ASSET PURCHASE AGREEMENT
by and between
SPX CORPORATION
and
▇▇▇▇ CORPORATION
________________
Dated as of
December 31, 1996
-3-
TABLE OF CONTENTS
Page
Number
ARTICLE 1
Certain Definitions
Section 1.1 Specific Definitions............................................ 2
Section 1.2 Other Terms ...................................................10
ARTICLE 2
Sale of Assets; Closing
Section 2.1 Assets to Be Acquired............................................10
Section 2.2 Excluded Assets..................................................12
Section 2.3 Assumption of Liabilities........................................13
Section 2.4 Excluded Liabilities.............................................13
Section 2.5 Consent of Third Parties.........................................13
Section 2.6 Consideration ...................................................14
Section 2.7 Time and Place of Closing........................................14
Section 2.8 Designation of Affiliates by Buyer...............................14
Section 2.9 Allocation of Purchase Price.....................................14
ARTICLE 3
Representations and Warranties of Seller
Section 3.1 Incorporation; Authorization; Etc................................15
Section 3.2 Capitalization; Structure........................................16
Section 3.3 Financial Statements.............................................16
Section 3.4 Absence of Undisclosed Liabilities...............................17
Section 3.5 Assets ...................................................17
Section 3.6 Absence of Certain Changes.......................................18
Section 3.7 Litigation; Orders...............................................19
Section 3.8 Intellectual Property............................................19
Section 3.9 Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc...........................20
Section 3.10 Labor Matters ...................................................20
Section 3.11 Compliance with Laws.............................................21
Section 3.12 Contracts ...................................................21
Section 3.13 Real Property ...................................................22
Section 3.14 Environmental Matters............................................24
Section 3.15 Employee Benefit Plans and Related Matters.......................25
Section 3.16 Brokers, Finders, Etc............................................26
Section 3.17 Customers ...................................................26
Section 3.18 Suppliers ...................................................27
Section 3.19 Product Warranties...............................................27
Section 3.20 Absence of Certain Business Practices............................27
ARTICLE 4
Representations and Warranties of Buyer
Section 4.1 Incorporation; Authorization; Etc................................27
Section 4.2 Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc...........................28
Section 4.3 Brokers, Finders, Etc............................................28
ARTICLE 5
Covenants of Seller and Buyer
Section 5.1 Investigation of Business; Access
to Properties and Records........................28
Section 5.2 Efforts; Obtaining Consents; Antitrust Laws......................29
Section 5.3 Further Assurances...............................................30
Section 5.4 Conduct of Business..............................................30
Section 5.5 Preservation of Business.........................................31
Section 5.6 Public Announcements.............................................31
Section 5.7 Intercompany and Intracompany Accounts...........................31
Section 5.8 Acquisition of Mahle Transferred
Subsidiary Interest..............................31
Section 5.9 Tax Covenants ...................................................31
Section 5.10 Franklin Plant...................................................32
ARTICLE 6
Employee Benefits
Section 6.1 Employment of Seller's Employees.................................32
Section 6.2 Retirement Plans.................................................34
Section 6.3 Welfare and Fringe Benefit Plans.................................36
Section 6.4 Workers Compensation.............................................37
Section 6.5 Employment Taxes.................................................37
ARTICLE 7
Tax Matters
Section 7.1 Tax Returns ...................................................38
Section 7.2 Tax Indemnification by Seller....................................39
Section 7.3 Tax Indemnity by Buyer...........................................40
Section 7.4 Allocation of Certain Taxes......................................40
Section 7.5 Filing Responsibility............................................41
Section 7.6 Refunds ...................................................41
Section 7.7 Cooperation and Exchange of Information..........................41
Section 7.8 Definitions ...................................................42
ARTICLE 8
Conditions of Buyer's Obligation to Close
Section 8.1 Representations, Warranties and
Covenants of Seller..............................43
Section 8.2 Filings; Consents; Waiting Periods...............................43
Section 8.3 No Material Adverse Effect.......................................44
Section 8.4 No Injunction ...................................................44
Section 8.5 Mexican Investments..............................................44
Section 8.6 Union Contracts..................................................44
Section 8.7 Schedules ...................................................44
ARTICLE 9
Conditions of Seller's Obligation to Close
Section 9.1 Representations, Warranties and
Covenants of Buyer...............................44
Section 9.2 Filings; Consents; Waiting Periods...............................45
Section 9.3 No Injunction ...................................................45
ARTICLE 10
Survival; Indemnification
Section 10.1 Indemnification by Seller........................................45
Section 10.2 Indemnification by Buyer.........................................46
Section 10.3 Indemnification Procedures.......................................47
Section 10.4 Indemnification Procedure Regarding the
Manchester Plant.................................47
Section 10.5 Time Limitation..................................................48
Section 10.6 Survival of Representations and Warranties, Etc..................48
Section 10.7 Product Warranties...............................................49
Section 10.8 Survival of Covenants ...........................................49
Section 10.9 Sole Remedy ...................................................49
ARTICLE 11
Deliveries at Closing
Section 11.1 Seller's Deliveries at Closing...................................49
Section 11.2 Buyer's Deliveries at Closing....................................51
Section 11.3 Required Documents...............................................51
ARTICLE 12
Termination
Section 12.1 Termination ...................................................51
Section 12.2 Procedure and Effect of Termination..............................52
ARTICLE 13
Post-Closing Obligations
Section 13.1 Working Capital Adjustment.......................................52
Section 13.2 Non-Competition..................................................53
Section 13.3 Operation of the Business as of Cut-Off Date.....................54
ARTICLE 14
Miscellaneous
Section 14.1 Corporate Name...................................................56
Section 14.2 Counterparts ...................................................56
Section 14.3 Governing Law ...................................................56
Section 14.4 Entire Agreement.................................................57
Section 14.5 Expenses ...................................................57
Section 14.6 Notices ...................................................57
Section 14.7 Successors and Assigns...........................................58
Section 14.8 Headings; Definitions............................................58
Section 14.9 Amendments and Waivers...........................................58
Section 14.10 Interpretation; Absence of Presumption.............58
Section 14.11 Severability.......................................59
Section 14.12 Remedies Cumulative................................59
Section 14.13 Specific Performance...............................59
Section 14.14 Attorney-Client Privilege: Work Product............59
EXHIBITS
Exhibit 13.1 Working Capital Computation Procedures
SCHEDULES
Schedule 2.1(n) Guarantees, Warranties, Indemnities
Schedule 2.1(o) Rights to Cause of Action, Lawsuits, Judgments,
Claims and Demands
Schedule 2.2(b) Retained Intellectual Property
Schedule 2.5 Waived Consents
Schedule 3.1(b) Transferred Subsidiaries
Schedule 3.2 Encumbrances
Schedule 3.3 Accounting Principles
Schedule 3.4 Material Undisclosed Liabilities
Schedule 3.5 Encumbrances on Assets
Schedule 3.6 Certain Material Changes
Schedule 3.7 Litigation
Schedule 3.8 Assigned Intellectual Property
Schedule 3.8(d) Due Registration of Intellectual Property
Schedule 3.9(a) Material Licenses, Permits, Franchises and Other
Authorizations
Schedule 3.9(b) Consents
Schedule 3.10 Collective Bargaining Agreements and Disputes
Schedule 3.11 Compliance with Laws
Schedule 3.12 Contracts and Commitments
Schedule 3.13(a) Owned Real Property
Schedule 3.13(b) Assigned Leases and Subsidiary Leases
Schedule 3.14(a) Environmental Permits
Schedule 3.14(b) Violations with respect to Environmental Permits or
Environmental Laws
Schedule 3.14(c) Liabilities of Seller with respect to Environmental
Matters
Schedule 3.14(d) Other Environmental Matters
Schedule 3.15(a) Employee Benefit Plans
Schedule 3.15(c) Plans
Schedule 3.17 20 largest Customers of the Division
Schedule 3.18 20 Largest Suppliers to the Division
Schedule 3.19 Product Warranties
Schedule 4.2 List of Registrations, Filings, Applications, Notices,
Consents, Approvals, Orders, Qualifications or Waivers
of Buyer
Schedule 5.4 Conduct of Business
Schedule 5.7 Intercompany and Intracompany Accounts
Schedule 6.1(b) List of Employees Not Offered Employment
Schedule 6.3(b) Incentive Bonuses Payable to Transferred Employees
Schedule 6.4(b) Reserve relating to Assumed Workers' Compensation
Liability
Schedule 7.1(a) Contested Taxes
Schedule 7.1(b) Agreements with respect to Extending Assessment or
Collection of Taxes
Schedule 7.1(c) Taxes Due or under Audit by any Governmental Authority
Schedule 7.1(e) Pending Tax Litigation or Appeals
Schedule 7.1(f) Exceptions with respect to Accuracy of Tax Returns
Schedule 7.1(g) Tax Liens
Schedule 7.1(h) Tax Jurisdictions
Schedule 7.1(i) Charges, Accruals and Reserves for Taxes
Schedule 7.1(j) Taxable Assets
Schedule 8.2 Filings; Consents Necessary to Consummate the Asset
Purchase
Schedule 13.1(e) Actions with respect to Working Capital
Schedule 13.3 Anticipated Items to be Paid by Seller for the Benefit
of SPD and by SPD for the Benefit of Seller
Schedule 14.10 Individuals with Knowledge
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of December 31,
1996, is by and between SPX Corporation, a Delaware corporation ("Seller"), and
▇▇▇▇ Corporation, a Virginia corporation ("Buyer").
WHEREAS, Seller is in the business of manufacturing and marketing piston
rings and cylinder liners for automotive and heavy duty engines and sealing
rings for automatic transmissions, together with other products related thereto,
in the United States, Europe, Mexico and certain other countries through its
unincorporated Sealed Power Division (the "Division") which it operates through
(i) Sealed Power Technologies Limited Partnership, a Delaware limited
partnership ("SPT") of which Seller indirectly owns 100% of the outstanding
equity interest, (ii) Sealed Power Technologies Corporation of Nevada, a Nevada
corporation ("SPT NV") of which Seller indirectly owns 100% of the outstanding
equity interest, (iii) Allied Ring Corporation, a Delaware corporation ("Allied
Ring") of which Seller indirectly owns 50% of the outstanding equity interest,
(iv) Sealed Power Europe Limited Partnership, a Delaware limited partnership
("SPE L.P.") of which Seller indirectly owns 70% of the outstanding equity
interest and ▇▇▇▇▇ GmbH, a German company ("Mahle"), indirectly owns 30% of the
outstanding equity interest, (v) Sealed Power Europe GmbH, a German company
("SPE GmbH") of which SPE L.P. directly owns 90% of the outstanding equity
interest, (vi) Sealed Power Technologies Pringy S.A., a French societe anonyme
("SPE S.A.") of which SPE L.P. directly owns 100% of the outstanding equity
interest, and (vii) Sealed Power Technologies ▇▇▇▇▇▇▇▇ ▇.▇., a Spanish company
("SPE S.L.") of which SPE L.P. directly owns 100% of the outstanding equity
interest (SPT NV, Allied Ring, SPE GmbH, SPE S.A. and SPE S.L., and all of their
direct or indirect subsidiaries (and investments in the equity interests of any
person) collectively are referred to herein as the "Transferred Subsidiaries");
WHEREAS, of the 10% outstanding equity interest of SPE GmbH not owned by
SPE L.P., 7% is indirectly owned by Seller and 3% is indirectly owned by Mahle
(such 3% interest, together with the 30% equity interest held by Mahle in SPE
L.P. and the managing general partner thereof, the "Mahle Transferred Subsidiary
Interest");
WHEREAS, Seller wishes to sell to Buyer substantially all of the assets,
business and goodwill of the Division, and Buyer wishes to purchase such assets,
business, goodwill, and equity interests and to assume substantially all of the
liabilities relating to the Division and its assets and business, excluding all
Excluded Liabilities (as defined herein), all upon the terms and subject to the
conditions set forth herein;
WHEREAS, it is the intention of Seller and of Buyer that the Business be
operated in trust for the benefit of Buyer after December 31, 1996 and that any
net cash generated by or net cash used by the Business beginning January 1, 1997
be for the sole account of Buyer; and
WHEREAS, Seller and Buyer have executed a letter of intent, dated as of
August 26, 1996, that, among other things, indicates the desire and intent of
the parties to effectuate promptly the sale of the Division by Seller to Buyer
substantially in accordance with the terms set forth in such letter, and
contemplates the entering into by Seller and Buyer of this Agreement.
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1
Certain Definitions
Section 1.1. Specific Definitions. As used in this Agreement the following
terms shall have the following respective meanings:
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority of any nature, civil,
criminal, regulatory or otherwise, in law or in equity.
"Active Employee" shall have the meaning set forth in Section 6.1(a).
"Affiliate" (and, with a correlative meaning, "affiliated") shall mean,
with respect to any person, any direct or indirect subsidiary of such person,
and any other person that directly, or through one or more intermediaries,
controls or is controlled by or is under common control with such first person,
and, if such a person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any person who is controlled by any such member or trust.
As used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"Agreement" shall have the meaning set forth in the first paragraph hereof.
"Allied Ring" shall have the meaning set forth in the recitations.
"Allocation" shall have the meaning set forth in Section 2.9(a).
"Allocation Agreement" shall have the meaning set forth in Section 2.9(a).
"Antitrust Laws" shall mean and include the ▇▇▇▇▇▇▇ Act, as amended, the
▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state, foreign (including German and Mexican)
and multinational (including European Community) statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
"Applicable Law" shall mean all applicable provisions of all (a)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (b)
Governmental Approvals and (c) orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any Governmental Authority.
"Assets" shall have the meaning set forth in Section 2.1.
"Asset Purchase" shall mean the consummation of the transactions described
in Section 2.1.
"Assigned Intellectual Property" shall mean any Intellectual Property that
is not Retained Intellectual Property, and shall include the name "Sealed
Power," all names, marks, trade names, trademarks, trade dress, and service
marks incorporating the name "Sealed Power," and any logos or representations
based thereon, derived therefrom or used in conjunction therewith.
"Assigned Leases" shall mean the real property leases, subleases, licenses
and occupancy agreements pursuant to which Seller or any of its Affiliates
(other than any Transferred Subsidiary) is the lessee, sublessee, licensee or
occupant with respect to Real Property Related to the Business.
"Assignment and Assumption Agreement" shall mean a ▇▇▇▇ of Sale, Assignment
and Assumption Agreement in such form as may be agreed to by Buyer and Seller.
"Assumed Contracts" shall mean, except as otherwise indicated on Schedule
3.12, all of the Contracts together with any contracts, agreements or other
instruments that would be required to be disclosed on Schedule 3.12 if not for
the minimum dollar values set forth in Sections 3.12(a)(iv), (viii) and (ix),
and other contracts, agreements or other instruments Related to the Business,
and shall specifically include the collective bargaining agreements with each of
the International Association of Machinists (District 9) and the United Auto
Workers' Union Local Nos. 221 and 637 (collectively, the "Union Contracts"), but
shall not, except as provided herein, include (i) any Plans or Liabilities under
Plans, or (ii) indemnities in favor of Seller with respect to Excluded
Liabilities under that certain Asset Purchase Agreement between TRW Automotive
Products Inc. and Seller with respect to the purchase of the Manchester
facility.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Assumed Plans" shall have the meaning set forth in Section 6.2(d).
"Assumed Workers' Compensation Liability" shall mean the Liabilities to or
in respect of any Employee relating to or arising in connection with any and all
claims for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on, prior to or following
the Closing Date, and any claims which could otherwise be made by Employees
under the general liability and long-term disability insurance policy or program
of Seller.
"Balance Sheet" shall have the meaning set forth in Section 3.3.
"Balance Sheet Date" shall have the meaning set forth in Section 3.3.
"Business" shall mean the business and operations of the Division.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in Chicago are authorized or
obligated by law or executive order to close. Any event the scheduled occurrence
of which would fall on a day which is not a Business Day shall be deferred until
the next succeeding Business Day.
"Buyer" shall have the meaning set forth in the first paragraph hereof.
"Buyer Indemnitees" shall have the meaning set forth in Section 10.1.
"Buyer's Dispute Notice" shall have the meaning set forth in Section
13.1(c).
"Buyer's Hourly Plans" shall have the meaning set forth in Section 6.2(b).
"Buyer's Pension Plans" shall have the meaning set forth in Section 6.2(a).
"Buyer's Savings Plans" shall have the meaning set forth in Section 6.2(c).
"Buyer's Welfare Plans" shall have the meaning set forth in Section 6.3(a).
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. Sec.9601 et seq.
"Claims" shall have the meaning set forth in Section 2.2(d).
"Closing" shall mean the consummation of the Asset Purchase.
"Closing Date" shall mean January 6, 1997, or, if the conditions set forth
in Articles 8 and 9 have not been satisfied or duly waived on or before January
6, 1997, then the (i) third Business Day following the date on which the last of
such conditions shall have been satisfied or duly waived, or (ii) if Seller and
Buyer mutually agree on a different date, the date upon which they have mutually
agreed.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"Combined State Tax" shall have the meaning set forth in Section 5.9(d).
"Confidentiality Agreement" shall have the meaning set forth in Section
5.1(c).
"Consent" shall mean any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any person, including but not limited to any Governmental Authority.
"Continuing Affiliate" shall mean any Affiliate of Seller other than the
Transferred Subsidiaries.
"Contracts" shall have the meaning set forth in Section 3.12(a).
"Controlled Subsidiaries" shall mean, collectively, SPT NV, SPE GmbH, SPE
S.A. and SPE S.L.
"Corporate Assets" shall have the meaning set forth in Section 2.2(g).
"Covered Returns" shall have the meaning set forth in Section 7.1(a).
"Cut-Off Date" shall mean (i) January 1, 1997, if the Closing Date is on or
before January 31, 1997, or (ii) the Closing Date, if the Closing Date is after
January 31, 1997.
"Determination" shall have the meaning set forth in Section 7.8(a).
"Division" shall have the meaning set forth in the recitations.
"Employee" shall mean any employee or former employee employed or formerly
employed in the operation of the Business or the beneficiaries or dependents of
any such employee or former employee.
"Encumbrances" shall mean mortgages, liens, encumbrances, security
interests, covenants, conditions, restrictions, claims, charges, options, rights
of first refusal, rights of use or occupancy or other legal or equitable
encumbrances and any other matters affecting title (including, in the case of
real property, rights-of-way, easements and encroachments).
"Environmental Laws" shall mean all Applicable Laws relating to the
protection of the environment, to human health and safety, or to any emission,
discharge, generation, processing, storage, holding, abatement, existence,
Release, threatened Release or transportation of any Hazardous Substances,
including (a) CERCLA, the Resource Conservation and Recovery Act, and the
Occupational Safety and Health Act, (b) all other requirements pertaining to
reporting, licensing, permitting, investigation or remediation of emissions,
discharges, Releases or threatened Releases of Hazardous Substances into the
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, sale, treatment, receipt, storage, disposal,
transport or handling of Hazardous Substances, and (c) all other requirements
pertaining to the protection of the health and safety of employees or the
public.
"Environmental Liabilities and Costs" shall mean all Liabilities, whether
direct or indirect, known or unknown, current or potential, past, present,
future, whether or not imposed by, under or pursuant to Environmental Laws,
including all Liabilities related to Remedial Actions (to the extent required
pursuant to Environmental Laws), and all fees, disbursements and expenses of
counsel, experts, personnel and consultants based on, arising out of or
otherwise in respect of: (a) the ownership or operation of the Business, Real
Property, Assigned Leases, Subsidiary Leases, or any other real properties,
assets, equipment or facilities, by Seller, or any of its predecessors or
Affiliates; (b) the environmental conditions existing before, on or after the
Closing Date on, under, above, or about any Real Property or property subject to
an Assigned Lease, Subsidiary Lease, or any other real properties, assets,
equipment or facilities currently or previously owned, leased or operated by
Seller, or any of its predecessors or Affiliates; and (c) expenditures necessary
to cause any Real Property or any aspect of the Business to be in compliance
with any and all requirements of Environmental Laws as of the Closing Date,
including all Environmental Permits issued under or pursuant to such
Environmental Laws, and reasonably necessary to make full economic use of any
Real Property including by virtue of maintaining, expanding, remodelling, or
demolishing any such Real Property.
"Environmental Permits" shall mean any federal, state or local permit,
license, registration, Consent, order, administrative consent order,
certificate, approval or other authorization with respect to Seller or any of
its Affiliates necessary for the conduct of the Business as currently conducted
or previously conducted under any Environmental Law.
"Environmental Report" shall have the meaning set forth in Section 3.14(b).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor thereto.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"FICA" shall have the meaning set forth in Section 6.5(a).
"Financial Statements" shall have the meaning set forth in Section 3.3.
"FUTA" shall have the meaning set forth in Section 6.5(a).
"GAAP" shall have the meaning set forth in Section 3.3.
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any government authority, agency, department, board,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof, and any tribunal or arbitrator(s)
of competent jurisdiction, and any self-regulatory organization.
"Hazardous Substances" shall mean any substance that: (a) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum derived substances or wastes, radon gas or related
materials; (b) requires investigation, removal, containment or remediation under
any Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" (or any similar designation) thereunder; or (c)
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
Governmental Authority or Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Income Taxes" shall have the meaning set forth in Section 7.8(b).
"Indemnified Party" shall have the meaning set forth in Section 10.3.
"Indemnifying Party" shall have the meaning set forth in Section 10.3.
"Intellectual Property" shall mean such of the following as are Related to
the Business or otherwise necessary for the ordinary conduct of the Business:
all domestic and foreign patents, industrial designs, mask works, copyrights,
names, marks, trade names, trademarks, trade dress, service marks (whether or
not registered) and registrations, and applications for any of the foregoing
(together with the goodwill associated with such trade names, trademarks and
service marks), trade secrets, inventions and other proprietary information and
licenses from third persons granting the right to use any of the foregoing.
"Interim Period" shall have the meaning set forth in Section 13.3(a).
"Inventories" shall have the meaning set forth in Section 2.1(e).
"IRS" shall have the meaning set forth in Section 7.8(c).
"KSOP" shall have the meaning set forth in Section 6.2(c).
"Leased Real Property" shall mean all interests leased, subleased or
licensed pursuant to the Assigned Leases or the Subsidiary Leases.
"Liabilities" shall mean any and all debts, losses, liabilities, claims,
damages, fines, costs, royalties, proceedings, deficiencies or obligations
(including those arising out of any Action, such as any settlement or compromise
thereof or judgment or award therein), of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due, and
whether or not resulting from third-party claims, and any out-of-pocket costs
and expenses (including attorneys', accountants', or other fees and expenses
incurred in defending any Action or in investigating any of the same or in
asserting any rights hereunder).
"Licenses" shall have the meaning set forth in Section 3.9(a).
"Mahle" shall have the meaning set forth in the recitations.
"Mahle Acquisition" shall have the meaning set forth in Section 5.8.
"Mahle Transferred Subsidiary Interest" shall have the meaning set forth in
the recitations.
"Manchester Liability" shall have the meaning set forth in Section 2.4(e).
"Material Adverse Effect" shall mean any event, occurrence, fact,
condition, change or effect that is materially adverse to the business,
operations, results of operations, prospects, condition (financial or
otherwise), properties (including intangible properties), assets (including
intangible assets) or Liabilities of the Business, taken as a whole.
"Names" shall have the meaning set forth in Section 14.1.
"Net Cash Flow" shall have the meaning set forth in Section 13.3(c).
"No. 3 Transferred Employees" shall have the meaning set forth in Section
6.2(a).
"Owned Real Property" shall mean the real property owned by Seller or any
Affiliate and Related to the Business, together with all other structures,
facilities, improvements, fixtures, systems, equipment and items of property
presently or hereafter located thereon, in each case, attached or appurtenant
thereto which are owned by Seller or any Affiliate, or owned by Seller or any
Affiliate and located on the Leased Real Property, and all easements, licenses,
approvals, permits, qualifications, rights and appurtenances relating to the
foregoing.
"Permitted Liens" shall mean (a) liens for Taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings; (b)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
liens arising in the ordinary course of business which are less than $10,000 in
amount (in the aggregate) per property and which are being contested in good
faith and by appropriate proceedings; or (c) easements, rights-of-way,
encroachments, restrictions, conditions and other similar encumbrances incurred
or suffered in the ordinary course of business and which, individually or in the
aggregate, (i) are not substantial in character, amount or extent in relation to
the applicable Real Property and (ii) do not detract from the use, utility or
value of the applicable Real Property or otherwise impair the present business
operations at such location.
"person" shall mean any individual, corporation, partnership, joint
venture, trust, unincorporated organization, other form of business or legal
entity or Governmental Authority.
"Plans" shall have the meaning set forth in Section 3.15(a).
"Purchase Price" shall mean $225 million (as finally adjusted pursuant to
Section 13.1).
"Real Property" shall mean the Owned Real Property and the Leased Real
Property.
"Real Property Laws" shall have the meaning as defined in Section 3.13(f).
"Reflected Taxes" shall mean Taxes other than Income Taxes to the extent
and in the amount reflected in the Balance Sheet and Taxes other than Income
Taxes arising in the ordinary course following the Balance Sheet Date consistent
with prior practice.
"Related to the Business" shall mean relating to, used in or held for use
in connection with or otherwise necessary to the Business as conducted
immediately prior to the Closing.
"Related Person" shall mean any Affiliate or any other trade or business,
whether or not incorporated, which, together with Seller or any Affiliate is or
would have been at any date of determination occurring within the preceding six
years treated as a single employer under Section 414 of the Code.
"Release" shall mean any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including the
moving of any materials through, into or upon any land, soil, surface water,
ground water or air, or otherwise entering into the environment.
"Relevant Date" shall have the meaning set forth in Section 7.4(b).
"Remedial Action" shall mean all actions undertaken to: (a) clean up,
remove, contain, treat or in any other way remediate any Hazardous Substances;
(b) prevent the Release of Hazardous Substances so that they do not migrate or
endanger or threaten to endanger public health or welfare or the environment; or
(c) perform studies, investigations and care related to any such Hazardous
Substances, whether or not required by any Environmental Laws.
"Retained Intellectual Property" shall mean all of the Intellectual
Property set forth or described in Schedule 2.2(b).
"Returns" shall have the meaning set forth in Section 7.8(d).
"Seller" shall have the meaning set forth in the first paragraph hereof.
"Seller Indemnitees" shall have the meaning set forth in Section 10.2.
"Seller's Hourly Plans" shall have the meaning set forth in Section 6.2(b).
"Service Agreement" shall have the meaning set forth in Section 11.1(k).
"SPD" shall mean the United States operations of SPT.
"SPE GmbH" shall have the meaning set forth in the recitations.
"SPE L.P." shall have the meaning set forth in the recitations.
"SPE S.A." shall have the meaning set forth in the recitations.
"SPE S.L." shall have the meaning set forth in the recitations.
"SPT" shall have the meaning set forth in the recitations.
"SPT NV" shall have the meaning set forth in the recitations.
"SUB Plans" shall have the meaning set forth in Section 6.2(e).
"Subsidiary Leases" shall mean the real property leases, subleases,
licenses and occupancy agreements pursuant to which any Transferred Subsidiary
or subsidiary of a Transferred Subsidiary is the lessee, sublessee, licensee or
occupant with respect to Real Property used in connection with, necessary for
the conduct of, or otherwise material to, the Business.
"subsidiary" of any person shall mean any company of which at least 30% of
the outstanding capital stock or other equity interests having voting power
under ordinary circumstances shall at the time be held, directly or indirectly,
by such person, by such person and one or more subsidiaries of such person, or
by one or more subsidiaries of such person.
"Tax Laws" shall have the meaning set forth in Section 7.8(f).
"Taxes" shall have the meaning set forth in Section 7.8(e).
"Taxing Authority" shall have the meaning set forth in Section 7.8(g).
"Transferred Employees" shall have the meaning set forth in Section 6.1(b).
"Transferred Subsidiaries" shall have the meaning set forth in the
recitations.
"Transferred Subsidiary Interests" shall have the meaning set forth in
Section 2.1(a).
"Union Contracts" shall have the meaning set forth in the definition of
Assumed Contracts.
"Working Capital" shall mean the net amount, as of the Cut-Off Date, of
those assets and liabilities to be included in the computation of Working
Capital in accordance with Exhibit 13.1.
"Working Capital Deficiency" shall have the meaning set forth in Section
13.1(b).
Section 1.2. Other Terms. Other terms may be defined elsewhere in this
Agreement and, unless otherwise indicated, shall have such meaning throughout
this Agreement.
ARTICLE 2
Sale of Assets; Closing
Section 2.1. Assets to Be Acquired. Subject to the satisfaction or waiver
in writing of the conditions set forth herein and to the other terms, conditions
and provisions hereof, at the Closing, Seller shall sell, convey, assign,
transfer and deliver to Buyer or cause to be sold, conveyed, assigned,
transferred and delivered to Buyer, as the case may be, and Buyer shall
purchase, acquire, accept and pay for, all of the right, title and interest of
Seller and its Affiliates (other than the Transferred Subsidiaries) in all of
the properties, assets and rights of every nature, tangible and intangible
(including goodwill), whether real, personal or mixed, wherever located, whether
now existing or hereafter acquired (excluding the Excluded Assets, and excluding
any right, title or interest of any of the Transferred Subsidiaries in any of
such properties, assets or rights) Related to the Business (collectively, the
"Assets").
The Assets shall include but not be limited to the following:
(a) all of the outstanding equity interests in each of Allied Ring, SPT NV,
SPE GmbH, SPE S.L. and SPE S.A. (the "Transferred Subsidiary Interests");
(b) the Owned Real Property (other than Owned Real Property owned by a
Transferred Subsidiary);
(c) the Assigned Leases;
(d) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment, motor
vehicles, tools and other tangible personal property;
(e) all inventories of raw materials, work in process, finished products,
goods, spare parts, replacement and component parts, and office and other
supplies (collectively, the "Inventories"), including Inventories held at any
location controlled by Seller or any Affiliate (other than the Transferred
Subsidiaries), Inventories previously purchased and in transit to Seller or any
Affiliate (other than the Transferred Subsidiaries), Inventories consigned to
vendors, resellers or customers, and Inventories in transit to such vendors,
resellers or customers;
(f) all rights in and to products of the Business sold or leased
(including, but not limited to, products hereafter returned or repossessed and
unpaid rights of rescission, replevin, reclamation and rights to stoppage in
transit);
(g) the Assumed Contracts;
(h) all written technical information, data, specifications, research and
development information, engineering drawings and operating and maintenance
manuals;
(i) the Assigned Intellectual Property and all rights thereunder or in
respect thereof, including, but not limited to, rights to ▇▇▇ and collect for
and remedies against past, present and future infringements thereof, and rights
of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof;
(j) all computer applications, programs and other software, including
systems documentation and instructions;
(k) all accounting and other books and records, cost information, sales and
pricing data, customer lists, quality records and reports, and other books,
records, studies, surveys, reports, plans and documents;
(l) all expenses and payments of the Division prepaid or advanced for
periods after the Cut-Off Date;
(m) all accounts and notes receivable (excluding intercompany and
intracompany receivables, which shall be treated as provided in Section 5.7),
and all notes, bonds and other evidences of indebtedness of and rights to
receive payments from any person, in each case, arising from the Business;
(n) except as set forth on Schedule 2.1(n), all guarantees, warranties,
indemnities and similar rights in favor of Seller or any Affiliate (other than a
Transferred Subsidiary) with respect to any Asset and all letters of credit and
performance bonds issued pursuant to which the Division is a material
beneficiary;
(o) except as set forth on Schedule 2.1(o), all rights to causes of action,
lawsuits, judgments, claims and demands of any nature available to or being
pursued by Seller or any Affiliate (other than a Transferred Subsidiary) with
respect to the Business or the ownership, use, function or value of any Asset,
whether arising by way of counterclaim or otherwise (except arising pursuant to
the transactions contemplated hereby); and
(p) all Licenses relating to the Division or any of the Assets.
Section 2.2. Excluded Assets. Anything to the contrary herein
notwithstanding, all of Seller's and its Affiliates' right, title and interest
in all of the following properties, assets and other rights (the "Excluded
Assets") shall be excluded from the Assets:
(a) the assets set forth on Schedule 13.1(e);
(b) the Retained Intellectual Property (as set forth on Schedule 2.2(b));
(c) except as specifically provided in Article 6, any assets of any Plan
and any rights under any Plan;
(d) all rights, demands, claims, Actions and causes of action (whether for
personal injuries or property, consequential or other damages of any kind)
(collectively, "Claims") which Seller, any Continuing Affiliate, the Division or
any of the Transferred Subsidiaries may have, on or after the date hereof,
against any Governmental Authority for refund or credit of any type with respect
to Seller's Taxes for periods prior to the Cut-Off Date (except with respect to
Income Taxes, as to which this clause shall apply with respect to periods prior
to the Closing Date);
(e) all Claims which Seller, any Continuing Affiliate, the Division or any
of the Transferred Subsidiaries may have against any person with respect to or
which are exclusively related to any Excluded Liabilities or Excluded Assets;
(f) cash and cash equivalents held directly by Seller or any Transferred
Subsidiary (other than Allied Ring or the Mexican investments of SPT NV); and
(g) assets related to the selling, general and administrative functions of
the Business currently afforded to the business by Seller, located in the
corporate office of Seller located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ or
held by Seller at the corporate level, and not necessary to the conduct of the
Business by Buyer (e.g. corporate aircraft of Seller that may from time to time
be used by the Business) (the "Corporate Assets").
Section 2.3. Assumption of Liabilities. Subject to the terms and conditions
set forth herein, at the Closing Date, Buyer shall assume and agree to pay,
honor and discharge when due all Liabilities to the extent relating to or
arising out of the past, present or future operations of the Business or
ownership of the Assets, other than any Excluded Liabilities (collectively, the
"Assumed Liabilities").
Section 2.4. Excluded Liabilities. Notwithstanding Section 2.3, and
regardless of any disclosure to Buyer, Buyer shall not assume any of the
following Liabilities, whether or not relating to or arising out of the
operation of the Business or the ownership of the Assets or otherwise:
(a) all Liabilities relating to Actions, whether asserted before or after
the Closing Date, relating to or arising out of the sale, use or misuse of
products manufactured or sold by the Division prior to the Closing Date, if and
to the extent such Actions assert as the basis for any recovery, the occurrence
of damages prior to the Closing Date;
(b) any Liabilities for the repair or replacement of products manufactured
or sold by the Business before the Closing, but only to the extent such
Liabilities arise as a result of occurrences prior to the Closing;
(c) except as otherwise specifically provided in Articles 7 and 13, all
Liabilities relating to Income Taxes with respect to periods ending on or prior
to the Closing Date, except with respect to the Transferred Subsidiaries (other
than SPT NV) for which the Cut-Off Date shall be substituted for the Closing
Date for purposes of this Section 2.4(c);
(d) all Liabilities relating to indebtedness for borrowed money of Seller
or any Transferred Subsidiary (other than Allied Ring or the Mexican investments
of SPT NV);
(e) any Environmental Liabilities and Costs related to or arising out of
the ownership or use of the properties and business at the Division's Manchester
facility to the extent such Environmental Liabilities and Costs are related to
or arise out of ownership or use of such properties and business prior to the
Closing Date (the "Manchester Liability"); and
(f) all Liabilities relating to or with respect to Employees or relating
to, with respect to, under or pursuant to Plans, except to the extent
specifically assumed by Buyer pursuant to Article 6;
(all the liabilities described in clauses (a) through (f) of this Section 2.4,
collectively, the "Excluded Liabilities").
Section 2.5. Consent of Third Parties. Anything to the contrary in this
Agreement notwithstanding, this Agreement shall not constitute an agreement to
assign or transfer any Governmental Approval, instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom if an assignment or transfer or an attempt to
make such an assignment or transfer without the Consent of a third party would
constitute a breach or violation thereof or affect materially and adversely the
rights of Buyer thereunder; and any transfer or assignment to Buyer by Seller of
any interest under any such instrument, contract, lease, permit, or other
agreement or arrangement that requires the Consent of a third party shall be
made subject to such Consent being obtained. In the event any such Consent is
not obtained on or prior to the Closing Date, Seller shall, at its own expense,
use its best efforts to obtain any such Consent after the Closing Date until
such time as such Consent has been obtained, and, if such Consent has not been
obtained prior to the Closing Date, Seller will cooperate with Buyer in any
lawful arrangement to provide that Buyer shall receive the interest of Seller or
the relevant Affiliate, as the case may be, in the benefits under any such
instrument, contract, lease or permit or other agreement or arrangement,
including performance by Seller or the relevant Affiliate, as the case may be,
as agent, provided that Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit only to the extent
Buyer would have been responsible therefor hereunder if such Consent had been
obtained. Except as set forth on Schedule 2.5, nothing in this Section shall be
deemed a waiver by Buyer of its right to have received on or before the Closing
an effective assignment of all of the Assets, nor shall this Section be deemed
to constitute an agreement to exclude from the Assets any properties, assets or
rights described under Section 2.1.
Section 2.6. Consideration. Subject to the terms and conditions hereof, at
the Closing, Buyer shall (a) pay to Seller the Purchase Price by wire transfer
of same day funds to the account or accounts specified by Seller, and (b) assume
the Assumed Liabilities pursuant to the Assignment and Assumption Agreement.
Section 2.7. Time and Place of Closing. The Closing shall take place on the
Closing Date at 10:00 A.M., Chicago time, at the offices of ▇▇▇▇▇▇▇, Carton &
▇▇▇▇▇▇▇, Chicago, Illinois.
Section 2.8. Designation of Affiliates by Buyer. Prior to the Closing, upon
at least one day's written notice to Seller, Buyer may designate one or more
Affiliates to acquire at the Closing all or part of the Assets, in which event
all references herein to "Buyer" shall be deemed also to refer to such
Affiliates, as appropriate; provided, however, that no such designation shall in
any event limit or affect the obligations of Buyer under this Agreement.
Section 2.9. Allocation of Purchase Price. (a) The parties shall use their
best efforts to enter into an agreement as soon as practicable after the Closing
Date concerning the allocation (the "Allocation") of the Purchase Price among
the Assets in accordance with Section 1060 of the Code and the regulations
promulgated thereunder (the "Allocation Agreement"). Buyer shall deliver to
Seller a proposed Allocation Agreement which will allocate the Purchase Price
among the Assets within 120 days after the Closing Date. If Seller has not
objected to such Allocation Agreement within 30 days after receipt, such
agreement shall be deemed accepted and shall be the Allocation Agreement. If
Seller objects to Buyer's proposed Allocation Agreement, Seller shall give Buyer
notice of its objections and Buyer and Seller shall use all reasonable efforts
to resolve their differences. If, 60 days after the date on which Seller has
given Buyer notice of its objections, the parties have not adopted the
Allocation Agreement, any disputes related thereto shall be referred to a "big
six" accounting firm having no material relationship with either party or their
respective Affiliates during the 12-month period preceding the date of referral
mutually agreed on by the parties and shall be resolved within 30 days after
such referral. The costs, expenses and fees of such accounting firm shall be
borne equally by the parties.
(b) Seller and Buyer agree to (i) be bound by the Allocation, (ii) act in
accordance with the Allocation in the preparation of financial statements and
filing of all Tax Returns (including filing Form 8594 with its federal Income
Tax Return for the taxable year that includes the date of the Closing) and in
the course of any Tax audit, Tax review or Tax litigation relating thereto and
(iii) take no position and cause their Affiliates to take no position
inconsistent with the Allocation for all Tax and accounting purposes.
(c) Not later than 30 days prior to the filing of their respective Forms
8594 relating to this transaction, each party shall deliver to the other party a
copy of its Form 8594.
ARTICLE 3
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Incorporation; Authorization; Etc. (a) Seller is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Seller (i) has all requisite corporate power to own its properties
and assets and to carry on its business as it is now being conducted, and (ii)
is in good standing and is duly qualified to transact business in each domestic
jurisdiction in which the nature of property owned or leased by it or the
conduct of its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business, would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Schedule 3.1(b) sets forth a list of each Transferred Subsidiary,
together with its jurisdiction of organization and its authorized and
outstanding capital stock or other equity interests. Each such entity is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate or similar power
and authority to own and operate its properties and assets and to carry on its
portion of the Business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation or other entity in
each jurisdiction where the ownership or operation of its properties and assets
or the conduct of its business requires such qualification, except where the
failure to be in good standing or to be duly qualified to transact business,
would not, individually or in the aggregate, have a Material Adverse Effect.
Seller has heretofore delivered to Buyer true, complete and correct copies of
each such entity's governing documents as in effect as of the date hereof.
(c) Seller has full corporate power to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of Seller's obligations hereunder have been duly
and validly authorized by all necessary corporate proceedings on the part of
Seller and no other corporate or stockholder proceedings or actions on the part
of Seller or its Affiliates or any of their partners, boards of directors, or
stockholders, as the case may be, are necessary therefor. The execution,
delivery and performance by Seller of this Agreement will not (i) violate any
provision of Seller's certificate of incorporation or by-laws, (ii) violate any
provision of any Transferred Subsidiary's certificate of incorporation or
by-laws or similar organizational instrument, (iii) violate any provision of, or
be an event that is (or with the passage of time will result in) a violation of,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) any obligation under, or
result in the imposition of any lien upon or the creation of a security interest
in any of the Assets or any of the Transferred Subsidiaries' assets or
properties pursuant to, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment, injunction or decree to which Seller or any of its
Affiliates is a party or by which any of them is bound, or (iv) except as
disclosed in Schedule 3.9(a) or 3.9(b), violate or conflict with any statute,
rule or regulation applicable to Seller or any of its Affiliates or any of their
properties or assets or any other material restriction of any kind or character
to which Seller or any of its Affiliates is subject, except, in the case of any
of clauses (ii), (iii) and (iv), such violations as would not, individually or
in the aggregate, have a Material Adverse Effect or prevent or make unlawful the
Asset Purchase. This Agreement has been duly executed and delivered by Seller,
and, assuming the due execution and delivery hereof by Buyer, this Agreement
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity (regardless of whether in equity or at law).
(d) Seller has all requisite power to transfer to Buyer good and marketable
title to the Assets free and clear of all Encumbrances, except for Permitted
Liens.
Section 3.2. Capitalization; Structure. All of the outstanding shares of
capital stock or other equity interests of each of the Transferred Subsidiaries
constituting the Transferred Subsidiary Interests, and all of the outstanding
shares of capital stock or other equity interests of each subsidiary of a
Transferred Subsidiary owned, directly or indirectly, by such Transferred
Subsidiary, have been validly issued and are fully paid and non-assessable and
are owned, directly or indirectly, by Seller free and clear of all Encumbrances,
except as set forth in Schedule 3.2. There are no outstanding options, warrants
or other rights of any kind to acquire, obligations to issue, or securities
convertible into, shares of capital stock of any class of, or other equity
interests in any of the Transferred Subsidiaries. Except as set forth in
Schedule 3.2, the outstanding shares of capital stock or other equity interests
owned by Seller of each of the Transferred Subsidiaries are not subject to any
restriction of transfer that would be violated or breached by the execution of
this Agreement or the consummation of the transactions contemplated hereby, and
no person has any preemptive right, right of first refusal, or other similar
right in connection with such shares or interests owned by Seller.
Section 3.3. Financial Statements. Seller has furnished to Buyer copies of
the unaudited balance sheets, income statements and cash flow statements as at
and for the period ended September 30, 1996 of (a) that portion of the Division
directly owned and operated by SPT, (b) SPE L.P. and (c) Allied Ring (the
"Financial Statements"). The Financial Statements were prepared on a basis
consistent with the divisional statements historically prepared by Seller with
respect to the Business and collectively present fairly in accordance with
United States generally accepted accounting principles ("GAAP") consistently
applied the financial condition of the Business represented by the Financial
Statements as of such date and the results of operations of the Business
represented by the Financial Statements for such period, except for differences
from GAAP and other accounting practices described in Schedule 3.3, and with the
exception of any assets and liabilities reflected in the Working Capital
computation described in Section 13.1 or historically reflected on Seller's
corporate office financial statements. The Balance Sheet does not include any
properties, assets or rights or Liabilities that do not constitute a part of the
Business or Assets after giving effect to the transactions contemplated hereby
and presents fairly the financial condition of the Business at the Balance Sheet
Date, in accordance with GAAP, except for differences from GAAP and other
accounting practices described in Schedule 3.3, and with the exception of any
assets and liabilities historically reflected on Seller's corporate office
financial statements described in Schedule 3.3, Excluded Assets and Excluded
Liabilities. The statements of income and of cash flows included in the
Financial Statements do not reflect the operations of any entity or business
that does not constitute a part of the Business after giving effect to all such
transactions, fairly present all costs that historically have been incurred by
the Business (other than those related to the Excluded Liabilities) and do
present fairly the results of operations and cash flows of the Business for the
periods indicated, in accordance with GAAP, except for differences from GAAP and
other accounting practices described in Schedule 3.3, and with the exception of
any assets and liabilities historically reflected on Seller's corporate office
financial statements described in Schedule 3.3, Excluded Assets and Excluded
Liabilities. As used herein, the "Balance Sheet Date" shall mean September 30,
1996 and the "Balance Sheet" shall mean the collective balance sheets described
in the first sentence of this Section 3.3.
Section 3.4. Absence of Undisclosed Liabilities. Seller has no Liabilities
arising out of or Related to the Business (including Liabilities for the repair
or replacement of products manufactured or sold by the Business), except (a) as
set forth in Schedule 3.4, (b) as and to the extent expressly disclosed or
reserved against in the Balance Sheet or reflected in the Working Capital
computation described in Section 13.1 or the balance sheet of Seller's corporate
office dated September 30, 1996, which reserves are described on Schedule 3.4,
and (c) as and to the extent both (i) incurred after the Balance Sheet Date in
the ordinary course of business consistent with prior practice and (ii)
individually and in the aggregate, not material to the Business and have not had
or resulted in, and will not have or result in, a Material Adverse Effect.
Section 3.5. Assets. Except as disclosed in Schedule 3.5, Seller or its
subsidiaries has good title to all of the Assets free and clear of any and all
Encumbrances other than Permitted Liens. The Assets together with the properties
and assets of the Transferred Subsidiaries, taken as a whole, constitute all the
properties, assets and rights necessary for Buyer to conduct and operate the
Business as conducted currently or at any time within the past 12 months (except
Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, contracts fully performed, properties or assets replaced by
equivalent or superior properties or assets (in each case, in the ordinary
course of business) and the Excluded Assets). The Assets together with the
properties and assets of the Transferred Subsidiaries, taken as a whole, are
adequate for the purposes for which they are currently used or are held for use,
are in good repair and operating condition (subject to normal wear and tear),
other than Assets that are under repair or out of service in the ordinary course
of business, and, to the knowledge of Seller, there are no facts or conditions
affecting them which could, individually or in the aggregate, interfere in any
material respect with the use, occupancy or operation thereof as currently used,
occupied or operated, or their adequacy for such use. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, ALL WARRANTIES (WHETHER WRITTEN OR ORAL, EXPRESS OR
IMPLIED) IN REGARD TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
CONDITION, DESIGN, OPERATION, MAINTENANCE, VALUE OR OTHERWISE WITH RESPECT TO
THE ASSETS OF THE DIVISION OR ANY TRANSFERRED SUBSIDIARY ARE EXPRESSLY EXCLUDED.
Section 3.6. Absence of Certain Changes. Except as set forth in Schedule
3.6, since the Balance Sheet Date, Seller and its Affiliates have conducted the
Business only in the ordinary course consistent with prior practice and (x)
Seller, (y) each of Seller's subsidiaries that holds Assets or suffers Assumed
Liabilities, and (z) the Transferred Subsidiaries, have not on behalf of, in
connection with or relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) mortgaged, pledged or subjected to Encumbrance (except for Permitted
Liens), any property, business or assets, tangible or intangible, held in
connection with the Business;
(c) sold, transferred, leased to others or otherwise disposed of any of the
Assets or any assets held, directly or indirectly, by any Transferred
Subsidiary, except for Inventory sold in the ordinary course of business;
(d) cancelled or compromised any debt or claim, or waived or released any
right of substantial value;
(e) received any notice of termination of any contract, lease or other
agreement or suffered any damage, destruction or loss (whether or not covered by
insurance) which, in any case or in the aggregate, has had a Material Adverse
Effect;
(f) transferred or granted any rights under, or entered into any settlement
regarding the breach or infringement of, any Assigned Intellectual Property or
any Intellectual Property held, directly or indirectly, by any Transferred
Subsidiary, or modified any existing rights with respect thereto;
(g) declared, set aside or paid any dividends or other distributions,
directly or indirectly, in respect of its capital stock or partnership
interests;
(h) other than in the ordinary course of business consistent with past
practices or as required by Applicable Laws or contracts entered into on or
before the date hereof, made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, incentive,
retention or other compensation, retirement, welfare, fringe or severance
benefit or vacation pay, to or in respect of any shareholder, director, officer,
employee, distributor or sales representative of Seller, or the Transferred
Subsidiaries, relating to the Business;
(i) encountered any labor union organizing activity, had any actual or, to
Seller's knowledge, threatened employee strikes, work stoppages, slowdowns or
lockouts, or had any material change in its relations with its employees,
agents, customers or suppliers;
(j) failed to replenish the Businesses' Inventories and supplies in a
normal and customary manner consistent with its prior practice, or made any
purchase commitment in excess of the normal, ordinary and usual requirements of
its business or, to the knowledge of Seller, at any price in excess of the then
current market price or upon terms and conditions more onerous than those usual
and customary in the industry, or made any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice;
(k) made any capital expenditures or capital additions or improvements in
excess of an aggregate of $100,000 individually or $2,000,000 in the aggregate;
(l) instituted, settled or agreed to settle any litigation, Action or
proceeding before any court or governmental body relating to the Business, the
Assets or any assets held by the Transferred Subsidiaries, other than in the
ordinary course of business consistent with past practices but not in any case
involving amounts in excess of $100,000 or $1,000,000 in the aggregate;
(m) entered into any transaction, contract or commitment other than in the
ordinary course of business or paid or agreed to pay any legal, accounting,
brokerage, finder's fee, Taxes or other expenses in connection with, or incurred
any severance pay obligations by reason of, this Agreement or the transactions
contemplated hereby which would result in an Assumed Liability; or
(n) taken any action or omitted to take any action that would result in the
occurrence of any of the foregoing; or
(o) entered into any agreement to do any of the foregoing.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule 3.7, there
are no Actions, pending or, to Seller's knowledge, threatened against Seller or
any of its Affiliates in connection with the Assets, any assets held by the
Transferred Subsidiaries, or the Business, or against or relating to the
transactions contemplated by this Agreement, and neither Seller nor any
Transferred Subsidiary knows of any basis for the same. Except as disclosed in
Schedule 3.7, there are no judgments or outstanding orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency, or by arbitration) against Seller or any of its Affiliates or any of
their respective properties or businesses that would reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect or that could
prohibit or make unlawful the Asset Purchase.
Section 3.8. Intellectual Property. (a) Assigned Intellectual Property.
Schedule 3.8 lists the Assigned Intellectual Property. Except as disclosed in
Schedule 3.8, no notices have been given nor claims have been asserted by any
person (i) to the effect that the manufacture, use or sale of any product,
invention, design, machine, process, technology, know-how, information,
literature, copyright table work, name, trade name, trademark, service ▇▇▇▇ or
trade dress as now manufactured, sold or used by Seller or any Affiliate in
connection with the Business infringes on any patents, intellectual property or
other right or (ii) challenging the ownership, validity or effectiveness of any
of the Assigned Intellectual Property or any of the Intellectual Property of any
Transferred Subsidiary. Except as set forth on Schedule 3.8, Seller owns or has
the exclusive right to use pursuant to license, sublicense, agreement or
permission all Assigned Intellectual Property and all Intellectual Property of
any Transferred Subsidiary, free from any Encumbrances (other than Permitted
Liens) and free from any requirement of any past, present or future royalty
payments, license fees, charges or other payments, or conditions or restrictions
whatsoever. The Assigned Intellectual Property and all Intellectual Property of
any Transferred Subsidiary comprises all of the intellectual property necessary
for Buyer to conduct and operate the Business as now being conducted, other than
as relates to use of the Names.
(b) Transfer. Seller has all requisite power to transfer the Assigned
Intellectual Property to Buyer, free from any Encumbrances (other than Permitted
Liens) and on terms and conditions no less favorable than as in effect prior to
the Closing.
(c) No Infringement. The conduct of the Business does not infringe or
otherwise conflict with any rights of any person in respect of any patents,
trademarks, copyrights or other Intellectual Property. To the knowledge of
Seller, none of the Assigned Intellectual Property nor any of the Intellectual
Property of any Transferred Subsidiary is being infringed or, to the knowledge
of Seller, otherwise used or available for use, by any other person.
(d) Due Registration, Etc. Except as set forth on Schedule 3.8(d), the
Assigned Intellectual Property and all Intellectual Property of any Transferred
Subsidiary has been duly registered with, filed in or issued by, as the case may
be, the United States Patent and Trademark Office, United States Copyright
Office or such other filing offices, domestic or foreign. Seller and its
Affiliates have taken such other actions, and to the knowledge of Seller, no
other actions will be required to be taken within the 180-day period commencing
the date hereof, to ensure full protection under any Applicable Laws or
regulations, and such registrations, filings, issuances and other actions remain
in full force and effect, in each case, to the extent Related to the Business.
Section 3.9. Licenses, Approvals, Other Authorizations, Consents, Reports,
Etc. (a) Schedule 3.9(a) lists all material licenses, permits, approvals,
franchises and other authorizations of any Governmental Authority necessary for,
or otherwise material to, the conduct of the Business (the "Licenses"). Except
as disclosed in Schedule 3.9(a), all such Licenses are in full force and effect
except for those whose failure to be in full force and effect would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. Except as disclosed in Schedule 3.9(a), no proceeding is pending
or, to the knowledge of Seller, threatened seeking the revocation or limitation
of any such License.
(b) Schedule 3.9(b) lists all Consents required to be made, filed, given or
obtained by Seller or any Affiliate with, to or from any Governmental Authority
or other person in connection with the consummation by it of the Asset Purchase
except for those (i) that become applicable solely as a result of the specific
regulatory status of Buyer or its Affiliates, or (ii) the failure to make, file,
give or obtain which would not, individually or in the aggregate, either have a
Material Adverse Effect or prevent the consummation of the Asset Purchase.
Section 3.10. Labor Matters. Schedule 3.10 lists all collective bargaining
agreements with labor unions or associations representing Employees of the
Division. No material work stoppage against the Division is pending or, to
Seller's knowledge, threatened. Except as set forth in Schedule 3.10, the
Division is not a party to or, to the knowledge of Seller, threatened with any
labor dispute, arbitration, lawsuit or administrative proceeding relating to
labor matters (excluding routine workers' compensation claims) involving the
Employees of the Division.
Section 3.11. Compliance with Laws. Except as disclosed in Schedule 3.11,
since January 1, 1995, Seller and its Affiliates have complied in all material
respects with all Applicable Laws applicable to the Business or the Assets, and
neither Seller nor any Transferred Subsidiary has received any written notice
alleging any such conflict, violation, breach or default of an Applicable Law.
Section 3.12. Contracts. (a) Schedule 3.12 contains a complete and correct
list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (1) by which
any of the Assets (or the assets of any Transferred Subsidiary) are bound or
affected or (2) to which Seller or any Affiliate is a party or by which it is
bound or affected in connection with the Business or the Assets, other than any
which relate solely to Excluded Liabilities and Plans (which are set forth in
Schedule 3.15(a)) (collectively, "Contracts"):
(i) leases and other contracts, agreements, arrangements or understandings
concerning or relating to the Real Property;
(ii) employment, consulting, agency, collective bargaining or other similar
contracts, agreements, and other instruments and arrangements relating to or for
the benefit of current, future or former employees, officers, directors,
stockholders, sales representatives, distributors, dealers, agents, independent
contractors or consultants;
(iii) loan agreements, indentures, letters of credit, mortgages, security
agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, and
other agreements and instruments relating to the borrowing of money or obtaining
of or extension of credit;
(iv) licenses, licensing arrangements and other contracts providing for
payments by Seller in excess of $10,000 per annum which provide in whole or in
part for the use of, or limiting the use of, any Assigned Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts involving a sharing
of profits or expenses (including but not limited to joint research and
development and joint marketing contracts);
(vii) asset purchase agreements and other acquisition or divestiture
agreements, including, but not limited to, any agreements relating to the sale,
lease or disposal of any Assets (or any assets held or owned, directly or
indirectly, by a Transferred Subsidiary) (other than sales of Inventory in the
ordinary course of business) or involving continuing indemnity or other
obligations;
(viii) orders and other contracts for the purchase or sale of materials,
supplies, products or services, each of which involves or could reasonably be
expected to involve aggregate annual payments in excess of $250,000, in the case
of purchases, or $250,000, in the case of sales;
(ix) contracts other than of the type described elsewhere in this Section
3.12 with respect to which the aggregate amount that could reasonably expected
to be paid or received thereunder in the future exceeds $500,000 per annum or
$2,000,000 in the aggregate;
(x) sales agency, manufacturer's representative, marketing or
distributorship agreements;
(xi) contracts, agreements or arrangements with respect to the
representation of the Business in foreign countries;
(xii) master lease agreements providing for the leasing of personal
property primarily used in, or held for use primarily in connection with, the
Business; and
(xiii) any other contracts, agreements or commitments that are material to
the Business.
(b) Seller has delivered to Buyer or has afforded Buyer access to true,
complete and correct copies of all written Contracts, together with all
amendments thereto, and accurate and complete descriptions of all oral
Contracts, set forth or required to be set forth in Schedule 3.12.
(c) All Contracts are in full force and effect and enforceable against
Seller and/or a Transferred Subsidiary and, to the knowledge of Seller, all
Contracts are in full force and effect and enforceable against each other party
thereto. There does not exist under any Contract any event of default or event
or condition that, after notice or lapse of time or both, would constitute a
violation, breach or event of default thereunder on the part of Seller or any of
its Affiliates or, to the knowledge of Seller, any other party thereto except as
set forth in Schedule 3.12 and except for such events or conditions that,
individually and in the aggregate, (i) have not had or resulted in, and would
not reasonably be expected to have or result in, a Material Adverse Effect and
(ii) have not and would not reasonably be expected to impair the ability of
Seller to perform its obligations under this Agreement. Except as set forth in
Schedule 3.12, no Consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of each Contract will
not be affected in any manner by, the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby.
Section 3.13. Real Property. (a) Owned Real Property. Schedule 3.13(a)
contains a complete and correct list of all Owned Real Property setting forth
the address and owner of each parcel of Owned Real Property. Seller or its
Affiliates have good, valid and marketable fee simple title to the Owned Real
Property indicated on Schedule 3.13(a) as being owned by it, free and clear of
all Encumbrances other than Permitted Liens. There are no outstanding sale
agreements, options, rights of first refusal or similar agreements to lease or
purchase the Owned Real Property, or any portion thereof or interest therein.
(b) Assigned Leases. Schedule 3.13(b) contains a complete and correct list
of all Assigned Leases and all Subsidiary Leases setting forth the address,
landlord and tenant for each Assigned Lease and each Subsidiary Lease. Seller
has delivered to Buyer correct and complete copies of the Assigned Leases and
Subsidiary Leases (including any amendments, modifications or supplements
thereto). Each Assigned Lease and each Subsidiary Lease is legal, valid,
binding, enforceable against Seller or the Transferred Subsidiary, as the case
may be, and, to Seller's knowledge, against the other parties thereto, and in
full force and effect, except as may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies. Neither Seller, any Transferred Subsidiary
nor, to Seller's knowledge, any other party is in default, violation or breach
in any material respect under any Assigned Lease or any Subsidiary Lease, and no
event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach in any
material respect under any Assigned Lease or any Subsidiary Lease. Each Assigned
Lease and each Subsidiary Lease grants the tenant under the Assigned Lease or
the Subsidiary Lease, respectively, the exclusive right to use and occupy the
demised premises thereunder. Seller, or the Transferred Subsidiary indicated on
Schedule 3.13(b), as the case may be, has good and valid title to the leasehold
estate under each Assigned Lease or Subsidiary Lease, as the case may be, free
and clear of all Encumbrances other than Permitted Liens. Seller, or the
Transferred Subsidiary indicated on Schedule 3.13(b), as the case may be, enjoys
peaceful and undisturbed possession under its respective Assigned Leases.
(c) Fee and Leasehold Interests, Etc. The Real Property constitutes all the
fee and leasehold interests in real property used by Seller or the Transferred
Subsidiaries in connection with, necessary for the conduct of, or otherwise
material to, the Business.
(d) No Proceedings. There are no eminent domain or other similar
proceedings pending or threatened affecting any portion of the Real Property.
There is no writ, injunction, decree, order or judgment outstanding, nor any
Action pending or, to the knowledge of Seller, threatened, relating to the
ownership, lease, use, occupancy or operation by any person of any Real
Property, or relating to the Real Property Taxes or assessments payable in
respect thereof.
(e) Current Use. The use and operation of the Real Property in the conduct
of the Business do not violate any instrument of record or any other instrument
or agreement affecting the Real Property. There is no violation of any covenant,
condition, restriction, easement or order of any Governmental Authority having
jurisdiction over such property or of any other person entitled to enforce the
same affecting the Real Property or the use or occupancy thereof. No damage or
destruction has occurred with respect to any of the Real Property since the
Balance Sheet Date that would, individually or in the aggregate, have a Material
Adverse Effect.
(f) Compliance with Real Property Laws. The Real Property is in full
compliance with all applicable building, zoning, subdivision and other land use
and similar Applicable Laws affecting the Real Property (collectively, the "Real
Property Laws"), and neither Seller nor any of its Affiliates has received any
notice of violation or claimed violation of any Real Property Law. No current
use by Seller or any of its Affiliates of the Real Property is dependent on a
nonconforming use or other Governmental Approval the absence of which would
materially limit the use of such properties or assets Related to the Business.
(g) Utilities. All water, sewer, gas, electric, telephone, drainage and
other utility equipment, facilities and services now used for the operation of
the Real Property are adequate to service the use of such properties as now
operated.
Section 3.14. Environmental Matters. (a) Permits. All Environmental Permits
currently held by Seller or any of the Transferred Subsidiaries are identified
in Schedule 3.14(a), and, to the extent transferable, all such Environmental
Permits shall be validly transferred to Buyer (except for all such Environmental
Permits held by a Transferred Subsidiary, all of which shall remain valid) on
the Closing Date. Neither Seller nor any Affiliate has been notified by any
relevant Governmental Authority that any Environmental Permit will be modified,
suspended, cancelled or revoked, or cannot be renewed in the ordinary course of
business.
(b) No Violations Asserted. Except as set forth in Schedule 3.14(b) or in a
report prepared at Buyer's direction by RMT, Inc. entitled Phase 1.5
Environmental Site Assessment Summaries, Sealed Power Division Sites, dated
October 1996 (including any revisions, supplements or addenda thereto, the
"Environmental Report"), to the knowledge of Seller, no person has alleged in a
writing received by Seller or its Affiliates any violation within the past two
years by Seller or any of its Affiliates of any Environmental Permits or any
applicable Environmental Law relating to the conduct of the Business or the use,
ownership or transferability of the Real Property (other than the air permit
violation described in the Environmental Report for which Seller agrees,
notwithstanding any other provision hereof, to be responsible for any fines or
penalties in connection therewith), and no citations, fines or penalties have
been asserted against Seller or any of its Affiliates with respect to the
Division since the Balance Sheet Date, under any Environmental Law or any
foreign, federal, state or local law relating to occupational health or safety.
(c) No Actions. Except as set forth in Schedule 3.14(c) or the
Environmental Report, neither Seller nor any of its Affiliates has knowledge of
any material Liability of Seller or its Affiliates relating to (i) the
environmental conditions on, under, or about any Real Property, the Assets or
other properties or assets owned, leased or used by Seller or any of its
Affiliates held for use in connection with, necessary for the conduct of, or
otherwise material to, the Business, other than unaffiliated third party
disposal sites, or (ii) the past or present use, management, handling,
transport, treatment, generation, storage or Release of any Hazardous Substances
with respect to any Real Property. To the knowledge of Seller and except as set
forth in Schedule 3.14(c) or as set forth in the Environmental Report: (i) no
Hazardous Substances have ever been buried, spilled, leaked, discharged,
emitted, or released, and no Hazardous Substances are now present in soils or
groundwater in, on, or under the Real Property in quantities that did or would
reasonably be expected to have a Material Adverse Effect or resulted in
contamination or remediation in excess of any applicable cleanup or remediation
standards, other than in compliance with Environmental Laws, (ii) the Real
Property is not being used and never has been used in connection with the
manufacturing, storing or transporting of Hazardous Substances, and no Hazardous
Substances have been treated, stored or disposed of there other than in
compliance with Environmental Laws, and (iii) there are not now and never have
been any underground or aboveground storage tanks or other containment
facilities of any kind on the Real Property which contain or ever did contain
any Hazardous Substances.
(d) Other. Except as set forth in the Environmental Report or on Schedule
3.14(d):
(i) None of the current or past operations of the Business, or any
by-product thereof, and none of the currently or formerly owned property or
assets of Seller or any Affiliate used in the Business, including the Assets,
the assets of the Transferred Subsidiaries and the Real Property, is related to
or subject to any pending or threatened investigation or evaluation by any
Governmental Authority as to whether any Remedial Action is needed to respond to
a Release or threatened Release of any Hazardous Substances.
(ii) Neither Seller nor any Affiliate is subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual or other obligation to
or with, any Governmental Authority or other person in respect of which has
resulted in, or may result in, the incurrence of any Environmental Liabilities
and Costs arising from the Release or threatened Release of a Hazardous
Substance.
(iii) None of the Real Property is, and neither Seller nor any Affiliate
has transported or arranged for transportation, directly or indirectly, of any
Hazardous Substances relating to the Assets, the assets of the Transferred
Subsidiaries or the Real Property to any location that is listed or proposed for
listing under CERCLA, or on any other list of contaminated property issued or
maintained by any Governmental Authority, or the subject of federal, state or
local enforcement actions or investigations or Remedial Action.
(iv) Except in the ordinary course of business, no work, repair or
construction, and no material capital expenditure, is required or planned by the
Division pursuant to or to comply with any Environmental Law, nor has Seller or
any Affiliate received any written notice of any such requirement.
(e) Full Disclosure. Seller has disclosed or made available to Buyer all
information, including all studies, analyses and test results, in the
possession, custody or control of Seller and its Affiliates relating to (i) the
environmental conditions on, under or about the Real Property, and (ii)
Hazardous Substances used, managed, handled, transported, treated, generated,
stored or Released by Seller, any Affiliate or any other person at any time on
any Real Property, or otherwise in connection with the use or operation of the
properties or assets used in or held for use in connection with the Business.
Section 3.15. Employee Benefit Plans and Related Matters. (a) Employee
Benefit Plans. Schedule 3.15(a) sets forth a true and complete list of each
"employee benefit plan," as such term is defined in section 3(3) of the ERISA,
whether or not subject to ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control, stock
option, stock appreciation, stock purchase, phantom stock, or other
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding, whether written
or unwritten, that provides or may provide benefits or compensation in respect
of any Employees or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by Seller or any Related Person or to which Seller or any Related
Person contributes or is or has been obligated or required to contribute or with
respect to which Seller, any Affiliate or the Business may have any Liability
(collectively, the "Plans"). With respect to each such Plan, Seller has provided
Buyer complete and correct copies of or has afforded Buyer access to: all
written Plans; descriptions of all unwritten Plans; all trust agreements,
insurance contracts or other funding arrangements; the two most recent actuarial
and trust reports; the two most recent Forms 5500 and all schedules thereto; the
most recent IRS Determination letter; current summary plan descriptions; all
material communications received from or sent to the IRS, the Pension Benefit
Guaranty Corporation or the Department of Labor (including a written description
of any oral communication); an actuarial study of any post-employment life or
medical benefits provided under any such Plan, if any; statements or other
communications regarding withdrawal or other multiemployer plan liabilities, if
any; and all amendments and modifications to any such document.
(b) Qualification. Each Plan intended to be qualified under Section 401(a)
of the Code, and the trust, if any, forming a part thereof, has received a
favorable Determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
Section 501(a) of the Code, and nothing has occurred that could adversely affect
such qualification or Tax-exempt status.
(c) Liability. (i) No Liability has been or is expected to be incurred by
Seller, any Related Person or the Business (either directly or indirectly,
including as a result of an indemnification obligation) under or pursuant to
Title I or IV of ERISA or the penalty, excise Tax or joint and several liability
provisions of the Code relating to employee benefit plans that could, following
the Closing, become or remain a Liability of the Business or become a Liability
of Buyer or of any employee benefit plan established or contributed to by Buyer,
and, to the knowledge of Seller, no event, transaction or condition has occurred
or exists that could result in any such Liability to the Business or, following
the Closing, Buyer.
(ii) No Transferred Employee is or may become entitled to post-employment
benefits of any kind by reason of employment in the Business, including death or
medical benefits (whether or not insured), other than (a) coverage provided
pursuant to the terms of any Plan specifically identified as providing such
coverage in Schedule 3.15(c) or mandated by Section 4980B of the Code, (b)
retirement benefits payable under any Plan qualified under Section 401(a) of the
Code, or (c) deferred compensation accrued as a Liability on the Balance Sheet.
The consummation of the transactions contemplated by this Agreement will not
result in an increase in the amount of compensation or benefits or the
acceleration of the vesting or timing of payment of any compensation or benefits
payable to or in respect of any Transferred Employee.
(d) Certain Assumed Plans. Without limiting the generality of the
foregoing: (i) each of the Assumed Plans and each of the SUB Plans has been
maintained and administered in compliance with its terms, ERISA, the Code and
all other applicable laws and regulations and contractual undertakings, (ii)
each of the Assumed Plans has at all times during its existence been maintained
and operated as a separate plan, and has never been the subject of any plan
merger, spin-off, split-up or similar transaction, and (iii) each of the SUB
Plans has been maintained and administered in compliance with its terms and all
applicable laws, regulations and contractual undertakings.
Section 3.16. Brokers, Finders, Etc. Seller and its Affiliates have not
employed any broker, finder, consultant or other intermediary in connection with
the Asset Purchase who would have a valid claim for a fee or commission from
Buyer in connection with such transaction.
Section 3.17. Customers. Schedule 3.17 sets forth (a) the names of the 20
largest customers of the Division during the 11-month period ended November 30,
1996 and (b) the amount for which each such customer was invoiced during such
period. To Seller's knowledge, except as set forth in Schedule 3.17, neither
Seller nor any of its Affiliates has received any notice that any such customer
of the Division (i) has ceased, or will cease, to use the products, goods or
services of the Division, (ii) has reduced or will reduce, materially, the use
of products, goods or services of the Division or (iii) has sought, or is
seeking, to reduce materially the price it will pay for products, goods or
services of the Division, including, in each case, after the consummation of the
transactions contemplated hereby.
Section 3.18. Suppliers. Schedule 3.18 sets forth (a) the names of the 20
largest suppliers (including Seller or any of its Affiliates) from which the
Division ordered raw materials, supplies, merchandise and other goods and
services during the 11-month period ended November 30, 1996 and (b) the amount
for which each such supplier invoiced the Division during such period. To
Seller's knowledge, except as set forth on Schedule 3.18, neither Seller nor any
of its Affiliates has received any notice that there has been any material
adverse change in the price of such raw materials, supplies, merchandise or
other goods or services, or that any such supplier will not sell raw materials,
supplies, merchandise and other goods to Buyer at any time after the Closing on
terms and conditions similar to those used in its current sales to the Division.
Section 3.19. Product Warranties. Except as set forth in Schedule 3.19 and
for warranties under Applicable Law, (a) there are no warranties express or
implied, written or oral, with respect to the products of the Business and (b)
there are no pending or threatened claims with respect to any such warranty, and
neither Seller nor any Transferred Subsidiary has any liability with respect to
any such warranty, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due.
Section 3.20. Absence of Certain Business Practices. None of Seller or its
Affiliates, any officer, employee or agent of any thereof, or any other person
acting on their behalf, has, directly or indirectly, within the past five years,
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the Business (or assist Seller or any of the Transferred Subsidiaries in
connection with any actual or proposed transaction relating to the Business) (a)
which subjected or might have subjected Seller or any Transferred Subsidiary to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (b) which if not given in the past, would have had a Material
Adverse Effect, (c) which, if not continued in the future, would have a Material
Adverse Effect or subject Seller or any Transferred Subsidiary to suit or
penalty in any private or governmental litigation or proceeding, or (d) for the
purpose of establishing or maintaining any concealed fund or concealed bank
account.
ARTICLE 4
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
Section 4.1. Incorporation; Authorization; Etc. Buyer is duly incorporated,
validly existing and in good standing under the laws of Virginia. Buyer has full
corporate power to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
performance of Buyer's obligations hereunder have been duly and validly
authorized by all necessary corporate proceedings on the part of Buyer and no
other corporate or stockholder proceedings or actions on the part of Buyer or
its Affiliates, or any of their partners, boards of directors or stockholders,
as the case may be, are necessary therefor. The execution, delivery and
performance of this Agreement will not (a) violate any provision of the charter
or by-laws or similar organizational instrument of Buyer or any of its
Affiliates, or (b) violate or conflict with any statute, rule or regulation
applicable to Buyer, any of its Affiliates or any of their properties or assets
or any other material restriction of any kind or character to which Buyer or any
of its Affiliates is subject, that would prohibit or make unlawful the Asset
Purchase. This Agreement has been duly executed and delivered by Buyer, and,
assuming the due execution hereof by Seller, this Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity (regardless
of whether in equity or at law).
Section 4.2. Licenses, Approvals, Other Authorizations, Consents, Reports,
Etc. Schedule 4.2 contains a list of all registrations, filings, applications,
Consents or qualifications required to be made, filed, given or obtained by
Buyer or any of its Affiliates with, to or from any person in connection with
the consummation of the Asset Purchase except for those (a) that become
applicable solely as a result of the specific regulatory status of Seller or any
of its Affiliates, or (b) where the failure to make, file, give or obtain any of
them would not prohibit or make unlawful the consummation of the Asset Purchase.
Section 4.3. Brokers, Finders, Etc. Buyer has not employed any broker,
finder, consultant or other intermediary in connection with the transactions
contemplated hereby who would have a valid claim for a fee or commission from
Seller or its Continuing Affiliates in connection with such transactions.
ARTICLE 5
Covenants of Seller and Buyer
Section 5.1. Investigation of Business; Access to Properties and Records.
(a) After the date hereof and through the Closing Date, Seller shall, and shall
cause each of its Affiliates to, afford to representatives of Buyer reasonable
access to their respective offices, plants, properties, books and records during
normal business hours, in order that Buyer may have full opportunity to make
such investigations as it desires of the affairs of the Business. All requests
for access to the offices, plants, properties, books, and records relating to
the Business shall be made to such representatives of Seller as Seller shall
designate, who shall be solely responsible for coordinating all such requests
and all access permitted hereunder. It is further understood and agreed that
Buyer (and its representatives) may, in its discretion, contact customers,
suppliers, joint venture partners, or other associates or Affiliates of Seller
or any of its Affiliates, in connection with the transactions contemplated
hereby.
(b) Buyer will continue its pre-acquisition review of the books, records
and facilities of SPT NV and its investments. Seller and its Affiliates will use
their best efforts to provide Buyer and its representatives, or cause Buyer and
its representatives to be provided with, as soon as reasonably practicable, the
access and information requested by Buyer under paragraph (a) of this Section in
connection with such review. Buyer shall use its best efforts to act promptly to
conclude such review after the date hereof and Buyer shall notify Seller at the
conclusion of such pre-acquisition investigation of all matters then known to
Buyer, which, in the reasonable judgment of Buyer, are of such significance as
to be reasonably likely to materially and adversely affect the business, assets,
financial condition or results of operations of SPT NV and its subsidiaries,
taken together, and Buyer shall have the right to terminate this Agreement as
set forth in Section 12.1(e), notwithstanding the fact that such matters may
have been disclosed in the Schedules to this Agreement.
(c) Any information Relating to the Business provided to Buyer or its
representatives pursuant to this Agreement shall be held by Buyer and its
representatives in accordance with, and shall be subject to the terms of, the
Confidentiality Agreement, dated November 5, 1993, by and between Seller and
Buyer (the "Confidentiality Agreement"); provided, however, that confidentiality
provisions in the Confidentiality Agreement relating to such information shall
terminate and be of no further force or effect as of the Closing; provided,
further, however, that Seller will treat confidentially any information Relating
to the Business until the third anniversary of the Closing.
(d) Except as provided in Section 7.7(b), Buyer agrees (i) to hold all of
the books and records of the Transferred Subsidiaries existing on the Closing
Date or included in the Assets and not to destroy or dispose of any thereof for
a period of seven years from the Closing Date, and (ii) at any time and from
time to time following the Closing Date to afford Seller, its accountants and
counsel, during normal business hours, upon reasonable request, full access to
such books, records and other data and to the employees engaged in the Business
or any successor thereto to the extent that such access may be reasonably
requested.
Section 5.2. Efforts; Obtaining Consents; Antitrust Laws. (a) Subject to
the terms and conditions herein provided, Seller and Buyer each agree to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated hereby,
and to cooperate with the other in connection with the foregoing, including
using all reasonable efforts (which efforts shall not require Buyer, in order to
obtain any Consent to (a) hold separate, sell or otherwise dispose of any
assets, including Assets or assets held by the Transferred Subsidiaries, or (b)
agree to any conditions, the effect of any of which, in the sole good faith
judgment of Buyer, would be to materially impair the value of the Asset Purchase
to Buyer) (i) to obtain all necessary Consents from other parties to material
loan agreements, leases and other contracts, (ii) to obtain all Consents that
are required to be obtained under any Applicable Law, (iii) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties hereto to consummate the transactions contemplated
hereby, (iv) to effect all necessary registrations and filings including, but
not limited to, filings under German and Mexican Antitrust Laws and regulations
and submissions of information requested by any Governmental Authority, and (v)
to fulfill all conditions to this Agreement.
(b) Each party hereto shall promptly inform the other of any material
communication from the United States Federal Trade Commission, the United States
Department of Justice or any other Governmental Authority regarding any of the
transactions contemplated hereby.
Section 5.3. Further Assurances. Seller and Buyer agree that, from time to
time, whether before, at or after the Closing Date, each of them will, and will
cause their respective Affiliates to, execute and deliver such further
instruments of conveyance and transfer and take such other action as may be
necessary to carry out the purposes and intents hereof.
Section 5.4. Conduct of Business. From the date hereof to the Closing,
except as disclosed on Schedule 5.4 or otherwise specifically provided for in
this Agreement, and, except as consented to in writing by Buyer, Seller
covenants and agrees that:
(a) the Business shall be operated in the ordinary course, consistent with
past practices except as provided for or permitted by this Section 5.4;
(b) none of the Transferred Subsidiaries shall issue, sell or agree to
issue or sell (i) any shares of its capital stock (or, as the case may be,
equity or partnership interests), or (ii) any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe for, any
shares of its capital stock (or, as the case may be, equity or partnership
interests);
(c) The Division, shall not (i) create, incur or assume any material
long-term or short-term debt for money borrowed (including obligations in
respect of capital leases) which would be an Assumed Liability, (ii) except in
the ordinary course of business, assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any person other than the Division, or (iii) make any material
loans, advances or capital contributions to or investments in, any person other
than a Transferred Subsidiary (except for customary loans or advances to
Employees);
(d) except as required by law or contractual obligations existing on the
date hereof, the Division, shall not (i) increase in any manner the base
compensation of, or enter into any new bonus or incentive agreement or
arrangement with, any of its directors, officers or other key Employees, (ii)
pay or agree to pay any pension, retirement allowance or similar employee
benefit to any such director, officer or key Employee, whether past or present,
(iii) enter into any new employment, severance, consulting, or other
compensation agreement with any existing director, officer or key Employee, or
(iv) commit itself to any additional pension, profit-sharing, deferred
compensation, group insurance, severance pay, retirement or other Plan, fund or
similar arrangement or amend or commit itself to amend any of such plans, funds
or similar arrangements in existence on the date hereof;
(e) except as required by law or contractual obligations existing on the
date hereof or as specifically provided for in this Agreement, the Division,
shall not (i) sell, transfer or otherwise dispose of any of its material assets,
(ii) create any new material Encumbrance on any of its properties or assets,
(iii) enter into any material joint venture or partnership or (iv) purchase any
material assets or securities of any person;
(f) neither Seller nor any of its Affiliates shall take any action or omit
to take any action which action or omission would result in a breach of any of
the representations and warranties set forth in Article 3; and
(g) Seller shall pay or otherwise discharge the obligation of SPE GmbH to
satisfy that certain indebtedness of SPE GmbH to Dresdner Bank which is
guaranteed by TRW Inc. and, as of November 30, 1996, amounted to DM 9,400,000.
(h) neither Seller nor any Affiliate shall agree to take or shall condone
any action prohibited by this Section.
Section 5.5. Preservation of Business. Subject to the terms and conditions
hereof, Seller shall, and shall cause its Affiliates to preserve the Business
intact, keep available to the Business the services of the Employees of the
Division, and preserve the good will of customers and others having business
relations with the Business.
Section 5.6. Public Announcements. From the date hereof until the Closing
Date, Seller and Buyer will consult with each other before issuing, or
permitting any agent or Affiliate to issue, any press releases or otherwise
making or permitting any agent or Affiliate to make, any public statements with
respect to this Agreement and the transactions contemplated hereby.
Section 5.7. Intercompany and Intracompany Accounts. Effective as of the
Closing, all intercompany and intracompany receivables, payables and loans then
existing between Seller or any Continuing Affiliate, on the one hand, and the
Division or any of the Transferred Subsidiaries, on the other hand, shall be
settled by way of capital contribution in kind (with respect to payables or
loans due to Seller or any Continuing Affiliate) or by way of dividend in kind
(with respect to receivables of the Division and the Transferred Subsidiaries
and subsidiaries of Transferred Subsidiaries owed by Seller or any Continuing
Affiliate); provided, however, the (a) trade payables and receivables, or (b)
other receivables, payables and loans set forth on Schedule 5.7, shall not be so
settled.
Section 5.8. Acquisition of Mahle Transferred Subsidiary Interest. At or
prior to the Closing, Seller, if so requested by Buyer and to the extent
permitted by Mahle, shall acquire all of the Mahle Transferred Subsidiary
Interest (the "Mahle Acquisition") upon terms satisfactory to Buyer, in its sole
discretion, and upon such terms and pursuant to such agreement as Buyer may
direct so long as such action by Seller shall not delay the Closing, provided
that Buyer shall reimburse Seller for any expenses associated with the Mahle
Acquisition and indemnify Seller for any liabilities associated with the Mahle
Acquisition, all upon terms satisfactory to Seller, in its sole discretion, and
any agreement relating to the Mahle Acquisition shall be a Contract for the
purposes of this Agreement; and provided, further, that the foregoing shall in
no way relieve Seller of its obligations to obtain any Consents required
pursuant to Section 8.2. If Buyer decides to acquire the Mahle Transferred
Subsidiary Interest, either directly or indirectly, Seller hereby consents to
such acquisition (provided that such acquisition shall include an option to
Seller to acquire the Mahle Transferred Subsidiary Interest at Buyer's cost
thereof in the event this Agreement is later terminated in which event Buyer
shall not reimburse Seller for any expenses as provided for in the provision of
the immediately preceding sentence).
Section 5.9. Tax Covenants. (a) Without the prior written consent of Buyer,
not to be unreasonably withheld, neither Seller nor the Transferred
Subsidiaries, any subsidiary or any Affiliate of Seller shall, to the extent it
may affect or relate to the Transferred Subsidiaries, make or change any Tax
election, change any annual tax accounting period, adopt or change any method of
Tax accounting, file any amended Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitations period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of increasing the Tax liability or
reducing any Tax asset (including net operating losses) of the Transferred
Subsidiaries.
(b) Without the prior written consent of Seller, not to be unreasonably
withheld, neither Buyer nor the Transferred Subsidiaries, any subsidiary or any
Affiliate of Buyer shall, to the extent it may affect or relate to the
Transferred Subsidiaries, make or change any Tax election, change any annual Tax
accounting period, adopt or change any method of Tax accounting, file any
amended Return, enter into any closing agreement, settle any Tax claim or
assessment, surrender any right to claim a Tax refund, consent to any extension
or waiver of the limitations period applicable to any Tax claim or assessment or
take or omit to take any other action, if any such action or omission would have
the effect of increasing Seller's Tax liability or obligation to indemnify
Buyer.
(c) All Returns not required to be filed on or before the Closing Date, the
filing responsibility for which is allocated in accordance with Section 7.5, and
relating, in whole or in part, to any taxable period beginning before the
Closing Date, (i) will be filed when due in accordance with all Applicable Laws,
and (ii) as of the time of filing, will accurately reflect the facts regarding
the income, business, assets, operations, activities and status of the
Transferred Subsidiaries, and any other information required to be shown
therein.
(d) Seller shall include, to the extent permissible under Applicable Law,
through the close of business on the Closing Date, SPT NV in its consolidated
federal Tax Return and in the Tax Returns of any state or local jurisdictions in
which Seller files Tax Returns with SPT NV on a consolidated, combined or
unitary basis for purpose of income or franchise tax ("Combined State Tax").
(e) Seller and the Transferred Subsidiaries shall not reserve any amount
for or make any payment of Taxes to any person or any Taxing Authority, except
for such Taxes as are due or payable or have been properly estimated in
accordance with Applicable Law as applied in a manner consistent with past
practice of Seller.
Section 5.10. Franklin Plant. Seller shall prosecute, using best efforts,
the challenge to the recognition and certification under the National Labor
Relations Act, as amended, and the regulation promulgated thereunder, as
amended, of the United Auto Workers' Union as the collective bargaining
representative of the employees of Seller's plant located in Franklin, Kentucky,
and use its best efforts to preserve the rights of Buyer to prosecute such
challenge from and after the Closing.
ARTICLE 6
Employee Benefits
Section 6.1. Employment of Seller's Employees. (a) Seller will use all
reasonable efforts to cause the Employees of Seller and its Affiliates who are
employed in connection with the operations of the Business and whose employment
has not been terminated or who have not retired ("Active Employees") to make
available their employment services to Buyer. For a period of two years from the
Closing Date, Seller will not, and will not permit any of its Continuing
Affiliates to, solicit, offer to employ or retain the services of or otherwise
interfere with the relationship of Buyer with any person employed by or
otherwise engaged to perform services for Buyer in connection with the operation
of the Business.
(b) Effective as of the Closing Date, Buyer shall offer employment to all
Active Employees, other than the Employees set forth on Schedule 6.1(b) who
shall not be offered employment, (i) in the case of Employees not subject to
collective bargaining agreements, at wage or salary levels, as applicable, and
with employee benefits, substantially equivalent in the aggregate to the wage or
salary and benefits enjoyed by similarly situated employees of Buyer,
immediately prior to the Closing Date, and (ii) in the case of Employees subject
to collective bargaining agreements, with wages and benefits substantially
equivalent in the aggregate to the wages and benefits enjoyed by such employee
immediately prior to the Closing Date. Those Active Employees who accept such
offers of employment effective as of the Closing Date shall be referred to
herein as the "Transferred Employees." Seller shall permit Buyer to communicate
with the Employees, at reasonable times and upon reasonable notice, concerning
Buyer's plans, operations, business, customer relations and general personnel
matters, provided that such contacts shall be conducted in a manner that is
reasonably acceptable to Seller.
(c) Effective as of the Closing Date, Buyer shall assume the Liability of
Seller in respect of the Transferred Employees for (i) accrued but unpaid
salaries, wages, vacation and sick pay, and 1996 incentive compensation, but
only to the extent such Liability is reflected on the Balance Sheet or incurred
after the date of the Balance Sheet in the ordinary course of business
consistent with prior practice and in accordance with the terms of this
Agreement (applied as if this Agreement had been in effect from the close of
business on the Balance Sheet Date through the Closing Date), (ii)
post-retirement medical and life insurance benefits but only to the extent such
benefits are disclosed on Schedule 3.15(c), and (iii) welfare benefits and
Liabilities from Actions arising out of or relating to the employment or the
actual or constructive termination of employment of Transferred Employees by
Seller, other than Liabilities expressly retained by Seller in Section
6.1(e)(ii) or related to Employees who are not Transferred Employees or other
than with respect to claims with respect to benefits or compensation. Seller
shall remain responsible for payment of any and all retention, change in control
or other similar compensation or benefits which are or may become payable to or
with respect to Employees or other employees and former employees of Seller and
its Affiliates and beneficiaries and dependents of any such employees and former
employees, in connection with or as a result of the consummation of the
transactions contemplated by this Agreement.
(d) Seller represents and warrants to Buyer that the Liabilities assumed by
Buyer under Section 6.1(c)(iii) are reflected on the Balance Sheet or were
incurred after the Balance Sheet Date in the ordinary course of business
consistent with past practice.
(e) Neither Buyer nor any of its Affiliates shall have any Liability with
respect to any Employee or Plan or any claim thereof or related thereto, except
to the extent expressly provided in this Article. From and after the Closing,
Seller shall, except to the extent otherwise expressly provided in this Article,
remain solely responsible for any and all Liabilities in respect of the
Employees, including the Transferred Employees and their beneficiaries and
dependents, relating to or arising in connection with or as a result of (i) the
employment or the actual or constructive termination of employment of any such
Employee by Seller (including in connection with the consummation of the
transactions contemplated by this Agreement), (ii) the participation in or
accrual of benefits or compensation under, or the failure to participate in or
to accrue compensation or benefits under, any Plan or other employee or retiree
benefit or compensation plan, program, practice, policy, agreement or
arrangement of Seller other than the Assumed Plans and the SUB Plans, or (iii)
accrued but unpaid salaries, wages, bonuses, incentive compensation, vacation or
sick pay or other compensation or payroll items (including deferred
compensation), except, in any such case, to the extent any such Liability is
specifically assumed by Buyer pursuant to this Article.
(f) Seller or one of its Affiliates, as the case may be, shall deliver any
notices to Employees required pursuant to the Worker Adjustment and Training
Notification Act as a result of the transactions contemplated hereby, to the
extent requested by Buyer to do so before the Closing Date.
(g) This Agreement is not intended to create and does not create any
contractual or legal rights in or enforceable by any Employee.
Section 6.2. Retirement Plans. (a) SPX Corporation Pension Plan No. 3.
Effective as of the Closing Date, Transferred Employees who are participating in
the SPX Corporation Pension Plan No. 3 ("No. 3 Transferred Employees") shall be
eligible to participate in defined benefit plans (as defined in ERISA Section
3(35)) sponsored by Buyer and its Affiliates ("Buyer's Pension Plans"). Any No.
3 Transferred Employee who retires under Buyer's Pension Plans or any successor
plan thereto within one year after the Closing Date shall be entitled to a
benefit thereunder which shall be no less than the difference between (i) the
benefit that would have been provided under the SPX Corporation Pension Plan No.
3, as in effect on the date hereof, had the No. 3 Transferred Employee continued
to be covered under the SPX Corporation Pension Plan No. 3 until such date of
retirement, based upon the information supplied to Buyer pursuant to Section
6.2(f) (and Buyer shall have no obligation to inquire as to the accuracy of such
information, and shall be entitled to rely conclusively upon it), and (ii) the
benefit payable to the No. 3 Transferred Employee from the SPX Corporation
Pension Plan No. 3 as at the date hereof.
(b) Seller's Hourly Plans. Effective as of the Closing Date, Transferred
Employees who are participating in the St. ▇▇▇▇▇ Wage Pension Plan No. 201, the
Muskegon Wage Pension Plan No. 001, the Rochester Wage Pension Plan No. 004 and
the Manchester Wage Pension Plan No. 019 ("Seller's Hourly Plans") shall be
eligible to participate in defined benefit plans (as defined in ERISA Section
3(35)) sponsored by Buyer and its Affiliates ("Buyer's Hourly Plans") which
shall be substantially similar to Seller's Hourly Plans for no less than five
years following the Closing Date in all material respects except as to monthly
benefit rates, retirement supplements (which terms are understood to include
without limitation "special age benefits" and to refer to supplements payable
before and/or after normal retirement age), early retirement subsidies and
subsidized actuarial factors as may be negotiated with the applicable collective
bargaining unit. For the period after the Closing Date, (i) Buyer's Hourly Plans
shall recognize Transferred Employees' service under Seller's Hourly Plans for
eligibility to participate, eligibility to receive any early retirement subsidy,
eligibility to receive subsidized actuarial factors, eligibility to receive
retirement supplements and eligibility to receive disability benefits, and for
vesting purposes, to the same extent as such service was recognized for such
purposes under Seller's Hourly Plans, (ii) Seller's Hourly Plans shall recognize
Transferred Employees' service under Buyer's Hourly Plans for vesting and for
eligibility to receive any early retirement subsidiary, eligibility to receive
subsidized actuarial factors, eligibility to receive retirement supplements and
eligibility to receive disability benefits, to the same extent as such service
is recognized for such purposes under Buyer's Hourly Plans; and (iii) any
Transferred Employee who qualifies for disability retirement or a retirement
supplement under Buyer's Hourly Plans following termination of service with
Buyer shall receive pro rata disability retirement benefits or retirement
supplements or special age benefits, as applicable, from Buyer's Hourly Plans
and Seller's Hourly Plans based proportionately on service with Seller and
Buyer; provided, that any determination of disability for purposes of Buyer's
Hourly Plans shall be made by Buyer, and for purposes of Seller's Hourly Plans
shall be made by Seller, after consultation with one another. Transferred
Employees, to the extent vested at the time of retirement, shall be eligible for
retirement benefits under Seller's Hourly Plans at the monthly benefit rates,
retirement supplement and disability benefit levels, and early retirement
subsidies and levels of subsidy of actuarial factors in effect on the Closing
Date. Notwithstanding the foregoing, Buyer shall have no obligation to pay any
portion of an early retirement or other supplement if such supplement has been
fully earned as of the Closing Date and any Transferred Employee who receives a
lump-sum distribution of all of his or her benefit under Seller's Hourly Plans
shall thereafter cease to have any benefit rights thereunder. The covenants
under this subsection (b) do not confer any right to continued employment by
Transferred Employees or to service credits for any period when a Transferred
Employee is not employed by Seller.
(c) SPX Corporation Retirement Savings and Stock Ownership Plan. Effective
as of the Closing Date, Transferred Employees who are participating in the SPX
Corporation Retirement Savings and Stock Ownership Plan No. 005 (the "KSOP")
shall be eligible to participate in one or more defined contribution plans (as
defined in ERISA 3(34)) sponsored by Buyer and its Affiliates ("Buyer's Savings
Plans"). Each Transferred Employee will receive full credit under Buyer's
Savings Plans for such Transferred Employee's service with Seller prior to the
Closing Date for purposes of eligibility to participate and for purposes of
vesting. Immediately following the Closing Date, Buyer's Savings Plan shall
accept individual transfers of Transferred Employees' accounts from the KSOP,
subject to the terms and conditions of Buyer's Savings Plans including any
prohibition on accepting transfers of Seller's common stock. For purposes of
this Section 6.2(c), "individual transfers" shall include both rollovers under
Code Section 402(c) and direct rollovers as described in Code Section
401(a)(31).
(d) Assumed Plans. As of the Closing Date, Buyer shall assume all of
Seller's rights, obligations and Liabilities under the Pension and Retirement
Plan for Franklin employees No. 401 and the Manchester Plan No. 401 (the
"Assumed Plans") and shall take such steps as are necessary to adopt and
continue such Assumed Plans. Seller shall make all governmental filings and
reports as may be due with respect to plan years of the Assumed Plans ending
prior to the Closing Date and Buyer shall be responsible for governmental
filings and reports for plan years ending after the Closing Date, provided,
however, that Seller shall promptly assist Buyer in preparing such reports for
the plan year in which the Closing Date occurs. Following the Closing Date,
Seller shall cause the trustee of the SPX Master Trust to continue to pay
benefit payments under the terms of the Assumed Plans, so as to avoid any
interruption in benefit payments to persons entitled thereto. Within 90 days
after the Closing Date, Buyer shall notify Seller in writing of the
Tax-qualified pension trust maintained by Buyer that will be the recipient of
the assets of the Assumed Plans, and, within 90 days thereafter, Seller shall
cause the assets of the SPX Master Trust properly allocable to the Assumed Plans
(less the amount of subsequent benefit payments, less the amounts of allocable
expenses and other proper charges) to be transferred to the trustee of such
successor trust. Seller and Buyer agree to execute, at or after the Closing
Date, such succession agreements or assignment agreements as may be necessary to
effectuate properly the transfer of the administration, sponsorship, assets and
Liabilities relating to the Assumed Plan.
(e) Supplemental Unemployment Benefit Plans. As of the Closing Date, Buyer
shall assume all of Seller's rights, obligations and Liabilities under the
Muskegon Operations Supplemental Unemployment Benefit Plan and the St. ▇▇▇▇▇
Plant Supplemental Unemployment Benefit Plan (the "SUB Plans") and shall take
such steps as are necessary to adopt and continue such SUB Plans. Following the
Closing Date, Seller shall cause the trustee of the SUB Plans' trust to continue
to pay benefit payments under the terms of the SUB Plans, so as to avoid any
interruption in benefit payments to persons entitled thereto. Within 90 days
after the Closing Date, Buyer shall notify Seller in writing of the Code Section
501(c)(17) Tax-exempt trust maintained by Buyer that will be the recipient of
the assets of the SUB Plans, and within 90 days thereafter, Seller shall cause
the assets of the SUB Plans (less the amount of subsequent benefit payments,
less the amounts of allocable expenses and other proper charges) to be
transferred to the trustee of such successor trust. Seller and Buyer agree to
execute, at or after the Closing Date, such succession agreements or assignment
agreements as may be necessary to effectuate properly the transfer of the
administration, sponsorship, assets and Liabilities relating to the SUB Plans.
Seller hereby represents and warrants to Buyer that the assets of the SUB Plans
are adequate for the purposes of covering Liabilities under the SUB Plans.
(f) Information Sharing. As soon as reasonably practicable, and in no event
less than 180 days, following the Closing Date, Seller shall provide Buyer with
a schedule of benefits accrued, as of the Closing Date, for each Transferred
Employee in the SPX Corporation Pension Plan No. 3 and Seller's Hourly Plans, as
applicable, and a schedule of the data used to determine each Transferred
Employee's benefit rights, including the period of service used to determine the
Transferred Employee's vesting of benefits, the period of service used for
benefit accrual purposes, the Transferred Employee's age and applicable
compensation data, to the extent such information is not in Buyer's possession
in a readily usable form.
Section 6.3. Welfare and Fringe Benefit Plans. (a) Buyer shall provide the
Transferred Employees, during their employment by Buyer, and their eligible
dependents and beneficiaries, coverage under any welfare and fringe benefit
plans, programs, policies or arrangements established or maintained by Buyer for
such persons ("Buyer's Welfare Plans") for claims incurred after the Closing
Date. Buyer's Welfare Plans shall treat service by Transferred Employees with
Seller and its Affiliates in the same manner as service with Buyer and its
Affiliates for purposes of eligibility to participate in Buyer's Welfare Plans,
and Buyer shall use its reasonable best efforts so that any limitations on
coverage of pre-existing conditions under Buyer's Welfare Plans will be waived
with respect to Transferred Employees and their eligible dependents and
beneficiaries.
(b) From and after the Closing Date, Seller shall remain solely responsible
for any and all Liabilities relating to or arising in connection with (i) the
requirements of Section 4980B of the Code to provide continuation of health care
coverage under any Plan in respect of (A) Employees, other than the Transferred
Employees and their covered dependents, and (B) to the extent related to a
qualifying event occurring on or before the Closing Date, Transferred Employees
and their covered dependents, (ii) except for claims for welfare benefits
assumed by Buyer under Section 6.1(c), claims for welfare benefits incurred by
Transferred Employees on or before the Closing Date, and (iii) incentive bonuses
payable to Transferred Employees in excess of the amounts allocated to such
Transferred Employees by the Division as set forth on Schedule 6.3(b).
Section 6.4. Workers Compensation. (a) From and after the Closing Date: (i)
Seller shall remain solely responsible for any and all Liabilities to or in
respect of any Employee who is not a Transferred Employee relating to or arising
in connection with any and all claims for workers' compensation benefits arising
in connection with any occupational injury or disease occurring or existing on,
prior to or after the Closing Date; and (ii) Buyer shall be solely responsible
for any and all Liabilities to or in respect of any Transferred Employee
relating to or arising in connection with any occupational injury or disease
occurring or arising after the Closing Date and for all Assumed Workers'
Compensation Liability.
(b) Seller hereby represents and warrants to Buyer that the amount
disclosed on Schedule 6.4(b) relating to the Assumed Workers' Compensation
Liability as of December 28, 1996 is an accurate estimate of such Assumed
Workers' Compensation Liability based on the outstanding claim reserve
information provided by Seller's insurance carrier or third-party administrator
on such date.
Section 6.5. Employment Taxes. (a) Seller shall, and Buyer shall (i) treat
Buyer as a "successor employer" and Seller as a "predecessor," within the
meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to
Transferred Employees who are employed by Buyer for purposes of Taxes imposed
under the United States Federal Unemployment Tax Act ("FUTA") or the United
States Federal Insurance Contributions Act ("FICA"), and (ii) cooperate with
each other to avoid, to the extent possible, the filing of more than one IRS
Form W-2 with respect to each such Transferred Employee for the calendar year
within which the Closing Date occurs.
(b) At the request of Buyer with respect to any particular applicable Tax
Law relating to employment, unemployment insurance, social security, disability,
workers' compensation, payroll, health care or other similar Tax other than
Taxes imposed under FICA and FUTA, Seller will and Buyer will (i) treat Buyer as
a successor employer and Seller as a predecessor employer, within the meaning of
the relevant provisions of such Tax Law, with respect to Transferred Employees
who are employed by Buyer, and (ii) cooperate with each other to avoid, to the
extent possible, the filing of more than one individual information reporting
form pursuant to each such Tax Law with respect to each such Transferred
Employee for the calendar year within which the Closing Date occurs.
ARTICLE 7
Tax Matters
Section 7.1. Tax Returns. (a) Seller or an Affiliate of Seller has (or by
the Closing will have) duly and timely filed all Returns of Seller and the
Transferred Subsidiaries relating to the Business required to be filed on or
before the Closing Date ("Covered Returns"). Except for Taxes set forth on
Schedule 7.1(a), which are being contested in good faith and by appropriate
proceedings, the following Taxes have (or by the Closing Date will have) been
duly and timely paid: (i) all Taxes shown to be due on the Covered Returns, (ii)
all deficiencies and assessments of Taxes of which notice has (or by the Closing
Date will have) been received by Seller or an Affiliate of Seller that are or
may become payable by Buyer or the Transferred Subsidiaries or chargeable as a
lien (other than a Permitted Lien) upon the Business, and (iii) all other Taxes
due and payable on or before the Closing Date for which neither filing of
Covered Returns nor notice of deficiency or assessment is required. All Taxes
required to be withheld by or on behalf of Seller or any Transferred Subsidiary
in connection with amounts paid or owing to any employee, independent
contractor, creditor or other party with respect to the Business have been
withheld, and such withheld Taxes have either been duly and timely paid to the
proper Governmental Authorities or set aside in accounts for such purpose.
(b) Except as set forth on Schedule 7.1(b), no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes, and no power of attorney with respect to any such
Taxes, has been filed with the IRS or any other Governmental Authority.
(c) Except as set forth on Schedule 7.1(c), (i) there are no Taxes asserted
in writing by any Governmental Authority to be due, and (ii) no issue has been
raised in writing by any Governmental Authority in the course of any audit with
respect to Taxes. Except as set forth on Schedule 7.1(c), no Taxes are currently
under audit by any Governmental Authority. Except as set forth on Schedule
7.1(c), neither the IRS nor any other Governmental Authority is now asserting
or, to the knowledge of Seller, threatening to assert against Seller or any
Transferred Subsidiary, any deficiency or claim for additional Taxes or any
adjustment of Taxes that would, if paid by Buyer, have a Material Adverse
Effect, and there is no reasonable basis for any such assertion of which Seller
or any Transferred Subsidiary is or reasonably should be aware.
(d) Buyer will not be required to deduct and withhold any amount pursuant
to Section 1445(a) of the Code upon the transfer of the Business to Buyer.
(e) Except as set forth on Schedule 7.1(e), there is no litigation or
administrative appeal pending or, to the knowledge of Seller threatened against
or relating to Seller, any Transferred Subsidiary in connection with Taxes.
(f) Except as set forth on Schedule 7.1(f), as of the time of filing, the
Tax Returns accurately reflected the facts regarding the income, business,
assets, operations, activities and status of the Division and any other
information required to be shown therein. On the Closing Date, after giving
effect to the transactions contemplated hereby, there will be available and
utilizable to SPE GmbH, German Tax loss carryforwards in an amount equal to at
least DM 69 million at December 31, 1995 for corporation income tax purposes and
DM 67 million at December 31, 1995 for trade Tax on income purposes, with both
Tax loss carryforwards being increased to reflect Tax losses incurred after
December 31, 1995 and prior to the Closing Date.
(g) Except as set forth on Schedule 7.1(g), there are no liens for any Tax
on the assets of the Transferred Subsidiaries, except for Taxes not yet due and
payable, or on the stock of any Transferred Subsidiary in the hands of Seller or
another Transferred Subsidiary.
(h) Except as set forth on Schedule 7.1(h), none of the Transferred
Subsidiaries has (i) been a member of any affiliated, consolidated, combined or
unitary group other than one of which Seller was the common parent or (ii)
participated in any other arrangement (including by way of a Tax sharing
agreement) whereby any income, revenues, receipts, gain, loss or Tax asset of
the Transferred Subsidiaries was determined or taken into account for Tax
purposes with references to or in conjunction with any income, revenues,
receipts, gain, loss, asset, liability or Tax asset of any other person.
Schedule 7.1(h) contains a list of all jurisdictions (whether foreign or
domestic) to which any Tax is properly payable by the Division.
(i) Except as set forth on Schedule 7.1(i), the charges, accruals and
reserves for Taxes with respect to the Assets or Transferred Subsidiaries for
any taxable period beginning before and ending on, prior to or after the Balance
Sheet Date (including taxable period for which no Return has yet be filed)
reflected on the Balance Sheet (excluding any provision for deferred Income
Taxes) are adequate to cover any unpaid such Taxes for the period or portion
thereof ending on or before the Balance Sheet Date.
(j) Except as set forth on Schedule 7.1(j),
(i)none of the Assets is Tax-exempt use property within the meaning of
Section 168(h) of the Code.
(ii)None of the Assets is property that is or will be required to be
treated as being owned by another person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in
effect immediately prior to the enactment of the Tax Reform Act of 1986.
(iii)None of the Assets (including assets held by any Transferred
Subsidiaries or subsidiaries of Transferred Subsidiaries) is subject to a
lease other than a "true lease" for United States federal Income Tax
purposes.
Section 7.2. Tax Indemnification by Seller. Seller shall be liable for, and
shall hold Buyer, the Transferred Subsidiaries, and any successor corporations
thereto and affiliates thereof harmless from and against the following Taxes
with respect to the Business:
(a) any several liability of the Transferred Subsidiaries for Income Taxes
under Treasury Regulation Section 1.1502-6 or under any comparable or similar
provision under state, local or foreign laws or regulations for periods ending
on or prior to the Closing Date; and
(b) any sales, transfer, documentary, use, filing and similar Taxes and
fees, whether levied on Buyer, Seller, the Transferred Subsidiaries or any of
their respective Affiliates, resulting from the transactions contemplated by
this Agreement.
Section 7.3. Tax Indemnity by Buyer. Buyer shall be liable for, and shall
hold Seller and the Seller Indemnitees harmless from and against, any and all
(i) Income Taxes for any taxable period or portion thereof beginning on or after
the Closing Date, (ii) Reflected Taxes, and (iii) Taxes other than Income Taxes
for any taxable period or portion thereof beginning on or after the Cut-Off
Date, in each case, due or payable with respect to the Business.
Section 7.4. Allocation of Certain Taxes. (a) Buyer and Seller agree that
if any of the Transferred Subsidiaries is permitted but not required under
applicable foreign, state or local Tax Laws to treat the day before the Closing
Date or the Closing Date as the last day of a taxable period, Buyer and Seller
shall treat such day as the last day of a taxable period.
(b) For purposes hereof, in the case of any Taxes that are imposed on a
periodic basis and are payable for a period that begins before the Closing Date,
the Cut-Off Date or the Balance Sheet Date, as the case may be, with respect to
any particular Tax in accordance with this Agreement (each, for the purposes of
this paragraph, a "Relevant Date") and ends after a Relevant Date, the portion
of such Tax that shall be deemed to be payable for the portion of the period
ending on the Relevant Date shall (i) in the case of any Taxes other than Taxes
based upon or related to income, payroll or receipts, be deemed to be the amount
of such Taxes for the entire period (or, in the case of such Taxes determined on
an arrears basis, the amount of such Taxes for the immediately preceding
period), whether actually paid before, during, or after such period, multiplied
by a fraction the numerator of which is the number of calendar days in the
period ending on (and including) the Relevant Date and the denominator of which
is the number of calendar days in the entire period, and (ii) in the case of any
Taxes based upon or related to income or receipts (including, but not limited
to, sales, use and withholding Taxes), be deemed equal to the amount which would
be payable if the taxable year ended on the close of business on the Relevant
Date and, in the case of any Taxes attributable to the ownership by Seller or
any of the Transferred Subsidiaries or any subsidiary of a Transferred
Subsidiary of any equity interest in any partnership or other "flowthrough"
entity, as if a taxable period of such partnership or the "flowthrough" entity
ended as of the close of business on the a Relevant Date. Any credits for such a
period shall be prorated except credits for Taxes paid or deposited will be
allocated to the party that paid or deposited such Taxes and credits which are
allocated in a different manner under the Code, based upon the fraction employed
in clause (i) of the preceding sentence. Such clause (i) shall be applied with
respect to Taxes for such period relating to capital (including net worth or
long-term debt) or intangibles by reference to the level of such items on the
Relevant Date. In the event that Seller or any of its Affiliates has prepaid any
Taxes referred to herein to the extent that such Taxes exceed Seller's share of
such Taxes under this Section, Buyer shall pay Seller the amount of such excess
within 120 days of the Closing Date upon receipt from Seller at the Closing of a
statement detailing such prepayments.
Section 7.5. Filing Responsibility. (a) Seller shall prepare and file or
shall cause the Transferred Subsidiaries to prepare and file the following
Returns with respect to the Business:
(i) all Income Tax Returns for any taxable period ending on or before the
Closing Date; and
(ii) all other Returns required to be filed (taking into account
extensions) prior to the Closing Date.
(b) Buyer or the Transferred Subsidiaries shall, subject to the provisions
of paragraph (c) of this Section, file all other Returns with respect to the
Business.
(c) With respect to any Income Tax Return for taxable periods beginning
before the Closing Date and ending after the Closing Date, Buyer shall consult
with Seller concerning such Return and shall report all items with respect to
the period ending on the Closing Date in accordance with the instructions of
Seller, unless otherwise agreed by Seller and Buyer. Buyer shall provide Seller
a copy of its proposed Return at least 15 days prior to the filing of such
Return, and Seller may provide comments to Buyer, which comments shall be
delivered to Buyer within seven days of receiving such copies from Buyer.
(d) Seller and Buyer shall cooperate in the filing of any elections under
Section 338 and 338(h)(10) of the Code with respect to the Transferred
Subsidiaries or any of the Affiliates as Buyer shall request.
Section 7.6. Refunds. (a) Seller shall be entitled to any refunds or
credits of Income Taxes attributable to or arising in taxable periods or
portions thereof ending on or before the Closing Date with respect to the
Business other than (i) any refunds reflected on the Balance Sheet and (ii) any
refunds attributable to carrybacks from post-Closing Date periods.
(b) Buyer or the Transferred Subsidiaries, as the case may be, shall be
entitled to any refunds or credits of Taxes attributable to or arising in
taxable periods or portions thereof beginning on or after the Closing Date with
respect to the Business and to all refunds not described in Section 7.6(a), in
each case, after deducting reasonable costs incurred in securing such refund.
(c) Buyer shall, and shall cause the Transferred Subsidiaries promptly to,
forward to Seller or to reimburse Seller for any refunds or credits due Seller
(pursuant to the terms of this Article) after receipt thereof, and Seller shall
promptly forward to Buyer (pursuant to the terms of this Article) or reimburse
Buyer for any refunds or credits due Buyer after receipt thereof.
Section 7.7. Cooperation and Exchange of Information. (a) As soon as
practicable, but in any event within 30 days after Seller's request, from and
after the Closing Date, Buyer shall provide Seller with such cooperation and
shall deliver to Seller such information and data concerning the pre-Closing
operations of the Business and make available such knowledgeable employees of
the Business as Seller may request, including providing the information and data
required by Seller's customary Tax and accounting questionnaires, in order to
enable Seller to complete and file all Returns which it may be required to file
with respect to the operations and business of the Business through the Closing
Date or to respond to audits by any Taxing Authorities with respect to such
operations. Such cooperation and information shall include provision of powers
of attorney for the purpose of signing Returns and defending audits and promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any Taxing Authority which relate to the Business, and
providing copies of all relevant Returns, together with accompanying schedules
and related workpapers, documents relating to rulings or other determinations by
any Taxing Authority and records concerning the ownership and Tax basis of
property, which Buyer and the Transferred Subsidiaries may possess.
(b) For a period of ten years after the Closing Date or such longer period
as may be required by law (including any period during which any applicable
statute of limitations for the assessment or collection of any Taxes remain
open, whether by waiver or otherwise), Buyer shall, and shall cause the
Transferred Subsidiaries to, retain, and neither destroy nor dispose of, all
Returns, books and records (including computer files) of, or with respect to the
activities of, the Business for all taxable periods ending on or prior to the
Closing Date and to make such books and records available to Seller on a
reasonable basis. Thereafter, Buyer shall not destroy or dispose of any such
Returns, books or records unless it first offers such Returns, books and records
to Seller in writing and Seller fails to accept such offer within 60 days of its
being made.
(c) Buyer and Seller and their respective Affiliates shall cooperate (and
make available knowledgeable employees) in the preparation of all Returns
relating, in whole or in part, to taxable periods ending on or before or
including the Closing Date that are required to be filed after such date. Such
cooperation shall include, but not be limited to, furnishing prior years'
Returns or Return preparation packages illustrating previous reporting practices
or containing historical information relevant to the preparation of such
Returns, and furnishing such other information within such party's possession
requested by the party filing such Returns as is relevant to their preparation.
In the case of any state, local or foreign joint, consolidated, combined,
unitary or group relief system Returns, such cooperation shall also relate to
any other taxable periods in which one party could reasonably require the
assistance of the other party in obtaining any necessary information.
Section 7.8. Definitions. For purposes of this Article, the following terms
shall have the meanings ascribed to them below:
(a) "Determination" means a "determination" as defined by Section 1313(a)
of the Code.
(b) "Income Taxes" means all (i) Taxes based upon or measured by income,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties and (ii) any obligations
under any agreements or arrangements with respect to any Taxes described in
clause (i) above.
(c) "IRS" means the Internal Revenue Service.
(d) "Returns" means returns, reports and forms required to be filed with
any domestic or foreign Taxing Authority.
(e) "Taxes" means (i) all federal, state, local and foreign taxes,
including but not limited to income, gross receipts, windfall profits, goods and
services, ad valorem, value added, severance, property, production, transfer,
sales, use, license, excise, franchise, employment, withholding or similar
taxes, and any custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties and
(ii) any obligations under any agreements or arrangements with respect to any
Taxes described in clause (i) above.
(f) "Tax Laws" means the Code, federal, state, county, local or foreign
laws relating to Taxes and any regulations or official administrative
pronouncements released thereunder.
(g) "Taxing Authority" means any Governmental Authority having jurisdiction
over the assessment, Determination, collection, or other imposition of Tax.
ARTICLE 8
Conditions of Buyer's Obligation to Close
Buyer's obligation to consummate the Asset Purchase shall be subject to the
satisfaction on or prior to the Closing Date, or waiver by Buyer, of all of the
following conditions:
Section 8.1. Representations, Warranties and Covenants of Seller. The
representations and warranties of Seller contained in this Agreement (a) shall
be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (b) shall be repeated and shall
be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
on and as of the Closing Date. Seller and its Affiliates shall have duly
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. Seller shall have delivered to Buyer a
certificate, dated the Closing Date and signed by its duly authorized officers,
to the foregoing effect.
Section 8.2. Filings; Consents; Waiting Periods. Seller shall have obtained
and shall have delivered to Buyer copies of (a) all Governmental Approvals
required to be obtained by Seller in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
and (b) all Consents necessary to be obtained in order to consummate the Asset
Purchase, including all those specified in Schedule 8.2 and including all those
as may be necessary to obtain the benefit of the Assumed Contracts, the Assigned
Intellectual Property and the Assigned Leases. All applicable approvals, and all
applicable waiting periods, under German and Mexican Antitrust Laws and
regulations shall have been obtained or shall have expired or been terminated,
as the case may be.
Section 8.3. No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the date hereof that, individually or in the aggregate, has
constituted or resulted in, or would reasonably be expected to constitute or
result in, a Material Adverse Effect.
Section 8.4. No Injunction. There shall not (a) be in effect any
injunction, order or decree, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement, or permitting
such consummation only subject to any condition or restriction unacceptable to
Buyer, in its sole judgment, or (b) be any Actions pending, or to the knowledge
of Seller, threatened, which could reasonably be expected to have any of the
effects set forth in clause (a) of this Section.
Section 8.5. Mexican Investments. Buyer shall be satisfied, in its sole
discretion, as to the prospects for developing a suitable working relationship
with the management of SPT NV's Mexican investments and as to all other aspects
of the operations, assets, finances and governance of such enterprise.
Section 8.6. Union Contracts. The unions party to the Union Contracts shall
have ratified and consented to the assignment by Seller of the Union Contracts
and the assumption thereof by Buyer.
Section 8.7. Schedules. Buyer shall have agreed to the contents of the
Schedules to this Agreement provided to Buyer by Seller and such Schedules shall
be satisfactory to Buyer, in its sole discretion; provided that this condition
shall either be satisfied or this Agreement terminated by Buyer no later than
the last to occur of: (i) five Business Days after receipt by Buyer of the
Schedules or (ii) January 9, 1997.
ARTICLE 9
Conditions of Seller's Obligation to Close
Seller's obligation to consummate the Asset Purchase is subject to the
satisfaction on or prior to the Closing Date, or waiver by Seller, of all of the
following conditions:
Section 9.1. Representations, Warranties and Covenants of Buyer. The
representations and warranties of Buyer contained in this Agreement (a) shall be
true and correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualification) at
and as of the date hereof and (b) shall be repeated and shall be true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualification) on
and as of the Closing Date with the same effect as though made at and as of such
time. Buyer shall have duly performed and complied in all material respects with
all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date. Buyer shall have delivered
to Seller a certificate, dated the Closing Date and signed by its duly
authorized officer, to the foregoing effect.
Section 9.2. Filings; Consents; Waiting Periods. Buyer shall have obtained
and shall have delivered to Seller copies of all Governmental Approvals required
to be obtained by Buyer in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. All
applicable waiting periods under German and Mexican Antitrust Laws and
regulations shall have expired or been terminated.
Section 9.3. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
Governmental Authority of competent jurisdiction that is in effect that
restrains, prohibits or makes unlawful the consummation of the Asset Purchase.
ARTICLE 10
Survival; Indemnification
Section 10.1. Indemnification by Seller. Seller covenants and agrees to
indemnify and hold harmless Buyer, its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Buyer Indemnitees")
from and against, and pay or reimburse the Buyer Indemnitees for, any and all
Liabilities, (a) as provided for in Section 7.2 and (b) resulting from or
arising out of:
(i) any inaccuracy of any representation or warranty made by Seller herein
or any certificate delivered pursuant to this Agreement and which survive the
Closing (but only, with respect to Transferred Subsidiaries other than the
Controlled Subsidiaries and their subsidiaries, other than with respect to those
representations and warranties contained in Section 3.1 and 3.2, to the extent
Seller has knowledge of the facts or circumstances constituting such inaccuracy
(and with respect to the Mexican investments held by SPT NV, only such knowledge
has Seller has without having undertaken any additional inquiry or
investigation)) (it being understood and agreed that notwithstanding anything to
the contrary contained in this Agreement, to determine if there had been an
inaccuracy or breach of a representation or warranty of Seller and the
Liabilities arising from such inaccuracy or breach, such representation or
warranty shall be read as if it were not qualified by materiality, including
qualifications indicating accuracy in all material respects, or accuracy except
to the extent the inaccuracy will not have a Material Adverse Effect);
(ii) any failure of Seller to perform any covenant or agreement hereunder
or fulfill any other obligation in respect hereof, including the obligations set
forth in Sections 13.1 and 13.2, except to the extent that such failure arises
due to acts or omissions of the Mexican investments held by SPT NV;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any and all Liabilities in respect of any and all Income Taxes for any
taxable period ending on or before the Closing Date, or allocable, in accordance
with the provisions of Section 7.4, to periods prior to the Closing Date;
(v) any and all Liabilities in respect of any and all Taxes (other than
Income Taxes) other than Reflected Taxes for any taxable period ending on or
before the Cut-Off Date, or allocable, in accordance with the provisions of
Section 7.4, to periods prior to the Cut-Off Date;
(vi) any failure of Seller to comply with any applicable bulk sales laws
(unless any Liabilities thereunder arise as a result of Buyer's failure to
satisfy the Assumed Liabilities); and
(vii) any and all out-of-pocket costs of Seller seeking to obtain or
obtaining any Consents whether before or after the Closing Date in accordance
with Section 2.5.
As to indemnification for inaccuracies in the representations and
warranties contained in this Agreement (other than those in Sections 3.1, 3.2,
3.15(a), (b), (c) and (d), as to which the following limitations shall not
apply), and as to indemnification pursuant to Section 10.1(b)(v), Seller shall
not be required to indemnify the Buyer Indemnitees with respect to any unrelated
claims which individually do not exceed $25,000, and in any event shall not be
required to indemnify the Buyer Indemnitees unless and until the aggregate
amount of all claims in excess of $25,000 against Seller with respect thereto
exceeds $2,500,000; provided, however, that, if such aggregate amount of such
claims exceeds $2,500,000, Seller shall be obligated to pay the entire amount
thereof. Without limiting the generality of the foregoing, Liabilities incurred
by Buyer in connection with the disqualification or possible disqualification of
any Assumed Plan (including in connection with any audit by, application to or
other proceeding before or negotiation with the IRS relating to the issue of the
qualification or disqualification of an Assumed Plan or any other plan sponsored
by Buyer with which an Assumed Plan may be merged after the Closing), which
Liabilities would not have been incurred if all of the representations set forth
in Section 3.15 had been accurate, shall be considered to result from or arise
out of the inaccuracy of such representations.
Section 10.2. Indemnification by Buyer. Buyer covenants and agrees to
indemnify and hold harmless Seller, its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Seller
Indemnitees") from and against, and pay or reimburse the Seller Indemnitees for,
any and all Liabilities (a) as provided for in Section 7.3 or (b) resulting from
or arising out of:
(i) any inaccuracy in any representation or warranty by Buyer made or
contained in this Agreement;
(ii) any failure of Buyer to perform any covenant or agreement made or
contained in this Agreement or fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities;
(iv) the operation of the Business by Buyer or Buyer's ownership, operation
or use of the Assets on or after the Cut-Off Date;
(v) any retroactive pension benefit increases with respect to Employees
covered by Seller's Hourly Plans which result from any action taken by Buyer
(unless the obligation to take such action exists, whether contingent or
otherwise, on the Closing Date);
except, in the case of clauses (iii) and (iv), to the extent such Liabilities
result from or arise out of the Excluded Liabilities or constitute Liabilities
for which Seller is required to indemnify the Buyer Indemnitees under Section
10.1.
Section 10.3. Indemnification Procedures. In the case of any claim asserted
by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (a)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(b) the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (c) the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all Liability with respect to such claim or
litigation. In the event that the Indemnified Party shall in good faith
determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax Liability or the ability of Buyer to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim, with counsel reasonably acceptable to the Indemnifying Party, at the
sole cost of the Indemnifying Party, provided that, if the Indemnified Party
does so take over and assume control, the Indemnified Party shall not settle
such claim or litigation without the written consent of the Indemnifying Party,
such consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such claim or
demand and shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
cooperate in the defense of any claim or litigation subject to this Article and
the records of each shall be available to the other with respect to such
defense.
Section 10.4. Indemnification Procedure Regarding the Manchester Plant.
With respect to indemnification claims relating to Environmental Liabilities and
Costs which are Excluded Liabilities, Buyer Indemnitees shall give prompt notice
to Seller describing in detail the facts giving rise to any claim for
indemnification. Seller shall have the right and responsibility of defending,
remedying, and settling any claim for Environmental Liabilities and Costs and
Buyer Indemnitees shall fully cooperate in connection therewith to the extent
reasonably requested by Seller. Seller shall have complete control over any
Manchester Liability, including the performance of any Remedial Actions, for
which indemnification is being sought by Buyer Indemnities hereunder. Buyer
Indemnitees shall provide Seller and any of its representatives and agents,
including, when deemed necessary by Seller, the representatives and agents of
TRW Automotive Products Inc., such reasonable access as may be necessary or
desirable by Seller or its representatives or agents to address any
Environmental Liabilities and Costs. Such actions shall include, where
desirable, cooperation in the placement and operation of any ▇▇▇▇▇ at the
Manchester plant. Buyer Indemnitees shall provide Seller and its representatives
or agents with such utility service at the Manchester plant as may be deemed
necessary by Seller or any of its representatives or agents, provided, however,
that Seller shall reimburse Buyer Indemnitees for reasonable out of pocket costs
for such services. Except during a reasonable period following the Closing Date
required to discontinue ongoing operations which may be aggravating the
Environmental Liabilities and Costs, Buyer Indemnitees shall take no actions
which aggravate any Environmental Liabilities and Costs being addressed by
Seller and shall conduct no subsurface sampling, drilling or digging unless
required by law or necessary for the continued operation of the Business at the
Manchester plant. Seller shall have no obligation to indemnify Buyer Indemnitees
to the extent that Buyer Indemnitees fail to comply with their duties set forth
herein. Seller's obligation to indemnify Buyer Indemnitees for Remedial Actions
at the Manchester plant shall be limited to the completion of those actions
consistent with the industrial use of the Manchester Plant and only to the
extent that such actions are required or requested by any Governmental Authority
or court order. Seller agrees to perform whatever investigations or remediations
which are required or reasonably requested by a Governmental authority or court,
however, nothing herein shall preclude Seller from challenging the
appropriateness of any investigations or remediations or Seller's obligation to
conduct any such actions. Notwithstanding anything to the contrary in this
Agreement, this indemnification survives the Closing and continues in effect
indefinitely.
Section 10.5. Time Limitation. All claims for indemnification under clause
(i) of Section 10.1(b) or clause (i) of Section 10.2(b) must be asserted within
30 days of the termination of the respective survival periods set forth in
Section 10.6.
Section 10.6. Survival of Representations and Warranties, Etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, any examination by or on behalf of the parties hereto and
the completion of the transactions contemplated herein, but only to the extent
specified below:
(a) except as set forth in clauses (b) and (c) below, the representations
and warranties of any party contained in this Agreement shall survive for a
period of three years following the Closing Date;
(b) the representations and warranties contained in Sections 3.1, 3.2,
3.15(b), 3.15(c) and 4.1 shall survive without limitation;
(c) any representations and warranties relating to matters addressed in
Section 3.14 or 3.19 shall not survive the Closing Date, other than with respect
to any breach thereof as to which Seller has knowledge on or prior to the
Closing Date (nor shall any claim for indemnification arising from an alleged
breach of Section 3.4 survive the Closing Date to the extent the basis for such
claim also constitutes a breach of the representations and warranties contained
in Section 3.14 or 3.19), and, accordingly, after the Closing, except to the
extent Buyer's claim is based on Seller's failure to disclose any fact or
circumstance known to Seller relating to Environmental Liabilities and Costs and
otherwise forming the basis of an appropriate claim for indemnification
hereunder, Seller shall have no Liability to Buyer for any Environmental
Liabilities and Costs relating to or arising out of the past, present or future
operations of the Business or ownership of the Assets (other than those which
are Excluded Liabilities); and
(d) the representations and warranties contained in Sections 7.1, 7.2 and
7.3 shall survive as to any Tax covered by such representations and warranties
for so long as any statute of limitations for such Tax remains open, in whole or
in part, including by reason of waiver of such statute of limitations.
Section 10.7. Product Warranties. Except as set forth in Schedule 3.19 and
for warranties under Applicable Law, (a) there are no warranties express or
implied, written or oral, with respect to the products of the Business and (b)
there are no pending or threatened claims with respect to any such warranty, and
neither Seller nor any Transferred Subsidiary has any Liability with respect to
any such warranty, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due.
Section 10.8. Survival of Covenants. The covenants and agreements of the
parties contained in this Agreement shall survive the Closing in accordance with
the terms hereof.
Section 10.9. Sole Remedy. The remedy provided for in this Article 10 shall
be the exclusive remedy of Buyer and Seller under this Agreement with respect to
money damages, but shall not preclude any assertion by a Buyer Indemnitee or a
Seller Indemnitee, as the case may be, of any causes of action that may exist
for fraud.
ARTICLE 11
Deliveries at Closing
Section 11.1. Seller's Deliveries at Closing. In addition to the other
things required to be done hereby, at the Closing, Seller shall deliver, or
cause to be delivered, to Buyer the following:
(a) a certificate dated the Closing Date and validly executed on behalf of
Seller to the effect that the conditions set forth in Section 8.1 and Section
8.2 have been satisfied;
(b) a copy of the resolutions of the board of directors of Seller, or
similar enabling document, authorizing the execution, delivery and performance
hereof by Seller, and a certificate of its Secretary, dated as of the Closing
Date, that such resolutions were duly adopted and are in full force and effect;
(c) evidence or copies of any Consents required pursuant to Section 8.2;
(d) in the case of each Transferred Subsidiary that is a stock corporation
with certificated shares, stock certificates representing the Transferred
Subsidiary Interests with all appropriate transfer Tax stamps affixed, duly
endorsed in blank or accompanied by stock powers duly executed in blank and
sufficient to transfer the Transferred Subsidiary on the books of the
Transferred Subsidiaries, or, in the case of each Transferred Subsidiary that is
a stock corporation, joint venture or partnership with uncertificated shares,
such originals or certified copies of all documentation necessary to evidence
Seller's partnership or joint venture interests in such Transferred Subsidiary;
(e) in the case of each Transferred Subsidiary that is a stock corporation,
the stock book, stock ledger, minute book, corporate seal and other corporate
books and records of each of such Transferred Subsidiaries;
(f) an opinion, addressed to Buyer and dated the Closing Date, from counsel
to Seller, in substance and form reasonably satisfactory to Buyer;
(g) all documents, certificates and agreements necessary to transfer to
Buyer good and marketable title to the Assets, free and clear of any and all
Encumbrances thereon, other than Permitted Liens, including:
(i) a duly executed Assignment and Assumption Agreement;
(ii) assignments of all Assumed Contracts, Assigned Intellectual Property
and any other agreements and instruments constituting Assets, dated the Closing
Date, assigning to Buyer all of Seller's right, title and interest therein and
thereto, with any required Consent endorsed thereon;
(iii) a general warranty deed, dated as of the Closing Date, with respect
to each parcel of Owned Real Property, together with any necessary transfer
declarations or other filings;
(iv) an assignment of lease, dated as of the Closing Date, with respect to
each Assigned Lease, in such form as Buyer and Seller shall agree, together with
any necessary transfer declarations or other filings; and
(v) certificates of title to all motor vehicles included in the Assets to
be transferred to Buyer hereunder, duly endorsed for transfer to Buyer as of the
Closing Date;
(h) all documents necessary to transfer to Buyer the Assigned Intellectual
Property;
(i) Consents from the lessor of each Assigned Lease to the assignment of
such Assigned Lease to Buyer;
(j) a "FIRPTA" certificate of Seller, dated the Closing Date and sworn to
under penalty of perjury, setting forth the name, address and federal Tax
identification number of Seller and stating that Seller is not a "foreign
person" within the meaning of Section 1445 of the Code, such certificate to be
in the form set forth in the regulations thereunder;
(k) a duly executed services agreement relating to interim services to be
provided by the Division to Seller's Filtran and Contech divisions ("Service
Agreement") in such form as shall be agreed by Buyer and Seller.
Section 11.2. Buyer's Deliveries at Closing. In addition to the other
things required to be done hereby, at the Closing, Buyer shall deliver, or cause
to be delivered, to Seller the following:
(a) a certificate dated the Closing Date and validly executed on behalf of
Buyer to the effect that the conditions set forth in Sections 9.1 and 9.2 shall
have been satisfied;
(b) a copy of the resolutions of the board of directors of Buyer, or
similar enabling document, authorizing the execution, delivery and performance
hereof by Buyer, and a certificate of its secretary or assistant secretary,
dated as of the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(c) evidence or copies of any Consents required pursuant to Section 9.2;
(d) a duly executed Assignment and Assumption Agreement;
(e) an opinion, addressed to Seller and dated the Closing Date, of counsel
for Buyer, in form and substance reasonably satisfactory to Seller;
(f) a duly executed Service Agreement; and
(g) letters of credit to replace letters of credit obtained or guaranteed
by Seller in favor of suppliers to the Business.
Section 11.3. Required Documents. All documents to be delivered by Seller
or to be entered into by Seller and Buyer necessary to carry out the
transactions contemplated by this Agreement or contemplated by the terms of this
Agreement shall be satisfactory in form and substance to Buyer and counsel to
Buyer and all documents to be delivered by Buyer necessary to carry out the
transactions contemplated by this Agreement or to be entered into by Seller and
Buyer necessary to carry out the transactions contemplated by this Agreement
shall be satisfactory in form and substance to Seller and counsel to Seller.
ARTICLE 12
Termination
Section 12.1. Termination. This Agreement may be terminated at any time
prior to the Closing by:
(a) written agreement of Seller and Buyer; or
(b) either Seller or Buyer if the Closing has not occurred by the close of
business on February 28, 1997 and if the failure to consummate the Asset
Purchase on or before such date did not result from the failure by the party
seeking termination of this Agreement to fulfill any undertaking or commitment
provided for herein that is required to be fulfilled prior to Closing; or
(c) either Seller or Buyer if any Governmental Authority of competent
jurisdiction shall have issued a final nonappealable order permanently enjoining
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement;
(d) by either Buyer or Seller in the event that (i) all of the conditions
to the obligation of such party to consummate the Asset Purchase set forth in
Sections 8 and 9 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Asset Purchase set forth in Section 8 (in
the case of Buyer) or Section 9 (in the case of Seller) is not capable of being
satisfied prior the end of the period referred to in Section 12.1(b);
(e) by Buyer in the event it notifies Seller as provided in Section 5.1; or
(f) by Buyer in the circumstances contemplated by Section 8.7.
Section 12.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of Seller and Buyer pursuant to
Section 12.1, written notice thereof shall forthwith be given by the terminating
party to the other party hereto, and this Agreement shall thereupon terminate
and become void and have no effect, and the transactions contemplated hereby
shall be abandoned without further action by the parties hereto, except that the
provisions of Sections 5.1(c) and 14.5 shall survive the termination of this
Agreement; provided, however, that such termination shall not relieve any party
hereto of any liability for any breach of this Agreement. If this Agreement is
terminated as provided herein all filings, applications and other submissions
made in accordance with Sections 3.9(b) and 4.2 shall, to the extent
practicable, be withdrawn from the persons to which they were made.
ARTICLE 13
Post-Closing Obligations
Section 13.1. Working Capital Adjustment. (a) By the date which is 30 days
after the Cut-Off Date, Seller will prepare the Working Capital computation as
of the Cut-Off Date in accordance with the procedures set forth in Exhibit 13.1.
Seller will provide Buyer reasonable detail of such computation, including
copies of any computations, work papers (including accountants' work papers) and
all other underlying books and records used in connection with Seller's
preparation of its Working Capital computation. Buyer will make available
necessary Division personnel and other resources under its control to assist
Seller in performing such computation.
(b) Concurrent with the delivery of the Working Capital computation to
Buyer from Seller, if the Working Capital is less than $29,955,000 (the absolute
amount of any such deficiency being referred to herein as the "Working Capital
Deficiency"), Seller shall promptly pay to Buyer by wire transfer of same day
funds to an account identified by Buyer an amount equal to the Working Capital
Deficiency.
(c) By the date which is 60 days after delivery of the Working Capital
computation to Buyer, Buyer will notify Seller in writing setting forth in
reasonable detail Buyer's disagreement with the Working Capital computation,
including the basis therefor and the dollar amount involved and will provide
Buyer's Working Capital computation ("Buyer's Dispute Notice"). Seller and Buyer
shall negotiate in good faith to resolve any disagreement with respect to the
determination of Working Capital. To the extent Seller and Buyer are unable to
agree with respect to the Working Capital computation within 30 days after the
date of Buyer's Dispute Notice, Seller and Buyer shall select a mutually
acceptable accounting firm with no material relationship to Seller or Buyer or
their Affiliates within the previous 12-month period, and submit their dispute
to such accounting firm for a binding resolution. If no Buyer's Dispute Notice
is received within 60 days after the date of delivery of the working capital
computation to Buyer, Seller's Working Capital computation shall be final and
binding on all the parties.
(d) If the Working Capital is adjusted in accordance with paragraph (c), a
final Working Capital Deficiency will be computed using the agreed upon Working
Capital computation, and, if the final Working Capital Deficiency is greater
than the Working Capital Deficiency computed in paragraph (b), Seller shall
promptly pay to Buyer by wire transfer of same day funds to an account
identified by Buyer an amount equal to the difference.
(e) Notwithstanding anything to the contrary in this Agreement, Seller may,
in its discretion, lengthen the payment of certain accounts payable in order to
achieve the Working Capital of $29,955,000 as of the Cut-Off Date, but only if
any such lengthening of payments could not reasonably have a non-trivial adverse
effect on the Division's relationship with any of its suppliers, and, if such
lengthening is outside the ordinary course of business, only with the written
approval of Buyer, which approval shall not be unreasonably withheld. Seller
shall deliver to Buyer on the Closing Date Schedule 13.1(e), which shall set
forth any actions taken under the preceding sentences. If undertaken in
compliance with this Section, the actions set forth on Schedule 13.1(e) shall
not be deemed to breach any other representation and warranty or covenant set
forth in this Agreement, regardless of whether disclosure of such items might
have been otherwise required or such action otherwise prohibited.
Section 13.2. Non-Competition. (a) For the period commencing on the Closing
Date and terminating on the first anniversary of the Closing Date, Seller shall
not, and shall not permit any of its Continuing Affiliates to, directly or
indirectly, manufacture, sell, market, advertise or distribute, anywhere in the
world, any items or products currently manufactured, sold, marketed, advertised
or distributed, serviced or otherwise made or offered by the Business, or any
items or products competitive with or substitutable therefor, and shall not, and
shall not permit its Continuing Affiliates to, license, sublicense or otherwise
permit any other person to do so.
(b) For the period commencing on the first anniversary of the Closing Date
and terminating on the 10th anniversary of the Closing Date, Seller shall not,
and shall not permit any of its Continuing Affiliates to, directly or
indirectly, (i) manufacture or (ii) sell, market, advertise or distribute to
original equipment manufacturers anywhere in the world, any items or products
currently manufactured, sold, marketed, advertised or distributed, serviced or
otherwise made or offered by the Business, or any items or products competitive
with or substitutable therefor, and shall not, and shall not permit its
Continuing Affiliates to license, sublicense or otherwise permit any other
person to do so.
(c) During the period commencing on the first anniversary of the Closing
Date and terminating on the 10th anniversary of the Closing Date, Seller shall
provide Buyer with the first opportunity to supply all of Seller's and its
Affiliates' requirements of piston rings and cylinder liners. Seller also shall
provide Buyer with the opportunity to meet another supplier's terms for
supplying piston rings and liners prior to acceptance thereof by Seller and if
Buyer meets such terms, Seller shall contract with Buyer.
Section 13.3. Operation of Business as of Cut-Off Date. (a) If the Cut-Off
Date is not the same as the Closing Date, during the period from the Cut-Off
Date to the Closing Date (the "Interim Period"), Seller shall operate the
business for the benefit of Buyer and Net Cash Flow will accrue to Buyer during
such period.
(b) Within five business days following the Closing, Seller shall deliver
to Buyer a detailed calculation of Net Cash Flow for the Interim Period. This
calculation will set forth in reasonable detail the basis for the calculation,
together with copies of any computations, work papers (including accountants'
work papers) and all other underlying books and records used in connection with
Seller's preparation and calculation of Net Cash Flow. If Net Cash Flow is
positive, then Seller shall promptly pay to buyer by wire transfer of same day
funds to an account identified by Buyer the amount of Net Cash Flow. If Net Cash
Flow is negative, then Buyer shall promptly pay to Seller by wire transfer of
same day funds to an account identified by Seller the amount of negative Net
Cash Flow.
(c) For the purposes hereof, "Net Cash Flow" will, except as specifically
otherwise provided in the following paragraphs, be measured by actual cash
receipts of and payments by the Division (including by Seller on behalf of the
Division), as captured using Seller's established cash management systems which
directly identifies any cash received or cash disbursed by or for the benefit of
the Division.
(i) Seller maintains bank accounts designated for cash receipts and cash
disbursements of SPD. On a daily basis, these bank accounts are swept into
Seller's overall bank account via a positive transfer to Seller if the SPD
account has a positive balance or via a reimbursement from Seller if the SPD
account has a negative balance. Using summary reports on the daily activity of
the SPD bank accounts, the Net Cash Flow will be computed by summarizing the
activity in these accounts during the Interim Period.
(ii) In addition, Seller will separately track all third-party expenses,
services and goods, that are for the benefit of SPD and that are paid for
directly by Seller other than through the SPD accounts, and SPD will separately
track any payments made for all third-party expenses, services and goods for the
benefit of Seller and that are paid for directly by SPD. All such payments shall
be taken into account in computing Net Cash Flow, and appropriate detail
describing the payments shall be included in the computation of Net Cash Flow.
Schedule 13.3 provides a listing of the anticipated items that will be paid by
Seller for the benefit of SPD and by SPD for the benefit of Seller, although
additional items may arise in the ordinary course of business.
(iii) During the Interim Period, no interest will accrue on any funds
advanced by Seller to the Division or any of the Transferred Subsidiaries, or in
any event be included in the determination of Net Cash Flow.
(iv) As to SPE L.P., any cash required by SPE L.P. and its subsidiaries
during the Interim Period will be provided by Seller via wire transfer, all
efforts will be made to avoid having any of these operations distribute cash to
Seller in any form, and Net Cash Flow will be decreased by any such cash wire
transferred by Seller, and Net Cash Flow will be increased by any cash received,
if any, from these operations by the Seller. Any cash balances existing at these
operations on the Closing Date shall be included in the Assets, and any cash
balances existing at these operations on the Cut-Off Date and not distributed
shall be deemed to be funds provided by Seller to SPE L.P. and its subsidiaries
for purposes of computing Net Cash Flow.
(v) Additionally, any net cash activity between the Seller and SPD with
Allied Ring will be treated the same as any other third-party transaction.
(vi) Any cash received by SPT NV shall be retained by SPT NV and not
distributed.
(vii) Net Cash Flow derived from the United States operations of SPT (other
than SPT NV and Allied Ring) shall be decreased by the amount of any Income
Taxes actually payable by Seller in respect of such Net Cash Flow and shall be
increased by any Income Tax actually realized by Seller as a result of negative
Net Cash Flow arising from the United States operations of SPT (other than SPT
NV and Allied Ring).
(viii) For purposes of Section 13.3(c)(vii), the Income Taxes payable by
Seller in respect of Net Cash Flow shall be the product of (A) the estimated
taxable income from operations, if any, for the period (excluding any taxable
income arising from the Asset Purchase), and (B) an assumed combined federal
foreign and state Income Tax rate of 38% and the Income Taxes receivable by
Seller in respect of Net Cash Flow shall be the product of (A) the estimated
taxable loss from operations, if any, for the period (excluding any taxable
income arising from the Asset Purchase), and (B) an assumed combined federal
foreign and state Income Tax rate of 38%. Buyer and Seller shall use their best
efforts to determine the foregoing amounts within 60 days of the Closing Date.
(d) To the extent that either party disagrees with Net Cash Flow, any
specific receipt or disbursement within Net Cash Flow, or any invoice received
from the other party, Seller and Buyer shall negotiate in good faith to resolve
any disagreement. To the extent Buyer and Seller are unable to agree with
respect to such items within 30 days after either party notifies the other of a
disagreement, Buyer and Seller shall select a mutually acceptable accounting
firm with no material relationship to Buyer or Seller within the previous
12-month period, and submit their dispute to such accounting firm for a binding
resolution.
(e) This Agreement contains certain cash adjustment provisions (including
this Section 13.3) which contemplates that Seller and/or Buyer may make certain
payments to the other following the Closing Date in order to put Seller and
Buyer in the respective positions of having sold and acquired the Business as of
the Cut-Off Date. Seller and Buyer acknowledge and agree that nothing in this
Agreement is intended to produce any double counting of benefits and detriments
to Seller or Buyer.
ARTICLE 14
Miscellaneous
Section 14.1. Corporate Name. Buyer acknowledges that, from and after the
Closing Date, Seller and the Continuing Affiliates have the absolute and
exclusive proprietary right to all names, marks, trade names and trademarks
(collectively "Names") incorporating "SPX Corporation" or "SPX," by themselves
or in combination with any other Name, and that none of the rights thereto or
goodwill represented thereby or pertaining thereto are being transferred hereby
or in connection herewith. Buyer agrees that from and after the Closing Date it
will not, nor will it permit any of its Affiliates to, use any name, phrase or
logo incorporating any of the Names in or on any of its literature, sales
materials or products or otherwise in connection with the sale of any products
or services; provided, however, that Buyer may, for 180 days after the Closing
Date, in accordance with procedures and practices used by the Business prior to
the Closing Date, continue to use any printed literature, sales materials,
purchase orders and sales, maintenance or license agreements, and sell any
products, that are included in the Assets or the Inventories of any of the
Transferred Subsidiaries on the Closing Date and that bear a name, phrase or
logo incorporating any Name, until the supplies thereof existing on the Closing
Date have been exhausted. With respect to the printed purchase orders and sales,
maintenance or license agreements referred to in the preceding sentence, from
and after the Closing Date, Buyer shall sticker or otherwise ▇▇▇▇ such documents
as necessary in order to indicate clearly that neither Seller nor any of its
Affiliates is a party to such documents.
Section 14.2. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided that receipt of copies of such counterparts is confirmed.
Section 14.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan without reference
to the choice of law principles thereof.
Section 14.4. Entire Agreement. This Agreement (including agreements
incorporated herein (other than the Confidentiality Agreement) and the Schedules
and Exhibits hereto contain the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except for Sections 10.2 and 10.3, which
are intended to benefit, and to be enforceable by, any of the Seller Indemnitees
and the Buyer Indemnitees, as the case may be, this Agreement is not intended to
confer upon any person not a party hereto (and their successors and assigns
permitted by Section 14.7) any rights or remedies hereunder.
Section 14.5. Expenses. Except as set forth in this Agreement, whether or
not the Asset Purchase is consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
Section 14.6. Notices. All notices and other communications hereunder shall
be sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission service
to the appropriate address or number as set forth below. Notices to Buyer shall
be addressed to:
▇▇▇▇ Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as Buyer may
designate by written notice to Seller. Notices to Seller shall be addressed to:
SPX Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as Seller may
designate by written notice to Buyer.
Section 14.7. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that no party hereto shall assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of each other party hereto.
Section 14.8. Headings; Definitions. The Section, Article and other
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
Section 14.9. Amendments and Waivers. This Agreement may not be amended,
modified, superseded, cancelled, renewed or extended except by a written
instrument signed by the party to be charged therewith. No provision of this
Agreement may be waived except by a written instrument signed by the party
waiving compliance. No waiver by any party hereto of any of the requirements
hereof or of any of such party's rights hereunder shall release the other
parties from full performance of their remaining obligations stated herein. No
failure to exercise or delay in exercising on the part of any party hereto any
right, power or privilege of such party shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege by such party.
Section 14.10. Interpretation; Absence of Presumption. (a) For the purposes
hereof, (i) 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 genders as the
context requires, (ii) the terms "hereof," "herein," and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including all of the Schedules and Exhibits hereto) and
not to any particular provision of this Agreement, and Article, Section,
paragraph, Exhibit and Schedule references are to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified,
(iii) the word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (iv) the word "or" shall not
be exclusive, (v) provisions shall apply, when appropriate, to successive events
and transactions, and (vi) "knowledge" of a party means the knowledge of any of
the individuals of such party set forth on Schedule 14.10 and any individual
reporting directly to any person set forth on Schedule 14.10, which such
individual should reasonably have after due inquiry and investigation.
(b) This Agreement 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.
Section 14.11. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 14.12. Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.
Section 14.13. Specific Performance. The parties hereto each acknowledge
that, in view of the uniqueness of the subject matter hereof, each of the
parties would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that each party shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
Section 14.14. Attorney-Client Privilege: Work Product. Anything in this
Agreement notwithstanding, except with respect to matters addressed in the
opinion referred to in Section 11.1(f), the transactions contemplated hereby
shall not be deemed to waive, any attorney-client privilege between Seller or
its Affiliates and its legal counsel with respect to legal advice concerning the
business or operations of the Business or Seller which constitute privileged
communications (or work product related thereto).
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the day first above written.
SPX CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President--Diversified Products
Exhibit 13.1
Working Capital
Seller and Buyer have agreed that Working Capital shall be defined as follows:
the sum of accounts receivable, net, plus net inventory and less accounts
payable, of SPD and SPE L.P.
Each such line item of Working Capital shall be consistent with Seller's
internal balance sheets of the portion of the Division directly owned and
operated by SPD and SPE L.P., and calculated in accordance with GAAP, using
Seller's accounting practices on a consistent basis with prior years and as
described in Section 3.3.
For purposes of reviewing the determination of Working Capital, Seller's
historical accounting practices, consistently applied, will prevail. However, if
Seller's accounting practices are not in accordance with GAAP and such
differences from GAAP are not described on Schedule 3.3 or in this Exhibit 13.1,
GAAP will prevail. Additionally, for purposes of assessing asset realization and
determination of liabilities in Working Capital as of the Cut-Off Date, only
facts and circumstances existing up to the date on which Seller delivers the
Working Capital computation to Buyer shall be considered.
In order to provide certain clarifications, the following are summaries and
descriptions of certain of Seller's historical accounting practices related to
certain items included in Working Capital:
Accounts Receivable, net
Accounts receivable, net, represents accounts receivable for shipments made to
customers or for other amounts in connection with customer orders (including,
but not limited to, tooling, freight and applicable Taxes).
The Division records general reserves or reserves calculated under formula type
methodologies for customer returns, allowances, discounts and bad debts.
Additionally, a specific reserve for bad debts is established based upon
specific identification of amounts deemed uncollectible from customers.
Net Inventory
(i) Supply and MRO inventory. Supplies and MRO items used in production are
valued at standard costs approximating the most recent purchase price of the
item.
(ii) Production inventory. Production inventory is costed at the Division's
standard cost which approximates actual first-in, first-out ("FIFO") cost in the
aggregate. Standard costs are revised in December of each year and inventory is
revalued at that time. For the United States and German production inventories,
the inventories are restated to the last-in, first-out ("LIFO") cost using
computations consistent with the prior years.
The Division provides for excess and obsolete Inventory based upon various
methodologies and procedures at each location. These methodologies are based
upon, among other factors, historical and forecast Inventory usage.
Additionally, any formula based calculations are then reviewed by management and
adjusted for non-formula based circumstances (e.g. new products, aftermarket
usage) to arrive at a required excess and obsolete Inventory reserve.
During 1996, the German production Inventories were restated to exclude an
amount for production scrap and yield that are included in the Inventory
valuation. An inventory reserve has been included to reduce the inventory to
exclude such scrap and yield factors.
Accounts Payable
Trade accounts payable are recorded upon receipt of the goods or services and
include amounts due for receipts in which vendor invoices may not have been
received.
Checks which have been released to payees, but which have not yet been presented
to the bank (outstanding checks) are included in accounts payable.