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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
between
FEDERAL-MOGUL IGNITION COMPANY
and
AVIATION ACQUISITION CORPORATION
dated April 29, 2001
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TABLE OF CONTENTS
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Article Heading
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I. Definitions
II. Purchase and Sale of the Assets and Liabilities
III. Closing
IV. Representations and Warranties of Federal-Mogul
V. Representations and Warranties of Buyer
VI. Covenants of Buyer and Federal-Mogul
VII. Conditions to Federal-Mogul's Obligations
VIII. Conditions to Buyer's Obligations
IX. Actions by Federal-Mogul and Buyer After the Closing
X. Miscellaneous
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
__________, 2001, is by and among Aviation Acquisition Corporation, a Delaware
corporation ("Buyer"), and Federal-Mogul Ignition Company, a Delaware
corporation ("Federal-Mogul").
RECITALS
A. Among other businesses and activities, Federal-Mogul is engaged in
the business formerly operated by Federal-Mogul Aviation, Inc. of
researching, designing, developing, engineering, manufacturing,
marketing, distributing and selling ignition systems and related
components and other products, including, without limitation, igniters,
spark plugs, exciters, ignition leads, oil filters, power supplies and
ignition harnesses, which business: (a) for turbine and piston aircraft
and other aerospace engine applications, includes, without limitation,
the assets and liabilities reflected in the Audited Financial
Statements and the activities conducted by Federal-Mogul at the
facility (including offices, improvements and an administration
building) located at 0000 Xxx Xxxxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxxxx (the
"Facility") and (b) for industrial applications consists of the
activities currently or at Closing being conducted by Federal-Mogul at
or from the Facility and the assets and liabilities reflected in the
Audited Financial Statements, in each of (a) and (b) also including the
related activities conducted by salespersons outside the Facility
including, without limitation, those sales persons located in Texas and
Belgium (such business hereinafter referred to as "the Business").
B. Federal-Mogul desires to sell such assets and liabilities of the
Business, and Buyer desires to purchase such assets and liabilities,
all on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS
As used herein, the terms below shall have the following meanings. Any of these
terms, unless the context otherwise requires, may be used in the singular or
plural, depending upon the reference.
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"Accrued Benefit Obligations" shall have the meaning described in
Section 2.04(h) of this Agreement.
"Action" shall mean any action, claim, suit, litigation, proceeding,
labor dispute, arbitral action, governmental audit, inquiry, criminal
prosecution, investigation or unfair labor practice charge or
complaint.
"Asbestos Claims" shall mean any and all past, present and future
Actions, charges, demands, disputes, controversies, audits, inquiries,
causes of action, allegations, assertions and accusations for any
damage of any and every kind and nature (whether actual, direct,
indirect, special, incidental, consequential, punitive or otherwise),
including, without limitation, any conditions, diseases, illnesses,
sicknesses or other personal injuries (whether physical, emotional or
otherwise and whether or not diagnosed or diagnosable on or before the
Closing Date) suffered by or affecting any Person, caused by (or
allegedly caused by), directly or indirectly, in whole or in part,
asbestos and/or asbestos-containing products, goods, components, parts,
assemblies, sub-assemblies or other items and/or the handling,
production or manufacture thereof and arising out of, resulting from or
relating to (or allegedly arising out of, resulting from or relating
to) (i) any products, goods, components, parts, assemblies,
sub-assemblies or other items containing or incorporating asbestos that
are or were designed, manufactured, produced, built, fabricated,
handled, assembled, sold or distributed by Federal-Mogul, Federal-Mogul
Corporation or any of their respective affiliates or Subsidiaries
(including, without limitation, any predecessor thereof and/or any
former affiliate or Subsidiary thereof) or any of them or any other
firm, corporation or other entity or Person for or with respect to
which the Federal-Mogul Entities or any of them is or may be liable or
responsible (collectively, the "Federal-Mogul Entities") at any time,
(ii) any past, present or future facilities or properties of the
Federal-Mogul Entities or any of them and/or (iii) any acts or
omissions of the Federal-Mogul Entities or any of them.
"Assets" shall have the meaning described in Section 2.01 of this
Agreement.
"Assumed Liabilities" shall have the meaning described in Section 2.03
of this Agreement.
"Audited Financial Statements" shall mean the balance sheets and
statements of operations and cash flow attached as Exhibit A.
"Aviation Intellectual Property" shall mean all Intellectual Property
that is owned by Federal-Mogul or by a third party and that is used or
held for use (whether by license, sublicense or otherwise) in the
conduct of the Business.
"Balance Sheet" shall mean the audited balance sheet as of December 31,
2000, as contained in the Audited Financial Statements.
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"Benefit Arrangement" shall mean any employment, consulting, severance
or other similar contract, arrangement or policy and each plan,
arrangement, program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health or accident
benefits (including, without limitation, any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which is not a Welfare Plan or
Pension Plan, and which (1) is entered into, maintained, contributed to
or required to be contributed to, as the case may be, by or on behalf
of the Business or (2) covers any employee of the Business (with
respect to their relationship with such entity).
"Books and Records" shall mean all books, records, lists, ledgers,
files, reports, plans, drawings and operating records of any kind
pertaining to the Business.
"Burlington Agreements" shall mean agreements substantially in the form
attached as Exhibit G.
"Business" shall have the meaning described in Recital A to this
Agreement.
"Buyer" shall have the meaning described in the preamble to this
Agreement.
"Buyer Indemnified Parties" shall have the meaning described in Section
9.03(a) of this Agreement.
"Cambridge Agreements" shall mean agreements substantially in the form
attached as Exhibit H.
"Claim" shall have the meaning described in Section 9.07(b) of this
Agreement.
"Closing" shall have the meaning described in Section 3.01 of this
Agreement.
"Closing Date" shall have the meaning described in Section 3.01 of this
Agreement.
"Closing Date Balance Sheet" shall have the meaning described in
Section 2.07(a) of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Condition" shall mean an occupational condition, cumulative trauma,
hearing loss, illness, sickness, disease or other injury.
"Contract" shall mean any of the agreements, contracts, licenses,
leases, notes, evidence of indebtedness, letters of credit, franchise
agreements, covenants not to compete, employment agreements,
instruments and other written or oral commitments concerning the
Business or to which the Business is subject.
"Date of Loss" shall mean the date of the incident where the incident
is a discrete occurrence such as a traumatic event, and shall mean the
date that a Hired Employee learned the nature of the problem (for
example, the date of diagnosis) where the trauma or other injury arose
over some period of time, all with respect to liabilities and
obligations arising out of or related to workers' compensation under
any Benefit Arrangement or other liability with respect to any
Condition suffered by any Hired Employee resulting from, or arising in
connection with, the employment of the employee by Federal-Mogul in the
Business or by the Buyer.
"Employee Plans" shall mean all Benefit Arrangements, Welfare Plans,
and Pension Plans.
"Encumbrance" shall mean any lien, pledge, option, charge, security
interest, mortgage, restriction, encumbrance or other adverse claim of
any kind or other right of any third party.
"Environmental Laws" shall mean all foreign, federal, state, district,
and local laws, all rules or Regulations promulgated thereunder, and
all orders, consent orders, judgments, Permits, licenses and demand
letters issued, promulgated or entered pursuant thereto which are
applicable to the Business as of the date of this Agreement relating to
pollution, protection, or remediation of the environment or the
control, licensing or qualification of any chemical because of its
deleterious effect on persons or the environment. Environmental Laws
shall include without limitation the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Toxic Substances Control Act ("TSCA"), as amended, the
Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Clean Water
Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air
Act, as amended, and all analogous laws promulgated or issued by any
state or other governmental authority.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any entity which is (or at any relevant
time was) a member of a "controlled group of corporations" with or
under "common control" with Federal-Mogul as defined under Section
414(b) or (c) (establishing a control
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group based on parent / subsidiary relationships or other
affiliations), Section 414(m) (establishing a control group based on
affiliated services group), or Section 414(o) (other, catch-all) of the
Code.
"Escrow Agent" shall mean the Person selected by Federal-Mogul and the
Buyer to act as escrow agent under the Escrow Agreement.
"Escrow Agreement" shall mean the escrow agreement among Federal-Mogul,
the Buyer and Escrow Agent substantially in the form attached hereto as
Exhibit B.
"Escrow Amount" shall have the meaning described in Section 2.06 of
this Agreement.
"Excluded Assets" shall have the meaning described in Section 2.02 of
this Agreement.
"F-M Indemnified Parties" shall have the meaning described in Section
9.04 of this Agreement.
"Facility" shall have the meaning described in Recital A.
"Federal-Mogul" shall have the meaning described in the preamble to
this Agreement.
"Final Effective Date Balance Sheet" shall have the meaning described
in Section 2.07(d) of this Agreement.
"Final Effective Net Working Capital Statement" shall have the meaning
described in Section 2.07(d) of this Agreement.
"Final Payment Date" shall have the meaning described in Section
2.07(d) of this Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect from time to time.
"Guarantee and Support Agreement" shall mean that certain Guarantee and
Support Agreement, dated of even date with this Agreement, by and among
TransDigm, Inc., the Buyer and Federal-Mogul Corporation.
"Hired Employees" shall have the meaning described in Section 9.09(a)
of this Agreement.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
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"Indebtedness" shall mean, to the extent related to the Business (a)
all indebtedness of Federal-Mogul, whether or not contingent, for
borrowed money, (b) all obligations of Federal-Mogul for the deferred
purchase price of property or services, (c) all obligations of
Federal-Mogul evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by Federal-Mogul, (e) all obligations, contingent or
otherwise, of Federal-Mogul under acceptance, letter of credit or
similar facilities, (f) all Indebtedness of others referred to in
clauses (a) through (e) above guaranteed directly or indirectly in any
manner by Federal-Mogul, or in effect guaranteed directly or indirectly
by Federal-Mogul, and (g) all Indebtedness referred to in clauses (a)
through (e) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Encumbrance on property (except Trade Accounts
Receivable) owned by Federal-Mogul, even though Federal-Mogul has not
assumed or become liable for the payment of such Indebtedness.
"Indemnified Party" shall mean, with respect to any particular Claim,
the party seeking indemnification from another party pursuant to
Article IX.
"Indemnifying Party" shall mean, with respect to any particular Claim,
any party against whom a claim for indemnification is asserted pursuant
to Article IX.
"Intellectual Property" shall mean (a) inventions (whether patentable
or unpatentable and whether or not reduced to practice), and patents,
patent applications, invention disclosures, and other rights of
invention in the United States and abroad, including any continuing
applications, reissued patents, reexamined patents or other
applications or patents claiming the benefit of the filing date of any
such application or patent (referred to herein as the patent
properties) (b) registered and unregistered trademarks, including
service marks, trade names, trade dress, logos, domain names, product
names and slogans, worldwide, and registrations and applications for
registration thereof, (c) copyrights and other rights of authorship, in
the United States and abroad, and any applications, registrations and
renewals in connection therewith, (d) trade secrets and confidential
business and technical information (collectively which is defined to
include ideas, research and development, know-how, formulas,
technology, compositions, manufacturing and production processes and
techniques, technical data, engineering, production and other designs,
plans, drawings, engineering notebooks, industrial models, software,
specifications, financial, marketing and business data, including
electronic data, pricing and cost information, business and marketing
plans and customer and supplier lists and information), (e) computer
and electronic data, data processing programs, documentation and
software, both source code and object code (including flow charts,
diagrams, descriptive texts and programs, computer print outs,
underlying tapes, computer
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databases and similar items), computer applications and operating
programs and web sites (including all related computer code and
content), (f) rights to exclude others from appropriating any of such
intellectual property including the rights to xxx for and remedies
against past, present and future infringements of any or all of the
foregoing and rights of priority and protection of interests therein
under the laws of the United States and abroad, and (g) any other
proprietary, intellectual property and other rights relating to any or
all of the foregoing.
"Intellectual Property Agreements" shall mean, collectively, the
following agreements to be delivered by Federal-Mogul to Buyer pursuant
to Section 3.02: (a) the Trademark License substantially in the form
attached hereto as Exhibit E-1; (b) the Patent and Technology License
substantially in the form attached hereto as Exhibit E-2; (c) the
Trademark Assignment substantially in the form attached hereto as
Exhibit F-1; and (d) the Patent and Technology Assignment substantially
in the form attached hereto as Exhibit F-2.
"IT Document" shall mean the document attached to this Agreement as
Exhibit J.
"Key Customers" shall have the meaning described in Section 4.19(b) of
this Agreement.
"Key Suppliers" shall have the meaning described in Section 4.19(b) of
this Agreement.
"Losses" shall have the meaning described in Section 9.03 of this
Agreement.
"Material Adverse Effect" shall mean (a) any material adverse effect on
or change with respect to (i) the business, operations, properties,
Assets, liabilities, financial condition or results of operations of
the Business or (ii) the right or ability of Federal-Mogul to
consummate any of the transactions contemplated by this Agreement, or
(b) any event, condition or circumstance or set of facts which could,
with the passage of time, the giving or receipt of notice or the
occurrence or nonoccurrence of any other circumstance, action or event,
constitute a "Material Adverse Effect" described in the foregoing
clause (a).
"Material Contracts" shall have the meaning described in Section
4.21(a) of this Agreement.
"Net Working Capital" shall mean the total current assets of the
Business less the total current liabilities of the Business calculated
pursuant to the methodology set forth on Exhibit C.
"Neutral Auditor" shall have the meaning described in Section 2.07(c)
of this Agreement.
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"Notice of Change" shall have the meaning described in Section 6.05 of
this Agreement.
"Offered Employees" shall have the meaning described in Section 9.09(a)
of this Agreement.
"Organizational Documents" shall mean (a) the articles or certificate
of incorporation of a corporation; (b) the bylaws of a corporation; (c)
the limited liability agreement and the certificate of formation (or
similar document) of a limited liability company; and (d) any amendment
to any of the foregoing.
"Owned Real Property" shall mean the real estate shown on the map
attached as Exhibit D.
"Pension Plan" shall mean any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (1) which the Business or any ERISA
Affiliate of Federal-Mogul maintains, administers, contributes to or is
required to contribute to or since October 9, 1998, has maintained,
administered, contributed to or been required to contribute to and (2)
which covers any employee or former employee of the Business or any
ERISA Affiliate (with respect to their relationship with
Federal-Mogul). This term includes the defined benefit pension plan and
the 401(k) plan currently being offered to or maintained for employees
of the Business.
"Permitted Encumbrances" shall mean (i) mechanics, materialmen's and
similar liens arising in the ordinary course of business with respect
to any amounts not yet due and payable or which are being contested in
good faith through appropriate proceedings, (ii) Encumbrances for Taxes
not yet due and payable, (iii) Encumbrances securing rental payments
under capital lease agreements, (iv) Encumbrances and restrictions on
real property that do not materially interfere with the present uses of
such real property, and (v) other Encumbrances that are not material to
any assets or properties, either individually or in the aggregate, that
arise in the ordinary course of business, and are not incurred in
connection with the borrowing of money.
"Permits" shall mean all licenses, permits, franchises, certificates,
approvals and other governmental authorizations necessary to carry on
the Business in all material respects as presently conducted.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability partnership, limited liability company, joint venture,
estate, trust, association, labor union or other entity or governmental
body.
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"PMA" shall mean Parts Manufacturing Approvals issued by the Federal
Aviation Administration.
"Purchase Price" shall have the meaning described in Section 2.06 of
this Agreement.
"Retained Employees" shall have the meaning described in Section
9.09(b) of this Agreement.
"Regulations" shall mean any laws, statutes, ordinances, regulations,
rules, notice requirements, agency guidelines and orders of any
foreign, federal, state or local government and any other governmental
department or agency, including without limitation Environmental Laws,
energy, motor vehicle safety, public utility, zoning, building and
health codes, occupational safety and health laws and laws respecting
employment practices, employee documentation, terms and conditions of
employment and wages and hours.
"Representative" shall mean any officer, director, principal, attorney,
agent, employee or other representative.
"Sparta Agreement" shall mean an agreement substantially in the form
attached as Exhibit I.
"Subsidiaries" shall mean, with respect to any Person, (i) any
corporations, partnerships, limited liability companies, associations
or other business entities of which (a) 50% or more of the total voting
power of shares or other voting securities outstanding thereof or (ii)
50% or more of the value of shares or other equity ownership interests
outstanding thereof is owned or controlled, directly or indirectly, by
such Person. The term "Subsidiaries" shall also include any partnership
of which such Person is a general partner, and shall include any
limited liability company of which such Person is a managing member.
"Target Working Capital" shall mean $10,325,000.
"Tax" or "Taxes" shall mean all federal, state, local, foreign and
other taxes, assessments or other government charges, including,
without limitation, income, estimated income, gross receipts, profits,
business, license, occupation, franchise, capital stock, real or
personal property, sales, use, transfer, value added, employment or
unemployment, social security, disability, alternative or add-on
minimum, customs, excise, stamp, environmental, commercial rent or
withholding taxes, including interest, penalties and additions in
connection therewith for which Federal-Mogul is or may be liable.
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"Tax Return" shall mean any return, declaration, report, claim for
refund or information return or statement or other tax form relating to
Taxes, including any schedule or attachment thereto.
"Trade Accounts Receivable" shall have the meaning described in Section
2.02(b) of this Agreement.
"Transaction Documents" shall mean the Guarantee and Support Agreement
and the other documents and other items listed in Sections 3.02 and
3.03 of this Agreement.
"Treasury Regulations" shall mean the applicable regulations
promulgated under the Code.
"Vehicles" shall mean all automobiles and other vehicles owned or
leased by the Business.
"Welfare Plan" shall mean any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA (including, without limitation, any
post-retirement welfare benefit plan), (1) which Federal-Mogul or an
affiliate maintains, administers, contributes to or is required to
contribute to, and (2) which covers any employee or former employee of
the Business.
ARTICLE II.
PURCHASE AND SALE OF THE ASSETS AND LIABILITIES
2.01 TRANSFER OF ASSETS. Upon the terms and subject to the conditions herein set
forth, Federal-Mogul agrees to sell, assign, transfer and convey to Buyer, and
Buyer agrees to purchase from Federal-Mogul, on the Closing Date, all of the
tangible and intangible assets, properties and business used or held for use in
the conduct of the Business, whether real or personal, of every kind and nature
and wherever situated, in the form held by Federal-Mogul, except as provided in
Section 2.02, free and clear of all Encumbrances except the Permitted
Encumbrances and as otherwise provided in this Agreement, including, without
limitation, all assets reflected in the Balance Sheet and not disposed of in the
ordinary course of the business as permitted by this Agreement and all assets of
the Business hereafter acquired (the "Assets"), and including, without
limitation, all of the following:
(a) The Aviation Intellectual Property (excluding the Aviation
Intellectual Property to be licensed to Buyer as described in Section 2.02(h).
(b) Subject to Section 2.05 of this Agreement, all Contracts;
(c) Owned Real Property, together with all buildings, fixtures, and
improvements
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erected thereon;
(d) The owned and consigned inventory of the Business, including
supplies, raw materials, work in process and finished goods, both on hand and on
order;
(e) Furniture, fixtures, machinery, equipment and other personal
property located at the Facility as of the Closing Date;
(f) Prepaid items, credits for refunds, and rights of offset relating
exclusively to the Business;
(g) All credit balances of or inuring to Federal-Mogul with respect to
the Business, including rebates from suppliers;
(h) Records relating exclusively to the Business, including, without
limitation, accounting records, customer lists, sales records, credit data and
other information regarding customers, suppliers, distributors and agents of the
Business. With respect to any non-exclusive records relating to the Business,
Federal-Mogul shall provide Buyer reasonable access to review and copy such
records during regular business hours upon two business days written notice;
(i) All permits, licenses, franchises, authorizations, certificates,
approvals, registrations and other governmental authorizations relating to the
Business (including, without limitation, PMA's);
(j) All part drawings and specifications, blueprints, designs, test
data, research and development files, memoranda, promotional materials, logs,
journals and other technical materials used in the Business;
(k) All Vehicles identified in Schedule 2.01(k); and
(l) Possession but not ownership of materials held by the Business on
consignment.
2.02 EXCLUDED ASSETS. Notwithstanding the foregoing, this sale shall not include
the following assets (the "Excluded Assets"):
(a) Cash, cash equivalents or intercompany accounts receivable relating
to the Business (other than xxxxx cash located at the Facility, but "Excluded
Assets" shall include xxxxx cash in any bank account);
(b) All accounts receivable arising from the sale of merchandise
rendered by the Business arising before or on the Closing Date (the "Trade
Accounts Receivable");
(c) Insurance policies covering the Business;
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(d) Any assets under any Employee Plans;
(e) Subject to the Cambridge Agreements, the equipment located at the
facility of Federal-Mogul in Cambridge, Ohio as set forth on Schedule 2.02(e);
(f) Computer software, systems, and equipment as set forth in the IT
Document as items 2.2, 3.2, 3.5, 3.6, and 4.1;
(g) All stock of Federal-Mogul World Wide, Inc.;
(h) The Intellectual Property to be licensed to Buyer pursuant to the
Intellectual Property Agreements; and
(i) All bank accounts.
2.03 ASSUMPTION OF LIABILITIES. The Buyer shall be responsible for and shall
adopt and assume, with effect from the Closing, and shall perform and discharge
in full, only the following liabilities and the obligations of Federal-Mogul
relating to the Business:
(a) All obligations and liabilities arising or performable after the
Closing Date under any of the Contracts assigned to the Buyer or for which the
Buyer is receiving the economic benefits of as provided in Section 2.05 (other
than liabilities and obligations attributable to any failure by Federal-Mogul to
comply with the terms thereof except as otherwise provided in this Agreement).
The foregoing shall include but not be limited to Federal-Mogul's obligations
for the unexpired portion of Federal-Mogul's warranty for parts and labor on
goods sold by the Business prior to the Closing Date, all accepted orders from
customers of the Business, and all purchase orders of the Business issued in the
ordinary course of business;
(b) All Taxes (other than (i) income taxes, and (ii) sales, transfer
and similar Taxes in excess of $200,000 that are incurred in connection with the
consummation of the transactions contemplated herein) to the extent such Taxes
are shown as liabilities on the Balance Sheet and all such Taxes that relate to
the Business and are incurred after December 31, 2000 in the ordinary course of
business and are unpaid as of the Closing Date;
(c) All sales, transfer and similar Taxes that are incurred or imposed
as a result of the consummation of the transactions contemplated herein, to the
extent such Taxes do not exceed $200,000;
(d) All trade accounts payable relating to the Business as of the
Closing Date;
(e) Any liabilities arising after the Closing Date based upon, arising
out of, relating to or otherwise in connection with events, actions,
occurrences, omissions,
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circumstances or conditions occurring after the Closing Date with respect to the
Facility under any Environmental Laws;
(f) Any liabilities related to employee compensation other than
liabilities under the Employee Plans, and related taxes, penalties and expenses,
as well as disability pay and related taxes, penalties and expenses accrued
and/or assessed as of the Closing Date and payable subsequent to the Closing
Date for Hired Employees, and any liabilities related to reimbursement to Hired
Employees of expenses incurred by such Hired Employees but not paid as of the
Closing Date (except those reimbursements not paid in the ordinary course of
business consistent with past practice);
(g) All amounts owing, obligations and liabilities in respect of the
termination or any other payments on leaving employment after the Closing Date
or on retirement after the Closing Date of Hired Employees except for the stay
bonuses referred to in schedule 2.03(g) and except for any obligations,
liabilities, or amounts payable under the Employee Plans;
(h) All liabilities and obligations arising out of or related to any
Condition (whether such liabilities and obligations arise under a Benefit
Arrangement or under worker's compensation, but excluding in any event
liabilities and obligations arising under any Welfare Plan and liabilities and
obligations related directly or indirectly to Asbestos Claims) suffered by any
Hired Employee resulting from, or arising in connection with, the employment of
the employee by Federal-Mogul in the Business or by the Buyer and where the Date
of Loss for such Condition occurred after the Closing Date, regardless of
whether the Condition occurred over a period that was solely before the Closing
Date or includes time both before and after the Closing Date;
(i) All amounts owing, obligations and liabilities arising from the
conduct of the Business after the Closing Date including, without limitation the
following: (i) all liabilities and obligations to third parties in respect of
tort claims involving the Business (whether personal injury, bodily harm or
property damage) that arise from products of the Business sold by the Buyer
after the Closing Date; (ii) all liabilities in respect of any Actions in
respect of which proceedings have been served on Federal-Mogul after the Closing
Date that arise out of the conduct of the Business or the use of the Assets by
the Buyerafter the Closing Date;
(j) All costs and liabilities relating to or arising in connection with
any recall of any product sold by the Buyer after the Closing Date (except to
the extent the same relates to a breach by Federal-Mogul of its express
representations and warranties contained in this Agreement);
(k) All medical, dental, life and welfare benefit claims incurred after
the Closing Date, excluding all such claims relating directly or indirectly to
Asbestos Claims. Claims are deemed to be incurred on the date services are
rendered or the date of death or disability; and
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(l) All liabilities reflected on the Balance Sheet and which remain
outstanding as of the Closing Date and all liabilities relating to the Business
which are incurred by Federal-Mogul in the ordinary course of business
consistent with past practice after December 31, 2000 through the Closing Date,
in each case excluding (i) Excluded Liabilities, (ii) liabilities and
obligations which relate to a breach of or noncompliance with any Contract or
Permit, any tort, any infringement or violation of law and/or arose out of any
Action and (iii) liabilities and obligations relating directly or indirectly to
Asbestos Claims.
The liabilities and obligations referred to in subparagraphs (a)
through (l) of this paragraph 2.03 are referred to herein as the "Assumed
Liabilities", and the Assumed Liabilities are the only liabilities or
obligations of Federal-Mogul which Buyer shall assume in connection with the
transaction which is the subject hereof. Without limiting the generality of the
foregoing, in no event shall the Buyer assume or be liable or responsible for
any liability or obligation related directly or indirectly to Asbestos Claims.
2.04 EXCLUDED LIABILITIES. For purposes of this Agreement, the term "Excluded
Liabilities" means any and all liabilities that are not assumed by Buyer under
Section 2.03, including without limitation the following:
(a) Any debt, intercompany accounts payable, litigation matters, any
obligations as indemnitor, guarantor or surety, and any obligations under any
Employee Plans;
(b) All liabilities and obligations to third parties in respect of tort
claims involving the Business (whether personal injury, bodily harm or property
damage) that arise from products of the Business sold on or before the Closing
Date;
(c) All liabilities in respect of any Actions that: (i) arise out of
tort claims involving the Business (whether personal injury, bodily harm or
property damage) that arise from products of the Business sold by Federal-Mogul
on or before the Closing Date; (ii) that were served on Federal-Mogul on or
before the Closing Date; or (iii) arise out of the conduct of the Business on or
prior to the Closing Date regardless of when served except to the extent that
such Actions referred to in this clause (iii) relate to Assumed Liabilities;
(d) All liabilities for and relating to Indebtedness or the guarantee
of any Indebtedness in each case for borrowed money;
(e) All liabilities under any Welfare Plan for any claims incurred but
not reported on or before the Closing Date. Claims are deemed to be incurred on
the date services are rendered or the date of death or disability;
(f) All liabilities with respect to the Retained Employees or former
employees of the Business;
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(g) Payment, to any Hired Employee, of any (i) severance or other
similar compensation or benefits arising in connection with any such Hired
Employee's termination of employment in connection with the consummation of the
transactions contemplated hereby, or (ii) any stay bonuses agreed by
Federal-Mogul;
(h) Pension Plan benefit obligations with respect to persons who are
current, former, or retired employees of the Business on the Closing Date
("Accrued Benefit Obligations");
(i) All liabilities and obligations arising after the Closing Date out
of or related to any Condition (whether such liabilities and obligations arise
under a Benefit Arrangement or under workers' compensation) suffered by any
Hired Employee resulting from, or arising in connection with, the employment of
the employee by Federal-Mogul in the Business or by the Buyer and where the Date
of Loss for such Condition occurred before the Closing Date;
(j) Liabilities relating to the facility associated with an affiliate
of Federal-Mogul located in Weatherly, Pennsylvania, including any maintenance
payments made to or on behalf of such facility that have previously been made by
the Business;
(k) Liabilities for any Taxes, except for such Taxes that are Assumed
Liabilities;
(l) All liabilities and obligations related directly or indirectly to
Asbestos Claims; and
(m) All liabilities and obligations relating to the Excluded Assets.
The Excluded Liabilities shall be and remain the sole and exclusive
responsibility of Federal-Mogul, and Federal-Mogul shall be solely liable and
responsible for, and shall perform and discharge in full, all of the Excluded
Liabilities.
2.05 ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an assignment, an
attempted assignment or an agreement to assign any Contract or Permit if an
assignment, attempted assignment or agreement to assign of the same without the
consent of any other party or parties thereto or, in the case of any Permit, the
governmental authority that issued or granted such Permit, would constitute a
breach thereof or not be permitted by law, or in any material way impair the
rights of Federal-Mogul or Buyer thereunder. Federal-Mogul shall use its
commercially reasonable efforts (it being understood that such efforts shall not
include any requirement to pay any consideration or offer or grant any financial
accommodation), and the Buyer shall cooperate (it being understood that such
cooperation shall not include any requirement to pay any consideration or offer
or grant any financial accommodation) in all reasonable respects with
Federal-Mogul, to obtain prior to the Closing all consents and to resolve all
impracticalities of assignments or
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transfers necessary to sell, assign, convey, transfer and deliver to the Buyer
the Assets. If any such consent is not obtained or if an attempted assignment or
agreement to assign would be ineffective or would impair Federal-Mogul's or the
Buyer's rights under any such Contract or Permit so that the Buyer would not
receive all material rights needed to conduct the Business, then Federal-Mogul
shall (x) use its commercially reasonable efforts (it being understood that such
efforts shall not include any requirement to pay any consideration or offer or
grant any financial accommodation) to provide or cause to be provided to the
Buyer, to the extent permitted by law, the full benefits of any such Contract or
Permit, (y) pay promptly or cause to be paid promptly to the Buyer when received
all monies and other properties received by Federal-Mogul with respect to any
thereof, provided that Buyer performs all the obligations relating thereto, and
(z) enforce, at the request of the Buyer and at the sole expense and for the
account of the Buyer, to the extent permitted by law, any and all rights of
Federal-Mogul arising from such Contract or Permit against the other party or
parties thereto or the issuer or grantor thereof (including the right to elect
to terminate such Contract or Permit in accordance with the terms thereof upon
the written advice of the Buyer). In addition, Federal-Mogul shall take such
other actions as may reasonably be requested by the Buyer in order to place the
Buyer, insofar as reasonably possible, in the same position as if such Contract
or Permit had been transferred as contemplated hereby and so that all the
benefits relating thereto, including possession, use, risk of loss, potential
for gain and dominion, control and command, shall inure to the Buyer.
Notwithstanding the foregoing, if any such consent is not obtained prior to the
Closing, Federal-Mogul shall continue to use its commercially reasonable efforts
(it being understood that such efforts shall not include any requirement to pay
any consideration or offer or grant any financial accommodation) to obtain all
such consents (and, if and when such consents are obtained, the transfer of the
applicable Contract or Permit shall be effected in accordance with the terms of
this Agreement). Notwithstanding anything to the contrary in this Section 2.05,
the failure by Federal-Mogul to obtain all such consents after complying with
its obligations set forth in this Section 2.05 shall not affect the Buyer's
obligation to consummate the transactions contemplated hereby except to the
extent any such failure causes the condition in Section 8.09 not to be
satisfied, nor constitute a breach, default, or inaccuracy by Federal-Mogul.
2.06 PURCHASE PRICE. Upon the terms and subject to the conditions set forth
herein, in consideration for the transfer of the Assets pursuant to Section 2.01
hereof, on the Closing Date Buyer shall (i) pay One Hundred Sixty Million One
Hundred Thirty Thousand Dollars ($160,130,000) (the "Purchase Price") minus Five
Million Dollars ($5,000,000) (the "Escrow Amount"), in cash by wire transfer of
immediately available funds to Federal-Mogul to such account as Federal-Mogul
shall designate in a written notice to Buyer at least two business days prior to
the Closing Date, and (ii) wire transfer to the Escrow Agent (to such bank and
account of the Escrow Agent in the United States as is specified to the Buyer at
least two business days prior to the Closing Date) in immediately available
funds the Escrow Amount to be held by the Escrow Agent pursuant to the Escrow
Agreement.
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2.07 ADJUSTMENT. The adjustment to the Purchase Price, if any, shall be
determined as follows:
(a) NET WORKING CAPITAL STATEMENT. Following the Closing, the Buyer
shall have prepared a balance sheet of the Business, dated as of the Closing
Date (the "Closing Date Balance Sheet"), with procedures to be performed by
Deloitte & Touche as to the inventory amount, the scope of which shall be as
mutually determined by Buyer and Federal-Mogul (the "Procedure"), and a
statement setting forth Net Working Capital as calculated based on the Closing
Date Balance Sheet (the "Net Working Capital Statement"). The cost of the
Procedure shall be borne solely by the Buyer up to a maximum of $15,000.
Federal-Mogul shall solely pay any cost of the Procedure to the extent that the
cost thereof exceeds $15,000 but is less than or equal to $30,000. To the extent
that the cost of the Procedure exceeds $30,000, Federal-Mogul and the Buyer
shall share equally the excess over $30,000. The Closing Date Balance Sheet and
the Net Working Capital Statement shall be prepared in accordance with GAAP
applied on a basis consistent with the accounting policies of the Business
reflected on the Balance Sheet, and shall present fairly the consolidated
financial position of the Business as of the Closing Date. Notwithstanding the
foregoing, the Closing Date Balance Sheet and the Net Working Capital Statement
shall be prepared by taking into account the matters set forth in Exhibit C. The
Buyer shall cause the Closing Date Balance Sheet and the Net Working Capital
Statement to be delivered to Federal-Mogul, along with supporting materials and
calculations, as soon as reasonably practicable, but in any event, not later
than the date which is sixty (60) days after the Closing Date. The Buyer and
Federal-Mogul agree that they shall, and agree to cause their respective
independent accountants to, cooperate and assist in the preparation and review
(as referred to in Section 2.07(b)) of the Closing Date Balance Sheet and the
Net Working Capital Statement, including, without limitation, the making
available to the extent necessary of books, records, files, documents, assets of
the Business, work papers and personnel. In addition, Buyer shall give
Federal-Mogul two days' notice of and take such steps as my be reasonably
necessary to permit Federal-Mogul or a representative thereof to observe all
procedures undertaken in any physical inventory count performed in connection
with the Procedure.
(b) REVIEW BY FEDERAL-MOGUL. If Federal-Mogul wishes to dispute any
matter arising out of the Closing Date Balance Sheet or the Net Working Capital
Statement, Federal-Mogul shall, within sixty (60) days after receipt of the
Closing Date Balance Sheet and Net Working Capital Statement, give written
notice to the Buyer of the dispute together with a written explanation of those
items in the Closing Date Balance Sheet or the Net Working Capital Statement
which Federal-Mogul disputes. Within a further period of thirty (30) days from
the end of the 60-day review period, the parties will attempt to resolve in good
faith any disputed items.
(c) ARBITRATION. If Buyer and Federal-Mogul fail to resolve all items
in dispute within the 30-day period, the parties agree that the independent
certified public accounting firm of PriceWaterhouseCoopers (the "Neutral
Auditor") shall be employed to resolve any items which remain in dispute after
the end of such thirty (30) day period (all
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such other items relating to the Closing Date Balance Sheet and the Net Working
Capital Statement shall be deemed to be final and binding on the parties). The
parties shall direct the Neutral Auditor to resolve the remaining items in
dispute as soon as reasonably practicable, but in no event later than 30 days,
and the decision of the Neutral Auditor shall be final and binding upon the
parties hereto. Such decision may be entered thereon as an arbitration award
pursuant to 9 U.S.C. ss.9 in any court of competent jurisdiction (subject to the
provisions of Section 10.05).
(d) ADJUSTMENT AMOUNT. The Closing Date Balance Sheet and the Net
Working Capital Statement, (i) if Federal-Mogul does not give written notice of
any dispute within sixty (60) days after receipt thereof; (ii) as modified by
the parties upon any mutual resolution of any dispute; or (iii) as finally
determined by the Neutral Auditor, as applicable, are hereinafter referred to as
the "Final Effective Date Balance Sheet" and the "Final Effective Net Working
Capital Statement". The date which is 10 days after (i) expiration of the sixty
day period in which Federal-Mogul may give written notice of a dispute if no
such notice is given, (ii) the parties mutually resolve any dispute, or (iii)
the date on which the Neutral Auditor finally resolves any dispute is
hereinafter referred to as the "Final Payment Date."
(e) PAYMENT. The Escrow Agreement shall provide that to the extent that
the amount set forth as Net Working Capital on the Final Effective Net Working
Capital Statement is less than the Target Working Capital (such an amount, the
"Shortfall Amount"), the Escrow Agent shall pay to Buyer the Shortfall Amount,
but in no event more than $1 million, as an adjustment to the Purchase Price, in
the manner and with interest as provided in Section 2.03(f), on the Final
Payment Date. To the extent that the amount paid by the Escrow Agent is less
than the total Shortfall Amount, Federal-Mogul shall pay the difference between
the amount paid by the Escrow Agent and the total Shortfall Amount to the Buyer,
as an adjustment to the Purchase Price, in the manner and with interest as
provided in Section 2.07(f), on the Final Payment Date. To the extent that the
amount set forth on the Final Effective Net Working Capital Statement exceeds
the Target Working Capital, Buyer shall pay to Federal-Mogul, as an adjustment
to the Purchase Price, the amount of that excess, in the manner and with
interest as provided in Section 2.07(f), on the Final Payment Date.
(f) Any payment pursuant to Section 2.07(e) shall be made on the Final
Payment Date by delivery by Buyer or Federal-Mogul, as the case may be, of cash
by wire transfer of immediately available funds to an account designated in
writing by the other party. The amount of any payment to be made pursuant to
this Section 2.07(f) shall bear interest from and including the Closing Date to
but excluding the date of payment at a rate per annum equal to the Prime Rate as
published in the Wall Street Journal, Eastern Edition, in effect from time to
time during the period from the Closing Date to the date of payment. Such
interest shall be payable at the same time as the payment to which it relates
and shall be calculated daily on the basis of a year of 365 days and the actual
number of days elapsed.
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(g) AUDITORS' FEES. The fees of the Neutral Auditor shall be borne
equally by the Buyer and Federal-Mogul.
ARTICLE III.
CLOSING
3.01 CLOSING. Upon the terms and subject to the conditions set forth herein, and
subject to Section 10.01, the closing of the transactions contemplated herein
(the "Closing") shall be held as soon as possible, but in no event later than
three business days after satisfaction or waiver of the conditions set forth in
Articles VII and VIII other than Section 7.05 and Section 8.05 (the "Closing
Date") at the offices of Xxxxxx & Xxxxxxx in New York, New York, or such other
date or place as the parties may agree to in writing.
3.02 DELIVERIES BY FEDERAL-MOGUL AT CLOSING.
(a) At Closing, Federal-Mogul shall execute (as appropriate) and deliver,
or cause to be executed and delivered, to Buyer:
(i) A duly executed and acknowledged special warranty deed;
(ii) Federal-Mogul's xxxx of sale with respect to its ownership
of the Assets, assignments, endorsements and other documents of
title and other good and sufficient instruments of conveyance
and transfer, as shall be effective to vest in Buyer full,
complete and marketable right, title and interest in and to the
Assets;
(iii) Any and all other documents necessary to convey valid and
marketable title to the Owned Real Property subject to the
Permitted Encumbrances;
(iv) A plat of survey of the Owned Real Property in form and
substance acceptable to the title insurer and prepared by a
licensed surveyor or engineer;
(v) A computer transition services agreement with such terms and
conditions as Federal-Mogul and Buyer shall agree upon;
(vi) A transition services agreement providing for medical,
dental, and prescription drug services through the last day of
the calendar month following the 60th day after the Closing
Date, certain computer services and certain other services with
such terms and conditions as Federal-Mogul and Buyer shall agree
upon;
(vii) Certificates of title to the Vehicles.
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(viii) Certified copies of resolutions of the board of directors
of Federal-Mogul authorizing Federal-Mogul to enter into and
perform its obligations under this Agreement;
(ix) Intellectual Property Agreements;
(x) The Cambridge Agreements;
(xi) The Burlington Agreements;
(xii) The Sparta Agreement;
(xii) The other Transaction Documents to which Federal-Mogul is
a party;
(xiv) An affidavit stating, under penalties of perjury,
Federal-Mogul's taxpayer identification number and that
Federal-Mogul is not a foreign person pursuant to Section
1445(b)(2) of the Code;
(xv) Affidavit of value;
(xvi) South Carolina non-resident withholding tax affidavit to
relieve the Buyer of any obligation to withhold any portion of
payments to Federal-Mogul pursuant to this Agreement;
(xvii) Lien releases or other evidence of termination as
required by Section 8.08; and
(xviii) Such other agreements, documents and instruments as
Buyer may reasonably require in order to effectuate the purchase
of the Assets.
(b) At Closing, Federal-Mogul shall deliver to the Escrow Agent the
Escrow Agreement.
3.03 DELIVERIES BY BUYER AT CLOSING.
(a) At Closing, Buyer shall execute (as appropriate) and deliver, or
cause to be executed and delivered, to Federal-Mogul:
(i) The Purchase Price minus the Escrow Payment;
(ii) An instrument in form reasonably acceptable to
Federal-Mogul evidencing Buyer's assumption of the Assumed
Liabilities;
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(iii) certified copies of resolutions of the board of directors
of Buyer authorizing Buyer to enter into and perform its
obligations under this Agreement;
(iv) The Cambridge Agreements;
(v) The Burlington Agreements;
(vi) The Sparta Agreement;
(vii) A computer transition services agreement with such terms
and conditions as Federal-Mogul and Buyer shall agree upon;
(viii) A transition services agreement providing for medical,
dental, and prescription drug services through the last day of
the calendar month following the 60th day after the Closing
Date, certain computer services and certain other services with
such terms and conditions as Federal-Mogul and Buyer shall agree
upon; and
(ix) Such other agreements, documents and instruments as
Federal-Mogul may reasonably require in order to effectuate the
sale of the Assets which is the subject hereof .
(b) At the Closing, Buyer shall deliver to the Escrow Agent the Escrow
Agreement and the Escrow Payment.
(c) Buyer may procure for itself, at its sole cost, any title insurance
policy for the Owned Real Property.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FEDERAL-MOGUL
Except as otherwise set forth on any Schedules to this Agreement,
Federal-Mogul hereby represents and warrants to Buyer as of the date hereof and
as of the Closing Date (except as expressly stated in any Notice of Change) as
follows:
4.01 ORGANIZATION; CAPITALIZATION. Federal-Mogul is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full power and authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
Federal-Mogul is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is necessary
under the applicable law as a result of the conduct of its business or the
ownership of its properties, except where the failure to be so qualified and in
good standing would not, in the aggregate, have a Material Adverse Effect.
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4.02 Authorization. Federal-Mogul has all necessary corporate power and
authority to execute and deliver this Agreement and all other Transaction
Documents to which it is a party, to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Federal-Mogul of this Agreement and the
other Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Federal-Mogul. This Agreement has
been, and the other Transaction Documents as applicable will be, duly executed
and delivered by Federal-Mogul and is, or will be as applicable, legal, valid
and binding obligations of Federal-Mogul, enforceable against Federal-Mogul in
accordance with its terms, except as may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally and (ii) general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.
4.03 GOVERNMENT CONSENTS AND APPROVALS. Except for the Permits identified on
Schedule 4.03, other than in connection with or in compliance with the
provisions of the HSR Act, no notice to, declaration, filing or registration
with, or authorization, consent or approval of, or permit from, any domestic or
foreign governmental or regulatory body or authority is required to be made or
obtained by Federal-Mogul in connection with the execution, delivery and
performance of this Agreement or the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, except for
consents or approvals the failure of which to obtain would not in the aggregate
impair the ability of Federal-Mogul to perform its obligations hereunder or have
a Material Adverse Effect.
4.04 TITLE TO ASSETS. Excluding Owned Real Property as to which certain
representations are made in Section 4.06, and also excluding the items referred
to in Schedule 4.04, Federal-Mogul has good and marketable title to, or in the
case of leased Assets has valid leasehold interest in, all the Assets. None of
the Assets is subject to any Encumbrances, other than Permitted Encumbrances and
other liens to be removed at or prior to Closing.
4.05 TANGIBLE ASSETS.
(a) Except as disclosed on Schedule 4.05, and except with respect to the
Aviation Intellectual Property which is covered by Section 4.20, the Assets
constitute all of the tangible and intangible assets and properties (whether
real, personal, or mixed, of every kind and nature, and wherever located) used
in, held by, licensed by, or is necessary to carry on the Business as presently
conducted.
(b) The tangible Assets are being transferred on an "as is, where is"
basis and Federal-Mogul makes no representations or warranties as to their
condition, merchantability or fitness for a particular purpose. FEDERAL-MOGUL
THEREFORE SPECIFICALLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, (other than
those explicitly set forth in sections 4.04 and 4.06 of this Agreement) WITH
RESPECT TO THE
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CONDITION OF THOSE ASSETS, INCLUDING WARRANTIES AS TO FITNESS FOR A PARTICULAR
PURPOSE AND MERCHANTABILITY, AND FEDERAL-MOGUL SHALL NOT BE LIABLE FOR ANY
DAMAGES, INCLUDING COMPENSATORY, INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH
RESPECT THERETO.
4.06 REAL PROPERTY. Federal-Mogul has good and marketable, indefeasible, fee
simple title to all Owned Real Property, subject only to any (i) Permitted
Encumbrances, (ii) Encumbrances which would be reflected on a survey or in a
title report, (iii) rights arising from Native American (Indian) burial grounds
on land not currently occupied by the buildings and improvements of the Facility
(iv) liens to be removed at or prior to Closing, and (v) minor imperfections of
title, conditions, easements, covenants or restrictions, in any, none of which
is substantial in amount and which do not, in the aggregate, materially detract
from the value of the affected property, or impair the use of the affected
property in the manner such property is currently being used, or impairs the
operations or the conduct of the Business.
4.07 NO CONFLICT OR VIOLATION. Except as set forth in Schedule 4.07, none of the
execution, delivery and performance of this Agreement or the other Transaction
Documents by Federal-Mogul nor the consummation of the transactions contemplated
hereby or thereby will result in (a) a violation of or a conflict with any
provision of the Organizational Documents of Federal-Mogul, (b) a breach of, or
a default under, or the creation of any right of any party to accelerate,
terminate or cancel, any Contract, or a breach or default under any Contract,
(c) assuming compliance with the HSR Act, a violation by Federal-Mogul of any
Regulation, Permit, order, judgment, writ, injunction, decree or award
applicable to the Business, or (d) an imposition of any Encumbrance (other than
Permitted Encumbrances) on the Assets or the Business, except in the case of
each of clauses (b), and (c) above, for such violations, breaches, defaults,
terminations, accelerations, which in the aggregate would not have a Material
Adverse Effect.
4.08 AUDITED FINANCIAL STATEMENTS.
(a) Federal-Mogul has delivered to Buyer the Audited Financial
Statements. The Audited Financial Statements have been prepared in conformity
with GAAP applied on a consistent basis (except as otherwise stated in the notes
to the financial statements) and based upon information contained in the books
and records of the Business. The Audited Financial Statements fairly present the
financial position of the Business as of the dates thereof and the results of
operations and cash flows for the Business for the relevant periods, in all
material respects.
(b) There are no liabilities of the Business of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation, or set of circumstances that
could reasonably be expected to result in such a liability, except for (i)
liabilities set forth, reflected in, reserved against or disclosed in the
Balance Sheet, (ii) liabilities incurred in the ordinary course of business
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consistent with past practice since December 31, 2000 which would not,
individually or in the aggregate, have a Material Adverse Effect, (iii) other
undisclosed liabilities which, individually or in the aggregate, are not
material to the Business, and (iv) other liabilities disclosed in Schedule 4.08.
4.09 LITIGATION AND PROCEEDINGS.
(a) Except as set forth in Schedule 4.09, there are no Actions or other
proceedings at law or in equity, or to the knowledge of Federal-Mogul,
investigations, before or by any court or governmental authority or
instrumentality or before any arbitrator pending or, to the knowledge of
Federal-Mogul, threatened, against Federal-Mogul with respect to the Business
which, if adversely determined, would result in a judgment in excess of $100,000
individually or $500,000 in the aggregate or could reasonably be expected to
restrain, enjoin or otherwise prevent consummation of the transactions
contemplated by this Agreement or permit such consummation only subject to any
material condition or restriction applicable to the Buyer. There are no
judgments, injunctions, orders or decrees against Federal-Mogul with respect to
the Business that may reasonably be expected to restrain, enjoin or otherwise
prevent consummation of the transactions contemplated by this Agreement or
permit such consummation only subject to any material condition or restriction
applicable to the Buyer.
(b) Neither Federal-Mogul nor, to Federal-Mogul's knowledge, any of its
predecessors, is now or ever has been named as a defendant in any Action,
dispute, mediation or other proceeding involving any Asbestos Claim.
4.10 LABOR MATTERS. Federal-Mogul is not a party to any collective bargaining
agreement or other contract with any labor union or association representing any
employee of the Business, nor are there any other current activities known to
Federal-Mogul to organize any employees of the Business into a collective
bargaining unit. There is no unfair labor practice charge or complaint pending
or, to the knowledge of Federal-Mogul, threatened that relates to the Business.
Since October 9, 1998, there has been no labor strikes, work stoppage or
arbitration involving the Business. Except as set forth in Schedule 4.10 and
other than the customary verbal at-will employment agreements relating to the
general employees of the Business, there are no written or unwritten employment
agreements or contracts between Federal-Mogul and any employee of the Business.
4.11 COMPLIANCE WITH LAW; PERMITS. Except as set forth in Schedule 4.11, and
except as relate to Environmental Laws (which is covered in section 4.14 of this
Agreement) the Business is in compliance in all material respects with all
applicable Regulations and all judgments, decisions or orders entered by any
federal, state, local, or foreign court relating to the Assets or the Business.
Federal-Mogul has all material Permits, each of which is currently valid and in
full force and effect, necessary to carry on the Business as it is presently
conducted.
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4.12 TAX MATTERS. Except as disclosed in Schedule 4.12, Federal-Mogul and all
members for income tax purposes of any affiliated group of corporations of which
Federal-Mogul is or has been a member (each a "Taxpayer") has filed all Tax
Returns with respect to the Business which it is required to have filed, and
such returns are true and correct. Each Taxpayer has paid or made adequate
provision (as reflected in the Balance Sheet) for the payment of all Taxes with
respect to the Business which have, or may become due pursuant to said returns,
or pursuant to any assessment received with respect thereto. To Federal-Mogul's
knowledge, there is no Action regarding Tax relating to the Business. To
Federal-Mogul's knowledge, there are no waivers or extensions of statute of
limitations in effect with respect to Taxes that are Assumed Liabilities. There
are no liens for Taxes on any of the Assets, other than Permitted Encumbrances.
None of the Assets directly or indirectly secures any debt the interest on which
is tax-exempt under Section 103(a) of the Code. None of the Assets is property
required to be treated as being owned by any other person pursuant to the "safe
harbor lease" provisions of former Section 168(f)(8) of the Code. None of the
Assets is "tax exempt use property" within the meaning of Section 168(h) of the
Code.
4.13 INSURANCE MATTERS. Prior to the Closing Date, the Business has been covered
by certain insurance programs which will not transfer with the sale of the
Assets. Schedule 4.13 contains a true and accurate list of all policies or
binders for business interruption, fire, liability, worker's compensation,
product liability, errors and omissions and other forms of insurance (showing as
to each policy or binder the line of coverage, insurer, limits of liability, and
expiration date) maintained as of the date of this Agreement by Federal-Mogul
Corporation for operations of Federal-Mogul Corporation and its direct and
indirect subsidiaries, including Federal-Mogul, and cannot be extended to cover
non-related entities. Since October 1, 1998 no insurer has refused or denied
coverage of any material claim made thereunder by the Business. To the best
knowledge of Federal-Mogul, all such policies and binders are in full force and
effect.
4.14 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.14:
(a) In respect of the Business, Federal-Mogul is in compliance, in all
material respects, with all Environmental Laws in effect as of the date of this
Agreement including in connection with the acquisition, storage, handling,
transportation, processing, use or disposal of any goods or materials, whether
as raw materials, work-in-process, finished goods or otherwise;
(b) Federal-Mogul has not received any notices of violation,
administrative actions, or lawsuits against Federal-Mogul relating to the use,
handling, storage, treatment, recycling, generation, or Release (as defined in
CERCLA) of Hazardous Substances (as defined in CERCLA, including petroleum,
crude oil, or any fraction thereof) in connection with the Business nor are
there any facts which would lead to such;
(c) There are no consent decrees, consent orders, judgments, judicial or
administrative orders, or liens by any governmental authority relating to any
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Environmental Law which regulate, obligate, or bind the Business or the Assets
nor is Federal-Mogul aware of any facts that would lead to the imposition of
such;
(d) Federal-Mogul has not received any written notification of any
allegation of any responsibility for any disposal, release, or threatened
release at any location or property now or previously owned, leased or operated
by Federal-Mogul of any hazardous substance generated or transported by them in
connection with the Business, except in each case where such responsibility has
since been cured, resolved or satisfied, nor are there any facts which would
lead to such;
(e) Federal-Mogul has no knowledge or reason to believe that any
chemical or raw material used or usable by the Business is not properly listed
on TSCA or any equivalent international list of controlled substances nor are
there any facts that would lead Federal-Mogul to believe such;
(f) No polychlorinated biphenyls, radioactive material, lead,
asbestos-containing material, incinerator, sump, surface impoundment, lagoon,
landfill, septic, wastewater treatment or other disposal system or underground
storage tank (active or inactive) is or has been present at the Owned Real
Property;
(g) There is not now nor has there been any Release (as defined in
CERCLA) or threat of Release of any Hazardous Substance (as defined in CERCLA,
including petroleum, crude oil, or any fraction thereof) at or from the Owned
Real Property which constitutes a violation of applicable Environmental Laws or
requires response under applicable Environmental Laws.
(h) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which Federal-Mogul has knowledge in
relation to the Business or any property or facility now or previously owned,
leased or operated by the Business which has not been delivered to Buyer at
least ten days prior to the date hereof.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.15(a) contains a complete list of Employee Plans which
Federal-Mogul currently maintains, contributes to or has any obligation under
with respect to employees of the Business (other than Xxxxxxx Xxxxxxxx) as of
the date of this Agreement. None of these Employee Plans will transfer to or for
the benefit of the Buyer, nor will Buyer have any liability with respect to
them.
(b) The Employee Plans comply, and have been maintained in compliance,
in all material respects, with the terms of such Employee Plans and with the
requirements prescribed by the Regulations which are applicable to such plans,
including but not limited to ERISA and the Code. Federal-Mogul does not have any
announced plan or legally binding commitment to create any additional Employee
Plans which are intended to cover employees or former employees of the Business
or to amend or modify any
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existing Employee Plan which covers or has covered employees or former employees
of the Business.
(c) None of the Business, Federal-Mogul, or any of the ERISA Affiliates
maintains, administers, or contributes to or is required to contribute to or
have since October 9, 1998 maintained, administered or contributed to or have
been required to contribute to any "multiemployer plan" as defined in ERISA
which covers any employee of the Business.
(d) Schedule 4.15(d) contains a complete and accurate list of the salary
and compensation for each employee of the Business as of December 31, 2000 and
as of April 15, 2001.
4.16 INVENTORY. The inventories of the Business consist of new and unused items
of a quality and quantity readily useable or saleable in the ordinary course of
business, consistent with past practice, except as set forth on Schedule 4.16.
4.17 BROKERS' FEES. No finder's fee, brokerage commission or similar payment is
required in connection with the transactions contemplated hereby due to the
actions of Federal-Mogul or any of its Representatives, except for any that may
be due First Union Securities, Inc., which are solely the obligation of
Federal-Mogul.
4.18 DISCLAIMER OF PROJECTIONS. Buyer hereby acknowledges and agrees that
Federal-Mogul does not make any representations or warranties to Buyer except as
specifically made in Article IV of this Agreement or in the Transaction
Documents. In particular, Federal-Mogul does not make any representations or
warranties to Buyer with respect to any financial projections or forecasts
relating to the Business. With respect to any such projections, or forecasts,
Buyer acknowledges that (i) there are uncertainties inherent in attempting to
make such projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it, (iv) planned efficiencies or business opportunities may not
materialize for a number of reasons, and (v) Buyer shall have no claim against
Federal-Mogul or Federal-Mogul Corporation or any of its Subsidiaries with
respect thereto.
4.19 ORDINARY COURSE.
(a) Since December 31, 2000, except as set forth in Schedule 4.19(a) and
other than in connection with the transactions contemplated hereby and by the
Transaction Documents, the Business has been conducted only in the ordinary
course of business consistent with past practices and there has not been any
event, occurrence, change, development, condition or state of circumstances
which has had or could reasonably be expected to have, in the aggregate, a
Material Adverse Effect. Without limiting the generality of the foregoing, there
has not been:
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(i) any disposal or commitment to dispose of any material Assets
relating to the Business or any material loss or damage to such
material Assets and;
(ii) any damage, destruction or casualty loss involving any
Asset (whether or not covered by insurance) in excess of
$500,000;
(iii) any capital expenditure or series of related capital
expenditures in excess of $500,000 for the Business;
(iv) any amendment or termination (other than by completion
thereof) of any Material Contract other than in the ordinary
course of business consistent with past practices;
(v) any incurrence, assumption or guarantee by Federal-Mogul of
any material liability, whether accrued, contingent, absolute,
determined, determinable or otherwise, relating to the Business
other than in the ordinary course of business consistent with
past practices;
(vi) any creation or other incurrence by Federal-Mogul of any
Encumbrance on any material Asset, other than Permitted
Encumbrances;
(vii) any change in accounting methods, practices or principles
of the Business;
(viii) any waiver or release of any rights or claims of material
value, including rights or claims under any Material Contract,
or any waiver or release of any right or claim relating to the
Business against any affiliate of Federal-Mogul;
(ix) any license or sublicense of any rights under or with
respect to any Intellectual Property;
(x) any acquisition by the Business or agreement by the Business
to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture,
association or other business organization or division,
operating unit or product line thereof; or
(xi) any Contract or commitment (other than this Agreement and
the Transaction Documents) to take any of the types of action
described in subclauses (i) through (x) of this Section 4.19(a).
(b) Schedule 4.19(b) sets forth a true and correct list of (a) the names
and addresses of the 10 largest customers of the Business in terms of sales
during the fiscal year ended December 31, 2000 (the "Key Customers"), setting
forth the total sales to each
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such customer and (b) the names and addresses of the 10 largest suppliers of the
Business in terms of purchases during the fiscal year ended December 31, 2000
(the "Key Suppliers"), setting forth for each such supplier the total purchases
from each such supplier.
(c) Except as set forth in Schedule 4.19(c), to the knowledge of
Federal-Mogul, none of the Key Customers or Key Suppliers has (i) suffered any
occurrence, event, development, incident, action, failure to act or transaction
that has materially adversely affected or could reasonably be expected to
materially adversely affect any such Key Customer or Key Supplier with respect
to such Key Customer's or Key Supplier's business or relationship with the
Business, (ii) informed any directors or officers of Federal-Mogul that the
consummation of the transactions contemplated hereby would have such an affect
on the Key Customers' and Key Suppliers' relationship with the Business or (ii)
stated to Federal-Mogul that they will not do business with the Business after
the Closing or would only conduct business with the Business after the Closing
if they received price concessions outside the ordinary course of business.
Buyer acknowledges the ability of any Key Customer or Key Supplier to
discontinue business with Federal-Mogul or the Business at any time, and the
written contract provisions that may prevent assignment or change in control
without consent.
4.20 INTELLECTUAL PROPERTY.
(a) Schedule 4.20(a) identifies all patents, patent applications, draft
patent applications, trademarks, service marks, and trademark and service xxxx
applications and registrations which are included in Aviation Intellectual
Property and which are to be licensed to Buyer pursuant to the Intellectual
Property Agreements attached as Exhibits E-1 and E-2.
(b) Except as set forth on Schedule 4.20(a), Schedule 4.20(b) identifies
all patents, patent applications, invention disclosures, mask work and copyright
applications and registrations, trademarks, service marks and trademark and
service xxxx applications and registrations which constitute Aviation
Intellectual Property.
(c) Except as set forth in Schedule 4.20(c) (as to which the parties
acknowledge that the Aviation Intellectual Property transferred under the
Intellectual Property Agreements may be subject to), as respecting the Aviation
Intellectual Property:
(i) Federal-Mogul solely owns all right, title and interest in
and to, or has an absolute and unrestricted right to use, all of
the Aviation Intellectual Property, free and clear of any
Encumbrances (except Permitted Encumbrances). (ii) Federal-Mogul
has not received any written claims by any third Person, and has
no knowledge that any third Person has alleged, that any
Aviation Intellectual Property, any activity of the Business, or
any product, process or material developed, produced or used in
the conduct of
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the Business, infringes upon any Intellectual Property or other
rights of any third Person;
(iii) No Action has been commenced by or against (and served on)
Federal-Mogul and/or Federal-Mogul World Wide, Inc.
(collectively and individually, for the purposes of this Section
4.20, "F-M") or is pending or, to the knowledge of
Federal-Mogul, threatened by or against F-M, including without
limitation in which any of the Aviation Intellectual Property is
asserted to be either invalid or unenforceable;
(iv) To the knowledge of Federal-Mogul there is no actual or
threatened infringement or misappropriation by any third Person
of any of the Aviation Intellectual Property;
(v) To the knowledge of Federal-Mogul there are no Contracts or
other agreements under which any Person has granted rights in or
licenses to any Aviation Intellectual Property or has granted an
option to acquire any such rights or licenses;
(vi) F-M has not agreed with any third person not to xxx or
otherwise enforce any legal rights;
(vii) To the knowledge of Federal-Mogul none of the Aviation
Intellectual Property has become abandoned or otherwise expired
for failure to pay a fee or otherwise take timely action; and
(viii) The Aviation Intellectual Property constitutes all of the
Intellectual Property that is used or held for use by the
Business as currently conducted.
Except as set forth in this Section 4.20(c), Federal-Mogul makes no warranty or
representation that any of the Aviation Intellectual Property is protectable or
as to the scope of any Intellectual Property rights that Federal-Mogul has in
any of the Aviation Intellectual Property.
(d) Federal-Mogul has taken all commercially reasonable steps (including
measures to protect secrecy and confidentiality) to protect its right, title and
interest in and to all Aviation Intellectual Property, and to assure that its
employees who have access to confidential or proprietary information of the
Business have a contractual or legal obligation of confidentiality to
Federal-Mogul with respect to such information, and have an obligation to
transfer rights for no additional consideration in inventions, and authored
works, whether or not patented, patentable, copyrighted or otherwise protectable
under the law, made during the course of their employment using resources of
Federal-Mogul and relating to the Business.
4.21 CONTRACTS.
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(a) Schedule 4.21(a) lists all of the following Contracts:
(i) all Contracts for the lease of real or personal property to
or from any Person for annual lease payments in excess of
$500,000 and all Contracts that would be treated as a capital
lease under GAAP;
(ii) all Contracts providing for the purchase by the Business of
materials, commodities, supplies, goods, services, products or
other real, personal or mixed property, providing for either (A)
annual payments by Federal-Mogul of $1,000,000 or more or (B)
remaining aggregate payments by Federal-Mogul of $1,000,000 or
more, including, without limitation, all Contracts relating to
Key Suppliers;
(iii) all Contracts (other than individual purchase orders)
providing for the sale by the Business of materials,
commodities, supplies, goods, services, products or other real,
personal or mixed property, that provides for either (A) annual
payments to Federal-Mogul of $1,000,000 or more or (B) remaining
aggregate payments to Federal-Mogul of $1,000,000 or more,
including, without limitation, all Contracts relating to Key
Customers;
(iv) all Contracts with the Business concerning any partnership
or joint venture;
(v) all Contracts under which the Business has borrowed money or
which evidence or relate to the borrowing of money by the
Business, or for which the Business has secured or guaranteed
any Indebtedness, in the amount of $1,000,000 or more, other
than purchases for which payment has not yet been made;
(vi) all Contracts concerning or containing provisions that
limit the freedom of the Business to compete in any line of
business or with any Person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any
Asset or which would so limit the freedom of the Buyer after the
Closing Date (other than standard noncompetition agreements, if
any, signed by employees generally, copies of which have been
provided to the Buyer);
(vii) all Contracts under which the Business has advanced or
loaned funds to any Person, including any of the employees of
the Business (other than Contracts solely relating to expenses
advanced to employees in the ordinary course of business);
(viii) all executory Contracts for the purchase or sale by the
Business of any business, corporation, partnership, joint
venture, association or other
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business organization or any division, operating unit or product
line thereof; and
(ix) all other Contracts (or groups of related Contracts)
relating to the Business involving consideration in excess of
$1,000,000.
Each item set forth or required to be set forth on Schedule 4.21(a) is referred
to herein as a "Material Contract".
(b) Except as set forth on Schedule 4.21(b), Federal-Mogul has complied
in all material respects with the provisions of each Material Contract and is
not in default in any material respect thereunder, and there does not exist any
condition which, after notice or lapse of time or both, would constitute a
default in any material respect thereunder by Federal-Mogul. Each Material
Contract constitutes a legal, valid and binding obligation of Federal-Mogul,
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (ii) general principles
of equity, regardless of whether asserted in a proceeding in equity or at law.
Federal-Mogul has heretofore delivered or made available to the Buyer true and
complete copies of all written Material Contracts.
4.22 AFFILIATE TRANSACTIONS. Schedule 4.22(a) sets forth a list of the material
products and services provided by or on behalf of Federal-Mogul Corporation or
any of its affiliates in connection with or in support of the operation of the
Business. Except as set forth on Schedule 4.22(b), none of Federal-Mogul or any
of Federal-Mogul's affiliates has entered into any transaction, Contract,
agreement, arrangement or understanding relating to the Business other than, in
each case, on an arm's length basis.
4.23 KNOWLEDGE OF FEDERAL-MOGUL. The phrases "to the knowledge of
Federal-Mogul", "to Federal-Mogul's knowledge" and other similar phrases shall
be deemed to refer only to the actual knowledge after due and reasonable inquiry
of the persons listed on Schedule 4.23.
4.24 REPRESENTATIONS AND WARRANTIES. No representation or warranty made by
Federal-Mogul contained in this Agreement or any Transaction Document contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Federal-Mogul as follows as of
the date hereof and as of the Closing Date (except as expressly stated in any
Notice of Change):
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5.01 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware with all power and
authority to conduct its business as it is presently being conducted and to own
and lease its properties and assets.
5.02 AUTHORIZATION. Buyer has all necessary corporate power and authority to
execute and deliver this Agreement and all other Transaction Documents to which
it is a party, to consummate the transactions contemplated hereby and thereby
and to perform its obligations hereunder and thereunder. The execution, delivery
and performance by Buyer of this Agreement and the other Transaction Documents
to which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been, and the other Transaction
Documents as applicable will be, duly executed and delivered by Buyer and is, or
will be as applicable, legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with its terms, except as may be limited
by (i) bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (ii) general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
5.03 NO CONFLICT OR VIOLATION. Except as set forth in Schedule 4.07, none of the
execution, delivery and performance of this Agreement or the other Transaction
Documents by Buyer nor the consummation of the transactions contemplated hereby
or thereby will result in (a) a violation of or a conflict with any provision of
the Organizational Documents of Buyer, or (b) assuming compliance with the HSR
Act, a violation by Buyer of any Regulation, order, judgment, writ, injunction,
decree or award applicable to Buyer, except in the case of each of clauses (a)
and (b) above, for such violations, breaches, defaults, terminations, or
accelerations which in the aggregate would not have a material adverse effect.
5.04 CONSENTS AND APPROVALS. Other than in connection with or in compliance with
the provisions of the HSR Act and assuming satisfaction of the applicable
conditions set forth in the Financing Letters referred to in Section 5.05, no
notice to, declaration, filing or registration with, or authorization, consent
or approval of, or permit from, any domestic or foreign governmental or
regulatory body or authority, or other Person or entity, is required to be made
or obtained by Buyer in connection with the execution, delivery and performance
of this Agreement or the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, except for consents or approvals
the failure of which to obtain would not in the aggregate impair the ability of
Buyer to perform its obligations hereunder or have a material adverse effect.
5.05 FINANCIAL ABILITY. The Buyer has delivered to Federal-Mogul complete and
correct executed copies of letters (the "Financing Letters") issued in
connection with the proposed financing of the transactions contemplated hereby
(the "Financing"). Assuming satisfaction of all applicable conditions set forth
in the Financing Letters and full funding thereunder, the proceeds from the
Financing will provide sufficient funds to consummate the transactions
contemplated by this Agreement, including, without limitation, the
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ability to pay the Purchase Price at the Closing and make any other payments
specified in this Agreement.
5.06 BROKERS' FEES. No finder's fee, brokerage commission or similar payment is
required in connection with the transactions contemplated hereby due to the
actions of Buyer or its Representatives other than any such fee which is solely
the obligation of Buyer.
5.07 LITIGATION. There are no Actions pending or, to the knowledge of Buyer,
threatened by or before any governmental authority against Buyer that could
reasonably be expected to restrain, enjoin or otherwise prevent consummation of
the transactions contemplated by this Agreement or permit such consummation only
subject to any material condition or restriction applicable to Federal-Mogul.
There are no judgments, injunctions, orders or decrees against Buyer or any of
its properties or business that may reasonably be expected to restrain, enjoin
or otherwise prevent consummation of the transactions contemplated by the
Agreement or permit such consummation only subject to any material condition or
restriction applicable to Federal-Mogul.
ARTICLE VI.
COVENANTS OF BUYER AND FEDERAL-MOGUL
Federal-Mogul and Buyer covenant and agree with each other as follows:
6.01 FURTHER ASSURANCES; HSR ACT FILINGS.
(a) Upon the terms and subject to the conditions contained herein, the
parties agree, both before and after the Closing, to use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement and to execute
any documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions contemplated
hereunder. Without limiting the foregoing, the parties agree to use their
respective commercially reasonable efforts (i) to obtain all necessary waivers,
consents and approvals from any third parties (including stockholders and
governmental authorities, whether foreign or domestic) necessary to authorize,
approve or permit the transfer of the Business to Buyer, (ii) to obtain all
necessary Permits as are required to be obtained under any Regulations whether
foreign or domestic, (iii) to defend all Actions challenging this Agreement or
the consummation of the transactions contemplated hereby, (iv) to give all
notices to, and make all registrations and filings with third parties, including
without limitation submissions of information requested by governmental
authorities whether foreign or domestic and (v) to fulfill all conditions to
this Agreement. Notwithstanding anything contained in this Agreement to the
contrary, none of the parties or Federal-Mogul shall be required to commence
litigation or divest or hold separate any business or Assets in connection with
the consummation of the transactions contemplated
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hereby, and nothing contained herein shall require the Buyer to enter into any
agreement or other arrangement for the financing of the transactions
contemplated hereby on terms that are not satisfactory to the Buyer in its sole
discretion (it being understood that the terms of the financing letters
previously delivered to Federal-Mogul are satisfactory to the Buyer in all
respects).
(b) Within ten days after the execution and delivery of this Agreement
or as soon thereafter as the parties shall agree, Buyer and Federal-Mogul shall
make all filings required under the HSR Act, and Buyer and Federal-Mogul shall
promptly respond to any Department of Justice or Federal Trade Commission
requests for further information. The filing fees to be paid pursuant to the HSR
Act in connection with the transactions contemplated by this Agreement shall be
borne by the parties as provided in the HSR Act. In addition, Buyer and
Federal-Mogul shall promptly commence all action required under this Section
6.01 after the date hereof.
6.02 CONDUCT OF BUSINESS. Except for the transactions described in Schedule
6.02, from the date hereof through the Closing Date, Federal-Mogul shall conduct
the Business in the ordinary course consistent with past practices and shall use
its commercially reasonable efforts to (i) retain the services of the present
employees and agents of the Business, (ii) maintain good business relationships
with third parties having business dealings with the Business and (iii) maintain
all material Permits. Without limiting the generality of the foregoing, from the
date hereof until the Closing Date, (A) Federal-Mogul shall not, and shall cause
the Business not to, sell, lease, license or otherwise dispose of (or commit to
sell, lease, license or otherwise dispose of) any Assets except pursuant to
existing Contracts and otherwise in the ordinary course consistent with past
practice, and (B) Federal-Mogul may make any capital expenditure or series of
related capital expenditures provided that they are of $500,000 or less.
6.03 ACCESS OF BUYER. During the period from the date hereof through the Closing
Date, Federal-Mogul will afford Buyer and its authorized Representatives
reasonable access to the sites, properties, books and records owned or leased by
the Business and shall furnish Buyer with such additional financial and
operating data and other information regarding the Business as Buyer may from
time to time reasonably request.
6.04 CERTAIN COOPERATION. Provided Federal-Mogul determines, in its sole
discretion, that it does not interfere with the operations of the Business,
Federal-Mogul agrees to provide, and shall cause its Representatives to provide,
reasonable cooperation in connection with the arrangement of any financing to be
consummated contemporaneous with or at the Closing in respect of the
transactions contemplated by this Agreement and the other Transaction Documents,
including without limitation, participation in meetings, due diligence sessions,
and the preparation of offering memoranda, all at the Buyer's sole expense. In
addition, Federal-Mogul shall use its commercially reasonable efforts to cause
Ernst & Young LLP to consent to the inclusion of the Audited Financial
Statements in any Securities and Exchange Commission filings to be made by
TransDigm, Inc. if such Audited Financial Statements are required to be included
therein.
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6.05 NOTICES. Between the date hereof and the Closing Date, Federal-Mogul and
the Buyer shall give prompt notice in writing (a "Notice of Change") to the
other of: (i) any information that indicates that, to its knowledge, any of its
representations or warranties contained herein was not true, accurate, and
correct (or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they are made, not
misleading) as of the date hereof or will not be true and correct at and as of
the Closing Date with the same force and effect as if made at and as of the
Closing Date, (ii) the occurrence or non-occurrence of any event which will
result, or has a reasonable prospect of resulting, in the failure of any
condition, covenant or agreement contained in this Agreement or any Transaction
Document to be complied with or satisfied by it, (iii) any failure of any party
to comply with or satisfy any condition, covenant or agreement to be complied
with or satisfied by it under this Agreement or any Transaction Document, and
(iv) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement or the Transaction Documents or that such
transactions otherwise may violate the rights of or confer remedies upon such
Person. All representations and warranties shall be deemed to be modified by the
Notice of Change, and the party providing the Notice of Change shall be
responsible only for the representation or warranty as modified.
6.06 PUBLIC ANNOUNCEMENTS. The parties shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement.
6.07 EXCLUSIVITY.
(a) Until June 15, 2001, Federal-Mogul shall not, and shall cause its
affiliates, Subsidiaries, stockholders, employees and Representatives not to,
directly or indirectly, (i) solicit or initiate, or encourage the submission of,
inquiries, proposals or offers relating to, (ii) respond to any submissions,
inquiries, proposals or offers relating to, (iii) participate or engage in any
negotiations or discussions with, or provide any information to, any Person
relating to, (iv) otherwise cooperate in any way with any Person in connection
with any, or (v) enter into any agreement or agreement in principle providing
for or relating to (x) any acquisition, merger, business combination,
recapitalization, liquidation, dissolution or similar transaction involving all
or any portion of the Business or the Assets or all or any portion of
Federal-Mogul's capital stock or other equity interests (including, without
limitation, any such transaction accomplished by way of such a transaction
involving any of the affiliates or Subsidiaries of Federal-Mogul Corporation),
(y) any purchase of any Assets or all or any portion of the Business or any sale
of Assets or all or any portion of the Business (other than sales permitted in
Section 6.02 or Section 4.19) or (z) any transaction inconsistent with the
transactions contemplated by this Agreement or the Transaction Documents, in
each case, without first obtaining the written approval of the Buyer, other than
with the Buyer or its Representatives or governmental authorities with respect
to the transactions contemplated by this Agreement and the Transaction
Documents. Federal-Mogul shall immediately
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provide written notification to the Buyer if any submissions, inquiries,
proposals or offers are made prior to June 15, 2001 relating to the foregoing.
(b) Federal-Mogul shall, and shall cause its affiliates, Subsidiaries,
stockholders, and Representatives to, immediately cease and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any persons conducted heretofore with respect to, or that
could reasonably be expected to lead to, any of the transactions, events or
actions described in Section 6.07(a). Federal-Mogul shall not, and shall cause
its Representatives not to, without the prior written consent of the Buyer,
release any Person from, or waive any provision of, any confidentiality or
standstill agreement to which any of them is a party and which relates to the
Business, the Assets, or Federal-Mogul.
ARTICLE VII.
CONDITIONS TO FEDERAL-MOGUL'S OBLIGATIONS
The obligations of Federal-Mogul to consummate the transactions
provided for hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions set forth in this Article VII.
Federal-Mogul may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that such waiver shall only be
effective if in writing and signed by a duly authorized executive officer of
Federal-Mogul.
7.01 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Buyer contained in this Agreement and the other Transaction
Documents (i) that are qualified by materiality or material adverse effect shall
be true and correct as of the date of this Agreement and as of the Closing Date
as though made on the Closing Date and (ii) that are not so qualified by
materiality or material adverse effect shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date, and Buyer shall have performed in all material
respects all agreements and covenants required hereby to be performed by it
prior to or at the Closing Date. Federal-Mogul shall have received a certificate
signed by a duly authorized officer of the Buyer confirming the foregoing as of
the Closing Date.
7.02 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All consents, approvals and
waivers from governmental authorities necessary to permit consummation of the
transactions contemplated by this Agreement and the Transaction Documents shall
have been obtained. The applicable waiting period, including any extension
thereof, under the HSR Act shall have expired.
7.03 NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No Actions by any governmental
authority or other Person shall have been instituted or threatened for the
purpose of enjoining or preventing the transactions contemplated by this
Agreement or the
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Transaction Documents or that question the validity or legality of the
transactions contemplated hereby or thereby.
7.04 AUTHORIZATION DOCUMENTS. Federal-Mogul shall have received from Buyer
resolutions adopted by the Board of Directors of Buyer approving this Agreement
and the Transaction Documents and the transactions contemplated hereby and
thereby, certified by Buyer's corporate secretary or other appropriate person.
7.05 CLOSING DELIVERIES AND TRANSACTION DOCUMENTS. The Buyer shall have made the
deliveries required by Section 3.03.
7.06 OPINION OF COUNSEL. Federal-Mogul shall have received an opinion of Xxxxxx
& Xxxxxxx, counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to Federal-Mogul.
7.07 NOTICE OF CHANGE. Federal-Mogul shall have not received a Notice of Change.
7.08 GUARANTEE. The obligations of TransDigm, Inc. or the Buyer under the
Guarantee and Support Agreement shall not have been denied, disavowed or
disaffirmed by TransDigm, Inc. or the Buyer or any person acting on behalf of
either of them, and the Guarantee and Support Agreement shall be in full force
and effect with respect to TransDigm, Inc. and the Buyer.
ARTICLE VIII.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate any of the transactions provided
for hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions set forth in this Article VIII. Buyer may waive
any or all of these conditions in whole or in part without prior notice;
provided, however, that such waiver shall only be effective if in writing and
signed by a duly authorized executive officer of Buyer.
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8.01 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Federal-Mogul contained in this Agreement and the other
Transaction Documents (i) that are qualified by materiality or Material Adverse
Effect shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date and (ii) that are not so
qualified by materiality or Material Adverse Effect shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except as to such representations which
speak as of a specific date or time (which only need be true and correct as of
such date or time), and Federal-Mogul shall have performed in all material
respects all agreements and covenants required hereby to be performed by it
prior to or at the Closing Date. The Buyer shall have received a certificate
signed by a duly authorized officer of Federal-Mogul confirming the foregoing as
of the Closing Date.
8.02 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All consents, approvals and
waivers from governmental authorities, including the approval of the Federal
Trade Commission or Department of Justice with regard to HSR Act filings,
necessary to permit consummation of the transactions contemplated by this
Agreement and the Transaction Documents shall have been obtained. The applicable
waiting period, including any extension thereof, under the HSR Act shall have
expired.
8.03 NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No Action by any governmental
authority or other Person shall have been instituted or threatened for the
purpose of enjoining or preventing the transactions contemplated by this
Agreement or the Transaction Documents or that question the validity or legality
of the transactions contemplated hereby or thereby.
8.04 AUTHORIZATION DOCUMENTS. Buyer shall have received from Federal-Mogul
resolutions adopted by the Board of Directors of Federal-Mogul approving this
Agreement and the Transaction Documents and the transactions contemplated hereby
and thereby, certified by Federal-Mogul's secretary or other appropriate person.
8.05 CLOSING DELIVERIES AND TRANSACTION DOCUMENTS. Federal-Mogul shall have made
the deliveries required by Section 3.02.
8.06 OPINION OF COUNSEL. The Buyer shall have received an opinion of internal
counsel to Federal-Mogul, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Buyer, subject to the qualification of not being
licensed to practice law in New York.
8.07 FINANCING. The funding contemplated by the Financing Letters shall have
been obtained.
8.08 REPAYMENT OF INDEBTEDNESS. All Encumbrances relating to Indebtedness of the
Business that may be outstanding on the Closing Date (together with all interest
accrued thereon through the Closing Date and any prepayment premiums, penalties
or fees) shall
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have been released. The creditors under any such Indebtedness shall have
terminated and released all Encumbrances of any kind on the Assets securing such
Indebtedness. The Buyer shall have received copies of such evidences of
termination and release by the creditors as are reasonably satisfactory to the
Buyer.
8.09 NOTICE OF CHANGE. The Buyer shall not have received a Notice of Change.
8.10 CERTAIN CONSENTS. The Buyer shall have received evidence, in form and
substance reasonably satisfactory to the Buyer, that the Persons whose consents
are required to assign or approve the transfer to the Buyer of the Contracts
listed on Schedule 8.10 have been obtained.
8.11 GUARANTEE. The obligations of Federal-Mogul Corporation under the Guarantee
and Support Agreement shall not have been denied, disavowed or disaffirmed by
Federal-Mogul Corporation or any person acting on its behalf, and the Guarantee
and Support Agreement shall be in full force and effect with respect to
Federal-Mogul Corporation.
ARTICLE IX.
ACTIONS BY FEDERAL-MOGUL AND BUYER AFTER THE CLOSING
9.01 BOOKS AND RECORDS. Federal-Mogul and Buyer agree that each shall cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and personnel (without substantial disruption of
employment) retained and remaining in existence after the Closing Date that are
related to the Business and that are necessary or useful in connection with any
tax inquiry, audit, investigation or dispute, any litigation or investigation or
any other matter requiring any such Books and Records, collection of Trade
Accounts Receivable, information relating to any claim that Federal-Mogul may
wish to make with its insurers relating to the operation of the Business before
or after Closing (whether in connection with a claim by or against Federal-Mogul
or the Business), or other information or employees for any reasonable business
purpose. The party requesting any such Books and Records, information or
employees shall bear all of the out-of-pocket costs and expenses (including
without limitation, attorneys' fees, but excluding reimbursement for salaries
and employee benefits) reasonably incurred in connection with providing such
Books and Records, information or employees.
9.02 SURVIVABILITY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in this Agreement or in any Transaction Document delivered
pursuant to this Agreement, unless otherwise stated, shall survive the Closing
until the close of business eighteen (18) months from the Closing Date.
Notwithstanding the preceding sentence, the representations and warranties set
forth in (i) Section 4.12 (tax matters) shall survive the Closing until the
expiration of the applicable statute of limitations plus 60 days, and (ii)
Section 4.14 (environmental) and Section 4.04 (title to Assets) shall survive
the Closing Date for a period of three years. Notwithstanding the foregoing, any
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representation or warranty in respect of which indemnification may be sought
under this Agreement shall survive the time at which it would otherwise
terminate pursuant to this Section 9.02, if notice of the specific inaccuracy or
breach thereof giving rise to such right of indemnification shall have been
given in detail and in writing to the Indemnifying Party prior to such time.
9.03 INDEMNIFICATION BY FEDERAL-MOGUL.
(a) Subject to the provisions of this Article IX, Federal-Mogul agrees
to indemnify, defend and hold Buyer and its affiliates and Representatives
(collectively, the "Buyer Indemnified Parties") harmless from and against any
and all costs, expenses, fees, charges, losses, deficiencies, liabilities,
obligations, damages, injuries, demands, suits, actions, claims, judgments and
settlements, including, without limitation, interest and penalties, reasonable
attorney's fees and expenses, all amounts incurred in the investigation (but
excluding salaries and overhead of the then current employees of the Indemnified
Parties), defense or settlement of any of the foregoing and costs of enforcing
this indemnity (collectively, "Losses") suffered or incurred by any Buyer
Indemnified Party (whether resulting from third party claims or otherwise)
arising out of, resulting from or relating to (i) any misrepresentation or
breach of any representation or warranty made by Federal-Mogul in this Agreement
or in any Transaction Document, (ii) any breach or violation of any covenant or
agreement of Federal-Mogul contained in this Agreement or in any Transaction
Document, (iii) any Excluded Assets or (iv) any Excluded Liabilities.
(b) Claims made by the Buyer pursuant to the indemnification
obligations of Federal-Mogul under Article IX shall be paid from funds
representing the Escrow Amount held pursuant to the Escrow Agreement, with
recourse to Federal-Mogul for such Claims in the event such funds are
insufficient to cover such Claims.
(c) Notwithstanding anything in this Agreement to the contrary,
Federal-Mogul agrees to indemnify, defend and hold the Buyer Indemnified Parties
harmless from and against any and all Losses suffered or incurred by any Buyer
Indemnified Party (whether resulting from third party claims or otherwise) as a
result of Buyer's purchase of the Assets and assumption of Assumed Liabilities
or the consummation of the transactions contemplated by this Agreement or the
Transaction Documents and arising out of resulting from or relating to, directly
or indirectly, any Asbestos Claim.
9.04. INDEMNIFICATION BY BUYER. Subject to the provisions of this Article IX,
Buyer agrees to indemnify, defend and hold Federal-Mogul and its affiliates and
Representatives (collectively, the "F-M Indemnified Parties") harmless, from and
against any and all Losses suffered or incurred by any F-M Indemnified Party
(whether resulting from third party claims or otherwise) arising out of,
resulting from or relating to (a) any misrepresentation or breach of any
representation or warranty made by Buyer in this Agreement or in any Transaction
Document, (b) any breach or violation of any covenant or agreement of Buyer
contained in this Agreement or in any Transaction Document, (c)
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Assets, or (d) Assumed Liabilities.
9.05 LIMITATIONS ON INDEMNITY.
(a) The Buyer Indemnified Parties and the F-M Indemnified Parties agree
not to seek recourse against, and shall not recover from Federal-Mogul or the
Buyer, as the case may be, under this Section 9 on account of any Loss with
respect to Claims made pursuant to Section 9.03(a)(i) or Section 9.04(a), as the
case may be, until, and then only to the extent that, the cumulative and
aggregate amount of all such individual Losses of the Buyer Indemnified Parties
or the F-M Indemnified Parties, as the case may be, recoverable under Section
9.03(a)(i) or Section 9.04(a), as the case may be, exceeds $1.5 million.
(b) The aggregate liability of Federal-Mogul or the Buyer, as the case
may be, under Sections 9.03(a)(i) and (ii) or Sections 9.04(a) and (b), as the
case may be (other than with respect to Federal-Mogul's representations and
warranties relating to title to Assets contained in Section 4.04) shall not
exceed an amount equal to 20% of the Purchase Price, as adjusted pursuant to
Section 2.07. The aggregate liability of Federal-Mogul under Federal-Mogul's
representations and warranties relating to title to Assets contained in Section
4.04 shall not exceed an amount equal to the Purchase Price, as adjusted
pursuant to Section 2.07.
(c) The obligations of any party hereto to indemnify, defend and hold
harmless any other party pursuant to (i) Section 9.03(a)(i) and Section 9.04(a),
shall terminate when the applicable representation or warranty expires pursuant
to Section 9.02, (ii) Sections 9.03(a)(ii), 9.03(a)(iii), and 9.03(a)(iv) and
Sections 9.04(b), (c), and (d), shall terminate on the date which is three years
from the Closing Date and (iii) Section 9.03(c), shall survive the Closing Date
without time limitation.
9.06. EXCLUSIVE REMEDY. Except for remedies that cannot be waived as a matter of
law, including, without limitation, claims based on fraud, the indemnification
obligations under this Article IX shall be the sole and the exclusive remedy of
the parties hereto with respect to:
(a) any breach of any representation, warranty, covenant or agreement
under this Agreement or any Transaction Document other than the Intellectual
Property Agreements, the Cambridge Agreements, the Burlington Agreements, and
the Sparta Agreement, by any party hereto or thereto; and
(b) any breach of any representation or warranty under the Intellectual
Property Agreements;
PROVIDED that nothing herein shall be construed or interpreted as limiting or
impairing the rights or remedies that the parties hereto or thereto may have at
equity for injunctive relief or specific performance.
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9.07 INDEMNIFICATION PROCEDURES.
(a) In order for an Indemnified Party to seek indemnification pursuant
to this Article IX, the Indemnified Party must promptly, but in no event later
than ten (10) business days after the Indemnified Party has actual knowledge of
the facts constituting the basis for such claim, give notice of such claim for
indemnification to the Indemnifying Party after the Indemnified Party becomes
aware of the basis for a claim; PROVIDED, HOWEVER, that failure of the
Indemnified Party to give such notice promptly shall not render the Indemnifying
Party's obligation of indemnity inapplicable to such claim unless, but only to
the extent, such failure prejudices the Indemnifying Party in the defense or
settlement of such claim. Such notice shall (i) be in writing, (ii) be given
prior to the applicable date set forth in Section 9.02, (iii) specifically
identify the matters which have given rise to such indemnity claims in
reasonable detail, and (iv) setting forth the amount of the loss, damage or
expense suffered, or which may be suffered, by the Indemnified Party.
(b) Upon receipt by an Indemnifying Party of the notice of claim for
indemnity required to be given by the Indemnified Party under Section 9.07(a)
above, the Indemnifying Party shall have the right, at any time thereafter, to
be represented, at such Person's own expense, by legal counsel and/or
accountants, consultants and experts of such Person's own choosing, with respect
to (i) any settlement negotiations or (ii) any Action, including any appeal
proceeding ((i) and (ii) collectively, "CLAIMS"), in each case with respect to
the matter giving rise to the Claim made by a Person who is not a party hereto.
In the event of any Claim by a Person who is not a party hereto, the
Indemnifying Party, at its option, shall have the right to assume the control
and defense of such Claim (at such Person's expense and with legal counsel
reasonably acceptable to the Indemnified Party), including, without limitation,
the right to control all negotiations, litigation, arbitration, settlements,
compromises and appeals of such Claim; PROVIDED, HOWEVER, that prior to entering
into any final settlement or compromise, (x) the Indemnifying Party shall use
all reasonable efforts in light of the then prevailing circumstances (including,
without limitation, any express or implied time constraints on any pending
settlement offer) to consult with the Indemnified Party as to the terms of the
settlement or compromise and shall use all reasonable efforts to incorporate
suggested modifications if such modifications (1) would reduce the risk to the
Indemnified Party of liability not indemnified hereunder and (2) would not
materially adversely affect the Indemnifying Party, and (y) the Indemnifying
Party shall obtain the Indemnified Party's consent to such settlement or
compromise, other than for such consents with respect to any Claims for which
the Indemnifying Party is providing indemnification pursuant to Article IX if
(A) the Indemnifying Party has unconditionally and irrevocably acknowledged in
writing its obligation to indemnify the Indemnified Party, (B) such final
settlement or compromise by its terms unconditionally releases the Indemnified
Party completely from all liability in connection with such Claim and the
compromise and settlement thereof, and (C) such final settlement or compromise
does not provide for injunctive or other nonmonetary relief affecting the
Indemnified Party. Subject to the Indemnifying Party's right to control
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the defense of any Claim as set forth above, the Indemnified Party shall have
the right (but not the obligation) to participate in the defense of any such
Claim at such Person's own cost and expense, except with respect to any Claims
for which the Indemnifying Party is providing indemnification pursuant to
Section 9.03(c); provided that the Indemnifying Party has unconditionally and
irrevocably acknowledged in writing its obligation to indemnify the Indemnified
Party.
(c) If the Indemnifying Party fails to assume the defense of a Claim
within thirty (30) days after receipt of notice thereof from the Indemnified
Party, the Indemnified Party may (but shall not be obligated to) upon delivering
notice thereof to the Indemnifying Party, have the right to undertake the
defense, compromise or settlement of such Claim (with counsel reasonably
acceptable to the Indemnifying Party); PROVIDED, HOWEVER, that the Indemnifying
Party shall have the right to participate as described above; and PROVIDED,
FURTHER, that the Indemnified Party shall not compromise or settle a Claim
without first obtaining the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld).
(d) The Indemnified Party shall supply the Indemnifying Party with such
information requested by the Indemnifying Party as is necessary or advisable for
the Indemnifying Party to control or defend in any Action to the extent
permitted by this Article IX (including without limitation, access to files,
records and employees).
(e) Compliance with the provisions of this Section 9.07 shall be a
prerequisite to any obligation of an Indemnifying Party to indemnify. In the
defense of any Claim, regardless of who is in control, each of the parties shall
fully cooperate with the other party, and shall cause their affiliates, counsel
and advisors to do so, and shall make available to each other all relevant books
and records during normal business hours and shall furnish each other such
assistance as each may reasonably request in connection with such defense.
(f) Buyer and Federal-Mogul agree, to the extent permitted by
applicable law, that indemnification payments made to either party shall be
treated as a purchase price adjustment for all tax purposes.
9.08 DUPLICATION OF REMEDIES. Neither Federal-Mogul nor the Buyer shall be
entitled to make a claim against the other under this Agreement, whether such
claim is for a breach of warranty under an indemnity or for a reduction of the
Purchase Price as provided in Section 2.03, if such claim would result in Buyer
or Federal-Mogul, as the case may be, being compensated twice with respect to
the same cause of action or in connection with the same subject matter.
9.09 EMPLOYEE MATTERS.
(a) As of the Closing Date, Buyer shall offer employment to all
employees of the Business (except those persons on leaves of absence and
short-term or long-term
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disability all of whom, as of the date of this Agreement, are as listed on
Schedule 9.09(a) ("Inactive Offered Employees")), including Xxxxxxx Xxxxxxxx
(the "Offered Employees") at the same salary and with respect to employees who
are residing and employed in the United States, with generally comparable
benefits (in the aggregate) as provided to the Offered Employees immediately
prior to the Closing Date under the Employee Plans (but not including any stay
bonuses and post-retirement welfare benefits). Buyer shall further offer
employment to the Inactive Offered Employees who return from such leave within
three months of the Closing Date. Each such offer to Inactive Offered Employees
shall be made upon the return from leave and on terms that are provided by the
Buyer to similarly situated Hired Employees (as defined below), determined as of
the time an applicable Inactive Offered Employee accepts employment with the
Buyer. Nothing in this Agreement shall (i) prevent Buyer from altering the
terms, salary, wages or benefits after the Closing Date of any Offered Employee
or Inactive Offered Employee who accepts such offer of employment (each, a
"Hired Employee") except as specifically provided herein or (ii) create any
obligation on the part of the Buyer to continue the employment of any Hired
Employee for any definite period of time following the Closing Date.
Federal-Mogul shall provide to Buyer upon Buyer's reasonable request such
documents that are necessary for Buyer to establish the plans for the Hired
Employees as required in this section 9.09(a).
(b) From and after the Closing Date, Federal-Mogul shall remain solely
liable for any and all liabilities relating to or arising in connection with the
requirements of COBRA (Section 4980B of the Code or Part 6 of Title I, Subtitle
B or ERISA) to provide continuation of health care coverage under any Employee
Plan in respect of any current, former or retired employees of the Business who
do not become Hired Employees (the "Retained Employees").
(c) Following the Closing Date, Buyer shall cause all applicable
employee benefit plans of Buyer to provide that a Hired Employee's period of
employment with the Business (as established immediately prior to Closing) shall
be treated as service for Buyer, for vesting under Buyer's plans (or, subject to
Section 9.09(g), for any other purpose required under applicable Belgian law
with respect to benefits provided to Xxxxxxx Xxxxxxxx). Buyer further agrees to
recognize the vacation and sick leave days accumulated by the Hired Employees
during the time they were employed by Federal-Mogul. Buyer's plans which are
substantially similar to the Welfare Plans shall waive any waiting period and
pre-existing condition limitations under such plans.
(d) Neither Federal-Mogul nor Buyer shall take any action or fail to
take any action with respect to any of the employees of the Business which shall
give rise to any liability of the other party to any former employees of the
Business or to any unit of local government under the Workers Adjustment and
Retraining Notification Act, or any similar state or local law, rule or
regulation.
(e) Buyer acknowledges that the Hired Employees shall no longer be
eligible and shall therefore cease to participate in the Pension Plans as of the
Closing Date. Federal-
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Mogul shall retain funds in its Pension Plans sufficient to meet Accrued Benefit
Obligations. Buyer acknowledges that the assets of any Pension Plan are excluded
from this Agreement and are not being transferred to Buyer.
(f) Buyer shall, in accordance with, and to the extent permitted
pursuant to Revenue Procedure 96-60, 1996-2 C.B. 399, assume all responsibility
for preparing and filing Form W-2, Wage and Tax Statements, Form W-3,
Transmittal of Income and Tax Statements, Form 941, Employer's Quarterly Federal
Tax Returns, Form W-4, Employee's Withholding Allowance Certificates, and Form
W-5, Earned Income Credit Advance Payment Certificates, and the applicable
employee withholding tax forms required under foreign law for wages paid after
the Closing Date. For this purpose, Federal-Mogul and Buyer agree to comply with
the alternative procedure described in Section 5 of Revenue Procedure 96-60, or
corresponding provisions of foreign law, if applicable.
(g) If the Buyer terminates the employment of Xxxxxxx Xxxxxxxx within
six months after the Closing Date, and provided that it does not re-hire or
contract directly or indirectly for the services of Xxxxxxx Xxxxxxxx within a
further one-year period, Federal-Mogul shall be responsible for any and all
legally imposed severance costs except to the extent that acts of the Buyer
(other than continued employment on substantially similar terms as he is
currently employed) cause such costs to be greater than they would be if he were
terminated as of the Closing Date.
9.10 TAX MATTERS.
(a) Federal-Mogul and Buyer shall provide each other with such
assistance as may reasonably be requested by them in connection with the
preparation of any Tax Return or Tax audit or other examination by any
governmental authority or any judicial or administrative proceeding related to
liability for Taxes. Federal-Mogul and Buyer shall retain and provide each other
with any records or information which may be relevant to such preparations,
audit examination, proceeding or determination. The party requesting assistance
hereunder shall reimburse the other for reasonable out-of-pocket expenses
incurred in providing such assistance.
(b) In the event of an Action by any taxing authority or governmental
entity or other third-party for Taxes, Buyer shall permit Federal-Mogul, at
Federal-Mogul's expense, to control any proceeding relating to Taxes for which
Federal-Mogul may reasonably be expected to indemnify Buyer, unless such
proceeding also relates to Taxes for which Buyer may be liable, in which case
Buyer and Federal-Mogul shall cooperate in good faith with respect to such
proceeding.
(c) Buyer shall pay when due any Taxes that are Assumed Liabilities.
Federal-Mogul shall pay when due any Taxes relating to the Business that are not
Assumed Liabilities. Buyer shall promptly pay (within 30 days of receipt) to
Federal-Mogul the amount of any Tax refund, credit or offset (including any
interest paid or credited with
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respect thereto) received, or utilized in the case of a credit or offset, by
Buyer to the extent such refund, credit or offset relates to Taxes paid (either
directly to a taxing authority or to Buyer pursuant to Article IX of this
Agreement) by Federal-Mogul.
9.11 TRADE ACCOUNTS RECEIVABLE. Buyer agrees to use reasonable best efforts to
assist Federal-Mogul in the collection of Trade Accounts Receivable, and to
promptly remit to Federal-Mogul no later than the first business day following
the week in which the Buyer receives any funds collected by Buyer that may
reasonably be attributed to Trade Accounts Receivable. Federal-Mogul agrees not
to, after the Closing Date, contact those customers of the Business that
continue to pay the Trade Accounts Receivable in accordance with past practice,
provided that all Trade Accounts Receivable are remitted in accordance with the
foregoing.
9.12 ALLOCATION. Buyer and Federal-Mogul agree that as soon as reasonably
practical after the date of this Agreement, but in any event before Closing,
they shall allocate the Purchase Price and all other capitalized costs among the
Assets in accordance with an allocation schedule (the "Purchase Price Allocation
Schedule") proposed by Buyer and reasonably acceptable to Federal-Mogul, which
shall be prepared in a manner required by Section 1060 of the Code . Within 30
days of the Final Payment Date, Buyer and Federal-Mogul shall adjust the
Purchase Price Allocation Schedule as may be appropriate based on the Final
Effective Net Working Capital Statement and the Final Effective Date Balance
Sheet. Buyer and Federal-Mogul shall prepare mutually acceptable and
substantially identical initial and supplemental IRS Forms 8594 "Asset
Acquisition Statements Under Section 1060" consistent with the Purchase Price
Allocation Schedule which the parties shall use to report the transactions
contemplated by this Agreement to the applicable taxing authorities. Neither
Buyer nor Federal-Mogul will contend or represent that such allocation is not a
correct allocation.
9.13 CONFIDENTIALITY.
(a) From and after the Closing, for a period of three years from the
Closing Date Federal-Mogul shall, and shall cause each of its affiliates and
Representatives to maintain in strict confidence any and all confidential
information concerning the Assets and the Business. It is understood that
Federal-Mogul shall not have any liability hereunder with respect to information
that (i) is in or, through no fault of Federal-Mogul or any of its
Representatives, comes into the public domain, (ii) Federal-Mogul is legally
required to disclose, or (iii) is or becomes available to Federal-Mogul from a
source (other than Buyer or any of its affiliates or Representatives) which, to
the best of Federal-Mogul's knowledge, is not prohibited from disclosing such
information to Federal-Mogul by a legal, contractual or fiduciary obligation.
(b) In the event that Federal-Mogul or any of its affiliates or
Representatives are required by law to disclose any such information,
Federal-Mogul shall promptly notify the Buyer in writing so that the Buyer may
seek a protective order and/or other motion to prevent or limit the production
or disclosure of such information. If such motion has
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been denied, then the Person required to disclose such information may disclose
only such portion of such information which, based on advice of Federal-Mogul's
outside legal counsel, is required by law to be disclosed (provided that the
Person required to disclose such information shall use all reasonable efforts to
preserve the confidentiality of the remainder of such information).
Federal-Mogul shall continue to be bound by its obligations pursuant to this
Section 9.13 for any information that is not required to be disclosed, or that
has been afforded protective treatment, pursuant to such motion.
(c) From and after the Closing, for a period of three years from the
Closing Date the Buyer shall, and shall cause each of its affiliates and
Representatives to, maintain in strict confidence any and all confidential
information concerning Federal-Mogul which is not related to the Assets or the
Business and which the Buyer is not purchasing or licensing in connection with
the transactions contemplated by this Agreement or the Transactions Documents.
It is understood that the Buyer shall not have any liability hereunder with
respect to information that (i) is in or, through no fault of the Buyer or any
of its Representatives, comes into the public domain, (ii) the Buyer is legally
required to disclose, or (iii) is or becomes available to the Buyer from a
source (other than Federal-Mogul or any of its affiliates or Representatives)
which, to the best of the Buyer's knowledge, is not prohibited from disclosing
such information to the Buyer by a legal, contractual or fiduciary obligation.
(d) In the event that the Buyer or any of its affiliates or
Representatives are required by law to disclose any such information, the Buyer
shall promptly notify Federal-Mogul in writing so that Federal-Mogul may seek a
protective order and/or other motion to prevent or limit the production or
disclosure of such information. If such motion has been denied, then the Person
required to disclose such information may disclose only such portion of such
information which, based on advice of the Buyer's outside legal counsel, is
required by law to be disclosed (provided that the Person required to disclose
such information shall use all reasonable efforts to preserve the
confidentiality of the remainder of such information). The Buyer shall continue
to be bound by its obligations pursuant to this Section 9.13 for any information
that is not required to be disclosed, or that has been afforded protective
treatment, pursuant to such motion.
(e) Upon the Closing the confidentiality letter dated December 1, 2000
shall terminate and be of no further force or effect.
9.14 INTELLECTUAL PROPERTY MEDIATION. Notwithstanding anything to the contrary
contained herein, in the event of a dispute concerning any of Sections
4.20(c)(i) through 4.20(c)(viii) and Section 4.20(d) before any litigation is
commenced a representative of each party with authority to settle on behalf of
the party shall meet in person in a good faith effort to resolve the dispute. If
no resolution is reached within 30 days of such meeting, within two weeks
thereafter the parties shall engage in a non-binding facilitative mediation with
a neutral attorney mutually agreed upon by both parties specializing in patent
or trademark law (as applicable) serving as the mediator; provided that if such
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mediation does not resolve the dispute between the parties within twenty (20)
business days after having been commenced, either party may terminate such
mediation and commence litigation.
9.15 INTERNET RESOURCES. Within 30 days after the Closing Date, the Buyer shall
remove from all of its web sites (including, without limitation,
xxx.xxxxxxxxxxxxxxxx.xxx and xxx.xxxxxxxxxx.xxx) all mention and references to
Federal-Mogul (including that displayed by the "view source" function) and
hyperlinks to xxx.xxxxxxx-xxxxx.xxx, xxx.xxxxxxxx.xxx, and their derivatives
except to the extent that the Buyer first obtains the express prior written
consent of Federal-Mogul.
ARTICLE X.
MISCELLANEOUS
10.01 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of Buyer and Federal-Mogul;
(b) by either Buyer or Federal-Mogul by giving written notice to the
other party if the Closing shall not have occurred by June 30, 2001, unless
extended by written agreement of the parties; provided that the party seeking
termination pursuant to this subsection (b) is not in default or breach
hereunder and provided, further, that the right to terminate this Agreement
under this subjection (b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by either Buyer or Federal-Mogul by giving written notice to the
other party if any governmental authority shall have issued an executive order,
decree, injunction or other ruling prohibiting the consummation of any of the
transactions contemplated by this Agreement, and such executive order, decree,
injunction or other ruling shall not be subject to appeal or shall have become
final and nonappealable.
In the event that this Agreement shall be terminated pursuant to this Section,
all obligations of the parties hereto under this Agreement shall terminate and
there shall be no liability of any party hereto to any other party and each
party hereto shall bear its own expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement, except
that (i) the obligations of the parties under Section 6.01(b), Section 10.03,
Section 10.05 and Section 10.08 of this Agreement shall remain in full force and
effect and (ii) such termination shall not relieve either party of any liability
for any breach of this Agreement.
10.02 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and
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permitted assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other party, except that Buyer may
assign any or all of its rights and/or obligations hereunder to (i) one of its
wholly-owned Subsidiaries, (ii) at or after the Closing, any financing source of
Buyer or TransDigm, Inc. or (iii) after the Closing, to any other Person, in
each case, without the consent of Federal-Mogul; provided, that any such
assignment shall not relieve Buyer from any liability hereunder.
10.03 NOTICES. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by fax, electronic or digital transmission method;
two days after it is sent, if sent for next day delivery to a domestic address
by recognized overnight delivery service; and upon receipt, if sent by certified
or registered mail, return receipt requested. In each case, notice shall be sent
to:
If to Buyer, addressed to:
President
TransDigm, Inc.
26380 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxx 00000
Fax: 000-000-0000
With a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
If to Federal-Mogul: Xxxxxxx X. Xxxxx
Vice President - Corporate Development
c/o Federal-Mogul Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
With a copy to: x/x Xxxxxxx-Xxxxx Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No. (000) 000-0000
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Or to such other place and with such other copies as either party may
designate as to itself by written notice to the others.
10.04 FURTHER ASSURANCES. The parties shall execute and deliver without further
consideration any further documents, and perform such other lawful acts as may
be reasonably required to fully secure and/or evidence the rights or interests
transferred. However, Federal-Mogul shall have no responsibility for the
recording of any instrument of transfer of any item of Intellectual Property to
Buyer. Buyer shall bear that responsibility in its entirety along with any
expense; provided that, notwithstanding any of the foregoing, with respect to
any item of Intellectual Property transferred or licensed to Buyer,
Federal-Mogul at its sole expense shall be responsible for recording with the
applicable authorities all instruments of transfer relating to each such item of
Intellectual Property prior to the transfer provided for in the Intellectual
Property Agreements.
10.05 GOVERNING LAW. The laws of the State of New York shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principals of conflicts of
law. Any suit, action or proceeding by a party hereto with respect to this
Agreement, or any judgment entered by any court in respect thereof, may be
brought in any state or federal court of competent jurisdiction in the State
ofNew York, and each party hereto hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.
10.06 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together with
all exhibits and schedules hereto and the Transaction Documents, constitute the
entire agreement among the parties pertaining to the subject matter hereof and
thereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
10.07 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.08 EXPENSES. Except as expressly provided in this Agreement, each party
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
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10.09 TITLES. The titles, captions or headings of the Articles and Sections
herein are for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.10 THIRD PARTY BENEFICIARIES. No provisions of this Agreement or any
agreement or document referenced herein shall create a third-party beneficiary
relationship or otherwise confer any benefit, entitlement or right upon any
Person other than the parties to this Agreement and their permitted assigns.
[Signature Page Follows]
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AVIATION ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
Title: President
FEDERAL-MOGUL IGNITION COMPANY
By: /s/ Xxxxxxx X. Xxxxx
Title: Vice President
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