UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
--------
Standard Motor Products, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $2.00 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
853666105
- --------------------------------------------------------------------------------
(CUSIP Number)
Michael L. DeBacker
Dana Corporation
4500 Dorr Street
Toledo, Ohio 43615
(419) 535-4500
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 30, 2003
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. / /
(Continued on following pages)
(Page 1 of 17 Pages)
CUSIP NO. 853666105 SCHEDULE 13D PAGE 2 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Dana Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
34-4361040
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 3 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Automotive Controls Corp.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
06-0793594
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 4 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
BWD Automotive Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
06-1043482
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 5 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
PACER INDUSTRIES, INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
06-1044104
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Missouri
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 6 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Ristance Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
35-1100419
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Indiana
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 7 OF 17 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Engine Controls Distribution Services, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
31-1637012
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
1,378,760
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,378,760
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,378,760 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO. 853666105 SCHEDULE 13D PAGE 8 OF 17 PAGES
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to shares of Common Stock, par value $2.00
per share (the "COMMON STOCK"), of Standard Motor Products, Inc., a New York
corporation (the "ISSUER"). The Issuer's principal executive offices are located
at 37-18 Northern Boulevard, Long Island City, New York 11101.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed on behalf of Dana Corporation, a Virginia
corporation ("DANA"), Automotive Controls Corp., a Connecticut corporation, BWD
Automotive Corporation, a Delaware corporation, Pacer Industries, Inc., a
Missouri corporation, Ristance Corporation, an Indiana corporation, and Engine
Controls Distribution Services, Inc., a Delaware corporation (collectively with
Dana, the "REPORTING PERSONS"). Each of Automotive Controls Corp., BWD
Automotive Corporation, Pacer Industries, Inc., Ristance Corporation and Engine
Controls Distribution Services, Inc. is a subsidiary of Dana.
Dana is one of the world's largest independent suppliers of modules,
systems and components for light, commercial and off-highway vehicle original
equipment manufacturers globally and for related original equipment service and
aftermarket customers. The other Reporting Persons design, manufacture, sell
and/or distribute products and systems for the automotive and automotive
aftermarket businesses.
The principal executive offices of each of the Reporting Persons are
located at 4500 Dorr Street, Toledo, Ohio 43615.
None of the Reporting Persons has, during the last five years, (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which it was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
The information required by clauses (a) through (f) of Item 2 of
Schedule 13D for each person enumerated in Instruction C of Schedule 13D is
provided on Schedule I hereto.
CUSIP NO. 853666105 SCHEDULE 13D PAGE 9 OF 17 PAGES
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On June 30, 2003 (the "CLOSING DATE"), pursuant to the Asset Purchase
Agreement, dated as of February 7, 2003, as amended (the "PURCHASE AGREEMENT"),
by and among the Reporting Persons and the Issuer, the Issuer acquired a
significant portion of the Engine Management Operations of Dana's Automotive
Aftermarket Group (the "Transaction") in consideration for 1,378,760 shares of
Common Stock (such shares of Common Stock, as they may be adjusted pursuant to
the terms of the Purchase Agreement, the "SHARES"), to which this report
relates, $90.75 million in cash and a Note (as defined in Item 6). The Shares
and the Note were each issued to Dana as designee for the Reporting Persons
pursuant to the terms of the Purchase Agreement.
Pursuant to the Purchase Agreement, the total consideration payable to
the Reporting Persons in the Transaction, including the number of shares of
Common Stock and the principal amount of the Note, is subject to a post-closing
purchase price adjustment based on the net book value of the assets acquired,
less the net book value of the liabilities assumed, by the Issuer in the
Transaction as of the Closing Date. Any such adjustment will be made ratably to
the value of the cash, the principal amount of the Note and the shares of Common
Stock received by the Reporting Persons on the Closing Date, but the total
consideration payable to the Reporting Persons in the Transaction will not
exceed $125.0 million in the aggregate.
Copies of the Purchase Agreement and the Note have been filed as
Exhibit 1 and Exhibit 2, respectively, to this report and are incorporated
herein by this reference. References to, and descriptions of, the Purchase
Agreement, the Note and the Share Ownership Agreement (as defined in Item 4) in
this Schedule 13D are not intended to be complete and are qualified in their
entirety by reference to the full texts thereof.
ITEM 4. PURPOSE OF TRANSACTION.
As disclosed in Item 3, the Reporting Persons acquired the Shares and
the Note as partial consideration for the Transaction pursuant to the terms of
the Purchase Agreement. The Shares and the Note were acquired for investment
purposes by Dana as designee for the Reporting Persons.
The Reporting Persons may acquire additional shares of Common Stock as
a result of the post-closing purchase price adjustment described in Item 3.
Further, each Reporting Person expects to evaluate on an ongoing basis the
Issuer's financial condition, business operations and prospects, market price of
the Shares, conditions in securities markets generally, general economic and
industry conditions, liquidity needs, alternative investment opportunities and
other factors. Accordingly, each Reporting Person reserves the right to change
its plans and intentions at any time, as it deems appropriate. In particular,
each Reporting Person may at any time and from time to time acquire additional
Common Stock or securities convertible or exchangeable for Common Stock; may
dispose of Shares (subject to, among other things, the Lock-up Period (as
defined in Item 6)) or the Note; and/or may enter into privately negotiated
derivative transactions with institutional counterparties to hedge the market
risk of some or all of its positions in such Shares. Any such transactions may
be effected at any time and from time to
CUSIP NO. 853666105 SCHEDULE 13D PAGE 10 OF 17 PAGES
time subject to any applicable limitations of the Securities Act of 1933 (the
"SECURITIES ACT") and any applicable limitations and restrictions set forth in
the Purchase Agreement, the Share Ownership Agreement, dated as of the Closing
Date (the "SHARE OWNERSHIP AGREEMENT"), by and between the Issuer and Dana or
the Note. If any Reporting Person engages in any such transaction, such
Reporting Person may determine to retain some portion of the Note or the Shares
as an investment. To the knowledge of each Reporting Person, each of the persons
listed on Schedule I hereto may make the same evaluation and reserves the same
rights.
Other than as set forth herein, none of the Reporting Persons or any
person listed on Schedule I hereto has any present plans or proposals that
relate to or would result in any of the actions specified in clauses (a) through
(j) of Item 4 of Schedule 13D.
Copies of the Purchase Agreement, the Note and the Share Ownership
Agreement have been filed as Exhibit 1, Exhibit 2, and Exhibit 3, respectively,
to this report and are incorporated herein by this reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Pursuant to the Transaction, the Reporting Persons together acquired
1,378,760 shares of Common Stock, which comprise 7.0% of the outstanding shares
of Common Stock. The Reporting Persons have shared power to vote, or to direct
the voting of, and shared power to dispose, or direct the disposition of, the
Shares.
Other than as set forth in this Schedule 13D, to the knowledge of the
Reporting Persons as of the date hereof, (i) none of the Reporting Persons or
any person listed on Schedule I hereto beneficially own any shares of Common
Stock and (ii) there have been no transactions in shares of Common Stock
effected during the past 60 days by any Reporting Person or any person listed on
Schedule I hereto.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
As disclosed in Item 3, pursuant to the terms of the Purchase
Agreement, the Reporting Persons acquired the Shares and the Note as partial
consideration for the Transaction, and the Shares and the Note were each issued
to Dana as designee for the Reporting Persons. The number of Shares and the
principal amount of the Note may increase or decrease as a result of the
post-closing purchase price adjustment described in Item 3.
Pursuant to the Purchase Agreement, a holder desiring to transfer the
Note or any Shares first must furnish the Issuer with (i) evidence reasonably
satisfactory to the Issuer that the holder may transfer the Note or such Shares
as desired without registration under the Securities Act and (ii) a written
assignment executed by the desired transferee, satisfactory to the Issuer,
agreeing to be bound by the terms of the Note and the Subordination Agreement
(as defined below) or the
CUSIP NO. 853666105 SCHEDULE 13D PAGE 11 OF 17 PAGES
restrictions on transfer contained in the Purchase Agreement and in the Share
Ownership Agreement, as applicable.
Further, pursuant to the Share Ownership Agreement, Dana has agreed not
to Transfer (as defined below) any of the Shares for a period of thirty months
following the Closing Date (such period, the "LOCK-UP PERIOD"), except that (i)
Dana may Transfer Shares to its Affiliates (as defined in the Share Ownership
Agreement) or to the Issuer or its Affiliates and (ii) during the Lock-Up Period
Dana may participate in a Transfer in connection with a Change of Control
Transaction (as defined in the Share Ownership Agreement). As used in the Share
Ownership Agreement, "Transfer" means (i) offer, sell, assign, transfer, agree
to sell, assign or transfer, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase,
assign, pledge, hypothecate or otherwise transfer or dispose of (including the
deposit of any Shares into a voting trust or similar arrangement), directly or
indirectly, any of Shares or any securities exercisable or exchangeable
therefor, or any interest therein or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of owning any Shares whether any such transaction described in
clause (i) or (ii) of this sentence is to be settled by delivery of Shares or
other securities, in cash or otherwise.
The Share Ownership Agreement provides that during the last fifteen
months of the Lock-Up Period, if the Issuer proposes to register any of its
shares or other securities under the Securities Act in connection with certain
public offerings of such securities, the Issuer will promptly give Dana written
notice of such registration. Upon the written request of Dana within 20 days
after the mailing of such notice by the Issuer, the Issuer will, subject to
certain provisions of the Share Ownership Agreement, use its commercially
reasonable efforts to cause to be registered under the Securities Act all of the
Shares that Dana has requested to be registered, so long as the Shares to be
registered shall result in an anticipated aggregate offering price of at least
$1.0 million, on the terms and subject to the conditions and limitations set
forth in the Share Ownership Agreement.
The Share Ownership Agreement provides that if, at any time within 90
days following a mutual determination in good faith by the Issuer and Dana that
Dana is not able to sell Shares at the end of the Lock-Up Period without
restrictions under Rule 144(k) of the Securities Act, the Issuer receives from
Dana a written request that the Issuer effect a registration on Form S-3 and any
related qualification or compliance with respect to all (but not less than all)
of the Shares, the Issuer will use commercially reasonable efforts to effect, as
expeditiously as possible, such registration and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all
(but not less than all) of the Shares, on the terms and subject to the
conditions and limitations set forth in the Share Ownership Agreement.
Pursuant to the terms of the Purchase Agreement, on the Closing Date
the Issuer delivered to Dana an unsecured subordinated promissory note in the
aggregate principal amount of $15.125 million (the "NOTE"). The Note has an
interest rate of 9.0% per annum for the first year, with such interest rate
increasing by 0.5% on each anniversary of the Closing Date.
CUSIP NO. 853666105 SCHEDULE 13D PAGE 12 OF 17 PAGES
Interest on the unpaid principal balance of the Note accrues monthly, and
accrued and unpaid interest is due quarterly under the Note. The maturity date
of the Note is December 30, 2008. The Issuer may prepay the Note in whole or in
part at any time without penalty. The indebtedness evidenced by the Note is
subordinate in the manner and to the extent set forth in the Subordination
Agreement, dated as of the Closing Date (the "SUBORDINATION AGREEMENT"), by and
among Dana, General Electric Capital Corporation, as agent, and the Issuer.
Copies of the Purchase Agreement, the Note and the Share Ownership
Agreement have been filed as Exhibit 1, Exhibit 2, and Exhibit 3, respectively,
to this report and are incorporated herein by this reference.
To the best of the knowledge of the Reporting Persons, except as
described in this Schedule 13D, there are at present no other contracts,
arrangements, understandings or relationships (legal or otherwise) between (i)
any Reporting Person or any person listed on Schedule I hereto and (ii) any
other person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Asset Purchase Agreement, dated as of February 7, 2003, by
and among Dana Corporation, Automotive Controls Corp., BWD
Automotive Corporation, Pacer Industries, Inc., Ristance
Corporation, Engine Controls Distribution Services, Inc.
and Standard Motor Products, Inc.
Exhibit 2 Promissory Note in the principal amount of $15.125 million,
dated as of June 30, 2003, made by Standard Motor Products,
Inc. payable to Dana Corporation.
Exhibit 3 Share Ownership Agreement, dated as of June 30, 2003, by
and between Standard Motor Products, Inc. and Dana
Corporation.
Exhibit 4 Joint Filing Agreement, dated as of July 8, 2003, by and
among Dana Corporation, Automotive Controls Corp., BWD
Automotive Corporation, Pacer Industries, Inc., Ristance
Corporation and Engine Controls Distribution Services, Inc.
CUSIP NO. 853666105 SCHEDULE 13D PAGE 13 OF 17 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: July 8, 2003 DANA CORPORATION
By: /s/ Michael L. DeBacker
---------------------------
Name: Michael L. DeBacker
Title: Vice President
AUTOMOTIVE CONTROLS CORP.
By: /s/ Thomas Madden
---------------------------
Name: Thomas Madden
Title: Vice President
BWD AUTOMOTIVE CORPORATION
By: /s/ Thomas Madden
---------------------------
Name: Thomas Madden
Title: Vice President
PACER INDUSTRIES, INC.
By: /s/ Harry M. Whited
---------------------------
Name: Harry M. Whited
Title: President
RISTANCE CORPORATION
By: /s/ Thomas Madden
---------------------------
Name: Thomas Madden
Title: Vice President
ENGINE CONTROLS DISTRIBUTION
SERVICES, INC.
By: /s/ Thomas Madden
---------------------------
Name: Thomas Madden
Title: Vice President
CUSIP NO. 853666105 SCHEDULE 13D PAGE 14 OF 17 PAGES
SCHEDULE I
Unless otherwise noted herein, each person listed herein (i) performs
his or her principal occupation at Dana Corporation, (ii) has a principal
business address of 4500 Dorr Street, Toledo, Ohio 43615, and (iii) is a United
States citizen.
None of the persons listed herein has, during the last five years, (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he or she was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
DANA CORPORATION
Directors:
Benjamin F. Bailar
Former Dean and Professor of Administration Emeritus, Jesse H. Jones
Graduate School of Administration, Rice University
A. Charles Baillie
Chairman of The Toronto-Dominion Bank
Toronto Dominion Center, 55 King Street, West - 4th Floor, Toronto,
Ontario M5K 1A2, Canada (Canadian citizen)
Edmund M. Carpenter
Chief Executive Officer and President of Barnes Group, Inc., a
diversified international company that serves a range of industrial and
transportation markets
123 Main Street, Bristol, CT 06011
Eric Clark
Former Director of BICC plc, a United Kingdom company serving the
international market for infrastructure development (United Kingdom
citizen)
Cheryl W. Grise
President, Utility Group of Northeast Utilities
P.O. Box 270, Hartford, CT 06141
Glen H. Hiner
Former Chairman and Chief Executive Officer of Owens Corning, a
manufacturer of advanced glass and composite materials
CUSIP NO. 853666105 SCHEDULE 13D PAGE 15 OF 17 PAGES
James P. Kelly
Former Chairman and Chief Executive Officer of United Parcel Service
Inc.
Joseph M. Magliochetti
Chairman and Chief Executive Officer of Dana Corporation
Marilyn R. Marks
Former Chairman of Dorsey Trailers, Inc., a manufacturer of truck
trailers
Richard B. Priory
Chairman and Chief Executive Officer of Duke Energy Corporation, a
supplier of energy and related services
Fernando M. Senderos
Chairman and Chief Executive Officer of DESC, S.A. de C.V., a Mexican
diversified holding company engaged in automotive parts, chemical, food
and real estate businesses
Paseo de Tamarindos 400-B-32, Col. Bosques de las Lomas, 05120 Mexico
D.F., Mexico (Mexican Citizen)
Executive Officers:
Joseph M. Magliochetti
Chairman and Chief Executive Officer
William J. Carroll
President - Automotive Systems Group
Bernard N. Cole
President - Heavy Vehicle Technologies and Systems Group
Marvin A. Franklin, III
President - Dana International and Global Initiatives
Charles F. Heine
President - Technology Development and Diversified Products
James M. Laisure
President - Engine and Fluid Management Group
Terry R. McCormack
President - Automotive Aftermarket Group
Robert C. Richter
Vice President and Chief Financial Officer
CUSIP NO. 853666105 SCHEDULE 13D PAGE 16 OF 17 PAGES
Richard J. Westerheide
Chief Accounting Officer and Assistant Treasurer
AUTOMOTIVE CONTROLS CORP.
Directors and Executive Officers:
Thomas Madden
Director and Vice President
Harry M. Whited
President
BWD AUTOMOTIVE CORPORATION
Directors and Executive Officers:
Thomas Madden
Director and Vice President
Harry M. Whited
President
PACER INDUSTRIES, INC.
Directors and Executive Officers:
Thomas Madden
Director
Harry M. Whited
President
RISTANCE CORPORATION
Directors and Executive Officers:
Thomas Madden
Director and Vice President
Robert M. Sweeney
President
CUSIP NO. 853666105 SCHEDULE 13D PAGE 17 OF 17 PAGES
ENGINE CONTROLS DISTRIBUTION SERVICES, INC.
Directors and Executive Officers:
Thomas Madden
Director and Vice President
Marlene D. Smith
President and Chief Executive Officer
EXHIBIT 1
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
DANA CORPORATION
AND
CERTAIN OF ITS SUBSIDIARIES
AS SELLERS
AND
STANDARD MOTOR PRODUCTS, INC.
AS BUYER
PROVIDING FOR THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF
DANA'S ENGINE MANAGEMENT BUSINESS
Dated as of February 7, 2003
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF ASSETS.................................................................1
1.1 Sale and Transfer of Assets....................................................................1
1.2 Retained Assets................................................................................3
1.3 Nonassignable Assets; Beneficial Ownership.....................................................4
ARTICLE II ASSUMPTION OF LIABILITIES...................................................................5
2.1 Assumed Liabilities............................................................................5
2.2 Retained Liabilities...........................................................................6
ARTICLE III PURCHASE PRICE..............................................................................6
3.1 Purchase Price.................................................................................6
3.2 Payment of Purchase Price......................................................................6
3.3 Purchase Price Adjustment......................................................................7
3.4 Purchase Price Allocation.....................................................................10
ARTICLE IV CLOSING AND DELIVERIES.....................................................................10
4.1 Closing.......................................................................................10
4.2 Deliveries by Sellers.........................................................................10
4.3 Deliveries by Buyer...........................................................................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS..................................................13
5.1 Organization and Standing.....................................................................13
5.2 Authority, Validity and Effect................................................................13
5.3 No Conflict; Required Filings and Consents....................................................13
5.4 Financial Statements..........................................................................14
5.5 Absence of Certain Changes....................................................................14
5.6 Acquired Assets...............................................................................15
5.7 Accounts Receivable...........................................................................15
5.8 Inventory.....................................................................................15
5.9 EMG Contracts.................................................................................15
5.10 Intellectual Property.........................................................................17
5.11 Real Property.................................................................................17
5.12 Legal Proceedings.............................................................................18
i
5.13 Compliance with Laws..........................................................................18
5.14 Product Warranty..............................................................................18
5.15 Product Liability.............................................................................19
5.16 Employees.....................................................................................19
5.17 Taxes.........................................................................................19
5.18 Employee Benefit Plans........................................................................20
5.19 Environmental Matters.........................................................................20
5.20 Acquisition for Investment....................................................................21
5.21 Investment Experience.........................................................................22
5.22 Accredited Investor...........................................................................22
5.23 No General Solicitation.......................................................................22
5.24 No Brokers....................................................................................22
5.25 Permits.......................................................................................22
5.26 Necessary Assets..............................................................................22
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER....................................................22
6.1 Organization and Standing.....................................................................23
6.2 Authority, Validity and Effect................................................................23
6.3 Capitalization; Title to Stock................................................................23
6.4 No Conflict; Required Filings and Consents....................................................23
6.5 SEC Filings...................................................................................24
6.6 Absence of Certain Changes....................................................................24
6.7 Legal Proceedings.............................................................................24
6.8 Compliance with Laws..........................................................................24
6.9 Exemption from Registration...................................................................25
6.10 Financial Ability.............................................................................25
6.11 No Brokers....................................................................................25
ARTICLE VII COVENANTS..................................................................................25
7.1 Interim Operations of the EMG Business........................................................25
7.2 Preservation of Business......................................................................26
7.3 Reasonable Access; Confidentiality............................................................26
7.4 Antitrust Filings.............................................................................27
7.5 Other Actions.................................................................................28
7.6 Buyer Financing...............................................................................29
ii
7.7 Notice of Developments........................................................................29
7.8 Publicity.....................................................................................29
7.9 Further Assurances; Subsequent Transfers......................................................29
7.10 Seller Share Certificates; Seller Note........................................................30
7.11 Prorations and Post-Closing Receipts..........................................................31
7.12 Financial Records.............................................................................32
7.13 Tax Matters...................................................................................32
7.14 Trademark Transition..........................................................................32
7.15 Sale of Retained Business Lines...............................................................33
7.16 Non-Competition...............................................................................33
7.17 Monthly Financial Statements..................................................................34
7.18 Title Insurance and Surveys...................................................................34
7.19 Litigation Support............................................................................35
7.20 Exclusivity...................................................................................35
7.21 Accounts Receivable...........................................................................35
7.22 Seller Designee...............................................................................36
7.23 Right of First Offer..........................................................................36
7.24 Information Required for Buyer's Registration Statement.......................................37
7.25 Tooling at Vendors............................................................................38
ARTICLE VIII ENVIRONMENTAL MATTERS......................................................................38
8.1 Site Assessment Environmental Liabilities.....................................................38
8.2 Environmental Remediation.....................................................................38
8.3 Environmental Records.........................................................................40
ARTICLE IX CONDITIONS TO CLOSING......................................................................41
9.1 Conditions to Obligations of Sellers and Buyer................................................41
9.2 Conditions to Obligation of Sellers...........................................................41
9.3 Conditions to Obligation of Buyer.............................................................42
ARTICLE X SURVIVAL AND INDEMNIFICATION...............................................................43
10.1 Survival Periods..............................................................................43
10.2 Indemnification...............................................................................44
10.3 Indemnification Amounts.......................................................................44
10.4 Claims........................................................................................45
10.5 Exclusive Remedy..............................................................................46
iii
10.6 Tax and Insurance.............................................................................47
ARTICLE XI EMPLOYEE BENEFIT MATTERS...................................................................47
11.1 Employment....................................................................................47
11.2 Compensation and Employee Benefits............................................................47
11.3 COBRA; Retiree Medical Benefits...............................................................49
11.4 WARN Act......................................................................................49
11.5 Non-Active Employees..........................................................................49
ARTICLE XII TERMINATION................................................................................49
12.1 Termination...................................................................................49
12.2 Effect of Termination.........................................................................50
ARTICLE XIII MISCELLANEOUS..............................................................................51
13.1 Expenses......................................................................................51
13.2 Successors and Assigns........................................................................51
13.3 Third Party Beneficiaries.....................................................................52
13.4 Notices.......................................................................................52
13.5 Complete Agreement............................................................................53
13.6 Captions; References..........................................................................53
13.7 Amendment.....................................................................................53
13.8 Waiver........................................................................................53
13.9 Governing Law.................................................................................53
13.10 Severability..................................................................................53
13.11 Updated Disclosure Schedules..................................................................53
13.12 Submission to Jurisdiction....................................................................54
13.13 Construction..................................................................................54
13.14 Counterparts..................................................................................55
iv
EXHIBITS
Exhibit A Form of Seller Note
Exhibit B-1 Form of Patent Assignment
Exhibit B-2 Form of Trademark Assignment
Exhibit B-3 Form of Copyright Assignment
Exhibit C-1 Form of Legal Opinion of Dana Law Department
Exhibit C-2 Form of Legal Opinion of Counsel to Sellers
Exhibit D Form of Legal Opinion of Counsel to Buyer
Exhibit E-1 EMG Financial Statements
Exhibit E-2 Pro Forma Balance Sheet
Exhibit F Form of Bill of Sale
Exhibit G Employees Party to Employee Retention Incentive Agreements
Exhibit H Environmental Reports
Exhibit I Form of Nashville Sub-Lease
Exhibit J Form of Nashville Sub-Sub-Lease
Exhibit K Form of Real Estate Lease Assignment
Exhibit L Replacement Leases
Exhibit M Form of Seller Lease
Exhibit N [Intentionally Omitted]
Exhibit O [Intentionally Omitted]
Exhibit P [Intentionally Omitted]
Exhibit Q [Intentionally Omitted]
Exhibit R Form of Share Ownership Agreement
Exhibit S Specified Accounting Principles
Exhibit T Subordination Agreement
Exhibit U Form of Beck-Arnley Supply Agreement
Exhibit V Form of Canadian Supply Agreement
Exhibit W Form of Buyer Transition Services Agreement
Exhibit X Form of Sellers Transition Services Agreement
Exhibit Y Form of IP License
Exhibit Z Form of Branford Access Agreement
APPENDIX
Appendix A Definitions
SCHEDULES
Schedule 1.1(a) Real Estate Leases
Schedule 1.1(g) Certain Acquired Contracts
Schedule 1.1(i) Registered Acquired Intellectual Property
Schedule 1.1(n) Owned Real Property
Schedule 1.2(d) Certain Retained Contracts
Schedule 1.2(e) Certain Retained Business Line Assets
Schedule 1.2(h) Other Retained Assets
v
Schedule 3.3(h) Accounts Receivables Selection Criteria
Schedule 3.4 Allocation Schedule
Schedule 4.2(p) Consents to be Delivered at Closing by Sellers
Schedule 4.3(q) Consents to be Delivered at Closing by Buyer
Schedule 5.3(a) Conflicts Exception
Schedule 5.3(b) Consents Exception
Schedule 5.5 Changes Since September 30, 2002
Schedule 5.6 Liens; Fixed Assets Exceptions
Schedule 5.8 Inventory Exceptions
Schedule 5.9(a) EMG Contracts
Schedule 5.9(c) EMG Contract Exceptions
Schedule 5.9(d) Powers of Attorney Exceptions
Schedule 5.10 Intellectual Property Exceptions
Schedule 5.11 Real Property Exceptions
Schedule 5.12 Litigation
Schedule 5.13 Compliance with Laws
Schedule 5.14 Product Warranty Exceptions; Terms and Conditions of Sale
Schedule 5.15 Product Liability Exceptions
Schedule 5.16 EMG Employees
Schedule 5.17 Pending Tax Claims
Schedule 5.18(a) Retiree Benefits
Schedule 5.19 Environmental Matters
Schedule 5.25 Non-Transferable Permits
Schedule 5.26 Necessary Assets Exception
Schedule 6.4(a) Conflicts
Schedule 6.4(b) Consents
Schedule 7.1 Interim Operations
Schedule 11.1 Certain Retained Employees
Schedule 11.2(b) Amendment to Reimbursement Agreement
Schedule 11.5 Certain Non-Active Employees
Schedule A-1 Branford Rental Properties Description
Schedule A-2 Permitted Liens
Schedule A-3 Title Commitments
vi
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of February
7, 2003, by and among DANA CORPORATION, a Virginia corporation ("DANA"),
AUTOMOTIVE CONTROLS CORP., a Connecticut corporation, BWD AUTOMOTIVE
CORPORATION, a Delaware corporation, PACER INDUSTRIES, INC., a Missouri
corporation, RISTANCE CORPORATION, an Indiana corporation, ENGINE CONTROLS
DISTRIBUTION SERVICES, INC., a Delaware corporation (each a "SELLER" and,
collectively, "SELLERS"), and STANDARD MOTOR PRODUCTS, INC., a New York
corporation ("BUYER"). Buyer and Sellers are referred to collectively herein as
the "PARTIES." Capitalized terms are used herein with the meanings assigned
those terms in Appendix A hereto.
RECITALS:
A. Sellers, by and through Dana's Engine Management Group, have
been engaged in the business of manufacturing and distributing certain
aftermarket parts for the passenger car and light vehicle markets in the United
States.
B. Buyer desires to purchase from Sellers, upon the terms and
subject to the conditions set forth in this Agreement, substantially all of the
assets, properties, rights and interests of Sellers in the EMG Business (more
particularly identified herein as the Acquired Assets), and Sellers desire to
sell the Acquired Assets to Buyer in consideration of certain payments by Buyer
and the assumption by Buyer of certain liabilities and obligations of Sellers,
on the terms and conditions contained in this Agreement and the other agreements
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, Sellers and Buyer hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 SALE AND TRANSFER OF ASSETS. At the Closing and effective as
of the Closing Date, Sellers shall, and shall cause their Affiliates to, sell,
assign, convey, transfer and deliver to Buyer, and Buyer shall purchase and
acquire from Sellers and such Affiliates, subject only to Permitted Liens, all
right, title and interest of Sellers and such Affiliates in and to all of the
assets and properties owned, used, occupied or held by or for the benefit of
Sellers and such Affiliates primarily in the operation of, or otherwise relating
primarily to, the EMG Business, excluding only the Retained Assets (the
"ACQUIRED ASSETS"), which Acquired Assets include, by way of example and not
limitation, the following:
(a) Leased Real Property. All of Sellers' right, title and
interest in, to and under the leases listed on Schedule 1.1(a) (the "REAL ESTATE
LEASES") and, to the extent covered
by such leases, any and all buildings, structures, improvements and fixtures
located on the real property covered by such leases.
(b) Fixed Assets. All of Sellers' right, title and interest
in the machinery and equipment, furniture, automobiles, trucks, tractors,
trailers, tools, jigs, dies and other tangible personal property used primarily
in the EMG Business (the "FIXED ASSETS").
(c) Inventory. All inventories and supplies of raw
materials, work-in-process, finished goods, spare parts, supplies, storeroom
contents and other inventoried items owned or held by or on behalf of Sellers
relating primarily to the EMG Business.
(d) Lockbox. Sellers' lockbox number 93307 with Bank One,
N.A., but excluding the account number currently associated with such lockbox
number (the "FRANKLIN PARK LOCKBOX").
(e) Accounts Receivable. All trade accounts receivable of
the EMG Business and of the portion of the Retained Business Lines relating to
fuel pumps and water pumps, other than those retained under Section 1.2(b) (the
"ACCOUNTS RECEIVABLE").
(f) Prepaid Amounts. All deposits and prepayments, to the
extent related to the EMG Business.
(g) Contracts. All rights and incidents of interest of, and
benefits accruing to, Sellers in and to or arising out of all Contracts entered
into by any Seller, but only to the extent such Contracts relate to the EMG
Business (the "ACQUIRED CONTRACTS"), including the Contracts listed on Schedule
1.1(g).
(h) Purchase Orders. All open purchase and sales orders, but
only to the extent such Contracts relate to the EMG Business (the "PURCHASE
ORDERS").
(i) Intellectual Property. All Intellectual Property owned
or used by a Seller in connection with the EMG Business (the "ACQUIRED
INTELLECTUAL PROPERTY"), including the registered Intellectual Property and the
trade names and brand names listed on Schedule 1.1(i), and all rights
thereunder, remedies against infringement thereof, and rights to protection of
interests therein.
(j) Permits. To the extent transferable under applicable
Law, all franchises, registrations, certificates, variances, permits, licenses,
authorizations, approvals and similar rights obtained, issued or granted to any
Seller by any Governmental Authority related primarily to the EMG Business (the
"PERMITS").
(k) Books and Records. All books and records (or true and
correct copies thereof), including all computerized books and records and all
Contracts, files, documents, lists, plats, correspondence, architectural plans,
drawings and specifications, invoices, forms, customer records, promotional and
advertising materials, technical data, operating records, operating manuals,
instructional documents, employee files (to the extent permitted under
applicable Law) and other printed or written materials, in each case, to the
extent related to the EMG Business.
2
(l) Warranties. All rights under or pursuant to all
warranties, representations and guarantees, whether express or implied, made by
suppliers, manufacturers, contractors and other third parties with respect to
any of the Acquired Assets.
(m) Claims and Causes of Action. All claims, defenses,
causes of action, choses in action, rights of recovery, rights of set off, and
rights of recoupment related to the EMG Business or the Acquired Assets or
Assumed Liabilities, excluding, however, any claims or rights under the
insurance policies described in Section 1.2(i) and excluding any of the
foregoing that relate to any Retained Assets or Retained Liabilities.
(n) Real Property. All of Sellers' right, title and interest
in and to the real property described on Schedule 1.1(n), and all buildings,
structures, improvements, and fixtures located thereon (the "OWNED REAL
PROPERTY"), except as otherwise provided in Section 3.3(b).
(o) Other Intangible Assets. The EMG Business as carried on
and conducted by Sellers as a going concern, including any and all goodwill and
similar intangible assets associated therewith and all customer lists, supplier
lists, catalogues, sales brochures and other marketing data.
1.2 RETAINED ASSETS. Sellers shall retain the following assets
only (collectively, the "RETAINED ASSETS") and Buyer will in no way be construed
to have purchased or acquired (or to be obligated to purchase or to acquire) any
interest whatsoever in any such Retained Assets:
(a) Cash and Cash Equivalents. Any cash, cash equivalents,
marketable securities, deposit accounts, payroll accounts, lockboxes (other than
the Franklin Park Lockbox) and investment accounts of Sellers.
(b) Retained Accounts Receivable. All trade accounts
receivable owed to a Seller by any other Seller or by any Affiliate of any
Seller and all trade accounts receivable of the EMG Business that have been sold
to Dana Asset Funding L.L.C. on or prior to December 31, 2002.
(c) Retained Real Property. All right, title and interest of
any Seller in (i) any Owned Real Property retained by Sellers and leased to
Buyer pursuant to Section 3.3(b) and (ii) the Branford Rental Properties.
(d) Contracts. All Contracts of Sellers other than those
described in Sections 1.1(a), 1.1(g) and 1.1(h), including those Contracts
listed on Schedule 1.2(d).
(e) Retained Business Lines. All right, title and interests
of any Seller in and to the Retained Business Lines and all buildings, land,
inventory, machinery, equipment and other assets used primarily in the Retained
Business Lines, including, without limitation, those listed on Schedule 1.2(e).
(f) Former EMG Facilities. All right, title and interests of
any Seller in the buildings, land, machinery and equipment and other personal
property located at the Former EMG Facilities.
3
(g) Other Assets. All assets not used primarily in the EMG
Business and all assets of Sellers exclusively used in businesses of Sellers
other than the EMG Business, including all rights (beyond those provided to
Buyer under Section 7.14) to the Dana name or any derivation thereof.
(h) Other Retained Assets. The assets identified on Schedule
1.2(h).
(i) Insurance Policies. All insurance policies of Sellers
and their Affiliates and all rights, including any prepayments or deposits,
thereunder.
(j) Employee Benefits Plans. All Seller Benefit Arrangements
and all Seller ERISA Plans.
(k) Retained Records. All books, records and other data that
relate to the Retained Assets or the Retained Liabilities and all books, records
and other data that Sellers are required by Law to retain.
(l) Tax Refunds. All rights or claims to refunds or credits
relating to Taxes paid by any Sellers.
1.3 NONASSIGNABLE ASSETS; BENEFICIAL OWNERSHIP.
(a) Notwithstanding any provision in this Agreement to the
contrary, this Article I does not constitute an agreement to assign, transfer or
convey any of the Acquired Assets that are not capable of being validly sold,
assigned, transferred or conveyed without the Consent of any third party and
which Consent is not obtained on or prior to the Closing Date (a "NONASSIGNABLE
ASSET").
(b) Subject to Section 7.9(b) hereof, to the extent that any
conveyances, assignments, transfers and deliveries contemplated by this
Agreement have not occurred as of the Closing Date, Sellers and Buyer shall
cooperate to effect such action as promptly thereafter as is practicable.
Notwithstanding the foregoing, neither Sellers nor Buyer will be liable in any
manner to any Person who is not a party to this Agreement for any failure of any
of the transfers contemplated by this Agreement to be consummated on or
subsequent to the Closing Date. Whether or not all of the Acquired Assets or the
Assumed Liabilities have been legally transferred to or assumed by Buyer as of
the Closing Date, Buyer will have, and will be deemed to have acquired, complete
and sole beneficial ownership over all of the Acquired Assets, including any
Nonassignable Assets, together with all of Sellers' rights, powers and
privileges incident thereto, and Buyer will be deemed to have assumed in
accordance with the terms of this Agreement all of the Assumed Liabilities and
all of Sellers' Liabilities, duties, obligations and responsibilities incident
thereto.
(c) Nothing in this Section 1.3 shall be construed to waive
or modify any right of Buyer to require a Consent set forth on Schedule 4.2(p)
as a condition to Buyer's obligation to consummate the transactions contemplated
by this Agreement.
4
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1 ASSUMED LIABILITIES. At the Closing and effective as of the
Closing Date, on and subject to the terms and conditions of this Agreement,
Buyer shall assume and thereafter perform, pay and discharge in accordance with
their terms only the following Liabilities of Sellers relating to the EMG
Business (collectively, the "ASSUMED LIABILITIES"):
(a) Final Net Book Value Statement. All Liabilities
reflected on the Final Net Book Value Statement.
(b) Real Estate Leases. All Liabilities arising under the
Real Estate Leases.
(c) Trade Payables. All Liabilities for trade accounts
payable of the EMG Business and all Liabilities for trade accounts payable,
outstanding on the Closing Date, of the portion of the Retained Business Lines
relating to fuel pumps and water pumps, to the extent such trade accounts
payable are reflected on the Final Net Book Value Statement (the "TRADE
PAYABLES").
(d) Contracts. All Liabilities arising under the Purchase
Orders and the Acquired Contracts.
(e) Employment Liabilities. All Liabilities arising out of
the employment of the Transferred Employees (including accrued compensation and
vacation) except only those Liabilities to be retained by Sellers or paid by
Sellers pursuant to Article XI of this Agreement.
(f) Workers' Compensation and Other Employee Claims. (i) All
Liabilities resulting from workers' compensation claims asserted by any
Transferred Employee relating to accidents or incidents occurring on or after
the Closing Date, including any occupational disease losses and any recurrences
(as distinct from reaggravations) of any prior injuries, (or if such accident or
incident is of a recurring or continuing nature that commenced prior to the
Closing Date, a pro rata portion of such Liability based on the ratio of the
number of days that such Transferred Employee was employed by Buyer while such
accident or incident continued to the total number of days that such accident or
incident continued), (ii) all Liabilities for claims (other than those arising
from such workers' compensation claims) asserted by any Transferred Employee on
or after the Closing Date and relating to an event or action that occurs on or
after the Closing Date (or if such claim is made prior to December 31, 2004 and
such event or action is of a recurring or continuing nature that commenced prior
to the Closing Date, a pro rata portion of such Liability based on the ratio of
the number of days that such Transferred Employee was employed by Buyer while
such event or action continued to the total number of days that such event or
action continued), and (iii) all Liabilities for claims (other than those
arising from workers' compensation claims) asserted by any Transferred Employee
after December 31, 2004 and relating to an event or action that occurred prior
to the Closing Date.
(g) Warranties and Sales Returns. All Liabilities for
product warranties, product recalls, refunds or sales returns, repair or
replacement and all performance guarantees
5
and similar obligations, related to products delivered, manufactured or sold or
services performed by the EMG Business regardless of whether such Liabilities
relate to periods or events occurring before or after the Closing Date.
(h) Product Liability. All Liabilities for personal or
bodily injury (including death) or property damage relating to any products
delivered, manufactured or sold or services performed by the EMG Business, but
only to the extent that such injury, death or damage occurs on or after the
Closing Date.
2.2 RETAINED LIABILITIES. All Liabilities of Sellers of any
nature, whether known or unknown, contingent or fixed, that are not Assumed
Liabilities are "RETAINED LIABILITIES," provided, however, that "RETAINED
LIABILITIES" shall not include any Liabilities arising under any Environmental,
Health or Safety Requirements or with respect to Environmental Claims or
Environmental Costs arising from Environmental Conditions at the Real Property,
irrespective of whether such Liability attaches or accrues to Buyer or Sellers
in the first instance, other than: (i) any Liability resulting from the
transport, disposal or treatment, or the arrangement for transport, disposal or
treatment, prior to the Closing Date, to or at any locations other than the Real
Property, of any waste or substance (including any hazardous waste, Hazardous
Substance or petroleum product); (ii) any off-site Liability resulting from a
private Third-Party claim for personal injury, property damage, diminution
and/or cleanup costs in connection with any Hazardous Substances which are
identified as emanating from the Real Property during the Buyer's Further
Investigations and/or Sellers' Further Investigations or during Sellers'
remediation; (iii) Liability arising from a private Third-Party claim for
personal injury to the extent arising from exposure or alleged exposure to
Hazardous Substances at the Real Property prior to the Closing Date, except
workers compensation and other employee claims assumed by Buyer pursuant to
Section 2.1(f) above; (iv) the Site Assessment Environmental Liabilities as
defined under Section 8.1; (v) all Liabilities for those matters identified on
Schedule 5.19; or (vi) any penalties or fines to the extent arising from
Sellers' violations of any affirmative obligation or duty pursuant to
Environmental, Health and Safety Requirements.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. In full consideration for the transfer of the
Acquired Assets, Buyer shall pay to Sellers an aggregate amount equal to the
lesser of the Closing Net Book Value or $125,000,000, except as otherwise
provided in Section 3.3(h) (the "PURCHASE PRICE"), and shall assume the Assumed
Liabilities.
3.2 PAYMENT OF PURCHASE PRICE.
(a) On the Closing Date, Buyer shall pay the Estimated
Purchase Price (as defined in Section 3.3(b)) to Dana, as agent for Sellers, as
follows:
6
(i) Seventy-five percent (75%) of the Estimated
Purchase Price in cash by wire transfer of immediately available funds
to an account designated by Dana prior to the Closing;
(ii) the number of fully paid and non-assessable
shares of Buyer's common stock, $2.00 par value (the "COMMON SHARES"),
obtained by dividing the amount equal to twelve and one-half percent
(12.5%) of the Estimated Purchase Price by the average closing price
of the Common Shares on the New York Stock Exchange during the ten
trading days immediately preceding the Closing Date (the "PRICE PER
SHARE"); the Common Shares to be issued pursuant to this Section
3.2(a)(ii) are herein referred to as the "SELLER SHARES," and the
Seller Shares shall be issued to the Seller Designee and held by it
pursuant to the terms of the Share Ownership Agreement; and
(iii) a promissory note, payable to the Seller
Designee and having an original principal amount equal to twelve and one-half
percent (12.5%) of the Estimated Purchase Price, substantially in the form of
Exhibit A hereto (the "SELLER NOTE").
(b) To the extent that the computation provided for in
Section 3.2(a)(ii) would result in the issuance to the Seller Designee of
fractional shares, the number of Seller Shares will be reduced to the next
lowest whole number and the cash payment to be made by Buyer under Section
3.2(a)(i) will be increased by an amount equal to the Price Per Share multiplied
by such fractional interest.
3.3 PURCHASE PRICE ADJUSTMENT.
(a) As used herein, the term "CLOSING NET BOOK VALUE" means
the net book value of the Acquired Assets less the net book value of the Assumed
Liabilities as of the close of business on the Closing Date and as such values
are determined in accordance with the Specified Accounting Principles and
reflected in the Final Net Book Value Statement.
(b) On the Business Day immediately preceding the Closing
Date, Sellers shall prepare and deliver to Buyer an Estimated Closing Net Book
Value Statement determined using the most recent financial statements delivered
to Buyer pursuant to Section 7.17 (the "ESTIMATED CLOSING NET BOOK VALUE
STATEMENT"). The net book value of the Acquired Assets less the net book value
of the Assumed Liabilities as reflected on the Estimated Closing Net Book Value
Statement shall be the "ESTIMATED CLOSING NET BOOK VALUE." Buyer shall pay Dana,
as agent for Sellers, an aggregate amount equal to the lesser of $125,000,000 or
the Estimated Closing Net Book Value (the "ESTIMATED PURCHASE PRICE"), allocated
among cash, the Seller Shares and the Seller Note in accordance with the
percentages set forth in Section 3.2(a). If the Estimated Closing Net Book Value
as determined from the Estimated Closing Net Book Value Statement delivered by
Sellers would exceed $125,000,000 (such excess being referred to below as the
"ESTIMATED NBV EXCESS"), then there shall be excluded from the Acquired Assets,
and included within the Retained Assets, Owned Real Property selected by Dana as
agent for the Sellers and having a net book value (determined on the basis of
the Estimated Closing Net Book Value Statement) that equals as closely as
possible (but is not in any event less than) the Estimated NBV Excess. Such
excluded Owned Real Property shall be leased by the applicable Seller pursuant
to a Seller Lease. In such event, the Estimated Closing
7
Net Book Value Statement and the Specified Accounting Principles shall be
revised to give effect to the exclusion of such Owned Real Property from the
Acquired Assets, and the Estimated Purchase Price shall be determined on the
basis of such revised Estimated Closing Net Book Value Statement.
(c) Within sixty days after the Closing Date, Sellers shall
prepare and deliver to Buyer a statement of the Closing Net Book Value (the
"CLOSING NET BOOK VALUE STATEMENT"). The Closing Net Book Value Statement will
be prepared in accordance with the Specified Accounting Principles.
(d) Buyer shall allow Sellers and Sellers' independent
accountants ("SELLERS' ACCOUNTANTS") access during normal business hours to the
business, books, records and personnel of the EMG Business to the extent
necessary for the preparation of the Closing Net Book Value Statement, and Buyer
shall cooperate and direct its personnel and its independent accountants
("BUYER'S ACCOUNTANTS") to cooperate with Sellers and Sellers' Accountants in
all reasonable respects to facilitate preparation and delivery of the Closing
Net Book Value Statement and in connection with the resolution of any disputes
with respect thereto and the determination of the Final Net Book Value
Statement. Buyer and its representatives, including Buyer's Accountants, will be
entitled to review all work papers, if any, of Sellers' Accountants prepared
subsequent to the date hereof and related to the Closing Net Book Value
Statement to the extent necessary for Buyer to review the Closing Net Book Value
Statement and to resolve any disputes concerning the same.
(e) The Closing Net Book Value Statement delivered by
Sellers to Buyer will be the Final Net Book Value Statement and will be
conclusive and binding on the Parties unless Buyer, within the thirty-day period
after the delivery to Buyer of the Closing Net Book Value Statement, notifies
Sellers in writing that Buyer disputes any of the amounts set forth therein,
specifying the nature of each dispute and the basis therefor (the "DISPUTE
NOTICE"); provided, however, that Buyer may deliver a Dispute Notice to Sellers
only if Buyer reasonably believes that the Closing Net Book Value Statement
contains mathematical errors or has not been prepared in accordance with the
Specified Accounting Principles. Sellers and its representatives, including
Sellers' Accountants, will be entitled to review all work papers, if any, of
Buyer's Accountants prepared subsequent to the date hereof and related to the
Closing Net Book Value Statement to the extent necessary for Seller to resolve
any disputes concerning the Closing Net Book Value Statement. Failure by Buyer
to dispute the amounts reflected in the Closing Net Book Value Statement within
such thirty-day period will be deemed by Buyer's acceptance of the Closing Net
Book Value Statement as the Final Net Book Value Statement. The Parties shall
attempt in good faith to reach agreement resolving all of the disputes set forth
in the Dispute Notice within thirty days after the Dispute Notice is delivered
by Buyer to Sellers, in which event the Closing Net Book Value Statement, as
amended, if necessary, to reflect the resolution of all such disputes, will be
the Final Net Book Value Statement and will be conclusive and binding on the
Parties. If the Parties are unable to resolve any or all of such disputes within
the aforesaid thirty-day period, the Parties will, promptly after the expiration
of such time period, submit for resolution all unresolved disputes to a mutually
acceptable independent accounting firm (the "DESIGNATED ACCOUNTING ARBITRATOR")
as an arbiter for resolution. Promptly, but no later than thirty days after its
acceptance of its appointment as Designated Accounting Arbitrator, the
Designated
8
Accounting Arbitrator shall determine, based solely on presentation by Buyer and
Sellers and not by independent review, those items in dispute on the Closing Net
Book Value Statement and shall render a written report to Buyer and Sellers as
to the resolution of each dispute and the resulting calculation of the Final Net
Book Value Statement and the Closing Net Book Value. In resolving any disputed
item, the Designated Accounting Arbitrator may not assign a value to such item
greater than the greatest value for such item claimed by either Party or less
than the smallest value for such item claimed by either Party. The Designated
Accounting Arbitrator will have exclusive jurisdiction over, and resort to the
Designated Accounting Arbitrator as provided in this Section 3.3(e) will be the
sole recourse and remedy of, the Parties against one another or any other Person
(including Sellers' Accountants or Buyer's Accountants) with respect to any
disputes arising out of or relating to the Closing Net Book Value Statement
and/or the Final Net Book Value Statement. The Designated Accounting
Arbitrator's determination will be conclusive and binding on the Parties and
will be enforceable in a court of law.
(f) Sellers shall pay the fees and expenses of Sellers'
Accountants, and Buyer shall pay the fees and expenses of Buyer's Accountants.
Buyer and Sellers shall share equally the fees and expenses of the Designated
Accounting Arbitrator.
(g) As used herein, the term "FINAL NET BOOK VALUE
STATEMENT" means (i) the Closing Net Book Value Statement if no Dispute Notice
is given by Buyer within the time period set forth in Section 3.3(e); (ii) if
the Dispute Notice is timely given and all of the disputed items are resolved by
mutual agreement of the Parties, the Closing Net Book Value Statement, as
amended, if necessary, to reflect such resolution of all disputes; or (iii) if
any or all of the disputed items are submitted to the Designated Accounting
Arbitrator for resolution, the Closing Net Book Value Statement, as amended, if
necessary, to reflect any resolution of any disputes by mutual agreement of the
Parties and the resolution of all other disputes by the Designated Accounting
Arbitrator.
(h) If the Closing Net Book Value exceeds $125,000,000, then
Buyer shall, at its option, (i) pay to Sellers the amount of such excess in cash
or (ii) assign to the Seller Designee accounts receivable of the EMG Business,
selected on the basis of the criteria set forth on Schedule 3.3(h), in an
aggregate amount which equals the amount of such excess. If the Purchase Price
is less than the Estimated Purchase Price, then: effective as of the Closing
Date, such difference shall be applied to reduce the amount of the cash, the
number of Seller Shares, and the principal amount of the Seller Note that were
paid or delivered on the Closing Date, such reduction to be made in accordance
with the percentages in Section 3.2(a); and in furtherance thereof, Sellers
shall pay to Buyer the amount of any reduction in the cash component of the
Purchase Price (plus interest thereon at a rate of 5% per annum from the Closing
Date) and shall transfer to Buyer the applicable number of Seller Shares, and
Buyer shall issue to the Seller Designee a replacement Seller Note for the
reduced principal amount. Alternatively, if the Purchase Price is greater than
the Estimated Purchase Price, then: effective as of the Closing Date, such
difference shall be applied to increase the amount of the cash, the number of
Seller Shares and the principal amount of the Seller Note, such increase to be
made in accordance with the percentages set forth in Section 3.2(a); and in
furtherance thereof, Buyer shall pay to the Seller Designee the amount of any
increase in the cash component of the Purchase Price (plus interest thereon at a
rate of 5% per annum from the Closing Date) and
9
shall issue to Seller Designee the applicable number of Seller Shares, and Buyer
shall issue to the Seller Designee a replacement Seller Note for the increased
principal amount. Seller and Buyer shall make payment, shall transfer or issue
such Seller Shares and shall issue such replacement Seller Note within ten (10)
Business Days after the date on which the Final Net Book Value Statement is
determined. Any such payment of cash shall be made by wire transfer of
immediately available funds to an account designated by the payee. To the extent
that the adjustments provided for in the foregoing sentences would result in the
transfer or issuance of fractional shares, the number of Seller Shares so
transferred or issued will be reduced to the next lowest whole number and the
Party transferring or issuing such shares shall pay the other Party an amount in
cash equal to the Price Per Share multiplied by such fractional interest. Upon
receipt from Buyer of a replacement promissory note providing for any such
revised principal amount, the Seller Designee shall promptly return the original
Seller Note.
3.4 PURCHASE PRICE ALLOCATION. The Purchase Price, plus the
aggregate amount of the Assumed Liabilities included in the amount realized on
the sale of Acquired Assets for federal income tax purposes, will be allocated
among the Acquired Assets and the non-competition agreement described in Section
7.16 in accordance with the allocation schedule attached hereto as Schedule 3.4.
Such schedule shall be adjusted as the parties agree to reflect any adjustment
pursuant to Section 3.3(h) to the Purchase Price or to the amount of Assumed
Liabilities included in the amount realized on the sale of the Acquired Assets
for federal income tax purposes. Unless otherwise required under applicable Law,
Buyer and Sellers shall report the purchase and sale of the Acquired Assets on
all Tax Returns, including timely filed Internal Revenue Service Forms 8594, in
accordance with the allocation shown on such schedule, as adjusted. All
allocations made pursuant to this Section 3.4 will be binding upon the Parties
and their respective successors and assigns. Neither Buyer nor Seller shall take
any position (whether in returns, audits, or otherwise) which is inconsistent
with the allocation shown on such schedule.
ARTICLE IV
CLOSING AND DELIVERIES
4.1 CLOSING. The closing of the transactions contemplated hereby
(the "CLOSING") is to take place at the offices of Jones, Day, Reavis & Pogue,
222 East 41st Street, New York, New York 10017, at 10:00 a.m. local time on the
first Business Day following the satisfaction or waiver of each of the
conditions set forth in Article IX (other than those conditions that are to be
satisfied at the Closing), or on such other date or at such other time and place
or in such other manner as the Parties agree in writing (the "CLOSING DATE").
All proceedings to be taken and all documents to be executed and delivered by
all Parties at the Closing will be deemed to have been taken and executed
simultaneously and no proceedings will be deemed to have been taken nor
documents executed or delivered until all have been taken, executed and
delivered.
4.2 DELIVERIES BY SELLERS. At the Closing, Sellers shall deliver
or cause to be delivered to Buyer the following items:
(a) the Nashville Sub-Lease, duly executed by Dana;
10
(b) the Nashville Sub-Sub-Lease, duly executed by the Seller
party thereto;
(c) the Real Estate Conveyances, each duly executed by the
Seller party thereto;
(d) the Seller Leases, if any, each duly executed by the
Seller party thereto;
(e) the Real Estate Lease Assignments, each duly executed by
the Seller party thereto;
(f) the Bill of Sale, duly executed by each Seller;
(g) such assignments, substantially in the forms of Exhibits
B-1, B-2 and B-3 hereto, as are necessary to effectuate the transfer of the
Acquired Intellectual Property listed on Schedule 1.1(i) (the "IP ASSIGNMENTS"),
each duly executed by the applicable Seller;
(h) the IP Licenses, duly executed by the applicable
Sellers;
(i) the Branford Access Agreement, duly executed by the
applicable Seller;
(j) the Share Ownership Agreement, duly executed by the
Seller Designee;
(k) the Subordination Agreement, duly executed by Dana;
(l) subject to Section 7.15, the Supply Agreements, each
duly executed by the applicable Seller;
(m) the Replacement Leases, each duly executed by the Seller
party thereto and the lessor party thereto;
(n) the Transition Services Agreements, each duly executed
by Dana;
(o) such other documents, instruments of sale, transfer,
conveyance and assignment as Buyer shall reasonably require to vest Sellers'
right, title and interest in and to the Acquired Assets in Buyer;
(p) evidence satisfactory to Buyer that Sellers have
obtained the Consents listed on Schedule 4.2(p);
(q) copies of the resolutions of the Board of Directors of
each Seller authorizing this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, certified by the secretary or
other appropriate officer of such Seller;
(r) legal opinions from Dana's law department and Dana's
outside counsel substantially in the form of Exhibits C-1 and C-2; and
(s) the certificate from Sellers referred to in Section
9.3(c).
11
4.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver or
cause to be delivered to Sellers the following items:
(a) one or more share certificates evidencing the Seller
Shares, duly signed by such officers of Buyer as are required by its By-Laws to
sign the same;
(b) the Seller Note, duly executed by Buyer;
(c) the Nashville Sub-Lease, duly executed by Buyer;
(d) the Nashville Sub-Sub-Lease, duly executed by Buyer;
(e) the Seller Leases, if any, each duly executed by Buyer;
(f) the Real Estate Lease Assignments, each duly executed
by Buyer;
(g) the Bill of Sale, duly executed by Buyer;
(h) the IP Assignments, each duly executed by Buyer;
(i) the IP Licenses, duly executed by Buyer;
(j) the Branford Access Agreement, duly executed by Buyer;
(k) the Share Ownership Agreement, duly executed by Buyer;
(l) the Subordination Agreement, duly executed by Buyer and
Buyer's Lender;
(m) subject to Section 7.15, the Supply Agreements, each
duly executed by Buyer;
(n) the Replacement Leases, each duly executed by Buyer;
(o) the Transition Services Agreements, each duly executed
by Buyer;
(p) such other documents and instruments as Sellers shall
reasonably require to evidence the assumption of the Assumed Liabilities by
Buyer;
(q) evidence satisfactory to Sellers that Buyer has obtained
the Consents listed on Schedule 4.3(q);
(r) copies of the resolutions of the Board of Directors of
Buyer authorizing this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, certified by the secretary or
other appropriate officer of Buyer;
(s) a legal opinion from Buyer's outside counsel
substantially in the form of Exhibit D, and
12
(t) the certificate from Buyer referred to in Section
9.2(c).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller jointly and severally represents and warrants to Buyer as
follows:
5.1 ORGANIZATION AND STANDING. Each Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation. Each Seller is duly qualified to do business and in good
standing in the states of the United States in which the character of the
properties owned or leased by it and used by it in the EMG Business or in which
the conduct of the EMG Business requires it to be so qualified, except where the
failure to be so qualified or to be in good standing would not reasonably be
expected to have a Material Adverse Effect on the EMG Business.
5.2 AUTHORITY, VALIDITY AND EFFECT. Each Seller has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Each Seller's execution, delivery
and performance of its obligations under this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all required corporate action.
This Agreement has been, and each of the Ancillary Agreements will be as of the
Closing Date, duly executed and delivered by each Seller party hereto or
thereto. This Agreement is, and each Ancillary Agreement will, when so executed
and delivered, be, the legal, valid and binding obligation of each Seller party
hereto or thereto, enforceable against it in accordance with the terms hereof or
thereof, except as limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally from time to time in effect and (ii) the
availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity).
5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Neither the execution and delivery by any Seller of this
Agreement or any of the Ancillary Agreements, nor the consummation by such
Seller of the transactions contemplated herein or therein, nor compliance by
such Seller with any of the provisions hereof or thereof, will, except as set
forth on Schedule 5.3(a), (i) conflict with or result in a breach of any
provision of such Seller's Certificate of Incorporation or By-Laws (or
equivalent organizational documents); (ii) conflict with, constitute or result
in the breach of any term, condition or provision of, or constitute a default
under, result in or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation or imposition of any
Lien upon any of the Acquired Assets pursuant to, or require any notice under,
any note, bond, mortgage, indenture, Contract or other instrument or obligation
to which any Seller is a party or by which the EMG Business is subject, and
that, in any such event, would reasonably be expected to have a Material Adverse
Effect on the EMG Business; or (iii) subject to receipt of the requisite
approvals referred to in Section 5.3(b), violate any Order or Law to which any
of the Sellers, the EMG Business or the Acquired Assets are subject.
13
(b) Other than (i) those required under the HSR Act, (ii)
those set forth on Schedule 5.3(b), and (iii) where the failure to give such
notice, make such filing or receive such Consent would not reasonably be
expected to have a Material Adverse Effect on the EMG Business, no notice to,
filing with, authorization of, exemption by or Consent of any Person is
necessary for the consummation by any Seller of the transactions contemplated in
this Agreement and the Ancillary Agreements.
5.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Exhibit E-1 are the following
financial statements with respect to the EMG Business and the Retained Business
Lines relating to fuel pumps and water pumps (collectively, the "EMG FINANCIAL
STATEMENTS"): (i) audited balance sheets as of December 31, 2001 and September
30, 2002 and (ii) results of operations and cash flows for the years ended
December 31, 2000 and December 31, 2001 and for the nine-month period ended
September 30, 2002. Each of the EMG Financial Statements presents fairly, in all
material respects, the financial position of the EMG Business and the Retained
Business Lines relating to fuel pumps and water pumps as of the respective date
thereof, and the results of operations of the EMG Business and the Retained
Business Lines relating to fuel pumps and water pumps for the respective period,
all in conformity with GAAP consistently applied during the periods involved as
described in Note 1 to the EMG Financial Statements.
(b) Attached hereto as Exhibit E-2 is a pro forma unaudited
balance sheet as of September 30, 2002 representing the Acquired Assets and the
Assumed Liabilities (the "PRO FORMA BALANCE SHEET"), along with a reconciliation
to the audited balance sheet in the EMG Financial Statements as of the same
date. The Pro Forma Balance Sheet presents the financial position of the EMG
Business and the Retained Business Lines relating to fuel pumps and water pumps
in accordance with the Specified Accounting Principles. The Final Net Book Value
Statement will accurately present all Liabilities for trade accounts payable of
the EMG Business and the Retained Business Lines relating to fuel pumps and
water pumps in accordance with the Specified Accounting Principles.
5.5 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
5.5, since September 30, 2002, there has not been any Material Adverse Effect on
the EMG Business or the Acquired Assets. Without limiting the generality of the
foregoing, since September 30, 2002, except as described on Schedule 5.5:
(a) no Seller has sold, leased, transferred, or assigned any
of the material assets, tangible or intangible, of the EMG Business other than
for fair value in the Ordinary Course of Business;
(b) no Seller has entered into any Contract or series of
related Contracts with respect to the EMG Business outside the Ordinary Course
of Business;
(c) no party (including a Seller) has accelerated,
terminated, modified or cancelled any Contract with respect to the EMG Business
involving more than $75,000;
(d) no Seller has made any capital expenditure (or series of
related capital expenditures) related to the EMG Business involving more than
$75,000;
14
(e) no Seller has made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other Person (or
series of related capital investments, loans or acquisitions) with respect to
the EMG Business outside the Ordinary Course of Business;
(f) no Seller has cancelled, compromised, waived or released
any right or claim (or series of related rights or claims) related to the EMG
Business outside the Ordinary Course of Business;
(e) no Seller has experienced any damage, destruction or
loss (whether or not covered by insurance) to any of its material property used
in the EMG Business; and
(g) no Seller has committed to any of the foregoing.
5.6 ACQUIRED ASSETS. Except as disclosed on Schedule 5.6:
(a) Sellers have title to, and the unqualified right to use
and transfer to Buyer, the Acquired Assets, free and clear of all Liens other
than Permitted Liens; and
(b) none of the Fixed Assets are subject to, or held under,
any security, conditional sales or other title retention Contract or will be
located on the Closing Date at any location in which Buyer will not be conveyed
an interest under this Agreement or one of the Ancillary Agreements.
5.7 ACCOUNTS RECEIVABLE. The Accounts Receivable represent sales
actually made in the Ordinary Course of Business. The EMG Financial Statements
contain, as of their respective dates adequate reserves for uncollectible
accounts in accordance with the Specified Accounting Principles.
5.8 INVENTORY. Except as set forth on Schedule 5.8, and except to
the extent of the reserves provided for on the Final Net Book Value Statement,
all inventories of goods held by Sellers is of merchantable quality and usable
or salable in the ordinary course of the EMG Business.
5.9 EMG CONTRACTS.
(a) Schedule 5.9(a) sets forth a list, as of the date
hereof, of the following Contracts regarding the EMG Business (the "EMG
CONTRACTS"):
(i) Each Contract (or group of related Contracts) to
which a Seller is a party requiring payment in excess of $75,000 per
year, except those that are terminable at the option of a Seller upon
thirty (30) days' notice or less;
(ii) Each Contract (including each Purchase Order)
covering the lease, purchase or service of tangible personal property
to which a Seller is a party requiring payments in excess of $75,000
per year, except those that are terminable at the option of a Seller
upon thirty (30) days' notice or less;
15
(iii) Each Contract concerning a partnership or joint
venture;
(iv) Each Contract under which a Seller has created,
incurred, assumed or guaranteed Indebtedness in excess of $75,000 or
under which it has imposed a Lien (other than a Permitted Lien) on any
of the Acquired Assets;
(v) Each management, consulting, employment,
severance or similar Contract requiring the payment of compensation to
a Transferred Employee in excess of $75,000 annually to which a Seller
or any of its Affiliates is a party;
(vi) Each Contract under which any amount has been
advanced or loaned to any employees of the EMG Business outside the
Ordinary Course of Business;
(vii) Each collective bargaining agreement;
(viii) Each Contract with any manufacturer's
representative, distributor or sales agent;
(ix) Each Contract concerning noncompetition or
confidentiality;
(x) Each Real Estate Lease;
(xi) Each Contract between one Seller and another
Seller or any of the Sellers' Affiliates; and
(xii) Each license, sublicense, agreement, or other
permission which any of the Sellers has granted to any third party with
respect to any of the Acquired Intellectual Property.
(b) Prior to the date hereof, except as otherwise provided
in Section 7.3(a), Sellers have delivered to Buyer a correct and complete copy
of each of the EMG Contracts (or described to Buyer in writing the material
terms of any EMG Contract that is not written).
(c) Each of the EMG Contracts is valid, binding and
enforceable in accordance with its terms, except as limited by any applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether or not considered in a court of law or equity) and
is in full force and effect. Except as set forth on Schedule 5.9(c), the
transactions contemplated by this Agreement will not give rise to any material
breach of, or right of acceleration or termination under, any EMG Contract. To
Sellers' Knowledge, there are no existing material defaults under any of the EMG
Contracts by any Seller or any other party thereto, and no Seller has received
notice of the occurrence of any event that (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default under any of the EMG Contracts by any party
thereto. To Sellers' Knowledge, except as disclosed to Buyer pursuant to the
last sentence of Section 7.2, no party to an EMG Contract or customer of the EMG
Business (other than a Seller) has indicated in writing, or orally with respect
to any customer Contracts or accounts, an intention to terminate such EMG
Contract or customer relationship or, except in accordance with the terms of
such
16
EMG Contract, to cease or materially reduce the purchase of products or
services from any Seller thereunder.
(d) Except as set forth on Schedule 5.9(d), there are no
outstanding powers of attorney executed on behalf of any Seller related to the
EMG Business.
5.10 INTELLECTUAL PROPERTY.
(a) Schedule 1.1(i) sets forth, with the title, filing date,
issue date, registration or application indicated, as applicable, a complete and
correct list of (i) all Acquired Intellectual Property that is registered or
pending registration anywhere in the world, including all: (A) patents and
patent applications, (B) trademark registrations and applications therefor, (C)
internet domain names, and (D) copyright registrations and applications
therefore; and (ii) all other trade names, brand names and logos not described
under clause (i)(B) of this sentence used in the EMG Business.
(b) Except as set forth on Schedule 5.10, there are no
Actions instituted, commenced or pending or, to Sellers' Knowledge, threatened
in writing, that (i) challenge the rights of any Seller regarding the exclusive
ownership or scope of any of the Acquired Intellectual Property or is otherwise
adverse to the use, registration, right to use, validity or enforceability of
the Acquired Intellectual Property or (ii) asserts that the operation of the EMG
Business as conducted by Sellers is or was infringing or otherwise in violation
of any Intellectual Property of any other Person. To Sellers' Knowledge, no
Person is infringing or otherwise in violation of any of the Acquired
Intellectual Property.
(c) Schedule 1.1(i) sets forth each item of Acquired
Intellectual Property that any Seller uses pursuant to license, sublicense,
agreement, or permission. The Sellers have delivered to the Buyer correct and
complete copies of all such licenses, sublicenses, agreements, or permissions,
or have described to the Buyer the material terms of any such item that is not
written. No breach or default by any Seller or, to Sellers' Knowledge, any other
party thereto exists under any such license, sublicense, agreement or
permission.
(d) The Acquired Intellectual Property represents all
material Intellectual Property necessary for the operation of the EMG Business
as conducted by Sellers.
5.11 REAL PROPERTY.
(a) Other than the Real Property, no Seller owns, leases or
otherwise uses any real property that is material to the operation of the EMG
Business.
(b) Except as set forth on Schedule 5.11, none of the
Sellers has leased or otherwise granted to any Person the right to use or occupy
any Real Property or any portion thereof. There are no outstanding options,
rights of first offer or rights of first refusal to purchase any Real Property
or any portion thereof or interest therein.
(c) To Sellers' Knowledge, all buildings, structures,
fixtures, building systems included in the Owned Real Property (the
"IMPROVEMENTS") are in adequate condition and repair for the operation of the
EMG Business as currently conducted by Sellers. To
17
Sellers' Knowledge, there are no material structural deficiencies affecting the
Improvements and there are no facts or conditions affecting the Improvements
that would reasonably be anticipated to interfere in any material respect with
the use or occupancy of the Improvements or any material portion thereof in the
operation of the EMG Business as currently conducted thereon.
(d) All Permits which are required or appropriate to use or
occupy the Owned Real Property or operate the EMG Business as currently
conducted thereon, have been issued and are in full force and effect. Schedule
5.11 lists all Permits held by the EMG Business and the Sellers with respect to
each parcel of Owned Real Property where the failure to hold such Permits would
have a Material Adverse Effect on the EMG Business or the Owned Real Property.
(e) To Sellers' Knowledge, as of the date hereof, Sellers
have not received written notice that their use or occupancy of the Owned Real
Property or any material portion thereof or any building or structures thereon,
or the operation of the EMG Business as currently conducted thereon, materially
violates any zoning Law or constitutes a non-conforming use or structure
thereunder.
5.12 LEGAL PROCEEDINGS. Except as set forth on Schedule 5.12,
there are no Actions instituted, commenced or pending, or to Sellers' Knowledge,
threatened, against any Seller, or against any property, asset, interest or
right of any Seller that would reasonably be expected to have a Material Adverse
Effect on the EMG Business or the Acquired Assets if decided adversely or that
would restrict the consummation of the transactions under this Agreement and the
Ancillary Agreements. No Seller is subject to any Order that would reasonably be
expected to have a Material Adverse Effect on the EMG Business or the Acquired
Assets. None of the Actions set forth on Schedule 5.12 would reasonably be
expected to have a Material Adverse Effect on the EMG Business or the Acquired
Assets if decided adversely.
5.13 COMPLIANCE WITH LAWS. Except (a) with respect to employee
benefit matters, the only representations and warranties as to which are made in
Section 5.18, (b) with respect to Environmental Laws, the only representations
and warranties as to which are made in Section 5.19, (c) as would not be
reasonably expected to have a Material Adverse Effect on the EMG Business, and
(d) as set forth on Schedule 5.13, each Seller (i) is in compliance with, and
since July 1, 1998, has been in compliance with, all Laws and Orders applicable
to the EMG Business, and (ii) since July 1, 1998 has not received any written
notification or communication from any Governmental Authority (A) asserting that
such Person is not in compliance with any Law or Order applicable to the EMG
Business or (B) threatening to revoke any material Permit necessary for the
operation of the EMG Business.
5.14 PRODUCT WARRANTY. Except as set forth on Schedule 5.14, each
product manufactured, sold or delivered by any Seller in connection with the EMG
Business has been manufactured, sold or delivered, as the case may be, in
conformity with all applicable contractual commitments (including any applicable
warranties), and no Seller has any Liability in connection with the EMG Business
(and there is no basis for any present or future Action against any of them
giving rise to any Liability) for replacement or repair thereof or other damages
in
18
connection therewith, except to the extent of the reserve for product warranty
claims set forth on the most recent EMG Financial Statements as adjusted for the
passage of time through the Closing Date in the Ordinary Course of Business. No
product manufactured, sold or delivered by any Seller in connection with the EMG
Business is subject to any guaranty, warranty or other indemnity beyond such
Seller's applicable standard terms and conditions of sale. Schedule 5.14
includes copies or complete descriptions of the standard terms and conditions of
sale for each Seller in connection with the EMG Business.
5.15 PRODUCT LIABILITY. Except as set forth on Schedule 5.15, no
Seller has manufactured, sold or supplied products or services that are or were
or will become in any material respect faulty or defective or that do not comply
in any material respect with any warranties or representations expressly or
impliedly made by any Seller and, to Seller's Knowledge, there is no basis for
any present or future Action arising out of any injury to individuals or
property as a result of the ownership, possession or use of any product
manufactured, sold or delivered by such Seller in connection with the EMG
Business.
5.16 EMPLOYEES. Schedule 5.16 lists all employees of Sellers
engaged in the EMG Business as of a date within thirty days of the date hereof
(other than employees who are employed primarily in a Retained Business Line or
who provide administrative or support services to the EMG Business and other
businesses of Sellers) and, with respect to each such employee, his or her
position, the date on which he or she became employed (or has been deemed by
Sellers to have become employed) by Sellers and, as applicable, his or her
annual salary or hourly wage. Except as set forth on Schedule 5.16, other than
the Sellers, no Subsidiary of Dana employs any Person who is engaged primarily
in the EMG Business. No Seller is a party to or bound by any collective
bargaining agreement that covers the employees of the EMG Business. Except as
set forth on Schedule 5.16, since January 1, 2001, no Seller has experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes relating to employees of the EMG Business. Except as set
forth on Schedule 5.16, to Sellers' Knowledge, there has not been, since January
1, 2001, any organizational effort made or threatened by or on behalf of any
labor union with respect to employees of any Seller engaged in the EMG Business.
With respect to the employees of the EMG Business, each Seller has complied in
all material respects with all Laws and Orders which relate to employment or
labor, civil rights or equal employment opportunity, including, without
limitation, the Americans with Disabilities Act. Except as set forth on Schedule
5.12, no Seller has received any written notice or otherwise has knowledge that
any employee of the EMG Business has threatened any Action or made any claim
against any Seller alleging any violation of such Laws and Orders or otherwise
seeking to impose any material Liability on any Seller in respect of such
employee's employment with any Seller. To Sellers' Knowledge, there is no basis
for any Action or claim.
5.17 TAXES. Each Seller has filed all Tax Returns required to be
filed by it, and has paid (or made adequate provision in the applicable balance
sheet for the payment of) all Taxes shown on such returns to be owed by it,
except where the failure to file the Tax Returns or to pay such Taxes would not
reasonably be expected to have a Material Adverse Effect on the EMG Business or
the Acquired Assets, and no claims for additional Taxes for any prior fiscal
years are pending except as disclosed on Schedule 5.17. No Seller is a party to
any pending Action, nor, to Sellers' Knowledge, is any Action threatened, by any
Governmental Authority for the assessment or collection of Taxes.
19
5.18 EMPLOYEE BENEFIT PLANS.
(a) Each "employee benefit plan," as defined in Section 3(3)
of ERISA, maintained, contributed to or required to be contributed to by any
Seller or any ERISA Affiliate of any Seller for the benefit of current, former
or retired employees of the EMG Business (the "SELLER ERISA PLANS") and each
other plan, contract, program or arrangement maintained, contributed to or
required to be contributed to by any Seller or any ERISA Affiliate of any Seller
for the benefit of current, former or retired employees of the EMG Business (the
"SELLER BENEFIT ARRANGEMENTS") complies in all material respects with its terms
and all applicable Laws, including ERISA, and no "reportable event" or
"prohibited transaction" (as such terms are defined in ERISA) or termination has
occurred with respect to any Seller ERISA Plan under circumstances that present
a risk of any material liability to Sellers or a Material Adverse Effect on the
EMG Business or could result in the imposition of any Lien on the Acquired
Assets. Copies or descriptions of each Seller ERISA Plan and Seller Benefit
Arrangement in which current employees of the EMG Business participate have been
made available to Buyer for review prior to the date hereof. Except as set forth
on Schedule 5.18(a), no Seller or any ERISA Affiliate of any Seller has any
obligation to provide medical or life insurance coverage to retired employees
under the Seller ERISA Plans, the Seller Benefit Arrangements or any other plan
or agreement.
(b) No Seller ERISA Plan or any other plan sponsored or
contributed to by Sellers or any of their ERISA Affiliates has incurred any
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived.
(c) Neither any Seller nor any ERISA Affiliate of any Seller
has completely or partially withdrawn from a "multiemployer plan," as such term
is defined in Section (3)(37) of ERISA within the last six years.
5.19 ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 5.19 or in the Environmental Reports,
to the Seller's Knowledge:
(a) The Sellers and the EMG Business have been and are
currently in compliance with, and have not received any written notice of any
potential or actual Liability pursuant to, Environmental, Health, and Safety
Requirements, common law or contractual obligation relating to any Hazardous
Substances or structure containing Hazardous Substances. There are no conditions
or circumstances that would prevent the continued and uninterrupted operation of
the EMG Business in compliance with Environmental, Health, and Safety
Requirements after the Closing.
(b) None of the Real Property has been affected by any
Hazardous Substances Contamination or Environmental Condition. There are no
Hazardous Substances at, on, in or under any of the Real Property, whether
contained in barrels, sumps, tanks, equipment (moveable or fixed) or other
containers incorporated into any structure on the Real Property, or in any
landfills, surface impoundments, or disposal areas, or otherwise existing
20
thereon, except for such Hazardous Substances as have been or are being handled,
stored and disposed of in accordance with applicable Environmental, Health, and
Safety Requirements.
(c) None of the Sellers, in connection with the EMG
Business, has transported or arranged for the disposal or treatment of any
Hazardous Substances to or at any off-site property that is not authorized to
receive such Hazardous Substances for disposal or treatment under applicable
Environmental, Health, and Safety Requirements or any off-site property that is
or has been designated for investigation or cleanup on the National Priorities
List or any other similar local, provincial, state or federal list.
(d) All Environmental Permits necessary for the
construction, equipping, ownership, use and uninterrupted operation of the EMG
Business or the Real Property have been obtained and are in full force and
effect and each Seller is in compliance therewith. Schedule 5.25 hereto contains
a complete and accurate list of all Environmental Permits required for the
ownership, use and operation of the EMG Business and the Real Property, correct
and complete copies of which have been delivered to the Buyer. All Environmental
Permits that are required to be transferred to the Buyer in order to allow the
Buyer to continue to own, use and operate the EMG Business the Real Property
without interruption after the Closing will have been assigned by each Seller to
the Buyer at the Closing.
(e) None of the Sellers has received written notice of, or
are subject to, any Environmental Claim against any Seller in connection with
the EMG Business or the Real Property or notice from any Governmental Authority
or any other Person related to any actual or threatened Release or the presence
of any Environmental Condition at, in, on, under or about the Real Property, or
any property adjacent to or within the immediate vicinity of the Real Property,
and no Environmental Claims are pending against any of the Sellers with respect
to the EMG Business or any of the Real Property.
(f) Each Seller has provided to the Buyer all information,
including all studies, analyses and test results, in the possession, custody or
control of each Seller and its respective Affiliates relating to (i) any
Environmental Conditions on, under or about the Real Property, and (ii)
Hazardous Substances used, managed, handled, transported, treated, generated,
stored or Released by any Seller or any other Person at any time on any of the
Real Property.
(g) Each Seller has provided Buyer with complete and
accurate copies of all written agreements pursuant to which any third party has
promised to indemnify, reimburse or perform any action on behalf of Seller in
connection with any Environmental Condition that existed at or originated from
any of the Real Property or with respect to the EMG Business on or prior to the
Closing Date.
5.20 ACQUISITION FOR INVESTMENT. Each Seller acknowledges that the
Seller Shares and Seller Note have not been registered under the Securities Act
or any state securities laws and are being issued hereunder in reliance upon
applicable exemptions from such registration for transactions not involving a
public offering. The Seller Shares and the Seller Note will be acquired for
investment purposes by the Seller Designee as nominee for the Sellers, but not
as a nominee or agent for any other Person, and not with a view to the resale or
distribution of any
21
part thereof (except as permitted under the Share Ownership Agreement). The
Seller Designee and the Sellers have no present intention of selling, granting
any participation in or otherwise distributing the Seller Shares or the Seller
Note; provided, however, that notwithstanding the foregoing, the Seller Designee
may sell the Seller Shares as permitted under the Share Ownership Agreement and
the Seller Note as permitted therein.
5.21 INVESTMENT EXPERIENCE. Each of the Seller Designee and each
Seller acknowledges that it can bear the economic risk and lack of liquidity of
its investment or beneficial interest in the Seller Shares and the Seller Note.
Each of the Seller Designee and each Seller has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Seller Shares and the Seller Note. None of the
Seller Designee or any Seller has been organized for the purpose of acquiring
the Seller Shares or the Seller Note.
5.22 ACCREDITED INVESTOR. Each of the Seller Designee and each
Seller is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act.
5.23 NO GENERAL SOLICITATION. Sellers acknowledge that the Seller
Shares and Seller Note were not offered to Sellers by means of any form of
general or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (a) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media, or broadcast over television or radio or (b) any seminar or meeting to
which Sellers were invited by any of the foregoing means of communication.
5.24 NO BROKERS. Except for the compensation payable to Credit
Suisse First Boston Corporation ("CSFB") in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements, which Dana shall
pay, no broker, finder or similar agent has been employed by or on behalf of
Sellers or Dana, and other than CSFB no Seller has any Liability or obligation
to pay any brokerage commission, finder's fee or any similar compensation in
connection with this Agreement or the Ancillary Agreements, or the transactions
contemplated hereby or thereby.
5.25 PERMITS. Schedule 5.25 identifies any Permit held by any
Seller which is not transferable under applicable law.
5.26 NECESSARY ASSETS. Except as set forth on Schedule 5.26, no
subsidiary or Affiliate of Dana other than one of the Sellers owns, leases, or
holds other rights for any asset or property used primarily in the EMG Business;
and upon Closing, the Acquired Assets together with Buyer's rights under the
Transition Services Agreements, the Seller Leases, and the Supply Agreements
will constitute materially all of the assets, property and rights necessary to
conduct the EMG Business substantially as currently conducted by the Sellers.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
22
6.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation. Buyer is duly qualified to do business and in good
standing in the states of the United States in which the character of the
properties owned or leased by it or in which the conduct of its business
requires it to be so qualified, except where the failure to be so qualified or
to be in good standing would not reasonably be expected to have a Material
Adverse Effect on Buyer's business.
6.2 AUTHORITY, VALIDITY AND EFFECT. Buyer has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The Buyer's execution, delivery
and performance of its obligations under this Agreement and each of the
Ancillary Agreements, and consummation of the transactions contemplated hereby
and thereby, have been duly authorized by all required corporate action. This
Agreement has been, and each of the Ancillary Agreements will be as of the
Closing Date, duly executed and delivered by Buyer. This Agreement is, and each
Ancillary Agreement will, when so executed and delivered, be, the legal, valid
and binding obligation of Buyer, enforceable against it in accordance with the
terms hereof or thereof, except as limited by (i) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally from time to time in effect and (ii)
the availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity). No approval by the holders of
the Common Shares is required in order for Buyer to execute, deliver and perform
its obligations under this Agreement or any of the Ancillary Agreements,
including its obligation to deliver the Seller Shares in accordance with the
terms hereof.
6.3 CAPITALIZATION; TITLE TO STOCK. The authorized capital stock
of Buyer consists of 30,000,000 shares of common stock, $2.00 par value per
share, of which 12,557,009 shares were issued and outstanding as of December 31,
2002. All of the issued shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid and non-assessable. When
issued in accordance with the terms of this Agreement, the Seller Shares will be
validly authorized and issued, fully paid and nonassessable and will not be
issued in violation of preemptive rights. Except as disclosed in the Buyer
Reports (including the financial statements included therein): there are no
outstanding subscriptions, Contracts, options, rights (preemptive or otherwise)
or warrants to purchase or to subscribe for any shares of common stock or any
other securities of Buyer, including through the conversion, exchange or
exercise of any other right or securities; and there are no stockholder
agreements or voting trusts relating to the Common Shares.
6.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Neither the execution and delivery by Buyer of this
Agreement or of any of the Ancillary Agreements, nor the consummation by Buyer
of the transactions contemplated herein or therein, nor compliance by Buyer with
any of the provisions hereof or thereof, will (i) conflict with or result in a
breach of any provision of Buyer's Articles of Incorporation or By-Laws, (ii)
except as set forth on Schedule 6.4(a), conflict with, constitute or result in
the breach of any term, condition or provision of, or constitute a default
under, result in or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation or imposition of any
Lien upon any material property or assets of Buyer pursuant to, or require
23
any notice under, any note, bond, mortgage, indenture, Contract or other
instrument or obligation to which Buyer is a party or by which it or any of its
material properties or assets may be subject, and that, in any such event, would
reasonably be expected to have a Material Adverse Effect on Buyer's business or
(iii) subject to receipt of the requisite approvals referred to in Section
6.4(b), violate any Order or Law to which Buyer or its Subsidiaries or any of
their businesses are subject.
(b) Other than (i) those required under the HSR Act, (ii)
those set forth on Schedule 6.4(b) and (iii) where the failure to give such
notice, make such filing or receive such Consent would not reasonably be
expected to have a Material Adverse Effect on Buyer's business, no notice to,
filing with, authorization of, exemption by or Consent of any Person is
necessary for the consummation by Buyer of the transactions contemplated by this
Agreement and the Ancillary Agreements.
6.5 SEC FILINGS. Buyer has filed all reports required to be filed
by it with the Securities and Exchange Commission (the "SEC") since January 1,
1999 (collectively, together with any amendments, the "BUYER REPORTS"). None of
the Buyer Reports, as of their respective dates, contained any untrue statement
of material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.6 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Buyer
Reports, neither Buyer nor any of its Subsidiaries has sustained since the date
of the latest financial statements included or incorporated by reference in the
Buyer Reports, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or Action or Order of any Governmental Authority. Except as
set forth in the Buyer Reports, since the date of such financial statements,
there has not been any change in the capital stock or long-term Indebtedness of
Buyer (other than changes in the outstanding principal balance of such long-term
Indebtedness permitted by the terms thereof described in the Buyer Reports) or
any of its Subsidiaries or any Material Adverse Effect, or any development that
is reasonably likely to result in a Material Adverse Effect, in or affecting
Buyer and its Subsidiaries, taken as a whole.
6.7 LEGAL PROCEEDINGS. Except as set forth in the Buyer Reports,
there are no Actions instituted, commenced or pending, or to Buyer's Knowledge,
threatened, against Buyer or any of its Subsidiaries, or against any of their
respective properties, assets, interests or rights that would reasonably be
expected to have a Material Adverse Effect on the business of Buyer or its
Subsidiaries if decided adversely or that would restrict the consummation of the
transactions under this Agreement and the Ancillary Agreements. Neither Buyer
nor any of its Subsidiaries is subject to any Order that would reasonably be
expected to have a Material Adverse Effect on its business.
6.8 COMPLIANCE WITH LAWS. Except as would not reasonably be
expected to have a Material Adverse Effect on its business, or as set forth in
the Buyer Reports, each of Buyer and its Subsidiaries (a) is in compliance with,
and since January 1, 1999, has been in compliance with, all Laws and Orders
applicable to it or its business; and (b) since January 1, 1999, has not
received any written notification or communication from any Governmental
Authority
24
(i) asserting that such Person is not in compliance with any Law; or (ii)
threatening to revoke any material Permit necessary for the operation of its
business.
6.9 EXEMPTION FROM REGISTRATION. Assuming the accuracy of the
representations and warranties made by Sellers and Seller Designee in Section
5.20 through Section 5.23, Buyer is entitled to issue to the Seller Shares and
the Seller Note to the Seller Designee pursuant to an exemption from
registration under Section 4(2) of the Securities Act and/or Regulation D
promulgated thereunder and under similar exemptions from registration under
applicable state securities Laws.
6.10 FINANCIAL ABILITY. Buyer has delivered to Sellers true and
complete copies of the Amended and Restated Credit Agreement by and among Buyer,
General Electric Capital Corporation and the other lenders party thereto, in the
form anticipated to be executed contemporaneously with this Agreement (together
with any other agreements contemplated thereby, the "FINANCING AGREEMENTS"),
pursuant to which such lenders have agreed to provide Buyer with debt financing
for the transactions contemplated by this Agreement and for other purposes,
subject only to the satisfaction of the Financing Conditions. The Financing
Agreements have not been modified in any material respect or terminated since
they were delivered to Sellers. If the Financing Conditions are satisfied, Buyer
will have sufficient funds to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.
6.11 NO BROKERS. Except for the compensation payable to Goldman
Sachs ("GOLDMAN") in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements, which Buyer shall pay, no broker, finder
or similar agent has been employed by or on behalf of Buyer, and no Person with
which Buyer has had any dealings or communications of any kind other than
Goldman is entitled to any brokerage commission, finder's fee or any similar
compensation in connection with this Agreement or the Ancillary Agreements or
the transactions contemplated hereby or thereby.
ARTICLE VII
COVENANTS
7.1 INTERIM OPERATIONS OF THE EMG BUSINESS. From the date hereof
until the Closing Date, except as contemplated by any other provision of this
Agreement or the Ancillary Agreements or as set forth on Schedule 7.1, unless
Buyer has previously consented in writing thereto, Sellers shall not engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business, and, without limiting the generality of the
foregoing, Sellers shall not cause or permit the EMG Business to:
(a) incur any Indebtedness in connection with the EMG
Business, other than Indebtedness incurred in the Ordinary Course of Business;
(b) acquire or dispose of any material property or assets
used in the EMG Business or create or permit to exist any Lien on any such
property or assets except in the Ordinary Course of Business;
25
(c) enter into any Contracts in connection with the EMG
Business, except Contracts made in the Ordinary Course of Business;
(d) engage in any transactions with, or enter into any
Contracts with, any Affiliates of Sellers in connection with the EMG Business,
except for any such transactions or Contracts in the Ordinary Course of Business
on terms no less favorable than would be obtained in an arms' length third-party
transaction;
(e) enter into, adopt, amend or terminate any Contract
relating to the compensation of any employee employed in the EMG Business or any
severance with respect to an employee that is subject to the Reimbursement
Agreement, except to the extent required by Law or any existing Contracts;
(f) accelerate the rate of collection of Accounts Receivable
other than in the Ordinary Course of Business; or
(g) agree to take any of the actions described in Sections
7.1(a) through 7.1(f) above.
7.2 PRESERVATION OF BUSINESS. From the date hereof until the
Closing, each Seller will use commercially reasonable efforts to keep its
business and properties relating to the EMG Business substantially intact,
including its present operations, physical facilities, working conditions and
relationships with lessors, licensors, suppliers, customers and employees
relating to the EMG Business, except that Sellers may close or relocate the
operations of the EMG Business located at Franklin Park, Illinois and Guilford,
Connecticut upon thirty (30) days prior written notice to Buyer, such notice to
contain the details of such proposed closure or relocation. Sellers shall
provide Buyer prompt written notice of any of the events described in the
proviso to the definition of the term "Material Adverse Effect".
7.3 REASONABLE ACCESS; CONFIDENTIALITY.
(a) From the date hereof until the Closing, Sellers shall
(i) give Buyer and its representatives (including its lenders, underwriters or
other financing sources and its consultants preparing the Environmental
Reports), upon reasonable written notice to Sellers, access during normal
business hours, and in a manner so as not to interfere with the normal business
operations of the EMG Business or Sellers, to all assets, properties, books,
records (including Tax records), Contracts, documents and personnel relating to
the EMG Business; (ii) permit Buyer to make such inspections as it may
reasonably require, including, without limitation, the inspections contemplated
in subsection (b) of the Section 7.3; and (iii) furnish Buyer during such period
with all such information relating to the EMG Business as Buyer may reasonably
request. Notwithstanding the foregoing: in no event will Sellers be required to
give Buyer access if the nature or timing of such access would interrupt any
Seller's normal business operations; and, except as set forth in the next
succeeding sentence, Sellers shall not be required to deliver to Buyer copies of
any Contracts, or any other information regarding the terms of Sellers'
arrangements, with the material customers of the EMG Business, to the extent
that Sellers in good faith deem such information to be of a nature that they
would not reasonably be expected to provide to a competitor (the "CUSTOMER
INFORMATION"). Not later
26
than eighteen (18) days prior to the anticipated Closing Date, Sellers shall
provide to representatives of Buyer an opportunity to review copies of any
Customer Information not previously provided to Buyer, at 4500 Dorr Street,
Toledo, Ohio. Buyer's representatives shall be permitted to make notes regarding
such Customer Information but not to remove or retain copies of the Customer
Information prior to the Closing Date. Sellers shall make available to Buyer's
representatives during such review representatives of Sellers who are familiar
with and able to respond to questions about the Customer information.
(b) From the date hereof until the Closing, Sellers shall,
upon reasonable written notice to Sellers, permit Buyer, during normal business
hours, and in a manner so as not to interfere with the normal business
operations of the EMG Business or Sellers, to inspect the Acquired Assets and
the Retained Assets and Sellers' books and records in order to verify the
accuracy of the information with respect thereto set forth in the Disclosure
Schedules or on any Exhibit to this Agreement. In the event that Buyer believes
that any asset classified as a Retained Asset in the Disclosure Schedules or on
an Exhibit has not been properly so classified in accordance with the provisions
of Section 1.2, or that any liability classified as an Assumed Liability in the
Disclosure Schedules or on an Exhibit has not been properly so classified in
accordance with the provisions of Section 2.1, Buyer may notify Dana of such
belief in writing. If, after such further discussions as the parties deem
necessary or desirable, Dana and Buyer agree that any such assets or liabilities
were improperly classified, then Sellers and Buyer shall amend the applicable
Disclosure Schedules or Exhibits accordingly.
(c) Any information provided to or obtained by Buyer
pursuant to Section 7.3(a) above is "EVALUATION MATERIAL" as defined under the
Confidentiality Agreement dated January 25, 2002, by and between Dana and Buyer
(as amended through the date hereof, the "CONFIDENTIALITY AGREEMENT") and is to
be held by Buyer in accordance with and subject to the terms of the
Confidentiality Agreement.
(d) Each Party will be bound by and comply with the
provisions of the Confidentiality Agreement as if such provisions were set forth
herein, and such provisions are hereby incorporated herein by reference.
(e) Buyer shall indemnify Sellers and hold Sellers and their
Related Persons harmless from and against any and all Liabilities for property
damage or personal injury suffered or incurred by Sellers or their Related
Persons arising out of or resulting from the gross negligence or willful
misconduct of Buyer or Buyer's representatives in connection with any inspection
or other activities conducted by Buyer or Buyer's representatives pursuant to
this Agreement.
7.4 ANTITRUST FILINGS.
(a) Subject to the terms and conditions of this Agreement,
the Parties shall use all commercially reasonable efforts to (i) file a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby within fourteen (14) days after the date
hereof; (ii) supply as promptly as practicable any additional information and
documentary material that may thereafter be requested pursuant to the HSR Act;
and (iii) cause
27
the expiration or termination of the applicable waiting periods under the HSR
Act as soon as practicable.
(b) In connection with the efforts referenced in Section
7.4(a), each of the Parties shall use all commercially reasonable efforts to (i)
cooperate with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) keep the other Parties informed in all
material respects of any material communication received by such Party from, or
given by such Party to, the Federal Trade Commission (the "FTC"), the Antitrust
Division of the Department of Justice (the "DOJ") or any other Governmental
Authority and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby and (iii) permit the other Parties to review
any material communication given to it by, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any other
Governmental Authority or in connection with any proceeding by a private party.
Each of the Parties shall coordinate and cooperate fully with the other Parties
in exchanging such information and providing such assistance as such other
Parties may reasonably request in connection with the foregoing and in seeking
early termination of any applicable waiting periods under the HSR Act.
(c) If any objections are asserted with respect to the
transactions contemplated hereby or if any suit is instituted by any
Governmental Authority or any private party challenging any of the transactions
contemplated hereby as violative of the HSR Act, each of the Parties shall use
all commercially reasonable efforts to resolve such objections or challenge as
such Governmental Authority or private party may have to such transactions,
including to vacate, lift, reverse or overturn any Order, whether temporary,
preliminary or permanent, so as to permit consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
(d) Notwithstanding anything in this Section 7.4 to the
contrary, Buyer shall not be required to take any action or to agree to any
modification of the terms of this Agreement or any Ancillary Agreement in order
to cause the expiration or termination of the waiting periods under the HSR Act
or to resolve any objection or challenge of any Governmental Authority or a
private party if the Buyer determines in its good faith judgment that the effect
of such action or modification would be to cause a Material Adverse Effect to
Buyer or the EMG Business or to impair materially the value to the Buyer of the
EMG Business.
7.5 OTHER ACTIONS. Subject to the terms and conditions of this
Agreement, Sellers and Buyer shall use commercially reasonable efforts to (a)
cooperate with each other in making any filings that are required to be made
prior to the Closing Date with, and seeking any Consents that are required to be
obtained prior to the Closing Date from, Governmental Authorities in connection
with the execution and delivery of this Agreement and the Ancillary Agreements
and the consummation of the transactions contemplated hereby and thereby (in
addition to the filings and Consents contemplated by Section 7.4); and (b) cause
the conditions to their respective obligations under this Agreement and the
Ancillary Agreements to be fulfilled.
28
7.6 BUYER FINANCING. Buyer shall (a) use commercially reasonable
efforts to satisfy all of the Financing Conditions, including consummation of
the Equity Offering; and (b) provide Sellers such information as they may
reasonably request from time to time about the performance by Buyer of its
obligations under Section 7.6(a). Buyer shall give Dana reasonable prior notice
of any amendment to the Financing Agreements that would modify any of the
Financing Conditions applicable to the consummation of the transactions
contemplated by this Agreement.
7.7 NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in Article V and Article VI above. No
disclosure by any Party pursuant to this Section 7.7, however, shall be deemed
to amend or supplement the Disclosure Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.8 PUBLICITY. Sellers and Buyer shall make a joint press release
announcing the execution of this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby, which release will be acceptable
to each of Sellers and Buyer. No other publicity release or announcement
concerning the transactions contemplated by this Agreement or the Ancillary
Agreements is to be issued by either Party without the advance written consent
of such other Party; provided that either Party may make any such release or
announcement that is required under applicable Law or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing Party will use commercially reasonable efforts to advise the other
Party prior to making the disclosure).
7.9 FURTHER ASSURANCES; SUBSEQUENT TRANSFERS.
(a) Each Seller and Buyer will execute and deliver such
further instruments of conveyance, transfer and assignment and will take such
other actions as either of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and the Ancillary Agreements and to
carry out the terms hereof and thereof. Without limiting the generality of the
foregoing, at any time and from time to time after the Closing Date, at the
request of Buyer and without further consideration therefor, Sellers will
execute and deliver to Buyer such other instruments of transfer, conveyance,
assignment and confirmation and will take such action as Buyer may reasonably
deem necessary or desirable in order more effectively to transfer, convey and
assign to Buyer and to confirm Buyer's title to any Acquired Assets, to put
Buyer in actual possession and operating control thereof and to permit Buyer to
exercise all rights with respect thereto (including rights with respect to
Nonassignable Assets). In addition, at the request of Sellers and without
further consideration therefor, Buyer will execute and deliver to Sellers all
instruments, undertakings or other documents and will take such other action as
Sellers may reasonably deem necessary or desirable in order to cause Buyer to
properly assume and discharge the Assumed Liabilities and to relieve Sellers of
any Liability with respect thereto and to evidence the same to third parties.
(b) Sellers will use commercially reasonable efforts to obtain
any Consent required to assign the Nonassignable Assets to Buyer, and Buyer will
cooperate in any commercially reasonable manner that Seller requests; provided,
however, that neither Sellers nor Buyer will be obligated to pay any
consideration (except for de minimis filing fees and
29
other administrative charges) to the third party from whom such Consents are
requested; and provided, further, that nothing in this Section shall be
construed to waive any requirement that a Consent be obtained as a condition to
the Buyer's obligation to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements. In the event and to the extent that
Sellers and Buyer are unable to obtain any such required Consent through the use
of commercially reasonable methods, and if Buyer waives the receipt of such
Consent as a condition precedent under Section 9.3, then from and after the
Closing Date, unless prohibited by Law or the terms thereof, (i) Sellers will
continue to be bound by the terms of such Nonassignable Assets and (ii) Buyer
shall pay, perform and discharge fully all the obligations of Sellers thereunder
from and after the Closing Date and indemnify Sellers and their Related Persons
for all Damages arising out of any failure of such performance by Buyer. Sellers
shall, without further consideration therefor, pay, assign and remit to Buyer
promptly all monies, rights and other considerations received in respect of such
performance by Buyer. Sellers shall exercise or exploit its rights and options
under all such Nonassignable Assets only as reasonably directed by Buyer and at
Buyer's expense. If and when any such Consent is obtained or such Nonassignable
Assets otherwise become assignable or able to be novated, Sellers shall promptly
assign and novate all its rights and obligations thereunder to Buyer, without
payment of further consideration therefor, and Buyer shall, without the payment
of any further consideration therefor, assume all such rights and obligations.
7.10 SELLER SHARE CERTIFICATES; SELLER NOTE.
(a) All certificates representing the Seller Shares shall bear
the following legend, in addition to any other legends that are necessary to
comply with applicable Law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS
EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SUCH
SECURITIES, EVIDENCE OF WHICH MAY INCLUDE A WRITTEN OPINION TO THAT
EFFECT DELIVERED TO AND SATISFACTORY TO STANDARD MOTOR PRODUCTS, INC.
(THE "COMPANY") IN FORM AND SUBSTANCE FROM COUNSEL SATISFACTORY TO THE
COMPANY BY REASON OF EXPERIENCE AND (3) IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES AND BLUE SKY LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
PROVISIONS OF A SHARE OWNERSHIP AGREEMENT DATED AS OF __________ ___,
200_ BY AND BETWEEN [THE SELLER DESIGNEE] AND STANDARD MOTOR PRODUCTS,
INC., WHICH CONTAINS CERTAIN RESTRICTIONS ON TRANSFERABILITY OF THE
SECURITIES REPRESENTED HEREBY.
30
(b) The Seller Note shall bear the following legend, in
addition to any other legends that are necessary to comply with applicable Law:
THIS SUBORDINATED PROMISSORY NOTE (THIS "NOTE") AND THE
INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE
EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT DATED AS OF EVEN DATE
HEREWITH BY AND AMONG PAYEE, GENERAL ELECTRIC CAPITAL CORPORATION, AS
AGENT (THE "AGENT"), AND MAKER (THE "SUBORDINATION AGREEMENT").
THIS NOTE WAS ORIGINALLY ISSUED ON _________ __, 2003 AND HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS A REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO THIS NOTE
HAS BECOME AND REMAINS EFFECTIVE OR UNLESS PAYEE ESTABLISHES TO THE
SATISFACTION OF MAKER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
(c) Each holder desiring to transfer the Seller Note or any
Seller Shares first must furnish Buyer with (i) evidence reasonably satisfactory
to Buyer, which may include a written opinion satisfactory to Buyer in form and
substance and from counsel reasonably satisfactory to the Buyer by reason of
experience, to the effect that the holder may transfer the Seller Note or such
Seller Shares as desired without registration under the Securities Act and (ii)
a written assignment executed by the desired transferee, satisfactory to the
Buyer in form and substance, agreeing to be bound by the terms of the Seller
Note and the Subordination Agreement or the restrictions on transfer contained
herein and in the Share Ownership Agreement, as applicable.
7.11 PRORATIONS AND POST-CLOSING RECEIPTS.
(a) After the Closing Date, Buyer and Sellers will cooperate
to make appropriate proration or other allocation (to the extent not reflected
in the Final Net Book Value Statement) of real estate Taxes, personal property
Taxes, utility expenses, payments under the Real Estate Leases, payroll and
payroll-related expenses and any other significant prepaid expenses related to
the EMG Business ("APPORTIONABLE EXPENSES"). Such prorations or allocations will
be made in accordance with the principle that Apportionable Expenses related to
or arising from time periods prior to the Closing Date will be borne by Sellers
and Apportionable Expenses related to or arising from time periods including or
after the Closing Date will be borne by Buyer.
(b) If, following the Closing Date, any Seller or Buyer
receives any payment relating to any property of the other party, such payment
will remain the property of the respective party and such Seller and Buyer will
cooperate to immediately forward such payment to the appropriate party.
31
7.12 FINANCIAL RECORDS. For a period of ten years after the Closing
Date, Buyer shall not cause or permit the destruction or disposal of financial
records (other than Tax records, which are provided for in Section 7.13)
relating to periods prior to the Closing Date without first offering to
surrender them to Sellers, and Buyer shall allow Sellers and their
representatives access to such records during regular business hours.
7.13 TAX MATTERS. From and after the Closing:
(a) Sellers and Buyer shall each (i) provide the other party
and shall cause their respective accountants to provide the other party's
accountant with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return or the conduct of any audit or
other examination by any taxing authority or judicial or administrative
proceedings relating to liability for Taxes related to the EMG Business; (ii)
retain and provide the other party and shall cause their respective accountants
to provide the other party's accountant any records or other information that
may be relevant to such Tax Return, audit or examination, proceeding or
determination; and (iii) provide the other party with any final determination of
any such audit or examination, proceeding or determination that affects any
amount required to be shown on any such Tax Return of the other for any period.
Without limiting the generality of the foregoing, Buyer and Sellers shall
retain, until the applicable statutes of limitation (including any extensions)
prescribed by Law have expired, copies of all Tax Returns, supporting work
schedules and other records or information related to the EMG Business that may
be relevant to such returns for all Tax periods or portions thereof ending on or
before the Closing Date and shall not destroy or otherwise dispose of any such
records without first providing the other party with a reasonable opportunity to
review and copy the same at the cost of such other party.
(b) Buyer shall pay any state and local sales, transfer or
similar Taxes and all recording costs and fees, however styled or designated,
that are required to be paid in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements, and, to the extent permitted under
applicable law, the Buyer, at its own expense, shall prepare and file all
necessary Tax Returns and other documentation with respect to all such Taxes,
costs and fees.
(c) Sellers and Buyer shall provide to each other prompt
notice of any audit or similar investigation or proceeding in which the Internal
Revenue Service or any other Governmental Authority makes or proposes to make a
Tax adjustment to any Tax period affecting the EMG Business ending on or before
the Closing Date.
7.14 TRADEMARK TRANSITION. To the extent that any trade name or
trademark of any Seller or any of their Affiliates (other than those included in
the Acquired Assets) in any form (the "RETAINED NAMES") appears on any business
form, packaging, container, sign, building or other property included in the
Acquired Assets, Sellers grant and/or confirm the grant by their Affiliates of a
royalty-free license to Buyer to use the Retained Names on such Acquired Assets
until removal can be effected or until such materials are used and exhausted;
provided, however, that Buyer shall use commercially reasonable efforts to
remove the Retained Names from all Acquired Assets in a timely fashion and shall
cease, in any event, all use of the Retained Names no later than six months
following the Closing Date, and except that Buyer may use the Retained
32
Names for a period of twelve months following the Closing Date on all existing
inventory and packaging included in the Acquired Assets. To the extent that any
trade name or trademark included in the Acquired Intellectual Property appears
on any inventory, packaging or sales, marketing or promotional materials not
conveyed to Buyer under this Agreement, Buyer grants Sellers and their
Affiliates a royalty-free license to use such Acquired Intellectual Property on
such inventory, packaging or materials for a period of twelve months following
the Closing Date.
7.15 SALE OF RETAINED BUSINESS LINES. Buyer acknowledges that Sellers
are in the process of marketing certain of the Retained Business Lines for sale
to Persons other than Buyer. If, on or before the Closing Date, Sellers enter
into any agreement providing for the sale of all or any portion of the Retained
Business Lines, Sellers shall give prompt notice thereof to Buyer, and if any
such sale is consummated prior to the Closing Date, neither Buyer nor Sellers
will be obligated to enter into the Supply Agreements with respect to the
Retained Business Lines (or portion thereof) so divested by Sellers. Between the
date hereof and the Closing Date, Sellers shall keep Buyer reasonably apprised
of developments related to Buyer's obligation to enter into the Supply
Agreements on the Closing Date.
7.16 NON-COMPETITION.
(a) For a period of three years beginning on the Closing Date,
Sellers shall not, and shall cause its officers, directors, employees and
Affiliates not to,
(i) acquire or invest in any business whose
operations competes with the EMG Business within the United States;
(ii) sell any goods, services or products that
compete with the EMG Business within the United States; or
(iii) (A) induce or attempt to induce any employee of
Buyer to leave the employ of Buyer, or in any way interfere with the
relationship between Buyer and any employee thereof; (B) hire directly
or through another entity any person who was an employee of Buyer at
any time prior to or during the three years from the Closing Date
unless such person has approached Sellers without any solicitation or
inducement by Sellers or (C) induce or attempt to induce any customer,
supplier, licensee or other business relation of the EMG Business to
cease doing business with the EMG Business, or in any way interfere
with the relationship between any such customer, supplier, licensee or
business relation and the EMG Business.
(b) The provisions of Section 7.16(a) do not prohibit Sellers
or their Affiliates from (i) acquiring another Person engaged in activities
prohibited by Section 7.16(a) if at the time of the acquisition such other
Person's sales during its most recently completed fiscal year from activities
otherwise prohibited by Section 7.16(a) represents less than fifteen percent
(15%) of such Person's consolidated sales for its most recently completed fiscal
year (provided, however, that if sales from the prohibited activities represent
five percent (5%) or more of such Person's consolidated sales for its most
recently completed fiscal year, the Sellers and their affiliates shall dispose
of or discontinue the business engaged in such prohibited activities within
eighteen months after the consummation of such acquisition), (ii) acquiring up
33
to five percent of the securities of any Person that is engaged in activities
prohibited by Section 7.16(a) if the securities of such Person are listed on a
national securities exchange or the NASDAQ Automated Quotation System, (iii)
selling products manufactured or marketed by the Echlin-Mexicana and CUMSA
business lin es to Persons in the United States, or (iii) engaging in any
business activity other than the EMG Business in which Sellers or their
Affiliates are currently engaged with any Person, including the Retained
Business Lines (except that Dana Canada Inc. shall not sell in the United States
any goods, services or products that compete with the EMG Business).
(c) Sellers shall not, nor shall any of their Affiliates,
including, without limitation, Candados Universales de Mexico, S.A. de C.V.
("CUMSA") and Echlin Industrias de Mexico, S.A. de C.V. ("ECHLIN-MEXICANA"), use
in North America any of the trademarks, service marks, trade dress, logos,
slogans, trade names, corporate names, together with all translations,
adaptations, derivations, and combinations thereof, that are Acquired Assets,
except as expressly provided in any license from Buyer to Seller with respect to
any Acquired Intellectual Property.
(d) For a period of three years beginning on the Closing Date,
Buyer shall not, and shall cause its officers, directors, employees and
Affiliates not to (i) induce or attempt to induce any employee of Sellers to
leave the employ of Sellers, or in any way interfere with the relationship
between a Seller and any employee thereof or (ii) hire directly or through
another entity any person who was an employee of a Seller at any time prior to
or during the three years from the Closing Date unless such person has
approached Buyer without any solicitation or inducement by Buyer.
(e) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 7.16 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
7.17 MONTHLY FINANCIAL STATEMENTS. Sellers shall deliver to the Buyer,
within 45 days after the end of the applicable month, the unaudited monthly
balance sheet and income statement for the EMG Business for each month ended
prior to the Closing Date, commencing with the month ended December 31, 2002,
prepared in a manner consistent with similar unaudited financial information
provided to Buyer and, where practical, consistent with the Specified Accounting
Principles, except that for the months ending March 31, 2003 and June 30, 2003,
such balance sheet and income statement shall be prepared in accordance with the
Specified Accounting Principles and shall be delivered within 60 days after the
end of each such month.
7.18 TITLE INSURANCE AND SURVEYS. Sellers will use commercially
reasonable efforts to assist the Buyer in obtaining on or prior to the Closing
Date the Title Commitments, Title Policies and Surveys in form and substance as
set forth in Article IX of this Agreement,
34
including removing from title any Liens which are not Permitted Liens. Each of
the Sellers shall provide the Title Company with any affidavits, indemnities,
memoranda or other assurances reasonably requested by the Title Company to issue
the Title Policies.
7.19 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any Action, investigation, charge,
claim, or demand by a third party in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the EMG Business, the other Party will cooperate with the contesting or
defending Party and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article X).
7.20 EXCLUSIVITY. From the date hereof until the Closing Date, the
Sellers will not, directly or indirectly, (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities of any Seller, or
any substantial portion of the assets of the EMG Business (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Sellers will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
Notwithstanding the foregoing, the provisions of this Section 7.20 shall not
apply to any transaction involving the capital stock or voting securities of
Dana, or the assets of Dana or any of its Affiliates other than the remaining
Sellers, so long after giving effect to any such transaction, Sellers remain
obligated to perform their obligations under this Agreement.
7.21 ACCOUNTS RECEIVABLE.
(a) Sellers will execute and deliver, or cause to be executed
and delivered, such agreements and instruments and take such other action as
Buyer or Buyer's Lender reasonably requests in order to provide that the
Accounts Receivable included in the Acquired Assets are conveyed to Buyer free
and clear of all Liens arising from or related to the prior securitization of
the Accounts Receivable.
(b) Sellers shall reimburse Buyer, within thirty (30) days
after Buyer's demand, (i) for the amount of all credits, deductions and offsets
taken or claimed by account debtors against Pumps Accounts Receivable, or (ii)
for the amount of all understatements of Trade Payables of the portion of the
Retained Business Lines relating to fuel pumps and water pumps. Buyer will
include with its demand for payment copies of any correspondence from the
applicable account debtor or creditor, as the case may be, regarding such
credit, deduction or offset or understatement, as the case may be, and such
other information with respect thereto in Buyer's possession that Sellers may
reasonably request.
35
(c) Buyer shall reimburse Sellers, within thirty (30) days
after Sellers' demand, (i) for the amount of all credits, deductions and offsets
granted to Buyer with respect to Trade Payables of the portion of the Retained
Business Lines relating to fuel pumps and water pumps, or (ii) for any amount
collected by Buyer in respect of Pumps Accounts Receivable in excess of the
amount thereof included in determining the Closing Net Book Value; provided,
however, that Sellers shall indemnify Buyer and hold Buyer and its Related
Persons harmless from and against any and all Liabilities suffered or incurred
by Buyer or its Related Persons arising out of or resulting from Buyer's
reimbursement of Sellers for such excess collections of Pumps Accounts
Receivable. Seller will include with its demand for payment copies of any
correspondence from the applicable account debtor or creditor, as the case may
be, regarding such credit, deduction or offset or understatement, as the case
may be, and such other information with respect thereto in Sellers' possession
that Buyer may reasonably request.
7.22 SELLER DESIGNEE. Each of the Sellers hereby appoints the Seller
Designee as its agent and representative for the purpose of holding such
Seller's rights and interests in the Seller Shares and Seller Note and
exercising all of the rights and performing all of the obligations of the record
owner of the Seller Shares and holder of the Seller Note. Each Seller agrees
that the issuance of the Seller Shares and the Seller Note to the Seller
Designee constitutes payment to such Seller of any amount represented by such
Seller Shares or Seller Note to which such Seller may be entitled in respect of
the Acquired Assets conveyed by such Seller pursuant to this Agreement. Each
Seller agrees that Buyer and Buyer's Lender may deal exclusively with the Seller
Designee with respect to all matters related to the Seller Shares and the Seller
Note without seeking any consent, approval or confirmation from or giving any
notice to such Seller.
7.23 RIGHT OF FIRST OFFER.
(a) For a period of three (3) years after the Closing Date
neither Dana nor any of its Affiliates may assign, sell or transfer to any
Person who is not an Affiliate of Dana either a controlling interest in the
capital stock or a majority of the assets of CUMSA or Echlin-Mexicana or both
unless Dana has delivered to Buyer notice of Dana's desire to undertake such
assignment, sale or transfer and describing the assets or capital stock Dana or
its Affiliates desires to assign, sell or transfer and providing basic financial
information about the business being sold (the "TRANSFER NOTICE"). Within thirty
(30) days after delivery of a Transfer Notice, Buyer may notify Dana whether
Buyer wishes to consider the transaction described in the Transfer Notice, and
if so, what range of price it might be prepared to pay. If Buyer notifies Dana
that Buyer does not desire to consider such transaction or if Buyer does not
submit any notice to Dana within the thirty (30) day time period, neither Dana
nor any of its Affiliates shall have any further obligation to Buyer in respect
of any assignment, transfer or sale of the capital stock or assets of CUMSA,
Echlin-Mexicana or both, and the provisions of Section 7.23(b) shall cease to
apply. If Buyer notifies Dana within the thirty (30) day time period that Buyer
desires to consider such a transaction, then during a period ending on the
ninetieth (90th) day following the date of the Transfer Notice ("NEGOTIATION
PERIOD"), Buyer and the applicable Sellers shall negotiate the terms and
conditions of the purchase of the assets or capital stock of CUMSA,
Echlin-Mexicana or both, as the case may be. During the Negotiation Period,
Sellers shall use commercially reasonable efforts to(i) give Buyer and its
representatives (including its lenders, underwriters or other financing
sources), upon
36
reasonable notice to Sellers, full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Sellers, to all assets, properties, books, records (including Tax records),
Contracts, documents and personnel relating to CUMSA, Echlin-Mexicana or both,
as the case may be, (ii) permit Buyer to make such inspections as it may
reasonably require and (iii) furnish Buyer during such period with all such
information as Buyer may reasonably request.
(b) During the Negotiation Period, the Sellers will not,
directly or indirectly, (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person other than Buyer relating to the
acquisition of any capital stock of CUMSA, Echlin-Mexicana or both, as the case
may be , or any substantial portion of the assets of CUMSA, Echlin-Mexicana or
both, as the case may be (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person other than Buyer to do or seek any of the foregoing.
(c) If (i) by the end of the Negotiation Period Buyer or its
designee and the applicable Sellers have not executed a definitive agreement for
the transaction described in the Transfer Notice or (ii) such an agreement has
been executed by the end of the Negotiation Period but the purchase and sale
contemplated thereby has not been consummated within sixty (60) days after the
date of the definitive agreement for any reason except default by the applicable
Sellers of their obligations thereunder, then neither Dana nor any of its
Affiliates shall have any further obligation to Buyer in respect of any
assignment, sale or transfer of the capital stock or assets of CUMSA,
Echlin-Mexicana or both and shall be free to assign, sell or transfer capital
stock or assets to any Person on any terms.
(d) The provisions of this Section 7.23 are not intended to
apply to (i) any assignment, pledge or other transfer of the capital stock or
assets of CUMSA, Echlin-Mexicana or both made in connection with financing
arrangements undertaken in the ordinary course of business by Dana or any of its
Affiliates, or (ii) any assignment, sale or transfer of the capital stock or
assets of CUMSA or Echlin-Mexicana or both to any Affiliate of Dana.
7.24 INFORMATION REQUIRED FOR BUYER'S REGISTRATION STATEMENT. Buyer and
Sellers acknowledge that Buyer is required to include in its registration
statement for the Equity Offering audited financial statements for the EMG
Business for the fiscal year ended December 31, 2002. Sellers shall prepare and
deliver to Buyer as promptly as reasonably possible an audited balance sheet for
the EMG Business (including the Retained Business Lines relating to fuel pumps
and water pumps) for the fiscal year ended December 31, 2002 and audited
statements of operations and cash flows for the fiscal year then ended, fairly
presenting, in all material respects, the financial position and results of
operations of the EMG Business (including the Retained Business Lines relating
to fuel pumps and water pumps) as at such date and for the period then ended,
all in conformity with GAAP consistently applied as described in the notes
thereto (the "EMG YEAR-END STATEMENTS"). Dana shall also cause
PricewaterhouseCoopers to prepare and deliver to Buyer a comfort letter and
consent, in form and substance reasonably acceptable to Buyer and its counsel,
with respect to the EMG Financial Statements and the EMG Year-End Statements, as
the case may be, for filing with Buyer's registration statement for the Equity
Offering.
37
7.25 TOOLING AT VENDORS. Not less than fourteen (14) days prior to the
Closing Date, Sellers shall prepare and deliver to Buyer a reasonably complete
schedule listing tooling, molds and dies used in the EMG Business that are
located at any premises other than the Real Property, together with the address
of each such premises and the identity of the Person holding such tooling, molds
or dies at such premises.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 SITE ASSESSMENT ENVIRONMENTAL LIABILITIES. The term "SITE
ASSESSMENT ENVIRONMENTAL LIABILITIES" means, until the required environmental
remediation is complete at each respective site, all Environmental Costs
relating to or arising in connection with the remediation of Environmental
Conditions at the Branford Site, the Independence Site, and, if applicable, the
Northvale Site, identified during the Buyer's Further Investigations and/or
Seller's Further Investigations or during the performance of the Sellers'
remediation. For purposes of this Section 8.1, a required environmental
remediation shall not be deemed complete during the period of any continued
operation and maintenance of any active remediation system or long-term
monitoring program (excluding, by way of example, any static engineered controls
such as a permanent cap) at the Real Property in connection with the remediation
or in the event that a No Further Action letter or similar closure documentation
is revoked, but only if the reason for the revocation is the inaccuracy of
information contained in Sellers' submissions to Governmental Authorities.
8.2 ENVIRONMENTAL REMEDIATION.
(a) Phase II Investigations. Commencing not later than ten
(10) days after the date of this Agreement: Buyer shall conduct a Phase II
Environmental Site Assessment and such other investigation activities as Buyer
deems necessary or appropriate in order to ensure its entitlement to the "bona
fide prospective purchaser exemption" as defined under the federal Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections 9601
et seq. at the Real Property and facilities of Sellers located at (1)
Independence, Kansas (the "INDEPENDENCE SITE"), (2) Branford, Connecticut (the
"BRANFORD SITE"), and (3) Northvale, New Jersey (the "Northvale Site") (in the
event that Buyer's Phase I Environmental Site Assessment of the Northvale Site
reveals the presence of any "recognized environmental condition" as defined in
ASTM 1527-97 or 1527-00) (collectively, the "BUYER'S FURTHER INVESTIGATION").
After Buyer performs its Phase II Environmental Site Assessment at the Branford
Site, Sellers shall conduct any activities at the Branford Site as necessary to
discharge their obligations pursuant to the Connecticut Property Transfer Act,
Sections 22a-134 et seq. (the "SELLERS' FURTHER BRANFORD INVESTIGATION"). After
Buyer performs its Phase II Environmental Site Assessment at the Northvale Site,
Sellers shall conduct such activities at the Northvale Site as are necessary to
discharge its obligations pursuant to the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et seq. (the "SELLERS' FURTHER NORTHVALE INVESTIGATION").
(Seller's Further Branford Investigation and Further Northvale Investigation, as
well as any other investigation conducted by Sellers in discharging their
obligations under this Section 8.2, shall be collectively referred to herein as
"SELLER'S FURTHER INVESTIGATION"). Sellers shall provide Buyer with such access
to the Northvale Site as Buyer deems necessary or desirable to
38
conduct the Phase I Environmental Assessment of that site and shall provide
Buyer with such access to the Independence Site, Branford Site, and Northvale
Site as Buyer deems necessary or desirable to conduct the Buyer's Further
Investigation, as applicable. Sellers agree to reimburse Buyer for the amount of
costs and expenses incurred by Buyer in connection with the Buyer's Further
Investigation up to an aggregate maximum reimbursement of $150,000. Sellers
shall make such reimbursement within thirty (30) days after receiving Buyer's
request for payment, accompanied by such supporting information as Sellers may
reasonably request. Sellers shall prepare and deliver to Buyer written reports
of the Sellers' Further Investigation and Buyer shall prepare and deliver to
Sellers written reports of the Buyer's Further Investigation, each in form and
substance reasonably satisfactory to Sellers and Buyer.
(b) Remediation Activities. Sellers shall be solely
responsible for, and shall pay all Environmental Costs associated with,
remediating the Environmental Conditions identified during the Buyer's Further
Investigations and/or Sellers' Further Investigations or the performance of
Sellers' remediation at the Independence Site, the Branford Site and, if
applicable, at the Northvale Site, in accordance with the Minimum Remediation
Standards and the other terms and provisions of this Section 8.2. Except as
otherwise provided in Section 8.2(e), Sellers shall have absolute control over
all aspects of any remediation undertaken by Sellers. Sellers shall select and
implement a remedy that, in addition to meeting the Minimum Remediation
Standards, does not materially interfere with or disrupt Buyer's normal business
activities at the Real Property. Sellers shall perform any investigation
activities as required pursuant to this Section 8.2 in a manner that does not
materially interfere with or disrupt Buyer's normal business activities at the
Real Property. Sellers shall prepare a remediation plan within a reasonable time
after receipt of Buyer's Further Investigation for each site, which plan shall
contain a schedule that provides for the prompt completion of the remediation at
each site. Upon completion of each plan for each site, Seller shall submit it to
Buyer in advance of submitting it to any Governmental Authority. Buyer shall
have the right to consult with Sellers, and comment on Sellers' remediation
plans and remediation activities at Buyer's cost, provided that so long as
Sellers have materially complied with their obligations under this Section 8.2,
Sellers shall retain control over the preparation and implementation of the
remediation plans and all remediation activities, and in its sole discretion,
may accept or reject any comments or recommendations by Buyer. Buyer shall have
the right to review, comment on, and observe Sellers' remediation activities at
Buyer's cost, but Sellers shall retain control over Sellers' remediation
activities, except as otherwise provided in Section 8.2(e). Sellers agree to
provide to Buyer copies of all technical reports, studies, tests, documents or
other materials in connection with Sellers' remediation activities in a timely
manner. Buyer shall cooperate with and provide Seller with such access to the
Independence Site and the Branford Site as Sellers deem necessary or desirable
to conduct Sellers' Further Investigations and any remediation activities,
provided, however, that Sellers shall do so in a manner that does not materially
disrupt Buyer's normal business activities. Sellers shall obtain a "No Further
Action" letter or equivalent document from the applicable state governmental
agency concluding that no further remediation activities are required at the
sites. Sellers shall submit to the appropriate regulatory authority a
remediation plan in a reasonably timely manner, but in no case later than two
(2) years after the Closing Date, unless a delay is caused by factors outside
the control of Sellers, including but not limited to, unforeseen environmental
conditions at the Site, delays caused by Third Parties, or delays in
governmental review or approval of any submittals by Sellers. Sellers shall
complete the remediation as set forth in the
39
remedial plans in a reasonably prompt manner, including, without limitation, by
conforming to the extent possible with the schedule for completion of the
remediation as set forth in the remedial plans. In the event that any of
Sellers' remedial plans involve any active remediation system or long-term
monitoring program (excluding, by way of example, any static engineered control
such as a permanent cap), Seller shall maintain and operate such system at its
sole expense until its receipt of a final No Further Action letter or similar
documentation providing that no further active remediation or monitoring is
required and until the remediation is complete within the meaning of Section 8.1
above.
(c) Connecticut Property Transfer Act Responsibilities.
Sellers shall provide to Buyer by not later than 15 days prior to the Closing
Date the following documents with respect to the Branford facility: (i), a fully
completed Form III as defined pursuant to Conn. Stat. Section 22a-134(12),
signed and certified by Sellers as the "certifying party," that complies in all
respects with the Connecticut Property Transfer Act, Sections 22a-134 et seq.;
and (ii) documentation showing that the completed Form III has been submitted to
the Commissioner of the Connecticut Department of Environmental Protection
("DEP"). Sellers shall conduct any activities at the Branford Site as necessary
to discharge its obligations pursuant to the Connecticut Property Transfer Act,
Sections 22a-134 et seq. and under Section 8.2(b).
(d) New Jersey Industrial Site Recovery Act Responsibilities
(ISRA). Sellers shall provide to Buyer by not later than 15 days prior to the
Closing Date at least one of the following documents with respect to the
Northvale facility: (1) a non-applicability letter, (2) written approval of
Seller's negative declaration or "No Further Action" letter as to all areas of
concern, (3) an approved Remediation Agreement with funding source; or (4) a
non-qualified approval of Seller's Remedial Action Workplan, in each case as
such terms are defined in or customarily used in connection with ISRA.
(e) Buyer's Right to Act. In addition to Buyer's rights to
make a claim for indemnification under Section 10.2 for a material breach by
Sellers of this Section 8.2, Buyer shall have the right, but not the obligation,
in its sole discretion, to conduct any investigation or take any remedial or
other appropriate action, at Sellers' cost and expense, if Sellers have not
timely performed any material obligation under this Section 8.2, provided that
Buyer shall have first provided written notice of such failure of Sellers to
timely perform such material obligation and Sellers have failed to cure such
failure within a 90-day period (except that this proviso shall not apply if
Buyer reasonably believes that its immediate action is necessary to prevent an
imminent threat to human health and, in such case, Buyer's right to act at
Sellers' cost with respect to such condition shall continue only for such time
and to such extent as appropriate under the circumstances to prevent and/or cure
any condition causing an imminent threat to human health). Notwithstanding the
90-day limitation on Sellers' right to cure after notice as provided in
foregoing sentence, if Sellers demonstrate in writing to Buyer that their
failure to perform a material obligation under this Section 8.2 cannot be cured
within such 90-day period, Seller shall have such additional time in which to
cure such failure as is reasonable under the circumstances.
8.3 ENVIRONMENTAL RECORDS. For a period of ten years after the Closing
Date, Buyer shall not cause or permit the destruction or disposal of
environmental records regarding the
40
Acquired Assets or the EMG Real Property relating to periods prior to the
Closing Date without first offering to surrender them to Sellers, and Buyer
shall allow Sellers and their representatives access to such records during
regular business hours.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF SELLERS AND BUYER. The respective
obligations of Sellers and Buyer to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements shall be subject to the satisfaction
or waiver at or prior to the Closing of each of the following conditions:
(a) All applicable waiting periods (and any extensions
thereof) to the consummation of the transactions contemplated by this Agreement
under the HSR Act shall have expired or been terminated.
(b) All Consents of Governmental Authorities referred to in
Sections 5.3 and 6.4 shall have been received.
(c) No Action shall be pending or threatened in writing before
any Governmental Authority wherein an unfavorable Order would prevent
consummation of the transactions contemplated by this Agreement, or cause any of
the transactions contemplated by this Agreement to be rescinded.
9.2 CONDITIONS TO OBLIGATION OF SELLERS. The obligation of Sellers to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction or waiver at or prior to the Closing of each of the following
additional conditions:
(a) The representations and warranties of Buyer set forth in
this Agreement shall have been true and correct in all material respects as of
the date of this Agreement, and shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date
(except to the extent that such representations and warranties are expressly
intended to speak only as of an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
date, and except to the extent that such representations and warranties are
already qualified by terms such as "material" or "Material Adverse Effect," in
which case such representations and warranties shall be true and correct in all
respects on and as of the Closing Date).
(b) Each of the agreements and covenants of Buyer to be
performed and complied with by Buyer pursuant to this Agreement prior to the
Closing Date shall have been duly performed and complied with in all material
respects.
(c) Buyer shall have delivered to Sellers a certificate, dated
as of the Closing Date and signed on its behalf by its chief executive officer
and its chief financial officer, as to the satisfaction by it of the conditions
set forth in Sections 9.1(c), 9.2(a) and 9.2(b).
41
(d) Between the date of this Agreement and the Closing Date,
no change or event shall have occurred that has had a Material Adverse Effect on
Buyer.
(e) Buyer shall have delivered the Estimated Purchase Price in
accordance with Section 3.2 and the documents required to be delivered by Buyer
pursuant to Section 4.3.
9.3 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction or waiver at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Sellers set forth in
this Agreement shall have been true and correct in all material respects as of
the date of this Agreement, and shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date
(except to the extent that such representations and warranties are expressly
intended to speak only as of an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
date, and except to the extent that such representations and warranties are
already qualified by terms such as "material" or "Material Adverse Effect," in
which case such representations and warranties shall be true and correct in all
respects on and as of the Closing Date).
(b) Each of the agreements and covenants of Sellers to be
performed and complied with by Sellers pursuant to this Agreement prior to the
Closing Date shall have been duly performed and complied with in all material
respects.
(c) Sellers shall have delivered to Buyer a certificate, dated
as of the Closing Date, as to the satisfaction by Sellers of the conditions set
forth in Sections 9.1(c), 9.3(a) and 9.3(b).
(d) The Financing Conditions shall have been satisfied and
Buyer shall have received the funds which Buyer is entitled to receive under the
Financing Agreements and the Equity Offering as of the Closing Date.
(e) The title company that issued the Title Commitments or
another title insurance company reasonably satisfactory to Buyer (the "TITLE
COMPANY") shall be prepared to issue (subject to any requirements to such
issuance that are to be satisfied by Buyer) a 1992 ALTA Owner's Title Insurance
Policy or other form of policy reasonably acceptable to the Buyer for each Owned
Real Property, insuring the Buyer's fee simple title to each Owned Real Property
as of the Closing Date (including all recorded appurtenant easements, insured as
separate legal parcels), with gap coverage through the date of recording,
subject only to Permitted Liens, in such amount as the Buyer reasonably
determines to be the value of the Owned Real Property insured thereunder and
including such endorsements as Buyer or Buyer's Lender reasonably requires (the
"TITLE POLICIES").
(f) The Buyer shall have obtained a survey for each parcel of
Owned Real Property, dated after the date of this Agreement, prepared by a
surveyor licensed in the jurisdiction where the applicable Owned Real Property
is located, reasonably satisfactory to the Buyer, and conforming to 1999
ALTA/ACSM Minimum Detail Requirements for Land Title Surveys, including Table A
Items Nos. 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(b)(2), 13,
42
14, 15 and 16, and such other standards as the Title Company and the Buyer may
reasonably require as a condition to the removal of any survey exceptions from
the Title Policies, and certified to the Buyer, the Buyer's Lender and the Title
Company, in a form and with a certification reasonably satisfactory to each of
such parties (the "SURVEYS"); the Surveys shall not disclose any encroachment
from or onto any of the Owned Real Property or any other material survey defect
which has not been cured or insured over to the Buyer's reasonable satisfaction
prior to the Closing.
(g) Between the date of this Agreement and the Closing Date,
no change or event shall have occurred that has had a Material Adverse Effect on
the EMG Business.
(h) Sellers shall have delivered to Buyer the documents
required to be delivered by Sellers pursuant to Section 4.2.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL PERIODS.
(a) Sellers' liability for any breach of the representations
and warranties made by them in this Agreement shall survive until the date that
is eighteen months after the Closing Date, except that:
(i) Sellers' liability for any breach of the
representations and warranties set forth in Section 5.17 (Taxes) or
Section 5.18 (Employee Benefit Plans) will survive until the expiration
of all applicable periods under the Laws prescribing applicable
statutes of limitation with respect to the subject matter of such
representations and warranties;
(ii) Sellers' liability for any breach of the
representations and warranties set forth in Section 5.19 (Environmental
Matters) will survive for five years after the Closing Date; and
(iii) Sellers' liability for any breach of the
representations and warranties set forth in Section 5.1 (Organization
and Standing), Section 5.2 (Authority, Validity and Effect), Section
5.6 (Acquired Assets), or Section 5.24 (No Brokers) will survive
indefinitely.
(b) Buyer's liability for any breach of the representations
and warranties made by it in this Agreement shall survive until the date that is
six months after the expiration of the Lock-Up Period (as defined in the Share
Ownership Agreement), except that Buyer's liability for any breach of the
representations and warranties set forth in Section 6.1 (Organization and
Standing), Section 6.2 (Authority, Validity and Effect), Section 6.3
(Capitalization; Title to Stock), or Section 6.11 (No Brokers) will survive
indefinitely.
(c) Each of the covenants and agreements of the Parties shall
survive the Closing in accordance with its terms.
43
(d) No party providing indemnification pursuant to this
Article X (an "INDEMNIFYING PARTY") is obligated to provide such indemnification
with respect to the representations and warranties (but not the covenants) to
the other party (the "INDEMNIFIED PARTY") unless the Indemnified Party has
delivered written notice of its claim for indemnification prior to the
expiration of the applicable period set forth in Section 10.1(a) or 10.1(b),
unless such claim is based upon the assertion that the Indemnifying Party had
committed fraud; provided, however, that any claim for indemnification for which
a notice has been given in accordance with Section 10.4 on or before the
expiration of such period may continue to be asserted and indemnified against
until finally resolved.
10.2 INDEMNIFICATION. Subject to the other provisions of this Article
X, from and after the Closing,
(a) Sellers shall indemnify and hold Buyer and its officers,
directors, shareholders, employees and Affiliates harmless from and against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
Liabilities, losses, claims and damages (collectively, "DAMAGES") resulting
from: (i) Sellers' breach of any representation or warranty made by them in or
pursuant to this Agreement, provided that Sellers shall not be liable for breach
of any representation or warranty to the extent (A) the fact, matter or
circumstance giving rise to a claim for breach is fairly disclosed in any of the
Disclosure Schedules to this Agreement or the documents attached thereto, or (B)
the amount claimed is reflected in the Final Net Book Value Statement or was the
subject of a Dispute Notice; (ii) Sellers' failure to perform or breach of any
covenant made by them in or pursuant to this Agreement; or (iii) Sellers'
failure to pay, perform or discharge in accordance with its terms any Retained
Liability.
(b) Buyer shall indemnify and hold Sellers and their
respective officers, directors, shareholders, employees and Affiliates harmless
from and against all Damages resulting from (i) Buyer's breach of any
representation or warranty made by it in or pursuant to in this Agreement, (ii)
Buyer's failure to perform or breach of any covenant made by it in or pursuant
to this Agreement, (iii) Buyer's failure to pay, perform or discharge in
accordance with its terms any of the Assumed Liabilities, or (iv) all
Liabilities arising under any Environmental, Health or Safety Requirements or
with respect to Environmental Claims or Environmental Costs arising from
Environmental Conditions at the Real Property, irrespective of whether such
Liability attaches or accrues to Buyer or Sellers in the first instance, but not
including any Retained Liability.
(c) The Buyer expressly releases and discharges Seller, its
successors and assigns, from all claims, demands, actions, judgments and
executions for the indemnified matters set forth in Section 10.2(b)(iv).
10.3 INDEMNIFICATION AMOUNTS.
(a) Notwithstanding any provision to the contrary contained in
this Agreement, Sellers will not be obligated to indemnify Buyer for any Damages
resulting from a breach of a representation or warranty made by Sellers:
44
(i) to the extent that Damages arising from any
individual claim for indemnification are $10,000 or less (the "BUYER
MINIMUM CLAIM AMOUNT");
(ii) unless and until the amount of all such Damages
(other than those for claims that do not satisfy the Buyer Minimum
Claim Amount) exceeds $1,300,000 (the "BUYER DEDUCTIBLE"), and then
only for the amount of the Damages in excess of the Buyer Deductible;
provided, however, that the Buyer Deductible shall not apply to any
Damages resulting from a breach of a representation or warranty made by
Sellers pursuant to Section 5.19 (Environmental Matters); and
(iii) to the extent that the aggregate amount of all
such payments for Damages (other than those for claims that do not
satisfy the Buyer Minimum Claim Amount) to Buyer exceeds an amount
equal to sixty-five percent (65%) of the amount of the Purchase Price
paid in cash.
(b) Notwithstanding any provision to the contrary contained in
this Agreement, Buyer will not be obligated to indemnify Sellers for any Damages
resulting from a breach of a representation or warranty made by Buyer:
(i) to the extent that the Damages arising from any
individual claim for indemnification are $10,000 or less; and
(ii) to the extent that the aggregate amount of all
such payments for Damages to Sellers exceeds the aggregate amount of
the Purchase Price paid in the form of the Seller Shares, as calculated
on the basis of the Price Per Share and after giving effect to any
adjustments to the Purchase Price under Section 3.3.
(c) For purposes of this Article X, a representation or
warranty shall be deemed breached if it would have been breached had the
representation not been qualified by the words "material", "materiality",
"Material Adverse Effect", "in all material respects", or words of similar
import.
10.4 CLAIMS.
(a) If an Indemnified Party intends to seek indemnification
pursuant to this Article X, such Indemnified Party shall promptly notify the
Indemnifying Party in writing of such claim describing such claim in reasonable
detail; provided that the failure to provide such notice will not affect the
obligations of the Indemnifying Party unless it is actually prejudiced thereby.
If the claim for indemnification does not involve a claim by a third party then
the Indemnifying Party shall be deemed to have accepted liability for the
Damages arising from such claim (subject to the limitations set forth in this
Article) unless the Indemnifying Party delivers a written objection to the
Indemnified Party within 30 days after receiving the notice of claim. If such
claim involves a claim by a third party against the Indemnified Party, the
Indemnifying Party will have thirty days after receipt of such notice to elect
to undertake, conduct and control, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and if it so elects, the
Indemnified Party shall cooperate with it in connection therewith; provided that
the Indemnified Party may participate in such settlement or defense through
counsel chosen and paid for by such Indemnified Party. The Indemnifying
45
Party shall not, without the written consent of the Indemnified Party, settle or
compromise any action in any manner or consent to the entry of any judgment with
respect to the matter unless the sole relief granted is the payment of money by
the Indemnifying Party and the plaintiff or claimant releases the Indemnified
Party from all liability. If the Indemnifying Party does not notify the
Indemnified Party within thirty days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, or if the Indemnifying Party assumes such defense but
thereafter fails to pursue such defense actively, then the Indemnified Party
will have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement. As
long as the Indemnifying Party is contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party has the right to pay or settle any such claim;
provided that as long as the Indemnifying Party is contesting such claim in good
faith, any such settlement is to include as an unconditional term thereof the
delivery by the claimant or plaintiff to the Indemnifying Party of a duly
executed written release of the Indemnifying Party from all liability and
obligation in respect of such action; and provided further that in such event,
unless the Indemnifying Party has consented to such payment or settlement, the
Indemnified Party shall waive any right to indemnity therefor by the
Indemnifying Party; and provided further that the Indemnified Party shall
provide the Indemnifying Party reasonable advance notice of any proposed
settlement or payment.
(b) The Indemnified Party shall cooperate fully in all aspects
of any investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this Article X, including, but not limited to, by providing the
other party with reasonable access to employees and officers (including as
witnesses) and other information. The Indemnified Party's actual costs and
expenses of providing such cooperation shall constitute a part of its Damages
for which it is entitled to indemnification in accordance with this Article X.
10.5 EXCLUSIVE REMEDY. Except with respect to the availability of
equitable relief or actual fraud, the indemnification provisions of this Article
X are the exclusive remedy following the Closing for any breaches or alleged
breaches of any representation, warranty, covenant, agreement or other provision
of this Agreement or the transactions contemplated hereby and, without
limitation of the foregoing, Buyer and each Seller hereby waives any and all
rights that are or may otherwise be available to it at law or equity in respect
of the transactions contemplated hereby, including, without limitation, any
claim pursuant to the federal Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Sections 9601 et seq.; and none of
the Parties, nor any of its Related Persons, may bring any action or proceeding,
at law, equity or otherwise, against any other party or its Related Persons, in
respect of any breaches or alleged breaches of any representation, warranty or
other provision of this Agreement, except pursuant to the express provisions of
this Article X. The Parties hereby acknowledge that no Party has made any
representations and warranties, express or implied, with respect to this
Agreement or the matters contemplated hereby, except as explicitly set forth in
or made pursuant to this Agreement. The Parties also acknowledge that this
Section 10.5 is not intended to restrict the rights of either party arising from
and after the Closing Date under the Ancillary Agreements.
46
10.6 TAX AND INSURANCE. The amount of any Damages suffered by an
Indemnified Party is to be reduced by any net federal Tax, insurance or other
benefits that such party receives in respect of or as a result of such Damages
or the facts or circumstances relating thereto. A 34% tax rate is to be used in
computing any such reduction for net federal Tax benefits. If any Damages for
which indemnification is provided hereunder are subsequently reduced by any net
tax benefit, insurance payment or other recovery from a third party, the
Indemnified Party shall promptly remit the amount of such reduction to the
Indemnifying Party.
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
11.1 EMPLOYMENT. Buyer shall make offers of employment to, and employ
for a period of not less than two months after the Closing Date, on the terms
required by this Article XI, all individuals who are employed in the EMG
Business immediately prior to the Closing Date and who accept such offers of
employment, including, to the extent set forth in Section 11.5, those
individuals who are on lay-off, leave of absence, disability leave or elect to
retire immediately prior to the Closing Date (collectively, those employees who
accept employment with Buyer as of the Closing Date shall collectively be
referred to herein as the "TRANSFERRED EMPLOYEES"); provided that, (a) except as
otherwise required by the Employee Retention Incentive Agreements, Buyer will
not be required to continue to employ any Transferred Employee who resigns or
otherwise voluntarily terminates his employment by Buyer or who is terminated by
Buyer for cause, (b) Buyer shall not make offers of employment to the
individuals identified on Schedule 11.1 whom Sellers desire to retain after the
Closing Date and such individuals shall not be considered "Transferred
Employees".
11.2 COMPENSATION AND EMPLOYEE BENEFITS.
(a) In General. Buyer shall provide each Transferred Employee,
so long as he or she otherwise remains employed by Buyer, with compensation,
employee benefits and severance programs that, in the aggregate, are
substantially equivalent to those provided by Buyer immediately prior to the
Closing Date to Buyer's employees serving in comparable capacities and with
comparable years of service. Subject to the foregoing, the other provisions of
this Article XI and the provisions of the Employee Retention Incentive
Agreements, Buyer shall have the right to determine the compensation and
employee benefits of the Transferred Employees.
(b) Severance Payments. Buyer and Sellers will be obligated
for severance payments to Transferred Employees as provided in the Reimbursement
Agreement except that Exhibit III of that letter shall be amended as set forth
on Schedule 11.2(b). Sellers shall be liable for and shall pay all eligible
individuals employed by the EMG Business prior to the Closing severance benefits
in accordance with the terms of Seller's severance policies; provided, however,
that nothing in this Agreement should be construed to obligate Sellers to pay
severance to any Transferred Employee or any employee of the EMG Business who is
made an offer of employment by Buyer, except as provided in the Reimbursement
Agreement. Seller shall also reimburse Buyer for all severance costs incurred by
Buyer, up to an aggregate cumulative amount of $400,000, in connection with any
Transferred Employee who was an
47
employee of Sellers' RAM Division on the Closing Date who is terminated by Buyer
within six months after the Closing Date because of the closing or relocation of
the operations of the RAM Division.
(c) Service Credit. For purposes of any employee benefit plan,
program or arrangement established for or made available to Transferred
Employees by Buyer (the "BUYER PLANS"), other than Buyer's post-retirement
medical benefit plan, Buyer shall credit such Transferred Employees with service
for all periods of service prior to the Closing Date with Sellers or any
Affiliate of Sellers. Such service will be credited for purposes of determining
eligibility for, vesting in and the amount of benefits under all of the Buyer
Plans and for all other purposes for which service is either taken into account
or recognized; provided, however, that such service need not be credited to the
extent it would result in duplication of coverage or benefits.
(d) Welfare Benefit Plans. Coverage for all Transferred
Employees and their respective dependents under the Seller ERISA Plans and
Seller Benefit Arrangements that are welfare benefit plans within the meaning of
Section 3(1) of ERISA (the "SELLER WELFARE PLANS"), will terminate effective as
of the day immediately prior to the Closing Date. All Liabilities of Sellers
under the Seller Welfare Plans prior to the effective date of such termination
shall be Retained Liabilities. The Buyer Plans that are welfare benefit plans
within the meaning of Section 3(1) of ERISA (the "BUYER WELFARE PLANS") shall
provide coverage and benefits to Transferred Employees (and the eligible
dependents of the Transferred Employees) beginning on the Closing Date. Buyer
shall cause deductibles and out-of-pocket payments expended for coverage under
the Seller Welfare Plans in the plan year in which the Closing Date occurs to be
counted toward the deductibles and out-of-pocket maximums applicable to each
Transferred Employee under the Buyer Welfare Plans. Sellers will provide Buyer,
at Buyer's expense, with electronic or other copies of existing records
regarding each Transferred Employee's status regarding deductibles and
out-of-pocket expenses under the Seller Welfare Plans (it being understood that
Sellers will not be required to generate any reports or provide any other
information that it did not produce or maintain in the Ordinary Course of
Business). In addition, no pre-existing condition, limitation, exclusion or
waiting period applicable with respect to any Buyer Welfare Plan will apply to
any Transferred Employee.
(e) Savings and Pension Plans.
(i) Effective as of the Closing Date, Sellers will
cause all Transferred Employees to become fully vested in their account
balances under the Dana Corporation Employee Incentive and Savings
Investment Plan (the "SAVINGS PLAN") and their accrued benefits under
the Pension Plan for Dana Automotive Aftermarket Group Employees (the
"PENSION PLAN"). All Liabilities of Sellers under the Savings Plan and
the Pension Plan shall be Retained Liabilities.
(ii) With respect to each Transferred Employee who
has an outstanding loan under the Savings Plan, Buyer and Sellers shall
take such action as shall be necessary to permit such Transferred
Employee to rollover such loan to the applicable Buyer Plan.
48
11.3 COBRA; RETIREE MEDICAL BENEFITS. Buyer shall have sole
responsibility for "continuation coverage" benefits provided after the Closing
Date under Buyer's group health plans to all Transferred Employees, and
"qualified beneficiaries" of Transferred Employees, for whom a "qualifying
event" occurs on or after the Closing Date. Sellers shall have the sole
responsibility for "continuation coverage" benefits provided under Sellers'
group health plans to all employees of Sellers, and "qualified beneficiaries" of
employees of Sellers, for whom a "qualifying event" has occurred prior to the
Closing Date, or for any such individual who is not a Transferred Employee or
"qualified beneficiary" with respect to a Transferred Employee, regardless of
when such "qualifying event" occurs, and the obligations of Sellers under this
sentence shall be Retained Liabilities. The terms "continuation coverage,"
"qualified beneficiaries" and "qualifying event" shall have the meaning ascribed
to them under Section 4980B of the Code and Sections 601-608 of ERISA.
11.4 WARN ACT. Buyer shall not engage in a "mass layoff" or "plant
closing" as defined in the United States Worker Adjustment and Retraining
Notification Act (the "WARN ACT") affecting the Transferred Employees without
complying with the WARN Act. Buyer shall defend, indemnify and hold harmless
Sellers and their Related Persons from any claims, charges, suits, demands,
damage, or liability arising out of or relating to any such noncompliance with
the WARN Act from and after the Closing Date.
11.5 NON-ACTIVE EMPLOYEES. Except as expressly provided below, Buyer
shall make offers of employment to, and shall employ to the extent such offers
are accepted, the individuals employed in the EMG Business who are on non-active
status on the Closing Date due to lay-off, leave of absence or disability (the
"NON-ACTIVE EMPLOYEES"). Notwithstanding the foregoing, Sellers shall retain as
their employees any Non-Active Employees listed on Schedule 11.5 who are on
long-term disability leave on the Closing Date and any other Non-Active
Employees who are on long-term disability leave on the Closing Date, up to a
maximum of sixteen (16) such employees. In consideration of Seller's agreement
to retain such employees, Buyer shall pay to Sellers, on the Closing Date and
subject to the contemporaneous consummation of the transactions contemplated by
this Agreement, the sum of Five Hundred Thousand Dollars ($500,000) by wire
transfer of immediately available funds to an account designated by Dana.
ARTICLE XII
TERMINATION
12.1 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the Closing
Date:
(a) by mutual written consent of Buyer and Dana;
(b) by Buyer, if a Seller has committed a material breach of
any representation, warranty or covenant of Sellers in this Agreement and such
breach is either not capable of being cured or if such Seller has failed to cure
such breach within 30 days after written notice thereof from Buyer;
49
(c) by Dana, if Buyer has committed a material breach of any
representation, warranty or covenant of Buyer in this Agreement and such breach
is either not capable of being cured or if Buyer has failed to cure such breach
within 30 days after written notice thereof from Dana;
(d) by Buyer or Dana, upon written notice to the other, if the
transactions contemplated by this Agreement have not been consummated on or
prior to the Outside Termination Date, because the conditions precedent to the
terminating party's obligations to consummate the transactions hereunder set
forth in Article IX have not been met by such date, unless such failure of
consummation is due to the failure of the Party seeking such termination to
perform or observe in all material respects the covenants and agreements hereof
to be performed or observed by such Party;
(e) by Dana, upon written notice to Buyer, if the transactions
contemplated by this Agreement have not been consummated on or prior to the
Outside Termination Date as a result of the failure of Buyer to satisfy the
condition in Section 9.3(d) (unless such failure results from Sellers' breach of
Section 7.24); or
(f) by Buyer or Dana, upon written notice to the other Party,
if a Governmental Authority of competent jurisdiction has issued an Order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and such Order has become final and
non-appealable; provided, however, that the Party seeking to terminate this
Agreement pursuant to this clause (f) has used its commercially reasonable
efforts to remove such Order.
12.2 EFFECT OF TERMINATION.
(a) The termination of this Agreement is to be effected by
delivery of written notice of such termination by the Party terminating the
Agreement to the other Party. In the event of termination of this Agreement
pursuant to Section 12.1, no Party will have any Liability or any further
obligation to any other Party (except for any Liability of any Party then in
breach and as provided in Section 12.2(b) or Section 12.2(c)).
(b) Buyer shall pay to Dana the sum of $6,000,000 in the event
that:
(i) Dana terminates this Agreement pursuant to
Section 12.1(c); or
(ii) Buyer wrongfully refuses or fails to consummate
the transactions contemplated by this Agreement; or
(iii) Buyer terminates this Agreement pursuant to
Section 12.1(d) as a result of the failure to satisfy the condition in
Section 9.3(d) (unless such failure to results from Sellers' breach of
Section 7.24); or
(iv) Dana terminates this Agreement pursuant to
Section 12.1(e).
(c) Dana shall pay to Buyer the sum of $6,000,000 in the event
that:
50
(i) Buyer terminates this Agreement pursuant to
Section 12.1(b); or
(ii) Any Seller wrongfully refuses or fails to
consummate the transactions contemplated by this Agreement.
(d) The payment from Buyer or Dana pursuant to subsection (b)
or subsection (c) above, as the case may be, shall be due and payable within
five (5) Business Days after the effective date of termination of this
Agreement. Such payment by Buyer or Dana shall be regarded as liquidated damages
and not as a penalty and, except as provided in Section 12.2(e), the Party
making such payment shall have no further liability to the other Party or
Parties as a result of the termination of this Agreement. Without intending to
limit any other provision of this Agreement, In no event shall either party be
obligated to make the payment described in this subsection if the transactions
contemplated by this Agreement are not consummated because the applicable
waiting periods under the HSR Act shall not have expired or been terminated or
because any Governmental Authority shall have commenced an Action or obtained an
Order to prevent the consummation of such transactions on the basis of
applicable antitrust or similar Laws.
(e) The obligations of the Parties under Sections 5.24, 6.11,
7.3 and 13.1 and under the Reimbursement Agreement shall survive any termination
of this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses (including all legal,
accounting, broker, finder or investment banker fees) incurred in connection
with this Agreement and the Ancillary Agreements and the transactions
contemplated hereby are to be paid by the Party incurring such expenses, except
as expressly provided herein, in the Ancillary Agreements or in the
Reimbursement Agreement and except that Buyer and Sellers will each pay one-half
of (a) the costs of the filing fee and other out-of-pocket costs (including any
out-of-pocket payments to third party economists and accountants but excluding
any legal fees and expenses) incurred in connection with the HSR Act filing and
the efforts to cause the applicable waiting period to expire or be terminated
(b) the costs and expenses incurred by Buyer to obtain the Surveys, and (c) the
fees and expenses of PricewaterhouseCoopers incurred in the preparation of the
monthly and quarterly financial statements delivered pursuant to Section 7.17
and the audited annual financial statements delivered pursuant to Section 7.24.
13.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns, and no Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Subsidiaries and (ii)
designate one or more of its Subsidiaries to perform its obligations hereunder
(in any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
51
13.3 THIRD PARTY BENEFICIARIES. Each Party hereto intends that neither
this Agreement nor any of the Ancillary Agreements benefits or creates any legal
or equitable right, remedy or claim in or on behalf of any Person other than the
Parties. This Agreement, the Ancillary Agreements and all of their respective
provisions and conditions are for the sole and exclusive benefit of the Parties
to this Agreement and the Ancillary Agreements, and their successors and
permitted assigns.
13.4 NOTICES. Any notice or other communication provided for herein or
given hereunder to a Party hereto will be sufficient if in writing, and sent by
facsimile transmission (electronically confirmed), delivered in person, mailed
by first class registered or certified mail, postage prepaid, or sent by Federal
Express or other overnight courier of national reputation, addressed as follows:
If to Buyer:
Standard Motor Products, Inc.
37-18 Northern Boulevard
Long Island City, New York 11101
Attn: Chief Financial Officer
Fax: (718) 472-0122
with a copy to:
Kelley Drye & Warren, LLP
101 Park Avenue
New York, New York 10178
Attn: Ronald B. Risdon, Esq.
Fax: (212) 808-7897
If to Sellers:
Dana Corporation
4500 Dorr Street
Toledo, Ohio 43697
Attn: General Counsel
Fax: (419) 535-4790
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: John P. Dunn, Esq.
Fax: (216) 579-0212
52
or to such other address with respect to a Party as such Party notifies the
other in writing as above provided.
13.5 COMPLETE AGREEMENT. This Agreement (along with the Disclosure
Schedules and the exhibits and appendices hereto) and the Ancillary Agreements,
together with the Reimbursement Agreement and the Confidentiality Agreement,
contain the complete and exclusive statement of the terms of the agreements
between the Parties with respect to the transactions contemplated hereby and
thereby and supersede all prior agreements and understandings between the
Parties with respect thereto.
13.6 CAPTIONS; REFERENCES. The name of this Agreement and the captions
contained herein are for convenience of reference only and do not affect the
interpretation or construction hereof. When a reference is made in this
Agreement to a clause, a Section or an Article, such reference will be to a
clause, a Section or Article of this Agreement unless otherwise indicated.
13.7 AMENDMENT. This Agreement may be amended or modified only by a
written agreement referencing this Agreement and duly executed by the Parties.
13.8 WAIVER. At any time prior to the Closing Date, the Parties may (a)
extend the time for the performance of any of the obligations or other acts of
the Parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein, to the
extent permitted by applicable Law. Any agreement on the part of a Party hereto
to any such extension or waiver will be valid only if set forth in a writing
signed on behalf of such Party. No waiver by any 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 such prior or subsequent
occurrence.
13.9 GOVERNING LAW. This Agreement is to be governed by, and construed
and enforced in accordance with, the laws of the State of Ohio, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Ohio or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Ohio.
13.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision is to be interpreted
to be only so broad as is enforceable.
13.11 UPDATED DISCLOSURE SCHEDULES. Until five (5) days prior to
Closing, Sellers may deliver to Buyer amended versions of the Schedules required
or permitted by this Agreement to the extent required to reflect developments in
or effecting the EMG Business and its assets or liabilities which occur from and
after the date of this Agreement (such developments, together with any
information of which Sellers notify Buyer pursuant to the last sentence of
Section 7.2,
53
being collectively referred to as "NEW FACTS"). If any amendment made pursuant
to this Section 13.11 discloses New Facts which result from the conduct of the
EMG Business as permitted by Sections 7.1 or 7.2 of this Agreement, or which is
an event that is deemed not to have a Material Adverse Effect pursuant to the
proviso to the definition of such term, then without any further action by Buyer
the Schedules, as so amended, will be deemed to have amended for all purposes of
this Agreement, including Section 9.3(a) and Section 10.2(a). If any amendment
delivered by Sellers pursuant to this Section 13.11 discloses New Facts other
than those described in the preceding sentence, then the Schedules will be
deemed to have been amended for the purposes of this Agreement only if and to
the extent Buyer approves such amendment in writing.
13.12 SUBMISSION TO JURISDICTION. Each of the Parties submits to the
non-exclusive jurisdiction of any state or federal court sitting in the County
of New York, New York and the County of Lucas, Ohio in any Action arising out of
or relating to this Agreement and agrees that all claims in respect of such
Action may be heard and determined in any such court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought. Any Party may make service on the other Party by sending or
delivering a copy of the process to the Party to be served at the address and in
the manner provided for the giving of notices in Section 13.4 above. Nothing in
this Section 13.12, however, shall affect the right of any Party to bring any
action or proceeding arising out of or relating to this Agreement in any other
court or to serve legal process in any other manner permitted by law or in
equity. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or in equity.
13.13 CONSTRUCTION. This Agreement is the result of the joint efforts
of Buyer and Sellers, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the Parties and there is to be no
construction against either Party based on any presumption of that Party's
involvement in the drafting thereof. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Whenever the context
so requires or permits, all references to the masculine herein shall include the
feminine and neuter, all references to the neuter herein shall include the
masculine and feminine, all references to the plural shall include the singular
and all references to the singular shall include the plural. Nothing in the
Disclosure Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the applicable Disclosure Schedule
or a document attached thereto fairly discloses the exception. Without limiting
the generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
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 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 will not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
54
13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
(Signatures are on the following page.)
55
IN WITNESS WHEREOF, Buyer and Sellers have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BUYER:
STANDARD MOTOR PRODUCTS, INC.
By: /s/ James Burke
-------------------------------------
Name: James Burke
Title: VP Finance, CFO
SELLERS:
DANA CORPORATION BWD AUTOMOTIVE CORPORATION
By: /s/ Terry R. McCormack By: /s/ Terry R. McCormack
------------------------------------- -------------------------------------
Name: Terry R. McCormack Name: Terry R. McCormack
Title: President, Automotive Aftermarket Title: President, Automotive Aftermarket
Group (POA) Group (POA)
AUTOMOTIVE CONTROLS CORP. RISTANCE CORPORATION
By: /s/ Terry R. McCormack
-------------------------------------
Name: Terry R. McCormack By: /s/ Terry R. McCormack
Title: President, Automotive Aftermarket -------------------------------------
Group (POA) Name: Terry R. McCormack
Title: President, Automotive Aftermarket
Group (POA)
PACER INDUSTRIES, INC. ENGINE CONTROLS DISTRIBUTION
SERVICES, INC.
By: /s/ Terry R. McCormack
-----------------------------------------
Name: Terry R. McCormack By: /s/ Terry R. McCormack
Title: President, Automotive Aftermarket -------------------------------------
Group (POA) Name: Terry R. McCormack
Title: President, Automotive Aftermarket
Group (POA)
APPENDIX A
DEFINITIONS
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 1.1(e).
"ACQUIRED ASSETS" has the meaning set forth in Section 1.1.
"ACQUIRED CONTRACTS" has the meaning set forth in Section 1.1(g).
"ACQUIRED INTELLECTUAL PROPERTY" has the meaning set forth in Section
1.1(i).
"ACTION" means any action, suit or legal, administrative or arbitral
proceeding or investigation before any Governmental Authority.
"AFFILIATE" means with respect to any Person, any Person that directly
or indirectly controls, is controlled by or is under common control with such
Person.
"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"ANCILLARY AGREEMENTS" means the Share Ownership Agreement, the
Nashville Sub-Lease, the Nashville Sub-Sub-Lease, the Seller Leases, the Supply
Agreements, the Transition Services Agreements, and the other agreements and
documents contemplated hereby.
"APPORTIONABLE EXPENSES" has the meaning set forth in Section 7.11(a).
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.1.
"BILL OF SALE" means the bill of sale and instrument of assignment and
assumption substantially in the form of Exhibit F hereto.
"BRANFORD ACCESS AGREEMENT" means the access agreement between Buyer
and a Seller, granting to such Seller access to the fuel pump testing areas at
the Branford facility, substantially in the form of Exhibit Z hereto, with such
changes thereto as shall be mutually acceptable to Buyer and the applicable
Seller.
"BRANFORD RENTAL PROPERTIES" means the real property and all personal
property located thereon located adjacent to the real property located in
Branford, Connecticut and more particularly described on Schedule A-1 attached
hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banks in Ohio or New York are authorized or obligated by Law to close.
"BUYER" has the meaning set forth in the preamble to this Agreement.
"BUYER DEDUCTIBLE" has the meaning set forth in Section 10.3(a)(ii).
"BUYER MINIMUM CLAIM AMOUNT" has the meaning set forth in Section
10.3(a)(i).
A-2
"BUYER PLANS" has the meaning set forth in Section 11.2(c).
"BUYER REPORTS" has the meaning set forth in Section 6.5.
"BUYER WELFARE PLANS" has the meaning set forth in Section 11.2(d).
"BUYER'S ACCOUNTANTS" has the meaning set forth in Section 3.3(d).
"BUYER'S KNOWLEDGE" means the actual knowledge of James Burke, Larry
Sills, John Gethin, Bob Martin, John Holowko and Eric Sills.
"BUYER'S LENDER" means General Electric Capital Corporation, as agent
for the lenders under the Financing Agreements.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CLOSING" has the meaning set forth in Section 4.1.
"CLOSING DATE" has the meaning set forth in Section 4.1.
"CLOSING NET BOOK VALUE" has the meaning set forth in Section 3.3(a).
"CLOSING NET BOOK VALUE STATEMENT" has the meaning set forth in Section
3.3(c).
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMON SHARES" has the meaning set forth in Section 3.2(a)(ii).
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
7.3(c).
"CONSENT" means any consent, approval, authorization, qualification,
waiver or notification of a Governmental Authority or any other Person.
"CONTRACTS" means any written or oral contract, agreement, license,
commitment, undertaking or arrangement, whether express or implied.
"CSFB" has the meaning set forth in Section 5.24.
"CUMSA" means Candados Universales de Mexico, S.A. de C.V.
"DAMAGES" has the meaning set forth in Section 10.2(a).
"DANA" means Dana Corporation, a Virginia corporation.
"DEP" has the meaning set forth in Section 8.2(c).
"DESIGNATED ACCOUNTING ARBITRATOR" has the meaning set forth in Section
3.3(e).
A-3
"DISCLOSURE SCHEDULES" means the Schedules attached hereto pursuant to
Articles V and VI.
"DISPUTE NOTICE" has the meaning set forth in Section 3.3(e).
"DOJ" has the meaning set forth in Section 7.4(b).
"ECHLIN-MEXICANA" means Echlin Industrias de Mexico, S.A. de C.V.
"EMG BUSINESS" means the manufacture and distribution in the United
States for the passenger car and light vehicle markets of aftermarket parts for
bulk ignition wire, ignition wire sets, battery cable assemblies, mechanical
fuel injection, electric fuel injection, disk fuel injection, distributor caps,
rotors, distributor cap relays, ignition coils, oxygen sensors, camshaft
sensors, crankshaft sensors, electronic ignition, solenoids, voltage regulators,
computer control modules, carburetor kits, mass air flow sensors, glow plug
controllers, condensers, contact sets, pick-up coils, ballast resistors, PCV
valves, automotive relays, emission gas regulators, and fuel pressure regulators
and all other product groups sold by the Sellers in the last 12 months that were
reflected in the EMG Financial Statements. The term "EMG Business" shall not,
however, include manufacture or distribution anywhere in the world of any
products of the Retained Business Lines.
"EMG CONTRACTS" has the meaning set forth in Section 5.9(a).
"EMG FINANCIAL STATEMENTS" has the meaning set forth in Section 5.4(a).
"EMPLOYEE RETENTION INCENTIVE AGREEMENTS" means the Employee Retention
Incentive Agreements by and between Dana and certain management members of the
EMG Business set forth on Exhibit G hereto.
"ENVIRONMENT" shall include, but is not limited to, air, land, surface
water or groundwater, and any building structure (such as floors, walls,
subsurface material, etc.), but shall not include any equipment.
"ENVIRONMENTAL CLAIM" shall mean any investigation, notice, violation,
directive, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial, quasi-judicial or private in nature) arising (i)
pursuant to or in connection with any violation of any Environmental, Health,
and Safety Requirement, (ii) in connection with any abatement, removal,
remedial, corrective, or other response action involving Hazardous Substances,
or (iii) arising from damage to natural resources.
"ENVIRONMENTAL CONDITION" shall mean any condition (including, without
limitation, any Hazardous Substances Contamination) with respect to the
Environment, as a result of which any Person (i) has incurred, or which results
in any damage, loss, cost, expense, claim, or liability to any Person or
property (including, without limitation, any Government Authority), or (ii) has
become subject to any order or demand to remediate such condition, including,
without limitation, any condition resulting from the operation of the EMG
Business.
A-4
"ENVIRONMENTAL COSTS" shall mean all charges, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including all consultants' fees, arising under
or related in any way to Environmental, Health, and Safety Requirements or
relating to a requirement of an applicable state voluntary cleanup program to
achieve an industrial property standard or criteria for remediation.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean any and all
present and subsequently enacted laws, statutes, codes, rules, or regulations,
ordinances, treaties, and permits, applicable to, affecting or relating to the
protection, preservation or remediation of the Environment enacted or
promulgated, published, decided or required by any federal, state, provincial,
county or municipal legislative, executive, judicial or regulatory authority, as
the case may be, including: (1) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 USCA 9601 et seq., (2) Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA 6901 et
seq., (3) Federal Water Pollution Control Act of 1972, as amended by the Clean
Water Act of 1977, as amended, 33 USCA 1251 et seq., (4) Toxic Substances
Control Act of 1976, as amended, 15 USCA 2601 et seq., (5) Emergency Planning
and Community Right-To-Know Act of 1986, 42 USCA 11001 et seq., (6) Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 USCA 7401 et
seq., (7) National Environmental Policy Act of 1970, as amended, 42 USCA 4321 et
seq., (8) Rivers and Harbors Act of 1899, as amended, 33 USCA 401 et seq., (9)
Endangered Species Act of 1973, as amended, 16 USCA 1531 et seq., (10)
Occupational Safety and Health Act of 1970, as amended, 29 USCA 651 et seq., to
the extent such act applies to the protection of the Environment, (11) Safe
Drinking Water Act of 1974, as amended, 42 USCA 300 (f) et seq., (12) Pollution
Prevention Act of 1990, 42 USCA 13101 et seq., (13) Oil Pollution Act of 1990,
33 USCA 2701 et seq., (14) the Atomic Energy Act of 1954 (42 USCA. 2011, et.
seq.), and any rules, regulations, ordinances, permits, policy statements,
guidance documents and judicial decisions enacted, issued, or promulgated,
published, decided or required by or under the laws referred to in items
(1)-(14) above, as well as any similar state, county or municipal statutes,
codes, rules or regulations ordinances, permits, policy statements, guidance
documents, and judicial decisions as the case may be.
"ENVIRONMENTAL PERMITS" shall mean any and all permits, licenses,
approvals, authorizations, consents or registrations required by any
Environmental, Health, and Safety Requirements in connection with the ownership,
construction, equipping, use or operation of the EMG Business or the Real
Properties, for the storage, treatment, generation, transportation, processing,
handling, production, release, storage, transportation and/or disposal of
Hazardous Substances in connection with the EMG Business or the sale, transfer
or conveyance of the Real Properties.
"ENVIRONMENTAL REPORTS" means the Phase I and other environmental
reports identified on Exhibit H.
"EQUITY OFFERING" means a public offering of shares of the Common
Shares, which offering yields net proceeds to Buyer of at least $59,000,000.
A-5
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means "affiliate," as such term is defined under
ERISA.
"ESTIMATED CLOSING NET BOOK VALUE" has the meaning set forth in Section
3.3(b).
"ESTIMATED CLOSING NET BOOK VALUE STATEMENT" has the meaning set forth
in Section 3.3(b).
"ESTIMATED NBV EXCESS" has the meaning set forth in Section 3.3(b).
"ESTIMATED PURCHASE PRICE" has the meaning set forth in Section 3.3(b).
"EVALUATION MATERIAL" has the meaning set forth in Section 7.3(c).
"FINAL NET BOOK VALUE STATEMENT" has the meaning set forth in Section
3.3(g).
"FINANCING AGREEMENTS" has the meaning set forth in Section 6.10.
"FINANCING CONDITIONS" means the conditions precedent set forth in the
Financing Agreements to which the lenders obligation to make loans thereunder is
subject, including, without limitation, the successful completion of the Equity
Offering.
"FIXED ASSETS" has the meaning set forth in Section 1.1(b).
"FORMER EMG FACILITIES" means the facilities formerly operated by
Sellers or their Affiliates in connection with the EMG Business at (i) 9101 Ely
Road, Pensacola, Florida; (ii) KM. 8.5 Carr. Lauro Villar H, Matamoros Tamps,
Mexico; (iii) 29387 Lorie Lane, Wixom, Michigan; (iv) 21 Roadway, Carlisle,
Pennsylvania; (v) 101 El Tuque Industrial Park, Ponce, Puerto Rico; (vi) 2345
Central Avenue, Brownsville, Texas; (vii) 127 Branford Connecticut; (viii) 1111
McKinley Street, Ottawa, Illinois; (ix) 2155 State Street, Hamden Connecticut;
(x) 9669 Prosperity Road, West Jordan, Utah; and (xi) the Branford Rental
Properties. If any facilities are closed by Sellers in accordance with Section
7.2, such facilities will be deemed to be Former EMG Facilities.
"FRANKLIN PARK LOCKBOX" has the meaning set forth in Section 1.1(d).
"FTC" has the meaning set forth in Section 7.4(b).
"GAAP" means United States generally accepted accounting principles.
"GOLDMAN" has the meaning set forth in Section 6.11.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision,
whether federal, state, local or foreign, or any agency or instrumentality of
any such government or political subdivision, or any federal, state, local or
foreign court or arbitrator.
A-6
"HAZARDOUS SUBSTANCE" shall mean, without limitation, friable or
airborne asbestos, polychlorinated biphenyls, petroleum, petroleum constituents,
petroleum products, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials, pollutants, and toxic pollutants, as defined in
or which is otherwise the subject of any requirement pursuant to any
Environmental, Health, and Safety Requirement.
"HAZARDOUS SUBSTANCES CONTAMINATION" shall mean, with respect to any
premises, building or facilities, or the Environment, contamination by a Release
or the presence of Hazardous Substances.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" means for any Person (without duplication): (i) all
indebtedness for borrowed money, whether current, short-term, or long-term,
secured or unsecured (excluding trade accounts payable); (ii) all indebtedness
for the deferred purchase price for purchases of property outside the ordinary
course that is not evidenced by trade accounts payables; (iii) any payment of
obligations in respect of letters of credit (other than stand-by letters of
credit in support of ordinary course trade payables); (iv) any liability with
respect to interest rate swaps, collars, caps and similar hedging obligations;
(v) any lease obligations under leases that are required to be accounted for as
capital leases under GAAP; (vi) any indebtedness referred to in clauses (i)
through (v) above that is directly or indirectly guaranteed by such Person.
"INDEMNIFYING PARTY" and "INDEMNIFIED PARTY" have the meanings set
forth in Section 10.1(d).
"INTELLECTUAL PROPERTY" means (i) patents and patent applications; (ii)
trademarks, service marks, trade names, brand names, trade dress, slogans, logos
and internet domain names, and registrations and applications for registration
thereof; (iii) copyrights (registered or unregistered), writings and other
copyrightable works and works in progress, and registrations and applications
for registration thereof; (iv) inventions, discoveries, ideas, processes,
formulae, designs, models, industrial designs, know-how, confidential
information, proprietary information and trade secrets, whether or not patented
or patentable; and (v) all other intellectual property rights.
"IP ASSIGNMENTS" has the meaning set forth in Section 4.2(g).
"IP LICENSES" means (i) the license or licenses, between Buyer, as
licensor, and one or more Sellers, as licensee, granting to such Sellers
licenses to use those items of Acquired Intellectual Property identified in the
Disclosure Schedules as being licensed back to Sellers, and (ii) the license or
licenses, between one or more Sellers, as licensor, and Buyer, as licensee,
granting to Buyer licenses to use certain items of Intellectual Property
retained by Sellers, in each case substantially in the forms attached as Exhibit
Y hereto, with such changes thereto as shall be mutually acceptable to Buyer and
the applicable Sellers.
"LAW" means any law, statute, code, ordinance, rule, regulation or
other legally enforceable requirement of any Governmental Authority.
A-7
"LEASED REAL PROPERTY" means the real property and improvements leased
to Sellers pursuant to the Real Estate Leases.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether or not accrued, contingent, known or unknown, or reflected on a balance
sheet, including those arising under any Law, Action or Order of any
Governmental Authority or any judgment of any court of any kind or any award of
any arbitrator of any kind, and those arising under any Contract.
"LIEN" means any mortgage, lien, pledge, adverse claim, interest,
charge or other similar encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to the EMG Business or
Buyer, as the case may be, a material adverse effect on the business, assets,
liabilities or financial condition of such business or such party and its
Subsidiaries, if any, taken as a whole, but excluding any state of facts, event,
change or effect caused by events, changes or developments relating to (i)
changes or conditions affecting the industries of which the EMG Business or the
Buyer's business, as the case may be, is a part generally; (ii) changes in
economic, regulatory or political conditions generally; or (iii) any acts of war
or terrorism; provided, however, that the following events, to the extent they
occur after the public announcement of the execution of this Agreement, shall
not be deemed to have a Material Adverse Effect on the EMG Business: (x) the
discontinuation of any amount of purchases by any customer of the EMG Business
if such customer instead agrees to purchase or purchases comparable amounts from
Buyer; (y) the discontinuation of purchases by one or more customers that in the
aggregate accounted for revenues of not more than $20,000,000 for the EMG
Business during the most recently ended twelve-month period; or (z) the
discontinuation of any amount of purchases by any customer more than 75 days
after the public announcement of the execution of this Agreement or after April
26, 2003, whichever is first to occur.
"MINIMUM REMEDIATION STANDARDS" means a remediation of any
Environmental Conditions identified in the Buyer's Further Investigations and/or
Seller's Further Investigations (collectively, the "FURTHER Investigations") in
accordance with applicable state remediation standards and/or criteria relating
to industrial properties.
"NASHVILLE SUB-LEASE" means the Sub-Lease Agreement substantially in
the form of Exhibit I hereto by and between Dana, as sublessor, and Buyer, as
sublessee, which provides for the sublease by Dana to Buyer of the real property
located at 6050 Dana Way, Nashville, Tennessee.
"NASHVILLE SUB-SUB-LEASE" means the Sub-Sub-Lease Agreement
substantially in the form of Exhibit J hereto by and between Buyer, as
sub-sublessor, and Dana, as sub-sublessee, which provides for the sub-sublease
by Buyer to Dana of a portion of the real property located at 6050 Dana Way,
Nashville, Tennessee.
"NEGOTIATION PERIOD" has the meaning set forth in Section 7.23.
"NONASSIGNABLE ASSET" has the meaning set forth in Section 1.3(a).
A-8
"ORDER" means any order, judgment, ruling, injunction, award, decree or
writ of any Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with Sellers' past custom and practice with respect to the EMG
Business.
"OUTSIDE TERMINATION DATE" means:
(a) April 30, 2003, if the applicable waiting periods under
the HSR Act have expired or been terminated not more than thirty days after the
date of filing under the HSR Act;
(b) if the applicable waiting periods under the HSR Act have
not expired or been terminated within the foregoing thirty day period, 45 days
after the later of the expiration or termination of the applicable waiting
periods under the HSR Act or the date Buyer is informed by the staff of the SEC
that it will have no further comments to Buyer's registration statement for the
Equity Offering;
(c) if the commitment of the lenders under the Financing
Agreements to provide the loans required by Buyer to consummate the transactions
contemplated by this Agreement has expired or been terminated, then the earlier
of (i) the date Buyer's Lender indicates to Buyer in writing that Buyer's Lender
will not consider an extension of such commitment or (ii) thirty (30) days after
the date of such expiration or termination; or
(d) September 30, 2003 in any event;
provided, however, Buyer may extend the Outside Termination Date prescribed
under clause (a) or clause (b) above until 75 days after the date that would
otherwise apply if, not later than ten (10) days prior to the date that would be
the Outside Termination Date without such extension, Buyer delivers to Dana a
Certificate of Buyer's chief executive officer or chief financial officer to the
effect that Buyer's board of directors has determined on the basis of such
advice as it deemed appropriate that the consummation of the Equity Offering by
such originally prescribed Outside Termination Date would have a material
adverse effect on Buyer, but in no event shall the Outside Termination Date
extend beyond September 30, 2003.
"OWNED REAL PROPERTY" has the meaning set forth in Section 1.1(n).
"PARTIES" has the meaning set forth in the Preamble.
"PENSION PLAN" has the meaning set forth in Section 11.2(e)(i).
"PERMITS" has the meaning set forth in Section 1.1(j).
"PERMITTED LIENS" means (i) Liens arising under Laws affecting the use of real
property, including zoning Laws, building Laws and similar restrictions that are
not violated by the current use or occupancy of such real property or the
operation of the EMG Business as currently conducted thereon; (ii) Liens
included in the Assumed Liabilities; (iii) Liens for Taxes, assessments or
governmental or other similar charges or levies that are not yet due and payable
A-9
or that, although due and payable, are being contested in good faith; (iv)
mechanics,' workmen's, materialmen's, landlords,' carriers' or other similar
Liens arising in the Ordinary Course of Business with respect to Liabilities
that are not yet due and payable or that are being contested in good faith; (v)
Liens disclosed on Schedule A-2; (vi) matters that would be disclosed by
accurate surveys of the applicable real property; and (vii) minor imperfections
of title, if any, none of which are substantial in amount or materially detract
from the value or impair the use or occupancy of the property subject thereto or
the operation of the EMG Business.
"PERSON" means any individual, sole proprietorship, partnership,
corporation, limited liability company, joint venture, unincorporated society or
association, trust or other entity or Governmental Authority.
"PRICE PER SHARE" has the meaning set forth in Section 3.2(a)(ii).
"PRO FORMA BALANCE SHEET" has the meaning set forth in Section 5.4(b).
"PUMPS ACCOUNTS RECEIVABLE" means Accounts Receivable of the portion of
the Retained Business Lines relating to fuel pumps and water pumps.
"PURCHASE ORDERS" has the meaning set forth in Section 1.1(h).
"PURCHASE PRICE" has the meaning set forth in Section 3.1.
"RAM DIVISION" means the operations conducted by Sellers at 150 Ludlow
Avenue, Northvale, N.J.
"REAL ESTATE CONVEYANCE" means the deeds and other instruments of
conveyance, in form and substance reasonably acceptable to Buyer and the Title
Company, pursuant to which Sellers convey to Buyer all of Sellers' right, title
and interest in and to the Owned Real Property.
"REAL ESTATE LEASE ASSIGNMENT" means the instrument of assignment and
assumption of the Real Estate Leases, substantially in the form of Exhibit K
hereto.
"REAL ESTATE LEASES" has the meaning set forth in Section 1.1(a).
"REAL PROPERTY" means, collectively, the Owned Real Property and the
Leased Real Property.
"REIMBURSEMENT AGREEMENT" means the reimbursement letter agreement,
dated August 2, 2002, by and between Dana and Buyer.
"RELATED PERSONS" means, as to any Person, its officers, directors,
employees, shareholders, partners, Affiliates, advisors, agents or
representatives.
"RELEASE" shall include any "release" and/or "threat of release" as
those terms are defined under any Environmental, Health and Safety Requirements,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 USCA Section 9601, et
seq.), and the regulations promulgated thereunder.
A-10
"REPLACEMENT LEASES" means the assignment of the portion each lease of
motor vehicles and equipment that relates to the EMG Business that are listed on
Exhibit L hereto.
"RETAINED ASSETS" has the meaning set forth in Section 1.2.
"RETAINED BUSINESS LINES" means (i) the manufacture or distribution of
clutches, fuel pumps and water pumps; (ii) the Echlin-Mexicana, Beck/Arnley,
Canadian and CUMSA businesses; and (iii) all other businesses of Sellers and
their Affiliates other than the EMG Business.
"RETAINED LIABILITIES" has the meaning set forth in Section 2.2.
"RETAINED NAMES" has the meaning set forth in Section 7.14.
"SAVINGS PLAN" has the meaning set forth in Section 11.2(e)(i).
"SEC" has the meaning set forth in Section 6.5.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"SELLER" and "SELLERS" have the meaning set forth in the preamble to
this Agreement.
"SELLER BENEFIT ARRANGEMENTS" has the meaning set forth in Section
5.18(a).
"SELLER DESIGNEE" means Dana or one of its Subsidiaries designated by
notice to Buyer prior to the Closing.
"SELLER ERISA PLANS" has the meaning set forth in Section 5.18(a).
"SELLER LEASES" means the lease agreement or agreements substantially
in the form of Exhibit M hereto regarding the real property commonly known as
(i) 1 Echlin Road, Branford, Connecticut; (ii) 1300 W. Oak Street, Independence,
Kansas; (iii) 800 N. 21st Street, Independence, Kansas; (iv) 10590-17th Street,
Argos, Indiana; and (v) 1718 North Home Street, Mishawaka, Indiana.
"SELLER NOTE" has the meaning set forth in Section 3.2(a)(iii).
"SELLER SHARES" has the meaning set forth in Section 3.2(a)(ii).
"SELLER WELFARE PLANS" has the meaning set forth in Section 11.2(d).
"SELLERS' ACCOUNTANTS" has the meaning set forth in Section 3.3(d).
A-11
"SELLERS' KNOWLEDGE" means the actual knowledge of Terry McCormack,
John Washbish, Harry Whited, Richard Westerhide, Tom Madden and Patrick Manning
and, for the purposes of Section 5.19, Paul Renberg.
"SHARE OWNERSHIP AGREEMENT" means the Share Ownership Agreement by and
between Buyer and the Seller Designee, substantially in the form of Exhibit R
hereto.
"SITE ASSESSMENT ENVIRONMENTAL LIABILITIES" has the meaning set forth
in Section 8.1.
"SPECIFIED ACCOUNTING PRINCIPLES" means the Specified Accounting
Principles set forth in Exhibit S hereto as the same may be amended in
accordance with Article III.
"SUBORDINATION AGREEMENT" means the Subordination Agreement by and
among Dana, Buyer and Buyer's Lender, substantially in the form of Exhibit T
hereto.
"SUBSIDIARIES" means any Person of which at least a majority of the
outstanding shares or other equity interests having ordinary voting power for
the election of directors or comparable managers of such Person are at the time
owned, directly or indirectly, by such Person, by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
"SUPPLY AGREEMENTS" means (i) the Beck-Arnley Supply Agreement,
substantially in the form of Exhibit U hereto and (ii) the Canadian Supply and
Distribution Agreement, substantially in the form of Exhibit V hereto.
"SURVEYS" has the meaning set forth in Section 9.3(f).
"TAX" or "TAXES" means any and all domestic or foreign federal, state
or local income, franchise, business, occupation, sales/use, manufacturer's
excise, payroll, withholding, Federal Insurance Contributions Act and employment
and unemployment taxes, personal and real property taxes and all other taxes or
charges (including all interest, penalties and additions to tax) measured,
assessed, levied, imposed or collected by any Governmental Authority, including
any such taxes or other charges the payment of which has been deferred.
"TAX RETURNS" means all Tax returns (including information returns) and
reports that are or were required to be filed by, or with respect to, the EMG
Business or its income, properties or operations.
"TITLE COMMITMENTS" means the commitments for title insurance listed on
Schedule A-3.
"TITLE COMPANY" has the meaning set forth in Section 9.3(e).
"TRADE PAYABLES" has the meaning set forth in Section 2.1(c).
"TRANSFER NOTICE" has the meaning set forth in Section 7.23.
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 11.1.
A-12
"TRANSITION SERVICES AGREEMENTS" means the Buyer Transition Services
Agreement by and between Dana and Buyer, substantially in the form of Exhibit W
hereto, and the Sellers Transition Services Agreement, substantially in the form
of Exhibit X hereto.
"WARN ACT" has the meaning set forth in Section 11.4.
A-13
EXHIBIT 2
EXECUTION COPY
SELLER NOTE
THIS SUBORDINATED PROMISSORY NOTE (THIS "NOTE") AND THE INDEBTEDNESS EVIDENCED
HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THE
SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH BY AND AMONG PAYEE,
GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT (THE "AGENT") AND MAKER (THE
"SUBORDINATION AGREEMENT").
THIS NOTE WAS ORIGINALLY ISSUED ON JUNE 30, 2003, AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT
TO THIS NOTE HAS BECOME AND REMAINS EFFECTIVE OR UNLESS PAYEE ESTABLISHES TO THE
SATISFACTION OF MAKER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUBORDINATED PROMISSORY NOTE
U.S. $15,125,000 New York, NY
June 30, 2003
FOR VALUE RECEIVED, the undersigned, Standard Motor Products, Inc., a
New York corporation (hereinafter "MAKER"), hereby promises to pay to the order
of Dana Corporation, a Virginia corporation ("PAYEE"), at 4500 Dorr Street,
Toledo, Ohio 43615, or such other place as Payee may from time to time designate
in writing, the principal sum of Fifteen Million One Hundred Twenty-Five
Thousand Dollars ($15,125,000) in lawful money of the United States of America,
together with interest accruing thereon from the date hereof, at the rates and
times hereinafter provided. Capitalized terms used but not defined in this Note
have the respective meanings assigned to such terms in the Asset Purchase
Agreement, dated as of February 7, 2003 (the "AGREEMENT"), by and among Payee,
certain of its Subsidiaries and Maker.
1. INTEREST. Interest hereunder shall accrue monthly on the unpaid
principal balance of this Note beginning on the date this Note is
issued, and continuing monthly thereafter until maturity. The rate of
interest will be 9% per annum from the date this Note is issued until
the first anniversary thereof and will thereafter increase by one-half
of a percentage point (0.5%) on each anniversary of such date until all
amounts owed under this Note are paid in full. Notwithstanding the
foregoing, during the continuance of an Event of Default the rate of
interest will be an additional 2% per annum over the rate determined in
accordance with the preceding sentence. Interest due and payable
hereunder will be computed based on the actual number of days elapsed
in a 360-day year.
2. PAYMENT TERMS. All accrued and unpaid interest shall be due and
payable in arrears on the first Business Day after the end of each
calendar quarter, commencing with the
calendar quarter ending on September 30, 2003. The principal balance
shall be due and payable on the date that is 5 years and 6 months after
the date on which this Note is issued. At any time upon five (5) days'
prior written notice to Payee, this Note may be prepaid by Maker in
whole or in part without penalty or premium. Any such permitted
prepayment under this Note shall first be applied to amounts due
hereunder pursuant to Section 9 other than for principal or interest,
second, to accrued and unpaid interest and last to principal.
3. COVENANTS OF MAKER. Maker shall provide Payee copies of (i) Maker's
unaudited monthly consolidated balance sheet and profit and loss and
cash flow statements; provided that Maker will not be obligated to
provide such balance sheets or statements for the month of January;
(ii) each notice from the Agent of any event of default or acceleration
under the Senior Lending Agreements (as defined in the Subordination
Agreement) and (iii) all amendments, modifications, supplements,
extensions and restatements of or to the Senior Lending Agreements (as
defined in the Subordination Agreement) promptly upon execution
thereof.
4. ADJUSTMENT OF PRINCIPAL BALANCE. If the Purchase Price is adjusted
pursuant to Section 3.3 of the Agreement, the principal amount of this
Note shall automatically be reduced or increased, as the case may be,
as provided in such Section. Upon receipt from Maker of a replacement
promissory note providing for such reduced or increased principal
amount, Payee shall promptly return this Note to Maker.
5. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT":
(a) Maker fails to pay when due any principal, interest or other
amount due under this Note and such failure continues for ten
(10) days after the same becomes due;
(b) Maker fails to comply with any covenant in this Note and such
failure continues uncured for thirty (30) days after Maker's
receipt of notice of such failure;
(c) The indebtedness owing under the Senior Loan Documents shall
have been accelerated based upon the occurrence of an event of
default under the Senior Loan Documents;
(d) Maker becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they become due or makes an
assignment for the benefit of creditors, or if a trustee or
receiver is appointed for Maker or for the major part of its
property and is not discharged within 90 days after such
appointment;
(e) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any
bankruptcy or similar laws for the relief of debtors, are
instituted by or against Maker and, if instituted against
Maker, are consented to by Maker or are not dismissed within
90 days after such institution; or
(f) Maker is merged or consolidated with or into any Person, or
Maker sells, leases or transfers all or substantially all of
its assets to any Person.
2
6. ACCELERATION. Subject to the Subordination Agreement: upon the
occurrence of an Event of Default under Section 5(d) or 5(e), all
principal, interest and all other amounts then outstanding hereunder
shall automatically mature and become immediately due and payable; and
upon the occurrence of any other Event of Default, Payee may, at its
option, declare the principal, interest and all other amounts then
outstanding hereunder to be immediately due and payable.
7. REMEDIES. Subject to the Subordination Agreement, upon the occurrence
of any Event of Default, Payee, at its option, may enforce or cause to
be enforced any and all of the rights or remedies accorded to Payee
under this Note or at law or in equity, by virtue of statute or
otherwise.
8. FORM OF PAYMENT. All payments hereunder will be made in such coin or
currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts.
9. COSTS AND EXPENSES. In the event that any principal or interest due
hereunder is not paid in accordance with this Note, Maker shall pay any
and all reasonable costs and expenses incurred by Payee to collect or
enforce the sums due hereunder, including, but not limited to,
reasonable attorneys' fees and expenses.
10. NO WITHHOLDING. All payments hereunder shall be made without
withholding on account of taxes, levies, duties or any other similar
deduction whatsoever, or with such additional amounts as may be
necessary in order that Payee, after such withholding, receives the
full amount of interest then due and payable or intended to be prepaid.
11. WAIVER OF DEFENSES. Maker hereby waives presentment for payment,
protest and demand, suretyship defenses and all other defenses in the
nature thereof and notice of non-payment.
12. NO IMPLIED WAIVER. Payee shall not, by any act, delay, omission or
otherwise, be deemed to waive any of its rights or remedies hereunder,
unless such waiver be in writing and signed by Payee and Maker, and
then only to the extent expressly set forth therein. A waiver on any
such occasion shall not be construed as a bar to, or waiver of, any
such right or remedy on any future occasion.
13. INTEREST RATE LIMITATION. Nothing herein contained, nor any
transaction related thereto, shall be construed or so operate as to
require Maker to pay interest at a greater rate than is now lawful or
in any case to contract for, or to make any payment, or to do any act
contrary to applicable law. Should any interest or other charges paid
by Maker, or parties liable for the payment of this Note, in connection
with the indebtedness evidenced by this Note or any other document
delivered in connection with this Note, result in the computation or
earning of interest in excess of the maximum legal rate of interest
that is legally permitted under applicable law, then any and all such
excess shall be, and the same hereby is, waived by Payee, and any and
all such excess shall be automatically credited against and in
reduction of the balance due under this Note, and the portion of said
excess that exceeds the balance due under this Note shall be paid by
Payee to Maker.
3
14. GOVERNING LAW AND SEVERABILITY. The provisions of this Note shall be
construed according to the laws of the State of New York without regard
to conflict of laws principles. If any provision hereof is in conflict
with any statute or rule of law of the State of New York or is
otherwise unenforceable for any reason whatsoever, then such provision
shall be ineffective to the extent of such invalidity, and shall be
deemed separable from and shall not invalidate any other provision of
this Note.
15. NOTICES. All notices required or permitted hereunder shall be given
in accordance with Section 13.4 of the Agreement.
16. BINDING EFFECT. This Note shall be shall be binding upon Maker and
Maker's successors and assigns and shall inure to the benefit of Payee
and its successors and assigns.
STANDARD MOTOR PRODUCTS, INC., as
Maker:
By: /s/ James J. Burke
Name: James J. Burke
Title: Vice President Finance, CFO
4
EXHIBIT 3
SHARE OWNERSHIP AGREEMENT
DATED AS OF JUNE 30, 2003
1. Registration Rights........................................................................................1
1.1 Definitions.......................................................................................1
1.2 Limitation on Transfer............................................................................2
1.3 Restrictive Legend................................................................................3
1.4 Company Registration..............................................................................4
1.5 Form S-3 Registration.............................................................................5
1.6 Obligations of Company............................................................................5
1.7 Information from Dana.............................................................................7
1.8 Expenses of Registration..........................................................................7
1.9 Delay of Registration.............................................................................7
1.10 Indemnification...................................................................................8
1.11 Reports Under the Exchange Act...................................................................10
1.12 Termination of Registration Rights...............................................................10
1.13 Determination of Availability of Rule 144(k) of the Securities Act...............................11
2. Miscellaneous.............................................................................................11
2.1 No Implied Restrictions..........................................................................11
2.2 Purchase Price Adjustment........................................................................11
2.3 Successors and Assigns...........................................................................11
2.4 Third Party Beneficiaries........................................................................11
2.5 Counterparts.....................................................................................12
2.6 Captions; References.............................................................................12
2.7 Notices..........................................................................................12
2.8 Amendments and Waivers...........................................................................13
2.9 Severability.....................................................................................13
2.10 Governing Law....................................................................................13
2.11 Submission to Jurisdiction.......................................................................13
2.12 Further Assurances...............................................................................14
2.13 Complete Agreement...............................................................................14
2.14 Construction.....................................................................................14
2.15 Expenses.........................................................................................14
EXECUTION COPY
SHARE OWNERSHIP AGREEMENT
This SHARE OWNERSHIP AGREEMENT (this "Agreement") is entered into as of
June 30, 2003 by and between Standard Motor Products, Inc., a New York
corporation ("Company") and Dana Corporation, a Virginia corporation ("Dana").
A. Dana, certain of its Affiliates (including Dana
Corporation) and Company are parties to that certain Asset Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement"), pursuant to which Dana
and the other Sellers (as defined in the Purchase Agreement) have agreed to sell
and Company has agreed to purchase substantially all of the assets, properties,
rights and interests relating to the EMG Business (as defined in the Purchase
Agreement), as further provided in the Purchase Agreement;
B. As part of the consideration under the Purchase Agreement,
Company is issuing to Dana 1,378,760 shares of common stock, par value $2.00 per
share, of Company (including any such shares received by Dana as a result of a
Recapitalization or pursuant to Section 3.3(g) of the Purchase Agreement, the
"Common Shares").
C. The obligations of Company and Sellers under the Purchase
Agreement are conditioned, among other things, upon the execution and delivery
of this Agreement by Dana and Company.
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained in this Agreement and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. REGISTRATION RIGHTS
1.1 DEFINITIONS
For purposes of this Agreement the following terms have the
meanings set forth below (capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Purchase Agreement):
"Change in Control Transaction" means any business
combination, merger or tender offer in which any portion of the Common Shares
are or are proposed to be purchased or redeemed by any Person (including
Company).
"Common Shares" has the meaning set forth in the second
recital.
"Company" has the meaning set forth in the preamble.
"Dana" has the meaning set forth in the preamble.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed with the SEC and
that is appropriate for the registration of the Registrable Securities for
resale.
"Indemnified Person" has the meaning set forth in Section
1.10(a).
"Lock-Up Period" has the meaning set forth in Section 1.2(a).
"Losses" has the meaning set forth in Section 1.10(a).
"Piggyback Registration Period" means the last fifteen (15)
months of the Lock-Up Period.
"Purchase Agreement" has the meaning set forth in the first
recital.
"Recapitalizations" means share splits, subdivisions, share
dividends, combinations, recapitalizations and the like.
"register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the SEC.
"Registrable Securities" shall mean the Common Shares;
provided that the Common Shares shall cease to be Registrable Securities (i)
when a registration statement with respect to such Common Shares has been
declared effective under the Securities Act and such Common Shares have been
exchanged or disposed of pursuant to such registration statement, (ii) when such
Common Shares are available for resale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (iii) when such Common
Shares cease to be outstanding.
"Rule 144(k) Negative Determination" has the meaning set forth
in Section 1.13.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Transfer" and "Transferred" each has the meaning set forth in
Section 1.2(a).
"Violation" has the meaning set forth in Section 1.10(a).
1.2 LIMITATION ON TRANSFER
(a) During the period commencing on date hereof and ending two
years and six months after the date hereof (the "Lock-Up Period"), Dana agrees,
with respect to the Common Shares, not to (i) offer, sell, assign, transfer,
agree to sell, assign or transfer, sell
2
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, assign, pledge, hypothecate or
otherwise transfer or dispose of (including the deposit of any such Common
Shares into a voting trust or similar arrangement), directly or indirectly, any
of such Common Shares or any securities exercisable or exchangeable therefor, or
any interest therein or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
owning any of such Common Shares, whether any such transaction described in
clause (i) or (ii) of this sentence is to be settled by delivery of such Common
Shares or other securities, in cash or otherwise (any transactions described in
such clauses (i) and (ii) being referred to herein as a "Transfer"), subject to
the provisions and upon the conditions specified in this Agreement; provided,
however, that during the Lock-Up Period Dana may participate in a Transfer in
connection with a Change in Control Transaction.
(b) Notwithstanding anything herein to the contrary, Dana may
Transfer Common Shares to its Affiliates or to Company or its Affiliates.
(c) Company shall not be required to (i) transfer on its books
any Common Shares that shall have been transferred in violation of any of the
provisions set forth in this Agreement or (ii) treat as owner of such Common
Shares, or to accord the right to vote or to pay dividends to, any transferee to
whom such Common Shares shall have been so transferred.
Company shall be entitled to provide stop transfer
instructions to the transfer agents of the Common Shares that are consistent
with the terms of this Agreement. In the event any of the Common Shares are
Transferred in compliance with this Agreement in a manner which under the terms
of this Agreement does not require such third party to agree in writing to be
bound by the provisions of this Agreement, then Company shall issue a new
certificate representing such Common Shares without such legend or make the
appropriate electronic notation that such legend is removed and remove such stop
transfer instructions with respect thereto.
(d) Notwithstanding anything herein to the contrary, Dana
hereby agrees that it will not Transfer any of the Common Shares except in
compliance with applicable securities laws.
1.3 RESTRICTIVE LEGEND
(a) All certificates representing the Common Shares shall bear
the following legend, in addition to any other legends that are necessary to
comply with applicable Law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION
STATEMENT WITH RESPECT TO SUCH
3
SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF
SUCH SECURITIES, ACCOMPANIED BY A WRITTEN OPINION DELIVERED TO AND
SATISFACTORY TO STANDARD MOTOR PRODUCTS, INC. (THE "COMPANY") IN FORM AND
SUBSTANCE FROM COUNSEL SATISFACTORY TO THE COMPANY BY REASON OF EXPERIENCE
TO THE EFFECT THAT THE HOLDER MAY TRANSFER SUCH SECURITIES AS DESIRED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND (3) IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
PROVISIONS OF A SHARE OWNERSHIP AGREEMENT DATED AS OF JUNE 30, 2003 BY AND
BETWEEN DANA CORPORATION AND THE COMPANY, WHICH CONTAINS CERTAIN
RESTRICTIONS ON TRANSFERABILITY OF THE SECURITIES REPRESENTED HEREBY.
1.4 COMPANY REGISTRATION
(a) During the Piggyback Registration Period, if Company
proposes to register (including for this purpose a registration effected by
Company for shareholders other than Dana) any of its shares or other securities
under the Securities Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Securities Act, a
registration on any form that does not include substantially the same
information (other than the information required concerning the selling
shareholder and plan of distribution) as would be required to be included in a
registration statement covering the sale of the Registrable Securities, or a
registration in which the only Common Shares being registered are Common Shares
issuable upon conversion of debt securities that are also being registered),
Company will, at such time, promptly give Dana written notice of such
registration. Upon the written request of Dana within twenty (20) days after
mailing of such notice by Company, Company will, subject to the provisions of
Section 1.4(c), use its commercially reasonable efforts to cause to be
registered under the Securities Act all of the Registrable Securities that Dana
has requested to be registered, so long as the Registrable Securities to be
registered shall result in an anticipated aggregate offering price of at least
$1,000,000.
(b) Company will have the right to terminate or withdraw any
registration initiated by it under this Section 1.4 prior to the effectiveness
of such registration whether or not Dana has elected to include securities in
such registration. The expenses of such withdrawn registration shall be borne by
Company in accordance with Section 1.8 hereof.
(c) In connection with any offering involving an underwriting
of shares of Company's capital stock, Company will not be required under this
Section 1.4 to include any of Dana's securities in such underwriting unless they
accept the terms of the underwriting as agreed upon between Company and the
underwriters selected by Company and
4
enter into an underwriting agreement in customary form (which shall include
customary representations, warranties and indemnities) with an underwriter or
underwriters selected by Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities to be sold other than by Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then Company will be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned first to
the Company, then to Dana and thereafter pro rata among the selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder or in such other proportions as mutually
agreed to by such selling shareholders).
1.5 FORM S-3 REGISTRATION
If, at any time within the ninety (90) days following a Rule 144(k)
Negative Determination, Company receives from Dana a written request that
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all (but not less than all) of the Registrable
Securities, Company will use commercially reasonable efforts to effect, as
expeditiously as possible, such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all (but not less than all) of the Registrable Securities.
However, Company will not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 1.5:
(a) if Form S-3 is not legally available for such offering by
Dana;
(b) if Company delivers to Dana a certificate signed by the
Chief Executive Officer or Chairman of the Board of Company stating that in the
good faith judgment of the Board of Directors of Company, it would have a
material adverse effect on Company and its stockholders for such Form S-3
registration to be effected at such time, in which event Company will have the
right to defer the filing of the Form S-3 for such period as may be required to
mitigate the adverse effect on Company but in no event shall such period of
deferral exceed one hundred and twenty (120) days after receipt of the request
of Dana under this Section 1.5, provided, however, that Company may not utilize
this right more than once and provided, further, that Company may not register
any other of its shares for its own account or for the account of others during
such one hundred and twenty (120) day period; or
(c) in any particular jurisdiction in which Company would be
required to qualify to do business, where not otherwise required, or to execute
a general consent to service of process in effecting such registration,
qualification or compliance.
1.6 OBLIGATIONS OF COMPANY
Whenever required under Sections 1.4 and 1.5 to effect the
registration of any Registrable Securities, Company will, as expeditiously as
possible (with respect to registration pursuant to Section 1.5, "registration
statement" in this Section 1.6 shall mean "Form S-3"):
5
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use commercially reasonable
efforts to cause such registration statement to become effective as
expeditiously as possible, and, upon the request of Dana, keep such registration
statement effective for a period of up to one hundred twenty (120) days or, if
earlier, until the distribution contemplated in the registration statement has
been completed;
(b) notify Dana of the effectiveness of the registration
statement; and prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to Dana such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as it may reasonably request in order
to facilitate the disposition of the Registrable Securities;
(d) use commercially reasonable efforts to (i) register and
qualify the securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as may be reasonably
requested by Dana, and do all other acts and things that may be necessary or
desirable to enable Dana to consummate its public sale or other disposition of
the Registrable Securities in such states; provided, that Company will not be
required in connection therewith or as a condition thereto to qualify to do
business, where not otherwise required, or to file a general consent to service
of process in any such states or jurisdictions, unless Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act and (ii) cause such Registrable Securities to be registered with
or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of Company to enable the
disposition of such Registrable Securities;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under the underwriting agreement, in usual and
customary form, with the managing underwriter of such offering and take all
other reasonable action, if any, as Dana and such managing underwriter shall
reasonably request (for example, to participate in the due diligence process and
roadshow process) in order to facilitate any disposition of the securities;
(f) notify Dana, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of (i) the
issuance of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation of any proceedings by any Person to
such effect, and promptly use commercially reasonable efforts to obtain the
release of such suspension, or (ii) the occurrence of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and promptly furnish to Dana copies of a supplement or amendment
of such prospectus as may be necessary to correct such misstatement or omission.
As such a notice would suspend Dana's ability to use the prospectus, Company's
obligation to maintain the effectiveness of the registration statement shall be
extended by the number of days during which Dana's use of the prospectus is so
suspended;
6
(g) cause all Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by Company are then listed;
(h) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration and use commercially reasonable efforts to cause the transfer agent
to remove restrictive legends on the securities covered by such registration;
and
(i) use commercially reasonable efforts to furnish, at the
request of Dana, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to Sections
1.4 and 1.5, if such securities are being sold through underwriters (i) an
opinion, dated as of such date, of the counsel representing Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to
Dana, addressed to the underwriters and to Dana requesting registration of
Registrable Securities, and (ii) a "comfort" letter dated as of such date, from
the independent certified public accountants of Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to
Dana, addressed to the underwriters and to Dana.
1.7 INFORMATION FROM DANA
It is a condition precedent to the obligations of Company to take any
action pursuant to Section 1.4 and 1.5 with respect to the Registrable
Securities that Dana furnish to Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as may reasonably be requested by Company or the managing
underwriter in order to satisfy the requirements applicable to such registration
of Dana's Registrable Securities.
1.8 EXPENSES OF REGISTRATION
All expenses (other than underwriting discounts, commissions relating
to Registrable Securities, and expenses of counsel for Dana) incurred in
connection with registrations, filings or qualifications pursuant to Sections
1.4 and 1.5, including, without limitation, all registration, filing and
qualification fees (including "blue sky" fees), printers' and accounting fees
(excluding fees related to any special audits), fees and disbursements of
counsel for Company will be borne by Company. Notwithstanding the foregoing,
Company will not be required to pay for any expenses of any registration
pursuant to Sections 1.4 and 1.5 if the registration request is subsequently
withdrawn at the request of Dana, in which case such expenses shall be borne by
Dana.
1.9 DELAY OF REGISTRATION
Dana has no right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this Section
1.
7
1.10 INDEMNIFICATION
In the event any Registrable Securities are included in a registration
statement under Sections 1.4 and 1.5:
(a) To the fullest extent permitted by law, Company covenants
and agrees to indemnify and hold harmless Dana, its officers and directors and
each Person, if any, who controls Dana, within the meaning of the Securities Act
or the Exchange Act (the "Indemnified Persons"), from and against any and all
losses, claims, actions, damages, liabilities and expenses (joint or several)
(including, without limitation, attorneys' fees and disbursements and all other
expenses incurred in investigating, preparing, compromising or defending against
any such litigation, commenced or threatened, or any claim whatsoever and all
amounts paid in settlement of any such claim or litigation) to which any of such
Indemnified Persons may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law or
otherwise (collectively "Losses") as incurred, insofar as such Losses arise out
of or are based upon any of the following (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by Company of the Securities Act, the
Exchange Act, any state securities laws or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities laws and
Company will reimburse any Person intended to be indemnified pursuant to this
Section 1.10(a), for any legal or other expenses reasonably incurred by such
Person in connection with investigating or defending any such Loss; provided,
however, that the indemnity agreement contained in this Section 1.10(a) will not
apply to amounts paid in settlement of any such Loss if such settlement is
effected without the consent of Company (which consent will not be unreasonably
withheld), nor will Company be liable in any such case for any such Loss to the
extent that it arises out of or is based upon a Violation that solely occurs in
reliance upon and in conformity with information provided by and relating to an
Indemnified Person, that is furnished expressly for use in connection with such
registration by such Indemnified Person; provided further, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of Dana or any underwriter, or any Person controlling
Dana or such underwriter, from whom the Person asserting any such Losses
purchased shares in the offering, if a copy of the prospectus (as then amended
or supplemented if Company shall have timely furnished the indemnified Person
with any amendments or supplements thereto) was not sent or given by or on
behalf of Dana or such underwriter to such Person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
shares to such Person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such Loss.
(b) To the fullest extent permitted by law, Dana covenants and
agrees to indemnify and hold harmless Company, each of its directors, each of
its officers who has signed the registration statement, each Person, if any, who
controls Company within the meaning of the Securities Act, any underwriter, any
other shareholder selling securities in such registration statement and any
controlling Person of any such underwriter or other shareholder,
8
against any Losses to which any of the foregoing Persons may become subject,
under the Securities Act, the Exchange Act or any other federal or state
statutory law or regulation or at common law or otherwise, insofar as such
Losses arise out of or are based upon any Violation (but excluding clause (iii)
of the definition thereof), in each case to the extent (and only to the extent)
that such Violation solely occurs in reliance upon and in conformity with
information provided by and relating to Dana that is furnished by Dana expressly
for use in connection with such registration statement; and Dana will reimburse
any Person intended to be indemnified pursuant to this Section 1.10(b), for any
legal or other expenses reasonably incurred by such Person in connection with
investigating or defending any such Loss; provided further that in no event will
any indemnity under this Section 1.10(b) apply to amounts paid in settlement of
any such Loss if such settlement is effected without the written consent of
Dana, which consent shall not be unreasonably withheld; provided further that in
no event will any indemnity under this Section 1.10(b) exceed the gross proceeds
from the sale of Registrable Securities received by Dana.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of any claim or the commencement of any action (including any
governmental action) as to which indemnity may be sought, such indemnified party
will deliver to the indemnifying party a written notice of the commencement
thereof (but the failure to so notify an indemnifying party will not relieve it
from any liability or obligation which it may have under this Section 1.10 or
otherwise unless the failure to notify results in the forfeiture by the
indemnifying party of substantial rights and defenses and will not in any event
relieve the indemnifying party from any obligations other than the
indemnification provided for herein). The indemnifying party will have the right
to participate in, and, to the extent the indemnifying party so desires, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. However, the indemnified party will have the right to retain
separate counsel and to participate in the defense thereof, with the fees and
expenses of such counsel to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be, in the indemnified party's view, inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. In no event will the
indemnifying party be required to pay the expenses of more than one counsel per
jurisdiction as counsel for the indemnified party. The indemnifying party will
be responsible for the expenses of such defense even if the indemnifying party
does not elect to assume such defense. No indemnifying party may, except with
the consent of the indemnified party, consent to the entry of any judgment or
enter into any settlement which does not include as a term thereof the
unconditional release of the indemnified party of all liability in respect of
such claim or litigation.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any Loss referred to herein, then the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, will contribute to the
amount paid or payable by such indemnified party as a result of such Loss in
such proportion as is appropriate to reflect the relative fault of and the
relative benefits received by the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violations that resulted
in such Loss as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party will be
determined by reference to, among other things, whether the Violation
9
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such Violation. The relative benefits received
by the indemnifying party and the indemnified party will be determined by
reference to the net proceeds received by each such party.
(e) In no event will any contribution by Dana under this
Section 1.10 exceed the gross proceeds from the sale of Registrable Securities
received by Dana.
(f) Notwithstanding the foregoing, no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to indemnification or contribution from any
Person not so guilty.
(g) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement will control.
(h) The obligations of Company and Dana under this Section
1.10 will survive the completion of any offering of Registrable Securities in a
registration statement under Section 1.4 and 1.5 and otherwise.
(i) The foregoing indemnification provisions are in addition
to, and not in derogation of, any statutory, equitable or common-law remedy any
party may otherwise have.
1.11 REPORTS UNDER THE EXCHANGE ACT
With a view to making available to Dana the benefits of Rule 144
promulgated under the Securities Act, Company agrees:
(a) to file with the SEC in a timely manner all reports and
other documents required of Company under the Securities Act and the Exchange
Act; and
(b) to furnish to Dana, forthwith upon request (i) a written
statement by Company as to its compliance with the reporting requirements of
Rule 144 under the Securities Act and of the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of Company filed by Company under the Exchange Act
and (iii) such other information as Dana may reasonably request in order to
avail itself of any similar rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.12 TERMINATION OF REGISTRATION RIGHTS
Subject to Sections 1.5 and 1.13 hereof, Dana will not be entitled to
exercise any right provided for in this Section 1 after the expiration of the
Lock-Up Period unless a registration statement involving the Registrable
Securities is pending on the date of such
10
expiration, in which case Dana will be entitled to exercise any right and
Company will be required to perform all of its obligations provided for in this
Section 1 in connection with such registration statement until such statement
becomes effective or is withdrawn under circumstances where withdrawal is
permitted hereunder.
1.13 DETERMINATION OF AVAILABILITY OF RULE 144(K) OF THE SECURITIES ACT
At any time on or after the ninetieth (90th) day (or the next business
day) prior to the end of the Lock-Up Period, upon the written request of Dana,
Company shall promptly furnish Dana with a written statement by Company as to
Company's compliance with the reporting requirements of Rule 144 of the
Securities Act, and promptly thereafter Company and Dana shall make a mutual
determination as to whether Dana may be able to sell all of the Common Shares it
desires to sell at the end of the Lock-Up Period without restrictions under Rule
144(k) of the Securities Act. Company and Dana shall base its determination with
respect to Dana solely upon the factual information Dana provides to Company in
Dana's written request to Company, which factual information shall be certified
by an executive officer of Dana. If Company and Dana mutually determine in good
faith that Dana is not able to sell the Common Shares at the end of the Lock-Up
Period without restrictions under Rule 144(k) of the Securities Act, such
determination shall be referred to as a "Rule 144(k) Negative Determination",
and Section 1.5 hereof shall then apply.
2. MISCELLANEOUS
2.1 NO IMPLIED RESTRICTIONS
Except and to the extent provided herein, Dana shall be entitled to
exercise all rights in its capacity as a record and beneficial owner of Common
Shares under any applicable law and Company's Certificate of Incorporation and
Bylaws, including the right to receive dividends and vote in connection with any
matter upon which shareholders of the Company may vote.
2.2 PURCHASE PRICE ADJUSTMENT
The Parties acknowledge that under certain circumstances described in
Article 3 of the Purchase Agreement, Dana may transfer some portion of the
Common Shares to Company in accordance with the terms thereof.
2.3 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.
2.4 THIRD PARTY BENEFICIARIES
Each party hereto intends that this Agreement does not benefit or
create any legal or equitable right, remedy or claim in or on behalf of any
Person other than the parties hereto. This Agreement is for the sole and
exclusive benefit of the parties hereto and their successors and permitted
assigns.
11
2.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which will be
deemed an original and all of which together will constitute one and the same
instrument.
2.6 CAPTIONS; REFERENCES
The captions contained in this Agreement are for convenience of
reference only and do not form a part of this Agreement. When a reference is
made in this Agreement to a clause or a Section, such reference will be to a
clause or a Section of this Agreement unless otherwise indicated.
2.7 NOTICES
Any notice or other communication provided for herein or given
hereunder to a party hereto will be sufficient if in writing, and sent by
facsimile transmission (electronically confirmed), delivered in person, mailed
by first class registered or certified mail, postage prepaid, or sent by Federal
Express or other overnight courier of national reputation, addressed as follows:
If to Company:
Standard Motor Products, Inc.
37-18 Northern Boulevard
Long Island City, New York 11101
Attn: Chief Financial Officer
Fax: (718) 472-0122
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attn: Ronald B. Risdon, Esq.
Fax: (212) 808-7897
If to Dana:
Dana Corporation
4500 Dorr Street
Toledo, Ohio 43697
Attn: General Counsel
Fax: (419) 535-4790
12
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: John P. Dunn, Esq.
Fax: (216) 579-0212
or to such other address with respect to a party as such party notifies the
other in writing as above provided.
2.8 AMENDMENTS AND WAIVERS
This Agreement may be amended or modified only by a written agreement
referencing this Agreement and duly executed by the parties hereto. No waiver by
any party hereto of any term of this Agreement, whether intentional or not,
shall be deemed to extend to any prior or subsequent any term of this Agreement
or affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
2.9 SEVERABILITY
Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision is to be interpreted to be only
so broad as is enforceable.
2.10 GOVERNING LAW This Agreement is to be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
2.11 SUBMISSION TO JURISDICTION
Each of the parties hereto submits to the jurisdiction of any state or
federal court sitting in the County of New York, New York in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each party hereto also agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
parties hereto waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto. Any
party hereto may make service on the other party by sending or delivering a copy
of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 2.7 above. Nothing in this Section
2.11, however,
13
shall affect the right of any party hereto to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to serve
legal process in any other manner permitted by law or in equity. Each party
hereto agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
2.12 FURTHER ASSURANCES
Dana and Company will from time to time and at all times hereafter
make, do, execute, or cause or procure to be made, done and executed such
further acts, deeds, conveyances, consents and assurances without further
consideration, which may reasonably be required to effect the transactions
contemplated by this Agreement.
2.13 COMPLETE AGREEMENT
This Agreement contains the complete and exclusive statement of the
terms of the agreements between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior agreements and
understandings between the parties hereto with respect thereto.
2.14 CONSTRUCTION
This Agreement is the result of the joint efforts of Dana and Company,
and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of the parties and there is to be no construction
against either party based on any presumption of that party's involvement in the
drafting thereof.
2.15 EXPENSES
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby are to be paid by the party incurring such
expenses, except as expressly provided herein.
(Signatures are on the following page.)
14
IN WITNESS WHEREOF, the parties hereto have executed this Share
Ownership Agreement as of the date first above written.
COMPANY:
STANDARD MOTOR PRODUCTS, INC.
By: /s/ Robert Martin
Name: Robert Martin
Title: Treasurer
DANA:
DANA CORPORATION
By: /s/ A. Glenn Paton
Name: A. Glenn Paton
Title: Vice President-Treasurer
EXHIBIT 4
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D with
respect to the shares of Common Stock, par value $2.00 per share, of Standard
Motor Products, Inc. is, and any amendment thereto signed by each of the
undersigned shall be, filed on behalf of each of the undersigned pursuant to and
in accordance with the provisions of Rule 13d-1(k) promulgated under the
Securities Exchange Act of 1934, as amended. The undersigned hereby further
agree that this Joint Filing Agreement be included as an exhibit to such
statement and any such amendment. This Joint Filing Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument.
Dated: July 8, 2003 DANA CORPORATION
By: /s/ Michael L. DeBacker
-----------------------------
Name: Michael L. DeBacker
Title Vice President
AUTOMOTIVE CONTROLS CORP.
By: /s/ Thomas Madden
----------------------------
Name: Thomas Madden
Title: Vice President
BWD AUTOMOTIVE CORPORATION
By: /s/ Thomas Madden
----------------------------
Name: Thomas Madden
Title: Vice President
PACER INDUSTRIES, INC.
By: /s/ Harry M. Whited
----------------------------
Name: Harry M. Whited
Title: President
RISTANCE CORPORATION
By: /s/ Thomas Madden
----------------------------
Name: Thomas Madden
Title: Vice President
ENGINE CONTROLS DISTRIBUTION
SERVICES, INC.
By: /s/ Thomas Madden
----------------------------
Name: Thomas Madden
Title: Vice President