Exhibit 2-1
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RECAPITALIZATION AGREEMENT
by and among
▇.▇. ▇▇▇▇▇▇ AUTOMOTIVE CASTINGS, INC.;
The Stockholders
Listed on
the Signature Pages Hereto
and
JLF ACQUISITION LLC
Dated as of March 29, 1999
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RECAPITALIZATION AGREEMENT, dated as of March 29, 1999 (this
"AGREEMENT"), by and among ▇.▇. ▇▇▇▇▇▇ AUTOMOTIVE CASTINGS, INC., a Delaware
corporation (the "COMPANY"); Windward Capital Associates, L.P., a Delaware
limited partnership ("WINDWARD CAPITAL"), Windward/Merban, L.P., a Delaware
limited partnership ("WINDWARD/MERBAN"), Windward/Merchant, L.P. a Delaware
limited partnership ("WINDWARD/MERCHANT"), Windward/Northwest, L.P., a
Delaware limited partnership ("WINDWARD/NORTHWEST"), Windward/Metropolitan,
L.L.C., a Delaware limited liability company ("WINDWARD/METROPOLITAN"),
Windward/Park JLF, L.L.C. a Delaware limited liability company
("WINDWARD/PARK JLF"), Windward/Park WACI, L.L.C., a Delaware limited
liability company ("WINDWARD/PARK WACI"), Windward/Badger JLF, L.L.C., a
Delaware limited liability company ("WINDWARD/BADGER JLF"), Windward/Badger
WACI, L.L.C., a Delaware limited liability company ("WINDWARD/BADGER WACI"),
CS First Boston Merchant Investments 1995/96, L.P., a Delaware limited
partnership ("CS FIRST BOSTON") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively the
"SELLERS"); and JLF Acquisition LLC, a Delaware limited liability company
("BUYER") and together with any assignees of Buyer pursuant to Section 10.7
hereof, the ("BUYER GROUP").
W I T N E S S E T H
WHEREAS, Sellers, collectively own all of the outstanding Shares
(as defined in Section 2.2 hereof) of the Company;
WHEREAS, the Buyer Group desires to acquire certain Shares from
the Company, and the Company desires to sell such Shares to The Buyer Group
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company desires to repurchase certain Shares from
the Sellers and the Sellers desire to sell such Shares to the Company.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements and conditions hereafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 PURCHASE AND SALE OF COMMON STOCK. Upon the terms
and subject to the satisfaction or waiver, if permissible, of the conditions
hereof, each member of the Buyer Group severally agrees to purchase from the
Company, and the Company agrees to sell and issue to each such member of the
Buyer Group at the Closing, free and clear of all Encumbrances (as defined in
Section 2.3 hereof), the number and class of shares of the Company's common
stock, as set forth opposite the name of such member of the Buyer Group in
Section 1.1 (which Section may be modified or supplemented) of the disclosure
schedule of Buyer attached hereto (the "BUYER DISCLOSURE SCHEDULE"), having the
rights and preferences set forth in the Amendment to the Certificate of
Incorporation (the "CHARTER AMENDMENT") attached hereto as Exhibit E-1, for an
aggregate purchase price equal to the excess of (i) $155,000,000 over (ii) the
product of (A) the number of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares (as defined below) multiplied
by (B) the Cash Payment Per Share (as defined below) (the "PURCHASE PRICE"),
such that immediately following the consummation of the recapitalization
transactions described herein (the "RECAPITALIZATION") the Buyer Group shall
hold in the aggregate the excess of (i) 88.57143% of the total outstanding
common stock of the Company over (ii) the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares. For the
purposes of this Agreement, the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SHARES" shall mean the shares
owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ immediately following the Closing.
SECTION 1.2 REDEMPTION OF SHARES AND ADDITIONAL RECAPITALIZATION
TRANSACTION.
(a) Upon the terms and subject to the satisfaction or waiver, if
permissible, of the conditions hereof, each Seller, jointly and not severally,
agrees to sell, assign, transfer, convey and deliver to the Company, and the
Company agrees to purchase, redeem, accept, acquire and take assignment and
delivery of the Shares to be redeemed listed opposite each Seller's name on
Section 1.2 of the disclosure schedule of the Company attached hereto (the
"COMPANY DISCLOSURE SCHEDULE") as being purchased for a price per Share equal
(as the same may be modified from time to time) to the Cash Payment Per Share
(as defined below). Immediately following the consummation of the
Recapitalization, the Sellers shall hold only shares of Class A Common Stock,
representing in the aggregate the sum of (A) 11.42857% of the total outstanding
common stock of the Company and (B) the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares and, concurrently
with the Closing, the Charter Amendment shall be filed with the Secretary of
State of the State of Delaware.
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(b) Notwithstanding the fact that the transactions contemplated
by this Agreement to occur at Closing shall occur simultaneously at the Closing,
but such transactions shall be deemed to have occurred in the following order:
(i) conversion of any shares of Class B Common Stock not to be redeemed into
shares of Class A Common Stock, (ii) the obtaining of the Financing by the
Company, (iii) the redemption of the Sellers' Shares pursuant to Section 1.2
hereof, (iv) the filing of the Charter Amendment, (v) the purchase of the Shares
by the Buyer Group pursuant to Section 1.1 hereof and (vi) the execution and
delivery of the Shareholders Agreement.
(c) For purposes of this Agreement, "CASH PAYMENT PER SHARE"
shall mean an amount equal to the quotient obtained by dividing (i) the sum of
(A) the Redemption Price (as defined herein) and (B) the aggregate exercise
price of all Options outstanding immediately prior to the Closing (as defined in
Section 2.2 hereof) (the "AGGREGATE OPTION EXERCISE PRICE") by (ii) the
aggregate number of all Shares outstanding immediately prior to the Closing
(other than Shares, if any, held in the treasury of the Company or owned by
Buyer) or subject to Options outstanding immediately prior to the Closing,
assuming full exercisability thereof (the "FULLY DILUTED SHARES"). For purposes
of this Agreement, the "REDEMPTION PRICE" shall be equal to the excess of
(i) $610,000,000 over (ii) the sum of (A) the Debt Amount and (B) the Fees and
Expenses.
(d) For purposes of this Agreement, the "DEBT AMOUNT" shall
equal the excess of (x) the sum of (1) the Preferred Stock Redemption Amount (as
defined in Section 5.12 hereof), (2) the Senior Debt Repayment Amount (as
defined in Section 5.11 hereof), (3) the Subordinated Debt Repayment Amount (as
defined in Section 5.11 hereof), (4) the Assumed Debt (as defined in Section
5.11 hereof) and (5) bonuses paid to non-U.S. employees in lieu of options
which shall be paid in cash concurrently with the Closing over (y) the available
cash and cash equivalents (excluding any cash paid in respect of the Ford
Tooling Receivable (as defined herein) from January 1, 1999 through the Closing
Date) on the consolidated balance sheet of the Company as of the Closing Date.
For purposes of calculating the payment to be made at the Closing, the Company
will provide the Buyer with a good faith estimate of cash and cash equivalents
as of the Closing Date (the "ESTIMATED CLOSING CASH").
(e) For purposes of this Agreement, "FEES AND EXPENSES" shall
mean those fees and expenses of the Persons set forth on Exhibit A hereto (which
Exhibit shall be provided two days prior to Closing).
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SECTION 1.3 CLOSING.
(a) The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City
time, on April 20, 1999 unless the conditions set forth in Articles VI and VII
hereof shall not have been satisfied or duly waived in which case the closing
shall occur on the business day following such satisfaction or waiver; or if the
Sellers' Representative and Buyer mutually agree on a different date, the date
upon which they have mutually agreed (such date, the "CLOSING DATE").
(b) At the Closing, the Company shall deliver the following to
the Buyer Group:
(i) stock certificates representing the number of Shares to
be received by each member of the Buyer Group, as set forth in
Section 1.1 of the Buyer Disclosure Schedule;
(ii) all other documents required to be delivered by the
Company on or prior to the Closing Date pursuant to this Agreement
or otherwise required from the Company in connection herewith;
(iii) the resignations of the members of the board of
directors of the Company and each of its Subsidiaries (as defined
herein); and
(iv) the stock books, stock ledgers, minute books and
corporate seal of the Company; PROVIDED THAT any of the foregoing
items shall be deemed to have been delivered pursuant to this Section
1.3(b)(iv) if such item has been delivered to or is otherwise located
at the Company or any offices of the Company.
(c) At the Closing, the Buyer Group shall deliver:
(i) to the Company, by wire transfer of immediately
available funds to a bank account designated by the Company, the
Purchase Price; and
(ii) all other documents required to be delivered by the
Buyer on or prior to the Closing Date pursuant to this Agreement or
otherwise required from Buyer in connection herewith.
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(d) At the Closing, the Company will provide from the proceeds of
the Financing:
(i) to the Sellers and the Working Capital Escrow Agent (as
defined herein, and allocated as provided in Section 1.4(e) of this
Agreement), the Cash Payment Per Share for each Share to be redeemed;
(ii) to the Preferred Stock Holders (as defined in
Section 5.12 hereof) the Preferred Stock Redemption Amount;
(iii) to the Senior Debt Holders (as defined in Section
5.11(a) hereof) the Senior Debt Repayment Amount; and
(iv) to the Subordinated Debt Holders (as defined in
Section 5.11(b) hereof) in accordance with Section 5.11(b) hereof, the
Subordinated Debt Repayment Amount.
(e) At the Closing, each Seller shall deliver to the Company
stock certificates representing the Shares that such Seller is selling to the
Company and the Company shall pay to each Seller an amount equal to the Cash
Payment Per Share for each such Share to be redeemed, as set forth on Section
1.2 of the Company Disclosure Schedule (as the same may be modified from time to
time), payable by wire transfer of immediately available funds on the Closing
Date to accounts designated by such Sellers to the Company.
SECTION 1.4 POST-CLOSING ADJUSTMENT. (a) The Redemption Price
(and, hence the Cash Payment Per Share (as adjusted, the "ADJUSTED CASH PAYMENT
PER SHARE")) shall be subject to adjustment after the Closing as specified in
this Section 1.4 and Section 1.4 of the Company Disclosure Schedule (the
"POST-CLOSING ADJUSTMENT").
(b) Within 45 days following the Closing Date, the Company shall
prepare and deliver to the Sellers' Representative the statement (the
"STATEMENT") setting forth the Working Capital (as defined below) of the Company
as of the Closing Date and cash and cash equivalents (excluding any cash paid in
respect of the Ford Tooling Receivable from January 1, 1999 through the Closing
Date) held by the Company as of the Closing Date, together with the review
thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the "BUYER'S ACCOUNTANTS") confirming that the
Statement fairly presents Working Capital and cash and cash equivalents
(excluding any cash paid in
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respect of the Ford Tooling Receivable from January 1, 1999 through the Closing
Date) held by the Company on the Closing Date in conformity with the standards
set forth in this Section 1.4 and Section 1.4 of the Company Disclosure
Schedule. The Statement shall be prepared in accordance with GAAP, consistent
with the principles and methods set forth in Section 1.4 of the Company
Disclosure Schedule. Following the Closing, the Company shall provide the
Sellers and any independent auditors (and other representatives) of the Sellers
with access (and to examine and make copies of) at all reasonable times to the
properties, books, records, work papers (including those of the parties'
respective accountants) and personnel of the Company for purposes of preparing
and reviewing the Statement. The Sellers' Representative shall have 30 days
after delivery to the Sellers' Representative of the Statement during which to
notify the Company of any dispute of any item contained in the Statement, which
notice shall set forth in reasonable detail the basis for such dispute. If the
Sellers' Representative fails to notify the Company of any such dispute within
such 30-day period, the Statement shall be deemed to be the Final Statement.
In the event that the Sellers' Representative shall so notify the Company of any
dispute, the Company and the Sellers' Representative and their respective
accountants shall cooperate in good faith to resolve such dispute as promptly as
possible. "WORKING CAPITAL" shall mean the sum of Current Assets less Current
Liabilities (excluding therefrom any Tax benefit or liability arising as a
result of the payment of the Redemption Price, the cancellation and payment in
respect of the Options (as provided in Section 5.9 hereof), the payment of the
Debt Amount or the payment of the Fees and Expenses). "CURRENT ASSETS" shall
mean the current assets of the Company as set forth on a balance sheet prepared
in accordance with GAAP, consistent with the standards and procedures set forth
in Section 1.4 of the Company Disclosure Schedule excluding (i) cash and cash
equivalents and (ii) the Ford Tooling Receivable. "CURRENT LIABILITIES" shall
mean the current liabilities of the Company as set forth on a balance sheet
prepared in accordance with GAAP, consistent with the standards and provisions
set forth on Section 1.4 of the Company Disclosure Schedule excluding (i) the
current portion of long-term debt and accrued interest on any debt and (ii)
payables arising from or related to capital expenditures. "FORD TOOLING
RECEIVABLE" shall mean the net amount recorded as a receivable in accordance
with GAAP pertaining to the tooling for the 4R100 Transmission Cases and the
4.6L 2V Front Covers under the letter agreement with Ford dated July 30, 1998.
(c) If the Company and the Sellers' Representative and their
respective accountants are unable to resolve any such dispute within 15 days of
the Sellers' Representative's delivery of such dispute notice, such dispute
shall be resolved by a jointly selected nationally recognized accounting firm
retained to resolve any
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disputes between the Company and the Sellers over any items contained in the
Statement (the "INDEPENDENT ACCOUNTING FIRM"), which shall make its
determination as promptly as practicable, and such determination shall be final
and binding on the parties. The Independent Accounting Firm shall, acting as
experts and not as arbitrators, determine on the basis of the standards set
forth in this Section 1.4 and Section 1.4 of the Company Disclosure Schedule,
whether and to what extent, if any, the Statement requires adjustment. If the
Sellers' Representative and the Company cannot jointly agree on the identity of
the Independent Accounting Firm, the Sellers' Representative and the Company
shall each submit to their respective accountants the name of an accounting firm
which does not at the time and has not in the prior two years provided services
to the Sellers or the Buyer or any of their respective affiliates, and the
Independent Accounting Firm shall be selected by lot from these two firms by the
respective accountants of the two parties. Any expenses relating to the
engagement of the Independent Accounting Firm shall be shared equally by the
Company and the Sellers. The Independent Accounting Firm shall be instructed to
use every reasonable effort to perform its services within 15 days of submission
of the Statement to it and, in any case, as soon as practicable after
submission. The Statement, as modified by resolution of any disputes by the
Company and the Sellers or by the Independent Accounting Firm, shall be the
Final Statement (the "FINAL STATEMENT"). Upon the determination of the Final
Statement, the Company and the Sellers' Representative shall deliver joint
written instructions to the Escrow Agent directing the Escrow Agent to deliver
the Working Capital Escrow Fund in the manner specified in such instructions
(including with respect to any claims for indemnification made against such Fund
in accordance with Section 1.4(g) hereof).
(d) The Redemption Price (and hence, the Cash Payment Per Share)
shall be increased by the positive amount by which the sum of (x)(i) the Working
Capital as set forth in the Final Statement (the "CLOSING WORKING CAPITAL") and
(ii) the cash and cash equivalents (excluding any cash paid in respect of the
Ford Tooling Receivable from the date of this Agreement through the Closing
Date) held by the Company as of the Closing Date as set forth in the Final
Statement (the "ACTUAL CLOSING CASH") exceeds (y) the product of (i)(1) the sum
of (A) $32,000,000 and (B) the Estimated Closing Cash multiplied by (2) 110%, or
the Redemption Price shall be decreased by the positive amount by which the
product of (i) the sum of (A) $32,000,000 and (B) the Estimated Closing Cash
multiplied by (ii) 90% exceeds the sum of (x) the Closing Working Capital and
(y) the Actual Closing Cash, as the case may be. To the extent that the
Redemption Price (and hence, the Cash Payment Per Share) is increased, (i) the
Company shall within ten business days after delivery of the Final Statement
make payment to the Sellers' Representative as agent for the
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Sellers by wire transfer of immediately available funds of the amount of such
difference as determined pursuant to the preceding sentence, together with
interest thereon at a fixed rate equal to the prime rate per annum as quoted in
the Wall Street Journal from the Closing Date to the date of payment and (ii)
the Redemption Price shall be increased and the Sellers' Representative
following receipt thereof shall make payment by wire transfer of immediately
available funds the amount of such increase as determined pursuant to the
preceding sentence, together with interest thereon at a fixed rate equal to the
prime rate per annum as quoted in the Wall Street Journal from the Closing Date
to the date of payment, to (x)(1) each holder of an Option, the amount equal to
the excess (together with interest thereon) of (A) the amount that would have
been paid at Closing pursuant to Section 5.9 of this Agreement had the Cash
Payment Per Share as adjusted above been the Cash Payment Per Share as of the
Closing Date, over (B) the amount actually paid to such holder of such Option on
the Closing Date in accordance with Section 5.9 of this Agreement and (2) each
Seller, an amount equal to the product of (A) the excess of (I) such increase
(and interest thereon) over (II) the aggregate amount paid to holders of Options
pursuant to the preceding clause (x)(1) above, and (B) such Seller's Seller
Percentage (as defined herein). For purposes of this Agreement, "SELLER
PERCENTAGE" shall mean the percentage set forth next to each Seller's name on
Section 1.2 of the Company's Disclosure Schedule (as the same may be modified
from time to time). To the extent that the Redemption Price (and hence, the Cash
Payment Per Share) is decreased, the Working Capital Escrow Agent shall release
to the Company within ten business days after delivery of the Final Statement an
amount equal to such decrease by wire transfer of immediately available funds
together with interest thereon at a fixed rate equal to the prime rate per annum
as quoted in the Wall Street Journal from the Closing Date to the date of
payment.
(e) In order to satisfy the obligations of the Sellers and the
holders of any Options pursuant to this Section 1.4, at the Closing, $5.0
million (the "WORKING CAPITAL ESCROW FUND") shall be deposited by the Company
with United States Trust Company of New York, (the "WORKING CAPITAL ESCROW
AGENT") pursuant to the Working Capital Escrow Agreement, substantially in the
form attached hereto as Exhibit B, (the "ESCROW AGREEMENT"), to be entered into
between the Company, the Sellers and the Working Capital Escrow Agent. Solely
for purposes of determining the amount to be distributed at Closing to the
Sellers and to the holders of any Options, the Redemption Price shall be deemed
to be reduced by the Working Capital Escrow Fund. The Escrow Agreement shall
provide for distributions of the Working Capital Escrow Fund (i) first, to pay
fees and expenses of the Working Capital Escrow Fund, (ii) second, to the
Company, as provided in the penultimate
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sentence of Section 1.4(d) of this Agreement and (iii) any remainder to (x) the
holder of any Option and the Sellers, calculated (I) with respect to the holder
of an Option, as if the Redemption Price were the Redemption Price minus the
amounts paid pursuant to clauses (i) and (ii) above and (II) to the Sellers, an
amount equal to the product of (A) the net amount available from the Working
Capital Escrow Fund, after deducting payments made pursuant to clauses (i), (ii)
and (iii) (x)(I) above and (B) such Seller's Seller Percentage. All
determinations pursuant to clause (iii) above shall be made by the Sellers'
Representative and shall be final and binding. To the extent that the amount
deposited in the Working Capital Escrow Fund is not sufficient to satisfy the
obligations pursuant to (i) and (ii) of the preceding sentence, the Sellers
shall severally and not jointly (pro rata based on each such Sellers' Seller
Percentage) be responsible for any additional amount necessary to satisfy such
obligations.
(f) Any payment paid to the Sellers in respect of Shares redeemed
shall be treated as an increase to the Redemption Price. Any cash paid to
Sellers in respect of Shares not to be redeemed pursuant to the first sentence
of Section 1.2(a) shall be paid in consideration of the redemption of a number
of Shares equal to the quotient of (i) the product of (A) such Seller's Seller
Percentage multiplied by (B) any increase in the Redemption Price (together with
interest thereon at a fixed rate equal to the prime rate per annum as quoted in
the Wall Street Journal from the Closing Date to the date of payment) pursuant
to this Section 1.4 divided by (ii) the Adjusted Cash Payment Per Share. The
Buyer Group shall simultaneously therewith have a number of Shares cancelled
(without any payment therefor) so as to maintain the ownership ratio, existing
immediately following the Closing, of the Sellers as a group in comparison to
the Buyer Group. Immediately following the redemption and cancellation referred
to in the preceding two sentences, the Company shall effect a stock split such
that each of the Sellers and the each member of the Buyer Group shall own a
number of Shares equal to the number of Shares owned by such Person prior to
such redemption or cancellation, as the case may be.
(g) Immediately following any distribution to the Company from
the Working Capital Escrow Fund pursuant to Section 1.4(e) hereof and
immediately preceding any distribution to the Sellers and Option holders from
the Working Capital Escrow Fund pursuant to Section 1.4(e) hereof and if and to
the extent that the Buyer/Company Indemnified Parties (as such term is defined
in Section 9.2 hereof) are entitled (either on the basis of (i) agreement among
the parties hereto (in which case the Company and the Sellers' Representative
shall deliver joint written instructions to the Escrow Agent to deliver the
amount agreed to be owed in respect
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of such claims in the manner specified in such instructions) or (ii) by a Final
Decree (as defined in the Escrow Agreement) existing on such date) to
indemnification pursuant to Article IX hereof, such parties shall be entitled to
make claims against the Working Capital Escrow Fund; PROVIDED THAT in no event
shall the term of the Working Capital Escrow Fund or the Escrow Agreement be
lengthened as a result of the foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Buyer Group to enter into this
Agreement, the Company represents and warrants to the Buyer Group as follows:
SECTION 2.1 CORPORATE ORGANIZATION AND AUTHORITY.
(a) Each of the Company and its Subsidiaries (as defined in
Section 2.3 hereof) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to own, lease and operate the
properties owned, leased and operated by it and to carry on the operations of
its business as now being conducted by it. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it with respect to its business or the nature of the business conducted by it
makes such licensing or qualification necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not have a material adverse effect on the Company. The Company has heretofore
made available to Buyer true, complete and correct copies of the certificate of
incorporation and bylaws of the Company, as currently in effect.
(b) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by the Board of
Directors of the Company (the "COMPANY BOARD") and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this
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Agreement by Buyer, a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to or limited by (i) bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
SECTION 2.2 CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 450,000 shares of common stock, par value $0.0001 per
share, of which 300,000 shares are designated Class A Common Stock (the "CLASS A
COMMON STOCK"), 75,000 shares are designated Class B Common Stock (the "CLASS B
COMMON STOCK"), 50,000 shares are designated Class C Common Stock (the "CLASS C
COMMON STOCK") and 25,000 shares are designated Class D Common Stock (the "CLASS
D COMMON STOCK") (the Class A Common Stock, the Class B Common Stock, the Class
C Common Stock and the Class D Common Stock are collectively referred to as the
"SHARES") and (ii) 3,000 shares of preferred stock, par value $0.0001 per share
(the "PREFERRED STOCK"), of which 1,500 shares are designated Series A
Convertible Preferred Stock (the "SERIES A PREFERRED STOCK") and 1,500 are
designated Series B Redeemable Preferred Stock (the "SERIES B PREFERRED STOCK").
As of the date of this Agreement, there were (i) 1,500 shares of Series A
Preferred Stock issued and outstanding, (ii) 60,492.73027 shares of Class A
Common Stock issued and outstanding, (iii) 16,016.36228 shares of Class B Common
Stock issued and outstanding, (iv) 2,651.05529 shares of Class C Common Stock
issued and outstanding, (v) 294.5617 shares of Class D Common Stock issued and
outstanding and (vi) options to purchase 5,193.8570 shares of Class A Common
Stock (the "OPTIONS"). As of the date hereof, the Company has outstanding
$85,000,000 principal amount of 12.0% Notes due March 31, 2006 (the "COMPANY
NOTES") issued pursuant to the Subordinated Note Agreement dated as of April 2,
1996 and amended and restated as of March 16, 1998, by and among the Company,
Metropolitan Life Insurance Company, a New York corporation, Windward/Merban,
Windward/Merchant, Windward/Northwest, Windward/Metropolitan, and The
Northwestern Mutual Life Insurance Company, a Wisconsin company (the "AMENDED
AND RESTATED SUBORDINATED NOTE AGREEMENT"). Immediately prior to the Closing,
the Company shall provide the Buyers with an amended capitalization chart in
form substantially similar to Section 2.2 of the Company Disclosure Schedule,
which will update such section of the Company Disclosure Schedule to accurately
reflect the capitalization of the Company at such time. All outstanding Shares
of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and except as provided for in the Amended and Restated
Stockholders Agreement between
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Windward Automotive Components International, Inc. (now ▇.▇. ▇▇▇▇▇▇ Automotive
Castings, Inc.) and the Sellers dated March 16, 1998 (the "COMPANY STOCKHOLDERS'
AGREEMENT"), are not subject to, and have not been issued in violation of, any
preemptive rights. Except as set forth in this Section 2.2 and Section 2.2 of
the Company Disclosure Schedule, there are no outstanding (i) shares of capital
stock or other voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company and (iii) options or other rights to acquire from the
Company, or any obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company. Except as set forth in this Section 2.2 and
Section 2.2 of the Company Disclosure Schedule, there are no outstanding
obligations of the Company to issue, sell, repurchase, redeem or otherwise
acquire any capital stock of the Company or any Shares. Section 2.2 of the
Company Disclosure Schedule sets forth (i) a list of each individual to whom
Options were granted, (ii) the dates of grants of such Options, (iii) the number
of Shares subject to such Options and (iv) the exercise prices per share. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights. Except as provided in Section 2.2 of the Company Disclosure Schedule,
there are no voting trusts or proxies or similar voting arrangements with
respect to the Company's capital stock.
SECTION 2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure
Schedule contains a true and complete list of all Subsidiaries of the
Company. All of the capital stock or other equity interests of each of the
Company's Subsidiaries have been validly issued and are fully paid and
nonassessable and have not been issued in violation of any preemptive rights
and, except as otherwise set forth in Section 2.3 of the Company Disclosure
Schedule, are owned by the Company or one or more of its Subsidiaries free and
clear of all Encumbrances. For purposes of this Agreement, "ENCUMBRANCES" shall
mean any lien, encumbrance, security interest, charge, mortgage, option, pledge
or restriction on transfer of any nature whatsoever. For purposes of this
Agreement, "SUBSIDIARY" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which are
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
12
(a) Except as set forth in Section 2.4(a) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries; (ii)
result in a violation or breach of, or default (or give rise to any right of
termination, cancellation or acceleration) or result in the creation of any
Lien (as defined below) under any of the terms, conditions or provisions of
any note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, license, lease or agreement or similar instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which them or
any of their assets may be bound or (iii) assuming that the filings,
registrations, notifications, authorizations, consents and approvals referred
to in subsection (b) below have been obtained or made, as the case may be,
violate any order, injunction, decree, statute, rule or regulation of any
governmental agency or authority or court to which the Company or any of its
Subsidiaries is subject, excluding from the foregoing clauses (ii) and (iii)
such requirements, defaults, breaches, rights or violations that would not
individually, or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries, taken as a whole, or that would not prevent or
delay the consumma tion of the transactions contemplated hereby. For purposes
of this Agreement, "LIEN" means, with respect to any asset, any Encumbrance
of any kind in respect of such asset.
(b) Except as set forth in Section 2.4(b) of the Company
Disclosure Schedule, no filing or registration with, notification to, or
authorization, consent or approval of, any local, state, federal or foreign
court, legislative, executive, governmental or regulatory authority or agency
(each, a "GOVERNMENTAL AUTHORITY") is required in connection with the
execution and delivery of this Agreement by the Company or the performance by
the Company of its obligations hereunder, except (i) compliance with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), or any other competition or antitrust
law in relevant jurisdictions (ii) those that become applicable as a result
of the matters specifically related to Buyer or its Affiliates (as such term
is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended)
and (iii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings the failure of which
to be obtained or made would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole or that would not prevent or
delay the consummation of the transactions contemplated hereby.
13
SECTION 2.5 FINANCIAL STATEMENTS. The Company has delivered to
Buyer true and complete copies of audited consolidated balance sheets of the
Company and audited consolidated statements of income and cash flows of the
Company (or its predecessor, as the case may be) for the period from April 2,
1996 to December 31, 1996 and for the fiscal year ended December 31, 1997 and
unaudited consolidated balance sheets of the Company and unaudited consolidated
statements of income and cash flows of the Company for the fiscal year ended
December 31, 1998 (including, in each case, any notes thereto) (collectively,
the "COMPANY FINANCIAL STATEMENTS"). The Company Financial Statements were
prepared in accordance with generally accepted accounting principles ("GAAP"),
applied on a consistent basis, and fairly present, in all material respects, the
financial condition of the Company and its Subsidiaries as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring and year-end
audit adjustments and the exclusion of certain footnotes thereto).
SECTION 2.6 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except as
set forth in Section 2.6 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement, since December 31, 1998, the Company and its
Subsidiaries have conducted their respective businesses in the ordinary course
consistent with past practice and there has not occurred a material adverse
change in the Company and its Subsidiaries, taken as a whole, excluding for such
purposes, (i) any change resulting from general economic, financial or market
conditions, (ii) any change resulting from conditions or circumstances generally
affecting the businesses or industries, as a whole, in which the Company and/or
its Subsidiaries operate and (iii) any change resulting from the entering into
of this Agreement with the Buyer. Except as set forth in Section 2.6 of the
Company Disclosure Schedule or as other wise contemplated by this Agreement,
since December 31, 1998, the Company and its Subsidiaries have:
(a) not amended its certificate of incorporation or bylaws;
(b) not issued, delivered, sold, pledged, disposed of or
encumbered, or authorized or committed to the issuance, sale, pledge,
disposition or encumbrance of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock of, or any kind of other ownership interest in, the
Company (including, but not limited to, stock appreciation rights or phantom
stock);
14
(c) except with respect to the Preferred Stock, not declared,
set aside, made or paid any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock or any
security or right exchangeable or exercisable for, or convertible into, its
capital stock;
(d) not reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock, or any security or right exchangeable or exercisable for, or convertible
into, its capital stock;
(e) other than in the ordinary course of business and consistent
with past practice, not (i) incurred any indebtedness for borrowed money; (ii)
made any capital expenditures in excess of an aggregate of $10 million; (iii)
sold or disposed of any other their properties or assets having a value
individually or in the aggregate in excess of $500,000; (iv) except as has been
required by contractual obligations, made any loans, advances or capital
contributions to, or investments in, any other Person on behalf of the Company
or (v) made any change in any of their accounting methods and practices of
their business, except as required by changes in GAAP;
(f) other than in the ordinary course of business and consistent
with past practice, not entered into, amended or terminated any Material
Contracts;
(g) other than in the ordinary course of business and consistent
with past practice, not changed the employment arrangements with its senior
executive officers (including hiring, termination, promotion or relocation),
entered into or amended any employment, severance, termination or other similar
agreement, adopted or amended any new employee benefit plan, program, agreement
or arrangement that would otherwise constitute an employee benefit plan, or
made any loans to any of its officers, directors, employees, agents or
consultants or made any changes in its existing borrowing or lending
arrangements for or on behalf of any of such persons; and
(h) not agreed, committed, or adopted any plan or proposal to
take any of the actions set forth in clauses (a) through (g) above.
SECTION 2.7 NO UNDISCLOSED LIABILITIES. Except as and to the
extent set forth in the Audited December 31, 1998 Balance Sheet (the "BALANCE
SHEET"), neither the Company nor any of its Subsidiaries had at December 31,
1998 any liabilities (whether accrued, absolute, contingent, known or unknown)
except such liabilities which (i) were incurred in the ordinary course of
business, (ii) are
15
performance liabilities under contracts, arrangements, understandings or the
like, or (iii) in the aggregate, are not material to the Company and its
Subsidiaries, taken as a whole. Except as and to the extent set forth in Section
2.7 of the Company Disclosure Schedule since December 31, 1998, neither the
Company nor any of its Subsidiaries has incurred any liabilities except such
liabilities which were incurred in the ordinary course of business or which, in
the aggregate, are not material to the Company and its Subsidiaries taken as a
whole.
SECTION 2.8 TAXES.
(a) Except as set forth in Section 2.8 of the Company
Disclosure Schedule:
(i) the Company and its Subsidiaries have filed all
Tax Returns (as defined herein) required to be filed by them in the
manner prescribed by law, or have a valid extension to file such Tax
Returns, and all such Tax Returns are true, correct and complete in
all material respects;
(ii) the Company and its Subsidiaries have paid or
adequately reserved for all Taxes (as defined herein) due and owing by
them, and neither the Company nor any of its Subsidiaries has incurred
any liability for Taxes outside the ordinary course of business since
December 31, 1998;
(iii) all Taxes due by the Company and its Subsidiaries with
respect to any completed and settled audit, examination or deficiency
litigation have been paid in full;
(iv) no deficiencies for any Tax have been proposed, asserted
or assessed in writing by any taxing authority against the Company or
any of its Subsidiaries, no written requests for information related
to Tax matters by any taxing authority has been received by the
Company or any of its Subsidiaries and no written notice indicating an
intent to open an audit or other review has been received by the
Company or any of its Subsidiaries from any taxing authority;
(v) neither the Company nor any of its Subsidiaries is a party to
any tax sharing agreement or is liable for the Taxes of another Person
that is not a Subsidiary of the Company as a transferee or successor,
by contract or indemnity, or otherwise;
16
(vi) there is no agreement or other documents extending, or
having the effect of extending, the period of assessment or collection of Taxes
of the Company or any of its Subsidiaries;
(vii) neither the Company nor any of its Subsidiaries is a party
to any agreement, contract or arrangement that has resulted within the past two
taxable years or would result in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code (or any comparable provision of
state, local or foreign law);
(viii) neither the Company nor any of its. Subsidiaries will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (A) change in method of accounting for a
taxable period ending on or prior to the Closing Date, or (B) "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law), entered into on or prior
to the Closing Date;
(ix) neither the Company nor any of its Subsidiaries has been a
member of an Affiliated Group other than the ones of which the Company or any of
its Subsidiaries (or any of their respective predecessors) was the common
parent, or filed or been included in a combined, consolidated or unitary income
Tax Return, other than one filed by the Company;
(x) Buyer will not be required to deduct and withhold any amount
pursuant to Section 1445(a) of the Code upon the transfer of the Shares to the
Buyer; and
(xi) the Company is not a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(b) For purposes of this Agreement, (i) "AFFILIATED GROUP" means
any affiliated group within the meaning of Section 1504(a) of the Code (or any
similar group defined under a corresponding provision of state, local or foreign
law), (ii) "CODE" means the Internal Revenue Code of 1986, as amended, (iii)
"TAXES" means all taxes, levies or other like assessments, charges or fees
(including estimated taxes, charges and fees), including, without limitation,
income, corporation, gross receipts, transfer, excise, property, sales, use,
value-added, license, payroll, pay as
17
you earn, withholding, social security and franchise or other governmental taxes
or charges, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, and such term shall include any
interest, penalties or additions to tax attributable to such taxes, and (iv)
"TAX RETURN" means any report, return, statement, claim for refund, information
return or other written information supplied to a taxing authority in connection
with Taxes.
SECTION 2.9 EMPLOYEE BENEFIT PLANS.
(a) Section 2.9(a) of the Company Disclosure Schedule lists, as
of the date of this Agreement, all stock option plans, employment, consulting
and severance agreements, pension, profit-sharing and retirement plans and all
bonus and other employee benefit or fringe benefit plans, including, without
limitation, "em ployee benefit plans" as such term is defined under Section 3(3)
of ERISA maintained or with respect to which contributions are made by the
Company and its Subsidiaries or with respect to which the Company or any
Subsidiaries has any liability except employment, consulting and severance
agreements and bonus and other employee benefit or fringe benefit plans, in each
case, involving annual payment to any one individual less than $100,000.
Accurate and complete copies of all such plans, programs or agreements have been
made available to Buyer.
(b) With respect to the employee benefit plans, programs and
arrangements maintained or contributed to by the Company and its Subsidiaries or
with respect to which the Company or any Subsidiaries has any liability (the
"COMPANY PLANS"), except as set forth in Section 2.9(b) of the Company
Disclosure Schedule and except as would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole: (i) each Company Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service that it is so
qualified, and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such Company Plan; (ii)
each Company Plan has been operated in all material respects in accordance with
its terms and the requirements of applicable law; and (iii) the Company and its
Subsidiaries have not incurred any direct or indirect liability under, arising
out of or by operation of Title IV of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), in connection with the termination of, or
withdrawal from, any Company Plan or other retirement plan or arrangement
(including, without limitation, any "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) that the Company, any Subsidiary or any other entity,
that together with the Company or any Subsidiary is treated as a single
18
employer under Section 414 of the Code, maintains or ever has maintained or to
which any of them contributes, ever has contributed, or ever has been required
to contribute), and, to the knowledge of the Company, no fact or event exists
that could reasonably be expected to give rise to any such liability. Except as
set forth in Section 2.9(b) of the Company Disclosure Schedule, the aggregate
accumulated benefit obligations of each defined benefits plan as of the Closing
Date do not exceed the fair market value of the assets of such plan as of the
Closing Date.
(c) To the knowledge of the Company, all employee benefit plans
that are subject to the laws of any jurisdiction outside the United States are
in material compliance with such applicable laws, including relevant Tax laws
relating thereto, and the requirements of any trust deed under which they are
established.
(d) Except as set forth on Section 2.9(d) of the Company
Disclosure Schedule, none of the Company Plans provide for medical or life
insurance benefits to retired or former employees.
SECTION 2.10 ENVIRONMENTAL MATTERS.
(a) (i) "ENVIRONMENTAL CLAIM" means any claim, action, cause
of action, investigation or notice (written or oral) by any Person or entity
alleging potential liability arising out of, based on or resulting from (a) the
presence or Release of any Hazardous Materials at any location, whether or not
owned or operated by the Company, or (b) circumstances forming the basis of any
violation of any Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all federal, state, local
and foreign laws and regulations, all common law and all other provisions having
the force or effect of law relating to pollution or the environment, including,
without limitation, those relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Materials.
(iii) "HAZARDOUS MATERIALS" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined
as such by, or regulated as such under, any Environmental Law.
19
(iv) "RELEASE" means any release, spill, emission,
discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal,
dispersal, leaching or migration of Hazardous Materials into the environment
(including, without limitation, ambient air, surface water, groundwater and
surface or subsurface strata).
(b) (i) Except as set forth in Section 2.10(b)(i) of the
Company Disclosure Schedule, to the knowledge of the Company, the Company and
its Subsidiaries are in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by the Company and
its Subsidiaries of all permits and other governmental authorizations required
under applicable Environmental Laws, which are in full force and effect, and
compliance with the terms and conditions thereof), except where failure to be in
compliance would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. As of the date of this Agreement, the Company
and its Subsidiaries have not received since January 1, 1997 any written
communication, whether from a governmental authority, citizens' group, employee
or otherwise, alleging that the Company and its Subsidiaries is not in such
compliance.
(ii) Except as set forth in Section 2.10(b)(ii) of the
Company Disclosure Schedule, there is no Environmental Claim pending or to the
knowledge of the Company, threatened against the Company and its Subsidiaries or
against any Person or entity whose liability for any Environmental Claim the
Company and its Subsidiaries has or may have retained or assumed either
contractually or by opera tion of law that would have a material adverse effect
on the Company and its Subsidiaries, taken as a whole.
(iii) There have been no Releases of Hazardous Materials
at any of the Real Property (as defined below) or to the knowledge of the
Company at any other location that would have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(c) Notwithstanding any other provision of this Agreement, the
representations and warranties made in this Section 2.10 are the sole and
exclusive representations made in this Agreement by the Sellers, the Company and
its Subsid iaries with respect to environmental matters.
SECTION 2.11 LEGAL PROCEEDINGS, ETC. Except as set forth in
Section 2.11 of the Company Disclosure Schedule, as of the date of this
Agreement,
20
there are no suits, actions, claims, proceedings or investigations pending, or,
to the knowledge of the Company, threatened against or involving the Company or
any of its Subsidiaries (or any of its stockholders, officers or directors in
connection with the business or affairs of the Company), before any court,
arbitrator or administrative or governmental body, United States or foreign
which (i) are criminal in nature or (ii) are of any other nature and which, if
adversely determined, would have a material adverse effect on the Company and
its Subsidiaries, taken as a whole. As of the date of this Agreement, there are
no such suits, actions, claims, proceedings or investigations pending or, to the
knowledge of the Company, threatened challenging the validity or propriety of
the transactions contemplated by this Agreement. The Company and its
Subsidiaries are not subject to any judgments, decrees, injunctions, or orders
of any (i) United States court or (ii) any other court which have had or would
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
SECTION 2.12 COMPLIANCE WITH APPLICABLE LAW. Except as set
forth in Section 2.12 of the Company Disclosure Schedule, each of the Company
(or its predecessor, as the case may be) and its Subsidiaries has since April 2,
1996 (except in the case of the Subsidiaries of the Company, in which case the
relevant date shall be date of acquisition of such Subsidiary) complied with and
is in compliance, with all applicable laws, ordinances, rules and regulations of
any federal, state, local or foreign governmental authority applicable to its
business and operations except for such noncompliance which would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
All governmental approvals, permits, licenses and other governmental
authorizations (collectively, "PERMITS") required to conduct the business of the
Company and its Subsidiaries are in the possession of the Company or any of its
Subsidiaries, are in full force and effect and are being complied with, except
for such Permits the failure of which to possess or be in compliance with which
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. Sellers have delivered or made available copies of the Permits
to Buyer.
SECTION 2.13 CERTAIN CONTRACTS AND ARRANGEMENTS. Section 2.13
of the Company Disclosure Schedule sets forth a list of all written Insurance
Policies (as defined in Section 2.16 hereof), Leases (as defined in Section 2.14
hereof), employee benefit agreements or arrangements, collective bargaining
agreements, personal property leases involving annual payments in excess of
$100,000, guarantees, indentures, mortgages and notes or other debt instruments
evidencing indebtedness, material leases or agreements under which it is lessor
of or permits any third
21
party to hold or operate any property, real or personal, owned or controlled by
it, contracts or group of related contracts with the same party for the purchase
or sale of supplies, products or other personal property or for the furnishing
or receipt of services which involves a sum in excess of $1,000,000 annually
(excluding any purchase orders or tooling orders), contracts which prohibit the
Company or its Subsidiaries from freely engaging in business anywhere in the
world and any other material contracts not in the ordinary course of business
(collectively, the "MATERIAL CONTRACTS") to which the Company or any Subsidiary
of the Company is a party. Except as set forth in Section 2.13 of the Company
Disclosure Schedule, none of the Company or any of its Subsidiaries, or, to the
knowledge of the Company, any other party thereto, is in breach of, or default
under, any of the Material Contracts, and no event has occurred that with notice
or passage of time or both would constitute such a breach or default thereunder
by the Company or any of its Subsidiaries, or, to the knowledge of the Company,
any other party thereto, except for such breaches and defaults as individually
or in the aggregate would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole. Sellers have delivered or made available
copies of the Material Contracts to Buyer.
SECTION 2.14 REAL PROPERTY.
(a) For purposes of this Agreement, "PERMITTED LIENS" means
(i) mechanics', carriers', workers', repairers', materialmen's, warehousemen's,
landlord's and other similar Liens arising or incurred in the ordinary course of
business, (ii) Liens arising or resulting from any action taken by Buyer, (iii)
Liens for current Taxes, assessments and other governmental charges not yet due
and payable or that may subsequently be paid without penalty (iv) Liens for
current Taxes, assessments and other governmental charges that have become due
and payable that are being contested in good faith by appropriate proceedings
for which appropriate reserves in accordance with GAAP have been established,
(v) Liens which would appear on an accurate survey of Real Property (as herein
defined), (vi) any other covenants, conditions, restrictions, reservations,
rights, claims, rights-of-ways, easements and other encumbrances or matters of
record affecting title, which do not individually or in the aggregate materially
adversely affect the value or current use of any of the Real Property, (vii)
zoning, building, land use, and other similar restrictions imposed by law,
statute, rule, regulation, ordinance, order or process promulgated by any
Governmental Authority, (viii) matters of public record, and (ix) matters set
forth in Section 2.14(a) of the Company Disclosure Schedule. "LEASES" means the
real property leases, subleases, licenses and use or occupancy agreements
pursuant to which the Company is the lessee, sublessee, licensee, user or
occupant of real
22
property, or interests therein, necessary for the conduct of, or otherwise
material to, the business of the Company as it is currently conducted. "LEASED
REAL PROPERTY" means all interests in real property leased, subleased, licensed,
used or occupied by the Company pursuant to the Leases. "OWNED REAL PROPERTY"
means the real property owned by the Company. "REAL PROPERTY" means the Owned
Real Property and the Leased Real Property.
(b) Section 2.14(b) of the Company Disclosure Schedule
contains a complete and correct list of all Owned Real Property setting forth
information sufficient to identify specifically such Owned Real Property and the
legal owner thereof. The Company has good and valid title to the Owned Real
Property, free and clear of any material Liens other than Permitted Liens.
Except as set forth in Section 2.14(b) of the Company Disclosure Schedule, there
are no outstanding options or rights of first refusal to purchase the Owned Real
Property, or any material portion thereof or interest therein. Except as set
forth on Section 2.13 of the Company Disclosure Schedule, there are no leases,
subleases, licenses, concessions, or other agreements, written or oral, granting
to any person the right of use or occupancy of any portion of the Owned Real
Property. The current use of the Owned Real Property does not violate any
instrument of record or agreement affecting such Owned Real Property except for
such violations that, individually or in the aggregate, would not have a
material adverse affect on the Owned Real Property.
(c) Section 2.14(c) of the Company Disclosure Schedule sets
forth a complete and correct list of all Leased Real Property setting forth
information sufficient to identify specifically such Leased Real Property. Each
Lease grants the lessee under the Lease the right to use and occupy the premises
and rights demised thereunder in accordance with the terms thereof, subject to
Permitted Liens. The Company has good and valid title to the leasehold estate or
other interest created under its respective Leases free and clear of any Liens
other than Permitted Liens and except as otherwise provided in the Leases.
(d) The Real Property constitutes all the fee, leasehold and
other interests in real property held by the Company, and constitutes all of the
fee, leasehold and other interests in real property, necessary for the conduct
of, or otherwise material to, the business of the Company as it is currently
conducted, except for any fee, leasehold or other interest acquired or disposed
of in the ordinary course of business after the date hereof.
23
SECTION 2.15 LABOR MATTERS. Except as set forth in Section
2.15 of the Company Disclosure Schedule, (i) the Company and its Subsidiaries
are not a party to or bound by any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company, nor does the
Company know of any activities or proceedings on behalf of or by any labor union
to organize any such employees, (ii) there are no unfair labor practice charges
or complaints, or any current union representation questions, involving
employees or former employees of the Company pending against the Company before
the National Labor Relations Board or similar foreign entity and (iii) there is
no labor strike, lockout, organized slowdown or organized work stoppage in
effect or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries other than, in cases of clauses (ii) and (iii), those
matters which would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
SECTION 2.16 INSURANCE. All material insurance policies (the
"INSURANCE POLICIES") with respect to the property, assets, operation and
business of the Company and the Subsidiaries of the Company are in full force
and effect. Except as set forth in Section 2.16 of the Company Disclosure
Schedule, as of the date of this Agreement, there are no pending claims having a
value in excess of $500,000 under the Insurance Policies by the Company or any
Subsidiary of the Company.
SECTION 2.17 PATENTS, TRADEMARKS, ETC. (a) Except as set forth
in Section 2.17 of the Company Disclosure Schedule (i) the Company and the
Subsidiaries of the Company own or possess adequate licenses or other valid
rights to use free and clear of all Encumbrances all United States and foreign
patents, trademarks, trade names, service marks, copyrights, and applications
and registrations for the foregoing which are currently used in the conduct of
the business of the Company and the Subsidiaries of the Company (the
"INTELLECTUAL PROPERTY RIGHTS"), (ii) as of the date of this Agreement, the
validity of the Intellectual Property Rights and the title or rights to use
thereof of the Company or any Subsidiary of the Company are not being
questioned in any litigation to which the Company or any Subsidiary of the
Company is a party, nor to the knowledge of the Company, is any such litigation
threatened, (iii) as of the date of this Agreement, neither the Company nor any
Subsidiary of the Company is a party to any litigation in connection with which
a Person has alleged that the conduct of the business of the Company and the
Subsidiaries of the Company infringed or infringes with any valid patents, trade
marks, trade name, service marks or copyrights of others, nor, to the knowledge
of the Company, is any such litigation threatened except for any such litigation
which
24
would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole, and (iv) to the knowledge of the Company, (A) no person is
materially infringing upon or violating any of the Intellectual Property Rights
and (B) no material claim is pending or threatened to that effect. Section 2.17
of the Company Disclosure Schedule sets forth a complete and correct list of all
applications to register and all registered Intellectual Property Rights and all
written licenses (other than off-the-shelf licenses) for Intellectual Property
Rights.
(b) All of the computer software, computer firmware, computer
hardware (whether general or special purpose), and other similar or related
items of automated, computerized, and/or software system(s) that are used or
relied on by the Company or its Subsidiaries in the conduct of such Company's
business will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when processing,
providing, and/or receiving (i) date related data into and between the twentieth
and twenty-first centuries and (ii) date related data in connection with any
valid date in the twentieth and twenty-first centuries, except for any such
malfunctions which would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
SECTION 2.18 CERTAIN FEES. Except as set forth in Section 2.18
of the Company Disclosure Schedule and included on Exhibit A hereto, (i) the
Company has not and will not employ any financial advisor or finder and (ii) the
Company has not and will not incur any liability for any financial advisory or
finders' fees or similar compensation in connection with this Agreement or the
transactions contemplated hereby.
SECTION 2.19 TRANSACTIONS WITH AFFILIATES. Except as set forth
in Section 2.19 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary of the Company is involved in any contract, commitment, transaction
or other situation with any of its officers, directors, Affiliates or
shareholders which may generally be characterized as a "conflict of interest,"
including, direct or indirect interest in the business of competitors, suppliers
or customers of the Company or any Subsidiary of the Company.
SECTION 2.20 ACCOUNTS RECEIVABLE; INVENTORIES.
(a) All notes and accounts receivable of the Company have arisen
from bona fide transactions by the Company in the ordinary course of business.
All accounts receivable reflected in the Balance Sheet and the Final Statement,
are good
25
and collectible in the ordinary course of business at the aggregate recorded
amounts thereof, net of any applicable allowance for doubtful accounts reflected
in such Balance Sheet or Final Statement.
(b) The inventory of the Company (including raw materials,
supplies, work-in-process, finished goods and other materials) reflected in the
Balance Sheet and the Final Statement (i) are in good, merchantable and useable
condition, (ii) are at the lower of cost (determined by the last-in, first-out
method) or market in accordance with GAAP, (iii) are, in the case of the
aluminum inventory, of a quality such that the recovery rate is consistent with
the most recent history of the Company, and (iv) are, in the case of the
finished goods, of a quality and quantity saleable in the ordinary course of
business and, in the case of all other inventories are of a quality and quantity
useable in the ordinary course of business. None of the inventory is consigned
inventory. The inventory obsolescence policies of the Company are appropriate
for the nature of the products sold and the marketing methods used by the
Company.
SECTION 2.21 INDEBTEDNESS. Except for Indebtedness included in
the Debt Amount, the Company or its Subsidiaries have no contracts, agreements,
understandings or other obligations relating to Indebtedness. For the purposes
hereof, "INDEBTEDNESS" means, without duplication, (i) all indebtedness or other
obligations of the Company and its Subsidiaries for borrowed money, whether
current, short-term, or long-term, secured or unsecured, (ii) all indebtedness
of the Company and its Subsidiaries for the deferred purchase price for
purchases of property outside the ordinary course which is not evidenced by
trade payables, (iii) all lease obligations of the Company and its Subsidiaries
under leases which are capital leases in accordance GAAP, (iv) all off-balance
financings of the Company and Subsidiaries including, without limitation,
synthetic leases and project financing, (v) any payment of obligations of the
Company or its Subsidiaries in respect of banker's acceptances or letters of
credit (other than stand-by letters of credit in support of ordinary course
trade payables), (vi) any liability of the Company or its Subsidiaries with
respect to interest rate swaps, collars, caps and similar hedging obligations,
(vii) any obligations of the Company or its Subsidiaries entered into with any
employees, directors, shareholders and their affiliates since August 13, 1998
providing for bonuses or other payment (excluding Options) to such Persons
(other than in respect of Fees and Expenses), (viii) the obligations pursuant to
any class of preferred stock and any dividends accrued thereon, (ix) any
indebtedness referred to in clauses (i) through (viii) above of any person or
entity other than the Company which is either guaranteed by, or secured by a
Lien upon any property owned by, the
26
Company or any of its Subsidiaries, and (x) any prepayment penalties resulting
from the discharge of any of the foregoing obligations which are actually
prepaid pursuant to a pre-existing contractual arrangement as a result of the
transactions contemplated by this Agreement.
SECTION 2.22 ISSUANCE OF SHARES. The Shares to be purchased
pursuant to Section 1.1 hereof will, upon the issuance and sale thereof pursuant
to the terms hereof, not have been issued in violation of any preemptive rights,
be duly and validly authorized and issued by the Company, be fully paid and
nonassessable and be free from any Encumbrances.
SECTION 2.23 PRODUCT WARRANTY AND LIABILITY.
(a) To the knowledge of the Company, all products currently
being designed, manufactured, merchandised, serviced, distributed, sold or
delivered by the Company or its Subsidiaries have been in conformity with all
material applicable contractual commitments and all express warranties. No
liability exists for replacement thereof or other damages in connection with
such sales or deliveries except for such liabilities or damages which would not
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
(b) None of the Company or its Subsidiaries is subject to
any pending actions, or to the knowledge of the Company, any threatened action,
asserting liability arising out of any injury to individuals or property as a
result of the ownership, possession or use of any product currently being
manufactured, sold, leased or delivered by the Company or its Subsidiaries
except for such actions which if adversely determined would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
In order to induce the Buyer Group to enter into this Agreement,
each Seller severally (as to himself, herself or itself and not as to any other
Seller) represents and warrants to the Buyer Group as follows:
SECTION 3.1 AUTHORITY AND RELATED MATTERS. Such Seller has all
requisite power to execute and deliver this Agreement and to perform its
obligations
27
hereunder and to consummate the transactions contemplated hereby. With respect
to any Seller that is a corporation or a partnership, the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
by such Seller have been duly and validly authorized by the Board of Directors
or other governing body of such Seller and no other corporate or similar
proceedings on the part of such Seller, and, as the case may be, its Board of
Directors or other governing body or its stockholders or partners are necessary
therefor. This Agreement has been duly executed and delivered by such Seller,
and, assuming the due execution hereof by each of the Company, Buyer and the
other Sellers, this Agreement constitutes the legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms, except for (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting the rights
of creditors generally and (ii) the effect of equitable principles of general
application. With respect to any Seller that is a corporation or partnership,
such Seller, to the extent applicable, is duly organized, validly existing and
in good standing under the laws of its state of organization.
SECTION 3.2 SHARE OWNERSHIP. Except as set forth in Section 3.2
of the disclosure schedule of the Sellers attached hereto (the "SELLERS
DISCLOSURE SCHEDULE"), such Seller is the record and beneficial owner of the
aggregate number of Shares and Options listed opposite its respective name in
Section 1.2 of the Company Disclosure Schedule (such Schedule also setting forth
the number of shares of Series A Preferred Stock held by such Seller and the
number of additional shares of Common Stock and Series B Preferred Stock to be
held by such Seller after giving effect to the conversion described in Section
5.12 hereof). Upon transfer to the Company of Certificates representing the
Shares set forth on Section 1.2 of the Company Disclosure Schedule, such
redeemed shares shall become authorized, unissued shares of the Company's Common
Stock, free and clear of all Encumbrances. Except for this Agreement and the
transactions contemplated hereby, and except as disclosed in Section 2.2 of the
Company Disclosure Schedule, there are no agreements, arrangements, warrants,
options, puts, calls, rights or other commitments or understandings of any
character to which such Seller is a party or by which any of his, her or its
respective assets is bound and relating to the issuance, sale, purchase,
redemption, conversion, exchange, registration, voting or transfer of any shares
of Common Stock or other capital stock of the Company or other securities
convertible into capital stock of the Company.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
28
(a) Except as described in Section 3.3(b) hereof, neither the
execution and delivery by such Seller of this Agreement nor the performance by
such Seller of its obligations hereunder will (i) conflict with or result in any
breach of any provision of any certificate of incorporation, by-laws, trust
agreement, partnership agreement, or certificate of partnership or other
constitutive documents of such Seller, (ii) result in the creation or imposition
of any Encumbrance upon any of such Seller's Shares or (iii) assuming that the
filings, registrations, notifications, authorizations, consent and approvals
referred to in subsection (b) below have been obtained or made, as the case may
be, violate any order, injunction, decree, statute, rule or regulation of any
Governmental Authority to which such Seller is subject, excluding from the
foregoing clause (ii) and (iii) such requirements, defaults, breaches, rights
or violations that would not have a material adverse effect on the ability of
such Seller to consummate the transactions contemplated hereby.
(b) No filing or registration with, notification to, or
authorization, consent or approval of any Governmental Authority is required in
connection with the execution and delivery of this Agreement by such Seller or
the performance by such Seller of its obligations hereunder, except for (i)
those set forth in Sections 2.4(b) and 3.3(b) of the Company Disclosure
Schedule, (ii) filings under the HSR Act, (iii) those that become applicable as
a result of matters specifically related to Buyer or its Affiliates, or (iv)
such other consents, approvals orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made would not have a material adverse effect on the ability of such Seller to
consummate the transactions contemplated hereby.
SECTION 3.4 BROKERS, FINDERS, ETC. Except as set forth in
Section 2.18 or in Section 2.18 of the Company Disclosure Schedule, (i) such
Seller has not employed any financial advisor or finder and (ii) such Seller has
not incurred any liability for any financial advisor or finders' fees in
connection with this Agreement or the transactions contemplated hereby. The
Company is solely responsible for any payment, fee or commission that may be due
to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated in connection with the transactions contemplated hereby, which
shall be set forth on Exhibit A.
SECTION 3.5 LEGAL PROCEEDINGS. There are no suits, actions,
claims, proceedings, or investigations pending against any Seller before any
court, arbitrator or administrative or governmental body, United States or
foreign which, if adversely determined, would have a material adverse effect on
the ability of such Seller to consummate the transactions contemplated hereby.
29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER GROUP
In order to induce the Company and each of the Sellers to enter
into this Agreement, the Buyer hereby represents and warrants to the Company and
Sellers as follows:
SECTION 4.1 CORPORATE ORGANIZATION AND AUTHORITY.
(a) Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to own, lease and
operate the properties owned, leased and operated by it and to carry on the
operations of its business as now being conducted by it. Buyer is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it with respect to its business or the
nature of the business conducted or proposed to be conducted by it makes such
licensing or qualification necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing would not have a
material adverse effect on Buyer. Buyer has heretofore made available to the
Company a complete and correct copy of the certificate of incorporation and
bylaws or other organizational documents of Buyer, as currently in effect.
(b) Buyer has the requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the performance of its obligations hereunder
have been duly and validly authorized by the Manager Committee of Buyer and no
other proceedings on the part of Buyer are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by Buyer and constitutes, assuming due authorization,
execution and delivery of this Agreement by the Company and Sellers, a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' right generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
30
SECTION 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except as set forth in Section 4.2 of the Buyer Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
performance by Buyer of its obligations hereunder will (i) conflict with or
result in any breach of any provision of the certificate of incorporation or
bylaws (or similar organizational documents) of Buyer; (ii) result in a
violation or breach of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar instrument or
obligation relating to the business of Buyer or to which Buyer is a party or by
which Buyer or any of the assets used or held for use by Buyer may be bound or
(iii) assuming that the filings, registrations, notifications, authorizations,
consents and approvals referred to in subsection (b) below have been obtained or
made, as the case may be, violate any order, injunction, decree, statute, rule
or regulation of any Governmental Authority to which Buyer is subject, excluding
from the foregoing clauses (ii) and (iii) such requirements, defaults, breaches,
rights or violations that would not in the aggregate have a material adverse
effect on Buyer and its subsidiaries, taken as a whole, or that would not
prevent or delay the consummation of the transactions contemplated hereby.
(b) Except as set forth in Section 4.2 of the Buyer Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Authority is required in connection
with the execution and delivery of this Agreement by Buyer or the performance by
Buyer of its obligations3 hereunder, except (i) compliance with any applicable
requirements of the HSR Act and similar applicable foreign merger control laws;
and (ii) such other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made would not have a material adverse effect on Buyer and its Subsidiaries,
taken as a whole or that would not prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 4.3 LEGAL PROCEEDINGS, ETC. Except as set forth in
Section 4.3 of the Buyer Disclosure Schedule, as of the date of this Agreement,
there are no suits, actions, claims, proceedings or investigations pending, or,
to the knowledge of Buyer, threatened against or involving Buyer or any of its
Subsidiaries (or any of their respective officers or directors in connection
with the business or affairs of Buyer and its Subsidiaries) before any court,
arbitrator or administrative or govern-
31
mental body, United States or foreign which, if adversely determined, would have
a material adverse effect on Buyer and its Subsidiaries, taken as a whole. As of
the date of this Agreement, there are no such suits, actions, claims,
proceedings or investigations pending or, to the knowledge of Buyer, threatened
challenging the validity or propriety of the transactions contemplated by this
Agreement. Neither Buyer nor any of its Subsidiaries is subject to any judgment,
decree, injunction or order of any court, which has had or would have a material
adverse effect on Buyer and its Subsidiaries, taken as a whole.
SECTION 4.4 CERTAIN FEES. Except as set forth in Section 4.4
of the Buyer Disclosure Schedule, (i) the Buyer has not employed any financial
advisor or finder and (ii) the Buyer has not incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
SECTION 4.5 FINANCING. The Company has received copies of
commitment letters dated March 26, 1999 and March 24, 1999, respectively, from
NationsBridge, L.L.C. and Chase Securities Inc., and Nationsbanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC, Bank of America NT&SA, Chase Securities Inc. and the Chase
Manhattan Bank (the "FINANCING COMMITMENT LETTERS"), pursuant to which the
foregoing has committed, subject to the terms and conditions set forth therein,
to enter into one or more credit agreements providing for loans to the Company
of up to $500,000,000. The aggregate commitments under the Financing Commitment
Letters, together with the Buyer Group's commitment to purchase equity, are in
an amount sufficient to (i) pay the Fees and Expenses required to be paid in
connection with the transactions contemplated hereby, (ii) provide the Company
with available borrowings of at least $20.0 million following the Closing, (iii)
provide the Company with adequate funds to meet its obligations under the
Assumed Debt and (iv) satisfy the obligation of the Company to make all
necessary cash payments to (A) make the payment of the Redemption Price to the
Sellers, (B) make the payment of the Subordinated Debt Repayment Amount to the
Subordinated Debt Holders, (C) repay and discharge all indebtedness outstanding
(including any accrued interest, premiums, if any, and expense reimbursement, if
required) under the Credit Agreement, dated as of March 16, 1998, among the
Company, French Holdings, Inc., a Delaware corporation, Automotive Components
Investment Limited, a private limited company incorporated under the laws of
England and Wales, ▇▇▇▇▇▇ ▇▇▇▇▇ Limited, a private limited liability company
incorporated under the laws of England and Wales, the several banks and other
financial institutions from time to time parties to the Credit Agreement, Chase
Manhattan International Limited, any Future Foreign
32
Subsidiary Agent, and the Chase Manhattan Bank, a New York banking corporation
(the "CREDIT AGREEMENT") and (D) make the payment of the Preferred Stock
Redemption Amount to the Preferred Stock Holders (the financing and the
available cash to provide for the payment of all of the obligations referred to
in this sentence, including, without limitation, the agreement relating thereto,
being referred to herein as the "FINANCING").
SECTION 4.6 ACQUISITION OF SHARES FOR INVESTMENT. Each member
of the Buyer Group has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its purchase of
the Shares. Buyer confirms that the Company and the Sellers have made available
to Buyer the opportunity to ask questions of the officers and management
employees of the Company and to acquire additional information about the
business and financial condition of the Company and its Subsidiaries. Each
member of the Buyer Group is acquiring the Shares for investment and not with a
view toward or for sale in connection with any distribution thereof, or with any
present intention of distributing or selling the Shares. Each member of the
Buyer Group agrees that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Shares Act of 1933, as amended, except pursuant to an exemption from such
registration available under such Act.
SECTION 4.7 SOLVENCY. At and following the Closing, the Company
and its Subsidiaries will be, on a consolidated basis, Solvent after giving
effect to the purchase and sale of the Shares and any other transactions
contemplated hereby or by Buyer or any of its affiliates on such date or which
would be otherwise taken into account in determining whether any of the
transactions contemplated hereby were a fraudulent conveyance or impermissible
dividend under applicable law. For purposes of this Agreement, "SOLVENT" shall
mean with respect to any Person that (a) the fair saleable value of the property
of such Person is, on the date of determination, greater than the total amount
of liabilities (including contingent and unliquidated liabilities) of such
Person as of such date, (b) as of such date, such Person is able to pay all of
its liabilities as such liabilities mature, (c) such Person does not have
unreasonably small capital for conducting the business theretofore or proposed
to be conducted by such Person and its Subsidiaries, and (d) such Person has not
incurred nor does it plan to incur debts beyond its ability to pay as they
mature.
ARTICLE V
33
COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS. The Company agrees that,
during the period from the date hereof until the earlier of the Closing or the
termination of this Agreement, except as (i) otherwise expressly contemplated
hereby, (ii) set forth in Section 5.1 of the Company Disclosure Schedule or
(iii) consented to by Buyer, in writing, (which consent shall not be
unreasonably withheld) the Company shall, and shall cause each of its
Subsidiaries to:
(a) use its commercially reasonable efforts to (x)cause its
business operations to be conducted in the ordinary course consistent with past
practice, including without limitation, maintenance of working capital balances,
the collection of accounts receivable, the payment of accounts payables, the
making of capital expenditures in accordance with the budget set forth on
Section 5.1(a) of the Company Disclosure Schedule and cash management practices
generally and (y) preserve intact its assets, properties, business organization
in all material respects and relationships with suppliers, employees and
customers;
(b) promptly (once the Company or any Seller has knowledge
thereof) inform Buyer in writing of any breach of any of the representations and
warranties contained in Article II or Article III hereof or any breach of any
covenant hereunder by Seller or the Company;
(c) not amend its certificate of incorporation or by-laws;
(d) not issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or encumbrance
of any shares of capital stock of any class (except upon the exercise of Options
outstanding on the date hereof), or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock
of, or any other ownership interest in, the Company (including, but not limited
to, stock appreciation rights or phantom stock);
(e) not declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or any security or right exchangeable or exercisable for,
or convertible into, its capital stock;
34
(f) not reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock, or any
security or right exchangeable or exercisable for, or convertible into, its
capital stock;
(g) other than in the ordinary course of business and consistent
with past practice, not (i) incur any indebtedness for borrowed money (except
for short term indebtedness incurred in the ordinary course of business); (ii)
make any capital expenditures in excess of an aggregate of $15 million; (iii)
sell or dispose of any of their properties or assets having a value individually
or in the aggregate in excess of $500,000; (iv) except as may be required by
existing contracts, make any loans, advances or capital contributions to, or
investments in, any other Person on behalf of the Company or (v) make any change
in any of the present accounting methods and practices of their business, except
as required by changes in GAAP;
(h) other than in the ordinary course of business and consistent
with past practice, not enter into, amend or terminate any Material Contracts;
(i) other than in the ordinary course of business and consistent
with past practice, not change the employment arrangements with its senior
executive officers (including hiring, termination, promotion or relocation),
enter into or amend any employment, severance, termination or other similar
agreement, adopt or amend any new employee benefit plan, program, agreement or
arrangement that would otherwise constitute an employee benefit plan, or make
any loans to any of its officers, directors, employees, agents or consultants or
make any changes in its existing borrowing or lending arrangements for or on
behalf of any of such persons;
(j) comply with all material applicable legal requirements and
material contractual obligations applicable to the operations of the Company and
pay all material taxes required by applicable law to be paid prior to the
Closing; and
(k) not agree, commit, or adopt any plan or proposal to take any
of the actions set forth in clauses (c) through (j) above.
35
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Upon reasonable advance notice, between the date hereof and
the earlier of the Closing or the termination of this Agreement in accordance
with its terms, the Company shall (i) give Buyer, its counsel, financial
advisors, financing sources, auditors and other authorized representatives
(collectively, "REPRESENTATIVES") reasonable access during normal business
hours upon reasonable advance written notice to the offices, properties, books
and records of the Company, (ii) furnish to Buyer and such Representatives such
financial and operating data and other information as such Persons may
reasonably request, and (iii) instruct its employees, counsel, financial
advisors and auditors to cooperate with Buyer in its investigation of the
business of the Company.
(b) The confidentiality agreement between Hidden Creek
Industries and the Company dated October 21, 1998 (the "CONFIDENTIALITY
AGREEMENT") shall remain in full force and effect and the other members of the
Buyer Group shall agree to be bound by the terms of, and comply with the
obligations of Hidden Creek Industries under, such Confidentiality Agreement.
SECTION 5.3 NO SHOP. Each Seller and the Company and its
Subsidiaries (and each of their respective directors, officers, employees,
advisors, representatives, agents or Affiliates) shall not engage in, solicit or
initiate any discussions or negotiations with, or provide any information to
(except, that in the event Buyer shall be obligated by law to publicly disclose
that this Agreement exists, the Sellers and the Company and its Subsidiaries may
provide information to other Persons for the sole purpose of advising them of
this Agreement), or negotiate or enter into any agreement or agreement in
principle with, any other Person with respect to a sale of the Company or any
Subsidiary, their assets (except as permitted by Section 5.1) or capital stock
or any similar transaction.
SECTION 5.4 NON-SOLICITATION OF EMPLOYEES; NON-COMPETE.
(a) If this Agreement is terminated, Buyer and its affiliates
agree that they will not for a period of two years thereafter, without the prior
written approval of the Company, directly or indirectly, solicit the employment
of, or offer employ ment to or hire any person who is a member of management of
the Company or any of its Subsidiaries, at the date hereof or at any time
hereafter that precedes such termination.
36
(b) For a period of two years from and after the Closing Date,
Windward Capital Associates, L.P. (or any entity controlled by it or under
common control with it) will not, directly or indirectly, engage (whether as an
officer, director, employee, investor, partner, stockholder, member, sole
proprietor, trustee or consultant) in the manufacture, design and sale of any
Products (defined herein) which the Company or its Subsidiaries produces as of
the Closing Date in any location in which the Company or any Subsidiary
manufacturers, designs and sells any of its Products as of the Closing Date;
provided, however, that ownership of less than 5% of the outstanding stock of
any publicly traded corporation shall not be deemed to be engaging in the
manufacture and sale of any Products which the Company or its Subsidiaries
produces; PROVIDED, FURTHER, THAT, Windward Capital Associates, L.P. (or any
entity controlled by it or under common control with it) shall not be prohibited
from owning equity in the Company. For the purposes of this Agreement,
"PRODUCTS" shall mean the range of medium and large high pressure aluminum
diecast engine and drivetrain components including oil pans, engine front
covers, transmission cases, timing chain housings, water pump housings, cam
covers and ladderframes. Windward Capital Associates, L.P. represents that it
is the general partner or manager of all the Sellers except for itself, CS
First Boston and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇).
(c) For a period of two years from and after the date hereof,
Windward Capital Associates, L.P. will not, without the prior written approval
of the Company, directly or indirectly, solicit the employment of, or offer
employment to or hire any person (other than (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇ or (ii) ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ for the purposes of being a director of an entity controlled by
Windward Capital Associates, L.P. or its affiliates or to evaluate investment
opportunities for Windward Capital Associates, L.P. or its affiliates (to the
extent not in violation of clause (b) above) who was a member of management of
the Company or any of its Subsidiaries at the date hereof.
(d) Each member of the Buyer Group, the Company and Windward
Capital Associates, L.P. agree that any remedy at law for any breach by it of
this Section 5.4 would be inadequate, and the Company would be entitled to
injunctive relief in such a case. If it is ever held that the restriction placed
on the Buyer Group and Windward Capital Associates, L.P. by this Section 5.4 is
too onerous and is not necessary for the protection of the Company, each member
of the Buyer Group and Windward Capital Associates, L.P. agree that any court of
competent jurisdiction may impose lesser restrictions which such court may
consider to be necessary or appropriate to properly protect the Company.
37
SECTION 5.5 DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION.
(a) If the Closing occurs, the Company agrees that all rights to
indemnification and all limitations on liability existing in favor of any
Company Indemnitee as provided in the certificates of incorporation or bylaws of
the Company or any Subsidiary of the Company, or any Indemnity Agreement to
which the Company or any Subsidiary of the Company is a party, shall survive the
consummation of the transactions contemplated by this Agreement and continue in
full force and effect and be honored by the Company and the Subsidiaries of the
Company after the Closing. To the extent permitted by (i) the certificate of
incorporation and bylaws of the Company or any Subsidiary of the Company or (ii)
any agreement providing for indemnification by the Company, any Subsidiary of
the Company or any Company Indemnitee in effect on the date of this Agreement
(an "INDEMNITY AGREEMENT"), advancement of Expenses pursuant to this Section
5.5(a) shall be mandatory rather than permissive and the Company shall advance
any Expenses in connection with such indemnification. In addition to the other
rights provided for in this Section 5.5(a) and not in limitation thereof, for
six years from and after the Closing Date, the Company shall, and shall cause
the Subsidiaries of the Company to, to the fullest extent permitted by
applicable law, (i) indemnify and hold harmless the individuals who on or prior
to the Closing Date were officers, directors or employees of the Company or any
Subsidiary of the Company, and the heirs, trustees, fiduciaries and
administrators of such officers, directors or employees (collectively, the
"COMPANY INDEMNITEES") against all losses, Expenses, claims, damages,
liabilities, judgments, or amounts paid in settlement (collectively, "COSTS") in
respect of any threatened, pending or completed claim, action, suit or
proceeding, whether criminal, civil, administrative or investigative to the
extent based on, or arising out of or relating to the fact that such person is
or was a director, officer or employee of the Company or any Subsidiary of the
Company and arising out of acts or omissions occurring on or prior to the
Closing Date (including, without limitation, in respect of acts or omissions in
connection with this Agreement and the transactions contemplated hereby) (an
"INDEMNIFIABLE CLAIM") and (ii) advance to such Company Indemnitees all Expenses
incurred in connection with any Indemnifiable Claim promptly after receipt of a
reasonably detailed statement therefor. In the event any Indemnifiable Claim is
asserted or made within such six year period, all rights to indemnification and
advancement of Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such Indemnifiable Claim are fully
satisfied; PROVIDED, HOWEVER, that the Company shall not be liable for any
settlement effected without its written consent (which consent
38
shall not be unreasonably withheld or delayed). The obligations of the Company
and the Subsidiaries of the Company under this Section 5.5(a) shall not be
terminated or modified in such a manner as to adversely affect any Company
Indemnitee to whom this Section 5.5(a) applies without the consent of such
affected Company Indemnitee (it being expressly agreed that the Company
Indemnitees to whom this Section 5.5(a) applies shall be third party
beneficiaries of this Section 5.5(a)). If the Closing occurs, the Company shall,
and shall cause the Subsidiaries of the Company to pay all Expenses to any
Company Indemnitee incurred in enforcing the indemnity or other obligations
provided for in this Section 5.5(a).
(b) For six years after the Closing, the Company will provide
and will cause the Subsidiaries of the Company to provide officers' and
directors' liability insurance in respect of acts or omissions occurring at or
prior to the Closing Date covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount not materially less favorable than those of such
policy in effect on the date hereof; PROVIDED, HOWEVER, that in no event shall
the Company or the Subsidiaries of the Company be required to expend more than
an amount per year equal to 200% of current annual premiums paid by the Company
for such insurance (the "MAXIMUM AMOUNT"). In the event that any Company
Indemnitee is entitled to coverage under an officers' and directors' liability
insurance policy pursuant to this Section 5.5(b) and such policy has lapsed,
terminated, been repudiated or is otherwise in breach or default as a result of
the Company's or the Company's Subsidiaries' failure to maintain and fulfill its
obligations pursuant to such policy as provided in this Section 5.5(b), the
Company and the Subsidiaries of the Company shall pay to the Company Indemnitee
such amounts and provide any other coverage or benefits as the Company
Indemnitee shall have received pursuant to such policy.
(c) In the event the Company or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company (or their successors and assigns)
shall assume the obligations set forth in this Section 5.5.
SECTION 5.6 REASONABLE BEST EFFORTS. Upon the terms and subject
to the conditions herein provided, except as otherwise provided in
Section 5.7, each of the parties hereto agrees to use its reasonable best
efforts to take or cause to be
39
taken all action, to do or cause to be done, and to assist and cooperate with
the other party hereto in doing (including cooperating at the Buyer Group's
expense in assisting in the process required to obtain title insurance policies
and surveys with respect to the Real Property), all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to, (i) the
satisfaction of the conditions precedent to the obligations of any of the
parties hereto, (ii) the obtaining of consents, waivers or approvals of third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the performance of the
obligations hereunder, and (iv) the execution and delivery of such instruments,
and the taking of such other actions as the other party hereto may reasonably
require in order to carry out the intent of this Agreement.
SECTION 5.7 GOVERNMENTAL AUTHORIZATIONS.
(a) The Company and the Sellers, on the one hand, and Buyer, on
the other hand, shall promptly file all necessary registrations and filings,
including, but not limited to, filings under the HSR Act or any other
competition or antitrust law in relevant jurisdictions and submissions of
additional information requested by any Governmental Authority; PROVIDED THAT
the parties agree to take reasonable best efforts to cause the filing under the
HSR Act shall occur not later than three business days following the execution
of this Agreement. Each of Buyer, the Company and the Sellers further agrees
that it will, and will cause its affiliates to, comply with any applicable
post-Closing notification or requirements of any antitrust, trade competition,
investment or control reporting or similar law or regulation or any Government
Authority with competent jurisdiction. Each of Buyer, the Company and the
Sellers agrees to cooperate with and promptly to consult with, to provide any
reasonably available information with respect to, and to provide, subject to
appropriate confidentiality provisions, copies of all presentations and filings
to any Governmental Authority to the other party or its counsel.
(b) In addition to the agreements set forth in (a) above, the
Company and Buyer shall each use its reasonable best efforts to ensure that the
consents, approvals, waivers or other authorizations from Governmental
Authorities, including without limitation, antitrust clearance under the HSR
Act, are obtained as promptly as practicable and that any conditions set forth
in or established by any such Governmental Authorities are wholly satisfied. In
fulfillment of this covenant,
40
the Company and Buyer each agrees, among other steps or actions and without
limiting the scope of Buyer's and the Company's obligations, to:
(i) take reasonable best efforts to satisfy any additional
conditions imposed by Governmental Authorities with respect to the
acquisition of the Company; and
(ii) oppose vigorously any litigation relating to this
Agreement or the transactions contemplated hereby, including, without
limitation, to appeal promptly any adverse decision or order by any
Governmental Authority or, if reasonably requested by the other party
hereto, to commence or threaten to commence and to pursue vigorously
litigation reasonably believed by the other party hereto to be helpful
in obtaining authorization from Governmental Authorities or in
terminating any outstanding proceedings; it being understood that the
costs and expenses of all such legal action shall be borne by Buyer.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. No press release or
announcement concerning the transactions contemplated hereby shall be issued by
the Company, any member of the Buyer Group or any Seller without the prior
consent of the Buyer, Sellers and the Company, except as such release or
announcement may be required by law, rule or regulation, in which case the party
required to issue the release or announcement shall allow Buyer, Sellers and the
Company reasonable time to comment on such release or announcement in advance of
its issuance.
SECTION 5.9 STOCK OPTIONS.
(a) Each Option granted to a Company employee that is
outstanding immediately prior to the Closing Date, whether or not then vested or
exercisable, shall, effective as of the Closing Date, but subject to Section
1.4(e) of this Agreement, be cancelled in exchange for a single lump sum cash
payment (net of required withholding Taxes) equal to the product of (1) the
number of Shares subject to such Option and (2) the excess, if any, of (A) Cash
Payment Per Share on the Closing Date over (B) the exercise price per Share
subject to such Option. At or prior to the Closing, the Company shall make
available to the Buyer evidence, reasonably satisfactory to the Buyer that no
Options shall remain outstanding immediately after the Closing.
41
(b) Sellers shall cause the Board to prepare and deliver to
Buyer on or before the Closing Date resolutions terminating the Company's (i)
1998 Stock Option Plan and (ii) 1998 Performance Stock Option Plan, each in
accordance with the terms of such plans.
(c) Sellers shall cause the Board to shorten the period during
which the options under the Company's 1998 Stock Option Plan and 1998
Performance Stock Option Plan are exercisable to provide for an exercise date of
no later than the Closing Date. The Board shall deliver written notice, in
accordance with the terms of such plans, of such acceleration no less than
eleven days prior to the Closing Date.
SECTION 5.10 EMPLOYEE MATTERS.
(a) Each individual who is employed by the Company or any
Subsidiary immediately prior to the Closing Date shall remain an employee of the
Company or such Subsidiary following the Closing Date (each such employee, an
"AFFECTED EMPLOYEE"); PROVIDED, HOWEVER, that this Section 5.10 shall not be
construed to limit the ability of the applicable employer to terminate the
employment of any Affected Employee at any time.
(b) The Company will, or will cause the applicable Subsidiary
of the Company to, give Affected Employees full credit for purposes of
eligibility, vesting, benefit accrual (except with respect to benefit accrual
under any defined benefit pension plans) and determination of the level of
benefits under any employee benefit plans or arrangements maintained by the
Company or any Subsidiary of the Company for such Affected Employees' service
with the Company or any Subsidiary of the Company to the same extent recognized
by the Company or such Subsidiary immediately prior to the Closing Date.
(c) The Company will, or will cause the applicable Subsidiary
of the Company to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans that such employees may be eligible to participate in after the Closing
Date, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Closing
Date under any welfare plan maintained for the Affected Employees immediately
prior to the Closing Date, and (ii) provide each Affected Employee with credit
for any co-payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements
42
under any welfare plans that such employees are eligible to participate in after
the Closing Date.
(d) For a period of one year immediately following the Closing
Date, the coverage and benefits provided to Affected Employees pursuant to
employee benefit plans or arrangements maintained by the Company or Company
Subsidiary shall be, in the aggregate, not less favorable than those provided to
such employees immediately prior to the Closing Date.
(e) As of the Closing Date, the Company shall expressly assume
and agree to perform, or cause the applicable Subsidiary of the Company to
perform, in accordance with their terms, all employment, severance and other
compensation agreements and arrangements then existing between the Company or
any Subsidiary of the Company with any director, officer or employee thereof.
SECTION 5.11 REPAYMENT OF INDEBTEDNESS.
(a) Simultaneously with the Closing and from the Financing
arranged by the Buyer as contemplated by this Agreement for consummation of the
transactions contemplated hereby, the Company shall repay and discharge in full
all amounts due under the Credit Agreement, including accrued and unpaid
interest thereon and any premiums, fees and expenses related to the prepayment
thereof (the "SENIOR DEBT REPAYMENT AMOUNT"), and shall repay and discharge such
indebtedness in a manner acceptable to the parties to the Credit Agreement (the
"SENIOR DEBT HOLDERS").
(b) Simultaneously with the Closing and from the Financing
arranged by the Buyer as contemplated by this Agreement for consummation of the
transactions contemplated hereby, the Company shall repay and discharge in full
the Company Notes, including accrued and unpaid interest thereon and any
premiums, fees and expenses related to the prepayment thereof (the "SUBORDINATED
DEBT REPAYMENT AMOUNT"), and shall repay and discharge such indebtedness in a
manner acceptable to the holders of the Subordinated Debt (the "SUBORDINATED
DEBT HOLDERS").
(c) Following the Closing Date, the following debt of the
Company or its Subsidiaries shall remain outstanding as an obligation of the
Company or its Subsidiaries and shall continue to be due and payable in
accordance with its terms: (i) the Guaranteed Unsecured Floating Rate Loan Notes
due 2003 Series A, Series B,
43
Series C and Series D, (ii) the ▇▇▇▇▇▇ ▇▇▇▇▇ Loan Notes due 2000, (iii) hedging
contracts for the forward sale of Pesetas from U.S. dollars, (iv) all
capitalized leases referred to in Section 2.13 of the Company Disclosure
Schedule and (v) all of the Peseta denominated debt at Ansola referred to in
Section 2.13 of the Company Disclosure Schedule (with respect to the foregoing
items, all outstanding principal and accrued interest shall be included
collectively (calculated on a net basis) as, the "ASSUMED DEBT").
SECTION 5.12 PREFERRED STOCK. Immediately prior to the Closing,
in accordance with their terms, the Company shall cause the shares of Series A
Preferred Stock to automatically, and without any action on the part of the
holders thereof, be converted into shares of Common Stock and Series B Preferred
Stock in accordance with the terms of the Amended and Restated Certificate of
Incorporation of the Company. From the Financing arranged by Buyer as
contemplated by this Agreement for consummation of the transactions contemplated
hereby, the Company shall redeem the shares of Series B Preferred Stock for the
Series B Preferred Redemption Price (as such term is defined in the Amended and
Restated Certificate of Incorporation of the Company) (the "PREFERRED STOCK
REDEMPTION AMOUNT") from the holders of the Preferred Stock (the "PREFERRED
STOCK HOLDERS"). The shares of Common Stock issued in such conversion shall be
redeemed by the Company or shall remain outstanding, as the case may be, in
accordance with Article I hereof.
SECTION 5.13 SHAREHOLDER APPROVAL OF PAYMENTS. Prior to the
Closing, the Company and Sellers shall have satisfied the shareholder approval
requirements of Section 280G(b)(5)(B) of the Code with respect to all payments
to be made to disqualified individuals (within the meaning of Section 280G(c) of
the Code) in connection with the transactions contemplated hereby.
SECTION 5.14 SHAREHOLDERS AGREEMENT; BOARD OF DIRECTORS;
BUYER'S FURTHER ASSURANCES. At or prior to the Closing, the Buyer Group, the
Sellers (to the extent they continue to own equity of the Company following the
redemption contemplated by Section 1.2 of this Agreement) and the Company shall
enter into a Shareholders Agreement (the "SHAREHOLDERS AGREEMENT") substantially
in the form of Exhibit D hereto. At or immediately following the Closing, the
Buyer Group shall cause the Company to appoint a Person designated by the
Sellers' Representative at least five days prior to Closing (which designee
shall be reasonably acceptable to the Buyer Group) to the Board of Directors of
the Company. The Shareholders Agreement shall provide for the right of the
Sellers' Representative to appoint one member of the Board of Directors of the
Company for so long as the Sellers or their
44
affiliates shall own in the aggregate at least 5% of the outstanding capital
stock of the Company. Following the Closing, each member of the Buyer Group
agrees to vote all shares owned by such Buyer to cause the Company to fully
comply with the post-closing covenants contained in this Agreement; PROVIDED
THAT the foregoing provision is not a guarantee of the Company's obligations
hereunder and the members of the Buyer Group shall not be obligated to make any
payment with respect to, or otherwise perform, the obligations of the Company
hereunder and the Sellers' sole remedy shall be an action for specific
performance, injunctive and/or other equitable relief.
SECTION 5.15 ORGANIZATIONAL DOCUMENTS. At or prior to the
Closing, Seller and the Company shall obtain or grant such approval, as the case
may be, and shall take such other action as is necessary, including, without
limitation, amending the Articles of Incorporation, substantially in the form of
Exhibit E-1 attached hereto, and By-Laws of the Company substantially in the
form of Exhibit E-2 attached hereto.
SECTION 5.16 FINANCING.
(a) In connection with the transactions contemplated hereby,
at the Closing, the Company shall execute and contemporaneously with the closing
of all transactions contemplated hereby, deliver agreements and instruments
relating to the Financing.
(b) Buyer will update the Company on a regular basis in
connection with the process of obtaining the Financing described in Section 4.5
hereto. The Company agrees to provide, and will cause its Subsidiaries and its
and their respective officers, employees, counsel and accountants to provide, to
the Buyer reasonable cooperation in connection with the arrangement of the
Financing and any other financing to be consummated contemporaneous with or at
or after the Closing in respect of the transactions contemplated by this
Agreement, including without limitation, the execution and delivery of any
pledge or security documents, underwriting or placement agreements, other
definitive financing documents, or other requested certificates, documents or
financial information as may be requested by Buyer.
(c) The Buyer shall use reasonable best efforts to obtain the
Financing contemplated by the Financing Commitment Letters to consummate the
transactions contemplated hereby.
45
SECTION 5.17 SOLVENCY OPINION. The Board of Directors of the
Company shall have been permitted to rely on the solvency opinion of the firms
retained by Buyer in connection with the Financing Commitment Letters in
reaching its determination to consummate the transactions contemplated by
Section 1.2 hereof.
ARTICLE VI
CONDITIONS TO BUYER GROUP'S OBLIGATION TO CLOSE
The Buyer Group's obligation to consummate the transactions
contemplated herein shall be subject to the satisfaction or written waiver by
Buyer on or prior to the Closing Date, of all of the following conditions:
SECTION 6.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. (a) The
representations and warranties of the Company, without giving any effect to any
materiality qualifications or limitations therein, shall be true and correct in
all respects on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date) (without
taking into account any disclosure made by the Company to Buyer pursuant to
Section 5.1(b) hereof), except (i) as otherwise contemplated by this Agreement,
(ii) for such failures to be true and correct which in the aggregate would not
have a material adverse effect (excluding therefrom effects to the extent
arising as a result of (A) general economic, financial or market conditions,
conditions or circumstances generally affecting the businesses or industries, as
a whole, in which the Company and/or its Subsidiaries operate or (B) the
identity of the Buyer Group) on the Company and its Subsidiaries, taken as a
whole. The Company shall have performed in all material respects each of its
respective agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Closing
pursuant to the terms hereof.
(b) The representations and warranties of the Sellers, without
giving effect to any materiality qualifications or limitations therein shall be
true and correct in all respects on and as of the Closing Date as though made on
and as of the Closing Date (except for representations and warranties made as of
a specified date, which need be true and correct only as of the specified date)
(without taking into account any disclosure made by the Sellers to Buyer
pursuant to Section 5.1(b) hereof), except (i) as otherwise contemplated by this
Agreement and (ii) for such failures to
46
be true and correct which in the aggregate would not have a material adverse
effect on the ability of the Sellers to consummate the transactions contemplated
hereby. Each of the Sellers shall have performed in all material respects each
of its respective agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Closing
pursuant to the terms hereof.
SECTION 6.2 FILINGS; CONSENTS; WAITING PERIODS. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers set forth in Section 6.2 of the Company Disclosure
Schedule shall have been filed, made or obtained, and all waiting periods
applicable under the HSR Act and similar applicable foreign merger control laws
shall have expired or been terminated.
SECTION 6.3 NO INJUNCTION. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the transactions contemplated herein.
SECTION 6.4 SHARE CERTIFICATES. The Sellers shall have
delivered to the Company certificates representing all of the Shares in
accordance with Section 1.2 hereof.
SECTION 6.5 PAY-OFF LETTERS. The Company shall have received
pay-off letters relating to the indebtedness for borrowed money which the
Company is obligated to repay or prepay on the Closing Date including, without
limitation, the Senior Debt and Subordinated Debt, and releases of any and all
security interests relating to such indebtedness held by third parties will have
been obtained, all on terms reasonably satisfactory to Buyer.
SECTION 6.6 FINANCING. The Company shall have obtained the
proceeds of the Financing pursuant to the Financing Commitment Letters. The
Company shall be obligated to accept any changes to such Commitment Letters or
the Financing made pursuant to the third full paragraph of the third page of the
Commitment Letter provided by Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC , Bank of
America NT&SA, Chase Securities Inc. and The Chase Manhattan Bank (which
provides for changes to the pricing (by up to .50% per annum for each Senior
Credit Facility (as such term is defined in such Commitment Letter)), terms and
structure of the Senior Credit Facilities after March 31, 1999 if the
syndication has not been completed and if Chase, Bank of America and the Lead
Arrangers determine that
47
such changes are necessary to insure a successful syndication of the Senior
Credit Facilities).
SECTION 6.7 SELLERS' OPINION. Buyer shall have received an
opinion, dated as of the Closing Date, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP counsel to Sellers, substantially in the form set forth on Exhibit F
attached hereto.
SECTION 6.8 PROCEEDINGS. All proceedings to be taken by Sellers
in connection with the consummation of the Closing transactions and the other
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to be delivered by Sellers to effect the transactions
contemplated hereby reasonably requested by Buyer will be reasonably
satisfactory in form and substance to Buyer.
SECTION 6.9 ANCILLARY AGREEMENTS. The Shareholders Agreement
shall have been executed and delivered by the applicable Sellers.
SECTION 6.10 ARTICLES OF INCORPORATION. The Articles of
Incorporation, as amended, shall have been filed and accepted by the Secretary
of State of Delaware.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
Sellers' and the Company's obligation to consummate the
transactions contemplated herein shall be subject to the satisfaction or written
waiver, by Sellers' Representative on or prior to the Closing Date, of all of
the following conditions:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of the Buyer Group, without giving any effect to
any materiality qualifications or limitations therein shall be true and correct
in all respects on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date), except (i)
as otherwise contemplated by this Agreement and (ii) for such failures to be
true and correct which in the aggregate would not have a material adverse effect
on Buyer and its subsidiaries, taken as a whole. Each member of the Buyer Group
shall have performed in all
48
material respects each of its respective agreements and covenants contained in
or contemplated by this Agreement that are required to be performed by it at or
prior to the Closing pursuant to the terms hereof.
SECTION 7.2 ANCILLARY AGREEMENTS. The Shareholders Agreement
shall have been executed and delivered by the Buyer Group and the Company, to
the extent applicable.
SECTION 7.3 FILINGS; CONSENTS; WAITING PERIODS. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers set forth in Section 7.3 of the Buyer Disclosure
Schedule shall have been filed, made or obtained, and all applicable waiting
periods under the HSR Act and similar applicable foreign merger control laws
shall have expired or been terminated.
SECTION 7.4 NO INJUNCTION. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the transactions contemplated hereby.
SECTION 7.5 PURCHASE PRICE AND FINANCING. The Buyer Group
shall have delivered the Purchase Price to the Company and the Company shall
have obtained the Financing and have the funds available to pay the Redemption
Price, the Fees and Expenses, the Preferred Stock Redemption Amount, the Senior
Debt Repayment Amount and the Subordinated Debt Repayment Amount.
SECTION 7.6 PROCEEDINGS. All proceedings to be taken by the
Buyer Group in connection with the consummation of the Closing transactions and
the other transactions contemplated hereby and all certificates, opinions,
instruments and other documents required to be delivered by the Buyer Group to
effect the transactions contemplated hereby reasonably requested by Sellers will
be reasonably satisfactory in form and substance to the Sellers' Representative.
SECTION 7.7 ARTICLES OF INCORPORATION. The Articles of
Incorporation, as amended, shall have been filed and accepted by the Secretary
of State of Delaware.
ARTICLE VIII
TERMINATION
49
SECTION 8.1 TERMINATION. Notwithstanding anything herein to
the contrary, this Agreement may be terminated at any time prior to the Closing
by:
(a) the mutual written consent of the Company, the Sellers'
Representative and Buyer;
(b) Buyer in the event that any condition set forth in Article
VI hereof shall not be satisfied and shall not be reasonably
capable of being remedied by May 14, 1999;
(c) the Company or the Sellers' Representative in the event than
any condition set forth in Article VII hereof shall not be satisfied
and shall not be reasonably capable of being remedied by May 14, 1999;
or
(d) either the Sellers' Representative or Buyer if the Closing
has not occurred by the close of business on May 14, 1999; provided,
however, that no party may terminate this Agreement pursuant to clause
(b) or (c) above, or pursuant to this clause (d), if the failure of the
applicable condition in Article VI or VII (as the case may be) to be
satisfied or the failure of the Closing to occur on or before the date
required in this Section 8.1(d) results from the willful and material
breach by the Sellers or the Company in the case of a termination by
the Sellers' Representative or the Company, or by Buyer in the case of
a termination by Buyer, of any covenant in this Agreement.
SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by a party hereto pursuant to Section 8.1 hereof,
written notice thereof shall forthwith be given by the terminating party to the
other parties hereto, and this Agreement shall thereupon terminate and become
void and have no effect, and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto, except that the
provisions of Sections 5.2(b), 5.4(a), 5.4(d), 5.8 and 9.6 shall survive the
termination of this Agreement; provided, however, that such termination shall
not relieve any party hereto of any liability for any breach of this Agreement
(other than nonwillful breaches of representations, warranties and covenants, as
to which no party shall be liable hereunder).
ARTICLE IX
50
INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Closing, except with
respect to (i) the representations and warranties set forth in Sections 2.2 and
3.2 contained herein which shall survive the Closing Date indefinitely and (ii)
the representation and warranty set forth in Section 2.21 hereof which shall
survive for four years following the Closing Date.
SECTION 9.2 INDEMNIFICATION BY THE SELLERS. The Sellers shall
severally and not jointly (with each Seller only responsible for its pro rata
share based upon the Seller Percentage of any Damages) indemnify the Buyer Group
and the Company (collectively, "BUYER/COMPANY INDEMNIFIED PARTIES") against, and
hold the Buyer/Company Indemnified Parties harmless from, all reasonable
out-of-pocket expenditures and all demands, actions, losses, damages,
liabilities, equitable relief, litigation, suits, proceedings, claims,
judgments, awards, obligations, responsibilities, penalties, reasonable costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively "DAMAGES"), directly arising out of
or resulting from any breach of any warranty or representation of the Company or
the Sellers contained in this Agreement that survives the Closing in accordance
with Section 9.1 hereof.
SECTION 9.3 LIMITATION ON INDEMNIFICATION. Notwithstanding the
foregoing, no indemnification shall be required in respect of any individual
claim pursuant to Section 9.2 hereof unless the aggregate amount of Damages
resulting from such claim exceeds $25,000, in which event the Buyer/Company
Indemnified Parties, shall be entitled to indemnification for the full amount of
such Damages without regard to the $25,000 threshold. The determination of
Damages shall take into account, and such Damages shall be reduced by, (i) any
reduction in income taxes of the party claiming indemnification as a result of
the event giving rise to such indemnification if and when such reduction in
income taxes is actually realized by the party claiming indemnification, (ii)
the amount of any insurance proceeds received by such party in connection
therewith and (iii) any third party payments actually received by virtue of
indemnification or subrogation. The Sellers' total liability under this Article
IX hereof shall be limited to the Redemption Price. For the purposes of this
Article IX, the representations and warranties of the parties shall be deemed to
have been made at the execution of this Agreement and again at the Closing,
subject to any additional qualifications thereto that either the Company or
51
the Sellers disclose to the Buyer but only if the Buyer Group was not obligated
as a result of such additional qualifications to consummate the transactions
contemplated herein at the Closing.
SECTION 9.4 INDEMNIFICATION PROCEDURES. If a claim is asserted
by a third party for which a party hereto is entitled to indemnification under
this Section 9 (as the "INDEMNITEE"), the indemnitee shall promptly give notice
(revealing the nature of the claim in sufficient detail and, if known, the
amount or approximate amount thereof), within a reasonable period not to exceed
60 days after receipt by the indemnitee of such claim to the other party (the
"INDEMNITOR") provided that the failure to give such notice shall not relieve
the indemnitor from liability it may have except to the extent the indemnitor is
actually prejudiced thereby. For this purpose, "reasonable period" shall mean
such period of time as will give the indemnitor reasonably sufficient time
(taking into account the date which the indemnitee has actual notice of such
claim) in which to respond to such claim in light of any time deadline of which
indemnitee is aware or upon reasonable inquiry should be aware. The indemnitor
will be entitled to take charge of the defense against such claim at the
indemnitor's cost and expense. Notwithstanding the indemnitor's assumption of
the defense or investigation of such claim, the indemnitee shall have the right
to employ separate legal counsel and to participate in the defense or
investigation of such claim, action or proceeding, and the indemnitor shall bear
the expense of such separate counsel, if (i) in the opinion of counsel to the
indemnitee, use of counsel of the indemnitor's choice could reasonably be
expected to give rise to a conflict of interest or (ii) the indemnitor shall
authorize the indemnitee to employ separate counsel at the indemnitor's expense.
The reasonable expenses, including reasonable attorney's fees, that may be
incurred by an indemnified party in enforcing the indemnity provided for in this
Article IX shall also be considered Damages and shall be payable if and when any
Damages are paid pursuant to this Article IX. In connection with the defense,
compromise or settlement of the claims by the indemnitor and its counsel, the
indemnitee shall cooperate reasonably, at the indemnitor's cost, to make
available to the indemnitor all necessary pertinent information and witnesses
under the indemnitee's control, and take such other steps as in the opinion of
counsel for the indemnitor are necessary or desirable to conduct such a defense,
compromise or settlement.
ARTICLE X
52
MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
to any party hereunder shall be in writing and deemed given on the date of
receipt via (a) personal delivery, (b) facsimile transmission with confirmation,
(c) overnight courier, or (d) certified or registered mail, in each case, with
delivery fees prepaid, addressed to the following addresses (or at such other
address for a party as shall be specified by notice given hereunder).
If to Buyer, to:
JLF Acquisition LLC
c/o Hidden Creek Industries
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
▇.▇. ▇▇▇▇▇▇ Automotive Castings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Sellers to the address set forth below such Seller's
name on Exhibit C attached hereto.
53
with copies, in the case of notice to the Company or any Sellers,
to:
Windward Capital Partners, L.P.
Americas Tower, 42nd Floor
1177 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.2 CURRENCY; FOREIGN EXCHANGE. Unless otherwise
indicated, all dollars ($'s) specified in this Agreement shall mean United
States dollars. Where necessary, all foreign currency shall be converted to U.S.
dollar equivalents determined on the basis of the spot exchange rate published
in the Wall Street Journal on the business day last preceding the date of
determination.
SECTION 10.3 INTERPRETATION. When a reference is made to an
Article, Section or Schedule, such reference shall be to an Article, Section or
Schedule of or to this Agreement unless otherwise indicated. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "to the
knowledge of the Company" in this Agreement shall mean the actual knowledge of
the following employees of the Company:
(1) ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
of the Company;
(2) ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer of the Company;
(3) ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director of Corporate Development of
the Company;
54
(4) ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Director, ▇▇▇▇▇▇ ▇▇▇▇▇ Limited;
(5) ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ Orbea Soroa, General Manager, Fundiciones
Viuda ▇▇ ▇▇▇▇▇▇, ▇.▇.
Notwithstanding anything to the contrary herein, the Sellers shall not be liable
to the any member of the Buyer Group and the members of the Buyer Group shall
not be entitled to claim that any representation or warranty of the Company or
the Sellers has been breached on account of (i) any fact, matter or circumstance
which any member of the Buyer Group was aware of on or before the date hereof or
(ii) any fact, matter or circumstance which any member of the Buyer Group
becomes aware of between the date of this Agreement and the Closing Date, if but
only if, in the case of clause (ii), the Buyer Group was not obligated to
consummate the Stock Purchase at the Closing.
SECTION 10.4 AMENDMENTS, MODIFICATION AND WAIVER.
(a) This Agreement, and the terms and provisions hereof, may
not be modified, waived or amended except by an instrument or instruments in
writing signed by the party against whom enforcement of any such modification or
amendment is sought (or, in the case of a waiver, by the intended beneficiary of
the waived term or provision); provided, however, that the Sellers hereby agree
that an amendment, waiver or modification may be enforced against all Sellers if
the Sellers' Representative have signed such amendment, waiver or modification
and such amendment, waiver or modification affects all Sellers in the same
manner.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.5 EXPENSES. Except as otherwise provided herein,
each party shall pay its own costs and expenses incurred in connection with this
Agreement, it being understood that all of the Sellers' and the Company's fees,
costs and expenses shall, to the extent not set forth on Exhibit A (as the same
may be modified from time to time) hereto, be paid by the Sellers.
Notwithstanding the foregoing, Buyer shall be responsible for paying all fees,
costs and expenses (i) relating to filings under the HSR Act and (ii) arising
under the Financing Commitment Letters. In the event the Closing occurs, the
Company shall be
55
responsible for paying the fees, costs and expenses referred to in the preceding
sentence and the obligations set forth in Section 4.4 of the Buyer Disclosure
Schedule or otherwise allocated to the Buyer Group under this Agreement.
SECTION 10.6 SELLERS' REPRESENTATIVE. Each Seller and each
holder of Options hereby authorizes and directs Windward Capital Partners, L.P.,
a Delaware limited partnership (the "SELLERS' REPRESENTATIVE") to take such
action on behalf of such Seller, and to exercise such rights, power and
authority, as are authorized, delegated and granted to the Sellers'
Representative pursuant to this Agreement and to exercise such rights, power and
authority as are incidental thereto including calculation of the Adjusted
Purchase Price and the additions and deductions related thereto. Each Seller
agrees that the Sellers' Representative shall not be liable for any actions
taken or omitted to be taken under or in connection with this Agreement or the
transactions contemplated hereby, except for such actions taken or omitted to be
taken resulting from the Sellers' Representative's willful misconduct.
SECTION 10.7 SUCCESSORS AND ASSIGNS; BINDING EFFECT. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of the other
parties hereto, except by Buyer (i) for collateral securities purposes to the
lenders pursuant to the Financing and (ii) to an assignee who becomes a member
of the Buyer Group in accordance with the last sentence of this Section 10.7;
PROVIDED THAT at least one member of the Buyer Group shall be Onex LLC or an
affiliate thereof or Hidden Creek Industries or an affiliate thereof. Subject to
the preceding sentence, this Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Following the date hereof, but in
any event within seven business days hereof, members of the Buyer Group may
become parties to this Agreement by executing a counterpart signature page
hereto and making the type of representations set forth in Sections 4.1, 4.2,
4.3, 4.4 and 4.6 hereof to the Sellers with respect to such member of the Buyer
Group. Upon such execution, the Buyer Disclosure Schedule shall be modified to
reflect the number of Shares to be purchased by such member of the Buyer Group,
the class of such Shares and the aggregate purchase price for such Shares (the
"INVESTMENT AMOUNT"). Each member of the Buyer Group shall be severally liable
for the obligations of the Buyer and the Buyer Group pursuant to this Agreement
on a pro rata basis determined by dividing such member's Investment Amount by
the Purchase Price, but in no event shall such obligations exceed such member's
56
Investment Amount. In connection with the foregoing, this Agreement shall be
amended so as to reflect the foregoing and any other changes that the Buyer and
the Sellers' Representative deem appropriate to reflect the foregoing.
Notwithstanding anything to the contrary set forth in this Agreement, after the
consummation of the Closing, no member of the Buyer Group shall be obligated to
make any payment with respect to, or otherwise perform, the obligations of the
Company hereunder.
SECTION 10.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof) as to all matters, including, but not limited to,
matters of validity, construction, effect, performance and remedies.
SECTION 10.9 JURISDICTION; FORUM. (a) By the execution and
delivery of this Agreement, each member of the Buyer Group, the Sellers and the
Company submit to the personal jurisdiction of any state or federal court in the
State of New York, County of New York in any suit or proceeding arising out of
or relating to this Agreement.
(b) To the extent that any member of the Buyer Group, any Seller
or the Company has or hereafter may acquire any immunity from jurisdiction of
any New York court from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such Buyer, such Seller or
the Company as the case may be, hereby irrevocably waives such immunity in
respect of its obligations with respect to this Agreement.
(c) The parties hereto agree that the appropriate and exclusive
forum for any disputes between any of the parties hereto arising out of this
Agreement or the transactions contemplated hereby shall be in any state or
federal court in the State of New York, County of New York. The parties hereto
further agree that the parties will not bring suit with respect to any disputes
arising out of this Agreement or the transactions contemplated hereby in any
court or jurisdiction other than the above specified courts; provided, however,
that the foregoing shall not limit the rights of the parties to obtain execution
of judgment in any other jurisdiction. The parties hereto further agree, to the
extent permitted by law, that final and unappealable judgment against a party in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United
57
States by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and amount of such judgment.
SECTION 10.10 SEVERABILITY. If any term or other provision of
the Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provision of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein is not affected in any
manner materially adverse to any party hereto. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner.
SECTION 10.11 THIRD PARTY BENEFICIARIES. Nothing in this
Agreement, express or implied, is intended or shall be construed to create any
third party beneficiaries, except for the provisions of Sections 5.5 and 5.10
which may be enforced by the beneficiaries thereof.
SECTION 10.12 SCHEDULES.
(a) Disclosure of any fact or item in any Section of the Company
Disclosure Schedule or the Buyer Disclosure Schedule hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or section
whether or not an explicit cross-reference appears.
(b) Certain of the representations and warranties set forth in
this Agreement contemplate that there will be included in the Company Disclosure
Schedule or the Buyer Disclosure Schedule information that might be "material"
or have a "material adverse effect." The Company and Buyer may, at their option,
include in such schedules items that are not material or are not likely to have
a material adverse effect in order to avoid any misunderstanding, and any such
inclusion shall not be deemed to be an acknowledgment or representation that
such items are material or would have a material effect, to establish any
standard of materiality or material adverse effect on the Company, or to define
further the meaning of such terms for purposes of this Agreement.
58
SECTION 10.13 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement, including any exhibits or schedules hereto constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements or understandings, both written
and oral, between the parties or any of them with respect to the subject matter
hereof. The only representations and warranties made by the parties hereto with
respect to the subject matter hereof are the representations and warranties
contained in or made pursuant to this Agreement.
SECTION 10.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be deemed an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 10.15 SPECIFIC PERFORMANCE. (a) Sellers acknowledge that
the Company's business is unique and recognize and affirm that in the event of a
breach of this Agreement by Sellers, money damages may be inadequate and Buyer
may have no adequate remedy at law. Accordingly, Sellers agree that Buyer shall
have the right, in addition to any other rights and remedies existing in its
favor, to enforce its rights and Sellers' obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief.
(b) Buyer acknowledges that the Company's business is unique
and recognizes and affirms that in the event of a breach of this Agreement by
Buyer, money damages may be inadequate and the Sellers may have no adequate
remedy at law. Accordingly, Buyer agrees that the Sellers and the Company shall
have the right, in addition to any other rights and remedies existing in their
favor, to enforce their rights and Buyer's obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief.
SECTION 10.16 COOPERATION AS TO FINANCIAL STATEMENTS. The Company
and Sellers shall reasonably cooperate with and assist, and cause its
independent accountants to cooperate with and assist, Buyer (at Buyer's sole
cost and expense) in Buyer's preparation of audited consolidated financial
statements for the Company in accordance with GAAP and in form (including the
relevant periods)
59
meeting the requirements of Regulation S-X of the Securities Act of 1933, as
amended.
SECTION 10.17 TAX MATTERS.
(a) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
State Gains tax, New York City Transfer Tax and any similar tax imposed in other
states or subdivisions) ("TRANSFER TAXES"), shall be paid by the Company when
due, and the Company will, at its own expense prepare and file all necessary Tax
Returns and other documentation with respect to all such transfer Taxes and, if
required by applicable law; the Sellers will, and will cause their affiliates
to, join in the execution of any such Tax Returns and other documentation;
PROVIDED THAT each Seller will be responsible for all transfer Taxes imposed
upon such Seller in connection with the redemption of such Seller's Shares.
(b) FIRPTA CERTIFICATE. Each Seller (other than Windward/Merban)
will furnish Buyer prior to the Closing a certification pursuant to Section 1. 1
445-2(b)(2) of the Treasury Regulations that such Seller is not a foreign
person.
(c) All payments made to the Sellers pursuant to Section 1.4
hereof shall be treated as additional payments in exchange for such Sellers'
Shares and any cancellation of the Shares of the Buyer Group pursuant to Section
1.4 hereof shall be treated as an adjustment to the Purchase Price.
SECTION 10.18 TERMINATION OF CERTAIN AGREEMENTS. In connection
with the transactions contemplated in this Agreement, the Sellers hereby agree
to waive any preemptive rights arising as a result of the transactions
contemplated hereby and that the Stockholders Agreement shall terminate and be
of no further force and effect as of the Closing.
60
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date and year first above written.
▇.▇. ▇▇▇▇▇▇ AUTOMOTIVE CASTINGS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
Title:
JLF ACQUISITION LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
Title:
SHAREHOLDERS:
WINDWARD CAPITAL ASSOCIATES, L.P.
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
61
WINDWARD/MERBAN, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
WINDWARD/MERCHANT, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
WINDWARD/NORTHWEST, L.P.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
62
WINDWARD/METROPOLITAN, L.L.C.
By: Windward Capital Associates, L.P., its general
partner
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
WINDWARD/PARK JLF, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
WINDWARD/PARK WACI, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
63
WINDWARD/BADGER JLF, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
WINDWARD/BADGER WACI, L.L.C.
By: Windward Capital Associates, L.P., its manager
By: Windward Capital Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
Title:
CS FIRST BOSTON MERCHANT INVESTMENTS
1995/96, L.P.
By: Merchant Capital, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:
Title:
64
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 Purchase and Sale of Common Stock. ...............................2
SECTION 1.2 Redemption of Shares and Additional
Recapitalization Transaction...................................................2
SECTION 1.3 Closing...........................................................4
SECTION 1.4 Post-Closing Adjustment...........................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.1 Corporate Organization and Authority.............................11
SECTION 2.2 Capitalization...................................................12
SECTION 2.3 Subsidiaries.....................................................14
SECTION 2.4 Consents and Approvals; No Violations............................14
SECTION 2.5 Financial Statements.............................................16
SECTION 2.6 Absence of Material Adverse Changes, etc.........................16
SECTION 2.7 No Undisclosed Liabilities.......................................18
SECTION 2.8 Taxes............................................................18
SECTION 2.9 Employee Benefit Plans...........................................20
SECTION 2.10 Environmental Matters...........................................22
SECTION 2.11 Legal Proceedings, etc..........................................24
SECTION 2.12 Compliance with Applicable Law..................................24
SECTION 2.13 Certain Contracts and Arrangements..............................25
SECTION 2.14 Real Property...................................................25
SECTION 2.15 Labor Matters...................................................27
SECTION 2.16 Insurance.......................................................28
SECTION 2.17 Patents, Trademarks, Etc........................................28
SECTION 2.18 Certain Fees....................................................29
SECTION 2.19 Transactions with Affiliates....................................29
SECTION 2.20 Accounts Receivable; Inventories................................29
SECTION 2.21 Indebtedness....................................................30
SECTION 2.22 Issuance of Shares..............................................31
SECTION 2.23 Product Warranty and Liability..................................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.1 Authority and Related Matters....................................32
SECTION 3.2 Share Ownership..................................................32
SECTION 3.3 Consents and Approvals; No Violations............................33
SECTION 3.4 Brokers, Finders, etc............................................34
SECTION 3.5 Legal Proceedings................................................34
i
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER GROUP
SECTION 4.1 Corporate Organization and Authority.............................34
SECTION 4.2 Consents and Approvals; No Violations............................35
SECTION 4.3 Legal Proceedings, etc...........................................36
SECTION 4.4 Certain Fees.....................................................37
SECTION 4.5 Financing........................................................37
SECTION 4.6 Acquisition of Shares for Investment.............................38
SECTION 4.7 Solvency.........................................................38
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Business..........................................39
SECTION 5.2 Access to Information; Confidentiality...........................41
SECTION 5.3 No Shop..........................................................42
SECTION 5.4 Non-Solicitation of Employees; Non-Compete.......................42
SECTION 5.5 Director and Officer Liability; Indemnification..................43
SECTION 5.6 Reasonable Best Efforts..........................................46
SECTION 5.7 Governmental Authorizations......................................46
SECTION 5.8 Public Announcements.............................................47
SECTION 5.9 Stock Options....................................................48
SECTION 5.10 Employee Matters................................................48
SECTION 5.11 Repayment of Indebtedness.......................................50
SECTION 5.12 Preferred Stock.................................................51
SECTION 5.13 Shareholder Approval of Payments................................51
SECTION 5.14 Shareholders Agreement; Board of Directors;
Buyer's Further Assurances...........................................51
SECTION 5.15 Organizational Documents........................................52
SECTION 5.16 Financing.......................................................52
SECTION 5.17 Solvency Opinion................................................53
ARTICLE VI
CONDITIONS TO BUYER GROUP'S OBLIGATION TO CLOSE
SECTION 6.1 Representations and Warranties; Covenants........................53
SECTION 6.2 Filings; Consents; Waiting Periods...............................54
SECTION 6.3 No Injunction....................................................54
SECTION 6.4 Share Certificates...............................................54
SECTION 6.5 Pay-off Letters..................................................54
SECTION 6.6 Financing........................................................54
SECTION 6.7 Sellers' Opinion.................................................55
SECTION 6.8 Proceedings......................................................55
SECTION 6.9 Ancillary Agreements.............................................55
SECTION 6.10 Articles of Incorporation.......................................55
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ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
SECTION 7.1 Representations and Warranties; Covenants........................56
SECTION 7.2 Ancillary Agreements.............................................56
SECTION 7.3 Filings; Consents; Waiting Periods...............................56
SECTION 7.4 No Injunction....................................................56
SECTION 7.5 Purchase Price and Financing.....................................56
SECTION 7.6 Proceedings......................................................57
SECTION 7.7 Articles of Incorporation........................................57
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination......................................................57
SECTION 8.2 Procedure and Effect of Termination..............................58
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Survival of Representations and Warranties.......................58
SECTION 9.2 Indemnification by the Sellers...................................58
SECTION 9.3 Limitation on Indemnification....................................59
SECTION 9.4 Indemnification Procedures.......................................59
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices.........................................................60
SECTION 10.2 Currency; Foreign Exchange......................................62
SECTION 10.3 Interpretation..................................................62
SECTION 10.4 Amendments, Modification and Waiver.............................63
SECTION 10.5 Expenses........................................................63
SECTION 10.6 Sellers' Representative.........................................64
SECTION 10.7 Successors and Assigns; Binding
Effect........................................................64
SECTION 10.8 Governing Law...................................................65
SECTION 10.9 Jurisdiction; Forum.............................................65
SECTION 10.10 Severability...................................................66
SECTION 10.11 Third Party Beneficiaries......................................66
SECTION 10.12 Schedules......................................................66
SECTION 10.13 Entire Agreement...............................................67
SECTION 10.14 Counterparts; Effectiveness....................................67
SECTION 10.15 Specific Performance...........................................67
SECTION 10.16 Cooperation as to Financial Statements.........................68
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SECTION 10.17 Tax Matters....................................................68
SECTION 10.18 Termination of Certain Agreements..............................69
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Index of Defined Terms
Actual Closing Cash............................................................8
Adjusted Cash Payment Per Share................................................6
Affected Employee ............................................................48
Affiliated Group ............................................................20
Aggregate Option Exercise Price................................................3
Agreement......................................................................1
Amended and Restated Subordinated Note Agreement..............................13
Assumed Debt..................................................................50
Balance Sheet.................................................................18
Buyer..........................................................................1
Buyer Disclosure Schedule.....................................................35
Buyer Group....................................................................1
Buyer's Accountants............................................................6
Buyer/Company Indemnified Parties.............................................58
Cash Payment Per Share.........................................................3
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares..........................................................2
Charter Amendment..............................................................2
Class A Common Stock..........................................................12
Class B Common Stock..........................................................12
Class C Common Stock..........................................................12
Class D Common Stock..........................................................12
Closing........................................................................4
Closing Date...................................................................4
Closing Working Capital........................................................8
Code..........................................................................20
Company........................................................................1
Company Board.................................................................12
Company Disclosure Schedule....................................................2
Company Financial Statements..................................................16
Company Indemnitees...........................................................44
Company Notes.................................................................13
Company Plans.................................................................21
Company Stockholders' Agreement...............................................13
Confidentiality Agreement.....................................................41
Costs.........................................................................44
Credit Agreement..............................................................38
CS First Boston................................................................1
Current Assets.................................................................7
Current Liabilities............................................................7
Damages.......................................................................59
Debt Amount....................................................................3
Encumbrances..................................................................14
Environmental Claim...........................................................22
Environmental Laws............................................................22
ERISA.........................................................................21
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Escrow Agreement...............................................................9
Estimated Closing Cash.........................................................4
Fees and Expenses..............................................................4
Final Statement................................................................8
Financing.....................................................................38
Financing Commitment Letter...................................................37
Ford Tooling Receivable........................................................7
Fully Diluted Shares...........................................................3
GAAP..........................................................................16
Governmental Authority........................................................15
Hazardous Materials...........................................................22
HSR Act.......................................................................15
Indebtedness..................................................................30
Indemnifiable Claim...........................................................44
indemnitee....................................................................59
indemnitor....................................................................59
Indemnity Agreement...........................................................44
Independent Accounting Firm....................................................7
Insurance Policies............................................................28
Intellectual Property Rights..................................................28
Investment Amount.............................................................64
Leased Real Property..........................................................26
Leases........................................................................26
Lien..........................................................................15
Material Contracts............................................................25
Maximum Amount................................................................45
Options.......................................................................13
Owned Real Property...........................................................26
Permits.......................................................................24
Permitted Liens...............................................................25
Post-Closing Adjustment........................................................6
Preferred Stock...............................................................13
Preferred Stock Holders.......................................................51
Preferred Stock Redemption Amount.............................................51
Products......................................................................43
Purchase Price.................................................................2
Real Property.................................................................26
Recapitalization...............................................................2
Redemption Percentage..........................................................9
Redemption Price...............................................................3
Release.......................................................................22
Representatives...............................................................41
Sellers........................................................................1
Sellers Disclosure Schedule...................................................32
Sellers' Representative.......................................................64
Senior Debt Holders...........................................................50
Senior Debt Repayment Amount..................................................50
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Series A Preferred Stock......................................................13
Series B Preferred Stock......................................................13
Shareholders Agreement........................................................51
Shares........................................................................12
Solvent.......................................................................38
Statement......................................................................6
Subordinated Debt Holders.....................................................50
Subordinated Debt Repayment Amount............................................50
Subsidiary....................................................................14
Tax Return....................................................................20
Taxes.........................................................................20
Threshold Amount..............................................................59
Transfer Taxes................................................................68
Windward Capital...............................................................1
Windward/Badger JLF............................................................1
Windward/Badger WACI...........................................................1
Windward/Merban................................................................1
Windward/Merchant..............................................................1
Windward/Metropolitan..........................................................1
Windward/Northwest.............................................................1
Windward/Park JLF..............................................................1
Windward/Park WACI.............................................................1
Working Capital................................................................7
Working Capital Escrow Agent...................................................9
Working Capital Escrow Fund....................................................9
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