AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AND AGREEMENT AND PLAN OF MERGER
By and Among
▇▇▇▇▇▇▇ INVESTMENTS, INC.
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
CPS TRAILER CO.
and
CPS ENTERPRISES, INC.
TABLE OF CONTENTS
Page
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1. DEFINITIONS.......................................................... 2
1.1 "Affiliate........................................................... 2
1.2 "Ancillary Documents................................................. 2
1.3 "Assets.............................................................. 2
1.4 "Code................................................................ 3
1.5 "Commitments......................................................... 3
2. ACQUISITION OF STOCK................................................. 3
2.1 Acquisition of Stock................................................. 3
2.2 Delivery of Possession and Instruments of Transfer................... 4
3. CONSIDERATION........................................................ 4
3.1 Cash Consideration................................................... 4
3.2 Deposit.............................................................. 5
3.3 Payment at Closing................................................... 5
3.4 Other Consideration.................................................. 5
(a) Employment Agreements.......................................... 5
(b) Earnout........................................................ 5
(c) Stock.......................................................... 5
3.5 Allocation of Consideration for Tax Purposes......................... 6
4. CLOSING.............................................................. 6
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND CPS............ 6
5.1 Organization, Good Standing, Power, Etc.............................. 6
5.2 Capital Stock........................................................ 6
5.3 Articles of Incorporation and By-Laws................................ 7
5.4 Subsidiaries, Divisions and Affiliates............................... 7
5.5 Equity Investments................................................... 7
5.6 Authorization of Agreement........................................... 7
5.7 Effect of Agreement.................................................. 8
5.8 Restrictions......................................................... 8
5.9 Governmental and Other Consents...................................... 8
5.10 Financial Statements................................................. 8
5.11 Absence of Certain Changes or Events................................. 9
5.12 Title to Assets; Absence of Liens and Encumbrances................... 9
5.13 Equipment............................................................ 10
5.14 Insurance............................................................ 10
5.15 Agreements, Arrangements, Etc........................................ 10
5.16 Patents, Trademarks Copyrights, Etc.................................. 13
5.17 Permits, Licenses, Etc............................................... 13
5.18 Compliance with Applicable Laws...................................... 14
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5.19 Litigation........................................................... 14
5.20 No Interest in Competitors........................................... 14
5.21 Customers, Suppliers, Distributors and Agents........................ 15
5.22 Books and Records.................................................... 15
5.23 Employee Benefit Plan................................................ 16
5.24 Powers of Attorney................................................... 16
5.25 Sufficiency of Assets and Commitments................................ 16
5.26 Labor Disputes, Unfair Labor Practices............................... 17
5.27 Past Due Obligations................................................. 17
5.28 Environmental Matters................................................ 17
5.29 Tax and Other Returns and Reports.................................... 19
5.30 Certain Tax Definitions.............................................. 20
5.31 Recent Dividends and Other Distributions............................. 20
5.32 Inventory............................................................ 20
5.33 Purchase and Sale Obligations........................................ 20
5.34 Other Information.................................................... 20
5.35 Accounts Receivable and Accounts Payable............................. 21
5.36 Knowledge of CPS and the Shareholder................................. 21
5.37 Deductible Amount.................................................... 21
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................... 21
6.1 Organization......................................................... 21
6.2 Authorization of Agreement........................................... 21
6.3 Effect of Agreement.................................................. 22
6.4 Litigation........................................................... 22
6.5 Standard Automotive Common Stock..................................... 22
7. PRE-CLOSING COVENANTS OF SHAREHOLDER AND CPS......................... 22
7.1 Conduct of Business Until Closing Date............................... 22
7.2 Approvals, Consents and Further Assurances........................... 23
7.3 Access to Properties, Records, Suppliers, Agents, Etc................ 23
7.4 Advice of Changes.................................................... 24
7.5 Conduct.............................................................. 24
7.6 Employee Benefit Plans............................................... 24
7.7 Satisfaction of Conditions by Shareholder and CPS.................... 24
8. PRE-CLOSING COVENANTS OF PURCHASER................................... 24
8.1 Satisfaction of Conditions by Purchaser.............................. 24
8.2 Environmental Audit.................................................. 24
8.3 Release of Guarantees................................................ 24
9. POST-CLOSING COVENANTS............................................... 25
9.1 Further Assurances................................................... 25
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER................. 25
10.1 Accuracy of Representations and Warranties........................... 25
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10.2 Performance of Agreements............................................ 25
10.3 Litigation, Etc...................................................... 25
10.4 Approvals and Consents............................................... 26
10.5 Shareholder's Certificate............................................ 26
10.6 Officer's Certificate................................................ 26
10.7 Good Standing Certificates........................................... 26
10.8 No Material Adverse Change........................................... 26
10.9 Actions, Proceedings, Etc............................................ 26
10.10 Opinion of Counsel to CPS............................................ 26
10.11 Licenses, Permits, Consents, Etc..................................... 27
10.12 Documentation of Rights.............................................. 27
10.13 Resignations of officers and Directors............................... 27
10.14 Product Liability Insurance.......................................... 27
11 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDER
AND CPS ............................................................. 27
11.1 Accuracy of Representations and Warranties........................... 27
11.2 Performance of Agreements............................................ 27
11.3 No Injunction........................................................ 27
11.4 Opinion of Counsel to Purchaser...................................... 27
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.......... 27
12.1 Survival............................................................. 28
12.2 Indemnification by the Shareholder................................... 28
12.3 Indemnification by Purchaser......................................... 28
12.4 Right to Defend...................................................... 29
12.5 Subrogation.......................................................... 29
13. MISCELLANEOUS........................................................ 29
13.1 Expenses............................................................. 29
13.2 Termination of Agreement............................................. 29
13.3 Waivers.............................................................. 29
13.4 Binding Effect, Benefits............................................. 30
13.5 Assignment........................................................... 30
13.6 Notices.............................................................. 30
13.7 Entire Agreement..................................................... 31
13.8 Headings; Certain Terms.............................................. 31
13.9 Counterparts......................................................... 31
13.10 Governing Law........................................................ 31
13.11 Severability......................................................... 32
13.12 Amendments........................................................... 32
13.13 Transaction Taxes.................................................... 32
13.14 Section References................................................... 32
13.15 Brokers and Finders.................................................. 32
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EXHIBIT INDEX
1. Exhibit 1.3(b) Inventory
2. Exhibit 1.3(c) Equipment
3. Exhibit 1.3(d) Rights (Patents, Trademarks, Copyrights, etc.)
4. Exhibit 1.3(h) Real Property (owned or leased (included or excluded)
5. Exhibit 1.3(1) Excluded Assets
6. Exhibit 3.4(a) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ Employment Agreements
7. Exhibit 4.1 Form of Closing Memorandum
8. Exhibit 5.1 Good Standing Certificates - CPS
9. Exhibit 5.2 Outstanding Offers, Options, Warrants, Securities, Etc.
10. Exhibit 5.3 Articles of Incorporation and By-Laws of CPS
11. Exhibit 5.4 Subsidiaries, Divisions and Affiliates of CPS
12. Exhibit 5.5 Equity Investments
13. Exhibit 5.8 Restrictions
14. Exhibit 5.9 Governmental and Other Consents
15. Exhibit 5.10 Financial Statements of CPS
16. Exhibit 5.11 Material Adverse Changes
17. Exhibit 5.12 Notices, Liens and Encumbrances of CPS
18. Exhibit 5.14 Insurance Policies
19. Exhibit 5.15 Commitments
20. Exhibit 5.16 Patents, Trademarks, Copyrights
21. Exhibit 5.19 Material Litigation
22. Exhibit 5.20 5% Interest Ownership Table
23. Exhibit 5.21(a) Customers, Suppliers, Distributions and Agents
24. Exhibit 5.21(b) 20 Largest Purchasers and Providers
25. Exhibit 5.23 Employee Benefit Plans
26. Exhibit 5.24 Powers of Attorney
27. Exhibit 5.25 Sufficiency of Assets & Commitments
28. Exhibit 5.26 Material Labor Disputes
29. Exhibit 5.27 Past Due Obligations
30. Exhibit 5.28 Environmental Matters
31. Exhibit 5.29(a) Tax Examination Dates
32. Exhibit 5.29(b) Examinations of Tax Returns by Governmental Agency
33. Exhibit 5.29(c) Proposal by Governmental Entity of Deficiency, Assessment
of Claim of Taxes
34. Exhibit 5.32(a) Inventory
35. Exhibit 5.32(b) Non-useable Inventory
36. Exhibit 5.35 Accounts Receivable and Accounts Payable
37. Exhibit 7.1 Conduct of Business Prior to Closing
38. Exhibit 10.10 Opinion of Counsel to CPS
39. Exhibit 11.4 Opinion of Counsel to ▇▇▇▇▇▇▇
▇▇
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AND AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT ("Agreement") is made and entered into
as of this 30th day of January, 1998, by and among ▇▇▇▇▇▇▇ Investments, Inc., a
New Jersey corporation having an address of c/o Redstone Capital Corp., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Purchaser"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(the "Shareholder"), CPS Trailer Co. ("Trailer") and CPS Enterprises, Inc.
("Enterprises"), both Missouri corporations, of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Trailer and Enterprises being collectively referred to as "CPS").
RECITALS:
WHEREAS, the Shareholder is the record and beneficial owner of 5 shares of
common stock of Trailer (the "Trailer Common Stock") and 550 shares of common
stock of Enterprises (the "Enterprises Common Stock," and collectively with the
Trailer Common Stock, the "Common Stock"), which is 100% of the issued and
outstanding capital stock of both companies, respectively;
WHEREAS, Purchaser is a wholly-owned subsidiary of Standard Automotive
Corporation, a Delaware corporation ("Standard Automotive");
WHEREAS, Purchaser desires to purchase from Shareholder, and Shareholder
desires to sell to Purchaser, the Trailer Common Stock;
WHEREAS, Enterprises and CPS Acquisition Corp., a wholly-owned subsidiary
of Standard Automotive ("CPS Acquisition"), desire to merge in a reverse
triangular merger, with the result that Enterprises will become a wholly-owned
subsidiary of Standard Automotive;
WHEREAS, Purchaser, Shareholder and CPS previously entered into that
certain Stock Acquisition Agreement, dated as of January 30, 1998, which was
subsequently amended by that certain First Amendment to Stock Acquisition
Agreement, dated as of June 10, 1998, and by that certain Second Amendment to
Stock Acquisition Agreement, dated as of July 8, 1998, and by that certain Third
Amendment to Stock Acquisition Agreement, dated as of September 14, 1998
(collectively, the "Original Agreement"), relating to the acquisition of the
Common Stock; and
WHEREAS, Purchaser, Shareholder and CPS desire to amend and restate the
Original Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements of the parties hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" As used in this Agreement, the term "Affiliate" shall
mean, as applied to any person, any other person directly or indirectly
controlling, controlled by, or under common control with, that person. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of that
person or entity, whether through the ownership of voting securities, by
contract, or otherwise.
1.2 "Ancillary Documents" shall have the meaning set forth in Section 9
hereof.
1.3 "Assets" As used in this Agreement, the term "Assets" shall mean the
assets of CPS (as of the Closing) as follows:
(a) the business of CPS as a going concern, the goodwill pertaining
thereto and all of CPS's right, title and interest in and to the names
"CPS Trailer Co.", and all other names used by CPS, as well as all logos
relating thereto;
(b) all items of inventory owned by CPS including, without
limitation, all raw materials, work-in-progress and finished products of
CPS (all of which are collectively referred to hereinafter as
"Inventory"), as set forth in Exhibit 1.3(b);
(c) all vehicles, machinery, equipment (including equipment which
has previously been fully depreciated by CPS and all equipment loaned to
customers), furniture, fixtures and non-inventory supplies of CPS
(including containers, packaging and shipping material, tools and spare
parts and other similar tangible personal property owned by CPS, which are
listed on Exhibit 1.3(c), all of which are collectively referred to
hereinafter as the "Equipment");
(d) all of CPS' right, title and interest in and to the United
States and foreign rights of CPS currently owned or used by CPS (and the
rights proposed to be used) which are set forth on Exhibit 1.3(d), in the
conduct of the business of CPS, with respect to copyrights, licenses,
patents, trademarks, trademark rights, tradenames, service marks, service
right marks, trade secrets, shop rights, know-how, technical information,
techniques, discoveries, designs, proprietary rights and non-public
information and registrations, reissues and extensions thereof and
applications and licenses therefor, including the items listed on Exhibit
1.3(d) (all of such rights being collectively referred to hereinafter as
the "Rights");
(e) all books and records of CPS including all in-house mailing
lists, other customer and supplier lists, trade correspondence, production
and purchase records, promotional literature, data storage tapes and
computer disks, computer software, order superseded forms, accounts
payable records (including invoices, correspondence and all related
documents), accounts receivable ledger from December 31, 1995 through the
Closing Date, all documents relating to uncollected invoices, and all
shipping records from January 1, 1996 through the Closing Date;
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(f) all contracts, agreements and orders for goods; all corporate
opportunities under discussion and related to the business of CPS,
including any documentation related thereto;
(g) all trade receivables of CPS and all advance payments, prepaid
items, rights to offset and credits of all kinds of CPS;
(h) all real property owned or leased by CPS together with all
fixtures attached thereto, except for property excluded, as set forth in
Exhibit 1.3(h) (the "Real Property");
(i) all real property and all tangible personal property owned by
CPS which is not specifically included in, or specifically excluded by,
the foregoing subsections (a) through (h);
(j) all plans, contracts, financing commitments and other rights
with respect to the land and new plant under construction next to the
existing facility in Oran, Missouri;
(k) all options to purchase real property adjacent to the CPS
facility in Oran, Missouri; and
(l) all other assets of CPS, except as specifically excluded on
Exhibit 1.3(1) ("Excluded Assets"). Shareholder's personal tractor shall
be excluded from the sale.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and/or superseded.
1.5 "Commitments" shall mean all agreements, indentures, mortgages, plans,
policies, arrangements, and other instruments, including all amendments thereto
(or where they are verbal, written summaries of the materials terms thereof),
fixed or contingent, required to be disclosed on Exhibit 5.15.
2. ACQUISITION OF STOCK
2.1 Acquisition of Stock.
2.1.1 In exchange for the consideration specified herein, and upon and
subject to the terms and conditions of this Agreement, (a) Purchaser shall
purchase and acquire from the Shareholder, and the Shareholder shall sell,
assign, transfer, convey and deliver to Purchaser at the Closing, the Trailer
Common Stock, and (b) CPS Acquisition shall merge with and into Enterprises in a
reverse triangular merger (the "Merger"), with the result that Enterprises shall
become a wholly-owned subsidiary of Standard Automotive. The consideration
payable pursuant to Section 3 hereof shall be allocated as follows: (i) to the
purchase and sale of the Trailer Common Stock, the consideration described in
Sections 3.1, 3.2, 3.4(a) and 3.4(b); and (ii) to the Merger, the consideration
described in Section 3.4(c).
3
2.1.2 In connection with the Merger, Enterprises and CPS Acquisition shall
prepare, execute and acknowledge an Agreement and Plan of Merger and Articles of
Merger (collectively, the "Merger Documents") and shall deliver the Merger
Documents to the Secretary of State of the State of Missouri as soon as
practicable after the Closing. The Merger shall become effective as of the time
of filing of the Merger Documents with the Secretary of State of the State of
Missouri (the "Effective Time"). At the Effective Time, (a) Shareholder's shares
of Enterprises Common Stock shall be converted, without any action on the part
of Shareholder, into that number of shares of common stock of Standard
Automotive set forth in Section 3.4(c), (b) the Articles of Incorporation and
By-Laws of Enterprises shall remain in place until duly amended, and (c) the
officers and directors of CPS Acquisition shall remain in office until
successors are duly elected. The Merger is intended to qualify as a
"reorganization" under Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), and this Agreement is intended to constitute a
"plan of reorganization" under regulations promulgated thereunder. The parties
intend that CPS Acquisition and Standard Automotive be parties to the "plan of
reorganization," notwithstanding that they are not parties to this Agreement.
2.2 Delivery of Possession and Instruments of Transfer. At the Closing,
the Shareholder shall deliver to Purchaser possession of all of the certificates
representing the shares of Common Stock, duly endorsed in blank or accompanied
by duly executed stock powers with signatures guaranteed, and such other
instruments of transfer requested by and satisfactory to Purchaser and its
counsel for the consummation of the transactions contemplated under this
Agreement and as are necessary to vest in Purchaser all right, title and
interest in and to the Common Stock, free and clear of any lien, encumbrance,
security agreement, equity, option, claim, charge or restriction, other than
restrictions imposed by federal or applicable state securities laws.
3. CONSIDERATION
3.1 Cash Consideration. The cash consideration to be paid by Purchaser in
consideration for its purchase of the Trailer Common Stock and the other rights
provided herein shall be the sum of (a) $7,410,000, plus (b) five-sixths (5/6)
of the Adjusted Net Income of CPS (as herein defined) for the period beginning
January 1, 1998 and ending the day prior to the Closing Date (as defined in
Section 4 hereof), minus any dividends paid by CPS during such period. For
purposes hereof, the Adjusted Net Income of CPS means the net income of CPS
determined in accordance with its regular method of accounting, increased by the
cost of the product liability insurance purchased by CPS pursuant to Section
10.14 hereof. The consideration provided in clause (a) shall be payable in
accordance with paragraph 3.3 hereof. As soon as practicable following the
Closing Date, the Purchaser's accountants shall prepare a financial statement as
of the Closing Date, and the consideration provided under clause (b) shall be
payable within ten (10) days after delivery of such financial statements to
Purchaser.
4
3.2 Deposit. Purchaser has heretofore deposited $370,000 in escrow with
Seller's attorney. Should Purchaser default in its obligation to close and
should Shareholder be in all respects ready to close and, along with CPS, in
full compliance with this Agreement, the Shareholder shall be entitled to retain
the deposit with all interest thereon as liquidated damages, and neither party
shall have any further obligation to the others.
3.3 Payment at Closing. The deposit shall be released to Shareholder and
an additional $7,040,000 in cash shall be payable at the Closing in clearing
house funds, provided good and marketable title to the Common Stock is
delivered, free and clear of any lien, or encumbrance as set forth in Section
2.2 hereof and provided all other terms and conditions of this Agreement have
been complied with. Interest on the deposit shall be paid to the Purchaser.
3.4 Other Consideration. In further consideration of the transactions
contemplated by this Agreement, the following shall be applicable:
(a) Employment Agreements. Shareholder and ▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ shall,
at the Closing, deliver executed Employment Agreements, and CPS shall
execute said Employment Agreements, in the form attached hereto as Exhibit
3.4(a). Said Employment Agreements shall have a term of four years and
shall recite, among other things, that Shareholder shall receive a salary
of $100,000 per year as Interim President and Director of Research &
Development, that ▇▇▇▇ ▇▇▇▇▇▇▇ shall receive a salary of $65,000 per year
as Vice President with bonus compensation and raises as the Board of
Directors shall determine, that Shareholder shall receive a bonus to
consist of 5% of CPS' earnings before depreciation, amortization, interest
and taxes (EBITDA) during employment of Shareholder for each year of
employment under the Employment Agreement and shall be subject to a
non-competition clause with respect to any products made or contemplated
to be made by CPS extending through course of employment and for one year
thereafter. For purposes hereof, the cost of the product liability
insurance purchased by CPS pursuant to Section 10.14 hereof shall not be
deducted in calculating EBITDA for the year ended December 31, 1998.
(b) Earnout. A cash payment on April 15, 2002 equal to $1,000,000 if
the amount of CPS' cumulative EBITDA for its years ended December 31,
1998, 1999, 2000 and 2001 exceeds $6,000,000. For purposes hereof, the
cost of the product liability insurance purchased by CPS pursuant to
Section 10.14 hereof shall not be deducted in calculating EBITDA for the
year ended December 31, 1998.
(c) Stock. Pursuant to the Merger, Purchaser shall cause to be
delivered to Shareholder 125,000 shares (the "Shares") of the common stock
of Standard Automotive. The Shares shall contain no restrictions on
transfer except as set forth in SEC Rule 144 or any replacement thereof.
5
3.5 Allocation of Consideration for Tax Purposes. The parties agree to
allocate the consideration paid pursuant to this Agreement in the manner and in
accordance with Section 2.11 of this Agreement. None of the parties shall, at
any time hereafter, in any tax or information return filed with any state or
federal agency or in any audit, other tax proceeding or otherwise, take a
position which is contrary to such allocation.
4. CLOSING
Subject to the provisions of this Agreement, the consummation of the
transactions contemplated by this Agreement (the "Closing") shall be held at
such place as selected by Purchaser at 10:00 A.M. (local time), on September 17,
1998, or at such later date, place or time as the parties shall otherwise
mutually agree upon (the date of the Closing being referred to herein as the
"Closing Date"). All Closing transactions shall be deemed to take place
simultaneously, and no Closing transaction shall be deemed consummated until all
transactions to take place at the Closing have been consummated. The actions and
documents necessary for the consummation of transactions contemplated by this
Agreement shall be set forth in the Closing Memorandum attached hereto as
Exhibit 4.1.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND CPS
As an inducement to Purchaser to enter into this Agreement and perform its
obligations hereunder, the Shareholder and CPS, jointly and severally, hereby
represent and warrant to Purchaser and CPS Acquisition as follows, each of which
representation and warranty is material and is being relied upon by Purchaser,
and each of which is true as of the date hereof and shall be true as of the
Closing, with the same effect as if said representations and warranties had been
made at and as of the Closing Date:
5.1 Organization, Good Standing, Power, Etc. CPS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri. CPS is authorized or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction (set forth in Exhibit 5.1) in which
the character and location of its Assets or the nature of the business
transacted by CPS makes such qualification necessary. CPS has all requisite
corporate power and authority to (i) execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby and (ii) to own or lease and operate its properties and assets, and carry
on its business as it is presently being conducted.
5.2 Capital Stock.
(a) Trailer has authorized capital stock consisting of thirty
thousand (30,000) shares of common stock, no par value, of which five (5)
shares are issued and outstanding, and all of which are duly authorized,
validly issued, fully paid, non assessable, and were issued in compliance
with all federal and applicable state securities laws.
6
(b) Enterprises has authorized capital stock consisting of three
thousand (3,000) shares of common stock, $10 par value, of which five
hundred fifty (550) shares are issued and outstanding, and all of which
are duly authorized, validly issued, fully paid, non assessable, and were
issued in compliance with all federal and applicable state securities
laws.
(c) Except as set forth in Exhibit 5.2 hereof, there are no
outstanding offers, options, warrants, rights, calls, commitments,
obligations (verbal or written), conversion rights, plans or other
agreements (conditional or unconditional) of any character providing for,
requiring or permitting the offer, sale, purchase or issuance of any
shares of capital stock of CPS or any other securities (as such term is
defined in the Securities Act of 1933, as amended). Except as set forth in
Exhibit 5.2, there are no equity securities of CPS that are reserved for
issuance or are outstanding.
(d) The Common Stock is owned by the Shareholder free and clear of
all liens, charges, encumbrances or claims of any kind whatsoever, except
for restrictions imposed by federal or applicable state securities laws.
5.3 Articles of Incorporation and By-Laws. Included in Exhibit 5.3 hereto
are correct and complete copies of the Articles of Incorporation of CPS, as
amended to date, and the ByLaws of CPS, as amended to date. Such Articles of
Incorporation and By-Laws are in full force and effect.
5.4 Subsidiaries, Divisions and Affiliates. Except as set forth on Exhibit
5.4, there are no subsidiaries, divisions or Affiliates of CPS. Except as set
forth on Exhibit 5.4, the business of CPS has been conducted solely by CPS and
not through any Affiliate, joint venture or other entity, person or under any
other name.
5.5 Equity Investments. Except as set forth in Exhibit 5.5, CPS does not
own or have any rights to any equity interest, directly or indirectly, in any
corporation, partnership, joint venture, firm or other entity.
5.6 Authorization of Agreement. The execution, delivery and performance of
this Agreement has been, and the Ancillary Documents will be duly authorized,
and the Agreement and Ancillary Documents, when executed and delivered in the
manner contemplated herein, will be duly and validly executed and delivered by
Shareholder. This Agreement constitutes a valid and binding obligation of the
Shareholder enforceable in accordance with its terms, except that such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor's rights generally.
7
5.7 Effect of Agreement. The execution, delivery and performance of this
Agreement by the Shareholder and the consummation by the Shareholder and CPS,
respectively, of the transactions contemplated hereby, will not, with or without
the giving of notice and the lapse of time, or both, (a) violate any provision
of law, statute, rule, regulation or executive order to which CPS or the
Shareholder is subject; (b) violate any judgment, order, writ or decree of any
court applicable to the Shareholder or CPS; or (c) result in the breach of or
conflict with any term, covenant, condition or provision of, result in the
modification or termination of, constitute a default under, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the Assets pursuant to any corporate charter, by-law, commitment,
contract or other agreement or instrument, including any of the Commitments, to
which CPS or the Shareholder is a party or by which any of the Assets is or may
be bound or affected or from which CPS or the Shareholder derive benefit, which
breach, conflict, modification, termination, default or encumbrance described in
this clause (c) would be material to the business of CPS or any of the Assets.
5.8 Restrictions. Except as set forth on Exhibit 5.8, neither CPS nor the
Shareholder is a party to any contract, commitment or agreement, nor is any of
them, the Common Stock or Assets subject to, or bound or affected by, any
provision of the Articles of Incorporation, ByLaws or other corporate
restriction, or any order, judgment, decree, law, statute, ordinance, rule,
regulation or other restriction of any kind or character, which would,
individually or in the aggregate, materially adversely affect CPS's business,
the Common Stock or any of the Assets.
5.9 Governmental and Other Consents. Except as set forth on Exhibit 5.9,
no consent, authorization or approval of, or exemption by, any governmental or
public body or authority is required in connection with the execution, delivery
and performance by the Shareholder of this Agreement or by CPS or the
Shareholder of any of the instruments or agreements herein referred to, or the
taking of any action herein contemplated.
5.10 Financial Statements. The Shareholder has delivered to Purchaser, and
included in Exhibit 5.10 hereto, correct and complete copies of financial
statements of CPS for the fiscal years ended December 31, 1997, 1996 and 1995,
and unaudited for the period ended June 30, 1998, together with such other
financial documents reasonably requested by Purchaser covering the period June
30, 1998, through the date of Closing (collectively, the "Financial
Statements"). The Financial Statements are in accordance with the books and
records of CPS, have been prepared in accordance with generally accepted
accounting principles and practices consistently applied and accurately present
the financial position of CPS at their respective dates and the results of
operations and cash flows for the respective periods covered thereby and all
items that could have a material adverse effect on the willingness of a
prospective purchaser to acquire CPS have been disclosed in the Financial
Statements or in the Exhibits to this Agreement.
8
5.11 Absence of Certain Changes or Events. Except as set forth on Exhibit
5.11, since December 31, 1997, CPS has not: (a) suffered any adverse change in,
or the occurrence of any events which, individually or in the aggregate, has or
have had, or might reasonably be expected to have, a material adverse effect on,
CPS's financial condition, results of operations or business or the value of the
Assets; (b) incurred damage to or destruction of any material Asset or material
portion of the Assets, whether or not covered by insurance; (c) incurred any
material obligation or liability (fixed or contingent) except (i) current trade
or business obligations incurred in the ordinary course of business, none of
which were entered into for grossly inadequate consideration, (ii) obligations
or liabilities under the Commitments to the extent required thereby, and (iii)
obligations and liabilities under this Agreement; (d) made or entered into
contracts or commitments to make any capital expenditures in excess of Ten
Thousand Dollars ($10,000.00); (e) mortgaged, pledged or subjected to lien or
any other encumbrance any of the Assets; (f) sold, transferred or leased any
material Asset or material portion of the Assets, or canceled or compromised any
debt or material claims, except in each case, in the ordinary course of
business; (g) sold, assigned, transferred or granted any rights under or with
respect to any licenses, agreements, patents, inventions, trademarks, trade
names, copyrights or formulae or with respect to know-how or any other
intangible asset including, but not limited to, the Rights; (h) amended or
terminated any of the contracts, agreements, leases or arrangements which
otherwise would have been set forth on Exhibit 5.15 hereto; (i) waived or
released any other rights of material value; or (j) entered into any
transactions not in the ordinary course of business which would, individually or
in the aggregate, materially adversely affect the Assets or the business of CPS.
5.12 Title to Assets; Absence of Liens and Encumbrances. Except as set
forth on Exhibit 5.12, (a) CPS has good title to, and owns outright, the Assets,
which include substantially all of CPS's assets reflected in the most recent
Financial Statements (except (i) as sold, used or otherwise disposed of in the
ordinary course of business, and (ii) as disclosed in the Financial Statements),
free and clear of all mortgages, claims, liens, charges, encumbrances, security
interests, restrictions on use or transfer or other defects as to title; and (b)
immediately following the Closing, CPS will have good and marketable title to
all Assets, free and clear of all mortgages, claims, liens, charges,
encumbrances, security interests, restrictions on use or transfer, or other
defects of any nature. The leases and other agreements or instruments under
which CPS holds, leases or is entitled to the use of any real or personal
property included in the Assets are in full force and effect and all rentals,
royalties or other payments accruing thereunder prior to the date hereof have
been duly paid. CPS enjoys peaceable and undisturbed possession under all such
leases, and the change in ownership of the Assets will not adversely affect such
leases, other agreements and instruments. All Assets are in conformance with all
applicable zoning and other laws, ordinances, rules and regulations; and no
notice of violation of any law, ordinance, rule or regulation thereunder has
been received by the Shareholder or CPS. All buildings, structures,
appurtenances and material items of machinery, equipment and other material
tangible assets used by CPS are in good operating condition and repair,
reasonable wear and tear excepted, are usable in the ordinary course of
business, are adequate and suitable for the uses to which they are being put and
conform in all material respects to all applicable statutes, laws, regulations,
ordinances, codes, rules, judgments, orders, decrees, agreements or governmental
restrictions relating to their construction, use and operation. The properties
and assets of CPS are sufficient to operate and conduct the business of CPS as
presently conducted.
9
5.13 Equipment. Set forth on Exhibit 1.3(c) is a correct and complete list
as of June 30, 1998 of all of the Equipment (in excess of a fair market value of
$3,000.00) (as defined in Section 1.3(c)), indicating for each piece of
Equipment whether it is owned or leased and setting forth where it is located.
Except as set forth on Exhibit 1.3(c), none of the Equipment has been disposed
of since June 30, 1998. Except as noted on Exhibit 1.3(c), all of the Equipment
(a) is in good working condition, with no material defects, and generally has
been suitable to CPS for the uses for which it was designed or has been employed
by CPS and (b) conforms in all material respects with any laws, ordinances,
regulations, orders or other similar governmental requirements relating to its
use, as the same are currently in effect.
5.14 Insurance. There are no outstanding or unsatisfied written
requirements or verbal recommendations imposed or made by any of CPS's current
insurance companies with respect to current policies covering any of the Assets,
or by any governmental authority requiring or recommending, with respect to any
of the Assets, that any repairs or other work be done on or with respect to, or
requiring or recommending any equipment or facilities be installed on or in
connection with, any of the Assets. Except as set forth on Exhibit 5.14, CPS
carries, and (with respect to any period for which a claim against CPS may still
arise) has always carried product liability insurance, worker's compensation
insurance in reasonable amounts, and other insurance which is reasonably
necessary to the conduct of the CPS's business. On Exhibit 5.14 is set forth a
correct and complete list of (a) all currently effective insurance policies and
bonds covering the Assets or the business of CPS, and their respective annual
premiums (as of the last renewal or purchase of new insurance), and (b) for the
five-year period ending on the date hereof, (i) all accidents, casualties or
damage occurring on or to the Assets or relating to the business or products of
CPS which in the aggregate are in excess of Ten Thousand Dollars ($10,000.00),
and (ii) claims for product liability, damages, contribution or indemnification
and settlements (including pending settlement negotiations) relating thereto
which in the aggregate are in excess of Ten Thousand Dollars ($10,000.00).
Except as set forth on Exhibit 5.14, as of the date hereof there are no disputes
with underwriters of any such policies or bonds, and all premiums due and
payable have been paid. There are no pending or, to the knowledge of Shareholder
and CPS, threatened terminations or premium increases with respect to any of
such policies or bonds and there is no condition or circumstance applicable to
the business of CPS, other than the sale of the Common Stock pursuant to this
Agreement, which may result in such termination or increase. CPS and the Assets
are in compliance with all conditions contained in such policies or bonds,
except for noncompliance which, individually or in the aggregate, would not have
a material adverse affect on the business of CPS or the Assets.
5.15 Agreements Arrangements, Etc.
5.15.1 Except as set forth on Exhibit 5.15.1(a)-(t), CPS is not a party
to, nor are CPS or any of the Assets bound by any:
(a) lease agreement (whether as lessor or lessee) of the Assets;
10
(b) license agreement, assignment or contract (whether as licensor
or licensee, assignor or assignee) relating to trademarks, trade names,
patents, or copyrights (or applications therefor), unpatented designs or
processes, formulae, know-how or technical assistance, or other
proprietary rights;
(c) employment or other contract or agreement with an employee or
independent contractor which (i) may not be terminated without liability
to CPS upon notice to the employee or independent contractor of not more
than 30 days, or (ii) provides payments (contingent or otherwise) of more
than $30,000 per year (including all salary, bonuses and commissions);
(d) agreement, contract or order with any buying agent, supplier or
other individual or entity who assists, provides or is otherwise involved
in the acquisition, supplying or providing Assets or other goods to CPS;
(e) non-competition, secrecy or confidentiality agreements;
(f) agreement or other arrangement for the sale of goods or services
by CPS to any third party (including the government or any other
governmental authority);
(g) agreement with any labor union;
(h) policy of insurance (including bonds) in force with respect to
CPS or any of its operations, properties, assets or executive officers;
(i) agreement, contract or order with any distributor, dealer,
leasing company, sales agent or representative, other than contracts or
orders for the purchase, sale or license of goods made in the usual and
ordinary course of business at an aggregate price per contract or more
than $10,000 and a term of more than six months under any such contract or
order;
(j) agreement, contract or order with any manufacturer, leasing
company, supplier or customer (including those agreements which allow
discounts or allowances or extended payment terms);
(k) agreement with any distributor or brokerage company, leasing
company, management company or any other individual or entity who assists,
places, brokers or otherwise is involved with the marketing or
distribution of CPS's products to its customers;
(l) joint venture or partnership agreement with any other person or
entity;
(m) agreement guaranteeing, indemnifying or otherwise becoming
liable for the obligations or liabilities of another;
11
(n) agreement with any banks or other persons, other than its
employees, for the borrowing or lending of money or payment or repayment
of draws on letters of credit or currency swap or exchange agreements
(other than purchase money security interests which may, under the terms
of invoices from its suppliers, be granted to suppliers with respect to
goods so purchased);
(o) agreement with any bank, finance company or similar organization
which acquires from CPS receivables or contracts for sales on credit;
(p) agreement granting any person a lien, security interest or
mortgage on any of the Assets, including, without limitation, any
factoring or agreement for the assignment of receivables or inventory;
(q) agreement for the incurrence of any capital expenditure in
excess of $10,000;
(r) advertising, publication or printing agreement;
(s) agreement which restricts CPS from doing business anywhere in
the world;
(t) agreement or statute or regulation giving any party the right to
renegotiate or require a reduction in prices or the repayment of any
amount previously paid; or
(u) other agreement or contract, not included in or expressly
excluded from the terms of the foregoing clauses (a) through (t),
materially affecting the Assets or CPS's business, except contracts or
purchase orders for the purchase or sale of goods or services made in the
usual and ordinary course of business.
Correct and complete copies of all Commitments required to be shown on
Exhibit 5.15 have been separately delivered to Purchaser prior to the date
hereof.
5.15.2 Each of the Commitments is valid, in full force and effect and
enforceable by CPS in accordance with its terms.
12
5.15.3 Except as set forth on Exhibit 5.15, CPS has fulfilled, or has
taken all action reasonably necessary to enable it to fulfill when due, all of
its obligations under the Commitments, except where the failure to do so would
not, individually or in the aggregate, have a material adverse affect on the
business of CPS or the Assets. Furthermore, there has not occurred any default
by CPS or any event which, with the lapse of time or the election of any person
other than CPS, will become a default, nor has there occurred any default by
others or any event which, with the lapse of time or the election of CPS, will
become a default under any of the Commitments, except for such defaults, if any,
which (a) have not resulted and will not result in any material loss to or
liability of CPS or any of its successors or assigns or (b) have been indicated
on Exhibit 5.15. CPS is not in arrears in any material respect with respect to
the performance or satisfaction of the terms or conditions to be performed or
satisfied by it under any of the Commitments and no waiver or variance has been
granted by any of the parties hereto.
5.15.4 After the Closing, except as set forth on Exhibit 5.15, each of the
Commitments included in the Assets does not require the consent of the other
parties thereto and, with respect to any of the Commitments which do require the
consent of the other parties thereto, CPS has obtained such consent and has
provided or will provide Purchaser with copies thereof.
5.16 Patents, Trademarks Copyrights, Etc. Exhibit 1.3(d) sets forth (i)
the registered and beneficial owner and the expiration date, to the extent
applicable, for each of the Rights set forth on such Exhibit and (ii) the
product, service, or products or services of CPS which make use of, or are sold,
licensed or made under, each such Right. All of the Rights are included in the
Assets and constitute all Rights necessary for the conduct of the business of
CPS, as such business is currently being conducted. Except as set forth on
Exhibit 5.16, CPS has not sold, assigned, transferred, licensed, sub-licensed or
conveyed the Rights, or any of them, or any interest in the Rights, or any of
them, to any person, and has the entire right, title and interest (free and
clear of all security interests, liens and encumbrances of every nature) in and
to the Rights necessary to the conduct of the business of CPS as currently being
conducted; neither has the validity of such items been, nor is the validity of
such items, nor the use thereof by CPS, the subject of any pending or threatened
opposition, interference, cancellation, nullification, conflict, concurrent use,
litigation or other proceeding. The conduct of the business of CPS as currently
operated, and the use of the Assets does not and will not conflict with, or
infringe, legally enforceable rights of third parties. Except as set forth on
Exhibit 5.16, the Rights owned by or licensed to CPS have not been used, and no
use is now being made, by any entity except CPS and other entities duly licensed
to use the same. Except as set forth on Exhibit 5.16, there is no infringement
of any proprietary right owned or licensed by CPS.
5.17 Permits, Licenses, Etc. CPS has all permits, licenses, registrations,
memberships, orders or approvals of governmental or administrative authorities
required to permit CPS to carry on its business as currently conducted other
than permits, licenses, orders or approvals, the failure to obtain which would
not, individually or in the aggregate, have a material adverse affect on the
Assets or on CPS's business).
13
5.18 Compliance with Applicable Laws. The conduct by CPS of its business
does not violate or infringe, and there is no basis for any claims of violation
or infringement of, any law, statute, ordinance, regulation or executive order
(including, without limitation, the Occupational Safety and Health Act and the
Foreign Corrupt Practices Act and the respective regulations thereunder and
similar applicable state laws and regulations) currently in effect, except in
each case for violations or infringements which do not and will not,
individually or in the aggregate, have a material adverse affect on the Assets
or CPS's business. CPS is not in default under any governmental or
administrative registration, membership or license issued to it, under any
governmental or administrative order or demand directed to it, or with respect
to any order,writ, injunction or decree of any court which, in any case,
materially adversely affects the financial condition, results of operations or
business of CPS or the value of the Assets.
5.19 Litigation. Except as set forth on Exhibit 5.19, there is no claim,
action, suit, proceeding, arbitration, reparation, investigation or hearing or
notice of hearing, pending or, to the knowledge of Shareholder and CPS,
threatened, before any court or governmental, administrative or other competent
authority or private arbitration tribunal against or relating to or affecting
(directly or indirectly, including by way of indemnification) the business of
CPS or any of the Assets, or the transactions contemplated by this Agreement;
nor are any facts known to CPS, which it believes could reasonably give rise to
any such claim, action, suit, proceeding, arbitration, investigation or hearing,
which may have any adverse affect, individually or in the aggregate in excess of
Ten Thousand Dollars ($10,000) upon the business of CPS, the value of the Assets
or the transactions contemplated by this Agreement. CPS has not waived any
statute of limitations or other affirmative defense with respect to any of its
obligations. There is no continuing order, injunction or decree of any court,
arbitrator or governmental, administrative or other competent authority to which
CPS is a party, or to which CPS is subject. Neither CPS nor the Shareholder or
other current officer, director, partner or employee of CPS or any Affiliate of
CPS has been permanently or temporarily enjoined or barred by order, judgment or
decree of any court or other tribunal or any agency or other body from engaging
in or continuing any conduct or practice in connection with the business engaged
in by CPS. CPS has not been served with process, and to its best knowledge has
not been named as a party-defendant or third party defendant, in any action or
proceeding arising out of or related to the accident which occurred in
▇▇▇▇▇▇▇▇▇▇ County, Alabama, described on Exhibit 5.19.
5.20 No Interest in Competitors. Set forth on Exhibit 5.20 is a list
describing the extent to which CPS, the Shareholder or any other officer or
director of CPS or any Affiliate of any of the foregoing, directly or
indirectly, owns more than a five percent (5%) interest in or controls or is an
employee, officer, director, or partner of or participant in (but only to the
extent such a participation exceeds one percent), or consultant to any
corporation, partnership, limited partnership, joint venture, association or
other entity which is a competitor, supplier or customer of CPS or has any type
of business or professional relationship with CPS.
14
5.21 Customers, Suppliers, Distributors and Agents. Except as set forth on
Exhibit 5.21(a), CPS has no knowledge or reason to believe that any customer,
client, distributor, supplier or any other person or entity with material
business dealings with CPS, will or may cease to continue such relationship with
CPS, or will or may substantially reduce the extent of such relationship, at any
time prior to or after the Closing Date. Except for such common public
information, CPS has no knowledge of (1) any other existing or contemplated
modification or change in the business relationship of CPS with, or (2) any
existing condition or state of facts which has affected adversely, will
adversely affect (in a material manner), or has a reasonable likelihood of
adversely affecting the business of CPS with its customers, clients, suppliers
or other persons or entities with material business dealings with CPS or which
has prevented or will prevent such business from being carried on by CPS under
its new ownership after the Closing in essentially the same manner as it is
currently carried on. Exhibit 5.21(b) sets forth as to CPS (a) the ten largest
(in dollar value) purchasers of its goods and/or services and (b) the ten
largest (in dollar value) providers of goods and/or services to it, in each case
with respect to each of the fiscal years ended December 31, 1997 and 1996.
5.22 Books and Records. The books of account and other financial and
corporate records of CPS are in all material respects complete, correct and up
to date, with all necessary signatures, and are in all material respects
accurately reflected in the Financial Statements.
15
5.23 Employee Benefit Plan. Except as described in Exhibit 5.23, CPS does
not have any hospitalization, health insurance, pension, retirement, profit
sharing, stock option or similar plans. Exhibit 5.23 sets forth a correct and
complete list of each and every employee benefit plan, including each pension,
profit sharing, stock bonus, bonus, deferred compensation, severance, stock
option or purchase plan, or other retirement plan or arrangement, covering
employees of CPS (the "Employee Benefit Plans"). For each such employee pension
plan, multi-employer plan or welfare plan as those terms are defined in Section
3 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and for each Employee Benefit Plan with respect to which CPS is a "party in
interest" as defined in Section 3 of ERISA, or a "disqualified person" as
defined in Section 4975 of the Code, CPS has delivered to Purchaser complete and
accurate copies of (i) all Employee Benefit Plans and all amendments thereto;
(ii) the trust instrument or insurance contract, if any, forming a part of the
plans, and all amendments thereto; (iii) the most recent and preceding year's
Internal Revenue Service Form 5500 and all schedules thereto; (iv) the most
recent Internal Revenue Service determination letter, or if no letter has been
issued, any pending application to the Internal Revenue Service for a
determination letter regarding qualified status; (v) any bond required by
Section 412 of ERISA; and (vi) the summary plan description. CPS has complied
with all of the rules and regulations governing each of the Employee Benefit
Plans maintained for the benefit of CPS's employees, including, without
limitation, rules and regulations promulgated pursuant to ERISA and the Code, by
the Department of Treasury, Department of Labor, and the Pension Benefit Plans
Guaranty Corporation, and each of the Employee Benefit Plans now operated has
since its inception been operated in accordance with its provisions and is in
compliance with such rules and regulations. Neither CPS nor any Employee Benefit
Plans maintained by CPS or any fiduciaries thereof have engaged in any
prohibited transaction, as that term is defined in Section 406 of ERISA or
Section 4975 of the Code, nor have any of them committed any breach of fiduciary
responsibility with respect to any of the Employee Benefit Plans, and CPS does
not have any knowledge that any other person has not complied with these rules
and regulations.
5.24 Powers of Attorney. Except as set forth on Exhibit 5.24, no person
has any power of attorney to act on behalf of CPS in connection with any of
CPS's properties or business affairs other than such powers to so act as
normally pertain to the officers of CPS.
5.25 Sufficiency of Assets and Commitments. Except as set forth in Exhibit
5.25, the Assets and the Commitments, taken in the aggregate, are sufficient,
and constitute all of the property and Rights necessary, for the continuation of
the business and operations of CPS on a basis consistent with past operations.
16
5.26 Labor Disputes, Unfair Labor Practices. Except as set forth on
Exhibit 5.26, CPS is not engaged in any labor practice which would have a
material adverse affect on the Assets or CPS's business. There is no pending or
affirmatively threatened (i) unfair labor practice complaint, charge, labor
dispute, strike, slowdown, walkout or work stoppage before the National Labor
Relations Board or any other authority or (ii) grievance or arbitration
proceeding arising out of or under a collective bargaining agreement involving
employees of CPS. There have been no strikes, labor disputes, slow-downs,
walkouts, or work stoppages involving employees of CPS during the last five (5)
years. Union representation of employees exists only as set forth on Exhibit
5.26. CPS has not received notice from any of its employees of such employee's
intent to terminate his or her employment or bring any action against CPS for
any reason related to the transactions contemplated by this Agreement or for any
other reason.
5.27 Past Due Obligations. Except as set forth on Exhibit 5.27, no past
due obligations of CPS over $5,000 have given rise or shall give rise within 5
days after the Closing Date (except as such will be performed by CPS prior to
the Closing Date so as to relieve Purchaser of all liability therefor) to any
additional liability to Purchaser on account of their being past due.
5.28 Environmental Matters.
17
(a) Except as set forth on Exhibit 5.28, (i) CPS is in substantial
compliance with all environmental laws, regulations, permits and orders
applicable to it, and with all laws, regulations, permits and orders
governing or relating to asbestos removal and abatement; (ii) CPS has not
transported, stored, treated or disposed, or arranged for any third
parties to transport, store, treat or dispose, of any Hazardous Substances
to or at any location other than a site lawfully permitted to receive such
Hazardous Substances for such purposes, or had performed or arranged for
any method or procedure such transportation, storage, treatment or
disposal in contravention of any laws or regulations nor has CPS disposed
of, or arranged for any third parties to dispose of, Hazardous Substances
upon property owned or leased by it in contravention of any applicable
laws or regulations; (iii) there has not occurred, nor is there presently
occurring, a Release of any Hazardous Substance on, into or beneath the
surface of any parcel of real property in which CPS has (or will have
after giving effect to the transactions contemplated hereby) an ownership
interest or any leasehold interest in contravention of any applicable laws
or regulations; (iv) CPS has not transported or disposed of, or allowed or
arranged for any third parties to transport or dispose of, any Hazardous
Substance to or at a site which, pursuant to the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), has been placed on the National Priorities List or its
Missouri equivalent; (v) CPS has not received notice and CPS has no actual
knowledge of any facts which could give rise to ally substantive notice,
that CPS is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA or notice
of any other Environmental Claim; (vi) CPS has not undertaken (or been
requested to undertake) any response or remedial actions or cleanup
actions of any kind at the request of any federal, state or local
governmental entity, or at the request of any other person or entity; and
(vii) there are no laws, regulations, ordinances, licenses, permits or
orders relating to environmental matters requiring any work, repairs,
construction or capital expenditures with respect to the assets or
properties of CPS.
18
(b) For the purposes of this Agreement: (i) "Environmental Claim"
shall mean any written demand, claim, governmental notice or threat of
litigation or the actual institution of any action, suit or proceeding
which asserts that an Environmental Condition constitutes a violation of
any statute, ordinance, regulation, or other governmental requirement
relating to the emission, discharge, or Release of any Hazardous Substance
into the environment or the generation, treatment, storage,
transportation, or disposal of any Hazardous Substance, prior to Closing
Date in each case in contravention of any applicable laws or regulations;
(ii) "Environmental Condition" shall mean the presence on any real
property during the period from the date such real property was first
owned, leased or used by CPS to the Closing Date, in surface water, ground
water, drinking water supply, land surface, subsurface strata or ambient
air of any Hazardous Substance arising out of or otherwise related to the
operations or other activities of CPS or of any predecessor of CPS,
conducted or undertaken prior to the Closing Date, and in each case in
contravention of any applicable laws or regulations; (iii) "Hazardous
Substance" shall mean any substance defined in the manner set forth in
Section 101(14) of the U.S. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, as applicable on the
Closing Date, and shall include any additional substances designated under
Section 102(a) thereof prior to the Closing Date; and (iv) "Release"
shall mean releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment in each case in contravention of any applicable laws
or regulations.
5.29 Tax and Other Returns and Reports. CPS has timely filed or will file
all Tax Returns and information returns required to be filed by CPS and has paid
all Taxes due for all periods ending on or before December 31, 1997. Adequate
provision has been made in the books and records of CPS and in the Financial
Statements referred to in Section 5.10 above, for all Taxes whether or not due
and payable and whether or not disputed. Exhibit 5.29(a) lists the date or dates
through which any governmental entity has examined any Tax Return of CPS. All
required Tax Returns, including amendments to date, have been prepared in good
faith without negligence or willful misrepresentation and are complete and
accurate in all material respects. Except as set forth in Exhibit 5.29(b), no
governmental entity has, during the past three years, examined or is in the
process of examining any Tax Returns of CPS. Except as set forth on Exhibit
5.29(c), no governmental entity has proposed (tentatively or definitively),
asserted or assessed or threatened to propose or assert, any deficiency,
assessment, lien, or other claim for Taxes and there would be no basis for any
such delinquency, assessment, lien or claim. There are no agreements, waivers or
other arrangements providing for an extension of time with respect to the
assessment of any Taxes or deficiency against CPS or with respect to any Tax
Return filed or to be filed by CPS.
19
5.30 Certain Tax Definitions. For purposes of this Agreement, the term
"Taxes" means all taxes, including without limitation all Federal, state, local,
foreign and other income, franchise, sales, use, property, payroll, withholding,
environmental, alterative or add-on minimum and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of my kind
whatsoever, and all estimated taxes, deficiency assessments, additions to tax,
penalties, and interest, and any contractual or other obligation to indemnify or
reimburse any person with respect to any such assessment. For purposes of this
Agreement, the term "Tax Return" shall mean any report, statement, return,
declaration of estimated tax or other information required to be supplied by or
on behalf of CPS to a taxing authority in connection with Taxes, or with respect
to grants of tax exemption, including any consolidated, combined, unitary, joint
or other return filed by any person that properly includes the income,
deductions or other tax information concerning CPS.
5.31 Recent Dividends and Other Distributions. Except as set forth on
Schedule 5.31, there has been no dividend or other distribution of assets or
securities whether consisting or money, property or any other thing of value,
declared, issued or paid to or for the benefit of CPS's Shareholder subsequent
to the date of the most recent Financial Statements described in Section 5.10 by
CPS.
5.32 Inventory. Except as set forth in Exhibits 5.32(a) and (b), all of
the Inventory has been received within six months of December 31, 1997, and is
of a quantity and quality saleable at regular prices or usable in the ordinary
course of business during 1998. Exhibit 5.32(a) shall specify all Inventory that
was received more than 12 months before the Closing Date, including the calendar
month in which such Inventory was received, by quality and product family.
Exhibit 5.32(b) shall specify all Inventory which is not of a quality or
quantity saleable or usable in the ordinary course of business during 1998.
5.33 Purchase and Sale Obligations. All purchases, sales and orders and
all other commitments for purchases, sales and orders made by or on behalf of
CPS have been made in the usual and ordinary course of its business in
accordance with normal practices. On the Closing Date, the Shareholder shall
deliver to Purchaser a schedule of all such uncompleted purchase and sale orders
and other commitments with respect to any of CPS's obligations as of a date not
earlier than ten (10) days prior to the Closing.
5.34 Other Information. None of the information which has been or may be
furnished by CPS or the Shareholder or any of their representatives to Purchaser
or any of its representatives in connection with the transactions contemplated
hereby, which is contained in this Agreement (including the Exhibits hereto) or
any Ancillary Document or any certificate or instrument delivered or to be
delivered by or on behalf of CPS or the Shareholder in connection with the
transactions contemplated hereby, does or will contain any untrue statement of a
material fact or omit a material fact necessary to make the information
contained herein or therein not misleading.
20
5.35 Accounts Receivable and Accounts Payable. All of the accounts
receivable of CPS are actual and bona fide accounts receivable representing
obligations for the total dollar amount thereof showing on the books of CPS, and
the accounts receivable are not and will not be subject to any recoupments,
set-offs or counter-claims. Except as otherwise reflected in the Financial
Statements, such accounts receivable are collectible in the ordinary course of
business. Exhibit 5.35 sets forth a true and correct aged (30-60-90 days) list
of all accounts receivable and accounts payable of CPS as of the end of the
calendar month preceding the date hereof.
5.36 Knowledge of CPS and the Shareholder. As to each representation and
warranty made by the Shareholder under this Article 5, any fact or information
known to CPS or notice received by CPS, shall be imputed to the Shareholder as
if such fact or information were known to the Shareholder or such notice
received by the Shareholder.
5.37 Deductible Amount. To the extent Shareholder has liability for breach
of any representations under this Article 5, he shall receive a credit of up to
$100,000. However, no credit shall be applicable to liability under paragraphs
5.29 and 5.30 hereof.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to CPS and the Shareholder as
follows, each of which representation and warranty shall be true as of the
Closing Date:
6.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and is a
wholly-owned subsidiary of Standard Automotive. Standard Automotive is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. CPS Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri
and is a first-tier, wholly-owned subsidiary of Standard Automotive. Purchaser
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. Each of CPS Acquisition and Standard Automotive has all
requisite corporate power and authority to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, and each has
adopted the "plan of reorganization" (as defined in the regulations to Code
Section 368) embodied in this Agreement.
6.2 Authorization of Agreement. The execution, delivery and performance of
this Agreement by Purchaser, and the consummation of the transactions
contemplated hereby, have been duly and effectively authorized by the Board of
Directors of Purchaser. This Agreement has been duly and validly authorized,
executed and delivered on behalf of Purchaser. This Agreement constitutes a
valid and binding obligation of Purchaser, enforceable in accordance with its
terms, except that such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors, rights generally.
21
6.3 Effect of Agreement. The execution, delivery and performance of this
Agreement by Purchaser, and the consummation of the transactions contemplated
hereby, will not, with or without the giving or notice and the lapse of time, or
both, (a) violate any provision of law, statute, rule, regulation or executive
order to which Purchaser is subject; (b) violate any judgment, order, writ or
decree of any court applicable to Purchaser; or (c) result in the breach of or
conflict with any term, covenant, condition or provision of the organizational
documents of Purchaser or any commitment, contract or other agreement on
instrument to which Purchaser is a party.
6.4 Litigation. To the best knowledge of Purchaser, there are no actions,
suits, proceedings or governmental investigations or inquiries pending or
threatened against it which, in its reasonable judgment, would prevent the
consummation of the transactions contemplated hereby.
6.5 Standard Automotive Common Stock. The issuance and delivery of the
Shares pursuant to Section 3.4(c) hereof shall be duly and validly authorized by
all necessary corporate action on the part of Standard Automotive. Such Shares
will be, as of the date of such issuance, duly and validly authorized and, when
issued, will be validly issued, fully paid, and non-assessable.
7. PRE-CLOSING COVENANTS OF SHAREHOLDER AND CPS
Shareholder and CPS hereby covenant and agree with Purchaser that
Shareholder and CPS shall do, or cause to be done, the following, between the
date of this Agreement and the Closing Date or date of termination of this
Agreement, as the case may be:
7.1 Conduct of Business Until Closing Date. Except as permitted or
required hereby or as set forth on Exhibit 7.1, the Shareholder shall cause CPS
to:
7.1.1 operate the business of CPS only in the usual, regular and ordinary
manner, and use their best efforts to (a) preserve the present business
organization of CPS intact, (b) keep available the services of the present
employees of CPS, and (c) preserve the current business relationships of CPS
with customers, clients, suppliers, distributors and others having business
dealings with it;
7.1.2 bear the risk of loss or damage to the Assets on and prior to the
Closing Date where such risk of loss is not the legal obligation of another, and
maintain all properties necessary for the conduct of the business of CPS,
whether owned or leased;
7.1.3 maintain the books, records and accounts of CPS in the usual,
regular and ordinary manner, on the basis consistent with prior periods;
7.1.4 duly comply with all laws, rules and regulations applicable to CPS
and to the conduct of its business;
7.1.5 perform all of the obligations of CPS without default, unless such
default is of no significance to CPS and could have no adverse impact on CPS,
its Assets or business;
22
7.1.6 neither (a) amend CPS's Articles of Incorporation or By-Laws; (b)
merge with or into, consolidate, amalgamate or otherwise combine with, any other
entity; nor (c) change the character of the business of CPS;
7.1.7 neither (a) encumber, mortgage, or voluntarily subject to lien any
of the existing Assets or the Common Stock; (b) transfer, sell, lease, license
or otherwise dispose of any of, or any part of, the Assets (other than in the
ordinary course of business); (c) convey, transfer or acquire any material Asset
or property to, for or on behalf of CPS other than in the ordinary course of
business; (d) enter into any arrangement, agreement or undertaking, with respect
to any of the employees relating to the payment of bonus, severance,
profit-sharing or special compensation or any increase in the compensation
payable or to become payable to any such employee; nor (e) incur any material
fixed or contingent obligation or enter into any agreement, commitment, contract
or other transaction or arrangement relating to the business of CPS or the
Assets;
7.1.8 not make any distributions or dividends of Assets or securities, nor
any changes to the capital structure of CPS; not agree to make or make any sales
of its securities including the issuance of any additional capital stock or
rights or options or contracts to acquire, or instruments convertible into,
Common Stock;
7.1.9 neither modify, change nor terminate any of its material obligations
other than in the ordinary course of business, nor grant any power of attorney
with respect to the business of CPS or the Assets to any party except Purchaser;
and
7.1.10 anything in this Section 7.1 notwithstanding, Shareholder and CPS
shall have the right in their discretion to make all decisions and expenditures
regarding the new plant and equipment therefor required to keep that project on
schedule.
7.2 Approvals, Consents and Further Assurances. Shareholder shall use and
shall cause CPS to use its best efforts to obtain in writing as promptly as
possible all approvals, consents and waivers required in order to effectuate the
transactions contemplated hereby, and shall deliver to Purchaser copies,
reasonably satisfactory in form and substance to counsel to Purchaser, of such
approvals and consents. Shareholder shall also use his best efforts to ensure
that the other conditions set forth in Article 10 hereof are satisfied by the
Closing Date.
7.3 Access to Properties, Records, Suppliers, Agents, Etc. Shareholder
shall cause CPS to give to Purchaser and to Purchaser's counsel, financiers,
accountants and other representatives access to and copies of such of CPS's
properties, personnel, books, tax returns, contracts, commitments and records as
relate to the Assets, suppliers, agents, distributors, etc. or other aspects of
the business of CPS; and shall furnish to Purchaser and such representatives all
such additional instruments, contracts, documents or other written obligations
(certified by officers of CPS, if so requested) and financial and other
information concerning such business, Assets, suppliers, agents, etc. as
Purchaser or its representatives may from time to time request.
23
7.4 Advice of Changes. If the Shareholder becomes aware of any fact or
facts which, if known at the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Agreement or which, individually or in
the aggregate, could materially adversely affect the business, Assets or Common
Stock of CPS, Shareholder shall promptly advise Purchaser in writing thereof.
7.5 Conduct. Except as permitted or required hereby or as Purchaser may
otherwise consent in writing, neither CPS nor the Shareholder shall enter into
any transaction or take any action which would result in any of the
representations and warranties of CPS or the Shareholder contained in this
Agreement or in any Ancillary Document not being true and correct as of the time
immediately after such transaction has been entered into or such event has
occurred and on the Closing Date.
7.6 Employee Benefit Plans. Except for payment of CPS's current
obligations, CPS shall not incur any additional obligations or liabilities,
including (i) all liabilities for all claims incurred, whether or not reported,
on or before the Closing Date under all "employee welfare benefit plans," within
the meaning of Section 3(1) of ERISA, (ii) all liabilities or obligations for
vacations or sick leave or retiree, medical or life benefits to employees or
former employees of CPS, and (iii) all liabilities of CPS for all benefits
accrued under any "employee pension benefit plan," within the meaning of Section
3(2) of ERISA under each Employee Benefit Plan.
7.7 Satisfaction of Conditions by Shareholder and CPS. Shareholder and CPS
hereby covenant and agree with Purchaser that, between the date of this
Agreement and the Closing Date or date of termination of this Agreement, as the
case may be, they shall use their best efforts to assure that the conditions set
forth in Article 10 hereof are satisfied by the Closing Date.
8. PRE-CLOSING COVENANTS OF PURCHASER
8.1 Satisfaction of Conditions by Purchaser. Purchaser hereby covenants
and agrees with CPS that, between the date of this Agreement and the Closing
Date or date of termination of this Agreement, as the case may be, Purchaser
shall use its best efforts to cause the conditions set forth in Article 11
hereof to be satisfied by the Closing Date.
8.2 Environmental Audit. Purchaser has conducted a comprehensive
environmental audit (the "Environmental Audit") of CPS and its properties,
assets and operations. Purchaser will deliver prior to Closing a copy of the
Environmental Audit report to the Shareholder and will otherwise keep the
Environmental Audit, its terms and any related documents strictly confidential.
8.3 Release of Guarantees. Purchaser shall use its best efforts to obtain
a release from Union Planters Bank of the personal guarantees of Shareholder and
▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ relating to a loan from Union Planters Bank to CPS to finance
the construction of a building and the acquisition of equipment.
24
9. POST-CLOSING COVENANTS
9.1 Further Assurances. After the Closing hereunder, the Shareholder, at
the request of Purchaser, shall execute, acknowledge and deliver to Purchaser,
without further consideration, all such further assignments, conveyances,
endorsements, deeds, powers of attorney, consents and other documents (together
with the instruments referred to in Section 1.3, referred to herein collectively
as the "Ancillary Documents") and take such other action as Purchaser may
reasonably request (a) to transfer to and fully vest in Purchaser, and protect
Purchaser's right, title and interest in and to all of CPS's right, title and
interest in and to the Assets, and (b) otherwise to consummate the transactions
contemplated by this Agreement.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser pursuant to this Agreement are subject to the
satisfaction at the Closing of each of the following conditions, any or all of
which conditions may be waived by Purchaser in its sole discretion:
10.1 Accuracy of Representations and Warranties. All representations and
warranties made by the Shareholder (contained in this Agreement, any Exhibit or
Schedule hereto, or any certificate or instrument delivered to Purchaser or its
representatives by the Shareholder or their representatives) shall be true on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date (i.e., with respect to representations that a state of
facts exists on or as of the date hereof, it is a condition that such state of
facts exists on or as of the Closing Date; and with respect to a representation
that a state of facts has or has not changed between a date prior to the date
hereof and the date hereof, it is a condition that such state of facts has or
has not changed between such prior date and the Closing Date), except as
affected by transactions contemplated hereby.
10.2 Performance of Agreements. The Shareholder and CPS shall have
performed and complied with all covenants, obligations and agreements to be
performed or complied with by them on or before the Closing Date pursuant to
this Agreement.
10.3 Litigation, Etc.
10.3.1 Except as set forth on Exhibit 5.19, no claim, action, suit,
proceeding, arbitration, investigation or hearing or note of hearing shall be
pending or threatened against or affecting the Shareholder or CPS or ally of the
Assets, which (a) might result either in an action or enjoin or prevent the
consummation of the transactions contemplated by this Agreement; (b) would
materially adversely affect the business of CPS or the ability of Purchaser to
consummate the transactions contemplated by this Agreement or to own the Common
Stock or to operate the business of CPS.
10.3.2 CPS shall not be in violation of any law, statute, ordinance, rule,
regulation or executive order, the enforcement of which would, individually or
in the aggregate, materially adversely affect the Assets or the business of CPS;
or which would individually or in the aggregate, materially adversely affect the
ability of Purchaser to consummate the transactions contemplated by this
Agreement or to own the Common Stock or to operate the business of CPS.
25
10.3.3 No law, regulation or decree shall have been proposed, adopted or
promulgated, or have become effective, the enforcement of which would materially
adversely affect the ability of Purchaser to consummate the transactions
contemplated by this Agreement or to own the Common Stock or to operate any such
business.
10.4 Approvals and Consents. CPS shall have obtained, and Purchaser shall
have received copies of, all of the approvals and consents referred to in
Section 7.2, each of which approvals and consents shall be in full force and
effect and reasonably satisfactory in form and substance to Purchaser and its
counsel.
10.5 Shareholder's Certificate. Purchaser shall have received an accurate
certificate of the Shareholder, dated the Closing Date, satisfactory in form and
substance to Purchaser and its counsel, certifying (a) as to the fulfillment of
the matters specified in Sections 10.1 through 10.3, and (b) any changes that
Purchaser is required to be notified of pursuant to Section 7.4, or that
previously had not been disclosed to Purchaser.
10.6 Officer's Certificate. Purchaser shall have received an accurate
certificate, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President of CPS, dated
as of the Closing Date, stating, among other things, that he is not aware of any
material omissions or facts that would materially alter any of the Financial
Statements, nor is he aware of any facts or factors that are reasonably likely
to occur, or if known to other parties, that could have a material adverse
effect on the financial condition, business, operations, Assets, liabilities,
management or prospects of CPS.
10.7 Good Standing Certificates. Purchaser shall have received a
certificate of the office of the Secretary of State of Missouri, dated within 10
days before the Closing Date, certifying that the records of such state
regarding both Trailer and Enterprises incorporated in such state reflect
neither a certificate of dissolution, a court order declaring dissolution, a
merger or consolidation which terminated its existence, nor suspension of its
corporate powers, rights and privileges, and that in accordance with the records
of such state, such corporation is authorized to exercise all of its corporate
powers, rights and privileges in such state.
10.8 No Material Adverse Change. There shall have been no material adverse
changes in the financial condition, business, operations, assets, liabilities,
management or prospects of CPS.
10.9 Actions, Proceedings, Etc. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
shall have been completed
10.10 Opinion of Counsel to CPS. Purchaser shall have received an opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.A., special counsel to CPS, addressed to Purchaser,
dated the Closing Date, to the effect set forth in, and substantially in the
form, of Exhibit 10.10.
26
10.11 Licenses, Permits, Consents, Etc. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to counsel for
Purchaser, that such licenses, permits, consents, approvals, authorizations or
orders of governmental authorities as are necessary to the consummation of the
transactions contemplated by this Agreement and the continued operation of the
business of CPS have been obtained.
10.12 Documentation of Rights. CPS shall have delivered to Purchaser true
and complete copies of all of the documentation held by CPS relating to each of
the Rights.
10.13 Resignations of Officers and Directors. CPS shall have delivered to
Purchaser the resignations of its officers and directors.
10.14 Product Liability Insurance. Purchaser shall have purchased an
excess product liability insurance policy covering any losses of CPS arising
from the accident described on Exhibit 5.19. The policy limits under such policy
shall be $50 million.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDER AND CPS
The obligations of the Shareholder and CPS under this Agreement are
subject to the satisfaction at the Closing of each of the following conditions.
11.1 Accuracy of Representations and Warranties. All representations and
warranties by Purchaser in this Agreement shall be true as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
11.2 Performance of Agreements. Purchaser shall have performed and
complied in all material respects with all covenants, obligations and agreements
to be performed or complied with by it on or before the Closing Date pursuant to
this Agreement.
11.3 No Injunction. No third party injunction, stay or restraining order
shall be in effect prohibiting the consummation of the transactions contemplated
hereby.
11.4 Opinion of Counsel to Purchaser. The Shareholder shall have received
an opinion of counsel to Purchaser, addressed to the Shareholder, dated as of
the Closing Date, to the effect set forth in, and substantially in the form, of
Exhibit 11.4.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
27
12.1 Survival. The representations and warranties set forth in this
Agreement, in any Exhibit or Schedule hereto and in any certificate or
instrument delivered in connection herewith shall survive for a period of two
(2) years after the Closing Date and shall thereupon terminate and expire and
shall be of no force or effect thereafter, except (i) with respect to any claim,
written notice of which shall have been delivered to Purchaser, the Shareholder
or CPS, as the case may be, such claim shall survive the termination of such
period and shall survive for as long as such claim is unsettled, and (ii) with
respect to any litigation which shall have been commenced to resolve such claim
on or prior to such date. Notwithstanding the foregoing, with respect to taxes,
the period shall be the applicable statute of limitations, and with respect to
customer claims, the period shall be five (5) years.
12.2 Indemnification by the Shareholder. The Shareholder hereby covenant
and agrees with Purchaser that, regardless of any investigation made at any time
by or on behalf of Purchaser or any information Purchaser may have and,
regardless of the Closing hereunder, the Shareholder shall indemnify Purchaser
and CPS and its respective directors, officers, employees and Affiliates of
Purchaser, and each of their successors and assigns (individually, a "Purchaser
Indemnified Party"), and hold them harmless from, against and in respect of any
and all costs, losses, claims, liabilities, fines, penalties, damages and
expenses (including interest which may be imposed in connection therewith, court
costs and reasonable fees and disbursements of counsel) incurred by any of them
resulting from any misrepresentation, breach of warranty or nonfulfillment of
any agreement, covenant or obligation by the Shareholder made in this Agreement
(including without limitation any Exhibit hereto and any certificate or
instrument delivered in connection herewith). Notwithstanding any provision
contained herein to the contrary, the Shareholder shall be obligated to
indemnify Purchaser with respect to customer claims only to the extent such
claims exceed $50,000 per year, and Shareholder's total liability hereunder
shall be limited to the amount of the consideration paid to Shareholder
hereunder.
12.3 Indemnification by Purchaser. Subject to the limitations set forth in
Section 12.1, Purchaser hereby covenants and agrees with the Shareholder that
Purchaser shall indemnify the Shareholder and hold him harmless from, against
and in respect of any and all costs, losses, claims, liabilities, fines,
penalties, damages and expenses (including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements of
counsel) incurred by any of them resulting, from any misrepresentation, breach
of warranty or the nonfulfillment of any agreement, covenant or obligation by
Purchaser made in this Agreement (including without limitation any Exhibit
hereto and any certificate or instrument delivered in connection herewith).
28
12.4 Right to Defend. If the facts giving rise to any such indemnification
shall involve any actual claim or demand by any third party against a Purchaser
Indemnified Party or Shareholder (referred to hereinafter as an "Indemnified
Party"), the indemnifying parties shall be entitled to notice of and entitled
(without prejudice to the right of any Indemnified Party to participate at its
own expense through counsel of its own choosing) to defend or prosecute such
claim at their expense and through counsel of their own choosing if they give
written notice of their intention to do so no later than the time by which the
interest of the Indemnified Party would be materially prejudiced as a result of
its failure to have received such notice; provided, however, that if the
defendants in any action shall include both the indemnifying parties and an
Indemnified Party, and the Indemnified Party shall have reasonably concluded
that counsel selected by the indemnifying parties has a conflict of interest
because of the availability of different or additional defenses to the
Indemnified Party, the Indemnified Party shall cooperate fully in the defense of
such claim and shall make available to the indemnifying parties pertinent
information under its control relating thereto, but shall be entitled to be
reimbursed, as provided in this Article 12, for all costs and expense incurred
by it in connection therewith.
12.5 Subrogation. If the Indemnified Party receives payment or other
indemnification from the indemnifying party hereunder, the indemnifying party
shall be subrogated to the extent of such payment or indemnification to all
rights in respect of the subject matter of such claim to which the Indemnified
Party may be entitled, to institute appropriate action for the recovery thereof,
and the Indemnified Party agrees reasonably to assist and cooperate with the
indemnifying party at no expense to the Indemnified Party in enforcing such
rights.
13. MISCELLANEOUS
13.1 Expenses. Except as and to the extent otherwise provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the Shareholder and Purchaser shall each pay their own respective
expenses and the fees and expenses of their respective counsel and other
experts.
13.2 Termination of Agreement. This Agreement may be terminated at any
time: (a) by mutual written consent of each of the parties hereto; or (b) by any
party hereto after September 18, 1998, if without fault of such terminating
party the Closing has not occurred by September 18, 1998. In the event of the
termination of this Agreement, no party shall have any liability hereunder,
including any liability for damages. In the event that a condition precedent to
a party's obligation is not met, nothing contained herein shall be deemed to
require any party to terminate this Agreement rather than to waive such
condition precedent and proceed with the Closing.
13.3 Waivers. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or in any other documents. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. Any party
hereto may, at or before the Closing, waive any conditions to its obligations
hereunder which are not fulfilled.
29
13.4 Binding Effect; Benefits. This Agreement shall inure to the benefit
of the parties hereto and shall be binding upon the parties hereto and their
respective successors and assigns. Except as otherwise set forth herein, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
13.5 Assignment. No party to this Agreement may assign its rights or
obligations hereunder without the prior written consent of all of the other
parties; provided, however, that Purchaser may assign this Agreement to an
affiliate of Standard Automotive without the consent of the Shareholder or CPS.
13.6 Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon receipt when transmitted by facsimile or telex or after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
If to Purchaser, to:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Investments, Inc.
c/o Redstone Capital Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇
Redstone Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to CPS, to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
30
Chief Executive Officer
CPS Trailer Company, Inc.
▇▇▇▇▇▇▇ ▇▇, ▇.▇. ▇▇▇▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Shareholder, to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
13.7 Entire Agreement. This Agreement (including the Exhibits hereto) and
the Ancillary Documents constitute the entire agreement and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof and supersede all prior agreements,
representations, warranties, statements, promises and understandings, whether
written or oral, with respect to the subject matter hereof. No party hereto
shall be bound by or charged with any written or oral arguments,
representations, warranties, statements, promises or understandings no
specifically set forth in this Agreement or in any Exhibit hereto or any
Ancillary Documents, or in certificates and instruments to be delivered pursuant
hereto on or before the Closing.
13.8 Headings; Certain Terms. The section and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement. As used in this Agreement, the term "including" means "including, but
not limited to" unless otherwise specified; the word "or" means "and/or," and
the word "person" means and refers to any individual, corporation, trust,
partnership, joint venture, government or governmental authority, or any other
entity; and the plural and singular forms are used interchangeably.
13.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed, shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
13.10 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Delaware, without giving effect to the choice of law
principles thereof.
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13.11 Severability. If any term or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the agreement shall be
valid and enforced to the fullest extent permitted by law.
13.12 Amendments. This Agreement may not be modified or changed except by
an instrument or instruments in writing signed by the party or parties against
whom enforcement of any such modification or amendment is sought.
13.13 Transaction Taxes. The Shareholder shall pay any and all taxes
imposed upon the sale of the Common Stock and transfer of ownership thereof.
13.14 Section References. All references contained in this Agreement to
any section number are references to sections of this Agreement unless otherwise
specifically stated.
13.15 Brokers and Finders. Shareholder recognizes that The March Group,
LLC, Nashville, Tennessee (▇▇. ▇▇▇ ▇▇▇▇▇▇▇, Paducah, Kentucky office) is the
broker which brought about this transaction and the Shareholder shall be solely
responsible for the payment of all fees and expenses of The March Group, LLC at
the Closing. Each party represents and warrants there are no other brokers,
finders or similar persons to whom compensation will be due or owing as a result
of consummation of the transactions contemplated by this Agreement and each
party hereby agrees to indemnify and hold the other party harmless against any
such claims.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement, or have
caused this Agreement to be signed in their respective names by an officer
thereunder duly authorized, on the date first above written.
CPS ENTERPRISES, INC. CPS TRAILER COMPANY, INC.
By: By:
----------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Selling Shareholder: ----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
Purchasers:
▇▇▇▇▇▇▇ INVESTMENTS, INC.
By
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
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