during such investigation by LSAC or Newco shall not
constitute an enlargement of or additional representations or warranties of the
Company beyond those specifically set forth in this Agreement. All such
information and access shall be subject to the terms and conditions of the
letter agreement dated August 14, 1996 between ▇▇▇▇▇▇ ▇. ▇▇▇ Company and
Safelite (the "Confidentiality Agreement").
4.04. NO SOLICITATION. From and after the date hereof, neither the Company
nor any LS Selling Stockholder shall directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) any Acquisition
Proposal (as defined below) from any person, or engage in or continue
discussions or negotiations relating to, any Acquisition Proposal, and the
Company and LS Selling Stockholders shall direct their respective shareholders,
partners, directors, officers, financial advisors and other authorized
representatives to refrain from taking any such action. "Acquisition Proposal"
means any proposal or offer for, or any written statement of intention (by
public announcement or otherwise) by any person or group to effect, any sale of
shares of capital stock, recapitalization, merger or consolidation with, or
acquisition of substantially all of the assets of, share exchange or other
business combination or similar transaction involving, the Company or any of the
Subsidiaries, or any written inquiry by any person or group with respect to the
Company's willingness to receive or discuss any of the foregoing.
39
45
4.05 TAX RETURNS. All Material income Tax Returns filed before December 20,
1996 and after the date hereof shall be subject to the review and consent of
Newco prior to the filing thereof, which consent shall not be unreasonably
withheld.
4.06 STOCKHOLDER APPROVAL. Each of the LS Selling Stockholders and LSNWY
shall vote all shares of capital stock of Safelite held by it in favor of this
Agreement and the transactions contemplated hereby.
ARTICLE V
COVENANTS OF LSAC AND NEWCO
---------------------------
LSAC and Newco hereby covenant and agree with the Seller Group as follows:
5.01. COOPERATION BV LSAC AND NEWCO. From the date hereof and prior to the
LSH Closing, LSAC and Newco shall use their best efforts, and shall cooperate
with the Company, to secure all necessary consents, approvals, authorizations,
exemptions and waivers from third parties as shall be required in order to
enable LSAC and Newco to effect the transactions contemplated hereby, and will
otherwise use their best efforts to cause the consummation of such transactions
in accordance with the terms and conditions hereof. Without limiting the
foregoing provisions of this Section 5.01, LSAC and Newco shall file with the
Department of Justice and the Federal Trade Commission a Pre-Merger Notification
and Report Form pursuant to the HSR Act in respect of the transactions
contemplated hereby within five business days of this Agreement, and LSAC and
Newco shall use, and shall cause each of its affiliates to use, its best efforts
to take or cause to be taken all actions necessary, including to promptly and
fully comply with any requests for information from regulatory authorities, to
obtain
40
46
any consent, waiver, approval or authorization relating to the HSR Act that is
necessary to enable the parties to consummate the transactions contemplated by
this Agreement.
5.02. INDEMNIFICATION; INSURANCE. (a) From and after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless to the fullest
extent permitted under applicable law each person who is now, or has been at any
time prior to the date hereof, an officer, director, employee or agent of the
Company or any of its present or former subsidiaries or parent corporations
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses,
including reasonable attorneys' fees, judgments, fines, penalties and amounts
paid in settlement (collectively, "Losses") incurred by an Indemnified Party in
connection with any claim, action, suit, proceeding or investigation (an
"Action") in any way arising out of, pertaining to or resulting from acts or
omissions, or alleged acts or omissions, by any of them in their capacities as
such, whether commenced, asserted or claimed before or after the Effective Time
and including, without limitation, any Losses incurred by any Indemnified Party
in any way arising out of or relating to this Agreement, the Merger, or any of
the other transactions contemplated hereby. In the event of any such Action, (i)
the Surviving Corporation shall pay on an as-incurred basis the reasonable fees
and expenses of counsel selected by the Indemnified Party in advance of the
final disposition of any such Action to the fullest extent permitted by
applicable law, upon receipt of any undertaking required by applicable law, and
(ii) the Surviving Corporation shall cooperate in the defense of any such matter
at its own expense; PROVIDED, HOWEVER, that the Surviving Corporation shall not
be liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld).
(b) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions providing for exculpation of director
and officer
41
47
liability and indemnification set forth in Annex A hereto. The Surviving
Corporation shall maintain in effect such provisions in the Certificate of
Incorporation and By-Laws of the Surviving Corporation providing for exculpation
of director and officer liability and indemnification to the fullest extent
permitted from time to time under the DGCL, which provisions shall not be
amended except as required by applicable law or except to make changes permitted
by applicable law that would enlarge the Indemnified Parties' right of
indemnification.
(c) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered, in their
capacities as officers and directors, by the Company's or any Subsidiary's
existing officers' and directors' liability insurance policies on terms
substantially no less advantageous to the Indemnified Parties than such existing
insurance; PROVIDED, HOWEVER, that the Surviving Corporation shall not be
required in order to maintain or procure such coverage to pay an annual premium
in excess of two and one-half times the aggregate of the current annual premiums
paid by the Company and Safelite for their existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, the Surviving
Corporation shall only be required to obtain as much coverage as can be obtained
by paying an annual premium equal to the Cap.
(d) From and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each person who is a stockholder of the Company or
any of its subsidiaries on the date hereof, and any person which controls or is
a general or limited partner or an affiliate or an employee of any of the
foregoing persons (individually, a "Stockholder Indemnified Party" and
collectively, the "Stockholder Indemnified Parties") against all Losses incurred
by a Stockholder Indemnified Party in
42
48
connection with any Action in any way arising out of, pertaining to or resulting
from this Agreement, the Merger, or any of the other transactions contemplated
hereby, or any act or omission or alleged act or omission related thereto
(including any corporate action taken or omitted to be taken in connection
therewith), whether commenced, asserted or claimed before or after the Effective
Time and including without limitation any Losses incurred by reason of the
assertion by any present or former stockholder of the Company or any of its
subsidiaries of any claim against a Stockholder Indemnified Party or any other
such stockholder; provided, however, that the Surviving Corporation shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonable withheld).
(e) From and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each Stockholder Indemnified Party against all
Losses incurred by such Stockholder Indemnified Party in connection with any
Action in any way arising out of, pertaining to or resulting from any liability
or obligation of, or arising out of or relating to, the Company or any of its
present or former subsidiaries, including any attempt by any third party
(whether or not successful) to impose any liability in respect thereof on any of
the Stockholder Indemnified Parties by reason of their share ownership or
otherwise; PROVIDED that, without limiting the rights of any Stockholder
Indemnified Party under any other provision of this Section 5.02 or otherwise, a
Stockholder Indemnified Party shall not be entitled to indemnification under
this subsection (e): (i) against Losses arising out of any matter with respect
to which the Stockholder Indemnified Party was found by final non-appealable
judgment of a court of competent jurisdiction to have been guilty of willful
misconduct in connection with such matter, or (ii) in respect of claims brought
against the Stockholder Indemnified Party by any present or former stockholder
of the Company or Safelite to the extent such claims are with respect to such
person's equity ownership in the Company or Safelite; and
43
49
provided further, that the Surviving Corporation shall not be liable for any
settlement-effected without its written consent (which consent shall not be
unreasonably withheld).
(f) The provisions of subsections (d) and (e) of this Section 5.02 are
intended to accord separate and independent rights to the Stockholder
Indemnified Parties, and the parties agree that so long as one of these
subsections would entitle a Stockholder Indemnified Party to be indemnified
against a particular matter, then such Stockholder Indemnified Party shall be
entitled to full indemnification with respect to such matter notwithstanding
that the Stockholder Indemnified Party is not or may not be entitled to
indemnification against such matter under the other of these subsections.
(g) In the event of any Action referred to in subsection (d) or (e) of this
Section 5.02, the Surviving Corporation shall pay on an as-incurred basis the
reasonable fees and expenses of counsel selected by the Stockholder Indemnified
Party in advance of the final disposition of any such Action, and the Surviving
Corporation shall cooperate in the defense of any such Action at its own
expense; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld).
(h) The Surviving Corporation shall pay all expenses, including attorneys'
fees, that may be incurred by any Indemnified Party or any Stockholder
Indemnified Party in enforcing the indemnity and other obligations provided for
in this Section 5.02.
(i) The rights of each Indemnified Party and Stockholder Indemnified Party
hereunder shall be in addition to any other rights such Indemnified Party or
Stockholder Indemnified Party, as the case may be; may have under the
Certificate of Incorporation or By-Laws of the Company or the Surviving
Corporation or any subsidiary, under the DGCL or otherwise. Notwithstanding
anything to the contrary
44
50
contained in this Agreement or otherwise, the provisions of this Section 5.02
shall survive the consummation of the Merger and the other transactions
contemplated hereby, and each Indemnified Party and Stockholder Indemnified
Party shall, for all purposes, be a third-party beneficiary of the covenants and
agreements of the Surviving Corporation under this Section 5.02 and,
accordingly, shall be treated as a party to this Agreement for purposes of the
rights and remedies relating to enforcement of such covenants and agreements and
shall be entitled to enforce any such rights and exercise any such remedies
directly.
(j) In no event shall any shareholder, officer, director, employee, trustee
or agent of the Surviving Corporation, nor shall any person which controls or is
a general partner or a limited partner or affiliate of any of the foregoing,
have any liability of any kind or nature under this Section 5.02.
5.03. EMPLOYEE BENEFITS. After the Effective Time, the Surviving
Corporation shall grant to all individuals who are, as of the Effective Time,
employees of the Company or any of its Subsidiaries credit for all service with
the Company, any of its present and former subsidiaries, any other affiliate of
the Company and their respective predecessors (collectively, the "▇▇▇▇ ▇▇▇▇▇▇▇
Affiliated Group") prior to the Effective Time for all purposes for which
service is recognized under each Company Benefit Plan. Benefit plans which
provide medical, dental or life insurance benefits after the Effective Time to
any individual who is an active or former employee of the ▇▇▇▇ ▇▇▇▇▇▇▇
Affiliated Group as of the Effective Time (an "Employee") or a dependent of an
Employee (a "Dependent") shall, with respect to such individuals, waive any
waiting periods and any pre-existing conditions and actively-at-work exclusions
to the extent so waived under present policy and shall provide that any
expenses-incurred on or before the Effective Time by such individuals shall be
taken into account under such plans for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions to
45
51
the extent taken into account under present policy. Without limiting the
generality of any other provision of this Agreement, after the Effective Time
the Surviving Corporation shall, and shall cause the Subsidiaries to, honor and
fully perform all the obligations under (i) all written Commitments with any
Employee; and (ii) all Company Benefit Plans. After the Effective Time, the
Company Benefit Plans shall not be terminated or amended in any manner that
would adversely affect the rights, benefits or protections provided thereunder
to any Employee or Dependent which have accrued and vested prior to the
Effective Time, provided that nothing herein shall prevent or restrict the
Surviving Corporation from terminating any Company Benefit Plan at any time or
from amending or otherwise modifying the terms of such Company Benefit Plan with
respect to benefits accrued or amounts earned after the Effective Time.
5.04. BRIDGE FINANCING. Newco will deliver to the Company a signed
commitment letter no later than November 13, 1996 providing the Surviving
Corporation with the senior subordinated debt portion of the financing required
to finance the transactions contemplated hereby, on a bridge financing basis
(the "Bridge Facility"). Newco covenants and agrees (subject to the fulfillment
of the conditions set forth in Article VI other than that relating to senior
subordinated indebtedness financing contained in Section 6.06) that, if and to
the extent senior subordinated notes have not been sold in the amount required
to enable the Merger and the other transactions contemplated hereby to be
consummated by December 20, 1996, Newco shall cause the Merger to occur on that
date and the Surviving Corporation shall draw upon the Bridge Facility in that
amount.
5.05. INSURANCE. Immediately prior to the Effective Time, LSAC shall
procure policies for insurance (the "LS Insurance"); which shall not be at the
expense of the Company or any of its subsidiaries other than Safelite and its
subsidiaries (collectively, the "LS Companies"), covering product liability
claims and workers'
46
52
compensation claims against the LS Companies and having such other terms as are
set forth in Exhibit 5.05 on behalf and for the benefit of the LS Companies.
Within three years of the date hereof, the Surviving Corporation shall, at its
own expense, procure a renewal of the LS Insurance effective from the fifth
anniversary of the Effective Time through the sixth anniversary of the Effective
Time.
5.06. ▇▇▇▇ ▇▇▇▇▇▇▇ DIVIDEND AND ASSET TRANSFER RESTRICTIONS. From and after
the LSH Closing and the payment in full of all amounts owing under the Note, the
Company shall not declare (or otherwise permit to be paid) any dividends on any
shares of any class of capital stock of the Company, or make any payment on
account of the purchase, redemption, retirement or other acquisition of any
shares of any class of capital stock of the Company, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Company or any of its subsidiaries. The
Company shall not, and shall cause its subsidiaries not to, convey, sell, lease,
assign, pledge, transfer or otherwise dispose of any of their respective
properties or assets, whether now owned or hereafter acquired, except (i) in
satisfaction of liabilities of any of the LS Companies or (ii) in bona fide
arm's length transactions with third parties in exchange for fair value, the
proceeds of which shall be held by the Company or a subsidiary of the Company,
as applicable, in accordance with the terms of this Agreement. Without limiting
the generality of the foregoing, none of the assets or stock of any of the LS
Companies shall be pledged or otherwise encumbered as security for any
indebtedness for borrowed money of any person other than the LS Companies. LSAC
shall not sell any of the stock of the Company other than to a party which
agrees to be bound by the provisions of this Section 5.06. The agreements and
covenants contained in this Section 5.06 shall expire six years and six months
from the Closing Date.
5.07. SOLVENCY LETTERS. Newco, on behalf of the Surviving Corporation,
shall deliver to the Seller Group at the LSH Closing and the Merger the solvency
letters
47
53
with respect to the Company and any of its Subsidiaries delivered by Newco or
the Surviving Corporation to the lenders of the Surviving Corporation, which
letters shall be addressed to the Seller Group.
5.08. OFFERING DOCUMENTS. From and after the date hereof, Newco shall
include, or cause to be included, in every offering document used by Newco, on
behalf of the Surviving Corporation, or any of its affiliates to raise funds for
the transactions contemplated hereby, or otherwise to raise funds prior to the
Closing Date, whether or not any of the LS Selling Stockholders, the Company,
Safelite, LSNWY or any of their affiliates are named therein, and whether by
private or public sales of securities, borrowings, or other means (collectively,
"Offering Documents"), a prominent, boldfaced statement in substantially the
following form:
"THIS DOCUMENT HAS BEEN PREPARED BY NEWCO
IN CONSULTATION WITH THE MANAGEMENT OF
SAFELITE GLASS CORP. NEITHER SAFELITE NOR
▇▇▇▇ ▇▇▇▇▇▇▇ HOLDINGS CORP. SHALL HAVE ANY
LIABILITY WITH RESPECT TO THE [NOTES] PRIOR
TO THE CLOSING OF THE MERGER OF NEWCO INTO
SAFELITE AND THE ACQUISITION OF ▇▇▇▇ ▇▇▇▇▇▇▇
BY LSAC. NONE OF THE STOCKHOLDERS OF ▇▇▇▇
▇▇▇▇▇▇▇ OR ANY OF THEIR AFFILIATES WILL HAVE
ANY LIABILITY FOR THIS OFFERING."
Newco further agrees that, while Newco may make such disclosures as it deems
appropriate under applicable law with respect to this Agreement, Newco shall
describe the Company and the Subsidiaries and any of their affiliates in any
Offering Documents only with the prior approval of the Company as to such
description. If Newco requests the approval of the Company pursuant hereto, the
Company shall respond to such request in a reasonably expeditious manner and
will not unreasonably withhold such approval. The parties acknowledge that the
Offering Documents may describe Safelite Glass Corp.
48
54
as the issuer of any securities or the borrower of any borrowings, so long as.
any such - description expressly states that such references are to Safelite
Glass Corp. the Surviving Corporation after the Merger and not to the current
Safelite Glass Corp.
5.09. RESTRICTION ON MERGER, ETC. LSAC shall not, for a period of at least
two years following the Closing Date, enter into a merger, consolidation or
other business combination pursuant to which it is not the surviving
corporation. Nothing herein shall prohibit LSAC from entering into any of the
foregoing transactions in which it is the surviving corporation.
AKTICLE VI
CONDITIONS TO LSAC'S AND NEWCO'S OBLIGATIONS
--------------------------------------------
The obligations of LSAC and Newco to consummate the transactions
contemplated hereby shall be subject to the satisfaction (or waiver, where
permissible) at or prior to the Effective Time of all of the following
conditions:
6.01. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE COMPANY. The Company
shall have complied in all material respects with its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and the
representations and warranties of the Company contained herein shall be true in
all material respects (or, in the case of any representations or warranties of
the Company contained herein that are already qualified by Materiality or
Material Adverse Effect, shall be true as written) on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, except (a) as
otherwise contemplated hereby, and (b) to the extent that such representations
and warranties were made as of a specified date and as to such representations
and warranties the same shall continue on the Closing Date to have been true in
all material respects (or true as written, as applicable) as of the specified
date.
49
55
LSAC and Newco shall have received a certificate executed by an executive
officer of the Company, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in this Section 6.01.
6.02. NO PROHIBITION. No statute, rule or regulation or order of any court
or administrative agency shall be in effect which prohibits LSAC or Newco from
consummating the transactions contemplated hereby.
6.03. CONSENTS. The applicable waiting period under the HSR Act shall have
expired or been terminated and all other consents, approvals, authorizations,
exemptions and waivers from governmental agencies that shall be required in
order to enable LSAC and Newco to consummate the transactions contemplated
hereby shall have been obtained (except for such consents, approvals,
authorizations, exemptions and waivers, the absence of which would not prohibit
consummation of such transactions or render such consummation illegal).
6.04. ESCROW AGREEMENT. Certain of the Partnership Sellers shall have
entered into the Escrow Agreement.
6.05. FIRPTA CERTIFICATE. Each of the Company and Safelite shall have
provided to LSAC and Newco, respectively, a statement, in a form reasonably
satisfactory to LSAC and Newco, respectively, pursuant to Section 1.897-2(h) of
the Treasury Regulations, certifying that interests in each of the Company and
Safelite, respectively, are not U.S. real property interests within the meaning
of Section 897(c)(1) of the Code and dated not more than 30 days prior to the
Closing Date.
6.06. FINANCING. The lenders under the commitment letters referred to in
Section 3.04 (other than the commitment letter of ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund III,
L.P. and its affiliates, receipt of the funds from which is not a condition to
Newco's and
50
56
LSAC's obligations to close) shall have made available to the Surviving
CorPoration and LSAC the Financing contemplated thereby.
ARTICLE VII
CONDITIONS TO THE LS SELLING STOCKHOLDERS'
------------------------------------------
AND THE COMPANY'S, SAFELITE'S AND LSNWY'S
------------------------------------------
OBLIGATIONS
-----------
The obligation of the LS Selling Stockholders, the Company, Safelite and
LSNWY to consummate the transactions contemplated hereby shall be subject to the
satisfaction (or waiver, where permissible) at or prior to the Effective Time of
all of the following conditions:
7.01. REPRESENTATIONS. WARRANTIES AND COVENANTS OF LSAC AND NEWCO. LSAC and
Newco shall have complied in all material respects with each of their agreements
and covenants contained herein to be performed on or prior to the Closing Date,
and the representations and warranties of LSAC and Newco contained herein shall
be true in all material respects (or, in the case of any representations and
warranties of Newco contained herein that are already qualified by materiality
or material adverse effect qualifiers, such representations and warranties shall
be true as written) on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except (a) as otherwise contemplated
hereby, and (b) to the extent that such representations and warranties were made
as of a specified date and as to such representations and warranties the same
shall continue on the Closing Date to have been true in all material respects
(or true as written, as applicable) as of the specified date. The LS Selling
Stockholders, the Company, Safelite and LSNWY' shall have received a certificate
executed by an executive officer of LSAC and Newco, dated as of the Closing
Date, certifying as to the fulfillment of the conditions set forth in this
Section 7.01.
51
57
7.02. NO PROHIBITION. No statute, rule or regulation or order of any court
or administrative agency shall be in effect which prohibits any office LS
Selling Stockholders, the Company, Safelite or LSNWY from consummating the
transactions contemplated hereby.
7.03. CONSENTS. The applicable waiting period under the HSR Act shall have
expired or been terminated and all other consents, approvals, authorizations,
exemptions and waivers from governmental agencies set forth in the Disclosure
Schedule that shall be required in order to enable the LS Selling Stockholders,
the Company, Safelite and LSNWY to consummate the transactions contemplated
hereby shall have been obtained (except for such consents, approvals,
authorizations, exemptions and waivers, the absence of which would not prohibit
consummation of such transactions or render such consummation illegal).
7.04. INSURANCE. LSAC shall have procured the LS Insurance set forth in
Exhibit 5.05.
7.05. SOLVENCY LETTERS. Newco, on behalf of the Surviving Corporation,
shall have delivered to the LS Selling Stockholders the solvency letters
required to be delivered pursuant to Section 5.07.
7.06. ESCROW AGREEMENT. The Company shall have entered into the Escrow
Agreement.
ARTICLE VIII
TERMINATION
-----------
8.01. TERMINATION. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether
52
58
prior to or after the execution and delivery of the consent of the stockholders
of Safelite thereto,
(a) by the mutual written consent of Newco and the Company; or
(b) by either the Company or Newco if the Merger shall not have
occurred on or before December 20, 1996 (in the case of the Company's
ability to terminate) or February 28, 1997 (in the case of Newco's ability
to terminate).
8.02. EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant to this
Article VIII shall terminate all rights and obligations of the parties hereunder
and. none of the parties shall have any liability to the other parties
hereunder, except that Sections 9.09, 9.13 and 9.14, the Confidentiality
Agreement, the last sentence of Section 4.03 and this Section 8.02 shall remain
in effect, and provided that nothing herein shall relieve any party from
liability for any breach of any covenant or agreement in this Agreement prior to
such termination.
ARTICLE IX
MISCELLANEOUS
-------------
9.01. SURVIVAL. The representations and warranties made in this Agreement
or in any agreement, certificate or other document executed in connection
herewith (an "Ancillary Document") shall not survive the Effective Time. The
covenants and agreements contained herein to be performed or complied with prior
to the Safelite Sale Closing or the LSH Closing shall not survive such Closing.
The covenants and agreements contained herein to be performed or complied with
at or after the Safelite Sale Closing or the LSH Closing shall survive such
Closing until the expiration of the' applicable statute of limitations.
53
59
9.02. KNOWLEDGE. Whenever used in this Agreement, "to the Company's
knowledge" or "to the knowledge of the Company" shall mean the actual knowledge
of the persons listed on Schedule 9.02 of the Disclosure Schedule and shall only
include their actual knowledge obtained in their respective capacities as such.
The burden of proving that a party or person had knowledge shall be on the party
asserting that such knowledge existed.
9.03. ENTIRE AGREEMENT. This Agreement (including the Disclosure Schedule
and all Exhibits hereto), the Ancillary Documents and the Confidentiality
Agreement constitute the sole understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements among the parties
hereto with respect to the subject matter hereof. Matters disclosed by the
Company to Newco and LSAC pursuant to any Section of this Agreement shall be
deemed to be disclosed with respect to all Sections of this Agreement.
9.04. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto; PROVIDED, HOWEVER, that this Agreement may not be
assigned by LSAC or Newco without the prior written consent of the Company
except that LSAC or Newco may assign its rights under this Agreement to a direct
or indirect wholly-owned subsidiary so long as (a) the representations and
warranties of LSAC or Newco, as applicable, made herein are equally true of any
such assignee of LSAC or Newco and (b) such assignment does not have any adverse
consequences to the Company or any of its affiliates (including, without
limitation, any adverse tax consequences or any adverse effect on the ability of
LSAC or Newco to timely consummate the transactions contemplated hereby), but no
such assignment of this Agreement or any of the rights or obligations hereunder
shall relieve LSAC or Newco of any of their obligations under this Agreement.
Such assignee shall execute a counterpart of this Agreement agreeing to be
54
60
bound by the provisions hereof as "Newco" or "LSAC," as applicable, and agreeing
to be jointly and severally liable with the assignor and any other assignee for
all 0fthe obligations of the assignor hereunder. Notwithstanding anything in
this Section 9.04 to the contrary, effective upon the LSH Closing, Newco and
LSAC shall be entitled to assign their rights under this Agreement to their
lenders if required to do so by such lenders.
9.05. PARTIES IN INTEREST. Notwithstanding anything contained in this
Agreement to the contrary, except for the provisions of Section 5.02 (the "Third
Party Provisions"), nothing in this Agreement, express or implied, is intended
to confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third Party
Provisions may be enforced directly by the Indemnified Parties and the
Stockholder Indemnified Parties.
9.06. HEADINGS. The headings of the articles, sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
9.07. AMENDMENT. This Agreement may be amended by the parties hereto at any
time, but no amendment shall be made at or after the Effective Time which alters
or changes (i) the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of any of the shares of
stock of Newco or Safelite, or (ii) any of the Third Party Provisions or this
Section 9.07. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of each of the parties hereto.
55
61
9.08. WAIVERS. The waiver by any party hereto of a breach.of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
9.09. EXPENSES. Each party shall pay all costs and expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby;
PROVIDED that the Transaction Expenses (as hereinafter defined) shall be borne
by the Partnership Sellers. The term "Transaction Expenses" shall mean any fees
and expenses of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
and Deloitte & Touche LLP incurred since August 31, 1996 in connection with the
transactions contemplated by this Agreement and the amount of the bonus payments
payable under the five bonus agreements dated October 28, 1996 between the
Company and five employees of ▇▇▇▇ ▇▇▇▇▇▇▇ Management Corp. The Company
covenants and agrees that from and after the date hereof it will not pay and
will cause Safelite not to pay any Transaction Expenses incurred by it.
9.10. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid:
If to the Company or LSNWY, to it:
c/▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Holdings Corp.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
56
62
with a copy to:
Safelite Glass Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the LS Selling Stockholders, to them:
c/o Forstmann Little & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to LSAC or Newco, to it:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
57
63
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice.
9.11 TRANSFER TAXES. LSAC and Newco shall pay all sales, use, transfer,
real property transfer, recording, gains, stock transfer and other similar Taxes
and fees, including without limitation any Delaware or New York state gains or
transfer Taxes (collectively, "Transfer Taxes") arising out of or in connection
with the transactions effected pursuant to this Agreement, and shall indemnify,
defend and hold harmless the LS Selling Stockholders with respect to such
Transfer Taxes. LSAC and Newco shall timely file as necessary documentation and
Tax Returns with respect to such Transfer Taxes.
9.12. ACCESS TO CERTAIN RECORDS. After the Closing Date, each person who is
an LS Selling Stockholder agrees to provide (or cause to be provided) to the IRS
any relevant records and other information reasonably requested by the IRS, or
reasonably requested by the Company to be provided to the IRS, and in each such
person's possession, and agrees to request the cooperation of the Company's
current auditors, in each case, in connection with any audit of the Company or
the Subsidiaries relating to Section 382 of the Code with respect to taxable
periods of the Company ending on or before the close of business on the Closing
Date. No LS Selling Stockholder shall be liable for any other LS Selling
Stockholder of the latter's breach of this Section 9.12.
58
64
9.13. GOVERNING LAW, ETC. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York applicable to agreements
made and to be performed wholly within such jurisdiction. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the United
States of America in each case located in the County of New York for any
Litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 9.l0 shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America in
each case located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
9.14. PUBLIC ANNOUNCEMENTS. The Company and Newco will consult with each
other with respect to the issuance of any press releases and the making of any
other public statements relating to the transactions contemplated hereby.
9.15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
59
65
LEAK ▇▇▇▇▇▇▇ HOLDINGS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
SAFELITE GLASS CORP.
By:
-------------------------------
Name:
Title:
LSNWY CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
66
LEAK ▇▇▇▇▇▇▇ HOLDINGS CORP.
By:
-------------------------------
Name:
Title:
SAFELITE GLASS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
LSNWY CORP.
By:
-------------------------------
Name:
Title:
67
▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS
By: FLC XVII Partnership,
its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
a general partner
LS PARTNERS
By: FLC XVII Partnership,
its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT
AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP - II
By: FLC Pannership, L.P.
its general ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT
AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP - III
By: FLC Partnership, L.P.
its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
a general partner
68
L.S. ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
LITE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President