EXHIBIT 10.1
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CMH ACQUISITION CORP.
AND
DAC ACQUISITION CORP.
WITH RESPECT TO THE
SALE OF THE OUTSTANDING STOCK
OF DREXEL INDUSTRIES, INC.
DATED AS OF APRIL 15, 1994
TABLE OF CONTENTS
Section Page
1. Sale and Purchase of Shares. 1
2. Purchase Price. 2
2.1 The Purchase Price. 2
2.2 Payment of Purchase Price 2
2.3 Closing Statement of Net Worth;
Adjustment to Purchase Price 2
2.4 Royalty Payments 8
2.5 Clark Payments 9
3. Closing. 10
3.1 Date of Closing. 10
3.2 Termination. 10
4. Representations and Warranties of Seller. 11
4.1 Organization, Standing and Authority of Seller. 11
4.2 Authorization of Agreement. 11
4.3 Organization, Standing and Qualification
of Drexel; Subsidiaries. 11
4.4 Corporate Records. 12
4.5 Consents of Third Parties. 12
4.6 Capitalization. 12
4.7 Ownership of Shares. 13
4.8 Financial Statements. 13
4.9 Absence of Certain Liabilities and Changes. 14
4.10 Inventory. 16
4.11 Receivables. 16
4.12 Taxes. 17
4.13 List of Material Contracts, etc. 18
4.14 Absence of Defaults. 19
4.15 Agreements Regarding Employees. 19
4.16 Employee Benefit Plans. 20
4.17 Litigation; Compliance with Laws. 23
4.18 Real Property. 24
4.19 Tangible Personal Property; Necessary Assets; Insurance. 25
4.20 Intellectual Property. 26
4.21 Environmental Matters. 27
4.22 Permits and Licenses. 31
4.23 Intercompany Transactions 31
4.24 Other Information 32
4.25 Terex's and Seller's Financial Condition 32
4.26 Sale Process 32
4.27 Powers of Attorney 33
4.28 Government Contracts 33
5. Representations and Warranties of Buyer. 35
5.1 Buyer's Organization. 35
5.2 Authorization of Agreement 35
5.3 Consents of Third Parties. 35
5.4 Litigation. 35
5.5 Investment. 36
5.6 Financing. 36
6. Further Agreements of the Parties. 36
6.1 Access to Information. 36
6.2 Conduct of the Business Pending the Closing. 36
6.3 [Intentionally Omitted]. 38
6.4 Other Action. 38
6.5. Notice by Buyer. 38
6.6 Expenses. 39
6.7 Publicity. 39
6.8 Transfer Taxes. 39
6.9 Supplements of Disclosure. 39
6.10 Preservation of Records. 39
6.11 Certain Post-Closing Assistance by Drexel. 40
6.12 Covenant not to Compete 40
6.13 Continuing Intercompany Agreements; Supply of
Proprietary Parts; Termination of Drexel Production
for Terex; Other Intercompany Arrangements 42
6.14 Access to Dealer Network and Purchase
of Proprietary Parts 43
6.15 Intercompany Accounts 44
6.16 Buyer Floor Plan Financing 44
6.17 Environmental Matters 44
6.18 Lockboxes 46
6.19 Indentures 46
6.20 Drexel's Shipping Schedule 46
6.21 Enforcement of Rights 46
7. Conditions of Closing. 47
7.1 Conditions Precedent to Obligations of Buyer. 47
7.2. Conditions Precedent to Obligations of Seller. 47
8. Documents to be Delivered at the Closing. 50
8.1 Documents to be Delivered by Seller. 50
8.2 Documents to be Delivered by Buyer. 51
9. Indemnification and Related Matters. 51
9.1 Indemnification for Breaches of Representations
and Convenants, etc.. 51
9.2 Determination of Damages and Related Matters. 53
9.3 Other Indemnification by Terex and Seller. 53
9.4 Time and Manner of Certain Claims. 55
9.5 Defense of Claims by Third Parties. 56
9.6 Buyer's Knowledge 57
10. Tax Matters. 57
10.1 Tax Returns. 57
10.2 Section 338 Elections and Forms. 61
10.3 Liability for Taxes. 63
10.4 Certain Tax Payment Responsibility. 63
10.5 Tax Contests. 64
10.6 Refunds, Tax Credits. 65
10.7 Tax Sharing Agreements. 66
11. Miscellaneous. 66
11.1 Finders. 66
11.2 Entire Agreement. 66
11.3 Governing Law. 67
11.4 Schedules; Tables of Contents and Headings. 67
11.5 Notices. 67
11.6 Separability. 68
11.7 Waiver. 68
11.8 Binding Effect; Assignment. 68
11.9 Best Knowledge. 69
11.10 Counterparts. 69
11.11 Waiver of Jury Trial. 69
11.12 Set-Off. 69
SCHEDULES TO AGREEMENT
Schedule and
Section Number Description
2.3(a) Amount of Receivables to reduce Net Worth
2.3(f) Certain Drexel Receivables
4.5 Consents and Approvals
4.6 Subsidiaries
4.8 Balance Sheet of Drexel
as of October 31, 1993
4.9 Exceptions to Warranty on Operation of
Business in Ordinary Course since the date
of the Balance Sheet
4.12 Exceptions to Tax Warranty
4.15 Agreements Regarding Employees;
Labor Disputes
4.17 Litigation
4.18 Part 1 Real Property Owned or Leased
4.18 Part 2 Permitted Liens
4.20 Patents and Trademarks
4.21 Environmental Citations
4.22 Exceptions to Permits and Licenses
4.23 Exceptions to Intercompany Transactions
4.27 Exceptions to Powers of Attorney
4.28 Government Contracts
6.2 Exceptions to Conduct of the
Business Pending the Closing
6.14(b) Clark Proprietary Parts
7.1(f) Employment Agreements
EXHIBITS TO AGREEMENT
Exhibit Description Section Reference
A Balance Sheet of Drexel as of
October 31, 1993, as adjusted 4.8
B License Agreement
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
The parties to this Amended and Restated Stock Purchase Agreement (this
"Agreement"), dated as of this 15th day of April, 1994, are CMH ACQUISITION
CORP., a Delaware corporation ("Seller"), and DAC ACQUISITION CORP., a Delaware
corporation ("Buyer").
Drexel Industries, Inc. ("Drexel"), a Pennsylvania corporation and a
wholly-owned subsidiary of Seller, is engaged in the development, manufacture,
marketing and distribution of industrial forklift trucks.
Seller wishes to sell, and Buyer wishes to purchase, all the outstanding
capital stock of Drexel (the "Shares").
On March 10, 1994 the parties hereto entered into a Stock Purchase
Agreement (the "Original Agreement") pursuant to which Seller agreed to sell,
and Buyer agreed to purchase, the Shares subject to the terms and conditions
set forth therein.
The parties hereto desire to amend and restate the Original Agreement in
its entirety.
As used in this Agreement, the term "Business" shall mean all of the
businesses and operations conducted by Drexel taken as a whole.
It is therefore agreed that the Original Agreement be amended and restated
as follows:
1. Sale and Purchase of Shares. Subject to the terms and conditions of
this Agreement, at the closing referred to in Section 3 (the "Closing"), Seller
shall sell and transfer to Buyer, and Buyer shall purchase from Seller, the
Shares.
2. Purchase Price.
2.1 The Purchase Price. Subject to adjustment as provided for in
Section 2.3 below, the aggregate purchase price for the Shares shall be eleven
million six hundred twenty-six thousand nine hundred forty-five dollars
($11,626,945) (the "Purchase Price"). The Purchase Price shall be payable as
provided in Section 2.2.
2.2 Payment of Purchase Price. At the Closing, Buyer shall pay to
Seller the cash portion of the Purchase Price by wire transfer of immediately
available funds to an account designated by Seller.
2.3 Closing Statement of Net Worth; Adjustment to Purchase Price.
(a) No later than one (1) week prior to the Closing Date,
Seller shall cause to be prepared and delivered to Buyer an estimated balance
sheet for Drexel as of the close of business on the day immediately preceding
the Closing Date (the "Closing Balance Sheet") and a computation of Drexel's
estimated net worth as of the Closing Date (the "Closing Net Worth"). The
Closing Balance Sheet shall present fairly the expected financial position of
the Business as of the close of business on the day immediately preceding the
Closing Date, in conformity with generally accepted accounting principles
("GAAP") applied on a basis consistent with the Balance Sheet, except that the
Closing Balance Sheet will not contain footnotes or normal year-end adjustments
and shall be calculated after giving effect to the cancellation of accounts
contemplated by Section 6.14 hereof. The term "Closing Net Worth" shall mean
the difference between (i) the book value of the assets, set forth on the
Closing Balance Sheet, and (ii) the book value of the liabilities set forth on
the Closing Balance Sheet, as such values are determined in accordance with
GAAP. In calculating the Closing Balance Sheet, (a) the reserve for doubtful
accounts on the Closing Balance Sheet shall equal $138,707, and (b) the reserve
for environmental matters on the Closing Balance Sheet shall be reduced by the
amount paid or payable by Seller or Drexel to Dames & Moore in connection with
the measures to be performed by them pursuant to Section 6.16 hereof, up to a
maximum of $75,000. Buyer shall have the right to review all work papers and
procedures used to prepare the Closing Balance Sheet and the computation of
Closing Net Worth as of the Closing Date. The Closing Balance Sheet and the
computation of Closing Net Worth shall be computed in a manner consistent with
the Balance Sheet (as defined in Section 4.8 below). The Drexel receivables
set forth on Schedule 2.3(a) shall be assigned by Drexel to Seller, without
recourse, on the Closing Date and shall be excluded from the Closing Balance
Sheet.
(b) The computation of Closing Net Worth as of the Closing Date
delivered by Seller to Buyer shall be the Final Statement of Net Worth and
shall be conclusive and binding on the parties unless Buyer, prior to the
Closing Date, determines in good faith and notifies Seller in writing that
Buyer disputes any of the amounts set forth therein, specifying the nature of
each dispute and the basis therefor (the "Dispute Notice"). The parties shall
attempt in good faith to reach agreement resolving all of the disputes set
forth in the Dispute Notice prior to the Closing Date, in which event the
Closing Balance Sheet, as amended to the extent necessary to reflect the
resolution of all such disputes, shall be the definitive Closing Balance Sheet
and the computation of Net Worth shall be the Final Statement of Net Worth and
shall be conclusive and binding on the parties. If the parties are unable to
resolve any or all of such disputes prior to the Closing Date, however, then
for purposes of the Closing, the parties shall (i) use the lesser of $4,995,002
or the amount set forth as Closing Net Worth on the computation delivered by
Seller, (ii) make the appropriate adjustment to the Purchase Price on such
basis and the Closing shall then take place. Thereafter, either party may,
promptly after the Closing Date, submit all unresolved disputes to a nationally
recognized independent accounting firm mutually agreeable to the parties, which
firm shall not have had a material relationship with either Buyer, Terex
Corporation ("Terex") or Seller or their respective affiliates within the two
years preceding the appointment (the "Arbiter"), for resolution. If the
parties cannot agree on the selection of the independent accounting firm to act
as Arbiter, either party may request the American Arbitration Association to
appoint such a firm, and such appointment shall be conclusive and binding on
the parties. Promptly, but no later than 30 days after its acceptance of its
appointment as Arbiter, the Arbiter shall determine, based solely on
presentations by Buyer and Seller, and not by independent review, those items
in dispute and shall render a written report as to the resolution of each
dispute and the resulting calculation of the Closing Statement of Net Worth and
the Closing Balance Sheet. In resolving any disputed item, the Arbiter may not
assign a value to such item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed
by either party. The Arbiter shall have exclusive jurisdiction over, and
resort to the Arbiter as provided in this paragraph (b) shall be the sole
recourse and remedy of the parties against one another or any other person
(including the auditors) with respect to, any disputes arising out of or
relating to the Closing Balance Sheet and/or the Final Statement of Net Worth;
and the Arbiter's determination shall be conclusive and binding on the parties
and shall be enforceable in a court of law.
(c) The fees and expenses of Buyer and its representatives
shall be paid by Buyer. The fees and expenses of Seller and its
representatives shall be paid by Seller. The fees and expenses of the Arbiter
incurred in connection with the calculation of Closing Net Worth, if any, shall
be borne by the party whose calculation of Closing Net Worth is farthest from
that of the Arbiter, or, if the resolution does not substantially favor either
party, such costs shall be borne equally by Buyer and Seller.
(d) As used herein, the term "Final Statement of Net Worth"
shall mean (i) the computation of Closing Net Worth delivered with the Closing
Balance Sheet if no Dispute Notice is given by Buyer within the time period set
forth in paragraph (b) of this Section 2.3 or (ii) if the Dispute Notice is
timely given and all of the disputed items are resolved by mutual agreement of
the parties, the computation of Closing Net Worth, as amended, if necessary, to
reflect such resolution of all disputes, or (iii) if any or all of the disputed
items are submitted to the Arbiter for resolution, the computation of Closing
Net Worth, as amended, if necessary, to reflect any resolution of any disputes
by mutual agreement of the parties and the resolution of all other disputes by
the Arbiter.
(e) The parties hereby acknowledge that $4,995,002 is the
amount shown as Net Worth on the Balance Sheet (as hereinafter defined). If,
however, the Final Statement of Net Worth exceeds $4,995,002, the Purchase
Price shall be increased by the amount of such excess either at the Closing or
otherwise and Buyer shall pay Seller the amount of such excess in cash;
provided, however, that if the Final Statement of Net Worth exceeds $5,565,191,
Buyer shall pay to Seller an additional $570,189 in cash and shall pay the
remainder with a note (the "Buyer Note") which shall bear interest at a rate of
6% per annum and shall be payable on December 15, 1994; provided, further that
the cash portion of the purchase price to be paid by Buyer at the Closing will
be reduced by the Tax Amount and the amount of the Contingent Note (as such
terms are defined below) pursuant to Sections 2.3(g) and (h) (the "Adjusted
Cash Purchase Price"), and Buyer shall pay to Seller in cash the Adjusted Cash
Purchase Price and shall deliver the Buyer Note and the Contingent Note. If
the Final Statement of Net Worth is less than $4,995,002, the Purchase Price
shall be decreased by the amount of such shortfall at the Closing or otherwise
and, if subsequent to Closing, Seller shall pay Buyer the amount of such
shortfall. If the determination of Closing Net Worth is finally resolved after
the Closing Date, any payment made pursuant to this Section 2.3(e) shall be
made together with interest thereon from the Closing Date to the date of
payment at an interest rate equal to 6% per annum. Such payment shall be made
within two business days of the date on which the Final Statement of Net Worth
is determined by wire transfer of immediately available funds to an account
designated by the payee.
(f) In addition to the foregoing adjustments to the Purchase
Price, Seller hereby agrees that in connection with the receivables set forth
on Schedule 2.3(f), if any of such receivables are not collected in full by
Buyer by December 15, 1994, such amounts, to the extent not collected in full,
shall be deducted from amounts due under the Buyer Note, if any. If any amount
is deducted from the Buyer Note pursuant to this Section 2.3(f), Drexel shall
assign to Seller, without recourse, any remaining receivables listed on
Schedule 2.3(f) to the extent of the deduction from the Buyer Note with respect
to the receivables.
(g) A portion of the Purchase Price which would have otherwise
been paid in cash at the Closing shall not be paid at the Closing, but shall be
deferred (the "Tax Amount") by Buyer in order to pay certain Pennsylvania Taxes
for which Seller is obligated hereunder. No later than one (1) week prior to
the Closing Date, Seller shall deliver to Buyer Seller's best estimate of the
Section 338 Taxes (as hereinafter defined) based on Seller's calculation of the
Closing Balance Sheet together with reasonable detail explaining such
calculation of the Section 338 Taxes. Section 338 Taxes shall mean the amount
of Taxes payable by Drexel to Pennsylvania as a result of Buyer making a
Section 338(g) Election or a Section 338(h)(10) Election (as defined in Section
10.2 hereof) for which Taxes Seller has agreed to be liable pursuant to Section
10.3 hereunder. If Buyer reasonably disputes Seller's calculation, the parties
shall attempt in good faith to reach agreement on the amount of the Section 338
Taxes. If the parties are unable to resolve any or all disputes prior to three
days before the Closing Date, the parties shall appoint the Arbiter to resolve
the dispute. The Arbiter shall be given two days to make its determination of
the amount of the Section 338 Taxes. For purposes of resolving any such
dispute, the Arbiter will not take any position with respect to the calculation
of the Section 338 Taxes which the Arbiter believes is not more likely than not
to be sustained on the merits. The Tax Amount shall be equal to the amount of
the Section 338 Taxes as so agreed or as determined by the Arbiter (the
"Estimated Section 338 Taxes"). The Arbiter's determination shall be
conclusive and binding on the parties for the purpose of determining the
Estimated Section 338 Taxes.
At least 7 business days prior to the due date (determined
without regard to extensions) of Drexel's Pennsylvania Tax return (the "Due
Date") for its taxable period ending on the Closing Date, Seller shall deliver
to Buyer, for Buyer's review, an updated calculation of the Section 338 Taxes
(the "Revised Section 338 Taxes"), based on the Final Statement of Net Worth,
and prepared in a manner consistent with the calculation of the Estimated
Section 338 Taxes. Any disputes with respect to the calculation of the Revised
Section 338 Taxes which are unable to be resolved by the parties shall be
referred to the Arbiter. Notwithstanding anything to the contrary in Section
10.1(a), all returns prepared by Seller shall report income, gain, loss or
deduction with respect to transactions contemplated by this Agreement in a
manner consistent with the methodology used to calculate the Revised Section
338 Taxes.
On the Due Date Buyer shall (i) pay to Seller in cash the
excess, if any, of the Tax Amount over the amount of Revised Section 338 Taxes
and (ii) pay or cause to be paid to Pennsylvania an amount equal to the Revised
Section 338 Taxes which amount shall be credited against Seller's liability for
Taxes pursuant to Section 10.3 hereof (but nothing in this Section 2.3(g) shall
relieve Seller from liability under Section 10.3 for any additional Taxes
arising from Section 338 Elections and if the Revised Section 338 Taxes exceed
the amount of the Tax Amount, Seller shall pay Buyer the amount of such excess
in accordance with the provisions of Section 10 hereof). In addition, Buyer
shall pay to Seller interest on the Tax Amount at an interest rate of 10% per
annum, from the Closing Date until two and one half months after the Closing
Date. Interest on the Tax Amount shall be payable monthly on the last day of
each calendar month or, if such day is not a business day, the next succeeding
business day, and on the Due Date.
The fees and expenses of the Arbiter incurred in connection with
the calculation of the Estimated Section 338 Taxes and the Revised Section 338
Taxes, if any, shall be borne by the party whose calculation of the Estimated
Section 338 Taxes or Revised Section 338 Taxes, as the case may be, is farthest
from that of the Arbiter, or, if the resolution does not substantially favor
either party, such costs shall be borne equally by Buyer and Seller.
(h) The parties agree that $750,000 of the Purchase Price which
would have otherwise been paid in cash at the Closing shall not be paid in
cash, but shall be paid pursuant to a note (the "Contingent Note") from Buyer
to Seller in the principal amount of $750,000. The principal amount due under
the Contingent Note shall be subject to reduction as provided therein. Seller
shall have 90 days from the Closing Date to replace the Contingent Note with
substitute collateral reasonably acceptable to Buyer in its sole discretion;
provided, however, that the parties acknowledge and agree that either (i) an
irrevocable letter of credit for the direct benefit of Buyer drawn on a
commercial bank organized under the laws of the United States or any state
thereof reasonably acceptable to Buyer, containing terms for drawdown pursuant
to a certificate of Buyer stating that Buyer has complied with and is
authorized pursuant to the terms of the Contingent Note to expend such funds or
(ii) a surety bond issued by a nationally recognized bonding company reasonably
acceptable to Buyer, providing for payment of all Tank Environmental Costs (as
defined in the Contingent Note) payable by Buyer pursuant to the terms of the
Contingent Note, shall be deemed to be reasonably acceptable. Buyer agrees
that insurance from a nationally recognized insurance company reasonably
acceptable to Buyer which Buyer, in its sole reasonable discretion, determines
protects Buyer and Drexel against any possible exposure, liability and/or Tank
Environmental Costs to the same extent Buyer is protected under the terms of
the Contingent Note will be acceptable.
2.4 Royalty Payments. After the Closing Date, pursuant to the terms
of a separate License Agreement, a copy of which is attached hereto as Exhibit
B, Buyer agrees to cause Drexel to pay to Terex or its designee, a series of
annual royalty payments ("Royalty Payments") for the period commencing from the
Closing Date until December 31, 1994 and for each of calendar years 1995 and
1996 based upon the number of units sold annually by Drexel for each of such
periods to (i) commercial buyers ("Commercial Units") and (ii) federal, state
and local government buyers ("U.S. Government Units") of "sit-down rider"
models and "turret truck" models which are currently in production or in
development at Drexel. In particular and without limitation, no Royalty
Payments shall be made by Drexel in respect of any (i) "walking" units sold by
Drexel, whether or not currently in production or development at Drexel and
(ii) units sold by Drexel to which Drexel acquires the manufacturing rights
after the Closing Date. Drexel will make a Royalty Payment to Seller in an
amount equal to $1,000 per U. S. Government Unit sold, and $4,000 per
Commercial Unit sold, above the following thresholds (which shall not be
cumulative), if any, in each calendar year (commencing from the Closing Date in
the case of 1994):
1994 1995 1996
U.S. Government Units N/A 60 50
Commercial Units 250 225 250
; provided, however, that for the period from the Closing Date until December
31, 1994, the threshold of 250 Commercial Units shall be reduced by the number
of trucks actually shipped by Drexel in 1994 prior to the Closing Date. Drexel
will make such Royalty Payments within 30 days after the completion of each of
such calendar years.
2.5 Clark Payments. In consideration for the rights granted to
Drexel pursuant to Section 6.14 hereof, Buyer agrees to pay or cause Drexel to
pay to Clark Material Handling Company ("Clark") or its designee Four Hundred
Thousand ($400,000) dollars at any time, in Buyer's sole discretion, on or
before the date which is sixty (60) days after the Closing Date. Drexel shall
have the option, in its sole discretion, of paying such amount either in cash
or by the cancellation of an intercompany receivable owed by Clark to Drexel in
like amount.
3. Closing.
3.1 Date of Closing. The closing of the sale and purchase of the
Shares provided for in Section 1 shall take place at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004
(or at such other place as the parties may agree in writing) on a date mutually
designated by Seller and Buyer, but in no event later than (a) March 25, 1994,
(b) five (5) business days after the date when each of the conditions specified
in Article 7 has been fulfilled (or waived by the party entitled to waive that
condition) or (c) such later date specified by Seller prior to April 15, 1994.
The date on which the Closing is held is referred to in this Agreement as the
"Closing Date". At the Closing, the parties shall execute and deliver the
documents referred to in Section 8.
3.2 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written agreement executed by Seller and Buyer;
(b) by Buyer in writing, without liability to Buyer on account
of such termination (provided Buyer is not otherwise in default or in breach of
this Agreement), if the Closing shall not have occurred on or before April 15,
1994;
(c) by Seller in writing, without liability to Seller on
account of such termination (provided Seller is not otherwise in default or in
breach of this Agreement), if the Closing shall not have occurred on or before
April 15, 1994; or
(d) by either Buyer or Seller, in writing, without liability to
the terminating party on account of such termination (provided the terminating
party is not otherwise in default or breach of this Agreement), if (i) there
shall have been a material breach by the other party of any of its
representations, warranties, covenants or agreements contained herein and (ii)
such breach cannot be remedied prior to Closing and if unremedied would result
in a failure to satisfy a condition to the terminating party's obligation to
consummate the transactions provided herein.
Upon such termination pursuant to this Section 3.2 neither of
the parties shall have any liability or further obligation arising out of this
Agreement except for any liability resulting from its breach of this Agreement.
Buyer's obligations under Section 6.1 shall survive the termination of this
Agreement.
4. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that:
4.1 Organization, Standing and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
enter into and perform this Agreement. Terex is the record and beneficial
owner of all of the issued and outstanding shares of capital stock of Seller.
4.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.3 Organization, Standing and Qualification of Drexel;
Subsidiaries.
(a) Drexel is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and has
full corporate power and authority to carry on its business as now conducted
and to own, lease and operate its properties as now done. Drexel is qualified
to do business and is in good standing in each jurisdiction in which the nature
of its business or the properties owned or leased by it requires qualification,
except where the failure to be so qualified or in good standing would not have
a Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" shall mean a material adverse effect upon the assets, results of
operations or financial condition of Drexel.
(b) Drexel does not have any subsidiaries.
4.4 Corporate Records. The copies of the articles of incorporation
and by-laws of Drexel that have been delivered to Buyer are complete and
correct as of the date of this Agreement, and the minute books of Drexel that
have been exhibited to Buyer are complete and correct in all material respects
as of the date of this Agreement.
4.5 Consents of Third Parties. Subject to receipt of the releases,
consents and approvals referred to in Schedule 4.5 which will be obtained prior
to Closing, the execution, delivery and performance of this Agreement by Seller
will not (i) violate or conflict with the articles of incorporation or by-laws
of either of Seller or Drexel; (ii) conflict with, or result in the breach of,
termination of, or constitute a default under, any lease, agreement, commitment
or other instrument to which any of Terex, Seller or Drexel is a party or by
which any of Terex, Seller or Drexel or any of their respective properties is
bound; (iii) constitute a violation of any law, regulation, order, writ,
judgment, injunction or decree applicable to any of Terex, Seller or Drexel; or
(iv) result in the creation of any lien, charge or encumbrance upon the capital
stock, properties or assets of Drexel, other than violations, conflicts,
breaches, terminations, accelerations, defaults and creations specified in the
foregoing clauses (ii) through (iv) which do not have a Material Adverse Effect
or prevent consummation of the transactions contemplated hereby. No consent,
approval or authorization of any governmental authority is required on the part
of Terex or Seller in connection with the execution, delivery and performance
of this Agreement.
4.6 Capitalization. The authorized capital stock of Drexel consists
of 1,000 shares of Common Stock, par value one cent ($.01) per share, of which
100 shares are issued and outstanding. All of the outstanding shares of
capital stock of Drexel were duly authorized for issuance and are validly
issued, fully paid and non-assessable, free of preemptive rights and none of
such shares are held in treasury. There are no outstanding options or rights
of any kind to acquire any shares of any class of securities or any securities
convertible into any shares of any class of securities of Drexel, nor are there
any obligations to issue any such options, rights or securities. There are no
restrictions of any kind on the transfer of the Shares, except (i) as may be
imposed by applicable federal and state securities laws and (ii) as are
disclosed on Schedule 4.5 (which shall be discharged at the Closing). Drexel
does not own any capital stock or other interest in any other corporation or
business entity (except as set forth on Schedule 4.6), nor is Drexel subject to
any obligations or requirements to make any investment in any entity.
4.7 Ownership of Shares. Seller is, and at the Closing will be, the
record and beneficial owner of the Shares free and clear of any claim, lien,
security interest or other encumbrance ("Lien") except as disclosed on Schedule
4.5 which shall be discharged at Closing. At the Closing, Seller will transfer
and deliver to Buyer legal and valid title to all Shares, free and clear of any
Lien.
4.8 Financial Statements. Buyer has been furnished the unaudited
balance sheet of Drexel as of October 31, 1993 and December 31, 1992 (the
October 31, 1993 balance sheet is attached hereto as Schedule 4.8), and the
related unaudited statements of operations, income statements and changes in
financial position of Drexel for the interim 10 month period and fiscal year
then ended. The foregoing financial statements have been prepared in the
ordinary course, consistent with past practice in accordance with GAAP, except
that they do not contain footnotes, the interim financial statements do not
contain normal year-end adjustments, and the October 31, 1993 balance sheet
does not include any reserves for the matters set forth on Schedule 4.12 for
which Seller is responsible, and are true, complete and correct in all material
respects and fairly present the financial position and results of operations of
Drexel as of said dates and for the periods indicated. The October 31, 1993
balance sheet, as adjusted, is herein referred to as the "Balance Sheet" and is
attached hereto as Exhibit A.
4.9 Absence of Certain Liabilities and Changes. Except to the
extent reflected or reserved for in the Balance Sheet, there are no liabilities
or obligations, known or unknown, contingent or otherwise, material to Drexel
or the Business, except (i) liabilities or obligations incurred in the ordinary
course of business since the date of the Balance Sheet, (ii) any material
liabilities and obligations set forth on Schedule 4.9, and (iii) liabilities
and obligations which are being retained by Seller. Since the date of the
Balance Sheet, Drexel has operated the Business in the ordinary course and,
except as set forth on Schedule 4.9 or contemplated by Schedule 6.2, there has
not been:
(a) any change in the assets, business, financial condition or
results of operations of the Business that has had, or could reasonably be
expected to have, a Material Adverse Effect;
(b) any change in any of the assets, licenses, permits or
franchises of Drexel, or any change in the manner of conducting the Business,
that has had, or could reasonably be expected to have, a Material Adverse
Effect;
(c) any material damage, destruction or loss (whether or not
covered by insurance) to its physical properties that has had, or could
reasonably be expected to have, a Material Adverse Effect;
(d) any material change in the accounting methods or principles
of Drexel;
(e) any product failure of Drexel's products in connection with
the testing of any of such products under Drexel's Government Contracts (as
defined in Section 4.28) which failure could cause a material delay in Drexel's
delivery schedule under such agreements;
(f) any declaration, setting aside or payment of any dividend
on, or any other distribution with respect to, any capital stock of Drexel or
repurchase, redemption or other acquisition of any capital stock of Drexel;
(g) any payment by Drexel to Seller, or any charges by Seller
to Drexel, or any other transaction between the Seller and Drexel, except in
the ordinary course of business of Drexel consistent with past practice or set
forth on Schedule 4.9;
(h) any option to purchase, or other right to acquire, capital
stock or any security or other instrument convertible into capital stock of any
class of Drexel granted to any person;
(i) any issuance of shares of capital stock (including treasury
shares) of Drexel;
(j) any material transaction made by Drexel relating to its
assets or business (including the acquisition or disposition of assets) other
than in the ordinary course of business consistent with past practice;
(k) any incurrence, assumption or guarantee by Drexel of any
indebtedness or liability for or in respect of borrowed money or any commitment
to do the same other than borrowings in the ordinary course of business
consistent with past practice and set forth on Schedule 4.9 (other than
borrowings pursuant to its intercompany account with Seller or its affiliates);
(l) any Lien created or assumed by Drexel on any of its assets
other than a Permitted Lien (as such term is defined in Section 4.18);
(m) any grant of any severance or termination pay to any
executive officer or director of Drexel or any increase in compensation or
benefits payable by Drexel under existing employment agreements or severance or
termination pay policies to any of their employees other than (i) normal merit
increases for salaried employees, (ii) increases or grants required by
contracts disclosed pursuant hereto or by applicable law, or (iii) increases,
agreements and bonuses disclosed in Schedule 4.15;
(n) any employment, bonus or deferred compensation agreement
entered into between Drexel and any of its directors, officers or other
employees, other than as disclosed in Schedule 4.15;
(o) any amendment of the articles of incorporation or by-laws
of Drexel, except for amendments which are necessary to revise the number of
directors on the Board of Directors of Drexel;
(p) any entering into, amendment or termination of any material
contract, agreement, lease, franchise, security instrument, permit, or license
that has had, or could reasonably be expected to have, a Material Adverse
Effect;
(q) any change in its relationship with its suppliers,
customers, or distributors having material business dealings with it which
would, or could be reasonably likely to, have a Material Adverse Effect;
(r) any failure by Drexel to meet its current shipping schedule
which has had, or could reasonably be expected to have, a Material Adverse
Effect; or
(s) any existing agreement or arrangement made by Drexel to
take any action that would cause any representation or warranty in this Section
4 to be untrue or incorrect.
4.10 Inventory. The inventory of Drexel, including that shown on the
Balance Sheet, is of a quality and quantity usable in the ordinary course of
business of Drexel in all material respects, except for obsolete items or items
below standard quality as to which an adequate provision has been made on the
Balance Sheet. The value of all inventory items, including finished goods,
work-in-process and raw materials, has been recorded on the Balance Sheet at
the lower of cost (determined in accordance with the accounting inventory
valuation methods of Drexel) or fair market value.
4.11 Receivables. All receivables of Drexel which either are
reflected on the Balance Sheet or were created subsequent to the date of the
Balance Sheet have arisen from bona fide transactions in the ordinary course of
business and have been collected in full or are current, and Seller has no
reason to believe such receivables will not be collected in full or will be
fully collectible at their face amounts (less any applicable reserves reflected
on the Balance Sheet or thereafter established on a basis consistent with the
reserves reflected on the Balance Sheet).
4.12 Taxes. Except as set forth on Schedule 4.12, (a) all Tax
Returns (as defined in Section 10.1) which are required to be filed with
respect to any member of the Federal consolidated group, or any combined group
or unitary group of which Seller and Drexel are members (the "Drexel Group")
have been timely filed (giving effect to any extensions) and all Taxes (as
defined in Section 10.1) shown as due on such Tax Returns have been paid,
except for those Taxes the nonpayment of which would not have a Material
Adverse Effect; (b) all Tax Returns filed with respect to any member of the
Drexel Group with respect to Taxes are true and correct in all material
respects; (c) there are no tax rulings or pending requests for rulings from any
taxing authority with respect to the Drexel Group; (d) none of Drexel or any
member of the Drexel Group on behalf of Drexel (i) is required to make any
adjustment pursuant to Section 481(a) of the Code by reason of a change in
accounting method initiated by Drexel, or (ii) has knowledge that the Internal
Revenue Service has proposed any such adjustment or change in accounting
method; (e) there are no agreements (and no requests for any such agreements
are pending) in effect to extend (i) the time to file any Tax Return covering
any material Tax for which any member of the Drexel Group would be liable, or
(ii) the period of limitations for the assessment or collection of the Taxes
for which any member of the Drexel Group would be liable; (f) there is no
action, suit, proceeding, investigation, audit, claim or assessment pending or
proposed with respect to any Tax liability for which any member of the Drexel
Group could be liable which if adversely determined would have a Material
Adverse Effect; (g) all amounts required to be withheld or collected by any
member of the Drexel Group with respect to Taxes have been duly collected or
withheld and any such withheld amounts have either been duly and timely paid to
the proper governmental agencies or authorities or set aside in accounts for
such purposes except to the extent such amounts would not have a Material
Adverse Effect; (h) Drexel is and will be on the Closing Date a member of the
"selling consolidated group" within the meaning of the first sentence of
Section 338(h)(10)(B) of the Code; (i) except for the group of which Drexel is
presently a member and the group of which Clark Equipment Company was the
common parent, Drexel has not been a member of any affiliated group of
corporations within the meaning of Section 1504 of the Code; (j) no power of
attorney has been granted with respect to any matter relating to Taxes of any
member of the Drexel Group; (k) the accruals and reserves for Taxes and
deferred taxes with respect to the members of the Drexel Group on the Balance
Sheet and on the books and records of the members of the Drexel Group are
adequate in all material respects to cover all liabilities of the members of
the Drexel Group for Taxes and deferred taxes for periods through the date
thereof.
4.13 List of Material Contracts, etc. (a) Buyer has been provided
with, or has been provided access to, copies of (i) all commitments and
agreements for the purchase of any materials or supplies that involve an
expenditure by Drexel of more than $50,000 for any one contract; (ii) all
personal property leases under which Drexel is either lessor or lessee that
involve annual payments or receipts of $50,000 or more; (iii) all other orders,
leases, commitments, agreements and instruments (including, but not limited to,
mortgages, indentures and other agreements and instruments relating to
indebtedness for borrowed money) to which Drexel is a party or by which it or
its properties are bound that require annual payments by Drexel of more than
$50,000; (iv) all government contracts and all other agreements with customers
that involve an annual payment to Drexel of more than $50,000 for any one
contract; (v) all contracts or agreements which guarantee the performance,
liabilities or obligations of any other entity; (vi) all contracts or
agreements which restrict Drexel from competing in any line of business; (vii)
all fire, liability and other insurance carried by Drexel; and (viii) any other
contract or agreement which is material to the Business.
(b) Drexel has no agreements for the sale of multiple forklift
trucks at fixed prices which are unfavorable to Drexel which would have, or
could be reasonably likely to have, a Material Adverse Effect.
4.14 Absence of Defaults. Drexel is not in default under the terms
of any commitment or agreement, which default has had, or reasonably could be
expected to have, a Material Adverse Effect. Each of the plans, contracts,
arrangements, instruments or other agreements (collectively, "Contracts")
covered by Section 4.13 is valid and in full force and effect with respect to
Drexel, and to the best of Seller's knowledge, with respect to the other
parties thereto, and neither Seller nor Drexel has any reason to believe any
such Contracts are invalid with respect to such third parties. No party has
notified Terex, Seller or Drexel orally or in writing of its intention to cease
to perform any material services required to be performed by it or withhold any
material payment required to be made by it thereunder.
4.15 Agreements Regarding Employees. Drexel is not a party to or
bound by any employment agreement, arrangement or understanding or any
collective bargaining or other labor agreement, or any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred compensation,
retainer, consultant, bonus, group insurance or other incentive or welfare
contract, plan or arrangement except as set forth on Schedule 4.15. Set forth
on Schedule 4.15 is a complete list of all employees of Drexel with an annual
salary of $60,000 or more and the rates of such salary. There are no existing
or, to the best of Terex's and Seller's knowledge, threatened material labor
disputes, grievances, safety or discrimination matters, or charges of unfair
labor practices involving the employees of Drexel except as set forth on
Schedule 4.15 and Drexel has not engaged in any unfair labor practices. Drexel
(i) is in compliance in all material respects with all applicable federal,
state and local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, terms and conditions of employment and wages
and hours; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to employees except for
immaterial amounts; (iii) is not liable for any material arrears of wages or
any material taxes or any material penalty for failure to comply with any of
the foregoing; and (iv) other than routine payments to be made in the normal
course of business and consistent with past practices, is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits.
4.16 Employee Benefit Plans. Schedule 4.15 lists all Employee
Benefit Plans and all Benefit Arrangements (each as defined in Section 6.3(a)).
With respect to each of such Employee Benefit Plans and Benefit Arrangements,
Seller has delivered to Buyer, as applicable, true and complete copies of any:
(a) plans and related trust documents and amendments thereto; (b) the most
recent summary plan descriptions, including all summaries of material
modifications relating thereto as required under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the two most recent annual
reports; (c) the two most recent actuarial valuations; and (d) the most recent
determination letter received from the Internal Revenue Service. With respect
to each Employee Benefit Plan and Benefit Arrangement: (i) Drexel is in
compliance in all material respects with the terms of such Employee Benefit
Plan or Benefit Arrangement and with the requirements prescribed by all
applicable statutes, orders or governmental rules or regulations including,
without limitation, ERISA and the Code; (ii) Drexel does not maintain or
contribute to and has not maintained or contributed to any "employee pension
benefit plan" (as that term is defined in ERISA) other than the Drexel
Industries, Inc. Retirement Plan and Trust (the "401(k) Plan"); (iii) by letter
dated September 4, 1991, the Internal Revenue Service has determined that the
401(k) Plan is a qualified plan and that its related trust is exempt from
taxation under Section 501(a) of the Code and nothing has occurred since such
date that would adversely affect such qualification or exemption or impair the
ability of the plan sponsor of the 401(k) Plan timely to amend the 401(k) Plan
so as to preserve such qualification or exemption. The 401(k) Plan is and has
been operated and administered in compliance with Section 401(a), (k) and (m)
of the Code; (iv) and set forth on Schedule 4.18, Part 2 there are no material
actions or proceedings (other than routine claims for benefits) pending or
threatened, with respect to any Employee Benefit Plan or Benefit Arrangement;
and (v) no "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA, has occurred with respect to any Employee Benefit
Plan. No ERISA Affiliate (as defined herein) maintains or contributes to or
has maintained or contributed to an employee benefit plan that is or was
subject to Title IV of ERISA and Drexel can not be held jointly and severally
liable with an ERISA Affiliate for any losses, damages, costs and expenses,
excise taxes or penalties arising out of the funding, operation,
administration, withdrawal or partial withdrawal from, or termination of, an
employee benefit plan maintained or contributed to by an ERISA Affiliate.
ERISA Affiliate shall mean any business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with Drexel within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company under Section 414(o) of
the Code, or is under "common control" with Drexel, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under
any of the foregoing Sections. At no time since September 25, 1980 has Drexel
contributed to or been required to contribute to any multiemployer plan as
defined in Section 3(37) of ERISA (a "Multiemployer Plan"). No ERISA Affiliate
incurred any withdrawal liability (within the meaning of Section 4201 of ERISA)
to any Multiemployer Plan which has not been satisfied.
Drexel does not maintain or contribute to any Employee Benefit
Plan which provides, or has any liability to provide, life insurance, medical
or other employee welfare benefits to any Employee (as defined in
Section 6.3(a)) upon his retirement or termination of employment, except as may
be required by law, and Drexel has never represented, promised or contracted
(whether in oral or written form) to any Employee (either individually or to
Employees as a group) that such Employee(s) would be provided with life
insurance, medical or other employee welfare benefits upon their retirement or
termination of employment, except to the extent required by law.
The execution of, and performance of the transactions
contemplated in this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any Employee
Benefit Plan, Benefit Arrangement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
In connection with the transactions contemplated by this
Agreement, no payment or benefit which will or may be made by Drexel with
respect to any Employee will be characterized as an "excess parachute payment,"
within the meaning of Section 280G(b)(1) of the Code.
For the purpose of this Section, the following terms shall have
the meanings indicated:
(i)
The term "Employees" shall mean all current employees (and all employees on
approved leaves of absence) of Drexel and the term "Employee" shall mean any of
the Employees.
(ii)
The term "Employee Benefit Plan" shall mean each and all "employee benefit
plans" as defined in Section 3(3) of ERISA, maintained or contributed to by
Drexel or any predecessor or in which Drexel or any predecessor participates or
participated and which covers Employees.
(iii)
The term "Benefit Arrangement" shall mean any life and health insurance,
hospitalization, holiday, vacation, sick pay, sick leave, disability, tuition
refund, service award, individual employment contracts of Drexel providing
employee or executive compensation or benefits to Employees, other than
Employee Benefit Plans.
4.17 Litigation; Compliance with Laws. (a) There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Terex's or Seller's knowledge, threatened, that question the validity of
this Agreement or any action taken or to be taken by Terex or Seller in
connection with this Agreement. Except as set forth on Schedule 4.17, there is
no litigation, proceeding or governmental investigation pending, or to the best
of Terex's or Seller's knowledge, threatened, or any order, injunction or
decree outstanding, against Drexel or the Owned Property (as defined in Section
4.18) or Drexel's interest in the Leased Property (as defined in Section 4.18)
that, if adversely determined, could individually or in the aggregate, have a
Material Adverse Effect.
(b) Drexel, the Owned Property and Drexel's use of the Leased
Property and, to the best of Seller's knowledge, the owner's use of the Leased
Property, are in compliance in all material respects with all applicable laws,
regulations, ordinances, or any other applicable requirement of any
governmental body or court, except where the failure to comply therewith does
not and could not reasonably be expected to have a Material Adverse Effect, and
no notice has been received by Terex, Seller or Drexel alleging any such
violations, which violations in the aggregate would, or could be reasonably
likely to, have a Material Adverse Effect.
4.18 Real Property. (a) Schedule 4.18, Part 1 sets forth all of the
real property (x) owned in fee by Drexel (the "Owned Property"), and (y) leased
by Drexel (the "Leased Property"). Except as set forth on Schedule 4.18, Part
2, Drexel has good and marketable fee title to the Owned Property (including
all improvements and fixtures located thereon) free and clear of all Liens,
other than (i) those reflected or reserved against in the Balance Sheet, (ii)
those listed on Schedule 4.18, (iii) imperfections of title, easements,
pledges, charges, restrictions and encumbrances, including, without limitation,
survey matters, landlord's liens, mechanics' liens, repairmen's liens and other
similar liens, if any, that do not materially detract from the value of the
property subject thereto or materially interfere with the manner in which it is
currently being used in the Business, or materially impair the operations of
the Business, and (iv) taxes and general and special assessments not in default
and payable without penalty or interest, other than those being contested in
good faith (the liens referred to in clauses (i) through (iv) above and set
forth on Schedule 4.18, Part 2 being hereinafter referred to as "Permitted
Liens").
(b) There are no leases, subleases or other rights of occupancy
or use of any portion of the Owned Property or the Leased Property, other than
the lease creating Drexel's interest in the Leased Property (the "Lease"). The
Lease is valid and binding and in full force and effect. Neither Drexel, as
tenant under the Lease, nor, to the best of Seller's knowledge, the landlord
under the Lease, is in default of any material term, covenant or obligation
under the Lease. Drexel has not given or received any notice of default under
the Lease which remains uncured.
(c) No improvement located on the Owned Property or the Leased
Property nor the continued use and operation of any such improvement is in
violation of any zoning law, or statute, ordinance or regulation or restrictive
covenant applicable to the Owned Property or the Leased Property, as the case
may be, which violation would, or could be reasonably likely to, have a
Material Adverse Effect. No improvements located on the Owned Property or the
Leased Property depend on any variance, special exception or other special
municipal approval or any easement over property not included in the Owned
Property or the Leased Property, as the case may be, for their continuing
legality or use. None of the improvements located on the Owned Property or the
Leased Property encroaches in any material respect upon property of another
person and no improvement of any other person encroaches in any material
respect upon the Owned Property or the Leased Property.
(d) All water, sewer, gas, electricity, telephone, waste
disposal and other utilities required by law or necessary for the operation of
the Business are supplied to the Owned Property and the Leased Property, are
presently installed and operating, are not being supplied on a temporary or
limited basis, and are not being provided through immediately adjacent private
land except in accordance with valid permanent easements.
4.19 Tangible Personal Property; Necessary Assets; Insurance. (a)
All of the fixtures, machinery and equipment reflected in the Balance Sheet
(the "Tangible Personal Property") are in existence (except for dispositions
made since the date of the Balance Sheet in the ordinary course of business and
minor items not substantial in character) and are in generally usable condition
and repair (ordinary wear and tear which are not such as to materially
adversely affect the operation of the Business excepted) and are reasonably
suitable for the uses for which intended. Drexel has good title to, or holds
by valid and existing lease, all of the Tangible Personal Property, free and
clear of all Liens, other than (i) those reflected or reserved against in the
Balance Sheet, or (ii) Permitted Liens.
(b) Drexel's assets include all of the material assets (other
than those leased pursuant to leases which are presently in full force and
effect) which are currently being used in the conduct of the Business, and as
of the Closing Date such assets (including leased assets) will include all of
the assets necessary for the conduct of the Business as it is now being
conducted by Drexel.
(c) All physical properties and assets of Drexel are covered
by insurance policies against fire, casualty and other losses in reasonable
amounts and upon reasonable terms issued by companies believed by Drexel to be
responsible. Drexel carries, or is otherwise covered by, public liability
insurance, product liability insurance and workmen's compensation insurance in
reasonable amounts. Drexel has not failed to give any notice or present any
material claim under any insurance policy in due and timely fashion. There are
no material outstanding requirements by any insurance company that issued a
policy with respect to any of the assets of Drexel or by any Board of Fire
Underwriters or other body exercising similar functions or by any governmental
authority requiring any repairs to be done on or with respect to any of the
assets of Drexel or requiring any equipment or facilities to be installed on or
in connection with any of the properties or assets of Drexel, where failure to
comply would, or could reasonably be expected to, have a Material Adverse
Effect.
4.20 Intellectual Property. (a) Schedule 4.20 sets forth a list of
(x) all inventions which are the subject of issued letters patent or an
application therefor and all trademarks, trade names, service marks, copyrights
and designs which have been registered or for which an application for
registration is pending, and (y) all unregistered trademarks, trade names and
service marks which are material to the Business, in each case which are owned
and used or held for use by Drexel (the "Intellectual Property Right"),
specifying as to each, as applicable: (i) the nature of such Intellectual
Property Right; (ii) the owner of such Intellectual Property Right; (iii) the
jurisdictions by or in which such Intellectual Property Right has been issued
or registered or in which an application for such issuance or registration has
been filed, including the respective registration or application numbers; and
(iv) material licenses, sublicenses and other agreements to which Drexel is a
party and pursuant to which any person is authorized to use such Intellectual
Property Right or any programs, trade secrets or know-how, or pursuant to which
Drexel is authorized to use any Intellectual Property Right or any programs,
trade secrets or know-how of any person which is material to its business.
Except as set forth on Schedule 4.20, Drexel is the sole and exclusive owner
of, with all right, title and interest in and to (free and clear of any lien),
the Intellectual Property Rights described in such list and has sole and
exclusive rights to the use thereof of the material covered thereby in
connection with the services or products in respect of which they are being
used, except to the extent where the failure to have exclusive rights to the
use thereof would not have a Material Adverse Effect. Except as set forth on
Schedule 4.20, to the best of Seller's knowledge, (i) Drexel owns or possesses
licenses or other valid rights to use all rights required to manufacture
(A) all of the products currently sold by Drexel and (B) all developmental
products for which as of the date hereof there are concrete plans to sell such
products in the future.
(b) Except as set forth on Schedule 4.20, Drexel (i) is not a
party in or to any claim, suit, action or proceeding relating to the Business
which involves a claim that Drexel or any product, process or method of
manufacture used by Drexel infringes any rights of any third party, and, to the
best of Seller's knowledge no such claim, suit, action or proceeding is
threatened, and (ii) does not have any knowledge of any existing material
infringement by another person of any of the Intellectual Property Rights or
any proprietary computer programs, trade secrets or know-how belonging to
Drexel. Except as disclosed on Schedule 4.20, no Intellectual Property Right
is subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by Drexel or restricting the licensing thereof by
Drexel to any person.
4.21 Environmental Matters. (a) Except as set forth in Schedule
4.21, Drexel (which, for the purposes of this Section 4.21, expressly includes
transferred, disposed of or discontinued operations of Drexel) has at all times
been operated, and is, in compliance in all material respects with all
applicable federal, state or local laws, rules, regulations, codes, ordinances,
orders, decrees, directives, permits, licenses and judgments relating to
Environmental Matters (as defined below), including all limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in all applicable Environmental Laws (as
defined below), and has obtained and is in compliance in all material respects
with all permits, licenses, authorizations, registrations and all governmental
or other consents required by applicable Environmental Laws ("Environmental
Permits").
(b) Except as set forth in Schedule 4.21, there has been no
release or other dissemination at any time of any Hazardous Material (as
defined below) at, on, from, under or within any Real Property currently or
formerly owned, operated or leased by Drexel or any predecessor of Drexel,
other than pursuant to and in accordance with permits held by Drexel or any
such predecessor, which would have, or could reasonably be expected to have, a
Material Adverse Effect.
(c) Except as set forth in Schedule 4.21, neither Seller nor
its Affiliates (with respect to Drexel) nor Drexel has, directly through its
own personnel or facilities, transported, or permitted any person to transport,
for off-site disposal any Hazardous Material (i) in violation of any currently
or formerly applicable Environmental Permit or Environmental Law or (ii) to any
site listed or proposed for listing on the Comprehensive Environmental
Response, Compensation and Liability Information Systems ("CERLIS"), the
National Priorities List ("NPL"), or any similar list, pursuant to any
Environmental Law, in each case, which would have, or could reasonably be
expected to have, a Material Adverse Effect.
(d) Except as set forth in Schedule 4.21, there are no claims,
notices, civil, criminal or administrative actions, suits, hearings,
investigations, inquiries or proceedings pending or, to the best of Seller's
knowledge, threatened against Drexel or affecting Drexel that are based on or
related to any Environmental Matters or the failure to have any required
Environmental Permits.
(e) Except as set forth in Schedule 4.21, there are no past or
present conditions, events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans that may: (i) interfere with or prevent
continued compliance by Drexel with Environmental Laws and the requirements of
Environmental Permits so as to have a Material Adverse Effect, or (ii) give
rise to any liability or other obligation under any Environmental Laws that may
require Drexel or Buyer to incur any actual or potential Environmental Costs
that would have a Material Adverse Effect, or (iii) to the best of Seller's
knowledge, be reasonably likely to form the basis of any claim, action, suit,
proceeding, hearing, investigation or inquiry against or involving Drexel based
on or related to any Environmental Matter.
(f) Except as set forth in Schedule 4.21, Drexel and, to the
extent relating to Drexel, Seller, have not received any notice or other
communication that any of them is or may be a potentially responsible person or
otherwise liable in connection with any waste disposal site allegedly
containing any Hazardous Materials, or other location used for the disposal of
any Hazardous Materials, or notice of any failure of Drexel or Seller to comply
in any material respect with any Environmental Law or the requirements of any
Environmental Permit.
(g) For the purposes of this Section, the following terms shall
have the meanings indicated:
"Environmental Costs" means, without limitation, any actual
cleanup costs, remediation, removal, or other response costs (which, without
limitation, shall include costs to cause Drexel to come into compliance with
Environmental Laws), investigation costs (including without limitation fees of
consultants, counsel, and other experts in connection with any environmental
investigation, testing, audits or studies), losses, liabilities or obligations
(including without limitation, liabilities or obligations under any lease or
other contract), payments, damages (including without limitation any actual,
punitive or consequential damages under any statutory laws, common law cause of
action or contractual obligations or otherwise, including without limitation
damages (i) of third parties for personal injury or property damage, or (ii) to
natural resources), civil or criminal fines or penalties, judgments, and
amounts paid in settlement arising out of or relating to or resulting from any
Environmental Matter.
"Environmental Laws" means, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. 11001 et seq., the Resource Conservation and Recovery Act,
42 U.S.C. 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601
et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
136 et seq., the Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water
Act (Federal Water Pollution Control Act), 33 U.S.C. 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. 300f et seq., the Occupational Safety and
Health Act, 29 U.S.C. 641, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. 1801, et seq., as any of the above statutes have been or may
be amended from time to time, all rules, regulations, codes of practice and
guidance notes promulgated pursuant to any of the above statutes, and any other
federal, state or local law, statute, ordinance, rule or regulation governing
Environmental Matters, as the same have been or may be amended from time to
time, including any common law cause of action providing for any right or
remedy with respect to any Environmental Matter, and all applicable judicial or
administrative decisions, orders, or decrees.
"Environmental Matter" means any matter arising out of,
relating to, or resulting from pollution, contamination, protection of the
environment (including flora or fauna), human health or safety, health or
safety of employees, sanitation, noise and vibration and any matters relating
to emissions, discharges, disseminations, releases or threatened releases, of
Hazardous Materials into the air (indoor and outdoor), surface water,
groundwater, soil, land surface or sub-surface, buildings, facilities, real or
personal property or fixtures or otherwise arising out of, relating to, or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
"Hazardous Material" means any substance, including any
component thereof, and any matter that contains any such substance that is
regulated by, or may now or in the future form the basis of liability under,
any Environmental Laws, including, without limitation, any pollutants,
contaminants, toxic or hazardous or extremely hazardous substances, materials,
wastes, constituents or chemicals, petroleum or any by-products or fractions
thereof, any form of natural gas, U.S. Bevill Amendment materials, lead,
asbestos and asbestos-containing materials, polychlorinated biphenyl's ("PCBs")
and PCB-containing equipment, radon and other radioactive elements, infectious,
carcinogenic, mutagenic, or etiologic agents, pesticides, defoliants,
explosives, flammables, corrosives and urea formaldehyde foam insulation.
"Real Property" means any real property and improvements
owned, leased, used operated or occupied by Drexel or any of its predecessors
or present or former subsidiaries.
4.22 Permits and Licenses. Except as disclosed in Schedule 4.22,
Drexel has all material permits, licenses, franchises and other authorizations
necessary for the conduct of the Business as currently conducted, including,
without limitation, in connection with the use of the Owned Property and the
Leased Property, and all such permits, licenses, franchises and authorizations
are valid and in full force and effect, except where failure to obtain or
maintain in full force and effect such permits, licenses, franchises and
authorizations would not, or could not reasonably be expected to, have a
Material Adverse Effect.
4.23 Intercompany Transactions. Except as set forth on Schedule 4.23
or otherwise provided in this Agreement, Drexel is not a party to any contract,
lease, agreement or other arrangement with Seller or any of its affiliates
which will not terminate at the Closing Date.
4.24 Other Information. This Agreement and all certificates,
exhibits, schedules, lists and information furnished by or on behalf of Seller,
do not contain any untrue statement of a material fact or omit any material
fact necessary in order to make the statements contained herein or therein not
misleading.
4.25 Terex's and Seller's Financial Condition. As of the date of
this Agreement, the fair salable value of each of Terex's and Seller's assets,
respectively, exceeds the amount that will be required to pay each of such
party's probable liability on its existing debts as they become absolute and
matured. After the consummation of the sale of the Shares, each of Terex and
Seller will have sufficient capital to continue to conduct their respective
business and to meet their respective obligations as they mature.
4.26 Sale Process. Seller has retained S.G. Warburg & Co. Inc.
("Warburg") as its agent to conduct the process of the sale of the outstanding
stock of Drexel. After consultation with Warburg, Seller and Warburg
established a procedure which, Warburg advised Seller, was reasonably designed
to identify all of the parties Warburg reasonably believed would be the likely
purchasers of Drexel and who had the financial resources necessary to pay the
highest price for Drexel. Warburg advised Seller that it contacted all of
those parties and gave all of such parties a reasonable opportunity to
participate in the sale process. Terex, Seller and Warburg believe that the
Purchase Price is fair to Terex and Seller and their respective creditors and
equity security holders and that the aggregate consideration that Seller is
receiving pursuant to this Agreement is fair equivalent value for the Shares.
Seller received other proposals for the purchase of the Shares, none of which
would have permitted Seller to receive value which was materially better than
the consideration to be paid by Buyer, including the Royalty Payments, under
the terms of this Agreement, and Seller believes that Buyer's proposal is more
favorable to Seller than any other proposal because Seller believes that there
is a higher probability that Buyer will consummate the transaction and, if such
other parties could consummate the transaction, Buyer will do so on a more
timely basis than any other party which made a proposal to Seller.
4.27 Powers of Attorney. Except as set forth on Schedule 4.27, no
person has any power of attorney to act on behalf of Drexel in connection with
its properties or business affairs other than such powers to so act as normally
pertain to the officers thereof. All of the powers of attorney granted by
Drexel will be revoked as of the Closing Date.
4.28 Government Contracts. (a) Except as set forth on Schedule 4.28,
with respect to the agreements between Drexel and the federal government which
are set forth on Schedule 4.28 (the "Government Contracts"), there are no
material outstanding claims asserted in writing or, to the best of Seller's
knowledge, likely to be asserted by Drexel against the federal government or
another contractor under a Government Contract or subcontract. Except as set
forth on Schedule 4.28, there are no outstanding claims asserted in writing or
to the best of Seller's knowledge, likely to be asserted by the federal
government or another contractor against Drexel under a Government Contract or
subcontract. Except for the agreements set forth on Schedule 4.28 and except
for individual purchase orders for less than five (5) forklift trucks, Drexel
has no Government Contracts.
(b) Except as set forth on Schedule 4.28, Drexel has no:
(1) Government Contracts as to which it has failed to
comply with any term or condition in any material manner;
(2) Government Contracts under which work is being
performed, to the best of Seller's knowledge, without written contract
coverage;
(3) Government Contracts with funding ceilings which (i)
to the best of Seller's knowledge, have been exceeded or (ii) Drexel reasonably
anticipates will be exceeded; and
(4) fixed-price Government Contracts which Drexel
anticipates can only be or will be completed at a loss which would have a
Material Adverse Effect.
(c) Except as set forth on Schedule 4.28, since January 1,
1993, Drexel has not received any written governmental reports (or reports of
outside legal counsel which were submitted to any governmental authority)
arising from audits or other investigations of the contracts (past or present)
of Drexel that assert overcharging, defective pricing practices, CAS
noncompliance, or any other issues, except in each case for assertions, which,
if true, would not have a Material Adverse Effect.
(d) Except as set forth on Schedule 4.28, to the best of
Seller's knowledge, there are no pending or actual audits or investigations by
any Government agency or instrumentality concerning Government Contracts or
subcontracts of Drexel or any individual involved with such contracts. Except
as set forth on Schedule 4.28, there are no outstanding or anticipated claims
or obligations under any warranty provision of Drexel's Government Contracts
which would have a Material Adverse Effect. There are no pending debarment or
suspension proceedings involving Drexel, and Drexel is aware of no facts or
circumstances which could result in a debarment or suspension. The accounting
system of Drexel meets the requirements of the Federal Acquisition Regulation
and the Cost Accounting Standards in all material respects. Except as set
forth on Schedule 4.28, Drexel has title to, license or otherwise has the
lawful ability to use, all inventions, drawings, software, technical data,
know-how and the like necessary to perform its Government Contracts.
5. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
5.1 Buyer's Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has the
full corporate power and authority to enter into and to perform this Agreement.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action of Buyer and this Agreement constitutes the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditor's rights
in general and subject to general principals of equity (regardless or whether
such enforceability is considered in a proceeding in equity or at law).
5.3 Consents of Third Parties. The execution, delivery and
performance of this Agreement by Buyer will not (i) violate or conflict with
the certificate of incorporation or by-laws of Buyer; (ii) conflict with, or
result in the breach or termination of, or constitute a default under, any
lease, agreement, commitment or other instrument to which Buyer is a party or
by which it or its properties are bound; or (iii) constitute a violation by
Buyer of any law, regulation, order, writ, judgment, injunction or decree
applicable to Buyer other than violations, conflicts, breaches, terminations,
and defaults specified in the foregoing clauses (ii) and (iii) which could not
reasonably be expected to have a material adverse effect on Buyer's ability to
perform its obligations under this Agreement. No consent, approval or
authorization of any governmental authority is required on the part of Buyer in
connection with the execution, delivery and performance of this Agreement.
5.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken or
to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best of
Buyer's knowledge, threatened, or any order, injunction or decree outstanding,
against Buyer that if adversely determined, would have a material adverse
effect upon Buyer's ability to perform its obligations under this Agreement.
5.5 Investment. Buyer is purchasing the Shares for investment
purposes and not with a view to the resale or distribution of the Shares, and
will not sell the Shares in violation of applicable federal or state securities
laws.
5.6 Financing. Buyer has received a commitment letter from General
Electric Capital Corporation ("GECC") pursuant to which GECC has committed to
provide Buyer with sufficient funds to enable Buyer to pay the Purchase Price
and related fees and expenses.
6. Further Agreements of the Parties.
6.1 Access to Information. Prior to the Closing, Buyer may make
such investigation of the business and properties of Drexel as Buyer may
desire, and upon reasonable notice Seller shall give to Buyer and its counsel,
accountants and other representatives reasonable access, during normal business
hours throughout the period prior to the Closing, to the property, books,
commitments, agreements, records, files and personnel of Drexel, and Seller
shall furnish to Buyer during that period all copies of documents and
information concerning Drexel as Buyer may reasonably request subject to
applicable law. Buyer shall hold, and shall cause its counsel, accountants and
other agents and representatives to hold, all such information and documents
confidential, except as required by law.
6.2 Conduct of the Business Pending the Closing. Until the Closing,
except as otherwise set forth in Schedule 6.2, each of Terex and Seller shall,
with respect to paragraphs (b), (h) and (l), comply with, and, with respect to
the remaining paragraphs of this Section, shall cause Drexel to comply with,
the provisions set forth below:
(a) Drexel shall operate the Business in the ordinary course
consistent with past practice and shall not make any material change in the
assets of the Business other than in the ordinary course consistent with past
practice;
(b) Terex and Seller shall notify Buyer of, and furnish to
Buyer, any information that Buyer may reasonably request with respect to the
occurrence of any event or the existence of any state of facts that would
result in any of Terex's or Seller's representations and warranties not being
true if they were made at any time prior to or as of the Closing Date;
(c) Drexel shall not (i) grant or agree to grant any severance
or termination pay to any executive officer or director, any bonuses to any
employee other than in the ordinary course of business consistent with past
practice, any general increase in the rates of salaries or compensation of its
employees or any specific increase to any employee except such as are in
accordance with regularly scheduled periodic increases, or (ii) provide for any
new pension, retirement or other employment benefits to any of its employees or
any increase in any existing benefits;
(d) Except for cash dividends and cash payments in respect of
intercompany accounts which are reflected on the Balance Sheet or the Closing
Balance Sheet, Drexel shall not declare, set aside or pay any dividends or
other distributions in respect of its capital stock or redeem, purchase or
otherwise acquire any of its capital stock or make any other payments to
Seller;
(e) Drexel shall not amend its articles of incorporation or
by-laws (other than to revise the number of members of its Board of Directors)
or enter into any merger or consolidation agreement;
(f) Drexel shall use reasonable efforts to maintain and
preserve the Business intact, to retain its present employees so that they will
be available to Buyer after the Closing and to maintain its relationships with
customers, suppliers and others so that those relationships will be preserved
after the Closing;
(g) Drexel shall not make any material change in its accounting
methods or principles;
(h) Neither Terex, Seller nor Drexel shall grant any option to
purchase, or other right to acquire, capital stock or any security or
instrument convertible into capital stock of any class of Drexel;
(i) Drexel shall not incur (other than through its intercompany
account with Seller or its affiliates), assume or guarantee any indebtedness or
liability for or in respect of borrowed money;
(j) Drexel shall not enter into, amend or terminate any
material contract, agreement, lease, franchise, security instrument, permit or
license;
(k) Drexel shall not sell, assign, voluntarily encumber, grant
a security interest in or license with respect to, or dispose of, any of its
material assets or properties, tangible or intangible, or incur any material
liabilities, except for sales and dispositions made in the ordinary course of
the Business; and
(l) Terex, Seller and Drexel shall maintain in full force and
effect all insurance specified in Schedule 4.13; it being understood that such
insurance will terminate after the Closing.
6.3 [Intentionally Omitted]
6.4 Other Action. Each of the parties shall use its best efforts to
cause the fulfillment at or prior to the Closing Date of all of the conditions
to their respective obligations to consummate the sale and purchase of the
Shares under this Agreement.
6.5. Notice by Buyer. Buyer shall promptly notify Seller and Terex
in writing of, and furnish to Seller and Terex any information that Seller or
Terex may reasonably request with respect to (i) the capitalization and
financing of Buyer and (ii) the occurrence of any event or the existence of any
state of facts that would result in any of Buyer's representations and
warranties not being true if they were made at any time prior to or as of the
Closing Date.
6.6 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer, Seller and Terex shall bear their own respective expenses
incurred in connection with this Agreement and in connection with all
obligations required to be performed by each of them under this Agreement.
6.7 Publicity. Buyer, Seller and Terex shall consult with each
other before issuing any press release concerning the transactions contemplated
by this Agreement and, except as may be required by applicable law or any
listing agreement with or regulation or rule of any stock exchange on which the
securities of Terex or Buyer are listed or traded, will not issue any such
press release prior to such consultation. If Buyer, Seller or Terex is so
required to issue such press release it shall use reasonable efforts to inform
the other party hereto prior to issuing such press releases.
6.8 Transfer Taxes. Any sales, stock transfer taxes or other like
taxes or recording fees payable as a result of the sale of the Shares shall be
paid by Seller.
6.9 Supplements of Disclosure. For purposes of determining the
accuracy of the representations and warranties of Terex and Seller contained in
Article 4 and the fulfillment of the conditions precedent set forth in Section
7.1(a), the Schedules delivered by Terex and Seller shall be deemed to include
only that information contained therein on the date of this Agreement or as of
the date of such Schedule and as the same may be amended or supplemented by
Terex and Seller with Buyer's consent prior to the Closing Date.
6.10 Preservation of Records. Except as otherwise provided in
Section 10, Buyer agrees that it shall, at its own expense, preserve and keep
the records of Drexel acquired by it pursuant to this Agreement for a period of
five years from the Closing, or for any longer periods as may be required by
any government agency or ongoing litigation, and shall make such records
available to Terex and/or Seller as may be reasonably required by Terex and/or
Seller in connection with, among other things, any insurance claim, legal
proceeding, environmental matter or governmental investigation relating to
Seller or the Business. In the event Buyer wishes to destroy such records
after that time, it shall first give ninety days' prior written notice to Terex
and Seller and Terex and Seller shall have the right at their option and
expense, upon prior written notice given to Buyer within that ninety-day
period, to take possession of the records within one hundred twenty days after
the date of such notice to Buyer.
6.11 Certain Post-Closing Assistance by Drexel. Buyer agrees to
cause the appropriate personnel at Drexel, at no cost or expense to Seller, at
Seller's reasonable request, to prepare all accounting and related reports for
Drexel for periods up to the Closing Date, and to make available necessary
records, which are required by Seller in connection with the Seller's
preparation and/or filing of various financial, tax and accounting reports.
6.12 Covenant not to Compete. (a) For the period ending on the tenth
anniversary of the Closing Date, neither Terex nor Seller nor Clark Material
Handling Company, a Kentucky corporation ("Clark"), shall, and each of them
shall cause all of their affiliates not to, (i) engage (including through the
provision of management or advisory services or through a joint venture or
partnership) anywhere in the United States in the business of developing,
manufacturing, assembling, selling, marketing and/or distributing any type of
(X) dedicated "man-up" turret industrial forklift trucks, (Y) explosion-proof
("EX") industrial forklift trucks (as "EX" industrial forklift trucks are
defined in the Underwriters Laboratories Inc. "Standard for Safety Publication
UL 583" (1985)) or (Z) very narrow aisle industrial forklift trucks, other than
"man-down" turret forklift trucks, or (ii) utilize the trade secrets to be
transferred to the Buyer pursuant to this Agreement, to the extent not
currently used in Clark's business, or disclose to any affiliate or any other
person any such trade secrets not already in the possession of such person.
Clark shall not develop, manufacture, assemble, sell, market and/or distribute
a very narrow aisle combined stock picker/"man-up" turret industrial forklift
truck; provided, however, that Clark shall have the opportunity, commencing one
(1) year after the commercial introduction by Drexel of a very narrow aisle
combined stock picker/"man up" turret industrial forklift truck (the "Drexel
Combined Truck"), to purchase Drexel Combined Trucks from Drexel on terms and
conditions to be mutually agreed upon by Drexel and Clark. Clark shall have
the right to resell such Drexel Combined Trucks under the Clark name using the
Clark dealer network. Notwithstanding the foregoing, Drexel shall have no
obligation, express or implied, to sell Drexel Combined Trucks to Clark if
mutually agreeable terms cannot be arrived at.
(b) For the period ending on the tenth anniversary of the Closing
Date, neither Buyer nor Drexel shall engage (including through the provisions
of management or advisory services or through a joint venture or partnership)
anywhere in the United States in the business of developing, manufacturing,
assembling, selling, marketing and/or distributing any type of "general
purpose" industrial forklift trucks (assuming for the purposes of this
Agreement that "man-up" turret trucks, EX trucks or very narrow aisle trucks
are not "general purpose" industrial forklift trucks).
(c) The foregoing shall not preclude Terex or Clark, or their
respective affiliates, on the one hand, or Buyer or Drexel, on the other hand,
from acquiring an interest in any business, some of the operations of which
would otherwise violate the foregoing prohibitions (the "Competing Operations")
so long as (x) the annual revenues attributable to the Competing Operations do
not exceed 10 percent of the annual revenues of such business, and (y) the
acquiring entity divests itself of the Competing Operations as soon as
practicable, but in no event later than 12 months, after such acquisition. If
either Terex, Clark, or their respective affiliates, acquires an interest in
any business which includes Competing Operations, neither Terex, Clark nor
their respective affiliates shall use the Clark dealer network to sell or
distribute products of the Competing Operations.
(d) For the period ending on the fifth anniversary of the Closing
Date, neither Terex, Seller nor Clark nor any of their respective subsidiaries
shall induce or attempt to induce any employee of Drexel to leave the employ of
Drexel. In addition, for the same period, Drexel shall not induce or attempt
to induce any employee of Terex, Seller or Clark to leave the employ of any of
them.
(e) Without intending to limit the remedies available to the
parties, the parties hereby agree that damages at law would be an insufficient
remedy in the event of any breach by any party of this Section 6.12 and that
the non-breaching party shall be entitled to injunctive relief or other
equitable remedies in the event of any such breach (without the posting of a
bond or other security).
(f) If any of the provisions of this Section 6.12 are held to be
unenforceable because of the scope, term or area of their applicability, then
the court making such determination shall modify such scope, term or area or
all of them to the extent necessary to render this Section 6.12 enforceable
under applicable law, and such provisions shall then be enforced in such
modified form.
6.13 Continuing Intercompany Agreements; Supply of Proprietary Parts;
Termination of Drexel Production for Terex; Other Intercompany Arrangements.
(a) Buyer, Seller, Terex and Clark agree that for the period
ending on the fifth anniversary of the Closing Date, Terex shall cause Clark
to, and Clark shall, allow Buyer and Drexel reasonable access to, and an
unlimited right to use for its own business without restriction or payment
(except as otherwise provided herein), upon Buyer or Drexel's reasonable
request, Clark's source documentation material for all parts used by Drexel at
the time of the Closing Date in the conduct of the Business. In addition, for
the period ending on the fifth anniversary of the Closing Date, Terex shall
cause Clark to allow Buyer and Drexel reasonable access to, and an unlimited
right to use for its own business without restriction or payment, upon Buyer or
Drexel's reasonable request, Clark's parts numbering system for parts currently
being used by Drexel or currently planned to be used by Drexel.
(b) From the Closing Date until May 31, 1994, Drexel will
assemble model EC500S30 forklift trucks for Clark (up to a maximum of 36) that
Drexel is currently assembling in accordance with past practice, using parts
and inventory supplied to Drexel at its plant in Pennsylvania by Clark at
Clark's expense. During such period, Drexel will provide labor for the
assembly of such forklift trucks for a price equal to Drexel's fully-burdened
labor costs of producing such trucks (which is $31.60 per hour) plus 15%. To
the extent that Drexel is in the process of assembling a forklift truck for
Clark on May 31, 1994, which is not completed, Drexel shall complete such
truck; provided, that Clark has provided the necessary parts for such truck on
a timely basis consistent with past practice. Drexel shall bill Clark for each
truck and Clark shall pay such invoice within 30 days from the date of such
invoice. Terex shall use its best efforts to cause Clark to timely pay any
such invoices.
(c) For a period of not more than 6 months after the Closing
Date, at Buyer's reasonable request, Terex or its affiliates shall provide
certain administrative services to Drexel, including without limitation,
payroll and management information services. Terex or its affiliates, as the
case may be, shall provide such services to Drexel at its fully-burdened labor
cost plus 15% and shall bill Drexel on a monthly basis, and Drexel shall pay
such costs within 30 days from the date of such invoice.
6.14 Access to Dealer Network and Purchase of Proprietary Parts.
(a) Terex and Clark agree that they shall not, in any manner,
interfere with, or otherwise prevent, Drexel and Buyer from gaining access to,
or using, Clark's dealer network for the sale and distribution of Drexel's
products. Neither Terex nor Clark shall encourage or assist in network
discrimination against Drexel or Drexel's products in any manner which could
adversely effect Drexel's ability to sell its products through the Clark
network. After the Closing Date, representatives of Drexel shall have the
right to attend meetings of dealers held by Clark and Drexel shall have the
right to use Clark's computer "on-line" network to communicate with Drexel's
dealers.
(b) After the Closing Date, Drexel shall have the right to
continue purchasing those parts which are set forth on Schedule 6.14(b) which
are proprietary to Clark from Clark (for so long as Clark continues to
manufacture such parts) on a non-exclusive, royalty-free basis at prices which
are equal to Clark's standard manufacturing costs for such parts plus 15%.
Terex agrees to cause Clark to allow such purchases. Drexel shall also have
the right to purchase such parts from third parties on a non-exclusive,
royalty-free basis.
6.15 Intercompany Accounts. The intercompany accounts between
Drexel, on the one hand, and Terex, Seller or any of their affiliates, on the
other hand, shall be cancelled immediately prior to the Closing without
consideration, except that an intercompany account pursuant to which Clark owes
Drexel $400,000 shall remain outstanding (but shall not be included in the
Closing Net Worth). The remaining intercompany account between Drexel and
Clark of $400,000 shall be payable by Clark to Drexel within 90 days after the
Closing Date; provided, however, that in the event that Drexel shall not pay to
Clark the amount payable pursuant to Section 2.5 hereof within the time period
set forth therein, then the remaining intercompany account of $400,000 shall be
cancelled in full satisfaction of the amounts owed by Drexel to Clark pursuant
to Section 2.5 hereof.
6.16 Buyer Floor Plan Financing. Buyer shall use its best efforts to
enter into an agreement with Clark Credit Corporation ("Clark Credit") to
provide floor plan financing for Drexel after the Closing Date.
6.17 Environmental Matters. (a) Terex and Seller shall use their
best efforts to complete prior to the Closing Date each of the measures (other
than the removal of the 8,000 gallon fuel oil underground storage tank)
recommended by Dames & Moore in its letter addressed to GE Capital Corporate
Finance Group, Inc., dated February 17, 1994 (the "Dames & Moore Letter"). If
such measures are not completed by the Closing Date, the parties shall agree on
an amount to be placed in escrow in order to complete the necessary work only
to the extent the fees of Dames & Moore (or other environmental consultants, if
any) have not been prepaid and any amounts placed in escrow shall, to the
extent all funds paid to Dames & Moore are less than $75,000, be charged to the
reserve for environmental matters on the Closing Balance Sheet. The parties
acknowledge and agree that neither Terex nor Seller shall have an obligation to
remedy any matters discovered as a result of the completion of such measures in
order to satisfy the conditions to Closing and it being understood that Buyer
shall have no obligation to close if such conditions are not satisfied.
(b) Buyer may conduct, at its own expense, reasonable soil and
groundwater sampling at the Owned Property prior to the Closing Date. Buyer
shall not have or incur any obligations or liabilities of any kind whatsoever
(including, without limitation, any obligations or liabilities with respect to
any contamination or other condition which may exist on, under, or around the
Owned Property) in connection with or as a result of such sampling and
analysis. Within 10 days of the date hereof, Seller shall, and shall cause
Drexel to, provide Buyer and/or Buyer's representatives access to the Owned
Property in order to conduct such soil and groundwater sampling. The parties
acknowledge and agree that neither Terex nor Seller shall have an obligation to
undertake remedial or other actions to address any contamination or other
condition discovered as a result of such sampling and it being understood that
Buyer shall have no obligation to close in the event any such contamination or
other condition is not remediated or addressed by Seller and Terex prior to
Closing to the reasonable satisfaction of Buyer.
(c) Seller shall cause Drexel to use its reasonable efforts to
obtain the necessary permits to discharge waste from the Owned Property into
Horsham's municipal sewer system.
6.18 Lockboxes. Terex and Seller shall, and shall cause Drexel to,
make all necessary arrangements to provide that all payments for Drexel
forklift trucks to be received after the Closing Date shall be sent to Drexel
(and not to any lockboxes). Any funds received by Terex, Seller or any of
their affiliates after the Closing Date with respect to sales of Drexel
forklifts shall promptly be paid to Drexel.
6.19 Indentures. In connection with the consummation of the
transactions contemplated hereby, Terex shall comply in all material respects
with all of the provisions of (i) its Indenture (the "Senior Indenture"), dated
as of July 31, 1992, with United States Trust Company of New York, as Trustee,
including, without limitation, the provisions of Section 4.12 of the Senior
Indenture, and (ii) its Indenture (the "Junior Indenture"), dated as of June
30, 1987, as amended, with Continental Illinois National Bank and Trust Company
of Chicago, as Trustee, including, without limitation, the provisions of
Section 4.12 of the Junior Indenture.
6.20 Drexel's Shipping Schedule. Terex and Seller shall use their
best efforts, and shall cause Drexel to use its best efforts, to meet its
current shipping schedule for its forklift trucks.
6.21 Enforcement of Rights. Upon Buyer's request, Terex shall
enforce on Buyer's and Drexel's behalf, such indemnification rights with
respect to Drexel as are then available under the Tax Agreement dated as of
July 31, 1992 by and between Clark Equipment Company and Terex Corporation,
entered into pursuant to the Stock Purchase Agreement dated as of May 27, 1992,
by and between Clark Equipment Company and Terex Corporation and attached as
Exhibit 1.10(a) to such agreement, and shall pay over to Drexel any
indemnification amounts received under the Tax Agreement with respect to
Drexel.
7. Conditions of Closing.
7.1 Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the purchase under this Agreement is subject to the
fulfillment, prior to or at the Closing, or each of the following conditions
(any or all of which may be waived by Buyer):
(a) all representations and warranties of Terex and Seller to
Buyer contained herein shall be true and correct in all material respects when
made and at and as of the time of the Closing with the same effect as though
made again at and as of that time;
(b) Terex and Seller shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Terex and Seller prior to or at the
Closing;
(c) Buyer shall have been furnished with a certificate (dated
the Closing Date) executed by an officer of Seller certifying to the
fulfillment of the conditions specified in Sections 7.1(a) and 7.1(b);
(d) Buyer shall have been furnished with the affidavit of
Seller required by Section 1445 (b) (2) of the Code;
(e) there shall not be in effect any injunction or restraining
order issued by a court of competent jurisdiction in any action or proceeding
against the consummation of sale and purchase of the Shares pursuant to this
Agreement;
(f) the employment agreement listed on Schedule 7.1 (f) shall
have been terminated in a manner reasonably satisfactory to Buyer with no
liability to Drexel;
(g) (i) Neither Terex nor Seller shall have commenced any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, and neither
Terex nor Seller shall have made a general assignment for the benefit of its
creditors; or (ii) there shall not have been commenced against Terex or Seller
any case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall not have been commenced
against Terex or Seller any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) neither
Terex nor Seller shall have taken any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above;
(h) all consents, approvals, authorizations, assignments,
exemptions and waivers from third parties that shall be required in order to
enable Buyer to consummate the transactions contemplated hereby shall have been
obtained and/or assigned to Buyer without material condition (except for such
consents, approvals, authorizations, assignments, exemptions and waivers, the
absence of which would not prohibit consummation of such transactions or render
such consummation illegal or would have a Material Adverse Effect);
(i) all liens, charges, mortgages, encumbrances and other
security interests (other than Permitted Liens) on or affecting Drexel's assets
shall have been discharged in a manner satisfactory to Buyer in its sole
discretion and all agreements pursuant to which Drexel has pledged any of its
assets to secure its indebtedness or indebtedness of any of its affiliates,
including without limitation, the agreements set forth on Schedule 4.5, shall
have been terminated and Drexel and Buyer shall have no liability or obligation
with respect to any of such indebtedness, and evidence of such discharge and/or
termination and/or release of liability in a manner satisfactory to Buyer in
its sole discretion shall have been provided to Buyer;
(j) Buyer shall have been offered an agreement with Clark
Credit to provide floor plan financing to Buyer on terms and conditions
comparable to those currently provided to Drexel and Drexel's existing
agreement with Clark Credit shall have been terminated;
(k) Terex shall have delivered a letter to Buyer providing that
the Royalty Payments shall be subordinated to the payment of Buyer's senior
debt only if a party other than GECC and/or its affiliates acquires the senior
debt of Buyer and Buyer provides Seller with evidence reasonably satisfactory
to it that such subordination is required; and
(l) Terex and Seller shall have delivered to Buyer an opinion,
dated the Closing Date, of Robinson Silverman Pearce Aronsohn & Berman, to the
effect that (i) this Agreement has been duly and validly authorized by each of
Terex and Seller, (ii) Seller is the record owner of the Shares and has the
authority to transfer the Shares and upon transfer of the Shares based upon
review of the documents referred to in Schedule 4.5 and documents provided to
the Trustee in accordance with Terex's agreements, Buyer will acquire the
Shares free and clear of any of the Liens set forth on Schedule 4.5 and
Drexel's assets are free and clear of any of the Liens set forth on Schedule
4.5 and, (iii) the security agreements entered into by Drexel have been validly
terminated and, from and after the Closing Date, Drexel has no liability or
obligation thereunder.
7.2. Conditions Precedent to Obligations of Seller. The obligation
of Seller to consummate the sale under this Agreement is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by Seller):
(a) all representations and warranties of Buyer to Seller
contained herein shall be true and correct in all material respects when made
and at and as of the time of the Closing with the same effect as though made
again at and as of that time;
(b) Buyer shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing;
(c) Seller shall have been furnished with a certificate (dated
the Closing Date) executed by an officer of Buyer certifying to the fulfillment
of the conditions specified in Section 7.2(a) and 7.2(b); and
(d) there shall not be in effect any injunction or restraining
order issued by a court of competent jurisdiction in an action or proceeding
against the consummation of the sale and purchase of the Shares pursuant to
this Agreement.
8. Documents to be Delivered at the Closing.
8.1 Documents to be Delivered by Seller. At the Closing, Seller
shall deliver, or cause to be delivered, to Buyer the following:
(a) stock certificates representing the Shares, duly endorsed
in blank or accompanied by stock transfer powers and with all requisite stock
transfer tax stamps attached;
(b) a copy of resolutions of the board of directors of each of
Terex and Seller authorizing the execution, delivery and performance of this
Agreement by each of them and a certificate of the secretary or assistant
secretary of each of them, dated the Closing Date, that such resolutions were
duly adopted and are in full force and effect;
(c) the certificate referred to in Section 7.1(c);
(d) the affidavit referred to in Section 7.1(d);
(e) the written resignations of the directors of Drexel as
Buyer shall request prior to Closing;
(f) the documents referred to in Section 7.1 (i);
(g) the letter referred to in Section 7.1(k); and
(h) the letter referred to in Section 9.3(a)(iii).
8.2 Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Seller the following:
(a) payment and evidence of the wire transfer referred to in
Section 2.2;
(b) a copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, and a certificate of its secretary or assistant secretary, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect; and
(c) the certificate referred to in Section 7.2(c).
9. Indemnification and Related Matters. 9.1
Indemnification for Breaches of Representations and Covenants, etc. (a) Subject
to the provisions of this Article 9, each of Terex and Seller jointly and
severally agree to indemnify and hold Buyer and its affiliates, including
Drexel after the Closing Date, and each of their officers, directors, employees
and agents (collectively, "Buyer Indemnified Parties"), harmless from and
against any and all liabilities, obligations, damages, losses, deficiencies,
Environmental Costs, costs and expenses (including, without limitation, court
costs and reasonable fees and disbursements of counsel) (collectively,
"Losses") relating to or resulting from any of the following: (i) any breach
of any of the representations or warranties made or given by Seller or Terex in
this Agreement; (ii) any failure by Terex or Seller to perform any of its
covenants or agreements contained in this Agreement, except for such
representations, warranties, covenants and agreements related to Taxes (as
defined in Section 10.1(a)), to the extent that Buyer receives indemnification
with respect thereto pursuant to Section 9.3 and Section 10 hereof; and (iii)
any Environmental Costs, other than Environmental Costs incurred by Drexel or
Buyer relating to or arising from the 8,000 gallon underground storage tank
(the "8,000 Gallon U.S.T.") formerly located at the Owned Property, or any
releases from the 8,000 gallon U.S.T., which are indemnified against pursuant
to the provisions of Section 9.3 hereof, or any claims, actions, suits,
proceedings or other allegations, whether contingent or absolute, matured or
unmatured, determined or undetermined, known or unknown prior to the Closing
Date, relating in any way to the presence of or exposure to Hazardous Materials
in any surface or subsurface soils, groundwater, surface water, air or
buildings, at, on, from, under or within any Real Property or any other
location, arising out of, relating to, resulting from or otherwise attributable
to activities, events, acts, omissions or conditions occurring or existing on
or prior to the Closing Date at any Real Property currently or formerly owned,
operated or leased by Drexel or any predecessor of Drexel. The foregoing
indemnity under clauses (ii)-(iii) above is in no way limited by the
information set forth on the Schedules to this Agreement.
(b) Subject to the provisions of this Article 9, Buyer agrees
to indemnify and hold each of Terex and Seller and their respective affiliates,
and each of their officers, directors, employees and agents (collectively,
"Seller Indemnified Parties"), harmless from and against any and all Losses
relating to or resulting from any of the following: (i) breach of any of the
representations, warranties made or given by Buyer in this Agreement, or (ii)
any failure by Buyer to perform any of its covenants or agreements contained in
this Agreement, except for such representations, warranties, covenants and
agreements related to Taxes, which matters are subject to Section 10.
9.2 Determination of Damages and Related Matters. In calculating
any amounts payable to any Buyer Indemnified Parties solely pursuant to Section
9.1(a) or payable to any Seller Indemnified Parties pursuant to Section 9.1(b),
Terex and Seller or Buyer, as the case may be, shall receive credit for (i) any
actual reduction in net tax liability as a result of the facts giving rise to
the claim for indemnification and any indemnification payments and insurance
payments, and (ii) any insurance recoveries. Terex and Seller, on the one
hand, and Buyer, on the other hand, shall have no liability for indemnification
under Section 9.1 unless the aggregate amount of the Losses to Buyer, on the
one hand, and Terex or Seller, on the other hand, from all claims finally
determined to arise under Section 9.1 exceeds $350,000 and, in such event,
Terex and Seller, on the one hand, and Buyer, on the other hand, shall be
required to pay only the amount by which such aggregate amount of claims
exceeds said amount in the aggregate but in no event in excess of $14,000,000.
For purposes of indemnification (and no other purpose) with respect to breaches
of representations and warranties contained herein, an event shall be deemed to
be "material" or to have a "Material Adverse Effect" if it results in a Loss
that exceeds $25,000. The indemnification provided for in this Section 9 and
in Section 10 shall, from and after the Closing, be the sole remedy for any of
the matters referred to herein and therein, respectively; it being expressly
understood and agreed that indemnification provided for in Sections 9.1 and 9.2
shall be without duplication for any matter for which indemnification is
provided for in Section 9.3 and in Section 10.
9.3 Other Indemnification by Terex and Seller. (a) Each of Terex
and Seller shall jointly and severally indemnify and hold harmless the Buyer
Indemnified Parties from and against any and all Losses incurred by any of
them, without regard as to time or the amount of such Losses, relating to or
arising from the following: (i) (a) any Taxes for which Terex or Seller is
liable pursuant to Paragraph 10.3, (b) any Taxes for or with respect to any
taxable period ending prior to or including the Closing Date by reason of
Drexel being severally liable for the taxes of Terex, Seller or any other
corporation that has been affiliated with Drexel or any of their respective
affiliates pursuant to Income Tax Regulation 1.1502-6 or any analogous state or
local tax provisions and (c) any breach of the representation and warranty
contained in Section 4.12(h); (ii) any claims, actions, suits, proceedings or
other allegations, by any person arising from or relating to any employee
benefit plan, program or arrangement of Terex, Seller or any of their
respective affiliates (other than Drexel) whether arising out of or relating to
any event or state of facts occurring or existing before, on or after the
Closing Date, and including, but not limited to, Losses arising under Title IV
of ERISA, Section 302 of ERISA and Sections 412 and 4971 of the Code; (iii) any
claims, actions, suits, proceedings or other allegations, whether contingent or
absolute, matured or unmatured, determined or undetermined, known or unknown
prior to the Closing Date, arising out of or relating to the matters referred
to in a letter to be delivered by Terex to Buyer at Closing pursuant to this
Section 9.3(a)(iii); and (iv) any Environmental costs incurred by Drexel or
Buyer relating to or arising from the 8,000 Gallon U.S.T. or any releases
therefrom, except that Terex and Seller shall not be obligated to indemnify the
Buyer Indemnified Parties to the extent of any reduction in the principal
amount of the Contingent Note (or in any collateral substituted for the
Contingent Note) due to Environmental Costs. The foregoing indemnity under
clauses (i)-(iv) above is in no way limited by the information set forth on the
Schedules to this Agreement.
(b) Buyer, Terex and Seller agree that with respect to each of
the actions set forth on Schedule 4.17 hereof, Terex and Seller shall jointly
and severally indemnify and hold harmless the Buyer Indemnified Parties for any
and all Losses incurred by any of the Buyer Indemnified Parties in excess of
$25,000 for each such action. Any Losses incurred by the Buyer Indemnified
Parties pursuant to this Section 9.3(b) which are not paid by Seller shall be
credited against the $350,000 amount referred to in Section 9.2 hereof.
9.4 Time and Manner of Certain Claims. (a) Except as otherwise
expressly provided herein, the representations and warranties set forth in this
Agreement shall survive until the first anniversary of the Closing Date and
Buyer, Terex and Seller shall be liable for damages under Sections 9.1(a) and
9.1(b) hereof arising from their respective breaches of their representations
or warranties only to the extent that notice of a claim therefor is asserted by
the other in writing and delivered prior to the expiration of one year from the
Closing Date. Any claim made prior to one year from the Closing Date shall
thereafter survive without limitation as to time and the party receiving such
claim shall remain liable with respect thereto. Any notice of a claim by
reason of any of the representations and warranties contained in this Agreement
shall state specifically the representations or warranties with respect to
which the claim is made, the general facts giving rise to the alleged basis for
the claim. Any claim made by any Buyer Indemnified Party pursuant to Section
9.3 hereof shall survive without limitation as to time.
(b) The covenants and agreements contained herein to be
performed or complied with at or after the Closing (other than the covenants
and agreements to indemnify pursuant to paragraph (a) above which shall expire
as set forth in paragraph (a) above) shall survive the Closing until the
expiration of the applicable statute of limitations.
9.5 Defense of Claims by Third Parties. (a) When a party seeking
indemnification hereunder (the "Indemnified Party") receives notice of any
claims made by third parties or has any other claim for indemnification
hereunder, the Indemnified Party shall give prompt written notice (a "Notice")
thereof to the other party (the "Indemnifying Party") stating the nature and
basis of such claim, provided, however, that failure of the Indemnified Party
to give the Indemnifying Party prompt notice as provided herein shall not
relieve the Indemnifying Party of any of its obligations hereunder, except to
the extent prejudiced thereby. Upon notice from the Indemnified Party, the
Indemnifying Party may, but shall not be required to, assume the defense of any
such claims brought by third parties ("Third Party Claims"), including its
compromise or settlement, and the Indemnifying Party shall pay all reasonable
costs and expenses thereof and shall be fully responsible for the outcome
thereof; provided, however, that in such case, the Indemnifying Party shall
have no obligation to pay any further costs or expenses of legal counsel of the
Indemnified Party thereafter incurred in connection with such defense. No
compromise or settlement in respect of any Third Party Claims may be effected
by the Indemnifying Party without the Indemnified Party's prior written consent
(which consent shall not be unreasonably withheld or delayed). The
Indemnifying Party shall give notice to the Indemnified Party as to its
intention to assume the defense of any such Third Party Claims within thirty
(30) days after the date of receipt of the Indemnified Party's notice in
respect of such Third Party Claims. If an Indemnifying Party does not, within
thirty (30) days after the Indemnified Party's notice is given, give notice to
the Indemnified Party of its assumption of the defense of the Third Party
Claims, the Indemnifying Party shall be deemed to have waived its rights to
control the defense thereof. If the Indemnified Party assumes the defense of
any Third Party Claims because of the failure of the Indemnifying Party to do
so in accordance with this Section 9.5, it may do so in such reasonable manner
as it may deem appropriate, and the Indemnifying Party shall pay all reasonable
costs and expenses of such defense. The Indemnifying Party shall have no
liability with respect to any compromise or settlement thereof effected without
its prior written consent (which consent shall not be unreasonably withheld or
delayed), unless the sole relief granted was equitable relief for which no
Indemnifying Party would have liability or to which no Indemnifying Party would
be subject.
(b) Notwithstanding the foregoing, with respect to any Third
Party Claim that the Indemnifying Party is defending, the Indemnified Party
shall have the right to retain separate counsel to represent it and the
Indemnifying Party shall pay the fees and expenses of such separate counsel if
there are conflicts that make it reasonably necessary for separate counsel to
represent the Indemnified Party and the Indemnifying Party.
9.6 Buyer's Knowledge. No investigation by Buyer or on its behalf
heretofore or hereafter conducted shall affect the representations, warranties
or indemnities of Seller under or pursuant to this Agreement.
10. Tax Matters.
10.1 Tax Returns. (a) Seller shall be responsible for the
preparation and timely filing of all "Tax Returns" (as hereinafter defined) of
Drexel relating to all "Pre-Closing Periods" (as hereinafter defined)
("Pre-Closing Tax Returns"). Such Tax Returns shall be prepared on a basis
consistent with those Tax Returns prepared for prior taxable periods, except as
otherwise required by law or regulation. If any of such Tax Returns cannot be
completed by Seller and filed until after the Closing Date, Buyer agrees to
cause the relevant officer(s) of Drexel to sign and file such Tax Returns after
they have been completed by Seller (and before the due date of such Tax
Returns), so long as such Tax Return(s) do not take any position for which
there is no "realistic possibility of being sustained on the merits" (as
defined for purposes of Section 6694 (a) (1) of the Code, or such equivalent
state or local standard) , and Seller agrees that such post-Closing execution
shall not detract from or otherwise affect Seller's liability for any Taxes
shown on such Tax Returns to the extent provided in Section 10.3 (a). "Tax
Return" shall mean any return, report, statement, estimate, declaration,
notice, form or other information or other document (including any related or
supporting information) supplied or required to be supplied to any taxing
authority in connection with the determination, assessment, collection,
administration or imposition of any Taxes. "Pre-Closing Periods" shall, with
respect to Drexel, mean and refer to any taxable period (or portion thereof)
ending at the close of the day of the Closing Date or at any time prior
thereto, and shall include for Federal, state, local or foreign Tax purposes,
any period which covers the deemed transfer of assets pursuant to a "Section
338(g) Election" or a "Section 338(h)(10) Election" (as such terms are
hereinafter defined) other than any period covered by a Straddling Return (as
hereinafter defined). "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, excise, employment,
property, sales, franchise, use and gross receipts, customs, estimated and
withholding taxes imposed by or payable to the United States or any state,
county, local or foreign government or subdivision or agency thereof, and shall
also include any interest, penalties or additions to tax attributable to such
assessments including penalties for the failure to file any Tax Return.
(b) Buyer shall be responsible for the preparation and timely
filing of all Tax Returns of Drexel for all taxable periods (or portions
thereof) other than Pre-Closing Periods of Drexel, including Straddling Returns
(as hereinafter defined) (such periods being hereinafter called "Post-Closing
Periods"). Buyer shall not permit Drexel to make any assertion or make any
election the effect of which would be to exclude Drexel from Seller's
consolidated federal Tax Return (or any consolidated or combined state, county
or local Tax Return of Seller's consolidated group) for any Pre-Closing Period
unless required by law or regulation.
(c) Buyer shall be responsible for the preparation and timely
filing of any Tax Returns of Drexel for taxable periods, if any, that begin
before the Closing Date and end after such Closing Date ("Straddling Returns").
Such Tax Returns shall be prepared on a basis consistent with those Tax Returns
prepared for prior taxable periods, except as otherwise required by law or
regulation, or, in the opinion (reasonably acceptable to Seller and its
counsel) of a reputable law firm (the "Law Firm"), by other applicable legal
authorities, and shall be subject to Seller's review and approval (which shall
not be unreasonably withheld or delayed) prior to being filed by Buyer. In the
event of a dispute with respect to any Straddling Return which is not resolved
prior to the due date of such Return, Buyer shall file the Return in the manner
it determines, provided that if any such dispute is resolved following the due
date of such Return in a manner inconsistent with the manner in which the
Return was filed, Buyer shall file an amended Return reflecting such
resolution. Seller shall provide Buyer with all necessary tax-related
information relating to the Pre-Closing Date Periods (as defined below) so that
Buyer can prepare such Straddling Returns. Seller shall pay to Buyer, as and
when required to do so under Section 10.4, so much of any Tax liability shown
on a Straddling Return as is properly allocable to the period ending on the
Closing Date (a "Pre-Closing Date Period"). The portion of Drexel's taxable
income, gain, loss and any resulting Tax shown on a Straddling Return which is
properly allocated to a PreClosing Date Period shall be determined by (i)
assuming that Drexel's taxable year ends as of the close of business on the
Closing Date, including within such Pre-Closing Date Period any income, gain or
loss resulting from any deemed transfer of assets pursuant to a Section 338(g)
Election, and (ii) except as otherwise provided by law or regulation or, in the
opinion (reasonably acceptable to Seller and its counsel) of the Law Firm, by
other applicable legal authorities, preparing Tax Returns based on the income,
gain and losses as so determined on a basis consistent with the methodology and
elections employed by Drexel in prior years as adjusted to reflect any
subsequent adjustments to such returns.
(d) Except as otherwise required by any then effective law or
regulation, or, in the opinion (reasonably acceptable to Seller and its
counsel) of the Law Firm by other applicable legal authorities, and except as
otherwise provided in Section 10.2, without the prior written consent of
Seller, Buyer shall not change or cause Drexel to change an annual accounting
period, adopt or change any accounting method, or amend any Pre-Closing Tax
Return if any such adoption, change or amendment would have the effect of
increasing the Tax liability of Drexel with respect to any Pre-Closing Period
or any Pre-Closing Date Period.
(e) Except for Tax Returns that cover the deemed transfer of
assets pursuant to a Section 338(g) Election and a Section 338(h)(10) Election
(each as defined in Section 10.2(a)), if, consistent with the provisions of
this Section 10, Seller desires to amend a Pre-Closing Tax Return, Buyer shall
cooperate in such matter to the extent reasonable. Seller shall indemnify and
hold Drexel and Buyer harmless against any increase in any Taxes, on an
after-tax basis, with respect to Post-Closing Periods resulting from any such
amendment.
(f) Seller shall retain all books, records, returns, schedules,
documents and all papers or relevant items of information relating to the
Federal, state, foreign or other Tax liability of Drexel for any Pre-Closing
Period, until the expiration of all statutes of limitations for claims to which
such documents may pertain. Thereafter, Seller shall have the right to dispose
of or destroy any of the items referred to in the preceding sentence, provided
that, as to any items identified by Buyer, Buyer shall have the right, at its
sole cost and expense, promptly to remove or obtain copies (or, if necessary,
originals) of such items and take whatever action Buyer may desire with respect
to such items. Notwithstanding the foregoing, Seller shall reasonably
cooperate with Buyer and furnish copies of any such items to Buyer, at Buyer's
sole cost and expense, upon written request.
10.2 Section 338 Elections and Forms. (a) With respect to Buyer's
acquisition of the Shares hereunder, Buyer may make an election under Section
338(g) of the Code, and the Treasury Regulations promulgated thereunder and
similar elections under applicable state, local and foreign laws (such election
being hereinafter called a "Section 338(g) Election"). With respect to
Seller's sale of the Shares hereunder, Seller agrees that if requested by
Buyer, Seller, together with Buyer, shall jointly make an election under
Section 338(h)(10) of the Code and the Treasury Regulations promulgated
thereunder and similar elections under applicable state, local and foreign laws
(such election being hereinafter called "Section 338(h)(10) Election"). Buyer
and Seller agree to report the transfers under this Agreement consistent with
any Section 338(g) Election and Section 338(h)(10) Election so made, and shall
take no position contrary thereto unless required by law to do so. For
purposes of this Agreement the terms Section 338(g) Election and Section
338(h)(10) Election shall include any deemed elections pursuant to Code
Sections 338(e) and 338(f).
(b) If Buyer makes a Section 338(h)(10) Election then (i) Buyer
shall be responsible (at its sole cost and expense) for the preparation and
timely filing of all statements and forms required under Section 338 of the
Code ("Section 338 Forms") in accordance with applicable tax laws and the terms
of this Agreement, (ii) Seller shall execute and deliver for filing a Form 8023
prepared by Buyer and execute and file, with its Federal Pre-Closing Tax Return
for the respective taxable year, a statement of election consistent with the
foregoing that is prepared and timely provided to Seller by Buyer (and Seller
shall file any similar statements required for state or other returns), and
(iii) Seller shall reasonably cooperate with Buyer in the preparation of Form
8023 or any appropriate state form. Seller shall pay all Taxes resulting from
any Section 338(g) Election or Section 338(h)(10) Election (except for Taxes
for which Buyer is liable pursuant to Section 10.3(b)) which payment shall be
made in accordance with Section 10.4.
(c) If Buyer makes a Section 338(h)(10) Election, the Purchase
Price shall be allocated in accordance with a schedule delivered by Buyer (the
"Section 338 Schedule"). The Section 338 Schedule shall be prepared by Buyer
and delivered to Seller within 180 days after the Closing Date. The allocation
of the Purchase Price in the Section 338 Schedule shall be as reasonably
determined by Buyer, shall be in accordance with the Treasury Regulations
prescribed under Code Section 338(b)(5) and shall be subject to Seller's review
and approval (which shall not be unreasonably withheld or delayed). For
purposes of this Section 10.2(c), Seller's withholding of approval shall not be
considered unreasonable if the allocation of the Purchase Price in the
Section 338 Schedule would result in a net capital loss being realized by
Seller as a result of the transactions contemplated by this Agreement (and, as
a consequence, Seller would suffer a Tax cost). If Seller reasonably withholds
its approval with respect to an allocation of the Purchase Price, the parties
shall attempt in good faith to resolve such dispute. If the parties are unable
to resolve such dispute, the parties shall appoint the Arbiter to resolve the
dispute. The Arbiter's determination shall be conclusive and binding on the
parties. The Purchase Price shall be adjusted for liabilities or any amounts
considered under applicable tax laws to be additional purchase price received
by Seller or a reduction thereof. All allocations contained in the Section 338
Schedule, as adjusted (as discussed above), shall be adhered to by the parties
in preparing the Section 338 Forms and all relevant Tax Returns, information
reports and the documents and forms; provided, however, that in determining the
adjusted basis of Buyer with respect to Drexel's assets, Buyer may increase the
amount of the Purchase Price for any additional costs and expenses as may be
required by applicable tax laws.
10.3 Liability for Taxes. Seller and Buyer hereby covenant and agree
that, as between Seller and Buyer, and except as otherwise provided in Section
10.4:
(a) Except as otherwise provided in Section 10.3(b), Seller
shall be liable for all Taxes (including, without limitation, all Taxes
attributable to any deferred intercompany amounts, excess loss accounts or
similar items triggered as a result of the transactions contemplated hereby and
any amounts owing pursuant to any tax sharing or similar agreements) payable by
or with respect to Drexel or Seller (i) with respect to Pre-Closing Periods,
(ii) with respect to Pre-Closing Date Periods as determined in accordance with
Section 10.1(c), and (iii) resulting from a Section 338(g) Election or a
Section 338(h)(10) Election (including, without limitation, all Pennsylvania
State Taxes payable as a result of any such Election).
(b) If (i) Drexel is liable for any Federal, state, local or
foreign income taxes resulting from a Section 338(g) Election, and (ii) Buyer
has failed to make any available Section 338(h)(10) Election with respect to
Drexel, then (iii) Buyer shall be liable for such resulting Federal, state,
local or foreign income taxes but only to the extent of any such income taxes
which would not have been payable by Drexel had Buyer made such available
Section 338(h)(10) Election.
(c) Buyer shall be liable for and shall pay, or shall cause
Drexel to pay, and Seller shall not be required to pay or reimburse Buyer or
Drexel for, all Taxes payable by Drexel for all Post-Closing Periods, other
than Taxes for which Seller is responsible pursuant to Sections 10.1(e) and
10.3(a) above.
10.4 Certain Tax Payment Responsibility. Notwithstanding anything in
this Section 10 to the contrary, if Seller is liable under Section 10.3(a) for
any Taxes that are required to be reported on a Tax Return prepared by Seller,
Seller shall be responsible for paying such Taxes to the relevant taxing
authorities on or before the date that such Taxes are due. The amount of the
Revised Section 338 Taxes retained by Buyer and payable to Pennsylvania shall
be credited, without duplication, against the amounts owed by Seller. If Buyer
is liable under Section 10.3(b) or Section 10.3(c) for any Taxes that are
required to be reported on a Tax Return prepared by Buyer, Buyer shall be
responsible for paying such Taxes to the relevant taxing authorities on or
before the date such Taxes are due. If one party (the "Payor") is liable for a
Tax pursuant to Section 10.3 and such tax is required to be reported on a Tax
Return to be filed by the other party (the "Preparer") under Section 10.1,
including any Tax imposed as a result of any subsequent adjustment, the Payor
shall pay such Tax to the Preparer on or before the later of (i) two business
days before the date the Preparer intends to pay the Tax, provided the
Preparer's request for payment is in writing, is signed by an officer of the
Preparer and is accompanied by a copy of the applicable Tax Return and, if
necessary, a statement reflecting the calculation of the amount of the Tax for
which the Payor is liable, and, where applicable, (ii) the date on which the
review and approval procedure described in Paragraph 10.1(c) has been completed
and (iii) the due date of such payment. The Preparer shall remit, or cause to
be remitted, any amount paid to the Preparer by the Payor to the appropriate
taxing authority within five days after the Preparer receives such payment (but
in no event after the due date), and, if the Preparer does not so remit the
funds, such Tax shall become a liability of the Preparer for purposes of this
Agreement, and the Payor shall have no further liability hereunder with respect
to such Tax.
10.5 Tax Contests. Each of the parties hereto shall promptly notify
the other in writing upon receipt by either of them or any of their respective
affiliates of notice of any pending or threatened Income Tax (as hereinafter
defined) audits or assessments which may affect the Income Tax liabilities of
Drexel and for which such other party would be liable under this Paragraph 10.
Seller shall have the right to represent Drexel's interests in any Income Tax
matter, including any audit or administrative or judicial proceeding or the
filing of any amended return, involving an Income Tax liability of Drexel for
any Pre-Closing Period and for which Seller would be liable under this Section
10 (a "Tax Matter") and to employ counsel of its choice at its expense. Buyer
agrees that it will cooperate fully with Seller and its counsel in the defense
or compromise of any such Tax Matter. With respect to (i) any Tax Matter that
could affect the amount or timing of any Income Tax for which Buyer or any of
its affiliates is or may be responsible, Seller shall consult with Buyer with
respect to the handling and resolution of such Tax Matter, and shall not settle
or take any other action with respect to such Tax Matter without Buyer's
consent, which shall not be unreasonably withheld, and (ii) any Income Tax
matter (including any audit or administrative or judicial proceeding or filing
of any amended return) involving an Income Tax liability of Drexel for any
Post-Closing Period and for which Buyer would be liable under this Section 10,
that could affect the amount or timing of any Income Tax for any Pre-Closing or
Pre-Closing Date Period for which Seller or any of its affiliates is
responsible, Buyer shall consult with Seller with respect to the handling and
resolution of such Income Tax matter, and shall not settle or take any other
action with respect to such Income Tax matter without Seller's consent, which
shall not be unreasonably withheld. "Income Tax" shall mean any Federal,
State, local or foreign income, franchise or similar tax and in each instance
any interest, penalties or additions to tax attributable to such tax.
10.6 Refunds, Tax Credits. To the extent that Buyer or Drexel
receives a refund of, or an offset with respect to, Taxes or a Tax credit
arising from or with respect to the Pre-Closing Periods or Pre-Closing Date
Periods, Buyer shall, and shall cause Drexel to, pay to or reimburse Seller for
the amount of any such Tax refund or credit received net of any Taxes payable
by Buyer or Drexel on such Tax refund or credit. To the extent that Seller
receives a refund of, or an offset with respect to, Taxes or a Tax credit
arising from or with respect to any of the Post-Closing Periods (excluding
Pre-Closing Date Periods), Seller shall reimburse Buyer for the amount of any
such Tax refund or credit received net of any Taxes payable by Seller on such
Tax refund or credit.
10.7 Tax Sharing Agreements. As of the Closing Date, all Tax sharing
agreements or arrangements, whether or not written, to which Drexel is a party
shall be terminated with respect to Drexel and Drexel shall have no further
obligations thereunder. No payments shall be made by Drexel (whether by cash
payment, accounting entry or otherwise) under any such Tax sharing agreements
or arrangements during the period beginning on the date of the signing of this
Agreement and ending on the Closing Date other than payments attributable to
the operations of Drexel in the ordinary course for that period, so that, in
particular, no payments may be made with respect to any liability for deferred
intercompany amounts, excess loss accounts or similar items triggered as a
result of the transactions contemplated hereby.
11. Miscellaneous.
11.1 Finders. Buyer, Terex and Seller respectively represent and
warrant that they have not employed or utilized the services of any broker or
finder in connection with this Agreement or the transactions contemplated by
it, except that Terex and Seller have utilized the services of Warburg and
Terex and Seller shall be liable for any compensation payable to Warburg in
connection with the transactions contemplated by this Agreement. Terex shall
indemnify and hold harmless the Buyer Indemnified Parties from and against any
claim by Warburg without regard to the amount of any such claim.
11.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between the
parties with respect to those matters (except as otherwise provided in Section
6.1), and cannot be changed or terminated orally.
11.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York without giving
effect to conflicts of law principles thereof.
11.4 Schedules; Tables of Contents and Headings. Any matter
disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed on all other Schedules to this Agreement to the extent that it should
have been disclosed on such other Schedule. The table of contents and section
headings of this Agreement and titles given to Schedules to this Agreement are
for reference purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
11.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: General Counsel
With a copy to:
Robinson Silverman Pearce
Aronsohn & Berman
1290 Avenue of the Americas
New York, New York 10104
Attn: Stuart A. Gordon, Esquire
If to Buyer, to:
DAC Acquisition Corp.
c/o Drexel Industries, Inc.
P.O. Box 248
Horsham, Pennsylvania 19044
With a copy to:
General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut 06927
Attn: Corporate Finance Group - Equity
With a copy to:
Fried, Frank, Harris, Shriver and Jacobson
One New York Plaza
New York, New York 10004
Attn: Gary Cooperstein, Esq.
11.6 Separability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect.
11.7 Waiver. Any party may waive compliance by another with any of
the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in writing.
11.8 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third-party beneficiary rights in any person or entity, including,
without limitation, Employees, not a party to this Agreement. No assignment of
this Agreement or of any rights or obligation hereunder may be made by either
party (by operation of law or otherwise) without the prior written consent of
the other and any attempted assignment without the required consent shall be
void; provided, however, that no such consent shall be required of Buyer,
Terex or Seller to assign part or all of its rights under this Agreement to one
or more of its subsidiaries or affiliates, but no such assignment by Buyer,
Terex or Seller of its rights or obligations hereunder shall relieve Buyer,
Terex or Seller of any of its obligations under this Agreement.
11.9 Best Knowledge. As used in this Agreement "to the best of
Seller's knowledge" shall mean either actual knowledge possessed by an officer
of Seller or Drexel or knowledge which should reasonably have been possessed by
an executive officer of Seller or Drexel, and "to the best of Buyer's
knowledge" shall mean actual knowledge possessed by an executive officer of
Buyer or knowledge which should reasonably have been possessed by an officer of
Buyer.
11.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same Agreement.
11.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
11.12 Set-Off. In connection with the additional payment
obligations of Buyer in connection with this Agreement, in addition to any
rights and remedies provided by law, Buyer shall have the right, without prior
notice to Terex or Seller, any such notice being expressly waived by Terex and
Seller to the extent permitted by law, to set-off and appropriate and apply
against such amount any and all amounts owed by Terex and/or Seller to Buyer,
whether matured or unmatured, in connection with this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
CMH ACQUISITION CORP.
By:________________________________
DAC ACQUISITION CORP.
By:________________________________
Terex Corporation hereby agrees to be bound by the provisions of Articles 6, 9
and 10 hereof.
TEREX CORPORATION
By:_______________________________
Clark Material Handling Company hereby agrees to be bound by the provisions of
Sections 6.12, 6.13, 6.14 and 6.15 hereof.
CLARK MATERIAL HANDLING COMPANY
By:_______________________________