Exhibit 1
AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.,
▇▇▇▇▇▇ GROUP, L.L.C.,
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
JENS HOHNEL,
▇▇ ▇▇▇▇▇▇, INC.,
ME ▇▇▇▇▇▇▇▇▇, INC.,
and
J HOEHNEL, INC.
Dated as of May 14, 2001
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions
ARTICLE II
THE MERGERS AND THE CONTRIBUTION
2.1 The Mergers
2.2 The Closing
2.3 Effective Time
2.4 The Charter and Bylaws.
2.5 Directors and Officers of the Surviving Corporation
2.6 Contribution
ARTICLE III
CONSIDERATION
3.1 Corporation Shares
3.2 Consideration for the Transactions
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SELLERS AND THE COMPANY
4.1 Due Incorporation; Subsidiaries
4.2 Due Authorization
4.3 Consents and Approvals; Authority Relative to This Agreement
4.4 Capitalization of the Company and Its Subsidiaries
4.5 Capitalization of the Corporations
4.6 Financial Statements; Undisclosed Liabilities; Other Documents
4.7 No Material Adverse Effects; No Material Adverse Change
4.8 Title to Properties
4.9 Condition and Sufficiency of Assets
4.10 Real Property
4.11 Personal Property
4.12 Inventory
4.13 Accounts Receivable; Tooling; Engineering and Development
-i-
4.14 Intellectual Property
4.15 Contracts; No Default or Violations
4.16 Permits
4.17 Insurance
4.18 Employee Benefit Plans; ERISA
4.19 Employment and Labor Matters
4.20 Capital Improvements
4.21 Taxes
4.22 Product Claims
4.23 Environmental Matters
4.24 Litigation
4.25 No Conflict of Interest
4.26 Bank Accounts
4.27 Additional Representations and Warranties by the Sellers
4.28 Brokers
4.29 Imposition of Certain Liability
4.30 Customers and Suppliers
4.31 Company Disclosure Schedule
4.32 Accuracy of Statements
4.33 Continuity of Enterprise and Ownership
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
5.1 Existence and Power
5.2 Due Authorization
5.3 Consents and Approvals; Authority Relative to This Agreement
5.4 No Violation of Other Instruments or Laws
5.5 Stock Consideration
5.6 Parent Disclosure Documents
5.7 Brokers
5.8 Additional Representations and Warranties by Parent
5.9 C&A Disclosure Schedule
5.10 Continuity of Business Enterprise
ARTICLE VI
COVENANTS
6.1 Implementing Agreement
6.2 Access to Information and Facilities
6.3 Consents and Approvals
6.4 Resignation of Officers and Directors
6.5 Supplemental Information
6.6 Use of Name
6.7 Termination of Certain Agreements
-ii-
6.8 Confidentiality
6.9 Publicity
6.10 Preservation of Business
6.11 Tax Matters
6.12 Maintenance of Insurance
6.13 Accounts Receivable
6.14 Operation of Corporations
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
7.1 Non-Compete Agreements
7.2 HSR Act
7.3 Shareholder Approval
7.4 ▇▇▇▇▇▇ Appointment
7.5 Actions or Proceedings
7.6 New York Stock Exchange
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND PURCHASER
8.1 Warranties True as of Both Present Date and Closing Date
8.2 Compliance with Agreements and Covenants
8.3 Consents and Approvals
8.4 Stockholders Agreement
8.5 EPP Rights; Termination of Agreements; Amendment of Certain Agreements
8.6 Financial Statements
8.7 Documents
8.8 Obligations to Affiliates; Working Capital
8.9 Assets.
8.10 Existing Indebtedness
8.11 Audited Financial Statements
8.12 Lease Amendment
8.13 ▇▇▇▇▇▇▇▇ Sales Commission
8.14 No Material Adverse Change
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
9.1 Warranties True as of Both Present Date and Closing Date
9.2 Compliance with Agreements and Covenants
9.3 Documents
-iii-
9.4 Registration Rights Agreement; Stockholders Agreement
9.5 Consents and Approvals
ARTICLE X
CLOSING
10.1 Deliveries by the Sellers and the Company
10.2 Deliveries by Parent and Purchaser
ARTICLE XI
TERMINATION
11.1 Termination
11.2 Effect of Termination
ARTICLE XII
INDEMNIFICATION
12.1 Survival
12.2 Indemnification by the Sellers
12.3 Indemnification by Purchaser
12.4 Claims
12.5 Notice of Third Party Claims; Assumption of Defense
12.6 Settlement or Compromise
12.7 Failure of Indemnifying Person to Act
12.8 Limitations on Indemnification
12.9 Satisfaction of Sellers' Indemnification Obligations
12.10 Assignment of Claims
12.11 Exclusive Remedies
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses
13.2 Amendment
13.3 Notices
13.4 Waivers
13.5 Counterparts
13.6 Headings
13.7 Interpretation
13.8 Applicable Law
13.9 Jurisdiction
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13.10 Assignment
13.11 No Third Party Beneficiaries
13.12 Further Assurances
13.13 Severability
13.14 Entire Understanding
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SCHEDULES
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Schedule 1.1 Corporations; Membership Interests
Schedule 3.2(b) Indebtedness
Schedule 4.1 States Where Licensed To Do Business
Schedule 4.3 Governmental and Third Party Consents
Schedule 4.4(b) Ownership of Equity Interests by the Company
Schedule 4.5 Ownership of Equity Interests by the Sellers
Schedule 4.10 Leased Real Property
Schedule 4.11 Owned Tangible Personal Property; Leases of Personal Property
Schedule 4.14 Intellectual Property; Royalties and Fees
Schedule 4.15(a) Contracts
Schedule 4.15(f) Complaints, Repricings, Givebacks or Discounts
Schedule 4.16 Permits
Schedule 4.17(a) Insurance Policies
Schedule 4.17(b) Insurance Claims
Schedule 4.18(a) Employee Benefit Plans
Schedule 4.18(s) Foreign Plans
Schedule 4.20 Capital Expenditures not yet Completed; Cost Estimate To
Complete
Schedule 4.21(a) Tax Returns After January 1, 1998
Schedule 4.21(b) Tax Audits After January 1, 1998; Deficiencies from Any Tax
Audit Being Contested
Schedule 4.21(c) Tax Consulting Services
Schedule 4.22 Product Liability Claims Pending or Threatened
Schedule 4.23(g) Environmental Reports
Schedule 4.24(a) Insurance Deductibles
Schedule 4.26 Bank Accounts
Schedule 4.30 Contracts with Customers and Suppliers
Schedule 6.6 Permitted Use of Name
Schedule 6.7 Contracts To Remain Outstanding
Schedule 6.10 Permitted Distributions
Schedule 6.11(j) Tax Liabilities
Schedule 13.3 Notice Information for Sellers
EXHIBITS
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Exhibit A Form of Stockholder Approval Agreement
Exhibit B Form of Non-Compete Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Stockholders Agreement
Exhibit E Form of Warrant
AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER is made as of May 14, 2001, by and
among ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, a Delaware corporation ("Parent"); ▇▇▇▇▇▇▇ &
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▇▇▇▇▇▇ Products Co., a Delaware corporation ("Purchaser"); ▇▇▇▇▇▇ Group, L.L.C.,
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a Michigan limited liability company (the "Company"); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and Jens Hohnel ("Hohnel" and,
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together with ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, the "Sellers") and ▇▇ ▇▇▇▇▇▇, Inc., a
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Michigan corporation (the "▇▇▇▇▇▇ Corporation"), ME ▇▇▇▇▇▇▇▇▇, Inc., a Michigan
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corporation (the "▇▇▇▇▇▇▇▇▇ Corporation"), and J Hoehnel, Inc., a Michigan
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corporation (the "Hoehnel Corporation" and, together with the ▇▇▇▇▇▇ Corporation
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and the ▇▇▇▇▇▇▇▇▇ Corporation, the "Corporations").
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WHEREAS, ▇▇▇▇▇▇ owns beneficially and of record all of the issued and
outstanding capital stock (the "▇▇▇▇▇▇ Shares") of the ▇▇▇▇▇▇ Corporation;
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▇▇▇▇▇▇▇▇▇ owns beneficially and of record all of the issued and outstanding
capital stock (the "▇▇▇▇▇▇▇▇▇ Shares") of the ▇▇▇▇▇▇▇▇▇ Corporation; and Hohnel
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owns beneficially and of record all of the issued and outstanding capital stock
(the "Hoehnel Shares" and, together with the ▇▇▇▇▇▇ Shares and the ▇▇▇▇▇▇▇▇▇
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Shares, the "Shares") of the Hoehnel Corporation;
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WHEREAS, the Corporations together own beneficially and of record all
of the issued and outstanding Membership Interests of the Company in the amounts
set forth on Schedule 1.1;
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WHEREAS, on the terms and subject to the conditions contained herein,
the board of directors of the ▇▇▇▇▇▇ Corporation has adopted a plan of merger
and recommended it to the shareholders of the ▇▇▇▇▇▇ Corporation, who have
approved the merger (the "▇▇▇▇▇▇ Merger") of the ▇▇▇▇▇▇ Corporation with and
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into Parent; the board of directors of the ▇▇▇▇▇▇▇▇▇ Corporation has adopted a
plan of merger and recommended it to the shareholders of the ▇▇▇▇▇▇▇▇▇
Corporation, who have approved the merger (the "▇▇▇▇▇▇▇▇▇ Merger") with and into
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Parent; and the board of directors of the Hoehnel Corporation has adopted a plan
of merger and recommended it to the shareholders of the Hoehnel Corporation, who
have approved the merger (the "Hoehnel Merger" and, together with the ▇▇▇▇▇▇
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Merger and the ▇▇▇▇▇▇▇▇▇ Merger, the "Mergers") with and into Parent;
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WHEREAS, on the terms and subject to the conditions contained herein,
the board of directors of Parent has approved the Mergers of the Corporations
with and into Parent, with Parent being the Surviving Corporation (as defined);
WHEREAS, on the terms and subject to the conditions contained herein
and subject to compliance with the requirements of the New York Stock Exchange
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
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Heartland has agreed to vote the shares of Common Stock owned by it in favor of
the issuance of the Merger Consideration (as defined herein) pursuant to an
agreement (the "Stockholder Approval Agreement") in the form attached hereto as
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Exhibit A; and
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WHEREAS, it is intended that, for federal income tax purposes, the
Mergers shall qualify as statutory mergers within the meaning of Section
368(a)(1)(A) of the Code and that this Agreement shall be, and hereby is,
adopted as a plan of reorganization for purposes of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise defined in this Agreement, the
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following terms shall have the meanings herein ascribed to such terms:
"Accredited Investor" shall have the meaning provided in Rule 501(a)
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under Regulation D.
"Affiliate" shall mean, with respect to any specified Person: (1) any
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other Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person;
and (2) any immediate family member of the specified Person or any of the
foregoing Persons, or any relative of such immediate family member.
"Agreement" shall mean this Agreement and Plan of Merger, including
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all exhibits and schedules hereto, as amended from time to time.
"▇▇▇▇▇▇" shall have the meaning set forth in the recitals to this
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Agreement.
"▇▇▇▇▇▇ Agreement" shall mean the non-compete agreement dated as of
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June 30, 1998, between JCI and ▇▇▇▇▇▇, as amended by an amendment dated as of
January 29, 1999.
"▇▇▇▇▇▇ Corporation" shall have the meaning set forth in the recitals
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to this Agreement.
"▇▇▇▇▇▇ Merger" shall have the meaning set forth in the recitals to
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this Agreement.
"▇▇▇▇▇▇ Shares" shall have the meaning set forth in the recitals to
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this Agreement.
"BPI" shall have the meaning set forth in Section 4.1(a).
---
"▇▇▇▇▇▇▇▇ Agreement" shall mean the agreement dated as of March 7,
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2000, between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Business Day" shall mean a day other than Saturday, Sunday or any
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other day on which commercial banks in New York, New York are authorized or
required by law to close.
"C&A Disclosure Schedule" shall have the meaning set forth in Article
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V.
"▇▇▇▇▇▇▇▇ Sales Commissions" shall mean all amounts owed to
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▇▇▇▇▇▇/▇▇▇▇▇▇▇▇, L.L.C. by the Company pursuant to or as a result of the
termination of the Manufacturers Representative Agreement (the "Manufacturers
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Agreement") dated as of April 1, 2000 and terminated as of February 9, 2001
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between the Company and ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇, L.L.C.
"Cash Payment" shall have the meaning set forth in Section 3.2(b).
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"Certificate of Merger" shall have the meaning set forth in Section
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2.3.
"Closing" shall have the meaning set forth in Section 2.2.
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"Closing Date" shall have the meaning set forth in Section 2.2.
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"Code" shall mean the United States Internal Revenue Code of 1986, as
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amended.
"Common Stock" shall mean the shares of common stock of Parent, par
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value $0.01 per share.
"Company" shall have the meaning set forth in the recitals to this
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Agreement.
"Company Disclosure Schedule" shall have the meaning set forth in
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Article IV.
"Company Financial Statements" shall mean all of the following: the
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consolidated financial statements of the Company as of December 31, 1999
(audited) and December 31, 2000 (unaudited), consisting of the consolidated
balance sheets at such date and the related consolidated statements of earnings
and retained earnings and cash flows for the year then ended. The term "Company
Financial Statements" shall also include any and all interim consolidated
financial statements of the Company then in existence.
"Company Intellectual Property" shall mean any and all Intellectual
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Property owned by the Company or any Subsidiary of the Company.
"Confidential Information" shall mean all nonpublic technical,
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proprietary, commercial, financial and other information (irrespective of the
form of such information) owned by or concerning the Company and its business
and operations, including without limitation all nonpublic Company Intellectual
Property.
"Contract" shall mean any contract, lease, commitment, understanding,
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sales order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, that is
binding and enforceable.
"Contribution" shall have the meaning set forth in Section 2.6.
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"Corporations" shall have the meaning set forth in the recitals to
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this Agreement.
"Debt Repayment Amount" shall have the meaning set forth in Section
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3.2(b).
"Detrex Claim" shall mean any Environmental Claim by Detrex
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Corporation or any of its Affiliates against the Company or any of its
Affiliates.
"DGCL" shall have the meaning set forth in Section 2.1.
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"Dollars" or numbers preceded by the symbol "$" shall mean amounts in
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United States Dollars.
"Effective Time" shall have the meaning set forth in Section 2.3.
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"Employee Benefit Plans" shall have the meaning set forth in Section
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4.18.
"End Date" shall have the meaning set forth in Section 11.1(b)(i).
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"Environmental Claim" shall mean any notice, claim, demand, action,
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suit, complaint, proceeding or other written communication by any Governmental
Authority or Person alleging liability or potential liability arising out of,
relating to, based on or resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous Material at any location, whether
or not owned, leased or operated by the Company or its Subsidiaries, or (ii)
circumstances forming the basis of any violation or alleged violation of any
Environmental Law or Environmental Permit or (iii) otherwise relating to
obligations or liabilities under any Environmental Law.
"Environmental Laws" shall mean the common law and all applicable
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federal, state, local and foreign statutes, rules, regulations, ordinances and
orders and decrees of any Governmental Authority, relating in any manner to
contamination, pollution or protection of human health or the environment.
"Environmental Permits" shall mean all permits, licenses,
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registrations and other governmental authorizations and approvals required for
the Company and its Subsidiaries, and the operations of the Company's and its
Subsidiaries' facilities, to conduct their business under Environmental Laws.
"Environmental Reports" shall mean all applications, notifications,
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reports, studies, assessments and audits that address any issue of noncompliance
with, or liability under, any Environmental Law that may affect the Company or
its Subsidiaries in any material respect.
"EPP" shall have the meaning set forth in Section 4.1(a).
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"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.18(a).
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"Exchange Act" shall have the meaning set forth in the recitals to
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this Agreement.
"GAAP" shall mean U.S. generally accepted accounting principles at the
----
time in effect.
"Governmental Authority" shall mean the government of the United
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States or any foreign country or any state or political subdivision thereof, and
any entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
the Pension Benefit Guaranty Corporation and other quasi-governmental entities
established to perform such functions.
"Hazardous Material" shall mean any chemical, material or substance
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defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "hazardous constituents", "restricted hazardous
materials", "extremely hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", or words of similar meaning
and regulatory effect under any applicable Environmental Law, including, without
limitation, petroleum (including, without limitation, crude oil or any fraction
thereof) and asbestos.
"Heartland" shall mean Heartland Industrial Partners, L.P.
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"Hohnel" shall have the meaning set forth in the recitals to this
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Agreement.
"Hoehnel Corporation" shall have the meaning set forth in the recitals
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to this Agreement.
"Hoehnel Merger" shall have the meaning set forth in the recitals to
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this Agreement.
"Hoehnel Shares" shall have the meaning set forth in the recitals to
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this Agreement.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
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of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" of any Person shall mean, without duplication, (a) all
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indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business), (b) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (c) all
capital lease obligations of such Person, (d) all obligations of such Person in
respect of bankers' acceptances issued or created for the account of such
Person, (e) all indebtedness of others secured by (or for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on any property owned or acquired by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof, and
(f) all guarantees by such Person of indebtedness of others. The Indebtedness
of any Person shall include the Indebtedness of any partnership in which such
Person is a general partner; provided that, if the sole asset of such Person is
its general partnership interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such general partnership
interest and the amount of any Indebtedness in respect of any guarantee of such
partnership Indebtedness shall be limited to the same extent as such guarantee
may be limited.
"Indemnified Taxes" shall mean (1) all Taxes imposed pursuant to the
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Michigan Single Business Tax for the 2000 taxable year and all preceding years,
(2) U.S. federal and Michigan income Taxes based upon income or profits of the
Company for tax periods for which the Company reported as a pass-through entity
and (3) Michigan sales and uses taxes imposed or found to be owed in connection
with or relating to the currently pending audit.
"Indemnified Person" shall mean the Person or Persons entitled to, or
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claiming a right to, indemnification under Article XII.
"Indemnifying Person" shall mean the Person or Persons claimed by the
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Indemnified Person to be obligated to provide indemnification under Article XII.
"Intellectual Property" shall mean any and all trademarks, trade
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names, service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing), technology,
trade secrets, inventions, know-how, designs, computer programs, processes, and
all other intangible assets, properties and rights.
"IRS" shall mean the Internal Revenue Service.
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"JCI" shall mean ▇▇▇▇▇▇▇ Controls, Inc., a Wisconsin corporation.
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"JCI Agreement" shall mean the supply agreement between the Company
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and JCI dated as of January 1, 1999.
"▇▇▇▇ Stockholders" shall mean the recipients of shares of Common
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Stock in connection with the acquisition by the Company of ▇▇▇▇ Automotive
Industries, Inc. and their transferees.
"knowledge", "knowing" and terms of similar import shall mean, with
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respect to the Company, the conscious awareness of any Seller or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ after reasonable investigation and inquiry of all relevant
individuals whether or not employed by the Company.
"Latest Balance Sheet" shall mean the consolidated balance sheet of
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the Company dated as of December 31, 2000.
"Law" shall mean any law, statute, regulation, ordinance, rule, order,
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decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority, including any of the foregoing related to occupational
safety and health.
"Lien" shall mean any mortgage, lien (except for any lien for taxes
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not yet due and payable), charge, restriction, pledge, assessment, security
interest, option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
"Loss" or "Losses" shall mean any and all liabilities, losses, costs,
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claims, damages (including consequential damages), penalties and expenses
(including attorneys' fees and expenses and costs of investigation and
litigation). In the event any of the foregoing are indemnifiable hereunder, the
terms "Loss" and "Losses" shall include any and all attorneys' fees and expenses
and costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
"Management Agreement" shall mean the agreement dated as of January
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29, 1999, between the Company and ▇▇▇▇▇▇ Ventures, LLC.
"Manufacturers Agreement" shall have the meaning set forth in the
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definition of "▇▇▇▇▇▇▇▇ Sales Commissions".
"Material Adverse Change" shall mean a change (or circumstance or
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event involving a prospective change) in the business, operations, assets,
liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as a whole,
that is materially adverse.
"Material Adverse Effect" shall mean an effect (or circumstance or
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event involving a prospective effect) that is materially adverse on either (i)
the business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Sellers or the
Company to consummate the Transactions.
"▇▇▇▇▇▇▇▇▇" shall have the meaning set forth in the recitals to this
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Agreement.
"▇▇▇▇▇▇▇▇▇ Corporation" shall have the meaning set forth in the
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recitals to this Agreement.
"▇▇▇▇▇▇▇▇▇ Merger" shall have the meaning set forth in the recitals to
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this Agreement.
"▇▇▇▇▇▇▇▇▇ Shares" shall have the meaning set forth in the recitals to
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this Agreement.
"Membership Interests" shall have the meaning set forth in Section
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4.4(a).
"Merger Consideration" shall have the meaning set forth in Section
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3.2(a).
"Mergers" shall have the meaning set forth in the recitals to this
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Agreement.
"Non-Compete Agreement" shall mean the non-compete agreement by and
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between Purchaser and each of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and Hohnel substantially in the
form attached hereto as Exhibit B.
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"Operating Agreement" shall have the meaning set forth in Section
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4.1(a).
"Parent" shall have the meaning set forth in the recitals to this
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Agreement.
"Parent Disclosure Documents" shall have the meaning set forth in
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Section 5.6.
"Permits" shall have the meaning set forth in Section 4.16.
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"Permitted Liens" shall mean any (i) zoning restrictions, easements,
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rights of way and similar encumbrances that do not materially detract from the
value of the applicable property or materially limit its usefulness, (ii)
pledges or deposits made in the ordinary course of business and consistent with
past practice in connection with workers' compensation, FELA or unemployment
insurance, and (iii) bid bonds and the like in the ordinary course of business
and consistent with past practice.
"Person" shall mean any individual, corporation, proprietorship, firm,
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partnership, limited partnership, trust, association or other entity.
"Product" shall have the meaning set forth in Section 4.22.
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"Purchaser" shall have the meaning set forth in the recitals to this
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Agreement.
"Purchaser Indemnified Parties" shall mean Purchaser, Parent and each
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of their Affiliates (including, after the Closing, the Company and the
Corporations), and their respective officers, directors, employees, members,
managers, agents and representatives; provided that in no event shall any Seller
be deemed a Purchaser Indemnified Party.
"Real Property" shall have the meaning set forth in Section 4.10.
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"Registration Rights Agreement" shall mean the registration rights
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agreement in the form attached hereto as Exhibit C to be entered into by and
---------
among Parent, Heartland and, among others, the Sellers.
"Regulation D" shall have the meaning set forth in Section 4.27(a).
------------
"Related Agreement" shall mean any Contract that is or is to be
-----------------
entered into at the Closing or otherwise pursuant to, or in connection with,
this Agreement, including the Stockholder Approval Agreement, the Non-Compete
Agreements, the Registration Rights Agreement, the Stockholders Agreement and
the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Sellers" shall have the meaning set forth in the recitals to this
-------
Agreement.
"Shares" shall have the meaning set forth in the recitals to this
------
Agreement.
"Stock Consideration" shall have the meaning set forth in Section
-------------------
3.2(a).
"Stockholder Approval Agreement" shall have the meaning set forth in
------------------------------
the recitals to this Agreement.
"Stockholders Agreement" shall mean the stockholders agreement in the
----------------------
form attached hereto as Exhibit D by and among Parent, Heartland and, among
---------
others, the Sellers.
"Straddle Period" shall mean any taxable period beginning on or
---------------
before, and ending after, the Closing Date.
"Subsidiary" shall mean, with respect to a specified Person, any
----------
corporation, partner ship or other entity in which the specified Person owns or
controls, directly or indirectly, through one or more intermediaries, more than
50% of the stock or other interests having general voting power in the election
of directors or Persons performing similar functions, or in which the specified
Person owns or controls rights to more than 50% of any distributions.
"Surviving Corporation" shall have the meaning set forth in Section
---------------------
2.1.
"Tax Benefits" shall mean the amount of any refund, credit or
------------
reduction in otherwise required Tax payments, including any interest payable
thereon, actually received.
"Tax Return" shall mean any report, return or other information
----------
required to be sup plied to a Governmental Authority in connection with any
Taxes.
"Taxes" shall mean all taxes, charges, fees, duties, levies or other
-----
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel,
excess profits, occupational, interest equalization, windfall profits,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority, and such
term shall include any interest, penalties or additions to tax attributable
thereto.
"Transactions" shall mean the Mergers, the Contribution and the other
------------
transactions contemplated by the Related Agreements.
"Warrants" shall have the meaning set forth in Section 3.2(a).
--------
"Working Capital" shall mean, at any time, (i) the consolidated trade
---------------
accounts receivable and product and corporate tooling inventory of the Company
and its Subsidiaries, less (ii) the consolidated accounts payable and accrued
current liabilities not related to Indebtedness or similar obligations of the
Company and its Subsidiaries, in each case calculated on a basis consistent with
the historical consolidated financial statements of the Company previously
delivered to Parent and Purchaser.
ARTICLE II
THE MERGERS AND THE CONTRIBUTION
2.1 The Mergers. On the terms and subject to the conditions of this
-----------
Agreement, at the Effective Time each Corporation shall be merged with and into
Parent, and the separate corporate existence of each Corporation shall thereupon
cease, and Pa rent shall be the surviving corporation in the Mergers (sometimes
hereinafter referred to as the "Surviving Corporation "). The Mergers shall
---------------------
each have the effects specified in the Delaware General Corporation Law (the
"DGCL").
-----
2.2 The Closing. On the terms and subject to the conditions of this
Agreement, the closing of the Transactions (the "Closing") shall take place at
-------
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ as promptly as practicable, but no later than two business days
following the satisfaction or waiver of the conditions set forth in Articles
VII, VIII and IX (other than conditions which by their nature are to be
satisfied at Closing, but subject to those conditions) or at such other time,
date or place as Purchaser and the Sellers may agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date".
------------
2.3 Effective Time. If all the conditions set forth in Articles VII,
--------------
VIII and IX shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article XI, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
252 of the DGCL (a "Certificate of Merger") with respect to each Merger to be
---------------------
properly executed and filed in accordance with such Section on the Closing Date.
Each Merger shall become effective at the time of filing of the applicable
Certificate of Merger with the Michigan Department of Consumer and Industry
Services and the Secretary of State of the State of Delaware in accordance with
the DGCL or at such later time which the parties hereto shall have agreed upon
and designated in such filings as the effective time of such Merger (the
"Effective Time").
--------------
2.4 The Charter and Bylaws. The Certificate of Incorporation and
----------------------
Bylaws of Parent as in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation and Bylaws of the Surviving Corporation.
2.5 Directors and Officers of the Surviving Corporation. The
directors and officers of Parent immediately prior to the Effective Time and
▇▇▇▇▇▇ shall be the directors of the Surviving Corporation as of the Effective
Time and until their successors are duly appointed or elected in accordance with
applicable law.
2.6 Contribution. Immediately following the Effective Time and on
------------
the Closing Date, Parent shall contribute (the "Contribution") all the
------------
Membership Interests to Purchaser in consideration of Purchaser's agreement (i)
to pay the Debt Repayment Amount to the applicable parties, and (ii) to pay the
Cash Payment at the Closing to the holders of the Shares outstanding immediately
prior to the Effective Time.
ARTICLE III
CONSIDERATION
3.1 Corporation Shares. As a result of the Mergers, at the Effective
------------------
Time each Share of each Corporation outstanding immediately prior to the
Effective Time shall be cancelled and cease to exist, and each holder of Shares
shall thereafter cease to have any rights with respect to such Shares, except
the right to receive, without interest, the consideration contemplated by
Section 3.2 allocable to it upon the surrender of such Shares.
3.2 Consideration for the Transactions.
----------------------------------
(a) At the Effective Time, the outstanding Shares shall be converted
into an aggregate of (i) certificates representing 17,000,000 shares of Common
Stock (the "Stock Consideration"), and (ii) warrants (the "Warrants") to
------------------- --------
purchase an aggregate of 500,000 shares of Common Stock in the form attached
hereto as Exhibit E. The consideration described in this Section 3.2(a) is
---------
referred to as the "Merger Consideration". Delivery of the Stock Consideration
--------------------
and the Warrants shall be made to the Sellers at Closing in accordance with
Section 3.2(d).
(b) Immediately following the Contribution, Purchaser will repay the
Indebtedness (including any interest, expenses, fees, penalties and other
related amounts due in respect thereof) owing under the agreements set forth on
Schedule 3.2(b) (the amount of all such Indebtedness outstanding on the Closing
---------------
Date is referred to as the "Debt Repayment Amount"). Immediately following the
---------------------
Contribution, Purchaser will pay to the holders of the Shares outstanding
immediately prior to the Effective Time cash in an aggregate amount (the "Cash
----
Payment"), if any, equal to $60,000,000 less the Debt Repayment Amount by means
-------
of a certified check or wire transfer of immediately available funds to a bank
account designated by each Seller in accordance with Section 3.2(d).
(c) Parent shall, on or prior to the Effective Time, reserve for
issuance upon exercise of the Warrants the number of its duly authorized but
unissued shares of Common Stock purchasable upon exercise of the Warrants as
will be sufficient to permit the exercise in full of all Warrants.
(d) The Merger Consideration and the Cash Payment shall be allocated
among the ▇▇▇▇▇▇ Shares, the ▇▇▇▇▇▇▇▇▇ Shares and the Hoehnel Shares in the
relative amounts set forth on Schedule 1.1, which sets forth the relative
------------
percentage ownership of the Membership Interests by the Corporations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SEllERS AND THE COMPANY
Each Seller and the Company jointly and severally represents and
warrants to Parent and Purchaser that, except as set forth in the corresponding
section or subsection of the Company Disclosure Schedule (the "Company
-------
Disclosure Schedule") delivered herewith:
-------------------
4.1 Due Incorporation; Subsidiaries.
-------------------------------
(a) The Company and each Subsidiary of the Company is duly formed,
validly existing and in good standing under the laws of the State of Michigan,
with all requisite power and authority to own, lease and operate its properties
and to carry on its businesses and operations as they are now being owned,
leased, operated and conducted. The Company and each Subsidiary of the Company
is licensed or qualified to do business and is in good standing as a foreign
limited liability company in each jurisdiction where the nature of the
properties owned, leased or operated by it and the businesses and operations
transacted by it require such licensing or qualification, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect.
The States set forth on Schedule 4.1 are the only jurisdictions in which the
------------
Company or any Subsidiary of the Company is organized, or licensed or qualified
to do business. The only Subsidiary of the Company is Brut Plastics, Inc., a
Michigan corporation ("BPI"). The Company does not hold any other direct or
---
indirect economic, voting or management interest in any Person or directly or
indirectly own any security issued by any Person other than a 45% interest in
Engineered Plastic Products, Inc. ("EPP"), a Michigan corporation. To the
---
knowledge of the Sellers and the Company, the net investment in EPP at cost is
$591,887 in equity and $1,398,241 in debt. The equity interests owned by the
Company in BPI and EPP are owned free and clear of all Liens. Accurate and
complete copies of (i) the Articles of Organization of the Company as currently
in effect, (ii) the Operating Agreement for the Company dated as of January 29,
1999 (as amended as of October 1, 1999, the "Operating Agreement") and (iii)
-------------------
the corporate books and records of the Company have been delivered to Purchaser.
The organizational instruments of each of BPI and EPP as currently in effect and
copies of the corporate books and records of BPI have been delivered to
Purchaser.
(b) Each Corporation is duly formed, validly existing and in good
standing under the laws of the State of Michigan, with all requisite power and
authority to own the Membership Interests owned by it. No Corporation has any
Subsidiary or holds any assets other than the Membership Interests owned by it.
No Corporation is a participant in any joint venture, partnership or similar
arrangement, and no Corporation conducts any business or operations. Accurate
and complete copies of the Certificate of Incorporation and Bylaws of each
Corporation as currently in effect have been delivered to Purchaser. No
Corporation is required to be licensed or qualified to do business as a foreign
corporation in any jurisdiction.
4.2 Due Authorization.
-----------------
(a) The Company has full power and authority to enter into this
Agreement and the Related Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by the Company of this Agreement and the Related Agreements to which
it is a party have been duly and validly approved by the managers, members, and
equityholders of the Company, and no other actions or proceedings on the part of
the Company are necessary to authorize this Agreement, the Related Agreements or
the transactions contemplated hereby and thereby. The Company has duly and
validly executed and delivered this Agreement and the Related Agreements. This
Agreement and the Related Agreements of the Company constitute (assuming, in
each case, due execution and delivery by Parent, Purchaser and the other
entities party thereto) legal, valid and binding obligations of the Company, in
each case enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
(b) Each Seller and each Corporation has full power and authority to
enter into this Agreement and the Related Agreements to which it is a party and
to consummate the transactions contemplated hereby and thereby. Each Seller and
each Corporation has duly and validly executed and delivered this Agreement and
the Related Agreements to which it is a party. This Agreement and the Related
Agreements to which each Seller and each Corporation is a party constitute
(assuming, in each case, due execution and delivery by Parent, Purchaser and the
other entities party thereto) legal, valid and binding obligations of such
Seller or Corporation, in each case enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies.
4.3 Consents and Approvals; Authority Relative to This Agreement.
------------------------------------------------------------
(a) No consent, authorization or approval of, or filing or
registration with, any Governmental Authority or any other Person not a party to
this Agreement is necessary in connection with the execution, delivery and
performance by the Company of this Agreement or the Related Agreements to which
it is a party or the consummation of the transactions contemplated hereby or
thereby, other than a Premerger Notification Form pursuant to the HSR Act.
(b) No consent, authorization or approval of, or filing or
registration with, any Governmental Authority or any other Person not a party to
this Agreement is necessary in connection with the execution, delivery and
performance of any Seller or any Corporation of this Agreement or the Related
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby, other than a Premerger Notification Form
pursuant to the HSR Act.
(c) The execution, delivery and performance by the Company of this
Agreement and the Related Agreements to which it is a party do not and will not:
(i) violate any Law; (ii) violate or conflict with, result in a breach or
termination of, constitute a default or give any third party any additional
right (including a termination right) under, permit cancellation of, result in
the creation of any Lien upon any of the assets or properties of the Company or
any Subsidiary of the Company under, or result in or constitute a circumstance
which, with or without notice or lapse of time or both, would constitute any of
the foregoing under, any Contract to which the Company or any Subsidiary of the
Company is a party or by which the Company or any Subsidiary of the Company or
any of their assets or properties are bound; (iii) permit the acceleration of
the maturity of any Indebtedness of the Company or any Subsidiary of the Company
or Indebtedness secured by their assets or properties; or (iv) violate or
conflict with any provision of any of, or cause the dissolution of the Company
or any Subsidiary of the Company pursuant to, the articles of organization,
certificate of formation, charter, Operating Agreement, or similar
organizational instruments of the Company or any Subsidiary of the Company.
(d) The execution, delivery and performance by the Sellers and the
Corporations of this Agreement and the Related Agreements to which they are a
party do not and will not (i) violate any Law or (ii) violate or conflict with,
result in a breach or termination of, constitute a default or give any third
party any additional right (including a termination right) under, permit
cancellation of, result in the creation of any Lien upon any of the assets or
properties of the Company or any Subsidiary of the Company under, or result in
or constitute a circumstance which, with or without notice or lapse of time or
both, would constitute any of the foregoing under, any Contract to which any
Seller or any Corporation is a party or by which any Seller or any Corporation
or any of its assets or properties are bound.
4.4 Capitalization of the Company and Its Subsidiaries.
--------------------------------------------------
(a) All of the equity ownership interests in the Company consist of
membership interests (the "Membership Interests"), all of which have been duly
--------------------
authorized and validly issued in compliance with the terms and conditions of the
Operating Agreement and in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of all applicable federal and
state securities laws. All of the Membership Interests are currently issued and
outstanding. The legal and beneficial and record ownership of the Membership
Interests are accurately set forth on Schedule 1.1. The Membership Interests
------------
are fully paid and nonassessable and are not subject to preemptive rights. All
capital contributions or similar contributions required by the Operating
Agreement have been made. There are no Membership Interests currently reserved
for issuance for any purpose or upon the occurrence of any event or condition.
Each of the Membership Interests is an uncertificated security.
(b) All of the equity ownership interests owned by the Company in its
Subsidiaries have been duly authorized and validly issued in compliance with the
terms and conditions of the applicable organizational
documents and in compliance with all registration or qualification requirements
(or applicable exemptions therefrom) of all applicable federal and state
securities laws. The legal and beneficial and record ownership of such equity
ownership interests are accurately set forth on Schedule 4.4(b). All of such
---------------
equity ownership interests are fully paid and nonassessable and are not subject
to preemptive rights.
(c) Except as set forth in clause (a) or (b), there are no Membership
Interests, stock or other securities (whether or not such securities have voting
rights) of the Company or its Subsidiaries issued or outstanding or any
subscriptions, options, warrants, puts, calls, rights, convertible securities or
other agreements or commitments of any character obligating any Seller, any
Corporation, the Company, or any of their respective Affiliates to issue,
transfer or sell, or cause the issuance, transfer or sale of, any Membership
Interests, stock or other securities (whether or not such securities have voting
rights) of the Company. There are no outstanding contractual rights or
obligations of any Person that relate to the purchase, sale, issuance,
repurchase, redemption, acquisition, transfer, disposition, holding or voting of
any Membership Interests, stock or other securities of the Company or its
Subsidiaries, or the management or operation of the Company, including rights of
first refusal, rights of first offer, "drag along" rights, or "tag along"
rights. Accurate and complete copies of any agreement relating to any such
arrangement have previously been provided to Purchaser. Except for each
Corporation's rights as a holder of Membership Interests, no Person has any
right to participate in, or receive any payment based (including payments
pursuant to this Agreement or any Related Agreement) on any amount relating to,
or arising in connection with, the revenue, income, value or net worth of the
Company or any component or portion thereof, or any current or former ownership
of Membership Interests, or any current or former ownership of the Company or
any Seller or any Corporation, or any increase or decrease in any of the
foregoing.
(d) The Membership Interests owned by each Corporation are owned free
and clear of any and all Liens.
4.5 Capitalization of the Corporations.
----------------------------------
(a) All of the equity ownership interests in each Corporation consist
of shares of common stock, all of which have been duly authorized and validly
issued in compliance with the terms and conditions of the certificate of
incorporation for such Corporation and in compliance with all registration or
qualification requirements (or applicable exemptions therefrom) of all
applicable federal and state securities laws. All of the Shares are currently
issued and outstanding. The legal and beneficial and record ownership of the
Shares are accurately set forth on Schedule 4.5. The Shares are fully paid and
------------
nonassessable and are not subject to preemptive rights. There are no Shares
currently reserved for issuance for any purpose or upon the occurrence of any
event or condition.
(b) Except as set forth in clause (a), there are no Shares or other
securities (whether or not such securities have voting rights) of any
Corporation issued or outstanding or any subscriptions, options, warrants, puts,
calls, rights, convertible securities or other agreements or commitments of any
character obligating any Seller or any of its Affiliates to issue, transfer or
sell, or cause the issuance, transfer or sale of, any Shares or other securities
(whether or not such securities have voting rights) of any Corporation. There
are no outstanding contractual rights or obligations of any Seller that relate
to the purchase, sale, issuance, repurchase, redemption, acquisition, transfer,
disposition, holding or voting of any Shares or other securities of any
Corporation, or the management or operation of any Corporation, including
without limitation, rights of first refusal, rights of first offer, "drag along"
rights, or "tag along" rights. Except for each Seller's rights as a holder of
Shares, no Person has any right to participate in, or receive any payment based
(including, without limitation, payments pursuant to this Agreement or any
Related Agreement) on any amount relating to, or arising in connection with, the
revenue, income, value or net worth of any Corporation or any component or
portion thereof, or any current or former ownership of Shares, or any current or
former ownership of any Corporation, or any increase or decrease in any of the
fore going.
(c) The Shares owned by each Seller are owned free and clear of any
and all Liens.
4.6 Financial Statements; Undisclosed Liabilities; Other Documents.
--------------------------------------------------------------
(a) Accurate and complete copies of the Company Financial Statements
have previously been provided to Purchaser. The Company Financial Statements
consistently and fairly present the consolidated financial position, assets and
liabilities of the Company and its Subsidiaries as of the dates thereof and the
consolidated revenues, expenses and results of operations of the Company and its
Subsidiaries for the periods covered thereby, in each case in accordance with
GAAP. The Company Financial Statements have been prepared in
accordance with the books and records of the Company. The Company Financial
Statements do not reflect any transactions which are not bona fide transactions.
The Company Financial Statements do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
(b) Except as set forth in the Latest Balance Sheet, the Company and
its Subsidiaries have no liabilities, Indebtedness or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, other
than accrued expenses incurred in the ordinary course of business since the date
of the Latest Balance Sheet. At the Effective Time, the Company and its
Subsidiaries will have no Indebtedness whatsoever other than as set forth on
Schedule 3.2(b) and the up to $4.25 million letter of credit for workers'
---------------
compensation and the $1.0 million guaranty of Indebtedness of EPP set forth in
Schedule 4.6(b), and no liability, Indebtedness or obligations, whether accrued,
---------------
absolute, contingent or otherwise, whether due or to become due, to ▇▇▇▇▇▇
Aviation, LLC, ▇▇▇▇▇▇ Europe GmbH, ▇▇▇▇▇▇ Ventures, LLC, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or in respect of the ▇▇▇▇▇▇▇▇ Sales Commissions or Manufacturers
Agreement (other than amounts not to exceed $269,231, including payments made
since the Latest Balance Sheet of $28,438, to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in connection
with the termination of the ▇▇▇▇▇▇▇▇ Agreement). The Company and its
Subsidiaries have no liabilities that are not directly related to, and that did
not arise directly out of, the business of the Company and its Subsidiaries.
The Debt Repayment Amount as of the date hereof is approximately $67,050,000.
(c) No Corporation has any liabilities, Indebtedness or obligations,
whether accrued, absolute, contingent or otherwise, whether due or to become
due.
4.7 No Material Adverse Effects; No Material Adverse Change. Since
-------------------------------------------------------
the date of the Latest Balance Sheet, the Company, together with its
Subsidiaries, has conducted its business in the ordinary course consistent with
past practices and has not:
(a) suffered any Material Adverse Change;
(b) suffered any damage, destruction or Loss to any of its assets or
properties (whether or not covered by insurance) that has had or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(c) taken any action or failed to take any action, or made any
expenditure or failed to make any expenditure, or entered into or
authorized any Contract or transaction, other than in the ordinary course
of business and consistent with past practice;
(d) sold, transferred, conveyed, assigned or otherwise disposed of
any of its material assets or properties, except sales of inventory in the
ordinary course of business and consistent with past practice;
(e) waived, released or cancelled any claims against third parties or
debts owing to it, or any rights which have any value;
(f) made any changes in its accounting systems, policies, principles
or practices;
(g) made any payment of any ▇▇▇▇▇▇▇▇ Sales Commissions, entered into,
authorized, or permitted any transaction with any Seller, any Corporation,
or any Affiliate of any Seller or any Corporation or paid any dividend or
made any other distribution in respect of the Membership Interests since
the date of the Latest Balance Sheet, except to the extent contemplated by
Section 8.13;
(h) authorized for issuance, issued, sold, delivered or agreed or
committed to issue, sell or deliver (whether through the issuance or
granting of options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise) any Membership
Interests or any other securities of the Company or any Subsidiary of the
Company or EPP, or amended any of the terms of any Membership Interests or
such other securities;
(i) split, combined, or reclassified any Membership Interests or any
other securities, declared, set aside or paid any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any Membership Interests or any other securities, or
redeemed or otherwise acquired any Membership Interests or any other
securities of the Company or any Subsidiary of the Company or EPP;
(j) made any borrowings, incurred any Indebtedness, or assumed,
guaranteed, endorsed (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business
and consistent with past practice) or otherwise become liable (whether
directly, indirectly or contingently) for the obligations or Indebtedness
of any other Person, or made any payment or repayment in respect of any
obligations or Indebtedness (other than (A) accrued expenses in the
ordinary course of business and consistent with past practice and (B)
drawings under existing loan commitments in the
ordinary course of business and consistent with past practice and
consistent with the representation in Section 4.6(b) and the condition in
Section 8.10);
(k) made any loans, advances or capital contributions to, or
investments in, any other Person;
(l) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, officer, member, manager or employee, or increased in any
manner the compensation or fringe benefits of any director, officer,
member, manager or employee or paid any benefit not required by any
existing plan and arrangement or entered into any contract, agreement,
commitment or arrangement to do any of the foregoing, in each case other
than increases in compensation or fringe benefits of employees (other than
the Sellers) in the ordinary course of business and consistent with past
practice;
(m) acquired or leased any assets outside the ordinary course of
business or any assets which are material to the Company and its
Subsidiaries, taken as a whole, or made any property subject to any Lien
whatsoever other than Permitted Liens;
(n) authorized or made any capital expenditures which individually or
in the aggregate are in excess of $100,000;
(o) made any Tax election or settled or compromised any federal,
state, local or foreign Tax liability, or waived or extended the statute of
limitations in respect of any such Taxes;
(p) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against the Company or any of its officers, members,
managers, employees or agents; or
(q) terminated, modified, amended or otherwise altered or changed any
of the terms or provisions of any Contract the terms of which provide for,
individually or in the aggregate, amounts to be paid either to or by the
Company or any Subsidiary in excess of $100,000, or paid any amount in
excess of $100,000 not required by Law or by any Contract, in each case
other than in the ordinary course of business and consistent with past
practice.
4.8 Title to Properties. The Company, together with its
-------------------
Subsidiaries, has good and marketable title to, and is the lawful owner of, all
of the tangible and intangible assets, properties and rights reflected in the
Company Financial Statements, Schedule 4.10 and Schedule 4.11 (other than
------------- -------------
leased assets under the leases set forth in Schedule 4.11), in all cases free
-------------
and clear of all Liens other than Permitted Liens on assets (other than the
Shares or other capital stock of the Company and its Subsidiaries).
4.9 Condition and Sufficiency of Assets. The Company, together with
-----------------------------------
its Subsidiaries, owns or leases all assets and rights used or useful for the
continued conduct of the Company's business and operations as presently
conducted and as proposed to be conducted. All of the tangible assets,
properties and rights of the Company and its Subsidiaries, whether real or
personal, owned or leased (with respect to leased property, during the term of
lease therefor), are in good operating condition and repair (with the exception
of normal wear and tear), and are free from defects other than such minor
defects as do not interfere with the intended use thereof in the conduct of
normal operations or adversely affect the resale value thereof.
4.10 Real Property. Schedule 4.10 sets forth an accurate and complete
------------- -------------
list of all real property leased (as lessor or lessee) by the Company and its
Subsidiaries. Accurate and complete copies of each such lease have previously
been provided to Purchaser. The Company and its Subsidiaries do not own and
have not owned any real property and are in compliance in all material respects
under each lease to which it is a party. With respect to the property that the
Company and its Subsidiaries use or have used in their business and operations
(the "Real Property"):
-------------
(a) the activities carried on by the Company and its Subsidiaries in
all buildings, plants, facilities, installations, fixtures and other
structures or improvements included as part of, or located on or at, the
Real Property, and the buildings, plants, facilities, installations,
fixtures and other structures or improvements themselves, are not in
violation of, or in conflict with, any applicable zoning, environmental or
health regulations or ordinance or any other similar Law, in each case
other than any violation or conflict that would not reasonably be expected
to result, individually or in the aggregate, in Losses in excess of
$100,000; or
(b) the Company and its Subsidiaries have not used, deposited,
stored, or located at, on, under, or beneath any Real Property or portion
thereof, any asbestos, asbestos-containing materials, PCB compounds or
other pollutants, contaminants, or Hazardous Substances, except as would
not reasonably be expected to exceed the amounts reflected as reserves
therefor in the Latest Balance Sheet.
4.11 Personal Property. Schedule 4.11 sets forth an accurate and
----------------- -------------
complete list of all of the tangible personal property owned by the Company and
its Subsidiaries with a book value, net of depreciation, on the Company
Financial Statements of $1.00 or more. Schedule 4.11 also sets forth all leases
-------------
of personal property binding upon the Company and its Subsidiaries or any of
their assets or properties, and all items of personal property covered thereby.
All of such tangible personal property is presently utilized by the Company and
its Subsidiaries in the ordinary course of business.
4.12 Inventory. All inventories of the Company and its Subsidiaries
---------
are of good, usable and merchantable quality. All such inventories as of the
date of the Latest Balance Sheet are reflected on the Latest Balance Sheet at
the lower of cost (determined on a first-in, first-out basis) or market in the
ordinary course of business, all in accordance with GAAP applied on a consistent
basis. Such inventories do not include any obsolete or discontinued items other
than as have been properly reserved against in the Latest Balance Sheet. Since
the date of the Latest Balance Sheet, no inventory items have been sold or
disposed of except through sales in the ordinary course of business and at gross
margins consistent with past practice.
4.13 Accounts Receivable; Tooling; Engineering and Development.
---------------------------------------------------------
(a) All accounts, notes receivable and other receivables (other than
receivables collected since the date of the Latest Balance Sheet) reflected on
the Latest Balance Sheet are, and all accounts and notes receivable arising from
or otherwise relating to the business of the Company and its Subsidiaries as of
the Closing Date will be, valid, genuine and fully collectible in the aggregate
amount thereof, subject to normal and customary trade discounts, less any
reserves for doubtful accounts and other allowances recorded on the Latest
Balance Sheet or established in the ordinary course thereafter. All accounts,
notes receivable and other receivables arising out of or relating to the
business and operations of the Company as of the date of the Latest Balance
Sheet were included in the Latest Balance Sheet in accordance with GAAP.
(b) All tooling inventory is free of defects and conforms to customer
specifications. All tooling inventory reflected on the Latest Balance Sheet is,
and all tooling inventory arising from or otherwise relating to the business of
the Company and its Subsidiaries as of the Closing Date will be, supported by a
purchase order from a customer and is fully collectible in the aggregate amount
thereof.
(c) All capitalized engineering and development expenses are
supported by a contractual commitment or purchase order from a customer and are
fully collectible in the aggregate amount thereof.
4.14 Intellectual Property. Schedule 4.14 sets forth an accurate and
--------------------- -------------
complete list of all Company Intellectual Property and all Intellectual Property
used by the Company and its Subsidiaries in the conduct of their businesses and
operations as of the date hereof.
(a) all of the Company Intellectual Property is owned by the Company
or a Subsidiary of the Company free and clear of all Liens, and is not
subject to any license, royalty or other agreement, and the Company and its
Subsidiaries have not granted any license or agreed to pay or receive any
royalty in respect of any Intellectual Property;
(b) except for the Company Intellectual Property, all of the
Intellectual Property used by the Company and its Subsidiaries is the
subject of a valid license, and all royalties and other fees to be paid by
the Company and its Subsidiaries with respect to such licenses are set
forth on Schedule 4.14;
-------------
(c) none of the Company Intellectual Property has been or is the
subject of any pending or threatened litigation or claim of infringement,
and the Company or a Subsidiary of the Company owns or possesses adequate
rights in perpetuity to preclude any infringement;
(d) to the knowledge of the Company, no Person is infringing the
rights of the Company and its Subsidiaries with respect to the Company
Intellectual Property;
(e) no party to any license or royalty agreement to which the Company
or a Subsidiary of the Company is a party is in breach or default, and no
notice of termination has been given or is threatened;
(f) the Company Intellectual Property that is a trademark, patent
or copyright (or any registration, application, license or right relating
to any of the foregoing) or is otherwise public does not infringe on any
Intellectual Property or confidential or proprietary rights of any other
Person in the United States or in the territories outside the United States
in which the Company or a Subsidiary of the Company has operated prior to
the Closing Date, and the Company and its Subsidiaries have not received
any notice contesting their right to use any such Intellectual Property; to
the knowledge of the Company, no other Company Intellectual Property
infringes on any Intellectual Property or confidential or proprietary
rights of any other Person in the United States or in the territories
outside the United States in which the Company or a Subsidiar y of the
Company has operated prior to the Closing Date, and the Company and its
Subsidiaries have not received any notice contesting their right to use any
such Intellectual Property; and
(g) the Company or a Subsidiary of the Company owns or possesses
adequate rights in perpetuity in and to all Intellectual Property necessary
to conduct its businesses and operations as presently conducted and as
proposed to be conducted, in each case other than manufacturing "know-how"
of individual employees.
4.15 Contracts; No Default or Violations.
-----------------------------------
(a) Schedule 4.15(a) sets forth an accurate and complete list of
----------------
all the Contracts of the following types to which the Company or a Subsidiary of
the Company is a party or by which it is bound, or to which any of their assets
or properties is subject:
(i) any collective bargaining agreement, as well as any document
modifying, terminating or extending such agreement and any letters of
understanding or side agreements with respect to such agreements, in each
case whether oral or written;
(ii) any Contract with any employee, officer, director, member,
manager, or committee of the Company or any of the respective Affiliates of
such individuals, or any Contract or other arrangement of any kind with any
Seller, any Corporation or any Affiliate of any Seller or any Corporation;
(iii) any Contract pursuant to which the Company or any Subsidiary
of the Company is obligated, or may be reasonably expected, to pay, or
entitled, or may be reasonably expected, to receive, in excess of $100,000
per annum, with a sales representative, manufacturer's representative,
promoter, producer, sponsor, distributor, dealer, broker, sales agency,
advertising agency or other Person engaged in sales, distributing or
promotional activities, or any Contract to act as one of the foregoing on
behalf of any Person; any Contract of any nature which involves the payment
or series of payments or receipt of cash or other property, an unperformed
commitment, or goods or services, or any combination thereof having a value
in excess of $100,000; any Contract pursuant to which the Company or a
Subsidiary of the Company has made or will make loans or advances, or has
or will have incurred debts or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any undertaking
of another (except for the negotiation or collection of negotiable
instruments in transactions in the ordinary course of business);
(iv) any indenture, credit agreement, loan agreement, note,
mortgage, security agreement, lease of real property or personal property,
loan commitment or other Contract or financing statement relating to
Indebtedness, the borrowing of funds, an extension of credit or financing,
in each case pursuant to which the Company or any Subsidiary of the Company
is obligated, or may be reasonably expected, to pay, or entitled, or may be
reasonably expected, to receive, in excess of $100,000 per annum;
(v) any Contract involving a partnership, joint venture or other
cooperative undertaking;
(vi) any Contract involving any restrictions with respect to the
geographical area of operations or scope or type of business of the Company
or any Subsidiary of the Company or any executive or management employee of
any of them;
(vii) any power of attorney or agency agreement or arrangement with
any Person pursuant to which such Person is granted the authority to act
for, or on behalf of, the Company, or the Company is granted the authority
to act for, or on behalf of, any Person;
(viii) any Contract pursuant to which the Company or any Subsidiary
of the Company is obligated, or may be reasonably expected, to pay, or
entitled, or may be reasonably expected, to receive, in excess of $100,000
per annum, for which the full performance thereof may extend beyond 60 days
from the Closing Date;
(ix) any Contract (other than this Agreement and the Related
Agreements) not made in the ordinary course of business which is to be
performed in whole or in part at or after the Closing Date and pursuant to
which the Company or any Subsidiary of the Company is obligated, or may be
reasonably expected, to pay, or entitled, or may be reasonably expected, to
receive, in excess of $100,000 per annum;
(x) any Contract (other than this Agreement and the Related
Agreements), whether or not fully performed, relating to any acquisition or
disposition of the Company or any acquisition or disposition of all or
substantially all of the assets of the Company, or any acquisition or
disposition of any Subsidiary, division, or line of business;
(xi) any Contract pursuant to which the Company or any Subsidiary
of the Company is obligated, or may be reasonably expected, to pay, or
entitled, or may be reasonably expected, to receive, in excess of $100,000
per annum, containing an option to purchase or sell any property, real or
personal, tangible or intangible, or containing any right of first refusal
to acquire or sell any such property;
(xii) any Contract involving the licensing of any Intellectual
Property; and
(xiii) any Contract not specified above, the breach or termination
of which would be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) The Sellers have delivered to Purchaser accurate and complete
copies of each Contract listed on Schedule 4.15, and Schedule 4.15 contains a
------------- -------------
written description of each oral arrangement of the kind listed. (i) All such
Contracts and arrangements between the Company or any Subsidiaries of the
Company, on the one hand, and the Company's Affiliates or any Seller, any
Corporation or any Affiliate of any Seller or Corporation, on the other hand,
are on terms that are no less favorable to the Company or such Subsidiary than
the terms that could be obtained as of the date hereof from an unrelated third
party; (ii) the cancellation of any such Contract would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(iii) all such Contracts are valid and enforceable obligations of the Company or
such Subsidiary and each other party thereto; and (iv) none of the Sellers, the
Corporations or the Company or any Subsidiary of the Company has received any
notice of default or termination with respect to any such Contract.
(c) The Company and its Subsidiaries have not breached any
provision of, nor are any of them in default under the terms of, any Contract to
which any of them is a party or under which any of them has any rights or by
which any of them or any of their assets or properties is bound, and no other
party to any such Contract has breached such Contract or is in default (with or
without notice or the passage of time, or both) thereunder.
(d) The Company and its Subsidiaries are in compliance with, and
no violation exists under, any and all applicable Laws.
(e) No notice from any Governmental Authority has been received
by the Company or any Subsidiary of the Company claiming any violation of any
Law (including any building, zoning or other ordinance) or requiring any work,
construction or expenditure, or asserting any Tax, assessment or penalty.
(f) Schedule 4.15(f) sets forth an accurate and complete
----------------
description in reasonable detail of any complaint or any repricing, giveback or
discount (or request for any of the foregoing) pursuant to or in connection with
the JCI Agreement.
4.16 Permits. Schedule 4.16 sets forth an accurate and complete
------- -------------
list of all licenses, certificates, permits, franchises, rights, code approvals
and private product approvals (together, the " Permits") held by the Company or
-------
any Subsidiary of the Company. The Company, together with its Subsidiaries,
holds all Permits, whether federal, state, local or foreign, that are necessary
for the lawful operation of the businesses of the Company and its Subsidiaries
as presently conducted and as proposed to be conducted, except where the failure
to hold any such Permit would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
4.17 Insurance.
---------
(a) Schedule 4.17(a) sets forth an accurate and complete list of all
----------------
policies of fire, liability, workers' compensation, title and other forms of
insurance owned, held by or applicable to the Company and its Subsidiaries (or
their assets or businesses), and the Sellers have previously delivered to
Purchaser an accurate and complete copy of all such policies, including all
occurrence-based policies applicable to the Company and its Subsidiaries (or
their assets or businesses) for all periods prior to the Closing Date. All such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy, except with respect to any such cancellation or termination that would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Such policies are sufficient, to the knowledge of the Company,
for compliance with all requirements of Law and compliance with all Contracts to
which the Company and its Subsidiaries are a party, and are valid, outstanding
and enforceable policies. Such insurance policies provide types and amounts of
insurance customarily obtained by businesses similar to the business of the
Company and its Subsidiaries. The Company and its Subsidiaries have not been
refused any insurance with respect to their assets or operations, and their
coverage has not been limited by any insurance carrier to which any of them has
applied for any such insurance or with which any of them has carried insurance
during the last three (3) years.
(b) Schedule 4.17(b) sets forth an accurate and complete list of all
----------------
claims which have been made by the Company or any Subsidiary of the Company in
the last three (3) years under any workers' compensation, general liability,
property or other insurance policy applicable to the Company and its
Subsidiaries or any of their properties. There are no pending or threatened
claims under any insurance policy. Such claim information includes all
available information with respect to each accident, loss, or other event,
including (i) the identity of the claimant; (ii) the date of the occurrence;
(iii) the status as of the report date; and (iv) the amounts paid or expected to
be paid or recovered.
4.18 Employee Benefit Plans; ERISA.
-----------------------------
(a) Schedule 4.18(a) sets forth an accurate and complete list of all
----------------
"employee pension benefit plans" as defined in Section 3(2) of ERISA ("Pension
-------
Plans"), "welfare benefit plans" as defined in Section 3(1) of ERISA ("Welfare
----- -------
Plans") and stock bonus, stock option, restricted stock, stock appreciation
-----
right, stock purchase, bonus, incentive, deferred compensation, severance, and
vacation plans, employment or consulting agreements, and all other employee
benefit plans, programs, policies or arrangements, covering employees (or former
employees) of the Company or its Subsidiaries, maintained or contributed to by
the Company or its Subsidiaries or any of their ERISA Affiliates (as
hereinafter defined), or to which the Company or its Subsidiaries or any of
their ERISA Affiliates contributes or is obligated to make payments thereunder
or otherwise may have any liability (collectively, the "Employee Benefit
----------------
Plans"). For purposes of this Agreement, "ERISA Affiliate" shall mean any
----- ---------------
person (as defined in Section 3(9) of ERISA) that is or has been a member of any
group of persons described in Section 414(b), (c), (m), (o) or (t) of the Code
including the Company or a Subsidiary of the Company.
(b) The Company and its Subsidiaries, and each of the Pension Plans
and Welfare Plans, are in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable laws in connection
with the Employee Benefit Plans.
(c) All contributions to, and payments from, the Pension Plans that
are required to have been made in accordance with the Pension Plans have been
timely made.
(d) Any Pension Plans intended to qualify under Section 401 of the
Code have been determined by the IRS to be so qualified and no event has
occurred and no condition exists with respect to the form or operation of such
Pension Plans that would cause the loss of such qualification or exemption or
the imposition of any material liability, penalty or tax under ERISA or the
Code.
(e) Each Pension Plan that is not qualified under Code section 401(a)
or 403(a) is exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan
that is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, pursuant to
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. No assets of the Company are
allocated to or held in a "rabbi trust" or similar funding vehicle.
(f) There are (i) no investigations pending by any governmental
entity (including the Pension Benefit Guaranty Corporation (the "PBGC"))
----
involving the Pension Plans or Welfare Plans, and (ii) no pending or threatened
claims (other than routine claims for benefits), suits or proceedings against
any Pension Plan or Welfare Plan, against the assets of any of the trusts under
any Pension Plan or Welfare Plan or against any fiduciary of any Pension Plan or
Welfare Plan with respect to the operation of such plan or asserting any rights
or claims to benefits
under any Pension Plan or against the assets of any trust under such plan, nor,
to the best of the Company's knowledge, are there any facts that would give rise
to any material liability.
(g) None of the Company, any of its Subsidiaries or any employee of
the foregoing, nor any trustee, administrator, other fiduciary or any other
"party in interest" or "disqualified person" with respect to the Pension Plans
or Welfare Plans, has engaged in a "prohibited transaction" (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA) that could result
in a material tax or penalty on the Company or any of its Subsidiaries under
Section 4975 of the Code or Section 502(i) of ERISA.
(h) With respect to any employee benefit pension plan subject to
Section 412 of the Code or Section 302 of ERISA maintained by the Company, any
Subsidiary of the Company or any ERISA Affiliate: (i) all contributions
required to be made by the Company or any of its Subsidiaries or any ERISA
Affiliate under Section 302 of ERISA and Section 412 of the Code have been
timely made, (ii) there has been no application for or waiver of the minimum
funding standards imposed by Section 412 of the Code, and (iii) no such plan has
incurred an "accumulated funding deficiency" within the meaning of Section
412(a) of the Code as of the end of the most recently completed plan year.
(i) No employee benefit pension plan subject to Title IV of ERISA
maintained by the Company, any Subsidiary of the Company or any ERISA Affiliate
has been terminated or has been the subject of a "reportable event" (as defined
in Section 4043 of ERISA and the regulations thereunder) for which the 30-day
notice requirement has not been waived by the PBGC.
(j) With respect to any Pension Plan subject to Title IV of ERISA,
there is not any amount of "unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) under such plan, and the Company has no knowledge of any
facts or circumstances that would materially change the funded status of any
such plan.
(k) Neither the Company nor any Subsidiary of the Company nor any
ERISA Affiliate has incurred, or is reasonably likely to incur, liability under
Title IV of ERISA.
(l) No Pension Plan is a "multiemployer plan" as defined in Section
3(37) of ERISA. With respect to each Pension Plan that is a multiemployer plan:
(i) no such plan has been terminated, and no proceeding has been initiated to
terminate such plan; (ii) such plan is not, as of the date hereof, insolvent (as
described in Section 4245 of ERISA) or in reorganization (as described in
Section 4241 of ERISA), and the Company does not know of any reason why such
plan would become insolvent or in reorgani-za-tion in the foreseeable future;
(iii) neither the Company nor any Subsidiary has incurred any liability on
account of a partial withdrawal or complete withdrawal (within the meaning of
Sections 4205 and 4203, respectively, of ERISA) from such plan, no such
liability has been asserted, and there are no events or circumstances which
could result in such partial or complete withdrawal; (iv) the Company, its
Subsidiaries and ERISA Affiliates have made all contributions to such plan due
or accrued as of the date hereof and will have made all such contributions as of
the Closing Date; and (v) there would be no withdrawal liability with respect to
such plan if the Company, a Subsidiary or an ERISA Affiliate were to withdraw
from such plan on the Closing Date.
(m) With respect to each of the Employee Benefit Plans, true, correct
and complete copies of the following documents have been made available to
Parent: (i) the plan document and any related trust agreement, including
amendments thereto, (ii) any current summary plan descriptions and other
material communications to participants relating to the Employee Benefit Plans,
(iii) the most recent Forms 5500, if applicable, (iv) the most recent IRS
determination letter, if applicable and (v) the most recent actuarial report or
valuation with respect to each Pension Plan subject to Title IV of ERISA.
(n) None of the Welfare Plans maintained by the Company or any of its
Subsidiaries provide for continuing benefits or coverage for any participant or
any beneficiary of a participant following termination of employment, except as
may be required under Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA ("COBRA"), or except at the expense of the participant or the
-----
participant's beneficiary. The Company, its Subsidiaries, and any ERISA
Affiliates which maintain a "group health plan" within the meaning of Section
5000(b)(1) of the Code have complied in all material respects with the "COBRA"
notice and continuation requirements.
(o) No liability under any Pension Plan or Welfare Plan has been
funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which the Company or any of its
Subsidiaries has received notice that such insurance company is in
rehabilitation or a comparable proceeding.
(p) As of the Closing, the Company, its Subsidiaries and any entity
with which the Company or its Subsidiaries could be considered a single employer
under 29 U.S.C. Section 2101(a)(1) or under any relevant case law, has not
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act, as it may be amended from time to time, and within the 90-day
period immediately following the Closing, will not
incur any such liability or obligation if, during such 90-day period, only
terminations of employment in the normal course of operations occur.
(q) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of the Company or any of
its Subsidiaries.
(r) The consummation of the transactions contemplated by this
Agreement will not result in or satisfy a condition to the payment of
compensation that would, in combination with any other payment, result in an
"excess parachute payment" within the meaning of Section 280G(b) of the Code.
(s) The Company has disclosed to Parent on Schedule 4.18(s) each
----------------
Foreign Plan (as hereinafter defined) to the extent the benefits provided
thereunder are not mandated by the laws of the applicable foreign jurisdiction.
The Company, each of its Subsidiaries and each of the Foreign Plans are in
compliance with applicable laws and all required contributions have been made to
the Foreign Plans, except where the failure to comply or make contributions
would not, individually and in the aggregate, either impair the Company's
ability to consummate the transactions contemplated hereby or have a Material
Adverse Effect. Each of the Foreign Plans that is a funded defined benefit plan
has a fair market value of plan assets that is greater than the plan's
liabilities, as determined in accordance with applicable laws. Copies of the
actuarial valuation reports or FAS 87 reports for such plans have been made
available to the Parent. For purposes hereof, the term "Foreign Plan" shall
------------
mean any plan, program, policy, arrangement or agreement maintained or
contributed to by, or entered into with, the Company or any Subsidiary with
respect to employees (or former employees) employed outside the United States.
4.19 Employment and Labor Matters.
----------------------------
(a) The Company and its Subsidiaries have no employment contract or
consulting agreement currently in effect that is not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
(b) The Company and its Subsidiaries (i) have not ever been nor are
now subject to a union organizing effort, (ii) are not subject to any collective
bargaining agreement with respect to any of their employees, (iii) are not
currently negotiating any collective bargaining agreement, mid-term bargaining
agreement, effects bargaining agreement or plant closure agreement with respect
to any of their employees, (iv) are not subject to any other contract, written
or oral, with any trade or labor union, employees' association or similar
organization, and (v) have no current labor disputes. The Company and its
Subsidiaries have good labor relations, and have no knowledge of any facts
indicating that the consummation of the transactions contemplated hereby will
have a material adverse effect on such labor relations, and have no knowledge
that any key employees intends to leave their employ.
(c) The Company and its Subsidiaries are in compliance with all
Contracts relating to employment, employment practices, wages, hours and terms
and conditions of employment of the employees. The Company and its Subsidiaries
are in compliance with all applicable laws with respect to employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health.
4.20 Capital Improvements. Schedule 4.20 sets forth an accurate and
-------------------- -------------
complete list of all capital improvements or purchases or other capital
expenditures of the Company and its Subsidiaries that have not been completed
prior to the date hereof, and also sets forth the cost and expense reasonably
estimated to complete such work and purchases.
4.21 Taxes.
-----
(a) All federal, state, local and foreign income, corporation and
other Tax Returns have been timely filed by or for the Sellers and the Company
and its Subsidiaries, or are subject to a valid extension of the filing date,
for all periods through and including the Closing Date as required by applicable
Law. All Taxes shown as due on all such Tax Returns and other filings, and all
other Taxes of such entities, have been timely paid. Each such Tax Return and
filing is accurate and complete. Schedule 4.21(a) sets forth an accurate and
----------------
complete list of Tax Returns filed by the Company and its Subsidiaries at any
time after January 1, 1999; a copy of each such Tax Return has previously been
provided to Purchaser. None of the Sellers or the Company nor any Subsidiary of
the Company currently has or will have any additional liability for Taxes with
respect to any Tax Return or other filing heretofore filed or which was required
by Law to be filed, other than: (i) as reflected as liabilities on the Company
Financial Statements; or (ii) since the date of the latest Company Financial
Statement, as have arisen in the ordinary course of business consistent with
past practice.
(b) No material Tax Return of the Company or its Subsidiaries is
under audit or examination by any taxing authority, and no written notice of
such an audit or examination has been received by any Seller or the Company or
any of its Subsidiaries. Schedule 4.21(b) sets forth an accurate and complete
----------------
list of all Tax audits of the Company or any of its Subsidiaries completed at
any time after January 1, 1999 and an accurate and complete description in
reasonable detail of any Tax audit or Tax claim with respect to the Company or
any of its Subsidiaries that was initiated but not completed in that time. Each
material deficiency resulting from any audit or examination relating to Taxes by
any taxing authority has been paid, except for deficiencies being contested in
good faith and described on Schedule 4.21(b).
----------------
(c) All Taxes that the Company and its Subsidiaries are required by
Law to withhold or collect, including sales and use taxes, and amounts required
to be withheld for Taxes of employees and other withholding taxes, have been
duly withheld or collected and, to the extent required, have been paid over to
the proper Governmental Authorities or are held in separate bank accounts for
such purpose. All information returns required to be filed by the Company or
any of its Subsidiaries prior to the date hereof have been filed (and prior to
the Closing Date will have been filed), and all statements required to be
furnished to payees by the Company or any of its Subsidiaries prior to the date
hereof have been furnished (and prior to the Closing Date will have been
furnished) to such payees, and the information set forth on such information
returns and statements is accurate and complete.
(d) No Seller (other than Hohnel) is a "foreign person" as defined in
Section 1445(f)(3) of the Code.
(e) The Company is and always has been classified as a partnership or
a disregarded entity for federal income tax purposes.
4.22 Product Claims. Schedule 4.22 sets forth an accurate and
-------------- -------------
complete list of all notices, demands, claims, actions, notices of violation or
investigation or classes of claims or lawsuits involving any product
manufactured, produced, distributed or sold by or on behalf of the Company or
any of its Subsidiaries (a "Product") that are pending or threatened by or on
-------
behalf of any Governmental Authority or any direct or indirect purchaser of any
Product resulting from an alleged defect in design, manufacture, materials or
workmanship of any Product, or any alleged failure to warn or from any breach of
express or implied specifications or warranties or representations. There has
not been, nor is there under consideration or investigation by the Company or
any Subsidiary of the Company, any recall, rework, retrofit or post-sale warning
concerning any Product or any recall conducted by or on behalf of any entity
involving any Product.
4.23 Environmental Matters.
---------------------
(a) (i) Each of the Company and its Subsidiaries is in compliance in
all material respects with all Environmental Laws applicable to the properties,
assets and businesses of the Company and its Subsidiaries and possesses and
complies in all material respects with all Environmental Permits required under
such Environmental Laws, and (ii) there are no present or past events,
conditions, circumstances, practices, plans or legal requirements that have been
asserted in writing to have violated any Environmental Law or that could
reasonably be expected to materially increase the burden on the Company or its
Subsidiaries of complying with Environmental Laws or of obtaining, renewing or
complying with all Environmental Permits required under Environmental Laws in
order to conduct the business of the Company and its Subsidiaries as currently
conducted or as contemplated under the five-year business plan of the Company
and its Subsidiaries.
(b) (i) None of the Company and its Subsidiaries has received any
Environmental Claim and (ii) there is no pending or, to the knowledge of the
Company, threatened Environmental Claim against the Company or its Subsidiaries
or any Environmental Claim pending or threatened against any entity for which
the Company or its Subsidiaries may be liable.
(c) There are no Hazardous Materials or other conditions at, under or
emanating from any property or facility owned, leased or operated by the Company
or its Subsidiaries now or in the past that could reasonably be expected to give
rise to a material Environmental Claim against or material liability of the
Company or its Subsidiaries in excess of the amounts reflected as reserves
therefor in the Latest Balance Sheet.
(d) (i) No property owned, leased or operated or otherwise used by
the Company or its Subsidiaries is (A) listed or proposed for listing on the
National Priorities List promulgated under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), or
------
(B) listed on the Comprehensive Environmental Response, Compensation, and
Liability Information System promulgated under CERCLA or (C) listed on any
comparable list promulgated or published by any Governmental Authority
(including, without limitation, any such list relating to gasoline or petroleum
or oil) and (ii) no Lien has been recorded under any Environmental Law with
respect to any property, facility or asset owned, leased or operated by the
Company or its Subsidiaries.
(e) None of the Company and its Subsidiaries has assumed,
contractually or by operation of Law, any liabilities or obligations of any
third party under Environmental Laws.
(f) The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby and the exercise by Parent
and Purchaser of rights to own and operate the business of the Company and its
Subsidiaries as currently conducted (i) will not affect the validity or require
the transfer of any Environmental Permits held by the Company or its
Subsidiaries under any Environmental Law and (ii) will not require any
notification, disclosure, registration, reporting, filing, or investigatory,
remedial, removal or other response action under any Environmental Law.
(g) Schedule 4.23(g) sets forth an accurate and complete list of
----------------
all Environmental Reports in the possession or control of the Company or its
Subsidiaries. A copy of each such Environmental Report has previously been
provided to Purchaser.
4.24 Litigation.
----------
(a) There are no actions, suits, claims, notices of potential
claims, requests for accommodation, arbitrations, regulatory proceedings or
other litigation, proceedings or governmental investigations pending or
threatened against or affecting the Company or any of its Subsidiaries, or any
of their officers, directors, employees, managers, or agents in their capacity
as such, or any of their respective properties, rights, assets, or businesses,
and there are no facts or circumstances which may give rise to any of the
foregoing. Any proceeding pending or threatened against the Company and its
Subsidiaries is fully covered by insurance policies (or other indemnification
agreements with third parties) and is being defended by the insurers (or such
third parties), subject to such deductibles as are set forth in Schedule
--------
4.24(a). The Company and its Subsidiaries are not subject to any order,
-------
judgment, decree, injunction, stipulation or consent order of or with any court
or other Governmental Authority. The Company and its Subsidiaries have not
entered into any agreement to settle or compromise any proceeding pending or
threatened against any of them which has involved any obligation other than the
payment of money or for which any of them has any continuing obligation.
(b) There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against the Company or any Subsidiary
of the Company, any of their officers or any Seller with respect to this
Agreement or the Related Agreements, or in connection with the transactions
contemplated hereby or thereby, and no Seller has any reason to believe there is
a valid basis for any such claim, action, suit, proceeding, or investigation.
4.25 No Conflict of Interest. None of the Sellers or the
-----------------------
Corporations nor any of their respective Affiliates has or claims to have any
direct or indirect interest in any tangible or intangible property, rights, or
assets used in the business of the Company and its Subsidiaries, except in the
case of the Corporations as holders of Membership Interests.
4.26 Bank Accounts. Schedule 4.26 sets forth a complete and
------------- -------------
accurate list of the names and locations of each bank or other financial
institution at which the Company and its Subsidiaries have an account (giving
the account numbers) or safe deposit box and the names of all Persons authorized
to draw thereon or have access thereto, and the names of all Persons, if any,
now holding powers of attorney or comparable delegation of authority from the
Company and its Subsidiaries and a summary statement thereof.
4.27 Additional Representations and Warranties by the Sellers.
--------------------------------------------------------
(a) Each Seller hereby acknowledges that Parent intends the offer
and issuance of the Common Stock representing the Stock Consideration to such
Seller to be exempt from registration under the Securities Act and applicable
state securities laws by virtue of: (i) the status of each Seller as an
Accredited Investor; and (ii) Regulation D promulgated under Section 4(2) of the
Securities Act ("Regulation D").
------------
(b) Each Seller hereby represents and warrants that:
(i) it is an Accredited Investor;
(ii) it shall acquire the Common Stock for its own account and not
with a view to or for sale in connection with any "sale," "offer for sale,"
"offer to sell," "offer," or "distribution" thereof within the meaning of
the Securities Act;
(iii) it has sufficient knowledge and experience in financial, tax,
and business matters to enable it to evaluate the merits and risks of
investment in the Common Stock; and it has the ability to bear the economic
risk of acquiring the Common Stock; and
(iv) it has been supplied with, or had access to, information to
which a reasonable investor would attach significance in making an
investment decision to acquire the Common Stock; and it has had an
opportunity to ask questions of, and receive information and answers from,
Purchaser concerning Purchaser and the Common Stock, and to assess and
evaluate any information supplied to the Sellers. All questions concerning
Purchaser and the Common Stock have been answered and all such information
has been provided to the full satisfaction of the Seller.
(c) Each Seller hereby acknowledges that:
(i) this Agreement, the Related Agreements, and the transactions
contemplated hereby and thereby involve complex tax and legal consequences
for the Seller, and the Seller is relying solely on the advice of its own
tax and legal advisors to evaluate such consequences;
(ii) Purchaser has not made (or shall be deemed to have made) any
representations or warranties concerning the tax or legal consequences of
such transaction to the Seller;
(iii) the Common Stock is not, and will not be, registered under
the Securities Act or any state securities laws and cannot be resold
without registration thereunder or exemption therefrom; and
(iv) the certificates representing the unregistered Common Stock
to be delivered at the Closing shall bear substantially the following
legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold, transferred,
or otherwise disposed of in the absence of an effective registration
statement under such Act or an opinion of counsel satisfactory to the
Company to the effect that such registration is not required."
4.28 Brokers. None of the Sellers nor the Company has used any
-------
broker or finder in connection with the transactions contemplated hereby, and
none of Parent, Purchaser nor any Affiliate of Parent or Purchaser has or shall
have any liability or otherwise suffer or incur any Loss as a result of, or in
connection with, any brokerage or finder's fee or other commission of any Person
retained by any Seller or the Company in connection with this Agreement, the
Related Agreements, or any of the transactions contemplated hereby or thereby.
4.29 Imposition of Certain Liability. None of the Sellers nor the
-------------------------------
Company has at any time taken any action or failed to take any action, as a
result of which the Company has lost or will lose limited liability associated
with the status of the Company as a limited liability company.
4.30 Customers and Suppliers. Since January 1, 2000, none of the
-----------------------
top five customers of or top ten suppliers (including subcontractors thereof) to
the Company or any of its Subsidiaries, in each case measured by dollar volume
for the twelve months ended as of December 31, 2000, has (i) notified any of the
Company or its Subsidiaries that it intends to discontinue its relationship with
the Company or its Subsidiaries, (ii) notified any of the Company or its
Subsidiaries that it intends to reduce its trading with or provision of supplies
to the Company or its Subsidiaries other than in the ordinary course of
business, or (iii) materially changed the terms on which it is prepared to
purchase from, trade with or supply the Company or its Subsidiaries pursuant to
which the Company or any Subsidiary of the Company is obligated, or may be
reasonably expected, to pay, or entitled, or may be reasonably expected, to
receive, in excess of $100,000 per annum. Schedule 4.30 sets forth an accurate
-------------
and complete list of each Contract with the customers and suppliers of the
Company and its Subsidiaries pursuant to which any of them is obligated, or may
be reasonably expected, to pay, or entitled, or may be reasonably expected,
to receive in excess of $100,000 per annum. Copies of each such Contract and of
each standard business agreement (i.e., purchase orders, invoices and the like)
used by the Company and its Subsidiaries have previously been provided to
Purchaser.
4.31 Company Disclosure Schedule. The Sellers have previously
---------------------------
provided to Purchaser accurate and complete copies of each document listed or
referred to on the Company Disclosure Schedule.
4.32 Accuracy of Statements.
----------------------
(a) Neither this Agreement, the Related Agreements, nor any written
schedule, exhibit, written statement, written list, document, certificate or
other written information furnished or to be furnished by, or on behalf of, the
Company to Purchaser or any representative or Affiliate of Purchaser in
connection with this Agreement, the Related Agreements, or any of the
transactions contemplated hereby or thereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
(b) Neither this Agreement, the Related Agreements, nor any written
schedule, exhibit, written statement, written list, document, certificate or
other written information furnished or to be furnished by, or on behalf of, the
Sellers or the Corporations to Purchaser or any representative or Affiliate of
Purchaser in connection with this Agreement, the Related Agreements, or any of
the transactions contemplated hereby or thereby contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
(c) This Agreement and the Company Disclosure Schedule together
describe all material information about the business and operations of the
Company and its Subsidiaries as presently conducted and as proposed to be
conducted.
4.33 Continuity of Enterprise and Ownership.
--------------------------------------
(a) The Company operates at least one significant historic business,
or owns at least a significant portion of its historic business assets, in each
case within the meaning of Regulation (S) 1.368-1(d) under the Code.
(b) The Sellers have no present plan, intention or arrangement to
dispose of any of the Stock Consideration in a manner which would cause the
Mergers to violate the continuity of interest requirement within the meaning of
Reg. (S) 1.368-1(e) under the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser jointly and severally represents and
warrants to the Sellers that, except as set forth in the corresponding section
or subsection of the C&A Disclosure Schedule (the "C&A Disclosure Schedule")
-----------------------
delivered herewith:
5.1 Existence and Power. Each of Parent and Purchaser is a
-------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with all requisite power and authority to own,
lease and operate its properties and to conduct its business as they are now
being owned, leased, operated and conducted.
5.2 Due Authorization. Each of Parent and Purchaser has full power
-----------------
and authority to enter into this Agreement and the Related Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by each of Parent and the
Purchaser of this Agreement and the Related Agreements to which it is a party
have been duly and validly approved and no other actions or proceedings on the
part of Parent or Purchaser are necessary to authorize this Agreement, the
Related Agreements to which it is a party and the transactions contemplated
hereby and thereby. Each of Parent and Purchaser has duly and validly executed
and delivered this Agreement and the Related Agreements to which it is a party.
This Agreement and each such Related Agreement constitute (assuming, in each
case, due execution and
delivery by the other parties thereto) legal, valid and binding obligations of
Parent or Purchaser, as the case may be, in each case enforceable in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
in effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
5.3 Consents and Approvals; Authority Relative to This Agreement.
------------------------------------------------------------
No consent, authorization or approval of, filing or registration with, or
cooperation from, any Governmental Authority or any other Person not a party to
this Agreement is necessary in connection with the execution, delivery and
performance by Parent or Purchaser of this Agreement and the Related Agreements
to which it is a party and the consummation of the transactions contemplated
hereby and thereby, other than a Premerger Notification Form pursuant to the HSR
Act.
5.4 No Violation of Other Instruments or Laws. The execution and
-----------------------------------------
delivery of this Agreement and the Related Agreements do not and will not: (a)
violate, breach or constitute any material event of default, or result in the
acceleration of any material obligation, under any material contract, order,
writ, injunction, arbitration award, judgment or decree to which Parent or
Purchaser is a party or by which it is bound; (b) violate any Law or regulation
of any Governmental Authority; or (c) violate or conflict with any provision of
any of, or cause the dissolution of Parent or Purchaser pursuant to, the
certificate of incorporation, bylaws or similar organizational documents of
Parent or Purchaser.
5.5 Stock Consideration. The shares of Common Stock that constitute
-------------------
the Stock Consideration, when issued and delivered by Parent to the Sellers in
accordance with the terms and conditions of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable, free and clear of all
Liens. The shares of Common Stock issuable upon exercise of the Warrants are
duly authorized and, upon exercise of the Warrants, will be validly issued,
fully paid and non-assessable, free and clear of all Liens created by or through
Parent. No stockholder of Parent has preemptive rights with respect to the
shares of Common Stock that constitute the Stock Consideration.
5.6 Parent Disclosure Documents. Parent has made available to the
---------------------------
Sellers true, correct and complete copies of its annual report on Form 10-K for
the year ended December 31, 2000 and each report on Form 8-K since that date, if
any (collectively, the "Parent Disclosure Documents"). Except as reflected in
---------------------------
any subsequent amendment or supplement to a Parent Disclosure Document, no
Parent Disclosure Document at the date on which such document was filed
contained any misstatements of a material fact or omitted to state a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
5.7 Brokers. Neither Parent nor Purchaser has used any broker or
-------
finder in connection with the transactions contemplated hereby, and no Seller
nor any Affiliate of any Seller has or shall have any liability or otherwise
suffer or incur any Loss as a result of, or in connection with, any brokerage or
finder's fee or other commission of any Person retained by Parent or Purchaser
in connection with any of the transactions contemplated by this Agreement.
5.8 Additional Representations and Warranties by Parent.
---------------------------------------------------
(a) Parent and Purchaser hereby acknowledge that the Sellers intend
the offer and sale of Membership Interests hereunder to be exempt from
registration under the Securities Act and applicable state securities laws by
virtue of: (i) the status of Parent and Purchaser as Accredited Investors; and
(ii) Regulation D.
(b) Each of Parent and Purchaser hereby represents and warrants
that:
(i) it is an Accredited Investor;
(ii) it shall acquire the Membership Interests for its own account
and not with a view to or for sale in connection with any "sale," "offer
for sale," "offer to sell," "offer," or "distribution" thereof within the
meaning of the Securities Act;
(iii) it has sufficient knowledge and experience in financial, tax,
and business matters to enable it to evaluate the merits and risks of
investment in the Membership Interests; and it has the ability to bear the
economic risk of acquiring the Membership Interests; and
(iv) it has been supplied with, or had access to, information to
which a reasonable investor would attach significance in making an
investment decision to acquire the Membership Interests; and it has had an
opportunity to ask questions of, and receive information and answers from,
the Sellers, the Corporations and the Company concerning the Company and
the Membership Interests, and to assess and evaluate any information
supplied to Parent and Purchaser. All questions concerning the Company and
the Membership Interests have been answered and all such information has
been provided to the full satisfaction of Parent and Purchaser.
(c) Each of Parent and Purchaser hereby acknowledges that:
(i) this Agreement, the Related Agreements, and the transactions
contemplated hereby and thereby involve complex tax and legal consequences
for Parent and Purchaser, and Parent and Purchaser are relying solely on
the advice of their own tax and legal advisors to evaluate such
consequences;
(ii) no Seller, no Corporation nor the Company made (or shall be
deemed to have made) any representations or warranties concerning the tax
or legal consequences of such transaction to Parent or Purchaser; and
(iii) the Membership Interests are not, and will not be, registered
under the Securities Act or any state securities laws and cannot be resold
without registration thereunder or exemption therefrom.
None of the representations in this Section 5.8 shall in any way limit or
nullify any representation or warranty of any Seller, any Corporation or the
Company elsewhere in this Agreement or in any Related Agreement.
5.9 C&A Disclosure Schedule. Parent and Purchaser have
-----------------------
previously provided to the Sellers accurate and complete copies of each document
listed or referred to on the C&A Disclosure Schedule.
5.10 Continuity of Business Enterprise. It is the present
---------------------------------
intention of Parent and Purchaser to continue at least one significant historic
business of the Company, or to use at least a significant portion of the
Company's historic business assets in a business, in each case within the
meaning of Reg. (S) 1.368-1(d) promulgated under the Code.
ARTICLE VI
COVENANTS
6.1 Implementing Agreement. On the terms and subject to the
----------------------
conditions hereof, from and after the date hereof, each party hereto shall use
its commercially reasonable efforts to take all action required of it to fulfill
its obligations under the terms of this Agreement and the Related Agreements to
which it is a party, and to facilitate the consummation of the transactions
contemplated hereby and thereby. The Sellers hereby agree that the Sellers
shall not cause or permit any Corporation to sell, transfer or otherwise dispose
of any Membership Interests or ▇▇▇▇▇ ▇ ▇▇▇▇ upon any Membership Interests (and
shall not agree to do the foregoing), and shall not, directly or indirectly,
cause or permit any Corporation to take any other action (or refrain from taking
any other action) that would have the effect of preventing or disabling any
Seller's performance of its obligations and the performance of the obligations
of the Corporations and the Company under this Agreement or the Related
Agreements to which it is a party. It is agreed that the ▇▇▇▇ Stockholders will
either be given rights pursuant to the Stockholders Agreement and the
Registration Rights Agreement or other documentation containing terms not
inconsistent with the Sellers' rights thereunder. The Sellers agree that, if
separately documented, these rights will be accorded no different treatment
under the terms of the Stockholders Agreement and the Registration Rights
Agreement by virtue thereof.
6.2 Access to Information and Facilities. From and after the
------------------------------------
date hereof, each Seller shall give Purchaser and Purchaser's representatives
access during normal business hours to all of the facilities,
properties, books, Contracts, commitments and records of the Company and its
Subsidiaries, of each Corporation and of each Seller that relate to the Company
and its Subsidiaries, and shall be available to Purchaser and its
representatives and shall make the Company's officers, directors, members,
managers, and employees available to Purchaser and its representatives as
Purchaser and its representatives, in each case, shall from time to time
request.
6.3 Consents and Approvals. The Company and each Seller shall use
----------------------
its commercially reasonable efforts to obtain all consents, approvals,
certificates and other documents required in connection with the performance by
it of this Agreement and the Related Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby, including all
consents and approvals by each party to any of the Contracts referred to in
Schedule 4.3; provided, however, that no contact shall be made by the Company or
------------
any Seller or any representative of the Company or any Seller with any third
party to obtain any such consent or approval except in accordance with a plan
previously agreed by Purchaser. Each of the Company, the Sellers, Parent and
Purchaser shall make all filings, applications, statements and reports to all
Governmental Authorities and other Persons that are required to be made by it
prior to the Closing Date by, or on behalf of, any such party pursuant to any
applicable Law or Contract in connection with this Agreement and the Related
Agreements, and the transactions contemplated hereby and thereby.
6.4 Resignation of Officers and Directors. The Sellers shall cause
-------------------------------------
each officer and manager of the Company and its Subsidiaries, if so requested by
Purchaser, to tender his or her resignation from such position effective as of
the Closing.
6.5 Supplemental Information. From time to time after the date
------------------------
hereof, the Sellers shall promptly disclose in writing to Purchaser any matter
hereafter arising which, if existing, occurring or known as of the date hereof
or the Closing Date would have been required to be disclosed to Purchaser or
which would render inaccurate any of the representations, warranties or
statements set forth in Article IV. No information provided to a party pursuant
to this Section 6.5 shall be deemed to cure any breach of any representation,
warranty or covenant made in this Agreement.
6.6 Use of Name. From and after the Closing Date, each Seller agrees
-----------
that it shall not, and that it shall cause its Affiliates not to, directly or
indirectly, use in any manner any trade name, trademark, service ▇▇▇▇, logo, or
other name owned or used by the Company and its Subsidiaries, or any trade name,
trademark, service ▇▇▇▇, logo, or other name that is similar thereto in sound or
appearance, in each case other than as set forth in Schedule 6.6.
------------
6.7 Termination of Certain Agreements. Each Seller shall, and shall
---------------------------------
cause its Affiliates and the Company and its Subsidiaries to, effective as of
the Closing, without any cost to the Company, terminate, rescind, cancel and
render void and of no effect any and all Contracts between the Company, on the
one hand, and the Sellers or any of their Affiliates (other than the Company),
on the other hand, other than the Contracts set forth on Schedule 6.7. Each
------------
Seller agrees that, effective as of the Closing, all rights of the Seller to
indemnification by the Company and its Subsidiaries (whether by Contract, Law or
otherwise) other than by the Operating Agreement or by charter or by-law
included in the Company Disclosure Schedules are hereby terminated, void, of no
effect and unenforceable by such Seller.
6.8 Confidentiality. Each Seller shall, and shall cause its
---------------
respective Affiliates and the Company to, keep confidential and not disclose or
furnish to any other Person, and not use for its own benefit or the benefit of
any other Person, any confidential information, knowledge, or data concerning
the business or affairs of the Company or Purchaser, except as required or
permitted by the Related Agreements to fulfill its obligations thereunder. Each
Seller agrees that, upon the request of Purchaser, it shall immediately deliver
to Purchaser all papers, books, manuals, lists, correspondence and documents (in
electronic format or otherwise) containing or relating to the confidential
information of the Company or Purchaser, together with all copies thereof.
6.9 Publicity. Each Seller, the Company, Parent and Purchaser agree
---------
that no public release or announcement concerning this Agreement and the
transactions contemplated hereby shall be issued without the prior consent of
the other parties, except as such release or announcement may be required by Law
or the rules or regulations of any securities exchange.
6.10 Preservation of Business. From and after the date hereof
------------------------
until the Closing Date, each Seller shall cause the Company and its Subsidiaries
to operate only in the ordinary and usual course of business and consistent with
past practice, and shall: (a) preserve intact the present business organization
and personnel of the Company and its Subsidiaries; (b) preserve the goodwill and
advantageous relationships of the Company and its Subsidiaries with customers,
suppliers, independent contractors, members, managers, employees and other
Persons material to the operation of its businesses; (c) preserve in full force
and effect its permits and licenses; and (d) not permit any action or omission
that would cause any of the representations or warranties of any Seller or the
Company contained herein to become inaccurate or any of the covenants of any
Seller or the Company to be breached. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, the Company shall not,
and shall not cause or permit any of its Subsidiaries to, without the prior
written consent of Purchaser:
(i) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have any value;
(ii) make any changes in its accounting systems, policies,
principles or practices;
(iii) make any payment of any ▇▇▇▇▇▇▇▇ Sales Commissions; make any
payment to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, make any payment to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in
excess of $269,231 (including the February, 2001 payment for vacation pay);
enter into, authorize, or permit any transaction with any Seller, any
Corporation, or any Affiliate of any Seller or any Corporation or pay any
dividend or make any other distribution in respect of the Membership
Interests, in each case other than (1) payments contemplated by Section
8.13 and (2) scheduled payments to ▇▇▇▇▇▇ Ventures, LLC, ▇▇▇▇▇▇ Aviation,
LLC, ▇▇▇▇▇▇ Properties Inc. and ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ LLC as required by the
terms of agreements as in effect on March 20, 2001 and disclosed to Parent
and Purchaser prior to such date;
(iv) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any Membership Interests or
any other securities of the Company or any Subsidiary of the Company, or
amend any of the terms of any Membership Interests or such other
securities;
(v) amend the Operating Agreement, split, combine, or reclassify
any Membership Interests (or any other securities), declare, set aside or
pay any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of any Membership Interests (or any
other securities), or redeem or otherwise acquire any Membership Interests
(or any other securities) of the Company or any Subsidiary of the Company,
in each case other than the distributions described on Schedule 6.10;
-------------
(vi) make any borrowings, incur any Indebtedness or assume,
guarantee, endorse (except for the negotiation or collection of negotiable
instruments in the ordinary course of business and consistent with past
practice) or otherwise become liable (whether directly, indirectly or
contingently) for the obligations or Indebtedness of any other Person, or
make any payment or repayment in respect of any obligations or
Indebtedness, other than (A) accrued expenses in the ordinary course of
business and consistent with past practice, and (B) drawings under existing
loan commitments in the ordinary course of business and consistent with
past practice and in amounts consistent with the representation in Section
4.6(b) and the condition in Section 8.10;
(vii) make any loans, advances or capital contributions to, or
investments in, any other Person;
(viii) enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer, member, manager
or employee or pay any benefit not required by any existing plan and
arrangement or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing, in each case other than increases
in compensation
and benefits of employees (other than the Sellers) in the ordinary course
of business and consistent with past practice;
(ix) acquire or lease any assets outside the ordinary course of
business or any assets that are material to the Company and its
Subsidiaries, taken as a whole or make any property subject to any Lien
whatsoever other than Permitted Liens incurred in the ordinary course of
business and consistent with past practice;
(x) make any Tax election or settle or compromise any federal,
state, local or foreign Tax liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(xi) take or fail to take any actions which would be reasonably
likely to prevent the Mergers from qualifying as a reorganization within
the meaning of Section 368(a) of the Code with respect to which gain
recognition is not required under Section 367(a) of the Code;
(xii) authorize or make any capital expenditures which
individually or in the aggregate are in excess of $100,000;
(xiii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) or repay or discharge any Indebtedness other than the payments,
discharges or satisfactions, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against
in the Latest Balance Sheet or subsequently incurred in the ordinary course
of business and consistent with past practice or collect, or accelerate the
collection of, any amounts owed (including accounts receivable) other than
collection in the ordinary course;
(xiv) pay any amount, perform any obligation or agree to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against the Company or any of its Subsidiaries or
any of their directors, officers, employees or agents;
(xv) terminate, modify, amend or otherwise alter or change any of
the terms or provisions of any Contract the terms of which provide for,
individually or in the aggregate, amounts to be paid either to or by the
Company or any Subsidiary in excess of $100,000, or pay any amount in
excess of $100,000 not required by Law or by any Contract, in each case
except to the extent expressly contemplated herein and other than, with
respect to customer and supply contracts with persons other than Affiliates
of the Company or any Seller, in the ordinary course of business and
consistent with past practice and in consultation with Purchaser;
(xvi) agree to any repricing, giveback or discount pursuant to or
in connection with any Contract; or
(xvii) take any action, or refrain from taking any action, that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
6.11 Tax Matters.
-----------
(a) Any federal Tax Return required to be filed by Parent or
Purchaser relating to any Straddle Period shall be submitted (with copies of any
relevant schedules, work papers and other documentation then available) to the
Sellers for their approval not less than 45 days prior to the due date for the
filing of such Tax Return, which approval shall not be unreasonably withheld or
delayed. Each Seller shall have the option of providing to Parent or Purchaser
at any time at least 30 days prior to the due date, written instructions as to
how such Seller desires any item for which it may be liable reflected on such
Tax Return. Parent shall cause the items for which such Seller is liable
hereunder to be reflected in accordance with such Seller's instructions (unless,
in the opinion of tax advisors to Parent, complying with such Seller's
instructions would possibly subject Parent to any criminal penalty or to civil
penalties under Sections 6662 through 6664 of the Code or similar provisions of
applicable state, local or foreign Law).
(b) Upon the written request of Parent setting forth in
reasonable detail the computation of the amounts owed, each Seller shall pay to
Parent, no later than five business days prior to the due date for the
applicable Tax Return, the Taxes for which such Seller is liable pursuant to
Section 6.11(d) and which are payable with any Tax Return to be filed by Parent
with respect to any Straddle Period.
(c) Within 90 days after the Closing Date, the Sellers shall
prepare and provide to Parent a package of Tax information materials, including
schedules and work papers but limited to those documents over which the Sellers
or their accountants have control, required by Parent to enable Parent to
prepare and file all Tax Returns required to be prepared and filed by it, it
being understood that Parent has the obligation to prepare and file all such Tax
Returns. The Sellers shall prepare such package in good faith in a manner
consistent with past practice.
(d) (i) To the extent permitted or required by law or
administrative practice, (A) the taxable year of the Company and its
Subsidiaries which includes the Closing Date shall be treated as closing on and
including the Closing Date and, notwithstanding the foregoing, (B) all
transactions whether or not in the ordinary course of business occurring after
the Closing Date shall be reported on Parent's consolidated United States
federal income Tax Return to the extent permitted by Treasury Regulation Section
1.1502-76(b) and shall be similarly reported on other Tax Returns of Parent or
its Affiliates to the extent permitted by applicable Law.
(ii) In determining any Seller's liability for Taxes pursuant to
this Agreement, such Seller shall be credited with the amount of estimated
Taxes of the Company paid by or on behalf of such Seller prior to the
Closing. To the extent that such Seller's liability for federal Taxes of
the Company for a taxable year or period is less than the amount of
estimated federal income Taxes previously paid by or on behalf of such
Seller with respect to all or a portion of such taxable year or period,
Parent shall pay such Seller the difference within five business days of
the receipt of the Tax refund or in the case of amounts credited against
Tax, the filing of the Tax Return relating to such income Taxes, whichever
is later.
(e) (i) Any federal Tax refund (including any interest in
respect thereof) received by Parent in respect of the Company, and any amounts
credited against Tax of the Company to which Parent becomes entitled (including
by way of any amended federal Tax Return other than any carryback filing), that
relate to any taxable period, or portion thereof, ending on or before the
Closing Date, shall be for the account of the Sellers pro rata, and Parent
shall pay over to the Sellers any such refund or the amount of any such credit
within five days of receipt of such credit. Parent shall pay the Sellers
interest at the rate prescribed under Section 6621(a)(1) of the Code, compounded
daily, on any amount not paid when due under this Section 6.11(e). For purposes
of this Section 6.11(e), where it is necessary to apportion a refund or credit
between Parent and the Sellers for a Straddle Period, such refund or credit
shall be apportioned between the period deemed to end at the close of the
Closing Date and the period deemed to begin at the beginning of the day
following the Closing Date on the basis of an interim closing of the books of
Parent, except that refunds or credits of Taxes imposed on a period basis shall
be allocated on a daily basis.
(ii) Parent shall cooperate in obtaining any material federal Tax
refund that any Seller reasonably believes should be available, including
through filing appropriate forms with the applicable Governmental
Authority.
(f) (i) If the examination of any federal Tax Return of the
Company for any taxable period ending on or before the Closing Date shall result
(by settlement or otherwise) in any adjustment which permits Parent to increase
deductions, losses or tax credits or decrease the income, gains or recapture of
tax credits which would otherwise (but for such adjustments) have been reported
or taken into account (including by way of any increase in basis) by Parent for
one or more periods ending after the Closing Date, the Seller shall notify
Parent and provide it with adequate information so that Parent can reflect on
its Tax Returns such increases in deductions, losses or tax credits or decreases
in income, gains or recapture of tax credits. Parent shall pay to each Seller,
within 30 days of the receipt of such Tax Benefits, the amount of any resulting
Tax Benefits.
(ii) If the examination of any federal Tax Return of Parent for
any taxable period ending after the Closing Date shall result (by
settlement or otherwise) in any adjustment which permits any Seller to
increase deductions, losses or tax credits or decrease the income, gains or
recapture of tax credits which would otherwise (but for such adjustments)
have been reported or taken into account (including by way of any increase
in basis) by such Seller for one or more periods ending on or before the
Closing Date, Parent, shall notify each Seller and provide it with adequate
information so that such Seller can reflect on its Tax Returns such
increases in deductions, losses or tax credits or decreases in income,
gains or recapture of tax credits. Each Seller shall pay to Parent, within
30 days of the receipt of such information, the amount of any resulting Tax
Benefits.
(g) (i) Parent shall not take any action which Parent knows
would (A) increase any Seller's liability for Taxes (including any liability of
any Seller to indemnify Parent for Taxes pursuant to this Agreement) or (B)
result in, or change the character of, any income or gain that any Seller must
report on any federal Tax Return.
(ii) Parent shall not amend, refile or otherwise modify any
federal Tax Return relating in whole or in part to the Company with respect
to any taxable year or period ending on or before the Closing Date (or with
respect to any Straddle Period) without the prior written consent of the
Sellers, which consent shall not be unreasonably withheld or delayed.
(h) After the Closing Date, each of Parent and the Sellers shall
(and shall cause their respective Affiliates to) (i) assist the other party in
preparing any Tax Returns which such other party is responsible for preparing
and filing, and (ii) cooperate fully in preparing for any audits of, or disputes
with any Tax Authority regarding, any Tax. The Sellers shall not dispose of any
Tax work papers, books or records relating to the Company or its Subsidiaries
during the six-year period following the Closing Date, and thereafter shall give
Parent reasonable written notice before disposing of such items.
(i) Parent shall not make any election under Section 338(g) of
the Code (or any analogous provision of state, local, or foreign law) with
respect to any Subsidiary of the Company without the prior written consent of
the Sellers, which consent shall not be unreasonably withheld or delayed. If the
Sellers do so consent, Parent shall be liable for, and shall pay, any Tax
attributable to, or resulting from, the making of such election and will
indemnify the Sellers from and against any Tax liability or other adverse
consequences attributable to, or resulting directly or indirectly from, the
making of such election. Any indemnification obligation of Parent pursuant to
this Section 6.11(i) shall be increased by the relevant After Tax Amount. For
purposes of this Section 6.11(i), "After Tax Amount" means any additional amount
----------------
necessary to reflect the tax consequences of the receipt or accrual of such
reimbursement payment (including the payment of an additional amount or amounts
hereunder) determined by using the actual marginal federal, state, foreign or
local rates for the relevant taxable period.
(j) Notwithstanding any other provision of this Agreement,
Sellers shall indemnify Parent from and against and in respect of any and all
Losses incurred by Parent, which may be imposed on, sustained, incurred or
suffered by or assessed against Parent, directly or indirectly, to the extent
relating to or arising out of any liability for Indemnified Taxes imposed on the
Sellers or the Company or its Subsidiaries or predecessors of any of the
foregoing (other than JCI) for any taxable year or period that ends on or before
the Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period deemed to end on and include the Closing Date.
(k) Notwithstanding any other provision of this Agreement,
Parent shall indemnify the Sellers from and against and in respect of any and
all Losses incurred by the Sellers, which may be imposed on, sustained, incurred
or suffered by or assessed against the Company, directly or indirectly, to the
extent relating to or arising out of:
(i) any liability for Taxes (other than Indemnified Taxes)
imposed on any of the Company or its Subsidiaries; and
(ii) any liability, or increase in a liability, for Taxes imposed
on any Seller as a result of any failure by Parent to perform or comply
with its obligations under Section 6.11(g)(i) of this Agreement.
(l) (i) Notice. After the Closing Date, Parent and the Sellers
------
each shall notify the other party in writing within 20 days of the notice of the
commencement of any Tax audit or administrative or judicial proceeding affecting
the Taxes of the Company or its Subsidiaries, which, if determined adversely to
the taxpayer (the "Tax Indemnitee") or after the lapse of time, would be grounds
--------------
for indemnification under this Section 6.11 by the other party (the "Tax
---
Indemnitor"). Such notice shall contain factual information describing any
----------
asserted Tax liability in reasonable detail and shall include copies of any
notice or other document received from any Tax Authority in respect of any such
asserted Tax liability. If Parent or any Seller fails to give the other party
prompt notice of an asserted Tax liability as required under this Agreement, if
such failure to give prompt notice results in a detriment to the Tax Indemnitor,
then any amount which the Tax Indemnitor is otherwise required to pay pursuant
to this Section 6.11 with respect to such liability shall be reduced by the
amount of such detriment.
(ii) Control of Contests Involving Pre-Closing Periods or
----------------------------------------------------
Straddle Periods. In the case of an audit or administrative or judicial
----------------
proceeding involving any asserted liability for Taxes relating to any
taxable years or periods ending on or before the Closing Date or any
Straddle Period, the Sellers shall have the right, at their expense, to
control the conduct of such audit or proceeding; provided, however, that
Parent may participate in the conduct of such audit or proceeding at its
own expense and the Sellers shall
not settle any such audit or proceeding without the consent of Parent,
which consent shall not be unreasonably withheld or delayed.
(iii) Control of Contests Involving Post-Closing Periods. In the
--------------------------------------------------
case of an audit or administrative or judicial proceeding involving any
asserted liability for Taxes relating to any taxable years or periods
beginning on or after the Closing Date, Parent shall have the right, at its
expense, to control the conduct of such audit or proceeding; provided,
however, that if such audit or proceeding would be reasonably expected to
result in a material increase in Tax liability of the Company for which the
Sellers would be liable under this Section 6.11, the Sellers may
participate in the conduct of such audit or proceeding at their own expense
and Parent shall not settle any such audit or proceeding without the
consent of the Sellers, which consent shall not be unreasonably withheld.
6.12 Maintenance of Insurance. The Sellers shall cause the
------------------------
Company to continue to carry its existing insurance through the Closing Date,
and shall not allow any breach, default, termination or cancellation of such
insurance policies or agreements to occur or exist.
6.13 Accounts Receivable. From and after the date hereof until
-------------------
the Closing Date, each Seller shall, and shall cause the Company and its
Subsidiaries to, use their best efforts to cause the Company's accounts
receivable to qualify for inclusion in the existing accounts receivable purchase
facility and related documentation in respect of which Purchaser and its
Subsidiaries are sellers of accounts receivable.
6.14 Operation of Corporations. From and after the date hereof
-------------------------
until the Closing Date, each Seller shall cause each Corporation not to own any
assets other than the Membership Interests owned by it on the date hereof, and
shall cause each Corporation not to enter into any Contract or to participate in
any joint venture, partnership or similar arrangement and not to conduct any
business or operations.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of Parent, Purchaser and each Seller to consummate the
Transactions are subject to the satisfaction of the following conditions:
7.1 Non-Compete Agreements. Each Seller shall have entered into
----------------------
a Non-Compete Agreement with Purchaser for an aggregate payments to all Sellers
of $18,000,000 ratably over five years, and each such agreement shall be in full
force and effect.
7.2 HSR Act. Any applicable waiting period under the HSR Act
-------
shall have expired or been terminated.
7.3 Shareholder Approval. As to each Seller, the issuance of
--------------------
the Merger Consideration pursuant to this Agreement, if required by the rules of
the New York Stock Exchange, shall have been approved by the requisite vote or
consent of the holders of the issued and outstanding shares of capital stock of
Parent and, as to Parent and Purchaser, 21 days shall have passed since the
mailing of an Information Statement prepared pursuant to the Securities Exchange
Act of 1934 describing the aforementioned vote (by written consent or
otherwise).
7.4 ▇▇▇▇▇▇ Appointment. ▇▇▇▇▇▇ shall be willing and able to
------------------
serve as and shall have been appointed to the Board of Directors of Parent as
Vice Chairman.
7.5 Actions or Proceedings. No action or proceeding by any
----------------------
Governmental Authority or other Person shall have been instituted or threatened,
and no event or circumstance having a prospective effect shall have occurred,
(a) that would reasonably be expected to have, individually or in the aggregate,
a material adverse effect on the business, operations, assets, liabilities,
results of operations, cash flows, condition (financial or otherwise) or
prospects of the Company or Purchaser (together with their consolidated
Subsidiaries); or (b) that would reasonably be expected to result in the
enjoining, restraining or prohibition of, or result in substantial
damages in respect of, any provision of this Agreement or the Related Agreements
or the consummation of the Transactions or the effective operation of any
material portion of the business of the Company or Purchaser or any integration
of any operations of the Company with those of Purchaser and its Affiliates.
7.6 New York Stock Exchange. The Common Stock representing the Stock
-----------------------
Consideration shall have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND PURCHASER
The obligations of Parent and Purchaser to consummate the Transactions
are subject to the waiver or satisfaction of the following conditions:
8.1 Warranties True as of Both Present Date and Closing Date. The
--------------------------------------------------------
representations and warranties of each Seller and the Company contained herein
shall have been accurate and complete on and as of the date hereof, and shall
also be accurate and complete on and as of the Closing Date (as updated pursuant
to Section 6.5), except for representations and warranties that are made as of a
specific date, which shall be accurate and complete as of such date, and except
for any failure of any representation or warranty to be true so long as Parent
and Purchaser would not have a right to terminate this Agreement pursuant to
Section 11.1(c) (it being understood that should any such failure result in a
default or event of default under any material debt instrument of Parent or its
Subsidiaries in connection with the consummation of the Transactions, Parent,
Purchaser and Sellers will be required to collectively use reasonable best
efforts to resolve the problem in a manner which permits financing of the
Transactions as contemplated).
8.2 Compliance with Agreements and Covenants. Each Seller and the
----------------------------------------
Company shall have performed and complied with all of its covenants, obligations
and agreements contained in this Agreement to be performed and complied with by
it on or prior to the Closing Date.
8.3 Consents and Approvals. The Company shall have furnished written
----------------------
evidence reasonably satisfactory to Purchaser that all consents and approvals
required for the consummation of the Transactions or the ownership and operation
by Purchaser of the Company and its Subsidiaries and their businesses and
operations have been obtained, and all required filings have been made,
including (without limitation) those set forth on Schedule 4.3.
------------
8.4 Stockholders Agreement. Each Seller shall have entered into the
----------------------
Stockholders Agreement, and such agreement shall be in full force and effect.
8.5 EPP Rights; Termination of Agreements; Amendment of Certain
-----------------------------------------------------------
Agreements. The Company shall have furnished written evidence satisfactory to
----------
Purchaser that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has waived any right to purchase the Company's
ownership interest in EPP and waived any right to sell ownership interests in
EPP owned by him to the Company or any Affiliate of the Company. The Company
shall have furnished written evidence satisfactory to Purchaser that each of the
Management Agreement and the Manufacturers Agreement has been terminated without
further liability or obligation, whether accrued, absolute, contingent or
otherwise, whether due or to become due, to the Company or any of its
Subsidiaries. ▇▇▇▇▇▇ shall have entered into an amendment to the ▇▇▇▇▇▇
Agreement with JCI in form and substance satisfactory to Parent and Purchaser,
and such amendment shall be in full force and effect. All supply agreements
between EPP and its Affiliates, on the one hand, and the Company and its
Affiliates, on the other hand, shall be in form and substance satisfactory to
Parent and Purchaser.
8.6 Financial Statements. The Company shall have furnished to
--------------------
Purchaser all financial statements of the Company for such periods and
containing such information sufficient to permit Parent to comply with the
requirements of Form 8-K under the Exchange Act; provided, however, that
Purchaser shall be solely responsible for the expense of preparing any
consolidated financial statements required to be filed with Form 8-K.
8.7 Documents. Purchaser shall have received each agreement,
---------
document and item specified in Section 10.1.
8.8 Obligations to Affiliates; Working Capital. The Company and its
------------------------------------------
Subsidiaries shall have no Indebtedness whatsoever other than as described in
Schedule 3.2(b) and the $1.0 million guaranty of Indebtedness of EPP identified
---------------
on Schedule 4.6(b), and the Company and its Subsidiaries shall have no
---------------
liability, Indebtedness or obligations, whether accrued, absolute, contingent or
otherwise, whether due or to become due, to or with respect to ▇▇▇▇▇▇ Aviation,
LLC, ▇▇▇▇▇▇ Europe GmbH, ▇▇▇▇▇▇ Ventures, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or in respect of
the ▇▇▇▇▇▇▇▇ Sales Commissions. The Company shall have Working Capital in an
amount consistent with past practices as previously disclosed to Purchaser. The
Company and its Subsidiaries shall have no liability, Indebtedness or other
obligations, whether accrued, absolute, contingent or otherwise, whether due or
to become due, to or with respect to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in excess of $240,793.
8.9 Assets. The Company shall have furnished written evidence
------
satisfactory to Purchaser that it has no equity interest or other ownership in
▇▇▇▇▇▇ Aviation, LLC or ▇▇▇▇▇▇ Europe GmbH.
8.10 Existing Indebtedness. On the Closing Date, (i) the Company and
---------------------
its Subsidiaries shall have outstanding only the Indebtedness set forth on
Schedule 3.2(b), the up to $4.25 million letter of credit for workers
---------------
compensation identified on Schedule 4.6(b) and the $1.0 million guaranty of
---------------
Indebtedness of EPP identified on Schedule 4.6(b), (ii) there shall have been no
---------------
modifications, waivers or amendments thereof since the date hereof, (iii) no
default or event of default shall exist in respect thereof and (iv) the Debt
Repayment Amount shall not exceed $60,000,000. All notices and other conditions
which must be met in order to permit Purchaser to repay the Debt Repayment
Amount and extinguish all liabilities and commitments in respect of all
Indebtedness of the Company and its Subsidiaries, other than the up to $4.25
million letter of credit for workers compensation and the $1.0 million guaranty
of Indebtedness of EPP identified on Schedule 4.6(b), and secure all necessary
---------------
releases from the creditors in respect thereof shall have been made or obtained.
All commitments for any other Indebtedness (excluding the up to $4.25 million
letter of credit and the $1.0 million guaranty of Indebtedness of EPP identified
on Schedule 4.6(b)) shall have been terminated.
---------------
8.11 Audited Financial Statements. The Company shall have delivered
----------------------------
audited consolidated financial statements of the Company as of December 31,
2000, consisting of the consolidated balance sheets at such date and the related
consolidated statements of earnings and retained earnings and cash flows for the
year then ended. Such audited financial statements shall be consistent with
draft financial statements delivered to Purchaser prior to the date hereof and
shall reflect the capitalization of approximately $3,385,000 of engineering and
development expenses. Such audited financial statements shall be accompanied by
a report of Ernst & Young in form and substance satisfactory to Parent and
Purchaser in all respects.
8.12 Lease Amendment. The Company shall have entered into agreements
---------------
or amendments to leases with respect to the leases of certain properties and
related matters described in the side letter addressed to Parent and Purchaser
prior to the date hereof. All such documentation shall be in form and substance
satisfactory to Parent and Purchaser and consistent with the aforementioned side
letter and in full force and effect.
8.13 ▇▇▇▇▇▇▇▇ Sales Commissions. The Company shall have entered into
--------------------------
a settlement agreement with ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇, L.L.C. with respect to the ▇▇▇▇▇▇▇▇
Sales Commissions and the Manufacturers Agreement in form and substance
satisfactory to Purchaser providing for total payments by the Company and its
Subsidiaries and EPP which, together with all other payments made under such
agreement by the Company and its Subsidiaries and EPP after January 1, 2001, do
not exceed $1,900,000.
8.14 No Material Adverse Change. No Material Adverse Change shall
--------------------------
have occurred since the date of the Latest Balance Sheet, and no event shall
have occurred which, in the reasonable judgment of Purchaser, would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SEllERS
The obligations of the Sellers to consummate the Transactions are
subject to the waiver or satisfaction of the following conditions:
9.1 Warranties True as of Both Present Date and Closing Date. The
--------------------------------------------------------
representations and warranties of Parent and Purchaser contained herein shall
have been accurate and complete on and as of the date hereof, and shall also be
accurate and complete as of the Closing Date, except for representations and
warranties that are made as of a specific date, which shall be accurate and
complete as of such date.
9.2 Compliance with Agreements and Covenants. Each of Parent and
----------------------------------------
Purchaser shall have performed and complied with all of its covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by it on or prior to the Closing Date.
9.3 Documents. The Sellers shall have received all of the
---------
agreements, documents and items specified in Section 10.2.
9.4 Registration Rights Agreement; Stockholders Agreement. Parent
-----------------------------------------------------
and Heartland shall have entered into the Registration Rights Agreement and the
Stockholders Agreement, and each such agreement shall be in full force and
effect.
9.5 Consents and Approvals. Parent and Purchaser shall have
----------------------
furnished written evidence reasonably satisfactory to the Sellers that all
consents and approvals required for the consummation of the transactions
contemplated hereby have been obtained, including without limitation consents
and approvals of Parent's shareholders and the board of directors of each, and
that all required filings with the New York Stock Exchange have been made.
ARTICLE X
CLOSING
10.1 Deliveries by the Sellers and the Company. At the Closing, in
-----------------------------------------
addition to any other documents or agreements required under this Agreement,
each Seller shall deliver to Parent and Purchaser the following:
(a) Receipts for the Cash Payment and the Merger Consideration
delivered to the Sellers at the Closing;
(b) A written statement from each Person holding a Lien to secure
Indebtedness upon any of the assets of the Company and its Subsidiaries or
upon any Membership Interests, and each creditor with respect to any
Indebtedness, confirming the repayment of the Indebtedness and the release
as of the Closing Date of: (i) any such Lien; and (ii) all obligations
under any and all Contracts relating thereto;
(c) A certificate dated the Closing Date of the Sellers certifying as
to the matters set forth in Section 8.1 and Section 8.2, and attached to
such certificate shall be a written statement of all matters that shall
have been disclosed pursuant to Section 6.5;
(d) A certificate of the members of the Company certifying
resolutions of the Company approving and authorizing the execution,
delivery and performance of this Agreement and the Related Agreements to
which it is a party and the consummation of the transactions contemplated
hereby and thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of the Company);
(e) A certified copy of the Membership Interest Register of the
Company (or similar records of the Company reflecting the current members
of the Company, and the Membership Interests of such Persons) as of the
Closing Date, reflecting that the Corporations are the registered owners of
all of the issued and outstanding Membership Interests, certified by the
secretary of the Company or equivalent Person;
(f) The Articles of Organization, certificate of formation, or
similar instruments of the Company certified by the Secretary of State or
equivalent Person of the jurisdiction of organization (dated as of a recent
date), and Operating Agreement or similar instruments of the Company,
certified by the Secretary of State or equivalent Person of the
jurisdiction of organization (dated as of a recent date);
(g) The certificate of incorporation, certificate of formation, or
similar instruments of each Corporation certified by the Secretary of
State or equivalent Person of the jurisdiction of organization (dated as of
a recent date);
(h) Certificates of Good Standing for the Company from the State of
Michigan (dated as of a recent date); and
(i) Certificates of Good Standing for each Corporation from the State
of Michigan (dated as of a recent date).
10.2 Deliveries by Parent and Purchaser. At the Closing, in addition
----------------------------------
to the delivery of any other documents required under this Agreement:
(a) Parent shall deliver to the Sellers the Merger Consideration;
(b) Purchaser shall deliver to the Sellers the Cash Payment;
(c) Parent and Purchaser shall each deliver to the Sellers a
certificate, dated the Closing Date, of an executive officer of Parent or
Purchaser, as the case may be, certifying as to the matters set forth in
Section 9.1 and Section 9.2; and
(d) Parent and Purchaser shall each deliver to the Sellers certified
resolutions of their board of directors, approving and authorizing the
execution, delivery and performance of this Agreement and the Related
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby (together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of Parent or
Purchaser, as the case may be).
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time on or
-----------
prior to the Closing Date:
(a) by mutual written consent of the Sellers and Parent and
Purchaser;
(b) by either the Sellers or Parent and Purchaser, if:
(i) the Closing has not occurred on or before June 30, 2001 (the "End
---
Date"), provided that the right to terminate this Agreement pursuant
----
to this Section 11.1(b)(i) shall not be available to any party whose
breach of any provision of this Agreement results in the failure of
the Closing to occur by that time; or
(ii) there shall be any law or regulation that makes consummation of
the Closing illegal or otherwise prohibited or any judgment,
injunction, order or decree of any Governmental Authority having
competent jurisdiction enjoining the Sellers or the Company or
Purchaser from consummating the Closing is entered and such judgment,
injunction, order or decree shall have become final and nonappealable;
(c) by Purchaser and Parent, if there shall have been any material
breach of any covenant, representation or warranty of any Seller hereunder
(disregarding for purposes of this clause (c) any materiality limitations
in such covenant, representation or warranty), and (i) such breach is
incapable of being remedied by the End Date or shall not have been remedied
within ten (10) Business Days after receipt by the Sellers of a written
notice from Parent or Purchaser specifying the breach and requesting such
be remedied and (ii) so long as such breach is not the result of any fraud
or willful breach on the part of any Seller, such breach (together with all
other breaches by the Sellers) if not remedied, would reasonably be
expected to result, individually or in the aggregate, in Losses in excess
of $10,000,000; or
(d) by the Sellers, if there shall have been any material breach of
any covenant, representation or warranty of Parent or Purchaser hereunder
(disregarding for purposes of this clause (d) any materiality limitations
in such covenant, representation or warranty), and (i) such breach is
incapable of being remedied by the End Date or shall not have been remedied
within ten (10) Business Days after receipt by Parent or Purchaser of
written notice from the Sellers specifying the breach and requesting such
be remedied and (ii) so long as such breach is not the result of any fraud
or willful breach on the part of
Parent or Purchaser, such breach (together with all other breaches by
Parent and Purchaser) if not remedied, would reasonably be expected to
result, individually or in the aggregate, in Losses in excess of
$10,000,000.
11.2 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to Section 11.1, all obligations of the parties hereunder shall terminate,
except for the obligations set forth in Sections 6.8, 6.9, 13.1, 13.8, 13.9 and
this Section 11.2 and Article XII, which shall survive the termination of this
Agreement, and except that no such termination shall relieve any party from
liability for any prior knowing or willful breach of this Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 Survival. The representations and warranties of the parties
--------
hereto contained herein shall not survive the Closing.
12.2 Indemnification by the Sellers. Subject to the terms and
------------------------------
conditions of the preamble to Article IV, each Seller jointly and severally
agrees to indemnify each of the Purchaser Indemnified Parties against, and
agrees to hold each of them harmless from, any and all Losses incurred or
suffered by them relating to, arising out of, or in connection with, any of the
following:
(a) any fraud or willful breach on the part of any Seller or the
Company with respect to any provision of this Agreement or the Related
Agreements or any other document delivered at Closing;
(b) any knowing or willful breach of, or knowing or willful failure
by any Seller to perform, any covenant or obligation of such Seller (x) set
out or contemplated in this Agreement or any Related Agreement or any
document delivered at Closing to the extent it is to be performed following
the Closing, or (y) described in Section 6.1, 6.5, 6.6 or 6.10;
(c) any costs, expenses, Taxes or other liabilities of the Company,
any Subsidiary, the Sellers or any Corporation arising out of or in
connection with (i) dispositions (whether by sale, liquidation, closing,
etc.) by the Company of its interests in ▇▇▇▇▇▇ Aviation, LLC and ▇▇▇▇▇▇
Europe GmbH (including severance, pension, insurance and other benefits to
employees), (ii) the termination by the Company of the Management
Agreement, (iii) the termination of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (but only amounts
in excess of $269,231, including payments of vacation pay in February,
2001), (iv) the termination of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and (v) the ▇▇▇▇▇▇▇▇ Sales
Commissions or the Manufacturers Agreement (but only amounts in excess of
that contemplated by Section 8.13); and
(d) any costs, expenses, Taxes or other liabilities of the Company,
any Subsidiary, the Sellers or any Corporation arising out of or in connection
with the Detrex Claim; provided that the Sellers shall not be liable for 50% of
the first $100,000 of the Losses incurred or suffered by the Purchaser
Indemnified Parties.
12.3 Indemnification by Purchaser. Purchaser agrees to indemnify the
----------------------------
Sellers against, and agrees to hold each of them harmless from, any and all
Losses incurred or suffered by them relating to, or arising out of, or in
connection with, any of the following:
(a) any fraud or willful breach on the part of Parent or Purchaser
with respect to any provision of this Agreement or the Related Agreements
or any other document delivered at Closing; and
(b) any knowing or willful breach of, or failure by Purchaser to
perform, any covenant or obligation of Purchaser (x) set out or
contemplated in this Agreement or any Related Agreement or any document
delivered at Closing to the extent it is to be performed following the
Closing, or (y) described in Section 6.1.
12.4 Claims.
------
(a) The provisions of this section shall be subject to Section 12.5.
As soon as is reasonably practicable after becoming aware of a claim for
indemnification under this Agreement or any Related Agreement, the Indemnified
Person shall promptly give notice to the Indemnifying Person of such claim and
the amount the
Indemnified Person will be entitled to receive hereunder from the Indemnifying
Person; provided that the failure of the Indemnified Person to give notice shall
not relieve the Indemnifying Person of its obligations under this Article XII
except to the extent (if any) that the Indemnifying Person shall have been
prejudiced thereby. If the Indemnifying Person does not object in writing to
such indemnification claim within 30 calendar days of receiving notice thereof,
the Indemnified Person shall be entitled to recover promptly from the
Indemnifying Person the amount of such claim (but such recovery shall not limit
the amount of any additional indemnification to which the Indemnified Person may
be entitled pursuant to Section 12.2 or Section 12.3), and no later objection by
the Indemnifying Person shall be permitted. If the Indemnifying Person agrees
that it has an indemnification obligation but objects that it is obligated to
pay only a lesser amount, the Indemnified Person shall nevertheless be entitled
to recover promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
(b) The liability of the Sellers and Purchaser under this Article XII
shall be reduced by an amount equal to (i) the value of any net Tax benefit
realized by the Indemnified Person (by reason of a Tax deduction, basis
adjustment, shifting of income, credits and/or deductions, or otherwise from one
or more fiscal periods to another resulting, in each case, from any Loss
suffered by the Indemnified Person that forms the basis of the Indemnifying
Person's obligation hereunder), giving effect to any Tax liabilities of the
Indemnified Person arising as a result of any payments made by an Indemnifying
Person with respect to such claim for indemnification; and (ii) the value of
insurance benefit realized by the Indemnified Person in connection with any Loss
suffered by such Person that forms the basis of the Indemnifying Person's
obligation hereunder.
12.5 Notice of Third Party Claims; Assumption of Defense. The
---------------------------------------------------
Indemnified Person shall give written notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any claim, or the
commencement of any suit, action or proceeding, by any Person not a party hereto
in respect of which indemnity may be sought under this Agreement; provided that
the failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Article XII except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
The Indemnifying Person may, at its own expense: (a) participate in the defense
of any claim, suit, action or proceeding; and (b) upon notice to the Indemnified
Person and the Indemnifying Person's delivering to the Indemnified Person a
written agreement that the Indemnified Person is entitled to indemnification
pursuant to Section 12.2 or Section 12.3 for all Losses arising out of such
claim, suit, action or proceeding and that the Indemnifying Person shall be
liable for the entire amount of any Loss, at any time during the course of any
such claim, suit, action or proceeding, assume the defense thereof; provided,
however, that: (i) the Indemnifying Person's counsel is reasonably satisfactory
to the Indemnified Person, and (ii) the Indemnifying Person shall thereafter
consult with the Indemnified Person upon the Indemnified Person's reasonable
request for such consultation from time to time with respect to such claim,
suit, action or proceeding. If the Indemnifying Person assumes such defense,
the Indemnified Person shall have the right (but not the duty) to participate in
the defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person. If, however, the Indemnified
Person reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest or if
the Indemnifying Person's counsel is otherwise not reasonably satisfactory to
the Indemnified Person, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding and the
Indemnifying Person shall pay the fees and disbursements of such separate
counsel. Whether or not the Indemnifying Person chooses to defend or prosecute
any such claim, suit, action or proceeding, all of the parties hereto shall
cooperate in the defense or prosecution thereof.
12.6 Settlement or Compromise. The Indemnifying Person may settle or
------------------------
compromise any claim, suit, action or proceeding of the kind referred to in
Section 12.5; provided, however, that no obligation, restriction or Loss shall
be imposed on the Indemnified Person as a result of such settlement without its
prior written consent. The Indemnified Person will give the Indemnifying Person
at least 30 days' notice of any proposed settlement or compromise of any claim,
suit, action or proceeding it is defending, during which time the Indemnifying
Person may reject such proposed settlement or compromise; provided, however,
that from and after such rejection, the Indemnifying Person shall be obligated
to assume the defense of and full and complete liability and responsibility for
such claim, suit, action or proceeding and any and all Losses in connection
therewith in excess of the amount of unindemnifiable Losses which the
Indemnified Person would have been obligated to pay under the proposed
settlement or compromise.
12.7 Failure of Indemnifying Person to Act. In the event that the
-------------------------------------
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations.
12.8 Limitations on Indemnification.
------------------------------
(a) The Sellers shall have no obligation to indemnify any Purchaser
Indemnified Party from and against any Losses until the aggregate Losses
suffered by all Purchaser Indemnified Parties exceed $100,000, at which time the
Sellers shall be liable to the Purchaser Indemnified Parties for the entire
amount of all aggregate Losses suffered by all Purchaser Indemnified Parties.
The foregoing limitation shall not apply to any Losses suffered by the Purchaser
Indemnified Parties with respect to Taxes or the termination of the ▇▇▇▇▇▇▇▇
Agreement to the extent it exceeds the amounts set forth in Section 4.6(b) or
the Detrex Claim.
(b) No claim for indemnification (other than any amounts with
respect to Taxes or the ▇▇▇▇▇▇▇▇ Sales Commissions or the Manufacturers
Agreement or the termination of the ▇▇▇▇▇▇▇▇ Agreement or the termination of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇) under this Agreement may be brought after the second anniversary
of this Agreement. There shall be no time limit on claims hereunder with respect
to the ▇▇▇▇▇▇▇▇ Sales Commissions, the Manufacturers Agreement or the ▇▇▇▇▇▇▇▇
Agreement or the Detrex Claim. Any claim for indemnification with respect to
Taxes may only be made prior to the expiration of the related statute of
limitations.
(c) In no event shall the aggregate liability of the Sellers
(excluding any liability with respect to Taxes, the termination of the ▇▇▇▇▇▇▇▇
Agreement, the ▇▇▇▇▇▇▇▇ Sales Commissions or the Manufacturers Agreement or the
Detrex Claim) to Parent and Purchaser arising under this Article XII exceed
$25,000,000.
12.9 Satisfaction of Sellers' Indemnification Obligations. At the
----------------------------------------------------
option of the Sellers, any amount owing by the Sellers to any Purchaser
Indemnified Party arising from or relating to this Agreement may be satisfied by
delivering to such Purchaser Indemnified Party shares of Common Stock valued at
the lesser of (i) the average per share closing price over the ten business days
immediately preceding the date on which such shares are delivered in
satisfaction of such claim, and (ii) a price per share yielding an annual
compounded rate of return of 30% measured from the date of this Agreement to the
date on which such shares are delivered in satisfaction of such claim; provided,
however, that in no event shall such value be less than $5 per share, in each
case as adjusted to give effect to the increase or decrease in the number of
shares as a result of a stock split or stock dividend or similar event applying
equally to all securities of that class.
12.10 Assignment of Claims. The parties agree that on satisfaction
--------------------
of the applicable obligation of the Indemnifying Person to indemnify, the
Indemnified Person will assign to the Indemnifying Person any and all claims,
causes of action and demands of whatever kind and nature which the Indemnified
Person may have against any person, firm or other entity giving rise to the
indemnified Loss, and will reasonably cooperate in any efforts to recover from
such person or entity.
12.11 Exclusive Remedies. Other than equitable remedies which may be
------------------
available for breaches of covenants or claims of fraud, this Article XII
provides the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other claim arising out of this Agreement or the transaction
contemplated by it. Each party shall use reasonable efforts to mitigate any
Losses.
ARTICLE XIII
MISCEllANEOUS
13.1 Expenses. Each party hereto shall bear its own costs and
--------
expenses (including the fees and disbursements of legal counsel, investment
bankers and accountants) with respect to the transactions contemplated hereby;
provided, however, that the Company shall pay up to $250,000 of the fees and
expenses of the Sellers relating to the HSR filing fee of ▇▇▇▇▇▇ and the
reasonably documented attorneys' and accountants' fees of the Sellers. The
Sellers shall pay all sales, use, stamp, transfer, service, recording, real
estate and like taxes or fees,
if any, imposed by any Governmental Authority in connection with the transfer
and assignment of the Shares and the Membership Interests.
13.2 Amendment. This Agreement may be amended, modified or
---------
supplemented only by a written instrument signed by Parent, Purchaser, the
Company and the Sellers.
13.3 Notices. Any notice, request, instruction or other document to
-------
be given hereunder by a party hereto shall be in writing and shall be deemed to
have been given: (a) when received if given in person or by courier or a
courier service; (b) on the date of transmission if sent by telex, facsimile or
other wire transmission; or (c) three (3) Business Days after being deposited in
the U.S. mail, certified or registered mail, postage prepaid:
If to the Sellers, then as set forth on Schedule 13.3.
-------------
with a copy to:
▇▇▇▇▇ Hill PLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Purchaser, addressed as follows:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
13.4 Waivers. The failure of a party hereto at any time or times to
-------
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one or
more instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
13.5 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.6 Headings. The headings preceding the text of articles and
--------
sections included in this Agreement and the headings to schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement.
13.7 Interpretation. Unless otherwise indicated, words describing
--------------
the singular number shall include the plural and vice versa, and words denoting
each gender shall include the other gender and words denoting natural persons
shall include corporations and partnerships and vice versa. The use of the terms
"including" or "included" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Unless otherwise
indicated, references to articles, sections, subsections or schedules shall
refer to those portions of this Agreement. Subject to the limitations set forth
in Section 12.1, consummation of the transactions contemplated herein shall not
be deemed a waiver of a breach of or inaccuracy in any representation, warranty
or covenant or of any party's rights and remedies with regard thereto. No
specific representation, warranty or covenant contained herein shall limit the
generality or applicability of a more general representation, warranty or
covenant contained herein. A breach of or inaccuracy in any representation,
warranty or covenant shall not be affected by the fact that any more general or
less general representation, warranty or covenant was not also breached or
inaccurate.
13.8 Applicable Law. The validity, construction and effect of this
--------------
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law of such State.
13.9 Jurisdiction. Any suit, action or proceeding seeking to
------------
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the Related Agreements shall be brought in the United
States District Court for Delaware, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 13.3
shall be deemed effective service of process on such party.
13.10 Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that no assignment of any rights or obligations shall be made
by any Seller without the written consent of Purchaser, or by Parent or
Purchaser without the written consent of each Seller, except that Parent or
Purchaser may assign its rights hereunder without such consent to any Affiliate
of Parent.
13.11 No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, members, managers, agents
and representatives, and no provision of this Agreement shall be deemed to
confer upon other third parties any remedy, claim, liability, reimbursement,
cause of action or other right.
13.12 Further Assurances. Upon the reasonable request of Purchaser,
------------------
each Seller shall on and after the Closing Date execute and deliver to Purchaser
such other documents, releases, assignments and other instruments as may be
required to effectuate completely the transfer and assignment to Purchaser of,
and to vest fully in Purchaser title in and to, the Membership Interests, and to
otherwise carry out the purposes of this Agreement.
13.13 Severability. If any provision of this Agreement shall be held
------------
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions shall not be affected thereby, and there shall be deemed
substituted for the provision at issue a valid, legal and enforceable provision
as similar as possible to the provision at issue.
13.14 Entire Understanding. This Agreement, together with the
--------------------
exhibits and schedules hereto and the Related Agreements, set forth the entire
agreement and understanding of the parties hereto and supersede any and all
prior agreements, arrangements and understandings among the parties hereto.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered as of the date first above written.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
By:
Name:
Title:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.
By:
Name:
Title:
▇▇▇▇▇▇ GROUP, L.L.C.
By:
Name:
Title:
▇▇ ▇▇▇▇▇▇, INC.
By:
Name:
Title:
ME ▇▇▇▇▇▇▇▇▇, INC.
By:
Name:
Title:
J HOEHNEL, INC.
By:
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
JENS HOHNEL
SCHEDULE 1.1
CORPORATIONS
------------
Percentage Percentage Shares of Stock
Corporation Interest in Amount of Cash Consideration Warrants
the Company Payment Allocable Allocable Allocable
-------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇▇▇, Inc. 80% 80% 13,600,000 400,000
ME ▇▇▇▇▇▇▇▇▇, Inc. 10 10 1,700,000 50,000
J Hoehnel, Inc. 10 10 1,700,000 50,000
--- --- ---------- -------
Total 100% 100% 17,000,000 500,000
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