EXHIBIT 2.1
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ASSET EXCHANGE AGREEMENT
AMONG
SMP MOTOR PRODUCTS, LTD.
STANDARD MOTOR PRODUCTS, INC.
XXXXXX INDUSTRIES (CANADA) INC.
MOOG AUTOMOTIVE COMPANY
AND
MOOG AUTOMOTIVE PRODUCTS, INC.
DATED AS OF MARCH 28, 1998
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CLOSING EFFECTIVE AS OF
12:01 A.M. ON MARCH 28, 1998
TABLE OF CONTENTS
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PAGE(S)
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ARTICLE I
CERTAIN DEFINITIONS..................................................... 21
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ARTICLE II
EXCHANGE OF ASSETS; ASSUMPTION OF LIABILITIES; ADJUSTMENTS............... 21
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2.1 Basic Transaction .............................................. 21
2.2 Conveyance of TC Assets ........................................ 21
2.3 Conveyance of Brake Assets ..................................... 22
2.4 TC Assumed Liabilities ......................................... 22
2.5 Brake Assumed Liabilities ...................................... 22
2.6 TC Retained Liabilities ........................................ 22
2.7 Brake Retained Liabilities ..................................... 22
2.8 Pre-Closing Balance Sheets ..................................... 22
2.9 Closing Payment Amount and Final Closing Payment Amount ........ 22
2.10 Closing Balance Sheets ......................................... 23
2.11 Preliminary Closing Balance Sheet Review ....................... 23
2.12 Final Closing Balance Sheet .................................... 24
2.13 Payment ........................................................ 25
2.14 Transfer Costs ................................................. 25
ARTICLE III
THE CLOSING............................................................ 25
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3.1 Closing Date ................................................... 25
3.2 Moog Deliveries at the Closing ................................. 25
3.3 SMP Deliveries at the Closing .................................. 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MOOG................................ 28
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4.1 Organization of Moog ............................................ 28
4.2 Authorization of Transaction .................................... 28
4.3 Non-contravention ............................................... 28
4.4 Moog Pre-Closing Balance Sheet and Financial Statements ......... 29
4.5 Undisclosed Liabilities ......................................... 29
4.6 Events After June 30, 1997 ...................................... 29
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4.7 Tax Matters .................................................... 31
4.8 TC Leases for Real Property .................................... 31
4.9 TC Real Property ............................................... 32
4.10 TC Intellectual Property ....................................... 32
4.11 Inventory ...................................................... 34
4.12 Tangible TC Assets ............................................. 34
4.13 Certain Agreements ............................................. 35
4.14 Insurance ...................................................... 36
4.15 Litigation ..................................................... 36
4.16 Product Warranty ............................................... 36
4.17 Product Liability .............................................. 36
4.18 Employees ...................................................... 37
4.19 Moog Employee Plans; ERISA; Employees .......................... 37
4.20 Environmental Matters .......................................... 39
4.21 Legal Compliance ............................................... 41
4.22 Vehicles ....................................................... 41
4.23 Guaranties ..................................................... 41
4.24 All TC Assets Transferred ...................................... 41
4.25 Moog Permits ................................................... 42
4.26 Brokers' Fees .................................................. 42
4.27 Customers and Suppliers ........................................ 42
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SMP................................. 42
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5.1 Organization of SMP ............................................ 42
5.2 Authorization of Transaction ................................... 42
5.3 Non-contravention .............................................. 43
5.4 SMP Pre-Closing Balance Sheet and Financial Statements ......... 43
5.5 Undisclosed Liabilities ........................................ 43
5.6 Events After June 30, 1997 ..................................... 44
5.7 Tax Matters .................................................... 45
5.8 Brake Leases for Real Property ................................. 46
5.9 Brake Real Property ............................................ 46
5.10 Brake Intellectual Property .................................... 47
5.11 Inventory ...................................................... 49
5.12 Tangible Brake Assets .......................................... 49
5.13 Certain Agreements ............................................. 49
5.14 Insurance ...................................................... 50
5.15 Litigation ..................................................... 50
5.16 Product Warranty ............................................... 51
5.17 Product Liability .............................................. 51
5.18 Employees ...................................................... 51
5.19 SMP Employee Plans; ERISA; Employees ........................... 52
5.20 Environmental Matters .......................................... 53
5.21 Legal Compliance ............................................... 55
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5.22 Vehicles ..................................................... 55
5.23 Guaranties ................................................... 55
5.24 All Brake Assets Transferred ................................. 56
5.25 SMP Permits .................................................. 56
5.26 Brokers' Fees ................................................ 56
5.27 Customers and Suppliers ...................................... 56
5.28 Industrial Development Revenue Bonds ......................... 56
ARTICLE VI
PRE-CLOSING COVENANTS................................................. 57
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6.1 Reasonable Best Efforts ........................................ 57
6.2 Notices and Consents ........................................... 57
6.3 H-S-R Act ...................................................... 57
6.4 Operation of the TC Business and the Brake Business ............ 57
6.5 Full Access .................................................... 58
6.6 Title Insurance and Surveys .................................... 58
6.7 Exclusivity .................................................... 59
6.8 Supply Agreements .............................................. 60
6.9 Disclosure Supplements ......................................... 60
6.10 Disposal of Certain Hazardous Materials ........................ 60
6.11 Termination of Joint Venture Agreement with Dalian Yongfeng
Car Parts Co. Ltd. ........................................... 60
ARTICLE VII
POST-CLOSING COVENANTS.................................................. 61
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7.1 Further Assurances ............................................... 61
7.2 Litigation Support ............................................... 61
7.3 Transitional Matters ............................................. 61
7.4 Confidentiality .................................................. 63
7.5 Consents ......................................................... 64
7.6 Press Releases ................................................... 64
7.7 Allocation ....................................................... 64
7.8 Tax Assistance ................................................... 64
7.9 Tax Proceedings .................................................. 64
7.10 Unemployment Tax Experience ...................................... 65
7.11 Employment Tax Compliance ........................................ 65
7.12 Product Returns Adjustment ....................................... 65
7.13 Uses of Excluded Trademarks and Trade Names ...................... 66
7.14 Existing Insurance Coverage ...................................... 66
7.15 Letters of Credit ................................................ 67
7.16 Non-Competition Agreement ........................................ 68
7.17 Compliance with Connecticut Transfer Act ......................... 70
7.18 Loan from Moog to SMP ............................................ 70
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7.19 Unprocessed Inventory as of the Closing Date ..................... 71
7.20 Consigned Inventory .............................................. 71
7.21 Product Returns Associated with Changeover of Trak Automotive .... 72
ARTICLE VIII
EMPLOYEE MATTERS....................................................... 72
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8.1 Employment and Severance for Sales Persons ....................... 72
8.2 Employment and Severance for Non-Sales Persons ................... 73
8.3 Employee Benefit Plans ........................................... 76
8.4 Solicitation ..................................................... 78
ARTICLE IX
ENVIRONMENTAL MATTERS.................................................. 79
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9.1 Environmental Indemnification and Remediation .................... 79
9.2 Limitations on Environmental Indemnification ..................... 79
9.3 Certain Procedures ............................................... 80
ARTICLE X
CONDITIONS TO OBLIGATION TO CLOSE....................................... 81
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10.1 Conditions to Obligation of Both Parties ........................ 81
10.2 Conditions to Obligation of Moog ................................ 82
10.3 Conditions to Obligation of SMP ................................. 82
10.4 Waiver; Right to Proceed ........................................ 82
ARTICLE XI
REMEDIES FOR BREACHES OF THIS AGREEMENT................................ 83
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11.1 Survival......................................................... 83
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Page(s)
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11.2 Assertion of Claims ............................................ 83
11.3 Indemnification Provisions for Benefit of Moog ................. 83
11.4 Indemnification Provisions for Benefit of SMP .................. 84
11.5 Matters Involving Third Parties ................................ 85
11.6 De Minimis Breaches of Representations and Warranties .......... 85
11.7 Tax Indemnification ............................................ 85
11.8 Other Indemnification Provisions ............................... 86
ARTICLE XII
TERMINATION........................................................... 86
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12.1 Termination of Agreement........................................ 86
12.2 Procedure and Effect of Termination............................. 87
ARTICLE XIII
GENERAL MATTERS....................................................... 87
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13.1 No Third-Party Beneficiaries................................... 87
13.2 Entire Agreement............................................... 88
13.3 Succession and Assignment...................................... 88
13.4 Counterparts................................................... 88
13.5 Headings....................................................... 88
13.6 Notices........................................................ 88
13.7 Amendments; Waivers; Consents.................................. 89
13.8 Severability................................................... 89
13.9 Expenses....................................................... 89
13.10 Construction................................................... 89
13.11 Specific Performance........................................... 90
13.12 Bulk Sales..................................................... 90
13.13 Governing Law.................................................. 90
ARTICLE XIV
DISPUTE RESOLUTION.................................................... 90
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14.1 Senior Officers................................................. 90
14.2 Binding Arbitration............................................. 91
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Page(s)
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EXHIBITS AND SCHEDULES
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Exhibit A -- Screw Machine Products Supply Agreement................... A-1
Exhibit B -- Brake Assignment and Assumption Agreement................. B-1
Exhibit C -- Rubber Supply Agreement................................... C-1
Exhibit D -- TC Assignment and Assumption Agreement.................... D-1
Exhibit E -- Moog Pre-Closing Balance Sheet............................ E-1
Exhibit F -- SMP Pre-Closing Balance Sheet............................. F-1
Exhibit G -- Balance Sheet Principles, Practices and Procedures........ G-1
Exhibit H -- TC Xxxx of Sale........................................... H-1
Exhibit I -- Moog FIRPTA Certificate................................... I-1
Exhibit J -- Brake Xxxx of Sale........................................ J-1
Exhibit K -- SMP FIRPTA Certificate.................................... K-1
Exhibit L -- Terms of TC Transitional Services......................... L-1
Exhibit M -- Terms of Brake Transitional Services...................... M-1
Exhibit N -- Intentionally Omitted..................................... N-1
Exhibit O -- Severance Policies........................................ O-1
Moog Disclosure Schedules
SMP Disclosure Schedules
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ASSET EXCHANGE AGREEMENT
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ASSET EXCHANGE AGREEMENT, dated as of March 28, 1998, among SMP Motor
Products, Ltd., a corporation organized under the laws of Canada ("SMP CANADA"),
Standard Motor Products, Inc., a corporation organized under the laws of the
State of New York ("SMP PARENT" and, together with SMP Canada, "SMP"), Xxxxxx
Industries (Canada) Inc., a corporation organized under the laws of the Province
of Ontario ("XXXXXX CANADA"), Moog Automotive Company, a corporation organized
under the laws of Delaware ("MOOG COMPANY"), and Moog Automotive Products, Inc.,
a corporation organized under the laws of the State of Missouri ("MOOG PARENT"
and, together with Xxxxxx Canada and Moog Company, "MOOG").
WHEREAS, Moog is engaged in the business of designing, developing,
manufacturing, marketing, selling, servicing, supplying and distributing
temperature control products and components to support vehicle systems designed
to regulate temperature for passengers and the Everco product line of brass
components and brake lines (the "TC BUSINESS");
WHEREAS, SMP is engaged in the business of designing, developing,
manufacturing, marketing, selling, servicing, supplying and distributing brake
products and components to support brake systems (the "BRAKE BUSINESS");
WHEREAS, SMP wishes to acquire from Moog the TC Assets (as hereinafter
defined) and Moog wishes to acquire from SMP the Brake Assets (as hereinafter
defined); and
WHEREAS, this Agreement sets forth the terms and conditions pursuant to
which Moog will convey to SMP the TC Assets and SMP will convey to Moog the
Brake Assets in such a manner as to effect a like-kind exchange of assets under
Section 1031 of the Code (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations and warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
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1.1 "ACCOUNTING ARBITRATOR" shall have the meaning ascribed thereto in
Section 2.11(d).
1.2 INTENTIONALLY OMITTED
1.3 "ACTIVE EMPLOYEES" means all employees actively employed on the
Closing Date in the TC Business or the Brake Business, as the case may be, and
all employees of such businesses on vacation, layoff and approved leave of
absence other than for long term disability; PROVIDED, HOWEVER, Active Employees
shall not include any employees located at Moog's facility in Ottumwa, Iowa or
at SMP's facilities in Middletown, Connecticut and Rural Retreat,
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Virginia. Xxxxxxx Umstreadt and Xxxxxxxx Xxxxx will be considered Inactive
Employees for purposes of this Agreement, even though they are currently on
short term disability, because they are not reasonably expected to return to
work.
1.4 INTENTIONALLY OMITTED
1.5 "ADVERSE CONSEQUENCES" means all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, settlements, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities, obligations,
Taxes (as hereinafter defined), liens, losses, expenses and fees, including all
reasonable attorneys', experts' and consultants' fees and court costs as well as
costs to enforce any indemnity provisions under this Agreement.
1.6 "AFFILIATE" means any Person (as hereinafter defined) that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with the referenced Person.
1.7 "AGREEMENT" means this Asset Exchange Agreement, including all
exhibits and schedules hereto, as it may be amended from time to time.
1.8 "ARBITRATOR" shall have the meaning ascribed thereto in Section
14.2(b).
1.9 "BRAKE ASSETS" shall mean:
(a) all of the property and assets of SMP used exclusively in the
conduct of the Brake Business whether or not reflected in the SMP Final Closing
Balance Sheet (as hereinafter defined), including, without limitation, the Brake
Real Properties (as hereinafter defined), the Brake Intellectual Property (as
hereinafter defined), inventories, plants, machinery, equipment, tools, dies,
data processing equipment, office equipment, supplies, furniture, fixtures,
leasehold improvements, motor vehicles, prepaid expenses and security deposits
(and including all items which would be included on the SMP Final Closing
Balance Sheet except for the fact that such items are fully depreciated or
expensed), and all items used exclusively in the conduct of the Brake Business
which are acquired in the ordinary course of business consistent with past
practice by the Brake Business between the date of the SMP Pre-Closing Balance
Sheet (as hereinafter defined) and the Closing Date;
(b) the Brake Books and Records (as hereinafter defined);
(c) the Brake Contracts (as hereinafter defined);
(d) the Brake Leases (as hereinafter defined);
(e) the interest of SMP in the EISLINE Manufacturing Company joint
venture pursuant to the Joint Venture Agreement between the EIS Brake Parts
Division of Standard Motor Products, Inc. and Autoline Industries, Inc. dated
January 1, 1994 and the related Supply
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Agreement between EISLINE Manufacturing Company and the EIS Brake Parts Division
of Standard Motor Products, Inc. dated January 1, 1994;
(f) the Autoline re-man inventory receivable; and
(g) computer software exclusively used by the Brake Business
including the software for payroll catalogues, finite scheduling, shop floor
labor reporting and MOST Industrial Engineering.
Notwithstanding the foregoing, the Brake Assets shall not mean or
include the Brake Retained Assets (as hereinafter defined).
1.10 "BRAKE ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
instrument of assignment and assumption substantially in the form attached
hereto as Exhibit B.
1.11 "BRAKE ASSUMED LIABILITIES" shall mean and include only the
following obligations and liabilities of the Brake Business:
(a) all Liabilities (as hereinafter defined) of the Brake Business
reflected on the SMP Final Closing Balance Sheet;
(b) subject to Section 7.12, all Liabilities for warranty and
customer service claims and other return obligations regarding products of the
Brake Business;
(c) all Liabilities for product liability claims (including claims
for property damage, personal injury or death) relating to products manufactured
or sold by the Brake Business based on or arising out of claims made or causes
of action filed after the first anniversary of the Closing Date, PROVIDED,
HOWEVER, that this subsection (c) shall not apply to any Liabilities based on or
arising out of asbestos exposure which are covered by Section 1.26(d);
(d) all Liabilities under the Brake Contracts and the Brake Leases,
to the extent such Brake Contracts and Brake Leases are assigned to Moog;
(e) all core Liabilities for the Brake Business;
(f) all Liabilities of SMP with respect to a government grant in
the amount of $450,000 provided to SMP pursuant to an Agreement By and Between
the Town of Berlin, Connecticut and Standard Motor Products, Inc. Concerning a
State Assistance Grant dated May 24, 1993;
(g) the Promissory Note dated December 1, 1989 in the original
principal amount of $2.5 million payable to the Arkansas Development Finance
Authority pertaining to the Arkansas Development Finance Authority Industrial
Development Revenue Bonds (Standard Motor Products, Inc. Project) Series 1989
and the related Loan Agreement, and the Mortgage and Security Agreement between
SMP and the Arkansas Development Finance Authority; and
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(h) the Lease Agreement dated as of June 1, 1990 from the City of
Manila, Arkansas to Standard Motor Products, Inc. pertaining to the $1.8 million
Industrial Development Revenue Bonds (Standard Motor Products, Inc. Project)
Series 1990.
Notwithstanding the foregoing, the Brake Assumed Liabilities shall not
include the Brake Retained Liabilities (as hereinafter defined).
1.12 "BRAKE XXXX OF SALE" shall have the meaning ascribed thereto
in Section 3.3(b).
1.13 "BRAKE BOOKS AND RECORDS" shall mean originals or copies of
all of the books and records of SMP relating to the operations of the Brake
Business, including, without limitation, all books and records relating to the
individuals employed by SMP who will be employed by Moog in the Brake Business
following the Closing Date, and to the extent related exclusively to the Brake
Business, all books and records related to the purchase of materials, the lease
of equipment, supplies and services, advertising, financial, accounting and
operations matters, product engineering, research and development, manufacture
and sale of products, provision of services and dealings with customers or
clients of the Brake Business. As used herein books and records shall include a
hardcopy of all computerized books and records.
1.14 "BRAKE BUSINESS" shall have the meaning ascribed thereto in
the recitals of this Agreement.
1.15 "BRAKE COMPETITIVE BUSINESS" shall have the meaning ascribed
thereto in Section 7.16(b).
1.16 "BRAKE COMPETITIVE PRODUCTS" shall have the meaning ascribed
thereto in Section 7.16(b).
1.17 "BRAKE CONTRACTS" shall mean all contracts, licenses, purchase
orders, agreements and commitments of SMP exclusively relating to the Brake
Business, including, without limitation, (i) the contracts, agreements and
commitments listed in Section 5.13 of the SMP Disclosure Schedule and (ii) all
contracts, agreements and commitments of SMP exclusively relating to the Brake
Business which are entered into between the date of this Agreement and the
Closing and expressly permitted by this Agreement, excluding, however, all
contracts, agreements and commitments which expire or are cancelled in
accordance with their terms prior to the Closing.
1.18 "BRAKE ENVIRONMENTAL COSTS" shall mean all Environmental
Costs, whether direct or indirect, known or unknown, joint or several, whenever
arising (including after Closing), based on, arising out of or otherwise in
respect of the Brake Assets, the Brake Business, or property currently or
formerly owned, operated, used or leased by SMP or its predecessors (including
off-site locations) and arising out of: (i) conditions or Hazardous
Materials existing on or originating from any such property or the Brake Assets
on or prior to the Closing Date including, but not limited to, the Discharge or
Disposal of Hazardous Materials at or from any such property on or prior to the
Closing Date; (ii) the operation of the Brake Business by SMP
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or its predecessors on or prior to the Closing Date; or (iii) non-compliance on
or prior to the Closing Date with any requirements of Environmental Laws.
1.19 "BRAKE INTELLECTUAL PROPERTY" shall mean all letters patent,
patents, trademarks, trade names, service marks, copyrights (including
registrations and applications for any of the foregoing), licenses, technology,
know-how, trade secrets, tangible or intangible proprietary information or
material, formulae and inventions owned by SMP which are used exclusively in or
relate exclusively to the Brake Business or the rights thereto (including rights
under licenses) which belong to SMP and are used exclusively in or relate
exclusively to the Brake Business, including, without limitation, (i) all items
listed in Section 5.10(c) of the Brake Disclosure Schedule and (ii) all such
intellectual property which is acquired or developed for use exclusively in the
Brake Business between the date of this Agreement and the Closing. The Brake
Intellectual Property shall not include the Excluded SMP Trademarks and Trade
Names (as hereinafter defined).
1.20 "BRAKE LEASES" shall mean all leases of SMP for real or personal
property exclusively relating to the Brake Business (whether entered into as
lessor or lessee), including, without limitation, (a) the real estate leases
listed in Section 5.8 of the SMP Disclosure Schedule and (b) all leases of SMP
exclusively relating to the Brake Business which are entered into between the
date of this Agreement and the Closing and expressly permitted by this
Agreement, excluding, however, all leases which will expire in accordance with
their terms prior to the Closing.
1.21 "BRAKE LETTERS OF CREDIT" shall have the meaning ascribed thereto
in Section 7.15(b).
1.22 "BRAKE MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect on the Brake Assets or on the business, financial condition, operations
or results of operations of the Brake Business.
1.23 "BRAKE PRODUCT LIABILITY CLAIM" shall have the meaning ascribed
thereto in Section 5.17(a).
1.24 "BRAKE REAL PROPERTIES" shall mean the real properties owned by
SMP and used exclusively in the Brake Business as listed in Section 5.9 of the
SMP Disclosure Schedule (but excluding the real properties owned or held by SMP
in Middletown, Connecticut and Rural Retreat, Virginia).
1.25 "BRAKE RETAINED ASSETS" shall mean all the following properties,
assets and other rights of SMP:
(a) all cash, cash equivalents and bank accounts;
(b) all of SMP's accounts and notes receivable including, but not
limited to, any inter- or intra-company receivables owed to the Brake Business
from SMP or any of its Affiliates (but excluding the Autoline re-man inventory
receivable which is included in the Brake Assets);
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(c) the assets of the Brake Business which are owned or held by SMP
or its Affiliates and which are located in Puerto Rico, subject to Moog's
obligation to purchase such assets pursuant to the terms of the Rubber Supply
Agreement;
(d) the real properties owned or held by SMP in Middletown,
Connecticut and Rural Retreat, Virginia including all improvements, structures
and fixtures thereon and other tangible assets located at such properties;
(e) the Excluded SMP Trademarks and Trade Names (as hereinafter
defined);
(f) all insurance policies, related prepaid expenses, refunds or
proceeds and all rights relating thereto subject to Section 7.14(b);
(g) the computer hardware set forth in Section 1.25(g) of the SMP
Disclosure Schedule and any computer software which is not exclusively used by
the Brake Business and leases, licenses or other arrangements therefor;
(h) all assets, including inventory and equipment, used in SMP's
rebuilt anti-lock brake system component business conducted by Blue Streak
Electronics at Xxxxxxx, Xxxxxxx, Xxxxxx (other than inventory related thereto
located at SMP's EIS facilities in Manila, Arkansas and Ontario, California);
(i) any assets of any Employee Pension Benefit Plans and Employee
Welfare Benefit Plans and any rights under such plans relating to employee
benefits, employment or compensation; and
(j) any vehicles owned or leased by SMP for use by
SMP sales personnel.
1.26 "BRAKE RETAINED LIABILITIES" shall mean the following:
(a) all Liabilities to the extent arising out of Brake Retained
Assets;
(b) all accounts and notes payable of the Brake Business incurred
on or prior to the Closing Date including, but not limited to, any inter- or
intra-company payables due from the Brake Business to SMP or any of its
Affiliates (but excluding the promissory note described in Section 1.11(g));
(c) all Liabilities for product liability claims (including claims
for property damage, personal injury or death) relating to products manufactured
or sold by the Brake Business based on or arising out of claims made or causes
of action filed on or before the first anniversary of the Closing Date,
PROVIDED, HOWEVER, that this Section (c) shall not apply to any Liabilities
based on or arising out of asbestos exposure which are covered by Section
1.26(d);
(d) any claims by third parties based on or arising out of asbestos
exposure relating to products manufactured or sold on or prior to the Closing
Date by the Brake Business and any claims by Active Employees or Inactive
Employees of the Brake Business (including
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worker's compensation claims) based on or arising out of such asbestos exposure
on or prior to the Closing Date;
(e) any claims by Active Employees or Inactive Employees of the
Brake Business, including worker's compensation claims, based on or arising out
of asbestos exposure after the Closing Date at the Brake Real Properties or real
properties subject to the Brake Leases (subject to the indemnity in Section
11.4(h));
(f) all Brake Environmental Costs;
(g) all Liabilities to Inactive Employees of the Brake Business and
their beneficiaries and dependents including, without limitation, all
Liabilities with respect to (i) salaries, wages, commissions, bonuses and
vacation pay (except to the extent accrued on the SMP Final Closing Balance
Sheet); (ii) severance pay and obligations (subject to Sections 8.1 and 8.2);
(iii) Employee Pension Benefit Plans and Employee Welfare Benefit Plans
(including any retiree medical and dental benefits) provided by SMP or its
Affiliates to such employees; (iv) worker's compensation claims; (v)
unemployment compensation claims; and (vi) claims or litigation relating to
discrimination claims, unjust discharge, claims for additional compensation or
benefits and claims for violation of health and safety laws;
(h) all Liabilities to Active Employees of the Brake Business and
their beneficiaries and dependents for (i) salaries, wages, commissions, bonuses
and vacation pay relating to periods on or prior to the Closing Date (except to
the extent accrued on the SMP Final Closing Balance Sheet); (ii) severance pay
and obligations for Active Employees who do not become employees of Moog
(subject to Sections 8.1 and 8.2); (iii) Employee Pension Benefit Plans and
Employee Welfare Benefit Plans (including any retiree medical and dental
benefits) provided by SMP or its Affiliates to such employees in accordance with
the provisions of such plans; (iv) worker's compensation claims based on or
resulting from incidents or events occurring before the Closing Date; (v)
unemployment compensation claims for Active Employees who do not become
employees of Moog; and (vi) claims or litigation relating to discrimination
claims, unjust discharge, claims for additional compensation or benefits and
violation of health and safety laws based upon or resulting from incidents or
events occurring before the Closing Date;
(i) all Liabilities for Taxes of SMP or the Brake Business for any
period prior to the Closing Date except to the extent that a liability for
non-income Taxes is accrued on the SMP Final Closing Balance Sheet;
(j) all Liabilities of SMP or the Brake Business for borrowed money
including notes payable, loans and revolving credits (but excluding the
promissory note described in Section 1.11(g));
(k) all Liabilities of SMP or the Brake Business with respect to
letters of credit and foreign exchange contracts or commitments, subject to
Section 7.15;
(l) all Liabilities of SMP or the Brake Business with respect to
powers of attorney, financing agreements, security agreements, bid bonds,
performance bonds, suretyship
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agreements, guarantees or any other similar arrangement where SMP is or may
become liable for the obligations of any other Person;
(m) all Liabilities for Existing Brake Litigation and Claims (as
hereinafter defined) including matters set forth in Section 5.15 of the SMP
Disclosure Schedule and, except for matters described in Sections 1.11(b) and
(c), all Liabilities for any actions, suits, proceedings, claims or
investigations arising after the Closing Date that arise from or relate to
matters, incidents, sets of facts or circumstances on or prior to the Closing
Date including breach of contract, tort, infringement or violation of law;
(n) all Liabilities relating to claims or lawsuits involving brake
hose assemblies which were the subject of SMP's recall 96E-023 for brake hose
assemblies which the National Highway Traffic Safety Administration determined
to be non-compliant with regard to identification markings;
(o) all Liabilities arising out of "wrap discounts", or other
discounts, customer incentives or rebates relating to sales on or prior to the
Closing Date; and
(p) the Liability on the books of the Brake Business which
represents free rent under the lease for the Ontario, California facility.
1.27 "BRAKE RETURNS SCHEDULE" shall have the meaning ascribed thereto
in Section 7.12(a).
1.28 "BRAKE SCHEDULED SALES PERSONS" shall have the meaning ascribed
thereto in Section 5.18(a).
1.29 "BRAKE TRANSFERRING SALES PERSON" shall have the meaning ascribed
thereto in Section 8.1(a).
1.30 "BUSINESS DAY" means each day which is not a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
1.31 "CLAIM" shall have the meaning ascribed thereto in Section 14.1.
1.32 "CLOSING" means the meeting held on the Closing Date at which the
Parties complete the contemplated transactions.
1.33 "CLOSING DATE" means 12:01 a.m. on March 28, 1998.
1.34 "CODE" means the Internal Revenue Code of 1986, as amended.
1.35 "XXXXXX CANADA" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
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1.36 "DEBT" means for any Person (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
for which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss including any notes, bonds, debentures or other debt
securities of such Person but excluding endorsements of negotiable instruments
for collection in the ordinary course of business; and (ii) all obligations
under leases which shall have been, or was required to have been, in accordance
with GAAP (as hereinafter defined), recorded as capital leases in respect of
which such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss. The term "Debt" shall not include any trade credit
incurred in the ordinary course of business.
1.37 "DISCHARGE" means any accidental, unknowing or intentional
spilling, leaking, seeping, pumping, pouring, emitting, leaching, escaping,
depositing, placing, emptying, dumping, discharging, releasing, burying,
injecting, abandoning, migrating, disposing, or other discharge or release of
any Hazardous Material into or upon or under any land or Water or air, or
otherwise into the indoor or outdoor Environment (including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks and other
receptacles containing or previously containing any Hazardous Material), and any
threat of any of the foregoing.
1.38 "DISPOSAL" or "DISPOSED" means the disposal, arranging for
disposal, carrying for disposal or Discharge of any Hazardous Material in a
landfill, surface impoundment, waste pile, injection well, facility, salt dome
or bed formation, underground mine or cave, vault, bunker or other location
(whether authorized or unauthorized) for storage (whether temporary or
permanent), disposal or any other purpose, from which Hazardous Materials have
entered or may enter the Environment or be Discharged into the Environment.
1.39 "EMPLOYEE PENSION BENEFIT PLANS" shall have the meaning ascribed
thereto under Section 3(2) of ERISA.
1.40 "EMPLOYEE WELFARE BENEFIT PLANS" shall have the meaning ascribed
thereto under Section 3(1) of ERISA.
1.41 "ENVIRONMENT" means the environment, air, land, Water (as
hereinafter defined), and any building, building interior, fixture or equipment.
1.41a "ENVIRONMENTAL CLAIM" means any investigation, notice, violation,
demand, allegation by a third party, 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 actual violation of any Environmental Law
or any violation of any Environmental Law alleged by a third party; or (ii) in
connection with any Remedial Action.
1.42 "ENVIRONMENTAL COSTS" means all Adverse Consequences arising under
or related in any way to Environmental Laws, or relating to the protection of
health, safety, or the Environment, including, without limitation, any costs
and/or expenses relating to (i) non-
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compliance with Environmental Laws; (ii) assessment of environmental damage and
preparation of clean-up plans and engineering and feasibility studies; (iii)
required remediation of the Environment and treatment or disposal of Hazardous
Materials; (iv) construction of facilities to prevent the spread of Hazardous
Materials into the surrounding Environment; (v) procurement of financial
assistance to the extent necessitated by or affected by the investigation and/or
remediation of Hazardous Materials; (vi) investigations, actions and lawsuits
instituted by private parties or Governmental Agencies in respect of any such
matter; (vii) business disruption, relocation of equipment or place of business,
and/or lost profits resulting from the performance of any Remedial Action which
materially interferes with the operation of the business by the Indemnified
Party; and/or (viii) material damage caused by, and the repair, replacement or
restoration of any improvement materially affected by, any implementation,
entry, performance, inspection, treatment, Disposal, excavation, operation,
maintenance or other activity undertaken in order to comply with any
Environmental Law or perform any Remedial Action (except to the extent any such
damage is caused by the negligence of the Indemnified Party, its officers,
employees, contractors or agents).
1.43 "ENVIRONMENTAL LAWS" means (a) any present or future federal,
state or local law (including common law) or regulation relating to the
handling, use, control, management, treatment, storage, disposal, release or
threat of release of any Hazardous Material, including without limitation, the
federal Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. ss.ss.9601 et seq., the federal Resource Conservation and Recovery
Act, 42 U.S.C. ss.ss.6901 et seq., the federal Water Pollution Control Act, 33
U.S.C. ss.ss.1251 et seq., the federal Clean Air Act, 42 U.S.C. ss.ss.7401 et
seq., the Toxic Substances Control Act, 7 U.S.C. ss.ss.136 et seq., the Safe
Drinking Water Act, 42 U.S.C. ss.ss.300f et seq., the Occupation Safety and
Health Act of 1970, 29 U.S.C. ss.ss.651 et seq., and (b) any and all
requirements arising under applicable present and future federal, state or local
laws, statutes, common law, rules, ordinances, codes, orders, licenses, permits,
approvals, plans, authorizations, or the like, and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders, relating to the
protection of human health or the Environment in connection with Hazardous
Materials, including without limitation: (i) any and all federal, state or local
law (including common law) or regulation pertaining to reporting, licensing,
authorizing, approving, permitting, investigating, and remediating emissions,
discharges, releases, or threat of releases of any Hazardous Materials into the
indoor or outdoor air, surface water, groundwater, or land, or otherwise into
the Environment, or relating to the manufacture, operation, processing,
distribution, use, treatment, storage, disposal, transport, handling or
management of any Hazardous Material; and (ii) any and all federal, state or
local law (including common law) or regulation pertaining to the protection of
the health and safety of employees or the public and/or the Environment.
1.43(a) "ENVIRONMENTAL PERMITS" shall have the meaning ascribed thereto
in Section 4.20(b).
1.44 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.45 "EXCLUDED MOOG TRADEMARKS AND TRADE NAMES" shall have the meaning
ascribed thereto in Section 7.13(a).
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1.46 "EXCLUDED SMP TRADEMARKS AND TRADE NAMES" shall have the meaning
ascribed thereto in Section 7.13(b).
1.47 "EXISTING BRAKE LITIGATION AND CLAIMS" shall have the meaning
ascribed thereto in Section 5.15.
1.48 "EXISTING TC LITIGATION AND CLAIMS" shall have the meaning
ascribed thereto in Section 4.15.
1.49 "FIRST PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(b).
1.50 "FIFTH PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(g).
1.51 "FOURTH PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(f).
1.52 "GAAP" means generally accepted accounting principles in the
United States as in effect at the relevant time.
1.53 "GOVERNMENTAL AGENCY" means any United States or foreign federal,
provincial, state, municipal or local government, any subdivision, agency,
court, entity, commission or authority thereof, or any arbitrator or
quasi-governmental authority exercising any judicial or regulatory authority.
1.54 "HAZARDOUS MATERIALS" means any substance or material: (a) the
presence of which requires investigation or remediation under any Environmental
Law; (b) which is or becomes regulated by any federal, state or local
governmental authority, including without limitation, any substance or waste
material which is defined or listed as a "hazardous waste," "extremely hazardous
waste," "restricted hazardous waste," "industrial waste," "hazardous substance,"
"solid waste," "hazardous material," "pollutant" or "contaminant" under any
Environmental Law; (c) which contains gasoline, diesel fuel or other petroleum
hydrocarbons or a petroleum derivative; (d) which contains polychlorinated
biphenyls ("PCBS"), asbestos or urea formaldehyde; or (e) which is explosive,
corrosive, flammable, infectious, radioactive or toxic.
1.55 "H-S-R ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and all regulations issued thereunder.
1.56 "INACTIVE EMPLOYEES" means all individuals who are not Active
Employees on the Closing Date including, without limitation; (i) any former
employees of the TC Business or the Brake Business (as the case may be) who
retired, resigned or were terminated prior to the Closing Date or (ii) any
employee of the TC Business or the Brake Business (as the case may be) receiving
or entitled to long term disability benefits. Xxxxxxx Umstreadt and Xxxxxxxx
Xxxxx
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will be considered Inactive Employees for purposes of this Agreement, even
though they are currently on short term disability, because they are not
reasonably expected to return to work.
1.57 "INDEMNIFIED PARTY" shall mean the Party entitled to the benefits
of (i) any indemnity provision or (ii) any Remedial Action under this Agreement.
1.58 "INDEMNIFYING PARTY" shall mean the Party obligated to indemnify
another Party or to perform a Remedial Action pursuant to any provision under
this Agreement.
1.59 "LIABILITY" means any Debt, adverse claim, liability, judgment,
Tax and obligation, whether accrued, contingent or otherwise, and whether known
or unknown, including those arising under any law (including the common law) or
any rule, order or regulation of any Governmental Agency or imposed by any court
or any arbitrator in a binding arbitration resulting from, arising out of or
relating to the assets, activities, operations, actions or omissions of a Person
or its Affiliates or its or their employees or agents, or products manufactured
or sold thereby or services provided thereby, or under contracts, agreements
(whether written or oral), leases, commitments or undertakings thereof, whether
based on negligence, strict liability or other theory of liability.
1.60 "MOOG" and "MOOG COMPANY" shall have the meanings ascribed thereto
in the introductory paragraph of this Agreement.
1.61 "MOOG DISCLOSURE SCHEDULE" shall have the meaning ascribed thereto
in Section 4.3(a).
1.62 "MOOG EMPLOYEE PLANS" shall have the meaning ascribed thereto in
Section 4.19(a).
1.63 "MOOG ERISA AFFILIATE" shall have the meaning ascribed thereto in
Section 4.19(a).
1.64 "MOOG FINAL CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.12(a).
1.65 "MOOG FINAL CLOSING NET BOOK VALUE" shall have the meaning
ascribed thereto in Section 2.12(a).
1.66 "MOOG FIRPTA CERTIFICATE" shall have the meaning ascribed thereto
in Section 3.2(d).
1.67 "MOOG PARENT" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.68 "MOOG PERMITS" shall have the meaning ascribed thereto in Section
4.25.
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1.69 "MOOG PRE-CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.8.
1.70 "MOOG PRE-CLOSING NET BOOK VALUE" shall mean the amount of the
excess of "Total Assets" over "Total Liabilities" as reflected in the Moog
Pre-Closing Balance Sheet.
1.71 "MOOG PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning
ascribed thereto in Section 2.10.
1.72 "MOOG'S ADJUSTMENT LETTER" shall have the meaning ascribed thereto
in Section 2.11(a).
1.73 "MOOG'S INDEMNIFIED GROUP" shall have the meaning ascribed thereto
in Section 11.3.
1.74 "MOOG'S KNOWLEDGE" or similar term means the actual knowledge of
(i) the individuals listed in Section 1.74 of the Moog Disclosure Schedule and
(ii) the highest ranking environmental compliance officer with responsibility
for each of the facilities currently used in the operations of the TC Business.
1.75 "MOOG'S RESPONSE LETTER" shall have the meaning ascribed thereto
in Section 2.11(b).
1.76 "MOOG SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS" shall
have the meaning ascribed thereto in Section 4.18(a).
1.77 "MOOG SEVERANCE SCHEDULE" shall have the meaning ascribed thereto
in Section 8.2(d).
1.78 "OVERSTOCK BRAKE RETURNS AMOUNT" and "OVERSTOCK TC RETURNS AMOUNT"
shall have the meanings ascribed thereto in Section 7.12(a).
1.79 "PARTY" means any of Xxxxxx Canada, Moog Company, Moog Parent, SMP
Parent, or SMP Canada; "PARTIES" means more than one Party.
1.80 "PERMITTED EXCEPTIONS" shall mean statutory liens for taxes or
assessments not yet due or delinquent. Further, with respect to the Brake Real
Properties and the TC Real Properties, Permitted Exceptions shall also include:
(i) zoning and similar restrictions provided the current use of such real
properties does not violate any of such restrictions; (ii) the matters set forth
on Section 1.80 of the Moog Disclosure Schedule with respect to the TC Real
Properties; (iii) the matters set forth on Section 1.80 of the SMP Disclosure
Schedule with espect to the Brake Real Properties; and (iv) any other
encumbrances or easements which individually or in the aggregate do not
materially detract from the value of the property subject thereto or materially
impair the use of such property as presently used by the Parties.
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1.81 "PERSON" means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, another entity or a
Governmental Agency.
1.82 "REMEDIAL ACTION" shall mean such actions as are required under
Environmental Law or required under any applicable provisions of the current
real estate leases listed in Section 4.8 of the Moog Disclosure Schedule and
Section 5.8 of the SMP Disclosure Schedule, to (i) clean up, remove, contain,
treat or in any other way address, remediate or respond to any Discharge; (ii)
prevent the dispersal of Hazardous Materials in the Environment so that they do
not migrate or endanger public health or safety or the Environment; and/or (iii)
perform studies, investigations, monitoring, or operation and maintenance
functions in respect of any such matter.
1.83 "RESOLUTION OF PRE-CLOSING ENVIRONMENTAL ISSUES" shall have the
meaning ascribed thereto in Section 9.3(a).
1.84 "RUBBER SUPPLY AGREEMENT" shall mean the Supply Agreement, between
Moog and Stanric, Inc., a company organized under the laws of the Commonwealth
of Puerto Rico, in the form attached hereto as Exhibit C.
1.85 "RULES" shall have the meaning ascribed thereto in Section
14.2(a).
1.86 "SECOND PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(c).
1.87 "SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, other lien or easement other than Permitted Exceptions.
1.88 "SMP" shall have the meaning ascribed thereto in the introductory
paragraph of this Agreement.
1.89 "SMP CANADA" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.90 "SMP DISCLOSURE SCHEDULE" shall have the meaning ascribed thereto
in Section 5.3.
1.91 "SMP EMPLOYEE PLANS" shall have the meaning ascribed thereto in
Section 5.19(a).
1.92 "SMP ERISA AFFILIATE" shall have the meaning ascribed thereto in
Section 5.19(a).
1.93 "SMP FINAL CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.12(b).
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1.94 "SMP FINAL CLOSING NET BOOK VALUE" shall have the meaning ascribed
thereto in Section 2.12(b).
1.95 "SMP FIRPTA CERTIFICATE" shall have the meaning ascribed thereto
in Section 3.3(d).
1.96 "SMP PARENT" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.97 "SMP PERMITS" shall have the meaning ascribed thereto in Section
5.25.
1.98 "SMP PRE-CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.8.
1.99 "SMP PRE-CLOSING NET BOOK VALUE" shall mean the amount of the
excess of "Total Assets" over "Total Liabilities" as reflected in the SMP
Pre-Closing Balance Sheet.
1.100 "SMP'S PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning
ascribed thereto in Section 2.10.
1.101 "SMP'S ADJUSTMENT LETTER" shall have the meaning ascribed thereto
in Section 2.11(a).
1.102 "SMP'S INDEMNIFIED GROUP" shall have the meaning ascribed thereto
in Section 11.4.
1.103 "SMP'S KNOWLEDGE" or similar term means the actual knowledge of
(i) the individuals listed in Section 1.103 of the SMP Disclosure Schedule and
(ii) the highest ranking environmental compliance officer with responsibility
for each of the facilities currently used in the operations of the Brake
Business.
1.104 "SMP'S RESPONSE LETTER" shall have the meaning ascribed thereto
in Section 2.11(b).
1.105 "SMP SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS" shall
have the meaning ascribed thereto in Section 5.18(a).
1.106 "SMP SEVERANCE SCHEDULE" shall have the meaning ascribed thereto
in Section 8.2(d).
1.107 "TARGET" shall have the meaning ascribed thereto in Section 7.16.
1.108 "TAXES" shall mean all United States or foreign federal,
provincial, state, municipal, local income, profits, gross receipts, license,
payroll, employment, franchise, unincorporated business, withholding, capital,
general corporate, customs duties, environmental (including Taxes under Code
Section 50A), disability, registration, alternative, add-on,
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minimum, estimated, sales, use, occupation, property, severance, production,
excise, recording, ad valorem, gains, transfer, value-added, unemployment
compensation, social security, premium, privilege and any and all other taxes
(including interest, additions to tax and penalties thereon, and interest on
such additions to tax and penalties).
1.109 "TAX RETURN" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.110 "TC ASSETS" shall mean:
(a) all of the property and assets of Moog used exclusively in
the conduct of the TC Business whether or not reflected in the Moog Final
Closing Balance Sheet (as hereinafter defined), including, without limitation,
the TC Real Properties (as hereinafter defined), the TC Intellectual Property
(as hereinafter defined), plants, machinery, equipment, tools, dies, data
processing equipment, office equipment, supplies, furniture, fixtures, leasehold
improvements, motor vehicles, prepaid expenses and security deposits (and
including all items which would be included on the Moog Final Closing Balance
Sheet except for the fact that such items are fully depreciated or expensed),
and all items used exclusively in the conduct of the TC Business which are
acquired in the ordinary course of business consistent with past practice by the
TC Business between the date of the Moog Pre-Closing Balance Sheet (as
hereinafter defined) and the Closing Date;
(b) the TC Books and Records (as hereinafter defined);
(c) the TC Contracts (as hereinafter defined);
(d) the TC Leases (as hereinafter defined);
(e) the note receivable due from Elite Automotive Systems Limited
dated July 3, 1997 in the original principal amount of (pound)300,000 together
with the related Legal Charge dated July 3, 1997 granting a security interest in
the assets of Elite Automotive Systems Limited to secure repayment of the note;
and
(f) inventories, other than the inventories to be consigned by
Moog to SMP as determined under Section 7.20 of this Agreement.
Notwithstanding the foregoing, the TC Assets shall not mean or include
the TC Retained Assets (as hereinafter defined).
1.111 "TC ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
instrument of assignment and assumption substantially in the form attached
hereto as Exhibit D.
1.112 "TC ASSUMED LIABILITIES" shall mean and include only the
following obligations and liabilities of the TC Business:
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(a) all Liabilities of the TC Business reflected on the Moog
Final Closing Balance Sheet;
(b) subject to Section 7.12, all Liabilities for warranty and
customer service claims and other return obligations regarding products of the
TC Business;
(c) all Liabilities for product liability claims (including
claims for property damage, personal injury or death) relating to products
manufactured or sold by the TC Business based on or arising out of claims made
or causes of action filed after the first anniversary of the Closing Date,
PROVIDED, HOWEVER, that this subsection (c) shall not apply to any Liabilities
based on or arising out of asbestos exposure which are covered by Section
1.127(d).
(d) all Liabilities under the TC Contracts and the TC Leases, to
the extent such TC Contracts and TC Leases are assigned to SMP; and
(e) all core Liabilities of the TC Business.
Notwithstanding the foregoing, the TC Assumed Liabilities shall not
include the TC Retained Liabilities (as hereinafter defined).
1.113 "TC XXXX OF SALE" shall have the meaning ascribed thereto in
Section 3.2(b).
1.114 "TC BOOKS AND RECORDS" shall mean originals or copies of all of
the books and records of Moog relating to the operations of the TC Business,
including, without limitation, all books and records relating to the individuals
employed by Moog who will be employed by SMP in the TC Business, following the
Closing Date, and to the extent related exclusively to the TC Business, all
books and records relating to the purchase of materials, the lease of equipment,
supplies and services, advertising, financial, accounting and operations
matters, product engineering, research and development, manufacture and sale of
products, provision of services and dealings with customers or clients of the TC
Business. As used herein books and records shall include a hardcopy of all
computerized books and records.
1.115 "TC BUSINESS" shall have the meaning ascribed thereto in the
recitals of this Agreement.
1.116 "TC COMPETITIVE BUSINESS" shall have the meaning ascribed thereto
in Section 7.16(a).
1.117 "TC COMPETITIVE PRODUCTS" shall have the meaning ascribed thereto
in Section 7.16(a).
1.118 "TC CONTRACTS" shall mean all contracts, licenses, purchase
orders, agreements and commitments of Moog exclusively relating to the TC
Business, including, without limitation, (i) the contracts, agreements and
commitments listed in Section 4.13 of the Moog Disclosure Schedule and (ii) all
contracts, agreements and commitments of Moog exclusively relating to the TC
Business which are entered into between the date of this Agreement and the
Closing Date
- 17 -
and expressly permitted by this Agreement, excluding, however, all contracts,
agreements and commitments which expire or are cancelled in accordance with
their terms prior to the Closing Date.
1.119 "TC ENVIRONMENTAL COSTS" shall mean all Environmental Costs,
whether direct or indirect, known or unknown, joint or several, whenever arising
(including after Closing), based on, arising out of or otherwise in respect of
the TC Assets, the TC Business, or property currently or formerly owned,
operated, used or leased by Moog or its predecessors (including off-site
locations) and arising out of: (i) conditions or Hazardous Materials existing on
or originating from any such property or the TC Assets on or prior to the
Closing Date including, but not limited to, the Discharge or Disposal of
Hazardous Materials at or from any such property on or prior to the Closing
Date; (ii) the operation of the TC Business by Moog or its predecessors on or
prior to the Closing Date; or (iii) non-compliance on or prior to the Closing
Date with any requirements of Environmental Laws.
1.120 "TC INTELLECTUAL PROPERTY" shall mean all letters patent,
patents, trademarks, trade names, service marks, copyrights (including
registrations and applications for any of the foregoing), licenses, technology,
know-how, trade secrets, tangible or intangible proprietary information or
material, formulae and inventions owned by Moog which are used exclusively in or
relate exclusively to the TC Business or the rights thereto (including rights
under licenses) which belong to Moog and are used exclusively in or relate
exclusively to the TC Business, including, without limitation, (i) all items
listed in Section 4.10(c) of the Moog Disclosure Schedule and (ii) all such
intellectual property which is acquired or developed for use exclusively in the
TC Business between the date of this Agreement and the Closing. The TC
Intellectual Property shall not include the Excluded Moog Trademarks and Trade
Names.
1.121 "TC LEASES" shall mean all leases of Moog for real or personal
property exclusively relating to the TC Business (whether entered into as lessor
or lessee), including, without limitation, (a) the real estate leases listed in
Section 4.8 of the Moog Disclosure Schedule and (b) all leases of Moog
exclusively relating to the TC Business which are entered into between the date
of this Agreement and the Closing and expressly permitted by this Agreement,
excluding, however, all leases which will expire in accordance with their terms
prior to the Closing.
1.122 "TC LETTERS OF CREDIT" shall have the meaning ascribed thereto in
Section 7.15(a).
1.123 "TC MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the TC Assets or on the business, financial condition, operations, or results
of operations of the TC Business.
1.124 "TC PRODUCT LIABILITY CLAIM" shall have the meaning ascribed
thereto in Section 4.17(a).
1.125 "TC REAL PROPERTIES" shall mean all of the real properties owned
by Moog and used exclusively in the TC Business as listed in Section 4.9 of the
Moog Disclosure Schedule (but excluding the real property owned or held by Moog
in Ottumwa, Iowa).
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1.126 "TC RETAINED ASSETS" shall mean all of the following properties,
assets and other rights of Moog:
(a) all cash, cash equivalents and bank accounts;
(b) all of Moog's accounts and notes receivable including, but
not limited to, any inter- or intra-company receivables owed to the TC Business
from Moog or any of its Affiliates (but excluding the note receivable due from
Elite Automotive Systems which is included in the TC Assets);
(c) the real property owned or held by Moog in Ottumwa, Iowa
including all improvements, structures and fixtures thereon and other tangible
assets located at such property;
(d) the Excluded Moog Trademarks and Trade Names;
(e) all insurance policies, related prepaid expenses, refunds or
proceeds and all rights relating thereto subject to Section 7.14(a);
(f) all personal computers and servers used in the TC Business
which were deployed by Moog to support SAP (but not wiring for the SAP system
which is included in the TC Assets) and all personal computers used by the Moog
sales force;
(g) the computer software used by the TC Business and leases,
licenses or other arrangements therefor;
(h) any assets of any Employee Pension Benefit Plans and Employee
Welfare Benefit Plans and any rights under such plans relating to employee
benefits, employment or compensation;
(i) any vehicles owned or leased by Moog for use by Moog sales
personnel;
(j) the inventories to be consigned by Moog to SMP as determined
under Section 7.20 of this Agreement; and
(k) any fixed assets located at Moog's facility in Boaz, Alabama
related to the production of screw machine products for the TC Business.
1.127 "TC RETAINED LIABILITIES" shall mean the following:
(a) all Liabilities to the extent arising out of TC Retained
Assets;
(b) all accounts and notes payable of the TC Business incurred on
or prior to the Closing Date including, but not limited to, any inter- or
intra-company payables due from the TC Business to Moog or any of its
Affiliates;
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(c) all Liabilities for product liability claims (including
claims for property damage, personal injury or death) relating to products
manufactured or sold by the TC Business based on or arising out of claims made
or causes of action filed on or before the first anniversary of the Closing
Date, PROVIDED, HOWEVER, that this Section (c) shall not apply to any
Liabilities based on or arising out of asbestos exposure which are covered by
Section 1.127(d);
(d) any claims by third parties based on or arising out of
asbestos exposure relating to products manufactured or sold on or prior to the
Closing Date by the TC Business and any claims by Active Employees or Inactive
Employees of the TC Business (including worker's compensation claims) based on
or arising out of asbestos exposure on or prior to the Closing Date;
(e) all TC Environmental Costs;
(f) all Liabilities to Inactive Employees of the TC Business and
their beneficiaries and dependents including, without limitation, all
Liabilities with respect to (i) salaries, wages, commissions, bonuses and
vacation pay (except to the extent accrued on the Moog Final Closing Balance
Sheet); (ii) severance pay and obligations (subject to Sections 8.1 and 8.2);
(iii) Employee Pension Benefit Plans and Employee Welfare Benefit Plans
(including any retiree medical and dental benefits) provided by Moog or its
Affiliates to such employees; (iv) worker's compensation claims; (v)
unemployment compensation claims; and (vi) claims or litigation relating to
discrimination claims, unjust discharge, claims for additional compensation or
benefits and claims for violation of health and safety laws;
(g) all Liabilities to Active Employees of the TC Business and
their beneficiaries and dependents for (i) salaries, wages, commissions, bonuses
and vacation pay relating to periods on or prior to the Closing Date (except to
the extent accrued on the Moog Final Closing Balance Sheet); (ii) severance pay
and obligations for Active Employees who do not become employees of SMP (subject
to Sections 8.1 and 8.2); (iii) Employee Pension Benefit Plans and Employee
Welfare Benefit Plans (including any retiree medical and dental benefits)
provided by Moog or its Affiliates to such employees in accordance with the
provisions of such plans; (iv) worker's compensation claims based on or
resulting from incidents or events occurring before the Closing Date; (v)
unemployment compensation claims for Active Employees who do not become
employees of SMP; and (vi) claims or litigation relating to discrimination
claims, unjust discharge, claims for additional compensation or benefits and
violation of the health and safety laws based upon or resulting from incidents
or events occurring before the Closing Date;
(h) all Liabilities for Taxes of Moog or the TC Business for any
period prior to the Closing Date except to the extent that a liability for
non-income Taxes is accrued on the Moog Final Closing Balance Sheet;
(i) all Liabilities of Moog or the TC Business for borrowed money
including notes payable, loans and revolving credits;
(j) all Liabilities of Moog or the TC Business with respect to
letters of credit and foreign exchange contracts or commitments, subject to
Section 7.15;
- 20 -
(k) all Liabilities of Moog or the TC Business with respect to
powers of attorney, financing agreements, security agreements, bid bonds,
performance bonds, suretyship agreements, guarantees or any other similar
arrangement where Moog is or may become liable for the obligations of any other
Person;
(l) all Liabilities for Existing TC Litigation and Claims (as
hereinafter defined) including matters set forth in Section 4.15 of the Moog
Disclosure Schedule and, except for matters described in Sections 1.112(b) and
(c), all Liabilities for any actions, suits, proceedings, claims or
investigations arising after the Closing Date that arise from or relate to
matters, incidents, sets of facts or circumstances on or prior to the Closing
Date including breach of contract, tort, infringement or violation of law; and
(m) all Liabilities arising out of "wrap discounts" or other
discounts, customer incentives or rebates relating to sales on or prior to the
Closing Date.
1.128 "TC RETURNS SCHEDULE" shall have the meaning ascribed thereto in
Section 7.12(a).
1.129 "TC SCHEDULED SALES PERSONS" shall have the meaning ascribed
thereto in Section 4.18(a).
1.130 "TC TRANSFERRING SALES PERSON" shall have the meaning ascribed
thereto in Section 8.1(a).
1.131 "THIRD PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(e).
1.132 "TRANSITION PERIOD" shall have the meaning ascribed thereto in
Section 7.3(c).
1.133 "WARRANTY BRAKE RETURNS AMOUNT" and "WARRANTY TC RETURNS AMOUNT"
shall have the meanings ascribed thereto in Section 7.12(a).
1.134 "WATER" means surface water, ground water, wetlands, other water,
or any of them.
ARTICLE II.
EXCHANGE OF ASSETS; ASSUMPTION OF LIABILITIES; ADJUSTMENTS
----------------------------------------------------------
2.1 BASIC TRANSACTION. On and subject to the terms and conditions of
------------------
this Agreement, the Parties shall effect an exchange of the TC Assets and the
Brake Assets as set forth below.
2.2 CONVEYANCE OF TC ASSETS. By means of appropriate documentation
------------------------
reasonably satisfactory to the Parties, at the Closing, Moog will sell,
transfer, assign, convey and deliver
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to SMP, free and clear of all Security Interests, all of its right, title and
interest in and to the TC Assets, and SMP will purchase, acquire and accept, as
provided herein, the TC Assets.
2.3 CONVEYANCE OF BRAKE ASSETS. By means of appropriate documentation
---------------------------
reasonably satisfactory to the Parties, at the Closing, SMP will sell, transfer,
assign, convey and deliver to Moog, free and clear of all Security Interests,
all of its right, title and interest in and to the Brake Assets, and Moog will
purchase, acquire and accept, as provided herein, the Brake Assets.
2.4 TC ASSUMED LIABILITIES. On and subject to the terms and conditions
-----------------------
set forth in this Agreement, effective as of the Closing Date, Moog will
transfer to SMP, and SMP will assume and undertake to perform when due, the TC
Assumed Liabilities.
2.5 BRAKE ASSUMED LIABILITIES. On and subject to the terms and
--------------------------
conditions set forth in this Agreement, effective as of the Closing Date, SMP
will transfer to Moog, and Moog will assume and undertake to perform when due,
the Brake Assumed Liabilities.
2.6 TC RETAINED LIABILITIES. The TC Retained Liabilities will be
------------------------
retained and performed when due by Moog.
2.7 BRAKE RETAINED LIABILITIES. The Brake Retained Liabilities will be
---------------------------
retained and performed when due by SMP.
2.8 PRE-CLOSING BALANCE SHEETS. Attached hereto as Exhibit E is a
---------------------------
balance sheet for the TC Business as of December 31, 1997 (the "MOOG PRE-CLOSING
BALANCE SHEET") and attached hereto as Exhibit F is a balance sheet for the
Brake Business as of December 31, 1997 (the "SMP PRE-CLOSING BALANCE SHEET").
Moog represents that the Moog Pre-Closing Balance Sheet and SMP represents that
the SMP Pre-Closing Balance Sheet has been prepared in accordance with the
principles, practices, methods and procedures set forth on Exhibit G.
2.9 CLOSING PAYMENT AMOUNT AND FINAL CLOSING PAYMENT AMOUNT.
--------------------------------------------------------
(a) At Closing, SMP shall pay Moog an amount equal to the sum of:
(i) the outstanding balance including any future principal payments due under
the $2.5 million Arkansas Development Finance Authority Industrial Development
Bonds (Standard Motor Products, Inc. Project) Series 1989, plus interest accrued
to the Closing Date; and (ii) the outstanding balance including any future
principal payments due under the $1.8 million Industrial Development Revenue
Bonds (Standard Motor Products, Inc. Project) Series 1990, plus interest accrued
to the Closing Date.
(b) If the SMP Final Closing Net Book Value exceeds the Moog Final
Closing Net Book Value, without giving effect to the consignment provisions of
Section 7.20, then on or before the first anniversary of the Closing Date, Moog
shall pay to SMP an amount equal to the difference between the SMP Final Closing
Net Book Value and the Moog Final Closing Net Book Value.
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(c) If Moog fails to timely make the payment described in Section
2.9(a), Moog shall pay to SMP interest on such amount at the rate of twelve
percent (12%) per annum from the first anniversary of the Closing Date to the
payment date.
(d) If the Moog Final Closing Net Book Value exceeds the SMP Final
Closing Net Book Value, without giving effect to the consignment provisions of
Section 7.20, then on or before the first anniversary of the Closing Date, SMP
shall pay Moog the amount determined under Section 7.20(e).
2.10 CLOSING BALANCE SHEETS. Within sixty (60) days following the
-----------------------
Closing Date, (i) Moog will prepare and furnish to SMP a balance sheet for the
TC Business as of the Closing Date (the "MOOG PRELIMINARY CLOSING BALANCE
SHEET") and (ii) SMP will prepare and furnish to Moog a balance sheet for the
Brake Business as of the Closing Date (the "SMP PRELIMINARY CLOSING BALANCE
SHEET"). The Moog Preliminary Closing Balance Sheet, the Moog Final Closing
Balance Sheet, the SMP Preliminary Closing Balance Sheet and the SMP Final
Closing Balance Sheet shall be prepared in accordance with principles,
practices, methods and procedures set forth on Exhibit G.
2.11 PRELIMINARY CLOSING BALANCE SHEET REVIEW. (a) Moog will have
-----------------------------------------
thirty (30) days following receipt of the SMP Preliminary Closing Balance Sheet
from SMP to review such SMP Preliminary Closing Balance Sheet and to determine
if, in Moog's good faith reasonable judgment, it has been prepared in accordance
with Exhibit G. If Moog does not raise any objections within such thirty (30)
day period, then Moog will be deemed to have accepted the SMP Preliminary
Closing Balance Sheet. If in Moog's good faith reasonable judgment adjustments
are necessary for the SMP Preliminary Closing Balance Sheet to be so prepared,
Moog shall notify SMP in writing of its proposed adjustments, including, in
reasonable detail, the amount, nature and basis for the adjustments ("MOOG'S
ADJUSTMENT LETTER") prior to the end of such thirty (30) day review period. SMP
will have thirty (30) days following receipt of the Moog Preliminary Closing
Balance Sheet from Moog to review such Moog Preliminary Closing Balance Sheet
and to determine if, in SMP's good faith reasonable judgment, it has been
prepared in accordance with Exhibit G. If SMP does not raise any objections
within such thirty (30) day period, then SMP will be deemed to have accepted the
Moog Preliminary Closing Balance Sheet. If in SMP's good faith reasonable
judgment adjustments are necessary for the Moog Preliminary Closing Balance
Sheet to be so prepared, SMP shall notify Moog in writing of its proposed
adjustments, including, in reasonable detail, the amount, nature and basis for
the adjustments ("SMP'S ADJUSTMENT LETTER") prior to the end of such thirty (30)
day review period.
(b) SMP will have fifteen (15) days following receipt of Moog's
Adjustment Letter, if any, to review the proposed adjustments and within such
period shall notify Moog in writing of SMP's position with respect to each of
Moog's proposed adjustments ("SMP'S RESPONSE LETTER"). If SMP does not notify
Moog in writing within such fifteen (15) day period of any objections to Moog's
proposed adjustments, then SMP will be deemed to have accepted each of Moog's
proposed adjustments set forth in Moog's Adjustment Letter. Moog will have
fifteen (15) days following receipt of SMP's Adjustment Letter, if any, to
review the proposed adjustments and within such period shall notify SMP in
writing of Moog's position with respect to each of SMP's proposed adjustments
("MOOG'S RESPONSE LETTER"). If Moog does not notify
- 23 -
SMP in writing within such fifteen (15) day period of any objections to SMP's
proposed adjustments, then Moog will be deemed to have accepted each of SMP's
proposed adjustments set forth in SMP's Adjustment Letter.
(c) Within ten (10) days after receipt of the response from each
of the Parties pursuant to Section 2.11(b), the Parties shall meet and endeavor
acting reasonably and in good faith, to resolve the adjustments, if any, which
are in dispute.
(d) If the Parties are unable to resolve all of the proposed
adjustments in Moog's Adjustment Letter and SMP's Adjustment Letter, within the
ten (10) day period provided in Section 2.11(c), the Parties shall jointly
engage the accounting firm of Coopers & Xxxxxxx (or their successor) (the
"ACCOUNTING ARBITRATOR"), to act as arbitrator, subject to the Accounting
Arbitrator confirming that it has no business or other relationship with either
party which would cause it not to be independent of both Parties which has not
been waived in writing by the Party not having such relationship in its sole
discretion. If such accounting firm is unable to confirm its independence and no
waiver is given, the Parties shall jointly engage an alternate mutually
acceptable accounting firm that can confirm that it is independent of both
Parties or such a waiver is given with respect to the alternate accounting firm.
If the Parties have failed to engage the Accounting Arbitrator within such ten
(10) day period either Party may request that an administrator designated by the
American Arbitration Association appoint a nationally recognized independent
accounting firm to act as the Accounting Arbitrator within fifteen (15) days of
such request. The Accounting Arbitrator shall be furnished with a copy of the
Agreement, the Moog Pre-Closing Balance Sheet, the SMP Pre-Closing Balance
Sheet, the Moog Preliminary Closing Balance Sheet, the SMP Preliminary Closing
Balance Sheet, Moog's Adjustment Letter (if any), SMP's Adjustment Letter (if
any), Moog's Response Letter (if any), SMP's Response Letter (if any) and any
other relevant correspondence between the Parties. The Accounting Arbitrator
must, within sixty (60) days from the date all of such documents are furnished,
complete its review and render a written report setting forth its conclusion
with respect to each of the proposed adjustments that were unresolved between
the Parties. The Accounting Arbitrator shall be granted access to the books and
records of the Parties as well as the working papers or other documents which
either Party or its accountants may have that relate to the Moog Preliminary
Closing Balance Sheet or the SMP Preliminary Closing Balance Sheet and any other
documents or information which the Accounting Arbitrator may deem appropriate.
The Accounting Arbitrator's review shall be limited to determining, in respect
of each disputed adjustment, which Party's position with respect to the proposed
adjustment most closely compares with the terms of this Agreement. The Parties
shall have the right to submit written materials to the Accounting Arbitrator
all in accordance with procedures to be set forth in the engagement letter
between the Parties and the Accounting Arbitrator. In arriving at its
determination the Accounting Arbitrator must select one Party's position with
respect to each proposed adjustment. The decision by the Accounting Arbitrator
shall be in writing and delivered to both Parties. The Accounting Arbitrator's
decision shall be conclusive and binding upon the Parties and may be entered and
enforced in any court of competent jurisdiction. The Parties agree to submit to
the jurisdiction of any such court for the enforcement of such award or
decision. Each Party shall pay fifty percent (50%) of the fees and expenses of
the Accounting Arbitrator.
2.12 FINAL CLOSING BALANCE SHEET. (a) The Moog Preliminary
----------------------------
Closing Balance Sheet as agreed to by the Parties pursuant to subsections
2.11(a), (b) or (c) or as modified by the
- 24 -
determination of the Accounting Arbitrator pursuant to subsection 2.11(d) will
become the "MOOG FINAL CLOSING BALANCE SHEET," and the excess of "Total Assets"
over "Total Liabilities" as reflected in the Moog Final Closing Balance Sheet
shall be the "MOOG FINAL CLOSING NET BOOK VALUE."
(b) The SMP Preliminary Closing Balance Sheet as agreed to by the
Parties pursuant to subsections 2.11(a), (b) or (c) or as modified by the
determination of the Accounting Arbitrator pursuant to subsection 2.11(d) will
become the "SMP FINAL CLOSING BALANCE SHEET," and the amount of the excess of
"Total Assets" over "Total Liabilities" as reflected in the SMP Final Closing
Balance sheet shall be the "SMP FINAL CLOSING NET BOOK VALUE."
2.13 PAYMENT. Any amounts to be paid pursuant to this Article II shall
--------
be paid in immediately available United States funds by wire transfer to an
account designated by the Party to receive such funds, of which such Party shall
advise the other Party not later than two (2) Business Days prior to the date
payment is to be made.
2.14 TRANSFER COSTS. (i) Moog will pay all transfer, income, conveyance
---------------
or other similar Taxes, stamps, duties or similar governmental
charges imposed by any taxing jurisdiction on or with respect to the transfer of
the TC Assets, (ii) SMP will pay all transfer, income, conveyance, or other
similar Taxes, stamps, duties or similar governmental charges imposed by any
taxing jurisdiction on or with respect to the transfer of the Brake Assets,
(iii) SMP will pay any recording, filing or notarial fees incurred in connection
with its acquisition of the TC Assets and (iv) Moog will pay any recording,
filing or notarial fees incurred in connection with its acquisition of the Brake
Assets.
ARTICLE III.
THE CLOSING
-----------
3.1 CLOSING DATE. The Closing shall take place on the seventh Business
-------------
Day following the fulfillment of all the conditions precedent specified in
Article X, at 10:00 a.m., at the offices of Xxxxxx Industries, Inc., 000 Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx, or at such other place, time or date as the Parties
may mutually agree. The Closing shall be effective as of the close of business
on that date.
3.2 MOOG DELIVERIES AT THE CLOSING. At the Closing, Moog shall deliver
-------------------------------
to SMP the following:
(a) Special warranty deeds (subject to Permitted Exceptions), in
recordable form, with respect to the TC Real Properties owned by Moog;
(b) A duly executed xxxx of sale substantially in the form of
Exhibit H to this Agreement (the "TC XXXX OF SALE"), together with such other
appropriate instruments of transfer as SMP may reasonably request, transferring
to SMP all of the personal and intangible property owned or held by Moog as of
the Closing which is included in the TC Assets;
- 25 -
(c) Duly executed instruments of assignment of the TC Leases, which
shall be in recordable form in the case of TC Leases of real property or
interests therein;
(d) Certification from Moog Company that it is not a foreign
corporation, foreign trust, foreign partnership or foreign estate (as such terms
are defined in the Code) and an affidavit of Moog Company in the form attached
hereto as Exhibit I (the "MOOG FIRPTA CERTIFICATE");
(e) Estoppel certificates from each lessor of a TC Lease for real
property in form and substance satisfactory to SMP;
(f) Duly executed instruments of assignment or transfer of the TC
Intellectual Property owned or held by Moog, in form suitable for recording in
the appropriate office or bureau, and the original certificates, if available,
of such TC Intellectual Property together with any powers of attorney necessary
to make the conveyance effective;
(g) The TC Books and Records; provided that any TC Books and
Records located on any of the TC Real Property or leased property shall be
deemed to be delivered upon transfer of such property as provided herein;
(h) Copies of the consents obtained as contemplated by Section
10.3(c);
(i) The TC Assignment and Assumption Agreement and the Brake
Assignment and Assumption Agreement each duly executed by Moog;
(j) Duly executed copies of each of the Rubber Supply Agreement
(Exhibit C), and the Screw Machine Products Supply Agreement (Exhibit A); and
(k) Such other and further instruments of conveyance, assignment
and transfer as SMP may reasonably request for the more effective conveyance and
transfer of any of the TC Assets and the assumption of any of the Brake Assumed
Liabilities.
3.3 SMP DELIVERIES AT THE CLOSING. At the Closing, SMP shall deliver to
------------------------------
Moog the following:
(a) Special warranty deeds (subject to Permitted Exceptions), in
recordable form, with respect to the Brake Real Properties owned by SMP;
(b) A duly executed xxxx of sale substantially in the form of
Exhibit J to this Agreement (the "BRAKE XXXX OF SALE"), together with such other
appropriate instruments of transfer as Moog may reasonably request, transferring
to Moog all of the personal and intangible property owned or held by SMP as of
the Closing which is included in the Brake Assets;
(c) Duly executed instruments of assignment of the Brake Leases
(including an assignment of the Lease Agreement dated as of June 1, 1990 from
the City of Manila to SMP pertaining to the $1.8 million Industrial Development
Revenue Bonds), which shall be in recordable form in the case of Brake Leases of
real property or interests therein;
- 26 -
(d) Certification from SMP Parent that it is not a foreign
corporation, foreign trust, foreign partnership or foreign estate (as such terms
are defined in the Code) and an affidavit of SMP in the form attached hereto as
Exhibit K (the "SMP FIRPTA CERTIFICATE");
(e) Estoppel certificates from each lessor of a Brake Lease for
real property in form and substance satisfactory to Moog;
(f) Duly executed instruments of assignment or transfer of the
Brake Intellectual Property owned or held by SMP, in form suitable for recording
in the appropriate office or bureau, and the original certificates, if
available, of such Brake Intellectual Property together with any powers of
attorney necessary to make the conveyance effective;
(g) The Brake Books and Records; provided that any Brake Books and
Records located on any of the Brake Real Property or leased property shall be
deemed to be delivered upon transfer of such property as provided herein;
(h) Copies of the consents obtained as contemplated by Section
10.2(c);
(i) The TC Assignment and Assumption Agreement and the Brake
Assignment and Assumption Agreement each duly executed by SMP;
(j) Duly executed copies of each of the Rubber Supply Agreement and
the Screw Machine Products Supply Agreement;
(k) Duly executed releases of all UCC financing statements filed
against SMP by the following secured parties releasing all the Brake Assets from
the collateral covered by the financing statements: The First National Bank of
Chicago, as Collateral Agent (assignee of Clipper Receivables Corporation); SMP
Credit Corporation; and Clipper Receivables Corporation (assignee of SMP Credit
Corporation);
(l) UCC financing statements executed by SMP pertaining to Moog's
interest in the inventory consigned to SMP pursuant to Section 7.20 of this
Agreement;
(m) Duly executed instruments of assignment of the Promissory Note
dated December 1, 1989 in the original principal amount of $2.5 million payable
to the Arkansas Development Finance Authority and the related Loan Agreement and
Mortgage and Security Agreement; and
(n) Such other and further instruments of conveyance, assignment
and transfer as Moog may reasonably request for the more effective conveyance
and transfer of any of the Brake Assets and the assumption of the TC Assumed
Liabilities.
- 27 -
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF MOOG
--------------------------------------
Moog represents and warrants to SMP that the statements contained in
this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV, except to the extent any representation or warranty
relates to a specific date).
4.1 ORGANIZATION OF MOOG. Each of Moog Company, Moog Parent and Xxxxxx
---------------------
Canada is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization. Each of
Moog Company, Moog Parent and Xxxxxx Canada is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of the TC Business or the use, ownership or leasing of properties
used in the TC Business requires such qualification, except where the failure to
be so qualified would not, individually or in the aggregate, have a TC Material
Adverse Effect. Each of Moog Company, Moog Parent and Xxxxxx Canada has full
corporate power and authority to carry on the TC Business and to use the
properties used by it in the TC Business.
4.2 AUTHORIZATION OF TRANSACTION. Each of Moog Company, Moog Parent and
-----------------------------
Xxxxxx Canada has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, including the power to
convey the TC Assets. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Moog Company, Moog Parent and Xxxxxx
Canada and no other corporate proceedings on the part of Moog Company, Moog
Parent or Xxxxxx Canada are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Moog Company, Moog Parent and Xxxxxx
Canada and constitutes the valid and legally binding obligation of Moog Company,
Moog Parent and Xxxxxx Canada, enforceable in accordance with its terms and
conditions.
4.3 NON-CONTRAVENTION. (a) Except as set forth in Section 4.3(a) of the
------------------
disclosure schedule of Moog attached hereto (the "MOOG DISCLOSURE SCHEDULE"),
and except for the applicable requirements of the H-S-R Act and any applicable
"bulk sales" laws, there is no requirement applicable to Moog to make any filing
with any Governmental Agency as a condition to the lawful consummation by Moog
of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.3(b) of the Moog Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) conflict with or
result in any breach of any provision of the certificate or articles of
incorporation or bylaws or other organizational document of Moog Company, Moog
Parent or Xxxxxx Canada, (ii) except for any applicable "bulk sales" laws,
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, or Governmental
Agency, to which Moog or any of the TC Assets is subject or (iii) conflict with,
result in a breach of, constitute a default under, result in
- 28 -
the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money or instrument of indebtedness, to which either Moog Company, Moog
Parent or Xxxxxx Canada is a party or by which Moog Company, Moog Parent or
Xxxxxx Canada is bound or to which any of the TC Assets is subject (or result in
the imposition of any Security Interest upon any of such TC Assets), except,
with respect to clauses (ii) and (iii), for such violations, conflicts, breaches
or defaults which would not individually or in the aggregate have a TC Material
Adverse Effect.
4.4 MOOG PRE-CLOSING BALANCE SHEET AND FINANCIAL STATEMENTS. (a) The
--------------------------------------------------------
Moog Pre-Closing Balance Sheet has been prepared from the books and records of
Moog in accordance with the principles, practices, methods and procedures set
forth on Exhibit G and reasonably reflects the assets that are TC Assets and
Liabilities that are TC Assumed Liabilities as of December 31, 1997.
(b) Moog has previously delivered to SMP the balance sheet of the
TC Business at December 31, 1996 and the income statement of the TC Business for
the year then ended. Such financial statements (i) have been prepared based on
the books and records of Moog in accordance with past practices applied on a
consistent basis, with such differences from GAAP as are described in Section
4.4 of the Moog Disclosure Schedule, and (ii) present fairly, in all material
respects, the financial position and results of operations of the TC Business as
of such date or for such year.
4.5 UNDISCLOSED LIABILITIES. Except as set forth in Section 4.5 of the
------------------------
Moog Disclosure Schedule, Moog has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise) that are of the type required to be
set forth in the Moog Pre-Closing Balance Sheet, except liabilities, obligations
or contingencies which are adequately accrued or reserved against in such
balance sheet or which were incurred after December 31, 1997, in the ordinary
course of business consistent with past practice or which in the aggregate do
not exceed $10,000.
4.6 EVENTS AFTER JUNE 30, 1997. Except for the loss of AutoZone as a
---------------------------
customer of the TC Business, since June 30, 1997, there has not been a TC
Material Adverse Effect. Except as set forth in Section 4.6 of the Moog
Disclosure Schedule, without limiting the foregoing, since that date, Moog, with
respect to the TC Business, has not:
(a) (i) sold, leased, transferred, disposed of or assigned any of
the TC Assets, other than finished goods sold in the ordinary course of business
or the sale or transfer of other assets which are not material to the TC
Business, all of which is consistent with past practice or (ii) mortgaged,
pledged or otherwise encumbered any TC Assets, except for Permitted Exceptions;
(b) made any capital expenditures in excess of $250,000 in the
aggregate;
(c) entered into any contract, agreement, arrangement, lease,
sublease, license, sublicense which involves a certain (rather than contingent)
obligation of or to Moog with respect to the TC Business of more than $100,000,
except for purchase orders, sales orders and
- 29 -
similar contracts entered into in the ordinary course of business consistent
with past practice which, in any individual case, did not exceed $500,000;
(d) created, incurred or assumed any long-term Debt (including
obligations in respect of capital leases), or, except in the ordinary course of
business consistent with past practice, any short-term Debt if, in either case,
such Debt would constitute a TC Assumed Liability;
(e) made any capital investment in, any loan or advance to, or any
acquisition of all or any substantial part of the assets, properties, business
or capital stock of, any other Person or entity (or series of related capital
investments, loans, advances and acquisitions);
(f) delayed or postponed the payment of accounts payable and other
Liabilities in any amount in the aggregate in excess of $200,000, except in the
ordinary course of business consistent with past practices;
(g) to Moog's Knowledge, cancelled, compromised, waived or released
any material right or claim;
(h) experienced any damage, destruction or loss (whether or not
covered by insurance) of property either involving more than $100,000, singly,
or $200,000, in the aggregate;
(i) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement except as set forth in Section 4.6(i) of the Moog Disclosure
Schedule;
(j) granted any increase in the compensation or employee benefits
of any of the officers or employees of the TC Business, other than routine
salary or hourly increases made pursuant to present salary review procedures in
the ordinary course of business consistent with past practice;
(k) adopted any (i) bonus, (ii) profit-sharing, (iii) incentive
compensation, (iv) pension, (v) retirement, (vi) medical, hospitalization, life
or other insurance, (vii) severance or (viii) other plan, contract or commitment
for any of its officers or employees of the TC Business, or modified or
terminated any such existing plan, contract or commitment;
(l) failed to maintain any insurance relating to the TC Business in
full force and effect, assigned or transferred such insurance or the proceeds
thereof to any Person, failed to pay any premiums due thereunder, or caused,
suffered or permitted any act or failure to act which could cause such insurance
to be canceled or terminated;
(m) failed to give any required notice or failed to present any
claims of known occurrences under any insurance relating to the TC Business or
failed to take any other required or appropriate action with respect thereto in
due and timely fashion or cancelled those insurance policies for occurrences
relating to the TC Business on or prior to Closing or caused or
- 30 -
permitted any retroactive cancellation of insurance coverage relating to the TC
Business in effect prior to Closing or for occurrences prior to Closing;
(n) made any change in accounting methods, principles, procedures
or practices, except as required by GAAP, any such changes to be set forth on
Section 4.6 of the Moog Disclosure Schedule;
(o) amended its certificate or articles of incorporation or bylaws
in a manner that adversely affects the transactions contemplated by this
Agreement;
(p) entered into any agreement, contract or commitment to do any of
the foregoing; or
(q) made or revoked any Tax election or settled or compromised any
Tax Liability relating to the TC Business or the TC Assets.
4.7 TAX MATTERS. (a) Except liens for Taxes not yet due, there are no
------------
Tax liens upon, pending against or, to Moog's Knowledge, threatened in writing
against any of the TC Assets that arose in connection with any failure to file a
Tax Return or to pay any Taxes.
(b) Moog has, in relation to the TC Business, withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
Person.
(c) There is no dispute or claim concerning any Liability for Taxes
relating to any of the TC Assets or the TC Business.
4.8 TC LEASES FOR REAL PROPERTY. Section 4.8 of the Moog Disclosure
Schedule sets forth a true and correct list of each TC Lease which relates to
real property, which constitutes all of the real property leased by Moog and
used exclusively in the TC Business. Moog has delivered to SMP correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 4.8 of the Moog Disclosure Schedule. Regarding each lease and sublease
listed in Section 4.8 of the Moog Disclosure Schedule:
(a) the lease or sublease is in full force and effect, is legal,
valid, binding and enforceable against Moog, and, to Moog's Knowledge, is legal,
valid, binding and enforceable against each other party thereto;
(b) Except as set forth in Section 4.8 of the Moog Disclosure
Schedule, Moog is not in breach or default, and no event has occurred which,
with notice or lapse of time, or both, would constitute a breach or default, or
would permit termination, modification, or acceleration thereunder, by the other
party thereto, and, to Moog's Knowledge, no other party to the lease or sublease
is in breach or default, and no event has occurred which, with notice or lapse
of time, or both, would constitute a breach or default, or would permit
termination, modification, or acceleration thereunder, by Moog.
- 31 -
(c) all facilities have received all approvals of Governmental
Agencies (including Moog Permits) required of Moog in connection with the
construction, leasing or operation thereof, and have been operated and
maintained in accordance with applicable laws, rules and regulations, except
where the failure to do so could not reasonably be expected to have a TC
Material Adverse Effect; and
(d) there are no (i) pending condemnation proceedings relating to
the property against Moog or its Affiliates or, to Moog's Knowledge, pending
condemnation proceedings relating to the property against any other parties or
threatened against Moog, its Affiliates or any other parties, (ii) pending
litigation or administrative actions relating to the property against Moog or
its Affiliates or, to Moog's Knowledge, pending litigation or administrative
actions relating to the property against any other parties or threatened against
Moog, its Affiliates or any other parties, or (iii) to Moog's Knowledge, other
matters materially and adversely affecting the current use, occupancy or value
of the property.
4.9 TC REAL PROPERTY. (a) Section 4.9 of the Moog Disclosure Schedule
-----------------
lists and describes the TC Real Property (except the property located in
Ottumwa, Iowa) which constitutes all of the real property owned by Moog and used
exclusively in the TC Business. Moog has on the date hereof good, valid and
marketable title to such real property free and clear of all Security Interests.
(b) Moog has not entered into any lease, subleases, licenses, or
other agreements granting to any third party the right to use or occupy all or
any portion of the TC Real Property.
(c) Except pursuant to this Agreement, Moog has not granted any
outstanding options or rights of first refusal to purchase, lease or license any
TC Real Property.
(d) Moog has not received any notice of any pending, threatened or
contemplated condemnation proceeding affecting the TC Real Property and no
proceedings or real estate tax certiorari protests are now pending for the
reduction of the assessed valuation of the TC Real Property.
(e) Moog has not received any written notice from any Governmental
Agency (i) stating or alleging that any improvements at the TC Real Property has
not been constructed in accordance with applicable law or (ii) requiring or
advising as to the need for any material repair, alteration, restoration or
improvement in connection with the TC Real Property.
4.10 TC INTELLECTUAL PROPERTY. (a) Moog owns or has the right to use
-------------------------
pursuant to license, sublicense, agreement or permission all TC Intellectual
Property and the TC Intellectual Property constitutes all the intellectual
property necessary for the operation of the TC Business as presently conducted.
Subject to Moog obtaining the consents of any third party required to transfer
Moog's interest in the TC Intellectual Property to SMP as provided in Section
4.10(f) below, each item of TC Intellectual Property will be owned or available
for use by SMP on identical terms and conditions effective upon the Closing.
(b) To Moog's Knowledge, Moog has not, in the conduct of the TC
Business or in its use of the TC Intellectual Property, interfered with,
infringed upon, misappropriated, or
- 32 -
otherwise come into conflict with any intellectual property rights of third
parties, except as set forth in Section 4.10(b) of the Moog Disclosure Schedule.
Moog and the directors and officers (and employees with responsibility for TC
Intellectual Property matters) of Moog, have not received during the five year
period prior to this Agreement any charge, complaint, claim or notice alleging
that the conduct by Moog of the TC Business or any use by Moog of the TC
Intellectual Property constitutes any such interference, infringement,
misappropriation or violation. To Moog's Knowledge, during the five year period
prior to this Agreement, no third party has materially interfered with,
infringed upon, misappropriated or otherwise come into conflict with any TC
Intellectual Property.
(c) Section 4.10(c) of the Moog Disclosure Schedule identifies:
(i) each patent (including issuing country, number, current
assignee of record, title and issue date), each trademark and service xxxx
registration (including issuing country, number, description of xxxx, current
owner of record and issue date), each unregistered trademark and service xxxx
for which no application for registration is pending (including a description of
the xxxx and the goods or services with which it is used) and each copyright
registration (including issuing country, number, title or description of work,
current owner of record and issue date) currently in effect, owned by Moog, and
included in the TC Intellectual Property;
(ii) each pending patent application (including country of
filing, serial number, current owner of record, title and filing date),
application for registration of a trademark or service xxxx (including country
of filing, serial number, description of xxxx, current owner of record, classes
of goods or services, and filing date), and application for copyright
registration (including country of filing, serial number, title or description
of work, current owner of record, and filing date), which Moog has made with
respect to any TC Intellectual Property; and
(iii) each license, agreement or other permission which Moog or
its Affiliates has granted to any third party with respect to any of its or
their owned TC Intellectual Property. Moog has delivered to SMP correct and
complete copies of all such written (or if oral, a written summary of such)
licenses, agreements and permissions (as amended to date).
(d) With respect to each item of TC Intellectual Property:
(i) the identified owner possesses all right, title and interest
in and to the item;
(ii) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; and
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand is pending or, to Moog's Knowledge, threatened
which challenges the legality, validity, enforceability, use or ownership of the
item.
- 33 -
(e) Section 4.10(e) of the Moog Disclosure Schedule identifies each
item of TC Intellectual Property (excluding computer software) that an Affiliate
of Moog or any third party owns and that Moog uses in the conduct of the TC
Business pursuant to license, subli- cense, agreement, registered user agreement
or permission. Moog has delivered to SMP correct and complete copies of all such
written (or if oral, a written summary of such) licenses, sublicenses,
agreements, registered user agreements and permissions (as amended to date).
With respect to each such item of TC Intellectual Property (excluding
off-the-shelf computer software available in the open market) not owned by Moog
but used by Moog in the conduct of the TC Business:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(ii) to Moog's Knowledge, no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which, with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iii) with respect to each sublicense, to Moog's Knowledge, the
representa- tions and warranties set forth in subsections 4.10(e)(i) through
4.10(e)(iii) above are true and correct with respect to the underlying license;
and
(iv) Moog has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(f) Section 4.10(f) of the Moog Disclosure Schedule identifies each
item of TC Intellectual Property with respect to which the consent of any third
party is required to transfer Moog's interest in such TC Intellectual Property
to SMP.
4.11 INVENTORY. The inventories of the TC Business included in the TC
----------
Assets to be transferred to SMP pursuant to this Agreement consist of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods which are not damaged or defective, except those items the value
of which have been provided through adequate reserve including a valuation
reserve for core inventories in the amount of $637,000 which is included in the
purchase price adjustment described in Exhibit G, clause (m). The representation
and warranty under this Section 4.11 shall only apply to inventory on hand which
is identified by SMP as damaged or defective prior to the sale of such inventory
to a customer. This representation and warranty shall not apply to any inventory
which is sold to a customer even if the inventory is subsequently returned by
the customer because the inventory is (or allegedly is) damaged or defective.
The representation and warranty under Section 4.16 applies to inventory which is
sold to a customer and is subsequently returned by the customer because the
inventory is (or allegedly is) damaged or defective.
4.12 TANGIBLE TC ASSETS. Moog owns or has a valid leasehold in all TC
-------------------
Assets necessary for the conduct of the TC Business as presently conducted. The
machinery, equipment, tools and dies of Moog included in the TC Assets and used
in the conduct of the TC Business are, in the aggregate, in satisfactory
operating condition for their current use and are all located on the TC Real
Properties or on real property subject to a TC Lease (except for tools
- 34 -
and dies located at the premises of various vendors). To Moog's Knowledge,
Section 4.12 of the Moog Disclosure Schedule lists those vendors which have
tools and dies which are included in the TC Assets. Section 4.12 of the Moog
Disclosure Schedule lists all such tangible TC Assets having a net book value at
September 30, 1997 of $10,000 or more and the net book value of each such asset.
4.13 CERTAIN AGREEMENTS. Section 4.13 of the Moog Disclosure Schedule
-------------------
lists the following contracts and agreements which are included in the TC
Contracts:
(a) any TC Leases for the lease of personal property from third
parties which involves any obligation to pay annual base rent of more than
$25,000;
(b) any agreement which involves a certain (rather than contingent)
obligation of or to the TC Business of more than $100,000;
(c) any agreement concerning a partnership, joint venture or other
agreement involving a sharing of profits or expenses;
(d) any agreement under which Moog has created, incurred, assumed,
or guaranteed (or may create, incur, assume, or guarantee) Debt (including
capitalized lease obligations) which are TC Assumed Liabilities, or under which
Moog has incurred a Security Interest on any of the TC Assets;
(e) any agreement concerning confidentiality;
(f) any agreement which limits the ability of the TC Business to
compete with any Person or in any geographical area;
(g) sales agency or representative, manufacturer's representative
and distributorship agreements;
(h) any contract, agreement or arrangement between the TC Business
and another division of Moog or an Affiliate of Moog which is a TC Assumed
Liability; and
(i) any other material contract, agreement or arrangement entered
into other than in the ordinary course of business.
Moog has made available to SMP a correct and complete copy of each
written agreement (or a written summary if the agreement is oral) listed in
Section 4.13 of the Moog Disclosure Schedule (as amended to date). Except as set
forth in Section 4.13 of the Moog Disclosure Schedule, with respect to each
agreement (written or oral) so listed (i) the agreement is in full force and
effect, is legal, valid, binding and enforceable against Moog, and, to Moog's
Knowledge, is legal, valid, binding and enforceable against any other party
thereto; (ii) the legality, validity, enforceability and effectiveness of the
agreement will not in any way be adversely affected by the Closing; (iii) Moog
is not, and, to Moog's Knowledge, no other party thereto is in breach or default
thereunder or has allowed an event to occur which with notice or lapse of time,
or both, would constitute a breach or default by, or permit termination,
- 35 -
modification, or acceleration against, such party under such agreement; (iv) no
consents are necessary from any third party for the assignment of any such
agreements; and (v) each such agreement is terminable by its terms upon no more
than 90 days notice.
4.14 INSURANCE. Section 4.14 of the Moog Disclosure Schedule sets forth
----------
the following information with respect to each insurance policy (including
policies providing property, casualty, liability and workers' compensation
coverage) to which Moog or its Affiliates have been a party, a named insured or
otherwise the beneficiary of coverage currently in effect covering the TC Assets
or otherwise applicable to the TC Business:
(a) the name of the insurer and the name of the policyholder;
(b) the period of coverage; and
(c) the scope (including an indication of whether the coverage is
or was on a claims made, occurrence, or other basis), coverage limits and amount
of deductibles or self-insured retentions.
Neither Moog nor, to Moog's Knowledge, any other party to the policy is
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, or both, would constitute such a breach or default or permit termination,
modification or acceleration, under the policy.
4.15 LITIGATION. Except for matters set forth in Section 4.15 of the
-----------
Moog Disclosure Schedule, there is no (i) action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation pending or, to Moog's
Knowledge, threatened against Moog, with respect to the TC Business or any of
the TC Assets, before any Governmental Agency, and (ii) judgment, decree,
injunction, rule or order of any Governmental Agency outstanding against and
unsatisfied by Moog with respect to the TC Business or any of the TC Assets (the
matters described in (i) and (ii) including those matters set forth on Section
4.15 of the Moog Disclosure Schedule are collectively referred to as the
"EXISTING TC LITIGATION AND CLAIMS").
4.16 PRODUCT WARRANTY. To Moog's Knowledge, each product manufactured,
-----------------
sold, leased or delivered by the TC Business has, subject to the amount of
defective product returns and other matters set forth in Section 4.16 of the
Moog Disclosure Schedule, been in material conformity with all applicable
contractual commitments and all express and implied warranties. Section 4.16 of
the Moog Disclosure Schedule includes (i) copies of the current standard terms
and conditions of sale or lease for the TC Business (containing applicable
guaranty, warranty and indemnity provisions) and (ii) the amounts of warranty
and guaranty claims brought against the TC Business for the last 3 years.
4.17 PRODUCT LIABILITY. (a) Except as set forth in Section 4.17 of the
------------------
Moog Disclosure Schedule, none of Moog or its Affiliates, is currently, or has
been at any time during the last three (3) years, party to any action, suit,
proceeding, hearing or governmental investigation arising out of any injury to
persons or damage to property as a result of the ownership, possession or use of
any product manufactured, sold, leased or delivered by the TC
- 36 -
Business (a "TC PRODUCT LIABILITY CLAIM"). To Moog's Knowledge, no event has
occurred which would be reasonably likely to give rise to a TC Product Liability
Claim.
(b) There are no outstanding warranty claims or any pending
litigation relating thereto concerning the products of the TC Business that
indicate a repeated pattern of product failure, product liability or product
recall claims. To Moog's Knowledge, the products of the TC Business conform to
the standards of safety customary in the industry of which the TC Business is a
part. Except as set forth in Section 4.17 of the Moog Disclosure Schedule, none
of the products of the TC Business currently are, or, to Moog's Knowledge, are
currently threatened to be, the subject of a product recall. All products of the
TC Business advertised or held out as listed or approved by any safety or rating
agency comply fully with the requirements of such agencies and no such listing
or approval has been or, to Moog's Knowledge, is threatened to be cancelled or
withdrawn.
4.18 EMPLOYEES. (a) Section 4.18(a)(i) of the Moog Disclosure Schedule
----------
lists all sales personnel currently employed by Moog in the TC Business who Moog
does not currently plan to employ following the Closing (the "TC SCHEDULED SALES
PERSONS"), indicating such person's name, title or position, location of
employment, current salary or compensation, and date of hire for the purpose of
determining years of continuous service. Section 4.18(a)(ii) of the Moog
Disclosure Schedule lists all salaried manufacturing, distribution, management
and support personnel employed by Moog as of July 21, 1997 or thereafter in the
TC Business or in the brake products business conducted by Moog (the "MOOG
SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS"), indicating such person's
name, title or position, location of employment, current salary, and the date of
hire for the purpose of determining years of continuous service.
(b) Section 4.18(b) of the Moog Disclosure Schedule lists all
collective bargaining agreements covering any employees of the TC Business, all
pending grievances or other collective bargaining disputes, and any claims of
unfair labor practices made within the last 3 years by employees of the TC
Business.
(c) Moog has not experienced any strikes or work stoppages within
the last five years with respect to employees in the TC Business.
(d) To Moog's Knowledge, except as described in the following
sentence, there is no organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the TC Business.
In February, 1998 there was initial organizational activity by the Teamsters at
the facility in Melrose Park, Illinois; to Moog's Knowledge, there has been no
activity in the last 30 days.
4.19 MOOG EMPLOYEE PLANS; ERISA; EMPLOYEES. (a) Section 4.19(a) of the
--------------------------------------
Moog Disclosure Schedule sets forth a complete and correct list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option or
other equity based, severance, termination, change in control, retention,
employment, hospitalization or other medical, life insurance, disability, other
welfare, supplemental unemployment benefits, profit-sharing, pension or
retirement plan program, agreement or arrangement, and each other employee
compensation or benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to
- 37 -
by Moog or by any trade or business, whether or not incorporated (a "MOOG ERISA
AFFILIATE"), that together with Moog would be deemed a "single employer" within
the meaning of Section 4001 of ERISA, in each case covering current or former
employees in the TC Business (the "MOOG EMPLOYEE PLANS").
(b) With respect to each Moog Employee Plan, Moog has heretofore
delivered or made available to SMP true and complete copies of each of the
following documents (including all amendments to such documents):
(i) any Moog Employee Plan or a written description of any Moog
Employee Plan not in writing;
(ii) the most recent annual report and actuarial report if
required under ERISA or if otherwise available;
(iii) the most recent Summary Plan Description with respect
thereto if required under ERISA or if otherwise available;
(iv) if any Moog Employee Plan or any obligations thereunder are
funded through a trust or any other funding vehicle, the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each Moog Employee Plan intended to
qualify under Section 401(a) of the Code.
(c) No liability under Title I or IV of ERISA, the penalty or
excise tax provisions of the Code relating to employee plans or equivalent
legislation of a foreign jurisdiction has been incurred by Moog or any of their
Moog ERISA Affiliates that has not been satisfied in full, and no condition
exists or event has occurred that presents a material risk to Moog or any of the
Moog ERISA Affiliates of incurring any such liability.
(d) No Moog Employee Plan is a "multiemployer plan," as defined in
Section 3(37) of ERISA, nor is any Moog Employee Plan a plan described in
Section 4063(a) of ERISA.
(e) No Moog Employee Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived. Each Moog Employee
Plan intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified; no
condition exists or event has occurred since the date of such initial
determination that would adversely affect the qualified status of any such Moog
Employee Plan; and each trust maintained thereunder has been determined by the
Internal Revenue Service to be exempt from taxation under Section 501(a) of the
Code. Each Moog Employee Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA, the Code and equivalent legislation of a foreign jurisdiction.
There are no pending, or to Moog's Knowledge, threatened, claims by or on behalf
of any Moog Employee Plan, by any employee or beneficiary covered under any such
Moog Employee Plan or otherwise involving any such Moog
- 38 -
Employee Plan or the assets thereof (other than routine claims for benefits).
(f) Neither Moog nor any of the Moog ERISA Affiliates would be
liable for any amount pursuant to Sections 4063 or 4064 of ERISA if any Moog
Employee Plan were to terminate. All contributions required to be made to each
Moog Employee Plan under the terms of such Moog Employee Plan, applicable law or
any applicable collective bargaining agreement have been paid in full when due.
(g) Except as set forth in Section 4.19(g) of the Moog Disclosure
Schedule, no Moog Employee Plan provides benefits, including without limitation
death or medical benefits, with respect to Active Employees or Inactive
Employees of Moog in the TC Business beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law and
(ii) benefits payable pursuant to any Moog Employee Plan qualified under Section
401(a) of the Code. Except as set forth in Section 4.19(g) of the Moog
Disclosure Schedule, the execution, delivery, or consummation of the
transactions contemplated by this Agreement will not entitle any employees of
the TC Business to severance pay or unemployment compensation.
4.20 ENVIRONMENTAL MATTERS.
----------------------
(a) Except as set forth in Section 4.20(a) of the Moog Disclosure
Schedule, to Moog's Knowledge, Moog is currently in compliance, and has complied
at all times in the past, in all material respects with all Environmental Laws
in the conduct of the TC Business.
(b) Except as set forth in Section 4.20(b) of the Moog Disclosure
Schedule, to the extent that the TC Business has on its premises, uses or
Discharges Hazardous Materials, Moog has obtained all licenses, approvals,
registrations, authorizations and permits ("ENVIRONMENTAL PERMITS") required
with respect thereto and, to Moog's Knowledge, Moog has been and is in
compliance with all material terms, conditions and requirements of such
Environmental Permits, a list of which is set forth in Section 4.20 of the Moog
Disclosure Schedule. Except as set forth in Section 4.20(b) of the Moog
Disclosure Schedule, there are no proceedings to which any of Moog or its
Affiliates is a party which are pending or, to Moog's Knowledge, threatened
against Moog or its Affiliates seeking to revoke, cancel or suspend any
Environmental Permit necessary for the conduct of the TC Business, except where
the failure to have obtained such Environmental Permit, or to so comply, or
where such proceedings could not reasonably be expected to have a TC Material
Adverse Effect. All Environmental Permits relating to the conduct of the TC
Business will be assigned by Moog to SMP in accordance with this Agreement,
except to the extent the same are not transferable under applicable law.
(c) Except as set forth in Section 4.20(c) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates has received any notice from
any Governmental Agency or any other Person concerning any Environmental Claims
in connection with the operation of the TC Business or with regard to any of the
TC Assets and which is currently unresolved. Except as set forth in Section
4.20(c) of the Moog Disclosure Schedule, to Moog's Knowledge, (i) there is no
investigational proceeding against Moog or its Affiliates by any federal, state
or local environmental or health and safety enforcement agency in connection
with the past or
- 39 -
present operation of the TC Business or with regard to any of the TC Assets; and
(ii) neither Moog nor any of its Affiliates has any pending or contingent
liability for any Environmental Claim in connection with the operation of the TC
Business or with regard to any of the TC Assets. Except as set forth in Section
4.20(c) of the Moog Disclosure Schedule, neither Moog nor any of its Affiliates
has been subject to any administrative or judicial enforcement action or any
third party lawsuits pursuant to any Environmental Laws either now or at any
time during the past five years in connection with the operation of the TC
Business or with regard to any of the TC Assets.
(d) Except as set forth in Section 4.20(d) of the Moog Disclosure
Schedule, to Moog's Knowledge, there are no conditions at, on, under, near or
originating from any of the TC Assets that reasonably and foreseeably (i) may
result in the imposition of liability pursuant to any Environmental Law against
Moog, or (ii) may result in any investigatory and/or remedial activities
pursuant to any Environmental Law.
(e) Except as set forth in Section 4.20(e) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates is subject to any remedial
obligation under a currently issued and applicable administrative order, decree,
or agreement pursuant to an Environmental Law in connection with the operation
of the TC Business or with regard to any of the TC Assets.
(f) Section 4.20(f) of the Moog Disclosure Schedule lists all
contracts or other written arrangements currently in effect within the
possession, custody or control of Moog relating to the collection, storage,
transportation, treatment, recovery, recycling, or Disposal of Hazardous
Materials associated with the TC Business to which any of Moog or its Affiliates
is a party and, to Moog's Knowledge, any such contracts or written arrangements
that are not currently in effect but to which any of Moog or its Affiliates has
been a party during the past five years.
(g) To Moog's Knowledge, except as set forth in Section 4.20(g) of
the Moog Disclosure Schedule, no Hazardous Materials have been Discharged or
Disposed of by or on behalf of Moog or its Affiliates on any real property
currently or formerly owned or leased by Moog and used or previously used in the
operation of the TC Business, and to Moog's Knowledge, Section 4.20(g) of the
Moog Disclosure Schedule sets forth all off site locations where Hazardous
Materials generated by Moog or its Affiliates in the conduct of the TC Business
have been generated, used, collected, treated, stored, transported, recovered,
recycled, Discharged or Disposed.
(h) Except as set forth in Section 4.20(h) of the Moog Disclosure
Schedule, no real property currently or formerly owned or leased or, to Moog's
Knowledge, used by Moog or its Affiliates (including any off-site locations
listed in Section 4.20(h) of the Moog Disclosure Schedule) in the TC Business is
listed on any federal list of Superfund or National Priorities List sites or
similar governmental lists regarding waste sites at which there has been
Disposal of Hazardous Materials, nor to Moog's Knowledge is any such property
subject to any environmentally-related liens of record.
- 40 -
(i) Except as set forth in Section 4.20(i) of the Moog Disclosure
Schedule, to Moog's Knowledge, and other than as allowed by licenses, approvals
and permits which have been obtained and are in full force and effect, the
operation of the TC Business, as presently conducted, does not require the
emission or Discharge of any Hazardous Material into the air, soil, or Water, or
into any sewer system or storm water drainage system at concentrations in excess
of permitted or regulatory limits. All equipment needed for the continued and
uninterrupted operation of the TC Business as it is currently conducted without
such Discharge of Hazardous Materials in excess of permitted or regulatory
limits is in satisfactory operating condition.
(j) Except as set forth in Section 4.20(j) of the Moog Disclosure
Schedule, to Moog's Knowledge, all properties and equipment used in the TC
Business are now free of friable asbestos and PCB's, and are now and at all
times in the past have been free of any underground storage tank, any landfill,
dump, hazardous waste management facility as defined pursuant to the federal
Resource Conservation and Recovery Act or any comparable state law, or xxxxx
used for Disposal, injection or other Discharge.
(k) Except as set forth in Section 4.20(k) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates has submitted any notice to any
Governmental Agency or other Person, and to Moog's Knowledge none is required,
regarding any Discharges of Hazardous Materials of reportable quantity (other
than Discharges authorized by Environmental Permits) on, under or from the TC
Assets within the past 5 years.
(l) Except as set forth in Section 4.20(l) of the Moog Disclosure
Schedule, none of the real property owned by Moog which is included in the TC
Assets is subject to any environmental liens or deed restrictions based on
Environmental Law.
4.21 LEGAL COMPLIANCE. Except with respect to environmental matters
-----------------
(which are addressed in Section 4.20), to Moog's Knowledge, Moog has complied in
all material respects with all laws (including rules and regulations thereunder)
of Governmental Agencies applicable to it in connection with the operation of
the TC Business.
4.22 VEHICLES. Section 4.22 of the Moog Disclosure Schedule sets out a
---------
complete and correct list of all vehicles owned or operated by Moog for or on
behalf of the TC Business included in the TC Assets.
4.23 GUARANTIES. Section 4.23 of the Moog Disclosure Schedule lists all
-----------
guaranties, performance bonds, bid bonds, and foreign exchange contracts or
commitments which relate to the TC Business.
4.24 ALL TC ASSETS TRANSFERRED. The TC Assets transferred to SMP at
--------------------------
Closing shall include all of the assets, contracts, rights and properties of
every kind and description, tangible or intangible, owned or leased, real,
personal or mixed, necessary to conduct the TC Business, as currently conducted,
free of all Security Interests, other than the TC Retained Assets.
- 41 -
4.25 MOOG PERMITS. Except with respect to environmental permits,
-------------
licenses and approvals (which are addressed in Section 4.20), Moog has in effect
all material permits, licenses, approvals, and other authorizations necessary
for the continued conduct of the TC Business as presently conducted (the "MOOG
PERMITS"), a list of which is set forth in Section 4.25 of the Moog Disclosure
Schedule, and there are no proceedings to which Moog is a party which are
pending or, to Moog's Knowledge, threatened against Moog or the TC Business
seeking to revoke, cancel or suspend any such Moog Permit. All Moog Permits will
be assigned by Moog to SMP in accordance with this Agreement except to the
extent that such assignment is not permissible under applicable law.
4.26 BROKERS' FEES. Neither SMP nor Moog has any liability or
--------------
obligation to pay any fees or commissions to any broker, finder, investment
banker or agent with respect to the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Moog.
4.27 CUSTOMERS AND SUPPLIERS. Section 4.27 of the Moog Disclosure
------------------------
Schedule contains a list of the 20 largest customers and suppliers of the TC
Business (measured by dollar volume of purchases and sales, as applicable)
during the past year and the dollar volume of such purchases and sales. To
Moog's Knowledge, no such customer or supplier is threatening to terminate,
non-renew or materially adversely change its arrangements with Moog with respect
to the TC Business.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SMP
-------------------------------------
SMP represents and warrants to Moog that the statements contained in
this Article V are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article V, except to the extent any representation or warranty
relates to a specific date).
5.1 ORGANIZATION OF SMP. Each of SMP Canada and SMP Parent is duly
--------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of SMP Canada and SMP Parent
is duly authorized to conduct business and is in good standing under the laws of
each jurisdiction in which the nature of the Brake Business or the use,
ownership or leasing of properties used in the Brake Business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a Brake Material Adverse Effect. Each of
SMP Canada and SMP Parent has full corporate power and authority to carry on the
Brake Business and to use the properties used by it in the Brake Business.
5.2 AUTHORIZATION OF TRANSACTION. Each of SMP Canada and SMP Parent has
-----------------------------
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, including the power to convey the Brake
Assets. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby
- 42 -
have been duly and validly authorized by the Board of Directors of SMP Canada
and SMP Parent and no other corporate proceedings on the part of SMP Canada and
SMP Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by SMP Canada and SMP Parent and constitutes the valid
and legally binding obligation of SMP Canada and SMP Parent, enforceable in
accordance with its terms and conditions.
5.3 NON-CONTRAVENTION. (a) Except as set forth in Section 5.3(a) of the
------------------
disclosure schedule of SMP attached hereto (the "SMP DISCLOSURE SCHEDULE"), and
except for the applicable requirements of the H-S-R Act and any applicable "bulk
sales" laws, there is no requirement applicable to SMP to make any filing with
any Governmental Agency as a condition to the lawful consummation by SMP of the
transactions contemplated by this Agreement.
(b) Except as set forth in Section 5.3(b) of the SMP Disclosure
Schedule, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) conflict with or
result in any breach of any provision of the certificate or articles of
incorporation or bylaws or other organizational document of SMP Canada or SMP
Parent, (ii) except for any applicable "bulk sales" laws, violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge or
other restriction of any government, or Governmental Agency to which SMP or any
of the Brake Assets is subject or (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any Person
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money or instrument of
indebtedness, to which either SMP Canada or SMP Parent is a party or by which
SMP Canada or SMP Parent is bound or to which any of the Brake Assets is subject
(or result in the imposition of any Security Interest upon any of such Brake
Assets), except, with respect for clause (ii) and (iii), for such violations,
conflicts, breaches or defaults which would not individually or in the aggregate
have a Brake Material Adverse Effect.
5.4 SMP PRE-CLOSING BALANCE SHEET AND FINANCIAL STATEMENTS. (a) The SMP
-------------------------------------------------------
Pre-Closing Balance Sheet has been prepared from the books and records of SMP in
accordance with the principles, practices, methods and procedures set forth in
Exhibit G and reasonably reflects the assets that are Brake Assets and
Liabilities that are Brake Assumed Liabilities as of December 31, 1997.
(b) SMP has previously delivered to Moog the balance sheet of the
Brake Business at December 31, 1996 and the income statement of the Brake
Business for the year then ended each of which have been prepared in conformity
with GAAP, except as set forth in Section 5.4 of the SMP Disclosure Schedule.
Such financial statements (i) have been prepared based on the books and records
of SMP in accordance with past practices applied on a consistent basis and (ii)
present fairly, in all material respects, the financial position and results of
operations of the Brake Business as of such date or for such year.
5.5 UNDISCLOSED LIABILITIES. Except as set forth in Section 5.5 of the
------------------------
SMP Disclosure Schedule, SMP has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise) that are of the type required to be
set forth in the SMP Pre-Closing Balance Sheet,
- 43 -
except liabilities, obligations or contingencies which are adequately accrued or
reserved against in such balance sheet or which were incurred after December 31,
1997, in the ordinary course of business consistent with past practice or which
in the aggregate do not exceed $10,000.
5.6 EVENTS AFTER JUNE 30, 1997. Since June 30, 1997, there has not been
---------------------------
a Brake Material Adverse Effect. Except as set forth in Section 5.6 of the SMP
Disclosure Schedule, without limiting the foregoing, since that date, SMP, with
respect to the Brake Business, has not:
(a) (i) sold, leased, transferred, disposed of or assigned any of
the Brake Assets, other than finished goods sold in the ordinary course of
business or the sale or transfer of other assets which are not material to the
Brake Business, all of which is consistent with past practice, or (ii)
mortgaged, pledged or otherwise encumbered any Brake Assets, except for
Permitted Exceptions;
(b) made any capital expenditures in excess of $250,000 in the
aggregate;
(c) entered into any contract, agreement, arrangement, lease,
sublease, license, sublicense which involves a certain (rather than contingent)
obligation of or to SMP with respect to the Brake Business of more than
$100,000, except for purchase orders, sales orders and similar contracts entered
into in the ordinary course of business consistent with past practice which, in
any individual case, did not exceed $500,000;
(d) created, incurred or assumed any long-term Debt (including
obligations in respect of capital leases), or except in the ordinary course of
business consistent with past practice, any short-term Debt if, in either case,
such Debt would constitute a Brake Assumed Liability;
(e) made any capital investment in, any loan or advance to, or any
acquisition of all or any substantial part of the assets, properties, business
or capital stock of, any other Person or entity (or series of related capital
investments, loans, advances and acquisitions);
(f) delayed or postponed the payment of accounts payable and other
Liabilities in any amount in the aggregate in excess of $200,000, except in the
ordinary course of business consistent with past practices;
(g) to SMP's Knowledge, cancelled, compromised, waived or released
any material right or claim;
(h) experienced any damage, destruction or loss (whether or not
covered by insurance) of property either involving more than $100,000, singly,
or $200,000, in the aggregate;
(i) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
- 44 -
(j) granted any increase in the compensation or employee benefits
of any of the officers or employees of the Brake Business, other than routine
salary or hourly increases made pursuant to present salary review procedures in
the ordinary course of business consistent with past practice;
(k) except for "stay on" bonuses disclosed in Section 5.6 of the
SMP Disclosure Schedule, adopted any (i) bonus, (ii) profit-sharing, (iii)
incentive compensation, (iv) pension, (v) retirement, (vi) medical,
hospitalization, life or other insurance, (vii) severance or (viii) other plan,
contract or commitment for any of the officers or employees of the Brake
Business, or modified or terminated any such existing plan, contract or
commitment.
(l) failed to maintain any insurance relating to the Brake Business
in full force and effect, assigned or transferred such insurance or the proceeds
thereof to any Person, failed to pay any premiums due thereunder, or caused,
suffered or permitted any act or failure to act which could cause such insurance
to be canceled or terminated;
(m) failed to give any required notice or failed to present any
claims of known occurrences under any insurance relating to the Brake Business
or failed to take any other required or appropriate action with respect thereto
in due and timely fashion or cancelled those insurance policies for occurrences
relating to the Brake Business on or prior to Closing or caused or permitted any
retroactive cancellation of insurance coverage relating to the Brake Business in
effect prior to Closing or for occurrences prior to Closing;
(n) made any change in accounting methods, principles, procedures
or practices, except as required by GAAP, any such changes to be set forth on
Section 5.6 of the SMP Disclosure Schedule;
(o) amended its certificate or articles of incorporation or bylaws
in a manner that adversely affects the transactions contemplated by this
Agreement;
(p) entered into any agreement, contract or commitment to do any of
the foregoing; or
(q) made or revoked any Tax election or settled or compromised any
Tax Liability relating to the Brake Business or the Brake Assets.
5.7 TAX MATTERS. (a) Except liens for Taxes not yet due, there are no
------------
Tax liens upon, pending against or, to SMP's Knowledge, threatened in writing
against any of the Brake Assets that arose in connection with any failure to
file a Tax Return or to pay any Taxes.
(b) SMP has, in relation to the Brake Business, withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other Person.
(c) There is no dispute or claim concerning any Liability for Taxes
relating to any of the Brake Assets or the Brake Business.
- 45 -
5.8 BRAKE LEASES FOR REAL PROPERTY. Section 5.8 of the SMP Disclosure
-------------------------------
Schedule sets forth a true and correct list of each Brake Lease which relates to
real property, which constitutes all of the real property leased by SMP and used
exclusively in the Brake Business. SMP has delivered to Moog correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 5.8 of the SMP Disclosure Schedule. Regarding each lease and sublease
listed in Section 5.8 of the SMP Disclosure Schedule:
(a) the lease or sublease is in full force and effect, is legal,
valid, binding and enforceable against SMP, and, to SMP's Knowledge, is legal,
valid, binding and enforceable against each other party thereto;
(b) SMP is not in breach or default, and no event has occurred
which, with notice or lapse of time, or both, would constitute a breach or
default, or would permit termination, modification, or acceleration thereunder,
by the other party thereto, and, to SMP's Knowledge, no other party to the lease
or sublease is in breach or default, and no event has occurred which, with
notice or lapse of time, or both, would constitute a breach or default, or would
permit termination, modification, or acceleration thereunder, by SMP;
(c) all facilities have received all approvals of Governmental
Agencies (including SMP Permits) required of SMP in connection with the
construction, leasing or operation thereof, and have been operated and
maintained in accordance with applicable laws, rules and regulations, except
where the failure to do so could not reasonably be expected to have a Brake
Material Adverse Effect; and
(d) there are no (i) pending condemnation proceedings relating to
the property against SMP or its Affiliates or, to SMP's Knowledge, pending
condemnation proceedings relating to the property against any other parties or
threatened against SMP, its Affiliates or any other parties, (ii) pending
litigation or administrative actions relating to the property against SMP or its
Affiliates or, to SMP's Knowledge, pending litigation or administrative actions
relating to the property against any other parties or threatened against SMP,
its Affiliates or any other parties, or (iii) to SMP's Knowledge, other matters
materially and adversely affecting the current use, occupancy or value of the
property.
5.9 BRAKE REAL PROPERTY. (a) Section 5.9 of the SMP Disclosure Schedule
--------------------
lists and describes the Brake Real Property (other than the Real Property
located in Middletown, CT and Rural Retreat, VA) which constitutes all of the
real property owned by SMP and used exclusively in the Brake Business. SMP has
on the date hereof good, valid and marketable title to such real property free
and clear of all Security Interests.
(b) SMP has not entered into any lease, subleases, licenses, or
other agreements granting to any third party the right to use or occupy all or
any portion of the Brake Real Property.
(c) Except pursuant to this Agreement, SMP has not granted any
outstanding options or rights of first refusal to purchase, lease or license any
Brake Real Property.
- 46 -
(d) SMP has not received any notice of any pending, threatened or
contemplated condemnation proceeding affecting the Brake Real Property and no
proceedings or real estate tax certiorari protests are now pending for the
reduction of the assessed valuation of the Brake Real Property.
(e) SMP has not received any written notice from any Governmental
Agency (i) stating or alleging that any improvements at the Brake Real Property
have not been constructed in accordance with applicable law or (ii) requiring or
advising as to the need for any material repair, alteration, restoration or
improvement in connection with the Brake Real Property.
5.10 BRAKE INTELLECTUAL PROPERTY. (a) SMP owns or has the right to use
----------------------------
pursuant to license, sublicense, agreement or permission all Brake Intellectual
Property and the Brake Intellectual Property constitutes all the intellectual
property necessary for the operation of the Brake Business as presently
conducted. Subject to SMP obtaining the consents of any third party required to
transfer SMP's interest in the Brake Intellectual Property to Moog as provided
in Section 5.10(f) below, each item of Brake Intellectual Property will be owned
or available for use by Moog on identical terms and conditions effective upon
the Closing.
(b) To SMP's Knowledge, SMP has not, in the conduct of the Brake
Business or in its use of the Brake Intellectual Property, interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties. SMP and the directors and
officers (and employees with responsibility for Brake Intellectual Property
matters) of SMP, have not received during the five year period prior to this
Agreement any charge, complaint, claim or notice alleging that the conduct by
SMP of the Brake Business or any use by SMP of the Brake Intellectual Property
constitutes any such interference, infringement, misappropriation or violation.
To SMP's Knowledge, during the five year period prior to this Agreement, no
third party has materially interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Brake Intellectual Property.
(c) Section 5.10(c) of the SMP Disclosure Schedule identifies:
(i) each patent (including issuing country, number, current
assignee of record, title and issue date), each trademark and service xxxx
registration (including issuing country, number, description of xxxx, current
owner of record and issue date), each unregistered trademark and service xxxx
for which no application for registration is pending (including a description of
the xxxx and the goods or services with which it is used) and each copyright
registration (including issuing country, number, title or description of work,
current owner of record and issue date) currently in effect, owned by SMP, and
included in the Brake Intellectual Property;
(ii) each pending patent application (including country of
filing, serial number, current owner of record, title and filing date),
application for registration of a trademark or service xxxx (including country
of filing, serial number, description of xxxx, current owner of record, classes
of goods or services, and filing date), and application for copyright
registration (including country of filing, serial number, title or description
of work, current owner of record, and filing date), which SMP has made with
respect to any Brake Intellectual Property; and
- 47 -
(iii) each license, agreement or other permission which SMP or
its Affiliates has granted to any third party with respect to any of its or
their owned SMP Intellectual Property. SMP has delivered to Moog correct and
complete copies of all such written (or if oral, a written summary of such)
licenses, agreements and permissions (as amended to date).
(d) With respect to each item of Brake Intellectual Property:
(i) the identified owner possesses all right, title and interest
in and to the item;
(ii) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; and
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand is pending or, to SMP's Knowledge, threatened
which challenges the legality, validity, enforceability, use or ownership of the
item.
(e) Section 5.10(e) of the SMP Disclosure Schedule identifies each
item of Brake Intellectual Property (excluding computer software) that an
Affiliate of SMP or any third party owns and that SMP uses in the conduct of the
Brake Business pursuant to license, sublicense, agreement, registered user
agreement or permission. SMP has delivered to Moog correct and complete copies
of all such written (or if oral, a written summary of such) licenses,
sublicenses, agreements, registered user agreements and permissions (as amended
to date). With respect to each such item of Brake Intellectual Property
(excluding off-the-shelf computer software available in the open market) not
owned by SMP but used by SMP in the conduct of the Brake Business:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(ii) to SMP's Knowledge, no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which, with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iii) with respect to each sublicense, to SMP's Knowledge, the
representations and warranties set forth in subsections 5.10(e)(i) through
5.10(e)(iii) above are true and correct with respect to the underlying license;
and
(iv) SMP has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(f) Section 5.10(f) of the SMP Disclosure Schedule identifies each
item of Brake Intellectual Property with respect to which the consent of any
third party is required to transfer SMP's interest in such Brake Intellectual
Property to Moog.
- 48 -
5.11 INVENTORY. The inventories of the Brake Business included in the
----------
Brake Assets to be transferred to Moog pursuant to this Agreement consist of raw
materials and supplies, manufactured and purchased parts, goods in process and
finished goods which are not damaged or defective, except those items the value
of which have been provided through adequate reserve. The representation and
warranty under this Section 5.11 shall only apply to inventory on hand which is
identified by Moog as damaged or defective prior to the sale of such inventory
to a customer. This representation and warranty shall not apply to any inventory
which is sold to a customer even if the inventory is subsequently returned by
the customer because the inventory is (or allegedly is) damaged or defective.
The representation and warranty under Section 5.16 applies to inventory which is
sold to a customer and is subsequently returned by the customer because the
inventory is (or allegedly is) damaged or defective.
5.12 TANGIBLE BRAKE ASSETS. SMP owns or has a valid leasehold in all
----------------------
Brake Assets necessary for the conduct of the Brake Business as presently
conducted. The machinery, equipment, tools and dies of SMP included in the Brake
Assets used in the conduct of the Brake Business are, in the aggregate, in
satisfactory operating condition for their current use and are all located on
the Brake Real Properties or on real property subject to a Brake Lease (except
for tools and dies located at the premises of various vendors). To SMP's
Knowledge, Section 5.12 of the SMP Disclosure Schedule lists those vendors which
have tools and dies which are included in the Brake Assets. Section 5.12 of the
SMP Disclosure Schedule lists all such tangible TC Assets having a net book
value at December 31, 1997 of $10,000 or more and the net book value of each
such asset.
5.13 CERTAIN AGREEMENTS. Section 5.13 of the SMP Disclosure Schedule
-------------------
lists the following contracts and agreements which are included in the Brake
Contracts:
(a) any Brake Leases for the lease of personal property from third
parties which involves an obligation to pay annual base rent of more than
$25,000;
(b) any agreement which involves a certain (rather than contingent)
obligation of or to the Brake Business of more than $100,000;
(c) any agreement concerning a partnership, joint venture or other
agreement involving a sharing of profits or expenses;
(d) any agreement under which SMP has created, incurred, assumed,
or guaranteed (or may create, incur, assume, or guarantee) Debt (including
capitalized lease obligations) which are Brake Assumed Liabilities or under
which SMP has incurred a Security Interest on any of the Brake Assets;
(e) any agreement concerning confidentiality;
(f) any agreement which limits the ability of the Brake Business to
compete with any Person or in any geographical area;
(g) sales agency or representative, manufacturer's representative
and distributorship agreements;
- 49 -
(h) any contract, agreement or arrangement between the Brake
Business and another division of SMP or an Affiliate of SMP which is a Brake
Assumed Liability; and
(i) any other material contract, agreement or arrangement entered
into other than in the ordinary course of business.
SMP has made available to Moog a correct and complete copy of each
written agreement (or a written summary if the agreement is oral) listed in
Section 5.13 of the SMP Disclosure Schedule (as amended to date). Except as set
forth in Section 5.13 of the SMP Disclosure Schedule, with respect to each
agreement (written or oral) so listed: (i) the agreement is in full force and
effect, is legal, valid, binding and enforceable against SMP, and, to SMP's
Knowledge, is legal, valid, binding and enforceable against any other party
thereto; (ii) the legality, validity, enforceability and effectiveness of the
agreement will not in any way be adversely affected by the Closing; (iii) SMP is
not, and, to SMP's Knowledge, no other party thereto is in breach or default
thereunder or has allowed an event to occur which with notice or lapse of time,
or both, would constitute a breach or default by, or permit termination,
modification, or acceleration against, such party under such agreement; (iv) no
consents are necessary from any third party for the assignment of any such
agreements; and (v) each such agreement is terminable by its terms upon no more
than 90 days notice.
5.14 INSURANCE. Section 5.14 of the SMP Disclosure Schedule sets forth
----------
the following information with respect to each insurance policy (including
policies providing property, casualty, liability and workers' compensation
coverage) to which SMP or its Affiliates have been a party, a named insured or
otherwise the beneficiary of coverage currently in effect in relation to the
Brake Business:
(a) the name of the insurer and the name of the policyholder;
(b) the period of coverage; and
(c) the scope (including an indication of whether the coverage is
or was on a claims made, occurrence, or other basis), coverage limits and amount
of deductibles or self-insured retentions.
Neither SMP nor, to SMP's Knowledge, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, or both, would constitute such a breach or default or permit
termination, modification or acceleration, under the policy.
5.15 LITIGATION. Except for matters set forth in Section 5.15 of the
-----------
SMP Disclosure Schedule, there is no (i) action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation pending or, to SMP's
Knowledge, threatened against SMP, with respect to the Brake Business or any of
the Brake Assets, before any Governmental Agency, and (ii) judgment, decree,
injunction, rule or order of any Governmental Agency outstanding against and
unsatisfied by SMP with respect to the Brake Business or any of the Brake Assets
(the matters described in (i) and (ii) including those matters set forth on
Section 5.15 of the SMP Disclosure Schedule are collectively referred to as the
"EXISTING BRAKE LITIGATION AND CLAIMS").
- 50 -
5.16 PRODUCT WARRANTY. To SMP's Knowledge, each product manufactured,
-----------------
sold, leased or delivered by the Brake Business has, subject to the amount of
defective product returns set forth in Section 5.16 of the SMP Disclosure
Schedule, been in material conformity with all applicable contractual
commitments and all express and implied warranties. Section 5.16 of the SMP
Disclosure Schedule includes (i) copies of the current standard terms and
conditions of sale or lease for the Brake Business (containing applicable
guaranty, warranty and indemnity provisions) and (ii) the amounts of warranty
and guaranty claims brought against the Brake Business for the last 3 years.
5.17 PRODUCT LIABILITY. (a) Except as set forth in Section 5.17 of the
------------------
SMP Disclosure Schedule, none of SMP or its Affiliates, is currently, or has
been at any time during the last three (3) years, party to any action, suit,
proceeding, hearing or governmental investigation arising out of any injury to
persons or damage to property as a result of the ownership, possession or use of
any product manufactured, sold, leased or delivered by the Brake Business (a
"BRAKE PRODUCT LIABILITY CLAIM"). To SMP's Knowledge, no event has occurred
which would be reasonably likely to give rise to a Brake Product Liability
Claim.
(b) There are no outstanding warranty claims or any pending
litigation relating thereto concerning the products of the Brake Business that
indicate a repeated pattern of product failure, product liability or product
recall claims. To SMP's Knowledge, the products of the Brake Business conform to
the standards of safety customary in the industry of which the Brake Business is
a part. None of the products of the Brake Business currently are, or, to SMP's
Knowledge, are currently threatened to be, the subject of a product recall. All
products of the Brake Business advertised or held out as listed or approved by
any safety or rating agency comply fully with the requirements of such agencies
and no such listing or approval has been or, to SMP's Knowledge, is threatened
to be cancelled or withdrawn.
5.18 EMPLOYEES. (a) Section 5.18(a)(i) of the SMP Disclosure Schedule
----------
lists all sales personnel currently employed by SMP in the Brake Business who
SMP does not currently plan to employ following the Closing (the "BRAKE
SCHEDULED SALES PERSONS"), indicating such person's name, title or position,
location of employment, current salary or compensation, and date of hire for the
purpose of determining years of continuous service. Section 5.18(a)(ii) of the
SMP Disclosure Schedule lists all salaried manufacturing, distribution,
management and support personnel employed by SMP as of July 21, 1997 or
thereafter in the Brake Business or in the temperature control products business
conducted by SMP (the "SMP SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS"),
indicating such person's name, title or position, location of employment,
current salary or compensation, and the date of hire for the purpose of
determining years of continuous service.
(b) Section 5.18(b) of the SMP Disclosure Schedule lists all
collective bargaining agreements covering any employees of the Brake Business,
all pending grievances 0r other collective bargaining disputes, and any claims
of unfair labor practices made within the last 3 years by employees of the Brake
Business.
(c) SMP has not experienced any strikes or work stoppages within
the last five years with respect to employees in the Brake Business.
- 51 -
(d) To SMP's Knowledge, there is no organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Brake Business.
5.19 SMP EMPLOYEE PLANS; ERISA; EMPLOYEES. (a) Section 5.19(a) of the
-------------------------------------
SMP Disclosure Schedule sets forth a complete and correct list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option or
other equity based, severance, termination, change in control, retention,
employment, hospitalization or other medical, life insurance, disability, other
welfare, supplemental unemployment benefits, profit-sharing, pension or
retirement plan program, agreement or arrangement, and each other employee
compensation or benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to by SMP or by any trade or business, whether or not
incorporated (an "SMP ERISA AFFILIATE"), that together with SMP would be deemed
a "single employer" within the meaning of Section 4001 of ERISA, in each case
covering current or former employees of the Brake Business (the "SMP EMPLOYEE
PLANS").
(b) With respect to each SMP Employee Plan, SMP has heretofore
delivered or made available to SMP true and complete copies of each of the
following documents (including all amendments to such documents):
(i) any SMP Employee Plan or a written description of any SMP
Employee Plan not in writing;
(ii) the most recent annual report and actuarial report if
required under ERISA or if otherwise available;
(iii) the most recent Summary Plan Description with respect
thereto if required under ERISA or if otherwise available;
(iv) if any SMP Employee Plan or any obligations thereunder are
funded through a trust or any other funding vehicle, the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each SMP Employee Plan intended to
qualify under section 401(a) of the Code.
(c) No liability under Title I or IV of ERISA, the penalty or
excise tax provisions of the Code relating to employee plans or equivalent
legislation of a foreign jurisdiction has been incurred by Moog or any of their
SMP ERISA Affiliates that has not been satisfied in full, and no condition
exists or event has occurred that presents a material risk to Moog or any of the
SMP ERISA Affiliates of incurring any such liability.
(d) No SMP Employee Plan is a "multiemployer plan," as defined in
section 3(37) of ERISA, nor is any SMP Employee Plan a plan described in section
4063(a) of ERISA.
- 52 -
(e) No SMP Employee Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived. Each SMP Employee
Plan intended to be "qualified" within the meaning of section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified; no
condition exists or event has occurred since the date of such initial
determination that would adversely affect the qualified status of any such SMP
Employee Plan; and each trust maintained thereunder has been determined by the
Internal Revenue Service to be exempt from taxation under section 501(a) of the
Code. Each SMP Employee Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA, the Code and equivalent legislation of a foreign jurisdiction.
There are no pending, or to the SMP's Knowledge, threatened, claims by or on
behalf of any SMP Employee Plan, by any employee or beneficiary covered under
any such SMP Employee Plan or otherwise involving any such SMP Employee Plan or
the assets thereof (other than routine claims for benefits).
(f) Neither SMP nor any of its SMP ERISA Affiliates would be liable
for any amount pursuant to Section 4063 or 4064 of ERISA if any SMP Employee
Plan were to terminate. All contributions required to be made to each SMP
Employee Plan under the terms of such SMP Employee Plan, applicable law or any
applicable collective bargaining agreement have been paid in full when due.
(g) Except as set forth in Section 5.19(g) of the SMP Disclosure
Schedule, no SMP Employee Plan provides benefits, including without limitation
death or medical benefits, with respect to Active Employees or Inactive
Employees of SMP in the Brake Business beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law and
(ii) benefits payable pursuant to any SMP Employee Plan qualified under Section
401(a) of the Code. Except as set forth in Section 5.19(g) of the SMP Disclosure
Schedule, the execution, delivery, or consummation of the transactions
contemplated, by this Agreement will not entitle any employees of the Brake
Business to severance pay or unemployment compensation.
5.20 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section 5.20(a)
----------------------
of the SMP Disclosure Schedule, to SMP's Knowledge, SMP is currently in
compliance, and has complied at all times in the past, in all material respects
with all Environmental Laws in the conduct of the Brake Business.
(b) Except as set forth in Section 5.20(b) of the SMP Disclosure
schedule, to the extent that the Brake Business has on its premises, uses or
Discharges Hazardous Materials, SMP has obtained all Environmental Permits
required with respect thereto and, to SMP's Knowledge, SMP has been and is in
compliance with all material terms, conditions and requirements of such
Environmental Permits, a list of which is set forth in Section 5.20 of the SMP
Disclosure Schedule. Except as set forth in Section 5.20(b) of the SMP
Disclosure Schedule, there are no proceedings to which any of SMP or its
Affiliates is a party which are pending or, to SMP's Knowledge, threatened
against SMP or its Affiliates seeking to revoke, cancel or suspend any
Environmental Permit necessary for the conduct of the Brake Business, except
where the failure to have obtained such Environmental Permit or to so comply, or
where such proceedings could not reasonably be expected to have a Brake Material
Adverse Effect. All Environmental Permits relating to the conduct of the Brake
Business will be assigned by SMP
- 53 -
to Moog in accordance with this Agreement, except to the extent the same are not
transferable under applicable law.
(c) Except as set forth in Section 5.20(c) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has received any notice from any
Governmental Agency or any other Person concerning any Environmental Claim in
connection with the operation of the Brake Business or with regard to any of the
Brake Assets and which is currently unresolved. To SMP's Knowledge, (i) there is
no investigational proceeding against SMP or its Affiliates by any federal,
state or local environmental or health and safety enforcement agency in
connection with the past or present operation of the Brake Business or with
regard to any of the Brake Assets; and (ii) neither SMP nor any of its
Affiliates has any pending or contingent liability for any Environmental Claim
in connection with the operation of the Brake Business or with regard to any of
the Brake Assets. Except as set forth in Section 5.20(c) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has been subject to any
administrative or judicial enforcement action or any third party lawsuits
pursuant to any Environmental Laws either now or at any time during the past
five years in connection with the operation of the Brake Business or with regard
to any of the Brake Assets.
(d) Except as set forth in Section 5.20(d) of the SMP Disclosure
Schedule, to SMP's Knowledge, there are no conditions at, on, under, near or
originating from any of the Brake Assets that reasonably and foreseeably (i) may
result in the imposition of liability pursuant to any Environmental Law against
SMP, or (ii) may result in any investigatory and/or remedial activities pursuant
to any Environmental Law.
(e) Except as set forth in Section 5.20(e) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates is subject to any remedial
obligation under a currently issued and applicable administrative order, decree,
or agreement pursuant to an Environmental Law in connection with the operation
of the Brake Business or with regard to any of the Brake Assets.
(f) Section 5.20(f) of the SMP Disclosure Schedule lists all
contracts or other written arrangements currently in effect and within the
possession, custody or control of SMP relating to the collection, storage,
transportation, treatment, recovery, recycling, or Disposal of Hazardous
Materials associated with the Brake Business to which any of SMP or its
Affiliates is a party and, to SMP's Knowledge, any such contracts or written
arrangements that are not currently in effect but to which any of SMP or its
Affiliates has been a party during the past five years.
(g) To SMP's Knowledge, except as set forth in Section 5.20(g) of
the SMP Disclosure Schedule, no Hazardous Materials have been Discharged or
Disposed of by or on behalf of SMP or its Affiliates on any real property
currently or formerly owned or leased by SMP and used or previously used in the
operation of the Brake Business, and to SMP's Knowledge, Section 5.20(g) of the
SMP Disclosure Schedule sets forth all off site locations where Hazardous
Materials generated by SMP or its Affiliates in the conduct of the Brake
Business have been generated, used, collected, treated, stored, transported,
recovered, recycled, Discharged or Disposed.
- 54 -
(h) Except as set forth in Section 5.20(h) of the SMP Disclosure
Schedule, no real property currently or formerly owned or leased or, to SMP's
Knowledge, used by SMP or its Affiliates (including any off-site locations
listed in Section 5.20(h) of the SMP Disclosure Schedule) in the Brake Business
is listed on any federal list of Superfund or National Priorities List sites or
similar governmental lists regarding waste sites at which there has been
Disposal of Hazardous Materials, nor to SMP's Knowledge is any such property
subject to any environmentally-relat- ed liens of record.
(i) To SMP's Knowledge, and other than as allowed by licenses,
approvals and permits which have been obtained and are in full force and effect,
the operation of the Brake Business, as presently conducted, does not require
the emission or Discharge of any Hazardous Material into the air, soil, or
Water, or into any sewer system or storm water drainage system at concentrations
in excess of permitted or regulatory limits. All equipment needed for the
continued and uninterrupted operation of the Brake Business as it is currently
conducted without such Discharge of Hazardous Materials in excess of permitted
or regulatory limits is in satisfactory operating condition.
(j) Except as set forth in Section 5.20(j) of the SMP Disclosure
Schedule, to SMP's Knowledge, all properties and equipment used in the Brake
Business are now free of friable asbestos and PCB's, and are now and at all
times in the past have been free of any underground storage tank, any landfill,
dump, hazardous waste management facility as defined pursuant to the federal
Resource Conservation and Recovery Act or any comparable state law, or xxxxx
used for Disposal, injection or other Discharge.
(k) Except as set forth in Section 5.20(k) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has submitted any notice to any
Governmental Agency or other Person, and to SMP's Knowledge none is required,
regarding any Discharges of Hazardous Materials of reportable quantity (other
than Discharges authorized by Environmental Permits) on, under or from the Brake
Assets within the past 5 years.
(l) Except as set forth in Section 5.20(l) of the SMP Disclosure
Schedule, none of the real property owned by SMP which is included in the Brake
Assets is subject to any environmental liens or deed restrictions based on
Environmental Law.
5.21 LEGAL COMPLIANCE. Except with respect to environmental matters
-----------------
(which are addressed in Section 5.20), to SMP's Knowledge, SMP has complied in
all material respects with all laws (including rules and regulations thereunder)
of Governmental Agencies applicable to it in connection with the operation of
the Brake Business.
5.22 VEHICLES. Section 5.22 of the SMP Disclosure Schedule sets out a
---------
complete and correct list of all vehicles owned or operated by SMP for or on
behalf of the Brake Business included in the Brake Assets.
5.23 GUARANTIES. Section 5.23 of the SMP Disclosure Schedule lists all
-----------
guaranties, performance bonds, bid bonds and foreign exchange contracts or
commitments which relate to the Brake Business.
- 55 -
5.24 ALL BRAKE ASSETS TRANSFERRED. The Brake Assets transferred to Moog
-----------------------------
at Closing shall include all of the assets, contracts, rights and properties of
every kind and description, tangible or intangible, owned or leased, real,
personal or mixed, necessary to conduct the Brake Business as currently
conducted, free of all Security Interests, other than the Brake Retained Assets.
5.25 SMP PERMITS. Except with respect to environmental permits,
------------
licenses and approvals (which are addressed in Section 5.20) SMP has in effect
all material permits, licenses, approvals, and other authorizations necessary
for the continued conduct of the Brake Business as presently conducted (the "SMP
PERMITS"), a list of which is set forth in Section 5.25 of the SMP Disclosure
Schedule, and there are no proceedings to which SMP is a party which are pending
or, to SMP's Knowledge, threatened against SMP or the Brake Business seeking to
revoke, cancel or suspend any such SMP Permit. All SMP Permits will be assigned
by SMP to Moog in accordance with this Agreement except to the extent that such
assignment is not permissible under applicable law.
5.26 BROKERS' FEES. Neither Moog nor SMP has any liability or
--------------
obligation to pay any fees or commissions to any broker, finder, investment
banker or agent with respect to the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of SMP.
5.27 CUSTOMERS AND SUPPLIERS. Section 5.27 of the SMP Disclosure
------------------------
Schedule contains a list of the 20 largest customers and suppliers of the Brake
Business (measured by dollar volume of purchases and sales, as applicable)
during the past year and the dollar volume of such purchases and sales. To SMP's
Knowledge, no such customer or supplier is threatening to terminate, non-renew
or materially adversely change its arrangements with SMP with respect to the
Brake Business.
5.28 INDUSTRIAL DEVELOPMENT REVENUE BONDS. As of the date of this
-------------------------------------
Agreement, the outstanding balance including any future payments due under the
$2.5 million Arkansas Development Finance Authority Industrial Development Bonds
(Standard Motor Products, Inc. Project) Series 1989, is $655,000 plus interest
accrued to the Closing Date and the outstanding balance including any future
payments due under the $1.8 million Industrial Development Revenue Bonds
(Standard Motor Products, Inc. Project) Series 1990, is $685,000 plus accrued
interest. SMP is not, and to SMP's Knowledge, no other party thereto is in
breach or default under: (i) such $2.5 million bonds or any related agreements
including the Promissory Note, Loan Agreement and Mortgage and Security
Agreement between SMP and the Arkansas Development Finance Authority or (ii)
such $1.8 million bonds or any related agreements including the Lease Agreement
dated June 1, 1990 between SMP and the City of Manila. The tax exempt status of
the bonds referred to in clauses (i) and (ii) above will not in any way be
adversely affected by the Closing.
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ARTICLE VI
PRE-CLOSING COVENANTS
---------------------
The Parties agree as follows regarding the period between the execution
of this Agreement and the Closing (and where indicated following the Closing).
6.1 REASONABLE BEST EFFORTS. Each Party will use its commercially
------------------------
reasonable best efforts to take all action and to do all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement (including satisfying the Closing conditions set
forth in Article X below at the earliest practicable time), subject to the
qualifications expressly set forth in this Agreement.
6.2 NOTICES AND CONSENTS. Each Party will, and will cause its
---------------------
Affiliates, to give any notices to third parties, and will, and will cause its
Affiliates to, use all commercially reasonable efforts to obtain, or to assist
the other Party with obtaining, any third-party consents that are required to
consummate the transactions contemplated by this Agreement or that the other
Party may reasonably request in connection with the matters disclosed or
required to be disclosed in the Moog Disclosure Schedule or the SMP Disclosure
Schedule, as the case may be. Each Party will file (and each of them will cause
their Affiliates to file) any notification and report forms and related material
that such party or its Affiliates may be required to file with any Governmental
Agency, including, without limitation, under the H-S-R Act as provided in
Section 6.3 below.
6.3 H-S-R ACT. (a) Each Party shall furnish to the other such necessary
----------
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
H-S-R Act. The Parties shall keep each other apprised of the status of any
material communications with and any inquiries or requests for additional
information made by any Governmental Agency. The Parties shall, upon request of
the U.S. Federal Trade Commission, U.S. Department of Justice or any other
Governmental Agency, supply such agency with any additional information
requested as promptly as practicable and shall use their good faith reasonable
efforts to cause the satisfaction or termination of the applicable waiting
period under the H-S-R Act or any extension thereof.
(b) Notwithstanding the foregoing, neither Party shall be required
to: (i) divest or hold separate any assets, including any asset of the TC
Business or Brake Business, (ii) agree to any limitation with respect to, or its
ability to retain, the TC Business or Brake Business or any portion thereof or
any of its other assets or businesses, or (iii) contest any suit or proceeding
brought by the U.S. Federal Trade Commission or U.S. Department of Justice that
seeks to restrain or prohibit the consummation of this Agreement or attempt to
lift or rescind any injunction or restraining order obtained by the U.S. Federal
Trade Commission or U.S. Department of Justice adversely affecting the ability
of the Parties hereto to consummate the transactions contemplated hereby.
6.4 OPERATION OF THE TC BUSINESS AND THE BRAKE BUSINESS. (a)
From the date hereof to the Closing, Moog agrees: (i) to operate the TC Business
in the ordinary course consistent with past practices in all material respects,
(ii) to use commercially reasonable efforts to preserve
- 57 -
the TC Business intact, to keep available to the TC Business the services of the
key employees of such business, and to preserve the goodwill of the customers,
suppliers and others having business relations with the TC Business, and (iii)
not to take any of the actions described in Section 4.6 except as approved in
advance in writing by SMP, such approval not to be unreasonably withheld or
delayed.
(b) From the date hereof to the Closing, SMP agrees: (i) to operate
the Brake Business in the ordinary course consistent with past practices in all
material respects, (ii) to use commercially reasonable efforts to preserve the
Brake Business intact, to keep available to the Brake Business the services of
the key employees of such business, and to preserve the goodwill of the
customers, suppliers and others having business relations with the Brake
Business, and (iii) not to take any of the actions described in Section 5.6
except as approved in advance in writing by Moog, such approval not to be
unreasonably withheld or delayed.
6.5 FULL ACCESS. (a) Moog will permit representatives of SMP upon
------------
reasonable notice to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of the TC Business,
to all premises, properties, personnel, attorneys, accountants books and records
of or pertaining to the TC Business and other aspects of the TC Business'
operations which SMP shall reasonably request including providing access to the
TC Real Properties and real properties subject to the TC Leases for
environmental investigations such as conducting soil, groundwater and other
intrusive sampling.
(b) SMP will permit representatives of Moog upon reasonable notice
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Brake Business, to all
premises, properties, personnel, attorneys, accountants books and records of or
pertaining to the Brake Business, and other aspects of the Brake Business'
operations which Moog shall reasonably request including providing access to the
Brake Real Properties and real properties subject to the Brake Leases for
environmental investigations such as conducting soil, groundwater and other
intrusive sampling.
(c) Between the date of this Agreement and the Closing Date, the
Parties will hold and will cause their respective Affiliates, representatives,
consultants and advisors to hold in strict confidence in accordance with the
terms of the Letter of Intent between Moog and SMP dated July 21, 1997, all
documents and information furnished by one Party to the other or its
representatives in connection with the transactions contemplated by this
Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained in accordance with such Letter
of Intent.
6.6 TITLE INSURANCE AND SURVEYS. Prior to Closing, Moog shall obtain
----------------------------
and deliver to SMP with respect to each parcel of TC Real Properties, and SMP
shall obtain and deliver to Moog with respect to each parcel of Brake Real
Properties, the following title insurance commitments, policies and surveys.
(a) With respect to each such parcel of real estate, Moog or SMP,
as the case may be, shall obtain and deliver an ALTA Owner's Policy of Title
Insurance Form B-1987 (or an equivalent policy acceptable to the Party acquiring
the real property if the real property is located in a jurisdiction in which an
ALTA Owner's Policy of Title Insurance Form B-1987 is
- 58 -
not available) insuring title to such real property to be in the Party acquiring
the real property as of the Closing (subject only to Permitted Exceptions). The
title insurance policy shall be issued by a title insurer satisfactory to the
Party acquiring the real property and the policy shall be in such amount as such
Party may determine to be the fair market value of such real property (including
all improvements located thereon).
(b) Each title insurance policy delivered hereunder shall (i)
insure title to the real property and all recorded easements benefitting such
real property, (ii) contain an "extended coverage endorsement" insuring over the
general exceptions contained customarily in such policies, (iii) contain an
endorsement insuring that the real property described in the title insurance
policy is the same real estate as shown on the survey delivered with respect to
such property, (iv) contain an endorsement insuring that each street adjacent to
the real property is a public street and that there is direct and unencumbered
pedestrian and vehicular access to such street from the real property, and (v)
if the real property consists of more than one record parcel, contain a
"contiguity" endorsement insuring that all of the record parcels are contiguous
to one another.
(c) With respect to each such parcel of real property as to which a
title insurance policy is to be procured pursuant to this Section 6.6, the Party
transferring such property shall procure in preparation for the Closing a
current survey of the real property certified to the Party acquiring such
property, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys. The survey shall disclose the
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters shown customarily on such surveys, and shall
show access affirmatively to public streets and roads. The survey shall not
disclose any material survey defect or encroachment from or onto the real
property which has not been cured or insured over prior to the Closing.
(d) The cost of the title insurance commitments, policies and
surveys obtained pursuant to this Section 6.6 shall be shared equally by the
Parties.
6.7 EXCLUSIVITY. (a) Moog will not (and will cause its Affiliates and
------------
the TC Business not to), (i) solicit, initiate, respond to, entertain or
encourage the submission of any proposal or offer from any Person relating to
any transaction which, directly or indirectly, involves the TC Business or (ii)
to 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 to do the
foregoing. Moog will notify SMP immediately if any Person makes any proposal,
offer, inquiry, expression of intent or contact with respect to the foregoing.
(b) SMP will not (and will cause its Affiliates and the Brake
Business not to), (i) solicit, initiate, respond to, entertain or encourage the
submission of any proposal or offer from any Person relating to any transaction
which, directly or indirectly, involves the Brake Business or (ii) to
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 to do the
foregoing. SMP will notify Moog immediately if any Person makes any proposal,
offer, inquiry, expression of intent or contact with respect to the foregoing.
- 59 -
(c) Notwithstanding the foregoing, nothing contained in this
Section 6.7 shall prohibit a Party from considering and responding to an
unsolicited bid for itself or the TC Business or the Brake Business, as the case
may be; provided, that such Party issues a negative response to the unsolicited
bid.
6.8 SUPPLY AGREEMENTS. On or prior to the Closing, SMP shall enter into
------------------
the Rubber Supply Agreement and SMP shall enter into a Screw Machine Products
Supply Agreement with Moog Company for screw machine products.
6.9 DISCLOSURE SUPPLEMENTS. From time to time after the date of this
-----------------------
Agreement and prior to the Closing, Moog will promptly supplement or amend the
Moog Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described therein or which is necessary to correct
any information therein or in any representation and warranty of Moog which has
been rendered inaccurate thereby. From time to time after the date of this
Agreement and prior to the Closing, SMP will promptly supplement or amend the
SMP Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described therein or which is necessary to correct
any information therein or in any representation and warranty of SMP which has
been rendered inaccurate thereby. For purposes of determining the accuracy of
the representations and warranties of Moog contained in Article IV and the
accuracy of the representations and warranties of SMP contained in Article V in
order to determine the fulfillment of the conditions set forth in Sections
10.3(a) and 10.2(a), respectively, the Moog Disclosure Schedule and the SMP
Disclosure Schedule shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto.
6.10 DISPOSAL OF CERTAIN HAZARDOUS MATERIALS. Prior to Closing, each
----------------------------------------
Party will remove and properly dispose at off-site locations all Hazardous
Materials existing in any baghouses, tanks, drums, pails, sumps, filters or
other collection devices or containers located at their respective facilities;
PROVIDED, HOWEVER, that any Hazardous Materials properly stored in non-leaking
containers for future use in the business as raw materials, manufacturing
supplies or maintenance supplies need not be removed and disposed of.
6.11 TERMINATION OF JOINT VENTURE AGREEMENT WITH DALIAN YONGFENG CAR
---------------------------------------------------------------
PARTS CO. LTD.. Prior to Closing, SMP shall use commercially reasonable efforts
--------------
to dissolve or otherwise terminate its joint venture with Dalian Yongfeng Car
Parts Co. Ltd. and to have its joint venture partner return to SMP the equipment
which SMP supplied to the joint venture. Any such equipment which Dalian
Yongfeng Car Parts Co. Ltd. may return to SMP shall be delivered to Moog at no
cost to Moog.
- 60 -
ARTICLE VII.
POST-CLOSING COVENANTS
----------------------
The Parties agree as follows regarding the period following the Closing
(and, where indicated, before the Closing).
7.1 FURTHER ASSURANCES. If, after the Closing, any further action is
-------------------
necessary or desirable to carry out the purposes of this Agreement, each Party
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article XI). Moog
acknowledges and agrees that from and after the Closing, SMP will be entitled,
at its own expense, to reasonable access to all Brake Books and Records. SMP
acknowledges and agrees that from and after the Closing, Moog will be entitled,
at its own expense, to reasonable access to the TC Books and Records.
7.2 LITIGATION SUPPORT. In the event and for so long as any Party
-------------------
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand 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 TC Business or the Brake Business, the other Party will cooperate
with it or its counsel in the contest or defense, make available its personnel
and provide such testimony and access to its books, records and properties 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 XI). Notwithstanding the foregoing, this Section 7.2 shall not apply to
any charge, complaint, action, suit, proceeding, hearing, investigation, claim
or demand where both Parties (or their respective Affiliates) are or may be
involved as contesting or defending parties and the Parties do or may have
adverse interests.
7.3 TRANSITIONAL MATTERS. (a) Moog will not take any action that is
---------------------
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of the TC Business from
maintaining the same business relationships with the TC Business after the
Closing as it maintained with the TC Business prior to the Closing. Moog will
refer all customer inquiries relating to the TC Business to SMP from and after
the Closing.
(b) SMP will not take any action that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier or
other business associate of the Brake Business from maintaining the same
business relationships with the Brake Business after the Closing as it
maintained with the Brake Business prior to the Closing. SMP will refer all
customer inquiries relating to the Brake Business to Moog from and after the
Closing.
(c) For a period of up to six (6) months from the Closing Date (the
"TRANSITION PERIOD"), Moog shall provide SMP with management information system
services for the TC Business in accordance with the terms set forth on Exhibit
L. If SMP notifies Moog in writing on or before 30 days before the expiration of
the Transition Period that SMP will
- 61 -
continue to need Moog to provide management information services after the
Transition Period, then Moog shall continue to provide such services for a
period of up to 12 months from the Closing Date. If Moog provides management
information services to SMP after the Transition Period: (i) SMP shall reimburse
Moog for all out-of-pocket costs incurred by Moog to provide such services after
the Transition Period including, but not limited to, the cost of Moog's
employees and the cost of any temporary personnel retained by Moog to provide
such services; and (ii) SMP shall indemnify Moog from all Adverse Consequences
arising from or relating to claims by any Person who is leasing, licensing or
otherwise providing software to Moog that the providing of such services by
Moog, constitutes an assignment or transfer by Moog of its interest or rights to
such software without such Person's consent, requires Moog to pay fees or other
consideration to such Person in order to allow Moog to provide such services to
SMP, or otherwise constitutes a violation of the terms of the lease, license or
other arrangement between Moog and such Person. Moog shall use commercially
reasonable efforts to provide SMP with management information services pursuant
to the terms of this Section 7.3(c) but Moog shall not be responsible for any
errors in reports, data or other information provided to SMP under this Section
7.3(c) including any errors resulting from the failure of the systems to be
"Year 2000" compliant, other than errors caused by the negligence of Moog.
(d) During the Transition Period, SMP shall provide Moog with
management information system services for the Brake Business in accordance with
the terms set forth on Exhibit M. SMP shall use commercially reasonable efforts
to provide SMP with management information services pursuant to the terms of
this Section 7.3(d), but SMP shall not be responsible for any errors in reports,
data or other information provided to Moog under this Section 7.3(d) including
any errors resulting from the failure of the systems to be "Year 2000"
compliant, other than errors caused by the negligence of SMP.
(e) Following Closing and for a period not to extend beyond
December 31, 1998, Moog shall provide SMP with support for tech-line services,
catalogue services and customer service for the TC Business transferred to SMP.
SMP shall reimburse Moog for all out-of-pocket expenses incurred by Moog to
provide such support. Moog shall issue an invoice to SMP for such support
services on a monthly basis and SMP shall pay such invoice within 30 days of the
date of such invoice.
(f) Following Closing and for a period not to extend beyond June
30, 1998, SMP shall provide Moog with support for processing exports for the
Brake Business transferred to Moog. Moog shall reimburse SMP for all
out-of-pocket expenses incurred by SMP to provide such support. SMP shall issue
an invoice to Moog for such support services on a monthly basis and Moog shall
pay such invoice within 30 days of the date of such invoice.
(g) Following Closing and for a period of up to 90 days thereafter,
Moog shall provide SMP the following accounting services for the TC Business:
accounts payable, order processing, invoicing, collection, accounts receivable
and purchasing. Moog shall provide such services to SMP at no cost for the first
15 days following Closing. SMP shall reimburse Moog for all out-of-pocket
expenses incurred by Moog to provide any such services after the 15th day
following Closing. Moog shall issue and invoice to SMP for such services on a
monthly basis and SMP shall pay such invoice within 30 days of the date of the
invoice.
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(h) At SMP's request, Moog has retained the services of Xxxx
Xxxxxx, Xxx Xxxxxx and Xxxx Xxxxxxx to provide marketing services to SMP
following Closing. SMP will reimburse Moog all out-of-pocket expenses incurred
by Moog for such marketing services for a period of 4 months following Closing.
SMP shall also indemnify Moog for any Adverse Consequences relating to the
actions of the employees providing such marketing services after Closing.
7.4 CONFIDENTIALITY. (a) Moog will treat and hold as such all
----------------
confidential information concerning the TC Business or the TC Assets, refrain
from using any of the confidential information except in connection with this
Agreement and deliver promptly to SMP or (subject to applicable law) destroy, at
the request of SMP, all tangible embodiments (and all copies) of the
confidential information relating exclusively to the TC Business or the TC
Assets which are in its possession. If Moog is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process) to
disclose any such confidential information, Moog will notify SMP promptly of the
request or requirement so that SMP may seek an appropriate protective order or
waive compliance with the provisions of this Section 7.4(a). If, in the absence
of a protective order or the receipt of a waiver hereunder, Moog or its
Affiliates is, on the advice of counsel, compelled to disclose any confidential
information to any tribunal or else stand liable for contempt or suffer a
substantial penalty, Moog or its Affiliates may disclose the confidential
information to the tribunal. In such event, Moog or its Affiliates shall use its
or their reasonable best efforts to obtain, at the reasonable request and
expense of SMP, an order or other assurance that confidential treatment will be
accorded to such portion of the confidential information required to be
disclosed as SMP shall designate. Notwithstanding the foregoing, this Section
7.4(a) shall not apply to information which is or becomes generally available to
the public other than as a result of disclosure after the Closing Date by Moog
or the agents or representatives or Moog.
(b) SMP will treat and hold as such all confidential information
concerning the Brake Business, refrain from using any of the confidential
information except in connection with this Agreement and deliver promptly to
Moog or (subject to applicable law) destroy, at the request of Moog, all
tangible embodiments (and all copies) of the confidential information relating
exclusively to the Brake Business or the Brake Assets which are in its
possession. If SMP is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any such confidential
information, SMP will notify Moog promptly of the request or requirement so that
Moog may seek an appropriate protective order or waive compliance with the
provisions of this Section 7.4(b). If, in the absence of a protective order or
the receipt of a waiver hereunder, SMP or its Affiliates is, on the advice of
counsel, compelled to disclose any confidential information to any tribunal or
else stand liable for contempt, SMP or its Affiliates may disclose the
confidential information to the tribunal. In such event, SMP or its Affiliates
shall use its or their reasonable best efforts to obtain, at the reasonable
request and expense of Moog, an order or other assurance that confidential
treatment will be accorded to such portion of the confidential information
required to be disclosed as Moog shall designate. Notwithstanding the foregoing,
this Section 7.4(b) shall not apply to information which is or becomes generally
available to the public other than as a result of disclosure after the Closing
Date by SMP or the agents or representatives of SMP.
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7.5 CONSENTS. If any required consent or agreement is not obtained by
---------
the Closing and the Party required to obtain such consent (and, if the obtaining
of such consent is a condition to another Party's obligation to close, such
other Party) desires to close the transaction anyway, the Parties will cooperate
in any reasonable arrangement to provide such Party with the benefits under or
with respect to the matter as to which the relevant consents or agreements were
not obtained as if such consents or agreements were obtained.
7.6 PRESS RELEASES. Both before and after Closing, the Parties and
---------------
their respective Affiliates will consult with each other before issuing any
press release or news media release or otherwise make any public statements with
respect to this Agreement and the transactions contemplated hereby, and no
Party, without the prior written consent of the other Party (which consent will
not be unreasonably withheld), will issue any such press release or news media
release or make such public statement with respect to this Agreement or the
transactions contemplated hereby, except as required by applicable law or stock
exchange rules.
7.7 ALLOCATION. The Parties will agree upon the allocation of like-kind
-----------
properties exchanged, liabilities assumed or relieved, adjusted bases of
properties exchanged, and cash or other property transferred or received
hereunder in accordance with Section 1031 and the Treasury regulations
thereunder and Treasury Regulation ss. 1.1060-1T(h) which allocation shall be
agreed upon within ninety (90) days of the Closing Date and shall specify an
"exchange group" for each item as provided in Treasury Regulation
ss.1.1031(j)-1. Each Party will report the exchange of the TC Assets and the
Brake Assets, consistent with such allocation, to the Internal Revenue Service
and any other Tax authority within the time period and in the manner required by
law. Each Party agrees to file all Tax Returns consistent with such allocation
and not to take any position inconsistent with such allocation, except as
required by law. Each Party will promptly notify the other if a Tax authority
disagrees with any aspect of such allocation.
7.8 TAX ASSISTANCE. Moog shall, and shall cause the employees of the
---------------
Brake Business to, and SMP shall, and shall cause the employees of the TC
Business to, (i) provide the other Party with such assistance as may reasonably
be requested by any of them in connection with the preparation of any Tax
Return, audit or other examination by any Tax authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) retain and
provide the other Party any records or other information that may be relevant to
such 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
Tax Return of the other Party for any period. Without limiting the foregoing,
Moog shall retain, and shall cause the employees of the Brake Business to
retain, and SMP shall retain, and shall cause the TC Business to retain, until
six (6) months following the expiration of the applicable statutes of limitation
(including any extensions), copies of all Tax Returns, supporting work schedules
and other records or information that may be relevant to such Tax Returns for
all Tax periods or portions thereof ending before or including 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.
7.9 TAX PROCEEDINGS. Each Party shall exercise, at its expense,
complete control over the handling, disposition and settlement of any
governmental inquiry, examination or proceeding that could result in a
determination with respect to Taxes due or payable by the other Party, for which
such Party or its Affiliates may be liable or against which such Party may be
required to indemnify the other Party pursuant to this Agreement. Each Party
shall promptly
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notify the other Party if, in connection with any such inquiry, examination or
proceeding, any Governmental Agency proposes in writing to make any assessment
or adjustment with respect to Tax items of such Party, which assessments or
adjustments could affect the TC Business or the Brake Business, as the case may
be, following the Closing Date, and shall consult with such other Party with
respect to any such proposed assessment or adjustment.
7.10 UNEMPLOYMENT TAX EXPERIENCE. (a) The state unemployment tax
----------------------------
experience of the TC Business shall be transferred to SMP at the sole discretion
of SMP. The decision to transfer such unemployment tax experience may be made
separately for each state in which the TC Business is conducted. If SMP elects
to transfer the aforementioned state unemployment tax experience in a particular
state, Moog will timely execute the necessary governmental filings to accomplish
this transfer.
(b) The state unemployment tax experience of the Brake Business
shall be transferred to Moog at the sole discretion of Moog. The decision to
transfer such unemployment tax experience may be made separately for each state
in which the Brake Business is conducted. If Moog elects to transfer the
aforementioned state unemployment tax experience in a particular state, SMP will
timely execute the necessary governmental filings to accomplish this transfer.
7.11 EMPLOYMENT TAX COMPLIANCE. Moog and SMP agree to use the
--------------------------
alternative procedure described in Section 5 of Revenue Procedure 84-77, 1984-2
Cum. Bull. 753, for preparing and filing Forms W-2, W-3, W-4, W-5, and 941 for
the calendar year in which the Closing occurs with respect to those individuals
who are employed by one Party immediately preceding the Closing and by the other
Party immediately thereafter. Each Party shall provide to the other Party such
assistance, cooperation and access to such books and records as may be
reasonably necessary to comply with this provision.
7.12 PRODUCT RETURNS ADJUSTMENT. (a) Not later than twenty (20) days
---------------------------
after the period ending ninety (90) days following the Closing Date (i) Moog
shall prepare and furnish to SMP a schedule (the "BRAKE RETURNS SCHEDULE")
reflecting, for the 90 day period following the Closing Date, the actual amount
of overstock returns (net of the average recovery rate over the prior 24 months)
of products of the Brake Business (the "OVERSTOCK BRAKE RETURNS AMOUNT") and the
actual amount of product warranty returns (with no reduction for any recoveries)
of products of the Brake Business (the "WARRANTY BRAKE RETURNS AMOUNT"); and
(ii) SMP shall prepare and furnish to Moog a schedule (the "TC RETURNS
SCHEDULE") reflecting, for the 90 day period following the Closing Date, the
actual amount of overstock returns (net of the average recovery rate over the
prior 24 months) of products of the TC Business (the "OVERSTOCK TC RETURNS
AMOUNT") and the actual amount of product warranty returns (with no reductions
for any recoveries) of products of the TC Business (the "WARRANTY TC RETURNS
AMOUNT"). Each Party shall promptly make available or provide to the other Party
such books and records (or copies thereof) as are reasonably requested by the
other Party to allow the other Party to confirm the information on the Brake
Returns Schedule and TC Returns Schedule, as the case may be.
(b) To the extent that (i) the sum of the Overstock Brake Returns
Amount and Warranty Brake Returns Amount exceeds the sum of the amounts accrued
for overstock and product warranty returns on the SMP Final Closing Balance
Sheet, SMP shall pay to Moog in accordance with Section 2.14, an amount equal to
fifty percent (50%) of such excess or (ii) the sum of the Overstock Brake
Returns Amount and Warranty Brake Returns Amount is less than
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the sum of the amounts accrued for overstock and product warranty returns on the
SMP Final Closing Balance Sheet, Moog shall pay to SMP an amount equal to fifty
percent (50%) of such deficit.
(c) To the extent that (i) the sum of the Overstock TC Returns
Amount and Warranty TC Returns Amount exceeds the sum of the amounts accrued for
overstock and product warranty returns on the Moog Final Closing Balance Sheet,
Moog shall pay to SMP in accordance with Section 2.14, an amount equal to fifty
percent (50%) of such excess or (ii) the sum of the Overstock TC Returns Amount
and Warranty TC Returns Amount is less than the sum of the amounts accrued for
overstock and product warranty returns on the Moog Final Closing Balance Sheet,
SMP shall pay to Moog an amount equal to fifty percent (50%) of such deficit.
(d) Any Party may set-off any amounts due to such Party pursuant to
Section 7.12(b) or 7.12(c) against any payment due from such Party pursuant to
either such Section. Any payment to be made pursuant to this Section 7.12 shall
be made within ten (10) Business Days following receipt of the Brake Returns
Schedule and the TC Returns Schedule.
7.13 USE OF EXCLUDED TRADEMARKS AND TRADE NAMES. (a) Section 7.13 of
-------------------------------------------
the Moog Disclosure Schedule sets forth the trademarks, service marks and trade
names used by Moog in the TC Business, but which are not included in the TC
Assets transferred to SMP because such trademarks, service marks and trade names
are also used by Moog or its Affiliates in other businesses (the "EXCLUDED MOOG
TRADEMARKS AND TRADE NAMES"). SMP may sell, use and distribute products and
materials including all packages, sales aids, sales literature, signage and
stationery which bear the Excluded Moog Trademarks and Trade Names for a period
not to exceed one year after the Closing Date, provided SMP uses the Excluded
Moog Trademark and Trade Names on the same products and materials and in the
same manner as used by Moog in the TC Business prior to the Closing Date.
(b) Section 7.13 of the SMP Disclosure Schedule sets forth the
trademarks, service marks and trade names used by SMP in the Brake Business, but
which are not included in the Brake Assets transferred to Moog because such
trademarks, service marks and trade names are also used by SMP or its Affiliates
in other businesses (the "EXCLUDED SMP TRADEMARKS AND TRADE NAMES"). Moog may
sell, use and distribute products and materials including all packages, sales
aids, sales literature, signage and stationery which bear the Excluded SMP
Trademarks and Trade Names for a period not to exceed [one year] after the
Closing Date, provided Moog uses the Excluded SMP Trademarks and Trade Names on
the same products and materials and in the same manner as used by SMP in the
Brake Business prior to the Closing Date.
7.14 EXISTING INSURANCE COVERAGE. (a) At Closing, Moog will cancel
----------------------------
insurance coverage applicable to the TC Business for occurrences or claims made
after the Closing Date; PROVIDED, HOWEVER, that the remaining insurance coverage
shall be available to SMP with respect to insured occurrences or claims made
relating to the TC Business on or prior to the Closing Date, if and only to the
extent that SMP has assumed or paid the loss or liability attributed to such
occurrences. If, after the Closing, Moog actually receives from an insurer cash
proceeds (excluding any return of premium or reimbursed attorneys or
investigation or other fees) attributable to such insurance coverage with
respect to any insured occurrences or any series of occurrences on or prior to
the Closing Date or any claims that were asserted on
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or prior to the Closing Date, then such cash proceeds shall be paid to SMP net
of any deductible, co-payment, retro fees, self-insured premiums, defense costs
or other charges paid or payable to the insurance carrier or obligations to
reimburse the insurance carrier for which Moog is liable, to the extent that SMP
has assumed or paid the loss or liability attributed to such occurrences. SMP
shall reimburse Moog for any administrative costs, retro fees, premiums,
self-insured or deductible loss costs or other expenses that Moog is charged
after the Closing by such insurance carrier relating to claims paid to SMP
subsequent to Closing under insurance coverage applicable to the TC Business
prior to Closing.
(b) At Closing, SMP will cancel insurance coverage applicable to
the Brake Business for occurrences or claims made after the Closing Date;
PROVIDED, HOWEVER, that the remaining insurance coverage shall be available to
Moog with respect to insured occurrences or claims made relating to the Brake
Business on or prior to the Closing Date, if and only to the extent that Moog
has assumed or paid the loss or liability attributed to such occurrences. If,
after the Closing, SMP actually receives from an insurer cash proceeds
(excluding any return of premium or reimbursed attorneys or investigation or
other fees) attributable to such insurance coverage with respect to any insured
occurrences or any series of occurrences on or prior to the Closing Date or any
claims that were asserted on or prior to the Closing Date, then such cash
proceeds shall be paid to Moog net of any deductible, co-payment, retro fees,
self-insured premiums, defense costs or other charges paid or payable to the
insurance carrier or obligations to reimburse the insurance carrier for which
SMP is liable, to the extent that Moog has assumed or paid the loss or liability
attributed to such occurrences. Moog shall reimburse SMP for any administrative
costs, retro fees, premiums, self-insured or deductible loss costs or other
expenses that SMP is charged after the Closing by such insurance carrier
relating to claims paid to Moog subsequent to Closing under insurance coverage
applicable to the Brake Business prior to Closing.
7.15 LETTERS OF CREDIT.
------------------
(a) SMP shall use all commercially reasonable efforts to replace,
on or as soon as practicable after the Closing Date, all "TC Letters of Credit"
(as defined below) existing on the Closing Date, and SMP shall reimburse Moog
and its Affiliates for any Liability that Moog or its Affiliates incur in
connection with any TC Letter of Credit as a result of such TC Letter of Credit
not being so replaced (or otherwise terminated) including the value of any
payments made under a claim or drawing together with associated costs and fees
to maintain, renew or extend such TC Letters of Credit to the extent such
payments, costs and fees relate to the period after the Closing Date. "TC
LETTERS OF CREDIT" shall mean, collectively, each commercial letter of credit or
standby letter of credit that relates exclusively to the TC Business and is
either specifically described in Section 7.15(a) of the Moog Disclosure Schedule
or is created after the date of this Agreement in the ordinary course of
conducting the TC Business consistent with past practices and as to which Moog
has notified SMP in writing prior to the Closing Date. If by April 30, 1998, SMP
has not effected the complete replacement of all outstanding TC Letters of
Credit such that Moog and its Affiliates are fully released from any liability
related thereto, SMP shall obtain and deliver to Moog letters of credit in favor
of Moog, from financial institutions and on terms reasonably acceptable to Moog,
which fully cover the liabilities under each such TC Letter of Credit then
outstanding. Moog or its Affiliates may elect not to renew or extend any TC
Letter of Credit if SMP has not obtained and delivered to Moog the letters of
credit in favor of Moog required because of SMP's failure to effectuate any
replacement required under this Section 7.15(a). Any election by Moog or its
Affiliates not to
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renew or extend a TC Letter of Credit shall not affect any of SMP's
indemnification obligations hereunder.
(b) Moog shall use all commercially reasonable efforts to replace,
on or as soon as practicable after the Closing Date, all "Brake Letters of
Credit" (as defined below) existing on the Closing Date, and Moog shall
reimburse SMP and its Affiliates for any Liability that SMP or its Affiliates
incur in connection with any Brake Letter of Credit as a result of such Brake
Letter of Credit not being so replaced (or otherwise terminated) including the
value of any payments made under a claim or drawing together with associated
costs and fees to maintain, renew or extend such Brake Letters of Credit to the
extent such payments, costs and fees relate to the period after the Closing
Date. "BRAKE LETTERS OF CREDIT" shall mean, collectively, each commercial letter
of credit or standby letter of credit that relates exclusively to the Brake
Business and is either specifically described in Section 7.15(b) of the SMP
Disclosure Schedule or is created after the date of this Agreement in the
ordinary course of conducting the Brake Business consistent with past practices
and as to which SMP has notified Moog in writing prior to the Closing Date. If
by April 30, 1998, Moog has not effected the complete replacement of all
outstanding Brake Letters of Credit such that SMP and its Affiliates are fully
released from any liability related thereto, Moog shall obtain and deliver to
SMP letters of credit in favor of SMP, from financial institutions and on terms
reasonably acceptable to SMP, which fully cover the liabilities under each such
Brake Letter of Credit then outstanding. SMP or its Affiliates may elect not to
renew or extend any Brake Letter of Credit if Moog has not obtained and
delivered to SMP the letters of credit in favor of SMP required because of
Moog's failure to effectuate any replacement required under this Section
7.15(b). Any election by SMP or its Affiliates not to renew or extend a Brake
Letter of Credit shall not affect any of Moog's indemnification obligations
hereunder.
7.16 NON-COMPETITION AGREEMENT.
--------------------------
(a) For a period of five years after the Closing Date, neither Moog
nor any of its Affiliates shall directly or indirectly (except as contemplated
by the Screw Machine Products Supply Agreement) (i) design, develop,
manufacture, market, service, supply or distribute any temperature control
products and components to support vehicle systems designed to regulate
temperature for passengers ("TC COMPETITIVE PRODUCTS") in North America and any
other country in which Moog conducted TC Business during the three years prior
to the Closing Date or (ii) engage in, manage, operate, be connected with or
acquire any interest in, as an employee, consultant, advisor, agent, owner,
partner, co-venturer, principal, director, shareholder, lender or otherwise, any
business competitive with the TC Business (as determined by whether such
business manufacturers, markets or sells TC Competitive Products) as conducted
on the date hereof or on the Closing Date, including the manufacturing and/or
distributing of stand alone motors which are TC Competitive Products (a "TC
COMPETITIVE BUSINESS") in North America or any other country in which Moog
conducted TC Business during the three years prior to the Closing Date.
Notwithstanding the foregoing, nothing herein shall be construed to prevent Moog
and its Affiliates from: (i) designing, developing, manufacturing, marketing,
servicing, supplying or distributing brass components and brake lines; (ii)
owning, in the aggregate, no more than 5% of the outstanding shares of any
publicly held corporation which is a TC Competitive Business which has shares
listed for trading on a securities exchange registered with the Securities and
Exchange Commission or through the automatic quotation system of a registered
securities association, so long as such shares are held for passive investment
purposes only and neither Moog nor any of its Affiliates in actively
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involved in the management or operation of such TC Competitive Business; or
(iii) acquiring a business (a "TARGET") which includes a TC Competitive Business
provided the annual sales derived from the TC Competitive Business of such
Target are not more than 20% of such Target's total annual sales based on the
Target's most recent annual financial statements. Further, the restrictions in
this Section 7.16(a) shall not apply to any Person who is not an Affiliate of
Moog and who acquires all of the shares or substantially all of the assets of
Moog Company, Moog Parent or Xxxxxx Canada.
(b) For a period of five years after the Closing Date, neither SMP
nor any of its Affiliates shall directly or indirectly (except as contemplated
by the Rubber Supply Agreement) (i) design, develop, manufacture, market,
service, supply or distribute any brake products and components to support brake
systems ("BRAKE COMPETITIVE PRODUCTS") in North America and any other country in
which SMP conducted the Brake Business during the three years prior to the
Closing Date or (ii) engage in, manage, operate, be connected with or acquire
any interest in, as an employee, consultant, advisor, agent, owner, partner,
co-venturer, principal, director, shareholder, lender or otherwise, any business
competitive with the Brake Business (as determined by whether such business
manufacturers, markets or sells Brake Competitive Products) as conducted on the
date hereof or on the Closing Date (a "BRAKE COMPETITIVE BUSINESS"), in North
America or any other country in which SMP conducted the Brake Business during
the three years prior to the Closing Date. Notwithstanding the foregoing,
nothing herein shall be construed to prevent SMP and its Affiliates from (i)
designing, developing, manufacturing, marketing, servicing or supplying
remanufactured anti-skid brake system control modules; (ii) owning, in the
aggregate, no more than 5% of the outstanding shares of any publicly held
corporation which is a Brake Competitive Business which has shares listed for
trading on a securities exchange registered with the Securities and Exchange
Commission or through the automatic quotation system of a registered securities
association, so long as such shares are held for passive investment purposes
only and neither SMP nor any of its Affiliates is actively involved in the
management or operations of such Brake Competitive Business; or (iii) acquiring
a business (a "TARGET") which includes a Brake Competitive Business provided the
annual sales derived from the Brake Competitive Business of such Target are not
more than 20% of such Target's total annual sales based on the Target's most
recent annual financial statements. Further, the restrictions in this Section
7.16(b) shall not apply to any Person who is not an Affiliate of SMP and who
acquires all of the shares or substantially all of the assets of SMP Parent or
SMP Canada.
(c) The Parties hereto agree that the duration and geographic scope
of the non-competition provision set forth in this Section 7.16 are reasonable.
In the event that any court or arbitrator determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the Parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The Parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective. Each Party agrees that damages are an inadequate remedy for any
breach of this provision and that the non-breaching Party shall, whether or not
it is pursuing any potential remedies at law, be entitled to equitable relief in
the form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this non-
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competition provision. The covenants contained in this Section 7.16 are deemed
to be material and each Party is entering into this Agreement relying on such
covenants.
7.17 COMPLIANCE WITH CONNECTICUT TRANSFER ACT. Within ten (10) days
-----------------------------------------
following the Closing Date, SMP will, if required by the Connecticut Transfer
Act, comply with such Act as it relates to the transfer of SMP's facility in
Berlin, Connecticut to Moog including an acknowledgement that SMP will be the
"certifying party" and SMP will provide Moog with copies of all required filings
to comply with such act.
7.18 LOAN FROM MOOG TO SMP. No later than 10 days following the later
----------------------
of (i) the Closing Date; or (ii) the date that SMP closes its financing for the
$108.5 million credit facility between SMP and the Bank of New York (as
Documentation Agent) and Chase Manhattan Bank (as Administrative Agent) et. al.,
Moog Automotive Products, Inc. shall (or shall cause one of its Affiliates to)
fund a loan to Standard Motor Products, Inc. in the amount of $22.5 million upon
the delivery to Moog (or its Affiliate) of loan documents which, except for the
principal payment terms which shall be governed by the formula provided in
paragraph 6 of SMP's letter dated January 28, 1998, shall include the same
provisions as the Revolving Credit and Guaranty Agreement among SMP, the Chase
Manhattan Bank (as Administrative Agent) and The Bank of New York (as
Documentation Agent) et. al. and any related agreements. The formula for
principal payments to Moog provides for payments at a rate of 75% of SMP's
paydown of any principal payments under the Revolving Credit and Guaranty
Agreement on a pro-rata basis of the outstanding balance due under the loan from
Moog. As an example, the formula for principal payments to Moog for a two month
period would be calculated as follows:
BANKS MOOG TOTAL
Loan Balance at the end of Month 0 $100 $20 $120
Pro-rata Loan Percent 83.3% 16.7% 100%
Principal payments Month 1 $ 10
Moog principal payment allocation at 75% 12.5%*
Principal payments March 1 $ 8.75 $ 1.25
Loan Balance at end of Month 1 $ 91.25 $18.75 $110
Pro-rata Loan Percent 82.9% 17.1% 100%
Principal payments Month 2 $ 15
Moog principal payment allocation at 75% 12.8%**
Principal payments Month 2 $ 13.08 $ 1.92
Loan Balance at end of Month 2 $ 78.17 $16.83 $ 95
*.75 times 16.7% **.75 times 17.1%
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7.19 UNPROCESSED INVENTORY AS OF THE CLOSING DATE.
---------------------------------------------
(a) Within fifteen (15) days following the Closing Date, Moog shall
(i) process and identify any unprocessed inventory as of the Closing Date
returned by customers of the Brake Business; and (ii) send SMP the processing
documents for such inventory. SMP shall be responsible for issuing the credit to
the customers which returned such unprocessed inventory.
(b) Within fifteen (15) days following the Closing Date, SMP shall:
(i) process and identify any unprocessed inventory as of the Closing Date
returned by customers of the TC Business; and (ii) send Moog the processing
documents for such inventory. Moog shall be responsible for issuing the credit
to the customers which returned such unprocessed inventory.
7.20 CONSIGNED INVENTORY.
--------------------
(a) As of Closing, Moog shall consign to SMP $15 million of
inventory. The consigned inventory shall consist of air compressor finished
goods inventory at the facilities at 0000 Xxxx Xxx Xxxxxx and at Tile Factory
Road in Palestine, Texas and will be comprised of the following part numbers set
forth in the order of priority on Section 7.20(a) of the Moog Disclosure
Schedule. If the total of such inventory at Palestine is less than the total
amount of consigned inventory, then inventory at the Dyersburg location (based
on mutually agreed part numbers) will make up the difference.
(b) SMP shall not permit the amount of consigned inventory on hand
at any time to fall below the Minimum Consigned Inventory Amount. The "Minimum
Consigned Inventory Amount" equals $10 million less the sum of: (i) the total
principal payments made by SMP to Moog under the promissory note referred to in
Section 7.18, and (ii) the total payments made by SMP to Moog for consigned
inventory sold by SMP. If a sale of consigned inventory by SMP would reduce the
consigned inventory below the Minimum Consigned Inventory Amount, then SMP shall
not sell such consigned inventory unless Moog receives payment from SMP on or
before the sale of such consigned inventory by SMP to its customer.
(c) SMP shall conspicuously identify or otherwise segregate the
consigned inventory from other inventory of SMP so it is evident to any third
parties that the consigned inventory is owned by Moog. Within 15 days following
the end of each month, SMP shall send Moog a report setting forth, as of the end
of the preceding month the amount of consigned inventory on hand together with a
calculation of the Minimum Consigned Inventory Amount. SMP shall also allow
representatives of Moog access to the Palestine facility to inspect the
consigned inventory.
(d) Subject to the final sentence of paragraph (b) above, during
the period of one year following Closing, SMP shall pay Moog for consigned
inventory sold by SMP (i) no later than forty-five (45) days following the last
day of the month in which SMP sells such inventory with respect to sales made
during any gross calendar month on or before September 30, 1998; and (ii) no
later than fifteen (15) days following the last day of the month in which SMP
sells such inventory with respect to sales made during any given calendar month
after September 30, 1998. The price for the consigned inventory shall be the
value of such inventory as determined under Exhibit G clauses(c)(i), (ii) and
(iii). SMP will sell consigned inventory
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before SMP sells other inventory owned by SMP which is the same product as that
included in the consigned inventory. At any time when the consigned inventory
falls below $10 million, any amount of consigned inventory which exceeds the
Minimum Consigned Inventory Amount will no longer be deemed consigned inventory
under this Section 7.20 and may be commingled with SMP's inventory.
(e) On or before the first anniversary of Closing, SMP shall pay
Moog an amount equal to (i) the excess of the Moog Final Closing Net Book Value
over the SMP Final Closing Net Book Value, without giving effect to the
consignment provisions of this Section 7.20 hereof, less (ii) any amounts paid
or to be paid under or in accordance with the provisions of subsection (d)
above.
(f) If SMP fails to timely make the payments described in
paragraphs (b), (d) and (e) above, SMP shall pay Moog interest on such amount at
the rate of twelve percent (12%) per annum from the due date of such payment.
7.21 PRODUCT RETURNS ASSOCIATED WITH CHANGEOVER OF TRAK AUTOMOTIVE. SMP
--------------------------------------------------------------
shall be responsible for issuing a credit to CSK for any products returned by
CSK relating to the changeover of the Trak Automotive stores. Moog shall process
and identify any such products returned by CSK and Moog shall send SMP the
processing documents for such product returns so SMP can issue the credit to
CSK. Moog shall pay SMP an amount determined by a side letter from SMP to Moog
dated March 30, 1998.
ARTICLE VIII
EMPLOYEE MATTERS
----------------
8.1 EMPLOYMENT AND SEVERANCE FOR SALES PERSONS. (a) Within five (5)
-------------------------------------------
days before the Closing Date: (i) Moog shall provide SMP a list of the Brake
Scheduled Sales Persons that Moog wishes to employ following the Closing Date
and shall offer employment to such individuals upon terms and conditions as Moog
shall, in its sole discretion, deem appropriate, and (ii) SMP shall provide Moog
a list of the TC Scheduled Sales Persons that SMP wishes to employ following the
Closing Date and shall offer employment to such individuals upon terms and
conditions as SMP shall, in its sole discretion, deem appropriate. Each TC
Scheduled Sales Person who accepts the offer of employment from SMP is
hereinafter referred to as an "TC TRANSFERRING SALES PERSON" and each Brake
Scheduled Sales Person who accepts the offer of employment from Moog is
hereinafter referred to as a "BRAKE TRANSFERRING SALES PERSON."
(b) Moog shall be responsible for (i) all relocation expenses
incurred by the Brake Transferring Sales Persons, (ii) all termination or
severance payments and other Liabilities to TC Scheduled Sales Persons who do
not become TC Transferring Sales Persons and (iii) all termination or severance
payments and other Liabilities to any Brake Transferring Sales Person who is
terminated by Moog following the Closing Date.
(c) SMP shall be responsible for (i) all relocation expenses
incurred by the TC Transferring Sales Persons, (ii) all termination or severance
payments and other Liabilities to Brake Scheduled Sales Persons who do not
become Brake Transferring Sales Persons and (iii) all termination or severance
payments and other Liabilities to any TC Transferring Sales Person who is
terminated by SMP following the Closing Date.
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8.2 EMPLOYMENT AND SEVERANCE FOR NON-SALES PERSONS. (a) Effective as of
-----------------------------------------------
the Closing Date, Moog shall offer employment to all Active Employees of the
Brake Business who are in manufacturing, distribution, management and support
positions. Such offer of employment shall be upon such terms and conditions as
Moog shall, in it sole discretion, deem appropriate. Effective as of the Closing
Date, SMP shall offer employment to all Active Employees of the TC Business who
are in manufacturing, distribution, management and support positions. Such offer
of employment shall be upon such terms and conditions as SMP shall, in its sole
discretion, deem appropriate.
(b) Not later than fifteen (15) days following the Closing Date (i)
Moog shall deliver to SMP a schedule setting forth the name of the individual
and the amount of severance obligations actually paid by Moog during the period
from July 21, 1997 to the Closing Date to or on behalf of each Moog Scheduled TC
and Brake Salaried Non-Sales Person who was terminated by Moog other than for
cause on or after July 21, 1997, and (ii) SMP shall deliver to Moog a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by SMP during the period from July 21, 1997 to the Closing Date to
or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who
was terminated by SMP other than for cause on or after July 21, 1997. The
aggregate amount of severance obligations reflected on both schedules is
referred to herein as the "FIRST PERIOD SEVERANCE AMOUNT." Within fifteen (15)
days of the receipt by the Parties of such schedules, the Party which paid the
lesser amount of severance obligations as reflected on such schedules shall pay
to the other Party, in the manner described in Section 2.14, an amount equal to
the difference between fifty percent (50%) of the First Period Severance Amount
and the amount of severance obligations actually paid by such Party as reflected
on the schedule delivered thereby pursuant to this Section 8.2(b).
(c) Not later than fifteen (15) days following the date which is
six (6) months after Closing Date (i) Moog shall deliver to SMP a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the date immediately following the
Closing Date to the date which is six (6) months after the Closing Date to or on
behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to or
on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by Moog other than for cause on or after July 21, 1997, and (ii) SMP
shall deliver to Moog a schedule setting forth the amount of severance
obligations actually paid by SMP during the period from the date immediately
following the Closing Date to the date which is six (6) months after the Closing
Date to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales
Person and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales
Person who was terminated by SMP other than for cause on or after July 21, 1997.
The aggregate amount of severance obligations reflected on both schedules is
referred to herein as the "SECOND PERIOD SEVERANCE AMOUNT." Within fifteen (15)
days of the receipt by the Parties of such schedules, the Party which paid the
lesser amount of severance obligations as reflected on such schedules shall pay
to the other Party, in the manner described in Section 2.14, an amount equal to
the difference between fifty percent (50%) of the Second Period Severance
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Amount and the amount of severance obligations actually paid by such Party as
reflected on the schedule delivered thereby pursuant to this Section 8.2(c).
(d) On or prior to the date which is six (6) months following the
Closing Date, (i) Moog shall deliver to SMP a list of the Moog Scheduled TC and
Brake Salaried Non-Sales Persons and SMP Scheduled TC and Brake Salaried
Non-Sales Persons who will be terminated by Moog between such date and the first
anniversary of the Closing Date (the "MOOG SEVERANCE SCHEDULE") and (ii) SMP
shall deliver to Moog a list of the Moog Scheduled TC and Brake Salaried
Non-Sales Persons and SMP Scheduled TC and Brake Salaried Non-Sales Persons who
will be terminated by SMP between such date and the first anniversary of the
Closing Date (the "SMP SEVERANCE SCHEDULE"). Moog shall terminate each
individual who is listed on the Moog Severance Schedule on or before the first
anniversary of the Closing Date and SMP shall terminate each individual who is
listed on the SMP Severance Schedule on or before the first anniversary of the
Closing Date.
(e) Not later than fifteen (15) days following the first
anniversary of the Closing Date (i) Moog shall deliver to SMP a schedule setting
forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from and including six months after the
Closing Date to the first anniversary of the Closing Date to and including each
Moog Scheduled TC and Brake Salaried Non-Sales Persons and to or on behalf of
each SMP Scheduled TC and Brake Salaried Non-Sales Person who was terminated by
Moog other than for cause on or after July 21, 1997 and (ii) SMP shall deliver
to Moog a schedule setting forth the name of the individual and the amount of
severance obligations actually paid by SMP during the period from and including
six months after the Closing Date to the first anniversary of the Closing Date
to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person
and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person
who was terminated by SMP other than for cause on or after July 21, 1997. The
aggregate amount of severance obligations reflected in such schedules is
referred to hereinafter as the "THIRD PERIOD SEVERANCE AMOUNT." Within fifteen
(15) days of the receipt by the Parties of such schedules, the Party which paid
the lesser amount of severance obligations as reflected on such schedules shall
pay to the other Party, in the manner described in Section 2.14, an amount equal
to the difference between fifty percent (50%) of the Third Period Severance
Amount and the amount of severance obligations actually paid by such Party as
reflected on the schedule delivered thereby pursuant to this Section 8.2(e).
With respect to individuals terminated by the Parties during the period from and
including six months after the Closing Date to the first anniversary of the
Closing Date, the schedules delivered by the Parties pursuant to Sections
8.2(e), (f) and (g) shall only include individuals who appear on the Moog
Severance Schedule or the SMP Severance Schedule.
(f) Not later than fifteen (15) days following the date which is
eighteen months after the Closing Date (i) Moog shall deliver to SMP a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the first anniversary of the
Closing Date to the date which is eighteen months after the Closing Date to or
on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to
or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who
was terminated by Moog other than for cause during the period from July 21, 1997
to the first
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anniversary of the Closing Date, and (ii) SMP shall deliver to Moog a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by SMP during the period from the first anniversary of the Closing
Date to the date which is eighteen months after the Closing Date to or on behalf
of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to or on
behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by SMP other than for cause during the period from July 21, 1997 to
the first anniversary of the Closing Date. The aggregate amount of severance
obligations reflected On both schedules is referred to herein as the "FOURTH
PERIOD SEVERANCE AMOUNT". Within fifteen (15) days of the receipt by the parties
of such schedules, the Party which paid the lesser amount of severance
obligations as reflected on such schedules shall pay to the other Party, in the
manner described in Section 2.14, an amount equal to the difference between
fifty percent (50%) of the Fourth Period Severance Amount and the amount of
severance obligations actually paid by such Party as reflected on the schedule
delivered thereby pursuant to this Section 8.2(f).
(g) Not later than fifteen (15) days following the second
anniversary of the Closing Date (i) Moog shall deliver to SMP a schedule setting
forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the date which is eighteen months
after the Closing Date to the second anniversary of the Closing Date to or on
behalf of each Moog Scheduled PC and Brake Salaried Non-Sales Person and to or
on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by Moog other than for cause during the period from July 21, 1997 to
the first anniversary of the Closing Date, and (ii) SMP shall deliver to Moog a
schedule setting forth the name of the individual and the amount of severance
obligations actually paid by SMP during the period from the date which is
eighteen months after the Closing Date to the second anniversary of the Closing
Date to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales
Person and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales
Person who was terminated by SMP other than for cause during the period from
July 21, 1997 to the first anniversary of the Closing Date. The aggregate amount
of severance obligations reflected in such schedules is referred to hereinafter
as the "FIFTH PERIOD SEVERANCE AMOUNT". Within fifteen (15) days of the receipt
by the parties of such schedules, the Party which paid the lesser amount of
severance obligations as reflected on such schedules shall pay to the other
Party, in the manner described in Section 2.14, an amount equal to the
difference between fifty percent (50%) of the Fifth Period Severance Amount and
the amount of severance obligations actually paid by such Party as reflected on
the schedule delivered thereby pursuant to this Section 8.2(g).
(h) Each Party shall promptly make available or provide to the
other Party such books and records (or copies thereof) as are reasonably
requested by the other Party to allow the other Party to confirm the severance
obligations set forth on the schedules referred to in this Section 8.2.
(i) For purposes of calculating the severance obligations under
this Section 8.2, the severance obligations payable to or on behalf of employees
who are terminated by Moog on or before the first anniversary of the Closing
Date shall be determined as follows. Severance for salaried employees shall be
determined by the severance policy in effect on the date of this Agreement, as
set forth on Exhibit O, for the facility where the individual is employed on the
date of termination. For example, SMP's current severance policy for its Berlin
facility would apply to any salaried employees at the Berlin facility who are
terminated by Moog on or before
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the first anniversary of the Closing Date. For purposes of calculating the
severance obligations under this Section 8.2, the severance obligations shall
consist only of lump sum severance payments, salary continuation (or similar
payments), stay-on bonuses and the out-of-pocket costs incurred by Moog to
provide continued coverage under the benefit plans specified in Exhibit O
including insurance premiums, self-insured costs and administrative fees paid to
third parties. If an individual was an employee of SMP prior to the Closing
Date, then the years of service for such individual for purposes of determining
the severance obligations shall include such individual's continuous years of
service with SMP as of the Closing Date.
(j) For purposes of calculating the severance obligations under
this Section 8.2, the severance obligations payable to or on behalf of employees
who are terminated by SMP on or before the first anniversary of the Closing Date
shall be determined as follows. Severance for salaried employees shall be
determined by the severance policy in effect on the date of this Agreement, as
set forth on Exhibit O, for the facility where the individual is employed on the
date of termination. For example, Moog's current severance policy for its Fort
Worth facility would apply to any salaried employees at the Fort Worth facility
who are terminated by SMP on or before the first anniversary of the Closing
Date. For purposes of calculating the severance obligations under this Section
8.2, the severance obligations shall consist only of lump sum severance
payments, salary continuation (or similar payments), stay-on bonuses and the
out-of-pocket costs incurred by SMP to provide continued coverage under the
benefit plans specified in Exhibit O including insurance premiums, self-insured
costs and administrative fees paid to third parties. The severance obligations
for any Moog Scheduled TC and Brake Salaried Non- Sales Persons who are
terminated by SMP shall include a 4% gross-up on the severance payment to
compensate such persons for the amount which would have been contributed to the
Xxxxxx Industries Salaried Pension Plan on their behalf if such persons would
have been terminated by Moog. In addition, any Moog Scheduled TC and Brake
Salaried Non-Sales Persons who are terminated by SMP may participate in the
Standard Motor Products 401(k) plan during the severance allowance period and
shall receive medical insurance coverage under SMP's medical plan during the
severance allowance period on the same terms as Active Employees of SMP. If an
individual was an employee of Moog prior to the Closing Date, then the years of
service for such individual for purposes of determining the severance
obligations shall include such individual's continuous years of service with
Moog as of the Closing Date.
(k) Each Party shall be responsible for all severance obligations
payable to any hourly employees terminated by such Party without any sharing of
such costs by any other Party.
8.3 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Benefit accruals of the Active Employees of Moog who become
employees of SMP as of the Closing Date under the Moog Employee Plans which are
Employee Pension Benefit Plans shall cease to be effective as of the Closing
Date. Moog shall retain all assets and liabilities under the Moog Employee Plans
which are Employee Pension Benefit Plans subject to the distribution rules of
such plans. Benefits accruals of the Active Employees of SMP who become
employees of Moog as of the Closing Date under the SMP Employee Plans which are
Employee Pension Benefit Plans shall cease to be effective as of the Closing
Date. SMP shall retain all assets and liabilities under the SMP Employee Plans
which are Employee Pension Benefit Plans subject to the distribution rules of
such plans.
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(b) Moog shall, or shall cause its Affiliates to, take any and all
necessary steps to fully vest the accrued benefits and to eliminate any and all
service requirements related to the commencement of benefits under each Moog
Employee Plan which is an Employee Pension Benefit Plan or an Employee Stock
Ownership Plan (as defined under Section 407(c)(6) of ERISA) with respect to
each Active Employee of Moog who becomes an employee of SMP as of the Closing
Date. SMP shall, or shall cause its Affiliates to, take any and all necessary
steps to fully vest the accrued benefits and to eliminate any and all service
requirements related to the commencement of benefits under each SMP Employee
Plan which is an Employee Pension Benefit Plan or an Employee Stock Ownership
Plan (as defined under Section 407(c)(6) of ERISA) with respect to each Active
Employee of SMP who becomes an employee of Moog as of the Closing Date.
(c) Moog shall, or shall cause its Affiliates to, take any and all
necessary steps to allow an Active Employee of Moog who becomes an employee of
SMP on the Closing Date and who has an outstanding loan from a Moog Employee
Plan to continue to repay the loan over its scheduled duration. SMP shall, or
shall cause its Affiliates to, take any and all necessary steps to allow an
Active Employee of SMP who becomes an employee of Moog on the Closing Date and
who has an outstanding loan from a SMP Employee Plan to continue to repay the
loan over its scheduled duration.
(d) Moog shall, or shall cause its Affiliates to, retain all
liability to provide retiree welfare benefits under Moog Employee Plans
maintained for such purpose to Active Employees of Moog who become employees of
SMP and are eligible for such benefits at the Closing Date (or would be eligible
for such benefits if they retired as of the Closing Date). SMP shall, or shall
cause its Affiliates to, retain all liability to provide retiree welfare
benefits under SMP Employee Plans maintained for such purpose to Active
Employees of SMP who become employees of Moog and are eligible for such benefits
at the Closing Date (or would be eligible for such benefits if they retired as
of the Closing Date).
(e) Subject to Section 8.3(f) below, the participation of the
Active Employees of Moog who become employees of SMP and their beneficiaries and
dependents under the Moog Employee Plans which are Employee Welfare Benefit
Plans shall cease to be effective as of the Closing Date and the participation
of the Active Employees of SMP who become employees of Moog and their
beneficiaries and dependents under the SMP Employee Plans which are Employee
Welfare Benefit Plans shall cease to be effective as of the Closing Date. Moog
shall retain all assets under the Moog Employee Plans which are Employee Welfare
Benefit Plans and shall retain any liability to Active Employees who become
employees of SMP and their beneficiaries and dependents for any claim resulting
from an Incident occurring before the Closing Date (other than claims for
ongoing treatment after the Closing Date of chronic ailments diagnosed by a
physician before the Closing Date). SMP shall retain all assets under the SMP
Employee Plans which are Employee Welfare Benefit Plans and shall retain any
liability to Active Employees who become employees of Moog and their
beneficiaries and dependents for any claim resulting from an Incident occurring
before the Closing Date (other than claims for ongoing treatment after the
Closing Date of chronic ailments diagnosed by a physician before the Closing
Date). For purposes of this Agreement, "INCIDENT" shall mean the occurrence of
an event, including without limitation, death, accident, disease, injury or
disability, which gives
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rise to a right to a benefit under an Employee Welfare Benefit Plan and which,
if a disease or disability, shall be deemed to take place at the time of
diagnosis by a physician.
(f) At the request of SMP, Moog shall, or shall cause its Affiliates
to, continue to provide coverage under the Moog Employee Plans which are
Employee Welfare Benefit Plans and which are specified by SMP prior to the
Closing Date, including the payment of premiums, administration of claims and
payment of benefits, as appropriate, on behalf of the Active Employees of Moog
who become employees of SMP on the Closing Date and their beneficiaries and
dependents for a period not to exceed ninety (90) days after the Closing Date in
order to allow SMP or its Affiliates time to install or establish welfare
benefit plans for such employees. SMP shall reimburse Moog or its Affiliates for
all premiums paid by Moog and for all payments relating to claims which are paid
pursuant to this Section 8.3(f) and for all out-of-pocket costs and
administrative expenses incurred by Moog or its Affiliates in connection with
such claim administration services within thirty (30) days after an invoice for
such reimbursement is mailed to SMP. At the request of Moog, SMP shall, or shall
cause its Affiliates to, continue to provide coverage under the SMP Employee
Plans which are Employee Welfare Benefit Plans and which are specified by Moog
prior to Closing, including the payment of premiums, administration of claims
and payment of benefits, as appropriate, on behalf of the Active Employees of
SMP who become employees of Moog on the Closing Date and their beneficiaries and
dependents for a period not to exceed ninety (90) days after the Closing Date in
order to allow Moog or its Affiliates time to install or establish welfare
benefit plans for such employees. Moog shall reimburse SMP or its Affiliates for
all premiums paid by SMP and for all payments relating to claims which are paid
pursuant to this Section 8.3(f) and for all out-of-pocket costs and
administrative expenses incurred by SMP or its Affiliates in connection with
such claim administration service within thirty (30) days after an invoice for
such reimbursement is mailed to Moog. Moog agrees to indemnify and hold SMP
harmless for any liability resulting from the continued operation of the Moog
Employee Plans pursuant to this Section 8.3(f) and SMP agrees to indemnify and
hold Moog harmless for any liability resulting from the continued operation of
the SMP Employee Plans pursuant to this Section 8.3(f).
8.4 SOLICITATION. For two years immediately after the Closing, (i)
without the prior written consent of Moog, SMP agrees not to employ or to
solicit directly or indirectly for employment any of the Brake Transferring
Sales Persons or any of the SMP Scheduled TC and Brake Salaried Non-Sales
Persons who are employed by Moog upon Closing, unless the employment of any such
person is terminated by Moog, and (ii) without the prior written consent of SMP,
Moog agrees not to employ or to solicit directly or indirectly for employment
any of the Moog Transferring Sales Persons or any of the Moog Scheduled TC and
Brake Salaried Non- Sales Persons who are employed by SMP upon Closing, unless
the employment of any such person is terminated by SMP. Each of SMP and Moog
shall cause its Affiliates to honor this covenant.
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ARTICLE IX
ENVIRONMENTAL MATTERS
---------------------
9.1 ENVIRONMENTAL INDEMNIFICATION AND REMEDIATION. (a) Without limiting
----------------------------------------------
SMP's indemnity for Brake Environmental Costs pursuant to Section 11.3(a), but
subject to Sections 9.1(b) and 9.2, from and after the Closing, SMP agrees to
commence and perform in a reasonably timely manner all Remedial Actions with
respect to Brake Environmental Costs in accordance with the procedures set forth
in Section 9.3. Without limiting Moog's indemnity for TC Environmental Costs
pursuant to Section 11.4(a), but subject to Sections 9.1(b) and 9.2, from and
after the Closing, Moog agrees to commence and perform in a reasonably timely
manner all Remedial Actions with respect to TC Environmental Costs in accordance
with the procedures set forth in Section 9.3.
(b) With respect to the Indemnifying Party's obligation pursuant to
Section 9.1(a) above to undertake Remedial Actions, the Indemnified Party shall
have the right, but not the obligation, to assume control over the Remedial
Action, at the Indemnifying Party's expense, if the Indemnifying Party fails to
satisfy the requirements of any Environmental Law for performing the Remedial
Action within the deadlines established by a Governmental Authority (or, in the
event that no such deadline is applicable, the Indemnifying Party fails to
perform the Remedial Action in a reasonable timely manner) and the Indemnifying
Party has not cured such failure within 30 days after receipt of written notice
thereof from the Indemnified Party. However, if the failure to satisfy the
deadline cannot with diligence be cured within such 30 day period and the
Indemnifying Party promptly commences to cure the same and thereafter prosecutes
the curing thereof with diligence, the time within which the Indemnifying
Party's failure may be cured shall be extended for such period as is necessary
to complete the curing thereof with diligence.
(c) SMP shall indemnify Moog for any Liabilities relating to the
tenant's obligations under Section 12.4 of the Agreement of Lease dated July 9,
1996 between 2832526 Canada Inc. and EIS Brake Manufacturing Ltd. for the
facility at 00000 Xxxxxxx Xxxx., Xxxxx, Xxxxxx to the extent "Hazardous
Substances" (as defined in such lease) were introduced in or upon the leased
premises prior to Closing. Moog shall indemnify SMP for any Liabilities relating
to the tenant's obligations under Section 12.4 of such lease to the extent
"Hazardous Substances" were introduced in or upon the leased premises after the
Closing Date. For purposes of allocating the Liabilities relating to the removal
of asbestos from the leased premises, the Parties agree that (i) Moog shall be
responsible only for that portion of the Liability determined by the ratio the
numerator of which is the number of days which Moog used asbestos in its
production process at the leased premises following the Closing Date and the
denominator of which is the total number of days that asbestos was used
(including use of asbestos by any third party) in the production process at the
leased premises both before and after Closing Date; and (ii) SMP shall be
responsible for the balance of the Liability.
9.2 LIMITATIONS ON ENVIRONMENTAL INDEMNIFICATION. (a) The Indemnified
---------------------------------------------
Party shall not be entitled to indemnification for Environmental Costs hereunder
or reimbursement under Section 9.1(b), and the Indemnifying Party in its
performance of the Remedial Actions referred to in Section 9.1(a) shall not be
required to take any actions, to the extent arising out of or
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attributable to measures in excess of or in addition to those required under
Environmental Law or required under any applicable provisions of the current
real estate leases listed in Section 4.8 of the Moog Disclosure Schedule and
Section 5.8 of the SMP Disclosure Schedule. Notwithstanding the foregoing, the
Indemnifying Party shall be responsible for any additional measures and the
costs related thereto resulting from the Indemnified Party's refusal to consent
to the matters described in Sections 9.3(c)(v), (vii), (viii) and (ix), unless
such consent was unreasonably withheld.
(b) The Indemnified Party shall not be entitled to indemnification
for Environmental Costs hereunder or reimbursement under Section 9.1(b) for
measures regarding asbestos if the measures are not required under Environmental
Law based on the condition of the asbestos as of the Closing Date or if the
measures are required as the result of building modifications or renovations
following the Closing Date.
9.3 CERTAIN PROCEDURES. (a) Subject to Sections 9.3(b), (c) and (d),
-------------------
the Indemnifying Party shall have authority and control with respect to
obtaining the resolution of issues involving any Remedial Action relating to
Environmental Costs covered by the Indemnifying Party's indemnity hereunder,
including but not limited to: (i) negotiating any compliance schedule,
compliance orders, clean-up standards, permit, consent agreement, consent order,
memorandum of understanding or other agreement, which may be required by any
Governmental Agency; (ii) contesting, defending, settling or otherwise resolving
complaints, directives or other demands by any such Governmental Agency; (iii)
bringing claims against, defending against and settling or otherwise resolving
claims brought by, or otherwise establishing liability of or to third parties;
and (iv) implementing any measures necessary to satisfy the agreements or other
terms resulting from any such negotiation, litigation, direction by a
Governmental Agency, or other resolution (such matters, collectively, the
"RESOLUTION OF PRE-CLOSING ENVIRONMENTAL ISSUES"). Subject to the parties
agreeing to a site access agreement and subject to Sections 9.3(b), (c) and (d),
the Indemnified Party hereby grants to the Indemnifying Party and the agents,
employees, consultants and contractors of the Indemnifying Party, upon giving
the Indemnified Party reasonable advance written notice, the right to enter the
premises of the Indemnified Party to perform such Remedial Actions as are
necessary to obtain information for, or to implement the terms of, any
Resolution of Pre-Closing Environmental Issues. Prior to commencing any site
work, the Indemnifying Party will provide the Indemnified Party with a
description of the work and a schedule for completion of the work.
(b) Notwithstanding any other provision in this Section 9, the
Party managing the Resolution of Pre-Closing Environmental Issues shall keep the
other Party reasonably informed of all material developments concerning the
Resolution of Pre-Closing Environmental Issues including: (i) promptly
furnishing the other Party a copy of all written correspondence and other
documents to or from any Governmental Agency or other third party; (ii) giving
the other Party reasonable advance notice of, and the opportunity to attend, any
meeting with any Governmental Agency or other third party; and (iii) reasonably
in advance of submission to a Governmental Agency or other third party,
furnishing the other Party a copy of any draft pleading, compliance schedule,
scope of work, Remedial Action plan, clean-up standard, permit, compliance
order, consent agreement, consent order, memorandum of understanding or other
agreement, consultant's report, and other material documents.
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(c) Notwithstanding any other provision in this Section 9, the
Party managing the Resolution of Pre-Closing Environmental Issues shall not,
without prior consultation with the other Party (and, in the case of (v), (vii),
(viii) and (ix) below, the consent of the Indemnified Party which consent shall
not be unreasonably withheld): (i) conclude any compliance schedule, compliance
order, scope of work, Remedial Action plan, clean-up standard, permit, consent
agreement, consent order, memorandum of understanding or other agreement; (ii)
settle or otherwise resolve complaints, directives or other demands by any
Governmental Agency or other third party; (iii) bring a claim against or
otherwise establish liability of or to third parties; (iv) extend schedules for
remediation or other activities; (v) accept property, use or deed restrictions
or affirmative cap maintenance or other similar property or use restrictions on
property owned by the Indemnified Party; (vi) contest decisions by Governmental
Agencies; (vii) treat, dispose of, transfer or excavate any sediment, soil,
surface or groundwater or other material on the premises of the Indemnified
Party or any off-site location; (viii) install any assessment, investigation,
remediation or monitoring system, or design and construct any cap; or (ix)
perform any Remedial Actions which will materially interfere with the operation
of the business by the Indemnified Party or materially and adversely effect the
valuation of the Indemnified Party's property.
(d) When managing the Resolution of Pre-Closing Environmental
Issues, the Indemnifying Party shall be liable for any Environmental Costs
arising from any material damage caused by, and the restoration of any
improvement materially affected by, any implementation, entry, performance,
inspection, treatment, disposal, excavation, operation, or maintenance described
herein.
ARTICLE X
CONDITIONS TO OBLIGATION TO CLOSE
---------------------------------
10.1 CONDITIONS TO OBLIGATION OF BOTH PARTIES. The obligation of each
-----------------------------------------
Party to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction or waiver of the following conditions:
(a) The waiting period (and any extensions thereof) under the H-S-R
Act shall have expired or shall have been terminated and the Parties and their
Affiliates shall have received all other material authorizations, consents and
approvals of Governmental Agencies required for the consummation of the Closing,
subject to no conditions which a party reasonably objects to.
(b) There shall be no injunction, restraining order, stipulation,
judgment, order, decree or ruling of any Governmental Agency of competent
jurisdiction that is in effect, no litigation or proceeding brought by a
Governmental Agency shall be pending, and no litigation or proceeding shall be
threatened by a Governmental Agency, which in any case: (i) restrains or
prohibits, or seeks to restrain or prohibit, the consummation of the
transactions contemplated by this Agreement, or (ii) conditions or seeks to
condition the consummation of the transactions contemplated by the Agreement on
the matters referred to in clauses (i) or (ii) of Section 6.3(b). For the
purposes of this Agreement, a litigation or proceeding shall be deemed to be
"threatened" by (i) the U.S. Federal Trade Commission, only if the U.S. Federal
Trade Commission shall have publicly announced or shall have advised Moog or SMP
that the U.S. Federal Trade Commission has authorized its staff to commence
administrative proceedings
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or proceedings in Federal court or (ii) the Antitrust Division of the U.S.
Department of Justice, only if the U.S. Department of Justice shall have
publicly announced or shall have advised Moog or SMP that the Assistant Attorney
General has determined to commence proceedings in Federal court, in either case,
seeking any of the remedies described in the preceding sentence.
10.2 CONDITIONS TO OBLIGATION OF MOOG. The obligation of Moog to
---------------------------------
consummate the transactions to be performed by it in connection with Closing is
subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties of SMP set forth in Article
V shall be true and correct in all material respects at and as of the Closing
Date, without giving effect to any disclosures made by SMP or its Affiliates to
Moog after the date of this Agreement through the Closing pursuant to Section
6.9 of this Agreement or otherwise.
(b) SMP shall have performed and complied in all material respects
with all of the covenants to be performed by it prior to Closing.
(c) SMP and its Affiliates shall have procured all consents,
releases or agreements specified in Section 10.2 of the Moog Disclosure
Schedule.
10.3 CONDITIONS TO OBLIGATION OF SMP. The obligation of SMP to
--------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties of Moog set forth in Article
IV shall be true and correct in all material respects at and as of the Closing
Date, without giving effect to any disclosures made by Moog or its Affiliates to
SMP after the date of this Agreement through the closing pursuant to Section 6.9
of this Agreement or otherwise.
(b) Moog shall have performed and complied in all material respects
with those covenants to be performed by it prior to Closing.
(c) Moog and its Affiliates shall have procured all consents,
releases or agreements specified in Section 10.3 or the SMP Disclosure Schedule.
10.4 WAIVER; RIGHT TO PROCEED. If any of the conditions specified in
-------------------------
Section 10.2 hereof have not been satisfied, Moog, in addition to any other
rights that may be available to it, may waive its rights to have such conditions
satisfied at Closing and may proceed with the transactions contemplated hereby,
and if any of the conditions specified in Section 10.3 hereof have not been
satisfied at Closing, SMP, in addition to any other rights that may be available
to it, may waive its rights to have such conditions satisfied and may proceed
with the transactions contemplated thereby; PROVIDED, HOWEVER, that any such
waiver by Moog or SMP, as the case may be, shall in no way diminish or eliminate
any other rights that may be available to the waiving party related to or as a
result of the waived condition or conditions not having been satisfied at
Closing.
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ARTICLE XI
REMEDIES FOR BREACHES OF THIS AGREEMENT
---------------------------------------
11.1 SURVIVAL. All representations and warranties of the Parties
---------
contained in this Agreement shall survive the Closing and continue in full force
and effect but will expire one (1) year after the Closing Date, except for
representations and warranties with respect to environmental matters and Taxes,
which shall continue in full force and effect until six (6) months following the
expiration of the applicable statute of limitations. All covenants and
agreements of the Parties contained in this Agreement (including without
limitation all covenants and agreements in Article VII hereof) shall survive in
accordance with their terms or without termination if no termination date is
specified or clearly evident from the context in which such provisions appear.
11.2 ASSERTION OF CLAIMS. Each Party must assert any claim involving a
--------------------
representation or warranty against the other Party before expiration of any
applicable survival period. Notwithstanding any contrary provision, as long as
the claim is asserted timely, the claim will continue to be valid and assertible
even though the survival period may subsequently expire before the claim is
resolved.
11.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF MOOG. Subject to the
-----------------------------------------------
requirements of Sections 11.2, 11.5 and 11.6, SMP agrees to defend, indemnify
and save harmless Moog, its Affiliates and their directors, officers and
employees ("MOOG'S INDEMNIFIED GROUP") from and against the entirety of any
Adverse Consequences that any of Moog's Indemnified Group may suffer through and
after the date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by:
(a) any Brake Retained Liability, including SMP's failure to pay or
satisfy any such Brake Retained Liability;
(b) the Brake Retained Assets;
(c) any TC Assumed Liability, including SMP's failure to pay or
satisfy any such TC Assumed Liability;
(d) SMP's operation of, or any act or omission of SMP occurring in
respect of, the TC Assets or the TC Business after the Closing Date;
(e) the breach of a representation or warranty of SMP contained
herein;
(f) the breach or non-performance of any covenant or agreement of
SMP contained herein;
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(g) any Liability for expenses incurred by SMP in connection with
or resulting from or attributable to the transactions contemplated by this
Agreement; and
(h) any Liability including lost wages or other benefits, based
upon, arising from or related to the order of the National Labor Relations Board
dated October 31, 1997 concerning unfair labor practices at Seller's facility in
Berlin, Connecticut and any appeals thereof or related proceedings, to the
extent such Liabilities relate to payments due or paid or benefits provided for
the time of employment prior to Closing.
11.4 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SMP. Subject to the
----------------------------------------------
requirements of Sections 11.2, 11.5 and 11.6, Moog agrees to defend, indemnify
and save harmless SMP, its Affiliates and their directors, officers and
employees ("SMP'S INDEMNIFIED GROUP") from and against the entirety of any
Adverse Consequences that any of the SMP's Indemnified Group may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by:
(a) any TC Retained Liability, including Moog's failure to pay or
satisfy any such TC Retained Liability;
(b) the TC Retained Assets;
(c) any Brake Assumed Liability, including Moog's failure to pay or
satisfy any such Brake Assumed Liability;
(d) Moog's operation of, or any act or omission of Moog occurring
in respect of, the Brake Assets or the Brake Business after the Closing Date;
(e) the breach of a representation or warranty of Moog contained
herein;
(f) the breach or non-performance of any covenant or agreement of
Moog contained herein;
(g) any Liability for expenses incurred by Moog in connection with
or resulting from or attributable to the transactions contemplated by this
Agreement;
(h) any claims by Active Employees of the Brake Business (who
become employees of Moog following the Closing Date) to the extent such claims
are based on or arise out of asbestos exposure after the Closing Date at the
facility of the Brake Business located at 00000 Xxxxxxx Xxxx., Xxxxx, Xxxxxx.
Moog's liability to indemnify SMP under this subsection (h) shall in no event
exceed the portion of such Active Employees' claim determined by multiplying
such claim by a fraction the numerator of which is the number of full months
that Moog continued to manufacture products containing asbestos at such facility
after the Closing Date and the denominator of which is the aggregate number of
full months that such employee was employed by SMP and Moog; and
(i) any Liability including lost wages or other benefits, based
upon, arising from or related to the order of the National Labor Relations Board
dated October 31, 1997 concerning
- 84 -
unfair labor practices at Seller's facility in Berlin, Connecticut and any
appeals thereof or related proceedings, to the extent such Liabilities relate to
payments due or paid or benefits provided for the time of employment after the
Closing.
11.5 MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
--------------------------------
the Indemnified Party with respect to any matter which may give rise to a claim
for indemnification against the Indemnifying Party, then the Indemnified Party
shall notify the Indemnifying Party thereof promptly; PROVIDED, HOWEVER, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
damaged. In the event any Indemnifying Party notifies the Indemnified Party
within thirty (30) days after the Indemnified Party has given notice of the
matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the third party seeks
injunctive relief or criminal sanctions), (iii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the matter without the prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or delayed), and (iv) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld or
delayed). In the event the Indemnifying Party fails to notify the Indemnified
Party within thirty (30) days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it reasonably may deem appropriate without waiving
any right to indemnity therefor by the Indemnifying Party.
11.6 DE MINIMIS BREACHES OF REPRESENTATIONS AND WARRANTIES; DEFINITION
-----------------------------------------------------------------
OF "MATERIAL." An Indemnifying Party will have no obligation to indemnify an
--------------
Indemnified Party pursuant to Section 11.3(e) or Section 11.4(e) as the case may
be, until such time, if any, as the aggregate Adverse Consequences suffered by
the Indemnified Party with respect to such breaches exceeds $100,000, and then
only to the extent the aggregate Adverse Consequences suffered by the
Indemnified Party exceed $100,000. Notwithstanding the foregoing, a breach of
SMP's representations and warranties under Section 5.28 shall not be subject to
this Section 11.6 and shall override the indemnity by Moog for Brake Assumed
Liabilities under Sections 1.11(g) and (h).
11.7 TAX INDEMNIFICATION. (a) Notwithstanding any provisions herein to
--------------------
the contrary, Moog agrees to indemnify and hold SMP harmless from and against
any liability for Taxes of Moog or the TC Business for any period prior to the
Closing Date, PROVIDED, HOWEVER, that such indemnification shall not apply to
the extent that a liability for Taxes has been reserved and is reflected on the
Moog Final Closing Balance Sheet.
- 85 -
(b) Notwithstanding any provisions herein to the contrary, SMP
agrees to indemnify and hold Moog harmless from and against any liability for
Taxes of SMP or the Brake Business for any period prior to the Closing Date,
PROVIDED, HOWEVER, that such indemnification shall not apply to the extent that
a liability for Taxes has been reserved and is reflected on the SMP Final
Closing Balance Sheet.
11.8 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
--------------------------------
provisions and any other indemnification provisions contained in this Agreement
are the exclusive remedies for, and are specifically meant to be in derogation
of, any statutory, common law or other remedy that a Party may have for breach
of representation, warranty, or covenant hereunder.
ARTICLE XII
TERMINATION
-----------
12.1 TERMINATION OF AGREEMENT. Subject to the parties' obligations as
-------------------------
provided in Section 6.1, this Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Moog and SMP;
(b) by Moog or SMP at any time after April 30, 1998, if the
conditions set forth in Article X shall not have been satisfied or waived for
any reason other than the failure or refusal of the party seeking to terminate
to perform any of its obligations hereunder;
(c) by Moog or SMP if any Governmental Agency having competent
jurisdiction shall have issued an injunction, restraining order, stipulation,
judgment, order, decree or ruling, restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;
(d) by Moog, if there has been a material violation or breach by
SMP of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of Moog
impossible and such violation or breach has not been waived by Moog;
(e) by SMP, if there has been a material violation or breach by
Moog of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of SMP
impossible and such violation or breach has not been waived by SMP;
(f) by Moog, if a Governmental Agency of competent jurisdiction has
commenced administrative or court proceedings, or such proceedings have been
"threatened" (as provided in Section 10.1(b)), seeking to restrain or prohibit
the consummation of the transactions contemplated by this Agreement or seeking
to condition the consummation of such transactions on matters referred to in
clauses (i) or (ii) of Section 6.3(b) so as to materially reduce the benefits to
Moog of the transactions contemplated by this Agreement or impose conditions
that are reasonably unacceptable.
- 86 -
(g) by SMP, if a Governmental Agency of competent jurisdiction has
commenced administrative or court proceedings, or such proceedings have been
"threatened" (as provided in Section 10.1(b)), seeking to restrain or prohibit
the consummation of the transactions contemplated by this Agreement or seeking
to condition the consummation of such transactions on matters referred to in
clauses (i) or (ii) of Section 6.3(b) so as to materially reduce the benefits to
SMP of the transactions contemplated by this Agreement or impose conditions that
are reasonably unacceptable.
12.2 PROCEDURE AND EFFECT OF TERMINATION.
------------------------------------
In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by any or all of the Parties pursuant to
Section 12.1, written notice thereof shall forthwith be given to the other
Parties and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the Parties hereto.
If this Agreement is terminated as provided herein:
(a) upon request therefor, each Party will redeliver all documents,
work papers and other material of any other Party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same;
(b) each Party hereto will use its best efforts to prevent
disclosure to third persons of all information received by either Party with
respect to the business of the other Party or its subsidiaries (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any Governmental Agency), except (i) as may be required
by applicable law; and (ii) as is permitted by this Agreement; and
(c) none of the Parties hereto shall have any liability or further
obligation to the other Party to this Agreement pursuant to this Agreement
except as stated in this Section 12.2 and in Sections 7.6 and 13.9, provided
that nothing herein shall relieve any party from liability for any breach of
this Agreement.
ARTICLE XIII
GENERAL MATTERS
---------------
13.1 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
-----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns. Nothing contained herein shall be construed as
constituting any change, modification or alteration in the at-will employment
status of any employee employed by any of the Parties or their respective
Affiliates. Nothing in this Agreement, expressed or implied, shall confer upon
any employee of Moog or SMP, legal representative thereof, or any collective
bargaining agent any rights or remedies, including, without limitation, any
right to employment, or continued employment for any specified period or the
benefits, terms and conditions thereof, of any nature or kind whatsoever under
or by reason of this Agreement.
- 87 -
13.2 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
-----------------
referred to in Section 6.5(c) (including the Schedules, Exhibits and documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that relate to the subject matter hereof.
Each of the Parties may rely on the representations and warranties contained in
this Agreement, notwithstanding any due diligence done by such Party.
13.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
--------------------------
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as otherwise provided herein, 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. Any Party may (i) assign
any of its rights and interests under this Agreement to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations under this Agreement (in any or all of which cases such Party
nonetheless shall remain liable and responsible for the performance of all of
its obligations under this Agreement). Except for assignments to Affiliates
permitted by the previous sentence, any assignment without proper written
approval of the other Party shall be null and void.
13.4 COUNTERPARTS. This Agreement may be executed in two (2) or more
-------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
13.5 HEADINGS. The article and section headings contained in this
---------
Agreement and in the Schedules are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
13.6 NOTICES. All notices and other communications under this Agreement
--------
shall be in writing and shall be deemed given (i) when delivered by hand or 5
days after deposit in the mail, certified, return receipt requested, (ii) when
transmitted by facsimile transmission, with written confirmation of receipt, or
(iii) one day after being sent for overnight delivery by Express Mail, Federal
Express or other nationally recognized express delivery service, to the
addressee at the following addresses or fax numbers (or to such other address or
fax number as a Party may specify from time to time by notice hereunder;
provided that notices of a change of address shall be effective only upon
receipt thereof):
IF TO SMP: c/o Standard Motor Products, Inc.
00-00 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO: Xxxxxx Xxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
- 88 -
IF TO MOOG: c/o Cooper Industries, Inc.
Texas Commerce Tower
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO: Moog Automotive Company
0000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
13.7 AMENDMENTS; WAIVERS; CONSENTS. No amendment or modification of or
------------------------------
supplement to any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties hereto. Except as otherwise
provided in this Agreement, any failure of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the Party
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
a Party, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 13.7.
13.8 SEVERABILITY. If for any reason any term or provision of this
-------------
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature. If
for any reason any term or provision containing a restriction set forth herein
is held to cover an area or to be for a length of time which is unreasonable, or
in any other way is construed to be too broad or to any extent invalid, such
term or provision shall not be determined to be null, void and of no effect, but
to the extent the same is or would be valid or enforceable under applicable law,
any court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area, time
period and other provisions (not greater than those contained herein) as shall
be valid and enforceable under applicable law.
13.9 EXPENSES. Except as otherwise expressly provided herein, each
---------
Party shall bear its own expenses (including all fees, costs and expenses of its
attorneys, consultants, investment bankers, accountants, advisers or other
agents or representatives) incident to or incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder and thereunder.
13.10 CONSTRUCTION. The language used in this Agreement will be deemed
-------------
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute
- 89 -
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. 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 that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
13.11 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that the
---------------------
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Each Party agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any remedy to which they may be
entitled, at law or in equity.
13.12 BULK SALES.
-----------
(a) Moog acknowledges that SMP will not comply with the
requirements of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement and Moog waives compliance with such
laws.
(b) SMP acknowledges that Moog will not comply with the
requirements of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement and waives compliance with such
laws.
13.13 GOVERNING LAW. This Agreement shall be governed by and be
--------------
construed in accordance with the substantive laws of the State of Texas
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of law) as to all matters, including matters of validity,
construction, effect, performance and remedies.
ARTICLE XIV
DISPUTE RESOLUTION
------------------
14.1 SENIOR OFFICERS. Any claim or dispute between Moog and SMP arising
----------------
out of or in connection with this Agreement or any alleged breach hereof or
thereof except those to which the arbitration provisions in Section 2.12 apply
(a "CLAIM") shall be submitted for resolution to a senior officer of each of SMP
and Moog, as designated by their respective chief executive officers, who shall
meet within thirty (30) days of such submission to seek in good faith an
amicable settlement.
- 90 -
14.2 BINDING ARBITRATION.
--------------------
(a) GOVERNING PRINCIPLES. If any Claim not settled by the Parties
---------------------
within sixty (60) days after written notice of the Claim is first given by
either Party to the other, then either Party may submit a written demand for
arbitration and the Claim shall be finally settled by arbitration under the
Commercial Arbitration Rules and the Guidelines for Expediting Larger, Complex
Commercial Arbitrations of the American Arbitration Association (the "RULES"),
and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction over it.
(b) SELECTION AND QUALIFICATION OF THE ARBITRATOR. If the Claim
----------------------------------------------
does not exceed $1,000,000, there shall be one arbitrator. If the Claim is
$1,000,000 or more, there shall be three arbitrators (all arbitrators are
hereafter collectively referred to as the "ARBITRATOR"). The Parties shall
endeavor to agree on the selection of an Arbitrator, but if no agreement has
been reached within thirty (30) days of claimant's demand for arbitration the
Arbitrator shall be selected by the American Arbitration Association. The
Arbitration shall be held in New York, New York. The Arbitrator shall conduct
himself or themselves as a neutral, and be subject to disqualification pursuant
to Section 19 of the Rules. The Arbitrator shall be compensated at such
Arbitrator's normal hourly or per diem rates for all time spent in connection
with the arbitration proceeding, and pending final award, appropriate
compensation and expenses shall be advanced equally by the Parties.
(c) PRELIMINARY HEARING. Within thirty (30) days after the
--------------------
Arbitrator has been appointed, a preliminary hearing among the Arbitrator and
counsel for the Parties shall be held for the purpose of evolving a written plan
for the management of the arbitration, that shall promote the efficient,
expeditious and cost-effective conduct of the proceeding.
(d) INTERIM RELIEF FROM A COURT. Either Party may request a court
----------------------------
to provide interim or provisional relief, and such request shall not be deemed
incompatible with the agreement to arbitrate or as a waiver of that agreement.
(e) POWERS OF THE ARBITRATOR AND ARBITRATION PROCEDURES. The
----------------------------------------------------
Arbitrator shall permit and facilitate such discovery as it determines is
appropriate, including prehearing depositions, particularly of witnesses who
will not appear, and orders to protect the confidentiality of proprietary
information, trade secrets, and other sensitive information disclosed in
discovery. Papers, documents and written communications shall be delivered by
the Parties directly to each other, the Arbitrator, and the American Arbitration
Association tribunal administrator. The Arbitrator shall actively manage the
proceeding to make it fair, expeditious, economical and less burdensome and
adversarial than litigation. The Arbitrator may limit the issues, limit the time
for each Party to present its case, exclude testimony and other evidence that it
deems irrelevant, cumulative or inadmissible, and order that the direct
testimony of witnesses be furnished by written sworn statement. All documents
that a Party proposes to offer in evidence, except for those objected to by an
opposing Party, shall be self-authenticated. There shall be a stenographic
transcript of the proceedings, the cost of which shall be borne equally by the
Parties, pending the final award. Any Claim submitted to arbitration shall be
resolved in accordance with Title 9 of the U.S. Code (U.S. Arbitration Act),
which shall govern the interpretation, enforcement and proceedings pursuant to
this arbitration provision.
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(f) RENDERING OF AWARD. The award rendered by the Arbitrator shall
-------------------
be itemized, shall not include punitive damages but may include all or a part of
a Party's reasonable attorneys' fees, and shall state the reasoning on which it
rests. Before rendering the final award, the Arbitrator shall submit to the
Parties an unsigned draft of the proposed award, and each Party may deliver,
within fifteen (15) days after receipt of such draft, a written statement of
alleged errors of fact, computation, law or otherwise. The Arbitrator may
disregard any Party's statement to the extent that it is in substance an
application for reargument. Within twenty (20) days after receipt of such Party
statements, the Arbitrator shall render the final award.
* * * * * * * * * * * *
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
SMP MOTOR PRODUCTS, LTD.
By:___________________________________
Name: XXXXXXX X. XXXXXX
Title: SENIOR VICE PRESIDENT/ CFO
STANDARD MOTOR PRODUCTS, INC.
By:___________________________________
Name:: XXXXXXX X. XXXXXX
Title: SENIOR VICE PRESIDENT/ CFO
XXXXXX INDUSTRIES (CANADA) INC.
By:___________________________________
Name: XXXXX X. XXXXX
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
MOOG AUTOMOTIVE COMPANY
By:___________________________________
Name: XXXXX X. XXXXX
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
MOOG AUTOMOTIVE PRODUCTS, INC.
By:___________________________________
Name: XXXXX X. XXXXX
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
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