ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
July 31, 1997 among Automatic Transmission Shops Inc., a North Carolina
corporation ("Seller"), X.X. Xxxxx, an individual and the sole stockholder of
Seller (the "Stockholder"), ATS Remanufacturing, Inc., a Delaware corporation
("Buyer"), and Aftermarket Technology Corp., a Delaware corporation and the sole
stockholder of Buyer ("ATC").
R E C I T A L S
WHEREAS, Seller is engaged in the remanufacture of transmissions and
related drive train components for General Motors vehicles (the "Business"); and
WHEREAS, Seller desires to sell and transfer to Buyer substantially
all of its assets related to the Business in consideration for the delivery by
Buyer to Seller of the purchase price provided for herein and on the other terms
and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual representations, warranties, covenants and agreements hereinafter set
forth, the parties hereto agree as follows.
ARTICLE I.
DEFINITIONS
1.01. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AFFILIATE" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such other Person.
"APPLICABLE LAW" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental
Law) applicable to such Person or any of its Affiliates or Plan Affiliates or
any of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person or any
of its Affiliates or ERISA Affiliates).
"BENEFIT ARRANGEMENT" means any material benefit arrangement, other
than an Employee Benefit Plan, maintained by Seller or any ERISA Affiliate that
covers the employees, former employees, directors, or former directors of Seller
and their beneficiaries; such term shall include, without limitation, the
following to the extent material: (i) each employment or consulting agreement;
(ii) each arrangement providing for insurance coverage or workers' compensation
benefits; (iii) each incentive bonus or deferred bonus arrangement; (iv) each
arrangement providing termination allowance, severance or similar benefits; (v)
each equity compensation plan; (vi) each deferred compensation plan; and
(vii) each compensation policy and practice.
"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in Chicago, Illinois are authorized or required by law
to close.
"BUYER ENVIRONMENTAL LIABILITIES" means Environmental Liabilities
arising out of the actions or inactions of Buyer after the Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" means all contracts, agreements, options, leases,
licenses, sales and purchase order, commitments and other instruments of any
kind, whether written or oral, to which Seller is a party on the Closing Date,
including the Scheduled Contracts and the Subsequent Material Contracts.
"DAMAGES" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement net of
insurance proceeds actually received, including without limitation (i) interest
on cash disbursements in respect of any of the foregoing at the per annum rate
of interest publicly announced from time to time by The Chase Manhattan Bank as
its prime rate (or reference rate) in effect from time to time, compounded
quarterly, from the date each such cash disbursement is made until the Person
incurring the same shall have been indemnified in respect thereof and
(ii) reasonable costs, fees and expenses of attorneys, accountants and other
agents of such Person. Any change in the rate referred to in clause (i) above
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"EMPLOYEE" means any Person employed by Seller.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined in
Section 3(3) of ERISA, sponsored or contributed to by Seller or any ERISA
Affiliate thereof that covers employees or former employees of Seller.
"ENVIRONMENTAL LAWS" means all Applicable Laws relating to Hazardous
Substances, occupational health and safety, or the environment including,
without limitation, (i) all Applicable Laws pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of Hazardous Substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, (ii) all Applicable Laws relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature; and
(iii) the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air
Act, the
Water Pollution Control Act, the Safe Drinking Water Act, the Toxic
Substance Control Act ("TSCA") and all requirements promulgated pursuant to any
of these or analogous state or local statutes.
"ENVIRONMENTAL LIABILITIES" means Liabilities of a Person that arise
pursuant to or under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any Person means any other Person that, together
with such Person as of the relevant measuring date under ERISA, was or is
required to be treated as a single employer under Section 414 of the Code.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis.
"GM" means General Motors Corporation.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"GROUP HEALTH PLAN" means any group health plan, as defined in
Section 5000(b)(1) of the Code sponsored or contributed to by Seller or any
ERISA Affiliate that covers employees or former employees of Seller.
"HAZARDOUS SUBSTANCE" means any substance or material: (i) the
presence of which requires investigation or remediation under any Applicable
Law; or (ii) the generation, storage, treatment, transportation, disposal,
remediation, removal, handling or management of which is regulated by any
Environmental Law; or (iii) that is defined as a "hazardous waste" or "hazardous
substance" under any Applicable Law; or (iv) that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or
otherwise hazardous and is regulated by any Governmental Authority having or
asserting jurisdiction over the Business or any of the Transferred Assets; or
(v) the presence of which constitutes a nuisance, trespass or other tortious
condition; or (vi) the presence of which on adjacent properties constitutes a
trespass by Seller; or (vii) without limitation, that contains gasoline, diesel
fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or
asbestos.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEMNIFYING PARTY" means: (i) Seller and the Stockholder, jointly
and severally, when any Buyer or ATC Indemnitee is asserting a claim under
Sections 9.01(a) or 11.11 or
(ii) Buyer and ATC, jointly or severally, when any
Seller Indemnitee is asserting a claim under Sections 9.01(b) or 11.11.
"INDEMNITEE" means: (i) each of Buyer, ATC and their Affiliates with
respect to any claim for which Seller and the Stockholder are Indemnifying
Parties under Sections 9.01(a) or 11.11; or (ii) Seller, the Stockholder and
their Affiliates with respect to claims for which Buyer and ATC are Indemnifying
Parties under Sections 9.01(b) or 11.11.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to any corporation, all things
actually known to the executive officers of such corporation.
"LIABILITY" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person and whether or not the same appears on any Schedule to this Agreement.
"LIEN" means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction,
encumbrance or charge of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of the Business that results
in a material adverse effect on, or a material adverse change in, the
Transferred Assets taken as a whole, or a material adverse effect on the
Business taken as a whole.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"PERMITTED LIENS" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for Taxes
the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other Liens
imposed by Applicable Law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith; and (iii) Liens relating to
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of leases, trade contracts or other similar agreements.
Notwithstanding the foregoing, the following shall not be Permitted Liens:
(a) any Lien arising under the Code or ERISA with respect to the operation,
termination, restoration or funding of any Benefit Plan sponsored by, maintained
by or contributed to by Seller or any of its ERISA Affiliates or arising in
connection with any excise tax or penalty tax with respect to such Benefit Plan
and (b) any Lien arising under clause (i) or (ii) above that is the
subject of a contest except and to the extent that the Taxes or sums in
questions have been reserved for on the 1996 Balance Sheet.
"PERSON" means an individual, corporation, partnership, association,
trust, estate or other entity or organization, including a Governmental
Authority.
"PROHIBITED TRANSACTION" means a transaction that is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"TAX" means all taxes imposed of any nature including federal, state,
local or foreign net income tax, alternative or add-on minimum tax, profits or
excess profits tax, franchise tax, gross income, adjusted gross income or gross
receipts tax, employment related tax (including employee withholding or employer
payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax,
sales or use tax, excise tax, stamp tax or duty, any withholding or back up
withholding tax, value added tax, severance tax, prohibited transaction tax,
premiums tax, occupation tax, together with any interest or any penalty,
addition to tax or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any such tax.
"TAX RETURN" means all returns, reports, forms or other information
required to be filed with respect to any Tax.
ARTICLE II.
TRANSFER OF ASSETS
2.01. TRANSFER OF ASSETS BY SELLER. Upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees to purchase from Seller
and Seller agrees to sell or cause to be sold to Buyer at the Closing, free and
clear of all Liens, other than Permitted Liens, all the assets, properties,
rights, licenses, permits, contracts, causes of action and claims, of every kind
and description as the same shall exist on the Closing Date (other than the
Excluded Assets), wherever located, whether tangible or intangible, real,
personal or mixed, that are used, owned by, leased by or in the possession of
Seller, whether or not reflected on the books and records of Seller, including
all assets shown on the 1996 Balance Sheet and not disposed of in the ordinary
course of business or as permitted by this Agreement prior to the Closing Date
(the collective assets, properties, rights, licenses, permits, contracts, causes
of action and claims to be transferred to Buyer by Seller pursuant hereto are
referred to collectively herein as the "Transferred Assets") and including
without limitation all right, title and interest of Seller in, to and under the
following, to the extent used, owned by, leased by or in the possession of
Seller at the time of Closing:
(a) all real property and leases, capitalized or operating, of,
and other interests in, real property of Seller, in each case together with all
buildings, fixtures and improvements erected thereon and appurtenances thereto;
(b) all machinery, equipment, furniture, office equipment,
computer equipment (including all hardware and software), communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel and other
tangible property (and interests in any of the foregoing) of Seller
("Equipment");
(c) all items of inventory notwithstanding how classified in the
financial records of Seller, including all raw materials, purchased parts, work-
in-process, finished goods, supplies, spare parts and samples ("Inventory");
(d) all contracts, agreements, options, leases, licenses, sales
and purchase orders, commitments and other instruments of any kind, whether
written or oral, to which Seller is a party on the Closing Date, including the
Scheduled Contracts and the Subsequent Material Contracts (the "Contracts");
(e) all books, records, files and papers of Seller, whether in
hard copy or computer format, including books of account, invoices, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, personnel and
employment records of present and former employees, and documentation developed
or used for accounting, marketing, engineering, manufacturing or any other
purpose;
(f) all prepaid charges and expenses of Seller, including any
such charges and expenses with respect to ad valorem taxes, leases and rentals
and utilities;
(g) all rights of Seller under any insurance policy;
(h) all of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Business or the
Transferred Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to Seller affecting any of
the Transferred Assets;
(i) all of Seller's patents, copyrights, trademarks, trade
names, service marks, service names, designs, know-how, processes, trade
secrets, inventions, and other proprietary data;
(j) all transferable franchises, licenses, permits or other
authorizations issued or granted by any Governmental Authority that are owned
by, granted to or held or used by Seller in connection with the Business,
whether or not actually utilized by Seller;
(k) all lists of present customers and lists of former
customers;
(l) all goodwill associated with the Business or the Transferred
Assets;
(m) all product designations used in Seller's catalogs;
(n) all accounts receivable and notes receivable (including,
without limitation, any Gainsharing payments), together with any unpaid interest
or fees accrued thereon or other amounts due with respect thereto, and any
security or collateral therefor; and
(o) except as specifically provided in Section 2.02, all other
assets and properties of Seller that exist on the Closing Date, whether tangible
or intangible, real or personal.
2.02. EXCLUDED ASSETS. Buyer expressly understands and agrees
that the following assets and properties of Seller (the "Excluded Assets") shall
be excluded from the Transferred Assets and shall be retained by Seller:
(a) all cash, cash equivalents and bank accounts;
(b) those assets listed on SCHEDULE 2.02; and
(c) the originals of Seller's books and records to the extent
that Seller provides copies thereof to Buyer.
2.03. ASSUMPTION OF LIABILITIES. Upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees, effective at the time
of Closing, to assume and in due course perform, pay and discharge each of the
following (the "Assumed Liabilities"):
(a) all Liabilities and obligations of Seller arising after the
Closing under Contracts included in the Transferred Assets;
(b) those bonus arrangements described on SCHEDULE 2.03, which
will be paid as deferred compensation; and
(c) all Liability arising out of warranty claims relating to the
products of the Business where such claims are made after the Closing Date.
2.04. EXCLUDED LIABILITIES. Buyer does not hereby assume, and
shall not at any time hereafter (including on or after the Closing Date) become
liable for, any of the Liabilities of Seller or any of its Affiliates or any
ERISA Affiliate of any of the foregoing other than the Assumed Liabilities (the
"Excluded Liabilities"). The Excluded Liabilities shall include, without
limitation, the following Liabilities:
(a) any Liability of any of Seller or any of its Affiliates or
any ERISA Affiliate of any of the foregoing whether currently in existence or
arising hereafter that is not attributable to, or that does not arise out of the
conduct of, the Business;
(b) any Liability whether presently in existence or arising
hereafter relating to an Excluded Asset;
(c) any Environmental Liability, whether presently in existence
or arising hereafter, other than Buyer Environmental Liabilities;
(d) any Liability whether currently in existence or arising
hereafter relating to fees, commissions or expenses owed to any broker, finder,
investment banker, attorney or other intermediary or advisor employed by Seller
or any of its Affiliates or their respective ERISA Affiliates in connection with
the transactions contemplated hereby or otherwise;
(e) any Liability the existence of which constitutes a breach of
any representation or warranty of Seller hereunder;
(f) any contingent Liabilities of Seller related to any
transactions by Seller prior to the date hereof except Liabilities that Buyer
has expressly agreed to assume pursuant to the terms of this Agreement;
(g) any Liability related to indebtedness of Seller for borrowed
money or capitalized leases, or the guarantee by Seller of the indebtedness of
any other Person;
(h) any Liability of Seller arising under this Agreement; and
(i) any account payable and payroll of Seller.
2.05. ASSIGNMENT OF CONTRACTS AND RIGHTS.
(a) With respect to any material Contract and any claim, right
or benefit arising thereunder or resulting therefrom that constitute Transferred
Assets, promptly after the date hereof, to the extent requested by Buyer, Seller
will use reasonable efforts to obtain the written consent of the other parties
to any such Contract to the assignment thereof to Buyer or written confirmation
from such parties reasonably satisfactory in form and substance to Buyer
confirming that such consent is not required.
(b) If such consent, waiver or confirmation is not obtained with
respect to any such Contract and notwithstanding the provisions of
Section 8.01(c) Buyer elects to consummate the Closing, Seller and Buyer shall
cooperate in an arrangement reasonably satisfactory to Buyer and Seller under
which Buyer would obtain, to the extent practicable, the claims, rights and
benefits and assume the corresponding obligations thereunder in accordance with
this Agreement, including subcontracting, sub-licensing or sub-leasing to Buyer,
or under which Seller would enforce for the benefit of Buyer, with Buyer
assuming Seller's obligations, any and all claims, rights and benefits of Seller
against a third party thereto. Seller will promptly pay to Buyer when received
all monies received by Seller under any Transferred Asset or any claim, right or
benefit arising thereunder not transferred to Buyer pursuant to this Section
2.05(b).
2.06. CLOSING.
(a) The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place Seller's offices, 0000 Xxxxx Xxxx, Xxxxxxxx,
Xxxxx Xxxxxxxx on July 31, 1997 or such other date as to which Buyer and Seller
may agree (the "Closing Date"). Notwithstanding the foregoing, pursuant to
Section 10.01(f) Seller or Buyer may terminate this Agreement if the Closing
shall not have been consummated by the Outside Date.
(b) At the Closing, Buyer shall pay to Seller $12,000,000, in
cash by wire transfer of immediately available funds to a bank account or bank
accounts designated in writing by Seller prior to the Closing.
(c) Seller shall deliver to Buyer such bills of sale,
certificates of title, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (which in the case of
Intellectual Property Rights, shall be documents immediately recordable in the
respective countries of origin) of such rights as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Buyer all of Seller's right, title and interest in, to and under the Transferred
Assets.
2.07. POST-CLOSING PAYMENTS. As additional consideration for the
Transferred Assets, Buyer shall pay to Seller the amounts called for by this
Section 2.07:
(a) Buyer shall pay to Seller, within 30 days after each of the
first eight anniversaries of the Closing Date, the Post-Closing Payment (as
defined in Section 2.07(b)) for such anniversary by wire transfer of immediately
available funds to an account or accounts to be designated in writing by Seller
prior the time of payment. If a prior Post-Closing Payment is retroactively
increased pursuant to the last sentence of Section 2.07(b), the additional
payment shall be made at the same time that Buyer pays the then-current Post-
Closing Payment.
(b) The "Post-Closing Payment" for any anniversary shall be
equal to the amount set forth on SCHEDULE 2.07 for such anniversary; PROVIDED,
HOWEVER, that if Adjusted GM Sales (as defined in Section 2.07(c)) for the
Contract Year (as defined in Section 2.07(d)) then ended are less than
$12,000,000, the Post-Closing Payment shall be reduced by an amount equal to the
product of (i) $12,000,000 minus such Adjusted GM Sales multiplied by (ii) the
factor set forth on SCHEDULE 2.07 for such anniversary. A Post-Closing Payment
shall be retroactively increased if the corresponding Adjusted GM Sales are
retroactively increased pursuant to the last sentence of Section 2.07(c). Post-
Closing Payments may be reduced pursuant to Section 9.01(c).
(c) "Adjusted GM Sales" for any Contract Year shall be equal to
the sum of (i) the amount of sales to GM by ATC, Buyer and all other
subsidiaries of ATC during such Contract Year where the products sold to GM are
for use in its North American operations plus (ii) any Excess GM Sales (as
defined in Section 2.07(e)) that are not utilized to reduce a shortfall in the
amount of Adjusted GM Sales for any prior Contract Year. If Adjusted GM Sales
in any Contract Year are less than $12,000,000 and there are Excess GM Sales in
any subsequent Contract Year that have not been applied to prior Contract Years,
such Adjusted GM Sales will be retroactively increased by the lesser of (i) the
amount of such Excess GM Sales and (ii) the amount by which such Adjusted GM
Sales are less than $12,000,000. Notwithstanding the foregoing, Adjusted GM
Sales shall not include any Excluded GM Sales. As used herein, "Excluded GM
Sales" mean any sales to GM by any present or future subsidiary of ATC pursuant
to any contract or purchase order in effect prior to ATC's acquisition of such
subsidiary (or such subsidiary's acquisition of the assets that include such
contract or purchase order) but excluding any sales attributable to incremental
programs commenced under such contracts or purchase orders on or after the date
of such acquisition.
(d) "Contract Year" shall mean a 12-month period ending on an
anniversary of the Closing Date.
(e) "Excess GM Sales" means the amount, if any, by which
Adjusted GM Sales during any Contract Year exceed $12,000,000.
(f) The sole consequence to Seller of the Adjusted GM Sales
being less than $12,000,000 for any or all of the Contract Years shall be
reduction of the Post-Closing Payments and Seller shall not be responsible to
Buyer for any shortfall in Adjusted GM Sales. The intent of this Section 2.07
is that if the total Adjusted GM Sales for the first eight Contract Years is at
least $96,000,000 in the aggregate, Seller shall receive total Post-Closing
Payments of $14,450,000 irrespective of in which of such Contract Years such
Adjusted GM Sales are achieved, subject to Section 9.01(c).
(g) On October 31, 1997, Buyer shall pay to Seller an amount
equal to the sum of all amounts received by Buyer in payment of accounts
receivable that constituted Transferred Assets. If after October 31, 1997
Buyer receives payment of any account receivable that constituted a Transferred
Asset, Buyer shall promptly pay to Seller an amount equal to such payment. Such
payments shall be made by wire transfer of immediately available funds to an
account or accounts to be designated in writing by Seller prior the time of
payment.
(h) If after the Closing Date Buyer receives any payment from GM
under any Gainsharing program approved as of the Closing Date, Buyer shall,
within 30 days after receipt thereof, pay to Seller the portion of such payment
that is attributable to sales to GM made on or before the Closing Date other
than such payments that are attributable to Excluded GM Sales.
2.08. PURCHASE PRICE ALLOCATION. Within 120 days after the
Closing Date, Buyer and Seller shall agree upon the final allocation of the
Purchase Price among the Transferred Assets for purposes of complying with
Section 1060 of the Code and making any required filings under state or local
law and shall set forth such allocation on a statement (the "Allocation
Statement"). After the Closing, from time to time, Buyer and Seller may agree
upon revisions to the Allocation Statement for tax purposes. Buyer and Seller
shall report the tax consequences of the transactions contemplated by this
Agreement in a manner consistent with the Allocation Statement, as it may be
revised from time to time, and shall not take any position inconsistent
therewith.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE STOCKHOLDER
As an inducement to Buyer and ATC to enter into this Agreement and to
consummate the transactions contemplated herein, Seller and the Stockholder
hereby jointly and severally represent and warrant to Buyer and ATC as follows:
3.01. EXISTENCE AND POWER. Seller is a corporation duly organized
and validly existing and in good standing under the laws of the State of North
Carolina and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on the Business as now
conducted and to own and operate the Business as now owned and operated, except
for those instances where, in the aggregate, the failure to have such licenses,
authorizations, consents and approvals has not had, and is not reasonably
expected to have, a Material Adverse Effect. Seller is qualified to conduct
business in each jurisdiction where the nature of its activities in connection
with the conduct of the Business requires it to be so qualified. Seller is in
good standing in each state where it is qualified, except for those
jurisdictions where in the aggregate the failure to be so has not had, and is
not reasonably expected to have, a Material Adverse Effect.
3.02. AUTHORIZATION. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly and validly executed by Seller and the Stockholder and
constitutes the legal, valid and binding agreement of Seller and the
Stockholder, enforceable against each of them in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and subject to
general principles of equity.
3.03. OWNERSHIP OF SELLER. The Stockholder owns all the issued
and outstanding shares of the capital stock of Seller, and all such shares are
free and clear of Liens, options, voting trusts and other agreements or
encumbrances of any kind. There are no outstanding subscription rights,
options, warrants, calls, commitments or agreements between Seller and any third
party regarding the issuance or sale of any shares of Seller's capital stock or
any security exercisable to acquire, or convertible into, or exchangeable for,
any such shares.
3.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Seller and the Stockholder of this Agreement and the other
agreements contemplated hereby require no action by, consent or approval of, or
filing with, any Governmental Authority other than (a) compliance with any
applicable requirements of the HSR Act and (b) any actions, consents, approvals
or filings otherwise expressly referred to in this Agreement or set forth on
SCHEDULE 3.04 or 3.14(b). To the Knowledge of Seller and the Stockholder, there
are no facts relating to the identity or circumstances of Seller or the
Stockholder that would prevent or materially delay obtaining any of the Required
Consents.
3.05. NON-CONTRAVENTION. The execution, delivery and performance
by Seller and the Stockholder of this Agreement and the other agreements
contemplated hereby do not and will not (a) contravene or conflict with the
Articles of Incorporation or Bylaws of Seller, true and correct copies of which
have been delivered to Buyer by Seller, (b) assuming receipt of the Required
Consents, contravene or conflict with or constitute a violation of any provision
of any Applicable Law binding upon or applicable to Seller, the Stockholder, the
Business or any of the Transferred Assets, (c) assuming receipt of the Required
Consents, constitute a default under or give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to which Seller is
entitled under, any material Contract or any Permit or similar authorization
relating
to the Business or included in any of the Transferred Assets or by
which any of the Transferred Assets may be bound, or (d) result in the creation
or imposition of any Lien on any Transferred Asset, other than Permitted Liens.
3.06. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Attached hereto as EXHIBIT A are true and complete copies of
the unaudited balance sheet of Seller as at December 31, 1996 (the "1996 Balance
Sheet") and the unaudited statements of income and statements of cash flows of
Seller for the years ended December 31, 1995 and 1996 (collectively, the
"Financials").
(b) The Financials (i) have been prepared from the books and
records of Seller in accordance with GAAP in all material respects except as
described on SCHEDULE 3.06(b), (ii) present fairly the financial condition,
results of operations and statements of cash flow of Seller as of the dates
indicated or the periods indicated; and (iii) contain and reflect adequate
reserves for all reasonably anticipated material losses, liabilities and
obligations of any nature, whether absolute, contingent or otherwise.
(c) Except as set forth on SCHEDULE 3.06(c), there are no
material Liabilities relating to Seller other than:
(i) any Liability accrued as a Liability on the 1996 Balance
Sheet; and
(ii) Liabilities specifically disclosed and identified as such in
the schedules to this Agreement.
3.07. ABSENCE OF CERTAIN CHANGES. Except as set forth on
SCHEDULE 3.07, since December 31, 1996 the Business has been conducted in the
ordinary course, and none of the following events has occurred with respect to
the Business:
(a) any event, occurrence, development or state of circumstances
or facts or change in the Transferred Assets or the Business (including any
damage, destruction or other casualty loss, but excluding any event, occurrence,
development or state of circumstances or facts or change resulting from changes
in general economic conditions) affecting the Business or any Transferred Assets
that has had or that may be reasonably expected to have, either alone or
together with all such events, occurrences, developments, states of
circumstances or facts or changes, a Material Adverse Effect;
(b) (i) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by Seller, (ii) any incurrence of any Liability
relating to a documentary or standby letter of credit by Seller, or (iii) any
change in any material Liability of Seller other than in the ordinary course of
business, or (iv) any incurrence of any other material Liability by Seller,
other than in the ordinary course of business;
(c) any creation, assumption or sufferance of the existence of
any Lien on any Transferred Asset, other than Permitted Liens;
(d) any transaction or commitment made, or any Contract entered
into, by Seller (including the acquisition or disposition of any Transferred
Assets), or any waiver, amendment, termination or cancellation of any Contract
by Seller, or any relinquishment of any rights thereunder by Seller, or of any
other right or debt owed to Seller, other than in each such case actions taken
in the ordinary course of business consistent with past practice;
(e) except for actions taken in the ordinary course of business
consistent with the past practice of Seller that are not, in the aggregate,
material to the Business, and except as described on SCHEDULE 2.03, any
(i) grant of any severance, continuation or termination pay to any Employee,
(ii) entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any Employee,
(iii) increase in benefits payable or potentially payable under any severance,
continuation or termination pay policies or employment agreements with any
Employee, (iv) increase in compensation, bonus or other benefits payable or
potentially payable to any Employee, (v) change in the terms of any bonus,
pension, insurance, health or other Benefit Plan of Seller, or
(vi) representation by Seller to any Employee that Buyer would assume, continue
to maintain or implement any Benefit Plan after the Closing Date;
(f) any loan to or guarantee or assumption of any loan or
obligation on behalf of any Employee, except travel advances occurring in the
ordinary course of business consistent with past practice;
(g) any material change by Seller in its accounting principles,
methods or practices or in the manner it keeps its books and records or any
material change by Seller of its current practices with regards to sales,
receivables, payables or accrued expenses that would affect the timing of
collection of receivables or the payment of payables;
(h) the entering into of any Contract or other arrangement
between Seller and any officer, director, stockholder or Affiliate of Seller or
any of their respective Affiliates, to the extent any such Contract or other
arrangement relates to the conduct of the Business; or
(i) any payment, discharge or satisfaction of any Liabilities of
Seller, other than payments, discharges or satisfactions in the ordinary course
of business.
3.08. PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Seller does not own any Real Property. SCHEDULE 3.08(a)
sets forth a true and complete list of all real property leased by Seller (the
"Real Property), which list sets forth the location of each parcel of Real
Property, the record owner thereof, the acreage and a brief description of the
nature of the activities of Seller on such Real Property. Seller has a good and
valid leasehold interest in all of the Real Property, which constitutes all of
the real property used in the Business.
(b) SCHEDULE 3.08(b) sets forth a true and complete list of all
personal property leases or licenses to which Seller is a party or by which
Seller is bound that provide for
annual payments by Seller in excess of $10,000 or that contain other
affirmative material obligations that cannot be terminated by Seller within
30 days (the "Personal Property Leases" and collectively with the leases for
the Real Property, the "Leases"). Each Lease is a binding obligation of
Seller and, to the Knowledge of Seller and the Stockholder, a binding
obligation of the other party thereto. Except as set forth on SCHEDULE
3.08(b), there exist no defaults by Seller or, to the Knowledge of Seller and
the Stockholder, any default or threatened default by the other party
thereto, that has affected or could reasonably be expected to materially
affect the rights and privileges thereunder of Seller. Except as set forth
on SCHEDULE 3.08(b), assuming the Required Consents are obtained, all Leases
to which Seller is a party or by which it is bound may be assigned,
transferred and conveyed to Buyer without default, penalty or modification
thereof.
(c) Except as disclosed in SCHEDULE 3.08(c) or SCHEDULE
3.20(c), Seller has not received notice of any pending zoning or other
land-use regulation proceedings or any proposed change in any Applicable Laws
that could reasonably be expected to materially and detrimentally affect the
use or operation of the Real Property, nor has Seller received notice of any
special assessment proceedings affecting the Real Property, or applied for
any change to the zoning or land use status of the Real Property.
3.09. SUFFICIENCY OF, TITLE TO, CONDITION OF AND BOOK VALUE OF THE
TRANSFERRED ASSETS. Seller has the right to sell, assign, transfer and convey,
and upon consummation of the transactions contemplated by this Agreement, will
have sold, assigned, transferred and conveyed, to Buyer all of the Transferred
Assets free and clear of all Liens, except for Permitted Liens, which
Transferred Assets constitute all of the properties and assets now held or
employed by Seller (other than the Excluded Assets). The Business is a going
concern, and, with the transfer of the Transferred Assets to Buyer pursuant to
this Agreement, Buyer will have all assets necessary to operate the Business as
a going concern with all operations of the Business unimpaired in any material
respect immediately after the Closing. Except as disclosed in SCHEDULE 3.09,
all the Transferred Assets are in good operating condition and repair. At the
Closing, the book value of the Equipment, as computed in accordance with GAAP,
will be at least $200,000.
3.10. AFFILIATES. Except as set forth in SCHEDULE 3.10,
neither Seller nor the Stockholder nor any officers or directors of Seller
(or any immediate family member of any such officer or director):
(a) now has or at any time subsequent to December 31, 1994,
had, either directly or indirectly, an equity or debt interest in any Person
which furnishes or sells or during such period furnished or sold services or
products to Seller or purchases or during such period purchased from Seller
any goods or services, or otherwise does or during such period did business
with Seller of a material nature or amount; PROVIDED, HOWEVER, that neither
Seller, nor the Stockholder nor any of Seller's officers and directors or
other Affiliates shall be deemed to have such an interest solely by virtue of
the ownership of less than five percent (5%) of the outstanding voting stock
or debt securities of any publicly held company, the stock or debt securities
of which are traded on a national stock exchange or quoted on the National
Association of Securities Dealers Automated Quotation System; or
(b) now is or at any time subsequent to December 31, 1994, was,
a party to any contract, commitment or agreement relating to the Business to
which Seller is or during such period was a party or under which Seller is or
was obligated or bound or to which any of their respective properties may be or
may have been subject.
3.11. INVENTORY.
(a) Subject to any reserve therefore that is included in the
1996 Balance Sheet and except as disclosed in SCHEDULE 3.11(a), the Inventory
(i) has been acquired or manufactured or remanufactured in the ordinary
course of business, in accordance with Seller's normal inventory practices;
(ii) is of a quality usable (including processing into merchantable finished
inventories for sale in the ordinary course of business), free of any
material defect or deficiency in design, material or workmanship; (iii) is in
merchantable and undamaged condition and meets customer specifications; and
(iv) is not obsolete.
(b) SCHEDULE 3.11(b) is a true and correct list of all
consigned inventory (including cores, parts and finished goods) owned by GM
and held by Seller as of the date hereof.
3.12. LITIGATION. Except as disclosed on SCHEDULE 3.12, (i)
there are no actions, suits, hearings, arbitrations, proceedings (public or
private) or governmental investigations that have been brought by or against
any Governmental Authority or any other Person (collectively, "Proceedings")
pending or, to the Knowledge of Seller and the Stockholder, threatened
against or affecting Seller or any of the Transferred Assets or which seek to
enjoin or rescind the transactions contemplated by this Agreement or
otherwise prevent Seller from complying with the terms and provisions of this
Agreement; and (ii) there are no existing orders, judgments or decrees of any
Governmental Authority affecting Seller any of the Transferred Assets.
3.13. CONTRACTS.
(a) SCHEDULE 3.13(a) sets forth a complete list of the
following contracts, commitments and obligations (whether written or oral) of
Seller that are in connection with the Business (collectively with the
Leases, the "Scheduled Contracts"):
(i) each Contract between Seller and (A) each present or
former Employee, (B) any supplier of services or products to Seller whose
dollar volume of sales to Seller exceeded $25,000 in 1996 or is expected to
exceed $25,000 in 1997, and (C) any Person in which the aggregate payments
made or to be made to Seller under such Contract exceeded $25,000 in 1996
or is expected to exceed $25,000 in 1997;
(ii) each other agreement or arrangement of Seller that (y)
requires the payment or incurrence of Liabilities or the rendering of
services by Seller, subsequent to the date of this Agreement of more than
$25,000 and (z) cannot be terminated by Seller within 30 days;
(iii) all Contracts relating to, and evidences of or
guarantees of, or providing security for, indebtedness for borrowed money
or the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset);
(iv) all partnership, joint venture or other similar
Contracts, arrangements or agreements;
(v) to the extent that any of the following provide for
annual payments by Seller in excess of $25,000 and cannot be terminated by
Seller within 30 days, all license, distribution, commission, marketing,
agent, franchise, technical assistance or similar agreements relating to
or providing for the marketing and/or sale of the products or services to
which Seller is a party or by which Seller is otherwise bound; and
(vi) all other material contracts, commitments and
obligations that are not in the ordinary course of the Business.
(b) Except as disclosed in SCHEDULE 3.13(b), each Scheduled
Contract and Subsequent Material Contract is a legal, valid and binding
obligation of Seller and, to the Knowledge of Seller and the Stockholder,
each other party thereto, enforceable (except to the extent such
enforceability may be limited by bankruptcy, equity and creditors' rights
generally) against Seller and, to the Knowledge of Seller and the
Stockholder, each such other party in accordance with its terms, and neither
Seller nor, to the Knowledge of Seller or the Stockholder, any other party
thereto is in material default or has failed to perform any material
obligation thereunder. A complete and correct copy of each Scheduled
Contract has been delivered to Buyer.
(c) SCHEDULE 3.13(c) sets forth a list (by name, address and
persons to contact) of the 10 largest customers of Seller for each of the
12-month periods ended December 31, 1995 and 1996, and the five primary
vendors providing services to Seller for each of the 12-month periods ended
December 31, 1995 and 1996 together with the approximate dollar amount of
sales by Seller or services provided to Seller during said period and a
summary description of the services provided by such vendors.
3.14. PERMITS; REQUIRED CONSENTS.
(a) SCHEDULE 3.14(a) sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities and all other Persons
necessary for the operation of the Transferred Assets or the Business in
substantially the same manner as currently operated or affecting or relating in
any way to the Business (the "Permits").
(b) SCHEDULE 3.14(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver (each, a "Required Governmental Approval") required
under Applicable Law to be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the loss of any material Permit or otherwise, and (ii) each
Scheduled Contract with respect to which the consent of the other party or
parties thereto must be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach or default thereunder or any other change or
modification to the terms thereof (each, a "Required Contractual Consent" and
collectively with the Required Governmental Approvals, the "Required
Consents"). Except as set forth in SCHEDULE 3.14(a) or (b) each Permit is
valid and in full force and effect in all material respects and, assuming the
related Required Consents have been obtained prior to the Closing Date, are
or will be transferable by Seller, and assuming the related Required Consents
have been obtained prior to the Closing Date, none of the Permits will be
terminated or become terminable or impaired in any material respect as a
result of the transactions contemplated hereby.
3.15. COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
SCHEDULE 3.15, the operation of the Business by Seller and the condition of
the Transferred Assets have not violated or infringed, and do not violate or
infringe, any material Applicable Law, or any order, writ, injunction or
decree of any Governmental Authority.
3.16. EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL; AND EMPLOYEE
BENEFITS.
(a) SCHEDULE 3.16(a) sets forth all Benefit Plans. Seller
has made true and correct copies of all governing instruments and related
agreements pertaining to such Benefit Plans available to Buyer.
(b) Except as set forth on SCHEDULE 3.16(b) no individual
shall accrue or receive additional benefits, service or accelerated rights to
payments of benefits under any Benefit Plan, including the right to receive
any parachute payment, as defined in Section 280G of the Code, or become
entitled to severance, termination allowance or similar payments as a direct
result of the transactions contemplated by this Agreement.
(c) No Employee Benefit Plan has participated in, engaged in
or been a party to any non-exempt Prohibited Transaction, and neither Seller
nor any ERISA Affiliates has pending or, to the Knowledge of Seller or the
Stockholder, threatened against it any claim for taxes under Chapter 43 of
Subtitle D of the Code and Sections 5000 of the Code, or for penalties under
ERISA Section 502(c), (i) or (l), with respect to any Employee Benefit Plan
nor, to the Knowledge of Seller or the Stockholder, is there a basis for any
such claim. No officer, director or employee of Seller has committed a
material breach of any responsibility or obligation imposed upon fiduciaries
by Title I of ERISA with respect to any Employee Benefit Plan.
(d) There is no material claim pending or, to the Knowledge
of Seller or the Stockholder, threatened involving any Benefit Plan by any
Person against such plan or Seller or any ERISA Affiliate. There is no
pending or, to the Knowledge of Seller or the Stockholder, threatened
proceeding involving any Employee Benefit Plan before the IRS, the United
States Department of Labor or any other Governmental Authority.
(e) Each Benefit Plan has been maintained in all material
respects, by its terms and in operation, in accordance with ERISA and the
Code including, but not limited to, all applicable reporting and disclosure
requirements. Seller and each ERISA Affiliate have made full and timely
payment of all amounts required to be contributed under the terms of each
Benefit Plan and Applicable Law or required to be paid as expenses under such
Benefit Plan, and Seller and each ERISA Affiliate shall continue to do so
through the Closing.
(f) With respect to any Group Health Plans maintained by
Seller or its ERISA Affiliates, Seller and its ERISA Affiliates have complied
in all material respects with the provisions of Part 6 Subtitle B of Title I
of ERISA and Section 4980B of the Code. Except as set forth on SCHEDULE
3.16(f), Seller is not obligated to provide health care benefits of any kind
to its retired employees pursuant to any Employee Benefit Plan, including
without limitation any Group Health Plan, or pursuant to any agreement or
understanding.
3.17. LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth on SCHEDULE 3.17(a), with respect to
the Business, no collective bargaining agreement exists that is binding on
Seller and, except as described on SCHEDULE 3.17(a), no petition has been
filed or proceedings instituted by an employee or group of employees with any
labor relations board seeking recognition of a bargaining representative.
SCHEDULE 3.17(a) describes any organizational effort currently being made or,
to the Knowledge of Seller or the Stockholder, threatened by or on behalf of
any labor union to organize any Employees.
(b) Except as set forth on SCHEDULE 3.17(a), (i) there is no
labor strike, dispute, slow down or stoppage pending or, to the Knowledge of
Seller or the Stockholder, threatened against or directly affecting Seller,
(ii) no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending, and no claims therefor exist; and
(iii) neither Seller nor of its Affiliates has received any notice or has any
Knowledge of any threatened labor or civil rights dispute, controversy or
grievance or any other unfair labor practice proceeding or breach of contract
claim or action with respect to claims of, or obligations to, any employee or
group of Employees.
(c) Seller has complied and is currently complying, in all
material respects, in respect of all Employees, with all Applicable Laws
respecting employment and employment practices and the protection of the
health and safety of Employees. Except as set forth on SCHEDULE 3.19, since
January 1, 1994 Seller has not received any citation or other notification
regarding the violation of occupational and health safety laws or regulations.
(d) All individuals who are performing or have performed
services for Seller or any Affiliate of Seller and are or were classified by
Seller or any Affiliate as "independent contractors" qualify for such
classification under Section 530 of the Revenue Act of 1978 or Section 1706
of the Tax Reform Act of 1986, as applicable, except for such instances which
are not, in the aggregate, material.
(e) SCHEDULE 3.17(e) sets forth all Employees receiving or
seeking worker's compensation benefits, as well as the following for each
such Employee: (i) brief description of the injury; (ii) weekly
compensation; (iii) estimated benefit period; and (iv) estimate of medical
and other expenses payable.
3.18. INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.18(a) sets forth a complete and correct list
of each patent, patent application and docketed invention, trademark, trade
name, trademark or trade name registration or application, copyright or
copyright registration or application for copyright registration, and each
license or licensing agreement for any of the foregoing relating to any
Transferred Asset or held by Seller or used in the Business (the
"Intellectual Property Rights").
(b) Except as disclosed in SCHEDULE 3.18(b), Seller has not
during the three years preceding the date of this Agreement been a party to
any Proceeding nor, to the Knowledge of Seller or the Stockholder, is any
Proceeding threatened as to which there is a reasonable possibility of a
determination adverse to Seller that involved or may involve a claim of
infringement by any Person (including any Governmental Authority) of any
Intellectual Property Right. Except as disclosed in SCHEDULE 3.18(b), no
Intellectual Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by Seller, or
restricting the licensing thereof by Seller to any Person. The use of the
Intellectual Property Rights does not conflict with, infringe upon or violate
any patent, patent license, patent application, trademark, trade name,
trademark or trade name registration, copyright, copyright registration,
service xxxx, brand xxxx or brand name or any pending application relating
thereto, or any trade secret, know-how, programs or processes, or any similar
rights, of any Person.
(c) Except as set forth in SCHEDULE 3.18(c), Seller either
owns the entire right, title and interest in, to and under, or has the
legally enforceable right to use, all Intellectual Property Rights.
3.19. ADVISORY FEES. There is no investment banker, broker,
finder or other intermediary or advisor that has been retained by or is
authorized to act on behalf of Seller, the Stockholder or their Affiliates
who might be entitled to any fee, commission or reimbursement of expenses
from Buyer, ATC or any of their Affiliates upon consummation of the
transactions contemplated by this Agreement.
3.20. ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed in SCHEDULE 3.20(a), Seller has
obtained all material approvals, authorizations, certificates, consents,
licenses, orders and permits or other similar authorizations of all
Governmental Authorities, or from any other Person, that are required with
respect to the Business or the Transferred Assets or otherwise required of
Seller under any Environmental Law. SCHEDULE 3.20(a) sets forth all permits,
licenses and other authorizations issued under any Environmental Law to
Seller.
(b) Except as disclosed in SCHEDULE 3.20(b), Seller is in
compliance in all material respects with all terms and conditions of all
approvals, authorizations, certificates, consents, licenses, orders and
permits or other similar authorizations of all Governmental Authorities (and
all other Persons) required under any Environmental Law that is applicable to
Seller, the Business or the Transferred Assets, and is also in compliance in
all material respects
with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws.
(c) Except as disclosed in SCHEDULE 3.20(c), there are no
past or present events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans relating to or in any way affecting
Seller, the Business or the Transferred Assets that could reasonably be
expected to prevent, or make materially more expensive, continued compliance
with any Environmental Law by Buyer after the Closing, or that may give rise
to any Environmental Liability, or otherwise form the basis of any claim,
action, demand, suit, Proceeding, hearing, study or investigation (i) under
any Environmental Law, (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without
limitation underground storage tanks), disposal, transport or handling, or
the emission, discharge, release or threatened release of any Hazardous
Substance, or (iii) resulting from exposure to workplace hazards.
3.21. TAX MATTERS. Except as set forth on SCHEDULE 3.21:
(a) Seller has timely filed all Tax Returns required to have
been filed by it, and has paid or accrued all Taxes due to any taxing
authority with respect to all taxable periods ending on or prior to the date
hereof, or otherwise attributable to all periods prior to the date hereof;
and all such Tax Returns are true, correct and complete in all respects.
Seller is not currently the beneficiary of any extension of time within which
to file any Tax Return.
(b) Seller has not received notice that the IRS or any other
taxing authority has asserted against Seller any deficiency in Taxes or claim
for additional Taxes in connection with any tax period. Except for Liens
arising from Taxes which are due but not yet payable, there are no Liens for
Taxes on any of Seller's assets.
(c) Seller has collected, withheld and paid over all Taxes
required to have been collected, withheld and paid over in connection with
amounts paid or owing to, or received from, any employee, independent
contractor, creditor, stockholder, or other Person;
(d) Seller has not been included in any consolidated,
combined or unitary Tax Return provided for under the laws of the United
States, any state or locality with respect to Taxes for any taxable period
for which the statute of limitations has not expired;
(e) There is no pending or, to the Knowledge of Seller or the
Stockholder, threatened action, audit, proceeding, or investigation with
respect to any Taxes or Tax Returns of Seller; and
(f) Seller has continuously been an S Corporation (as defined
in Section 1361) of the Code) since January 1, 1986 and will be an S
Corporation immediately prior to the Closing.
3.22. INSURANCE.
(a) SCHEDULE 3.22 sets forth a complete and correct list of
all material insurance policies of any kind currently in force with respect
to Seller (the "Insurance Policies"), including all "occurrence based"
liability policies regardless of the periods to which they relate. SCHEDULE
3.22 sets forth for each Insurance Policy the type of coverage, the name of
the insureds, the insurer, the premium, the expiration date, the period to
which it relates, the deductibles and loss retention amounts and the amounts
of coverage. No cancellation or material amendment or increase of premiums
is pending or, to the Knowledge of Seller or the Stockholder, threatened with
respect to any of the Insurance Policies.
(b) No insurance company that issued any Insurance Policy,
Board of Fire Underwriters or similar body, or Governmental Authority has
issued a recommendation or requirement for any changes in the conduct of the
Business or any repairs or other work to be done on or with respect to any of
the Transferred Assets.
3.23. MATERIAL DISCLOSURES. No statement, representation or
warranty made by Seller or the Stockholder in this Agreement or in any
certificate, statement, list, schedule or other document furnished or to be
furnished to the Buyer hereunder contains, or when so furnished will contain,
any untrue statement of a material fact, or fails to state, or when so
furnished will fail to state, a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in
which they are made, not misleading.
3.24. GAINSHARING PROGRAMS. SCHEDULE 3.24 sets forth a true
and complete list of all of the "gainsharing" programs currently approved
between Seller and GM ("Gainsharing").
3.25. LOCATION OF DISCLOSURE. So long as any information
called for by any provision of this Agreement is disclosed by Seller or the
Stockholder in the text of this Agreement or any Schedule hereto, such
information shall be considered disclosed for all purposes of this Agreement
notwithstanding that the information may have been more properly disclosed in
some other Schedule or provision of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND ATC
As an inducement to Seller and the Stockholder to enter into this
Agreement and to consummate the transactions contemplated herein, Buyer and
ATC hereby jointly and severally represent and warrant to Seller and the
Stockholder that:
4.01. ORGANIZATION AND EXISTENCE. Each of Buyer and ATC is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Each of Buyer and ATC is duly qualified
to do business as a foreign corporation in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary to carry on its business as now
conducted, except for those
jurisdictions where the failure to be so qualified has not been, and may not
reasonably be expected to be, material.
4.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by each of Buyer and ATC of this Agreement and the consummation
by each of Buyer and ATC of the transactions contemplated hereby are within
the corporate powers of each of Buyer and ATC and have been duly authorized
by all necessary corporate action on the part of each of Buyer and ATC. This
Agreement constitutes the legal, valid and binding agreement of each of Buyer
and ATC, enforceable in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and subject to general principles
of equity.
4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by each of Buyer and ATC of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than
as set forth in this Agreement.
4.04. NON-CONTRAVENTION. The execution, delivery and
performance by each of Buyer and ATC of this Agreement does not (a)
contravene or conflict with the Certificate of Incorporation or Bylaws of
Buyer or ATC, or (b) assuming compliance with the matters referred to in
Section 4.03, contravene or conflict with or constitute a violation of any
provision of any Applicable Law binding upon or applicable to Buyer or ATC.
4.05. ADVISORY FEES. Except for Aurora Capital Partners L.P.
(whose fees and expenses will be paid by Buyer), there is no investment
banker, broker, finder or other intermediary or advisor that has been
retained by or is authorized to act on behalf of Buyer or ATC who might be
entitled to any fee, commission or reimbursement of expenses from Seller or
any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.
4.06. LITIGATION. There is no Proceeding pending against, or
to the Knowledge of Buyer or ATC, threatened against or affecting, Buyer or
ATC before any court or arbitrators or any governmental body, agency or
official that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
5.01. CONDUCT OF THE BUSINESS. From the date hereof until the
Closing Date, Seller shall conduct the Business in the ordinary course and in
substantially the same manner as it has prior to the date of this Agreement
and agrees, other than in the ordinary course of business, not to enter into
any material agreements or take any other significant actions without the
prior written consent of Buyer, which shall not be unreasonably withheld or
delayed. Seller shall use its reasonable efforts to preserve intact the
Transferred Assets, the Business and the business organizations and
relationships and goodwill of Seller with third parties and keep available
the services of the present officers, employees, agents and other personnel
of Seller relating to the
Business. Without limiting the generality of this Section 5.01(a) and except
as otherwise expressly provided in this Agreement, from the date hereof until
the Closing Date:
(a) Seller will, and the Stockholder will cause Seller to:
(i) (A) maintain the Transferred Assets in the
ordinary course of business consistent with past practice in operating
order and at least the condition in effect as of the date hereof,
reasonable wear and tear excepted, (B) promptly repair, restore or
replace any Transferred Assets in use on the date hereof except
Transferred Assets sold in the ordinary course of business consistent
with past practice, (C) upon any damage, destruction or loss to any of
the Transferred Assets, apply any and all insurance proceeds received
with respect thereto to the prompt repair, replacement and restoration
thereof to the condition of the Transferred Assets before such event,
(D) use its reasonable efforts to obtain, prior to the Closing Date, all
Required Consents, and (E) take all actions necessary to be in
compliance with, and to maintain the effectiveness of, all material
Permits;
(ii) comply with all material Applicable Laws;
(iii) promptly notify Buyer in writing of (A) any
action, event, condition or circumstance, or group of actions, events,
conditions or circumstances, that results in, or could reasonably be
expected to result in, a Material Adverse Effect, other than changes in
general economic conditions, (B) the commencement of any Proceeding by
or against Seller, or Seller becoming aware of any threat, claim,
action, suit, inquiry, proceeding, notice of violation, demand letter,
subpoena, government audit or disallowance that could reasonably be
expected to result in a Proceeding, and (C) the occurrence of any breach
by Seller of any representation or warranty, or any covenant or
agreement, contained in this Agreement.
(b) without Buyer's prior consent (which shall not
unreasonably be withheld or delayed), Seller will not, and the
Stockholder shall cause Seller not to:
(i) purchase or otherwise acquire assets that would
constitute Transferred Assets other than in the ordinary course of the
Business;
(ii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with Permitted
Liens), any of the Transferred Assets except (A) pursuant to existing
obligations of Seller as set forth in SCHEDULE 3.08 or (B) in the ordinary
course of the Business;
(iii) enter any agreement or arrangement that requires or
allows payment, acceleration of payment or incurrence of Liabilities
relating to the Business, or the rendering of services by Seller outside
the ordinary course of the Business;
(iv) amend or modify in any material respect or terminate
any Scheduled Contract or any other Contract entered into by Seller after
the date hereof which, if in existence on the date hereof, would be
required to be set forth in the SCHEDULE 3.13(a) as a Scheduled Contract
(each, a "Subsequent Material Contract");
(v) make or commit to make any capital expenditure, or
group of related capital expenditures relating to the Business, in
excess of $25,000, other than capital expenditures expressly required
under any Scheduled Contract;
(vi) enter into or commit or propose to enter into any
Subsequent Material Contract;
(vii) (A) increase the rate or terms of compensation payable
or to become payable to any Employee except in the ordinary course of
business, (B) pay or agree to pay any pension, retirement allowance or
other employee benefit to an Employee not provided for by any Employee
Plan, Benefit Arrangement or Employment Agreement set forth in the
Schedules hereto, (C) commit itself to any additional pension, profit
sharing, bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay,
continuation pay, termination pay, retirement or other employee benefit
plan, agreement or arrangement for Employees, or increase the rate or
terms of any Employee Plan or Benefit Arrangement, (D) enter into any
employment agreement with or for the benefit of any Employee, or (E)
increase the rate of compensation under or otherwise change the terms of
any Employment Agreement set forth in SCHEDULE 3.16(a); and
(viii) enter into any agreement to do any of the foregoing.
5.02. ACCESS TO INFORMATION. Subject to compliance with
Applicable Laws, from the date hereof until the Closing Date, Seller will
promptly: (a) give Buyer, ATC and their counsel, financial advisors,
auditors and other authorized representatives reasonable access to the
offices, properties, books and records relating to the Business and the
Transferred Assets upon reasonable prior notice, (b) furnish to Buyer, ATC
and their counsel, financial advisors, auditors and other authorized
representatives such information relating to the Business or the Transferred
Assets as Buyer or ATC may reasonably request and (c) instruct the directors,
officers, employees, counsel, auditors and financial advisors of Seller to
cooperate with Buyer, ATC and their counsel, financial advisors, auditors and
other authorized representatives in their investigation of the Business and
the Transferred Assets. Such investigation shall include, but shall not be
limited to:
(i) A review of the business and operations of the Business;
(ii) A review of the financial statements and related work
papers and tax returns and any tax audits, other Governmental
Authority audits or internal audits of Seller;
(iii) An environmental review as to the presence and nature
of any hazardous materials in or on any of the Real Property; and
(iv) A standard legal due diligence examination relating to
Seller and the Business.
Buyer and ATC (x) shall conduct their investigation in such a way so as not
to be unduly disruptive to the conduct of Seller's business and (y) shall not
contact the employees of Seller prior to the Closing without the prior
consent of Seller.
5.03. COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS
AND REQUIRED CONTRACTUAL CONSENTS. On and after the Closing Date, Seller
shall comply at its own expense with all conditions and requirements
affecting Seller set forth in (a) all Required Governmental Approvals as
necessary to keep the same in full force and effect assuming continued
compliance with the terms thereof by Buyer and (b) all Required Contractual
Consents as necessary to keep the same effective and enforceable against the
Persons giving such Required Contractual Consents assuming continued
compliance with the terms thereof by Buyer.
5.04. MAINTENANCE OF INSURANCE POLICIES. On and after the date
hereof (including after the Closing Date), Seller shall not take or fail to
take any action if such action or inaction, as the case may be, would
adversely affect the applicability of any insurance in effect on the date
hereof that covers all or any part of the Transferred Assets or the Business
with respect to the period of time ending on the Closing Date.
Notwithstanding the foregoing, Seller shall not have any obligation to make
any monetary payment to maintain the effectiveness of any such insurance
policy after the Closing Date.
5.05. CONFIDENTIALITY.
(a) Seller and the Stockholder will, and will cause their
representatives to, treat any data and information obtained with respect to
Buyer, ATC or any of their Affiliates from any representative, officer,
director, or employee of Buyer or ATC, or from any books or records of Buyer
or ATC in connection with this Agreement, confidentially and with
commercially reasonable care and discretion, and will not disclose any such
information to third parties; PROVIDED, HOWEVER, that the foregoing shall not
apply to (i) information in the public domain or that becomes public through
disclosure by any party other than Seller, the Stockholder or their
Affiliates or representatives, so long as such other party is not in breach
of a confidentiality obligation, (ii) information that may be required to be
disclosed by Applicable Law or (iii) information required to be disclosed to
obtain any Required Consents.
(b) In the event that the Closing fails to take place and
this Agreement is terminated, Seller and the Stockholder, upon the written
request of Buyer or ATC, will, and will cause their representatives to,
promptly deliver to Buyer or ATC any and all documents or other materials
furnished by Buyer or ATC or any of their Affiliates to Seller or the
Stockholder in connection with this Agreement without retaining any copy
thereof. In the event of such request, all other documents, whether
analyses, compilations or studies, that contain or otherwise reflect the
information furnished by Buyer or ATC, shall be destroyed by Seller or the
Stockholder or shall be returned to Buyer or ATC, and Seller shall confirm to
Buyer in writing that all such materials have been returned or destroyed. No
failure or delay by Buyer or ATC in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 5.05, money damages would not be an adequate
remedy for such breach and, even if money damages were adequate, it would be
impossible to ascertain or measure with any degree of accuracy the damages
sustained therefrom. Accordingly, if there should be a breach or threatened
breach of the provisions of this Section 5.05, Buyer, ATC and their
Affiliates shall be entitled to an injunction restraining Seller and the
Stockholder from any breach without showing or proving actual damage
sustained by Buyer, ATC or their Affiliates, as the case may be. Nothing in
the preceding sentence shall limit or otherwise affect any remedies that
Buyer, ATC or their Affiliates may otherwise have under Applicable Law.
5.06. USE OF NAME. After the Closing Date, Seller shall not
use the name "ATS Remanufacturing" or any name substantially similar thereto,
except that Seller may use (i) payroll checks bearing the name "ATS
Remanufacturing" for a period not to exceed 90 days after the Closing and
(ii) other checks bearing the name "ATS Remanufacturing" for a period not to
exceed 30 days after the Closing.
5.07. PAYMENT AND DISCHARGE OF EXCLUDED LIABILITIES. After the
Closing Date, Seller shall pay and discharge all Excluded Liabilities
(including, without limitation, all accrued payroll) when due except for
Excluded Liabilities that are being contested in good faith.
5.08. REMEDIATION OF CERTAIN ENVIRONMENTAL CONDITIONS.
Promptly after the Closing Date, Seller shall perform the tasks set forth on
SCHEDULE 5.08, to the extent that such tasks are not completed prior to the
Closing. Seller shall perform such tasks in accordance with Applicable Law
(including, without limitation, all Environmental Laws) and in a commercially
reasonable manner.
5.09. ADMINISTRATION OF ACCOUNTS. All payments made to Seller
after the Closing Date with respect to Transferred Assets shall be held by
Seller in trust for the benefit of Buyer and, promptly after receipt by
Seller of any such payment, Seller shall pay, or cause to be paid, over to
Buyer the amount of such payment.
5.10. GAINSHARING PAYMENTS. If after the Closing Date Seller
or the Stockholder receives any payment from GM under any Gainsharing program
approved as of the Closing Date, Seller or the Stockholder, as the case may
be, shall promptly pay to Buyer the portion of such payment that is
attributable to sales to GM made after the Closing Date.
ARTICLE VI
COVENANTS OF BUYER AND ATC
6.01. CONFIDENTIALITY.
(a) Buyer and ATC will, and will cause their representatives
to, treat any data and information obtained with respect to Seller or the
Stockholder from any representative, officer, director or employee of Seller
or the Stockholder, or from any books or records of Seller in connection with
this Agreement, confidentially and with commercially
reasonable care and discretion, and will not disclose any such information to
third parties; PROVIDED, HOWEVER, that the foregoing shall not apply to (i)
information in the public domain or that becomes public through disclosure by
any party other than Buyer or ATC or their Affiliates or representatives, so
long as such other party is not in breach of a confidentiality obligation,
(ii) information that may be acquired to be disclosed by Applicable Law,
(iii) information required to be disclosed to obtain any Required Consents;
or (iv) any information that is disclosed by Buyer or ATC or their Affiliates
to any of their actual or prospective lenders or investors in connection with
financing the transactions contemplated by this Agreement; PROVIDED, HOWEVER,
that in the event the Closing has occurred, this Section 6.01(a) shall cease
to be effective with respect to any data and information obtained with
respect to the Business.
(b) In the event that the Closing fails to take place and
this Agreement is terminated, Buyer and ATC, upon the written request of
Seller, will, and will cause their representatives to, promptly deliver to
Seller any and all documents or other materials furnished by Seller or the
Stockholder to Buyer or ATC in connection with this Agreement without
retaining any copy thereof. In event of such request, all other documents,
whether analyses, compilations or studies, that contain or otherwise reflect
the information furnished by Seller or the Stockholder, shall be destroyed by
Buyer or ATC or shall be returned to Seller, and Buyer and ATC shall confirm
to Seller in writing that all such materials have been returned or destroyed.
No failure or delay by Seller or the Stockholder in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 6.01, money damages would not be an adequate
remedy for such breach and, even if money damages were adequate, it would be
impossible to ascertain or measure with any degree of accuracy the damages
sustained by Seller therefrom. Accordingly, if there should be a breach or
threatened breach of provisions of this Section 6.01, Seller and the
Stockholder shall be entitled to an injunction restraining Buyer and ATC from
any breach without showing or proving actual damage sustained by Seller or
the Stockholder. Nothing in the preceding sentence shall limit or otherwise
affect any remedies that Seller or the Stockholder may otherwise have under
Applicable Law.
6.02. BULK SALES LAWS. Buyer waives compliance by Seller with
the provisions of all applicable provisions of Article 6 of the Uniform
Commercial Code as adopted in any state relating to bulk sales.
6.03. PAYMENTS TO CONTINUING EMPLOYEES.
(a) On the third anniversary of the Closing Date, Buyer shall
pay to each person listed on SCHEDULE 6.03 (a "Designated Person") the amount
set forth opposite such Designated Person's name on SCHEDULE 6.03 PROVIDED
that such Designated Person is then employed by Buyer. All payments under
this Section 6.03(a) will be made by check and will be subject to standard
withholding for income taxes, social security and the like. Notwithstanding
the foregoing, Buyer shall be under no obligation to retain any Designated
Person as an employee, and Buyer shall be free to terminate any Designated
Person at any time for cause or without
cause, even though such termination would terminate such Designated Person's
right to receive payment under this Section 6.03(a) if it occurs prior to the
third anniversary of the Closing Date.
(b) At the time of the payments called for by Section
6.03(a), Buyer shall pay to the Stockholder in cash $33,333 plus the amount
otherwise payable to any Designated Person who is no longer employed by Buyer
on the third anniversary of the Closing Date.
6.04. RETURN OF USED WASTE OIL HEATERS. After the Closing,
Buyer intends to replace certain waste oil heaters at the primary facility at
which the Business is conducted. Buyer will deliver to Seller or Seller's
designee the waste oil heaters currently in place as they are replaced with
new ones. The costs of delivering such used heaters to Seller or its designee
shall be borne by Seller.
ARTICLE VII
COVENANTS OF ALL PARTIES
7.01. FURTHER ASSURANCES. Subject to the terms and conditions
of this Agreement, each party will use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Law to consummate the transactions
contemplated by this Agreement. Buyer, ATC, the Stockholder and Seller agree
to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be reasonably necessary
or desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement. Following the Closing, Buyer
shall make the employees and records of the Business reasonably available to
Seller during normal business hours, at no charge to Seller other than for
out of pocket expenses incurred by Buyer for items such as photocopying or
travel, for the purposes of providing accounting information reasonably
required by Seller, providing testimony or information in connection with any
legal proceeding or for any other appropriate purpose arising out of Seller's
ownership and operation of the Business.
7.02. CERTAIN FILINGS. The parties hereto shall cooperate with
one another in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required or reasonably appropriate, or
any action, consent, approval or waiver from any party to any Contract is
required or reasonably appropriate, in connection with the consummation of
the transactions contemplated by this Agreement. Subject to the terms and
conditions of this Agreement, in taking such actions or making any such
filings, the parties hereto shall furnish information required in connection
therewith and seek timely to obtain any such actions, consents, approvals or
waivers. Without limiting the foregoing, the parties hereto shall each
promptly complete and file all reports and forms, and respond to all requests
or further requests for additional information, if any, as may be required or
authorized under the HSR Act.
7.03. PUBLIC ANNOUNCEMENTS. Up to (and including) the Closing
Date, the parties agree that they will not make any disclosure with respect
to this Agreement or the transactions contemplated hereby or cause to be
publicized in any manner whatsoever by way of interviews, responses to
questions or inquiries, press releases or otherwise any aspect of this
Agreement or the transactions contemplated hereby without prior written
notice to and approval of the other parties hereto, unless such party
reasonably concludes that such release of information is required by
applicable law or stock exchange regulations, and the parties hereto cannot
reach agreement upon a mutually acceptable form of release. Notwithstanding
the foregoing, the parties hereto may, on a confidential basis, advise their
respective agents, accountants, attorneys and financing sources with respect
to the contents of this Agreement and the transactions contemplated hereby.
7.05. TAXES.
(a) All sales, value added and use Taxes imposed in
connection with the sale of the Transferred Assets shall be borne by Buyer.
(b) Seller agrees that no new elections with respect to Taxes
or any changes in current elections with respect to Taxes affecting the
Transferred Assets shall be made after the date of this Agreement without the
prior written consent of Buyer.
(c) Buyer and Seller shall (i) provide to each other such
assistance as may reasonably be requested in connection with the preparation
of any Tax Return relating to the Business and the conduct of any audit or
other examination by any taxing authority or in connection with judicial or
administrative proceedings relating to any liability for Taxes relating to
the Business, (ii) retain all records or other information that may be
relevant to the preparation of any Tax Returns relating to the Business, or
the conduct of any audit or examination, or other tax proceeding relating to
the Business, and (iii) retain all relevant documents, including prior year's
Tax Returns relating to the Business, supporting work schedules and other
records or information that may be relevant to such returns and shall not
destroy or otherwise dispose of any such records without the prior written
consent of the other party.
7.07. EMPLOYEES AND EMPLOYEE BENEFIT MATTERS.
(a) On or before the Closing Date, Buyer shall offer
employment to each person who is an employee of Seller immediately prior to
the Closing at a wage rate at least equal to the rate in effect for such
employee on the Closing Date.
(b) Buyer shall provide group insurance benefits (health,
dental, life) to employees of Seller who accept employment with Buyer, such
benefits to be substantially equivalent to the insurance benefits that are in
effect for the principal employee group of Seller immediately prior to the
Closing. Buyer shall waive all insurance waiting periods for those employees
who have already attained the required eligibility for insurance coverage as
of the Closing.
(c) Buyer will honor any earned but unused 1997 vacation time
for employees of Seller who accept employment with Buyer. Seller will
provide Buyer with a listing, by employee, that summarizes such earned but
unused 1997 vacation time as of the Closing Date.
(d) For purposes of determining the seniority of any person
hired by Buyer pursuant to Section 7.07(a), such person will be credited with
the period of employment by Seller prior to the Closing.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of each of the following conditions:
(a) (i) Seller shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, (ii) each of
the representations and warranties of Seller and the Stockholder contained in
this Agreement shall have been true and correct in all material respects when
made and shall contain no misstatement or omission that would make any such
representation or warranty materially misleading when made and shall be true
and correct in all material respects, and shall not contain any misstatement
or omission that would make any such representation or warranty materially
misleading, at and as of the Closing Date with the same force and effect as
if made as of the Closing Date and (iii) Buyer shall have received
certificates signed by the Stockholder and a duly authorized executive
officer of Seller to the foregoing effect and to the effect that to the
Knowledge of the Stockholder and such officer the conditions specified within
this Section 8.01 have been satisfied.
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without
the imposition of any conditions that are or would become applicable to the
Business, the Transferred Assets or Buyer (or any of its Affiliates) after
the Closing that Buyer in good faith reasonably determines would be
materially burdensome upon the Business, the Transferred Assets or Buyer (or
any of its Affiliates) or their respective businesses substantially as such
businesses have been conducted prior to the Closing Date or as said
businesses, as of the date hereof, would be reasonably expected to be
conducted after the Closing Date. All such Required Governmental Approvals
shall be in effect, and no Proceedings shall have been instituted or
threatened by any Governmental Authority with respect thereto as to which, in
Buyer's good faith opinion, there is a material risk of a determination that
would terminate the effectiveness of, or otherwise materially and adversely
modify the terms of, any such Required Governmental Approval; all applicable
waiting periods with respect to such Required Governmental Approvals shall
have expired; and all conditions and requirements prescribed by Applicable
Law or by such Required Governmental Approvals to be satisfied on or prior to
the Closing Date shall have been satisfied to the extent necessary such that
all such Required Governmental Approvals are, and will remain, in full force
and effect assuming continued compliance with the terms thereof after the
Closing.
(c) All material Required Contractual Consents shall have
been obtained without the imposition of any conditions that are or would
become applicable to the Business, the Transferred Assets, Buyer or any of
its Affiliates after the Closing that Buyer in
good faith determines would be materially burdensome upon the Business, the
Transferred Assets, Buyer or any of its Affiliates or their respective
businesses substantially as such businesses have been conducted prior to the
Closing Date or as said businesses, as of the date hereof, would be
reasonably expected to be conducted after the Closing Date. All such
Required Contractual Consents (and with respect to the Subsequent Material
Contracts, such other consents as may be required) shall be in effect. All
conditions and requirements prescribed by any Required Contractual Consent
(or any such other consent) to be satisfied on or prior to the Closing Date
shall have been satisfied to the extent necessary such that all such Required
Contractual Consents (and all such other consents) are effective and
enforceable, and will remain effective and enforceable against the Persons
giving such Required Contractual Consents (and such other consents) assuming
continued compliance with the terms thereof.
(d) The transactions contemplated by this Agreement and the
consummation of the Closing shall not violate any material Applicable Law.
No temporary restraining order, preliminary or permanent injunction, cease
and desist order or other order issued by any court of competent jurisdiction
or any competent Governmental Authority or any other legal restraint or
prohibition preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall be
in effect, and there shall be no pending or threatened actions or proceedings
by any Governmental Authority (or determinations by any Governmental
Authority) or by any other Person (i) challenging or in any manner seeking to
restrict or prohibit the transfer and exchange contemplated hereby or the
consummation of the Closing, or to impose conditions that Buyer in good faith
determines would be materially burdensome upon the Business, the Transferred
Assets, Buyer or any of its Affiliates or their respective businesses
substantially as such businesses have been conducted prior to the Closing
Date or as said businesses, as of the date hereof, would be reasonably
expected to be conducted after the Closing Date.
(e) Since the date hereof, there shall not have been any
event, occurrence, development or state of circumstances or facts or change
in the Transferred Assets or the Business (including any damage, destruction
or other casualty loss, but excluding any event, occurrence, development or
state of circumstances or facts or change resulting from changes in general
economic conditions) affecting the Business or any Transferred Asset that has
had or that may be reasonably expected to have, either alone or together with
all such events, occurrences, developments, states of circumstances or facts
or changes, a Material Adverse Effect.
(f) The Stockholder shall have executed and delivered to
Buyer and ATC a Noncompetition Agreement in a form reasonably acceptable to
Buyer.
(g) The Stockholder shall have executed and delivered to
Buyer a lease in a form reasonably acceptable to Buyer for the facility at
which the Business is conducted.
(h) The Stockholder shall have executed and delivered to
Buyer a lease in a form reasonably acceptable to Buyer for the GM parts
storage facility.
(i) The Stockholder shall have executed and delivered to
Buyer a consulting agreement in a form reasonably acceptable to Buyer.
(j) Buyer shall have received an opinion of counsel from
Horack, Talley, Xxxxx & Lowndes in a form reasonably acceptable to Buyer.
(k) Seller shall have executed and delivered a xxxx of sale
and such other documents of assignment, transfer and conveyance as Buyer
shall reasonably request to transfer to Buyer all right, title and interest
of Seller in and to the Transferred Assets.
(l) Buyer shall be reasonably satisfied that there has been
no material degradation of the Transferred Assets since the completion by
Buyer of its inspection of the Transferred Assets.
(m) Buyer shall have completed its customary due diligence as
contemplated by Section 5.02 and Buyer shall be satisfied, in its reasonable
judgment, with both the quantity and the substance of the information
provided to it.
(n) Buyer shall received a true and correct list of all
consigned inventory (including cores, parts and finished goods) owned by GM
and held by Seller as of the Closing Date.
(o) Xxxxxx XxXxxxxx shall have executed and delivered to
Buyer a consulting agreement substantially in a form reasonably acceptable to
Buyer.
(p) H. Xxx Xxxxx shall have executed and delivered to Buyer a
consulting agreement in a form reasonably acceptable to Buyer.
(q) Xxxxxx Xxxxx shall have executed and delivered to Buyer a
consulting agreement in a form reasonably acceptable to Buyer.
8.02. CONDITIONS TO OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of each of the following conditions:
(a) (i) Buyer shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, (ii) the
representations and warranties of Buyer and ATC contained in this Agreement
shall be true, complete and accurate in all material respects at and as of
the Closing Date, as if made at and as of such date and (iii) Seller shall
have received a certificate signed by a duly authorized executive officer of
Buyer and ATC to the foregoing effect and to the effect that to such
officers' Knowledge the conditions specified within this Section 8.02 have
been satisfied.
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without
the imposition of any conditions that are or would become applicable to
Seller or any of its Affiliates after the Closing that Seller in good faith
reasonably determines would be materially burdensome upon such Person. All
such Required Governmental Approvals shall be in effect, and no Proceedings
shall have been instituted or threatened by any Governmental Authority with
respect thereto as to which, in Seller's good faith opinion, there is a
material risk of a determination that would
terminate the effectiveness of, or otherwise materially and adversely modify
the terms of, any such Required Governmental Approval. All applicable
waiting periods with respect to such Required Governmental Approvals shall
have expired, and all conditions and requirements prescribed by Applicable
Law or by such Required Governmental Approvals to be satisfied on or prior to
the Closing Date shall have been satisfied to the extent necessary such that
all such Required Governmental Approvals are, and will remain, in full force
and effect assuming continued compliance with the terms thereof after the
Closing.
(c) All material Required Contractual Consents shall have
been obtained without the imposition of any conditions that are or would
become applicable to Seller. All such Required Contractual Consents (and
with respect to the Subsequent Material Contracts, such other consents) shall
be in effect, and no Proceeding shall have been instituted or threatened with
respect thereto that, in Seller's good faith judgment, creates a material
risk that any material Liability will be imposed on Seller. All conditions
and requirements prescribed by any such Required Contractual Consent (or any
such other consent) to be satisfied on or prior to the Closing Date shall
have been satisfied to the extent necessary such that no material Liability
will be imposed on Seller.
(d) The sale and transfer contemplated by this Agreement and
the consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or
any competent Governmental Authority or any other legal restraint or
prohibition preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall be
in effect, and there shall be no pending or threatened actions or proceedings
by any Governmental Authority (or determinations by any Governmental
Authority) or by any other Person challenging or in any manner seeking to
restrict or prohibit the transfer and exchange contemplated hereby or the
consummation of the Closing.
(e) Buyer shall have executed and delivered to the
Stockholder a lease in a form reasonably acceptable to the Stockholder for
the facility at which the Business is conducted.
(f) Buyer shall have executed and delivered to the
Stockholder a lease in a form reasonably acceptable to the Stockholder for
the GM parts storage facility.
(g) Buyer shall have executed and delivered to the
Stockholder a consulting agreement in a form reasonably acceptable to the
Stockholder.
(h) Seller shall have received an opinion of counsel from
Xxxxxx Xxxxxxxxxxxx, Esq., General Counsel of ATC, in a form reasonably
acceptable to Seller.
(i) Buyer shall have executed and delivered to Xxxxxx
XxXxxxxx a consulting agreement in a form reasonably acceptable to Xx.
XxXxxxxx.
(j) Buyer shall have executed and delivered to H. Xxx Xxxxx a
consulting agreement in a form reasonably acceptable to Xx. Xxxxx.
(k) Buyer shall have executed and delivered to Xxxxxx Xxxxx a
consulting agreement in a form reasonably acceptable to Xx. Xxxxx.
ARTICLE IX
INDEMNIFICATION
9.01. AGREEMENT TO INDEMNIFY.
(a) Subject to the limitations provided herein, Buyer, ATC
and their Affiliates (collectively, the "Buyer Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this Article IX by
Seller and the Stockholder, jointly and severally, in respect of any Damages
reasonably and proximately incurred by any Buyer Indemnitee (i) as a result
of any inaccuracy or misrepresentation in or breach of or failure to perform
any representation, warranty, covenant, agreement or obligation of Seller or
the Stockholder in this Agreement, (ii) as a result of Buyer's waiver of
compliance with applicable "bulk sales" laws pursuant to Section 6.02 or
(iii) in connection with any Excluded Liability. Notwithstanding the
foregoing, Seller and the Stockholder shall not be liable as Indemnifying
Parties until all claims by the Buyer Indemnitees for indemnification exceed
$10,000 in the aggregate, and thereafter Seller and the Stockholder shall be
liable for all indemnification claims up to the aggregate liability set forth
in Section 9.01(c); PROVIDED, HOWEVER, that Seller and the Stockholder shall
be liable for all claims by the Buyer Indemnitees, regardless of amount,
arising out of (i) the fraud or willful misconduct of Seller or the
Stockholder or (ii) any Environmental Liability, other than Buyer
Environmental Liabilities.
(b) Seller, the Stockholder and their Affiliates
(collectively the "Seller Indemnitees") shall each be indemnified and held
harmless to the extent set forth in this Article IX by Buyer and ATC, jointly
and severally, in respect of any and all Damages reasonably and proximately
incurred by any Seller Indemnitee as a result of (i) any inaccuracy or
misrepresentation in or breach of or failure to perform any representation,
warranty, covenant, agreement or obligation of Buyer or ATC in this
Agreement, (ii) the conduct of the Business after the Closing or (iii)
Assumed Liabilities.
(c) Subject to the proviso to Section 9.01(a), Seller and the
Stockholder shall be liable under Section 9.01(a) for an amount in the
aggregate not to exceed the sum of all payments made by Buyer as of the time
in question pursuant to Article II, PROVIDED that any amount that Seller
and/or the Stockholder would be obligated to pay to or on behalf of a Buyer
Indemnity but for such limit will be netted against and reduce subsequent
Post-Closing Payments, if any.
9.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
(a) The representations and warranties contained in this
Agreement shall survive as follows:
(i) Except as otherwise provided in Section 9.02(a)(ii),
(iii) or (iv), all representations and warranties shall expire on the first
anniversary of the Closing Date.
(ii) Notwithstanding Section 9.02(a)(i) the representations
and warranties of Seller and the Stockholder as an Indemnifying Party shall
survive the Closing Date until the expiration of any applicable statute of
limitations, including extensions thereof, with respect to: (1) the
inaccuracy or misrepresentation in or breach of any representation or
warranty made by Seller or the Stockholder in this Agreement arising out of
fraud or willful misconduct; and (2) any inaccuracy or misrepresentation in
or breach of any representation or warranty made in Sections 3.15, 3.20 and
3.21 regardless of whether such inaccuracy or misrepresentation or breach
arises out of fraud or willful misconduct.
(iii) Notwithstanding Section 9.02(a)(i), the representations
and warranties of Buyer and ATC as Indemnifying Parties shall survive the
Closing Date until the expiration of the applicable statute of limitations,
including extensions thereof, with respect to any inaccuracy or
misrepresentation in or breach of any representation or warranty made by
Buyer or ATC in this Agreement arising out of fraud or willful misconduct.
(iv) Notwithstanding Section 9.02(a)(i), the representations
and warranties of Seller and the Stockholder set forth in Sections 3.01,
3.02, 3.04, 3.05, 3.09, 3.12 and 3.14 shall survive without expiration.
Any cause of action for breach of a representation or warranty contained
herein shall expire and terminate unless the party claiming that such breach
occurred delivers to the other party written notice and a reasonably detailed
explanation of the alleged breach on or before 5:00 P.M., eastern time, on
the date on which such representation or warranty expires pursuant to this
Section 9.02(a).
(b) The covenants contained in this Agreement shall survive
without expiration unless otherwise expressly provided in such covenant.
9.03. CLAIMS FOR INDEMNIFICATION. If any Indemnitee shall
believe that such Indemnitee is entitled to indemnification pursuant to this
Article IX in respect of any Damages, such Indemnitee shall give the
appropriate Indemnifying Party prompt written notice thereof. Any such
notice shall set forth in reasonable detail and to the extent then known the
basis for such claim for indemnification. The failure of such Indemnitee to
give notice of any claim for indemnification promptly shall not adversely
affect such Indemnitee's right to indemnity hereunder except to the extent
that such failure materially adversely affects the right of the Indemnifying
Party to assert any reasonable defense to such claim. Each such claim for
indemnity shall expressly state that the Indemnifying Party shall have only
the ten (10) Business Day period referred to in the next sentence to dispute
or deny such claim. The Indemnifying Party shall have ten (10) Business Days
following its receipt of such notice either (a) to acquiesce in such claim by
giving such Indemnitee written notice of such acquiescence or (b) to object
to the claim by giving such Indemnitee written notice of the objection. If
the Indemnifying Party does not object thereto within such ten (10) Business
Day period, such Indemnitee shall be entitled to be indemnified for all
Damages reasonably and proximately incurred by such Indemnitee in respect of
such claim. If the Indemnifying Party objects to such claim in a timely
manner, and such Indemnitee and the Indemnifying Party are unable to resolve
their dispute within ten (10) Business Days following such objection (or such
additional period of time as may be mutually agreed to by such Persons), the
claim shall be submitted immediately to arbitration pursuant to Section 11.12.
9.04. DEFENSE OF CLAIMS.
(a) In connection with any claim which may give rise to
indemnity under this Article IX resulting from or arising out of any claim or
Proceeding against an Indemnitee by a Person that is not a party hereto, the
Indemnifying Party may, subject to Section 9.04(b), assume the defense of any
such claim or Proceeding (unless such Indemnitee elects not to seek indemnity
hereunder for such claim), upon written notice to the relevant Indemnitee, if
all Indemnifying Parties with respect to such claim or Proceeding jointly
acknowledge to the Indemnitee its right to indemnity pursuant hereto in
respect of the entirety of such claim (as such claim may have been modified
through written agreement of the parties or arbitration hereunder) and
provides assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Parties will be financially able to satisfy such claim in full
if such claim or Proceeding is decided adversely. If the Indemnifying
Parties assume the defense of any such claim or Proceeding, the Indemnifying
Parties shall select counsel reasonably acceptable to such Indemnitee to
conduct the defense of such claim or Proceeding, shall take all steps
necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the Indemnifying
Parties shall have assumed the defense of any claim or Proceeding in
accordance with this Section 9.04, the Indemnifying Parties shall be
authorized to consent to a settlement of, or the entry of any judgment
arising from, any such claim or Proceeding, without the prior written consent
of such Indemnitee; PROVIDED, HOWEVER, that the Indemnifying Parties shall
pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; PROVIDED, FURTHER, that
the Indemnifying Parties shall not be authorized to encumber any of the
assets of any Indemnitee or to agree to any restriction that would apply to
any Indemnitee or to its conduct of business; and PROVIDED, FURTHER, that a
condition to any such settlement shall be a complete release of such
Indemnitee and its Affiliates, officers, employees, consultants and agents
with respect to such claim. Subject to Section 9.04(b), such Indemnitee
shall be entitled to participate in (but not control) the defense of any such
action, with its own counsel and at its own expense and the Indemnifying
Parties shall provide such Indemnitee with reasonable access to all materials
relating to the defense of the action and otherwise cooperate with such
Indemnitee and its counsel in connection with the Indemnitee's participation
in such defense. Each Indemnitee shall, and shall cause each of its
Affiliates, officers, employees, consultants and agents to, cooperate fully
with the Indemnifying Parties in the defense of any claim or Proceeding being
defended by the Indemnifying Parties
pursuant to this Section 9.04. If the Indemnifying Parties do not assume the
defense of any claim or Proceeding resulting therefrom in accordance with the
terms of this Section 9.04(a), such Indemnitee may defend against such claim
or Proceeding.
(b) Notwithstanding Section 9.04(a), the Indemnifying Parties
may not assume the defense of any claim or Proceeding and the Indemnitee may
at its own cost and expense assume such defense if, in the reasonable opinion
of the Indemnitee, (i) such claim or Proceeding involves an issue or matter
that, if determined adversely to the Indemnitee, is likely to have a material
adverse effect on the business, operations, assets, properties or prospects
of the Indemnitee, or (ii) there is one or more legal defenses available to
the Indemnitee that conflict with those available to an Indemnifying Party.
If the Indemnitee assumes defense of any such claim or Proceeding, (A) the
Indemnifying Parties may participate in, but not control, the defense of such
claim or Proceeding, and (B) if the Indemnitee receives a settlement proposal
from the Person asserting such claim or instituting such Proceeding and is
notified by an Indemnifying Party that such Indemnifying Party wants to
accept such settlement proposal, the liability of the Indemnifying Parties
with respect to such claim or Proceeding shall equal the lesser of (x) the
amount offered in such settlement proposal, (y) the amount of actual Damages
of the Indemnitee with respect to such claim or Proceeding or (z) the maximum
liability of the Indemnifying Parties pursuant to Section 9.01(a).
(c) If the Indemnitee elects to defend any claim or
Proceeding pursuant to the last sentence of Section 9.04(a) or pursuant to
Section 9.04(b), the Indemnitee shall conduct such defense in such manner as
it shall deem appropriate, including settling such claim or Proceeding after
giving notice of the same to the Indemnifying Parties, on such terms as such
Indemnitee shall deem appropriate. If the Indemnifying Parties seek to
question the manner in which such Indemnitee defended such claim or
Proceeding or the amount of or nature of any such settlement, the
Indemnifying Parties shall have the burden to prove by a preponderance of the
evidence that such Indemnitee did not defend such claim or Proceeding in a
reasonably prudent manner.
ARTICLE X
TERMINATION
10.01. GROUNDS FOR TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing under the following circumstances:
(i) by mutual written agreement of all of the parties
hereto;
(ii) by either party if the other party has breached any of
its representations or warranties contained herein or materially defaulted
in the performance of any of its covenants or agreements contained herein
and such breach or default is not curable prior to the Outside Date; or
(iii) by Buyer or by Seller, if the Closing shall not
have been consummated by September 30, 1997 (the "Outside Date"); PROVIDED,
HOWEVER, that neither Buyer nor Seller may terminate this Agreement
pursuant to this Section 10.01(a)(iii) if the Closing shall not have been
consummated within such time period by reason of the failure of such party
or any of its Affiliates to perform in all material respects any of its or
their respective covenants or agreements contained in this Agreement.
The party desiring to terminate this Agreement pursuant to Section
10.01(a)(ii) or (iii) shall give written notice of such termination to the
other party.
(b) This Agreement shall automatically terminate if any
Federal, state or foreign law or regulation thereunder shall hereafter be
enacted or become applicable that makes the transactions contemplated hereby
or the consummation of the Closing illegal or otherwise prohibited, or if any
judgment, injunction, order or decree enjoining either party hereto from
consummating the transactions contemplated hereby is entered, and such
judgment, injunction, order or decree shall become final and nonappealable.
10.02. EFFECT OF TERMINATION. If this Agreement is terminated
as permitted by Section 10.01, such termination shall be without liability of
any party to any other party to this Agreement; PROVIDED, HOWEVER, that if
such termination shall result from the breach by any party of its
representations, warranties or covenants contained in this Agreement, such
party shall be fully liable for any and all Damages incurred or suffered by
the other parties as a result of such failure or breach notwithstanding such
termination. The provisions of Sections 5.05, 6.01, 10.02, 11.03, 11.05
11.07, 11.08, 11.10, 11.11 and 11.13 shall survive any termination of this
Agreement pursuant to this Article X.
ARTICLE XI
MISCELLANEOUS
11.01. NOTICES. All notices, requests, demands, claims and
other communications hereunder shall be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given
(i) if personally delivered, when so delivered, (ii) if mailed, two Business
Days after having been sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set
forth below, (iii) if given by telex or telecopier, once such notice or other
communication is transmitted to the telex or telecopier number specified
below and the appropriate answer back or telephonic confirmation is received,
PROVIDED that such notice or other communication is promptly thereafter
mailed in accordance with the provisions of clause (ii) above or (iv) if sent
through an overnight delivery service in circumstances to which such service
guarantees next day delivery, the day following being so sent:
If to Seller:
Automatic Transmission Shops, Inc.
X.X. Xxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: X. X. Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Horack, Talley, Xxxxx & Lowndes
2600 One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
If to Buyer:
ATS Remanufacturing, Inc.
c/o Aftermarket Technology Corp.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer and
General Counsel
Telecopier No: (000) 000-0000
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties notice in the manner herein
set forth.
11.02. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by all parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No failure or delay
by a party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
11.03. EXPENSES. Except as otherwise provided herein, Seller or
the Stockholder, on the one hand, and by Buyer or ATC, on the other hand,
shall bear their own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
11.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party hereto may assign either this
Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of each other party, which approval shall not be
unreasonably withheld.
11.05. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the internal laws (without reference to
choice or conflict of laws) of the State of North Carolina.
11.06. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other parties hereto.
11.07. ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits referred to herein which are hereby incorporated by
reference) constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to the subject matter of this Agreement.
11.08. CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
11.09. SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the
date this Agreement was executed or last amended.
11.10. CONSTRUCTION.
(a) The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against either party. Any
reference to any Applicable Law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires
otherwise. Whenever required by the context, any gender shall include any
other gender,
the singular shall include the plural and the plural shall include the
singular. The words "herein," "hereof," "hereunder," and words of similar
import refer to the Agreement as a whole and not to a particular section.
Whenever the word "including" is used in this Agreement, it shall be deemed
to mean "including, without limitation," "including, but not limited to" or
other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and
shall not be deemed to be an exhaustive list of applicable items in the
context thereof.
(b) The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance.
If any party has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant.
11.11. DISPUTE RESOLUTION.
(a) If a dispute arises out of or relates to this Agreement
or the transactions contemplated hereby, and if such dispute cannot be
settled through negotiation, the parties agree to first try in good faith to
settle the dispute by mediation before resorting to some other dispute
resolution procedure. Such mediation shall be administered by the American
Arbitration Association under its Commercial Mediation Rules and shall be
conducted in Chicago, Illinois.
(b) Except as otherwise specifically provided elsewhere in
this Agreement, any dispute that the parties are unable to resolve pursuant
to Section 11.11(a) shall be submitted to and resolved by arbitration
pursuant to and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date of the initial request
that gave rise to the dispute to be arbitrated (the "AAA Rules").
(c) Such arbitration shall be conducted by a panel of three
arbitrators, which shall be selected from a list of arbitrators pursuant to
and in accordance with the AAA Rules. Such arbitration proceeding shall be
conducted in Chicago, Illinois. The arbitrators shall not have the authority
to modify any term or provision of this Agreement. The arbitration
proceeding shall include an opportunity for the parties to conduct discovery
in advance of the proceeding, which discovery may be limited by rules
established by the arbitrators. Notwithstanding the foregoing, the parties
agree that they will attempt, and they intend that they and the arbitrators
should use their best efforts in that attempt, to conclude such arbitration
proceeding and have a final decision from the arbitrators within 90 days from
the date of selection of the arbitrators; provided, however, that the
arbitrators shall be entitled to extend such 90-day period one or more times
to the extent necessary for such arbitrators to place a dollar value on any
claim that may be unliquidated. The arbitrators shall promptly deliver a
written decision with respect to the dispute to each of the parties, which
shall promptly act in accordance therewith. Each party agrees that any
decision of the arbitrators shall be final, conclusive and binding, absent
fraud or manifest error, and that they will not contest any action by any
other party hereto in accordance with a decision of the arbitrators, except
on a basis of fraud or manifest error. It is
specifically understood and agreed that any party may enforce any award
rendered pursuant to the arbitration provisions of this Section 11.11 by
bringing suit in any court of competent jurisdiction.
(d) All fees, costs and expenses (including attorneys' fees
and expenses) incurred by the party that prevails in any such arbitration
commenced pursuant to this Section 11.11 or any judicial action or proceeding
seeking to enforce the agreement to arbitrate disputes as set forth in this
Section 11.11 or seeking to enforce any order or award of any arbitration
commenced pursuant to this Section 11.11 may be assessed against the party or
parties that do not prevail in such arbitration in such manner as the
arbitrators or the court in such judicial action, as the case may be, may
determine to be appropriate under the circumstances. All costs and expenses
attributable to the arbitrators shall be allocated among the parties to the
arbitration in such manner as the arbitrators shall determine to be
appropriate under the circumstances.
11.12. CUMULATIVE REMEDIES. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.13. THIRD PARTY BENEFICIARIES. No provision of this
Agreement shall create any third party beneficiary rights in any Person,
including any employee of Buyer or employee or former employee of Seller or
any Affiliate thereof (including any beneficiary or dependent thereof).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
AUTOMATIC TRANSMISSION SHOPS INC.
By: /S/ X.X. XXXXX
-------------------------------------
X.X. Xxxxx
President
THE STOCKHOLDER:
/S/ X.X. XXXXX
----------------------------------------
X.X. Xxxxx
ATS REMANUFACTURING INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
AFTERMARKET TECHNOLOGY CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
President and
Chief Executive Officer
SCHEDULE 2.03
ASSUMED LIABILITIES
Seller has declared bonuses to each of H. Xxx Xxxxx, Xxxxxx XxXxxxxx, Xxxxx
Xxxxxxx and Xxx Xxxxxxx in consideration of their assistance in the
development of the Business and the sale of the Business to Buyer. Except as
otherwise provided below, the bonuses are payable in immediately available
funds within 30 days after the fifth anniversary of the Closing Date and are
to be in the following amounts:
Xx. Xxxxx: The following amounts on each indicated anniversary of the Closing
Date:
Anniversary Payment
----------- --------
5th $100,000
6th $154,000
7th $148,000
8th $142,000
9th $136,000
10th $130,000
11th $124,000
12th $118,000
13th $112,000
14th $106,000
Xx. XxXxxxxx: An amount equal to $800,000 minus the product of (i) the amount,
if any, by which Adjusted GM Sales for the five Contract Years
ending on the fifth anniversary of the Closing Date (without
giving effect to any retroactive adjustments in such Adjusted
GM Sales due to Excess GM Sales after such fifth anniversary) are
less than $60,000,000 multiplied by (ii) 0.0242.
Xx. Xxxxxxx: An amount equal to $900,000 minus the product of (i) the amount,
if any, by which Adjusted GM Sales for the five Contract Years
ending on the fifth anniversary of the Closing Date (without
giving effect to any retroactive adjustments in such Adjusted
GM Sales due to Excess GM Sales after such fifth anniversary)
are less than $60,000,000 multiplied by (ii) 0.0273.
Xx. Xxxxxxx: An amount equal to $850,000 minus the product of (i) the amount,
if any, by which Adjusted GM Sales for the five Contract Years
ending on the fifth anniversary of the Closing Date (without
giving effect to any retroactive adjustments in such Adjusted
GM Sales due to Excess GM Sales after such fifth anniversary)
are less than $60,000,000 multiplied by (ii) 0.0258.
SCHEDULE 2.07
POST-CLOSING PAYMENTS
ANNIVERSARY AMOUNT FACTOR
----------- ------ ------
1 $1,500,000 0.2560
2 $1,500,000 0.2560
3 $1,500,000 0.2560
4 $1,500,000 0.2560
5 $2,450,000 0.2560
6 $2,000,000 0.3333
7 $2,000,000 0.3333
8 $2,000,000 0.3333