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PURCHASE AGREEMENT
BY AND AMONG
TEXTRON INC.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
AND
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.
AUGUST 7, 2001
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions...........................................................1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares..........................................12
2.2 Purchase and Sale of Assets..........................................13
2.3 Restructuring........................................................13
2.4 Purchase Price Adjustment............................................13
2.5 Allocation of Consideration; Tax Filings.............................16
2.6 Closing..............................................................17
2.7 Closing Obligations..................................................18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
3.1 Corporate Organization, Qualification, Power and Authority...........19
3.2 Stock of Subsidiaries................................................20
3.3 Consents and Approvals; No Violations................................21
3.4 Financial Statements.................................................22
3.5 Absence of Certain Changes or Events.................................22
3.6 No Undisclosed Liabilities...........................................24
3.7 Litigation...........................................................24
3.8 Taxes................................................................24
3.9 Employee Benefit Plans and Agreements................................25
3.10 Labor Matters........................................................28
3.11 Environmental Laws and Regulations...................................28
3.12 Compliance with Laws.................................................29
3.13 Properties...........................................................29
3.14 Material Contracts...................................................29
3.15 Intellectual Property................................................30
3.16 Product Warranties; Recalls..........................................31
3.17 Brokers and Finders..................................................31
3.18 Customers and Suppliers..............................................31
3.19 Additional Representations and Warranties by Parent..................31
3.20 Indebtedness.........................................................32
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3.21 R&D People...........................................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND C&A PRODUCTS
4.1 Corporate Organization, Qualification, Power and Authority...........32
4.2 Capitalization of Holdings and C&A Products..........................34
4.3 Stock of Subsidiaries................................................36
4.4 Valid Issuance of Stock..............................................36
4.5 Consents and Approvals; No Violations................................36
4.6 SEC Filings; Financial Statements....................................37
4.7 Absence of Certain Changes or Events.................................37
4.8 No Undisclosed Liabilities...........................................38
4.9 Litigation...........................................................38
4.10 Financing............................................................38
4.11 Certain Agreements...................................................39
4.12 Brokers and Finders..................................................39
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of the Business..............................................39
5.2 Access to Information................................................42
5.3 Competition Filings..................................................42
5.4 Consents and Reasonable Efforts......................................43
5.5 Further Assurances...................................................44
5.6 Publicity............................................................45
5.7 Employee Matters.....................................................46
5.8 Tax Matters..........................................................52
5.9 Bison Financial Statements...........................................61
5.10 Observer Rights......................................................62
5.11 Non-Competition......................................................63
5.12 Intercompany Transactions............................................64
5.13 Additional Covenant of C&A and Holdings..............................64
5.14 Certain Pre-Closing Restrictions.....................................64
5.15 Closing Date Indebtedness............................................65
5.16 Tax Reporting........................................................65
5.17 R&D Employees........................................................65
5.18 IRB..................................................................66
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ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to Complete the
Transactions.........................................................66
6.2 Additional Conditions to the Obligation of Holdings and C&A
Products.............................................................67
6.3 Additional Conditions to the Obligation of Parent....................68
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent........................................69
7.2 Termination by Any Party.............................................69
7.3 Termination by Parent................................................69
7.4 Effect of Termination................................................69
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations, Warranties and Covenants;
Indemnification......................................................70
8.2 Environmental Indemnification........................................75
8.3 Quota Purchase Agreement Indemnification.............................81
8.4 Name Changes.........................................................82
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation.......................................................82
9.2 Principle of Construction............................................83
9.3 Payment of Expenses and Other Payments...............................83
9.4 Amendment............................................................83
9.5 Waiver and Extension.................................................83
9.6 Counterparts.........................................................83
9.7 Governing Law........................................................83
9.8 Notices..............................................................84
9.9 Entire Agreement; Assignment.........................................85
9.10 Parties in Interest..................................................85
9.11 Validity.............................................................85
9.12 Captions.............................................................85
9.13 Transfer, Sales and Stamp Taxes......................................85
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SCHEDULE A - Directly Purchased Subsidiaries
SCHEDULE B - Subsidiaries of the Directly Purchased Subsidiaries
SCHEDULE C - Restructuring
SCHEDULE D - Allocation of Purchase Price
SCHEDULE E - Subsidiaries of Holdings
SCHEDULE F - Acquiring Entities
EXHIBIT 1 - Certificate of Designation
EXHIBIT 2 - Assignment and Assumption Agreement
EXHIBIT 3A - Intellimold License Agreement
EXHIBIT 3B - Retained IP - License Agreement
EXHIBIT 3C - Licensed IP - License Agreement
EXHIBIT 4 - Transition Agreement
EXHIBIT 5 - Preferred Stock Registration Rights Agreement
EXHIBIT 6 - Common Stock Registration Rights Agreement
EXHIBIT 7 - Asset Purchase Agreement
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of August 7, 2001 (the "Agreement") by and
between Textron Inc., a Delaware corporation ("Parent"), ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Corporation, a Delaware corporation ("Holdings"), and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products
Co., a Delaware corporation ("C&A Products") and a wholly owned subsidiary of
Holdings.
WHEREAS, Parent desires to sell and C&A Products and certain of its
Subsidiaries desire to purchase the exterior and interior automotive trim
operations currently managed as a unit of Textron Automotive Company Inc.;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Parent, Holdings and C&A Products, intending to be legally bound,
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:
"Actuary Firm" shall have the meaning ascribed to it in Section
5.7(c)(vii).
"Adjustment Schedule" shall have the meaning ascribed to it in Section
2.5(a).
"Affiliate" of any Person shall mean any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"After-Acquired Business" shall have the meaning ascribed to it in
Section 5.11(b).
"After Tax Amount" shall have the meaning ascribed to it in Section
5.8(g).
"Agreement" shall have the meaning ascribed to it in the preamble.
"Allocation Dispute Notice" shall have the meaning ascribed to it in
Section 2.5(b).
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"Antitrust Division" shall have the meaning ascribed to it in Section
5.3(a).
"Balance Sheet Indebtedness" shall mean Indebtedness of the type
referenced in clauses (a), (b) and (c) of the definition thereof plus accrued
interest on said Indebtedness in each case determined in accordance with GAAP.
"Bank" shall have the meaning ascribed to it in Section 4.10(a).
"Bison Plan" shall have the meaning ascribed to it in Section 3.9(a).
"Bison Properties" shall mean all parcels of and interests in real
property owned in fee or leased by Parent or its Subsidiaries and used in the
Business as of the date hereof or the Closing Date.
"Bison Subsidiaries" shall have the meaning ascribed to it in Section
2.3.
"Brazilian Entities" shall have the meaning ascribed to it in Section
5.8(a)(i).
"Business" shall mean the Textron exterior and interior automotive trim
operations currently managed as a unit of Textron Automotive Company Inc.
"C&A Products" shall have the meaning ascribed to it in the preamble.
"C&A Products' Hourly Pension Plan" shall have the meaning ascribed to
it in Section 5.7(c)(iii).
"C&A Products' Salaried Pension Plan" shall have the meaning ascribed
to it in Section 5.7(c)(ii).
"C&A Products' Savings Plan" shall have the meaning ascribed to it in
Section 5.7(d).
"C&A Products' Trustee" shall have the meaning ascribed to it in
Section 5.7(c)(iv).
"Certificate of Designation" shall have the meaning ascribed to it in
Section 2.1(b).
"Claim" shall have the meaning ascribed to it in Section 8.1(e).
"Closing" shall have the meaning ascribed to it in Section 2.6.
"Closing Cash" shall mean cash as shown on the Closing Financial
Statement; provided, however, that with respect to Plascar Participacoes
Industriais S.A. and TATB, only 56.6% of the foregoing items shall constitute
Closing Cash. Closing Cash
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includes cash in any account in which cash has been withheld or otherwise set
aside for the benefit of an applicable Taxing Authority to satisfy Taxes,
provided that Holdings or C&A Products has directly or indirectly received
control over such account. (For avoidance of doubt, outstanding checks and
negative cash attributable to negative cash balances will be taken into account
when computing Closing Cash unless the item is included in Balance Sheet
Indebtedness or the computation of Working Capital.)
"Closing Date" shall have the meaning ascribed to it in Section 2.6.
"Closing Financial Statement" shall have the meaning ascribed to it in
Section 2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Letters" shall have the meaning ascribed to it in Section
4.10(a).
"Confidentiality Agreement" shall mean the agreement dated as of
February 23, 2001 by and between Parent and Heartland Industrial Partners, L.P.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by, or filing with or notification to,
a Person pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any agreement, arrangement, commitment, contract,
indenture, instrument, lease or other obligation of any kind or character that
is binding on any Person or its capital stock, properties or business.
"Debt Commitment Letter" shall have the meaning ascribed to it in
Section 4.10(a).
"December 30, 2000 Statement of Net Assets to be Sold" shall have the
meaning ascribed to it in Section 3.4.
"Default" shall mean (i) any breach or violation of or default under
any Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit or (iii) any
occurrence of any event that with the passage of time or the giving of notice or
both would give rise to any right of termination, cancellation or acceleration
under any Contract, Order or Permit.
"Direct Claim" shall have the meaning ascribed to it in Section 8.1(e).
"Directly Purchased Subsidiary" shall mean the Subsidiaries of Parent
listed on Schedule A hereto.
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"Disclosure Schedule" shall mean the Disclosure Schedule prepared by
Parent and delivered to Holdings and C&A Products concurrently with the
execution of this Agreement.
"Dispute Notice" shall have the meaning ascribed to it in Section
2.4(e).
"E&Y" shall mean Ernst & Young LLP, independent accountants of Parent
and the Bison Subsidiaries.
"Employee Agreement" shall have the meaning ascribed to it in Section
5.7(f)(iii).
"Employees" shall mean employees employed by a Bison Subsidiary on the
Closing Date.
"Environmental Laws" means the common law and all domestic and foreign,
federal, state and local Laws, relating to pollution or protection of the
environment, including employee health and safety and natural resource damages,
and including Laws relating to releases or threatened releases of Hazardous
Substances into the environment (including ambient air, indoor air, surface
water, groundwater, land, surface and subsurface strata).
"Environmental Losses" shall have the meaning ascribed to it in Section
8.2(e).
"Equity Commitment Letters" shall have the meaning ascribed to it in
Section 4.10(a).
"Equity Consideration" shall have the meaning ascribed to it in Section
3.19(a).
"Equity Sources" shall have the meaning ascribed to it in Section
4.10(a).
"ERISA" shall have the meaning ascribed to it in Section 3.9(a).
"ERISA Affiliate" shall have the meaning ascribed to it in Section
3.9(a).
"FAS 87" shall have the meaning ascribed to it in Section 5.7(c)(v).
"Final Allocation Schedule" shall have the meaning ascribed to it in
Section 2.5(c).
"Financial Statements" shall have the meaning ascribed to it in Section
3.4.
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"Financing Agreements" shall have the meaning ascribed to it in Section
5.5(b).
"Foreign Competition Laws" shall mean foreign statutes, ordinances,
rules, regulations, orders, decrees, administrative and judicial directives, and
other foreign laws, that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization, lessening of
competition or restraint of trade or creating or strengthening a dominant
position.
"Foreign Plan" shall have the meaning ascribed to it in Section 3.9(l).
"Former Employee" shall mean any (a) person whose employment by a Bison
Subsidiary, or by Textron Automotive Company Inc. if such person's entire salary
was directly charged to the Business, was terminated on or before the Closing
Date (whether by retirement or otherwise), excluding persons who were employed
by Parent, a Non-Bison Subsidiary or any of their other Affiliates, as of the
Closing Date and (b) employee who is on short-term medical disability as of the
Closing Date and who thereafter becomes eligible for long-term medical
disability.
"FTC" shall have the meaning ascribed to it in Section 5.3(a).
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any domestic or foreign agency,
authority, board, judicial body, commission, legislature, instrumentality or
office of any federal, state, county, district, municipal, city or other
government unit.
"Guarantees" shall have the meaning ascribed to it in Section 5.4(b).
"Hazardous Substances" shall mean any chemical, material or substance
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
petroleum and asbestos.
"Heartland" means Heartland Industrial Partners, L.P. and its
Affiliates.
"Holdings" shall have the meaning ascribed to it in the preamble.
"Holdings Common Stock" shall have the meaning ascribed to it in
Section 2.1(b).
"Holdings Indemnified Parties" shall have the meaning ascribed to it in
Section 8.1(b).
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"Holdings Material Adverse Effect" shall mean any adverse change in the
business, properties, financial condition or results of operations of Holdings
or any of its Subsidiaries, which, individually or together with any other such
adverse change, is material to C&A and its Subsidiaries, taken as a whole, other
than any such effect attributable to or resulting from (i) the public
announcement of the transactions contemplated hereby or (ii) any adverse change
in general economic conditions or in conditions affecting the automotive
supplier industry generally.
"Holdings SEC Reports" shall have the meaning ascribed to it in Section
4.7(a).
"HSR Act" shall have the meaning ascribed to it in Section 3.3(a).
"Indemnified Party" shall have the meaning ascribed to it in Section
8.1(d)(ii).
"Indemnifying Party" shall have the meaning ascribed to it in Section
8.1(d)(ii).
"Indebtedness" of any Person shall mean without duplication, (a) all
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 or letters of credit issued or created for the
account of such Person, (e) all obligations of others secured by (or for which
the holder of such obligation 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, (f) all obligations of such Person in respect of interest rate and
currency swap or hedge agreements and (g) 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.
"Independent Accounting Firm" shall have the meaning ascribed to it in
Section 2.4(e).
"Intellectual Property" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all re-issuances, continuations,
continuations-in-part, revisions, extensions and reexaminations
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thereof, (b) all trademarks and service marks, including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (d) all know-how, trade
secrets, technical information and confidential business information (whether
patentable or unpatentable and whether or not reduced to practice), including,
ideas, research and development, formulas, compositions, manufacturing and
production processes, techniques and methods, technical data, designs, drawings,
blue prints, patterns, specifications, assembly procedures, test procedures,
instruction manuals, operation manuals, maintenance manuals, reliability data,
quality control data, customer and supplier lists, parts lists, pricing and cost
information and business and marketing plans and proposals, (e) all computer
software (excluding generally commercially available software licensed on
standard terms) used solely in the conduct of the Business (including data and
related documentation), (f) all other proprietary rights and (g) all copies and
tangible embodiments thereof (in whatever form or medium), in each case
necessary for the conduct of the Business as currently conducted.
"Interest Rate" shall mean 6.5% per year calculated on the basis of a
365 day year and charged for the actual number of days elapsed.
"Law" shall mean any domestic or foreign federal, state or local law,
statute, ordinance, rule, regulation, and any other executive or legislative
proclamation.
"Lien" shall mean any mortgage, pledge, security interest, attachment,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing) or right of others of any similar nature; provided, however, that
the term "Lien" shall not include (i) statutory liens for Taxes, which are not
yet due and payable or are being contested in good faith by appropriate
proceedings, (ii) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises rented, (iii)
deposits or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension or other social security
programs mandated under applicable Laws, (iv) statutory or common law liens in
favor of carriers, warehousemen, mechanics and materialmen to secure claims for
labor, materials or supplies and other like liens and (v) restrictions on
transfer of securities imposed by applicable state and federal securities Laws.
"Litigation" shall mean any suit, action, arbitration, cause of action,
claim, complaint, criminal prosecution, investigation, demand letter,
governmental or other administrative proceeding, whether at law or at equity,
before or by any domestic or foreign federal, state or local court, tribunal, or
agency or before any arbitrator.
"Losses" shall mean any and all actual losses, liabilities, costs and
expenses (including reasonable attorneys' fees and costs of investigation),
after giving effect to any related Tax Benefit and Tax Detriment and net of any
reserves and amounts recovered from third parties, including amounts recovered
under insurance policies purchased by Parent or a Subsidiary of Parent prior to
the Closing Date, with respect to such Losses; provided, that Losses shall not
include any costs or expenses of any
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Indemnified Party related to the time spent on any indemnified matter by
employees or management of the Indemnified Party.
"Material Adverse Effect" shall mean any adverse change in the
business, properties, financial condition or results of operations of any of the
Bison Subsidiaries (after giving effect to the Restructuring), which,
individually or together with any other such adverse change, is material to the
Business, taken as a whole, other than any such effect attributable to or
resulting from (i) the public announcement of the transactions contemplated
hereby, (ii) any act or omission of Parent or any Bison Subsidiary taken with
the prior written consent of Holdings, (iii) actions taken by Parent or any
Bison Subsidiary at the specific written request of Holdings or (iv) any adverse
change in general economic conditions or in conditions affecting the tier one
automotive supplier industry generally.
"Material Contract" shall have the meaning ascribed to it in Section
3.14(b).
"Non-Bison Subsidiary" shall have the meaning ascribed to it in Section
2.4(g).
"Off-Site Location" shall have the meaning ascribed to it in Section
8.2(e).
"Order" shall mean any decision or award, decree, injunction, judgment,
order, quasi-judicial decision or award, ruling, or writ of any domestic or
foreign federal, state or local or other court, arbitrator (with binding
effect), tribunal, administrative agency or authority.
"Ownership Percentage" shall have the meaning ascribed to it in Section
5.8(c)(iii).
"Parent" shall have the meaning ascribed to it in the preamble.
"Parent Entity" shall mean (i) Parent and its Subsidiaries (other than
the Bison Subsidiaries), so long as such subsidiary remains an Affiliate of
Parent, and (ii) any Person who directly or indirectly acquires more than 50% of
the voting control of Parent as a result of a nonacquisitive reorganization such
as a merger pursuant to Section 251(g) of the Delaware General Corporation Law
and any Subsidiaries of such Person.
"Parent Indemnified Parties" shall have the meaning ascribed to it in
Section 8.1(c).
"Parent Names" shall have the meaning ascribed to it in Section 8.4.
"Parent's Hourly Master Pension Benefit" shall have the meaning
ascribed to it in Section 5.7(c)(iii).
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"Parent's Salaried Pension Benefit" shall have the meaning ascribed to
it in Section 5.7(c)(ii).
"Parent's Trustee" shall have the meaning ascribed to it in Section
5.7(c)(iv).
"Permali" shall have the meaning ascribed to it in Section 5.8(a)(i).
"Permit" shall mean, with respect to any Person, any domestic or
foreign federal, state or local governmental approval, authorization,
certificate, declaration, easement, filing, franchise, license, notice, permit,
variance, clearance, exemption or right to which such Person is a party or that
is or may be binding upon or inure to the benefit of such Person or its
securities, properties or business.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, organization or other
entity.
"Preferred Stock" shall have the meaning ascribed to it in Section
2.1(b).
"Plascar" shall have the meaning assigned to it in Section 3.8(a).
"Remediation" shall have the meaning ascribed to it in Section 8.2(e).
"Remediation Standard" shall have the meaning ascribed to it in Section
8.2(e).
"Representatives" shall have the meaning ascribed to it in Section
5.2(a).
"Requesting Party" shall have the meaning ascribed to it in Section
5.16(b).
"Required Amount" shall have the meaning ascribed to it in Section
4.10(a).
"Required Financial Statements" shall have the meaning ascribed to it
in Section 5.9(b).
"Requisite Regulatory Approvals" shall have the meaning ascribed to it
in Section 3.3(a).
"Restricted Field" shall have the meaning ascribed to it in Section
5.11(a).
"Restricted Portion" shall have the meaning ascribed to it in Section
5.11(b).
"Restriction" shall have the meaning ascribed to it in Section
8.2(b)(i).
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"Restructuring" shall have the meaning ascribed to it in Section 2.3.
"Retention Payment" shall have the meaning ascribed to it in Section
5.7(f)(iv).
"▇▇▇▇▇▇▇" shall have the meaning ascribed to it in Section 5.8(a)(i).
"SEC" shall have the meaning ascribed to it in Section 4.6(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Preferred Stock" shall have the meaning ascribed to it in
Section 2.1(b).
"Series B Preferred Stock" shall have the meaning ascribed to it in
Section 2.1(b).
"Series C Preferred Stock" shall have the meaning ascribed to it in
Section 2.1(b).
"Severance Payment" shall have the meaning ascribed to it in Section
5.7(f)(iii).
"Shares" shall have the meaning ascribed to it in Section 2.1(a).
"Stand-Alone Pension Plans" shall have the meaning ascribed to it in
Section 5.7(c)(i).
"Straddle Period" shall mean a taxable year or period beginning on or
before, and ending after, the Closing Date.
"Subsidiary" shall mean any corporation, partnership, limited liability
company, joint venture or other legal entity of which a Person, either alone or
together with any other Subsidiary, owns, directly or indirectly, more than 50%
of the stock or other equity interests of such corporation or other legal
entity.
"TATB" shall have the meaning ascribed to it in Section 3.8(a).
"Tax" or "Taxes" shall mean all United States federal, state,
provincial, local, territorial and foreign income, profits, franchise, license,
capital, transfer, ad valorem, wage, severance, occupation, import, custom,
gross receipts, payroll, sales, employment, use, property, real estate, excise,
value added, estimated, stamp, alternative or add-on minimum, environmental,
withholding and any other taxes, duties, assessments or governmental charges of
any kind whatsoever.
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"Tax Authority" shall mean any domestic or foreign federal, national,
state, provincial, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body exercising any taxing authority or any other authority exercising Tax
regulatory authority.
"Tax Benefit" shall mean the amount of any refund, credit or reduction
in otherwise required Tax payments, including any interest payable thereon,
actually realized, provided, that, for these purposes, Tax items shall be taken
into account in accordance with the ordering principles of the Code or other
applicable Law.
"Tax Detriment" shall mean the amount of any increase in otherwise
required Tax payments, including any interest payable thereon, actually
realized, provided, that, for these purposes, Tax items shall be taken into
account in accordance with the ordering principles of the Code or other
applicable Law.
"Tax Indemnitee" shall have the meaning ascribed to it in Section
5.8(k)(i).
"Tax Indemnitor" shall have the meaning ascribed to it in Section
5.8(k)(i).
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including any information return, claim for refund, amended return or
declaration of estimated Tax.
"Third Party" shall have the meaning ascribed to it in Section
8.1(g)(i).
"Third Party Claim" shall have the meaning ascribed to it in Section
8.1(e).
"Transactions" shall mean the actions set forth in Sections 2.1 and
2.2.
"Transaction Agreements" shall mean this Agreement, the Transition
Agreement attached hereto as Exhibit 4, the Assignment and Assumption Agreement
attached hereto as Exhibit 2, the License Agreements attached hereto as Exhibits
3A, 3B and 3C and the Registration Rights Agreements attached hereto as Exhibits
5 and 6, the Asset Purchase Agreement attached hereto as Exhibit 7 and the other
agreements and certificates contemplated to be delivered hereby and thereby.
"Transition Agreement" shall mean the Transition Agreement, the form of
which is attached hereto as Exhibit 4.
"Transferred Employee" shall have the meaning ascribed to it in Section
5.7(a).
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"Two-Month Cash Amount" shall have the meaning ascribed to it in
Section 2.4(c)(i).
"U.S. Bison Subsidiary" shall mean a Bison Subsidiary organized under
the laws of a state of the United States of America.
"WARN Act" shall have the meaning ascribed to it in Section 3.10(b).
"Working Capital" shall mean (a) the sum of net accounts receivable,
inventory and other current assets, excluding cash and cash equivalents and
income Tax assets, minus (b) the sum of net accounts payable and other current
liabilities, excluding the current portion of Balance Sheet Indebtedness of the
Bison Subsidiaries, accrued interest and any liability for income Taxes. Working
Capital shall be computed without regard to any changes in GAAP since December
30, 2000 using the same accounting principles used in computing the working
capital set forth in Section 2.4(c) of the Disclosure Schedule.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares.
---------------------------
(a) Subject to the terms and conditions of this Agreement, at the
Closing, Parent shall sell, transfer, convey, assign and deliver, or shall cause
its applicable Subsidiaries to sell, transfer, convey, assign and deliver, to
the entities specified on Schedule F hereto, and said entities shall purchase,
acquire and accept or cause its wholly owned Subsidiaries to purchase, acquire
and accept, from Parent or its applicable Subsidiaries, all of the issued and
outstanding shares of capital stock of the Directly Purchased Subsidiaries
(excluding directors' qualifying shares) (the "Shares"), free and clear of all
Liens (without regard to subsections (i) through (iv) of the provision in the
definition of "Liens") for an amount of cash equal to nine hundred forty-three
million dollars ($943,000,000) minus the amount of Balance Sheet Indebtedness of
the Bison Subsidiaries existing on the Closing Date.
(b) Subject to the terms and conditions of this Agreement, at the
Closing, Parent shall cause its applicable Subsidiary to contribute all of the
issued and outstanding shares of capital stock of Textron Automotive Exteriors
Inc., a Delaware corporation and a wholly owned indirect Subsidiary of Parent,
free and clear of all Liens (without regard to subsections (i) through (iv) of
the provision in the definition of Liens) to C&A Products in exchange for (i)
130,000 shares of Series A1 Redeemable Preferred Stock, liquidation preference
$1,000 per share, of C&A Products (the "Series A Preferred Stock"), (ii) 95,000
shares of Series B1 Redeemable Preferred Stock, liquidation preference $1,000
per
12
share, of C&A Products (the "Series B Preferred Stock"), (iii) 20,000 shares of
Series C1 Redeemable Preferred Stock, liquidation preference $1,000 per share,
of C&A Products (the "Series C Preferred Stock"), (iv) eighteen million
(18,000,000) shares of common stock, par value $.01 per share, of Holdings (the
"Holdings Common Stock"), and (v) cash equal to forty-two million dollars
($42,000,000). The relative rights, preferences and limitations of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
(collectively, the "Preferred Stock") will be as set forth in the Certificate of
Designation of C&A Products attached hereto as Exhibit 1 (the "Certificate of
Designation"). Parent, Holdings and C&A Products hereby agree that the fair
market value of the Preferred Stock is equal to six hundred fifty dollars ($650)
per share.
2.2 Purchase and Sale of Assets.
---------------------------
(a) Parent shall cause one of its Subsidiaries to sell, transfer,
convey, assign and deliver to the entity specified on Schedule F all
Intellectual Property identified in Section C-2 of the Disclosure Schedule which
is, as of the date hereof, owned and in the name of Textron Automotive Company
Inc., a Delaware corporation, for a purchase price of fifteen million dollars
($15,000,000) payable in cash. (A list of the Intellectual Property being sold
pursuant to this section together with appropriate documents of transfer will be
provided to C&A Products or its designated Subsidiary at the Closing.)
(b) On the day prior to the Closing Date, certain assets currently
owned by Textron Automotive Exteriors Inc. shall be sold to JPS Automotive,
Inc., a Subsidiary of C&A Products, pursuant to an Asset Purchase Agreement
substantially in the form attached hereto as Exhibit 7. The parties agree that
the fair market value of the assets sold pursuant to said agreement is one
hundred twenty-five million dollars ($125,000,000).
2.3 Restructuring. Prior to the Closing Date, Parent shall take such
actions as may be necessary or appropriate to (a) cause the Subsidiaries of the
Directly Purchased Subsidiaries to be those listed on Schedule B hereto and (b)
effect the transfers of the Subsidiaries, assets, liabilities, businesses and
employees listed on Schedule C hereto (such actions are collectively referred to
as the "Restructuring"). The Directly Purchased Subsidiaries together with their
Subsidiaries listed on Schedule B and Textron Automotive Exteriors Inc. are
collectively referred to herein as the "Bison Subsidiaries."
2.4 Purchase Price Adjustment.
-------------------------
(a) As soon as practicable, but in any event not more than 60 days
after the Closing Date, unless otherwise extended by the mutual agreement of
Parent and Holdings, Parent shall deliver to Holdings a statement of net assets
to be sold as of the Closing Date, including information necessary to determine
the Working Capital and Closing Cash at such date (but without giving effect to
the Closing or the transactions covered by the Asset Purchase Agreement
specified in Section 2.2(b)) (the "Closing Financial Statement"), together with
a report of E&Y thereon to the effect that such statement fairly presents in all
material respects the financial position of the Bison Subsidiaries as of said
date, and that such statement has been prepared in accordance with
13
GAAP applied on a basis consistent with the December 30, 2000 Statement of Net
Assets to be Sold (including the elimination of the corporate overhead items
identified in Part B of Section 3.4 of the Disclosure Schedule but except that
M&C Advanced Processes is included in the Closing Financial Statements), except
(i) for any accounting changes mandated by accounting regulators and (ii) as set
forth in Part A of Section 3.4 of the Disclosure Schedule. All costs and
expenses incurred by Parent in connection with the preparation and delivery of
the Closing Financial Statement shall be borne equally by Parent and Holdings.
(b) Subject to Section 2.4(e), if Working Capital on the Closing Date
is less than negative thirty two million dollars ($-32,000,000), the difference
between Working Capital and negative $32,000,000 shall be paid by Parent to C&A
Products. Subject to Section 2.4(e), if Working Capital on the Closing Date is
more than negative thirty two million dollars ($-32,000,000), the difference
between Working Capital and negative $32,000,000 shall be paid by C&A Products
to Parent.
(c) (i) Subject to Section 2.4(e), if the Closing Cash on the
Closing Date is greater than zero, the difference between zero and the
Closing Cash shall be paid by C&A Products to Parent. Subject to
Section 2.4(e), if the Closing Cash on the Closing Date is less than
zero, the difference between zero and the Closing Cash shall be paid by
Parent to C&A Products. If the Closing Cash on the Closing Date of any
Bison Subsidiary incorporated in a jurisdiction other than a state of
the United States of America is greater than the sum of payments to
employees and suppliers during the last two fiscal months ended prior
to the Closing Date (the "Two-Month Cash Amount"), then the amount
payable to Parent pursuant to the first sentence of Section 2.4(c)
shall be reduced by the amount of the Closing Cash on the Closing Date
of the applicable Subsidiary which is in excess of the Two-Month Cash
Amount multiplied by the withholding Tax rate applicable to dividends
paid by the applicable Bison Subsidiary; provided that during such
two-month period payments to employees and suppliers shall be
made consistent with past practice.
(ii) Subject to Section 2.4(e), if the Closing has not
occurred prior to the Capital Expenditure Date, C&A Products will pay
Parent any amount by which capital expenditures for assets not recorded
on the financial statements prior to the Capital Expenditure Date
during the period beginning on the Capital Expenditure Date and ending
on the Closing Date exceed depreciation attributable to the Business
during that period. No later than the delivery of the Closing Financial
Statement, Parent shall deliver a certificate of its Chief Financial
Officer certifying to the amount payable, if any, pursuant to this
section. The term "Capital Expenditure Date" shall mean October 1,
2001; provided, however, that if the financial statements required to
be delivered to C&A Products pursuant to Section 5.9(a), are not
delivered by August 31, 2001, the Capital Expenditure Date shall be
extended by the number of days by which the deadline is not met.
14
(d) Subject to Section 2.4(e), payments required pursuant to Section
2.4 shall be made within 60 days after the date of receipt by Holdings of the
Closing Financial Statement by wire transfer of immediately available funds to
one or more accounts specified at least two business days prior to such date by
the party who shall receive the funds. Any such payment shall be made together
with interest thereon at the Interest Rate, payable for the period commencing on
the Closing Date and ending on the day immediately prior to the date such
payment is made.
(e) Holdings may dispute any amounts used in the calculation of the
purchase price adjustment pursuant to Sections 2.4(b) or 2.4(c)(i) as reflected
on the Closing Financial Statement or the purchase price adjustment pursuant to
Section 2.4(c)(ii) that involves a proposed adjustment with respect to any
single item of more than $50,000 but only to the extent that proposed
adjustments exceeding $50,000 exceed, in the aggregate, $500,000; provided,
however, that Holdings shall notify Parent in writing (the "Dispute Notice") of
each disputed item, specifying the amount thereof in dispute and setting forth,
in reasonable detail, the basis for such dispute, within 45 days of Holdings'
receipt of the Closing Financial Statement; provided further, however, that if
an account or item is recorded or treated in a manner consistent with past
practice and, if applicable, with the December 30, 2000 Statement of Net Assets
to be Sold, then, provided that such recording or treatment does not prevent the
Closing Financial Statement from being in accordance with GAAP, it must be
accepted as correct by Holdings for purposes of this Section 2.4. Holdings shall
submit only one Dispute Notice containing all disputed items. In the event of
such a dispute, Holdings and Parent shall attempt to reconcile their difference,
and any resolution by them as to any disputed amounts shall be final, binding
and conclusive. If Holdings and Parent are unable to reach a resolution with
such effect within 30 days of the receipt by Parent of the Dispute Notice,
Holdings and Parent shall submit the items remaining in dispute for resolution
to the Independent Accounting Firm which shall, within 30 days after submission,
determine and report to the parties upon such remaining disputed items, and such
report shall be final, binding and conclusive on the parties hereto. All costs
and expenses of the Independent Accounting Firm relating to the disputed items
shall be allocated between Parent and Holdings in the same proportion that the
aggregate dollar amount of the items unsuccessfully disputed by each party bears
to the total dollar amount of the items disputed under such notice. The term
"Independent Accounting Firm" shall mean Deloitte & Touche LLP or such other
firm as Holdings and Parent shall agree.
(f) Notwithstanding any dispute pursuant to Section 2.4(e) of any
amounts payable pursuant to this Section 2.4, the applicable party shall at the
time specified in Section 2.4 pay that portion of the amounts payable by it
pursuant to this Section 2.4 that are not subject at the time of such payment to
any dispute. Any amount payable following resolution of a matter specified in a
Dispute Notice shall be paid within five (5) business days following the
resolution thereof.
(g) During the periods in which (i) the Closing Financial Statement is
being prepared or (ii) any dispute is raised as contemplated by Section 2.4(e),
Parent and Holdings shall provide each other, including their Representatives,
with
15
reasonable access, during normal business hours and without disruption to their
day-to-day business, to their respective books, records and facilities
pertaining to the Bison Subsidiaries and the Transactions to the extent
affecting the Bison Subsidiaries, including any consolidated or combined
returns, schedules, consolidated or combined work papers and other related
documents; provided, however, that with respect to consolidated, combined,
unitary or similar Tax Returns which include Parent (or any Subsidiary of
Parent, other than a Bison Subsidiary (a "Non-Bison Subsidiary")) on the one
hand and any of the Bison Subsidiaries on the other hand, Holdings shall only
have access to portions of such Tax Returns relevant to the Bison Subsidiaries.
2.5 Allocation of Consideration; Tax Filings.
----------------------------------------
(a) The consideration attributable to the purchase of the Directly
Purchased Subsidiaries shall be allocated among the Shares as set forth in
Schedule D hereto. Within 30 days after the determination of the adjustments
pursuant to Section 2.4, Parent shall deliver to Holdings a schedule (the
"Adjustment Schedule") allocating said adjustments among the Shares, and also
accounting for any difference between the Balance Sheet Indebtedness of the
Bison Subsidiaries existing on the Closing Date and $80,000,000, in a manner
consistent with the allocation methodology used in determining the allocation
set forth in Schedule D.
(b) Holdings may dispute any allocation set forth on the Adjustment
Schedule; provided, however, that (i) Holdings shall not dispute any of the
original allocations set forth in Schedule D and (ii) Holdings shall notify
Parent in writing (the "Allocation Dispute Notice") of each disputed item,
specifying the allocation in dispute and setting forth, in reasonable detail,
the basis for such dispute within 30 days of Holdings' receipt of the schedule.
Holdings shall submit only one Allocation Dispute Notice containing all disputed
allocations. In the event of such a dispute, Holdings and Parent shall attempt
to reconcile their differences and any resolution by them as to any disputed
allocations shall be final, binding and conclusive. If Holdings and Parent are
unable to reach a resolution with such effect within 30 days of the receipt by
Parent of the Allocation Dispute Notice, Holdings and Parent shall submit the
items remaining in dispute for resolution to the Independent Accounting Firm
which shall, within 30 days after submission, determine and report to the
parties upon such remaining disputed allocations, and such report shall be
final, binding and conclusive on the parties hereto. All costs and expenses of
the Independent Accounting Firm relating to the disputed allocations shall be
borne equally by Parent and Holdings; provided, however, that if the Independent
Accounting Firm determines that the position asserted by one of the parties in
such dispute is substantially in error, then all such costs and expenses shall
be borne by the party so determined to be in error.
(c) Upon agreement of the parties with respect to the Adjustment
Schedule, or the completion of a report prepared by the Independent Accounting
Firm pursuant to Section 2.5(b), a schedule (the "Final Allocation Schedule")
setting forth the allocation among the Shares as specified in Section 2.5(a)
and modified pursuant to Section 2.5(b) shall be prepared by the parties. Each
of Holdings and Parent shall (i) timely file with each relevant Tax Authority
all forms and Tax Returns required to be filed
16
in connection with the allocation set forth in the Final Allocation Schedule,
(ii) be bound by such allocation for purposes of determining Taxes, (iii)
prepare and file, and cause their respective Affiliates to prepare and file,
their Tax Returns on a basis consistent with such allocation, and (iv) not take
any position, or cause their respective Affiliates to take any position,
inconsistent with such allocation on any Tax Return, in any audit or proceeding
before any Tax Authority or in any report made for Tax purposes; provided,
however, that, notwithstanding anything in this Section 2.5 to the contrary, (i)
the parties shall be permitted to take a position inconsistent with that set
forth in this Section 2.5 if required to do so by a final and unappealable
decision, judgment, decree or other order by any court of competent
jurisdiction, and (ii) with respect to any of the transactions contemplated by
this Agreement, Parent, Holdings or C&A Products may pursue a pre-filing
agreement in accordance with Revenue Procedure 2001-22 (or any successor
pronouncement), and upon the request of the party pursuing a pre-filing
agreement the other parties shall (and shall cause their respective Affiliates
to) provide their reasonable cooperation and assistance in obtaining any such
pre-filing agreement.
(d) (i) Parent, Holdings and C&A Products hereby agree to
treat the transactions pursuant to Section 2.1(a) for Tax purposes as
taxable sales of the Shares in exchange for the consideration set forth
in Section 2.1(a) subject to the recognition of gains or losses, as the
case may be, pursuant to Section 1001(c) of the Code.
(ii) Parent, Holdings and C&A Products hereby agree to treat
the transaction pursuant to Section 2.1(b) for Tax purposes as a
transaction described in Section 351 of the Code.
(iii) Parent, Holdings and C&A Products hereby agree to treat
the transaction pursuant to Section 2.2(a) for Tax purposes as a
taxable sale of the Intellectual Property in exchange for the
consideration set forth in Section 2.2(a) subject to the recognition of
gain or loss, as the case may be, pursuant to Section 1001(c) of the
Code.
(iv) Parent, Holdings and C&A Products hereby agree to treat
the transaction pursuant to Section 2.2(b) for Tax purposes as a
taxable sale of the assets described in the Asset Purchase Agreement in
exchange for the consideration set forth in the Asset Purchase
Agreement subject to the recognition of gain or loss, as the case may
be, pursuant to Section 1001(c) of the Code.
2.6 Closing. Parent shall as promptly as possible notify Holdings, and
Holdings shall as promptly as possible notify Parent, when the conditions set
forth in Article VI to such party's obligations to complete the Transactions
have been satisfied or waived. The closing of the Transactions (the "Closing")
shall take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
Four Times Square, New York, New York at 10:00 a.m. New York time on the second
business day following the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and place as Parent and Holdings may
agree; provided, however, that the Closing Date shall not be earlier than 45
days after the delivery of the financial statements required by Sections
5.9(a)(i) and (ii),
17
and provided further that, with respect to the purchase and sale of the issued
and outstanding shares of capital stock of any Directly Purchased Subsidiary
which is organized in a foreign jurisdiction, at the request of Parent, Holdings
shall agree to have the closing with respect to the purchase and sale of such
shares of capital stock take place in the jurisdiction in which the Directly
Purchased Subsidiary is organized. The date on which the Closing occurs is
referred to herein as the "Closing Date."
2.7 Closing Obligations.
-------------------
(a) At the Closing, Parent shall deliver to Holdings or C&A Products:
(i) certificates representing the Shares and all of the issued
and outstanding shares of capital stock of Textron Automotive Exteriors
Inc. duly endorsed (or accompanied by duly executed stock powers) for
transfer to C&A Products or a designated Subsidiary or Subsidiaries of
C&A Products;
(ii) the Officer's Certificate described in Section 6.2(c);
(iii) the resignation of any officer or director of any Bison
Subsidiary who is an employee or director of Parent or a Non-Bison
Subsidiary;
(iv) a certificate under Section 1445(b)(2) of the Code
providing that Parent is not a foreign person, in form and substance
reasonably satisfactory to Holdings;
(v) a duly executed Assignment and Assumption Agreement and
Transition Agreement substantially in the forms attached hereto as
Exhibits 2 and 4 respectively;
(vi) duly executed License Agreements substantially in the
forms attached hereto as Exhibits 3A, 3B and 3C;
(vii) duly executed Registration Rights Agreements
substantially in the forms attached hereto as Exhibits 5 and 6; and
(viii) duly executed documents to effect the sale and transfer
of Intellectual Property required by Section 2.2(a).
(b) At the Closing, Holdings and C&A Products shall deliver to Parent
or a designated Subsidiary of Parent:
18
(i) one or more certificates representing the number of shares
of Holdings Common Stock specified in Section 2.1(b);
(ii) certificates representing the Preferred Stock;
(iii) the Officer's Certificate described in Section 6.3(c);
(iv) a duly executed Assignment and Assumption Agreement and
Transition Agreement substantially in the forms attached hereto as
Exhibits 2 and 4 respectively;
(v) duly executed License Agreements substantially in the
forms attached hereto as Exhibits 3A, 3B and 3C;
(vi) duly executed Registration Rights Agreements
substantially in the forms attached hereto as Exhibits 5 and 6; and
(vii) the cash amounts set forth in Sections 2.1 and 2.2 by
wire transfer of immediately available funds to accounts designated by
Parent in writing at least two business days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to Holdings and C&A Products, subject to
the exceptions set forth in the Disclosure Schedule (which exceptions shall
specifically identify a Section to which such exception relates, it being
understood and agreed that each such exception shall be deemed to be disclosed
both under such Section and any other Section to which such disclosure on its
face relates), that:
3.1 Corporate Organization, Qualification, Power and Authority.
----------------------------------------------------------
(a) Parent and each of the Bison Subsidiaries is a corporation duly
organized, validly existing and in good standing (where applicable) under the
Laws of its jurisdiction of incorporation. Each of the Bison Subsidiaries is
qualified and in good standing (where applicable) as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it requires such qualification, except where any failure
to be so qualified or be in good standing would not, individually or in the
aggregate, be reasonably likely to
19
have a Material Adverse Effect. Each of the Bison Subsidiaries has all requisite
corporate power and corporate authority and all necessary Permits to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where any failure to have such power and authority or Permits
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. Parent has or will have made available to Holdings
prior to the Closing complete and correct copies of the articles of organization
or articles of or certificates of incorporation, as the case may be, and by-laws
or other equivalent organizational documents of it and each Bison Subsidiary as
in effect as of the date hereof.
(b) Parent and its Subsidiaries have the requisite corporate power and
corporate authority to execute and deliver the Transaction Agreements (to the
extent each is a party thereto) and to consummate the transactions contemplated
thereby. The Transaction Agreements and the consummation by Parent and said
Subsidiaries of the transactions contemplated thereby have been duly and validly
authorized by the Boards of Directors of Parent and Textron Automotive Company
Inc., and the general partner of Textron Innovations L.P. (to the extent each is
a party thereto), and no other corporate proceeding on the part of Parent or its
Subsidiaries is necessary to authorize the Transaction Agreements or to
consummate the transactions contemplated thereby. This Agreement has been duly
and validly executed and delivered by Parent and, assuming this Agreement
constitutes the valid and binding agreement of Holdings and C&A Products,
constitutes the valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms, except as such enforcement may be limited
by (a) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar Laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). When executed and delivered to Holdings and C&A Products at the
Closing, the Transaction Agreements (other than this Agreement) will be duly and
validly executed and delivered by Parent and its Subsidiaries (to the extent
each is a party thereto) and, assuming such agreements constitute the valid and
binding agreements of the other parties thereto, constitute the valid and
binding agreements of Parent and its Subsidiaries (to the extent each is a party
thereto), enforceable against Parent and said Subsidiaries, in accordance with
their terms, except as such enforcement may be limited by (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar Laws now or hereinafter in effect relating to or affecting creditors'
rights generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.2 Stock of Subsidiaries.
---------------------
(a) Schedule B to this Agreement identifies each entity that will be a
Subsidiary of the Directly Purchased Subsidiaries on the Closing Date. As of the
Closing Date, the Directly Purchased Subsidiaries will not own, directly or
indirectly, any equity interests in any other Person.
(b) All of the shares of capital stock of the Directly Purchased
Subsidiaries, except for any directors' qualifying shares, are owned by Parent,
or one or more of its Subsidiaries free and clear of all Liens (without regard
to subsections (i) through (iv) of the proviso in the definition of "Liens"),
and have been duly authorized, validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. Except for any director's qualifying shares and except as
20
otherwise set forth on Schedule B, all of the shares of capital stock of the
Subsidiaries listed on Schedule B will, as of the Closing Date, be owned by one
or more of the other Bison Subsidiaries as set forth on Schedule B, free and
clear of all Liens (without regard to subsections (i) through (iv) of the
proviso in the definition of "Liens"), and said shares, together with the
outstanding common stock of Textron Automotive Exteriors Inc., have been duly
authorized, validly issued and are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights, except for any Liens or
where any failure to be duly authorized, validly issued and fully paid or
nonassessable would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect.
(c) There are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock
of, or other equity interest in, any Bison Subsidiary obligating Parent or any
Bison Subsidiary to issue, sell, transfer, vote or otherwise dispose of or sell
any shares of capital stock of, or other equity interest in, any Bison
Subsidiary or obligating Parent or any Bison Subsidiary to grant, extend or
enter into any such option, warrant, convertible security or other right,
agreement, arrangement or commitment. There are no voting trusts, proxies or
other voting agreements or understandings to which Parent or any of its
Subsidiaries is a party or by which it or they are bound with respect to the
shares of capital stock of any of the Bison Subsidiaries.
3.3 Consents and Approvals; No Violations.
-------------------------------------
(a) Except for (i) the filing of notification and report forms with the
United States Federal Trade Commission and the United States Department of
Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇") and the expiration or termination of any applicable waiting period
thereunder, (ii) the filing of the applications and notices, as applicable,
listed in Section 3.3(a)(ii) of the Disclosure Schedule with foreign
Governmental Authorities under the Foreign Competition Laws, the issuance of
consents, authorizations or approvals of such applications by such authorities,
if required, and the expiration or termination of any applicable waiting periods
thereunder, (iii) compliance with any applicable environmental transfer statutes
and (iv) the notices to or consultations with any works council, personnel
committee or similar employee council or committee listed in Schedule 3.3(a)(iv)
of the Disclosure Schedule, no material applications, notices to, consultations
with, Consents of, or filings with, any Government Authority, self-regulatory
authority or third party are necessary in connection with the execution and
delivery by Parent and its Subsidiaries of the Transaction Agreements (to the
extent each is a party thereto) and the consummation by Parent and its
Subsidiaries of the transactions contemplated thereby. The notices,
notifications, filings, consents, authorizations, approvals, and expirations or
terminations of waiting periods referred in clauses 3.3(a)(i) and 3.3(a)(ii) are
hereinafter referred to as the "Requisite Regulatory Approvals."
(b) Neither the execution, delivery or performance of the Transaction
Agreements by Parent and its Subsidiaries nor the consummation by Parent and its
Subsidiaries of the transactions contemplated thereby does or will (i) conflict
with
21
or result in any breach of any provisions of the certificate of incorporation or
by-laws of Parent or the certificate of incorporation or by-laws or other
equivalent organizational documents of any of its Subsidiaries; (ii) conflict
with, result in or constitute a Default under, any of the terms, conditions or
provisions of (A) any Contract to which Parent is a party or by which it or any
of its properties or assets may be bound and (B) any Contract relating to the
Business to which any of Parent's Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound; (iii)
conflict with, result in or constitute a Default under, any of the terms,
conditions or provisions of any Permit relating to the Business of Parent or any
of its Subsidiaries; or (iv) subject to giving the notices, the occurrence of
the required consultations, compliance with applicable environmental transfer
statutes and obtaining the Requisite Regulatory Approvals referred to in clauses
(i) through (iv) in paragraph (a) above, conflict with or violate any Order or
Law applicable to (A) Parent or any of its properties or assets or (B) any of
Parent's Subsidiaries engaged in the conduct of the Business or any of their
properties or assets to the extent used in the conduct of the Business, except,
in the case of clauses (ii), (iii) or (iv) of this paragraph (b) for conflicts
or Defaults which would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.
3.4 Financial Statements. Parent has delivered to Holdings the
following financial statements for the Bison Subsidiaries (as adjusted to give
effect to the Restructuring) (collectively, the "Financial Statements"): a
statement of net assets to be sold as at December 30, 2000 and January 1, 2000
and statements of earnings for each of the 12 months then ended. The December
30, 2000 statement of net assets to be sold (the "December 30, 2000 Statement of
Net Assets to be Sold") has been audited and was delivered together with a
report of E&Y thereon. Except as set forth in the notes to the Financial
Statements or Section 3.4 of the Disclosure Schedule, the Financial Statements
have been prepared in conformity with GAAP and present fairly in all material
respects the financial position of the Bison Subsidiaries (as adjusted to give
effect to the Restructuring) and their results of operations for the periods
covered therein.
3.5 Absence of Certain Changes or Events. Except as a consequence of,
or as expressly contemplated by, this Agreement, since December 30, 2000 through
and including the date hereof:
(a) the Business has been conducted in the ordinary course of business
consistent with past practice;
(b) the Business has not experienced any events, developments or
changes which, individually or in the aggregate, would be reasonably likely to
have, or have had, a Material Adverse Effect;
(c) except for the Restructuring and except in the ordinary course of
business consistent with past practice, neither Parent nor any of its
Subsidiaries has sold, transferred, conveyed, assigned or otherwise disposed of
any material assets or properties related to the Business;
22
(d) neither Parent nor any of its Subsidiaries has waived, released or
canceled any material claims against third parties or debts owing to it, or any
material rights which have any value and which relate to the Business, other
than in the ordinary course of business consistent with past practice pursuant
to Contracts which are not Material Contracts with Persons that are not
Affiliates of Parent;
(e) neither Parent nor any of its Subsidiaries has made any changes in
their accounting systems, policies, principles or practices related to the
Business;
(f) none of the Bison Subsidiaries has 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 Shares or any of its other securities, or amended any of the
terms of any shares of its capital stock or such other securities;
(g) the Bison Subsidiaries have not made any loans, advances or capital
contributions to, or investments in, any Person other than a Subsidiary of
Parent;
(h) as of Closing, there will be no loans or advances outstanding
between Parent and the Non-Bison Subsidiaries on the one hand, and the Bison
Subsidiaries on the other hand, and the Bison Subsidiaries will not have any
accounts payable to, or investments in, Parent or the Non-Bison Subsidiaries,
other than accounts payable in connection with commercial transactions in the
ordinary course of business consistent with past practice;
(i) except in the ordinary course of business consistent with past
practice and except as set forth in Section 3.9(e) of the Disclosure Schedule,
neither Parent nor any of its Subsidiaries has increased in any manner the
compensation or fringe benefits of any employee of the Business or entered into
any contract, agreement, commitment or arrangement to do any of the foregoing;
(j) except in the ordinary course of business consistent with past
practice, neither Parent nor any of its Subsidiaries has, except in connection
with the Restructuring, acquired or leased any assets relating to the Business,
or made any material amount of property of the Business, subject to any Lien
whatsoever;
(k) as of Closing, no assets or property owned or leased by the Bison
Subsidiaries or used in the Business will be subject to any Lien securing
Balance Sheet Indebtedness;
(l) there have been no capital expenditures with respect to the
Business which, in the aggregate, are in excess of one hundred fifteen million
dollars ($115,000,000), except for capital expenditures not exceeding fifty-five
million dollars ($55,000,000) in support of sales to Fiat by Textron Automotive
Company Italia s.r.l.;
23
(m) neither Parent nor any of its Subsidiaries has made any material
Tax election or settled or compromised any material domestic or foreign federal,
national, state, provincial, county, municipal or local Tax liability, or waived
or extended the statute of limitations in respect of any such Taxes in each case
with respect to the Business; and
(n) neither Parent nor any of its Subsidiaries has 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 with respect to
the Business or any of the officers, members, managers, employees or agents of
the Bison Subsidiaries in excess of $5,000,000.
3.6 No Undisclosed Liabilities. As of the date hereof, except to the
extent of the amounts specifically reflected or reserved in the December 30,
2000 Statement of Net Assets to be Sold and except for liabilities and
obligations incurred in the ordinary course of business, since December 30,
2000, (a) none of the Bison Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by GAAP
to be recognized or disclosed on a statement of net assets to be sold of the
Bison Subsidiaries, as adjusted to give effect to the Restructuring, or in the
notes thereto, except for liabilities or obligations which would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect and (b) to the knowledge of the persons identified in Section 3.6
of the Disclosure Schedule, none of the Bison Subsidiaries has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
except for liabilities or obligations which would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
3.7 Litigation. As of the date hereof, there are no Litigations
pending, or to Parent's knowledge, threatened against Parent or any of its
Subsidiaries with respect to the Business, the outcomes of which, individually
or in the aggregate, are reasonably likely to have a Material Adverse Effect.
3.8 Taxes.
-----
(a) Tax Returns Filed and Taxes Paid. Each of the Bison Subsidiaries
has filed or had filed on its behalf all material Tax Returns that it was
required to file or have filed on its behalf on or before the date of this
Agreement, and all such Tax Returns were correct and complete in all material
respects. Each of the Bison Subsidiaries has paid all material Taxes due or
owing. Each of Plascar Participacoes Industriais S.A. ("Plascar") and Textron
Automotive Trim Brasil Ltda. ("TATB") has made adequate provision for the
payment of all material Taxes not yet due.
(b) Tax Positions. No position has been asserted in writing by any Tax
Authority with respect to Taxes of any of the Bison Subsidiaries which, if
asserted by such Tax Authority in a Tax period ending after the Closing Date,
would be reasonably likely to have a Material Adverse Effect.
24
(c) No Affiliated Group Liability. No liability has been asserted
against any of the Bison Subsidiaries with respect to Taxes of any affiliated
group within the meaning of Section 1504(a) of the Code of which any of the
Bison Subsidiaries has been a member and of which Parent was not the common
parent corporation.
(d) No Tax Indemnities. No liability has been asserted against any of
the Bison Subsidiaries with respect to Taxes of any other Person pursuant to any
Tax allocation or sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.
3.9 Employee Benefit Plans and Agreements.
-------------------------------------
(a) A "Bison Plan" shall mean any (i) "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and any comparable foreign plan; (ii)
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA)
and any comparable foreign plan; (iii) deferred compensation plan or incentive
compensation plan; (iv) employment, termination or severance agreement with any
officer of a Directly Purchased Subsidiary whose principal office is located in
the United States other than officers who are employed by a Non-Bison
Subsidiary; (v) stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, severance or vacation plans; and (vi) any other
material employee benefit plans, funds or programs, in each case, that are
sponsored or maintained by or contributed to or required to be contributed to by
a Bison Subsidiary or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with a Bison Subsidiary would be deemed a
"single employer" within the meaning of Section 4001(b) of ERISA or to which a
Bison Subsidiary or an ERISA Affiliate is party, for the benefit of any employee
or former employee of a Bison Subsidiary (or of Textron Automotive Company Inc.
if such person's entire salary was directly charged to the Business), or with
respect to which a Bison Subsidiary could incur liability and any comparable
foreign plan. Section 3.9 of the Disclosure Schedule lists each material Bison
Plan applicable to any Bison Subsidiary having its jurisdiction of organization
within the United States and all foreign pension plans. A copy of each material
Bison Plan (and, if applicable, related amendments, trust agreements, current
summary plan descriptions, most recent Form 5500, most recent Internal Revenue
Service determination letter and most recent actuarial report) applicable solely
to any Bison Subsidiary having its jurisdiction of organization within the
United States has been made available to Holdings, and a copy of each material
Bison Plan from which assets will be transferred from Parent to C&A Products
pursuant to Section 5.7 will be made available to Holdings prior to Closing.
(b) No liability under Title IV or Section 302 of ERISA has been
incurred by any Bison Subsidiary or any ERISA Affiliate that has not been
satisfied in full, and, to Parent's knowledge, no condition exists that presents
a material risk to a Bison Subsidiary of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
25
(c) Each Bison Plan (other than a Foreign Plan) has been operated and
administered in accordance with its terms and with the requirements (including
funding requirements) of applicable Law, including ERISA and the Code, except
where any failure to be so operated and administered would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect. All
material contributions required to be made under the terms of any Bison Plan
(other than a Foreign Plan) as of the Closing Date have been made or will be
timely made on or prior to the Closing Date. With respect to any Bison Plan
subject to Section 412 of the Code or Section 302 of ERISA, there has been no
application for or waiver of the minimum funding standards imposed by Section
412 of the Code, and 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.
(d) Each Bison Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service stating that it is so qualified, and no event has occurred since
the date of such determination that would adversely affect such determination or
result in the imposition of any material liability, penalty or tax under ERISA
or the Code.
(e) The consummation of the Transactions will not (i) entitle any
employee of any Bison Subsidiary to severance pay payable by a Bison Subsidiary,
(ii) accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Bison Plans, (iii) result in any
material Default under, any of the Bison Plans or (iv) 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" with respect to any
Employee within the meaning of Section 280G(b) of the Code.
(f) With respect to any Bison 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 Parent is not aware of any facts
or circumstances that would materially change the funded status of any such
plan.
(g) No Bison Subsidiary or any ERISA Affiliate has liability (including
any contingent liability under Section 4204 of ERISA) with respect to any
multiemployer plan, within the meaning of Section 3(37) of ERISA.
(h) There are (i) to Parent's knowledge, no investigations pending by
any governmental entity (including the Pension Benefit Guaranty Corporation)
involving Bison Plans, and (ii) no pending or, to Parent's knowledge, threatened
claims (other than routine claims for benefits), suits or proceedings against
any Bison Plans, or against any fiduciary of any Bison Plan which would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(i) None of the Bison Subsidiaries or any employee of the foregoing,
nor any trustee or administrator with respect to the Bison Plans, has engaged
in
26
a "prohibited transaction" (as such term is defined in Section 4975 of the Code
or Section 406 of ERISA) that could result in a tax or penalty under Section
4975 of the Code or Section 502(i) of ERISA which would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(j) Since January 1, 2000, the Bison 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.
(k) Except as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, each Bison Plan subject to
ERISA that is an employee pension benefit plan and is not qualified under
Section 401(a) of the Code 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.
(l) Each Foreign Plan has been operated and administered in accordance
with its terms and with the requirements of applicable Law, except where any
failure to be so operated and administered would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. All material
contributions required to be made under the terms of any Foreign Plan as of the
Closing Date have been made or will be timely made on or prior to the Closing
Date, and no Bison Subsidiary has incurred any unpaid obligation in connection
with the termination or withdrawal from any Foreign Plan. With respect to any
unfunded retirement plan which is a Foreign Plan for which GAAP or applicable
Law requires that reserves be recorded on a statement of financial position,
reserves have been recorded on the December 30, 2000 Statement of Net Assets to
be Sold in a manner which is consistent with GAAP and applicable Law. With
respect to funded retirement plans which are Foreign Plans, the plans have been
funded in accordance with applicable Law. Copies of the most recent actuarial
valuation reports or FAS 87 reports for Foreign Plans, to the extent that they
exist, have been made available to Holdings. There are no actions, suits or
claims (other than routine claims for benefits) pending or threatened with
respect to any Foreign Plan that would, individually, or in the aggregate, be
reasonably likely to result in a Material Adverse Effect. For purposes hereof,
the term "Foreign Plan" shall mean any Bison Plan maintained or contributed to
primarily for the benefit of any employee or former employee of a Bison
Subsidiary employed outside the United States.
(m) Notwithstanding any other provision of this Agreement, Section 3.4
and this Section 3.9 set forth the sole representations and warranties in
Article III of this Agreement with respect to the compliance by Parent and any
Bison Subsidiary with ERISA, sections of the Code and any other Law applicable
to the operation or administration of any Bison Plan.
27
3.10 Labor Matters.
-------------
(a) Since January 1, 1999, except as will not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, (i) none of
the Bison Subsidiaries has or is now engaged in any unfair labor practice, nor
is any complaint against any Bison Subsidiary pending or, to Parent's knowledge,
threatened before the National Labor Relations Board; (ii) there is no labor
strike, dispute, slowdown or stoppage pending or, to Parent's knowledge,
threatened with respect to any employees of any Bison Subsidiary; and (iii) no
grievance is pending arising out of any collective bargaining agreement or in
accordance with any Bison Subsidiaries' established procedures for handling
grievances.
(b) The Bison Subsidiaries are in compliance in all material respects
with their obligations pursuant to the Worker Adjustment and Retraining
Notification Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇ ▇▇▇"). Since January 1, 1999 through and
including the date hereof, none of the Bison Subsidiaries has effectuated (i) a
"mass layoff" (as defined in the WARN Act) in the United States affecting any
site of employment or facility or operating unit within any site of employment
or facility of any Bison Subsidiary or (ii) a "plant closing" (as defined in the
WARN Act) in the United States affecting any Bison Subsidiary site of employment
or facility. Since January 1, 1999 through and including the date hereof, no
Bison Subsidiary has been affected by any transaction or engaged in lay-offs or
employment terminations sufficient in number to trigger the application of any
Law similar to the WARN Act.
(c) Section 3.10(c) of the Disclosure Schedule lists each collective
bargaining agreement involving a Bison Subsidiary facility located in the United
States or Canada.
3.11 Environmental Laws and Regulations. To the knowledge of the
individuals identified in Section 3.11 of the Disclosure Schedule and except as
would not, individually or in the aggregate, be reasonably likely to have, and
have not had, a Material Adverse Effect:
(a) As of the date hereof, each of Parent and its Subsidiaries with
respect to the Business is in compliance with all applicable Environmental Laws,
including possessing all Permits required for the operation of the Business
under applicable Environmental Laws. Notwithstanding any other provision of this
Agreement, this Section 3.11(a) sets forth the sole representation and warranty
in Article III of this Agreement with respect to the compliance by Parent and
its Subsidiaries with any Environmental Law applicable to the Business.
(b) As of the date hereof, there is no pending or threatened Litigation
against Parent or any of its Subsidiaries with respect to the Business, and no
events have occurred or matters exist that might reasonably be expected to
result in Litigation, under or pursuant to any Environmental Law; provided,
however, that the
28
representation made in this Section 3.11(b) with respect to pending Litigation
and Orders are made without reference to knowledge. As of the date hereof,
neither Parent nor any of its Subsidiaries is subject to any Order with respect
to the Business in connection with any Environmental Law. This Section 3.11(b)
sets forth the sole representation and warranty in Article III of this Agreement
with respect to Litigation under or pursuant to any Environmental Law.
3.12 Compliance with Laws. Each of Parent and its Subsidiaries is in
compliance with all applicable Laws, Orders and Permits with respect to the
Business, except for instances of noncompliance which, individually or in the
aggregate, would not be reasonably likely to have, and have not had, a Material
Adverse Effect.
3.13 Properties. Except as would not be reasonably likely to have a
Material Adverse Effect, Parent or its Subsidiaries, collectively, have good and
marketable title, free and clear of all Liens, to all of the real property and
personal property used in the conduct of the Business other than (i)
Intellectual Property (which is covered in Section 3.15), (ii) assets not used
within the Business and (iii) assets which are leased or licensed, with respect
to which the Parent or its Subsidiaries, collectively, have valid and
enforceable Contracts under which there exists no Default by Parent or its
Subsidiaries.
3.14 Material Contracts.
------------------
(a) Each Contract applicable to the Business is (i) in full force and
effect and is a valid and binding obligation of Parent or its Subsidiaries and
(ii) enforceable in accordance with its terms (except that the enforcement
thereof may be limited by (A) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law), except, in each case, as would not be reasonably likely to have a
Material Adverse Effect. The execution and delivery by Parent of the Transaction
Agreements and the consummation by Parent of the transactions contemplated
thereby will not, and no condition exists or event has occurred which would,
constitute a Default by Parent or its Subsidiaries of any Contract applicable to
the Business, except for such Defaults as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(b) Section 3.14(b) of the Disclosure Schedule lists all Material
Contracts involving the licensing of any Intellectual Property, including any
Intellectual Property which is the subject of any of the License Agreements
attached hereto as Exhibits 3A, 3B and 3C, from any third party and any Material
Contract involving the licensing of any such Intellectual Property by Parent or
its Subsidiaries to any third party, other than Contracts entered into in the
ordinary course of business consistent with past practice. A "Material Contract"
shall mean any contract which is material to the Business.
(c) Neither Parent nor any of its Subsidiaries is a party to or bound
by any non-competition agreement or similar agreement or obligation which
29
purports to limit in any material respect the manner in which, or the localities
in which, all or any material portion of the Business is conducted.
(d) Section 3.14(d) of the Disclosure Schedule identifies each Contract
to which a Bison Subsidiary is a party relating to indebtedness for borrowed
money or capital leases, in each case, involving an obligation which exceeds
$250,000. Copies of any written Contract relating to said indebtedness will be
provided to Holdings prior to Closing.
3.15 Intellectual Property.
---------------------
(a) Except as would not be reasonably likely to have a Material Adverse
Effect:
(i) Parent and its Subsidiaries, collectively, own, or are
licensed or otherwise possess legally enforceable rights to use the
Intellectual Property.
(ii) Neither Parent nor any of its Subsidiaries is, nor will,
as a result of the execution and delivery of the Transaction Agreements
or the performance by Parent of any of its obligations thereunder, be
in breach of any license, sublicense or other agreement relating to the
Intellectual Property.
(iii) (A) Each patent, trademark, service ▇▇▇▇ and copyright
owned by either Parent or its Subsidiaries which is used in the
Business as currently conducted is subsisting and, to Parent's
knowledge, valid and enforceable; (B) neither Parent nor its
Subsidiaries, as of the date hereof, is a party to any currently
pending Litigation which involves a claim of infringement of any
patent, trademark, service ▇▇▇▇ or copyright or violation of any trade
secret or other proprietary right of any third party, or has received
written notice of any such threatened claim; (C) to Parent's knowledge,
the manufacturing, marketing, licensing or sale of any products of the
Business, taken as a whole, in the manner currently manufactured,
marketed, sold or licensed by the Business, does not infringe any
patent, trademark, service ▇▇▇▇, copyright, trade secret or other
proprietary right of any third party.
(b) After the Closing Date, the Bison Subsidiaries will have the right
to use all Intellectual Property material to the Business (i) which is used in
the Business as of the date hereof or (ii) which the Bison Subsidiaries have
the right to use in the Business as of the date hereof, in each case to the
extent that such Intellectual Property is held by the Bison Subsidiaries from
Parent or the Non-Bison Subsidiaries and in each case solely to the extent of
the Bison Subsidiaries' rights of use in such Intellectual Property as of the
date hereof; provided, however, that the foregoing representation and warranty
shall not apply with respect to the Retained IP (at that term is defined in the
30
Retained IP Agreement), the rights to which are exclusively as set forth in the
Retained IP Agreement.
3.16 Product Warranties; Recalls.
---------------------------
(a) Since January 1, 1999 through and including the date hereof, there
have been no warranty claims with respect to products sold by the Business,
except for such warranty claims which would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, nor, as of
the date hereof, are there any pending warranty claims with respect to products
sold by the Business, except for such warranty claims which would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(b) Since January 1, 1999 through and including the date hereof, there
have been no product recalls, retrofits, field campaigns or service campaigns by
a Governmental Authority with respect to the products manufactured, distributed
or sold by the Business; and no such recalls, retrofits, field campaigns or
service campaigns are pending or, to Parent's knowledge, threatened by any
Governmental Authority.
3.17 Brokers and Finders. Parent has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's, financial advisory or similar fee or
commission from any Bison Subsidiary in connection with this Agreement or the
transactions contemplated hereby.
3.18 Customers and Suppliers. Since January 1, 2001 through and
including the date hereof, none of the top five customers of or top ten
suppliers to the Business, measured by dollar volume for the twelve months ended
as of December 31, 2000, has (i) notified any senior executive of Textron
Automotive Company Inc. that it intends to discontinue its relationship with the
Bison Subsidiaries or the Business or (ii) materially changed the terms on which
it is prepared to purchase from, trade with or supply the Bison Subsidiaries or
the Business.
3.19 Additional Representations and Warranties by Parent.
---------------------------------------------------
(a) Parent hereby acknowledges that Holdings intends to offer and issue
the Holdings Common Stock and C&A Products intends to offer and issue the
Preferred Stock (collectively, the "Equity Consideration") representing a
portion of the purchase price relating to parts of the Transactions to Parent in
a transaction which is exempt from registration under the Securities Act and
applicable state securities laws.
(b) Parent hereby represents and warrants that: (i) it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act; (ii) it shall acquire the Equity Consideration 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
31
experience in financial, tax, and business matters to enable it to evaluate the
merits and risks of investment in the Equity Consideration; and (iv) it has been
provided with access to, and the opportunity to ask questions of, management of
Holdings and C&A Products, and to obtain additional information concerning
Holdings and C&A Products.
(c) Parent hereby acknowledges that: (i) the Equity Consideration is
not, and, subject to the Registration Rights Agreements attached as Exhibits 5
and 6 hereof, will not be, registered under the Securities Act or any state
securities laws and cannot be resold without registration thereunder or
exemption therefrom; and (ii) the certificates representing the unregistered
Equity Consideration 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."
3.20 Indebtedness. Section 3.20 of the Disclosure Schedule lists total
Indebtedness of the Bison Subsidiaries (after giving effect to the Restructuring
and excluding intercompany accounts that will be settled prior to Closing),
separated into the categories "a" through "g" contained in the definition of
Indebtedness, as of June 29, 2001.
3.21 R&D People. To the best knowledge of the persons identified in
Section 3.21 of the Disclosure Schedule, without inquiry, no material amount of
people whose activities as of March 31, 2001 related primarily to research and
development and product development related to the Business have been, as of the
date of this Agreement, transferred to a Non-Bison Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND C&A PRODUCTS
Holdings and C&A Products jointly and severally represent and warrant
to Parent, subject to the exceptions set forth in the Holdings Disclosure
Schedule (which exceptions shall specifically identify a Section to which such
exception relates, it being understood and agreed that each such exception shall
be deemed to be disclosed both under such Section and any other Section to which
such disclosure on its face relates), that:
4.1 Corporate Organization, Qualification, Power and Authority.
----------------------------------------------------------
(a) Holdings is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. Holdings is qualified
and in good standing as a foreign corporation in each jurisdiction where the
properties owned,
32
leased or operated, or the business conducted, by it requires such
qualification, except where any failure to be so qualified or be in good
standing would not, individually or in the aggregate, be reasonably likely to
have a Holdings Material Adverse Effect. Holdings has all requisite corporate
power and corporate authority and all necessary Permits to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where any failure to have such power and authority or Permits
would not, individually or in the aggregate, be reasonably likely to have a
Holdings Material Adverse Effect. Holdings has or will have made available to
Parent prior to the Closing complete and correct copies of its certificate of
incorporation and by-laws as in effect as of the date hereof.
(b) C&A Products is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware. C&A Products is
qualified and in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by it
requires such qualification, except where any failure to be so qualified or be
in good standing would not, individually or in the aggregate, be reasonably
likely to have a Holdings Material Adverse Effect. C&A Products has all
requisite corporate power and corporate authority and all necessary Permits to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where any failure to have such power and authority or
Permits would not, individually or in the aggregate, be reasonably likely to
have a Holdings Material Adverse Effect. C&A Products has or will have made
available to Parent prior to the Closing complete and correct copies of its
certificate of incorporation and by-laws as in effect as of the date hereof.
(c) Holdings has the requisite corporate power and corporate authority
to execute and deliver the Transaction Agreements (to the extent it is party
thereto) and to consummate the transactions contemplated thereby. Such
Transaction Agreements and the consummation by Holdings of the transactions
contemplated thereby have been duly and validly authorized by the Board of
Directors of Holdings, and no other corporate proceedings on the part of
Holdings are necessary to authorize such Transaction Agreements or to consummate
the transactions contemplated thereby, except for such proceedings relating to
approval of the definitive Financing Agreements, which such proceedings will be
completed prior to Closing. This Agreement has been duly and validly executed
and delivered by Holdings and, assuming this Agreement constitutes the valid and
binding agreement of Parent, constitutes the valid and binding agreement of
Holdings, enforceable against Holdings in accordance with its terms, except as
such enforcement may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law). When executed and delivered to Parent at
the Closing, the Transaction Agreements (other than this Agreement) (to the
extent it is party thereto) will be duly and validly executed and delivered by
Holdings and, assuming such agreements constitute the valid and binding
agreements of the other parties thereto, constitute the valid and binding
agreements of Holdings, enforceable against it in accordance with their terms,
except that the
33
enforcement thereof may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
(d) C&A Products has the requisite corporate power and corporate
authority to execute and deliver the Transaction Agreements (to the extent it is
a party thereto) and to consummate the transactions contemplated thereby. Such
Transaction Agreements and the consummation by C&A Products of the transactions
contemplated thereby have been duly and validly authorized by the Board of
Directors of C&A Products, and no other corporate proceedings on the part of C&A
Products are necessary to authorize such Transaction Agreements or to consummate
the transactions contemplated thereby, except for such proceedings relating to
approval of the definitive Financing Agreements, which such proceedings will be
completed prior to Closing. This Agreement has been duly and validly executed
and delivered by C&A Products and, assuming this Agreement constitutes the valid
and binding agreement of Parent, constitutes the valid and binding agreement of
C&A Products, enforceable against C&A Products in accordance with its terms,
except such enforcement may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law). When executed and delivered to Parent at
the Closing, the Transaction Agreements (other than this Agreement) to the
extent it is a party thereto will be duly and validly executed and delivered by
C&A Products and, assuming such agreements will constitute the valid and binding
agreements of the other parties thereto, constitute the valid and binding
agreements of C&A Products, enforceable against it in accordance with their
terms, except that the enforcement thereof may be limited by (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to or affecting creditors'
rights generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.2 Capitalization of Holdings and C&A Products.
-------------------------------------------
(a) The authorized capital stock of Holdings consists of (i)
300,000,000 shares of Holdings Common Stock of which, as of July 31, 2001,
105,122,130 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights and (ii) 16,000,000 shares of
preferred stock, par value $.01 per share, none of which are issued and
outstanding. Except as reflected in the Holdings SEC Reports (including for
pending acquisitions) and for employee, officer and director compensation
arrangements in the ordinary course of business, there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments relating to the capital stock of, or other equity interest in,
Holdings obligating Holdings to issue, sell, transfer, vote or otherwise
dispose of or sell any shares of capital stock of, or other equity interest in,
Holdings or its Subsidiaries or obligating Holdings or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, convertible security
or other right,
34
agreement, arrangement or commitment that would, in any such case, materially
affect the ability of C&A Products to perform its obligations and agreements
relating to the Preferred Stock. As of the date hereof, except as reflected in
the Holdings SEC Reports (including for pending acquisitions) and for employee,
officer and director compensation arrangements in the ordinary course of
business, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock
of, or other equity interest in, Holdings obligating Holdings to issue, sell,
transfer, vote or otherwise dispose of or sell any shares of capital stock of,
or other equity interest in, Holdings or its Subsidiaries or obligating Holdings
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, convertible security or other right, agreement, arrangement or
commitment. There are no voting trusts, proxies or other voting agreements or
understandings to which Holdings is a party or by which it is bound with respect
to the shares of capital stock of Holdings.
(b) The authorized capital stock of C&A Products consists of (i) 2000
shares of common stock, without par value, of which 1,000 shares are issued and
outstanding as of July 31, 2001, all of which are duly authorized, validly
issued, fully paid, nonassessable and were not issued in violation of any
preemptive or similar rights and are owned by Holdings, and (ii) 1000 shares of
preferred stock, without par value, none of which are issued. Prior to the
Closing, Holdings and C&A Products will take such actions necessary to cause
there to be sufficient capital stock authorized to meet the requirements of the
Transaction Agreements and immediately prior to the Closing, 130,000 (plus such
number of shares as is necessary to meet C&A Products' obligations to issue
additional shares of Series A1 Redeemable Preferred Stock) shares will have
been designated as Series A1 Redeemable Preferred Stock, none of which are
issued and outstanding, 130,000 (plus such number of shares as is necessary to
meet C&A Products' obligations to issue additional shares of Series A2
Redeemable Preferred Stock) shares will have been designated as Series A2
Redeemable Preferred Stock, none of which are issued and outstanding, 95,000
(plus such number of shares as is necessary to meet C&A Products' obligations
to issue additional shares of Series B1 Redeemable Preferred Stock) shares will
have been designated as Series B1 Redeemable Preferred Stock, none of which are
issued and outstanding, 95,000 (plus such number of shares as is necessary to
meet C&A Products' obligations to issue additional shares of Series B2
Redeemable Preferred Stock) shares will have been designated as Series B2
Redeemable Preferred Stock, none of which are issued and outstanding, 20,000
(plus such number of shares as is necessary to meet C&A Products' obligations
to issue additional shares of Series C1 Redeemable Preferred Stock) shares will
have been designated as Series C1 Redeemable Preferred Stock, none of which are
issued and outstanding and 20,000 (plus such number of shares as is necessary
to meet C&A Products' obligations to issue additional shares of Series C2
Redeemable Preferred Stock) shares of Series C2 Redeemable Preferred Stock,
none of which are issued and outstanding. On the Closing Date, the relative
rights, preferences, and limitations of the Preferred Stock will be
substantially as set forth in the Certificate of Designation of C&A Products
attached hereto as Exhibit 1. There are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments relating to
the capital stock of, or other equity interest in, C&A Products obligating C&A
35
Products to issue, sell, transfer, vote or otherwise dispose of or sell any
shares of capital stock of, or other equity interest in, C&A Products or its
Subsidiaries or obligating C&A Products or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, convertible security or other
right, agreement, arrangement or commitment that would in any such case
materially affect the ability of C&A Products to perform its obligations and
agreements relating to the Preferred Stock. As of the date hereof, there are no
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments relating to the capital stock of, or other equity
interest in, C&A Products obligating C&A Products to issue, sell, transfer, vote
or otherwise dispose of or sell any shares of capital stock of, or other equity
interest in, C&A Products or its Subsidiaries or obligating C&A Products or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
convertible security or other right, agreement, arrangement or commitment. There
are no voting trusts, proxies or other voting agreements or understandings to
which C&A Products is a party or by which it is bound with respect to the shares
of capital stock of any of its Subsidiaries.
4.3 Stock of Subsidiaries. Schedule E to this Agreement identifies each
entity that is a Subsidiary of Holdings as of the date hereof. All of the shares
of capital stock of the Subsidiaries listed on Schedule E are owned as of the
date hereof by Holdings or one of its Subsidiaries, free and clear of all Liens
(without regard to subsections (i) through (iv) of the provision in the
definition of "Liens" and other than Liens to secure Indebtedness of Holdings or
one of its Subsidiaries), and have been duly authorized, validly issued and are
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights, except for any such Liens or where any failure to be duly
authorized, validly issued and fully paid or nonassessable would not,
individually or in the aggregate, be reasonably likely to have a Holdings
Material Adverse Effect.
4.4 Valid Issuance of Stock.
-----------------------
(a) The shares of Holdings Common Stock, when issued, sold and
delivered pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable, will not be subject to any preemptive rights or
Liens and, assuming the accuracy of Parent's representations in Section 3.19,
will be issued in compliance with applicable federal and state securities laws.
(b) The shares of Series A Preferred Stock and Series B Preferred
Stock, when issued, sold and delivered pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, will not be subject to
any preemptive rights or Liens and, assuming the accuracy of Parent's
representations in Section 3.19, will be issued in compliance with applicable
federal and state securities laws.
4.5 Consents and Approvals; No Violations. The issuance of the debt
and equity securities contemplated by the Commitment Letter, the execution,
delivery or performance of the Transaction Agreements by Holdings and C&A
Products (to the extent each is a party thereto), and the consummation by
Holdings and C&A Products of the transactions contemplated thereby do not or
will not (i) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of Holdings and C&A
36
Products; (ii) conflict with, result in or constitute a Default under, any of
the terms, conditions or provisions of any Contract to which any of C&A Products
or Holdings is a party or by which any of them or any of their respective
properties or assets may be bound; (iii) conflict with, result in or constitute
a Default under, any of the terms, conditions or provisions of any Permit
applicable to Holdings or C&A Products; or (iv) except as set forth in Section
4.5 of the Holdings Disclosure Schedule and subject to giving the notices, the
occurrence of the required consultations, compliance with applicable
environmental transfer statutes and obtaining the Requisite Regulatory Approvals
referred to in clauses (i) through (iv) in Section 3.3(a), conflict with or
violate any Order or Law applicable to C&A Products or Holdings or any of their
respective properties or assets, except, in the case of clauses (ii), (iii) or
(iv) of this Section 4.5 for conflicts or Defaults which would not, individually
or in the aggregate, be reasonably likely to have a Holdings Material Adverse
Effect or a material adverse effect on Holdings' and C&A Products' ability to
consummate the Transactions. The terms of the Preferred Stock as set forth in
the Certificate of Designation attached hereto as Exhibit 1 do not breach,
conflict with, violate or otherwise constitute a Default under any Contract to
which Holdings or C&A Products or any of their Subsidiaries is a party,
including any Contract relating to Indebtedness or any Contract relating to any
equity security of Holdings and C&A Products.
4.6 SEC Filings; Financial Statements.
---------------------------------
(a) Holdings has timely filed all forms, reports, schedules, statements
and other documents required to be filed by Holdings with the Securities and
Exchange Commission (the "SEC") since December 31, 1998 (collectively, the
"Holdings SEC Reports") and such Holdings SEC Reports are publicly available.
The Holdings SEC Reports, at the time filed, did not contain as of their
respective dates (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such additional filing), or if filed after
the date hereof, will not contain, any untrue statement of a material fact or
omit to state a material fact required to be stated in such Holdings SEC Reports
or necessary in order to make the statements in such Holdings SEC Reports, in
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements, including any
related notes thereto, contained in the Holdings SEC Reports, complied, as of
its respective date, in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis with
prior periods (except as otherwise noted therein) and fairly present the
consolidated financial position of Holdings and its Subsidiaries as at the dates
indicated therein and the consolidated results of its operations and cash flows
for the periods indicated therein, subject to, in the case of unaudited interim
financial statements, normal and recurring year-end adjustments which were not
likely to be material in amount.
4.7 Absence of Certain Changes or Events. Except as a consequence of,
or as expressly contemplated by, this Agreement and except as disclosed in the
Holdings SEC Reports filed and publicly available prior to the date of this
Agreement, since
37
December 31, 2000, Holdings and its Subsidiaries have not experienced any event,
development or change which would, individually or in the aggregate, be
reasonably likely to have a Holdings Material Adverse Effect.
4.8 No Undisclosed Liabilities. Except as disclosed in the Holdings SEC
Reports filed and publicly available prior to the date of this Agreement and
except for liabilities and obligations incurred in the ordinary course of
business, since December 31, 2000, (a) neither Holdings nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be recognized or
disclosed in their financial statements, or in the notes thereto, except for
liabilities or obligations which would not, individually or in the aggregate, be
reasonably likely to have a Holdings Material Adverse Effect and (b) to the
knowledge of the persons identified in Section 4.8 of the Holdings Disclosure
Schedule, Holdings does not have any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) except for liabilities or
obligations which would not, individually or in the aggregate, be reasonably
likely to have a Holdings Material Adverse Effect.
4.9 Litigation. Except as disclosed in the Holdings SEC Reports filed
and publicly available prior to the date hereof, there are no Litigations
pending, or to Holdings' knowledge, threatened against Holdings or any of its
Subsidiaries, the outcomes of which, individually or in the aggregate, are
reasonably likely to have a Holdings Material Adverse Effect.
4.10 Financing.
---------
(a) Holdings and C&A Products have received and furnished copies to
Parent of (i) a commitment letter to provide debt and receivables financing to
C&A Products and its Subsidiaries (including the Summaries of Terms and
Conditions annexed thereto, the "Debt Commitment Letter") with The Chase
Manhattan Bank, ▇.▇. ▇▇▇▇▇▇ Securities Inc., Credit Suisse First Boston,
Deutsche Banc Alex. ▇▇▇▇▇ Inc., Bankers Trust Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital
Corporation and Credit Suisse First Boston, Cayman Islands Branch (collectively
the "Bank") dated as of August 7, 2001, and (ii) equity commitment letters (the
"Equity Commitment Letters" and, together with the Debt Commitment Letter, the
"Commitment Letters") to provide equity financing to Holdings from the persons
named therein in the amount contemplated by the Debt Commitment Letter (the
"Equity Sources"). The funds which the Bank and the Equity Sources have agreed
to provide, subject to the terms and conditions of the Commitment Letters, will
be sufficient, when taken together with other funds available to Holdings and
C&A Products, to consummate the Transactions and the other transactions
contemplated by the Commitment Letters and to pay and all related fees and
expenses of Holdings and C&A Products relating to the Transactions and the other
transactions contemplated by the Commitment Letters (collectively, the "Required
Amount").
(b) As of the date hereof (i) the Commitment Letters have not been
withdrawn and are in full force and effect and (ii) neither Holdings nor C&A
Products has
38
any reason to believe that any of the conditions set forth in the Commitment
Letters will not be satisfied at or prior to the Closing Date.
4.11 Certain Agreements. Section 4.11 of the Holdings Disclosure
Schedule lists each Contract to which Holdings or C&A Products is a party
relating directly or indirectly to indebtedness for borrowed money in excess of
ten million dollars ($10,000,000) or the registration, voting or transfer of, or
preemptive rights with respect to, any equity security of Holdings or C&A
Products.
4.12 Brokers and Finders. No investment banker, broker, finder, or
intermediary or other Person is or will be entitled to any investment banking,
brokerage, finder's, financial advisory or similar fee or commission from Parent
or any Non-Bison Subsidiary in connection with this Agreement or the
transactions contemplated hereby as a result of any arrangement made by
Holdings.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of the Business. Except as otherwise set forth in Section
5.1 of the Disclosure Schedule, during the period from the date of this
Agreement to the Closing Date, unless Holdings shall otherwise consent in
writing (which shall include electronic mail), which consent shall not be
unreasonably withheld, conditioned or delayed, and except as otherwise expressly
contemplated by this Agreement, the Transition Agreement or the Assignment and
Assumption Agreement, or as is reasonably necessary to effect the Restructuring,
Parent will conduct, and will cause its Subsidiaries to conduct, the Business in
the ordinary course of business and shall use their commercially reasonable
efforts to keep available the services of their current officers and employees,
maintain their Permits and Contracts and preserve their relationships with
customers, suppliers, creditors, agents and others having business dealings with
the Business. Without limiting the generality of the foregoing, and except as
consented to in writing by Holdings, which consent shall not be unreasonably
withheld, conditioned or delayed, or as otherwise contemplated by this
Agreement, the Transition Agreement or the Assignment or Assumption Agreement or
as is reasonably necessary to effect the Restructuring, Parent agrees as to
itself and its Subsidiaries (unless otherwise stated) that:
(a) Capital Stock and Other Securities. The Bison Subsidiaries shall
not issue, sell, grant, dispose of, pledge or otherwise encumber or transfer,
or cause, authorize or propose the issuance, sale, grant, disposition or pledge
or other encumbrance or transfer of (i) any additional shares of capital stock
of any class of any Bison Subsidiary, or any securities or rights convertible
into, exchangeable for, or
39
evidencing the right to subscribe for any such shares of capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any such shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any such shares of capital stock or (ii) any other securities
in respect of, in lieu of, or in substitution for, shares of any Bison
Subsidiary outstanding on the date hereof. No Bison Subsidiary shall split,
combine, subdivide or reclassify any shares of its capital stock.
(b) Reorganization. Neither Parent nor any of the Bison Subsidiaries
shall adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of any
Bison Subsidiary.
(c) Capital Expenditures. Except for capital expenditures in 2001 not
exceeding fifty-five million dollars ($55,000,000) in support of sales to Fiat
by Textron Automotive Company Italia s.r.l., the Bison Subsidiaries will not
make or commit to make any capital expenditures relating to a single project in
excess of fifteen million dollars ($15,000,000) or in the aggregate, in 2001, in
excess of one hundred fifteen million dollars ($115,000,000). Except for capital
expenditures in 2001 not exceeding fifty-five million dollars ($55,000,000) in
support of sale to Fiat by Textron Automotive Company Italia s.r.l., Parent or a
Subsidiary of Parent shall consult with C&A Products with respect to any
proposed commitment to make a capital expenditure relating to a single project
in excess of five million dollars ($5,000,000).
(d) No Dispositions. Except for sales of inventory in the ordinary
course of business consistent with past practice, neither Parent nor any of its
Subsidiaries shall sell, lease, license to third parties or otherwise encumber,
subject to a Lien or dispose of any material assets of the Business.
(e) No Acquisitions. No Bison Subsidiary shall acquire or agree to
acquire (i) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, limited liability company, partnership, joint venture, association
or other entity or division thereof or, (ii) except in the ordinary course of
business consistent with past practice, any assets that, individually or in the
aggregate, except as otherwise permitted by Section 5.1(c), have a purchase
price exceeding one million dollars ($1,000,000), nor shall Parent or any of its
Subsidiaries take any such action relating to the Business set forth in clause
(ii).
(f) Governing Documents. No Bison Subsidiary shall adopt any amendment
to its articles of organization or articles or certificate of incorporation, as
the case may be, or its by-laws or other equivalent organizational documents, or
alter through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Bison Subsidiary.
(g) Contracts. Except in the ordinary course of business consistent
with past practice, neither Parent nor any of its Subsidiaries shall enter into
any Material Contract with a term extending beyond the Closing Date, and
neither Parent nor any of its Subsidiaries shall modify or amend in any
material respect or transfer or terminate any
40
Material Contract to which Parent or any of its Subsidiaries is a party or
waive, release or assign any material rights or claims thereunder.
(h) Employee Matters. Except as required by Law or an existing
Contract, neither Parent nor any of its Subsidiaries shall (i) except in the
ordinary course of business consistent with past practice, increase the
compensation or fringe benefits of any employee of the Business, (ii) enter into
any Contract with an officer or director of a U.S. Bison Subsidiary regarding
his or her employment, compensation or benefits or (iii) except pursuant to
collective bargaining, adopt or amend any material Bison Plan to the extent such
adoption or amendment would create or increase in any material respect any
liability or obligation on the part of any Bison Subsidiary.
(i) Accounting Policies and Procedures. Neither Parent nor any of its
Subsidiaries shall make any material change to its accounting methods,
principles or practices with respect to the Business, except as may be required
by GAAP or accounting standards applicable to foreign Bison Subsidiaries.
(j) Liens. Parent shall not, and shall not permit any of its
Subsidiaries to, create, incur, suffer to exist or assume (i) any Lien to secure
Balance Sheet Indebtedness of a Bison Subsidiary or (ii) any other Lien on any
of the material assets of the Business.
(k) Claims. Neither Parent nor any of its Subsidiaries shall settle any
material Litigation relating to the Business or waive, assign or release any
material rights or claims with respect to the Business, except in either case
(i) in the ordinary course of business or (ii) if the settlement of any such
Litigation would not impose material restrictions on the conduct of the
Business.
(l) Taxes. Neither Parent nor any of its Subsidiaries shall make any
Tax election or settle or compromise any Tax liability relating to the Business,
except in the ordinary course of business; provided, however, that the foregoing
restrictions shall not apply to any Tax election or Tax matter involving a Tax
Return which includes (i) a Bison Subsidiary as part of any combined, unitary,
consolidated or similar group which includes Parent or any Non-Bison Subsidiary
and such Tax election or Tax matter would not individually result in additional
post-Closing Taxes in excess of seventy five thousand dollars ($75,000) being
owed by any Bison Subsidiary or (ii) Textron Canada Limited and such Tax
election is solely with respect to, or such Tax matter solely involves
adjustments with respect to, one or more of the Subsidiaries or businesses
listed in Item 1. of Schedule C hereto.
(m) Investments. Except as permitted by Section 5.1(e), no Bison
Subsidiary shall lend any money or make a capital contribution to, or other
investment in any Person other than a Bison Subsidiary.
(n) Affiliate Contracts. Except for Contracts and relationships
contemplated by the Transition Agreement, no Bison Subsidiary shall enter into
any
41
Contract with Parent or any of its Subsidiaries other than (i) Contracts
containing commercially reasonable terms for Contracts between unrelated parties
or (ii) Contracts which do not contain obligations to receive or deliver
products or services after February 1, 2002. Neither Parent nor any of its
Subsidiaries shall modify any Contract existing on the date hereof between a
Bison Subsidiary and Parent or one of the Non-Bison Subsidiaries in a manner
which would involve the addition of terms or conditions which would not be
commercially reasonable for Contracts between unrelated parties.
(o) No Agreements. Neither Parent nor any of its Subsidiaries shall
authorize or announce an intention to do any of the foregoing, or agree or enter
into any Contract to do any of the foregoing.
5.2 Access to Information.
---------------------
(a) In order to evaluate the transactions contemplated by this
Agreement, upon reasonable advance notice, Parent shall (and shall cause each of
the Bison Subsidiaries to) provide Holdings and its Subsidiaries and Heartland
Industrial Partners, L.P., and their respective agents and representatives
("Representatives"), with reasonable access, during normal business hours and
without disruption to their day-to-day business, from the date of this Agreement
to the earlier of the Closing Date or termination of this Agreement, to the
books and records pertaining to the Bison Subsidiaries and, during such period,
it shall (and shall cause each of the Bison Subsidiaries to) furnish promptly to
such Representatives all financial, operating and other data and other
information concerning its business, properties and personnel as may reasonably
be requested. Upon reasonable request and for reasonable periods of time, Parent
will make senior executives of Bison Subsidiaries available to provide
information to Persons who have executed Commitment Letters and their
Representatives for the purpose of providing information responsive to
reasonable due diligence inquiries relating to the financing contemplated by the
Commitment Letters.
(b) Holdings agrees that it will, and will cause its Representatives
to, use any information obtained pursuant to this Section 5.2 only in connection
with the evaluation of the transactions contemplated by this Agreement.
(c) The Confidentiality Agreement shall apply with respect to
Information, as defined therein, furnished pursuant to this Section 5.2.
5.3 Competition Filings.
-------------------
(a) Parent and Holdings shall, as promptly as practicable but in any
event not more than 10 business days after the date hereof, file, or cause to
be filed all required notification and report forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") and will use their
respective commercially reasonable efforts to respond as promptly as
practicable to all inquiries received from the FTC and the
42
Antitrust Division for additional information or documentation and to cause the
waiting periods under the HSR Act to terminate or expire at the earliest
possible date.
(b) Parent and Holdings shall, as promptly as practicable but in any
event not more than 15 business days after the date hereof, file, or cause to be
filed (i) all required forms and letters under the EC Commission Regulation
4064/89 with the European Commission, (ii) all required forms and letters under
the Canadian Competition Act with the Canadian Competition Bureau and (iii) all
required notices to and applications with Governmental Authorities in connection
with the transactions contemplated hereby, and, in each case, will use their
respective commercially reasonable efforts to respond as promptly as practicable
to all inquiries received from the European Commission, the Canadian Competition
Bureau or any other Governmental Authority for additional information or
documentation, and to cause the waiting period under the Canadian Competition
Act or any Foreign Competition Laws to terminate or expire at the earliest
possible date, or consents, approvals or authorizations to be adopted at the
earliest possible date under the EC Commission Regulation 4064/89 or any Foreign
Competition Laws, as may apply.
(c) Parent and Holdings will each furnish to the other such information
and assistance as the other may reasonably request in connection with its
preparation of any filings necessary under the provisions of the HSR Act, EC
Commission Regulation 4064/89, the Canadian Competition Act and any applicable
Foreign Competition Laws.
(d) The parties shall promptly furnish to each other copies of all
filings and correspondence relating to the Transactions with any Governmental
Authority specified in this Section 5.3.
5.4 Consents and Reasonable Efforts.
-------------------------------
(a) Parent, Holdings and C&A Products shall, as promptly as practical,
use all commercially reasonable efforts (unless otherwise stated herein) to
satisfy the conditions to Closing set forth in Article VI and consummate the
transactions contemplated by this Agreement, including obtaining any required
Consents. Parent, Holdings and C&A Products shall furnish to each other such
information and assistance as the other may reasonably request in connection
with required filings, applications and Consents, and they shall keep each other
advised of the progress of making all such filings, applications and Consents.
(b) Parent, Holdings and C&A Products shall use all commercially
reasonable efforts to terminate the guarantees by Parent or any Non-Bison
Subsidiary of obligations of Bison Subsidiaries identified in Section 5.4(b) of
the Disclosure Schedule (the "Guarantees") and arrange for C&A Products to
assume the obligations of Parent under the Guarantees as soon as possible after
the Closing Date. If the obligations under any Guarantee relating to Balance
Sheet Indebtedness of a Bison Subsidiary has not been assumed by C&A Products
or a Subsidiary of C&A Products as of the date thirty days after
43
the Closing Date, Holdings and C&A Products shall, within sixty days after the
Closing Date, pay or cause to be paid all such indebtedness covered by the
Guarantee in a manner which will permit Parent to promptly thereafter terminate
the Guarantee. If any Guarantee shall be in effect after Closing, Holdings and
C&A Products shall pay or cause to be paid all debt covered by the Guarantee as
the same shall become due and payable, and shall indemnify and hold Parent and
any Non-Bison Subsidiary harmless with respect to any payments made by Parent or
any Non-Bison Subsidiary pursuant to any Guarantee, provided, that such payments
have been made in good faith.
(c) Parent, Holdings and C&A Products shall use all commercially
reasonable efforts to cause the Contracts identified in Section 5.4(c) of the
Disclosure Schedule to be assigned to, and assumed by, C&A Products or one or
more of its Subsidiaries (including the Bison Subsidiaries), and to cause Parent
and the Non-Bison Subsidiaries to be released from any further obligations
thereunder, on or before the Closing Date. In the event that Parent or a
Non-Bison Subsidiary is required to guarantee, or otherwise remain liable for,
the performance by C&A Products or any of its Subsidiaries (including the Bison
Subsidiaries) of any such Contract following the assignment to, and assumption
by, C&A Products or its Subsidiaries of such Contract, (i) on or before the
Closing Date, Parent shall deliver to C&A Products a list of such Contracts and
any corresponding guarantee and (ii) C&A Products or a Subsidiary of C&A
Products shall indemnify Parent and the Non-Bison Subsidiaries from and against
and in respect of any and all Losses incurred by Parent or a Non-Bison
Subsidiary to the extent relating to or arising out of any such guarantee.
(d) Prior to the Closing, Parent shall, and shall cause its
Subsidiaries and their respective Representatives to, provide reasonably
requested support to Holdings and C&A Products in connection with the marketing
efforts related to obtaining the financing contemplated by the Debt Commitment
Letters. In addition, Parent shall request that E&Y provide a comfort letter of
the type customarily required by underwriters in connection with the financing
contemplated by the Debt Commitment Letters.
5.5 Further Assurances.
------------------
(a) On and after the Closing Date, Parent, Holdings and C&A Products
shall use all commercially reasonable efforts to take or cause to be taken all
necessary or appropriate actions and do, or cause to be done, all things
necessary or appropriate to consummate and make effective the transactions
contemplated hereby and by the other Transaction Agreements, including the
execution of any additional documents or instruments of any kind (not containing
additional representations and warranties) which may be reasonably necessary or
appropriate to carry out any of the provisions hereof. Parent, Holdings and C&A
Products shall cause the License Agreements attached hereto as Exhibits 3A, 3B
and 3C, the Assignment and Assumption Agreement attached hereto as Exhibit 2 and
the Registration Rights Agreements attached hereto as Exhibits 5 and 6 to be
executed on or prior to Closing.
44
(b) Holdings and C&A Products shall use their respective reasonable
best efforts to obtain financing in an amount at least equal to the Required
Amount, including by executing definitive agreements for the financing
contemplated by the Commitment Letters on or prior to the Closing Date. Holdings
and C&A Products shall not engage in any transaction outside of the ordinary
course of business that is reasonably likely to jeopardize obtaining funding in
an amount at least equal to the Required Amount. The definitive agreements for
such financing (along with any other document pursuant to which Holdings, C&A
Products or any of their Subsidiaries intend to obtain financing of all or a
portion of the Required Amount) are referred to herein collectively as the
"Financing Agreements."
(c) Without limiting the generality of the foregoing, in the event that
at any time it may be reasonably likely that funds will not be made available
under the Commitment Letters or Financing Agreements so as to enable Holdings
and C&A Products to proceed with the Transactions in a timely manner, Holdings
and C&A Products shall (i) immediately notify Parent, (ii) use their respective
reasonable best efforts to obtain alternative funding in an amount at least
equal to the amount committed pursuant to the Debt Commitment Letters on terms
and conditions comparable to those provided in the applicable Financing
Agreements or on terms that are not materially more onerous in the aggregate to
Holdings and C&A Products than those in the applicable Debt Commitment Letter
and on other reasonable and customary terms and (iii) shall continue to use
their respective reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate the Transactions;
provided that the foregoing shall not require that Holdings or C&A Products
secure equity financing in excess of the amounts contemplated by the Debt
Commitment Letter. Holdings and C&A Products shall promptly notify Parent of all
communications between Holdings and C&A Products and the parties to the
Commitment Letters which are reasonably likely to (A) affect Parent's rights or
obligations thereunder or hereunder, (B) impact the terms of the Preferred Stock
or (C) delay the Closing. Holdings and C&A Products shall promptly deliver a
copy of any such communication to Parent.
(d) Beginning as soon as practical after the date of this Agreement,
Parent and C&A Products will work together in good faith to identify and resolve
issues relating to the transition from Parent ownership and operation of the
Business to C&A Products ownership and operation of the Business.
5.6 Publicity. Parent and Holdings will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Transactions and shall not issue any such press release or public
announcement prior to such consultation and agreement, except as may be required
by applicable Law or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the party proposing to issue such
press release or public announcement shall use its reasonable efforts to consult
in good faith with the other party before issuing any such press release or
public announcement.
45
5.7 Employee Matters.
----------------
(a) Employment Status. C&A Products or one of its Subsidiaries shall
continue to employ all of the Employees who are actively employed by a Bison
Subsidiary on the Closing Date (each such employee being hereafter referred to
as a "Transferred Employee"), it being agreed that persons who are on lay-off or
leave and who have a right to return to work at a Bison Subsidiary or who are on
short-term (not more than six months) medical disability (including pregnancy
leave) who do not thereafter become eligible for long-term medical disability,
or other authorized leave (such as military, family or other leaves where return
to work is subject to statutory requirements) are to be considered Employees who
are actively employed but that persons on long-term medical disability or whose
short-term medical disability thereafter becomes a long-term medical disability
and persons whose employment has terminated or will terminate prior to the
Closing Date without any right to return to work are not to be considered
Employees who are actively employed; provided, however, that the provisions of
this Section 5.7(a) shall not be construed to limit the ability of C&A Products
to terminate any such Employee at any time for any reason. For the purposes of
this Agreement the terms "layoff", "right to return to work", "short-term
disability", "long-term disability" and "pregnancy leave" shall be construed in
accordance with the personnel policies of the Bison Subsidiaries and the
collective bargaining agreements covering Employees as of the Closing Date, if
applicable.
(b) Benefits and Compensation.
-------------------------
(i) C&A Products shall establish, effective as of the Closing Date,
employee compensation and benefit plans, programs, policies and arrangements
(including fringe benefits and severance pay) that will provide benefits and
compensation to the Transferred Employees that are for a period of at least one
year after the Closing Date (or such longer period as may be required by
applicable Law) substantially comparable in the aggregate to those provided by
Bison Subsidiaries to the Transferred Employees immediately prior to the
Closing Date. Notwithstanding anything to the contrary contained in this
Agreement, C&A Products shall not terminate any Stand-Alone Pension Plan
assumed pursuant to Section 5.7(c)(i) or any pension plan into which Parent has
caused assets to be transferred pursuant to Section 5.7(c) for a period of at
least 12 months after the Closing Date.
(ii) C&A Products shall assume responsibility for providing all Former
Employees (including all Former Employees or Employees who are on long-term
disability as of the Closing Date) with all medical (including Medicare Part
B), dental and life insurance benefits being provided by Parent or any
Affiliate of Parent for Former Employees as of the date hereof for a period of
at least 12 months.
(iii) Following the Closing Date, with respect to each employee
benefit plan in which any Transferred Employee participates, for
46
purposes of determining eligibility to participate, vesting and entitlement to
benefits, including severance benefits and vacation entitlement (but not
accrual of pension benefits), service with the Bison Subsidiaries (or
predecessor employers to the extent the Bison Subsidiaries provided past
service credit) shall be treated as service with C&A Products; provided,
however, that such service shall not be recognized to the extent that such
recognition would result in a duplication of benefits. Such service shall also
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements or the application of any pre-existing condition limitations. Each
such plan shall waive pre-existing condition limitations to the same extent
waived under the applicable plan of the Bison Subsidiary. Transferred Employees
shall be given credit under the applicable plan of Holdings or any Affiliate
thereof for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the successor or replacement plan.
(c) Pension Plans.
-------------
(i) As of the Closing Date, C&A Products shall assume the stand-alone
pension plans listed in Section 5.7(c)(i) of the Disclosure Schedule (the
"Stand-Alone Pension Plans") and all liabilities, and shall receive all assets
held, thereunder as of the Closing Date.
(ii) C&A Products shall establish, or shall amend one of its existing
pension plans, as of the Closing Date, or as soon as practicable after the
Closing Date, to include, a tax-qualified defined benefit plan ("C&A Products'
Salaried Pension Plan") for salaried Employees and Former Employees
participating in the Textron Master Retirement Plan Addendum A ("Parent's
Salaried Pension Benefit"). Subject to the transfer of assets described in
Section 5.7(c)(iv), C&A Products' Salaried Pension Plan shall assume the
liabilities as of the Closing Date for the benefits of all Employees and Former
Employees participating in Parent's Salaried Pension Benefit.
(iii) C&A Products shall establish, or shall amend one of its existing
pension plans as of the Closing Date, or as soon as practicable after the
Closing Date, to include a tax-qualified defined benefit plan ("C&A Products'
Hourly Pension Plan") for hourly Employees and Former Employees participating
in the Textron Master Retirement Plan Addenda B, H, L and O ("Parent's Hourly
Master Pension Benefit"). Subject to the transfer of assets described in
Section 5.7(c)(iv), C&A Products' Hourly Pension Plan shall assume the
liabilities as of the Closing Date for the benefits of all Employees and Former
Employees participating in Parent's Hourly Master Pension Benefit.
47
(iv) On a day which is within 60 days after the later of (i)
the date upon which C&A Products delivers to the Parent notice that C&A
Products' actuaries, pursuant to Section 5.7(c)(vii) of this Agreement,
have reviewed the calculations of Parent's actuaries and are satisfied
that such calculations are in accordance with this Agreement, or (ii)
the day upon which C&A Products delivers to Parent a favorable Internal
Revenue Service determination letter or an opinion, reasonably
satisfactory to Parent's counsel, of C&A Products' counsel to the
effect that the terms of C&A Products' Salaried Pension Plan and C&A
Products' Hourly Pension Plan and their related trusts qualify, as to
form, under Section 401(a) and Section 501(a) of the Code, Parent shall
cause the trustee under the Parent's Salaried Pension Benefit and
Parent's Hourly Master Pension Benefit ("Parent's Trustee") to transfer
to the trustee of C&A Products' Salaried Pension Plan and C&A Products'
Hourly Pension Plan ("C&A Products' Trustee") cash assets in an amount
equal to the amount computed pursuant to the following paragraph, but
not less than the amount necessary to satisfy the applicable
requirements of Section 414(1) and 401(a)(12) of the Code.
(v) The assets to be transferred from Parent's Trustee to C&A
Products' Trustee shall be cash only and shall equal 120% of the
projected benefit obligation as of the Closing Date of the Employees
and Former Employees under Parent's Salaried Pension Benefit and
Parent's Hourly Master Pension Benefit. The calculation of 120% of the
projected benefit obligation will be calculated using the actual census
information as of the Closing Date and by applying (i) a discount rate
calculated pursuant to the methodologies utilized in Parent's December
31, 2000 audit disclosure prepared for purpose of Statement of
Financial Accounting Standards Number 87 published by the FASB ("FAS
87") and (ii) other actuarial assumptions, methods and methodologies
utilized in Parent's FAS 87 audit disclosure, each as set forth in
Section 5.7(c)(vii) of the Disclosure Schedule.
(vi) The amount transferred pursuant to Section 5.7(c)(iv)
shall be adjusted for investment earnings or losses of the trust in
which Textron Master Retirement Plan assets are held for the period
between the Closing Date and the actual date of transfer and reduced by
the amount of any benefit payments from such plan to Employees and
Former Employees during such period and a proportionate share of
administrative expenses for such period if such administrative expenses
are properly chargeable (and are actually charged) to the Parent's
Salaried Pension Benefit or Parent's Hourly Master Pension Benefit.
Parent shall estimate such earnings as of the actual date of transfer
and then within 90 days of the actual date of transfer, Parent shall
cause Parent's trust to remit to C&A Products' trust or C&A Products
shall cause C&A Products' trust to remit to Parent's trust, as
appropriate, an amount equal to the difference between the
48
actual rate of earnings for such period and the estimated amount
transferred as of the actual date of transfer (such difference to be
adjusted for investment earnings at the State Street Bank short-term
rate for the period between the actual date of transfer and the date
such difference is paid to Parent or C&A Products). Notwithstanding
anything in this Section 5.7(c) to the contrary, following the Closing
Date and until the date of the respective transfers of assets to
trusts under C&A Products' pension plans, Parent shall cause the
trusts under the pension plans of Parent or an Affiliate covered by
this Section 5.7(c) to continue to provide benefits to plan
participants in accordance with the terms of the applicable pension
plan to the extent that such benefits have accrued on or before the
Closing Date. To the extent that benefits have accrued after the
Closing Date, following the transfer of assets pursuant to Section
5.7(c)(iv), C&A Products shall pay such benefits to plan participants
(retroactively, if applicable) in accordance with the terms of the
applicable pension plan.
(vii) The assets caused to be transferred pursuant to Section
5.7(c) shall be calculated by Parent's actuary, and shall be subject to
review by C&A Products' actuary for the purpose of confirming that the
calculation was made in accordance with (i) the actuarial assumptions
and methods set forth in this Section 5.7(c) and in Section 5.7(c)(vii)
of the Disclosure Schedule and (ii) generally accepted actuarial
practice. As soon as practicable after the Closing Date, Parent shall
provide C&A Products with a detailed summary of the calculations
described in this Section 5.7(c) and any back-up data reasonably
requested by C&A Products. If C&A Products or C&A Products' actuary
does not notify Parent to the contrary within 60 days after the
delivery to C&A Products of such detailed summary and data, the
calculations of Parent's actuary pursuant to this Section 5.7(c) shall
be deemed to be final, conclusive and binding on the parties. If,
however, C&A Products notifies Parent in writing within such period
that it and its actuaries believe that the calculations were not
prepared in accordance with the requirements of this Section 5.7(c) and
such notice specifies (i) the precise items of the calculations
challenged, (ii) the basis of the challenge and (iii) the amount of the
adjustment they propose with respect to each such item, the parties
will then attempt to resolve their differences with respect thereto.
C&A Products shall only be entitled to dispute any individual item that
involves a proposed adjustment of more than $25,000 or items
collectively aggregating $100,000 or more. If the parties are unable to
resolve their dispute within 30 days after the date C&A Products
notifies Parent of the disputed items, the disputed items shall be
referred to an international benefits consulting firm (the "Actuary
Firm") mutually acceptable to C&A Products and Parent. The Actuary Firm
shall be asked to resolve such disputes and report to Parent and C&A
Products upon such remaining disputed items within 45 days after such
referral. The decision of the Actuary Firm shall be final, conclusive
and binding on the
49
parties hereto. The fees and expenses of the Actuary Firm in
conducting this assignment shall be borne equally by Parent and C&A
Products.
(d) Defined Contribution Plan. As soon as practical after the Closing
Date and following delivery by C&A Products to Parent of a favorable Internal
Revenue Service determination letter regarding a defined contribution plan of
C&A Products ("C&A Products' Savings Plan") or an opinion, reasonably
satisfactory to Parent, of C&A Products' counsel to the effect that the terms of
the C&A Products' Savings Plan and its related trust qualify, as to form, under
Section 401(a) and Section 501(a) of the Code, Parent shall cause the trustee of
the Parent Savings Plan to transfer all of the assets and liabilities thereof
attributable to Employees and Former Employees of Bison Subsidiaries to the C&A
Products' Savings Plan. Unless otherwise agreed by Parent and C&A Products, the
assets to be transferred shall be cash, promissory notes for loans made to
Employees and Former Employees of the Bison Subsidiaries under the terms of the
Parent Savings Plan, and, if requested by C&A Products, Parent stock held in
accounts of the Employees and Former Employees of the Bison Subsidiaries.
(e) Collective Bargaining Agreements. Effective as of the Closing Date,
C&A Products or a Subsidiary of C&A Products shall assume the collective
bargaining agreements listed in Section 5.7(e) of the Disclosure Schedule. C&A
Products acknowledges that at Closing, C&A Products or such Subsidiary of C&A
Products will become a successor employer under such collective bargaining
agreements and agree to assume all obligations of any Bison Subsidiary under
such agreements.
(f) Severance and Other Liability.
-----------------------------
(i) Except as otherwise set forth in this Section 5.7(f), C&A
Products or a Subsidiary of C&A Products shall assume, discharge, pay
and be solely liable for and shall indemnify and hold Parent harmless
from and against all Losses relating to any Claim or liability arising
out of the employment of the Employees and Former Employees which is
payable after the Closing, including Claims or liability under any
Bison Plan; provided, however, that C&A Products and its Subsidiaries
shall not be liable for any Claim arising from an event occurring
prior to Closing to the extent that it is covered by insurance carried
by Parent or a Subsidiary of Parent.
(ii) Parent shall retain any and all liability for Losses
relating to severance costs incurred by Parent or its Subsidiaries
(including the Bison Subsidiaries) on or prior to the Closing that
relate to employees of any Subsidiary of Parent, whether or not any
such employee is transferred to a Bison Subsidiary on or prior to the
Closing Date, except for Losses relating to the termination of
employees at the written request of Holdings or C&A Products.
50
(iii) C&A Products shall pay 50%, and Parent shall pay the
other 50%, of any Severance Payment payable to persons identified in
Section 5.7(f)(A) of the Disclosure Schedule if such amount is payable
as a result of such person's termination of his or her employment
after the Closing Date and during the term of said agreement for "good
reason", as defined in the agreement relating to such person listed in
Section 5.7(f)(A) of the Disclosure Schedule; provided, however, that
C&A Products and its Subsidiaries shall not be responsible for
Severance Payments to such persons in excess of 50% of the amount set
forth for each such person in Section 5.7(f)(B) of the Disclosure
Schedule, and any remaining amount shall be paid by Parent. Except as
set forth in the preceding sentence, C&A Products shall pay 100% of
any Severance Payment if such amount is payable as a result of a
Qualifying Termination, as defined in the agreement relating to such
person listed in Section 5.7(f)(A) of the Disclosure Schedule (each an
"Employee Agreement"), which occurs after the Closing Date; provided,
that Parent shall reimburse C&A for the cost of any such payment above
the amount set forth in Section 5.7(f)(B) of the Disclosure Schedule.
"Severance Payment" shall mean the severance benefits payable pursuant
to the Employment Agreements.
(iv) C&A Products shall pay the portion of any Retention
Payment payable to persons identified in Sections 5.7(f)(A) of the
Disclosure Schedule equal to a fraction (the "Fraction") whose
numerator is 365 minus the number of days elapsed from and including
January 1, 2001, through the Closing Date, and whose denominator is
365, up to a maximum amount for each person equal to the amount set
forth in Section 5.7(f)(B) of the Disclosure Schedule multiplied by
the Fraction. Parent shall pay the balance of the Retention Payments.
The term "Retention Payment" shall mean the retention awards and any
special operating incentive and divestiture incentive awards payable
pursuant to the Employment Agreements.
(v) Except for payments by C&A Products described in Sections
5.7(f)(iii) and 5.7(f)(iv), C&A Products shall not be liable for any
severance or retention payments payable under any written agreement
signed by an Employee and existing prior to Closing, excluding
agreements entered into in the ordinary course of business with
Employees of a Bison Subsidiary organized under the laws of a
jurisdiction other than the United States and excluding collective
bargaining agreements (it being understood and agreed that company
policies generally applicable to all or a class of employees shall not
be deemed to be an agreement for the purposes of this subsection).
(vi) Except as set forth in Section 5.1(h) of the Disclosure
Schedule, neither Parent nor its Subsidiaries shall amend, or cause to
be amended, any term or provision in any agreement listed in
51
Section 5.7(f)(A) of the Disclosure Schedule without the prior written
consent of Holdings.
(vii) Payments which are the responsibility of Parent under
Sections 5.7(f)(ii), (iii), (iv) and (v) shall be paid to the person
by C&A Products within five days after receipt from Parent of funds
equal to the amount of said payments.
(g) Worker's Compensation Claims. C&A Products shall assume liability
for all suits, claims, proceedings and actions pending as of or commenced after
the Closing Date resulting from actual or alleged harm or injury to Employees or
Former Employees regardless of when the incident or accident giving rise to such
liability occurred or occurs. Holdings will make all necessary arrangements to
assume all worker's compensation claim files, whether open or closed, as of the
Closing Date, and will make the necessary arrangements for assuming the
continued management of such liabilities.
(h) Foreign Plans. To the extent that Employees and Former Employees
are located in a jurisdiction outside of the United States and are covered by
defined benefit plans or similar plans which also cover persons employed by
Parent, any Non-Bison Subsidiary or their Affiliates, Holdings will cause
similar plans to be established for such Employees in accordance with applicable
Law, labor agreements and customary practice, and Parent will cause assets to be
transferred to the applicable trusts of such successor plans established by C&A
Products, it being agreed that the amount of assets to be transferred to such
trusts will be the minimum amount required by applicable Law.
5.8 Tax Matters
-----------
(a) Tax Returns. Except as provided in Section 9.13,
(i) Parent shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to each of
the Bison Subsidiaries (other than Permali do Brasil Industria e
Comercio Ltda. ("Permali"), ▇▇▇▇▇▇▇ Project S.A. ("▇▇▇▇▇▇▇"), Plascar,
and TATB, collectively, the "Brazilian Entities") for taxable years or
periods ending on or before the Closing Date, and Parent shall remit
(or cause to be remitted) any Taxes due in respect of such Tax
Returns.
(ii) Parent shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to each of
the Brazilian Entities that are due on or before the Closing Date, and
Parent shall remit (or cause to be remitted) any Taxes due in respect
of such Tax Returns.
(iii) Holdings shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to each
of the
52
Brazilian Entities that are due after the Closing Date with respect to
taxable years or periods ending on or before the Closing Date or
Straddle Periods, and Holdings shall remit (or cause to be remitted)
any Taxes due in respect of such Tax Returns.
(iv) Holdings shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to each
of the Bison Subsidiaries (other than the Brazilian Entities) for
taxable years or periods ending after the Closing Date, and Holdings
shall remit (or cause to be remitted) any Taxes due in respect of such
Tax Returns.
(v) Any Tax Return required to be filed by Holdings relating
to any Straddle Period shall be submitted (with copies of any relevant
schedules, work papers and other documentation then available) to
Parent for Parent's approval not less than 45 days prior to the due
date (including extensions) for the filing of such Tax Return, which
approval shall not be unreasonably withheld, conditioned or delayed.
Parent shall have the option of providing to Holdings, at any time at
least 30 days prior to the due date, written instructions as to how
Parent wants any, or all, of the items for which it may be liable
reflected on such Tax Return. Holdings shall, in preparing such
return, cause the items for which Parent is liable hereunder to be
reflected in accordance with Parent's instructions (unless, in the
opinion of nationally recognized tax advisor to Holdings, complying
with Parent's instructions would likely subject Holdings to any
criminal penalty or to one or more civil penalties under Sections 6662
through 6664 of the Code or similar provisions of applicable state,
local or foreign laws) and, in the absence of having received such
instructions, in accordance with past practice, if any, to the extent
permissible under applicable Law.
(vi) Upon the written request of Holdings setting forth in
detail the computation of the amount owed, Parent shall pay to
Holdings, no later than 2 days prior to the due date for the
applicable Tax Return, the Taxes for which Parent is liable pursuant
to Section 5.8(b) but which are payable with any Tax Return to be
filed by Holdings with respect to any Straddle Period.
(vii) Within 120 days after the Closing Date, Holdings shall
cause each of the Bison Subsidiaries to prepare and provide to Parent
a package of Tax information materials, including schedules and work
papers required by Parent to enable Parent to prepare and file all Tax
Returns required to be prepared and filed by it pursuant to Section
5.8(a)(i). Holdings shall prepare such package in good faith in a
manner substantially consistent with Parent's past practice.
(viii) Parent may amend any Tax Return filed or required to
be filed by or with respect to each of the Bison Subsidiaries
53
(other than the Brazilian Entities) for any taxable years or periods
ending on or before the Closing Date; provided, that no such amendment
shall be permitted if it would result in any Tax Detriment to any
Bison Subsidiary after the Closing.
(b) Computation of Tax Liabilities.
------------------------------
(i) To the extent permitted or required by law or
administrative practice, (A) the taxable year of each Bison Subsidiary
which includes the Closing Date shall be treated as closing on (and
including) the Closing Date and, notwithstanding the foregoing, (B)
all transactions not in the ordinary course of business occurring
after the Closing Date shall be reported on Holdings' consolidated
United States federal income Tax Return to the extent permitted by
Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) and shall be
similarly reported on other Tax Returns of Holdings or its Affiliates
to the extent permitted by applicable Law. For purposes of Sections
5.8, where it is necessary to apportion between Parent and Holdings
the Tax liability of an entity for a Straddle Period (which is not
treated under the immediately preceding sentence as closing on the
Closing Date), such liability 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, except that Taxes (such as
real property Taxes) imposed on a periodic basis shall be allocated on
a daily basis.
(ii) In determining Parent's liability for Taxes pursuant to
this Agreement, Parent shall be credited with the amount of estimated
Taxes paid by or on behalf of any of the Bison Subsidiaries prior to
the Closing. To the extent that Parent's liability for Taxes for a
taxable year or period is less than the amount of estimated income
Taxes previously paid by or on behalf of any of the Bison Subsidiaries
with respect to all or a portion of such taxable year or period,
Holdings shall pay Parent the difference within two days of filing the
Tax Return relating to such income Taxes.
(c) Refunds.
-------
(i) Any Tax refund (including any interest in respect
thereof) received by Holdings, C&A Products or any of the Bison
Subsidiaries (other than the Brazilian Entities), and any amounts
credited against Tax to which Holdings, C&A Products or any of the
Bison Subsidiaries (other than the Brazilian Entities) becomes
entitled (including by way of any amended Tax Returns or 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 Parent, and
Holdings shall pay over to Parent any
54
such refund or the amount of any such credit within 15 days after
receipt of such credit or entitlement thereto.
(ii) Any Tax refund (including any interest in respect
thereof) received by Permali or ▇▇▇▇▇▇▇, and any amounts credited
against Tax to which Permali or ▇▇▇▇▇▇▇ becomes entitled (including by
way of any amended Tax Returns or 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 Parent, and Holdings shall
pay over to Parent any such refund or the amount of any such credit
within 15 days after receipt of such credit or entitlement thereto.
(iii) The percentage (the "Ownership Percentage"), equal to
the lesser of (A) 56.6% or (B) the percentage of issued and
outstanding stock of Plascar held by Permali, of any Tax refund
(including any interest in respect thereof) received by Plascar or
TATB or any amounts credited against Tax to which Plascar or TATB
becomes entitled (including by way of any amended Tax Returns or 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 Parent, and Holdings shall pay over to Parent the Ownership
Percentage of any such refund or credit within 15 days after receipt
of such credit or entitlement thereto.
(iv) Holdings shall pay Parent 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 5.8(c). For purposes
of this Section 5.8(c), where it is necessary to apportion a refund or
credit between Holdings and Parent 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 each of the Bison Subsidiaries, except
that refunds or credits of Taxes imposed on a periodic basis (e.g.,
real property Taxes) shall be allocated on a daily basis.
(v) Holdings shall cooperate, and cause C&A Products and each
of the Bison Subsidiaries to cooperate, in obtaining, at Parent's
expense, any Tax refund (other than a refund based on a carryback from
a taxable year or period beginning after the Closing Date) that Parent
reasonably believes is available based on substantial authority,
including through filing appropriate forms with the applicable Tax
Authority; provided, that if the refund would result in any Tax
Detriment to any Bison Subsidiary after the Closing, Parent shall
reimburse Holdings the amount of such Tax Detriment.
55
(d) Certain Post-Closing Settlement Payments.
----------------------------------------
(i) If the examination of any federal, state, local or other
Tax Return of Parent for any taxable period ending on or before the
Closing Date shall result (by settlement or otherwise) in any
adjustment which permits Holdings, C&A Products or any of the Bison
Subsidiaries 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 Holdings, C&A Products
or any of the Bison Subsidiaries for one or more periods ending within
ten years after the Closing Date, Parent shall notify Holdings and
provide it with adequate information so that Holdings can reflect on
its, C&A Products' or the applicable Bison Subsidiary's Tax Returns
such increases in deductions, losses or tax credits or decreases in
income, gains or recapture of tax credits. Holdings shall pay to
Parent, within 30 days of the realization of any resulting Tax
Benefits, the amount of any resulting Tax Benefits.
(ii) If the examination of any federal, state, local or other
Tax Return of Holdings, C&A Products or any of the Bison Subsidiaries
for any taxable period ending after 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
on or before the Closing Date, Holdings 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 Holdings, within 30 days of the receipt of such information,
the amount of any resulting Tax Benefits.
(e) Post-Closing Actions which Affect Parent's Liability for Taxes.
--------------------------------------------------------------
(i) Holdings shall not take, or cause or permit C&A Products
or any of the Bison Subsidiaries (or any of their Affiliates) to take,
any action, with respect to the taxable year or period of Holdings,
C&A Products, such Bison Subsidiary, or Affiliate, as applicable,
which includes the Closing Date, which would be reasonably likely to
increase Parent's or any Non-Bison Subsidiaries (or any of their
Affiliates) liability for Taxes (including any liability of Parent to
indemnify Holdings for Taxes pursuant to this Agreement) including,
for example, any action which would be reasonably likely to, result
in, or change the character of, any income or gain (including any
Subpart F income) that Parent or any Non-Bison Subsidiary (or any of
their Affiliates) must report on any Tax Return.
56
(ii) None of Holdings or any Affiliate of Holdings (including
C&A Products) shall (or shall cause or permit any of the Bison
Subsidiaries to) amend, refile or otherwise modify any Tax Return
relating in whole or in part to any of the Bison Subsidiaries 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 Parent, which consent may be withheld in the sole
discretion of Parent.
(iii) Except to the extent otherwise required by Law, none of
Holdings or any Affiliate of Holdings (including C&A Products) shall
(or shall cause or permit any of the Bison Subsidiaries to) carryback
for federal, state, local or foreign tax purposes to any taxable
period, or portion thereof, of any of the Bison Subsidiaries or Parent
or any Affiliate of Parent ending before, or which includes, the
Closing Date any operating losses, net operating losses, capital
losses, tax credits or similar items arising in, resulting from, or
generated in connection with a taxable year of Holdings or any
Affiliate of Holdings (including C&A Products), or portion thereof,
ending on or after the Closing Date.
(f) Assistance and Cooperation. After the Closing Date, each of Parent
and Holdings shall, (and shall cause their respective Affiliates to), provide
information to the other party regarding any of the Bison Subsidiaries or the
Business in connection with (i) the other party preparing any Tax Returns which
such other party is responsible for preparing and filing, and (ii) the other
party preparing for any audits of, or disputes with any Tax Authority regarding,
any Tax Returns of any of the Bison Subsidiaries. In connection therewith,
Holdings, C&A Products and Parent shall not dispose of any Tax work papers,
books or records relating to any of the Bison Subsidiaries during the six-year
period following the Closing Date, and thereafter shall give the other parties
reasonable written notice before disposing of such items.
(g) Section 338(g) Elections. Holdings shall ensure that C&A Products
does not make any election under Section 338(g) of the Code (or any analogous
provision of state, local, or foreign law) with respect to the purchase of the
stock of any foreign Bison Subsidiary without the prior written consent of
Parent, which consent may be withheld in the sole discretion of Parent. If
Parent does so consent, Holdings shall be liable for, and shall pay, any Tax
attributable to, or resulting from, the making of such election and will
indemnify Parent 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 Holdings pursuant to
this Section 5.8(g) shall be increased by the relevant After Tax Amount. For
purposes of this Section 5.8(g), "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.
57
(h) Stock Options. Holdings and its Affiliates (including C&A Products
and the Bison Subsidiaries) shall not claim any Tax deduction arising by reason
of any exercise of an employee stock option to acquire Parent stock held by
employees of any Bison Subsidiary. If, however, all or any part of a Tax
deduction claimed by Parent with respect to the exercise of an option to acquire
Parent stock held by employees of any Bison Subsidiary is disallowed to Parent,
then, to the extent permitted by law, Holdings, C&A Products or a Bison
Subsidiary (or their appropriate Affiliate) shall claim such Tax deduction. If
Holdings, C&A Products or a Bison Subsidiary (or any of their Affiliates)
receives any Tax Benefit in any taxable period as a result of any Tax deduction
claimed by Holdings, C&A Products or a Bison Subsidiary (or any of their
Affiliates) pursuant to this Section 5.8(h), Holdings shall promptly pay to
Parent the amount of such Tax Benefit.
(i) Indemnification by Parent. Notwithstanding any other provision of
this Agreement, Parent shall indemnify Holdings from and against and in respect
of any and all Losses incurred by Holdings, which may be imposed on, sustained,
incurred or suffered by or assessed against Holdings, directly or indirectly, to
the extent relating to or arising out of:
(i) any liability for income Taxes imposed on any of the Bison
Subsidiaries (other than the Brazilian Entities) as members of the
"affiliated group" (within the meaning of Section 1504(a) of the Code)
of which Parent (or any predecessor or successor) is the common parent
that arises under Treasury Regulation Section 1.1502-6(a) or comparable
provisions of foreign, state or local Law;
(ii) any liability for Taxes (including Taxes resulting from
the Restructuring), imposed on any of the Bison Subsidiaries (other
than the Brazilian Entities) 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;
(iii) any liability for Taxes (including Taxes resulting from
the Restructuring), imposed on Permali or ▇▇▇▇▇▇▇ 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, but only to the extent such Taxes
exceed the accrual or reserve for Taxes (excluding any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) recorded in the December 30, 2000 Statement of Net
Assets to be Sold, as adjusted to take into account the extent to which
(A) Parent's indemnification for a liability for Taxes pursuant to any
clause of this Section 5.8(i) has previously been reduced or eliminated
as a result of the application of such accrual or reserve for Taxes and
(B) Holdings' indemnification for a liability for Taxes pursuant to any
clause of Section
58
5.8(j) has previously been paid as a result of the application of such
accrual or reserve for Taxes; and
(iv) the Ownership Percentage of any liability for Taxes
(including Taxes resulting from the Restructuring), imposed on Plascar
or TATB 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, but
only to the extent such liability exceeds the Ownership Percentage of
the accrual or reserve for Taxes (excluding any reserve for deferred
Taxes established to reflect timing differences between book and Tax
income) recorded in the December 30, 2000 Statement of Net Assets to be
Sold, as adjusted to take into account the extent to which (A) Parent's
indemnification for a liability for Taxes pursuant to any clause of
this Section 5.8(i) has previously been reduced or eliminated as a
result of the application of such accrual or reserve for Taxes and (B)
Holdings' indemnification for a liability for Taxes pursuant to any
clause of Section 5.8(j) has previously been paid as a result of the
application of such accrual or reserve for Taxes.
(v) indemnification pursuant to this Section 5.8(i) shall be
the sole and exclusive remedy of Holdings and C&A Products against
Parent with respect to any and all Losses arising under or related to
any liability for Taxes.
(j) Indemnification by Holdings. Notwithstanding any other provision of
this Agreement, Holdings 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:
(i) any liability for Taxes imposed on any of the Bison
Subsidiaries for any taxable year or period that begins after the
Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period beginning the day after the Closing Date;
(ii) any liability for Taxes imposed on Permali or ▇▇▇▇▇▇▇ 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, but only to the
extent of the accrual or reserve for Taxes (excluding any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) recorded in December 30, 2000 Statement of Net Assets
to be Sold, as adjusted to take into account the extent to which (A)
Parent's indemnification for a liability for Taxes pursuant to any
clause of Section 5.8(i) has previously been reduced or eliminated as a
result of the application of such accrual or reserve for Taxes and
(B) Holdings'
59
indemnification for a liability for Taxes pursuant to any clause of
this Section 5.8(j) has previously been paid as a result of the
application of such accrual or reserve for Taxes;
(iii) the Ownership Percentage of any liability for Taxes
imposed on Plascar or TATB 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, but only to the extent of the Ownership Percentage of the
accrual or reserve for Taxes (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
recorded in December 30, 2000 Statement of Net Assets to be Sold, as
adjusted to take into account the extent to which (A) Parent's
indemnification for a liability for Taxes pursuant to any clause of
Section 5.8(i) has previously been reduced or eliminated as a result of
the application of such accrual or reserve for Taxes and (B) Holdings'
indemnification for a liability for Taxes pursuant to any clause of
this Section 5.8(j) has previously been paid as a result of the
application of such accrual or reserve for Taxes;
(iv) any liability, or increase in a liability, for Taxes
imposed on Parent or any of its Affiliates as a result of any failure
by Holdings to perform or comply with its obligations under Section
5.8(e)(i) of this Agreement;
(v) indemnification pursuant to this Section 5.8(j) shall be
the sole and exclusive remedy of Parent against Holdings and C&A
Products with respect to any and all Losses arising under or related to
any liability for Taxes.
(k) Contests.
--------
(i) Notice. After the Closing Date, Holdings and Parent each
shall notify the other party in writing within 15 days of the
commencement of any Tax audit or administrative or judicial proceeding
affecting the Taxes of any of the Bison Subsidiaries, which, if
determined adversely to the taxpayer ("Tax Indemnitee") or after the
lapse of time would be grounds for indemnification under this Section
5.8 by the other party ("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 either Holdings or Parent fails to give the other party
prompt notice of an asserted Tax liability as required under this
Agreement, then (A) if the Tax Indemnitor is precluded by the failure
to give prompt notice from contesting the asserted Tax liability in any
judicial forum, then such party shall not have any obligation to
indemnify the other party for any Losses arising out of such asserted
Tax
60
liability and (B) if the Tax Indemnitor is not so precluded from
contesting, 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 5.8
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 of any Bison Subsidiaries, Parent shall have the right,
at its expense, to control the conduct of such audit or proceeding;
provided, however, that (i) Parent shall keep Holdings reasonably
informed with respect to the status of such audit or proceeding and
provide Holdings with copies of all written correspondence with respect
to such audit or proceeding in a timely manner and (ii) if such audit
or proceeding would be reasonably expected to result in a material
increase in Tax liability of any Bison Subsidiaries for which Holdings
would be liable under this Section 5.8, (A) Holdings may participate in
the conduct of such audit or proceeding at its own expense and (B)
Parent shall not settle any such audit or proceeding without the
consent of Holdings, which consent shall not be unreasonably withheld.
(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 after the Closing Date, Holdings 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 any Bison Subsidiaries for which Parent would be liable
under this Section 5.8, (A) Parent may participate in the conduct of
such audit or proceeding at its own expense and (B) Holdings shall not
settle any such audit or proceeding without the consent of Parent,
which consent shall not be unreasonably withheld.
(l) As of the Closing Date, Parent shall cause all Tax sharing, Tax
allocation, or Tax indemnity agreements between Parent or any Non-Bison
Subsidiary on the one hand, and any Bison Subsidiary on the other hand, to be
terminated.
5.9 Bison Financial Statements.
--------------------------
(a) Parent shall deliver to C&A Products and Holdings, at Parent's
expense:
(i) statements of financial position with respect to the
Business as at December 30, 2000 and January 1, 2000, and statements
61
of income, cash flows and changes in net worth for each of the fiscal
years ended December 30, 2000, January 1, 2000 and January 2, 1999,
together with an audit report of E&Y thereon prepared in accordance
with the accounting requirements and the published rules and
regulations of the SEC applicable to a registration statement relating
to an offering of debt securities, which report for the fiscal year
2000 will be substantially to the effect of E&Y's report relating to
the Statement of Net Assets to be Sold at December 30, 2000 dated
February 28, 2001, adapted as appropriate for inclusion of a statement
of income and cash flows and as otherwise appropriate for its purpose;
and
(ii) an unaudited statement of financial position for the
interim period ended June 30, 2001 and unaudited statements of income
and cash flows for the interim period ended June 30, 2001 and the
corresponding period in 2000, in each case prepared in accordance with
GAAP consistently applied for the periods presented and with the
accounting requirements and the published rules and regulations of the
SEC applicable to a registration statement relating to an offering of
debt securities, provided, however, that if the Closing occurs on or
after November 15, 2001, Parent shall deliver to C&A Products and
Holdings not later than November 15, 2001 comparable financial
statements for the interim period ended September 30, 2001 and the
corresponding period in 2000.
(b) Parent shall deliver to C&A Products and Holdings a summary of
financial information in the form set forth in Section 5.9(b) of the Disclosure
Schedule for each fiscal month beginning immediately after the last quarterly
statement provided pursuant to Section 5.9(a) and ending with the fiscal month
which ends at least thirty days prior to the Closing Date, and the summary shall
be delivered within 28 days after the end of said month.
The financial statements required by this Section 5.9 are referred to herein as
the "Required Financial Statements".
(c) E&Y and Parent shall provide to Holdings and C&A and its auditors
reasonable cooperation in the preparation of such pro forma financial
information as may be required for the financing of the Transactions on the
basis contemplated hereby.
5.10 Observer Rights. For so long as Parent or its Affiliates hold at
least 50% of the Holdings Common Stock issued pursuant to this Agreement,
Parent shall have the right to designate two representatives to serve as
observers on the Board of Directors of Holdings. Such observers shall have the
right to receive all notices and meeting materials provided to members of the
Board of Directors of Holdings and committees of the Board of Directors of
Holdings and to attend and participate in all meetings of the Board of
Directors of Holdings and meetings of committees of the Board of Directors of
Holdings. For so long as Parent or its Affiliates hold at least 50% of the
Preferred Stock issued pursuant to this Agreement, Parent shall have the right
to designate two representatives to
62
serve as observers on the Board of Directors of C&A Products. Such observers
shall have the right to receive all notices and meeting materials provided to
members of the Board of Directors of C&A Products and committees of the Board of
Directors of C&A Products and to attend and participate in all meetings of the
Board of Directors of C&A Products and meetings of committees of the Board of
Directors of C&A Products.
5.11 Non-Competition.
---------------
(a) Prior to the third anniversary of the Closing Date, the Parent
Entities shall not engage in the business of (i) manufacturing or selling
overhead systems, headliners, interior instrument panels, interior quarter
panel/sidewall trim, interior trim consoles, lift-gate trim panels, painted or
unpainted fascia and bumpers, claddings/exterior trim moldings, exterior
grilles, structural composite bumpers, or signal, taillight and other lighting
or (ii) assembling or selling cockpit systems or front-end modules, in each case
as currently manufactured, assembled or sold by the Bison Subsidiaries and in
each case for use in automotive passenger cars and light and heavy trucks (the
"Restricted Field"). For the avoidance of doubt, the continued operation of the
existing businesses of Parent and the Non-Bison Subsidiaries shall not be a
violation of this Section 5.11(a).
(b) Notwithstanding the foregoing, the Parent Entities may acquire,
directly or indirectly, all or substantially all of the capital stock or assets
of any Person (an "After-Acquired Business") which derives 33% or less of its
gross sales revenues from the Restricted Field, if Parent or such Parent Entity
promptly grants to Holdings an option to acquire the portion of the
After-Acquired Business which engages in the Restricted Field (the "Restricted
Portion") upon the terms and conditions set forth in this Section 5.11(b) and
promptly gives notice to Holdings of such option (but in no event later than the
date the After-Acquired Business was acquired). The purchase price for the
Restricted Portion shall be an amount equal to the aggregate purchase price,
including any liabilities assumed by a Parent Entity, paid by a Parent Entity
for the After-Acquired Business, multiplied by a fraction, the numerator of
which shall be the net operating profit or other mutually acceptable measure of
value of the Restricted Portion during the most recently completed fiscal year
prior to the date such Parent Entity acquired the After-Acquired Business and
the denominator of which shall be the net operating profit or other mutually
acceptable measure of value of the After-Acquired Business during the same
period.
(i) The purchase of the Restricted Portion by Holdings will be
subject to the execution by the Parent Entity and Holdings of a
mutually satisfactory definitive agreement for such purchase and the
obtaining of all necessary regulatory approvals from any Governmental
Authority and material third party Consents (in each case at no
out-of-pocket cost or expense to the Parent Entity) and the expiration
or termination of any applicable waiting period under the HSR Act and
any applicable Foreign Competition Laws. The Parent Entity's
representations and warranties in the definitive purchase agreement for
the Restricted Portion shall be limited to reasonable assurances that
the applicable Parent
63
Entity had caused the Restricted Portion to be operated in the
ordinary course of business during the period of such Parent Entity's
ownership, and the Parent Entity shall use all commercially reasonable
efforts to cause its rights under the purchase agreement by which it
acquired the After-Acquired Business to the extent relating to the
Restricted Portion to be assigned or otherwise made available to
Holdings. The definitive purchase agreement shall provide that such
agreement may be terminated at the option of either a Parent Entity
(or the applicable Non-Bison Subsidiary) or Holdings if such
transaction is not consummated by the six month anniversary of the
date the After-Acquired Business was acquired by a Parent Entity.
(ii) If Holdings fails to give Parent notice of its intent to
exercise this option on or before the one month anniversary of the date
the After-Acquired Business was acquired or the sale of the Restricted
Portion to Holdings is not consummated, other than because of a default
by a Parent Entity, the Parent Entity may retain ownership of the
After-Acquired Business, including the Restricted Portion.
5.12 Intercompany Transactions. Intercompany transactions shall be
treated in accordance with the Transition Agreement.
5.13 Additional Covenant of C&A and Holdings. Neither Holdings nor C&A
Products shall amend or cause to be amended any of the Commitment Letters
(except to add new lenders) without the prior written consent of Parent, which
consent shall not be unreasonably withheld, conditioned or delayed.
5.14 Certain Pre-Closing Restrictions. Prior to the Closing, Products
will comply with the following provisions of the Certificate of Designation as
though in effect on the date hereof:
(a) Section 7(c), provided that the term "Issuance Date of the Series
A1 Redeemable Preferred Stock, the Series B1 Redeemable Preferred Stock and the
Series C1 Redeemable Preferred Stock" shall be deemed to refer to the date of
this Purchase Agreement;
(b) Section 7(f), provided that the consent of Textron and its
Subsidiaries shall be required to the extent stated therein notwithstanding the
Preferred Stock has not been issued and in no event shall such provisions
prevent any of the Transactions and related matters, including but not limited
to any payments pursuant to the Advisory Agreement (as defined in the
Certificate of Designation) as amended through the date of the Closing;
(c) Section 7(h); and
(d) Section 7(b), provided that (i) the term "Restricted Payments"
shall only include Restricted Payments of a type described in clauses (i) and
(ii), (ii) clause
64
(b) of the first paragraph thereof shall be that ratio referred to in the
footnote to Section 7(a), (iii) the exceptions in the second paragraph of
Section 7(b) shall be construed to include those exceptions in C&A Products'
existing 11-1/2% Senior Subordinated Notes due 2006 in any case in which there
is a blank or bracketed amount and (iv) insofar as Restricted Payments of the
type referred to in clause (iii) of the term "Restricted Payments" is concerned,
C&A Products will abide by the provisions applicable to such types of Restricted
Payments in its existing 11-1/2% Senior Subordinated Notes due 2006.
5.15 Closing Date Indebtedness. On or prior to the Closing Date, Parent
shall provide to Holdings and C&A Products a schedule listing total Indebtedness
of the Bison Subsidiaries (after giving effect to the Restructuring and
excluding intercompany accounts that have been settled prior to Closing),
separated into the categories "a" through "g" contained in the definition of
Indebtedness, as of the Closing Date.
5.16 Tax Reporting.
-------------
(a) Holdings, C&A Products and Parent shall classify the Preferred
Stock as equity for tax purposes and shall not take any position inconsistent
with such classification.
(b) Parent, Holdings and C&A Products shall take the position that
there will not be any constructive distributions (or series of constructive
distributions) with respect to the Preferred Stock under Section 305 of the Code
or the Treasury Department regulations promulgated thereunder ("Tax Law"). None
of Parent, Holdings or C&A Products shall take any position inconsistent with
such position; provided, however, that if Parent, Holdings or C&A Products
determines that under then applicable Tax Law the parties may be required to
take a position inconsistent with that set forth in this Section 5.16(b), the
party making such determination (the "Requesting Party") shall notify the other
parties of such determination and, if the other parties do not agree that the
parties will be required under then applicable Tax Law to take a position
inconsistent with the position set forth in this Section 5.16(b), Parent,
Holdings and C&A Products shall retain a mutually agreed upon nationally
recognized tax counsel to advise the parties as to whether they will be required
under then applicable Tax Law to take a position inconsistent with the position
set forth in this Section 5.16(b). In the event that the parties agree, or the
mutually agreed upon nationally recognized tax counsel determines, that the
parties will be required under then applicable Tax Law to take a position
inconsistent with the position set forth in this Section 5.16(b), then the
parties shall take the position so agreed upon or determined. All costs and
expenses of the mutually agreed upon nationally recognized tax counsel relating
to such advice shall be borne equally by Parent and Holdings; provided, however,
that if the mutually agreed upon nationally recognized tax counsel determines
that the parties will not be required under then applicable Tax Law to take a
position inconsistent with the position set forth in this Section 5.16(b), then
all such costs and expenses shall be borne by the Requesting Party.
5.17 R&D Employees. Persons whose activities prior to the date hereof
related primarily to research and development and product development related to
the Business shall not be continuously employed by Parent or a Subsidiary of
Parent after the
65
Closing. For a period of two years from the date of this Agreement, Parent and
its Affiliates shall not, without the written consent of C&A Products, solicit
for employment any Transferred Employee whose activities prior to the date
hereof related primarily to research and development or product development.
This non-solicitation covenant shall not apply to general advertisements for
available employment positions.
5.18 IRB. On or prior to the Closing, Holdings shall either (i) cause
the Indebtedness under the Loan Agreement dated as of August 1, 1991 between C&A
Products (formerly ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation) and the Michigan Strategic Fund
(the "Loan Agreement") to be completely paid and retired and terminate all
obligations under the Loan Agreement and the Reimbursement Agreement dated as of
August 1, 1991 between C&A Products (formerly ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation and
NBD Bank, N.A.) (the "Reimbursement Agreement") or (ii) obtain amendments to or
waivers of any terms of the Reimbursement Agreement, the Loan Agreement and any
other Contract relating thereto such that the Reimbursement Agreement, the Loan
Agreement and the related Contracts will not in any manner adversely affect the
ability of C&A Products to pay dividends on or redeem (other than redemptions
solely at the option of C&A Products) the Preferred Stock or adversely affect
the ability of Holdings or C&A Products to complete the transactions
contemplated by the Transaction Agreements or the Commitment Letters.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to Complete the
Transactions. The respective obligations of each party to complete the
Transactions are subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) Injunction. There shall not be in effect any Law or Order of any
Governmental Authority of competent jurisdiction directing that the Transactions
not be consummated as provided herein.
(b) Governmental Filings and Consents. The regulatory approvals listed
in Section 6.1(b) of the Disclosure Schedule shall have been obtained and be in
effect as of the Closing Date, and the waiting period under HSR Act shall have
expired or early termination thereof shall have been granted.
(c) Works Councils. All required notices to any works council,
personnel committee or similar employee council or committee shall have been
made, and any required consultation with any works council, personnel committee
or similar employee council or committee shall have occurred.
(d) Restructuring. Parent shall have completed the Restructuring in all
material respects.
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6.2 Additional Conditions to the Obligation of Holdings and C&A
Products. The obligation of Holdings and C&A Products to complete the
Transactions is subject to the satisfaction at or prior to the Closing Date of
the following conditions, any and all of which may be waived in whole or in part
by Holdings to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and warranties
of Parent contained in this Agreement shall be true and correct on the date of
this Agreement and on the Closing Date as though made on and as of the Closing
Date (except to the extent that a representation or warranty expressly speaks as
of a specified date or period of time); provided, however, that for purposes of
this Section 6.2(a), such representations and warranties shall be deemed to be
true and correct unless the failure or failures of such representations and
warranties to be so true and correct, without regard to any materiality or
Material Adverse Effect qualifiers contained therein, individually or in the
aggregate, results or would reasonably be likely to result in a Material Adverse
Effect.
(b) Performance. Parent shall have performed in all material respects
all of its covenants and agreements under this Agreement to be performed or
complied with on or prior to the Closing Date; provided that Parent shall be
provided the opportunity to cure any failure to so perform or comply, if a cure
is possible, within a reasonable time after receiving written notice of such
failure from Holdings.
(c) Officer's Certificate. Holdings shall have received on the Closing
Date a certificate dated the Closing Date and executed by the Chief Operating
Officer or the Chief Financial Officer of Parent certifying to the fulfillment
of the conditions specified in Sections 6.1(d), 6.2(a) and 6.2(b).
(d) Bison Financial Statements. Parent shall have delivered the
Required Financial Statements pursuant to Section 5.9.
(e) Agreements. Parent and its Subsidiaries (to the extent each is a
party thereto) shall have executed the License Agreements attached hereto as
Exhibits 3A, 3B and 3C, the Assignment and Assumption Agreement attached hereto
as Exhibit 2, the Registration Rights Agreements attached hereto as Exhibits 5
and 6 and the Transition Agreement attached hereto as Exhibit 4.
(f) Financing. The financing contemplated by the Debt Commitment
Letter shall have been completed on substantially the terms and conditions
identified in such Debt Commitment Letter or on such other terms and conditions
or involving such other financing sources, as are not materially more onerous
in the aggregate to Holdings and C&A Products than those in the applicable Debt
Commitment Letter and on other reasonable and customary terms (but not
requiring more equity financing than is contemplated by the Debt Commitment
Letter); provided, that this condition shall be deemed satisfied if the failure
of this condition is due to a breach by Holdings, C&A Products, Heartland or
any of their respective Affiliates of any covenant contained in any
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Financing Agreement, except if any such breach would not occur but for a breach
by Parent or any of its Affiliates of any of its covenants, representations or
warranties contained herein or a failure of Parent or any of its Affiliates to
comply with a reasonable request of Holdings in respect of the financing
contemplated by the Debt Commitment Letter or an adverse change in the business,
operations, assets, financial condition, contingent liabilities or material
agreements of the Business or the Bison Subsidiaries.
6.3 Additional Conditions to the Obligation of Parent. The obligation
of Parent to complete the Transactions is subject to the satisfaction at or
prior to the Closing Date of the following conditions, any and all of which may
be waived in whole or in part by Parent to the extent permitted by applicable
Law:
(a) Representations and Warranties. The representations and warranties
of Holdings and C&A Products contained in this Agreement shall be true and
correct on the date of this Agreement and on the Closing Date as though made on
and as of the Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of time); provided,
however, that for purposes of this Section 6.3(a), such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, without regard
to any materiality or Holdings Material Adverse Effect qualifiers contained
therein, individually or in the aggregate, results or would reasonably be likely
to result in a Material Adverse Effect.
(b) Performance. Holdings shall have performed in all material respects
its covenants and agreements under this Agreement to be performed or complied
with on or prior to the Closing Date; provided that Holdings shall be provided
the opportunity to cure any failure to so perform or comply, if a cure is
possible, within a reasonable time after receiving written notice of such
failure from Parent.
(c) Officer's Certificate. Parent shall have received on the Closing
Date a certificate dated the Closing Date and executed by the Chief Operating
Officer or the Chief Financial Officer of Holdings certifying to the fulfillment
of the conditions specified in Sections 6.3(a) and (b) hereof.
(d) Agreements. Holdings and C&A Products shall have executed the
License Agreements attached hereto as Exhibits 3A, 3B and 3C, the Assignment and
Assumption Agreement attached hereto as Exhibit 2, the Registration Rights
Agreements attached hereto as Exhibits 5 and 6 and the Transition Agreement
attached hereto as Exhibit 4.
(e) Certificate of Designation. The Certificate of Designation shall
have been duly filed with the Secretary of State of the State of Delaware, shall
be in full force and effect and shall not have been amended or modified.
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ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Closing Date, by the
mutual written consent of Parent and Holdings.
7.2 Termination by Any Party. This Agreement may be terminated and the
Transactions may be abandoned by any party hereto by prompt written notice to
the others if (a) any court of competent jurisdiction or other Governmental
Authority shall have issued an Order permanently restraining, enjoining or
otherwise prohibiting the Transactions, and such Order shall have become final
and nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (a) shall have used all commercially
reasonable efforts to have such Order vacated, or (b) the Closing shall not have
occurred by December 31, 2001; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.2(b) shall not be available to any
party whose failure to fulfill any of its material obligations under this
Agreement results in the failure of the Closing to occur on or prior to such
date.
7.3 Termination by Parent.
---------------------
(a) This Agreement may be terminated by Parent at any time if (a) any
condition contained in any Commitment Letter shall fail to be satisfied and such
failure is not cured within 30 days of Holdings' or C&A Products' notice of such
failure or (b) one or more of the Commitment Letters is withdrawn, terminated or
revoked; provided, however, that in the event an Equity Commitment Letter is
withdrawn, terminated or revoked, Holdings and C&A Products shall have 30 days
to cause such Equity Commitment Letter to be reinstated or the commitment
covered by said Equity Commitment Letter replaced by another investor pursuant
to a commitment letter containing the same terms, except for the identity of the
parties; provided, further, however that Parent's right to terminate this
Agreement pursuant to this Section 7.3 will not be available if Parent fails to
fulfill any of its obligations under this Agreement and such failure results in
the failure of the applicable condition to Closing.
7.4 Effect of Termination. In the event this Agreement is terminated
pursuant to this Article VII, the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto, and this
Agreement shall become void and have no further force and effect, except that
(i) the obligations of Heartland Industrial Partners, C&A, Holdings and C&A
Products set forth in the Confidentiality Agreement shall remain in effect, (ii)
neither party shall be relieved from any liabilities or damages arising out of a
willful breach of any provision of this Agreement and (iii) the respective
obligations of the parties set forth in Section 9.3 shall remain in effect.
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ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations, Warranties and Covenants;
Indemnification. (a) Survival. All representations and warranties contained in
this Agreement shall survive until the first anniversary of the Closing Date,
except (i) the representations and warranties contained in Sections 3.2(b) and
(c) and Section 4.4(a) and (b) of this Agreement, which shall survive the
Closing and (ii) the representations and warranties contained in Section 3.8 and
Section 3.11, which shall not survive the Closing. This Section 8.1(a) shall not
limit any covenant or agreement of the parties hereto which by its express terms
contemplates performance after the Closing, including Parent's indemnification
obligations for certain environmental matters and Taxes set forth in Sections
8.2 and 5.8(i).
(b) Indemnification by Parent. Subject to the other provisions of this
Section 8.1, Parent shall indemnify Holdings, its Subsidiaries and their present
and former directors, officers, employees and agents (collectively, the
"Holdings Indemnified Parties") from and against and in respect of any and all
Losses incurred by a Holdings Indemnified Party, which may be imposed on,
sustained, incurred or suffered by or assessed against a Holdings Indemnified
Party, directly or indirectly, to the extent relating to or arising out of:
(i) the failure of any of the representations or warranties of
Parent contained in Article III (excluding the representations and
warranties contained in Section 3.8 and Section 3.11) to be true and
correct on the date of this Agreement and on the Closing Date as though
made on and as of the Closing Date (except to the extent that a
representation or warranty expressly speaks as of a specified date or
period of time and except as modified hereafter in this Section
8.1(b)(i)); provided, that solely for the purpose of this Section
8.1(b)(i), the representations and warranties in Sections 3.6(a) and
3.7 shall be read without regard to the words "as of the date hereof"
and the representations and warranties in Sections 3.16(a) and (b)
shall be read without regard to the words "through and including the
date hereof"; provided, further, that solely for the purpose of Section
8.1(b)(i), the representations and warranties in Sections 3.3(b),
3.6(a) and (b), 3.7, 3.12 and 3.16 shall be read without regard to any
materiality or Material Adverse Effect qualifiers contained therein;
(ii) any failure by Parent to perform or comply with its
covenants and agreements contained in this Agreement (excluding any
covenant contained in Section 5.8 for which the exclusive remedy of
Holdings shall be indemnification pursuant to Section 5.8), the
Transition Agreement and the Assignment and Assumption Agreement; and
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(iii) except as set forth in Section 5.8, Section 8.1(g),
Section 8.2 and Section 8.3, the businesses, operations and assets of
Parent or any Non-Bison Subsidiary (giving effect to the Restructuring
and Closing), other than Losses relating to or arising out of the
operation and conduct of the Business, commercial transactions with the
Bison Subsidiaries in the ordinary course of business pre-Closing and
commercial transactions with the Bison Subsidiaries post-Closing.
(c) Indemnification by Holdings and C&A Products. Subject to the other
provisions of this Section 8.1, Holdings and C&A Products shall indemnify
Parent, its Subsidiaries and their present and former directors, officers,
employees and agents (collectively, the "Parent Indemnified Parties") from and
against and in respect of any and all Losses incurred by a Parent Indemnified
Party, which may be imposed on, sustained, incurred or suffered by or assessed
against a Parent Indemnified Party, directly or indirectly, to the extent
relating to or arising out of:
(i) the failure of any of the representations or warranties of
Holdings or C&A Products contained in Article IV to be true and correct
on the date of this Agreement and on the Closing Date as though made on
and as of the Closing Date (except to the extent that a representation
or warranty expressly speaks as of a specified date or period of time);
provided, however, that for purposes of this Section 8.1(c)(i), such
representations and warranties that are qualified by reference to
materiality or Holdings Material Adverse Effect shall be true and
correct and such representations and warranties that are not so
qualified shall be true and correct in all material respects;
(ii) any failure by Holdings or C&A Products to perform or
comply with their respective covenants and agreements contained in this
Agreement (excluding any covenant contained in Section 5.8 for which
the exclusive remedy of Parent shall be indemnification pursuant to
Section 5.8), the Transition Agreement and the Assignment and
Assumption Agreement;
(iii) the use of any Parent Name from and after the Closing
Date; and
(iv) except as set forth in Section 5.8, Section 8.1(g),
Section 8.2 and Section 8.3, the businesses, operations and assets of
any Bison Subsidiary (giving effect to the Restructuring and Closing),
other than Losses relating to or arising out of the operation and
conduct of the businesses conducted by Parent and the Non-Bison
Subsidiaries (other than the Business), and commercial transactions
with the Non-Bison Subsidiaries in the ordinary course of business
pre-Closing and commercial transactions with the Bison Subsidiaries
post-Closing.
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(d) Limitation of Liability. The obligations and liabilities of Parent,
Holdings and C&A Products under Sections 8.1(b)(i) and (c)(i), respectively,
shall be subject to the following additional limitations:
(i) Parent shall not have any liability with respect to the
payment of any indemnification amounts which Holdings Indemnified
Parties would be entitled pursuant to Section 8.1(b)(i), whether or not
asserted pursuant to Section 8.1(b)(i), until such time as the
aggregate amount of Losses incurred by Holdings Indemnified Parties for
which Holdings Indemnified Parties would otherwise be entitled to
indemnification pursuant to Section 8.1(b)(i) exceeds ten million
dollars ($10,000,000) and thereafter, only to the extent of such Losses
in excess of ten million dollars ($10,000,000); provided, however, that
(A) with respect to Losses relating to or arising out of the breach of
any representation or warranty in Sections 3.3(b), 3.6, 3.7, 3.12 and
3.16, a Holdings Indemnified Party shall not make any claim against
Parent which individually does not exceed five hundred thousand dollars
($500,000), and such claims not meeting this threshold shall not be
applied in calculating the ten million dollar ($10,000,000) minimum
specified above, (B) with respect to any Losses for which Holdings
Indemnified Parties would be entitled pursuant to Section 8.1(b)(i)
other than those referred to in Section 8.1(d)(i)(A), a Holdings
Indemnified Party shall not make any Claim against Parent which
individually does not exceed fifty thousand dollars ($50,000) and such
Claims not meeting this threshold shall not be applied in calculating
the ten million dollar ($10,000,000) minimum specified above, and (C)
Parent's maximum aggregate indemnification liability for which Holdings
Indemnified Parties would be entitled pursuant to Section 8.1(b)(i) and
Section 8.2(a) (excluding liability for any and all Environmental
Losses related to, or arising out of, (A) the Dover Municipal Landfill
located in Dover, New Hampshire and (B) the Cardinal Landfill located
in Farmington, New Hampshire, which such Environmental Losses shall not
be subject to any maximum aggregate indemnification liability cap)
shall be one hundred million dollars ($100,000,000); and provided,
further, that Parent's indemnification obligation for breach of any
representation or warranty contained in Section 3.2(b) or (c) and
pursuant to Sections 8.1(b)(ii) and (iii) shall not be subject to the
provisions of this Section 8.1(d)(i); and
(ii) No party shall be liable for any Losses pursuant to
Sections 8.1(b) or (c) unless the party seeking such indemnification
(the "Indemnified Party") has (x) delivered the notice of Claim in
respect of such Loss required by Section 8.1(e) below and (y) such
notice of Claim is received by the party from which indemnification is
sought (the "Indemnifying Party") within 30 days after the first
anniversary of the Closing Date, except that (A) for any Losses
relating to or arising out of
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breaches of any representations or warranties contained in Sections
3.2(b) and (c) and Section 4.4(a) and (b), such notice of Claim may be
delivered at any time, (B) for breach of any covenant or agreement,
such notice of Claim may be delivered at any time prior to the
expiration of the applicable statute of limitation and (C) for
Environmental Losses such notice of Claim may be delivered on or prior
to the period specified in Section 8.2. Indemnification under Section
8.1(b)(i) and (ii) and Section 8.1(c)(i) and (ii) shall be the
exclusive remedy of Holdings, C&A Products and Parent, as applicable,
for breach of any representation, warranty, covenant or agreement
(excluding breach of any covenant contained in Section 5.8 for which
the exclusive remedy of Holdings, C&A Products and Parent, as
applicable, shall be indemnification pursuant to Section 5.8)
contained in this Agreement, the Transition Agreement and the
Assignment and Assumption Agreement.
(e) Notice of Claim. If the Indemnified Party shall become aware of any
claim, proceeding or other matter (a "Claim") which may give rise to a Loss or
Environmental Loss that will be taken into account for purposes of calculating
whether the Indemnifying Party's indemnification obligation arises pursuant to
Section 8.1(b) or Section 8.1(c) above or Section 8.2(a) or Section 8.3 below,
the Indemnified Party shall promptly give notice thereof to the Indemnifying
Party. Such notice shall specify whether the Claim arises as a result of a Claim
by a Person against the Indemnified Party (a "Third Party Claim") or whether the
Claim does not so arise (a "Direct Claim"), and shall also specify with
reasonable particularity (to the extent that the information is available) the
factual basis for the Claim and the amount of the Claim, if known. If the
Indemnified Party does not promptly give notice of any Claim as specified above,
such failure shall not be deemed a waiver of the Indemnified Party's right to
indemnification or application to the applicable deductible set forth in Section
8.1(d), Section 8.2(a)(iii) or Section 8.2 (a)(iv) hereunder for Losses or
Environmental Losses in connection with such Claim, but the amount of
reimbursement to which the Indemnified Party is entitled or application to the
applicable deductible shall be reduced by the amount, if any, by which the
Indemnified Party's Losses or Environmental Losses would have been reduced had
such notice been promptly delivered.
(f) Direct Claims. With respect to any Direct Claim, following receipt
of notice from the Indemnified Party of the Claim, the Indemnifying Party shall
have 90 days to make such investigation of the Claim as is considered necessary
or desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 90-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, they
shall agree to apply it to the applicable deductible, or if the applicable
deductible has been satisfied, the Indemnifying Party shall immediately pay to
the Indemnified Party the full agreed upon amount of the Claim, failing which
the matter shall be referred to binding arbitration in such manner as the
parties may agree or shall be determined by a court of competent jurisdiction in
the State of Delaware.
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(g) Third Party Claims.
------------------
(i) With respect to any Third Party Claims, the Indemnifying
Party shall have the right, at its expense and at its election, to
assume control of the negotiation, settlement and defense of the Claim
through counsel of its choice reasonably acceptable to the other party;
provided, that it irrevocably agrees that the Claim is covered by
Section 8.1(b) or (c), as the case may be. In such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the
Indemnified Party's reasonable out-of-pocket expenses as a result of
such assumption. The election of the Indemnifying Party to assume such
control shall be made within the latter of 90 days of receipt of notice
of the Third Party Claim or thirty days after the indemnification
obligation arises, failing which the Indemnifying Party shall be deemed
to have elected not to assume such control. If the Indemnifying Party
elects to assume such control, the Indemnified Party shall have the
right to be informed and consulted with respect to the negotiation,
settlement or defenses of such Third Party Claim and to retain counsel
to act on its behalf, but the fees and disbursements of such counsel
shall be paid by the Indemnified Party unless the Indemnifying Party
consents to the retention of such counsel or unless the named parties
to any action or proceeding include both the Indemnifying Party and the
Indemnified Party and a representation of both the Indemnifying Party
and the Indemnified Party by the same counsel would be inappropriate
due to the actual or potential differing interests between them (such
as the availability of different defenses). If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the
Third Party Claim within a reasonable period of time, the Indemnified
Party shall be entitled to assume such control, and the Indemnifying
Party shall be bound by the results obtained by the Indemnified Party
with respect to the Third Party Claim. If any Third Party Claim is of a
nature such that the Indemnified Party is required by applicable Law to
make a payment to any Person (a "Third Party") with respect to the
Third Party Claim before the completion of settlement negotiations or
related legal proceedings, the Indemnified Party may make such payment
and the Indemnifying Party shall, subject to the provisions of Section
8.1, Section 8.2 and Section 8.3, after demand by the Indemnified
Party, reimburse the Indemnified Party for such payment. If the amount
of any liability of the Indemnified Party under the Third Party Claim
in respect of which such payment was made, as finally determined, is
less than the amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, promptly after receipt
of the difference from the Third Party, pay the amount of such
difference to the Indemnifying Party.
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(ii) If the Indemnifying Party fails to assume control of the
defense of, or having assumed such control fails to defend, any Third
Party Claim, the Indemnified Party shall have the exclusive right to
consent, settle or pay the amount claimed, in which case the
Indemnifying Party shall be responsible for paying any such Claim or,
if paid by the Indemnified Party, reimbursing the Indemnified Party.
Whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defense of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, conditioned or delayed, unless such settlement
provides solely for monetary damages or other monetary payments.
(iii) The Indemnified Party and the Indemnifying Party shall
cooperate fully with each other with respect to Third Party Claims and,
regardless of which party has control thereof as provided for herein,
shall keep each other reasonably advised with respect thereto.
(h) Notwithstanding anything in Section 8.1, Section 8.2 or Section 8.3
to the contrary, the Indemnifying Party shall not be liable for any Losses or
Environmental Losses arising out of any matter to the extent that the Losses or
Environmental Losses with respect to such matter have been mitigated as a result
of having been reflected as a liability or the subject matter of a specific
result in the Closing Financial Statement.
8.2 Environmental Indemnification.
-----------------------------
(a) (i) Except for the environmental matters set forth in Section
8.2(a)(i) of the Disclosure Schedule, Parent shall indemnify the Holdings
Indemnified Parties from and against and in respect of any and all Environmental
Losses incurred by a Holdings Indemnified Party, which may be imposed on,
sustained, incurred or suffered by or assessed against a Holdings Indemnified
Party, directly or indirectly, to the extent relating to or arising out of: (A)
the Remediation of Hazardous Substances that were disposed of or released on or
into the air, soils, groundwater, surface water, sediments or similar
environmental media, at, on, under or migrating from or to any Bison Property on
or before the Closing Date; (B) Litigation by Third Parties in respect of bodily
injury or property damage as a result of Hazardous Substances that were disposed
of or released into the soils, groundwater, surface water, sediments or similar
environmental media, on or before the Closing Date, at, on, under or migrating
from any Bison Property; (C) the disposal, storage, transportation, discharge,
release, treatment or recycling of Hazardous Substances, or the arrangement for
the same activities, by Parent or any of its Subsidiaries with respect to the
Business, prior to the Closing Date, at any Off-Site Location, including
Environmental Losses related to bodily injury, property damage or the
Remediation of such Hazardous Substances; and (D) any violation by Parent or any
of its Subsidiaries of any Environmental Law applicable to the Business
(including Permits or other
75
authorizations issued pursuant to any applicable Environmental Law) on or prior
to the Closing Date.
(ii) Parent's obligation to indemnify the Holdings Indemnified
Parties for the matters addressed in Section 8.2(a)(i)(A) through (C)
shall be limited to those matters as to which Holdings provides Parent
with written notice of said Claim in the manner set forth in Section
8.1(e) within 10 years after the Closing Date. Parent's obligation to
indemnify the Holdings Indemnified Parties for matters addressed in
Section 8.2(a)(i)(D) shall be limited to those matters as to which
Holdings provides Parent with written notice of said Claim in the
manner set forth in Section 8.1(e) within two years after the Closing
Date.
(iii) Notwithstanding the foregoing, Parent shall not have any
liability with respect to the payment of any indemnification amounts
pursuant to Section 8.2(a)(i)(A) through (D) until such time as the
aggregate amount of such Environmental Losses incurred by the Holdings
Indemnified Parties, excluding any and all Environmental Losses related
to, or arising out of, (A) the Dover Municipal Landfill located in
Dover, New Hampshire and (B) the Cardinal Landfill located in
Farmington, New Hampshire, for which such parties would otherwise be
entitled to indemnification pursuant to Section 8.2(a)(i)(A) through
(D) exceeds five million dollars ($5,000,000) and thereafter, Parent
shall only be liable to the extent of such Environmental Losses in
excess of five million dollars ($5,000,000); provided, however, that
(A) Holdings shall not make any claim against Parent which individually
does not exceed fifty thousand dollars ($50,000), and such claims not
meeting this threshold shall not be applied in calculating the five
million dollar ($5,000,000) limitation specified above, and (B)
Parent's maximum aggregate indemnification liability pursuant to
Section 8.2(a)(i) shall be subject to and included within the dollar
limitation contained in Section 8.1(d)(i)(B).
(iv) Notwithstanding any other provision of this Agreement,
Parent shall not have any liability with respect to the payment of any
indemnification amounts pursuant to Section 8.2(a)(i)(A) through (D)
with respect to Environmental Losses related to, or arising out of, (A)
the Dover Municipal Landfill located in Dover, New Hampshire and (B)
the Cardinal Landfill located in Farmington, New Hampshire until such
time as the aggregate amount of such Environmental Losses incurred by
the Holdings Indemnified Parties for which such parties would otherwise
be entitled to indemnification pursuant to Section 8.2(a)(i)(A) through
(D) exceeds ten million dollars ($10,000,000) and thereafter, Parent
shall be liable for fifty percent (50%) of such Environmental Losses in
excess of ten million dollars ($10,000,000).
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(v) Notwithstanding any other provision of this Agreement, if
a Holdings Indemnified Party has a claim pursuant to Section
8.2(a)(i)(D) of this Agreement, Parent shall indemnify the Holdings
Indemnified Parties with respect to (A) any claims for fines or
penalties arising out of said noncompliance and (B) Environmental
Losses arising out of any expenditures made or actions taken by or on
behalf of Holdings or C&A Products after the Closing Date to correct
such noncompliance, but only to the extent that the Environmental
Losses relate to the least expensive, commercially reasonable
alternative necessary to correct such noncompliance; provided, that
Holdings shall not make any claim against Parent pursuant to this
Section 8.2(a)(v)(B) which individually does not exceed fifty thousand
dollars ($50,000) with respect to any single occurrence of
noncompliance; provided, further, that with respect to any single
occurrence of noncompliance, Parent shall only be liable for such
Environmental Losses in excess of fifty thousand dollars ($50,000). If
Holdings elects to correct such noncompliance by any means other than
the least expensive, commercially reasonable alternative, subject to
the provisions of this Section 8.2, Parent shall indemnify the Holdings
Indemnified Parties for Environmental Losses up to an amount equal to
the difference between the Environmental Losses that otherwise would
have been incurred if the least expensive, commercially reasonable
alternative had been implemented and five hundred thousand dollars
($500,000). Further, with respect to claims pursuant to Section
8.2(a)(i)(D) which involve a violation that commenced prior to the
Closing Date and continues after the Closing Date, Parent's
indemnification obligation with respect to such continuing violation
shall apply only with respect to the time period prior to the Closing
Date. Notwithstanding the above, the foregoing shall not be interpreted
to preclude the Holdings Indemnified Parties from indemnification with
respect to the Remediation of Hazardous Substances that are present on
or before the Closing Date in any environmental media at, on, under or
migrating from or to, any Bison Property, as otherwise provided in this
Agreement, including with respect to Hazardous Substances that were
discharged into the environment prior to the Closing Date and continue
to exist in the environment after the Closing Date.
(b) With respect to claims to indemnify Holdings Indemnified Parties
that are described by Section 8.2(a)(i)(A):
(i) Parent shall only be required to indemnify Holdings
Indemnified Parties to the extent that, after the deductible set forth
in Section 8.2(a)(iii) is met: (A) the Remediation of the Hazardous
Substances is required pursuant to an applicable Environmental Law that
is in effect as of the Closing Date; (B) the Remediation Standards
applicable to the Remediation are the most cost effective Remediation
Standards required under Environmental Law assuming continued
industrial use of the property, provided, that it is a Bison Property
and where it is not, such other
77
use then associated with such non-Bison Property; and (C) the
Remediation shall be conducted in a reasonable, cost effective manner
consistent with applicable Environmental Law or as may be otherwise
required by a Governmental Authority. Holdings shall accept
appropriate engineering controls or institutional controls, including,
if necessary, deed restrictions limiting property to an industrial use
or limitations on the drilling and use of water ▇▇▇▇▇ on Bison
Properties (individually or collectively, a "Restriction"), if such
controls are needed in order to complete a Remediation consistent with
the use of the least stringent Remediation Standards. Holdings shall
not be required to consent to any Restriction in connection with
completing a Remediation if the Restriction would materially impair or
otherwise unreasonably interfere with the continued operations of the
Bison Subsidiary or if the Governmental Authority having jurisdiction
for such matter does not approve of reliance on such Restriction.
(ii) For the sole purpose of seeking indemnification for
Environmental Losses pursuant to Section 8.2(a)(i) of this Agreement,
after the Closing Date, neither Holdings nor its Affiliates shall
undertake any effort to discover whether there has been a release of
Hazardous Substances at, on, underneath or migrating from any Bison
Property, including the collection of soil, groundwater, or surface
water samples or samples of other environmental media, except that
Holdings or its authorized representatives may take such samples and
the Holdings Indemnified Parties may seek indemnification therefor if:
(A) required pursuant to an applicable Environmental Law or a lawful
order of a Governmental Authority; (B) required by a potential acquirer
of said Bison Property or the Business or a lessee of said Bison
Property; (C) required in connection with defending against or pursuing
a third party claim; or (D) required by Holdings' or C&A Products'
lender or financial underwriter prior to five years from the Closing
Date. If Holdings fails to comply in any material respect with this
provision, Parent shall have no obligation to provide any Holdings
Indemnified Party with an indemnity for the Remediation of Hazardous
Substances on such Bison Property or for any Claims for bodily injury
or property damage related to Hazardous Substances on such property;
provided, however, that this limitation on indemnification shall apply
only the extent that any Environmental Losses incurred by a Holdings
Indemnified Party for which indemnification is sought are identified
solely as a result of such material noncompliance.
(c) Claims brought pursuant to this Section 8.2 shall be subject to the
procedures for indemnification set forth in Section 8.1(g) if such Claims are
Third Party Claims. Claims that involve or also involve the Remediation of
Hazardous Substances at any Bison Property shall also be subject to the
procedures set forth in Section 8.2(f).
78
(d) If Holdings or any of its Affiliates intends to sell, lease or
otherwise convey any Bison Subsidiary or any Bison Property, Holdings or said
Affiliate shall include, as a condition of such sale, lease or other agreement,
terms and conditions that will ensure that all Restrictions that have been
accepted with respect to the Bison Property are not disturbed (or, if such
Restrictions will be disturbed, that they will be restored at the expense of the
party causing the disturbance or, if additional Remediation is required as a
result of the disturbance of such Restrictions, that such additional Remediation
will be performed at the sole cost and expense of the party causing the
disturbance).
(e) For purposes of this Agreement: (1) the term "Environmental Losses"
shall only include the following costs and expenses (after giving effect to any
related reduction in Taxes and amounts recovered from third parties, including
amounts recovered under insurance policies, with respect to such Environmental
Losses): (A) costs and expenses to implement a Remediation; (B) damages for
third party bodily injury and third party property damage; (C) fines and
penalties; and (D) reasonable attorneys' fees, consultants' fees and expenses
associated with (A), (B) or (C), including costs and expenses associated with
Litigation; (2) the term "Remediation Standard" means a numerical standard
(whether resulting from an enacted statute, promulgated regulation, guidance or
policy document issued by a Governmental Authority, or developed on a
case-by-case basis through a risk assessment or other methodology authorized
pursuant to an applicable Environmental Law and, if appropriate, approved by a
Governmental Authority) that defines the concentrations of Hazardous Substances
that may be permitted to remain in any environmental media after an
investigation, remediation or containment of a release of Hazardous Substances;
(3) the term "Remediation" means any action of any kind to investigate and/or
clean up and/or otherwise respond a release of Hazardous Substances into an
environmental medium, including the following activities: (A) monitoring,
investigation, assessment, treatment, cleanup, containment, removal, mitigation,
remediation, corrective action, response or restoration work; (B) obtaining any
permits, consents, approvals or authorizations of any Governmental Authority
necessary to conduct any such activity; (C) preparing and implementing any plans
or studies for any such activity; and (D) obtaining a written notice from a
Governmental Authority with jurisdiction over the site being addressed under
Environmental Laws that no additional work is required by such Governmental
Authority; and (4) the term "Off-Site Location" means any location other than
(x) any Bison Property or (y) property adjacent to any Bison Property which has
been impacted by a release of Hazardous Substances at, on, under or from any
Bison Property.
(f) Procedures for Remedial Actions.
-------------------------------
(i) Parent shall be entitled to assume control of Remediations
at or with respect to any Bison Property (other than the Dover
Municipal Landfill and the Cardinal Landfill) if the deductible set
forth in Section 8.2(a)(iii) is met. The election of Parent to assume
control of any such Remediation shall be made within a reasonable time.
In the event that Parent shall control any Remediation, it shall
promptly provide copies to
79
Holdings of all notices, correspondence, draft reports, submissions,
draft and final work plans and final reports and shall give Holdings a
reasonable opportunity (at Holding's own expense) to comment on any
submissions Parent intends to deliver or submit to the appropriate
regulatory body prior to said submission. The party not controlling
any Remediation may, at its own expense, hire its own consultants,
attorneys or other professionals to monitor the work performed by the
party controlling such Remediation, including any field work
undertaken by such party. Notwithstanding the foregoing, Parent and
Holdings, as applicable, agree to cooperate with each other, directly
and through their respective consultants and counsel, to effect the
successful completion of the Remediation within such period as may be
specified by a Governmental Authority or under applicable
Environmental Laws, or otherwise within a reasonable period of time;
provided, however, that neither party shall take any actions that
could unreasonably delay or unreasonably interfere with the
performance of the work of the party controlling any Remediation.
(ii) If Holdings is required to or desires to undertake a
Remediation at or with respect to the Dover Municipal Landfill or the
Cardinal Landfill that either Holdings or Parent determines is
reasonably likely to cause the deductible set forth in Section
8.2(a)(iv) to be met, then Holdings shall notify Parent prior to
undertaking such Remediation, and Parent and Holdings shall consult
with each other, in good faith, to implement a mutually agreeable
course of action to effect such Remediation. In the event of such
determination, Holdings shall promptly provide copies to Parent of all
notices, correspondence, draft reports, submissions, draft and final
work plans and final reports and shall give Parent a reasonable
opportunity (at Parent's expense) to comment on any submissions
Holdings intends to deliver or submit to the appropriate regulatory
body prior to said submission. Parent may, at its own expense, hire its
own consultants, attorneys or other professionals to monitor the work
performed by Holdings, including any field work undertaken by Holdings.
Parent and Holdings, as applicable, agree to cooperate with each other,
directly and through their respective consultants and counsel, to
effect the successful completion of the Remediation within such period
as may be specified by a Governmental Authority or under applicable
Environmental Laws, or otherwise within a reasonable period of time;
provided, however, that neither party shall take any actions that could
unreasonably delay or unreasonably interfere with the performance of
the Remediation.
(g) Exclusive Remedy for Environmental Matters; Indemnification by
Holdings. Notwithstanding anything to the contrary in this Agreement, Holdings
hereby agrees that its sole and exclusive remedy against any Parent Indemnified
Party with respect to any and all Losses arising under or related to any
Environmental Law or any Hazardous Substances or the environment, including
statutory or common law claims for
80
Environmental Losses, damages, fines, penalties or response costs related to
Hazardous Substances or the environment, in connection with the Bison
Subsidiaries, shall be the indemnity set forth in this Section 8.2. Except with
respect to the remedy referred to in the preceding sentence, Holdings hereby
waives, to the fullest extent permitted under applicable Law, and forever
releases the Parent Indemnified Parties, in connection with the Bison
Subsidiaries from, and shall indemnify the Parent Indemnified Parties against,
any and all Environmental Losses arising under or related to Environmental Laws
or Hazardous Substances. Parent Indemnified Parties shall not make any claim
against Holdings for indemnification for any Loss, including any Environmental
Loss, pursuant to this Section 8.2(g) which individually does not exceed fifty
thousand dollars ($50,000). Holdings' obligation to indemnify the Parent
Indemnified Parties pursuant to this Section 8.2(g) shall be limited to those
matters as to which Parent provides Holdings with written notice of said Claim
in the manner set forth in Section 8.1(e).
(h) Disputes. In the event of any dispute between Parent and Holdings
or C&A Products concerning a Claim for indemnification for Environmental Losses
under this Section 8.2 which cannot be resolved within thirty (30) days, such
dispute shall be promptly referred to an independent third party having
expertise in the matters at issue and mutually acceptable to the parties (or if
the parties cannot agree, the CPR Institute for Dispute Resolution, in New York,
New York shall select a recognized expert who shall be independent from each of
the parties), whose fees and expenses shall be shared equally by the parties,
and who shall evaluate the facts and circumstances at issue and recommend a
course of action that the expert believes in its good faith judgment satisfies
the requirements of this Agreement and applicable Environmental Laws. Such
recommendations shall be final and binding on the parties. The parties agree to
act as promptly as practicable in implementing the foregoing procedures;
provided, however, that in the event that actions are required to be taken by a
Governmental Authority or in an emergency to avoid imminent and substantial harm
to health or the environment before the foregoing procedures can be implemented,
Holdings or C&A Products may undertake such actions without prejudice to its
rights under this Section 8.2 to seek indemnification for Environmental Losses.
In all other situations, Holdings' or C&A Products' failure to comply with the
requirements of this Section 8.2(h) shall not limit or reduce the obligations of
Parent under this Agreement except to the extent Parent is actually and
materially prejudiced thereby.
(i) Other. Nothing contained in this Section 8.2 shall restrict
Holdings or C&A Products from taking any action (and, if appropriate pursuant to
Section 8.2(a)(i), seeking indemnification therefore) where required to be taken
by any Governmental Authority or in an emergency to avoid imminent and
substantial harm to health or the environment.
8.3 Quota Purchase Agreement Indemnification. Holdings and C&A Products
shall indemnify Parent from and against and in respect of any and all Losses
incurred by Parent under any guarantee agreement by and between Parent and S.W.
Industries Inc., or any successor thereto, relating to any assignment by Parent
to C&A Products of Parent's rights, and the assumption by C&A Products of
Parent's obligations,
81
under the Quota Purchase Agreement dated as of May 31, 2000 by and between
Textron International Holdings, S.L. and S.W. Industries Inc., or if no such
assignment has occurred prior to the Closing, the parties hereto shall take the
actions relating to the Brazilian Entities specified in the Transition
Agreement.
8.4 Name Changes. On or before the six month anniversary of the Closing
Date, Holdings or C&A Products will change the names of the entities listed in
Section 8.4 of the Disclosure Schedule and cease using the name "Parent" in any
manner. Holdings and C&A Products agree that from and after the Closing Date,
(i) the name "Parent" and all similar related names (all such names being the
"Parent Names") shall be owned by Parent or a Non-Bison Subsidiary, (ii) neither
Holdings, C&A Products nor any Bison Subsidiary shall have any rights in, and
shall not, after the three month anniversary of the Closing Date, use, any
Parent Name and (iii) neither Holdings, C&A Products nor any Bison Subsidiary
shall contest the ownership or validity of any rights of Parent or any Non-Bison
Subsidiary in or to the Parent Names.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation.
--------------
(a) Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation."
(b) The words "hereof", "hereby", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(c) The plural of any defined term shall have a meaning correlative to
such defined term, the singular of any defined term shall have a meaning
correlative to such term defined in the plural and words denoting any gender
shall include all genders. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.
(d) A reference to any party to this Agreement or any other agreement
or document shall include such party's permitted successors and permitted
assigns.
(e) A reference to any legislation or to any provision of any
legislation shall include any amendment, modification or re-enactment thereof,
any legislative provision substituted therefore and all regulations and
statutory instruments issued thereunder or pursuant thereto.
82
(f) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
9.2 Principle of Construction. In construing this Agreement, for the
avoidance of doubt, those Contracts and assets not owned as of any date of
determination by a Bison Subsidiary (and the related liabilities) but which are
intended to be made the subject of the transfer and assignment contemplated by
the Assignment and Assumption Agreement shall be construed as pertaining to the
business, operations, assets, properties, liabilities and Contracts of the Bison
Subsidiaries and the Business. In furtherance thereof, any action not permitted
to be taken by a Bison Subsidiary with respect to the Business shall apply to
Parent and its Subsidiaries.
9.3 Payment of Expenses and Other Payments. Whether or not the
Transactions shall be consummated and except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses incident to preparing,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
9.4 Amendment. This Agreement may be amended only by a written
agreement signed by each of the parties hereto.
9.5 Waiver and Extension. At any time prior to the Closing Date, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) except to the extent prohibited by Law, waive compliance
with any of the agreements described or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by such party. The
failure of any party at any time or times to demand performance of any provision
hereof shall in no manner affect the right of such party at a later time to
enforce the same or any other provision of this Agreement. No waiver of any
condition or the breach of any term contained in this Agreement in one or more
instances shall be deemed to be a, or construed as a further or continuing,
waiver of such condition or breach.
9.6 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute one agreement.
9.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Delaware.
83
9.8 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to another party shall be in writing and shall be
deemed given when delivered personally, upon receipt of a transmission
confirmation (with a confirming copy sent by overnight courier) if sent by
facsimile or like transmission and on the next business day when sent by Federal
Express, United Parcel Service, Express Mail, or other reputable overnight
courier, as follows:
(a) If to Parent, to:
Textron Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Executive Vice President and General Counsel
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
with a copy to:
b) If to Holdings or C&A Products to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
and
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
84
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this Section 9.7 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including Litigation arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable Law.
9.9 Entire Agreement; Assignment. The Transaction Agreements (including
all exhibits and schedules to such agreements) together (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
(b) shall not be assigned or transferred by operation of law or otherwise
without the prior written consent of each other party hereto.
9.10 Parties in Interest. This Agreement is not intended to confer any
rights or remedies upon any Person except the parties hereto and their
respective successors and assigns and any other Person which is indemnified
under this Agreement pursuant to Sections 8.1 and 8.2.
9.11 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.12 Captions. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.13 Transfer, Sales and Stamp Taxes. All transfer, value added, sales
and stamp taxes and similar charges, fees and assessments incurred in connection
with the Transactions, shall be borne equally by Parent and C&A Products.
Holdings and C&A Products shall prepare and file (or cause to be filed), to the
extent required by, or permissible under, applicable Law, all necessary Tax
Returns and other documentation with respect to all such transfer, value added,
sales and stamp taxes and similar charges,
85
fees and assessments, and, if required by applicable Law, Parent shall join in
the execution of any such Tax Returns and other documentation as reasonably
requested by Holdings.
[SIGNATURE PAGE FOLLOWS]
86
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
TEXTRON INC.
By: _________________________________________________
Name:
Title:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
By: _________________________________________________
Name:
Title:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.
By: _________________________________________________
Name:
Title:
Signature Page to Purchase Agreement
SCHEDULE A
DIRECTLY PURCHASED SUBSIDIARIES
Jurisdiction
Subsidiary of Organization
---------- -----------------
Textron Automotive Interiors Inc. Delaware
Textron S.A. de C.V. Mexico
Textron Canada Limited Canada
Textron Properties Inc. Delaware
Textron Automotive MIP Limited United Kingdom
Permali do Brasil Industria e Comercio Ltda. Brazil
Textron Automotive Belgium B.V.B.A. Belgium
Textron Automotive B.V. Netherlands
Textron Automotive Holdings Italy S.r.l. Italy
A-1
SCHEDULE B
SUBSIDIARIES OF THE DIRECTLY PURCHASED SUBSIDIARIES
Jurisdiction
Directly Purchased Subsidiary Subsidiary of Organization
----------------------------- ---------- ---------------
Textron Automotive Holdings Italy Textron Automotive Company Italia Italy
S.r.l. S.r.l.(1) (formerly, Textron Breed
Automotive S.r.l.)
A.P.C.O. - Advanced Plastic Company Italy
S.r.l.
FAS S.p.A. Italy
Textron Automotive B.V. Textron Automotive Moravia s.r.o. Czech Republic
Permali do Brasil Industria e Comercio ▇▇▇▇▇▇▇ Project S.A. Argentina
Ltda.
Plascar Participacoes Industriais Brazil
S.A.(2)
Textron Automotive Trim Brasil Brazil
Ltda.(3)
Textron Automotive MIP Limited AS Textron Ltd. United Kingdom
Textron Automotive Ltd. United Kingdom
Textron Automotive Interiors Inc. Textron Automotive (Asia) Inc. Delaware
Textron Automotive (Argentina) Inc. Delaware
▇▇▇▇▇▇▇▇ Realty Ltd. Ontario
Textron Automotive Overseas Delaware
Investment Inc.
------------
(1) 10% of the issued and outstanding shares of capital stock of Textron
Automotive Company Italia S.r.l. are owned by Magneti Marelli Holding
S.p.A.
(2) Preferred shares representing 43.4% of the issued and outstanding shares of
capital stock of Plascar Participacoes Industriais S.A. are publicly held.
(3) 0.5% of the issued and outstanding shares of capital stock of Textron
Automotive Trim Brasil Ltda. which is a subsidiary of Plascar, are owned by
Kautex Textron Iberica, S.L.
B-1
Jurisdiction
Directly Purchased Subsidiary Subsidiary of Organization
----------------------------- ---------- ---------------
Textron Automotive International Delaware
Services Inc.
M&C Advanced Processes, Inc. Michigan
Textron S.A. de C.V. Textron Executive Services Mexico, Mexico
S.A. de C.V.
Textron Automotive Management Mexico
Services Company de Cuautitlan,
S.A. de C.V.
Textron Automotive Company de Mexico
Mexico, S. A. de C.V.
Textron Automotive Management Mexico
Services Company Mexico, S.A. de
C.V.
Textron Automotive Belgium B.V.B.A. Textron Automotive Germany GmbH(4) Germany
------------
(4) Textron Automotive Germany GmbH is in the process of being organized.
B-2
SCHEDULE C
RESTRUCTURING
1. The following subsidiaries and businesses and their related assets and
liabilities will be divested from the Bison Subsidiaries prior to Closing:
Kautex Textron de Mexico S.A. de C.V. (which owns Kautex Textron Management
Services Company de Puebla S.A. de C.V.)
Camcar Textron de Mexico S.A. de C.V.
49% interest in Helicopteros ▇▇▇▇ de Mexico s.r.l.
Abuco Inc.
▇▇▇▇ Helicopter Canada International Inc.
Kautex Corporation (Canada)
3724140 Canada Inc.
▇▇▇▇ Calgary division
▇▇▇▇ ▇▇▇▇▇▇▇ division
Avdel Canada division
Flexalloy Canada division
Camcar Canada division
Greenlee Canada division
BTHC Properties Company, Inc.
Assets and liabilities of A.P.C.O. Advanced Plastic Company relating to
the operations of the Kautex Unit of Textron Automotive Company Inc. (for their
book value).
In addition, Parent will retain ownership to the intellectual property
set forth on Section C-1 of the Disclosure Schedule.
C-1
2. Prior to the Closing, except as otherwise agreed by Parent and Holdings,
employees of Textron Automotive Company Inc. ("TAC") whose entire salaries
are directly charged to the Trim Division shall be transferred to a Bison
Subsidiary.
3. Immediately after Closing, Textron Automotive Company Inc. will assign its
49% interest in Synova Plastics LLC to Holdings. (51% of the membership
interest in Synova Plastics LLC is owned by ▇▇▇▇▇▇▇ Plastics Inc.)
4. The following assets and liabilities will be transferred to a Bison
Subsidiary on or before the Closing Date:
(a) assets and liabilities (other than Contracts) which are used primarily
in or relate primarily to the Business including the following:
(i) to the extent permitted by law, assets and liabilities reflected
on the December 30, 2000 Statement of Net Assets to be sold,
which is part of the Financial Statements, which have not been
disposed of or satisfied subsequent to December 30, 2000 and
which are in the name of a Non-Bison Subsidiary; excluding,
however, the assets being transferred pursuant to Section 2.2(a)
of the Purchase Agreement; and
(ii) to the extent permitted by law, assets and liabilities acquired
or incurred subsequent to December 30, 2000 which (i) have not
been disposed or satisfied prior to the Closing Date, (ii) are in
the name of a Non-Bison Subsidiary and (iii) which are used
primarily in or relate primarily to the business of a Bison
Subsidiary;
(b) Contracts relating solely to the business of a Bison Subsidiary which
are in the name of a Non-Bison Subsidiary and which can be assigned on
or before the Closing Date;
(c) Contracts currently in effect with a customer of the Business which
can be assigned on or before the Closing Date; and
(d) intellectual property listed on Section C-2 of the Disclosure Schedule
which is in the name of a Non-Bison Subsidiary; excluding, however,
the assets being transferred pursuant to Section 2.2(a) of the
Purchase Agreement. (This list includes intellectual property
currently held in the name of Bison Subsidiaries as well as
intellectual property currently held in the name of Non-Bison
Subsidiaries.)
5. Title to the real property covered by the deeds identified in Section
5.4(c) part A of the Disclosure Schedule will be transferred on or before
the Closing Date to a Bison Subsidiary.
C-2
SCHEDULE D
ALLOCATION OF PURCHASE PRICE
This schedule assumes Balance Sheet Indebtedness on the Closing Date is $80
million.
--------------------------------------------------------------------------------
DIRECTLY PURCHASED SUBSIDIARY FAIR MARKET VALUE OF
INTEREST BEING SOLD (IN USD
MILLIONS)
--------------------------------------------------------------------------------
Textron Automotive Belgium B.V.B.A. 20
Permali do Brasil Industria e Comercio Ltda 10
Textron Canada Limited 124
Textron Properties Inc. 226
Textron Automotive Holdings Italy S.r.l. 45
Textron S.A. de C.V. 107
Textron Automotive B.V. 59
Textron Automotive MIP Limited 20
Textron Automotive Interiors Inc. 252
TOTAL 863
--------------------------------------------------------------------------------
D-1
SCHEDULE E
SUBSIDIARIES OF ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
COMPANY JURISDICTION
------- ------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co. Delaware
Carcorp, Inc. Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Accessory Mats, Inc. Delaware
Akro Mats, LLC Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Mats, LLC Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Asset Services, Inc. Delaware
CW Management Corporation (1) Delaware
▇▇▇▇▇▇▇ Services, Inc. (2) Minnesota
SAF Services Corporation (3) Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive International, Inc. Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Carpet & Acoustics (MI), Inc. Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Carpet & Acoustics (TN), Inc. Tennessee
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Export Corporation U.S. Virgin Isles
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Holdings Canada Inc. Canada
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Canada Inc. Canada
C & A Canada International Holdings Limited (4) Canada
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Luxembourg, S.A. Luxembourg
Imperial Wallcoverings (Canada) Inc. Canada
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ International Corporation Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe, Inc. Delaware
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ (Gibraltar) Limited Gibraltar/Delaware
C & A Canada International Holding Company Canada
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe S.A. (5) Luxembourg
C&A (Gibraltar) Gibraltar
C&A (Gibraltar) No. 2 Gibraltar
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Holding GmbH Germany
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems GmbH Germany
Dura Convertible Systems GmbH Germany
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems Italy S.r.l. (6) Italy
------------
(1) 10% owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation of North Carolina
(2) 10% owned by O'Brien & ▇▇▇▇ of North America, Inc.
(3) 10% owned by Unicare, Inc.
(4) 50% owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Plastics, Ltd.
(5) 30% owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Luxembourg, S.A; 49% by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ (Gibraltar) Ltd.
(6) 25% owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe B.V.
E-1
COMPANY JURISDICTION
------- ------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems N.V. (7) Belgium
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems S.L. (8) Spain
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe B.V. Netherlands
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Floormats Europe, B.V. Netherlands
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Holding AB Sweden
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems AB Sweden
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products GmbH Austria
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Holdings Limited United Kingdom
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Fabrics Limited United Kingdom
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Interior Systems Europe Limited United Kingdom
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems Limited United Kingdom
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Carpet Products (UK) Limited United Kingdom
Abex Plastic Products Limited United Kingdom
Manchester Kigass International Limited United Kingdom
Premier Springs & Pressings Limited United Kingdom
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Holdings, S.A. de C.V. (9) Mexico
Amco de Mexico, S.A. de ▇.▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, S.A. de C.V. (10) Mexico
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Carpet & Acoustics, S.A. de C.V. (11) Mexico
Dura Convertible Systems de Mexico, S.A. de C.V. (12) Mexico
Industrias Enjema, S.A. de C.V. (13) Mexico
Servitop, S.A. de C.V. (14) Mexico
Servitrim, S.A. de C.V. (15) Mexico
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Plastics, Inc. Delaware
▇▇▇▇▇▇ Group, LLC Michigan
Brut Plastics, Inc. Michigan
Engineered Plastic Products, Inc. (16) Michigan
--------------------------------------------------------------------------------------------------------------------------------
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(7) Ten shares owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Systems AB
(8) One share owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Holdings Limited
(9) One share owned by Habinus Trading Company
(10) One share owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Accessory Mats, Inc.
(11) One share of Series "A" owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ International Corporation
(12) One share owned by Dura Convertible Systems, Inc.
(13) One share owned by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ International Corporation
(14) One share owned by Amco de Mexico, S.A. de C.V.
(15) One share owned by Dura Convertible Systems de Mexico, S.A. de C.V.
(16) 55% owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
E-2
COMPANY JURISDICTION
------- ------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Plastics, Ltd. Canada
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Plastics, L.L.C. (17) Michigan
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Properties, Inc. Delaware
Comet Acoustics, Inc. Delaware
Dura Convertible Systems, Inc. Delaware
Amco Convertible Fabrics, Inc. Delaware
▇▇▇▇▇▇ Development Company Minnesota
Grefab, Inc. New York
JPS Automotive, Inc. Delaware
JPS Automotive Products Corp. Delaware
Waterstone Insurance, Inc. Vermont
Wickes Asset Management, Inc. Delaware
Wickes Manufacturing Company Delaware
NON-PROFIT CORPORATIONS
-----------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Foundation California
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Disaster Relief Fund, Inc. North Carolina
------------
(17) 53% owned by Mexican Industries in Michigan, Inc.
E-3
SCHEDULE F
ACQUIRING ENTITIES
TARGET ACQUIRER
------ --------
TAC Inc. Intangibles ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Development Company
Textron Automotive Belgium B.V.B.A. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe S.A. and/or one or more of
its wholly owned subsidiaries
Permali do Brasil Industria e Comercio Ltda ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ International Corporation and/or
one or more of its wholly owned subsidiaries
Textron Canada Limited ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Canada Domestic Holding Company
and/or one or more of its wholly owned subsidiaries
Textron Properties Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Canada Domestic Holding Company
and/or one or more of its wholly owned subsidiaries
Textron Automotive Holdings Italy S.r.l. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe S.A. and/or one or more of
its wholly owned subsidiaries
Textron S.A. de ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ International Corporation and/or
one or more of its wholly owned subsidiaries
Textron Automotive B.V. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe S.A. and/or one or more of
its wholly owned subsidiaries
Textron Automotive MIP Limited ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe S.A. and/or one or more of
its wholly owned subsidiaries
Textron Automotive Interiors Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Interiors, Inc.
Textron Automotive Exteriors Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co.
Americus and Evart JPS Automotive, Inc.
F-1
EXHIBIT 1
CERTIFICATE OF DESIGNATION OF THE
POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER
SPECIAL RIGHTS OF THE 15% SERIES A
REDEEMABLE PREFERRED STOCK, THE 16%
SERIES B REDEEMABLE PREFERRED STOCK
AND THE 16% SERIES C REDEEMABLE
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF
----------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co. (the "COMPANY"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the Board of Directors
of the Company by its Certificate of Incorporation (hereinafter referred to as
the "CERTIFICATE OF INCORPORATION") and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated [ ], 2001, duly approved and
adopted the following resolution (the "RESOLUTION"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors hereby
creates, authorizes and provides for the issuance of six series of Preferred
Stock of the Company, designated as (1) 15% Series A1 Redeemable Preferred
Stock, without par value, of the Company, (2) 16% Series B1 Redeemable Preferred
Stock, without par value, of the Company, (3) 16% Series C1 Redeemable Preferred
Stock, without par value, of the Company, (4) 15% Series A2 Redeemable Preferred
Stock, without par value, of the Company, (5) 16% Series B2 Redeemable Preferred
Stock, without par value, of the Company and (6) 16% Series C2 Redeemable
Preferred Stock, without par value, of the Company, having the designations,
preferences, relative, participating, optional and other special rights of the
shares of each such series, and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution, as follows:
SECTION 1. Designation, Amount and Issuance. (a) Of the six series of
Preferred Stock authorized by this Resolution, the Series A1 Redeemable
Preferred Stock, the Series B1 Redeemable Preferred Stock and the Series C1
Redeemable Preferred Stock are to be initially issued in connection with the
Acquisition and the Series A2 Redeemable Preferred
-2-
Stock, the Series B2 Redeemable Preferred Stock and the Series C2 Redeemable
Preferred Stock are to be initially issued as necessary to comply with the
registration and exchange provisions of the Registration Rights Agreement.
Additional shares of Redeemable Preferred Stock may also be issued in accordance
with Section 1(b), additional shares of Series A1 Redeemable Preferred Stock or
Series A2 Redeemable Preferred Stock may be issued in accordance with Section
7(d) and additional shares of Series B1 Redeemable Preferred Stock or Series B2
Redeemable Preferred Stock may also be issued in accordance with Section 5(e).
The designations for the six series of Preferred Stock authorized by this
Resolution shall be (1) the 15% Series A1 Redeemable Preferred Stock, without
par value (the "SERIES A1 REDEEMABLE PREFERRED STOCK"), (2) the 16% Series B1
Redeemable Preferred Stock, without par value (the "SERIES B1 REDEEMABLE
PREFERRED STOCK"), (3) the 16% Series C1 Redeemable Preferred Stock, without par
value (the "SERIES C1 REDEEMABLE PREFERRED STOCK"), (4) the 15% Series A2
Redeemable Preferred Stock, without par value (the "SERIES A2 REDEEMABLE
PREFERRED STOCK" and, together with the Series A1 Redeemable Preferred Stock,
the "SERIES A REDEEMABLE PREFERRED STOCK"), (5) the 16% Series B2 Redeemable
Preferred Stock, without par value (the "SERIES B2 REDEEMABLE PREFERRED STOCK"
and, together with the Series B1 Redeemable Preferred Stock, the "SERIES B
REDEEMABLE PREFERRED STOCK"), and (6) the 16% Series C2 Redeemable Preferred
Stock, without par value (the "SERIES C2 REDEEMABLE PREFERRED STOCK" and,
together with the Series C1 Redeemable Preferred Stock, the "SERIES C REDEEMABLE
PREFERRED STOCK" and such Series C Redeemable Preferred Stock, together with the
Series A Redeemable Preferred Stock and the Series B Redeemable Preferred Stock,
the "REDEEMABLE PREFERRED Stock"). The liquidation preference of the Series A1
Redeemable Preferred Stock, the Series B1 Redeemable Preferred Stock and the
Series C1 Redeemable Preferred Stock at their Issuance Date is $1,000 per share
and the original issue price for each such share is $1,000. The issue price per
share or Liquidation Preference of the Redeemable Preferred Stock shall not for
any purpose be considered to be a determination by the Board of Directors with
respect to the capital and surplus of the Company. The liquidation preference of
the Series A2 Redeemable Preferred Stock, the Series B2 Redeemable Preferred
Stock and the Series C2 Redeemable Preferred Stock at their Issuance Date will
equal the Liquidation Preference of the Series A1 Redeemable Preferred Stock,
the Series B1 Redeemable Preferred Stock and the Series C1 Redeemable Preferred
Stock, respectively, at such Issuance Date pursuant to the terms of the
Registration Rights Agreement (which is inclusive of an amount of Series A
Accrued Dividends, Series B Accrued Dividends and Series C Accrued Dividends,
respectively, equal to that of the Series A1 Redeemable Preferred Stock, the
Series B1 Redeemable Preferred Stock and the Series C1 Redeemable Preferred
Stock at such time). The number of shares constituting the Series A1 Redeemable
Preferred Stock shall be 130,000 shares. The number of shares constituting the
Series B1 Redeemable Preferred Stock shall be 95,000 shares. The number of
shares constituting the Series C1 Redeemable Preferred Stock shall be 20,000
shares. The number of shares constituting the Series A2 Redeemable Preferred
Stock shall be 130,000 shares. The number of shares constituting the Series B2
Redeemable Preferred Stock
-3-
shall be 95,000 shares. The number of shares constituting the Series C2
Redeemable Preferred Stock shall be 20,000 shares. In addition, each series of
Redeemable Preferred Stock shall be constituted by up to an additional [ ]
shares of such series to be available for issuance from time to time as provided
for in Sections 1(b) and 7(d) and each series of Series B Preferred Stock shall
be further constituted by up to an additional [ ] shares of such series to be
available for issuance as provided in Section 5(e). None of the shares of
Redeemable Preferred Stock acquired by the Company by reason of redemption,
purchase or otherwise shall be reissued as such, but may be redesignated for
reissuance as shares of a different class or series of Preferred Stock in
compliance with the terms hereof. Except as provided in Section 1(b), Section
7(d) and Section 5(e), the Company shall only issue the shares of the Series A2
Redeemable Preferred Stock, the Series B2 Redeemable Preferred Stock and the
Series C2 Redeemable Preferred Stock to the Holders of the Series A1 Redeemable
Preferred Stock, the Series B1 Redeemable Preferred Stock and the Series C1
Redeemable Preferred Stock, as applicable, as is necessary to comply with the
registration and exchange provisions of the Registration Rights Agreement.
(b) In the event that the Company shall be required to pay Liquidated
Damages pursuant to the Registration Rights Agreement and shall elect to pay
such Liquidated Damages in kind, on each Dividend Payment Date the Company shall
issue to each Holder entitled to Liquidated Damages in respect of shares of a
series of Redeemable Preferred Stock held by such Holder such number of newly
issued shares of such series of Redeemable Preferred Stock as is equal to (x)
the Liquidated Damages then due to such Holder in respect of shares of
Redeemable Preferred Stock of such series held by such Holder, divided by (y)
the Liquidation Preference plus Total Cash Dividends in Arrears (inclusive of
Additional Dividends and accrued regular dividends from the preceding Dividend
Payment Date if not concurrently paid or accrued in accordance with the terms
hereof) in respect of each share of Redeemable Preferred Stock of such series as
of such Dividend Payment Date. Each newly issued share of Redeemable Preferred
Stock of a series issued to a Holder shall be identical in all respects,
including Liquidation Preference and Total Cash Dividends in Arrears, to all
other shares of Redeemable Preferred Stock of the same series held by such
Holder. In lieu of any issuing any fractional shares of Redeemable Preferred
Stock of any series, the Company may deliver to a Holder an amount in cash equal
to such fraction multiplied by the amount set forth in clause (y) of the
preceding sentence with respect to such series.
SECTION 2. Dividends. (a) Subject to Section 7(d) in the case of
Textron Shares only, all shares of Redeemable Preferred Stock will bear
dividends, whether or not earned or declared, out of funds legally available
therefor, from the Issuance Date thereof accruing on the Liquidation Preference
thereof at the rate of (x) 15% per annum (the "SERIES A DIVIDEND RATE") in the
case of the Series A Redeemable Preferred Stock, (y) 16% per annum (the "SERIES
B DIVIDEND RATE") in the case of the Series B Redeemable Preferred Stock and (z)
16% per annum (the "SERIES C DIVIDEND RATE" and, together with the Series A
Dividend
-4-
Rate and the Series B Dividend Rate, the "DIVIDEND RATE") in the case
of the Series C Redeemable Preferred Stock and, in each case, will be payable
quarterly in arrears on each Dividend Payment Date, commencing on March 1, 2002,
to Holders of record on the February 15, May 15, August 15 and November 15
immediately preceding the relevant Dividend Payment Date. In calculating the
amount of dividends due on any Dividend Payment Date, the Liquidation Preference
utilized shall be the Liquidation Preference in effect on the first business day
following the immediately preceding Dividend Payment Date. The Company may, at
its option and without notice, elect to accrue up to (but not more than) an
amount (rounded to the nearest $.01) equivalent to 7% per annum of the dividends
on the Series A Redeemable Preferred Stock payable on any Dividend Payment Date
and up to (but not more than) an amount (rounded to the nearest $.01) equivalent
to 8% per annum of the dividends on each of the Series B Redeemable Preferred
Stock and the Series C Redeemable Preferred Stock payable on any Dividend
Payment Date in lieu of payment of such dividends in cash and, in each such
case, any such accrued dividends (respectively, the "SERIES A ACCRUED
DIVIDENDS," "SERIES B ACCRUED DIVIDENDS" and "SERIES C ACCRUED DIVIDENDS") will
be added to the Liquidation Preference of the applicable series of Redeemable
Preferred Stock. Additional dividends are payable in cash in respect of Series A
Redeemable Preferred Stock constituting Textron Shares as provided in Section
7(d) ("LIQUIDITY DIVIDENDS"). For the avoidance of doubt, Liquidity Dividends
shall not be subject to accrual as provided in the second preceding sentence but
shall be treated as dividends payable in cash for all purposes of this Section
2. Dividends shall cease to accumulate in respect of the shares of Redeemable
Preferred Stock upon their redemption unless the Company shall have failed to
pay the relevant redemption price on the Redemption Date.
(b) All dividends (including pursuant to Section 2(f)) paid with
respect to shares of the Redeemable Preferred Stock pursuant to this Certificate
of Designation shall be paid pro rata to the Holders entitled thereto.
(c) Dividends with respect to Redeemable Preferred Stock are payable
when, as and if declared by the Board of Directors, and nothing contained in
this Certificate of Designation shall in any way or under any circumstances be
construed or deemed to require the Board of Directors to declare, or the Company
to pay or set apart for payment, any dividends on shares of the Redeemable
Preferred Stock at any time. Dividends on the Redeemable Preferred Stock will
accrue whether or not the Company has earnings or profits, whether or not there
are funds legally available for the payment of such dividends and whether or not
dividends are declared. The accrual of dividends as Series A Accrued Dividends,
Series B Accrued Dividends or Series C Accrued Dividends as permitted by Section
2(a) shall be deemed to be a payment of dividends and shall fulfill the
Company's obligations with respect to the payment of such portion of the
dividends payable upon the Redeemable Preferred Stock for all purposes hereof.
Other dividends will accumulate to the extent they are not paid on the Dividend
Payment Date for the period to which they relate as Cash
-5-
Dividends in Arrears and accumulated and unpaid dividends which are required to
be paid in cash will bear Additional Dividends until paid on the same basis as
set forth in Section 2(a) of this Certificate of Designation, compounded
quarterly on each Dividend Payment Date.
(d) Subject to the Company's option to accrue a portion of the
dividends provided for in Section 2(a), Holders shall be entitled to receive the
cash dividends provided for in this Certificate of Designation (including the
Total Cash Dividends in Arrears) in preference to and in priority over any cash
dividends (including accumulated and unpaid dividends) payable upon any Junior
Securities.
(e) At the Issuance Date of the Series A2 Redeemable Preferred Stock
and the Series B2 Redeemable Preferred Stock and the Series C2 Redeemable
Preferred Stock, such shares shall be issued with Total Cash Dividends in
Arrears and accumulated and unpaid dividends for the then current dividend
period equal to that of the Series A1 Redeemable Preferred Stock, the Series B1
Redeemable Preferred Stock and the Series C1 Redeemable Preferred Stock for
which it is exchanged pursuant to the Registration Rights Agreement.
(f) At any time and from time to time when there shall be Total Cash
Dividends in Arrears, the Company may declare and pay, to the Holders of record
of the Redeemable Preferred Stock on any record date chosen by the Company
(which record date shall be not less than 10 and not more than 60 days prior to
the payment date for such special dividend) for such dividends, a special
dividend per share of Redeemable Preferred Stock equal to all or a portion of
the Total Cash Dividends in Arrears as of the payment date. Upon payment of such
a dividend, if less than the Total Cash Dividends in Arrears with respect to a
share has been paid, the Cash Dividends in Arrears and Additional Dividends with
respect to such share shall be reduced on a pro rata basis by the amount of such
dividend.
(g) No full dividends may be declared or paid or funds set apart for
the payment of dividends on, and the Company shall not make any other
distribution with respect to, any Parity Securities for any period unless the
entire Total Cash Dividends in Arrears for all issued and outstanding shares of
Redeemable Preferred Stock shall have been declared and paid in full, except as
provided below. If at any time there shall exist Total Cash Dividends in
Arrears, the Redeemable Preferred Stock will share dividends pro rata with the
Parity Securities (on the basis of the relative unpaid amount of Cash Dividends
in Arrears and Additional Dividends, in the case of the Redeemable Preferred
Stock and of cumulative accrued and unpaid dividends, in the case of such Parity
Securities).
(h) Cash Dividends in Arrears, Additional Dividends and other dividends
in connection with any redemption may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to Holders of record of the
Redeemable Preferred Stock on such date, not more than 60 days prior to the
payment thereof, as may be fixed by the Board of Directors.
-6-
(i) Dividends payable on the Redeemable Preferred Stock shall be
computed on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in the period for which dividends are payable and shall
be deemed to accrue on a daily basis.
SECTION 3. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, Holders will be entitled
to be paid, out of the assets of the Company available for distribution to
stockholders, the Liquidation Preference per share of Redeemable Preferred
Stock, plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends (including any Total Cash Dividends in Arrears), if any,
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up),
plus, in the case of the Series C Redeemable Preferred Stock only, an amount in
cash equal to the Common Participation Amount, before any distribution is made
on any Junior Securities, including, without limitation, on any Common Stock of
the Company. If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the amounts payable with respect to the Redeemable
Preferred Stock and all other Parity Securities are not paid in full, the
Holders of the Redeemable Preferred Stock and the holders of the Parity
Securities will share equally and ratably in any distribution of assets of the
Company in proportion to their relative liquidation preferences, together with
all accumulated and unpaid dividends to which each is entitled. After payment of
the full amount of the Liquidation Preference and, without duplication,
accumulated and unpaid dividends (including any Total Cash Dividends in Arrears)
to which they are entitled, and, in the case of the Series C Redeemable
Preferred Stock only, an amount in cash equal to the Common Participation
Amount, Holders will not be entitled to any further participation in any
distribution of assets of the Company. For the avoidance of doubt, the Series A
Redeemable Preferred Stock, the Series B Redeemable Preferred Stock and the
Series C Redeemable Preferred Stock shall constitute Parity Securities with
respect to one another. For the purposes of this Section 3, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with one or more entities
shall be deemed to be a liquidation, dissolution or winding-up of the Company.
Any payment of accumulated and unpaid dividends shall be paid prior to any other
payments called for pursuant to this Section 3.
SECTION 4. Voting Rights. (a) Except as otherwise required under the
laws of the State of Delaware or as set forth below, Holders shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Company.
(b) If (i) after December 1, 2002, there shall exist any Total Cash
Dividends in Arrears remaining in arrears and unpaid for any two consecutive
quarterly dividend periods;
-7-
(ii) the Company fails to discharge its obligation to redeem Redeemable
Preferred Stock on any Redemption Date to the extent required by Section 5;
(iii) the Company fails to make a Par Offer if such offer is required by the
second paragraph of Section 7(d) hereof or fails to purchase shares of Series A
Redeemable Preferred Stock from Holders who elect to have such shares purchased
pursuant to such Par Offer; (iv) a breach or violation of any other provisions
contained in Section 7 hereof occurs and the breach or violation continues for a
period of 45 days or more after the Company receives notice thereof specifying
the default from the Holders of at least 25% of the shares of Redeemable
Preferred Stock then outstanding; (v) Indebtedness of the Company and/or any
Restricted Subsidiary having an individual or aggregate outstanding principal
amount of $25,000,000 or more is declared due and payable following an event of
default prior to its scheduled stated maturity or is not paid in full upon its
scheduled stated maturity; (vi) a decree or order is entered by a court having
jurisdiction in the premises granting relief in respect of any Significant
Subsidiary in any involuntary case under the Federal Bankruptcy Code, adjudging
such Significant Subsidiary a bankrupt, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of any Significant Subsidiary under any Bankruptcy Law, or appointing a
receiver, liquidator, custodian, assignee, trustee, sequestrator (or other
similar official) of any Significant Subsidiary, or of substantially all of its
properties, or ordering the winding-up or liquidation of its affairs under any
such law, and any such decree or order continues unstayed and in effect for a
period of 60 consecutive days; or (vii) any Significant Subsidiary institutes
proceedings to be adjudicated a bankrupt, or any Significant Subsidiary consents
to the institution of bankruptcy proceedings against it, or any Significant
Subsidiary files a petition or answer or consent seeking reorganization or
relief under any Bankruptcy Law, or any Significant Subsidiary consents to the
filing of any such petition or to the appointment of a receiver, liquidator,
custodian, assignee, trustee, sequestrator (or other similar official) of any
Significant Subsidiary, or of substantially all of its properties under any such
law, then, in each such case, the Holders of the majority of the then
outstanding affected series of Redeemable Preferred Stock (voting or consenting,
as the case may be, as one class to the extent such Voting Rights Triggering
Event relates to both series of Redeemable Preferred Stock) will be entitled to
elect two members of the Board of Directors of the Company; provided, however,
that in no event shall such Holders be entitled to elect more than two such
members. Such voting rights will continue until such time as (x) in the case of
a dividend default described in clause (i) above, all Total Cash Dividends in
Arrears on the Redeemable Preferred Stock are paid in full, (y) in the case of
an event described in clause (v) above, any such acceleration or event of
default has been rescinded, cured or waived or the Indebtedness relating to such
acceleration has been paid, redeemed, repurchased or defeased in full and (z) in
all other cases, any failure, breach, default or event giving rise to such
voting rights is remedied, cured or waived by the Holders of at least a majority
of the then outstanding affected series of Redeemable Preferred Stock (voting or
consenting, as the case may be, as one class to the extent such Voting Rights
Triggering Event relates to both series of Redeemable Preferred Stock), after
which time the term of the directors elected pursuant to
-8-
the provisions of this paragraph shall terminate. Each such event described in
clauses (i) through (vii) above is referred to herein as a "VOTING RIGHTS
TRIGGERING EVENT."
(c) The Company shall not modify, change, affect or amend (including in
connection with a merger or consolidation, except to the limited extent
contemplated by Section 7(e)) the Certificate of Incorporation or this
Certificate of Designation to affect materially and adversely the specified
rights, preferences, privileges or voting rights of the Holders of the
Redeemable Preferred Stock, or authorize the issuance of any additional shares
of Redeemable Preferred Stock, without the affirmative vote or consent of
Holders of at least a majority of the shares of Redeemable Preferred Stock then
outstanding, voting or consenting, as the case may be, as one class. In
addition, the Company shall not authorize, create (by way of reclassification,
merger, consolidation or otherwise) or issue (i) any Parity Securities, or any
obligation or security convertible into or evidencing the right to purchase any
Parity Securities, without the affirmative vote or consent of the Holders of a
majority of the then outstanding shares of Redeemable Preferred Stock, (ii) any
Senior Securities, or any obligation or security convertible into or evidencing
the right to purchase Senior Securities, without the affirmative vote or consent
of the Holders of at least a majority of the outstanding shares of the
Redeemable Preferred Stock and (iii) any Junior Securities constituting
Disqualified Stock, or any obligation or security convertible into or evidencing
the right to purchase Junior Securities constituting Disqualified Stock, without
the affirmative vote or consent of the Holders of at least a majority of the
outstanding shares of the Redeemable Preferred Stock, in each case voting or
consenting, as the case may be, as one class. Except as expressly set forth
above, (i) the creation, authorization or issuance of any shares of Junior
Securities, Parity Securities or Senior Securities, including the designation of
series thereof within the existing class of Preferred Stock of the Company, or
(ii) the increase or decrease in the amount of authorized Capital Stock of any
class, including any Preferred Stock of the Company (other than the Redeemable
Preferred Stock), shall not require the consent of the Holders and shall not be
deemed to affect materially and adversely the specified rights, preferences,
privileges or voting rights of Holders. The affirmative vote or consent of
Holders of at least a majority of the then issued and outstanding shares of
Redeemable Preferred Stock shall be required to increase the amount of
authorized Redeemable Preferred Stock. No vote of the Holders shall be required
to decrease the number of authorized shares of the Redeemable Preferred Stock;
provided, however, that such number shall not be decreased below the number of
the then currently issued and outstanding shares of Redeemable Preferred Stock.
(d) Immediately after voting power to elect directors shall have become
vested and be continuing in the Holders pursuant to Section 4(b) or if vacancies
shall exist in the offices of directors elected by the Holders, Holders of at
least 10% of the then issued and outstanding shares of Redeemable Preferred
Stock or a proper officer of the Company shall call a special meeting of the
Holders for the purpose of electing the directors which such
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Holders are entitled to elect. Any such meeting shall be held at the earliest
practicable date, and the Company shall provide Holders with access to the lists
of Holders. At any meeting held for the purpose of electing directors at which
the Holders shall have the right, voting separately as a class, to elect
directors, the presence in person or by proxy of the Holders of at least a
majority of the outstanding shares of Redeemable Preferred Stock shall be
required to constitute a quorum of such Holders.
(e) Any vacancy occurring in the office of a director elected by the
Holders shall be filled by the Holders.
(f) In any case in which the Holders shall be entitled to vote pursuant
to this Section 4 or pursuant to the General Corporation Law of the State of
Delaware, each Holder shall be entitled to one vote for each share of Redeemable
Preferred Stock held.
(g) Holders of at least a majority of the then outstanding shares of
Redeemable Preferred Stock, voting or consenting, as the case may be, separately
as a single class, may waive compliance with any provision of this Certificate
of Designation.
SECTION 5. Redemption and Series C Exchange.
(a) Optional Redemption. (i) The Series A Redeemable Preferred Stock
and the Series B Redeemable Preferred Stock will be redeemable at the election
of the Company, as a whole or from time to time in part, at any time on or after
December 1, 2006, at the applicable redemption prices (expressed as a percentage
of the Liquidation Preference thereof) set forth below, plus, without
duplication, an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the date of redemption (the
"OPTIONAL REDEMPTION DATE") to the Optional Redemption Date, if redeemed during
the 12-month period beginning on December 1 of the years indicated below.
Redemption Price
-----------------------------------------
Series A Redeemable Series B Redeemable
Year Preferred Stock Preferred Stock
---- --------------- ---------------
2006..................... 107.500% 108.000%
2007..................... 105.000% 105.333%
2008..................... 102.500% 102.667%
2009 and thereafter...... 100.000% 100.000%
(ii) No optional redemption may be made unless prior to such redemption
any Total Cash Dividends in Arrears shall have been fully paid on all shares of
the Redeemable Preferred Stock. If less than all the Redeemable Preferred Stock
of any series is to be redeemed, the particular shares of such series to be
redeemed will be determined pro rata among Holders of such series, except that
the Company may redeem such shares held by
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any Holder of fewer than 100 shares without regard to such pro rata redemption
requirement. If any Redeemable Preferred Stock is to be redeemed in part, the
Redemption Notice that relates to such Redeemable Preferred Stock shall state
the portion of the Liquidation Preference to be redeemed. New shares of the same
series of Redeemable Preferred Stock having an aggregate Liquidation Preference
equal to the unredeemed portion will be issued in the name of the Holder thereof
upon cancellation of the original shares of Redeemable Preferred Stock.
(b) Mandatory Redemption. (i) The Company shall redeem all outstanding
Series A Redeemable Preferred Stock and Series B Redeemable Preferred Stock
(subject to the legal availability of funds therefor) in whole on December 1,
2012; provided that such date shall be automatically changed upon the issuance
of the Acquisition Notes to be the date that is the first Business Day which is
one year following the final stated maturity date of the Acquisition Notes
(without giving effect to any amendment, modification or waiver thereof), at a
redemption price equal to 100% of the Liquidation Preference thereof, plus,
without duplication, all accumulated and unpaid dividends (including any Total
Cash Dividends in Arrears), if any, to the Maturity Redemption Date. The Company
shall redeem all outstanding Series C Redeemable Preferred Stock (subject to the
legal availability of funds therefor) in whole on January 1, 2022, at a
redemption price equal to 100% of the Liquidation Preference thereof, plus,
without duplication, all accumulated and unpaid dividends (including any Total
Cash Dividends in Arrears), if any, to the Maturity Redemption Date, plus the
Common Participation Amount.
(ii) The Company shall make an offer to redeem (a "CHANGE OF CONTROL
OFFER") all outstanding Redeemable Preferred Stock (subject to legal
availability of funds therefor) not later than 60 days following a Change of
Control (the "CHANGE OF CONTROL REDEMPTION DATE") at a redemption price equal to
100% of the Liquidation Preference thereof, plus, without duplication, all
accumulated and unpaid dividends (including any Total Cash Dividends in
Arrears), if any, to the Change of Control Redemption Date, plus, in the case of
the Series C Redeemable Preferred Stock only, an amount equal to the Common
Participation Amount; provided that (A) no redemption under this Section
5(b)(ii) shall be required unless (i) all Existing Notes shall have ceased to be
outstanding, (ii) the Company shall have consummated a defeasance with respect
to the Existing Notes in accordance with the terms thereof or (iii) the holders
of Existing Notes shall have consented to the Company's performance of its
obligations under this Section 5(b)(ii) and (B) no redemption shall be effected
until after the Company has performed all of its obligations arising upon a
"change of control" under any debt instruments of the Company. The Company shall
not consummate a transaction resulting in a Change of Control unless at the time
of or prior to the Change of Control, the Company shall have entered into
customary financial and/or other arrangements which permit the timely redemption
of the Redeemable Preferred Stock under this Section 5(b)(ii) (disregarding the
proviso of the preceding sentence). The Company may (but
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shall not be obligated to) discharge any obligation arising under this Section
5(b)(ii) if a Person other than the Company (whether or not an Affiliate) makes
and consummates a Change of Control Offer in the manner contemplated, and as
required by, this Certificate of Designation.
(iii) In the event of any Asset Disposition resulting in Net Cash
Proceeds to the Company or any Restricted Subsidiary required by the terms of
the Company's then outstanding Indebtedness to be applied towards the repayment
of, or any offer to repay, any outstanding Indebtedness of the Company to the
extent that such Net Cash Proceeds are not applied by the Company within 365
days following such Asset Disposition toward the repayment of any such
Indebtedness or are not reinvested in the business of the Company and the
Restricted Subsidiaries within 365 days following such Asset Disposition, first
the Company shall apply such Net Cash Proceeds towards the making and
consummation of any remaining obligation to offer to purchase or other repayment
of any outstanding Indebtedness of the Company to the extent required by, and in
accordance with, the terms thereof, and towards any fees and expenses associated
therewith, and, second, to the extent that any Net Cash Proceeds remain after
any such purchase or repayment and payment of associated fees and expenses (such
remaining proceeds being "NET AVAILABLE PROCEEDS") and provided no default or
event of default would result under the terms of any Indebtedness of the
Company, the Company shall (a) declare a special dividend pursuant to Section
2(e) in an amount equal to the lesser of (x) the full amount of the entire Total
Cash Dividends in Arrears (together with all other dividends payable in respect
thereof) or (y) the amount of such Net Available Proceeds, and (b) after
fulfilling any obligations with respect to special dividends referred to in the
preceding clause (a), apply any remaining Net Available Proceeds ("REMAINING NET
AVAILABLE PROCEEDS") towards the making and consummation of an offer (an "ASSET
DISPOSITION OFFER") to redeem shares of Redeemable Preferred Stock, at a
redemption price equal to 100% of the Liquidation Preference thereof, plus,
without duplication, all accumulated and unpaid dividends (including any Total
Cash Dividends in Arrears), if any, to the redemption date (the "ASSET
DISPOSITION REDEMPTION DATE"), which shall be not more than 60 nor less than 30
days following the Company's satisfaction of all obligations in respect of such
Asset Disposition and the application of the Net Cash Proceeds therefrom
required hereby to be performed prior to the making of an Asset Disposition
Offer, plus, in the case of the Series C Redeemable Preferred Stock only, an
amount equal to the Common Participation Amount. Notwithstanding anything herein
to the contrary, the amount of Net Available Proceeds may be recalculated to
take account of the pro rata rights of any holders of Parity Securities, if any.
(c) Dividend Payment. Any payment of accumulated and unpaid dividends
shall be made prior to the payment of any redemption price made pursuant to this
Section 5. In addition, the Company shall declare and pay a special dividend as
provided in Section 2(e) in respect of the full amount of any Total Cash
Dividends in Arrears prior to the payment of
-12-
any redemption price made pursuant to this Section 5. Notwithstanding anything
herein to the contrary, this Section 5(c) shall not result in any requirement to
make a duplicative payment upon any redemption hereunder.
(d) Procedure for Redemptions. (i) Not more than 60 and not less then
30 days prior to any Redemption Date (or, in the case of a redemption pursuant
to Section 5(b)(ii), not more than 60 and not less than 5 Business Days prior to
any Redemption Date), written notice (the "REDEMPTION NOTICE") shall be given by
first-class mail, postage prepaid, to each Holder of record of shares to be
redeemed on the record date fixed for such redemption of the Redeemable
Preferred Stock or entitled to the benefits of a Change of Control Offer or
Asset Disposition Offer, as the case may be, at such Holder's address as the
same appears on the stock register of the Company; provided, however, that (1) a
Redemption Notice may be given with respect to a redemption pursuant to Section
5(b)(ii) on a basis that is conditioned upon and subject to the occurrence of a
Change of Control upon a date that may be subsequently changed (a "CONDITIONAL
REDEMPTION NOTICE") and (2) no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the redemption of any
shares of Redeemable Preferred Stock to be redeemed except as to the Holder or
Holders to whom the Company has failed to give such notice or except as to the
Holder or Holders whose notice was defective. The Redemption Notice shall state:
(A) in the case of a Change of Control Offer or Asset Disposition Offer
only, that a Change of Control has occurred or that Remaining Net Available
Proceeds resulting from an Asset Disposition exist, as the case may be, and
that such Holder has the right to require the Company to redeem such
Holder's Redeemable Preferred Stock at the within mentioned Redemption
Price, in the case of an Asset Disposition Offer, up to a maximum aggregate
Redemption Price equal to the Remaining Net Available Proceeds less the
amount of fees and expenses associated with the making and consummation of
the Asset Disposition Offer;
(B) the Redemption Price or, if unascertainable, how the Redemption
Price will be calculated;
(C) in the case of an optional redemption only, whether all or less
than all the outstanding shares of a series of Redeemable Preferred Stock
are to be redeemed and the total number of shares of such Redeemable
Preferred Stock being redeemed;
(D) in the case of an optional redemption only, the number and series
of shares of Redeemable Preferred Stock held by the Holder that the Company
intends to redeem;
(E) in the case of an Asset Disposition Offer only, the aggregate
Remaining Net Available Proceeds available to redeem shares of Redeemable
Preferred Stock
-13-
pursuant to the Asset Disposition Offer and to pay fees and expenses
associated therewith;
(F) in the case of an Asset Disposition Offer only, that any shares of
Redeemable Preferred Stock tendered in excess of the maximum number able to
be repurchased with the Remaining Net Available Proceeds (net of fees and
expenses associated with the Asset Disposition Offer) will be returned to
the Holder and will be treated for all purposes as if such shares had not
been tendered for redemption, and that in the event of such an excess
tender, the Company shall select the shares of Redeemable Preferred Stock to
be redeemed as nearly as practicable on a pro rata basis;
(G) the Redemption Date or, in the case of a Conditional Redemption
Notice, the first possible and intended Redemption Date;
(H) in the case of an optional redemption or maturity date redemption
only, that the Holder is to surrender to the Company, at the place or places
that shall be designated in such Redemption Notice, its certificates
representing the shares of Redeemable Preferred Stock to be redeemed;
(I) in the case of a Change of Control Offer or Asset Disposition Offer
only, that the Holder is to surrender to the Company, at the place or places
that shall be designated in such Redemption Notice, its certificates
representing the shares of Redeemable Preferred Stock that such Holder has
elected to be redeemed;
(J) that dividends on the shares of any Redeemable Preferred Stock to
be redeemed shall cease to accumulate on the day prior to such Redemption
Date unless the Company defaults in the payment of the redemption price; and
(K) the name of any bank or trust company performing the duties
referred to in subsection (d)(iv) below.
(ii) On or before a Redemption Date, each Holder of Redeemable
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Redeemable Preferred Stock to the Company, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full redemption price for such shares shall be payable in
cash to the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be returned to authorized
but unissued shares. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
-14-
(iii) On and after the Redemption Date, unless the Company defaults in
the payment in full of the applicable redemption price, dividends on the
Redeemable Preferred Stock called or tendered for redemption shall cease to
accumulate on the day prior to the Redemption Date, and the Holders of such
shares shall cease to have any further rights with respect thereto on the
Redemption Date, other than the right to receive the redemption price, without
interest.
(iv) If a Redemption Notice shall have been duly given or if the
Company shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before the
Redemption Date specified therein the funds necessary for such redemption shall
have been deposited by the Company with such bank or trust company in trust for
the pro rata benefit of the Holders of the Redeemable Preferred Stock called or
tendered for redemption, then, notwithstanding that any certificate for shares
so called for redemption shall not have been surrendered for cancellation, from
and after the time of such deposit, all shares so called or tendered, or to be
so called or tendered pursuant to such irrevocable authorization, for redemption
shall no longer be deemed to be outstanding and all rights with respect to such
shares shall forthwith cease and terminate, except only the right of the Holders
thereof to receive from such bank or trust company at any time after the time of
such deposit the funds so deposited, without interest. The aforesaid bank or
trust company shall be organized and in good standing under the laws of the
United States of America or of any state within the United States, shall have
capital, surplus and undivided profits aggregating at least $25,000,000 (a
"QUALIFIED BANK") and shall be identified in the Redemption Notice. Any interest
accrued on such funds from and after the Redemption Date shall be paid to the
Company from time to time. Any funds so set aside or deposited, as the case may
be, and unclaimed at the end of one year from such Redemption Date shall, to the
extent permitted by law, be released or repaid to the Company, after which
release or repayment the Holders of the shares so called for redemption shall
look only to the Company for payment thereof.
(e) Exchange of Series C Redeemable Preferred Stock for Series B
Redeemable Preferred Stock. At any time after the second anniversary of the
Issuance Date of the Series C1 Redeemable Preferred Stock but prior to the third
anniversary of the Issuance Date of the Series C1 Redeemable Preferred Stock, at
the option of the Company or upon the written request of Holders of a majority
of the outstanding shares of Series C Redeemable Preferred Stock, the Company
shall exchange, in whole and not in part, all outstanding shares of Series C
Redeemable Preferred Stock for newly issued shares of Series B Redeemable
Preferred Stock. If any Series B Redeemable Preferred Stock shall be outstanding
immediately prior to such exchange, all newly issued shares of Series B
Redeemable Preferred Stock shall be of the same series as all other outstanding
shares of Series B Redeemable Preferred Stock at such time and identical to such
outstanding shares in all respects, including as to Liquidation Preference,
Total Cash Dividends in Arrears (inclusive of any Additional
-15-
Dividends accruing from the most recent Dividend Payment Date), accrued regular
dividends and, if previously obtained with respect to outstanding Series B
Redeemable Preferred Stock, CUSIP number. If no shares of Series B Redeemable
Preferred Stock shall be outstanding immediately prior to such exchange, all
newly issued shares of Series B Redeemable Preferred Stock shall be issued with
the same Liquidation Preference, Total Cash Dividends in Arrears (inclusive of
any Additional Dividends accruing from the most recent Dividend Payment Date)
and accrued regular dividends as the shares of Series C Redeemable Preferred
Stock immediately prior to such exchange (and the Common Exchange Factor shall
be calculated on such basis). The ratio of exchange shall be one share of Series
B Redeemable Preferred Stock multiplied by the Common Exchange Factor for each
share of Series C Redeemable Preferred Stock exchanged. In lieu of issuing any
fractional shares of Series B Redeemable Preferred Stock, the Company may
deliver to a Holder an amount in cash equal to such fraction multiplied by the
sum of the Liquidation Preference plus Total Cash Dividends in Arrears
(inclusive of any Additional Dividends accruing from the most recent Dividend
Payment Date) plus accrued regular dividends in respect of each share of Series
B Redeemable Preferred Stock being issued.
Not more than 60 and not less than 10 days prior to an exchange
provided for in the preceding paragraph , written notice (the "EXCHANGE NOTICE")
shall be given by first-class mail, postage prepaid, to each Holder of record of
shares to be exchanged on the record date fixed for such exchange of Series B
Redeemable Preferred Stock for Series C Redeemable Preferred Stock, at such
Holder's address as the same appears on the stock register of the Company;
provided, however, that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for such exchange. The
Exchange Notice shall state (i) the date set for exchange, (ii) the method used
to calculate the Common Exchange Factor, (iii) that the Holder is to surrender
to the Company, at the place or places that shall be designated in such Exchange
Notice, its certificates representing the shares of Series C Redeemable
Preferred Stock to be exchanged, (iv) that following the date set for exchange,
such Holder's shares of Series C Redeemable Preferred Stock shall cease to
accrue dividends, whether or not submitted for exchange, and (v) that following
the date set for exchange, dividends on newly issued shares of Series B
Redeemable Preferred Stock shall accrue from the most recent Dividend Payment
Date.
SECTION 6. Ranking. The Redeemable Preferred Stock shall, with respect
to dividends and distributions upon liquidation, winding-up and dissolution of
the Company, rank (a) senior to all classes of Common Stock of the Company, and
to each other class of Capital Stock or series of Preferred Stock of the Company
established after the Issuance Date of the Series A1 Redeemable Preferred Stock,
Series B1 Redeemable Preferred Stock and Series C1 Redeemable Preferred Stock
the terms of which expressly provide that it ranks junior to the Redeemable
Preferred Stock as to dividends and distributions upon liquidation, winding-up
and dissolution of the Company (collectively referred to, together with all
classes
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of Common Stock of the Company, as "JUNIOR SECURITIES"), (b) subject to any
required approval of the Holders in accordance with Section 4(c) hereof, on a
parity with each other class of Capital Stock or series of Preferred Stock
established after the Issuance Date of the Series A1 Redeemable Preferred Stock,
Series B1 Redeemable Preferred Stock and Series C1 Redeemable Preferred Stock
the terms of which expressly provide that such class or series will rank on a
parity with the Redeemable Preferred Stock as to dividends and distributions
upon liquidation, winding-up and dissolution of the Company (collectively
referred to as "PARITY SECURITIES"), and (c) subject to any required approval of
the Holders in accordance with Section 4(c) hereof, junior to each class of
Capital Stock or series of Preferred Stock established after the Issuance Date
of the Series A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred
Stock and Series C1 Redeemable Preferred Stock by the Board of Directors and the
terms of which do not expressly provide that such class or series will rank
junior to, or on a parity with, the Redeemable Preferred Stock as to dividends
and distributions upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "SENIOR SECURITIES"). For the avoidance of doubt,
each series of Redeemable Preferred Stock shall constitute Parity Securities
with respect to one another.
SECTION 7. Certain Additional Provisions.
(a) Limitation on Indebtedness. The Company shall not Incur any
Indebtedness, and the Company shall not permit any of the Restricted
Subsidiaries to Incur any Indebtedness, other than, in any such case, Permitted
Indebtedness; provided that the Company or a Restricted Subsidiary may Incur
Indebtedness if immediately after giving pro forma effect thereto and the use of
the proceeds thereof (in accordance with the definition of "Consolidated
Coverage Ratio"), the Consolidated Coverage Ratio is at least equal to
[ ]:1.00.(a)
For purposes of determining compliance with this Section 7(a),
(i) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Permitted Indebtedness or the provisions of the first
paragraph of this Section 7(a), the Company in its sole discretion may classify,
and may from time to time reclassify, such item of Indebtedness and only be
required to include the amount of such Indebtedness as one of such types and
such item of Indebtedness may be divided and classified in more than one of such
types, (ii) the
--------------
(a) To be set with 0.25:1.00 greater capacity than provided for in the
Acquisition Notes or, if the Acquisition Notes are not issued on or before
the first Issuance Date, at a level reasonably acceptable to the Company
and Textron. In no event will the Consolidated Coverage Ratio be greater
than 2.0:1.00.
-17-
liquidation preference of any Preferred Stock will be the amount of all
obligations of such Person with respect to the redemption of such Preferred
Stock at its stated maturity or upon liquidation or dissolution (whichever is
greater) and (iii) in no event shall the accrual of dividends or interest or
issuance of pay-in-kind dividends or interest subsequent to the issuance or
Incurrence of Indebtedness or Preferred Stock giving rise thereto constitute an
Incurrence required to be tested under this Section 7(a).
(b) Limitations on Restricted Payments. Without limiting other
prohibitions in this Certificate of Designation (including Sections 4(c) and
5(a)(ii)), the Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, (i) declare or pay any dividend or make any
distribution to the holders of any Junior Securities or Parity Securities (other
than dividends or distributions payable solely in shares of Qualified Capital
Stock or in options, warrants or other rights to purchase shares of Qualified
Capital Stock); (ii) purchase, redeem or otherwise acquire or retire for value
any Junior Securities or Parity Securities or any options, warrants or other
rights to acquire Junior Securities or Parity Securities (other than such
options, warrants or rights owned by the Company or a Restricted Subsidiary); or
(iii) make any Investment (other than a Permitted Investment) in any Person (any
of the foregoing actions described in clause (i), (ii) or (iii), other than the
exclusions therefrom, are collectively referred to herein as "RESTRICTED
PAYMENTS"), unless at the time the Company or such Restricted Subsidiary makes
such Restricted Payment:
(1) no Voting Rights Triggering Event shall have occurred and be
continuing (or result therefrom);
(2) after giving effect to such Restricted Payment, the Consolidated
Coverage Ratio shall be equal to or greater than [ ]:1.00;(a)
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issuance Date of the
Series A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred Stock
and Series C1 Redeemable Preferred Stock would not exceed the sum of
(without duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issuance Date of the Series
A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred Stock and
Series C1 Redeemable Preferred Stock to the end of the most recent
fiscal quarter ending prior to the date of such Restricted Payment as
to which
--------------
(a) To be the same as set forth in the first paragraph of Section 7(a).
-18-
financial results are available (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit); plus
(B) the aggregate net cash proceeds or fair market value of
property received by the Company from the issue or sale of Qualified
Capital Stock of the Company or other capital contributions in respect
of Qualified Capital Stock of the Company subsequent to the Issuance
Date of the Series A1 Redeemable Preferred Stock, Series B1 Redeemable
Preferred Stock and Series C1 Redeemable Preferred Stock, provided that
any such net proceeds received, directly or indirectly, by the Company
from an employee stock ownership plan financed by loans from the
Company or a Subsidiary of the Company shall be included only to the
extent such loans have been repaid with cash on or prior to the date of
determination; plus
(C) the amount by which Indebtedness of the Company or a
Restricted Subsidiary (other than, in either case, Indebtedness owed to
the Company or a Restricted Subsidiary) is reduced on the Company's
consolidated balance sheet upon the conversion or exchange subsequent
to the Issuance Date of the Series A1 Redeemable Preferred Stock,
Series B1 Redeemable Preferred Stock and Series C1 Redeemable Preferred
Stock of any such Indebtedness into or for Qualified Capital Stock of
the Company (less the amount of any cash, or other property,
distributed by the Company or such Restricted Subsidiary, as
applicable, upon such conversion or exchange on account of such
Indebtedness other than on account of interest or dividends in respect
thereof); plus
(D) to the extent not included in Consolidated Net Income, the net
reduction (received by the Company or any Restricted Subsidiary in
cash) in Investments (other than Permitted Investments) made by the
Company and the Restricted Subsidiaries since the Issuance Date of the
Series A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred
Stock and Series C1 Redeemable Preferred Stock (including if such
reduction occurs by reason of the return of equity capital, the
repayment of the principal of loans or advances or the redesignation of
an Unrestricted Subsidiary as a Restricted Subsidiary), not to exceed,
in the case of any Investments in any Person, the amount of Investments
(other than Permitted Investments) made by the Company and its
Restricted Subsidiaries in such Person since the Issuance Date of the
Series A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred
Stock and Series C1 Redeemable Preferred Stock.
-19-
Notwithstanding the foregoing paragraph, so long as no Voting Rights
Triggering Event shall have occurred and be continuing (except as to clauses
(i), (ii), (iii), (vi), (viii), (ix) and (x) below) the foregoing provisions
shall not prohibit the following actions:
(i) retirements, redemptions, dividends and other distributions made or
paid within 60 days after the date of declaration or issuance of notice of
redemption or retirement if at such date of declaration or issuance of
notice of redemption or retirement such dividend would have complied with
this Section 7(b);
(ii) any purchase, retirement or redemption of Capital Stock of the
Company made (x) by exchange for, or out of the proceeds of any
substantially concurrent capital contribution in respect of or substantially
concurrent sale of, Qualified Capital Stock of the Company (other than
Capital Stock issued or sold to a Subsidiary) or (y) by exchange for shares
of Capital Stock of Parent;
(iii) any purchase, retirement or redemption of Parity Securities
effected together with a purchase or redemption of the Redeemable Preferred
Stock on a basis that is in proportion to their relative liquidation
preferences and otherwise in compliance with this Certificate of
Designation;
(iv) payments (including through dividends or distributions to Parent
to enable it to make payments) (A) of amounts necessary and when necessary
to purchase, redeem, acquire, cancel or otherwise retire for value Capital
Stock of Parent of the Company, in each case held by full time officers,
directors or employees of Parent, the Company or any of the Company's
Subsidiaries, upon, in connection with or following death, disability,
retirement, severance or termination of employment or service or pursuant to
any agreement or plan under which such Capital Stock was issued or which was
otherwise approved by the Board of Directors of the Parent or the Company
and creates an obligation on the part of the Parent or the Company with
respect to its Capital Stock of the type contemplated by this subclause (A),
(B) to redeem or repurchase stock purchase or similar rights in respect of
Capital Stock or (C) to make cash payments to holders of Capital Stock in
lieu of the issuance of fractional shares of its Capital Stock; provided,
however, that the amount of such payments pursuant to subclauses (A), (B)
and (C) of this clause (iv) after the Issuance Date of the Series A1
Redeemable Preferred Stock, Series B1 Redeemable Preferred Stock and Series
C1 Redeemable Preferred Stock does not exceed $[ ] million in
-20-
any fiscal year plus any unutilized portion of such amount in any prior
fiscal year and $[ ] million in the aggregate after such Issuance Date;(a)
(v) Restricted Payments (other than Investments and other Restricted
Payments otherwise permitted hereunder) in an aggregate amount not to exceed
$[ ] million;*
(vi) the payment of dividends or distributions to Parent in amounts and
at the times necessary to permit Parent to pay amounts, if any, owing by
Parent in connection with the Acquisition, the Credit Facility, the
Receivables Facility, the Acquisition Notes, the Bridge Financing, the
Redeemable Preferred Stock and fees and expenses related to any of the
foregoing;
(vii) Investments (other than Permitted Investments or Investments
otherwise permitted hereunder) in an aggregate amount not to exceed $[ ]
million.*
(viii) subject to compliance with the other applicable provisions
hereof, the payment of dividends or distributions in respect of the
Redeemable Preferred Stock or other Preferred Stock issued pursuant to and
in compliance with this Certificate of Designation and purchases,
retirements or redemptions of any shares of Redeemable Preferred Stock in
accordance with the terms hereof;
(ix) dividends or other Restricted Payments (including tax sharing
payments) to Parent to the extent used by Parent to pay its operating and
administrative expenses incurred in the ordinary course of its business,
including directors' fees, legal and audit expenses, listing fees,
judgments, awards or settlements payable by Parent arising from the
businesses of the Company or its Subsidiaries or Parent's status as a public
company, public company compliance expenses and corporate, franchise and
other taxes; or
(x) any Investment made by the exchange for, or out of the proceeds of
a capital contribution in respect of or the substantially concurrent sale
of, Qualified Capital Stock of the Company or by exchange for shares of
Capital Stock of Parent.
--------------
(a) To provide 15% additional flexibility in amount as provided for in the
Acquisition Notes or, if the Acquisition Notes are not issued on or prior
to the first Issuance Date, in amounts to be reasonably acceptable to the
Company and Textron.
-21-
Notwithstanding any other provision of this Section 7(b), for so long
as any Textron Shares remain issued and outstanding, the Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly make any
Restricted Payment of the type described in clause (i) or (ii) of the definition
thereof other than (a) Restricted Payments permitted by clauses (ii), (iii),
(iv), (vi), (viii) and (ix) of the preceding paragraph, (b) any dividend or
distribution to Parent to the extent required by Parent to service Indebtedness
owing to any Person that is not an Affiliate of Parent or the Company if such
Restricted Payment would otherwise be permitted by this Section 7(b), and (c)
any dividend or distribution to Parent to the extent required by Parent in
connection with any financing of the Acquisition in lieu of any of the debt
financing contemplated by the Debt Commitment Letter (as defined in the Purchase
Agreement), including the Acquisition Notes and any Refinancing of the Bridge
Financing. The provisions of this paragraph shall operate solely for the benefit
of Textron and its Subsidiaries in their capacity as holders of Textron Shares.
Notwithstanding anything in this Certificate of Designation to the contrary, in
the event of a breach of these provisions and no other provision of this
Certificate of Designation, the sole affected Holders entitled to voting rights
under Section 4 shall be the Holders of the Textron Shares.
The amount of any non-cash Restricted Payment shall be the fair market
value, on the date such Restricted Payment is made, of the assets or securities
proposed to be transferred or issued by the Company pursuant to such Restricted
Payment. For the purposes of calculating the aggregate amount of Restricted
Payments made for the purposes of clause (2) of the first paragraph of this
Section 7(b), any payment made pursuant to clauses (i), (ii), (iv), (v) and, (x)
of the second preceding paragraph shall be included and any payment made
pursuant to clauses (iii), (vi), (vii), (viii) and (ix) of the second preceding
pragraph shall be excluded.
(c) Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (i) to pay dividends (in cash or otherwise) or make any
other distributions in respect of its Capital Stock owned by the Company or any
other Restricted Subsidiary or pay any Indebtedness or other obligation owed to
the Company or any other Restricted Subsidiary; (ii) to make loans or advances
to the Company or any other Restricted Subsidiary; or (iii) to transfer any of
its property or assets to the Company or any other Restricted Subsidiary.
Notwithstanding the foregoing, the Company may, and may permit any Restricted
Subsidiary to, create or otherwise cause or suffer to become effective any such
encumbrance or restriction (A) pursuant to any agreement in effect on the
Issuance Date of the Series A1 Redeemable Preferred Stock, the Series B1
Redeemable Preferred Stock and the Series C1 Redeemable Preferred Stock; (B)
pursuant to the terms of any Credit Facility, Currency Agreement, Interest Rate
Agreement, Commodity
-22-
Agreement, Receivables Facility or Indebtedness Incurred pursuant to clause
(iii) or (iv) of the definition of "Permitted Indebtedness"; provided that the
Company determines in good faith that the provisions relating to such
encumbrance or restriction at the time any such agreement is entered into (i)
are customary in similar agreements entered into by Persons of a comparable size
and credit worthiness to the Company and (ii) could not reasonably be expected
to materially adversely affect the Company's ability to make required cash
dividend payments with respect to the Redeemable Preferred Stock or to redeem
the Redeemable Preferred Stock on the Maturity Redemption Date; (C) pursuant to
an agreement existing prior to the date on which such Person became a Subsidiary
of the Company and outstanding on such date and not created in anticipation of
becoming a Subsidiary, which encumbrance or restriction is not applicable to any
other Person or the properties or assets of any other Person; (D) pursuant to an
agreement effecting a renewal, refunding or extension of Indebtedness Incurred
or Preferred Stock issued pursuant to an agreement referred to in clause (A),
(B) or (C) above or this clause (D), provided that the provisions contained in
such renewal, refunding or extension agreement relating to such encumbrance or
restriction are not, in the aggregate, more restrictive in any material respect
than the provisions contained in the agreement the subject thereof, as
determined in good faith by the Company; (E) in the case of clause (iii) above,
restrictions contained in any mortgage, security or lease agreement (including a
capital or operating lease) securing Indebtedness of a Subsidiary or relating to
property or assets of a Subsidiary otherwise permitted hereunder, but only to
the extent such restrictions restrict the transfer of the property or asset
subject to such mortgage, security or lease agreement; (F) in the case of clause
(iii) above, customary nonassignment provisions entered into in the ordinary
course of business consistent with past practice in leases and other contracts
to the extent such provisions restrict the transfer or subletting of any such
lease or the assignment of rights under such contract; (G) any restriction with
respect to a Subsidiary of the Company imposed pursuant to an agreement which
has been entered into for the sale or disposition of Capital Stock or assets of
such Subsidiary; (H) any encumbrance or restriction with respect to a Foreign
Subsidiary pursuant to an agreement relating to Indebtedness or Liens Incurred
by such Foreign Subsidiary which is permitted hereunder; provided, that the
Company determines in good faith that the provisions relating to such
encumbrance or restriction at the time any such agreement is entered into (i)
are customary in similar agreement entered into by persons of a comparable size
and credit worthiness to the Company and (ii) could not reasonably be expected
to materially adversely affect the Company's ability to make required cash
dividend payments with respect to the Redeemable Preferred Stock or to redeem
the Redeemable Preferred Stock on the Maturity Redemption Date; or (I) any
encumbrance or restriction which by its terms permits payments to the Company to
the extent needed to pay dividends on any Dividend Payment Date or as otherwise
required hereunder.
(d) Textron Share Liquidity Provisions. The provisions of this Section
7(d) are solely for the benefit of Holders of Series A Redeemable Preferred
Stock that constitute Textron Shares. In the event that either (I) both (A) the
Liquidity Condition is satisfied at any
-23-
time and (B) no Par Offer has been properly made on or before the First Dividend
Payment Date and all Textron Shares purchased pursuant thereto or (II) both (A)
the Existing Notes are repaid at their final Stated Maturity and (B) no Par
Offer has been properly made on or before the final Stated Maturity of the
Existing Notes, the Series A Dividend Rate applicable solely to Textron Shares
will increase by 1.00% per annum for the first dividend period commencing on the
first day after the First Dividend Payment Date and by an additional 0.50% per
annum for each dividend period thereafter; provided that (1) the Series A
Dividend Rate applicable to Textron Shares in effect at any time shall not
exceed 20% per annum and (2) the Series A Dividend Rate will return to the
Dividend Rate otherwise applicable under Section 2(a) once a Par Offer has been
properly made and all Textron Shares purchased pursuant thereto. The period
during which the increased Series A Dividend Rate in respect of Textron Shares
shall be in effect under the immediately preceding sentence is referred to
herein as the "RESTRICTED PERIOD." During the Restricted Period, if any, the
Company and the Restricted Subsidiaries shall not Incur any Indebtedness (other
than Permitted Restricted Period Debt or Indebtedness Incurred for the purpose
financing a Par Offer) unless the Adjusted Consolidated Coverage Ratio (or, if
there has been an Asset Acquisition after the Issuance Date of the Series A1
Preferred Stock, the Adjusted Consolidated Pro Forma Coverage Ratio) after
giving effect to the Incurrence of such Indebtedness is equal to or greater than
the ratios specified below for the four fiscal quarter periods ending when
specified below:
Periods ending on or prior to December 31, 2002....................... 3.00:1.0
Periods ending on or between January 1, 2003 and December 31, 2003.... 3.25:1.0
Periods ending on and after January 1, 2004........................... 3.50:1.0.
For so long as there are any issued and outstanding Textron Shares, the
Company will not, and will not permit any Restricted Subsidiary to, refinance,
repay, retire or defease Existing Notes (other than at their final Stated
Maturity) in an aggregate principal amount greater than $25 million, unless
prior to or concurrently therewith a Par Offer shall have been made.
For so long as there are any issued and outstanding Textron Shares,
within 60 days after an Asset Acquisition occurring following the Issuance Date
of the Series A1 Preferred Stock and prior to a Par Offer, the Company shall
deliver a certificate of its Chief Financial Officer to the Holders of Textron
Shares certifying that attached five full fiscal year "stand alone" projections
(the "CERTIFIED PROJECTIONS") of Consolidated Cash Flow and Consolidated
Interest Expense for the Persons or assets acquired pursuant to such Asset
Acquisition (assuming for the purposes of such projections that such Persons or
assets are the "Company and the Restricted Subsidiaries" and disregarding clause
(viii) of the definition of Consolidated Interest Expense) are (1) projections
that are utilizing consistent operating assumptions with any projections
delivered to lenders to the Company in connection with the
-24-
particular Asset Acquisition (it being agreed that the Certified Projections are
"stand alone" projections and will accordingly give no effect to any impact of
combining or integrating the acquired Person or assets with the Company and the
Restricted Subsidiaries) or (2) in the absence of the projections referred to in
the preceding clause (1), the projections utilized by the Board of Directors of
the Company (or any duly authorized Committee thereof) in approving the
particular Asset Acquisition. Such Certified Projections may include a
prospective reasonable methodology for allocating the indicated Consolidated
Cash Flow and Consolidated Interest Expense across quarters for the entire
period covered by the Certified Projections.
The benefit of the provisions of this Section 7(d) are solely intended
for Textron and its Subsidiaries and shall terminate as to any shares of Series
A Redeemable Preferred Stock that are transferred or otherwise disposed of to
any other Person, regardless of their subsequent reacquisition by Textron or any
of its Subsidiaries.
In the event of any transfer of Textron Shares to a Person other than
Textron or its Subsidiaries (a "NON-TEXTRON TRANSFEREE"), if immediately prior
to such transfer there shall exist Total Liquidity Dividends in Arrears with
respect to such Textron Shares, then immediately following such transfer such
Total Liquidity Dividends in Arrears shall cease to exist with respect to such
transferred Textron Shares (the "TRANSFERRED SHARES") and the Transferred Shares
shall be for all purposes shares of Series A Redeemable Preferred Stock not
entitled to any of the benefits afforded to Textron Shares. For the avoidance of
doubt, but without limitation, the Transferred Shares shall have a Liquidation
Preference and be entitled to Total Cash Dividends in Arrears, if any, as if
such shares (or any predecessor shares) had never been Textron Shares. As
promptly as practicable following a written notice of a transfer of Textron
Shares to a Non-Textron Transferee, the Company shall issue to such Non-Textron
Transferee additional shares of Series A Redeemable Preferred Stock identical to
the Transferred Shares in all respects (including, without limitation, as to
Liquidation Preference, Total Cash Dividends in Arrears, if any, and accrued
regular dividends), with the number of such newly issued shares being equal to
(x) the Total Liquidity Dividends in Arrears formerly applicable to the
Transferred Shares, divided by (y) the Liquidation Preference plus Total Cash
Dividends in Arrears (inclusive of Additional Dividends accruing from the most
recent Dividend Payment Date) plus accrued regular dividends from the most
recent Dividend Payment Date in respect of each share of newly issued Series A
Redeemable Preferred Stock as of its date of issuance. In lieu of any issuing
any fractional shares of Series A Redeemable Preferred Stock, the Company may
deliver to a Non-Textron Transferee an amount in cash equal to such fraction
multiplied by the amount set forth in clause (y) of the preceding sentence. The
Company may require reasonable certifications and indemnities from Textron
and/or any Non-Textron Transferee concerning the transfer of Textron Shares as a
condition to issuing additional shares of Series A Redeemable Preferred Stock
(or cash payments in respect of fractional shares) as contemplated by this
paragraph.
-25-
(e) Consolidation, Merger and Sale of Assets. The Company shall not, in
a single transaction or through a series of transactions, consolidate with or
merge with or into any other Person or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets to
any other Person or Persons or permit any of the Restricted Subsidiaries to
enter into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of the Company and the Restricted Subsidiaries on a
consolidated basis to any other Person or Persons, unless at the time and
immediately after giving effect thereto:
(i) either (a) the Company shall be the continuing corporation or (b)
the Person (if other than the Company) formed by such consolidation or into
which the Company or such Subsidiary is merged or the Person that acquires
by sale, assignment, conveyance, transfer, lease or disposition all or
substantially all the properties and assets of the Company and the
Restricted Subsidiaries on a consolidated basis (the "SURVIVING ENTITY")
shall be a corporation duly organized and validly existing under the laws of
the United States of America, any state thereof or the District of Columbia;
(ii) the Redeemable Preferred Stock shall be converted into or
exchanged for and shall become shares of the Surviving Entity having in
respect of the Surviving Entity the same rights and privileges that the
Redeemable Preferred Stock had immediately prior to such transaction or
series of transactions with respect to the Company;
(iii) no Voting Rights Triggering Event shall have occurred and be
continuing; and
(iv) after giving effect to such transaction or series of transactions,
the Consolidated Coverage Ratio shall be equal to or greater than
[ ]:1.00.(a)
Any Surviving Entity shall file an appropriate certificate of
designation with respect to the preferred stock referred to in clause (ii) above
with the Secretary of State (or similar public official) of the jurisdiction
under whose laws it is organized. In such event, the Company shall be released
from its obligations under this Certificate of Designation.
(f) Limitation on Transactions with Affiliates. The Company shall not,
and shall not permit any of the Restricted Subsidiaries to, directly or
indirectly, enter into or
--------------
(a) To be the same as the first paragraph of Section 7(a).
-26-
conduct any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) involving payments or value to such Affiliate with or for the benefit
of any Affiliate of the Company or any of the Restricted Subsidiaries (an
"AFFILIATE TRANSACTION") unless the terms of such Affiliate Transaction are
either (x) fair to the Company or such Restricted Subsidiary from a financial
point of view or (y) no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not such an
Affiliate. For any transaction that involves in excess of $1,000,000, a majority
of the disinterested members of the Board of Directors shall determine that the
transaction satisfies the criteria of the preceding sentence. For any Affiliate
Transaction that involves in excess of $25,000,000, the Company shall obtain an
opinion from a nationally recognized independent investment banking firm or
other firm with experience in evaluating or appraising the terms and conditions
of the type of transaction (or series of related transactions) for which the
opinion is required (an "INDEPENDENT EVALUATION FIRM") stating in substance that
the terms of such Affiliate Transaction are in compliance with either clause (x)
or (y) above. For any Affiliate Transaction (other than as set forth in clauses
(i) through (x) (other than clause (viii)) below) that involves in excess of
$1,000,000, for so long as Textron and its Subsidiaries are the Holders of at
least a majority of the aggregate Liquidation Preference of any of the Series A
Redeemable Preferred Stock, the Series B Redeemable Preferred Stock or the
Series C Redeemable Preferred Stock, the Company shall obtain the prior consent
of Textron unless the Company shall have obtained an opinion from an Independent
Evaluation Firm stating in substance that the terms of such Affiliate
Transaction are in compliance with either clause (x) or (y) above.
The requirements of the immediately preceding paragraph shall not apply
to:
(i) any Restricted Payment permitted to be made pursuant to Section
7(b);
(ii) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to employment arrangements, or any
stock options and stock ownership plans for the benefit of employees,
officers and directors, consultants and advisors approved by the Board of
Directors of the Company, or any loans or advances to employees in the
ordinary course of business of the Company or any of its Subsidiaries;
(iii) any transaction between or among the Company and any Restricted
Subsidiary or between or among Restricted Subsidiaries so long as, in the
case of any Restricted Subsidiary that is not a Wholly Owned Subsidiary, no
Affiliate of the Company (other than a Restricted Subsidiary) owns any
Capital Stock (other than directors' qualifying shares) in such Restricted
Subsidiary;
-27-
(iv) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of the Company and its
Subsidiaries or any employment, noncompetition or confidentiality agreements
entered into by the Company or any of its Subsidiaries with its directors,
officers or employees in the ordinary course of business;
(v) the issuance of Capital Stock of the Company or the receipt of
capital contributions by the Company otherwise in compliance with this
Certificate of Designation;
(vi) transactions pursuant to agreements as in existence on the
Issuance Date of the Series A1 Redeemable Preferred Stock, Series B1
Redeemable Preferred Stock and Series C1 Redeemable Preferred Stock;
(vii) payments contemplated by the Advisory Agreement and payments in
connection with the Acquisition, including the reimbursement of
out-of-pocket expenses incurred in connection with the Acquisition;
(viii) for so long as Textron and its Subsidiaries are the Holders of
at least a majority of the aggregate Liquidation Preference of any of the
Series A Redeemable Preferred Stock, the Series B Redeemable Preferred Stock
or the Series C Redeemable Preferred Stock, any Affiliate Transaction with
respect to which the Company shall have obtained the prior consent of
Textron;
(ix) any management, service, purchase, supply or similar agreement
relating to operations of a business entered into in the ordinary course of
the Company's business between the Company or any Restricted Subsidiary and
any Affiliate (including an Unrestricted Subsidiary), so long as any such
agreement is on terms no less favorable to the Company than those that could
be obtained in a comparable arm's-length transaction with an entity that is
not an Affiliate or a Related Person; and
(x) any reasonable corporate service agreements, tax sharing agreements
and other agreements customary in connection with spin-off transactions
entered into between the Company or any Restricted Subsidiary and any
spun-off entity.
(g) Reports. At all times during which the Parent continues to file
reports on Form 10-K and Form 10-Q with the Securities and Exchange Commission
(the "COMMISSION") containing the information required by the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder, the
Company will provide (i) to each Holder, within 10 Business Days following the
filing of any such report with the Commission, a copy (if necessary) of any
reconciliation of any material differences between the
-28-
consolidated financial statements of the Parent contained in such report and the
consolidated financial results and condition of the Company and its Subsidiaries
during the relevant period or as of the relevant date, as the case may be, to
the extent required to evaluate financial differences between the legal entities
and (ii) at all times that (A) the Company is not subject to Section 13 or 15(d)
of the Exchange Act and (B) the requesting Holder is unable to transfer its
Redeemable Preferred Stock pursuant to Rule 144(k) under the Securities Act,
within 10 Business Days of any written request by a Holder, to the requesting
Holder or a proposed transferee of such Holder the information required to be
provided by Rule 144A(d)(4) under the Securities Act. If at any time the Parent
shall cease to file such reports on Form 10-K and Form 10-Q with the Commission,
the Company shall provide to each Holder (i) within 135 days of the end of each
fiscal year of the Company, audited year end financial statements of the Company
(including a balance sheet, income statement and statement of changes in cash
flows) prepared in accordance with GAAP, and (ii) within 60 days after the end
of each of the first three fiscal quarters of each fiscal year of the Company,
unaudited quarterly consolidated financial statements (including a balance
sheet, income statement and statement of changes in cash flows) prepared in
accordance with GAAP.
(h) Limitation on Issuance of Preferred Stock of Restricted
Subsidiaries. The Company will not sell, and will not permit any Restricted
subsidiary to issue or sell, any Preferred Stock of a Restricted Subsidiary
except (i) to the Company or a Restricted Subsidiary, (ii) the issuance and sale
of Preferred Stock of a Foreign Subsidiary, (iii) upon the request of the
lenders party to the Debt Commitment Letter in accordance with the agreements
relating to the various financings referred to therein, the issuance and sale of
Preferred Stock issued in lieu of any of the debt financing contemplated by the
Debt Commitment Letter, including the Acquisition Notes and any Refinancing of
the Bridge Financing, (iv) the issuance of Preferred Stock by a Restricted
Subsidiary which is a joint venture with a third party which is not an Affiliate
of the Company or a Restricted Subsidiary, and (v) pursuant to obligations with
respect to the issuance or sale of Preferred Stock of a Restricted Subsidiary
which exist at the time it becomes a Restricted Subsidiary of the Company.
SECTION 8. Exchange.
(a) Requirements. The outstanding Series A1 Redeemable Preferred Stock,
Series A2 Redeemable Preferred Stock, Series B1 Redeemable Preferred Stock,
Series B2 Redeemable Preferred Stock, Series C1 Redeemable Preferred Stock and
Series C2 Redeemable Preferred Stock are exchangeable, as a whole but not in
part, solely at the option of the Company on any Dividend Payment Date for,
respectively, the Company's Series A1, 15% Subordinated Notes (the "SERIES A1
EXCHANGE NOTES"), Series A2, 15% Subordinated Notes (the "SERIES A2 EXCHANGE
NOTES"), Series B1, 16% Subordinated Notes (the "SERIES B1 EXCHANGE Notes"),
Series B2, 16% Subordinated Notes (the "SERIES B2 EXCHANGE NOTES"), Series C1,
16% Subordinated Notes (the "SERIES C1 EXCHANGE NOTES")
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or Series C2, 16% Subordinated Notes (the "SERIES C2 EXCHANGE Notes" and,
together with the Series A1 Exchange Notes, Series A2 Exchange Notes, Series B1
Exchange Notes, Series B2 Exchange Notes and Series C1 Exchange Notes, the
"EXCHANGE NOTES"), each to be substantially in the form set forth in the
Exchange Indenture, provided that any such exchange may only be made if on or
prior to the date of such exchange no Total Cash Dividends in Arrears shall
exist and the Company otherwise has paid all accumulated dividends on the
Redeemable Preferred Stock (including the dividends payable on the date of
exchange); provided, further, that for so long as Textron and its Subsidiaries
are the Holders of at least a majority of the aggregate Liquidation Preference
of any of the Series A Redeemable Preferred Stock, the Series B Redeemable
Preferred Stock or the Series C Redeemable Preferred Stock, as the case may be,
the Company shall obtain the written consent of Textron (which consent may be
withheld by Textron in its sole discretion) prior to initiating the procedures
for exchange with respect to such series of Redeemable Preferred Stock. The
exchange rate shall be $1.00 principal amount of Exchange Notes for each $1.00
of the aggregate Liquidation Preference of Redeemable Preferred Stock,
including, to the extent necessary, Exchange Notes in principal amounts less
than $1,000.
(b) Procedure for Exchange. (i) At least thirty (30) days and not more
than sixty (60) days prior to the date fixed for exchange, written notice (the
"EXCHANGE NOTICE") shall be given by first class mail, postage prepaid, to each
Holder of record on the record date fixed for such exchange of the Redeemable
Preferred Stock at such Holder's address as the same appears on the share books
of the Company, provided that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the exchange of any
Redeemable Preferred Stock to be exchanged except as to the Holder or Holders to
whom the Company has failed to give said notice or except as to the Holder or
Holders whose notice was defective. The Exchange Notice shall state:
(A) the Exchange Date;
(B) that the Holder is to surrender to the Company, in the manner and
at the place or places designated, his certificate or certificates
representing the Redeemable Preferred Stock to be exchanged;
(C) that dividends on the Redeemable Preferred Stock to be exchanged
shall cease to accrue on such Exchange Date whether or not certificates for
Redeemable Preferred Stock are surrendered for exchange on such Exchange
Date unless the Company shall default in the delivery of Exchange Notes; and
(D) that interest on the Exchange Notes shall accrue from the Exchange
Date whether or not certificates for Redeemable Preferred Stock are
surrendered for exchange on such Exchange Date.
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(ii) On or before the Exchange Date, each Holder of Redeemable
Preferred Stock shall surrender the certificate or certificates representing
such Redeemable Preferred Stock, in the manner and at the place designated in
the Exchange Notice. The Company shall cause the Exchange Notes to be executed
on the Exchange Date and, upon surrender in accordance with the Exchange Notice
of the certificates for any Redeemable Preferred Stock so exchanged, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Company), such shares shall be exchanged by the Company into Exchange Notes. The
Company shall pay interest on the Exchange Notes at the rate and on the dates
specified therein from the Exchange Date.
(iii) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Exchange Indenture shall have
been duly executed and delivered by the Company and the trustee thereunder and
(2) all Exchange Notes necessary for such exchange shall have been duly executed
by the Company and delivered to the trustee under the Exchange Indenture with
irrevocable instructions to authenticate the Exchange Notes necessary for such
exchange, then the rights of the Holders of Redeemable Preferred Stock so
exchanged as shareholders of the Company shall cease (except the right to
receive Exchange Notes, an amount equal to the amount of accrued and unpaid
dividends to the Exchange Date), and the Person or Persons entitled to receive
the Exchange Notes issuable upon exchange shall be treated for all purposes as
the registered Holder or Holders of such Exchange Notes as of the Exchange Date.
(c) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this Section 8, the Company shall not be entitled to exchange the
Redeemable Preferred Stock for Exchange Notes if such exchange, or any term or
provision of the Exchange Indenture or the Exchange Notes, or the performance of
the Company's obligations under the Exchange Indenture or the Exchange Notes,
shall materially violate or conflict with any applicable law or if, at the time
of such exchange, the Company is insolvent or if it would be rendered insolvent
by such exchange.
(d) Exchange Indenture. The Exchange Notes shall be issued pursuant to
an indenture (the "EXCHANGE INDENTURE") to be entered into between the Company
and a trustee acceptable to it substantially in the form of Annex A hereto.(a)
--------------
(a) The Exchange Indenture will be prepared prior to closing. The Exchange
Notes and the Exchange Indenture shall (i) be subordinated to all
obligations (including trade payables) and Indebtedness of the Company on
terms imposed by senior lenders to the Company and its Subsidiaries
(including with respect to payment blockages), (ii) not
Footnote continued on next page.
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(e) Exchange Taxes. The Company shall be responsible for any transfer
or stamp tax imposed as a result of any exchange made pursuant to this Section
8, regardless of upon whom such tax is imposed (collectively, "EXCHANGE TAXES").
The Company shall indemnify and hold the Holders harmless against any Exchange
Taxes and shall gross-up Holders and their Affiliates any additional amount
necessary to reflect the tax consequences to the Holders or their Affiliates
(without taking into account any loss credit or other offset against Tax) of the
receipt or accrual of any payments required to be made under this Section 8(e).
SECTION 9. Conversion or Exchange. The Holders of Redeemable Preferred
Stock shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Company.
SECTION 10. Reissuance of Senior Preferred Stock. Shares of Redeemable
Preferred Stock reacquired pursuant to the exchange offer contemplated by the
Registration Rights Agreement may be designated and reissued as Preferred Stock
of another series or class; provided that any issuance of such shares of
Preferred Stock must be in compliance with the terms hereof.
--------------
Footnote continued from previous page.
be guaranteed by any of the Company's Subsidiaries or otherwise, (iii)
contain the covenants and provisions set forth in Section 7 (with respect
to the Exchange Notes), and the related definitions of Section 13 hereof,
except that the limitations in Sections 7(a), (b) and (c) will not
restrict the ability of the Company or any of its Subsidiaries to issue
Preferred Stock, (iv) contain events of default that are equivalent to the
Voting Rights Triggering Events listed in clauses (i) through (v) of
Section 4(b) of this Resolution and customary remedies provisions for
subordinated high yield debt instruments (and no shareholder or governance
voting rights in any event), (v) provide for quarterly payments of
interest in cash and/or in-kind or by accrual at the rates and on the same
basis and dates as set forth in Section 2, (vi) mature as provided in
Section 5(b)(i) and be subject to redemption as provided in Sections 5(a)
and 5(b)(ii) (with appropriate provisions to ensure the prior payment of
senior debt) and (vii) contain such other immaterial terms as are
appropriate to a high yield debt indenture. Subject to the foregoing, the
Exchange Notes and the Exchange Indenture shall be mutually acceptable to
the parties.
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SECTION 11. Business Day. If any payment or redemption shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment or redemption shall be made on the immediately succeeding Business
Day.
SECTION 12. Transfer Restrictions. (a) The Redeemable Preferred Stock
will bear a legend to the following effect (as applicable) unless otherwise
agreed by the Company and the Holder thereof:
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 PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF.
In addition, each share of Redeemable Preferred Stock shall also bear
the following legend:
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY OR SERIES
THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
(b) The transfer agent for the Preferred Stock may refuse to register
any transfer of Redeemable Preferred Stock in violation of the restrictions
contained in the legend provided for in Section 12(a).
(c) The legend provided for in the first paragraph of Section 12(a) may
be removed if the Redeemable Preferred Stock has been registered pursuant to an
effective registration statement under the Securities Act and will be removed as
to Redeemable Preferred Stock held by any Holder after the expiration of the
holding period applicable to sales of the Redeemable Preferred Stock under Rule
144(k) under the Securities Act upon the written representation of such Holder
that such Holder is not an affiliate (as defined in Rule 144 under the
Securities Act) of the Company and has not been an affiliate of the Company at
any time during the three months preceding such request.
SECTION 13. Definitions. As used in this Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular having
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comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"ACQUISITION" means the acquisition by the Company of the Bison
Subsidiaries (as defined in the Purchase Agreement) pursuant to the Purchase
Agreement and the related transactions.
"ACQUISITION NOTES" means the debt securities issued by the Company at
or prior to the date of the Acquisition to finance, in part, the Acquisition or
any debt securities first issued by the Company after the date of the
Acquisition to refinance in whole or in part any bridge or interim loans
(including any rollover or exchange notes issued in exchange therefor or upon
the maturity thereof) issued or incurred on or prior to the date of the
Acquisition to finance, in part, the Acquisition, as the same may be amended,
modified, waived or refinanced with new debt securities.
"ADDITIONAL DIVIDENDS" means, with respect to a series of Redeemable
Preferred Stock, the Series A Additional Dividends, the Series B Additional
Dividends or the Series C Additional Dividends, as applicable.
"ADJUSTED CONSOLIDATED COVERAGE RATIO" means, as of any date of
determination, the Consolidated Coverage Ratio as of such date; provided that in
calculating Consolidated Cash Flow and Consolidated Interest Expense for such
purpose, clause (viii) of the definition of Consolidated Interest Expense shall
be disregarded.
"ADJUSTED CONSOLIDATED PRO FORMA COVERAGE RATIO" means, as of any date
of determination, the ratio of (i) the aggregate amount of Consolidated Cash
Flow for the period of the four most recent fiscal quarters of the Company,
minus Projected Time Adjusted Acquisition Cash Flow to (ii) Consolidated
Interest Expense for such four fiscal quarter period (without giving effect to
clause (viii) of the definition thereof), minus Projected Time Adjusted
Acquisition Interest Expense.
"ADVISORY AGREEMENT" means the Services Agreement dated as of February
23, 2001, as amended on the date of the Purchase Agreement, among the Parent,
the Company and Heartland Industrial Partners, L.P. (or any other Affiliate
thereof), as the same may be amended or modified from time to time; but without
giving effect to any amendment or modification after the Issuance Date of the
Series A1 Redeemable Preferred Stock, the Series B1 Redeemable Preferred Stock
and the Series C1 Redeemable Preferred Stock that would increase the net fees
payable thereunder to Heartland Industrial Partners, L.P. and its Affiliates
that have not been made subject to compliance with the provisions of Section
7(f).
"AFFILIATE" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such
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specified Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"ASSET ACQUISITION" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Company or any Restricted Subsidiary or (ii) the acquisition by the Company
or any Restricted Subsidiary of the assets of any Person which constitute
substantially all of the assets of such Person or any division or line of
business of such Person.
"ASSET DISPOSITION" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
other equity interests in) a Restricted Subsidiary (other than directors'
qualifying shares), or of any other property or other assets (each referred to
for the purposes of this definition as a "disposition") by the Company or any of
its Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) other than (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary, (ii) any disposition in the ordinary
course of business, and (iii) any disposition of obsolete or worn out equipment
or equipment that is no longer used or useful in the conduct of the business of
the Company and its Restricted Subsidiaries and that is disposed of in each case
in the ordinary course of business. Notwithstanding anything to the contrary
contained above, a Restricted Payment or other payment made in compliance with
Section 7(b) shall not constitute an Asset Disposition.
"ASSET DISPOSITION OFFER" has the meaning specified in Section
5(b)(iii) hereof.
"ASSET DISPOSITION OFFER REDEMPTION DATE" has the meaning specified in
Section 5(b)(iii) hereof.
"BRIDGE FINANCING" means collectively the "Senior Unsecured Facility"
and the "Subordinated Facility", in each case as defined in the Debt Commitment
Letter.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York City or
place of payment are authorized or obligated by law, regulation or executive
order to close.
"CAPITAL STOCK" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however
-35-
designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into such equity.
"CAPITALIZED LEASE OBLIGATIONS" means an obligation to pay rent or
other payment amounts under a lease that is required to be classified and
accounted for as a capitalized lease or a liability for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP.
"CASH DIVIDENDS IN ARREARS" means, with respect to a share of
Redeemable Preferred Stock at any date of determination, the Series A Cash
Dividends in Arrears, the Series B Cash Dividends in Arrears or the Series C
Cash Dividends in Arrears, as applicable, at such date of determination.
"CERTIFIED PROJECTIONS" has the meaning specified in Section 7(d)
hereof.
"CHANGE OF CONTROL" means the occurrence of any of the following
events: (A) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding Sponsor and, in the case of the
Company, Parent, shall become the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of
the total voting power of the then outstanding Voting Stock of the Company or of
Parent; provided, however, that (1) any such Person or group shall be deemed to
beneficially own any Voting Stock beneficially owned by any other Person (the
"PARENT ENTITY") so long as such Person or group beneficially owns, directly or
indirectly, a majority of the then outstanding Voting Stock of the parent entity
and no other Person or group has the right to designate or appoint a majority of
the directors (or similar governing body) of such parent entity, and (2) the
effect of any stockholders agreements with respect to voting for directors that
exist on the date of, and after giving effect to, the Acquisition will be
disregarded, or (B) any other event constituting a "change of control" under any
Acquisition Notes that constitutes either an event of default or a circumstance
that permits holders of Acquisition Notes to require that the Company repurchase
their Acquisition Notes.
"CHANGE OF CONTROL REDEMPTION DATE" has the meaning specified in
Section 5(b)(ii) hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act.
"COMMODITY AGREEMENT" means any commodity future contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any
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Restricted Subsidiary that is designed to protect the Company or any Restricted
Subsidiary against fluctuations in the price of commodities used by the Company
or a Restricted Subsidiary as raw materials in the ordinary course of business.
"COMMON FAIR MARKET VALUE" means the fair market value per share of
Common Stock of the Company, as determined from time to time by the board of
directors of the Company acting in good faith, which determination shall be
conclusive.
"COMMON EQUIVALENT SHARES" means, with respect to each share of Series
C Redeemable Preferred Stock, (x) as of the initial Issuance Date of the Series
C1 Redeemable Preferred Stock, [ ](a) shares of Common Stock of the Company
and (y) as of any other date, such number of shares of Common Stock of the
Company, as increased or decreased from time to time by the board of directors
of the Company acting in good faith, which determination shall be conclusive, to
reflect (A) dividends and distributions in respect of Common Stock of the
Company paid in Common Stock of the Company, (B) subdivisions, combinations and
reclassifications of Common Stock of the Company, (C) the issuance to all
holders of Common Stock of the Company of rights, options or warrants entitling
such holders to purchase from the Company its Common Stock at a price below the
Common Fair Market Value at the record date with respect to the issuance of such
rights, options or warrants, and (D) capital contributions to the Company either
(i) not accompanied by any issuance of Common Stock of the Company to the Person
making any such capital contribution, or (ii) accompanied by the issuance of
Common Stock of the Company (or securites convertible into or exchangeable
therefor) to the person making any such capital contribution at an implied price
per share of Common Stock of the Company that is less than the Common Fair
Market Value as of the date of such capital contribution.
--------------
(a) As of the Issuance Date of the Series C1 Redeemable Preferred Stock, and
only as of such date, this number will equal a fraction, (i) the numerator
of which is (x) $1,000 (the initial Liquidation Preference of the Series
C1 Redeemable Preferred Stock), multiplied by (y) the number of
outstanding shares of Common Stock of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co. on
such date, and (ii) the denominator of which is (x) the number of
outstanding shares of Common Stock of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation on such
date (after giving effect to the transactions contemplated by the Purchase
Agreement), multiplied by (y) $5 per share. After the Issuance Date of the
Series C1 Redeemable Preferred Stock, this number will be adjusted from
time to time as set forth in the definition.
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"COMMON EXCHANGE FACTOR" means as of any date of determination (x) the
Liquidation Preference per share of the Series C Redeemable Preferred Stock as
of such date, plus the Total Cash Dividends in Arrears (inclusive of any
Additional Dividends accruing from the most recent Dividend Payment Date) with
respect to a share of Series C Redeemable Preferred Stock as of such date, plus
accrued regular dividends per share of Series C Redeemable Preferred Stock as of
such date, plus the Common Participation Amount, divided by (y) the Liquidation
Preference per share of the Series B Redeemable Preferred Stock as of such date,
plus the Total Cash Dividends in Arrears (inclusive of any Additional Dividends
accruing from the most recent Dividend Payment Date) with respect to a share of
Series B Redeemable Preferred Stock as of such date, plus accrued regular
dividends per share of Series B Redeemable Preferred Stock as of such date.
"COMMON PARTICIPATION AMOUNT" means fifteen percent of the difference
between (x) the product of the number of Common Equivalent Shares multiplied by
the Common Fair Market Value, in each case as of the time of any event requiring
the calculation of the Common Participation Amount, minus (y) the product of the
number of Common Equivalent Shares multiplied by the Common Fair Market Value,
in each case as of the Issuance Date of the Series C1 Redeemable Preferred
Stock; provided that (i) the Common Participation Amount shall not exceed an
amount per share of Series C Redeemable Preferred Stock equal to (p) $2,000,000
divided by (q) the total number of outstanding shares of Series C Redeemable
Preferred Stock as of the time of any event requiring the calculation of the
Common Participation Amount and (ii) the Common Participation Amount cannot be
less than zero.
"COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issuance Date or issued after the Issuance Date, and includes, without
limitation, all series and classes of such common stock.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Certificate of Designation until a successor or other Person
shall have become such pursuant to the applicable provisions of this Certificate
of Designation, and thereafter "Company" shall mean such successor Person.
"CONSOLIDATED CASH FLOW" for any period means the Consolidated Net
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) consolidated income tax expense; (ii)
Consolidated Interest Expense; (iii) depreciation expense; (iv) amortization
expense; (v) all other noncash items reducing Consolidated Net Income; (vi) all
management and other fees directly or indirectly paid during such period to
Sponsor to the extent permitted hereunder; and (vii) non-recurring and customary
fees and expenses related to any issue of Capital Stock, Incurrence of
Indebtedness or other financing transaction. Notwithstanding the foregoing, the
consolidated
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income tax expense, depreciation expense and amortization expense of a
Subsidiary of the Company shall be included in Consolidated Cash Flow only to
the extent (and in the same proportion) that the net income of such Subsidiary
was included in calculating Consolidated Net Income.
"CONSOLIDATED COVERAGE RATIO" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; provided that (1)
if the Company or any of the Restricted Subsidiaries has Incurred any
Indebtedness since the beginning of such period through the date of
determination of the Consolidated Coverage Ratio that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an incurrence of Indebtedness, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to (A) such Indebtedness (provided that, if such Indebtedness is
Incurred under a revolving credit facility (or similar arrangement or under any
predecessor revolving credit or similar arrangement), only that portion of such
Indebtedness that constitutes the one year projected average balance of such
Indebtedness (as determined in good faith by senior management of the Company)
shall be deemed outstanding for purposes of this calculation) and (B) the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period any Indebtedness of the Company or any of the Restricted Subsidiaries has
been repaid, repurchased, defeased or otherwise discharged (other than
Indebtedness under a revolving credit or similar arrangement unless such
revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(3) if since the beginning of such period the Company or any of the Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio involves an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any of the Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary of the Company is sold, transferred or otherwise disposed
of, the Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent
-39-
the Company and the continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale, transfer or other disposition), (4) if since
the beginning of such period the Company or any of the Restricted Subsidiaries
(by merger or otherwise) shall have made an Asset Acquisition, Consolidated Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the incurrence of any Indebtedness)
as if such Asset Acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period shall have made any Asset
Disposition or Asset Acquisition that would have required an adjustment pursuant
to clause (3) or (4) above if made by the Company or a Restricted Subsidiary
during such period, Consolidated Cash Flow and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition or Asset Acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
Asset Acquisition, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by the Company. If any Indebtedness or Preferred Stock bears a
floating rate of interest or dividends and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to any such
Indebtedness if such Interest Rate Agreement has a remaining term that extends
at least until the end of such period).(a)
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense of the Company and the Restricted Subsidiaries for such period
as determined on a consolidated basis in accordance with GAAP, plus, to the
extent not included in such interest expense, (i) interest expense attributable
to capital leases, (ii) amortization of debt discount, (iii) capitalized
interest, (iv) noncash interest expense, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers acceptance
financing, (vi) interest actually paid by the Company or any such Restricted
Subsidiary under any guarantee of Indebtedness or other obligation of any other
Person and (vii) net payments
--------------
(a) Solely for purposes of Sections 7(a), (b) and (e), this definition and the
definitions of Consolidated Net Income, Consolidated Cash Flow and
Consolidated Interest Expense will be conformed to the similar interest
coverage calculations and definitions in the Acquisition Notes if the
Acquisition Notes are issued on or prior to the first Issuance Date.
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(whether positive or negative) pursuant to Interest Rate Agreements and, to the
extent related to Indebtedness, Currency Agreements. Notwithstanding the
foregoing, consolidated interest expense and the other items referred to in the
preceding clauses of a Subsidiary of the Company shall be included only to the
extent (and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Interest Expense.
"CONSOLIDATED NET INCOME" means, for any period, the net income (loss)
of the Company and the consolidated Restricted Subsidiaries for such period
determined in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any gain or loss realized upon the
sale or other disposition of any assets of the Company or the Restricted
Subsidiaries (including pursuant to any sale/leaseback transaction) which are
not sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital Stock of
any Person; (ii) any extraordinary or nonrecurring gain or loss; (iii) the
cumulative effect of a change in accounting principles; (iv) any noncash
expenses attributable to grants or exercises of employee stock options or other
employee benefit arrangements; (v) the net income or loss of any Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (vi) any net income or loss of any Restricted Subsidiary to the
extent such Restricted Subsidiary is subject to restrictions on the payment of
dividends or the making of distributions by such Restricted Subsidiary, directly
or indirectly, to the Company.
"CREDIT FACILITIES"(a) means (i) the credit agreement dated as of [ ],
2001, among [ ], [ ], as administrative agent and each of the lenders that
is a signatory thereto, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing, increasing the
total commitment of, or otherwise restructuring (including by way of adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders, (ii) any other senior term or revolving credit facilities with
one or more financial institutions and (iii) any refinancing, refunding,
renewal, replacement or extension in whole or in part of any of the foregoing.
--------------
(a) Information to be completed at closing.
-41-
"CURRENCY AGREEMENT" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"DEBT COMMITMENT LETTER" has the meaning specified in the Purchase
Agreement, as amended, supplemented or modified from time to time.
"DISQUALIFIED STOCK" means (a) any Capital Stock of the Company which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or upon the happening of any event (i) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the Mandatory Redemption Date, or (ii) is convertible into
or exchangeable (unless at the sole option of the issuer thereof) for (a)
Indebtedness of the Company or any Restricted Subsidiary or (b) any Capital
Stock referred to in (i) above, in each case at any time prior to the Mandatory
Redemption Date. Notwithstanding the preceding sentence, (1) any Capital Stock
that would constitute Disqualified Stock solely because the holders of the
Capital Stock have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock if prohibited by
the terms hereof and (2) Capital Stock in respect of which the Company may have
an obligation of the type referred to in clause (iv) of the second paragraph of
Section 7(b)(iv) shall not constitute Disqualified Stock. For avoidance of
doubt, the Redeemable Preferred Stock is not Disqualified Stock.
"DIVIDEND PAYMENT DATE" means each March 1, June 1, September 1 and
December 1 of each year on which dividends shall be paid or are payable, any
Redemption Date and any other date on which dividends in arrears may be paid.
"DIVIDEND RATE" has the meaning specified in Section 2(a) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"EXCHANGE DATE" means the date on which Redeemable Preferred Stock is
exchanged by the Company for Exchange Notes.
"EXCHANGE NOTES" shall have the meaning ascribed to it in Section 6
hereof.
"EXCHANGE NOTICE" shall have the meaning ascribed to it in Section 6
hereof.
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"EXCHANGE OFFER" means the exchange offer contemplated by the
Registration Rights Agreement.
"EXISTING NOTES" means the Company's 11 1/2% Senior Subordinated Notes
Due 2006 and the related indenture and supplemental indentures, as each may be
amended or modified from time to time (including in connection with the
Acquisition).
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length transaction, for cash,
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Fair market value shall
be conclusively determined by the Board of Directors of the Company acting in
good faith.
"FIRST DIVIDEND PAYMENT DATE" means the first Dividend Payment Date
following the occurrence of a Liquidity Condition.
"FOREIGN SUBSIDIARY" means a Subsidiary that is organized under the
laws of any country other than the United States and substantially all of the
assets of which are located outside the United States.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee to such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning.
"HOLDER" means the record holder of shares of Redeemable Preferred
Stock.
-43-
"INCUR" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness of a Person existing at the
time such person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
"INDEBTEDNESS" means, (a) with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the tenth Business Day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), (v) all Capitalized Lease Obligations of such
Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of such Indebtedness shall be the lesser of
the fair market value of such asset at such date of determination and the amount
of such Indebtedness of such other Person, and (vii) all Indebtedness of other
Persons to the extent guaranteed by such Person and (b) any Preferred Stock of
any Restricted Subsidiary permitted under Section 7(h).
"INDEPENDENT EVALUATION FIRM" has the meaning specified on Section 7(f)
hereof.
"INTEREST RATE AGREEMENT" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"INVESTMENT" by any Person means any loan, advance or other extension
of credit or capital contribution (by means of transfers of cash or other
property to others or payments for property or services for the account or use
of others, or otherwise) to, or purchase or acquisition of Capital Stock, bonds,
notes, debentures or other securities or evidence of Indebtedness issued by, any
other Person, including any payment on a guarantee of any obligation of such
other Person, but shall not include trade accounts receivable in the
-44-
ordinary course of business. Upon any issuance or sale of Capital Stock of any
Restricted Subsidiary such that it ceases to be a Restricted Subsidiary, the
Company shall be deemed to have made an Investment in the retained Capital Stock
and other Investments in such Subsidiary at such time. For purposes of Section
7(b) and the definitions of "Permitted Investments" and "Unrestricted
Subsidiary," with respect to a Restricted Subsidiary that is designated as an
Unrestricted Subsidiary, "Investment" shall include the portion (proportionate
to the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of such Subsidiary at the time that such Subsidiary is designated
an Unrestricted Subsidiary and, with respect to a Person that is designated as
an Unrestricted Subsidiary simultaneously with its becoming a Subsidiary of the
Company, "Investment" shall mean the Investment made by the Company and the
Restricted Subsidiaries to acquire such Subsidiary.
"ISSUANCE DATE" means (1) in the case of the Series A1 Redeemable
Preferred Stock, the Series B1 Redeemable Preferred Stock and the Series C1
Redeemable Preferred Stock, the date on which such Redeemable Preferred Stock is
originally issued under this Certificate of Designation and (2) in the case of
the Series A2 Redeemable Preferred Stock, the Series B2 Redeemable Preferred
Stock and the Series C2 Redeemable Preferred Stock, the Exchange Date.
"JUNIOR SECURITIES" has the meaning specified in Section 6 hereof.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"LIQUIDATED DAMAGES" has the meaning specified in the Registration
Rights Agreement.
"LIQUIDATION PREFERENCE" means, with respect to a series of Redeemable
Preferred Stock, the Series A Liquidation Preference, the Series B Liquidation
Preference or the Series C Liquidation Preference, as applicable.
"LIQUIDITY CONDITION" means the date upon which audited annual or
unaudited quarterly consolidated financial information for the Company and the
Restricted Subsidiaries is available reflecting that the Company's Adjusted
Consolidated Pro Forma Coverage Ratio is greater than or equal to the ratios
specified below for the periods specified below:
-45-
Periods Ending on or prior to December 31,
2002.................................................. 3.75:1.0
Periods ending on or between January 1, 2003 and March
31, 2003.............................................. 3.50:1.0
Period ending on or between April 1, 2003 and June 30,
2003.................................................. 3.25:1.0
Periods ending on or between July 1, 2003 and December
31, 2003.............................................. 3.00:1.0
Periods ending on or between January 1, 2004 and
December 31, 2004..................................... 2.75:1.0
Periods ending on and after January 1, 2005............... 2.50:1.0.
"MATURITY REDEMPTION DATE" with respect to a series of Redeemable
Preferred Stock means the mandatory redemption date for such series specified in
Section 5(b)(i) hereof.
"NET AVAILABLE PROCEEDS" has the meaning specified in Section 5(b)(iii)
hereof.
"NET CASH PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset
Disposition (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset
Disposition), net of the direct costs relating to such Asset Disposition
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any related expenses Incurred as a result thereof,
taxes paid or payable as a result thereof, amounts required to be applied to the
repayment of Indebtedness secured by a lien on the asset or assets that were the
subject of such Asset Disposition and any reserve for adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP.
"OPTIONAL REDEMPTION DATE" has the meaning specified in Section 5(a)(i)
hereof.
"PARENT" means ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, a Delaware corporation,
and any successor thereto that continues to control the Company.
"PAR OFFER" means any offer to purchase for cash any and all Textron
Shares at a purchase price per share equal to the aggregate Liquidation
Preference of the Textron Shares, plus accumulated and unpaid dividends
(including Total Cash Dividends in Arrears), if any; provided that (1) any such
offer shall be made pursuant to a written notice addressed to Textron, with
instructions as to the manner in which the offer may be accepted and Textron
Shares tendered for purchase, and shall remain available for acceptance for not
less than 10
-46-
Business Days and (2) any and all Textron Shares as to which an acceptance has
been made, and in respect of which certificates therefor have been timely
delivered to the offeror, shall have been purchased. The written notice shall
state that (i) it is a Par Offer; (ii) any Textron Shares not delivered and duly
endorsed for transfer to the offeror on a timely basis will remain outstanding
and continue to accumulate dividends, but will have no further benefit of
Section 7(d); (iii) unless the offeror defaults in the payment of the Par Offer,
all Textron Shares delivered for payment pursuant to the Par Offer will cease to
accumulate dividends upon payment; and (iv) the Par Offer must be accepted by
the offeror in whole and may not be accepted in part. A "PAR OFFER" may be made
and consummated by any Person, whether or not the Company or one of its
Affiliates, pursuant to these provisions and shall nonetheless be an effective
Par Offer.
"PARITY SECURITIES" has the meaning specified in Section 6 hereof.
"PERMITTED INDEBTEDNESS AND PREFERRED STOCK" means:
(i) Indebtedness Incurred by the Company or any Restricted Subsidiary
pursuant to one or more Credit Facilities; provided, however, that the
aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i) does not exceed $[ ] million at any time outstanding less the
amount of any Net Cash Proceeds from an Asset Disposition used to
permanently reduce the availability under the term loan portion of any such
Credit Facilities;(a)
(ii) Indebtedness of the Company or any Restricted Subsidiary under [the
Bridge Financing and] any Acquisition Notes and any replacement, refunding,
refinancing, renewal or extension thereof in an aggregate principal amount
or liquidation preference not to exceed $[ ] million at any time
outstanding;(b)
(iii) Indebtedness of any Foreign Subsidiary (other than a Foreign
Subsidiary organized under the laws of Canada) incurred for working capital
purposes
--------------
(a) To provide 15% flexibility in amount as compared with the similar basket
in the Acquisition Notes or, if the Acquisition Notes are not issued on or
prior to the first Issuance Date, the amount will equal the total
commitments under Credit Facility to be entered into in connection with
the Acquisition plus an additional 15% to allow for future growth.
(b) To equal amount of Bridge Financing or Acquisition Notes.
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not to exceed at any time outstanding the sum of (x) the consolidated book
value of the accounts receivable of such Foreign Subsidiary plus (y) the
consolidated book value of the inventories of such Foreign Subsidiary;(a)
(iv) Indebtedness of the Company or any Restricted Subsidiary constituting
and any replacement, refunding or refinancing of a Receivables Facility and
any replacement, refunding, refinancing, renewal or extension thereof;
provided that the aggregate principal amount of Indebtedness Incurred
pursuant to this clause (iv) shall not exceed $[ ] million at any time
outstanding;(b)
(v) Indebtedness of the Company or any Restricted Subsidiary represented by
Capitalized Lease Obligations, mortgage financing or purchase money
obligations, in each case Incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of
property or Incurred to refinance any such purchase price or cost of
construction or improvement, in each case Incurred no later than 365 days
after the date of such acquisition or the date of completion of such
construction or improvement;(c)
(vi) Indebtedness of the Company or any Restricted Subsidiary in a principal
amount or liquidation preference not to exceed $[ ] million outstanding at
any time (it being understood that any Indebtedness Incurred under this
clause (vi) shall cease to be outstanding for purposes of this clause (vi)
but shall be deemed to be Incurred or issued for purposes of the first
paragraph of Section 7(a) from and after the first date on which the Company
or such Restricted Subsidiary could have Incurred such Indebtedness under
the first paragraph of Section 7(a) without reliance upon this clause
(vi));(d)
--------------
(a) To be limited in the same manner as the Acquisition Notes, if any, plus a
15% margin in the case of a dollar limitation or receivables plus
inventory limitation.
(b) To provide 25% in excess of an amount equal to the US/Canadian Receivables
Facility entered into at Acquisition closing.
(c) To be limited to a dollar amount if so provided in the Acquisition Notes,
plus a 15% margin.
(d) To equal amount of "rainy day" basket in Acquisition Notes plus 20% or, if
Acquisition Notes are not issued, an amount to be reasonably acceptable to
the
Footnote continued on next page.
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(vii) (A) Indebtedness of the Company owing to and held by any Restricted
Subsidiary or (B) Indebtedness of a Restricted Subsidiary owing to and held
by the Company or any Restricted Subsidiary; provided, however, that any
subsequent issuance (other than directors' qualifying shares) or transfer of
any Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer
of any such Indebtedness (except, in the case of subclause (A), to a
Restricted Subsidiary or, in the case of subclause (B), to the Company or a
Restricted Subsidiary) shall be deemed in each case to constitute the
Incurrence of such Indebtedness;
(viii) (A) other Indebtedness outstanding on the Issuance Date of the Series
A1 Redeemable Preferred Stock, the Series B1 Redeemable Preferred Stock and
the Series C1 Redeemable Preferred Stock, including without limitation the
Existing Notes and Indebtedness assumed by reason of the Acquisition, and
any refinancing, replacement, refunding, renewal or extension thereof and
(B) any refinancing, replacement, refunding, renewal or extension of any
Indebtedness Incurred under the first paragraph of Section 7(a);
(ix) Indebtedness of the Company or any Restricted Subsidiary (A) in respect
of performance bonds, bankers' acceptances and surety or appeal bonds
provided by the Company or any of the Restricted Subsidiaries to their
customers in the ordinary course of their business and not for money
borrowed, (B) in respect of performance bonds or similar obligations of the
Company or any of the Restricted Subsidiaries for or in connection with
pledges, deposits or payments made or given in the ordinary course of
business and not for money borrowed in connection with or to secure
statutory, regulatory or similar obligations, including obligations under
health, safety or environmental obligations, (C) arising from guarantees to
suppliers, lessors, licensees, contractors, franchises or customers of
obligations (other than Indebtedness) incurred in the ordinary course of
business and not for money borrowed and (D) under Currency Agreements,
Interest Rate Agreements and Commodity Agreements; provided, however, that
in the case of subclause (D), such agreements are entered into for bona fide
hedging purposes of the Company or any of the Restricted Subsidiaries (as
determined in good faith by the Company);
--------------
Footnote continued from previous page.
Company and Textron, but not less than $60 million (i.e., 120% of the
rainy day basket under Existing Notes) in any event.
-49-
(x) Indebtedness of the Company or any Restricted Subsidiary arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of the Company or any of the
Restricted Subsidiaries pursuant to such agreements, in each case Incurred
or issued in connection with the disposition of any business, assets or
Subsidiary of the Company in a principal amount or liquidation preference
not to exceed the gross proceeds actually received by the Company or any of
the Restricted Subsidiaries in connection with such disposition;
(xi) Indebtedness consisting of (A) guarantees by the Company or any
Restricted Subsidiary of Indebtedness Incurred or Preferred Stock issued by
a Restricted Subsidiary otherwise permitted hereunder, (B) guarantees by a
Restricted Subsidiary of Indebtedness or Preferred Stock Incurred or issued
by the Company otherwise permitted hereunder, or (C) guarantees by the
Company or any Restricted Subsidiary of Indebtedness Incurred by a Foreign
Subsidiary in the ordinary course of business; and
(xii) Indebtedness consisting of Preferred Stock of Restricted Subsidiaries
to the extent that such Preferred Stock is issued or sold in accordance with
Section 7(h) hereof.
For the purposes of determining Indebtedness permitted above in
connection with a replacement, refunding, refinancing, renewal or extension of
such Indebtedness (a "REFINANCING" and the term "REFINANCED" having a
correlative meaning), the aggregate principal amount of Indebtedness Incurred in
connection with such Refinancing shall not exceed the principal amount of the
Indebtedness being Refinanced, plus the amount of any premium required to be
paid in connection with such Refinancing pursuant to the terms of the
Indebtedness being Refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such Refinancing by means of a tender
offer or privately negotiated purchase or repayment, plus the fees and expenses
of the Company or Restricted Subsidiary, as the case may be, Incurred in
connection with such Refinancing.
"PERMITTED INVESTMENTS"(a) means (i) Investments in cash equivalents,
(ii) any Investments included in the definition of Permitted Indebtedness,
including in respect of
--------------
(a) Baskets and concepts are to be modified to provide equivalent flexibility
to the Acquisition Notes plus additional flexibility reasonably acceptable
to the Company and Textron; if Acquisition Notes are not issued on or
prior to the first Issuance Date, the Company and Textron will negotiate
to complete the blank information and to
Footnote continued on next page.
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Currency Agreements, Interest Rate Agreements and Commodity Agreements, (iii)
Investments in existence on the Issuance Date of the Series A1 Redeemable
Preferred Stock, Series B1 Redeemable Preferred Stock and Series C1 Redeemable
Preferred Stock, (iv) Investments in any Restricted Subsidiary by the Company or
any Restricted Subsidiary, including any Investment made to acquire such
Restricted Subsidiary, (v) Investments in any Receivables Facility, (vi)
Investments in the Company by any Restricted Subsidiary, (vii) sales of goods or
services on trade credit terms consistent with the Company's and its
Subsidiaries' past practices or otherwise consistent with trade credit terms in
common use in the industry and recorded as accounts receivable on the balance
sheet of the Person making such sale, (viii) loans or advances to employees for
purposes of purchasing common stock of Parent or the Company in an aggregate
amount outstanding at any one time not to exceed $[ ] million and other loans
and advances to employees of the Company and its Subsidiaries in the ordinary
course of business, including travel, moving and other like advances, (ix) loans
or advances to vendors or contractors of the Company and its Subsidiaries (other
than Affiliates of the Company) in the ordinary course of business, (x) lease,
utility and other similar deposits in the ordinary course of business, (xi)
stock, obligations or securities received in the ordinary course of business in
settlement of debts owing to the Company or a Subsidiary thereof as a result of
foreclosure, perfection, enforcement of any Lien or in a bankruptcy proceeding,
(xii) Investments in Unrestricted Subsidiaries, partnerships or joint ventures
involving the Company or its Restricted Subsidiaries if the amount of such
Investment (after taking into account the amount of all other Investments made
pursuant to this clause (xii), less any return of capital realized or any
repayment of principal received on such Permitted Investments, or any release or
other cancellation of any guarantee constituting such Permitted Investment,
which has not at such time been reinvested in Permitted Investments made
pursuant to this clause (xii)) does not exceed the greater of $[ ] million or [
]% of the consolidated assets of the Company and the Restricted Subsidiaries,
(xiii) Investments in Persons to the extent any such Investment represents the
non-cash consideration received by the Company or the Restricted Subsidiaries in
connection with an Asset Disposition and (xiv) Investments consisting of
guarantees of Indebtedness of Foreign Subsidiaries Incurred in the ordinary
course of business.
"PERMITTED RESTRICTED PERIOD DEBT" means Indebtedness (i) under any
revolving credit or letter of credit facility required for funding the Company
and the Restricted
--------------
Footnote continued from previous page.
supplement this definition for additional identified ordinary course needs
on a basis reasonably acceptable to each of them.
-51-
Subsidiaries in the ordinary course of business (including under the Credit
Facility), (ii) of the type set forth in clauses (i), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (x) and (xi) of the definition of "Permitted Indebtedness"
and any Refinancing thereof and (iii) Incurred for the purpose of Refinancing
Indebtedness of the Company or a Restricted Subsidiary having a Stated Maturity
within one year of the date of such Incurrence; provided in each case that the
proceeds to the Company and the Restricted Subsidiaries from the Incurrence of
any such Indebtedness are not applied as consideration in respect of any Asset
Acquisition.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PREFERRED STOCK", means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or distribution of
funds, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.
"PROJECTED CONSOLIDATED INTEREST EXPENSE" means, with respect to a
particular Asset Acquisition, the projected Consolidated Interest Expense
(without giving effect to clause (viii) thereof and assuming for this purpose
that the acquired Persons or assets are the "Company and the Restricted
Subsidiaries") attributable to Indebtedness Incurred or assumed to effect the
particular Asset Acquisition, as set forth in the Certified Projections with
respect to such Asset Acquisition, for the time period for which the Adjusted
Consolidated Pro Forma Coverage Ratio is being calculated (but not to cover any
time period in which the particular Asset Acquisition had not been made).
"PROJECTED PERIOD CASH FLOW" means, with respect to a particular Asset
Acquisition, the projected Consolidated Cash Flow (assuming for this purpose
that the acquired Persons or assets are the "Company and the Restricted
Subsidiaries") of the Persons or assets which are the subject of such Asset
Acquisition, as set forth in the Certified Projections with respect to such
Asset Acquisition, for the time period for which the Adjusted Consolidated Pro
Forma Coverage Ratio is being calculated (but not to cover any time period in
which the particular Asset Acquisition had not been made).
"PROJECTED TIME ADJUSTED ACQUISITION CASH FLOW" means the sum of the
following calculations determined for each Asset Acquisition effected after the
Issuance Date of the Series A1 Redeemable Preferred Stock, Series B1 Redeemable
Preferred Stock and Series C1 Redeemable Preferred Stock. The following
calculation shall be made for each Asset Acquisition utilizing the time periods
of the Certified Projections for the Subject Acquisition for which the Adjusted
Consolidated Pro Forma Coverage Ratio is being calculated: the Time Period
Factor for the subject Acquisition shall be multiplied by the Projected Period
Cash Flow of such Asset Acquisition.
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"PROJECTED TIME ADJUSTED ACQUISITION INTEREST EXPENSE" means the sum of
the following calculations determined for each Asset Acquisition effected after
the Issuance Date of the Series A1 Redeemable Preferred Stock, Series B1
Redeemable Preferred Stock and Series C1 Redeemable Preferred Stock. For each
Asset Acquisition the following calculation shall be made utilizing the time
periods of the Certified Projections for which the Adjusted Consolidated Pro
Forma Coverage Ratio is being calculated: the Time Period Factor with respect to
the subject Acquisition shall be multiplied by the Projected Consolidated
Interest Expense of such Asset Acquisition.
"PURCHASE AGREEMENT" means the Purchase Agreement dated August 7, 2001
among Textron, Parent and the Company.
"QUALIFIED BANK" has the meaning specified in Section 5(c)(iv) hereof.
"QUALIFIED CAPITAL STOCK" of the Company shall mean any Capital Stock
of the Company which is not Disqualified Stock.
"RECEIVABLES FACILITY" means any receivables financing facilities
pursuant to which the Company or any of its Subsidiaries sells, transfers,
assigns or pledges its accounts receivable and/or any rights ancillary thereto
to a special purpose entity or trust and in connection therewith such entity or
trust Incurs Indebtedness secured by such accounts receivable and/or ancillary
rights with customary repurchase obligations for breaches of representations
warranties or covenants or recourse based upon the collectability of the
accounts receivable or ancillary rights sold, including, without limitation the
Receivables Facility contemplated by the Debt Commitment Letter.
"RECEIVABLES FINANCING SUBSIDIARY" means a Subsidiary formed for the
purpose of monetizing accounts receivable of the Company and/or one or more of
its Subsidiaries whose assets consent of cash, such accounts receivable and
related intangibles and assets.
"REDEEMABLE PREFERRED STOCK" has the meaning set forth in Section 1
hereof.
"REDEMPTION DATE" means the Optional Redemption Date, the Maturity
Redemption Date, the Change of Control Redemption Date or the Asset Disposition
Redemption Date, as the case may be.
"REDEMPTION NOTICE" has the meaning specified in Section 5(c)(i)
hereof.
"REDEMPTION PRICE" means the price at which the Redeemable Preferred
Stock may be redeemed.
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"REGISTRATION RIGHTS AGREEMENT" means that certain Exchange and
Registration Rights Agreement, dated as of [ ], 2001, by and between the Company
and Textron, as amended or modified in accordance with its terms.
"REMAINING NET AVAILABLE PROCEEDS" has the meaning specified in Section
5(b)(iii) hereof.
"RESTRICTED PAYMENT" has the meaning specified in Section 7(b) hereof.
"RESTRICTED PERIOD" has the meaning specified in Section 7(d) hereof.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.
"SENIOR SECURITIES" has the meaning specified in Section 6 hereof.
"SERIES A ACCRUED DIVIDENDS" has the meaning specified in Section 2(a)
hereof.
"SERIES A ADDITIONAL DIVIDENDS" means, as of any date of determination
with respect to a share of Series A Redeemable Preferred Stock, the aggregate
amount of dividends accrued upon the Series A Cash Dividends in Arrears in
respect of such share pursuant to Section 2(c), to the extent that payment in
cash of such dividends has not been made on or prior to such date of
determination.
"SERIES A CASH DIVIDENDS IN ARREARS" means, as of any date of
determination with respect to a share of Series A Redeemable Preferred Stock,
the aggregate of all accumulated and unpaid dividends upon such share of Series
A Redeemable Preferred Stock that were required to be paid in cash on any
Dividend Payment Date occurring prior to such date of determination, to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.
"SERIES A DIVIDEND RATE" has the meaning set forth in Section 2(a)
hereof.
"SERIES A LIQUIDATION PREFERENCE" means with respect to a share of
Series A Redeemable Preferred Stock, $1,000 plus the aggregate amount of all
Series A Accrued Dividends in respect of such share through and including the
date of determination.
"SERIES A REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
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"SERIES A1 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES A1 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES A2 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES A2 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES B ACCRUED DIVIDENDS" has the meaning specified in Section 2(a)
hereof.
"SERIES B ADDITIONAL DIVIDENDS" means, as of any date of determination
with respect to a share of Series B Redeemable Preferred Stock, the aggregate
amount of dividends accrued upon the Series B Cash Dividends in Arrears in
respect of such share pursuant to Section 2(c), to the extent that payment in
cash of such dividends has not been made on or prior to such date of
determination.
"SERIES B CASH DIVIDENDS IN ARREARS" means, as of any date of
determination with respect to a share of Series B Redeemable Preferred Stock,
the aggregate of all accumulated and unpaid dividends upon such share of any
Series B Redeemable Preferred Stock that were required to be paid in cash on any
Dividend Payment Date occurring prior to such date of determination, to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.
"SERIES B DIVIDEND RATE" has the meaning set forth in Section 2(a)
hereof.
"SERIES B LIQUIDATION PREFERENCE" means $1,000 plus the aggregate
amount of all Series B Accrued Dividends through and including the date of
determination.
"SERIES B REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES B1 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES B1 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
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"SERIES B2 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES B2 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES C ACCRUED DIVIDENDS" has the meaning specified in Section 2(a)
hereof.
"SERIES C ADDITIONAL DIVIDENDS" means, as of any date of determination
with respect to a share of Series C Redeemable Preferred Stock, the aggregate
amount of dividends accrued upon the Series C Cash Dividends in Arrears in
respect of such share pursuant to Section 2(c), to the extent that payment in
cash of such dividends has not been made on or prior to such date of
determination.
"SERIES C CASH DIVIDENDS IN ARREARS" means, as of any date of
determination with respect to a share of Series C Redeemable Preferred Stock,
the aggregate of all accumulated and unpaid dividends upon such share of any
Series C Redeemable Preferred Stock that were required to be paid in cash on any
Dividend Payment Date occurring prior to such date of determination, to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.
"SERIES C DIVIDEND RATE" has the meaning set forth in Section 2(a)
hereof.
"SERIES C LIQUIDATION PREFERENCE" means $1,000 plus the aggregate
amount of all Series C Accrued Dividends through and including the date of
determination.
"SERIES C REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES C1 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES C1 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
"SERIES C2 EXCHANGE NOTES" shall have the meaning ascribed to it in
Section 6 hereof.
"SERIES C2 REDEEMABLE PREFERRED STOCK" shall have the meaning ascribed
to it in Section 1(a) hereof.
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"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be
a "significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Securities and Exchange Commission.
"SPONSOR" means Heartland Industrial Partners, L.P. and its Affiliates.
"STATED MATURITY" means, with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"SUBSIDIARY" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary shall refer to a Subsidiary of the
Company.
"SURVIVING ENTITY" has the meaning specified in Section 7(e)(i).
"TEXTRON" means Textron, Inc. and its legal successors.
"TEXTRON SHARES" means all shares of Series A Redeemable Preferred
Stock held beneficially and of record solely by Textron and/or any of Textron's
Subsidiaries to the extent solely and continuously beneficially owned since the
Issuance Date of the Series A1 Preferred Stock; provided that the Company may
require reasonable certifications and indemnities from Textron as to such
beneficial ownership and continuous beneficial ownership since the Issuance Date
of the Series A1 Preferred Stock as a condition to complying with the provisions
of, or determining eligibility for, a Par Offer or for ascertaining the need to
comply with the penultimate paragraph of Section 7(b).
"TIME PERIOD FACTOR" is to be utilized in order to determine the
portion of the annual Certified Projections to be utilized when the four fiscal
quarter period for which the Adjusted Consolidated Pro Forma Coverage Ratio is
being calculated doesn't match. To that end, the portion of any fiscal year set
forth in the Certified Projections to be utilized will be based upon, with
respect to a particular Asset Acquisition, the fraction obtained by dividing (1)
the actual
number of days of a particular fiscal year of the Company to be reflected in
Adjusted Consolidated Pro Forma Coverage Ratio by (2) 365 days. In addition, to
the extent an Asset Acquisition was consummated during the four fiscal quarter
period for which the Adjusted Consolidated Pro Forma Coverage Ratio is being
calculated (i.e., less than a full year), the Time Period Factor will equal the
fraction obtained by dividing (1) the actual
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number of days for which the Asset Acquisition has been included in Consolidated
Cash Flow of the Company by (2) 365 days.
"TOTAL CASH DIVIDENDS IN ARREARS" means, with respect to any share of
Redeemable Preferred Stock at any date of determination, the total of (1) the
Cash Dividends in Arrears with respect to such share, if any, at the date of
determination and (2) the associated Additional Dividends with respect to such
share at such date of determination.
"TOTAL LIQUIDITY DIVIDENDS IN ARREARS" means, with respect to any
Textron Share at any date of determination, the total of (1) the aggregate of
all accumulated and unpaid Liquidity Dividends upon such Textron Share, if any,
at the date of determination and (2) the associated Additional Dividends with
respect to such share at such date of determination.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below, (ii) any Receivables
Financing Subsidiary and (iii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary of the Company (including any
newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or owns or holds any Lien on any property of, the
Company or any Restricted Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated to the extent not otherwise permitted hereby;
provided, however, that after giving effect to any such designation, the Company
could (1) Incur $1.00 of Indebtedness under the first paragraph of Section 7(a)
and (2) make an Investment in such Subsidiary under Section 7(b). Any such
designation shall be deemed to have resulted in an Investment by the Company for
purposes of Section 7(b). The Board of Directors may designate any Unrestricted
Subsidiary (other than a Receivables Financing Subsidiary) to be a Restricted
Subsidiary; provided, however, that all Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such designation, if Incurred at
such time, would have been permitted to be Incurred for all purposes of this
Certificate of Designation. Any such designation by the Board of Directors shall
be evidenced to the holders of the Redeemable Preferred Stock by promptly
delivering to the transfer agent for the Preferred Stock a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Notwithstanding the foregoing, any Subsidiary which shall be designated an
"Unrestricted Subsidiary" in accordance with the terms of the Acquisition Notes
shall be deemed to be an Unrestricted Subsidiary for purposes hereunder.
"VOTING RIGHTS TRIGGERING EVENT" has the meaning set forth above in
Section 4(b) hereof.
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"VOTING STOCK" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
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IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed in its corporate name on this day of , 2001.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.
By:
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Name:
Title:
By:
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Name:
Title:
EXHIBIT 7
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") dated as of August 7, 2001
between Textron Automotive Exteriors Inc., a Delaware corporation ("Exteriors")
and JPS Automotive, Inc., a Delaware corporation ("JPS "). Except as expressly
defined herein, capitalized terms used in this Agreement shall have the meaning
ascribed to them in the Purchase Agreement dated as of August 7, 2001 (the
"Purchase Agreement") by and among Textron Inc. ("Parent"), ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Products Co., a Delaware corporation ("C&A Products") and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Corporation, a Delaware corporation.
WHEREAS, the Purchase Agreement provided for the sale of certain of
Parent's automotive trim operations currently managed as a unit of Textron
Automotive Corporation Inc. a Delaware corporation, to C&A Products and those
entities specified in the Purchase Agreement;
WHEREAS, Exteriors desires to sell and assign to JPS, and JPS to
purchase and assume from Exteriors, certain assets, Contracts, other obligations
and liabilities relating to the business conducted by Exteriors; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and in the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Sale and Purchase of Assets. (a) On the terms and subject to the
conditions of this Agreement, at the Closing, Exteriors shall sell, transfer,
assign and deliver to JPS, or cause to be sold, transferred, assigned and
delivered to JPS, free and clear of any Liens (other than Permitted Liens), and
JPS shall purchase and assume from Exteriors, all of Exteriors' right, title and
interest in and to the Transferred Assets. To the extent that the Transferred
Assets consist of written documents (including microfilms and computer files)
which are necessary to the maintenance of Exteriors' records in accordance with
reasonable practice, Exteriors may either deliver to JPS a duplicate copy of
such documents and retain the original or deliver to JPS the original of such
documents and retain a duplicate copy; provided, however, that Exteriors shall
deliver the original of any such document when delivery of the original is
necessary to effectuate the transfer of any Transferred Asset.
(b) For purposes of this Agreement, "Transferred Assets" shall mean the
Evart, Michigan and Americus, Georgia plants (the "Plants") including, the
following used primarily at or related primarily to the Plants:
(i) the real estate, buildings thereon, fixtures, equipment and
other personal property in the buildings,
(ii) Contracts, to the extent their transfer is permitted by their
terms, for products produced at the Plants,
(iii) to the extent their transfer is permitted by Law, all Permits
relating to the Plants issued to Exteriors by any Governmental
Authority;
(iiii) all rights in and to products sold (including, without
limitation, products hereafter repossessed or returned and
unpaid, Exteriors, rights of replevin, rescission, reclamation
and rights to stoppage in transit) which were manufactured at
the Plants;
(iv) all rights of way, easements, appurtenances and similar realty
interests of Exteriors pertaining to the real property on which
the Plants are located;
(v) all machinery, equipment, furniture, furnishings, vehicles and
other fixed assets used primarily on or relating primarily to
the Plants;
(vi) all leases of vehicles and of tangible assets which are used
primarily at or related primarily to the Plants;
(viii) all inventories of raw materials, work-in-progress, spare
parts, replacement and component parts, office and other
supplies and finished goods for the Plants (the "Inventory");
(ivii) all Contracts relating primarily to the Plants to the extent
their transfer is permitted by their terms (the "Purchased
Contracts"), including, without limitation, any right to
receive payment for products sold or services rendered, and to
receive goods and services, pursuant to such agreements;
(x) all customer lists relating primarily to the Plants (the
"Customer Lists");
(viii) all Pre-paid Expenses, credits, deferred charges, advance
payments, security deposits and other prepaid items related
primarily to the Transferred Assets;
(ixi) all rights, claims, credits, causes of action or rights of
set-off against third parties related primarily to the
Transferred Assets or the Assumed Liabilities, including,
without limitation, unliquidated rights under manufacturers'
and vendors' warranties and rights under insurance policies
covering the Transferred Assets, other than in relation to
liabilities that are the obligations of Exteriors and rights to
▇▇▇ for and remedies against past, present and future
infringements of any Intellectual Property rights;
(xiii) all trade accounts and notes receivable and payments for
services as of the Closing Date which arose from the operation
of the Plants in the ordinary course prior to the Closing Date;
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(xi) all books, records, manuals and other materials (in any form or
medium), including, without limitation, all advertising
materials, catalogues, price lists, correspondence, mailing
lists, distribution lists, photographs, production data, sales
and promotional materials and records, purchasing materials and
records, personnel records, manufacturing and quality control
records and procedures, blueprints, research and development
files, records, data and laboratory books, media materials and
plates, accounting records, customer records, sales order files
and litigation files used primarily in or relating primarily to
the Plants;
(xii) all guarantees, warranties, indemnities and similar rights in
favor of Exteriors with respect to any Transferred Asset;
(xiii) any and all of the databases, software, source codes, object
codes, documentation, technical data, manuals, comments and
instructions, and computer processes used primarily at or
relating primarily to the Plants;
(xiv) all goodwill and any other intangible assets related primarily
to the Plants, including without limitation all relationships
with brokers and representatives relating to the sales,
marketing, distribution or promotion of products manufactured
in the Plants; and
(xv) all other assets (other than Contracts) which are used
primarily at or relate primarily to the business of such
plants.
2. Purchase Price. (a) The purchase price for the Transferred Assets
shall be one hundred twenty-five million dollars ($125,000,000) minus the
estimated amount of Assumed Liabilities which are treated as liabilities for
income tax purposes as of the Closing Date (the "Purchase Price"). The estimate
of said Assumed Liabilities shall be made by the parties in good faith shortly
prior to the closing. JPS shall deliver to Exteriors at the Closing a promissory
note in the principal amount of the Purchase Price bearing 11% interest
compounded annually and payable quarterly in arrears maturing on the fifth
anniversary of the Closing. Such note shall have terms and provisions as are
acceptable to both Exteriors and JPS.
(b) Real property, personal property and other ad valorem Taxes of
Exteriors related to the Transferred Assets shall be allocated between JPS and
Exteriors on the basis of a daily proration and the net amount owing from JPS to
Exteriors or from Exteriors to JPS on account of such proration shall be paid
promptly upon written request by the party entitled to receive such payment. If
an assessment for the tax period that includes the Closing Date (the "Current
Period") has not been made by the time that payment is due under the preceding
sentence, a tentative payment shall be made at that time based on the assessment
for the immediately preceding tax period, and JPS or Exteriors, as the case may
be, shall make an appropriate adjusting payment within 10 days following receipt
of the assessment for the Current Period.
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(c) Upon the terms and subject to the conditions of this Agreement and
the Purchase Agreement, at the Closing JPS shall, by appropriate instruments to
be executed and delivered at Closing, assume and agree to buy, perform and
discharge in accordance with the terms thereof, when due all of the liabilities
and obligations related primarily to the Plants on the Closing Date of whatever
kind or nature, absolute or contingent, known or unknown, whenever arising (the
"Assumed Liabilities").
(d) On terms and subject to the conditions of this Agreement, the
closing of the Transaction (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New York
at 8:00 a.m. (New York time) as promptly as practicable, but no later than the
second Business Day following the satisfaction or waiver of the conditions set
forth in Section 3 (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 JPS and Exteriors may agree. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date"
3. Conditions. The obligation of each party to complete the purchase of
the Plants by JPS are subject to the satisfaction on or prior to the Closing
Date of the conditions set forth in Section 6.1 of the Purchase Agreement. The
obligations of JPS to complete the purchase of the Plants is subject to the
satisfaction on or prior to the Closing Date of the conditions set forth in
Section 6.2 or the Purchase Agreement. The obligations of Exteriors to complete
the sale of the Plants is subject to the satisfaction on or prior to the closing
date of the conditions set forth in Section 6.3 or the Purchase Agreement.
4. Rescission. In the event that the Closing pursuant to the Purchase
Agreement does not occur within two Business Days after the Closing pursuant to
this Agreement, Exteriors and JPS shall rescind the purchase of the Transferred
Assets and the assumption of the Assumed Liabilities by JPS.
5. Termination. This Agreement may be terminated at any time prior to
the Closing by either Exterior or JPS if the Purchase Agreement has been
terminated.
6. Miscellaneous. (a) This Agreement shall be construed and the rights
and duties of the parties determined in accordance with the laws of the State of
Delaware.
(b) This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective assigns and successors.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(d) This Agreement may be amended only by a written agreement signed by
JPS and Exteriors.
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(e) Any notice, request, instruction or other document to be given
hereunder by any party to another party shall be given in the manner and to the
parties specified in the Purchase Agreement.
(f) In case any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal or unenforceable in any jurisdiction.
the validity, legality and enforceability of the remaining terms, provisions,
covenants or restrictions, or of such term provision, covenant or restriction in
any other jurisdiction, shall not in any way be affected or impaired thereby.
(g) In the event of any conflict between this Agreement and the
agreements attached as Exhibits 2, 3A, 3B, 3C and 4 to the Purchase Agreement,
the latter agreements shall apply.
(h) Upon the reasonable request of JPS, Exteriors shall on and after
the Closing Date execute and deliver to JPS such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transactions contemplated hereby, and to otherwise carry out the purposes of
this Agreement. Upon the reasonable request of Exteriors, JPS shall on the
Closing Date execute and deliver to Exteriors such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transactions.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered as of the date and year first written
above.
TEXTRON AUTOMOTIVE EXTERIORS INC.
By:
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Name:
Title:
JPS AUTOMOTIVE, INC.
By:
--------------------------------------
Name:
Title:
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