EXHIBIT 2
PURCHASE AGREEMENT
AMONG
TECUMSEH PRODUCTS COMPANY,
FASCO INDUSTRIES, INC.,
MOTORES FASCO DE MEXICO
AND
REGAL BELOIT CORPORATION
----------
Dated as of July 3, 2007
TABLE OF CONTENTS
PAGE
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ARTICLE 1 SALE AND PURCHASE.............................................. 2
1.1 Sale and Purchase of Shares.................................. 2
1.2 Sale and Purchase of Assets.................................. 2
ARTICLE 2 PURCHASE PRICE AND PAYMENT..................................... 6
2.1 Purchase Price............................................... 6
2.2 Adjustments to Initial Purchase Price........................ 6
2.3 Payment of Initial Purchase Price and Adjustment Amount...... 8
2.4 Escrow Arrangements.......................................... 9
2.5 Purchase Price Allocation.................................... 9
ARTICLE 3 CLOSING AND TERMINATION........................................ 9
3.1 Closing Date................................................. 9
3.2 Termination of Agreement..................................... 10
3.3 Procedure Upon Termination................................... 10
3.4 Effect of Termination........................................ 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................. 11
4.1 Organization and Good Standing............................... 11
4.2 Authorization of Agreement................................... 11
4.3 Capitalization............................................... 11
4.4 Subsidiaries................................................. 12
4.5 Corporate Records............................................ 12
4.6 Conflicts; Consents of Third Parties......................... 12
4.7 Ownership and Transfer of Shares and Transferred Assets...... 13
4.8 Financial Statements......................................... 13
4.9 No Undisclosed Liabilities................................... 14
4.10 Absence of Certain Developments.............................. 14
4.11 Certain Tax Matters.......................................... 15
4.12 Real Property................................................ 17
4.13 Tangible Property............................................ 18
4.14 Technology and Intellectual Property......................... 18
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TABLE OF CONTENTS
(CONTINUED)
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4.15 Material Contracts........................................... 19
4.16 Employee Benefits............................................ 21
4.17 Labor........................................................ 23
4.18 Litigation................................................... 24
4.19 Compliance with Laws; Permits................................ 24
4.20 Environmental Matters........................................ 24
4.21 Financial Advisors........................................... 25
4.22 Insurance.................................................... 25
4.23 Certain Payments............................................. 25
4.24 Relationships with Related Persons........................... 25
4.25 Inventory.................................................... 25
4.26 Major Customers and Suppliers................................ 26
4.27 Product Warranty and Product Liability....................... 26
4.28 No Other Representations or Warranties....................... 26
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................... 27
5.1 Organization and Good Standing............................... 27
5.2 Authorization of Agreement................................... 27
5.3 Conflicts; Consents of Third Parties......................... 27
5.4 Litigation................................................... 28
5.5 Investment Intention......................................... 28
5.6 Financial Advisors........................................... 28
5.7 Sufficiency of Funds......................................... 28
ARTICLE 6 COVENANTS...................................................... 28
6.1 Access to Management......................................... 28
6.2 Conduct of Business Pending the Closing...................... 29
6.3 Employee Matters............................................. 30
6.4 Preservation of Records...................................... 34
6.5 Publicity.................................................... 34
6.6 Use of Names................................................. 34
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TABLE OF CONTENTS
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6.7 Insurance.................................................... 35
6.8 Reasonable Commercial Efforts................................ 36
6.9 Contacts with Suppliers, Employees and Customers............. 37
6.10 Sellers Commitments.......................................... 37
6.11 Intellectual Property Covenants.............................. 37
6.12 Notification................................................. 37
6.13 Estoppel Certificates........................................ 38
6.14 Pre-Closing Environmental and Excluded Liabilities........... 38
6.15 Transition Services Agreement................................ 38
6.16 Supply Agreements............................................ 38
6.17 Noncompetition; Confidentiality.............................. 38
6.18 Title Insurance.............................................. 40
6.19 Survey....................................................... 40
6.20 Employer Substitution Agreement.............................. 40
ARTICLE 7 CONDITIONS TO CLOSING.......................................... 41
7.1 Condition Precedent to Obligations of Purchaser.............. 41
7.2 Condition Precedent to Obligations of Sellers................ 42
7.3 Conditions to Each Party's Obligations....................... 42
ARTICLE 8 DOCUMENTS TO BE DELIVERED...................................... 43
8.1 Documents to be Delivered by the Sellers..................... 43
8.2 Documents to be Delivered by the Purchaser................... 44
ARTICLE 9 INDEMNIFICATION................................................ 45
9.1 General Indemnification...................................... 45
9.2 Limitations on Indemnification for Breaches of
Representations and Warranties............................ 46
9.3 Limitations on Indemnification for Environmental
Liabilities............................................... 46
9.4 Survival of Representations and Warranties and Covenants..... 47
9.5 General Indemnification Procedures........................... 48
9.6 Tax Matters.................................................. 50
9.7 Exclusive Remedies........................................... 54
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TABLE OF CONTENTS
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9.8 Adjustments for Insurance and Tax Benefits................... 54
9.9 Treatment of Indemnity Payments.............................. 55
ARTICLE 10 MISCELLANEOUS................................................. 55
10.1 Certain Definitions.......................................... 55
10.2 Payment of Transfer Taxes.................................... 64
10.3 Expenses..................................................... 64
10.4 Further Assurances........................................... 64
10.5 Governing Law................................................ 64
10.6 Submission to Jurisdiction; Consent to Service of Process.... 64
10.7 Entire Agreement; Amendments and Waivers..................... 65
10.8 Table of Contents and Headings............................... 65
10.9 Notices...................................................... 65
10.10 Severability................................................. 66
10.11 Binding Effect; No Third Party Beneficiaries; Assignment..... 66
10.12 Bulk Sales Laws.............................................. 67
10.13 Disclosure Schedules......................................... 67
10.14 Rules of Construction........................................ 67
10.15 Counterparts................................................. 67
10.16 Prorations................................................... 68
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TABLE OF ANNEXES AND SCHEDULES
Schedules
SCHEDULE NAME
-------- ----
Schedule 1.2.1(a) Transferred Personal Property
Schedule 1.2.1(c) Assumed Contracts
Schedule 1.2.1(d) Transferred Real Property
Schedule 1.2.1(o) Transferred Equipment, Tools, Dies and Inventory at
Paris, TN
Schedule 1.2.2(f) Excluded Assets
Schedule 2.3.1 Sellers' Accounts
Schedule 2.3.4 Purchaser's Accounts
Schedule 2.4.2 Settlement Escrow Provisions
Schedule 2.5 Purchase Price Allocation
Schedule 4.4 Subsidiaries
Schedule 4.6.1 Conflicts
Schedule 4.6.2 Required Consents and Approvals - Sellers
Schedule 4.7 Ownership and Transfer of Shares and Transferred Assets
Schedule 4.8 Financial Statements
Schedule 4.9 Undisclosed Liabilities
Schedule 4.10 Certain Developments
Schedule 4.11 Tax Matters
Schedule 4.12 Company Properties
Schedule 4.13.1 Tangible Personal Property
Schedule 4.13.2 Assets Not Transferred
Schedule 4.13.4 Condition of Transferred Assets
Schedule 4.14.1 Registered Patents, Trademarks and Copyrights (and
Applications therefor) Included in Fasco U.S.
Intellectual Property
Schedule 4.14.2 Third Party Owners of Fasco U.S. Intellectual Property
Schedule 4.14.3 Assignments, Transfers, Conveyances or Encumbrances of
Fasco U.S. Intellectual Property
Schedule 4.14.4 Challenges to Validity and Enforceability of Fasco U.S.
Intellectual Property
Schedule 4.14.5 Third Party Infringement on or Violation of Fasco U.S.
Intellectual Property
Schedule 4.14.6.1 IP/Technology Used and Not Owned by the Company to Be
Licensed to the Company
Schedule 4.14.6.2 IP/Technology Used and Not Owned by the Company Subject to
Third-Party Licenses
Schedule 4.14.7 Company Royalty Obligations
Schedule 4.14.8 Alleged Infringements of Third Party Trademark, Copyright or
Trade Secret Rights
Schedule 4.15A Material Contracts
Schedule 4.15B Validity of Material Contracts
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SCHEDULE NAME
-------- ----
Schedule 4.16.1 Employee Benefit Plans
Schedule 4.16.2 Transferred Company Plans
Schedule 4.17.1 Labor
Schedule 4.18 Litigation
Schedule 4.19 Compliance with Laws; Permits
Schedule 4.20 Environmental Matters
Schedule 4.22 Insurance
Schedule 4.24 Related Party Transactions
Schedule 4.26.1 Major Customers
Schedule 4.26.2 Major Suppliers
Schedule 4.27 Product Liability Claims
Schedule 5.3.2 Consents, Waivers and Approvals
Schedule 5.6 Purchaser's Financial Advisors
Schedule 5.7.2 Sources of Purchaser's Financing
Schedule 6.2 Conduct of Business Pending the Closing
Schedule 6.10 List of Commitments
Schedule 6.17 Competitive Businesses of Tecumseh
Schedule 7.1.4 Consents Condition Precedent to Purchaser's Obligation
to Purchase
Schedule 7.1.7 Corrective Actions
Schedule 8.1.12 Payments or Obligations to be Satisfied on or Prior to
Closing
Schedule 9.1.1.3 Seller Retained Losses
Annexes
Annex A - Companies
Annex B - Accounting Principles
Exhibits
Exhibit 6.17.1 - Tecumseh Europe Motor Products
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of July 3, 2007 (this "Agreement"), by and
among Regal Beloit Corporation, a corporation organized and existing under the
laws of the State of Wisconsin (the "Purchaser"), Tecumseh Products Company, a
corporation organized and existing under the laws of the State of Michigan
("Tecumseh"), Fasco Industries, Inc., a corporation organized and existing under
the laws of the State of Delaware ("Fasco U.S.") and Motores Fasco de Mexico, S.
de X.X. de C.V., a corporation organized and existing under the laws of Mexico
("Fasco Mexico"). Each of Tecumseh, Fasco U.S. and Fasco Mexico are sometimes
referred to herein as a "Seller" and, collectively, as the "Sellers". Each of
Fasco U.S. and Fasco Mexico are sometimes referred to herein as an "Asset
Seller" and, collectively, as the "Asset Sellers".
WITNESSETH:
WHEREAS, Tecumseh owns all of the issued and outstanding shares of
capital stock or other form of equity of the companies set forth on Annex A
(each a "Company" and, collectively, the "Companies"), except as otherwise
indicated thereon; and
WHEREAS, the capital stock or other form of equity of the companies
set forth on Schedule 4.4 (each a "Subsidiary" and, collectively, the
"Subsidiaries"), is owned by the Company, Companies, and Persons indicated on
Schedule 4.4;
WHEREAS, Tecumseh is, through the Companies and Subsidiaries,
presently engaged in the business of designing, manufacturing and selling the
Products (as hereinafter defined); such business and Products collectively, and
as conducted and developed, designed, manufactured, marketed and sold on the
date hereof, the "Acquired Business";
WHEREAS, Tecumseh wishes to sell, and to cause to be sold by the other
Sellers, to the Purchaser, and the Purchaser desires to purchase from the
Sellers, (i) all of the Shares and (ii) certain of the assets of the Asset
Sellers, for the purchase price and upon the terms and conditions hereinafter
set forth. In addition, the Purchaser wishes to assume, and Tecumseh wishes to
have the Purchaser assume, certain liabilities of the Asset Sellers, upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in addition to the Acquired Business, Tecumseh is also
engaged in several other lines of business (the "Other Businesses"). Except as
expressly provided herein, Tecumseh and its affiliates will retain all assets,
properties, rights, liabilities and obligations related to and/or associated
with the Other Businesses; and
WHEREAS, certain terms used in this Agreement are defined in Section
10.1.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE 1
SALE AND PURCHASE
1.1 Sale and Purchase of Shares. Upon the terms and subject to the
conditions contained herein, on the Closing Date, the Sellers shall sell,
assign, transfer, convey and deliver the Shares to the Purchaser, and the
Purchaser shall purchase the Shares from the Sellers. The purchase and sale of
the Shares pursuant to this Agreement shall be effective as of 11:59 p.m. on the
Closing Date (the "Effective Time").
1.2 Sale and Purchase of Assets.
1.2.1 Transferred Assets. Upon the terms and subject to the conditions
contained herein, on the Closing Date, Tecumseh shall, or shall cause to be
sold, conveyed, assigned, transferred or delivered, and shall cause the Asset
Sellers to, sell, convey, assign, transfer and deliver, to the Purchaser (or
upon the Purchaser's request, to one or more wholly-owned subsidiaries of the
Purchaser as designated by the Purchaser), free and clear of all Liens, except
for Permitted Exceptions, and the Purchaser shall purchase, acquire and accept
from the Asset Sellers, all of the assets, properties, rights, licenses,
Contracts (or portions thereof or rights thereunder) and businesses, of every
kind and description, wherever located, whether real, personal or mixed,
tangible or intangible, that are owned, leased or licensed by the Asset Sellers
and used in the conduct of the operation of the Acquired Business by the Asset
Sellers as the same shall exist on the Closing Date, including all assets shown
on the Balance Sheet of such Asset Seller and not disposed of in the ordinary
course of business consistent with past practice as permitted by this Agreement,
and all assets of the Acquired Business acquired by the Asset Sellers after the
Balance Sheet Date and prior to the Closing as permitted by this Agreement
(collectively, the "Transferred Assets"), including all right, title and
interest of the Asset Sellers in, to and under:
(a) all personal property and interests therein, including machinery,
equipment, dies, tooling, molds, supplies, furniture, office equipment,
software, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible personal property used or held for
use in the conduct of the operation of the Acquired Business, including the
items listed on Schedule 1.2.1(a);
(b) all raw materials, work-in-process, finished goods (including
those in transit), supplies, components, service and replacement parts and other
inventories used or held for resale in the conduct of the operation of the
Acquired Business, together with related packaging materials;
(c) subject to Section 1.2.5, all rights under Contracts that relate
to the Acquired Business (the "Assumed Contract Rights") listed on Schedule
1.2.1(c);
(d) the owned and leased real property listed on Schedule 1.2.1(d);
(e) all accounts, drafts, notes and other receivables that relate to
the Acquired Business;
(f) all rights of the Asset Sellers relating to deposits and prepaid
expenses, claims for refunds (excluding Tax refunds) and rights to offset in
respect thereof, in each case as of the Closing Date, including lease and rental
payments, to the extent relating to the Acquired Business;
(g) all of the Asset Sellers' causes of action against third parties
relating to the Transferred Assets or any Assumed Liability, including rights
under manufacturers' and vendors' warranties;
(h) all Fasco Intellectual Property;
(i) all other proprietary rights and intangible property rights
relating to the Acquired Business that are transferable;
(j) all transferable licenses, permits or other governmental
authorizations used in the conduct of the operation of the Acquired Business;
(k) all books, records, files and papers, whether in hard copy or
computer format, used in the conduct of the operation of the Acquired Business,
including engineering information, sales and promotional literature, catalogs,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records and copies of any information relating to Taxes imposed on the Acquired
Business;
(l) all computer source codes, programs, software and data, including
all machine readable code, printed listings of code, documentation and related
property and information, owned by the Asset Sellers and used in the conduct of
the operation of the Acquired Business;
(m) all insurance benefits, including rights and proceeds, arising
from or relating to the Assumed Liabilities or any loss or damage with respect
to the other Transferred Assets occurring prior to the Closing;
(n) all goodwill associated with the Acquired Business, including that
arising out of or associated with any of the Fasco Intellectual Property; and
(o) the tools and dies located at Tecumseh's Paris, Tennessee facility
used to produce or manufacture components, materials, supplies and other
products for the Acquired Business, including the items listed on Schedule
1.2.1(o).
1.2.2 Excluded Assets. The Sellers and the Purchaser expressly agree
that the following assets and properties of the Asset Sellers (the "Excluded
Assets") shall
be retained by Tecumseh and the Asset Sellers, and shall be excluded from the
Transferred Assets, notwithstanding any other provision of this Agreement:
(a) all cash on hand or held by any bank or other third Person;
(b) except as forth on Schedule 1.2.1(d), all owned and leased real
property and other interests in real property;
(c) the Asset Sellers' employee benefit plans, programs, arrangements
and agreements (including any retirement and retirement health benefit plans,
programs, arrangements and agreements and collective bargaining agreements, but
not including agreements listed on Schedule 1.2.1(c)), other than the Mexico
Employee Liabilities;
(d) any assets sold or otherwise disposed of in the ordinary course of
business consistent with past practice and not in violation of any provisions of
this Agreement during the period from the Balance Sheet Date to the Closing
Date;
(e) all causes of action (including counterclaims) and defenses
against third parties relating to the Excluded Assets and the Excluded
Liabilities;
(f) the assets and properties listed on Schedule 1.2.2(f); and
(g) any assets of the Other Businesses not included in the Transferred
Assets under Section 1.2.1.
1.2.3 Assumed Liabilities. On the terms and subject to the conditions
set forth in this Agreement, the Purchaser hereby agrees, effective at the
Effective Time, to assume and agree to pay, discharge and perform only the
following liabilities of the Asset Sellers (collectively, the "Assumed
Liabilities") (except with respect to items to be prorated pursuant to Section
10.16, which items shall be settled in accordance with Section 10.16):
(a) all liabilities and obligations of the Acquired Business reflected
on the Closing Balance Sheet, but only in the amounts so reflected; and
(b) all liabilities and obligations of the Acquired Business arising
after the Closing under the Assumed Contract Rights.
1.2.4 Excluded Liabilities. The Purchaser is not assuming or agreeing
to pay or discharge any of the liabilities or obligations of Tecumseh or the
Asset Sellers that are not expressly assumed by the Purchaser under Section
1.2.3 including any of the following (all liabilities and obligations other than
the Assumed Liabilities are herein referred to as the "Excluded Liabilities")
(except with respect to items to be prorated pursuant to Section 10.16, which
items shall be settled in accordance with Section 10.16):
(a) any indebtedness for borrowed money;
(b) any liability or obligation relating to or arising under any
Excluded Asset;
(c) any Pre-Closing Environmental Liability;
(d) any liability, indebtedness or obligation of an Affiliate of
Tecumseh owed or payable to an Affiliate of Tecumseh, including but not limited
to Intercompany Payables and Inter-Division Investment Account;
(e) any liability or obligation for Taxes, benefits, contributions to
pension or multiemployer plans, compensation and employment-related matters,
including any liability or obligation relating to or arising under any Company
Plans or the Mexican Federal Labor Law, other than those liabilities and
obligations under the Transferred Company Plans expressly assumed by the
Purchaser pursuant to Section 6.3;
(f) except for Transfer Taxes (which shall be paid in accordance with
Section 10.2), any liability for Taxes (including those derived from any
unbalance between the balance of inventories pursuant to temporary import
pedimentos and their physical inventory of Fasco Mexico) applicable to, imposed
upon or arising out of the sale or transfer of the Transferred Assets or any
other transaction contemplated by this Agreement, including any income,
transfer, sales, use, gross receipts or documentary stamp taxes and all
penalties and interest related thereto;
(g) any liability or obligation relating to or arising out of claims
for workers' compensation or employer's liability or other occupational disease
or injury claims brought by, or in respect of, any employees or former employees
of the Acquired Business, including the Employees as defined in Section 6.3.1,
which claims arise in whole or in part out of events occurring or conditions
existing on or prior to the Closing Date;
(h) any liability or obligation to provide parts or service on, or to
replace, repair or recall, any products manufactured or sold by the Acquired
Business on or prior to the Closing Date, and any other liabilities and
obligations related to warranty claims in regards to such products ("Product
Warranty Liabilities"), but in each case (i) if such liability or obligation is
actually limited by the terms of the warranty or warranties given by the
Acquired Business for such products, then only to the extent covered by the
terms of the warranty or warranties given by the Acquired Business for such
products (including any extensions thereof ) and (ii) only to the extent that,
in the aggregate, all such liabilities and obligations are in excess of the
amount related to such liabilities and obligations reflected in the Closing
Balance Sheet;
(i) any liability or obligation for personal injury or property damage
arising out of or resulting from any products manufactured or sold by the
Acquired Business on or prior to the Closing Date ("Product Liability
Liabilities");
(j) except for any Pre-Closing Environmental Liability, any
liabilities or obligations relating to or arising under any legal,
administrative, arbitration, grievance or other proceeding or action of any kind
or nature whatsoever resulting from conditions,
acts or omissions that occurred on or prior to the Closing Date, including the
matters set forth on Schedule 4.18;
(k) any liabilities or obligations of Fasco Mexico arising on or prior
to the Closing Date under NAFTA or other Free Trade Agreements signed by Mexico,
Mexican Customs Laws, Mexican Foreign Trade Law and their regulations, including
but not limited to the Maquiladora and Promotional Sectorial Programs and
requirements with respect to NAFTA certificates of origin and payment of import
duties pursuant to article 303 of NAFTA, and customs processing fees; or
(l) except for any Pre-Closing Environmental Liability, any liability
or obligation for any violation or failure to comply with any Law prior to the
Closing Date.
1.2.5 Assignment of Contracts and Rights. Notwithstanding any other
provision of this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any Transferred Asset or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
or other contravention thereof or in any way adversely affect the rights of the
Purchaser or the Asset Sellers (as applicable) thereunder. The Asset Sellers
will use their commercially reasonable efforts to obtain the consent of the
other parties to any such Transferred Asset or any claim or right or any benefit
arising thereunder for the assignment thereof to the Purchaser as the Purchaser
may request. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of the Asset
Sellers thereunder so that the Purchaser would not in fact receive all such
rights, the Asset Sellers and the Purchaser will cooperate in a mutually
agreeable arrangement under which the Purchaser would obtain at no additional
cost to the Purchaser the benefits and assume the obligations and bear the
economic burden thereunder in accordance with this Agreement, including
subcontracting, sublicensing or subleasing to the Purchaser, or under which the
Asset Sellers would enforce for the benefit of the Purchaser any and all of
their rights against a third party thereto, and the Asset Sellers would promptly
pay to the Purchaser when received all monies received by them under any
Transferred Asset or any claim or right or any benefit arising thereunder.
ARTICLE 2
PURCHASE PRICE AND PAYMENT
2.1 Purchase Price.
2.1.1 The unadjusted aggregate purchase price for the Shares and the
Transferred Assets shall be (a) an amount equal to the sum of Two Hundred Twenty
Million Dollars ($220,000,000) (the "Initial Purchase Price"), plus (b) the
amount of the Assumed Liabilities. The Initial Purchase Price is subject to
adjustment by the Closing Adjustment and the Adjustment Amount (the result
being, the "Final Purchase Price") pursuant to Section 2.2. The Initial Purchase
Price (as adjusted by the Closing Adjustment, if any) and the Adjustment Amount
shall be payable as provided in
Section 2.3. All amounts set forth in this Agreement shall be in U.S. Dollars,
unless otherwise stated.
2.2 Adjustments to Initial Purchase Price.
2.2.1 Estimated Statement of Working Capital. The Sellers shall
prepare and, not less than five (5) Business Days prior to the anticipated
Closing Date, deliver to the Purchaser an estimated statement of Working Capital
as of the close of business on the Closing Date (the "Estimated Statement of
Working Capital"). The Estimated Statement of Working Capital shall be prepared
in accordance with the Accounting Principles. The Sellers shall afford, and
shall cause the Companies and Subsidiaries to afford, the Purchaser and its
respective representatives reasonable opportunity to review the preparation of
the Estimated Statement of Working Capital, including supporting detail,
undertaken by the Sellers.
2.2.2 Closing Adjustment. The Initial Purchase Price to be paid at the
Closing shall be decreased dollar for dollar to the extent the Working Capital
set forth on the Estimated Statement of Working Capital is less than the Target
Working Capital (the "Closing Adjustment").
2.2.3 Final Statement of Working Capital. Within sixty (60) calendar
days following the Closing Date (the "Adjustment Period"), the Purchaser shall
prepare, or cause to be prepared, and deliver to Sellers a statement of Working
Capital as of the close of business on the Closing Date (the "Final Statement of
Working Capital"). The Final Statement of Working Capital shall be prepared in
accordance with the Accounting Principles. During the Adjustment Period,
Purchaser shall afford, and shall cause the Companies and Subsidiaries to
afford, the Sellers and their respective representatives reasonable opportunity
to review the preparation of the Final Statement of Working Capital, including
supporting detail, undertaken by Purchaser.
2.2.4 The Final Statement of Working Capital shall be final and
binding on the parties unless Sellers shall, within thirty (30) days following
the delivery of the Final Statement of Working Capital, deliver to the Purchaser
written notice of objection (the "Objection Notice") with respect to the Final
Statement of Working Capital. The Objection Notice shall specify in reasonable
detail the disputed items on the Final Statement of Working Capital and describe
in reasonable detail the basis for the disputed items, including the data that
forms the basis thereof, as well as the amount in dispute. During the 30-day
period following the Purchaser's delivery of the Final Statement of Working
Capital to the Sellers, the Purchaser shall grant the Sellers reasonable access
during normal business hours to the books and records of each Company and
Subsidiary relevant to the preparation of such statement.
2.2.5 If the Objection Notice is delivered, the parties shall consult
with each other with respect to the disputed items and attempt in good faith to
resolve the dispute. If the parties are unable to reach agreement within thirty
(30) days after delivery of the Objection Notice, either the Purchaser or either
Seller may refer any unresolved disputed items to an accounting firm of national
reputation selected by mutual agreement
of the Purchaser and the Sellers, or if the Purchaser and the Sellers are unable
to so agree, the Chicago office of BDO Xxxxxxx, LLP (the "Unrelated Accounting
Firm"). The Unrelated Accounting Firm shall be directed to render a written
report as promptly as practicable and, in any event, within thirty (30) days on
the unresolved disputed items and to resolve only those issues of dispute set
forth in the Objection Notice. The Unrelated Accounting Firm shall resolve such
issues of dispute in accordance with the Accounting Principles. The resolution
of the dispute by the Unrelated Accounting Firm shall be final and binding on
the parties. The fees and expenses of the Unrelated Accounting Firm shall be
borne equally by the Sellers and the Purchaser.
2.2.6 Upon final determination of the Final Statement of Working
Capital, the Initial Purchase Price (as adjusted by the Closing Adjustment)
shall be (a) decreased dollar for dollar to the extent the Working Capital set
forth on the Final Statement of Working Capital is less than the Working Capital
set forth on the Estimated Statement of Working Capital or (b) increased dollar
for dollar to the extent the Working Capital set forth on the Final Statement of
Working Capital is greater than the Working Capital set forth on the Estimated
Statement of Working Capital; provided, however, that in no event shall any
adjustment pursuant to clause (b) exceed the amount of the Closing Adjustment.
The adjustment to the Initial Purchase Price (as adjusted by the Closing
Adjustment) determined pursuant to this Section 2.2.6 (the "Adjustment Amount")
shall be paid by Purchaser to Sellers, or Sellers to Purchaser, as the case may
be, in accordance with Section 2.3.3 and 2.3.4. Until paid, the Adjustment
Amount shall bear interest determined by computing simple interest on the
Adjustment Amount from the Closing Date to the date of payment(s) at the rate of
interest announced publicly by Citibank, N.A. from time to time as its
"reference rate" (on the basis of a 365-day year).
2.3 Payment of Initial Purchase Price and Adjustment Amount.
2.3.1 At the Closing, the Purchaser shall pay to the Sellers an amount
equal to (a) the Initial Purchase Price minus (b) the Closing Adjustment, if
any, minus (c) the Escrow Amount, minus (d) the Settlement Escrow Amount, minus
(e) the Trade Escrow Amount (if any), and minus (f) the aggregate amount
required to satisfy the obligations specified on Schedule 8.1.12, by wire
transfer of immediately available funds to an account or accounts designated by
the Sellers on Schedule 2.3.1.
2.3.2 At the Closing, the Purchaser shall deliver to the Escrow Agent
(a) the sum of five percent (5.0%) of the Initial Purchase Price (the "Escrow
Amount"), (b) Settlement Escrow Amount, and (c) Trade Escrow Amount (if any),
each by wire transfer of immediately available funds to an account or accounts
designated by the Escrow Agent pursuant to the Escrow Agreement.
2.3.3 Within five (5) Business Days after the parties agree on the
Final Statement of Working Capital in accordance with Section 2.2, the
Adjustment Amount as determined in accordance with Section 2.2.6 shall be paid
by the applicable party to the other party. If the Adjustment Amount is to be
paid by the Sellers to the Purchaser, then the Sellers shall promptly cause the
Adjustment Amount to be paid to the Purchaser pursuant to the Escrow Agreement
from the Escrow Funds (or, if the amount of the
Escrow Funds is less than the Adjustment Amount, by delivery of the entire
Escrow Funds). If the Adjustment Amount exceeds the Escrow Funds then remaining
available, then the Sellers shall pay to the Purchaser the amount of such
difference not paid from the Escrow Funds.
2.3.4 Payment of the Adjustment Amount shall be made by wire transfer
of immediately available funds if to Sellers by Purchaser to an account or
accounts designated by the Sellers on Schedule 2.3.1, and if to Purchaser by
Sellers to an account or accounts designated by the Purchaser on Schedule 2.3.4.
2.4 Escrow Arrangements.
2.4.1 At the Closing, the Sellers and the Purchaser shall enter into
an escrow agreement in a form acceptable to the Sellers and the Purchaser (the
"Escrow Agreement") pursuant to which the Purchaser and the Sellers shall
appoint U.S. Bank National Association, or another financial institution
acceptable to the Sellers and the Purchaser, as the escrow agent (the "Escrow
Agent"), to receive and hold the Escrow Amount together with all interest and
other income thereon (the Escrow Amount, together with such interest and other
income, is referred to herein as the "Escrow Funds") for a period of eighteen
(18) months from the Closing Date; provided, however, that the Sellers and the
Purchaser agree that fifty percent (50%) of the Escrow Funds (net of the amount
of any pending claims) remaining following the payment of the Adjustment Amount,
if any, shall be released within five (5) Business Days after the parties agree
on the Final Statement of Working Capital in accordance with Section 2.2. The
Escrow Funds will be used as security for the Sellers' obligations to the
Purchaser under this Agreement, including the payment by the Sellers of the
Adjustment Amount, if any, pursuant to Section 2.3.3 and Sellers'
indemnification obligations under Article 9. The rights and obligations of the
parties with respect to the Escrow Funds, and the disbursement of the Escrow
Funds, shall be set forth in the Escrow Agreement.
2.4.2 At the Closing, the Sellers and the Purchaser shall enter into
an escrow agreement in a form acceptable to the Sellers and the Purchaser (the
"Settlement Escrow Agreement") pursuant to which the Purchaser and the Sellers
shall appoint the Escrow Agent to receive and hold the Settlement Escrow Amount
together with all interest and other income thereon (the Settlement Escrow
Amount, together with such interest and other income, is referred to herein as
the "Settlement Escrow Funds") for a period of two (2) years from the Closing
Date. The Settlement Escrow Funds will be used as security for the obligations
of the Sellers described in Schedule 2.4.2. The rights and obligations of the
parties with respect to the Settlement Escrow Funds, and the disbursement of the
Settlement Escrow Funds, shall be set forth in the Settlement Escrow Agreement.
2.4.3 In the event that the Sellers have not completed the corrective
actions set forth on Schedule 7.1.7 not less than five (5) Business Days before
the Closing Date, at the Closing, the Sellers and the Purchaser shall enter into
an escrow agreement in a form acceptable to the Sellers and the Purchaser (the
"Trade Escrow Agreement") pursuant to which the Purchaser and the Sellers shall
appoint the Escrow
Agent to receive and hold the Trade Escrow Amount together with all interest and
other income thereon (the Trade Escrow Amount, together with such interest and
other income, is referred to herein as the "Trade Escrow Funds") for a period of
two (2) years from the Closing Date. The Trade Escrow Funds will be used as
security for the obligations of the Sellers related to the Tax and compliance
matters in connection with Fasco Mexico described in Schedule 4.19.1 and
Schedule 7.1.7. The rights and obligations of the parties with respect to the
Trade Escrow Funds, and the disbursement of the Trade Escrow Funds, shall be set
forth in the Trade Escrow Agreement.
2.5 Purchase Price Allocation. The Purchaser, each Company and
Subsidiary and Sellers agree that the Purchase Price and the liabilities of each
Company and each Subsidiary (plus other relevant items) will be allocated to the
assets of each Company and each Subsidiary for all purposes in a manner
consistent with Code Section 1060 and the regulations thereunder. The Purchaser,
each Company and Subsidiary, and Sellers shall file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such allocation. The parties agree that prior to the Closing,
the parties will finalize Schedule 2.5, which will reflect the fair market value
of the assets of each Company and each Subsidiary. The parties shall each
execute and timely file a Form 8594 consistent with the terms of this Section
2.5 after first exchanging mutually acceptable drafts of such forms (and any
equivalent state, municipal, county, local foreign or other Tax forms).
Notwithstanding the forgoing, the Purchaser's cost for the assets of each
Company and each Subsidiary may differ to the extent necessary to reflect the
Purchaser's capitalized acquisition costs for such assets. In the event of a
dispute between or among the parties relating to this Section 2.5, the
determination of the purchase price allocation shall be resolved by following
the procedures described in Sections 2.2.4 and 2.2.5.
ARTICLE 3
CLOSING AND TERMINATION
3.1 Closing Date. The closing of the sale and purchase of the Shares
and the Transferred Assets (the "Closing") shall take place at the offices of
Miller, Canfield, Paddock and Stone, P.L.C., located at 000 Xxxx Xxxx Xxxx Xxxx,
Xxxxx 000, Xxxx, Xxxxxxxx, 00000 at 10:00 a.m., local time, on the 3rd Business
Day after the conditions to closing set forth in Section 7.1, Section 7.2 and
Section 7.3 (other than those to be satisfied at the Closing, which shall be
satisfied or waived at the Closing) have been satisfied or waived by the party
entitled to waive such condition, or on such other date after such satisfaction
or waiver and at such other time and place upon which the Sellers and the
Purchaser shall agree (which time and place are designated as the "Closing
Date").
3.2 Termination of Agreement. This Agreement may be terminated prior
to the Closing as follows:
3.2.1 At the election of either the Sellers or the Purchaser on or
after September 30, 2007, if the Closing shall not have occurred by the close of
business on
such date, provided that the terminating party is not in default of any of its
obligations hereunder;
3.2.2 by mutual written consent of the Sellers and the Purchaser;
3.2.3 by the Purchaser if Tecumseh or any other Seller becomes
insolvent; or Tecumseh or any other Seller applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian for
Tecumseh or any other Seller or any substantial part of the property thereof, or
makes a general assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for Tecumseh or any other Seller or for any substantial
part of the property thereof; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding, is commenced in respect of
Tecumseh or any other Seller; or
3.2.4 at the election of either the Sellers or the Purchaser if there
shall be in effect a final nonappealable Order of a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; it being agreed that the
parties hereto shall promptly appeal any appealable adverse determination (and
pursue such appeal with reasonable diligence).
3.3 Procedure Upon Termination. In the event the Purchaser or the
Sellers, or both, elect to terminate this Agreement pursuant to Section 3.2,
written notice thereof shall promptly be given to the other party, and this
Agreement shall terminate, and the purchase and sale of the Shares and
Transferred Assets hereunder shall be abandoned, without further action by the
Purchaser or the Sellers. If this Agreement is terminated as provided herein
each party shall redeliver all documents, work papers and other material of the
other party relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof.
3.4 Effect of Termination. In the event this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of
their duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to the Purchaser,
the Companies, the Subsidiaries, or the Sellers; provided, however, that the
obligations of the parties set forth in Section 6.5 shall survive any such
termination and shall be enforceable hereunder notwithstanding such termination;
provided, further, that nothing in this Section 3.4 shall relieve the Purchaser
or Sellers of any liability for a breach of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to the Purchaser that:
4.1 Organization and Good Standing. Each Company and each Seller is a
corporation or other entity duly organized, validly existing and in good
standing
under the laws of the jurisdiction of its organization as set forth above or on
Annex A and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. Each
Company is duly qualified to do business as a foreign corporation under the laws
of each jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its assets
requires such qualification and where the failure to be so qualified would have
a Company Material Adverse Effect on such Company.
4.2 Authorization of Agreement. Each Seller has all requisite power,
authority and legal capacity to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by such Seller in connection with the consummation
of the transactions contemplated by this Agreement (together with this
Agreement, the "Seller Documents"), and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each of the other
Seller Documents will be at or prior to the Closing, duly and validly executed
and delivered by each Seller party thereto and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the other Seller Documents when so executed and
delivered will constitute, legal, valid and binding obligations of each Seller,
enforceable against each Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
4.3 Capitalization.
4.3.1 The (i) authorized capital stock (or other equity), (ii) par
value per share (if any), and (iii) number of issued and outstanding shares of
capital stock (or other equity) of each of the Companies (other than the Asset
Sellers) and the owners of such shares are as set forth on Annex A. No shares of
capital stock (or other equity) of any Company (other than the Asset Sellers)
are held by such Company as treasury stock.
4.3.2 All of the Shares were duly authorized for issuance and, except
as described on Annex A, are validly issued, fully paid and non-assessable.
4.3.3 There is no existing option, warrant, call, right, commitment or
other agreement of any character to which any Seller or Company is a party
requiring, and there are no securities of any Company outstanding which upon
conversion or exchange would require, the issuance, sale or transfer of any
additional shares of capital stock or other equity securities of the respective
Company or other securities convertible into, exchangeable for or evidencing the
right to subscribe for or purchase shares of capital stock or other equity
securities of such Company. None of the Sellers or any Company is a party to any
voting trust or other voting agreement with respect to any of the Shares or to
any agreement relating to the issuance, sale, redemption, transfer or other
disposition of the capital stock (or other equity) of any Company.
4.4 Subsidiaries. Schedule 4.4 hereto sets forth the name of each
Subsidiary and, with respect to each Subsidiary, the jurisdiction in which it is
incorporated or organized, the number of shares of its authorized capital stock,
the number and class of shares thereof duly issued and outstanding, the names of
all stockholders or other equity owners and the number of shares of stock owned
by each stockholder or the amount of equity owned by each equity owner. All of
the outstanding shares of capital stock or equity interests of each Subsidiary
are validly issued, fully paid and non-assessable, and the shares or other
equity interests shown on Schedule 4.4 as being owned by any Company are owned
by such Company free and clear of any and all Liens of any kind whatsoever,
except as set forth on Schedule 4.4. No shares of capital stock are held by any
Subsidiary as treasury stock. There is no existing option, warrant, call,
commitment or agreement to which any Subsidiary is a party requiring, and there
are no convertible securities of any Subsidiary outstanding which upon
conversion would require, the issuance of any additional shares of capital stock
or other equity interests of any Subsidiary or other securities convertible into
shares of capital stock or other equity interests of any Subsidiary or other
equity security of any Subsidiary. With respect to any Subsidiary which is shown
on Schedule 4.4 as having shares or other equity interests owned by a Person
other than a Company, each such Person has no rights as a shareholder or holder
of other equity interests in any Subsidiary, whether by contract, Subsidiary
charter document or otherwise, other than rights which are available to a
shareholder or holder of other equity interests existing by operation of
applicable Law. Each Subsidiary is a duly organized and validly existing
corporation or other entity in good standing under the laws of the jurisdiction
of its organization and is duly qualified to do business under the laws of (i)
each jurisdiction in which it owns or leases real property and (ii) each other
jurisdiction in the United States in which the conduct of its business or the
ownership of its assets requires such qualification and where the failure to be
so qualified would have a material adverse effect on the Subsidiary and each
such jurisdiction described in (i) and (ii) above is set forth on Schedule 4.4.
Each Subsidiary has all requisite corporate power and authority to own its
properties and carry on its business as presently conducted.
4.5 Corporate Records. The Sellers have made available to the
Purchaser true, correct and complete copies of the certificate of incorporation
and bylaws or comparable organizational documents and statutory registers of
each Company and each Subsidiary.
4.6 Conflicts; Consents of Third Parties.
4.6.1 Except as set forth in Schedule 4.6.1, none of the execution and
delivery by the Sellers of this Agreement and the other Seller Documents, the
consummation of the transactions contemplated hereby, or compliance by the
Sellers with any of the provisions hereof or thereof will: (i) conflict with, or
result in the breach of, any provision of the certificate of incorporation or
bylaws of any Company or Subsidiary; (ii) conflict with, violate, result in the
breach or termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which any Company, Seller or Subsidiary is a party or by which it or any of its
properties or assets is bound; (iii) violate any statute, rule, regulation,
order or decree
of any Governmental Body or authority by which any Company, Seller or Subsidiary
is bound; (iv) result in the creation of any Lien upon the Shares or the
properties or assets of any Company or Subsidiary, including the Transferred
Assets; or (v) conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or cancel, terminate or modify any Material Contract, except, in
each case, for such violations, breaches or defaults as would not, individually
or in the aggregate, have a Company Material Adverse Effect.
4.6.2 Except as set forth on Schedule 4.6.2, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of any
Company or Subsidiary in connection with the execution and delivery of this
Agreement or the other Seller Documents, or the compliance by the Sellers or any
Company or Subsidiary as the case may be, with any of the provisions hereof or
thereof, except such consents, waivers, approvals, Orders, Permits and
authorizations which, if not obtained or made would not, individually or in the
aggregate, have a Company Material Adverse Effect or prevent or delay the
consummation by the Sellers of the transactions contemplated by this Agreement
or the Seller Documents.
4.7 Ownership and Transfer of Shares and Transferred Assets. Each
Seller (and each identified Affiliate of Seller) is the record and beneficial
owner of the Shares indicated as being owned by such Seller on Annex A, free and
clear of any and all Liens. Each Seller (and each identified Affiliate of
Seller) has the corporate power and authority to sell, transfer, assign and
deliver the Shares as provided in this Agreement, and such delivery will convey
to the Purchaser title to the Shares, free and clear of any and all Liens.
Except as set forth on Schedule 4.7, each Asset Seller has good and marketable
title to the Transferred Assets free and clear of all Liens. Each Asset Seller
will sell, transfer, assign and deliver to the Purchaser at the Closing good and
marketable title to the Transferred Assets free and clear of all Liens.
4.8 Financial Statements. Attached hereto as Schedule 4.8 is a copy of
the proforma unaudited combined financial statements of the Acquired Business at
December 31, 2006 and for the twelve-month period then ended. Such financial
statements are collectively referred to herein as the "Financial Statements."
The Financial Statements have been prepared in accordance with the Accounting
Principles. The Financial Statements fairly present, in all material respects,
the financial condition and results of operations of the Acquired Business, as
of and for the periods to which they relate. For the purposes hereof, (i) the
proforma unaudited combined balance sheet of the Acquired Business, which is
included in the Financial Statements, as at December 31, 2006, is referred to as
the "Balance Sheet" and December 31, 2006 is referred to as the "Balance Sheet
Date".
4.9 No Undisclosed Liabilities. Except as disclosed on Schedule 4.9,
as of the Balance Sheet Date, no Company and no Subsidiary had indebtedness,
obligations or liabilities of any kind required by the Accounting Principles to
be reflected in the Balance Sheet that was not fully reflected in the Balance
Sheet and, since the Balance Sheet Date, no Company and no Subsidiary has
incurred any indebtedness,
obligation or liability of any kind (whether absolute, accrued or contingent)
other than in the ordinary course of business consistent with past practice.
4.10 Absence of Certain Developments. Except as contemplated by or in
connection with this Agreement or as permitted by Section 6.2 or set forth on
Schedule 4.10, since the Balance Sheet Date (as used in this Section 4.10, the
terms Company and Subsidiary shall, with respect to the Asset Sellers, refer
only to the Transferred Assets and the Acquired Business):
4.10.1 there has not been any damage, destruction or loss whether or
not covered by insurance, with respect to the property and assets of any Company
or any Subsidiary having a replacement cost of more than One Hundred Thousand
Dollars ($100,000) for any single loss;
4.10.2 there has not been any declaration, setting aside or payment of
any dividend or other distribution in respect of any shares of capital stock of
any Company or any repurchase, redemption or other acquisition by the Sellers or
any Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interest in, any Company or any
Subsidiary;
4.10.3 there has not been any material change by any Company or any
Subsidiary in accounting or Tax reporting principles, methods or policies;
4.10.4 no Company or Subsidiary has entered into any transaction or
Contract involving the expenditure of more than One Hundred Thousand Dollars
($100,000) or conducted its business other than in the ordinary course of
business consistent with past practice;
4.10.5 no Company or Subsidiary has made any material loans, advances
or capital contributions to, or investments in, or incurred any liabilities or
obligations on behalf of, any Person or paid any fees or expenses to the Sellers
or any Affiliate of Sellers other than in the ordinary course of business
consistent with past practice;
4.10.6 no Company or Subsidiary has mortgaged, pledged or subjected to
any Lien any asset, or acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any of its assets for which the
aggregate consideration paid or payable in any individual transaction was in
excess of One Hundred Thousand Dollars ($100,000), except for assets mortgaged,
pledged, subjected to any Lien, acquired or sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the ordinary course of business
consistent with past practice;
4.10.7 no Company or Subsidiary has canceled or compromised any debt
or claim with a value, individually or in the aggregate, exceeding One Hundred
Thousand Dollars ($100,000) or amended, canceled, terminated, relinquished,
waived or released any Contract or right involving the expenditure of more One
Hundred Thousand Dollars ($100,000);
4.10.8 no Company or Subsidiary has made or committed to make any
capital expenditures or capital additions or betterments in excess of One
Hundred Thousand Dollars ($100,000) other than in the ordinary course of
business; and
4.10.9 no Company or Subsidiary has instituted or settled any Legal
Proceeding in which equitable relief was sought or in which claimed damages
exceeded One Hundred Thousand Dollars ($100,000).
4.11 Certain Tax Matters. Except as set forth on Schedule 4.11:
4.11.1 (i) All material Tax Returns required to be filed by or on
behalf of any Company or Subsidiary have been filed in a timely manner (within
any applicable extension periods), (ii) each Company and Subsidiary has paid or
made provision for the payment of all Taxes shown to be due on such Tax Returns,
(iii) with respect to any Taxes of any Company or Subsidiary, no material Liens
for Taxes have been filed with respect to the assets of any Company or
Subsidiary and no material claims are being asserted in writing, and (iv) the
provision made for Taxes (excluding any provision for deferred Taxes established
to reflect timing differences between book and Tax income) on the Financial
Statements is sufficient for the payment of all Taxes of each Company and
Subsidiary;
4.11.2 (i) No Company or Subsidiary has filed a consent under Section
341(f) of the Code concerning collapsible corporations, (ii) no property of any
Company or Subsidiary is "tax exempt use property" within the meaning of Section
168(h) of the Code or "tax exempt bond financed property" within the meaning of
Section 168(g) of the Code and (iii) no Company or Subsidiary is a party to any
lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954;
4.11.3 Each Company and Subsidiary has complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and has duly and timely withheld from amounts owing to
any employee, independent contractors, creditor, stockholder or other third
party of each Company and Subsidiary and paid over such withholding for all
periods under all applicable laws;
4.11.4 Sellers have made available to Purchaser complete copies of (i)
all material income or franchise Tax Returns of each Company and Subsidiary (or,
in the case of Tax Returns filed for an affiliated group, the portion of such
consolidated Tax Returns relating to each Company and Subsidiary) relating to
the taxable periods ending after December 31, 2003 and (ii) the portions of any
audit report issued within the last five years relating to any Taxes due from
each Company and Subsidiary;
4.11.5 To the Knowledge of Sellers, there are no audits or
investigations by any taxing authority of any Company or Subsidiary in progress
and no Company or Subsidiary has granted a currently-applicable extension to the
applicable statute of limitations related to Taxes of any Company or Subsidiary;
4.11.6 No Company or Subsidiary is a party to any tax sharing or
similar agreement or arrangement (whether or not written) pursuant to which it
will have any obligation to make any payments after the Closing.
4.11.7 No Company or Subsidiary organized in a jurisdiction outside
the United States currently has in effect an election described in Section
897(i) of the Code. No Company or Subsidiary has a permanent establishment in
any foreign country, as defined in the applicable Tax treaty or convention
between the United States of America and such foreign country and Fasco Mexico
has complied with the conditions established in articles 215, 216 and 216-Bis of
the Mexican Income Tax Law to avoid being considered a permanent establishment
of Fasco U.S.
4.11.8 No Company or Subsidiary will be required to include any item
of income or gain in, or exclude any item of deduction or loss from taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date, (ii) "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign income tax Law) executed on or prior to the Closing Date, (iii)
installment sale made on or prior to the Closing Date, (iv) prepaid amount
received on or prior to the Closing Date, (v) deferred inter-company gain or any
excess loss account described in Treasury Regulations under Section 1502 of the
Code (or any corresponding or similar provision of state, local or foreign
income tax Law), or (vi) the use of the cash, modified cash or modified accrual
method of accounting.
4.11.9 There are no tax rulings, requests for ruling or closing
agreements relating to any Company or any Subsidiary that could affect the
liability for Taxes of such entities for any period after the Closing Date.
4.11.10 There are no powers of attorney (that are currently in force)
which have been granted by any Company or any Subsidiary with respect to Taxes
of any Company or Subsidiary.
4.11.11 No Company or Subsidiary has made, or is obligated to make,
any payment or is a party to any agreement that could obligate it to make any
payment that will not be deductible for Tax purposes pursuant to Sections 280G
or 162(m) of the Code, Article 31 of the Mexican Income Tax Law or will
otherwise not be deductible.
4.11.12 Each Company and Subsidiary has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662.
4.11.13 Within the past five years, no Company or Subsidiary has been
the "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355 of the Code) with respect to a transaction described in Section
355 of the Code.
4.11.14 All the finished products to be transferred by Fasco Mexico
pursuant to this Agreement comply with NAFTA rules of origin and the Asset
Sellers shall keep all records to show evidence of such representation for five
years following the execution of the NAFTA certificates of origin to be
delivered to the Purchaser at the Closing.
4.12 Real Property. Schedule 4.12 sets forth a complete list of (i)
all real property and interests in real property, owned in fee by each Schedule
4.12 identified Company and Subsidiary (other than the Asset Sellers) or the
Asset Sellers (with the respect to the Acquired Business) (individually, an
"Owned Property" and collectively, the "Owned Properties"), and (ii) all real
property and interests in real property leased by each Company and Subsidiary
(other than the Asset Sellers) or the Asset Sellers (with the respect to the
Acquired Business) as lessee or lessor (individually, a "Real Property Lease"
and the real properties specified in such leases, together with the Owned
Properties, being referred to herein individually as a "Company Property" and
collectively as the "Company Properties"). Each Schedule 4.12 identified Company
and Subsidiary has good and marketable fee title to all Owned Property, free and
clear of all Liens of any nature whatsoever except: (a) Liens set forth on
Schedule 4.12, none of which, individually or in the aggregate, materially
detract from the value of or materially interfere with the present use of the
properties subject thereto or affected thereby, or otherwise materially impair
the identified Company or Subsidiary operations involving such properties, and
(b) Permitted Exceptions. Each identified Company and Subsidiary has a valid and
enforceable leasehold interest under each of the identified Real Property
Leases, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and no Company or
Subsidiary, or to the Knowledge of Sellers, any other Person, is in default nor
has any event occurred that with notice or lapse of time, or both, would
constitute a default by such Company or Subsidiary under any of the Real
Property Leases. Sellers have delivered to Purchaser true, correct and complete
copies of the Real Property Leases including, without limitation, all
amendments, modifications and extensions thereto. There is no encroachment of
buildings or other improvements from or onto the Owned Properties and the
Cassville, Missouri Leased Property except as shown on full-sized surveys
delivered to Purchaser by Sellers on or before the date hereof, which
encroachments do not, individually or in the aggregate, materially detract from
the value of or materially interfere with the present use of the properties
affected thereby, or any claim of adverse possession or prescriptive rights
involving any Owned Property or the Cassville, Missouri Leased Property. No U.S.
Company Property and, to the Seller's Knowledge, no non-U.S. Company Property is
located in a flood plain, flood hazard area, wetland or lakeshore erosion area
within the meaning of any Law. Except as described on Schedule 4.12 with regard
to the Subsidiary, Fasco Yamabishi Ltd., each Owned Property is plotted as a
single separate parcel of real estate for conveyancing and taxing purposes.
4.13 Tangible Property.
4.13.1 Except as set forth on Schedule 4.13.1, each Company and
Subsidiary (other than the Asset Sellers) and the Asset Sellers (with the
respect to the Acquired Business) (i) has good and valid title to all tangible
personal property that is currently employed by it in the conduct of its
business as presently conducted and which is material to the conduct by each
Company and Subsidiary of its business, free and clear of all Liens other than
Permitted Exceptions and (ii) upon consummation of the transactions contemplated
by this Agreement, will be entitled to continue to use all such tangible
personal property.
4.13.2 Except as set forth on Schedule 4.13.2, the Transferred Assets
constitute all of the assets necessary to conduct the Acquired Business as
conducted by the Asset Sellers on the date of this Agreement and as proposed by
the Asset Sellers to be conducted. The assets of the Companies and Subsidiaries
(other than the Asset Sellers) constitute all of the assets necessary for each
such Company and Subsidiary to conduct the Acquired Business as conducted on the
date of this Agreement and as proposed by the Sellers to be conducted.
4.13.3 Except as set forth on Schedules 4.6.1 and 4.6.2, none of the
Transferred Assets or the assets of the Companies and Subsidiaries (other than
the Asset Sellers) are subject to any restrictions with respect to the
transferability thereof.
4.13.4 Except as set forth on Schedule 4.13.4, (i) all tangible assets
(real and personal) constituting Transferred Assets or assets of the Companies
and Subsidiaries (other than the Asset Sellers) are in good operating condition
and repair, free from any defects (except such minor defects as do not interfere
with the use thereof in the conduct of the normal operation of the Acquired
Business) and have been maintained consistent with the standards generally
followed in the industry and (ii) all buildings, plants and other structures
constituting assets of the Companies and Subsidiaries (other than the Asset
Sellers) and the Asset Sellers (with the respect to the Acquired Business) are
in good condition and repair (subject to normal wear and tear) and have no
structural defects affecting the plumbing, electrical, sewerage, or heating,
ventilation or air conditioning systems (except for such defects as do not
materially interfere with the use thereof in the conduct of the normal operation
thereof).
4.14 Technology and Intellectual Property.
4.14.1 Schedule 4.14.1 lists all patents, registered copyrights,
registered trademarks and pending applications therefor included in the Fasco
Intellectual Property.
4.14.2 Except as shown in Schedule 4.14.2, the identified Company or
Subsidiary is the sole and exclusive owner of the Fasco Intellectual Property,
and no other Person has served the Company with any written notice of a claim of
ownership with respect to the Fasco Intellectual Property.
4.14.3 Except as shown in Schedule 4.14.3, no Company or Subsidiary
has previously assigned, transferred, conveyed or otherwise encumbered its
right, title and interest in the Fasco Intellectual Property.
4.14.4 Except as shown in Schedule 4.14.4 or as noted in Schedule
4.14.1, to the Knowledge of Sellers, the Fasco Intellectual Property is valid,
is not invalid or unenforceable in whole or in part and is not the subject of
any challenge.
4.14.5 Except as shown in Schedule 4.14.5, to the Knowledge of
Sellers, no third party is currently violating or infringing upon any of the
Company's or Subsidiary's rights in the Fasco Intellectual Property.
4.14.6 Each Company or Subsidiary owns or otherwise possesses (or at
the time of Closing will possess) valid and enforceable rights to use all
Intellectual Property and Technology currently used in the Acquired Business as
conducted up to and through the Closing Date. With respect to Intellectual
Property and Technology set forth in Schedule 4.14.6.1, each Company or
Subsidiary has, or prior to the Closing will be granted, licenses sufficient for
the conduct of the Acquired Business as conducted up to and through the Closing
Date. Schedule 4.14.6.2 lists all other license agreements granting to each
Company or Subsidiary any right to use any Intellectual Property or Technology
other than software that is available through "shrink wrap" or similar widely
available commercial end user licenses.
4.14.7 Except as shown in Schedule 4.14.7, no Company or Subsidiary is
under any obligation to pay any royalties or similar payments in connection with
any license to the Company or Subsidiary of Intellectual Property and Technology
currently used in the Acquired Business.
4.14.8 Except as shown in Schedule 4.14.8, to the Knowledge of
Sellers, the business of each Company and Subsidiary as it is currently
conducted does not violate or infringe the Intellectual Property of any third
party.
4.15 Material Contracts. Schedule 4.15A sets forth all of the
following Contracts to which any Company or any Subsidiary (as used in this
Section 4.15, the terms Company and Subsidiary shall, with respect to the Asset
Sellers, refer only to the Transferred Assets and the Acquired Business) is a
party or by which it is bound (collectively, the "Material Contracts"):
4.15.1 Contracts with any Seller or any Affiliate of any Seller, which
involve payments, in the aggregate, in excess of One Hundred Thousand Dollars
($100,000);
4.15.2 Contracts entered into other than in the ordinary course of
business or for the grant to any Person of any preferential rights to purchase
any of its assets in each case for consideration in excess of One Hundred
Thousand Dollars ($100,000);
4.15.3 joint venture or written partnership agreements with any
Person;
4.15.4 Contracts containing covenants that in any way restrict the
business activity of any Company or Subsidiary in any respect that would be
material to that Company or Subsidiary, or which limit the freedom of any
Company or Subsidiary to engage in any line of business or to compete with any
Person;
4.15.5 Contracts relating to the acquisition by any Company or any
Subsidiary of any operating business or the capital stock of any other Person,
in each case, for consideration in excess of One Hundred Thousand Dollars
($100,000);
4.15.6 Contracts relating to the borrowing of money involving amounts
in excess of One Hundred Thousand Dollars ($100,000);
4.15.7 to the Knowledge of Sellers, all confidentiality agreements
which restrict the ability of a Company or a Subsidiary to disclose any
information to a third party;
4.15.8 each written warranty, guaranty or other similar undertaking
with respect to contractual performance extended by any Company or Subsidiary
other than in the ordinary course of business;
4.15.9 written contractual obligations by which any Company or
Subsidiary has agreed to pay or be responsible for the debts or obligations of
any other Person, except where any such payment would be Fifty Thousand Dollars
($50,000) or less or where the other party is a Company or a Subsidiary;
4.15.10 any other Contracts, other than Real Property Leases, which
involve the expenditure of more than One Hundred Thousand Dollars ($100,000) in
the aggregate that are not terminable by a Company or Subsidiary without penalty
on less than thirty (30) days' notice; and
4.15.11 each written amendment, supplement or modification to any of
the foregoing.
Except as set forth in Part One of Schedule 4.15B, (i) to the
Knowledge of Sellers, no officer, director or employee of any Company or
Subsidiary is bound by any Contract that limits the ability of such officer,
director or employee to (A) engage in or continue any conduct, activity, or
practice relating to the Acquired Business, or (B) assign to any Company or
Subsidiary any rights to any invention, improvement or discovery; and (ii) no
Company or Subsidiary owns, or has any Contract to acquire, any equity
securities or other securities of any Person (other than the Companies or the
Subsidiaries) or any direct or indirect equity or ownership interest in any
other business.
Except as set forth in Part Two of Schedule 4.15B, all of the Material
Contracts are in full force and effect and are the legal, valid and binding
obligation of a Company and/or a Subsidiary, enforceable against it/them in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Except as set forth in Part Three of Schedule 4.15B:
(i) to the Knowledge of Sellers, each Company or Subsidiary is in
compliance with all applicable terms and requirements of each Material
Contract;
(ii) to the Knowledge of Sellers, each other Person that has any
obligation or liability under any Material Contract under which any Company
or Subsidiary has any rights is in compliance with all applicable terms and
requirements of such Material Contract;
(iii) no Company or Subsidiary has given to or received from any
other Person any written notice regarding any actual or alleged violation
or breach of, or default under, any Material Contract; and
(iv) there are no renegotiations of, or outstanding rights to
renegotiate, any material amounts paid or payable to any Company or
Subsidiary under current or completed Material Contracts with any Person
and, to the Knowledge of Sellers, no such Person has made written demand
for such renegotiation.
4.16 Employee Benefits.
4.16.1 Schedule 4.16.1 sets forth all material, written "employee
benefit plans," (as defined in Section 3(3) of ERISA), programs, agreements or
arrangements maintained by any Seller, Company or Subsidiary or to which any
Seller, Company, or Subsidiary contributes or is obligated to contribute
thereunder on behalf of current or former employees or current or former
directors of any Company or Subsidiary or beneficiaries or dependents thereof,
within the last six plan years preceding the Closing Date (the "Company Plans").
No Seller, Company or Subsidiary has any unwritten material Company Plans and
has no binding obligation to establish any Company Plan.
4.16.2 True, correct and complete copies of the following documents,
with respect to each of the Company Plans, if applicable, have been made
available or delivered to the Purchaser: (i) any plans and related trust
documents, and amendments thereto; and (ii) with respect to Company Plans that
are sponsored or maintained by the Company or will be assumed hereunder by the
Purchaser on and after the Closing Date ("Transferred Company Plans"): (a) the
most recent Forms 5500; (b) the last IRS determination letter, if applicable;
(c) the most recent actuarial report; (d) summary plan descriptions; (e) the
most recent actuarial valuation; and (f) all material employee communications,
in each case as applicable to such Transferred Company Plans. Schedule 4.16.2
sets forth all Transferred Company Plans.
4.16.3 The Company Plans intended to qualify under Section 401 of the
Code are so qualified and the trusts maintained pursuant thereto are exempt from
federal income taxation under Section 501 of the Code, and nothing has occurred
with respect to
the operation of the Company Plans which is reasonably likely to cause the loss
of such qualification or exemption or the imposition of any liability, penalty
or tax under ERISA or the Code which would result in a Company Material Adverse
Effect.
4.16.4 The Transferred Company Plans have been administered in
accordance with their terms and with all applicable provisions of the Code and
ERISA (including rules and regulations thereunder) and other applicable federal
and state laws and regulations. No actions, suits, claims or disputes (other
than routine claims for benefits) are pending or, to the Knowledge of Sellers,
threatened, with respect to any Company Plan. No audits, inquiries, reviews,
proceedings, claims or demands involving any Transferred Company Plan are
pending with any Governmental Body. To the Knowledge of Sellers, no Seller,
Company or Subsidiary, or any of their employees (current or former) or
directors, or any other individual for whom the Seller, Company or Subsidiary
has an obligation to indemnify, has engaged in a prohibited transaction with
respect to the Company Plans for which liability could be assessed under Section
4975 of the Code or Section 502 of ERISA. Each Transferred Company Plan may be
amended or terminated at any time by the appropriate Company or Subsidiary
without liability for the payment of benefits thereunder as a result of such
termination.
4.16.5 No Company Plan is a "multiemployer pension plan" as defined in
Section 3(37) of ERISA and no Seller, Company or Subsidiary has any liability,
contingent or otherwise, with respect to any "multiemployer pension plan". No
Transferred Company Plan is a plan subject to Title IV of ERISA or Section 412
of the Code (or is a plan that has a similar status under foreign laws) and no
Company or Subsidiary has any liability, contingent or otherwise, with respect
to any such plan. No Transferred Company Plan provides post-retirement medical
or other welfare benefits except benefits required to be provided after
termination under applicable Law.
4.16.6 All contributions to any Company Plan required to be made by a
Company or Subsidiary and any payment under any Company Plan (except those to be
made from a trust qualified under Sections 401(a) and 501(a) of the Code)
required to be made by a Company or Subsidiary for any period ending before the
Closing Date have been paid, and to the extent unpaid, are reflected on the
Balance Sheet.
4.16.7 Neither the execution and delivery of this Agreement nor the
consummation of the transaction contemplated hereby, either alone or in
combination with any other event, will (i) result in any payment becoming due to
any Company or Subsidiary employee by any Company or Subsidiary for which the
Company or the Subsidiary will not be allowed a full tax deduction, (ii)
increase any benefits otherwise payable under any Transferred Company Plan, or
(iii) require any contributions or payments to fund any obligations under any
Company Plan.
4.16.8 With respect to each Company Plan that is subject to the Law of
any jurisdiction other than the United States (a "Foreign Benefit Plan"), (i)
all employer and employee contributions to each Foreign Benefit Plan required by
Law or by the terms of such Foreign Benefit Plan have been made or, if
applicable, accrued in accordance with normal accounting practices, (ii) except
as to Fasco Mexico, the fair market value of
the assets of each funded Foreign Benefit Plan, the liability of each insurer
for any Foreign Benefit Plan funded through insurance or the book reserve
established for any Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the Effective Time, with respect to all current and former
participants in such plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Foreign Benefit
Plan, and no transaction contemplated by this Agreement will cause such assets
or insurance obligations to be less than such benefit obligations, (iii) all
Foreign Benefit Plans have been maintained in accordance with their terms and
all requirements of applicable Law, (iv) each Foreign Benefit Plan required to
be registered has been registered and has been maintained in good standing with
the appropriate Governmental Entities and (v) to the extent any Foreign Benefit
Plan is intended to qualify for special tax treatment, such Foreign Benefit Plan
meets all requirements for such treatment. Except as described on Schedule
4.16.8, the employee savings fund of Fasco Mexico complies with all applicable
rules established in Mexican Income Tax and Social Security Laws.
4.17 Labor.
4.17.1 Except as set forth on Schedule 4.17.1, no Company or
Subsidiary (except as it relates to the A&S Business) is party to any labor or
collective bargaining agreement, work rules or practices, or any other
labor-related contract with any labor union, labor organization or works council
and there are no such agreements, rules, practices or contracts which pertain to
employees of such Company or Subsidiary. The Sellers have delivered or otherwise
made available to the Purchaser true, correct and complete copies of the labor
or collective bargaining agreements, work rules or practices, or any other
labor-related contract with any labor union, labor organization or works council
listed on Schedule 4.17.1, together with all amendments, modifications or
supplements thereto.
4.17.2 Except as it relates to the A&S Business, no labor
organization, labor union, works council or group of employees of any Company or
Subsidiary has made, in writing, a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation or certification proceeding presently pending
or, to the Knowledge of Sellers, threatened to be brought or filed with the
National Labor Relations Board, other labor relations tribunal or other
governmental entity, foreign or otherwise. To the Knowledge of Sellers, there
are no organizational attempts relating to labor unions, labor organizations or
works councils occurring with respect to any employees of any Company or
Subsidiary.
4.17.3 There are no strikes, work stoppages, unfair labor practice
charges, slowdowns or lockouts or, to the Knowledge of Sellers, grievances or
other labor disputes pending or overtly threatened against or involving any
Company or Subsidiary (except as it relates to the A&S Business) except as would
not have a Company Material Adverse Effect. The execution and delivery of this
Agreement will not, and the consummation of the transactions contemplated hereby
will not, require any consent or approval of, or any
consultation with, any labor union, labor organization, works council or group
of employees of any Company or Subsidiary.
4.18 Litigation. Except as set forth on Schedule 4.18, there is no
Legal Proceeding pending or, to the Knowledge of Sellers, threatened against any
Company or Subsidiary.
4.19 Compliance with Laws; Permits.
4.19.1 Except as set forth on Schedule 4.19.1, each Company and
Subsidiary (and its respective properties) is in compliance with all Laws
applicable to such Company or Subsidiary or to the conduct of the business or
operations of such Company or Subsidiary or the use of its properties (including
any leased property) and assets, except for such non-compliances as would not,
individually or in the aggregate, have a Company Material Adverse Effect. All
governmental Permits and approvals from state, federal or local authorities
which are required for each Company and Subsidiary to operate its business have
been issued, except for those the absence of which would not, individually or in
the aggregate, have a Company Material Adverse Effect.
4.19.2 Schedule 4.19.2 contains a complete and accurate list of each
Governmental Authorization that is held by any Company or Subsidiary which is
material to the conduct of the business of any Company or Subsidiary. Each
Governmental Authorization listed in Schedule 4.19.2 is valid and in full force
and effect. To the Knowledge of Sellers, each Company or Subsidiary is in
compliance with all of the terms and requirements of each Governmental
Authorization identified in Schedule 4.19.2.
4.20 Environmental Matters. Except as disclosed on Schedule 4.20, (i)
each Company and Subsidiary is, and has been, and has operated the Acquired
Business in material compliance with, all Environmental Laws, which compliance
includes obtaining, maintaining and complying with any and all Permits required
to own and operate the facilities and the Company Property in compliance with
all applicable Environmental Laws; (ii) none of the Companies or Subsidiaries
have entered into any judgment, decree or order issued by any Governmental Body,
or received any written notice or request for information, complaint or claim
from a Governmental Body or third party, alleging the violation of,
non-compliance with, or liability under Environmental Laws; (iii) there is no
Release or threat of a Release of any Hazardous Material in, on, or under any of
the real property currently or formerly owned, operated or leased by the
Companies or Subsidiaries; (iv) there are no past or present acts, activities,
facts, circumstances, events, incidents, omissions or conditions that could
result in any Company or Subsidiary incurring liabilities under Environmental
Laws; (v) no Lien has been imposed on any facilities currently or formerly
owned, operated or leased by any Company or Subsidiary under Environmental Law;
(vi) Sellers have made available to Purchaser true, accurate and materially
complete copies of all materials, environmental records, reports, notifications,
permits, pending permit applications, correspondence, engineering studies, and
environmental studies or assessments related to the Companies or Subsidiaries,
or any property currently or formerly owned, operated or leased by the Companies
or Subsidiaries; and (vii) none of the Companies or Subsidiaries have any
obligation pursuant to any agreement, or by operation of law, for any Losses
related to compliance with, or liability under, any Environmental Law.
4.21 Financial Advisors. Except for Rothschild Inc., no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for the
Sellers in connection with the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof. The Sellers shall be responsible for the fees of Rothschild Inc.
4.22 Insurance. Set forth in Schedule 4.22 is a complete list and
description of all policies of fire, liability, product liability, workers
compensation, health, environmental and other forms of insurance presently in
effect with respect to each Company and Subsidiary. To the Knowledge of Sellers,
the policies set forth in Schedule 4.22 are valid and enforceable policies. No
notice of cancellation or termination has been received with respect to any such
policy. No Company or Subsidiary has been refused any insurance with respect to
its respective business nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last three years. To the Knowledge of Sellers, each Company
and Subsidiary has duly and timely made all claims it has been entitled to make
under each policy of insurance. All products liability and general liability
policies maintained by or for the benefit of each Company and Subsidiary have
been "occurrence" policies and not "claims made" policies.
4.23 Certain Payments. Since January 1, 2005, no Company or Subsidiary
or director, officer, agent, or employee of any Company or Subsidiary has
directly or indirectly made any contribution, gift, bribe, rebate, payoff,
influence, payment, kickback, or other payment to any Person, private or public,
regardless of form whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, or (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Company or Subsidiary, in
each case, with respect to clauses (i), (ii) and (iii), which was in violation
of any Law in effect as of the date of such event.
4.24 Relationships with Related Persons. Except as listed and
described on Schedule 4.24, none of the Sellers, or any Affiliate of any Seller
(other than a Company or Subsidiary) (i) has any interest in any property
(whether real, personal, or mixed and whether tangible or intangible) used in
the Acquired Business, or (ii) is a party to any Contract with, has any claim or
right against, or is a creditor of, any Company or Subsidiary.
4.25 Inventory. All inventory of each Company and Subsidiary reflected
on the Balance Sheet consists of a quality and quantity usable and saleable in
the ordinary course of business, had a commercial value at least equal to the
value shown on such Balance Sheet and is valued in accordance with generally
accepted accounting principles at the lower of cost (on a FIFO basis) or market.
All inventory purchased since the Balance Sheet Date consists of a quality and
quantity usable and saleable in the ordinary course of business. All
work-in-process is of a quality ordinarily produced in
accordance with the requirements of the orders to which such work-in-process is
identified, and will require no rework with respect to services performed prior
to Closing.
4.26 Major Customers and Suppliers.
4.26.1 Major Customers. Schedule 4.26.1 contains a list of the fifteen
(15) largest customers, including distributors, of the Acquired Business for
each of the two (2) most recent fiscal years (determined on the basis of the
total dollar amount of net sales) showing the total dollar amount of net sales
to each such customer during each such year. None of the customers listed on
Schedule 4.26.1 has provided notice that it will not continue to be a customer
of the Acquired Business after the Closing at substantially the same level of
purchases as heretofore.
4.26.2 Major Suppliers. Schedule 4.26.2 contains a list of the fifteen
(15) largest suppliers to the Acquired Business for each of the two (2) most
recent fiscal years (determined on the basis of the total dollar amount of
purchases) showing the total dollar amount of purchases from each such supplier
during each such year. None of the suppliers listed on Schedule 4.26.2 has
provided notice that it will not continue to be a supplier to the Acquired
Business after the Closing with substantially the same quantity and quality of
goods at competitive prices.
4.27 Product Warranty and Product Liability. Schedule 4.27 contains a
description of all product liability claims and similar Legal Proceedings
relating to Fasco Products manufactured or sold, or services rendered, which are
presently pending or which to the Knowledge of Sellers are threatened, or which
have been asserted or commenced against any Company or Subsidiary within the
last three (3) years, in which a party thereto either requests injunctive relief
or alleges damages in excess of $50,000 (whether or not covered by insurance).
There are no defects in design, construction or manufacture of Fasco Products
that would adversely affect performance or create an unusual risk of injury to
persons or property. Since January 1, 2002, none of the Fasco Products has been
the subject of any replacement, field fix, retrofit, modification or recall
campaign by any Company or Subsidiary and, to the Sellers' Knowledge, no facts
or conditions exist which could reasonably be expected to result in such a
recall campaign. The Fasco Products have been designed and manufactured so as to
meet and comply with all governmental standards and specifications currently in
effect. Such Fasco Products have received all governmental approvals necessary
to allow their sale and use.
4.28 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 4, neither Sellers nor
any Company nor Subsidiary makes any representations or warranties, and the
Sellers and each Company and Subsidiary hereby disclaim any other
representations or warranties, whether made by the Sellers, any Company, any
Subsidiary, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or
any Sellers Document, or the transactions contemplated hereby, notwithstanding
the delivery or disclosure to Purchaser or its representatives of any
documentation or other information with respect to any one or more of the
foregoing. Notwithstanding anything to the contrary herein, no representation or
warranty contained
in this Article 4 is intended to, or does, cover or otherwise pertain to any
assets not owned by the Company or Subsidiary.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Sellers that:
5.1 Organization and Good Standing. The Purchaser is a corporation
organized, validly existing and in good standing under the laws of the State of
Wisconsin.
5.2 Authorization of Agreement. The Purchaser has all requisite power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Purchaser in connection with the consummation of the
transactions contemplated hereby and thereby (together with this Agreement, the
"Purchaser Documents"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Purchaser of this
Agreement and each Purchaser Document have been duly authorized by all necessary
corporate action on behalf of the Purchaser. This Agreement has been, and each
Purchaser Document will be at or prior to the Closing, duly executed and
delivered by the Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each Purchaser Document when so executed and delivered will constitute,
legal, valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity.
5.3 Conflicts; Consents of Third Parties.
5.3.1 None of the execution and delivery by the Purchaser of this
Agreement and the other Purchaser Documents, the consummation of the
transactions contemplated hereby, or the compliance by the Purchaser with any of
the provisions hereof or thereof will (i) conflict with, or result in the breach
of, any provision of the articles of incorporation or bylaws or comparable
organizational documents of the Purchaser, (ii) conflict with, violate, result
in the breach of, or constitute a default under any note, bond, mortgage,
indenture, license, agreement or other obligation to which the Purchaser is a
party or by which the Purchaser or its properties or assets are bound or (iii)
violate any statute, rule, regulation, order or decree of any Governmental Body
or authority by which the Purchaser is bound, except, in the case of clauses
(ii) and (iii), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Purchaser to consummate the transactions contemplated by this Agreement.
5.3.2 Except as set forth on Schedule 5.3.2, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification
to, any Person or Governmental Body is required on the part of the Purchaser in
connection with the execution and delivery of this Agreement or the Purchaser
Documents or the compliance by Purchaser with any of the provisions hereof or
thereof.
5.4 Litigation. There are no Legal Proceedings pending or, to the
Knowledge of Purchaser, threatened, that are reasonably likely to prohibit or
adversely affect the ability of the Purchaser to enter into this Agreement or
consummate the transactions contemplated hereby.
5.5 Investment Intention. The Purchaser is acquiring the Shares for
its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act")) thereof. Purchaser understands that the
Shares have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available.
5.6 Financial Advisors. Except as set forth in Schedule 5.6, no Person
has acted, directly or indirectly, as a broker, finder or financial advisor for
the Purchaser in connection with the transactions contemplated by this Agreement
and no Person is entitled to any fee or commission or like payment in respect
thereof. The Purchaser shall be responsible for the fees or commissions of any
Person listed on Schedule 5.6.
5.7 Sufficiency of Funds.
5.7.1 Purchaser (i) has, and at the Closing will have, sufficient
internal funds (giving effect to any unfunded committed financing) available to
pay the Purchase Price and any expenses incurred by Purchaser in connection with
the transactions contemplated by this Agreement; (ii) has, and at the Closing
will have, the resources and capabilities (financial or otherwise) to perform
its obligations hereunder and under the other Purchaser Documents.
5.7.2 Schedule 5.7.2 sets forth each of the sources and amounts of
Purchaser's financing, and Purchaser has delivered or shall deliver to Sellers,
promptly upon its becoming available, any and all commitment letters and all
other letters and agreements in connection with such financing.
ARTICLE 6
COVENANTS
6.1 Access to Management. The Sellers agree that, prior to the Closing
Date, the Purchaser shall be permitted access to (during normal business hours)
the Company Properties, including access to perform environmental assessments
(which may include sampling of media when permitted by the penultimate sentence
of this Section 6.1), books, Contracts, commitments, Tax Returns and other
records relating to the Tax attributes of the Companies and Subsidiaries, and
(subject to the general rule set forth in the fourth sentence of this Section
6.1) access to such officers, employees, consultants, agents, accountants,
attorneys and other representatives of each Company
and Subsidiary as Purchaser may reasonably request; provided, however, that
Purchaser's access shall not materially disrupt or interfere with the operation
of the business. In connection with access matters related to this Section 6.1,
all Purchaser access requests shall be made by Xxxx X. Xxxxxx, as Purchaser's
designated representative or such other person as shall be designated by
Purchaser in writing from time to time. All such Purchaser access requests shall
be made to Xxx Xxxxxxx as Sellers' designated representative or such other
person as shall be designated by Sellers in writing from time to time. It is
understood that, as a general rule, such access will be limited to discussions
with or presentations by senior management personnel of each Company and
Subsidiary, except as necessary for Purchaser to perform environmental
assessments. Purchaser shall reimburse Sellers and each Company and Subsidiary
for the reasonable out-of-pocket costs and expenses incurred by Sellers and each
Company and Subsidiary in complying with requests made by Purchaser in
connection with this Section 6.1. With respect to environmental audits, the
Purchaser may conduct (i) Phase I investigations of the Company Properties in
Piedras Negras, Mexico and Thailand in accordance with ASTM 1527-05 and
environmental compliance audits and (ii) related Phase II investigation, if any,
activities (including sampling of media), to the extent such activities are
recommended in the Phase I report to address specific "Recognized Environmental
Conditions". The Sellers and the Purchasers shall reasonably agree on the scope
and timing of such environmental assessments, and the Purchaser shall deliver
the consultant reports delivered in connection with such environmental
assessments.
6.2 Conduct of Business Pending the Closing.
6.2.1 After the date of this Agreement and prior to the Closing,
except: (i) as set forth on Schedule 6.2 hereto, (ii) as contemplated by this
Agreement, (iii) as required by applicable Law or (iv) with the prior written
consent of the Purchaser, the Sellers shall, and shall cause each Company and
Subsidiary (except the Asset Sellers) and the Asset Sellers (with respect to the
Acquired Business), respectively, to:
6.2.1.1 conduct the business of such Company or Subsidiary only in the
ordinary course consistent with past practice; and
6.2.1.2 use reasonable efforts to (i) preserve the present business
operations, organization (including, without limitation, management and the
sales force) and goodwill of such Company and Subsidiary and (ii) preserve the
present relationship with Persons having business dealings with such Company or
Subsidiary.
6.2.2 After the date of this Agreement and prior to the Closing,
except as (i) set forth on Schedule 6.2 hereto, (ii) contemplated by this
Agreement, (iii) required by applicable Law or (iv) with the prior written
consent of the Purchaser, the Sellers shall not, and no Company or Subsidiary
(except the Asset Sellers) and no Asset Seller (with respect to the Acquired
Business), shall:
6.2.2.1 declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of such Company or Subsidiary or
repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock or other
securities, or other ownership interests in, the Company or Subsidiary;
6.2.2.2 transfer, issue, sell or dispose of any shares of capital
stock or other securities of such Company or Subsidiary or grant options,
warrants, calls or other rights to purchase or otherwise acquire shares of the
capital stock or other securities of such Company or Subsidiary;
6.2.2.3 effect any recapitalization, reclassification, stock split or
like change in the capitalization of such Company or Subsidiary;
6.2.2.4 amend the articles of incorporation or bylaws or comparable
organizational documents of such Company or Subsidiary;
6.2.2.5 except for trade payables and for indebtedness for borrowed
money incurred in the ordinary course of business and consistent with past
practice, borrow monies for any reason or draw down on any line of credit or
debt obligation, or become the guarantor, surety, endorser or otherwise liable
for any debt, obligation or liability (contingent or otherwise) of any other
Person;
6.2.2.6 subject to any Lien (except for Liens that do not materially
impair the use of the property subject thereto in the business as presently
conducted and Permitted Exceptions) any of the properties or assets (whether
tangible or intangible) of such Company or Subsidiary;
6.2.2.7 acquire any properties or assets or sell, assign, transfer,
convey, lease or otherwise dispose of any of the properties or assets (except
for fair consideration in the ordinary course of business consistent with past
practice) of such Company or Subsidiary for which the aggregate consideration
paid or payable in any individual transaction is in excess of One Hundred
Thousand Dollars ($100,000);
6.2.2.8 permit such Company or Subsidiary to enter into or agree to
enter into any merger or consolidation with any corporation or other entity;
6.2.2.9 license, transfer, convey, assign or otherwise transfer any
Fasco Intellectual Property;
6.2.2.10 increase in any manner the compensation of any of Company's
or Subsidiary's directors, officers, employees or consultants or enter into,
establish, amend or terminate any Company Plan other than (A) as required
pursuant to the terms of a Company Plan in effect on the date of this Agreement
and (B) increases in salaries, wages or benefits of employees in the ordinary
course of business consistent with past practice; or
6.2.2.11 agree to take any action prohibited by this Section 6.2.
6.3 Employee Matters.
6.3.1 The Purchaser acknowledges that by purchasing the Shares of the
Companies, it shall, through the Company, employ all of the individuals employed
by the Companies (including employees on vacation and on any Approved Absence,
as defined below) as of the Closing Date. "Approved Absence" means an approved
leave of absence (including active military service), short term and long term
disability (including employees on workers' compensation).
Purchaser shall, or shall cause a Purchaser Affiliate to, offer
employment, to be effective on the Closing Date, to all employees of the Asset
Sellers employed in the operation of the Acquired Business who are in Active
Employment Status, as defined below, immediately prior to the Closing Date. The
term "Active Employment Status" means an employee who is actively at work, on
vacation, or on authorized leave of absence, but shall not include an employee
on military leave, leave of absence for medical reasons (such as workers
compensation, short- or long-term disability) or any individual who has
permanently ceased providing services to the Asset Sellers. An employee of any
such Asset Seller who is not in Active Employment Status but who has a right to
return to employment under any applicable Law shall be extended an offer of
employment by Purchaser if, for any employee on military leave, the employee has
a right to re-employment under the provisions of the Uniformed Services
Employment and Reemployment Rights Act (or similar state Law) and the employee
makes application for employment with the Purchaser within the applicable
timeframe for such re-employment rights, and for any employee on medical leave,
the employee makes application for employment within thirty days (or such longer
time as may be required by Law) after the time such employee is eligible to
return to work in the job classification deemed warranted by Purchaser.
Notwithstanding the foregoing, the Purchaser shall not be obligated to extend an
offer of employment to any such individual if the Purchaser has eliminated the
individual's position, unless specifically required by applicable Law.
For purposes hereof, each employee of the Companies and Subsidiaries
(other than the Asset Sellers) (including employees on vacation and on any
Approved Absence), and each employee of the Asset Sellers who accepts employment
with the Purchaser on the Closing Date (or such later date as described above
following a leave of absence) pursuant to this Agreement, are referred to
collectively as the "Employees".
Notwithstanding anything herein, subject to applicable Law, this
Section 6.3.1 shall not require the Purchaser, and Company or Subsidiary or any
of their respective Affiliates to continue the employment of any Employee for
any specified period after the Closing Date.
6.3.2 For a period of 12 months following the Closing Date, Purchaser
agrees to provide, or shall cause the appropriate Company or Subsidiary or a
Purchaser Affiliate to provide, each Employee, while employed by the Purchaser,
Company or Subsidiary, with a base salary or wage rate that is not less than his
or her base salary or wage rate in effect immediately prior to the Closing Date
(or, as applicable, immediately prior to his or her Approved Absence), unless an
Employee agrees otherwise. The
Purchaser shall provide or cause the Company or Subsidiary or a Purchaser
Affiliate to provide, each Employee with employee benefits (other than defined
benefit pension and retiree medical benefits) that are substantially similar to
the employee benefits (other than defined benefit pension and retiree medical
benefits) provided by Purchaser to its similarly situated employees.
6.3.3 With respect to the Purchaser's employee benefit plans, programs
and arrangements covering or otherwise benefiting any of the Employees on or
after the Closing Date (other than any non-qualified retirement or deferred
compensation plans or equity-based compensation plans), service with a Company
or Subsidiary shall be counted for purposes of eligibility to participate,
vesting, and in determining the level of benefits with respect to vacation and
severance (if any), to the same extent such service was counted under the
corresponding employee benefit plans, programs, or arrangements of Sellers or
the Company or Subsidiary prior to the Closing Date; provided that the
Purchaser's obligation to comply with the foregoing shall be subject to the
consent of the insurer for any insured arrangement, which Purchaser shall use
its reasonable best efforts to obtain.
6.3.4 With respect to any benefit plans of the Purchaser providing
welfare benefits of the type described in Section 3(1) of ERISA to Employees on
and after the Closing Date, (a) such plans shall grant credit for amounts paid
by the Employees (including applicable deductibles, copays, annual out-of-pocket
limits or similar costs) under corresponding Company Plans since January 1,
2007; and (b) shall waive any pre-existing condition exclusions, evidence of
insurability provisions, waiting period requirements or any similar provisions,
to the extent they were waived under corresponding Company Plans; provided that
the Purchaser's obligations to comply with the provisions of subsection (b)
shall be subject to the consent of the insurer for any insured arrangement,
which Purchaser shall use its reasonable best efforts to obtain. On the Closing
Date and each month thereafter for the remainder of the plan year, the Sellers
shall provide the Purchaser with information regarding the amount of
deductibles, copays, out-of-pocket limits or similar costs incurred by each
Employee during the portion of the plan year preceding such date.
Notwithstanding the foregoing, Purchaser shall credit each Employee with their
balances in any medical or dependent care flexible spending accounts only if the
payroll deductions made by such Employee for the plan year and not used to pay
benefits under such accounts are transferred to Purchaser.
6.3.5 Effective as of the Closing Date, the Purchaser shall cover, or
shall cause a Company, Subsidiary or Purchaser Affiliate to cover, Employees
under a defined contribution plan and trust intended to qualify under Sections
401(a) and (k) and Section 501(a) of the Code (the "Purchaser DC Plan"). The
Purchaser shall cause the Purchaser DC Plan to permit Employees to make a direct
rollover of their account balances under the Tecumseh Products Company Salaried
Retirement Savings Plan and the Tecumseh Products Company Retirement Savings
Plan for the Non-Union Hourly Rated Employees of the Acquired Business. Sellers
and Purchaser shall reasonably cooperate in good faith to effect such transfers
or distributions as soon as practicable after the Closing Date.
6.3.6 On and after the Closing Date, Purchaser shall assume all of the
duties and obligations of any Company or Subsidiary under the Transferred
Company Plans that are sponsored and maintained by the Sellers; but only to the
extent to which, with respect to any Transferred Company Plan from which
benefits are paid out of the Company's or Subsidiary's general assets, the
liabilities for such plans are accrued as liabilities on the Closing Balance
Sheet. All Transferred Company Plans that are sponsored or maintained by a
Company or Subsidiary (other than the Asset Sellers) shall remain the
responsibility of the Company or Subsidiary on and after the Closing Date.
Notwithstanding, the Sellers shall, on and after the Closing Date, continue to
provide retiree medical and life insurance coverage under the Tecumseh Products
Company Retiree Medical and Life Insurance Plan for Fasco Employees to
individuals and their eligible spouses and dependents who are receiving retiree
medical and life insurance benefits as of the Closing Date ("Company Retirees");
provided, however, that the Sellers may, at any time, in Sellers' sole
discretion (subject to applicable Laws), revise or terminate the medical and
life insurance coverage as applicable to such Company Retirees.
6.3.7 With respect to all other Company Plans that are not Transferred
Company Plans, the Sellers shall retain all of the duties and obligations under
all such Plans, and the Purchaser shall assume no liability or obligations under
such plans. Sellers shall amend each such Company Plan that provides retirement
benefits (other than welfare benefits) to Employees to fully vest each Employee
under such Company Plan as of the Closing Date. With regard to any Company Plan
that is a 401(k) plan, Sellers shall make all matching contributions that have
been accrued through the Closing Date but not yet paid, without regard to any
requirement that the Employee be employed on the last day of the plan year or
have completed a minimum number of hours of service. Seller shall take
appropriate action under each such Company Plan that is a bonus plan, including
the Tecumseh Products Company Key Employee Bonus Plan, to provide that Employees
will be paid a pro-rata bonus, based on quarterly target bonus amounts, earned
as of the Closing Date.
6.3.8 The parties agree that, with respect to the Employees who accept
employment with Purchaser as of the Closing Date, they respectively meet the
definition of "predecessor" and "successor" as defined in Revenue Procedure
2004-53. For purposes of reporting employee remuneration to the IRS on Forms W-2
and W-3 for the calendar year in which the Closing Date occurs, Sellers and
Purchaser shall utilize the "Alternative Procedure" described in Section 5 of
Revenue Procedure 2004-53. The parties agree that, for purposes of reporting
employee remuneration for Federal Insurance Contributions Act purposes for the
calendar year within which the Closing Date occurs, Company meets the definition
of "predecessor" and Purchaser meets the definition of "successor" as defined in
the IRS Regulation Section 31.3121(a)(1)1(b). Sellers shall supply Purchaser,
with respect to all Employees, all cumulative payroll information as of the
Closing Date. Notwithstanding the foregoing, Purchaser shall not assume any
Liability with respect to such cumulative payroll information, and all such
Liabilities shall be the sole responsibility of Sellers. Sellers shall pay all
such Liabilities as and when due. Each party shall cooperate in good faith to
adopt similar procedures under applicable state, municipal, county, local,
foreign or other Laws.
6.3.9 Required Notice. Sellers shall provide any plant closing notices
as required under federal, state or local Law (including the Worker Adjustment
Retraining Notification Act of 1988, as amended) as a result of the transactions
contemplated by this Agreement, and Sellers shall indemnify and hold harmless
Company from and against all Losses arising from Sellers' failure to provide
such notice on a timely and effective basis.
6.3.10 Mexico Employees. Notwithstanding anything in this Agreement to
the contrary, the parties covenant and agree that on the Closing Date all
Persons employed (as determined under Mexican Federal Labor Law (the "MFLL")) as
of the Closing Date by Fasco Mexico (the "Mexico Employees") shall be
transferred to a Mexican company to be determined by the Purchaser pursuant to
an employer substitution as provided under, and in accordance with, the
applicable terms and provisions of the MFLL. Pursuant to such employer
substitution: (i) subject to the provisions of the MFLL, no severance has to be
paid to the Mexico Employees who are transferred by Fasco Mexico pursuant to
such employer substitution; (ii) the current labor conditions granted to the
Mexico Employees shall remain in effect without change or diminution as required
under the MFLL, including but not limited to, position, work shift, work scope,
salary and benefits; (iii) the employer substitution shall become effective as
of the date the employment substitution agreement is executed by Fasco Mexico
and the Purchaser, and, at the Closing, Fasco Mexico and the Purchaser shall
provide notice of the employment substitution to the affected employees,
pursuant to article 41 of the Ley Federal de Trabajo of Mexico and (iv) the
Sellers shall pay the mandatory Mexican profit sharing accrued to the Closing
Date in accordance to the MFLL.
6.4 Preservation of Records. Subject to Section 9.6.2.3 and 9.6.4.1
(relating to the preservation of Tax records), the Sellers and the Purchaser
agree that each of them shall preserve and keep the records held by it relating
to the business of each Company and Subsidiary, including records related to Tax
matters, for a period of five (5) years from the Closing Date and shall make
such records and personnel available to the other as may be reasonably required
by such party in connection with, among other things, any insurance claims by,
Legal Proceedings against or governmental investigations of the Sellers or the
Purchaser or any of their Affiliates or related to any Tax matters, or in order
to enable the Sellers or the Purchaser to comply with their respective
obligations under this Agreement and each other agreement, document or
instrument contemplated hereby or thereby. In the event the Sellers or the
Purchaser wishes to destroy such records within five (5) years of the Closing
Date, such party shall first give ninety (90) days prior written notice to the
other and such other party shall have the right at its option and expense, upon
prior written notice given to such party within that ninety (90) day period, to
take possession of the records.
6.5 Publicity. Neither the Sellers nor the Purchaser shall issue any
press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, based upon advice of their respective legal counsel, disclosure
is otherwise required by applicable Law or by the applicable rules of any stock
exchange or national quotation system on which the Purchaser or the Sellers list
securities, provided that, to the extent required by
applicable Law, the party intending to make such release shall use its
commercially reasonable efforts consistent with such applicable Law to consult
with the other party with respect to the text thereof.
6.6 Use of Names.
6.6.1 Purchaser agrees that it shall cause each Company and Subsidiary
to (i) as soon as practicable after the Closing Date and in any event within
sixty (60) days following the Closing Date, cease to make any use of the name
"Tecumseh Products Company" or "Tecumseh," or any service marks, trademarks,
trade names, identifying symbols, logos, emblems, signs or insignia related
thereto or containing or comprising the foregoing, including any name or xxxx
confusingly similar thereto (collectively, the "Sellers Marks"), and (ii)
immediately after the Closing, cease to hold itself out as having any
affiliation with Sellers or any of its Affiliates. In furtherance thereof, as
promptly as practicable but in no event later than sixty (60) days following the
Closing Date, Purchaser shall cause each Company and Subsidiary to remove,
strike over or otherwise obliterate all Sellers Marks from all materials owned
by each Company and Subsidiary, including, without limitation, any vehicles,
business cards, schedules, stationery, packaging materials, displays, signs,
promotional materials, manuals, forms, computer software, each Company's and
Subsidiary's website, and other materials in any form or media; provided,
however, that any Company or Subsidiary may during such sixty (60) day period
continue to use any such material containing a Xxxxxxx Xxxx to the extent that
it is not practicable to remove or obliterate such Xxxxxxx Xxxx. The Sellers
hereby grant to the Purchaser a limited license to continue the use of Sellers
Marks existing on the Closing Date for the life of dies, tooling, molds, and
machinery and equipment as presently used in the Acquired Business.
6.6.2 Tecumseh agrees that it shall cause each Asset Seller and each
of its other Affiliates to (i) as soon as practicable after the Closing Date and
in any event within sixty (60) days following the Closing Date, cease to make
any use of the name "Fasco Products" or "Fasco," or any service marks,
trademarks, trade names, identifying symbols, logos, emblems, signs or insignia
related thereto or containing or comprising the foregoing, including any name or
xxxx confusingly similar thereto (collectively, the "Fasco Marks"), and (ii)
immediately after the Closing, cease to hold itself out as having any
affiliation with Purchaser, any Company or Subsidiary or any of their respective
Affiliates. In furtherance thereof, as promptly as practicable but in no event
later than sixty (60) days following the Closing Date, Tecumseh shall cause each
Asset Seller and each of its other Affiliates to remove, strike over or
otherwise obliterate all Fasco Marks from all materials owned by Tecumseh, each
Asset Seller and their respective Affiliates, including, without limitation, any
vehicles, business cards, schedules, stationery, packaging materials, displays,
signs, promotional materials, manuals, forms, computer software, its and its
Affiliate's website, and other materials in any form or media; provided,
however, that Tecumseh and any Asset Seller may during such sixty (60) day
period continue to use any such material containing a Fasco Xxxx to the extent
that it is not practicable to remove or obliterate such Fasco Xxxx. Purchaser
hereby grants to the Sellers a limited license to continue the use of Fasco
Marks existing on the Closing Date
for the life of dies, tooling, molds, and machinery and equipment as presently
used in the A&S Business.
6.7 Insurance.
6.7.1 Except for insurance policies maintained with respect to Company
Plans (which are governed by Section 6.3), the Purchaser acknowledges and agrees
that, upon Closing, all insurance coverage provided in relation to the business
of each Company and Subsidiary pursuant to policies being maintained by any
Seller or its Affiliates (other than the Companies and Subsidiaries) (whether
such policies are maintained with third party insurers or with the Sellers or
its Affiliates (other than the Companies and Subsidiaries)) shall cease and no
further coverage shall be available to any Company or Subsidiary as an Affiliate
under any such policies that are "claims made" basis policies but (subject to
the terms of any relevant policy) without prejudice to any accrued claims which
a Company or a Subsidiary or any Seller or Affiliate (in the latter case in
relation to the Acquired Business) may have at Closing, provided that each
Company and Subsidiary shall retain the benefit of "occurrence" based policies
of insurance to the extent available in relation to events occurring prior to
Closing but in respect of which no claim has yet arisen at the time of Closing.
6.7.2 The Sellers agree to use commercially reasonable efforts prior
to the Closing to have the Purchaser and/or the Companies and Subsidiaries added
(at the Purchaser's sole cost) as a named insured by endorsement to the Indian
Harbor Insurance Company - Policy #PEC0014177 Pollution and Remediation Legal
Liability and the XL Europe Limited - Policy # LPA0300039 Pollution and
Remediation Legal Liability and to have waived any limitations regarding
properties covered by such policies that may be triggered by the consummation of
the transaction contemplated by this Agreement.
6.7.3 The Sellers agree to use commercially reasonable efforts prior
to the Closing to assist the Purchaser in obtaining (at the Purchaser's sole
cost) one or more buyer-side representations and warranties insurance policies
insuring the Purchaser with respect to Losses based upon, attributable to or
resulting from the breach or failure of any representation or warranty of the
Sellers set forth in Article 4; provided, however that such assistance shall be
limited to providing information with respect to the Acquired Business and
access consistent with Section 6.1 (but not including access for the performance
of environmental assessments).
6.8 Reasonable Commercial Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
reasonable commercial efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including the following: (i) the taking of all
acts necessary to cause the conditions to Closing to be satisfied as promptly as
practicable, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents, permits and approvals from Governmental Bodies and the making of all
necessary registrations and filings (if any, including filings with Governmental
Bodies)
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by any Governmental Body, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any lawsuits or other Legal Proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Body
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement; provided, however, that such
efforts shall not include any requirement (A) that any party divest, sell or
hold separate any assets, businesses or properties owned or held by such party
or enter into any consent decree or assume any other obligations with respect to
its ongoing operations or (B) to commence any litigation.
6.9 Contacts with Suppliers, Employees and Customers. Without the
prior written consent of Sellers, which may not be unreasonably withheld,
Purchaser shall not contact any suppliers to, employees of, or customers of, any
Company or Subsidiary in connection with or pertaining to any subject matter of
this Agreement.
6.10 Sellers Commitments. Purchaser acknowledges and agrees that, on
or before the date that is ninety (90) days following the Closing Date, it shall
cause any Commitment made by Sellers and their Affiliates (other than Companies
and Subsidiaries) with respect to the activities (financial or otherwise) of any
Company or Subsidiary to be terminated or settled or replaced by an alternate
Commitment from a party other than Sellers or their Affiliates (excluding
Companies and Subsidiaries). For purposes of the foregoing, "Commitment" shall
mean the financial commitments or support, performance bonds, parent company
guarantees, bid bonds, bank guarantees or similar instruments set forth on
Schedule 6.10.
6.11 Intellectual Property Covenants. To the extent that Sellers
transfer any Intellectual Property or Technology to Purchaser that does not
relate to the Companies and Subsidiaries or the Acquired Business or is
necessary to the conduct of the business of Sellers or its Affiliates (other
than the Companies and Subsidiaries) as conducted up to and through the Closing
Date, after written notice by Sellers to Purchaser, Purchaser agrees to transfer
that Intellectual Property or Technology (excluding for all purposes any BLDC
Technology) back to Sellers and/or its Affiliates or, if that Intellectual
Property or Technology is used by the Companies and Subsidiaries or in the
operation of the Acquired Business, to xxxxx Xxxxxxx and/or its Affiliates a
license (on terms and conditions acceptable to Purchaser) to use that
Intellectual Property or Technology to the extent that Purchaser has the right
to make such grant. Conversely, to the extent that Sellers fail to transfer any
Intellectual Property or Technology to Purchaser that relates to the Companies
and Subsidiaries or the Acquired Business or was developed for or is necessary
to the conduct of Acquired Business as conducted up to and through the Closing
Date, after written notice by Purchaser to Sellers, Sellers agree to transfer
that Intellectual Property or Technology to Purchaser.
6.12 Notification. Between the date of this Agreement and the Closing
Date, each of the Sellers on the one hand and the Purchaser on the other hand
will use its best efforts to promptly notify the other party in writing if a
Seller or Purchaser becomes aware of any fact or condition that causes or
constitutes a breach of any of such party's representations and warranties under
this Agreement. Should any such fact or condition require any change in any
Schedule previously delivered by a party under this Agreement, such party will
promptly deliver to the other party a supplement to the subject Schedule(s)
specifying such change. During the same period, each of the Sellers on the one
hand and the Purchaser on the other hand will use its best efforts to promptly
notify the other party of the occurrence of any breach of any of its covenants
in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
6.13 Estoppel Certificates. Sellers acknowledge and agree that from
the date hereof through the Closing Date they shall use their commercially
reasonable efforts to obtain estoppel certificates (in such form as shall be
reasonably acceptable to the Purchaser) from the landlords of each of the Real
Property Leases.
6.14 Pre-Closing Environmental and Excluded Liabilities. Sellers shall
take all actions necessary to discharge and pay when due all liabilities and
obligations relating to Pre-Closing Environmental Liabilities and Excluded
Liabilities, except any such liabilities being contested by Sellers in good
faith.
6.15 Transition Services Agreement. Between the date of this Agreement
and the Closing Date, the parties hereto agree to negotiate and finalize a
Transition Services Agreement (the "Transition Services Agreement"), pursuant to
which Sellers will provide, if necessary, certain services to the Companies and
Subsidiaries for a transitional period after the Closing Date.
6.16 Supply Agreements. Between the date of this Agreement and the
Closing Date, the parties hereto agree to negotiate and finalize one or more
Supply Agreements (the "Supply Agreements"), pursuant to which Sellers and
certain their Affiliates will agree to continue to supply or purchase, as the
case may be, goods and services relating to the Acquired Business on terms and
conditions consistent with the terms and conditions existing on the date of this
Agreement and with pricing consistent with those reflected in the Financial
Statements. The parties agree that one such Supply Agreement will provide for
the continued supply of laminations and other components from an Affiliate of
Seller to the Acquired Business and Purchaser (the "Paris Supply Agreement").
The parties agree that the Paris Supply Agreement will contain terms consistent
with the following: a two-year term; with quantities to be supplied consistent
with the quantities supplied during the twelve-month period prior to the Closing
Date, unless otherwise agreed; prices on current products of Purchaser (or its
Affiliates) and current products of, and products currently being tooled for,
the Acquired Business will be at the lower of current pricing or Seller's cost,
plus adjustments to reflect changes in steel prices; pricing of other products
will determined according to arms-length negotiations.
6.17 Noncompetition; Confidentiality. Subject to the Closing, and as
an inducement to Purchaser to execute this Agreement and complete the
transactions contemplated hereby, and in order to preserve the goodwill
associated with the business of the Companies and Subsidiaries being acquired
pursuant to this Agreement, each Seller hereby covenants and agrees as follows:
6.17.1 Covenant Not to Compete. For a period of five (5) years from
the Closing Date, no Seller or Affiliate of any Seller will directly or
indirectly:
(i) engage in, continue in or carry on any business which
competes with the business of any Company or Subsidiary or is substantially
similar thereto, including owning or controlling any financial interest in
any corporation, partnership, firm or other form of business organization
which is so engaged;
(ii) consult with, license or sell Intellectual Property or
Technology to, advise or assist in any way, whether or not for
consideration, any corporation, partnership, firm or other business
organization which is now or becomes a competitor in any aspect with
respect to the business of any Company or Subsidiary;
(iii) offer employment to an employee of any Company or
Subsidiary during his or her employment with the Company or Subsidiary or
within six months following termination of such employment, without the
prior written consent of the Purchaser; provided, however, that nothing in
this clause (iii) shall prohibit any Seller or Affiliate of any Seller from
employing any person who responds a general solicitation to the public or
general advertising; or
(iv) engage in any practice the purpose of which is to evade the
provisions of this covenant not to compete or to commit any act which
adversely affects the business of any Company or Subsidiary;
provided, however, that the foregoing shall not prohibit (a) the ownership of
securities of corporations which are listed on a national securities exchange or
traded in the national over-the-counter market in an amount which shall not
exceed 5% of the outstanding shares of any such corporation; or (b) any Seller
or Affiliate of any Seller from engaging in any Existing Business Activities.
The parties agree that the geographic scope of this covenant not to compete
shall extend throughout the jurisdictions in which the Companies and the
Subsidiaries operate, sell products or provides services as of the Closing (or
in which any such activities were conducted within twelve (12) months prior to
the Closing). In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this covenant not to
compete shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such over broad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
6.17.2 Exclusivity. Except with respect to an Acquisition Proposal
relating solely to the sale of the A&S Business, from the date of this Agreement
until the Closing or the date this Agreement is terminated under Article 3,
neither Tecumseh nor any of its Affiliates will, or will permit any officer,
director, employee or representative of Tecumseh nor any of its Affiliates to:
(a) initiate or encourage the initiation by others of discussions or
negotiations with third parties or respond to (other than to decline interest
in) solicitations by third parties relating to any merger, sale or other
disposition of the Transferred Assets, the Shares, the Acquired Business or
substantially all the assets of any Company or Subsidiary (an "Acquisition
Proposal"), (b) enter into or participate in any discussion, negotiation or
agreement with respect to any such Acquisition Proposal, or (c) furnish any
non-public information to any third party in connection with an Acquisition
Proposal. Tecumseh and its Affiliates shall promptly advise the Purchaser of any
Acquisition Proposal or inquiry regarding the making of an Acquisition Proposal,
including any requests for information, the material terms and conditions of
such request.
6.17.3 Equitable Relief for Violations. Each Seller agrees that the
provisions and restrictions contained in this Section 16.17 are necessary to
protect the legitimate continuing interests of the Purchaser in acquiring the
Shares, and that any violation or breach of these provisions will result in
irreparable injury to the Purchaser for which a remedy at law would be
inadequate and that, in addition to any relief at law which may be available to
the Purchaser for such violation or breach and regardless of any other provision
contained in this Agreement, the Purchaser shall be entitled to injunctive and
other equitable relief as a court may grant after considering the intent of this
Section 16.17.
6.18 Title Insurance. With respect to the Eldon, Missouri Owned
Property, within ten (10) days after the date of this Agreement, Sellers shall
deliver to Purchaser a title insurance commitment issued by a national title
insurance company reasonably acceptable to Purchaser (the "Title Company"),
together with copies of all instruments referenced therein, pursuant to which
the Title Company shall agree to issue to Purchaser a standard ALTA Form 2006
owner's policy of title insurance in the full amount of the fair market value of
the Eldon, Missouri Owned Property, insuring good and marketable title to the
Eldon, Missouri Owned Property (expressly including all easements and other
appurtenances thereto), subject only to Permitted Exceptions (but with all
standard exceptions deleted), and including such endorsements as Purchaser may
reasonably request, including without limitation, (i) zoning 3.1 endorsement,
(ii) owners comprehensive endorsement insuring over violations of title
covenants, conditions and restrictions, (iii) access endorsement, (iv) "same as"
survey endorsement, (v) location endorsement, (vi) contiguity endorsement, and
(vii) non-imputation endorsement.
6.19 Survey. With respect to the Eldon, Missouri Owned Property,
within twenty (20) days after the date of this Agreement, Sellers shall deliver
to Purchaser an original current survey of the Eldon, Missouri Owned Property
certified to Purchaser and to the Title Company, prepared by registered
surveyors reasonably satisfactory to Purchaser, which surveys shall be prepared
in accordance with the 2005
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (including
all Table A Items except contours).
6.20 Employer Substitution Agreement. Between the date of this
Agreement and the Closing Date, the parties hereto agree to negotiate and
finalize a Employer Substitution Agreement (the "Employer Substitution
Agreement"), pursuant to which the Mexico Employees shall be transferred by
Fasco Mexico to a Mexican company to be determined by the Purchaser in
accordance with Section 6.3.10.
6.21 License Agreement. Between the date of this Agreement and the
Closing Date, the parties hereto shall agree to negotiate and finalize a License
Agreement (the "License Agreement") pursuant to which the Purchaser, a Company
or a Subsidiary, as the case may be, will license BLDC Technology to Tecumseh
(or an appropriate Affiliate of Tecumseh) on a royalty-free, non-exclusive basis
for use within the single field of use of hermetic motors incorporated into
compressors.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Condition Precedent to Obligations of Purchaser. The obligation of
the Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of the following
condition (which may be waived by the Purchaser in whole or in part to the
extent permitted by applicable Law):
7.1.1 The representations and warranties of Sellers in this Agreement
shall be true and correct at and as of the Closing Date with the same force and
effect as though made at and as of the Closing Date (it being understood that,
for purposes of determining the accuracy of such representations and warranties:
(i) to the extent that any representation or warranty is made as of a specific
date, such representation or warranty shall be true and correct as of such date;
(ii) any update to or modification to the Sellers' Schedules made after the date
of this Agreement shall be disregarded; and (iii) all materiality qualifications
contained in such representations and warranties shall be disregarded);
provided, however, that in the event of a breach of a representation and
warranty (except Sections 4.2, 4.3 and 4.7), the condition set forth in this
Section 7.1 shall be deemed satisfied unless the effect of all such breaches of
representations and warranties (except a breach of Sections 4.2, 4.3 and 4.7)
taken together results in a Company Material Adverse Effect.
7.1.2 Each of the covenants and obligations that Sellers are required
to perform or comply with pursuant to this Agreement at or prior to the Closing
shall have been duly performed or complied with in all material respects, except
that the covenants and agreements contained in Section 6.2 shall be duly
performed or complied with in all respects.
7.1.3 There shall not have occurred any Company Material Adverse
Effect or any event or circumstances that would result in a Company Material
Adverse Effect.
7.1.4 Sellers shall have obtained the consents, approvals and/or
authorizations of any third person required under the Contracts set forth on
Schedule 7.1.4 to consummate the transactions contemplated under this Agreement
or to otherwise transfer such Contracts to the benefit of the Purchaser.
7.1.5 Sellers (and such Affiliates of Sellers listed on Annex A) shall
be able to deliver to the Purchaser all outstanding shares of stock in each of
the Companies and the Subsidiaries (other than the Asset Sellers) and the
Transferred Assets held in the name of the Sellers, free and clear of any and
all Liens of any kind whatsoever, except (i) for Permitted Exceptions with
respect to the Transferred Assets and (ii) for the right of first refusal
arising following the Closing described in Article 11 of The Articles of
Assocation of FascoYamabishi Ltd.
7.1.6 Purchaser shall have obtained, at Sellers' expense, good and
valid title insurance policies or, in final form, irrevocable title insurance
binders, dated as of the Closing Date, conforming to the specifications set
forth in this Agreement.
7.1.7 Purchaser and Sellers shall have agreed on the terms of the
Trade Escrow Agreement, in the event that the Sellers have not completed the
corrective actions set forth on Schedule 7.1.7 not less than five (5) Business
Days before the Closing Date.
7.1.8 The Sellers shall have executed and delivered to the Purchaser a
settlement agreement (the "Settlement Agreement") to fully and finally resolve
the matter described on Schedule 4.9.
7.1.9 The Sellers, the Companies and the Subsidiaries shall have
terminated, and shall have caused all other parties to terminate, the
Intellectual Property License Agreement between Fasco Australia Pty. Ltd. and
Tecumseh Compressor Company, dated June 22, 2007 and the Intellectual Property
License Agreement between In Motion Technologies Pty. Ltd. and Tecumseh
Compressor Company, dated June 22, 2007 and all rights of any licensee (or
sublicensee) thereunder without any continuing or residual rights or licenses or
sublicenses granted thereto and no other licenses, sublicenses, assignments or
other transfers of any BLDC Technology shall have been granted by any Seller,
Company or Subsidiary or any of their respective Affiliates, without the
Purchaser's prior written consent.
7.2 Condition Precedent to Obligations of Sellers. The obligation of
the Sellers to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of the following
conditions (which may be waived by the Sellers in whole or in part to the extent
permitted by applicable Law):
7.2.1 The representations and warranties of Purchaser in this
Agreement (i) that are qualified as to materiality shall be true and correct in
all respects, and (ii) that are not so qualified shall be true and correct in
all material respects, at and as of the
Closing Date with the same force and effect as though made at and as of the
Closing Date (except to the extent that any representation or warranty is made
as of a specific date, in which case such representation or warranty shall be
true and correct as of such date).
7.2.2 Each of the covenants and obligations that Purchaser is required
to perform or comply with pursuant to this Agreement at or prior to the Closing
shall have been duly performed or complied with in all material respects.
7.2.3 The Sellers shall have received satisfactory evidence that the
Mexico company designated by the Purchaser to receive the Transferred Assets
from Fasco Mexico has qualified under the Maquiladora Program and has registered
all the assets, raw materials, tools, inventories and finished products imported
on temporarily basis by Fasco Mexico.
7.2.4 The environmental assessments performed by the Purchaser in
accordance with Section 6.1 shall not have identified a condition that will
cause a Company Material Adverse Effect.
7.3 Conditions to Each Party's Obligations. The respective obligations
of each party to effect the transactions contemplated by this Agreement are
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by a party in whole or
in part to the extent permitted by applicable Law):
7.3.1 The consents, waivers, approvals or other authorizations of
Governmental Bodies required to consummate the transactions contemplated hereby,
including those listed on Schedule 4.6.2 and Schedule 5.3.2, shall have been
obtained or otherwise satisfied and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have expired;
7.3.2 No Order issued by any court of competent jurisdiction or other
Governmental Body restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement shall be in
effect.
ARTICLE 8
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by the Sellers. At the Closing, the
Sellers shall deliver, or cause to be delivered, to the Purchaser the following:
8.1.1 stock certificates representing all of the Shares, duly endorsed
in blank or accompanied by stock transfer powers or forms and with all requisite
stock transfer tax (including stamp duty) stamps attached;
8.1.2 one or more bills of sale in form and substance acceptable to
Purchaser and the Sellers, covering all personal property included within the
Transferred
Assets and, where applicable, Mexican invoices that comply with the requirements
established in the federal Fiscal Code of Mexico;
8.1.3 one or more warranty deeds in form and substance acceptable to
Purchaser and the Sellers, covering all Owned Property included within the
Transferred Assets;
8.1.4 an Assumption and Assignment Agreement in form and substance
acceptable to Purchaser and the Sellers (the "Assignment and Assumption
Agreement"), evidencing the assumption by Purchaser of the Assumed Liabilities;
8.1.5 assignment agreements providing for the assignment of the Fasco
Intellectual Property to Purchaser, in form and substance acceptable to
Purchaser and the Sellers;
8.1.6 a written release of all Liens on the Shares, the Transferred
Assets and the assets of the Companies and Subsidiaries (other than the Asset
Sellers) on which Liens have been placed, except for Permitted Exceptions;
8.1.7 amendments to each of the First Lien Credit Agreement dated as
of February 6, 2007, as amended, and the Amended and Restated Second Lien Credit
Agreement dated as of November 13, 2006, as Amended (the "Credit Agreements") in
form and substance reasonably satisfactory to the Purchaser with respect to the
subject matter of this Section 8.1.7 evidencing: (i) the consent of the
Collateral Agent (as defined in the Credit Agreements) and the relevant lenders
to the granting of a security interest in favor of the Purchaser (collectively
the "Purchaser Security Interests") in the Escrow Funds, the Settlement Escrow
Funds, and the Trade Escrow Funds (if any) (collectively, for purposes of this
Section 8.1.7, the "Funds") pursuant to the terms of the Escrow Agreement, the
Settlement Escrow Agreement, and the Trade Escrow Agreement (if any)
(collectively, for purposes of this Section 8.1.7, the "Fund Agreements"), (ii)
with respect to the security interests in favor the Collateral Agent for the
benefit of the lenders (collectively the "Lenders") under the Credit Agreements
or any extension of credit during the term of a Fund Agreement (the "Senior
Security Interests"), (A) the subordination of the Senior Security Interests to
the Purchaser Security Interests with respect to any rights the Sellers may have
in the Funds for the period (x) beginning on the date the Funds are deposited
with the Escrow Agent and (y) ending, with respect to each and every
disbursement to a Seller pursuant to the terms of a Fund Agreement, on that date
at which such Funds, or a portion thereof, are distributed to a Seller by the
Escrow Agent pursuant to the terms of the relevant Fund Agreement (but only to
the extent of such disbursement) and (B) the release of the Senior Security
Interests on that date on which any such Funds are disbursed to any party other
than a Seller pursuant to the terms of the relevant Fund Agreement, and (iii)
the consent of the Collateral Agent and the relevant lenders to the Sellers'
entry into, and the consummation of the transactions contemplated by, this
Agreement and the other documents and agreements, including the Fund Agreements,
contemplated hereby and the waiver of any defaults of events of default, if any,
arising therefrom;
8.1.8 (a) written resignations of each of the directors of each
Company and Subsidiary; and (b) written resignations of those Company and
Subsidiary officers identified by Purchaser;
8.1.9 certificates of the Secretary, Assistant Secretary or other
officer of each Seller, dated the Closing Date, as to the resolutions duly and
validly adopted by the board of directors such Seller evidencing its
authorization of the execution, delivery and performance of this Agreement and
such other documents as may be reasonably necessary to consummate the
transactions contemplated by this Agreement;
8.1.10 the Escrow Agreement, the Settlement Escrow Agreement, and the
Trade Escrow Agreement (if any), duly executed by each Seller and the Escrow
Agent;
8.1.11 the Transition Services Agreement, Supply Agreements, Employer
Substitution Agreement and License Agreement referenced in Sections 6.15, 6.16,
6.20 and 6.21, respectively, duly executed by each Seller and all appropriate
Affiliates of each Seller;
8.1.12 evidence in such form as shall be reasonably acceptable to the
Purchaser that each of the obligations and payments set forth on Schedule 8.1.12
has been, or upon payment pursuant to Section 2.3.1(d) will be, fully and
finally satisfied; and
8.1.13 such other documents and seals as the Purchaser shall
reasonably request.
8.2 Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver to the Sellers and/or Escrow Agent the following:
8.2.1 the Initial Purchase Price, Escrow Amount, Settlement Escrow
Amount, and the Trade Escrow Agreement (if any), each in accordance with Section
2.3;
8.2.2 evidence of the wire transfers of the Initial Purchase Price,
Escrow Amount, Settlement Escrow Amount, and Trade Escrow Amount (if any)
referred to in Sections 2.3.1 and 2.3.2, respectively;
8.2.3 a certificate of the Secretary, Assistant Secretary or other
officer of Purchaser, dated the Closing Date, as to the resolutions duly and
validly adopted by the board of directors of Purchaser evidencing its
authorization of the execution, delivery and performance of this Agreement and
such other documents as may be reasonably necessary to consummate the
transactions contemplated by this Agreement;
8.2.4 the Escrow Agreement, the Settlement Escrow Agreement, and the
Trade Escrow Agreement (if any) duly executed by the Purchaser and the Escrow
Agent;
8.2.5 the Transition Services Agreement, Supply Agreements, Employer
Substitution Agreement and License Agreement referenced in Sections 6.15, 6.16,
6.20 and 6.21 respectively, duly executed by the Purchaser;
8.2.6 the Assignment and Assumption Agreement, duly executed by the
Purchaser;
8.2.7 with respect to any Transferred Assets permanently imported or
purchased in Mexico by Fasco Mexico, to which title belongs to Fasco Mexico, an
official tax invoice in compliance with applicable Mexican Tax Laws;
8.2.8 with respect to any Transferred Assets temporarily imported by
Fasco Mexico under the maquiladora program, to the extent that the Purchaser has
obtained, directly or indirectly, appropriate governmental approvals and
filings, a customs transfer between Fasco Mexico and a Mexican company to be
determined by the Purchaser, shall be made, which requires the filing of export
and import pedimentos before Mexican Customs pursuant to the procedures set
forth in the Mexican Customs Law and the Annual Rules of Foreign Trade for the
year 2007;
8.2.9 original executed NAFTA certificates of origin of all the raw
materials, work in process and finished products transferred at the Closing to
the Mexican company to be determined by the Purchaser; and
8.2.10 such other documents as the Sellers shall reasonably request.
ARTICLE 9
INDEMNIFICATION
9.1 General Indemnification.
9.1.1 Subject to Sections 9.2 and 9.3, the Sellers hereby agree to
jointly and severally indemnify and hold the Purchaser, each Company and
Subsidiary, and their respective directors, officers, employees, Affiliates,
agents, successors and assigns (collectively, the "Purchaser Indemnified
Parties") harmless from and against:
9.1.1.1 subject to Section 9.4, any and all Losses based upon,
attributable to or resulting from the breach or failure of any representation or
warranty of the Sellers set forth in Article 4, or any representation or
warranty contained in any certificate delivered by or on behalf of the Sellers
pursuant to this Agreement (without giving effect to any supplement to the
Schedules), to be true and correct (in each case, ignoring for purposes of
determining the existence of any such breach or failure or the amount of any
Losses with respect thereto, any "materiality," "Company Material Adverse
Effect" or similar qualifiers set forth in such representations and warranties);
9.1.1.2 any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of the Sellers
under this Agreement;
9.1.1.3 any Seller Retained Liabilities;
9.1.1.4 any Excluded Liabilities (other than Pre-Closing Environmental
Liabilities); and
9.1.1.5 any Pre-Closing Environmental Liabilities.
9.1.2 Subject to Sections 9.2 and 9.4, Purchaser hereby agrees to
indemnify and hold the Sellers, and its respective Affiliates, and their
respective directors, officers, employees, agents, successors and assigns
harmless from and against:
9.1.2.1 subject to Section 9.4, any and all Losses based upon,
attributable to or resulting from the breach or failure of any representation or
warranty of the Purchaser set forth in Article 5, or any representation or
warranty contained in any certificate delivered by or on behalf of the Purchaser
pursuant to this Agreement (without giving effect to any supplement to the
Schedules), to be true and correct (in each case, ignoring for purposes of
determining the existence of any such breach or failure or the amount of any
Losses with respect thereto, any "materiality" or similar qualifiers set forth
in such representations and warranties); and
9.1.2.2 any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of the Purchaser
under this Agreement.
9.1.3 The provisions of this Section 9.1 and Section 9.5 shall not
apply to Taxes, which shall be governed by the provisions of 9.6.
9.2 Limitations on Indemnification for Breaches of Representations and
Warranties. An indemnifying party shall not have any liability under Section
9.1.1.1 or 9.1.2.1 for breaches of representations and warranties (except for
the representations and warranties set forth in Sections 4.2, 4.3, 4.7, 4.11,
4.21 and 5.2):
9.2.1 with respect to any individual claim for the breach of a
representation and warranty, unless and until the Losses claimed exceed Fifty
Thousand Dollars ($50,000) (the "De Minimis Amount");
9.2.2 unless and until the total amount of Losses to the indemnified
parties finally determined to arise thereunder based upon, attributable to or
resulting from the breach of all representations and warranties, exceeds, in the
aggregate, Two Hundred Fifty Thousand Dollars ($250,000) (the "Deductible"),
disregarding any individual claim that does not exceed the De Minimis Amount and
then only to the extent that such Losses exceed the Deductible; and
9.2.3 for any Losses in excess of an amount equal to ten percent (10%)
in the aggregate of the Final Purchase Price (the "Cap") once the total amount
of Losses to the indemnified parties finally determined to arise thereunder
based upon, attributable to or resulting from the breach of all representations
and warranties equals or exceeds the Cap.
9.3 Limitations on Indemnification for Environmental Liabilities.
9.3.1 Sellers shall have no obligation to indemnify, defend and hold
harmless the Purchaser Indemnified Parties from and against any liability
arising in connection with a breach of the representation and warranty set forth
in Section 4.20 or under Section 9.1.1.5 ("Environmental Liabilities") to the
extent that such Environmental Liabilities are directly caused by Purchaser
conducting any soil or groundwater sampling on the Company Property if such
sampling is not (i) required by Environmental Law, an Order, or a Governmental
Body with jurisdiction over the property; (ii) conducted in conjunction with a
transaction that includes the sale of interests in the Company Property located
in Eldon, Missouri or Thailand; (iii) required pursuant to any Real Property
Lease; or (iv) conducted as part of any maintenance, repair or reconstruction
activities required to keep or return any buildings, plants, improvements or
other structures to the condition existing on the Closing Date, and in which
event, in conducting such activities, Purchaser becomes aware of any condition
or the presence of any Hazardous Substance that requires notice to be provided
or any action to be taken under any Order, any Environmental Laws or any other
Laws.
9.3.2 Remedial Actions shall be conducted in a reasonable and
cost-effective manner, to standards applicable for the current use of the
subject properties, and to the extent applicable to that particular site, shall
include the use of risk-based cleanup standards or natural attenuation.
9.3.3 Any claim for indemnification of a Loss under Section 9.1.1.5
(other than a claim for a Loss based upon, attributable to or resulting from the
presence of any Hazardous Substance in any Fasco Products, which claim shall not
be limited by this Section 9.3.3) that is not asserted by 11:59 p.m. on December
31, 2015 may not be pursued and is hereby irrevocably waived after such time.
Any claim for indemnification of a Loss under Section 9.1.1.4 asserted prior to
such time and date will be timely made for purposes hereof.
9.4 Survival of Representations and Warranties and Covenants.
9.4.1 The representations and warranties of Purchaser and Sellers
contained in this Agreement shall survive the Closing solely for purposes of
Article 9 and such representations and warranties shall terminate at 11:59 p.m.
on the date that is eighteen (18) months after the Closing Date; provided,
however, that (i) the representations and warranties contained in Sections 4.2,
4.3, 4.7 and 5.2 shall survive the Closing and remain in effect indefinitely;
(ii) the representations and warranties contained in Section 4.11 shall survive
the Closing until the expiration of six (6) months following the last day on
which the Tax may be validly assessed with due regard to any extension of time
for assessment by the IRS or any other Governmental Body against any Company,
any Subsidiary, or any of their respective assets; and (iii) the representations
and warranties contained in section 4.16 shall survive the Closing until the
expiration of the applicable statute of limitations (including extensions
thereof). Any claim for indemnification with respect to any of such matters
which is not asserted by notice given as herein provided relating thereto within
such specified period of survival may not be
pursued and is hereby irrevocably waived after such time. Any claim for
indemnification of a Loss asserted within such period of survival as herein
provided will be timely made for purposes hereof.
9.4.2 Unless a specified period is set forth in this Agreement (in
which event such specified period will control), the covenants in this Agreement
will survive the Closing and remain in effect indefinitely.
9.5 General Indemnification Procedures.
9.5.1 In the event that any Legal Proceedings shall be instituted or
any claim or demand, including a third party claim or demand (including
reasonable attorney fees) (collectively, with a Legal Proceeding, a "Claim")
shall be asserted by any Person in respect of which payment may be sought under
Section 9.1 (regardless of the De Minimis Amount or the Deductible referred to
above), the indemnified party shall reasonably and promptly cause written notice
of the assertion of any Claim of which it has knowledge which is covered by this
Article 9 to be forwarded to the indemnifying party. Such notice shall identify
specifically the basis under which indemnification is sought pursuant to Section
9.1 and enclose true and correct copies of any and all written documents
furnished to the indemnified party by the Person that instituted the Claim. The
indemnifying party shall have the right, at its sole option and expense, to be
represented by counsel of its choice, which must be reasonably satisfactory to
the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within ten (10) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Losses under
this Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim. If the indemnified party defends any Claim, then
the indemnifying party shall reimburse the indemnified party for the reasonable
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
party (i) if so requested by the indemnifying party to participate; (ii) if, in
the reasonable opinion of counsel to the indemnified party, a conflict or
potential conflict exists between the indemnified party and the indemnifying
party that would make such separate representation advisable; or (iii) if the
indemnifying party does not, in the reasonable opinion of the indemnified party,
based on the written advice of counsel, diligently conduct such defense; and
provided, further, that the indemnifying party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such Claim. The
indemnified party shall promptly supply to the indemnifying party copies of all
correspondence and documents relating to or in connection with such Claim and
keep the indemnifying party fully informed of all developments relating to or in
connection with such Claim (including, without limitation, providing to the
indemnifying party on request updates and summaries as to the status thereof).
9.5.2 If the indemnifying party assumes the defense of a Claim, (i) no
compromise or settlement of such Claim may be effected by the indemnifying party
without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other Claims made against the indemnified party, and (B)
the sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (ii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent, which shall not be unreasonably withheld.
9.5.3 Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a Claim may
adversely affect it or its Affiliates other than as a result of monetary
damages, the indemnified party may, by notice to the indemnifying party, assume
the exclusive right to defend, compromise, or settle such Claim, but the
indemnifying party will not be bound by any determination of a Claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld).
9.5.4 After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party shall
have arrived at a mutually binding agreement with respect to a Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall be required to pay all of the
sums so due and owing to the indemnified party by wire transfer of immediately
available funds within ten (10) Business Days after the date of such notice.
9.5.5 The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
9.5.6 Payment Through Escrow. During the term of the Escrow Agreement
(exclusive of any extension thereof past its regular term which occurs solely as
a result of a Claim being made thereunder, other than with respect to such
Claim), if the Sellers are determined to owe a Claim amount under Section 9.1,
then the amount due to the Purchaser Indemnified Parties shall be made first by
the delivery to the Purchaser pursuant to the Escrow Agreement of cash from the
Escrow Funds in the amount of the Claim to be so satisfied (or, if the amount of
the Escrow Funds is less than the Claim amount, by delivery of the entire Escrow
Funds). For the avoidance of doubt, no amount
due to the Purchaser hereunder shall be limited by the amount of the Escrow
Funds. If the amount of any Claim exceeds the Escrow Funds then remaining
available, then the Sellers shall pay to the Purchaser the amount of such
difference not paid from the Escrow Funds.
9.6 Tax Matters.
9.6.1 Tax Indemnification.
9.6.1.1 Sellers shall indemnify Purchaser and its Affiliates
(including each Company and Subsidiary) and each of their respective officers,
directors, employees, stockholders, agents and representatives and hold them
harmless from all liability for Excluded Taxes. Notwithstanding the foregoing,
Sellers shall not indemnify and hold harmless Purchaser and its Affiliates
(including each Company and Subsidiary) or any of their respective officers,
directors, employees or agents, from any liability for Taxes attributable to any
action taken on or after the Closing Date by Purchaser, any of its Affiliates
(including each Company and Subsidiary) or any transferee of Purchaser or any of
its Affiliates (other than any such action expressly required by applicable Law
or by this Agreement) (a "Purchaser Tax Act") or attributable to a breach by
Purchaser of its obligations under this Agreement.
9.6.1.2 Purchaser shall, and shall cause each Company and Subsidiary
to, indemnify Sellers and its Affiliates and each of their respective officers,
directors, employees, stockholders, agents and representatives and hold them
harmless from (i) all liability for Taxes of each Company and Subsidiary for any
taxable period ending after the Closing Date (except to the extent such taxable
period began before the Closing Date, in which case Purchaser's indemnity will
cover only that portion of any such Taxes that are not for the Pre-Closing Tax
Period), and (ii) all liability for Taxes attributable to a Purchaser Tax Act or
to a breach by Purchaser of its obligations under this Agreement.
9.6.1.3 In the case of any taxable period that includes (but does not
end on) the Closing Date (a "Straddle Period"):
9.6.1.3.1 real, personal and intangible property Taxes ("Property
Taxes") of each Company and Subsidiary allocable to the Pre-Closing Tax Period
shall be equal to the amount of such Property Taxes for the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the number of days in the Straddle Period; and
9.6.1.3.2 the Taxes (other than Property Taxes) of each Company and
Subsidiary allocable to the Pre-Closing Tax Period shall be computed as if such
taxable period ended as of the Effective Time on the Closing Date, applying all
exemptions, allowances or deductions (including, but not limited to,
depreciation and amortization deductions) applicable to such Pre-Closing Tax
Period applied on an annual basis shall be allocated between the periods in
proportion to the number of days in each period.
9.6.2 Procedures Relating to Indemnification of Tax Claims.
9.6.2.1 If one party is responsible for the payment of Taxes pursuant
to Section 9.6.1 (the "Tax Indemnifying Party"), and the other party (the "Tax
Indemnified Party") receives notice of any deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim (a "Tax Claim")
with respect to such Taxes, the Tax Indemnified Party shall promptly notify the
Tax Indemnifying Party in writing of such Tax Claim. If notice of a Tax Claim is
not given to the Tax Indemnifying Party within a sufficient period of time to
allow such party effectively to contest such Tax Claim, or in reasonable detail
to apprise such party of the nature of the Tax Claim, the Tax Indemnifying Party
shall not be liable to the Tax Indemnified Party (or any of its Affiliates or
any of their respective officers, directors, employees, stockholders, agents or
representatives) to the extent that the Tax Indemnifying Party position is
actually prejudiced as a result thereof.
9.6.2.2 With respect to any Tax Claim, the Tax Indemnifying Party
shall assume and control all proceedings taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative proceedings with any
taxing authority with respect thereto, and may, in its sole discretion, either
pay the Tax claimed and xxx for a refund or contest the Tax Claim in any
permissible manner; provided, however, that in the case of a Tax Claim relating
solely to Taxes of a Company or Subsidiary for a Straddle Period, Sellers and
Purchaser shall jointly control all proceedings taken in connection with any
such Tax Claim, further provided, that in the case of the settlement of any Tax
Claim that can be reasonably expected to impact the Taxes of any Company or
Subsidiary for any Tax period other than a Pre-Closing Tax Period, the prior
written consent of the Purchaser shall be required (which consent may not be
unreasonably conditioned, withheld or delayed).
9.6.2.3 The Tax Indemnified Party and each of its respective
Affiliates shall cooperate with the Tax Indemnifying Party in contesting any Tax
Claim, which cooperation shall include the retention and (upon the Tax
Indemnifying Party's request) the provision to the Tax Indemnifying Party of
records and information which are reasonably relevant to such Tax Claim, and
making employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
9.6.2.4 In no case shall the Tax Indemnified Party, the Companies, the
Subsidiaries, or any of their respective officers, directors, employees,
stockholders, agents or representatives settle or otherwise compromise any Tax
Claim without the Tax Indemnifying Party's prior written consent. Neither party
shall settle a Tax Claim relating solely to Taxes of any Company or Subsidiary
for a Straddle Period without the other party's prior written consent.
9.6.3 Responsibility for Preparation and Filing of Tax Returns and
Amendments.
9.6.3.1 For any taxable period of a Company or Subsidiary that
includes (but does not end on) the Closing Date, Purchaser shall timely prepare
and file with the appropriate authorities all Tax Returns required to be filed
and shall pay all Taxes due with respect to such returns, reports and forms;
provided that Sellers shall reimburse Purchaser for any amount owed by Sellers
pursuant to Section 9.6.1.1 with respect to the taxable periods covered by such
Tax Returns. All such Tax Returns shall be prepared on a basis consistent with
past practice, except to the extent any position does not have sufficient legal
support to avoid the imposition of penalties, fines or similar amounts.
Purchaser shall furnish such Tax Returns to Sellers for its approval (which
approval shall not be unreasonably delayed or withheld) at least twenty (20)
days prior to the due date for filing such Tax Returns.
9.6.3.2 For any taxable period of a Company or Subsidiary that ends on
or before the Closing Date, Sellers shall timely prepare and Purchaser or
Sellers, as appropriate, shall timely file with the appropriate authorities all
Tax Returns required to be filed. Purchaser shall timely furnish tax work papers
to Sellers upon request in accordance with Sellers' past custom and practice.
Sellers shall pay all Taxes due with respect to such Tax Returns. Such Tax
Returns shall be prepared in a manner such that all positions have sufficient
legal support to avoid the imposition of penalties, fines or similar amounts.
Any Tax Returns to be filed by Purchaser, a Company or Subsidiary shall be
furnished by Sellers to the Purchaser, such Company or Subsidiary, as the case
may be, for signature and filing at least twenty (20) days prior to the due date
for filing such Tax Returns and the Purchaser, such Company or Subsidiary, as
the case may be, shall promptly sign and timely file any such Tax Return.
Purchaser and Sellers agree to cause each Company and Subsidiary to file all Tax
Returns for the period including the Closing Date on the basis that the relevant
taxable period ended as of the Effective Time on the Closing Date, unless the
relevant taxing authority will not accept a Tax Return filed on that basis.
9.6.3.3 Sellers shall be responsible for filing any amended,
consolidated, combined or unitary Tax Returns for taxable years ending on or
prior to the Closing Date. For those jurisdictions in which separate Tax Returns
are filed by any Company or Subsidiary, any required amended Tax Returns shall
be prepared by Sellers and furnished to the Purchaser, such Company or
Subsidiary, as the case may be, for signature and filing at least twenty (20)
days prior to the due date for filing such Tax Returns, and the Purchaser, such
Company or Subsidiary, as the case may be, shall promptly sign and timely file
any such amended Tax Return.
9.6.3.4 In the event a dispute arises regarding whether a position
taken on any Tax Return complies with this Agreement, such dispute shall be
resolved by following the procedures described in Sections 2.2.2 and 2.2.3
9.6.4 Cooperation.
9.6.4.1 Each of Sellers, the Companies, the Subsidiaries, and
Purchaser shall reasonably cooperate, and shall cause their respective
Affiliates, officers, employees, agents, auditors and representatives reasonably
to cooperate, in preparing and filing all Tax Returns, including maintaining and
making available to each other all records necessary in connection with Taxes
and in resolving all disputes and audits with respect to all taxable periods,
including records related to customs duties for the four-year period prior to
Closing Date and the period beginning on the Closing Date and ending twelve
months period thereafter.
9.6.4.2 Such cooperation shall include the retention and (upon the
other party's request, at the other party's cost and expense, and at the time
and place mutually agreed upon by the parties) the provision of records and
information that are reasonably relevant to any such audit, litigation or other
proceeding, the preparation of financial statements (including FIN 48) and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, to the extent
such information and/or explanation is readily available and within the control
of the party to which such request is made. The responsibility to retain records
and information shall include the responsibility to (i) retain such records and
information as are required to be retained by any applicable taxing authority
and (ii) retain such records and information in machine-readable format where
appropriate (to the extent such records and information are in such format as of
the Closing Date) such that the requesting party shall be able to readily access
such records and information. Purchaser and Sellers shall (a) retain all books
and records with respect to Tax matters pertinent to each Company and Subsidiary
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or Sellers, any extensions thereof) of the respective taxable periods,
and to abide by all record retention arrangements entered into with any taxing
authority, and (b) give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, Purchaser, or Sellers, as the case may be, shall allow
the other party to take possession of such books and records at its sole cost
and expense. The requesting party shall reimburse the other party for any
reasonable out-of-pocket expenses, or costs of making employees available, upon
receipt of reasonable documentation of such expenses or costs. Any information
or explanation obtained pursuant to this Section 9.6.4.2 shall be maintained in
confidence, except (x) as may be legally required in connection with claims for
refund or in conducting or defending any Tax audit or other proceeding or (y) to
the extent the disclosing party provides written permission for such disclosure.
9.6.5 Refunds and Credits.
9.6.5.1 Any refunds or credits of Taxes of a Company or Subsidiary for
any Pre-Closing Tax Period or that are Excluded Taxes shall be for the account
of Sellers. Any refunds or credits of a Company or Subsidiary for any taxable
period beginning after the Closing Date shall be for the account of the
Purchaser. Any refunds or credits of Taxes of a Company or Subsidiary for any
Straddle Period shall be equitably apportioned
between Sellers and Purchaser. Purchaser shall, if Sellers so requests and at
Sellers' expense, file for and obtain any refunds or credits, or cause such
Company or Subsidiary to file for and obtain any refunds or credits, to which
Sellers is entitled under this Section 9.6.5. Purchaser shall permit Sellers to
control the prosecution of any such refund claim.
9.6.5.2 Purchaser shall cause each Company and Subsidiary to elect,
where permitted by applicable Law, to carry forward any Tax asset arising in a
taxable period beginning after the Closing Date that would, absent such
election, be carried back to a Pre-Closing Tax Period in which such Company or
Subsidiary was included in a consolidated, combined or unitary return with the
Sellers or its Affiliates.
9.7 Exclusive Remedies.
9.7.1 The parties hereto agree that their respective remedies under
Article 9 of this Agreement are their exclusive remedies under this Agreement,
including without limitation, any matter based on the inaccuracy, untruth,
incompleteness or breach of any representation or warranty of any party hereto
contained herein, and the parties hereto hereby waive any claims with respect to
any other right of contribution or indemnity available against any indemnifying
party hereunder in such capacity on the basis of common law, statute or
otherwise beyond the express terms of this Agreement; provided, however, that
this exclusive remedy for damages does not preclude a party from bringing an
action for specific performance or other equitable remedy to require a party to
perform its obligations under this Agreement or any Sellers Document or
Purchaser Document; provided, further, that nothing contained in this Agreement
(including, without limitation, this Section 9.7.1) shall affect or impair
Purchaser's or Sellers' right to pursue any remedy in respect of a breach of any
covenant or agreement contained herein to be performed by Sellers or Purchaser
after the Closing Date, and for the avoidance of doubt no such remedy shall be
subject to the limitations of Section 9.2; and
9.7.2 Notwithstanding any other provision of this Agreement, the
liability for indemnification of any indemnifying party under this Agreement
shall not exceed the actual damages of the party entitled to indemnification and
shall not include incidental, consequential, indirect, special, punitive,
exemplary or other similar damages, other than compensatory damages; provided,
however, that nothing herein shall prevent an indemnified party from being
indemnified by an indemnifying party for all components of awards against the
indemnified party in third party claims, including incidental, consequential,
indirect, special, punitive, exemplary or other similar damages.
9.8 Adjustments for Insurance and Tax Benefits. Any indemnification
payable in accordance with Article 9 shall be net of any (i) amounts actually
recovered (after deducting related costs and expenses) or recoverable by the
indemnified party for the Losses for which such indemnification payment is made
under any insurance policy, warranty or indemnity from any Person other than a
party hereto and (ii) Tax benefits (in the form of an actual refund or a
reduction in any Tax that would otherwise have been payable) realized by the
indemnified party in respect of any Losses for which such indemnification
payment is made.
9.9 Treatment of Indemnity Payments. Sellers and the Purchaser agree
that all indemnification payments made in accordance with Article 9 will be
treated by the parties as an adjustment to the Final Purchase Price.
ARTICLE 10
MISCELLANEOUS
10.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 10.1:
"Accounting Principles" means consistently applied accounting methods,
principles and calculations of the Companies and Subsidiaries under GAAP and
pursuant to which the Financial Statements were prepared and set forth in Annex
B. A specific method, principle or calculation under GAAP specified in Annex B,
means a calculation made in a consistent manner (to the extent applicable) in
accordance with such specific method, principle or calculation used by the
Company and Subsidiaries. For purposes of any application of GAAP hereunder, the
Accounting Principles shall control and GAAP shall be applied on a basis
consistent with those principles reflected by the applicable Company or
Subsidiary in the preparation of its Financial Statements.
"Acquired Business" shall have the meaning set forth in the preamble of
this Agreement.
"Acquisition Proposal" shall have the meaning set forth in Section 6.17.2.
"Adjustment Amount" shall have the meaning set forth in Section 2.2.6.
"Adjustment Period" shall have the meaning set forth in Section 2.2.3.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"A&S Business" shall mean the Automotive/Specialty DC business as described
in the Confidential Information Memorandum as conducted by the Asset Sellers on
the date hereof.
"Approved Absence" shall have the meaning set forth in Section 6.3.1.
"Asset Seller" shall have the meaning set forth in the preamble of this
Agreement.
"Asset Sellers" shall have the meaning set forth in the preamble of this
Agreement.
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 8.1.4.
"Assumed Contract Rights" shall have the meaning set forth in Section
1.2.1(c).
"Assumed Liabilities" shall have the meaning set forth in Section 1.2.3.
"Balance Sheet" shall have the meaning set forth in Section 4.8.
"Balance Sheet Date" shall have the meaning set forth in Section 4.8.
"Business Day" means any day of the year not a Saturday or a Sunday on
which national banking institutions in Detroit, Michigan are open to the public
for conducting business and are not required or authorized to close.
"Cap" shall have the meaning set forth in Section 9.2.3.
"Claim" shall have the meaning set forth in Section 9.5.1.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Adjustment" shall have the meaning set forth in Section 2.2.2.
"Closing Balance Sheet" shall mean a balance sheet as of the Closing Date
prepared only with respect to the Acquired Business (and separately identifying
the balance sheet assets and liabilities of the Asset Sellers) and prepared
consistently with the Accounting Principles, which Closing Balance Sheet shall
be prepared, delivered and determined in accordance the procedures and
requirements established in Sections 2.2.1, 2.2.3, 2.2.4 and 2.2.5 for the
preparation, delivery and determination of the Final Statement of Working
Capital.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" shall have the meaning set forth in Section 6.10.
"Company" and "Companies" shall have the meaning set forth in the recitals
of this Agreement.
"Company Material Adverse Effect" means a material adverse effect on the
assets, liabilities, business, financial condition or results of operations of
the Companies and Subsidiaries (taken as a whole) other than an effect resulting
from an Excluded Matter. "Excluded Matters" means any one or more of the
following: (i) the effect of any change arising from or related to any market in
general in which any Company or Subsidiary operates (whether in the United
States or internationally), the United States economy as a whole, or the
international economy; (ii) the effect of any matter of which Purchaser is aware
on the date hereof; (iii) the effect of any changes in applicable Laws,
regulations or accounting rules adopted after the Closing Date; or (iv) any
effect of the public announcement of this Agreement, the transactions
contemplated hereby or the consummation of such transactions.
"Company Plans" shall have the meaning set forth in Section 4.16.1.
"Company Property" or "Company Properties" shall have the meaning set forth
in Section 4.12.
"Company Retirees" shall have the meaning set forth in Section 6.3.6.
"Confidential Information Memorandum" means the confidential information
memorandum dated February 2007 prepared and distributed by Rothschild Inc.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement.
"Credit Agreements" shall have the meaning set forth in Section 8.1.7.
"De Minimis Amount" shall have the meaning set forth in Section 9.2.1.
"Deductible" shall have the meaning set forth in Section 9.2.2.
"Effective Time" shall have the meaning set forth in Section 1.1.
"Employees" shall have the meaning set forth in Section 6.3.1.
"Employer Substitution Agreement" shall have the meaning set forth in
Section 6.20.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, rule of common law, judgment or other legal requirement
relating to pollution or protection of human health or the environment
including, without limitation, any applicable provisions of the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. Section
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.) the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), and the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the regulations promulgated
pursuant thereto, as amended.
"Environmental Liabilities" shall have the meaning set forth in Section
9.3.1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall have the meaning set forth in Section 2.4.
"Escrow Agreement" shall have the meaning set forth in Section 2.4.1.
"Escrow Amount" shall have the meaning set forth in Section 2.3.2.
"Escrow Funds" shall have the meaning set forth in Section 2.4.1.
"Estimated Statement of Working Capital" shall have the meaning set forth
in Section 2.2.1.
"Excluded Assets" shall have the meaning set forth in Section 1.2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 1.2.4.
"Excluded Taxes" means any liability, obligation or commitment, whether or
not accrued, assessed or currently due and payable, (i) for any Taxes of a
Company or Subsidiary for any Pre-Closing Tax Period and (ii) as a result of
Treasury Regulation Section 1.1502-6(a) for Taxes of Sellers or any other
corporation which has been affiliated with Sellers (other than the Companies and
Subsidiaries).
"Existing Business Activities" shall mean the business activities of a
Seller or an Affiliate of any Seller described on Schedule 6.17.1.
"Fasco Intellectual Property" shall mean all Intellectual Property and
Technology owned or developed (or being developed): (i) for use by a Company or
Subsidiary (as the case may be) with respect to the Products or (ii) relating to
the brushless permanent magnet motor designs and electronic controls used to
drive brushless permanent magnet motors ("BLDC Technology"), in each case
whether owned or registered by, licensed to or developed (or being developed) by
a Company or Subsidiary or any other Affiliate of Tecumseh.
"Fasco Marks" shall have the meaning set forth in Section 6.6.2.
"Fasco Mexico" shall have the meaning set forth in the preamble of this
Agreement.
"Fasco Products" means all Products and all other products at any time
previously manufactured, distributed or sold by any Company or Subsidiary, or by
any predecessor of any Company or Subsidiary under any brand name or xxxx.
"Fasco U.S." shall have the meaning set forth in the preamble of this
Agreement.
"Final Purchase Price" shall have the meaning set forth in Section 2.1.1.
"Final Statement of Working Capital" shall have the meaning set forth in
Section 2.2.3.
"Financial Statements" shall have the meaning set forth in Section 4.8.
"Foreign Benefit Plan" shall have the meaning set forth in Section 4.16.8.
"Fund Agreements" shall have the meaning set forth in Section 8.1.7.
"Funds" shall have the meaning set forth in Section 8.1.7.
"GAAP" means consistently applied accounting methods, principles, policies
and calculations of the Companies and Subsidiaries as provided in the books and
records of the Companies and Subsidiaries under generally accepted United States
accounting principles, and the basis on which the Financial Statements were
prepared.
"Governmental Body" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"Hazardous Material" means any substance, material or waste that is
characterized, classified or designated under or regulated by any Environmental
Law as hazardous, toxic, pollutant, contaminant, explosive, radioactive or words
of similar meaning or effect, including without limitation, petroleum and its
by-products, nuclear fuel, asbestos, urea formaldehyde, and polychlorinated
biphenyls.
"Initial Purchase Price" shall have the meaning set forth in Section 2.1.1.
"Intellectual Property" means all rights under patent, copyright, trademark
or trade secret law or any other statutory provision or common law doctrine and
all inventions (whether or not patentable), service marks, trade dress, logos,
slogans, trade names, corporate names (including the name "Fasco"), confidential
information (including ideas, formulas, compositions, technical data, designs,
drawings, specifications, pricing and cost information, and business and
marketing plans and proposals), internet websites and domain names, product
listings and identification numbers, rights in telephone and facsimile numbers,
know-how, manufacturing and production processes and techniques, research and
development information and all other proprietary rights.
"Inventory" shall have the meaning set forth in the Accounting Principles.
"IRS" means the Internal Revenue Service of the United States.
"Knowledge of Purchaser" means the actual knowledge of the senior officers
of the Purchaser or other employees of the Purchaser actively involved in the
transactions contemplated hereby.
"Knowledge of Sellers" means the actual knowledge of (a) Xxxxx Xxxxxxx,
Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxx or
Xxxxx Xxxx and (b) Xxxx Xxxxxxx or Xxx Xxxxxxxx with respect to Sections 4.14,
4.17, 4.18, 4.19 and 4.27, in each case after reasonable investigation.
"Law" means any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement.
"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private), claims or governmental proceedings.
"Lenders" shall have the meaning set forth in Section 8.1.7.
"License Agreement" shall have the meaning set forth in Section 6.21.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Losses" means any and all losses, claims (including third party claims),
expenses, damages, judgments, settlements, debts, liabilities, penalties, fines,
obligations, interest (including prejudgment interest), costs and expenses
(including court costs and reasonable attorneys' fees and expenses and costs of
investigation and remediation).
"MFLL" shall have the meaning set forth in Section 6.3.10.
"Material Contracts" shall have the meaning set forth in Section 4.15.
"Mexico Employees" shall have the meaning set forth in Section 6.3.10.
"Mexico Federal Labor Law" means the Ley Federal del Trabajo of Mexico.
"Objection Notice" shall have the meaning set forth in Section 2.2.4.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Other Businesses" shall have the meaning set forth in the preamble of this
Agreement.
"Owned Property" or "Owned Properties" shall have the meaning set forth in
Section 4.12.
"Other Business Liabilities" shall mean any and all Losses or obligations
of any Company or Subsidiary or any Seller or any Affiliate of any Seller
(including any current or former subsidiaries and affiliates), and any
contractual liability of such entities, arising out of, related to or incurred
(whether before or after the Closing) in connection with any business other than
the Acquired Business.
"Paris Supply Agreement" shall have the meaning set forth in Section 6.16.
"Permits" means any approvals, authorizations, consents, licenses, permits
or certificates.
"Permitted Exceptions" means (i) matters set forth in clause (a) of Section
4.12; (ii) statutory liens for current taxes, assessments or other governmental
charges not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are not,
individually or in the aggregate, material to any Company's or Subsidiary's
operations or financial condition, and that are not for delinquent amounts or
the amount or validity of which is being contested in good faith by appropriate
proceedings provided an appropriate reserve is established therefor; and (iv)
zoning, entitlement and other land use and environmental regulations by any
Governmental Body that affect the Owned Real Property, provided that such
regulations have not been violated; (v) all matters caused by Purchaser; and
(vi) such other imperfections in title, charges, easements, restrictions,
encumbrances and matters revealed by a plat of survey which do not, individually
or in the aggregate, materially detract from the value of or materially
interfere with the present use of any Company Property subject thereto or
affected thereby or otherwise materially impair the identified Company or
Subsidiary operations involving such properties, or for which the Title Company
agrees to provide title insurance coverage.
"Person" means any individual, partnership, joint venture, trust,
corporation, limited liability entity, unincorporated organization or other
entity (including a Governmental Body).
"Pre-Closing Environmental Liabilities" means any and all Losses or
obligations of the Subsidiaries or the Companies (including any current or
former subsidiaries and affiliates), and any contractual liability of such
entities, arising out of, related to or incurred in connection with any
pollution, threat to the environment or human health, exposure to or
manufacture, processing, distribution, use, treatment, generation, transport or
handling, disposal, emission, discharge, storage or release of Hazardous
Material (as defined with reference to Environmental Laws existing as of or
prior to the Closing Date) that occurred or existed on or before the Closing
Date, including but not limited to any noncompliance with, or liability under,
any Environmental Laws (existing as of or prior to the Closing Date), whether or
not known by Purchaser.
"Pre-Closing Tax Period" means, with respect to each Company and
Subsidiary, any Tax period (i) ending on or before the Closing Date, (ii) any
Straddle Period beginning on the first day of the Straddle Period and ending on
the Closing Date (which period may include for this purpose only the Closing
Date), and (iii) any period or Tax Return of "Old T" pursuant to Treas. Reg.
Section 1.338(h)(10)-1 or any analogous or similar state, local or foreign law
or regulation.
"Product Liability Liabilities" shall have the meaning set forth in Section
1.2.4(i).
"Product Warranty Liabilities" shall have the meaning set forth in Section
1.2.4(h).
"Products" shall mean all current products of any Company or Subsidiary and
all products designed (or being designed) and/or developed (or being developed)
for use of or sale by any Company or Subsidiary, but excluding current products
of the A&S
Business and all products designed (or being designed) and/or developed (or
being developed) for use of the A&S Business.
"Property Taxes" shall have the meaning set forth in Section 9.6.1.3.1.
"Proration Settlement Date" shall have the meaning set forth in Section
10.16.
"Purchaser" shall have the meaning set forth in the preamble of this
Agreement.
"Purchaser DC Plan" shall have the meaning set forth in Section 6.3.5.
"Purchaser Documents" shall have the meaning set forth in Section 5.2.
"Purchaser Indemnified Parties" shall have the meaning set forth in Section
9.1.1.
"Purchaser Security Interest" shall have the meaning set forth in Section
8.1.7.
"Purchaser Tax Act" shall have the meaning set forth in Section 9.6.1.1.
"Real Property Lease" shall have the meaning set forth in Section 4.12.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment, including without limitation, the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Material.
"Remedial Action" means all actions required under Environmental Laws to
investigate, clean up, remove, treat or otherwise address any Hazardous Material
located at, on or under real property.
"Securities Act" shall have the meaning set forth in Section 5.5.
"Seller" shall have the meaning set forth in the preamble of this
Agreement.
"Sellers" shall have the meaning set forth in the preamble of this
Agreement.
"Seller Documents" shall have the meaning set forth in Section 4.2.
"Seller Retained Liabilities" shall mean the Other Business Liabilities,
Product Warranty Liabilities and Product Liability Liabilities associated with
any products manufactured or sold by the Acquired Business on or prior to the
Closing Date and any and all Losses arising out of, related to or incurred in
connection with the matters set forth on Schedule 9.1.1.3.
"Sellers Marks" shall have the meaning set forth in Section 6.6.1.
"Senior Security Interests" shall have the meaning set forth in Section
8.1.7.
"Settlement Agreement" shall have the meaning set forth in Section 7.1.8.
"Settlement Escrow Agreement" shall have the meaning set forth in Section
2.4.2
"Settlement Escrow Amount" shall mean the amount determined by the Sellers
and the Purchaser prior to the Closing that shall be sufficient to pay all
financial obligations under the Settlement Agreement, including all payments to
be made by the Sellers and the estimated costs of the Purchaser (or any Company
or Subsidiary) in repairing, replacing, servicing or recalling any products
under the Settlement Agreement.
"Settlement Escrow Funds" shall have the meaning set forth in Section
2.4.2.
"Shares" shall mean all the issued and outstanding shares of capital stock
or other form of equity of Fasco Australia Pty. Ltd. and Fasco Motors Thailand
Ltd.
"Software" shall mean all computer programs (including source code,
executable code, data, databases and related documentation) embodied in Products
or used in the design, development, manufacture or testing of Products.
"Straddle Period" shall have the meaning set forth in Section 9.6.1.3.
"Subsidiary" and "Subsidiaries" shall have the meaning set forth in the
recitals of this Agreement.
"Supply Agreements" shall have the meaning set forth in Section 6.16.
"Target Working Capital" shall mean $43,900,000.
"Tax Claim" shall have the meaning set forth in Section 9.6.2.1.
"Tax Indemnified Party" shall have the meaning set forth in Section
9.6.2.1.
"Tax Indemnifying Party" shall have the meaning set forth in Section
9.6.2.1.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means, whether or not disputed and whether imposed by law, contract
or otherwise, (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including, without limitation, all net
income, gross receipts, capital, sales, use, ad valorem, value added, asset,
transfer, franchise, profits, gains, single business, commercial activity,
inventory, capital stock, license, withholding, payroll, employment, Housing
Fund Institute quotas, social security (or similar), unemployment, excise,
severance, stamp, occupation, property, replacement, registration, value added,
alternative or add-on minimum and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever, retirement savings quotas
(Cuotas del Sistema de Ahorro para el Retiro), countervailing and antidumping
duties and customs processing fees, (ii) all interest, penalties, fines,
additions to tax or additional amounts imposed by any taxing authority in
connection with any item described in clause (i), and (iii) "Tax"
shall have the correlative meaning any transferee liability in respect of any
items described in clauses (i) and/or (ii).
"Technology" means, collectively, all designs, formulas, algorithms,
procedures, techniques, ideas, know-how, software (including all Software),
tools, inventions, creations, improvements, works of authorship other similar
materials relating the Products, and all recordings, graphs, drawings, reports,
analyses, other writings, and any other embodiment of the above, in any form,
whether or not specifically listed herein, and all related technology used in,
incorporated in, embodied in or displayed by any of the foregoing, or used or
useful in the design, development, reproduction, maintenance or modification of
any of the foregoing.
"Tecumseh" shall have the meaning set forth in the preamble of this
Agreement.
"Title Company" shall have the meaning set forth in Section 6.18.
"Trade Accounts Payable" shall have the meaning set forth in the Accounting
Principles.
"Trade Escrow Agreement" shall have the meaning set forth in Section 2.4.3.
"Trade Escrow Amount" shall mean the amount, up to Six Million Dollars
($6,000,000), determined by the Sellers and the Purchaser prior to the Closing
that shall be sufficient to pay financial obligations (including Taxes and
fines) that may be owed in connection with those matters described in Schedule
4.11.14, 4.19.1, and the corrective actions described in Schedule 7.1.7.
"Trade Escrow Funds" shall have the meaning set forth in Section 2.4.3.
"Trade Receivables" shall have the meaning set forth in the Accounting
Principles.
"Transfer Taxes" means all sales, use, transfer, intangible, recordation,
documentary stamp or similar Taxes or charges, of any nature whatsoever.
"Transferred Assets" shall have the meaning set forth in Section 1.2.1.
"Transferred Company Plans" shall have the meaning set forth in Section
4.16.2.
"Transition Services Agreement" shall have the meaning set forth in Section
6.15.
"Unrelated Accounting Firm" shall have the meaning set forth in Section
2.2.5.
"U.S. Dollars" or "Dollars" means the legal currency of the United States.
"Working Capital" means, as of the applicable date, the Inventory, Trade
Receivables and Trade Accounts Payable of the Acquired Business, in each case,
as reflected on the Estimated Statement of Working Capital or the Final
Statement of
Working Capital, as the case may be, all in accordance with Section 2.2 and
prepared on a basis consistent with the Accounting Principles.
10.2 Payment of Transfer Taxes. The Purchaser, on the one hand, and
the Sellers, on the other hand, shall pay or cause to be paid, and shall
indemnify, defend and hold harmless the other party for, 50% of any and all
Transfer Taxes attributable to the transactions contemplated by this Agreement.
Purchaser and Sellers shall use commercially reasonable efforts to mitigate,
reduce or eliminate Transfer Taxes that could arise from, or be due as a result
of, the transactions contemplated in this Agreement.
10.3 Expenses. Except as otherwise provided in this Agreement, the
Sellers and the Purchaser shall each bear their own expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby, including all fees and expenses of representatives, agents and
advisors, it being understood that in no event shall any Company or Subsidiary
bear any of such costs and expenses.
10.4 Further Assurances. The Sellers and the Purchaser each agrees to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the documents referred to in this Agreement, and the
consummation of the transactions contemplated hereby.
10.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
10.6 Submission to Jurisdiction; Consent to Service of Process.
10.6.1 The parties hereto hereby irrevocably submit to the exclusive
jurisdiction of any federal or state court located within the State of Michigan
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action, or proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
10.6.2 Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by the
mailing of a copy thereof in accordance with the provisions of Section 10.9.
10.7 Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
10.8 Table of Contents and Headings. The table of contents and section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
10.9 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when (i) delivered
personally or (ii) mailed by certified or registered mail, return receipt
requested, or (iii) sent by FedEx or other nationally recognized express
carrier, fee prepaid to the parties (and shall also be transmitted by facsimile
to the Persons receiving copies thereof) at the following addresses (or to such
other address as a party may have specified by notice given to the other party
pursuant to this provision):
If to Sellers: Tecumseh Products Company
Fasco Industries, Inc.
Motores Fasco de Mexico
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
With a copy to: Miller, Canfield, Paddock & Stone, P.L.C.
000 Xxxx Xxxx Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Purchaser, to: Regal Beloit Corporation
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
With a copy to: Xxxxx & Lardner LLP
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, III
Facsimile: (000) 000-0000
10.10 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced under any Law or as a matter
of public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties to this Agreement shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement be consummated as originally contemplated to the greatest extent
possible.
10.11 Binding Effect; No Third Party Beneficiaries; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
Person not a party to this Agreement. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Sellers or the
Purchaser (by operation of law or otherwise) without the prior written consent
of the other parties hereto and any attempted assignment without the required
consents shall be void; provided, however, that the Purchaser may assign this
Agreement and any or all rights or obligations hereunder (including, without
limitation, the Purchaser's rights to purchase the Shares and/or any Transferred
Assets and the Purchaser's rights to seek indemnification hereunder) to any
Affiliate of the Purchaser. Upon any such permitted assignment, the references
in this Agreement to the Purchaser shall also apply to any such assignee unless
the context otherwise requires.
10.12 Bulk Sales Laws. The Purchaser and the Sellers hereby agree to
use commercially reasonable efforts prior to the Closing to comply with the
provisions of the "bulk sales," "bulk transfer," tax clearance or similar laws
of any state or any jurisdiction outside the United States applicable to the
transfer of the Transferred Assets to the Purchaser pursuant to this Agreement.
10.13 Disclosure Schedules. Any disclosure with respect to a Section
or Schedule of this Agreement shall be deemed to be disclosed for other Sections
and Schedules of this Agreement to the extent that such disclosure sets forth
facts in sufficient detail so that the relevance of such disclosure would be
reasonably apparent to a reader of such disclosure. No reference to or
disclosure of any item or other matter in any Section or Schedule of this
Agreement shall be construed as an admission or indication that such item or
other matter is material or that such item or other matter is required to be
referred to or disclosed in this Agreement.
10.14 Rules of Construction. Interpretation of the Sellers and
Purchaser Documents (except as specifically provided in any such agreement, in
which case such specified rules of construction shall govern with respect to
such agreement) shall be governed by the following rules of construction: (a)
words in the singular shall be held to include the plural and vice versa, and
words of one gender shall be held to include the other gender as the context
requires; (b) references to the terms Article, Section, paragraph, Exhibit and
Schedule are references to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified; (c) references to "$"
shall mean U.S. dollars; (d) the word "including" and words of similar import
when used in the Transaction Agreements shall mean "including without
limitation," unless otherwise specified; (e) the word "or" shall not be
exclusive; (f) provisions shall apply, when appropriate, to successive events
and transactions; (g) the headings contained in this Agreement or the Sellers or
Purchaser Documents are for reference purposes only and shall not affect in any
way the meaning or interpretation of the Transaction Agreements; and (h) this
Agreement and each of the Sellers and Purchaser Documents shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
10.15 Counterparts. This Agreement and each of the Sellers and
Purchaser Documents may be executed in one or more counterparts, and by the
different parties to each such agreement in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement or a Sellers Document or Purchaser
Document by facsimile or e-mail shall be as effective as delivery of a manually
executed counterpart of any such agreement.
10.16 Prorations. The following prorations will be made as of the
Closing Date, with the Sellers liable to the extent such items relate to any
time period up to and including the Closing Date, if not already taken into
account on the Final Statement of Working Capital, and Buyer liable to the
extent such items relate to periods subsequent to the Closing Date. To the
extent any such prorations can be determined on the Closing Date, the Sellers
and the Purchaser shall settle the net amount of such prorations on the Closing
Date. To the extent not settled and paid on the Closing Date, the net amount of
all such prorations will be settled and paid within 60 days of the Closing Date
(the "Proration Settlement Date") by wire transfer of immediately available
funds to an account designated in writing by the recipient.
10.16.1 Rents. Rents, additional rents, taxes and other items payable
under any lease, license, permit, contract or other agreement or arrangement to
be assigned to or assumed by Buyer.
10.16.2 Utilities. The amount of charges for sewer, water, fuel,
telephone, electricity and other utilities; provided that if practicable, meter
readings shall be taken at the Closing Date and the respective obligations of
the parties determined in accordance with such readings.
10.16.3 Employee Benefit Obligations. The amount of payments, bonuses,
benefits or other obligations arising under any Transferred Company Plans or any
other plans, programs, agreements or arrangements to which any Company or
Subsidiary contributes or is obligated to contribute, which amount is to be
paid, funded or otherwise satisfied following the Closing Date with respect to,
including or covering any period prior to the Closing Date.
10.16.4 Other Items. All other items to be adjusted and prorated as of
the Closing Date in connection with transactions contemplated by the Agreement.
10.16.5 If the actual expense of any of the above items for the
billing period within which the Closing Date falls is not known on the Proration
Settlement Date, the proration shall be made based on the expense incurred in
the previous billing period, for expenses billed less often than quarterly, and
on the average expense incurred in the preceding three billing periods, for
expenses billed quarterly or more often. The Sellers agree to furnish the
Purchaser with such documents and other records as shall be reasonably requested
in order to confirm all proration calculations.
[Signatures follow on next page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.
PURCHASER:
REGAL BELOIT CORPORATION
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Operating
Officer
SELLERS:
TECUMSEH PRODUCTS COMPANY
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
FASCO INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman
MOTORES FASCO DE MEXICO
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-fact
(apoderado general)
