Asset Purchase Agreement - General Motors Corp. and Clutch Operating Co. Inc.
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF
JUNE 28, 2007
BY AND BETWEEN
GENERAL MOTORS CORPORATION
AND
CLUTCH OPERATING COMPANY, INC.
<PAGE>
TABLE OF CONTENTS
Article I DEFINITIONS...................................................... 2
Section 1.1 Definitions............................................. 2
Article II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES....... 18
Section 2.1 Purchase of Assets and Assumption of Liabilities........ 18
Section 2.2 Purchased and Excluded Assets........................... 19
Section 2.3 Assumed and Excluded Liabilities........................ 22
Article III PURCHASE PRICE AND CLOSING..................................... 24
Section 3.1 Closing................................................. 24
Section 3.2 Closing Payment......................................... 25
Section 3.3 Closing Date Net Working Capital........................ 25
Section 3.4 Allocation of Purchase Price............................ 27
Article IV REPRESENTATIONS AND WARRANTIES OF GM............................ 27
Section 4.1 Organization............................................ 27
Section 4.2 Authorization of Transaction............................ 28
Section 4.3 Noncontravention; Consents.............................. 28
Section 4.4 Business Financial Statements; Absence of Undisclosed
Liabilities.......................................... 28
Section 4.5 Capitalization.......................................... 29
Section 4.6 Title to Transferred Stock.............................. 30
Section 4.7 Absence of Certain Changes.............................. 30
Section 4.8 Title and Sufficiency of Assets......................... 30
Section 4.9 Contracts............................................... 30
Section 4.10 Real Property........................................... 31
Section 4.11 Permits................................................. 32
Section 4.12 Intellectual Property................................... 32
Section 4.13 Legal Compliance........................................ 34
Section 4.14 Litigation.............................................. 34
Section 4.15 Employees and Employee Benefits......................... 34
Section 4.16 Environmental Matters................................... 35
Section 4.17 Tax Matters............................................. 36
Section 4.18 Customers and Suppliers................................. 37
Section 4.19 Accounts Receivable..................................... 38
Section 4.20 Related Party Transactions.............................. 38
Section 4.21 Product Liability; Product Warranties................... 38
Section 4.22 Brokers' Fees........................................... 38
Section 4.23 Government Contracts.................................... 38
Section 4.24 Business Relationships.................................. 39
Section 4.25 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES........... 39
Article V REPRESENTATIONS AND WARRANTIES OF THE BUYER...................... 39
Section 5.1 Organization............................................ 39
Section 5.2 Authorization of Transaction............................ 40
Section 5.3 Noncontravention; Consents.............................. 40
Section 5.4 Litigation.............................................. 40
Section 5.5 Availability of Funds................................... 40
Section 5.6 Brokers' Fees........................................... 41
Section 5.7 LIMITATIONS ON GM'S REPRESENTATIONS AND WARRANTIES...... 41
Article VI PRE-CLOSING COVENANTS........................................... 41
Section 6.1 General................................................. 41
Section 6.2 Notices and Consents.................................... 42
Section 6.3 Conduct of the Business................................. 43
i
<PAGE>
Section 6.4 Access to Business...................................... 45
Section 6.5 Notice of Developments.................................. 46
Section 6.6 Ancillary Documents..................................... 46
Section 6.7 Union Matters........................................... 46
Section 6.8 Financing............................................... 46
Section 6.9 Termination of Intercompany Agreements.................. 47
Section 6.10 Treatment of Synthetic Lease............................ 48
Section 6.11 Waiver of Right of First Refusal........................ 48
Article VII POST-CLOSING COVENANTS......................................... 48
Section 7.1 General................................................. 48
Section 7.2 Post-Closing Consents; Nonassignable Contracts.......... 48
Section 7.3 Litigation Support...................................... 50
Section 7.4 Compliance with the WARN Act............................ 50
Section 7.5 Apportioned Obligations................................. 50
Section 7.6 Agreements Regarding Tax Matters........................ 51
Section 7.7 Agreements Regarding Environmental Matters.............. 52
Section 7.8 Use of Excluded Marks................................... 56
Section 7.9 Non-Competition......................................... 56
Section 7.10 Preservation of Records................................. 61
Section 7.11 Novation of Government Prime Contracts.................. 61
Section 7.12 Compliance with Consent Decree.......................... 62
Section 7.13 Assumption of Union Agreements.......................... 62
Section 7.14 Guarantees.............................................. 62
Section 7.15 Insurance............................................... 63
Section 7.16 Confidentiality......................................... 63
Section 7.17 Hybrid JV Agreements.................................... 64
Section 7.18 DPIM Warranty Matters................................... 64
Article VIII CLOSING CONDITIONS............................................ 66
Section 8.1 General Conditions of the Parties....................... 66
Section 8.2 Conditions to Obligations of the Buyer.................. 66
Section 8.3 Conditions to Obligations of GM......................... 68
Article IX REMEDIES........................................................ 70
Section 9.1 Survival................................................ 70
Section 9.2 Indemnification by GM................................... 70
Section 9.3 Indemnification by the Buyer............................ 71
Section 9.4 Procedures for Indemnification of Third Party Claims.... 72
Section 9.5 Certain Limitations..................................... 73
Section 9.6 Treatment of Indemnity Payments......................... 74
Section 9.7 Exclusive Remedy........................................ 74
Section 9.8 Mitigation.............................................. 74
Section 9.9 Equitable Relief........................................ 74
Section 9.10 Informal Dispute Resolution............................. 74
Article X TERMINATION...................................................... 74
Section 10.1 Termination of Agreement................................ 74
Section 10.2 Effect of Termination................................... 75
Section 10.3 Termination Fee......................................... 75
Article XI MISCELLANEOUS................................................... 76
Section 11.1 Notices................................................. 76
Section 11.2 Expenses; No Offset..................................... 77
Section 11.3 Seller Disclosure Schedules............................. 78
Section 11.4 Bulk Sales or Transfer Laws............................. 78
Section 11.5 Assignment; Successors and Assigns...................... 78
ii
<PAGE>
Section 11.6 Amendment; Waiver....................................... 78
Section 11.7 Severability............................................ 78
Section 11.8 Counterparts............................................ 79
Section 11.9 Descriptive Headings.................................... 79
Section 11.10 No Third-Party Beneficiaries............................ 79
Section 11.11 Exhibits and Schedules.................................. 79
Section 11.12 Governing Law........................................... 79
Section 11.13 Forum Selection; Consent to Service of Process;
Waiver of Jury Trial................................. 79
Section 11.14 Entire Agreement........................................ 79
Section 11.15 Confidentiality; Public Announcement.................... 80
Section 11.16 Interpretation; Construction............................ 80
EXHIBITS
Exhibit A Form of Employee Matters Agreement
Exhibit B Form of Transition Services Agreement
Exhibit C Form of Bill of Sale and Assignment and Assumption Agreement
Exhibit D-1 Form of Assignment of Copyrights
Exhibit D-2 Form of Assignment of Trademarks
Exhibit E Form of Patent and Technology License Agreement
Exhibit F Form of A1000 IP License Agreement
Exhibit G Form of Software License Agreement
Exhibit H-1 Form of DPG Proving Grounds Use Agreement
Exhibit H-2 Form of MK Proving Grounds Use Agreement
Exhibit I Form of Business to GM Edge Agreement
Exhibit J Form of GMPT Germany Supply Contract
Exhibit K Form of Sublease Agreement
Exhibit L Form of Lease Agreement
Exhibit M Form of Engineering Services Agreement
Exhibit N Form of Hybrid Co-Branding Agreement
Exhibit O Form of Transferred Subsidiary IP and Software Assignment
Exhibit P Form of Government Related Subcontract Agreement
Exhibit Q DPIM Standard Warranty
Exhibit R Form of Non-compete Joinder
Exhibit S Form of MOU
Exhibit T Claim Header Summary Report
SCHEDULES
Schedule 1.1A Sellers
Schedule 1.1B Business Locations
Schedule 1.1C Transferred Subsidiaries
Schedule 1.1D Shared Retained Facilities
Schedule 1.1E Net Working Capital
Schedule 1.1F Retained Real Property
Schedule 1.1G Seller's Knowledge
Schedule 1.1H Transferred Sub Real Property
Schedule 1.1I 6L90 Transmission Criteria
iii
<PAGE>
Schedule 2.2(a)(iii) Certain Purchased Contracts
Schedule 2.2(a)(iv) Certain Purchased Equipment
Schedule 2.2(a)(vii) Transferred Real Property
Schedule 2.2(a)(ix) Transferred Intellectual Property
Schedule 2.2(a)(xiii) Certain Purchased Assets
Schedule 2.2(b)(xvi) Certain Excluded Intellectual Property
Schedule 2.2(b)(xxi) Certain Excluded Assets
Schedule 2.3(a)(vii) Certain Assumed Actions
Schedule 2.3(b)(ii) Certain Excluded Environmental Liabilities
Schedule 2.3(b)(iii) Certain Excluded Recent Balance Sheet Liabilities
Schedule 2.3(b)(vi) Certain Excluded Liabilities
Schedule 4.3 Noncontravention; Consents
Schedule 4.4(a) Business Financial Statements
Schedule 4.4(b) Liabilities and Obligations
Schedule 4.4(c) Pro Forma Financial Statements
Schedule 4.7 Absence of Certain Changes
Schedule 4.8 Title and Sufficiency of Assets
Schedule 4.9 Material Contracts
Schedule 4.10 Real Property
Schedule 4.12 Intellectual Property
Schedule 4.13 Legal Compliance
Schedule 4.14 Litigation
Schedule 4.15 Employees and Employee Benefits
Schedule 4.16 Environmental Matters
Schedule 4.17 Tax Matters
Schedule 4.18 Customers and Suppliers
Schedule 4.20 Related Party Transactions
Schedule 4.21 Product Liability; Product Warranties
Schedule 4.22 Brokers' Fees
Schedule 4.23 Government Contracts
Schedule 5.5 Commitment Letters
Schedule 6.1(b) Certain EMA Provisions
Schedule 6.2(a) Required Notices and Consents
Schedule 6.2(b) Required Antitrust Filings
Schedule 6.3 Conduct of Business
Schedule 6.9 Intercompany Agreements
Schedule 7.7 General Deed Restrictions for Owned Real Property
Schedule 7.9(a) Non-Competition
Schedule 7.9(j) GMT 900 4500 Platform
Schedule 8.2(e) Consents Required for Closing
Schedule 11.2 Cost Sharing Understanding
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of June 28,
2007, is made by and between General Motors Corporation, a Delaware corporation
("GM"), and Clutch Operating Company, Inc., a Delaware corporation (the
"Buyer").
WHEREAS, GM, together with certain of its Subsidiaries set forth on
Schedule 1.1A (collectively with GM, the "Sellers," and each individually, a
"Seller"), are engaged through their Allison Transmission operations ("Allison")
in the business, conducted at the locations listed on Schedule 1.1B, of (i)
researching, developing, designing, manufacturing, distributing, marketing, and
selling (A) Automatic Transmissions for use in Vocational Vehicles, Military
Vehicles and Off-Road Products, and (B) Hybrid Propulsion Systems for use in
Vocational Vehicles and Military Vehicles (the "Transferred Hybrid Business"),
(ii) remanufacturing such Automatic Transmissions for use in those applications,
(iii) manufacturing and selling replacement parts and support equipment and
providing related services, in each case, for such Automatic Transmissions and
Hybrid Propulsion Systems, and (iv) researching, developing, designing,
manufacturing, distributing, marketing and selling the products, and providing
the services, currently researched, developed, designed, manufactured,
distributed, marketed, sold or provided, as applicable, at or from the
facilities listed on Schedule 1.1B (the foregoing, excluding the Retained
Businesses, the "Business");
WHEREAS, the Business is also conducted by the Subsidiaries set forth on
Schedule 1.1C (the "Transferred Subsidiaries"), all of the outstanding capital
stock of which (all of the outstanding capital stock of all of the Transferred
Subsidiaries, collectively, the "Transferred Stock") is, or will be prior to
Closing, owned directly or indirectly by GM and one or more of the Sellers;
WHEREAS, GM and its Affiliates are engaged in the business, based out of
the Castleton Facility and elsewhere, of designing, manufacturing, distributing
and selling Hybrid Propulsion Systems for use in Non-vocational Vehicles (such
business, including all businesses relating to Hybrid Propulsion Systems other
than the Transferred Hybrid Business, the "Retained Hybrid Business");
WHEREAS, GM and its Affiliates are engaged in the business, based out of
the Szentgotthard Facility, of assembling Automatic Transmissions sold by
Allison outside of North America (the "Hungarian Manufacturing Business");
WHEREAS, GM and its Affiliates are engaged in the business, based out of
the Baltimore Facility and other facilities in the United States and elsewhere
(the Baltimore Facility, together with the Castleton Facility and the
Szentgotthard Facility, the "Retained Facilities"), of designing, manufacturing,
distributing and selling, among other things, (i) Automatic Transmissions
(including A1000 Products) for use in Non-vocational Vehicles, and (ii)
Non-vocational Vehicles and Vocational Vehicles employing those and other
Automatic Transmissions (such business, together with the Retained Hybrid
Business and the Hungarian Manufacturing Business, the "Retained Businesses");
WHEREAS, the Retained Businesses and the Retained Facilities, including any
and all assets, rights and properties primarily used or held for use in
connection with or at such Retained Businesses, are not included in the Business
and are not being transferred to or acquired by the Buyer;
<PAGE>
WHEREAS, GM and its Affiliates have certain interests in, and/or conduct
various businesses and operations, not included in the Business, at, the
facilities and other properties listed on Schedule 1.1D (the "Shared Retained
Facilities"), which Shared Retained Facilities are also used in connection with
the Business but are being retained by GM and its Affiliates and are not being
transferred to or acquired by the Buyer; and
WHEREAS, this Agreement contemplates that the Buyer shall acquire
substantially all of the assets of the Business (other than the Retained
Businesses, the Retained Facilities and certain excluded assets), including the
Transferred Stock, certain assets of the Business at the Shared Retained
Facilities, and a right to continued use of portions of certain of the Shared
Retained Facilities and shall assume substantially all of the liabilities of the
Business, other than certain excluded liabilities, in each case on the terms and
subject to the conditions set forth in this Agreement and the Ancillary
Documents.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the Parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below:
"1000 Series Products" means Automatic Transmissions manufactured at the
Business' operations in Indianapolis, Indiana and known by GM and the Business
as the "Allison 1000 Series," in each case as of the date hereof, and any
Derivations thereof, but excludes all Hybrid Propulsion Systems. For the
avoidance of doubt, the manufacture of the 1000 Series Products (and any
Derivations thereof) after the date hereof is not limited to such location.
"A1000 IP License Agreement" has the meaning set forth in SECTION 8.2(D).
"A1000 Products" means Automatic Transmissions manufactured at the
Baltimore Facility and known by GM and the Business as the "A1000," in each case
as of the date hereof, and any Derivations thereof, but excludes all Hybrid
Propulsion Systems. For the avoidance of doubt, the manufacture of A1000
Products (and any Derivations thereof) is not limited to the Baltimore Facility.
"Adverse Buyer Modification" means any modification or modifications to the
MOU that are materially adverse to the Buyer or that would reasonably be
expected to have a material and adverse impact, cost or expense on or to the
Buyer or the Business.
"Adverse GM Modification" means any modification or modifications to the
MOU that are materially adverse to GM or that would reasonably be expected to
have a material and adverse impact, cost or expense on or to GM.
"Automatic Transmission" means an electro/mechanical/hydraulic mechanism
that transmits torque from the prime mover in a vehicle or Off-Road Product to
propel the vehicle or product without power interruption to the drive wheels or
mechanism during shifting between gear ranges and that changes gear ranges
automatically without any operator input required
2
<PAGE>
beyond depressing the accelerator pedal, if applicable, and specifically
excludes automated manual transmissions (i.e., AMTs, as such term is commonly
understood in the United States automobile industry as of the date hereof).
"Action" means any claim, action, arbitration, charge, grievance, suit,
inquiry, proceeding or investigation by or before any Governmental Entity or any
arbitrator with legal and binding authority over such matter.
"Affiliates" has the meaning set forth in Rule l2b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Agreed Accounting Conventions" means GAAP applied on a basis consistent
with the past practices of the Sellers and the Transferred Subsidiaries.
"Agreement" has the meaning set forth in the Preamble.
"Allison" has the meaning set forth in the Recitals.
"Allison Indy Transmission Facilities" means the facilities used in the
Business and consisting of Plants 3, 4, 6 and 7 located at 4700 West 10th
Street, Speedway, Indiana, Plants 12 and 14 located at 901 Grande Avenue,
Indianapolis, Indiana and the former Plant 2 located at 4500 West Gilman Street,
Speedway, Indiana.
"Allison New Lease Facilities" means the facilities located at (i) Taeseok
Building, #275-5 Yahggjae-dong, Seocho-gu, Seoul, Korea and (ii) Kalman Imre u.
1, Budapest, Hungary.
"Allocation" has the meaning set forth in SECTION 3.4.
"Ancillary Documents" means the Employee Matters Agreement, the Transition
Services Agreement, the Bill of Sale and Assignment and Assumption Agreement,
the Assignment of Trademarks, the Assignment of Copyrights, the Patent and
Technology License Agreement, the A1000 IP License Agreement, the Software
License Agreement, the Confidentiality Agreements, the Proving Grounds Use
Agreements, the Business to GM Edge Agreement, the GMPT Germany Supply Contract,
the Sublease Agreement, the Lease Agreement, the Engineering Services Agreement,
the Government Related Subcontract Agreement, the Buyer Parent Guarantees, the
Hybrid Co-Branding Agreement and each other agreement or document executed by
the Parties pursuant to this Agreement or any of the foregoing and each
certificate and other document to be delivered by the Parties pursuant to
ARTICLE VIII.
"Antitrust Laws" has the meaning set forth in SECTION 6.2(C).
"Apportioned Obligations" means any Tax (including any additional Tax
determined subsequent to the Closing Date) relating to the Business or any
Purchased Asset that is due or becomes due for any Straddle Period.
"Article" means, except as otherwise expressly indicated herein, an article
of this Agreement.
"Assigned GSCs" means those GSCs designated as "Assign" in Schedule D of
the Transition Services Agreement, but only with respect to the applicable
services, as more fully set forth in SECTION 2.2(C).
3
<PAGE>
"Assignment of Copyrights" has the meaning set forth in SECTION 8.2(D).
"Assignment of Trademarks" has the meaning set forth in SECTION 8.2(D).
"Assumed Liabilities" has the meaning set forth in SECTION 2.3(A).
"Baltimore Facility" means the facility located at 10301 Philadelphia Road
White Marsh, Maryland.
"Basket" has the meaning set forth in SECTION 9.2(B).
"Benefit Plans" has the meaning set forth in SECTION 4.15(B).
"Bill of Sale and Assignment and Assumption Agreement" has the meaning set
forth in SECTION 8.2(D).
"Business" has the meaning set forth in the Recitals.
"Business Assets" means the Purchased Assets and all of the assets, rights
and properties of the Transferred Subsidiaries, collectively.
"Business Day" means any day that is not a Saturday, Sunday or any other
day on which banks are required or authorized by Law to be closed in New York
City, New York.
"Business Employee" has the meaning set forth in the Employee Matters
Agreement.
"Business Financial Statements" has the meaning set forth in SECTION
4.4(A).
"Business to GM Edge Agreement" has the meaning set forth in SECTION
8.2(D).
"Buyer" has the meaning set forth in the Preamble.
"Buyer Claims" has the meaning set forth in SECTION 9.2(A).
"Buyer Competing Business" has the meaning set forth in SECTION 7.9(B).
"Buyer Cure" has the meaning set forth in SECTION 8.3(E).
"Buyer Indemnified Party" has the meaning set forth in SECTION 9.2(A).
"Buyer Material Adverse Effect" has the meaning set forth in SECTION 5.1.
"Buyer Military Vehicles" means Military Vehicles with a gross vehicle
weight rating greater than 3500 kg.
"Buyer Parent Guarantees" means those certain Guarantees made and delivered
to GM by the Guarantors as of the date hereof.
"Buyer Proposed Amount" has the meaning set forth in SECTION 3.3(C).
4
<PAGE>
"Buyer Restricted Products" means Automatic Transmissions and Hybrid
Propulsion Systems manufactured or sold for use anywhere in the world in (i)
Non-vocational Vehicles or (ii) GM Military Vehicles.
"Buyer Service Agent" has the meaning set forth in SECTION 11.13.
"Buyer Termination Fee" has the meaning set forth in SECTION 10.3(A).
"Cap" has the meaning set forth in SECTION 9.2(B).
"Castleton Facility" means the facility located at 7601 East 88th Place,
Indianapolis, Indiana.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.
"Claims" has the meaning set forth in SECTION 9.3(A).
"Closing" has the meaning set forth in SECTION 3.1.
"Closing Date" has the meaning set forth in SECTION 3.1.
"Closing Date Debt" means the aggregate Indebtedness of the Transferred
Subsidiaries and, to the extent contained in the Assumed Liabilities, the
Sellers as of the close of business on the day immediately preceding the Closing
Date, as reflected on the Final Statement.
"Closing Date Net Working Capital" has the meaning set forth in SECTION
3.3(A).
"Closing Payment" has the meaning set forth in SECTION 3.2.
"Code" means the Internal Revenue Code of 1986, as amended (together with
all rules and regulations promulgated thereunder).
"Commitment Letters" has the meaning set forth in SECTION 5.5.
"Competing Business" has the meaning set forth in SECTION 7.9(B).
"Confidentiality Agreements" means those certain confidentiality agreements
dated February 9, 2007, between GM and each of Carlyle Investment Management,
L.L.C. and Onex Partners Advisor LP, in each case as amended.
"Consent Decree" means the consent decree between the Directorate, Office
of Defense Trade Controls, Bureau of Political Military Affairs, U.S. Department
of State, the U.S. Department of Homeland Security, U.S. Immigration and Customs
Enforcement, GM and General Dynamics Corporation dated November 1, 2004.
"Contracts" means any contracts, agreements, arrangements, leases,
licenses, obligations, commitments and undertakings that are binding, or purport
to be binding by their terms, on the parties thereto, and any outstanding bids
or proposals (which bids or proposals if accepted by the recipient thereof would
result in a binding contract), in each case, whether written or oral, express or
implied.
5
<PAGE>
"Copyrights" means copyright registrations and applications.
"Corrective Action" has the meaning set forth in SECTION 7.7(A).
"COTS License" means any Contract under which any of the Sellers receives a
license to use unmodified commercially-available Software or obtains any
services related thereto (including maintenance, hosting or consulting service).
"Coverage Period" has the meaning set forth in the definition of "DPIM
Extended Special Coverage".
"Covered Claim" means a claim against the Buyer under the DPIM Extended
Special Coverage that is covered by the DPIM Extended Special Coverage and made
by a "Participating OEM" or an "Allison Transmission Distributor/Dealer" (such
terms having the meanings given to them under the DPIM Extended Special
Coverage) based on the failure of a DPIM Unit for any reason other than (i)
misuse by the end user of the DPIM Unit or other failure to use the DPIM Unit or
associated Hybrid Propulsion System for its intended purpose, or (ii) improper
installation of such DPIM Unit by the bus OEM or by the servicing distributor of
such DPIM Unit.
"Decatur Boulevard Property" has the meaning set forth in SECTION 6.10.
"Deeds" has the meaning set forth in SECTION 8.2(D).
"Derivations" means any modifications and derivations to a product as long
as the product retains its powerflow, core engineering and design criteria,
including enhancements to the core design or additional features or functions
applied to the product's core architecture.
"Dollars" and the sign "$" each means lawful money of the United States of
America.
"DPIM" has the meaning set forth in SECTION 7.18(E).
"DPIM Conversion Date" has the meaning set forth in the definition of "DPIM
Unit".
"DPIM Coverage Costs" means an amount, per DPIM Unit replaced by the Buyer
in accordance with the DPIM Extended Special Coverage in response to a Covered
Claim made in respect of an open repair order opened prior to the expiration of
the Coverage Period, equal to (i) the out-of-pocket cost incurred by the Buyer
for the replacement DPIM Unit, plus (ii) the out-of-pocket shipping costs
incurred by the Buyer in transporting such replacement DPIM Unit to the
customer, plus (iii) the out-of-pocket cost paid by the Buyer to the distributor
of the replacement DPIM Unit to replace the failed DPIM Unit, plus (iv) a
reasonable pro-rata portion of the salary of the special contract logistics
manager hired for the purposes of expediting the DPIM Units and avoiding the
costs of normal service channel mark-up, plus (v) any payment made by the Buyer
to a supplier (including the DPIM Supplier) as reimbursement for such supplier's
increased capacity costs associated with DPIM Unit rebuilding or
remanufacturing.
"DPIM Design Program" has the meaning set forth in SECTION 7.18(E).
"DPIM Extended Special Coverage" means that certain DPIM standard warranty
provided by the Business to certain of its customers in the form attached hereto
as Exhibit Q;
6
<PAGE>
provided that (i) the warranty period is two (2) years from the vehicle in
service date and the extended special coverage period is in effect from the end
of such two-year period through the date that is the twelfth anniversary of the
vehicle in service date (such warranty and extended special coverage periods,
collectively, the "Coverage Period"), and (ii) during years 8-12 of the Coverage
Period, the Business will be responsible to certain of its customers covered by
the DPIM Extended Special Coverage for the following portions of the customer
claims covered by the DPIM Extended Special Coverage: (A) year 8, 90%, (B) year
9, 80%, (C) year 10, 70%, (D) year 11, 60%, and (E) year 12, 50%.
"DPIM Supplier" means Arens Controls Company, L.L.C.
"DPIM Unit" means a single dual power inverter module (identified by part
numbers 29545820 and 29540600 and interim improvements to such parts prior to
the DPIM Conversion Date) that was (i) manufactured for use in, and that was
actually used in, the Hybrid Propulsion Systems sold by the Business for use in
buses that are Vocational Vehicles, and (ii) sold by the Business and shipped to
its customers prior to the date (the "DPIM Conversion Date") that is the earlier
of (x) July 1, 2009 and (y) the date on which there is a start of regular
production for a DPIM block change, as is evidenced by a change in the DPIM part
number and/or by such other criteria as is customarily used by the Business
prior to the Closing to indicate such action, provided that GM and the Buyer
agree (which agreement will not be unreasonably withheld) that the DPIM part
bearing such new part number meets the validation requirements of a Global
Product Development Process (as such term is commonly understood within the
design and engineering organizations of GM Powertrain and the Business), which
shall include an Analysis Development Validation (ADV) plan (as such term is
commonly understood within the design and engineering organizations of GM
Powertrain and the Business), with a stated objective of B5 280,000 miles (the
"Required Specification").
"EEA" means the European Economic Area, as its membership may be altered
from time to time, and any successor thereto, and which, as of the date hereof,
consists of member states of the EU together with Iceland, Norway and
Liechtenstein.
"Employee Matters Agreement" has the meaning set forth in SECTION 8.2(D).
"Employee Pension Benefit Plan" has the meaning set forth in Section 3(1)
of ERISA, whether or not subject thereto.
"Employee Welfare Benefit Plan" has the meaning set forth in Section 3(2)
of ERISA, whether or not subject thereto.
"Engineering Services Agreement" has the meaning set forth in SECTION
8.2(D).
"Environmental Assessments" has the meaning set forth in SECTION 4.16(A).
"Environmental Laws" means any Law with respect to any Hazardous Materials,
drinking water, groundwater, wetlands, landfills, open dumps, above ground
storage tanks, underground storage tanks, solid waste, waste water, storm water
run-off, waste emissions or wells (but not including federal, state, or local
Occupational Safety and Health Administration or other occupational health or
safety requirements). Without limiting the generality of the foregoing, the term
shall encompass each of the following statutes and the regulations promulgated
thereunder, as amended: (i) CERCLA; (ii) RCRA; (iii) the Hazardous Materials
7
<PAGE>
Transportation Act; (iv) the Toxic Substances Control Act; (v) the Clean Water
Act; (vi) the Clean Air Act; (vii) the Safe Drinking Water Act; (viii) the
National Environmental Policy Act of 1969; (ix) the Emergency Planning and
Community Right-to-Know Act; (x) any equivalent state and local laws; and (xi)
any non-U.S. equivalents of the foregoing if applicable to the Business.
"E(P)40/50 Hybrid Products" means the Hybrid Propulsion System known by GM
and the Business as of the date hereof as the "E(P)40/50 Allison Drive System,"
having a powerflow characterized as a dual mode input and compound split
transmission, and a control arrangement including programming to enable
operation of such transmission, as exemplified by the powerflow shown in Exhibit
1 of the Patent and Technology License Agreement, and any Derivations thereof
intended for use in Vocational Vehicles or Buyer Military Vehicles (other than
the X20R Technology (as such term is defined in the Patent and Technology
License Agreement) and any Derivations thereof).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Estimated Closing Date Debt" has the meaning set forth in SECTION 3.1.
"Extended Special Coverage Period" has the meaning set forth in SECTION
7.18(A).
"EU" means the European Union, as its membership may be altered from time
to time, and any successor thereto, and which, as of the date hereof, consists
of Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden and the United Kingdom.
"Europe" means the countries comprising the EU, the EEA and Switzerland.
"Excluded Assets" has the meaning set forth in SECTION 2.2(B).
"Excluded Liabilities" has the meaning set forth in SECTION 2.3(B).
"Excluded Marks" means any Marks that include or are based on (in each
case, in whole or in part) or are likely to be confused with the General Motors
Corporation insignia, the terms or Marks "General Motors" or "GM" or any other
terms or marks not listed in Schedule 2.2(a)(ix).
"Excluded Shared Contracts" has the meaning set forth in SECTION 7.2(C).
"Exhibit" means, except as otherwise expressly indicated herein, an exhibit
to this Agreement that is attached hereto in accordance with the terms hereof.
"FCL" has the meaning set forth in SECTION 6.1.
"Final Statement" has the meaning set forth in SECTION 3.3(C).
"Financing" has the meaning set forth in SECTION 6.8.
"Foreign Jurisdiction Transfer Document" has the meaning set forth in
SECTION 8.2(D).
8
<PAGE>
"Former Facility" means any facility previously used in the operation of
the Business for which such use was discontinued prior to the date hereof;
provided that the term "Former Facility" shall not include any of the
Transferred Real Property or Transferred Sub Real Property.
"GAAP" means United States generally accepted accounting principles, as in
effect as of the date of this Agreement.
"GM" has the meaning set forth in the Preamble.
"GM Comparable Products" means Automatic Transmissions manufactured by GM
or a GM Qualified Subsidiary with power, torque and durability ratings
comparable to those ratings of any Automatic Transmission then-manufactured by
GM or any GM Qualified Subsidiary for use in Non-vocational Vehicles or GM
Military Vehicles; provided that such ratings do not exceed the ratings for GM's
6L90 transmission and Derivations thereof as then-manufactured by GM or its
Subsidiaries for use in Non-vocational Vehicles or GM Military Products. For
example, Schedule 1.1I sets forth power, torque and durability ratings for GM's
6L90 transmission as of the date of this Agreement.
"GM Cost" means GM's fully-allocated product cost, calculated as the sum of
(i) the direct cost of material purchased for system components, (ii) direct and
indirect factory costs, (iii) indirect material costs, (iv) direct engineering
costs (i.e., per unit amortization of those engineering costs directly related
to the specific Hybrid Propulsion System under discussion between the Parties,
as documented in project management reporting and/or analysis materials prepared
in the course of the development of the specific Hybrid Propulsion System for
automotive program(s)) and (v) tooling amortization and depreciation charges
related to the manufacturing of the system.
"GM Cure" has the meaning set forth in SECTION 8.2(F).
"GM Information Request" has the meaning set forth in SECTION 7.7(L).
"GM Medium Duty Truck Business" means GM's medium duty truck business as
that term is commonly understood within GM.
"GM Military Vehicles" means Military Vehicles with a gross vehicle weight
rating less than or equal to 3500 kg.
"GM Non-Restricted Products" means GM Comparable Products manufactured or
sold for use (i) outside of North America in any vehicle having a gross vehicle
weight rating less than or equal to 4250 kg, or (ii) anywhere in the world in
Military Vehicles having a gross vehicle weight rating less than or equal to
4250 kg.
"GM Proposed Amount" has the meaning set forth in SECTION 3.3(C).
"GMPT Germany Supply Contract" has the meaning set forth in SECTION 8.2(D).
"GM Qualified Subsidiary" means a Subsidiary of GM that is wholly-owned by
GM or another wholly-owned Subsidiary of GM, except that a party unaffiliated
with GM may hold not more than five percent (5%) of the outstanding stock or
other equity of such Subsidiary to the
9
<PAGE>
extent necessary to comply with the local requirements of Law of a foreign
jurisdiction and so long as such Subsidiary is controlled by GM.
"GM Restricted Products" means (i) Automatic Transmissions and Hybrid
Propulsion Systems manufactured or sold for use anywhere in the world in
Vocational Vehicles or Buyer Military Vehicles, and (ii) Automatic Transmissions
and Hybrid Propulsion Systems manufactured or sold anywhere in the world for use
in Off-Road Products but only if (with respect to this item (ii) only) such
Automatic Transmissions and Hybrid Propulsion Systems have power, torque and
durability ratings equivalent to or higher than those ratings of any Automatic
Transmissions or Hybrid Propulsion Systems then-manufactured and sold by the
Buyer or its Subsidiaries for use in Vocational Vehicles or Buyer Military
Products; provided that this item (ii) does not include Automatic Transmissions
and Hybrid Propulsion Systems having power, torque and durability ratings
equivalent to those ratings of Automatic Transmissions and Hybrid Propulsion
Systems then-manufactured and sold for use in GM's GMT 900 2500 and 3500 van and
pickup truck platforms manufactured by GM or its Subsidiaries (or their
comparable successor platforms) or competing vehicles of comparable weight.
"GMT 900 4500 Platform" means GM's proposed GMT 900 4500 pickup truck
platform (and its comparable successor platforms) manufactured by GM or its
Subsidiaries.
"GM Tax Claim" has the meaning set forth in SECTION 7.6(C).
"GM Third Party Licenses" has the meaning set forth in SECTION 4.12(F).
"GMTR" means General Motors Trade Receivables LLC, a Delaware limited
liability company.
"Government Contract" has the meaning set forth in SECTION 4.23(A).
"Governmental Entity" means the United States, any state or other political
subdivision thereof, and any other foreign or domestic entity exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any government authority,
agency, department, corporation, board, commission, court, tribunal or
instrumentality of the United States or any foreign entity, any state of the
United States or any political subdivision of any of the foregoing.
"Government Prime Contracts" means the Purchased Contracts that are between
the U.S. Government and, with respect to the Business, one or more of the
Sellers, including such Purchased Contracts set forth on Schedule 2.2(a)(iii).
"Government Related Subcontract Agreement" has the meaning set forth in
SECTION 7.11(C).
"GSCs" means the global service contracts entered into by GM and/or its
Affiliates with third-party service providers in connection with GM's "Terms and
Conditions for Information Technology and Related Services."
"Guarantees" has the meaning set forth in SECTION 7.14.
10
<PAGE>
"Guarantors" means Carlyle Partners IV, L.P., a Delaware limited
partnership, and Onex Partners II LP, a Delaware limited partnership.
"Hazardous Materials" means any element, compound, chemical mixture,
contaminant, pollutant, material, waste or other substance that is defined or
regulated under any applicable Environmental Law, determined or identified as
hazardous or toxic under any applicable Environmental Law, or the release of or
exposure to which is prohibited under any applicable Environmental Law,
including asbestos, asbestos-containing materials, polychlorinated biphenyls,
radioactive materials, chlorinated solvents, chromium, lead, petroleum products
and petroleum byproducts.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Hungarian Manufacturing Business" has the meaning set forth in the
Recitals.
"Hybrid Co-Branding Agreement" has the meaning set forth in SECTION 8.2(D).
"Hybrid JV Agreements" has the meaning set forth in SECTION 7.17.
"Hybrid Product" has the meaning set forth in SECTION 7.9(D).
"Hybrid Propulsion System" means all components of the electric propulsion
system of a vehicle or Off-Road Product having both an internal combustion
engine and an electric propulsion system, including the drive unit, motor(s),
generator(s), onboard and exportable power generation and interface, energy
storage device(s), energy conversion device and control modules for the system
and its components.
"IDEM" has the meaning set forth in SECTION 7.7(B).
"Indebtedness" means, with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money (including all accrued and
unpaid interest and all prepayment penalties or premiums in respect thereof),
(ii) all obligations of such Person to pay amounts evidenced by bonds,
debentures, notes or similar instruments (including all accrued and unpaid
interest and all prepayment penalties or premiums in respect thereof), (iii) all
obligations of such Person under or in respect of leases required to be
capitalized in accordance with GAAP, to the extent of the obligations so
capitalized, (iv) all obligations of others, of the types set forth in clauses
(i)-(iii), that are secured by any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, but
only to the extent so secured, (v) all unreimbursed reimbursement obligations of
such Person under letters of credit issued for the account of such Person, (vi)
obligations of such Person under conditional sale, title retention or similar
arrangements or other obligations, in each case, to pay the deferred purchase
price for property or services, to the extent of the unpaid purchase price
(other than ordinary course trade payables and other than customary reservations
or retentions of title under agreements with suppliers in the ordinary course of
business), (vii) all net monetary obligations of such Person in respect of
interest rate and currency swap obligations, and (viii) all guarantees of or by
such Person of any of the matters described in clauses (i)-(vii) hereof, to the
extent of the maximum amount for which such Person may be liable pursuant to
such guarantee; provided that in no event does "Indebtedness" include any
current liability included in the calculation of the Closing Date Net Working
Capital on the Final Statement.
11
<PAGE>
"Indemnified Party" has the meaning set forth in SECTION 9.4(A).
"Indemnifying Party" has the meaning set forth in SECTION 9.4(A).
"Indianapolis Right of First Refusal" has the meaning set forth in SECTION
6.11.
"Intellectual Property" means any and all of the following in any
jurisdiction throughout the world: (i) Patents; (ii) Marks; (iii) Copyrights,
mask works and other works of authorship (other than Software); and (iv)
Technology.
"International Facilities" means the facilities located at (i) Rua Agostino
Togneri 57, Jurubatuba, Santo Amaro, Sao Paulo, Brazil, (ii) Ringerstraat 12 -
18, Sliedrecht, Netherlands and (iii) 88 Ri Bin Road, Waigaoqaio Free Trade
Zone, Shanghai, China.
"International Facilities Testing" has the meaning set forth in SECTION
6.4.
"ITAR" means the International Traffic in Arms Regulations, 22 CFR 120, et
seq.
"Law" means any applicable United States or non-United States federal,
provincial, state or local statute, common law, rule, regulation, ordinance,
permit, order, writ, injunction, judgment or decree of any Governmental Entity.
"Lease Agreement" has the meaning set forth in SECTION 8.2(D).
"Leased Real Property" has the meaning set forth in SECTION 2.2(A).
"Licensed Intellectual Property" means the Intellectual Property licensed
to the Buyer in the Patent and Technology License Agreement or the Engineering
Services Agreement.
"Licensed Software" means the Software licensed to the Buyer in the
Software License Agreement.
"Lien" means any pledge, security interest, encumbrance or lien.
"Losses" means any claims, causes of action, liabilities, losses,
grievances, damages, penalties, fines, amounts paid in settlement, costs and
expenses (including reasonable and documented attorneys' fees and
disbursements).
"Marketing Period" means the first fifteen (15) consecutive Business Day
period after the date hereof throughout which period (i) the Buyer shall have
the Required Financial Information that GM is required to provide to the Buyer
pursuant to SECTION 6.8, (ii) the conditions set forth in SECTION 8.1 shall have
been satisfied (or waived by the Buyer in writing), (iii) the representations
and warranties of GM set forth in ARTICLE IV, disregarding qualifications as to
materiality and Material Adverse Effect, shall have been true and correct
(except to the extent expressly made as of an earlier date, in which case only
as of such date), with only such exceptions as, individually or in the
aggregate, have not had, or would not be reasonably expected to have, a Material
Adverse Effect, (iv) GM and the other Sellers shall have performed and complied
with, in all material respects, their material covenants and agreements
contained in this Agreement that were required to be performed or complied with
prior to and during such period, (v) the conditions set forth in SECTION 8.2(E)
and SECTION 8.2(F) shall have been satisfied
12
<PAGE>
and (vi) Deloitte & Touche LLP shall have not withdrawn its audit opinions for
any of the audited financial statements included in the Required Financial
Information.
"Marks" means any and all trademarks, service marks, certification marks,
trade names, corporate names, domain names, logos, trade dress, or other indicia
of source or origin, and all registrations of and applications to register the
foregoing, in each case in any jurisdiction throughout the world.
"Material Adverse Effect" means any change, event, circumstance, occurrence
or development that, individually or in the aggregate with all other such
changes, events, circumstances, occurrences or developments, has had, or would
reasonably be expected to have, a material adverse effect on or change in (A)
the assets, business, results of operations or condition (financial or
otherwise) of the Business, taken as a whole; provided, however, that the term
"Material Adverse Effect" does not, and shall not be deemed to, include any of
the following: (i) changes or effects that generally affect the industry or
industries in which the Business operates; (ii) changes in securities markets,
interest rates or general economic, regulatory or political conditions,
including acts of terrorism or the commencement or escalation of any war,
whether declared or undeclared, or other hostilities (excluding in the case of
clauses (i) and (ii) any changes that have a substantially disproportionate
impact on the Business, relative to other businesses, generally, which
businesses operate in the same industries or geographies as the Business); (iii)
changes or effects arising out of, or attributable to, the announcement of the
execution of this Agreement or the identity of the Buyer, including with respect
to the customers and employees of the Business, compliance by the Sellers with
their obligations hereunder or the consummation of the transactions contemplated
hereby; (iv) changes or effects due to changes (or proposed or prospective
changes) in any Laws affecting the Business or the Business Assets; (v) changes
in GAAP or other applicable accounting regulations and principles or the
interpretation thereof; or (vi) the failure of the Business to meet any internal
projections or forecasts (it being understood that the facts or occurrences
giving rise or contributing to such failure that are not otherwise excluded from
the definition of a "Material Adverse Effect" may be taken into account in
determining whether there has been a Material Adverse Effect and it being
further understood that any such failure may be taken into account in
determining whether the facts or occurrences giving rise or contributing to such
failure are materially adverse to the assets, business, results of operations or
condition (financial or otherwise) of the Business, taken as a whole) or (B) the
ability of the Sellers to consummate the transactions contemplated by, and
discharge their obligations under, this Agreement and the Ancillary Documents.
"Material Contracts" has the meaning set forth in SECTION 4.9(A).
"Military Vehicles" means tracked and wheeled combat and tactical vehicles;
provided that any such vehicles based on GM's GMT 900 2500 or 3500 van and
pickup truck platforms (or their comparable successor platforms) are not
considered to be Military Vehicles, and are instead considered to be
Non-vocational Vehicles.
"MOU" means a Memorandum of Understanding with the UAW in substantially the
form attached hereto as Exhibit S.
"Net Working Capital" means an amount determined in accordance with, and
based solely on the items contained in, Schedule 1.1E.
"Neutral Auditor" has the meaning set forth in SECTION 3.3(C).
13
<PAGE>
"Non-Military Vehicles" means vehicles (which, for the avoidance of doubt,
shall include motorhomes) other than Military Vehicles.
"Non-vocational Vehicles" means (i) all Non-Military Vehicles (other than
Off-Road Products) manufactured or sold for use in North America with a gross
vehicle weight rating less than or equal to 5900 kg, (ii) all Non-Military
Vehicles (other than Off-Road Products) manufactured or sold for use anywhere
else in the world with a gross vehicle weight rating less than or equal to 3500
kg, and (iii) GM's GMT 900 2500 and 3500 van and pickup truck platforms (or
their comparable successor platforms) manufactured by GM or its Subsidiaries and
competing vehicles of comparable weight.
"North America" means the United States, Canada and Mexico and their
respective territories and possessions.
"Novation Agreement" has the meaning set forth in SECTION 7.11(A).
"Objection Notice" has the meaning set forth in SECTION 3.3(B).
"Offering Documents" has the meaning set forth in SECTION 6.8.
"Off-Road Products" means vehicles and non-vehicular equipment designed,
manufactured or sold for use anywhere in the world in the construction,
agriculture, forestry, mining and energy industries, and other industrial and
similar non-on-highway applications.
"Offset Amount" has the meaning set forth in SECTION 9.5(C).
"Outside Date" has the meaning set forth in SECTION 10.1(B).
"Owned Real Property" has the meaning set forth in SECTION 2.2(A).
"Parties" means the Sellers and the Buyer together, and "Party" means any
of the Sellers, on the one hand, or the Buyer, on the other hand, as appropriate
and as the case may be.
"Patent and Technology License Agreement" has the meaning set forth in
SECTION 8.2(D).
"Patents" means any and all patents, patent applications, inventions,
invention disclosures and statutory invention registrations.
"Permits" has the meaning set forth in SECTION 2.2(A).
"Permitted Liens" means any: (i) mechanics', materialmens' and similar
Liens imposed by Law with respect to amounts not yet due and payable or the
validity of which is being contested in good faith; (ii) Liens for Taxes not yet
due and payable or the validity of which is being contested in good faith; (iii)
pledges or deposits to secure obligations under workers' compensation Laws or
similar legislation or to secure public or statutory obligations; (iv) with
respect to the Transferred Real Property and Transferred Sub Real Property,
easements, rights-of-way, restrictive covenants and servitudes and other similar
rights and any subdivision, development, servicing, site plan or other similar
agreement and any Liens, matters or exceptions that would be disclosed by a
current title commitment and/or current surveys of the applicable Transferred
Real Property and/or Transferred Sub Real Property that, in each case, do not
materially interfere with the use and enjoyment of the real property in question
in the manner
14
<PAGE>
currently used; and (v) Liens imposed by the U.S. Government in connection with
Government Prime Contracts.
"Person" means an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or Governmental Entity.
"Post-Closing Tax Period" has the meaning set forth in SECTION 9.2(A).
"Pre-Closing Tax Period" has the meaning set forth in SECTION 2.3(B).
"Preliminary Statement" has the meaning set forth in SECTION 3.3(A).
"Pro Forma Adjustments" has the meaning set forth in SECTION 4.4(C).
"Pro Forma Financial Statements" has the meaning set forth in SECTION
4.4(C).
"Proposed Use Statement" has the meaning set forth in SECTION 7.7(L).
"Proving Grounds Use Agreements" has the meaning set forth in SECTION
8.2(D).
"Purchased Assets" has the meaning set forth in SECTION 2.2(A).
"Purchased Contracts" has the meaning set forth in SECTION 2.2(A).
"Purchase Price" has the meaning set forth in SECTION 3.2.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 2 U.S.C.
Section 6901, et seq.
"Receivables Agreement" means that certain Purchase and Sale Agreement,
dated as of July 22, 2004, between GM and GMTR.
"Recent Balance Sheet" has the meaning set forth in SECTION 4.4(A).
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping,
discarding, burying, abandoning or disposing into the environment of Hazardous
Materials that is prohibited under, or reasonably likely to result in a
liability in excess of $1,000,000 under, any applicable Environmental Law.
"Required Antitrust Filings" has the meaning set forth in SECTION 6.2(C).
"Required Financial Information" has the meaning set forth in SECTION 6.8.
"Required Specifications" has the meaning set forth in the definition of
"DPIM Unit".
"Resolution Period" has the meaning set forth in SECTION 3.3(B).
"Retained Businesses" has the meaning set forth in the Recitals.
"Retained Facilities" has the meaning set forth in the Recitals.
15
<PAGE>
"Retained Hybrid Business" has the meaning set forth in the Recitals.
"Retained Real Property" means the Retained Facilities, the Shared Retained
Facilities and all other real property owned or leased (as lessee) by GM or its
Affiliates (other than Transferred Real Property), including the real property
set forth on Schedule 1.1F.
"Review Period" has the meaning set forth in SECTION 3.3(B).
"ROFR Waiver" has the meaning set forth in SECTION 6.11.
"Schedule" means, except as otherwise expressly indicated herein, a
schedule to this Agreement (including each of the Seller Disclosure Schedules),
all of which Schedules are incorporated herein by reference.
"Section" means, except as otherwise expressly indicated herein, a section
of this Agreement.
"Securities Act" has the meaning set forth in SECTION 6.8.
"Sellers" has the meaning set forth in the Recitals.
"Seller Claims" has the meaning set forth in SECTION 9.3(A).
"Seller Competing Business" has the meaning set forth in SECTION 7.9(B).
"Seller Disclosure Schedules" means the Schedules pertaining to, and
corresponding to the Section references of, ARTICLE IV of this Agreement,
initialed by the Parties hereto.
"Seller Indemnified Parties" has the meaning set forth in SECTION 9.3(A).
"Seller's Knowledge" means the actual knowledge of the individuals listed
on Schedule 1.1G, as to the matters represented, as of the date the
representation is made.
"Shared Retained Facilities" has the meaning set forth in the Recitals.
"Software" means software of any type and in any form, including source
code, executable code, databases, data and documentation.
"Software License Agreement" has the meaning set forth in SECTION 8.2(D).
"Soliciting Party" has the meaning set forth in SECTION 7.9(D).
"Specified Consent" has the meaning set forth in SECTION 7.2(B).
"Straddle Period" means any Tax year or period beginning on or before the
Closing Date and ending after the Closing Date.
"Sublease Agreement" has the meaning set forth in SECTION 8.2(D).
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
corporation, limited liability company, partnership or other legal entity of
which such Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50 percent
16
<PAGE>
of the stock or other equity interests the holder of which is generally entitled
to vote for the election of the board of directors or other governing body of
such corporation, limited liability company, partnership or other legal entity.
"Szentgotthard Facility" means the facility located at Fuzesi utca 15-9971,
Szentgotthard, Hungary.
"Target Closing Date Net Working Capital" has the meaning set forth in
SECTION 3.3(E).
"Tax" or "Taxes" means a tax or taxes of any kind or nature, or however
denominated, and whether disputed or not, including any federal, provincial,
state, local or foreign income, gross receipts, franchise, alternative minimum,
net worth, transfer, sales, use, transfer, registration, business and
occupation, value added, excise, severance, stamp, premium, windfall profit,
customs, duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee tax or other
withholding, including any estimated tax, interest, penalties or additions to
tax or additional amounts in respect of the foregoing, including any transferee
or secondary liability for any such tax, and any tax liability assumed by
Contract or arising as a result of being or ceasing to be a member of any
affiliated group, or of being included or required to be included in any Tax
Return relating thereto.
"Tax Returns" means, with respect to any Tax, any information return for
such Tax, and any return, report, statement, declaration, claim for refund or
document filed or required to be filed under the Law for such Tax.
"Technology" means unpatented technology, trade secrets, know-how and other
confidential and proprietary information.
"Termination Date" has the meaning set forth in SECTION 10.1(B).
"Third Party Claim" has the meaning set forth in SECTION 9.4(A).
"Transaction" has the meaning set forth in SECTION 7.9(D)(II).
"Transfer Tax Forms" has the meaning set forth in SECTION 8.2(D).
"Transferred Employee" means, solely for purposes of this Agreement, a
Business Employee to whom the Buyer is obligated to offer employment pursuant to
the Employee Matters Agreement.
"Transferred Hybrid Business" has the meaning set forth in the Recitals.
"Transferred Intellectual Property" has the meaning set forth in SECTION
2.2(A)(IX).
"Transferred Real Property" has the meaning set forth in SECTION 2.2(A).
"Transferred Stock" has the meaning set forth in the Recitals.
"Transferred Sub Real Property" means the ownership and leasehold interests
of the Transferred Subsidiaries in real property set forth on Schedule 1.1IH.
"Transferred Subsidiaries" has the meaning set forth in the Recitals.
17
<PAGE>
"Transferred Subsidiary Tax Claim" has the meaning set forth in SECTION
7.6(C).
"Transition Services Agreement" has the meaning set forth in SECTION
8.2(D).
"UAW" means the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, including Local 933.
"UAW Agreement" has the meaning set forth in the Employee Matters
Agreement.
"UAW Facilities" means the facilities located at 4700 West 10th Street,
P.O. Box 0894-46206-0894, Indianapolis, Indiana, 5902 Decatur Boulevard,
Indianapolis, Indiana, 2840 Fortune Circle W Suite A, Indianapolis, Indiana and
6040 W. 62nd Street, Indianapolis, Indiana.
"Union Agreements" has the meaning set forth in the Employee Matters
Agreement.
"United States" or "U.S." means the United States of America, including its
territories and possessions.
"U.S. EPA" has the meaning set forth in SECTION 7.7(A).
"U.S. Government" means the federal government of the United States and any
agencies, instrumentalities and departments thereof.
"Vocational Vehicles" means (i) all Non-Military Vehicles (other than
Off-Road Products) manufactured or sold for use in North America with a gross
vehicle weight rating greater than 5900 kg, and (ii) all Non-Military Vehicles
(other than Off-Road Products) manufactured or sold for use anywhere else in the
world with a gross vehicle weight rating greater than 3500 kg; provided that
GM's GMT 900 2500 and 3500 van and pickup truck platforms (or their comparable
successor platforms) manufactured by GM or its Subsidiaries and competing
vehicles of comparable weight are not considered to be Vocational Vehicles, and
are instead considered to be Non-vocational Vehicles.
"WARN Act" means the United States Worker Adjustment and Retraining Act of
1988, as amended.
"Warranty Period" has the meaning set forth in SECTION 7.18.
ARTICLE II
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
Section 2.1 Purchase of Assets and Assumption of Liabilities.
On the terms and subject to the conditions set forth in this
Agreement, at the Closing:
(a) the Buyer shall purchase from the Sellers, and the Sellers
shall, and GM shall cause the other Sellers to, sell, transfer, assign, convey
and deliver to the Buyer, the Purchased Assets, free and clear of all Liens
(other than Permitted Liens), and the Transferred Stock, free and clear of all
Liens; and
(b) the Buyer shall assume and agree to pay, discharge and
perform when due all of the Assumed Liabilities.
18
<PAGE>
Section 2.2 Purchased and Excluded Assets.
(a) The "Purchased Assets" are all of the right, title and
interest that each of the Sellers possesses in and to the following assets,
rights and properties (other than the Excluded Assets), as the same may exist as
of the close of business on the Closing Date:
(i) all accounts and notes receivable and other such claims
for money due to any Seller from (A) any third parties to the extent
arising from the rendering of services or the sale of goods or materials by
the Business and (B) any other Seller or any of its Subsidiaries to the
extent arising from the sale of Automatic Transmissions to the Sellers by
the Business;
(ii) all raw materials, work in process and finished goods
inventories, to the extent used or held for use primarily in connection
with the Business;
(iii) all Contracts to which any Seller is a party that
pertain exclusively to the Business, the Assigned GSCs (subject to SECTION
2.2(C)), all COTS Licenses used exclusively by the Business and those
Contracts set forth on Schedule 2.2(a)(iii) (collectively, the "Purchased
Contracts");
(iv) all machinery, equipment, hardware, spare parts, tools,
dies, test equipment, furniture, fixtures, vehicles and other tangible
personal property that are used or held for use primarily in connection
with the Business, together with the machinery, equipment, spare parts,
tools, dies, test equipment, hardware, furniture, fixtures, vehicles and
other tangible personal property set forth on Schedule 2.2(a)(iv);
(v) to the extent legally transferable, all licenses,
permits, franchises, certificates of authority or orders, or any waiver of
the foregoing, issued by any Governmental Entity exclusively with respect
to the conduct of the Business or to any of the Transferred Real Properties
(collectively, the "Permits");
(vi) to the extent legally transferable, all rights under or
pursuant to warranties, representations and guarantees made by suppliers,
manufacturers or contractors in connection with products or services
provided to the Sellers from third parties other than GM and/or any of its
Affiliates primarily in connection with the Business;
(vii) the (A) real property that is owned by the Sellers
(including all buildings, structures and improvements thereon and
appurtenances thereto) and is set forth on Schedule 2.2(a)(vii) (the "Owned
Real Property") and (B) the leasehold or subleasehold interests of the
Sellers, as lessees or sublessees, under the real property leases of the
real property set forth on Schedule 2.2(a)(vii) (the "Leased Real
Property," and together with the Owned Real Property, the "Transferred Real
Property");
(viii) all books, records, ledgers, files, documents,
correspondence, lists, plans, specifications, plats, surveys, drawings,
advertising and promotional materials, reports and other materials (in
whatever form or medium) of the Sellers that pertain primarily to the
Business or the Transferred Employees; provided, however, that the Sellers
shall be entitled to retain copies of any such materials they deem
reasonably necessary;
19
<PAGE>
(ix) the Intellectual Property set forth on Schedule
2.2(a)(ix) (the "Transferred Intellectual Property");
(x) any credits, prepaid expenses, deferred charges, advance
payments, prepaid items and claims for refunds or reimbursements (but
excluding cash security or other deposits), in each case to the extent
pertaining primarily to the Business;
(xi) any rights to credits, refunds, rebates or abatements
of Taxes with respect to the Purchased Assets for any period beginning
after the Closing Date;
(xii) all other personal property used or held for use
exclusively in connection with, or relating exclusively to, the Business
(other than any Intellectual Property and Software); and
(xiii) the assets, rights and properties set forth on
Schedule 2.2(a)(xiii).
(b) The Purchased Assets shall not include any assets, rights or
properties other than those described in SECTION 2.2(A). Without limiting the
generality of the foregoing sentence and notwithstanding anything to the
contrary contained in SECTION 2.2(A), the Sellers or their Affiliates (other
than the Transferred Subsidiaries) shall retain all of their respective right,
title and interest in and to, and shall not, and shall not be deemed to, sell,
transfer, assign, convey or deliver to the Buyer, and the Purchased Assets shall
not, and shall not be deemed to, include, the following (collectively, the
"Excluded Assets"):
(i) any cash or cash equivalents, including any marketable
securities or certificates of deposit, or any collected funds or accounts
or items in the process of collection at the financial institutions of the
Sellers through and including the Closing Date, and any cash security or
other deposits, together with all accrued but unpaid interest thereon;
(ii) (A) any accounts and notes receivable contributed to
GMTR pursuant to the Receivables Agreement and any related rights to
payment therefor due to any Seller and (B) any accounts and notes
receivable and other such claims for money due to any Seller from any other
Seller or any of its Subsidiaries other than those arising from the sale of
Automatic Transmissions to the Sellers by the Business;
(iii) (A) any rights of the Sellers or any of their
respective Affiliates (other than the Transferred Subsidiaries) to any Tax
refunds, credits or abatements with respect to assets that are not
Purchased Assets; (B) any rights to credits, refunds, rebates or abatements
of Taxes with respect to the Purchased Assets and relating to periods (or
portions thereof) ending on or prior to the Closing Date; (C) any Tax
Returns or Tax records of the Sellers or any of their Affiliates (other
than the Transferred Subsidiaries) that do not relate exclusively to the
Purchased Assets; and (D) any rights of the Sellers or any of their
respective Affiliates (other than the Transferred Subsidiaries) under any
Tax allocation or sharing Contract;
(iv) any credits, prepaid expenses, deferred charges,
advance payments, security deposits, prepaid items, deposits and claims for
refunds or reimbursements, in each case relating primarily to the other
Excluded Assets and/or Excluded Liabilities;
20
<PAGE>
(v) any rights to indemnification, contribution or other
reimbursement, or limitations on liability, under the Purchased Contracts,
or any warranties and guarantees, in each case, from any third parties with
respect to any Excluded Liabilities and/or Losses for which GM has an
indemnification obligation under SECTION 9.2(A)(III), (IV) and (V) of this
Agreement;
(vi) any property, casualty or other insurance policy held
by any Seller or any of its Affiliates (other than the Transferred
Subsidiaries) or related insurance services Contract to which any Seller or
any of its Affiliates (other than the Transferred Subsidiaries) is a party,
and any rights of any Seller or any of its Affiliates (other than the
Transferred Subsidiaries) under any such policy or Contract;
(vii) any rights of any Seller or the Seller Indemnified
Parties under this Agreement, any Ancillary Document or any other Contract
between any Seller and the Buyer;
(viii) any right, title or interest in the Retained Real
Property and any assets, rights and properties of the Sellers relating
primarily to the Retained Real Property, other than (A) machinery,
equipment, hardware, spare parts, tools, dies, test equipment, furniture,
fixtures, vehicles and other tangible personal property used or held for
use exclusively in connection with the Business at the Shared Retained
Facilities or the Szentgotthard Facility and (B) raw materials, work in
process and finished goods inventories to the extent used or held for use
primarily in connection with the Business;
(ix) any machinery, equipment, spare parts, tools, dies,
test equipment, furniture, fixtures, vehicles and other tangible personal
property that is located at the Shared Retained Facilities and/or Retained
Facilities and that is not or are not used or held for use exclusively in
connection with the Business;
(x) the corporate charter, qualification to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers,
corporate seal, minute books, stock transfer books, blank stock
certificates, books and records relating to Taxes, and any other documents
relating to the governance, organization, maintenance and existence of the
Sellers or to the proposed sale of the Business;
(xi) any of the Benefit Plans and underlying assets or any
rights of any Seller or any of its Affiliates under the Benefit Plans,
unless otherwise set forth in the Employee Matters Agreement;
(xii) any Patents;
(xiii) the Excluded Marks;
(xiv) any Technology, except for rights to Technology under
Purchased Contracts;
(xv) any Software, except for rights to Software under
Purchased Contracts;
(xvi) the Intellectual Property set forth on Schedule
2.2(b)(xvi);
21
<PAGE>
(xvii) except for licenses or rights granted under a
Purchased Contract, any licenses or other rights to use Intellectual
Property or Software owned by Persons other than the Sellers;
(xviii) any COTS Licenses not used exclusively in the
Business and not listed on Schedule 2.2(a)(iii);
(xix) any GSCs (other than the Assigned GSCs);
(xx) the Retained Facilities and the Shared Retained
Facilities; and
(xxi) any other assets, rights and properties that are set
forth on Schedule 2.2(b)(xxi).
(c) Notwithstanding anything to the contrary, the sale, transfer,
assignment, conveyance and delivery of the Assigned GSCs pursuant to SECTION 2.1
consists only of a partial assignment of the Assigned GSCs with respect to the
services provided thereunder to the Business as of the date hereof, to the
extent permitted by sections 27.2 and 31.1 of GM's "Terms and Conditions for
Information Technology and Related Services" (as incorporated into such Assigned
GSCs). GM shall retain any and all rights under the Assigned GSCs that relate to
any other services provided to GM or its Affiliates thereunder. GM shall use
reasonable efforts to enter into a Contract with the applicable third-party
service providers prior to Closing (on terms reasonably acceptable to the Buyer)
to document the scope of such partial assignments, including by identifying the
scope of services and corresponding pricing terms that are contained in such
partial assignment (which Contract may be in the form of an amendment to the
applicable Assigned GSC), and any such Contract shall, upon execution by the
parties thereto, be deemed to be a Purchased Contract hereunder. If GM has not
entered into such a Contract with respect to an Assigned GSC on or before the
Closing, then, at the request of either GM or the Buyer, GM and the Buyer shall
cooperate in good faith to document the scope of the partial assignment
thereunder.
Section 2.3 Assumed and Excluded Liabilities.
(a) The "Assumed Liabilities" mean the following liabilities and
obligations of the Sellers, whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and
whether due or to become due (except to the extent such liabilities or
obligations are Excluded Liabilities):
(i) all liabilities and obligations to the extent arising
from the conduct of the Business, including all accounts payable and other
current liabilities to the extent arising from the conduct of the Business,
reflected or reserved for on the Recent Balance Sheet or identified in the
notes thereto, and any liabilities and obligations to the extent arising
from the conduct of the Business incurred in the ordinary course of
business since the date of the Recent Balance Sheet, except to the extent
paid or discharged in the ordinary course of business since the date
thereof and except as set forth on Schedule 2.3(b)(iii);
(ii) all liabilities and obligations arising under or
relating to the Purchased Contracts;
22
<PAGE>
(iii) all liabilities and obligations arising out of or
relating to services provided or products sold in connection with the
Business, whether prior to or after the Closing (and, with respect to such
products, regardless of when designed or manufactured), including all
product return, exchange, rebate (including rebate liabilities and
obligations in connection with the sales referred to in SECTION
2.2(A)(I)(B)), credit and warranty obligations and all product liabilities
and infringement liabilities relating thereto, whether in tort, strict
liability or otherwise;
(iv) all liabilities and obligations arising out of or
relating to the generation, use, handling, presence, treatment, storage,
transportation, disposal or Release of any Hazardous Materials (A) by the
Buyer or its Affiliates on or after the Closing Date, or (B) at, on, under,
about, or migrating to or from, the Transferred Real Property before or
after the Closing, except as set forth on Schedule 2.3(b)(ii), in each
case, including any such liabilities or obligations resulting from
violations of applicable Environmental Laws;
(v) all liabilities and obligations arising out of or
relating to the current and former employees of the Business (including all
Transferred Employees) to the extent provided in the Employee Matters
Agreement;
(vi) all liabilities and obligations with respect to current
and former employees of the Business (including all Transferred Employees)
under any Benefit Plan, except to the extent expressly excluded in the
Employee Matters Agreement;
(vii) all liabilities and obligations of the Sellers arising
out of or in connection with the Actions set forth on Schedule 2.3(a)(vii),
and any other Actions related to the Business initiated between the date
hereof and the Closing against the Sellers (or any of them); and
(viii) all liabilities and obligations incurred, accrued or
arising on or after the Closing Date in connection with the conduct or
operation of the Business or the use or ownership of the Purchased Assets.
(b) The Buyer shall not assume or become responsible for, and shall
not be deemed to have assumed or to have become responsible for, and GM shall
assume from the Transferred Subsidiaries, the following liabilities and
obligations (collectively, the "Excluded Liabilities"):
(i) any liabilities or obligations of the Sellers or the
Transferred Subsidiaries pertaining primarily to any Excluded Asset;
(ii) any liabilities and obligations of the Sellers or the
Transferred Subsidiaries arising out of or relating to the generation, use,
handling, presence, treatment, storage, transportation, disposal or Release
of any Hazardous Materials at, on, under, about, or migrating to or from,
(A) the Retained Real Property, whether before or after Closing, (B) the
Transferred Real Property only to the extent set forth on Schedule
2.3(b)(ii) or (C) any Former Facility;
23
<PAGE>
(iii) all liabilities and obligations that (A) are reflected
or reserved for on the Recent Balance Sheet or identified in the notes
thereto and (B) are identified on Schedule 2.3(b)(iii);
(iv) any liabilities and obligations of the Sellers or the
Transferred Subsidiaries arising out of or relating to the disposal of any
Hazardous Materials from the Transferred Real Property before Closing to a
third party offsite location for disposal, which disposal results in a
violation of, or liability under, CERCLA or any similar state law;
(v) any liabilities or obligations of the Sellers with
respect to Taxes arising in connection with the Business or the Purchased
Assets for any taxable period or ratable portion thereof ending on or prior
to the Closing Date (a "Pre-Closing Tax Period");
(vi) those liabilities or obligations of the Sellers arising
out of or relating primarily to the Business that are expressly set forth
on Schedule 2.3(b)(vi);
(vii) any liabilities or obligations in respect of, or that
constitute, Indebtedness (other than such liabilities and obligations of
the type set forth in clauses (iii) and/or (vi) of the definition of
"Indebtedness" and any Indebtedness of the Transferred Subsidiaries);
(viii) all liabilities and obligations allocated to GM
and/or the other Sellers pursuant to the Employee Matters Agreement;
(ix) all liabilities and obligations of the Transferred
Subsidiaries to the extent arising primarily from any business of GM or its
past or present Affiliates, divisions or business units, in each case,
other than the Business; and
(x) all liabilities and obligations of the Sellers or the
Transferred Subsidiaries in respect of the factoring or securitization of
any accounts or notes receivable (including any such obligation to
repurchase any accounts or notes receivable sold in connection with such
factoring or securitization or any such obligation secured by a lien or
pledge of any such accounts or notes receivable).
ARTICLE III
PURCHASE PRICE AND CLOSING
Section 3.1 Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall occur on the later of (i) three (3) Business Days following the
satisfaction and/or waiver of all conditions to Closing set forth in ARTICLE
VIII (other than such conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions at or
prior to the Closing) and (ii) a date specified by the Buyer on not less than
three (3) Business Days' notice to GM, which date shall not be later than the
last day of the Marketing Period and shall not be earlier than the date on which
all conditions to Closing set forth in ARTICLE VIII (other than such conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of such conditions at or prior to the Closing) have been
satisfied and/or waived, at the offices of Latham & Watkins LLP, 885 Third
Avenue, Suite 1200, New York, NY 10022, or at such other place or on such other
date as the Parties may
24
<PAGE>
agree in writing. The date on which the Closing actually occurs shall be
referred to as the "Closing Date," and except as otherwise expressly provided
herein, the Closing shall for all purposes be deemed effective as of 9:00 a.m.,
New York City time, on the Closing Date. Within ten (10) Business Days prior to
the Closing Date, and in no event less than three (3) Business Days prior to the
Closing Date, GM shall deliver to the Buyer a certificate signed by an
authorized representative of GM setting forth GM's reasonable best estimate of
the Closing Date Debt (the "Estimated Closing Date Debt").
Section 3.2 Closing Payment.
On the terms and subject to the conditions set forth in this
Agreement, at the Closing, the Buyer shall pay to GM an aggregate amount (such
amount, the "Closing Payment") equal to (i) Five Billion Five Hundred
Seventy-Five Million Dollars ($5,575,000,000) less (ii) the Estimated Closing
Date Debt, in cash by wire transfer of immediately available funds to the
account or accounts designated in writing by GM. The sum of the Closing Payment
plus the aggregate amount of the Assumed Liabilities, as such sum may be
adjusted in accordance with SECTIONS 3.3 and 9.6, is referred to herein as the
"Purchase Price".
Section 3.3 Closing Date Net Working Capital.
(a) Within 30 days after the Closing Date, GM shall deliver to the
Buyer a preliminary statement (the "Preliminary Statement") of (i) the Closing
Date Debt and (ii) the Net Working Capital of the Business, determined as of the
close of business on the day immediately preceding the Closing Date and in
accordance with the Agreed Accounting Conventions and exclusive of the
Apportioned Obligations (the "Closing Date Net Working Capital"). Any items
comprising the Closing Date Debt or the Closing Date Net Working Capital that
are denominated in a currency other than Dollars shall be converted to Dollars
using an exchange rate equal to the average Dollar exchange rate for such
currency during the 15-Business Day period immediately preceding, and including,
the Closing Date, as reported by Bloomberg, L.P. on page FXC (or any
successor/substitute page thereto) at 9:00 a.m., New York City time on each
Business Day during such period. The Buyer and its Affiliates (including the
Transferred Subsidiaries) shall provide GM and its representatives with full
access at all reasonable times and on reasonable advance notice to such
personnel and books, records and other materials of the Business to the extent
they are reasonably necessary for the preparation of, or relate to the matters
covered by, the Preliminary Statement, Final Statement, Closing Date Debt and
Closing Date Net Working Capital.
(b) The Buyer shall have 30 days to review the Preliminary Statement
from the date of its receipt thereof (the "Review Period"). Upon commencement of
the Review Period, the Buyer shall be provided full access to the books, records
and work papers of the Sellers to the extent related to the preparation of, or
matters covered by, the Preliminary Statement, Final Statement, Closing Date
Debt or Closing Date Net Working Capital. The Review Period shall be extended by
one (1) Business Day (up to an aggregate maximum of 60 days) for each day that
GM fails to respond in full to any reasonable information request from the Buyer
concerning any of the matters covered by the Preliminary Statement, Final
Statement, Closing Date Debt or Closing Date Net Working Capital. If the Buyer
objects to any aspect of the Preliminary Statement, then the Buyer must deliver
a written notice of objection (the "Objection Notice") to GM on or prior to the
expiration of the Review Period; provided that the Buyer may so object to the
Preliminary Statement based only on the existence of mathematical errors therein
or on the failure of the Preliminary Statement to be prepared in accordance with
the Agreed Accounting Conventions and the definitions of the Closing Date Debt
or the Net Working Capital, as applicable, and the other requirements of this
SECTION 3.3. The Objection
25
<PAGE>
Notice shall specify in reasonable detail any adjustment to the Preliminary
Statement proposed by the Buyer and the basis therefor, including the specific
items proposed to be adjusted and the specific Dollar amount of each such
proposed adjustment and an explanation of how such proposed adjustment was
calculated. If the Buyer delivers an Objection Notice to GM prior to the
expiration of the Review Period in accordance with this SECTION 3.3(B), the
Buyer and GM shall, for a period of 15 days thereafter (the "Resolution
Period"), attempt in good faith to resolve the matters properly contained
therein, and any written resolution, signed by each of the Buyer and GM, as to
any such matter shall be final, binding, conclusive and non-appealable for all
purposes hereunder. Except to the extent properly challenged in an Objection
Notice as provided in this SECTION 3.3(B), or in the event the Buyer does not
deliver an Objection Notice to GM in accordance with this SECTION 3.3(B) prior
to the expiration of the Review Period, the Buyer shall be deemed to have agreed
to the Preliminary Statement in its entirety, which Preliminary Statement or
undisputed portions thereof (as the case may be) shall be final, binding,
conclusive and non-appealable for all purposes hereunder.
(c) If, at the conclusion of the Resolution Period, the Buyer and GM
have not reached an agreement with respect to all disputed matters properly
contained in the Objection Notice, then within 10 days thereafter, the Buyer and
GM shall submit for resolution such matters remaining in dispute to Ernst &
Young LLP, or if such firm is unavailable or unwilling to so serve, to a
mutually acceptable nationally recognized independent accounting firm (the
"Neutral Auditor"). Each of GM and the Buyer agrees to execute, if requested by
the Neutral Auditor, an engagement letter reasonably satisfactory to such Party.
The Neutral Auditor shall act as an arbitrator to resolve (based solely on the
written submissions of the Buyer and GM and not by independent review) only
those matters properly included in the Objection Notice and still in dispute at
the end of the Resolution Period. In resolving such disputed matters, the
Neutral Auditor shall (i) limit its review to determining whether, considering
all such disputed matters (other than with respect to the Closing Date Debt)
together as a whole, the aggregate amount for such matters set forth in the
Preliminary Statement (the "GM Proposed Amount") or the aggregate amount for
such matters proposed by the Buyer in the Objection Notice (the "Buyer Proposed
Amount") was calculated more in accordance with the Agreed Accounting
Conventions, (ii) resolve all such disputed matters (other than with respect to
the Closing Date Debt) by choosing either the GM Proposed Amount or the Buyer
Proposed Amount, whichever was calculated more in accordance with the Agreed
Accounting Conventions with respect to such disputed matters, and (iii)
determine whether and to what extent (if any) the calculation of the Closing
Date Debt set forth in the Preliminary Statement requires adjustment. The Buyer
and GM shall direct the Neutral Auditor to render a resolution of all such
disputed matters, in accordance with the foregoing, within 30 days after its
engagement or such other period agreed upon by the Buyer and GM. The resolution
of the Neutral Auditor shall be set forth in a written statement delivered to
each of the Buyer and GM and shall be final, binding, conclusive and
non-appealable for all purposes hereunder. The Preliminary Statement, once
modified and/or agreed to in accordance with SECTION 3.3(B) or this SECTION
3.3(C), shall become the "Final Statement."
(d) All fees and expenses of the Neutral Auditor shall be borne
equally by GM and the Buyer, and each of them shall promptly advance to the
Neutral Auditor, upon its request, such Party's share of such fees and expenses.
Except as provided in the preceding sentence, all other costs and expenses
incurred by the Parties in connection with resolving any dispute hereunder
before the Neutral Auditor shall be borne by the Party incurring such cost and
expense.
26
<PAGE>
(e) If the Closing Date Net Working Capital as stated on the Final
Statement exceeds One Hundred Fifty-One Million Dollars ($151,000,000) (the
"Target Closing Date Net Working Capital"), then the Buyer shall pay to GM an
amount equal to such excess, by wire transfer of immediately available funds to
the account or accounts designated in writing by GM, within five Business Days
after the date on which the Preliminary Statement becomes the Final Statement.
If the Target Closing Date Net Working Capital exceeds the Closing Date Net
Working Capital as stated on the Final Statement, then GM shall pay to the Buyer
an amount equal to such excess, by wire transfer of immediately available funds
to the account designated in writing by the Buyer, within five Business Days
after the date on which the Preliminary Statement becomes the Final Statement.
If the Estimated Closing Date Debt exceeds the Closing Date Debt, as finally
determined pursuant to SECTION 3.3(C), then the Buyer shall pay to GM an amount
equal to such excess, by wire transfer of immediately available funds to the
account or accounts designated in writing by GM, within five Business Days after
the date on which the Preliminary Statement becomes the Final Statement. If the
Closing Date Debt, as finally determined pursuant to SECTION 3.3(C), exceeds the
Estimated Closing Date Debt, then GM shall pay to the Buyer an amount equal to
such excess, by wire transfer of immediately available funds to the account
designated in writing by the Buyer, within five Business Days after the date on
which the Preliminary Statement becomes the Final Statement. Any payment
pursuant to this SECTION 3.3(E) will be treated by the Parties as an adjustment
to the Purchase Price.
Section 3.4 Allocation of Purchase Price.
On or before ninety (90) days following the Closing Date, the Buyer
shall prepare and deliver to GM the allocation of the Purchase Price and other
consideration paid in exchange for the Purchased Assets, the Transferred Stock,
the non-competition agreement set forth in SECTION 7.9 and rights under the
Patent and Technology License Agreement prepared in accordance with Section 1060
of the Code and the rules and regulations promulgated thereunder (the
"Allocation"). GM shall have thirty (30) days after the delivery of the
Allocation to review and consent to the Allocation, which consent shall not be
unreasonably withheld, conditioned or delayed. GM and the Buyer each agree to
use such Allocation to prepare and file in a timely manner all appropriate Tax
filings including, if applicable, the preparation and filing of Form 8594 under
Section 1060 of the Code (or any successor form or successor provision of any
future Tax Law), with their respective Tax Returns for the taxable year that
includes the Closing Date and to take no position in any Tax Return that is
inconsistent with such Allocation; provided, however, that nothing contained
herein shall prevent GM and the Buyer from settling any proposed deficiency or
adjustment by any Governmental Entity based upon or arising out of the purchase
price allocation, and neither GM nor the Buyer shall be required to litigate
before any court, any proposed deficiency or adjustment by any taxing authority
challenging such allocation. GM shall provide the Buyer and the Buyer shall
provide GM with a copy of any information required to be furnished to the
Secretary of the Treasury under Section 1060 of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GM
Except as set forth in, and in all cases subject to, the Seller Disclosure
Schedules, GM represents and warrants to the Buyer as follows:
Section 4.1 Organization.
Each of the Sellers and the Transferred Subsidiaries is duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization. Each of the Sellers and the Transferred
Subsidiaries is duly qualified or licensed to do business as a foreign entity
and is in good standing in each jurisdiction in which the
27
<PAGE>
ownership or lease of the Business Assets or the conduct of the Business
requires such qualification or license, except where the failure to be so
qualified or be so licensed would not have a Material Adverse Effect. Each of
the Sellers and the Transferred Subsidiaries has all requisite corporate or
other organizational power and authority to carry on the Business as currently
conducted and to own, lease or use, as the case may be, its Business Assets (to
the extent used or currently expected to be used in the Business). GM has made
available to the Buyer true and complete copies of the currently effective
articles of incorporation and bylaws (and/or other governing and organizational
documents) of each Transferred Subsidiary.
Section 4.2 Authorization of Transaction.
GM has all requisite corporate power and authority to execute,
deliver, and perform this Agreement, and each of the Sellers will have as of the
Closing all requisite corporate or other organizational power and authority to
execute, deliver and perform the Ancillary Documents to which it is a party.
This Agreement has been duly authorized, executed and delivered by GM and
constitutes, and each Ancillary Document when executed and delivered by any
Seller or the Sellers, as the case may be, shall be duly authorized and shall
constitute, a valid and legally binding obligation of the respective Seller or
Sellers (assuming that this Agreement and such Ancillary Documents constitute
valid and legally binding obligations of the Buyer and its permitted assignees),
enforceable in accordance with its terms and conditions, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles, including principles of commercial reasonableness, good faith and
fair dealing.
Section 4.3 Noncontravention; Consents.
(a) Except with respect to required filings or other actions under any
applicable Antitrust Laws and the expiration of any applicable waiting or review
periods thereunder, the execution and delivery by GM of this Agreement, and by
the Sellers of the Ancillary Documents to which they are a party, and the
consummation by the Sellers of the transactions contemplated hereby and thereby,
do not: (i) violate, contravene or conflict with, in any material respect, or
result in a material breach of, any Law to which the Sellers, the Transferred
Subsidiaries, the Business or the Business Assets is subject; (ii) violate,
contravene or conflict with, or result in a breach of, any provision of the
certificates of incorporation, bylaws or other organizational documents of the
Sellers or the Transferred Subsidiaries; (iii) result in a material breach of,
constitute a material default under, create in any party the right to
accelerate, terminate, adversely modify or cancel, or result in the acceleration
of, any material obligation of the Sellers or the Transferred Subsidiaries under
any Material Contracts; or (iv) result in the creation or imposition of any
Lien, other than any Permitted Liens, upon the Business Assets.
(b) Except with respect to required filings or other actions under any
applicable Antitrust Laws and the expiration of any applicable waiting or review
periods thereunder, no material notices, Permits, consents, approvals,
authorizations, qualifications or orders of Governmental Entities are required
for the consummation by the Sellers of the transactions contemplated hereby or
by the Ancillary Documents to which they are parties.
Section 4.4 Business Financial Statements; Absence of Undisclosed
Liabilities.
(a) Set forth on Schedule 4.4(a) is a copy of (i) the audited combined
balance sheet for the Business as of the end of the fiscal year of each of 2005
and 2006, and audited combined statement of operations, combined statement of
cash flows and combined statement of
28
<PAGE>
equity for each of the fiscal years ended 2004, 2005 and 2006, and (ii) an
unaudited combined balance sheet of the Business as of March 31, 2007 (the
"Recent Balance Sheet"), and the related unaudited combined statement of
operations for the three-month period then ended (collectively, the foregoing,
the "Business Financial Statements"). The Business Financial Statements
(including the notes thereto) were prepared in accordance with GAAP applied
consistently with past practices and present fairly in all material respects the
financial condition and the results of operations and cash flows of the Business
as of the dates and for the periods indicated therein. The audited and unaudited
Business Financial Statements have been derived from the consolidated financial
statements and accounting records of GM using the historical results of
operations and the historical basis of assets and liabilities of the Business
and may not necessarily be indicative of the conditions that would have existed
or the results of operations if the Business had been operated as an
unaffiliated company. The Business Financial Statements include allocations of
certain expenses for services and other costs of GM attributable to the Business
that are considered to be reasonable. The unaudited Business Financial
Statements are subject to normal year-end adjustments (including Tax
adjustments) and do not include footnotes.
(b) The Business does not have any material liabilities or obligations
of any nature that would be Assumed Liabilities and would be required to be
disclosed, reflected or reserved on an audited balance sheet of the Business
prepared in accordance with GAAP applied consistently with past practices (or
disclosed in the notes thereto), whether known or unknown, fixed, absolute,
accrued, contingent or otherwise, other than liabilities and obligations (i)
that are disclosed, reflected or reserved against on the Recent Balance Sheet,
(ii) incurred in the ordinary course of business since the date of the Recent
Balance Sheet, (iii) expressly disclosed in or contemplated by this Agreement,
the Seller Disclosure Schedules or any Ancillary Document, or (iv) arising under
the Purchased Contracts.
(c) The pro forma financial statements set forth on Schedule 4.4(c)
(the "Pro Forma Financial Statements") reflect the pro forma adjustments to the
audited financial statements contained in the Business Financial Statements for
the items described in Schedule 4.4(c) (the "Pro Forma Adjustments") and not any
other adjustments. The Pro Forma Adjustments are in all material respects
accurately described in Schedule 4.4(c) and represent GM's best estimate of the
material adjustments that are required to be made to such audited financial
statements in order to present fairly in all material respects the financial
condition and the results of operations and cash flows of the Business.
Section 4.5 Capitalization.
At Closing, the Transferred Stock collectively will constitute all of
the issued and outstanding capital stock or other equity interests of the
Transferred Subsidiaries. Schedule 1.1C sets forth, for each Transferred
Subsidiary, (i) all of the authorized capital stock or other equity interests of
such Transferred Subsidiary, (ii) all issued and outstanding shares of such
capital stock or such other equity interests and (iii) all holders of all such
shares of capital stock or such other equity interests. All of the Transferred
Stock is duly authorized, validly issued, fully paid and non-assessable. None of
the Transferred Stock has been issued in violation of any securities laws,
preemptive rights or rights of first refusal or first offer. There are (x) no
outstanding securities convertible into or exchangeable for shares of
Transferred Stock, (y) no outstanding options, rights or warrants to purchase or
subscribe for any such shares and (z) no voting trust, proxy or other agreement
or understanding with respect to the voting of Transferred Stock.
29
<PAGE>
Section 4.6 Title to Transferred Stock.
Each of the Sellers identified on Schedule 1.1C is the record and
beneficial owner of, and has good and valid title to, the shares of the
Transferred Stock set forth on Schedule 1.1C, free and clear of any and all
Liens other than Permitted Liens, and there are no limitations or restrictions
on such Seller's right to transfer such shares to the Buyer pursuant to this
Agreement, other than those that may be imposed by applicable securities Laws.
Assuming the Buyer has requisite power and authority to be the lawful owner of
the Transferred Stock, upon delivery of the Transferred Stock to the Buyer at
Closing, good and valid title to the Transferred Stock (free and clear of all
Liens) will pass to the Buyer.
Section 4.7 Absence of Certain Changes.
Since December 31, 2006, (a) there has not occurred any Material
Adverse Effect, (b) except as expressly required or contemplated by this
Agreement or any Ancillary Documents, the Sellers and the Transferred
Subsidiaries have conducted the operations of the Business in the ordinary
course of business consistent with past practices in all material respects and
(c) none of the Transferred Subsidiaries or, with respect to the Business, the
Sellers has taken or agreed to take any action that would be prohibited by
SECTION 6.3 if taken after the date hereof.
Section 4.8 Title and Sufficiency of Assets.
As of the Closing, the Sellers and the Transferred Subsidiaries will
have good title to, a valid license to or leasehold interest in, or other legal
rights to possess and use all of the material personal property contained in the
Business Assets, free and clear of all Liens, except for Permitted Liens. The
Business Assets and Transferred Stock, together with the rights granted to the
Buyer under the Ancillary Documents, constitute all of the material assets,
rights and properties necessary to conduct the Business in substantially the
same manner as presently conducted by the Sellers and the Transferred
Subsidiaries as of the date hereof; provided that this SECTION 4.8 does not
apply to, and GM does not make any representation or warranty in this SECTION
4.8 with respect to, any Intellectual Property or Software.
Section 4.9 Contracts.
(a) Schedule 4.9 lists all Contracts contained in the Business Assets,
in each case as of the date of this Agreement, (i) the performance of which is
reasonably expected to involve payment or receipt by the Business of aggregate
consideration in excess of $50,000,000 in the 12-month period immediately
following the date hereof, (ii) pursuant to which the Business is committed to
make a capital expenditure or to purchase a capital asset in excess of
$5,000,000 that is not contemplated by the fiscal year 2007 capital expenditure
budget for the Business, (iii) between the Business or a Transferred Subsidiary,
on the one hand, and a Seller or an Affiliate of another Seller, on the other
hand, (iv) that contain a non-compete provision or similar covenant restricting
the Business or any Transferred Subsidiary from competing with another Person or
engaging in any line of business or (v) of the type described in the enumerated
list below in this SECTION 4.9(A) (collectively, the "Material Contracts"). The
Sellers have made available to the Buyer a correct and complete copy of each
Material Contract. Schedule 4.9 lists the following Contracts to which any
Transferred Subsidiary is a party or that is, as of the date hereof, contained
in the Business Assets:
(i) any Contract relating to Indebtedness of any Transferred
Subsidiary or any guarantee by any Transferred Subsidiary or, with respect
to the Business, any Seller of any Indebtedness of any other Person;
30
<PAGE>
(ii) any joint development or collaboration agreement and any
other Contract pursuant to which the Business licenses (as licensee or
licensor) any material Intellectual Property or Software;
(iii) any joint venture contract, partnership agreement, limited
liability company agreement or other similar Contract;
(iv) any Contract relating to the purchase or sale of any
business, business unit, division, facility or subsidiary of any Person or
any equity interest of, or all or any substantial portion of, the assets
of, any business, corporation or other Person (whether by merger, sale of
stock, sale of assets or otherwise) in each case either (i) for
consideration in excess of $10,000,000 or (ii) under which any Transferred
Subsidiary has any obligation or liability (contingent or otherwise) after
the date of this Agreement that is reasonably expected to exceed
$10,000,000;
(v) any Contract with "take or pay" provisions, or "requirements"
provisions obligating a Person to provide the quantity of goods or services
required by another Person;
(vi) any collective bargaining agreement; and
(vii) any lease of real property providing for annual rents in
excess of $2,000,000.
(b) Each Material Contract is a valid, binding and enforceable
obligation of the applicable Seller (or a Transferred Subsidiary) party thereto
and, to the Seller's Knowledge, of the other party or parties thereto, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles, including principles of commercial reasonableness, good faith and
fair dealing and to the Seller's Knowledge, each Material Contract is in full
force and effect.
(c) None of the Sellers or the Transferred Subsidiaries or, to the
Seller's Knowledge, any other party thereto is in material breach of or material
default under any term of any Material Contract or has repudiated any material
term of any Material Contract.
(d) None of the Sellers or the Transferred Subsidiaries has received
any written or, to the Seller's Knowledge, oral notice of termination,
cancellation or non-renewal with respect to any Material Contract.
(e) Except as specifically set forth on Schedule 6.2(a), no consent,
approval or authorization of any party to any Material Contract is required for
the consummation by the Sellers of the transactions contemplated hereby or by
the Ancillary Documents to which they are parties.
Section 4.10 Real Property.
(a) With respect to the Sellers:
(i) As of Closing, (A) the Sellers own good and valid fee simple
title to the Owned Real Property, free and clear of any Lien, except for
Permitted Liens; (B)
31
<PAGE>
no third party has any option or right of first refusal to acquire the
Owned Real Property; and (C) there are no Persons (other than the Sellers
or their Affiliates) in possession of the Owned Real Property.
(ii) As to each respective lease underlying the Leased Real
Property: (A) such lease is in full force and effect and constitutes the
entire agreement to which the applicable Seller is a party with respect to
the Leased Real Property leased thereunder; (B) the Seller that is a party
to such lease has not assigned, sublet, transferred or conveyed any
interest in the leasehold; and (C) the Seller that is a party to such lease
is not in receipt of any written or, to the Seller's Knowledge, oral notice
of default with respect to such lease.
(iii) To the Seller's Knowledge, no parcel of Owned Real Property
or Leased Real Property is subject to any pending or threatened
condemnation Action.
(b) With respect to the Transferred Subsidiaries:
(i) The Transferred Subsidiaries do not own any real property.
(ii) As to each respective lease underlying the Transferred Sub
Real Property: (A) such lease is in full force and effect and constitutes
the entire agreement to which the applicable Transferred Subsidiary is a
party with respect to the Transferred Sub Real Property leased thereunder;
(B) the Transferred Subsidiary that is a party to such lease has not
assigned, sublet, transferred or conveyed any interest in the leasehold;
and (C) the Transferred Subsidiary that is a party to such lease is not in
receipt of any written or, to the Seller's Knowledge, oral notice of
default with respect to such lease.
(iii) To the Seller's Knowledge, no parcel of Transferred Sub
Real Property is subject to any pending or threatened condemnation Action.
Section 4.11 Permits.
The Sellers and the Transferred Subsidiaries hold, and have during the
past three (3) years complied in all material respects with, all material
Permits that are required by any Governmental Entity to conduct the Business as
presently conducted or to own or use the Business Assets. Each such Permit is
valid, binding and in full force and effect and no holder thereof is in default
(or with giving of notice or lapse of time or both, would be in default) under
such Permit in any material respect and no proceeding is pending or, to the
Seller's Knowledge, threatened, to revoke, suspend, withdraw, terminate or limit
such Permit.
Section 4.12 Intellectual Property.
(a) Schedule 4.12(a) identifies (i) each registered Mark and
application to register the same that is owned by any of the Transferred
Subsidiaries or the Sellers and used exclusively in connection with the Business
and (ii) each registered Copyright and application to register the same that is
owned by any of the Transferred Subsidiaries or the Sellers and used primarily
in connection with the Business and in each case, the respective application or
registration numbers and dates thereof. With respect to each item of registered
Intellectual Property that is listed on Schedule 2.2(a)(ix), and each item of
registered Intellectual Property contained in the Licensed Intellectual
Property, (i) to the Seller's Knowledge, all necessary registration, maintenance
and other filing fees through the date hereof have been timely paid and all
necessary documents have been timely filed with the relevant Governmental
Entities, (ii) to
32
<PAGE>
the Seller's Knowledge, there are no actions to be taken by any Seller or any
Transferred Subsidiary within 120 days of the date hereof that if not taken
would have a material impact on the Buyer's right to use such item and (iii) one
or more of the Transferred Subsidiaries or the Sellers has good title to each
such item of registered Intellectual Property listed on Schedule 2.2(a)(ix),
free and clear of any Liens other than Permitted Liens.
(b) The Business Assets, the Licensed Intellectual Property and the
Licensed Software contain all of the Intellectual Property and Software owned by
or, to the Seller's Knowledge, validly licensed by, the Sellers and/or
Transferred Subsidiaries that is necessary to conduct the Business in
substantially the same manner as presently conducted by the Sellers and the
Transferred Subsidiaries as of the date hereof.
(c) To the Seller's Knowledge, (i) the operation of the Business as it
is presently conducted by the Sellers and the Transferred Subsidiaries does not
infringe or misappropriate any Intellectual Property of third parties or any
rights of third parties in Software, (ii) the Transferred Subsidiaries and, with
respect to the Business, the Sellers have not infringed or misappropriated any
Intellectual Property of third parties or any rights of third parties in
Software, and (iii) the Sellers and the Transferred Subsidiaries have not
received, within the past three (3) years, any written charge, complaint, claim,
demand or notice alleging any such infringement or misappropriation.
(d) To the Seller's Knowledge, (i) no third party is currently in any
material respect infringing or misappropriating any of the material Transferred
Intellectual Property or the material Licensed Intellectual Property, (ii) none
of such Intellectual Property is invalid or unenforceable and (iii) no
third-party has challenged in writing the validity or enforceability of any such
Intellectual Property.
(e) The Sellers and the Transferred Subsidiaries have a policy of
requiring employees who develop Intellectual Property for the Sellers or the
Transferred Subsidiaries, as applicable, to enter into written agreements to
assign such Intellectual Property to the Sellers or the Transferred
Subsidiaries, as applicable. Each of the Sellers and the Transferred
Subsidiaries has taken reasonable steps to enforce such policy and to protect
and preserve the confidentiality of all material Technology contained in the
Business Assets and Licensed Intellectual Property.
(f) Schedule 4.12(f) lists all licenses and similar agreements entered
into by GM or any of its Affiliates in connection with or in respect of the
Licensed Intellectual Property or the Licensed Software that would reasonably be
expected to restrict the Buyer's rights to use, exploit or sublicense to others
the Licensed Intellectual Property or the Licensed Software with respect to the
Exclusively Licensed Products (as such term is defined in the Patent and
Technology License Agreement) under the Ancillary Documents, including the
Hybrid JV Agreements (all such licenses and similar agreements being referred to
as the "GM Third Party Licenses"). GM has made available to the Buyer a true and
complete copy of each GM Third Party License.
(g) Subject to Section 4.7 of the Patent and Technology License
Agreement, with respect to the Licensed IP (as defined in the Patent and
Technology License Agreement) other than Third-Party IP (as defined in the
Patent and Technology License Agreement), Licensor (as defined in the Patent and
Technology License Agreement) is the sole owner of such Licensed IP or otherwise
has the right to grant the Buyer the licenses granted under the Patent and
Technology License Agreement with respect to such Licensed IP; provided
33
<PAGE>
that this SECTION 4.12(G) is not a representation or warranty regarding
infringement, misappropriation or other unauthorized use or a representation or
warranty that no other Persons have the right to use any Technology. Without
limiting the foregoing, subject to Section 4.7 of the Patent and Technology
License Agreement, Licensor has not granted any license that conflicts with
those granted under the Patent and Technology License Agreement with respect to
Exclusively Licensed Products (as defined in the Patent and Technology License
Agreement).
(h) Notwithstanding anything to the contrary in this Agreement,
SECTIONS 4.3 (with respect to Material Contracts relating to Intellectual
Property), 4.7, 4.9 (with respect to Material Contracts relating to Intellectual
Property), 4.14 and 4.20 and this SECTION 4.12 contain the sole and exclusive
representations and warranties of GM hereunder with respect to Intellectual
Property or Software (or rights therein), including any arising under any Laws
regarding infringement, misappropriation or other unauthorized use of
Intellectual Property.
Section 4.13 Legal Compliance.
Since January 1, 2005, (a) the conduct of the Business and the
operation of the Business Assets by the Sellers and the Transferred Subsidiaries
have complied in all material respects with all applicable Laws, (b) no Action
has been filed or commenced or, to the Seller's Knowledge, threatened, against
the Sellers or the Transferred Subsidiaries alleging any failure to so comply,
and (c) no Seller or Transferred Subsidiary has (i) received any written notice
alleging any failure to so comply or (ii) conducted any internal investigation
in connection with which outside legal counsel was retained for the purpose of
conducting or assisting with such investigation with respect to any actual,
potential or alleged failure to so comply, except with respect to the Actions
set forth on Schedule 2.3(a)(vii) and for any of the foregoing of this SECTION
4.13 that would not be (with respect to Actions against the Sellers only) an
Assumed Liability. GM and its Affiliates are, and at all times have been, in
material compliance with the terms of the Consent Decree.
Section 4.14 Litigation.
There are no Actions pending or, to the Seller's Knowledge,
threatened, (a) against or affecting the Sellers or the Transferred Subsidiaries
relating to the Business or the Business Assets that, if adversely determined,
would reasonably be expected to result in the imposition on the Buyer, the
Business or the Transferred Subsidiaries of damages in an amount in excess of
$5,000,000 individually or $20,000,000 in the aggregate, that would be an
Assumed Liability, or result in the imposition of any equitable relief that
would be materially adverse to the Business or the Transferred Subsidiaries, or
(b) that question the validity of this Agreement or any of the Ancillary
Documents, or any action taken or to be taken by the Sellers in connection with
this Agreement or any of the Ancillary Documents. None of the Transferred
Subsidiaries or, with respect to the Business, the Sellers is subject to any
outstanding material injunction, judgment or judicial order, decree or ruling
that would be adverse to the Business or the Transferred Subsidiaries from and
after the Closing.
Section 4.15 Employees and Employee Benefits.
(a) Schedule 4.15(a) sets forth a list of all currently effective
collective bargaining agreements, memoranda of understanding or other labor
agreements with any union or labor organization representing the Transferred
Employees. With respect to the conduct of the Business: (i) there are no, and
have been no within the last three (3) years, strikes, work stoppages or
material labor disputes pending, or to the Seller's Knowledge, threatened, that
involve any of the current or former employees of the Business; and (ii) to the
Seller's Knowledge, no union organization campaign is in progress, or was in
progress within the last
34
<PAGE>
three (3) years, with respect to Transferred Employees who are nonunion
employees, and no question concerning representation exists respecting such
nonunion employees.
(b) Schedule 4.15(b) lists, by country, all material Benefit Plans,
and specifically identifies any Benefit Plan solely sponsored or maintained by a
Transferred Subsidiary. As soon as reasonably practicable following the date
hereof, the Sellers shall update Schedule 4.15(b) to list all Benefit Plans.
"Benefit Plans" means all employee benefit plans, programs, policies, agreements
or other arrangements, including any Employee Welfare Benefit Plan, any Employee
Pension Benefit Plan, and any bonus, incentive, deferred compensation, vacation,
severance, change in control, employment or fringe benefit plan, program or
agreement, in each case that are sponsored, maintained or contributed to by the
Sellers or the Transferred Subsidiaries for the benefit of current or former
employees of the Business.
(c) All Benefit Plans comply and have been administered in form and in
operation, in all material respects in accordance with their terms, the terms of
any applicable collective bargaining agreement and with all applicable
requirements of Law (including ERISA and the Code).
(d) Each Benefit Plan that is intended to meet the requirements of a
"qualified plan" under section 401(a) of the Code has received a determination
from the Internal Revenue Service that such Benefit Plan is so qualified, and
nothing has occurred since the date of such determination that could reasonably
be expected to materially adversely affect the qualified status of any such
Benefit Plan.
(e) No Benefit Plan exists that would reasonably be expected to result
in (i) the payment to any current employee of the Business or the Transferred
Subsidiaries of any money or other property, or accelerate or provide any other
rights or benefits, in each case, that is or would be an Assumed Liability or a
liability of any Transferred Subsidiary that is not an Excluded Liability, or
(ii) the forgiveness of any Indebtedness of such employee that is or would be a
Business Asset, in the case of both clauses (i) and (ii), as a result of the
consummation of the transactions contemplated by this Agreement (whether alone
or in connection with any other event).
Section 4.16 Environmental Matters.
(a) Environmental consultants retained by the Sellers conducted
environmental assessments of certain of the Transferred Real Property and the
Transferred Sub Real Property and prepared final environmental assessment
reports, including all related environmental sampling and analytical data
("Environmental Assessments"). Schedule 4.16(a) sets forth a list of
Environmental Assessments. The Environmental Assessments listed on Schedule
4.16(a) have been delivered to the Buyer. In addition, to the Seller's
Knowledge, GM has provided correct and complete copies of all Phase I and Phase
II environmental reports, including a discussion of all soil and groundwater
sampling, completed in the last five years, in their control or possession
relating to the Business, the Transferred Real Property and the Transferred Sub
Real Property.
(b) The Business is, and for the past two (2) years has been, in
material compliance with all applicable Environmental Laws, which includes
obtaining, maintaining and complying with all Permits issued under Environmental
Laws. No Seller or any Transferred Subsidiary has received any written notice
regarding any unresolved actual or alleged material
35
<PAGE>
violation of Environmental Laws, and no Actions arising under Environmental Laws
or with respect to Hazardous Materials are pending or, to the Seller's
Knowledge, threatened, in each case, that is or would be an Assumed Liability or
a liability of any Transferred Subsidiary that is not an Excluded Liability with
respect to the Business, the Transferred Real Property or the Transferred Sub
Real Property.
(c) Neither the Sellers nor any Transferred Subsidiary has received
any written request for information, or been notified in writing that it is a
potentially responsible party, under CERCLA or equivalent state laws with
respect to any Transferred Real Property or Transferred Sub Real Property, or
that any Transferred Real Property or Transferred Sub Real Property is listed or
proposed for listing on the "National Priority List" under CERCLA or any similar
list maintained by any state or other Governmental Entity, except in each case
to the extent such matters are Excluded Liabilities. Neither the Sellers nor any
Transferred Subsidiary has received any written notice that it is subject to
potential liability or corrective action under RCRA or equivalent state laws
with respect to the Business, any Transferred Real Property, or any Transferred
Sub Real Property.
(d) To the Seller's Knowledge, there have been no Releases of any
Hazardous Materials at any Transferred Real Property or Transferred Sub Real
Property, except as permitted pursuant to Environmental Laws or except in an
amount, concentration or of a nature which would not reasonably be expected to
result in a material liability to the Buyer.
(e) Notwithstanding anything to the contrary in this Agreement, this
SECTION 4.16 contains the sole and exclusive representations and warranties of
GM with respect to compliance with any Environmental Laws.
Section 4.17 Tax Matters.
(a) The Transferred Subsidiaries have timely filed with the
appropriate Governmental Entities all Tax Returns required to be filed. The
Sellers have timely filed with the appropriate Governmental Entities all Tax
Returns required to be filed with respect to the Purchased Assets and the income
and operations of the Business. All such Tax Returns of the Transferred
Subsidiaries and the Sellers are true, complete, and correct in all material
respects.
(b) The Transferred Subsidiaries have paid or will pay prior to the
Closing all Taxes that have accrued or are due and payable, in each case in
respect of a Pre-Closing Tax Period, other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income. The
Sellers have paid or discharged or will pay in full or will discharge all Taxes
the nonpayment of which would result in a Lien on the Purchased Assets or the
Transferred Stock in the hands of the Buyer.
(c) There are no Liens for Taxes upon the Business Assets, other than
Permitted Liens.
(d) The transactions contemplated by this Agreement are not subject to
Tax withholding pursuant to the provisions of section 3406 or subchapter A of
chapter 3 of the Code, or to the Tax withholding provisions of any other
applicable Law.
(e) None of the Transferred Subsidiaries (or the Sellers insofar as
any such matter pertains to the Purchased Assets or the income and operations of
the Business) has waived
36
<PAGE>
any statute of limitations with respect to Taxes, or agreed to any extension of
time with respect to an assessment or deficiency of Taxes, except to the extent
that the foregoing does not or would not relate or give rise to an Assumed
Liability or liability of any Transferred Subsidiary that is not an Excluded
Liability.
(f) Schedule 4.17(f) sets forth each of the Sellers that is not a
United States Person within the meaning of the Code.
(g) There is no audit or, to the Seller's Knowledge, other matter in
controversy, with respect to any Taxes due and owing by any of the Transferred
Subsidiaries (or the Sellers insofar as any such matter pertains to the
Purchased Assets or the income and operations of the Business), and there is no
Tax deficiency or claim assessed or, to the Seller's Knowledge, proposed or
threatened (whether orally or in writing) against any of the Transferred
Subsidiaries (or the Sellers insofar as any such deficiency or claim pertains to
the Purchased Assets or the income and operations of the Business), in each case
other than in respect of any such audits, controversies, deficiencies,
assessments, or proposed assessments that are being contested in good faith.
(h) The Transferred Subsidiaries have withheld all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party,
and such withheld Taxes have either been duly paid to the proper Governmental
Entity or set aside in accounts for such purpose.
(i) The Transferred Subsidiaries have no liability for the Taxes of
any other person under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee, successor or by contract or
otherwise.
(j) No claim has ever been made in writing by a Governmental Authority
in a jurisdiction where any of the Transferred Subsidiaries does not file Tax
Returns that such Transferred Subsidiary is or may be subject to taxation by
that jurisdiction.
(k) No Transferred Subsidiary has any obligation under any Tax
allocation or sharing agreement, and after the Closing Date, no Transferred
Subsidiary shall be a party to, bound by or have any obligation under any such
Tax allocation or sharing agreement or have any liability thereunder for amounts
due in respect of Pre-Closing Tax Periods.
(l) No Transferred Subsidiary will be required to recognize income in
a Tax period or portion thereof ending after the Closing Date that is
attributable to any transaction occurring in, or a change of accounting method
made for, a Tax period ending on or prior to the Closing Date that resulted in
deferred reporting of income from such transaction or change in accounting
method.
Section 4.18 Customers and Suppliers.
Schedule 4.18 sets forth a complete and correct list of the ten
largest customers and the ten largest suppliers (each measured by Dollar volume
of sales and purchases as the case may be) of the Business as of and for each of
the last two fiscal years, and the amount of such business done (by Dollar
volume of sales and purchases as the case may be) with each such customer or
supplier as of and for each such year. To the Seller's Knowledge, since January
1, 2007, no Transferred Subsidiary or Seller has received any written notice
from any such customer or supplier that such customer or supplier has ceased, or
will cease, to purchase or sell, as applicable, any material amount of products
or services to or
37
<PAGE>
from the Transferred Subsidiaries or, with respect to the Business, the Sellers
or will or intends to substantially reduce such purchases or sales, as
applicable.
Section 4.19 Accounts Receivable.
The accounts receivable contained in the Business Assets (i) arise
from bona fide transactions and (ii) to the Seller's Knowledge, the Sellers and
the Transferred Subsidiaries have not received written notice of any valid
claims or set offs or other defense or counterclaims with respect to such
accounts receivable.
Section 4.20 Related Party Transactions.
None of GM or its Affiliates (including the Sellers and the
Transferred Subsidiaries) is a party to any material Contract that is primarily
related to the Business and that is not contained in the Business Assets, and
neither GM nor any Affiliate of GM is a counterparty to any Material Contract
that is contained in the Business Assets.
Section 4.21 Product Liability; Product Warranties.
To the Seller's Knowledge, since January 1, 2006, (i) the products
sold by the Business and the services provided by the Business have complied in
all material respects with applicable Laws and (ii) there have not been any
defects or deficiencies in any such products or services that would result in a
claim or claims against the Business that would have a Material Adverse Effect.
Schedule 4.21 sets forth copies of the standard written warranties of the
Business with respect to its products and services. To the Seller's Knowledge,
neither any Seller, in respect of the Business, nor any Transferred Subsidiary
(or any predecessor thereto) has manufactured, sold or distributed any products
containing asbestos or asbestos-containing materials.
Section 4.22 Brokers' Fees.
None of the Sellers nor any of their Affiliates has engaged or has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement or the
Ancillary Documents for which the Buyer would become liable.
Section 4.23 Government Contracts.
(a) (i) To the Seller's Knowledge, none of the Transferred
Subsidiaries, Transferred Employees or, with respect to the Business, the
Sellers, is or during the last three (3) years has been (except as to routine
security investigations) under administrative, civil or criminal investigation,
indictment or information by any Governmental Entity and (ii) during the last
three (3) years, none of the Transferred Subsidiaries or, with respect to the
Business, the Sellers, has made a voluntary disclosure with respect to any
material irregularity, misstatement or omission arising under or relating to a
Government Contract or any other material violation of Law by any of the
Transferred Subsidiaries or, with respect to the Business, the Sellers. For
purposes of this Agreement, "Government Contract" means any Contract that is (x)
between any Transferred Subsidiary or, with respect to the Business, any Seller
and a Governmental Entity or (y) entered into by any Transferred Subsidiary or,
with respect to the Business, any Seller as a subcontractor (at any tier) in
connection with a Contract between another Person and a Governmental Entity.
(b) There are (i) no outstanding material claims against any
Transferred Subsidiary or, with respect to the Business, any Seller, by a
Governmental Entity or by any prime contractor, subcontractor or vendor or other
Person arising under any Government Contract and (ii) no material disputes
presently existing between any Transferred Subsidiary or, with respect to the
Business, any Seller, and the U.S. Government under the Contract Disputes Act or
any other
38
<PAGE>
federal statute or between any Transferred Subsidiary or, with respect to the
Business, any Seller, and any prime contractor, subcontractor or vendor arising
under or relating to any such Government Contract.
(c) None of the Transferred Subsidiaries or the Sellers nor any of the
Transferred Employees is (or during the last ten (10) years has been) (i)
suspended or debarred from doing business with a Governmental Entity or (ii) the
subject of a finding of non-responsibility or ineligibility for U.S. Government
or non-U.S. Government contracting. During the past five (5) years, no
Government Contract has been terminated for default on the part of any
Transferred Subsidiary or, with respect to the Business, any Seller. No
termination for convenience, cure notice or show cause notice is currently in
effect with respect to any Government Contract.
(d) Final indirect cost rates with respect to the Government Contracts
have been established for all years prior to 2005.
Section 4.24 Business Relationships.
To Seller's Knowledge, no Transferred Subsidiary or, with respect to
the Business, any Seller or Seller Affiliate has a customer, supplier or other
business relationship with, or is a party to any contract with, any Person (a)
organized or domiciled in or that is a citizen of, Balkans, Bahrain, Burma
(Myanmar), Cuba, Iran, Liberia, North Korea, Sudan, Syria or Zimbabwe (including
any Governmental Entity within any such country) or (b) that appears on the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Controls in the United States Department of the Treasury or in the
Annexes to the United States Executive Order 13224 - Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism.
Section 4.25 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV OR ANY ANCILLARY
DOCUMENT, NEITHER GM NOR ANY OF THE OTHER SELLERS MAKES ANY REPRESENTATION OR
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
CONNECTION WITH OR WITH RESPECT TO ANY OF THE BUSINESS ASSETS, THE ASSUMED
LIABILITIES, THE TRANSFERRED STOCK, THE BUSINESS OR OTHERWISE, OR WITH RESPECT
TO ANY INFORMATION PROVIDED TO THE BUYER, INCLUDING WITH RESPECT TO ANY
REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE OR USE, TITLE, NON-INFRINGEMENT, OR ENVIRONMENTAL MATTERS. ALL OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY DISCLAIMED. EXCEPT AS EXPRESSLY SET
FORTH IN THIS ARTICLE IV OR ANY ANCILLARY DOCUMENT, GM AND THE SELLERS ARE
SELLING, ASSIGNING AND TRANSFERRING THE PURCHASED ASSETS AND TRANSFERRED STOCK
TO THE BUYER ON AN "AS-IS, WHERE-IS" BASIS.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows:
Section 5.1 Organization.
The Buyer is a corporation duly incorporated, validly existing and in
good standing under the Laws of the State of Delaware. The Buyer is duly
qualified or licensed to do business as a foreign entity and is in good standing
in each
39
<PAGE>
jurisdiction where such qualification or license is required, except where the
failure to be so qualified or be so licensed would not have a material adverse
effect on the Buyer's ability to consummate the transactions contemplated by,
and discharge its obligations under, this Agreement and the Ancillary Documents
(a "Buyer Material Adverse Effect"). The Buyer has all requisite corporate power
and authority to carry on its business as currently conducted and as proposed to
be conducted after the Closing.
Section 5.2 Authorization of Transaction.
The Buyer has all requisite corporate power and authority to execute,
deliver and perform this Agreement and each of the Ancillary Documents to which
it is a party. This Agreement constitutes, and each of the Ancillary Documents
when executed and delivered by the Buyer shall constitute, a valid and legally
binding obligation of the Buyer (assuming that this Agreement and such Ancillary
Documents constitute valid and legally binding obligations of the other parties
thereto), enforceable in accordance with its terms and conditions, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors' rights or by general equity
principles, including principles of commercial reasonableness, good faith and
fair dealing.
Section 5.3 Noncontravention; Consents.
(a) Except with respect to required filings or other actions under any
applicable Antitrust Laws and the expiration of any applicable waiting or review
periods thereunder and except as set forth on Schedule 4.3(a), the execution and
delivery by the Buyer of this Agreement and the Ancillary Documents to which it
is a party, and the consummation by the Buyer of the transactions contemplated
hereby and thereby, do not: (i) violate any Law to which the Buyer or its assets
is subject; (ii) conflict with or result in a breach of any provision of the
organizational documents of the Buyer; or (iii) create a breach, default,
termination, cancellation or acceleration of any obligation under any Contract
to which the Buyer is a party or by which the Buyer or any of its assets or
properties are bound or subject, except for any of the foregoing in the case of
clauses (i) and (iii) that would not have a Buyer Material Adverse Effect.
(b) Except with respect to required filings or other actions under any
applicable Antitrust Laws and the expiration of any applicable waiting or review
periods thereunder and except as set forth on Schedule 4.3(b), no notices,
permits, consents, approvals, authorizations, qualifications or orders of
Governmental Entities are required for the consummation by the Buyer of the
transactions contemplated hereby or by the Ancillary Documents to which it is a
party, other than such of the foregoing that, if not given or obtained, would
not have a Buyer Material Adverse Effect.
Section 5.4 Litigation.
As of the date of this Agreement, there are no Actions pending or, to
the knowledge of the Buyer, threatened, that question the validity of this
Agreement or any of the Ancillary Documents, or any action taken or to be taken
by the Buyer in connection with this Agreement or any of the Ancillary
Documents, other than such of the foregoing that would not have a Buyer Material
Adverse Effect.
Section 5.5 Availability of Funds.
Upon consummation of the financing transactions contemplated by the
equity commitment letters furnished by Carlyle Partners IV, L.P. and Onex
Partners II LP and the commitment letters attached hereto as Schedule 5.5 (the
"Commitment Letters"), the Buyer will have access to immediately available funds
in a quantity sufficient to pay the Closing Payment and to perform all of its
obligations pursuant to, and to
40
<PAGE>
consummate the transactions contemplated by, this Agreement and each of the
Ancillary Documents to which it is a party.
Section 5.6 Brokers' Fees.
Neither the Buyer nor any of its Affiliates has engaged or has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
any of the Sellers or their Affiliates would become liable.
Section 5.7 LIMITATIONS ON GM'S REPRESENTATIONS AND WARRANTIES.
THE BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET
FORTH IN ARTICLE IV OR ANY ANCILLARY DOCUMENT, NEITHER GM NOR ANY OF THE OTHER
SELLERS MAKES, AND THE BUYER IS NOT RELYING ON, ANY REPRESENTATION OR WARRANTY
OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION
WITH OR WITH RESPECT TO ANY OF THE BUSINESS ASSETS, THE ASSUMED LIABILITIES, THE
TRANSFERRED STOCK, THE BUSINESS OR OTHERWISE, OR WITH RESPECT TO ANY INFORMATION
PROVIDED TO THE BUYER, INCLUDING WITH RESPECT TO ANY REPRESENTATIONS OR
WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR USE, TITLE,
NON-INFRINGEMENT OR ENVIRONMENTAL MATTERS, AND THAT ALL OTHER REPRESENTATIONS
AND WARRANTIES ARE DISCLAIMED BY GM AND THE OTHER SELLERS. THE BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE IV OR ANY
ANCILLARY DOCUMENT, THE BUYER IS PURCHASING THE PURCHASED ASSETS AND TRANSFERRED
STOCK ON AN "AS-IS, WHERE-IS" BASIS.
ARTICLE VI
PRE-CLOSING COVENANTS
The Buyer and GM agree to the following with respect to the period prior to
the Closing:
Section 6.1 General.
(a) Each of the Parties shall, and GM shall cause the Sellers and the
Transferred Subsidiaries to, use commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done, as soon as
reasonably practicable, all things necessary, proper or advisable (subject to
any Laws) to consummate the Closing and the other transactions contemplated by
this Agreement, including the negotiation, execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement or the Ancillary Documents. None of the Parties shall, without
prior written consent of the other Parties, take or fail to use reasonable
efforts to take, or permit their respective Affiliates to take or fail to use
reasonable efforts to take, any action, that would reasonably be expected to
prevent or materially impede, interfere with or delay the consummation, as soon
as reasonably possible, of the transactions contemplated by this Agreement or
the Ancillary Documents; provided that nothing in this SECTION 6.1 shall require
a Party to cure any breach or inaccuracy with respect to any representation or
warranty contained in this Agreement or any Ancillary Documents.
(b) Between the date hereof and the Closing, each Party hereby agrees
to take any action that would be required to be taken by such Party under the
provisions of the
41
<PAGE>
Employee Matters Agreement set forth in Schedule 6.1(b) as if the Employee
Matters Agreement was in effect as of the date hereof.
(c) GM shall cooperate with the Buyer, as necessary and at the Buyer's
expense, to enable the Buyer to obtain a facility security clearance ("FCL") at
the level required to perform certain classified Government Prime Contracts and
to effect transfer of personnel security clearances from GM's FCL to the Buyer's
FCL as and when required.
(d) As promptly as practicable following the date hereof, GM and the
Buyer shall each use its commercially reasonable efforts to obtain a domestic
non-availability determination from the U.S. Secretary of Defense that compliant
specialty metal of satisfactory quality and sufficient quantity, and in the
required form, cannot be procured as and when needed by the Business.
(e) In the event that the UAW executes the MOU, but with modifications
that constitute either an Adverse Buyer Modification or an Adverse GM
Modification, the Parties will work together in good faith, and exercise
commercially reasonable efforts, in order to identify an appropriate GM Cure or
Buyer Cure, as applicable; provided that the foregoing shall in no way obligate
GM to effect a GM Cure or the Buyer to effect a Buyer Cure.
Section 6.2 Notices and Consents.
(a) Prior to the Closing Date and subject to SECTION 6.2(D) below, GM
shall use commercially reasonable efforts to give, or to cause the other Sellers
to give, all notices directed to be given by the Buyer and to obtain, or to
cause the other Sellers to obtain, those consents, approvals or authorizations
of third parties, in each case, under the Material Contracts that are set forth
on Schedule 6.2(a).
(b) Prior to the Closing Date, GM and the Buyer shall, and GM shall
cause the other Sellers to, use commercially reasonable efforts to obtain all
material consents, approvals or authorizations of all Governmental Entities that
are, or will become, necessary for the consummation of the transactions
contemplated by this Agreement, including any material consents, approvals or
authorizations required by any of the Permits, and the Parties shall cooperate
with each other in seeking any such consents, approvals or authorizations and
making any filings or notifications with any Governmental Entity required in
connection with the transactions contemplated hereby or otherwise as reasonably
requested by any of the Parties, but in each case, excluding any consents,
approvals and authorizations under any Antitrust Laws other than the HSR Act and
any Required Antitrust Filings.
(c) Each of the Buyer and GM, or the relevant Affiliate of either such
Party, shall (i) within ten (10) Business Days following the execution and
delivery of this Agreement, file all notifications and related materials that
are required under (A) the HSR Act and (B) those non-U.S. antitrust or
competition Laws (the "Antitrust Laws") set forth on Schedule 6.2(b) (the
"Required Antitrust Filings"), it being understood that the commencement of the
European Union Merger Review Process and the filing of a preliminary Form CO
with the European Union Commission shall constitute the making of the antitrust
filing required in the European Union for the purpose of meeting the ten (10)
Business Day filing requirement, (ii) use commercially reasonable efforts to
obtain early termination of the applicable waiting period or expedited review,
as applicable, of such notifications and related materials and (iii) take
further actions and
42
<PAGE>
make all further filings pursuant thereto. In connection with the foregoing,
each Party shall (x) promptly notify the other Party of any written
communication to that Party or its Affiliates from any Governmental Entity and,
subject to applicable Law, provide the other Party with a copy of any written
communication to any of the foregoing and (y) not participate in any substantive
meeting or discussion with any Governmental Entity in respect of any filing,
investigation or inquiry concerning the transactions contemplated by this
Agreement or the Ancillary Documents unless it consults with the other Party in
advance and, to the extent permitted by such Governmental Entity, gives the
other Party the opportunity to attend and participate in such meeting or
discussion.
(d) In connection with and without limiting the generality of the
foregoing, for purposes of this SECTION 6.2, commercially reasonable efforts of
the Parties shall be deemed to include (i) offering to enter into, and entering
into, any settlement, undertaking, consent decree, stipulation or agreement or
agreeing to any order regarding antitrust matters in connection with any
objections of any Governmental Entity to the transactions contemplated hereby
and (ii) offering to divest to others and/or hold separate, and divesting or
otherwise holding separate (including by establishing a trust or otherwise), or
taking any other action (or otherwise agreeing to do any of the foregoing) with
respect to, any portion of its and/or the business, assets or properties of its
Subsidiaries, other than any such action pursuant to clause(s) (i) and/or (ii)
that would require any divestiture, holding separate or sale (by whatever means)
of (or any agreement to do any of the foregoing) any material assets of GM and
the Buyer.
(e) The Buyer shall be responsible for the payment of 100 percent of
the amount of any fees required in connection with the filing of any
notifications and related materials that are required under the HSR Act or in
connection with the Required Antitrust Filings.
(f) Notwithstanding anything to the contrary contained herein, (i)
neither the Sellers nor any Transferred Subsidiary shall be required to make any
expenditure or incur any liability in connection with such efforts and (ii) the
Buyer acknowledges and agrees that, except with respect to the HSR Act and the
Required Antitrust Filings as provided in SECTION 8.1(A) and except as provided
in SECTION 8.2(E) and SECTION 8.2(F), the successful procurement of any consent,
approval or authorization of any third party is not a condition to the Buyer's
obligation to effect the Closing. Notwithstanding anything to the contrary
contained herein, and except as otherwise provided under any Ancillary Document,
the Buyer further agrees that, so long as the Sellers have complied with their
obligations under this SECTION 6.2, no representation, warranty, covenant or
agreement of the Sellers contained herein shall be breached or deemed breached,
and no condition of the Buyer (other than SECTION 8.1(A), SECTION 8.1(B),
SECTION 8.2(E) and SECTION 8.2(F)) shall be deemed not to be satisfied, solely
as a result of the failure to obtain any consent, approval or authorization.
Section 6.3 Conduct of the Business.
Except as set forth on Schedule 6.3, as otherwise required or
contemplated hereby or with the written consent of the Buyer (which consent
shall not be unreasonably withheld, conditioned or delayed), the Sellers and the
Transferred Subsidiaries shall: (a) maintain and operate the tangible Purchased
Assets in good operating condition and repair, ordinary wear and tear excepted;
(b) operate the Business in the ordinary course of business, in substantially
the same manner as conducted prior to the date hereof, including with respect to
managing current assets and current liabilities in a manner consistent with past
practice; (c) use commercially reasonable efforts to preserve and maintain the
goodwill associated with the Business and its relationships with the Transferred
Employees
43
<PAGE>
and the material customers suppliers and distributors of, and others doing
business with, the Business; (d) use commercially reasonable efforts to maintain
in effect all material Permits; and (e) use commercially reasonable efforts to
keep available the services of present officers and management employees (as a
group) of the Business. Without limiting the generality of the foregoing,
without the prior written consent of the Buyer (which consent shall not be
unreasonably withheld, conditioned or delayed), and except as set forth on
Schedule 6.3, none of the Transferred Subsidiaries or, with respect to the
Business, the Sellers will:
(i) make any amendment or change in the articles of
incorporation, bylaws or comparable organizational or governing documents
of the Transferred Subsidiaries or effect any merger, consolidation,
reorganization or recapitalization;
(ii) sell, lease, transfer or assign any material assets,
tangible or intangible, outside of the ordinary course of business or
pursuant to a Contract in existence as of the date hereof (or entered into
in compliance with this SECTION 6.3), or permit any material asset to
become subject to a Lien, other than Permitted Liens;
(iii) make any capital expenditures in excess of $5,000,000 in
the aggregate in excess of amounts contemplated by the fiscal year 2007
capital expenditure budget for the Business (a true and correct copy of
which has been made available to the Buyer);
(iv) issue, sell or otherwise dispose of any of the capital stock
or other equity interests of the Transferred Subsidiaries, or grant any
options, warrants or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any of such capital stock or other equity
interests;
(v) declare, set aside, or pay any dividend or make any
distribution with respect to the capital stock or other equity interests of
the Transferred Subsidiaries or redeem, purchase or otherwise acquire or
reclassify, combine, split or subdivide any of such capital stock or other
equity interests;
(vi) waive any material rights other than in the ordinary course
of business;
(vii) (A) except for normal periodic increases in the ordinary
course of business and consistent with past practices, increase the
compensation or benefits payable or to become payable to any Transferred
Employee or officer, director or employee of a Transferred Subsidiary; (B)
other than as required by a plan or Contract in existence as of the date
hereof (or entered into in compliance with this SECTION 6.3), grant or
make, contingently or otherwise, any bonus, incentive compensation, service
award or other benefit for or to the credit of any Transferred Employee or
officer, director or employee of a Transferred Subsidiary; or (C) enter
into any new employment, severance, termination pay or change of control
agreement to which any of the Transferred Subsidiaries or, with respect to
the Transferred Employees, the Sellers is a party, which provides for
payments exceeding $250,000 per year per individual;
(viii) change any accounting methods, practices, principles or
policies, other than as required by applicable Law or GAAP or make any Tax
election, settle or compromise any Tax liability, amend any material Tax
Return or, with respect to any of
44
<PAGE>
the Transferred Subsidiaries, enter into any material agreement with
respect to Taxes, including any agreement to extend the statute of
limitations with respect to material Taxes;
(ix) revalue any of its respective assets, including writing off
notes or accounts receivable or revaluing inventory, except as required by
GAAP;
(x) make any acquisitions or effect any disposition of any Person
(other than an individual) or any division, business or business unit of
any Person or any equity security of or equity interest in any Person;
(xi) settle or compromise any material claim or Action (whether
or not commenced prior to the date of this Agreement);
(xii) adopt, amend, terminate or enter into any Material Contract
(other than the entry into customer contracts in the ordinary course of
business); or
(xiii) commit or agree to any of the foregoing;
provided that nothing in this SECTION 6.3 shall prohibit (x) the Sellers from
using cash and cash equivalents to pay Indebtedness or from removing any and all
cash and cash equivalents from the Transferred Subsidiaries at any time, and
from time to time, prior to the Closing with prior notice to, and consent of,
the Buyer, which consent will not be unreasonably withheld, conditioned or
delayed, except that (i) the Buyer may not withhold, condition or delay such
consent unless there would be an adverse Tax consequence to the Buyer or the
respective Transferred Subsidiary caused by such payment or removal or such
payment or removal would violate Law and (ii) for this purpose, the use, for
United States federal income Tax purposes, of foreign Tax credits attributable
to the operations of the Transferred Subsidiaries during any Pre-Closing Tax
Periods shall not be deemed to impose any adverse Tax consequence on the Buyer
or the Transferred Subsidiaries, (y) the Sellers from terminating or permitting
to expire the leases pursuant to which the Allison New Lease Facilities are
being leased as of the date hereof or (z) the assignment of any Intellectual
Property and Software contemplated by the form attached hereto as Exhibit O.
Section 6.4 Access to Business.
Except as may be prohibited by Law, by the terms of any Contract or
under any confidentiality agreement, or as may be required to preserve legal
privilege, the Sellers and the Transferred Subsidiaries shall, upon reasonable
notice, permit representatives of the Buyer to have reasonable access during
normal business hours and under reasonable circumstances to personnel, premises,
properties, assets, books and records, contracts and documents pertaining to the
Business or the Business Assets; provided that such personnel, premises,
properties, assets, books and records, contracts and documents are reasonably
required by the Buyer to timely consummate the transactions contemplated
hereunder; provided, further that the Buyer may not conduct or cause to be
conducted any intrusive or invasive environmental testing at any of the
properties of the Sellers, including any of the Transferred Real Property or the
Transferred Sub Real Property, unless and until prior written authorization for
such testing is obtained from GM. If any requested disclosure would cause any
loss of a legal privilege or require consent under any agreement, the Parties
shall use commercially reasonable efforts to make appropriate alternative
disclosure arrangements (e.g., the entry into an appropriate joint defense
agreement in connection with affording access to such information) or to obtain
any required consent. Notwithstanding the foregoing, prior to the Closing, the
Sellers shall grant to the Buyer full access to the International Facilities for
the purpose of permitting the Buyer to
45
<PAGE>
continue its environmental due diligence of such facilities, including
permitting the Buyer to conduct, subject to any restrictions under Law or the
provisions of the leases underlying such leased facilities, such Phase II or
other similar environmental testing as it may reasonably request (the
"International Facilities Testing"); provided, however, that the Buyer shall
provide notice to GM prior to conducting any testing, that such testing shall be
conducted in a manner so as not to unreasonably interfere with the conduct of
the Business at such facilities, and that any testing shall be performed in
accordance with applicable Law.
Section 6.5 Notice of Developments.
Each Party shall give prompt written notice to the other Party of (a)
any statement or information contained in such other Party's representations and
warranties (or Schedules thereto) that is incomplete or inaccurate or (b) the
occurrence of any Material Adverse Effect or Buyer Material Adverse Effect, as
applicable.
Section 6.6 Ancillary Documents.
On the Closing Date, the Buyer shall (or, in accordance with SECTION
11.5, shall cause one or more of its Affiliates to, and GM shall (or shall cause
one or more of its Affiliates to), execute and deliver each of the Ancillary
Documents to which such Person or Affiliate is to be a party as contemplated by
this Agreement.
Section 6.7 Union Matters.
Subject to the restrictions placed on the Buyer pursuant to this
SECTION 6.7, the Buyer and GM shall use commercially reasonable efforts to
obtain the consent of the UAW to the consummation of the transactions
contemplated by this Agreement as they relate to the UAW Facilities, including
the sale of the UAW Facilities. The Buyer shall not, directly or indirectly,
have any communications with the UAW, or otherwise engage in any activities
relating to the UAW, in either case that would reasonably be expected to have an
adverse effect on the ability of GM and the Buyer to obtain such consent of the
UAW. With respect to its communications, the Buyer shall not advise the UAW that
it will not assume and honor the Union Agreements covering Transferred Employees
or that its offer to purchase the Business is dependent upon it obtaining
amendments or modifications to such Union Agreements. Notwithstanding any other
provision in this Agreement or the Employee Matters Agreement, neither GM nor
the Buyer shall be obligated to take any action or make concessions to obtain
such UAW consent, other than the Buyer's commitment to assume the UAW Agreement
at the Closing.
Section 6.8 Financing.
As promptly as practicable, between the date hereof and the Closing,
the Buyer shall use its commercially reasonable efforts to obtain the financing
contemplated by the Commitment Letters or, if such financing becomes
unavailable, alternative financing on terms acceptable to the Buyer (the
"Financing"). GM agrees to provide, and shall cause the Sellers and the
Transferred Subsidiaries and their respective employees (including all
management employees of Allison), accountants, consultants, agents and other
representatives, to provide all reasonable cooperation (including with respect
to timeliness) in connection with the arrangement of the Financing as may be
reasonably requested by the Buyer (provided that the Buyer uses its commercially
reasonable efforts at all times to obtain the Financing and that such requested
cooperation does not unreasonably interfere with the ongoing operations of GM or
the Business), including, subject to the foregoing proviso, (i) reasonable
participation in meetings, drafting sessions, road shows, bank meetings and due
diligence sessions, (ii) using commercially reasonable efforts to furnish the
Buyer and its financing sources with financial and other pertinent information
regarding the Transferred Subsidiaries and the Business as may be reasonably
requested by the Buyer, including all financial statements and financial data of
the type required by Regulation S-X and Regulation S-K under the Securities Act
of 1933, as amended (the "Securities Act"), and of type and form, and for the
periods, customarily included
46
<PAGE>
in private placements under Rule 144A of the Securities Act to consummate the
offering of debt securities contemplated by the Commitment Letters at the time
during the Business' fiscal year such offering will be made (together with any
consents necessary to include such information in any bank book, Rule 144A
offering memorandum or other presentation to financing sources, the "Required
Financial Information"), (iii) reasonably assisting the Buyer and its financing
sources in the preparation of (A) offering, information or syndication documents
for the Financing (the "Offering Documents") and (B) materials for rating agency
presentations, (iv) reasonably cooperating with the marketing efforts of the
Buyer and its financing sources in connection with the Financing, (v) providing
and executing documents as may be reasonably requested by the Buyer, and using
commercially reasonable efforts to obtain consents of accountants for use of
their reports in any materials relating to the Financing, (vi) reasonably
facilitating the pledging by the Buyer of collateral as of the Closing and (vii)
using commercially reasonable efforts to obtain accountants' comfort letters,
surveys and title insurance as reasonably requested by the Buyer; provided that
none of the Transferred Subsidiaries or any Seller shall be required to pay any
commitment or other similar fee or incur any other liability in connection with
the Financing. The Buyer shall, (i) promptly upon request by any Seller,
reimburse such Seller for all reasonable out-of-pocket costs incurred by any
Transferred Subsidiary or Seller in connection with any such cooperation,
including the fees and expenses of any advisor retained by management of the
Business at the request of the Buyer prior to the date hereof incurred in
connection with services specifically authorized by the Buyer and (ii) indemnify
and hold harmless GM, the Sellers and the Transferred Subsidiaries and their
respective directors, officers, employees, agents and representatives from and
against any and all Losses suffered or incurred by them in connection with the
Financing and any information utilized in connection therewith (other than
written information specifically provided by GM, the Sellers or the Transferred
Subsidiaries for inclusion in the Offering Documents). In the event that the
Buyer becomes aware of any event or circumstances that makes procurement of any
portion of the Financing unlikely to occur, the Buyer shall promptly notify GM
and shall use its commercially reasonable efforts to arrange the alternative
financing described above.
Section 6.9 Termination of Intercompany Agreements.
Except for the Ancillary Documents, any assignments of Intellectual
Property and Software as contemplated by SECTION 6.3, the Assumed Liabilities
that constitute rebate liabilities and obligations in connection with the sale
referred to in SECTION 2.2(A)(I)(B) and the Contracts listed on Schedule 6.9,
all Contracts between GM or any of its Subsidiaries (other than the Transferred
Subsidiaries), on the one hand, and any of the Transferred Subsidiaries, on the
other hand, shall be terminated and of no further force and effect after the
Closing, with no liabilities on the part of any party thereto. Notwithstanding
the foregoing, all intercompany trade accounts, whether payables or receivables,
arising in the ordinary course of business between GM or any of its Subsidiaries
(other than the Transferred Subsidiaries), on the one hand, and any of the
Transferred Subsidiaries, on the other hand, as of the Closing shall continue in
full force and effect from and after the Closing and shall be paid in accordance
with the terms thereof, or, if no such terms are specified, then in accordance
with GM's MNS-2 system which provides, on average, for payment on the second day
of the second month following the date of the invoice, and all other
intercompany accounts between GM or any of its Subsidiaries (other than the
Transferred Subsidiaries), on the one hand, and any of the Transferred
Subsidiaries, on the other hand, shall be extinguished by payment on or prior to
the Closing Date of the full balance payable.
47
<PAGE>
Section 6.10 Treatment of Synthetic Lease.
GM shall terminate that certain lease effective as of April 5, 2002 by
and between GM and Auto Facilities Real Estate Trust 2001-1 and the financing
related thereto as it relates to the property located at 5902 Decatur Boulevard,
Indianapolis, Indiana (the "Decatur Boulevard Property") and shall take all
other action necessary (i) for GM to own prior to the Closing, good and valid
fee simple title to the Decatur Boulevard Property, free and clear of any Liens,
except for Permitted Liens, or (ii) to cause the lessor under the above
referenced lease to convey directly to the Buyer, at the Closing, good and valid
fee simple title to the Decatur Boulevard Property, free and clear of any Liens,
except for Permitted Liens.
Section 6.11 Waiver of Right of First Refusal.
Between the date hereof and the Closing Date, GM shall use
commercially reasonable efforts to obtain prior to the Closing a written waiver
with respect to the consummation of the transactions contemplated by this
Agreement from the Board of Park Commissioners of the City of Indianapolis of
its right of first refusal to purchase three (3) parcels of land located at 4700
West 10th Street, Indianapolis, Indiana, as more fully described in that certain
Special Ordinance No. 6, 1967 passed by the City of Indianapolis on February 6,
1967 (the "Indianapolis Right of First Refusal"), which written waiver shall be
in a form reasonably acceptable to the Buyer (such waiver, the "ROFR Waiver").
ARTICLE VII
POST-CLOSING COVENANTS
The Buyer and GM agree to the following with respect to the period
following the Closing:
Section 7.1 General.
In the event that at any time after the Closing Date any further
action is reasonably necessary to carry out the purposes of this Agreement, each
of the Parties shall, and GM shall cause the Sellers to, take such further
action (including the execution and delivery of such further instruments and
documents) as the other Party may reasonably request, at the sole cost and
expense of the requesting Party (unless otherwise specified herein).
Section 7.2 Post-Closing Consents; Nonassignable Contracts.
Subject to SECTION 7.11 with respect to Government Prime Contracts:
(a) The Sellers and the Buyer each shall use commercially reasonable
efforts after the Closing Date to obtain any consents, approvals or
authorizations of any third parties (other than for COTS Licenses) that are not
obtained prior to the Closing Date and that are required in connection with the
transactions contemplated by this Agreement; provided that none of the Sellers
or the Buyer shall be required to make any expenditure or incur any liability in
connection with such efforts.
(b) Notwithstanding anything to the contrary contained in this
Agreement, to the extent that any Purchased Contract is not capable of being
transferred by the Sellers to the Buyer pursuant to this Agreement without the
consent, approval or authorization of a third party, and such consent, approval
or authorization is not obtained prior to the Closing, or if such transfer or
attempted transfer would constitute a breach or a violation of the Purchased
Contract or any Law (each a "Specified Consent"), nothing in this Agreement
shall constitute an assignment or transfer or an attempted assignment or
transfer thereof.
48
<PAGE>
(c) In the event that (i) any such Specified Consent is not obtained
on or prior to the Closing Date or (ii) as of the Closing, the Business has not
entered into Contracts replacing the Contracts to which a Seller is a party and
that pertain primarily to the Business but are not contained in the Purchased
Assets (the Contracts referred to in this clause (ii), the "Excluded Shared
Contracts"), the Sellers shall use commercially reasonable efforts to, or to
cause one of their Affiliates to use commercially reasonable efforts to: (i)
provide to the Buyer all of the benefits of the applicable Purchased Contract or
Excluded Shared Contract; (ii) cooperate in any reasonable and lawful
arrangement designed to provide such benefits to the Buyer, including accepting
such reasonable direction as the Buyer shall request of such Seller or
Affiliate; and (iii) enforce at the request and expense of the Buyer and for the
account of the Buyer, any rights of the Sellers arising from any such Purchased
Contract or Excluded Shared Contract; provided that no Seller shall be required
to make any expenditure or incur any liability in connection with any such
activities described in clauses (i) through (iii) above, unless reimbursed by
the Buyer for the full amount of any such expenditure or liability; provided
that this SECTION 7.2(C) shall not apply to COTS Licenses.
(d) If the Buyer is provided all of the benefits received by the
Sellers under any Purchased Contract or Excluded Shared Contract pursuant to
SECTION 7.2(C), the Buyer shall perform and discharge when due the obligations,
and assume the liabilities, of the Sellers under such Purchased Contract or
Excluded Shared Contract to the extent arising out of or relating to the
Business, for the benefit of the Sellers and the other party or parties thereto.
(e) Once a Specified Consent is obtained, the applicable Purchased
Contract shall be deemed to have been automatically assigned and/or transferred
to the Buyer on the terms set forth in this Agreement with respect to the other
Purchased Contracts transferred and assumed at the Closing, and without limiting
the generality of the foregoing, the obligations and liabilities of the Sellers
under such Purchased Contracts shall be deemed to be Assumed Liabilities, and
the rights of the Sellers under such Purchased Contracts shall be deemed to be
Purchased Assets. Once the Buyer has entered into a Contract replacing an
Excluded Shared Contract, the rights and obligations of the Parties under this
SECTION 7.2 shall cease with respect to such Excluded Shared Contract.
Notwithstanding anything to the contrary, all of the obligations of the Sellers
and the Buyer under this SECTION 7.2 shall cease with respect to all Excluded
Shared Contracts 120 days after the Closing Date.
(f) The Buyer agrees that, so long as the Sellers have complied with
their obligations under ARTICLES IV AND VI and, after the Closing, this SECTION
7.2, none of the Sellers shall have any liability whatsoever to the Buyer
arising out of or relating to the failure to obtain any consents, approvals or
authorizations that may have been or may be required in connection with the
transactions contemplated by this Agreement or because of the breach, violation,
acceleration or termination of any Contract as a result thereof.
(g) Without limiting the generality of the foregoing, with respect to
any Purchased Contract for which a Specified Consent is not obtained on or prior
to the Closing Date and that is a lease of Leased Real Property, the Buyer shall
enter into a sublease containing the same terms and conditions as such lease
(unless the lease by its terms prohibits such subleasing arrangement), and entry
into and compliance with such sublease shall satisfy the obligations of the
Parties under SECTION 7.2(C) until the Specified Consent is obtained and the
Purchased Contract assigned and/or transferred in accordance with SECTION
7.2(E).
49
<PAGE>
Section 7.3 Litigation Support.
In the event and for so long as either Party is actively contesting or
defending against any actual or potential Action brought by a third party in
connection with any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or
transaction involving the Business, the other Party shall reasonably cooperate
with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel and provide such access to its
non-privileged books and records as may be reasonably requested in connection
with the contest or defense, at the sole cost and expense of the contesting or
defending Party (unless such contesting or defending Party is entitled to
indemnification therefor under ARTICLE IX, in which case, the costs and expense
shall be borne by the Parties in accordance with ARTICLE IX). Notwithstanding
the foregoing, this SECTION 7.3 shall not apply to Actions with respect to which
the Parties are in dispute as to whether one of the Parties has an obligation to
provide indemnification under ARTICLE IX.
Section 7.4 Compliance with the WARN Act.
The Buyer shall have full responsibility under the WARN Act and any
other similar statutes or regulations of any jurisdiction relating to any plant
closing or mass layoff for all obligations to the Transferred Employees who are
terminated or laid off by the Buyer. For the avoidance of doubt, the Buyer's
obligations under this SECTION 7.4 include (i) all obligations triggered under
the WARN Act and such other U.S., state, local and non-U.S. statutes and
regulations requiring prior notice of a plant closing or mass layoff, which are
triggered, in whole or in part, by the Buyer's actions or omissions, including
the failure to employ or continue to employ from and after the Closing Date some
or all of the Transferred Employees who accept employment with the Buyer on or
prior to the Closing Date and become employees of the Buyer and (ii) all
liabilities to Business Employees under the WARN Act incurred by any Sellers as
a result, in whole or in part, of the Buyer's failure to provide the Sellers
with reasonable advance notice of the termination or lay off of Transferred
Employees by the Buyer.
Section 7.5 Apportioned Obligations.
The Parties agree that any Apportioned Obligations, and any refund,
rebate or similar payment received by the Sellers or the Buyer for any Taxes
that are Apportioned Obligations, will be apportioned between the Sellers and
the Buyer as follows:
(a) For Apportioned Obligations not described in SECTION 7.5(B), GM
agrees to indemnify the Buyer for the amount of such Apportioned Obligations
that would be payable if the relevant year or period ended on the Closing Date.
(b) For all Apportioned Obligations relating to ad valorem or property
Taxes, GM agrees to indemnify the Buyer for the amount of such Apportioned
Obligations that are determined by multiplying (i) the amount of such
Apportioned Obligations for the entire Straddle Period, by (ii) a fraction, the
numerator of which is the number of calendar days in the portion of the Straddle
Period ending on the Closing Date and the denominator of which is the number of
calendar days in the entire Straddle Period.
(c) GM will pay Apportioned Obligations that are due and payable on or
prior to the Closing Date, and invoice the Buyer for any part of that amount
apportioned to the Buyer. The Buyer will pay Apportioned Obligations that are
due and payable after the Closing Date and invoice GM for any part of that
amount apportioned to GM.
50
<PAGE>
(d) GM and the Buyer shall share the costs of any inquiry, examination
or proceeding by a Governmental Entity in proportion to the fraction determined
in this SECTION 7.5 with respect to the nature of the obligation in dispute.
Section 7.6 Agreements Regarding Tax Matters.
(a) The Sellers (or an Affiliate of the Sellers other than the
Transferred Subsidiaries) shall prepare and timely file all Tax Returns in
respect of the Purchased Assets or the Transferred Subsidiaries for all
Pre-Closing Tax Periods. The Buyer shall prepare and timely file all Tax Returns
that are required to be filed in respect of the Purchased Assets or the
Transferred Subsidiaries for all Straddle Periods.
(b) GM and the Buyer shall provide each other with such assistance and
non-privileged information relating to the Purchased Assets as may reasonably be
requested in connection with the preparation of any Tax Return or the
performance of any audit, examination or any other proceeding by any taxing
authority relating to any Tax Return, whether conducted in a judicial or
administrative forum. GM and the Buyer shall retain and provide to the other
Party all non-privileged records and other information which may be relevant to
any such Tax Return, audit, examination or any other proceeding.
(c) Except as provided below, GM, together with the other Sellers,
shall exercise exclusive control over the handling, disposition and settlement
of any inquiry, examination or proceeding by a Governmental Entity (or that
portion of any inquiry, examination or proceeding by a Governmental Entity) that
could result in a determination with respect to Taxes due or payable by GM or
any other Seller, or the Transferred Subsidiaries for any taxable period ending
on or before the Closing Date (a "GM Tax Claim"). The Buyer shall notify GM in
writing promptly upon learning of any such inquiry, examination or proceeding;
provided, however, no failure or delay by the Buyer to provide notice of such
inquiry, examination or proceeding shall reduce or otherwise affect the
obligation of GM or any Seller hereunder except to the extent such person is
actually prejudiced thereby. The Buyer and its Affiliates shall cooperate with
GM, as GM may reasonably request and at GM's expense, in any GM Tax Claim.
Neither the Buyer nor any of its Affiliates shall extend, without GM's prior
written consent, the statute of limitations for any Tax of the Transferred
Subsidiaries for any Pre-Closing Tax Period. Notwithstanding the foregoing, (i)
GM shall keep the Buyer informed regarding the progress and substantive aspects
of any GM Tax Claim that involves a Pre-Closing Tax Period of a Transferred
Subsidiary (a "Transferred Subsidiary Tax Claim"), including providing the Buyer
with all written materials relating to such Tax proceeding received from the
relevant Governmental Entity and all written materials submitted to such
Governmental Entity by GM or any Seller and (ii) the Buyer shall be entitled to
participate in any Transferred Subsidiary Tax Claim, including having an
opportunity to comment on any written materials prepared in connection with any
Transferred Subsidiary Tax Claim and attending any conferences relating to any
Transferred Subsidiary Tax Claim.
(d) Neither Party (nor any Affiliate of such Party) shall agree to
settle any Tax liability or compromise any claim with respect to Taxes, which
settlement or compromise may affect the liability for Taxes hereunder (or right
to Tax benefit) of the other Party, without the other Party's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
51
<PAGE>
(e) If the Buyer or an Affiliate of the Buyer receives a refund with
respect to Taxes for which the Sellers or any of their Affiliates are wholly or
partially responsible under SECTION 2.3(B)(V) or SECTION 7.5 hereof (other than
any refund reflected as an asset in the calculation of Closing Date Net Working
Capital), the Buyer or such Affiliate shall pay, within 30 days following the
receipt of such refund, the amount of such refund attributable to GM. If the
Sellers or an Affiliate of the Sellers receives a refund with respect to Taxes
relating to the Business or the Purchased Assets in a Post-Closing Tax Period or
for which the Buyer is wholly or partially responsible under SECTION 7.5 hereof,
the Sellers or such Affiliate shall pay, within 30 days following the receipt of
such refund, the amount of such refund attributable to the Buyer.
(f) Notwithstanding anything else contained herein, GM and the Buyer
shall (i) each pay one-half of all amounts that are required to be paid in
respect of any transfer, sales, use, recording, value-added or similar Taxes
(including any registration and/or stamp Taxes, levies and duties) that may be
imposed by reason of the sale, assignment, transfer and delivery of the
Purchased Assets; and (ii) timely file all Tax Returns required to be filed in
connection with the payment of such Taxes (and GM and the Buyer, as applicable,
shall be responsible for all penalties and interest related to a late filing or
error in filing related to such Tax Returns).
Section 7.7 Agreements Regarding Environmental Matters.
(a) GM will, and will cause the Sellers to, comply with their
obligations with respect to the Allison Indy Transmission Facilities under the
Performance Based Corrective Action Agreement between the United States
Environmental Protection Agency ("U.S. EPA") and GM for the Allison Transmission
Facility, dated April 22, 2005 (the "Corrective Action") until such time as GM
receives written acknowledgment in the form of a "No Further Action" or
equivalent determination from the U.S. EPA that GM's corrective action
obligations are complete, subject to controls, with respect to the entire site;
provided that, without limiting the generality of SECTION 2.3(B), the Buyer will
be liable for any Losses to the extent relating to any Release caused by Buyer
after the Closing.
(b) The Buyer agrees that the Allison Indy Transmission Facilities
shall be subject to the following deed restrictions on use:
(i) the Buyer shall prohibit all uses of the Allison Indy
Transmission Facilities that are not compatible with the land use
restrictions placed on the property in accordance with the Corrective
Action with the consent of the Buyer (not to be unreasonably withheld,
conditioned or delayed), otherwise subject to this SECTION 7.7;
(ii) the Buyer shall manage, at its own cost, all soils, media
and/or debris that are excavated or disturbed on the Allison Indy
Transmission Facilities by the Buyer in accordance with all applicable
state and federal Environmental Laws;
(iii) except as provided in SECTION 7.7(B)(IV), the Buyer shall
prohibit any construction of wells or other devices to extract groundwater
for consumption, irrigation, or any other use, except for wells and devices
that are part of or consistent with the Corrective Action or for purposes
of monitoring groundwater quality;
(iv) dewatering wells or other devices for maintenance or
construction purposes are permitted, provided the dewatering, including
management and disposal of the groundwater, is conducted in accordance with
all applicable local, state, and federal Environmental Laws and does not
result in a material violation of Environmental Laws
52
<PAGE>
(it being understood that the Buyer will use commercially reasonable
efforts to complete construction and maintenance projects without
constructing wells or other devices to extract groundwater and, to the
extent construction of wells and similar devices is necessary in connection
with any such construction or maintenance activity (notwithstanding the
Buyer's exercise of such efforts), the Buyer will cooperate with GM to
complete the construction of such wells and similar devices in a manner
consistent with the Corrective Action);
(v) the Buyer shall use commercially reasonable efforts not to
unreasonably interfere with the operation of any technology, treatment or
other activities engaged in by GM or its Affiliates in accordance with
their obligations under the Corrective Action;
(vi) if the Buyer contemplates actions which will materially
interfere with the operation of any technology, treatment or other
activities engaged in by GM or its Affiliates in accordance with their
obligations under the Corrective Action, the Buyer shall provide prior
notice to GM of its intent to take such action; and
(vii) if the Buyer intends to transfer any interest in the
Allison Indy Transmission Facilities, the Buyer shall provide notice
thereof to the U.S. EPA Region 5 and the Indiana Department of
Environmental Management ("IDEM") at least twenty-one (21) days prior to
consummating any such transfer. The Buyer shall not transfer any interest
in the Allison Indy Transmission Facilities unless the transferee agrees in
writing to comply with the terms and conditions of this SECTION 7.7 that
are applicable to the Buyer and GM is provided the right thereunder to
enforce such written agreement against such transferee.
(c) The Buyer agrees that the Owned Real Property shall be subject to
the deed restrictions on use set forth in Schedule 7.7.
(d) GM and its Affiliates shall have the right to undertake response
activities that they have determined in their discretion and judgment should or
must be conducted under the Corrective Action or otherwise under applicable
Environmental Laws to comply with the Corrective Action so long as such
activities do not unreasonably interfere with the current or proposed conduct of
the Business at the time the response activity is undertaken, consistent with
SECTION 7.7(L). GM agrees to reimburse the Buyer for reasonable and documented
out-of-pocket expenses incurred by the Buyer in connection with response
activities requested by GM. In no event will GM or its Affiliates be obligated
to conduct any response activities pursuant to this SECTION 7.7 to address
contamination at the Allison Indy Transmission Facilities in order to achieve
levels of cleanup more stringent than those required under the Corrective Action
and consistent with the industrial usage of the Allison Indy Transmission
Facilities.
(e) GM reserves its right to challenge any U.S. EPA or IDEM decisions
in connection with the Corrective Action process.
(f) Upon request, GM shall provide the Buyer with copies of all final
reports, data, sampling results and written communications with Governmental
Entities created following the Closing Date in connection with the Corrective
Action. To the extent that GM is proposing or considering accepting deed or land
use restrictions on the Allison Indy Transmission Facilities with respect to
such Corrective Action (other than those set forth in SECTION 7.7(B)(I) through
53
<PAGE>
SECTION 7.7(B)(VII)), GM shall consult with the Buyer prior to proposing or
accepting such restrictions. GM shall not agree to any deed or land use
restrictions that unreasonably limit the Buyer's use of the Allison Indy
Transmission Facilities for commercial or industrial purposes, and any proposed
deed restrictions shall be subject to the Buyer's reasonable approval. The Buyer
shall have a right to be present in person or by phone in any substantive
discussions or negotiations that GM or its Affiliates is having with any
Governmental Entities regarding the Corrective Action (provided that such
participation shall be limited to providing information requested in such
negotiations and listening to such negotiations) and the Buyer shall not
independently engage in any discussions or negotiations with such Governmental
Entities regarding the response activities of GM or its Affiliates under the
Corrective Action, except to the extent that GM has not satisfied its
obligations pursuant to this SECTION 7.7 following notice to GM of any
deficiency and an opportunity to cure such deficiency. The Buyer agrees that it
will promptly notify GM of any material contact by or with any Governmental
Entity or any other Person relating to the Corrective Action.
(g) The Buyer agrees to cooperate with GM and its representatives, if
such cooperation is required or reasonably requested, in obtaining after Closing
any requisite governmental approvals, consents, waivers, permits or deed
notifications/restrictions at GM's expense, in connection with all such
activities undertaken by GM and its Affiliates in accordance with the Corrective
Action.
(h) At any time after the Closing, upon reasonable notice to the Buyer
and at reasonable times, GM and its representatives shall have reasonable access
to the Allison Indy Transmission Facilities to undertake and complete activities
required under the Corrective Action, so long as such activities do not
unreasonably interfere with the current or proposed conduct of the Business at
such facilities at the time the activities are undertaken, consistent with
SECTION 7.7(L). All such response activities shall be performed in a good and
workmanlike manner and in accordance with applicable Laws governing work safety
and construction. GM shall not permit any construction Liens to be filed against
such property in connection therewith. The Deed transferring the Allison Indy
Transmission Facilities to the Buyer as part of the Purchased Assets will
provide GM with an easement for GM to access the Allison Indy Transmission
Facilities at reasonable times and upon reasonable prior notice for all such
activities to be conducted by GM and its representatives, which easement will be
subject to the limitations described in this SECTION 7.7(H).
(i) In undertaking activities in furtherance of its obligations under
the Corrective Action, GM agrees to exercise commercially reasonable efforts to
avoid interfering with the Buyer's development of and operations at the Allison
Indy Transmission Facilities; provided that, due to the nature of GM's
obligations under the Corrective Action, the Buyer acknowledges that some
interference may occur in a manner that does not unreasonably interfere with the
conduct of the Business at such facilities. The Buyer acknowledges that in any
event GM must comply with the Corrective Action, and the Buyer will exercise its
reasonable efforts to avoid interfering with the activities of the Sellers in
furtherance of their obligations under the Corrective Action. In the event the
U.S. EPA or any other Governmental Entity is proposing or requiring that GM take
actions that would materially adversely interfere with the Buyer's ability to
conduct operations at the Allison Indy Transmission Facilities, or to undertake
construction or development at the Allison Indy Transmission Facilities as
described in its development plans (to the extent that they have been prepared
at the time of such proposed or required action and are otherwise in conformance
with the provisions of this SECTION 7.7), GM will notify the Buyer
54
<PAGE>
promptly, and the Buyer shall have the right to participate in such
discussions/negotiations with U.S. EPA or other Governmental Entity. If the
proposed remedial options materially interfere with the Buyer's ability to
undertake construction or development planned for the Allison Indy Transmission
Facilities, the Buyer shall promptly notify GM thereof with reasonably detailed
information describing such planned activities. In no event shall any remedial
options proposed by GM pursuant to the Corrective Action materially interfere
with the Buyer's ability to conduct operations at the Allison Indy Transmission
Facilities, or to undertake such construction or development at the Allison Indy
Transmission Facilities that is planned or reasonably anticipated at the time
the remedial option is proposed, consistent with SECTION 7.7(L). In no event,
however, will GM or any of its Affiliates be liable or responsible for any
consequential, incidental, exemplary, special or punitive damages or Losses,
including loss of profits, loss of business opportunity or Losses related to
construction/development delay or interference with operations, in connection
with its activities in furtherance of its obligations under the Corrective
Action, if any.
(j) In addition to the use restrictions set forth in SECTION 7.7(B)
hereof, the Buyer acknowledges that the activities of the Sellers in furtherance
of their obligations under the Corrective Action may result in temporary
restrictions on the Buyer's use of certain areas of the Allison Indy
Transmission Facilities in a manner that does not unreasonably interfere with
the conduct of the Business at such facilities. The Buyer further acknowledges
that these activities may also require certain equipment, such as investigation,
construction and remediation equipment to be temporarily located in areas of the
Allison Indy Transmission Facilities. Upon completion of their activities,
Sellers shall promptly remove any equipment brought on-site to conduct these
activities and restore any areas of the Allison Indy Transmission Facilities
impacted by their activities in furtherance of their obligations under the
Corrective Action to a condition substantially similar to that existing prior to
such activities, unless otherwise agreed in writing by the Parties.
(k) The parties agree that GM shall be responsible for all fees, costs
and expenses incurred by the Buyer and its Subsidiaries as a result of any
injury to persons or damage or destruction of property caused by GM or its
agents or independent contractors in connection with GM's conduct of the
Corrective Action and any of the activities contemplated by SECTION 7.7(M);
provided that, GM shall be provided with notice of any claim for fees, costs or
expenses within thirty (30) days of the Buyer's discovery of the injury, damage
or destruction.
(l) At the time of GM's proposal of any material remedial option with
respect to the Allison Indy Transmission Facilities, GM will provide the Buyer
with a reasonably detailed description of the proposed remedial option and may
request (a "GM Information Request") that the Buyer, within 30 days of receipt
of any GM Information Request, provide GM with a written statement (the
"Proposed Use Statement") (i) setting forth the anticipated expansion,
construction, development and maintenance activities and other changes to the
manner in which the Buyer conducts its business at the facilities subject to the
Corrective Action reasonably anticipated by the Buyer at such time for the five
(5) year period commencing on the date of the GM Information Request and (ii)
identifying any material interference with the conduct of the Buyer's business
at such facilities (as proposed to be modified in the Proposed Use Statement)
that the Buyer believes would be caused by the remedial option proposed by GM.
For the purpose of this SECTION 7.7, the "proposed conduct" of the Buyer's
business at the facilities subject to the Corrective Action as of the date of
any Proposed Use Statement will be deemed to include only (x) the conduct of the
Business at such facilities as conducted on such
55
<PAGE>
date and as described in such Proposed Use Statement, (ii) the construction and
maintenance activities described in such Proposed Use Statement and (iii) other
ordinary course maintenance activities.
(m) At any time after the Closing, upon reasonable notice to the Buyer
and at reasonable times, GM and its representatives shall have reasonable access
to the Eagle Creek Technology Center, 6040 W. 62nd Street, Indianapolis,
Indiana, to undertake and complete activities required under LUST Incident #
200310504, so long as such activities do not unreasonably interfere with the
current or proposed conduct of the Business at such facility at the time the
activities are undertaken. All such response activities shall be performed in a
good and workmanlike manner and in accordance with applicable Laws governing
work safety and construction. GM shall not permit any construction Liens to be
filed against such property in connection therewith.
Section 7.8 Use of Excluded Marks.
As promptly as practicable following the Closing, but in no event
later than 90 days after the Closing Date, the Buyer shall cease, and shall
cause its Affiliates (including the Transferred Subsidiaries) to cease, using
the Excluded Marks in any form, whether by removing, permanently obliterating,
covering or otherwise eliminating all Excluded Marks that appear on any Business
Asset, including all signs, promotional or advertising literature, labels,
stationery, business cards, office forms and packaging materials. During such
time period, the Buyer may exhaust its inventory of such Business Assets in
existence as of immediately prior to the Closing; provided that the Buyer shall
not, and shall cause its Affiliates (including the Transferred Subsidiaries) not
to, take any action that could detract from or impair the goodwill associated
with such Excluded Marks. Neither the Buyer nor any of its Affiliates (including
the Transferred Subsidiaries) shall, following such 90-day period, use any
Excluded Mark or other Mark that is likely to cause confusion with any of the
Excluded Marks or be associated with GM, any other Sellers or any of their
Affiliates after the Closing Date.
Section 7.9 Non-Competition.
(a) Without limiting and subject to the provisions below, GM, with
respect to its transmission business (other than the Business), on the one hand,
and the Business, on the other hand, each expect that for the foreseeable future
they will continue and grow their respective existing transmission businesses,
which in the case of GM (other than with respect to the Business) is currently
focused on manufacturing transmissions for use in vehicles sold by GM, in
substantially the same manner as in the past and, in accordance with SECTION
7.9(D), will work together to ensure that customers may choose the best
transmissions available for the customers' applications. Schedule 7.9(a) sets
forth in summary form examples of how this SECTION 7.9 addresses certain
applications, but is not intended to be comprehensive. In the event of any
conflict or inconsistency between this SECTION 7.9 and Schedule 7.9(a), this
SECTION 7.9 shall control.
(b) For a period of 10 years from and after the Closing Date, except
as otherwise set forth in SECTION 7.9(C):
(i) the Buyer shall not, and shall cause its Subsidiaries not to,
use the Purchased Assets, the Transferred Employees, the Licensed
Intellectual Property or the Licensed Software to design, manufacture,
re-manufacture, sell or attempt to sell, or license or otherwise authorize
others to design, manufacture, re-manufacture, sell or
56
<PAGE>
knowingly attempt to sell, Buyer Restricted Products for use anywhere in
the world or manufacture, distribute or sell replacement parts or support
equipment therefor (collectively, the activities described in this clause
(i), a "Buyer Competing Business"); and
(ii) the Sellers shall not, and shall cause their Subsidiaries
not to, design, manufacture, re-manufacture, sell or attempt to sell, or
license or otherwise authorize others to design, manufacture,
re-manufacture, sell or knowingly attempt to sell, GM Restricted Products
for use anywhere in the world or manufacture, distribute or sell
replacement parts or support equipment therefor (collectively, the
activities described in this clause (ii), a "Seller Competing Business,"
and together with a Buyer Competing Business, a "Competing Business");
(iii) provided that with respect to any products manufactured or
sold for use in Europe, the obligations of the Buyer and the Sellers
pursuant to this SECTION 7.9(B) shall apply only for a period of 5 years
from and after the Closing Date and such activities under clauses (i) and
(ii) will cease to be Competing Businesses at such time; and
(iv) provided, further, that for purposes of this SECTION 7.9,
the term "design" means to have a formal design program that has been
approved by management and funded.
(c) Notwithstanding anything to the contrary in SECTION 7.9(B):
(i) the Sellers may manufacture, re-manufacture or sell GM
Non-Restricted Products for use anywhere in the world; provided that no
license or sublicense may be granted by the Sellers or any GM Qualified
Subsidiary with respect to Licensed Intellectual Property or Licensed
Software for use in manufacturing, selling or distributing any GM
Non-Restricted Products having a gross vehicle weight rating of more than
3500 kg, other than licenses and sublicenses (with no right to further
sublicense) by GM to any GM Qualified Subsidiary; provided, further, that
no stockholder or other equityholder of any Qualified GM Subsidiary (other
than GM or any wholly-owned Subsidiary of GM) shall be provided access to
any Licensed Intellectual Property or Licensed Software;
(ii) each Party and its Subsidiaries may manufacture,
re-manufacture or sell, or license or otherwise authorize others to
manufacture, re-manufacture or sell, any products for use by the other
Party and its Subsidiaries;
(iii) subject to the terms of the Business to GM Edge Agreement,
the Sellers and their Subsidiaries may use Automatic Transmissions designed
and manufactured by other transmission suppliers in any vehicle sold by the
Sellers or their Subsidiaries;
(iv) the Buyer and its Subsidiaries may re-sell Automatic
Transmissions designed and manufactured by other transmission suppliers if
re-sold for use in Vocational Vehicles, Buyer Military Vehicles and
Off-Road Products;
57
<PAGE>
(v) the Parties and their respective Subsidiaries may manufacture
or sell Automatic Transmissions for use in GMT 900 4500 Platforms as
permitted by SECTION 7.9(J); and
(vi) the Parties and their respective Subsidiaries may
manufacture, distribute or sell replacement parts or support equipment for
any products that they are permitted to manufacture or sell under this
SECTION 7.9.
(d) (i) The Parties may consult and use commercially reasonable
efforts to reach agreement on appropriate modifications or exceptions to this
SECTION 7.9 and, if applicable, the scope of the licenses granted under the
Patent and Technology License Agreement (including with respect to exclusivity),
if a situation arises where a customer would not accept one Party's transmission
for a particular vehicle application but would accept the other Party's
transmission for that application, and such other Party is prohibited by this
SECTION 7.9 from selling such transmission to that customer; provided, however,
that neither Party will solicit customers during the term of this SECTION 7.9
for the sale of products by such Party if such sale would be prohibited by this
SECTION 7.9 but for the provisions of this SECTION 7.9(D)(I) for the purpose or
intent of circumventing this SECTION 7.9(D), implicating or invoking this
SECTION 7.9(D)(I) or giving rise to a customer inquiry that would implicate this
SECTION 7.9(D)(I). Neither GM and/or its Subsidiaries, on the one hand, nor the
Buyer and/or its Subsidiaries, on the other hand, (each, a "Soliciting Party")
will be considered to be in violation of the non-solicitation restrictions set
forth in the proviso contained in the immediately preceding sentence as a result
of an inquiry from a customer concerning the purchase or sale of products that
such Soliciting Party is prohibited from selling that arise from otherwise
permitted solicitations if, in response to such inquiry, the Soliciting Party
refers the customer in question to the other Party with respect to such inquiry,
rather than soliciting such customer to purchase the Soliciting Party's products
in response to such inquiry. Toward that end, lead sales representatives from
each Party will meet periodically to discuss such situations and provide
recommendations to their respective management personnel concerning appropriate
modifications or exceptions to this SECTION 7.9 and the Parties will use
reasonable efforts to coordinate and communicate concerning the result of any
opportunity referred by a Soliciting Party to the other Party pursuant to the
immediately preceding sentence.
(ii) During the applicable period described in SECTION 7.9(B), GM
will provide the Buyer with a right of "first offer" (as set forth in this
SECTION 7.9(D)(II)) for Hybrid Propulsion Systems that the Sellers or their
Subsidiaries desire to sell for use in Vocational Vehicles so that the Buyer
could instead purchase such systems from the Sellers or their Subsidiaries for
the Buyer to re-sell. GM will notify the Buyer of the Sellers' or their
Subsidiaries' desire to commence marketing a specific product which is a Hybrid
Propulsion System (a "Hybrid Product") for use in Vocational Vehicles or to
enter into a particular sales transaction for Hybrid Propulsion Systems for use
in Vocational Vehicles (a "Transaction"), and the Buyer will have 60 days from
the date of such notice to offer GM a commercially-reasonable proposal under
which the Buyer would purchase such systems for the Buyer to re-sell in
connection with the Transaction or otherwise. If the Buyer makes such an offer,
then GM and the Buyer will negotiate in good faith to reach a
commercially-reasonable agreement based on the Buyer's proposal; provided that
the pricing for such systems will be at GM Cost plus eight percent (8%). When
evaluating the reasonableness of the Buyer's proposal and such agreement, GM and
the Buyer will take into account the commercial terms (other than price), if
any, that GM and the Buyer have offered to other OEMs for similar Hybrid
Propulsion Systems. If the
58
<PAGE>
Buyer does not make any such offer or if GM and the Buyer are unable to reach
agreement within 120 days after the date of GM's notice, then the Sellers and
their Subsidiaries shall be free to enter into the Transaction with a third
party or market such Hybrid Product, as applicable, and shall have no further
obligation to the Buyer under this SECTION 7.9(D)(II) with respect to the
particular product in question, and the restrictions in SECTION 7.9(B) shall no
longer apply to such Transaction. Notwithstanding anything to the contrary, this
SECTION 7.9(D)(II) does not apply to E(P)40/50 Hybrid Products.
(e) In furtherance of the non-compete restrictions set forth in
SECTION 7.9(B), (i) the Buyer agrees that, during the applicable period
described in SECTION 7.9(B), neither the Buyer nor any of its Subsidiaries will
knowingly sell any Buyer Restricted Products or replacement parts or support
equipment therefor to any distributor or dealer that, to the knowledge of the
Buyer or such Subsidiaries, primarily distributes such products for use in
Non-vocational Vehicles or GM Military Vehicles (except as the Buyer and its
Subsidiaries would be permitted under SECTION 7.9(C)) and (ii) GM agrees that,
during the applicable period described in SECTION 7.9(B), neither GM nor any of
its Subsidiaries will knowingly sell any GM Restricted Products or replacement
parts or support equipment therefor to any distributor or dealer that, to the
knowledge of GM or such Subsidiaries, primarily distributes such products for
use in Vocational Vehicles, Buyer Military Vehicles or Off-Road Products (except
as the Sellers and their Subsidiaries would be permitted under SECTION 7.9(C)).
(f) Notwithstanding SECTION 7.9(B), neither Party nor their respective
Subsidiaries shall be prohibited from (i) engaging in any business other than,
with respect to the Buyer, a Buyer Competing Business, and, with respect to the
Sellers, a Seller Competing Business (i.e., an "applicable Competing Business")
or (ii) owning less than five percent (5%) of the outstanding voting power in
any Person engaged in an applicable Competing Business; provided that, in each
case, such ownership is passive other than solely with respect to the exercise
of rights as a shareholder and does not involve the exercise of control over the
management or policies of such Person.
(g) Notwithstanding SECTION 7.9(B), the acquisition (by asset
purchase, stock purchase, merger, consolidation or otherwise) by either Party or
their respective Subsidiaries of the stock, business or assets of any Person
that at the time of such acquisition is engaged in an applicable Competing
Business, and the continuation of such applicable Competing Business following
such acquisition shall not be prohibited hereunder if such Person was not
substantially engaged in such Competing Business prior to such acquisition;
provided that such Competing Business is not permitted to use and is not
provided access to any Intellectual Property or Software that is licensed by any
Seller to the Buyer, or by the Buyer to any Seller, pursuant to the Ancillary
Documents. For the purpose of this Agreement, a Person shall be deemed to be
"substantially engaged" in a Competing Business if the gross operating revenues
of such Person for the 12 month period preceding the date of such acquisition
that are attributable to the Competing Business account for more than 20 percent
(20%) of the total gross operating revenues of such Person for such period. In
the event either Party or their respective Subsidiaries acquire the stock,
business or assets of any Person that at the time of such acquisition is
substantially engaged in an applicable Competing Business, neither such Party
nor any of its Subsidiaries shall be deemed to be engaged in the Competing
Business as a result of such acquisition if such Party or its Subsidiaries
divests the Competing Business within 18 months after such acquisition; provided
that such Competing Business is not permitted to use and is not provided access
to any Intellectual Property that is licensed by any Seller to the Buyer, or by
the
59
<PAGE>
Buyer to any Seller, pursuant to the Ancillary Documents. In addition, if GM or
any of its Subsidiaries acquires (by asset purchase, stock purchase, merger,
consolidation or otherwise) the stock, business or assets of any of the
following Persons or the commercial transmission business owned by such Persons
(or any successor to that business), then it shall divest the Competing Business
of such Person within 18 months after such acquisition (regardless of whether
such Person is considered to be "substantially engaged" in such Competing
Business as set forth above) and it will not permit such Person to use, and
shall not provide such Person access to, the Licensed Intellectual Property or
the Licensed Software: Voith AG, ZF Friedrichshafen AG, ArvinMeritor, Inc.,
Caterpillar, Inc., Aisin Seiki Co., Ltd. and Eaton Corporation. If the Buyer or
any of its Subsidiaries acquires (by asset purchase, stock purchase, merger,
consolidation or otherwise) the stock, business or assets of any of the
following Persons, then it shall divest the Competing Business of such Person
within 18 months after such acquisition (regardless of whether such Person is
considered to be "substantially engaged" in such Competing Business as set forth
above): Ford Motor Company and DaimlerChrysler AG.
(h) The Buyer and the Sellers acknowledge that the restrictions
contained in this SECTION 7.9 are reasonable in scope and duration in light of
the nature, size and location of the Business and the Retained Businesses. The
Buyer and the Sellers further acknowledge that the restrictions contained in
this SECTION 7.9 are necessary to protect the Buyer's significant investment in
the Business, including its goodwill, and also to protect the Sellers'
significant investment in the Retained Businesses, including their goodwill. The
Buyer and the Sellers are of equal bargaining power. It is the desire and intent
of the Parties that the provisions of this SECTION 7.9 be enforced to the
fullest extent permissible under applicable Law. If all or part of this SECTION
7.9 is held invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect. If any part of this SECTION 7.9 is held to be
excessively broad as to duration, scope, activity or subject, such part will be
construed by limiting and reducing it so as to be enforceable to the maximum
extent permissible under applicable Law.
(i) Successors.
(i) In the event the Buyer sells, leases, transfers, conveys or
otherwise transfers, in one or more transactions, all or substantially all
of the Purchased Assets or all or substantially all of any line of business
within the Business, by way of asset sale or sale (by merger or otherwise)
of any equity interests of any Subsidiary prior to the tenth (10th)
anniversary of the Closing Date, the Buyer shall require the assignee to
agree to be bound by all of the terms of this SECTION 7.9, such agreement
to be embodied in a written instrument signed by the Buyer and such
assignee, and delivered to GM prior to the consummation thereof, which
instrument shall be substantially in a form attached as Exhibit R.
(ii) In the event GM sells, leases, transfers, conveys or
otherwise transfers, in one or more transactions, all or substantially all
of its business of manufacturing and selling (A) A1000 Products or any
Derivation of such products or (B) GM's 6L90 transmissions or any
Derivation of such transmissions, by way of asset sale or otherwise prior
to the tenth (10th) anniversary of the Closing Date, GM shall require the
assignee to agree to be bound by all of the terms of this SECTION 7.9, such
agreement to be embodied in a written instrument signed by GM and such
assignee, and delivered to the Buyer prior to the consummation thereof,
which instrument shall be substantially in a form attached as Exhibit R.
60
<PAGE>
(iii) If, during the applicable period set forth in SECTION
7.9(B), GM approves production of the GMT 900 4500 Platform, then the terms
and conditions set forth in Schedule 7.9(j) shall apply during the
remainder of such time period following such approval.
Section 7.10 Preservation of Records.
The Parties shall preserve and keep all books and records that they
own immediately after the Closing relating to the Business, the Purchased Assets
or the Assumed Liabilities for a period of six years following the Closing Date
or for such longer period as may be required by applicable Law, unless disposed
of in the ordinary course or pursuant to a document retention policy. During
such retention period, duly authorized representatives of a Party shall, upon
reasonable notice, have reasonable access during normal business hours to
examine, inspect and copy such books and records held by the other Party for any
proper purpose, except as may be prohibited by Law, including ITAR, by the terms
of any Contract or under any confidentiality agreement; provided that to the
extent that disclosing any such information would reasonably be expected to
constitute a waiver of attorney-client, work product or other legal privilege
with respect thereto, the Parties shall take all commercially reasonable action
to permit such disclosure without the waiver of any such privilege, including
entering into an appropriate joint defense agreement in connection with
affording access to such information. The access provided pursuant to this
SECTION 7.10 shall be subject to such additional confidentiality provisions as
the disclosing Party may reasonably deem necessary. The Sellers shall cooperate,
and shall use commercially reasonable efforts to cause their accountants to
cooperate, with the Buyer in connection with the preparation of an audited
combined balance sheet of the Business as of the Closing Date and the related
audited combined statement of operations, combined statement of cash flows and
combined statement of equity of the Business for the period from January 1, 2007
through the Closing Date; provided that the Buyer shall reimburse the Sellers,
promptly upon request, for all reasonable out-of-pocket costs incurred by the
Sellers in connection with any such cooperation.
Section 7.11 Novation of Government Prime Contracts.
Notwithstanding SECTION 7.2 above:
(a) Following the Closing, the Parties will, in accordance with, and
to the extent required by, the Federal Acquisition Regulation Part 42, Subpart
42.12 and Defense Federal Acquisition Regulation Supplement (48 C.F.R. 242.12),
promptly submit in writing to each responsible contracting officer with respect
to the Government Prime Contracts a request that the U.S. Government (i)
recognize the Buyer as the successor in interest to all of the Government Prime
Contracts and (ii) if required to effectuate such recognition, enter into a
novation agreement (a "Novation Agreement") in substantially the form
contemplated by such regulations with respect to each such contract. The Parties
will use commercially reasonable efforts to promptly obtain all consents,
approvals and waivers required for the purpose of processing, entering into and
completing a Novation Agreement with regard to each Government Prime Contract,
including responding to requests for information by the U.S. Government with
regard to such Novation Agreement. The Parties will use commercially reasonable
efforts to provide all reasonable information and take all other actions
reasonably necessary to execute and consummate such Novation Agreement.
(b) If the U.S. Government declines to enter into a Novation Agreement
in accordance with, and to the extent required by, Federal Acquisition
Regulation Part 42, Subpart 42.12 and Defense Federal Acquisition Regulation
Supplement (48 C.F.R. 242.12) that recognizes the transfer of the Government
Prime Contracts to the Buyer, or until such time as the
61
<PAGE>
U.S. Government recognizes such transfer by entering into a Novation Agreement,
nothing in this Agreement will constitute a transfer, assignment, attempted
transfer or an attempted assignment thereof.
(c) Effective upon the Closing and until such time as the U.S.
Government recognizes the transfer of the Government Prime Contracts to the
Buyer, in accordance with the Federal Acquisition Regulation Part 42, Subpart
42.12 and Defense Federal Acquisition Regulation Supplement (48 C.F.R. 242.12),
one or more of the Sellers shall subcontract with the Buyer, pursuant to a
subcontract agreement in substantially the form attached hereto as Exhibit P
(the "Government Related Subcontract Agreement"), for the Buyer to perform for
and in the place of the Sellers any and all obligations and provide any and all
services and other performance obligations under the Government Prime Contracts
as of the Closing, including any and all amendments, options, modifications, and
purchase orders issued thereunder and such other terms and conditions as may
have been duly incorporated in the Government Prime Contracts; provided that the
Sellers shall not be so obligated to subcontract to the Buyer any Government
Prime Contract for which novation is not required. Any Seller that is a party to
a Government Related Subcontract Agreement shall maintain its existence until
the Government Prime Contracts underlying such Subcontract Agreement have been
completed or duly terminated, or duly transferred to the Buyer pursuant to one
or more Novation Agreements. Upon the U.S. Government recognizing the transfer
or assignment of any Government Prime Contract to the Buyer, the Sellers will
execute such agreement as may be in form and substance reasonably acceptable to
GM and the Buyer to effect and evidence such transfer or assignment.
Section 7.12 Compliance with Consent Decree.
The Buyer shall operate the Business, and GM and its Subsidiaries will
operate their businesses, in material compliance with all terms of the Consent
Decree (other than, in the case of the Buyer, those terms of the Consent Decree
dealing with monetary penalties assessed to GM, which shall be the
responsibility of GM), and the Buyer agrees to be subject to all compliance
remedies established in the Consent Decree with respect to the Business, and, if
requested by either the U.S. Department of State or U.S. Immigration and Customs
Enforcement, the Buyer shall execute a consent decree similar in all material
respects to the Consent Decree (other than those terms of the Consent Decree
dealing with monetary penalties assessed to GM).
Section 7.13 Assumption of Union Agreements.
To the extent required by the terms of any Union Agreement to which GM
is a party, the Buyer shall assume the Union Agreement covering Transferred
Employees on the Closing Date.
Section 7.14 Guarantees.
The Buyer shall use its commercially reasonable efforts (which shall
not require any modifications of the terms of the underlying obligations) to
cause itself or one or more of its Subsidiaries to be substituted in all
respects for the Sellers and their Affiliates (i) effective as of the Closing
Date, in respect of all obligations of the Sellers and their Affiliates under
each of the guarantees, indemnities, surety bonds, letters of credit and letters
of comfort made or provided by the Sellers and their Affiliates (or any of them)
for the benefit of the Business and (ii) effective as of the date of such
Novation Agreement, in respect of all obligations of the Sellers and their
Affiliates under each of the guarantees, indemnities, surety bonds, letters of
credit and letters of comfort made or provided by the Sellers and their
Affiliates (or any of them) in connection with any Novation Agreement
(collectively, clauses (i) and (ii), the "Guarantees"). If the Buyer is unable
to effect such a substitution with respect to any such Guarantee after using its
commercially reasonable efforts to do so, then the Buyer shall (x) obtain
letters of credit, on terms and from financial institutions reasonably
satisfactory to GM,
62
<PAGE>
with respect to the obligations covered by each of the Guarantees for which the
Buyer does not effect such substitution in an amount equal to the amount of each
such Guarantee identified by GM to the Buyer in writing prior to the Closing;
provided, however, that the Buyer shall have no obligation to obtain letters of
credit pursuant to this SECTION 7.14 with aggregate face amounts in excess of
$10,000,000) and (y) until the Buyer obtains such letters of credit referred to
in the foregoing clause (x), not, and not permit the Business or any of the
Buyer's Affiliates (including the Transferred Subsidiaries) to renew or extend
the term of, or increase its obligations under, or transfer to another third
party, any Contract underlying such Guarantee (including any Novation Agreement
and/or Government Prime Contract). Notwithstanding the foregoing, but without
limiting the rights of Seller Indemnified Parties under SECTION 9.3(A)(V), the
Buyer shall have no obligation to use commercially reasonable efforts to cause
itself or its Subsidiaries to be substituted for the Sellers and their
Affiliates under any Guarantee if GM does not provide written notice of such
Guarantee to the Buyer prior to the Closing.
Section 7.15 Insurance.
GM shall provide commercially reasonable cooperation to the Buyer in
order to afford the Buyer and its Subsidiaries, and shall use all commercially
reasonable efforts to ensure that the Buyer and its Subsidiaries are provided,
the right to receive payment, after the Closing Date, under any insurance
policies of GM and its Subsidiaries that covered the Business prior to the
Closing Date with respect to any claim or loss that is covered by such policies
and arises out of, results from or relates to any of the Business Assets,
Assumed Liabilities or operations of the Business, including claims currently
being processed under such insurance policies, which efforts shall include
tendering claims under existing insurance policies of GM and its Subsidiaries on
the Buyer's behalf and remitting any payment in respect of such claims from
insurers to the Buyer; provided that the Buyer shall have delivered reasonable
written notice of any such claim or loss to GM prior to the date that is two (2)
years from the Closing Date; provided, further, that GM and its Subsidiaries
shall not be required to maintain, extend or renew any of the insurance policies
that covered the Business prior to the Closing Date, or any other insurance
policies. Any such rights of the Buyer to receive payment on any such insurance
claim shall be subject to any deductibles, self-insured retentions, retained
amounts, retentions or exclusions as well as pro rata allocation thereof as
between GM and the Buyer based on the aggregate claims asserted by each under
the respective policy, and the Buyer shall reimburse GM for any actual
out-of-pocket expenses incurred by GM pursuant to this SECTION 7.15.
Notwithstanding the foregoing, to the extent any such claims or losses are
included as a current liability on the Final Statement in the calculation of the
Closing Date Net Working Capital, then GM shall retain all rights to seek and
receive payment of the insurance proceeds related thereto. From and after the
Closing Date until the date that is two (2) years from the Closing Date, upon
reasonable written notice, GM and the Sellers shall furnish the Buyer with
recently valued insurance claim data for all lines of insurance and access to
engineering and safety surveys completed prior to the Closing and exclusively
related the Business.
Section 7.16 Confidentiality.
For a period of thirty (30) months from the Closing Date, the Sellers
and their Affiliates shall treat all information relating to the Buyer, the
Transferred Subsidiaries and the Business as confidential, preserve the
confidentiality thereof, not use or disclose to any Person such information and
instruct their directors, officers, employees, representatives or other agents
who have had access to such information to keep confidential and not to use any
such information, unless such information is (i) now or is hereafter disclosed,
through no act or omission of the Sellers or any of their Affiliates or any of
their directors, officers, employees, representatives or other agents, in a
manner making it
63
<PAGE>
available to the general public or (ii) required by Law to be disclosed.
Notwithstanding anything to the contrary, nothing in THIS SECTION 7.16 shall be
deemed to limit in any way the use or disclosure by the Sellers or their
Affiliates of any Technology or other Intellectual Property or Software, subject
to any applicable restrictions in the Ancillary Documents. The Buyer and the
Transferred Subsidiaries shall be entitled to injunctive relief to enforce this
SECTION 7.16.
Section 7.17 Hybrid JV Agreements.
From and after the Closing, GM will not (i) amend either the First
Amended and Restated General Cooperation Agreement or the Second Amended and
Restated Proprietary Rights Agreement, in each case by and among GM,
DaimlerChrysler Corporation and BMW Hybrid Technology Corporation (collectively,
the "Hybrid JV Agreements") in a manner that conflicts or interferes with or
restricts the Buyer's rights to the Licensed Intellectual Property under the
Ancillary Documents or (ii) grant its consent under any of the Hybrid JV
Agreements to any party to license any Intellectual Property subject thereto for
use in Vocational Vehicles, Military Vehicles or Off-Road Products, except to
the extent that doing so would not conflict with the license granted to the
Buyer under the Ancillary Documents, disregarding for the foregoing purpose the
fact that such licenses to the Buyer were made or are subject to the Hybrid JV
Agreements.
Section 7.18 DPIM Warranty Matters.
(a) GM shall reimburse the Buyer, promptly upon request, for all DPIM
Coverage Costs incurred by the Buyer and its Subsidiaries for Covered Claims
after, and then only to the extent that, the aggregate DPIM Coverage Costs
incurred by the Buyer during the period from the Closing until the date that is
the thirteenth (13th) anniversary of the date on which the last DPIM Unit sold
by the Business is first placed into service (such period, the "Extended Special
Coverage Period") exceed $12,000,000 and are less than or equal to $46,000,000.
To the extent the aggregate DPIM Extended Special Coverage Costs incurred by the
Buyer for Covered Claims during the Extended Special Coverage Period exceed
$46,000,000, GM shall reimburse the Buyer, promptly upon request, for two-thirds
of such DPIM Coverage Costs.
(b) The Buyer will provide GM a Claim Header Summary Report, in the
form attached hereto as Exhibit T, in respect of each Covered Claim. Each Claim
Header Summary Report will have an electronic file name as a reference number.
From and after the date when the aggregate DPIM Coverage Costs incurred by the
Buyer during the Coverage Period exceed $12,000,000, the Buyer will issue an
invoice to GM for the DPIM Coverage Costs that correspond with the Covered
Claims set forth on the Claim Header Summary Reports. GM will pay the Buyer in
accordance with its MNS-2 system which provides, on average, for payment on the
second day of the second month following the date of the invoice or, if such
MNS-2 system is not operated, within 40 days after receipt of the invoice. GM
may contest invoice amounts in good faith; provided, however, that GM will pay
the full invoice amount in accordance with such MNS-2 system, including any
contested amounts. If GM contests any invoiced amounts, GM and the Buyer shall
confer regarding such contested amounts. If the Buyer agrees with GM's position,
it may either adjust the invoice at issue, or reduce the invoice for the
following month appropriately, and if GM disagrees with the Buyer's position
with respect to such matter or does not receive prompt notice of the Buyer's
position with respect to such matter, it may bring a Seller Claim under ARTICLE
IX in its discretion. Disputes between GM and the Buyer that relate to invoices
that are issued to GM by the Buyer should be submitted in writing to the Buyer's
Chief Financial Officer for resolution. Notwithstanding anything to the
contrary, nothing in this
64
<PAGE>
SECTION 7.18(B) shall limit in any way the rights or obligations of the Parties
under ARTICLE IX, including with respect to the right to bring Claims
thereunder.
(c) At no time during the Extended Special Coverage Period shall the
Buyer amend, revise or otherwise modify the DPIM Extended Special Coverage in a
manner that would or would reasonably be expected to increase or expand in any
respect the obligations of GM under this SECTION 7.18, without GM's consent, not
to be unreasonably withheld.
(d) In no event shall GM have any obligation under this SECTION 7.18
for Covered Claims received by, or DPIM Coverage Costs incurred by, the Buyer
(i) for repair orders after the expiration of the Extended Special Coverage
Period, (ii) to the extent of any increase in the failure rate resulting from
the failure of DPIM Units manufactured for the Business by any supplier other
than the DPIM Supplier, but only to the extent that, from and after the first
anniversary of the date on which such DPIM Units were first sold by such new
supplier, the failure rate with the new supplier (as measured from the date on
which such DPIM Units were first sold by such new supplier) is greater than the
failure rate for DPIM Units manufactured by the DPIM Supplier and sold by the
Business after the Closing Date, (iii) to the extent any DPIM Units manufactured
for the Business have determined by in-depth root cause analysis with
participation of the appropriate skill set of the Product Engineering and
current Product Improvement Team of GM and the Business to be the responsibility
of the supplier resulting from a loss of manufacturing, assembly, or process
control by such supplier or any of its sub-contractors, and/or (iv) for any
failure of DPIM Units manufactured for the Business by any supplier that are due
to shipping or mishandling by OEMs, distributors, service channel participants
or customers. Notwithstanding the foregoing, the preceding clause (ii) shall not
apply with respect to increases in failure rates of DPIM Units caused by the
failure of a component thereof that, after the Closing Date, was subject to a
design change approved by GM and the Buyer. In the event of a dispute under
clause (iii) above, the Parties agree to have such dispute promptly resolved by
a neutral arbitrator, who is reasonably acceptable to each Party and who has
professional expertise as to the matter in dispute.
(e) Between the date hereof and the DPIM Conversion Date, GM and the
Buyer shall work together in good faith, each using commercially reasonable
efforts, to design a single dual power inverter module product (the "DPIM") that
meets the Required Specifications and that can be placed into salable production
(the "DPIM Design Program"). The DPIM Design Program will involve quarterly
program reviews which will be attended by at least one representative of
management of GM Powertrain and at least one representative of management of the
Buyer. Such program reviews will include (i) review of program scope and timing
and in-depth discussion of cross functional scope and timing, (ii) review of
deliverables as appropriate for program status, (iii) review of program quality
metrics (status to goals such as projected B-life, incidents per thousand
vehicles and cost per vehicle), (iv) identification of resource and budget
issues and review of budget status, (v) review of status of Design Failure Modes
and Effect Analysis, Design Review, Design Release, Software/Calibration and
Analysis Development Validation, (vi) review of status of design for
manufacturability and serviceability and identification of risk areas, (vii)
review of purchasing, Advanced Product Quality Planning (as defined in AIAG
standards) and supplier quality and identification of risk areas, (viii)
analysis of reliability growth, plan review, status to plan and results date and
identification of issues based on results, (ix) review of OEM integration and
OEM final test status and issues, (x) review of plan to manage identified risks
or plan to develop plan to manage risks, (xi) review of all program disconnects
to achieving program timing and program deliverables via planned
65
<PAGE>
processes and (xii) review and identification of cross-functional issues.
Specific engineering or design nomenclature used in this SECTION 7.18(E) and in
the definition of "DPIM Unit" shall be interpreted as commonly understood within
the design and engineering organizations of GM Powertrain and the Business.
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 General Conditions of the Parties.
The obligations of each Party to effect the Closing and to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:
(a) (i) any waiting period (and any extension thereof) under the HSR
Act applicable to the transactions contemplated by this Agreement shall have
expired or shall have been terminated, and (ii) all waiting periods shall have
expired or shall have been terminated and all required approvals shall have been
received under or in respect of the Required Antitrust Filings;
(b) the UAW shall have consented to the sale of the UAW Facilities to
the Buyer in a form reasonably satisfactory to GM; and
(c) there shall not be any judgment, order, decree, stipulation,
injunction or charge issued by any court of competent jurisdiction or any other
Governmental Entity in effect preventing consummation of the transactions
contemplated by this Agreement.
Section 8.2 Conditions to Obligations of the Buyer.
The obligation of the Buyer to effect the Closing and consummate the
transactions contemplated by this Agreement is subject to satisfaction or waiver
as of the Closing Date of the following conditions:
(a) the representations and warranties of GM set forth in ARTICLE IV,
disregarding qualifications as to materiality and Material Adverse Effect, shall
be true and correct as of the Closing Date (except to the extent expressly made
as of an earlier date, in which case as of such date), with only such exceptions
as, individually and in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect;
(b) GM and the other Sellers shall have performed and complied with,
in all material respects, their covenants and agreements contained in this
Agreement that are required to be performed or complied with on or prior to the
Closing Date;
(c) GM shall have delivered to the Buyer a certificate executed as of
the Closing Date by an authorized representative of GM to the effect that the
conditions set forth in SECTIONS 8.2(A) and (B) are satisfied;
(d) GM, on behalf of itself and the other Sellers (as applicable),
shall have delivered to the Buyer and, as applicable, executed on behalf of the
Sellers:
(i) a duly executed counterpart of a employee matters agreement
in substantially the form attached hereto as Exhibit A (the "Employee
Matters Agreement");
66
<PAGE>
(ii) a duly executed counterpart of a transition services
agreement in substantially the form attached hereto as Exhibit B (the
"Transition Services Agreement");
(iii) one or more duly executed quitclaim deeds, in customary
form, subject only to the Permitted Liens, conveying the Owned Real
Property to the Buyer (the "Deeds");
(iv) duly executed counterparts to any transfer Tax or sales
disclosures forms relating to the Owned Real Property, to the extent
required, including an Indiana Sales Disclosure form for any Owned Real
Property located in Indiana (the "Transfer Tax Forms");
(v) duly executed counterparts of such instruments of sale,
transfer, assignment and assumption as are necessary to convey to the Buyer
or its permitted assignees certain Purchased Assets held in, or held by the
Sellers organized in, jurisdictions within and outside of the United
States, in substantially the form attached hereto as Exhibit C (the "Bill
of Sale and Assignment and Assumption Agreement");
(vi) a duly executed counterpart of an assignment of the
copyrights contained in the Purchased Assets in substantially the form
attached hereto as Exhibit D-1 (the "Assignment of Copyrights");
(vii) a duly executed counterpart of an assignment of the
trademarks contained in the Purchased Assets in substantially the form
attached hereto as Exhibit D-2 (the "Assignment of Trademarks");
(viii) a duly executed counterpart of a patent and technology
license agreement in substantially the form attached hereto as Exhibit E
(the "Patent and Technology License Agreement");
(ix) a duly executed counterpart of a copyright and trademark
license agreement in substantially the form attached hereto as Exhibit F
(the "A1000 IP License Agreement");
(x) a duly executed counterpart of a software license agreement
in substantially the form attached hereto as Exhibit G (the "Software
License Agreement");
(xi) duly executed counterparts of the proving grounds use
agreements in substantially the form attached hereto as Exhibit H-1 (the
"DPG Proving Grounds Use Agreement") and Exhibit H-2 (the "MK Proving
Grounds Use Agreement" and, together with the DPG Proving Grounds Use
Agreement, the "Proving Grounds Use Agreements");
(xii) a duly executed counterpart of a participation agreement in
substantially the form attached hereto as Exhibit I (the "Business to GM
Edge Agreement"); provided that if GM sells or transfers the GM Medium Duty
Truck Business prior to the Closing Date, the delivery of a duly executed
counterpart of such Business to GM Edge Agreement shall cease to be a
condition to Closing;
67
<PAGE>
(xiii) a duly executed counterpart of a supply agreement in
substantially the form attached hereto as Exhibit J (the "GMPT Germany
Supply Contract");
(xiv) a duly executed counterpart of a contract agreement on
GMODC leasing of premises in substantially the form attached hereto as
Exhibit K (the "Sublease Agreement");
(xv) a duly executed counterpart of a private instrument of non
residential lease agreement in substantially the form attached hereto as
Exhibit L (the "Lease Agreement");
(xvi) a duly executed counterpart of an engineering services
agreement in substantially the form attached hereto as Exhibit M (the
"Engineering Services Agreement");
(xvii) a duly executed counterpart of a hybrid co-branding
agreement in substantially the form attached hereto as Exhibit N (the
"Hybrid Co-Branding Agreement");
(xviii) duly executed counterparts of such instruments of sale,
transfer, assignment and assumption as are necessary to convey to the Buyer
or its permitted assignees certain Purchased Assets held in, or held by the
Sellers organized in, jurisdictions outside of the United States (the
"Foreign Jurisdiction Transfer Documents"), in a form reasonably
satisfactory to the Buyer (provided that in no event shall any Foreign
Jurisdiction Transfer Documents expand or limit any rights or obligations
of the Buyer, the Sellers or their respective Affiliates hereunder);
(xix) stock certificates (or the local legal equivalent)
evidencing the Transferred Stock, duly endorsed in blank or accompanied by
stock powers duly endorsed in blank, in proper form for transfer, including
any required stamps affixed thereto; and
(xx) statements that satisfy the Buyer's obligations under
Treasury Regulation Section 1.1445-2(b)(2) or 1.1445-2(c)(3), as
applicable;
(e) the Buyer shall have been provided evidence reasonably acceptable
to the Buyer that the third party consents set forth in Schedule 8.2(e) have
been obtained; and
(f) the UAW shall have executed the MOU, with only such modifications
as do not constitute an Adverse Buyer Modification; provided, however, that in
the event that the UAW shall have executed the MOU, but with modifications that
constitute an Adverse Buyer Modification, the condition set forth in this
SECTION 8.2(F) shall be deemed to be satisfied if GM cures (a "GM Cure") the
adverse effect of such Adverse Buyer Modification by taking actions that place
the Buyer in the substantially equivalent economic position as if the MOU had
been executed without such Adverse Buyer Modification.
Section 8.3 Conditions to Obligations of GM.
The obligation of GM to effect the Closing and consummate the
transactions contemplated by this Agreement is subject to satisfaction or waiver
as of the Closing Date of the following conditions:
68
<PAGE>
(a) the representations and warranties of the Buyer set forth in
ARTICLE V of this Agreement, disregarding qualifications as to materiality and
Buyer Material Adverse Effect, shall be true and correct in all material
respects as of the Closing Date (except to the extent expressly made as of an
earlier date, in which case as of such date), with only such exceptions as,
individually and in the aggregate, have not had, and would not reasonably be
expected to have, a Buyer Material Adverse Effect;
(b) the Buyer shall have performed and complied with, in all material
respects, all of its covenants and agreements contained in this Agreement that
are required to be performed or complied with on or prior to the Closing Date;
(c) the Buyer shall have delivered to GM a certificate executed as of
the Closing Date by an authorized representative of the Buyer to the effect that
each of the conditions specified in SECTIONS 8.3(A) and (B) are satisfied;
(d) the Buyer shall have delivered to GM:
(i) the Closing Payment in cash by wire transfer of immediately
available funds to the account or accounts designated in writing by GM;
(ii) a duly executed counterpart of the Employee Matters
Agreement;
(iii) a duly executed counterpart of the Transition Services
Agreement;
(iv) a duly executed counterpart of the Bill of Sale and
Assignment and Assumption Agreement;
(v) a duly executed counterpart of the Assignment of Copyrights;
(vi) a duly executed counterpart of the Assignment of Trademarks;
(vii) a duly executed counterpart of the Patent and Technology
License Agreement;
(viii) a duly executed counterpart of the A1000 IP License
Agreement;
(ix) a duly executed counterpart of the Software License
Agreement;
(x) duly executed counterparts to the Transfer Tax Forms, to the
extent required;
(xi) duly executed counterparts of the Proving Grounds Use
Agreements;
(xii) a duly executed counterpart of the Business to GM Edge
Agreement; provided that if GM sells or transfers the GM Medium Duty Truck
Business prior to the Closing Date, the delivery of a duly executed
counterpart of such Business to GM Edge Agreement shall cease to be a
condition to Closing;
(xiii) a duly executed counterpart of the GMPT Germany Supply
Contract;
69
<PAGE>
(xiv) a duly executed counterpart of the Sublease Agreement;
(xv) a duly executed counterpart of the Lease Agreement;
(xvi) a duly executed counterpart of the Engineering Services
Agreement; and
(xvii) a duly executed counterpart of the Hybrid Co-Branding
Agreement; and
(e) the UAW shall have executed the MOU, with only such modifications
as do not constitute an Adverse GM Modification; provided, however, that in the
event that the UAW shall have executed the MOU, but with modifications that
constitute an Adverse GM Modification, the condition set forth in this SECTION
8.3(E) shall be deemed to be satisfied if the Buyer cures (a "Buyer Cure") the
adverse effect of such Adverse GM Modification by taking actions that place GM
in the substantially equivalent economic position as if the MOU had been
executed without such Adverse GM Modification.
ARTICLE IX
REMEDIES
Section 9.1 Survival.
The representations and warranties of the Parties contained in this
Agreement shall survive until the first anniversary of the Closing Date, except
for the representations and warranties in SECTIONS 4.2, 4.5, 4.6, 4.8 (but only
the first sentence thereof), 4.22, 4.25, 5.2, 5.6 and 5.7, which shall survive
indefinitely, and in SECTION 4.17, which shall survive until ninety (90) days
after the expiration of the applicable statute of limitations. The covenants or
agreements of the Parties contained in this Agreement and the Ancillary
Documents shall survive the Closing indefinitely, except that those covenants
and agreements that by their terms are to be performed or complied with for a
shorter period of time shall survive only until the expiration of such shorter
time period. Notwithstanding anything to the contrary, no claim may be made with
respect to any representations or warranties under this Agreement after the
expiration of the applicable survival period set forth in this SECTION 9.1.
Section 9.2 Indemnification by GM.
(a) Subject to the terms and conditions of this ARTICLE IX, from and
after the Closing, GM agrees to reimburse, indemnify and hold harmless the
Buyer, its directors, officers, representatives, employees, stockholders,
Affiliates and Subsidiaries (including, following the Closing, the Transferred
Subsidiaries) (each, a "Buyer Indemnified Party") from, against and in respect
of any and all Losses incurred by any Buyer Indemnified Party resulting from,
arising out of, or that exist or arise due to, any of the following
(collectively, "Buyer Claims"):
(i) prior to its expiration in accordance with SECTION 9.1, any
inaccuracy of any representation or warranty as of the Closing Date or the
breach of any representation or warranty made by the Sellers in this
Agreement as of the Closing Date;
(ii) prior to its expiration in accordance with SECTION 9.1, the
breach by the Sellers of any covenant or agreement under this Agreement
(subject to any express limitations therein);
(iii) the Excluded Liabilities;
70
<PAGE>
(iv) any (x) Taxes of the Transferred Subsidiaries for any
Pre-Closing Tax Period, (y) Taxes of the Sellers and (z) Taxes of any other
Person imposed on the Transferred Subsidiaries for any Pre-Closing Tax
Period, whether imposed as a result of Treasury Regulation Section 1.1502-6
or any provision of any foreign, state or local Tax Law having similar
effect, as transferee, successor, by contract or otherwise; provided that
references to any Losses shall be deemed to include amounts that would have
constituted a Loss but for the set off or other utilization of any loss,
deduction or credit realized in, or attributable to, a taxable period or
portion thereof beginning after the Closing Date (a "Post-Closing Tax
Period");
(v) any failure of GM to obtain the ROFR Waiver or, if the ROFR
Waiver is not obtained prior to Closing, the exercise of the Indianapolis
ROFR;
(vi) any material violation of any Environmental Law or any
material Release or presence of any Hazardous Materials that would
reasonably be expected to give rise to any material liability under any
Environmental Law, in each case with respect to the International
Facilities, to the extent such violation, Release or presence is identified
in connection with the International Facilities Testing but was not
previously disclosed in writing to the Buyer; provided that the Buyer
notifies GM of such violation, Release or presence prior to the Closing and
that the obligations of GM pursuant to this SECTION 9.2(A)(VI) shall (A)
not apply to any Buyer Claims under this SECTION 9.2(A)(VI) until, and then
only to the extent that, the aggregate Losses incurred by all Buyer
Indemnified Parties exceeds $5,000,000, (B) be limited to, and shall not
exceed when aggregated with all other Losses indemnified by GM under
SECTION 9.2(A)(I) and under this SECTION 9.2(A)(VI), the Cap (as defined
below), and (C) not apply to any Buyer Claims made after the one-year
anniversary of the Closing Date; and
(vii) the matters set forth on Schedule 9.2(a)(vii).
(b) Notwithstanding anything contained herein to the contrary, the
obligations of GM pursuant to SECTION 9.2(A)(I), shall: (i) not apply to any
Buyer Claims until, and then only to the extent that, the aggregate Losses
incurred by all Buyer Indemnified Parties exceeds $55,000,000 (the "Basket");
(ii) be limited to, and shall not exceed, the aggregate amount of $550,000,000
(the "Cap"); (iii) not apply to any individual Buyer Claim or series of related
Buyer Claims with respect to which the Losses incurred by the Buyer Indemnified
Party are less than $500,000 and/or (iv) not apply to any Losses arising out of,
relating to or resulting from any facts, events, circumstances or other matters
that are raised by the Buyer in connection with an objection to the Preliminary
Statement under SECTION 3.3 hereof, and/or taken into account by both the Buyer
and GM, or by the Neutral Auditor, as the case may be, in the calculation of the
Closing Date Net Working Capital set forth on the Final Statement (whether or
not any such facts, events, circumstances or other matters result or resulted in
an adjustment to the Purchase Price); provided, however, that the foregoing
limitations shall not apply to any Buyer Claim brought under SECTION 9.2(A)(I)
for any breach of, or inaccuracy in, any representation or warranty set forth in
SECTION 4.2, SECTION 4.5, SECTION 4.6, SECTION 4.17 or SECTION 4.22 of this
Agreement.
Section 9.3 Indemnification by the Buyer.
(a) Subject to the terms and conditions of this ARTICLE IX, from and
after the Closing, the Buyer agrees to reimburse, indemnify and hold harmless
GM, the other Sellers, and
71
<PAGE>
their respective directors, officers, representatives, employees, stockholders,
Affiliates and Subsidiaries (collectively, the "Seller Indemnified Parties")
from, against and in respect of any and all Losses incurred by any Seller
Indemnified Party resulting from, arising out of, or that exist or arise due to,
any of the following (collectively, "Seller Claims," and together with Buyer
Claims, "Claims"):
(i) prior to its expiration in accordance with SECTION 9.1, any
inaccuracy of any representation or the breach of any warranty made by the
Buyer in this Agreement;
(ii) prior to its expiration in accordance with SECTION 9.1, the
breach by the Buyer of any covenant or agreement under this Agreement;
(iii) the Assumed Liabilities;
(iv) any failure by the Buyer and/or its Affiliates (including
the Transferred Subsidiaries) to employ some or all of the Transferred
Employees who accept employment with the Buyer on or prior to the Closing
Date and become employees of the Buyer from and after the Closing Date in
accordance with the Employee Matters Agreement; and
(v) any claim by or payment to a third party resulting from
failure by the Buyer to cause itself and/or its Affiliates (including the
Transferred Subsidiaries) to be substituted in all respects for the Sellers
and their Affiliates, effective as of the date of such Novation Agreement,
in respect of all Guarantees made or provided by the Sellers and their
Affiliates (or any of them) in connection with any Novation Agreement.
(b) Notwithstanding SECTION 9.3(A), the obligations of the Buyer
pursuant to SECTION 9.3(A)(I) shall: (i) not apply to any Seller Claims until,
and then only to the extent that, the aggregate Losses incurred by all Seller
Indemnified Parties exceeds the Basket and (ii) be limited to, and shall not
exceed, the Cap.
Section 9.4 Procedures for Indemnification of Third Party Claims.
(a) No Party shall be liable for any Claim for indemnification under
this ARTICLE IX unless written notice of a Claim for indemnification is
delivered by the party seeking indemnification (the "Indemnified Party") to the
Party from whom indemnification is sought (the "Indemnifying Party") prior to
the expiration of the applicable survival period, if any, set forth in SECTION
9.1. If any third party notifies the Indemnified Party with respect to any
matter that may give rise to a Claim for indemnification (a "Third Party Claim")
against the Indemnifying Party under this ARTICLE IX, then the Indemnified Party
shall notify the Indemnifying Party promptly thereof in writing and in any event
within 30 days after receiving notice from a third party; provided that no delay
on the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder except to the
extent the Indemnifying Party is prejudiced thereby. All notices given pursuant
to this SECTION 9.4 shall describe with reasonable specificity the Third Party
Claim and the basis of the Indemnified Party's Claim for indemnification. Upon
the Indemnified Party giving notice of the Third Party Claim to the Indemnifying
Party, the Indemnifying Party shall be entitled to participate therein and, to
the extent desired, to assume the defense thereof with counsel of its choice. If
the Indemnifying Party provides the Indemnified Party with notice of its
determination to assume the
72
<PAGE>
defense of such Third Party Claim, the Indemnified Party may nevertheless
participate in (but not control) such defense, but the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense of
the Third Party Claim, other than reasonable costs of investigation, unless the
Indemnifying Party does not actually assume the defense thereof following notice
of such election. Unless and until the Indemnifying Party notifies the
Indemnified Party that it is assuming the defense of such Third Party Claim, the
Indemnified Party shall have the right to undertake the defense of such Third
Party Claim, by counsel or other representatives of its own choosing, on behalf
of and for the account and risk of the Indemnifying Party (subject to the
limitations on the Indemnifying Party's obligations to indemnify as set forth in
this ARTICLE IX and the right of the Indemnifying Party to assume the defense of
or opposition to such Third Party Claim at any time prior to settlement,
compromise or final determination thereof).
(b) Neither the Indemnified Party nor the Indemnifying Party shall
consent to the entry of any judgment or enter into any settlement of any Third
Party Claim that might give rise to liability of the other Party under this
ARTICLE IX without such Party's consent, which consent shall not be unreasonably
withheld, conditioned or delayed.
Section 9.5 Certain Limitations.
(a) OTHER THAN IN RESPECT OF (I) A "THIRD PARTY CLAIM" (AS DEFINED
HEREIN), (II) A CLAIM IN RESPECT OF SECTION 7.9, 7.12, 7.16 AND/OR 7.17 OF THIS
AGREEMENT, OR (III) A CLAIM BROUGHT PURSUANT TO SECTION 9.2(A)(I), SECTION
9.2(A)(V) OR SECTION 9.3(A)(I), AN INDEMNIFYING PARTY SHALL NOT BE LIABLE UNDER
THIS ARTICLE IX IN RESPECT OF ANY CLAIM FOR DIMINUTION OF VALUE OR INCIDENTAL,
EXEMPLARY, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
CONSEQUENTIAL DAMAGES RESULTING FROM BUSINESS INTERRUPTION, LOST TAX OR INCOME
TAX BENEFITS, INCREASED INSURANCE PREMIUMS OR LOST PROFITS.
(b) The obligations of the Indemnifying Party to provide
indemnification under this ARTICLE IX shall be modified or abated as appropriate
to the extent that the underlying Claim is based, in whole or in part, on the
bad faith or willful misconduct of the Indemnified Party.
(c) The amount of any indemnification payable under this ARTICLE IX
shall be reduced by an amount (the "Offset Amount") equal to the proceeds
actually received by the Indemnified Party under any insurance policy or from
any third-party in respect of such Claim less all out-of-pocket costs and
expenses incurred by such Indemnified Party in connection with obtaining such
insurance proceeds or third-party recovery (including reasonable attorneys'
fees). An Indemnified Party shall use commercially reasonable efforts to pursue
any insurance recovery or third-party recovery available to it with respect to
which such Indemnified Party seeks indemnification pursuant to this ARTICLE IX.
The amount of Losses for which indemnification is provided under this ARTICLE IX
shall be reduced to take account of any net Tax benefit realized by the
Indemnified Party arising from the payment of such Losses when and as such Tax
cost or benefit is actually realized through a reduction in cash Taxes otherwise
due. If an Indemnified Party receives a payment for Losses under any insurance
policy or from a third-party, or receives any Tax benefit as described in this
SECTION 9.5(C), at any time subsequent to receiving any indemnification payment
by the Indemnifying Party pursuant to this ARTICLE IX, then such Indemnified
Party shall promptly reimburse the Indemnifying Party for any payment
73
<PAGE>
made by the Indemnifying Party related thereto. For purposes of determining the
Tax Benefit realized hereunder, such Losses shall be taken into account after
all other losses, deductions, credits or attributes otherwise available to
reduce Taxes otherwise due
Section 9.6 Treatment of Indemnity Payments.
All indemnification payments made pursuant to this Agreement shall be
treated by the Parties as adjustments to the Purchase Price.
Section 9.7 Exclusive Remedy.
Except as set forth in SECTION 9.9, from and after the Closing, the
remedies provided in this ARTICLE IX shall be the sole and exclusive remedies of
the Parties (and all Indemnified Parties) for all disputes arising out of or
relating to this Agreement, and shall supersede and replace all other rights and
remedies that any of the Parties may have under any Law.
Section 9.8 Mitigation.
Each Party agrees to use commercially reasonable efforts to mitigate
any Loss that forms the basis of a Claim hereunder. In addition to, and not in
limitation of, the foregoing, if the Buyer has any right to indemnification,
contribution or other reimbursement, or limitation on liability, under the
Purchased Contracts, or any warranties or guarantees, in each case, from any
third parties with respect to any Losses for which GM has an indemnification
obligation under SECTION 9.2(A)(I), SECTION 9.2(A)(II) and/or SECTION
9.2(A)(VI), and the Buyer does not exercise such right within a reasonable time
after bringing a Claim hereunder, the Buyer shall promptly upon request assign
and transfer such right to GM (or its designee) so as to permit GM (or its
designee) to exercise such right in a reasonable manner in connection with such
Claim.
Section 9.9 Equitable Relief.
Each Party acknowledges and agrees that the other Party may be
irreparably damaged if any provision of this Agreement is not performed in
accordance with its terms or otherwise is breached. Accordingly, each Party
agrees that the other Party may be entitled, subject to a determination by a
court of competent jurisdiction, to non-monetary injunctive relief to prevent
any such failure of performance or breach and to enforce specifically this
Agreement and any of the terms and provisions hereof.
Section 9.10 Informal Dispute Resolution.
In the event of a dispute between the Parties arising out of this
Agreement, prior to the institution of any Action, the Parties will use good
faith efforts for a reasonable period of time under the circumstances to resolve
the dispute informally and will escalate the dispute to their executive officers
having overall responsibility for their transmission operations (equivalent to
the present Group Vice President for GM's Global Powertrain Operations and the
President of the Allison Transmission Operations); provided that this SECTION
9.10 shall not preclude either Party from instituting an Action, regardless of
whether it first complies with such procedure, if necessary to avoid the
expiration of any statute of limitations or survival period or if such Party
reasonably believes that the circumstances so require.
ARTICLE X
TERMINATION
Section 10.1 Termination of Agreement.
The Parties may terminate this Agreement as provided below:
74
<PAGE>
(a) GM and the Buyer may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice to
GM at any time prior to the Closing if the Closing has not occurred on or before
October 31, 2007 (the "Termination Date"); provided that, if the condition set
forth in SECTION 8.1(B) has not been satisfied on or prior to the Termination
Date, the Termination Date shall be extended to the earlier of (i) 10 Business
Days after satisfaction of the condition set forth in SECTION 8.1(B) and (ii)
December 31, 2007 (the "Outside Date"); and
(c) GM may terminate this Agreement by giving written notice to the
Buyer at any time prior to the Closing if the Closing has not occurred on or
before the Termination Date; provided that, if the condition set forth in
SECTION 8.1(B) has not been satisfied on or prior to the Termination Date, the
Termination Date shall be extended to the earlier of (i) 10 Business Days after
satisfaction of the condition set forth in SECTION 8.1(B) and (ii) the Outside
Date.
Section 10.2 Effect of Termination.
If any Party terminates this Agreement pursuant to SECTION 10.1, all
obligations and liabilities of the Parties under this Agreement shall terminate
and become void; provided (a) subject to SECTION 10.3, nothing herein shall
relieve any Party from liability for any breach of any representation, warranty,
covenant or agreement in this Agreement prior to the date of termination and (b)
the Confidentiality Agreements, this ARTICLE X and ARTICLE XI shall remain in
full force and effect and survive any termination of this Agreement; provided,
however, that, notwithstanding the foregoing, the obligations of the Buyer
relating to any breach of this Agreement prior to the Closing shall be limited
as provided in SECTION 10.3.
Section 10.3 Termination Fee.
(a) The Buyer agrees that, in the event that (i) this Agreement shall
have been terminated pursuant to SECTION 10.1(B) or SECTION 10.1(C) and (ii)
prior to such termination of this Agreement, (A) the conditions set forth in
SECTION 8.1 shall have been satisfied (or waived by the Buyer in writing), (B)
the representations and warranties of GM set forth in ARTICLE IV, disregarding
qualifications as to materiality and Material Adverse Effect, shall have been
true and correct as of the date of termination (except to the extent expressly
made as of an earlier date, in which case only as of such date), with only such
exceptions as, individually or in the aggregate, have not had, or would not be
reasonably expected to have, a Material Adverse Effect as of the date of
termination, (C) GM and the other Sellers shall have performed and complied
with, in all material respects, their material covenants and agreements
contained in this Agreement that were required to be performed or complied with
prior to the date of termination, (D) the Marketing Period shall have expired,
(E) the conditions set forth in SECTION 8.2(E) and SECTION 8.2(F) shall have
been satisfied and (F) the Buyer shall have failed to consummate the
transactions contemplated hereby, then the Buyer shall pay to GM a termination
fee of $165,000,000 (the "Buyer Termination Fee") in cash by wire transfer of
immediately available funds to the account or accounts designated in writing by
GM no later than two (2) Business Days after the date of such termination of
this Agreement.
(b) Each Party acknowledges that the agreements contained in this
SECTION 10.3 are an integral part of the transactions contemplated hereby.
Notwithstanding anything to the contrary in this Agreement, other than GM's
right to receive reimbursement of costs and expenses pursuant to SECTION 6.8,
and enforcement of GM's rights under the Confidentiality
75
<PAGE>
Agreements, GM's right to terminate this Agreement pursuant to SECTION 10.1 and
to receive payment of the Buyer Termination Fee pursuant to this SECTION 10.3
shall be the exclusive remedy of GM and the other Sellers against the Buyer or
any of its stockholders, partners, members, Affiliates, directors, officers or
agents for Losses suffered as a result of the breach of this Agreement by the
Buyer prior to Closing or the failure of the transactions contemplated hereby to
be consummated by the Buyer, and, upon payment of the Buyer Termination Fee in
accordance with this SECTION 10.3, none of the Buyer or any of its stockholders,
partners, members, Affiliates, directors, officers or agents shall have any
further liability or obligation relating to or arising out of this Agreement or
the transactions contemplated hereby.
(c) Each Party acknowledges and agrees that the agreements contained
in this SECTION 10.3 are an integral part of the transactions contemplated
hereby, that GM's damages resulting from breach of this Agreement resulting in
termination of this Agreement pursuant to SECTION 10.1(C) as set forth in this
SECTION 10.3 are uncertain and incapable of accurate calculation or precise
estimation, and that the Buyer Termination Fee bears a reasonable proportion to
the probable damages and is a reasonable forecast of the actual damages that may
be incurred by GM under the circumstances in which the Buyer Termination Fee is
payable. Notwithstanding anything in this Agreement to the contrary, the Buyer
Termination Fee constitutes, and the Parties intend the Buyer Termination Fee to
constitute, a liquidated damages remedy and not a penalty.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices.
Any notice, request, instruction or other document to be given
hereunder shall be sent in writing and delivered personally, sent by reputable,
overnight courier service (charges prepaid), sent by registered or certified
mail, postage prepaid, or by facsimile, according to the instructions set forth
below. Such notices shall be deemed given: at the time delivered by hand, if
personally delivered; one Business Day after being sent, if sent by reputable,
overnight courier service; at the time received, if sent by registered or
certified mail; and at the time when confirmation of successful transmission is
received by the sending facsimile machine, if sent by facsimile.
If to GM:
General Motors Corporation
Mail Code 482-C25-D81
300 Renaissance Center
Detroit, Michigan 48265-3000
Attn.: General Counsel
Facsimile No.: (248) 267-4584
With copies (which shall not constitute notice) to:
General Motors Corporation
Treasurer's Office
767 Fifth Avenue
New York, New York 10153
Attention: Treasurer
Facsimile No.: (212) 418-3630
76
<PAGE>
and:
Jenner & Block LLP
330 N. Wabash Avenue
Chicago, IL 60611
Attention: Donald E. Batterson
Joseph P. Gromacki
Edward J. Neveril
Facsimile No.: (312) 527-0484
If to the Buyer:
Clutch Operating Company, Inc.
c/o The Carlyle Group
1001 Pennsylvania Avenue NW
Suite 220 South
Washington, DC 20004-2505
Attention: Gregory S. Ledford
Facsimile No.: 202-347-1818
With copies (which shall not constitute notice) to:
Clutch Operating Company, Inc.
c/o Onex Corporation
161 Bay Street
Suite 4900
Toronto, Canada M5J 2S1
Attention: Seth M. Mersky
Facsimile No.: 416-362-6803
and:
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, DC 20004
Attention: Daniel T. Lennon
Paul F. Sheridan
Facsimile No.: (202) 637-2201
or to such other address or to the attention of such other Party that the
recipient Party has specified by prior written notice to the sending Party in
accordance with the preceding.
Section 11.2 Expenses; No Offset.
Except as expressly provided in this Agreement or as set forth on
Schedule 11.2, each of the Parties shall bear its own costs and expenses
(including legal, accounting and investment banking fees and expenses) incurred
in connection with this Agreement and the transactions contemplated hereby,
whether or not such transactions are consummated. Neither Party may make any
offset against amounts due to the other Party or any of the other Party's
Affiliates pursuant to this Agreement, the Ancillary Documents or otherwise.
77
<PAGE>
Section 11.3 Seller Disclosure Schedules.
The representations and warranties of the Sellers set forth in this
Agreement are made and given subject to the disclosures contained in the Seller
Disclosure Schedules. Neither GM nor any of the other Sellers shall be, nor
shall they be deemed to be, in breach of any such representations and warranties
(and no Buyer Claim may be made in respect thereof) in connection with any such
matter so disclosed in the Seller Disclosure Schedules. Inclusion of information
in the Seller Disclosure Schedules shall not be construed as an admission that
such information is material to the business, operations or condition (financial
or otherwise) of the Business or the Business Assets, taken in part or as a
whole, or as an admission of liability or obligation of GM or any of the other
Sellers to any third party. The specific disclosures set forth in the Seller
Disclosure Schedules have been organized to correspond to Section references in
this Agreement to which the disclosure may be most likely to relate; provided,
however, that any disclosure in the Seller Disclosure Schedules shall apply to,
and shall be deemed to be disclosed for, any other Section of this Agreement to
the extent the relevance of such disclosure to such other Section is reasonably
apparent on its face; provided, further, however, that no disclosure in the
Seller Disclosure Schedules (other than disclosures on Schedule 4.7) shall
qualify or apply to, or be deemed to be disclosed for, SECTION 4.7(A) for the
purpose of SECTION 8.2(A).
Section 11.4 Bulk Sales or Transfer Laws.
The Buyer waives compliance by GM and each of the other Sellers with
the provisions of any bulk sales laws that may be applicable to the transactions
contemplated by this Agreement.
Section 11.5 Assignment; Successors and Assigns.
Neither this Agreement nor any of the rights, interests or obligations
provided by this Agreement may be assigned by either Party (whether by operation
of Law or otherwise) without the prior written consent of the other Party;
provided, however, that the Buyer may assign its rights under this Agreement
without such consent to (i) one or more Affiliates of the Buyer or (ii) any
Person providing financing to the Buyer or its Affiliates in connection with the
transactions contemplated hereby, and any refinancing thereof, but in each case
such assignment shall not relieve the Buyer of its obligations or liabilities
under this Agreement, or (iii) a successor in interest (or its equivalent) of
all or substantially all of its capital stock or assets in the event of a
merger, acquisition, consolidation or change of control. Subject to the
preceding sentence and except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and permitted assigns.
Section 11.6 Amendment; Waiver.
This Agreement may be amended only by a written instrument executed
and delivered by GM and the Buyer. At any time prior to the Closing, the Parties
may extend the time for performance of or waive compliance with any of the
covenants or agreements of the other Party to this Agreement, and may waive any
breach of the representations or warranties of such other Party. No agreement
extending or waiving any provision of this Agreement shall be valid or binding
unless it is in writing and is executed and delivered by or on behalf of the
Party against which it is sought to be enforced.
Section 11.7 Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Law, but if any
provision of this Agreement is held to be prohibited by or invalid under Law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
78
<PAGE>
Section 11.8 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all such counterparts taken together
shall constitute one and the same Agreement.
Section 11.9 Descriptive Headings.
The descriptive headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
Section 11.10 No Third-Party Beneficiaries.
This Agreement does not confer any rights or remedies upon any Person
or entity, other than the Parties hereto and their respective successors and
permitted assigns and the Buyer Indemnified Parties and the Seller Indemnified
Parties under ARTICLE IX.
Section 11.11 Exhibits and Schedules.
The Exhibits and Schedules to this Agreement are made a part of this
Agreement as if set forth fully herein.
Section 11.12 Governing Law.
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY LAW OR
RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK TO BE APPLIED, GOVERN ALL MATTERS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND
ENFORCEMENT.
Section 11.13 Forum Selection; Consent to Service of Process; Waiver
of Jury Trial.
Each Party hereby irrevocably (i) submits to the exclusive
jurisdiction of any state court sitting in New York City or any federal court
sitting in the Southern District of New York in any Action arising out of or
relating to this Agreement, (ii) agrees that all claims in respect of such
Action may be heard and determined only in any such court, (iii) hereby waives
any claim of inconvenient forum or other challenge to venue in such court, and
(iv) agrees not to bring any Action arising out of or relating to this Agreement
in any other court. GM agrees to cause the Seller Indemnified Parties, and the
Buyer agrees to cause the Buyer Indemnified Parties, to comply with the
foregoing as though such Indemnified Party was a Party to this Agreement. The
Buyer irrevocably designates, appoints and empowers The CT Corporation System
with offices on the date hereof in New York, as its agent (the "Buyer Service
Agent") with respect to any Action in New York to receive, and on its behalf,
and in respect of its property, service of any and all legal process, summons,
notices and documents that may be served in any such Action and agrees that the
failure of the agent to notify the Buyer of any such service of process shall
not impair or affect the validity of service. The Buyer further irrevocably
consents to the service of process out of any of the courts listed in this
SECTION 11.13 by the mailing of copies by registered or certified mail, postage
prepaid, to the Buyer at its address set forth in SECTION 11.1, such service to
become effective 30 days after such mailing. If for any reason the Buyer Service
Agent shall cease to be available to act as agent, the Buyer agrees to designate
within 10 Business Days a new agent in New York on the same terms and for the
same purposes. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND SHALL CAUSE
ITS INDEMNIFIED PARTIES TO IRREVOCABLY WAIVE, ANY AND ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY
DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
Section 11.14 Entire Agreement.
This Agreement and the Ancillary Documents collectively constitute the
entire agreement among the Parties and supersede any prior and
79
<PAGE>
contemporaneous understandings, agreements or representations by or among the
Parties, written or oral, that may have related in any way to the subject matter
hereof.
Section 11.15 Confidentiality; Public Announcement.
Effective as of the Closing, the Confidentiality Agreements shall
terminate solely with respect to Confidential Material (as defined therein)
contained in or related to the Business Assets; provided that the Buyer
acknowledges and agrees that any and all other Confidential Material (as defined
in the Confidentiality Agreements) shall remain subject to the terms and
conditions of the Confidentiality Agreements from and after the Closing, which
shall otherwise survive the Closing in full force and effect. Notwithstanding
the foregoing, neither Party shall disclose the terms of this Agreement or any
of the transactions contemplated herein, including by issuance of any press
release or public announcement relating to the subject matter of this Agreement,
without the prior written consent of the other Party; provided that either Party
may make any public disclosure it believes in good faith is required by Law or
any listing agreement concerning its publicly-traded securities, in which case
the disclosing Party shall use its commercially reasonable efforts to advise and
consult with the other Party prior to making such disclosure and shall disclose
the minimum information necessary to comply with such requirement, including
seeking "confidential treatment" of items requested to be so treated by the
other Party.
Section 11.16 Interpretation; Construction.
References to "applicable" Law or Laws with respect to a particular
Person, thing or matter shall include only such Law or Laws as to which the
Governmental Entity that enacted or promulgated such Law or Laws has
jurisdiction over such Person, thing or matter as determined under the Laws of
the United States as required to be applied thereunder by a federal court
sitting in the State of New York. Whenever the context requires, the singular
number shall include the plural, and vice versa, the masculine gender shall
include the feminine and neuter genders, the feminine gender shall include the
masculine and neuter genders, and the neuter gender shall include masculine and
feminine genders. The words "include" and "including," and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words "without limitation." The terms "hereof," "hereunder,"
"herein" and words of similar import shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. Each Party hereto has
participated in the drafting of this Agreement, which each Party acknowledges is
the result of extensive negotiations between the Parties, and consequently this
Agreement shall be interpreted without reference to any rule or precept of Law
to the effect that any ambiguity in a document be construed against the drafter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
80
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement on the date first written above.
GENERAL MOTORS CORPORATION
By:
------------------------------------
Name: Walter G. Borst
Title: Treasurer
CLUTCH OPERATING COMPANY, INC.
By:
------------------------------------
Name: Brian A. Bernasek
Title: President
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT