RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Among
AMERICAN AXLE & MANUFACTURING, INC.,
AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC.,
JUPITER CAPITAL CORPORATION,
MR. RICHARD E. DAUCH,
MR. MORTON E. HARRIS,
and
AAM ACQUISITION, INC.
dated as of
September 19, 1997
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF ACQUIRED SHARES; RECAPITALIZATION....................... 2
1.1 Purchase and Sale of Acquired Shares.................................... 2
1.2 Recapitalization........................................................ 2
1.3 The Closing............................................................. 3
1.4 Phantom Stock Options................................................... 5
1.5 Further Assurances...................................................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES REGARDING
THE STOCKHOLDERS............................................................. 7
2.1 Ownership of Stock...................................................... 7
2.2 Authorization, Etc. .................................................... 7
2.3 No Approvals or Conflicts............................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING
THE COMPANY.................................................................. 8
3.1 Corporate Organization.................................................. 8
3.2 Capital Stock........................................................... 9
3.3 Authorization, Etc...................................................... 9
3.4 Financial Statements.................................................... 10
3.5 No Undisclosed Liabilities.............................................. 10
3.6 No Approvals or Conflicts............................................... 11
3.7 Compliance with Law; Governmental Authorizations........................ 11
3.8 Litigation.............................................................. 12
3.9 Title to Assets......................................................... 12
3.10 Absence of Certain Changes............................................. 12
3.11 Taxes.................................................................. 12
3.12 Employee Benefits...................................................... 14
3.13 Labor Relations........................................................ 15
3.14 Patents, Trademarks, Trade Names, Etc. ................................ 15
3.15 Contracts.............................................................. 16
3.16 Environmental Matters.................................................. 16
3.17 Brokers' and Other Fees................................................ 16
3.18 Affiliated Transactions................................................ 17
3.19 Recalls................................................................ 17
3.20 Product Liability Claims............................................... 17
3.21 Real Property.......................................................... 17
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3.22 Insurance.............................................................. 18
3.23 Required Assets........................................................ 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING
PURCHASER.................................................................... 19
4.1 Organization............................................................ 19
4.2 Authorization, Etc. .................................................... 19
4.3 No Approvals or Conflicts............................................... 19
4.4 Acquisition for Investment.............................................. 20
4.5 Financing............................................................... 20
4.6 No Brokers' or Other Fees............................................... 20
ARTICLE V COVENANTS AND AGREEMENTS..................................................... 21
5.1 Conduct of Business by Company.......................................... 21
5.2 Access to Books and Records; Cooperation................................ 22
5.3 Filings and Consents.................................................... 23
5.4 Tax Matters............................................................. 23
5.5 WARN Act................................................................ 26
5.6 Employee Benefits....................................................... 27
5.7 Supplements to Disclosure Schedule...................................... 27
5.8 Covenant to Satisfy Conditions.......................................... 27
5.9 Director and Officer Liability and Indemnification...................... 27
5.10 Contact with Customers and Suppliers................................... 28
5.11 Financing.............................................................. 28
5.12 Affiliated Transactions................................................ 28
5.13 Financial Statements and Reports....................................... 28
5.14 Section 338(h)(10) Election............................................ 29
5.15 Disclosure............................................................. 29
ARTICLE VI CONDITIONS TO THE STOCKHOLDERS'
OBLIGATIONS.................................................................. 30
6.1 Representations and Warranties.......................................... 30
6.2 Performance............................................................. 30
6.3 Preferred Stock Purchase and Redemption................................. 30
6.4 Officer's Certificate................................................... 31
6.5 HSR Act................................................................. 31
6.6 Injunctions............................................................. 31
6.7 Closing Certificates.................................................... 31
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ARTICLE VII CONDITIONS TO PURCHASER'S OBLIGATIONS............................. 31
7.1 Representations and Warranties.......................................... 31
7.2 Performance............................................................. 32
7.3 Preferred Stock Purchase and Redemption................................. 32
7.4 Park Corporation Guarantee.............................................. 32
7.5 Officer's Certificate................................................... 32
7.6 HSR Act................................................................. 32
7.7 Injunctions and Certain Other Matters................................... 32
7.8 Funding................................................................. 33
7.9 Resignation of Directors................................................ 33
7.10 Closing Certificates................................................... 33
7.11 Stockholder Approval................................................... 33
ARTICLE VIII TERMINATION.......................................................... 33
8.1 Termination............................................................. 33
8.2 Procedure and Effect of Termination..................................... 34
ARTICLE IX MISCELLANEOUS................................................................ 35
9.1 Indemnification......................................................... 35
9.2 The Stockholders' Obligations........................................... 38
9.3 Fees and Expenses....................................................... 38
9.4 Governing Law........................................................... 39
9.5 Amendment............................................................... 39
9.6 No Assignment........................................................... 39
9.7 Waiver.................................................................. 39
9.8 Notices................................................................. 40
9.9 Complete Agreement...................................................... 41
9.10 Counterparts........................................................... 41
9.11 Publicity.............................................................. 41
9.12 Headings............................................................... 42
9.13 Severability........................................................... 42
9.14 Third Parties.......................................................... 42
9.15 CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.............................................................. 42
9.16 WAIVER OF JURY TRIAL................................................... 42
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SCHEDULE I
EXHIBIT A Form of Stockholders Agreement
EXHIBIT B Form of Park Corporation Guarantee
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RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
This Recapitalization and Stock Purchase Agreement (this
"Agreement"), dated as of September 19, 1997, is entered into by and among
American Axle & Manufacturing, Inc., a Delaware corporation (the "Company"),
American Axle & Manufacturing of Michigan, Inc., a Michigan corporation and a
wholly owned subsidiary of the Company ("AAMM"), Jupiter Capital Corporation, an
Ohio corporation ("Jupiter"), Mr. Richard E. Dauch and Mr. Morton E. Harris
(each such individual owner and Jupiter is referred to herein as a "Stockholder"
and both such individuals and Jupiter are referred to herein collectively as the
"Stockholders"), and AAM Acquisition, Inc., a Delaware corporation
("Purchaser").
WHEREAS, the Stockholders collectively own, beneficially and
of record, an aggregate of 21,053 shares (the "Company Shares") of common stock,
par value $0.01 per share (the "Company Common Stock"), of the Company, 18,261
of which are owned by Jupiter, 1,488 of which are owned by Mr. Dauch and 1,304
of which are owned by Mr. Harris;
WHEREAS, the Company Shares constitute all of the issued and
outstanding shares of Company Common Stock as of the date hereof;
WHEREAS, the Stockholders desire to contribute the Company
Shares to AAMM in exchange for an aggregate of 21,053 newly issued shares (the
"AAMM Shares") of Common Stock, par value $0.01 per share (the "AAMM Common
Stock"), of AAMM, on the terms and subject to the conditions set forth herein;
WHEREAS, in connection with the foregoing, the parties hereto
desire to recapitalize the Company and the Subsidiaries by virtue of extensions
of credit to the Company and certain related transactions as more fully set
forth herein;
WHEREAS, the parties hereto desire that the proceeds from such
extensions of credit be used to (i) repay certain indebtedness of the Company,
(ii) redeem all of the Company's issued and outstanding shares of Class A
Preferred Stock, $.01 par value per share (the "Class A Preferred Stock"), (iii)
distribute a cash dividend to AAMM in an amount sufficient to (x) repurchase
11,125 AAMM Shares (the "Jupiter Recapitalization Shares") to be held by Jupiter
and 1,266 AAMM Shares (the "Harris Recapitalization Shares" and, together with
the Jupiter Recapitalization Shares, the "Recapitalization Shares") to be held
by Mr. Harris and (y) pay to Jupiter an amount equal to the estimated Election
Taxes, as set forth in Schedule I hereto
(the "Election Taxes"), and (iv) consummate certain other transactions as more
fully set forth herein; and
WHEREAS, in connection with the foregoing transactions,
Jupiter desires to sell to Purchaser, and Purchaser desires to purchase from
Jupiter, 6,602 AAMM Shares (the "Jupiter Acquired Shares") to be held by
Jupiter, and Mr. Dauch desires to sell to Purchaser, and Purchaser desires to
purchase from Mr. Dauch 595 AAMM Shares (the "Dauch Acquired Shares" and,
together with the Jupiter Acquired Shares, the "Acquired Shares") to be held by
Mr. Dauch, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED SHARES; RECAPITALIZATION
1.1 Purchase and Sale of Acquired Shares. Each of Jupiter and
Mr. Dauch agrees to sell to Purchaser, and Purchaser agrees to purchase from
Jupiter and Mr. Dauch, the Acquired Shares at the Closing, free and clear of any
preemptive rights, options, rights, liens, claims or other encumbrances or
restrictions ("Encumbrances") and on the terms and subject to the conditions set
forth in this Agreement. The aggregate purchase price for the Jupiter Acquired
Shares is $110,991,372 (the "Jupiter Acquired Shares Purchase Price") and the
aggregate purchase price for the Dauch Acquired Shares is $10,003,009 (the
"Dauch Acquired Shares Purchase Price" and, together with the Jupiter Acquired
Shares Purchase Price, the "Acquired Shares Purchase Price"), in each case
payable in immediately available United States funds at the Closing in the
manner provided in Section 1.3(a)(ix).
1.2 Recapitalization. The Recapitalization will consist of the
following transactions, upon the terms and subject to the conditions set forth
in this Agreement (collectively, the "Recapitalization"), which transactions
will be consummated in the following order:
(a) At the Closing the Company shall borrow funds,
provided that Purchaser shall have caused certain financial institutions (the
"Lenders") to lend such funds to the Company (such borrowings are collectively
referred to herein as the "Financing"), such that, when taken together with
other cash available to the
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Company, the Company has sufficient cash at the Closing (net of any fees,
expenses and other costs required to be paid by the Company in connection with
the transactions contemplated hereby) to, among other things, (i) repay the
indebtedness of the Company set forth in Section 1.2(a) of the Disclosure
Schedule attached hereto and made a part hereof (the "Disclosure Schedule"), and
(ii) redeem all of the Class A Preferred Stock held by Jupiter.
(b) The Stockholders shall contribute the Company Shares
to AAMM in exchange for the AAMM Shares.
(c) In connection with the Recapitalization, AAMM and
Jupiter shall jointly cause the election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code"), and other related
elections as described in Section 5.14.
(d) The Company shall declare and pay a dividend to AAMM
in cash in an amount equal to the entire net proceeds of the Financing less
amounts paid by the Company in connection with the transactions set forth in
clauses (a)(i) and (a)(ii) of this Section 1.2, and immediately thereafter
cancel any shares of AAMM Common Stock owned by the Company.
(e) AAMM shall pay to Jupiter an amount equal to the
Election Taxes.
(f) AAMM shall repurchase the Jupiter Recapitalization
Shares for a purchase price of $187,031,053 (the "Jupiter Recapitalization Cash
Consideration") and shall repurchase the Harris Recapitalization Shares for a
purchase price of $21,283,713 (the "Harris Recapitalization Cash
Consideration"), in each case payable in immediately available funds at the
Closing in the manner provided in Section 1.3(a)(vii).
(g) Purchaser shall purchase from Jupiter and Mr. Dauch
the Acquired Shares as set forth in Section 1.1.
1.3 The Closing. The closing (the "Closing") of the
transactions contemplated in this Agreement shall take place at the offices of
Simpson Thacher & Bartlett at 425 Lexington Avenue, New York, New York, at 10:00
a.m., local time, on the second business day or as soon thereafter as
practicable following the satisfaction or waiver of all of the conditions set
forth in Articles VI and VII hereof
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(the "Closing Date"), or at such other place and time as may be agreed upon by
the Stockholders and Purchaser.
(a) At the Closing, the following transactions will be
consummated in the following order:
(i) the Company shall consummate the Financing,
provided that Purchaser shall have caused the Lenders to provide the
Financing;
(ii) the Company shall (x) repay all amounts of
outstanding indebtedness of the Company listed on Section 1.2(a) of the
Disclosure Schedule and (y) redeem all of the Class A Preferred Stock
held by Jupiter;
(iii) the Stockholders shall contribute the Company
Shares to AAMM in exchange for the AAMM Shares;
(iv) AAMM and Jupiter shall jointly cause the
election under Section 338(h)(10) of the Code, and other related
elections as described in Section 5.14;
(v) the Company shall declare and pay a dividend to
AAMM in cash in an amount equal to the entire net proceeds of the
Financing less amounts paid by the Company in connection with the
transactions set forth in clauses (a)(ii)(x) and (a)(ii)(y) of this
Section 1.3, and immediately thereafter cancel any shares of AAMM
Common Stock owned by the Company;
(vi) AAMM shall pay to Jupiter an amount equal to the
estimated Election Taxes, as set forth in Schedule I hereto;
(vii) AAMM shall pay to Jupiter the Jupiter
Recapitalization Cash Consideration and pay to Mr. Harris the Harris
Recapitalization Cash Consideration by wire transfer of immediately
available funds to such account or accounts as Jupiter and Mr. Harris
may direct by written notice delivered to AAMM at least two Business
Days before the Closing Date. Simultaneously with such payments and
deliveries, (A) Jupiter will assign and transfer to
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AAMM good and valid title in and to the Jupiter Recapitalization Shares
and (B) Mr. Harris will assign and transfer to AAMM good and valid
title in and to the Harris Recapitalization Shares. Each such
Recapitalization Share delivered by Jupiter and Mr. Harris to AAMM
shall be delivered free and clear of any Encumbrances and each
certificate representing such Recapitalization Shares delivered by
Jupiter and Mr. Harris shall be properly endorsed for transfer or
accompanied by duly executed stock powers, in either case executed in
blank or in favor of AAMM;
(viii) Purchaser will pay Jupiter the Jupiter
Acquired Shares Purchase Price and pay Mr. Dauch the Dauch Acquired
Shares Purchase Price by wire transfer of immediately available funds
to such account or accounts as Jupiter and Mr. Dauch may direct by
written notice delivered to Purchaser at least two Business Days before
the Closing Date. Simultaneously with such payment and delivery, (A)
Jupiter will assign and transfer to Purchaser good and valid title in
and to the Jupiter Acquired Shares held by Jupiter and (B) Mr. Dauch
will assign and transfer to Purchaser good and valid title in and to
the Dauch Acquired Shares held by Mr. Dauch. Each such Acquired Share
delivered by Jupiter and Mr. Dauch to Purchaser shall be delivered free
and clear of any Encumbrances and each certificate representing such
Acquired Shares delivered by Jupiter and Mr. Dauch shall be properly
endorsed for transfer or accompanied by duly executed stock powers, in
either case executed in blank or in favor of Purchaser; and
(ix) AAMM, Purchaser and the Stockholders shall enter
into a Stockholders Agreement (the "Stockholders Agreement"),
substantially in the form attached hereto as Exhibit A.
(b) All instruments and documents executed and delivered
to Purchaser pursuant hereto shall be in form and substance, and shall be
executed in a manner, reasonably satisfactory to Purchaser. All instruments and
documents executed and delivered to the Stockholders or the Company pursuant
hereto shall be in form and substance, and shall be executed in a manner,
reasonably satisfactory to the Stockholders or the Company, as applicable.
1.4 Phantom Stock Options. The Company shall take all actions
necessary to provide that, immediately prior to the Closing, each phantom stock
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option (each, a "Phantom Stock Option") granted to a Company employee pursuant
to the Company's Phantom Stock Plan (the "Phantom Stock Plan") that is listed in
Section 1.4 of the Disclosure Schedule and is outstanding immediately prior to
the Closing, whether or not then vested or exercisable, shall, effective as of
the Closing and subject to any required consent of the option holder, be
cancelled in exchange for (x) a single lump sum cash payment equal to the
product of (1) the number of phantom shares of Common Stock subject to such
Phantom Stock Option and (2) $16,811.78 less the exercise price per share of
such Phantom Stock Option (the "Phantom Stock Value"), (y) newly issued AAMM
options, each with a value on the Closing Date equal to the Phantom Stock Value
or (z) a combination of cash and shares of AAMM Common Stock, each with a value
equal to the Phantom Stock Value; provided that the foregoing shall not require
any action that violates the rights of any optionee under the Phantom Stock
Plan, the Phantom Stock Options or any agreements in respect thereof. The
parties will allocate the deduction attributable to the cancellation of options
under this Section 1.4 to the taxable period ending on the Closing Date. The
parties agree that the aggregate Phantom Stock Value that is exchanged for newly
issued options of AAMM (such aggregate value, the "Phantom Exchange Value")
shall be (i) deducted from the amount of Acquired Share Purchase Price paid by
Purchaser to Jupiter and (ii) added to the amount of Recapitalization Cash
Consideration paid to Jupiter. The parties also agree that (i) the number of
Jupiter Acquired Shares received from Jupiter by Purchaser shall be reduced by
an amount equal to the quotient of (x) the Phantom Exchange Value divided by (y)
16,811.78 (the "Phantom Share Adjustment Amount") and (ii) the number of
Recapitalization Shares purchased from Jupiter by AAMM shall be increased by the
Phantom Adjustment Amount.
1.5 Further Assurances. After the Closing, each party hereto
shall from time to time, at the request of the other party and without further
cost or expense to such other party, execute and deliver such other instruments
of conveyance and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the transactions
contemplated hereby.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
REGARDING THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Purchaser,
with respect to such Stockholder only, as follows:
2.1 Ownership of Stock. Each Stockholder is the record and
beneficial owner of the number of shares of Company Common Stock set forth
opposite such Stockholder's name in Section 2.1 of the Disclosure Schedule. The
Company Shares owned by the Stockholders are owned free and clear of all
Encumbrances, other than the restrictions imposed by Federal and state
securities laws. Upon the consummation of the transactions contemplated hereby,
Purchaser will acquire title to the Acquired Shares, free and clear of all
Encumbrances, other than the restrictions imposed by Federal and state
securities laws and Encumbrances arising as a result of any action taken by
Purchaser or any of its affiliates ("Affiliates") as defined in Rule 12b-2 of
the regulations promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
2.2 Authorization, Etc. Each Stockholder has full power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors and the sole
stockholder of Jupiter have duly approved and authorized the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. No other action on the part of a Stockholder is necessary to approve and
authorize the execution and delivery by such Stockholder of this Agreement and
the consummation by each Stockholder of the transactions contemplated hereby.
This Agreement has been duly and validly executed by each Stockholder and,
assuming this Agreement constitutes the valid and binding agreement of the other
parties hereto, constitutes a valid and binding agreement of each Stockholder,
enforceable against such Stockholder in accordance with its terms, except that
(i) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
2.3 No Approvals or Conflicts. Except as set forth in Section
2.3 of the Disclosure Schedule or expressly provided herein, neither the
execution and deliv-
7
ery by the Stockholders of this Agreement nor the consummation by the
Stockholders of the transactions contemplated hereby will (i) violate, conflict
with or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the creation of any lien, security interest, charge or
encumbrance upon the Stockholders' interest in the Shares under the Certificate
of Incorporation or Bylaws of Jupiter or any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement or other
instrument to which the Stockholders or any of their respective properties may
be bound, (iii) violate any order, injunction, judgment, ruling, law or
regulation of any court or governmental authority applicable to the Stockholders
or any of their respective properties or (iv) except for applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental or regulatory
authority, which, in the case of clauses (ii), (iii) and (iv) above, would
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the ability of such Stockholder to consummate the transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
3.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has full corporate power and authority to own its
properties and assets and to carry on its business as now being conducted and is
duly qualified or licensed to do business as a foreign corporation in good
standing in the jurisdictions in which the ownership of its property or the
conduct of its business requires such qualification, except jurisdictions in
which the failure to be so qualified or licensed would not have a material
adverse effect on the business, results of operations or financial condition of
the Company and its subsidiaries, taken as a whole, or on the ability of the
Company to perform its obligations hereunder (it being understood that no
representation or warranty is being made by the Company regarding the ability to
finance the transactions contemplated hereby) (hereinafter referred to as a
"Material Adverse Effect"). The Company has delivered to Purchaser complete and
correct copies of the Certificate of Incorporation and all amendments thereto to
the date hereof, and the Bylaws as presently in effect of the Company.
8
Section 3.1 of the Disclosure Schedule sets forth a list of each of the
Company's subsidiaries (the "Subsidiaries"). Each Subsidiary is a corporation
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the power and authority to carry on its business as now being
conducted and has the power and authority to own and operate the properties and
assets now owned and being operated by it. Except as set forth in Section 3.1 of
the Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have any direct
or indirect equity or ownership interest in any partnership, joint venture or
other business.
3.2 Capital Stock. The authorized capital stock of the Company
consists of (i) 36,134 shares of Company Common Stock of which, as of the close
of business on the date of this Agreement, 21,053 shares were issued and
outstanding, (ii) 13,334 shares of Class A Preferred Stock, of which, as of the
close of business on the date of this Agreement, 13,334 shares were issued and
outstanding, and (iii) 50 shares of Class B 8% Non-Voting Preferred Stock, $0.01
par value per share, none of which is issued or outstanding. As of the date of
this Agreement, 1,747 shares of Common Stock were reserved for issuance upon
exercise of outstanding stock options ("Company Options") pursuant to the
Nonqualified Stock Option Agreement, dated as of February 27, 1994, by and
between the Company and Mr. Dauch. Except as set forth above, or as a result of
the exercise of the Company Options outstanding as of the date of this
Agreement, and except as set forth in Section 3.2 of the Disclosure Schedule,
there are no subscriptions, options, warrants, calls, rights, contracts,
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, transfer or voting of any shares of common stock of the Company,
including any rights of conversion or exchange under any outstanding securities
or other instruments, other than restrictions imposed by Federal and state
securities laws. All of the outstanding shares of capital stock of the Company
have been validly issued and are fully paid, nonassessable and free of
preemptive rights. All of the issued and outstanding shares of each Subsidiary
are owned by the Company and all such shares have been duly authorized and
validly issued and are fully paid and nonassessable. The Company is, and always
has been, the sole owner of all the issued and outstanding shares of AAMM. The
AAMM Shares, when issued and delivered to the Stockholders at the Closing in
accordance with the terms hereof, shall have been duly authorized and validly
issued and, upon receipt by AAMM of the Company Shares, shall be fully paid and
nonassessable.
3.3 Authorization, Etc. Each of the Company and AAMM has
full corporate power and authority to execute and deliver this Agreement and
to carry out the transactions contemplated hereby. The Board of Directors of
each of the
9
Company and AAMM, and the sole stockholder of AAMM, have duly approved and
authorized the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and no other action on the part of the
Company or AAMM is necessary to approve and authorize the execution and delivery
by the Company and AAMM of this Agreement and the consummation by the Company
and AAMM of the transactions contemplated hereby. This Agreement has been duly
and validly executed by each of the Company and AAMM and, assuming this
Agreement constitutes the valid and binding agreement of the other parties
hereto, constitutes a valid and binding agreement of the Company and AAMM,
enforceable against the Company and AAMM in accordance with its terms, except
that (i) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3.4 Financial Statements. The Company has previously delivered
to Purchaser copies of the following financial statements: (a) the audited
Balance Sheets of the Company as of December 31, 1995 and 1996 and the
Statements of Income, Shareholders' Equity and Cash Flows of the Company for the
years ended December 31, 1995 and 1996, together with the notes thereto, and the
unqualified opinion of Ernst & Young LLP, the Company's independent auditors
(the "Audited Financial Statements") and (b) the balance sheet of the Company as
of June 30, 1997 (the "Balance Sheet") and the Statements of Income,
Shareholders' Equity and Cash Flows of the Company for the six months ended June
30, 1997 (collectively with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements fairly present the consolidated financial
position and results of operations of the Company as of the dates and for the
periods indicated. Each of the Financial Statements has been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis except as disclosed in the footnotes thereto (if
applicable) and, with respect to financial statements referred to in clause (b),
subject to normal year-end adjustments.
3.5 No Undisclosed Liabilities. Except as disclosed in Section
3.5 of the Disclosure Schedule, the Company and the Subsidiaries have no
liabilities or obligations, whether accrued, absolute or contingent that are
required to be reflected on or disclosed in a balance sheet of the Company
prepared in accordance with GAAP (including appropriate footnote disclosure),
other than (i) liabilities and obligations that are reflected, accrued or
reserved for or disclosed in the Balance Sheet, (ii) obligations incurred in the
ordinary course of business and consistent with past
10
practice since the date of the Balance Sheet and (iii) other liabilities and
obligations that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
3.6 No Approvals or Conflicts. Except as set forth in Section
3.6 of the Disclosure Schedule or expressly provided herein, neither the
execution and delivery by the Company and AAMM of this Agreement nor the
consummation by the Company and AAMM of the transactions contemplated hereby
will (i) violate, conflict with or result in a breach of any provision of the
Certificate of Incorporation or Bylaws of the Company or AAMM, (ii) violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties of the Company or any of the
Subsidiaries, under any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement or other instrument to which the
Company or any of the Subsidiaries or any of their respective properties may be
bound, (iii) violate any order, injunction, judgment, ruling, law or regulation
of any court or governmental authority applicable to the Company or any of the
Subsidiaries or any of their respective properties or (iv) except for applicable
requirements of the HSR Act, require any consent, approval or authorization of,
or notice to, or declaration, filing or registration with, any governmental or
regulatory authority, which, in the case of clauses (ii), (iii) and (iv) above,
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
3.7 Compliance with Law; Governmental Authorizations. Except
as set forth in Section 3.7 of the Disclosure Schedule, neither the Company nor
any of the Subsidiaries are in violation of any order, injunction, judgment,
ruling, law or regulation of any court or governmental authority applicable to
the property or business of the Company which violation or violations would be
reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect. Except as set forth in Section 3.7 of the Disclosure Schedule,
the licenses, permits and other governmental authorizations held by the Company
and its Subsidiaries are valid and sufficient for the conduct of the Company's
businesses as currently conducted, except where the failure to hold such
licenses, permits and other governmental authorizations would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
3.8 Litigation. Except as set forth in Section 3.8 of the
Disclosure Schedule, as of the date of this Agreement, there are no actions,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the
11
Company or any of the Subsidiaries, before any court or governmental or
regulatory authority or body which, if adversely determined, would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
3.9 Title to Assets. Except as set forth in Section 3.9 of the
Disclosure Schedule, on June 30, 1997, the Company had and, except with respect
to assets disposed of in the ordinary course of business since June 30, 1997,
the Company now has, good and valid title to all the properties and assets owned
by the Company and reflected on the Balance Sheet or which would have been
reflected on the Balance Sheet if acquired prior to June 30, 1997 free and clear
of all Encumbrances of any nature except for (i) exceptions to title as set
forth in Section 3.9 of the Disclosure Schedule; (ii) mortgages and encumbrances
which secure indebtedness or obligations which are properly reflected on the
Balance Sheet; (iii) liens for Taxes (as defined in Section 3.11) not yet
payable or any Taxes being contested in good faith; (iv) liens arising as a
matter of law in the ordinary course of business, provided that the obligations
secured by such liens are not delinquent or are being contested in good faith;
and (v) such imperfections of title and encumbrances, if any, as would not
reasonably be expected, individually or in the aggregate, to materially impair
the value of such properties and assets, taken as a whole (together, the
"Permitted Encumbrances"). The Company owns, or has valid leasehold interests or
other contractual rights in, all material tangible properties and assets used in
the conduct of the Company's business as presently conducted. None of the
Subsidiaries owns any material tangible properties or assets.
3.10 Absence of Certain Changes. Except as disclosed in
Section 3.10 of the Disclosure Schedule, since June 30, 1997 (i) the business of
the Company has been conducted only in the ordinary course and consistent with
past practice in all material respects, (ii) the Company has not suffered a
Material Adverse Effect and (iii) neither the Company nor any of the
Subsidiaries has taken any action which would require the consent of Purchaser
under Section 5.1(b) had such action been taken by the Company or any Subsidiary
after the date hereof.
3.11 Taxes. (a) The Company, or an Affiliate or other
representative of the Company on its behalf, has (i) duly filed with the
appropriate Federal, state, local and foreign taxing authorities all material
Tax Returns (as defined below) required to be filed by or with respect to the
Company and the Subsidiaries, and (ii) paid or made provision for in the Balance
Sheet all material Taxes (as defined below) due and required to be paid by the
Company and the Subsidiaries regardless of whether shown as being owed on such
required Tax Returns. Except as set forth in Section 3.11 of the Disclosure
Schedule, as of the date of this Agreement, (i) neither
12
the Company nor any Affiliate or, to the Company's knowledge, other
representative of the Company has received any written notice of deficiency or
assessment from any Federal, state, local or foreign taxing authority with
respect to liabilities for material Taxes of the Company or any member of the
consolidated, combined or unitary group, of which the Company is or was at any
time a member (the "Tax Group") which have not been paid or finally settled and
any such deficiency or assessment disclosed in Section 3.11 of the Disclosure
Schedule is being contested in good faith through appropriate proceedings; (ii)
no audit of any Tax Return concerning the Company or any member of the Tax Group
is pending, being conducted, or, to the knowledge of the Company and the
Stockholders, threatened to be instituted by a Tax authority for periods during
which the Company was a member of the Tax Group; (iii) no extension of the
statute of limitations on the assessment of any Taxes has been granted to the
Company or any member of the Tax Group and is currently in effect for periods
during which the Company was a member of the Tax Group; (iv) no consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code") has
been filed with respect to the Company or any member of the Tax Group; (v)
neither the Company nor any of the Subsidiaries is a party to any agreement or
arrangement that would result, separately or in the aggregate, in the actual or
deemed payment by the Company of any "excess parachute payments" within the
meaning of Section 280G of the Code; (vi) the Company has not been at any time a
member of any partnership or joint venture or the holder of a beneficial
interest in any trust for any period for which the statute of limitations for
any Tax has not expired; (vii) the Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
(viii) the Company is not doing business in or engaged in a trade or business in
any jurisdiction in which it has not filed all required income or franchise Tax
Returns; (ix) all Taxes required to be withheld, collected or deposited by or
with respect to the Company and the Subsidiaries have been timely withheld,
collected or deposited, as the case may be, and, to the extent required, have
been paid to the relevant taxing authority; (x) no power of attorney that is
currently in force has been granted with respect to any matter relating to Taxes
that could materially affect the Tax liability of the Company and the
Subsidiaries; (xi) neither the Company nor any of the Subsidiaries is a party to
any written or unwritten tax sharing agreement or indemnity agreement or
agreement executed or agreed to on or prior to the date of this Agreement; (xii)
Section 3.11 of the Disclosure Schedule sets forth, to the Company's best
knowledge as of the date of this Agreement, the actual and estimated tax bases
of the Company's inventory and property, plant and equipment as of December 31,
1996 and the date of this Agreement; and (xiii) the Company has no liability for
any due and owing Taxes of any person other than the Company under
13
Treasury regulation section 1.1502-6 (or any similar provision of state, local
or foreign law).
(b) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States Federal, state, local or foreign taxing authority, including, but
not limited to, income, gross receipts, service, leasing, occupation, excise,
property, sales and use, transfer, gains, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto.
(c) For purposes of this Agreement, "Tax Return" shall
mean any return, amended return, report, information return or other document
(including any related or supporting information) filed or required to be filed
with any taxing authority with respect to Taxes.
3.12 Employee Benefits. (a) Section 3.12 of the Disclosure
Schedule sets forth a true and complete list of each employee benefit or
compensation plan, program and contract, including, but not limited to, any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any
multiemployer plan within the meaning of Section 3(37) of ERISA, to which the
Company or any of the Subsidiaries is a party, under which any employee or
former employee of the Company has any present or future right to benefits, with
respect to which the Company or any of the Subsidiaries could incur liability
under ERISA or the Code that is maintained for employees or former employees of
the Company or any of the Subsidiaries and to which the Company or any of the
Subsidiaries or any trade or business, whether or not incorporated, that
together with the Company or any of the Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA (an "ERISA Affiliate"),
is obligated to contribute (the "Plans"). Each Plan has been maintained in
substantial compliance with all applicable laws and has been operated in all
material respects in compliance with its terms. Except as set forth in Section
3.12 of the Disclosure Schedule, (i) no Plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Internal Revenue
Code of 1986, as amended (the "Code"), and (ii) no proceedings have been
instituted to terminate any Plan that is subject to Title IV of ERISA. Any Plan
intended to be "qualified" (within the meaning of Section 401(a) of the Code)
either (x) has received a favorable Determination Letter from the Internal
Revenue Service and, to the knowledge of the Company, no event has occurred nor
condition exists which could reasonably be expected to result in the revocation
of such Determination Letter, or (y) is the subject of an application for such a
Determination Letter.
14
(b) No event has occurred which would subject the
Company or any of the Subsidiaries to liability under the terms of any Plan
(including solely for this purpose, any Plan maintained by any ERISA Affiliate
of the Company) under ERISA, the Code or any other applicable law which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
3.13 Labor Relations. Except as set forth in Section 3.13 of
the Disclosure Schedule, neither the Company nor any of the Subsidiaries is a
party to any collective bargaining agreement, labor contract or letter of
understanding with a union or labor organization applicable to employees of the
Company nor are any of its employees represented by any other union or labor
organization. Except as set forth in Section 3.13 of the Disclosure Schedule,
(i) the Company and the Subsidiaries are in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except for such violations that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Affect, (ii) neither the Company nor any of the Subsidiaries is engaged
in any unfair labor practice which has had or is reasonably expected to have a
Material Adverse Effect, and (iii) there is no labor strike, material slowdown
or stoppage or material labor dispute actually pending or, to the knowledge of
the Company, threatened against the Company or any of the Subsidiaries.
3.14 Patents, Trademarks, Trade Names, Etc. Section 3.14 of
the Disclosure Schedule contains a list of all patents, trademarks, trade names
and copyrights (collectively, "Intellectual Property") used or owned by the
Company or any of the Subsidiaries as of the date of this Agreement which are
material to the Company and the Subsidiaries, taken as a whole, and a list of
all material licenses and other agreements (collectively, "License Agreements")
relating thereto. Except as set forth in Section 3.14 of the Disclosure
Schedules, (i) the consummation of the transactions contemplated by this
Agreement will not materially impair any right to use the Intellectual Property
or the License Agreements, and (ii) as of the date of this Agreement, the
Company has received no written notice of any claims by any person to the use of
any such Intellectual Property, or challenging or questioning the validity or
effectiveness of any such License Agreement, which claims, if adversely decided,
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Since January 1, 1995, to the knowledge of the Company,
no third party has interfered with, infringed upon, misappropriated, or violated
any such Intellectual Property rights of the Company in any material respect.
15
3.15 Contracts. Except as may be permitted by Section 5.1,
Section 3.15 of the Disclosure Schedule sets forth a complete and accurate list
of all material contracts, agreements and understandings to which the Company or
any of the Subsidiaries is a party which require ongoing annual payments in
excess of $1.0 million. Except as set forth in Section 3.15 of the Disclosure
Schedule, (i) each of the contracts, agreements and understandings to which the
Company or any of the Subsidiaries is a party or by which any of their
respective assets or operations may be bound is in full force and effect, except
where the failure to be in full force and effect would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
and (ii) there are no existing defaults by the Company or any of the
Subsidiaries thereunder, which defaults would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
3.16 Environmental Matters. Except as set forth in Section
3.16 of the Disclosure Schedule, since January 1, 1995 neither the Company nor
any of the Subsidiaries has received any written notice alleging the present or
past violation of any applicable Federal, state or local laws or regulations
related to the protection of human health or the environment ("Environmental
Laws") which would reasonably be expected to result in a Material Adverse Effect
and (i) the Company and the Subsidiaries are and have been in compliance with
all Environmental Laws, (ii) the Company and the Subsidiaries have obtained and
are and have been in compliance with all required governmental environmental
permits with respect to the business of the Company as currently conducted,
(iii) no hazardous waste, substance or material has been stored, treated,
released or disposed of by the Company or any of the Subsidiaries or, to the
knowledge of the Company, by any other person, on the real property owned,
operated or leased by the Company except in compliance with applicable
Environmental Laws and (iv) the Company and the Subsidiaries have disposed of
their respective hazardous waste products with respect to the operations of the
Company's business in compliance with Environmental Laws except, in each case
referred to in clauses (i) through (iv) above, where such failure to be in
compliance or to obtain, store, treat or dispose of would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
3.17 Brokers' and Other Fees. Except for the fees payable by
the Company as set forth in Section 9.3, no broker, finder or investment banker
is entitled to any fee or commission from the Company in connection with the
transactions contemplated hereby upon arrangements made by or on behalf of the
Stockholders.
16
3.18 Affiliated Transactions. Section 3.18 of the Disclosure
Schedule contains accurate summaries of the principal terms of all arrangements,
relationships and transactions between the Company or any of the Subsidiaries
and any of the Stockholders or any director, officer, employee or any other
Affiliate of the Company, the Subsidiaries or any of the Stockholders since
January 1, 1995 other than arrangements, relationships and transactions with
officers or employees in the ordinary course of employment.
3.19 Recalls. Section 3.19 of the Disclosure Schedule sets
forth a summary of each recall (voluntary or involuntary) of products
manufactured by the Company or any of the Subsidiaries (or recalls of any
vehicles because of a problem relating to products manufactured by the Company
or any of the Subsidiaries) since January 1, 1995, describing in each case the
nature of the problem giving rise to such recall, the number of vehicles or
products recalled, and the aggregate costs incurred by the Company for each such
recall. Except as set forth on Section 3.19 of the Disclosure Schedule, the
Company has no knowledge of any defects which could reasonably be expected to
result in a recall (voluntary or involuntary) of products manufactured by the
Company or any Subsidiary (or vehicles containing products manufactured by the
Company or any Subsidiary) within the next two years.
3.20 Product Liability Claims. Section 3.20 of the Disclosure
Schedule sets forth a summary of each Product Liability Claim (as defined below)
in excess of $50,000 paid by the Company or any of the Subsidiaries during the
past three years, and each outstanding Product Liability Claim in excess of
$50,000. Except as set forth on Section 3.20 of the Disclosure Schedule, the
Company has no knowledge of any design or manufacturing defects which could
reasonably be expected to result in future Product Liability Claims that would
reasonably be expected to result in a Material Adverse Effect. For purposes of
this Section 3.20, the term "Product Liability Claim" shall mean any claim
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any vehicle or product manufactured, sold,
leased or delivered by the Company or any of the Subsidiaries.
3.21 Real Property. (a) The Company has good and marketable
fee simple title to the real property owned by the Company (the "Real
Property"), free and clear of all Encumbrances other than Permitted
Encumbrances, and the Company is in possession of the Real Property. The Company
has rights of ingress and egress with respect to the Real Property and the
manufacturing plants and other facilities located on such Real Property (the
"Facilities") adequate to conduct its business as currently conducted.
17
(b) The Company has valid and subsisting leasehold estate
in and the right to quiet enjoyment of the real properties subject to the real
property leases (the "Real Property Leases") for the full term thereof. Each
Real Property Lease is in full force and effect except where the failure to be
in full force and effect would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(c) The Company has heretofore made available to
Purchaser prior to the execution of this Agreement true and complete copies (to
the extent in the possession of the Company) of (i) all legal descriptions and
surveys with respect to the Real Property and (ii) all Real Property Leases
(including any amendments and renewal letters).
(d) No material Real Property is subject to any option,
rights of first refusal or other contractual rights to purchase, acquire, sell
or dispose of such Real Property or any portion thereof or interest therein.
There are no condemnation or appropriation proceedings pending or, to the
knowledge of the Company, threatened against any of the Real Property or the
Facilities.
(e) The Subsidiaries do not own any Real Property and are
not parties to any Real Property Leases.
3.22 Insurance. Section 3.22 of the Disclosure Schedule sets
forth a list of the material insurance policies applicable to the business of
the Company and, as of the date of this Agreement, all current claims under such
policies, except for workers' compensation claims incurred in the ordinary
course of business. Each policy referred to in the Disclosure Schedule is valid
and binding and in full force and effect, no premiums due thereunder have not
been paid (within any applicable grace period) and the Company has not received
any notice of cancellation or termination in respect of any such policy or is in
default thereunder in any material respect. Except as disclosed in Section 3.22
of the Disclosure Schedule and except for workers' compensation claims incurred
in the ordinary course of business, the Company has not received written notice,
as of the date of this Agreement, that any insurer under any such policy is
denying liability with respect to a current claim thereunder or defending any
claim under a reservation of rights clause.
3.23 Required Assets. The Company and the Subsidiaries own,
lease or have licenses or other contractual rights to use all of the material
tangible and intangible assets used by them in the conduct of the Company's
business as presently conducted.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING PURCHASER
Purchaser hereby represents and warrants to the Stockholders
as follows:
4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization, Etc. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors of Purchaser has duly
approved and authorized the execution and delivery by Purchaser of this
Agreement and the consummation by Purchaser of the transactions contemplated
hereby, and no other corporate proceedings on the part of Purchaser are
necessary to approve and authorize the execution and delivery by Purchaser of
this Agreement and the consummation by Purchaser of the transactions
contemplated hereby. This Agreement has been duly and validly executed by
Purchaser and, assuming this Agreement constitutes the valid and binding
agreement of the other parties hereto, constitutes a valid and binding agreement
of Purchaser, enforceable against Purchaser in accordance with its terms, except
that (i) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4.3 No Approvals or Conflicts. Except as set forth in Section
4.3 of the Disclosure Schedule, neither the execution and delivery by Purchaser
of this Agreement nor the consummation by Purchaser of the transactions
contemplated hereby will (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-laws of Purchaser, (ii)
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of Purchaser's properties under, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement or other instrument to which Purchaser or its
subsidiaries or any of their respective properties may be bound, (iii) violate
any
19
order, injunction, judgment, ruling, law or regulation of any court or
governmental authority applicable to Purchaser or its subsidiaries or any of
their respective properties, or (iv) except for applicable requirements of the
Exchange Act and the HSR Act, require any consent, approval or authorization of,
or notice to, or declaration, filing or registration with, any governmental or
regulatory authority or other third party, which, in the case of clauses (ii),
(iii) and (iv) above, would have a material adverse effect on the business,
operations or financial condition of Purchaser and its subsidiaries, considered
as a single enterprise or on Purchaser's ability to consummate the transactions
contemplated hereby.
4.4 Acquisition for Investment. Purchaser acknowledges that
neither the offer nor the sale of the Shares has been registered under the
Securities Act. Purchaser is acquiring the Shares solely for its own account and
not with a view to any distribution or other disposition of such Shares, and the
Shares will not be transferred except in a transaction registered or exempt from
registration under the Securities Act.
4.5 Financing. Purchaser has delivered to the Stockholders
true and complete copies of all debt commitment letters of the Lenders received
by Purchaser with respect to the Financing (the "Debt Commitment Letters"), as
well as the equity commitment letter of Blackstone Capital Partners II Merchant
Banking Fund L.P. ("Blackstone") with respect to the Acquired Shares Purchase
Price (together with the Debt Commitment Letters, the "Commitment Letters"). The
proceeds of the Financing and the equity contribution referred to above will be
sufficient to enable AAMM, the Company and Purchaser to consummate the
transactions contemplated by this Agreement. On the Closing Date, the capital
structure of Purchaser will be as set forth in Section 4.5 of the Disclosure
Schedule.
4.6 No Brokers' or Other Fees. Except for the fees payable by
Purchaser, AAMM or the Company as set forth in Section 9.3, no broker, finder or
investment banker is entitled to any fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Purchaser.
20
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Conduct of Business by Company. The Company covenants
that, except (i) for actions taken to implement this Agreement and the
transactions contemplated hereby, (ii) as disclosed in Section 5.1 of the
Disclosure Schedule, or (iii) as consented to in writing by Purchaser, from and
after the date of this Agreement and until the Closing Date, the Company shall:
(a) use reasonable best efforts consistent with good
business judgment to preserve intact the present business organization of the
Company and to operate the Company in the ordinary course of business consistent
with past practice in all material respects;
(b) not (i) issue or sell any shares of capital stock
or other securities of the Company or any options, warrants or commitments of
any kind with respect thereto, other than the issuance of Common Stock upon
exercise of the Company Options to purchase up to 1,747 shares of Common Stock,
(ii) directly or indirectly purchase, redeem or otherwise acquire or dispose of
any shares of capital stock of the Company; (iii) declare, set aside or pay any
dividend or other distribution or advance on its capital stock or make any other
distribution to its stockholders, except for the payment of accrued and unpaid
dividends on the outstanding Class A Preferred Stock if and as declared; (iv)
borrow or agree to borrow any funds or incur, whether directly or by way of
guarantee, any obligation for borrowed money; (v) subject any of the property or
assets of the Company (real, personal or mixed, tangible or intangible) to any
material mortgage, pledge, lien or encumbrance or otherwise permit or allow the
sale or other disposition of any material property or assets of the Company
(real, personal or mixed, tangible or intangible), other than the sale of the
Company's products in the ordinary course of business consistent with past
practice; (vi) make any material change in its accounting policies from those
applied in the preparation of the Financial Statements; (vii) make any capital
expenditures not set forth in the Capital Plan dated July 17, 1997, a copy of
which has been previously provided to Purchaser, except for capital expenditures
not in excess of $250,000 individually or $500,000 in the aggregate; (viii)
modify or change in any material respect, or enter into or terminate, any
material contract or commitment; (ix) acquire an equity interest in, or the
assets of, any other corporation or entity; (x) waive any claims or rights
relating to the Company's business, except in the ordinary course of business
and consistent with past practice in an amount not to exceed $100,000 in the
aggregate; (xi) increase the compensation payable or to
21
become payable to any of its directors, officers or employees or take any action
with respect to the grant of any severance or termination pay, or stay bonus or
other incentive arrangement (other than pursuant to benefit plans and policies
in effect on the date of this Agreement), except any increases or grants made in
the ordinary course of business consistent with past practice; (xii) make any
material Tax election or pay any amounts under, or in respect of, any tax
sharing agreement or arrangement, except for payments in accordance with the Tax
Sharing Agreement; (xiii) amend its certificate of incorporation or bylaws;
(xiv) enter into any agreements or arrangements with an Affiliate; (xv) take any
action that would, or that could reasonably be expected to, result in any of the
representations or warranties of the Company set forth in this Agreement to
become untrue; or (xvi) agree to do any of the foregoing.
5.2 Access to Books and Records; Cooperation.
(a) The Company shall, and shall cause each of its
Subsidiaries to, afford to Purchaser, and to Purchaser's accountants, counsel
and other representatives, reasonable access and permit them to make such
inspections as they may reasonably require during normal business hours,
including all available environmental reviews or audits, during the period from
the date of this Agreement through the Closing to their respective properties,
books, contracts, commitments and records. The Company and its Subsidiaries
shall furnish or cause to be furnished to Purchaser such financial and operating
data and other information with respect to the business and properties of the
Company, including access to the work papers of the Company's independent
auditors, as Purchaser may from time to time reasonably request, and Purchaser
and its representatives shall be entitled, in consultation with the Company, to
such access to the representatives, officers and employees of the Company as
Purchaser may reasonably request. Purchaser will hold, and will cause its
affiliates, associates and representatives to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreement, dated as of February
19, 1997, between The Blackstone Group L.P. and the Company (the
"Confidentiality Agreement").
(b) AAMM, the Company and Purchaser agree that from
the Closing Date and until the fifth anniversary of the Closing, during normal
business hours, AAMM and the Company shall permit, at no charge, cost or expense
to AAMM, the Company or Purchaser and without disruption of AAMM's, the
Company's or Purchaser's businesses, the Stockholders and their respective
auditors and other representatives to have reasonable access to the tax,
financial and
22
accounting records relating to the Company's business prior to the Closing Date
and to examine and, at the Stockholders' expense, take copies thereof.
(c) AAMM and the Company agree not to destroy at any time
prior to the fifth anniversary of the Closing Date any books or records of AAMM
or the Company without giving reasonable notice to the Stockholders, and within
30 days of receipt of such notice, the Stockholders may cause to be delivered to
the Stockholders the records intended to be destroyed, at the Stockholders'
expense.
5.3 Filings and Consents. Each of the Stockholders, the
Company and AAMM, on the one hand, and Purchaser, on the other hand, shall use
all reasonable efforts to obtain and to cooperate in obtaining any consent,
approval, authorization or order of, and in making any registration or filing
with, any governmental agency or body or other third party required in
connection with the execution, delivery or performance of this Agreement. The
parties agree to cause to be made all appropriate filings under the HSR Act as
soon as practicable and to diligently pursue early termination of the waiting
period under such Act.
5.4 Tax Matters.
(a) Mutual Cooperation. As soon as practicable, but in any
event within 30 days after any Stockholder's or Purchaser's request, as the case
may be, Purchaser shall cause the Company to deliver to the Stockholders, or the
Stockholders shall deliver to the Company, such information and other data in
the possession of the Stockholders, Purchaser or the Company relating to the
Company's business prior to the Closing Date, as the case may be, and shall
provide such other assistance as may reasonably be requested, relating to the
Tax Returns and Taxes of the Company, including such information and assistance
customarily required by the Stockholders or Purchaser, as the case may be, to
cause the payment of all Taxes or to permit the preparation of any Tax Returns
or to respond to audits by any taxing authorities with respect to any Tax
Returns or Taxes of the Company or to otherwise enable the Stockholders or the
Company, as the case may be, to satisfy their accounting or Tax requirements.
The party requesting information or assistance hereunder shall reimburse the
other party for reasonable expenses incurred in connection therewith.
Notwithstanding Section 5.2(c), for a period of seven years after the Closing,
and, if at the expiration thereof any Tax audit or judicial proceeding is in
progress or the applicable statute of limitations has been extended, for such
longer period as such audit or judicial proceeding is in progress or such
statutory period is extended, Purchaser shall cause the Company to, maintain and
make available to the Stockholders, on the Stockholders' reasonable request,
copies of any and all
23
information, books and records referred to in this Section 5.4(a). After
such period, Purchaser or the Company may dispose of such information, books and
records, provided that prior to such disposition Purchaser shall give the
Stockholders a reasonable opportunity to take possession of such information,
books and records. Purchaser shall have the right to review any Tax Returns or
portions thereof filed with respect to the Company prior to the Closing Date,
which Tax Returns shall be filed and prepared in accordance with past practice
utilized in filing prior Tax Returns, including estimated Tax Returns.
(b) Contests. Whenever any taxing authority asserts a
claim, makes an assessment or otherwise disputes or affects the Tax reporting
position of the Company for periods ending prior to the Closing Date, the
Company shall, promptly upon receipt by Purchaser or the Company of notice
thereof, inform the Stockholders, and the Stockholders shall have the right,
at their expense, to control any resulting proceedings and to determine whether
and when to settle any such claim, assessment or dispute, to the extent such
proceedings affect the amount of Taxes with respect to which the Company and
Purchaser are entitled to indemnification pursuant to Section 9.1, provided that
the Stockholders shall not be entitled to settle any claim for Taxes that would
have the consequence of adversely affecting the liability for Taxes of the
Company or its Subsidiaries for any period after the Closing Date to any extent
(including, but not limited to, the imposition of income tax deficiencies,
reduction of asset basis or cost adjustments, the lengthening of any
amortization or depreciation periods or the denial of amortization or
depreciation deductions) without the prior written consent of Purchaser. Such
consent shall not be unreasonably withheld and shall not be necessary to the
extent the Stockholders have indemnified Purchaser and the Company against the
effects of any such settlement. Purchaser, the Company and their representatives
may also participate in any such proceedings at their own expense. Whenever any
taxing authority asserts a claim, makes an assessment or otherwise disputes the
amount of Taxes with respect to which the Company and Purchaser are not entitled
to indemnification pursuant to Section 9.1 because such Taxes are not covered by
the indemnification provisions set forth in this Agreement, the Stockholders
shall, promptly upon receiving notice thereof, inform Purchaser. The Company
shall have the right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute, but only to
the extent such proceedings affect the amount of Taxes for which the Company is
not entitled to indemnification pursuant to Section 9.1. The Stockholders and
their representatives may also participate in any such proceedings at their own
expense. Purchaser shall not (and shall cause the Company not to) file or amend
any Tax Return with respect to periods ending on or prior to the Closing Date.
Notwithstanding anything set forth herein, if a taxing authority requests an
24
extension of the statute of limitations for assessment and the Stockholders
control such proceeding, the extension shall not be granted if the statute of
limitations would be extended to a date after five years following the Closing
Date.
(c) Tax Sharing Agreements. (i) All tax sharing agreements
or similar agreements with respect to or involving the Company and its
Subsidiaries shall be terminated as of the Closing Date and, after the Closing
Date, the Company and its Subsidiaries shall not be bound thereby or have any
liability thereunder, provided that Jupiter shall allocate the Taxes paid with
respect to the consolidated, combined or unitary group of which Jupiter is a
member (the "Tax Group") to the Tax liability of the Company and its
Subsidiaries for purposes of Regulation ss. 1.1502-75(f)(2). Neither Jupiter nor
any other member of the Tax Group shall seek a refund with respect to Taxes
attributable to the Company's inclusion in the Tax Group without the prior
written consent of the Company. In the event the Company consents to the
application for such a refund, Jupiter shall pay to the Company any amounts
received pursuant to such refund application. Notwithstanding the foregoing,
Jupiter or any member of the Tax Group may seek and retain a refund with respect
to Taxes attributable to adjustments to the income, deductions, or other items
of any entity that is part of the Tax Group for the period relating to the
refund; provided, that any such refund that results from adjustments to the
Taxes of the Company prior to the Closing Date shall be paid to the Company;
provided, further, that notwithstanding the foregoing, any refund or credit
resulting from an ineffective or invalid election under Section 338(h)(10) of
the Code, or any comparable state or local laws, shall be paid to Jupiter.
(ii) Upon the later of (i) 60 days following the
Closing Date and (ii) the first quarterly estimated payment date for
Federal income taxes following the Closing Date, the Company, in
consultation with Jupiter, shall deliver written notice of (x) the
total amount of Federal income tax due from the Company for 1997
through the Closing Date (the "Closing Period"), as determined
consistent with past practices, calculated assuming no Section
338(h)(10) election is made (the "Total Hypothetical Taxes"), and (y)
the sum of all amounts paid by the Company to Jupiter or any Affiliate
of Jupiter (other than the Company) with respect to the Closing Period
pursuant to the terms of the Tax Sharing Agreement (the "Sharing
Payments"). Within two business days after receipt of such notice (i)
the Company shall deliver an amount equal to the Total Hypothetical
Taxes less the Sharing Payments to an account or accounts specified in
writing by Jupiter by wire transfer of immediately available funds,
in the event
25
the Total Hypothetical Taxes exceed the Sharing Payments, or (ii)
Jupiter shall deliver an amount equal to the Sharing Payments less the
Total Hypothetical Taxes to an account or accounts specified in writing
by the Company by wire transfer of immediately available funds, in the
event the Sharing Payments exceed the Total Hypothetical Taxes.
(d) Certain Taxes. All transfer, gains, documentary,
sales, use, stamp, registration and other such Taxes and fees (including any
penalties and interest) imposed on the Company or the Stockholders and
incurred in connection with this Agreement which accrue on or prior to the
Closing Date ("Transfer Taxes") shall be paid by the Stockholders
when due, and the Stockholders will, at their own expense,
file all necessary Tax Returns and other documentatio
with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and if required by applicable law.
Purchaser will, and will cause the Company and its Subsidiaries to, join in the
execution of any such Tax Returns and other documentation (including
documentation providing exemptions or refunds of Transfer Taxes, any such
refunds to be paid to the Stockholders).
(e) Certain Other Matters. Except for obligations with
respect to Taxes for which the Company and Purchaser are entitled to
indemnification pursuant to Section 9.1, the Company shall be liable for and
shall pay promptly any and all Taxes imposed on the Stockholders (or promptly
reimburse the Stockholders for any such Taxes paid by the Stockholders) with
respect to the Company or imposed on the Company.
(f) Prior to the Closing Date, the Company shall
either (i) file its Tax Returns for the taxable year ending December 31, 1996
and provide such Tax Returns to Purchaser or (ii) provide a pro forma Tax
Return to Purchaser, as filed and/or prepared, as the case may be, by the
Company in accordance with past practice utilized in filing prior Tax Returns,
including estimated Tax Returns.
5.5 WARN Act. Purchaser and the Stockholders agree that for
purposes of the United States Worker Adjustment and Retraining Notification Act
(the "WARN Act"), the Closing Date shall be the "effective date" as such term is
used in the WARN Act. Purchaser acknowledges and represents that it has no
present intent to effectuate a "mass layoff" or "plant closing" with respect to
AAMM or the Company as defined in the WARN Act. Purchaser agrees that from and
after the Closing Date AAMM and the Company shall be responsible for any
notification required under the WARN Act with respect to AAMM or the Company, as
26
applicable, and AAMM and the Company shall indemnify the Stockholders and hold
the Stockholders harmless from and against all fines and other payments which
may become due under the WARN Act with respect to AAMM and the Company.
5.6 Employee Benefits. Immediately after the Closing, the
Company shall have the same responsibilities and rights with respect to any Plan
or employee benefit or labor contract, plan, program, agreement, policy or
arrangement including any employment agreement, severance agreement, option
agreement or collective bargaining agreement in effect and disclosed to
Purchaser on the date hereof as the Company had prior to the Closing.
5.7 Supplements to Disclosure Schedule. From time to time
prior to the Closing, the Stockholders, the Company and Purchaser will promptly
supplement or amend the sections of the Disclosure Schedule relating to their
respective representations and warranties in this Agreement with respect to any
matter, condition or occurrence hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in their respective sections of the Disclosure Schedule.
Except with respect to a supplement or amendment not objected to in writing by
the Stockholders, the Company or Purchaser within ten business days after
receipt thereof, no supplement or amendment by the Stockholders, the Company or
Purchaser shall have any effect for the purpose of (i) determining satisfaction
by the Stockholders of the conditions set forth in Sections 6.1 and 6.2 hereof
or (ii) determining satisfaction by Purchaser of the conditions set forth in
Sections 7.1 and 7.2 hereof.
5.8 Covenant to Satisfy Conditions. Each party agrees to use
reasonable best efforts to ensure that the conditions set forth in Article VI
and Article VII hereof are satisfied, insofar as such matters are within the
control of such party.
5.9 Director and Officer Liability and Indemnification. For a
period of seven years after the Closing, Purchaser shall not permit AAMM or the
Company to amend, repeal or modify any provision in its respective Certificate
of Incorporation or Bylaws relating to the exculpation or indemnification of
former officers and directors (unless required by law), it being the intent of
the parties that the officers and directors of AAMM and the Company prior to the
Closing shall continue to be entitled to such exculpation and indemnification to
the fullest extent permitted under applicable law. Notwithstanding the
foregoing, the provisions of this Section 5.9 may not be relied upon by the
Stockholders to avoid liability in connection with any indemnification claim
made by a Purchaser Indemnified Party (as defined herein) pursuant to Section
9.1(a) of this Agreement.
27
5.10 Contact with Customers and Suppliers. Purchaser and its
representatives shall contact and communicate with the employees, customers,
suppliers and licensors of the Company in connection with the transactions
contemplated hereby only with the prior written consent of the Stockholders,
which consent may be conditioned upon a designee of the Stockholders being
present at any such meeting or conference.
5.11 Financing. The Company, AAMM and their respective
officers and employees will provide all reasonable cooperation in connection
with the arrangement of the Financing, including without limitation the
execution and delivery of any commitment letters, pledge and security documents,
other definitive financing documents, or other requested agreements,
certificates or documents, including any indemnity agreements, in connection
with the closing of the Financing as may be reasonably requested by Purchaser.
Purchaser hereby agrees to use its reasonable best efforts, subject only to the
conditions set forth in the Commitment Letters, to arrange the Financing,
including using its reasonable best efforts (i) to assist the Company in the
negotiation of definitive agreements with respect to the Financing and (ii) to
satisfy all conditions applicable to Purchaser in such definitive agreements;
provided, however, that the Company shall not be responsible for funding any
commitment fees or other fees and expenses in connection with the foregoing
unless the transactions contemplated by this Agreement are consummated.
Purchaser will keep the Company informed of the status of its efforts to arrange
the Financing, including making reports with respect to significant
developments.
5.12 Affiliated Transactions. Except as set forth in Section
5.12 of the Disclosure Schedule, prior to or concurrently with the Closing, all
contracts, arrangements or obligations between the Company or any of the
Subsidiaries, on the one hand, and the Stockholders or any of their Affiliates,
on the other hand, shall be terminated without the payment of any monies
required by the Company or the Subsidiaries.
5.13 Financial Statements and Reports. As promptly as
practicable, the Company shall provide to Purchaser true and complete copies of
the Company's monthly unaudited Balance Sheets and Statements of Income,
Shareholders' Equity and Cash Flows, together with the notes thereto, if any
(the "Interim Financial Statements"). The Interim Financial Statements shall be
prepared on a basis consistent with the Financial Statements referred to in
Section 3.4 and shall fairly present the financial position and results of
operations of the Company in accordance with GAAP as of the dates and for the
periods set forth in such interim financial statements. As promptly as
practicable, the Company shall deliver to Purchaser true
28
and complete copies of such other regularly prepared financial statements,
reports and analyses as may be prepared by the Company and delivered to the
Company's existing lenders under its credit facilities.
5.14 Section 338(h)(10) Election. Within 60 days after the
Closing Date, AAMM and Jupiter shall jointly cause an election on Form 8023 or
in such other manner as may be required by rule or regulation of the Internal
Revenue Service under Section 338(h)(10) and 338(g) of the Code and comparable
state and local tax laws, concerning the transactions contemplated by this
Agreement. AAMM shall, with the assistance and cooperation of the Stockholders,
prepare all Section 338(h)(10) forms in accordance with applicable Tax laws, and
AAMM shall deliver such forms and related documents to Jupiter at least 40 days
prior to the due date of filing. Jupiter shall deliver to AAMM at least 20 days
prior to the due date of filing such completed forms as are reasonably requested
by AAMM and required to be filed under Section 338(h)(10) of the Code and
comparable state and local tax laws. Jupiter and AAMM shall use their best
efforts to agree, as soon as practicable after the Closing, on the computation
of the Modified Aggregate Deemed Sale Price ("MADSP") (as defined under Treasury
Regulations) and the allocation of the MADSP among the assets as of the Closing
Date. AAMM, the Company and the Stockholders will not take any position in any
Tax Return or proceeding that is inconsistent with the election under Section
338(h)(10) of the Code, including the allocation of purchase price among the
assets. Assuming the parties hereto make the timely, effective and valid
election under Section 338(h)(10) and Section 338(g) of the Code (as well as
comparable elections under state and local tax laws) as contemplated herein (the
"Election"), Jupiter will pay all Election Taxes accruing on or before the
Closing Date which result from the Election and from any comparable timely,
effective and valid election under state or local tax laws.
5.15 Disclosure. The Company shall promptly notify Purchaser
of, and furnish Purchaser with any information Purchaser may reasonably request
with respect to the occurrence, to the best knowledge of the Stockholders, of
any event or condition or the existence of any fact that would cause any of the
conditions to Purchaser's obligations to consummate the transactions
contemplated by this Agreement not to be fulfilled. Purchaser shall promptly
notify the Stockholders of, and furnish the Stockholders with any information
the Stockholders may reasonably request with respect to the occurrence, to the
best knowledge of Purchaser, of any event or condition or the existence of any
fact that would cause any of the conditions to the Stockholders' obligations to
consummate the transactions contemplated by this Agreement not to be fulfilled.
29
ARTICLE VI
CONDITIONS TO THE STOCKHOLDERS' OBLIGATIONS
The obligations of the Stockholders to effect the Closing
under this Agreement are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions, unless waived in writing by the
Stockholders.
6.1 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement that are qualified by materiality
shall be true and correct in all respects on the Closing Date as though such
representations and warranties were made at such date, except to the extent such
representations and warranties speak as of an earlier date, in which case they
shall be true in all respects as of such earlier date, and the representations
and warranties made by Purchaser in this Agreement that are not qualified by
materiality shall be true and correct in all material respects as though such
representations and warranties were made at such date, except to the extent such
representations and warranties speak as of an earlier date, in which case they
shall be true in all material respects as of such earlier date.
6.2 Performance. Purchaser shall have performed and complied
in all material respects with all agreements, obligations and conditions
required by this Agreement to be so performed or complied with by Purchaser
prior to the Closing.
6.3 Preferred Stock Purchase and Redemption. Jupiter shall
have purchased from General Motors Corporation ("GM"), and the Company shall
have redeemed from Jupiter, all of the issued and outstanding shares of Class A
Preferred Stock upon the terms set forth in the Class A Preferred Stock Purchase
Agreement, by and between the Company and GM (the "Preferred Stock Purchase
Agreement"), plus, in the case of the redemption of such shares by the Company,
an amount equal to the interest carrying expenses associated with such Class A
Preferred Stock from the date of the purchase of such shares by Jupiter through
and including the Closing Date, and all of the other obligations under the
Preferred Stock Purchase Agreement shall have been satisfied or waived.
6.4 Officer's Certificate. Purchaser shall have delivered to
the Stockholders a certificate, dated as of the Closing Date and executed by the
President or a Vice President of Purchaser, certifying to the fulfillment of the
conditions specified in Sections 6.1 and 6.2 hereof.
30
6.5 HSR Act. All applicable waiting periods under the HSR Act
with respect to the transactions contemplated hereby shall have expired or been
terminated.
6.6 Injunctions. On the Closing Date there shall be no
injunction, writ, preliminary restraining order or other order in effect of any
nature issued by a court or governmental agency of competent jurisdiction
directing that the transactions provided for herein not be consummated as
provided herein and no provision of any applicable law or regulation shall
prohibit the consummation of the transactions contemplated by this Agreement.
6.7 Closing Certificates. The Stockholders shall have received
all certificates and other documents evidencing Purchaser action to approve the
transactions contemplated by this Agreement, in form and substance reasonably
satisfactory to the Stockholders.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to effect the Closing under this
Agreement are subject to the satisfaction, at or prior to the Closing, of each
of the following conditions, unless waived in writing by Purchaser.
7.1 Representations and Warranties. The representations and
warranties made by the Stockholders and the Company in this Agreement that are
qualified by materiality shall be true and correct in all respects on the
Closing Date as though such representations and warranties were made at such
date, except to the extent such representations and warranties speak as of an
earlier date, in which case they shall be true in all respects as of such
earlier date, and the representations and warranties made by the Stockholders in
this Agreement that are not qualified by materiality shall be true and correct
in all material respects as though such representations and warranties were made
at such date, except to the extent such representations and warranties speak as
of an earlier date, in which case they shall be true in all material respects
as of such earlier date.
7.2 Performance. The Stockholders, AAMM and the Company shall
have performed and complied in all material respects with all agreements,
obligations and conditions required by this Agreement to be so performed or
complied with by the Stockholders, AAMM and the Company prior to the Closing.
31
7.3 Preferred Stock Purchase and Redemption. Jupiter shall
have purchased from GM, and the Company shall have redeemed from Jupiter, all of
the issued and outstanding shares of Class A Preferred Stock upon the terms set
forth in the Preferred Stock Purchase Agreement, plus, in the case of the
redemption of such shares by the Company, an amount equal to the interest
carrying expenses associated with such Class A Preferred Stock from the date of
the purchase of such shares by Jupiter through and including the Closing Date,
and all of the other obligations under the Preferred Stock Purchase Agreement
shall have been satisfied or waived.
7.4 Park Corporation Guarantee. The Stockholders shall have
delivered or caused to be delivered an executed copy of the Park Corporation
Guarantee, substantially in the form attached hereto as Exhibit B.
7.5 Officer's Certificate. The Stockholders shall have
delivered to Purchaser a certificate, dated as of the Closing Date and executed
by the President or Chief Financial Officer of the Company, certifying to the
fulfillment of the conditions specified in Sections 7.1 and 7.2 hereof.
7.6 HSR Act. All applicable waiting periods under the HSR Act
with respect to the transactions contemplated hereby shall have expired or been
terminated.
7.7 Injunctions and Certain Other Matters. On the Closing Date
there shall be no injunction, writ, preliminary restraining order or other order
in effect of any nature issued by a court or governmental agency of competent
jurisdiction directing that the transactions provided for herein not be
consummated as provided herein and no provision of any applicable law or
regulation shall prohibit the consummation of the transactions contemplated by
this Agreement. Since the date of this Agreement, (i) there shall not have been
instituted or, to the knowledge of the Company, threatened against the Company
any action, proceeding or investigation before any court or governmental or
regulatory authority or body and (ii) the Company shall not have received
written notice that any insurer under any material insurance policy applicable
to the business of the Company is denying liability with respect to a current
claim thereunder or defending any claim under a reservation of rights clause
except, in the case of clause (i), actions, proceedings or investigations or, in
the case of clause (ii), liabilities which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
7.8 Funding. The entire amount of the funds set forth in the
Debt Commitment Letters shall have been received by the Company.
32
7.9 Resignation of Directors. All directors of the Company and
any Subsidiary whose resignation shall have been requested by Purchaser prior to
the Closing Date shall have submitted their resignations or been removed from
office effective as of the close of business on the Closing Date.
7.10 Closing Certificates. Purchaser shall have received all
certificates and other documents evidencing the Company and the Stockholder
action to approve the transactions contemplated by this Agreement, in form and
substance reasonably satisfactory to Purchaser.
7.11 Stockholder Approval. The Stockholders (including the
shareholders of Jupiter) shall have approved the transactions contemplated in
the letter dated September 19, 1997 between Mr. Dauch and Purchaser (as such
letter contemplates actions to be taken by AAMM) in the manner set forth in
Section 280(b)(5)(B) of the Code and the proposed regulations thereunder, to the
extent applicable.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated and
abandoned at any time prior to the Closing:
(a) by the mutual consent of the Stockholders and
Purchaser;
(b) by either the Stockholders or Purchaser in the
event the Closing has not occurred on or before October 29, 1997 (the "Cut-Off
Date"), unless the failure of such consummation shall be due to the failure of
the party seeking to terminate this Agreement to comply in all material respects
with the agreements and covenants contained herein to be performed by such party
on or before the Cut-Off Date; or
(c) by either the Stockholders or Purchaser in the
event any court or governmental agency of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and such
order, decree or ruling or other action shall have become final and
nonappealable.
33
8.2 Procedure and Effect of Termination. In the event of the
termination and abandonment of this Agreement by the Stockholders or Purchaser
pursuant to Section 8.1 hereof, written notice thereof shall forthwith be given
to the other parties. If the transactions contemplated by this Agreement are
terminated as provided herein:
(a) Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by Purchaser
with respect to the business of the Company shall be treated in accordance with
the provisions of the Confidentiality Agreement, which shall survive the
termination of this Agreement in accordance with its terms; and
(c) No party to this Agreement will have any liability
under this Agreement to the other except (i) as stated in subparagraphs (a) and
(b) of this Section 8.2, (ii) for any willful breach of any provision of this
Agreement and (iii) as provided in the Confidentiality Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Indemnification. (a) Subject to Sections 9.1(c), 9.1(d)
and 9.1(e), the Company, AAMM, Purchaser, and their respective directors,
officers, employees, affiliates, advisors, representatives, successors and
assigns (collectively, "Purchaser Indemnified Parties") shall be indemnified and
held harmless as follows:
(i) by each Stockholder, with respect to any and all
damages, claims, losses, liabilities, costs, deficiencies and expenses
(including without limitation interest, penalties and reasonable legal,
accounting and other expert or advisory fees and expenses, but not
including consequential damages, claims, losses, liabilities, costs,
deficiencies and expenses) (collectively, "Damages") incurred or
sustained by a Purchaser Indemnified Party as a result of any breach by
such Stockholder of its or his covenants or agreements
34
contained herein or the breach of its or his representations and
warranties set forth in Article II;
(ii) by Jupiter with respect to any and all Damages
incurred or sustained by the Company for any unpaid Taxes (A) of any
members of the Tax Group (other than the Company and its Subsidiaries)
under Reg. ss. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise
and (B) for which Jupiter is responsible pursuant to Section 5.14; and
(iii) by Jupiter with respect to any and all Damages
incurred or sustained by the Company for any unpaid ERISA liabilities
of any Person (other than the Company and its Subsidiaries) resulting
solely from the Company's affiliation with any entity which was a
member of the Company's Controlled Group at any time prior to the
Closing Date. For purposes of this Section 9.1 (a)(vi), "Controlled
Group" means any entity which is a member of a controlled group of
organizations within the meaning of Section 414(b), (c), (m) or (o) of
the Code as of the date hereof.
(b) The Company, AAMM and Purchaser jointly and severally
shall indemnify and hold the Stockholders, and the Stockholders' directors,
officers, employees, affiliates, advisors, representatives, successors and
assigns (collectively, "Stockholder Indemnified Parties") harmless from and
against and in respect of:
(i) any and all Damages incurred or sustained by a
Stockholder Indemnified Party as a result of any breach by Purchaser of
its covenants or agreements contained herein;
(ii) any and all Damages incurred or sustained by a
Stockholder Indemnified Party as a result of any breach by the Company
or AAMM of their respective covenants or agreements contained herein
which relate to actions or omissions by AAMM or the Company after the
Closing; and
(iii) any and all Damages incurred or sustained by a
Stockholder Indemnified Party as a result of any breach by the
Purchaser of the representations and warranties set forth in Article
IV; provided that (A) the Stockholders agree to aggregate their claims
35
submitted pursuant to this clause (iii) so that the aggregate amount of
any such claim is $100,000 or greater and (B) any claim for
indemnification under this clause (iii) must be made in writing with
specificity reasonable to the Company by a Stockholder Indemnified
Party during the applicable survival period set forth in Section 9.1(c)
below.
(c) The representations and warranties included in
Sections 2.1, 2.2, 2.3, 4.1, 4.2 and 4.3 shall survive the Closing indefinitely.
All other representations and warranties included in this Agreement shall expire
and be terminated at the Closing. After expiration and termination of the
respective representation or warranty, the Stockholders and Purchaser shall have
no liability whatsoever with respect to any such representation or warranty with
respect to any claim not asserted in writing with reasonable specificity before
such expiration or termination.
(d) Promptly after receipt by an indemnified party
under this Section 9.1 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 9.1, notify the indemnifying party in
writing of the claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to the indemnified party unless the indemnifying party is
materially prejudiced in its ability to defend such action. If any such claim
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled at its
expense to participate therein, and to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party, and to settle and compromise
any such claim or action; provided, however, (i) the indemnifying party must
acknowledge in writing its obligation to indemnify the indemnified party with
respect to such claim and (ii) if the indemnified party has elected to be
represented by separate counsel pursuant to the proviso to the following
sentence or if such settlement or compromise does not include an unconditional
release of the indemnified party for any liability arising out of such claim or
action, such settlement or compromise shall be effected only with the consent of
the indemnified party, which consent shall not be unreasonably withheld. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 9.1 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation, provided, however,
that the indemnified party shall have the right to employ counsel to represent
it if, in the opinion of counsel to the indemnified party, it is advisable for
the indemnified party to be represented by separate counsel
36
due to actual or potential conflicts of interest, and in that event the
reasonable fees and expenses of such separate counsel shall be paid by the
indemnifying party; provided that in no event shall the indemnifying party be
responsible for the fees of more than one counsel retained to represent the
indemnified parties. The parties hereto shall each render to each other such
assistance as may reasonably be requested in order to ensure the proper and
adequate defense of any such claim or proceeding. For purposes of this Section
9.1(d) and Section 9.1(e) below, the Stockholders shall be deemed to be
"indemnifying parties" with respect to matters subject to indemnification under
clause (i) of Section 9.1(a). In the event that the provisions contained in this
Section 9.1(d) are inconsistent with the provisions contained in Section 5.4,
with respect to matters governed by Section 5.4, the provisions of such Section
5.4 shall govern.
(e) The indemnities provided in this Agreement shall
survive the Closing. The indemnity provided in this Section 9.1 shall be the
sole and exclusive remedy of the indemnified party against the indemnifying
party at law or equity for any matter covered by paragraphs (a) and (b) of this
Section 9.1. For Tax purposes, any payments made pursuant to this Section 9.1
shall be considered by the parties as an adjustment to the purchase price for
the Shares or Acquired Shares, as the case may be.
(f) In the event a Stockholder Indemnified Party or a
Purchaser Indemnified Party receives insurance proceeds or realizes
a Tax Benefit
in respect of Damages for which a claim for indemnification under this Article
IX is pending or is subsequently made, such claim for Damages shall be reduced
by the amount of any such insurance proceeds or Tax Benefit. In the event a
Stockholder Indemnified Party or a Purchaser Indemnified Party receives
insurance proceeds or realizes a Tax Benefit in respect of Damages for which a
claim for indemnification under this Article IX has previously been made, any
payment by the Stockholders under Section 9.1(a)(i), by Jupiter and/or Park
Corporation under Sections 9.1(a)(ii) and 9.1(a)(iii) or by the Company, AAMM
and/or Purchaser under Section 9.1(b), as the case may be, resulting from such
claim for Damages shall be reimbursed within five business days after receipt of
such insurance proceeds or realization of such Tax Benefit, provided that such
reimbursement shall not exceed the amount of such insurance proceeds or Tax
Benefit, as the case may be. For purposes of this Section 9.1(f), a "Tax
Benefit" shall mean an actual reduction in Taxes paid by the Indemnified Party
taking into account the benefit associated with the payment of the Damages that
gave rise to the claim for indemnification compared to the Taxes that would be
payable by the Indemnified Party by excluding the payment of such Damages;
provided, that a Tax Benefit will not result solely by reason of payments
pursuant to Section
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5.4(c)(ii), which represent additional proceeds to the Stockholders. Each
Stockholder Indemnified Party and Purchaser Indemnified Party agrees to use
reasonable efforts to obtain any such Tax Benefit and any such insurance
proceeds, file all appropriate forms and take all necessary actions in
connection therewith. To the extent (i) the Company is required to pay any Taxes
attributable to a Tax period ending on or prior to the Closing Date, (ii) the
Company does not receive indemnification for such Taxes from the Stockholders
pursuant to any of the indemnification provisions of this Agreement and (iii)
the Stockholders realize a Stockholder Tax Benefit attributable to the change in
position that gave rise to such Tax, then the Stockholders shall pay the Company
the amount of such Stockholder Tax Benefit. For purposes of this Section 9.1(f),
a "Stockholder Tax Benefit" shall mean any actual reduction in Taxes paid by the
Stockholders taking into account the change in position that gave rise to the
increased Tax on the Company compared to the Taxes payable by the Stockholders
by excluding the change in position that gave rise to the increased Tax of the
Company.
9.2 The Stockholders' Obligations. The obligations of the
Stockholders herein are several and not joint, except as otherwise provided in
Section 9.1.
9.3 Fees and Expenses. Except as otherwise specifically
provided in this Agreement, the Stockholders shall bear their own respective
expenses and Purchaser shall bear its own expenses in connection with the
negotiation and consummation of the transactions contemplated by this Agreement;
provided that if the Closing occurs the Company and AAMM shall be solely
responsible for all such fees and expenses (i) incurred by Purchaser and (ii)
incurred by the Company, including the fees and expenses of Merrill Lynch & Co.,
Berenson Minella & Company and Skadden, Arps, Slate, Meagher & Flom LLP and its
affiliated entities, to the extent that the aggregate of such fees and expenses,
together with the bonus payable, under certain circumstances, to Mr. McLernon as
set forth in Schedule 5.1(b) of the Disclosure Schedule and the payments
required at closing pursuant to the Phantom Stock Plan, as amended, do not
exceed $30.0 million, it being understood and agreed that the Stockholders shall
be responsible for such fees and expenses in excess of such amount; provided,
however, that the parties hereto agree that any holder of a Phantom Stock Option
who takes newly issued AAMM options in lieu of a single lump sum cash payment
equal to the Phantom Stock Value for such Phantom Stock Option shall be deemed
to have received a cash payment equal to the Phantom Stock Value for purposes of
calculating the amount of the expenses set forth in this Section 9.3.
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9.4 Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Delaware without regard to the conflicts of
laws provisions thereof.
9.5 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by Purchaser and the Stockholders.
9.6 No Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of Purchaser, in the case of assignment by any
Stockholder, and the Stockholders, in the case of any assignment by Purchaser;
provided that Purchaser shall be entitled to assign its rights under this
Agreement to one or more Affiliates of Purchaser.
9.7 Waiver. Any of the terms or conditions of this Agreement
which may be lawfully waived may be waived in writing at any time by each party
which is entitled to the benefits thereof. Any waiver of any of the provisions
of this Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
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9.8 Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if (a) personally delivered,
(b) received by registered or certified first-class mail, prepaid with return
receipt requested, (c) delivered by a nationally recognized overnight courier
service, to the recipient at the address below indicated or (d) delivered by
facsimile which is confirmed in writing by sending a copy of such facsimile to
the recipient thereof pursuant to clause (a) or (c) above:
If to Purchaser:
David A. Stockman
AAM Acquisition, Inc.
c/o Blackstone Management
Associates II L.L.C.
345 Park Avenue -- 31st Floor
New York, NY 10154
(212) 754-8720 (telecopier)
(212) 836-9818 (telephone)
with a copy to:
Robert L. Friedman, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
(212) 455-2502 (telecopier)
(212) 455-2780 (telephone)
If to the Stockholders:
c/o Raymond P. Park
Park Corporation
6200 Riverside Drive
Cleveland, OH 44135
(216) 265-2559 (telecopier)
(216) 265-2560 (telephone)
With copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Blaine V. Fogg, Esq.
(212) 735-2000 (telecopier)
(212) 735-3000 (telephone)
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
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Except as otherwise provided herein, any notice under this Agreement will be
deemed to have been given (x) on the date such notice is personally delivered or
delivered by facsimile, (y) four days after the date of mailing if sent by
certified or registered mail or (z) the next succeeding business day after the
date such notice is delivered to the overnight courier service if sent by
overnight courier; provided that in each case notices received after 4:00 p.m.
(local time of the recipient) shall be deemed to have been duly given on the
next business day.
9.9 Complete Agreement. This Agreement, the Confidentiality
Agreement and the other documents and writings referred to herein or delivered
pursuant hereto contain the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and thereof. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
9.10 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
9.11 Publicity. The Stockholders and Purchaser will consult
with each other and will mutually agree upon any publication or press release of
any nature with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such publication or press release prior to such
consultation and agreement except as may be required by applicable law, in which
case the party proposing to issue such publication or press release shall use
reasonable efforts to consult in good faith with the other party or parties
before issuing any such publication or press release.
9.12 Headings. The headings contained in this Agreement are
for reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
9.13 Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
41
9.14 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation, other than the
parties hereto and their permitted successors or assigns, any rights or remedies
under or by reason of this Agreement.
9.15 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE
PARTIES HERETO HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE AREA ENCOMPASSED BY THE STATE OF DELAWARE AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES HERETO EACH ACCEPT FOR
ITSELF AND HIMSELF, AS THE CASE MAY BE, AND IN CONNECTION WITH ITS OR HIS, AS
THE CASE MAY BE, RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION AND VENUE OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY NON-
APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
9.16 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE
PARTIES HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS OR HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND
42
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS OR HIS, AS THE CASE MAY BE, JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, each of Purchaser, the Company and the
Stockholders have caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
AAM ACQUISITION, INC.
By
------------------------------------
Name: David A. Stockman
Title: President
AMERICAN AXLE & MANUFACTURING, INC.
By
------------------------------------
Name: Richard E. Dauch
Title: President & Chief Executive
Officer
AMERICAN AXLE & MANUFACTURING
OF MICHIGAN, INC.
By
------------------------------------
Name: Richard E. Dauch
Title: President & Chief Executive
Officer
44
JUPITER CAPITAL CORPORATION
By
------------------------------------
Name: Raymond P. Park
Title: President
---------------------------------------
Richard E. Dauch
---------------------------------------
Morton E. Harris
45