UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
Date of Report (Date of earliest event report): June 17, 1996
_____________________________
COLTEC INDUSTRIES INC
(Exact name of registrant as specified in its chapter)
Pennsylvania 1-7568 13-1846375
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
430 Park Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 940-0400
1 of 3
Item 2. Acquisition or Disposition of Assets.
________________________________________________
On June 17, 1996, the Registrant and certain of its subsidiary
corporations completed the sale of the registrant's Holley Automotive, Coltec
Automotive and Performance Friction Products businesses to Borg-Warner
Automotive, Inc. and certain of its subsidiary corporations pursuant to an
Agreement of Purchase and Sale dated May 31, 1996 for $283 million in cash. The
businesses sold provide components primarily to the domestic automotive original
equipment manufacturers and had combined sales in 1995 of $255 million.
Item 7. Financial Statements and Exhibits.
__________________________________________
(b) Pro forma financial information.
(c) Exhibits.
2. Agreement of Purchase and Sale dated May 31, 1996 by and among
Coltec Industries Inc, Holley Automotive Inc, Holley Automotive
Group, Ltd., Coltec Automotive Inc, and Holley Automotive
Systems GmbH and Borg-Warner Automotive, Inc., Borg-Warner
Automotive Air/Fluid Systems Corporation, and Borg-Warner
Automotive Air/Fluid Systems Corporation of Michigan.
4.1 First Amendment dated as of October 11, 1995 to the Credit
Agreement among Coltec Industries Inc, Various Banks, The Co-
Agents and Bankers Trust Company, as Administrative Agent dated
as of March 24, 1992 and Amended and Restated as of January 11,
1994 (the "Amended Credit Agreement").
4.2 Third Amendment dated as of May 14, 1996 to the Amended Credit
Agreement.
4.3 Fourth Amendment dated as of June 6, 1996 to the Amended Credit
Agreement.
99. Press Release, dated June 18, 1996, announcing completion of
the sale of the registrant's Holley Automotive, Coltec
Automotive and Performance Friction Products businesses to
Borg-Warner Automotive.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLTEC INDUSTRIES INC
By: Name: Robert J. Tubbs
Title: Senior Vice President
Dated: July 1, 1996
3
Pro Forma Financial Information
On June 17, 1996, Coltec completed the sale of its Holley Automotive, Coltec
Automotive and Performance Friction Products businesses (collectively, the
"Automotive Business") to Borg-Warner Automotive, Inc for $283 million. The
sale of the Automotive Business will be accounted for as a discontinued
operation.
The following unaudited pro forma consolidated statements of earnings for the
three months ended March 31, 1996 and the year ended December 31, 1995, and the
unaudited pro forma consolidated balance sheet as of March 31, 1996 have been
prepared to reflect the following: (i) the deletion of the sales, expenses,
assets sold and liabilities assumed of the Automotive Business, (ii) the
proceeds received and the gain recognized on the sale, net of taxes, liabilities
retained, transaction costs and obligations related to the sale, and (iii) the
application of the proceeds to pay current taxes, transaction costs, retire debt
and repurchase shares of Coltec common stock. The use of proceeds to retire
certain debt and repurchase common stock reflect management's current estimates
and plans which, among other factors, are based on consideration of current
market conditions. The actual use of proceeds may differ from the pro forma
disclosures contained herein depending on changes in management's evaluation of
the efficient use of these funds. The unaudited pro forma consolidated
statements of earnings and the unaudited pro forma consolidated balance sheet
were prepared as if the sale of the Automotive Business and the application of
the proceeds had occurred on January 1, 1995 and March 31, 1996, respectively.
The pro forma financial data are provided for informational purposes only in
response to requirements of the Securities and Exchange Commission and do not
purport to be indicative of Coltec's financial position or results which would
actually have been obtained had such transactions been completed as of the date
or for the periods presented, or which may be obtained in the future.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended March 31, 1996
__________________________________
Actual Adjustments Pro Forma
________ ___________ _________
(In millions,
except per share data)
Net sales $359.4 $(66.5)(a) $292.9
______ ______ ______
Costs and expenses -
Cost of sales 271.2 (53.9)(a) 217.3
Selling and administrative 55.3 (2.0)(a) 52.8
(.7)(b)
.2 (c)
______ ______ ______
Total costs and expenses 326.5 (56.4) 270.1
______ ______ ______
Operating income 32.9 (10.1) 22.8
Interest and debt expense, net 21.1 (3.4)(d) 17.7
______ ______ ______
Earnings from continuing operations before
income taxes and extraordinary item 11.8 (6.7) 5.1
Provision for income taxes 4.0 (2.2)(c) 1.8
______ ______ ______
Earnings from continuing operations before
extraordinary item $ 7.8 $ (4.5) $ 3.3
====== ====== ======
Earnings per common share - continuing
operations $ .11 $ .05
====== ======
Weighted average number of common and
common equivalent shares 70.2 (7.0)(e) 63.2
====== ====== ======
See Notes to Unaudited Pro Forma Consolidated Statement of Earnings.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
Year Ended December 31, 1995
__________________________________
Actual Adjustments Pro Forma
________ ___________ _________
(In millions,
except per share data)
Net sales $1,401.9 $(255.1)(a) $1,146.8
________ _______ ________
Costs and expenses -
Cost of sales 979.2 (197.8)(a) 781.4
Selling and administrative 198.0 (8.4)(a) 187.9
(3.0)(b)
1.3 (c)
Special charge 27.0 27.0
________ _______ ________
Total costs and expenses 1,204.2 (207.9) 996.3
________ _______ ________
Operating income 197.7 (47.2) 150.5
Interest and debt expense, net 89.9 (13.9)(d) 76.0
________ _______ ________
Earnings from continuing operations before
income taxes and extraordinary item 107.8 (33.3) 74.5
Provision for income taxes 36.7 (11.3)(c) 25.4
________ _______ ________
Earnings from continuing operations before
extraordinary item $ 71.1 $ (22.0) $ 49.1
________ _______ ________
Earnings per common share - continuing
operations $ 1.02 $ .78
________ _______ ________
Weighted average number of common and
common equivalent shares 69.8 (7.0)(e) 62.8
________ _______ ________
See Notes to Unaudited Pro Forma Consolidated Statement of Earnings.
Notes to Unaudited Pro Forma Consolidated Statement of Earnings
(a) Elimination of the revenues and expenses of the discontinued Automotive
Business.
(b) Current estimate of cost savings resulting from relocation of the Corporate
office from New York, NY to Charlotte, NC.
(c) Income taxes on the pro forma adjustments are calculated using the U.S.
federal statutory rate of 35% and a state and local tax rate of 7-3/4%. In
accordance with Coltec's standard accounting practice, state and local
income taxes are reported in selling and administrative expenses.
(d) Assumes $161.4 million of the $283.0 million of proceeds from the sale were
used to retire the following debt: (i) $90.0 million of the Credit
Agreement, (ii) $50.0 million of the 9-3/4% Senior Notes due 1999 and (iii)
$21.4 million of the 11-1/4% Debentures. The resulting pro forma
adjustments to interest expense consist of the following:
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
------------------ -----------------
(In millions)
Elimination of interest related to:
Credit Agreement $1.5 $ 6.5
9-3/4% Senior Notes due 1999 1.3 5.0
11-1/4% Debentures .6 2.4
---- -----
$3.4 $13.9
---- -----
(e) The pro forma weighted average number of common and common equivalent
shares assumes $93.0 million of the $283 million of proceeds from the sale
were used to repurchase 7.0 million shares of common stock at a market
price of $13.25 per share (the closing price on the New York Stock Exchange
on June 12, 1996).
(f) The unaudited pro forma consolidated statements of earnings do not include
an extraordinary charge of $2.9 million, net of a $2.0 million tax benefit,
for premiums paid and write-off of unamortized financing costs incurred in
connection with the retirement of debt.
COLTEC INDUSTRIES INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
Actual Adjustments Pro Forma
________ ___________ _________
(In millions,
except per share data)
A S S E T S
Current assets -
Cash and cash equivalents $ 6.6 $ (.1)(a) $ 6.5
283.0 (a)
(283.0)(b)
Accounts and notes receivable, net 212.4 (24.1)(a) 188.3
Inventories 231.4 (15.3)(a) 216.1
Other current assets 25.3 25.3
________________________________
Total current assets 475.7 (39.5) 436.2
Property, plant and equipment, net 233.0 (26.1)(a) 206.9
Costs in excess of net assets acquired,
net of amortization 139.7 (3.8)(a) 135.9
Other assets 81.4 (.9)(b) 80.5
________________________________
$929.8 $(70.3) $859.5
================================
COLTEC INDUSTRIES INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
Actual Adjustments Pro Forma
__________ ___________ _________
(In millions,
except per share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities -
Notes payable and current maturities
of long-term debt $ 2.2 $ $ 2.2
Accounts payable 75.8 (12.7)(a) 63.1
Accrued expenses 199.7 2.4 (a) 195.5
(6.6)(b)
Current portion of liabilities of
discontinued operations 3.0 20.0 (a) 3.0
(20.0)(b)
__________________________________
Total current liabilities 280.7 (16.9) 263.8
Long-term debt 924.8 (161.4)(b) 763.4
Deferred income taxes 16.7 22.5 (a) 39.2
Other liabilities 125.8 125.8
Liabilities of discontinued operations 26.3 147.0 (a) 173.3
Shareholders' equity -
Preferred stock, $.01 par value,
2,500,000 shares authorized,
shares outstanding - none - -
Common stock, $.01 par value,
100,000,000 shares authorized,
70,269,309 shares issued at March 31,
1996 (excluding 25,000,000 shares
held by a wholly owned subsidiary) .7 .7
Capital in excess of par value 641.4 641.4
Retained earnings (deficit) (1,082.1) 34.4 (a) (1,050.6)
(2.9)(b)
Unearned compensation - restricted
stock awards (2.1) (2.1)
Foreign currency translation adjustments (.7) (.7)
__________________________________
(442.8) 31.5 (411.3)
Less: Cost of 104,677 actual shares and
7,123,677 pro forma shares of
common stock in treasury (1.7) (93.0)(b) (94.7)
__________________________________
(444.5) (61.5) (506.0)
__________________________________
$ 929.8 $(70.3) $ 859.5
==================================
See Notes to Unaudited Pro Forma Consolidated Balance Sheet.
Notes to Unaudited Pro Forma Consolidated Balance Sheet
(a) Reflects (i) $283.0 million of proceeds received on the sale of the
Automotive Business, (ii) elimination of assets sold to and liabilities
assumed by Borg-Warner Automotive, Inc and (iii) $34.4 million after-tax
gain recognized on the sale of the Automotive Business, net of liabilities
retained, transaction costs and obligations related to the sale of the
Automotive Business.
(b) Reflects the application of the $283.0 million of proceeds to (i) repay
$90.0 million of the Credit Agreement, (ii) repurchase $50.0 million of 9-
3/4% Senior Notes due 1999, (iii) redeem $21.4 million of 11-1/4%
Debentures, (iv) repurchase 7.0 million shares of Coltec common stock, at a
market price of $13.25 per common share (the closing price on the New York
Stock Exchange on June 12, 1996), for a total cost of $93.0 million, and
(v) pay $28.6 million of current taxes, transaction costs and obligations
related to the sale.
EXHIBIT 2
AGREEMENT OF PURCHASE AND SALE
by and among
COLTEC INDUSTRIES INC,
HOLLEY AUTOMOTIVE INC,
HOLLEY AUTOMOTIVE GROUP, LTD.,
COLTEC AUTOMOTIVE INC, and
HOLLEY AUTOMOTIVE SYSTEMS GmbH
and
BORG-WARNER AUTOMOTIVE, INC.,
BORG-WARNER AUTOMOTIVE AIR/FLUID SYSTEMS CORPORATION, and
BORG-WARNER AUTOMOTIVE AIR/FLUID
SYSTEMS CORPORATION OF MICHIGAN
Dated: May 31, 1996
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is dated as
of May ___, 1996, and is by and among Coltec Industries Inc, a
Pennsylvania corporation, Holley Automotive Group, Ltd., a U.K.
corporation, Holley Automotive Inc, a Delaware corporation, Coltec
Automotive Inc, a Delaware corporation, and Holley Automotive
Systems GmbH, a corporation organized under German law
(collectively, together with the Performance Friction Products
Division of Coltec Industries Inc s indirect, wholly-owned
subsidiary Stemco Inc, hereinafter called "Coltec"), and Borg-
Warner Automotive Air/Fluid Systems Corporation, a Delaware
corporation ( BW ), Borg-Warner Automotive Air/Fluid Systems
Corporation of Michigan, a Delaware corporation ( BW-MI ), and
Borg-Warner Automotive, Inc. ( Borg-Warner ), a Delaware
corporation. (BW, BW-MI and Borg-Warner are sometimes referred to
together as Purchaser .)
Recital
WHEREAS, Purchaser desires to purchase the Business (as
hereinafter defined) from Coltec and Coltec desires to sell the
Business to Purchaser, and to effect such transaction Purchaser
desires to purchase and assume from Coltec and Coltec desires to
sell and assign or cause to sell and assign to Purchaser, the
Assets and the Assumed Liabilities (as hereinafter defined) all on
the terms and conditions set forth in this Agreement.
Terms and Conditions
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, and intending to be legally bound
hereby, Purchaser and Coltec hereby agree as follows:
ARTICLE I
General Provisions
1.1 Definitions. Appendix A to this Agreement sets forth the
definitions of certain terms used in this Agreement. Those terms
shall have the meanings set forth on Appendix A where used herein
and identified with initial capital letters.
1.2 Other Definitions and Meanings, Interpretations. For
purposes of this Agreement, the term "parties" means (except where
the context otherwise requires) Coltec and Purchaser. The term
"person" includes any natural person, firm, association,
partnership, corporation, limited liability company, joint venture,
trust, unincorporated organization, governmental or regulatory
agency or other entity other than the parties. The term
"including" means "including but not limited to." The table of
contents and the headings of the Articles and Sections of this
Agreement have been included herein for convenience of reference
only and shall not be deemed to affect the meaning of the operative
provisions of this Agreement. "Agreement" includes this Agreement
together with all Schedules and Appendices attached hereto.
ARTICLE II
Purchase and Sale
2.1 Transaction. Subject to the terms and conditions of this
Agreement, at the Closing (a) Purchaser will purchase from Coltec
and Coltec will sell, transfer and assign to Purchaser, all of the
Assets, free and clear of all Encumbrances except for Approved
Encumbrances and Permitted Encumbrances; (b) Purchaser will pay to
Coltec the Purchase Price as herein provided; and (c) Purchaser
will assume and be directly and solely responsible for the Assumed
Liabilities. Notwithstanding such transaction, Coltec will retain
the Excluded Assets and retain and be directly and solely
responsible for the Excluded Liabilities. BW-MI will purchase all
of the Assets which are located in the State of Michigan and BW
will purchase all other Assets. Borg-Warner will guarantee all of
BW s and BW-MI s obligations under this Agreement.
2.2 Assets. For purposes hereof the term "Assets" means all
assets, properties and rights of every type and description owned
or leased by Coltec which relate to the Operating Units' conduct of
the Business as the same exists on the Closing Date, and which are
located at the Facilities or on the Real Property, but excluding
the Excluded Assets. Without limiting the generality of the
foregoing, the Assets will include all of Coltec's right, title and
interest in and to the following assets as of the Closing:
(a) all inventories of raw materials, finished goods,
work in process, parts, accessories, supplies and
packaging of the Business ("Inventories");
(b) the Real Property-Owned, all as more fully
described on Schedule 2.2(b)(1), and Real Property-
Leased, all as more fully described on Schedule
2.2(b)(2), used in the Business as office,
manufacturing, engineering and development, and
warehouse facilities, together with and including
all structures, improvements, buildings, building
equipment, fixtures, easements and other
appurtenances, oil and mineral rights owned by
Coltec and oil wells, if any, leasehold interests
as lessor, sublessor, lessee or sublessee, rentals,
royalties and any other rights of Coltec pertaining
to such Real Property. In each case, easements
benefiting the Real Property are listed on Schedule
2.2(b)(3);
(c) all personal property of the Business (whether as
owner, lessor, lessee or otherwise), including all
trade fixtures, machinery and equipment (including
a plate and framed filter press for the Water
Valley location, which will be purchased by Coltec
and installed at the Water Valley location), tools,
dies, furniture and office equipment, and vehicles
for employees, owned or leased by Coltec for use in
the Business (all items of such personal property
which are material to the research and development
and manufacturing aspects of the Business,
including computer systems, are listed or described
on Schedules 2.2(c)(1) (owned personal property)
and 2.2(c)(2) (leased property);
(d) all supplier lists and all orders and Contracts and
commitments for the purchase of goods and/or
services by the Business, including all such items
relating to the purchase of capital, products and
supplies (all such Contracts, other than blanket
purchase orders which impose no obligation to
purchase, in an amount in excess of $100,000 or
which require more than one (1) year to perform are
listed or described on Schedule 2.2(d));
(e) all orders, bids and proposals for the sale of
Products by the Business, other than blanket orders
which impose no obligation to sell, in an amount in
excess of $100,000, and all other Material
Contracts, are as listed or described on Schedule
2.2(e);
(f) all other orders, bids, proposals and Contracts
relating to the Business, including all leases for
machinery and equipment, vehicle leases for the
employee fleet vehicles and all other leases, and
all causes of action, rights of action and warranty
and product liability claims against other persons
(including General Motors Corporation's ("General
Motors") air pump business claim referred to in
Section 2.8 below) relating to the Business except
to the extent related to the Excluded Assets or the
Excluded Liabilities;
(g) all trade and other accounts receivable of the
Business;
(h) all Intellectual Property and all applications
therefor;
(i) all Permits of the Business and all applications
therefor, to the extent the transfer of such
Permits is permitted under applicable Law;
(j) all Books and Records used or held for use in the
conduct of the Business or otherwise relating to
the Assets, other than the Excluded Books and
Records, it being understood that Coltec Industries
Inc and the Operating Units may retain copies of
the Books and Records;
(k) all deposits and prepayments and similar items of
or related to the assets described in Sections
2.2(a), (b), (c), (d) and (f) which are reflected
on the Final Net Purchased Working Capital
Statement, including all prepaid expenses, deferred
charges, advance payments, deposits on molds and
tooling and other prepaid items;
(l) all customer lists used in the Business; and
(m) goodwill of the Business.
2.3 Excluded Assets. For purposes hereof, the term "Excluded
Assets" means the following rights, properties and assets of Coltec
as the same shall exist as of the Closing:
(a) all intercompany receivables between any of the
Operating Units, on the one hand, and Coltec
Industries Inc or its Affiliates, on the other
hand;
(b) all the (i) tradenames and trademarks "Coltec
Industries", "Coltec", "Holley", "Holley
Automotive", "Holley Performance Products",
"Garlock", "Gylon" "Hy-Carb" and "Stemco" and the
corporate names and logos (design) associated
therewith or incorporating any of such names or
logos and any other name or mark that has such a
near resemblance thereto as may be likely to cause
confusion or mistake to the public, or to otherwise
deceive the public, (ii) all the patents and
applications therefor and the like owned or
controlled by Coltec Industries Inc or its
Affiliates other than those used solely in
connection with or directly relating to the
Business including, but not limited to, such
patents covering the "GYLON" and "HY-CARB"
Products, and (iii) know-how, formulae, drawings,
software, specifications, technical or business
information, trade secrets, and the like owned or
controlled by Coltec Industries Inc or its
Affiliates other than in connection with the
Business including, but not limited to, such
property relating to GYLON and HY-CARB Products
heretofore manufactured by Coltec Industries Inc or
its Affiliates other than at the Performance
Friction Products facility in Longview, Texas (the
"Excluded Intellectual Property");
(c) all cash and cash equivalent items, other than as
described on Schedule 2.7(a) and provided in
Section 2.2(k), held by Coltec as of the Closing;
(d) any assets or rights under Coltec pension plans;
(e) all refunds or credits, if any, of Taxes for all
periods on or prior to the Closing Date;
(f) all life insurance policies of officers, directors
and other employees of Coltec and all other
insurance policies relating to Coltec, including
those relating to the operation of the Business;
(g) the minute books, stock transfer books and
corporate seal of Coltec Industries Inc and the
Incorporated Operating Units, all Books and Records
of Coltec relating to Taxes or employee benefit
matters (including any federal, state and local
income and franchise Tax returns) and any other
Books and Records relating primarily to the
Excluded Assets or the Excluded Liabilities (the
"Excluded Books and Records");
(h) any assets, except the Real Property, which are
owned by Coltec Industries Inc and/or its
Affiliates and used by the Operating Units but
which are not used exclusively in the operation of
the Business (all material assets which are
excluded under this clause (h) are generally
described or identified on Schedule 2.3 to this
Agreement); and
(i) all of Coltec's rights under this Agreement, the
Related Agreements, the Confidentiality Agreement
and any other agreements, instruments or documents
executed by or delivered to Coltec in connection
with this Agreement and the transactions
contemplated hereby and thereby.
2.4 Assumed Liabilities. For purposes hereof, the term
"Assumed Liabilities" means only the following liabilities but
excluding the Excluded Liabilities:
(a) all accounts payable of the Business which arose in
the ordinary course of the Business and which are
reflected in the Final Net Purchased Working
Capital Statement prepared pursuant to Section
2.7(b) below;
(b) all liabilities and obligations of Coltec which
arise in respect of periods subsequent to the
Closing under (i) the Real Property leases listed
or described on Schedule 2.2(b)(2), (ii) the
personal property leases listed or described on
Schedule 2.2(c)(2), (iii) the orders, bids,
proposals and Material Contracts listed or
described on Schedule 2.2(e), and (iv) all other
purchase orders, Permits which have been assigned
to Purchaser pursuant to this Agreement and
Contracts included in the Assets, except, (1) with
respect to clause (iv) only, such liabilities or
obligations will be Assumed Liabilities only to the
extent that they are consistent with the
representation and warranty set forth in the last
sentence of Section 3.1(m) below and are consistent
with the operations of the Business in the ordinary
course, as reflected on the March 31, 1996
Financial Statements, and (2) with respect to
clauses (i) through (iv), to the extent such
liabilities relate to the period preceding the
Closing Date (e.g., (1) liabilities or obligations
with respect to a default by Coltec on or before
the Closing Date under a Contract will not be an
Assumed Liability and (2) liabilities or
obligations with respect to delivery of products or
services to Coltec prior to Closing but not paid
for by Coltec prior to Closing will not be an
Assumed Liability, unless they are accounts payable
which are assumed under clause (a) above); and
(c) all liabilities and obligations arising out of
Purchaser's obligations under Article VIII hereof
only to the extent specifically provided therein.
The liabilities and obligations assumed by Purchaser under this
Agreement include only those Assumed Liabilities delineated above.
Purchaser shall have no liability for and shall not be responsible
for any Excluded Liabilities.
2.5 Excluded Liabilities. For the purposes hereof, the term
"Excluded Liabilities" means the following: (a) intercompany
payables owed by any Operating Unit to Coltec Industries Inc; (b)
the lease at 1748 Northwood Drive, Troy, Michigan (the former
administrative headquarters of Coltec Automotive Inc), the premises
known as 2968 Waterview Drive, Rochester Hills, Michigan and all
liabilities with respect to Real Property and/or operations no
longer used in the Business, including those described on Schedule
2.5(b); (c) all other liabilities and obligations of Coltec or its
Affiliates or with respect to the Assets or the Business (including
the matters referenced in the Schedules hereto and amounts payable
to General Motors in respect of the air pump business referred to
in Section 2.8(d) below), other than the Assumed Liabilities; (d)
any liability arising from Coltec's participation in the Midwest
Pension Plan; and (e) all obligations retained or indemnifiable by
Coltec under Section 9.2(a)(4) below.
2.6 Purchase Price. For purposes hereof, the term "Purchase
Price" means Two Hundred Eighty Three Million U.S. Dollars
($283,000,000), plus or minus the amount of the adjustment
determined pursuant to Section 2.7 of this Agreement, if any (the
"Adjustment"), the other adjustments described in Section 2.8 and,
if applicable, any adjustment pursuant to Section 10.3(a)(iii).
2.7 Adjustment to Purchase Price. The Adjustment will be
determined as follows:
(a) The Purchase Price shall be increased or decreased
dollar-for-dollar following the Closing Date to the
extent that the Net Purchased Working Capital of
the Business as of the Closing Date (the "Final Net
Purchased Working Capital") does not equal the
amount of the Net Purchased Working Capital which
is calculated in accordance with GAAP, except as
disclosed on Schedule 2.7(b), and is shown on
Schedule 2.7(a) (the "Reference Net Purchased
Working Capital"). If the Final Net Purchased
Working Capital exceeds the Reference Net Purchased
Working Capital, Purchaser shall pay Coltec
Industries Inc the difference and if the Final Net
Purchased Working Capital is less than the
Reference Net Purchased Working Capital, Coltec
Industries Inc shall pay Purchaser the difference,
in each case in immediately available funds at the
times provided below. For purposes of calculating
Final Net Purchased Working Capital, (i) the total
amount by which Product Inventory exceeds $720,000
will not be considered a current Asset and will not
be counted towards Final Net Purchased Working
Capital (provided that if the Closing occurs prior
to the last day of a month, any portion of such
excess Product Inventory which is sold in the
ordinary course of business by Purchaser in the
calendar month in which the Closing occurs will be
considered a current Asset and will be counted
towards Final Net Purchased Working Capital if the
customer pays the full purchase price for such
Product Inventory in the ordinary course of
Purchaser s business), and (ii) amounts paid or
payable by Coltec to General Motors in respect of
Coltec's purchase of the air pump business referred
to in Section 2.8(d) below will not be counted
unless Purchaser has paid or specifically agreed in
writing to pay any such amount, in which case the
amount paid or to be paid by Purchaser will be
considered a current Assumed Liability.
(b) The Reference Net Purchased Working Capital has
been calculated from Coltec's March 31, 1996
Financial Statements. The Final Net Purchased
Working Capital will be calculated on the basis of
the Closing Date Balance Sheet, after applying the
GAAP exceptions which are identified on Schedule
2.7(b). Coltec Industries Inc and Purchaser shall
prepare a statement identifying their calculation
of the Final Net Purchased Working Capital (the
"Final Net Purchased Working Capital Statement").
In connection with the preparation of the Final Net
Purchased Working Capital Statement, Purchaser
shall, at no cost to Coltec, give representatives
of Coltec Industries Inc access to the appropriate
books and records of the Business and cause
appropriate personnel of Purchaser to provide
reasonable assistance.
(c) The Final Net Purchased Working Capital Statement
and Final Net Purchased Working Capital
determination shall be approved by Coltec
Industries Inc and Purchaser as soon as possible,
but not later than sixty (60) days, after the
completion of the Closing Date Balance Sheet. The
appropriate party will pay to the other the amount
of the Adjustment, if any, required by this Section
2.7 within seven days after completion of the Final
Net Purchased Working Capital Statement. If Coltec
Industries Inc and Purchaser cannot agree on the
Final Net Purchased Working Capital Statement
within such sixty (60) day period, (i) if the total
amount of all disputed items is less than 33% of
the total amount of all non-disputed items, the
amount of the Adjustment which is not in dispute
shall be paid by the appropriate party within such
seven-day period; (ii) if the total amount of all
disputed items equals or exceeds 33% of the total
amount of all non-disputed items, no payment will
be made by either party until the Adjustment is
finalized under clause (d) below; and (iii) the
parties will submit their dispute to arbitration
pursuant to clause (d) below.
(d) If the parties cannot agree on the Adjustment
pursuant to clause (c) above within the time period
provided therein, the parties shall use their best
efforts to attempt to resolve the disputed items
and make the required payments within 10 days after
the end of such sixty (60) day period. Any items
remaining in dispute at the end of such period will
be referred by the parties to a big six accounting
firm which is selected by the parties (the "Firm").
If the parties cannot agree on the selection of a
Firm, their respective accounting firms will
together select a Firm which has no material
relationship with Coltec or Purchaser or their
respective Affiliates. The Firm shall hear
arguments from both parties and will then make a
final, binding, and non-appealable determination on
the disputed items so submitted within 30 days of
its receipt of the parties' statements, adjust the
Final Net Purchased Working Capital Statement to
reflect that determination and calculate the Final
Net Purchased Working Capital and the final
Adjustment. The parties shall promptly respond to
all requests of the Firm with a view to minimizing
any delay in the decision date. The amount of the
final Adjustment as so determined, less undisputed
amounts previously paid, shall be paid by the
appropriate party within ten days of such
determination.
2.8 Other Closing Adjustments. In addition to the
Adjustment, the parties shall execute and deliver to each other a
closing statement setting forth the closing adjustments to be made
to the Purchase Price as follows:
(a) The current year's ad valorem real estate and personal
property Taxes shall be prorated per diem as of the
Closing Date on a calendar year basis in accordance with
the local custom or in its absence generally accepted
accounting principles, consistently applied. If the Tax
bills for the current year have not been issued as of the
Closing Date, the current year's Taxes will be estimated
on the basis of the prior year's Tax bills and an
appropriate readjustment will be made as soon as
practicable after the Closing when the current year's Tax
bills become available.
(b) Vacation and Holiday pay obligations as set forth in
Schedule 8.8 hereto.
(c) Purchaser will pay Coltec Industries Inc $1,600,000 as a
reimbursement to Coltec Industries Inc for sums paid and
payable by Coltec to General Motors and resulting from
Coltec's purchase of the air pump business of General
Motors; Coltec will assign to Purchaser any amounts
payable after the Closing Date (irrespective of whether
such payment is attributable to periods preceding or
following the Closing Date), and any claims of Coltec
against General Motors, relating to the air pump
business acquired by Coltec from General Motors, in
accordance with Section 2.2(f) above.
2.9 Payment of Purchase Price. At the Closing, Purchaser
will pay the Purchase Price pursuant to Section 2.10. The Purchase
Price shall be allocated among and (subject to Section 2.10) paid
by BW, BW-MI and Borg-Warner in such manner as they desire.
2.10 Method of Payment. All payments hereunder shall be made
by delivery to the recipient by depositing, by bank wire transfer,
the required amount (in immediately available funds) in an account
of a payee or payees designated by Coltec Industries Inc (or, in
the case of an Adjustment payable to Purchaser, by Purchaser),
which account shall be designated by the payee for such purpose at
least five (5) business days prior to the date of the required
payment.
2.11 Allocation of Purchase Price. The Purchase Price
shall be allocated as set forth in Schedule 2.11 hereto. Each
party hereto agrees (i) that any such allocation shall be
consistent with the requirements of Section 1060 of the Code and
the regulations thereunder and (ii) to complete jointly and to file
separately Form 8594 with its federal income tax return consistent
with such allocation for the tax year in which the Closing Date
occurs.
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Coltec. Coltec
Industries Inc and each Incorporated Operating Unit hereby jointly
and severally represents and warrants to Purchaser, as of the date
hereof and as of the Closing Date, the following:
(a) Organization and Existence. Coltec Industries Inc and
each of the Incorporated Operating Units is a corporation
duly organized, validly existing and in good standing
under the laws of the state or jurisdiction of its
formation and each of Coltec Industries Inc and the
Incorporated Operating Units have all requisite corporate
power and authority to carry on the Business as it is
currently being conducted and to own, lease and operate
the Assets. Coltec Industries Inc and each of the
Incorporated Operating Units is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned
or used by it in the conduct of the Business, or the
nature of the activities conducted by it in respect of
the Business, requires such qualification, except where
the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect.
(b) Power and Authority. Coltec Industries Inc and each of
the Incorporated Operating Units has full corporate power
and authority to enter into, execute, deliver and perform
this Agreement and all Related Agreements to which it is
a party.
(c) Authorization. The execution, delivery and performance
of this Agreement and the Related Agreements by Coltec
Industries Inc and each of the Incorporated Operating
Units, as applicable, each have been duly authorized by
all requisite corporate action on the part of Coltec
Industries Inc and each such Incorporated Operating Unit.
(d) Binding Effect. This Agreement and the Related
Agreements, upon execution and delivery by Coltec
Industries Inc and each of the Incorporated Operating
Units, will each be duly executed and delivered by Coltec
and (assuming due execution and delivery hereof and
thereof by Purchaser) will be valid and binding
obligations of Coltec Industries Inc or such Incorporated
Operating Unit, enforceable against it in accordance with
their respective terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
(e) No Default. Except as otherwise set forth in this
Agreement or the Schedules hereto, Coltec Industries Inc
and each of the Incorporated Operating Units has the
absolute unrestricted right and capacity to execute and
deliver this Agreement and the Related Agreements to
which it is a party and to perform its obligations
hereunder and thereunder. Neither the execution and
delivery of this Agreement or the Related Agreements, the
consummation of the transactions contemplated hereby or
thereby, nor Coltec's full performance of its obligations
hereunder or thereunder will directly or indirectly (with
or without notice or lapse of time or both):
(i) conflict with, contravene, violate or breach, or
otherwise constitute or give rise to a Default
under, the terms or provisions of the articles of
incorporation or bylaws of Coltec Industries Inc or
any of the Incorporated Operating Units, each as
currently in effect, or of any Contract, commitment
or other obligation to which Coltec Industries Inc
or any of the Operating Units is a party or by
which the Assets or Business are bound which could
reasonably be expected to have a Material Adverse
Effect;
(ii) except as it relates to matters which are the
subject of trade law or trade regulation regarding
mergers and acquisitions generally, contravene,
conflict with or result in a violation of any of
the terms of, or to the knowledge of Coltec, give
any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify any
Governmental Authorization relating to the Business
or the Assets that could reasonably be expected to
have a Material Adverse Effect;
(iii) except as it relates to matters which are the
subject of trade law or trade regulation
regarding mergers and acquisitions generally,
contravene, conflict with or result in a
violation of, or give any Governmental Body or
other person the right to challenge any
transaction contemplated by this Agreement or
to exercise any remedy or obtain any relief
under, any Law or order of any court, tribunal
or other Governmental Body ("Order") to which
Coltec is a party or to which the Business or
any Asset is subject; or
(iv) result in the imposition or creation of any
Encumbrance upon or with respect to any Asset.
(f) Finders. Coltec has not engaged and is not directly or
indirectly obligated to any person acting as a broker or
finder or in any similar capacity in connection with the
transactions contemplated hereby, except Morgan Stanley
whose fees shall be paid by Coltec.
(g) No Consents. Except for an anticipated filing of a
premerger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and except for the German Approval, and except as
set forth on Schedule 3.1(g), no notice, consent,
approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body or
person under or pursuant to any Material Contract is
required to be obtained in connection with (x) the
execution and delivery of this Agreement and the Related
Agreements by Coltec or (y) the consummation by Coltec of
the transactions contemplated hereby and thereby.
(h) Financial Statements.
(i) The financial statements for the years ended
December 31, 1993, 1994 and 1995 and the quarter
ended March 31, 1996 (collectively, the "Financial
Statements") attached as Appendix C fairly and
accurately present in accordance with GAAP, except
as disclosed on Schedule 2.7(b), the financial
position, results of operations and cash flows of
the Operating Units, as of December 31, 1993, 1994
and 1995, and March 31, 1996, respectively, and for
the periods then ended. The Closing Date Balance
Sheet will fairly present the financial condition
of the Business as of the Closing Date in
accordance with GAAP.
(ii) The exceptions listed on Schedule 2.7(b) are the
same exceptions to GAAP as have been employed by
the Business during the periods covered by the
Financial Statements in calculating Net Purchased
Working Capital and which were used in preparing
the Reference Net Purchased Working Capital. The
Reference Net Purchased Working Capital calculation
identified on Schedule 2.7(a) fairly and accurately
presents, and the Final Net Purchased Working
Capital Statement will fairly and accurately
present, the Net Purchased Working Capital of the
Operating Units as of the March 31, 1996 (with
respect to Net Purchased Reference Working Capital)
and the Closing Date (with respect to Net Purchased
Working Capital), in accordance with GAAP, except
as disclosed on Schedule 2.7(b).
(iii) To the Knowledge of Coltec, the Operating
Units do not have any liability, whether real
or contingent, liquidated or unliquidated,
asserted or unasserted that, individually or
when aggregated with other liabilities, could
reasonably be expected to have a Material
Adverse Effect that: (a) is required under
GAAP to be accrued on, or disclosed in the
notes to, the Financial Statements and is not
so accrued or disclosed, (b) is required by
GAAP to be accrued on, or disclosed in the
notes to, the financial statements delivered
under Section 7.9 below and is not so accrued
or disclosed or (c) has not been disclosed in
the Schedules attached to this Agreement.
(i) Inventories and Accounts Receivable.
(i) Except as otherwise disclosed in Schedule 3.1(i),
Coltec owns all Inventories of the Business and all
such Inventories are valued on the books of Coltec
in accordance with GAAP, except as disclosed on
Schedule 2.7(b). All such Inventories consist of a
quality and quantity usable and salable in the
ordinary course of business of the Business except
for obsolete items and items of below-standard
quality, all of which have been or will be written
off or written down to net realizable value in the
March 31, 1996 Financial Statements or on the Final
Net Purchased Working Capital Statement. All
Inventories not written off have been priced at the
lower of cost or market on a first in first out
basis in accordance with GAAP, except as disclosed
on Schedule 2.7(b).
(ii) All accounts receivable relating to the Business
reflected on the Final Net Purchased Working
Capital Statement (a) represent valid obligations
arising from sales actually made or services
actually performed, (b) have arisen in the ordinary
course of business of the Operating Units, and (c)
will be collected in full, without any setoff,
within 90 days after the day on which such accounts
receivable first become due and payable. There is
no contest, or right of setoff other than returns
in the ordinary course of business of the Business,
under any Contract with any maker of any such
accounts receivable relating to the validity or
amount of such accounts receivable. Coltec
guarantees payment to Purchaser of any accounts
receivable on the Closing Date which are not
collected by Purchaser in the ordinary course of
business (without resorting to litigation or
extraordinary expense or effort on Purchaser's
part). Upon payment of such amount by Coltec
Industries Inc to Purchaser, Purchaser shall
transfer to Coltec Industries Inc all accounts
receivable so paid for by Coltec Industries Inc,
free and clear of all liens, claims or
Encumbrances. Such payment by Coltec Industries
Inc will not be applied to reduce the deductible
under Article IX below.
(j) Title to Owned Property.
(i) Except as specifically set forth in Schedule
3.1(j)(i), Coltec has, and at the Closing will
have, good and marketable title to the Assets owned
by Coltec other than the Real Property, free and
clear of all Encumbrances except (a) Encumbrances
for current taxes not yet due and payable and (b)
minor imperfections of title or minor Encumbrances
which do not materially detract from the value of
the property subject thereto or impair the
continued use thereof by the Operating Units.
(ii) Except as set forth in Schedule 3.1(j)(ii)
("Permitted Encumbrances"), Coltec and/or the
Operating Units owns outright and has good, valid,
marketable and indefeasible fee simple title to the
Real Property-Owned and at Closing such title will
be held free and clear of all Encumbrances, except
(a) Encumbrances for current taxes not yet due and
payable without regard to grace periods; (b)
Permitted Encumbrances; and (c) Approved
Encumbrances. Except as set forth on Schedule
3.1(j)(ii), none of the Real Property-Owned is
owned, individually or jointly, by any person other
than Coltec Industries Inc or a subsidiary or
Affiliate of Coltec Industries Inc and all Real
Property-Owned which is owned, individually or
jointly, by a Coltec Affiliate other than Coltec
Industries Inc or an Incorporated Operating unit is
identified on Schedule 3.1(j)(ii).
(iii) Coltec is the holder of the leasehold interest
which comprises the Real Estate-Leased and has
a good, valid recorded marketable and
indefeasible lessee's interest as defined in
the relevant lease, and such leasehold
interest is held free and clear of all
Encumbrances except (a) Encumbrances for
current taxes not yet due and payable without
regard to grace periods, (b) Permitted
Encumbrances and (c) Approved Encumbrances.
Except as set forth on Schedule 3.1(j)(ii),
none of the Real Property-Leased is leased or
occupied, individually or jointly, by any
person other than Coltec or a subsidiary or
Affiliate of Coltec, and all Real
Estate-Leased which is leased or occupied by a
Coltec Affiliate other than Coltec Industries
Inc or an Incorporated Operating Unit is
identified on Schedule 3.1(j)(ii).
(iv) The buildings (and improvements), plants,
structures, and machinery and equipment have been
maintained for the five year period prior to the
date hereof in accordance with Coltec's standard
maintenance practices and are adequate for the uses
to which they are being put. The buildings (and
improvements), plants, structures, and machinery
and equipment are sufficient for the continued
conduct of the Business as presently conducted. To
the Knowledge of the applicable Coltec plant
manager or Facilities manager, there are no
structural defects in any Facility except for such
defects as would not, either individually or in the
aggregate, have a material adverse effect on the
use or value of such Facility.
(k) Liabilities. Except as otherwise disclosed in Schedule
3.1(k), neither Coltec Industries Inc nor any of the
Operating Units is in Default of its obligations under
any note, bond, debenture, mortgage, indenture, security
agreement, guaranty or other instrument of indebtedness
affecting the Business or the Assets.
(l) Litigation. Except as otherwise disclosed in Schedule
3.1(l) or Schedule 3.1(n), (i) there presently exists no
litigation, proceedings, actions, administrative or
arbitration proceeding or claims, at law or in equity, or
investigations pending or, to Coltec's Knowledge,
threatened against or affecting the Assets, the Business
or the Assumed Liabilities; and (ii) neither Coltec
Industries Inc nor any of the Operating Units is subject
to any notice, writ, injunction, consent agreement,
order, award or decree or other action or instrument of
any court, agency or other Governmental Body or
arbitrational tribunal affecting the Assets, the Business
or the Assumed Liabilities. Except as otherwise
disclosed in Schedule 3.1(l) or Schedule 3.1(n), there is
no dispute with any person that could reasonably be
expected to have a Material Adverse Effect.
(m) Contracts. Except as otherwise disclosed in Schedule
3.1(m)(1), (i) each of the Material Contracts is valid,
in full force and effect and binding upon Coltec and, to
Coltec's Knowledge, the other party or parties thereto in
accordance with its terms; (ii) to Coltec's Knowledge, no
party thereto has terminated, cancelled or substantially
modified any Material Contract or given notice with
respect thereto, (iii) to Coltec's Knowledge, no party to
any Material Contract is in Default of its obligations
under any such Material Contract, and (iv) to Coltec's
Knowledge, no written demand for adequate assurance of
performance under any Material Contract has been received
by Coltec. To Coltec's Knowledge, no event has occurred
which, through the passage of time or the giving of
notice or both, or otherwise could constitute a Default,
under any contract, agreement, lease, permit or other
document pertaining to the Business, including the
Material Contracts, which Default could reasonably be
expected to have a Material Adverse Effect or adversely
affect Coltec's ability to perform its obligations under
this Agreement and/or the Related Agreements. Schedules
2.2(d) and 2.2(e) set forth all Material Contracts and
Coltec has provided to or made available for inspection
by Purchaser true, correct and complete copies of all
written Material Contracts and all leases of real or
personal property which are to be assumed by Purchaser
pursuant to this Agreement. Any unwritten Material
Contracts or real or personal property leases are
accurately described in Schedules 2.2(d) or 2.2(e).
Except as otherwise disclosed in Schedule 3.1(m)(2), none
of the purchase orders, bids or other Contracts with
customers of the Business which are being assumed by
Purchaser involve a sale of Products or services at a
loss to Coltec and, assuming that Purchaser operates the
Business consistent with past practice of Coltec and on
commercially reasonable terms, will not involve a sale of
Products at a loss to Purchaser.
(n) Intellectual Property. Except as otherwise disclosed in
Appendix B or in Schedule 3.1(n), (i) Coltec Industries
Inc and/or any of the Operating Units has Ownership of
the Intellectual Property, (ii) Coltec Industries Inc
and/or the Operating Units has not granted any rights or
interest to any person in connection with any of the
Intellectual Property, (iii) Coltec Industries Inc and/or
any of the Operating Units is not obligated to pay any
amount, whether as a royalty, license, fee or other
payment to any person with regard to any intellectual
property rights of any others in connection with the
Business, and (iv) Coltec is not aware of any actual,
potential or threatened infringement by Coltec in
connection with the Business. The patents, trademarks,
copyrights, tradenames and applications therefor listed
in Appendix B are the only United States or foreign
patents, trademarks, copyrights, tradenames and
applications therefor, other than the Excluded
Intellectual Property that are used solely in connection
with or relate directly to the Business. There are no
trademarks, tradenames or the like used in conjunction
with any Products used in the Business and existing on
the Closing Date, other than the trademarks listed on
Appendix B. Other than in the ordinary course of the
Business with customers or potential joint venture
partners, neither Coltec Industries Inc, nor any of the
Operating Units, and to the Knowledge of Coltec, none of
their respective employees has entered into any agreement
that requires the transfer, assignment or disclosure of
Intellectual Property to anyone other than Coltec
Industries Inc and/or any of the Operating Units. All
patents constituting part of the Intellectual Property
are, to the Knowledge of Coltec, valid and enforceable.
To the Knowledge of Coltec, no Intellectual Property is
infringed or has been challenged or threatened, and no
patent constituting part of the Intellectual Property is
involved in any interference, reissue, reexamination or
opposition proceeding. The Intellectual Property and the
matters which are the subject of the License Agreements
are sufficient to conduct the Business as it is presently
conducted. Except for the License Agreements or as
otherwise contemplated or required by the transactions
contemplated hereby, no Coltec Affiliate has granted a
waiver, covenant not to sue or license to the Operating
Units as to the use of any intellectual property.
(o) Employee Benefits.
(i) Schedule 3.1(o)(i) identifies the following in
connection with the employees of Coltec related to
the conduct of the Business: (A) any collective
bargaining agreement not otherwise referenced in
this Agreement or any employment agreements not
terminable on 30 days notice; and (B) any
agreements that contain any severance or
termination pay liabilities or obligations.
(ii) Each employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) which covers or has
covered any of the employees of Coltec related to
the conduct of Business and any trust created
thereunder:
(A) is, and has been in compliance with all the
applicable requirements of ERISA,
(B) has satisfied all of the applicable provisions
of the Code,
(C) has never been involved in a non-exempt
prohibited transaction,
(D) has not incurred any accumulated funding
deficiency under ERISA and the Code or any
funding liability to the PBGC, and
(E) is not a "multi-employer plan" as defined in
Section 3(37) or Section 4001(a)(3) of ERISA.
(iii) Coltec has informed the employees of the
Operating Units in writing at various times
prior to the Closing Date that on and after
January 1, 1998 retirees will pay 100% of the
cost for any retiree welfare benefit coverage
under the Coltec Welfare Benefit Plans.
Further, no retirement benefit obligation
exists under the Coltec Welfare Benefit Plans
for employees of the Operating Units who are
eligible to retire on or after January 1, 1998
which would require the accrual of such
obligation in compliance with the provisions
of Statement of Financial Accounting Standards
No. 106.
(iv) Coltec has satisfied all of the withdrawal
liability to the Midwest Pension Plan incurred as a
result of its cessation of contributions and
withdrawal therefrom.
(p) Compliance with Laws. To the Knowledge of Coltec and
except as otherwise disclosed in Schedule 3.1(p), the
Business has been conducted in compliance with all Laws
material to the conduct of the Business and/or the use,
construction and operation of the Real Property and/or
the Assets and the transfer to and operation of the Real
Property by Purchaser in the manner the Real Property is
currently operated shall not violate any Laws, and Coltec
has not received any notice, claim, order or complaint
from any Governmental Body or other person alleging that
Coltec has failed to comply with any Laws.
(q) Payment of Taxes; Tax Liens. Except as otherwise
disclosed in Schedule 3.1(q), (i) all Tax returns,
reports and declarations required to be filed by Coltec
Industries Inc and/or the Operating Units with respect to
the Business with due dates (including extensions) prior
to the Closing Date have been or will be filed on or
before the Closing Date and to the Knowledge of Coltec,
such returns, reports and declarations are accurate and
complete in all material respects, (ii) all Taxes
indicated as due and payable prior to the Closing on such
returns, reports and declarations have or will be paid
when due; and (iii) the Assets are not encumbered as the
result of the nonpayment of any Taxes except for Taxes
not yet due and payable.
(r) No Material Adverse Events. Except as otherwise
disclosed in Schedule 3.1(r), (i) the Business has been
conducted only in the ordinary and usual course since
December 31, 1995; (ii) no event or events have occurred
since December 31, 1995 that could reasonably be expected
to have a Material Adverse Effect; and (iii) to the
Knowledge of Coltec, no event or events are threatened
and there has been no damage, loss or destruction which
could reasonably be expected to have a Material Adverse
Effect.
(s) Permits. Coltec has all Permits necessary for the
conduct of the Business. Except as set forth in Schedule
3.1(s), Coltec and/or the Operating Units, as applicable,
is in compliance with, and has applied for renewal or
reissuance of, all Permits material to the conduct of the
Business as currently conducted, the ownership or use of
the Assets as required by any Governmental Body or under
law, and all such Permits are valid and in full force and
effect and to the Knowledge of Coltec, no proceeding is
pending or to the Knowledge of Coltec, threatened, to
revoke, modify or limit any such Permit. To the
Knowledge of Coltec and except as set forth in Schedule
3.1(s), no event has occurred or circumstance exists that
may (with or without notice or lapse of time) (i)
constitute or result directly or indirectly in a
violation of or a failure to comply with any term or
requirement of any Permit which could reasonably be
expected to have a Material Adverse Effect or (ii) result
directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any
material modification to, any Permit. To the Knowledge
of Coltec, except as set forth in Schedule 3.1(s), no
notice has been received by Coltec from any Governmental
Body or any other person regarding any actual, alleged,
possible, or potential violation of or failure to comply
with any term or requirement of any Permit which could
reasonably be expected to have a Material Adverse Effect
or any actual proposed, possible, or potential
revocation, withdrawal, suspension, cancellation,
termination of, or modification to any such Permit.
(t) Environmental Matters. Except as otherwise disclosed in
Schedule 3.1(t):
(i) To the Knowledge of Coltec, Coltec has not received
any notice, citation, claim, assessment, proposed
assessment or demand or other communication
("Environmental Notices") related to or alleging
any, violation of the Environmental Laws by or
related to the Operating Units or the Assets which
has not been resolved in accordance with applicable
Law.
(ii) Coltec has not received any Environmental Notice
that it is or may be responsible for the
investigation, correction or clean-up of any
substance or condition resulting directly or
indirectly, and whether in whole or in part, from
the ownership or operations of the Assets.
(iii) None of the Real Property has been the site of
a "release" or a "threatened release", as
those terms are defined under any
Environmental Law.
(iv) No Hazardous Materials exist at or about the Real
Property, except in the form of materials held in
stock for incorporation into or incorporated into
Products and in any common and ordinary materials
out of which buildings on the Real Property are
constructed (in no case do any poly- or mono-
chlorinated biphenyls ("PCBs") or urea formaldehyde
foam exist at or about the Real Property, nor is
any asbestos present at or about the Real Property
other than asbestos that might be found in common
or ordinary building materials which are in sound
condition and properly maintained and which, unless
disturbed, will not release asbestos fibers).
(v) While Coltec has owned or operated the Real
Property, Coltec and the Real Property have been in
compliance with all applicable Environmental Laws
then in effect.
(vi) To Coltec's Knowledge, no environmental health or
safety hazards (other than those which are normally
present in businesses similar to the Business which
are operated lawfully and in accordance with
commercially reasonable practices) exist on or with
respect to the Real Property or the Business or the
operations conducted on the Real Property, and
there are no underground storage tanks on the Real
Property, except as set forth on Schedule 3.1(t).
(u) Facilities.
(i) Schedule 2.2(b)(1) and (2) set forth a correct list
and a complete and accurate legal description of
the Real Property-Owned and Real Property-Leased.
The Real Property constitutes all of the real
estate and buildings used by the Operating Units in
the Business as necessary to achieve the results
reflected on the Financial Statements.
(ii) Except as set forth in Schedule 3.1(u)(ii), (a)
there are no current leases, subleases, options or
other agreements, granting to any third person the
right to purchase or lease the Real Property-Owned
or, to the Knowledge of Coltec the Real Property-
Leased; and (b) there are no written or oral
agreements to permit third persons to use or occupy
the Real Property-Owned, or, to the Knowledge of
Coltec, the Real Property-Leased.
(iii) Except as disclosed on Schedule 3.1(u)(iii),
there are no existing property tax abatement
programs or other governmental assistance
programs with respect to the Real Properties.
Schedule 3.1(u) sets forth all documents to
which Coltec is a party relating to any such
programs. Coltec will use commercially
reasonable efforts to assist Purchaser in
obtaining the benefit of all such programs.
(iv) There is no pending, and Coltec has received no
written notice and has no Knowledge of threatened
condemnation, expropriation, eminent domain,
special assessment or similar proceeding affecting
the Real Property.
(v) Coltec has furnished copies of any and all
engineering and geologic reports and environmental
reports prepared in the three years prior to
Closing by or for Coltec with respect to the Real
Property. The certificates of occupancy, required
for Coltec's use and occupancy of the Real
Property, have been obtained and are valid and in
effect. Except as shown on the survey required by
Section 4.8(b), none of the structures or
improvements necessary to the Business and erected
on the Real Property encroaches on the property of
others.
(vi) Except as disclosed on Schedule 3.1(u)(vi), Coltec
has direct access to publicly dedicated rights-of-
way and, to Coltec's Knowledge, there do not exist
any claims to such access that could reasonably be
expected to have a Material Adverse Effect.
(vii) Private and public utilities servicing the
Real Property have capacity to meet the
utility requirements of the Facilities to the
extent presently operated on a year-round
basis. All public utilities are installed and
operating, and all installation and connection
charges have been paid in full. All equipment
owned by Coltec or its Affiliates which is
used in the furnishing of utilities, including
electric gas, water, telephone, storm sewer
and sanitary sewer services are located within
the boundaries of the Real Property as
described in Schedules 2.2(b)(1) and
2.2(b)(2). Coltec has no contracts or other
arrangements with respect to the furnishing of
utilities or municipal services such as fire
and police protection except as set forth in
Schedule 3.1(u)(vii), and all such contracts,
if any, are in good standing and are
assignable. Schedule 3.1(u)(vii) lists the
third-party suppliers of natural gas to the
Facilities.
(viii) Except as set forth in Schedule 3.1(u)(viii),
to Coltec's knowledge there are no outstanding
requirements or recommendations by the fire
underwriters or rating boards, or any
insurance company requiring or recommending
any repairs or work to be done with reference
to the Real Property.
(v) Assets. Except for the Excluded Assets, the License
Agreements, the transitional services, if any, to be
rendered under Section 4.7 below and the additional items
set forth on Schedule 3.1(v), the Assets constitute all
of the property and property rights of Coltec necessary
to the use and the conduct of the Business in the manner
and to the extent presently conducted.
(w) Labor Matters. Except to the extent set forth on
Schedule 3.1(w):
(i) there is no unfair labor practice charge or
complaint against the Operating Units or the
Business pending or, to Coltec's Knowledge,
threatened before the National Labor Relations
Board;
(ii) no grievance or arbitration proceeding arising out
of or under the UAW Agreement is pending and, to
Coltec's Knowledge, no such claim has been
threatened; and
(iii) there are no administrative charges or court
complaints against the Operating Units or the
Business concerning alleged employment
discrimination or other employment related
matters pending or, to Coltec's Knowledge,
threatened before the U.S. Equal Employment
Opportunity Commission or any state or Federal
court or agency.
(x) Other Schedules. The schedules referenced in Article II
hereof are accurate and complete in all material
respects.
(y) Disclosure. No representation or warranty of Coltec in
this Agreement omits to state a material fact necessary
to make the statements herein, in light of the
circumstances in which they were made, not misleading.
(z) Insurance. Coltec has not received any written notice
or been informed in writing directly or indirectly by
Coltec's existing insurance carriers or any insurance
organization (a) threatening a suspension, revocation,
modification or cancellation of any insurance policy that
relates to the Assets or a material increase in any
premium in connection therewith or (b) informing Coltec
that any existing coverage will or may not be available
in the future on substantially the same terms as now in
effect.
(aa) Knowledge of Inaccuracy. None of the Coltec employees
listed on Schedule 3.1(aa) has any Knowledge of any fact
or circumstance that would constitute a breach of any
representation or warranty of Purchaser contained in
Section 3.2 or make any representation of Purchaser
contained in Section 3.2 untrue or incomplete or which
would constitute a ground for terminating this Agreement
pursuant to Sections 10.3 or 10.4 hereof. Purchaser
shall have the burden of proving the Knowledge required
under this Section 3.1(aa).
3.2 Purchaser's Representations and Warranties. Purchaser,
jointly and severally, hereby represents and warrants to Coltec as
of the date hereof and as of the Closing Date the following:
(a) Organization and Existence. Each of BW, BW-MI and Borg-
Warner is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware, has all requisite corporate power and authority
to carry on its business as it is currently being
conducted and to own, lease and operate its businesses,
assets and properties. Borg-Warner and BW are, and on
the Closing Date BW-MI will be, duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in
which either the ownership or use of the assets and
properties owned or used by it in conducting its
businesses, or the nature of the activities conducted by
it, requires such qualification.
(b) Power and Authority. Each of BW, BW-MI and Borg-Warner
has full corporate power and authority to enter into,
execute, deliver and perform this Agreement and all
Related Agreements to which it is a party.
(c) Authorization. The execution, delivery and performance
of this Agreement and any Related Agreements by BW, BW-MI
and Borg-Warner have been duly authorized by all
requisite corporate actions on its part.
(d) Binding Effect. This Agreement and the Related
Agreements, upon execution and delivery by Purchaser,
will be duly executed and delivered by Purchaser and
(assuming due execution and delivery hereof and thereof
by Coltec) will be valid and binding obligations of
Purchaser enforceable against Purchaser in accordance
with their respective terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
(e) No Default. Except as otherwise set forth in this
Agreement or the schedules hereto, Purchaser has the
absolute unrestricted right and capacity to execute and
deliver this Agreement and the Related Agreements to
which it is a party and to perform its obligations
hereunder and thereunder. Neither the execution and
delivery of this Agreement or the Related Agreements, the
consummation of the transactions contemplated hereby or
thereby, nor Purchaser's full performance of its
obligations hereunder or thereunder will directly or
indirectly (with or without notice or lapse of time or
both):
(i) conflict with, contravene, violate or breach, or
otherwise constitute or give rise to a Default
under, the terms and provisions of BW s, BW-MI s or
Borg-Warner s certificate of incorporation or
bylaws, each as currently in effect, or any
contract, agreement, document, instrument,
commitment or other obligation to which such
corporation is a party or by which its assets,
properties or businesses is bound which,
individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on
Purchaser's assets or business;
(ii) except as it relates to matters which are the
subject of trade law or trade regulation regarding
mergers and acquisitions generally, contravene,
conflict with or result in a violation of the terms
of, or to the Knowledge of Purchaser, give any
Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any
Governmental Authorization relating to any of the
businesses, assets or properties of the Purchaser
that could reasonably be expected to have a
Material Adverse Effect on the Purchaser's business
or assets; or
(iii) except as it relates to matters which are the
subject of trade law or trade regulation
regarding mergers and acquisitions generally,
contravene, conflict with or result in a
violation, or give any Governmental Body or
other person the right to challenge any
transaction contemplated by this Agreement or
the Related Agreements or to exercise any
remedy or obtain any relief under, any Law or
Order to which any of BW, BW-MI or Borg-Warner
is a party or by which its assets, properties
or businesses is bound that could reasonably
be expected to have a Material Adverse Effect
on the Purchaser's business or assets.
(f) Finders. Purchaser has not engaged and is not directly
or indirectly obligated to any person acting as a broker
or finder or in any similar capacity in connection with
the transactions contemplated hereby, other than Merrill
Lynch Pierce Fenner and Smith Incorporated, whose fees
shall be paid by Purchaser.
(g) No Consents. Except for an anticipated filing of a pre-
merger notification report under the HSR Act, and except
for the German Approval, and except as set forth on
Schedule 3.2(g), no notice, consent, approval, order or
authorization of, or registration, declaration or filing
with, any Governmental Body or person under or pursuant
to any contract, agreement, instrument, document,
commitment or other obligation to which Purchaser is a
party or by which any of its assets, properties or
businesses is bound is required to be obtained or made in
connection with (x) the execution and delivery of this
Agreement and the Related Agreements by Purchaser or (y)
the consummation by Purchaser of the transactions
contemplated hereby and thereby.
(h) Litigation. There presently exists no litigation,
proceedings, actions, administrative or arbitration
proceedings or claims, at law or in equity, or to the
Knowledge of Purchaser, threatened against, relating to
or effecting Purchaser or its businesses, assets and
properties, which could reasonably be expected to result
in the issuance of an order restraining, enjoining or
otherwise prohibiting or making illegal the consummation
of any of the transactions contemplated by this Agreement
and the Related Agreements.
(i) Financing. Purchaser has sufficient cash and/or
available credit facilities (and has provided Coltec with
evidence thereof prior to the date hereof) or commitments
therefor (copies of which have been furnished to Coltec
prior to the date hereof) to pay the Purchase Price and
to make all of the necessary payments, including payments
of fees and expenses, in connection with the transactions
contemplated by this Agreement and the Related
Agreements.
(j) Knowledge of Inaccuracy. None of the employees of Borg-
Warner who are listed on Schedule 3.2(j) has any
Knowledge of any fact or circumstance that would make any
representation or warranty of Coltec contained in Section
3.1 untrue or incomplete or which would constitute a
grounds for terminating this Agreement pursuant to
Sections 10.3 or 10.4 hereof. Coltec shall have the
burden of proving the Knowledge required under this
Section 3.2(j).
3.3 Survival. The covenants, representations and warranties
of each party contained in this Agreement will survive the
execution and delivery of this Agreement and the Closing until the
fifth anniversary of the Closing Date. Subject to the provisions
of Article IX of this Agreement, the termination of the covenants,
representations and warranties provided herein shall not affect the
rights of a party in respect of a claim made by such party if a
Notice is given in the manner and at the times required under
Section 9.3 hereof by such party and received by the other party on
or prior to the expiration of the survival period provided herein.
ARTICLE IV
Actions Before Closing
4.1 Access to Records and Facilities. Coltec hereby
covenants to Purchaser that, between the date hereof and the
Closing and subject to the Purchaser's obligation of
confidentiality imposed by the Confidentiality Agreement dated
December 19, 1995, between Coltec and Borg-Warner (the
"Confidentiality Agreement"), Coltec will afford duly authorized
employees, agents, attorneys, accountants, consultants and other
representatives of Purchaser, displaying appropriate credentials,
access, upon reasonable notice and at agreed upon times, to all of
the Operating Units, Assets, properties, books and nonprivileged
records of the Business and will permit such representatives to
make, at Purchaser's cost, reasonable physical and environmental
inspections thereof (including those referred to in Section 4.14
below), the scope and extent of which will be subject to the
reasonable approval of Coltec, including inspections regarding the
Business' environmental practices, the environmental condition of
the Assets and the Business' compliance with Environmental Laws
(including sampling and analysis of materials), and of the Assets
located thereon and to make abstracts from, or take copies of, such
books, records, or other documentation, or to obtain temporary
possession of any thereof as may be reasonably required by
Purchaser, and Coltec will furnish to Purchaser such information
concerning the Business and the Operating Units' assets,
liabilities, or condition as Purchaser may reasonably request.
Coltec shall provide Purchaser access and permit Purchaser to
interview employees, customers, suppliers and other third parties
regarding the Business. With respect to Purchaser's right to
access and review any records relating to the employees of the
Operating Units, such access and review shall be subject to the
terms and conditions set forth in this Section 4.1 and, in all
cases, shall be subject to all privacy statutes and non-disclosure
provisions of applicable Laws. Notwithstanding anything contained
herein, the parties shall not use any information exchanged during
the course of negotiations and investigations concerning this
transaction in a manner that would constitute a violation of Law.
Purchaser shall obtain all necessary permits, licenses, and
approvals, if any, required for the inspections contemplated by
this Section 4.1, and shall comply with all applicable statutes,
regulations or ordinances in conducting such inspections.
4.2 Interim Conduct of the Business. Coltec hereby covenants
to Purchaser that, from the date hereof to the Closing, Coltec will
conduct the Business only in the ordinary and usual course subject
to Purchaser's approval of certain transactions pursuant to Section
4.3 below. Without limiting the generality of the foregoing,
Coltec hereby covenants to Purchaser that, insofar as the Business
is concerned, Coltec will:
(a) use its reasonable commercial efforts to preserve
substantially intact the Business' relationships
with suppliers, customers, employees, agents,
consultants, creditors and others having business
dealings with the Business or the Divisions (such
efforts will include (i) continuing its ordinary
course treatment of such persons and (ii)
reasonable transition activities);
(b) maintain in full force and effect its existing
policies of insurance which materially affect the
Business;
(c) maintain all Intellectual Property to be included
as part of the Assets in substantially the same
standing as exists on the date hereof and continue
the prosecution of all applications therefor; and
(d) continue performance in the ordinary course of its
obligations under contracts, commitments or other
obligations to be included as part of the Assets.
(e) All hazardous waste accumulation containers,
including, but not limited to, trash cans,
dumpsters, drums and tanks, will be emptied and the
contents removed from the Real Property on or
before the Closing by Coltec.
4.3 Purchaser's Approval of Certain Transactions. Coltec
hereby covenants to Purchaser that, except as may otherwise be
required under this Agreement, from the date hereof to the Closing,
insofar as the Business is concerned, Coltec will not do any of the
following without the prior written approval of Purchaser which
approval will not be unreasonably withheld or delayed. Purchaser
shall nominate an individual ("Approval Contact") to receive
requests for approval of the following actions. The Approval
Contact or his or her designee shall approve or disapprove such
requests by Coltec whether made orally or in writing within 5
business days of receiving such request. If the Approval Contact
does not approve or disapprove Coltec's request within 5 business
days, the request shall be deemed approved:
(a) incur or permit the incurrence of any debt, borrow
money or incur any obligation or other liability
which would constitute an Assumed Liability, except
in the ordinary course of the Business;
(b) purchase, lease, transfer, dispose, encumber or
subject to any lien, any of the Real Property or
interest therein;
(c) purchase or lease any Assets, other than in the
ordinary course of the Business, having a value
exceeding Five Hundred Thousand Dollars ($500,000)
in the aggregate or transfer or sell any Assets,
other than in the ordinary course of business of
the Business, having a value exceeding One Hundred
Thousand Dollars ($100,000) in the aggregate;
(d) enter into any lease of personal property or any
renewals thereof involving a term of more than one
year or rental obligation exceeding One Hundred
Thousand Dollars ($100,000) per annum in the
aggregate;
(e) permit to be incurred any Encumbrances of any of
the Assets except as may be permitted by this
Agreement;
(f) except for normal merit or cost-of-living increases
and changes in job responsibilities in accordance
with the past practices of Coltec and except as
required in the UAW Agreement, increase the rate of
compensation for any of the employees of Coltec
related to the conduct of the Business or otherwise
enter into or modify or amend any employment,
consulting or managerial services agreement
affecting or relating to the Business which are to
be assumed by Purchaser;
(g) commence, enter into or alter any pension,
retirement, profit-sharing, employee stock option
or stock purchase, bonus, deferred compensation,
incentive compensation, life insurance, health
insurance, fringe benefit or other employee benefit
plan or arrangement which will affect employees of
Coltec related to the conduct of the Business after
Closing;
(h) make any new commitments or increase any previous
commitments for capital expenditures for the
Business exceeding Five Hundred Thousand Dollars
($500,000) in any individual case or Two Million
Dollars ($2,000,000) in the aggregate, provided
that any new commitment or any increase in a
previous commitment for capital expenditures which
is not specifically contemplated in Coltec's 1996
capital budget for the Business which was furnished
to Purchaser prior to the date of this Agreement
will require Purchaser's advance written approval,
which will not be unreasonably withheld;
(i) either accelerate or delay the sale of Products; or
sell, buy or dispose of any inventory all except in
the ordinary course of the Business;
(j) enter into any transaction, contract or commitment
or Permit outside of the ordinary course of the
Business which will become an Assumed Liability,
waive any right of substantial value or cancel any
debt or claim affecting any Asset, other than
intercompany debt and except in the ordinary course
of the Business; or
(k) sell, assign, transfer, license or convey any of
the Intellectual Property except consistent with
past practice and in the ordinary course of the
Business.
4.4 Consents to Assignment.
(a) Each of Purchaser and Coltec shall (i) take all
commercially reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all
commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions
of, to make all filings with and to give all notices to
all Governmental Bodies or any other person required of
Purchaser and Coltec to consummate the transactions
contemplated hereby, (ii) provide such other information
and communications to such Governmental Bodies or other
persons as such Governmental Bodies or other persons may
reasonably request in connection therewith, and (iii)
provide reasonable cooperation to the other party in
obtaining all consents, approvals or actions of, making
all filings with and giving all notices to each
Governmental Body or other persons required to consummate
the transactions contemplated hereby and the Related
Agreements. Coltec shall not agree to any modification
of any contract, agreement or Permit without the written
consent of Purchaser in the course of obtaining any such
consent, which consent shall not be unreasonably withheld
or delayed by Purchaser. Coltec shall bear the cost of
obtaining consents to the assignment of Permits,
contracts and other agreements which relate to the
Business. Each party shall bear its own individual costs
in obtaining any other consent, permit or approval. All
costs associated with assigning or transferring the
ownership of the Intellectual Property shall be borne by
Purchaser.
(b) Subject to the following sentence, if Coltec is unable to
obtain any consent, approval or waiver of the assignment
to Purchaser of any Contract or Permit as required by
this Agreement, the provisions of Section 7.2 below will
apply. If Coltec is unable to obtain any consent,
approval or waiver referred to in Section 5.1(d) below,
the condition precedent set forth in Section 5.1(d) will
not be deemed to be satisfied unless Coltec, at or before
Closing, provides Purchaser with a reasonable and lawful
arrangement which, in Purchaser's reasonable opinion,
provides Purchaser with all of the rights and benefits
which Purchaser would have received had such consent,
approval or waiver been obtained for the entire duration
that such rights and benefits would have accrued to
Purchaser had such consent, approval or waiver been
obtained, without cost or penalty to Purchaser, and
Coltec will indemnify and hold Purchaser harmless
(pursuant to Section 9.2(a)(3) below, without any minimum
dollar limitation) against any Damage suffered by
Purchaser if such arrangement does not provide such
rights and benefits to Purchaser (provided, however, that
Coltec will only be obligated to indemnify and hold
Purchaser harmless with respect to such Damages to the
extent that the Damages relate to the validity or
enforceability of the arrangement which is made in lieu
of the consent, approval or waiver, as opposed to claims
related to the actual benefits, rights and obligations
conferred by the arrangement). Purchaser will, at
Coltec's request, pay Coltec or a third party any
payments which would have been payable by Purchaser after
the Closing Date in respect of the Permit, Contract or
other item associated with a consent, approval or waiver
which is not obtained (e.g., rent under a lease which is
not assigned) and for which a substitute arrangement is
provided under this Section 4.4(b) (provided that (i)
Coltec uses such payment to cover the amount which would
have been payable under the Permit, Contract or other
item to which the consent, approval or waiver related
(e.g., rent, but not the cost of securing a sublease or
other arrangement), (ii) Purchaser will pay only the
actual amount paid by Coltec or charged by the third
party in clause (i) and no other amount and
(iii) Purchaser will not pay more than the amount of
payments which were required under the Permit, Contract
or other item associated with the consent, approval or
waiver which was not obtained).
4.5 Government Notification. Coltec hereby covenants to
Purchaser, and Purchaser hereby covenants to Coltec, that the
parties will proceed promptly with the preparation and filing of
any required notification and documentation under Title II of the
HSR Act and the rules of the FTC thereunder. Additionally, the
parties shall cooperate with preparing and filing all requests for
additional information made by the appropriate antitrust review
authority having jurisdiction over the HSR filing. Purchaser and
Coltec Industries Inc will share equally and pay to the FTC the
appropriate filing fee totalling the full amount required under the
rules of the FTC for a single application for one acquiring person,
which fee shall not exceed Forty Five Thousand Dollars ($45,000) in
the aggregate. Purchaser shall pay all required filing fees in
excess of one half of such aggregate amount. Purchaser, at its own
expense, shall prepare for and file any notification or
documentation required for the German Approval. Coltec shall
cooperate fully, at no cost, with Purchaser s efforts to obtain the
German Approval.
4.6 Parties' Reasonable Commercial Efforts. From the date
hereof to the Closing, the parties will cooperate and use their
respective commercially reasonable efforts to cause the conditions
set forth in Article V to be satisfied on or before the Closing
Date, including, without limitation, obtaining, without cost or
penalty to or imposition of adverse condition upon, Purchaser, any
required consents to assignment to Purchaser of all rights and
obligations under any leases or contracts and Permits and to
consummate and make effective the transactions contemplated by this
Agreement and the Related Agreements.
4.7 Transition Services Agreement. If required to assist
Purchaser, the parties will negotiate a Transition Services
Agreement to be executed on or before Closing whereby Coltec
Industries Inc will provide certain interim administrative services
and assistance, similar in nature and scope to those currently
provided, at Purchaser's expense and option for a six month period
following Closing, for which Coltec Industries Inc will be
reimbursed for all costs and expenses (including overhead) it
incurs in providing such services.
4.8 Title Commitment and Survey.
(a) Coltec shall deliver to Purchaser commitments for a 1992
Form B ALTA Owner's (or in the case of Real Property--
Leased a Leasehold) Title Insurance Policy (the "Title
Commitments") issued by Chicago Title Insurance
Corporation (the "Title Company") in form satisfactory to
Purchaser. The Title Commitments with respect to each
parcel of Real Property which will commit the insurer to
insure that, with respect to Real Property--Owned, the
fee simple absolute title to the parcel of Real Property
described therein is marketable and valid and vested in
Purchaser and, with respect to Real Property--Leased,
that the leasehold is good and marketable subject to the
rights of the lessor under the lease, and the lessor
named in the lease was the owner of the Real Property--
Leased on the date of the signing of the lease and the
recording of notice of the lease in the appropriate
governmental title registry, subject in each case only to
the Permitted Encumbrances in respect of such Real
Property and to all exceptions which Purchaser has
approved (the "Approved Encumbrances") and to no other
exceptions, printed or otherwise. Each Title Commitment
will be accompanied by readable copies of all documents
cited as exceptions to title therein (the "Underlying
Documents"), which will be certified by the Title Company
as true, correct and complete copies of the Underlying
Documents as recorded on the land records. At the
Closing, Coltec will deliver to Purchaser the title
insurance policies covered by the Title Commitments. In
lieu of a policy the Title Company may issue a "mark up
commitment" indicating that the Title Company's
requirements have been satisfied and that a policy as
required hereunder will be issued promptly following the
Closing. Such title insurance policies shall (i) be in
the amounts set forth on Schedule 4.8(a) (which amounts,
however, shall not be binding for the purpose of
allocating the Purchase Price), (ii) be issued by the
Title Company, (iii) show in Schedule A thereof the
approved survey description of such Real Property and
each easement appurtenant thereto, with the standard
printed exceptions deleted, and otherwise show in
Schedule B thereof only the Permitted Encumbrances and
the Approved Encumbrances, and (iv) shall be accompanied
by the endorsements listed on Schedule 4.8(a) and contain
such endorsements as may reasonably be requested by
Purchaser. No title insurance will be necessary for the
property located in Kettering, England.
(b) Coltec shall also deliver a current ALTA boundary survey
of each Real Property certified to Purchaser and the
Title Company (and such other persons as Purchaser may
require) by a registered land surveyor or engineer
containing legal descriptions of each Real Property and
showing (1) all adjacent and interior public streets and
roadways, (2) the exact location of all access roads, and
entry buildings and points of all utilities to the Real
Property, (3) the exact location of all buildings and
improvements, (4) the exact location of all recorded or
visible easements on or servicing the Real Property, and
(5) the number of parking spaces. The surveys will
certify to Purchaser, the Title Company, and such other
persons or entities as Purchaser may desire that no
portion of any Real Property lies within a federally
designated flood plain, except as shown; and that there
are no encroachments either onto or off of the Real
Property, except as shown. The legal description of the
Real Property set forth in the Title Commitment will
conform exactly to the legal descriptions set forth in
the survey required under this Section 4.8(b). No survey
will be necessary for the property located in Kettering,
England.
(c) If objection to the title to any Real Property is made by
Purchaser within ten days after the date of receipt of
the Title Commitment, together with all Underlying
Documents thereto, and the survey referred to in Section
4.8(b), that the title is not in the condition required
for performance under this Agreement or the title and
survey disclose a condition of the Property which, if
enforced, would impair the ability of the Purchaser to
operate the Real Property in the manner in which it is
currently operated to achieve the economic results
reflected in the Financial Statements (including those
delivered under Section 7.9 below), Coltec will have ten
days from the time that it is notified in writing of the
particular defect claimed to provide Purchaser with a
revised Title Commitment evidencing that such defect has
been remedied and/or, with Purchaser's consent, insured
over in a manner satisfactory to Purchaser. If Coltec is
unable to obtain such revised Title Commitment within
such ten day period and the defect is other than a lien
or encumbrance securing a liquidated amount and if the
subject Real Property is identified on Schedule 4.8(c),
Purchaser will have the option to (1) proceed with this
transaction, in which event the subject Real Property
will be retained by Coltec at no cost or penalty to
Purchaser and will be leased (or subleased) to Purchaser
for a period not to exceed 12 months for a monthly rent
in an amount set forth on Schedule 4.8(c), until such
time as Purchaser is ready to move the Business
operations from such Real Property to a new location;
(2) reduce the Purchase Price by the amount set forth on
Schedule 4.8(c) as the assumed value of such Real
Property; or (3) terminate this Agreement, in which case
neither Coltec nor Purchaser will have any liability to
the other. If the defect is other than a lien or
encumbrance securing a liquidating amount and if the Real
Property is not identified on Schedule 4.8(c), Purchaser
will have the ability to terminate this Agreement, in
which case neither Coltec nor Purchaser will have any
liability to the other. If the defect is a lien or
encumbrance securing a liquidated amount, Coltec shall
pay and satisfy or bond and obtain title insurance over
the defect at or before Closing, and if necessary shall
use the Closing proceeds or the appropriate portion
thereof for that purpose.
4.9 Certificates of Occupancy. Coltec will cooperate in
Purchaser's application(s) for certificates of occupancy necessary
for Purchaser's operation of the Business after Closing with
respect to the Facilities. Prior to Closing, Coltec will (a)
furnish information reasonably necessary to complete Purchaser's
application for the said certificates pertaining to the Facilities
and (b) subject to the provisions of Section 4.1 hereof, provide
reasonable access to the Facilities for such inspection upon
reasonable prior notice. Subject to Section 10.3(a)(iii)(C), in
the event, as a result of such inspections, the relevant
Governmental Body issues a report requiring repairs or
modifications to any Facility, Coltec agrees to complete all such
required repairs or modifications and the Closing shall be delayed
until the repairs and modifications are complete and the
Governmental Body has approved same.
4.10 Notification. Between the date of this Agreement and the
Closing Date, each party will promptly notify the other party in
writing if either becomes aware of any fact or condition that
causes or constitutes a breach of any of its covenants or
representations and warranties as of the date of this Agreement, or
if Coltec or Purchaser becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except
as expressly contemplated by this Agreement) cause or constitute a
breach of any such covenant or such representation or warranty had
such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules attached to
this Agreement if the Schedules were dated the date of the
occurrence or discovery of any such fact or condition, the
applicable party will promptly deliver to the other updated
Schedules specifying such changes, which updated Schedules must be
reasonably satisfactory to the other party.
4.11 No Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to Article X, Coltec will not,
directly or indirectly, solicit (including furnishing any
information concerning the Business), initiate or encourage any
inquiries or proposals from, or negotiate with, provide any non-
public information to, or consider the merits of any unsolicited
inquires or proposals from, any person (other than Purchaser)
relating to any transaction involving the sale of Assets (other
than in the ordinary course of Business) or the Business.
4.12 Communications to Employees. Prior to the Closing Date,
Coltec and Purchaser shall consult with each other before issuing
any written communications or otherwise making any public
statements to employees of Coltec relating to the transactions
contemplated by this Agreement, and prior to communicating with
labor unions concerning any notice requirements contained in the
collective bargaining agreements which are affected by this
Agreement. All such communications will be jointly approved, such
approval not to be unreasonably withheld. Coltec shall have the
sole responsibility for the matters covered by Section 8.13 below.
4.13 Environmental Transfer Laws. Prior to the Closing Date,
Coltec, at Coltec's sole expense, shall comply with the provisions
of Environmental Laws that require the submission of notice to
Purchaser or to any Governmental Body in connection with the
transfer of title to the Assets and to the Business ("Environmental
Transfer Laws") and shall deliver to Purchaser on or prior to the
Closing Date documents reasonably satisfactory to Purchaser that
demonstrate compliance in such regard with such Environmental
Transfer Laws and any documents required by such Environmental
Transfer Laws that may be necessary to convey title to each of the
Assets and the Business. Purchaser will cooperate to the extent
reasonably necessary to effect Coltec's compliance in such regard
with such Environmental Transfer Laws.
4.14 Environmental Reviews and Inspections. Between the date
of this Agreement and the Closing, Purchaser, at its cost and
expense, may have one or more independent consultants perform
reasonable environmental inspections, reviews and audits of the
Real Properties and the Facilities and the machinery and equipment
located at the Facilities (the "Environmental Inspection"),
including tests of air, soil (including surface and subsurface
materials), surface water and ground water, or any equipment
located at the Facilities. Purchaser will promptly restore any
disturbance to the Assets which results from the Environmental
Inspection to the same or reasonably similar predisturbed
condition. Coltec will cooperate with Purchaser in such testing
activities, including making Coltec employees available to
Purchaser and its consultants. Purchaser shall obtain all
necessary permits, licenses, and approvals, if any, required for
the inspections contemplated by this Section 4.1, and shall comply
with all applicable statutes, regulations or ordinances in
conducting such inspections.
4.15 Work Plan. As far in advance of the Closing as is
commercially practicable, Purchaser will deliver to Coltec a list
showing defects, required repairs and other conditions (other than
environmental matters) relating to the Real Property and the
Facilities which Purchaser identifies during its physical
inspection of the Real Properties and the Facilities, a copy of
which shall be added as Schedule 4.15 to this Agreement. Coltec
will develop a work plan for the items set forth on such Schedule,
which will be subject to Purchaser's review and approval, which
will not be unreasonably withheld. Subject to Coltec's right to
terminate this Agreement pursuant to Section 10.3(a)(iii)(C) (in
which case the provisions of such Section 10.3(a)(iii)(C) will
apply), Coltec will correct all defects and make all repairs and
modifications required under the work plan in a workmanlike manner,
and will complete such work as soon as commercially practicable,
either before or after the Closing, and Purchaser will have the
right to approve such work after completion by Coltec (such
approval not to be unreasonably withheld). To the extent Coltec
makes the corrections, repairs and modifications referred to in the
preceding sentence in the manner required by that sentence, Coltec
will have no further liability solely with respect to the defect or
condition warranting such repair, correction or modification.
Purchaser will use commercially reasonable efforts to cooperate (at
no cost to Purchaser) with Coltec in making any corrections,
repairs and modifications required by this Section 4.15.
ARTICLE V
Conditions
5.1 Conditions to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of each of the following
conditions (any of which may be waived by Purchaser in whole or in
part) at or before the Closing:
(a) The representations and warranties of Coltec
contained in this Agreement shall be true, accurate
and complete in all material respects as of the
date hereof and as of the Closing as if such
representations and warranties had been made anew
as of the Closing, provided, however, that to the
extent that the representations or warranties of
Coltec are qualified by exceptions which do not
have a Material Adverse Effect, if such exceptions
could either individually or in the aggregate
reasonably be expected to have a Material Adverse
Effect, then this condition will be deemed to have
not been satisfied (Coltec will use commercially
reasonable efforts to provide Purchaser with
advance written notice before the Closing Date of
the items which come within the scope of this
proviso);
(b) Coltec shall have materially performed and complied
with all agreements and conditions required by this
Agreement to be performed or satisfied by Coltec on
or prior to the Closing and Coltec shall have
delivered to Purchaser all documents, certificates
and instruments required to be delivered by Coltec
under the terms of this Agreement;
(c) Coltec shall have taken or caused to be taken all
corporate and other proceedings or actions in
connection with the transactions contemplated by
this Agreement;
(d) Coltec shall have obtained all of the material
consents and approvals (including as to transfer of
Permits), or effective waivers thereof, identified
by an asterisk on Schedule 3.1(g) with the
exception of any such consents, approvals or
waivers listed thereon which in any way relate to
the UAW Agreement and except as provided in Section
4.4(b);
(e) Coltec will cause its Affiliates to assign any
Assets which are jointly owned or owned solely by
such Affiliate, and will deliver to Purchaser such
transfer documents as Purchaser reasonably
requests;
(f) Coltec shall have obtained and delivered to
Purchaser the Title Commitments as required by
Section 4.8 of this Agreement and Coltec shall have
advised Purchaser in writing that the transfer to
and operation of the Real Property by Purchaser in
the manner the Real Property is currently operated
will not violate or cause the revocation of any
Permits, except for such violations or revocations
which would not, individually or in the aggregate,
have a Material Adverse Effect;
(g) Coltec shall obtain, at Coltec's sole cost and
expense, and deliver to Purchaser an estoppel
certificate from the landlord under each lease of
Real Property-Leased constituting an Assumed
Liability stating (a) that such lease is in full
force and effect and has not been amended, modified
or supplemented other than as set forth on Schedule
2.2(b), (b) that all rent and other sums and
charges payable under such lease are current and
setting forth the date through which such payments
have been made, (c) the amount of any tenant
security or other similar deposit held by or on
behalf of such landlord under such lease, (d) that
no notice of default on the part of Coltec or
termination notice has been served under such lease
that remain outstanding, (e) that to such
landlord's knowledge, no uncured material default
or termination event or condition exists under such
lease and (f) that the consummation of the
transactions provided for herein will not
constitute a default under such lease or grounds
for the termination thereof; and
(h) Purchaser will have conducted its physical
inspection of the Real Properties and Facilities
pursuant to Section 4.1 above and the Environmental
Inspection pursuant to Section 4.14 above and will
be satisfied, in its reasonable discretion, (i)
with all aspects of the Real Property and the
Facilities, including but not limited to, its
physical condition, suitability for the operation
of the Business, zoning, permit and licensing
status (including the transferability thereof),
compliance with Laws, contractual arrangements for
utilities and city services, and title and survey
matters, which shall include Purchaser's review of
the boundaries of the Real Property, of the
inclusion of the buildings, equipment and machinery
which constitute Assets within such boundaries or
on appropriate and insurable appurtenant easements,
of the Real Property's access to public streets and
ways, and of the availability of utilities through
lines directly from public roads or utility company
rights of way or properly recorded and insurable
private easements, and (ii) with the results of its
Environmental Inspection. Purchaser will use
commercially reasonable efforts to conduct and
complete such physical inspection and the
Environmental Inspection as soon as practicable
after the date of this Agreement. If Purchaser is
unsatisfied with the results of such physical
inspection or the Environmental Investigation, it
will be free to terminate this Agreement without
any liability. Purchaser will advise Coltec on or
before June 3, 1996 as to its decision as to
whether the condition specified in clause (i) of
the first sentence on this Section 5.1(h) has been
satisfied; provided, however, such date may at
Purchaser's election be extended to the date 10
days after Purchaser's receipt of the Title
Commitment, Underlying Documents and survey
described in Sections 4.8(a) and (b). If Purchaser
has not timely notified Coltec as to whether the
condition specified in clause (i) of the first
sentence of this Section 5.1(h) has been satisfied,
then the condition shall be deemed to have been
waived.
5.2 Conditions to Coltec's Obligations. The obligation of
Coltec to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following
conditions (any of which may be waived by Coltec in whole or in
part) at or before the Closing:
(a) The representations and warranties of Purchaser
contained in this Agreement shall be true, accurate
and complete in all material respects as of the
date hereof and as of the Closing as if such
representations and warranties had been made anew
as of the Closing;
(b) Purchaser shall have materially performed and
complied with all agreements and conditions
required by this Agreement to be performed or
satisfied by Purchaser on or prior to the Closing,
and Purchaser shall have delivered all documents,
certificates and instruments required to be
delivered by Purchaser under the terms of this
Agreement;
(c) Purchaser shall have taken or caused to be taken
all corporate and other proceedings or actions in
connection with the transactions contemplated by
this Agreement; and
(d) Purchaser shall have obtained all of the material
consents and approvals, or effective waivers
thereof, identified by an asterisk on Schedule
3.2(g).
5.3 Conditions to Coltec's and Purchaser's Obligations. The
obligations of Coltec and Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of
the following conditions at or before the Closing:
(a) All requisite governmental approvals and
authorizations necessary for consummation of the
transactions contemplated hereby, including the
German Approval, shall have been duly issued or
granted and the applicable waiting periods
prescribed by Title II of the HSR Act and the rules
of the FTC thereunder shall have expired; and
(b) there shall not have been issued and in effect any
injunction or similar legal order prohibiting or
restraining consummation of any of the transactions
herein contemplated and no legal action or
governmental investigation which might reasonably
be expected to result in any such injunction or
order shall be pending.
ARTICLE VI
Closing
6.1 Time, Date and Place of Closing. The closing ("Closing")
will occur at 10:00 a.m. (Central Time) on the second business day
following the latter of (a) the date on which the applicable HSR
Act and German Approval waiting periods have expired or terminated
and all Closing conditions have been satisfied or waived and (b)
the date on which the deliveries in Section 6.2 are made by Coltec,
or such other date as the parties may agree in writing (the
"Closing Date"). The Closing will take place at the offices of
Borg-Warner Automotive, Inc, 200 South Michigan Avenue, Chicago,
Illinois, or at such other place as the parties may agree in
writing. The Closing will be deemed to have occurred as of 11:59
p.m. (Central Time) on the Closing Date.
6.2 Deliveries by Coltec. At the Closing, Coltec will
deliver to Purchaser the following:
(a) General warranty deeds granting to Purchaser good and
marketable title to the Real Property-Owned and an
assignment of the leasehold in the Real Property-Leased
including Coltec's interests as lessor, sublessor, lessee
or sublessee (subject in each case only to Permitted
Encumbrances and Approved Encumbrances) together with, to
the extent the same are held by Coltec, all rights,
privileges, easements and appurtenances thereto, and all
affidavits, governmental forms and other documents
required in connection therewith to convey such title to
Purchaser subject only to Approved Encumbrances and
Permitted Encumbrances.
(b) Bills of sale and other instruments of conveyance,
assignment and transfer, as appropriate or as Purchaser
may reasonably request, pursuant to which Coltec conveys,
or causes Stemco Inc, on behalf of its Performance
Friction Products Division, to convey, ownership of the
Assets (including Contracts and Permits) to Purchaser as
provided herein.
(c) An executed license agreement in the same form as that
attached as Exhibit 6.2(c) governing Purchaser's use of
the "Holley Automotive" marks in connection with the
Business (the "Holley Automotive License Agreement").
(d) Executed license agreements in the same form as that
attached as Exhibit 6.2(d) with regard to "GYLON" and
"HY-CARB" Products and the use of the GYLON and HY-CARB
marks by the Purchaser in conjunction with such Products
(the "Gylon and Hy-Carb License Agreements").
(e) An executed Patent License Agreement.
(f) An instrument conveying and assigning the patents and
applications set forth on Appendix B.
(g) Title policies pursuant to the Title Commitments will be
issued effective as of the recording of the deeds and
leasehold assignments will be issued as provided in
Section 4.8(a) above.
(h) Such other documents including certificates of good
standing as Purchaser may reasonably request to
effectuate the transactions contemplated by this
Agreement.
6.3 Deliveries by the Purchaser. At the Closing, the
Purchaser will deliver to Coltec the following:
(a) The payment to be made at Closing pursuant to Section
2.6.
(b) An agreement whereby the Purchaser will assume and agree
to pay and discharge the Assumed Liabilities.
(c) The executed License Agreements.
(d) Such other documents including certificates of good
standing as Coltec may reasonably request to effectuate
the transactions contemplated by this Agreement.
(e) An executed license agreement regarding certain rights to
be granted back to Coltec Industries Inc under certain
patents that are to be assigned to Purchaser pursuant to
this Agreement, in the form of Exhibit 6.3(e) (the
Patent License Agreement ).
ARTICLE VII
Actions After Closing
7.1 Further Conveyances. After the Closing, except as agreed
to in Section 4.4, Coltec will, without further cost or expense to
Purchaser, execute and deliver to Purchaser (or cause to be
executed and delivered to Purchaser), such additional instruments
of conveyance, and Coltec will take such other and further actions
as Purchaser may reasonably request to more completely sell,
transfer and assign to Purchaser and vest in Purchaser ownership of
the Assets as contemplated herein.
7.2 Further Consents to Assignment. To the extent Coltec
shall have failed to obtain prior to Closing the consent or
approval (or an effective waiver thereof) of any person or persons
in respect of any item described in Section 4.4 hereof (other than
a consent or approval referred to in Schedule 3.1(g), unless
Purchaser has agreed to waive the condition that such consent or
approval be delivered), after the Closing:
(a) Coltec will use its commercially reasonable efforts
to obtain from such person or persons the required
consents or approvals (or effective waivers
thereof); and
(b) if the parties are unable to obtain any such
consent, approval or waiver, then (i) this
Agreement shall not constitute or be deemed to be a
contract to assign the same if an attempted
assignment without such consent, approval or waiver
would constitute a breach of such item or create in
the issuer or any party thereto the right or power
to cancel or terminate such item and (ii) Coltec
will cooperate with Purchaser in any reasonable
arrangement designed to provide Purchaser with the
benefit of the rights of Coltec under such item at
no cost or penalty to Purchaser, including
enforcement (at Coltec's expense) of any and all
rights of Coltec against such person as Purchaser
may reasonably request (provided, however, that
Coltec will only be obligated to pay for the
enforcement or defense of any claim under such an
arrangement to the extent that the claim relates to
the validity or enforceability of the arrangement
which is made in lieu of the consent, approval or
waiver, as opposed to claims related to the actual
benefits, rights, and obligations conferred by the
arrangement).
7.3 Access to Former Employees. After the Closing, Purchaser
will make available to Coltec, Purchaser's (or its subsidiaries')
employees who may reasonably be needed in order to defend or
prosecute any legal or administrative action to which Coltec is a
party or any matter referred to in Section 7.8 below. Coltec will
pay or reimburse Purchaser for its reasonable costs and expenses
which may be incurred in connection therewith (including a per
diem charge which reflects the actual out of pocket cost to
Purchaser of such employee). Purchaser shall not be required,
however, to maintain in its employ after Closing any employee by
reason of this Section 7.3.
7.4 Use of Trademark. After the Closing, other than as
permitted by the License Agreements, Purchaser will not use the
trademarks or tradenames of the Excluded Intellectual Property in
any way; except Purchaser shall be permitted (a) for the period of
up to six (6) months after Closing, to use "Coltec" and "Holley"
and the associated corporate logo (design) in the building,
equipment, furniture, stationery, office supplies and the like
existing on the Closing Date, and (b) for the period of up to six
(6) months after Closing or until such items are consumed,
whichever is earlier, to use "Coltec", and "Holley" and the
associated corporate logo (design) on the inventory of Products and
the corresponding packaging therefor existing on the Closing Date.
7.5 Warranty Claims. After the Closing, Purchaser shall
honor, for Products manufactured and sold by Coltec or the
Operating Units prior to the Closing Date in the conduct of the
Business, those warranty claims made in accordance with written
warranties given by Coltec or the Operating Units to their
customers (a) which, when aggregated with the cost of all prior
claims for such model number, are expected to cost no more than
$100,000 in any one calendar year and (b) which, when aggregated
with the cost of all prior claims for such model number, are
expected to cost more than $100,000 in any one calendar year and
are approved in advance by Coltec, by repairing or replacing
defective Products. With regard to such warranty claims, Coltec
shall reimburse Purchaser within ten (10) business days after
Purchaser's invoice date for the actual and reasonable costs
incurred by Purchaser in performing such warranty work, provided
that Purchaser shall provide to Coltec, upon request, documentation
reasonably supporting such costs. Purchaser shall make available
for inspection by Coltec, on reasonable notice, records relating to
the need for such work, the cost of performing such work and the
applicability of Coltec's written warranties to such warranty work.
As to any warranty claim which Purchaser expects, in good faith, to
cost more than $100,000 when aggregated with the cost of all prior
claims for such model number in any one calendar year, Purchaser
shall notify Coltec of such claim in writing. If Coltec does not
give a written response regarding such claim within 30 days after
receipt of such notification, such claim shall be considered
approved for purposes of this Section 7.5 and Coltec shall be
required to reimburse Purchaser. If Coltec denies liability for
such warranty claim, Purchaser may determine to honor or deny such
claim without prejudicing any of its rights or remedies hereunder.
Purchaser shall not be responsible for any product recall
obligations or product liability of Coltec for Products sold prior
to the Closing.
7.6 Covenant Not to Compete/Nonsolicitation. Until the fifth
anniversary of the Closing, Coltec shall not, anywhere in the
World, as an owner, consultant, joint venturer, member of a limited
liability company, general partner, controlling shareholder of a
privately-held corporation or shareholder to the extent of twenty-
five percent (25%) or more of the outstanding shares of a publicly-
held corporation, either directly or indirectly, engage or
participate in or assist others in engaging or participating in the
business of designing, manufacturing and/or marketing products that
are directly competitive with the Business as conducted as of the
Closing or the Products existing or under development as of the
Closing; except the Licensee under the Patent License Agreement and
its sublicensees and/or assigns thereunder, provided the Patent
License Agreement has not been terminated, may engage and
participate in the business of designing, manufacturing and
marketing the products expressly licensed in Sections 3.1, 3.2, 3.3
and 3.4 of the Patent License Agreement subject to the restrictions
stated therein. For two (2) years after the Closing Date, Coltec
shall not without Purchaser's prior written consent, directly or
indirectly, solicit for employment, hire as an employee, consultant
or contractor or otherwise engage any employee who was employed by
Coltec related to the Business within six (6) months of the date
hereof unless such person is no longer employed by Purchaser at the
time Coltec solicits such employee for employment. Coltec shall not
at any time sell, license or otherwise transfer Gylon or Hy-Carb
technology for use as a friction material in powertrain components
used in automotive vehicles, trucks, or off-road vehicles.
Notwithstanding anything contained herein, Coltec and its
Affiliates shall have the unrestricted right to sell, license or
otherwise transfer Gylon or Hy-Carb technology except as provided
in the immediately preceding sentence and to manufacture, use and
sell Gylon and Hy-Carb products, other than Products of the
Business, to third parties. Purchaser, its Affiliates, successors
and assigns shall only make, use and sell Gylon and Hy-Carb
Products for use as a friction material in powertrain components of
automotive vehicles, trucks and off-road vehicles.
7.7 Dispute Resolution. If, after the Closing, but before
the expiration of the applicable survival periods set forth in
Section 3.3 of this Agreement, the parties should have any dispute
arising out of or relating to this Agreement or the parties'
respective rights and duties hereunder (excluding only those
matters relating to the Adjustment to the Purchase Price that are
to be resolved in accordance with the process described in Section
2.7 hereof) (in each case a "Dispute"), then the parties will
resolve such Dispute in the following manner:
(a) Either party may at any time deliver to the other a
written notice identifying a Dispute (the "Resolution
Notice"). The Resolution Notice shall initiate the
dispute resolution mechanism contemplated by this Section
7.7. Within fifteen (15) days after delivery of the
Resolution Notice, the receiving party shall submit to
the other a written response. The Resolution Notice and
the response thereto shall state with particularity the
facts and conditions giving rise to the Dispute and shall
include (i) a statement of each party's position and a
summary of arguments supporting that position and (ii)
the name and title of the persons who will represent that
party in the negotiations contemplated by Section 7.7(b)
below.
(b) Within thirty (30) days after delivery of the Resolution
Notice, the designated representatives of both parties
shall attempt in good faith to resolve the Dispute and
shall meet at a mutually acceptable time and place, and
thereafter as they reasonably deem necessary, to attempt
to resolve the Dispute. All negotiations pursuant to
this Section 7.7(b) shall be confidential and shall be
treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.
(c) If the representatives of the parties are unable to
resolve the Dispute through negotiations within ninety
(90) days after delivery of the Resolution Notice, then
the Dispute shall be resolved by final and binding
arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), as
the same may be modified by the terms of this Agreement.
Within ten (10) days of the expiration of the ninety (90)
day period referenced in this Section 7.7(c), the
demanding party may initiate arbitration by making a
written demand for arbitration on the other party and
simultaneously filing copies of the demand, together with
the required fees, with the office of the AAA in Chicago,
Illinois. Within ten (10) business days after receipt of
such demand by the other party, each party shall
designate one arbitrator (who shall have had no material
business relationship with the designating party within
the last three (3) calendar years) and the two
arbitrators named by the parties will, within ten (10)
business days thereafter, select a third arbitrator (the
three arbitrators being collectively referred to herein
as the "Arbitration Panel"). The Arbitration Panel shall
cause a hearing to be held within sixty (60) calendar
days after the date the third arbitrator is selected and
shall render an award within ninety (90) calendar days
from the commencement date of the hearing based on the
unanimous or majority decision of the arbitrators.
(d) The place of arbitration shall be Chicago, Illinois. The
parties expressly covenant and agree to be bound by the
decision of the Arbitration Panel and accept any such
decision as the final determination of the matter in
dispute. Any decision, award and/or judgment rendered by
the Arbitration Panel may be entered in any court having
competent jurisdiction. In no event shall any demand for
arbitration be made after the date that institution of
legal or equitable proceedings based upon the claim,
dispute or other matter would be barred by this
Agreement. The expenses and fees of the Arbitration
Panel shall be borne as set forth in the award of the
Arbitration Panel. Each party shall bear its own legal
fees and expenses.
(e) The Arbitration Panel is empowered to award any damages
it believes are reasonable under the circumstances, but
it is not empowered to award punitive damages.
(f) The procedures specified in this Section 7.7 shall be the
sole and exclusive procedures for the resolution of a
Dispute; provided, however, that a party, without
prejudice to the above procedures, may seek a preliminary
injunction or other provisional judicial relief, if in
its sole judgment such action is necessary to avoid
irreparable damage or to preserve the status quo.
7.8 Access to Records. Coltec and the Purchaser each agree
to maintain and make reasonably available to the other, in such
form as the other shall reasonably request, all books and records
of or relating to the Business which are kept by such party and are
reasonably necessary in connection with (i) responding to inquiries
regarding the Business from regulatory (including Tax) authorities;
(ii) the preparation of Tax returns and/or claims for refunds;
(iii) audits of Tax returns or claims for refund; (iv) responding
to inquiries from any customer or supplier of the Business; (v)
any litigation involving the Business to which Purchaser or Coltec
or any of their respective Affiliates is or becomes a party; (vi)
any liability, claim or other litigation, investigation or
proceeding, whether pending, threatened or existing hereafter,
which may involve Purchaser or Coltec or any of their respective
Affiliates, or (viii) any indemnification obligation set forth in
this Agreement. Each party agrees to retain all such records for
a period of ten years or in accordance with past practice,
whichever is longer, and to offer to turn such records over to the
other party before destroying them.
7.9 Financial Statements. Coltec will, within sixty (60)
days after the Closing Date, deliver to Purchaser audited financial
statements for the Business for the years ended December 31, 1994
and December 31, 1995, unaudited interim financial statements for
the Business for the quarters ended March 31, 1995 and March 31,
1996 and an audited balance sheet for the Business as of the
Closing Date (the "Closing Date Balance Sheet"), together with the
accountant's reports with respect to such financial statements.
Such financial statements will be in accordance with GAAP (except,
with respect to the interim financial statements, for non-recurring
normal audit adjustments), and will be in conformance with the
requirements of Regulation S-X (Form and Content of and
Requirements for Financial Statements, Securities Act of 1993,
Securities Exchange Act of 1934, etc.). Coltec's auditors will
provide Purchaser with access to the workpapers relating to such
financial statements.
ARTICLE VIII
Employees And Employee Benefits
8.1 Union Represented Employees - Warren Plant
(a) Assignment - Assumption. At the Closing:
(i) Coltec shall, except for the matters set forth in
Section 8.1(a)(ii) through (iv) below, assign to a
BWA Subsidiary and the BWA Subsidiary shall offer
to assume the collective bargaining agreement, the
supplemental agreements and the letters of
understanding listed in Schedule 8.1(a)
(collectively the "UAW Agreement") which agreement,
made November 1, 1994, is applicable to the hourly-
rated production, tool maker and maintenance
personnel (the "Warren Union Represented
Employees") located at Coltec's Warren, Michigan
Plant ("Warren Plant"); provided however that such
assignment and assumption shall not be effective if
the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of
America UAW and its Local Union No. 983
(collectively, the "UAW Union") does not accept the
BWA Subsidiary's offer to assume the UAW Agreement
pursuant to Section 8.1(a)(v) below,
(ii) Coltec shall not assign, and neither the Purchaser
nor the BWA Subsidiary shall assume or have any
liability for, the rights, obligations and
liabilities of the Holley Detroit Hourly Employees'
Pension Plan, a/k/a Coltec Industries Inc Non-
Contributory Pension Plan for Hourly Employees of
Holley Automotive Division ("Holley UAW Pension
Plan"). Coltec shall retain the rights,
obligations and liabilities of the Holley UAW
Pension Plan,
(iii) Coltec shall not assign, and neither the
Purchaser nor the BWA Subsidiary shall assume
or have any liability for, the terms and
conditions of Article 19 of the UAW Agreement
relating to the Pension Supplement and the
Agreement Regarding Pension Plan Amendment
made November 1, 1994 (collectively the "UAW
Pension Agreement"). Coltec shall retain the
obligations and liabilities of the UAW Pension
Agreement and shall, in the manner more fully
described in Section 8.3(a) below, fulfill the
terms and conditions of Article 19 of the UAW
Agreement relating to the Pension Supplement
and the Agreement Regarding Pension Plan
Amendment under the Holley UAW Pension Plan,
(iv) Coltec shall not assign, and neither the Purchaser
nor the BWA Subsidiary shall assume or have
liability for, any group insurance policies,
obligations and liability of any kind (including,
but not limited to, those relating to health,
dental, prescription drug, life, accidental death
and dismemberment and sickness and accident) under
the UAW Agreement with respect to (A) the Warren
Union Represented Employees who are not in active
employment status at the Warren Plant on the day
immediately prior to the Closing Date (the "Non-
Active Warren Union Represented Employees") and (B)
the terminated or retired Warren Union Represented
Employees (the "Former Warren Employees") and
(C) the Active Warren Union Represented Employees
to the extent not provided for in Section 8.5
below. Coltec shall retain such group insurance,
obligations and liabilities in the manner more
fully described in Section 8.5 below, and
(v) The BWA Subsidiary shall inform the UAW Union that
it is willing to assume the UAW Agreement subject
to the exceptions set forth in Section 8.1(a)(ii)
through (iv) above.
(b) Employment. All of the Warren Union Represented
Employees who are in active employment status at the
Warren Plant on the day immediately prior to the Closing
Date (the "Active Warren Union Represented Employees")
shall cease their employment status with Coltec at the
Closing and simultaneously therewith shall be offered
employment by the BWA Subsidiary under the terms and
conditions of the UAW Agreement subject to the provisions
of Section 8.1(a) above. Any Non-Active Warren Union
Represented Employee who had a right to return to
employment at the Warren Plant under the UAW Agreement
(such as an employee on layoff status or on an approved
medical or disability leave of absence, etc.), all of
whom are listed in Schedule 8.1(b), shall be extended an
employment offer by the BWA Subsidiary at the time each
such employee is eligible, if at all, under the UAW
Agreement to return to work, and if employed, shall for
the purposes of events which occur after such date of
employment be considered an Active Warren Union
Represented Employee.
8.2 Hourly Paid Non-Union Represented Employees and Salaried
Employees.
(a) Employment. All of the hourly paid employees of Coltec
related to the Business who are not represented by a
collective bargaining agent (the "Non-Union Represented
Employees") and all of the employees of Coltec related to
the Business who are paid on a salaried or commission
basis (the "Salaried Employees") (collectively, the "Non-
Represented Employees") who were engaged in the conduct
of the Business and in active employment status on the
day immediately prior to the Closing Date (the "Active
Non-Represented Employees") shall cease their employment
with Coltec at the Closing and simultaneously therewith
shall be offered employment with the BWA Subsidiary.
Non-Represented Employees who were not in active
employment status and who on the Closing Date had rights
to return to employment (the "Non-Active Non-Represented
Employees") under Coltec's policies (such as employees on
an approved medical or disability leave of absence,
approved personal leave of absence or employees having
recall rights pursuant to a written layoff policy, etc.)
all of whom are listed in Schedule 8.2(a) will be offered
employment by the BWA Subsidiary at the time that each
such employee is eligible to return to work or additional
employment in the applicable job classification is deemed
warranted by the BWA Subsidiary, provided that at that
time a right to return to employment would have existed
for such employee under Coltec's policies had they been
in effect. If such Non-Active Non-Represented Employee
is employed by the BWA Subsidiary pursuant to the
preceding sentence, such employee shall for the purposes
of events which occur after such date of employment be
considered an Active Non-Represented Employee.
(b) Wage Rates. The BWA Subsidiary shall make each Active
Non-Represented Employee an offer of employment at the
same current base hourly rate of pay or current base
monthly salary, as applicable, that was in effect for
such employee immediately prior to the Closing Date. The
BWA Subsidiary shall have the unlimited right to adjust
any individual Non-Represented Employee's wage rate at
any time after employment is accepted.
8.3 Retirement Plans
(a) Holley UAW Pension Plan. With respect to the Holley UAW
Pension Plan, Coltec and the Purchaser agree as follows:
(i) As soon as practicable after the Closing, Coltec
shall amend the Holley UAW Pension Plan to provide
that the service of Warren Union Represented
Employees with the BWA Subsidiary from the Closing
Date through October 31, 1997 will be counted as
Credited Service under the Holley UAW Pension Plan
for the purpose of computing any benefit, allowance
or payment thereunder,
(ii) Coltec shall implement the scheduled January 1,
1997 benefit increase under the Holley UAW Pension
Plan as set forth in the Agreement Regarding
Pension Plan Amendment and shall be solely
responsible for the costs of such increased benefit
level,
(iii) Concurrent with October 31, 1997, or at the
time that it is permissible pursuant to any
Code and PBGC notice requirements for the
cessation of benefit accruals under defined
benefit pension plans, Coltec will freeze all
benefit accruals under the Holley UAW Pension
Plan effective as of October 31, 1997 and
shall treat the Warren Union Represented
Employees as inactive deferred vested
participants; provided however, that all
Warren Union Represented Employees who on the
day prior to the Closing Date did not have a
vested benefit in the Holley UAW Pension Plan
shall become fully vested in the benefit they
had accrued as of the Closing Date and, if
such employee is employed by the BWA
Subsidiary after the Closing Date, in the
benefit he/she accrues based on Credited
Service to the earlier of such employee's
termination date or October 31, 1997,
(iv) If a Warren Union Represented Employee retires from
or is separated from service with the BWA
Subsidiary prior to October 31, 1997, his/her
eligibility for a Normal Retirement Benefit and/or
Early Retirement Benefit in accordance with the
provisions of the Holley UAW Pension Plan shall be
based on the Credited Service such individual
actually accrued up to the date of retirement. If
a Warren Union Represented Employee retires from or
is separated from service with the BWA Subsidiary
after October 31, 1997, he/she shall be entitled to
a deferred vested pension benefit pursuant to the
terms of the Holley UAW Pension Plan based on the
Credited Service such individual actually accrued
up through October 31, 1997. Neither the Purchaser
nor the BWA Subsidiary shall be responsible for, or
have any obligations or liabilities with respect
to, the Holley UAW Pension Plan or any pension
obligation pertaining to the UAW Agreement and the
Agreement Regarding Pension Plan Amendments for the
period from the Closing Date through October 31,
1997. Coltec shall indemnify and hold Purchaser
and the BWA Subsidiary harmless from and against
all claims related to the Holley UAW Pension Plan
and the pension obligation pertaining to the UAW
Agreement and the Agreement Regarding Pension Plan
Amendments. The Purchaser or the BWA Subsidiary,
as applicable, shall provide to Coltec timely and
accurate information when requested to do so by
Coltec, regarding the status of employment of the
Warren Union Represented Employees which
information is needed by Coltec for the
administration of the Holley UAW Pension Plan after
the Closing and until such time as the Warren Union
Represented Employees terminate their employment
with the BWA Subsidiary, and
(v) Within ten (10) days after January 1, 1997, the BWA
Subsidiary shall pay to Coltec a sum of money
actuarially determined by Coltec s actuary, Buck
Consultants, based upon the actuarial assumptions
used in the 1995 Actuarial Valuation of the Holley
UAW Pension Plan which amount will equal:
(A) the present value of the cost attributable to
the addition of Credited Service accrued by
the Warren Union Represented Employees under
the Holley UAW Pension Plan for service with
the BWA Subsidiary from the Closing Date
through October 31, 1997 based on the pension
benefit level of $19.00 for each year of
credited service pursuant to Section 8.3
(a)(i) above, and
(B) the present value of the cost attributable to
the increase in the pension benefit level
effective as of January 1, 1997 from $19.00 to
$20.00 for each year of Credited Service of
the Warren Union Represented Employees under
the Holley UAW Pension Plan for service with
the BWA Subsidiary from January 1, 1997
through October 31, 1997,
provided however that the total amount
required to be paid under this Section 8.3
(a)(v) shall not exceed $40,000.00.
(b) Non-Represented Employees. With respect to the Non-
Contributory Pension Plan for Employees of Coltec
Industries Inc (the "Hourly Pension Plan") and the
Retirement Plan For Salaried Employees of Coltec
Industries Inc (the "Salaried Pension Plan"), Coltec and
the Purchaser agree as follows:
(i) Concurrent with the Closing Date, or at the time
that it is permissible pursuant to any Code and
PBGC notice requirements for the cessation of
benefit accruals under defined benefit pension
plans, Coltec will freeze all service and benefit
accruals effective as of the Closing Date under the
Hourly Pension Plan and the Salaried Pension Plan
(collectively the "Coltec Pension Plans") for all
of the Non-Represented Employees and shall
thereafter treat such individuals as inactive
deferred vested participants under the Coltec
Pension Plans; provided however, that all the Non-
Represented Employees who on the day prior to the
Closing Date did not have a vested benefit in the
applicable Coltec Pension Plans shall become fully
vested in the benefit that they had accrued under
the applicable Coltec Pension Plans as of the
Closing Date,
(ii) Neither the Purchaser nor the BWA Subsidiary shall
be responsible for, or have any obligations or
liabilities with respect to, the Coltec Pension
Plans. Coltec shall indemnify and hold Purchaser
and the BWA Subsidiary harmless from and against
all claims related to the Coltec Pension Plans, and
(iii) Non-Represented Employees who are eligible to
retire under the Coltec Pension Plans may
elect to retire from Coltec as of the Closing
Date and retain the right to be rehired by the
BWA Subsidiary as provided for in Section
8.2(a). The election to retire from Coltec
must be submitted prior to Closing. A Coltec
employee who elects to retire under this
paragraph shall have his or her years of
service with Coltec considered for purposes
only of eligibility and vesting under the BWA
Subsidiary's welfare and fringe benefit plans.
8.4 Savings Plans. With respect to the Coltec Industries Inc
Retirement Savings Plan For Salaried Employees and the Coltec
Industries Inc Retirement Accumulation Plan (collectively the
"Coltec Savings Plan"), Coltec and the Purchaser agree as follows:
(a) Coltec shall make all contributions required of it
under the applicable Coltec Savings Plans for the
Active Warren Union Represented Employees and the
Active Non-Represented Employees who are
participants in such plans (the "Savings Plans
Members") for all periods of time up to and
including the Closing Date and shall cause the
applicable Coltec Savings Plan to fully vest each
such Savings Plans Member in the balance of his/her
account as of the Closing Date,
(b) Coltec shall allow any Savings Plans Members with
an account balance under the Coltec Savings Plans
to withdraw and/or transfer his/her account balance
distribution.
(c) Neither the Purchaser nor the BWA Subsidiary shall
be responsible for, or have any obligations or
liabilities with respect to, the Coltec Savings
Plans. Coltec shall indemnify and hold Purchaser
and the BWA Subsidiary harmless from and against
any and all claims related to the Coltec Savings
Plans, and
(d) The Purchaser shall cause the BWA Subsidiary to
establish one or more defined contribution plan(s)
to cover the Savings Plans Members or shall include
such groups of employees in currently established
defined contribution plans (the "BWADC Plans").
Under the terms of the BWADC Plans, the Savings
Plans Members shall receive credit for all service
with Coltec for purposes only of eligibility and
vesting. Purchaser shall indemnify and hold Coltec
harmless from and against any and all claims
related to the BWADC plans.
8.5 Welfare Benefit Plans.
(a) Purchaser Welfare Benefit Plans. The Purchaser agrees
to cause the BWA Subsidiary to establish, effective as of
the Closing Date, employee welfare benefit plans which
shall provide the opportunity for health, medical,
dental, vision, life insurance and disability coverages
(the "Purchaser's Welfare Benefit Plans") for the Active
Warren Union Represented Employees as well as the Active
Non-Represented Employees. Purchaser's Welfare Benefit
Plans will provide that service with Coltec prior to the
Closing Date will be treated as service for meeting any
applicable waiting periods and waiver periods. Non-
Active Warren Union Represented Employees, and the Non-
Active Non-Represented Employees shall be eligible for
coverage under such Purchaser's Welfare Benefit Plans
when the individual employee begins employment with BWA
Subsidiary, subject to the provisions set forth in this
Section 8.5(b) through (e).
(b) Welfare Plans for Active Warren Union Represented
Employees. Purchaser agrees that, subject to the
acceptance of the offer of assignments set forth in
Section 8.1(a)(i), the Purchaser's Welfare Benefit Plans
which are established for the Active Warren Union
Represented Employees shall provide the same type of
benefits as the welfare benefit plans covering the Active
Warren Union Represented Employees immediately prior to
the Closing Date for the remaining term of the UAW
Agreement, as applicable, except that the Purchaser s
Welfare Benefit Plans shall not contain provisions or
provide coverage for, and Purchaser shall not have
obligations or liabilities with respect to welfare
benefit coverage for:
(i) retirees or former employees (and the dependent(s)
of either class) who were employed at any time
prior to the Closing Date as a Warren Union
Represented Employee but who on the day immediately
prior to the Closing Date were not employed by
Coltec,
(ii) the Non-Active Warren Union Represented Employees
(and their dependent(s)), until such employee(s)
become employed by the BWA Subsidiary.
(iii) the Active Warren Union Represented Employees
(and their dependent(s)) upon their
retirement, if such retirement occurs prior to
January 1, 1998,
(iv) the Active Warren Union Represented Employees (and
their dependent(s) as described in Section
8.5(e)(iii), and
(v) the persons described in Section 8.5(e).
(c) Welfare Benefits Plans For Active Non-Represented
Employees. The Purchaser shall cause the BWA Subsidiary
to establish Welfare Benefit Plans for the Active Non-
Represented Employees, the type of benefits which, at the
discretion of the BWA Subsidiary, will either be similar
to, but not necessarily the same as, those presently
offered to them by Coltec, but excluding all provisions
relating to retiree welfare benefit coverages, or similar
to, but not necessarily the same as, those offered by the
BWA Subsidiary or related subsidiaries of the Purchaser
for new hires, or a combination of the above two
alternatives. The Active Non-Represented Employees shall
receive credit for years of service with Coltec for
purposes only of eligibility and vesting under the BWA
Subsidiary's Welfare Benefit Plans. The Purchaser and the
BWA Subsidiary shall have the unlimited right to amend,
modify or terminate its Welfare Benefit Plans in the
future when and as it deems appropriate. Further, neither
the Purchaser or the BWA Subsidiary shall provide
coverage for nor shall the Purchaser or the BWA
Subsidiary have any obligations or liabilities with
respect to welfare benefit coverages for:
(i) retirees or former employees (and the dependent(s)
of either class) who were employed at any time
prior to the Closing Date as Non-Represented
Employees, but who on the date immediately prior to
the Closing Date were not employed by Coltec,
(ii) Non-Active Non-Represented Employees (and their
dependent(s)), until such employee(s) become
employed by the BWA Subsidiary,
(iii) the Active Non-Represented Employees (and their
dependent(s)) upon their retirement, if such
retirement occurs prior to January 1, 1998,
(iv) the Active Non-Represented Employees (and their
dependent(s) as described in Section 8.5(e)(iii),
and
(v) the persons described in Section 8.5(e).
(d) Indemnification by Coltec. Coltec shall indemnify and
hold Purchaser and the BWA Subsidiaries harmless from and
against all claims filed by the individuals set forth in
Section 8.5(b)(i) through (v) and Section 8.5(c)(i)
through (v) above (the "Non-Covered Persons") and for any
other person or organization seeking to have Purchaser or
the BWA Subsidiary provide coverages under the BWA
Subsidiary's Welfare Benefit Plans to the Non-Covered
Persons.
(e) Claims Under Coltec's Welfare Benefit Plans. Coltec
shall retain all the obligations and liabilities of any
kind arising under or related to claims under its health,
medical, dental, vision, life insurance and disability
coverages ("Coltec Welfare Benefit Plans") based on
charges for covered expenses incurred:
(i) By the persons described in subsection (b)(i) and
(c)(i) above;
(ii) By an Active Warren Union Represented Employee or
an Active Non-Represented Employee (and the
eligible dependent(s) of either class) upon their
retirement, if such retirement occurs prior to
January 1, 1998;
(iii) By an Active Warren Union Represented Employee or
an Active Non-Represented Employee (and the
eligible dependent(s) of either class), if such
person, during the period from and after the
Closing Date and prior to January 1, 1998, makes
application for a pension benefit under either
the Holley UAW Pension Plan, the Hourly Pension
Plan or the Salaried Pension Plan while employed
by the BWA Subsidiary; provided, however, that
the BWA Subsidiary s Welfare Benefit Plans will
provide primary coverage and the Coltec Welfare
Benefit Plans will provide secondary coverage for
that period during which such person remains
employed by the BWA Subsidiary;
(iv) By an Active Warren Union Represented Employee (and
his/her eligible dependent(s)) and/or an Active
Non-Represented Employee and his/her eligible
dependents covered under the Coltec Welfare Benefit
Plans for claims incurred on or prior to 11:59 p.m.
(Central Time) on the Closing Date;
(v) By a Non-Active Warren Union Represented Employee
(and his/her eligible dependent(s)), which
liability for claims shall continue until the
earlier of (A) his/her loss of seniority under the
UAW Agreement and COBRA coverage, or (B) his/her
employment with the BWA Subsidiary;
(vi) By a Non-Active Non-Represented Employee (and
his/her eligible dependent(s)), which liability for
claims shall continue until the earlier of (A)
his/her loss of coverages under the applicable
Coltec policy (medical leave, disability leave,
personal leave, layoff) and COBRA coverage, or (B)
his/her employment with the BWA Subsidiary; and
(vii) By an Warren Active Union Represented Employee
(and his/her eligible dependent(s)), by an Active
Non-Represented Employee (and his/her eligible
dependent(s)), by a Non-Active Warren Union
Represented Employee (and his/her eligible
dependent(s)) after such employee becomes
employed by Purchaser, and by a Non-Active Non-
Represented Employee and his/her eligible
dependent(s) after such employee become employed
by the Purchaser, (collectively, the "Active
Employees"), who incur a claim(s) after the
Closing Date as a result of an injury or sickness
that was treated within twelve (12) months prior
to the Closing Date (a "Pre-Existing Condition").
Coltec shall retain all the obligations and
liabilities related to a Pre-Existing Condition
of such an individual until the earlier of (A)
the Pre-Existing Condition no longer exists, or
(B) January 1, 1997, and, provided that, the
individual is not confined for the Pre-Existing
Condition on January 1, 1997.
(f) Indemnification by Purchaser. Purchaser shall indemnify
and hold Coltec and the Operating Units harmless from and
against all claims filed by individuals who become
employees of the BWA Subsidiaries and either (i) are not
Non-Covered Persons, or (ii) for which Coltec has not
retained any obligations or liabilities under this
Section 8.5 which claims seek to have Coltec provide
coverage to such person.
8.6 Employment Claims
(a) Claims Filed Prior to Closing Date. Coltec shall be
responsible and liable for any claim, complaint, charge
or lawsuit filed prior to the Closing Date which alleges
a violation of any federal, state, county, local or
governmental law, decree, ordinance or regulation
applicable to an act or omission of Coltec pertaining to
employment, employment practices or labor relations.
(b) Claims Filed On or After the Closing Date. The Purchaser
shall be responsible and liable for any claim, complaint,
charge or lawsuit filed on or after the Closing Date
which alleges a violation of any federal, state, county,
local or other governmental law, decree, ordinance or
regulation applicable to an act or omission by the BWA
Subsidiary pertaining to employment, employment practices
or labor relations except that:
(i) For any claim, complaint, charge or lawsuit which
is filed after the Closing Date by (A) an
individual who was employed by Coltec prior to the
Closing Date, or by a person who was an applicant
for employment with Coltec (but was not hired)
prior to the Closing Date, and (B) alleges a
violation of a federal, state, county, local or
other governmental law, decree, ordinance or
regulation which pertains in part to an act or
event that occurred prior to the Closing Date and
relates to employment or employment practices,
Coltec shall be responsible and liable for any
monetary damages that are part of a settlement or
court order to the extent that such damages are
attributable to the period prior to the Closing
Date and all attorneys fees and court costs to the
same proportional extent. Coltec and Purchaser
shall cooperate in good faith to develop strategies
to minimize each party s potential exposure with
respect to any such claims, complaints, charges or
lawsuits. Purchaser shall not consent to any
settlement of nor concede any issue regarding such
claims, complaints, charges or lawsuits which
affects Coltec without the prior written consent of
Coltec, which consent shall not be unreasonably
withheld,
(ii) For any unfair labor practice complaint filed
within six months after the Closing Date and any
grievance or arbitration claim under the UAW
Agreement filed within ninety (90) days after the
Closing Date with respect to an act or event
occurring prior to the Closing Date, Coltec shall
be responsible and liable for any monetary damages
that are part of a court order or Arbitrator's
award to the extent that such damages are
attributable to the period prior to the Closing
Date. Coltec and Purchaser shall cooperate in good
faith to develop strategies to minimize each
party s potential exposure with respect to such
complaints and/or claims, and
(iii) In the event that the matters contemplated by
Section 8.6(b)(i) or (ii) above occur, the BWA
Subsidiary will provide Coltec with any
information, material or documents which Coltec
shall request as part of its defense and Coltec
shall not consent to any settlement nor concede
any issue in litigation or arbitration which
affects Purchaser or the BWA Subsidiary without
the prior written consent of the BWA Subsidiary,
which consent shall not be unreasonably withheld.
8.7 Worker's Compensation Claims and Worker's Occupational
Diseases Claim. Coltec shall be responsible for the defense and,
when it is adjudicated or administratively determined, liable for
any claim which may be asserted by Active Employees and Non-Covered
Persons which arises under the occupational disease and disablement
statutes (or any similar statutes) and regulations thereof of the
states where the Operating Units facilities are located and is
based on a reported injury sustained solely while employed by
Coltec on or prior to the Closing Date. The BWA Subsidiary shall
be responsible for the defense and, when it is adjudicated or
administratively determined, liable for any claim arising by an
Active Employee under the aforementioned occupational disease and
disablement statutes (or any similar statutes) and regulations
thereof which is based on a reported injury sustained solely on or
after the Closing Date. If a claim is asserted on or after the
Closing Date by an Active Employee under the aforementioned
occupational disease and disablement statutes (or any similar
statutes) and regulations thereunder and such claim alleges a
reported injury sustained in part before the Closing Date and in
part on or after the Closing Date, the BWA Subsidiary shall be
responsible for the defense of such claim and if an award is
adjudicated or administratively determined for such Active
Employee, Coltec shall be liable for and pay to the BWA Subsidiary,
that percentage of the award which is based on the time period from
the determined beginning date of the injury to the Closing Date
over that period of time from the determined beginning date to the
date of the award. If such pro rata amount cannot be determined,
the Purchaser and Coltec shall in good faith negotiate and agree
upon the proration of the award which shall be in accord with the
principles of the preceding sentence.
8.8 Vacation and Holiday Pay. As of the Closing Date, the
BWA Subsidiary will assume all obligations of Coltec to the Active
Employees for any vacation pay entitlement and holiday pay
entitlement which exist as of the Closing Date. The Purchase Price
shall be reduced by the amount of such obligation, which obligation
will be determined by Purchaser and Coltec on the basis of Coltec's
books and records in accordance with the existing policies of
Coltec regarding accrual of vacation and holiday pay. The amount
so determined will be set forth on Schedule 8.8 to this Agreement.
8.9 Severance. Neither Coltec, the Purchaser nor the BWA
Subsidiary shall be responsible by virtue of anything contained
herein for severance pay to any Active Warren Union Represented
Employee or Active Non-Represented Employee who declines the BWA
Subsidiary's offer of employment. Coltec shall be responsible for
any severance pay due to a Non-Active Warren Union Represented
Employee or a Non-Active Non-Represented Employee who is terminated
prior to the Closing Date or terminated after the Closing Date as
a result of the loss of his/her re-employment right.
8.10 Other Agreements, Plans, Understandings and Practice.
Subject to Article IX but not subject to the Deductible and unless
otherwise specifically assumed by Purchaser in the above provisions
of Article VIII, Coltec shall retain any and all obligations or
liabilities with respect to any Coltec agreement, plan,
understanding or practice which provided or promised a payment,
benefit, contribution, prerequisite or service to Active Employees
or Non-Covered Persons and shall indemnify and hold Purchaser and
the BWA Subsidiary harmless from and against all claims related
thereto. Purchaser and the BWA Subsidiary shall jointly and
severally indemnify and hold Coltec harmless from and against any
and all claims related in any way to any matter specifically
assumed by Purchaser or the BWA Subsidiary in Article VIII hereof.
8.11 Termination or Layoffs.
(a) With respect to the termination or layoff of any Active
Employee after the Closing Date, the BWA Subsidiary will
comply fully with the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN").
(b) With respect to the termination or layoff of any of the
employees of the Business prior to the Closing Date, as
well as the termination of those Active Warren Union
Represented employees and Active Non-Represented
Employees who decline Purchaser's offer of employment,
Coltec will comply fully with WARN.
8.12 Obligation to Prepare W-2s. Coltec will prepare and
cause to be filed 1996 Forms W-2 for all periods through and
including the Closing Date for all employees of the Business who
are at the time of the Closing Date paid by Coltec s Corporate
Office in New York, New York. Purchaser or the BWA Subsidiary, as
applicable, agrees to assume Coltec s obligation to furnish Forms
W-2 to employees of the Business, other than those referred to
above, in accordance with the Alternative Procedure set forth in
Section 5 of Rev. Proc. 84-77, 1984-2 C.B. 753.
8.13 Coltec s Obligations Under the National Labor Relations
Act. Nothing in this Agreement or the Confidentiality Agreement
shall limit Coltec from fulfilling its obligations regarding notice
and effects bargaining under the National Labor Relations Act.
ARTICLE IX
Indemnification
9.1 Indemnification of Coltec. In addition to its
indemnification obligations under Article VIII above, and subject
to the provisions of this Article IX, Purchaser will indemnify,
defend and hold Coltec, its officers, directors, employees, agents,
affiliates, attorneys, consultants, successors and assigns (to the
extent the assignment to such assignee is permitted under Section
11.8 below) harmless from and against any and all Damages arising
out of or resulting from (a) any misrepresentation or breach of a
representation or warranty made by Purchaser for which notice is
given by Coltec within the period specified in Section 3.3 hereof;
(b) Purchaser's failure to pay or satisfy or cause to be paid or
satisfied any of the Assumed Liabilities when due and payable; (c)
nonperformance by Purchaser of any obligation or covenant to be
performed on the part of Purchaser under this Agreement; or (d)
except for matters which are indemnifiable by Coltec under Article
VIII above or Section 9.2 below, the operation of the Business or
the use or ownership of the Assets subsequent to Closing. The
indemnification under this Section 9.1 will be on a joint and
several basis among all entities which, for purposes of this
Agreement, constitute Purchaser.
9.2 Indemnification of Purchaser.
(a) In addition to its indemnification obligations under
Article VIII above, and subject to the provisions of this
Article IX, Coltec will indemnify, defend and hold
Purchaser, its officers, directors, employees, agents,
affiliates, attorneys, consultants, successors and
assigns (to the extent the assignment to such assignee is
permitted under Section 11.8 below) harmless from and
against any and all Damages arising out of or resulting
from (1) any misrepresentation or breach of any
representation or warranty by Coltec for which notice is
given by Purchaser within the period specified in Section
3.3 hereof; (2) the failure of Coltec fully to pay or
satisfy or cause to be paid or satisfied any of the
Excluded Liabilities when due and payable; (3)
nonperformance by Coltec of any obligation or covenant to
be performed on the part of Coltec under this Agreement;
(4) irrespective of whether Coltec has made a
representation or warranty with respect thereto and if a
representation or warranty has been made, irrespective of
whether it has been breached, any liability, cost or
expense (real or contingent, liquidated or unliquidated)
which relates directly or indirectly to the condition or
operation of the Business or the Assets as of or prior to
the Closing Date (Schedule 9.2 sets forth certain
hypothetical examples of indemnification required under
this Section 9.2) except for work plan items completed by
Coltec pursuant to Section 4.15 above and except for any
repairs, modifications and corrections for which Coltec
is released from liability under Section 10.3(a)(iii)(C);
(5) non-compliance with applicable bulk sales laws; or
(6) irrespective of whether Coltec has made a
representation or warranty with respect thereto and, if
a representation or warranty has been made, irrespective
of whether it has been breached or whether any item is
identified on a Schedule to this Agreement, any on-site
environmental condition including the presence of any
waste materials, existing on or before the Closing Date
with respect to the Assets or the Business or relating to
or emanating from activities, conditions or materials at,
of or from the Assets or Business on or before the
Closing Date (including transport or disposition of
substances and waste materials) without regard to Section
3.3 above; or (7) any matters identified on Schedules
2.5(b), 3.1(l) (other than the Ford Motor Company Zetec
Oil Pump situation, the potential pricing discount on the
Ford Motor Company V-6 oil pump and the Ford Motor
Company European Air Pump tooling reimbursement described
in items 7, 12 and 13 respectively on Schedule 3.1(l)),
3.1(n), 3.1(p), 3.1(s), or 3.1(t). Clause (4) of the
preceding sentence reflects the parties' intent that,
notwithstanding the representations and warranties
herein, other than the Assumed Liabilities, any Damages
relating to (i) the operation of the Business prior to
the Closing or (ii) any condition or circumstance
affecting the Facilities or Assets on the Closing Date be
retained by and be the responsibility of Coltec and
Purchaser shall be indemnified by Coltec against such
Damages pursuant to this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Section 9.2 or elsewhere in this Agreement, Coltec
shall have no indemnity obligations to Purchaser
hereunder in respect of Damages suffered, incurred or
sustained by Purchaser under clause Section 9.2 (a) (1) -
(4) unless, until and only to the extent that all such
Damages, when aggregated, exceed $283,000 (the
"Deductible"). Coltec's liability for any Damages
suffered, incurred or sustained by the Purchaser shall be
limited to the amount of Damages in excess of the
Deductible and the maximum aggregate liability of Coltec
for any claim under Sections 9.2(a)(1) - (4) shall not
exceed a sum equal to $141.5 million, which amount shall
be reduced by $14,150,000 on each of the second, third
and fourth anniversaries of the Closing Date. The
indemnification under Sections 9.2(a)(5), (6) and (7)
above will be without any minimum or maximum dollar
limitation.
(c) The allocations set forth in Schedule 2.11 to this
Agreement will have no effect on the calculation of
Damages or amounts to be indemnified under this Section
9.2
(d) The indemnification provided under this Section 9.2 will
be on a joint and several basis among all of the entities
which, for purposes of this Agreement, constitute Coltec.
9.3 Notice of Indemnification Claim.
(a) Following the assertion of any claim by a third party or
the occurrence of any event or the discovery of any facts
or conditions which could reasonably be expected to give
rise to a claim for indemnification from an indemnifying
party (the "Indemnitor") under this Article IX, an
indemnified party (the "Indemnitee") shall within a
reasonable time thereafter notify the Indemnitor in
writing of such claim, setting forth in reasonable detail
the specific facts and circumstances relating to such
claim and the amount of Damages claimed (or a non-
binding, reasonable estimate thereof if the actual amount
is not known or not capable of reasonable calculation)
(an "Indemnification Notice"). The Indemnitor shall in
no way be liable to the Indemnitee for any claim not
presented in accordance with the provisions of this
Section 9.3.
(b) With respect to a claim for indemnification under Section
9.2(a)(4) above, the Indemnitee's notice under Section
9.3(a) above must be given promptly after it discovers,
or in the normal course of operating the Business should
have discovered, the facts, circumstance or condition
giving rise to such claim.
(c) Notice of any claim for indemnification under Section 9.1
or 9.2(a) above must be given no later than the fifth
anniversary of the Closing Date, and any claim brought
thereafter is time-barred, except that no time limitation
shall apply to claims made under Section 9.1(b),
9.2(a)(2), 9.2(a)(6) or 9.2(a)(7) above.
9.4 Third Party Claims.
(a) If the facts or conditions giving rise to the right of
indemnification under this Article IX involve any actual
or threatened claim or demand by a third party against
Coltec or Purchaser or a claim by Coltec or Purchaser
against any third party (a "Third Party Claim"), the
Indemnitor shall have thirty (30) days following receipt
of the Indemnification Notice in respect of such Third
Party Claim to advise the Indemnitee as to whether
(1) the Indemnitor disputes or accepts, in whole or in
part, its liability to the Indemnitee, (2) the Indemnitor
desires to defend the Indemnitee against such Third Party
Claim and (3) the Indemnitor is financially capable of
making the required indemnification (for purposes of this
sentence, a written notification furnished in good faith
by the Indemnitor providing adequate assurance as to the
items described in clauses (1) through (3) of this
sentence will be sufficient, although the Indemnitee will
be entitled to reasonably request that the Indemnitor
ratify and confirm such written assurance from time to
time). During such 30 day period (or such shorter period
as Coltec may require to accept its indemnification
obligation) the Indemnitor will either indemnify the
Indemnitee for its costs of investigating and defending
the Third Party Claim or defend the Indemnitee pursuant
to this Section 9.4 (without prejudice as to its right to
dispute its indemnification obligation within such 30 day
period) (such investigation and defense will be limited
to preventing a default judgment, beginning the
preparation of responsive pleadings and such other
actions as are commercially reasonable under the
circumstances). The Indemnitor shall consult with the
Indemnitee before selecting counsel.
(b) In the event the Indemnitor determines to accept the
defense of any such Third Party Claim pursuant to this
Section 9.4, the Indemnitee shall have the right to be
represented by its own counsel, its participation to be
subject to the reasonable direction of the Indemnitor,
and the Indemnitee shall provide all requested waivers
and authorities to permit the Indemnitor to defend such
Third Party Claim. Counsel selected by the Indemnitee to
act on its behalf in the defense of a Third Party Claim
shall be at the Indemnitee's sole cost and expense unless
(1) the Indemnitor has agreed to pay such expenses,
(2) the Indemnitor has failed to assume the defense of
the Third Party Claim or (3) in the reasonable judgment
of the Indemnitee, based upon the written opinion of its
counsel, a conflict of interest exists or could
reasonably be expected to exist between the Indemnitee
and the Indemnitor with respect to the Third Party Claim
(in which case the Indemnitor will not have the right to
assume the defense, on behalf of the Indemnitee, of the
Third Party Claim).
(c) If the Indemnitor fails to provide the assurances
required under this Section 9.4, does not have the right,
as a result of clause (3) of the last sentence of Section
9.4(b) above, to undertake the Defense of the Third Party
Claim or fails to undertake the defense of or settle or
pay any Third Party Claim within thirty (30) days
following receipt of the Indemnification Notice in
respect of such Third Party Claim, or if the Indemnitor,
after having given notification to the Indemnitee that it
intends to assume the defense, fails within thirty (30)
days from its receipt of the Indemnification Notice to
defend, settle (subject to Section 9.5 below) or pay such
Third Party Claim, then the Indemnitee may take any and
all necessary actions to dispose of the Third Party Claim
including the settlement or full payment thereof upon
such terms as it shall deem appropriate, in its sole
discretion, subject to Section 9.5 below with respect to
any proposed settlement thereof.
9.5 Settlement Proposals.
(a) In the event the Indemnitee desires to settle a Third
Party Claim the defense, settlement or payment of which
has not been assumed by the Indemnitor, but where the
Indemnitor has admitted, in writing to the Indemnitee,
that it is liable for such Third Party Claim, the
Indemnitee shall advise the Indemnitor in writing of the
amount it proposes to pay in settlement thereof (the
"Proposed Settlement"). If the Proposed Settlement is
unsatisfactory to the Indemnitor (provided that
Indemnitor will not unreasonably withhold its consent to
any proposed settlement), it shall have the right, at its
expense, to contest such claim by giving written notice
of such election to the Indemnitee within ten (10) days
after the Indemnitor's receipt of the advice of the
Proposed Settlement. If the Indemnitor does not deliver
such written notice within ten (10) days after receipt of
such advice or if the Indemnitor, after having given such
notice to the Indemnitee, fails forthwith to defend,
settle or pay such claim, the Indemnitee may offer the
Proposed Settlement to the third party making such claim.
If the Proposed Settlement is not accepted by the third
party, any new Proposed Settlement which the Indemnitee
may wish to present to the party making such claim shall
first be presented to the Indemnitor who shall have the
right, subject to the conditions hereinabove set forth in
Section 9.4, to contest such claim.
(b) In the event that the Indemnitor has not assumed the
defense, settlement or payment of a Third Party Claim and
in failing to do so, has not admitted its liability for
such Third Party Claim in writing to the Indemnitee, then
the Indemnitee shall be entitled to settle such Third
Party Claim in any manner which it determines.
(c) The Indemnitor may settle a Third Party Claim that it has
agreed to settle, pay or defend on terms which it may
deem reasonable; provided, however, that the Indemnitor
shall not, without the Indemnitee's prior written consent
to any such settlement, which shall not be unreasonably
withheld and shall be given or rejected within 10 days
after Indemnitor's request for consent. In no event will
the Indemnitor (i) settle or compromise any such
proceeding, claim or demand, or consent to the entry of
any judgment which does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to
the Indemnitee of a written release from all liability in
respect of such proceeding, claim or demand, or (ii)
settle or compromise any such proceeding, claim or demand
in any manner that may adversely affect the Indemnitee.
9.6 Environmental Conditions. Subject to Sections 9.3 and
9.4 above, if Purchaser makes a claim for indemnification under
this Article IX for Damages arising from any matter or condition
referred to in Section 3.1(t) above (irrespective of whether Coltec
has breached a representation or warranty in that Section), or from
any misrepresentation or breach of a representation or warranty,
breach of covenant, or investigation and clean-up or other
remediation of an environmental condition or a material which is a
waste material or is causing pollution or contamination at any Real
Property, then Coltec shall have the right to assume control of the
investigation, clean-up or remediation subject to Purchaser's
obligation to comply with (i) governmental or judicial order or
judgment or (ii) lender or insurance company directive on
commercially reasonable terms to an owner-occupier of like
industrial properties. If Coltec exercises its right to assume
control of the investigation, clean-up or remediation, then Coltec
shall be responsible for completing the investigation, clean-up or
remediation in compliance with or as required by Environmental Laws
and/or with this Agreement and the representations and warranties
herein, to the extent and in the manner requested by Purchaser in
the exercise of reasonable commercial judgment, and subject to
Purchaser's obligation to comply with governmental or judicial
order or judgment or lender or insurance company directive on
commercially reasonable terms to an owner-occupier of like
industrial properties, and Coltec shall conduct the investigation,
clean-up or remediation promptly, expeditiously and in a
workmanlike, non-negligent manner with as little disruption to
Purchaser's use of the Real Property-Owned or Real Property-Leased
as reasonably practicable. Coltec shall discuss with Purchaser in
advance, and provide Purchaser with all documents describing or
related to, its proposed and final plans for investigation, clean-
up and remediation. Coltec shall provide Purchaser with one copy
of each document proposed for submittal to, and of each document
submitted to or received from, environmental regulatory
authorities, and with notice of any communication, related to the
plans for or the investigation, clean-up or remediation, or to
environmental conditions or activities at or related to the
Business or Assets. Coltec will provide copies of proposed
submittal documents and notice of its proposed communications
reasonably in advance of submittal of each such document or
communication. Purchaser shall have the right to comment on and
consult with Coltec about such plans, documents and communications.
Coltec will make any changes to any plan, document or communication
and will provide and make any additional plan, document or
communication as reasonably requested by Purchaser. Purchaser may
retain one or more environmental consultants to oversee the
investigation, clean-up or other remediation conducted by Coltec,
but the bills of such consultants (other than any attorneys) for
such oversight work shall be paid by Purchaser.
9.7 Other Indemnification Claims. Except for Third Party
Claims, the Indemnitor shall have twenty (20) days to advise the
Indemnitee of whether it disputes or accepts liability to the
Indemnitee for all other indemnification claims that are the
subject of an Indemnification Notice delivered to the Indemnitor as
provided in Section 9.3 above. Failure to give such notice will
constitute acceptance of responsibility for the claim.
9.8 Exclusive Remedy. From and after the Closing Date, the
indemnification provisions of this Article IX shall be the sole and
exclusive remedy for any breach of this Agreement and the Related
Agreements, and no other remedy shall be had in contract, tort or
otherwise by Coltec or Purchaser and their respective officers,
directors, employees, agents, affiliates, attorneys, consultants,
successors and assigns, all such remedies being hereby expressly
waived. In addition to the foregoing, the amount of the
indemnification obligations of Coltec set forth in Section 9.2
hereof shall be the maximum amount of Coltec's indemnification
obligations hereunder, and Purchaser shall not be entitled to a
rescission of this Agreement or any of the Related Agreements or to
any further indemnification rights or claims of any nature
whatsoever, all of which the Purchaser hereby waives.
ARTICLE X
Amendment, Waiver and Termination
10.1 Amendment. This Agreement may be amended at any time
prior to the Closing, but only by written instrument executed by
Borg-Warner and Coltec Industries Inc.
10.2 Waiver. Either Coltec Industries Inc or Purchaser may at
any time waive compliance by the other with any covenants or
conditions contained in this Agreement only by written instrument
executed by the party waiving such compliance. No such waiver,
however, shall be deemed to constitute the waiver of any such
covenant or condition in any other circumstance or the waiver of
any other covenant or condition.
10.3 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing Date:
(i) by mutual written consent of Coltec Industries Inc
and Purchaser;
(ii) by Purchaser (A) if there is a material breach of
any representation or warranty set forth in Section
3.1 hereof or any covenant or agreement to be
complied with or performed by Coltec pursuant to
the terms of this Agreement which breach has not
been cured by Coltec or waived by Purchaser within
30 days following receipt of written notice of such
breach, (B) in the event that all of the conditions
under 5.1 and 5.3 have not been satisfied by the
Closing Date or waived by Purchaser, in accordance
with Section 10.2, (C) in accordance with Section
10.4 or (D) if Purchaser is not satisfied with its
physical inspection of the Facilities or the
Environmental Inspection;
(iii) by Coltec Industries Inc (A) if there is a
material breach of any representation or warranty
set forth in Section 3.2 hereof or any covenant
or agreement to be complied with or performed by
Purchaser pursuant to the terms of this Agreement
which breach has not been cured by Purchaser or
waived by Coltec Industries Inc within 45 days
following receipt of written notice of such
breach, (B) in the event that all of the
conditions under 5.2 and 5.3 have not been
satisfied by the Closing Date or waived by Coltec
Industries Inc in accordance with Section 10.2,
(C) if the total cost of all modifications and
repairs required in order to obtain certificates
of occupancy pursuant to Section 4.9 above, to
satisfy Purchaser's requests under Section 4.15
above following its physical inspection under
Section 4.1 above, and/or to correct title or
survey matters under Section 4.8 above (except
for defects consisting of liens or encumbrances
securing a liquidated amount) exceeds $3,000,000
(provided that Purchaser will have the option of
reducing the Purchase Price by $3,000,000, in
which case Coltec Industries Inc will not have
the right to terminate this Agreement and Coltec
will have no further liability (whether monetary
or otherwise) for the modifications, repairs and
corrections referred to in this clause (C), which
will be identified on a Schedule 10.3(a)(iii) and
attached to this Agreement at Closing);
(iv) by Coltec Industries Inc or Purchaser if the
Closing shall not have occurred on or before June
30, 1996, unless (A) the failure to close relates
to a failure to satisfy the condition precedent set
forth in Section 5.3 above, in which case such date
will be automatically extended to August 31, 1996,
or (B) the failure to close is the result of a
material breach of this Agreement by the party
seeking to terminate; or
(v) by Purchaser pursuant to Section 4.8(c) above.
(b) In the event of termination of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party
relating to the transactions contemplated hereby,
whether so obtained before or after the execution
hereof, to the party furnishing the same; and
(ii) The provisions of the Confidentiality Agreement
shall continue in full force and effect,
(c) In the event this Agreement is terminated by Purchaser
for any reason other than pursuant to Section 10.3(a)(i),
(ii), (iv), or (v) or pursuant to Section 10.4 or by
Coltec Industries Inc for any reason other than pursuant
to Section 10.3 (a) (i), (iii) or (iv), then the
terminating party shall pay to the other party not later
than three (3) business days after the effective date of
termination, a termination fee equal to 10% of the
Purchase Price (the "Termination Fee") by wire transfer
of immediately available funds to the account designated
in writing by the non-terminating party. The parties
acknowledge that the agreement contained in this Section
10.3(c) is an integral part of the transactions
contemplated by this Agreement; accordingly, if a party
fails to promptly pay the Termination Fee when due and,
in order to obtain such payment, the non-terminating
party commences or initiates a proceeding which results
in a judgment or an award against the terminating party
for the Termination Fee, the terminating party shall pay
to the non-terminating party its costs and expenses
(including reasonable attorneys' fees) in connection with
such proceeding, together with interest on the amount of
the Termination Fee at a rate of ten percent (10%) per
annum. This Section 10.3 will constitute the parties'
exclusive remedy in the event or with respect to a
termination of this Agreement. Any termination of this
Agreement which does not require the payment of a
Termination Fee will be without liability to the other
party.
10.4 Termination Upon Certain Casualties.
(a) (i) In the event the Real Property-Owned or Real
Property-Leased shall be damaged or destroyed by
fire or other casualty prior to the Closing Date,
Coltec shall provide Purchaser with notice thereof.
(ii) In the event Purchaser reasonably determines (the
"Determination") that the repair and restoration of
the Real Property-Owned or Real Property-Leased
would not be completed within ninety (90) days from
such occurrence and the failure to complete such
repair or restoration within such period would have
a Material Adverse Effect, Purchaser may elect to
terminate this Agreement. Purchaser shall make the
Determination within seven (7) business days of
receipt of notice from Coltec under Section
10.4(a)(i). In the event Purchaser elects to
terminate this Agreement, the provisions of Section
10.3(b) shall apply. In the alternative Purchaser
shall have the right to terminate this Agreement
with respect to the parcel of Real Property damaged
and the Purchase Price shall be reduced
accordingly, in the amount set forth on Schedule
4.8(c) or to complete this transaction, in which
case Coltec shall assign and deliver to Purchaser
the insurance proceeds resulting from such
casualty.
(iii) If Purchaser has not elected to terminate this
Agreement under Section 10.4(a)(ii), Coltec shall
be obligated to repair and restore such damage
prior to Closing; provided however, if the repair
and restoration of the Real Property is not
completed prior to Closing, Purchaser (A) may
elect to delay Closing by the period reasonably
necessary to complete such repair and
restoration, and Coltec shall be obligated to
complete said repairs; or (B) Purchaser may elect
to proceed with Closing and assume responsibility
for completing the repair and restoration of the
Real Property; provided, however, if Purchaser
elects to so repair and restore the Real
Property, Purchaser shall be granted a credit
against the Purchase Price at Closing in the
amount of the cost of such repair as determined
by competitive bidding based on mutually
acceptable procedures.
(iv) If Purchaser has not elected to terminate this
Agreement under Section 10.4(a)(iii), Coltec shall
be obligated to repair and restore such damage
prior to Closing; provided, however, that in no
event shall the aggregate amount of Coltec's
obligation under this Section 10.4(a)(iv) exceed
the coverage amounts available to Coltec and/or the
Operating Units under all applicable Insurance
Policies of Coltec and the Operating Units then in
full force and effect, plus the amount of any
deductibles payable in respect of such Insurance
Policies.
(b) At any time prior to Closing, if any governmental
authority shall, under the power of eminent domain, take
any part of the buildings upon the Real Property-Owned or
Real Property-Leased, or so much of the Real Property-
Owned or Real Property-Leased that there is no longer
reasonably sufficient land to provide parking to service
the Real Property-Owned or Real Property-Leased with
respect to the operation of the Business as presently
conducted, which, in each case, such taking would have a
Material Adverse Effect, then Purchaser shall have the
right to terminate this Agreement by written notice to
Coltec Industries Inc within ten (10) days after receipt
of notice of such taking from Coltec. In the alternative
Purchaser may terminate the Agreement only with respect
to the affected Property, and the Purchase Price shall be
reduced accordingly as provided in Section 4.8(c).
Failure to deliver written notice of the exercise of such
right to terminate shall be deemed an election by
Purchaser to proceed to Closing. If Purchaser is
entitled to terminate this Agreement based upon the
exercise of a power of eminent domain, but does not so
elect, upon the Closing Date, Coltec shall assign all of
its right to any condemnation award relating to the Real
Property to Purchaser and shall reasonably assist
Purchaser in any matter relating to such award.
ARTICLE XI
Miscellaneous
11.1 Confidentiality. Subject to Section 10.3(b)(ii), the
Confidentiality Agreement will continue in effect until Closing.
Upon Closing, the terms and conditions of the Confidentiality
Agreement will no longer apply with regard to the Business being
acquired by the Purchaser pursuant to this Agreement; however, the
terms and conditions of the Confidentiality Agreement with regard
to the businesses not being acquired pursuant to this Agreement
shall remain in full force and effect for the period specified in
the Confidentiality Agreement.
11.2 Severability; Construction. If any provision of this
Agreement shall finally be determined to be unlawful, then such
provision shall, if possible, be rewritten or construed more
narrowly to comply with the intent of the parties and the law, or
alternatively, be deemed to be severed from this Agreement and
every other provision of this Agreement shall remain in full force
and effect.
11.3 Expenses. Except as otherwise provided in this
Agreement, each party will bear its own expenses incurred in
connection with this Agreement and the transactions contemplated
hereby, whether or not such transactions shall be consummated.
Coltec will be solely responsible for payment of any fees of
Coltec's auditors and fees of Morgan Stanley, and Purchaser will be
solely responsible for payment of any fees of Purchaser's auditors
and fees of Merrill Lynch Pierce Fenner and Smith Incorporated,
resulting from or arising out of the transactions contemplated
hereby. The premiums for the title insurance policies, and the
Title Commitment and survey charges, pursuant to Section 4.8 above,
including, but not limited to, charges for title abstract and
examination, shall be paid equally by Purchaser and Coltec
Industries Inc (provided that in no event shall Purchaser pay more
than $75,000). The cost of preparing the financial statements
referred to in Section 7.9 above will be shared equally between
Coltec Industries Inc and Purchaser, except that Purchaser will not
be required to pay more than $100,000 for its share, and any excess
will be paid by Coltec. Coltec Industries Inc and Purchaser will
each pay one-half of any fees charged by the second Firm of
certified public accounts referred to in Section 2.7(d) hereof.
11.4 Transfer Taxes. Purchaser and Coltec Industries Inc will
each bear one-half the cost of sales, use, registration, stamp,
value added or other transfer taxes, if any, which may result from
the transfer of the Assets from Coltec Industries Inc and the
Operating Units to Purchaser and/or its nominees.
11.5 Bulk Sales. Purchaser and Coltec waive compliance with
the provisions of any laws dealing with bulk sales in any
jurisdiction. Coltec will indemnify and hold Purchaser harmless
pursuant to Section 9.2(a)(5) above with respect to any Damages
which may be suffered by Purchaser in respect of the parties'
failure to comply with such laws.
11.6 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly
given at the time of receipt if delivered by hand or communicated
by electronic transmission, or, if mailed, three (3) days after
mailing registered or certified mail, return-receipt requested,
with postage prepaid:
If to Purchaser, then to:
Borg-Warner Automotive, Inc.
Attention: Chief Executive Officer
200 South Michigan Avenue
Chicago, Illinois 60604
Telefax: (312) 461-0507
with a copy to:
Borg-Warner Automotive, Inc.
Vice President and General Counsel
200 South Michigan Avenue
Chicago, Illinois 60604
Telefax: (312) 322-8621
If to Coltec, then to:
Coltec Industries Inc
430 Park Avenue
New York, New York 10022
Attention: Corporate Secretary
Telefax: (212) 940-0587
provided, however, that if either party shall have designated a
different address by notice to the other given as provided above,
then to the last address so designated.
11.7 Publicity. Until the Closing, the timing and the content
of all public announcements regarding any aspect of this Agreement
(including, but not limited to, suppliers, customers, distributors,
the financial community, government agencies or the public at
large) will be mutually agreed upon in advance by Purchaser and
Coltec Industries Inc, unless otherwise required by law.
11.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the successors of each of the parties
hereto, but shall not be assignable by any party without the prior
written consent of the other; provided, that Borg-Warner may assign
this Agreement to a wholly owned subsidiary of Borg-Warner without
the consent of Coltec, but only so long as Borg-Warner agrees to
remain fully liable for all covenants and obligations of Purchaser
created herein.
11.9 No Third Parties. Nothing in this Agreement, expressed
or implied, is intended or shall be construed to confer upon any
person, other than the parties and successors and assigns permitted
by Section 11.8, any right, remedy or claim under or by reason of
this Agreement.
11.10 Incorporation by Reference. The Schedules and
Appendices to the Agreement constitute integral parts of this
Agreement and are hereby incorporated into this Agreement by this
reference.
11.11 Governing Law. This Agreement will be governed by
and construed in accordance with the internal substantive laws of
the State of Illinois (without reference to the choice of law
provisions of Illinois law); provided, that all matters relating to
real estate shall be governed by the law of the state in which the
real estate is situated.
11.12 Counterparts. More than one counterpart of this
Agreement may be executed by the parties hereto and each fully
executed counterpart shall be deemed an original without production
of the other.
11.13 Complete Agreement. This Agreement sets forth the
entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior letters of intent,
agreements, covenants, arrangements, communications,
representations, or warranties, whether oral or written, by any
officer, employee, or representative of either party relating
thereto with the exception of the Confidentiality Agreement.
11.14 Purchaser s Consents and Other Actions. For
purposes of this Agreement and all Related Agreements, Borg-Warner
shall have the right to act on behalf of Purchaser, and all
consents, waivers and other actions taken or given by Borg-Warner
on behalf of Purchaser shall be binding on Purchaser without any
further action on the part of BW or BW-MI.
IN WITNESS WHEREOF, the parties each have caused this
Agreement to be executed by their respective duly authorized
officers and have caused their respective corporate seals to be
hereunto affixed and attested, all as of the date first above
written.
BORG-WARNER AUTOMOTIVE, INC.
By:_________________________________
Its:_________________________________
Attest:
By:________________________
BORG-WARNER AUTOMOTIVE AIR/FLUID SYSTEMS
CORPORATION
By:_________________________________
Its:_________________________________
Attest:
By:________________________
BORG-WARNER AUTOMOTIVE AIR/FLUID SYSTEMS
CORPORATION OF MICHIGAN
By:_________________________________
Its:_________________________________
Attest:
By:________________________
COLTEC INDUSTRIES INC
By:_________________________________
Its:_________________________________
Attest:
By:________________________
HOLLEY AUTOMOTIVE INC
By:_________________________________
Its:_________________________________
Attest:
By:________________________
COLTEC AUTOMOTIVE INC
By:_________________________________
Its:_________________________________
Attest:
By:________________________
HOLLEY AUTOMOTIVE GROUP, LTD.
By:_________________________________
Its:_________________________________
Attest:
By:________________________
HOLLEY AUTOMOTIVE SYSTEMS GmbH
By:_________________________________
Its:_________________________________
Attest:
By:________________________
APPENDIX A
1.1 Definitions. As used herein, the terms below shall have
the following meanings. Any of these terms, unless the context
otherwise requires, may be used in the singular or plural depending
upon the reference.
"AAA" shall have the meaning set forth in Section 7.7(c)
of this Agreement.
"Active Warren Union Represented Employees" shall have
the meaning set forth in Section 8.1(b) of this Agreement.
"Adjustment" shall have the meaning set forth in Section
2.6 of this Agreement.
"Affiliate" shall have the meaning set forth in the
Securities and Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
"Approval Contact" shall have the meaning set forth in
Section 4.3 of this Agreement.
"Approved Encumbrances" shall have the meaning set forth
in Section 4.8 of this Agreement.
"Arbitration Panel" shall have the meaning set forth in
Section 7.7(c) of this Agreement.
"Assets" shall have the meaning set forth in Section 2.2
of this Agreement.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.4 of this Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, 11 U.S.C. 101 et seq., as such may be amended from time to
time.
"Books and Records" shall mean (i) all records and lists
pertaining to the Assets, (ii) all records and lists of customers,
suppliers, distributors or personnel pertaining to the Business,
(iii) all product, business and marketing plans of the Business,
marketing research data and sales and promotional materials of the
Business and (iv) all books, ledgers, files, reports, plans,
drawings and operating records of every kind pertaining to the
Business.
"Business" shall mean the automotive, truck and off-road
vehicle components and systems business of the Operating Units
including all Products.
"BWADC Plans" shall have the meaning set forth in Section
8.4(d) of this Agreement.
"BWA Subsidiary" shall mean a subsidiary of Borg Warner
Automotive, Inc. or a subsidiary of such a subsidiary.
"Closing" and "Closing Date" shall have the meanings set
forth in Section 6.1 of this Agreement.
"Closing Date Balance Sheet" shall have the meaning set
forth in Section 7.9 of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
such may be amended from time to time.
"Coltec" means Coltec Industries Inc and the Operating
Units.
"Coltec Pension Plans" shall have the meaning set forth
in Section 8.3(b)(i) of this Agreement.
Coltec Savings Plan shall have the meaning set forth in
Section 8.4 of this Agreement.
"Coltec Welfare Benefit Plans" shall have the meaning set
forth in Section 8.5(e) of this Agreement.
"Confidentiality Agreement" shall have the meaning set
forth in Section 4.1 of this Agreement.
"Contracts" shall mean all written contracts,
arrangements and agreements, and all oral agreements, including
those described in Schedules 2.2(d) and 2.2(e), to which Coltec
Industries Inc or the Operating Units is a party and which relate
to the Business or the Assets.
"Damages" shall mean all liabilities, damages, losses,
penalties, fines, judgments, claims, costs and expenses (including
interest, amounts paid in settlement, reasonable attorneys' fees
and reasonable consultants' and experts' fees). The term "Damages"
is not limited to matters asserted by third parties, but includes
Damages incurred or sustained by Coltec or Purchaser in the absence
of third party claims.
"Deductible" shall have the meaning set forth in Section
9.2 of this Agreement.
"Default" shall mean an occurrence which constitutes a
material breach or material default under a contract, order or
other commitment, after the expiration of any grace period provided
without cure.
"Determination" shall have the meaning set forth in
Section 10.4(a)(ii) of this Agreement.
"Dispute" shall have the meaning set forth in Section 7.7
of this Agreement.
"Encumbrances" shall mean any claim, lien, pledge,
option, easement, security interest, deed or trust, mortgage,
right-of-way, encroachment, building or use or other restriction,
conditional sales agreement, right of first refusal, encumbrance or
other right of third parties, or any other encumbrance, restriction
or limitation, whether voluntarily incurred or arising by operation
of law, including any agreement to give any of the foregoing in the
future, and any contingent sale or other title retention agreement
in the nature thereof.
"Environmental Inspection" shall have the meaning set
forth in Section 4.14 of this Agreement.
"Environmental Laws" shall mean (i) any applicable
federal, state and local law, statute, ordinance, rule, regulation,
code or requirements relating to pollution (or the cleanup of the
environment), or the protection of air, surface water, groundwater,
drinking water, land (including its surface and subsurface), human
health, the environment or any other natural resource, or
concerning the use, storage, recycling, treatment, generation,
transportation, processing, handling, production or disposal of
hazardous, toxic or polluting wastes or substances, in each case as
amended on or before the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass
and strict liability) that may impose liability or obligation for
or related to the investigation, remediation or clean-up of the
threatened, alleged or actual presence of hazardous, toxic or
polluting waste or substance.
"Environmental Notice" shall have the meaning set forth
in Section 3.1(t)(i) of this Agreement.
"ERISA" shall have the meaning set forth in Section
3.1(o)(ii) of this Agreement.
"Excluded Assets" shall have the meaning set forth in
Section 2.3 of this Agreement.
"Excluded Books and Records" shall have the meaning set
forth in Section 2.3(g) of this Agreement.
"Excluded Intellectual Property" shall have the meaning
set forth in Section 2.3(b) of this Agreement.
"Excluded Liabilities" shall have the meaning set forth
in Section 2.5 of this Agreement.
"Facility" and "Facilities" shall mean the building and
improvements situated on the Real Property-Owned and the Real
Property-Leased.
"Final Net Purchased Working Capital" shall have the
meaning set forth in Section 2.7(a) of this Agreement.
"Final Net Purchased Working Capital Statement" shall
have the meaning set forth in Section 2.7(b) of this Agreement.
"Financial Statements" shall have the meaning set forth
in Section 3.1(h)(i) of this Agreement.
"Firm" shall have the meaning set forth in Section 2.7(d)
of this Agreement.
"Former Warren Employees" shall have the meaning set
forth in Section 8.1(a)(iv) of this Agreement.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting
principles on the date of this Agreement, consistently applied.
General Motors shall have the meaning set forth in
Section 2.2(f) of this Agreement.
"German Approval" shall mean the approval Purchaser must
receive from the Bundeskartellamt (Federal Cartel Office) under the
Gesetz Gegen Wetbewerbs-beschrankungen of 20 February 1990 (Act
Against Restraints of Competition) prior to the Closing Date.
"Governmental Body" or "Governmental Bodies" shall mean
any federal, state, county, municipal, local or foreign government
and any governmental agency, bureau, commission, authority, body,
court (or other judicial body), administrative or executive agency,
legislative or quasi-legislative body, commission, council or other
agency.
"Gylon and Hy-Carb License Agreements" shall have the
meaning set forth in Section 6.2(d).
"Hazardous Materials" shall mean any pollutants or
contaminants, or any hazardous or toxic substances, wastes, or
materials, including petroleum or petroleum products, PCBs and
asbestos, defined as such or governed by any applicable
Environmental Law.
"Holley Automotive License Agreement" shall have the
meaning set forth in Section 6.2(c).
"Holley UAW Pension Plan" shall have the meaning set
forth in Section 8.1(a)(ii) of this Agreement.
"Hourly Pension Plan" shall have the meaning set forth in
Section 8.3(b) of this Agreement.
"HSR Act" shall have the meaning set forth in Section
3.1(g) of this Agreement.
"Incorporated Operating Units" shall mean all of the
Operating Units other than Performance Friction Products.
"Indemnification Notice" shall have the meaning set forth
in Section 9.3(a) of this Agreement.
"Indemnitee" shall have the meaning set forth in Section
9.3(a) of this Agreement.
"Indemnitor" shall have the meaning set forth in Section
9.3(a) of this Agreement.
"Intellectual Property" shall mean (whether Coltec
Industries Inc and/or any of the Operating Units is owner,
inventor, employer of an inventor, licensor, licensee or otherwise)
the following:
(a) all know-how, formulae, drawings, software,
specifications, technical or business information,
trade secrets, and the like owned, controlled or
used by Coltec Industries Inc and/or any of the
Operating Units solely in connection with or
directly relating to the Business, including such
property relating to GYLON and HY-CARB Products
heretofore manufactured at the Performance Friction
Products facility in Longview, Texas but excluding
any other such property utilized by Coltec
Industries Inc and all Affiliates thereof (other
than the Operating Units);
(b) all trademarks, trade names, service marks, logos,
applications therefor and the like used by Coltec
Industries Inc and/or any of the Operating Units
which are set forth in Appendix B hereof and any
other name or mark that has such a near resemblance
thereto as may be likely to cause confusion or
mistake to the public, or to otherwise deceive the
public, but, other than as set forth in the License
Agreements, excluding any right to the marks/names
"COLTEC", COLTEC INDUSTRIES , "GARLOCK", "STEMCO",
"GYLON", "HOLLEY", HOLLEY AUTOMOTIVE , HOLLEY
PERFORMANCE PRODUCTS , "HY-CARB" and any corporate
logo (design) of Coltec, Garlock, Holley, Hy-Carb
or Stemco associated therewith or incorporating any
of such names or logos and any other name or mark
that has such a near resemblance thereto as may be
likely to cause confusion or mistake to the public,
or to otherwise deceive the public;
(c) all patents, applications therefor and the like
owned, controlled or used by Coltec Industries Inc
and/or any of the Operating Units solely in
connection with or relating to the Business which
are set forth in Appendix B hereof, but, other than
as set forth in the License Agreements, excluding
any patent or application therefor or the like
covering the "GYLON" or "HY-CARB" Products; and
(d) all copyrights, mask works or other intellectual
property used by Coltec Industries Inc and/or any
of the Operating Units exclusively in connection
with or relating exclusively to the Business which
are set forth on Appendix B.
"Inventories" shall have the meaning set forth in Section
2.2(a) of this Agreement.
"Knowledge" of a given person or party shall mean the
actual knowledge of such person or party and such person's or
party's subsidiaries, operating units and divisions.
"Law" shall mean any statute, common law, rule,
regulation, ordinance, code, order, judgment, writ, injunction,
decree or other governmental requirement.
"License Agreements" shall mean the Holley Automotive
License Agreement and the Gylon and Hy-Carb License Agreements.
"Material Adverse Effect" shall mean a material adverse
effect on the Assets or Business, as currently conducted; provided
that to the extent the Business is not currently conducted in a
commercially reasonable manner, "Material Adverse Effect" shall
mean a material adverse effect on the Assets or Business, assuming
it was or is conducted consistent with commercially reasonable
practices.
"Material Contract" shall mean (i) all Contracts,
including leases, relating to Real Property-Owned and Real
Property-Leased, (ii) all Contracts for the purchase, lease or sale
of goods or the provision or receipt of services in excess of
$100,000 in actual or potential aggregate payments, (iii) all
Contracts requiring more than one (1) year to perform, (iv) all
Contracts granting a power of attorney, (v) all non-competition and
non-solicitation Contracts, (vi) all partnership agreements,
distribution agreements and similar agreements, and (vii) all
Contracts of guaranty or indebtedness.
"Net Purchased Working Capital" shall mean the current
Assets comprised of the items set forth on Schedule 2.7(a) to this
Agreement, minus the current Assumed Liabilities comprised of the
items set forth on Schedule 2.7(a) to this Agreement.
"Non-Active Warren Union Represented Employees" shall
have the meaning set forth in Section 8.1(a)(iv) of this Agreement.
"Non-Covered Persons" shall have the meaning set forth in
Section 8.5(d) of this Agreement.
"Non-Represented Employees" shall have the meaning set
forth in Section 8.2(a) of this Agreement.
"Non-Union Represented Employees" shall have the meaning
set forth in Section 8.2(a) of this Agreement.
"Operating Units" shall mean the following subsidiaries
or divisions of Coltec Industries Inc: Holley Automotive Inc.
(including the assets of the former Coltec automotive division),
Holley Automotive Group Ltd., Holley Automotive Systems GmbH,
Coltec Automotive Inc, and Performance Friction Products (a
division of Stemco Inc, an indirect, wholly-owned subsidiary of
Coltec Industries Inc).
"Order" shall have the meaning set forth in Section
3.1(e)(iii) of this Agreement.
"Ownership" shall mean such ownership as confers upon the
person having good and marketable title to and control over the
thing or right owned, free and clear of any and all Encumbrances
except Permitted Encumbrances and Approved Encumbrances.
Patent License Agreement shall have the meaning set
forth in Section 6.3(e) of this Agreement.
PBGC shall mean the Pension Benefit Guaranty
Corporation.
"PCBs" shall have the meaning set forth in Section
3(t)(iv) of this Agreement.
"Permits" shall mean all licenses, permits, franchises,
approvals, registrations, authorizations, consents or orders of, or
filings with, any governmental authority, whether foreign, federal,
state or local, necessary for the present conduct of, or relating
to, the operation of the Business.
"Permitted Encumbrances" shall have the meaning set forth
in Section 3.1(j)(ii) of this Agreement.
"Product Inventory" shall mean all costs of producing
goods for sale to customers of the Business less any amounts
relating to the costs of tooling, samples and prototypes.
"Product Recall Campaign" shall mean a systematic effort
by Purchaser, a customer or a governmental agency to remedy a
breach of Coltec's warranty or as required in order to comply with
laws, regulations, orders or other applicable government
requirements to replace or correct Products.
"Products" shall mean all automotive, truck or off-road
vehicle products currently developed, currently being developed,
manufactured or sold by the Operating Units including, without
limitation, throttle body assemblies, upper intake module
assemblies, air induction assemblies, manifold assemblies,
modulators, solenoids and assemblies, emission controls, engine
accessories, air injection pumps, engine oil pumps, synchronizers,
friction products and materials, and fuel introduction, regulation,
and metering systems (other than carburetors and retrofit stand
alone fuel injection systems).
"Proposed Settlement" shall have the meaning set forth in
Section 9.5 of this Agreement.
"Purchase Price" shall have the meaning set forth in
Section 2.6 of this Agreement.
"Purchaser" shall have the meaning set forth in the
opening paragraph of this Agreement.
"Purchaser's Welfare Benefit Plans" shall have the
meaning set forth in Section 8.5(a) of this Agreement.
"Real Property" shall mean the Real Property-Owned and
the Real Property-Leased.
"Real Property - Owned" shall have the meaning set forth
in Section 2.2(b) of this Agreement and as listed on Schedule
2.2(b)(1).
"Real Property - Leased" shall have the meaning set forth
in Section 2.2(b) of this Agreement and as listed on Schedule
2.2(b)(2).
"Real Property Taxes" shall mean state and/or local taxes
assessed on the ownership of or interests in real property and/or
improvements thereon, including, without limitation, ad valorem
taxes, general assessments and special assessments.
"Reference Net Purchased Working Capital" shall have the
meaning set forth in Section 2.7(a) of this Agreement.
Related Agreements shall mean all agreements, other
than this Agreement, which are executed and delivered in connection
with this Agreement, including the bills of sale delivered under
Section 6.2, the License Agreements, the Patent License Agreement
and the assumption agreement to be delivered under Section 6.3(b).
"Resolution Notice" shall have the meaning set forth in
Section 7.7(a) of this Agreement.
"Salaried Employees" shall have the meaning set forth in
Section 8.2(a) of this Agreement.
"Salaried Pension Plan" shall have the meaning set forth
in Section 8.3(b) of this Agreement.
"Savings Plan Members" shall have the meaning set forth
in Section 8.4(a) of this Agreement.
"Tax" or "Taxes" shall mean all United States federal,
state or local, and any foreign or other tax, levy, impost, fee
assessments, impositions or other similar government charges,
including income, estimated income, business, occupation,
franchise, real property, payroll, personal property, sales,
transfer, stamp, use, employment, commercial rent or withholding,
occupancy, premium, gross receipts, profits, windfall profits,
deemed profits, license, lease, occupation, capital, production,
corporation, ad valorem, excise, duty or other taxes including
interest, penalties and additions in connection therewith.
"Termination Fee" shall have the meaning set forth in
Section 10.3(c) of this Agreement.
"Third Party Claim" shall have the meaning set forth in
Section 9.4 of this Agreement.
"Title Commitment" shall have the meaning set forth in
Section 4.8 of this Agreement.
"Title Company" shall have the meaning set forth in
Section 4.8 of this Agreement.
"UAW Agreement" shall have the meaning set forth in
Section 8.1(a)(i) of this Agreement.
"UAW Pension Agreement" shall have the meaning set forth
in Section 8.1(a)(iii) of this Agreement.
"UAW Union" shall have the meaning set forth in Section
8.1(a)(i) of this Agreement.
"WARN" shall have the meaning set forth in Section
8.13(a).
"Warren Plant" shall have the meaning set forth in
Section 8.1(a)(i) of this Agreement.
"Warren Union Represented Employees" shall have the
meaning set forth in Section 8.1(a)(i) of this Agreement.
Schedules and Exhibits to Agreement of Purchase and Sale:
(a) Schedule 2.2(b)(1)- Real Property-Owned by Coltec
(b) Schedule 2.2(b)(2)- Real Property-Leased by Coltec
(c) Schedule 2.2(b)(3)- Easements Benefiting the Real Property-Owned and the
Real Property-Leased
(d) Schedule 2.2(c)(1)- Personal Property of the Business Owned
by Coltec
(i) Exhibit A - Assets Maintained at
Warren, Michigan Facility
(ii) Exhibit B - Assets Maintained at
Water Valley, Mississippi Facility
(iii) Exhibit C - Assets Maintained at
Sallisaw, Oklahoma Facility
(iv) Exhibit D - Assets Maintained at
Longview, Texas Facility
(e) Schedule 2.2(c)(2)- Personal Property of the Business Leased
by Coltec
(f) Schedule 2.2(d)- Service Contracts and Orders for the
Purchase of Goods with a Value in Excess
of $100,000 or which Require more than
One Year to Perform
(i) Exhibit A - Vendor List for the
Warren, Michigan and Water Valley,
Mississippi Facilities
(ii) Exhibit B - Vendor List for the
Sallisaw, Oklahoma Facility
(iii) Exhibit C - Vendor List for the
Longview, Texas Facility
(g) Schedule 2.2(e)- Orders, Bids and Proposals for the Sale
of Products by the Business with a Value
in Excess of $100,000 and all other
Material Contracts
(i) Exhibit A - Vendor List for the
Warren, Michigan and Water Valley,
Mississippi Facilities
(ii) Exhibit B - Vendor List for the
Sallisaw, Oklahoma Facility
(iii) Exhibit C - Vendor List for the
Longview, Texas Facility
(h) Schedule 2.3- Excluded Assets
(i) Schedule 2.5(b) Liabilities with Respect to the Real
Property and/or the Operations No Longer
Used in the Business
(j) Schedule 2.7(a)- Net Purchased Working Capital
(w/attachments)
(k) Schedule 2.7(b)- Exceptions GAAP
(l) Schedule 2.11 Purchase Price Allocation
(m) Schedule 3.1(g)- List of Required Notices, Consents,
Approvals, Etc.
(n) Schedule 3.1(i)- Inventory Encumbrances and Exceptions
(o) Schedule 3.1(j)(i)- Encumbrances on the Assets Other than
the Real Property
(p) Schedule 3.1(j)(ii)-List of Permitted Encumbrances to Real Property-Owned
(q) Schedule 3.1(k)- Defaults under Instruments of
Indebtedness
(r) Schedule 3.1(l)- Pending or Threatened Litigation and
Disputes
(s) Schedule 3.1(m)(l)- Exceptions to Validity, Enforceability,
Etc. of Material Contracts
(t) Schedule 3.1(m)(2)- Purchase Orders, Bids or Other Contracts
with Customers Involving a Sale of
Products or Services at a Loss
(u) Schedule 3.1(n)- Exceptions to Ownership of Intellectual
Property
(v) Schedule 3.1(o)(i)- Collective Bargaining Agreements Not
Otherwise Referenced in the Agreement,
Employment Agreements Not Terminable on
30 Days Notice and Severance or
Termination Obligations
(w) Schedule 3.1(p)- Failure to Comply with Material Laws
(x) Schedule 3.1(q)- Failure to File Tax Returns, Pay Taxes
and Existence of Tax Liens
(y) Schedule 3.1(r)- Loss or Damage Suffered or Threatened
that could have Material Adverse Effect
(z) Schedule 3.1(s)- Permits that are Expired or Pending
(aa) Schedule 3.1(t)- Environmental Notices and Hazards
(bb) Schedule 3.1(u)(ii)-Options and Similar Agreements Granting Third Parties
the Rights to Purchase, Lease or Occupy the Real Property
(cc) Schedule 3.1(u)(iii)-Real Property Abatement Programs
(dd) Schedule 3.1(u)(vi)-Exceptions to Direct Access to Publicly
Dedicated Rights-of-Way
(ee) Schedule 3.1(u)(vii)-List of Contracts or Arrangements Regarding the
Furnishing of Utilities or Municipal Services
(ff) Schedule 3.1(u)(viii)-Third Party Requirements or Recommendations
(i) Exhibit A - Warren, Michigan
Facility
(ii) Exhibit B - Water Valley,
Mississippi Facility
(iii) Exhibit C - Longview, Texas
Facility
(iv) Exhibit D - Sallisaw, Oklahoma
Facility
(v) Exhibit E - Longview, Texas
Facility
(gg) Schedule 3.1(v)- Assets Used in the Business but not
being Transferred
(hh) Schedule 3.1(w)- List of All Employee-Related Charges,
Complaints, Proceedings, Etc.
(i) Exhibit A - Medical and Indemnity
Claims
(ii) Schedule 3.1(aa)- List of Coltec Employees with No Actual
Knowledge
(jj) Schedule 3.2(g)- Notice, Consents, Approvals, Etc. to be
Obtained by Purchaser
(kk) Schedule 3.2(j)- List of Purchaser Employees with No
Actual Knowledge
(ll) Schedule 4.8(a)- Dollar Value of Title Insurance Policies
(mm) Schedule 4.8(c)- Selected Real Property and Assumed Value
(nn) Schedule 4.15- Defects, Required Repairs and Other
Conditions Relating to the Real Property
and the Facilities
(oo) Schedule 8.1(a)- Supplemental Agreements Relating to
Hourly-Rated Production, Tool Maker and
Maintenance Personnel at Warren,
Michigan Facility and November 1, 1994
Collective Bargaining Agreement
(pp) Schedule 8.1(b)- Non-Active Warren Union-Represented
Employees with Right to Return to
Employment
(qq) Schedule 8.2(a)- Non-Active Non-Represented Employees
with a Right to Return to Employment
(rr) Schedule 8.8- Vacation and Holiday Pay Entitlements
(ss) Schedule 9.2- Indemnification Examples
(tt) Appendix A- Definitions
(uu) Appendix B- Intellectual Property
(vv) Appendix C- Coltec Financial Statements
(ww) Exhibit 6.2(c)- Trademark License Agreement
(xx) Exhibit 6.2(d)- Gylon Trademark License Agreement and
HyCarb Patent and Trademark License
Agreement
(yy) Exhibit 6.3(e)- Patent License Agreement
NOTE:
The registrant hereby agrees to furnish copies of the
foregoing schedules and exhibits to the Securities and Exchange
Commission upon request.
EXHIBIT 4.1
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT (the "Amendment"), dated as of October
11, 1995, among COLTEC INDUSTRIES INC (the "Company") and the
financial institutions party to the Credit Agreement referred to
below (the "Banks"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such
terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Company, the Banks, the Co-Agents and
Bankers Trust Company, as Administrative Agent, are parties to a
Credit Agreement, dated as of March 24, 1992 and amended and
restated as of January 11, 1994, as amended, modified or
supplemented through the date hereof (as so amended, modified or
supplemented, the "Credit Agreement");
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 2.01 of the Credit Agreement is hereby
amended by inserting immediately after the phrase "L/C Supportable
Indebtedness of the Company" the phrase ", any of its Foreign
Subsidiaries".
2. Section 8.14 of the Credit Agreement is hereby
amended by (i) deleting the comma appearing at the end of clause
(a)(x)(C) and inserting in lieu thereof the word "and", (ii)
deleting clause (a)(x)(E) in its entirety and (iii) deleting
Section 8.14 (b) and inserting in lieu thereof the phrase "(b)
intentionally omitted".
3. Notwithstanding anything to the contrary contained
in Section 8.14 of the Credit Agreement the Required Banks hereby
waive compliance with Section 8.14 (a)(x)(D) of the Credit
Agreement, solely to the extent necessary to permit the purchase of
contracts and certain related equipment from Allied Signal for an
aggregate purchase price not to exceed $14 million.
4. Section 9.04(i) of the Credit Agreement is hereby
amended by deleting the amount "$15,000,000" contained therein and
inserting in lieu thereof the amount "$25,000,000".
5. Notwithstanding anything to the contrary contained
in Section 9.14(ii)(x)(ii) of the Credit Agreement, the Required
Banks hereby (i) agree to the creation of a new Foreign Subsidiary
in the United Kingdom (the "New U.K. Subsidiary") which shall be a
Wholly-Owned Subsidiary of the Company and which shall be formed
for the purpose of holding all of the capital stock of Coltec
Automotive Group Ltd, Garlock (Great Britain) Limited and Delavan
Limited and shall have no other significant assets or liabilities
and shall engage in no business activities and (ii) waive
compliance by the Company with the requirement contained therein
that any Foreign Subsidiary created by the Company shall be a
Wholly-Owned Subsidiary of another Foreign Subsidiary that is a
Wholly-Owned Subsidiary of the Company, solely to the extent
necessary to permit the New UK Subsidiary to be Wholly-Owned by the
Company.
6. The definition of "Change of Control" contained in
Section 11 of the Credit Agreement is hereby amended by inserting
immediately following the phrase "provided that" the phrase "(i) JP
Morgan Asset Management shall be permitted to acquire up to 23% of
the outstanding capital stock of the Company and (ii)".
7. The definition of "L/C Supportable Indebtedness"
contained in Section 11 of the Credit Agreement is hereby amended
by inserting at the end of the proviso contained therein the clause
"; provided further, in no event shall L/C Supportable Indebtedness
of all Foreign Subsidiaries exceed $20 million."
8. The definition of "Permitted Acquisition" contained
in Section 11 of the Credit Agreement is hereby amended by (i)
deleting the comma appearing at the end of clause (B) and inserting
in lieu thereof the word "and", (ii) deleting "(i)" appearing in
clause (C) and (iii) deleting the phrase "and (ii) if at the time
of such asset acquisition... (if such surviving corporation is
organized outside the United States and the States and territories
thereof)".
9. Nothwithstanding anything to the contrary contained
in the Second Waiver to the Credit Agreement dated June 5, 1995
among Coltec Industries Inc and the Banks (the "Second Waiver"),
the New German Subsidiary (as defined in the Second Waiver) shall,
in addition to engaging in the sale of automotive products, also
hold the shares of Garlock GmbH but shall otherwise have no
significant assets or liabilities.
10. In order to induce the Banks to enter into this
Amendment, the Company hereby (i) makes each of the repre-
sentations, warranties and agreements contained in Section 7 of the
Credit Agreement and (ii) represents and warrants that there exists
no Default or Event of Default, in each case on the Amendment
Effective Date (as defined herein) both before and after giving
effect to this Amendment.
11. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other
provision of the Credit Agreement or any other Credit Document.
12. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the
Administrative Agent.
13. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
14. This Amendment shall become effective on the date
(the "Amendment Effective Date") when the Company and the Required
Banks shall have signed a copy hereof (whether the same or
different copies) and shall have delivered (including by way of
facsimile) the same to the Administrative Agent at the Notice
Office.
15. From and after the Amendment Effective Date, all
references in the Credit Agreement and the other Credit Documents
to the Credit Agreement shall be deemed to be references to such
Credit Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused
a counterpart of this Amendment to be duly executed and delivered
as of the date first above written.
COLTEC INDUSTRIES INC
By
Title:
BANKERS TRUST COMPANY,
Individually, and as
Administrative Agent
By
Title:
THE BANK OF MONTREAL,
Individually and as Co-Agent
By
Title:
THE BANK OF NOVA SCOTIA,
Individually, and as Co-Agent
By
Title:
CREDIT LYONNAIS NEW YORK
BRANCH, Individually and as
Co-Agent
By
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, New York Branch,
Individually, and as
Co-Agent
By
Title:
CIBC, INC.
By
Title:
ABN AMRO BANK N.V.
By
Title:
By
Title:
COMERICA BANK
By
Title:
THE SUMITOMO BANK, LIMITED
By
Title:
BANK OF AMERICA ILLINOIS
By
Title:
SOCIETY NATIONAL BANK
By
Title:
ROYAL BANK OF SCOTLAND
By
Title:
THE BANK OF NEW YORK
By
Title:
THE BANK OF TOKYO TRUST
COMPANY
By
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By____________________________
Title:
By____________________________
Title:
BANQUE PARIBAS
By____________________________
Title:
By____________________________
Title:
THE FUJI BANK, LIMITED,
New York Branch
By____________________________
Title:
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED, NEW
YORK BRANCH
By
Title:
THE NIPPON CREDIT BANK, LTD.,
New York Branch
By
Title:
MERITA BANK
By
Title:
By
Title:
ARAB BANKING CORP.
By
Title:
BANK OF IRELAND
By
Title:
BANK OF SCOTLAND
By
Title:
EXHIBIT 4.2
THIRD AMENDMENT TO CREDIT AGREEMENT
THIRD AMENDMENT (the "Third Amendment"), dated as of May
14, 1996, among COLTEC INDUSTRIES INC (the "Company") and the
financial institutions party to the Credit Agreement referred to
below (the "Banks"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such
terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Company, the Banks, the Co-Agents and
Bankers Trust Company, as Administrative Agent, are parties to a
Credit Agreement, dated as of March 24, 1992 and amended and
restated as of January 11, 1994, as amended, modified or
supplemented through the date hereof (as so amended, modified or
supplemented, the "Credit Agreement");
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The definition of "Consolidated EBITDA" in
Section 11 of the Credit Agreement is hereby amended by adding the
following new sentence immediately at the end thereof:
"Notwithstanding anything to the contrary contained above
or in the component definitions used in determining
Consolidated EBITDA, and for purposes of Section 9.09 only,
(x) Consolidated EBITDA for any period which includes the
third quarter of fiscal year 1995 shall not be reduced by the
Walbar Canada Special Charge and, accordingly, to the extent
Consolidated EBITDA has been reduced thereby, the amount of
the Walbar Canada Special Charge shall be added back to
Consolidated EBITDA; provided that as and when cash amounts
are actually expended by the Company and/or its Subsidiaries
in connection with the closing of the Walbar Compressor Blade
Facility (and to the extent such amounts relate to the write-off
previously taken in respect of the Walbar Canada Special
Charge), such cash expenditures shall reduce Consolidated
EBITDA for the respective period in which such cash
expenditures are made by the amount thereof, (y) to the extent
Consolidated EBITDA is being determined for any period which
includes the first quarter of fiscal year 1996, same shall not
be reduced by the Fokker Special Charge (and the amount
thereof shall be added back in determining Consolidated
EBITDA); provided that to the extent that any cash
expenditures are actually made, or any payments are actually
received, by the Company and/or its Subsidiaries, which relate
to the write-off previously taken in respect of the Fokker
Special Charge, such cash expenditures shall reduce
Consolidated EBITDA for the respective period in which such
cash expenditures are made by the amount thereof and any such
subsequent payments received shall not be included as a
component of Consolidated EBITDA (whether as an addition to
Consolidated Net Income or otherwise) in any subsequent period
and (z) to the extent Consolidated EBITDA for any period has
been reduced (whether as a reduction to Consolidated Net
Income or otherwise) by the amount of any non-cash
compensation (including the amortization of deferred non-cash
compensation) paid to directors, officers or employees of the
Company and/or its Subsidiaries through the issuance of
capital stock of the Company (including restricted stock) and
the issuance or vesting of options to purchase or acquire such
capital stock, the amount of Consolidated EBITDA shall be
increased by the amount of the respective such reduction for
such period."
2. Section 11 of the Credit Agreement is hereby further
amended by adding the following new definitions in appropriate
alphabetical order therein:
"Fokker Special Charge" shall mean the $14 million
special charge taken by the Company in the first quarter of the
fiscal year 1996, which charge relates to the cessation of
shipments of landing gears and flight control systems for the
Fokker 70 and 100 aircraft.
"Walbar Canada Special Charge" shall mean the $27,000,000
special charge taken by the Company in the third quarter of fiscal
year 1995, which charge relates to the planned closing of the
Walbar Compressor Blade Facility in Canada to occur in 1996.
3. In order to induce the Banks to enter into this
Third Amendment, the Company hereby (i) makes each of the repre-
sentations, warranties and agreements contained in Section 7 of the
Credit Agreement, (ii) represents and warrants that there exists no
Default or Event of Default, in each case on the Third Amendment
Effective Date (as defined herein) after giving effect to this
Third Amendment.
4. This Third Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver of any
other provision of the Credit Agreement or any other Credit
Document.
5. This Third Amendment may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the
Administrative Agent.
6. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
7. This Third Amendment shall become effective on the
date (the "Third Amendment Effective Date") when the Company and
the Required Banks shall have signed a copy hereof (whether the
same or different copies) and shall have delivered (including by
way of facsimile) the same to the Administrative Agent at the
Notice Office.
8. From and after the Third Amendment Effective Date,
all references in the Credit Agreement and the other Credit
Documents to the Credit Agreement shall be deemed to be references
to such Credit Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused
a counterpart of this Third Amendment to be duly executed and
delivered as of the date first above written.
COLTEC INDUSTRIES INC
By
Title:
BANKERS TRUST COMPANY,
Individually, and as
Administrative Agent
By
Title:
THE BANK OF MONTREAL,
Individually and as Co-Agent
By
Title:
THE BANK OF NOVA SCOTIA,
Individually, and as Co-Agent
By
Title:
CREDIT LYONNAIS NEW YORK
BRANCH, Individually and as
Co-Agent
By
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, New York Branch,
Individually, and as
Co-Agent
By
Title:
CIBC, INC.
By
Title:
ABN AMRO BANK N.V.
By
Title:
By
Title:
COMERICA BANK
By
Title:
THE SUMITOMO BANK, LIMITED
By
Title:
BANK OF AMERICA ILLINOIS
By
Title:
SOCIETY NATIONAL BANK
By
Title:
ROYAL BANK OF SCOTLAND
By
Title:
THE BANK OF NEW YORK
By
Title:
BANK OF TOKYO-MITSUBISHI LTD.
By
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By
Title:
By
Title:
BANQUE PARIBAS
By
Title:
By
Title:
THE FUJI BANK, LIMITED,
New York Branch
By
Title:
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED, NEW
YORK BRANCH
By
Title:
THE NIPPON CREDIT BANK, LTD.,
New York Branch
By
Title:
MERITA BANK
By
Title:
By
Title:
ARAB BANKING CORP.
By
Title:
BANK OF IRELAND
By
Title:
BANK OF SCOTLAND
By
Title:
EXHIBIT 4.3
FOURTH AMENDMENT TO CREDIT AGREEMENT
FOURTH AMENDMENT (the "Fourth Amendment"), dated as of
June 6, 1996, among COLTEC INDUSTRIES INC (the "Company") and the
financial institutions party to the Credit Agreement referred to
below (the "Banks"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such
terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Company, the Banks, the Co-Agents and
Bankers Trust Company, as Administrative Agent, are parties to a
Credit Agreement, dated as of March 24, 1992 and amended and
restated as of January 11, 1994, as amended, modified or
supplemented through the date hereof (as so amended, modified or
supplemented, the "Credit Agreement");
WHEREAS, the Company has informed the Banks that it
intends to sell the assets of its Holley Automotive Division
(including the assets of the former Coltec Automotive Division) and
Performance Friction Products Operation (collectively, the
"Automotive Business") to Borg-Warner Automotive, Inc. or one of
its subsidiaries ("Borg-Warner") pursuant to a definitive purchase
agreement ("Purchase Agreement") which will be consistent with the
letter of intent dated April 25, 1996 and attached hereto as Annex
I ("Letter of Intent") for a cash purchase price of $283 million,
subject to (x) a post-closing adjustment for changes in working
capital (inventory plus accounts receivable minus assumed payables)
on March 31, 1996, as compared to the amount of working capital as
calculated on the closing date of the sale of the Automotive
Business and (y) such other adjustments as may be provided in the
Purchase Agreement, so long as the aggregate amount of the
adjustments described in this clause (y) in no event reduces the
aggregate purchase consideration by more than $10 million;
WHEREAS, the Company has also informed the Banks that, in
an effort to reduce the asbestos liability costs currently being
incurred by certain of its Subsidiaries, it has developed a plan to
establish a "case management" Subsidiary which would manage and
attempt to contain contingent asbestos-related liabilities of
Garlock Inc ("Garlock"), The Anchor Packing Company ("Anchor
Packing") and their respective Subsidiaries; and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided in connection with the items described
in the two preceding "WHEREAS" clauses, as well as for certain
other purposes;
NOW, THEREFORE, it is agreed:
1. Section 1.01(a) of the Credit Agreement is hereby
amended by (i) at the end of clause (iii) thereof, inserting the
phrase "as reduced by such Bank's Adjusted Percentage of the
Blocked Commitment (determined after giving effect to any
reductions thereto on such date) at such time" immediately after
the phrase "outstanding, equals the Commitment of such Bank at such
time" appearing therein and (ii) at the end of clause (iv) thereof,
inserting the phrase "as reduced by the amount of the Blocked
Commitment (after giving effect to any reductions thereto on such
date) at such time" immediately after the phrase "exceeds an amount
equal to the Total Commitment at such time" appearing therein.
2. Section 1.01(b) of the Credit Agreement is hereby
amended by adding the phrase "as reduced by the amount of the
Blocked Commitment (after giving effect to any reductions thereto
on such date) as then in effect" immediately after the phrase
"Adjusted Total Commitment on such date)" appearing in clause (iii)
thereof.
3. Section 1.08(a) of the Credit Agreement is hereby
amended by adding the following new proviso immediately at the end
thereof:
"; provided that at any time when the Applicable Margin
is 1.25%, the rate per annum otherwise applicable as
provided in preceding clause (a) shall be increased by
.25%."
4. Section 2.01(c) of the Credit Agreement is hereby
amended by inserting the phrase "as reduced by the amount of the
Blocked Commitment (after giving effect to any reductions thereto
on such date) as then in effect" immediately after the phrase
"Commitment on such date)" appearing at the end of clause (i)
thereof.
5. Section 3.01 of the Credit Agreement is hereby
amended by adding the following new clause (f) at the end thereof:
"(f) On the date of the consummation of the Automotive
Business Sale, the Company shall pay to the
Administrative Agent for distribution to Banks as
provided in the immediately succeeding sentence a fee in
an aggregate amount equal to the Aggregate Fourth
Amendment Executing Bank Percentage of an amount equal to
1/2 of 1% of the Net Sale Proceeds (calculated without
regard to any subsequent post-closing working capital
adjustment) from the Automotive Business Sale. The fee
paid as described in the immediately preceding sentence
shall be distributed to those Banks (whether or not such
Persons remain Banks on the Automotive Business Sale
Date) which executed the Fourth Amendment and delivered
(by physical delivery or telecopier) to the
Administrative Agent its signature page so executed prior
to 5:00 p.m. (New York time) on June 6, 1996 (with each
such Bank being herein called a "Fourth Amendment
Executing Bank"), with each Fourth Amendment Executing
Bank to receive a percentage of the aggregate fee paid
pursuant to the immediately preceding sentence equal to
a fraction (expressed as a percentage) the numerator of
which is the amount of the Commitment of such Fourth
Amendment Executing Bank on June 6, 1996 and the
denominator of which is the aggregate amount of the
Commitments of all Fourth Amendment Executing Banks on
June 6, 1996."
6. So long as the Automotive Business Sale is effected
in accordance with the requirements of Section 9.02(xviii), then
the Banks hereby irrevocably waive any reduction to the Total
Commitment and any repayment which would otherwise be required
pursuant to either or both of Sections 3.03(e) and (f) of the
Credit Agreement; provided that the Company will have to
subsequently comply with the requirements of Section 3.03(j) as
added pursuant to the following Section 7 of this Fourth Amendment.
7. Section 3.03 of the Credit Agreement is hereby
amended by adding the following new clause (j) immediately at the
end thereof:
"(j) On the date which is the first anniversary of the
Automotive Business Sale Date, the Total Commitment shall
be reduced by the amount, if any, by which $50 million
exceeds the aggregate amount (excluding amounts paid in
respect of accrued interest) theretofore paid to purchase
or redeem Senior Notes in accordance with Section
9.10(i)(z) hereof."
8. Section 4.02(a) of the Credit Agreement is hereby
amended by (i) inserting the phrase "as reduced by the amount of
the Blocked Commitment (after giving effect to any reductions
thereto on such date) as then in effect" immediately after the
phrase "exceeds the Adjusted Total Commitments as then in effect"
each place it appears therein and (ii) adding the following new
clause (iii) immediately after clause (ii) thereof:
"(iii) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, on the date of the
consummation of the Automotive Business Sale, the gross
cash proceeds therefrom (as reduced by cash expenses
incurred in connection with the Automotive Business Sale)
shall be applied (x) first, to repay outstanding
principal of Revolving Loans made by Non-Defaulting Banks
and (y) to the extent in excess thereof, to repay
outstanding Swingline Loans; provided that to the extent
repayments required by preceding clause (x) would cause
the Company to incur breakage costs under Section 1.11 as
a result of Eurodollar Rate Loans (the "Affected
Eurodollar Rate Loans") being prepaid other than on the
last day of an Interest Period applicable thereto (it
being understood that the Company shall first prepay any
Revolving Loans of Non-Defaulting Banks maintained as
Base Rate Loans or as Eurodollar Rate Loans where no such
breakage costs would be incurred), then the Company may,
at its option, in lieu of repaying the Affected
Eurodollar Rate Loans, deposit a portion (up to 100%) of
the amounts that otherwise would have been paid in
respect of the Affected Eurodollar Rate Loans with the
Administrative Agent (which deposit must be equal in
amount to the amount of Affected Eurodollar Rate Loans
not immediately prepaid as a result of this proviso) to
be held as security for the obligations of the Company
hereunder in an account maintained by the Administrative
Agent (with investments of such funds permitted only in
Cash Equivalents), with the proceeds on deposit in such
account to be used solely (a) to repay the outstanding
principal of Affected Eurodollar Rate Loans at the end of
the respective Interest Periods (as in effect on the
Automotive Business Sale Date) relating thereto and (b)
prior to the application in full of any funds pursuant to
preceding clause (x), and so long as no Default or Event
of Default is in existence, such funds may be withdrawn
by the Company to the extent needed by it for purposes
for which it would otherwise incur Revolving Loans from
the Banks. Any Loans repaid pursuant to this clause
(iii) may thereafter be reborrowed in accordance with the
relevant provisions of this Agreement."
9. Section 8.01(f) of the Credit Agreement is hereby
amended by (i) inserting the phrase "4.02," immediately after the
phrase "provisions of Sections 3.03," appearing therein and (ii)
inserting the following phrase immediately at the end of the
existing text thereof:
", and setting forth the calculations of the amount of
the Blocked Commitment (as well as the sub-components
thereof) at the end of such fiscal period".
10. Section 8.12 of the Credit Agreement is hereby
amended by inserting the phrase "(but subject to Section 8.16 in a
case of the Case Management Subsidiary)" immediately after the
phrase "Restatement Effective Date" appearing therein.
11. Section 8.16 of the Credit Agreement is hereby
amended by adding the following new sentence immediately at the end
thereof:
"On or before the 180th day after the Automotive Business
Sale Date, the Company shall cause the Final Existing
Senior Debenture Redemption to have occurred, and no
Existing Senior Debentures shall remain outstanding after
giving effect thereto."
12. Section 8 of the Credit Agreement is hereby amended
by adding the following new Section 8.17 immediately at the end
thereof:
"8.17 Case Management Subsidiary. After the Fourth
Amendment Effective Date, the Company may designate an
existing Wholly-Owned Subsidiary acceptable to the
Administrative Agent to be the "Case Management
Subsidiary" so long as, at the time of such designation,
the Wholly-Owned Subsidiary so designated has as its only
assets (x) the Case Management Subsidiary Intercompany
Note transferred to it as described below and (y) other
assets not in excess (in the aggregate) of $15 million,
it being understood and agreed that the assets referenced
in this clause (y) may include loans (so long as not in
excess of the amount referenced above in this clause (y))
made by the Case Management Subsidiary to the Company or
its other Subsidiaries with funds previously advanced to
the Case Management Subsidiary by the Company. Following
such designation, such Subsidiary shall constitute the
"Case Management Subsidiary" for purposes of this
Agreement, and will thereafter manage and attempt to
contain certain asbestos-related liabilities of Garlock
Inc ("Garlock"), The Anchor Packing Company ("Anchor
Packing") and their respective Subsidiaries. At the time
of such designation, the name of the Subsidiary so
designated shall be changed to "Case Management, Inc."
In connection with the establishment of the Case
Management Subsidiary, Garlock may contribute an
intercompany promissory note (the sole obligor on which
shall be Stemco Inc or any other entity which, on the
Fourth Amendment Effective Date, is a Subsidiary of
Garlock) in an amount not to exceed $375 million, which
note shall be in the form of Annex II to the Fourth
Amendment (the "Case Management Subsidiary Intercompany
Note"). The Case Management Subsidiary shall at such
time assume the contingent asbestos-related liabilities
of Garlock and Anchor Packing (and their respective
Subsidiaries) and, in exchange, the Case Management
Subsidiary will issue a second class of common stock (its
"Class B" common stock) to Garlock. The Class B common
stock so issued by the Case Management Subsidiary shall,
by its terms, have an equity value of not greater than
10% of the entire value of the Case Management
Subsidiary. After the taking of the actions described
above, (x) Garlock shall be permitted to sell Class B
common stock of the Case Management Subsidiary to third
party investors (which may include the management of the
Case Management Subsidiary) for an amount equal to its
fair market value (estimated to be approximately $1
million) and (y) the Company or its respective
Subsidiaries which own the other common stock of the Case
Management Subsidiary shall be permitted to sell portions
of such capital stock of the Case Management Subsidiary
to third party investors (which may include management of
the Case Management Subsidiary); provided that at no time
shall the equity interests in the Case Management
Subsidiary not directly or indirectly owned by the
Company and its Wholly-Owned Subsidiaries exceed 10% of
the entire equity interests in the Case Management
Subsidiary. Upon the taking of the actions described
above, if the Case Management Subsidiary was theretofore
a party to any Guarantee or Security Document, the Case
Management Subsidiary shall be released therefrom, and
the Administrative Agent and Collateral Agent are hereby
authorized and directed by the Banks to take all actions
as may be reasonably necessary or desirable in connection
therewith. The Banks hereby further agree that the
actions described above in this Section 8.17 may be taken
notwithstanding anything to the contrary contained
elsewhere in this Agreement or any other Credit Document.
It is also hereby agreed that the Case Management
Subsidiary shall not, after it ceases to be a Wholly-Owned Subsidiary,
be subject to the requirements of
Section 8.14 (although the capital stock of the Case
Management Subsidiary owned by the Company and/or its
Wholly-Owned Subsidiaries shall be required to be pledged
in accordance with the relevant provisions of the
Security Documents)."
13. Section 9.02 of the Credit Agreement is hereby
amended by (i) inserting the following phrase immediately after the
phrase "provided that" appearing in clause (xii) thereof:
"(t) after the establishment of the Case Management
Subsidiary, each of the Case Management Subsidiary and
any obligor on the Case Management Subsidiary
Intercompany Note shall be deemed not to constitute
Wholly-Owned Subsidiaries of the Company for purposes of
this clause (xii),"
(ii) deleting the word "and" appearing at the end of clause (xv)
thereof, (iii) deleting the period at the end of clause (xvi)
thereof and inserting a semi-colon in lieu thereof and (iv)
inserting the following new clauses (xvii) and (xviii) immediately
after clause (xvi) thereof:
"(xvii) the Company shall be permitted to establish the
Case Management Subsidiary in accordance with the
requirements of Section 8.17 and, in connection
therewith, may take all the actions expressly permitted
by said Section 8.17 and the last sentence of Section
9.03; and
(xviii) the Company may sell the assets of its Holley
Automotive Division (including the assets of the former
Coltec Automotive Division) and its Performance Friction
Products Operation (collectively, the "Automotive
Business") to Borg-Warner Automotive, Inc. or one of its
subsidiaries ("Borg-Warner") pursuant to a definitive
purchase agreement (the "Purchase Agreement"), so long as
same is consistent with the letter of intent dated April
25, 1996 and attached to the Fourth Amendment as Annex I
thereto (the "Letter of Intent") for a cash purchase
price of at least $283 million, subject to (x) a post-closing
adjustment for changes in working capital
(inventory plus accounts receivable minus assumed
payables) on March 31, 1996, as compared to the amount of
working capital as calculated on the closing date of said
transaction and (y) such other adjustments as may be
provided in the Purchase Agreement, so long as the
aggregate amount of the adjustments described in this
clause (y) in no event reduces the aggregate purchase
consideration by more than $10 million, so long (i) as
the Purchase Agreement is submitted to the Administrative
Agent and the Banks prior to the consummation of the
Automotive Business Sale and same is in form and
substance reasonably satisfactory to the Administrative
Agent and (ii) on or prior to the date of the
consummation of the Automotive Business Sale, the Company
shall submit to the Administrative Agent its calculation
of the amount required to be applied to the repayment
(and/or collateralization) of Revolving Loans pursuant to
Section 4.02(a)(iii), the Net Sale Proceeds therefrom and
the amount of Deferred Taxes created in connection
therewith and such amounts shall be reasonably
satisfactory to the Administrative Agent."
14. Section 9.03 of the Credit Agreement is hereby
amended by (i) in clause (ii) thereof, adding the phrase "and is
not the Case Management Subsidiary" immediately after the phrase
"which is not a Wholly-Owned Subsidiary" contained therein, (ii)
deleting the word "and" appearing immediately before clause (iii)
thereof, (iii) inserting the following phrase immediately at the
end of the existing text thereof:
"and (iv) so long as there shall exist no Default or
Event of Default (both before and after giving effect to
the payment thereof), and in addition to purchases
permitted pursuant to the preceding provisions of this
Section 9.03, the Company shall be permitted (but only if
the Automotive Business Sale Date occurs) to purchase,
during the one-year period beginning on the Automotive
Business Sale Date, shares of Company common stock so
long as the aggregate amount spent in connection with
purchases pursuant to this clause (iv) does not exceed
$93 million" and
(iv) adding the following new sentence immediately at the end
thereof:
"Notwithstanding anything to the contrary contained in
this Section 9.03 or elsewhere in this Agreement, after
the establishment thereof in accordance with Section
8.17, and in connection with the sale of equity interests
therein as provided in said Section 8.17, the Case
Management Subsidiary (and/or the Company and one or more
of its other Subsidiaries) may enter into certain "put"
and/or "call" arrangements with respect to its equity
(not in excess of 10% of its entire equity) sold to third
party investors as contemplated by Section 8.17, so long
as (x) no such arrangements shall require any payment by
the Case Management Subsidiary prior to the tenth
anniversary of the date of the creation of the Case
Management Subsidiary and (y) no such payment shall
actually be made unless this Section 9.03 is no longer
applicable or has been amended or modified in accordance
with the provisions of this Agreement to permit said
payment."
15. Section 9.04(b) of the Credit Agreement is hereby
amended by (i) deleting the word "and" appearing at the end of
clause (ii) of the proviso thereto and (ii) inserting the following
new phrase immediately at the end thereof:
"and (iv) from and after the date which is 180 days after
the Automotive Business Sale Date, Item A.4. listed on
Schedule VI shall be deemed deleted (and such
Indebtedness shall no longer be permitted to remain
outstanding and no refinancing thereof shall be
permitted)"
16. Section 9.04 of the Credit Agreement is hereby
further amended by (i) deleting the word "and" appearing at the end
of clause (m) thereof, (ii) deleting the period appearing at the
end of clause (n) thereof and inserting in lieu thereof "; and" and
(iii) inserting the following new clause (o) immediately at the end
thereof:
"(o) after the establishment of the Case Management
Subsidiary in accordance with the requirements of Section
8.17, (x) the Case Management Subsidiary Intercompany
Note as described in said Section 8.17, (y) the loans
described in clause (y) of the first sentence of Section
8.17 and (z) loans evidenced by the Case Management
Subsidiary Subordinated Notes and made in accordance with
the provisions of Section 9.15, shall be permitted to be
issued or made and remain outstanding."
17. Section 9.05 of the Credit Agreement is hereby
amended by (i) deleting the period at the end of clause (xix)
thereof and by inserting in lieu thereof "; and" and (ii) inserting
the following new clause (xx) immediately at the end thereof:
"(xx) the Case Management Subsidiary may be established
in accordance with the requirements of Section 8.17 and
investments and loans may be made in, or by, the Case
Management Subsidiary as described in Sections 8.17,
9.04(o) and 9.15."
18. Section 9.06 of the Credit Agreement is hereby
amended by (i) deleting the word "and" appearing at the end of
clause (ii) of the first sentence thereof and (ii) inserting the
following new phrase at the end of the first sentence thereof:
"and (iv) the Case Management Subsidiary may be
established in accordance with the relevant requirements
of Section 8.17 and the transactions described in said
Section 8.17 and Sections 9.04(o), 9.05(xx) and 9.15 may
be effected in accordance with said Sections."
19. Section 9.09 of the Credit Agreement is hereby
amended by deleting "1994" as same appears in the table therein and
by inserting in lieu thereof "1996".
20. Section 9.10 of the Credit Agreement is hereby
amended by (i) deleting the phrase "or redemption (including
pursuant to any change of control provision) or" appearing in
clause (i) thereof and by inserting in lieu thereof the phrase ",
or make (or give any notice in respect of) any redemption or offer
to purchase (including pursuant to any change of control or asset
sale provision), or effect any other", (ii) inserting the following
new sub-clause (u) immediately before sub-clause (v) of clause (i)
thereof:
"(u) within 180 days after the Automotive Business Sale
Date, the Final Existing Senior Debenture Redemption may
be effected in accordance with the definition thereof
contained herein,"
and (iii) deleting the phrase "after the repayment in full of the
Existing Senior Debentures" appearing in sub-clause (z) of clause
(i) thereof and by inserting in lieu thereof the phrase "after the
Automotive Business Sale Date".
21. Section 9.10 of the Credit Agreement is hereby
further amended by adding the following new sentence at the end
thereof:
"The provisions of preceding clauses (iii) through (vi)
shall in no event prohibit the taking of actions
necessary or desirable in connection with the
establishment of the Case Management Subsidiary in
accordance with the requirements of Section 8.17."
22. Section 9.12(a) of the Credit Agreement is hereby
amended by (i) deleting the word "and" appearing at the end of
clause (vi) thereof and by inserting a comma in lieu thereof and
(ii) inserting the following phrase at the end thereof:
"and (viii) issuances of Class B common stock by the Case
Management Subsidiary following the establishment
thereof, so long as such establishment and issuance of
Class B common stock comply with the requirements of said
Section 8.17."
23. Section 9 of the Credit Agreement is hereby further
amended by adding the following new Section 9.15 immediately at the
end thereof:
"9.15 Restrictions Regarding Case Management Subsidiary
Intercompany Note. After the issuance of the Case Management
Subsidiary Intercompany Note, the Company shall not, and shall
not permit any of its Subsidiaries to, (i) amend or modify the
Case Management Subsidiary Intercompany Note (except to the
extent such amendment or modification is for the purpose of
including bracketed language contained in the form of Case
Management Subsidiary Intercompany Note attached to the Fourth
Amendment as Annex II) or, after the issuance thereof, any
Case Management Subsidiary Subordinated Note in any respect or
(ii) make any cash payments (other than regularly scheduled
payments of interest) pursuant to, or in respect of, the Case
Management Subsidiary Intercompany Note or, after the issuance
thereof (and subject to the subordination provisions thereof),
any Case Management Subsidiary Subordinated Note, except that
(x) to the extent the amount needed exceeds the amount of cash
and Cash Equivalents then available to the Case Management
Subsidiary (and exceeds the amount of any accrued interest
then due and payable with respect to the Case Management
Subsidiary Intercompany Note and any outstanding Case
Management Subsidiary Subordinated Notes), cash payments of
principal (including prepayments thereof) of the Case
Management Subsidiary Intercompany Note or, subject to the
subordination provisions thereof, any Case Management
Subsidiary Subordinated Note may be made at such times, and in
such amounts, as are needed so that the Case Management
Subsidiary has adequate money (but not excess funds) to fund
its expenses and the payment of asbestos-related liabilities
of Garlock and Anchor Packing (and their respective
Subsidiaries) assumed by the Case Management Subsidiary as
described in Section 8.17. Furthermore, after the issuance of
the Case Management Subsidiary Intercompany Note, (x) if at
any time the aggregate amount of cash and Cash Equivalents
held by the Case Management Subsidiary exceeds an amount equal
to the sum of $1 million plus the amount the Case Management
Subsidiary in good faith determines will be needed so that the
Case Management Subsidiary has adequate money (but not excess
funds) to fund its expenses and the payment of asbestos-related
liabilities of Garlock and Anchor Packing (and their
respective Subsidiaries) assumed by the Case Management
Subsidiary as described in Section 8.17 for the period of
three calendar months from the date of the respective such
determination, then the Case Management Subsidiary shall be
required to advance such funds to Garlock or another Wholly-Owned
Subsidiary of Garlock (in each case which is a Wholly-Owned Subsidiary of
the Company) pursuant to a promissory note
which shall mature not earlier than the Case Management
Subsidiary Intercompany Note and which promissory note shall
be subordinated on terms, and all other terms of which shall
be, satisfactory to the Administrative Agent (with each
promissory note described in this clause (x) being herein
called a "Case Management Subsidiary Subordinated Note") and
(y) the Company shall not permit the Case Management
Subsidiary at any time to sell, assign or transfer any
interest in the Case Management Subsidiary Intercompany Note
or any Case Management Subsidiary Subordinated Note to any
other Person."
24. Section 11 of the Credit Agreement is hereby amended
by modifying certain defined terms contained therein as set forth
below:
(i) the definition of "Applicable Margin" is hereby
amended by adding the following phrase at the end thereof:
"; provided that at any time when the Interest Coverage
Increase of 1/4 of 1% is applicable in accordance with
the definition thereof contained herein, the "Applicable
Margin" shall be 1-1/4%".
(ii) the definition of "Consolidated EBITDA" is hereby
amended by deleting the phrase "and for purposes of Section
9.09 only" appearing in the last sentence thereof and by
inserting in lieu thereof the phrase "and for purposes of
Section 9.09 and in determining the Interest Coverage Ratio
for purposes of determining the Interest Coverage Increase
only".
(iii) the definition of "Leverage Reduction Discount" is
hereby amended by adding the following new clause (C)
immediately at the end of the first sentence thereof:
"and (C) the Leverage Reduction Discount shall be reduced
to zero at any time when any Interest Coverage Increase
is applicable".
(iv) the definition of "Margin Reduction Period" is
hereby amended by adding the following new sentence
immediately at the end thereof:
"Notwithstanding anything to the contrary contained
above, any existing Margin Reduction Period shall end,
and a new Margin Reduction Period shall begin, on each
Interest Coverage Increase Calculation Date if the
determination required in accordance with the definition
of Interest Coverage Increase results in any increase to
the Applicable Margin on such date."
25. Section 11 of the Credit Agreement is hereby further
amended by adding the following new definitions therein in
appropriate alphabetical order:
"Affected Eurodollar Rate Loans" shall have the meaning
provided in Section 4.01(a)(iii).
"Aggregate Fourth Amendment Executing Bank Percentage"
shall mean a fraction (expressed as a percentage) the
numerator of which is the aggregate amount of the
Commitments of the Fourth Amendment Executing Banks on
June 6, 1996 and the denominator of which is the
aggregate amount of the Commitments of all Banks on
June 6, 1996.
"Anchor Packing" shall have the meaning provided in
Section 8.17.
"Automotive Business" shall have the meaning provided in
Section 9.02(xviii).
"Automotive Business Sale" shall mean the sale of the
Automotive Business in accordance with the requirements
of Section 9.02(xviii).
"Automotive Business Sale Date" shall mean the date of
the consummation of the Automotive Business Sale.
"Blocked Commitment" at any time shall mean the sum of
the Deferred Taxes Blocked Commitment, the Existing
Senior Debentures Blocked Commitment and the Senior Notes
Blocked Commitment, each as then in effect.
"Borg-Warner" shall have the meaning provided in Section
9.02(xviii).
"Case Management Subsidiary" shall mean the Subsidiary of
the Company designated as such pursuant to, and in
accordance with the requirements of, Section 8.17.
"Case Management Subsidiary Intercompany Note" shall have
the meaning provided in Section 8.17.
"Case Management Subsidiary Subordinated Note" shall have
the meaning provided in Section 9.15.
"Deferred Taxes" at any time shall be the amount which
would at such time be shown on a consolidated balance
sheet of the Company prepared in accordance with GAAP as
"Deferred Taxes" or as a similar such liability in
respect of taxes, in each case to the extent resulting
from the Automotive Business Sale; provided that the
amount of Deferred Taxes shall be determined in a manner
consistent with the description of deferred taxes
resulting from the Automotive Business Sale as previously
discussed by the Company and the Administrative Agent
regardless of whether such amount would be shown as
deferred taxes in accordance with GAAP.
"Deferred Taxes Blocked Commitment" at any time on or
after the Fourth Amendment Effective Date shall mean an
amount equal to the amount of Deferred Taxes, as same may
be reduced by any payments of taxes which reduce such
Deferred Taxes.
"Existing Senior Debentures Blocked Commitment" at any
time shall mean an amount equal to the aggregate
principal amount of Existing Senior Debentures then
outstanding.
"Final Existing Senior Debenture Redemption" shall mean
the redemption, to occur within 180 days after the
Automotive Business Sale Date, of the remaining
outstanding principal amount ($22 million as of the
Fourth Amendment Effective Date) of the Existing Senior
Debentures at a price not to exceed 105.625% of their
principal amount, plus accrued and unpaid interest
thereon; provided that, if the remaining outstanding
Existing Senior Debentures may, in accordance with their
terms and the terms of the Existing Senior Indenture, be
defeased through the payment of aggregate consideration
which is less than that which would be required to effect
the redemption otherwise described above, the Company may
effect the Final Existing Senior Debenture Redemption
through the defeasance in full of all obligations with
respect thereto, rather than through the redemption of
the Existing Senior Debentures as otherwise described
above, so long as such defeasance is effected within 180
days after the Automotive Business Sale Date and fully
complies with the applicable requirements of the Existing
Senior Debentures and the Existing Senior Indenture.
"Fourth Amendment" shall mean the Fourth Amendment to
this Agreement, dated as of June 6, 1996.
"Fourth Amendment Effective Date" shall mean the Fourth
Amendment Effective Date under, and as defined in, the
Fourth Amendment.
"Fourth Amendment Executing Bank" shall have the meaning
provided in Section 3.01(f).
"Garlock" shall have the meaning provided in Section
8.17.
"Interest Coverage Increase" shall mean initially zero,
provided that on the first day of each Margin Reduction
Period, on the Fourth Amendment Effective Date, on the
Automotive Business Sale Date, on each date upon which
any Dividend is paid pursuant to clause (iv) of Section
9.03, and on each date upon which any payment of taxes is
made which reduces, or will reduce, the amount of
Deferred Taxes (each such date an "Interest Coverage
Increase Calculation Date"), the Interest Coverage Ratio
shall be determined for the four consecutive fiscal
quarters ended on the most recently ended Test Date, but
after giving effect to the Specified Pro Forma
Adjustments, and if the Interest Coverage Ratio as so
determined shall be less than 2.75:1.0, then an Interest
Coverage Increase of 1/4 of 1% shall be applicable from
the date of determination as specified above until the
last day of the respective Margin Reduction Period which
begins on such date.
"Interest Coverage Increase Calculation Date" shall have
the meaning provided in the definition of Interest
Coverage Increase."
"Letter of Intent" shall have the meaning provided in
Section 9.02(xviii).
"Purchase Agreement" shall have the meaning provided in
Section 9.02(xviii).
"Senior Notes Blocked Commitment" at any time shall mean
an amount (which shall in no event be less than $0) equal
to $50 million less the sum of (x) the aggregate amount
expended after the Fourth Amendment Effective Date
(excluding amounts paid in respect of accrued interest)
pursuant to clause (i)(z) of Section 9.10 in respect of
purchases of outstanding Senior Notes and (y) the amount
of any reduction to the total Commitment which has
theretofore occurred pursuant to Section 3.03(j).
"Specified Pro Forma Adjustments" shall mean, in
determining the Interest Coverage Ratio for purposes of
the definition of "Interest Coverage Increase" contained
herein, a calculation of the Interest Coverage Ratio as
otherwise provided in this Agreement, but after giving
effect to the following pro forma adjustments:
(i) for any calculation of the Interest Coverage
Ratio on the Automotive Business Sale Date or at any time
thereafter for any period of four consecutive fiscal
quarters which includes the Automotive Business Sale
Date, all calculations of Consolidated EBITDA shall give
pro forma effect to the Automotive Business Sale as if
same had occurred on the first day of the respective four
fiscal quarter period;
(ii) subject to following clauses (iii), (iv), (v)
and (vi) if any portion of the respective four quarter
period includes the Automotive Business Sale Date or any
period prior thereto, then for purposes of determining
Consolidated Interest Expense, the average outstanding
Loans pursuant to this Agreement for that portion of the
respective period which ends on the Automotive Business
Sale Date shall be decreased by the aggregate amount
actually used to repay Loans (for this purpose, deeming
Affected Eurodollar Rate Loans which are cash
collateralized as permitted by the proviso to
Section 4.02(a)(iii) as being repaid on the Automotive
Business Sale Date) on the Automotive Business Sale Date
pursuant to Section 4.01(a)(iii);
(iii) at any time after the Automotive Business
Sale Date when any payments are made which have the
effect of reducing the amount of Deferred Taxes and
regardless of the source of the respective such payment,
then for all periods prior to the date of the making of
such payment the average amount of Loans outstanding
shall be deemed increased by the amount of such payment
and Consolidated Interest Expense shall be deemed
increased by the interest which would have accrued during
the respective period had such increased average amount
been outstanding at all times prior to the making of such
payment;
(iv) at any time after the Automotive Business Sale
Date when any payments are made pursuant to Section
9.03(iv) and regardless of the source of the respective
such payment, then for all periods prior to the date of
the making of such payment the average amount of Loans
outstanding shall be deemed increased by the amount of
such payment and Consolidated Interest Expense shall be
deemed increased by the interest which would have accrued
during the respective period had such increased average
amount been outstanding;
(v) at any time after the Automotive Business Sale
Date when any payments are made to effect the Final
Existing Senior Debenture Redemption and regardless of
the source of the respective such payment, then for all
periods prior to the date of the making of such payments
(x) the average amount of Loans outstanding shall be
deemed increased by the amount of such payments
(excluding payments of interest accrued on the Existing
Senior Debentures at the time the Final Existing Senior
Debenture Redemption is effected) so made and
Consolidated Interest Expense shall be deemed increased
by the interest which would have accrued during the
respective period had such increased average amount been
outstanding and (y) the principal amount of Existing
Senior Debentures redeemed or defeased as a result of
such payments shall be deemed to have been retired and
Consolidated Interest Expense shall be deemed decreased
by the interest which would have accrued during the
respective period on the principal amount so retired; and
(vi) at any time after the Automotive Business Sale
Date when any payments are made to purchase Senior Notes
pursuant to clause (i)(z) of Section 9.10 which have the
effect of reducing the Senior Notes Blocked Commitment,
and regardless of the source of the respective such
payment, then for all periods prior to the date of the
making of such payments (x) the average amount of Loans
outstanding shall be deemed increased by the amount of
payments (excluding payments of interest accrued on the
Senior Notes so repurchased at the time of the repurchase
thereof) so made and Consolidated Interest Expense shall
be deemed increased by the interest which would have
accrued during the respective period had such increased
average amount been outstanding and (y) the principal
amount of Senior Notes so repurchased (and which
repurchase reduces the amount of the Senior Notes Blocked
Commitment) shall be deemed to have been retired and
Consolidated Interest Expense shall be deemed decreased
by the interest which would have accrued during the
respective period on the principal amount so repurchased.
26. In order to induce the Banks to enter into this
Fourth Amendment, the Company hereby (i) makes each of the repre-
sentations, warranties and agreements contained in Section 7 of the
Credit Agreement and (ii) represents and warrants that there exists
no Default or Event of Default, and in each case on the Fourth
Amendment Effective Date (as defined herein) both before and after
giving effect to this Fourth Amendment.
27. This Fourth Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver of any
other provision of the Credit Agreement or any other Credit
Document.
28. This Fourth Amendment may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the
Administrative Agent.
29. THIS FOURTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
30. This Fourth Amendment shall become effective on the
date (the "Fourth Amendment Effective Date") when (i) the Company,
each other Credit Party and the Required Banks shall have signed a
copy hereof (whether the same or different copies) and shall have
delivered (including by way of facsimile) the same to the Adminis-
trative Agent at the Notice Office and (ii) the General Counsel of
the Company shall have delivered to the Administrative Agent his or
her legal opinion with respect to this Fourth Amendment in form and
substance satisfactory to the Administrative Agent.
31. From and after the Fourth Amendment Effective Date,
all references in the Credit Agreement and the other Credit
Documents to the Credit Agreement shall be deemed to be references
to the Credit Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused
a counterpart of this Third Amendment to be duly executed and
delivered as of the date first above written.
COLTEC INDUSTRIES INC
By
Title:
BANKERS TRUST COMPANY,
Individually, and as
Administrative Agent
By
Title:
THE BANK OF MONTREAL,
Individually and as Co-Agent
By
Title:
THE BANK OF NOVA SCOTIA,
Individually, and as Co-Agent
By
Title:
CREDIT LYONNAIS NEW YORK
BRANCH, Individually and as
Co-Agent
By
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, New York Branch,
Individually, and as
Co-Agent
By
Title:
CIBC, INC.
By
Title:
ABN AMRO BANK N.V.
By
Title:
By
Title:
COMERICA BANK
By
Title:
THE SUMITOMO BANK, LIMITED
By
Title:
BANK OF AMERICA ILLINOIS
By
Title:
SOCIETY NATIONAL BANK
By
Title:
ROYAL BANK OF SCOTLAND
By
Title:
THE BANK OF NEW YORK
By
Title:
THE BANK OF TOKYO -
MITSUBISHI LTD.
By
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By____________________________
Title:
By____________________________
Title:
BANQUE PARIBAS
By____________________________
Title:
By____________________________
Title:
THE FUJI BANK, LIMITED,
New York Branch
By____________________________
Title:
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED, NEW
YORK BRANCH
By
Title:
THE NIPPON CREDIT BANK, LTD.,
New York Branch
By
Title:
MERITA BANK
By
Title:
By
Title:
ARAB BANKING CORP.
By
Title:
BANK OF IRELAND
By
Title:
BANK OF SCOTLAND
By
Title:
EACH OF THE UNDERSIGNED (EACH BEING A CREDIT PARTY OTHER
THAN THE COMPANY) HEREBY ACKNOWLEDGES AND AGREES TO THE PROVISIONS
OF THE FOREGOING FOURTH AMENDMENT, AND ACKNOWLEDGES AND AGREES
THAT THE CREDIT AGREEMENT AS AMENDED THROUGH THE FOURTH AMENDMENT
(AND AFTER GIVING EFFECT THERETO) SHALL BE ENTITLED TO ALL
BENEFITS OF THE CREDIT DOCUMENTS HERETOFORE EXECUTED BY SUCH
CREDIT PARTY.
CII HOLDINGS INC
COLTEC AUTOMOTIVE INC
COLTEC CANADA INC
COLTEC INDUSTRIAL PRODUCTS INC
COLTEC TECHNICAL SERVICES INC
DELAVAN-DELTA, INC
DELAVAN INC
FARNAM SEALING SYSTEMS INC
GARLOCK INC
GARLOCK INTERNATIONAL, INC
GARLOCK OVERSEAS CORPORATION
HOLLEY AUTOMOTIVE INC
HOLLEY PERFORMANCE PRODUCTS INC
PENNSYLVANIA COAL & COKE
CORPORATION
STEMCO INC
THE ANCHOR PACKING COMPANY
WALBAR INC
By
As Vice President and Treasurer
of each of the entities named
above
EXHIBIT 99
COLTEC INDUSTRIES COMPLETES SALE OF THREE AUTOMOTIVE UNITS
New York, NY, June 18, 1996 -- Coltec Industries Inc (NYSE:COT)
has completed the sale of its Holley Automotive, Coltec Automotive
and Performance Friction Products businesses to Borg-Warner
Automotive (NYSE:BWA) for $283 million in cash. These divisions
provide components primarily to the domestic automotive original
equipment manufacturers and had combined sales in 1995 of $255
million.
The transaction will result in an after-tax gain of $34 million,
or 49 cents per share, net of liabilities retained, transaction
costs and obligations related to the sale. The gain will be booked
in the second quarter as a gain from discontinued operations.
The cash proceeds, net of expenses and taxes, approximate $250
million. Of this, $160 million will be applied to reduce
indebtedness including repurchase or defeasance of $75 million of
high-yield debt and repayment of $85 million of bank debt. In
addition, up to $90 million of common equity, or 10% of the shares
outstanding if purchased at today's prices, will be repurchased in
the open market over the next six months.
Assuming this transaction had been consummated on January 1, 1995,
pro forma earnings from continuing operations for the full year,
excluding the special charge, would have been $66.7 million versus
$88.7 million reported. Pro forma 1995 earnings per share from
continuing operations would have been $1.06 versus reported
earnings per share of $1.27. On the same basis, pro forma first
quarter 1995 earnings from continuing operations would have been
$17.1 million, equal to 27 cents per share versus 34 cents
reported. Pro forma first quarter 1996 earnings from continuing
operations, excluding the charge related to Fokker, would have
been $12.7 million, or 20 cents per share versus 24 cents
reported. In both years, the automotive businesses had a
relatively strong performance in the first quarter.
(more)
John W. Guffey, Jr., chairman, president and chief executive
officer, said, "This transaction positions Coltec to focus greater
management and financial resources on its industrial and aerospace
businesses where it has far stronger market positions and
excellent long-term growth prospects. Furthermore, I am convinced
that our equity market value does not adequately reflect either
our improving financial or our improving operating positions.
Therefore, I believe that reinvesting a portion of the transaction
proceeds in our stock will provide our shareholders with handsome
rewards from current prices."
Coltec Industries is a diversified manufacturing company serving
primarily aerospace and general industrial markets.
