<PAGE>
EXHIBIT 10.25
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY
AND AMONG
PRECISION PARTNERS HOLDING COMPANY,
HLI OPERATING COMPANY, INC.
HLI COMMERCIAL HIGHWAY HOLDING COMPANY, INC.
AND
HAYES LEMMERZ INTERNATIONAL - COMMERCIAL HIGHWAY, INC.
DATED AS OF
OCTOBER 14, 2005
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Certain
Definitions........................................ 1
Section 1.2 Other
Terms................................................ 9
Section 1.3 Other
Definitional Provisions.............................. 9
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and
Sale of the Shares............................ 9
Section 2.2
Conveyance.................................................
9
Section 2.3
Consideration..............................................
9
ARTICLE III
CLOSING
Section 3.1
Closing....................................................
10
Section 3.2 Deliveries by
Sellers and the Companies.................... 10
Section 3.3 Deliveries by
Purchaser.................................... 11
Section 3.4 Simultaneous
Transactions.................................. 12
Section 3.5 Purchase Price
Adjustment.................................. 12
Section 3.6 Allocation of
Purchase Price............................... 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 4.1 Organization and
Qualification............................. 15
Section 4.2 Authority;
Binding Effect.................................. 15
Section 4.3 Title to Company
Shares.................................... 15
Section 4.4 No
Violation...............................................
16
Section 4.5 Absence of
Litigation...................................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
WITH RESPECT TO THE COMPANIES
Section 5.1 Organization and
Qualification............................. 16
Section 5.2 Financial
Statements and Inventories....................... 17
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Section 5.3 Absence of
Certain Changes or Events....................... 17
Section 5.4 Ownership of
Stock/Capitalization.......................... 17
Section 5.5 Consents and
Approvals/No Violation........................ 18
Section 5.6 Absence of
Litigation...................................... 19
Section 5.7 Related Party
Agreements................................... 19
Section 5.8 Permits;
Compliance with Laws.............................. 19
Section 5.9 No Undisclosed
Liabilities................................. 19
Section 5.10 Employee Benefit
Plans; ERISA.............................. 20
Section 5.11 Material
Contracts......................................... 21
Section 5.12 Personal
Property.......................................... 23
Section 5.13 Environmental
Matters...................................... 23
Section 5.14 Real
Property.............................................. 24
Section 5.15 Labor
Matters.............................................. 25
Section 5.16
Insurance..................................................
26
Section 5.17 Intellectual
Property...................................... 26
Section 5.18
Taxes......................................................
27
Section 5.19 Products
Liability......................................... 28
Section 5.20
Brokers....................................................
29
Section 5.21 Corporate
Records.......................................... 29
Section 5.22 Foreign Corrupt
Practices Act.............................. 29
Section 5.23 Safe Deposit Boxes and
Bank Accounts....................... 29
Section 5.24 Sufficiency of Assets
and Intercompany Services............ 29
Section 5.25 Material Customers and
Suppliers........................... 29
Section 5.26 Employees; Employment
Contracts............................ 30
Section 5.27 Disclaimer of
Warranties................................... 30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 6.1
Organization...............................................
30
Section 6.2 Authority;
Binding Effect.................................. 30
Section 6.3 No Violation;
Consents and Approvals....................... 31
Section 6.4 Acquisition of
Shares for Investment....................... 31
Section 6.5 Absence of
Litigation...................................... 31
Section 6.6
Financing..................................................
31
Section 6.7
Brokers....................................................
32
Section 6.8 Purchaser's Due
Diligence Reports.......................... 32
Section 6.9
Investigation..............................................
32
ARTICLE VII
COVENANTS
Section 7.1 Conduct of
Business........................................ 32
Section 7.2 Reasonable
Efforts......................................... 34
Section 7.3
Consents...................................................
34
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Section 7.4 Antitrust
Notification..................................... 35
Section 7.5 Further
Assurances......................................... 35
Section 7.6 Access to
Information; Confidentiality..................... 35
Section 7.7 Notification of
Certain Matters............................ 35
Section 7.8 Inter-Company
Obligations; Affiliate Agreements............ 35
Section 7.9 Supplements to
Disclosure Schedule......................... 36
Section 7.10 Access to Books and
Records Following the Closing.......... 36
Section 7.11
Resignations...............................................
36
Section 7.12 Covenant Not To
Compete.................................... 36
Section 7.13 Transition Services
Agreement.............................. 37
Section 7.14 License
Agreement.......................................... 37
Section 7.15 Public
Announcements....................................... 38
Section 7.16 Use of
Names............................................... 38
Section 7.17 Employees; Employee
Benefits............................... 38
Section 7.18 Escrow
Agreement........................................... 41
Section 7.19 Financing and Equity
Commitments........................... 41
Section 7.20 Post-Closing
Collections................................... 41
Section 7.21 Offsite Disposal
Records................................... 42
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Mutual
Conditions to the Obligations of the Parties........ 42
Section 8.2 Conditions to
the Obligations of Purchaser................. 42
Section 8.3 Conditions to
the Obligations of Sellers................... 43
ARTICLE IX
INDEMNIFICATION OBLIGATIONS; SURVIVAL
Section 9.1 Agreements to
Indemnify.................................... 44
Section 9.2 Sellers'
Limitation of Liability........................... 44
Section 9.3 Conditions of
Indemnification.............................. 46
Section 9.4 Survival of
Representations and Closing Covenants.......... 47
Section 9.5 Tax Treatment of
Indemnity Payments........................ 47
ARTICLE X
TERMINATION
Section 10.1
Termination................................................
48
Section 10.2 Effect of
Termination...................................... 48
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ARTICLE XI
TAX MATTERS
Section 11.1 Tax
Covenants..............................................
49
Section 11.2 Section 338 Elections
and Related Matters.................. 52
ARTICLE XII
MISCELLANEOUS
Section 12.1
Notices....................................................
53
Section 12.2 Amendment;
Waiver.......................................... 54
Section 12.3
Assignment.................................................
54
Section 12.4 Entire
Agreement........................................... 54
Section 12.5 Fulfillment of
Obligations................................. 55
Section 12.6 Parties in
Interest........................................ 55
Section 12.7
Expenses...................................................
55
Section 12.8
Brokers....................................................
55
Section 12.9 Governing Law;
Jurisdiction................................ 55
Section 12.10
Counterparts...............................................
55
Section 12.11
Headings...................................................
55
Section 12.12 Further
Assurances......................................... 55
Section 12.13 Specific
Performance....................................... 56
Section 12.14
Knowledge..................................................
56
Section 12.15
Severability...............................................
56
Section 12.16 No Strict
Construction..................................... 56
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
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Exhibit A Calculation of Base
Amount
Exhibit B Accounting Principles
Exhibit C Financial Statements
Exhibit D Form of Transition Services
Agreement
Exhibit E Form of License
Agreement
Exhibit F Form of Seller Opinion
(Outside Counsel)
Exhibit G Form of Seller Opinion
(Internal Counsel)
Exhibit H Form of Purchaser Opinion
(Outside Counsel)
Exhibit I Form of Purchaser Opinion
(Internal Counsel)
Exhibit J Form of Intellectual
Property Assignment
Exhibit K Form of Escrow Agreement
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SCHEDULES
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3.6
Allocation of Purchase Price
4.2
Authority; Binding Effect
4.3
Title to Company Shares
4.4 No
Violation
4.5
Absence of Litigation: Sellers
5.1
Organization and Qualification
5.2(a) Financial Statements
and Inventories: Accounting Principles
5.2(b) Financial Statements
and Inventories: Receivables
5.3
Absence of Certain Changes or Events
5.4(b) Ownership of
Stock/Capitalization: Options and Warrants
5.4(c) Ownership of
Stock/Capitalization: Liens on Shares
5.5(a) Consents and
Approvals/No Violation: Consents
5.5(b) Consents and
Approvals/No Violation: Conflicts
5.6
Absence of Litigation: Companies
5.7
Related Party Agreements
5.8
Permits/Compliance With Laws
5.9
Undisclosed Liabilities
5.10(a) Employee Benefit Plans;
ERISA: U.S. Plans
5.10(c) Employee Benefit Plans;
ERISA: Assets of Plan
5.10(g) Employee Benefit Plans;
ERISA: Retirement or Termination
5.10(h) Employee Benefit Plans;
ERISA: Retention Agreements
5.10(i) Employee Benefit Plans; ERISA:
Mexican Plans
5.11(a) Material Contracts
5.11(b) Material Contracts:
Breach
5.12 Personal
Property
5.13(a) Environmental Matters:
Compliance and Permits
5.13(b) Environmental Matters:
Claims and Releases
5.13(c) Environmental Matters:
Hazardous Materials
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5.14(a) Real Property: Owned and
Leased Realty
5.14(b) Real Property: Liens
5.14(c) Real Property:
Encroachment
5.14(d) Real Property: Leases
5.15 Labor
Matters
5.16
Insurance
5.17
Intellectual Property
5.18 Taxes
5.19 Product
Liability
5.21 Corporate
Records
5.23 Safe
Deposit Boxes and Bank Deposits
5.24
Sufficiency of Assets and Intercompany Services
5.25 Material
Customers and Suppliers
5.26 Employees;
Employee Contracts
6.3(a) No Violation; Consents
and Approvals: Defaults
6.3(b) No Violation; Consents
and Approvals: Consents
7.1
Conduct of Business
7.8
Intercompany
Obligations; Affiliate Agreements
7.11
Resignations
7.17(a) Non-Continuing Employees
8.1(b) Consents
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STOCK PURCHASE
AGREEMENT (this "Agreement "), dated as of October 14, 2005,
by and among Precision Partners Holding
Company, a Delaware corporation
("Purchaser"), HLI Operating Company, Inc.,
a Delaware corporation ("HLI Opco"),
HLI Commercial Highway Holding Company,
Inc., a Delaware corporation ("HLI
Commercial Holding"), and Hayes Lemmerz
International - Commercial Highway,
Inc., a Delaware corporation ("HLI
Commercial Highway" and collectively with HLI
Opco and HLI Commercial Holding, the
"Sellers" and each in its individual
capacity, a "Seller").
WITNESSETH:
WHEREAS, (i) HLI
Commercial Holding is the direct record and beneficial
owner of all of the issued and outstanding
shares of capital stock (the "HLI
Mexico Shares") of Hayes Lemmerz
International - Mexico, Inc., a Delaware
corporation ("HLI Mexico"), (ii) HLI
Commercial Highway is the direct record and
beneficial owner of all of the issued and
outstanding shares of capital stock
(the "HLI Hub & Drum Shares") of Hayes
Lemmerz International - Hub and Drum,
Inc., a Delaware corporation ("HLI Hub
& Drum"), (iii) HLI Opco is the direct
record and beneficial owner of one share of
capital stock (the "Seller Hayes
Mexico Share" and, collectively with the
HLI Mexico Shares and the HLI Hub &
Drum Shares, the "Shares") of Hayes Lemmerz
Mexico, S.A. de C.V., a corporation
organized under the laws of Mexico ("Hayes
Mexico" and, collectively with HLI
Hub & Drum and HLI Mexico, the
"Companies"), and (iv) HLI Mexico is the direct
record and beneficial owner of all of the
remaining issued and outstanding
shares of capital stock of Hayes Mexico
(together with the Seller Hayes Mexico
Share, the "Hayes Mexico Shares");
WHEREAS, the
Companies are engaged in the business of designing,
fabricating, procuring, selling and
distributing brake hubs and drums in the
North American market as currently
conducted by the Companies (the "Business")
and, in connection therewith, own and
operate certain manufacturing facilities
located in Berea, Kentucky, Chattanooga,
Tennessee and Ecatopec, State of
Mexico, Mexico (collectively, the "Plants")
and own the Vacant Land;
WHEREAS,
Purchaser desires to acquire from Sellers, and Sellers desire
to
sell to Purchaser, the Companies, the
Business and the Plants by means of the
purchase and sale of the Shares (the "Stock
Purchase"), all upon the terms and
subject to the conditions contained herein;
and
WHEREAS, the
respective Boards of Directors of Sellers and Purchaser have
approved this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE,
in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the
terms and conditions herein set
forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1
Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or
as referenced below:
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"Accounting
Firm" shall have the meaning set forth in Section 3.5(b)
hereof.
"Accounting
Principles" shall mean the methodologies, practices, accounting
applications and assumptions of the
Companies set forth on Exhibit B hereto.
"Adverse
Consequences" shall mean all actions, suits, proceedings,
investigations, charges, complaints,
claims, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties,
fines, costs, reasonable amounts
paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses,
and fees (including court costs and
reasonable attorneys' fees and expenses,
whether or not involving a third party
claim).
"Affiliate"
shall mean, as to any Person (as hereinafter defined), any
other Person which, directly or indirectly,
is in control of, is controlled by,
or is under common control with, such
Person. The term "control" (including,
with correlative meanings, the terms
"controlled by" and "under common control
with"), as applied to any Person, means the
possession, direct or indirect, of
the power to direct or cause the direction
of the management and policies of
such Person, whether through the ownership
of voting securities or other
ownership interest, by contract or
otherwise.
"Affiliate
Agreements" shall have the meaning set forth in Section 7.8
hereof.
"Agreement"
shall mean this Agreement, as the same may be amended or
supplemented from time to time in
accordance with the terms hereof.
"Balance Sheet"
shall have the meaning set forth in Section 5.2(a) hereof.
"Base Amount"
shall have the meaning set forth in Section 3.5(d) hereof.
"Business" shall
have the meaning set forth in the recitals hereto.
"Business Day"
shall mean any day other than a Saturday, a Sunday or a day
on which banks in the City of New York are
authorized or obligated by law or
executive order to close.
"Closing" shall
mean the closing of the transactions contemplated by this
Agreement, as provided for in Section 3.1
hereof.
"Closing
Covenants" shall have the meaning set forth in Section 9.2(a)
hereof.
"Closing Date" shall
have the meaning set forth in Section 3.1 hereof.
"Closing Working
Capital" shall have the meaning set forth in Section
3.5(a) hereof.
"Code" shall
mean the Internal Revenue Code of 1986, as amended.
"Companies"
shall have the meaning set forth in the recitals hereto.
"Competition
Laws" shall mean foreign statutes, rules, regulations, orders,
decrees, administrative and judicial
doctrines, and other foreign laws that are
designed or intended to
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prohibit, restrict or regulate actions
having the purpose or effect of
monopolization, lessening of competition or
restraint of trade, including any
such applicable Laws of Mexico.
"Confidentiality
Agreement" shall mean the Confidentiality Agreement, dated
February 8, 2005, between Purchaser and HLI
Opco.
"Consents" shall
have the meaning set forth in Section 5.5(a) hereof.
"Continuing
Employees" shall have the meaning set forth in Section 7.17(a)
hereof.
"Contracts"
shall have the meaning set forth in Section 5.11(a) hereof.
"Credit
Agreement" shall mean the Amended and Restated Credit
Agreement,
dated as of April 11, 2005, by and among
HLI Opco, as Borrower, Hayes Lemmerz
International, Inc., the Lenders and
Issuers listed therein, Citicorp North
America, Inc., as First Lien Agent, Second
Lien Agent and Collateral Agent,
Lehman Commercial Paper, Inc., as
Syndication Agent, and General Electric
Capital Corporation, as Documentation
Agent, including any related Mortgages,
Deeds of Trust, Guaranties, Pledge and
Security Agreements, or other documents
executed in connection therewith by Sellers
or any of the Companies, all as
amended through the date hereof.
"Damages" shall
have the meaning set forth in Section 9.1(a) hereof.
"Disk Brake
Business" shall have the meaning set forth in Section 7.12(a)
hereof.
"Environmental
Claim" means any claim, action, cause of action,
investigation or written notice by any
person or entity alleging potential
liability (including, without limitation,
potential liability for investigatory
costs, remediation costs, governmental
response costs, natural resources
damages, property damages, personal
injuries, or penalties) arising out of,
based on or resulting from (a) the presence
or Release of any Hazardous
Materials at any location, whether or not
owned or operated by any of the
Companies, or (b) circumstances forming the
basis of any violation of any
Environmental Law.
"Environmental
Laws" shall mean all federal, state, local and foreign laws
and regulations relating to pollution or
protection of human health or the
environment, including laws relating to
Releases or threatened Releases of
Hazardous Materials or otherwise relating
to the manufacture, processing,
distribution, use, treatment, storage,
disposal, transport or handling of
Hazardous Materials and all laws and
regulations with regard to recordkeeping,
notification, disclosure and reporting
requirements respecting Hazardous
Materials, including any such applicable
Laws of Mexico.
"ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA
Affiliate" shall mean each trade or business (whether or not
incorporated) that together with HLI Hub
& Drum would be deemed to be a "single
employer" within the meaning of Section
4001 of ERISA.
"ERISA Plans"
shall have the meaning set forth in Section 5.10(a) hereof.
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"Escrow
Agreement" shall have the meaning set forth in Section 7.18
hereof.
"Escrow Agent"
shall have the meaning set forth in Section 7.18 hereof.
"Excepted Seller
Claims" shall have the meaning set forth in Section 9.2(b)
hereof.
"Final Closing
Working Capital" shall have the meaning set forth in Section
3.5(c) hereto.
"Financial
Statements" shall have the meaning set forth in Section 5.2(a)
hereof.
"GAAP" shall
mean United States generally accepted accounting principles
and practices in effect from time to time
as consistently applied.
"Governmental
Authority" shall have the meaning set forth in Section 5.5(a)
hereof.
"Hayes Mexico"
shall have the meaning set forth in the recitals hereto.
"Hayes Mexico
Shares" shall have the meaning set forth in the recitals
hereto.
"Hazardous
Materials" shall mean all substances defined as Hazardous
Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40
C.F.R. Section 300.5 or otherwise
defined as such by, or regulated as such
under, any Environmental Laws in force
in Mexico, including materials peligrosos
or residuos peligrosos as each of such
terms are defined under the applicable
Environmental Laws in force in Mexico and
any other substances characterized or
otherwise defined as "hazardous" under any
Environmental Laws in force in Mexico.
"HLI Affiliated
Group" shall mean the "affiliated group" (within the
meaning of Section 1504(a) of the Code) of
which Parent is the common parent.
"HLI Commercial
Highway" shall have the meaning set forth in the recitals
hereto.
"HLI Commercial
Holding" shall have the meaning set forth in the recitals
hereto.
"HLI Opco" shall
have the meaning set forth in the recitals hereto.
"HLI Hub &
Drum" shall have the meaning set forth in the recitals hereto.
"HLI Hub &
Drum Shares" shall have the meaning set forth in the recitals
hereto.
"HLI Mexico"
shall have the meaning set forth in the recitals hereto.
"HLI Mexico
Shares" shall have the meaning set forth in the recitals
hereto.
"HSR Act" shall
mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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"Improvements"
shall mean all buildings, fixtures, sidings, parking lots,
roadways, structures, erections, fixed
machinery, fixed equipment and
appurtenances situate on, in, under, over
or forming part of the Owned Realty,
in each case to the extent owned by the
Companies.
"Indebtedness"
of any Person at any date shall include (a) all indebtedness
of such Person for borrowed money or for
the deferred purchase price of property
or services (other than current trade
liabilities incurred in the ordinary
course of business and payable in
accordance with customary practices), (b) any
other indebtedness of such Person that is
evidenced by a note, bond, debenture
or similar instrument, (c) all obligations
of such Person in respect of
acceptances issued or created for the
account of such Person (including letters
of credit), (d) all liabilities secured by
any Lien (as hereinafter defined) on
any property owned by such Person even
though such Person has not assumed or
otherwise become liable for the payment
thereof and (e) all direct or indirect
guarantees of any of the foregoing for the
benefit of another Person.
"Indenture"
shall mean the Indenture dated as of June 3, 2003 with respect
to HLI Opco's 10 1/2% Senior Notes Due
2010.
"Initial
Purchase Price" shall have the meaning set forth in Section 2.3
hereof.
"Intellectual
Property" shall have the meaning set forth in Section 5.17
hereof.
"Inter-Company
Loan Documents" shall mean the following documents pursuant
to which Hayes Mexico borrows money from
certain Affiliates: Asset and Accounts
Receivable Pledge Agreement in favor of HLI
Netherlands B.V.; Second Place Asset
Pledge and Receivables Agreement in favor
of HLI Swiss Holdings, LLC; Shares
Pledge Agreement; Corporate Guaranty; First
Security Mortgage in favor of HLI
Netherlands B.V.; Second Security Mortgage
in favor of HLI Swiss Holdings and
Intercompany Note.
"IRS" shall mean
the Internal Revenue Service of the United States.
"Labor Laws"
shall have the meaning set forth in Section 5.15 hereof.
"Laws" shall
mean any United States or Mexican federal, state or local law,
statute, ordinance, rule, regulation,
order, judgment or decree, administrative
order or decree, administrative or judicial
decision, and any other executive or
legislative proclamation.
"Leased Realty"
shall have the meaning set forth in Section 5.14(a) hereof.
"Leases" shall
have the meaning set forth in Section 5.14(d) hereof.
"License
Agreement" shall have the meaning set forth in Section 7.14
hereof.
"Liens" shall
mean any lien, security interest, mortgage, pledge, charge or
similar encumbrance.
"Litigation"
shall have the meaning set forth in Section 5.6 hereof.
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"Material
Adverse Effect" shall mean a material adverse effect on the
business, results of operations or
financial condition of the Companies, taken
as a whole, except any such effect
resulting primarily from (a) this Agreement,
the transactions contemplated by this
Agreement or the announcement thereof, or
(b) Purchaser's announcement or other
disclosure of its plans or intentions with
respect to the conduct of the Business (or
any portion thereof) of the
Companies.
"Material
Contracts" shall have the meaning set forth in Section 5.11(b)
hereto.
"Mexican Plans"
shall have the meaning set forth in Section 5.10(i) hereof.
"Mexico
Allocation" shall have the meaning set forth in Section
11.2(b)(ii)
hereof.
"Ordinary Course
of Business" shall mean, with respect to a Company or the
Sellers, as applicable, the ordinary course
of business of such Company (or the
Sellers) and consistent with such Company's
(or the Sellers') past practices.
"Owned Realty"
shall have the meaning set forth in Section 5.14(a) hereof.
"Parent" shall mean
Hayes Lemmerz International, Inc.
"Participants"
shall have the meaning set forth in Section 7.17(e) hereof.
"Permits" shall
have the meaning set forth in Section 5.8 hereof.
"Permitted
Liens" means (i) mechanics', carriers', workmen's, repairmen's
or other like Liens arising or incurred in
the ordinary course of business with
respect to liabilities that are not yet due
or delinquent, (ii) Liens for Taxes
(as hereinafter defined), assessments and
other governmental charges which are
not delinquent or which may hereafter be
paid without penalty or which are being
contested in good faith by appropriate
proceedings (for which reserves have been
made in the Financial Statements), (iii)
other imperfections of title or
encumbrances, if any, which imperfections
of title or other encumbrances,
individually or in the aggregate, would not
materially detract from the value of
the property or asset to which it relates
or materially impair the ability of
the Companies to use the property or asset
to which it relates in substantially
the same manner as it was used prior to the
Closing Date, (iv) liens created by
Purchaser in connection with the financing
of the acquisition of the Owned
Realty, (v) statutory liens and similar
encumbrances in favor of landlords, (vi)
with respect to the Owned Realty located in
Mexico, all matters disclosed in
title policies, commitments, binders,
reports, abstracts, certificates or other
title-related materials furnished or made
available to Purchaser prior to the
Closing Date and (vii) with respect to the
Owned Realty located in the United
States, all Liens disclosed on Schedules
5.14(b) and (c), other than those
indicated thereon to be released or
terminated on the Closing Date.
"Person" shall
mean an individual, a corporation, a partnership, a limited
liability company, an association, a trust
or other entity or organization.
"Plans" shall
have the meaning set forth in Section 5.10(i) hereof.
"Plants" shall
have the meaning set forth in the recitals hereto.
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"Pre-Closing Tax
Period" shall mean all taxable periods ending on or before
the Closing Date and that portion to and
including the Closing Date of any
taxable period that includes (but does not
necessarily end on) the Closing Date.
"Prime Rate"
shall mean the national average prime lending rate of interest
as published from time to time in The Wall
Street Journal.
"Purchase Price
Adjustment" shall have the meaning set forth in Section
3.5(a) hereof.
"Purchaser"
shall have the meaning set forth in the preamble hereto.
"Purchaser
Group" shall have the meaning set forth in Section 9.1(a)
hereof.
"Purchaser
Plans" shall have the meaning set forth in Section 7.17(b)
hereof.
"Purchaser's
Closing Schedule" shall have the meaning set forth in Section
3.5(a) hereof.
"Purchaser's
Dispute Notice" shall have the meaning set forth in Section
3.5(a) hereof.
"Purchaser's
Savings Plan" shall have the meaning set forth in Section
7.17(d) hereof.
"Related Party
Agreements" shall have the meaning set forth in Section 5.7
hereof.
"Release" shall
mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge,
dispersal, leaching or migration into
the indoor or outdoor environment
(including ambient air, surface water,
groundwater and surface or subsurface
strata) at the property, or into or out of
any property, including the movement of
Hazardous Materials through or in the
air, soil, surface water, groundwater or
property.
"Retiree Medical
Benefits" shall have the meaning set forth in Section
7.17(e) hereof.
"Retiree Medical
Plan" shall have the meaning set forth in Section 7.17(e)
hereof.
"Retained
Liability" means any item disclosed on the Schedules hereto
that
is marked as a Retained Liability.
"Schedule" shall
mean the disclosure schedule being delivered by Sellers
concurrently with the execution of this
Agreement, as the same may be amended
from time to time by the delivery of
amended or supplemental disclosure
schedules as provided in Section 7.9
hereof.
"Section 338(g)
Election" shall have the meaning set forth in Section
11.2(b)(i) hereof.
"Section
338(h)(10) Election" shall have the meaning set forth in
Section
11.2(a)(i) hereof.
"Securities Act"
shall mean the Securities Act of 1933, as amended.
"Seller" and
"Sellers" shall have the meanings set forth in the preamble
hereto.
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"Seller Claims"
shall have the meaning set forth in Section 9.1(a) hereof.
"Seller Hayes
Mexico Share" shall have the meaning set forth in the
recitals hereto.
"Sellers'
Closing Schedule" shall have the meaning set forth in Section
3.5(a) hereof.
"Sellers'
Savings Plan" shall have the meaning set forth in Section
7.17(d)
hereof.
"Shares" shall
have the meaning set forth in the recitals hereto.
"Standby Letter
of Credit" shall have the meaning set forth in Section
7.17(e) hereof.
"Stock Purchase"
shall have the meaning set forth in the recitals hereto.
"Tax Law" shall
mean any Law relating to Taxes.
"Tax Return"
shall mean any return, report, information return or other
document (including any related or
supporting information) with respect to
Taxes.
"Taxes" shall
mean all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any foreign,
Mexican or United States federal,
state or local Governmental Authority or
subdivision or agency thereof,
including, but not limited to, income,
gross receipts, excise, property, sales,
gain, use, license, capital stock,
transfer, franchise, payroll, withholding,
social security, value-added, import or
export duties or other taxes or duties,
including any interest, penalties,
additions to tax or additional amount,
attributable thereto.
"Threshold
Indemnification Amount" shall have the meaning set forth in
Section 9.2(b) hereof.
"Transition
Services Agreement" shall have the meaning set forth in Section
7.13 hereof.
"Treasury
Regulations" shall mean the income tax regulations (final and
temporary) promulgated under the Code, as
they may be in effect from time to
time. References to specific sections of
the Treasury Regulations shall be to
such sections as amended, supplemented or
superseded by Treasury Regulations
currently in effect.
"U.S.
Allocation" shall have the meaning set forth in Section
11.2(a)(iii)
hereof.
"U.S. Plans"
shall have the meaning set forth in Section 5.10(a) hereof.
"Vacant Land"
shall mean the land in Ecatopec, State of Mexico, Mexico,
which is located at "Chavarria Segundo"
("San Cayetano II"), Mineral de la
Reforma, Hidalgo.
"WARN Act" shall
have the meaning set forth in Section 5.15 hereof.
"Working
Capital" shall mean, as of any date of determination: (i) the
sum
of (A) cash and cash equivalents, including
value-added tax recoverables, (B)
trade accounts receivable less allowance
for bad debt, (C) inventory, (D)
prepaid expenses and (E) any other current
assets, minus (ii) the sum of (A)
trade accounts payable, (B) the current
portion of accrued expenses,
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<PAGE>
and (C) any other current liabilities, in
each case, calculated in accordance
with the Accounting Principles and as used
in determining the Base Amount, the
calculation of which is set forth in
Exhibit A. In calculating Working Capital,
all reserves and other accounts shall be
calculated on a consolidated basis for
all the Companies using the Accounting
Principles. In calculating Working
Capital, inventory shall include raw
materials, work in process, finished goods
and factory supplies, net of applicable
reserves, in each case, determined in
accordance with the Accounting
Principles.
Section 1.2
Other Terms. Other terms may be defined elsewhere in the text
of this Agreement and, unless otherwise
indicated, shall have such meaning
throughout this Agreement.
Section 1.3
Other Definitional Provisions.
(a) The words "hereof", "herein", "hereto", "hereunder" and
"hereinafter" and words of similar import,
when used in this Agreement, shall
refer to this Agreement as a whole and not
to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a comparable
meaning
when used in the plural, and vice
versa.
(c) The term "dollars" and character "$" shall mean United
States
dollars.
(d) The word "including" shall mean including, without limitation,
and
the words "include" and "includes" shall
have corresponding meanings.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1
Purchase and Sale of the Shares. Upon the terms and subject to
the conditions of this Agreement, at the
Closing, Sellers shall sell, convey,
assign, transfer and deliver to Purchaser,
and Purchaser shall purchase, acquire
and accept from Sellers, all right, title
and interest in and to the Shares,
free and clear of any and all Liens.
Section 2.2
Conveyance. Such sale, conveyance, assignment, transfer and
delivery shall be effected by delivery to
Purchaser or, at Purchaser's request,
to any other designee of Purchaser, by HLI
Commercial Highway of stock
certificates representing the Hub &
Drum Shares, by HLI Commercial Holding of
stock certificates representing the HLI
Mexico Shares, and by HLI Opco of stock
certificates representing the Seller Hayes
Mexico Share, and in the case of all
Shares, duly endorsed or accompanied by
stock powers duly executed in blank with
appropriate transfer stamps, if any,
affixed, and any other documents that are
necessary to transfer title to the Shares
to Purchaser (or to any designee of
Purchaser), free and clear of any and all
Liens. Additionally, the transfer of
the Seller Hayes Mexico Share by HLI Opco,
shall be duly recorded in the
"Register of Shareholders" maintained by
Hayes Mexico.
Section 2.3
Consideration. Upon the terms and subject to the conditions of
this Agreement, in consideration of such
sale, conveyance, assignment, transfer
and delivery of the Shares by Sellers,
Purchaser shall pay or cause to be paid
to Sellers, an aggregate amount in cash
9
<PAGE>
equal to (i) if the Closing Date occurs on
or before November 11, 2005,
$51,075,000, or (ii) if the Closing Date
occurs after November 11, 2005, an
amount equal to the difference of (A)
$51,475,000, minus (B) an amount equal to
$25,000 multiplied by the number of days
from (but excluding) November 11, 2005
to (and including) the date that the
Closing Date occurs (the amount determined
by application of clause (i) or (ii), the
"Initial Purchase Price"). The Initial
Purchase Price shall be subject to
post-Closing Date adjustment pursuant to
Section 3.5 hereof.
ARTICLE III
CLOSING
Section 3.1
Closing. The closing of the Stock Purchase (the "Closing")
shall take place at the offices of Stroock
& Stroock & Lavan LLP, 180 Maiden
Lane,New York, NY 10038, at 10:00 a.m.
(local time), on the first Business Day
following the satisfaction or waiver of the
conditions precedent specified in
Article VIII hereof, or at such other time
and place as the parties hereto may
mutually agree. The date on which the
Closing occurs is referred to herein as
the "Closing Date."
Section 3.2
Deliveries by Sellers and the Companies. At the Closing,
Sellers and the Companies, as applicable,
shall deliver or cause to be delivered
to Purchaser (unless delivered previously)
the following:
(a) the stock certificate or stock certificates representing
the
Shares, duly endorsed or accompanied by
stock powers duly executed in blank with
appropriate transfer stamps, if any,
affixed, and any other documents that are
reasonably necessary to transfer title to
the Shares;
(b) a resolution, in form and substance reasonably satisfactory
to
Sellers and Purchaser, duly adopted by the
stockholder or stockholders of each
Company pursuant to which (i) each of the
officers and directors of such Company
appointed by Sellers are released from any
and all liabilities which they may
have incurred as a result of their service
to such Company, other than those
resulting from gross negligence or willful
misconduct; and (ii) the cancellation
of powers of attorney;
(c) the Transition Services Agreement, duly executed by HLI Opco
or
one of its Affiliates;
(d) the License Agreement, duly executed by HLI Opco or one of
its
Affiliates;
(e) a release from each Seller, in form and substance
reasonably
satisfactory to Sellers and Purchaser;
(f) a release from the Companies, in form and substance
reasonably
satisfactory to Sellers and Purchaser;
(g) assignments of the Intellectual Property, in substantially
the
forms attached hereto as Exhibit J;
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<PAGE>
(h) an officer's certificate dated as of the Closing Date
certifying
the satisfaction of the conditions set
forth in Section 8.2(a), (b) and (c);
(i) legal opinions from Skadden, Arps, Slate Meagher & Flom
LLP,
counsel to Sellers, and Pat Cauley, general
counsel to HLI Opco, each dated as
of the Closing Date, and addressed to the
Purchaser, in substantially the forms
attached hereto as Exhibits F and G,
respectively;
(j) copies of the written resignations (effective as of the
Closing)
of the officers and members of the Board of
Directors of the Companies set forth
on Schedule 7.11;
(k) copies of payoff letters and releases (i) discharging Hayes
Mexico
for all borrowings and other amounts
outstanding under the Inter-Company Loan
Documents and (ii) releasing HLI Mexico and
HLI Hub & Drum from any obligations
under any guarantees made on behalf of the
Sellers or in connection with any
other Affiliate Agreements;
(l) terminations of all Affiliate Agreements, in form and
substance
reasonably satisfactory to Sellers and
Purchaser;
(m) a
certification of each Seller's non-foreign status, as set forth
in Treasury Regulations Section
1.1445-2(b);
(n) certificate issued by the Secretary of Hayes Mexico
confirming
that the transfer of the Seller Hayes
Mexico Share by HLI Opco in favor of the
Purchaser has been duly recorded in the
"Register of Shareholders" maintained by
Hayes Mexico;
(o) releases of all Liens on the Shares and all Liens other
than
Permitted Liens on any of Companies'
assets, including without limitation any
pay-off letters, UCC-3 termination
statements and other documents required
hereunder in connection with such releases,
in each case, in form and substance
reasonably satisfactory to Purchaser;
and
(p) all other documents, certificates, instruments or writings
required to be delivered by Sellers or the
Companies at or prior to the Closing
pursuant to this Agreement or otherwise
reasonably required in connection
herewith.
Section 3.3
Deliveries by Purchaser. At the Closing, Purchaser shall
deliver or cause to be delivered to Sellers
(unless delivered previously) the
following:
(a) a wire transfer of federal or other immediately available funds
to
the account designated by Sellers at least
two (2) Business Days prior to the
Closing Date in an aggregate amount equal
to the Initial Purchase Price;
(b) the Transition Services Agreement, duly executed by Purchaser
or
one of its Affiliates;
(c) the License Agreement, duly executed by Purchaser or one of
its
Affiliates;
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<PAGE>
(d) an officer's certificate dated as of the Closing Date
certifying
the satisfaction of the conditions set
forth in Section 8.3(a) and (b);
(e) legal opinions from Stroock & Stroock & Lavan LLP,
counsel to
Purchaser, and Richard A. Buccarelli,
general counsel to the Purchaser, each
dated as of the Closing Date, and addressed
to the Sellers, in substantially the
forms attached hereto as Exhibits H and I,
respectively
(f) the Standby Letter of Credit; and
(g) all other documents, certificates, instruments or writings
reasonably required to be delivered by
Purchaser at or prior to the Closing
pursuant to this Agreement or otherwise
reasonably required in connection
herewith.
Section 3.4
Simultaneous Transactions. All of the transactions contemplated
by this Agreement shall be deemed to occur
simultaneously, and no such
transaction shall be deemed to have been
consummated until all such transactions
have been consummated.
Section 3.5
Purchase Price Adjustment.
(a) The Initial Purchase Price shall be subject to adjustment as
set
forth in this Section 3.5 (the "Purchase
Price Adjustment"). As promptly as
practicable, but in no event later than 45
days after the Closing Date, Sellers
shall prepare and deliver to Purchaser a
schedule (the "Sellers' Closing
Schedule"), prepared in accordance with the
Accounting Principles and certified
by HLI Opco's Chief Financial Officer,
setting forth in reasonable detail
Sellers' calculation of Working Capital as
of the Closing Date ("Closing Working
Capital"). Purchaser will give Sellers and
their representatives reasonable
access, during the normal business hours of
Purchaser, to all personnel, books
and records (including bank statements,
collection information and other
accounts receivable information) of the
Companies as reasonably requested by
Sellers to assist them in their preparation
of Sellers' Closing Schedule. As
promptly as practicable, but in no event
later than 60 days after its receipt of
the Sellers' Closing Schedule (subject to
an automatic 30-day extension, if
requested by the Purchaser), Purchaser
shall engage Ernst & Young LLP to audit
the Closing Working Capital. Sellers will
give Purchaser and its representatives
reasonable access, during the normal
business hours of Sellers, to all
personnel, books and records (including
bank statements, collection information
and other accounts receivable information)
of the Sellers (to the extent
relevant to the Companies) and the
Companies (to the extent retained by Sellers
after the Closing Date) as reasonably
requested by Purchaser to assist it in its
audit of the Closing Working Capital. No
later than the last day of such 60-day
or 90-day period, as applicable, Purchaser
shall prepare and deliver to Sellers
a schedule ("Purchaser's Closing
Schedule"), prepared in accordance with the
Accounting Principles, setting forth in
reasonable detail Purchaser's
calculation of Closing Working Capital and
certified by Ernst & Young LLP.
Purchaser shall cause Ernst & Young LLP
to allow Sellers access to any work
papers used in connection with the audit of
the Closing Working Capital at the
offices of Ernst & Young LLP, subject
to Sellers having entered into a customary
agreement with Ernst & Young LLP
regarding the use of such work papers, the
confidentiality thereof and similar
matters. Sellers shall promptly reimburse
Purchaser for one half of the reasonable
and customary costs, fees and expenses
of Ernst & Young LLP's audit of the
Closing Working
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<PAGE>
Capital paid by Purchaser. If the Closing
Working Capital shown on Purchaser's
Closing Schedule is the same, or greater
than, Sellers' calculation of Closing
Working Capital as set forth in Sellers'
Closing Schedule, the Purchaser's
calculation thereof shall be the "Final
Working Capital." If the Closing Working
Capital shown on Purchaser's Closing
Schedule is less than Sellers' calculation
of Closing Working Capital as set forth in
Sellers' Closing Schedule,
Purchaser's Closing Schedule shall be
deemed written notice ("Purchaser's
Dispute Notice") that Purchaser disagrees
with Sellers' calculation of Closing
Working Capital as set forth in Sellers'
Closing Schedule.
(b) Upon receipt by (or deemed notice to) Sellers of
Purchaser's
Dispute Notice, Sellers and Purchaser shall
negotiate in good faith to resolve
any disagreement with respect to Closing
Working Capital. To the extent
Purchaser and Sellers are unable to agree
with respect to Closing Working
Capital within 30 days after receipt by (or
deemed notice to) Sellers of
Purchaser's Dispute Notice and the parties
have not mutually agreed to extend
such deadline, Purchaser and Sellers shall
promptly select a mutually
acceptable, nationally recognized
independent accounting firm (the "Accounting
Firm") with no material relationship to
Purchaser or Sellers or any of their
respective Affiliates and submit their
dispute to such accounting firm for a
binding resolution. If, within 10 days
after such 30-day period, Purchaser and
Sellers are not able to agree upon an
Accounting Firm, upon demand of either
Purchaser or Sellers, the appointment of an
Accounting Firm will be finally
determined by binding arbitration in
Detroit, Michigan by a single arbitrator
pursuant to the Expedited Procedures of the
Commercial Arbitration Rules of the
American Arbitration Association. The fees
and expenses of the Accounting Firm
and arbitrator shall be paid one-half by
Sellers and one-half by Purchaser.
(c) Not later than 30 days after the engagement of the Accounting
Firm
(as evidenced by its written acceptance by
facsimile or otherwise to the
parties), Sellers and Purchaser shall
submit simultaneous briefs to the
Accounting Firm (with a copy to the other
party) setting forth their respective
positions regarding the issues in dispute,
which disputes shall be limited to
the discrepancies between the Sellers'
Closing Schedule and the Purchaser's
Dispute Notice. If additional briefing, a
hearing, or other information is
required by the Accounting Firm, the
Accounting Firm shall give notice thereof
to the parties as soon as practicable
within 5 days after the expiration of such
30-day period, and the parties shall
promptly respond with a view to minimizing
any delay in the decision date. Sellers and
Purchaser shall instruct the
Accounting Firm to render its decision
resolving the dispute within 30 days
after submission of the reply briefs or, in
the event additional information or
a hearing is required, within 30 days after
the submission of such additional
information or the completion of such
hearing, as the case may be. The
determination of the Accounting Firm with
respect to Closing Working Capital
cannot, however, be in excess of the
calculation of Closing Working Capital set
forth in the Sellers' Closing Schedule nor
less than the calculation of Closing
Working Capital set forth in the
Purchaser's Dispute Notice. Closing Working
Capital, as agreed upon by Sellers and
Purchaser, as determined pursuant to the
second to last sentence of Section 3.5(a),
or as determined by the Accounting
Firm in accordance with this Section
3.5(c), shall be final and binding on all
parties hereto and shall be referred to
herein as the "Final Closing Working
Capital."
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<PAGE>
(d) The Purchase Price Adjustment shall be made as follows:
(i) if the Closing Working Capital set forth in the Sellers'
Closing Schedule
is greater than $12,400,000 (the "Base Amount"), Purchaser
shall pay to
Sellers 60% of the amount of such excess; subject, if the
Closing Date
occurs on the last day of a calendar month, to a maximum
amount of
$3,000,000;
(ii) if a Purchaser's Dispute Notice has been delivered and (x)
the Closing
Working Capital as set forth therein is greater than the Base
Amount,
Purchaser shall pay to Sellers the amount of such excess, less
the
amount of any
payment made by Purchaser pursuant to clause (i) of this
Section 3.5(d)
or (y) if the Base Amount is greater than the Closing
Working Capital
set forth in the Sellers' Closing Schedule, Sellers shall
pay to Purchaser
the amount of such excess;
(iii) if the Final Closing Working Capital is greater than the
Base Amount,
Purchaser shall pay to Sellers the amount of such excess, less
the amount of
any payment(s) made by Purchaser pursuant to clauses (i) and
(ii)(x) of this
Section 3.5(d), or (ii) if the Base Amount is greater than
the Final
Closing Working Capital, Sellers shall pay to Purchaser the
amount of such
excess, less the amount of any payment made by Sellers
pursuant to
clause (ii)(y) of this Section 3.5(d); and
(iv) Purchaser and Sellers agree that (x) if the Closing Date
occurs on the
last day of a calendar month, Purchaser's aggregate payment
obligations
under Sections 3.5(d)(i), (ii) and (iii) shall not exceed a
maximum amount
of $5,000,000 and (y) any payment required to be made
pursuant to
Section 3.5(d)(i) shall be made within five Business Days after
the delivery of
Sellers' Closing Schedule, any payment required to be made
pursuant to
Section 3.5(d)(ii) shall be made within five Business Days
after the
delivery of Purchaser's Dispute Notice and that any payment
required to be
made pursuant to Section 3.5(d)(iii) shall be made within
five Business
Days after the Purchase Price Adjustment becomes final and
binding on the
parties hereto, in each case, by wire transfer of federal or
other
immediately available funds to an account or accounts designated
by
Sellers or
Purchaser, as the case may be, to the other party, as
applicable.
(e) The parties
agree that the Purchase Price Adjustment contemplated
by this Section 3.5 is intended to adjust
the Purchase Price for changes in
Working Capital from the Base Amount and
that such changes may be measured only
if the calculation is performed in
accordance with (i) the procedures set forth
in this Section 3.5 and the definition of
Working Capital and (ii) the
Accounting Principles. Notwithstanding
anything contained herein to the
contrary, in the event of any conflict
between the requirements of GAAP, and the
Accounting Principles used in connection
with the preparation of the Balance
Sheet and as used in determining the Base
Amount, the calculation of which is
set forth in Exhibit A, the Accounting
Principles shall control.
(f) Purchaser and each Seller agrees that, following the
Closing
through the date on which the Final Closing
Working Capital becomes final and
binding, it shall not, and, in the case of
the Purchaser, will cause each of the
Companies not to, take any actions with
respect to any accounting books,
records, policies or procedures on which
the Final Closing Working
14
<PAGE>
Capital is to be based that would make it
impossible or impracticable to
calculate the Final Closing Working Capital
in the manner and utilizing the
methods required hereby.
(g) Any Mexican Peso denominated amounts that are used to
determine
the Final Closing Working Capital shall be
converted to U.S. dollars for such
purpose at the interbank exchange rate on
the Closing Date, as reported and
published by The Wall Street Journal on
such date.
Section 3.6
Allocation of Purchase Price. Except as provided in Section
11.2, the parties hereto agree to allocate
the Purchase Price among the Shares
in the manner to be mutually agreed as soon
as practicable (but in any event no
later than the Closing), which allocation
shall comply with applicable Laws,
including the Code. Sellers and Purchaser
each hereby agree that such allocation
shall be conclusive and binding on each of
them for purposes of Mexican and
United States federal and, where
applicable, state and local Tax Returns and
that they will not voluntarily take any
position inconsistent therewith. Upon
the completion of such allocation, such
allocation shall be appended to this
Agreement as Schedule 3.6.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby
represent and warrant to Purchaser as follows as of the date
hereof and as of the Closing Date (except
to the extent such representations and
warranties speak as of an earlier
date):
Section 4.1
Organization and Qualification. Each Seller is duly organized,
validly existing and in good standing under
the laws of the jurisdiction of its
incorporation, and has all requisite power
and authority, corporate or
otherwise, to own, lease and operate all of
its properties and assets and to
conduct its business as it is now being
conducted.
Section 4.2
Authority; Binding Effect. Except as set forth on Schedule 4.2,
each Seller has all requisite power and
authority to execute and deliver this
Agreement, to perform its obligations
hereunder and to consummate the
transactions contemplated hereby. The
execution, delivery and performance of
this Agreement, and the consummation of the
transactions contemplated hereby
have been duly authorized by all necessary
corporate action on the part of each
Seller, and no other action, corporate or
otherwise, on the part of any Seller
or its stockholders is required to
authorize the execution, delivery and
performance hereof, and the consummation of
the transactions contemplated
hereby. This Agreement has been duly
executed and delivered by each Seller and
constitutes the valid and binding
obligation of Sellers enforceable against
Sellers in accordance with its terms,
except that such enforcement may be
subject to any bankruptcy, insolvency,
reorganization, moratorium or other laws
now or hereafter in effect relating to or
limiting creditors' rights generally
and 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 proceedings
therefor may be brought.
Section 4.3
Title to Company Shares. Except as set forth in Schedule 4.3,
Sellers are the record owners and have good
and valid title to all of the
Shares, free and clear of all Liens
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<PAGE>
and, subject to the satisfaction or, to the
extent permitted by applicable Law,
waiver of the conditions to consummation of
the transactions contemplated hereby
set forth in Article VIII hereof, at the
Closing Sellers will deliver to
Purchaser good and valid title to all of
the Shares, free and clear of all
Liens.
Section 4.4 No
Violation. The execution and delivery of this Agreement by
Sellers do not, and the performance of this
Agreement by Sellers and the
consummation by Sellers of the transactions
contemplated hereby will not, except
as set forth in Schedule 4.4, (i) conflict
with or violate the certificate of
incorporation or by-laws, in each case, as
currently in effect, of any Seller,
(ii) conflict with or violate in any
material respect any Laws applicable to any
Seller or by which the Shares are bound or
are subject, or (iii) result in any
material breach of, or constitute a
material default (or an event that with
notice or lapse of time, or both, would
constitute a material default) under, or
give to others any right of termination,
amendment, acceleration or cancellation
of, or require payment under, or result in
the creation of a Lien on any of the
Shares under, any material note, bond,
indenture, Contract, permit, franchise or
other instrument or obligation to which any
Seller is a party or by which the
Shares are bound or subject.
Section 4.5
Absence of Litigation. Except as set forth in Schedule 4.5,
there is no Litigation pending or, to the
knowledge of Sellers, threatened
against any Seller, if adversely
determined, nor any judgment, order or decree
of any Governmental Authority to which any
Seller is a party or subject, that
would reasonably be expected to impair (i)
Sellers' ability to perform their
obligations hereunder or to consummate the
transactions contemplated hereby or
(ii) the ability of the Companies to
conduct their respective businesses after
the Closing Date in substantially the
manner as they are now being conducted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SELLERS WITH RESPECT TO THE COMPANIES
Sellers hereby
represent and warrant to Purchaser with respect to the
Companies as follows as of the date hereof
and as of the Closing Date (except to
the extent such representations and
warranties speak as of an earlier date):
Section 5.1
Organization and Qualification. Each of the Companies is duly
organized, validly existing and in good
standing under the laws of the
jurisdiction of its incorporation, and has
all requisite power and authority,
corporate or otherwise, to own, lease and
operate all of its properties and
assets and to conduct its business as it is
now being conducted. Except as set
forth in Schedule 5.1, each of the
Companies is duly qualified or licensed and
in good standing to do business as a
foreign corporation in each jurisdiction in
which the nature of its business, or the
ownership, leasing or operation of its
properties or assets, makes such
qualification necessary. Sellers have delivered
or made available to Purchaser a complete
and correct copy of the certificate of
incorporation and by-laws or comparable
organizational documents, each as
amended to date, of each of the Companies.
The certificate of incorporation and
by-laws or comparable organizational
documents of each of the Companies are in
full force and effect, and none of the
Companies is in violation of any material
provision thereof.
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Section 5.2
Financial Statements and Inventories.
(a) Attached hereto as Exhibit C are the unaudited consolidated
balance sheet of the Companies as of July
31, 2005, and the unaudited
consolidated statement of operations of the
Companies for each of the fiscal
years ended January 31, 2004, and January
31, 2005 and the six-month period
ended July 31, 2005 (collectively, the
"Financial Statements"). Except as set
forth in Schedule 5.2(a), each of the
Financial Statements has been prepared in
accordance with the Accounting Principles,
and fairly presents the consolidated
financial position and results of
operations of the Companies as of the date or
for the period indicated therein. The
unaudited consolidated balance sheet of
the Companies as of July 31, 2005 included
in the Financial Statements is herein
referred to as the "Balance Sheet."
(b) Except as set forth in Schedule 5.2(b), all accounts
receivable
and notes receivable of the Companies (i)
have arisen from bona fide
transactions in the ordinary course of
business and (ii) are not subject to any
right of rescission, setoff, counterclaim
or defense (in each case, arising
prior to the Closing Date or as a result of
any act or omission of any Seller)
by any obligor and no such action or
defense has been asserted or threatened
with respect to any receivable.
(c) The inventories of each of the Companies consist of a quality
and
quantity usable and saleable in the
Ordinary Course of Business, subject to
reserves reflected on the Balance Sheet
(which reserves were determined in
accordance with the Accounting Principles).
All inventories are of a quantity
consistent with past practices of the
Companies and have been reflected on the
Balance Sheet at the lower of cost or
market on a "first in first out" basis.
Section 5.3
Absence of Certain Changes or Events. Except as set forth in
Schedule 5.3, since April 30, 2005, (a)
each of the Companies has conducted its
business only in the Ordinary Course of
Business, (b) there has not occurred,
nor has there been any condition, event,
circumstance, change or effect which,
individually or in the aggregate, has had
or would reasonably be expected to
have, a Material Adverse Effect on the
Companies, taken as a whole, and (c) none
of the Companies has taken any action
which, if taken after the execution and
delivery of this Agreement, would
constitute a breach or violation of Sections
7.1(b), (d), (e), (f), (g), (h), (i), (k),
(l), (m) or (n) hereof.
Section 5.4
Ownership of Stock/Capitalization.
(a) The authorized capital stock of HLI Mexico consists of
1,000
shares of common stock, par value $1.00 per
share, of which 1,000 shares are
issued and outstanding. The authorized
capital stock of HLI Hub & Drum consists
of 1,000 shares of common stock, par value
$.01 per share, of which 1,000 shares
are issued and outstanding. The authorized
capital stock of Hayes Mexico
consists of 3,743,000 shares of common
stock, par value P.S. $1.00 per share, of
which 3,743,000 are issued and outstanding.
No shares of capital stock of any of
the Companies are reserved for issuance
upon exercise of outstanding stock
options. No shares of capital stock of any
of the Companies are held as treasury
stock. Each issued and outstanding share of
capital stock of each of the
Companies has been duly authorized and
validly issued, and is fully paid and
nonassessable. None of the issued and
outstanding shares of capital stock of any
of the Companies has been issued in
violation of, or is subject to, any
preemptive or
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subscription rights. All of the issued and
outstanding capital stock of HLI Hub
& Drum is owned, beneficially and of
record, by HLI Commercial Highway, all of
the issued and outstanding capital stock of
HLI Mexico is owned, beneficially
and of record, by HLI Highway Holding, and
all of the issued and outstanding
capital stock of Hayes Mexico is owned,
beneficially and of record, by HLI
Mexico, except the Seller Hayes Mexico
Share, which is owned, beneficially and
of record, by HLI Opco.
(b) Except as set forth in Schedule 5.4(b), (i) there is no
option,
warrant or other right, agreement,
arrangement, or commitment of any kind
whatsoever to which any of the Companies is
a party relating to the issued or
unissued capital stock or other equity
interests of such Company or obligating
such Company to grant, issue or sell any
share of the capital stock or other
equity interests of such Company by sale,
lease, license or otherwise; (ii)
there is no obligation, contingent or
otherwise, of any Company to (A)
repurchase, redeem or otherwise acquire any
share of the capital stock or other
equity interests of such Company, or (B)
provide funds to, or make any
investment in (in the form of a loan,
capital contribution or otherwise), or
provide any guarantee with respect to the
obligations of, such Company or any
other Person; (iii) none of the Companies,
directly or indirectly, owns, or has
agreed to purchase or otherwise acquire,
the capital stock or other equity
interests of, or any interest convertible
into or exchangeable or exercisable
for such capital stock or such equity
interests of, any corporation,
partnership, joint venture or other entity;
and (iv) there is no voting trust,
proxy or other agreement, arrangement,
contract or other commitment of any kind
whatsoever to which any Company is a party,
or by which any Company, or any of
their respective properties or assets, is
bound with respect to the voting of
any share of capital stock or other equity
interest of any Company.
(c) Upon
delivery to Purchaser at the Closing of the Shares pursuant
to Section 3.2(a) hereof, and payment by
Purchaser of the consideration therefor
pursuant to Section 3.3(a) hereof,
Purchaser shall directly or indirectly
acquire and receive all right, title and
interest in and to 100% of the issued
and outstanding shares of capital stock of
the Companies, free and clear of all
Liens, except as set forth in Schedule
5.4(c).
Section 5.5
Consents and Approvals/No Violation.
(a) The execution and delivery of this Agreement by Sellers do
not,
and the performance by Sellers of this
Agreement and the consummation of the
transactions contemplated hereby will not,
require any Seller or any Company to
obtain (x) any consent, approval, waiver,
authorization or permit of, or to make
any filing or registration with or
notification to ("Consents"), any court,
agency or commission, or other governmental
entity, authority or
instrumentality, whether domestic or
foreign ("Governmental Authority"), or (y)
any Consent of any third party, except for
(i) applicable filing requirements,
if any, of the HSR Act or the Competition
Laws; (ii) filings required under the
Securities and Exchange Act of 1934 to be
made by HLI Opco with the United
States Securities and Exchange Commission;
and (iii) the Consents set forth in
Schedule 5.5(a).
(b) Provided Sellers have obtained or made the Consents set forth
in
Schedule 5.5(a), the execution and delivery
of this Agreement by Sellers do not,
and the performance of this Agreement by
Sellers and the consummation of the
transactions contemplated hereby will
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<PAGE>
not, except as set forth in Schedule
5.5(b), (i) conflict with or violate the
certificate of incorporation or by-laws or
comparable organizational documents,
in each case as currently in effect, of any
Company, (ii) conflict with or
violate any Laws applicable to any Company
or by or to which any of their
respective properties or assets is bound or
subject, or (iii) result in any
breach of, or constitute a default (or an
event that with notice or lapse of
time or both would constitute a default)
under, or give to others any right of
termination, amendment, acceleration or
cancellation of, or require payment
under, or result in the creation of a Lien
on any of the properties or assets of
any Company under, any material note, bond,
indenture, Contract, permit,
franchise or other instrument or obligation
to which such Company is a party or
by or to which any Company or any of their
respective properties or assets is
bound or subject.
Section 5.6
Absence of Litigation. Except as set forth in Schedule 5.6, (i)
there is no claim, action, suit, proceeding
or investigation at law or in equity
(including actions or proceedings seeking
injunctive relief), by or before any
Governmental Authority or arbitral body
("Litigation"), pending or, to the
knowledge of Sellers, threatened against
any of the Companies or affecting any
of their respective properties or assets,
and (ii) no Company is a party or
subject to, or in default under, any
judgment, order or decree of any
Governmental Authority.
Section 5.7
Related Party Agreements. Except as set forth in Schedule 5.7,
neither Sellers nor any of their Affiliates
(other than the Companies) is a
party to any agreement, arrangement,
contract or other commitment (the "Related
Party Agreements") to which any of the
Companies is a party or by or to which
any of their respective properties or
assets is bound or subject.
Section 5.8
Permits; Compliance with Laws. Each Company possesses all
material franchises, grants,
authorizations, licenses, permits, easements,
variances, exemptions, consents,
certificates, approvals and orders necessary to
own, lease and operate its properties and
assets and to carry on its business as
it is now being conducted (other than those
required under (i) Environmental
Laws, which are governed by Section 5.13
hereof, (ii) ERISA and other Laws
regarding employee benefit matters, which
are governed by Section 5.10 hereof,
(iii) Labor Laws, which are governed by
Section 5.15 hereof, and (iv) Tax Laws,
which are governed by Section 5.18 hereof)
(collectively, the "Permits"), and
there is no material claim, action, suit,
proceeding or investigation pending
or, to the knowledge of Sellers, threatened
regarding suspension or cancellation
of any such Permits. Schedule 5.8 lists all
Permits possessed by each Company.
Except as set forth in Schedule 5.8, each
Company is in compliance in all
material respects with such Permits and
with all Laws applicable to it or by or
to which any of its properties or assets is
bound or subject (other than (i)
Environmental Laws, which are governed by
Section 5.13 hereof, (ii) ERISA and
other Laws regarding employee benefit
matters, which are governed by Section
5.10 hereof, (iii) Labor Laws, which are
governed by Section 5.15 hereof, and
(iv) Tax Laws, which are governed by
Section 5.18 hereof). Except as set forth
in Schedule 5.8, each Permit will remain in
full force and effect following the
Closing.
Section 5.9 No
Undisclosed Liabilities. Except for liabilities and
obligations (a) disclosed in the Balance
Sheet, (b) incurred in the Ordinary
Course of Business since July 31, 2005, or
(c) disclosed in Schedule 5.9, none
of the Companies has any liabilities or
obligations (including, without
limitation, contingent, unmatured,
unliquidated, unasserted or conditional
liabilities or obligations and whether or
not GAAP or the Accounting Principles
would require
19
<PAGE>
the inclusion of such liabilities or
obligations on the Balance Sheet). This
Section 5.9 shall apply only in the event
that there is no other Section of this
Agreement that addresses the
representation, warranty, covenant or agreement
alleged by Purchaser to have been breached
by Sellers. For example, if Purchaser
alleges that Sellers have breached a
representation relating to an environmental
matter, such alleged breach shall be
addressed under Section 5.13 and this
Section 5.9 shall not apply.
Section 5.10
Employee Benefit Plans; ERISA.
(a) Schedule 5.10(a) sets forth a list of each material bonus,
deferred compensation, incentive
compensation, stock purchase, stock option,
severance or termination pay,
hospitalization or other medical, life or other
insurance, supplemental unemployment
benefits, profit-sharing, pension or
retirement plan, program or agreement, and
each other employee benefit plan,
program or agreement, sponsored, maintained
or contributed to or required to be
contributed to by any of the Companies or
by any ERISA Affiliate, for the
benefit of any employee or former employee
of any of HLI Hub & Drum and its
subsidiaries (collectively, the "U.S.
Plans"). Schedule 5.10(a) identifies each
of the U.S. Plans that is an "employee
pension plan," as that term is defined in
Section 3(3) of ERISA (such plans being
hereinafter referred to collectively as
the "ERISA Plans"). Sellers have provided
to Purchaser copies of the U.S. Plans,
available descriptions thereof, the Form
5500 annual reports for the three most
recent plan years and the actuarial
valuation reports for the three most recent
plan years with respect to each U.S. Plan
(to the extent applicable).
(b) Each U.S. Plan has been created, operated and administered in
all
material respects in accordance with its
terms and in compliance with applicable
Laws.
(c) No liability under Title IV of ERISA has been incurred by HLI
Hub
& Drum or any ERISA Affiliate that has
not been satisfied in full, and, to
Sellers' knowledge, no condition exists
that presents a risk to HLI Hub & Drum
or any ERISA Affiliate of incurring a
liability under Title IV of ERISA, other
than liability for premiums due the Pension
Benefit Guaranty Corporation (which
premiums have been paid when due) and no
amendment has occurred which would
reasonably be expected to require or has
required any of the Companies to
provide security to any ERISA Plan under
Section 401(a)(29) of the Code. Except
as set forth in Schedule 5.10(c), with
respect to each ERISA Plan subject to
Title IV of ERISA, as of each such ERISA
Plan's most recent annual valuation
date, the assets for each such ERISA Plan
are at least equal in value to the
present value of the accrued benefits
(determined as of the most recent annual
valuation date) of the participants in such
ERISA Plan, based on the actuarial
assumptions used for funding purposes in
the most recent actuarial report
prepared by such plan's actuary.
(d) Full payment has been made of all amounts that HLI Hub &
Drum or
any ERISA Affiliate is required to pay
under the terms of each ERISA Plan and
Section 412 of the Code as of the last day
of the most recent Plan year thereof
ended prior to the date of this Agreement,
and all such amounts properly accrued
through the Closing Date with respect to
the current Plan year thereof will be
paid by the applicable Company on or prior
to the Closing Date or will be
properly recorded in the consolidated
financial statements of the Companies in
accordance with the Accounting
Principles.
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<PAGE>
(e) No ERISA Plan is a "multiemployer plan," as such term is
defined
in Section 3(37) of ERISA.
(f) Each ERISA Plan that is intended to be "qualified" within
the
meaning of Section 401(a) of the Code has
received a favorable determination
letter to the effect that it is so
qualified and that the trusts maintained
thereunder are exempt from taxation under
Section 501(a) of the Code, and, to
Sellers' knowledge, no circumstances exist
that would reasonably be expected to
result in such Plan no longer being
qualified.
(g) Except as set forth in Schedule 5.10(g), no U.S. Plan
provides
benefits, including death or medical
benefits (whether or not insured), with
respect to current or former employees of
any Company or any ERISA Affiliate
beyond their retirement or other
termination of service (other than coverage
mandated by applicable Laws), and neither
any Company nor any ERISA Affiliate
has any binding obligation to provide any
employee or group of employees with
any such benefits upon their retirement or
termination of employment.
(h) Except as set forth in Schedule 5.10(h), neither the execution
and
delivery of this Agreement by Sellers nor
the performance by Sellers of this
Agreement nor the consummation of the
transactions contemplated hereby will (i)
entitle any current or former director,
officer or employee of any Company or
any ERISA Affiliate to severance pay,
unemployment compensation or any other
payment from such Company or (ii)
accelerate the time of payment or vesting, or
increase the amount of compensation due any
such director, officer or employee.
(i) Schedule 5.10(i) sets forth a list of each material
employee
benefit plan, program, agreement or
arrangement that is sponsored, maintained or
contributed to, or required to be
contributed to, by any of HLI Mexico and its
Affiliates for the benefit of any employee
or former employee of any of Hayes
Mexico and its subsidiaries (the "Mexican
Plans" and, collectively with the U.S.
Plans, the "Plans"). To Sellers' knowledge,
each Mexican Plan is in compliance
in all material respects with all Laws
applicable thereto and the respective
requirements of the governing documents for
such Plan.
(j) Hayes Mexico has duly registered its employees before the
Mexican
Institute of Social Security, National Fund
of Housing Institute and Savings for
Retirement Fund System, and is in material
compliance with all applicable social
security and labor laws. All contributions
(including all employer contributions
and employees' salaries contributions) or
premium payments required to have been
made under the terms of any "employee
benefit plan", or in accordance with
applicable legal requirements, including,
without limitation all employer
contributions quotas to the Mexican
Institute of Security, National Fund of
Housing Institute, Savings for Retirement
Fund System, have been timely made by
Hayes Mexico in respect of each Hayes
Mexico employee's salary.
Section 5.11
Material Contracts.
(a) Schedule 5.11(a) sets forth a list of each of the following
agreements, contracts, mortgages, leases
and licenses to which any of the
Companies is a party or by or to which any
of their respective properties or
assets is bound or subject (each a
"Contract")(other
21
<PAGE>
than Contracts that (i) (A) involve
aggregate obligations of any Company in any
future twelve-month period of $75,000 or
less, or (B) are purchase orders issued
or received by any Company in the Ordinary
Course of Business; (ii) are U.S.
Plans listed in Schedule 5.10(a) or Mexican
Plans listed in Schedule 5.10(i);
(iii) are Related Party Agreements listed
in Schedule 5.7; or (iv) are Leases
listed in Schedule 5.14(c)):
(i) employment, severance, termination or consulting Contracts;
(ii) employee collective bargaining Contracts and other
Contracts
with any labor
union;
(iii) covenants not to compete and Contracts that restrict or
limit in any
material respect the ability of any Company to compete in any
line of business
or with any person in any area;
(iv) Contracts under which any Company is a lessor or sublessor
of, or makes
available for use by any third party, (A) any real property
owned or leased
by such Company, or any portion of premises otherwise
occupied by any
of the Companies, or (B) any material personal property
owned or leased
by any of the Companies;
(v) Contracts under which any of the Companies has borrowed or
loaned any money
or issued any note, bond, indenture or other evidence of
Indebtedness or
directly or indirectly guaranteed any indebtedness,
liability or
obligation of any third party (other than any endorsement for
the purpose of
collection, any loan made to any employee for relocation,
travel or other
employment-related purposes, in each case, in the Ordinary
Course of
Business);
(vi) joint venture Contracts;
(vii) (A) continuing contracts for the future purchase of
materials,
supplies or equipment, (B) management, service or other similar
type of
contracts or (C) advertising contracts;
(viii) mortgages, pledges, security agreements, deeds of trust
or
other documents
granting a Lien;
(ix) Contracts (A) providing for the payment of any bonus or
commission based
on sales or earnings or (B) providing for any bonus or
other payment
based on the sale of any of the Companies or any portion
thereof or any
other change of control of any of the Companies, in either
case, to any
Persons, other than any employees, of any of the Companies;
(x) Contracts that provide that the terms and conditions that
would otherwise
govern the relationship of the parties thereto will be
altered upon a
change of control of any of the Companies;
(xi) Contracts providing for material indemnification
obligations
by any of the
Companies;
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<PAGE>
(xii) Contracts with any Governmental Authority except those
entered into in
the Ordinary Course of Business which are not material to
the
Companies;
(xiii) Contracts under which any of the Companies licenses to
or
from any third
party any Intellectual Property;
(xiv) Contracts obligating any Company to make capital
expenditures;
(xv) Contracts purporting to give any person a power of
attorney
on behalf of any
Company;
(xvi) Contracts under which any of the Companies guaranties the
obligations of
another party, except for guaranties executed in connection
with the Credit
Agreement or the Inter-Company Loan Documents;
(xvii) Contracts with any officer or director of any Company
(including,
without limitation, any loan agreements);
(xviii) Contracts entered into outside of the Ordinary Course
of
Business;
and
(xix) any product warranties, except for product warranties
granted to
customers in the Ordinary Course of Business.
(b) Each Contract
listed on Schedule 5.11(a) (the "Material
Contracts") is in full force and effect and
is the valid and binding obligation
of the Company that is a party thereto.
Except as set forth in Schedule 5.11(b),
no Company or, to the knowledge of Sellers,
any other party thereto is in breach
of or in default in any material respect
under any Material Contract and no
event or condition exists which, after
notice or lapse of time, or both, would
constitute a breach or default in any
material respect under any Material
Contract.
Section 5.12
Personal Property. Schedule 5.12 lists substantially all of
(i) each item of personal property owned by
each Company with a book value in
excess of $15,000 and (ii) each item of
personal property leased by each Company
with a book value in excess of $15,000.
Except as set forth in Schedule 5.12,
each of the Companies has good and valid
title to, or a valid and enforceable
right to use, all personal property
(whether tangible or intangible) reflected
on the books and records of such Company,
free and clear of any and all Liens
except Permitted Liens.
Section 5.13
Environmental Matters.
(a) Except as set forth in Schedule 5.13(a), each of the Companies
has
been in material compliance, and is in
material compliance, with all applicable
Environmental Laws (which compliance
includes, but is not limited to, the
possession by each of the Companies of all
Permits and other governmental
authorizations required under applicable
Environmental Laws, and compliance with
the terms and conditions thereof). Schedule
5.13(a), lists all Permits required
under applicable Environmental Laws. Except
as set forth in Schedule 5.13(a),
each
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<PAGE>
Company possesses each Permit required of
it under applicable Environmental Laws
and each such Permit will remain in full
force and effect following the Closing.
(b) Except as set forth in Schedule 5.13(b), there is no
Environmental
Claim pending or, to the knowledge of
Sellers, threatened against any of the
Companies or, to the knowledge of Sellers,
against any Person whose liability
for any Environmental Claim any of the
Companies has or may have retained or
assumed either contractually or by
operation of law. Except as set forth in
Schedule 5.13(b), there have been no
Releases of Hazardous Materials by any of
the Companies on, beneath or adjacent to
any property currently or formerly
owned, operated, or leased by any of the
Companies.
(c) Except as disclosed in Schedule 5.13(c), the Companies have
not,
and no other Person has, placed, stored,
deposited, discharged, buried, dumped
or disposed of Hazardous Materials produced
by, or resulting from, any business,
commercial or industrial activities,
operations or processes, on or beneath any
property currently or formerly owned,
operated or leased by any of the
Companies, other than in material
compliance with applicable Environmental Laws
and the Companies have not disposed of or
arranged for the disposal or treatment
of Hazardous Materials at any other
location which could result in any
Environmental Claim being asserted against
the Companies.
(d) Sellers have delivered or otherwise made available for
inspection
to Purchaser copies and results of any
material reports, studies, analyses,
tests or monitoring possessed by Sellers or
any of the Companies, pertaining to
Hazardous Materials in, on, beneath or
adjacent to any property currently or
formerly owned, operated or leased by any
of the Companies, or regarding such
Company's compliance with applicable
Environmental Laws.
Section 5.14
Real Property.
(a) Schedule 5.14(a) sets forth a list of all real property to
which
any Company has legal or equitable title
(the "Owned Realty") or in which any
Company has a valid and subsisting
leasehold interest (the "Leased Realty"), and
sets forth for each such Owned Realty and
Leased Realty the title or interest
held by any Company. Copies of the most
recent title insurance reports issued to
the Companies with respect to the Owned
Realty, and in Sellers' or the
Companies' possession, have been furnished
or made available to Purchaser prior
to the date hereof.
(b) Each Company set forth in Schedule 5.14(a) as the owner of
a
particular piece of the Owned Realty has
good and marketable fee title to such
Owned Realty, free and clear of any and all
Liens (except Permitted Liens and
the leases, subleases, rights of parties in
possession, easements and
encroachments set forth in Schedule
5.14(b)).
(c) Except as set forth in Schedule 5.14(c), (i) the Improvements
are
located wholly within the boundaries of the
Owned Realty and do not encroach
upon any registered or unregistered
easement or right-of-way affecting the Owned
Realty and (ii) there is no material
encroachment into the Owned Realty by
buildings or improvements owned by the
owners of adjoined real property.
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<PAGE>
(d) Each Company set forth in Schedule 5.14(a) as the lessee of
a
particular piece of Leased Realty possesses
a valid and subsisting leasehold or
other interest in such Leased Realty
pursuant to the leases or other instruments
set forth in Schedule 5.14(d) (the
"Leases"), free and clear of any and all
Liens (except Permitted Liens, the
subleases, rights of parties in possession,
easements and encroachments set forth in
Schedule 5.14(d) and such other
encumbrances as may affect the estate of
the landlord under any lease). Each
Lease to which any of the Companies is a
party is in full force and effect, and
is the valid and binding obligation of the
Company party thereto, as the case
may be, and, to the knowledge of Sellers,
is the valid and binding obligation of
each other party thereto in accordance with
its terms, and there is not under
any Lease any existing material default by
any Company or, to the knowledge of
Sellers, an
