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Exhibit 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
DAYCO PRODUCTS, LLC
AND THE OTHER SELLERS SET FORTH
ON THE SIGNATURE PAGES HERETO
AS THE "SELLERS"
AND
CARLISLE COMPANIES INCORPORATED
AS "BUYER"
DATED AS OF AUGUST 10, 2001
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.........................................................1
1.1 Defined Terms................................................1
1.2 Other Defined Terms.........................................12
1.3 The Parties' Knowledge......................................13
ARTICLE II. PURCHASE AND SALE OF ASSETS.......................................14
2.1 Transfer of Assets..........................................14
2.2 Assumption of Liabilities...................................14
2.3 Purchase Price..............................................15
2.4 Calculation of Estimated Purchase Price.....................16
2.5 Post-Closing Adjustment.....................................16
2.6 Closing Costs; Transfer Taxes and Fees......................19
ARTICLE III. CLOSING..........................................................20
3.1 Closing.....................................................20
3.2 Deliveries at Closing.......................................20
3.3 Consents to Assignment......................................22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.....................23
4.1 Organization................................................24
4.2 Authorization...............................................24
4.3 Absence of Certain Changes or Events........................25
4.4 Assets; Sold Subsidiary; Spanish Subsidiary.................27
4.5 Facilities..................................................27
4.6 Contracts and Commitments...................................29
4.7 Permits.....................................................30
4.8 No Conflict or Violation; Consents and Approvals............31
4.9 Financial Statements; Undisclosed Liabilities...............31
4.10 Litigation..................................................32
4.11 Compliance with Law.........................................32
4.12 Intellectual Property.......................................32
4.13 Seller Plans................................................33
4.14 Tax Matters.................................................35
4.15 Environmental Matters.......................................37
4.16 No Brokers or Finders.......................................39
4.17 Product Warranty............................................39
4.18 Customers, Distributors and Suppliers.......................39
4.19 Insurance...................................................40
4.20 Labor Relations.............................................40
4.21 Employees...................................................40
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4.22 Accounts Receivable.........................................41
4.23 Inventories.................................................41
4.24 Bank Account; Powers of Attorney............................41
4.25 Certain Payments............................................42
4.26 Books and Records...........................................42
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER............................42
5.1 Organization of Buyer.......................................42
5.2 Authorization...............................................42
5.3 No Conflict or Violation; Consents and Approvals............43
5.4 No Brokers or Finders.......................................42
5.5 Financing...................................................43
ARTICLE VI. COVENANTS OF THE SELLERS AND BUYER................................43
6.1 Further Assurances..........................................43
6.2 No Solicitation.............................................44
6.3 Notification of Certain Matters.............................44
6.4 Access by Buyer.............................................45
6.5 Conduct of Business.........................................45
6.6 Employee Matters............................................47
6.7 Intercompany Amounts........................................55
6.8 Insurance Matters...........................................55
6.9 [Intentionally Omitted].....................................57
6.10 No Additional Representations and Warranties................57
6.11 Disclaimer of Estimates and Projections.....................57
6.12 Non-competition with Buyer..................................57
6.13 Non-competition with the Sellers............................59
6.14 Release of Bank Lien and Other Encumbrances.................60
6.15 [Intentionally Omitted].....................................60
6.16 Removal of TCI Equipment....................................61
6.17 Further Assurances Relating to the Sold Subsidiary
and the Spanish Subsidiary..................................61
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS...............................61
7.1 Representations, Warranties and Covenants...................61
7.2 No Laws or Governmental Orders..............................61
7.3 Other Agreements............................................61
7.4 Deliveries..................................................62
ARTICLE VIII. CONDITIONS TO BUYER'S OBLIGATIONS...............................62
8.1 Representations, Warranties and Covenants...................62
8.2 No Law or Governmental Orders...............................62
8.3 Other Agreements............................................62
8.4 FIRPTA Affidavit............................................62
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8.5 Accounts....................................................62
8.6 Deliveries..................................................63
8.7 Release of Encumbrances.....................................63
ARTICLE IX. POST-CLOSING COVENANTS............................................63
9.1 Collection of Accounts Receivable...........................63
9.2 Books and Records...........................................63
9.3 Survival of Representations, Etc............................63
9.4 Indemnification.............................................64
9.5 Limitations on Indemnification..............................65
9.6 Indemnification for Taxes...................................67
9.7 Bulk Sales Laws.............................................68
9.8 Non-Solicitation of Employees...............................68
9.9 Spanish Subsidiary Environmental Remediation................68
ARTICLE X. MISCELLANEOUS......................................................69
10.1 Termination.................................................69
10.2 Assignment..................................................69
10.3 Notices.....................................................70
10.4 Governing Law...............................................71
10.5 Entire Agreement; Amendments and Waivers....................71
10.6 Counterparts................................................71
10.7 Expenses....................................................71
10.8 Severability................................................72
10.9 Titles; Gender..............................................72
10.10 Publicity...................................................72
10.11 Exhibits and Schedules; Construction of Certain Provisions..72
10.12 Cumulative Remedies.........................................72
10.13 Service of Process, Consent to Jurisdiction.................73
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EXHIBITS
EXHIBIT A - Excluded Assets
EXHIBIT B-1 - Form of Intellectual Property Agreement
EXHIBIT B-2 - Form of Intercompany Leases
EXHIBIT B-3 - Form of Software License Agreement
EXHIBIT B-4 - Form of Supply Agreements
EXHIBIT B-5 - Form of Transition Services Agreement
EXHIBIT C - Allocation of Purchase Price
EXHIBIT D-1 - Form of Deed
EXHIBIT D-2 - Form of Bill of Sale
EXHIBIT E-1 - Form of Assignment of Leases
EXHIBIT E-2 - Form of Assignment of Contract
EXHIBIT E-3 - Form of Assignment of Intellectual Property
EXHIBIT F - Form of Assumption Agreement
EXHIBIT G-1 - Form of Opinion of Latham & Watkins
EXHIBIT G-2 - Form of Opinion of Lippes, Silverstein, Mathias & Wexler LLP
EXHIBIT G-3 - Form of Opinion of Steven J. Ford
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 10, 2001
(this "AGREEMENT"), is by and among DAYCO PRODUCTS, LLC, a Delaware limited
liability company, and the other Sellers set forth on the signature pages
hereto, in each case with offices at c/o Mark IV Industries, Inc., One Towne
Centre, 501 John James Audubon Parkway, Amherst, New York 14226-0810, and
Carlisle Companies Incorporated, a Delaware corporation with offices at 15800
John J. Delaney Drive, Suite 350, Charlotte, North Carolina 28277 ("BUYER").
RECITALS
WHEREAS, the Sellers own certain assets which are used in the
operation of the Industrial Power Transmission Business (as defined below).
WHEREAS, Buyer desires to purchase from the Sellers, and the
Sellers desire to sell to Buyer, such assets upon the terms and subject to the
conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements of the parties
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have
the following meanings. Any of such terms, unless the context otherwise
requires, may be used in the singular or plural, depending upon the reference.
"ACCOUNTING PRINCIPLES" shall mean GAAP, as modified or
clarified by, and subject to, the statements, principles, exceptions and
qualifications identified on SCHEDULE 1.1(a).
"ACTION" shall mean any action, Claim, suit, litigation,
proceeding or investigation.
"AFFILIATE" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
"ANCILLARY AGREEMENTS" shall mean, collectively, (a) the
Intercompany Leases, (b) the Intellectual Property Agreement, (c) the Transition
Services Agreement, (d) the Supply Agreements and (e) the Software License
Agreement.
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"AUTOMOTIVE AFTERMARKET BUSINESS" shall mean the sale of
products to customers operating in the automotive aftermarket for replacement
parts (other than those parts produced by original equipment suppliers) as
conducted on the Closing Date at the Sellers' facility located in Tulsa,
Oklahoma.
"AUTOMOTIVE POWER TRANSMISSION BUSINESS" shall mean the
business of manufacturing, distributing and/or selling products such as rubber
belts, tensioners and pulleys, which are used to transfer power to accessory and
camshaft drive systems for use in cars, light trucks and other on-road vehicles
up to and including Class 8, and for use on engines of up to 1,000 horse power
(other than in connection with the Transferred CVT Business).
"BUYER ERISA AFFILIATE" shall mean with respect to Buyer, any
other person that, together with Buyer, would be treated as a single employer
under Code Section 414.
"BUYER'S EXCLUSIVE MARKET" shall mean the market for CVT
Products sold (a) for use in vehicles designed primarily for off-road uses,
including, but not limited to, snowmobiles, golf carts, all-terrain vehicles,
lawn and grounds vehicles, recreation vehicles, agricultural vehicles, forestry
vehicles, mining vehicles, construction vehicles and any other vehicles
manufactured for similar uses or (b) for use in stationary industrial machinery
and equipment.
"CLAIM" shall mean any claim, demand, cause of action, chose
in action, right of recovery or right of set-off of whatever kind or description
against any person.
"CLOSING NET ASSETS" shall mean the Net Assets of the
Industrial Power Transmission Business at the Closing Date as reflected on (or
calculable from) the Closing Date Statement of Net Assets.
"CODE" shall mean the U.S. Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
confidentiality agreement dated November 10, 2000 by and between Buyer and SG
Advisers on behalf of the Sellers.
"CONTROL" (including its correlative meanings "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of securities or partnership
or other interests, by contract or otherwise.
"CREDIT AGREEMENT" shall mean that certain Credit Agreement,
dated as of September 14, 2000, by and among MIV Holdings S.A., MIV Acquisition
Corporation, Dayco Products, LLC, certain subsidiaries of Sellers, the lenders
and financial institutions from time to time party thereto, and The Chase
Manhattan Bank, as Administrative Agent.
"CVT PRODUCTS" shall mean continuously variable transmission
belts designed to accommodate a wide range of speed ratios through the use of
sheave faces that move apart and allow the belt to move up and down in the
sheave to create speed ratio changes.
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"DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by the Sellers to Buyer on the date hereof which sets forth certain
exceptions to the representations and warranties contained in Article IV hereof.
Each reference in this Agreement to any numbered Schedule is a reference to that
numbered Schedule in the Disclosure Schedule.
"ENCUMBRANCE" shall mean any lien, pledge, charge, easement or
other security interest.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any entity that is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, a
Seller, the Sold Subsidiary or the Spanish Subsidiary as defined in Section
414(b), (c), (m) or (o) of the Code.
"ESTIMATED NET ASSETS" shall mean the Net Assets of the
Industrial Power Transmission Business reflected on (or calculable from) the
Estimated Statement of Net Assets.
"ESTIMATED STATEMENT OF NET ASSETS" shall mean the unaudited
statement of the Net Assets of the Industrial Power Transmission Business as of
June 30, 2001, prepared in accordance with the Accounting Principles and
containing a statement of the Estimated Net Assets (or from which the Estimated
Net Assets can be calculated), a copy of which is attached as SCHEDULE 1.1(b).
"EXCLUDED ASSETS," shall mean the following assets of the
Sellers relating to the Industrial Power Transmission Business, which,
notwithstanding any other provision of this Agreement, are expressly excluded
from the Industrial Power Transmission Assets and are not to be acquired by
Buyer pursuant to this Agreement: (a) all cash and cash equivalents other than
as set forth on the Closing Date Statement of Net Assets (including without
limitation, the Cash Balance); (b) all Permits, to the extent not transferable;
(c) all of the Sellers' rights and remedies pursuant to this Agreement and the
Ancillary Agreements; (d) all Intellectual Property of the Sellers except (i)
Intellectual Property expressly included as Transferred Intellectual Property
and (ii) all rights granted to Buyer with respect to Licensed Intellectual
Property; (e) all assets of the Sellers or any affiliate thereof that are not
Industrial Power Transmission Assets; (f) all assets of the Sellers the benefits
of which are to be provided to Buyer in accordance with the terms of the
Ancillary Agreements; (g) except as set forth in Section 6.6 hereof, all assets
held by any Seller Plan; (h) any refunds or credits or claims for refunds or
credits relating to the payment of Taxes for Tax periods ending on or before the
Closing Date; (i) all receivables of the Spanish Subsidiary with respect to the
environmental remediation described on SCHEDULE 1.1(c) hereto; and (j) the other
assets set forth on EXHIBIT A attached hereto.
"EXISTING SUPPLY AGREEMENTS" shall mean, collectively, the
agreements listed on SCHEDULE 1.1(d) hereto, with respect to the supply of
certain products between the Industrial Power Transmission Business and the
supplier or purchaser party thereto, as each such agreement may be amended,
modified or otherwise supplemented from time to time.
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"FACILITIES" shall mean, collectively, the Owned Real Property
and the Leased Real Property. For purposes of Section 4.15 only, the term shall
also include any Owned Real Property or Leased Real Property interest formerly
owned or operated by any Seller, the Sold Subsidiary, the Spanish Subsidiary or
any predecessor person.
"FACILITY LEASES" shall mean, collectively, the Intercompany
Leases and the Third Party Leases.
"FINANCIAL STATEMENTS" shall mean, collectively, (a) the
Interim Statement of Net Assets, (b) the unaudited statement of Net Assets at
May 31, 2001, and (c) the unaudited income statement of the Industrial Power
Transmission Business for the twelve months ending February 28, 2001 and the
three months ending May 31, 2001, in each case prepared in accordance with the
Accounting Principles, copies of which statements are attached as SCHEDULE 4.9.
"FIXTURES AND EQUIPMENT" shall mean all of the equipment,
furniture, fixtures, furnishings, machinery, vehicles, automobiles, trucks,
spare parts, supplies, machinery, tooling, molds, patterns, dies and other
tangible personal property owned by the Sellers and used primarily in connection
with the Industrial Power Transmission Business, and shall in any event include
all equipment, computers and other information technology equipment, phone
systems, furniture, fixtures, furnishings, machinery, vehicles, automobiles,
trucks, spare parts, supplies, tooling, molds, patterns, dies and other tangible
personal property located at the Facilities.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" shall mean any court, government
(federal, state, local, foreign or multinational) or other regulatory,
administrative or governmental agency or authority.
"GOVERNMENTAL ORDER" shall mean any judgment, decision,
consent decree, injunction, ruling, writ or order of or entered by any
Governmental Authority that is binding on any person or its property under
applicable Law.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INCOME TAXES" shall mean all taxes (including franchise
taxes), charges, fees, levies or other assessments imposed by any Taxing
Authority and based on or measured solely with respect to net income or profits,
including any interest, penalties or additions attributable or imposed with
respect thereto.
"INDUSTRIAL POWER TRANSMISSION ASSETS" shall mean all of the
right, title and interest in and to the business, properties, assets and rights
of any kind, whether tangible or intangible, real or personal, used primarily in
connection with the Industrial Power Transmission Business as a going concern
that are owned by the Sellers or in which the Sellers have any direct or
indirect interest, including, without limitation, all of the Sellers' right,
title and interest in and to the following:
(a) all accounts and notes receivable (other than
intercompany accounts and notes receivable);
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(b) all Industrial Power Transmission Contracts, to
the extent assignable and provided any such Contract that is
listed on SCHEDULE 4.6 is not identified thereon as being
retained by Sellers;
(c) the Owned Real Property;
(d) all Fixtures and Equipment;
(e) all Inventory;
(f) all Transferred Intellectual Property;
(g) all Permits, to the extent transferable;
(h) all leasehold interests relating to (i) the
Leased Real Property and (ii) any personal property leased by,
or used primarily in connection with the Industrial Power
Transmission Business;
(i) all available supplies, sales literature,
promotional literature, art work, display units, telephone and
fax numbers and purchasing records;
(j) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection
with the Industrial Power Transmission Assets or services
furnished to the Sellers pertaining to the Industrial Power
Transmission Business or affecting the Industrial Power
Transmission Assets, to the extent such warranties,
representations and guarantees are assignable;
(k) all Claims against any person or entity,
including without limitation any liens, security interests,
pledges or other rights to payment or to enforce payment in
connection with products delivered by the Sellers on or prior
to the Closing Date;
(l) (i) all records and lists pertaining to the
Industrial Power Transmission Assets, (ii) all records and
lists pertaining to the customers, suppliers or personnel of
the Industrial Power Transmission Business, (iii) all product,
business and marketing plans of the Industrial Power
Transmission Business and (iv) all books, ledgers, files,
reports, plans, drawings and operating records of every kind
maintained by the Sellers and used primarily in connection
with the Industrial Power Transmission Business, but excluding
the originals of the Sellers' respective minute books, stock
books and Tax Returns;
(m) subject to the conditions set forth in Section
6.8, all proceeds from any Insurance Coverage Claim;
(n) the Sold Subsidiary Stock of the Sold Subsidiary
set forth on SCHEDULE 4.4(b) hereto;
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(o) all assets reflected on the Interim Statement of
Net Assets relating to the Industrial Power Transmission
Business that have not otherwise been sold or transferred in
the ordinary course of business;
(p) the corporate assets located in Dayton, Ohio, and
set forth on SCHEDULE 1.1(e) hereto;
(q) all telephone numbers used in or relating to the
Industrial Power Transmission Business;
(r) all goodwill in the Industrial Power Transmission
Business;
(s) the Cash Balance; and
(t) all rights in connection with prepaid expenses
with respect to the Industrial Power Transmission Assets.
Notwithstanding the foregoing, the Industrial Power Transmission Assets shall
not include any of the Excluded Assets.
"INDUSTRIAL POWER TRANSMISSION BUSINESS" shall mean (i) for
purposes of Sections 6.12, 6.13 and 9.8 hereof, the business of manufacturing,
distributing and/or selling products such as rubber belts, tensioners and
pulleys, which are used to transfer power from an engine or motor to the drive
system, including the Transferred CVT Business, but excluding the Automotive
Power Transmission Business and the Retained CVT Business and (ii) for purposes
of the remainder of this Agreement, the business as currently conducted at the
Facilities of manufacturing, distributing and/or selling products such as rubber
belts, tensioners and pulleys, which are used to transfer power from an engine
or motor to the drive system, including the Transferred CVT Business, but
excluding the Automotive Power Transmission Business and the Retained CVT
Business.
"INDUSTRIAL POWER TRANSMISSION CONTRACTS" shall mean all
executory, written agreements and contracts to which any Seller, the Sold
Subsidiary, the Spanish Subsidiary or the Industrial Power Transmission Business
is a party or is bound and which relate primarily to the Industrial Power
Transmission Business or the Industrial Power Transmission Assets, including,
but not limited to, the Existing Supply Agreements.
"INDUSTRIAL POWER TRANSMISSION EMPLOYEES" means the current
and former employees of the Sellers, the Sold Subsidiary and the Spanish
Subsidiary who are or were primarily employed in the Industrial Power
Transmission Business.
"INTELLECTUAL PROPERTY" shall mean all patents, copyrights,
trademarks and service marks, tradenames, trade secrets and know-how (including
all registrations and applications for any of the foregoing) owned or licensed
by the Sellers or the Industrial Power Transmission Business and used primarily
in connection with, and which relate primarily to, the Industrial Power
Transmission Business.
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"INTELLECTUAL PROPERTY AGREEMENT" shall mean the Intellectual
Property Agreement to be entered into by the Sellers and Buyer concurrent with
the Closing pursuant to this Agreement with respect to the Transferred
Intellectual Property, in substantially the form attached hereto as EXHIBIT B-1.
"INTERCOMPANY LEASES" shall mean, collectively, the leases and
subleases listed on SCHEDULE 1.1(f) hereto to be entered into by certain Sellers
or affiliates thereof and Buyer concurrent with the Closing pursuant to this
Agreement, each in substantially the form attached hereto as EXHIBIT B-2.
"INTERIM STATEMENT OF NET ASSETS" shall mean the unaudited
statement of net assets of the Industrial Power Transmission Business at
February 28, 2001, prepared in accordance with the Accounting Principles, a copy
of which statement is attached as SCHEDULE 1.1(g).
"INVENTORY" shall mean all inventory of the Industrial Power
Transmission Business held for resale and all raw materials, work in process,
finished products, wrapping, supply and packaging items and similar items.
"IRS" shall mean the U.S. Internal Revenue Service.
"LAWS" shall mean any laws, statutes, ordinances, regulations,
rules, court decisions and orders of any Governmental Authority.
"LEASED REAL PROPERTY" shall mean the real property subject to
the Facility Leases, together with all buildings, structures, fixtures and
leasehold improvements located thereon.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including without limitation those liabilities,
indebtedness and obligations arising under any Law, Action, threatened Action,
Governmental Order or any award of any arbitrator of any kind, and those arising
under any contract, agreement, commitment or undertaking.
"LICENSED INTELLECTUAL PROPERTY" shall have the meaning set
forth in the Intellectual Property Agreement, the form of which is attached
hereto as EXHIBIT B-1.
"LOSSES" shall mean, in respect of the indemnification
obligations of any party pursuant to this Agreement, any and all actual costs,
losses, liabilities, obligations, damages, deficiencies and other reasonable
out-of-pocket expenses, including without limitation interest, penalties,
reasonable attorneys' fees and all amounts paid in investigation, defense or
settlement of Actions relating to Losses. Payments by Buyer of amounts for which
Buyer is indemnified hereunder, and payments by the Sellers of amounts for which
the Sellers are indemnified, shall not be a condition precedent to recovery.
Notwithstanding anything to the contrary in this
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Agreement, Losses indemnifiable hereunder shall expressly exclude punitive
damages, exemplary damages, and other penalty or speculative damages.
"MATERIAL ADVERSE EFFECT" shall mean any effect or change that
is or would reasonably be expected to be material and adverse to the Industrial
Power Transmission Assets or the financial condition, results of operations or
prospects of the Industrial Power Transmission Business, other than any effect
or change arising out of any adverse change or trend in the economy in general
or in the industry in which the Industrial Power Transmission Business operates.
"NET ASSETS" shall, at a specified date, mean the aggregate
total assets of the Industrial Power Transmission Business LESS the aggregate
total liabilities of the Industrial Power Transmission Business, each calculated
at such date; PROVIDED, HOWEVER, that Net Assets shall not reflect any Excluded
Assets or Retained Liabilities and shall reflect the application of the
Accounting Principles.
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any
similar phrase shall mean the ordinary course of the Industrial Power
Transmission Business, consistent with the Sellers' past practice in operating
the Industrial Power Transmission Business.
"OTHER TAX" or "OTHER TAXES" shall mean all taxes, charges,
levies, fees or other assessments, including, but not limited to, transfer,
gross receipt, sales, use, service, occupation, ad valorem, property, payroll,
personal property, excise, severance, premium, stamp, documentary, license,
registration, social security, employment, unemployment, disability,
environmental (including taxes under Section 59A of the Code), add-on,
value-added, withholding (whether payable directly or by withholding and whether
or not requiring the filing of a Tax Return therefor), commercial rent and
occupancy taxes, and any estimated taxes, deficiency assessments, interest,
penalties and additions to tax or additional amounts in connection therewith,
imposed by any Taxing Authority, but specifically excluding Income Taxes.
"OWNED REAL PROPERTY" shall mean the real property set forth
on SCHEDULE 1.1(h) hereto, and all appurtenances, easements and other rights,
buildings and other improvements located thereon or related thereto.
"PBGC" shall mean the U.S. Pension Benefit Guaranty
Corporation.
"PERMITS" shall mean, collectively, all licenses, permits,
franchises, approvals, authorizations, consents or orders of, or filings with,
any Governmental Authority required in connection with any Environmental,
Occupational Health and Safety Laws or the operation of the Industrial Power
Transmission Business as presently conducted or in the ownership of the
Industrial Power Transmission Assets.
"PERMITTED ENCUMBRANCES" shall mean (a) deposits or pledges
made in the ordinary course of business in connection with worker's
compensation, unemployment insurance, old-age pensions and other social security
benefits; (b) Encumbrances securing the performance of bids, tenders, leases,
contracts (other than for the repayment of debt), statutory obligations, surety,
customs and appeals bonds and other obligations of like nature, incurred as
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an incident to and in the ordinary course of business; (c) Encumbrances imposed
by law, such as carriers', warehousemen's, mechanics', materialmen's,
landlords', laborers', suppliers' and vendors' liens incurred in the ordinary
course of business and securing obligations which are not yet due or which are
being contested in good faith; (d) Permitted Tax Liens; (e) use or zoning or
planning restrictions, easements, licenses, rights of way, declarations,
reservations, provisions, covenants, conditions, waivers, irregularities, survey
exceptions or other title matters or Encumbrances (and, with respect to
leasehold interests, Encumbrances and other obligations incurred, created,
assumed or permitted to exist and arising by, through or under a landlord or
owner of the leased property, with or without consent of the lessee) which do
not materially impair the use (in the manner currently used) or value of the
parcel of property to which they relate; (f) with respect to each Owned Real
Property, other Encumbrances or exceptions to title described in the commitments
for title insurance for such Owned Real Property listed on SCHEDULE 1.1(i)
hereto (other than those Encumbrances and exceptions that would be removed from
such commitments if a survey had been performed in connection therewith); and
(g) any extensions, renewals and replacements of any of the foregoing.
"PERMITTED TAX LIENS" shall mean (a) liens securing the
payment of Taxes which are either not delinquent or being contested in good
faith by appropriate proceedings, and (b) liens for current Taxes not yet due
and payable.
"PERSON" shall mean an individual, a partnership, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government or any department or agency thereof or any other
entity.
"POST-CLOSING ADJUSTMENT AMOUNT" shall have the meaning set
forth in Section 2.5(g) hereof.
"PRELIMINARY NET ASSETS" shall mean an amount equal to
$92,300,000, representing the Net Assets of the Industrial Power Transmission
Business at February 28, 2001, as reflected in the Interim Statement of Net
Assets.
"REPRESENTATIVE" shall mean, with respect to any person, any
officer, director, principal, attorney, agent, employee or other authorized
representative of such person.
"RETAINED CVT BUSINESS" shall mean the business of
manufacturing and selling CVT Products for use in the Seller's Exclusive Market
and otherwise as permitted in Section 6.12(b).
"RETAINED LIABILITIES" shall mean, except to the extent
reflected in the Closing Date Statement of Net Assets, (a) any Liabilities of
any Seller for Taxes; (b) any Liabilities under Seller Plans (including, without
limitation, medical and dental benefit, long term disability benefit and workers
compensation benefit claims incurred by a Transferred Employee prior to the date
such person becomes a Transferred Employee), except as otherwise set forth in
Section 2.2(d) or in Section 6.6 hereof; (c) any Liabilities to any affiliate of
the Sellers, the Sold Subsidiary or the Spanish Subsidiary; (d) any Liabilities
for legal, accounting, audit and investment banking fees, brokerage commissions
and any other expenses incurred by the Sellers, the Sold Subsidiary, the Spanish
Subsidiary or any affiliate thereof in connection with the
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negotiation and preparation of this Agreement and the transactions contemplated
hereby; (e) any Liabilities for, or related to any, capitalized lease (other
than those reflected in the Closing Date Statement of Net Assets), indebtedness
and guarantees of indebtedness of the Sellers, the Sold Subsidiary, the Spanish
Subsidiary or any affiliate thereof to banks, financial institutions or other
persons with respect to borrowed money or otherwise, and all interest, premiums
and penalties accrued thereon; (f) any Liabilities of the Sellers under any
Industrial Power Transmission Contract or Permit not assignable to Buyer, in the
event that Buyer is not provided with the benefits of such Contract or Permit
pursuant to Section 3.3 hereof; (g) subject to the provisions of Section 3.3
hereof, any Liabilities of the Sellers in connection with or arising out of the
transfer or assignment of any Industrial Power Transmission Contract or Permit,
including any computer software agreement; (h) any Liability of the Sellers not
relating to the Industrial Power Transmission Business; (i) any Liabilities
relating to the Excluded Assets; (j) all costs and expenses incurred in
connection with the resignation of (i) the directors of the Sold Subsidiary set
forth in Section 3.2(xiv) hereof and (ii) the directors of the Spanish
Subsidiary set forth in Section 3.2(xv) hereof, and (k) any other Liabilities
not constituting an Assumed Liability or otherwise described herein as a
Retained Liability.
"SELLER PLANS" shall mean any employee pension benefit plan,
as defined in Section 3(2) of ERISA, any employee welfare benefit plan, as
defined in Section 3(1) of ERISA, and any agreement, plan, program, fund,
policy, contract or arrangement (whether written or unwritten) providing
compensation, benefits, pension, retirement, superannuation, profit sharing,
stock bonus, stock option, stock purchase, phantom or stock equivalent, bonus,
thirteenth month, incentive, deferred compensation, hospitalization, medical,
dental, vision, vacation, life insurance, death benefit, sick pay, disability,
severance, termination indemnity, redundancy pay, educational assistance,
holiday pay, housing assistance, moving expense reimbursement, fringe benefit or
similar employee benefits covering any Industrial Power Transmission Employee or
the beneficiaries and dependents of any Industrial Power Transmission Employee,
regardless of whether it is mandated under local law, voluntary, private,
funded, unfunded, financed by the purchase of insurance, contributory or
non-contributory; PROVIDED, HOWEVER, that any governmental plan or program
requiring the mandatory payment of social insurance taxes or similar
contributions to a governmental fund with respect to the wages of an employee
shall not be considered a "Seller Plan" for these purposes.
"SELLERS" shall mean, collectively, Dayco Products LLC, a
Delaware limited liability company, Mark IV Industries, Inc., a Delaware
corporation, Dayco Pacific PTY Ltd., a company organized under the laws of
Australia, Mark IV Luxembourg S.a.r.l., a company organized under the laws of
Luxembourg, Mark IV Industries Canada Corp., a Canadian corporation, Dayco
Europe S.a.r.l, a company organized under the laws of France, Dayco Europe Ltd.,
a company organized under the laws of the United Kingdom, Dayco Distributing
Inc., a Kentucky corporation, Mark IV AB, a company organized under the laws of
Sweden, and Mark IV Industries GmbH, a company organized under the laws of
Germany.
"SELLERS' EXCLUSIVE MARKET" shall mean the market for CVT
Products sold (a) for use in cars, light trucks and all other on-road vehicles
up to and including Class 8, (b) for use in engine-related applications
involving engines up to and including 1000 horsepower, (c) to customers of the
Automotive Aftermarket Business, (d) for use in on-road scooters, three wheel
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vehicles, city cars/city vans and other similar vehicles, or (e) as part of a
complete gear-box or engine power pack system.
"SG ADVISERS" shall mean, collectively, SG Hambros Corporate
Finance Advisory, a division of Societe Generale, and SG Cowen Securities
Corporation.
"SOFTWARE" shall have the meaning set forth in the Software
License Agreement, the form of which is attached hereto as EXHIBIT B-3.
"SOFTWARE LICENSE AGREEMENT" shall mean the Software License
Agreement to be entered into by one or more of the Sellers, as the case may be,
and Buyer concurrent with the Closing pursuant to this Agreement, with respect
to certain software developed by such Seller to be licensed to Buyer, in
substantially the form attached hereto as EXHIBIT B-3.
"SOLD SUBSIDIARY" shall mean Dayco Industrial Belts SRL, a
company organized under the laws of Italy.
"SUPPLY AGREEMENTS" shall mean the Supply Agreements to be
entered into by one or more of the Sellers, as the case may be, and Buyer
concurrent with the Closing pursuant to this Agreement, with respect to the
supply of certain products by Buyer to such Sellers or such Sellers to Buyer,
following the Closing, in substantially the form attached hereto as EXHIBIT B-4,
the cost information with respect to which are set forth on SCHEDULE P hereto.
"TAX" or "TAXES" shall mean Income Taxes and Other Taxes.
"TAX RETURN" shall mean any return, report or similar
statement or form required to be filed with respect to any Tax (including any
attached schedules and related or supporting information), including without
limitation any information return, claim for refund, amended return or
declaration of estimated Tax.
"TAXING AUTHORITY" shall mean any Governmental Authority
(domestic or foreign) responsible for the imposition of any Tax or exercising
Tax regulatory authority.
"THIRD PARTY LEASES" shall mean, collectively, the leases set
forth on SCHEDULE 1.1(j) hereto, as each such lease may be amended, modified or
otherwise supplemented from time to time.
"TRANSFERRED CVT BUSINESS" shall mean (i) for purposes of
Sections 6.12, 6.13 and 9.8 hereof, the business of manufacturing and selling
CVT Products for use in the Buyer's Exclusive Market and as otherwise permitted
in Section 6.13(b) and (ii) for purposes of the remainder of this Agreement, the
business, as currently conducted at the Facilities, of manufacturing and selling
CVT Products for use in the Buyer's Exclusive Market and as otherwise permitted
in Section 6.13(b).
"TRANSFERRED INTELLECTUAL PROPERTY" includes the Intellectual
Property relating to the Industrial Power Transmission Business that is to be
transferred to Buyer and shall have the meaning that is set forth in the
Intellectual Property Agreement, the form of which is attached hereto as EXHIBIT
B-1.
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"TRANSITION SERVICES AGREEMENT" shall mean the Transition
Services Agreement to be entered into by the Sellers and Buyer concurrent with
the Closing pursuant to this Agreement with respect to certain transition
services to be provided by the parties following the Closing, in substantially
the form attached hereto as EXHIBIT B-5.
"UNION CONTRACTS" shall mean the Industrial Power Transmission
Contracts set forth on SCHEDULE 1.1(k) hereto.
1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Accounting Expert 2.5(d)
Agreement Preamble
Assignment of Contracts 3.2(a)(v)
Assignment of Intellectual Property 3.2(a)(vi)
Assignment of Leases 3.2(a)(iv)
Assumed Benefit Plan 6.6(i)
Assumed Liabilities 2.2
Assumption Agreement 3.2(b)(iii)
Bank Lien 6.14
Buyer Preamble
Buyer 401(k) Plan 6.6(f)
Buyer Competitor 6.13(c)
Buyer Pension Plan 6.6(e)
Buyer Plans 6.6(b)
Buyer Subsidiary 6.13(a)
Buyer Welfare Plans 6.6(c)
Buyer Workers Compensation Program 6.6(n)
Cash Balance 8.5
Claim Notice 9.4(c)
Closing 3.1
Closing Date 3.1
Closing Date Statement of Net Assets 2.5(a)
Dudley Lease 3.3(b)
Environmental, Occupational Safety and Health 4.15(a)(i)
Laws
Estimated Purchase Price 2.3(a)
Final Purchase Price 2.3(a)
Former Business Employees 6.6(e)
Hazardous Materials 4.15(a)(ii)
HSR Filing 6.1(b)
Insurance Coverage 6.8(a)
Insurance Coverage Claim 6.8(a)
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Term Section
---- -------
Insured Loss 9.5(b)
Interest Rate 2.5(g)
Leases 3.3(b)
Mark IV Pension Plan 6.6(e)
Material Contracts 4.6(a)
Non-Assignable Rights 3.3(a)
Objection Notice 2.5(b)
Objection Period 2.5(b)
Post-Closing Adjustment Amount 2.5(g)
Post-Closing Partial Period 9.6(b)
Pre-Closing Partial Period 9.6(a)
Preliminary Transfer Date 6.6(e)(ii)
Proposal 3.3(d)
Purchase Price 2.3(a)
Reimbursed Amounts 6.8(b)
Release 4.15(a)(iii)
Sedlmayr Lease 3.3(b)
Seller 401(k) Plan 6.6(f)
Seller Competitor 6.12(c)
Seller Affiliate 4.3(n)
Seller Subsidiary 6.12(a)
Seller Welfare Plan 6.6(c)
Sold Subsidiary Stock 4.4(b)
Spanish Subsidiary 4.4(c)
Transfer Date 6.6(f)
Transferred Employees 6.6(a)(iii)
Transferee 3.3(d)
Transferred Pension Plan Participants 6.6(e)
WARN Act 6.6(o)
1.3 THE PARTIES' KNOWLEDGE
(a) Whenever a phrase herein is qualified by "to the knowledge
of the Sellers" or a similar phrase, it shall mean the actual
knowledge, without independent investigation, of William P. Montague
(President of Mark IV Industries, Inc.), Richard L. Grenolds, Richard
Bing, Michael Gearhardt, Stanley Bellar, Roy L. Pyle, George Photakis
and William Senften.
(b) Whenever a phrase herein is qualified by "to the knowledge
of Buyer" or a similar phrase, it shall mean the actual knowledge,
without independent investigation, of Rick McKinnish, Scott Selbach and
Rick Russell.
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ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1 TRANSFER OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Sellers will sell,
convey, transfer, assign and deliver to Buyer, and Buyer will purchase and
acquire from the Sellers, all of the Industrial Power Transmission Assets, free
and clear of all Encumbrances other than Permitted Encumbrances.
2.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, Buyer shall assume,
pay, perform and discharge in due course all Liabilities of the Sellers relating
to the Industrial Power Transmission Assets and the Industrial Power
Transmission Business, whether or not accruing, arising out of or relating to
events or occurrences happening before, on or after the Closing Date (the
"ASSUMED LIABILITIES"), other than the Retained Liabilities, including, without
limitation, the following:
(a) all accounts payable relating to the Industrial Power
Transmission Business;
(b) all Liabilities with respect to the performance of all
Industrial Power Transmission Contracts and under all Permits
constituting Industrial Power Transmission Assets under this Agreement;
(c) all Liabilities arising out of, relating to or in
connection with any environmental matters, including without limitation
any Liabilities under any Environmental, Occupational Safety and Health
Laws, applicable to or involving the Facilities, the Industrial Power
Transmission Business or the Industrial Power Transmission Assets;
(d) all (i) Liabilities under any retention or "stay-bonus"
agreements or arrangements in existence on or prior to the Closing Date
with respect to Transferred Employees, which are set forth on SCHEDULE
2.2(d)(i), the amount of which is $275,000, (ii) Liabilities for
severance with respect to any Transferred Employee, including, but not
limited to, those Liabilities set forth on SCHEDULE 2.2(d)(ii), (iii)
Liabilities for incentive bonuses and vacation pay accrued through the
Closing Date with respect to any Transferred Employees and (iv)
Liabilities for deferred compensation related to the individual set
forth on SCHEDULE 2.2(d)(iv), the amount of which is $150,000;
(e) all products Liabilities, including without limitation all
product warranty or guaranty Liabilities and Liabilities for product
recall or replacement, with respect to any product manufactured, sold
or distributed (including prior to the Closing Date) by or on behalf of
the Industrial Power Transmission Business (whether or not any Claim
therefor shall have been made or be pending as of the Closing Date);
(f) all Liabilities for capital expenditures set forth on
SCHEDULE 2.2(f) hereof; and
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(g) all Liabilities arising out of, relating to or in
connection with any pending or threatened Action involving the
Industrial Power Transmission Business or the Industrial Power
Transmission Assets.
Buyer shall take, or cause to be taken, all actions necessary within Buyer's
control to cause the assumption on the Closing Date by Buyer of the Assumed
Liabilities, including without limitation the execution and delivery at the
Closing of the Assumption Agreement. The assumption by Buyer of the Assumed
Liabilities shall not enlarge any rights of any person. Nothing herein shall
prevent Buyer from contesting any of the Assumed Liabilities with any third
party obligee.
2.3 PURCHASE PRICE
(a) The aggregate purchase price to be paid by Buyer to the
Sellers for the Industrial Power Transmission Assets shall be equal to
One Hundred Forty Two Million Dollars ($142,000,000) (the "PURCHASE
PRICE"). The Purchase Price shall be subject to adjustment (i) FIRST,
at the Closing pursuant to Section 2.4 hereof for purposes of
determining the amount which is payable by Buyer to the Sellers at the
Closing pursuant to Section 2.3(b) hereof (as so adjusted, the
"ESTIMATED PURCHASE PRICE"), and (ii) SECOND, following the Closing in
the manner provided in Section 2.5 hereof for purposes of determining
any Post-Closing Adjustment Amount which is payable following the
Closing (as so adjusted, the "FINAL PURCHASE PRICE").
(b) At the Closing, Buyer shall pay the Estimated Purchase
Price (determined by adjusting the Purchase Price in the manner
provided for in Section 2.4 hereof) to the Sellers by wire transfer of
immediately available funds to an account designated by the Sellers in
writing. Any Post-Closing Adjustment Amount required to be paid
pursuant to Section 2.5 hereof shall be paid in accordance with Section
2.5(g) hereof.
(c) As and when determined in accordance with Section 2.5
hereof, the Final Purchase Price together with the Assumed Liabilities
shall be allocated among the Industrial Power Transmission Assets in
the manner required by Section 1060 of the Code. The amount of the
Purchase Price (without giving effect to any adjustments thereto
pursuant to this Article II) and Assumed Liabilities allocable to the
various Industrial Power Transmission Assets is set forth on EXHIBIT C
attached hereto. As soon as practicable following the Closing, and
prior to the filing of any Tax Return which includes information
related to the transactions contemplated by this Agreement, the Sellers
and Buyer, employing the allocation specified in this Section 2.3(c),
shall prepare mutually acceptable and substantially identical initial
and supplemental IRS Forms 8594 "Asset Acquisition Statements Under
Section 1060" consistent with EXHIBIT C attached hereto (together with
and which gives effect to mutually agreed-upon adjustments to the
allocation set forth on EXHIBIT C attached hereto as a result of any
required adjustments to the Purchase Price pursuant to this Article II)
which the parties shall use to report the transactions contemplated by
this Agreement to the applicable Taxing Authorities.
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Neither the Sellers nor Buyer shall take a position in any Tax Return,
Tax proceeding, Tax audit or otherwise inconsistent with the
allocation provided by this Section 2.3(c); PROVIDED, however, that
nothing contained herein shall require the Sellers or Buyer to contest
any proposed deficiency or adjustment by any Taxing Authority which
challenges such allocation, or exhaust administrative remedies before
any Taxing Authority in connection therewith, and the Sellers and Buyer
shall not be required to litigate before any court (including without
limitation the United States Tax Court), any proposed deficiency or
adjustment by any Taxing Authority which challenges such allocation.
The Sellers and Buyer shall give prompt notice to the other of the
commencement of any Tax audit or proceeding or the written assertion of
any proposed deficiency or adjustment by any Taxing Authority which
challenges such allocation.
(d) Notwithstanding the provisions of Section 6.5 hereof or
any other provision of this Agreement to the contrary, the Sellers
shall have the right to distribute, assign or otherwise transfer, at
any time and from time to time prior to the Closing, the Excluded
Assets to Mark IV Industries, Inc. or any designee thereof, including,
without limitation, the assets of the Sold Subsidiary and the Spanish
Subsidiary described on SCHEDULE 2.3(d) hereof, the form and manner of
such distribution, assignment or transfer to be in the sole discretion
of the Sellers.
2.4 CALCULATION OF ESTIMATED PURCHASE PRICE. The Estimated
Purchase Price payable by Buyer at the Closing pursuant to Section 2.3(b) hereof
shall be equal to $139,000,000, which amount equals the Purchase Price MINUS the
difference between the Estimated Net Assets and the Preliminary Net Assets, PLUS
the Cash Balance.
2.5 POST-CLOSING ADJUSTMENT
(a) As soon as practicable following the Closing, but not
later than one hundred twenty (120) days thereafter, the Sellers shall,
with the cooperation and assistance of Buyer, prepare or cause to be
prepared in accordance with the Accounting Principles an unaudited
statement of Net Assets of the Industrial Power Transmission Business
at the Closing Date (the "CLOSING DATE STATEMENT OF NET ASSETS"), which
Closing Date Statement of Net Assets shall contain a statement of the
Closing Net Assets (or from which the Closing Net Assets can be
calculated), and shall cause a copy of the Closing Date Statement of
Net Assets to be delivered to Buyer.
(b) Buyer shall have thirty (30) days following delivery of
the Closing Date Statement of Net Assets (the "OBJECTION PERIOD") to
provide written notice to the Sellers (the "OBJECTION NOTICE") of any
good faith objection to any portion of the Closing Date Statement of
Net Assets relating to the calculation of the Closing Net Assets, which
objection shall be set forth with reasonable detail in such Objection
Notice. Unless Buyer timely delivers an Objection Notice before the
expiration of the Objection Period, the Closing Date Statement of Net
Assets (and the Closing Net Assets reflected thereon or calculated
therefrom) shall be deemed to have been accepted and approved by Buyer
and shall thereafter be final and binding upon Buyer for purposes of
any post-closing
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adjustment set forth in this Section 2.5 (and any amounts to be paid
pursuant to Section 2.5(g) hereof shall thereupon be paid). In
addition, to the extent any portion of the Closing Date Statement of
Net Assets or of the calculation of the Closing Net Assets shall not be
objected to in the Objection Notice, such matters shall be deemed to
have been accepted and approved by Buyer and shall be final and binding
upon Buyer for purposes hereof (and any amounts to be paid pursuant to
Section 2.5(g) hereof shall thereupon be paid). If Buyer timely
delivers an Objection Notice before the expiration of the Objection
Period, then those aspects of the Closing Date Statement of Net Assets
objected to in the Objection Notice shall not thereafter be final and
binding until resolved in accordance with this Section 2.5.
(c) Following receipt of any Objection Notice, the Sellers and
Buyer shall discuss in good faith the applicable objections set forth
therein for a period of sixty (60) days thereafter and shall, during
such period, attempt to resolve the matter or matters in dispute by
mutual written agreement. If the parties reach such an agreement, such
agreement shall be confirmed in writing and shall revise the Closing
Date Statement of Net Assets to reflect such agreement, which agreement
(and the Closing Date Statement of Net Assets, as so revised, including
the Closing Net Assets reflected thereon or calculated therefrom) shall
thereafter be final and binding upon the Sellers and Buyer for purposes
of any post-closing adjustment set forth in this Section 2.5 (and any
amounts to be paid pursuant to Section 2.5(g) hereof shall thereupon be
paid).
(d) If the parties are unable to reach a mutual agreement in
accordance with Section 2.5(c) hereof during the sixty (60) day period
referred to therein, then the Sellers and Buyer shall jointly select
the New York office of one of the five (5) largest United Stated
independent public accountants (other than PricewaterhouseCoopers, LLP
and Arthur Andersen) (the "ACCOUNTING EXPERT"), who, acting as an
expert and not as an arbitrator, shall resolve those matters still in
dispute with respect to the Closing Date Statement of Net Assets and
the Closing Net Assets reflected thereon or calculated therefrom. If
the parties fail to agree on an Accounting Expert within five (5)
business days after the expiration of the sixty (60) day period, either
party may request the American Arbitration Association to appoint such
an Accounting Expert (or another accounting firm if all five accounting
firms decline to or are disqualified from accepting the dispute), and
such appointment shall be conclusive and binding upon the parties. The
Accounting Expert's resolution of the matters in dispute, including any
adjustments to the Closing Date Statement of Net Assets (or the Closing
Net Assets reflected thereon or calculated therefrom) made by the
Accounting Expert, shall be final and binding on the Sellers and Buyer
(and any amounts to be paid pursuant to Section 2.5(g) hereof shall
thereupon be paid). The Accounting Expert shall make a determination as
soon as practicable and in any event within sixty (60) days (or such
other time as the parties shall agree in writing) after its engagement.
Notwithstanding anything set forth in this Section 2.5(d), the scope of
any dispute to be resolved by the Accounting Expert pursuant to this
Section 2.5(d) shall be limited to whether the Closing Date Statement
of Net Assets was prepared in accordance with the Accounting Principles
or whether there were errors of fact or mathematical errors in the
Closing Date Statement of Net Assets or the calculation of the Closing
Net Assets.
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(e) The Sellers and Buyer agree that any adjustments made
pursuant to this Section 2.5 shall be made without regard to
materiality. Notwithstanding any other provision of this Agreement,
including without limitation any provision stating that remedies shall
be cumulative and not exclusive, this Section 2.5 provides the sole and
exclusive method for resolving any and all disputes of each and every
nature whatever that may arise between or among the parties with
respect to the purchase price adjustment. The Sellers and Buyer further
agree on their own behalf and on behalf of their respective affiliates
and Representatives that if one or more of them should initiate any
attempt to resolve any such dispute or disputes in any manner other
than the sole and exclusive manner set forth in this Section 2.5, such
initiators shall pay and reimburse all fees, costs and expenses
incurred by any other party as a result of, in connection with or
related to such attempt or attempts. This Section 2.5(e) shall not
preclude Buyer from seeking indemnification pursuant to Section 9.4(a)
with respect to any untruth or inaccuracy of any representation or
warranty made by the Sellers in this Agreement, except to the extent
that such matter was previously resolved pursuant to the procedures set
forth in this Section 2.5.
(f) The Final Purchase Price shall be calculated based upon
the final calculation of the Closing Net Assets as determined in this
Section 2.5 and shall be calculated at the time the Closing Date
Statement of Net Assets (and the Closing Net Assets reflected thereon
or calculated therefrom) becomes final and binding on the parties
pursuant to this Section 2.5. If the Closing Net Assets as reflected on
or calculated from such final and binding Closing Date Statement of Net
Assets:
(i) are greater than or equal to the Preliminary Net
Assets, then the Final Purchase Price shall be equal to (A)
the Purchase Price (without giving effect to any adjustment
pursuant to Section 2.4 hereof), PLUS (B) the amount, if any,
by which the Closing Net Assets exceeds the Preliminary Net
Assets; or
(ii) are less than the Preliminary Net Assets, then
the Final Purchase Price shall be equal to (A) the Purchase
Price (without giving effect to any adjustment pursuant to
Section 2.4 hereof), MINUS (B) the amount by which the
Preliminary Net Assets exceeds the sum of the Closing Net
Assets.
(g) If the Final Purchase Price (i) is greater than the
Estimated Purchase Price, Buyer shall pay to the Sellers the amount by
which the Final Purchase Price exceeds the Estimated Purchase Price, or
(ii) is less than the Estimated Purchase Price, the Sellers shall pay
to Buyer the amount by which the Estimated Purchase Price exceeds the
Final Purchase Price (the amount of either such adjustment, a
"POST-CLOSING ADJUSTMENT AMOUNT"). Any Post-Closing Adjustment Amount
payable by either party pursuant to this Section 2.5(g) shall be paid
promptly by the party required to pay such Post-Closing Adjustment
Amount, but in no event later than ten (10) business days following the
determination of such Post-Closing Adjustment Amount. Payment by either
party of any Post-Closing Adjustment Amount shall be made in
immediately available funds via wire transfer to an account designated
by the party entitled to receive such payment in writing and shall be
paid together with interest thereon from and including the Closing
Date, but
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excluding the date of payment, at a variable rate per annum equal to
the "Prime Rate" as reported from time to time in THE WALL STREET
JOURNAL (the "INTEREST RATE").
(h) Each of the parties hereto agrees that the sole purpose of
the post-closing adjustment to the Purchase Price contemplated by this
Section 2.5 is to measure the effect of operating activities and
transactions that have occurred between the date of the Interim
Statement of Net Assets and the Closing. This post-closing adjustment
is not intended to permit the introduction of different judgments,
accounting methods, policies, practices, procedures or estimation
methods for the purpose of determining the amount of Closing Net Assets
and preparing the Closing Date Statement of Net Assets from those used
in determining the amount of Preliminary Net Assets and preparing the
Interim Statement of Net Assets. Notwithstanding anything else in this
Section 2.5 to the contrary, to the extent that a disagreement relates
to an error in the Closing Date Statement of Net Assets and a similar
error exists in the Interim Statement of Net Assets, then if the
Closing Net Assets is reduced or increased as a result of such error,
the Preliminary Net Assets shall also be reduced or increased, as
appropriate, to reflect such error, and as a result thereof, only the
difference between the Preliminary Net Assets (as so adjusted) and the
Closing Net Assets (as so adjusted) shall be the post-closing
adjustment contemplated by this Section 2.5.
(i) All fees and expenses of the Sellers relating to the
matters described in this Section 2.5, including the preparation and
delivery of the Closing Date Statement of Net Assets, shall be borne by
the Sellers, and all fees and expenses of Buyer relating to the matters
described in this Section 2.5 shall be borne by Buyer. Notwithstanding
the foregoing, in the event any dispute is submitted to the Accounting
Expert for resolution as provided in Section 2.5(d) hereof, the fees
and expenses of the Accounting Expert (and any arbitrator appointing
such expert, if applicable) shall be borne equally by the Sellers and
Buyer.
2.6 CLOSING COSTS; TRANSFER TAXES AND FEES. The Sellers and
Buyer shall be each responsible for and shall pay one-half of (a) all
documentary and transfer Taxes and any Other Taxes imposed by reason of the
transfer of the Industrial Power Transmission Assets provided hereunder (and any
deficiency, interest or penalty asserted with respect thereto); (b) all
recording, filing, title and registration fees or other charges in connection
with or as a direct result of the transfer of the Industrial Power Transmission
Assets, including, but not limited to, the assignment of the Transferred
Intellectual Property; and (c) all costs of obtaining the transfer of existing
Permits which may be lawfully transferred. Notwithstanding the foregoing, Buyer
shall be solely responsible for (i) all costs of obtaining owner's title
insurance policies with respect to any of the Facilities; (ii) all premiums and
other costs of obtaining surveys with respect to any of the Facilities; and
(iii) all costs of applying for a new Permit, if a Permit may not lawfully be
transferred.
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ARTICLE III.
CLOSING
3.1 CLOSING. Unless this Agreement shall have been terminated
in accordance with Section 10.1 hereof, the closing of the purchase and sale of
the Industrial Power Transmission Assets and the consummation of the other
transactions contemplated herein (the "CLOSING") shall be held at 10:00 a.m. New
York time at the offices of Mark IV Industries Inc., One Towne Centre, 501 John
James Audubon Parkway, Amherst, New York on the second (2nd) business day
following the satisfaction or waiver of all of the conditions precedent to the
obligations of the parties set forth in Articles VII and VIII (other than
conditions which are not capable of being satisfied until the Closing Date) (the
"CLOSING DATE"), unless the parties hereto otherwise agree in writing.
3.2 DELIVERIES AT CLOSING
(a) To effect the transactions contemplated hereby, the
Sellers shall, at the Closing, deliver to Buyer, or cause to be
delivered to Buyer:
(i) one or more deeds in substantially the form
attached hereto as EXHIBIT D-1 executed by the applicable
Sellers and conveying good and marketable fee simple title to
the Owned Real Property to Buyer;
(ii) one or more bills of sale in substantially the
form attached hereto as EXHIBIT D-2 executed by the Sellers
and conveying in the aggregate all of the Sellers' owned
tangible personal property included in the Industrial Power
Transmission Assets to Buyer;
(iii) with respect to the Sold Subsidiary, one or
more certificates representing all of the issued and
outstanding Sold Subsidiary Stock of the Sold Subsidiary, duly
endorsed in blank or accompanied by a duly executed stock
power executed in blank or such other documentation as may be
necessary;
(iv) subject to Section 3.3 hereof, one or more
assignment documents in substantially the form attached hereto
as EXHIBIT E-1 executed by the Sellers party thereto and
assigning the Third Party Leases to Buyer (the "ASSIGNMENT OF
LEASES");
(v) subject to Section 3.3 hereof, one or more
assignment documents in substantially the form attached hereto
as EXHIBIT E-2 executed by the Sellers party thereto and
assigning the Industrial Power Transmission Contracts to Buyer
(the "ASSIGNMENT OF CONTRACTS");
(vi) one or more assignment documents in
substantially the form attached hereto as EXHIBIT E-3 executed
by the Sellers and assigning the Transferred Intellectual
Property to Buyer (which shall in any case be in recordable
form to the extent necessary to assign such rights) (the
"ASSIGNMENT OF INTELLECTUAL PROPERTY");
(vii) executed counterparts to each of the Ancillary
Agreements;
(viii) the certificates and other matters described
in Article VIII;
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(ix) certified copies of each Seller's certificate of
incorporation and by-laws and the appropriate corresponding
documentation for the Sold Subsidiary and the Spanish
Subsidiary;
(x) certificates of good standing of each Seller,
issued not earlier than thirty (30) days prior to the Closing
Date by the applicable Secretaries of State and the
appropriate corresponding documentation for the Sold
Subsidiary and the Spanish Subsidiary;
(xi) an incumbency and specimen signature certificate
with respect to the officers of each Seller executing this
Agreement and each Ancillary Agreement to which such Seller is
a party;
(xii) the written opinions of Latham & Watkins and
Lippes, Silverstein, Mathias & Wexler, counsels to the Sellers
incorporated in Delaware, addressed to Buyer, dated as of the
Closing Date, in substantially the forms set forth on EXHIBITS
G-1 and G-2, respectively;
(xiii) the written opinion of Studio Carnelutti, the
Italian counsel of the Sold Subsidiary, addressed to Buyer,
dated as of the Closing Date, with respect to the Sold
Subsidiary, in form and substance reasonably acceptable to
Buyer;
(xiv) the written resignation of the following
directors of the Sold Subsidiary: Giuliano Zucco, Kurt J.
Johansson, A. Rittatore Vonwiller, A. Rolando and W. Vilardi;
(xv) the written resignation of the following
directors of the Spanish Subsidiary: Richard Bing and William
Montague;
(xvi) consents to the assignment of each Industrial
Power Transmission Contract and Permit set forth on SCHEDULE
3.2(a)(xvi), or alternate arrangements with respect thereto,
all as reasonably acceptable to Buyer;
(xvii) certificates of title or origin with respect
to all vehicles included in the Industrial Power Transmission
Assets; and
(xviii) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer title in and to the
Industrial Power Transmission Assets in accordance with the
provisions of this Agreement.
(b) To effect the transactions contemplated hereby, Buyer
shall, at the Closing, deliver to the Sellers, or cause to be delivered
to the Sellers (unless previously delivered):
(i) an amount equal to the Estimated Purchase Price,
payable in accordance with Section 2.3(b) hereof;
(ii) executed counterparts to each of the Ancillary
Agreements;
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(iii) an instrument of assumption in substantially
the form attached hereto EXHIBIT F, evidencing Buyer's
assumption, in accordance with Section 2.2 hereof, of the
Assumed Liabilities (the "ASSUMPTION AGREEMENT");
(iv) executed counterparts to each of the Assignment
of Leases, the Assignment of Contracts and the Assignment of
Intellectual Property;
(v) the certificates and other matters described in
Article VII;
(vi) certified copies of Buyer's certificate of
incorporation and by-laws;
(vii) a certificate of good standing of Buyer, issued
not earlier than thirty (30) days prior to the Closing Date by
the Secretary of State of Delaware;
(viii) an incumbency and specimen signature
certificate with respect to the officers of Buyer executing
this Agreement and each Ancillary Agreements to which Buyer is
a party; and
(ix) the written opinion of Steven J. Ford, counsel
to Buyer, addressed to Sellers, dated as of the Closing Date,
in substantially the form set forth on EXHIBIT G-3.
(c) To the extent that a form of any document to be delivered
hereunder is not attached as an Exhibit hereto, such documents shall be
in form and substance, and shall be executed and delivered in a manner,
mutually satisfactory to the parties.
3.3 CONSENTS TO ASSIGNMENT.
(a) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign
any Industrial Power Transmission Contract, Permit or any claim or
right or any benefit arising thereunder or resulting therefrom if an
attempted assignment or transfer thereof, without the consent of a
third party thereto, would constitute a breach or default thereof or
give rise to a right of termination or cancellation thereunder, or in
any way materially adversely affect the rights of Buyer thereunder. If
such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would materially adversely affect the rights of
Buyer thereunder, the Sellers will cooperate with Buyer, in all
reasonable respects and at Buyer's expense, to provide to Buyer the
benefits under any such Industrial Power Transmission Contract, Permit
or claim or right (collectively, the "NON-ASSIGNABLE RIGHTS"),
including without limitation (i) enforcement for the benefit of Buyer
of any and all rights of the Sellers against a third party thereto
arising out of the breach, default, termination or cancellation by such
third party or otherwise; (ii) holding any of the Non-Assignable Rights
in trust for Buyer or acting as agent for Buyer; and (iii) paying over
to Buyer all monies collected by or paid to the Sellers in respect of
the Non-Assignable Rights.
(b) Notwithstanding the foregoing Section 3.3(a), if the lease
agreement between Folkes Properties Limited and Pirelli Power
Transmission (U.K.) Limited dated
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April 23, 1999 (Netherton Dudley, West Midlands, United Kingdom) (the
"DUDLEY LEASE"), the lease agreement between Gebr. Sedlmayr GmbH & Co.
and Mark IV Industries GmbH dated November 20, 2000 (the "SEDLMAYR
LEASE") and the lease agreement between C. Otto Gehrckens Vertriebs
GmbH & Co. KG and Mark IV Industries GmbH dated December 28, 2000
(collectively with the Dudley Lease and the Sedlmayr Lease, the
"LEASES") cannot be assigned or otherwise transferred to Buyer prior to
the Closing, the Sellers will cooperate with Buyer, at the Sellers'
expense, to provide Buyer with the Non-Assignable Rights under such
Leases, PROVIDED, HOWEVER, that:
(i) with respect to any Lease, if Buyer's possession
is disrupted by the landlord thereunder, then any financial
obligations with respect to such Lease that exceeds the amount
that Buyer would have had to pay if such Lease had
successfully been assigned to Buyer on the Closing Date shall
become Retained Liabilities until such time as such disruption
is terminated (including, without limitation, by the
successful assignment to Buyer of the such Lease), and the
Sellers shall indemnify and reimburse Buyer for all of its
out-of-pocket expenses with respect to such disruption; and
(ii) if (A) Buyer delivers to the Sellers written
evidence of a proposed agreement with a third party transferee
(a "TRANSFEREE"), whether by assignment, sublease or other
similar arrangement (a "PROPOSAL"), pursuant to which Buyer
proposes to transfer to the Transferee all or a portion of
Buyer's Non-Assignable Rights with respect to the Dudley Lease
(which evidence shall include the amount such Transferee
proposes to pay for the Non-Assignable Rights and the identity
of the Transferee) and (B) such Proposal is not executed or
fails to become effective primarily as a result of the
inability of the Dudley Lease to be assigned or otherwise
transferred to Buyer, then Sellers shall indemnify, without
regard to the threshold set forth in Section 9.5(a)(i) hereof,
Buyer for Buyer's Losses directly relating to the failure of
such Proposal to become effective. Buyer may withhold and set
off against any and all amounts due the Sellers with respect
to Buyer's Non-Assignable Rights relating to the Dudley Lease
any and all amounts as to which the Sellers are obligated to
indemnify Buyer under this Section 3.3(b)(ii).
(c) Buyer acknowledges and agrees that, with respect to each
Lease, if (i) the Sellers are able to make arrangements to provide
Buyer with all of the Non-Assignable Rights with respect to such Lease
and (ii) such arrangements do not require Buyer to assume Liabilities
with respect to such Lease that exceed those Liabilities Buyer would
have assumed if the Lease had been assigned to Buyer, then the
provision of such Non-Assignable Rights shall be deemed "alternative
arrangements reasonably acceptable to Buyer" under Section 3.2(a)(xvi)
and shall satisfy the requirements of Section 3.2(a)(xvi) with respect
to such Lease.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant
to Buyer, except as otherwise set forth on the Disclosure Schedule, as follows:
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4.1 ORGANIZATION
(a) Each of the Sellers is a corporation or limited liability
company, as the case may be, duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction in
which it was incorporated or organized, with the requisite corporate or
limited liability company power and authority to conduct the Industrial
Power Transmission Business as it is presently being conducted and to
own and lease the Industrial Power Transmission Assets.
(b) The Sold Subsidiary is a corporation duly incorporated or
organized, validly existing and in good standing under the laws of
Italy, with the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Sellers have delivered to Buyer true, correct and
complete copies of the Sold Subsidiary's certificate of incorporation
and bylaws (in each case, as amended to date). The Sold Subsidiary is
not in default under or in violation of any provision of its
certificate of incorporation or bylaws.
(c) The Spanish Subsidiary is a corporation duly incorporated
or organized, validly existing and in good standing under the laws of
Spain, with the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Sellers have made available to Buyer true, correct and
complete copies of the Spanish Subsidiary's certificate of
incorporation and bylaws (in each case, as amended to date). The
Spanish Subsidiary is not in default under or in violation of any
provision of its certificate of incorporation or bylaws.
(d) Each Seller, the Sold Subsidiary and the Spanish
Subsidiary is duly qualified as a foreign corporation, and is in good
standing, under the laws of all jurisdictions where the nature of the
Industrial Power Transmission Business or the nature or location of the
assets used in the Industrial Power Transmission Business require such
qualification. Each jurisdiction in which a Seller, the Sold Subsidiary
or the Spanish Subsidiary is qualified to conduct business with respect
to the Industrial Power Transmission Business is set forth on SCHEDULE
4.1(d).
(e) Set forth on SCHEDULE 4.1(e) is a chart depicting the
ownership of each Seller, the Sold Subsidiary and the Spanish
Subsidiary.
4.2 AUTHORIZATION. Each of the Sellers has all requisite
corporate or limited liability company power and authority, as the case may be,
and has taken all corporate or limited liability company action necessary, to
execute and deliver this Agreement and the Ancillary Agreements to which it is a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. This Agreement and each
Ancillary Agreement to which it is a party has been duly executed and delivered
by each Seller and, assuming the due authorization, execution and delivery of
this Agreement by Buyer, is a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, except as may be
limited by the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization,
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moratorium and other similar Laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
4.3 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on SCHEDULE 4.3, since February 28, 2001 (and, with respect to Section 4.3(n),
since February 28, 2000), the Industrial Power Transmission Business has been
operated by the Sellers, the Sold Subsidiary and the Spanish Subsidiary in the
ordinary course of business, and there has not been any:
(a) Material Adverse Effect;
(b) change in accounting methods, principles or practices
affecting the Industrial Power Transmission Assets, the Assumed
Liabilities or the Industrial Power Transmission Business;
(c) revaluation of any of the Industrial Power Transmission
Assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable;
(d) material damage, destruction or loss (whether or not
covered by insurance) adversely affecting the Industrial Power
Transmission Assets or the Industrial Power Transmission Business;
(e) cancellation of any indebtedness or waiver or release of
any right or claim of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary relating to their activities or properties, which had or
will have an adverse effect on the Industrial Power Transmission Assets
or the Industrial Power Transmission Business;
(f) (i) increase in the base compensation payable or to become
payable to any employee of the Industrial Power Transmission Business
outside the ordinary course of business, (ii) grant or accrual of any
loan, bonus, fees, incentive compensation, service award or other
similar benefit, to or for the benefit of any of the employees of the
Industrial Power Transmission Business, except pursuant to the Seller
Plans or any employment or consulting contract in effect as of the date
hereof, (iii) adoption of, or material amendment to, any Seller Plan
(other than the extension of coverage to any employee of the Industrial
Power Transmission Business who became eligible under any such Seller
Plan following the date hereof), (iv) entry into or cancellation of any
employment or consulting agreement or agreement to any material
amendment to any employment or consulting agreement in effect as of the
date hereof, or (v) hired any employee who has an annual salary in
excess of $95,000, or (vi) terminated any employee having an annual
salary or wages in excess of $95,000;
(g) amendment, cancellation or termination of any Material
Contract or Permit relating to the Industrial Power Transmission Assets
or the Industrial Power Transmission Business or entry into any
contract, commitment, agreement, lease, transaction or permit that is
not in the ordinary course of business;
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(h) mortgage, pledge or other Encumbrance of any material
Industrial Power Transmission Assets, the assets of the Sold Subsidiary
or the assets of the Spanish Subsidiary;
(i) sale, assignment or transfer of any of the Industrial
Power Transmission Assets, the assets of the Sold Subsidiary or the
assets of the Spanish Subsidiary, other than (i) any asset having a
book value individually of less than $10,000 as of the date hereof, or
(ii) Inventory in the ordinary course of business;
(j) single capital expenditure or commitment therefor that is
in excess of $100,000 (other than expenditures made in accordance with
the capital expenditure budget provided to Buyer on or prior to the
date hereof);
(k) failure to pay or satisfy when due any Liability of the
Industrial Power Transmission Business, except where the failure would
not have a Material Adverse Effect;
(l) failure of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary to carry on diligently the Industrial Power Transmission
Business in the ordinary course so as to keep available to Buyer the
services of the employees of the Industrial Power Transmission
Business, and to preserve for Buyer the Industrial Power Transmission
Assets and the Industrial Power Transmission Business and the goodwill
of the suppliers, customers and distributors of the Industrial Power
Transmission Business;
(m) disposition or lapsing of any Transferred Intellectual
Property or any disposition to any person of any Transferred
Intellectual Property not theretofore a matter of public knowledge;
(n) the Industrial Power Transmission Business has not paid
(or been paid by) any affiliate of the Sellers, the Sold Subsidiary or
the Spanish Subsidiary that is a direct or indirect subsidiary of MIV
Holdings, S.A. (each, a "SELLER AFFILIATE"), or charged (or been
charged by) any Seller Affiliate, for (i) goods sold or services
rendered by or to the Industrial Power Transmission Business, or (ii)
corporate overhead expenses, management fees, legal or accounting fees,
capital charges or similar charges or expenses, which is (x) on a basis
that is either more or less favorable to the Industrial Power
Transmission Business than the basis that would be employed by a party
who is not an affiliate of the Sellers, the Sold Subsidiary or the
Spanish Subsidiary, (y) pursuant to an arrangement that will not
continue after the Closing as part of the arrangements included in the
Ancillary Agreements, and (z) not described in the Accounting
Principles;
(o) efforts by the Sellers, out of the ordinary course of
business, to materially accelerate the accounts receivable attributable
to the Industrial Power Transmission Business or to materially delay
the payment of any accounts payable attributable to the Industrial
Power Transmission Business; or
(p) agreement to do any of the things described in the
preceding clauses (a) through (o) other than as expressly provided for
herein.
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4.4 ASSETS; SOLD SUBSIDIARY; SPANISH SUBSIDIARY
(a) Except for (i) the Sold Subsidiary Stock (which is the
subject of Section 4.4(b) hereof), the capital stock of the Spanish
Subsidiary (which is the subject of Section 4.4(c) hereof) and (ii) the
Facilities (which are the subject of Section 4.5 hereof) or as set
forth on SCHEDULE 4.4(a), each Seller has good title to all material
tangible Industrial Power Transmission Assets owned by such Seller, and
each of the Sold Subsidiary and the Spanish Subsidiary has good title
to all material tangible assets owned by such Sold Subsidiary or
Spanish Subsidiary, as the case may be, in each case free and clear of
any Encumbrances other than Permitted Encumbrances.
(b) SCHEDULE 4.4(b) lists the outstanding capital stock (or
other ownership interests) of the Sold Subsidiary (the "SOLD SUBSIDIARY
STOCK") and the Seller or the Sellers that hold such Sold Subsidiary
Stock. Except as set forth on SCHEDULE 4.4(b), each Seller listed on
SCHEDULE 4.4(b) is the legal and beneficial owner of all of the
outstanding Sold Subsidiary Stock indicated on SCHEDULE 4.4(b), free
and clear of any and all Encumbrances. Except for this Agreement and
the transactions contemplated hereby, there are no outstanding options,
warrants, puts, calls, rights or other commitments or agreements of any
character relating to the Sold Subsidiary obligating the Sold
Subsidiary, directly or indirectly, to issue additional shares of its
capital stock or other equity interests. All of the outstanding Sold
Subsidiary Stock is duly and validly issued and fully paid and
nonassessable, free of any preemptive or subscription rights.
(c) The Sold Subsidiary owns all of the issued and outstanding
capital stock of Dayco PTI S.A., a corporation formed under the laws of
Spain (the "SPANISH SUBSIDIARY"), free and clear of any and all
Encumbrances. Except for this Agreement and the transactions
contemplated hereby, there are no outstanding options, warrants, puts,
calls, rights or other commitments or agreements of any character
relating to the Spanish Subsidiary obligating the Spanish Subsidiary,
directly or indirectly, to issue additional shares of its capital stock
or other equity interests. All of the outstanding capital stock of the
Spanish Subsidiary is duly and validly issued and fully paid and
nonassessable, free of any preemptive or subscription rights.
(d) The Industrial Power Transmission Assets, the assets of
the Sold Subsidiary and of the Spanish Subsidiary and the rights
conferred by the Ancillary Agreements will allow Buyer to conduct the
Industrial Power Transmission Business in all material respects as
presently conducted.
(e) EXHIBIT A describes all assets (tangible and intangible)
used in the Industrial Power Transmission Business that are not
included among the Industrial Power Transmission Assets.
4.5 FACILITIES. SCHEDULE 4.5 contains a complete and accurate
list of all Facilities and identifies each Facility as being owned or leased, as
the case may be.
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(a) Each Seller, the Sold Subsidiary and the Spanish
Subsidiary has good and marketable and insurable fee simple title to
the Owned Real Property owned by such Seller, Sold Subsidiary or
Spanish Subsidiary, free and clear of all Encumbrances other than
Permitted Encumbrances. None of the Sellers, the Sold Subsidiary or the
Spanish Subsidiary has received written notice of any special
assessment relating to any Owned Real Property or any portion thereof,
and there is no pending special assessment with respect thereto. Each
of the Sellers, the Sold Subsidiary and the Spanish Subsidiary enjoys
peaceful and undisturbed possession of all Owned Real Property owned by
such Seller, Sold Subsidiary or Spanish Subsidiary. The Sellers, the
Sold Subsidiary and the Spanish Subsidiary have all easements and
rights of ingress and egress necessary for utilities and services and
for all operations conducted on the Owned Real Property. Except as set
forth on SCHEDULE 4.5(a), there are no outstanding (i) leases,
subleases, licenses, concessions or other agreements granting any
person the right to use or occupy any material portion of any Owned
Real Property, or (ii) options or rights of first refusal to purchase,
lease or use any Owned Real Property or any material portion thereof.
(b) Except as set forth on SCHEDULE 4.5(b), (i) the Third
Party Leases are in full force and effect and constitute legal, valid
and binding obligations of the Sellers party thereto and, to the
knowledge of the Sellers, the other parties thereto, and (ii) no Seller
is in default in any material respect under any of the Third Party
Leases. The Sellers have furnished Buyer with true and correct copies
of each Third Party Lease, together with all amendments and supplements
thereto. No Seller has received any written notice of cancellation or
termination or any written notice of default under any Third Party
Lease. None of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary has received written notice of any special assessment
relating to any Leased Real Property for which any Seller, the Sold
Subsidiary or the Spanish Subsidiary may be liable for payment thereof,
and there is no pending special assessment with respect thereto.
(c) There are no pending or, to the knowledge of the Sellers,
threatened condemnation proceedings or other Actions relating to any
Facility.
(d) All Facilities have received all approvals of Governmental
Authorities (including, without limitation, Permits and a certificate
of occupancy or other similar certificate permitting lawful occupancy
of the Facilities) required in connection with the operation thereof
and have been operated and maintained in all material respects in
accordance with applicable regulations.
(e) All Facilities are supplied with utilities (including
without limitation water, sewage, disposal, electricity, gas and
telephone) and other services necessary for the operation of such
Facilities as currently operated, and there is no condition which would
reasonably be expected to result in the termination of the present
access from any Facility to such utility services.
(f) All improvements constructed on the Facilities, including,
without limitation, all improvements to Leased Real Property, and all
material Fixtures and Equipment constituting Industrial Power
Transmission Assets, when considered as a
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whole, are in good operating condition and repair in all material
respects, subject to ordinary wear and tear.
(g) All improvements constructed on the Facilities, including,
without limitation, all improvements to Leased Real Property, and all
Fixtures and Equipment and other tangible assets owned or leased by the
Sold Subsidiary or the Spanish Subsidiary at the Facilities are
sufficient for the operation of the Industrial Power Transmission
Business as presently conducted.
4.6 CONTRACTS AND COMMITMENTS
(a) SCHEDULE 4.6(a) sets forth a complete and accurate list of
Industrial Power Transmission Contracts in the following categories
(collectively, the "MATERIAL CONTRACTS"):
(i) all employment contracts and severance
agreements, including, without limitation, contracts (A) to
employ or terminate executive officers or other personnel of
the Industrial Power Transmission Business or (B) that will
result in the payment by, or the creation of any Liability to
pay on behalf of Buyer, the Sellers, the Sold Subsidiary or
the Spanish Subsidiary any severance, termination, "golden
parachute," or other similar payments to any present or former
employee of the Industrial Power Transmission Business
following termination of employment or otherwise as a result
of the consummation of the transactions contemplated by this
Agreement;
(ii) all franchise, license, technical assistance,
commission, consulting, agency or advertising contracts
related to the Industrial Power Transmission Assets or the
Industrial Power Transmission Business involving the payment
of more than $50,000 annually and which are not cancelable
without penalty on thirty (30) calendar days notice;
(iii) all labor or union contracts;
(iv) all contracts or commitments relating to
commission arrangements with others;
(v) all promissory notes, loans, agreements,
indentures, evidences of indebtedness, letters of credit,
guarantees, or other instruments relating to an obligation to
pay money, individually in excess of or in the aggregate in
excess of $100,000, whether a Seller, the Sold Subsidiary or
the Spanish Subsidiary shall be the borrower, lender or
guarantor thereunder or whereby any Industrial Power
Transmission Assets are pledged (excluding credit provided by
a Seller, the Sold Subsidiary or the Spanish Subsidiary in the
ordinary course of business to purchasers of its products), it
being agreed and understood by the parties that all
obligations under such instruments shall constitute Retained
Liabilities;
(vi) any agreement concerning confidentiality or
non-competition;
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(vii) all purchase, supply, distribution and sales
contracts (including each Existing Supply Agreement) which
involve payments in excess of $50,000 annually and which are
not cancelable without penalty on thirty (30) calendar days
notice;
(viii) any contract between any Seller, the Sold
Subsidiary or the Spanish Subsidiary and any affiliate
thereof;
(ix) any service contract affecting any of the
Industrial Power Transmission Assets having an annual service
charge in excess of $50,000 and an unexpired term as of the
Closing Date in excess of 90 days;
(x) any lease or sublease that provides for annual
rent in excess of $50,000;
(xi) any contract for the purchase, sale or removal
of electricity, gas, water, telephone, coal, sewage, power or
utility service, other than such contracts with local
utilities entered into in the ordinary course of business;
(xii) any contract or agreement involving the
electronic exchange of information and amounts in excess of
$50,000 annually; and
(xiii) any other contract involving payments in
excess of $100,000 annually.
(b) Except as set forth on SCHEDULE 4.6(b) (i) all of the
material Industrial Power Transmission Contracts are in full force and
effect and constitute legal, valid and binding obligations of the
Sellers, the Sold Subsidiary and the Spanish Subsidiary to the extent a
party thereto and, to the knowledge of the Sellers, the other parties
thereto, (ii) each of the Sellers, the Sold Subsidiary and the Spanish
Subsidiary has fulfilled, or taken all action necessary to enable it to
fulfill when due, all of its obligations under each such Industrial
Power Transmission Contract to which it is a party and (iii) none of
the Sellers, the Sold Subsidiary or the Spanish Subsidiary is in
default in any material respect under any of the Industrial Power
Transmission Contracts, and (iv) no event, occurrence or condition
exists which, with the lapse of time, the giving of notice or both,
would become a default in any material respect by any Seller, the Sold
Subsidiary or the Spanish Subsidiary. None of the Sellers, the Sold
Subsidiary or the Spanish Subsidiary has received any written notice of
cancellation or termination or any written notice of default under any
Industrial Power Transmission Contract. The Sellers have furnished
Buyer with true and correct copies of each of the Material Contracts
set forth on SCHEDULE 4.6(a), together with all amendments and
supplements thereto.
4.7 PERMITS. The Sellers, the Sold Subsidiary and the Spanish
Subsidiary hold, own or possess all material Permits required in order to
conduct the Industrial Power Transmission Business, and all such material
Permits are listed on SCHEDULE 4.7. Except as set forth on SCHEDULE 4.7 such
Permits are in full force and effect, and none of the Sellers, the Sold
Subsidiary or the Spanish Subsidiary is in default, or has received any written
notice of any claim of default, with respect to any such Permit.
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4.8 NO CONFLICT OR VIOLATION; CONSENTS AND APPROVALS
(a) Neither the execution, delivery or performance by any
Seller of this Agreement or the Ancillary Agreements nor the
consummation by the Sellers of the transactions contemplated hereby and
thereby, will (i) violate or conflict with any provision of the
articles of incorporation, bylaws, certificate of formation, limited
liability company agreement of a Seller, the Sold Subsidiary or the
Spanish Subsidiary, (ii) violate, conflict with, or result in or
constitute a breach or default under (with the giving of notice or
passage of time or both), or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, any Material Contract, or (iii)
violate any Law or Governmental Order applicable to a Seller, the Sold
Subsidiary or the Spanish Subsidiary.
(b) Other than in connection with the filing of a notification
and report form under and compliance with the provisions of the HSR Act
or as disclosed on SCHEDULE 4.8(b) hereto, no consent, approval or
authorization of or from, notice to or declaration, filing or
registration with any domestic or foreign Governmental Authority or any
other person is required to be made or obtained by the Sellers in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
except where failure to obtain such consent, approval or authorization
or to make such notice, declaration, filing or registration would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or to materially adversely affect the ability
of the Sellers to consummate the transactions contemplated hereby.
4.9 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES
(a) The Financial Statements are set forth on SCHEDULE 4.9.
Except as otherwise set forth on SCHEDULE 4.9, the Financial Statements
in all material respects have been prepared in a manner consistent with
the books and records of the Sellers, the Sold Subsidiary and the
Spanish Subsidiary and have been prepared in accordance with the
Accounting Principles consistently applied throughout the periods
covered thereby, and fairly present in all material respects,
consistent with the Accounting Principles, the financial condition and
results of operations of the Industrial Power Transmission Business as
of the respective dates or periods indicated thereon.
(b) To the knowledge of the Sellers, there are no Liabilities
of the Sellers that are included within the Assumed Liabilities and
there are no Liabilities of the Sold Subsidiary or the Spanish
Subsidiary, except for (i) Liabilities provided for or set forth on the
Interim Statement of Net Assets or the Closing Date Statement of Net
Assets, (ii) Liabilities under contracts, Permits and other
commitments, undertakings, agreements and arrangements disclosed on the
Disclosure Schedule and under contracts, Permits and other commitments,
undertakings, agreements and arrangements that are not required to be
disclosed on the Disclosure Schedule, (iii) Liabilities reflected on
the Disclosure Schedule, (iv) Liabilities that arise under this
Agreement, (v) Liabilities that arise in the ordinary course of
business, and (vi) Liabilities that are not, individually or in the
aggregate, material to the Industrial Power Transmission Business.
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4.10 LITIGATION. Except as set forth on SCHEDULE 4.10, (a)
there is no Action pending or, to the knowledge of the Sellers, threatened (i)
against or affecting the Industrial Power Transmission Business or the
Industrial Power Transmission Assets, or (ii) seeking to delay, limit or enjoin
the transactions contemplated by this Agreement, (b) none of the Sellers, the
Sold Subsidiary or the Spanish Subsidiary is subject to any Governmental Order
relating to the Industrial Power Transmission Business, and (c) there are no
unsatisfied judgments against the Industrial Power Transmission Business or the
Industrial Power Transmission Assets.
4.11 COMPLIANCE WITH LAW. The Sellers, the Sold Subsidiary and
the Spanish Subsidiary are, in the conduct of the Industrial Power Transmission
Business, in compliance in all material respects with all applicable Laws (other
than Environmental, Occupational Safety and Health Laws, which are the subject
of Section 4.15 hereof) and Governmental Orders relating to the Industrial Power
Transmission Assets or the Industrial Power Transmission Business.
4.12 INTELLECTUAL PROPERTY
(a) SCHEDULE 4.12(a) sets forth all material Transferred
Intellectual Property.
(b) Except as set forth in SCHEDULE 4.12(b) and the
Intellectual Property Agreement, the Sellers, the Sold Subsidiary and
the Spanish Subsidiary (i) own all right, title and interest in and to
the Transferred Intellectual Property, (ii) have no obligation to
compensate any person for the use of any Transferred Intellectual
Property, and (iii) have not granted to any person any license, option
or other rights in or to any Transferred Intellectual Property. Except
as set forth in SCHEDULE 4.12(b), none of the Sellers, the Sold
Subsidiary or the Spanish Subsidiary has received any written notice
that any other person is claiming any ownership of, or right to use,
any Transferred Intellectual Property. All patents and registered
trademarks included among the Transferred Intellectual Property have
been duly registered or filed in the United States Patent and Trademark
Office or the appropriate foreign Governmental Authority, as
applicable, and such registrations have been properly maintained and
renewed in accordance with all applicable laws, rules and regulations.
SCHEDULE 4.12(b) lists all unregistered trademarks included among the
Transferred Intellectual Property.
(c) Except as set forth in SCHEDULE 4.12(c), the Sellers, the
Sold Subsidiary and the Spanish Subsidiary own or possess sufficient
rights in and to the Licensed Intellectual Property to grant Buyer the
rights set forth in the Intellectual Property Agreement. Except as set
forth in SCHEDULE 4.12(c), none of the Sellers, the Sold Subsidiary or
the Spanish Subsidiary has received any written notice that any other
person is claiming any ownership of or right to use any Licensed
Intellectual Property in a manner that would conflict with the license
rights granted to Buyer in the Intellectual Property Agreement.
(d) Except as set forth in SCHEDULE 4.12(d), the Sellers, the
Sold Subsidiary and the Spanish Subsidiary own or possess sufficient
rights in and to the Software to
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grant Buyer the rights set forth in the Software License Agreement.
Except as set forth in SCHEDULE 4.12(d), none of the Sellers, the Sold
Subsidiary or the Spanish Subsidiary has received any written notice
that any other person is claiming any ownership of or right to use any
Software in a manner that would conflict with the license rights
granted to Buyer in the Software License Agreement.
4.13 SELLER PLANS
(a) SCHEDULE 4.13(a) sets forth a list of all Seller Plans or
with respect to which any Seller, the Sold Subsidiary or the Spanish
Subsidiary has any actual or contingent Liability. With respect to each
Seller Plan (to the extent applicable), the Sellers have provided or
made available to Buyer true and complete copies of (i) the current
Seller Plan documents, including all amendments, (ii) each trust or
other funding agreement relating to such Seller Plan, (iii) the annual
report (IRS Form 5500 Series) filed with the IRS for the most recent
three plan years, including all schedules thereto and opinions of
independent accountant, (iv) the most recent summary plan description,
and such other written summaries and descriptions furnished to
participants, (v) the most recent determination letter issued by the
IRS, (vi) all personnel, payroll, and employment manuals and policies,
(vii) a written description of any Seller Plan that is not otherwise in
writing, (viii) all insurance policies purchased by or to provide
benefits under any Seller Plan, (ix) all reports submitted within the
three years preceding the date of this Agreement by third party
administrators, actuaries, investment managers, trustees, consultants,
or other independent contractors with respect to any Seller Plan, (x)
all notices that were given by any Seller or any ERISA Affiliate or any
Seller Plan to the IRS, the PBGC, or any participant or beneficiary,
pursuant to statute, within the three years preceding the date of this
Agreement, including notices that are expressly mentioned elsewhere in
this Section 4.13, (xi) all notices that were given by the IRS, the
PBGC, or the U.S. Department of Labor to any Seller, any ERISA
Affiliate, or any Seller Plan within the three years preceding the date
of this Agreement, and (xii) with respect to Seller Plans subject to
Title IV of ERISA, the Form PBGC-1 filed for each of the three most
recent plan years for each such Seller Plan.
(b) All Seller Plans have been administered in all material
respects in compliance with their terms and with the requirements of
any applicable Laws, including, but not limited to ERISA and the Code
and with any applicable collective bargaining agreement.
(c) No Seller Plan subject to Title IV of ERISA for which any
Seller, the Sold Subsidiary or the Spanish Subsidiary was a
contributing sponsor was terminated within six years prior to the date
hereof, or was terminated more than six years prior to the date hereof
unless such Seller, the Sold Subsidiary or the Spanish Subsidiary has
no material contingent or actual liability with respect to such plan as
of the date hereof (other than in a standard termination pursuant to
Section 4041 of ERISA). None of the Sellers, the Sold Subsidiary or the
Spanish Subsidiary has engaged in a transaction that may give rise to
liability under Sections 4064 or 4069 of ERISA. None of the Sellers,
the Sold Subsidiary or the Spanish Subsidiary is subject to any lien
imposed under Section 412(n) of the Code or Section 302(f) of ERISA,
whichever may apply, with respect to any Seller Plan. None
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of the Sellers, the Sold Subsidiary or the Spanish Subsidiary has any
material liability for unpaid contributions with respect to any Seller
Plan. None of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary is required to provide security to any Seller Plan under
Section 307 of ERISA or Section 401(a)(29) of the Code. Each Seller
Plan and each related trust agreement, annuity contract or other
funding instrument which covers or has covered Industrial Power
Transmission Employees which is intended to be qualified and tax-exempt
under the provisions of Code Sections 401(a) and 501(a) has received a
determination letter that it is so qualified, and none of the Sellers,
the Sold Subsidiary or the Spanish Subsidiary has knowledge of any
facts which would adversely affect its qualified status. The Sellers,
the Sold Subsidiary or the Spanish Subsidiary, as applicable, have paid
all premiums (and interest charges and penalties for late payment, if
applicable) due the PBGC with respect to each applicable Seller Plan
for each plan year thereof for which such premiums are required. There
has been no "reportable event" (as defined in Section 4043(b) of ERISA
and the PBGC regulations under such Section) with respect to any
applicable Seller Plan as to which the reporting requirement has not
been waived. No filing has been made by any Seller, the Sold Subsidiary
or the Spanish Subsidiary with the PBGC, and no proceeding has been
commenced by the PBGC, to terminate any Seller Plan, except for any
Seller Plan terminated under the standard termination provisions of
Section 4041 of ERISA. No condition exists and no event has occurred
that could constitute grounds for the termination of, or the
appointment of a trustee to administer, any Seller Plan by the PBGC.
With respect to any "multiemployer plan" (as defined in Section 3(37)
of ERISA) to which any Seller, the Sold Subsidiary or the Spanish
Subsidiary contributes or with respect thereto has any liability and
which is subject to Title IV of ERISA, no event has occurred in
connection with which any Seller, the Sold Subsidiary or the Spanish
subsidiary could have any liability that would have a Material Adverse
Effect.
(d) the Sellers and all ERISA Affiliates have performed all of
their respective material obligations under all Seller Plans. The
Sellers and all ERISA Affiliates have made appropriate entries in their
financial records and statements for all obligations and Liabilities
under such Seller Plans that have accrued but are not due in a manner
consistent with the Accounting Principles.
(e) None of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary, nor, to the knowledge of the Sellers, any trustee or
administrator of any Seller Plan, has engaged in a "prohibited
transaction," as defined in Section 4975 of the Code, or a transaction
prohibited by Section 406 of ERISA that could give rise to any material
tax or penalty.
(f) No Seller or ERISA Affiliate has any material liability to
the IRS with respect to any Seller Plan, including any liability
imposed by Chapter 43 of the Code.
(g) No Seller or ERISA Affiliate has any material liability to
the PBGC with respect to any Seller Plan or has any liability under
ERISA Section 502 or Section 4071.
(h) At the end of its most recent plan year, each Seller Plan
to which Section 412 of the Code or Section 302 of ERISA is applicable
satisfied the minimum funding standards provided for in such Section
and all required installments (within the meaning
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of Section 412(m) of the Code or Section 302(e) of ERISA), the due date
for which is after the end of the most recent plan year but prior to
the date hereof, have been made.
(i) No Seller or any ERISA Affiliate has ever established,
maintained, or contributed to or otherwise participated in, or had an
obligation to maintain, contribute to, or otherwise participate in, any
multiemployer plan as that term is defined in Section 3(37) of ERISA.
(j) Each Seller Plan which is an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA and which is a "group health
plan," as defined in Section 607(l) of ERISA, has been operated in
compliance in all material respects with provisions of Part 6 of Title
1, Subtitle B of ERISA and Section 4980B of the Code at all times.
(k) With respect to any Seller Plan, each such plan has been
maintained in all material respects in compliance with its terms and
with the requirements prescribed by any and all applicable Laws,
statutes, orders, rules and regulations (including without limitation
any special provisions relating to the tax status of contributions to,
earnings of or distributions from such plans where each such plan was
intended to have such tax status) and has been maintained in good
standing with applicable regulatory authorities.
(l) SCHEDULE 4.13(l) sets forth a true and complete list of
each works council, union or other labor organization which has to be
notified or consulted or with which negotiations need to be conducted
in connection with the transactions contemplated by this Agreement and
each collective bargaining agreement which has any impact on the terms
and conditions of employment of the Transferred Employees.
(m) The representations and warranties set forth in Sections
4.13(c) and (h) are also true with respect to any employee pension
benefit plan (as defined in Section 3(2) of ERISA) maintained,
sponsored, administered or contributed to by any entity which is in the
same "controlled group" (as defined in Section 4001(a)(14) of ERISA or
Section 414(b), (c), (m) or (o) of the Code) as any applicable Seller,
the Sold Subsidiary or the Spanish Subsidiary.
(n) SCHEDULE 4.13(n) sets forth a list and identifies the
status of all Seller Plans that provide or provided benefits to
retirees (other than pensions).
(o) There are no accrued but unpaid contributions with respect
to the Mark IV Pension Plan.
4.14 TAX MATTERS
(a) The Sellers (and any affiliated group of which any Seller
is now or has been a member) has timely filed with the appropriate
Taxing Authorities all Tax Returns with respect to the Industrial Power
Transmission Assets and the Industrial Power Transmission Business
required to be filed through the date hereof and will timely file any
such Tax Returns required to be filed on or prior to the Closing Date.
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(b) All material Taxes with respect to the Industrial Power
Transmission Assets and the Industrial Power Transmission Business, in
respect of periods beginning before the Closing Date, have been timely
paid, or will be timely paid, or an adequate reserve has been
established therefor, as set forth in the Closing Date Statement of Net
Assets.
(c) Each of the Sold Subsidiary and the Spanish Subsidiary has
timely filed with the appropriate Taxing Authorities all Tax Returns
required to be filed through the date hereof and will timely file any
such Tax Returns required to be filed on or prior to the Closing Date.
No federal, state, local or foreign audits or other proceedings exist
with respect to any Taxes or Tax Returns relating to the Sold
Subsidiary or the Spanish Subsidiary. The Sellers have not received any
written notice that an audit or other proceeding is pending or
threatened with respect to Taxes or Tax Returns relating to the Sold
Subsidiary or the Spanish Subsidiary.
(d) All material Taxes of the Sold Subsidiary and the Spanish
Subsidiary have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor as set forth in the
Closing Date Statement of Net Assets.
(e) No waivers of statutes of limitation with respect to any
Tax Returns have been given by or requested from the Sold Subsidiary or
the Spanish Subsidiary.
(f) There are no liens for Taxes on or against any of the
Industrial Power Transmission Assets or any assets of the Sold
Subsidiary or the Spanish Subsidiary, other than Permitted Tax Liens.
(g) None of the Industrial Power Transmission Assets or assets
of the Sold Subsidiary or the Spanish Subsidiary is (i) property that
is required to be treated as being owned by any other person pursuant
to the so-called "safe harbor lease" provisions of former Section
168(f)(8) of the Code; (ii) "tax-exempt use property" within the
meaning of Section 168(h) of the Code; or (iii) property which directly
or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(h) Neither the Sold Subsidiary nor the Spanish Subsidiary has
consented at any time under Section 341(f)(1) of the Code (or similar
provisions of state and local law) to have the provisions of Section
341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(c) of the Code). Neither
the Sold Subsidiary nor the Spanish Subsidiary has agreed to make, and
is not required to make, any adjustment under Section 481(a) of the
Code (or similar provisions of state and local law) by reason of a
change in accounting method or otherwise.
(i) There are no tax sharing agreements or similar
arrangements currently in effect (whether written or unwritten) with
respect to or involving the Sold Subsidiary or the Spanish Subsidiary.
Neither the Sold Subsidiary nor the Spanish Subsidiary has any
obligation to pay the Tax liabilities of any other person under
Treasury Regulation Section 1.1502-6 or any similar provision of
foreign law.
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(j) Neither the Sold Subsidiary nor the Spanish Subsidiary is
a party to any joint venture or partnership that is treated as a
partnership for federal income tax purposes.
(k) Neither the Sold Subsidiary nor the Spanish Subsidiary is
a party to any agreements or arrangements that would result,
individually or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code,
including, without limitation, as a result of any event connected with
the acquisition of the Industrial Power Transmission Assets by Buyer or
any other transaction contemplated herein.
(l) Notwithstanding the foregoing, the representations and
warranties set forth in Sections 4.14(a) and (b) hereof shall not be
applicable to the extent that the Industrial Power Transmission Assets
cannot be made subject to Tax liens, and Buyer cannot be held liable
for Taxes relating to matters constituting any breach of such
representations and warranties.
4.15 ENVIRONMENTAL MATTERS
(a) The following terms, when used in this Section 4.15 and
elsewhere in this Agreement, shall have the following meaning . Any of
these terms may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
(i) "ENVIRONMENTAL, OCCUPATIONAL SAFETY AND HEALTH
LAWS" shall mean any Law relating to the regulation,
protection or clean-up of the environment or the use,
treatment, storage, transportation, generation, manufacture,
processing, distribution, handling or disposal or Release of
Hazardous Materials, including without limitation the
Comprehensive Environmental Response, Compensation and
Liability Act of 1990, as amended, 42 U.S.C.ss.9601 ET SEQ.,
the Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.6901 ET SEQ.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C.ss.1251 ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C.ss.2601 ET SEQ.; the Clean
Air Act, 42 U.S.C.ss.7401 ET SEQ.; and the Safe Drinking Water
Act, 42 U.S.C.ss.3908 ET SEQ. and any Law designed to provide
safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program,
whether governmental or private (such as those promulgated or
sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
(ii) "HAZARDOUS MATERIALS" shall mean (i) any
petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea
formaldehyde, PCBs, and radon gas, and (ii) any waste or other
substance that is listed, defined, designed, or classified as,
or otherwise determined to be, hazardous, radioactive or
toxic, or a pollutant or a contaminant under any applicable
Environmental Law.
(iii) "RELEASE" shall mean and include any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
dispersing, injecting, escaping, leaching,
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dumping, migrating or disposing into the environment or the
workplace of any Hazardous Materials, and otherwise as defined
in any Environmental Law.
(b) Except as set forth on SCHEDULE 4.15(b), (i) each of the
Sellers, the Sold Subsidiary and the Spanish Subsidiary is, with
respect to the Industrial Power Transmission Business and the
Industrial Power Transmission Assets, and the Sold Subsidiary and the
Spanish Subsidiary is, in compliance in all materials respects with all
Environmental, Occupational Safety and Health Laws applicable to the
Industrial Power Transmission Business, the Industrial Power
Transmission Assets and the Sold Subsidiary or the Spanish Subsidiary;
(ii) there has been no Release or to the knowledge of the Sellers a
threat of Release of any Hazardous Materials on, upon, into or from any
Facilities, whether by any Seller, the Sold Subsidiary or the Spanish
Subsidiary or any other Person for whose conduct it is or may be held
responsible in quantities or at levels requiring remediation or
reporting under any Environmental, Occupational Safety and Health Law;
and (iii) there are no above-ground or underground storage tanks
located at any Facility.
(c) Except as set forth on SCHEDULE 4.15(c), none of the
Sellers, the Sold Subsidiary or the Spanish Subsidiary has received any
written notice of alleged, actual or potential responsibility for, or
any inquiry or investigation regarding, (i) any Release or threatened
Release of any Hazardous Materials at or affecting any Facility,
including any obligation to undertake or bear the cost of any
remediation or cleanup with respect to any Facility, or with respect to
any Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by
such Seller, the Sold Subsidiary, the Spanish Subsidiary or any other
Person for whose conduct it is or may be held responsible, or from
which Hazardous Materials have been transported, treated stored,
handled, transferred, disposed, recycled, or received or (ii) any
alleged violation of or non-compliance with any Environmental,
Occupational Safety and Health Law or the conditions of any Permit
required under any Environmental, Occupational Safety and Health Law
affecting any Facility or the Industrial Power Transmission Business.
None of the Sellers, the Sold Subsidiary or the Spanish Subsidiary or
any other Person for whose conduct it is or may be held responsible is
subject to any Governmental Order with respect to matters subject to
regulation under any Environmental, Occupational Safety and Health Law
nor has any Seller, the Sold Subsidiary or the Spanish Subsidiary
received written notice, citation, summons, warning or other written
communication of any Claim or Action by any person alleging any actual
or threatened injury or damage to any person, property, natural
resource or the environment arising from or relating to any Release or
threatened Release of any Hazardous Materials at, on, under, in, to or
from any Facilities or in connection with the operation of the
Industrial Power Transmission Business, or with respect to any Facility
to or by which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by such Seller, the Sold
Subsidiary, the Spanish Subsidiary or any other Person for whose
conduct it is or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(d) SCHEDULE 4.15(d) contains a complete list of all material
Permits, consents, licenses and authorizations, required in order to
conduct the Industrial Power
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Transmission Business, issued to or obtained by the Sellers, the Sold
Subsidiary or the Spanish Subsidiary under the Environmental,
Occupational Safety and Health Laws, and each Seller, the Sold
Subsidiary and the Spanish Subsidiary is in compliance with the terms
and conditions of such Permits. The Sellers have delivered to Buyer
true and complete copies and results of any environmental reports,
laboratory analyses, tests, or monitoring possessed or initiated by
such Seller, the Sold Subsidiary or the Spanish Subsidiary pertaining
to Hazardous Materials in, on, or under any Facility, or concerning
compliance by such Seller, the Sold Subsidiary, the Spanish Subsidiary
or any other Person for whose conduct they are or may be held
responsible, with Environmental, Occupational Safety and Health Laws
with respect to the operation of the Facilities.
4.16 NO BROKERS OR FINDERS. Except for SG Advisers, the fees
of which are the sole responsibility of the Sellers, the Sellers have not
engaged or made any agreement with any broker, finder or similar agent or any
person or firm which will result in the obligation of Buyer or any of its
affiliates to pay any finder's fee, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby.
4.17 PRODUCT WARRANTY
(a) Except as set forth on SCHEDULE 4.17(a), since January 1,
2000, none of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary has received any written claims in excess of $50,000 for
product liability or breach of warranty (whether or not covered by
insurance), nor has any Seller, the Sold Subsidiary or the Spanish
Subsidiary given written notice to any customer of any defect or
deficiency with respect to products designed, manufactured, assembled,
repaired, maintained, delivered or installed or services rendered prior
to the Closing. Except as set forth on SCHEDULE 4.17(a), no products
sold or manufactured by the Industrial Power Transmission Business have
at any time been subject to any voluntary or governmental recall, and,
to the knowledge of the Sellers, there is no presently existing
circumstance that would constitute a valid basis therefor.
(b) SCHEDULE 4.17(b) contains true, correct and complete
copies of all forms of product warranties issued with respect to
products sold by the Industrial Power Transmission Business within the
last three years.
4.18 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. SCHEDULE 4.18 sets
forth a complete and accurate list of the names and addresses of (a) the ten
(10) largest customers of the Industrial Power Transmission Business for the
most recent fiscal year, showing the approximate total sales in dollars by the
Industrial Power Transmission Business to each such customer during such fiscal
year and (b) the ten (10) largest suppliers of the Industrial Power Transmission
Business for the most recent fiscal year, showing the approximate total
purchases in dollars by the Industrial Power Transmission Business from each
such supplier during such fiscal year. None of the Sellers, the Sold Subsidiary
or the Spanish Subsidiary has received any written notice from any customer or
supplier named on
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SCHEDULE 4.18 of any intention to terminate or materially reduce purchases from,
or supplies to, the Industrial Power Transmission Business.
4.19 INSURANCE. SCHEDULE 4.19 contains a complete list of the
current insurance policies held on the date hereof by the Sellers, the Sold
Subsidiary and the Spanish Subsidiary in respect of the Industrial Power
Transmission Business, copies of which have been provided to Buyer. None of the
Sellers, the Sold Subsidiary or the Spanish Subsidiary has received (i) any
written notice of cancellation of any such policies or refusal of coverage
thereunder, (ii) any written notice that any issuer of any of such policies has
filed for protection under applicable bankruptcy laws or is otherwise in the
process of liquidating or has been liquidated; (iii) any other written notice
that such policies are no longer in full force and effect or that the issuer of
any of such policies is no longer willing or able to perform its obligations
thereunder, or (iv) any written notice that any issuer of any such policies
intends to substantially increase rates or that substantial capital improvements
or other expenditures will have to be made in order to continue such insurance
at present rates.
4.20 LABOR RELATIONS. Except as set forth on SCHEDULE 4.20,
none of the Sellers, the Sold Subsidiary or the Spanish Subsidiary is party to
or bound by any collective bargaining agreement with respect to the Industrial
Power Transmission Business or any of the employees of the Industrial Power
Transmission Business. There is no labor strike, slowdown, lockout or other work
stoppage due to labor disagreements pending or, to the knowledge of the Sellers,
threatened against the Sellers, the Sold Subsidiary or the Spanish Subsidiary
with respect to the Industrial Power Transmission Business. Except as set forth
on SCHEDULE 4.20, (a) there is no unfair labor practice charge or complaint
pending against any Seller, the Sold Subsidiary or the Spanish Subsidiary before
the National Labor Relations Board or any comparable state, local or foreign
agency with respect to the Industrial Power Transmission Business, and (b) there
is no written grievance currently being asserted against any Seller, the Sold
Subsidiary or the Spanish Subsidiary with respect to the Industrial Power
Transmission Business.
4.21 EMPLOYEES
(a) Except as set forth on SCHEDULE 4.21(a), each Seller, the
Sold Subsidiary and the Spanish Subsidiary is and has been in
compliance, in all material respects, with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including any such laws respecting
employment discrimination, occupational safety and health and unfair
labor practices.
(b) Neither any Seller, the Sold Subsidiary nor the Spanish
Subsidiary is delinquent in any material respect in payments to any of
its employees of the Industrial Power Transmission Business for any
wages, salaries, commissions, bonuses or other direct compensation for
any services performed by them or any amounts required to be reimbursed
to such Employees.
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(c) Except as set forth in SCHEDULE 4.21(c), the employment of
each of the Sellers', the Sold Subsidiary's and the Spanish
Subsidiary's employees employed in the Industrial Power Transmission
Business is terminable at will by the Sellers, the Sold Subsidiary or
the Spanish Subsidiary.
(d) SCHEDULE 4.21(d) contains a true and complete list, as of
the date hereof, of all employees of each Seller, the Sold Subsidiary
and the Spanish Subsidiary who are dedicated to the Industrial Power
Transmission Business and entitled to an annual salary in excess of
$75,000. None of the Sellers, the Sold Subsidiary or the Spanish
Subsidiary owes any employee any sum in excess of $1,000 individually
that has not been provided for on the Closing Date Statement of Net
Assets, other than amounts owing for accrued wages or salaries for the
current payroll period.
(e) SCHEDULE 4.21(e) contains a true and complete list, as of
the date hereof, of the Industrial Power Transmission Employees based
in Italy or the United Kingdom.
4.22 ACCOUNTS RECEIVABLE. The accounts receivable included
among the Industrial Power Transmission Assets (i) arose only from bona fide
transactions in the ordinary course of business, and (ii) represent valid and
binding obligations of the account debtors, not subject to defense or offset to
which such receivables relate.
4.23 INVENTORIES. The value at which the Inventory is shown on
the Financial Statements has been determined in accordance with the normal
valuation policy of the Sellers, the Sold Subsidiary, the Spanish Subsidiary and
the Industrial Power Transmission Business, consistently applied. Except as set
forth on the Financial Statements, the Inventories included in the Financial
Statements are of good, usable and merchantable quality in all material
respects, and, except as set forth in SCHEDULE 4.23, do not include a material
amount of obsolete or discontinued items. The work in process Inventory is
capable of being manufactured into saleable finished goods. SCHEDULE 4.23
contains a complete description of the discount activity currently conducted by
the Industrial Power Transmission Business.
4.24 BANK ACCOUNT; POWERS OF ATTORNEY. SCHEDULE 4.24 lists all
accounts and safe deposit boxes relating to the Industrial Power Transmission
Business that will be included as Industrial Power Transmission Assets at any
bank or other financial institution of the Sellers, the Sold Subsidiary and the
Spanish Subsidiary, and the names of all persons authorized to draw on or have
access to such accounts and safe deposit boxes. SCHEDULE 4.24 also lists all
powers of attorney primarily relating to the Industrial Power Transmission
Business entered into by the Sellers, the Sold Subsidiary or the Spanish
Subsidiary.
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4.25 CERTAIN PAYMENTS. None of the Sellers, the Sold
Subsidiary, the Spanish Subsidiary or any director, officer, agent or employee
thereof has, directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payments kick- back, or other payment to any person,
private or public, regardless of form, whether in money, property or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Industrial
Power Transmission Business, or in violation of any law, rule, regulation or
other legal requirement, or (b) established or maintained any fund or bank
account that has not been recorded in the books and records of the Sellers, the
Sold Subsidiary or the Spanish Subsidiary.
4.26 BOOKS AND RECORDS. The minute books, equity record books
and other records of the Sold Subsidiary and the Spanish Subsidiary, all of
which have been made available to Buyer, are accurate and complete in all
material respects. The minute books of the Sold Subsidiary and the Spanish
Subsidiary contain accurate and complete records of all meetings held of, and
corporate action taken by, such Sold Subsidiary's and Spanish Subsidiary's
respective stockholders, directors and directors' committees. At the time of the
Closing, all of the books and records of the Sold Subsidiary and the Spanish
Subsidiary will be in the possession of the Sold Subsidiary and the Spanish
Subsidiary.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as
follows:
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power and authority to conduct its business as it
is presently being conducted and to own and lease its properties and assets.
5.2 AUTHORIZATION. Buyer or an affiliate thereof has all
requisite corporate power and authority, and has taken all corporate action
necessary, to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. This Agreement
and each Ancillary Agreement to which it is a party has been duly executed and
delivered by Buyer or an affiliate thereof and, assuming the due authorization,
execution and delivery of this Agreement and each Ancillary Agreement by Seller,
is a legal, valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms, except as may be limited by the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
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5.3 NO CONFLICT OR VIOLATION; CONSENTS AND APPROVALS
(a) Neither the execution, delivery or performance by Buyer of
this Agreement or the Ancillary Agreements nor the consummation by
Buyer of the transactions contemplated hereby and thereby, will (i)
violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Buyer, (ii) violate, conflict with, or
result in or constitute a breach or default under (with the giving of
notice or passage of time or both), or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, any of the terms, conditions or
provisions of any material contract or agreement to which Buyer is a
party or by which its assets are bound, or (iii) violate any Law or
Governmental Order applicable to Buyer.
(b) Other than in connection with the filing of a notification
and report form under and compliance with the provisions of the HSR
Act, no consent, approval or authorization of or from, notice to or
declaration, filing or registration with any domestic or foreign
Governmental Authority or any other person is required to be made or
obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, except where failure to obtain such consent,
approval or authorization or to make such notice, declaration, filing
or registration would not reasonably be expected to have a material
adverse effect on Buyer or to materially adversely affect the ability
of Buyer to consummate the transactions contemplated hereby.
5.4 NO BROKERS OR FINDERS. Buyer has not engaged or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in the obligation of any Seller or any of its affiliates to pay any
finder's fee, brokerage fees or commission or similar payment in connection with
the transactions contemplated hereby.
5.5 FINANCING. Buyer has cash on hand and/or committed lines
of credit sufficient, in the aggregate, to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements and to satisfy all
other costs and expenses arising in connection herewith and therewith.
ARTICLE VI.
COVENANTS OF THE SELLERS AND BUYER
The Sellers and Buyer each covenant with the other as follows:
6.1 FURTHER ASSURANCES
(a) Upon the terms and subject to the conditions contained
herein, the parties agree, both before and after the Closing, (i) to
use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions
contemplated by this Agreement, (ii) to execute any documents,
instruments or conveyances of any kind which
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may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each
other in connection with the foregoing.
(b) Each of the parties will give any notices to, make any
filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of any Governmental Authorities
required in connection with the consummation of the transactions
contemplated hereby. Without limiting the generality of the foregoing,
within five (5) days after the date hereof, each of Buyer and the
Sellers shall file any Notification and Report Forms and related
material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department
of Justice under the HSR Act (collectively, the "HSR FILING") in
connection with this Agreement and transactions contemplated hereby,
and will use its reasonable best efforts to seek the expiration or
earlier termination of the applicable waiting period under the HSR Act,
and will make any further filings pursuant thereto that may be
necessary, proper, or advisable in connection therewith, PROVIDED,
HOWEVER, that neither party shall be obligated to take any action
reasonably likely to impact in an adverse manner the economic or
business benefits of the transactions contemplated by this Agreement
including, without limitation, the divestiture of any other asset or
business.
6.2 NO SOLICITATION. From the date hereof through the Closing
or the earlier termination of this Agreement, the Sellers shall not, and shall
cause their Representatives not to, directly or indirectly, solicit, initiate or
encourage the submission of any inquiry or proposal by any person, or
participate in any negotiations with, or provide any material non-public
information to, any person, other than Buyer, its affiliates and
Representatives, concerning any sale of all or substantially all of the
Industrial Power Transmission Assets or the Industrial Power Transmission
Business. The Sellers agree not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement relating to the
Industrial Power Transmission Assets or the Industrial Power Transmission
Business to which any Seller, the Sold Subsidiary or the Spanish Subsidiary is a
party and further agree to assign to Buyer at Closing all of the Sellers' rights
under such confidentiality or standstill agreements.
6.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof
through the Closing, the Sellers shall give notice to Buyer of (a) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement or
in any Exhibit or Schedule hereto to be untrue or inaccurate, (b) any failure of
the Sellers, or their affiliates, or of any of their respective Representatives,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or any Exhibit or Schedule hereto
and (c) whether such occurrence or non-occurrence gives Buyer that right to
terminate this Agreement pursuant to Section 10.1(a)(iii) hereof. In such event,
(x) if the Sellers have notified Buyer in accordance with this Section 6.3 that
Buyer has the right to terminate this Agreement pursuant to Section 10.1(a)(iii)
hereof by reason of such development and Buyer fails to exercise such right
prior to the Closing, the written notice provided by the Sellers to Buyer
pursuant to
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this Section 6.3 shall be deemed (i) to have amended the Disclosure Schedule,
(ii) to have qualified the representations and warranties contained in Article
IV hereof, and (iii) to have cured any misrepresentation or breach of warranty
that otherwise might have existed hereunder by reason of such development, and
(y) if the Sellers have notified Buyer in accordance with this Section 6.3 that
Buyer does not have the right to terminate this Agreement pursuant to Section
10.1(a)(iii), then any remedies with respect to such development available to
Buyer under Section 9.4 hereof shall remain available to Buyer after the
Closing.
6.4 ACCESS BY BUYER. From the date hereof through the Closing,
the Sellers shall permit (and shall cause their Representatives to permit) Buyer
and its Representatives to have access at all reasonable times within normal
business hours, and in a manner so as not to interfere with the normal business
operations of the Industrial Power Transmission Business, to all Industrial
Power Transmission Assets, the Facilities, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to the Industrial Power
Transmission Business as may be reasonably requested by Buyer. In addition, with
respect to investigations relating to Environmental, Occupational Safety and
Health Laws, Buyer shall (i) have access to the Facilities, (ii) be entitled to
interview the environmental managers located at the Facilities, and (iii)
subject to the Sellers' prior consent with respect to such assessments, be
entitled to conduct reasonable environmental, health and safety assessments of
any of the Facilities, including potential soil and/or groundwater sampling,
PROVIDED that in the case of each of clauses (i) through (iii) such activities
by Buyer must be within normal business hours and in a manner so as not to
interfere with the normal business operations of the Industrial Power
Transmission Business. If the Sellers withhold their consent to the assessments
proposed by Buyer to be conducted pursuant to clause (iii) of the previous
sentence, Buyer shall have the right to terminate this Agreement in accordance
with Section 10.1 hereof. Any information furnished to Buyer or which Buyer
receives in exercising its rights pursuant to this Section 6.4 shall be subject
to the terms of the Confidentiality Agreement.
6.5 CONDUCT OF BUSINESS. From the date hereof through the
Closing, the Sellers shall, except as contemplated by this Agreement, or as
consented to by Buyer in writing, operate the Industrial Power Transmission
Business in the ordinary course of business. Without limiting the generality of
the foregoing, the Sellers shall not, and shall not permit the Sold Subsidiary
or the Spanish Subsidiary to, except as contemplated by this Agreement or as
consented to by Buyer in writing, take any of the following actions from the
date hereof through the Closing with respect to the Industrial Power
Transmission Business or the Industrial Power Transmission Assets, as
applicable:
(a) operate the Industrial Power Transmission Business other
than in the ordinary course and, in connection therewith, shall use all
commercially reasonable efforts to preserve intact the business and
goodwill of each Seller, the Sold Subsidiary and the Spanish
Subsidiary;
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(b) change or amend the certificate of incorporation or bylaws
of the Sold Subsidiary or the Spanish Subsidiary;
(c) enter into, extend, materially modify, terminate or renew
any contract or lease, except in the ordinary course of business and
not involving payments in excess of $100,000;
(d) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Industrial Power
Transmission Assets having a book value individually in excess of
$10,000 as of the date hereof, or any interests therein, except the
Sellers will produce, maintain and sell Inventory consistent with its
past practices;
(e) incur any Liability for long-term interest bearing
indebtedness, guarantee the obligations of others, indemnify others or,
except in the ordinary course of business, incur any other Liability;
(f) (i) take any action with respect to the grant of any
bonus, severance or termination pay (except to the extent legally
obligated pursuant to policies or agreements of the Sellers, the Sold
Subsidiary or the Spanish Subsidiary in effect on the date hereof that
are described on the Disclosure Schedule) or with respect to any
increase of benefits payable under its severance or termination pay
policies or agreements in effect on the date hereof or increase in any
manner the compensation or fringe benefits of any employee or pay any
benefit not required by any existing Seller Plan or policy; (ii) make
any change in the key management structure of the Industrial Power
Transmission Business, including without limitation the hiring of
additional officers or the termination of existing officers; (iii)
adopt, enter into or amend any Seller Plan, agreement (including
without limitation any collective bargaining or employment agreement),
trust, fund or other arrangement for the benefit or welfare of any
employee, except for any such amendment as may be required to comply
with applicable Regulations; or (iv) fail to maintain all Seller Plans
in accordance with applicable Regulations;
(g) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or
otherwise acquire any material assets or business of any corporation,
partnership, association or other business organization or division
thereof;
(h) fail to expend funds for budgeted capital expenditures or
commitments, unless requested by Buyer in writing, or make any
non-budgeted capital expenditure or commitment;
(i) willingly allow or permit to be done, any act by which any
Insurance Coverage may be suspended, rescinded, forfeited, impaired or
canceled;
(j) (i) fail to pay its accounts payable and any debts owed or
obligations due to it, or pay or discharge when due any Liabilities, in
the ordinary course of business or (ii) fail to collect its accounts
receivable in the ordinary course of business;
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(k) enter into, renew, modify or revise any agreement or
transaction with any affiliate of a Seller, the Sold Subsidiary or the
Spanish Subsidiary (other than for the transfer of cash to the Sellers
in accordance with the Sellers' ordinary course cash management
practices with respect to the Industrial Power Transmission Business)
other than in the ordinary course of business;
(l) fail to maintain the Industrial Power Transmission Assets
in substantially their current state of repair, excepting normal wear
and tear, in the ordinary course of business;
(m) make any loans or advances to any partnership, firm or
corporation, or, except for expenses incurred in the ordinary course of
business, any individual;
(n) make any income tax election or settlement or compromise
with tax authorities, PROVIDED that this covenant shall only apply with
respect to the Sold Subsidiary and the Spanish Subsidiary;
(o) fail to comply in any material respect with all
regulations applicable to the Industrial Power Transmission Assets and
the Industrial Power Transmission Business;
(p) intentionally do any other act that would cause any
representation or warranty of the Sellers in this Agreement to be or
become untrue in any material respect;
(q) fail to use its best efforts to (i) retain the employees
of the Industrial Power Transmission Business and (ii) maintain the
Industrial Power Transmission Business so that such employees will
remain available to the Industrial Power Transmission Business on and
after the Closing Date, (iii) maintain existing relationships with
suppliers, customers and others having business dealings with the
Industrial Power Transmission Business and (iv) otherwise to preserve
the goodwill of the Industrial Power Transmission Business so that such
relationships and goodwill will be preserved on and after the Closing
Date;
(r) except as disclosed on SCHEDULE 6.5(r), permit the Sold
Subsidiary to (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to its capital stock, or
(ii) directly or indirectly redeem, purchase or otherwise acquire any
of its capital stock, or (iii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other security
in respect thereof; or
(s) enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder.
6.6 EMPLOYEE MATTERS
(a) OFFER OF EMPLOYMENT.
(i) Effective as of the Closing Date all employees of
the Sellers, the Sold Subsidiary and the Spanish Subsidiary
actively employed with respect to the Industrial Power
Transmission Business on the Closing Date who become
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employed by Buyer or a Buyer ERISA Affiliate by operation of
law in connection with the consummation of the transaction
contemplated by this Agreement shall be employed by Buyer or a
Buyer ERISA Affiliate under such terms and conditions as are
in accordance with the requirements of local law, except for
any such employee who refuses to transfer his employment to
Buyer or a Buyer ERISA Affiliate in accordance with applicable
laws.
(ii) With respect to all employees of the Sellers,
the Sold Subsidiary and the Spanish Subsidiary actively
employed with respect to the Industrial Power Transmission
Business on the Closing Date (including without limitation any
such employees who are on vacation or short term disability as
of the Closing Date) who are not employed in a jurisdiction in
which the transfer of employment of such employees to Buyer
will be achieved by operation of law in connection with the
consummation of the transaction contemplated by this
Agreement, Buyer or a Buyer ERISA Affiliate shall offer
employment to such employees at rates of pay and on such other
terms and conditions (including benefit plan coverages) as
are, in the aggregate substantially comparable to those in
effect with the Sellers, the Sold Subsidiary or the Spanish
Subsidiary, as the case may be, immediately prior to the
Closing Date, with it being expressly acknowledged by the
parties that SCHEDULE 6.6(a)(ii)(1) sets forth the list of
non-production employees of the Sellers located in North
America who will receive offers of employment. In addition to
such individuals, such offers of employment shall be extended
to those employees of the Sellers who are engaged in providing
corporate services with respect to the Industrial Power
Transmission Business and who are set forth on SCHEDULE
6.6(a)(ii)(2). Notwithstanding the foregoing, Buyer or a Buyer
ERISA Affiliate shall, upon notification of and cooperation
with the Sellers, offer employment to corporate employees of
the Sellers based in Miamisburg, Ohio who are primarily
engaged in providing corporate and/or information technology
services with respect to the Industrial Power Transmission
Business and the management employees of the Sellers located
in Louisville, Kentucky who are primarily engaged in providing
warehouse and distribution services with respect to the
Industrial Power Transmission Business and who are set forth
on SCHEDULE 6.6(a)(ii)(3) during or upon the completion of the
period during which the Sellers provide Buyer with information
technology and other services pursuant to the Transition
Services Agreement. The Sellers shall cooperate with and use
reasonable efforts to assist Buyer in its efforts to secure
reasonably satisfactory employment arrangement with the above
described employees.
(iii) All employees of the Sellers, the Sold
Subsidiary and the Spanish Subsidiary who become employed by
Buyer or a Buyer ERISA Affiliate in accordance with Section
6.6(a)(i) and Section 6.6(a)(ii) shall be referred to herein
as "TRANSFERRED EMPLOYEES". Except as otherwise specifically
set forth herein, the Sellers shall have no responsibility
whatsoever for any Liabilities or obligations which relate in
any way to such Transferred Employee's employment service with
Buyer. The Sellers shall remain responsible and liable for any
and all Liabilities or obligations which relate in any way to
any employee of the Sellers, the Sold Subsidiary and the
Spanish Subsidiary who does not become a Transferred
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Employee. In addition, except as otherwise provided under this
Agreement with respect to each Transferred Employee, the
Sellers shall remain responsible for all Liabilities and
obligations accruing through the date such employee becomes a
Transferred Employee.
(iv) The Sellers and Buyer agree that as of the
Closing Date, employees will be added to SCHEDULE
6.6(a)(ii)(1), SCHEDULE 6.6(a)(ii)(2) and SCHEDULE
6.6(a)(ii)(3), to reflect new hires hired by the Sellers, the
Sold Subsidiary and the Spanish Subsidiary in connection with
the Industrial Power Transmission Business during the period
between the date of this Agreement and the Closing Date or to
include an employee who was inadvertently excluded from such
Schedules, in each case subject to the consent of Buyer,
provided that such consent shall not be unreasonably withheld.
The Sellers and Buyer further agree that as of the Closing
Date, employees will be deleted from such Schedules to reflect
retirements, resignations, dismissals and discharges during
the period between the date of this Agreement and the Closing
Date. All references to SCHEDULE 6.6(a)(ii)(1), SCHEDULE
6.6(a)(ii)(2) and SCHEDULE 6.6(a)(ii)(3) in this Agreement
shall refer to such Schedules as updated and delivered on the
Closing Date in accordance with this subsection.
(b) Effective as of the Closing Date (or any later date that
an individual becomes a Transferred Employee), Buyer shall, or cause a
Buyer ERISA Affiliate to, consistent with its obligations under Section
6.6(a)(ii) hereof to provide substantially comparable benefits,
establish or maintain such employee benefit plans, programs and
arrangements as Buyer deems necessary (the "BUYER PLANS"). The Buyer
Plans shall recognize each Transferred Employee's prior service with
the Sellers or their affiliates that is recognized under the comparable
Seller Plan (and prior service with the Sellers' predecessors to the
extent such prior service is recognized under the comparable Seller
Plan) for participation and vesting purposes, but not benefit accrual
or contribution purposes; PROVIDED, HOWEVER, that the Buyer Plans shall
recognize such prior service for benefit accrual and contribution
purposes (A) to the extent that assets and liabilities are transferred
to a Buyer Plan from a Seller Plan and (B) with respect to the pension
plan of the Spanish Subsidiary. In addition, neither Buyer nor any
Buyer ERISA Affiliate shall assume or be responsible for any Liability
under any United Kingdom occupational pension plan other than as may be
required by Law, and the Sellers shall retain and remain responsible
for all such Liabilities.
(c) Effective as of the date an individual becomes a
Transferred Employee, such Transferred Employee shall cease to be
covered by the Sellers' employee welfare benefit plans, including
plans, programs, policies and arrangements which provide medical and
dental coverage, life and accident insurance, disability coverage
(collectively, "SELLER WELFARE PLANS"). The Sellers shall retain
responsibility for all medical and dental benefit, long term disability
benefit and other welfare benefit claims incurred by employees of the
Sellers, the Sold Subsidiary and the Spanish Subsidiary prior to the
date they become Transferred Employees. For purposes of this
subsection, a claim shall be deemed to have been incurred (A) with
respect to medical and dental benefit claims, on the date the medical
service giving rise to the claim is performed and (B) with respect to
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disability claims, on the date the individual becomes disabled. With
respect to the Transferred Employees, effective as of the date an
individual becomes a Transferred Employee, Buyer shall cause all
applicable Buyer Plans that provide medical or dental coverage, life
and accident insurance, and disability or similar coverage
(collectively, "BUYER WELFARE PLANS") to waive pre-existing condition
exclusions, evidence of insurability provisions, waiting period
requirements or similar provisions to the extent such exclusions,
requirements and provisions were waived or satisfied under the
applicable Seller Welfare Plan as of the Closing Date. In addition,
Buyer shall cause the applicable Buyer Welfare Plans to credit
Transferred Employees with amounts credited by the Sellers under the
Sellers' group health and dental plans toward the satisfaction of
annual deductible and out-of-pocket maximums under such group health
and dental plans during the calendar year in which an employee of a
Seller, the Sold Subsidiary or the Spanish Subsidiary (or other
individual in accordance with Section 6.6(a)(ii) becomes a Transferred
Employee.
(d) Effective as of the Closing Date, Buyer will assume the
Sellers' obligations, duties and Liabilities to provide retiree health
benefits and life insurance benefits to any Transferred Employee and
any former Industrial Power Transmission Employee and the spouse and
dependents of any such Transferred Employee or former Industrial Power
Transmission Employee (including, without limitation, any such
obligations with respect to current or former union and non-union
Industrial Power Transmission Employees located in Springfield,
Missouri) under the retiree benefit plans listed on SCHEDULE 6.6(d),
and Buyer will indemnify and hold harmless the Sellers and their ERISA
Affiliates from and against any Claims or Losses arising in connection
with or relating to such benefits other than any Claims or Losses that
arise out of any breach or default under the such plans by the Sellers
or any ERISA Affiliate occurring on or prior to the Closing Date.
(e) Effective as of the Closing Date, Buyer shall cause to be
established a defined benefit pension plan (the "BUYER PENSION PLAN")
for the benefit of participants (including retired and deferred vested
participants) in the Mark IV Industries, Inc. and Subsidiaries
Employees' Retirement Income Fund, as amended from time to time (the
"MARK IV PENSION PLAN"), as of the Closing Date who are Transferred
Employees or who subsequently become Transferred Employees or who
retired or whose employment was terminated prior to the Closing Date
and whose employment prior to their retirement or termination of
employment was in connection with the Businesses set forth on SCHEDULE
6.6(e) ("FORMER BUSINESS EMPLOYEES") (including alternate payees
related thereto) (such participants and alternate payees being
hereinafter referred to as the "TRANSFERRED PENSION PLAN
PARTICIPANTS"). The Buyer Pension Plan shall have terms substantially
similar to the Mark IV Pension Plan as in effect immediately prior to
the Closing Date, with respect to services prior to the Closing Date,
preserving all accrued benefits with respect to the Transferred Pension
Plan Participants. The Transferred Employees shall be given credit in
the Buyer Pension Plan for service with the Sellers and their ERISA
Affiliates (and any predecessor employer, to the extent such credit was
given under the Mark IV Pension Plan) for purposes of determining
participation and vesting service under the Buyer Pension Plan and with
respect to Transferred Pension Plan Participants for benefit accrual
and contribution purposes. In addition, the Sellers agree to vest each
Transferred Pension
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Plan Participant in his or her accrued benefit earned through the
Closing Date or any later date that the individual becomes a
Transferred Employee. In connection with the foregoing, the following
actions will be taken:
(i) At the time and in the manner set forth in
subsection (ii) below, the Mark IV Pension Plan sponsor shall
cause to be transferred to the Buyer Pension Plan a pro-rata
portion of the assets of the Mark IV Pension Plan in an amount
equal to the total assets of the Mark IV Pension Plan as of
the Closing Date multiplied by the accumulated benefit
obligations with respect to the Transferred Pension Plan
Participants under the Mark IV Pension Plan as of the Closing
Date divided by the total accumulated benefit obligations with
respect to all participants under the Mark IV Pension Plan as
of the Closing Date, plus interest on such amount from the
Closing Date until the date of transfer described in
subsection (ii) below using the Interest Rate.
(ii) The accumulated benefit obligations pursuant to
subsection (i) above shall be determined in accordance with
ERISA Section 4044 and Code Section 414(l) and based on the
actuarial methods and assumptions set forth on SCHEDULE
6.6(e)(ii) attached hereto. The Sellers' actuaries will make a
reasonable, good faith estimate of the amount of assets to be
transferred in accordance with subsection (i), and the Sellers
will, within sixty (60) days of the Closing Date (such date
being hereinafter referred to as the "PRELIMINARY TRANSFER
DATE"), cause 90% of such estimated amount, along with
interest thereon calculated from the Closing Date until the
Preliminary Transfer Date using the Interest Rate, to be
transferred from the Mark IV Pension Plan to the Buyer Pension
Plan. The Sellers' actuaries shall complete the calculation of
the amount of assets to be transferred pursuant to subsection
(i) on or before December 31, 2001. If the amount of assets to
be transferred pursuant to subsection (i) exceeds the amount
of assets transferred on the Preliminary Transfer Date, the
Sellers will cause such excess, along with interest thereon
calculated from the Closing Date until the actual transfer of
such excess using the Interest Rate, to be transferred from
the Mark IV Pension Plan to the Buyer Pension Plan as soon as
administratively practicable; PROVIDED, HOWEVER, that if such
transfer occurs after December 31, 2001, the interest rate
used to calculate the interest on such excess shall be the
Interest Rate for the period commencing on the Closing Date
and ending on December 31, 2001 and shall be the Interest Rate
for the period commencing on January 1, 2002 and ending on the
actual transfer date. If the amount of assets transferred on
the Preliminary Transfer Date to the Buyer Pension Plan
exceeds the amount of assets to be transferred pursuant to
subsection (i), Buyer will cause such excess, along with
interest thereon calculated from the Closing Date until the
actual transfer of such excess using the Interest Rate, to be
transferred from the Buyer Pension Plan to the Mark IV Pension
Plan as soon as administratively practicable; PROVIDED,
HOWEVER, that if such transfer occurs after December 31, 2001,
the interest rate used to calculate the interest on such
difference after December 31, 2001 shall be the Interest Rate
for the period commencing on the Closing Date and ending on
December 31, 2001 and shall be the Interest Rate for the
period commencing on January 1, 2002 and ending on the actual
transfer date.
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All of the calculations required under this Section 6.6(e)
will be subject to the assumptions set forth on SCHEDULE
6.6(e)(ii). The assets to be transferred pursuant to
subsection (i) may be in cash or in kind, as determined by the
Sellers with the consent of the Buyer.
(iii) Benefit payments to Transferred Pension Plan
Participants in pay status shall continue to be made from the
Mark IV Pension Plan following the Closing Date and until the
Preliminary Transfer Date. Any such payments, adjusted for
applicable interest, shall be deducted from the amount
required to be transferred to the Buyer Pension Plan pursuant
to subsection (ii).
(iv) Buyer agrees to apply for a favorable Internal
Revenue Service determination letter as to the qualified
status of the Buyer Pension Plan as soon as administratively
practicable after the Closing Date. Buyer agrees to make any
operational or form changes with respect to the Buyer Pension
Plan as may be required by the Internal Revenue Service so
that such a favorable determination letter will be issued.
(v) Following the Preliminary Transfer Date, and
subject to and expressly conditioned upon the Sellers'
complete satisfaction of their obligations under this Section
6.6(e), Buyer shall assume all obligations and Liabilities of
the Sellers, the Sold Subsidiary and the Spanish Subsidiary
and any of their respective ERISA Affiliates under the Mark IV
Pension Plan with respect to accrued benefits of the
Transferred Pension Plan Participants, and the Sellers, the
Sold Subsidiary and the Spanish Subsidiary shall have no
further liability to Buyer or any Transferred Pension Plan
Participant with respect thereto following the Preliminary
Transfer Date.
(vi) Nothing contained in this Section 6.6(e) shall
prevent Buyer from amending or terminating any Buyer Pension
Plan.
(f) Effective as of the Closing Date, Buyer shall take all
action necessary or appropriate to cause a defined contribution plan
adopted or maintained by Buyer or a Buyer ERISA Affiliate (the "BUYER
401(K) PLAN") to recognize prior service with the Sellers for purposes
of vesting and participation. The Sellers shall cause the account
balances of the Transferred Employees under the Mark IV Savings and
Retirement Plan, as amended from time to time ("SELLER 401(K) PLAN"),
to be fully vested as of the Closing Date (or any later date that an
individual becomes a Transferred Employee). In accordance with the
applicable provisions of Sections 414(l) and 411(d)(6) of the Code, the
Sellers shall cause the assets of the Seller 401(k) Plan attributable
to the accounts of each participant who is a Transferred Employee to be
transferred by the trustee of the Seller 401(k) Plan to the trustee of
the Buyer 401(k) Plan. Unless otherwise agreed to by the parties, such
transfer of assets shall be in cash (but shall include any promissory
notes or other evidences of indebtedness with respect to outstanding
loans), and shall be made as of and as soon as practicable after a
valuation date under the Seller 401(k) Plan occurring immediately
following the Closing Date (or any later date that an individual
becomes a Transferred Employee), or as of such later valuation date as
may be mutually
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selected by Buyer and the Sellers. Such transfer shall account
appropriately for earnings during the period from the applicable
valuation date to the actual date of transfer (the "TRANSFER DATE").
From the Closing Date until the Transfer Date, the Sellers shall, to
the extent permissible under applicable Laws, permit Transferred
Employees to continue to make loan repayments (other than through
payroll deduction) under any Seller 401(k) Plan participant loan.
(g) The Sellers shall provide promptly to Buyer, at Buyer's
reasonable request, any information or copies of personnel records
(including addresses, dates of birth, dates of hire and dependent
information) relating to the Transferred Employees or relating to the
service of Transferred Employees and Former Business Employees with the
Sellers prior to the Closing Date (or any later date that an employee
becomes a Transferred Employee). The Sellers and Buyer shall each
cooperate with the other and shall provide to the other such
documentation, information and assistance as is reasonably necessary to
effect the provisions of this Section 6.6.
(h) As of the Closing Date, Buyer agrees to take any and all
actions necessary or appropriate to provide that Buyer or a Buyer ERISA
Affiliate shall assume and maintain all Liabilities with respect to the
employment agreements, stay bonus agreements, severance agreements,
incentive compensation arrangements and other agreements described in
Section 2.2(d) and that the Sellers shall have no further liability
with respect thereto.
(i) Notwithstanding any other provision of this Section 6.6 to
the contrary, as of the Closing Date, Buyer or a Buyer ERISA Affiliate
shall: (i) assume the Seller Plans which it is required to assume under
the laws of any applicable jurisdiction or which it, with the consent
of the Sellers or the appropriate ERISA Affiliate, has agreed to assume
(the "ASSUMED BENEFIT PLAN"), which Assumed Benefit Plans shall be set
forth on SCHEDULE 6.6(i); (ii) establish new employee benefit plans;
(iii) cover the Transferred Employees under its existing employee
benefit plans; or (iv) any combination of (i), (ii) or (iii), above, as
Buyer deems necessary or advisable in furtherance of its obligations
under this Section 6.6. The Sellers and all ERISA Affiliates agree (x)
to cooperate in good faith and do all things reasonably necessary to
assist Buyer and any Buyer ERISA Affiliate in this regard and (y) not
to withhold any consent required under applicable law with respect to
the assumption of any Assumed Benefit Plan.
(j) Unless otherwise provided under this Agreement, the
Sellers shall be responsible for and shall discharge any and all
Claims, Losses or Liabilities arising under: (i) any Seller Plan
maintained or contributed to by the Sellers or any ERISA Affiliate,
other than an Assumed Benefit Plan, regardless of whether the Claims,
Losses or Liabilities relate to or arise out of conditions, events,
employment service or transactions which exist or occur prior to, on or
after the Closing Date; and (ii) any Assumed Benefit Plan, to the
extent such Claims, Losses or Liabilities relate to or arise out of
conditions, events, employment service or transactions which exist or
occur on or prior to the Closing Date. Unless otherwise provided under
this Agreement, Buyer shall be responsible for and shall discharge any
and all Claims, Losses or Liabilities related to Assumed Benefit Plans,
to the extent such Claims, Losses or Liabilities relate to or arise
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out of conditions, events, employment service or transactions which
exist or occur following the Closing Date, but excluding any Claims,
Losses or Liabilities that arise out of any breach or default under any
Assumed Benefit Plan by the Sellers or any ERISA Affiliate occurring on
or prior to the Closing Date.
(k) Unless otherwise provided under this Agreement, the
Sellers shall be responsible for and shall discharge all Claims, Losses
or Liabilities with respect to or in connection with any severance,
termination indemnity, compensation, or benefit or amount under any
Seller Plan with respect to: (i) any employee of the Sellers or an
ERISA Affiliate who is not a Transferred Employee; (ii) any employee of
the Sellers or an ERISA Affiliate who would otherwise be a Transferred
Employee, but who withholds his individual consent or objects to the
transfer under local law and thus refuses to become an employee of
Buyer or a Buyer ERISA Affiliate; and (iii) any former employee of the
Sellers or an ERISA Affiliate who terminated employment for any reason
prior to or on the Closing Date.
(l) Effective as of the Closing Date, Buyer shall assume (and
thereby recognize Locals 31 and 662 of the United Steelworkers of
America) the Union Contracts and the Sellers' obligations to negotiate
in good faith with respect to such Union Contracts.
(m) Nothing herein, express or implied, shall confer upon any
employee or former employee of any Seller, the Sold Subsidiary or the
Spanish Subsidiary (including, without limitation, the Transferred
Employees) any rights or remedies under or by reason of this Agreement
or shall constitute a contract of employment with respect to any
Transferred Employee.
(n) Buyer shall establish one or more plans or arrangements
providing workers compensation benefits for Transferred Employees (the
"BUYER WORKERS COMPENSATION PROGRAM"), effective as of the date they
become Transferred Employees. The Buyer Workers Compensation Program
shall be responsible for all claims and benefits which are incurred by
Transferred Employees following the date they become Transferred
Employees. The Sellers worker compensation programs shall retain
responsibility for all claims and benefits which are incurred by
Transferred Employees prior to or on the date they become Transferred
Employees, whether or not the applicable claim is reported as of such
date. For purposes of this subsection, a claim shall be deemed to have
been incurred on the date the injury or other event giving rise to the
claim takes place.
(o) Buyer shall be responsible for providing or discharging
any and all notifications, benefits and liabilities to Transferred
Employees and governmental entities under the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN ACT") or by any other
applicable law relating to plant closings or employee separations or
severance pay that are first required to be provided or discharged
after the Closing Date. Buyer shall not take any action after the
Closing that would cause any termination of employment of any employees
of the Sellers, the Sold Subsidiary or the Spanish Subsidiary that
occurs on or prior to the Closing to constitute a "plant closing" or
"mass
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layoff" under the WARN Act or any similar statute, or create any
liability to the Sellers for any employment terminations under
applicable law. The Sellers, the Sold Subsidiary and the Spanish
Subsidiary shall notify Buyer prior to the Closing of any layoffs that
have occurred in the 90-day period prior to the Closing.
(p) In the event that Buyer or any of its successors and
assigns (i) consolidates with or merges into any person or entity and
is not the continuing or surviving corporation or entity in such
consolidation or merger, or (ii) transfers all or substantially all of
its assets to any person or entity, then, in each case, proper
provision shall be made so that the successors and assigns of Buyer
honor the obligations of Buyer set forth in this Section 6.6.
(q) Where required under local law, the Sellers shall, prior
to the Closing Date, properly and timely notify, or where appropriate,
consult or negotiate with, each local works council, union, labor board
or relevant governmental agency set forth on SCHEDULE 6.6(q) concerning
the transactions contemplated by this Agreement.
(r) Any Liability or obligation under any Seller Plan or
Assumed Benefit Plan which is not expressly assumed by Buyer under this
Section 6.6 or under Section 2.2(d) shall be considered a Retained
Liability for purposes of this Agreement.
6.7 INTERCOMPANY AMOUNTS. Immediately prior to the Closing,
(a) all intercompany accounts payable owing to the Sellers or any of their
affiliates by the Industrial Power Transmission Business, and (b) all
intercompany accounts payable owing by the Sellers or any of their affiliates to
the Industrial Power Transmission Business shall be forgiven, discharged,
released or paid, in each case as determined by the Sellers in their sole
discretion and such transactions shall be reflected on the Closing Date
Statement of Net Assets, except as otherwise provided in the Accounting
Principles.
6.8 INSURANCE MATTERS
(a) Prior to the date hereof, the Sellers have maintained
certain insurance coverage provided by third-party insurers (including
stop loss, excess liability and umbrella coverage) for certain Assumed
Liabilities arising out of occurrences prior to the Closing Date and
relating to the Industrial Power Transmission Business (the "INSURANCE
COVERAGE"). The Sellers agree to take such action as may be reasonably
necessary to maintain the Insurance Coverage after the Closing for the
benefit of Buyer and not to voluntarily relinquish or terminate such
Insurance Coverage. To the extent that any claim with respect to such
Assumed Liabilities that arises out of any act, omission, occurrence,
fact or circumstance existing or occurring prior to the Closing Date is
made against Buyer and/or any Seller, and the Insurance Coverage by its
terms applies to such claim (any such claim, an "INSURANCE COVERAGE
CLAIM"), the Sellers shall submit such Insurance Coverage Claim upon
becoming aware thereof to the insurer under the applicable insurance
policy for potential payment and shall use commercially reasonable
efforts to obtain the maximum recovery from the provider of the related
Insurance Coverage.
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Buyer shall reimburse the Sellers for any applicable administrative and
processing fees or other costs and expenses imposed by the insurer and
paid by the Sellers relating to Insurance Coverage Claims and the
processing thereof. In addition, the Sellers agree to cooperate with
Buyer to make the benefits of the Insurance Coverage available to Buyer
(subject to the terms and conditions of such Insurance Coverage) and
continue, from and after the Closing, to process such Insurance
Coverage Claims in the ordinary course of business in substantially the
same manner as similar claims were processed prior to the Closing Date.
In the event that (i) the Sellers receive any proceeds of the Insurance
Coverage with respect to any Insurance Coverage Claims thereunder and
(ii) such claim has been paid by Buyer, the Sellers shall promptly pay
or reimburse Buyer with respect to the amount so paid by Buyer, net of
any applicable administrative or processing fees or other costs and
expenses of the Sellers relating thereto.
(b) With respect to Buyer's obligation to reimburse the
Sellers for any amounts described in this Section 6.8 (the "REIMBURSED
AMOUNTS"), the Sellers and Buyer agree that (i) the Sellers will
invoice Buyer on a monthly basis for all Reimbursed Amounts paid or
incurred by the Sellers with appropriate supporting details and (ii)
Buyer agrees to pay the amount reflected on such invoices as promptly
as practicable and in any event within ten (10) days of receipt of any
such invoice with appropriate supporting details.
(c) In the event that Buyer or any or its affiliates or
Representatives takes or fails to take any action which results in the
Insurance Coverage not being available for any reason with respect to
any Insurance Coverage Claim, then the Sellers' obligations pursuant to
this Section 6.8 with respect to any such Insurance Coverage Claim
shall immediately terminate and be of no further force and effect.
(d) Buyer expressly acknowledges and agrees that (i) in no
event shall the Sellers be required to pay, or be held responsible for,
any self insured retention amounts or deductibles payable with respect
to any Insurance Coverage Claim and (ii) Buyer shall be responsible for
all self insured retention amounts and deductibles payable with respect
to any Insurance Coverage Claim. Buyer further acknowledges and agrees
that Buyer shall reimburse the Sellers for any self insured retention
amounts or deductibles described in this clause (d) that are paid by
the Sellers.
(e) Buyer acknowledges that effective as of the Closing Date,
the Sellers intend to remove the Industrial Power Transmission Assets
and the Industrial Power Transmission Business from the Insurance
Coverage to the extent that the Insurance Coverage relates to the
Industrial Power Transmission Assets or the Industrial Power
Transmission Business with respect to any periods arising at any time
on or after the Closing Date. Accordingly, Buyer acknowledges that no
Insurance Coverage shall be available to Buyer with respect to any
injury, loss or damage that Buyer, any of the Industrial Power
Transmission Assets, the Industrial Power Transmission Business or any
third party may suffer as a result of any act, omission, occurrence,
fact or circumstance occurring with respect to the Industrial Power
Transmission Assets or Industrial Power Transmission Business at any
time on or after the Closing Date.
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6.9 [INTENTIONALLY OMITTED]
6.10 NO ADDITIONAL REPRESENTATIONS AND WARRANTIES. Buyer
acknowledges that none of the Sellers or any other person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Industrial Power Transmission
Business or the Industrial Power Transmission Assets, except as expressly set
forth in this Agreement, and Buyer further agrees that none of the Sellers or
any other person shall have or be subject to any liability to Buyer or any other
person resulting from the distribution to Buyer or such person, or Buyer's or
such person's use of, any such information, including, without limitation, the
Confidential Information Memorandum prepared by SG Advisers and any information,
documents, data or materials made available to Buyer in any data room furnished
by the Sellers, management presentations or other form in expectation of the
transactions contemplated by this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT OR THE ANCILLARY AGREEMENTS, IT IS THE EXPRESS INTENT OF THE
PARTIES HERETO THAT THE SELLERS MAKE NO ADDITIONAL REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY IN RESPECT OF THE INDUSTRIAL
POWER TRANSMISSION BUSINESS OR THE INDUSTRIAL POWER TRANSMISSION ASSETS OR ANY
OTHER MATTER BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
INDUSTRIAL POWER TRANSMISSION BUSINESS OR ANY OF THE INDUSTRIAL POWER
TRANSMISSION ASSETS, AND ANY SUCH REPRESENTATIONS OR WARRANTIES ARE EXPRESSLY
DISCLAIMED.
6.11 DISCLAIMER OF ESTIMATES AND PROJECTIONS. In connection
with Buyer's investigation of the Industrial Power Transmission Business and the
Industrial Power Transmission Assets, Buyer has received from or on behalf of
the Sellers certain estimates, forecasts, plans and financial projections. Buyer
acknowledges that (a) there are uncertainties inherent in making such estimates,
forecasts, plans and projections and that Buyer is familiar with such
uncertainties, (b) Buyer is taking full responsibility for conducting its own
evaluation of the adequacy and accuracy of such estimates, forecasts, plans and
projections (including without limitation the reasonableness of the assumptions
underlying such estimates, forecasts, plans and projections), and (c) Buyer
shall have no Claim against the Sellers or any other person with respect to such
estimates, forecasts, plans or projections. Accordingly, except as otherwise
expressly provided herein, the Sellers are making no representation or warranty
with respect to such estimates, forecasts, plans and projections (including
without limitation such underlying assumptions).
6.12 NON-COMPETITION WITH BUYER
(a) Except with respect to the CVT Products, which are the
subject of Section 6.12(b) hereof, and subject to the provisions of
Section 6.12(c) hereof, as a part of the inducement to Buyer to enter
into this Agreement, the Sellers hereby agree that for a
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period of five (5) years from and after the Closing Date, the Sellers
shall not, nor shall any division of any Seller or any person with
respect to which any Seller directly or indirectly controls the
management or owns more than fifty percent (50%) of the total number of
outstanding equity entitled to vote (each, for purposes of this Section
6.12, a "SELLER SUBSIDIARY"), without the prior written consent of
Buyer, own, manage, operate or control, directly or indirectly, any
business, firm, entity or other person which is engaged in, or
otherwise competitive with, the Industrial Power Transmission Business.
(b) Subject to the provisions of Section 6.12(c) hereof, the
Sellers hereby agree that for a period of five (5) years from and after
the Closing Date, the Sellers shall not, nor shall any Seller
Subsidiary, without the prior written consent of Buyer, manufacture or
sell CVT Products for or into the Buyer's Exclusive Market, PROVIDED
that the Sellers and Seller Subsidiaries may manufacture or sell CVT
Products for or into the Seller's Exclusive Market and otherwise for
use outside of the Buyer's Exclusive Market, regardless of whether the
purchaser thereof produces products for sale in the Buyer's Exclusive
Market in addition to outside of the Buyer's Exclusive Market.
(c) The agreements set forth in this Section 6.12 shall be
binding on all successors, transferees, assigns and acquirers of the
applicable assets or the stock of any Seller or Seller Subsidiary;
PROVIDED, HOWEVER, that, subject to Section 6.12(d) hereof, nothing
contained herein shall be deemed to prohibit, limit or otherwise
restrict the Sellers or any Seller Subsidiary (i) from selling its
capital stock and/or assets to any person that is not an affiliate of
such Seller or Seller Subsidiary, PROVIDED, that if such person is a
competitor of the Industrial Power Transmission Business on the date of
transfer (a "SELLER COMPETITOR"), such person agrees in writing, for
the benefit of Buyer, not to use any tangible or intangible assets or
personnel of the acquired business to compete with the Industrial Power
Transmission Business (in which event the provisions of this Section
6.12 shall terminate with respect to such Seller Competitor); (ii) from
owning, purchasing or otherwise acquiring an aggregate of up to five
percent (5%) of the outstanding capital stock of any person that
engages in the Industrial Power Transmission Business, the securities
of which are listed on a national securities exchange or included in
the national list of over-the-counter securities; and (iii) from
continuing at all times from and after the date hereof to conduct their
respective businesses (other than the Industrial Power Transmission
Business) anywhere in the world as currently conducted, including the
Automotive Power Transmission Business. Except with respect to Section
6.12(d) hereof, the provisions of this Section 6.12 shall not in any
case be applicable to BC Partners or any of its affiliates or any funds
advised by BC Partners other than the Sellers and the Seller
Subsidiaries.
(d) The Sellers hereby agree that the Sellers shall not, and
shall not permit any Seller Subsidiary to, transfer any tangible or
intangible assets or personnel from the Automotive Power Transmission
Business to any affiliate of the Sellers or any Seller Subsidiary,
unless such affiliate undertakes and agrees in writing, for the benefit
of Buyer, not to use such assets or personnel in the ownership,
management, operation or control, directly or indirectly, of any
business, firm, entity or other person engaged in the or otherwise
competitive with the Industrial Power Transmission Business.
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(e) The Sellers acknowledge that any breach of the provisions
of this Agreement by any Seller or any Seller Subsidiary will result in
irreparable injury to Buyer (following the consummation of the
transactions contemplated hereby), and that Buyer's remedies at law
would be inadequate and insufficient. Accordingly, in the event of any
such breach by any Seller or any Seller Subsidiary of any of the
provisions of this Section 6.12 or Section 9.8, Buyer shall be entitled
to preliminary and/or permanent injunctive relief, in addition to all
such other legal and equitable remedies as may be available to Buyer
therefor. In the event any of the provisions of this Section 6.12 or
Section 9.8 are determined by a court of competent jurisdiction to be
contrary to any applicable Law, or for any reason to be unenforceable
or invalid as written, the parties acknowledge that such court may, if
permitted by applicable Law, may modify any of such provisions so as to
permit enforcement thereof as so modified.
6.13 NON-COMPETITION WITH THE SELLERS
(a) Except with respect to the Industrial Power Transmission
Business and except with respect to the CVT Products, which are the
subject of Section 6.13(b) hereof, and subject to the provisions of
Section 6.13(c) hereof, as a part of the inducement to the Sellers to
enter into this Agreement, Buyer hereby agree that for a period of five
(5) years from and after the Closing Date, Buyer shall not, nor shall
any division of Buyer or any person with respect to which the Buyer
directly or indirectly controls the management or owns more than fifty
percent (50%) of the total number of outstanding equity entitled to
vote (each, for purposes of this Section 6.13, a "BUYER SUBSIDIARY"),
without the prior written consent of the Sellers, own, manage, operate
or control, directly or indirectly, any business, firm, entity or other
person which is engaged in, or otherwise competitive with, the
Automotive Power Transmission Business.
(b) Subject to the provisions of Section 6.13(c) hereof, Buyer
hereby agrees that for a period of five (5) years from and after the
Closing Date, Buyer shall not, nor shall any Buyer Subsidiary, without
the prior written consent of the Sellers, manufacture or sell CVT
Products for or into the Seller's Exclusive Market, PROVIDED that Buyer
and Buyer Subsidiaries may manufacture or sell CVT Products for or into
the Buyer's Exclusive Market and otherwise for use outside of the
Seller's Exclusive Market, regardless of whether the purchaser thereof
produces products for sale in the Seller's Exclusive Market in addition
to outside of the Seller's Exclusive Market.
(c) The agreements set forth in this Section 6.13 shall be
binding on all successors, transferees, assigns and acquirers of the
applicable assets or the stock of any Buyer or Buyer Subsidiary;
PROVIDED, HOWEVER, that nothing contained herein shall be deemed to
prohibit, limit or otherwise restrict Buyer or any Buyer Subsidiary (i)
from acquiring any person or business if such person does not use any
Industrial Power Transmission Assets to compete with the Automotive
Power Transmission Business; (ii) from selling its capital stock and/or
assets to any person that is not an affiliate of Buyer or such Buyer
Subsidiary, PROVIDED, that if such person is a competitor of the
Automotive Power Transmission Business on the date of transfer (a
"BUYER COMPETITOR"), such person agrees in writing not to use any
tangible or intangible assets or personnel of the acquired business to
compete with the Automotive Power Transmission
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Business (in which event the provisions of this Section 6.13 shall
terminate with respect to such Buyer Competitor); (iii) from owning,
purchasing or otherwise acquiring an aggregate of up to five percent
(5%) of the outstanding capital stock of any person that engages in the
Automotive Power Transmission Business, the securities of which are
listed on a national securities exchange or included in the national
list of over-the-counter securities; and (iv) from continuing at all
times from and after the date hereof to conduct their respective
businesses anywhere in the world as currently conducted including the
business and operations of Carlisle Engineered Products. The provisions
of this Section 6.13 shall not in any case apply to the shareholders of
Buyer.
(d) Notwithstanding any other provision of this Section 6.13,
Buyer and Buyer's Subsidiaries shall have the exclusive right to supply
CVT Products to the Sellers in connection with sales made by the
Sellers into the non-automotive markets for complete gear box or power
pack systems; PROVIDED, HOWEVER, that Buyer is able to (i) meet the
Sellers' product specifications, (ii) satisfy quality and volume
demands and (iii) provide such CVT belts at competitive market prices.
(e) Buyer acknowledges that any breach of the provisions of
this Agreement by Buyer or any Buyer Subsidiary will result in
irreparable injury to the Sellers (following the consummation of the
transactions contemplated hereby), and that the Sellers' remedies at
law would be inadequate and insufficient. Accordingly, in the event of
any such breach by Buyer or any Buyer Subsidiary of any of the
provisions of this Section 6.13 or Section 9.8, the Sellers shall be
entitled to preliminary and/or permanent injunctive relief, in addition
to all such other legal and equitable remedies as may be available to
the Sellers therefor. In the event any of the provisions of this
Section 6.13 or Section 9.8, are determined by a court of competent
jurisdiction to be contrary to any applicable Law, or for any reason to
be unenforceable or invalid as written, the parties acknowledge that
such court may, if permitted by applicable Law, may modify any of such
provisions so as to permit enforcement thereof as so modified.
6.14 RELEASE OF BANK LIEN AND OTHER ENCUMBRANCES. The Sellers
shall, concurrent with or prior to the Closing, cause to be removed, released
and discharged any and all liens and other security interests arising in favor
of The Chase Manhattan Bank, as Administrative Agent for the lenders and
financial institutions party to the Credit Agreement, or such lenders under and
pursuant to the Credit Agreement (or any security document contemplated thereby
or executed by Seller in connection therewith) which affects the Industrial
Power Transmission Assets or to which the Industrial Power Transmission Assets
are subject (collective, the "BANK LIEN") and all other Encumbrances that are
not Permitted Encumbrances.
6.15 [INTENTIONALLY OMITTED]
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6.16 REMOVAL OF TCI EQUIPMENT. The Sellers shall, within
thirty (30) days of the date hereof, remove the manufacturing equipment used for
producing products for Total Containment, Inc. from the Facility located in
Springfield, Missouri.
6.17 FURTHER ASSURANCES RELATING TO THE SOLD SUBSIDIARY AND
THE SPANISH SUBSIDIARY. Following the Closing, the Sellers shall cooperate with
Buyer, at Sellers' cost, to convey to, and vest Buyer (or any subsidiary
thereof) with, the ownership of the Sold Subsidiary Stock and convey to, and
vest the Sold Subsidiary with, the ownership of all of the outstanding capital
stock of the Spanish Subsidiary, including, without limitation, the execution of
any documents, instruments or conveyances that may be reasonably necessary to
effect such conveyance and vesting. The Sellers and Buyer further agree and
acknowledge that any costs incurred in connection with the provisions of this
Section 6.17 shall be deemed a Retained Liability for purposes of this
Agreement.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject, in the sole discretion of the
Sellers, to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by the Sellers:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Buyer contained in this Agreement that are
qualified as to materiality or material adverse effect shall be true and correct
and all representations and warranties of Buyer contained in this Agreement that
are not so qualified shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date (except, in either case,
for representations and warranties which by their terms speak as of a specific
date which need only be true and correct as of such date, or as otherwise
permitted to be changed by the terms hereof), and Buyer shall have performed and
satisfied in all material respects all agreements and covenants required hereby
to be performed by it prior to or on the Closing Date. Buyer shall furnish the
Sellers with a certificate executed by a duly authorized officer of Buyer to the
effect that the conditions set forth in this Section 7.1 are satisfied.
7.2 NO LAWS OR GOVERNMENTAL ORDERS. There shall not be any Law
or Governmental Order or proceeding that makes the purchase and sale of the
Industrial Power Transmission Business or the Industrial Power Transmission
Assets contemplated hereby illegal or otherwise prohibited.
7.3 OTHER AGREEMENTS. Buyer shall have executed and delivered
the Assumption Agreement and the Ancillary Agreements.
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7.4 DELIVERIES. The Sellers shall have received from Buyer
each of the deliveries described in Section 3.2(b).
ARTICLE VIII.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject, in the sole discretion of Buyer, to
the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Buyer:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of the Sellers contained in this Agreement that
are qualified as to materiality or material adverse effect shall be true and
correct and all representations and warranties of the Sellers contained in this
Agreement that are not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date (except, in
either case, for representations and warranties which by their terms speak as of
a specific date which need only be true and correct as of such date, or as
otherwise permitted to be changed by the terms hereof), and the Sellers shall
have performed and satisfied in all material respects all agreements and
covenants required hereby to be performed by it prior to or on the Closing Date.
The Sellers shall furnish Buyer with a certificate executed by duly authorized
officers of the Sellers to the effect that the conditions set forth in this
Section 8.1 are satisfied.
8.2 NO LAW OR GOVERNMENTAL ORDERS. There shall not be any Law
or Governmental Order or proceeding that makes the purchase and sale of the
Industrial Power Transmission Business or the Industrial Power Transmission
Assets contemplated hereby illegal or otherwise prohibited.
8.3 OTHER AGREEMENTS. The Sellers shall have executed and
delivered the Ancillary Agreements and the Assignment Agreements.
8.4 FIRPTA AFFIDAVIT. Each Seller that is transferring a
"United States real property interest" within the meaning of Section 1445(a)of
the Code shall have furnished Buyer with an affidavit certifying as to such
Seller's United States taxpayer identification number and that such Seller is
not a "foreign person" pursuant to Section 1445(b)(2) of the Code.
8.5 ACCOUNTS. The bank accounts of the Sold Subsidiary and the
Spanish Subsidiary shall carry a combined cash balance equal to $500,000 (the
"CASH BALANCE").
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8.6 DELIVERIES. Buyer shall have received from the Sellers
each of the deliveries described in Section 3.2(a).
8.7 RELEASE OF ENCUMBRANCES. All Encumbrances, excluding
Permitted Encumbrances, and the Bank Lien shall have been removed, released and
discharged in accordance with SECTION 6.14.
ARTICLE IX.
POST-CLOSING COVENANTS
9.1 COLLECTION OF ACCOUNTS RECEIVABLE. At the Closing, Buyer
will acquire hereunder, and thereafter Buyer or its designee shall have the
right and authority to collect for Buyer's or its designee's account, all
receivables and other items which constitute a part of the Industrial Power
Transmission Assets, and the Sellers shall, promptly after receipt of any
payment in respect of any of the foregoing, properly endorse and deliver to
Buyer any documents, cash or checks received on account of or otherwise relating
to any such receivables or other items. The Sellers shall promptly transfer or
deliver to Buyer or its designee any cash or other property that the Sellers may
receive in respect of any deposit, prepaid expense, Claim, contract, sales
order, purchase order or receivable of any character, or any other item,
constituting a Industrial Power Transmission Asset and to which Buyer is
entitled by virtue of purchasing the Industrial Power Transmission Assets and
the Industrial Power Transmission Business pursuant to this Agreement.
9.2 BOOKS AND RECORDS. Each party agrees that it will
cooperate with and make available to the other party, during normal business
hours, all books and records, information and employees (without substantial
disruption of employment) retained and remaining in existence after the Closing
which are necessary or useful in connection with any Tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring any such books and records, information or employees for any
reasonable business purpose. The party requesting any such books and records,
information or employees shall bear all of the out of pocket costs and expenses
(including without limitation attorneys' fees, but excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with providing
such books and records, information or employees. All information received
pursuant to this Section 9.2 shall be subject to the terms of the
Confidentiality Agreement.
9.3 SURVIVAL OF REPRESENTATIONS, ETC. All of the
representations, warranties, covenants, agreements and indemnities made by each
party in this Agreement shall survive the Closing for a period of eighteen (18)
months following the Closing, except (a) the representations and warranties
contained in Section 4.14 shall survive in accordance with the applicable
statute of limitations, (b) the representations and warranties contained in
Sections 4.13 and 4.15 shall survive for a period of three (3) years
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following the Closing, (c) the representations and warranties contained in
Section 4.2, Section 4.4(a), (b) and (c) and the first sentence of Section
4.5(a) shall survive in perpetuity, (d) with respect to those covenants to be
performed by the parties following the Closing for a specified period expressly
set forth in this Agreement shall survive for such period, and (e) with respect
to the Sellers' indemnification obligation pursuant to Section 9.4(a)(iii) and
9.6 and Buyer's indemnification obligation pursuant to Section 9.4(b)(iii) and
9.6 hereof, each of which shall survive in perpetuity. Each party hereto shall
be entitled to rely upon the representations and warranties of the other party
set forth in this Agreement. The expiration of the representations and
warranties provided herein shall not affect the rights of a party in respect of
any Claim made by such party in a writing received by the other party prior to
the expiration of the applicable survival period provided herein.
9.4 INDEMNIFICATION
(a) From and after the Closing, the Sellers shall, jointly and
severally, indemnify, save and hold harmless Buyer, its affiliates and
subsidiaries, and its and their respective Representatives, from and
against any and all Losses incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or
warranty or the inaccuracy of any representation, made by the Sellers
in or pursuant to this Agreement; (ii) any breach of any covenant or
agreement made by the Sellers in or pursuant to this Agreement (other
than pursuant to Section 4.14 hereof, which is addressed in Section 9.6
hereof); and (iii) any Retained Liability (other than any Liability for
Taxes, which is addressed in Section 9.6 hereof).
(b) From and after the Closing, Buyer shall indemnify and save
and hold harmless the Sellers, their affiliates and subsidiaries, and
their respective Representatives from and against any and all Losses
incurred in connection with, arising out of, resulting from or incident
to (i) any breach of any representation or warranty or the inaccuracy
of any representation, made by Buyer in or pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by Buyer in or
pursuant to this Agreement; or (iii) any Assumed Liability (other than
any Liability for Taxes, which is addressed in Section 9.6 hereof).
(c) If a Claim for Losses is to be made by a party entitled to
indemnification hereunder against the indemnifying party, the party
claiming such indemnification shall give written notice (a "CLAIM
NOTICE") to the indemnifying party as soon as practicable after the
party entitled to indemnification becomes aware of any fact, condition
or event which may give rise to Losses for which indemnification may be
sought under this Section 9.4; PROVIDED, HOWEVER, if any Action is
filed against any party entitled to the benefit of and seeking
indemnity hereunder, the applicable Claim Notice shall be given to the
indemnifying party as promptly as practicable (and in any event within
fifteen (15) business days after the service of the citation or
summons). Notwithstanding the foregoing, the failure of any indemnified
party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying
party is actually and materially prejudiced by such failure. After
receiving a Claim Notice relating to a Claim by or against any third
party, the indemnifying party shall be entitled, upon written notice to
the indemnified party, at its own cost, risk and expense,
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(i) to take control of the defense and investigation of such lawsuit or
action, (ii) to employ and engage attorneys of its own choice to handle
and defend the same (unless the named parties to such Action include
both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that there may
be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying
party, in which event the indemnified party shall be entitled, at the
indemnifying party's cost, risk and expense, to separate counsel of its
own choosing), and (iii) to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of
the indemnified party, such consent not to be unreasonably withheld. In
such circumstance, the indemnified party may, at its own cost,
participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. If the indemnifying party
fails to assume the defense of such claim within fifteen (15) business
days after receipt of the Claim Notice, the indemnified party against
which such claim has been asserted will (upon delivering notice to such
effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or
settlement of such claim on behalf of and for the account and risk of
the indemnifying party; PROVIDED, HOWEVER, that such Claim shall not be
compromised or settled without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld. In the event
the indemnified party assumes the defense of the claim, the indemnified
party will keep the indemnifying party reasonably informed of the
progress of any such defense, compromise or settlement. The parties
shall cooperate in all reasonable respects with each other in the
investigation, trial and defense of any such claim for Losses or Action
and any appeal arising therefrom.
9.5 LIMITATIONS ON INDEMNIFICATION
(a) Notwithstanding anything to the contrary contained in this
Agreement, (i) no indemnification under Section 9.4(a)(i) and (ii)
hereof shall be made by the Sellers and no indemnification under
Section 9.4(b)(i) and (ii) hereof shall be made by Buyer, and neither
the Sellers nor Buyer shall have any liability, respectively, to the
other therefor, unless and until the aggregate amount of Losses subject
to indemnification pursuant thereto and due the party being indemnified
shall exceed $250,000, and once such threshold amount is exceeded the
indemnifying party shall indemnify the indemnified party, and shall be
liable, only for the amount of any such Losses in excess of such
threshold amount, and (ii) the aggregate amount required to be paid by
the Sellers pursuant to their indemnification obligations under Section
9.4(a)(i) and 9.4(a)(ii) hereof or by Buyer pursuant to its
indemnification obligations under Section 9.4(b)(i) and 9.4(b)(ii)
hereof shall not exceed $30,000,000, and neither party shall have any
liability to any indemnified party for, and such indemnified parties
shall have no right to recover from the Sellers or Buyer, as the case
may be, any amount of Losses which exceeds (and from and after the time
such Losses exceed) such amount. The applicable indemnified party shall
be entitled to indemnification without regard to the provisions of this
Section 9.5(a) with respect to the indemnification obligations of the
Sellers pursuant to Section 9.4(a)(iii) hereof and the indemnification
obligations of Buyer pursuant to Section 9.4(b)(iii) hereof and with
respect to the covenants contained in Sections 6.12 and 6.13 hereof.
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(b) To the extent that any Losses or Claim therefor which is
subject to indemnification hereunder are covered by insurance held by
any indemnified party (an "INSURED LOSS"), such indemnified party shall
only be entitled to indemnification pursuant to Section 9.4 hereof with
respect to the amount of Losses in excess of the net cash proceeds
received by such indemnified party pursuant to such insurance;
provided, however, that the foregoing shall in no way obligate the
indemnified party to maintain any level of insurance or prevent any
indemnified party from self-insuring its risks. With respect to any
Insured Loss, the applicable indemnified party shall first use all
reasonable efforts to obtain the maximum recovery from the provider of
such insurance and then, to the extent that the net cash proceeds
received by such indemnified party are less than the amount of the
Losses indemnified hereunder, or if the indemnified party is unable to
obtain any recovery from such provider, the indemnified party shall be
entitled to seek indemnification pursuant to Section 9.4 hereof with
respect to the amount of the Losses that exceed such recovery;
provided, however, that if, following the receipt of any indemnity
payments pursuant to Section 9.4 hereof, the indemnified party obtains
any insurance recovery from a third party insurance provider, then such
indemnified party shall promptly pay over to the indemnifying party (in
proportion to their relative payments in respect of the underlying
Loss) the amount of the net cash proceeds received by such indemnified
party pursuant to such insurance up to, but not in excess of, the
amount of the indemnity payments made by the indemnifying party
pursuant to such Losses. In determining the amount of Losses for
purposes of Section 9.5(a) hereof, to the extent of any Insured Loss,
the amount of Losses subject to indemnification hereunder will be
determined at the earlier of such time as the indemnified party either
(a) obtains any insurance recovery from third party insurance providers
(in which case the amount of such Losses shall be calculated net of
such recovery), or (b) reasonably determines that it is unable to
obtain any recovery from such providers. The parties agree that no
insurance company shall have any right of subrogation under this
Section 9.5(b) and the parties agree that this Section 9.5(b) is not
for the benefit of any third party insurance provider.
(c) None of Buyer nor any person otherwise entitled to
indemnity pursuant to Section 9.4(a) hereof shall be entitled to, and
shall be deemed to have waived all claims and rights to,
indemnification hereunder (i) for any Losses to the extent (but only to
the extent) that reserves or accruals have been established or
reflected on the Closing Date Statement of Net Assets (and have not
been previously used or applied) specifically for the class or category
(or any substantially similar class or category) of Losses for which
indemnification is sought, or (ii) with respect to the untruth or
inaccuracy of any representation or warranty made by the Sellers in
this Agreement or with respect to the non-fulfillment, non-performance
or other breach of any covenant or agreement of the Sellers hereunder
if an individual included in the definition of knowledge of Buyer in
Section 1.3(b) hereof had actual knowledge of such untruth, inaccuracy,
non-fulfillment, non-performance or other breach on or prior to the
Closing Date.
(d) Except for equitable relief, including without limitation
injunctive relief or specific performance, to which either party hereto
may be entitled, the indemnification provided in Section 9.4 hereof
shall be the sole and exclusive remedy of the parties with respect to
this Agreement and the transactions contemplated hereby, except with
respect
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to any Losses incurred by either party as a result of fraud or
intentional misrepresentation on the part of the other party.
9.6 INDEMNIFICATION FOR TAXES
(a) INDEMNIFICATION BY THE SELLERS. Each Seller will jointly
and severally indemnify, defend and hold harmless the Buyer from and
against all Losses (including all costs incident to return preparation)
attributable to Taxes of the Sold Subsidiary and the Spanish Subsidiary
and all Taxes of the Sellers relating to the Industrial Power
Transmission Business or the Industrial Power Transmission Assets
(other than Other Taxes imposed by reason of the transfer of the
Industrial Power Transmission Assets, as described in Section 2.6
hereof) (i) with respect to all periods ending on or prior to the
Closing Date, (ii) with respect to any period beginning before the
Closing Date and ending after the Closing Date, but only with respect
to the portion of such period up to and including the Closing Date
(such portion, a "PRE-CLOSING PARTIAL PERIOD"), or (iii) payable as a
result of any breach of any representation or warranty or the
inaccuracy of any representation made by the Sellers in or pursuant to
Section 4.14 hereof; PROVIDED that adequate reserves have not been made
for such Taxes on the Closing Date Statement of Net Assets. The Sellers
shall be entitled to any net refunds of Taxes (including interest
thereon) with respect to the periods described in clauses (i) and (ii)
above, except to the extent such refund arises as the result of a
carryback of a loss or other tax benefit from a period beginning after
the Closing Date (including, but not limited to, any Post Closing
Partial Period).
(b) INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless each Seller from and against all Losses (including all costs
incident to return preparation) attributable to Taxes of the Sold
Subsidiary and the Spanish Subsidiary (i) with respect to all periods
beginning after the Closing Date, and (ii) with respect to any period
beginning before the Closing Date and ending after the Closing Date,
but only with respect to the portion of such period beginning the day
after the Closing Date (such portion, a "POST-CLOSING PARTIAL PERIOD").
(c) ALLOCATION BETWEEN PARTIAL PERIODS. Any Taxes for a period
including a Pre-Closing Partial Period and a Post-Closing Partial
Period shall be apportioned between such Pre-Closing Partial Period and
such Post-Closing Partial Period, based in the case of real and
personal property Taxes, on a per diem basis and, in the case of other
Taxes, on the actual activities, taxable income or taxable loss of the
applicable entity during such Pre-Closing Partial Period and such
Post-Closing Partial Period using the closing of the books method under
Treasury Regulation Section 1.150276(b)(2)(i) (or any similar provision
of state, local or foreign law).
(d) COOPERATION. The Sellers, on the one hand, and Buyer, on
the other hand, agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information and
assistance (including access to books and records) relating to the
Industrial Power Transmission Assets or the Industrial Power
Transmission Business as is reasonably necessary for the preparation of
any return for
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Taxes, claim for refund or audit, and the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment.
(e) TAX PROCEEDINGS. The provisions of Section 9.4(c) of this
Agreement shall also govern any claim or demand made pursuant to this
Section 9.6.
(f) FILING OF TAX RETURNS. The Sellers shall cause to be
prepared and timely filed all Tax Returns of the Sold Subsidiary and
the Spanish Subsidiary for any taxable period ending on or before the
Closing Date. The Sellers shall timely pay all Taxes shown as due and
payable on such Tax Returns. Buyer shall cause to be prepared and
timely filed all other Tax Returns of the Sold Subsidiary and the
Spanish Subsidiary and shall timely pay all Taxes shown to be due and
payable on such Tax Returns. All such Tax Returns shall be prepared in
a manner consistent with past tax practices, except as otherwise
required by law. To the extent that a party makes a payment of Taxes in
connection with the filing of a Tax Return, which Taxes are the
responsibility of the other party pursuant to this Section 9.6, the
party responsible for such Taxes shall promptly pay the amount owed to
the other party.
9.7 BULK SALES LAWS. Buyer acknowledges that the Sellers will
not comply with the provisions of any applicable bulk sales or transfer Laws (or
similar Laws) of any jurisdiction in connection with the transactions
contemplated by this Agreement and the parties hereby waive compliance with the
provisions of such bulk sales or transfer Laws.
9.8 NON-SOLICITATION OF EMPLOYEES
(a) The parties hereto agree that for a period of five (5)
years from the date of this Agreement, (i) Buyer and its affiliates
will not intentionally solicit, entice away or otherwise encourage
employees or officers of any Seller or its affiliates, and (ii) each
Seller and its affiliates will not intentionally solicit, entice away
or otherwise encourage employees or officers of Buyer or its
affiliates.
(b) The provisions of this Section 9.8 shall be binding on all
successors, transferees, assigns and acquirers of the applicable
tangible and intangible assets or stock of Buyer, the Sellers, the Sold
Subsidiary and the Spanish Subsidiary.
9.9 SPANISH SUBSIDIARY ENVIRONMENTAL REMEDIATION. Buyer agrees
that it shall use all commercially reasonable efforts to assist the Sellers in
obtaining all receivables of the Spanish Subsidiary with respect to the
environmental remediation described on SCHEDULE 1.1(b). The Sellers shall bear
all of Buyer's out of pocket costs and expenses reasonably incurred in
connection with providing such assistance.
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ARTICLE X.
MISCELLANEOUS
10.1 TERMINATION
(a) This Agreement may be terminated at any time prior to
Closing:
(i) By mutual written consent of Buyer and the
Sellers;
(ii) By Buyer or the Sellers if the Closing shall not
have occurred on or before August 31, 2001; PROVIDED HOWEVER,
that this provision shall not be available to Buyer if the
Sellers have the right to terminate this Agreement under
Section 10.1(a)(iv) hereof, and this provision shall not be
available to the Sellers if Buyer has the right to terminate
this Agreement under Section 10.1(a)(iii) hereof;
(iii) By Buyer if there is a material breach of any
representation or warranty of the Sellers set forth in Article
IV hereof or any covenant or agreement to be complied with or
performed by the Sellers pursuant to the terms of this
Agreement, or the occurrence of any event which results or
would result in the failure of a condition set forth in
Article VIII to be satisfied on or prior to the Closing Date;
PROVIDED, HOWEVER, that Buyer may not terminate this Agreement
prior to the Closing if the Sellers have not had an adequate
opportunity to cure such failure; or
(iv) By the Sellers if there is a material breach of
any representation or warranty set forth in Article V hereof
or of any covenant or agreement to be complied with or
performed by Buyer pursuant to the terms of this Agreement, or
the occurrence of any event which results or would result in
the failure of a condition set forth in Article VII to be
satisfied on or prior to the Closing Date; PROVIDED, HOWEVER,
that the Sellers may not terminate this Agreement prior to the
Closing Date if Buyer has not had an adequate opportunity to
cure such failure.
(b) In the event of termination of this Agreement, no party
hereto shall have any Liability under this Agreement to any other party
hereto, except for any willful breach of this Agreement occurring prior
to the termination of this Agreement. Upon any such termination, each
party will redeliver all documents, work papers and other material of
any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same. The provisions of the Confidentiality Agreement
shall continue in full force and effect notwithstanding any termination
of this Agreement or any provision hereof to the contrary.
10.2 ASSIGNMENT. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party without the prior written
consent of the other parties, except that Buyer shall be entitled to assign its
rights and delegate its duties under this Agreement to any wholly owned
subsidiary of Buyer, so long as such assignee agrees in writing to be bound by
the terms and conditions hereof, on a joint and several basis with Buyer, such
written agreement to be in form and substance reasonably satisfactory to the
Sellers. No such assignment shall relieve
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Buyer of any of its Liabilities under this Agreement. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, and no other
person shall have any right, benefit or obligation under this Agreement as a
third party beneficiary or otherwise.
10.3 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given (a) when received if
personally delivered; (b) when transmitted if transmitted by telecopy,
electronic or digital transmission; (c) the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery
service; and (d) upon receipt, if sent by certified or registered mail, return
receipt requested. In each case any such notice, request, demand or other
communication shall be sent to:
If to the Sellers, to:
Dayco Products, LLC
c/o Mark IV Industries, Inc.
One Towne Centre
501 John James Audubon Parkway
Amherst, New York 14226-0810
Attention: William P. Montague, President
Facsimile: (716) 689-6098
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: R. Ronald Hopkinson, Esq.
Facsimile: (212) 906-1840
If to Buyer, to:
Carlisle Companies Incorporated
15800 John J. Delaney Drive, Suite 350
Charlotte, North Carolina 28277
Attention: Richmond D. McKinnish
Facsimile: President and Chief Executive Officer
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with a copy to:
Carlisle Companies Incorporated
250 South Clinton Street, Suite 201
Syracuse, New York 13202-1258
Attention: Vice President, Secretary and
General Counsel
Facsimile: 315-474-2008
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
10.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS OF
NEW YORK LAW).
10.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
(together with all Exhibits and Schedules hereto), the Ancillary Agreements and
the Confidentiality Agreement constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
10.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding upon the parties
hereto.
10.7 EXPENSES. Except as otherwise specified in this
Agreement, each party hereto shall pay its own legal, accounting, out-of-pocket
and other expenses in connection with, arising out of or incident to this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, including without limitation any action taken by such party in
preparation for carrying this Agreement into effect. Without limiting the
foregoing, Buyer shall pay all costs relating to the HSR Filing; PROVIDED that
if this Agreement shall terminate pursuant to Section 10.1(a)(i), (ii) or (iii)
hereof, Seller shall pay 50% of such costs.
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10.8 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
10.9 TITLES; GENDER. The titles, captions or headings of the
Articles and Sections herein, and the use of a particular gender, are for
convenience of reference only and are not intended to be a part of or to affect
or restrict the meaning or interpretation of this Agreement.
10.10 PUBLICITY. Neither Buyer nor the Sellers shall, without
the prior written consent of the other party, issue any press release or make
any public statement regarding the transactions contemplated hereby except as
may be required by law; PROVIDED, HOWEVER, that the parties may jointly issue or
make an appropriate and mutually acceptable press release or public announcement
following each of (a) the execution and delivery of this Agreement and (b) the
Closing.
10.11 EXHIBITS AND SCHEDULES; CONSTRUCTION OF CERTAIN
PROVISIONS. The Exhibits and Schedules referred to in this Agreement shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth in their entirety herein. Each disclosure in the
Disclosure Schedule shall be deemed to qualify all representations and
warranties of the Sellers, notwithstanding the lack of a specific
cross-reference, except to the extent that its applicability to a particular
representation, warranty, agreement or condition is not reasonably apparent from
the disclosure thereof. It is understood and agreed that the specification of
any dollar amount in the representations and warranties contained in this
Agreement or the inclusion of any specific item in the Exhibits or Schedules is
not intended to imply that such amounts or higher or lower amounts, or the items
so included or other items, are or are not material, and no party shall use the
fact of the setting of such amounts or the fact of the inclusion of any such
item in the Schedules in any dispute or controversy between the parties as to
whether any obligation, item or matter not described herein or included in an
Exhibit or a Schedule is or is not material for purposes of this Agreement.
10.12 CUMULATIVE REMEDIES. Subject to Section 9.5(d) hereof,
all rights and remedies of either party hereto are cumulative of each other and
of every other right or remedy such party may otherwise have at law or in
equity, and the exercise of one or more rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of other rights or remedies.
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10.13 SERVICE OF PROCESS, CONSENT TO JURISDICTION.
(a) Each of the parties hereto irrevocably consents to the
service of any process, pleading, notices or other papers by the
mailing of copies thereof by registered, certified or first class mail,
postage prepaid, to such party at such party's address set forth
herein, or by any other method provided or permitted under New York
law.
(b) Each party hereto irrevocably and unconditionally (i)
agrees that any suit, action or other legal proceeding arising out of
this Agreement may be brought in the any New York state court of
federal court sitting in the Borough of Manhattan, New York; (ii)
consents to the exclusive jurisdiction of any such court in any such
suit, action or proceeding; and (iii) waives any objection to the
laying of venue of any such suit, action or proceeding in any such
court.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
THE SELLERS:
DAYCO PRODUCTS LLC
By: MARK IV INDUSTRIES, INC.,
its sole member
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Vice President
MARK IV INDUSTRIES, INC.
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Vice President
DAYCO PACIFIC PTY LTD.
By: /s/ WILLIAM P. MONTAGUE
----------------------------------------
Name: William P. Montague
Title: Director
MARK IV LUXEMBOURG S.A.R.L.
By: /s/ WILLIAM P. MONTAGUE
----------------------------------------
Name: William P. Montague
Title: Director
MARK IV INDUSTRIES CANADA CORP.
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Vice President
<Page>
DAYCO EUROPE LTD.
By: /s/ WILLIAM P. MONTAGUE
----------------------------------------
Name: William P. Montague
Title: Director
DAYCO DISTRIBUTING INC.
By: /s/ WILLIAM P. MONTAGUE
----------------------------------------
Name: William P. Montague
Title: President
DAYCO EUROPE S.A.R.L.
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Authorized Signatory
MARK IV AB
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Authorized Signatory
MARK IV INDUSTRIES GMBH
By: /s/ RICHARD GRENOLDS
-----------------------------------------
Name: Richard Grenolds
Title: Authorized Signatory
<Page>
BUYER:
CARLISLE COMPANIES INCORPORATED
By: /s/ SCOTT C. SELBACH
-----------------------------------------
Name: SCOTT C. SELBACH
---------------------------------------
Title: VICE PRESIDENT, CORPORATE DEVELOPMENT
--------------------------------------