EXHIBIT 99
PURCHASE AGREEMENT
BY AND BETWEEN
MARK IV INDUSTRIES, INC.
AND
ARVIN INDUSTRIES, INC.
Dated February 8, 1999
TABLE OF CONTENTS
Article 1 Sale of the Automotive Filter Business . . . . . . . 4
1.01 Pre-Closing Transfers of Retained Businesses . . . . . . 4
1.02 Transfer of Assets to PPC or for the
benefit of Buyer at Closing . . . . . . . . . . . . . . 5
1.03 Sale of the PPC Shares . . . . . . . . . . . . . . . . . 6
Article 2 Purchase Price . . . . . . . . . . . . . . . . . . . 6
2.01 Purchase Price . . . . . . . . . . . . . . . . . . . . . 6
2.02 Payment of Purchase Price . . . . . . . . . . . . . . . 7
2.03 Definitions Relating to Purchase Price Adjustments . . . 7
2.04 Calculation of Estimated Purchase Price . . . . . . . 12
2.05 Pre-Closing Deliveries of Financial Information . . . 13
2.06 Post-Closing Adjustment . . . . . . . . . . . . . . . 14
2.07 Calculation of Closing Net Assets . . . . . . . . . . 15
Article 3 Closing . . . . . . . . . . . . . . . . . . . . . . 19
3.01 Time and Place of Closing . . . . . . . . . . . . . . 19
3.02 Deliveries by Seller . . . . . . . . . . . . . . . . . 20
3.03 Deliveries by Buyer . . . . . . . . . . . . . . . . . 22
Article 4 Representations and Warranties of Seller . . . . . 22
4.01 Organization of Seller . . . . . . . . . . . . . . . . 22
4.02 Organization of the Automotive Filter Companies . . . 23
4.03 Authorization by Seller . . . . . . . . . . . . . . . 23
4.04 Ownership of Automotive Filter
Company Equity Interests . . . . . . . . . . . . . . . 24
4.05 Options or Other Rights . . . . . . . . . . . . . . . 25
4.06 Certificates of Incorporation
and By-Laws; Partnership Agreement . . . . . . . . . . 26
4.07 Binding Agreements . . . . . . . . . . . . . . . . . . 27
4.08 No Violation . . . . . . . . . . . . . . . . . . . . . 28
4.09 Financial Statements . . . . . . . . . . . . . . . . . 29
4.10 Absence of Certain Changes . . . . . . . . . . . . . . 30
4.11 Title to Personal Property; Encumbrances; Etc. . . . . 33
4.12 Real Property . . . . . . . . . . . . . . . . . . . . 33
4.13 Leases . . . . . . . . . . . . . . . . . . . . . . . . 36
4.14 Patents, Trademarks, Trade Names, Etc. . . . . . . . . 37
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . 39
4.16 Banks and Brokers . . . . . . . . . . . . . . . . . . 39
4.17 Employee Benefit Plans . . . . . . . . . . . . . . . . 39
4.18 Consents and Approvals . . . . . . . . . . . . . . . . 42
4.19 Environmental Protection . . . . . . . . . . . . . . . 43
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . 47
4.21 Contracts and Commitments . . . . . . . . . . . . . . 47
4.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . 50
4.23 Labor Relations; Employees . . . . . . . . . . . . . . 52
4.24 Customers and Suppliers . . . . . . . . . . . . . . . 53
4.25 Compliance with Law . . . . . . . . . . . . . . . . . 54
4.26 Brokers and Finders . . . . . . . . . . . . . . . . . 55
4.27 Product Warranties . . . . . . . . . . . . . . . . . . 55
4.28 Potential Conflicts of Interest . . . . . . . . . . . 56
4.29 Accounts Receivable and Accounts Payable . . . . . . . 56
4.30 Unimpaired Operation . . . . . . . . . . . . . . . . . 57
4.31 Absence of Questionable Payments . . . . . . . . . . . 57
4.32 Representations and Warranties
on the Closing Date; Disclosure . . . . . . . . . . . 58
Article 5 Representations and Warranties of Buyer . . . . . . 58
5.01 Organization . . . . . . . . . . . . . . . . . . . . . 58
5.02 Authorization by Buyer . . . . . . . . . . . . . . . . 58
5.03 Binding Agreements . . . . . . . . . . . . . . . . . . 59
5.04 No Violation . . . . . . . . . . . . . . . . . . . . . 59
5.05 Litigation . . . . . . . . . . . . . . . . . . . . . . 60
5.06 Consents and Approvals . . . . . . . . . . . . . . . . 60
5.07 Purchase for Investment . . . . . . . . . . . . . . . 61
5.08 Brokers and Finders . . . . . . . . . . . . . . . . . 61
Article 6 Covenants of Seller . . . . . . . . . . . . . . . . 61
6.01 Access Pending the Closing Date . . . . . . . . . . . 61
6.02 Conduct of Business Prior to the Closing . . . . . . . 62
6.03 Termination of Benefit Accruals
Under Defined Benefit Plans . . . . . . . . . . . . . 62
6.04 No Solicitation . . . . . . . . . . . . . . . . . . . 63
6.05 Non-Competition . . . . . . . . . . . . . . . . . . . 64
Article 7 Covenants of Buyer . . . . . . . . . . . . . . . . 66
7.01 Obligation to Continue Certain Employee Benefits . . . 67
7.02 Collective Bargaining Agreements . . . . . . . . . . . 67
7.03 Insurance Coverage . . . . . . . . . . . . . . . . . . 68
7.04 Limitation on Representations and Warranties . . . . . 68
Article 8 Additional Covenants of Buyer and Seller . . . . . 69
8.01 Consents and Conditions . . . . . . . . . . . . . . . 69
8.02 Filings . . . . . . . . . . . . . . . . . . . . . . . 69
8.03 Access After the Closing Date . . . . . . . . . . . . 70
8.04 Record Retention . . . . . . . . . . . . . . . . . . . 71
8.05 Tax Returns and Audits . . . . . . . . . . . . . . . . 71
8.06 Tax Refunds . . . . . . . . . . . . . . . . . . . . . 78
8.07 Confidentiality . . . . . . . . . . . . . . . . . . . 79
8.08 Cooperation Regarding Defined
Benefit Plan Administration . . . . . . . . . . . . . 79
8.09 Transfer of 401(k) Plan Assets . . . . . . . . . . . . 80
8.10 Public Announcements . . . . . . . . . . . . . . . . . 83
8.11 Employee Bonuses Due on Sale . . . . . . . . . . . . . 83
8.12 Post-Closing Cooperation . . . . . . . . . . . . . . . 84
8.13 Termination of Seller Arrangements . . . . . . . . . . 84
Article 9 Conditions Precedent to the Obligation of Seller . 85
9.01 Representations and Covenants . . . . . . . . . . . . . 85
9.02 Government Consents; Filings . . . . . . . . . . . . . 85
9.03 Substitute Guarantees . . . . . . . . . . . . . . . . 86
9.04 Litigation . . . . . . . . . . . . . . . . . . . . . . 86
9.05 Certificate of Buyer . . . . . . . . . . . . . . . . . 86
Article 10 Conditions Precedent to the Obligation of Buyer . 87
10.01 Representations and Covenants . . . . . . . . . . . . 87
10.02 Government Consents; Filings . . . . . . . . . . . . . 87
10.03 Litigation . . . . . . . . . . . . . . . . . . . . . . 88
10.04 Certificate as to Authorization . . . . . . . . . . . 88
Article 11 Survival of Representations; Indemnifications . . 89
11.01 Survival of Representations . . . . . . . . . . . . . 89
11.02 Statements as Representations . . . . . . . . . . . . 89
11.03 Indemnification by Seller . . . . . . . . . . . . . . 89
11.04 Indemnification by Buyer . . . . . . . . . . . . . . . 93
11.05 Conditions of Indemnification . . . . . . . . . . . . 95
11.06 Termination of Indemnification Obligations . . . . . . 96
11.07 Litigation Cooperation . . . . . . . . . . . . . . . . 97
11.08 Remedies Cumulative . . . . . . . . . . . . . . . . . 98
Article 12 Miscellaneous Provisions . . . . . . . . . . . . . 98
12.01 Termination . . . . . . . . . . . . . . . . . . . . . 98
12.02 Certain Terms . . . . . . . . . . . . . . . . . . . . 98
12.03 Amendment and Modification . . . . . . . . . . . . . . 99
12.04 Waiver of Compliance . . . . . . . . . . . . . . . . . 99
12.05 Notices . . . . . . . . . . . . . . . . . . . . . . . 99
12.06 Assignment . . . . . . . . . . . . . . . . . . . . . . 101
12.07 Governing Law and Jurisdiction . . . . . . . . . . . . 101
12.08 Counterparts . . . . . . . . . . . . . . . . . . . . . 101
12.09 Headings . . . . . . . . . . . . . . . . . . . . . . . 101
12.10 Entire Agreement . . . . . . . . . . . . . . . . . . . 102
12.11 Third Parties . . . . . . . . . . . . . . . . . . . . 102
12.12 Severability . . . . . . . . . . . . . . . . . . . . . 103
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made on this
8th day of February, 1999, by and among Mark IV Industries, Inc., a
Delaware corporation with offices at One Towne Centre, 501 John James
Audubon Parkway, Amherst, New York, 14226 (the "Seller"); and Arvin
Industries, Inc., an Indiana corporation with offices at One Noblitt
Plaza, Columbus, Indiana 47201 (the "Buyer").
RECITALS:
Seller is the owner of all the issued and outstanding common
stock of Purolator Products Company, a Delaware corporation with
offices at One Towne Centre, 501 John James Audubon Parkway, Amherst,
New York ("PPC").
PPC, together with its wholly owned subsidiaries, Purolator
Products NA, Inc., a Delaware corporation and Facet Advanced
Technology Company, a Delaware corporation, and M Filter OY ("M
Filter"), an indirect wholly owned subsidiary of Seller which is
organized under the laws of Finland, are collectively engaged in the
design, manufacture, marketing and distribution of a complete line of
automotive oil, air and fuel filters and related parts for use
primarily in automobiles and light commercial vehicles and, to a
lesser extent, in heavy duty trucks and off-road equipment
(hereinafter the "Automotive Filter Business").
In addition to PPC, Purolator Products NA, Inc., Facet Advanced
Technology Company and M Filter, certain direct and indirect wholly-
owned foreign subsidiaries of the Seller are, as an additional
activity which is not the primary businesses engaged in by such direct
and indirect wholly-owned subsidiaries, engaged in the distribution
(but not the manufacture) of automotive oil, air and fuel filters and,
as a consequence, such direct and indirect wholly-owned foreign
subsidiaries (hereinafter the "Foreign Distributors") own certain
inventory, other assets and related liabilities which are attributable
to the Automotive Filter Business. Schedule A attached hereto
contains a list of the Foreign Distributors together with an
approximation of the amount of inventory, other assets and related
liabilities, if any, owned by such Foreign Distributors which are
attributable to the Automotive Filter Business as of November 30, 1998
(respectively, the "Foreign Distributors' Assets" and the "Foreign
Distributors' Liabilities").
In addition to the Automotive Filter Business, PPC is also
engaged in certain other businesses, either directly through the
ownership of manufacturing facilities and operations which are
separately identified as divisions of PPC or indirectly through the
ownership of direct and indirect subsidiaries which are engaged in
such other businesses (all such other businesses being hereinafter
referred to as the "Retained Businesses"). Schedule B attached hereto
contains a list of the divisions and subsidiaries of PPC which
constitute the Retained Businesses.
The Seller desires to sell the Automotive Filter Business to the
Buyer and the Buyer desires to purchase the Automotive Filter Business
from the Seller upon the terms and conditions set forth herein.
Accordingly, prior to the closing of the sale of the Automotive Filter
Business to Buyer, PPC will transfer to a wholly owned subsidiary of
PPC (such subsidiary being hereinafter referred to as "Holdco"), all
of the Retained Businesses and certain other rights and properties
(the "Shared Properties") which are currently owned by PPC and used by
both the Automotive Filter Business and certain of the Retained
Businesses such that, following such transfers, all of the assets used
or held for use primarily in the Automotive Filter Business (other
than the Shared Properties and the Foreign Distributors' Assets) will
be legally owned by PPC and its wholly owned subsidiaries, Purolator
Products NA, Inc., Facet Advanced Technology Company and M Filter
(each of PPC (but only to the extent of the business and operations of
PPC which are primarily related to the Automotive Filter Business) and
such corporations being hereinafter referred to individually as an
"Automotive Filter Company" and collectively as the "Automotive Filter
Companies"). In addition, effective at the closing of the sale of the
Automotive Filter Business to Buyer, the Automotive Filter Companies
shall be granted certain rights to use of the Shared Properties by
Seller and its affiliates. Schedule C attached hereto contains a list
of the Shared Properties.
In addition, prior to the closing of the transactions
contemplated by this Agreement, PPC will transfer (at Seller's
expense) all the issued and outstanding stock of Holdco to Seller,
without recourse, representation or warranty.
CONSIDERATION:
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements hereinafter set forth, the Seller and the
Buyer hereby agree as follows:
ARTICLE 1 SALE OF THE AUTOMOTIVE FILTER BUSINESS
1.01 Pre-Closing Transfers of Retained Businesses. Buyer
acknowledges and agrees that Seller does not intend to sell to Buyer
and Buyer does not intend to purchase, any of the stock, interests,
assets or businesses which comprise the Retained Businesses.
Furthermore, Buyer acknowledges that Seller does not intend to sell to
Buyer and Buyer does not intend to purchase any of the Shared
Properties; provided that, Buyer will be provided certain rights to
use the Shared Properties as contemplated by certain of the agreements
referred to in Section 3.02 hereof. Finally, Buyer acknowledges that
it is intended by Seller that all of the rights, properties and assets
of the Automotive Filter Business (other than ownership of the Shared
Properties and the Foreign Distributors' Assets) will be owned legally
and beneficially by PPC or another Automotive Filter Company at the
closing of the transactions contemplated by this Agreement.
Accordingly, Buyer hereby acknowledges and agrees that prior to the
closing of the transactions contemplated by this Agreement, Seller
will, at its expense, take any and all action necessary to cause the
Retained Businesses to be transferred by PPC to Holdco without
recourse, representation or warranty and to cause the Shared
Properties to be transferred to Holdco by the Automotive Filter
Companies without recourse, representation or warranty.
1.02 Transfer of Assets to PPC or for the benefit of Buyer at
Closing. Seller agrees at Closing to:
(a) cause all the issued and outstanding capital stock of M
Filter to be transferred to PPC, free and clear of any liens, claims
or encumbrances of any nature;
(b) transfer to PPC all right, title and interest in a
certain lease for warehouse premises in Vancouver, Canada presently
used in the Automotive Filter Business (hereinafter the "Vancouver
Warehouse Lease");
(c) cause the Foreign Distributors' Assets to be sold at
Closing to the Buyer or any of its foreign affiliates as Buyer may
direct to Seller prior to Closing, free and clear of any liens, claims
or encumbrances of any nature except for the Foreign Distributors'
Liabilities which shall be assumed by Buyer or its affiliates. The
purchase price for the Foreign Distributors' Assets to be paid at
Closing shall be the book value thereof as of November 30, 1998, less
the amount of the Foreign Distributors' Liabilities as shown in
Schedule A (the "Foreign Distributors' Assets Purchase Price") and
shall be payable in U.S. dollars for the account of Seller by wire
transfer of immediately available funds to the parties listed in
Schedule A in the respective amounts set forth therein.
Notwithstanding anything contained in this Agreement to the contrary,
any changes in the amount of the Foreign Distributors' Assets and
Foreign Distributors' Liabilities between November 30, 1998 and the
Closing Date shall be included in the calculation of Net Assets as
defined in Section 2.03(e) of this Agreement for purposes of making
the purchase price adjustments referred to in Article 2 of this
Agreement, and;
(d) transfer to PPC all right, title and interest, in and
to all assets of Seller or its Affiliates used or held for use in the
Automotive Filter Business (other than the Shared Properties or any
other assets referred to in the Ancillary Agreement).
1.03 Sale of the PPC Shares. Subject to the terms and conditions
of this Agreement, at the Closing (as hereinafter defined in Section
3.01 hereof) Seller will sell, transfer, convey and assign to Buyer
and Buyer will purchase, acquire and accept from Seller, all the
Seller's right, title and interest in and to one thousand five hundred
(1,500) shares of common stock, without any par value per share, of
PPC (the "PPC Shares").
ARTICLE 2 PURCHASE PRICE
2.01 Purchase Price. The aggregate purchase price to be paid by
the Buyer to the Seller for the PPC Shares shall be equal to Two
Hundred Seventy Six Million Dollars ($276,000,000), less any
indebtedness of M Filter, determined as of the Closing Date, for money
borrowed from any financial institution and the Foreign Distributors'
Assets Purchase Price (the "Initial Purchase Price"), adjusted as
described in this ARTICLE 2. For purposes of determining the amount
which is payable by the Buyer to the Seller at the Closing, the
Initial Purchase Price shall be adjusted in the manner provided for in
Section 2.04 hereof (the Initial Purchase Price, as adjusted pursuant
to Section 2.04 hereof, being hereinafter referred to as the
"Estimated Purchase Price"). The Estimated Purchase Price shall be
adjusted in the manner provided by Section 2.06 hereof for purposes of
determining the amount, if any, which is payable by Buyer to Seller or
by Seller to Buyer after the determination of the amount of the
Closing Net Assets (as hereinafter defined) is made (the Estimated
Purchase Price, as adjusted pursuant to Section 2.06 hereof, being
hereinafter referred to as the "Final Purchase Price").
2.02 Payment of Purchase Price. At the Closing, the Buyer shall
pay the Estimated Purchase Price (determined by adjusting the Initial
Purchase Price in the manner provided for by Section 2.04 hereof) to
the Seller by wire transfer of immediately available funds to an
account specified by Seller in writing. Any adjustments to the
Estimated Purchase Price provided for by Section 2.06 to reflect the
Final Purchase Price shall be paid by the Buyer to the Seller or by
the Seller to the Buyer (as the case may be) as provided for in
Section 2.06 hereof.
2.03 Definitions Relating to Purchase Price Adjustments. For
purposes of calculating the adjustments to the Initial Purchase Price
and the adjustments to the Estimated Purchase Price provided for by
this ARTICLE 2 and for purposes of this Agreement, the following terms
shall have the following meanings:
(a) Closing Balance Sheet means a statement, prepared by
Buyer in accordance with the provisions of Section 2.07 hereof,
delivered to Seller in accordance with the provisions of 2.07 hereof
and containing a written statement, in balance sheet format, of the
Closing Net Assets;
(b) Closing Net Assets means, subject to Section 2.07
hereof, the "Net Assets" of the Automotive Filter Companies
determined, as of the Closing Date, according to the principles set
forth in Section 2.03(e) hereof;
(c) Estimated Balance Sheet means an unaudited statement
prepared by Seller and delivered to Buyer at least ten (10) days prior
to the Closing Date, and containing a written statement, in balance
sheet format, of the Estimated Net Assets;
(d) Estimated Net Assets means the "Net Assets" of the
Automotive Filter Companies determined, according to the principles
set forth in Section 2.03(e) hereof, as of December 31, 1998 and set
forth in the Estimated Balance Sheet;
(e) Net Assets means the aggregate net assets of the
Automotive Filter Companies calculated, as of a specified date, in a
manner which is consistent with the manner in which the aggregate net
assets of the Automotive Filter Companies, determined as of November
30, 1998 was calculated; provided, however, that notwithstanding
anything to the contrary contained herein, for purposes of determining
the amount of the Net Assets as of any specified date, the following
valuation criteria shall be utilized:
(i) no liabilities shall be included to reflect any
currently payable Income Taxes (as defined in Section 4.22(b) hereof);
provided however that, in the event that the tax year of any of the
Automotive Filter Companies relating to any foreign, state or local
Income Taxes payable by any such Automotive Filter Companies does not
end on the Closing Date, a liability shall be included to reflect the
amount of any such foreign, state or local Income Taxes which would be
payable by the Automotive Filter Companies for the portion of their
then current Income Tax year which ends on the Closing Date, which
liability shall be computed on an interim, closing-of-the books basis,
treating the Closing Date as the end of the tax year (except that
exemptions, allowances and deductions otherwise calculated on an
annual basis (such as deductions for real estate taxes, depreciation
and depletion) shall be apportioned on a per diem basis) and in a
manner consistent with Seller's past practices;
(ii) a net liability in an amount equal to Twenty Four
Million Seven Hundred Thousand Dollars ($24,700,000) shall be used to
provide for all net deferred tax liabilities;
(iii) no liabilities shall be included to reflect
accrued defined benefit pension plan expenses;
(iv) a liability in an amount equal to Three Million
Six Hundred Thousand Dollars ($3,600,000) shall be used to reflect the
accrued liability for retiree medical and retiree life insurance
benefits payable to current and former employees of the Automotive
Filter Business;
(v) a reserve for excess and obsolete inventory shall
be included to provide for a reduction of the carrying value of such
inventory to its estimated net realizable value, determined in a
manner which is consistent with the procedures described in Schedule
2.03(e)(v);
(vi) a reserve in an amount equal to One Million Three
Hundred Thousand Dollars ($1,300,000) shall be included to reflect
severance and other costs related to the repositioning charge of Six
Million One Hundred Thousand Dollars ($6,100,000) reflected in the
unaudited balance sheet of the Automotive Filter Companies which is
dated as of November 30, 1998 (the "November 30 Balance Sheet"), a
copy of which is attached hereto as Schedule 2.03(e)(vi);
(vii) an amount equal to One Hundred Seventy Six
Million Six Hundred Thousand Dollars ($176,600,000) to reflect the
goodwill of the Automotive Filter Business;
(viii) no liabilities shall be included with respect
to any indebtedness of any of the Automotive Filter Companies for
money borrowed from any financial institution;
(ix) a liability in an amount equal to the aggregate
incentive plan bonuses referred to in Section 8.11(b) shall be
included; and
(x) No liabilities shall be included with respect to
the following matters:
1. the Lemelson claim set forth on Schedule 4.15,
Item 11;
2. the Subaru claim set forth on Schedule 4.15, Item
10; and
3. the Fayetteville on-site environmental response
actions claim set forth as Item 2 on Schedule
4.19(c);
except to the extent of the amount of the reserves for the above
referenced matters which are contained in the November 30 Balance
Sheet.
(f) Net Cash Balance means the difference between the
aggregate amount of loans, advances or other disbursements of cash or
cash equivalents made by Seller to the Automotive Filter Companies
between December 31, 1998 and the Closing Date and the aggregate
amount of the repayments, withdrawals, dividends, loans advances or
other disbursements of cash made by the Automotive Filter Companies to
Seller between December 31, 1998 and the Closing Date.
Notwithstanding the foregoing, the transfers of any real property,
personal property or other tangible or intangible assets contemplated
by Section 1.01 shall not be deemed or construed to have any effect on
the calculation of the Net Cash Balance whatsoever, except to the
extent that such transfers result in an increase or decrease in the
cash of the Automotive Filter Companies. If the aggregate amount of
loans, advances or other disbursements of cash made by Seller to the
Automotive Filter Companies between December 31, 1998 and the Closing
Date: (i) exceeds the aggregate amount of repayments, withdrawals,
dividends, loans, advances or other disbursements of cash made by the
Automotive Filter Companies to Seller during such period, the Net Cash
Balance shall be a positive number and, as provided in Section 2.04
below, shall operate to increase the amount of cash otherwise payable
to Seller at the Closing; or (ii) is less than the aggregate amount of
repayments, withdrawals, dividends, loans, advances or other
disbursements of cash made by the Automotive Filter Companies to
Seller during such period, the Net Cash Balance shall be a negative
number and, as provided in Section 2.04 below, shall operate to
decrease the amount of cash otherwise payable to Seller at the
Closing; and
(g) Preliminary Net Assets means an amount equal to the
$351.8 Million Net Assets of the Automotive Filter Companies which are
reflected in the November 30 Balance Sheet.
2.04 Calculation of Estimated Purchase Price. The Estimated
Purchase Price shall be calculated as of the Closing Date by adjusting
the amount of the Initial Purchase Price as follows:
(a) if the Estimated Net Assets is: (i) greater than the
Preliminary Net Assets, the Initial Purchase Price shall be increased,
on a dollar-for-dollar basis, by the amount of any such excess; or
(ii) less than Preliminary Net Assets, the Initial Purchase Price
shall be reduced, on a dollar-for-dollar basis by the amount of such
difference; and
(b) if the Net Cash Balance is: (i) a positive number, the
Initial Purchase Price shall be increased, on a dollar-for-dollar
basis, by the amount of the Net Cash Balance; or (ii) a negative
number, the Initial Purchase Price shall be decreased on a dollar-for-
dollar basis, by the amount of the Net Cash Balance. An example of the
procedures for calculating the Estimated Purchase Price and the post-
closing adjustment referred to in Section 2.06 is set forth on
Schedule 2.04.
2.05 Pre-Closing Deliveries of Financial Information. At least
ten (10) days prior to the Closing, Seller shall provide Buyer a copy
of the Estimated Balance Sheet. In addition, beginning February 8,
1999, Seller shall provide to Buyer, a written statement of the Net
Cash Balance for the period beginning January 1, 1999 and ending
February 5, 1999, on February 15, 1999, Seller shall provide to Buyer
a written statement of the Net Cash Balance for the week ending
February 12, 1999 and, in the event that the Closing shall not have
occurred, on February 22, 1999, Seller shall provide to Buyer a
written statement of the Net Cash Balance for the week ending February
19, 1999. The written statement of the Net Cash Balance shall be
provided to Buyer on a daily basis beginning three (3) days prior to
the anticipated Closing Date. Seller shall also, promptly following a
request from Buyer, provide to Buyer copies of such additional
documents as may reasonably be requested by Buyer for the purpose of
verifying the amount of the Estimated Net Assets as contained in the
Estimated Balance Sheet which is delivered to the Buyer or for the
purpose of verifying the statements of the Net Cash Balance which are
provided to the Buyer.
2.06 Post-Closing Adjustment.
(a) The Final Purchase Price shall be calculated based upon
the final calculation of the Closing Net Assets (as determined
pursuant to Section 2.07 below). If the Closing Net Assets, as
determined as provided in Section 2.07 below: (i) exceeds the
Estimated Net Assets plus or minus the Net Cash Balance, then the
Final Purchase Price shall be equal to: (A) the Estimated Purchase
Price plus (B) the amount by which the Closing Net Assets exceeds the
Estimated Net Assets plus or minus the Net Cash Balance; or (ii) is
less than the Estimated Net Assets plus or minus the Net Cash Balance,
then the Final Purchase Price shall be equal to: (A) the Estimated
Purchase Price minus (B) the amount by which the Closing Net Assets is
less than the Estimated Net Assets plus or minus the Net Cash Balance.
(b) If the Final Purchase Price as calculated pursuant to
the provisions of Section 2.06(a) above exceeds the Estimated Purchase
Price, the amount by which the Final Purchase Price exceeds the
Estimated Purchase Price shall be paid by Buyer to the Seller. If the
Final Purchase Price as calculated pursuant to Section 2.06(a) above
is less than the Estimated Purchase Price, the amount by which the
Estimated Purchase Price exceeds the Final Purchase Price shall be
paid by the Seller to the Buyer.
(c) All payments required to be made pursuant to Section
2.06(b) above shall be paid to the party entitled to receive the same
in cash or immediately available funds promptly, but in no event later
than ten (10) business days following the determination of the Closing
Net Assets as contemplated in Section 2.07 below, by delivery to such
account as the party entitled to payment shall specify in writing, of
an amount equal to the sum of any such payment together with interest
thereon from, and including the Closing Date to, but excluding, the
date of such payment at a variable rate per annum equal to the rate
announced publicly by Bank of America National Trust and Savings
Association from time to time as its "base rate". The date on which
such payment shall occur is referred to herein as the "Supplemental
Closing".
2.07 Calculation of Closing Net Assets.
(a) As soon as practicable following the Closing, Buyer
shall, with the cooperation and assistance of Seller, prepare a
balance sheet containing a statement of the Closing Net Assets which
it shall deliver to a nationally recognized firm of certified public
accountants engaged by the Buyer ("Buyer's Accountants") to perform an
audit of the same. As soon as practicable thereafter, but in no event
later than ninety (90) days following the Closing Date, Buyer's
Accountants shall deliver an audited balance sheet to the Seller
containing a statement of the Closing Net Assets, determined according
to the principles set forth in this Agreement (hereinafter the
"Proposed Closing Balance Sheet").
(b) The Proposed Closing Balance Sheet shall be
subject to verification and examination by Seller and, in order to
facilitate such verification and examination, Buyer shall, at such
reasonable times and places as may be requested by Seller, deliver
copies of all supporting documents to Seller and its representatives
and provide to Seller and its representatives the right to examine or
take copies of any work papers (other than proprietary work papers)
used by Buyer in the preparation of the Proposed Closing Balance
Sheet.
(c) Seller shall have a period of forty five (45) days
after delivery of the Proposed Closing Balance Sheet to Seller, to
present in writing to Buyer any objections Seller may have to the
accuracy of the Proposed Closing Balance Sheet, which objections shall
be set forth in reasonable detail. If no objections are raised within
such forty five (45) day period, the Proposed Closing Balance Sheet
shall be deemed to be accepted and approved by Seller, the Net Assets
as contained in the Proposed Closing Balance Sheet shall be deemed to
be the Closing Net Assets and any amounts required to be paid by
Section 2.06(b) hereof shall be paid by Seller or Buyer, as the case
may be at a Supplemental Closing held at the same place as is provided
in Section 3.01 hereof, ten (10) business days following the
expiration of such forty-five (45) day period, or at such other place
and at such other time and date as may be mutually agreed upon in
writing by Buyer and Seller.
(d) If Seller shall disagree as to the accuracy of the
Closing Net Assets as contained in the Proposed Closing Balance Sheet,
Seller shall present to Buyer written notice within the forty five
(45) day period described in Section 2.07(c) specifying such
disagreement. Following receipt of such notice by Buyer, Buyer and
Seller shall use their best efforts to promptly resolve the matter or
matters in disagreement. If Seller and Buyer resolve the matter or
matters in disagreement, the Seller and the Buyer shall either confirm
or revise the original Proposed Closing Balance Sheet and Closing Net
Assets whereupon the statement of the Net Assets of the Automotive
Filter Companies as contained in the confirmed or revised Proposed
Closing Balance Sheet shall be deemed to be the Closing Net Assets,
shall be final and binding upon the parties hereto and any amounts
required to be paid by Section 2.06(b) hereof shall be paid by Seller
or Buyer, as the case may be, at a Supplemental Closing held at the
same place as is provided in Section 3.01 hereof, ten (10) business
days following the date on which Buyer and Seller are able to resolve
their disagreement with respect to the Proposed Closing Balance Sheet
or at such other place and at such other time and date as may be
mutually agreed upon in writing by Buyer and Seller.
(e) If Seller and Buyer are unable to resolve the matter or
matters in disagreement within ninety (90) days following Buyer's
receipt of written notice from Seller of Seller's disagreement with
the accuracy of the Closing Net Assets or the Proposed Closing Balance
Sheet, then the Buyer and the Seller shall select a mutually
acceptable, neutral, independent accounting firm (the "Arbitrator"),
and submit such disputes to arbitration. The Arbitrator shall decide
all points in dispute and provide written notice of its decision
(which need not assert the basis therefor) within thirty (30) days of
its appointment, and its determinations shall be final, conclusive and
binding on Buyer and Seller with respect to the final determination of
the Closing Net Assets and the Proposed Closing Balance Sheet. The
fees and expenses of the Arbitrator shall be shared equally by Buyer
and Seller.
(f) Notwithstanding anything to the contrary contained in
this Section 2.07, during the period that the determination of the
Closing Net Assets shall remain in dispute, unless otherwise required
by a validly issued order of a court of competent jurisdiction,
neither party shall be required to pay to the other party the amount
that would otherwise be payable hereunder if no such disagreement were
to exist.
(g) During and with respect to the audit and reviews
referred to in this Section 2.07, Seller and Buyer shall: (i) fully
cooperate with all reasonable requests of Seller, Buyer and the
Buyer's Accountants, as the case may be; and (ii) upon reasonable
request make available to Seller, Buyer and the Buyer's Accountants,
all work papers, (excluding proprietary programs and information of
Seller and Buyer) supporting schedules, documents and other
information (including access to all appropriate knowledgeable
personnel of Seller) upon which the Closing Balance Sheet is prepared
and the Closing Net Assets is determined.
(h) All fees and expenses of Seller relating to the matters
described in this Section 2.07 shall be borne by Seller, and all fees
and expenses of the Buyer relating to the matters described in this
Section 2.07 (including the fees, expenses and disbursements of
Buyer's Accountants) shall be borne by Buyer.
ARTICLE 3 CLOSING
3.01 Time and Place of Closing. Unless this Agreement has been
terminated pursuant to the provisions of Section 12.01, the closing of
the sale and purchase of the PPC Shares as contemplated by this
Agreement (the "Closing") shall take place at the offices of Lippes,
Silverstein, Mathias & Wexler LLP, 700 Guaranty Building, 28 Church
Street, Buffalo, New York, on the second business day following the
latest to occur of: (a) the expiration (or early termination) of the
waiting period (or any extensions thereof) established by the Hart-
Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR
Act"); (b) the satisfaction of the conditions to Seller's obligation
to close the transactions contemplated by this Agreement as more
particularly set forth in ARTICLE 9 hereof; and (c) the satisfaction
of the conditions to Buyer's obligation to close the transactions
contemplated by this Agreement as more particularly set forth in
ARTICLE 10 hereof; or at such other place, date and time as the
parties hereto may agree. For purposes of this Agreement, the date on
which the Closing occurs is referred to as the "Closing Date".
3.02 Deliveries by Seller. At the Closing, Seller will deliver
to Buyer (unless previously delivered):
(a) stock certificates evidencing all of the PPC Shares,
duly endorsed for transfer to the Buyer or accompanied by duly
executed stock powers providing for the transfer of the PPC Shares to
the Buyer;
(b) stock certificates representing all of the issued and
outstanding shares of capital stock of each of Purolator Products NA,
Inc., M Filter and Facet Advanced Technology Company (collectively the
"Subsidiary Shares");
(c) certificates representing PPC's 39.27% ownership
interest in Purolator India Limited, a corporation organized under the
laws of India ("Purolator India") and copies of any organizational
documents in Seller's possession with respect to Purolator India;
(d) a true and complete copy of a Joint Venture Agreement,
dated as of September 19, 1989 between Facet Advanced Technology
Company and Filtration Management Incorporated (the "Purodenso
Agreement" and the "Purodenso Joint Venture") as the same has been
amended together with copies of any other organizational documents and
all material correspondence pertaining to the Purodenso Agreement;
(e) the corporate minute books and stock ledgers of each of
the Automotive Filter Companies,;
(f) the written resignation of the officers and directors
of each of the Automotive Filter Companies;
(g) duly executed original copies of the various agreements
for use of Shared Properties, licensing of patents and trademarks and
other transitional services, all as more particularly identified in
Schedule 3.02(g) (collectively, the "Ancillary Agreements") which
Ancillary Agreements shall be in form and substance reasonably
satisfactory to each of Buyer and Seller;
(h) true and complete copies of all assignments, bills of
sale and other instruments of transfer entered into for the purpose of
effecting the transactions described in Section 1.01 hereof;
(i) Bills of Sale and such other documentation as may be
reasonably necessary to effect the transfer of the M Filter Stock, the
Vancouver Warehouse Lease, the Foreign Distributors' Assets and any
other transfers contemplated by Section 1.02 hereof; and
(j) the documentation identified in ARTICLE 10 hereof which
is required to be delivered to Buyer in satisfaction of the conditions
to the Buyer's obligation to close the transactions contemplated by
this Agreement and any other documentation reasonably requested by
Buyer.
3.03 Deliveries by Buyer. At the Closing, Buyer will deliver to
Seller (unless previously delivered):
(a) an amount equal to the Estimated Purchase Price, by
wire transfer of immediately available funds to such account or
accounts as may be designated by the Seller in writing;
(b) amounts equal to the Foreign Distributors' Assets
Purchase Price as provided in Section 1.02(c) hereof;
(c) duly executed copies of each of the Ancillary
Agreements;
(d) duly executed Assignment and Assumption agreements to
effect the assumption by PPC of the obligations arising under the
terms of the Vancouver Warehouse Lease and the assumption by Buyer or
its affiliates of the Foreign Distributors' Liabilities; and
(e) the documentation identified in ARTICLE 9 hereof which
is required to be delivered to Seller in satisfaction of the
conditions to the Seller's obligation to close the transactions
contemplated by this Agreement and any other documentation reasonably
requested by Seller.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.01 Organization of Seller. Seller is a corporation, duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware and has the corporate power and authority to
carry on its business as presently conducted. Seller is qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the failure of Seller to be so qualified would
have a material adverse effect on the Automotive Filter Companies
taken as a whole.
4.02 Organization of the Automotive Filter Companies. Each of
the Automotive Filter Companies is a corporation, duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated and has the corporate power
and authority to carry on its business as presently conducted. Each
of the Automotive Filter Companies is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the failure of such Automotive Filter Company to be so qualified
would have a material adverse effect on the Automotive Filter
Companies taken as a whole.
4.03 Authorization by Seller. Seller has full corporate power
and authority to enter into, execute and deliver this Agreement and
each of the other documents and instruments to be executed and
delivered by Seller pursuant to this Agreement and to carry into
effect the transactions contemplated hereunder and thereunder. The
execution, delivery and performance of this Agreement and each of the
other documents and instruments to be executed and delivered by Seller
pursuant to this Agreement and the consummation of the transactions
contemplated hereunder and thereunder have been duly authorized by all
necessary corporate action on the part of Seller. No other corporate
act or proceeding on the part of Seller or the Seller's shareholders
is necessary to authorize the execution and delivery of this Agreement
and each of the other documents and instruments to be executed and
delivered by Seller pursuant to this Agreement, or the consummation by
Seller of the transactions contemplated hereby and thereby.
4.04 Ownership of Automotive Filter Company Equity Interests.
(a) Schedule 4.04(a) attached hereto contains a statement
of: (i) the total number, class and par value of each class of capital
stock which each Automotive Filter Company is authorized to issue; and
(ii) the total number, class and par value of each class of capital
stock of each Automotive Filter Company which is issued and
outstanding together with the identity of the owner (or owners) of all
the issued and outstanding shares of each class of capital stock of
each such Automotive Filter Company;
(b) Except as otherwise set forth in Schedule 4.04(b)
attached hereto, Seller is the owner of and has good and marketable
title to all the issued and outstanding capital stock of PPC, free and
clear of all liens, claims, encumbrances or other restrictions or
limitations of any kind or nature.
(c) Except as otherwise set forth in Schedule 4.04(c)
attached hereto, PPC is the owner of and has good and marketable title
to all the issued and outstanding capital stock of Purolator Products
NA, Inc. and Facet Advanced Technology Company, free and clear of all
liens, claims, encumbrances or other restrictions or limitations of
any kind or nature. As of the Closing, PPC will be the owner of, and
will have good and marketable title to, all the issued and outstanding
capital stock of M Filter, free and clear of all liens, claims,
encumbrances or other restrictions or limitations of any kind or
nature.
(d) Except as otherwise set forth in Schedule 4.04(d)
attached hereto: (i) PPC is the owner of 39.27% of the capital stock
of Purolator India and Facet Advanced Technology Company is the owner
of and has good and marketable title to a fifty percent (50%) equity
interest in the Purodenso Joint Venture, in each case, free and clear
of all liens, claims, encumbrances or other restrictions or
limitations of any kind or nature with respect to such equity
interest; (ii) no Automotive Filter Company owns, directly or
indirectly, any capital stock or other securities, or any direct or
indirect equity or ownership interest in any person, other than the
Purodenso Joint Venture and other than the Automotive Filter Companies
(including any joint venture, partnership or similar interest); and
(iii) no Automotive Filter Company is subject to any obligation to
provide funds to or make any investment (in the form of loans, capital
contributions or otherwise) in any person. The Purodenso Joint
Venture and Purolator India are hereinafter referred to as the "Joint
Ventures").
4.05 Options or Other Rights. There is no existing subscription,
option, warrant, call, commitment or other agreement entitling any
third party to, and there are no convertible or exchangeable
securities outstanding which, upon conversion or exchange would
require the issuance of any additional shares of capital stock or
other equity interests in or indebtedness of any of the Automotive
Filter Companies or any other securities convertible into or
exchangeable for shares of capital stock or other equity interests in
any of the Automotive Filter Companies. None of the Automotive Filter
Companies is a party to any agreement which would require such
Automotive Filter Company to repurchase, redeem or otherwise acquire
any of the issued and outstanding shares of capital stock or other
equity interests of such Automotive Filter Company. None of the PPC
Shares or the Subsidiary Shares is subject to any first refusal,
repurchase or similar rights.
4.06 Certificates of Incorporation and By-Laws; Partnership
Agreement. With respect to each Automotive Filter Company, the Seller
has heretofore delivered to the Buyer true and complete copies of the
Certificate of Incorporation (or any other substantially equivalent
documentation which has been filed, in connection with the
organization of any such Automotive Filter Company, with the
governmental authorities of the jurisdiction in which any of such
Automotive Filter Companies have been incorporated or organized) (such
Certificate of Incorporation or substantially equivalent documentation
being hereinafter referred to as "Incorporation Documents") and the
By-Laws (or any other substantially equivalent documentation
regulating the internal affairs of such Automotive Filter Company)
(such By-Laws or substantially equivalent documentation being
hereinafter referred to as the "By-Laws") as the same are in effect on
and as of the date hereof, including all amendments and restatements
thereto. In addition, except as set forth in Schedule 4.06 attached
hereto, the Seller has heretofore made the minute books of each
Automotive Filter Company available to the Buyer for inspection by the
Buyer and its representatives. At Closing, Seller will deliver to
Buyer the original minute books of each Automotive Filter Company,
which shall be complete and contain all formal proceedings of the
shareholders and directors of each such entity.
The Seller has heretofore delivered to the Buyer true and
complete copies of the certificate of partnership of Purodenso filed
with the Secretary of State of the State of Delaware and the Purodenso
Agreement and the equivalent organizational documents of Purolator
India, to the extent they shall be in Seller's possession, as the same
are in effect on and as of the date hereof, including all amendments
and restatements thereto. There are no agreements or understandings
with respect to the Purodenso Joint Venture and Purolator India to
which Seller or any Automotive Filter Company is a party or any of
their assets are bound other than as set forth in Schedule 4.06 of
this Agreement.
4.07 Binding Agreements. This Agreement constitutes and, when
executed and delivered on the Closing Date, each of the other
documents to be executed and delivered by Seller to Buyer will
constitute, valid and binding obligations of Seller enforceable
against Seller in accordance with their respective terms, except that:
(a) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditor's rights; and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
4.08 No Violation. Except as set forth in Schedule 4.08 attached
hereto, neither the execution and delivery of this Agreement nor the
consummation by Seller of the transactions contemplated hereby will:
(a) violate any statute or law, or any rule or regulation
of any governmental authority; or
(b) violate any order, writ, injunction or decree of any
court or governmental agency which is applicable to the Seller, the
PPC Shares, any Automotive Filter Company or their respective assets;
or
(c) violate or conflict with or constitute a default under
(or an event which, with notice or lapse of time, or both, would
constitute a default under), or will result in the termination of, or
accelerate the performance required by, or result in the creation of
any lien, security interest, charge or encumbrance upon or trigger any
first refusal, repurchase or similar right with respect to, the PPC
Shares, the Subsidiary Shares or any interest of the Automotive Filter
Companies in either of the Joint Ventures or any of the assets of any
of the Automotive Filter Companies under any term or provision of: (i)
the Incorporation Documents and By-Laws of Seller or the Incorporation
Documents and By-Laws of any of the Automotive Filter Companies or the
organizational documents of the Purodenso Joint Venture or Purolator
India; or (ii) any lease, contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character: (A)
to which Seller, any of its subsidiaries or any of the Automotive
Filter Companies is a party; or (B) by which the Seller, the PPC
Shares, any of the Automotive Filter Companies or any of their assets
or properties may be bound (including, without limitation, the
Purodenso Agreement) except, to the extent that the existence of any
violation described in Sections 4.08(a), (b), or (c), above and the
existence of any conflict, default, termination, acceleration of
performance or creation of any lien, security interest, charge or
encumbrance as described in Section 4.08(c), above would not have a
material adverse effect on the Automotive Filter Companies taken as a
whole.
4.09 Financial Statements. Seller has heretofore delivered to
Buyer the November 30 Balance Sheet and a pro forma income statement
for the nine (9) month period ending November 30, 1998, a copy of
which is attached hereto as Schedule 4.09. The November 30 Balance
Sheet has been prepared in accordance with generally accepted
accounting principles and fairly presents the assets and liabilities
and financial position of the Automotive Filter Companies as of
November 30, 1998 utilizing the valuation criteria contained in
Section 2.03(e). The pro forma income statement for the nine (9)
month period ending November 30, 1998 has been prepared using
generally accepted accounting principles as modified for pro forma
adjustments, and fairly presents the income of the Automotive Filter
Business on such a pro forma basis for the period reflected therein.
4.10 Absence of Certain Changes. Except for the pre-closing
transfer of assets as more particularly described in Section 1.01
hereof and except as and to the extent set forth in Schedule 4.10
attached hereto, from November 30, 1998 through the date hereof and
through the Closing Date the operations of the Automotive Filter
Business have been conducted in the ordinary course consistent with
past practice and no Automotive Filter Company (nor the Seller with
respect to the Automotive Filter Business) has or will
(a) amended its Incorporation Documents or its By-Laws; or
(b) merged with or into or consolidated with any other
person, firm, corporation or other entity; or
(c) subdivided or reclassified any shares of its capital
stock;
(d) issued, sold, purchased or redeemed or issued options
or rights to subscribe to, or entered into any contracts or
commitments to issue, sell, purchase or redeem any shares of its
capital stock or other equity interests or any securities convertible
into or exchangeable for any of its shares of capital stock or other
equity interests;
(e) declared or paid any dividends or declared or made any
distributions of any kind (other than cash distributions) to its
stockholders or other owners of any of its outstanding equity
interests or made any direct or indirect redemption, retirement,
purchase or other acquisition of any shares of its capital stock or
other equity interests except for cash receipts remitted to the Seller
in connection with the ordinary cash management practices of the
Seller or acquired any equity securities or options or rights to
acquire equity securities of any person;
(f) entered into or amended any written employment
agreement with any employee of any of the Automotive Filter Companies;
entered into or amended any agreement with any labor union or
association representing any employee or entered into or amended in
any material respect, any employee benefit plan or arrangement
relating to any employees of any of the Automotive Filter Companies;
(g) suffered any adverse change in its financial condition,
assets, liabilities or business other than changes which arise as a
result of changes in the economy in general and changes which
individually and in the aggregate do not have a material adverse
effect on the Automotive Filter Companies taken as a whole;
(h) sold, transferred or otherwise disposed of any of its
assets, properties, or rights other than in the ordinary course of the
conduct of its business or canceled any claims which are material to
its business;
(i) disposed of or permitted to lapse any patent, patent
application, trademark, trademark registration, trademark application,
assumed name, service mark, trade name or copyright application,
copyright registration or license, or permitted to lapse or is in
breach of (or with notice, lapse of time or both will be in breach of
or permit to lapse) any agreement under which it has any right or
license relating to the business of the Automotive Filter Companies
other than any of the foregoing which would not have a material
adverse effect on the Automotive Filter Companies taken as a whole;
(j) made any single capital expenditure in excess of Two
Hundred Fifty Thousand Dollars ($250,000.00) or made any commitment to
make capital expenditures in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00), except for commitments to make such capital
expenditures which have been made in the ordinary course of the
business of such Automotive Filter Company and are reflected in the
November 30 Balance Sheet;
(k) made any material change in any method of accounting or
accounting practice or policy or in its manner of keeping its books,
accounts or records;
(l) made any material changes in its product warranty or
return policies;
(m) granted any general increase in the compensation or
benefits of any of its officers or employees other than in the
ordinary course of business, (including any such increase pursuant to
any bonus, pension, profit sharing, severance, medical and welfare or
other plan or commitment);
(n) made any loan or advance to any of its officers,
directors or employees other than advances of expenses made in the
ordinary course of its business and cash receipts remitted to Seller
in accordance with the regular cash management policies of the Seller
and the Automotive Filter Companies; and
(o) agreed, whether in writing or otherwise, to take any of
the actions set forth in this Section 4.10.
4.11 Title to Personal Property; Encumbrances; Etc. Except as
set forth in Schedule 4.11 attached hereto, each Automotive Filter
Company has good and valid title to the personal property which it
purports to own and, on the Closing Date, will have good and valid
title to the personal property which it purports to own in each case,
free and clear of any liens, charges or encumbrances.
4.12 Real Property.
(a) Schedule 4.12(a) hereto contains a list of the address
of each parcel of real property in connection with the Automotive
Filter Business owned, used or held for use by the Automotive Filter
Companies (hereinafter the "Real Property") and includes a statement
of: (i) the approximate square footage of each such parcel of Real
Property and a general description of all improvements thereon; (ii)
whether such Real Property is owned or leased; (iii) in the case of
any Real Property which is owned by any of the Automotive Filter
Companies (or to be transferred to any Automotive Filter Company in
accordance with Section 1.01), the identity of the owner of such Real
Property; and (iv) in the case of any Real Property which is or will
be leased by any of the Automotive Filter Companies from any third
party, the identity of the lessee and the lessor of such Real
Property.
(b) Except as otherwise set forth in Schedule 4.12(b)
attached hereto, each Automotive Filter Company that is identified in
Schedule 4.12(a) as the owner of any Real Property has or will have at
the Closing Date good, marketable and insurable fee simple title to
the Real Property which the Automotive Filter Company is identified as
the owner of, free and clear of all liens, charges or other
encumbrances.
(c) Except as otherwise set forth in Schedule 4.12(c)
attached hereto, with respect to each parcel of Real Property which is
identified in Schedule 4.12(a) as being leased by an Automotive Filter
Company, the Automotive Filter Company that is identified in Schedule
4.12(a) as the lessee of such Real Property has or will have at the
Closing Date a valid and enforceable leasehold interest in such Real
Property and, except as otherwise set forth in Schedule 4.12(c)
attached hereto, there are no defaults (or events or conditions which
with notice, lapse of time or both would constitute a default) by
Seller or any Automotive Filter Company under the terms of any lease
of any Real Property except for defaults which would not have a
material adverse effect on the Automotive Filter Companies taken as a
whole and, to the knowledge of the Seller, there are no defaults with
respect to the obligations of the lessor of such Real Property. Prior
to the date hereof, Seller has delivered to Buyer true and complete
copies of each lease of any Real Property listed in Schedule 4.12(a)
as leased.
(d) Except as otherwise set forth in Schedule 4.12(d)
attached hereto, the use, occupancy and ownership (or leasing) by any
Automotive Filter Company of any buildings, structures or other
improvements located at any Real Property which is identified in
Schedule 4.12(a) is in compliance with all applicable laws, including,
without limitation, any zoning ordinances or any other codes or
regulations other than any noncompliance which would not, individually
or in the aggregate, impair the ability of the Automotive Filter
Companies to use the same consistent with past practice and neither
Seller nor any of the Automotive Filter companies has received notice
of any such violation.
(e) Except as otherwise set forth in Schedule 4.12(e)
attached hereto, none of the Real Property is subject to any pending
or, to the knowledge of Seller, threatened condemnation or similar
proceeding by any public or quasi-public agency or other authority
which would impair the right or ability of the Automotive Filter
Company that (as described in Schedule 4.12(a) attached hereto) is the
owner or lessee of any such Real Property, to use such Real Property
consistent with past practice.
(f) Except as otherwise set forth in Schedule 4.12(f)
attached hereto, all of the Real Property and improvements thereon is
benefited by all easements or other rights (including utility service)
necessary for the Automotive Filter Company which is identified in
Schedule 4.12(a) attached hereto as the owner or lessee of such Real
Property, to use such Real Property consistent with past practice.
(g) There is no actual or, to the knowledge of Seller,
pending, imposition of any assessments for public improvements with
respect to any Real Property, except for customary annual assessments
under state and local law, and, to Seller's knowledge no such
improvements have been constructed or planned that would be paid for
by means of assessments upon any Real Property.
(h) No termination rights have been exercised or, to
Seller's knowledge threatened by any party with respect to any leases
of the Real Property.
4.13 Leases. Schedule 4.13 attached hereto contains a list of
each lease relating to any personal property used by any of the
Automotive Filter Companies in the conduct of its business which
provides for annual lease payments in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) whose term is in excess of one (1) year
and which is not cancelable upon thirty (30) or fewer days' notice
without any liability, penalty or premium (other than nominal
cancellation fee or charge) (the "Leases"). Prior to the date hereof,
Seller has delivered to Buyer true and complete copies of the Leases
including all amendments thereof and all modifications thereto.
Except as set forth in Schedule 4.13 attached hereto, no default (or
event or condition which with notice, lapse of time, or both would
constitute a default) has occurred under the terms of any of the
Leases with respect to the obligations of any of the Automotive Filter
Companies or any other parties to such Leases other than any such
default which would not have a material adverse effect on the
Automotive Filter Companies taken as a whole.
4.14 Patents, Trademarks, Trade Names, Etc.
(a) Schedule 4.14(a) attached hereto contains a complete
list and a general description of all patents, inventions, trademarks,
service marks, trademark registrations, mask works, mask works
registrations, trade names, assumed names, copyrights, copyright
registrations and in each case applications therefore, and license
agreements (other than licenses related to commercial off-the-shelf
software) presently owned, held or used by any of the Automotive
Filter Companies in connection with the Automotive Filter Business or
with respect to which any of the Automotive Filter Companies owns or
holds any license (hereinafter collectively the "Patents and
Trademarks"). Except as set forth in Schedule 4.14(a), to the
knowledge of Seller, the use by any of the Automotive Filter Companies
of the Patents and Trademarks or any other intellectual property right
used by any Automotive Filter Company does not violate any provision
of applicable law or infringe upon the rights of any person, firm,
corporation or other entity and the Seller has not received notice of
any claim of any violation or infringement.
(b) Except as set forth in Schedule 4.14(b): (i) the
Patents and Trademarks constitute all of the intellectual property
rights which are currently capable of being registered and which are:
(A) owned by any of the Automotive Filter Companies and used in the
Automotive Filter Business or (B) used in the business and operation
of any of the Automotive Filter Companies; (ii) an Automotive Filter
Company owns the entire right, title and interest in and to such
Patents and Trademarks; (iii) the Patents and Trademarks are
sufficient to conduct the business and operations of the Automotive
Filter Business as presently conducted in all material respects; (iv)
there are no pending or, to Seller's knowledge, threatened
interferences, reexaminations, oppositions or protests relating to any
such Patents and Trademarks and Seller knows of no basis for any such
interference; (v) there are no disputes pending or, to the knowledge
of Seller threatened with former or present employees of the
Automotive Filter Business involving rights to any of the Patents and
Trademarks or any other intellectual property right used by any of the
Automotive Filter Companies; and (vi) to Seller's knowledge, no person
is infringing upon or has misappropriated any of the Patents and
Trademarks or any other intellectual property right used by any of the
Automotive Filter Companies.
4.15 Litigation. Except as set forth in Schedule 4.15 attached
hereto, there are no actions, suits or written claims (including
without limitation, product liability claims or claims that any of the
Automotive Filter Companies has breached or otherwise failed to
perform its obligations under any product or service warranties
described in Section 4.27 hereof) or legal, administrative, equitable
or arbitration proceedings or outstanding orders, judgments,
injunctions, awards or decrees of any court, any governmental or
regulatory body or any arbitration tribunal pending or, to the
Seller's knowledge, threatened against or involving Seller, any of the
Automotive Filter Companies or any of their assets which: (a) seek to
prevent the consummation of the transactions contemplated by this
Agreement; or (b) relate to the any of the Automotive Filter Companies
and which, if adversely decided, would have a material adverse effect
on the Automotive Filter Companies taken as a whole.
4.16 Banks and Brokers. Schedule 4.16 attached hereto sets forth
the name of each bank, trust company, securities or other broker or
other financial institution: (a) with which the Seller has any
account, lock box, safe deposit box or vault for the exclusive purpose
of providing or maintaining banking or other financial services to any
of the Automotive Filter Companies; and (b) with which any of the
Automotive Filter Companies has any account, lock box, safe deposit
box or vault.
4.17 Employee Benefit Plans.
(a) Except for any individual employment, consulting or
severance contracts disclosed in Schedule 4.21 attached hereto,
Schedule 4.17(a) attached hereto sets forth a list, for each
Automotive Filter Company, of:
(i) each plan, fund or program constituting an
"employee welfare plan" (hereinafter the "Employee Welfare Plans")
within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including, without
limitation, basic and supplemental life insurance, health insurance
(including medical, dental and hospitalization), accidental death and
dismemberment insurance, business travel and accident insurance, short
and long term disability insurance programs; and
(ii) each "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (the "Employee Pension Plans")
including, without limitation, pension, profit sharing, and 401(k)
retirement plans; which is: (w) maintained, assumed or contributed to
by Seller for the benefit of any employee of any of the Automotive
Filter Companies; or (x) maintained, assumed or contributed to by any
Automotive Filter Company for the benefit of its employees or any
employees of any of the Automotive Filter Companies (individually a
"Plan" and collectively, the "Plans").
(b) Except as otherwise set forth in Schedule 4.17(b)
attached hereto, Seller has previously delivered to Buyer: (i)
complete copies of all plan documents which set forth the terms of
each of the Plans and where applicable, complete copies of any related
trusts; (ii) a general description of any of the Plans with respect to
which no formal plan document has been adopted; and (iii) where
applicable, the most recent Form 5500, as filed with the Internal
Revenue Service ("IRS") together with all attachments thereto,
relating to the Plans.
(c) To the knowledge of Seller, each of the Plans which is
intended to conform to the requirements of the Code and ERISA is in
compliance with the applicable requirements of the Code and ERISA and,
to the knowledge of Seller, has been administered in all material
respects, in substantial compliance with the applicable requirements
of the Code and ERISA.
(d) Except as set forth in Schedule 4.17(d) attached
hereto: (i) to the knowledge of Seller there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any of the Plans; (ii) to the
knowledge of Seller, neither the Seller nor any of the Automotive
Filter Companies have incurred, directly or indirectly, any liability
under Title IV of ERISA (other than, in the case of the Seller,
liability for premium payments to the Pension Benefit Guaranty
Corporation arising in the ordinary course); (iii) to the knowledge of
Seller, no reportable event (within the meaning of Section 4043 of
ERISA) has occurred at any time during the last five (5) years or is
expected to occur with respect to any of the Plans which are subject
to Title IV of ERISA except for plan mergers which have occurred with
respect to certain of the plans which are employee pension benefit
plans within the meaning of Section 3(2) of ERISA, which mergers have
not had any material adverse effect on the ability of such employee
pension benefit plans to pay to employees of the Automotive Filter
Companies that are participants in such employee pension benefit
plans, the amount that employees of the Automotive Filter Companies
have accrued under such employee pension benefit plans; (iv) none of
the Plans has incurred an accumulated funding deficiency (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived, as of the most recently ended plan year of such Plan;
(v) none of the assets of the Seller or any of the Automotive Filter
Companies is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code; (vi) neither the Seller nor any
of the Automotive Filter Companies have been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code;
and (vii) none of the Plans is a multi-employer plan (within the
meaning of Sections 3(37) or 4001(a)(3) of ERISA) or a single employer
pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Seller or any of the Automotive Filter Companies could incur
liability under Sections 4063 or 4064 of ERISA.
4.18 Consents and Approvals. Except for consents listed in
Schedules 4.18 and 4.19(a) attached hereto and for the filing of pre-
merger notification documentation under the HSR Act and the expiration
of all applicable waiting periods thereunder, no permit, consent,
approval or authorization of, or declaration, filing or registration
with, any governmental agency or authority or any other person, firm
or corporation is necessary or required to be obtained in connection
with the execution and delivery by Seller of this Agreement or the
consummation by Seller of the transactions contemplated hereby, except
where the failure to obtain any such permit, consent, approval or
authorization or where the failure to make any such declaration,
filing or registration would not have a material adverse effect on the
Automotive Filter Companies taken as a whole. Schedule 4.18 attached
hereto also contains a list of all consents, approvals,
authorizations, declarations, filings, or registrations which, are
required to be obtained by any of the Automotive Filter Companies from
any governmental agency or authority in connection with the conduct of
their respective businesses (hereinafter the "Permits and Consents")
other than any Permit or Consent which, if not held or obtained by any
of the Automotive Filter Companies, would not have a material adverse
effect on the Automotive Filter Companies taken as a whole. All such
Permits and Consents are in full force and effect and the Automotive
Filter Companies are in compliance with the terms thereof other than
instances of non-compliance with such Permits and Consents which,
individually or in the aggregate, would not have a material adverse
effect on the Automotive Filter Companies taken as a whole.
4.19 Environmental Protection.
(a) Except as set forth in Schedule 4.19(a) attached
hereto, to the knowledge of Seller, each Automotive Filter Company has
obtained and maintains in full force and effect all permits, licenses
and other authorizations which: (i) are required to be obtained by
any such Automotive Filter Company under all federal, state, local and
foreign laws relating to human health, safety, pollution or protection
of the environment, (hereinafter referred to as "Environmental Laws"),
including, without limitation, laws relating to emissions, discharges,
releases or threatened releases into the environment (including,
without limitation, ambient air, surface water, ground water or land)
of any substances identified in any such Environmental Laws (such
substances being hereinafter referred to as "Regulated Materials");
and (ii) relate to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Regulated
Materials; except for those permits, licenses or other authorizations
required to be obtained by any Automotive Filter Company under the
terms of the Environmental Laws which, if not obtained, would not have
a material adverse effect on the Automotive Filter Companies taken as
a whole.
(b) Except as set forth in Schedule 4.19(b) attached
hereto, to the knowledge of Seller, each Automotive Filter Company is
in material compliance with: (i) all terms and conditions of all
permits, licenses and authorizations required under the terms of any
Environmental Laws; (ii) all other limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations
contained in any of the Environmental Laws as applicable to such
Automotive Filter Company; and (iii) all plans, orders, decrees,
judgments, injunctions, notices or demand letters applicable to such
Automotive Filter Company and issued, entered, promulgated or approved
under any of the Environmental Laws.
(c) Except as set forth in Schedule 4.19(c) attached
hereto, neither Seller nor any of its subsidiaries, nor any of the
Automotive Filter Companies has received any written notice that any
past or present conditions, circumstances, activities, practices,
incidents or actions of any of the Automotive Filter Company (or, to
the knowledge of the Seller, any predecessor to an Automotive Filter
Company) relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Regulated
Material or relating to any emission, discharge, release or threatened
release into the environment of any Regulated Material: (i) will
interfere with or prevent compliance or continued compliance by any of
the Automotive Filter Companies with any of the Environmental Laws or
any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder; (ii) will give rise to any common law or legal liability;
or (iii) will otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study or investigation, unless the alleged
violation or noncompliance with any Environmental Laws which forms the
basis of any notice described above in this Section 4.19(c), if
uncured or unsettled, could not reasonably be expected to have a
material adverse effect on the Automotive Filter Companies taken as a
whole.
(d) Except as set forth in Schedule 4.19(d) attached
hereto, there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or to the knowledge of Seller,
threatened against Seller or any Automotive Filter Company with
respect to the Automotive Filter Business relating in any way to any
violation of any of the Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
(e) None of the Real Property is listed on or, to the
knowledge of Seller, has been proposed for listing on the National
Priorities List, the CERCLIS or any similar list of sites of suspected
or known environmental contamination (including contamination
consisting of the release of any Regulated Material) maintained by any
governmental agency. Except as set forth on Schedule 4.19(e), no
Automotive Filter Company or, to Seller's knowledge, any predecessor
of any Automotive Filter Company has been named as a "potentially
responsible party" with respect to, or received any request or demand
from any party concerning, its potential involvement in or at any site
at which conditions exist which may give rise to remedial action under
any applicable Environmental Laws.
4.20 Insurance. Schedule 4.20 attached hereto contains a general
description (including the amount of any applicable deductibles) of
all policies of fire, liability, workmen's compensation and other
forms of insurance owned or held by Seller or any Automotive Filter
Company and issued with respect to or covering risks associated with
the assets, properties or business of each Automotive Filter Company.
All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing
Date have been or will be paid when due, and no notice of cancellation
or termination has been received with respect to any such policy.
Such policies are valid, outstanding and enforceable policies; will
remain in full force and effect through the respective dates set forth
in Schedule 4.20 without the payment of additional premiums; and will
not, with respect to all periods up to and including the Closing Date,
in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement except to the extent set
forth in Schedule 4.20. The Seller and the Automotive Filter
Companies have not been denied any insurance coverage.
4.21 Contracts and Commitments.
(a) Except for leases required to be disclosed pursuant to
Sections 4.12 and 4.13 hereof, Plans required to be disclosed pursuant
to Section 4.17(a) hereof and insurance policies required to be
disclosed by Section 4.20 hereof, Schedule 4.21(a) attached hereto
contains a list of each contract, subcontract, agreement, commitment,
option, note, bond, mortgage, indenture, deed of trust, guarantee,
franchise or license which:
(i) (A) requires payments in excess of Five Hundred
Thousand Dollars ($500,000.00); (B) contains the terms and conditions:
(I) upon which any person is employed or engaged as an officer,
general manager, or consultant; or (II) upon which any severance or
other termination payments are payable; (C) provides preferential
rights to purchase any material quantity of any assets; (D) limits the
freedom of any party to engage in any business in any geographic area;
(E) contains any "change in control" provision which would be breached
by the consummation of the transactions contemplated by this
Agreement; or (F) contains the terms of any guaranty of the payment or
performance of any liabilities or obligations the cost of the payment
or performance of which liabilities or obligations exceeds, in the
aggregate, an amount equal to Five Hundred Thousand Dollars
($500,000); and
(ii) (A) Seller is a party to and relates primarily to
any Automotive Filter Company (hereinafter individually referred to as
a "Seller Contract" and collectively as the "Seller Contracts"); or
(B) any Automotive Filter Company is a party to or the beneficiary of
(hereinafter individually referred to as a "Automotive Filter Company
Contract" and collectively as the "Automotive Filter Company
Contracts").
(b) Prior to the date hereof Seller has delivered or
otherwise made available to Buyer, true and complete copies of the
Seller Contracts and the Automotive Filter Company Contracts including
all amendments thereof and modifications thereto.
(c) Except as set forth in Schedule 4.21(c) attached
hereto, each of the Seller Contracts and the Automotive Filter Company
Contracts are valid, binding and in full force and effect and
enforceable in accordance with its terms except to the extent that:
(i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors rights; and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(d) Except as set forth in Schedule 4.21(d) attached
hereto, Seller is not in material default (and no event or condition
exists which, with notice, lapse of time or both would constitute a
material default) with respect to any of its obligations under any of
the Seller Contracts, and, to the knowledge of Seller, there is no
basis for any claim that any other parties to any of the Seller
Contracts is in material default with respect to its obligations under
such Seller Contracts; and
(e) Except as set forth in Schedule 4.21(e) attached
hereto, none of the Automotive Filter Companies is in material default
(and no event or condition exists which, with notice, lapse of time or
both would constitute a material default) with respect to the
obligations of any Automotive Filter Company under any of the
Automotive Filter Company Contracts and, to the knowledge of Seller,
there is no basis for any claim that any other party to any of the
Automotive Filter Company Contracts is in material default with
respect to its obligations under such Automotive Filter Company
Contracts.
(f) To Seller's knowledge, all other agreements,
arrangements and understandings to which any of the Automotive Filter
Companies is a party are in full force and effect and are valid and
binding obligations of the applicable Automotive Filter Company,
except to the extent that the failure of any such contract to be valid
and binding would not individually or in the aggregate have a material
adverse effect on the Automotive Filter Companies taken as a whole.
4.22 Tax Matters.
(a) Except as set forth in Schedule 4.22 attached hereto,
the Seller and each of the Automotive Filter Companies has or will
have filed or caused to be filed with the appropriate governmental
agencies all Tax Returns (as hereinafter defined) required to be filed
by such entity prior to the Closing Date with respect to the
Automotive Filter Business and with respect to the Automotive Filter
Companies and their respective operations and assets for all periods
ending on or prior to such date. In addition, except as otherwise set
forth in Schedule 4.22 attached hereto, Seller has or will have paid,
or caused to be paid in full, all Taxes shown to be due on such Tax
Returns for such periods and the Automotive Filter Companies have
withheld, collected or otherwise provided for all Taxes (including
income, payroll and employment taxes) required to have been held or
collected and paid or deposited as of the Closing Date as required by
applicable law. Following the Closing Date, Seller will pay or cause
to be paid, in full, all Income Taxes (as hereinafter defined), if
any, attributable to the Automotive Filter Companies and their
respective operations and assets and either: (i) shown to be due on
such Tax Returns, or (ii) otherwise due or claimed to be due from the
Seller or any Automotive Filter Company by any taxing authority for
all periods and portions thereof up to and including the Closing Date
to the extent that a liability for current Income Taxes (excluding
deferred Income Taxes) has not been accrued on the Closing Balance
Sheet. There are no liens with respect to Taxes upon any of the
assets of any of the Automotive Filter Companies.
(b) For the purposes of this Agreement: (i) "Taxes" shall
mean all taxes, charges, fees, levies or other assessments, including,
without limitation, income, excise, property, sales and franchise
taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment) imposed by the
United States or any other jurisdiction, and any state, province,
county, local or other government, taxing authority, or subdivision
thereof; (ii) "Income Taxes" shall mean all taxes (including any
interest, penalties or additions attributable or imposed on or with
respect to such taxes) imposed by the United States or any other
jurisdiction or by any state, province, county, local or other
government, taxing authority or subdivision thereof, solely with
respect to any income of Seller or any of the Automotive Filter
Companies excluding, specifically, any sales taxes, transfer taxes,
real or personal property taxes; and (iii) "Tax Return" shall mean any
return, report, information return or other document (including any
related or supporting information) filed or required to be filed with
any governmental entity or other authority in connection with the
determination, assessment or collection of any Taxes (whether or not
such Taxes are imposed on Seller or an Automotive Filter Company) or
the administration of any laws, regulations or administrative
requirements relating to any Taxes.
4.23 Labor Relations; Employees. Schedule 4.23 attached hereto
contains a list of each contract or other agreement between any
Automotive Filter Company (or Seller or any of its subsidiaries to
which employees of the Automotive Filter Business are subject) and any
labor union or other association representing any employees of the
Automotive Filter Business (each such contract being hereinafter
referred to as a "Labor Agreement"). Prior to the date hereof, Seller
has delivered to the Buyer true and complete copies of each Labor
Agreement listed in Schedule 4.23 attached hereto. Except as set
forth in Schedule 4.23 attached hereto, none of the Automotive Filter
Companies has, at any time during the last three (3) years,
experienced any labor disputes or any work stoppage, slow down,
picketing or lockout. In addition, except to the extent set forth in
Schedule 4.23 attached hereto: (a) there is no unfair labor practice
charge, or complaint or other action against any of the Automotive
Filter Companies pending or, to the knowledge of Seller, threatened
before the National Labor Relations Board, and none of the Automotive
Filter Companies is subject to any order to bargain by the National
Labor Relations Board; (b) there is no, and during the past three (3)
years there has not been any labor strike, slow down, picketing or
lockout or work stoppage actually pending or, to the knowledge of
Seller, threatened against or affecting any Automotive Filter Company;
(c) no question concerning representation is pending or to the
Seller's knowledge is threatened respecting employees of any of the
Automotive Filter Companies; and (d) no written grievance which might
have a material adverse effect on the Automotive Filter Companies
taken as a whole is pending. Schedule 4.23 attached hereto also
includes an accurate list of all salaried employees of the Automotive
Filter Companies that are based in North America (other than
manufacturing salaried employees) and the salary of each. Seller has
provided Buyer with an accurate list of those employees of any
Automotive Filter Company who have requested long term or short term
disability leave.
4.24 Customers and Suppliers. Except as set forth in Schedule
4.24 attached hereto, to the knowledge of Seller, none of the
Automotive Filter Companies is engaged in any dispute or any
negotiation regarding the termination of any existing arrangement with
any customer or supplier of any of the Automotive Filter Companies
except for disputes or negotiations with customers or suppliers of any
of the Automotive Filter Companies which, individually or in the
aggregate, will not have a material adverse effect on the Automotive
Filter Companies taken as a whole. In addition, except as set forth
in Schedule 4.24 attached hereto, to the knowledge of the Seller,
neither Seller nor any of the Automotive Filter Companies has received
notice of any customer's or supplier's intention to terminate or
change any existing relationship with any Automotive Filter Company in
any manner which would have a material adverse effect on the
Automotive Filter Companies taken as a whole.
4.25 Compliance with Law. Except for matters pertaining to the
Plans which are provided for in Section 4.17 and matters pertaining to
Environmental Laws which are provided for in Section 4.19, the
business and operations of each of the Automotive Filter Companies is
conducted in accordance with all applicable laws, regulations and
other requirements of all national governmental authorities, and of
all states, municipalities and other political subdivisions and
agencies thereof, having jurisdiction over the business of the
Automotive Filter Companies, including, without limitation, all
Permits and Consents and such laws, regulations and requirements
relating to employment of unauthorized aliens, antitrust, consumer
protection, currency exchange, equal opportunity, health, occupational
safety, pension and securities, except for deviations from such laws
arising from the operations of the Automotive Filter Companies which,
individually or in the aggregate, would not have a material adverse
effect on the Automotive Filter Companies taken as a whole. Except as
set forth in Schedule 4.25 attached hereto, none of the Automotive
Filter Companies has received any written notification of any asserted
failure by any of the Automotive Filter Companies to comply with any
such laws, rules or regulations.
4.26 Brokers and Finders. Except as set forth in Schedule 4.26
attached hereto, neither Seller nor any of its officers, directors or
employees, as the case may be, nor any of the Automotive Filter
Companies, has employed any broker or finder or incurred any liability
for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement. Seller will be
solely responsible for the fees payable to any persons listed on
Schedule 4.26.
4.27 Product Warranties. The standard product or service
warranties, indemnifications and guarantees which each of the
Automotive Filter Companies extends to its customers in the ordinary
course of the conduct of their respective businesses, copies of which
have been delivered to Buyer, are identified in Schedule 4.27 attached
hereto. Schedule 4.27 also contains a general description of any
product or service warranties, indemnifications or guarantees extended
by any of the Automotive Filter Companies to any customer, the terms
of which are materially different from the standard product or service
warranties, indemnifications or guarantees otherwise described in
Schedule 4.27 attached hereto. No warranties, indemnifications or
guarantees are now in effect or outstanding with respect to products
or services manufactured, produced or performed by any of the
Automotive Filter Companies in the ordinary course of conduct of their
respective businesses, except for warranties implied by law and
warranties, indemnifications and guarantees of the types identified in
Schedule 4.27 attached hereto.
4.28 Potential Conflicts of Interest. Except as set forth in
Schedule 4.28 attached hereto, no contract, agreement or arrangement
(excluding employment agreements and rights arising under any of the
Plans) providing for the purchase or sale of any goods or services or
relating to any interest in any property, whether real or personal, or
tangible or intangible, which is used by or relates to any of the
Automotive Filter Companies exists between: (a) Seller and any of the
Automotive Filter Companies; (b) Seller and any officers or directors
of any of the Automotive Filter Companies; or (c) between any of the
Automotive Filter Companies and any officers or directors of any of
the Automotive Filter Companies. Except as set forth in Schedule 4.28
attached hereto, none of the officers or directors of Seller and none
of the stockholders, officers or directors of any of the Automotive
Filter Companies has any cause of action or other claim whatsoever
against any of the Automotive Filter Companies.
4.29 Accounts Receivable and Accounts Payable. All accounts
receivable of the Automotive Filter Companies represent sales actually
made in the ordinary course of business or valid claims. The accounts
payable of the Company reflected in the Closing Balance Sheet arose,
or will arise, from bona fide transactions in the ordinary course of
business.
4.30 Unimpaired Operation. At Closing, the Automotive Filter
Companies will hold all assets of Seller and its affiliates which are
used in, held for use by or related to the Automotive Filter Business
(other than the Shared Properties), except for those assets which, if
not held by the Automotive Filter Companies would not, individually or
in the aggregate, have a material adverse effect on the Automotive
Filter Companies as a whole.
4.31 Absence of Questionable Payments. To the knowledge of
Seller, none of the Automotive Filter Companies nor any of their
directors, officers, agents, employees or any other persons acting on
their behalf has: (a) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or
others or established or maintained any unlawful or unrecorded funds
in violation of Section 104 of the Foreign Corrupt Practices Act of
1977 ( 15 USC Section 78dd-2), as amended, or any other applicable
foreign, federal or state law; or (b) accepted or received any
unlawful contributions, payments, expenditures or gifts.
4.32 Representations and Warranties on the Closing Date;
Disclosure. The representations and warranties contained in this
ARTICLE 4 shall be true and complete on and as of the Closing Date
with the same force and effect as though made on the Closing Date.
Disclosure of any fact or information in any Schedule required by this
ARTICLE 4 shall be deemed for purposes of this Agreement to be
disclosure on any other Schedule required by any Section of this
Agreement on which such item could have been listed pursuant to this
Agreement.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.01 Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Indiana, and
has the corporate power and authority to carry on its business as
presently conducted.
5.02 Authorization by Buyer. The Buyer has full corporate power
and authority to enter into, execute and deliver this Agreement and
each of the other documents and instruments to be executed and
delivered by Buyer pursuant to this Agreement and to carry into effect
the transactions contemplated hereunder and thereunder. The execution
and delivery of this Agreement and each of the other documents and
instruments to be executed and delivered by the Buyer pursuant to this
Agreement and the consummation of the transactions contemplated
hereunder and thereunder have been duly authorized by all necessary
corporate action on the part of Buyer. No other corporate act or
proceeding on the part of Buyer or its stockholders is necessary to
authorize the execution and delivery of this Agreement and each of the
other documents and instruments to be executed and delivered by Buyer
pursuant to this Agreement or the consummation of the transactions
contemplated hereby and thereby.
5.03 Binding Agreements. This Agreement constitutes, and, when
executed and delivered on the Closing Date, each of the other
documents and instruments to be executed and delivered by Buyer to
Seller will constitute valid and binding obligations of Buyer,
enforceable against Buyer in accordance with its terms except that:
(a) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally; and,
(b) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
5.04 No Violation. Neither the execution and delivery of this
Agreement, nor the consummation by Buyer of the transactions
contemplated hereby will: (a) to the knowledge of Buyer, violate any
statute or law, or any rule or regulation of any governmental
authority; (b) violate any order, writ, injunction or decree of any
court or governmental authority; or (c) violate or conflict with or
constitute a default under (or an event which, with notice or lapse of
time, or both, would constitute a default under) or will result in the
termination of, or accelerate the performance required by, or result
in the creation of any material lien, security interest, charge or
encumbrance upon any of the material assets of Buyer under any term or
provision of: (i) the Articles of Incorporation or By-Laws of Buyer;
or (ii) any material lease, contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to
which Buyer is a party or by which Buyer or any of its assets or
properties may be bound or affected.
5.05 Litigation. There are no actions, suits or claims or legal,
administrative, equitable or arbitration proceedings or outstanding
orders, judgments, injunctions, awards or decrees of any court, any
governmental or regulatory body or arbitration tribunal pending, or to
the knowledge of Buyer, threatened against or involving Buyer which:
(a) seek to prevent the consummation of the transactions contemplated
by this Agreement; or (b) or relate to the business or operations of
the Buyer and which, if adversely decided, would have a material
adverse effect on the business, assets or financial condition of the
Buyer.
5.06 Consents and Approvals. Except for the filing of pre-merger
notification documentation under the HSR Act and the expiration of all
applicable waiting periods thereunder, no permit, consent, approval or
authorization of, or declaration, filing or registration with, any
governmental agency or authority or any other person, firm or
corporation is necessary or required to be obtained in connection with
the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the transactions contemplated hereby.
5.07 Purchase for Investment. Buyer is purchasing the PPC Shares
for investment and not for resale or distribution and the Buyer will
not sell, transfer, offer for sale, pledge, hypothecate or otherwise
dispose of any of the PPC Shares in violation of any applicable
securities laws or regulations.
5.08 Brokers and Finders. Except as set forth in Schedule 5.08,
neither Buyer, nor any of its officers, directors or employees, as the
case may be, has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this Agreement.
Buyer will be solely responsible for the fees payable to any persons
listed in Schedule 5.08.
ARTICLE 6 COVENANTS OF SELLER
6.01 Access Pending the Closing Date. Seller has and will cause
each of the Automotive Filter Companies, to: (a) grant to Buyer and
its counsel, accountants and other representatives, reasonable access
during normal business hours to Seller's facilities relating to the
Automotive Filter Business, the Shared Properties and each parcel of
Real Property which is used by the Automotive Filter Companies in the
conduct of their respective businesses and to all properties, books,
contracts, commitments and records of Seller relating to the
Automotive Filter Business and each of the Automotive Filter
Companies; and (b) furnish Buyer and its representatives all such
information as Buyer or its representatives may reasonably request
concerning the Automotive Filter Business and the business and assets
of the Automotive Filter Companies.
6.02 Conduct of Business Prior to the Closing. Except for the
pre-closing transfers contemplated by Section 1.01 hereof, during the
period commencing on the date hereof and ending on the Closing Date:
(a) Seller has not taken any action; and (b) in the case of the
Automotive Filter Companies, Seller will take any and all action
necessary to prevent each of the Automotive Filter Companies from
taking any action; that would, in any such case, cause any of the
representations and warranties of Seller contained in Section 4.10 to
be untrue as of the Closing Date. In addition, during the period
beginning on the date hereof and ending on the Closing Date: (w)
Seller will use its reasonable best efforts and (x) in the case of the
Automotive Filter Companies, Seller will take such action as may be
necessary to cause each Automotive Filter Company to use its
reasonable best efforts; to keep intact the business organization and
reputation of each such Automotive Filter Company and to preserve for
the Buyer the goodwill of the suppliers, customers, distributors,
sales representatives, employees and others having business relations
with the Automotive Filter Business.
6.03 Termination of Benefit Accruals Under Defined Benefit Plans.
Seller agrees that, prior to the Closing Date, Seller shall amend the
terms of the master defined benefit pension plan maintained by Seller
and known as the Mark IV Industries, Inc. and Subsidiaries Employees
Retirement Income Fund (hereinafter the "Master Defined Benefit
Plan"): (a) to provide that participants therein who are employees of
any of the Automotive Filter Companies immediately prior to the
Closing Date ("Automotive Filter Participants") shall cease to accrue
benefits thereunder on the Closing Date (or such earlier date as
Seller and Buyer may subsequently agree to in writing), and (b) to
provide that Automotive Filter Participants shall be fully vested
(i.e., one hundred percent (100%) vested) in their accrued benefits
under the Master Defined Benefit Plan. Seller agrees to take, or cause
each of the Automotive Filter Companies to take, prior to the Closing
Date, any and all actions (including, without limitation, the delivery
of any notices required under ERISA and the Code and the timely filing
of all required filings with any government agency), which are
necessary or reasonably required to effectuate the intent of this
Section 6.03.
6.04 No Solicitation. Seller shall not and shall take any and
all action necessary to prevent any of Sellers directors, officers,
employees or agents and any directors, officers, employees or agents
of any of the Automotive Filter Companies, as the case may be, from
directly or indirectly, encouraging, soliciting, initiating or
entering into any discussions or negotiations concerning, any
disposition of all or any material portion of the capital stock or
assets of the Automotive Filter Companies (other than pursuant to this
Agreement), or any proposal therefor, or from furnishing or causing to
be furnished any information concerning the Automotive Filter Business
to any party in connection with any transaction involving the
acquisition of any stock or assets of any Automotive Filter Company by
any person other than the Buyer.
6.05 Non-Competition. As a part of the inducement to Buyer to
enter into this Agreement, Seller hereby agrees that for a period of
three (3) years (the "Covenant Term") from the date hereof, Seller
shall not, nor shall any division of Seller or any corporation which
Seller, directly or indirectly controls the management of or owns more
than fifty percent (50%) of the total number of outstanding shares
entitled to vote, or their successors and assigns (hereinafter
referred to as "Seller's Affiliates") without the prior express
written consent of the Buyer, own, manage, operate, or control,
directly or indirectly, any business, firm or corporation which is
engaged anywhere in the world in the manufacture and sale of any
automotive products which are or were manufactured and sold by the
Automotive Filter Business prior to the Closing Date (hereinafter the
"Products"). Notwithstanding the foregoing, nothing herein shall be
deemed to limit or otherwise restrict the rights of any division,
subsidiary or affiliate of Seller which is not engaged in the
Automotive Filter Business from continuing, after the Closing Date, to
conduct its business in the same manner as such business was conducted
prior to the Closing Date. In addition, this Section 6.05 shall not
be deemed to prohibit any division, subsidiary or affiliate of Seller
from engaging after the Closing Date in the manufacture and sale of
those products listed in Schedule 6.05 attached hereto. In addition,
notwithstanding anything to the contrary contained in this Section
6.05, nothing in this Section 6.05 shall be deemed to prohibit, limit
or otherwise restrict the right of Seller, or any of Seller's
Affiliates, to manufacture and sell products referred to in the
Champion Supply Agreement (one of the Ancillary Agreements) and to
purchase the business and assets of APT, a corporation engaged in the
design, manufacture and sale of automotive and industrial filter
products and, following any such acquisition, nothing contained in
this Section 6.05 shall be deemed to prohibit, limit or otherwise
restrict the right of Seller or its affiliate to continue to conduct
the business of APT, including, but not limited to, the manufacture
and sale of automotive filter products as conducted immediately prior
to its acquisition by Seller. Ownership or purchase by Seller at or
after the time of Closing, of less than five percent (5%) of the
issued and outstanding capital stock of any enterprise engaged in the
production or sale of Products, the securities of which are listed on
a national securities exchange or included in the national list of
over-the-counter securities shall not be deemed a violation of this
Section 6.05. In addition to the rights of Seller to acquire the
business and assets of APT, Seller shall not be deemed to be in
violation of this Section 6.05 in the event that, following the
Closing Date, Seller or any of Seller's Affiliates acquires
substantially all the assets of any person, firm or corporation or a
majority of the issued and outstanding capital stock of any
corporation and, following such acquisition, less than fifteen percent
(15%) of the total annual sales of any such acquired company is
attributable to sales of products competitive with the Products. Upon
breach by Seller or Seller's Affiliates of any provision of this
Section 6.05, Buyer shall be entitled to injunctive relief, both
preliminarily and permanently, since the remedy at law would be
inadequate and insufficient. For purposes of this Agreement, it is
expressly agreed that the provisions of this Section shall not limit
or restrict the right of any person, firm, corporation or other entity
which acquires control of the Seller or any of the Retained Businesses
to continue to conduct the businesses which any such person was
engaged in immediately prior to the acquisition by any such person of
control of Seller or any of the Retained Businesses. Additionally,
Buyer will be entitled to all such other legal and equitable remedies
as may be available to it. In the event any of the provisions of this
Section 6.05 are determined by a court of competent jurisdiction to be
contrary to any applicable statute, law or rule, or for any reason to
be unenforceable as written, such court may modify any of such
provisions so as to permit enforcement thereof as thus modified.
ARTICLE 7 COVENANTS OF BUYER
7.01 Obligation to Continue Certain Employee Benefits. The Buyer
hereby agrees that, at all times during the one (1) year period
following the Closing Date (the "Benefit Continuation Period"), the
Buyer shall use its best efforts to maintain and provide for the
employees of each Automotive Filter Company or take such action as may
be necessary to cause each Automotive Filter Company to maintain and
provide for its employees, personnel practices, employee welfare plans
and employee pension plans which provide to the employees of each such
Automotive Filter Company, benefits which in the aggregate are
reasonably comparable to the Employee Welfare Plans and the Employee
Pension Plans which were provided to the employees of such Automotive
Filter Company on the Closing Date as more particularly set forth in
Schedule 4.17(a) attached hereto, provided, that Buyer shall have the
right to make any amendment to or adjustment in any such employee
benefits as may be necessary, in Buyer's judgment, to be in accord
with any existing Buyer Employee Welfare Plan or Employee Pension Plan
that may be applicable to other employees of the Buyer. Buyer and
Seller agree to give each other 90 days advance notice (or such lesser
period as may be practicable under the circumstances) of any change in
employee benefits of their respective employees at any of the
facilities covered under the Ancillary Agreements.
7.02 Collective Bargaining Agreements. Buyer acknowledges that M
Filter Company is a party to a Labor Agreement with its employees.
7.03 Insurance Coverage. Buyer acknowledges that the insurance
coverage which Seller maintains with respect to the Automotive Filter
Companies and the Automotive Filter Business including, without
limitation, general liability, product liability, auto liability,
property, commercial umbrella, excess umbrella, aircraft products,
fiduciary liability, crime liability and workers compensation
insurance coverage is maintained by Seller under policies with respect
to which Seller is the named insured and the Automotive Filter
Companies are additional insureds. Buyer acknowledges that effective
as of the Closing Date, the Seller intends to remove the Automotive
Filter Companies and the Automotive Filter Business from the insurance
coverage provided by such insurance policies to the extent that such
insurance coverage relates to the Automotive Filter Business or the
business and assets of any Automotive Filter Company with respect to
any periods arising at any time on or after the Closing Date.
Accordingly, Buyer acknowledges that no insurance protection shall be
available to Buyer with respect to any injury, loss or damage which
Buyer, any of the Automotive Filter Companies, the Automotive Filter
Business or any third party may suffer as a result of any event,
occurrence or circumstance existing or occurring with respect to the
Automotive Filter Business or any of the Automotive Filter Companies
at any time on or after the Closing Date.
7.04 Limitation on Representations and Warranties. Buyer
acknowledges that, except for the representations and warranties of
Seller contained in or made pursuant to ARTICLE 4 hereof, neither
Seller nor any of its officers, employees, agents, stockholders,
affiliates, consultants, investment bankers, legal advisors or other
representatives shall be deemed to have made any representations,
warranties or assurances of any kind.
ARTICLE 8 ADDITIONAL COVENANTS OF BUYER AND SELLER
8.01 Consents and Conditions. Prior to the Closing, Seller will
use its best efforts, at its own cost and expense, to seek to obtain
any required stockholder, third-party and governmental consents to the
transactions contemplated hereunder and to cause each of the
conditions to the obligations of Buyer to close the transactions
contemplated hereunder (as more particularly set forth in ARTICLE 10
hereof) to be satisfied. Buyer will, at Seller's expense, cooperate
with Seller and take such action as Seller may reasonably request in
connection with Seller's efforts to obtain any consent from any third
party to the consummation of the transactions contemplated by this
Agreement.
8.02 Filings. Not later than five (5) days following the date
hereof, Seller and Buyer shall make any and all filings required under
the HSR Act. In addition, Seller shall furnish to the Buyer and Buyer
shall furnish to Seller: (a) such information and reasonable
assistance as may reasonably be requested in connection with the
preparation by such other party of any necessary filings or
submissions to any governmental agency, including, without limitation,
any filings necessary under the provisions of the HSR Act; and (b)
copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party or its
representatives, on the one hand, and the Federal Trade Commission,
the Antitrust Division of the U.S. Department of Justice or any other
governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement or the
transactions contemplated hereby.
8.03 Access After the Closing Date. Seller agrees with Buyer
that, on and after the Closing Date, each, upon at least seventy-two
(72) hours advance notice from the other, will permit the other and
their respective representatives (including their counsel and
auditors), during normal business hours and for a reasonable business
purpose, to have access to and examine all books and records of the
other which pertain to the conduct of the Automotive Filter Business
prior to the Closing including, but not limited to, correspondence,
memoranda, books of account, payroll records, computer records,
insurance policies and the like. The out-of-pocket costs of reviewing
and photocopying any such material (excluding the compensation and
related payroll taxes of employees engaged in the copying of any such
materials) shall be borne by the party requesting such review or
photocopies. Any obligations under this Section shall terminate as to
either party three (3) years following the Closing Date; provided
that, to the extent any matter for which information is requested
hereunder is subject to a statute of limitations which expires more
than three (3) years following the Closing Date, the obligations under
this Section shall terminate at the end of the statute of limitations
which applies to any such matter.
8.04 Record Retention. For a period of seven (7) years after the
date hereof, or, in the case of books or records pertaining to Taxes,
for a period until the expiration of all applicable statutes of
limitation, Buyer and Seller agree that, prior to the destruction or
disposition of any books or records pertaining to the Automotive
Filter Business or the business or assets of any of the Automotive
Filter Companies, each party shall provide not less than forty five
(45) nor more than ninety (90) days prior written notice to the other
of any such proposed destruction or disposal. If the recipient of
such notice desires to obtain any of such documents, it may do so by
notifying the other party in writing at any time prior to the
scheduled date for such destruction or disposal. Such notice must
specify the documents which the requesting party wishes to obtain.
The parties shall then promptly arrange for the delivery of such
documents. All out-of-pocket costs associated with the delivery of
the requested documents (excluding the compensation (and related
payroll taxes) of employees engaged in the preparation, copying or
delivery of any such documents) shall be paid by the requesting party.
8.05 Tax Returns and Audits.
(a) Seller shall be responsible for filing, or causing to
be filed, within the time and in the manner prescribed by law, all Tax
Returns with respect to any Income Taxes payable by Seller and each of
the Automotive Filter Companies for all taxable periods of Seller and
each of the Automotive Filter Companies ending on or before the
Closing Date. Seller shall also be responsible for filing, or causing
to be filed, within the time and in the manner prescribed by law, all
Tax Returns which are required to be filed prior to the Closing
(without regard to any available extensions for the filing of such Tax
Returns) with respect to any Taxes (other than Income Taxes) payable
by Seller and any of the Automotive Filter Companies with respect to
any periods ending on or prior to the Closing Date. Seller shall be
responsible for the payment of all Taxes shown to be due under any Tax
Return to be filed by Seller pursuant to this subparagraph 8.05(a).
Seller shall provide Buyer a copy of any Tax Return relating to Income
Taxes which is described above in this subparagraph and which is
required to be signed by Buyer or any of the Automotive Filter
Companies not later than fifteen (15) days prior to the due date
(including extensions) for filing such Tax Return.
(b) Buyer shall be responsible for filing, or causing to be
filed, within the time and in the manner prescribed by law, all Tax
Returns relating to any Taxes (other than Income Taxes) payable by any
of the Automotive Filter Companies, in each case, for all taxable
periods beginning on or before the Closing Date to the extent that
such Tax Returns are not required to be filed by Seller or any of the
Automotive Filter Companies pursuant to the provisions of Section
8.05(a) above. Buyer shall be responsible for the payment of all
Taxes, other than Income Taxes, payable by any of the Automotive
Filter Companies with respect to the Automotive Filter Business or the
business, operations or property of any of the Automotive Filter
Companies, to the extent that the due date (without regard to
extensions thereof) for payment of such Taxes occurs at any time after
the Closing Date. Buyer shall be responsible for filing all Tax
Returns with respect to Income Taxes required to be filed after the
Closing Date (without regard to extensions) on behalf of each of the
Automotive Filter Companies in connection with the business,
operations and assets of each of the Automotive Filter Companies for
periods ending after the Closing Date.
(c) Seller shall have full control and ultimate discretion
over all actions to be taken or decisions to be made in the course of
any audit or examination, or any subsequent proceedings, including
settlement or other dispositions thereof, other than any adjustment
that would result in a liability of or otherwise adversely affect
Buyer or any of the Automotive Filter Companies following the Closing
(in which case such settlement or disposition shall not be effected
without Buyer's consent, which consent shall not be unreasonably
withheld): (i) with respect to any Income Taxes due and payable by the
Seller or any of the Automotive Filter Companies for any period ending
on or prior to the Closing Date; and (ii) with respect to any Taxes
(other than Income Taxes) which are payable in connection with any Tax
Returns which Seller and the Automotive Filter Companies are required
to file pursuant to the provisions of Section 8.05(a) above. Seller
shall reimburse Buyer and each Automotive Filter Company for all
reasonable out-of-pocket costs incurred by Buyer and each Automotive
Filter Company in connection with the taking of any action which
Seller requests Buyer or such Automotive Filter Company to take in the
course of such audit, examination or subsequent proceeding. If any
taxing authority shall take any action which may give rise to a claim
by any such taxing authority that: (w) any Automotive Filter Company
has not filed any Tax Return relating to Income Taxes which is
required with respect to any period ending on or before the Closing
Date; or (x) any Automotive Filter Company has not paid in full or
owes any Income Taxes for any period ending on or before the Closing
Date, then the Buyer shall promptly notify Seller thereof in writing;
provided, however, that any failure to notify Seller shall not release
Seller from its obligation to file such Tax Returns or pay such Income
Taxes as stated in this Section to the extent Seller would not be
prejudiced thereby.
(d) Buyer shall have full control and ultimate discretion
over all actions to be taken or decisions to be made in the course of
any audit or examination or any subsequent proceedings, including
settlement or other dispositions thereof (other than any adjustment
that would result in a liability or otherwise adversely affect the
Seller or any of its Affiliates following the Closing in which case
such settlement or disposition may not be effected without Seller's
consent, which consent shall not be unreasonably withheld) with
respect to any Taxes (other than Income Taxes) due and payable for any
period beginning on or prior to the Closing Date to the extent that,
pursuant to Section 8.05(b) above, the Buyer is responsible for the
filing of the Tax Returns relating to such Taxes. Buyer shall
reimburse Seller for all reasonable out-of-pocket costs incurred by
Seller in connection with the taking of any action which Buyer
requests Seller to take in the course of such audit, examination or
subsequent proceeding.
(e) If, in response to any claim which is made by any
taxing authority to the effect that any of the Automotive Filter
Companies owes any additional Income Taxes for any period ending on or
before the Closing, Seller pays any amount to such taxing authority,
Buyer shall, upon the reasonable written request of Seller, file (or
take such action as may be necessary to cause any Automotive Filter
Company identified by Seller to file) a claim for refund with the
appropriate taxing authorities with respect to any Income Taxes for
any such period. Seller will provide Buyer or any of the Automotive
Filter Companies identified by Seller as the appropriate party for
making a claim for any such refund, with such information as may be
reasonably necessary to enable Buyer or any of the Automotive Filter
Companies identified by Seller, as the case may be, to file a claim
for refund. Buyer and each of the Automotive Filter Companies shall,
at the sole cost of Seller (including all reasonable out-of-pocket
costs incurred by Buyer and each of the Automotive Filter Companies)
promptly take all actions as may be reasonably requested by Seller to
obtain such refund. Buyer acknowledges and agrees that any and all
refunds of any Income Taxes paid or payable by Seller or by any of the
Automotive Filter Companies in connection with the operations of the
Seller and the Automotive Filter Companies prior to the Closing Date
shall be the property of Seller and such refunds, including interest
thereon, net of any additional Income Taxes imposed on Buyer or any of
the Automotive Filter Companies for any period occurring after the
Closing Date and which are attributable to the receipt of such refunds
shall be paid by Buyer to Seller promptly after such refund is either
received or credited against such liability of Buyer or any of the
Automotive Filter Companies for Taxes. Buyer agrees that neither the
Buyer nor any of the Automotive Filter Companies have any right to
carry back any loss incurred by any of the Automotive Filter Companies
after the Closing Date to any period prior to the Closing Date.
(f) If, in connection with any audit or other investigation
by any taxing authority of any Income Taxes payable by Seller or any
Automotive Filter Company for any period ending on or prior to the
Closing Date: (i) any deduction claimed by Seller or any Automotive
Filter Company with respect to any such pre-closing tax period is
disallowed by the taxing authority conducting such audit or
investigation; and (ii) the taxing authority conducting such audit or
investigation agrees that the Buyer or any Automotive Filter Company
will be permitted to use such deduction with respect to such pre-
closing period for purposes of calculating the Taxes due and payable
by the Buyer or any Automotive Filter Company with respect to any
period ending after the Closing Date (any deduction which satisfies
the criteria described in subparagraphs 8.05(f) (i) and (ii) above
being hereinafter the "Disallowed Deduction"); then (iii) the Buyer
agrees to pay to Seller an amount equal to the discounted present
value of the benefit of such deduction to the Buyer as mutually agreed
by Buyer and Seller or, in the absence of such agreement, as
determined by a nationally recognized independent accounting firm
mutually acceptable to Buyer and Seller. Seller will provide Buyer or
any of the Automotive Filter Companies identified by Buyer with such
information as may be reasonably requested by Buyer in order to enable
Buyer or any of the Automotive Filter Companies identified by Buyer,
to use the Disallowed Deduction and file a claim for a tax refund for
any tax period ending after the Closing Date in which the Disallowed
Deduction may be used.
(g) Each party hereto shall provide the other party with
such assistance as may reasonably be requested by such party in
connection with the preparation of any Tax Return or claim for refund,
any audit or other examination by any taxing authority or any judicial
or administrative proceedings relating to the liability of any of the
Automotive Filter Companies for any Taxes attributable to any period
ending on or before the Closing Date. Seller shall cause all tax
sharing or similar agreements to which any of the Automotive Filter
Companies is subject to terminate on the Closing Date and have no
further effect or liability as to any Automotive Filter Company with
respect to any tax period ending on, prior to or after the Closing
Date.
8.06 Tax Refunds. Seller shall be entitled to any tax refund
received by the Buyer or any of the Automotive Filter Companies which
is attributable to any Income Taxes paid by the Seller or any of the
Automotive Filter Companies with respect to any period ending on or
prior to the Closing Date and any tax refund received by the Buyer or
any of the Automotive Filter Companies with respect to any Taxes
(other than Income Taxes) paid by Seller for any periods ending prior
to the Closing Date. Buyer agrees to notify Seller upon receipt of,
and forthwith deliver to Seller duly endorsed in the name of Seller,
any tax refund check or other evidence of payment in respect of any
such tax refund, which refund check or other evidence of payment shall
not be deposited into any bank account for collection and pending
delivery to Seller shall be held by Buyer or the Automotive Filter
Company to whom such refund was paid, as the case may be, in trust
pending delivery to Seller; provided, however, that the amount of any
additional liability imposed on Buyer or any of the Automotive Filter
Companies for Taxes that are attributable to any such tax refund is
simultaneously paid by Seller to Buyer.
8.07 Confidentiality. Each party hereto will hold and will cause
its directors, officers, employees, agents, consultants and advisors
to hold in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the
other party furnished to it by such other party or its representatives
in connection with the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been:
(a) previously lawfully known by the party to which it was furnished,
(b) in the public domain through no fault of such party, or (c) later
lawfully acquired from other sources by the party to which it was
furnished), and each party will not release or disclose such
information to any other person, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in
connection with this Agreement. If the transactions contemplated by
this Agreement are not consummated, such confidence shall be
maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in
confidence, and in any event such information shall not be used to the
detriment of, or in relation to any investment in, the other party and
all such documents (including copies thereof and software) shall be
returned to the other party immediately upon the written request of
such other party.
8.08 Cooperation Regarding Defined Benefit Plan. Administration.
Buyer agrees to cooperate with Seller and to cause each of the
Automotive Filter Companies to cooperate with Seller in connection
with Seller's administration, after the Closing Date, of its master
defined benefit plan as applicable to Automotive Filter Company
employees.
8.09 Transfer of 401(k) Plan Assets.
(a) Certain employees of the Automotive Filter Companies
have accumulated funds for their retirement in an account which is
maintained for the benefit of such Automotive Filter Company employees
under the terms of the Mark IV Savings & Retirement Plan, a master
401(k) plan maintained by Seller for certain of its employees (the
"Master 401(k) Plan"). The assets of the Master 401(k) Plan are held
under the terms of a master trust agreement, dated as of January 1,
1987, between Mark IV and Marine Midland Bank, N.A. (the "Master
Trust").
(b) As soon as practicable following the Closing, Seller
shall take such action as may reasonably be necessary to amend the
Master 401(k) Plan to provide that each Automotive Filter Company
employee who is a participant in the Master 401(k) Plan shall be 100%
vested in his accrued benefit, if any, determined as of the Closing
Date under the terms of the Master 401(k) Plan.
(c) As soon as practicable following the Closing Date,
Seller shall take such action as may be reasonably necessary to
provide for the transfer of the accrued benefit of each employee of
any Automotive Filter Company under the terms of the Master 401(k)
Plan to the 401(k) plan established by Buyer for employees of the
Automotive Filter Companies (the "New 401(k) Plan"). In connection
with such transfer, Buyer shall take such action as may reasonably be
necessary or which may be required by the Internal Revenue Service,
including, but not limited to, the adoption of amendments to the New
401(k) Plan to accommodate such transfer. In addition, the Buyer
shall take all necessary steps to ensure that: (i) the accrued
benefit determined under the terms of the New 401(k) Plan as of the
date on which the assets of the Master 401(k) Plan which are
attributable to employees of the Automotive Filter Companies are
transferred (as hereinafter provided for) is not less than the accrued
benefit of each such employee determined as of such date under the
terms of the Master 401(k) Plan; (ii) for a period of no less than two
(2) years following the Closing, Participants in the New 401(k) Plan
will continue to be able to hold in the New 401(k) Plan, shares of
common stock of the Seller previously acquired under the Master 401(k)
Plan; (iii) Participants in the New 401(k) Plan will continue to be
able to hold in the New 401(k) Plan until September 30, 1999, shares
of common stock of PennzEnergy Company previously held under the
Master 401(k) Plan; and (iv)the New 401(k) Plan shall continue to
conform to all applicable requirements established for qualification
of retirement plans under the terms of Section 401(a) of the Code.
(d) As soon as practicable following the Closing Date,
Seller shall deliver to Buyer, a statement of the amount of the
accrued benefit under the terms of the Master 401(k) Plan of each
employee of each Automotive Filter Company.
(e) As soon as practicable following the Closing Date and
the delivery by Buyer to Seller of a copy of the New 401(k) Plan, a
copy of any amendment to such plan adopted pursuant to Section 8.09(c)
hereof, a copy of the trust established pursuant to the terms of the
New 401(k) Plan, a copy of the most recent IRS determination letter
for the New 401(k) Plan and such other documentation establishing to
the reasonable satisfaction of Seller's counsel that the New 401(k)
Plan, as amended, continues to conform to all applicable requirements
established for qualification of retirement plans under Section 401(a)
of the Code, and that the trust established pursuant to the terms of
the New 401(k) Plan conforms to all applicable requirements under
Section 501(a) of the Code and the regulations thereunder, but in no
event prior to the expiration of thirty (30) days following the filing
of any notices of transfer and assumption which may be required under
Section 6058(b) of the Code, Seller shall, direct the trustee of the
Master Trust holding the assets of the Master 401(k) Plan to transfer
to the trust established under the terms of the New 401(k) Plan, an
amount, in cash, equal to the aggregate value of the accounts
established under the terms of the Master 401(k) Plan for all
employees of the Automotive Filter Companies minus the aggregate value
of such accounts which is attributable to shares of common stock of
the Seller and shares of common stock of PennzEnergy Company, which
portion of such accounts shall be transferred in kind. For purposes
of calculating the amount to be transferred to the trust established
under the terms of the New 401(k) Plan pursuant to the preceding
sentence, the value of such accounts shall be determined as of the
date immediately preceding the date of such transfer, plus any
contributions which are required to be made in respect of such
employees which were not yet paid to the trustee of the Master Trust.
(f) In connection with the transfer contemplated by this
Section 8.09, Seller and Buyer shall cooperate with each other and
make all appropriate filings required under the Code or the
regulations thereunder in connection with such transfers.
8.10 Public Announcements. Buyer and Seller will consult with
each other before issuing any press releases or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any press release or make any
public statement without the consent of the remaining party, except as
may be required by law.
8.11 Employee Bonuses Due on Sale.
(a) Seller agrees to pay any incentive to stay bonuses
that may be due to any employee of the Automotive Filter Companies as
a result of the closing of the transactions contemplated by this
Agreement as described on Schedule 8.11.
(b) Buyer will pay incentive bonuses arising under the
operating incentive bonus plan for the Automotive Filter Employees in
an aggregate amount equal to the amount of the incentive plan bonus
liability which shall be accrued on the Closing Balance Sheet. The
aggregate amount of such incentive bonuses shall be allocated among
the Automotive Filter Company employees in a manner to be set forth in
a written designation to be delivered to Buyer by Seller within sixty
(60) days following the Closing Date.
(c) Buyer will pay or cause PPC to pay the amount of any
severance obligations which may become due and payable to those
Automotive Filter Company employees listed on Schedule 8.11 pursuant
to the severance policies attached as part of such schedule.
8.12 Post-Closing Cooperation. After the Closing, without
further consideration: (a) Seller shall take all such further actions
and execute, acknowledge and deliver all such further consents and
other documents as Buyer may reasonably request to facilitate or
effect the transactions contemplated by this Agreement; and (b) Buyer
shall, and shall cause each of the Automotive Filter Companies, to
take all such further actions and execute, acknowledge and deliver all
such further consents and other documents as Seller may reasonably
request in order to facilitate the transactions contemplated by this
Agreement.
8.13 Termination of Seller Arrangements. Seller shall cause all
agreements, arrangements and understandings between or among any of
the Automotive Filter Companies and Seller or any of its Affiliates
(other than matters referred to in this Agreement, the Ancillary
Agreements and any other agreements specifically requested by Buyer to
be retained), including, without limitation, any benefit plan or
arrangement in which any employee of any Automotive Filter Company is
a participant, to be terminated as to the Automotive Filter Companies
effective as of the date immediately preceding the Closing Date,
without cost or liability to Buyer or any of the Automotive Filter
Companies.
ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER
The obligation of Seller to enter into and complete the Closing
is subject to the fulfillment of the following conditions, any one of
more of which may be waived by it:
9.01 Representations and Covenants.
(a) The representations and warranties of Buyer contained
in this Agreement shall be true and correct on and as of the Closing
Date with the same force and effect as though made on and as of the
Closing Date.
(b) Buyer shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
(c) Buyer shall have delivered to Seller a certificate,
dated the Closing Date and signed by an officer of Buyer, to the
foregoing effect and stating that all conditions to Seller's
obligations hereunder have been satisfied.
9.02 Government Consents; Filings. The waiting period under the
HSR Act shall have expired and no conditions to the transactions
contemplated by this Agreement shall have been imposed or proposed by
any federal or state governmental agency.
9.03 Substitute Guarantees. Buyer shall deliver to the parties
identified in Schedule 9.03 attached hereto, guarantees in form and
substance reasonably acceptable to Seller and sufficient to cause each
of the parties identified in Schedule 9.03 attached hereto to deliver
to Seller a written acknowledgment from such parties that, effective
as of the Closing Date, Seller is and shall be unconditionally
released and discharged from any and all liabilities and obligations
that Seller may have under the terms of any guarantees previously
issued by Seller to such parties.
9.04 Litigation. No action, suit or proceeding which seeks to
restrain, modify or prevent the carrying out of the transactions
contemplated hereby or which seeks damages or a discovery order in
connection with such transactions shall have been instituted before
any court or U.S. or foreign governmental or regulatory body, or
instituted or threatened by any U.S. or foreign governmental or
regulatory body and no suit, action or proceeding shall have been
instituted or threatened against Buyer by any person, firm,
corporation or other entity before any court or U.S. or foreign
governmental regulatory body which, if adversely determined against
Buyer, would have a material adverse effect on the business and
financial condition of the Buyer.
9.05 Certificate of Buyer. Seller shall have received a
certificate of the Secretary or Assistant Secretary of Buyer, dated
the Closing Date setting forth the resolutions of the Board of
Directors of Buyer authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
and certifying that such resolutions were duly adopted and have not
been rescinded or amended as of the Closing Date.
ARTICLE 10 CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER
The obligation of Buyer to enter into and complete the Closing is
subject to the fulfillment, on or prior to the Closing Date, of the
following conditions, any one or more of which may be waived by it:
10.01 Representations and Covenants.
(a) The representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
(b) Seller shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or
complied with by Seller on or prior to the Closing Date.
(c) Seller shall have delivered to Buyer a certificate,
dated the Closing Date and signed by Seller, to the foregoing effect
and stating that all conditions to Buyer's obligations hereunder have
been satisfied.
10.02 Government Consents; Filings. The waiting period under
the HSR Act shall have expired and no conditions to the transactions
contemplated by this Agreement shall have been imposed or proposed by
any federal or state governmental agency.
10.03 Litigation. No action, suit or proceeding which seeks
to restrain, modify or prevent the carrying out of the transactions
contemplated hereby or which seeks damages or a discovery order in
connection with such transaction shall have been instituted before any
court or U.S. or foreign governmental or regulatory body, or
instituted or threatened by any U.S. or foreign governmental or
regulatory body, and no suit, action or proceeding shall have been
instituted or threatened by any person, firm, corporation or other
entity against Seller before any court or U.S. or foreign governmental
body which, if adversely determined against Seller, would have a
material adverse effect on the business and financial condition of the
Seller.
10.04 Certificate as to Authorization. Buyer shall have
received a certificate of the Secretary or an Assistant Secretary of
Seller, dated the Closing Date, setting forth resolutions of the
Boards of Directors of Seller authorizing the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby, certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date,
and certifying that approval by Seller's shareholders is not required,
or has been obtained, in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE 11 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
11.01 Survival of Representations. Except for the
representations and warranties made by Seller pursuant to Sections
4.04, and 4.22 hereof, all representations and warranties contained in
ARTICLE 4 or ARTICLE 5 and made by any party to this Agreement
pursuant hereto shall survive for a period of two (2) years after the
Closing Date. The representations and warranties made by Seller
pursuant to Section 4.04 hereof (hereinafter the "Title Warranties")
shall survive for a period of ten (10) years following the Closing
Date, and the representations and warranties made by Seller pursuant
to Section 4.22 hereof and the covenants of Seller contained in
Section 8.05 hereof (hereinafter the "Tax Warranties") shall survive
for a period equal to the applicable statute of limitations with
respect to any Taxes referred to therein.
11.02 Statements as Representations. All statements
contained in any Schedule delivered pursuant to ARTICLE 4 or ARTICLE 5
hereof shall be deemed representations and warranties within the
meaning of Sections 9.01, 10.01, and 11.01 hereof.
11.03 Indemnification by Seller. Subject to the terms and
conditions of this Section, Seller hereby agrees to indemnify, defend
and hold harmless Buyer and any parent, subsidiary or affiliate
companies of Buyer, including, without limitation, each of the
Automotive Filter Companies (hereinafter the "Buyer Companies"), from
and against all demands, claims, actions or causes of action,
assessments, payments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest, penalties and
reasonable attorneys' fees and expenses (collectively "Damages")
asserted against, resulting to, imposed upon or incurred by the Buyer
Companies or any member thereof, by reason of or resulting from:
(a) any liabilities of Seller or any of the Automotive
Filter Companies arising out of or relating to any activities
unrelated to the conduct of the Automotive Filter Business which, for
purposes hereof, shall include, without limitation, liabilities
arising out of or relating to any of the matters set forth in Schedule
11.03(a) attached hereto;
(b) any liabilities of Seller or any of its affiliates
arising as a result of a breach by Seller or any of Seller's
Affiliates of any of their respective obligations arising under any of
the Ancillary Agreements;
(c) any liabilities of any of the Automotive Filter
Companies to any of its officers and directors who have resigned
pursuant to the provisions of this Agreement (other than those
liabilities for payment of incentive bonuses which have been assumed
by Buyer pursuant to Section 8.11 hereof);
(d) any liabilities for payment to current or former
employees of any of the Automotive Filter Companies, of pension
benefits payable to such employees under the terms of the Master
Defined Benefit Plan or of retirement benefits payable to such
employees under the terms of the Master 401(k) Plan provided that, in
the case of liabilities in respect of the Master 401(k) Plan, the
transfer of assets of the Master 401(k) Plan to the New 401(k) Plan as
contemplated by Section 8.09 hereof has not occurred;
(e) any breach of any of the Title Warranties;
(f) any breach of any of the Tax Warranties and any
liability of any of the Automotive Filter Companies for payment of any
Taxes with respect to the conduct of their respective businesses for
all periods or portions thereof ending on or prior to the Closing Date
to the extent any such Taxes (excluding deferred Taxes) are not
reflected as a liability on the Closing Balance Sheet.
(g) a breach of any covenant, representation or warranty of
Seller (other than the Title Warranties and the Tax Warranties)
contained in or made pursuant to this Agreement.
For purposes of this Agreement, the claims described in
Section 11.03(a) through and including Section 11.03(g)and Section
11.04(a) through and including Section 11.04(c) shall be referred to
individually as a "Claim" and collectively as "Claims".
The Seller's obligation to indemnify the Buyer Companies as
set forth in the preceding paragraph shall be limited to the Damages
(as defined above) arising from Claims (as defined above) and shall
exclude Damages which may arise as a result of any reorganization or
other legal restructuring of the Buyer or the Buyer Companies and in
no event shall any such reorganization or restructuring be deemed to
increase the liability of Seller beyond the actual Damages arising
from any Claims.
The Seller's obligation to indemnify and hold Buyer harmless
from and against any Damages incurred as a result of Claims described
in Sections 11.03(a), (b), (c) (d), (e) or (f) hereof shall apply with
respect to the full amount of any and all Damages incurred by Buyer
and the Buyer Companies as a result of such Claims.
With respect to Damages incurred by Buyer or any member of
the Buyer Companies and arising from any Claim or Claims described in
Section 11.03(g) hereof, Seller shall have no liability or obligation
to indemnify and hold Buyer or any member of the Buyer Companies
harmless from any Damages incurred by Buyer or any member of the Buyer
Companies except to the extent that the aggregate amount of the
Damages incurred by Buyer and the Buyer Companies arising from any
such Claim or from all prior Claims described solely in Section
11.03(g) hereof, exceeds Two Million Eight Hundred Thousand Dollars
($2,800,000) and then, only to the extent that the amount of such
Damages exceeds Two Million Eight Hundred Thousand Dollars
($2,800,000).
Notwithstanding anything to the contrary contained in this
Section 11.03, Seller shall have no obligation to indemnify Buyer or
the Buyer Companies with respect to any Damages incurred as a result
of Claims described in Section 11.03(g) hereof to the extent that the
aggregate amount of the Damages incurred by Buyer or the Buyer
Companies with respect to the Claims described solely in Section
hereof exceeds an amount equal to Thirty Five Million Dollars
($35,000,000.00).
11.04 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend and hold harmless Seller and any parent, subsidiary
or affiliate companies of Seller (the "Seller Companies") from any
Damages arising by reason of or resulting from:
(a) any claim made against Seller or any member of the
Seller Companies relating to the Automotive Filter Business or any of
the businesses, assets or operations of the Automotive Filter
Companies before or after the Closing Date other than claims which
result from any breach by Seller of any representation or warranty in
this Agreement;
(b) any breach by Buyer, any of the Automotive Filter
Companies or any of Buyer's affiliates of any of their respective
obligations arising under any of the Ancillary Agreements; and
(c) any breach of any representation, warranty, covenant or
agreement of Buyer contained in or made pursuant to this Agreement.
The Buyer's obligation to indemnify the Seller Companies as
set forth in the preceding paragraph shall be limited to the Damages
(as defined above) arising from Claims (as defined above) and shall
exclude Damages which may arise as a result of any reorganization or
other legal restructuring of the Seller or the Seller Companies and in
no event shall any such reorganization or restructuring be deemed to
increase the liability of Buyer beyond the actual Damages arising from
any Claims.
The Buyer's obligation to indemnify and hold the Seller
harmless from and against any Damages incurred as a result of Claims
described in Section 11.04(a) and Section 11.04(b) hereof shall apply
with respect to the full amount of any and all Damages incurred by
Seller and the Seller Companies as a result of such Claims.
With respect to Damages incurred by Seller or any member of
the Seller Companies and arising from any claim or claims described
solely in Section 11.04(c) hereof, Buyer shall have no liability or
obligation to indemnify and hold Seller or any member of the Seller
Companies harmless from any Damages incurred by Seller or any member
of the Seller Companies except to the extent that the aggregate amount
of the Damages incurred by Seller and the Seller Companies arising
from any such Claim or Claims described solely in Section 11.04(c)
hereof, exceeds Two Million Eight Hundred Thousand Dollars
($2,800,000) and then, only to the extent that the amount of such
excess exceeds Two Million Eight Hundred Thousand Dollars ($2,800,000)
of Damages.
Notwithstanding anything to the contrary contained in this
Section 11.04, Buyer shall have no obligation to indemnify Seller or
the Seller Companies with respect to any Damages incurred solely as a
result of Claims described in Section 11.04(c) hereof to the extent
that the aggregate amount of the Damages incurred by Seller or the
Seller Companies with respect to the Claims described solely in
Section 11.04(c) hereof exceeds Thirty Five Million Dollars
($35,000,000.00).
11.05 Conditions of Indemnification. The obligations and
liabilities of Seller under Section 11.03 hereof and the obligations
and liabilities of Buyer under Section 11.04 hereof with respect to
Claims relating to third parties shall be subject to the following
terms and conditions:
(a) A party seeking indemnification under this Agreement
("Indemnified Party") will give the party required to provide such
indemnification (the "Indemnifying Party") prompt notice of any such
Claim, and thereafter, provided that the Indemnifying Party
acknowledges in writing to the Indemnified Party that the Indemnifying
Party is obligated to indemnify the Indemnified Party against such
Claim, the Indemnifying Party will be permitted to undertake the
defense thereof by representatives chosen by it. The failure to
provide any such notice shall not excuse the Indemnifying Party from
its obligations hereunder, provided that the Claim shall be reduced by
any loss to the Indemnifying Party resulting from such failure to
provide notice.
(b) If the Indemnifying Party, within a reasonable time
after notice of any such Claim, fails to acknowledge in writing its
obligation to indemnify the Indemnified Party with respect to such
Claim or fails to diligently prosecute or settle such Claim, the
Indemnified Party will have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of
the Indemnifying Party to participate at its expense in the defense of
such Claim at any time prior to settlement, compromise or final
determination thereof.
(c) Anything in this Section 11.05 to the contrary
notwithstanding: (i) if there is a reasonable probability that a Claim
may materially and adversely affect an Indemnified Party other than as
a result of money damages or other money payments, the Indemnified
Party shall have the right, at its own cost and expense, to defend,
and with the consent of the Indemnifying Party, to compromise or
settle such Claim; and (ii) the Indemnifying Party shall not, without
the written consent of the Indemnified Party, its successors and
assigns settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party, of a
release from all liability in respect of such Claim.
11.06 Termination of Indemnification Obligations. The
obligations to indemnify and hold harmless a party hereto with respect
to any Damages arising from any Claims: (a) contained in Section
11.03(g) and Section 11.04(c) shall terminate when the applicable
representation or warranty terminates pursuant to Section 11.01; (b)
contained in the provisions of Section 11.03(e) and Section 11.03(f)
shall terminate ninety (90) days following the expiration of the
applicable statute of limitations which applies with respect to the
underlying basis for such Claims; and (c) contained in the provisions
of Sections 11.03(a) through and including Section 11.03(d) or Section
11.04(a) and Section 11.04(b) shall not terminate; provided that, as
to clause (a) and clause (b) above, such obligations to indemnify and
hold harmless shall not terminate with respect to any representation,
warranty or liability with respect to which the Indemnified Party
shall have, prior to the termination of such indemnity obligation
therefor, made a specific Claim relating to a breach of such
representation, warranty or such liability by delivering written
notice (stating in reasonable detail the basis of such Claim) to the
Indemnifying Party.
11.07 Litigation Cooperation.
(a) The Seller shall cooperate with the Buyer and each of
the Automotive Filter Companies and shall cause its officers,
employees, agents, auditors and representatives to cooperate with the
Buyer and each of the Automotive Filter Companies in connection with
the investigation, prosecution, defense and settlement of any judicial
or administrative proceeding or claim which Buyer or any of the
Automotive Filter Companies has undertaken the defense of in
connection with the Buyer's obligation to indemnify the Seller as
provided for in Section 11.04 above; provided that the Buyer shall
reimburse the Seller and its officers, employees, agents, auditors and
representatives for the reasonable out-of-pocket costs and expenses
incurred in providing such assistance.
(b) The Buyer shall cooperate with the Seller and shall
cause its officers, employees, agents, auditors and representatives to
cooperate with the Seller in connection with the investigation,
prosecution, defense and settlement of any judicial or administrative
proceeding or claim which Seller has undertaken the defense of in
connection with the Seller's obligation to indemnify the Buyer as
provided for in Section 11.03 above provided that the Seller shall
reimburse the Buyer and its officers, employees, agents, auditors and
representatives for the reasonable out-of-pocket costs and expenses
incurred in providing such assistance.
11.08 Remedies Cumulative. Except as herein expressly
provided, the remedies provided herein shall be cumulative and shall
not preclude assertion by any party hereto of any other rights or the
seeking of any other remedies against any other party hereto.
ARTICLE 12 MISCELLANEOUS PROVISIONS
12.01 Termination. This Agreement may be terminated at any
time prior to the Closing without any liability on the part of either
Buyer or Seller: (a) by mutual consent of Seller and Buyer; and (b)
by Seller or Buyer at any time subsequent to February 26, 1999 if the
Closing has not occurred by or before such date.
12.02 Certain Terms. For purposes of this Agreement,
(a) the term "knowledge" with respect to Seller means the
actual knowledge of those persons identified in Schedule 12.02
attached hereto;
(b) "material adverse affect" with respect to any of the
Automotive Filter Companies means a material adverse change in the
financial condition, results of operations, business, assets, earnings
or revenues of any of the Automotive Filter Companies.
12.03 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented only by
written agreement of the parties hereto at any time with respect to
any of the terms contained herein.
12.04 Waiver of Compliance. Any failure of Seller, on the
one hand, or Buyer, on the other, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in
writing by the Chairman, President or a Vice President of Buyer or
Seller, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
12.05 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given: (a) if delivered by hand
when delivered; (b) if by telex, telecopy, cable or overnight delivery
when received, or (c) if by mail, five (5) days after being mailed,
certified or registered mail, with postage prepaid:
(i) If to Seller, to:
Mark IV Industries, Inc.
One Towne Centre
501 John James Audubon Parkway
Amherst, NY 14226
Attention: William P. Montague
with a copy to:
Gerald S. Lippes, Esq.
Lippes, Silverstein, Mathias & Wexler LLP
700 Guaranty Building
28 Church Street
Buffalo, New York 14202
or to such other person or address as Seller shall furnish
to Buyer in writing.
(ii) If to Buyer, to:
Arvin Industries, Inc.
One Noblitt Plaza
Columbus, Indiana 47201
Attention: Ronald R. Snyder, Esq.
with a copy to:
Dickstein, Shapiro, Morin & Oshinsky LLP
2101 L Street NW
Washington, D.C. 20037
Attention: Emanuel Faust, Esq.
or to such other person or address as Buyer shall furnish to Seller in
writing.
12.06 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties.
12.07 Governing Law and Jurisdiction. This Agreement and the
legal relations among the parties hereto shall be governed by and
construed in accordance with the internal laws of the State of New
York without regard to its conflicts of law doctrine.
12.08 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
12.09 Headings. The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or
interpretation of this Agreement.
12.10 Entire Agreement. This Agreement, including the
Exhibits hereto, the Schedules hereto and the other documents and
certificates delivered pursuant to the terms hereof, sets forth the
entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
12.11 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or corporation
other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
12.12 Severability. The invalidity or illegality of any
provision, term, or agreement contained in or made a part of this
Agreement shall not affect the validity of the remainder of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be affixed
hereto, all as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ W. P. Montague
=========================
Title: President
ARVIN INDUSTRIES, INC.
By: /s/ Richard A. Smith
=========================
Title: Vice President-Finance