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ASSET PURCHASE AGREEMENT
by and among
Xxxx Corporation
and
Certain of its Subsidiaries
as Sellers
and
Standard Motor Products, Inc.
as Buyer
Providing for the Sale of Substantially all of the Assets of
Dana's Engine Management Business
Dated as of February 7, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF ASSETS...............................................................1
1.1 Sale and Transfer of Assets....................................................................1
1.2 Retained Assets................................................................................3
1.3 Nonassignable Assets; Beneficial Ownership.....................................................4
ARTICLE II ASSUMPTION OF LIABILITIES.................................................................5
2.1 Assumed Liabilities............................................................................5
2.2 Retained Liabilities...........................................................................6
ARTICLE III PURCHASE PRICE............................................................................6
3.1 Purchase Price.................................................................................6
3.2 Payment of Purchase Price......................................................................6
3.3 Purchase Price Adjustment......................................................................7
3.4 Purchase Price Allocation.....................................................................10
ARTICLE IV CLOSING AND DELIVERIES...................................................................10
4.1 Closing.......................................................................................10
4.2 Deliveries by Sellers.........................................................................10
4.3 Deliveries by Buyer...........................................................................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS................................................13
5.1 Organization and Standing.....................................................................13
5.2 Authority, Validity and Effect................................................................13
5.3 No Conflict; Required Filings and Consents....................................................13
5.4 Financial Statements..........................................................................14
5.5 Absence of Certain Changes....................................................................14
5.6 Acquired Assets...............................................................................15
5.7 Accounts Receivable...........................................................................15
5.8 Inventory.....................................................................................15
5.9 EMG Contracts.................................................................................15
5.10 Intellectual Property.........................................................................17
5.11 Real Property.................................................................................17
5.12 Legal Proceedings.............................................................................18
i Asset Purchase Agreement
5.13 Compliance with Laws..........................................................................18
5.14 Product Warranty..............................................................................18
5.15 Product Liability.............................................................................19
5.16 Employees.....................................................................................19
5.17 Taxes.........................................................................................19
5.18 Employee Benefit Plans........................................................................20
5.19 Environmental Matters.........................................................................20
5.20 Acquisition for Investment....................................................................21
5.21 Investment Experience.........................................................................22
5.22 Accredited Investor...........................................................................22
5.23 No General Solicitation.......................................................................22
5.24 No Brokers....................................................................................22
5.25 Permits.......................................................................................22
5.26 Necessary Assets..............................................................................22
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..................................................22
6.1 Organization and Standing.....................................................................23
6.2 Authority, Validity and Effect................................................................23
6.3 Capitalization; Title to Stock................................................................23
6.4 No Conflict; Required Filings and Consents....................................................23
6.5 SEC Filings...................................................................................24
6.6 Absence of Certain Changes....................................................................24
6.7 Legal Proceedings.............................................................................24
6.8 Compliance with Laws..........................................................................24
6.9 Exemption from Registration...................................................................25
6.10 Financial Ability.............................................................................25
6.11 No Brokers....................................................................................25
ARTICLE VII COVENANTS................................................................................25
7.1 Interim Operations of the EMG Business........................................................25
7.2 Preservation of Business......................................................................26
7.3 Reasonable Access; Confidentiality............................................................26
7.4 Antitrust Filings.............................................................................27
7.5 Other Actions.................................................................................28
7.6 Buyer Financing...............................................................................29
ii Asset Purchase Agreement
7.7 Notice of Developments........................................................................29
7.8 Publicity.....................................................................................29
7.9 Further Assurances; Subsequent Transfers......................................................29
7.10 Seller Share Certificates; Seller Note........................................................30
7.11 Prorations and Post-Closing Receipts..........................................................31
7.12 Financial Records.............................................................................32
7.13 Tax Matters...................................................................................32
7.14 Trademark Transition..........................................................................32
7.15 Sale of Retained Business Lines...............................................................33
7.16 Non-Competition...............................................................................33
7.17 Monthly Financial Statements..................................................................34
7.18 Title Insurance and Surveys...................................................................34
7.19 Litigation Support............................................................................35
7.20 Exclusivity...................................................................................35
7.21 Accounts Receivable...........................................................................35
7.22 Seller Designee...............................................................................36
7.23 Right of First Offer..........................................................................36
7.24 Information Required for Buyer's Registration Statement.......................................37
7.25 Tooling at Vendors............................................................................38
ARTICLE VIII ENVIRONMENTAL MATTERS....................................................................38
8.1 Site Assessment Environmental Liabilities.....................................................38
8.2 Environmental Remediation.....................................................................38
8.3 Environmental Records.........................................................................40
ARTICLE IX CONDITIONS TO CLOSING....................................................................41
9.1 Conditions to Obligations of Sellers and Buyer................................................41
9.2 Conditions to Obligation of Sellers...........................................................41
9.3 Conditions to Obligation of Buyer.............................................................42
ARTICLE X SURVIVAL AND INDEMNIFICATION.............................................................43
10.1 Survival Periods..............................................................................43
10.2 Indemnification...............................................................................44
10.3 Indemnification Amounts.......................................................................44
10.4 Claims........................................................................................45
10.5 Exclusive Remedy..............................................................................46
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10.6 Tax and Insurance.............................................................................47
ARTICLE XI EMPLOYEE BENEFIT MATTERS.................................................................47
11.1 Employment....................................................................................47
11.2 Compensation and Employee Benefits............................................................47
11.3 COBRA; Retiree Medical Benefits...............................................................49
11.4 WARN Act......................................................................................49
11.5 Non-Active Employees..........................................................................49
ARTICLE XII TERMINATION..............................................................................49
12.1 Termination...................................................................................49
12.2 Effect of Termination.........................................................................50
ARTICLE XIII MISCELLANEOUS............................................................................51
13.1 Expenses......................................................................................51
13.2 Successors and Assigns........................................................................51
13.3 Third Party Beneficiaries.....................................................................52
13.4 Notices.......................................................................................52
13.5 Complete Agreement............................................................................53
13.6 Captions; References..........................................................................53
13.7 Amendment.....................................................................................53
13.8 Waiver........................................................................................53
13.9 Governing Law.................................................................................53
13.10 Severability..................................................................................53
13.11 Updated Disclosure Schedules..................................................................53
13.12 Submission to Jurisdiction....................................................................54
13.13 Construction..................................................................................54
13.14 Counterparts..................................................................................55
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Exhibits
Exhibit A Form of Seller Note
Exhibit B-1 Form of Patent Assignment
Exhibit B-2 Form of Trademark Assignment
Exhibit B-3 Form of Copyright Assignment
Exhibit C-1 Form of Legal Opinion of Xxxx Law Department
Exhibit C-2 Form of Legal Opinion of Counsel to Sellers
Exhibit D Form of Legal Opinion of Counsel to Buyer
Exhibit E-1 EMG Financial Statements
Exhibit E-2 Pro Forma Balance Sheet
Exhibit F Form of Xxxx of Sale
Exhibit G Employees Party to Employee Retention Incentive Agreements
Exhibit H Environmental Reports
Exhibit I Form of Nashville Sub-Lease
Exhibit J Form of Nashville Sub-Sub-Lease
Exhibit K Form of Real Estate Lease Assignment
Exhibit L Replacement Leases
Exhibit M Form of Seller Lease
Exhibit N [Intentionally Omitted]
Exhibit O [Intentionally Omitted]
Exhibit P [Intentionally Omitted]
Exhibit Q [Intentionally Omitted]
Exhibit R Form of Share Ownership Agreement
Exhibit S Specified Accounting Principles
Exhibit T Subordination Agreement
Exhibit U Form of Xxxx-Arnley Supply Agreement
Exhibit V Form of Canadian Supply Agreement
Exhibit W Form of Buyer Transition Services Agreement
Exhibit X Form of Sellers Transition Services Agreement
Exhibit Y Form of IP License
Exhibit Z Form of Branford Access Agreement
Appendix
Appendix A Definitions
Schedules
Schedule 1.1(a) Real Estate Leases
Schedule 1.1(g) Certain Acquired Contracts
Schedule 1.1(i) Registered Acquired Intellectual Property
Schedule 1.1(n) Owned Real Property
Schedule 1.2(d) Certain Retained Contracts
Schedule 1.2(e) Certain Retained Business Line Assets
Schedule 1.2(h) Other Retained Assets
v Asset Purchase Agreement
Schedule 3.3(h) Accounts Receivables Selection Criteria
Schedule 3.4 Allocation Schedule
Schedule 4.2(p) Consents to be Delivered at Closing by Sellers
Schedule 4.3(q) Consents to be Delivered at Closing by Buyer
Schedule 5.3(a) Conflicts Exception
Schedule 5.3(b) Consents Exception
Schedule 5.5 Changes Since September 30, 2002
Schedule 5.6 Liens; Fixed Assets Exceptions
Schedule 5.8 Inventory Exceptions
Schedule 5.9(a) EMG Contracts
Schedule 5.9(c) EMG Contract Exceptions
Schedule 5.9(d) Powers of Attorney Exceptions
Schedule 5.10 Intellectual Property Exceptions
Schedule 5.11 Real Property Exceptions
Schedule 5.12 Litigation
Schedule 5.13 Compliance with Laws
Schedule 5.14 Product Warranty Exceptions; Terms and Conditions of Sale
Schedule 5.15 Product Liability Exceptions
Schedule 5.16 EMG Employees
Schedule 5.17 Pending Tax Claims
Schedule 5.18(a) Retiree Benefits
Schedule 5.19 Environmental Matters
Schedule 5.25 Non-Transferable Permits
Schedule 5.26 Necessary Assets Exception
Schedule 6.4(a) Conflicts
Schedule 6.4(b) Consents
Schedule 7.1 Interim Operations
Schedule 11.1 Certain Retained Employees
Schedule 11.2(b) Amendment to Reimbursement Agreement
Schedule 11.5 Certain Non-Active Employees
Schedule A-1 Branford Rental Properties Description
Schedule A-2 Permitted Liens
Schedule A-3 Title Commitments
vi Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of February 7,
2003, by and among XXXX CORPORATION, a Virginia corporation ("Dana"), AUTOMOTIVE
CONTROLS CORP., a Connecticut corporation, BWD AUTOMOTIVE CORPORATION, a
Delaware corporation, PACER INDUSTRIES, INC., a Missouri corporation, RISTANCE
CORPORATION, an Indiana corporation, ENGINE CONTROLS DISTRIBUTION SERVICES,
INC., a Delaware corporation (each a "Seller" and, collectively, "Sellers"), and
STANDARD MOTOR PRODUCTS, INC., a New York corporation ("Buyer"). Buyer and
Sellers are referred to collectively herein as the "Parties." Capitalized terms
are used herein with the meanings assigned those terms in Appendix A hereto.
RECITALS:
A. Sellers, by and through Dana's Engine Management Group, have been
engaged in the business of manufacturing and distributing certain aftermarket
parts for the passenger car and light vehicle markets in the United States.
B. Buyer desires to purchase from Sellers, upon the terms and subject to
the conditions set forth in this Agreement, substantially all of the assets,
properties, rights and interests of Sellers in the EMG Business (more
particularly identified herein as the Acquired Assets), and Sellers desire to
sell the Acquired Assets to Buyer in consideration of certain payments by Buyer
and the assumption by Buyer of certain liabilities and obligations of Sellers,
on the terms and conditions contained in this Agreement and the other agreements
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, Sellers and Buyer hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Sale and Transfer of Assets. At the Closing and effective as of the
Closing Date, Sellers shall, and shall cause their Affiliates to, sell, assign,
convey, transfer and deliver to Buyer, and Buyer shall purchase and acquire from
Sellers and such Affiliates, subject only to Permitted Liens, all right, title
and interest of Sellers and such Affiliates in and to all of the assets and
properties owned, used, occupied or held by or for the benefit of Sellers and
such Affiliates primarily in the operation of, or otherwise relating primarily
to, the EMG Business, excluding only the Retained Assets (the "Acquired
Assets"), which Acquired Assets include, by way of example and not limitation,
the following:
(a) Leased Real Property. All of Sellers' right, title and interest
in, to and under the leases listed on Schedule 1.1(a) (the "Real Estate Leases")
and, to the extent covered
Asset Purchase Agreement
by such leases, any and all buildings, structures, improvements and fixtures
located on the real property covered by such leases.
(b) Fixed Assets. All of Sellers' right, title and interest in the
machinery and equipment, furniture, automobiles, trucks, tractors, trailers,
tools, jigs, dies and other tangible personal property used primarily in the EMG
Business (the "Fixed Assets").
(c) Inventory. All inventories and supplies of raw materials,
work-in-process, finished goods, spare parts, supplies, storeroom contents and
other inventoried items owned or held by or on behalf of Sellers relating
primarily to the EMG Business.
(d) Lockbox. Sellers' lockbox number 93307 with Bank One, N.A., but
excluding the account number currently associated with such lockbox number (the
"Franklin Park Lockbox").
(e) Accounts Receivable. All trade accounts receivable of the EMG
Business and of the portion of the Retained Business Lines relating to fuel
pumps and water pumps, other than those retained under Section 1.2(b) (the
"Accounts Receivable").
(f) Prepaid Amounts. All deposits and prepayments, to the extent
related to the EMG Business.
(g) Contracts. All rights and incidents of interest of, and benefits
accruing to, Sellers in and to or arising out of all Contracts entered into by
any Seller, but only to the extent such Contracts relate to the EMG Business
(the "Acquired Contracts"), including the Contracts listed on Schedule 1.1(g).
(h) Purchase Orders. All open purchase and sales orders, but only to
the extent such Contracts relate to the EMG Business (the "Purchase Orders").
(i) Intellectual Property. All Intellectual Property owned or used by
a Seller in connection with the EMG Business (the "Acquired Intellectual
Property"), including the registered Intellectual Property and the trade names
and brand names listed on Schedule 1.1(i), and all rights thereunder, remedies
against infringement thereof, and rights to protection of interests therein.
(j) Permits. To the extent transferable under applicable Law, all
franchises, registrations, certificates, variances, permits, licenses,
authorizations, approvals and similar rights obtained, issued or granted to any
Seller by any Governmental Authority related primarily to the EMG Business (the
"Permits").
(k) Books and Records. All books and records (or true and correct
copies thereof), including all computerized books and records and all Contracts,
files, documents, lists, plats, correspondence, architectural plans, drawings
and specifications, invoices, forms, customer records, promotional and
advertising materials, technical data, operating records, operating manuals,
instructional documents, employee files (to the extent permitted under
applicable Law) and other printed or written materials, in each case, to the
extent related to the EMG Business.
2 Asset Purchase Agreement
(l) Warranties. All rights under or pursuant to all warranties,
representations and guarantees, whether express or implied, made by suppliers,
manufacturers, contractors and other third parties with respect to any of the
Acquired Assets.
(m) Claims and Causes of Action. All claims, defenses, causes of
action, choses in action, rights of recovery, rights of set off, and rights of
recoupment related to the EMG Business or the Acquired Assets or Assumed
Liabilities, excluding, however, any claims or rights under the insurance
policies described in Section 1.2(i) and excluding any of the foregoing that
relate to any Retained Assets or Retained Liabilities.
(n) Real Property. All of Sellers' right, title and interest in and to
the real property described on Schedule 1.1(n), and all buildings, structures,
improvements, and fixtures located thereon (the "Owned Real Property"), except
as otherwise provided in Section 3.3(b).
(o) Other Intangible Assets. The EMG Business as carried on and
conducted by Sellers as a going concern, including any and all goodwill and
similar intangible assets associated therewith and all customer lists, supplier
lists, catalogues, sales brochures and other marketing data.
1.2 Retained Assets. Sellers shall retain the following assets only
(collectively, the "Retained Assets") and Buyer will in no way be construed to
have purchased or acquired (or to be obligated to purchase or to acquire) any
interest whatsoever in any such Retained Assets:
(a) Cash and Cash Equivalents. Any cash, cash equivalents, marketable
securities, deposit accounts, payroll accounts, lockboxes (other than the
Franklin Park Lockbox) and investment accounts of Sellers.
(b) Retained Accounts Receivable. All trade accounts receivable owed
to a Seller by any other Seller or by any Affiliate of any Seller and all trade
accounts receivable of the EMG Business that have been sold to Xxxx Asset
Funding L.L.C. on or prior to December 31, 2002.
(c) Retained Real Property. All right, title and interest of any
Seller in (i) any Owned Real Property retained by Sellers and leased to Buyer
pursuant to Section 3.3(b) and (ii) the Branford Rental Properties.
(d) Contracts. All Contracts of Sellers other than those described in
Sections 1.1(a), 1.1(g) and 1.1(h), including those Contracts listed on Schedule
1.2(d).
(e) Retained Business Lines. All right, title and interests of any
Seller in and to the Retained Business Lines and all buildings, land, inventory,
machinery, equipment and other assets used primarily in the Retained Business
Lines, including, without limitation, those listed on Schedule1.2(e).
(f) Former EMG Facilities. All right, title and interests of any
Seller in the buildings, land, machinery and equipment and other personal
property located at the Former EMG Facilities.
3 Asset Purchase Agreement
(g) Other Assets. All assets not used primarily in the EMG Business
and all assets of Sellers exclusively used in businesses of Sellers other than
the EMG Business, including all rights (beyond those provided to Buyer under
Section 7.14) to the Xxxx name or any derivation thereof.
(h) Other Retained Assets. The assets identified on Schedule 1.2(h).
(i) Insurance Policies. All insurance policies of Sellers and their
Affiliates and all rights, including any prepayments or deposits, thereunder.
(j) Employee Benefits Plans. All Seller Benefit Arrangements and all
Seller ERISA Plans.
(k) Retained Records. All books, records and other data that relate to
the Retained Assets or the Retained Liabilities and all books, records and other
data that Sellers are required by Law to retain.
(l) Tax Refunds. All rights or claims to refunds or credits relating
to Taxes paid by any Sellers.
1.3 Nonassignable Assets; Beneficial Ownership.
(a) Notwithstanding any provision in this Agreement to the contrary,
this Article I does not constitute an agreement to assign, transfer or convey
any of the Acquired Assets that are not capable of being validly sold, assigned,
transferred or conveyed without the Consent of any third party and which Consent
is not obtained on or prior to the Closing Date (a "Nonassignable Asset").
(b) Subject to Section 7.9(b) hereof, to the extent that any
conveyances, assignments, transfers and deliveries contemplated by this
Agreement have not occurred as of the Closing Date, Sellers and Buyer shall
cooperate to effect such action as promptly thereafter as is practicable.
Notwithstanding the foregoing, neither Sellers nor Buyer will be liable in any
manner to any Person who is not a party to this Agreement for any failure of any
of the transfers contemplated by this Agreement to be consummated on or
subsequent to the Closing Date. Whether or not all of the Acquired Assets or the
Assumed Liabilities have been legally transferred to or assumed by Buyer as of
the Closing Date, Buyer will have, and will be deemed to have acquired, complete
and sole beneficial ownership over all of the Acquired Assets, including any
Nonassignable Assets, together with all of Sellers' rights, powers and
privileges incident thereto, and Buyer will be deemed to have assumed in
accordance with the terms of this Agreement all of the Assumed Liabilities and
all of Sellers' Liabilities, duties, obligations and responsibilities incident
thereto.
(c) Nothing in this Section 1.3 shall be construed to waive or modify
any right of Buyer to require a Consent set forth on Schedule 4.2(p) as a
condition to Buyer's obligation to consummate the transactions contemplated by
this Agreement.
4 Asset Purchase Agreement
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1 Assumed Liabilities. At the Closing and effective as of the Closing
Date, on and subject to the terms and conditions of this Agreement, Buyer shall
assume and thereafter perform, pay and discharge in accordance with their terms
only the following Liabilities of Sellers relating to the EMG Business
(collectively, the "Assumed Liabilities"):
(a) Final Net Book Value Statement. All Liabilities reflected on the
Final Net Book Value Statement.
(b) Real Estate Leases. All Liabilities arising under the Real Estate
Leases.
(c)Trade Payables. All Liabilities for trade accounts payable of the
EMG Business and all Liabilities for trade accounts payable, outstanding on the
Closing Date, of the portion of the Retained Business Lines relating to fuel
pumps and water pumps, to the extent such trade accounts payable are reflected
on the Final Net Book Value Statement (the "Trade Payables").
(d) Contracts. All Liabilities arising under the Purchase Orders and
the Acquired Contracts.
(e) Employment Liabilities. All Liabilities arising out of the
employment of the Transferred Employees (including accrued compensation and
vacation) except only those Liabilities to be retained by Sellers or paid by
Sellers pursuant to Article XI of this Agreement.
(f) Workers' Compensation and Other Employee Claims. (i) All
Liabilities resulting from workers' compensation claims asserted by any
Transferred Employee relating to accidents or incidents occurring on or after
the Closing Date, including any occupational disease losses and any recurrences
(as distinct from reaggravations) of any prior injuries, (or if such accident or
incident is of a recurring or continuing nature that commenced prior to the
Closing Date, a pro rata portion of such Liability based on the ratio of the
number of days that such Transferred Employee was employed by Buyer while such
accident or incident continued to the total number of days that such accident or
incident continued), (ii) all Liabilities for claims (other than those arising
from such workers' compensation claims) asserted by any Transferred Employee on
or after the Closing Date and relating to an event or action that occurs on or
after the Closing Date (or if such claim is made prior to December 31, 2004 and
such event or action is of a recurring or continuing nature that commenced prior
to the Closing Date, a pro rata portion of such Liability based on the ratio of
the number of days that such Transferred Employee was employed by Buyer while
such event or action continued to the total number of days that such event or
action continued), and (iii) all Liabilities for claims (other than those
arising from workers' compensation claims) asserted by any Transferred Employee
after December 31, 2004 and relating to an event or action that occurred prior
to the Closing Date.
(g) Warranties and Sales Returns. All Liabilities for product
warranties, product recalls, refunds or sales returns, repair or replacement and
all performance guarantees
5 Asset Purchase Agreement
and similar obligations, related to products delivered, manufactured or sold or
services performed by the EMG Business regardless of whether such Liabilities
relate to periods or events occurring before or after the Closing Date.
(h) Product Liability. All Liabilities for personal or bodily injury
(including death) or property damage relating to any products delivered,
manufactured or sold or services performed by the EMG Business, but only to the
extent that such injury, death or damage occurs on or after the Closing Date.
2.2 Retained Liabilities. All Liabilities of Sellers of any nature, whether
known or unknown, contingent or fixed, that are not Assumed Liabilities are
"Retained Liabilities," provided, however, that "Retained Liabilities" shall not
include any Liabilities arising under any Environmental, Health or Safety
Requirements or with respect to Environmental Claims or Environmental Costs
arising from Environmental Conditions at the Real Property, irrespective of
whether such Liability attaches or accrues to Buyer or Sellers in the first
instance, other than: (i) any Liability resulting from the transport, disposal
or treatment, or the arrangement for transport, disposal or treatment, prior to
the Closing Date, to or at any locations other than the Real Property, of any
waste or substance (including any hazardous waste, Hazardous Substance or
petroleum product); (ii) any off-site Liability resulting from a private
Third-Party claim for personal injury, property damage, diminution and/or
cleanup costs in connection with any Hazardous Substances which are identified
as emanating from the Real Property during the Buyer's Further Investigations
and/or Sellers' Further Investigations or during Sellers' remediation; (iii)
Liability arising from a private Third-Party claim for personal injury to the
extent arising from exposure or alleged exposure to Hazardous Substances at the
Real Property prior to the Closing Date, except workers compensation and other
employee claims assumed by Buyer pursuant to Section 2.1(f) above; (iv) the Site
Assessment Environmental Liabilities as defined under Section 8.1; (v) all
Liabilities for those matters identified on Schedule 5.19; or (vi) any penalties
or fines to the extent arising from Sellers' violations of any affirmative
obligation or duty pursuant to Environmental, Health and Safety Requirements.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. In full consideration for the transfer of the Acquired
Assets, Buyer shall pay to Sellers an aggregate amount equal to the lesser of
the Closing Net Book Value or $125,000,000, except as otherwise provided in
Section 3.3(h) (the "Purchase Price"), and shall assume the Assumed Liabilities.
3.2 Payment of Purchase Price.
(a) On the Closing Date, Buyer shall pay the Estimated Purchase Price
(as defined in Section 3.3(b)) to Xxxx, as agent for Sellers, as follows:
6 Asset Purchase Agreement
(i) Seventy-five percent (75%) of the Estimated Purchase Price in
cash by wire transfer of immediately available funds to an account
designated by Xxxx prior to the Closing;
(ii) the number of fully paid and non-assessable shares of
Buyer's common stock, $2.00 par value (the "Common Shares"), obtained by
dividing the amount equal to twelve and one-half percent (12.5%) of the
Estimated Purchase Price by the average closing price of the Common Shares
on the New York Stock Exchange during the ten trading days immediately
preceding the Closing Date (the "Price Per Share"); the Common Shares to be
issued pursuant to this Section 3.2(a)(ii) are herein referred to as the
"Seller Shares," and the Seller Shares shall be issued to the Seller
Designee and held by it pursuant to the terms of the Share Ownership
Agreement; and
(iii) a promissory note, payable to the Seller Designee and
having an original principal amount equal to twelve and one-half percent
(12.5%) of the Estimated Purchase Price, substantially in the form of
Exhibit A hereto (the "Seller Note").
(b) To the extent that the computation provided for in Section
3.2(a)(ii) would result in the issuance to the Seller Designee of fractional
shares, the number of Seller Shares will be reduced to the next lowest whole
number and the cash payment to be made by Buyer under Section 3.2(a)(i) will be
increased by an amount equal to the Price Per Share multiplied by such
fractional interest.
3.3 Purchase Price Adjustment.
(a) As used herein, the term "Closing Net Book Value" means the net
book value of the Acquired Assets less the net book value of the Assumed
Liabilities as of the close of business on the Closing Date and as such values
are determined in accordance with the Specified Accounting Principles and
reflected in the Final Net Book Value Statement.
(b) On the Business Day immediately preceding the Closing Date,
Sellers shall prepare and deliver to Buyer an Estimated Closing Net Book Value
Statement determined using the most recent financial statements delivered to
Buyer pursuant to Section 7.17 (the "Estimated Closing Net Book Value
Statement"). The net book value of the Acquired Assets less the net book value
of the Assumed Liabilities as reflected on the Estimated Closing Net Book Value
Statement shall be the "Estimated Closing Net Book Value." Buyer shall pay Xxxx,
as agent for Sellers, an aggregate amount equal to the lesser of $125,000,000 or
the Estimated Closing Net Book Value (the "Estimated Purchase Price"), allocated
among cash, the Seller Shares and the Seller Note in accordance with the
percentages set forth in Section 3.2(a). If the Estimated Closing Net Book Value
as determined from the Estimated Closing Net Book Value Statement delivered by
Sellers would exceed $125,000,000 (such excess being referred to below as the
"Estimated NBV Excess"), then there shall be excluded from the Acquired Assets,
and included within the Retained Assets, Owned Real Property selected by Xxxx as
agent for the Sellers and having a net book value (determined on the basis of
the Estimated Closing Net Book Value Statement) that equals as closely as
possible (but is not in any event less than) the Estimated NBV Excess. Such
excluded Owned Real Property shall be leased by the applicable Seller pursuant
to a Seller Lease. In such event, the Estimated Closing
7 Asset Purchase Agreement
Net Book Value Statement and the Specified Accounting Principles shall be
revised to give effect to the exclusion of such Owned Real Property from the
Acquired Assets, and the Estimated Purchase Price shall be determined on the
basis of such revised Estimated Closing Net Book Value Statement.
(c) Within sixty days after the Closing Date, Sellers shall prepare
and deliver to Buyer a statement of the Closing Net Book Value (the "Closing Net
Book Value Statement"). The Closing Net Book Value Statement will be prepared in
accordance with the Specified Accounting Principles.
(d) Buyer shall allow Sellers and Sellers' independent accountants
("Sellers' Accountants") access during normal business hours to the business,
books, records and personnel of the EMG Business to the extent necessary for the
preparation of the Closing Net Book Value Statement, and Buyer shall cooperate
and direct its personnel and its independent accountants ("Buyer's Accountants")
to cooperate with Sellers and Sellers' Accountants in all reasonable respects to
facilitate preparation and delivery of the Closing Net Book Value Statement and
in connection with the resolution of any disputes with respect thereto and the
determination of the Final Net Book Value Statement. Buyer and its
representatives, including Buyer's Accountants, will be entitled to review all
work papers, if any, of Sellers' Accountants prepared subsequent to the date
hereof and related to the Closing Net Book Value Statement to the extent
necessary for Buyer to review the Closing Net Book Value Statement and to
resolve any disputes concerning the same.
(e) The Closing Net Book Value Statement delivered by Sellers to Buyer
will be the Final Net Book Value Statement and will be conclusive and binding on
the Parties unless Buyer, within the thirty-day period after the delivery to
Buyer of the Closing Net Book Value Statement, notifies Sellers in writing that
Buyer disputes any of the amounts set forth therein, specifying the nature of
each dispute and the basis therefor (the "Dispute Notice"); provided, however,
that Buyer may deliver a Dispute Notice to Sellers only if Buyer reasonably
believes that the Closing Net Book Value Statement contains mathematical errors
or has not been prepared in accordance with the Specified Accounting Principles.
Sellers and its representatives, including Sellers' Accountants, will be
entitled to review all work papers, if any, of Buyer's Accountants prepared
subsequent to the date hereof and related to the Closing Net Book Value
Statement to the extent necessary for Seller to resolve any disputes concerning
the Closing Net Book Value Statement. Failure by Buyer to dispute the amounts
reflected in the Closing Net Book Value Statement within such thirty-day period
will be deemed by Buyer's acceptance of the Closing Net Book Value Statement as
the Final Net Book Value Statement. The Parties shall attempt in good faith to
reach agreement resolving all of the disputes set forth in the Dispute Notice
within thirty days after the Dispute Notice is delivered by Buyer to Sellers, in
which event the Closing Net Book Value Statement, as amended, if necessary, to
reflect the resolution of all such disputes, will be the Final Net Book Value
Statement and will be conclusive and binding on the Parties. If the Parties are
unable to resolve any or all of such disputes within the aforesaid thirty-day
period, the Parties will, promptly after the expiration of such time period,
submit for resolution all unresolved disputes to a mutually acceptable
independent accounting firm (the "Designated Accounting Arbitrator") as an
arbiter for resolution. Promptly, but no later than thirty days after its
acceptance of its appointment as Designated Accounting Arbitrator, the
Designated
8 Asset Purchase Agreement
Accounting Arbitrator shall determine, based solely on presentation by Buyer and
Sellers and not by independent review, those items in dispute on the Closing Net
Book Value Statement and shall render a written report to Buyer and Sellers as
to the resolution of each dispute and the resulting calculation of the Final Net
Book Value Statement and the Closing Net Book Value. In resolving any disputed
item, the Designated Accounting Arbitrator may not assign a value to such item
greater than the greatest value for such item claimed by either Party or less
than the smallest value for such item claimed by either Party. The Designated
Accounting Arbitrator will have exclusive jurisdiction over, and resort to the
Designated Accounting Arbitrator as provided in this Section 3.3(e) will be the
sole recourse and remedy of, the Parties against one another or any other Person
(including Sellers' Accountants or Buyer's Accountants) with respect to any
disputes arising out of or relating to the Closing Net Book Value Statement
and/or the Final Net Book Value Statement. The Designated Accounting
Arbitrator's determination will be conclusive and binding on the Parties and
will be enforceable in a court of law.
(f) Sellers shall pay the fees and expenses of Sellers' Accountants,
and Buyer shall pay the fees and expenses of Buyer's Accountants. Buyer and
Sellers shall share equally the fees and expenses of the Designated Accounting
Arbitrator.
(g) As used herein, the term "Final Net Book Value Statement" means
(i) the Closing Net Book Value Statement if no Dispute Notice is given by Buyer
within the time period set forth in Section 3.3(e); (ii) if the Dispute Notice
is timely given and all of the disputed items are resolved by mutual agreement
of the Parties, the Closing Net Book Value Statement, as amended, if necessary,
to reflect such resolution of all disputes; or (iii) if any or all of the
disputed items are submitted to the Designated Accounting Arbitrator for
resolution, the Closing Net Book Value Statement, as amended, if necessary, to
reflect any resolution of any disputes by mutual agreement of the Parties and
the resolution of all other disputes by the Designated Accounting Arbitrator.
(h) If the Closing Net Book Value exceeds $125,000,000, then Buyer
shall, at its option, (i) pay to Sellers the amount of such excess in cash or
(ii) assign to the Seller Designee accounts receivable of the EMG Business,
selected on the basis of the criteria set forth on Schedule 3.3(h), in an
aggregate amount which equals the amount of such excess. If the Purchase Price
is less than the Estimated Purchase Price, then: effective as of the Closing
Date, such difference shall be applied to reduce the amount of the cash, the
number of Seller Shares, and the principal amount of the Seller Note that were
paid or delivered on the Closing Date, such reduction to be made in accordance
with the percentages in Section 3.2(a); and in furtherance thereof, Sellers
shall pay to Buyer the amount of any reduction in the cash component of the
Purchase Price (plus interest thereon at a rate of 5% per annum from the Closing
Date) and shall transfer to Buyer the applicable number of Seller Shares, and
Buyer shall issue to the Seller Designee a replacement Seller Note for the
reduced principal amount. Alternatively, if the Purchase Price is greater than
the Estimated Purchase Price, then: effective as of the Closing Date, such
difference shall be applied to increase the amount of the cash, the number of
Seller Shares and the principal amount of the Seller Note, such increase to be
made in accordance with the percentages set forth in Section 3.2(a); and in
furtherance thereof, Buyer shall pay to the Seller Designee the amount of any
increase in the cash component of the Purchase Price (plus interest thereon at a
rate of 5% per annum from the Closing Date) and
9 Asset Purchase Agreement
shall issue to Seller Designee the applicable number of Seller Shares, and Buyer
shall issue to the Seller Designee a replacement Seller Note for the increased
principal amount. Seller and Buyer shall make payment, shall transfer or issue
such Seller Shares and shall issue such replacement Seller Note within ten (10)
Business Days after the date on which the Final Net Book Value Statement is
determined. Any such payment of cash shall be made by wire transfer of
immediately available funds to an account designated by the payee. To the extent
that the adjustments provided for in the foregoing sentences would result in the
transfer or issuance of fractional shares, the number of Seller Shares so
transferred or issued will be reduced to the next lowest whole number and the
Party transferring or issuing such shares shall pay the other Party an amount in
cash equal to the Price Per Share multiplied by such fractional interest. Upon
receipt from Buyer of a replacement promissory note providing for any such
revised principal amount, the Seller Designee shall promptly return the original
Seller Note.
3.4 Purchase Price Allocation. The Purchase Price, plus the aggregate
amount of the Assumed Liabilities included in the amount realized on the sale of
Acquired Assets for federal income tax purposes, will be allocated among the
Acquired Assets and the non-competition agreement described in Section 7.16 in
accordance with the allocation schedule attached hereto as Schedule 3.4. Such
schedule shall be adjusted as the parties agree to reflect any adjustment
pursuant to Section 3.3(h) to the Purchase Price or to the amount of Assumed
Liabilities included in the amount realized on the sale of the Acquired Assets
for federal income tax purposes. Unless otherwise required under applicable Law,
Buyer and Sellers shall report the purchase and sale of the Acquired Assets on
all Tax Returns, including timely filed Internal Revenue Service Forms 8594, in
accordance with the allocation shown on such schedule, as adjusted. All
allocations made pursuant to this Section 3.4 will be binding upon the Parties
and their respective successors and assigns. Neither Buyer nor Seller shall take
any position (whether in returns, audits, or otherwise) which is inconsistent
with the allocation shown on such schedule.
ARTICLE IV
CLOSING AND DELIVERIES
4.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") is to take place at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. local time on the
first Business Day following the satisfaction or waiver of each of the
conditions set forth in Article IX (other than those conditions that are to be
satisfied at the Closing), or on such other date or at such other time and place
or in such other manner as the Parties agree in writing (the "Closing Date").
All proceedings to be taken and all documents to be executed and delivered by
all Parties at the Closing will be deemed to have been taken and executed
simultaneously and no proceedings will be deemed to have been taken nor
documents executed or delivered until all have been taken, executed and
delivered.
4.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or cause
to be delivered to Buyer the following items:
(a) the Nashville Sub-Lease, duly executed by Xxxx;
10 Asset Purchase Agreement
(b) the Nashville Sub-Sub-Lease, duly executed by the Seller party
thereto;
(c) the Real Estate Conveyances, each duly executed by the Seller
party thereto;
(d) the Seller Leases, if any, each duly executed by the Seller party
thereto;
(e) the Real Estate Lease Assignments, each duly executed by the
Seller party thereto;
(f) the Xxxx of Sale, duly executed by each Seller;
(g) such assignments, substantially in the forms of Exhibits X-0, X-0
and B-3 hereto, as are necessary to effectuate the transfer of the Acquired
Intellectual Property listed on Schedule 1.1(i) (the "IP Assignments"), each
duly executed by the applicable Seller;
(h) the IP Licenses, duly executed by the applicable Sellers;
(i) the Branford Access Agreement, duly executed by the applicable
Seller;
(j) the Share Ownership Agreement, duly executed by the Seller
Designee;
(k) the Subordination Agreement, duly executed by Xxxx;
(l) subject to Section 7.15, the Supply Agreements, each duly executed
by the applicable Seller;
(m) the Replacement Leases, each duly executed by the Seller party
thereto and the lessor party thereto;
(n) the Transition Services Agreements, each duly executed by Xxxx;
(o) such other documents, instruments of sale, transfer, conveyance
and assignment as Buyer shall reasonably require to vest Sellers' right, title
and interest in and to the Acquired Assets in Buyer;
(p) evidence satisfactory to Buyer that Sellers have obtained the
Consents listed on Schedule 4.2(p);
(q) copies of the resolutions of the Board of Directors of each Seller
authorizing this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby, certified by the secretary or other appropriate
officer of such Seller;
(r) legal opinions from Dana's law department and Dana's outside
counsel substantially in the form of Exhibits C-1 and C-2; and
(s) the certificate from Sellers referred to in Section 9.3(c).
11 Asset Purchase Agreement
4.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be
delivered to Sellers the following items:
(a) one or more share certificates evidencing the Seller Shares, duly
signed by such officers of Buyer as are required by its By-Laws to sign the
same;
(b) the Seller Note, duly executed by Buyer;
(c) the Nashville Sub-Lease, duly executed by Buyer;
(d) the Nashville Sub-Sub-Lease, duly executed by Buyer;
(e) the Seller Leases, if any, each duly executed by Buyer;
(f) the Real Estate Lease Assignments, each duly executed by Buyer;
(g) the Xxxx of Sale, duly executed by Buyer;
(h) the IP Assignments, each duly executed by Buyer;
(i) the IP Licenses, duly executed by Buyer;
(j) the Branford Access Agreement, duly executed by Buyer;
(k) the Share Ownership Agreement, duly executed by Buyer;
(l) the Subordination Agreement, duly executed by Buyer and Buyer's
Lender;
(m) subject to Section 7.15, the Supply Agreements, each duly executed
by Buyer;
(n) the Replacement Leases, each duly executed by Buyer;
(o) the Transition Services Agreements, each duly executed by Buyer;
(p) such other documents and instruments as Sellers shall reasonably
require to evidence the assumption of the Assumed Liabilities by Buyer;
(q) evidence satisfactory to Sellers that Buyer has obtained the
Consents listed on Schedule 4.3(q);
(r) copies of the resolutions of the Board of Directors of Buyer
authorizing this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby, certified by the secretary or other appropriate
officer of Buyer;
(s) a legal opinion from Buyer's outside counsel substantially in the
form of Exhibit D, and
12 Asset Purchase Agreement
(t) the certificate from Buyer referred to in Section 9.2(c).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller jointly and severally represents and warrants to Buyer as
follows:
5.1 Organization and Standing. Each Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation. Each Seller is duly qualified to do business and in good
standing in the states of the United States in which the character of the
properties owned or leased by it and used by it in the EMG Business or in which
the conduct of the EMG Business requires it to be so qualified, except where the
failure to be so qualified or to be in good standing would not reasonably be
expected to have a Material Adverse Effect on the EMG Business.
5.2 Authority, Validity and Effect. Each Seller has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Each Seller's execution, delivery
and performance of its obligations under this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all required corporate action.
This Agreement has been, and each of the Ancillary Agreements will be as of the
Closing Date, duly executed and delivered by each Seller party hereto or
thereto. This Agreement is, and each Ancillary Agreement will, when so executed
and delivered, be, the legal, valid and binding obligation of each Seller party
hereto or thereto, enforceable against it in accordance with the terms hereof or
thereof, except as limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally from time to time in effect and (ii) the
availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity).
5.3 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery by any Seller of this Agreement
or any of the Ancillary Agreements, nor the consummation by such Seller of the
transactions contemplated herein or therein, nor compliance by such Seller with
any of the provisions hereof or thereof, will, except as set forth on Schedule
5.3(a), (i) conflict with or result in a breach of any provision of such
Seller's Certificate of Incorporation or By-Laws (or equivalent organizational
documents); (ii) conflict with, constitute or result in the breach of any term,
condition or provision of, or constitute a default under, result in or give rise
to any right of termination, cancellation or acceleration with respect to, or
result in the creation or imposition of any Lien upon any of the Acquired Assets
pursuant to, or require any notice under, any note, bond, mortgage, indenture,
Contract or other instrument or obligation to which any Seller is a party or by
which the EMG Business is subject, and that, in any such event, would reasonably
be expected to have a Material Adverse Effect on the EMG Business; or (iii)
subject to receipt of the requisite approvals referred to in Section 5.3(b),
violate any Order or Law to which any of the Sellers, the EMG Business or the
Acquired Assets are subject.
13 Asset Purchase Agreement
(b) Other than (i) those required under the HSR Act, (ii) those set
forth on Schedule 5.3(b), and (iii) where the failure to give such notice, make
such filing or receive such Consent would not reasonably be expected to have a
Material Adverse Effect on the EMG Business, no notice to, filing with,
authorization of, exemption by or Consent of any Person is necessary for the
consummation by any Seller of the transactions contemplated in this Agreement
and the Ancillary Agreements.
5.4 Financial Statements.
(a) Attached hereto as Exhibit E-1 are the following financial
statements with respect to the EMG Business and the Retained Business Lines
relating to fuel pumps and water pumps (collectively, the "EMG Financial
Statements"): (i) audited balance sheets as of December 31, 2001 and September
30, 2002 and (ii) results of operations and cash flows for the years ended
December 31, 2000 and December 31, 2001 and for the nine-month period ended
September 30, 2002. Each of the EMG Financial Statements presents fairly, in all
material respects, the financial position of the EMG Business and the Retained
Business Lines relating to fuel pumps and water pumps as of the respective date
thereof, and the results of operations of the EMG Business and the Retained
Business Lines relating to fuel pumps and water pumps for the respective period,
all in conformity with GAAP consistently applied during the periods involved as
described in Note 1 to the EMG Financial Statements.
(b) Attached hereto as Exhibit E-2 is a pro forma unaudited balance
sheet as of September 30, 2002 representing the Acquired Assets and the Assumed
Liabilities (the "Pro Forma Balance Sheet"), along with a reconciliation to the
audited balance sheet in the EMG Financial Statements as of the same date. The
Pro Forma Balance Sheet presents the financial position of the EMG Business and
the Retained Business Lines relating to fuel pumps and water pumps in accordance
with the Specified Accounting Principles. The Final Net Book Value Statement
will accurately present all Liabilities for trade accounts payable of the EMG
Business and the Retained Business Lines relating to fuel pumps and water pumps
in accordance with the Specified Accounting Principles.
5.5 Absence of Certain Changes. Except as set forth on Schedule 5.5, since
September 30, 2002, there has not been any Material Adverse Effect on the EMG
Business or the Acquired Assets. Without limiting the generality of the
foregoing, since September 30, 2002, except as described on Schedule 5.5:
(a) no Seller has sold, leased, transferred, or assigned any of the
material assets, tangible or intangible, of the EMG Business other than for fair
value in the Ordinary Course of Business;
(b) no Seller has entered into any Contract or series of related
Contracts with respect to the EMG Business outside the Ordinary Course of
Business;
(c) no party (including a Seller) has accelerated, terminated,
modified or cancelled any Contract with respect to the EMG Business involving
more than $75,000;
(d) no Seller has made any capital expenditure (or series of related
capital expenditures) related to the EMG Business involving more than $75,000;
14 Asset Purchase Agreement
(e) no Seller has made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other Person (or series of
related capital investments, loans or acquisitions) with respect to the EMG
Business outside the Ordinary Course of Business;
(f) no Seller has cancelled, compromised, waived or released any right
or claim (or series of related rights or claims) related to the EMG Business
outside the Ordinary Course of Business;
(g) no Seller has experienced any damage, destruction or loss (whether
or not covered by insurance) to any of its material property used in the EMG
Business; and
(h) no Seller has committed to any of the foregoing.
5.6 Acquired Assets. Except as disclosed on Schedule 5.6:
(a) Sellers have title to, and the unqualified right to use and
transfer to Buyer, the Acquired Assets, free and clear of all Liens other than
Permitted Liens; and
(b) none of the Fixed Assets are subject to, or held under, any
security, conditional sales or other title retention Contract or will be located
on the Closing Date at any location in which Buyer will not be conveyed an
interest under this Agreement or one of the Ancillary Agreements.
5.7 Accounts Receivable. The Accounts Receivable represent sales actually
made in the Ordinary Course of Business. The EMG Financial Statements contain,
as of their respective dates adequate reserves for uncollectible accounts in
accordance with the Specified Accounting Principles.
5.8 Inventory. Except as set forth on Schedule 5.8, and except to the
extent of the reserves provided for on the Final Net Book Value Statement, all
inventories of goods held by Sellers is of merchantable quality and usable or
salable in the ordinary course of the EMG Business.
5.9 EMG Contracts.
(a) Schedule 5.9(a) sets forth a list, as of the date hereof, of the
following Contracts regarding the EMG Business (the "EMG Contracts"):
(i) Each Contract (or group of related Contracts) to which a
Seller is a party requiring payment in excess of $75,000 per year, except
those that are terminable at the option of a Seller upon thirty (30) days'
notice or less;
(ii) Each Contract (including each Purchase Order) covering the
lease, purchase or service of tangible personal property to which a Seller
is a party requiring payments in excess of $75,000 per year, except those
that are terminable at the option of a Seller upon thirty (30) days' notice
or less;
15 Asset Purchase Agreement
(iii) Each Contract concerning a partnership or joint venture;
(iv) Each Contract under which a Seller has created, incurred,
assumed or guaranteed Indebtedness in excess of $75,000 or under which it
has imposed a Lien (other than a Permitted Lien) on any of the Acquired
Assets;
(v) Each management, consulting, employment, severance or similar
Contract requiring the payment of compensation to a Transferred Employee in
excess of $75,000 annually to which a Seller or any of its Affiliates is a
party;
(vi) Each Contract under which any amount has been advanced or
loaned to any employees of the EMG Business outside the Ordinary Course of
Business;
(vii) Each collective bargaining agreement;
(viii) Each Contract with any manufacturer's representative,
distributor or sales agent;
(ix) Each Contract concerning noncompetition or confidentiality;
(x) Each Real Estate Lease;
(xi) Each Contract between one Seller and another Seller or any
of the Sellers' Affiliates; and
(xii) Each license, sublicense, agreement, or other permission
which any of the Sellers has granted to any third party with respect to any
of the Acquired Intellectual Property.
(b) Prior to the date hereof, except as otherwise provided in Section
7.3(a), Sellers have delivered to Buyer a correct and complete copy of each of
the EMG Contracts (or described to Buyer in writing the material terms of any
EMG Contract that is not written).
(c) Each of the EMG Contracts is valid, binding and enforceable in
accordance with its terms, except as limited by any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether or not considered in a court of law or equity) and is in full force and
effect. Except as set forth on Schedule 5.9(c), the transactions contemplated by
this Agreement will not give rise to any material breach of, or right of
acceleration or termination under, any EMG Contract. To Sellers' Knowledge,
there are no existing material defaults under any of the EMG Contracts by any
Seller or any other party thereto, and no Seller has received notice of the
occurrence of any event that (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a material
default under any of the EMG Contracts by any party thereto. To Sellers'
Knowledge, except as disclosed to Buyer pursuant to the last sentence of Section
7.2, no party to an EMG Contract or customer of the EMG Business (other than a
Seller) has indicated in writing, or orally with respect to any customer
Contracts or accounts, an intention to terminate such EMG Contract or customer
relationship or, except in accordance with the terms of such
16 Asset Purchase Agreement
EMG Contract, to cease or materially reduce the purchase of products or services
from any Seller thereunder.
(d) Except as set forth on Schedule 5.9(d), there are no outstanding
powers of attorney executed on behalf of any Seller related to the EMG Business.
5.10 Intellectual Property.
(a) Schedule 1.1(i) sets forth, with the title, filing date, issue
date, registration or application indicated, as applicable, a complete and
correct list of (i) all Acquired Intellectual Property that is registered or
pending registration anywhere in the world, including all: (A) patents and
patent applications, (B) trademark registrations and applications therefor, (C)
internet domain names, and (D) copyright registrations and applications
therefore; and (ii) all other trade names, brand names and logos not described
under clause (i)(B) of this sentence used in the EMG Business.
(b) Except as set forth on Schedule 5.10, there are no Actions
instituted, commenced or pending or, to Sellers' Knowledge, threatened in
writing, that (i) challenge the rights of any Seller regarding the exclusive
ownership or scope of any of the Acquired Intellectual Property or is otherwise
adverse to the use, registration, right to use, validity or enforceability of
the Acquired Intellectual Property or (ii) asserts that the operation of the EMG
Business as conducted by Sellers is or was infringing or otherwise in violation
of any Intellectual Property of any other Person. To Sellers' Knowledge, no
Person is infringing or otherwise in violation of any of the Acquired
Intellectual Property.
(c) Schedule 1.1(i) sets forth each item of Acquired Intellectual
Property that any Seller uses pursuant to license, sublicense, agreement, or
permission. The Sellers have delivered to the Buyer correct and complete copies
of all such licenses, sublicenses, agreements, or permissions, or have described
to the Buyer the material terms of any such item that is not written. No breach
or default by any Seller or, to Sellers' Knowledge, any other party thereto
exists under any such license, sublicense, agreement or permission.
(d) The Acquired Intellectual Property represents all material
Intellectual Property necessary for the operation of the EMG Business as
conducted by Sellers.
5.11 Real Property.
(a) Other than the Real Property, no Seller owns, leases or otherwise
uses any real property that is material to the operation of the EMG Business.
(b) Except as set forth on Schedule 5.11, none of the Sellers has
leased or otherwise granted to any Person the right to use or occupy any Real
Property or any portion thereof. There are no outstanding options, rights of
first offer or rights of first refusal to purchase any Real Property or any
portion thereof or interest therein.
(c) To Sellers' Knowledge, all buildings, structures, fixtures,
building systems included in the Owned Real Property (the "Improvements") are in
adequate condition and repair for the operation of the EMG Business as currently
conducted by Sellers. To
17 Asset Purchase Agreement
Sellers' Knowledge, there are no material structural deficiencies affecting the
Improvements and there are no facts or conditions affecting the Improvements
that would reasonably be anticipated to interfere in any material respect with
the use or occupancy of the Improvements or any material portion thereof in the
operation of the EMG Business as currently conducted thereon.
(d) All Permits which are required or appropriate to use or occupy the
Owned Real Property or operate the EMG Business as currently conducted thereon,
have been issued and are in full force and effect. Schedule 5.11 lists all
Permits held by the EMG Business and the Sellers with respect to each parcel of
Owned Real Property where the failure to hold such Permits would have a Material
Adverse Effect on the EMG Business or the Owned Real Property.
(e) To Sellers' Knowledge, as of the date hereof, Sellers have not
received written notice that their use or occupancy of the Owned Real Property
or any material portion thereof or any building or structures thereon, or the
operation of the EMG Business as currently conducted thereon, materially
violates any zoning Law or constitutes a non-conforming use or structure
thereunder.
5.12 Legal Proceedings. Except as set forth on Schedule 5.12, there are no
Actions instituted, commenced or pending, or to Sellers' Knowledge, threatened,
against any Seller, or against any property, asset, interest or right of any
Seller that would reasonably be expected to have a Material Adverse Effect on
the EMG Business or the Acquired Assets if decided adversely or that would
restrict the consummation of the transactions under this Agreement and the
Ancillary Agreements. No Seller is subject to any Order that would reasonably be
expected to have a Material Adverse Effect on the EMG Business or the Acquired
Assets. None of the Actions set forth on Schedule 5.12 would reasonably be
expected to have a Material Adverse Effect on the EMG Business or the Acquired
Assets if decided adversely.
5.13 Compliance with Laws. Except (a) with respect to employee benefit
matters, the only representations and warranties as to which are made in Section
5.18, (b) with respect to Environmental Laws, the only representations and
warranties as to which are made in Section 5.19, (c) as would not be reasonably
expected to have a Material Adverse Effect on the EMG Business, and (d) as set
forth on Schedule 5.13, each Seller (i) is in compliance with, and since July 1,
1998, has been in compliance with, all Laws and Orders applicable to the EMG
Business, and (ii) since July 1, 1998 has not received any written notification
or communication from any Governmental Authority (A) asserting that such Person
is not in compliance with any Law or Order applicable to the EMG Business or (B)
threatening to revoke any material Permit necessary for the operation of the EMG
Business.
5.14 Product Warranty. Except as set forth on Schedule 5.14, each product
manufactured, sold or delivered by any Seller in connection with the EMG
Business has been manufactured, sold or delivered, as the case may be, in
conformity with all applicable contractual commitments (including any applicable
warranties), and no Seller has any Liability in connection with the EMG Business
(and there is no basis for any present or future Action against any of them
giving rise to any Liability) for replacement or repair thereof or other damages
in
18 Asset Purchase Agreement
connection therewith, except to the extent of the reserve for product warranty
claims set forth on the most recent EMG Financial Statements as adjusted for the
passage of time through the Closing Date in the Ordinary Course of Business. No
product manufactured, sold or delivered by any Seller in connection with the EMG
Business is subject to any guaranty, warranty or other indemnity beyond such
Seller's applicable standard terms and conditions of sale. Schedule 5.14
includes copies or complete descriptions of the standard terms and conditions of
sale for each Seller in connection with the EMG Business.
5.15 Product Liability. Except as set forth on Schedule 5.15, no Seller has
manufactured, sold or supplied products or services that are or were or will
become in any material respect faulty or defective or that do not comply in any
material respect with any warranties or representations expressly or impliedly
made by any Seller and, to Seller's Knowledge, there is no basis for any present
or future Action arising out of any injury to individuals or property as a
result of the ownership, possession or use of any product manufactured, sold or
delivered by such Seller in connection with the EMG Business.
5.16 Employees. Schedule 5.16 lists all employees of Sellers engaged in the
EMG Business as of a date within thirty days of the date hereof (other than
employees who are employed primarily in a Retained Business Line or who provide
administrative or support services to the EMG Business and other businesses of
Sellers) and, with respect to each such employee, his or her position, the date
on which he or she became employed (or has been deemed by Sellers to have become
employed) by Sellers and, as applicable, his or her annual salary or hourly
wage. Except as set forth on Schedule 5.16, other than the Sellers, no
Subsidiary of Xxxx employs any Person who is engaged primarily in the EMG
Business. No Seller is a party to or bound by any collective bargaining
agreement that covers the employees of the EMG Business. Except as set forth on
Schedule 5.16, since January 1, 2001, no Seller has experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes relating to employees of the EMG Business. Except as set forth on
Schedule 5.16, to Sellers' Knowledge, there has not been, since January 1, 2001,
any organizational effort made or threatened by or on behalf of any labor union
with respect to employees of any Seller engaged in the EMG Business. With
respect to the employees of the EMG Business, each Seller has complied in all
material respects with all Laws and Orders which relate to employment or labor,
civil rights or equal employment opportunity, including, without limitation, the
Americans with Disabilities Act. Except as set forth on Schedule 5.12, no Seller
has received any written notice or otherwise has knowledge that any employee of
the EMG Business has threatened any Action or made any claim against any Seller
alleging any violation of such Laws and Orders or otherwise seeking to impose
any material Liability on any Seller in respect of such employee's employment
with any Seller. To Sellers' Knowledge, there is no basis for any Action or
claim.
5.17 Taxes. Each Seller has filed all Tax Returns required to be filed by
it, and has paid (or made adequate provision in the applicable balance sheet for
the payment of) all Taxes shown on such returns to be owed by it, except where
the failure to file the Tax Returns or to pay such Taxes would not reasonably be
expected to have a Material Adverse Effect on the EMG Business or the Acquired
Assets, and no claims for additional Taxes for any prior fiscal years are
pending except as disclosed on Schedule 5.17. No Seller is a party to any
pending Action, nor, to Sellers' Knowledge, is any Action threatened, by any
Governmental Authority for the assessment or collection of Taxes.
19 Asset Purchase Agreement
5.18 Employee Benefit Plans.
(a) Each "employee benefit plan," as defined in Section 3(3) of ERISA,
maintained, contributed to or required to be contributed to by any Seller or any
ERISA Affiliate of any Seller for the benefit of current, former or retired
employees of the EMG Business (the "Seller ERISA Plans") and each other plan,
contract, program or arrangement maintained, contributed to or required to be
contributed to by any Seller or any ERISA Affiliate of any Seller for the
benefit of current, former or retired employees of the EMG Business (the "Seller
Benefit Arrangements") complies in all material respects with its terms and all
applicable Laws, including ERISA, and no "reportable event" or "prohibited
transaction" (as such terms are defined in ERISA) or termination has occurred
with respect to any Seller ERISA Plan under circumstances that present a risk of
any material liability to Sellers or a Material Adverse Effect on the EMG
Business or could result in the imposition of any Lien on the Acquired Assets.
Copies or descriptions of each Seller ERISA Plan and Seller Benefit Arrangement
in which current employees of the EMG Business participate have been made
available to Buyer for review prior to the date hereof. Except as set forth on
Schedule 5.18(a), no Seller or any ERISA Affiliate of any Seller has any
obligation to provide medical or life insurance coverage to retired employees
under the Seller ERISA Plans, the Seller Benefit Arrangements or any other plan
or agreement.
(b) No Seller ERISA Plan or any other plan sponsored or contributed to
by Sellers or any of their ERISA Affiliates has incurred any "accumulated
funding deficiency" (as such term is defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived.
(c) Neither any Seller nor any ERISA Affiliate of any Seller has
completely or partially withdrawn from a "multiemployer plan," as such term is
defined in Section (3)(37) of ERISA within the last six years.
5.19 Environmental Matters.
Except as set forth on Schedule 5.19 or in the Environmental Reports, to
the Seller's Knowledge:
(a) The Sellers and the EMG Business have been and are currently in
compliance with, and have not received any written notice of any potential or
actual Liability pursuant to, Environmental, Health, and Safety Requirements,
common law or contractual obligation relating to any Hazardous Substances or
structure containing Hazardous Substances. There are no conditions or
circumstances that would prevent the continued and uninterrupted operation of
the EMG Business in compliance with Environmental, Health, and Safety
Requirements after the Closing.
(b) None of the Real Property has been affected by any Hazardous
Substances Contamination or Environmental Condition. There are no Hazardous
Substances at, on, in or under any of the Real Property, whether contained in
barrels, sumps, tanks, equipment (moveable or fixed) or other containers
incorporated into any structure on the Real Property, or in any landfills,
surface impoundments, or disposal areas, or otherwise existing
20 Asset Purchase Agreement
thereon, except for such Hazardous Substances as have been or are being handled,
stored and disposed of in accordance with applicable Environmental, Health, and
Safety Requirements.
(c) None of the Sellers, in connection with the EMG Business, has
transported or arranged for the disposal or treatment of any Hazardous
Substances to or at any off-site property that is not authorized to receive such
Hazardous Substances for disposal or treatment under applicable Environmental,
Health, and Safety Requirements or any off-site property that is or has been
designated for investigation or cleanup on the National Priorities List or any
other similar local, provincial, state or federal list.
(d) All Environmental Permits necessary for the construction,
equipping, ownership, use and uninterrupted operation of the EMG Business or the
Real Property have been obtained and are in full force and effect and each
Seller is in compliance therewith. Schedule 5.25 hereto contains a complete and
accurate list of all Environmental Permits required for the ownership, use and
operation of the EMG Business and the Real Property, correct and complete copies
of which have been delivered to the Buyer. All Environmental Permits that are
required to be transferred to the Buyer in order to allow the Buyer to continue
to own, use and operate the EMG Business the Real Property without interruption
after the Closing will have been assigned by each Seller to the Buyer at the
Closing.
(e) None of the Sellers has received written notice of, or are subject
to, any Environmental Claim against any Seller in connection with the EMG
Business or the Real Property or notice from any Governmental Authority or any
other Person related to any actual or threatened Release or the presence of any
Environmental Condition at, in, on, under or about the Real Property, or any
property adjacent to or within the immediate vicinity of the Real Property, and
no Environmental Claims are pending against any of the Sellers with respect to
the EMG Business or any of the Real Property.
(f) Each Seller has provided to the Buyer all information, including
all studies, analyses and test results, in the possession, custody or control of
each Seller and its respective Affiliates relating to (i) any Environmental
Conditions on, under or about the Real Property, and (ii) Hazardous Substances
used, managed, handled, transported, treated, generated, stored or Released by
any Seller or any other Person at any time on any of the Real Property.
(g) Each Seller has provided Buyer with complete and accurate copies
of all written agreements pursuant to which any third party has promised to
indemnify, reimburse or perform any action on behalf of Seller in connection
with any Environmental Condition that existed at or originated from any of the
Real Property or with respect to the EMG Business on or prior to the Closing
Date.
5.20 Acquisition for Investment. Each Seller acknowledges that the Seller
Shares and Seller Note have not been registered under the Securities Act or any
state securities laws and are being issued hereunder in reliance upon applicable
exemptions from such registration for transactions not involving a public
offering. The Seller Shares and the Seller Note will be acquired for investment
purposes by the Seller Designee as nominee for the Sellers, but not as a nominee
or agent for any other Person, and not with a view to the resale or distribution
of any
21 Asset Purchase Agreement
part thereof (except as permitted under the Share Ownership Agreement). The
Seller Designee and the Sellers have no present intention of selling, granting
any participation in or otherwise distributing the Seller Shares or the Seller
Note; provided, however, that notwithstanding the foregoing, the Seller Designee
may sell the Seller Shares as permitted under the Share Ownership Agreement and
the Seller Note as permitted therein.
5.21 Investment Experience. Each of the Seller Designee and each Seller
acknowledges that it can bear the economic risk and lack of liquidity of its
investment or beneficial interest in the Seller Shares and the Seller Note. Each
of the Seller Designee and each Seller has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Seller Shares and the Seller Note. None of the
Seller Designee or any Seller has been organized for the purpose of acquiring
the Seller Shares or the Seller Note.
5.22 Accredited Investor. Each of the Seller Designee and each Seller is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act.
5.23 No General Solicitation. Sellers acknowledge that the Seller Shares
and Seller Note were not offered to Sellers by means of any form of general or
public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (a) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media, or broadcast over television or radio or (b) any seminar or meeting to
which Sellers were invited by any of the foregoing means of communication.
5.24 No Brokers. Except for the compensation payable to Credit Suisse First
Boston Corporation ("CSFB") in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements, which Xxxx shall pay, no broker,
finder or similar agent has been employed by or on behalf of Sellers or Xxxx,
and other than CSFB no Seller has any Liability or obligation to pay any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the Ancillary Agreements, or the transactions
contemplated hereby or thereby.
5.25 Permits. Schedule 5.25 identifies any Permit held by any Seller which
is not transferable under applicable law.
5.26 Necessary Assets. Except as set forth on Schedule 5.26, no subsidiary
or Affiliate of Xxxx other than one of the Sellers owns, leases, or holds other
rights for any asset or property used primarily in the EMG Business; and upon
Closing, the Acquired Assets together with Buyer's rights under the Transition
Services Agreements, the Seller Leases, and the Supply Agreements will
constitute materially all of the assets, property and rights necessary to
conduct the EMG Business substantially as currently conducted by the Sellers.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
22 Asset Purchase Agreement
6.1 Organization and Standing. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation. Buyer is duly qualified to do business and in good standing in
the states of the United States in which the character of the properties owned
or leased by it or in which the conduct of its business requires it to be so
qualified, except where the failure to be so qualified or to be in good standing
would not reasonably be expected to have a Material Adverse Effect on Buyer's
business.
6.2 Authority, Validity and Effect. Buyer has all requisite corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and each of the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The Buyer's execution, delivery
and performance of its obligations under this Agreement and each of the
Ancillary Agreements, and consummation of the transactions contemplated hereby
and thereby, have been duly authorized by all required corporate action. This
Agreement has been, and each of the Ancillary Agreements will be as of the
Closing Date, duly executed and delivered by Buyer. This Agreement is, and each
Ancillary Agreement will, when so executed and delivered, be, the legal, valid
and binding obligation of Buyer, enforceable against it in accordance with the
terms hereof or thereof, except as limited by (i) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally from time to time in effect and (ii)
the availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity). No approval by the holders of
the Common Shares is required in order for Buyer to execute, deliver and perform
its obligations under this Agreement or any of the Ancillary Agreements,
including its obligation to deliver the Seller Shares in accordance with the
terms hereof.
6.3 Capitalization; Title to Stock. The authorized capital stock of Buyer
consists of 30,000,000 shares of common stock, $2.00 par value per share, of
which 12,557,009 shares were issued and outstanding as of December 31, 2002. All
of the issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable. When issued in
accordance with the terms of this Agreement, the Seller Shares will be validly
authorized and issued, fully paid and nonassessable and will not be issued in
violation of preemptive rights. Except as disclosed in the Buyer Reports
(including the financial statements included therein): there are no outstanding
subscriptions, Contracts, options, rights (preemptive or otherwise) or warrants
to purchase or to subscribe for any shares of common stock or any other
securities of Buyer, including through the conversion, exchange or exercise of
any other right or securities; and there are no stockholder agreements or voting
trusts relating to the Common Shares.
6.4 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery by Buyer of this Agreement or
of any of the Ancillary Agreements, nor the consummation by Buyer of the
transactions contemplated herein or therein, nor compliance by Buyer with any of
the provisions hereof or thereof, will (i) conflict with or result in a breach
of any provision of Buyer's Articles of Incorporation or By-Laws, (ii) except as
set forth on Schedule 6.4(a), conflict with, constitute or result in the breach
of any term, condition or provision of, or constitute a default under, result in
or give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation or imposition of any Lien upon any
material property or assets of Buyer pursuant to, or require
23 Asset Purchase Agreement
any notice under, any note, bond, mortgage, indenture, Contract or other
instrument or obligation to which Buyer is a party or by which it or any of its
material properties or assets may be subject, and that, in any such event, would
reasonably be expected to have a Material Adverse Effect on Buyer's business or
(iii) subject to receipt of the requisite approvals referred to in Section
6.4(b), violate any Order or Law to which Buyer or its Subsidiaries or any of
their businesses are subject.
(b) Other than (i) those required under the HSR Act, (ii) those set
forth on Schedule 6.4(b) and (iii) where the failure to give such notice, make
such filing or receive such Consent would not reasonably be expected to have a
Material Adverse Effect on Buyer's business, no notice to, filing with,
authorization of, exemption by or Consent of any Person is necessary for the
consummation by Buyer of the transactions contemplated by this Agreement and the
Ancillary Agreements.
6.5 SEC Filings. Buyer has filed all reports required to be filed by it
with the Securities and Exchange Commission (the "SEC") since January 1, 1999
(collectively, together with any amendments, the "Buyer Reports"). None of the
Buyer Reports, as of their respective dates, contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
6.6 Absence of Certain Changes. Except as set forth in the Buyer Reports,
neither Buyer nor any of its Subsidiaries has sustained since the date of the
latest financial statements included or incorporated by reference in the Buyer
Reports, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or Action or Order of any Governmental Authority. Except as
set forth in the Buyer Reports, since the date of such financial statements,
there has not been any change in the capital stock or long-term Indebtedness of
Buyer (other than changes in the outstanding principal balance of such long-term
Indebtedness permitted by the terms thereof described in the Buyer Reports) or
any of its Subsidiaries or any Material Adverse Effect, or any development that
is reasonably likely to result in a Material Adverse Effect, in or affecting
Buyer and its Subsidiaries, taken as a whole.
6.7 Legal Proceedings. Except as set forth in the Buyer Reports, there are
no Actions instituted, commenced or pending, or to Buyer's Knowledge,
threatened, against Buyer or any of its Subsidiaries, or against any of their
respective properties, assets, interests or rights that would reasonably be
expected to have a Material Adverse Effect on the business of Buyer or its
Subsidiaries if decided adversely or that would restrict the consummation of the
transactions under this Agreement and the Ancillary Agreements. Neither Buyer
nor any of its Subsidiaries is subject to any Order that would reasonably be
expected to have a Material Adverse Effect on its business.
6.8 Compliance with Laws. Except as would not reasonably be expected to
have a Material Adverse Effect on its business, or as set forth in the Buyer
Reports, each of Buyer and its Subsidiaries (a) is in compliance with, and since
January 1, 1999, has been in compliance with, all Laws and Orders applicable to
it or its business; and (b) since January 1, 1999, has not received any written
notification or communication from any Governmental Authority
24 Asset Purchase Agreement
(i) asserting that such Person is not in compliance with any Law; or (ii)
threatening to revoke any material Permit necessary for the operation of its
business.
6.9 Exemption from Registration. Assuming the accuracy of the
representations and warranties made by Sellers and Seller Designee in Section
5.20 through Section 5.23, Buyer is entitled to issue to the Seller Shares and
the Seller Note to the Seller Designee pursuant to an exemption from
registration under Section 4(2) of the Securities Act and/or Regulation D
promulgated thereunder and under similar exemptions from registration under
applicable state securities Laws.
6.10 Financial Ability. Buyer has delivered to Sellers true and complete
copies of the Amended and Restated Credit Agreement by and among Buyer, General
Electric Capital Corporation and the other lenders party thereto, in the form
anticipated to be executed contemporaneously with this Agreement (together with
any other agreements contemplated thereby, the "Financing Agreements"), pursuant
to which such lenders have agreed to provide Buyer with debt financing for the
transactions contemplated by this Agreement and for other purposes, subject only
to the satisfaction of the Financing Conditions. The Financing Agreements have
not been modified in any material respect or terminated since they were
delivered to Sellers. If the Financing Conditions are satisfied, Buyer will have
sufficient funds to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements.
6.11 No Brokers. Except for the compensation payable to Xxxxxxx Xxxxx
("Goldman") in connection with the transactions contemplated by this Agreement
and the Ancillary Agreements, which Buyer shall pay, no broker, finder or
similar agent has been employed by or on behalf of Buyer, and no Person with
which Buyer has had any dealings or communications of any kind other than
Goldman is entitled to any brokerage commission, finder's fee or any similar
compensation in connection with this Agreement or the Ancillary Agreements or
the transactions contemplated hereby or thereby.
ARTICLE VII
COVENANTS
7.1 Interim Operations of the EMG Business. From the date hereof until the
Closing Date, except as contemplated by any other provision of this Agreement or
the Ancillary Agreements or as set forth on Schedule 7.1, unless Buyer has
previously consented in writing thereto, Sellers shall not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business, and, without limiting the generality of the foregoing,
Sellers shall not cause or permit the EMG Business to:
(a) incur any Indebtedness in connection with the EMG Business, other
than Indebtedness incurred in the Ordinary Course of Business;
(b) acquire or dispose of any material property or assets used in the
EMG Business or create or permit to exist any Lien on any such property or
assets except in the Ordinary Course of Business;
25 Asset Purchase Agreement
(c) enter into any Contracts in connection with the EMG Business,
except Contracts made in the Ordinary Course of Business;
(d) engage in any transactions with, or enter into any Contracts with,
any Affiliates of Sellers in connection with the EMG Business, except for any
such transactions or Contracts in the Ordinary Course of Business on terms no
less favorable than would be obtained in an arms' length third-party
transaction;
(e) enter into, adopt, amend or terminate any Contract relating to the
compensation of any employee employed in the EMG Business or any severance with
respect to an employee that is subject to the Reimbursement Agreement, except to
the extent required by Law or any existing Contracts;
(f) accelerate the rate of collection of Accounts Receivable other
than in the Ordinary Course of Business; or
(g) agree to take any of the actions described in Sections 7.1(a)
through 7.1(f) above.
7.2 Preservation of Business. From the date hereof until the Closing, each
Seller will use commercially reasonable efforts to keep its business and
properties relating to the EMG Business substantially intact, including its
present operations, physical facilities, working conditions and relationships
with lessors, licensors, suppliers, customers and employees relating to the EMG
Business, except that Sellers may close or relocate the operations of the EMG
Business located at Franklin Park, Illinois and Guilford, Connecticut upon
thirty (30) days prior written notice to Buyer, such notice to contain the
details of such proposed closure or relocation. Sellers shall provide Buyer
prompt written notice of any of the events described in the proviso to the
definition of the term "Material Adverse Effect".
7.3 Reasonable Access; Confidentiality.
(a) From the date hereof until the Closing, Sellers shall (i) give
Buyer and its representatives (including its lenders, underwriters or other
financing sources and its consultants preparing the Environmental Reports), upon
reasonable written notice to Sellers, access during normal business hours, and
in a manner so as not to interfere with the normal business operations of the
EMG Business or Sellers, to all assets, properties, books, records (including
Tax records), Contracts, documents and personnel relating to the EMG Business;
(ii) permit Buyer to make such inspections as it may reasonably require,
including, without limitation, the inspections contemplated in subsection (b) of
the Section 7.3; and (iii) furnish Buyer during such period with all such
information relating to the EMG Business as Buyer may reasonably request.
Notwithstanding the foregoing: in no event will Sellers be required to give
Buyer access if the nature or timing of such access would interrupt any Seller's
normal business operations; and, except as set forth in the next succeeding
sentence, Sellers shall not be required to deliver to Buyer copies of any
Contracts, or any other information regarding the terms of Sellers'
arrangements, with the material customers of the EMG Business, to the extent
that Sellers in good xxxxx xxxx such information to be of a nature that they
would not reasonably be expected to provide to a competitor (the "Customer
Information"). Not later
26 Asset Purchase Agreement
than eighteen (18) days prior to the anticipated Closing Date, Sellers shall
provide to representatives of Buyer an opportunity to review copies of any
Customer Information not previously provided to Buyer, at 0000 Xxxx Xxxxxx,
Xxxxxx, Xxxx. Buyer's representatives shall be permitted to make notes regarding
such Customer Information but not to remove or retain copies of the Customer
Information prior to the Closing Date. Sellers shall make available to Buyer's
representatives during such review representatives of Sellers who are familiar
with and able to respond to questions about the Customer information.
(b) From the date hereof until the Closing, Sellers shall, upon
reasonable written notice to Sellers, permit Buyer, during normal business
hours, and in a manner so as not to interfere with the normal business
operations of the EMG Business or Sellers, to inspect the Acquired Assets and
the Retained Assets and Sellers' books and records in order to verify the
accuracy of the information with respect thereto set forth in the Disclosure
Schedules or on any Exhibit to this Agreement. In the event that Buyer believes
that any asset classified as a Retained Asset in the Disclosure Schedules or on
an Exhibit has not been properly so classified in accordance with the provisions
of Section 1.2, or that any liability classified as an Assumed Liability in the
Disclosure Schedules or on an Exhibit has not been properly so classified in
accordance with the provisions of Section 2.1, Buyer may notify Xxxx of such
belief in writing. If, after such further discussions as the parties deem
necessary or desirable, Xxxx and Buyer agree that any such assets or liabilities
were improperly classified, then Sellers and Buyer shall amend the applicable
Disclosure Schedules or Exhibits accordingly.
(c) Any information provided to or obtained by Buyer pursuant to
Section 7.3(a) above is "Evaluation Material" as defined under the
Confidentiality Agreement dated January 25, 2002, by and between Xxxx and Buyer
(as amended through the date hereof, the "Confidentiality Agreement") and is to
be held by Buyer in accordance with and subject to the terms of the
Confidentiality Agreement.
(d) Each Party will be bound by and comply with the provisions of the
Confidentiality Agreement as if such provisions were set forth herein, and such
provisions are hereby incorporated herein by reference.
(e) Buyer shall indemnify Sellers and hold Sellers and their Related
Persons harmless from and against any and all Liabilities for property damage or
personal injury suffered or incurred by Sellers or their Related Persons arising
out of or resulting from the gross negligence or willful misconduct of Buyer or
Buyer's representatives in connection with any inspection or other activities
conducted by Buyer or Buyer's representatives pursuant to this Agreement.
7.4 Antitrust Filings.
(a) Subject to the terms and conditions of this Agreement, the Parties
shall use all commercially reasonable efforts to (i) file a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby within fourteen (14) days after the date hereof; (ii) supply
as promptly as practicable any additional information and documentary material
that may thereafter be requested pursuant to the HSR Act; and (iii) cause
27 Asset Purchase Agreement
the expiration or termination of the applicable waiting periods under the HSR
Act as soon as practicable.
(b) In connection with the efforts referenced in Section 7.4(a), each
of the Parties shall use all commercially reasonable efforts to (i) cooperate
with each other in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated by a
private party, (ii) keep the other Parties informed in all material respects of
any material communication received by such Party from, or given by such Party
to, the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Authority and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby and (iii) permit the other Parties to review any material communication
given to it by, and consult with each other in advance of any meeting or
conference with, the FTC, the DOJ or any other Governmental Authority or in
connection with any proceeding by a private party. Each of the Parties shall
coordinate and cooperate fully with the other Parties in exchanging such
information and providing such assistance as such other Parties may reasonably
request in connection with the foregoing and in seeking early termination of any
applicable waiting periods under the HSR Act.
(c) If any objections are asserted with respect to the transactions
contemplated hereby or if any suit is instituted by any Governmental Authority
or any private party challenging any of the transactions contemplated hereby as
violative of the HSR Act, each of the Parties shall use all commercially
reasonable efforts to resolve such objections or challenge as such Governmental
Authority or private party may have to such transactions, including to vacate,
lift, reverse or overturn any Order, whether temporary, preliminary or
permanent, so as to permit consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements.
(d) Notwithstanding anything in this Section 7.4 to the contrary,
Buyer shall not be required to take any action or to agree to any modification
of the terms of this Agreement or any Ancillary Agreement in order to cause the
expiration or termination of the waiting periods under the HSR Act or to resolve
any objection or challenge of any Governmental Authority or a private party if
the Buyer determines in its good faith judgment that the effect of such action
or modification would be to cause a Material Adverse Effect to Buyer or the EMG
Business or to impair materially the value to the Buyer of the EMG Business.
7.5 Other Actions. Subject to the terms and conditions of this Agreement,
Sellers and Buyer shall use commercially reasonable efforts to (a) cooperate
with each other in making any filings that are required to be made prior to the
Closing Date with, and seeking any Consents that are required to be obtained
prior to the Closing Date from, Governmental Authorities in connection with the
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby (in addition to
the filings and Consents contemplated by Section 7.4); and (b) cause the
conditions to their respective obligations under this Agreement and the
Ancillary Agreements to be fulfilled.
28 Asset Purchase Agreement
7.6 Buyer Financing. Buyer shall use commercially reasonable efforts to
satisfy all of the Financing Conditions, including consummation of the Equity
Offering; and (b) provide Sellers such information as they may reasonably
request from time to time about the performance by Buyer of its obligations
under Section 7.6(a). Buyer shall give Xxxx reasonable prior notice of any
amendment to the Financing Agreements that would modify any of the Financing
Conditions applicable to the consummation of the transactions contemplated by
this Agreement.
7.7 Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of any of
its own representations and warranties in Article V and Article VI above. No
disclosure by any Party pursuant to this Section 7.7, however, shall be deemed
to amend or supplement the Disclosure Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.8 Publicity. Sellers and Buyer shall make a joint press release
announcing the execution of this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby, which release will be acceptable
to each of Sellers and Buyer. No other publicity release or announcement
concerning the transactions contemplated by this Agreement or the Ancillary
Agreements is to be issued by either Party without the advance written consent
of such other Party; provided that either Party may make any such release or
announcement that is required under applicable Law or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing Party will use commercially reasonable efforts to advise the other
Party prior to making the disclosure).
7.9 Further Assurances; Subsequent Transfers.
(a) Each Seller and Buyer will execute and deliver such further
instruments of conveyance, transfer and assignment and will take such other
actions as either of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and the Ancillary Agreements and to
carry out the terms hereof and thereof. Without limiting the generality of the
foregoing, at any time and from time to time after the Closing Date, at the
request of Buyer and without further consideration therefor, Sellers will
execute and deliver to Buyer such other instruments of transfer, conveyance,
assignment and confirmation and will take such action as Buyer may reasonably
deem necessary or desirable in order more effectively to transfer, convey and
assign to Buyer and to confirm Buyer's title to any Acquired Assets, to put
Buyer in actual possession and operating control thereof and to permit Buyer to
exercise all rights with respect thereto (including rights with respect to
Nonassignable Assets). In addition, at the request of Sellers and without
further consideration therefor, Buyer will execute and deliver to Sellers all
instruments, undertakings or other documents and will take such other action as
Sellers may reasonably deem necessary or desirable in order to cause Buyer to
properly assume and discharge the Assumed Liabilities and to relieve Sellers of
any Liability with respect thereto and to evidence the same to third parties.
(b) Sellers will use commercially reasonable efforts to obtain any
Consent required to assign the Nonassignable Assets to Buyer, and Buyer will
cooperate in any commercially reasonable manner that Seller requests; provided,
however, that neither Sellers nor Buyer will be obligated to pay any
consideration (except for de minimis filing fees and
29 Asset Purchase Agreement
other administrative charges) to the third party from whom such Consents are
requested; and provided, further, that nothing in this Section shall be
construed to waive any requirement that a Consent be obtained as a condition to
the Buyer's obligation to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements. In the event and to the extent that
Sellers and Buyer are unable to obtain any such required Consent through the use
of commercially reasonable methods, and if Buyer waives the receipt of such
Consent as a condition precedent under Section 9.3, then from and after the
Closing Date, unless prohibited by Law or the terms thereof, (i) Sellers will
continue to be bound by the terms of such Nonassignable Assets and (ii) Buyer
shall pay, perform and discharge fully all the obligations of Sellers thereunder
from and after the Closing Date and indemnify Sellers and their Related Persons
for all Damages arising out of any failure of such performance by Buyer. Sellers
shall, without further consideration therefor, pay, assign and remit to Buyer
promptly all monies, rights and other considerations received in respect of such
performance by Buyer. Sellers shall exercise or exploit its rights and options
under all such Nonassignable Assets only as reasonably directed by Buyer and at
Buyer's expense. If and when any such Consent is obtained or such Nonassignable
Assets otherwise become assignable or able to be novated, Sellers shall promptly
assign and novate all its rights and obligations thereunder to Buyer, without
payment of further consideration therefor, and Buyer shall, without the payment
of any further consideration therefor, assume all such rights and obligations.
7.10 Seller Share Certificates; Seller Note.
(a) All certificates representing the Seller Shares shall bear the
following legend, in addition to any other legends that are necessary to comply
with applicable Law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR
BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE
DISPOSITION OF SUCH SECURITIES, EVIDENCE OF WHICH MAY INCLUDE A WRITTEN
OPINION TO THAT EFFECT DELIVERED TO AND SATISFACTORY TO STANDARD MOTOR
PRODUCTS, INC. (THE "COMPANY") IN FORM AND SUBSTANCE FROM COUNSEL
SATISFACTORY TO THE COMPANY BY REASON OF EXPERIENCE AND (3) IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A
SHARE OWNERSHIP AGREEMENT DATED AS OF __________ ___, 200_ BY AND BETWEEN
[THE SELLER DESIGNEE] AND STANDARD MOTOR PRODUCTS, INC., WHICH CONTAINS
CERTAIN RESTRICTIONS ON TRANSFERABILITY OF THE SECURITIES REPRESENTED
HEREBY.
30 Asset Purchase Agreement
(b) The Seller Note shall bear the following legend, in addition to
any other legends that are necessary to comply with applicable Law:
THIS SUBORDINATED PROMISSORY NOTE (THIS "NOTE") AND THE INDEBTEDNESS
EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH
IN THE SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH BY AND AMONG
PAYEE, GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT (THE "AGENT"), AND
MAKER (THE "SUBORDINATION AGREEMENT").
THIS NOTE WAS ORIGINALLY ISSUED ON _________ __, 2003 AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION
STATEMENT UNDER THE ACT WITH RESPECT TO THIS NOTE HAS BECOME AND REMAINS
EFFECTIVE OR UNLESS PAYEE ESTABLISHES TO THE SATISFACTION OF MAKER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
(c) Each holder desiring to transfer the Seller Note or any Seller
Shares first must furnish Buyer with (i) evidence reasonably satisfactory to
Buyer, which may include a written opinion satisfactory to Buyer in form and
substance and from counsel reasonably satisfactory to the Buyer by reason of
experience, to the effect that the holder may transfer the Seller Note or such
Seller Shares as desired without registration under the Securities Act and (ii)
a written assignment executed by the desired transferee, satisfactory to the
Buyer in form and substance, agreeing to be bound by the terms of the Seller
Note and the Subordination Agreement or the restrictions on transfer contained
herein and in the Share Ownership Agreement, as applicable.
7.11 Prorations and Post-Closing Receipts.
(a) After the Closing Date, Buyer and Sellers will cooperate to make
appropriate proration or other allocation (to the extent not reflected in the
Final Net Book Value Statement) of real estate Taxes, personal property Taxes,
utility expenses, payments under the Real Estate Leases, payroll and
payroll-related expenses and any other significant prepaid expenses related to
the EMG Business ("Apportionable Expenses"). Such prorations or allocations will
be made in accordance with the principle that Apportionable Expenses related to
or arising from time periods prior to the Closing Date will be borne by Sellers
and Apportionable Expenses related to or arising from time periods including or
after the Closing Date will be borne by Buyer.
(b) If, following the Closing Date, any Seller or Buyer receives any
payment relating to any property of the other party, such payment will remain
the property of the respective party and such Seller and Buyer will cooperate to
immediately forward such payment to the appropriate party.
31 Asset Purchase Agreement
7.12 Financial Records. For a period of ten years after the Closing Date,
Buyer shall not cause or permit the destruction or disposal of financial records
(other than Tax records, which are provided for in Section 7.13) relating to
periods prior to the Closing Date without first offering to surrender them to
Sellers, and Buyer shall allow Sellers and their representatives access to such
records during regular business hours.
7.13 Tax Matters. From and after the Closing:
(a) Sellers and Buyer shall each (i) provide the other party and shall
cause their respective accountants to provide the other party's accountant with
such assistance as may reasonably be requested by any of them in connection with
the preparation of any Tax Return or the conduct of any audit or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes related to the EMG Business; (ii) retain and
provide the other party and shall cause their respective accountants to provide
the other party's accountant any records or other information that may be
relevant to such Tax Return, audit or examination, proceeding or determination;
and (iii) provide the other party with any final determination of any such audit
or examination, proceeding or determination that affects any amount required to
be shown on any such Tax Return of the other for any period. Without limiting
the generality of the foregoing, Buyer and Sellers shall retain, until the
applicable statutes of limitation (including any extensions) prescribed by Law
have expired, copies of all Tax Returns, supporting work schedules and other
records or information related to the EMG Business that may be relevant to such
returns for all Tax periods or portions thereof ending on or before the Closing
Date and shall not destroy or otherwise dispose of any such records without
first providing the other party with a reasonable opportunity to review and copy
the same at the cost of such other party.
(b) Buyer shall pay any state and local sales, transfer or similar
Taxes and all recording costs and fees, however styled or designated, that are
required to be paid in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements, and, to the extent permitted under
applicable law, the Buyer, at its own expense, shall prepare and file all
necessary Tax Returns and other documentation with respect to all such Taxes,
costs and fees.
(c) Sellers and Buyer shall provide to each other prompt notice of any
audit or similar investigation or proceeding in which the Internal Revenue
Service or any other Governmental Authority makes or proposes to make a Tax
adjustment to any Tax period affecting the EMG Business ending on or before the
Closing Date.
7.14 Trademark Transition. To the extent that any trade name or trademark
of any Seller or any of their Affiliates (other than those included in the
Acquired Assets) in any form (the "Retained Names") appears on any business
form, packaging, container, sign, building or other property included in the
Acquired Assets, Sellers grant and/or confirm the grant by their Affiliates of a
royalty-free license to Buyer to use the Retained Names on such Acquired Assets
until removal can be effected or until such materials are used and exhausted;
provided, however, that Buyer shall use commercially reasonable efforts to
remove the Retained Names from all Acquired Assets in a timely fashion and shall
cease, in any event, all use of the Retained Names no later than six months
following the Closing Date, and except that Buyer may use the Retained
32 Asset Purchase Agreement
Names for a period of twelve months following the Closing Date on all existing
inventory and packaging included in the Acquired Assets. To the extent that any
trade name or trademark included in the Acquired Intellectual Property appears
on any inventory, packaging or sales, marketing or promotional materials not
conveyed to Buyer under this Agreement, Buyer grants Sellers and their
Affiliates a royalty-free license to use such Acquired Intellectual Property on
such inventory, packaging or materials for a period of twelve months following
the Closing Date.
7.15 Sale of Retained Business Lines. Buyer acknowledges that Sellers are
in the process of marketing certain of the Retained Business Lines for sale to
Persons other than Buyer. If, on or before the Closing Date, Sellers enter into
any agreement providing for the sale of all or any portion of the Retained
Business Lines, Sellers shall give prompt notice thereof to Buyer, and if any
such sale is consummated prior to the Closing Date, neither Buyer nor Sellers
will be obligated to enter into the Supply Agreements with respect to the
Retained Business Lines (or portion thereof) so divested by Sellers. Between the
date hereof and the Closing Date, Sellers shall keep Buyer reasonably apprised
of developments related to Buyer's obligation to enter into the Supply
Agreements on the Closing Date.
7.16 Non-Competition.
(a) For a period of three years beginning on the Closing Date, Sellers
shall not, and shall cause its officers, directors, employees and Affiliates not
to,
(i) acquire or invest in any business whose operations competes
with the EMG Business within the United States;
(ii) sell any goods, services or products that compete with the
EMG Business within the United States; or
(iii) (A) induce or attempt to induce any employee of Buyer to
leave the employ of Buyer, or in any way interfere with the relationship
between Buyer and any employee thereof; (B) hire directly or through
another entity any person who was an employee of Buyer at any time prior to
or during the three years from the Closing Date unless such person has
approached Sellers without any solicitation or inducement by Sellers or (C)
induce or attempt to induce any customer, supplier, licensee or other
business relation of the EMG Business to cease doing business with the EMG
Business, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the EMG Business.
(b) The provisions of Section 7.16(a) do not prohibit Sellers or their
Affiliates from (i) acquiring another Person engaged in activities prohibited by
Section 7.16(a) if at the time of the acquisition such other Person's sales
during its most recently completed fiscal year from activities otherwise
prohibited by Section 7.16(a) represents less than fifteen percent (15%) of such
Person's consolidated sales for its most recently completed fiscal year
(provided, however, that if sales from the prohibited activities represent five
percent (5%) or more of such Person's consolidated sales for its most recently
completed fiscal year, the Sellers and their affiliates shall dispose of or
discontinue the business engaged in such prohibited activities within eighteen
months after the consummation of such acquisition), (ii) acquiring up
33 Asset Purchase Agreement
to five percent of the securities of any Person that is engaged in activities
prohibited by Section 7.16(a) if the securities of such Person are listed on a
national securities exchange or the NASDAQ Automated Quotation System, (iii)
selling products manufactured or marketed by the Echlin-Mexicana and CUMSA
business lines to Persons in the United States, or (iii) engaging in any
business activity other than the EMG Business in which Sellers or their
Affiliates are currently engaged with any Person, including the Retained
Business Lines (except that Xxxx Canada Inc. shall not sell in the United States
any goods, services or products that compete with the EMG Business).
(c) Sellers shall not, nor shall any of their Affiliates, including,
without limitation, Candados Universales de Mexico, S.A. de C.V. ("CUMSA") and
Echlin Industrias de Mexico, S.A. de C.V. ("Echlin-Mexicana"), use in North
America any of the trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, together with all translations, adaptations,
derivations, and combinations thereof, that are Acquired Assets, except as
expressly provided in any license from Buyer to Seller with respect to any
Acquired Intellectual Property.
(d) For a period of three years beginning on the Closing Date, Buyer
shall not, and shall cause its officers, directors, employees and Affiliates not
to (i) induce or attempt to induce any employee of Sellers to leave the employ
of Sellers, or in any way interfere with the relationship between a Seller and
any employee thereof or (ii) hire directly or through another entity any person
who was an employee of a Seller at any time prior to or during the three years
from the Closing Date unless such person has approached Buyer without any
solicitation or inducement by Buyer.
(e) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 7.16 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
7.17 Monthly Financial Statements. Sellers shall deliver to the Buyer,
within 45 days after the end of the applicable month, the unaudited monthly
balance sheet and income statement for the EMG Business for each month ended
prior to the Closing Date, commencing with the month ended December 31, 2002,
prepared in a manner consistent with similar unaudited financial information
provided to Buyer and, where practical, consistent with the Specified Accounting
Principles, except that for the months ending March 31, 2003 and June 30, 2003,
such balance sheet and income statement shall be prepared in accordance with the
Specified Accounting Principles and shall be delivered within 60 days after the
end of each such month.
7.18 Title Insurance and Surveys. Sellers will use commercially reasonable
efforts to assist the Buyer in obtaining on or prior to the Closing Date the
Title Commitments, Title Policies and Surveys in form and substance as set forth
in Article IX of this Agreement,
34 Asset Purchase Agreement
including removing from title any Liens which are not Permitted Liens. Each of
the Sellers shall provide the Title Company with any affidavits, indemnities,
memoranda or other assurances reasonably requested by the Title Company to issue
the Title Policies.
7.19 Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any Action, investigation, charge, claim, or
demand by a third party in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving the EMG
Business, the other Party will cooperate with the contesting or defending Party
and its counsel in the contest or defense, make available its personnel, and
provide such testimony and access to its books and records as shall be
reasonably necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Article X).
7.20 Exclusivity. From the date hereof until the Closing Date, the Sellers
will not, directly or indirectly, (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities of any Seller, or any
substantial portion of the assets of the EMG Business (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Sellers will
notify the Buyer immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing. Notwithstanding the foregoing,
the provisions of this Section 7.20 shall not apply to any transaction involving
the capital stock or voting securities of Xxxx, or the assets of Xxxx or any of
its Affiliates other than the remaining Sellers, so long after giving effect to
any such transaction, Sellers remain obligated to perform their obligations
under this Agreement.
7.21 Accounts Receivable.
(a) Sellers will execute and deliver, or cause to be executed and
delivered, such agreements and instruments and take such other action as Buyer
or Buyer's Lender reasonably requests in order to provide that the Accounts
Receivable included in the Acquired Assets are conveyed to Buyer free and clear
of all Liens arising from or related to the prior securitization of the Accounts
Receivable.
(b) Sellers shall reimburse Buyer, within thirty (30) days after
Buyer's demand, (i) for the amount of all credits, deductions and offsets taken
or claimed by account debtors against Pumps Accounts Receivable, or (ii) for the
amount of all understatements of Trade Payables of the portion of the Retained
Business Lines relating to fuel pumps and water pumps. Buyer will include with
its demand for payment copies of any correspondence from the applicable account
debtor or creditor, as the case may be, regarding such credit, deduction or
offset or understatement, as the case may be, and such other information with
respect thereto in Buyer's possession that Sellers may reasonably request.
35 Asset Purchase Agreement
(c) Buyer shall reimburse Sellers, within thirty (30) days after
Sellers' demand, (i) for the amount of all credits, deductions and offsets
granted to Buyer with respect to Trade Payables of the portion of the Retained
Business Lines relating to fuel pumps and water pumps, or (ii) for any amount
collected by Buyer in respect of Pumps Accounts Receivable in excess of the
amount thereof included in determining the Closing Net Book Value; provided,
however, that Sellers shall indemnify Buyer and hold Buyer and its Related
Persons harmless from and against any and all Liabilities suffered or incurred
by Buyer or its Related Persons arising out of or resulting from Buyer's
reimbursement of Sellers for such excess collections of Pumps Accounts
Receivable. Seller will include with its demand for payment copies of any
correspondence from the applicable account debtor or creditor, as the case may
be, regarding such credit, deduction or offset or understatement, as the case
may be, and such other information with respect thereto in Sellers' possession
that Buyer may reasonably request.
7.22 Seller Designee. Each of the Sellers hereby appoints the Seller
Designee as its agent and representative for the purpose of holding such
Seller's rights and interests in the Seller Shares and Seller Note and
exercising all of the rights and performing all of the obligations of the record
owner of the Seller Shares and holder of the Seller Note. Each Seller agrees
that the issuance of the Seller Shares and the Seller Note to the Seller
Designee constitutes payment to such Seller of any amount represented by such
Seller Shares or Seller Note to which such Seller may be entitled in respect of
the Acquired Assets conveyed by such Seller pursuant to this Agreement. Each
Seller agrees that Buyer and Buyer's Lender may deal exclusively with the Seller
Designee with respect to all matters related to the Seller Shares and the Seller
Note without seeking any consent, approval or confirmation from or giving any
notice to such Seller.
7.23 Right of First Offer.
(a) For a period of three (3) years after the Closing Date neither
Xxxx nor any of its Affiliates may assign, sell or transfer to any Person who is
not an Affiliate of Xxxx either a controlling interest in the capital stock or a
majority of the assets of CUMSA or Echlin-Mexicana or both unless Xxxx has
delivered to Buyer notice of Dana's desire to undertake such assignment, sale or
transfer and describing the assets or capital stock Xxxx or its Affiliates
desires to assign, sell or transfer and providing basic financial information
about the business being sold (the "Transfer Notice"). Within thirty (30) days
after delivery of a Transfer Notice, Buyer may notify Xxxx whether Buyer wishes
to consider the transaction described in the Transfer Notice, and if so, what
range of price it might be prepared to pay. If Buyer notifies Xxxx that Buyer
does not desire to consider such transaction or if Buyer does not submit any
notice to Xxxx within the thirty (30) day time period, neither Xxxx nor any of
its Affiliates shall have any further obligation to Buyer in respect of any
assignment, transfer or sale of the capital stock or assets of CUMSA,
Echlin-Mexicana or both, and the provisions of Section 7.23(b) shall cease to
apply. If Buyer notifies Xxxx within the thirty (30) day time period that Buyer
desires to consider such a transaction, then during a period ending on the
ninetieth (90th) day following the date of the Transfer Notice ("Negotiation
Period"), Buyer and the applicable Sellers shall negotiate the terms and
conditions of the purchase of the assets or capital stock of CUMSA,
Echlin-Mexicana or both, as the case may be. During the Negotiation Period,
Sellers shall use commercially reasonable efforts to(i) give Buyer and its
representatives (including its lenders, underwriters or other financing
sources), upon
36 Asset Purchase Agreement
reasonable notice to Sellers, full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Sellers, to all assets, properties, books, records (including Tax records),
Contracts, documents and personnel relating to CUMSA, Echlin-Mexicana or both,
as the case may be, (ii) permit Buyer to make such inspections as it may
reasonably require and (iii) furnish Buyer during such period with all such
information as Buyer may reasonably request.
(b) During the Negotiation Period, the Sellers will not, directly or
indirectly, (i) solicit, initiate, or encourage the submission of any proposal
or offer from any Person other than Buyer relating to the acquisition of any
capital stock of CUMSA, Echlin-Mexicana or both, as the case may be , or any
substantial portion of the assets of CUMSA, Echlin-Mexicana or both, as the case
may be (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person other than
Buyer to do or seek any of the foregoing.
(c) If (i) by the end of the Negotiation Period Buyer or its designee
and the applicable Sellers have not executed a definitive agreement for the
transaction described in the Transfer Notice or (ii) such an agreement has been
executed by the end of the Negotiation Period but the purchase and sale
contemplated thereby has not been consummated within sixty (60) days after the
date of the definitive agreement for any reason except default by the applicable
Sellers of their obligations thereunder, then neither Xxxx nor any of its
Affiliates shall have any further obligation to Buyer in respect of any
assignment, sale or transfer of the capital stock or assets of CUMSA,
Echlin-Mexicana or both and shall be free to assign, sell or transfer capital
stock or assets to any Person on any terms.
(d) The provisions of this Section 7.23 are not intended to apply to
(i) any assignment, pledge or other transfer of the capital stock or assets of
CUMSA, Echlin-Mexicana or both made in connection with financing arrangements
undertaken in the ordinary course of business by Xxxx or any of its Affiliates,
or (ii) any assignment, sale or transfer of the capital stock or assets of CUMSA
or Echlin-Mexicana or both to any Affiliate of Xxxx.
7.24 Information Required for Buyer's Registration Statement. Buyer and
Sellers acknowledge that Buyer is required to include in its registration
statement for the Equity Offering audited financial statements for the EMG
Business for the fiscal year ended December 31, 2002. Sellers shall prepare and
deliver to Buyer as promptly as reasonably possible an audited balance sheet for
the EMG Business (including the Retained Business Lines relating to fuel pumps
and water pumps) for the fiscal year ended December 31, 2002 and audited
statements of operations and cash flows for the fiscal year then ended, fairly
presenting, in all material respects, the financial position and results of
operations of the EMG Business (including the Retained Business Lines relating
to fuel pumps and water pumps) as at such date and for the period then ended,
all in conformity with GAAP consistently applied as described in the notes
thereto (the "EMG Year-End Statements"). Xxxx shall also cause
PricewaterhouseCoopers to prepare and deliver to Buyer a comfort letter and
consent, in form and substance reasonably acceptable to Buyer and its counsel,
with respect to the EMG Financial Statements and the EMG Year-End Statements, as
the case may be, for filing with Buyer's registration statement for the Equity
Offering.
37 Asset Purchase Agreement
7.25 Tooling at Vendors. Not less than fourteen (14) days prior to the
Closing Date, Sellers shall prepare and deliver to Buyer a reasonably complete
schedule listing tooling, molds and dies used in the EMG Business that are
located at any premises other than the Real Property, together with the address
of each such premises and the identity of the Person holding such tooling, molds
or dies at such premises.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 Site Assessment Environmental Liabilities. The term "Site Assessment
Environmental Liabilities" means, until the required environmental remediation
is complete at each respective site, all Environmental Costs relating to or
arising in connection with the remediation of Environmental Conditions at the
Branford Site, the Independence Site, and, if applicable, the Northvale Site,
identified during the Buyer's Further Investigations and/or Seller's Further
Investigations or during the performance of the Sellers' remediation. For
purposes of this Section 8.1, a required environmental remediation shall not be
deemed complete during the period of any continued operation and maintenance of
any active remediation system or long-term monitoring program (excluding, by way
of example, any static engineered controls such as a permanent cap) at the Real
Property in connection with the remediation or in the event that a No Further
Action letter or similar closure documentation is revoked, but only if the
reason for the revocation is the inaccuracy of information contained in Sellers'
submissions to Governmental Authorities.
8.2 Environmental Remediation.
(a) Phase II Investigations. Commencing not later than ten (10) days
after the date of this Agreement: Buyer shall conduct a Phase II Environmental
Site Assessment and such other investigation activities as Buyer deems necessary
or appropriate in order to ensure its entitlement to the "bona fide prospective
purchaser exemption" as defined under the federal Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 'SS''SS'9601 et seq. at
the Real Property and facilities of Sellers located at (1) Independence, Kansas
(the "Independence Site"), (2) Branford, Connecticut (the "Branford Site"), and
(3) Northvale, New Jersey (the "Northvale Site") (in the event that Buyer's
Phase I Environmental Site Assessment of the Northvale Site reveals the presence
of any "recognized environmental condition" as defined in ASTM 1527-97 or
1527-00) (collectively, the "Buyer's Further Investigation"). After Buyer
performs its Phase II Environmental Site Assessment at the Branford Site,
Sellers shall conduct any activities at the Branford Site as necessary to
discharge their obligations pursuant to the Connecticut Property Transfer Act,
'SS''SS'22a-134 et seq. (the "Sellers' Further Branford Investigation"). After
Buyer performs its Phase II Environmental Site Assessment at the Northvale Site,
Sellers shall conduct such activities at the Northvale Site as are necessary to
discharge its obligations pursuant to the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et seq. (the "Sellers' Further Northvale Investigation").
(Seller's Further Branford Investigation and Further Northvale Investigation, as
well as any other investigation conducted by Sellers in discharging their
obligations under this Section 8.2, shall be collectively referred to herein as
"Seller's Further Investigation"). Sellers shall provide Buyer with such access
to the Northvale Site as Buyer deems necessary or desirable to
38 Asset Purchase Agreement
conduct the Phase I Environmental Assessment of that site and shall provide
Buyer with such access to the Independence Site, Branford Site, and Northvale
Site as Buyer deems necessary or desirable to conduct the Buyer's Further
Investigation, as applicable. Sellers agree to reimburse Buyer for the amount of
costs and expenses incurred by Buyer in connection with the Buyer's Further
Investigation up to an aggregate maximum reimbursement of $150,000. Sellers
shall make such reimbursement within thirty (30) days after receiving Buyer's
request for payment, accompanied by such supporting information as Sellers may
reasonably request. Sellers shall prepare and deliver to Buyer written reports
of the Sellers' Further Investigation and Buyer shall prepare and deliver to
Sellers written reports of the Buyer's Further Investigation, each in form and
substance reasonably satisfactory to Sellers and Buyer.
(b) Remediation Activities. Sellers shall be solely responsible for,
and shall pay all Environmental Costs associated with, remediating the
Environmental Conditions identified during the Buyer's Further Investigations
and/or Sellers' Further Investigations or the performance of Sellers'
remediation at the Independence Site, the Branford Site and, if applicable, at
the Northvale Site, in accordance with the Minimum Remediation Standards and the
other terms and provisions of this Section 8.2. Except as otherwise provided in
Section 8.2(e), Sellers shall have absolute control over all aspects of any
remediation undertaken by Sellers. Sellers shall select and implement a remedy
that, in addition to meeting the Minimum Remediation Standards, does not
materially interfere with or disrupt Buyer's normal business activities at the
Real Property. Sellers shall perform any investigation activities as required
pursuant to this Section 8.2 in a manner that does not materially interfere with
or disrupt Buyer's normal business activities at the Real Property. Sellers
shall prepare a remediation plan within a reasonable time after receipt of
Buyer's Further Investigation for each site, which plan shall contain a schedule
that provides for the prompt completion of the remediation at each site. Upon
completion of each plan for each site, Seller shall submit it to Buyer in
advance of submitting it to any Governmental Authority. Buyer shall have the
right to consult with Sellers, and comment on Sellers' remediation plans and
remediation activities at Buyer's cost, provided that so long as Sellers have
materially complied with their obligations under this Section 8.2, Sellers shall
retain control over the preparation and implementation of the remediation plans
and all remediation activities, and in its sole discretion, may accept or reject
any comments or recommendations by Buyer. Buyer shall have the right to review,
comment on, and observe Sellers' remediation activities at Buyer's cost, but
Sellers shall retain control over Sellers' remediation activities, except as
otherwise provided in Section 8.2(e). Sellers agree to provide to Buyer copies
of all technical reports, studies, tests, documents or other materials in
connection with Sellers' remediation activities in a timely manner. Buyer shall
cooperate with and provide Seller with such access to the Independence Site and
the Branford Site as Sellers deem necessary or desirable to conduct Sellers'
Further Investigations and any remediation activities, provided, however, that
Sellers shall do so in a manner that does not materially disrupt Buyer's normal
business activities. Sellers shall obtain a "No Further Action" letter or
equivalent document from the applicable state governmental agency concluding
that no further remediation activities are required at the sites. Sellers shall
submit to the appropriate regulatory authority a remediation plan in a
reasonably timely manner, but in no case later than two (2) years after the
Closing Date, unless a delay is caused by factors outside the control of
Sellers, including but not limited to, unforeseen environmental conditions at
the Site, delays caused by Third Parties, or delays in governmental review or
approval of any submittals by Sellers. Sellers shall complete the remediation as
set forth in the
39 Asset Purchase Agreement
remedial plans in a reasonably prompt manner, including, without limitation, by
conforming to the extent possible with the schedule for completion of the
remediation as set forth in the remedial plans. In the event that any of
Sellers' remedial plans involve any active remediation system or long-term
monitoring program (excluding, by way of example, any static engineered control
such as a permanent cap), Seller shall maintain and operate such system at its
sole expense until its receipt of a final No Further Action letter or similar
documentation providing that no further active remediation or monitoring is
required and until the remediation is complete within the meaning of Section 8.1
above.
(c) Connecticut Property Transfer Act Responsibilities. Sellers shall
provide to Buyer by not later than 15 days prior to the Closing Date the
following documents with respect to the Branford facility: (i), a fully
completed Form III as defined pursuant to Conn. Stat. 'SS'22a-134(12),
signed and certified by Sellers as the "certifying party," that complies in all
respects with the Connecticut Property Transfer Act, 'SS''SS'22a-134 et seq.;
and (ii) documentation showing that the completed Form III has been submitted to
the Commissioner of the Connecticut Department of Environmental Protection
("DEP"). Sellers shall conduct any activities at the Branford Site as necessary
to discharge its obligations pursuant to the Connecticut Property Transfer Act,
'SS''SS'22a-134 et seq. and under Section 8.2(b).
(d) New Jersey Industrial Site Recovery Act Responsibilities (ISRA).
Sellers shall provide to Buyer by not later than 15 days prior to the Closing
Date at least one of the following documents with respect to the Northvale
facility: (1) a non-applicability letter, (2) written approval of Seller's
negative declaration or "No Further Action" letter as to all areas of concern,
(3) an approved Remediation Agreement with funding source; or (4) a
non-qualified approval of Seller's Remedial Action Workplan, in each case as
such terms are defined in or customarily used in connection with ISRA.
(e) Buyer's Right to Act. In addition to Buyer's rights to make a
claim for indemnification under Section 10.2 for a material breach by Sellers of
this Section 8.2, Buyer shall have the right, but not the obligation, in its
sole discretion, to conduct any investigation or take any remedial or other
appropriate action, at Sellers' cost and expense, if Sellers have not timely
performed any material obligation under this Section 8.2, provided that Buyer
shall have first provided written notice of such failure of Sellers to timely
perform such material obligation and Sellers have failed to cure such failure
within a 90-day period (except that this proviso shall not apply if Buyer
reasonably believes that its immediate action is necessary to prevent an
imminent threat to human health and, in such case, Buyer's right to act at
Sellers' cost with respect to such condition shall continue only for such time
and to such extent as appropriate under the circumstances to prevent and/or cure
any condition causing an imminent threat to human health). Notwithstanding the
90-day limitation on Sellers' right to cure after notice as provided in
foregoing sentence, if Sellers demonstrate in writing to Buyer that their
failure to perform a material obligation under this Section 8.2 cannot be cured
within such 90-day period, Seller shall have such additional time in which to
cure such failure as is reasonable under the circumstances.
8.3 Environmental Records. For a period of ten years after the Closing
Date, Buyer shall not cause or permit the destruction or disposal of
environmental records regarding the
40 Asset Purchase Agreement
Acquired Assets or the EMG Real Property relating to periods prior to the
Closing Date without first offering to surrender them to Sellers, and Buyer
shall allow Sellers and their representatives access to such records during
regular business hours.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Sellers and Buyer. The respective
obligations of Sellers and Buyer to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements shall be subject to the satisfaction
or waiver at or prior to the Closing of each of the following conditions:
(a) All applicable waiting periods (and any extensions thereof) to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated.
(b) All Consents of Governmental Authorities referred to in Sections
5.3 and 6.4 shall have been received.
(c) No Action shall be pending or threatened in writing before any
Governmental Authority wherein an unfavorable Order would prevent consummation
of the transactions contemplated by this Agreement, or cause any of the
transactions contemplated by this Agreement to be rescinded.
9.2 Conditions to Obligation of Sellers. The obligation of Sellers to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction or waiver at or prior to the Closing of each of the following
additional conditions:
(a) The representations and warranties of Buyer set forth in this
Agreement shall have been true and correct in all material respects as of the
date of this Agreement, and shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date (except to
the extent that such representations and warranties are expressly intended to
speak only as of an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such date,
and except to the extent that such representations and warranties are already
qualified by terms such as "material" or "Material Adverse Effect," in which
case such representations and warranties shall be true and correct in all
respects on and as of the Closing Date).
(b) Each of the agreements and covenants of Buyer to be performed and
complied with by Buyer pursuant to this Agreement prior to the Closing Date
shall have been duly performed and complied with in all material respects.
(c) Buyer shall have delivered to Sellers a certificate, dated as of
the Closing Date and signed on its behalf by its chief executive officer and its
chief financial officer, as to the satisfaction by it of the conditions set
forth in Sections 9.1(c), 9.2(a) and 9.2(b).
41 Asset Purchase Agreement
(d) Between the date of this Agreement and the Closing Date, no change
or event shall have occurred that has had a Material Adverse Effect on Buyer.
(e) Buyer shall have delivered the Estimated Purchase Price in
accordance with Section 3.2 and the documents required to be delivered by Buyer
pursuant to Section 4.3.
9.3 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction or waiver at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Sellers set forth in this
Agreement shall have been true and correct in all material respects as of the
date of this Agreement, and shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date (except to
the extent that such representations and warranties are expressly intended to
speak only as of an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such date,
and except to the extent that such representations and warranties are already
qualified by terms such as "material" or "Material Adverse Effect," in which
case such representations and warranties shall be true and correct in all
respects on and as of the Closing Date).
(b) Each of the agreements and covenants of Sellers to be performed
and complied with by Sellers pursuant to this Agreement prior to the Closing
Date shall have been duly performed and complied with in all material respects.
(c) Sellers shall have delivered to Buyer a certificate, dated as of
the Closing Date, as to the satisfaction by Sellers of the conditions set forth
in Sections 9.1(c), 9.3(a) and 9.3(b).
(d) The Financing Conditions shall have been satisfied and Buyer shall
have received the funds which Buyer is entitled to receive under the Financing
Agreements and the Equity Offering as of the Closing Date.
(e) The title company that issued the Title Commitments or another
title insurance company reasonably satisfactory to Buyer (the "Title Company")
shall be prepared to issue (subject to any requirements to such issuance that
are to be satisfied by Buyer) a 1992 ALTA Owner's Title Insurance Policy or
other form of policy reasonably acceptable to the Buyer for each Owned Real
Property, insuring the Buyer's fee simple title to each Owned Real Property as
of the Closing Date (including all recorded appurtenant easements, insured as
separate legal parcels), with gap coverage through the date of recording,
subject only to Permitted Liens, in such amount as the Buyer reasonably
determines to be the value of the Owned Real Property insured thereunder and
including such endorsements as Buyer or Buyer's Lender reasonably requires (the
"Title Policies").
(f) The Buyer shall have obtained a survey for each parcel of Owned
Real Property, dated after the date of this Agreement, prepared by a surveyor
licensed in the jurisdiction where the applicable Owned Real Property is
located, reasonably satisfactory to the Buyer, and conforming to 1999 ALTA/ACSM
Minimum Detail Requirements for Land Title Surveys, including Table A Items Nos.
1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 0, 0, 00, 00(x)(0), 00,
00 Xxxxx Purchase Agreement
14, 15 and 16, and such other standards as the Title Company and the Buyer may
reasonably require as a condition to the removal of any survey exceptions from
the Title Policies, and certified to the Buyer, the Buyer's Lender and the Title
Company, in a form and with a certification reasonably satisfactory to each of
such parties (the "Surveys"); the Surveys shall not disclose any encroachment
from or onto any of the Owned Real Property or any other material survey defect
which has not been cured or insured over to the Buyer's reasonable satisfaction
prior to the Closing.
(g) Between the date of this Agreement and the Closing Date, no change
or event shall have occurred that has had a Material Adverse Effect on the EMG
Business.
(h) Sellers shall have delivered to Buyer the documents required to be
delivered by Sellers pursuant to Section 4.2.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1 Survival Periods.
(a) Sellers' liability for any breach of the representations and
warranties made by them in this Agreement shall survive until the date that is
eighteen months after the Closing Date, except that:
(i) Sellers' liability for any breach of the representations and
warranties set forth in Section 5.17 (Taxes) or Section 5.18 (Employee
Benefit Plans) will survive until the expiration of all applicable periods
under the Laws prescribing applicable statutes of limitation with respect
to the subject matter of such representations and warranties;
(ii) Sellers' liability for any breach of the representations and
warranties set forth in Section 5.19 (Environmental Matters) will survive
for five years after the Closing Date; and
(iii) Sellers' liability for any breach of the representations
and warranties set forth in Section 5.1 (Organization and Standing),
Section 5.2 (Authority, Validity and Effect), Section 5.6 (Acquired
Assets), or Section 5.24 (No Brokers) will survive indefinitely.
(b) Buyer's liability for any breach of the representations and
warranties made by it in this Agreement shall survive until the date that is six
months after the expiration of the Lock-Up Period (as defined in the Share
Ownership Agreement), except that Buyer's liability for any breach of the
representations and warranties set forth in Section 6.1 (Organization and
Standing), Section 6.2 (Authority, Validity and Effect), Section 6.3
(Capitalization; Title to Stock), or Section 6.11 (No Brokers) will survive
indefinitely.
(c) Each of the covenants and agreements of the Parties shall survive
the Closing in accordance with its terms.
43 Asset Purchase Agreement
(d) No party providing indemnification pursuant to this Article X (an
"Indemnifying Party") is obligated to provide such indemnification with respect
to the representations and warranties (but not the covenants) to the other party
(the "Indemnified Party") unless the Indemnified Party has delivered written
notice of its claim for indemnification prior to the expiration of the
applicable period set forth in Section 10.1(a) or 10.1(b), unless such claim is
based upon the assertion that the Indemnifying Party had committed fraud;
provided, however, that any claim for indemnification for which a notice has
been given in accordance with Section 10.4 on or before the expiration of such
period may continue to be asserted and indemnified against until finally
resolved.
10.2 Indemnification. Subject to the other provisions of this Article X,
from and after the Closing,
(a) Sellers shall indemnify and hold Buyer and its officers,
directors, shareholders, employees and Affiliates harmless from and against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
Liabilities, losses, claims and damages (collectively, "Damages") resulting
from: (i) Sellers' breach of any representation or warranty made by them in or
pursuant to this Agreement, provided that Sellers shall not be liable for breach
of any representation or warranty to the extent (A) the fact, matter or
circumstance giving rise to a claim for breach is fairly disclosed in any of the
Disclosure Schedules to this Agreement or the documents attached thereto, or (B)
the amount claimed is reflected in the Final Net Book Value Statement or was the
subject of a Dispute Notice; (ii) Sellers' failure to perform or breach of any
covenant made by them in or pursuant to this Agreement; or (iii) Sellers'
failure to pay, perform or discharge in accordance with its terms any Retained
Liability.
(b) Buyer shall indemnify and hold Sellers and their respective
officers, directors, shareholders, employees and Affiliates harmless from and
against all Damages resulting from (i) Buyer's breach of any representation or
warranty made by it in or pursuant to in this Agreement, (ii) Buyer's failure to
perform or breach of any covenant made by it in or pursuant to this Agreement,
(iii) Buyer's failure to pay, perform or discharge in accordance with its terms
any of the Assumed Liabilities, or (iv) all Liabilities arising under any
Environmental, Health or Safety Requirements or with respect to Environmental
Claims or Environmental Costs arising from Environmental Conditions at the Real
Property, irrespective of whether such Liability attaches or accrues to Buyer or
Sellers in the first instance, but not including any Retained Liability.
(c) The Buyer expressly releases and discharges Seller, its successors
and assigns, from all claims, demands, actions, judgments and executions for the
indemnified matters set forth in Section 10.2(b)(iv).
10.3 Indemnification Amounts.
(a) Notwithstanding any provision to the contrary contained in this
Agreement, Sellers will not be obligated to indemnify Buyer for any Damages
resulting from a breach of a representation or warranty made by Sellers:
44 Asset Purchase Agreement
(i) to the extent that Damages arising from any individual claim
for indemnification are $10,000 or less (the "Buyer Minimum Claim Amount");
(ii) unless and until the amount of all such Damages (other than
those for claims that do not satisfy the Buyer Minimum Claim Amount)
exceeds $1,300,000 (the "Buyer Deductible"), and then only for the amount
of the Damages in excess of the Buyer Deductible; provided, however, that
the Buyer Deductible shall not apply to any Damages resulting from a breach
of a representation or warranty made by Sellers pursuant to Section 5.19
(Environmental Matters); and
(iii) to the extent that the aggregate amount of all such
payments for Damages (other than those for claims that do not satisfy the
Buyer Minimum Claim Amount) to Buyer exceeds an amount equal to sixty-five
percent (65%) of the amount of the Purchase Price paid in cash.
(b) Notwithstanding any provision to the contrary contained in this
Agreement, Buyer will not be obligated to indemnify Sellers for any Damages
resulting from a breach of a representation or warranty made by Buyer:
(i) to the extent that the Damages arising from any individual
claim for indemnification are $10,000 or less; and
(ii) to the extent that the aggregate amount of all such payments
for Damages to Sellers exceeds the aggregate amount of the Purchase Price
paid in the form of the Seller Shares, as calculated on the basis of the
Price Per Share and after giving effect to any adjustments to the Purchase
Price under Section 3.3.
(c) For purposes of this Article X, a representation or warranty shall
be deemed breached if it would have been breached had the representation not
been qualified by the words "material", "materiality", "Material Adverse
Effect", "in all material respects", or words of similar import.
10.4 Claims.
(a) If an Indemnified Party intends to seek indemnification pursuant
to this Article X, such Indemnified Party shall promptly notify the Indemnifying
Party in writing of such claim describing such claim in reasonable detail;
provided that the failure to provide such notice will not affect the obligations
of the Indemnifying Party unless it is actually prejudiced thereby. If the claim
for indemnification does not involve a claim by a third party then the
Indemnifying Party shall be deemed to have accepted liability for the Damages
arising from such claim (subject to the limitations set forth in this Article)
unless the Indemnifying Party delivers a written objection to the Indemnified
Party within 30 days after receiving the notice of claim. If such claim involves
a claim by a third party against the Indemnified Party, the Indemnifying Party
will have thirty days after receipt of such notice to elect to undertake,
conduct and control, through counsel of its own choosing and at its own expense,
the settlement or defense thereof, and if it so elects, the Indemnified Party
shall cooperate with it in connection therewith; provided that the Indemnified
Party may participate in such settlement or defense through counsel chosen and
paid for by such Indemnified Party. The Indemnifying
45 Asset Purchase Agreement
Party shall not, without the written consent of the Indemnified Party, settle or
compromise any action in any manner or consent to the entry of any judgment with
respect to the matter unless the sole relief granted is the payment of money by
the Indemnifying Party and the plaintiff or claimant releases the Indemnified
Party from all liability. If the Indemnifying Party does not notify the
Indemnified Party within thirty days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, or if the Indemnifying Party assumes such defense but
thereafter fails to pursue such defense actively, then the Indemnified Party
will have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement. As
long as the Indemnifying Party is contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party has the right to pay or settle any such claim;
provided that as long as the Indemnifying Party is contesting such claim in good
faith, any such settlement is to include as an unconditional term thereof the
delivery by the claimant or plaintiff to the Indemnifying Party of a duly
executed written release of the Indemnifying Party from all liability and
obligation in respect of such action; and provided further that in such event,
unless the Indemnifying Party has consented to such payment or settlement, the
Indemnified Party shall waive any right to indemnity therefor by the
Indemnifying Party; and provided further that the Indemnified Party shall
provide the Indemnifying Party reasonable advance notice of any proposed
settlement or payment.
(b) The Indemnified Party shall cooperate fully in all aspects of any
investigation, defense, pretrial activities, trial, compromise, settlement or
discharge of any claim in respect of which indemnity is sought pursuant to this
Article X, including, but not limited to, by providing the other party with
reasonable access to employees and officers (including as witnesses) and other
information. The Indemnified Party's actual costs and expenses of providing such
cooperation shall constitute a part of its Damages for which it is entitled to
indemnification in accordance with this Article X.
10.5 Exclusive Remedy. Except with respect to the availability of equitable
relief or actual fraud, the indemnification provisions of this Article X are the
exclusive remedy following the Closing for any breaches or alleged breaches of
any representation, warranty, covenant, agreement or other provision of this
Agreement or the transactions contemplated hereby and, without limitation of the
foregoing, Buyer and each Seller hereby waives any and all rights that are or
may otherwise be available to it at law or equity in respect of the transactions
contemplated hereby, including, without limitation, any claim pursuant to the
federal Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. 'SS'SS'9601 et seq.; and none of the Parties, nor any of its Related
Persons, may bring any action or proceeding, at law, equity or otherwise,
against any other party or its Related Persons, in respect of any breaches or
alleged breaches of any representation, warranty or other provision of this
Agreement, except pursuant to the express provisions of this Article X. The
Parties hereby acknowledge that no Party has made any representations and
warranties, express or implied, with respect to this Agreement or the matters
contemplated hereby, except as explicitly set forth in or made pursuant to this
Agreement. The Parties also acknowledge that this Section 10.5 is not intended
to restrict the rights of either party arising from and after the Closing Date
under the Ancillary Agreements.
46 Asset Purchase Agreement
10.6 Tax and Insurance. The amount of any Damages suffered by an
Indemnified Party is to be reduced by any net federal Tax, insurance or other
benefits that such party receives in respect of or as a result of such Damages
or the facts or circumstances relating thereto. A 34% tax rate is to be used in
computing any such reduction for net federal Tax benefits. If any Damages for
which indemnification is provided hereunder are subsequently reduced by any net
tax benefit, insurance payment or other recovery from a third party, the
Indemnified Party shall promptly remit the amount of such reduction to the
Indemnifying Party.
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
11.1 Employment. Buyer shall make offers of employment to, and employ for a
period of not less than two months after the Closing Date, on the terms required
by this Article XI, all individuals who are employed in the EMG Business
immediately prior to the Closing Date and who accept such offers of employment,
including, to the extent set forth in Section 11.5, those individuals who are on
lay-off, leave of absence, disability leave or elect to retire immediately prior
to the Closing Date (collectively, those employees who accept employment with
Buyer as of the Closing Date shall collectively be referred to herein as the
"Transferred Employees"); provided that, (a) except as otherwise required by the
Employee Retention Incentive Agreements, Buyer will not be required to continue
to employ any Transferred Employee who resigns or otherwise voluntarily
terminates his employment by Buyer or who is terminated by Buyer for cause, (b)
Buyer shall not make offers of employment to the individuals identified on
Schedule 11.1 whom Sellers desire to retain after the Closing Date and such
individuals shall not be considered "Transferred Employees".
11.2 Compensation and Employee Benefits.
(a) In General. Buyer shall provide each Transferred Employee, so long
as he or she otherwise remains employed by Buyer, with compensation, employee
benefits and severance programs that, in the aggregate, are substantially
equivalent to those provided by Buyer immediately prior to the Closing Date to
Buyer's employees serving in comparable capacities and with comparable years of
service. Subject to the foregoing, the other provisions of this Article XI and
the provisions of the Employee Retention Incentive Agreements, Buyer shall have
the right to determine the compensation and employee benefits of the Transferred
Employees.
(b) Severance Payments. Buyer and Sellers will be obligated for
severance payments to Transferred Employees as provided in the Reimbursement
Agreement except that Exhibit III of that letter shall be amended as set forth
on Schedule 11.2(b). Sellers shall be liable for and shall pay all eligible
individuals employed by the EMG Business prior to the Closing severance benefits
in accordance with the terms of Seller's severance policies; provided, however,
that nothing in this Agreement should be construed to obligate Sellers to pay
severance to any Transferred Employee or any employee of the EMG Business who is
made an offer of employment by Buyer , except as provided in the Reimbursement
Agreement. Seller shall also reimburse Buyer for all severance costs incurred by
Buyer, up to an aggregate cumulative amount of $400,000, in connection with any
Transferred Employee who was an
47 Asset Purchase Agreement
employee of Sellers' RAM Division on the Closing Date who is terminated by Buyer
within six months after the Closing Date because of the closing or relocation of
the operations of the RAM Division.
(c) Service Credit. For purposes of any employee benefit plan, program
or arrangement established for or made available to Transferred Employees by
Buyer (the "Buyer Plans"), other than Buyer's post-retirement medical benefit
plan, Buyer shall credit such Transferred Employees with service for all periods
of service prior to the Closing Date with Sellers or any Affiliate of Sellers.
Such service will be credited for purposes of determining eligibility for,
vesting in and the amount of benefits under all of the Buyer Plans and for all
other purposes for which service is either taken into account or recognized;
provided, however, that such service need not be credited to the extent it would
result in duplication of coverage or benefits.
(d) Welfare Benefit Plans. Coverage for all Transferred Employees and
their respective dependents under the Seller ERISA Plans and Seller Benefit
Arrangements that are welfare benefit plans within the meaning of Section 3(1)
of ERISA (the "Seller Welfare Plans"), will terminate effective as of the day
immediately prior to the Closing Date. All Liabilities of Sellers under the
Seller Welfare Plans prior to the effective date of such termination shall be
Retained Liabilities. The Buyer Plans that are welfare benefit plans within the
meaning of Section 3(1) of ERISA (the "Buyer Welfare Plans") shall provide
coverage and benefits to Transferred Employees (and the eligible dependents of
the Transferred Employees) beginning on the Closing Date. Buyer shall cause
deductibles and out-of-pocket payments expended for coverage under the Seller
Welfare Plans in the plan year in which the Closing Date occurs to be counted
toward the deductibles and out-of-pocket maximums applicable to each Transferred
Employee under the Buyer Welfare Plans. Sellers will provide Buyer, at Buyer's
expense, with electronic or other copies of existing records regarding each
Transferred Employee's status regarding deductibles and out-of-pocket expenses
under the Seller Welfare Plans (it being understood that Sellers will not be
required to generate any reports or provide any other information that it did
not produce or maintain in the Ordinary Course of Business). In addition, no
pre-existing condition, limitation, exclusion or waiting period applicable with
respect to any Buyer Welfare Plan will apply to any Transferred Employee.
(e) Savings and Pension Plans.
(i) Effective as of the Closing Date, Sellers will cause all
Transferred Employees to become fully vested in their account balances
under the Xxxx Corporation Employee Incentive and Savings Investment Plan
(the "Savings Plan") and their accrued benefits under the Pension Plan for
Xxxx Automotive Aftermarket Group Employees (the "Pension Plan"). All
Liabilities of Sellers under the Savings Plan and the Pension Plan shall be
Retained Liabilities.
(ii) With respect to each Transferred Employee who has an
outstanding loan under the Savings Plan, Buyer and Sellers shall take such
action as shall be necessary to permit such Transferred Employee to
rollover such loan to the applicable Buyer Plan.
48 Asset Purchase Agreement
11.3 COBRA; Retiree Medical Benefits. Buyer shall have sole responsibility
for "continuation coverage" benefits provided after the Closing Date under
Buyer's group health plans to all Transferred Employees, and "qualified
beneficiaries" of Transferred Employees, for whom a "qualifying event" occurs on
or after the Closing Date. Sellers shall have the sole responsibility for
"continuation coverage" benefits provided under Sellers' group health plans to
all employees of Sellers, and "qualified beneficiaries" of employees of Sellers,
for whom a "qualifying event" has occurred prior to the Closing Date, or for any
such individual who is not a Transferred Employee or "qualified beneficiary"
with respect to a Transferred Employee, regardless of when such "qualifying
event" occurs, and the obligations of Sellers under this sentence shall be
Retained Liabilities. The terms "continuation coverage," "qualified
beneficiaries" and "qualifying event" shall have the meaning ascribed to them
under Section 4980B of the Code and Sections 601-608 of ERISA.
11.4 WARN Act. Buyer shall not engage in a "mass layoff" or "plant closing"
as defined in the United States Worker Adjustment and Retraining Notification
Act (the "WARN Act") affecting the Transferred Employees without complying with
the WARN Act. Buyer shall defend, indemnify and hold harmless Sellers and their
Related Persons from any claims, charges, suits, demands, damage, or liability
arising out of or relating to any such noncompliance with the WARN Act from and
after the Closing Date.
11.5 Non-Active Employees. Except as expressly provided below, Buyer shall
make offers of employment to, and shall employ to the extent such offers are
accepted, the individuals employed in the EMG Business who are on non-active
status on the Closing Date due to lay-off, leave of absence or disability (the
"Non-Active Employees"). Notwithstanding the foregoing, Sellers shall retain as
their employees any Non-Active Employees listed on Schedule 11.5 who are on
long-term disability leave on the Closing Date and any other Non-Active
Employees who are on long-term disability leave on the Closing Date, up to a
maximum of sixteen (16) such employees. In consideration of Seller's agreement
to retain such employees, Buyer shall pay to Sellers, on the Closing Date and
subject to the contemporaneous consummation of the transactions contemplated by
this Agreement, the sum of Five Hundred Thousand Dollars ($500,000) by wire
transfer of immediately available funds to an account designated by Xxxx.
ARTICLE XII
TERMINATION
12.1 Termination. Notwithstanding any other provision of this Agreement,
this Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual written consent of Buyer and Xxxx;
(b) by Buyer, if a Seller has committed a material breach of any
representation, warranty or covenant of Sellers in this Agreement and such
breach is either not capable of being cured or if such Seller has failed to cure
such breach within 30 days after written notice thereof from Buyer;
49 Asset Purchase Agreement
(c) by Xxxx, if Buyer has committed a material breach of any
representation, warranty or covenant of Buyer in this Agreement and such breach
is either not capable of being cured or if Buyer has failed to cure such breach
within 30 days after written notice thereof from Xxxx;
(d) by Buyer or Xxxx, upon written notice to the other, if the
transactions contemplated by this Agreement have not been consummated on or
prior to the Outside Termination Date, because the conditions precedent to the
terminating party's obligations to consummate the transactions hereunder set
forth in Article IX have not been met by such date, unless such failure of
consummation is due to the failure of the Party seeking such termination to
perform or observe in all material respects the covenants and agreements hereof
to be performed or observed by such Party;
(e) by Xxxx, upon written notice to Buyer, if the transactions
contemplated by this Agreement have not been consummated on or prior to the
Outside Termination Date as a result of the failure of Buyer to satisfy the
condition in Section 9.3(d) (unless such failure results from Sellers' breach of
Section 7.24); or
(f) by Buyer or Xxxx, upon written notice to the other Party, if a
Governmental Authority of competent jurisdiction has issued an Order enjoining
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement, and such Order has become final and non-appealable; provided,
however, that the Party seeking to terminate this Agreement pursuant to this
clause (f) has used its commercially reasonable efforts to remove such Order.
12.2 Effect of Termination.
(a) The termination of this Agreement is to be effected by delivery of
written notice of such termination by the Party terminating the Agreement to the
other Party. In the event of termination of this Agreement pursuant to Section
12.1, no Party will have any Liability or any further obligation to any other
Party (except for any Liability of any Party then in breach and as provided in
Section 12.2(b) or Section 12.2(c)).
(b) Buyer shall pay to Xxxx the sum of $6,000,000 in the event that:
(i) Xxxx terminates this Agreement pursuant to Section 12.1(c);
or
(ii) Buyer wrongfully refuses or fails to consummate the
transactions contemplated by this Agreement; or
(iii) Buyer terminates this Agreement pursuant to Section 12.1(d)
as a result of the failure to satisfy the condition in Section 9.3(d)
(unless such failure to results from Sellers' breach of Section 7.24); or
(iv) Xxxx terminates this Agreement pursuant to Section 12.1(e).
(c) Xxxx shall pay to Buyer the sum of $6,000,000 in the event that:
50 Asset Purchase Agreement
(i) Buyer terminates this Agreement pursuant to Section 12.1(b);
or
(ii) Any Seller wrongfully refuses or fails to consummate the
transactions contemplated by this Agreement.
(d) The payment from Buyer or Xxxx pursuant to subsection (b) or
subsection (c) above, as the case may be, shall be due and payable within five
(5) Business Days after the effective date of termination of this Agreement.
Such payment by Buyer or Xxxx shall be regarded as liquidated damages and not as
a penalty and, except as provided in Section 12.2(e), the Party making such
payment shall have no further liability to the other Party or Parties as a
result of the termination of this Agreement. Without intending to limit any
other provision of this Agreement, In no event shall either party be obligated
to make the payment described in this subsection if the transactions
contemplated by this Agreement are not consummated because the applicable
waiting periods under the HSR Act shall not have expired or been terminated or
because any Governmental Authority shall have commenced an Action or obtained an
Order to prevent the consummation of such transactions on the basis of
applicable antitrust or similar Laws.
(e) The obligations of the Parties under Sections 5.24, 6.11, 7.3 and
13.1 and under the Reimbursement Agreement shall survive any termination of this
Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses (including all legal,
accounting, broker, finder or investment banker fees) incurred in connection
with this Agreement and the Ancillary Agreements and the transactions
contemplated hereby are to be paid by the Party incurring such expenses, except
as expressly provided herein, in the Ancillary Agreements or in the
Reimbursement Agreement and except that Buyer and Sellers will each pay one-half
of (a) the costs of the filing fee and other out-of-pocket costs (including any
out-of-pocket payments to third party economists and accountants but excluding
any legal fees and expenses) incurred in connection with the HSR Act filing and
the efforts to cause the applicable waiting period to expire or be terminated
(b) the costs and expenses incurred by Buyer to obtain the Surveys, and (c) the
fees and expenses of PricewaterhouseCoopers incurred in the preparation of the
monthly and quarterly financial statements delivered pursuant to Section 7.17
and the audited annual financial statements delivered pursuant to Section 7.24.
13.2 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors and permitted
assigns, and no Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other Party; provided, however, that Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its Subsidiaries and (ii)
designate one or more of its Subsidiaries to perform its obligations hereunder
(in any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
51 Asset Purchase Agreement
13.3 Third Party Beneficiaries. Each Party hereto intends that neither this
Agreement nor any of the Ancillary Agreements benefits or creates any legal or
equitable right, remedy or claim in or on behalf of any Person other than the
Parties. This Agreement, the Ancillary Agreements and all of their respective
provisions and conditions are for the sole and exclusive benefit of the Parties
to this Agreement and the Ancillary Agreements, and their successors and
permitted assigns.
13.4 Notices. Any notice or other communication provided for herein or
given hereunder to a Party hereto will be sufficient if in writing, and sent by
facsimile transmission (electronically confirmed), delivered in person, mailed
by first class registered or certified mail, postage prepaid, or sent by Federal
Express or other overnight courier of national reputation, addressed as follows:
If to Buyer:
Standard Motor Products, Inc.
00-00 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to Sellers:
Xxxx Corporation
0000 Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
52 Asset Purchase Agreement
or to such other address with respect to a Party as such Party notifies the
other in writing as above provided.
13.5 Complete Agreement. This Agreement (along with the Disclosure
Schedules and the exhibits and appendices hereto) and the Ancillary Agreements,
together with the Reimbursement Agreement and the Confidentiality Agreement,
contain the complete and exclusive statement of the terms of the agreements
between the Parties with respect to the transactions contemplated hereby and
thereby and supersede all prior agreements and understandings between the
Parties with respect thereto.
13.6 Captions; References. The name of this Agreement and the captions
contained herein are for convenience of reference only and do not affect the
interpretation or construction hereof. When a reference is made in this
Agreement to a clause, a Section or an Article, such reference will be to a
clause, a Section or Article of this Agreement unless otherwise indicated.
13.7 Amendment. This Agreement may be amended or modified only by a written
agreement referencing this Agreement and duly executed by the Parties.
13.8 Waiver. At any time prior to the Closing Date, the Parties may (a)
extend the time for the performance of any of the obligations or other acts of
the Parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein, to the
extent permitted by applicable Law. Any agreement on the part of a Party hereto
to any such extension or waiver will be valid only if set forth in a writing
signed on behalf of such Party. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.
13.9 Governing Law. This Agreement is to be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Ohio or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Ohio.
13.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision is to be interpreted
to be only so broad as is enforceable.
13.11 Updated Disclosure Schedules. Until five (5) days prior to Closing,
Sellers may deliver to Buyer amended versions of the Schedules required or
permitted by this Agreement to the extent required to reflect developments in or
effecting the EMG Business and its assets or liabilities which occur from and
after the date of this Agreement (such developments, together with any
information of which Sellers notify Buyer pursuant to the last sentence of
Section 7.2,
53 Asset Purchase Agreement
being collectively referred to as "New Facts"). If any amendment made pursuant
to this Section 13.11 discloses New Facts which result from the conduct of the
EMG Business as permitted by Sections 7.1 or 7.2 of this Agreement, or which is
an event that is deemed not to have a Material Adverse Effect pursuant to the
proviso to the definition of such term, then without any further action by Buyer
the Schedules, as so amended, will be deemed to have amended for all purposes of
this Agreement, including Section 9.3(a) and Section 10.2(a). If any amendment
delivered by Sellers pursuant to this Section 13.11 discloses New Facts other
than those described in the preceding sentence, then the Schedules will be
deemed to have been amended for the purposes of this Agreement only if and to
the extent Buyer approves such amendment in writing.
13.12 Submission to Jurisdiction. Each of the Parties submits to the
non-exclusive jurisdiction of any state or federal court sitting in the County
of New York, New York and the County of Xxxxx, Ohio in any Action arising out of
or relating to this Agreement and agrees that all claims in respect of such
Action may be heard and determined in any such court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought. Any Party may make service on the other Party by sending or
delivering a copy of the process to the Party to be served at the address and in
the manner provided for the giving of notices in Section 13.4 above. Nothing in
this Section 13.12, however, shall affect the right of any Party to bring any
action or proceeding arising out of or relating to this Agreement in any other
court or to serve legal process in any other manner permitted by law or in
equity. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or in equity.
13.13 Construction. This Agreement is the result of the joint efforts of
Buyer and Sellers, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the Parties and there is to be no
construction against either Party based on any presumption of that Party's
involvement in the drafting thereof. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Whenever the context
so requires or permits, all references to the masculine herein shall include the
feminine and neuter, all references to the neuter herein shall include the
masculine and feminine, all references to the plural shall include the singular
and all references to the singular shall include the plural. Nothing in the
Disclosure Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the applicable Disclosure Schedule
or a document attached thereto fairly discloses the exception. Without limiting
the generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact there exists
another representation, warranty, or covenant relating to the same subject
matter (regardless of the relative levels of specificity) that the Party has not
breached will not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
54 Asset Purchase Agreement
13.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
(Signatures are on the following page.)
55 Asset Purchase Agreement
IN WITNESS WHEREOF, Buyer and Sellers have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BUYER:
STANDARD MOTOR PRODUCTS, INC.
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Vice President Finance, Chief Financial Officer
SELLERS:
XXXX CORPORATION BWD AUTOMOTIVE CORPORATION
By: /s/ Xxxxx X. XxXxxxxxx By: /s/ Xxxxx X. XxXxxxxxx
---------------------------------- ----------------------------------
Name: Xxxxx X. XxXxxxxxx Name: Xxxxx X. XxXxxxxxx
Title: Title:
AUTOMOTIVE CONTROLS CORP. RISTANCE CORPORATION
By: /s/ Xxxxx X. XxXxxxxxx By: /s/ Xxxxx X. XxXxxxxxx
---------------------------------- ----------------------------------
Name: Xxxxx X. XxXxxxxxx Name: Xxxxx X. XxXxxxxxx
Title: Title:
PACER INDUSTRIES, INC. ENGINE CONTROLS DISTRIBUTION
SERVICES, INC.
By: /s/ Xxxxx X. XxXxxxxxx By: /s/ Xxxxx X. XxXxxxxxx
---------------------------------- ----------------------------------
Name: Xxxxx X. XxXxxxxxx Name: Xxxxx X. XxXxxxxxx
Title: Title:
Asset Purchase Agreement
APPENDIX A
DEFINITIONS
"Accounts Receivable" has the meaning set forth in Section 1.1(e).
"Acquired Assets" has the meaning set forth in Section 1.1.
"Acquired Contracts" has the meaning set forth in Section 1.1(g).
"Acquired Intellectual Property" has the meaning set forth in Section
1.1(i).
"Action" means any action, suit or legal, administrative or arbitral
proceeding or investigation before any Governmental Authority.
"Affiliate" means with respect to any Person, any Person that directly or
indirectly controls, is controlled by or is under common control with such
Person.
"Agreement" has the meaning set forth in the preamble to this Agreement.
"Ancillary Agreements" means the Share Ownership Agreement, the Nashville
Sub-Lease, the Nashville Sub-Sub-Lease, the Seller Leases, the Supply
Agreements, the Transition Services Agreements, and the other agreements and
documents contemplated hereby.
"Apportionable Expenses" has the meaning set forth in Section 7.11(a).
"Assumed Liabilities" has the meaning set forth in Section 2.1.
"Xxxx of Sale" means the xxxx of sale and instrument of assignment and
assumption substantially in the form of Exhibit F hereto.
"Branford Access Agreement" means the access agreement between Buyer and a
Seller, granting to such Seller access to the fuel pump testing areas at the
Branford facility, substantially in the form of Exhibit Z hereto, with such
changes thereto as shall be mutually acceptable to Buyer and the applicable
Seller.
"Branford Rental Properties" means the real property and all personal
property located thereon located adjacent to the real property located in
Branford, Connecticut and more particularly described on Schedule A-1 attached
hereto.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banks in Ohio or New York are authorized or obligated by Law to close.
"Buyer" has the meaning set forth in the preamble to this Agreement.
"Buyer Deductible" has the meaning set forth in Section 10.3(a)(ii).
"Buyer Minimum Claim Amount" has the meaning set forth in Section
10.3(a)(i).
A-2
"Buyer Plans" has the meaning set forth in Section 11.2(c).
"Buyer Reports" has the meaning set forth in Section 6.5.
"Buyer Welfare Plans" has the meaning set forth in Section 11.2(d).
"Buyer's Accountants" has the meaning set forth in Section 3.3(d).
"Buyer's Knowledge" means the actual knowledge of Xxxxx Xxxxx, Xxxxx Xxxxx,
Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxx and Xxxx Xxxxx.
"Buyer's Lender" means General Electric Capital Corporation, as agent for
the lenders under the Financing Agreements.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"Closing" has the meaning set forth in Section 4.1.
"Closing Date" has the meaning set forth in Section 4.1.
"Closing Net Book Value" has the meaning set forth in Section 3.3(a).
"Closing Net Book Value Statement" has the meaning set forth in Section
3.3(c).
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Common Shares" has the meaning set forth in Section 3.2(a)(ii).
"Confidentiality Agreement" has the meaning set forth in Section 7.3(c).
"Consent" means any consent, approval, authorization, qualification, waiver
or notification of a Governmental Authority or any other Person.
"Contracts" means any written or oral contract, agreement, license,
commitment, undertaking or arrangement, whether express or implied.
"CSFB" has the meaning set forth in Section 5.24.
"CUMSA" means Candados Universales de Mexico, S.A. de C.V.
"Damages" has the meaning set forth in Section 10.2(a).
"Xxxx" means Xxxx Corporation, a Virginia corporation.
"DEP" has the meaning set forth in Section 8.2(c).
"Designated Accounting Arbitrator" has the meaning set forth in Section
3.3(e).
A-3
"Disclosure Schedules" means the Schedules attached hereto pursuant to
Articles V and VI.
"Dispute Notice" has the meaning set forth in Section 3.3(e).
"DOJ" has the meaning set forth in Section 7.4(b).
"Echlin-Mexicana" means Echlin Industrias de Mexico, S.A. de C.V.
"EMG Business" means the manufacture and distribution in the United States
for the passenger car and light vehicle markets of aftermarket parts for bulk
ignition wire, ignition wire sets, battery cable assemblies, mechanical fuel
injection, electric fuel injection, disk fuel injection, distributor caps,
rotors, distributor cap relays, ignition coils, oxygen sensors, camshaft
sensors, crankshaft sensors, electronic ignition, solenoids, voltage regulators,
computer control modules, carburetor kits, mass air flow sensors, glow plug
controllers, condensers, contact sets, pick-up coils, ballast resistors, PCV
valves, automotive relays, emission gas regulators, and fuel pressure regulators
and all other product groups sold by the Sellers in the last 12 months that were
reflected in the EMG Financial Statements. The term "EMG Business" shall not,
however, include manufacture or distribution anywhere in the world of any
products of the Retained Business Lines.
"EMG Contracts" has the meaning set forth in Section 5.9(a).
"EMG Financial Statements" has the meaning set forth in Section 5.4(a).
"Employee Retention Incentive Agreements" means the Employee Retention
Incentive Agreements by and between Xxxx and certain management members of the
EMG Business set forth on Exhibit G hereto.
"Environment" shall include, but is not limited to, air, land, surface
water or groundwater, and any building structure (such as floors, walls,
subsurface material, etc.), but shall not include any equipment.
"Environmental Claim" shall mean any investigation, notice, violation,
directive, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial, quasi-judicial or private in nature) arising (i)
pursuant to or in connection with any violation of any Environmental, Health,
and Safety Requirement, (ii) in connection with any abatement, removal,
remedial, corrective, or other response action involving Hazardous Substances,
or (iii) arising from damage to natural resources.
"Environmental Condition" shall mean any condition (including, without
limitation, any Hazardous Substances Contamination) with respect to the
Environment, as a result of which any Person (i) has incurred, or which results
in any damage, loss, cost, expense, claim, or liability to any Person or
property (including, without limitation, any Government Authority), or (ii) has
become subject to any order or demand to remediate such condition, including,
without limitation, any condition resulting from the operation of the EMG
Business.
A-4
"Environmental Costs" shall mean all charges, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including all consultants' fees, arising under
or related in any way to Environmental, Health, and Safety Requirements or
relating to a requirement of an applicable state voluntary cleanup program to
achieve an industrial property standard or criteria for remediation.
"Environmental, Health, and Safety Requirements" shall mean any and all
present and subsequently enacted laws, statutes, codes, rules, or regulations,
ordinances, treaties, , and permits, applicable to, affecting or relating to the
protection, preservation or remediation of the Environment enacted or
promulgated, published, decided or required by any federal, state, provincial,
county or municipal legislative, executive, judicial or regulatory authority, as
the case may be, including: (1) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 USCA 9601 et seq., (2) Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA 6901 et
seq., (3) Federal Water Pollution Control Act of 1972, as amended by the Clean
Water Act of 1977, as amended, 33 USCA 1251 et seq., (4) Toxic Substances
Control Act of 1976, as amended, 15 USCA 2601 et seq., (5) Emergency Planning
and Community Right-To-Know Act of 1986, 42 XXXX 00000 et seq., (6) Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 USCA 7401 et
seq., (7) National Environmental Policy Act of 1970, as amended, 42 USCA 4321 et
seq., (8) Rivers and Harbors Act of 1899, as amended, 33 USCA 401 et seq., (9)
Endangered Species Act of 1973, as amended, 16 USCA 1531 et seq., (10)
Occupational Safety and Health Act of 1970, as amended, 29 USCA 651 et seq., to
the extent such act applies to the protection of the Environment, (11) Safe
Drinking Water Act of 1974, as amended, 42 USCA 300 (f) et seq., (12) Pollution
Prevention Act of 1990, 42 XXXX 00000 et seq., (13) Oil Pollution Act of 1990,
33 USCA 2701 et seq., (14) the Atomic Energy Act of 1954 (42 USCA. 2011, et.
seq.), and any rules, regulations, ordinances, permits, policy statements,
guidance documents and judicial decisions enacted, issued, or promulgated,
published, decided or required by or under the laws referred to in items
(1)-(14) above, as well as any similar state, county or municipal statutes,
codes, rules or regulations ordinances, permits, policy statements, guidance
documents, and judicial decisions as the case may be.
"Environmental Permits" shall mean any and all permits, licenses,
approvals, authorizations, consents or registrations required by any
Environmental, Health, and Safety Requirements in connection with the ownership,
construction, equipping, use or operation of the EMG Business or the Real
Properties, for the storage, treatment, generation, transportation, processing,
handling, production, release, storage, transportation and/or disposal of
Hazardous Substances in connection with the EMG Business or the sale, transfer
or conveyance of the Real Properties.
"Environmental Reports" means the Phase I and other environmental reports
identified on Exhibit H.
"Equity Offering" means a public offering of shares of the Common Shares,
which offering yields net proceeds to Buyer of at least $59,000,000.
A-5
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means "affiliate," as such term is defined under ERISA.
"Estimated Closing Net Book Value" has the meaning set forth in Section
3.3(b).
"Estimated Closing Net Book Value Statement" has the meaning set forth in
Section 3.3(b).
"Estimated NBV Excess" has the meaning set forth in Section 3.3 (b).
"Estimated Purchase Price" has the meaning set forth in Section 3.3(b).
"Evaluation Material" has the meaning set forth in Section 7.3(c).
"Final Net Book Value Statement" has the meaning set forth in Section
3.3(g).
"Financing Agreements" has the meaning set forth in Section 6.10.
"Financing Conditions" means the conditions precedent set forth in the
Financing Agreements to which the lenders obligation to make loans thereunder is
subject, including, without limitation, the successful completion of the Equity
Offering.
"Fixed Assets" has the meaning set forth in Section 1.1(b).
"Former EMG Facilities" means the facilities formerly operated by Sellers
or their Affiliates in connection with the EMG Business at (i) 0000 Xxx Xxxx,
Xxxxxxxxx, Xxxxxxx; (ii) KM. 8.5 Xxxx. Xxxxx Xxxxxx X, Xxxxxxxxx Xxxxx, Xxxxxx;
(iii) 00000 Xxxxx Xxxx, Xxxxx, Xxxxxxxx; (iv) 00 Xxxxxxx, Xxxxxxxx,
Xxxxxxxxxxxx; (v) 000 Xx Xxxxx Xxxxxxxxxx Xxxx, Xxxxx, Xxxxxx Xxxx; (vi) 0000
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx; (vii) 127 Branford Connecticut; (viii) 0000
XxXxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx; (ix) 0000 Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxx;
(x) 0000 Xxxxxxxxxx Xxxx, Xxxx Xxxxxx, Xxxx; and (xi) the Branford Rental
Properties. If any facilities are closed by Sellers in accordance with Section
7.2, such facilities will be deemed to be Former EMG Facilities.
"Franklin Park Lockbox" has the meaning set forth in Section 1.1(d).
"FTC" has the meaning set forth in Section 7.4(b).
"GAAP" means United States generally accepted accounting principles.
"Xxxxxxx" has the meaning set forth in Section 6.11.
"Governmental Authority" means any government or political subdivision,
whether federal, state, local or foreign, or any agency or instrumentality of
any such government or political subdivision, or any federal, state, local or
foreign court or arbitrator.
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"Hazardous Substance" shall mean, without limitation, friable or airborne
asbestos, polychlorinated biphenyls, petroleum, petroleum constituents,
petroleum products, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials, pollutants, and toxic pollutants, as defined in
or which is otherwise the subject of any requirement pursuant to any
Environmental, Health, and Safety Requirement.
"Hazardous Substances Contamination" shall mean, with respect to any
premises, building or facilities, or the Environment, contamination by a Release
or the presence of Hazardous Substances.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means for any Person (without duplication): (i) all
indebtedness for borrowed money, whether current, short-term, or long-term,
secured or unsecured (excluding trade accounts payable); (ii) all indebtedness
for the deferred purchase price for purchases of property outside the ordinary
course that is not evidenced by trade accounts payables; (iii) any payment of
obligations in respect of letters of credit (other than stand-by letters of
credit in support of ordinary course trade payables); (iv) any liability with
respect to interest rate swaps, collars, caps and similar hedging obligations;
(v) any lease obligations under leases that are required to be accounted for as
capital leases under GAAP; (vi) any indebtedness referred to in clauses (i)
through (v) above that is directly or indirectly guaranteed by such Person.
"Indemnifying Party" and "Indemnified Party" have the meanings set forth in
Section 10.1(d).
"Intellectual Property" means (i) patents and patent applications; (ii)
trademarks, service marks, trade names, brand names, trade dress, slogans, logos
and internet domain names, and registrations and applications for registration
thereof; (iii) copyrights (registered or unregistered), writings and other
copyrightable works and works in progress, and registrations and applications
for registration thereof; (iv) inventions, discoveries, ideas, processes,
formulae, designs, models, industrial designs, know-how, confidential
information, proprietary information and trade secrets, whether or not patented
or patentable; and (v) all other intellectual property rights.
"IP Assignments" has the meaning set forth in Section 4.2(g).
"IP Licenses" means (i) the license or licenses, between Buyer, as
licensor, and one or more Sellers, as licensee, granting to such Sellers
licenses to use those items of Acquired Intellectual Property identified in the
Disclosure Schedules as being licensed back to Sellers, and (ii) the license or
licenses, between one or more Sellers, as licensor, and Buyer, as licensee,
granting to Buyer licenses to use certain items of Intellectual Property
retained by Sellers, in each case substantially in the forms attached as Exhibit
Y hereto, with such changes thereto as shall be mutually acceptable to Buyer and
the applicable Sellers.
"Law" means any law, statute, code, ordinance, rule, regulation or other
legally enforceable requirement of any Governmental Authority.
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"Leased Real Property" means the real property and improvements leased to
Sellers pursuant to the Real Estate Leases.
"Liabilities" means any and all debts, liabilities and obligations, whether
or not accrued, contingent, known or unknown, or reflected on a balance sheet,
including those arising under any Law, Action or Order of any Governmental
Authority or any judgment of any court of any kind or any award of any
arbitrator of any kind, and those arising under any Contract.
"Lien" means any mortgage, lien, pledge, adverse claim, interest, charge or
other similar encumbrance.
"Material Adverse Effect" means, with respect to the EMG Business or Buyer,
as the case may be, a material adverse effect on the business, assets,
liabilities or financial condition of such business or such party and its
Subsidiaries, if any, taken as a whole, but excluding any state of facts, event,
change or effect caused by events, changes or developments relating to (i)
changes or conditions affecting the industries of which the EMG Business or the
Buyer's business, as the case may be, is a part generally; (ii) changes in
economic, regulatory or political conditions generally; or (iii) any acts of war
or terrorism; provided, however, that the following events, to the extent they
occur after the public announcement of the execution of this Agreement, shall
not be deemed to have a Material Adverse Effect on the EMG Business: (x) the
discontinuation of any amount of purchases by any customer of the EMG Business
if such customer instead agrees to purchase or purchases comparable amounts from
Buyer; (y) the discontinuation of purchases by one or more customers that in the
aggregate accounted for revenues of not more than $20,000,000 for the EMG
Business during the most recently ended twelve-month period; or (z) the
discontinuation of any amount of purchases by any customer more than 75 days
after the public announcement of the execution of this Agreement or after April
26, 2003, whichever is first to occur.
"Minimum Remediation Standards" means a remediation of any Environmental
Conditions identified in the Buyer's Further Investigations and/or Seller's
Further Investigations (collectively, the "Further Investigations") in
accordance with applicable state remediation standards and/or criteria relating
to industrial properties.
"Nashville Sub-Lease" means the Sub-Lease Agreement substantially in the
form of Exhibit I hereto by and between Xxxx, as sublessor, and Buyer, as
sublessee, which provides for the sublease by Xxxx to Buyer of the real property
located at 0000 Xxxx Xxx, Xxxxxxxxx, Xxxxxxxxx.
"Nashville Sub-Sub-Lease" means the Sub-Sub-Lease Agreement substantially
in the form of Exhibit J hereto by and between Buyer, as sub-sublessor, and
Xxxx, as sub-sublessee, which provides for the sub-sublease by Buyer to Xxxx of
a portion of the real property located at 0000 Xxxx Xxx, Xxxxxxxxx, Xxxxxxxxx.
"Negotiation Period" has the meaning set forth in Section 7.23.
"Nonassignable Asset" has the meaning set forth in Section 1.3(a).
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"Order" means any order, judgment, ruling, injunction, award, decree or
writ of any Governmental Authority.
"Ordinary Course of Business" means the ordinary course of business
consistent with Sellers' past custom and practice with respect to the EMG
Business.
"Outside Termination Date" means:
(a) April 30, 2003, if the applicable waiting periods under the HSR
Act have expired or been terminated not more than thirty days after the date of
filing under the HSR Act;
(b) if the applicable waiting periods under the HSR Act have not
expired or been terminated within the foregoing thirty day period, 45 days after
the later of the expiration or termination of the applicable waiting periods
under the HSR Act or the date Buyer is informed by the staff of the SEC that it
will have no further comments to Buyer's registration statement for the Equity
Offering;
(c) if the commitment of the lenders under the Financing Agreements to
provide the loans required by Buyer to consummate the transactions contemplated
by this Agreement has expired or been terminated, then the earlier of (i) the
date Buyer's Lender indicates to Buyer in writing that Buyer's Lender will not
consider an extension of such commitment or (ii) thirty (30) days after the date
of such expiration or termination; or
(d) September 30, 2003 in any event;
provided, however, Buyer may extend the Outside Termination Date prescribed
under clause (a) or clause (b) above until 75 days after the date that would
otherwise apply if, not later than ten (10) days prior to the date that would be
the Outside Termination Date without such extension, Buyer delivers to Xxxx a
Certificate of Buyer's chief executive officer or chief financial officer to the
effect that Buyer's board of directors has determined on the basis of such
advice as it deemed appropriate that the consummation of the Equity Offering by
such originally prescribed Outside Termination Date would have a material
adverse effect on Buyer, but in no event shall the Outside Termination Date
extend beyond September 30, 2003.
"Owned Real Property" has the meaning set forth in Section 1.1(n).
"Parties" has the meaning set forth in the Preamble.
"Pension Plan" has the meaning set forth in Section 11.2(e)(i).
"Permits" has the meaning set forth in Section 1.1(j).
"Permitted Liens" means (i) Liens arising under Laws affecting the use of
real property, including zoning Laws, building Laws and similar restrictions
that are not violated by the current use or occupancy of such real property or
the operation of the EMG Business as currently conducted thereon; (ii) Liens
included in the Assumed Liabilities; (iii) Liens for Taxes, assessments or
governmental or other similar charges or levies that are not yet due and payable
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or that, although due and payable, are being contested in good faith; (iv)
mechanics,' workmen's, materialmen's, landlords,' carriers' or other similar
Liens arising in the Ordinary Course of Business with respect to Liabilities
that are not yet due and payable or that are being contested in good faith; (v)
Liens disclosed on Schedule A-2; (vi) matters that would be disclosed by
accurate surveys of the applicable real property; and (vii) minor imperfections
of title, if any, none of which are substantial in amount or materially detract
from the value or impair the use or occupancy of the property subject thereto or
the operation of the EMG Business.
"Person" means any individual, sole proprietorship, partnership,
corporation, limited liability company, joint venture, unincorporated society or
association, trust or other entity or Governmental Authority.
"Price Per Share" has the meaning set forth in Section 3.2(a)(ii).
"Pro Forma Balance Sheet" has the meaning set forth in Section 5.4(b).
"Pumps Accounts Receivable" means Accounts Receivable of the portion of the
Retained Business Lines relating to fuel pumps and water pumps.
"Purchase Orders" has the meaning set forth in Section 1.1(h).
"Purchase Price" has the meaning set forth in Section 3.1.
"RAM Division" means the operations conducted by Sellers at 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, X.X.
"Real Estate Conveyance" means the deeds and other instruments of
conveyance, in form and substance reasonably acceptable to Buyer and the Title
Company, pursuant to which Sellers convey to Buyer all of Sellers' right, title
and interest in and to the Owned Real Property.
"Real Estate Lease Assignment" means the instrument of assignment and
assumption of the Real Estate Leases, substantially in the form of Exhibit K
hereto.
"Real Estate Leases" has the meaning set forth in Section 1.1(a).
"Real Property" means, collectively, the Owned Real Property and the Leased
Real Property.
"Reimbursement Agreement" means the reimbursement letter agreement, dated
August 2, 2002, by and between Xxxx and Buyer.
"Related Persons" means, as to any Person, its officers, directors,
employees, shareholders, partners, Affiliates, advisors, agents or
representatives.
"Release" shall include any "release" and/or "threat of release" as those
terms are defined under any Environmental, Health and Safety Requirements,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 USCA Section 9601, et
seq.), and the regulations promulgated thereunder.
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"Replacement Leases" means the assignment of the portion each lease of
motor vehicles and equipment that relates to the EMG Business that are listed on
Exhibit L hereto.
"Retained Assets" has the meaning set forth in Section 1.2.
"Retained Business Lines" means (i) the manufacture or distribution of
clutches, fuel pumps and water pumps; (ii) the Echlin-Mexicana, Xxxx/Arnley,
Canadian and CUMSA businesses; and (iii) all other businesses of Sellers and
their Affiliates other than the EMG Business.
"Retained Liabilities" has the meaning set forth in Section 2.2.
"Retained Names" has the meaning set forth in Section 7.14.
"Savings Plan" has the meaning set forth in Section 11.2(e)(i).
"SEC" has the meaning set forth in Section 6.5.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Seller" and "Sellers" have the meaning set forth in the preamble to this
Agreement.
"Seller Benefit Arrangements" has the meaning set forth in Section 5.18(a).
"Seller Designee" means Xxxx or one of its Subsidiaries designated by
notice to Buyer prior to the Closing.
"Seller ERISA Plans" has the meaning set forth in Section 5.18(a).
"Seller Leases" means the lease agreement or agreements substantially in
the form of Exhibit M hereto regarding the real property commonly known as (i) 0
Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx; (ii) 0000 X. Xxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxx; (iii) 000 X. 00xx Xxxxxx, Xxxxxxxxxxxx, Xxxxxx; (iv) 00000-00xx Xxxxxx,
Xxxxx, Xxxxxxx; and (v) 0000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx.
"Seller Note" has the meaning set forth in Section 3.2(a)(iii).
"Seller Shares" has the meaning set forth in Section 3.2(a)(ii).
"Seller Welfare Plans" has the meaning set forth in Section 11.2(d).
"Sellers' Accountants" has the meaning set forth in Section 3.3(d).
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"Sellers' Knowledge" means the actual knowledge of Xxxxx XxXxxxxxx, Xxxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Westerhide, Xxx Xxxxxx and Xxxxxxx Xxxxxxx and,
for the purposes of Section 5.19, Xxxx Xxxxxxx.
"Share Ownership Agreement" means the Share Ownership Agreement by and
between Buyer and the Seller Designee, substantially in the form of Exhibit R
hereto.
"Site Assessment Environmental Liabilities" has the meaning set forth in
Section 8.1.
"Specified Accounting Principles" means the Specified Accounting Principles
set forth in Exhibit S hereto as the same may be amended in accordance with
Article III.
"Subordination Agreement" means the Subordination Agreement by and among
Xxxx, Buyer and Buyer's Lender, substantially in the form of Exhibit T hereto.
"Subsidiaries" means any Person of which at least a majority of the
outstanding shares or other equity interests having ordinary voting power for
the election of directors or comparable managers of such Person are at the time
owned, directly or indirectly, by such Person, by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
"Supply Agreements" means (i) the Xxxx-Arnley Supply Agreement,
substantially in the form of Exhibit U hereto and (ii) the Canadian Supply and
Distribution Agreement, substantially in the form of Exhibit V hereto.
"Surveys" has the meaning set forth in Section 9.3(f).
"Tax" or "Taxes" means any and all domestic or foreign federal, state or
local income, franchise, business, occupation, sales/use, manufacturer's excise,
payroll, withholding, Federal Insurance Contributions Act and employment and
unemployment taxes, personal and real property taxes and all other taxes or
charges (including all interest, penalties and additions to tax) measured,
assessed, levied, imposed or collected by any Governmental Authority, including
any such taxes or other charges the payment of which has been deferred.
"Tax Returns" means all Tax returns (including information returns) and
reports that are or were required to be filed by, or with respect to, the EMG
Business or its income, properties or operations.
"Title Commitments" means the commitments for title insurance listed on
Schedule A-3.
"Title Company" has the meaning set forth in Section 9.3(e).
"Trade Payables" has the meaning set forth in Section 2.1(c).
"Transfer Notice" has the meaning set forth in Section 7.23.
"Transferred Employees" has the meaning set forth in Section 11.1.
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"Transition Services Agreements" means the Buyer Transition Services
Agreement by and between Xxxx and Buyer, substantially in the form of Exhibit W
hereto, and the Sellers Transition Services Agreement, substantially in the form
of Exhibit X hereto.
"WARN Act" has the meaning set forth in Section 11.4.
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