UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 reported) MARCH 28, 1998
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STANDARD MOTOR PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK I-4743 11-1362020
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(State or other jurisdiction (Commission File Number) (IRS Employer
incorporated) Identification Number
37-18 NORTHERN BLVD. LONG ISLAND CITY, N.Y. 11101
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(address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (718) 392-0200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 28, 1998, Standard Motor Products, Inc. (the "Company") completed the
exchange of their brake business for the Moog Automotive Temperature Control
business of Cooper Industries.
The brake business of Standard Motor Products includes a line of hydraulic and
friction products, drums and rotors and hardware distributed under the EIS,
Cali-Blok, Traffic King, Tru Tech and private label brand names. The temperature
control business of Moog Automotive includes heating and cooling system parts
and electric motors distributed under the Everco, Murray, Frostemp, Automotive
Components and private label brand names. The Moog Automotive temperature
control business will be merged into the Company's existing temperature control
business over the next year.
The assets exchanged consist primarily of inventory; property, plant and
equipment and certain other assets and liabilities. The fair values of the
related net assets at the date of the transaction approximate their respective
net book values. The fair value of the net assets received is estimated to
exceed the fair value of the assets disposed of by approximately $10 million and
results in a $ 10 million payment due to Cooper Industries. Standard Motor
Products will pay the $ 10 million owed to Cooper Industries as the Company
sells the acquired finished goods inventory to third parties. Any remaining
balance is payable in full one year after the closing date. Cooper Industries
will initially retain title to approximately $ 15 million of such inventory,
however, such interest will decrease as payments under the purchase obligation
are made. The total exchange value assigned to each business and the payment due
for differences in their related fair market value was arrived at by way of arms
length negotiation between the parties. These exchange values may be adjusted
based upon the results of post closing audits by both parties.
Prior to the exchange described above, there was no material relationship
between the directors or officers of Cooper Industries and the Company or any of
its affiliates, any director or officer of the Company or any associate of any
such director or officer.
ITEM 5 OTHER EVENTS
On March 27, 1998, the Company entered into a series of agreements with its
senior note holders which provided waivers on defaults of certain covenants
resulting from the year end 1997 adjustments for discontinued operations and the
APS, Inc. bankruptcy filing and amended certain covenants through September 30,
1998. Subsequent to September 30, 1998, the covenants will revert back to the
original covenants, prior to the amendment. The Company believes based upon its
present financial condition that it should be in compliance with the amended
covenants and subsequent to September 30, 1998 the original covenants.
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On March 30, 1998, the Company entered into an agreement for a new $108.5
million short-term bank facility. The committed revolving bank credit which has
been syndicated to a group of six banks, expires on November 30, 1998. Prior to
the expiration of this facility, it is the Company's intent to enter into a
multi-year committed bank credit facility to meet its working capital
requirements and raise additional capital to fund the future growth
opportunities of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements and Exhibits:
(1) None
(b) Pro forma financial information:
(1) The required pro forma financial information of the business
acquired and the business disposed of, are not available as
of the date this report is filed. Such information will be
filed under cover of Form 8 no later than sixty (60) days
from the date hereof.
(c) Exhibits:
2.1 Asset Exchange Agreement dated as of March 28, 1998 among SMP
Motor Products, LTD., Standard Motor Products, Inc., Cooper
Industries (Canada) Inc., Moog Automotive Company and Moog
Automotive Products, Inc., without exhibits and schedules to
said agreement (filed herewith).
10.17 Letter Agreement of March 27, 1998 amending the Note
Agreement between the Registrant and the American United Life
Insurance Company, the Great American Life Insurance Company,
the Jefferson- Pilot Life Insurance Company, the Ohio
National Life Insurance Company, the Crown Insurance Company,
the Great-West Life Insurance Company, the Security Mutual
Life Insurance Company, Woodmen Accident and Life Insurance
Company and Nomura Holding America, Inc. dated October 15,
1989 is included as Exhibit 10.17.
10.18 Letter Agreement of March 27, 1998 amending the Note
Agreement between the Registrant and Kemper Investors Life
Insurance Company, Federal Kemper Life Assurance Company,
Lumbermens Mutual Casualty Company, Fidelity Life
Association, American Motorists Insurance Company, American
Manufacturers Mutual Insurance
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Company, Allstate Life Insurance Company, Teachers Insurance
& Annuity Association of America, and Phoenix Home Life
Mutual Insurance Company dated November 15, 1992 is included
as Exhibit 10.18.
10.19 Letter Agreement of March 27, 1998 amending the Note
Agreement between the Registrant and Metropolitan Life
Insurance Company, the Travelers Insurance Company,
Connecticut Life Insurance Company, CIGNA Property and
Casualty Insurance Company, Life Insurance Company of North
America and American United Life Insurance Company dated
December 1, 1995 is included as Exhibit 10.19.
10.20 Revolving Credit and Guarantee Agreement dated March 30, 1998
among Standard Motor Products, Inc., Reno Standard
Incorporated, Mardevco Credit Corp., Stanric, Inc., The Chase
Manhattan Bank, The Bank of New York, Fleet Bank, National
Association, NBD Bank, Canadian Imperial Bank of Commerce and
Commerica Bank is included as Exhibit 10.20, without
exhibits and schedules to said agreement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
STANDARD MOTOR PRODUCTS, INC.
(Michael J. Bailey)
By: /s/ Michael J. Bailey
Michael J. Bailey
Senior Vice President, Administration and Finance
Chief Financial Officer
Dated as of March 28, 1998
EXHIBIT 2.1
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ASSET EXCHANGE AGREEMENT
AMONG
SMP MOTOR PRODUCTS, LTD.
STANDARD MOTOR PRODUCTS, INC.
COOPER INDUSTRIES (CANADA) INC.
MOOG AUTOMOTIVE COMPANY
AND
MOOG AUTOMOTIVE PRODUCTS, INC.
DATED AS OF MARCH 28, 1998
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CLOSING EFFECTIVE AS OF
12:01 A.M. ON MARCH 28, 1998
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TABLE OF CONTENTS
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PAGE(S)
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ARTICLE I
CERTAIN DEFINITIONS..................................................... 21
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ARTICLE II
EXCHANGE OF ASSETS; ASSUMPTION OF LIABILITIES; ADJUSTMENTS............... 21
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2.1 Basic Transaction .............................................. 21
2.2 Conveyance of TC Assets ........................................ 21
2.3 Conveyance of Brake Assets ..................................... 22
2.4 TC Assumed Liabilities ......................................... 22
2.5 Brake Assumed Liabilities ...................................... 22
2.6 TC Retained Liabilities ........................................ 22
2.7 Brake Retained Liabilities ..................................... 22
2.8 Pre-Closing Balance Sheets ..................................... 22
2.9 Closing Payment Amount and Final Closing Payment Amount ........ 22
2.10 Closing Balance Sheets ......................................... 23
2.11 Preliminary Closing Balance Sheet Review ....................... 23
2.12 Final Closing Balance Sheet .................................... 24
2.13 Payment ........................................................ 25
2.14 Transfer Costs ................................................. 25
ARTICLE III
THE CLOSING............................................................ 25
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3.1 Closing Date ................................................... 25
3.2 Moog Deliveries at the Closing ................................. 25
3.3 SMP Deliveries at the Closing .................................. 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MOOG................................ 28
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4.1 Organization of Moog ............................................ 28
4.2 Authorization of Transaction .................................... 28
4.3 Non-contravention ............................................... 28
4.4 Moog Pre-Closing Balance Sheet and Financial Statements ......... 29
4.5 Undisclosed Liabilities ......................................... 29
4.6 Events After June 30, 1997 ...................................... 29
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Page(2)
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4.7 Tax Matters .................................................... 31
4.8 TC Leases for Real Property .................................... 31
4.9 TC Real Property ............................................... 32
4.10 TC Intellectual Property ....................................... 32
4.11 Inventory ...................................................... 34
4.12 Tangible TC Assets ............................................. 34
4.13 Certain Agreements ............................................. 35
4.14 Insurance ...................................................... 36
4.15 Litigation ..................................................... 36
4.16 Product Warranty ............................................... 36
4.17 Product Liability .............................................. 36
4.18 Employees ...................................................... 37
4.19 Moog Employee Plans; ERISA; Employees .......................... 37
4.20 Environmental Matters .......................................... 39
4.21 Legal Compliance ............................................... 41
4.22 Vehicles ....................................................... 41
4.23 Guaranties ..................................................... 41
4.24 All TC Assets Transferred ...................................... 41
4.25 Moog Permits ................................................... 42
4.26 Brokers' Fees .................................................. 42
4.27 Customers and Suppliers ........................................ 42
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SMP................................. 42
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5.1 Organization of SMP ............................................ 42
5.2 Authorization of Transaction ................................... 42
5.3 Non-contravention .............................................. 43
5.4 SMP Pre-Closing Balance Sheet and Financial Statements ......... 43
5.5 Undisclosed Liabilities ........................................ 43
5.6 Events After June 30, 1997 ..................................... 44
5.7 Tax Matters .................................................... 45
5.8 Brake Leases for Real Property ................................. 46
5.9 Brake Real Property ............................................ 46
5.10 Brake Intellectual Property .................................... 47
5.11 Inventory ...................................................... 49
5.12 Tangible Brake Assets .......................................... 49
5.13 Certain Agreements ............................................. 49
5.14 Insurance ...................................................... 50
5.15 Litigation ..................................................... 50
5.16 Product Warranty ............................................... 51
5.17 Product Liability .............................................. 51
5.18 Employees ...................................................... 51
5.19 SMP Employee Plans; ERISA; Employees ........................... 52
5.20 Environmental Matters .......................................... 53
5.21 Legal Compliance ............................................... 55
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Page(s)
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5.22 Vehicles ..................................................... 55
5.23 Guaranties ................................................... 55
5.24 All Brake Assets Transferred ................................. 56
5.25 SMP Permits .................................................. 56
5.26 Brokers' Fees ................................................ 56
5.27 Customers and Suppliers ...................................... 56
5.28 Industrial Development Revenue Bonds ......................... 56
ARTICLE VI
PRE-CLOSING COVENANTS................................................. 57
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6.1 Reasonable Best Efforts ........................................ 57
6.2 Notices and Consents ........................................... 57
6.3 H-S-R Act ...................................................... 57
6.4 Operation of the TC Business and the Brake Business ............ 57
6.5 Full Access .................................................... 58
6.6 Title Insurance and Surveys .................................... 58
6.7 Exclusivity .................................................... 59
6.8 Supply Agreements .............................................. 60
6.9 Disclosure Supplements ......................................... 60
6.10 Disposal of Certain Hazardous Materials ........................ 60
6.11 Termination of Joint Venture Agreement with Dalian Yongfeng
Car Parts Co. Ltd. ........................................... 60
ARTICLE VII
POST-CLOSING COVENANTS.................................................. 61
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7.1 Further Assurances ............................................... 61
7.2 Litigation Support ............................................... 61
7.3 Transitional Matters ............................................. 61
7.4 Confidentiality .................................................. 63
7.5 Consents ......................................................... 64
7.6 Press Releases ................................................... 64
7.7 Allocation ....................................................... 64
7.8 Tax Assistance ................................................... 64
7.9 Tax Proceedings .................................................. 64
7.10 Unemployment Tax Experience ...................................... 65
7.11 Employment Tax Compliance ........................................ 65
7.12 Product Returns Adjustment ....................................... 65
7.13 Uses of Excluded Trademarks and Trade Names ...................... 66
7.14 Existing Insurance Coverage ...................................... 66
7.15 Letters of Credit ................................................ 67
7.16 Non-Competition Agreement ........................................ 68
7.17 Compliance with Connecticut Transfer Act ......................... 70
7.18 Loan from Moog to SMP ............................................ 70
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Page(s)
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7.19 Unprocessed Inventory as of the Closing Date ..................... 71
7.20 Consigned Inventory .............................................. 71
7.21 Product Returns Associated with Changeover of Trak Automotive .... 72
ARTICLE VIII
EMPLOYEE MATTERS....................................................... 72
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8.1 Employment and Severance for Sales Persons ....................... 72
8.2 Employment and Severance for Non-Sales Persons ................... 73
8.3 Employee Benefit Plans ........................................... 76
8.4 Solicitation ..................................................... 78
ARTICLE IX
ENVIRONMENTAL MATTERS.................................................. 79
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9.1 Environmental Indemnification and Remediation .................... 79
9.2 Limitations on Environmental Indemnification ..................... 79
9.3 Certain Procedures ............................................... 80
ARTICLE X
CONDITIONS TO OBLIGATION TO CLOSE....................................... 81
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10.1 Conditions to Obligation of Both Parties ........................ 81
10.2 Conditions to Obligation of Moog ................................ 82
10.3 Conditions to Obligation of SMP ................................. 82
10.4 Waiver; Right to Proceed ........................................ 82
ARTICLE XI
REMEDIES FOR BREACHES OF THIS AGREEMENT................................ 83
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11.1 Survival......................................................... 83
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Page(s)
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11.2 Assertion of Claims ............................................ 83
11.3 Indemnification Provisions for Benefit of Moog ................. 83
11.4 Indemnification Provisions for Benefit of SMP .................. 84
11.5 Matters Involving Third Parties ................................ 85
11.6 De Minimis Breaches of Representations and Warranties .......... 85
11.7 Tax Indemnification ............................................ 85
11.8 Other Indemnification Provisions ............................... 86
ARTICLE XII
TERMINATION........................................................... 86
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12.1 Termination of Agreement........................................ 86
12.2 Procedure and Effect of Termination............................. 87
ARTICLE XIII
GENERAL MATTERS....................................................... 87
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13.1 No Third-Party Beneficiaries................................... 87
13.2 Entire Agreement............................................... 88
13.3 Succession and Assignment...................................... 88
13.4 Counterparts................................................... 88
13.5 Headings....................................................... 88
13.6 Notices........................................................ 88
13.7 Amendments; Waivers; Consents.................................. 89
13.8 Severability................................................... 89
13.9 Expenses....................................................... 89
13.10 Construction................................................... 89
13.11 Specific Performance........................................... 90
13.12 Bulk Sales..................................................... 90
13.13 Governing Law.................................................. 90
ARTICLE XIV
DISPUTE RESOLUTION.................................................... 90
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14.1 Senior Officers................................................. 90
14.2 Binding Arbitration............................................. 91
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Page(s)
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EXHIBITS AND SCHEDULES
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Exhibit A -- Screw Machine Products Supply Agreement................... A-1
Exhibit B -- Brake Assignment and Assumption Agreement................. B-1
Exhibit C -- Rubber Supply Agreement................................... C-1
Exhibit D -- TC Assignment and Assumption Agreement.................... D-1
Exhibit E -- Moog Pre-Closing Balance Sheet............................ E-1
Exhibit F -- SMP Pre-Closing Balance Sheet............................. F-1
Exhibit G -- Balance Sheet Principles, Practices and Procedures........ G-1
Exhibit H -- TC Bill of Sale........................................... H-1
Exhibit I -- Moog FIRPTA Certificate................................... I-1
Exhibit J -- Brake Bill of Sale........................................ J-1
Exhibit K -- SMP FIRPTA Certificate.................................... K-1
Exhibit L -- Terms of TC Transitional Services......................... L-1
Exhibit M -- Terms of Brake Transitional Services...................... M-1
Exhibit N -- Intentionally Omitted..................................... N-1
Exhibit O -- Severance Policies........................................ O-1
Moog Disclosure Schedules
SMP Disclosure Schedules
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<PAGE>
ASSET EXCHANGE AGREEMENT
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ASSET EXCHANGE AGREEMENT, dated as of March 28, 1998, among SMP Motor
Products, Ltd., a corporation organized under the laws of Canada ("SMP CANADA"),
Standard Motor Products, Inc., a corporation organized under the laws of the
State of New York ("SMP PARENT" and, together with SMP Canada, "SMP"), Cooper
Industries (Canada) Inc., a corporation organized under the laws of the Province
of Ontario ("COOPER CANADA"), Moog Automotive Company, a corporation organized
under the laws of Delaware ("MOOG COMPANY"), and Moog Automotive Products, Inc.,
a corporation organized under the laws of the State of Missouri ("MOOG PARENT"
and, together with Cooper Canada and Moog Company, "MOOG").
WHEREAS, Moog is engaged in the business of designing, developing,
manufacturing, marketing, selling, servicing, supplying and distributing
temperature control products and components to support vehicle systems designed
to regulate temperature for passengers and the Everco product line of brass
components and brake lines (the "TC BUSINESS");
WHEREAS, SMP is engaged in the business of designing, developing,
manufacturing, marketing, selling, servicing, supplying and distributing brake
products and components to support brake systems (the "BRAKE BUSINESS");
WHEREAS, SMP wishes to acquire from Moog the TC Assets (as hereinafter
defined) and Moog wishes to acquire from SMP the Brake Assets (as hereinafter
defined); and
WHEREAS, this Agreement sets forth the terms and conditions pursuant to
which Moog will convey to SMP the TC Assets and SMP will convey to Moog the
Brake Assets in such a manner as to effect a like-kind exchange of assets under
Section 1031 of the Code (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations and warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
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1.1 "ACCOUNTING ARBITRATOR" shall have the meaning ascribed thereto in
Section 2.11(d).
1.2 INTENTIONALLY OMITTED
1.3 "ACTIVE EMPLOYEES" means all employees actively employed on the
Closing Date in the TC Business or the Brake Business, as the case may be, and
all employees of such businesses on vacation, layoff and approved leave of
absence other than for long term disability; PROVIDED, HOWEVER, Active Employees
shall not include any employees located at Moog's facility in Ottumwa, Iowa or
at SMP's facilities in Middletown, Connecticut and Rural Retreat,
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Virginia. Barbara Umstreadt and Virginia Askew will be considered Inactive
Employees for purposes of this Agreement, even though they are currently on
short term disability, because they are not reasonably expected to return to
work.
1.4 INTENTIONALLY OMITTED
1.5 "ADVERSE CONSEQUENCES" means all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, settlements, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities, obligations,
Taxes (as hereinafter defined), liens, losses, expenses and fees, including all
reasonable attorneys', experts' and consultants' fees and court costs as well as
costs to enforce any indemnity provisions under this Agreement.
1.6 "AFFILIATE" means any Person (as hereinafter defined) that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with the referenced Person.
1.7 "AGREEMENT" means this Asset Exchange Agreement, including all
exhibits and schedules hereto, as it may be amended from time to time.
1.8 "ARBITRATOR" shall have the meaning ascribed thereto in Section
14.2(b).
1.9 "BRAKE ASSETS" shall mean:
(a) all of the property and assets of SMP used exclusively in the
conduct of the Brake Business whether or not reflected in the SMP Final Closing
Balance Sheet (as hereinafter defined), including, without limitation, the Brake
Real Properties (as hereinafter defined), the Brake Intellectual Property (as
hereinafter defined), inventories, plants, machinery, equipment, tools, dies,
data processing equipment, office equipment, supplies, furniture, fixtures,
leasehold improvements, motor vehicles, prepaid expenses and security deposits
(and including all items which would be included on the SMP Final Closing
Balance Sheet except for the fact that such items are fully depreciated or
expensed), and all items used exclusively in the conduct of the Brake Business
which are acquired in the ordinary course of business consistent with past
practice by the Brake Business between the date of the SMP Pre-Closing Balance
Sheet (as hereinafter defined) and the Closing Date;
(b) the Brake Books and Records (as hereinafter defined);
(c) the Brake Contracts (as hereinafter defined);
(d) the Brake Leases (as hereinafter defined);
(e) the interest of SMP in the EISLINE Manufacturing Company joint
venture pursuant to the Joint Venture Agreement between the EIS Brake Parts
Division of Standard Motor Products, Inc. and Autoline Industries, Inc. dated
January 1, 1994 and the related Supply
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Agreement between EISLINE Manufacturing Company and the EIS Brake Parts Division
of Standard Motor Products, Inc. dated January 1, 1994;
(f) the Autoline re-man inventory receivable; and
(g) computer software exclusively used by the Brake Business
including the software for payroll catalogues, finite scheduling, shop floor
labor reporting and MOST Industrial Engineering.
Notwithstanding the foregoing, the Brake Assets shall not mean or
include the Brake Retained Assets (as hereinafter defined).
1.10 "BRAKE ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
instrument of assignment and assumption substantially in the form attached
hereto as Exhibit B.
1.11 "BRAKE ASSUMED LIABILITIES" shall mean and include only the
following obligations and liabilities of the Brake Business:
(a) all Liabilities (as hereinafter defined) of the Brake Business
reflected on the SMP Final Closing Balance Sheet;
(b) subject to Section 7.12, all Liabilities for warranty and
customer service claims and other return obligations regarding products of the
Brake Business;
(c) all Liabilities for product liability claims (including claims
for property damage, personal injury or death) relating to products manufactured
or sold by the Brake Business based on or arising out of claims made or causes
of action filed after the first anniversary of the Closing Date, PROVIDED,
HOWEVER, that this subsection (c) shall not apply to any Liabilities based on or
arising out of asbestos exposure which are covered by Section 1.26(d);
(d) all Liabilities under the Brake Contracts and the Brake Leases,
to the extent such Brake Contracts and Brake Leases are assigned to Moog;
(e) all core Liabilities for the Brake Business;
(f) all Liabilities of SMP with respect to a government grant in
the amount of $450,000 provided to SMP pursuant to an Agreement By and Between
the Town of Berlin, Connecticut and Standard Motor Products, Inc. Concerning a
State Assistance Grant dated May 24, 1993;
(g) the Promissory Note dated December 1, 1989 in the original
principal amount of $2.5 million payable to the Arkansas Development Finance
Authority pertaining to the Arkansas Development Finance Authority Industrial
Development Revenue Bonds (Standard Motor Products, Inc. Project) Series 1989
and the related Loan Agreement, and the Mortgage and Security Agreement between
SMP and the Arkansas Development Finance Authority; and
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<PAGE>
(h) the Lease Agreement dated as of June 1, 1990 from the City of
Manila, Arkansas to Standard Motor Products, Inc. pertaining to the $1.8 million
Industrial Development Revenue Bonds (Standard Motor Products, Inc. Project)
Series 1990.
Notwithstanding the foregoing, the Brake Assumed Liabilities shall not
include the Brake Retained Liabilities (as hereinafter defined).
1.12 "BRAKE BILL OF SALE" shall have the meaning ascribed thereto
in Section 3.3(b).
1.13 "BRAKE BOOKS AND RECORDS" shall mean originals or copies of
all of the books and records of SMP relating to the operations of the Brake
Business, including, without limitation, all books and records relating to the
individuals employed by SMP who will be employed by Moog in the Brake Business
following the Closing Date, and to the extent related exclusively to the Brake
Business, all books and records related to the purchase of materials, the lease
of equipment, supplies and services, advertising, financial, accounting and
operations matters, product engineering, research and development, manufacture
and sale of products, provision of services and dealings with customers or
clients of the Brake Business. As used herein books and records shall include a
hardcopy of all computerized books and records.
1.14 "BRAKE BUSINESS" shall have the meaning ascribed thereto in
the recitals of this Agreement.
1.15 "BRAKE COMPETITIVE BUSINESS" shall have the meaning ascribed
thereto in Section 7.16(b).
1.16 "BRAKE COMPETITIVE PRODUCTS" shall have the meaning ascribed
thereto in Section 7.16(b).
1.17 "BRAKE CONTRACTS" shall mean all contracts, licenses, purchase
orders, agreements and commitments of SMP exclusively relating to the Brake
Business, including, without limitation, (i) the contracts, agreements and
commitments listed in Section 5.13 of the SMP Disclosure Schedule and (ii) all
contracts, agreements and commitments of SMP exclusively relating to the Brake
Business which are entered into between the date of this Agreement and the
Closing and expressly permitted by this Agreement, excluding, however, all
contracts, agreements and commitments which expire or are cancelled in
accordance with their terms prior to the Closing.
1.18 "BRAKE ENVIRONMENTAL COSTS" shall mean all Environmental
Costs, whether direct or indirect, known or unknown, joint or several, whenever
arising (including after Closing), based on, arising out of or otherwise in
respect of the Brake Assets, the Brake Business, or property currently or
formerly owned, operated, used or leased by SMP or its predecessors (including
off-site locations) and arising out of: (i) conditions or Hazardous
Materials existing on or originating from any such property or the Brake Assets
on or prior to the Closing Date including, but not limited to, the Discharge or
Disposal of Hazardous Materials at or from any such property on or prior to the
Closing Date; (ii) the operation of the Brake Business by SMP
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or its predecessors on or prior to the Closing Date; or (iii) non-compliance on
or prior to the Closing Date with any requirements of Environmental Laws.
1.19 "BRAKE INTELLECTUAL PROPERTY" shall mean all letters patent,
patents, trademarks, trade names, service marks, copyrights (including
registrations and applications for any of the foregoing), licenses, technology,
know-how, trade secrets, tangible or intangible proprietary information or
material, formulae and inventions owned by SMP which are used exclusively in or
relate exclusively to the Brake Business or the rights thereto (including rights
under licenses) which belong to SMP and are used exclusively in or relate
exclusively to the Brake Business, including, without limitation, (i) all items
listed in Section 5.10(c) of the Brake Disclosure Schedule and (ii) all such
intellectual property which is acquired or developed for use exclusively in the
Brake Business between the date of this Agreement and the Closing. The Brake
Intellectual Property shall not include the Excluded SMP Trademarks and Trade
Names (as hereinafter defined).
1.20 "BRAKE LEASES" shall mean all leases of SMP for real or personal
property exclusively relating to the Brake Business (whether entered into as
lessor or lessee), including, without limitation, (a) the real estate leases
listed in Section 5.8 of the SMP Disclosure Schedule and (b) all leases of SMP
exclusively relating to the Brake Business which are entered into between the
date of this Agreement and the Closing and expressly permitted by this
Agreement, excluding, however, all leases which will expire in accordance with
their terms prior to the Closing.
1.21 "BRAKE LETTERS OF CREDIT" shall have the meaning ascribed thereto
in Section 7.15(b).
1.22 "BRAKE MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect on the Brake Assets or on the business, financial condition, operations
or results of operations of the Brake Business.
1.23 "BRAKE PRODUCT LIABILITY CLAIM" shall have the meaning ascribed
thereto in Section 5.17(a).
1.24 "BRAKE REAL PROPERTIES" shall mean the real properties owned by
SMP and used exclusively in the Brake Business as listed in Section 5.9 of the
SMP Disclosure Schedule (but excluding the real properties owned or held by SMP
in Middletown, Connecticut and Rural Retreat, Virginia).
1.25 "BRAKE RETAINED ASSETS" shall mean all the following properties,
assets and other rights of SMP:
(a) all cash, cash equivalents and bank accounts;
(b) all of SMP's accounts and notes receivable including, but not
limited to, any inter- or intra-company receivables owed to the Brake Business
from SMP or any of its Affiliates (but excluding the Autoline re-man inventory
receivable which is included in the Brake Assets);
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(c) the assets of the Brake Business which are owned or held by SMP
or its Affiliates and which are located in Puerto Rico, subject to Moog's
obligation to purchase such assets pursuant to the terms of the Rubber Supply
Agreement;
(d) the real properties owned or held by SMP in Middletown,
Connecticut and Rural Retreat, Virginia including all improvements, structures
and fixtures thereon and other tangible assets located at such properties;
(e) the Excluded SMP Trademarks and Trade Names (as hereinafter
defined);
(f) all insurance policies, related prepaid expenses, refunds or
proceeds and all rights relating thereto subject to Section 7.14(b);
(g) the computer hardware set forth in Section 1.25(g) of the SMP
Disclosure Schedule and any computer software which is not exclusively used by
the Brake Business and leases, licenses or other arrangements therefor;
(h) all assets, including inventory and equipment, used in SMP's
rebuilt anti-lock brake system component business conducted by Blue Streak
Electronics at Concord, Ontario, Canada (other than inventory related thereto
located at SMP's EIS facilities in Manila, Arkansas and Ontario, California);
(i) any assets of any Employee Pension Benefit Plans and Employee
Welfare Benefit Plans and any rights under such plans relating to employee
benefits, employment or compensation; and
(j) any vehicles owned or leased by SMP for use by
SMP sales personnel.
1.26 "BRAKE RETAINED LIABILITIES" shall mean the following:
(a) all Liabilities to the extent arising out of Brake Retained
Assets;
(b) all accounts and notes payable of the Brake Business incurred
on or prior to the Closing Date including, but not limited to, any inter- or
intra-company payables due from the Brake Business to SMP or any of its
Affiliates (but excluding the promissory note described in Section 1.11(g));
(c) all Liabilities for product liability claims (including claims
for property damage, personal injury or death) relating to products manufactured
or sold by the Brake Business based on or arising out of claims made or causes
of action filed on or before the first anniversary of the Closing Date,
PROVIDED, HOWEVER, that this Section (c) shall not apply to any Liabilities
based on or arising out of asbestos exposure which are covered by Section
1.26(d);
(d) any claims by third parties based on or arising out of asbestos
exposure relating to products manufactured or sold on or prior to the Closing
Date by the Brake Business and any claims by Active Employees or Inactive
Employees of the Brake Business (including
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worker's compensation claims) based on or arising out of such asbestos exposure
on or prior to the Closing Date;
(e) any claims by Active Employees or Inactive Employees of the
Brake Business, including worker's compensation claims, based on or arising out
of asbestos exposure after the Closing Date at the Brake Real Properties or real
properties subject to the Brake Leases (subject to the indemnity in Section
11.4(h));
(f) all Brake Environmental Costs;
(g) all Liabilities to Inactive Employees of the Brake Business and
their beneficiaries and dependents including, without limitation, all
Liabilities with respect to (i) salaries, wages, commissions, bonuses and
vacation pay (except to the extent accrued on the SMP Final Closing Balance
Sheet); (ii) severance pay and obligations (subject to Sections 8.1 and 8.2);
(iii) Employee Pension Benefit Plans and Employee Welfare Benefit Plans
(including any retiree medical and dental benefits) provided by SMP or its
Affiliates to such employees; (iv) worker's compensation claims; (v)
unemployment compensation claims; and (vi) claims or litigation relating to
discrimination claims, unjust discharge, claims for additional compensation or
benefits and claims for violation of health and safety laws;
(h) all Liabilities to Active Employees of the Brake Business and
their beneficiaries and dependents for (i) salaries, wages, commissions, bonuses
and vacation pay relating to periods on or prior to the Closing Date (except to
the extent accrued on the SMP Final Closing Balance Sheet); (ii) severance pay
and obligations for Active Employees who do not become employees of Moog
(subject to Sections 8.1 and 8.2); (iii) Employee Pension Benefit Plans and
Employee Welfare Benefit Plans (including any retiree medical and dental
benefits) provided by SMP or its Affiliates to such employees in accordance with
the provisions of such plans; (iv) worker's compensation claims based on or
resulting from incidents or events occurring before the Closing Date; (v)
unemployment compensation claims for Active Employees who do not become
employees of Moog; and (vi) claims or litigation relating to discrimination
claims, unjust discharge, claims for additional compensation or benefits and
violation of health and safety laws based upon or resulting from incidents or
events occurring before the Closing Date;
(i) all Liabilities for Taxes of SMP or the Brake Business for any
period prior to the Closing Date except to the extent that a liability for
non-income Taxes is accrued on the SMP Final Closing Balance Sheet;
(j) all Liabilities of SMP or the Brake Business for borrowed money
including notes payable, loans and revolving credits (but excluding the
promissory note described in Section 1.11(g));
(k) all Liabilities of SMP or the Brake Business with respect to
letters of credit and foreign exchange contracts or commitments, subject to
Section 7.15;
(l) all Liabilities of SMP or the Brake Business with respect to
powers of attorney, financing agreements, security agreements, bid bonds,
performance bonds, suretyship
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agreements, guarantees or any other similar arrangement where SMP is or may
become liable for the obligations of any other Person;
(m) all Liabilities for Existing Brake Litigation and Claims (as
hereinafter defined) including matters set forth in Section 5.15 of the SMP
Disclosure Schedule and, except for matters described in Sections 1.11(b) and
(c), all Liabilities for any actions, suits, proceedings, claims or
investigations arising after the Closing Date that arise from or relate to
matters, incidents, sets of facts or circumstances on or prior to the Closing
Date including breach of contract, tort, infringement or violation of law;
(n) all Liabilities relating to claims or lawsuits involving brake
hose assemblies which were the subject of SMP's recall 96E-023 for brake hose
assemblies which the National Highway Traffic Safety Administration determined
to be non-compliant with regard to identification markings;
(o) all Liabilities arising out of "wrap discounts", or other
discounts, customer incentives or rebates relating to sales on or prior to the
Closing Date; and
(p) the Liability on the books of the Brake Business which
represents free rent under the lease for the Ontario, California facility.
1.27 "BRAKE RETURNS SCHEDULE" shall have the meaning ascribed thereto
in Section 7.12(a).
1.28 "BRAKE SCHEDULED SALES PERSONS" shall have the meaning ascribed
thereto in Section 5.18(a).
1.29 "BRAKE TRANSFERRING SALES PERSON" shall have the meaning ascribed
thereto in Section 8.1(a).
1.30 "BUSINESS DAY" means each day which is not a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
1.31 "CLAIM" shall have the meaning ascribed thereto in Section 14.1.
1.32 "CLOSING" means the meeting held on the Closing Date at which the
Parties complete the contemplated transactions.
1.33 "CLOSING DATE" means 12:01 a.m. on March 28, 1998.
1.34 "CODE" means the Internal Revenue Code of 1986, as amended.
1.35 "COOPER CANADA" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
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1.36 "DEBT" means for any Person (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
for which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss including any notes, bonds, debentures or other debt
securities of such Person but excluding endorsements of negotiable instruments
for collection in the ordinary course of business; and (ii) all obligations
under leases which shall have been, or was required to have been, in accordance
with GAAP (as hereinafter defined), recorded as capital leases in respect of
which such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss. The term "Debt" shall not include any trade credit
incurred in the ordinary course of business.
1.37 "DISCHARGE" means any accidental, unknowing or intentional
spilling, leaking, seeping, pumping, pouring, emitting, leaching, escaping,
depositing, placing, emptying, dumping, discharging, releasing, burying,
injecting, abandoning, migrating, disposing, or other discharge or release of
any Hazardous Material into or upon or under any land or Water or air, or
otherwise into the indoor or outdoor Environment (including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks and other
receptacles containing or previously containing any Hazardous Material), and any
threat of any of the foregoing.
1.38 "DISPOSAL" or "DISPOSED" means the disposal, arranging for
disposal, carrying for disposal or Discharge of any Hazardous Material in a
landfill, surface impoundment, waste pile, injection well, facility, salt dome
or bed formation, underground mine or cave, vault, bunker or other location
(whether authorized or unauthorized) for storage (whether temporary or
permanent), disposal or any other purpose, from which Hazardous Materials have
entered or may enter the Environment or be Discharged into the Environment.
1.39 "EMPLOYEE PENSION BENEFIT PLANS" shall have the meaning ascribed
thereto under Section 3(2) of ERISA.
1.40 "EMPLOYEE WELFARE BENEFIT PLANS" shall have the meaning ascribed
thereto under Section 3(1) of ERISA.
1.41 "ENVIRONMENT" means the environment, air, land, Water (as
hereinafter defined), and any building, building interior, fixture or equipment.
1.41a "ENVIRONMENTAL CLAIM" means any investigation, notice, violation,
demand, allegation by a third party, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding or claim (whether
administrative, judicial, quasi-judicial or private in nature) arising (i)
pursuant to or in connection with any actual violation of any Environmental Law
or any violation of any Environmental Law alleged by a third party; or (ii) in
connection with any Remedial Action.
1.42 "ENVIRONMENTAL COSTS" means all Adverse Consequences arising under
or related in any way to Environmental Laws, or relating to the protection of
health, safety, or the Environment, including, without limitation, any costs
and/or expenses relating to (i) non-
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compliance with Environmental Laws; (ii) assessment of environmental damage and
preparation of clean-up plans and engineering and feasibility studies; (iii)
required remediation of the Environment and treatment or disposal of Hazardous
Materials; (iv) construction of facilities to prevent the spread of Hazardous
Materials into the surrounding Environment; (v) procurement of financial
assistance to the extent necessitated by or affected by the investigation and/or
remediation of Hazardous Materials; (vi) investigations, actions and lawsuits
instituted by private parties or Governmental Agencies in respect of any such
matter; (vii) business disruption, relocation of equipment or place of business,
and/or lost profits resulting from the performance of any Remedial Action which
materially interferes with the operation of the business by the Indemnified
Party; and/or (viii) material damage caused by, and the repair, replacement or
restoration of any improvement materially affected by, any implementation,
entry, performance, inspection, treatment, Disposal, excavation, operation,
maintenance or other activity undertaken in order to comply with any
Environmental Law or perform any Remedial Action (except to the extent any such
damage is caused by the negligence of the Indemnified Party, its officers,
employees, contractors or agents).
1.43 "ENVIRONMENTAL LAWS" means (a) any present or future federal,
state or local law (including common law) or regulation relating to the
handling, use, control, management, treatment, storage, disposal, release or
threat of release of any Hazardous Material, including without limitation, the
federal Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. ss.ss.9601 et seq., the federal Resource Conservation and Recovery
Act, 42 U.S.C. ss.ss.6901 et seq., the federal Water Pollution Control Act, 33
U.S.C. ss.ss.1251 et seq., the federal Clean Air Act, 42 U.S.C. ss.ss.7401 et
seq., the Toxic Substances Control Act, 7 U.S.C. ss.ss.136 et seq., the Safe
Drinking Water Act, 42 U.S.C. ss.ss.300f et seq., the Occupation Safety and
Health Act of 1970, 29 U.S.C. ss.ss.651 et seq., and (b) any and all
requirements arising under applicable present and future federal, state or local
laws, statutes, common law, rules, ordinances, codes, orders, licenses, permits,
approvals, plans, authorizations, or the like, and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders, relating to the
protection of human health or the Environment in connection with Hazardous
Materials, including without limitation: (i) any and all federal, state or local
law (including common law) or regulation pertaining to reporting, licensing,
authorizing, approving, permitting, investigating, and remediating emissions,
discharges, releases, or threat of releases of any Hazardous Materials into the
indoor or outdoor air, surface water, groundwater, or land, or otherwise into
the Environment, or relating to the manufacture, operation, processing,
distribution, use, treatment, storage, disposal, transport, handling or
management of any Hazardous Material; and (ii) any and all federal, state or
local law (including common law) or regulation pertaining to the protection of
the health and safety of employees or the public and/or the Environment.
1.43(a) "ENVIRONMENTAL PERMITS" shall have the meaning ascribed thereto
in Section 4.20(b).
1.44 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.45 "EXCLUDED MOOG TRADEMARKS AND TRADE NAMES" shall have the meaning
ascribed thereto in Section 7.13(a).
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1.46 "EXCLUDED SMP TRADEMARKS AND TRADE NAMES" shall have the meaning
ascribed thereto in Section 7.13(b).
1.47 "EXISTING BRAKE LITIGATION AND CLAIMS" shall have the meaning
ascribed thereto in Section 5.15.
1.48 "EXISTING TC LITIGATION AND CLAIMS" shall have the meaning
ascribed thereto in Section 4.15.
1.49 "FIRST PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(b).
1.50 "FIFTH PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(g).
1.51 "FOURTH PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(f).
1.52 "GAAP" means generally accepted accounting principles in the
United States as in effect at the relevant time.
1.53 "GOVERNMENTAL AGENCY" means any United States or foreign federal,
provincial, state, municipal or local government, any subdivision, agency,
court, entity, commission or authority thereof, or any arbitrator or
quasi-governmental authority exercising any judicial or regulatory authority.
1.54 "HAZARDOUS MATERIALS" means any substance or material: (a) the
presence of which requires investigation or remediation under any Environmental
Law; (b) which is or becomes regulated by any federal, state or local
governmental authority, including without limitation, any substance or waste
material which is defined or listed as a "hazardous waste," "extremely hazardous
waste," "restricted hazardous waste," "industrial waste," "hazardous substance,"
"solid waste," "hazardous material," "pollutant" or "contaminant" under any
Environmental Law; (c) which contains gasoline, diesel fuel or other petroleum
hydrocarbons or a petroleum derivative; (d) which contains polychlorinated
biphenyls ("PCBS"), asbestos or urea formaldehyde; or (e) which is explosive,
corrosive, flammable, infectious, radioactive or toxic.
1.55 "H-S-R ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and all regulations issued thereunder.
1.56 "INACTIVE EMPLOYEES" means all individuals who are not Active
Employees on the Closing Date including, without limitation; (i) any former
employees of the TC Business or the Brake Business (as the case may be) who
retired, resigned or were terminated prior to the Closing Date or (ii) any
employee of the TC Business or the Brake Business (as the case may be) receiving
or entitled to long term disability benefits. Barbara Umstreadt and Virginia
Askew
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will be considered Inactive Employees for purposes of this Agreement, even
though they are currently on short term disability, because they are not
reasonably expected to return to work.
1.57 "INDEMNIFIED PARTY" shall mean the Party entitled to the benefits
of (i) any indemnity provision or (ii) any Remedial Action under this Agreement.
1.58 "INDEMNIFYING PARTY" shall mean the Party obligated to indemnify
another Party or to perform a Remedial Action pursuant to any provision under
this Agreement.
1.59 "LIABILITY" means any Debt, adverse claim, liability, judgment,
Tax and obligation, whether accrued, contingent or otherwise, and whether known
or unknown, including those arising under any law (including the common law) or
any rule, order or regulation of any Governmental Agency or imposed by any court
or any arbitrator in a binding arbitration resulting from, arising out of or
relating to the assets, activities, operations, actions or omissions of a Person
or its Affiliates or its or their employees or agents, or products manufactured
or sold thereby or services provided thereby, or under contracts, agreements
(whether written or oral), leases, commitments or undertakings thereof, whether
based on negligence, strict liability or other theory of liability.
1.60 "MOOG" and "MOOG COMPANY" shall have the meanings ascribed thereto
in the introductory paragraph of this Agreement.
1.61 "MOOG DISCLOSURE SCHEDULE" shall have the meaning ascribed thereto
in Section 4.3(a).
1.62 "MOOG EMPLOYEE PLANS" shall have the meaning ascribed thereto in
Section 4.19(a).
1.63 "MOOG ERISA AFFILIATE" shall have the meaning ascribed thereto in
Section 4.19(a).
1.64 "MOOG FINAL CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.12(a).
1.65 "MOOG FINAL CLOSING NET BOOK VALUE" shall have the meaning
ascribed thereto in Section 2.12(a).
1.66 "MOOG FIRPTA CERTIFICATE" shall have the meaning ascribed thereto
in Section 3.2(d).
1.67 "MOOG PARENT" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.68 "MOOG PERMITS" shall have the meaning ascribed thereto in Section
4.25.
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1.69 "MOOG PRE-CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.8.
1.70 "MOOG PRE-CLOSING NET BOOK VALUE" shall mean the amount of the
excess of "Total Assets" over "Total Liabilities" as reflected in the Moog
Pre-Closing Balance Sheet.
1.71 "MOOG PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning
ascribed thereto in Section 2.10.
1.72 "MOOG'S ADJUSTMENT LETTER" shall have the meaning ascribed thereto
in Section 2.11(a).
1.73 "MOOG'S INDEMNIFIED GROUP" shall have the meaning ascribed thereto
in Section 11.3.
1.74 "MOOG'S KNOWLEDGE" or similar term means the actual knowledge of
(i) the individuals listed in Section 1.74 of the Moog Disclosure Schedule and
(ii) the highest ranking environmental compliance officer with responsibility
for each of the facilities currently used in the operations of the TC Business.
1.75 "MOOG'S RESPONSE LETTER" shall have the meaning ascribed thereto
in Section 2.11(b).
1.76 "MOOG SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS" shall
have the meaning ascribed thereto in Section 4.18(a).
1.77 "MOOG SEVERANCE SCHEDULE" shall have the meaning ascribed thereto
in Section 8.2(d).
1.78 "OVERSTOCK BRAKE RETURNS AMOUNT" and "OVERSTOCK TC RETURNS AMOUNT"
shall have the meanings ascribed thereto in Section 7.12(a).
1.79 "PARTY" means any of Cooper Canada, Moog Company, Moog Parent, SMP
Parent, or SMP Canada; "PARTIES" means more than one Party.
1.80 "PERMITTED EXCEPTIONS" shall mean statutory liens for taxes or
assessments not yet due or delinquent. Further, with respect to the Brake Real
Properties and the TC Real Properties, Permitted Exceptions shall also include:
(i) zoning and similar restrictions provided the current use of such real
properties does not violate any of such restrictions; (ii) the matters set forth
on Section 1.80 of the Moog Disclosure Schedule with respect to the TC Real
Properties; (iii) the matters set forth on Section 1.80 of the SMP Disclosure
Schedule with espect to the Brake Real Properties; and (iv) any other
encumbrances or easements which individually or in the aggregate do not
materially detract from the value of the property subject thereto or materially
impair the use of such property as presently used by the Parties.
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1.81 "PERSON" means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, another entity or a
Governmental Agency.
1.82 "REMEDIAL ACTION" shall mean such actions as are required under
Environmental Law or required under any applicable provisions of the current
real estate leases listed in Section 4.8 of the Moog Disclosure Schedule and
Section 5.8 of the SMP Disclosure Schedule, to (i) clean up, remove, contain,
treat or in any other way address, remediate or respond to any Discharge; (ii)
prevent the dispersal of Hazardous Materials in the Environment so that they do
not migrate or endanger public health or safety or the Environment; and/or (iii)
perform studies, investigations, monitoring, or operation and maintenance
functions in respect of any such matter.
1.83 "RESOLUTION OF PRE-CLOSING ENVIRONMENTAL ISSUES" shall have the
meaning ascribed thereto in Section 9.3(a).
1.84 "RUBBER SUPPLY AGREEMENT" shall mean the Supply Agreement, between
Moog and Stanric, Inc., a company organized under the laws of the Commonwealth
of Puerto Rico, in the form attached hereto as Exhibit C.
1.85 "RULES" shall have the meaning ascribed thereto in Section
14.2(a).
1.86 "SECOND PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(c).
1.87 "SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, other lien or easement other than Permitted Exceptions.
1.88 "SMP" shall have the meaning ascribed thereto in the introductory
paragraph of this Agreement.
1.89 "SMP CANADA" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.90 "SMP DISCLOSURE SCHEDULE" shall have the meaning ascribed thereto
in Section 5.3.
1.91 "SMP EMPLOYEE PLANS" shall have the meaning ascribed thereto in
Section 5.19(a).
1.92 "SMP ERISA AFFILIATE" shall have the meaning ascribed thereto in
Section 5.19(a).
1.93 "SMP FINAL CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.12(b).
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1.94 "SMP FINAL CLOSING NET BOOK VALUE" shall have the meaning ascribed
thereto in Section 2.12(b).
1.95 "SMP FIRPTA CERTIFICATE" shall have the meaning ascribed thereto
in Section 3.3(d).
1.96 "SMP PARENT" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
1.97 "SMP PERMITS" shall have the meaning ascribed thereto in Section
5.25.
1.98 "SMP PRE-CLOSING BALANCE SHEET" shall have the meaning ascribed
thereto in Section 2.8.
1.99 "SMP PRE-CLOSING NET BOOK VALUE" shall mean the amount of the
excess of "Total Assets" over "Total Liabilities" as reflected in the SMP
Pre-Closing Balance Sheet.
1.100 "SMP'S PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning
ascribed thereto in Section 2.10.
1.101 "SMP'S ADJUSTMENT LETTER" shall have the meaning ascribed thereto
in Section 2.11(a).
1.102 "SMP'S INDEMNIFIED GROUP" shall have the meaning ascribed thereto
in Section 11.4.
1.103 "SMP'S KNOWLEDGE" or similar term means the actual knowledge of
(i) the individuals listed in Section 1.103 of the SMP Disclosure Schedule and
(ii) the highest ranking environmental compliance officer with responsibility
for each of the facilities currently used in the operations of the Brake
Business.
1.104 "SMP'S RESPONSE LETTER" shall have the meaning ascribed thereto
in Section 2.11(b).
1.105 "SMP SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS" shall
have the meaning ascribed thereto in Section 5.18(a).
1.106 "SMP SEVERANCE SCHEDULE" shall have the meaning ascribed thereto
in Section 8.2(d).
1.107 "TARGET" shall have the meaning ascribed thereto in Section 7.16.
1.108 "TAXES" shall mean all United States or foreign federal,
provincial, state, municipal, local income, profits, gross receipts, license,
payroll, employment, franchise, unincorporated business, withholding, capital,
general corporate, customs duties, environmental (including Taxes under Code
Section 50A), disability, registration, alternative, add-on,
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minimum, estimated, sales, use, occupation, property, severance, production,
excise, recording, ad valorem, gains, transfer, value-added, unemployment
compensation, social security, premium, privilege and any and all other taxes
(including interest, additions to tax and penalties thereon, and interest on
such additions to tax and penalties).
1.109 "TAX RETURN" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.110 "TC ASSETS" shall mean:
(a) all of the property and assets of Moog used exclusively in
the conduct of the TC Business whether or not reflected in the Moog Final
Closing Balance Sheet (as hereinafter defined), including, without limitation,
the TC Real Properties (as hereinafter defined), the TC Intellectual Property
(as hereinafter defined), plants, machinery, equipment, tools, dies, data
processing equipment, office equipment, supplies, furniture, fixtures, leasehold
improvements, motor vehicles, prepaid expenses and security deposits (and
including all items which would be included on the Moog Final Closing Balance
Sheet except for the fact that such items are fully depreciated or expensed),
and all items used exclusively in the conduct of the TC Business which are
acquired in the ordinary course of business consistent with past practice by the
TC Business between the date of the Moog Pre-Closing Balance Sheet (as
hereinafter defined) and the Closing Date;
(b) the TC Books and Records (as hereinafter defined);
(c) the TC Contracts (as hereinafter defined);
(d) the TC Leases (as hereinafter defined);
(e) the note receivable due from Elite Automotive Systems Limited
dated July 3, 1997 in the original principal amount of (pound)300,000 together
with the related Legal Charge dated July 3, 1997 granting a security interest in
the assets of Elite Automotive Systems Limited to secure repayment of the note;
and
(f) inventories, other than the inventories to be consigned by
Moog to SMP as determined under Section 7.20 of this Agreement.
Notwithstanding the foregoing, the TC Assets shall not mean or include
the TC Retained Assets (as hereinafter defined).
1.111 "TC ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
instrument of assignment and assumption substantially in the form attached
hereto as Exhibit D.
1.112 "TC ASSUMED LIABILITIES" shall mean and include only the
following obligations and liabilities of the TC Business:
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(a) all Liabilities of the TC Business reflected on the Moog
Final Closing Balance Sheet;
(b) subject to Section 7.12, all Liabilities for warranty and
customer service claims and other return obligations regarding products of the
TC Business;
(c) all Liabilities for product liability claims (including
claims for property damage, personal injury or death) relating to products
manufactured or sold by the TC Business based on or arising out of claims made
or causes of action filed after the first anniversary of the Closing Date,
PROVIDED, HOWEVER, that this subsection (c) shall not apply to any Liabilities
based on or arising out of asbestos exposure which are covered by Section
1.127(d).
(d) all Liabilities under the TC Contracts and the TC Leases, to
the extent such TC Contracts and TC Leases are assigned to SMP; and
(e) all core Liabilities of the TC Business.
Notwithstanding the foregoing, the TC Assumed Liabilities shall not
include the TC Retained Liabilities (as hereinafter defined).
1.113 "TC BILL OF SALE" shall have the meaning ascribed thereto in
Section 3.2(b).
1.114 "TC BOOKS AND RECORDS" shall mean originals or copies of all of
the books and records of Moog relating to the operations of the TC Business,
including, without limitation, all books and records relating to the individuals
employed by Moog who will be employed by SMP in the TC Business, following the
Closing Date, and to the extent related exclusively to the TC Business, all
books and records relating to the purchase of materials, the lease of equipment,
supplies and services, advertising, financial, accounting and operations
matters, product engineering, research and development, manufacture and sale of
products, provision of services and dealings with customers or clients of the TC
Business. As used herein books and records shall include a hardcopy of all
computerized books and records.
1.115 "TC BUSINESS" shall have the meaning ascribed thereto in the
recitals of this Agreement.
1.116 "TC COMPETITIVE BUSINESS" shall have the meaning ascribed thereto
in Section 7.16(a).
1.117 "TC COMPETITIVE PRODUCTS" shall have the meaning ascribed thereto
in Section 7.16(a).
1.118 "TC CONTRACTS" shall mean all contracts, licenses, purchase
orders, agreements and commitments of Moog exclusively relating to the TC
Business, including, without limitation, (i) the contracts, agreements and
commitments listed in Section 4.13 of the Moog Disclosure Schedule and (ii) all
contracts, agreements and commitments of Moog exclusively relating to the TC
Business which are entered into between the date of this Agreement and the
Closing Date
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<PAGE>
and expressly permitted by this Agreement, excluding, however, all contracts,
agreements and commitments which expire or are cancelled in accordance with
their terms prior to the Closing Date.
1.119 "TC ENVIRONMENTAL COSTS" shall mean all Environmental Costs,
whether direct or indirect, known or unknown, joint or several, whenever arising
(including after Closing), based on, arising out of or otherwise in respect of
the TC Assets, the TC Business, or property currently or formerly owned,
operated, used or leased by Moog or its predecessors (including off-site
locations) and arising out of: (i) conditions or Hazardous Materials existing on
or originating from any such property or the TC Assets on or prior to the
Closing Date including, but not limited to, the Discharge or Disposal of
Hazardous Materials at or from any such property on or prior to the Closing
Date; (ii) the operation of the TC Business by Moog or its predecessors on or
prior to the Closing Date; or (iii) non-compliance on or prior to the Closing
Date with any requirements of Environmental Laws.
1.120 "TC INTELLECTUAL PROPERTY" shall mean all letters patent,
patents, trademarks, trade names, service marks, copyrights (including
registrations and applications for any of the foregoing), licenses, technology,
know-how, trade secrets, tangible or intangible proprietary information or
material, formulae and inventions owned by Moog which are used exclusively in or
relate exclusively to the TC Business or the rights thereto (including rights
under licenses) which belong to Moog and are used exclusively in or relate
exclusively to the TC Business, including, without limitation, (i) all items
listed in Section 4.10(c) of the Moog Disclosure Schedule and (ii) all such
intellectual property which is acquired or developed for use exclusively in the
TC Business between the date of this Agreement and the Closing. The TC
Intellectual Property shall not include the Excluded Moog Trademarks and Trade
Names.
1.121 "TC LEASES" shall mean all leases of Moog for real or personal
property exclusively relating to the TC Business (whether entered into as lessor
or lessee), including, without limitation, (a) the real estate leases listed in
Section 4.8 of the Moog Disclosure Schedule and (b) all leases of Moog
exclusively relating to the TC Business which are entered into between the date
of this Agreement and the Closing and expressly permitted by this Agreement,
excluding, however, all leases which will expire in accordance with their terms
prior to the Closing.
1.122 "TC LETTERS OF CREDIT" shall have the meaning ascribed thereto in
Section 7.15(a).
1.123 "TC MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the TC Assets or on the business, financial condition, operations, or results
of operations of the TC Business.
1.124 "TC PRODUCT LIABILITY CLAIM" shall have the meaning ascribed
thereto in Section 4.17(a).
1.125 "TC REAL PROPERTIES" shall mean all of the real properties owned
by Moog and used exclusively in the TC Business as listed in Section 4.9 of the
Moog Disclosure Schedule (but excluding the real property owned or held by Moog
in Ottumwa, Iowa).
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1.126 "TC RETAINED ASSETS" shall mean all of the following properties,
assets and other rights of Moog:
(a) all cash, cash equivalents and bank accounts;
(b) all of Moog's accounts and notes receivable including, but
not limited to, any inter- or intra-company receivables owed to the TC Business
from Moog or any of its Affiliates (but excluding the note receivable due from
Elite Automotive Systems which is included in the TC Assets);
(c) the real property owned or held by Moog in Ottumwa, Iowa
including all improvements, structures and fixtures thereon and other tangible
assets located at such property;
(d) the Excluded Moog Trademarks and Trade Names;
(e) all insurance policies, related prepaid expenses, refunds or
proceeds and all rights relating thereto subject to Section 7.14(a);
(f) all personal computers and servers used in the TC Business
which were deployed by Moog to support SAP (but not wiring for the SAP system
which is included in the TC Assets) and all personal computers used by the Moog
sales force;
(g) the computer software used by the TC Business and leases,
licenses or other arrangements therefor;
(h) any assets of any Employee Pension Benefit Plans and Employee
Welfare Benefit Plans and any rights under such plans relating to employee
benefits, employment or compensation;
(i) any vehicles owned or leased by Moog for use by Moog sales
personnel;
(j) the inventories to be consigned by Moog to SMP as determined
under Section 7.20 of this Agreement; and
(k) any fixed assets located at Moog's facility in Boaz, Alabama
related to the production of screw machine products for the TC Business.
1.127 "TC RETAINED LIABILITIES" shall mean the following:
(a) all Liabilities to the extent arising out of TC Retained
Assets;
(b) all accounts and notes payable of the TC Business incurred on
or prior to the Closing Date including, but not limited to, any inter- or
intra-company payables due from the TC Business to Moog or any of its
Affiliates;
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(c) all Liabilities for product liability claims (including
claims for property damage, personal injury or death) relating to products
manufactured or sold by the TC Business based on or arising out of claims made
or causes of action filed on or before the first anniversary of the Closing
Date, PROVIDED, HOWEVER, that this Section (c) shall not apply to any
Liabilities based on or arising out of asbestos exposure which are covered by
Section 1.127(d);
(d) any claims by third parties based on or arising out of
asbestos exposure relating to products manufactured or sold on or prior to the
Closing Date by the TC Business and any claims by Active Employees or Inactive
Employees of the TC Business (including worker's compensation claims) based on
or arising out of asbestos exposure on or prior to the Closing Date;
(e) all TC Environmental Costs;
(f) all Liabilities to Inactive Employees of the TC Business and
their beneficiaries and dependents including, without limitation, all
Liabilities with respect to (i) salaries, wages, commissions, bonuses and
vacation pay (except to the extent accrued on the Moog Final Closing Balance
Sheet); (ii) severance pay and obligations (subject to Sections 8.1 and 8.2);
(iii) Employee Pension Benefit Plans and Employee Welfare Benefit Plans
(including any retiree medical and dental benefits) provided by Moog or its
Affiliates to such employees; (iv) worker's compensation claims; (v)
unemployment compensation claims; and (vi) claims or litigation relating to
discrimination claims, unjust discharge, claims for additional compensation or
benefits and claims for violation of health and safety laws;
(g) all Liabilities to Active Employees of the TC Business and
their beneficiaries and dependents for (i) salaries, wages, commissions, bonuses
and vacation pay relating to periods on or prior to the Closing Date (except to
the extent accrued on the Moog Final Closing Balance Sheet); (ii) severance pay
and obligations for Active Employees who do not become employees of SMP (subject
to Sections 8.1 and 8.2); (iii) Employee Pension Benefit Plans and Employee
Welfare Benefit Plans (including any retiree medical and dental benefits)
provided by Moog or its Affiliates to such employees in accordance with the
provisions of such plans; (iv) worker's compensation claims based on or
resulting from incidents or events occurring before the Closing Date; (v)
unemployment compensation claims for Active Employees who do not become
employees of SMP; and (vi) claims or litigation relating to discrimination
claims, unjust discharge, claims for additional compensation or benefits and
violation of the health and safety laws based upon or resulting from incidents
or events occurring before the Closing Date;
(h) all Liabilities for Taxes of Moog or the TC Business for any
period prior to the Closing Date except to the extent that a liability for
non-income Taxes is accrued on the Moog Final Closing Balance Sheet;
(i) all Liabilities of Moog or the TC Business for borrowed money
including notes payable, loans and revolving credits;
(j) all Liabilities of Moog or the TC Business with respect to
letters of credit and foreign exchange contracts or commitments, subject to
Section 7.15;
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(k) all Liabilities of Moog or the TC Business with respect to
powers of attorney, financing agreements, security agreements, bid bonds,
performance bonds, suretyship agreements, guarantees or any other similar
arrangement where Moog is or may become liable for the obligations of any other
Person;
(l) all Liabilities for Existing TC Litigation and Claims (as
hereinafter defined) including matters set forth in Section 4.15 of the Moog
Disclosure Schedule and, except for matters described in Sections 1.112(b) and
(c), all Liabilities for any actions, suits, proceedings, claims or
investigations arising after the Closing Date that arise from or relate to
matters, incidents, sets of facts or circumstances on or prior to the Closing
Date including breach of contract, tort, infringement or violation of law; and
(m) all Liabilities arising out of "wrap discounts" or other
discounts, customer incentives or rebates relating to sales on or prior to the
Closing Date.
1.128 "TC RETURNS SCHEDULE" shall have the meaning ascribed thereto in
Section 7.12(a).
1.129 "TC SCHEDULED SALES PERSONS" shall have the meaning ascribed
thereto in Section 4.18(a).
1.130 "TC TRANSFERRING SALES PERSON" shall have the meaning ascribed
thereto in Section 8.1(a).
1.131 "THIRD PERIOD SEVERANCE AMOUNT" shall have the meaning ascribed
thereto in Section 8.2(e).
1.132 "TRANSITION PERIOD" shall have the meaning ascribed thereto in
Section 7.3(c).
1.133 "WARRANTY BRAKE RETURNS AMOUNT" and "WARRANTY TC RETURNS AMOUNT"
shall have the meanings ascribed thereto in Section 7.12(a).
1.134 "WATER" means surface water, ground water, wetlands, other water,
or any of them.
ARTICLE II.
EXCHANGE OF ASSETS; ASSUMPTION OF LIABILITIES; ADJUSTMENTS
----------------------------------------------------------
2.1 BASIC TRANSACTION. On and subject to the terms and conditions of
------------------
this Agreement, the Parties shall effect an exchange of the TC Assets and the
Brake Assets as set forth below.
2.2 CONVEYANCE OF TC ASSETS. By means of appropriate documentation
------------------------
reasonably satisfactory to the Parties, at the Closing, Moog will sell,
transfer, assign, convey and deliver
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to SMP, free and clear of all Security Interests, all of its right, title and
interest in and to the TC Assets, and SMP will purchase, acquire and accept, as
provided herein, the TC Assets.
2.3 CONVEYANCE OF BRAKE ASSETS. By means of appropriate documentation
---------------------------
reasonably satisfactory to the Parties, at the Closing, SMP will sell, transfer,
assign, convey and deliver to Moog, free and clear of all Security Interests,
all of its right, title and interest in and to the Brake Assets, and Moog will
purchase, acquire and accept, as provided herein, the Brake Assets.
2.4 TC ASSUMED LIABILITIES. On and subject to the terms and conditions
-----------------------
set forth in this Agreement, effective as of the Closing Date, Moog will
transfer to SMP, and SMP will assume and undertake to perform when due, the TC
Assumed Liabilities.
2.5 BRAKE ASSUMED LIABILITIES. On and subject to the terms and
--------------------------
conditions set forth in this Agreement, effective as of the Closing Date, SMP
will transfer to Moog, and Moog will assume and undertake to perform when due,
the Brake Assumed Liabilities.
2.6 TC RETAINED LIABILITIES. The TC Retained Liabilities will be
------------------------
retained and performed when due by Moog.
2.7 BRAKE RETAINED LIABILITIES. The Brake Retained Liabilities will be
---------------------------
retained and performed when due by SMP.
2.8 PRE-CLOSING BALANCE SHEETS. Attached hereto as Exhibit E is a
---------------------------
balance sheet for the TC Business as of December 31, 1997 (the "MOOG PRE-CLOSING
BALANCE SHEET") and attached hereto as Exhibit F is a balance sheet for the
Brake Business as of December 31, 1997 (the "SMP PRE-CLOSING BALANCE SHEET").
Moog represents that the Moog Pre-Closing Balance Sheet and SMP represents that
the SMP Pre-Closing Balance Sheet has been prepared in accordance with the
principles, practices, methods and procedures set forth on Exhibit G.
2.9 CLOSING PAYMENT AMOUNT AND FINAL CLOSING PAYMENT AMOUNT.
--------------------------------------------------------
(a) At Closing, SMP shall pay Moog an amount equal to the sum of:
(i) the outstanding balance including any future principal payments due under
the $2.5 million Arkansas Development Finance Authority Industrial Development
Bonds (Standard Motor Products, Inc. Project) Series 1989, plus interest accrued
to the Closing Date; and (ii) the outstanding balance including any future
principal payments due under the $1.8 million Industrial Development Revenue
Bonds (Standard Motor Products, Inc. Project) Series 1990, plus interest accrued
to the Closing Date.
(b) If the SMP Final Closing Net Book Value exceeds the Moog Final
Closing Net Book Value, without giving effect to the consignment provisions of
Section 7.20, then on or before the first anniversary of the Closing Date, Moog
shall pay to SMP an amount equal to the difference between the SMP Final Closing
Net Book Value and the Moog Final Closing Net Book Value.
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<PAGE>
(c) If Moog fails to timely make the payment described in Section
2.9(a), Moog shall pay to SMP interest on such amount at the rate of twelve
percent (12%) per annum from the first anniversary of the Closing Date to the
payment date.
(d) If the Moog Final Closing Net Book Value exceeds the SMP Final
Closing Net Book Value, without giving effect to the consignment provisions of
Section 7.20, then on or before the first anniversary of the Closing Date, SMP
shall pay Moog the amount determined under Section 7.20(e).
2.10 CLOSING BALANCE SHEETS. Within sixty (60) days following the
-----------------------
Closing Date, (i) Moog will prepare and furnish to SMP a balance sheet for the
TC Business as of the Closing Date (the "MOOG PRELIMINARY CLOSING BALANCE
SHEET") and (ii) SMP will prepare and furnish to Moog a balance sheet for the
Brake Business as of the Closing Date (the "SMP PRELIMINARY CLOSING BALANCE
SHEET"). The Moog Preliminary Closing Balance Sheet, the Moog Final Closing
Balance Sheet, the SMP Preliminary Closing Balance Sheet and the SMP Final
Closing Balance Sheet shall be prepared in accordance with principles,
practices, methods and procedures set forth on Exhibit G.
2.11 PRELIMINARY CLOSING BALANCE SHEET REVIEW. (a) Moog will have
-----------------------------------------
thirty (30) days following receipt of the SMP Preliminary Closing Balance Sheet
from SMP to review such SMP Preliminary Closing Balance Sheet and to determine
if, in Moog's good faith reasonable judgment, it has been prepared in accordance
with Exhibit G. If Moog does not raise any objections within such thirty (30)
day period, then Moog will be deemed to have accepted the SMP Preliminary
Closing Balance Sheet. If in Moog's good faith reasonable judgment adjustments
are necessary for the SMP Preliminary Closing Balance Sheet to be so prepared,
Moog shall notify SMP in writing of its proposed adjustments, including, in
reasonable detail, the amount, nature and basis for the adjustments ("MOOG'S
ADJUSTMENT LETTER") prior to the end of such thirty (30) day review period. SMP
will have thirty (30) days following receipt of the Moog Preliminary Closing
Balance Sheet from Moog to review such Moog Preliminary Closing Balance Sheet
and to determine if, in SMP's good faith reasonable judgment, it has been
prepared in accordance with Exhibit G. If SMP does not raise any objections
within such thirty (30) day period, then SMP will be deemed to have accepted the
Moog Preliminary Closing Balance Sheet. If in SMP's good faith reasonable
judgment adjustments are necessary for the Moog Preliminary Closing Balance
Sheet to be so prepared, SMP shall notify Moog in writing of its proposed
adjustments, including, in reasonable detail, the amount, nature and basis for
the adjustments ("SMP'S ADJUSTMENT LETTER") prior to the end of such thirty (30)
day review period.
(b) SMP will have fifteen (15) days following receipt of Moog's
Adjustment Letter, if any, to review the proposed adjustments and within such
period shall notify Moog in writing of SMP's position with respect to each of
Moog's proposed adjustments ("SMP'S RESPONSE LETTER"). If SMP does not notify
Moog in writing within such fifteen (15) day period of any objections to Moog's
proposed adjustments, then SMP will be deemed to have accepted each of Moog's
proposed adjustments set forth in Moog's Adjustment Letter. Moog will have
fifteen (15) days following receipt of SMP's Adjustment Letter, if any, to
review the proposed adjustments and within such period shall notify SMP in
writing of Moog's position with respect to each of SMP's proposed adjustments
("MOOG'S RESPONSE LETTER"). If Moog does not notify
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SMP in writing within such fifteen (15) day period of any objections to SMP's
proposed adjustments, then Moog will be deemed to have accepted each of SMP's
proposed adjustments set forth in SMP's Adjustment Letter.
(c) Within ten (10) days after receipt of the response from each
of the Parties pursuant to Section 2.11(b), the Parties shall meet and endeavor
acting reasonably and in good faith, to resolve the adjustments, if any, which
are in dispute.
(d) If the Parties are unable to resolve all of the proposed
adjustments in Moog's Adjustment Letter and SMP's Adjustment Letter, within the
ten (10) day period provided in Section 2.11(c), the Parties shall jointly
engage the accounting firm of Coopers & Lybrand (or their successor) (the
"ACCOUNTING ARBITRATOR"), to act as arbitrator, subject to the Accounting
Arbitrator confirming that it has no business or other relationship with either
party which would cause it not to be independent of both Parties which has not
been waived in writing by the Party not having such relationship in its sole
discretion. If such accounting firm is unable to confirm its independence and no
waiver is given, the Parties shall jointly engage an alternate mutually
acceptable accounting firm that can confirm that it is independent of both
Parties or such a waiver is given with respect to the alternate accounting firm.
If the Parties have failed to engage the Accounting Arbitrator within such ten
(10) day period either Party may request that an administrator designated by the
American Arbitration Association appoint a nationally recognized independent
accounting firm to act as the Accounting Arbitrator within fifteen (15) days of
such request. The Accounting Arbitrator shall be furnished with a copy of the
Agreement, the Moog Pre-Closing Balance Sheet, the SMP Pre-Closing Balance
Sheet, the Moog Preliminary Closing Balance Sheet, the SMP Preliminary Closing
Balance Sheet, Moog's Adjustment Letter (if any), SMP's Adjustment Letter (if
any), Moog's Response Letter (if any), SMP's Response Letter (if any) and any
other relevant correspondence between the Parties. The Accounting Arbitrator
must, within sixty (60) days from the date all of such documents are furnished,
complete its review and render a written report setting forth its conclusion
with respect to each of the proposed adjustments that were unresolved between
the Parties. The Accounting Arbitrator shall be granted access to the books and
records of the Parties as well as the working papers or other documents which
either Party or its accountants may have that relate to the Moog Preliminary
Closing Balance Sheet or the SMP Preliminary Closing Balance Sheet and any other
documents or information which the Accounting Arbitrator may deem appropriate.
The Accounting Arbitrator's review shall be limited to determining, in respect
of each disputed adjustment, which Party's position with respect to the proposed
adjustment most closely compares with the terms of this Agreement. The Parties
shall have the right to submit written materials to the Accounting Arbitrator
all in accordance with procedures to be set forth in the engagement letter
between the Parties and the Accounting Arbitrator. In arriving at its
determination the Accounting Arbitrator must select one Party's position with
respect to each proposed adjustment. The decision by the Accounting Arbitrator
shall be in writing and delivered to both Parties. The Accounting Arbitrator's
decision shall be conclusive and binding upon the Parties and may be entered and
enforced in any court of competent jurisdiction. The Parties agree to submit to
the jurisdiction of any such court for the enforcement of such award or
decision. Each Party shall pay fifty percent (50%) of the fees and expenses of
the Accounting Arbitrator.
2.12 FINAL CLOSING BALANCE SHEET. (a) The Moog Preliminary
----------------------------
Closing Balance Sheet as agreed to by the Parties pursuant to subsections
2.11(a), (b) or (c) or as modified by the
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determination of the Accounting Arbitrator pursuant to subsection 2.11(d) will
become the "MOOG FINAL CLOSING BALANCE SHEET," and the excess of "Total Assets"
over "Total Liabilities" as reflected in the Moog Final Closing Balance Sheet
shall be the "MOOG FINAL CLOSING NET BOOK VALUE."
(b) The SMP Preliminary Closing Balance Sheet as agreed to by the
Parties pursuant to subsections 2.11(a), (b) or (c) or as modified by the
determination of the Accounting Arbitrator pursuant to subsection 2.11(d) will
become the "SMP FINAL CLOSING BALANCE SHEET," and the amount of the excess of
"Total Assets" over "Total Liabilities" as reflected in the SMP Final Closing
Balance sheet shall be the "SMP FINAL CLOSING NET BOOK VALUE."
2.13 PAYMENT. Any amounts to be paid pursuant to this Article II shall
--------
be paid in immediately available United States funds by wire transfer to an
account designated by the Party to receive such funds, of which such Party shall
advise the other Party not later than two (2) Business Days prior to the date
payment is to be made.
2.14 TRANSFER COSTS. (i) Moog will pay all transfer, income, conveyance
---------------
or other similar Taxes, stamps, duties or similar governmental
charges imposed by any taxing jurisdiction on or with respect to the transfer of
the TC Assets, (ii) SMP will pay all transfer, income, conveyance, or other
similar Taxes, stamps, duties or similar governmental charges imposed by any
taxing jurisdiction on or with respect to the transfer of the Brake Assets,
(iii) SMP will pay any recording, filing or notarial fees incurred in connection
with its acquisition of the TC Assets and (iv) Moog will pay any recording,
filing or notarial fees incurred in connection with its acquisition of the Brake
Assets.
ARTICLE III.
THE CLOSING
-----------
3.1 CLOSING DATE. The Closing shall take place on the seventh Business
-------------
Day following the fulfillment of all the conditions precedent specified in
Article X, at 10:00 a.m., at the offices of Cooper Industries, Inc., 600 Travis,
Suite 5800, Houston, Texas, or at such other place, time or date as the Parties
may mutually agree. The Closing shall be effective as of the close of business
on that date.
3.2 MOOG DELIVERIES AT THE CLOSING. At the Closing, Moog shall deliver
-------------------------------
to SMP the following:
(a) Special warranty deeds (subject to Permitted Exceptions), in
recordable form, with respect to the TC Real Properties owned by Moog;
(b) A duly executed bill of sale substantially in the form of
Exhibit H to this Agreement (the "TC BILL OF SALE"), together with such other
appropriate instruments of transfer as SMP may reasonably request, transferring
to SMP all of the personal and intangible property owned or held by Moog as of
the Closing which is included in the TC Assets;
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(c) Duly executed instruments of assignment of the TC Leases, which
shall be in recordable form in the case of TC Leases of real property or
interests therein;
(d) Certification from Moog Company that it is not a foreign
corporation, foreign trust, foreign partnership or foreign estate (as such terms
are defined in the Code) and an affidavit of Moog Company in the form attached
hereto as Exhibit I (the "MOOG FIRPTA CERTIFICATE");
(e) Estoppel certificates from each lessor of a TC Lease for real
property in form and substance satisfactory to SMP;
(f) Duly executed instruments of assignment or transfer of the TC
Intellectual Property owned or held by Moog, in form suitable for recording in
the appropriate office or bureau, and the original certificates, if available,
of such TC Intellectual Property together with any powers of attorney necessary
to make the conveyance effective;
(g) The TC Books and Records; provided that any TC Books and
Records located on any of the TC Real Property or leased property shall be
deemed to be delivered upon transfer of such property as provided herein;
(h) Copies of the consents obtained as contemplated by Section
10.3(c);
(i) The TC Assignment and Assumption Agreement and the Brake
Assignment and Assumption Agreement each duly executed by Moog;
(j) Duly executed copies of each of the Rubber Supply Agreement
(Exhibit C), and the Screw Machine Products Supply Agreement (Exhibit A); and
(k) Such other and further instruments of conveyance, assignment
and transfer as SMP may reasonably request for the more effective conveyance and
transfer of any of the TC Assets and the assumption of any of the Brake Assumed
Liabilities.
3.3 SMP DELIVERIES AT THE CLOSING. At the Closing, SMP shall deliver to
------------------------------
Moog the following:
(a) Special warranty deeds (subject to Permitted Exceptions), in
recordable form, with respect to the Brake Real Properties owned by SMP;
(b) A duly executed bill of sale substantially in the form of
Exhibit J to this Agreement (the "BRAKE BILL OF SALE"), together with such other
appropriate instruments of transfer as Moog may reasonably request, transferring
to Moog all of the personal and intangible property owned or held by SMP as of
the Closing which is included in the Brake Assets;
(c) Duly executed instruments of assignment of the Brake Leases
(including an assignment of the Lease Agreement dated as of June 1, 1990 from
the City of Manila to SMP pertaining to the $1.8 million Industrial Development
Revenue Bonds), which shall be in recordable form in the case of Brake Leases of
real property or interests therein;
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(d) Certification from SMP Parent that it is not a foreign
corporation, foreign trust, foreign partnership or foreign estate (as such terms
are defined in the Code) and an affidavit of SMP in the form attached hereto as
Exhibit K (the "SMP FIRPTA CERTIFICATE");
(e) Estoppel certificates from each lessor of a Brake Lease for
real property in form and substance satisfactory to Moog;
(f) Duly executed instruments of assignment or transfer of the
Brake Intellectual Property owned or held by SMP, in form suitable for recording
in the appropriate office or bureau, and the original certificates, if
available, of such Brake Intellectual Property together with any powers of
attorney necessary to make the conveyance effective;
(g) The Brake Books and Records; provided that any Brake Books and
Records located on any of the Brake Real Property or leased property shall be
deemed to be delivered upon transfer of such property as provided herein;
(h) Copies of the consents obtained as contemplated by Section
10.2(c);
(i) The TC Assignment and Assumption Agreement and the Brake
Assignment and Assumption Agreement each duly executed by SMP;
(j) Duly executed copies of each of the Rubber Supply Agreement and
the Screw Machine Products Supply Agreement;
(k) Duly executed releases of all UCC financing statements filed
against SMP by the following secured parties releasing all the Brake Assets from
the collateral covered by the financing statements: The First National Bank of
Chicago, as Collateral Agent (assignee of Clipper Receivables Corporation); SMP
Credit Corporation; and Clipper Receivables Corporation (assignee of SMP Credit
Corporation);
(l) UCC financing statements executed by SMP pertaining to Moog's
interest in the inventory consigned to SMP pursuant to Section 7.20 of this
Agreement;
(m) Duly executed instruments of assignment of the Promissory Note
dated December 1, 1989 in the original principal amount of $2.5 million payable
to the Arkansas Development Finance Authority and the related Loan Agreement and
Mortgage and Security Agreement; and
(n) Such other and further instruments of conveyance, assignment
and transfer as Moog may reasonably request for the more effective conveyance
and transfer of any of the Brake Assets and the assumption of the TC Assumed
Liabilities.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF MOOG
--------------------------------------
Moog represents and warrants to SMP that the statements contained in
this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV, except to the extent any representation or warranty
relates to a specific date).
4.1 ORGANIZATION OF MOOG. Each of Moog Company, Moog Parent and Cooper
---------------------
Canada is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization. Each of
Moog Company, Moog Parent and Cooper Canada is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of the TC Business or the use, ownership or leasing of properties
used in the TC Business requires such qualification, except where the failure to
be so qualified would not, individually or in the aggregate, have a TC Material
Adverse Effect. Each of Moog Company, Moog Parent and Cooper Canada has full
corporate power and authority to carry on the TC Business and to use the
properties used by it in the TC Business.
4.2 AUTHORIZATION OF TRANSACTION. Each of Moog Company, Moog Parent and
-----------------------------
Cooper Canada has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, including the power to
convey the TC Assets. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Moog Company, Moog Parent and Cooper
Canada and no other corporate proceedings on the part of Moog Company, Moog
Parent or Cooper Canada are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Moog Company, Moog Parent and Cooper
Canada and constitutes the valid and legally binding obligation of Moog Company,
Moog Parent and Cooper Canada, enforceable in accordance with its terms and
conditions.
4.3 NON-CONTRAVENTION. (a) Except as set forth in Section 4.3(a) of the
------------------
disclosure schedule of Moog attached hereto (the "MOOG DISCLOSURE SCHEDULE"),
and except for the applicable requirements of the H-S-R Act and any applicable
"bulk sales" laws, there is no requirement applicable to Moog to make any filing
with any Governmental Agency as a condition to the lawful consummation by Moog
of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.3(b) of the Moog Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) conflict with or
result in any breach of any provision of the certificate or articles of
incorporation or bylaws or other organizational document of Moog Company, Moog
Parent or Cooper Canada, (ii) except for any applicable "bulk sales" laws,
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, or Governmental
Agency, to which Moog or any of the TC Assets is subject or (iii) conflict with,
result in a breach of, constitute a default under, result in
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the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money or instrument of indebtedness, to which either Moog Company, Moog
Parent or Cooper Canada is a party or by which Moog Company, Moog Parent or
Cooper Canada is bound or to which any of the TC Assets is subject (or result in
the imposition of any Security Interest upon any of such TC Assets), except,
with respect to clauses (ii) and (iii), for such violations, conflicts, breaches
or defaults which would not individually or in the aggregate have a TC Material
Adverse Effect.
4.4 MOOG PRE-CLOSING BALANCE SHEET AND FINANCIAL STATEMENTS. (a) The
--------------------------------------------------------
Moog Pre-Closing Balance Sheet has been prepared from the books and records of
Moog in accordance with the principles, practices, methods and procedures set
forth on Exhibit G and reasonably reflects the assets that are TC Assets and
Liabilities that are TC Assumed Liabilities as of December 31, 1997.
(b) Moog has previously delivered to SMP the balance sheet of the
TC Business at December 31, 1996 and the income statement of the TC Business for
the year then ended. Such financial statements (i) have been prepared based on
the books and records of Moog in accordance with past practices applied on a
consistent basis, with such differences from GAAP as are described in Section
4.4 of the Moog Disclosure Schedule, and (ii) present fairly, in all material
respects, the financial position and results of operations of the TC Business as
of such date or for such year.
4.5 UNDISCLOSED LIABILITIES. Except as set forth in Section 4.5 of the
------------------------
Moog Disclosure Schedule, Moog has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise) that are of the type required to be
set forth in the Moog Pre-Closing Balance Sheet, except liabilities, obligations
or contingencies which are adequately accrued or reserved against in such
balance sheet or which were incurred after December 31, 1997, in the ordinary
course of business consistent with past practice or which in the aggregate do
not exceed $10,000.
4.6 EVENTS AFTER JUNE 30, 1997. Except for the loss of AutoZone as a
---------------------------
customer of the TC Business, since June 30, 1997, there has not been a TC
Material Adverse Effect. Except as set forth in Section 4.6 of the Moog
Disclosure Schedule, without limiting the foregoing, since that date, Moog, with
respect to the TC Business, has not:
(a) (i) sold, leased, transferred, disposed of or assigned any of
the TC Assets, other than finished goods sold in the ordinary course of business
or the sale or transfer of other assets which are not material to the TC
Business, all of which is consistent with past practice or (ii) mortgaged,
pledged or otherwise encumbered any TC Assets, except for Permitted Exceptions;
(b) made any capital expenditures in excess of $250,000 in the
aggregate;
(c) entered into any contract, agreement, arrangement, lease,
sublease, license, sublicense which involves a certain (rather than contingent)
obligation of or to Moog with respect to the TC Business of more than $100,000,
except for purchase orders, sales orders and
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similar contracts entered into in the ordinary course of business consistent
with past practice which, in any individual case, did not exceed $500,000;
(d) created, incurred or assumed any long-term Debt (including
obligations in respect of capital leases), or, except in the ordinary course of
business consistent with past practice, any short-term Debt if, in either case,
such Debt would constitute a TC Assumed Liability;
(e) made any capital investment in, any loan or advance to, or any
acquisition of all or any substantial part of the assets, properties, business
or capital stock of, any other Person or entity (or series of related capital
investments, loans, advances and acquisitions);
(f) delayed or postponed the payment of accounts payable and other
Liabilities in any amount in the aggregate in excess of $200,000, except in the
ordinary course of business consistent with past practices;
(g) to Moog's Knowledge, cancelled, compromised, waived or released
any material right or claim;
(h) experienced any damage, destruction or loss (whether or not
covered by insurance) of property either involving more than $100,000, singly,
or $200,000, in the aggregate;
(i) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement except as set forth in Section 4.6(i) of the Moog Disclosure
Schedule;
(j) granted any increase in the compensation or employee benefits
of any of the officers or employees of the TC Business, other than routine
salary or hourly increases made pursuant to present salary review procedures in
the ordinary course of business consistent with past practice;
(k) adopted any (i) bonus, (ii) profit-sharing, (iii) incentive
compensation, (iv) pension, (v) retirement, (vi) medical, hospitalization, life
or other insurance, (vii) severance or (viii) other plan, contract or commitment
for any of its officers or employees of the TC Business, or modified or
terminated any such existing plan, contract or commitment;
(l) failed to maintain any insurance relating to the TC Business in
full force and effect, assigned or transferred such insurance or the proceeds
thereof to any Person, failed to pay any premiums due thereunder, or caused,
suffered or permitted any act or failure to act which could cause such insurance
to be canceled or terminated;
(m) failed to give any required notice or failed to present any
claims of known occurrences under any insurance relating to the TC Business or
failed to take any other required or appropriate action with respect thereto in
due and timely fashion or cancelled those insurance policies for occurrences
relating to the TC Business on or prior to Closing or caused or
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permitted any retroactive cancellation of insurance coverage relating to the TC
Business in effect prior to Closing or for occurrences prior to Closing;
(n) made any change in accounting methods, principles, procedures
or practices, except as required by GAAP, any such changes to be set forth on
Section 4.6 of the Moog Disclosure Schedule;
(o) amended its certificate or articles of incorporation or bylaws
in a manner that adversely affects the transactions contemplated by this
Agreement;
(p) entered into any agreement, contract or commitment to do any of
the foregoing; or
(q) made or revoked any Tax election or settled or compromised any
Tax Liability relating to the TC Business or the TC Assets.
4.7 TAX MATTERS. (a) Except liens for Taxes not yet due, there are no
------------
Tax liens upon, pending against or, to Moog's Knowledge, threatened in writing
against any of the TC Assets that arose in connection with any failure to file a
Tax Return or to pay any Taxes.
(b) Moog has, in relation to the TC Business, withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
Person.
(c) There is no dispute or claim concerning any Liability for Taxes
relating to any of the TC Assets or the TC Business.
4.8 TC LEASES FOR REAL PROPERTY. Section 4.8 of the Moog Disclosure
Schedule sets forth a true and correct list of each TC Lease which relates to
real property, which constitutes all of the real property leased by Moog and
used exclusively in the TC Business. Moog has delivered to SMP correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 4.8 of the Moog Disclosure Schedule. Regarding each lease and sublease
listed in Section 4.8 of the Moog Disclosure Schedule:
(a) the lease or sublease is in full force and effect, is legal,
valid, binding and enforceable against Moog, and, to Moog's Knowledge, is legal,
valid, binding and enforceable against each other party thereto;
(b) Except as set forth in Section 4.8 of the Moog Disclosure
Schedule, Moog is not in breach or default, and no event has occurred which,
with notice or lapse of time, or both, would constitute a breach or default, or
would permit termination, modification, or acceleration thereunder, by the other
party thereto, and, to Moog's Knowledge, no other party to the lease or sublease
is in breach or default, and no event has occurred which, with notice or lapse
of time, or both, would constitute a breach or default, or would permit
termination, modification, or acceleration thereunder, by Moog.
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(c) all facilities have received all approvals of Governmental
Agencies (including Moog Permits) required of Moog in connection with the
construction, leasing or operation thereof, and have been operated and
maintained in accordance with applicable laws, rules and regulations, except
where the failure to do so could not reasonably be expected to have a TC
Material Adverse Effect; and
(d) there are no (i) pending condemnation proceedings relating to
the property against Moog or its Affiliates or, to Moog's Knowledge, pending
condemnation proceedings relating to the property against any other parties or
threatened against Moog, its Affiliates or any other parties, (ii) pending
litigation or administrative actions relating to the property against Moog or
its Affiliates or, to Moog's Knowledge, pending litigation or administrative
actions relating to the property against any other parties or threatened against
Moog, its Affiliates or any other parties, or (iii) to Moog's Knowledge, other
matters materially and adversely affecting the current use, occupancy or value
of the property.
4.9 TC REAL PROPERTY. (a) Section 4.9 of the Moog Disclosure Schedule
-----------------
lists and describes the TC Real Property (except the property located in
Ottumwa, Iowa) which constitutes all of the real property owned by Moog and used
exclusively in the TC Business. Moog has on the date hereof good, valid and
marketable title to such real property free and clear of all Security Interests.
(b) Moog has not entered into any lease, subleases, licenses, or
other agreements granting to any third party the right to use or occupy all or
any portion of the TC Real Property.
(c) Except pursuant to this Agreement, Moog has not granted any
outstanding options or rights of first refusal to purchase, lease or license any
TC Real Property.
(d) Moog has not received any notice of any pending, threatened or
contemplated condemnation proceeding affecting the TC Real Property and no
proceedings or real estate tax certiorari protests are now pending for the
reduction of the assessed valuation of the TC Real Property.
(e) Moog has not received any written notice from any Governmental
Agency (i) stating or alleging that any improvements at the TC Real Property has
not been constructed in accordance with applicable law or (ii) requiring or
advising as to the need for any material repair, alteration, restoration or
improvement in connection with the TC Real Property.
4.10 TC INTELLECTUAL PROPERTY. (a) Moog owns or has the right to use
-------------------------
pursuant to license, sublicense, agreement or permission all TC Intellectual
Property and the TC Intellectual Property constitutes all the intellectual
property necessary for the operation of the TC Business as presently conducted.
Subject to Moog obtaining the consents of any third party required to transfer
Moog's interest in the TC Intellectual Property to SMP as provided in Section
4.10(f) below, each item of TC Intellectual Property will be owned or available
for use by SMP on identical terms and conditions effective upon the Closing.
(b) To Moog's Knowledge, Moog has not, in the conduct of the TC
Business or in its use of the TC Intellectual Property, interfered with,
infringed upon, misappropriated, or
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otherwise come into conflict with any intellectual property rights of third
parties, except as set forth in Section 4.10(b) of the Moog Disclosure Schedule.
Moog and the directors and officers (and employees with responsibility for TC
Intellectual Property matters) of Moog, have not received during the five year
period prior to this Agreement any charge, complaint, claim or notice alleging
that the conduct by Moog of the TC Business or any use by Moog of the TC
Intellectual Property constitutes any such interference, infringement,
misappropriation or violation. To Moog's Knowledge, during the five year period
prior to this Agreement, no third party has materially interfered with,
infringed upon, misappropriated or otherwise come into conflict with any TC
Intellectual Property.
(c) Section 4.10(c) of the Moog Disclosure Schedule identifies:
(i) each patent (including issuing country, number, current
assignee of record, title and issue date), each trademark and service mark
registration (including issuing country, number, description of mark, current
owner of record and issue date), each unregistered trademark and service mark
for which no application for registration is pending (including a description of
the mark and the goods or services with which it is used) and each copyright
registration (including issuing country, number, title or description of work,
current owner of record and issue date) currently in effect, owned by Moog, and
included in the TC Intellectual Property;
(ii) each pending patent application (including country of
filing, serial number, current owner of record, title and filing date),
application for registration of a trademark or service mark (including country
of filing, serial number, description of mark, current owner of record, classes
of goods or services, and filing date), and application for copyright
registration (including country of filing, serial number, title or description
of work, current owner of record, and filing date), which Moog has made with
respect to any TC Intellectual Property; and
(iii) each license, agreement or other permission which Moog or
its Affiliates has granted to any third party with respect to any of its or
their owned TC Intellectual Property. Moog has delivered to SMP correct and
complete copies of all such written (or if oral, a written summary of such)
licenses, agreements and permissions (as amended to date).
(d) With respect to each item of TC Intellectual Property:
(i) the identified owner possesses all right, title and interest
in and to the item;
(ii) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; and
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand is pending or, to Moog's Knowledge, threatened
which challenges the legality, validity, enforceability, use or ownership of the
item.
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(e) Section 4.10(e) of the Moog Disclosure Schedule identifies each
item of TC Intellectual Property (excluding computer software) that an Affiliate
of Moog or any third party owns and that Moog uses in the conduct of the TC
Business pursuant to license, subli- cense, agreement, registered user agreement
or permission. Moog has delivered to SMP correct and complete copies of all such
written (or if oral, a written summary of such) licenses, sublicenses,
agreements, registered user agreements and permissions (as amended to date).
With respect to each such item of TC Intellectual Property (excluding
off-the-shelf computer software available in the open market) not owned by Moog
but used by Moog in the conduct of the TC Business:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(ii) to Moog's Knowledge, no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which, with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iii) with respect to each sublicense, to Moog's Knowledge, the
representa- tions and warranties set forth in subsections 4.10(e)(i) through
4.10(e)(iii) above are true and correct with respect to the underlying license;
and
(iv) Moog has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(f) Section 4.10(f) of the Moog Disclosure Schedule identifies each
item of TC Intellectual Property with respect to which the consent of any third
party is required to transfer Moog's interest in such TC Intellectual Property
to SMP.
4.11 INVENTORY. The inventories of the TC Business included in the TC
----------
Assets to be transferred to SMP pursuant to this Agreement consist of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods which are not damaged or defective, except those items the value
of which have been provided through adequate reserve including a valuation
reserve for core inventories in the amount of $637,000 which is included in the
purchase price adjustment described in Exhibit G, clause (m). The representation
and warranty under this Section 4.11 shall only apply to inventory on hand which
is identified by SMP as damaged or defective prior to the sale of such inventory
to a customer. This representation and warranty shall not apply to any inventory
which is sold to a customer even if the inventory is subsequently returned by
the customer because the inventory is (or allegedly is) damaged or defective.
The representation and warranty under Section 4.16 applies to inventory which is
sold to a customer and is subsequently returned by the customer because the
inventory is (or allegedly is) damaged or defective.
4.12 TANGIBLE TC ASSETS. Moog owns or has a valid leasehold in all TC
-------------------
Assets necessary for the conduct of the TC Business as presently conducted. The
machinery, equipment, tools and dies of Moog included in the TC Assets and used
in the conduct of the TC Business are, in the aggregate, in satisfactory
operating condition for their current use and are all located on the TC Real
Properties or on real property subject to a TC Lease (except for tools
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and dies located at the premises of various vendors). To Moog's Knowledge,
Section 4.12 of the Moog Disclosure Schedule lists those vendors which have
tools and dies which are included in the TC Assets. Section 4.12 of the Moog
Disclosure Schedule lists all such tangible TC Assets having a net book value at
September 30, 1997 of $10,000 or more and the net book value of each such asset.
4.13 CERTAIN AGREEMENTS. Section 4.13 of the Moog Disclosure Schedule
-------------------
lists the following contracts and agreements which are included in the TC
Contracts:
(a) any TC Leases for the lease of personal property from third
parties which involves any obligation to pay annual base rent of more than
$25,000;
(b) any agreement which involves a certain (rather than contingent)
obligation of or to the TC Business of more than $100,000;
(c) any agreement concerning a partnership, joint venture or other
agreement involving a sharing of profits or expenses;
(d) any agreement under which Moog has created, incurred, assumed,
or guaranteed (or may create, incur, assume, or guarantee) Debt (including
capitalized lease obligations) which are TC Assumed Liabilities, or under which
Moog has incurred a Security Interest on any of the TC Assets;
(e) any agreement concerning confidentiality;
(f) any agreement which limits the ability of the TC Business to
compete with any Person or in any geographical area;
(g) sales agency or representative, manufacturer's representative
and distributorship agreements;
(h) any contract, agreement or arrangement between the TC Business
and another division of Moog or an Affiliate of Moog which is a TC Assumed
Liability; and
(i) any other material contract, agreement or arrangement entered
into other than in the ordinary course of business.
Moog has made available to SMP a correct and complete copy of each
written agreement (or a written summary if the agreement is oral) listed in
Section 4.13 of the Moog Disclosure Schedule (as amended to date). Except as set
forth in Section 4.13 of the Moog Disclosure Schedule, with respect to each
agreement (written or oral) so listed (i) the agreement is in full force and
effect, is legal, valid, binding and enforceable against Moog, and, to Moog's
Knowledge, is legal, valid, binding and enforceable against any other party
thereto; (ii) the legality, validity, enforceability and effectiveness of the
agreement will not in any way be adversely affected by the Closing; (iii) Moog
is not, and, to Moog's Knowledge, no other party thereto is in breach or default
thereunder or has allowed an event to occur which with notice or lapse of time,
or both, would constitute a breach or default by, or permit termination,
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modification, or acceleration against, such party under such agreement; (iv) no
consents are necessary from any third party for the assignment of any such
agreements; and (v) each such agreement is terminable by its terms upon no more
than 90 days notice.
4.14 INSURANCE. Section 4.14 of the Moog Disclosure Schedule sets forth
----------
the following information with respect to each insurance policy (including
policies providing property, casualty, liability and workers' compensation
coverage) to which Moog or its Affiliates have been a party, a named insured or
otherwise the beneficiary of coverage currently in effect covering the TC Assets
or otherwise applicable to the TC Business:
(a) the name of the insurer and the name of the policyholder;
(b) the period of coverage; and
(c) the scope (including an indication of whether the coverage is
or was on a claims made, occurrence, or other basis), coverage limits and amount
of deductibles or self-insured retentions.
Neither Moog nor, to Moog's Knowledge, any other party to the policy is
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, or both, would constitute such a breach or default or permit termination,
modification or acceleration, under the policy.
4.15 LITIGATION. Except for matters set forth in Section 4.15 of the
-----------
Moog Disclosure Schedule, there is no (i) action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation pending or, to Moog's
Knowledge, threatened against Moog, with respect to the TC Business or any of
the TC Assets, before any Governmental Agency, and (ii) judgment, decree,
injunction, rule or order of any Governmental Agency outstanding against and
unsatisfied by Moog with respect to the TC Business or any of the TC Assets (the
matters described in (i) and (ii) including those matters set forth on Section
4.15 of the Moog Disclosure Schedule are collectively referred to as the
"EXISTING TC LITIGATION AND CLAIMS").
4.16 PRODUCT WARRANTY. To Moog's Knowledge, each product manufactured,
-----------------
sold, leased or delivered by the TC Business has, subject to the amount of
defective product returns and other matters set forth in Section 4.16 of the
Moog Disclosure Schedule, been in material conformity with all applicable
contractual commitments and all express and implied warranties. Section 4.16 of
the Moog Disclosure Schedule includes (i) copies of the current standard terms
and conditions of sale or lease for the TC Business (containing applicable
guaranty, warranty and indemnity provisions) and (ii) the amounts of warranty
and guaranty claims brought against the TC Business for the last 3 years.
4.17 PRODUCT LIABILITY. (a) Except as set forth in Section 4.17 of the
------------------
Moog Disclosure Schedule, none of Moog or its Affiliates, is currently, or has
been at any time during the last three (3) years, party to any action, suit,
proceeding, hearing or governmental investigation arising out of any injury to
persons or damage to property as a result of the ownership, possession or use of
any product manufactured, sold, leased or delivered by the TC
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Business (a "TC PRODUCT LIABILITY CLAIM"). To Moog's Knowledge, no event has
occurred which would be reasonably likely to give rise to a TC Product Liability
Claim.
(b) There are no outstanding warranty claims or any pending
litigation relating thereto concerning the products of the TC Business that
indicate a repeated pattern of product failure, product liability or product
recall claims. To Moog's Knowledge, the products of the TC Business conform to
the standards of safety customary in the industry of which the TC Business is a
part. Except as set forth in Section 4.17 of the Moog Disclosure Schedule, none
of the products of the TC Business currently are, or, to Moog's Knowledge, are
currently threatened to be, the subject of a product recall. All products of the
TC Business advertised or held out as listed or approved by any safety or rating
agency comply fully with the requirements of such agencies and no such listing
or approval has been or, to Moog's Knowledge, is threatened to be cancelled or
withdrawn.
4.18 EMPLOYEES. (a) Section 4.18(a)(i) of the Moog Disclosure Schedule
----------
lists all sales personnel currently employed by Moog in the TC Business who Moog
does not currently plan to employ following the Closing (the "TC SCHEDULED SALES
PERSONS"), indicating such person's name, title or position, location of
employment, current salary or compensation, and date of hire for the purpose of
determining years of continuous service. Section 4.18(a)(ii) of the Moog
Disclosure Schedule lists all salaried manufacturing, distribution, management
and support personnel employed by Moog as of July 21, 1997 or thereafter in the
TC Business or in the brake products business conducted by Moog (the "MOOG
SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS"), indicating such person's
name, title or position, location of employment, current salary, and the date of
hire for the purpose of determining years of continuous service.
(b) Section 4.18(b) of the Moog Disclosure Schedule lists all
collective bargaining agreements covering any employees of the TC Business, all
pending grievances or other collective bargaining disputes, and any claims of
unfair labor practices made within the last 3 years by employees of the TC
Business.
(c) Moog has not experienced any strikes or work stoppages within
the last five years with respect to employees in the TC Business.
(d) To Moog's Knowledge, except as described in the following
sentence, there is no organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the TC Business.
In February, 1998 there was initial organizational activity by the Teamsters at
the facility in Melrose Park, Illinois; to Moog's Knowledge, there has been no
activity in the last 30 days.
4.19 MOOG EMPLOYEE PLANS; ERISA; EMPLOYEES. (a) Section 4.19(a) of the
--------------------------------------
Moog Disclosure Schedule sets forth a complete and correct list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option or
other equity based, severance, termination, change in control, retention,
employment, hospitalization or other medical, life insurance, disability, other
welfare, supplemental unemployment benefits, profit-sharing, pension or
retirement plan program, agreement or arrangement, and each other employee
compensation or benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to
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by Moog or by any trade or business, whether or not incorporated (a "MOOG ERISA
AFFILIATE"), that together with Moog would be deemed a "single employer" within
the meaning of Section 4001 of ERISA, in each case covering current or former
employees in the TC Business (the "MOOG EMPLOYEE PLANS").
(b) With respect to each Moog Employee Plan, Moog has heretofore
delivered or made available to SMP true and complete copies of each of the
following documents (including all amendments to such documents):
(i) any Moog Employee Plan or a written description of any Moog
Employee Plan not in writing;
(ii) the most recent annual report and actuarial report if
required under ERISA or if otherwise available;
(iii) the most recent Summary Plan Description with respect
thereto if required under ERISA or if otherwise available;
(iv) if any Moog Employee Plan or any obligations thereunder are
funded through a trust or any other funding vehicle, the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each Moog Employee Plan intended to
qualify under Section 401(a) of the Code.
(c) No liability under Title I or IV of ERISA, the penalty or
excise tax provisions of the Code relating to employee plans or equivalent
legislation of a foreign jurisdiction has been incurred by Moog or any of their
Moog ERISA Affiliates that has not been satisfied in full, and no condition
exists or event has occurred that presents a material risk to Moog or any of the
Moog ERISA Affiliates of incurring any such liability.
(d) No Moog Employee Plan is a "multiemployer plan," as defined in
Section 3(37) of ERISA, nor is any Moog Employee Plan a plan described in
Section 4063(a) of ERISA.
(e) No Moog Employee Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived. Each Moog Employee
Plan intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified; no
condition exists or event has occurred since the date of such initial
determination that would adversely affect the qualified status of any such Moog
Employee Plan; and each trust maintained thereunder has been determined by the
Internal Revenue Service to be exempt from taxation under Section 501(a) of the
Code. Each Moog Employee Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA, the Code and equivalent legislation of a foreign jurisdiction.
There are no pending, or to Moog's Knowledge, threatened, claims by or on behalf
of any Moog Employee Plan, by any employee or beneficiary covered under any such
Moog Employee Plan or otherwise involving any such Moog
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Employee Plan or the assets thereof (other than routine claims for benefits).
(f) Neither Moog nor any of the Moog ERISA Affiliates would be
liable for any amount pursuant to Sections 4063 or 4064 of ERISA if any Moog
Employee Plan were to terminate. All contributions required to be made to each
Moog Employee Plan under the terms of such Moog Employee Plan, applicable law or
any applicable collective bargaining agreement have been paid in full when due.
(g) Except as set forth in Section 4.19(g) of the Moog Disclosure
Schedule, no Moog Employee Plan provides benefits, including without limitation
death or medical benefits, with respect to Active Employees or Inactive
Employees of Moog in the TC Business beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law and
(ii) benefits payable pursuant to any Moog Employee Plan qualified under Section
401(a) of the Code. Except as set forth in Section 4.19(g) of the Moog
Disclosure Schedule, the execution, delivery, or consummation of the
transactions contemplated by this Agreement will not entitle any employees of
the TC Business to severance pay or unemployment compensation.
4.20 ENVIRONMENTAL MATTERS.
----------------------
(a) Except as set forth in Section 4.20(a) of the Moog Disclosure
Schedule, to Moog's Knowledge, Moog is currently in compliance, and has complied
at all times in the past, in all material respects with all Environmental Laws
in the conduct of the TC Business.
(b) Except as set forth in Section 4.20(b) of the Moog Disclosure
Schedule, to the extent that the TC Business has on its premises, uses or
Discharges Hazardous Materials, Moog has obtained all licenses, approvals,
registrations, authorizations and permits ("ENVIRONMENTAL PERMITS") required
with respect thereto and, to Moog's Knowledge, Moog has been and is in
compliance with all material terms, conditions and requirements of such
Environmental Permits, a list of which is set forth in Section 4.20 of the Moog
Disclosure Schedule. Except as set forth in Section 4.20(b) of the Moog
Disclosure Schedule, there are no proceedings to which any of Moog or its
Affiliates is a party which are pending or, to Moog's Knowledge, threatened
against Moog or its Affiliates seeking to revoke, cancel or suspend any
Environmental Permit necessary for the conduct of the TC Business, except where
the failure to have obtained such Environmental Permit, or to so comply, or
where such proceedings could not reasonably be expected to have a TC Material
Adverse Effect. All Environmental Permits relating to the conduct of the TC
Business will be assigned by Moog to SMP in accordance with this Agreement,
except to the extent the same are not transferable under applicable law.
(c) Except as set forth in Section 4.20(c) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates has received any notice from
any Governmental Agency or any other Person concerning any Environmental Claims
in connection with the operation of the TC Business or with regard to any of the
TC Assets and which is currently unresolved. Except as set forth in Section
4.20(c) of the Moog Disclosure Schedule, to Moog's Knowledge, (i) there is no
investigational proceeding against Moog or its Affiliates by any federal, state
or local environmental or health and safety enforcement agency in connection
with the past or
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present operation of the TC Business or with regard to any of the TC Assets; and
(ii) neither Moog nor any of its Affiliates has any pending or contingent
liability for any Environmental Claim in connection with the operation of the TC
Business or with regard to any of the TC Assets. Except as set forth in Section
4.20(c) of the Moog Disclosure Schedule, neither Moog nor any of its Affiliates
has been subject to any administrative or judicial enforcement action or any
third party lawsuits pursuant to any Environmental Laws either now or at any
time during the past five years in connection with the operation of the TC
Business or with regard to any of the TC Assets.
(d) Except as set forth in Section 4.20(d) of the Moog Disclosure
Schedule, to Moog's Knowledge, there are no conditions at, on, under, near or
originating from any of the TC Assets that reasonably and foreseeably (i) may
result in the imposition of liability pursuant to any Environmental Law against
Moog, or (ii) may result in any investigatory and/or remedial activities
pursuant to any Environmental Law.
(e) Except as set forth in Section 4.20(e) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates is subject to any remedial
obligation under a currently issued and applicable administrative order, decree,
or agreement pursuant to an Environmental Law in connection with the operation
of the TC Business or with regard to any of the TC Assets.
(f) Section 4.20(f) of the Moog Disclosure Schedule lists all
contracts or other written arrangements currently in effect within the
possession, custody or control of Moog relating to the collection, storage,
transportation, treatment, recovery, recycling, or Disposal of Hazardous
Materials associated with the TC Business to which any of Moog or its Affiliates
is a party and, to Moog's Knowledge, any such contracts or written arrangements
that are not currently in effect but to which any of Moog or its Affiliates has
been a party during the past five years.
(g) To Moog's Knowledge, except as set forth in Section 4.20(g) of
the Moog Disclosure Schedule, no Hazardous Materials have been Discharged or
Disposed of by or on behalf of Moog or its Affiliates on any real property
currently or formerly owned or leased by Moog and used or previously used in the
operation of the TC Business, and to Moog's Knowledge, Section 4.20(g) of the
Moog Disclosure Schedule sets forth all off site locations where Hazardous
Materials generated by Moog or its Affiliates in the conduct of the TC Business
have been generated, used, collected, treated, stored, transported, recovered,
recycled, Discharged or Disposed.
(h) Except as set forth in Section 4.20(h) of the Moog Disclosure
Schedule, no real property currently or formerly owned or leased or, to Moog's
Knowledge, used by Moog or its Affiliates (including any off-site locations
listed in Section 4.20(h) of the Moog Disclosure Schedule) in the TC Business is
listed on any federal list of Superfund or National Priorities List sites or
similar governmental lists regarding waste sites at which there has been
Disposal of Hazardous Materials, nor to Moog's Knowledge is any such property
subject to any environmentally-related liens of record.
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<PAGE>
(i) Except as set forth in Section 4.20(i) of the Moog Disclosure
Schedule, to Moog's Knowledge, and other than as allowed by licenses, approvals
and permits which have been obtained and are in full force and effect, the
operation of the TC Business, as presently conducted, does not require the
emission or Discharge of any Hazardous Material into the air, soil, or Water, or
into any sewer system or storm water drainage system at concentrations in excess
of permitted or regulatory limits. All equipment needed for the continued and
uninterrupted operation of the TC Business as it is currently conducted without
such Discharge of Hazardous Materials in excess of permitted or regulatory
limits is in satisfactory operating condition.
(j) Except as set forth in Section 4.20(j) of the Moog Disclosure
Schedule, to Moog's Knowledge, all properties and equipment used in the TC
Business are now free of friable asbestos and PCB's, and are now and at all
times in the past have been free of any underground storage tank, any landfill,
dump, hazardous waste management facility as defined pursuant to the federal
Resource Conservation and Recovery Act or any comparable state law, or wells
used for Disposal, injection or other Discharge.
(k) Except as set forth in Section 4.20(k) of the Moog Disclosure
Schedule, neither Moog nor any of its Affiliates has submitted any notice to any
Governmental Agency or other Person, and to Moog's Knowledge none is required,
regarding any Discharges of Hazardous Materials of reportable quantity (other
than Discharges authorized by Environmental Permits) on, under or from the TC
Assets within the past 5 years.
(l) Except as set forth in Section 4.20(l) of the Moog Disclosure
Schedule, none of the real property owned by Moog which is included in the TC
Assets is subject to any environmental liens or deed restrictions based on
Environmental Law.
4.21 LEGAL COMPLIANCE. Except with respect to environmental matters
-----------------
(which are addressed in Section 4.20), to Moog's Knowledge, Moog has complied in
all material respects with all laws (including rules and regulations thereunder)
of Governmental Agencies applicable to it in connection with the operation of
the TC Business.
4.22 VEHICLES. Section 4.22 of the Moog Disclosure Schedule sets out a
---------
complete and correct list of all vehicles owned or operated by Moog for or on
behalf of the TC Business included in the TC Assets.
4.23 GUARANTIES. Section 4.23 of the Moog Disclosure Schedule lists all
-----------
guaranties, performance bonds, bid bonds, and foreign exchange contracts or
commitments which relate to the TC Business.
4.24 ALL TC ASSETS TRANSFERRED. The TC Assets transferred to SMP at
--------------------------
Closing shall include all of the assets, contracts, rights and properties of
every kind and description, tangible or intangible, owned or leased, real,
personal or mixed, necessary to conduct the TC Business, as currently conducted,
free of all Security Interests, other than the TC Retained Assets.
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<PAGE>
4.25 MOOG PERMITS. Except with respect to environmental permits,
-------------
licenses and approvals (which are addressed in Section 4.20), Moog has in effect
all material permits, licenses, approvals, and other authorizations necessary
for the continued conduct of the TC Business as presently conducted (the "MOOG
PERMITS"), a list of which is set forth in Section 4.25 of the Moog Disclosure
Schedule, and there are no proceedings to which Moog is a party which are
pending or, to Moog's Knowledge, threatened against Moog or the TC Business
seeking to revoke, cancel or suspend any such Moog Permit. All Moog Permits will
be assigned by Moog to SMP in accordance with this Agreement except to the
extent that such assignment is not permissible under applicable law.
4.26 BROKERS' FEES. Neither SMP nor Moog has any liability or
--------------
obligation to pay any fees or commissions to any broker, finder, investment
banker or agent with respect to the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Moog.
4.27 CUSTOMERS AND SUPPLIERS. Section 4.27 of the Moog Disclosure
------------------------
Schedule contains a list of the 20 largest customers and suppliers of the TC
Business (measured by dollar volume of purchases and sales, as applicable)
during the past year and the dollar volume of such purchases and sales. To
Moog's Knowledge, no such customer or supplier is threatening to terminate,
non-renew or materially adversely change its arrangements with Moog with respect
to the TC Business.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SMP
-------------------------------------
SMP represents and warrants to Moog that the statements contained in
this Article V are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article V, except to the extent any representation or warranty
relates to a specific date).
5.1 ORGANIZATION OF SMP. Each of SMP Canada and SMP Parent is duly
--------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of SMP Canada and SMP Parent
is duly authorized to conduct business and is in good standing under the laws of
each jurisdiction in which the nature of the Brake Business or the use,
ownership or leasing of properties used in the Brake Business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a Brake Material Adverse Effect. Each of
SMP Canada and SMP Parent has full corporate power and authority to carry on the
Brake Business and to use the properties used by it in the Brake Business.
5.2 AUTHORIZATION OF TRANSACTION. Each of SMP Canada and SMP Parent has
-----------------------------
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, including the power to convey the Brake
Assets. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby
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<PAGE>
have been duly and validly authorized by the Board of Directors of SMP Canada
and SMP Parent and no other corporate proceedings on the part of SMP Canada and
SMP Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by SMP Canada and SMP Parent and constitutes the valid
and legally binding obligation of SMP Canada and SMP Parent, enforceable in
accordance with its terms and conditions.
5.3 NON-CONTRAVENTION. (a) Except as set forth in Section 5.3(a) of the
------------------
disclosure schedule of SMP attached hereto (the "SMP DISCLOSURE SCHEDULE"), and
except for the applicable requirements of the H-S-R Act and any applicable "bulk
sales" laws, there is no requirement applicable to SMP to make any filing with
any Governmental Agency as a condition to the lawful consummation by SMP of the
transactions contemplated by this Agreement.
(b) Except as set forth in Section 5.3(b) of the SMP Disclosure
Schedule, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) conflict with or
result in any breach of any provision of the certificate or articles of
incorporation or bylaws or other organizational document of SMP Canada or SMP
Parent, (ii) except for any applicable "bulk sales" laws, violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge or
other restriction of any government, or Governmental Agency to which SMP or any
of the Brake Assets is subject or (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any Person
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money or instrument of
indebtedness, to which either SMP Canada or SMP Parent is a party or by which
SMP Canada or SMP Parent is bound or to which any of the Brake Assets is subject
(or result in the imposition of any Security Interest upon any of such Brake
Assets), except, with respect for clause (ii) and (iii), for such violations,
conflicts, breaches or defaults which would not individually or in the aggregate
have a Brake Material Adverse Effect.
5.4 SMP PRE-CLOSING BALANCE SHEET AND FINANCIAL STATEMENTS. (a) The SMP
-------------------------------------------------------
Pre-Closing Balance Sheet has been prepared from the books and records of SMP in
accordance with the principles, practices, methods and procedures set forth in
Exhibit G and reasonably reflects the assets that are Brake Assets and
Liabilities that are Brake Assumed Liabilities as of December 31, 1997.
(b) SMP has previously delivered to Moog the balance sheet of the
Brake Business at December 31, 1996 and the income statement of the Brake
Business for the year then ended each of which have been prepared in conformity
with GAAP, except as set forth in Section 5.4 of the SMP Disclosure Schedule.
Such financial statements (i) have been prepared based on the books and records
of SMP in accordance with past practices applied on a consistent basis and (ii)
present fairly, in all material respects, the financial position and results of
operations of the Brake Business as of such date or for such year.
5.5 UNDISCLOSED LIABILITIES. Except as set forth in Section 5.5 of the
------------------------
SMP Disclosure Schedule, SMP has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise) that are of the type required to be
set forth in the SMP Pre-Closing Balance Sheet,
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except liabilities, obligations or contingencies which are adequately accrued or
reserved against in such balance sheet or which were incurred after December 31,
1997, in the ordinary course of business consistent with past practice or which
in the aggregate do not exceed $10,000.
5.6 EVENTS AFTER JUNE 30, 1997. Since June 30, 1997, there has not been
---------------------------
a Brake Material Adverse Effect. Except as set forth in Section 5.6 of the SMP
Disclosure Schedule, without limiting the foregoing, since that date, SMP, with
respect to the Brake Business, has not:
(a) (i) sold, leased, transferred, disposed of or assigned any of
the Brake Assets, other than finished goods sold in the ordinary course of
business or the sale or transfer of other assets which are not material to the
Brake Business, all of which is consistent with past practice, or (ii)
mortgaged, pledged or otherwise encumbered any Brake Assets, except for
Permitted Exceptions;
(b) made any capital expenditures in excess of $250,000 in the
aggregate;
(c) entered into any contract, agreement, arrangement, lease,
sublease, license, sublicense which involves a certain (rather than contingent)
obligation of or to SMP with respect to the Brake Business of more than
$100,000, except for purchase orders, sales orders and similar contracts entered
into in the ordinary course of business consistent with past practice which, in
any individual case, did not exceed $500,000;
(d) created, incurred or assumed any long-term Debt (including
obligations in respect of capital leases), or except in the ordinary course of
business consistent with past practice, any short-term Debt if, in either case,
such Debt would constitute a Brake Assumed Liability;
(e) made any capital investment in, any loan or advance to, or any
acquisition of all or any substantial part of the assets, properties, business
or capital stock of, any other Person or entity (or series of related capital
investments, loans, advances and acquisitions);
(f) delayed or postponed the payment of accounts payable and other
Liabilities in any amount in the aggregate in excess of $200,000, except in the
ordinary course of business consistent with past practices;
(g) to SMP's Knowledge, cancelled, compromised, waived or released
any material right or claim;
(h) experienced any damage, destruction or loss (whether or not
covered by insurance) of property either involving more than $100,000, singly,
or $200,000, in the aggregate;
(i) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
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(j) granted any increase in the compensation or employee benefits
of any of the officers or employees of the Brake Business, other than routine
salary or hourly increases made pursuant to present salary review procedures in
the ordinary course of business consistent with past practice;
(k) except for "stay on" bonuses disclosed in Section 5.6 of the
SMP Disclosure Schedule, adopted any (i) bonus, (ii) profit-sharing, (iii)
incentive compensation, (iv) pension, (v) retirement, (vi) medical,
hospitalization, life or other insurance, (vii) severance or (viii) other plan,
contract or commitment for any of the officers or employees of the Brake
Business, or modified or terminated any such existing plan, contract or
commitment.
(l) failed to maintain any insurance relating to the Brake Business
in full force and effect, assigned or transferred such insurance or the proceeds
thereof to any Person, failed to pay any premiums due thereunder, or caused,
suffered or permitted any act or failure to act which could cause such insurance
to be canceled or terminated;
(m) failed to give any required notice or failed to present any
claims of known occurrences under any insurance relating to the Brake Business
or failed to take any other required or appropriate action with respect thereto
in due and timely fashion or cancelled those insurance policies for occurrences
relating to the Brake Business on or prior to Closing or caused or permitted any
retroactive cancellation of insurance coverage relating to the Brake Business in
effect prior to Closing or for occurrences prior to Closing;
(n) made any change in accounting methods, principles, procedures
or practices, except as required by GAAP, any such changes to be set forth on
Section 5.6 of the SMP Disclosure Schedule;
(o) amended its certificate or articles of incorporation or bylaws
in a manner that adversely affects the transactions contemplated by this
Agreement;
(p) entered into any agreement, contract or commitment to do any of
the foregoing; or
(q) made or revoked any Tax election or settled or compromised any
Tax Liability relating to the Brake Business or the Brake Assets.
5.7 TAX MATTERS. (a) Except liens for Taxes not yet due, there are no
------------
Tax liens upon, pending against or, to SMP's Knowledge, threatened in writing
against any of the Brake Assets that arose in connection with any failure to
file a Tax Return or to pay any Taxes.
(b) SMP has, in relation to the Brake Business, withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other Person.
(c) There is no dispute or claim concerning any Liability for Taxes
relating to any of the Brake Assets or the Brake Business.
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5.8 BRAKE LEASES FOR REAL PROPERTY. Section 5.8 of the SMP Disclosure
-------------------------------
Schedule sets forth a true and correct list of each Brake Lease which relates to
real property, which constitutes all of the real property leased by SMP and used
exclusively in the Brake Business. SMP has delivered to Moog correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 5.8 of the SMP Disclosure Schedule. Regarding each lease and sublease
listed in Section 5.8 of the SMP Disclosure Schedule:
(a) the lease or sublease is in full force and effect, is legal,
valid, binding and enforceable against SMP, and, to SMP's Knowledge, is legal,
valid, binding and enforceable against each other party thereto;
(b) SMP is not in breach or default, and no event has occurred
which, with notice or lapse of time, or both, would constitute a breach or
default, or would permit termination, modification, or acceleration thereunder,
by the other party thereto, and, to SMP's Knowledge, no other party to the lease
or sublease is in breach or default, and no event has occurred which, with
notice or lapse of time, or both, would constitute a breach or default, or would
permit termination, modification, or acceleration thereunder, by SMP;
(c) all facilities have received all approvals of Governmental
Agencies (including SMP Permits) required of SMP in connection with the
construction, leasing or operation thereof, and have been operated and
maintained in accordance with applicable laws, rules and regulations, except
where the failure to do so could not reasonably be expected to have a Brake
Material Adverse Effect; and
(d) there are no (i) pending condemnation proceedings relating to
the property against SMP or its Affiliates or, to SMP's Knowledge, pending
condemnation proceedings relating to the property against any other parties or
threatened against SMP, its Affiliates or any other parties, (ii) pending
litigation or administrative actions relating to the property against SMP or its
Affiliates or, to SMP's Knowledge, pending litigation or administrative actions
relating to the property against any other parties or threatened against SMP,
its Affiliates or any other parties, or (iii) to SMP's Knowledge, other matters
materially and adversely affecting the current use, occupancy or value of the
property.
5.9 BRAKE REAL PROPERTY. (a) Section 5.9 of the SMP Disclosure Schedule
--------------------
lists and describes the Brake Real Property (other than the Real Property
located in Middletown, CT and Rural Retreat, VA) which constitutes all of the
real property owned by SMP and used exclusively in the Brake Business. SMP has
on the date hereof good, valid and marketable title to such real property free
and clear of all Security Interests.
(b) SMP has not entered into any lease, subleases, licenses, or
other agreements granting to any third party the right to use or occupy all or
any portion of the Brake Real Property.
(c) Except pursuant to this Agreement, SMP has not granted any
outstanding options or rights of first refusal to purchase, lease or license any
Brake Real Property.
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(d) SMP has not received any notice of any pending, threatened or
contemplated condemnation proceeding affecting the Brake Real Property and no
proceedings or real estate tax certiorari protests are now pending for the
reduction of the assessed valuation of the Brake Real Property.
(e) SMP has not received any written notice from any Governmental
Agency (i) stating or alleging that any improvements at the Brake Real Property
have not been constructed in accordance with applicable law or (ii) requiring or
advising as to the need for any material repair, alteration, restoration or
improvement in connection with the Brake Real Property.
5.10 BRAKE INTELLECTUAL PROPERTY. (a) SMP owns or has the right to use
----------------------------
pursuant to license, sublicense, agreement or permission all Brake Intellectual
Property and the Brake Intellectual Property constitutes all the intellectual
property necessary for the operation of the Brake Business as presently
conducted. Subject to SMP obtaining the consents of any third party required to
transfer SMP's interest in the Brake Intellectual Property to Moog as provided
in Section 5.10(f) below, each item of Brake Intellectual Property will be owned
or available for use by Moog on identical terms and conditions effective upon
the Closing.
(b) To SMP's Knowledge, SMP has not, in the conduct of the Brake
Business or in its use of the Brake Intellectual Property, interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties. SMP and the directors and
officers (and employees with responsibility for Brake Intellectual Property
matters) of SMP, have not received during the five year period prior to this
Agreement any charge, complaint, claim or notice alleging that the conduct by
SMP of the Brake Business or any use by SMP of the Brake Intellectual Property
constitutes any such interference, infringement, misappropriation or violation.
To SMP's Knowledge, during the five year period prior to this Agreement, no
third party has materially interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Brake Intellectual Property.
(c) Section 5.10(c) of the SMP Disclosure Schedule identifies:
(i) each patent (including issuing country, number, current
assignee of record, title and issue date), each trademark and service mark
registration (including issuing country, number, description of mark, current
owner of record and issue date), each unregistered trademark and service mark
for which no application for registration is pending (including a description of
the mark and the goods or services with which it is used) and each copyright
registration (including issuing country, number, title or description of work,
current owner of record and issue date) currently in effect, owned by SMP, and
included in the Brake Intellectual Property;
(ii) each pending patent application (including country of
filing, serial number, current owner of record, title and filing date),
application for registration of a trademark or service mark (including country
of filing, serial number, description of mark, current owner of record, classes
of goods or services, and filing date), and application for copyright
registration (including country of filing, serial number, title or description
of work, current owner of record, and filing date), which SMP has made with
respect to any Brake Intellectual Property; and
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(iii) each license, agreement or other permission which SMP or
its Affiliates has granted to any third party with respect to any of its or
their owned SMP Intellectual Property. SMP has delivered to Moog correct and
complete copies of all such written (or if oral, a written summary of such)
licenses, agreements and permissions (as amended to date).
(d) With respect to each item of Brake Intellectual Property:
(i) the identified owner possesses all right, title and interest
in and to the item;
(ii) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; and
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand is pending or, to SMP's Knowledge, threatened
which challenges the legality, validity, enforceability, use or ownership of the
item.
(e) Section 5.10(e) of the SMP Disclosure Schedule identifies each
item of Brake Intellectual Property (excluding computer software) that an
Affiliate of SMP or any third party owns and that SMP uses in the conduct of the
Brake Business pursuant to license, sublicense, agreement, registered user
agreement or permission. SMP has delivered to Moog correct and complete copies
of all such written (or if oral, a written summary of such) licenses,
sublicenses, agreements, registered user agreements and permissions (as amended
to date). With respect to each such item of Brake Intellectual Property
(excluding off-the-shelf computer software available in the open market) not
owned by SMP but used by SMP in the conduct of the Brake Business:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(ii) to SMP's Knowledge, no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which, with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iii) with respect to each sublicense, to SMP's Knowledge, the
representations and warranties set forth in subsections 5.10(e)(i) through
5.10(e)(iii) above are true and correct with respect to the underlying license;
and
(iv) SMP has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(f) Section 5.10(f) of the SMP Disclosure Schedule identifies each
item of Brake Intellectual Property with respect to which the consent of any
third party is required to transfer SMP's interest in such Brake Intellectual
Property to Moog.
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5.11 INVENTORY. The inventories of the Brake Business included in the
----------
Brake Assets to be transferred to Moog pursuant to this Agreement consist of raw
materials and supplies, manufactured and purchased parts, goods in process and
finished goods which are not damaged or defective, except those items the value
of which have been provided through adequate reserve. The representation and
warranty under this Section 5.11 shall only apply to inventory on hand which is
identified by Moog as damaged or defective prior to the sale of such inventory
to a customer. This representation and warranty shall not apply to any inventory
which is sold to a customer even if the inventory is subsequently returned by
the customer because the inventory is (or allegedly is) damaged or defective.
The representation and warranty under Section 5.16 applies to inventory which is
sold to a customer and is subsequently returned by the customer because the
inventory is (or allegedly is) damaged or defective.
5.12 TANGIBLE BRAKE ASSETS. SMP owns or has a valid leasehold in all
----------------------
Brake Assets necessary for the conduct of the Brake Business as presently
conducted. The machinery, equipment, tools and dies of SMP included in the Brake
Assets used in the conduct of the Brake Business are, in the aggregate, in
satisfactory operating condition for their current use and are all located on
the Brake Real Properties or on real property subject to a Brake Lease (except
for tools and dies located at the premises of various vendors). To SMP's
Knowledge, Section 5.12 of the SMP Disclosure Schedule lists those vendors which
have tools and dies which are included in the Brake Assets. Section 5.12 of the
SMP Disclosure Schedule lists all such tangible TC Assets having a net book
value at December 31, 1997 of $10,000 or more and the net book value of each
such asset.
5.13 CERTAIN AGREEMENTS. Section 5.13 of the SMP Disclosure Schedule
-------------------
lists the following contracts and agreements which are included in the Brake
Contracts:
(a) any Brake Leases for the lease of personal property from third
parties which involves an obligation to pay annual base rent of more than
$25,000;
(b) any agreement which involves a certain (rather than contingent)
obligation of or to the Brake Business of more than $100,000;
(c) any agreement concerning a partnership, joint venture or other
agreement involving a sharing of profits or expenses;
(d) any agreement under which SMP has created, incurred, assumed,
or guaranteed (or may create, incur, assume, or guarantee) Debt (including
capitalized lease obligations) which are Brake Assumed Liabilities or under
which SMP has incurred a Security Interest on any of the Brake Assets;
(e) any agreement concerning confidentiality;
(f) any agreement which limits the ability of the Brake Business to
compete with any Person or in any geographical area;
(g) sales agency or representative, manufacturer's representative
and distributorship agreements;
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(h) any contract, agreement or arrangement between the Brake
Business and another division of SMP or an Affiliate of SMP which is a Brake
Assumed Liability; and
(i) any other material contract, agreement or arrangement entered
into other than in the ordinary course of business.
SMP has made available to Moog a correct and complete copy of each
written agreement (or a written summary if the agreement is oral) listed in
Section 5.13 of the SMP Disclosure Schedule (as amended to date). Except as set
forth in Section 5.13 of the SMP Disclosure Schedule, with respect to each
agreement (written or oral) so listed: (i) the agreement is in full force and
effect, is legal, valid, binding and enforceable against SMP, and, to SMP's
Knowledge, is legal, valid, binding and enforceable against any other party
thereto; (ii) the legality, validity, enforceability and effectiveness of the
agreement will not in any way be adversely affected by the Closing; (iii) SMP is
not, and, to SMP's Knowledge, no other party thereto is in breach or default
thereunder or has allowed an event to occur which with notice or lapse of time,
or both, would constitute a breach or default by, or permit termination,
modification, or acceleration against, such party under such agreement; (iv) no
consents are necessary from any third party for the assignment of any such
agreements; and (v) each such agreement is terminable by its terms upon no more
than 90 days notice.
5.14 INSURANCE. Section 5.14 of the SMP Disclosure Schedule sets forth
----------
the following information with respect to each insurance policy (including
policies providing property, casualty, liability and workers' compensation
coverage) to which SMP or its Affiliates have been a party, a named insured or
otherwise the beneficiary of coverage currently in effect in relation to the
Brake Business:
(a) the name of the insurer and the name of the policyholder;
(b) the period of coverage; and
(c) the scope (including an indication of whether the coverage is
or was on a claims made, occurrence, or other basis), coverage limits and amount
of deductibles or self-insured retentions.
Neither SMP nor, to SMP's Knowledge, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, or both, would constitute such a breach or default or permit
termination, modification or acceleration, under the policy.
5.15 LITIGATION. Except for matters set forth in Section 5.15 of the
-----------
SMP Disclosure Schedule, there is no (i) action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation pending or, to SMP's
Knowledge, threatened against SMP, with respect to the Brake Business or any of
the Brake Assets, before any Governmental Agency, and (ii) judgment, decree,
injunction, rule or order of any Governmental Agency outstanding against and
unsatisfied by SMP with respect to the Brake Business or any of the Brake Assets
(the matters described in (i) and (ii) including those matters set forth on
Section 5.15 of the SMP Disclosure Schedule are collectively referred to as the
"EXISTING BRAKE LITIGATION AND CLAIMS").
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5.16 PRODUCT WARRANTY. To SMP's Knowledge, each product manufactured,
-----------------
sold, leased or delivered by the Brake Business has, subject to the amount of
defective product returns set forth in Section 5.16 of the SMP Disclosure
Schedule, been in material conformity with all applicable contractual
commitments and all express and implied warranties. Section 5.16 of the SMP
Disclosure Schedule includes (i) copies of the current standard terms and
conditions of sale or lease for the Brake Business (containing applicable
guaranty, warranty and indemnity provisions) and (ii) the amounts of warranty
and guaranty claims brought against the Brake Business for the last 3 years.
5.17 PRODUCT LIABILITY. (a) Except as set forth in Section 5.17 of the
------------------
SMP Disclosure Schedule, none of SMP or its Affiliates, is currently, or has
been at any time during the last three (3) years, party to any action, suit,
proceeding, hearing or governmental investigation arising out of any injury to
persons or damage to property as a result of the ownership, possession or use of
any product manufactured, sold, leased or delivered by the Brake Business (a
"BRAKE PRODUCT LIABILITY CLAIM"). To SMP's Knowledge, no event has occurred
which would be reasonably likely to give rise to a Brake Product Liability
Claim.
(b) There are no outstanding warranty claims or any pending
litigation relating thereto concerning the products of the Brake Business that
indicate a repeated pattern of product failure, product liability or product
recall claims. To SMP's Knowledge, the products of the Brake Business conform to
the standards of safety customary in the industry of which the Brake Business is
a part. None of the products of the Brake Business currently are, or, to SMP's
Knowledge, are currently threatened to be, the subject of a product recall. All
products of the Brake Business advertised or held out as listed or approved by
any safety or rating agency comply fully with the requirements of such agencies
and no such listing or approval has been or, to SMP's Knowledge, is threatened
to be cancelled or withdrawn.
5.18 EMPLOYEES. (a) Section 5.18(a)(i) of the SMP Disclosure Schedule
----------
lists all sales personnel currently employed by SMP in the Brake Business who
SMP does not currently plan to employ following the Closing (the "BRAKE
SCHEDULED SALES PERSONS"), indicating such person's name, title or position,
location of employment, current salary or compensation, and date of hire for the
purpose of determining years of continuous service. Section 5.18(a)(ii) of the
SMP Disclosure Schedule lists all salaried manufacturing, distribution,
management and support personnel employed by SMP as of July 21, 1997 or
thereafter in the Brake Business or in the temperature control products business
conducted by SMP (the "SMP SCHEDULED TC AND BRAKE SALARIED NON-SALES PERSONS"),
indicating such person's name, title or position, location of employment,
current salary or compensation, and the date of hire for the purpose of
determining years of continuous service.
(b) Section 5.18(b) of the SMP Disclosure Schedule lists all
collective bargaining agreements covering any employees of the Brake Business,
all pending grievances 0r other collective bargaining disputes, and any claims
of unfair labor practices made within the last 3 years by employees of the Brake
Business.
(c) SMP has not experienced any strikes or work stoppages within
the last five years with respect to employees in the Brake Business.
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(d) To SMP's Knowledge, there is no organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Brake Business.
5.19 SMP EMPLOYEE PLANS; ERISA; EMPLOYEES. (a) Section 5.19(a) of the
-------------------------------------
SMP Disclosure Schedule sets forth a complete and correct list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option or
other equity based, severance, termination, change in control, retention,
employment, hospitalization or other medical, life insurance, disability, other
welfare, supplemental unemployment benefits, profit-sharing, pension or
retirement plan program, agreement or arrangement, and each other employee
compensation or benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to by SMP or by any trade or business, whether or not
incorporated (an "SMP ERISA AFFILIATE"), that together with SMP would be deemed
a "single employer" within the meaning of Section 4001 of ERISA, in each case
covering current or former employees of the Brake Business (the "SMP EMPLOYEE
PLANS").
(b) With respect to each SMP Employee Plan, SMP has heretofore
delivered or made available to SMP true and complete copies of each of the
following documents (including all amendments to such documents):
(i) any SMP Employee Plan or a written description of any SMP
Employee Plan not in writing;
(ii) the most recent annual report and actuarial report if
required under ERISA or if otherwise available;
(iii) the most recent Summary Plan Description with respect
thereto if required under ERISA or if otherwise available;
(iv) if any SMP Employee Plan or any obligations thereunder are
funded through a trust or any other funding vehicle, the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each SMP Employee Plan intended to
qualify under section 401(a) of the Code.
(c) No liability under Title I or IV of ERISA, the penalty or
excise tax provisions of the Code relating to employee plans or equivalent
legislation of a foreign jurisdiction has been incurred by Moog or any of their
SMP ERISA Affiliates that has not been satisfied in full, and no condition
exists or event has occurred that presents a material risk to Moog or any of the
SMP ERISA Affiliates of incurring any such liability.
(d) No SMP Employee Plan is a "multiemployer plan," as defined in
section 3(37) of ERISA, nor is any SMP Employee Plan a plan described in section
4063(a) of ERISA.
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<PAGE>
(e) No SMP Employee Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived. Each SMP Employee
Plan intended to be "qualified" within the meaning of section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified; no
condition exists or event has occurred since the date of such initial
determination that would adversely affect the qualified status of any such SMP
Employee Plan; and each trust maintained thereunder has been determined by the
Internal Revenue Service to be exempt from taxation under section 501(a) of the
Code. Each SMP Employee Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA, the Code and equivalent legislation of a foreign jurisdiction.
There are no pending, or to the SMP's Knowledge, threatened, claims by or on
behalf of any SMP Employee Plan, by any employee or beneficiary covered under
any such SMP Employee Plan or otherwise involving any such SMP Employee Plan or
the assets thereof (other than routine claims for benefits).
(f) Neither SMP nor any of its SMP ERISA Affiliates would be liable
for any amount pursuant to Section 4063 or 4064 of ERISA if any SMP Employee
Plan were to terminate. All contributions required to be made to each SMP
Employee Plan under the terms of such SMP Employee Plan, applicable law or any
applicable collective bargaining agreement have been paid in full when due.
(g) Except as set forth in Section 5.19(g) of the SMP Disclosure
Schedule, no SMP Employee Plan provides benefits, including without limitation
death or medical benefits, with respect to Active Employees or Inactive
Employees of SMP in the Brake Business beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law and
(ii) benefits payable pursuant to any SMP Employee Plan qualified under Section
401(a) of the Code. Except as set forth in Section 5.19(g) of the SMP Disclosure
Schedule, the execution, delivery, or consummation of the transactions
contemplated, by this Agreement will not entitle any employees of the Brake
Business to severance pay or unemployment compensation.
5.20 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section 5.20(a)
----------------------
of the SMP Disclosure Schedule, to SMP's Knowledge, SMP is currently in
compliance, and has complied at all times in the past, in all material respects
with all Environmental Laws in the conduct of the Brake Business.
(b) Except as set forth in Section 5.20(b) of the SMP Disclosure
schedule, to the extent that the Brake Business has on its premises, uses or
Discharges Hazardous Materials, SMP has obtained all Environmental Permits
required with respect thereto and, to SMP's Knowledge, SMP has been and is in
compliance with all material terms, conditions and requirements of such
Environmental Permits, a list of which is set forth in Section 5.20 of the SMP
Disclosure Schedule. Except as set forth in Section 5.20(b) of the SMP
Disclosure Schedule, there are no proceedings to which any of SMP or its
Affiliates is a party which are pending or, to SMP's Knowledge, threatened
against SMP or its Affiliates seeking to revoke, cancel or suspend any
Environmental Permit necessary for the conduct of the Brake Business, except
where the failure to have obtained such Environmental Permit or to so comply, or
where such proceedings could not reasonably be expected to have a Brake Material
Adverse Effect. All Environmental Permits relating to the conduct of the Brake
Business will be assigned by SMP
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to Moog in accordance with this Agreement, except to the extent the same are not
transferable under applicable law.
(c) Except as set forth in Section 5.20(c) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has received any notice from any
Governmental Agency or any other Person concerning any Environmental Claim in
connection with the operation of the Brake Business or with regard to any of the
Brake Assets and which is currently unresolved. To SMP's Knowledge, (i) there is
no investigational proceeding against SMP or its Affiliates by any federal,
state or local environmental or health and safety enforcement agency in
connection with the past or present operation of the Brake Business or with
regard to any of the Brake Assets; and (ii) neither SMP nor any of its
Affiliates has any pending or contingent liability for any Environmental Claim
in connection with the operation of the Brake Business or with regard to any of
the Brake Assets. Except as set forth in Section 5.20(c) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has been subject to any
administrative or judicial enforcement action or any third party lawsuits
pursuant to any Environmental Laws either now or at any time during the past
five years in connection with the operation of the Brake Business or with regard
to any of the Brake Assets.
(d) Except as set forth in Section 5.20(d) of the SMP Disclosure
Schedule, to SMP's Knowledge, there are no conditions at, on, under, near or
originating from any of the Brake Assets that reasonably and foreseeably (i) may
result in the imposition of liability pursuant to any Environmental Law against
SMP, or (ii) may result in any investigatory and/or remedial activities pursuant
to any Environmental Law.
(e) Except as set forth in Section 5.20(e) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates is subject to any remedial
obligation under a currently issued and applicable administrative order, decree,
or agreement pursuant to an Environmental Law in connection with the operation
of the Brake Business or with regard to any of the Brake Assets.
(f) Section 5.20(f) of the SMP Disclosure Schedule lists all
contracts or other written arrangements currently in effect and within the
possession, custody or control of SMP relating to the collection, storage,
transportation, treatment, recovery, recycling, or Disposal of Hazardous
Materials associated with the Brake Business to which any of SMP or its
Affiliates is a party and, to SMP's Knowledge, any such contracts or written
arrangements that are not currently in effect but to which any of SMP or its
Affiliates has been a party during the past five years.
(g) To SMP's Knowledge, except as set forth in Section 5.20(g) of
the SMP Disclosure Schedule, no Hazardous Materials have been Discharged or
Disposed of by or on behalf of SMP or its Affiliates on any real property
currently or formerly owned or leased by SMP and used or previously used in the
operation of the Brake Business, and to SMP's Knowledge, Section 5.20(g) of the
SMP Disclosure Schedule sets forth all off site locations where Hazardous
Materials generated by SMP or its Affiliates in the conduct of the Brake
Business have been generated, used, collected, treated, stored, transported,
recovered, recycled, Discharged or Disposed.
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<PAGE>
(h) Except as set forth in Section 5.20(h) of the SMP Disclosure
Schedule, no real property currently or formerly owned or leased or, to SMP's
Knowledge, used by SMP or its Affiliates (including any off-site locations
listed in Section 5.20(h) of the SMP Disclosure Schedule) in the Brake Business
is listed on any federal list of Superfund or National Priorities List sites or
similar governmental lists regarding waste sites at which there has been
Disposal of Hazardous Materials, nor to SMP's Knowledge is any such property
subject to any environmentally-relat- ed liens of record.
(i) To SMP's Knowledge, and other than as allowed by licenses,
approvals and permits which have been obtained and are in full force and effect,
the operation of the Brake Business, as presently conducted, does not require
the emission or Discharge of any Hazardous Material into the air, soil, or
Water, or into any sewer system or storm water drainage system at concentrations
in excess of permitted or regulatory limits. All equipment needed for the
continued and uninterrupted operation of the Brake Business as it is currently
conducted without such Discharge of Hazardous Materials in excess of permitted
or regulatory limits is in satisfactory operating condition.
(j) Except as set forth in Section 5.20(j) of the SMP Disclosure
Schedule, to SMP's Knowledge, all properties and equipment used in the Brake
Business are now free of friable asbestos and PCB's, and are now and at all
times in the past have been free of any underground storage tank, any landfill,
dump, hazardous waste management facility as defined pursuant to the federal
Resource Conservation and Recovery Act or any comparable state law, or wells
used for Disposal, injection or other Discharge.
(k) Except as set forth in Section 5.20(k) of the SMP Disclosure
Schedule, neither SMP nor any of its Affiliates has submitted any notice to any
Governmental Agency or other Person, and to SMP's Knowledge none is required,
regarding any Discharges of Hazardous Materials of reportable quantity (other
than Discharges authorized by Environmental Permits) on, under or from the Brake
Assets within the past 5 years.
(l) Except as set forth in Section 5.20(l) of the SMP Disclosure
Schedule, none of the real property owned by SMP which is included in the Brake
Assets is subject to any environmental liens or deed restrictions based on
Environmental Law.
5.21 LEGAL COMPLIANCE. Except with respect to environmental matters
-----------------
(which are addressed in Section 5.20), to SMP's Knowledge, SMP has complied in
all material respects with all laws (including rules and regulations thereunder)
of Governmental Agencies applicable to it in connection with the operation of
the Brake Business.
5.22 VEHICLES. Section 5.22 of the SMP Disclosure Schedule sets out a
---------
complete and correct list of all vehicles owned or operated by SMP for or on
behalf of the Brake Business included in the Brake Assets.
5.23 GUARANTIES. Section 5.23 of the SMP Disclosure Schedule lists all
-----------
guaranties, performance bonds, bid bonds and foreign exchange contracts or
commitments which relate to the Brake Business.
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5.24 ALL BRAKE ASSETS TRANSFERRED. The Brake Assets transferred to Moog
-----------------------------
at Closing shall include all of the assets, contracts, rights and properties of
every kind and description, tangible or intangible, owned or leased, real,
personal or mixed, necessary to conduct the Brake Business as currently
conducted, free of all Security Interests, other than the Brake Retained Assets.
5.25 SMP PERMITS. Except with respect to environmental permits,
------------
licenses and approvals (which are addressed in Section 5.20) SMP has in effect
all material permits, licenses, approvals, and other authorizations necessary
for the continued conduct of the Brake Business as presently conducted (the "SMP
PERMITS"), a list of which is set forth in Section 5.25 of the SMP Disclosure
Schedule, and there are no proceedings to which SMP is a party which are pending
or, to SMP's Knowledge, threatened against SMP or the Brake Business seeking to
revoke, cancel or suspend any such SMP Permit. All SMP Permits will be assigned
by SMP to Moog in accordance with this Agreement except to the extent that such
assignment is not permissible under applicable law.
5.26 BROKERS' FEES. Neither Moog nor SMP has any liability or
--------------
obligation to pay any fees or commissions to any broker, finder, investment
banker or agent with respect to the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of SMP.
5.27 CUSTOMERS AND SUPPLIERS. Section 5.27 of the SMP Disclosure
------------------------
Schedule contains a list of the 20 largest customers and suppliers of the Brake
Business (measured by dollar volume of purchases and sales, as applicable)
during the past year and the dollar volume of such purchases and sales. To SMP's
Knowledge, no such customer or supplier is threatening to terminate, non-renew
or materially adversely change its arrangements with SMP with respect to the
Brake Business.
5.28 INDUSTRIAL DEVELOPMENT REVENUE BONDS. As of the date of this
-------------------------------------
Agreement, the outstanding balance including any future payments due under the
$2.5 million Arkansas Development Finance Authority Industrial Development Bonds
(Standard Motor Products, Inc. Project) Series 1989, is $655,000 plus interest
accrued to the Closing Date and the outstanding balance including any future
payments due under the $1.8 million Industrial Development Revenue Bonds
(Standard Motor Products, Inc. Project) Series 1990, is $685,000 plus accrued
interest. SMP is not, and to SMP's Knowledge, no other party thereto is in
breach or default under: (i) such $2.5 million bonds or any related agreements
including the Promissory Note, Loan Agreement and Mortgage and Security
Agreement between SMP and the Arkansas Development Finance Authority or (ii)
such $1.8 million bonds or any related agreements including the Lease Agreement
dated June 1, 1990 between SMP and the City of Manila. The tax exempt status of
the bonds referred to in clauses (i) and (ii) above will not in any way be
adversely affected by the Closing.
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ARTICLE VI
PRE-CLOSING COVENANTS
---------------------
The Parties agree as follows regarding the period between the execution
of this Agreement and the Closing (and where indicated following the Closing).
6.1 REASONABLE BEST EFFORTS. Each Party will use its commercially
------------------------
reasonable best efforts to take all action and to do all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement (including satisfying the Closing conditions set
forth in Article X below at the earliest practicable time), subject to the
qualifications expressly set forth in this Agreement.
6.2 NOTICES AND CONSENTS. Each Party will, and will cause its
---------------------
Affiliates, to give any notices to third parties, and will, and will cause its
Affiliates to, use all commercially reasonable efforts to obtain, or to assist
the other Party with obtaining, any third-party consents that are required to
consummate the transactions contemplated by this Agreement or that the other
Party may reasonably request in connection with the matters disclosed or
required to be disclosed in the Moog Disclosure Schedule or the SMP Disclosure
Schedule, as the case may be. Each Party will file (and each of them will cause
their Affiliates to file) any notification and report forms and related material
that such party or its Affiliates may be required to file with any Governmental
Agency, including, without limitation, under the H-S-R Act as provided in
Section 6.3 below.
6.3 H-S-R ACT. (a) Each Party shall furnish to the other such necessary
----------
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
H-S-R Act. The Parties shall keep each other apprised of the status of any
material communications with and any inquiries or requests for additional
information made by any Governmental Agency. The Parties shall, upon request of
the U.S. Federal Trade Commission, U.S. Department of Justice or any other
Governmental Agency, supply such agency with any additional information
requested as promptly as practicable and shall use their good faith reasonable
efforts to cause the satisfaction or termination of the applicable waiting
period under the H-S-R Act or any extension thereof.
(b) Notwithstanding the foregoing, neither Party shall be required
to: (i) divest or hold separate any assets, including any asset of the TC
Business or Brake Business, (ii) agree to any limitation with respect to, or its
ability to retain, the TC Business or Brake Business or any portion thereof or
any of its other assets or businesses, or (iii) contest any suit or proceeding
brought by the U.S. Federal Trade Commission or U.S. Department of Justice that
seeks to restrain or prohibit the consummation of this Agreement or attempt to
lift or rescind any injunction or restraining order obtained by the U.S. Federal
Trade Commission or U.S. Department of Justice adversely affecting the ability
of the Parties hereto to consummate the transactions contemplated hereby.
6.4 OPERATION OF THE TC BUSINESS AND THE BRAKE BUSINESS. (a)
From the date hereof to the Closing, Moog agrees: (i) to operate the TC Business
in the ordinary course consistent with past practices in all material respects,
(ii) to use commercially reasonable efforts to preserve
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the TC Business intact, to keep available to the TC Business the services of the
key employees of such business, and to preserve the goodwill of the customers,
suppliers and others having business relations with the TC Business, and (iii)
not to take any of the actions described in Section 4.6 except as approved in
advance in writing by SMP, such approval not to be unreasonably withheld or
delayed.
(b) From the date hereof to the Closing, SMP agrees: (i) to operate
the Brake Business in the ordinary course consistent with past practices in all
material respects, (ii) to use commercially reasonable efforts to preserve the
Brake Business intact, to keep available to the Brake Business the services of
the key employees of such business, and to preserve the goodwill of the
customers, suppliers and others having business relations with the Brake
Business, and (iii) not to take any of the actions described in Section 5.6
except as approved in advance in writing by Moog, such approval not to be
unreasonably withheld or delayed.
6.5 FULL ACCESS. (a) Moog will permit representatives of SMP upon
------------
reasonable notice to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of the TC Business,
to all premises, properties, personnel, attorneys, accountants books and records
of or pertaining to the TC Business and other aspects of the TC Business'
operations which SMP shall reasonably request including providing access to the
TC Real Properties and real properties subject to the TC Leases for
environmental investigations such as conducting soil, groundwater and other
intrusive sampling.
(b) SMP will permit representatives of Moog upon reasonable notice
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Brake Business, to all
premises, properties, personnel, attorneys, accountants books and records of or
pertaining to the Brake Business, and other aspects of the Brake Business'
operations which Moog shall reasonably request including providing access to the
Brake Real Properties and real properties subject to the Brake Leases for
environmental investigations such as conducting soil, groundwater and other
intrusive sampling.
(c) Between the date of this Agreement and the Closing Date, the
Parties will hold and will cause their respective Affiliates, representatives,
consultants and advisors to hold in strict confidence in accordance with the
terms of the Letter of Intent between Moog and SMP dated July 21, 1997, all
documents and information furnished by one Party to the other or its
representatives in connection with the transactions contemplated by this
Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained in accordance with such Letter
of Intent.
6.6 TITLE INSURANCE AND SURVEYS. Prior to Closing, Moog shall obtain
----------------------------
and deliver to SMP with respect to each parcel of TC Real Properties, and SMP
shall obtain and deliver to Moog with respect to each parcel of Brake Real
Properties, the following title insurance commitments, policies and surveys.
(a) With respect to each such parcel of real estate, Moog or SMP,
as the case may be, shall obtain and deliver an ALTA Owner's Policy of Title
Insurance Form B-1987 (or an equivalent policy acceptable to the Party acquiring
the real property if the real property is located in a jurisdiction in which an
ALTA Owner's Policy of Title Insurance Form B-1987 is
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not available) insuring title to such real property to be in the Party acquiring
the real property as of the Closing (subject only to Permitted Exceptions). The
title insurance policy shall be issued by a title insurer satisfactory to the
Party acquiring the real property and the policy shall be in such amount as such
Party may determine to be the fair market value of such real property (including
all improvements located thereon).
(b) Each title insurance policy delivered hereunder shall (i)
insure title to the real property and all recorded easements benefitting such
real property, (ii) contain an "extended coverage endorsement" insuring over the
general exceptions contained customarily in such policies, (iii) contain an
endorsement insuring that the real property described in the title insurance
policy is the same real estate as shown on the survey delivered with respect to
such property, (iv) contain an endorsement insuring that each street adjacent to
the real property is a public street and that there is direct and unencumbered
pedestrian and vehicular access to such street from the real property, and (v)
if the real property consists of more than one record parcel, contain a
"contiguity" endorsement insuring that all of the record parcels are contiguous
to one another.
(c) With respect to each such parcel of real property as to which a
title insurance policy is to be procured pursuant to this Section 6.6, the Party
transferring such property shall procure in preparation for the Closing a
current survey of the real property certified to the Party acquiring such
property, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys. The survey shall disclose the
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters shown customarily on such surveys, and shall
show access affirmatively to public streets and roads. The survey shall not
disclose any material survey defect or encroachment from or onto the real
property which has not been cured or insured over prior to the Closing.
(d) The cost of the title insurance commitments, policies and
surveys obtained pursuant to this Section 6.6 shall be shared equally by the
Parties.
6.7 EXCLUSIVITY. (a) Moog will not (and will cause its Affiliates and
------------
the TC Business not to), (i) solicit, initiate, respond to, entertain or
encourage the submission of any proposal or offer from any Person relating to
any transaction which, directly or indirectly, involves the TC Business or (ii)
to participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner, any effort or attempt by any Person to do, or seek to do the
foregoing. Moog will notify SMP immediately if any Person makes any proposal,
offer, inquiry, expression of intent or contact with respect to the foregoing.
(b) SMP will not (and will cause its Affiliates and the Brake
Business not to), (i) solicit, initiate, respond to, entertain or encourage the
submission of any proposal or offer from any Person relating to any transaction
which, directly or indirectly, involves the Brake Business or (ii) to
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner, any effort or attempt by any Person to do or seek to do the
foregoing. SMP will notify Moog immediately if any Person makes any proposal,
offer, inquiry, expression of intent or contact with respect to the foregoing.
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(c) Notwithstanding the foregoing, nothing contained in this
Section 6.7 shall prohibit a Party from considering and responding to an
unsolicited bid for itself or the TC Business or the Brake Business, as the case
may be; provided, that such Party issues a negative response to the unsolicited
bid.
6.8 SUPPLY AGREEMENTS. On or prior to the Closing, SMP shall enter into
------------------
the Rubber Supply Agreement and SMP shall enter into a Screw Machine Products
Supply Agreement with Moog Company for screw machine products.
6.9 DISCLOSURE SUPPLEMENTS. From time to time after the date of this
-----------------------
Agreement and prior to the Closing, Moog will promptly supplement or amend the
Moog Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described therein or which is necessary to correct
any information therein or in any representation and warranty of Moog which has
been rendered inaccurate thereby. From time to time after the date of this
Agreement and prior to the Closing, SMP will promptly supplement or amend the
SMP Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described therein or which is necessary to correct
any information therein or in any representation and warranty of SMP which has
been rendered inaccurate thereby. For purposes of determining the accuracy of
the representations and warranties of Moog contained in Article IV and the
accuracy of the representations and warranties of SMP contained in Article V in
order to determine the fulfillment of the conditions set forth in Sections
10.3(a) and 10.2(a), respectively, the Moog Disclosure Schedule and the SMP
Disclosure Schedule shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto.
6.10 DISPOSAL OF CERTAIN HAZARDOUS MATERIALS. Prior to Closing, each
----------------------------------------
Party will remove and properly dispose at off-site locations all Hazardous
Materials existing in any baghouses, tanks, drums, pails, sumps, filters or
other collection devices or containers located at their respective facilities;
PROVIDED, HOWEVER, that any Hazardous Materials properly stored in non-leaking
containers for future use in the business as raw materials, manufacturing
supplies or maintenance supplies need not be removed and disposed of.
6.11 TERMINATION OF JOINT VENTURE AGREEMENT WITH DALIAN YONGFENG CAR
---------------------------------------------------------------
PARTS CO. LTD.. Prior to Closing, SMP shall use commercially reasonable efforts
- --------------
to dissolve or otherwise terminate its joint venture with Dalian Yongfeng Car
Parts Co. Ltd. and to have its joint venture partner return to SMP the equipment
which SMP supplied to the joint venture. Any such equipment which Dalian
Yongfeng Car Parts Co. Ltd. may return to SMP shall be delivered to Moog at no
cost to Moog.
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ARTICLE VII.
POST-CLOSING COVENANTS
----------------------
The Parties agree as follows regarding the period following the Closing
(and, where indicated, before the Closing).
7.1 FURTHER ASSURANCES. If, after the Closing, any further action is
-------------------
necessary or desirable to carry out the purposes of this Agreement, each Party
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article XI). Moog
acknowledges and agrees that from and after the Closing, SMP will be entitled,
at its own expense, to reasonable access to all Brake Books and Records. SMP
acknowledges and agrees that from and after the Closing, Moog will be entitled,
at its own expense, to reasonable access to the TC Books and Records.
7.2 LITIGATION SUPPORT. In the event and for so long as any Party
-------------------
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving the TC Business or the Brake Business, the other Party will cooperate
with it or its counsel in the contest or defense, make available its personnel
and provide such testimony and access to its books, records and properties as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article XI). Notwithstanding the foregoing, this Section 7.2 shall not apply to
any charge, complaint, action, suit, proceeding, hearing, investigation, claim
or demand where both Parties (or their respective Affiliates) are or may be
involved as contesting or defending parties and the Parties do or may have
adverse interests.
7.3 TRANSITIONAL MATTERS. (a) Moog will not take any action that is
---------------------
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of the TC Business from
maintaining the same business relationships with the TC Business after the
Closing as it maintained with the TC Business prior to the Closing. Moog will
refer all customer inquiries relating to the TC Business to SMP from and after
the Closing.
(b) SMP will not take any action that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier or
other business associate of the Brake Business from maintaining the same
business relationships with the Brake Business after the Closing as it
maintained with the Brake Business prior to the Closing. SMP will refer all
customer inquiries relating to the Brake Business to Moog from and after the
Closing.
(c) For a period of up to six (6) months from the Closing Date (the
"TRANSITION PERIOD"), Moog shall provide SMP with management information system
services for the TC Business in accordance with the terms set forth on Exhibit
L. If SMP notifies Moog in writing on or before 30 days before the expiration of
the Transition Period that SMP will
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continue to need Moog to provide management information services after the
Transition Period, then Moog shall continue to provide such services for a
period of up to 12 months from the Closing Date. If Moog provides management
information services to SMP after the Transition Period: (i) SMP shall reimburse
Moog for all out-of-pocket costs incurred by Moog to provide such services after
the Transition Period including, but not limited to, the cost of Moog's
employees and the cost of any temporary personnel retained by Moog to provide
such services; and (ii) SMP shall indemnify Moog from all Adverse Consequences
arising from or relating to claims by any Person who is leasing, licensing or
otherwise providing software to Moog that the providing of such services by
Moog, constitutes an assignment or transfer by Moog of its interest or rights to
such software without such Person's consent, requires Moog to pay fees or other
consideration to such Person in order to allow Moog to provide such services to
SMP, or otherwise constitutes a violation of the terms of the lease, license or
other arrangement between Moog and such Person. Moog shall use commercially
reasonable efforts to provide SMP with management information services pursuant
to the terms of this Section 7.3(c) but Moog shall not be responsible for any
errors in reports, data or other information provided to SMP under this Section
7.3(c) including any errors resulting from the failure of the systems to be
"Year 2000" compliant, other than errors caused by the negligence of Moog.
(d) During the Transition Period, SMP shall provide Moog with
management information system services for the Brake Business in accordance with
the terms set forth on Exhibit M. SMP shall use commercially reasonable efforts
to provide SMP with management information services pursuant to the terms of
this Section 7.3(d), but SMP shall not be responsible for any errors in reports,
data or other information provided to Moog under this Section 7.3(d) including
any errors resulting from the failure of the systems to be "Year 2000"
compliant, other than errors caused by the negligence of SMP.
(e) Following Closing and for a period not to extend beyond
December 31, 1998, Moog shall provide SMP with support for tech-line services,
catalogue services and customer service for the TC Business transferred to SMP.
SMP shall reimburse Moog for all out-of-pocket expenses incurred by Moog to
provide such support. Moog shall issue an invoice to SMP for such support
services on a monthly basis and SMP shall pay such invoice within 30 days of the
date of such invoice.
(f) Following Closing and for a period not to extend beyond June
30, 1998, SMP shall provide Moog with support for processing exports for the
Brake Business transferred to Moog. Moog shall reimburse SMP for all
out-of-pocket expenses incurred by SMP to provide such support. SMP shall issue
an invoice to Moog for such support services on a monthly basis and Moog shall
pay such invoice within 30 days of the date of such invoice.
(g) Following Closing and for a period of up to 90 days thereafter,
Moog shall provide SMP the following accounting services for the TC Business:
accounts payable, order processing, invoicing, collection, accounts receivable
and purchasing. Moog shall provide such services to SMP at no cost for the first
15 days following Closing. SMP shall reimburse Moog for all out-of-pocket
expenses incurred by Moog to provide any such services after the 15th day
following Closing. Moog shall issue and invoice to SMP for such services on a
monthly basis and SMP shall pay such invoice within 30 days of the date of the
invoice.
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(h) At SMP's request, Moog has retained the services of Gary
Hueser, Ken Spates and Bill Wallace to provide marketing services to SMP
following Closing. SMP will reimburse Moog all out-of-pocket expenses incurred
by Moog for such marketing services for a period of 4 months following Closing.
SMP shall also indemnify Moog for any Adverse Consequences relating to the
actions of the employees providing such marketing services after Closing.
7.4 CONFIDENTIALITY. (a) Moog will treat and hold as such all
----------------
confidential information concerning the TC Business or the TC Assets, refrain
from using any of the confidential information except in connection with this
Agreement and deliver promptly to SMP or (subject to applicable law) destroy, at
the request of SMP, all tangible embodiments (and all copies) of the
confidential information relating exclusively to the TC Business or the TC
Assets which are in its possession. If Moog is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process) to
disclose any such confidential information, Moog will notify SMP promptly of the
request or requirement so that SMP may seek an appropriate protective order or
waive compliance with the provisions of this Section 7.4(a). If, in the absence
of a protective order or the receipt of a waiver hereunder, Moog or its
Affiliates is, on the advice of counsel, compelled to disclose any confidential
information to any tribunal or else stand liable for contempt or suffer a
substantial penalty, Moog or its Affiliates may disclose the confidential
information to the tribunal. In such event, Moog or its Affiliates shall use its
or their reasonable best efforts to obtain, at the reasonable request and
expense of SMP, an order or other assurance that confidential treatment will be
accorded to such portion of the confidential information required to be
disclosed as SMP shall designate. Notwithstanding the foregoing, this Section
7.4(a) shall not apply to information which is or becomes generally available to
the public other than as a result of disclosure after the Closing Date by Moog
or the agents or representatives or Moog.
(b) SMP will treat and hold as such all confidential information
concerning the Brake Business, refrain from using any of the confidential
information except in connection with this Agreement and deliver promptly to
Moog or (subject to applicable law) destroy, at the request of Moog, all
tangible embodiments (and all copies) of the confidential information relating
exclusively to the Brake Business or the Brake Assets which are in its
possession. If SMP is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any such confidential
information, SMP will notify Moog promptly of the request or requirement so that
Moog may seek an appropriate protective order or waive compliance with the
provisions of this Section 7.4(b). If, in the absence of a protective order or
the receipt of a waiver hereunder, SMP or its Affiliates is, on the advice of
counsel, compelled to disclose any confidential information to any tribunal or
else stand liable for contempt, SMP or its Affiliates may disclose the
confidential information to the tribunal. In such event, SMP or its Affiliates
shall use its or their reasonable best efforts to obtain, at the reasonable
request and expense of Moog, an order or other assurance that confidential
treatment will be accorded to such portion of the confidential information
required to be disclosed as Moog shall designate. Notwithstanding the foregoing,
this Section 7.4(b) shall not apply to information which is or becomes generally
available to the public other than as a result of disclosure after the Closing
Date by SMP or the agents or representatives of SMP.
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7.5 CONSENTS. If any required consent or agreement is not obtained by
---------
the Closing and the Party required to obtain such consent (and, if the obtaining
of such consent is a condition to another Party's obligation to close, such
other Party) desires to close the transaction anyway, the Parties will cooperate
in any reasonable arrangement to provide such Party with the benefits under or
with respect to the matter as to which the relevant consents or agreements were
not obtained as if such consents or agreements were obtained.
7.6 PRESS RELEASES. Both before and after Closing, the Parties and
---------------
their respective Affiliates will consult with each other before issuing any
press release or news media release or otherwise make any public statements with
respect to this Agreement and the transactions contemplated hereby, and no
Party, without the prior written consent of the other Party (which consent will
not be unreasonably withheld), will issue any such press release or news media
release or make such public statement with respect to this Agreement or the
transactions contemplated hereby, except as required by applicable law or stock
exchange rules.
7.7 ALLOCATION. The Parties will agree upon the allocation of like-kind
-----------
properties exchanged, liabilities assumed or relieved, adjusted bases of
properties exchanged, and cash or other property transferred or received
hereunder in accordance with Section 1031 and the Treasury regulations
thereunder and Treasury Regulation ss. 1.1060-1T(h) which allocation shall be
agreed upon within ninety (90) days of the Closing Date and shall specify an
"exchange group" for each item as provided in Treasury Regulation
ss.1.1031(j)-1. Each Party will report the exchange of the TC Assets and the
Brake Assets, consistent with such allocation, to the Internal Revenue Service
and any other Tax authority within the time period and in the manner required by
law. Each Party agrees to file all Tax Returns consistent with such allocation
and not to take any position inconsistent with such allocation, except as
required by law. Each Party will promptly notify the other if a Tax authority
disagrees with any aspect of such allocation.
7.8 TAX ASSISTANCE. Moog shall, and shall cause the employees of the
---------------
Brake Business to, and SMP shall, and shall cause the employees of the TC
Business to, (i) provide the other Party with such assistance as may reasonably
be requested by any of them in connection with the preparation of any Tax
Return, audit or other examination by any Tax authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) retain and
provide the other Party any records or other information that may be relevant to
such return, audit or examination, proceeding or determination and (iii) provide
the other Party with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be shown on any
Tax Return of the other Party for any period. Without limiting the foregoing,
Moog shall retain, and shall cause the employees of the Brake Business to
retain, and SMP shall retain, and shall cause the TC Business to retain, until
six (6) months following the expiration of the applicable statutes of limitation
(including any extensions), copies of all Tax Returns, supporting work schedules
and other records or information that may be relevant to such Tax Returns for
all Tax periods or portions thereof ending before or including the Closing Date
and shall not destroy or otherwise dispose of any such records without first
providing the other Party with a reasonable opportunity to review and copy the
same.
7.9 TAX PROCEEDINGS. Each Party shall exercise, at its expense,
complete control over the handling, disposition and settlement of any
governmental inquiry, examination or proceeding that could result in a
determination with respect to Taxes due or payable by the other Party, for which
such Party or its Affiliates may be liable or against which such Party may be
required to indemnify the other Party pursuant to this Agreement. Each Party
shall promptly
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notify the other Party if, in connection with any such inquiry, examination or
proceeding, any Governmental Agency proposes in writing to make any assessment
or adjustment with respect to Tax items of such Party, which assessments or
adjustments could affect the TC Business or the Brake Business, as the case may
be, following the Closing Date, and shall consult with such other Party with
respect to any such proposed assessment or adjustment.
7.10 UNEMPLOYMENT TAX EXPERIENCE. (a) The state unemployment tax
----------------------------
experience of the TC Business shall be transferred to SMP at the sole discretion
of SMP. The decision to transfer such unemployment tax experience may be made
separately for each state in which the TC Business is conducted. If SMP elects
to transfer the aforementioned state unemployment tax experience in a particular
state, Moog will timely execute the necessary governmental filings to accomplish
this transfer.
(b) The state unemployment tax experience of the Brake Business
shall be transferred to Moog at the sole discretion of Moog. The decision to
transfer such unemployment tax experience may be made separately for each state
in which the Brake Business is conducted. If Moog elects to transfer the
aforementioned state unemployment tax experience in a particular state, SMP will
timely execute the necessary governmental filings to accomplish this transfer.
7.11 EMPLOYMENT TAX COMPLIANCE. Moog and SMP agree to use the
--------------------------
alternative procedure described in Section 5 of Revenue Procedure 84-77, 1984-2
Cum. Bull. 753, for preparing and filing Forms W-2, W-3, W-4, W-5, and 941 for
the calendar year in which the Closing occurs with respect to those individuals
who are employed by one Party immediately preceding the Closing and by the other
Party immediately thereafter. Each Party shall provide to the other Party such
assistance, cooperation and access to such books and records as may be
reasonably necessary to comply with this provision.
7.12 PRODUCT RETURNS ADJUSTMENT. (a) Not later than twenty (20) days
---------------------------
after the period ending ninety (90) days following the Closing Date (i) Moog
shall prepare and furnish to SMP a schedule (the "BRAKE RETURNS SCHEDULE")
reflecting, for the 90 day period following the Closing Date, the actual amount
of overstock returns (net of the average recovery rate over the prior 24 months)
of products of the Brake Business (the "OVERSTOCK BRAKE RETURNS AMOUNT") and the
actual amount of product warranty returns (with no reduction for any recoveries)
of products of the Brake Business (the "WARRANTY BRAKE RETURNS AMOUNT"); and
(ii) SMP shall prepare and furnish to Moog a schedule (the "TC RETURNS
SCHEDULE") reflecting, for the 90 day period following the Closing Date, the
actual amount of overstock returns (net of the average recovery rate over the
prior 24 months) of products of the TC Business (the "OVERSTOCK TC RETURNS
AMOUNT") and the actual amount of product warranty returns (with no reductions
for any recoveries) of products of the TC Business (the "WARRANTY TC RETURNS
AMOUNT"). Each Party shall promptly make available or provide to the other Party
such books and records (or copies thereof) as are reasonably requested by the
other Party to allow the other Party to confirm the information on the Brake
Returns Schedule and TC Returns Schedule, as the case may be.
(b) To the extent that (i) the sum of the Overstock Brake Returns
Amount and Warranty Brake Returns Amount exceeds the sum of the amounts accrued
for overstock and product warranty returns on the SMP Final Closing Balance
Sheet, SMP shall pay to Moog in accordance with Section 2.14, an amount equal to
fifty percent (50%) of such excess or (ii) the sum of the Overstock Brake
Returns Amount and Warranty Brake Returns Amount is less than
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the sum of the amounts accrued for overstock and product warranty returns on the
SMP Final Closing Balance Sheet, Moog shall pay to SMP an amount equal to fifty
percent (50%) of such deficit.
(c) To the extent that (i) the sum of the Overstock TC Returns
Amount and Warranty TC Returns Amount exceeds the sum of the amounts accrued for
overstock and product warranty returns on the Moog Final Closing Balance Sheet,
Moog shall pay to SMP in accordance with Section 2.14, an amount equal to fifty
percent (50%) of such excess or (ii) the sum of the Overstock TC Returns Amount
and Warranty TC Returns Amount is less than the sum of the amounts accrued for
overstock and product warranty returns on the Moog Final Closing Balance Sheet,
SMP shall pay to Moog an amount equal to fifty percent (50%) of such deficit.
(d) Any Party may set-off any amounts due to such Party pursuant to
Section 7.12(b) or 7.12(c) against any payment due from such Party pursuant to
either such Section. Any payment to be made pursuant to this Section 7.12 shall
be made within ten (10) Business Days following receipt of the Brake Returns
Schedule and the TC Returns Schedule.
7.13 USE OF EXCLUDED TRADEMARKS AND TRADE NAMES. (a) Section 7.13 of
-------------------------------------------
the Moog Disclosure Schedule sets forth the trademarks, service marks and trade
names used by Moog in the TC Business, but which are not included in the TC
Assets transferred to SMP because such trademarks, service marks and trade names
are also used by Moog or its Affiliates in other businesses (the "EXCLUDED MOOG
TRADEMARKS AND TRADE NAMES"). SMP may sell, use and distribute products and
materials including all packages, sales aids, sales literature, signage and
stationery which bear the Excluded Moog Trademarks and Trade Names for a period
not to exceed one year after the Closing Date, provided SMP uses the Excluded
Moog Trademark and Trade Names on the same products and materials and in the
same manner as used by Moog in the TC Business prior to the Closing Date.
(b) Section 7.13 of the SMP Disclosure Schedule sets forth the
trademarks, service marks and trade names used by SMP in the Brake Business, but
which are not included in the Brake Assets transferred to Moog because such
trademarks, service marks and trade names are also used by SMP or its Affiliates
in other businesses (the "EXCLUDED SMP TRADEMARKS AND TRADE NAMES"). Moog may
sell, use and distribute products and materials including all packages, sales
aids, sales literature, signage and stationery which bear the Excluded SMP
Trademarks and Trade Names for a period not to exceed [one year] after the
Closing Date, provided Moog uses the Excluded SMP Trademarks and Trade Names on
the same products and materials and in the same manner as used by SMP in the
Brake Business prior to the Closing Date.
7.14 EXISTING INSURANCE COVERAGE. (a) At Closing, Moog will cancel
----------------------------
insurance coverage applicable to the TC Business for occurrences or claims made
after the Closing Date; PROVIDED, HOWEVER, that the remaining insurance coverage
shall be available to SMP with respect to insured occurrences or claims made
relating to the TC Business on or prior to the Closing Date, if and only to the
extent that SMP has assumed or paid the loss or liability attributed to such
occurrences. If, after the Closing, Moog actually receives from an insurer cash
proceeds (excluding any return of premium or reimbursed attorneys or
investigation or other fees) attributable to such insurance coverage with
respect to any insured occurrences or any series of occurrences on or prior to
the Closing Date or any claims that were asserted on
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or prior to the Closing Date, then such cash proceeds shall be paid to SMP net
of any deductible, co-payment, retro fees, self-insured premiums, defense costs
or other charges paid or payable to the insurance carrier or obligations to
reimburse the insurance carrier for which Moog is liable, to the extent that SMP
has assumed or paid the loss or liability attributed to such occurrences. SMP
shall reimburse Moog for any administrative costs, retro fees, premiums,
self-insured or deductible loss costs or other expenses that Moog is charged
after the Closing by such insurance carrier relating to claims paid to SMP
subsequent to Closing under insurance coverage applicable to the TC Business
prior to Closing.
(b) At Closing, SMP will cancel insurance coverage applicable to
the Brake Business for occurrences or claims made after the Closing Date;
PROVIDED, HOWEVER, that the remaining insurance coverage shall be available to
Moog with respect to insured occurrences or claims made relating to the Brake
Business on or prior to the Closing Date, if and only to the extent that Moog
has assumed or paid the loss or liability attributed to such occurrences. If,
after the Closing, SMP actually receives from an insurer cash proceeds
(excluding any return of premium or reimbursed attorneys or investigation or
other fees) attributable to such insurance coverage with respect to any insured
occurrences or any series of occurrences on or prior to the Closing Date or any
claims that were asserted on or prior to the Closing Date, then such cash
proceeds shall be paid to Moog net of any deductible, co-payment, retro fees,
self-insured premiums, defense costs or other charges paid or payable to the
insurance carrier or obligations to reimburse the insurance carrier for which
SMP is liable, to the extent that Moog has assumed or paid the loss or liability
attributed to such occurrences. Moog shall reimburse SMP for any administrative
costs, retro fees, premiums, self-insured or deductible loss costs or other
expenses that SMP is charged after the Closing by such insurance carrier
relating to claims paid to Moog subsequent to Closing under insurance coverage
applicable to the Brake Business prior to Closing.
7.15 LETTERS OF CREDIT.
------------------
(a) SMP shall use all commercially reasonable efforts to replace,
on or as soon as practicable after the Closing Date, all "TC Letters of Credit"
(as defined below) existing on the Closing Date, and SMP shall reimburse Moog
and its Affiliates for any Liability that Moog or its Affiliates incur in
connection with any TC Letter of Credit as a result of such TC Letter of Credit
not being so replaced (or otherwise terminated) including the value of any
payments made under a claim or drawing together with associated costs and fees
to maintain, renew or extend such TC Letters of Credit to the extent such
payments, costs and fees relate to the period after the Closing Date. "TC
LETTERS OF CREDIT" shall mean, collectively, each commercial letter of credit or
standby letter of credit that relates exclusively to the TC Business and is
either specifically described in Section 7.15(a) of the Moog Disclosure Schedule
or is created after the date of this Agreement in the ordinary course of
conducting the TC Business consistent with past practices and as to which Moog
has notified SMP in writing prior to the Closing Date. If by April 30, 1998, SMP
has not effected the complete replacement of all outstanding TC Letters of
Credit such that Moog and its Affiliates are fully released from any liability
related thereto, SMP shall obtain and deliver to Moog letters of credit in favor
of Moog, from financial institutions and on terms reasonably acceptable to Moog,
which fully cover the liabilities under each such TC Letter of Credit then
outstanding. Moog or its Affiliates may elect not to renew or extend any TC
Letter of Credit if SMP has not obtained and delivered to Moog the letters of
credit in favor of Moog required because of SMP's failure to effectuate any
replacement required under this Section 7.15(a). Any election by Moog or its
Affiliates not to
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renew or extend a TC Letter of Credit shall not affect any of SMP's
indemnification obligations hereunder.
(b) Moog shall use all commercially reasonable efforts to replace,
on or as soon as practicable after the Closing Date, all "Brake Letters of
Credit" (as defined below) existing on the Closing Date, and Moog shall
reimburse SMP and its Affiliates for any Liability that SMP or its Affiliates
incur in connection with any Brake Letter of Credit as a result of such Brake
Letter of Credit not being so replaced (or otherwise terminated) including the
value of any payments made under a claim or drawing together with associated
costs and fees to maintain, renew or extend such Brake Letters of Credit to the
extent such payments, costs and fees relate to the period after the Closing
Date. "BRAKE LETTERS OF CREDIT" shall mean, collectively, each commercial letter
of credit or standby letter of credit that relates exclusively to the Brake
Business and is either specifically described in Section 7.15(b) of the SMP
Disclosure Schedule or is created after the date of this Agreement in the
ordinary course of conducting the Brake Business consistent with past practices
and as to which SMP has notified Moog in writing prior to the Closing Date. If
by April 30, 1998, Moog has not effected the complete replacement of all
outstanding Brake Letters of Credit such that SMP and its Affiliates are fully
released from any liability related thereto, Moog shall obtain and deliver to
SMP letters of credit in favor of SMP, from financial institutions and on terms
reasonably acceptable to SMP, which fully cover the liabilities under each such
Brake Letter of Credit then outstanding. SMP or its Affiliates may elect not to
renew or extend any Brake Letter of Credit if Moog has not obtained and
delivered to SMP the letters of credit in favor of SMP required because of
Moog's failure to effectuate any replacement required under this Section
7.15(b). Any election by SMP or its Affiliates not to renew or extend a Brake
Letter of Credit shall not affect any of Moog's indemnification obligations
hereunder.
7.16 NON-COMPETITION AGREEMENT.
--------------------------
(a) For a period of five years after the Closing Date, neither Moog
nor any of its Affiliates shall directly or indirectly (except as contemplated
by the Screw Machine Products Supply Agreement) (i) design, develop,
manufacture, market, service, supply or distribute any temperature control
products and components to support vehicle systems designed to regulate
temperature for passengers ("TC COMPETITIVE PRODUCTS") in North America and any
other country in which Moog conducted TC Business during the three years prior
to the Closing Date or (ii) engage in, manage, operate, be connected with or
acquire any interest in, as an employee, consultant, advisor, agent, owner,
partner, co-venturer, principal, director, shareholder, lender or otherwise, any
business competitive with the TC Business (as determined by whether such
business manufacturers, markets or sells TC Competitive Products) as conducted
on the date hereof or on the Closing Date, including the manufacturing and/or
distributing of stand alone motors which are TC Competitive Products (a "TC
COMPETITIVE BUSINESS") in North America or any other country in which Moog
conducted TC Business during the three years prior to the Closing Date.
Notwithstanding the foregoing, nothing herein shall be construed to prevent Moog
and its Affiliates from: (i) designing, developing, manufacturing, marketing,
servicing, supplying or distributing brass components and brake lines; (ii)
owning, in the aggregate, no more than 5% of the outstanding shares of any
publicly held corporation which is a TC Competitive Business which has shares
listed for trading on a securities exchange registered with the Securities and
Exchange Commission or through the automatic quotation system of a registered
securities association, so long as such shares are held for passive investment
purposes only and neither Moog nor any of its Affiliates in actively
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involved in the management or operation of such TC Competitive Business; or
(iii) acquiring a business (a "TARGET") which includes a TC Competitive Business
provided the annual sales derived from the TC Competitive Business of such
Target are not more than 20% of such Target's total annual sales based on the
Target's most recent annual financial statements. Further, the restrictions in
this Section 7.16(a) shall not apply to any Person who is not an Affiliate of
Moog and who acquires all of the shares or substantially all of the assets of
Moog Company, Moog Parent or Cooper Canada.
(b) For a period of five years after the Closing Date, neither SMP
nor any of its Affiliates shall directly or indirectly (except as contemplated
by the Rubber Supply Agreement) (i) design, develop, manufacture, market,
service, supply or distribute any brake products and components to support brake
systems ("BRAKE COMPETITIVE PRODUCTS") in North America and any other country in
which SMP conducted the Brake Business during the three years prior to the
Closing Date or (ii) engage in, manage, operate, be connected with or acquire
any interest in, as an employee, consultant, advisor, agent, owner, partner,
co-venturer, principal, director, shareholder, lender or otherwise, any business
competitive with the Brake Business (as determined by whether such business
manufacturers, markets or sells Brake Competitive Products) as conducted on the
date hereof or on the Closing Date (a "BRAKE COMPETITIVE BUSINESS"), in North
America or any other country in which SMP conducted the Brake Business during
the three years prior to the Closing Date. Notwithstanding the foregoing,
nothing herein shall be construed to prevent SMP and its Affiliates from (i)
designing, developing, manufacturing, marketing, servicing or supplying
remanufactured anti-skid brake system control modules; (ii) owning, in the
aggregate, no more than 5% of the outstanding shares of any publicly held
corporation which is a Brake Competitive Business which has shares listed for
trading on a securities exchange registered with the Securities and Exchange
Commission or through the automatic quotation system of a registered securities
association, so long as such shares are held for passive investment purposes
only and neither SMP nor any of its Affiliates is actively involved in the
management or operations of such Brake Competitive Business; or (iii) acquiring
a business (a "TARGET") which includes a Brake Competitive Business provided the
annual sales derived from the Brake Competitive Business of such Target are not
more than 20% of such Target's total annual sales based on the Target's most
recent annual financial statements. Further, the restrictions in this Section
7.16(b) shall not apply to any Person who is not an Affiliate of SMP and who
acquires all of the shares or substantially all of the assets of SMP Parent or
SMP Canada.
(c) The Parties hereto agree that the duration and geographic scope
of the non-competition provision set forth in this Section 7.16 are reasonable.
In the event that any court or arbitrator determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the Parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The Parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective. Each Party agrees that damages are an inadequate remedy for any
breach of this provision and that the non-breaching Party shall, whether or not
it is pursuing any potential remedies at law, be entitled to equitable relief in
the form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this non-
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competition provision. The covenants contained in this Section 7.16 are deemed
to be material and each Party is entering into this Agreement relying on such
covenants.
7.17 COMPLIANCE WITH CONNECTICUT TRANSFER ACT. Within ten (10) days
-----------------------------------------
following the Closing Date, SMP will, if required by the Connecticut Transfer
Act, comply with such Act as it relates to the transfer of SMP's facility in
Berlin, Connecticut to Moog including an acknowledgement that SMP will be the
"certifying party" and SMP will provide Moog with copies of all required filings
to comply with such act.
7.18 LOAN FROM MOOG TO SMP. No later than 10 days following the later
----------------------
of (i) the Closing Date; or (ii) the date that SMP closes its financing for the
$108.5 million credit facility between SMP and the Bank of New York (as
Documentation Agent) and Chase Manhattan Bank (as Administrative Agent) et. al.,
Moog Automotive Products, Inc. shall (or shall cause one of its Affiliates to)
fund a loan to Standard Motor Products, Inc. in the amount of $22.5 million upon
the delivery to Moog (or its Affiliate) of loan documents which, except for the
principal payment terms which shall be governed by the formula provided in
paragraph 6 of SMP's letter dated January 28, 1998, shall include the same
provisions as the Revolving Credit and Guaranty Agreement among SMP, the Chase
Manhattan Bank (as Administrative Agent) and The Bank of New York (as
Documentation Agent) et. al. and any related agreements. The formula for
principal payments to Moog provides for payments at a rate of 75% of SMP's
paydown of any principal payments under the Revolving Credit and Guaranty
Agreement on a pro-rata basis of the outstanding balance due under the loan from
Moog. As an example, the formula for principal payments to Moog for a two month
period would be calculated as follows:
BANKS MOOG TOTAL
Loan Balance at the end of Month 0 $100 $20 $120
Pro-rata Loan Percent 83.3% 16.7% 100%
Principal payments Month 1 $ 10
Moog principal payment allocation at 75% 12.5%*
Principal payments March 1 $ 8.75 $ 1.25
Loan Balance at end of Month 1 $ 91.25 $18.75 $110
Pro-rata Loan Percent 82.9% 17.1% 100%
Principal payments Month 2 $ 15
Moog principal payment allocation at 75% 12.8%**
Principal payments Month 2 $ 13.08 $ 1.92
Loan Balance at end of Month 2 $ 78.17 $16.83 $ 95
*.75 times 16.7% **.75 times 17.1%
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7.19 UNPROCESSED INVENTORY AS OF THE CLOSING DATE.
---------------------------------------------
(a) Within fifteen (15) days following the Closing Date, Moog shall
(i) process and identify any unprocessed inventory as of the Closing Date
returned by customers of the Brake Business; and (ii) send SMP the processing
documents for such inventory. SMP shall be responsible for issuing the credit to
the customers which returned such unprocessed inventory.
(b) Within fifteen (15) days following the Closing Date, SMP shall:
(i) process and identify any unprocessed inventory as of the Closing Date
returned by customers of the TC Business; and (ii) send Moog the processing
documents for such inventory. Moog shall be responsible for issuing the credit
to the customers which returned such unprocessed inventory.
7.20 CONSIGNED INVENTORY.
--------------------
(a) As of Closing, Moog shall consign to SMP $15 million of
inventory. The consigned inventory shall consist of air compressor finished
goods inventory at the facilities at 2500 West Oak Street and at Tile Factory
Road in Palestine, Texas and will be comprised of the following part numbers set
forth in the order of priority on Section 7.20(a) of the Moog Disclosure
Schedule. If the total of such inventory at Palestine is less than the total
amount of consigned inventory, then inventory at the Dyersburg location (based
on mutually agreed part numbers) will make up the difference.
(b) SMP shall not permit the amount of consigned inventory on hand
at any time to fall below the Minimum Consigned Inventory Amount. The "Minimum
Consigned Inventory Amount" equals $10 million less the sum of: (i) the total
principal payments made by SMP to Moog under the promissory note referred to in
Section 7.18, and (ii) the total payments made by SMP to Moog for consigned
inventory sold by SMP. If a sale of consigned inventory by SMP would reduce the
consigned inventory below the Minimum Consigned Inventory Amount, then SMP shall
not sell such consigned inventory unless Moog receives payment from SMP on or
before the sale of such consigned inventory by SMP to its customer.
(c) SMP shall conspicuously identify or otherwise segregate the
consigned inventory from other inventory of SMP so it is evident to any third
parties that the consigned inventory is owned by Moog. Within 15 days following
the end of each month, SMP shall send Moog a report setting forth, as of the end
of the preceding month the amount of consigned inventory on hand together with a
calculation of the Minimum Consigned Inventory Amount. SMP shall also allow
representatives of Moog access to the Palestine facility to inspect the
consigned inventory.
(d) Subject to the final sentence of paragraph (b) above, during
the period of one year following Closing, SMP shall pay Moog for consigned
inventory sold by SMP (i) no later than forty-five (45) days following the last
day of the month in which SMP sells such inventory with respect to sales made
during any gross calendar month on or before September 30, 1998; and (ii) no
later than fifteen (15) days following the last day of the month in which SMP
sells such inventory with respect to sales made during any given calendar month
after September 30, 1998. The price for the consigned inventory shall be the
value of such inventory as determined under Exhibit G clauses(c)(i), (ii) and
(iii). SMP will sell consigned inventory
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before SMP sells other inventory owned by SMP which is the same product as that
included in the consigned inventory. At any time when the consigned inventory
falls below $10 million, any amount of consigned inventory which exceeds the
Minimum Consigned Inventory Amount will no longer be deemed consigned inventory
under this Section 7.20 and may be commingled with SMP's inventory.
(e) On or before the first anniversary of Closing, SMP shall pay
Moog an amount equal to (i) the excess of the Moog Final Closing Net Book Value
over the SMP Final Closing Net Book Value, without giving effect to the
consignment provisions of this Section 7.20 hereof, less (ii) any amounts paid
or to be paid under or in accordance with the provisions of subsection (d)
above.
(f) If SMP fails to timely make the payments described in
paragraphs (b), (d) and (e) above, SMP shall pay Moog interest on such amount at
the rate of twelve percent (12%) per annum from the due date of such payment.
7.21 PRODUCT RETURNS ASSOCIATED WITH CHANGEOVER OF TRAK AUTOMOTIVE. SMP
--------------------------------------------------------------
shall be responsible for issuing a credit to CSK for any products returned by
CSK relating to the changeover of the Trak Automotive stores. Moog shall process
and identify any such products returned by CSK and Moog shall send SMP the
processing documents for such product returns so SMP can issue the credit to
CSK. Moog shall pay SMP an amount determined by a side letter from SMP to Moog
dated March 30, 1998.
ARTICLE VIII
EMPLOYEE MATTERS
----------------
8.1 EMPLOYMENT AND SEVERANCE FOR SALES PERSONS. (a) Within five (5)
-------------------------------------------
days before the Closing Date: (i) Moog shall provide SMP a list of the Brake
Scheduled Sales Persons that Moog wishes to employ following the Closing Date
and shall offer employment to such individuals upon terms and conditions as Moog
shall, in its sole discretion, deem appropriate, and (ii) SMP shall provide Moog
a list of the TC Scheduled Sales Persons that SMP wishes to employ following the
Closing Date and shall offer employment to such individuals upon terms and
conditions as SMP shall, in its sole discretion, deem appropriate. Each TC
Scheduled Sales Person who accepts the offer of employment from SMP is
hereinafter referred to as an "TC TRANSFERRING SALES PERSON" and each Brake
Scheduled Sales Person who accepts the offer of employment from Moog is
hereinafter referred to as a "BRAKE TRANSFERRING SALES PERSON."
(b) Moog shall be responsible for (i) all relocation expenses
incurred by the Brake Transferring Sales Persons, (ii) all termination or
severance payments and other Liabilities to TC Scheduled Sales Persons who do
not become TC Transferring Sales Persons and (iii) all termination or severance
payments and other Liabilities to any Brake Transferring Sales Person who is
terminated by Moog following the Closing Date.
(c) SMP shall be responsible for (i) all relocation expenses
incurred by the TC Transferring Sales Persons, (ii) all termination or severance
payments and other Liabilities to Brake Scheduled Sales Persons who do not
become Brake Transferring Sales Persons and (iii) all termination or severance
payments and other Liabilities to any TC Transferring Sales Person who is
terminated by SMP following the Closing Date.
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8.2 EMPLOYMENT AND SEVERANCE FOR NON-SALES PERSONS. (a) Effective as of
-----------------------------------------------
the Closing Date, Moog shall offer employment to all Active Employees of the
Brake Business who are in manufacturing, distribution, management and support
positions. Such offer of employment shall be upon such terms and conditions as
Moog shall, in it sole discretion, deem appropriate. Effective as of the Closing
Date, SMP shall offer employment to all Active Employees of the TC Business who
are in manufacturing, distribution, management and support positions. Such offer
of employment shall be upon such terms and conditions as SMP shall, in its sole
discretion, deem appropriate.
(b) Not later than fifteen (15) days following the Closing Date (i)
Moog shall deliver to SMP a schedule setting forth the name of the individual
and the amount of severance obligations actually paid by Moog during the period
from July 21, 1997 to the Closing Date to or on behalf of each Moog Scheduled TC
and Brake Salaried Non-Sales Person who was terminated by Moog other than for
cause on or after July 21, 1997, and (ii) SMP shall deliver to Moog a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by SMP during the period from July 21, 1997 to the Closing Date to
or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who
was terminated by SMP other than for cause on or after July 21, 1997. The
aggregate amount of severance obligations reflected on both schedules is
referred to herein as the "FIRST PERIOD SEVERANCE AMOUNT." Within fifteen (15)
days of the receipt by the Parties of such schedules, the Party which paid the
lesser amount of severance obligations as reflected on such schedules shall pay
to the other Party, in the manner described in Section 2.14, an amount equal to
the difference between fifty percent (50%) of the First Period Severance Amount
and the amount of severance obligations actually paid by such Party as reflected
on the schedule delivered thereby pursuant to this Section 8.2(b).
(c) Not later than fifteen (15) days following the date which is
six (6) months after Closing Date (i) Moog shall deliver to SMP a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the date immediately following the
Closing Date to the date which is six (6) months after the Closing Date to or on
behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to or
on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by Moog other than for cause on or after July 21, 1997, and (ii) SMP
shall deliver to Moog a schedule setting forth the amount of severance
obligations actually paid by SMP during the period from the date immediately
following the Closing Date to the date which is six (6) months after the Closing
Date to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales
Person and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales
Person who was terminated by SMP other than for cause on or after July 21, 1997.
The aggregate amount of severance obligations reflected on both schedules is
referred to herein as the "SECOND PERIOD SEVERANCE AMOUNT." Within fifteen (15)
days of the receipt by the Parties of such schedules, the Party which paid the
lesser amount of severance obligations as reflected on such schedules shall pay
to the other Party, in the manner described in Section 2.14, an amount equal to
the difference between fifty percent (50%) of the Second Period Severance
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Amount and the amount of severance obligations actually paid by such Party as
reflected on the schedule delivered thereby pursuant to this Section 8.2(c).
(d) On or prior to the date which is six (6) months following the
Closing Date, (i) Moog shall deliver to SMP a list of the Moog Scheduled TC and
Brake Salaried Non-Sales Persons and SMP Scheduled TC and Brake Salaried
Non-Sales Persons who will be terminated by Moog between such date and the first
anniversary of the Closing Date (the "MOOG SEVERANCE SCHEDULE") and (ii) SMP
shall deliver to Moog a list of the Moog Scheduled TC and Brake Salaried
Non-Sales Persons and SMP Scheduled TC and Brake Salaried Non-Sales Persons who
will be terminated by SMP between such date and the first anniversary of the
Closing Date (the "SMP SEVERANCE SCHEDULE"). Moog shall terminate each
individual who is listed on the Moog Severance Schedule on or before the first
anniversary of the Closing Date and SMP shall terminate each individual who is
listed on the SMP Severance Schedule on or before the first anniversary of the
Closing Date.
(e) Not later than fifteen (15) days following the first
anniversary of the Closing Date (i) Moog shall deliver to SMP a schedule setting
forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from and including six months after the
Closing Date to the first anniversary of the Closing Date to and including each
Moog Scheduled TC and Brake Salaried Non-Sales Persons and to or on behalf of
each SMP Scheduled TC and Brake Salaried Non-Sales Person who was terminated by
Moog other than for cause on or after July 21, 1997 and (ii) SMP shall deliver
to Moog a schedule setting forth the name of the individual and the amount of
severance obligations actually paid by SMP during the period from and including
six months after the Closing Date to the first anniversary of the Closing Date
to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person
and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person
who was terminated by SMP other than for cause on or after July 21, 1997. The
aggregate amount of severance obligations reflected in such schedules is
referred to hereinafter as the "THIRD PERIOD SEVERANCE AMOUNT." Within fifteen
(15) days of the receipt by the Parties of such schedules, the Party which paid
the lesser amount of severance obligations as reflected on such schedules shall
pay to the other Party, in the manner described in Section 2.14, an amount equal
to the difference between fifty percent (50%) of the Third Period Severance
Amount and the amount of severance obligations actually paid by such Party as
reflected on the schedule delivered thereby pursuant to this Section 8.2(e).
With respect to individuals terminated by the Parties during the period from and
including six months after the Closing Date to the first anniversary of the
Closing Date, the schedules delivered by the Parties pursuant to Sections
8.2(e), (f) and (g) shall only include individuals who appear on the Moog
Severance Schedule or the SMP Severance Schedule.
(f) Not later than fifteen (15) days following the date which is
eighteen months after the Closing Date (i) Moog shall deliver to SMP a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the first anniversary of the
Closing Date to the date which is eighteen months after the Closing Date to or
on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to
or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who
was terminated by Moog other than for cause during the period from July 21, 1997
to the first
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anniversary of the Closing Date, and (ii) SMP shall deliver to Moog a schedule
setting forth the name of the individual and the amount of severance obligations
actually paid by SMP during the period from the first anniversary of the Closing
Date to the date which is eighteen months after the Closing Date to or on behalf
of each Moog Scheduled TC and Brake Salaried Non-Sales Person and to or on
behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by SMP other than for cause during the period from July 21, 1997 to
the first anniversary of the Closing Date. The aggregate amount of severance
obligations reflected On both schedules is referred to herein as the "FOURTH
PERIOD SEVERANCE AMOUNT". Within fifteen (15) days of the receipt by the parties
of such schedules, the Party which paid the lesser amount of severance
obligations as reflected on such schedules shall pay to the other Party, in the
manner described in Section 2.14, an amount equal to the difference between
fifty percent (50%) of the Fourth Period Severance Amount and the amount of
severance obligations actually paid by such Party as reflected on the schedule
delivered thereby pursuant to this Section 8.2(f).
(g) Not later than fifteen (15) days following the second
anniversary of the Closing Date (i) Moog shall deliver to SMP a schedule setting
forth the name of the individual and the amount of severance obligations
actually paid by Moog during the period from the date which is eighteen months
after the Closing Date to the second anniversary of the Closing Date to or on
behalf of each Moog Scheduled PC and Brake Salaried Non-Sales Person and to or
on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales Person who was
terminated by Moog other than for cause during the period from July 21, 1997 to
the first anniversary of the Closing Date, and (ii) SMP shall deliver to Moog a
schedule setting forth the name of the individual and the amount of severance
obligations actually paid by SMP during the period from the date which is
eighteen months after the Closing Date to the second anniversary of the Closing
Date to or on behalf of each Moog Scheduled TC and Brake Salaried Non-Sales
Person and to or on behalf of each SMP Scheduled TC and Brake Salaried Non-Sales
Person who was terminated by SMP other than for cause during the period from
July 21, 1997 to the first anniversary of the Closing Date. The aggregate amount
of severance obligations reflected in such schedules is referred to hereinafter
as the "FIFTH PERIOD SEVERANCE AMOUNT". Within fifteen (15) days of the receipt
by the parties of such schedules, the Party which paid the lesser amount of
severance obligations as reflected on such schedules shall pay to the other
Party, in the manner described in Section 2.14, an amount equal to the
difference between fifty percent (50%) of the Fifth Period Severance Amount and
the amount of severance obligations actually paid by such Party as reflected on
the schedule delivered thereby pursuant to this Section 8.2(g).
(h) Each Party shall promptly make available or provide to the
other Party such books and records (or copies thereof) as are reasonably
requested by the other Party to allow the other Party to confirm the severance
obligations set forth on the schedules referred to in this Section 8.2.
(i) For purposes of calculating the severance obligations under
this Section 8.2, the severance obligations payable to or on behalf of employees
who are terminated by Moog on or before the first anniversary of the Closing
Date shall be determined as follows. Severance for salaried employees shall be
determined by the severance policy in effect on the date of this Agreement, as
set forth on Exhibit O, for the facility where the individual is employed on the
date of termination. For example, SMP's current severance policy for its Berlin
facility would apply to any salaried employees at the Berlin facility who are
terminated by Moog on or before
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the first anniversary of the Closing Date. For purposes of calculating the
severance obligations under this Section 8.2, the severance obligations shall
consist only of lump sum severance payments, salary continuation (or similar
payments), stay-on bonuses and the out-of-pocket costs incurred by Moog to
provide continued coverage under the benefit plans specified in Exhibit O
including insurance premiums, self-insured costs and administrative fees paid to
third parties. If an individual was an employee of SMP prior to the Closing
Date, then the years of service for such individual for purposes of determining
the severance obligations shall include such individual's continuous years of
service with SMP as of the Closing Date.
(j) For purposes of calculating the severance obligations under
this Section 8.2, the severance obligations payable to or on behalf of employees
who are terminated by SMP on or before the first anniversary of the Closing Date
shall be determined as follows. Severance for salaried employees shall be
determined by the severance policy in effect on the date of this Agreement, as
set forth on Exhibit O, for the facility where the individual is employed on the
date of termination. For example, Moog's current severance policy for its Fort
Worth facility would apply to any salaried employees at the Fort Worth facility
who are terminated by SMP on or before the first anniversary of the Closing
Date. For purposes of calculating the severance obligations under this Section
8.2, the severance obligations shall consist only of lump sum severance
payments, salary continuation (or similar payments), stay-on bonuses and the
out-of-pocket costs incurred by SMP to provide continued coverage under the
benefit plans specified in Exhibit O including insurance premiums, self-insured
costs and administrative fees paid to third parties. The severance obligations
for any Moog Scheduled TC and Brake Salaried Non- Sales Persons who are
terminated by SMP shall include a 4% gross-up on the severance payment to
compensate such persons for the amount which would have been contributed to the
Cooper Industries Salaried Pension Plan on their behalf if such persons would
have been terminated by Moog. In addition, any Moog Scheduled TC and Brake
Salaried Non-Sales Persons who are terminated by SMP may participate in the
Standard Motor Products 401(k) plan during the severance allowance period and
shall receive medical insurance coverage under SMP's medical plan during the
severance allowance period on the same terms as Active Employees of SMP. If an
individual was an employee of Moog prior to the Closing Date, then the years of
service for such individual for purposes of determining the severance
obligations shall include such individual's continuous years of service with
Moog as of the Closing Date.
(k) Each Party shall be responsible for all severance obligations
payable to any hourly employees terminated by such Party without any sharing of
such costs by any other Party.
8.3 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Benefit accruals of the Active Employees of Moog who become
employees of SMP as of the Closing Date under the Moog Employee Plans which are
Employee Pension Benefit Plans shall cease to be effective as of the Closing
Date. Moog shall retain all assets and liabilities under the Moog Employee Plans
which are Employee Pension Benefit Plans subject to the distribution rules of
such plans. Benefits accruals of the Active Employees of SMP who become
employees of Moog as of the Closing Date under the SMP Employee Plans which are
Employee Pension Benefit Plans shall cease to be effective as of the Closing
Date. SMP shall retain all assets and liabilities under the SMP Employee Plans
which are Employee Pension Benefit Plans subject to the distribution rules of
such plans.
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(b) Moog shall, or shall cause its Affiliates to, take any and all
necessary steps to fully vest the accrued benefits and to eliminate any and all
service requirements related to the commencement of benefits under each Moog
Employee Plan which is an Employee Pension Benefit Plan or an Employee Stock
Ownership Plan (as defined under Section 407(c)(6) of ERISA) with respect to
each Active Employee of Moog who becomes an employee of SMP as of the Closing
Date. SMP shall, or shall cause its Affiliates to, take any and all necessary
steps to fully vest the accrued benefits and to eliminate any and all service
requirements related to the commencement of benefits under each SMP Employee
Plan which is an Employee Pension Benefit Plan or an Employee Stock Ownership
Plan (as defined under Section 407(c)(6) of ERISA) with respect to each Active
Employee of SMP who becomes an employee of Moog as of the Closing Date.
(c) Moog shall, or shall cause its Affiliates to, take any and all
necessary steps to allow an Active Employee of Moog who becomes an employee of
SMP on the Closing Date and who has an outstanding loan from a Moog Employee
Plan to continue to repay the loan over its scheduled duration. SMP shall, or
shall cause its Affiliates to, take any and all necessary steps to allow an
Active Employee of SMP who becomes an employee of Moog on the Closing Date and
who has an outstanding loan from a SMP Employee Plan to continue to repay the
loan over its scheduled duration.
(d) Moog shall, or shall cause its Affiliates to, retain all
liability to provide retiree welfare benefits under Moog Employee Plans
maintained for such purpose to Active Employees of Moog who become employees of
SMP and are eligible for such benefits at the Closing Date (or would be eligible
for such benefits if they retired as of the Closing Date). SMP shall, or shall
cause its Affiliates to, retain all liability to provide retiree welfare
benefits under SMP Employee Plans maintained for such purpose to Active
Employees of SMP who become employees of Moog and are eligible for such benefits
at the Closing Date (or would be eligible for such benefits if they retired as
of the Closing Date).
(e) Subject to Section 8.3(f) below, the participation of the
Active Employees of Moog who become employees of SMP and their beneficiaries and
dependents under the Moog Employee Plans which are Employee Welfare Benefit
Plans shall cease to be effective as of the Closing Date and the participation
of the Active Employees of SMP who become employees of Moog and their
beneficiaries and dependents under the SMP Employee Plans which are Employee
Welfare Benefit Plans shall cease to be effective as of the Closing Date. Moog
shall retain all assets under the Moog Employee Plans which are Employee Welfare
Benefit Plans and shall retain any liability to Active Employees who become
employees of SMP and their beneficiaries and dependents for any claim resulting
from an Incident occurring before the Closing Date (other than claims for
ongoing treatment after the Closing Date of chronic ailments diagnosed by a
physician before the Closing Date). SMP shall retain all assets under the SMP
Employee Plans which are Employee Welfare Benefit Plans and shall retain any
liability to Active Employees who become employees of Moog and their
beneficiaries and dependents for any claim resulting from an Incident occurring
before the Closing Date (other than claims for ongoing treatment after the
Closing Date of chronic ailments diagnosed by a physician before the Closing
Date). For purposes of this Agreement, "INCIDENT" shall mean the occurrence of
an event, including without limitation, death, accident, disease, injury or
disability, which gives
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rise to a right to a benefit under an Employee Welfare Benefit Plan and which,
if a disease or disability, shall be deemed to take place at the time of
diagnosis by a physician.
(f) At the request of SMP, Moog shall, or shall cause its Affiliates
to, continue to provide coverage under the Moog Employee Plans which are
Employee Welfare Benefit Plans and which are specified by SMP prior to the
Closing Date, including the payment of premiums, administration of claims and
payment of benefits, as appropriate, on behalf of the Active Employees of Moog
who become employees of SMP on the Closing Date and their beneficiaries and
dependents for a period not to exceed ninety (90) days after the Closing Date in
order to allow SMP or its Affiliates time to install or establish welfare
benefit plans for such employees. SMP shall reimburse Moog or its Affiliates for
all premiums paid by Moog and for all payments relating to claims which are paid
pursuant to this Section 8.3(f) and for all out-of-pocket costs and
administrative expenses incurred by Moog or its Affiliates in connection with
such claim administration services within thirty (30) days after an invoice for
such reimbursement is mailed to SMP. At the request of Moog, SMP shall, or shall
cause its Affiliates to, continue to provide coverage under the SMP Employee
Plans which are Employee Welfare Benefit Plans and which are specified by Moog
prior to Closing, including the payment of premiums, administration of claims
and payment of benefits, as appropriate, on behalf of the Active Employees of
SMP who become employees of Moog on the Closing Date and their beneficiaries and
dependents for a period not to exceed ninety (90) days after the Closing Date in
order to allow Moog or its Affiliates time to install or establish welfare
benefit plans for such employees. Moog shall reimburse SMP or its Affiliates for
all premiums paid by SMP and for all payments relating to claims which are paid
pursuant to this Section 8.3(f) and for all out-of-pocket costs and
administrative expenses incurred by SMP or its Affiliates in connection with
such claim administration service within thirty (30) days after an invoice for
such reimbursement is mailed to Moog. Moog agrees to indemnify and hold SMP
harmless for any liability resulting from the continued operation of the Moog
Employee Plans pursuant to this Section 8.3(f) and SMP agrees to indemnify and
hold Moog harmless for any liability resulting from the continued operation of
the SMP Employee Plans pursuant to this Section 8.3(f).
8.4 SOLICITATION. For two years immediately after the Closing, (i)
without the prior written consent of Moog, SMP agrees not to employ or to
solicit directly or indirectly for employment any of the Brake Transferring
Sales Persons or any of the SMP Scheduled TC and Brake Salaried Non-Sales
Persons who are employed by Moog upon Closing, unless the employment of any such
person is terminated by Moog, and (ii) without the prior written consent of SMP,
Moog agrees not to employ or to solicit directly or indirectly for employment
any of the Moog Transferring Sales Persons or any of the Moog Scheduled TC and
Brake Salaried Non- Sales Persons who are employed by SMP upon Closing, unless
the employment of any such person is terminated by SMP. Each of SMP and Moog
shall cause its Affiliates to honor this covenant.
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ARTICLE IX
ENVIRONMENTAL MATTERS
---------------------
9.1 ENVIRONMENTAL INDEMNIFICATION AND REMEDIATION. (a) Without limiting
----------------------------------------------
SMP's indemnity for Brake Environmental Costs pursuant to Section 11.3(a), but
subject to Sections 9.1(b) and 9.2, from and after the Closing, SMP agrees to
commence and perform in a reasonably timely manner all Remedial Actions with
respect to Brake Environmental Costs in accordance with the procedures set forth
in Section 9.3. Without limiting Moog's indemnity for TC Environmental Costs
pursuant to Section 11.4(a), but subject to Sections 9.1(b) and 9.2, from and
after the Closing, Moog agrees to commence and perform in a reasonably timely
manner all Remedial Actions with respect to TC Environmental Costs in accordance
with the procedures set forth in Section 9.3.
(b) With respect to the Indemnifying Party's obligation pursuant to
Section 9.1(a) above to undertake Remedial Actions, the Indemnified Party shall
have the right, but not the obligation, to assume control over the Remedial
Action, at the Indemnifying Party's expense, if the Indemnifying Party fails to
satisfy the requirements of any Environmental Law for performing the Remedial
Action within the deadlines established by a Governmental Authority (or, in the
event that no such deadline is applicable, the Indemnifying Party fails to
perform the Remedial Action in a reasonable timely manner) and the Indemnifying
Party has not cured such failure within 30 days after receipt of written notice
thereof from the Indemnified Party. However, if the failure to satisfy the
deadline cannot with diligence be cured within such 30 day period and the
Indemnifying Party promptly commences to cure the same and thereafter prosecutes
the curing thereof with diligence, the time within which the Indemnifying
Party's failure may be cured shall be extended for such period as is necessary
to complete the curing thereof with diligence.
(c) SMP shall indemnify Moog for any Liabilities relating to the
tenant's obligations under Section 12.4 of the Agreement of Lease dated July 9,
1996 between 2832526 Canada Inc. and EIS Brake Manufacturing Ltd. for the
facility at 11060 Parkway Blvd., Anjou, Quebec to the extent "Hazardous
Substances" (as defined in such lease) were introduced in or upon the leased
premises prior to Closing. Moog shall indemnify SMP for any Liabilities relating
to the tenant's obligations under Section 12.4 of such lease to the extent
"Hazardous Substances" were introduced in or upon the leased premises after the
Closing Date. For purposes of allocating the Liabilities relating to the removal
of asbestos from the leased premises, the Parties agree that (i) Moog shall be
responsible only for that portion of the Liability determined by the ratio the
numerator of which is the number of days which Moog used asbestos in its
production process at the leased premises following the Closing Date and the
denominator of which is the total number of days that asbestos was used
(including use of asbestos by any third party) in the production process at the
leased premises both before and after Closing Date; and (ii) SMP shall be
responsible for the balance of the Liability.
9.2 LIMITATIONS ON ENVIRONMENTAL INDEMNIFICATION. (a) The Indemnified
---------------------------------------------
Party shall not be entitled to indemnification for Environmental Costs hereunder
or reimbursement under Section 9.1(b), and the Indemnifying Party in its
performance of the Remedial Actions referred to in Section 9.1(a) shall not be
required to take any actions, to the extent arising out of or
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attributable to measures in excess of or in addition to those required under
Environmental Law or required under any applicable provisions of the current
real estate leases listed in Section 4.8 of the Moog Disclosure Schedule and
Section 5.8 of the SMP Disclosure Schedule. Notwithstanding the foregoing, the
Indemnifying Party shall be responsible for any additional measures and the
costs related thereto resulting from the Indemnified Party's refusal to consent
to the matters described in Sections 9.3(c)(v), (vii), (viii) and (ix), unless
such consent was unreasonably withheld.
(b) The Indemnified Party shall not be entitled to indemnification
for Environmental Costs hereunder or reimbursement under Section 9.1(b) for
measures regarding asbestos if the measures are not required under Environmental
Law based on the condition of the asbestos as of the Closing Date or if the
measures are required as the result of building modifications or renovations
following the Closing Date.
9.3 CERTAIN PROCEDURES. (a) Subject to Sections 9.3(b), (c) and (d),
-------------------
the Indemnifying Party shall have authority and control with respect to
obtaining the resolution of issues involving any Remedial Action relating to
Environmental Costs covered by the Indemnifying Party's indemnity hereunder,
including but not limited to: (i) negotiating any compliance schedule,
compliance orders, clean-up standards, permit, consent agreement, consent order,
memorandum of understanding or other agreement, which may be required by any
Governmental Agency; (ii) contesting, defending, settling or otherwise resolving
complaints, directives or other demands by any such Governmental Agency; (iii)
bringing claims against, defending against and settling or otherwise resolving
claims brought by, or otherwise establishing liability of or to third parties;
and (iv) implementing any measures necessary to satisfy the agreements or other
terms resulting from any such negotiation, litigation, direction by a
Governmental Agency, or other resolution (such matters, collectively, the
"RESOLUTION OF PRE-CLOSING ENVIRONMENTAL ISSUES"). Subject to the parties
agreeing to a site access agreement and subject to Sections 9.3(b), (c) and (d),
the Indemnified Party hereby grants to the Indemnifying Party and the agents,
employees, consultants and contractors of the Indemnifying Party, upon giving
the Indemnified Party reasonable advance written notice, the right to enter the
premises of the Indemnified Party to perform such Remedial Actions as are
necessary to obtain information for, or to implement the terms of, any
Resolution of Pre-Closing Environmental Issues. Prior to commencing any site
work, the Indemnifying Party will provide the Indemnified Party with a
description of the work and a schedule for completion of the work.
(b) Notwithstanding any other provision in this Section 9, the
Party managing the Resolution of Pre-Closing Environmental Issues shall keep the
other Party reasonably informed of all material developments concerning the
Resolution of Pre-Closing Environmental Issues including: (i) promptly
furnishing the other Party a copy of all written correspondence and other
documents to or from any Governmental Agency or other third party; (ii) giving
the other Party reasonable advance notice of, and the opportunity to attend, any
meeting with any Governmental Agency or other third party; and (iii) reasonably
in advance of submission to a Governmental Agency or other third party,
furnishing the other Party a copy of any draft pleading, compliance schedule,
scope of work, Remedial Action plan, clean-up standard, permit, compliance
order, consent agreement, consent order, memorandum of understanding or other
agreement, consultant's report, and other material documents.
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(c) Notwithstanding any other provision in this Section 9, the
Party managing the Resolution of Pre-Closing Environmental Issues shall not,
without prior consultation with the other Party (and, in the case of (v), (vii),
(viii) and (ix) below, the consent of the Indemnified Party which consent shall
not be unreasonably withheld): (i) conclude any compliance schedule, compliance
order, scope of work, Remedial Action plan, clean-up standard, permit, consent
agreement, consent order, memorandum of understanding or other agreement; (ii)
settle or otherwise resolve complaints, directives or other demands by any
Governmental Agency or other third party; (iii) bring a claim against or
otherwise establish liability of or to third parties; (iv) extend schedules for
remediation or other activities; (v) accept property, use or deed restrictions
or affirmative cap maintenance or other similar property or use restrictions on
property owned by the Indemnified Party; (vi) contest decisions by Governmental
Agencies; (vii) treat, dispose of, transfer or excavate any sediment, soil,
surface or groundwater or other material on the premises of the Indemnified
Party or any off-site location; (viii) install any assessment, investigation,
remediation or monitoring system, or design and construct any cap; or (ix)
perform any Remedial Actions which will materially interfere with the operation
of the business by the Indemnified Party or materially and adversely effect the
valuation of the Indemnified Party's property.
(d) When managing the Resolution of Pre-Closing Environmental
Issues, the Indemnifying Party shall be liable for any Environmental Costs
arising from any material damage caused by, and the restoration of any
improvement materially affected by, any implementation, entry, performance,
inspection, treatment, disposal, excavation, operation, or maintenance described
herein.
ARTICLE X
CONDITIONS TO OBLIGATION TO CLOSE
---------------------------------
10.1 CONDITIONS TO OBLIGATION OF BOTH PARTIES. The obligation of each
-----------------------------------------
Party to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction or waiver of the following conditions:
(a) The waiting period (and any extensions thereof) under the H-S-R
Act shall have expired or shall have been terminated and the Parties and their
Affiliates shall have received all other material authorizations, consents and
approvals of Governmental Agencies required for the consummation of the Closing,
subject to no conditions which a party reasonably objects to.
(b) There shall be no injunction, restraining order, stipulation,
judgment, order, decree or ruling of any Governmental Agency of competent
jurisdiction that is in effect, no litigation or proceeding brought by a
Governmental Agency shall be pending, and no litigation or proceeding shall be
threatened by a Governmental Agency, which in any case: (i) restrains or
prohibits, or seeks to restrain or prohibit, the consummation of the
transactions contemplated by this Agreement, or (ii) conditions or seeks to
condition the consummation of the transactions contemplated by the Agreement on
the matters referred to in clauses (i) or (ii) of Section 6.3(b). For the
purposes of this Agreement, a litigation or proceeding shall be deemed to be
"threatened" by (i) the U.S. Federal Trade Commission, only if the U.S. Federal
Trade Commission shall have publicly announced or shall have advised Moog or SMP
that the U.S. Federal Trade Commission has authorized its staff to commence
administrative proceedings
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or proceedings in Federal court or (ii) the Antitrust Division of the U.S.
Department of Justice, only if the U.S. Department of Justice shall have
publicly announced or shall have advised Moog or SMP that the Assistant Attorney
General has determined to commence proceedings in Federal court, in either case,
seeking any of the remedies described in the preceding sentence.
10.2 CONDITIONS TO OBLIGATION OF MOOG. The obligation of Moog to
---------------------------------
consummate the transactions to be performed by it in connection with Closing is
subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties of SMP set forth in Article
V shall be true and correct in all material respects at and as of the Closing
Date, without giving effect to any disclosures made by SMP or its Affiliates to
Moog after the date of this Agreement through the Closing pursuant to Section
6.9 of this Agreement or otherwise.
(b) SMP shall have performed and complied in all material respects
with all of the covenants to be performed by it prior to Closing.
(c) SMP and its Affiliates shall have procured all consents,
releases or agreements specified in Section 10.2 of the Moog Disclosure
Schedule.
10.3 CONDITIONS TO OBLIGATION OF SMP. The obligation of SMP to
--------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties of Moog set forth in Article
IV shall be true and correct in all material respects at and as of the Closing
Date, without giving effect to any disclosures made by Moog or its Affiliates to
SMP after the date of this Agreement through the closing pursuant to Section 6.9
of this Agreement or otherwise.
(b) Moog shall have performed and complied in all material respects
with those covenants to be performed by it prior to Closing.
(c) Moog and its Affiliates shall have procured all consents,
releases or agreements specified in Section 10.3 or the SMP Disclosure Schedule.
10.4 WAIVER; RIGHT TO PROCEED. If any of the conditions specified in
-------------------------
Section 10.2 hereof have not been satisfied, Moog, in addition to any other
rights that may be available to it, may waive its rights to have such conditions
satisfied at Closing and may proceed with the transactions contemplated hereby,
and if any of the conditions specified in Section 10.3 hereof have not been
satisfied at Closing, SMP, in addition to any other rights that may be available
to it, may waive its rights to have such conditions satisfied and may proceed
with the transactions contemplated thereby; PROVIDED, HOWEVER, that any such
waiver by Moog or SMP, as the case may be, shall in no way diminish or eliminate
any other rights that may be available to the waiving party related to or as a
result of the waived condition or conditions not having been satisfied at
Closing.
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ARTICLE XI
REMEDIES FOR BREACHES OF THIS AGREEMENT
---------------------------------------
11.1 SURVIVAL. All representations and warranties of the Parties
---------
contained in this Agreement shall survive the Closing and continue in full force
and effect but will expire one (1) year after the Closing Date, except for
representations and warranties with respect to environmental matters and Taxes,
which shall continue in full force and effect until six (6) months following the
expiration of the applicable statute of limitations. All covenants and
agreements of the Parties contained in this Agreement (including without
limitation all covenants and agreements in Article VII hereof) shall survive in
accordance with their terms or without termination if no termination date is
specified or clearly evident from the context in which such provisions appear.
11.2 ASSERTION OF CLAIMS. Each Party must assert any claim involving a
--------------------
representation or warranty against the other Party before expiration of any
applicable survival period. Notwithstanding any contrary provision, as long as
the claim is asserted timely, the claim will continue to be valid and assertible
even though the survival period may subsequently expire before the claim is
resolved.
11.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF MOOG. Subject to the
-----------------------------------------------
requirements of Sections 11.2, 11.5 and 11.6, SMP agrees to defend, indemnify
and save harmless Moog, its Affiliates and their directors, officers and
employees ("MOOG'S INDEMNIFIED GROUP") from and against the entirety of any
Adverse Consequences that any of Moog's Indemnified Group may suffer through and
after the date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by:
(a) any Brake Retained Liability, including SMP's failure to pay or
satisfy any such Brake Retained Liability;
(b) the Brake Retained Assets;
(c) any TC Assumed Liability, including SMP's failure to pay or
satisfy any such TC Assumed Liability;
(d) SMP's operation of, or any act or omission of SMP occurring in
respect of, the TC Assets or the TC Business after the Closing Date;
(e) the breach of a representation or warranty of SMP contained
herein;
(f) the breach or non-performance of any covenant or agreement of
SMP contained herein;
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(g) any Liability for expenses incurred by SMP in connection with
or resulting from or attributable to the transactions contemplated by this
Agreement; and
(h) any Liability including lost wages or other benefits, based
upon, arising from or related to the order of the National Labor Relations Board
dated October 31, 1997 concerning unfair labor practices at Seller's facility in
Berlin, Connecticut and any appeals thereof or related proceedings, to the
extent such Liabilities relate to payments due or paid or benefits provided for
the time of employment prior to Closing.
11.4 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SMP. Subject to the
----------------------------------------------
requirements of Sections 11.2, 11.5 and 11.6, Moog agrees to defend, indemnify
and save harmless SMP, its Affiliates and their directors, officers and
employees ("SMP'S INDEMNIFIED GROUP") from and against the entirety of any
Adverse Consequences that any of the SMP's Indemnified Group may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by:
(a) any TC Retained Liability, including Moog's failure to pay or
satisfy any such TC Retained Liability;
(b) the TC Retained Assets;
(c) any Brake Assumed Liability, including Moog's failure to pay or
satisfy any such Brake Assumed Liability;
(d) Moog's operation of, or any act or omission of Moog occurring
in respect of, the Brake Assets or the Brake Business after the Closing Date;
(e) the breach of a representation or warranty of Moog contained
herein;
(f) the breach or non-performance of any covenant or agreement of
Moog contained herein;
(g) any Liability for expenses incurred by Moog in connection with
or resulting from or attributable to the transactions contemplated by this
Agreement;
(h) any claims by Active Employees of the Brake Business (who
become employees of Moog following the Closing Date) to the extent such claims
are based on or arise out of asbestos exposure after the Closing Date at the
facility of the Brake Business located at 11060 Parkway Blvd., Anjou, Quebec.
Moog's liability to indemnify SMP under this subsection (h) shall in no event
exceed the portion of such Active Employees' claim determined by multiplying
such claim by a fraction the numerator of which is the number of full months
that Moog continued to manufacture products containing asbestos at such facility
after the Closing Date and the denominator of which is the aggregate number of
full months that such employee was employed by SMP and Moog; and
(i) any Liability including lost wages or other benefits, based
upon, arising from or related to the order of the National Labor Relations Board
dated October 31, 1997 concerning
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unfair labor practices at Seller's facility in Berlin, Connecticut and any
appeals thereof or related proceedings, to the extent such Liabilities relate to
payments due or paid or benefits provided for the time of employment after the
Closing.
11.5 MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
--------------------------------
the Indemnified Party with respect to any matter which may give rise to a claim
for indemnification against the Indemnifying Party, then the Indemnified Party
shall notify the Indemnifying Party thereof promptly; PROVIDED, HOWEVER, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
damaged. In the event any Indemnifying Party notifies the Indemnified Party
within thirty (30) days after the Indemnified Party has given notice of the
matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the third party seeks
injunctive relief or criminal sanctions), (iii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the matter without the prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or delayed), and (iv) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld or
delayed). In the event the Indemnifying Party fails to notify the Indemnified
Party within thirty (30) days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it reasonably may deem appropriate without waiving
any right to indemnity therefor by the Indemnifying Party.
11.6 DE MINIMIS BREACHES OF REPRESENTATIONS AND WARRANTIES; DEFINITION
-----------------------------------------------------------------
OF "MATERIAL." An Indemnifying Party will have no obligation to indemnify an
- --------------
Indemnified Party pursuant to Section 11.3(e) or Section 11.4(e) as the case may
be, until such time, if any, as the aggregate Adverse Consequences suffered by
the Indemnified Party with respect to such breaches exceeds $100,000, and then
only to the extent the aggregate Adverse Consequences suffered by the
Indemnified Party exceed $100,000. Notwithstanding the foregoing, a breach of
SMP's representations and warranties under Section 5.28 shall not be subject to
this Section 11.6 and shall override the indemnity by Moog for Brake Assumed
Liabilities under Sections 1.11(g) and (h).
11.7 TAX INDEMNIFICATION. (a) Notwithstanding any provisions herein to
--------------------
the contrary, Moog agrees to indemnify and hold SMP harmless from and against
any liability for Taxes of Moog or the TC Business for any period prior to the
Closing Date, PROVIDED, HOWEVER, that such indemnification shall not apply to
the extent that a liability for Taxes has been reserved and is reflected on the
Moog Final Closing Balance Sheet.
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(b) Notwithstanding any provisions herein to the contrary, SMP
agrees to indemnify and hold Moog harmless from and against any liability for
Taxes of SMP or the Brake Business for any period prior to the Closing Date,
PROVIDED, HOWEVER, that such indemnification shall not apply to the extent that
a liability for Taxes has been reserved and is reflected on the SMP Final
Closing Balance Sheet.
11.8 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
--------------------------------
provisions and any other indemnification provisions contained in this Agreement
are the exclusive remedies for, and are specifically meant to be in derogation
of, any statutory, common law or other remedy that a Party may have for breach
of representation, warranty, or covenant hereunder.
ARTICLE XII
TERMINATION
-----------
12.1 TERMINATION OF AGREEMENT. Subject to the parties' obligations as
-------------------------
provided in Section 6.1, this Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Moog and SMP;
(b) by Moog or SMP at any time after April 30, 1998, if the
conditions set forth in Article X shall not have been satisfied or waived for
any reason other than the failure or refusal of the party seeking to terminate
to perform any of its obligations hereunder;
(c) by Moog or SMP if any Governmental Agency having competent
jurisdiction shall have issued an injunction, restraining order, stipulation,
judgment, order, decree or ruling, restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;
(d) by Moog, if there has been a material violation or breach by
SMP of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of Moog
impossible and such violation or breach has not been waived by Moog;
(e) by SMP, if there has been a material violation or breach by
Moog of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of SMP
impossible and such violation or breach has not been waived by SMP;
(f) by Moog, if a Governmental Agency of competent jurisdiction has
commenced administrative or court proceedings, or such proceedings have been
"threatened" (as provided in Section 10.1(b)), seeking to restrain or prohibit
the consummation of the transactions contemplated by this Agreement or seeking
to condition the consummation of such transactions on matters referred to in
clauses (i) or (ii) of Section 6.3(b) so as to materially reduce the benefits to
Moog of the transactions contemplated by this Agreement or impose conditions
that are reasonably unacceptable.
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<PAGE>
(g) by SMP, if a Governmental Agency of competent jurisdiction has
commenced administrative or court proceedings, or such proceedings have been
"threatened" (as provided in Section 10.1(b)), seeking to restrain or prohibit
the consummation of the transactions contemplated by this Agreement or seeking
to condition the consummation of such transactions on matters referred to in
clauses (i) or (ii) of Section 6.3(b) so as to materially reduce the benefits to
SMP of the transactions contemplated by this Agreement or impose conditions that
are reasonably unacceptable.
12.2 PROCEDURE AND EFFECT OF TERMINATION.
------------------------------------
In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by any or all of the Parties pursuant to
Section 12.1, written notice thereof shall forthwith be given to the other
Parties and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the Parties hereto.
If this Agreement is terminated as provided herein:
(a) upon request therefor, each Party will redeliver all documents,
work papers and other material of any other Party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same;
(b) each Party hereto will use its best efforts to prevent
disclosure to third persons of all information received by either Party with
respect to the business of the other Party or its subsidiaries (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any Governmental Agency), except (i) as may be required
by applicable law; and (ii) as is permitted by this Agreement; and
(c) none of the Parties hereto shall have any liability or further
obligation to the other Party to this Agreement pursuant to this Agreement
except as stated in this Section 12.2 and in Sections 7.6 and 13.9, provided
that nothing herein shall relieve any party from liability for any breach of
this Agreement.
ARTICLE XIII
GENERAL MATTERS
---------------
13.1 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
-----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns. Nothing contained herein shall be construed as
constituting any change, modification or alteration in the at-will employment
status of any employee employed by any of the Parties or their respective
Affiliates. Nothing in this Agreement, expressed or implied, shall confer upon
any employee of Moog or SMP, legal representative thereof, or any collective
bargaining agent any rights or remedies, including, without limitation, any
right to employment, or continued employment for any specified period or the
benefits, terms and conditions thereof, of any nature or kind whatsoever under
or by reason of this Agreement.
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13.2 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
-----------------
referred to in Section 6.5(c) (including the Schedules, Exhibits and documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that relate to the subject matter hereof.
Each of the Parties may rely on the representations and warranties contained in
this Agreement, notwithstanding any due diligence done by such Party.
13.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
--------------------------
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as otherwise provided herein, no Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party. Any Party may (i) assign
any of its rights and interests under this Agreement to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations under this Agreement (in any or all of which cases such Party
nonetheless shall remain liable and responsible for the performance of all of
its obligations under this Agreement). Except for assignments to Affiliates
permitted by the previous sentence, any assignment without proper written
approval of the other Party shall be null and void.
13.4 COUNTERPARTS. This Agreement may be executed in two (2) or more
-------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
13.5 HEADINGS. The article and section headings contained in this
---------
Agreement and in the Schedules are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
13.6 NOTICES. All notices and other communications under this Agreement
--------
shall be in writing and shall be deemed given (i) when delivered by hand or 5
days after deposit in the mail, certified, return receipt requested, (ii) when
transmitted by facsimile transmission, with written confirmation of receipt, or
(iii) one day after being sent for overnight delivery by Express Mail, Federal
Express or other nationally recognized express delivery service, to the
addressee at the following addresses or fax numbers (or to such other address or
fax number as a Party may specify from time to time by notice hereunder;
provided that notices of a change of address shall be effective only upon
receipt thereof):
IF TO SMP: c/o Standard Motor Products, Inc.
37-18 Northern Boulevard
Long Island City, New York 11101
Attention: Chief Financial Officer
Telephone: (718) 392-0200
Facsimile: (718) 472-0794
WITH A COPY TO: Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attention: Bud G. Holman
Telephone: (212) 808-7800
Facsimile: (212) 808-7978
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<PAGE>
IF TO MOOG: c/o Cooper Industries, Inc.
Texas Commerce Tower
600 Travis Street, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Telephone: (713) 209-8400
Facsimile: (713) 209-8989
WITH A COPY TO: Moog Automotive Company
6565 Wells Avenue
St. Louis, MO 63133
Attention: President
Telephone: (314) 977-0500
Facsimile: (314) 977-0941
13.7 AMENDMENTS; WAIVERS; CONSENTS. No amendment or modification of or
------------------------------
supplement to any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties hereto. Except as otherwise
provided in this Agreement, any failure of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the Party
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
a Party, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 13.7.
13.8 SEVERABILITY. If for any reason any term or provision of this
-------------
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature. If
for any reason any term or provision containing a restriction set forth herein
is held to cover an area or to be for a length of time which is unreasonable, or
in any other way is construed to be too broad or to any extent invalid, such
term or provision shall not be determined to be null, void and of no effect, but
to the extent the same is or would be valid or enforceable under applicable law,
any court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area, time
period and other provisions (not greater than those contained herein) as shall
be valid and enforceable under applicable law.
13.9 EXPENSES. Except as otherwise expressly provided herein, each
---------
Party shall bear its own expenses (including all fees, costs and expenses of its
attorneys, consultants, investment bankers, accountants, advisers or other
agents or representatives) incident to or incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder and thereunder.
13.10 CONSTRUCTION. The language used in this Agreement will be deemed
-------------
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute
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<PAGE>
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
13.11 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that the
---------------------
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Each Party agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any remedy to which they may be
entitled, at law or in equity.
13.12 BULK SALES.
-----------
(a) Moog acknowledges that SMP will not comply with the
requirements of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement and Moog waives compliance with such
laws.
(b) SMP acknowledges that Moog will not comply with the
requirements of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement and waives compliance with such
laws.
13.13 GOVERNING LAW. This Agreement shall be governed by and be
--------------
construed in accordance with the substantive laws of the State of Texas
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of law) as to all matters, including matters of validity,
construction, effect, performance and remedies.
ARTICLE XIV
DISPUTE RESOLUTION
------------------
14.1 SENIOR OFFICERS. Any claim or dispute between Moog and SMP arising
----------------
out of or in connection with this Agreement or any alleged breach hereof or
thereof except those to which the arbitration provisions in Section 2.12 apply
(a "CLAIM") shall be submitted for resolution to a senior officer of each of SMP
and Moog, as designated by their respective chief executive officers, who shall
meet within thirty (30) days of such submission to seek in good faith an
amicable settlement.
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<PAGE>
14.2 BINDING ARBITRATION.
--------------------
(a) GOVERNING PRINCIPLES. If any Claim not settled by the Parties
---------------------
within sixty (60) days after written notice of the Claim is first given by
either Party to the other, then either Party may submit a written demand for
arbitration and the Claim shall be finally settled by arbitration under the
Commercial Arbitration Rules and the Guidelines for Expediting Larger, Complex
Commercial Arbitrations of the American Arbitration Association (the "RULES"),
and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction over it.
(b) SELECTION AND QUALIFICATION OF THE ARBITRATOR. If the Claim
----------------------------------------------
does not exceed $1,000,000, there shall be one arbitrator. If the Claim is
$1,000,000 or more, there shall be three arbitrators (all arbitrators are
hereafter collectively referred to as the "ARBITRATOR"). The Parties shall
endeavor to agree on the selection of an Arbitrator, but if no agreement has
been reached within thirty (30) days of claimant's demand for arbitration the
Arbitrator shall be selected by the American Arbitration Association. The
Arbitration shall be held in New York, New York. The Arbitrator shall conduct
himself or themselves as a neutral, and be subject to disqualification pursuant
to Section 19 of the Rules. The Arbitrator shall be compensated at such
Arbitrator's normal hourly or per diem rates for all time spent in connection
with the arbitration proceeding, and pending final award, appropriate
compensation and expenses shall be advanced equally by the Parties.
(c) PRELIMINARY HEARING. Within thirty (30) days after the
--------------------
Arbitrator has been appointed, a preliminary hearing among the Arbitrator and
counsel for the Parties shall be held for the purpose of evolving a written plan
for the management of the arbitration, that shall promote the efficient,
expeditious and cost-effective conduct of the proceeding.
(d) INTERIM RELIEF FROM A COURT. Either Party may request a court
----------------------------
to provide interim or provisional relief, and such request shall not be deemed
incompatible with the agreement to arbitrate or as a waiver of that agreement.
(e) POWERS OF THE ARBITRATOR AND ARBITRATION PROCEDURES. The
----------------------------------------------------
Arbitrator shall permit and facilitate such discovery as it determines is
appropriate, including prehearing depositions, particularly of witnesses who
will not appear, and orders to protect the confidentiality of proprietary
information, trade secrets, and other sensitive information disclosed in
discovery. Papers, documents and written communications shall be delivered by
the Parties directly to each other, the Arbitrator, and the American Arbitration
Association tribunal administrator. The Arbitrator shall actively manage the
proceeding to make it fair, expeditious, economical and less burdensome and
adversarial than litigation. The Arbitrator may limit the issues, limit the time
for each Party to present its case, exclude testimony and other evidence that it
deems irrelevant, cumulative or inadmissible, and order that the direct
testimony of witnesses be furnished by written sworn statement. All documents
that a Party proposes to offer in evidence, except for those objected to by an
opposing Party, shall be self-authenticated. There shall be a stenographic
transcript of the proceedings, the cost of which shall be borne equally by the
Parties, pending the final award. Any Claim submitted to arbitration shall be
resolved in accordance with Title 9 of the U.S. Code (U.S. Arbitration Act),
which shall govern the interpretation, enforcement and proceedings pursuant to
this arbitration provision.
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<PAGE>
(f) RENDERING OF AWARD. The award rendered by the Arbitrator shall
-------------------
be itemized, shall not include punitive damages but may include all or a part of
a Party's reasonable attorneys' fees, and shall state the reasoning on which it
rests. Before rendering the final award, the Arbitrator shall submit to the
Parties an unsigned draft of the proposed award, and each Party may deliver,
within fifteen (15) days after receipt of such draft, a written statement of
alleged errors of fact, computation, law or otherwise. The Arbitrator may
disregard any Party's statement to the extent that it is in substance an
application for reargument. Within twenty (20) days after receipt of such Party
statements, the Arbitrator shall render the final award.
* * * * * * * * * * * *
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
SMP MOTOR PRODUCTS, LTD.
By:___________________________________
Name: MICHAEL J. BAILEY
Title: SENIOR VICE PRESIDENT/ CFO
STANDARD MOTOR PRODUCTS, INC.
By:___________________________________
Name:: MICHAEL J. BAILEY
Title: SENIOR VICE PRESIDENT/ CFO
COOPER INDUSTRIES (CANADA) INC.
By:___________________________________
Name: DAVID A. WHITE
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
MOOG AUTOMOTIVE COMPANY
By:___________________________________
Name: DAVID A. WHITE
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
MOOG AUTOMOTIVE PRODUCTS, INC.
By:___________________________________
Name: DAVID A. WHITE
Title: SENIOR VICE PRESIDENT
STRATEGIC PLANNING
- 93 -
EXHIBIT 10.17
OVERRIDE AND AMENDMENT AGREEMENT
This OVERRIDE AND AMENDMENT AGREEMENT (this "Agreement") is made and
entered into as of March 27, 1998, by and among STANDARD MOTOR PRODUCTS, INC.
(the "Company") and each of the entities set forth on the signature pages hereto
(collectively, the "1989 Noteholders"). All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Note Agreement
dated as of October 15, 1989 (as amended from time to time prior to the date
hereof, the "Existing Note Agreement", and as modified and overridden hereby,
the "Note Agreement") among the Company and the 1989 Noteholders (or their
respective predecessors in interest).
R E C I T A L S
---------------
WHEREAS, various Events of Default under the Existing Note Agreement
presently exist, as more particularly set forth on Schedule 1 of this Agreement
(collectively referred to herein as the "Current Events of Default"); and
WHEREAS, as a result of the Current Events of Default, the 1989
Noteholders are entitled, among other things, to enforce their rights and
remedies provided for in the Existing Note Agreement, including without
limitation, the right to accelerate and immediately demand payment in full of
the Notes; and
WHEREAS, the Company has requested that the 1989 Noteholders waive the
Current Events of Default and agree to certain modifications to the Existing
Note Agreement; and
WHEREAS, the 1989 Noteholders are willing to waive the Current Events
of Default and make such modifications, but only upon full and complete
compliance by the Company with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings (or the meanings set forth in the Section of this Agreement
referred to opposite such term) and the following definitions shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined. Terms used herein and not defined shall have the respective meanings
ascribed to them in the Note Agreement.
ACCEPTABLE REPLACEMENT FACILITY -- shall mean, collectively, one or
more financing transactions with one or more banks, insurance companies or other
institutional investors, which transactions,
1
<PAGE>
(i) constitute, in the aggregate, a legally binding commitment to
provide to the Company unsecured revolving credit and/or term debt
and/or equity financing in an aggregate amount of at least $100,000,000
and having a maturity not earlier than two years from the date the full
$100,000,000 first becomes available to the Company; and
(ii) do not (individually or in the aggregate) violate any
provision of the Note Agreement in effect at the time any of such
transactions is entered into.
AGREEMENT -- the introductory paragraph hereof.
AMENDMENT FEE -- one and one half percent (1.50%) of the outstanding
principal amount of the Notes.
BANK LOAN AGREEMENT -- the Revolving Credit and Guaranty Agreement
dated as of March 30, 1998 among the Company as borrower, certain of its
subsidiaries as guarantors, the Banks as lenders, The Chase Manhattan Bank, as
Administrative Agent, and The Bank of New York, as Documentation Agent, as in
effect on the date hereof.
BANKS -- The Chase Manhattan Bank, The Bank of New York, Fleet Bank,
National Association, NBD Bank, Comerica Bank, and Canadian Imperial Bank of
Commerce.
CIBC OTHER CREDITS -- the term loan in the outstanding principal amount
of CDN $20,000,000 extended by Canadian Imperial Bank of Commerce to SMP Motor
Products, Inc., and the letter of guaranty by Canadian Imperial Bank of Commerce
for the account of SMP Motor Products, Inc., in the aggregate amount of CDN
$60,000 evidenced by letter of guarantee No. T374406000 issued December 30,
1996, as in effect on the date hereof.
CLIPPER FACILITY -- collectively, the Purchase and Sale Agreement dated
as of March 19, 1997 between the Company and SMP Credit Corp., the Receivables
Purchase Agreement dated as of March 19, 1997 among SMP Credit Corp., the
Company, Clipper Receivables Corporation, State Street Boston Capital
Corporation and State Street Bank and Trust Company and any other instrument or
agreement executed and delivered in connection therewith, in each case as in
effect on the date hereof.
COMPANY -- the introductory paragraph hereof.
COOPER -- collectively, Cooper Industries, Inc., an Ohio corporation,
Cooper Industries (Canada) Inc., Moog Automotive Company, a Delaware corporation
and Moog Automotive Products, Inc., a Missouri corporation.
COOPER FINANCING -- a $22,500,000 loan from Cooper to the Company
substantially on the terms set forth in that certain letter from Michael J.
Bailey to Brad McWilliams, dated January 28, 1998.
COOPER SWAP -- the proposed exchange of the assets of the Company's
brake division for the assets of Cooper's climate control division, as more
particularly described in the
2
<PAGE>
"Standard Motor Products, Inc. Cooper Swap Deal Summary" signed on behalf of
both the Company and Cooper on March 17, 1998, and all transactions between
Cooper and its subsidiaries and the Company and its Subsidiaries related to such
exchange.
COSTS AND EXPENSES -- Section 10.
CREDIT EXTENSION DATE -- October 31, 1998; PROVIDED that if on October
31, 1998 the Company is in compliance with Sections 6.15 and 6.16 of the Bank
Loan Agreement, the Credit Extension Date shall be November 30, 1998; and
PROVIDED FURTHER that if (a) the Maturity Date (as defined in the Bank Loan
Agreement) is extended beyond November 30, 1998 and (b) the Banks receive no
permanent reduction of the Tranche A Commitment (as defined in the Bank Loan
Agreement), no collateral, and no increase in interest rates or fees as a result
of such extension, the Credit Extension Date will be extended to the earlier of
the extended Maturity Date under the Bank Loan Agreement or the date on which an
Event of Default shall exist.
CURRENT EVENTS OF DEFAULT -- the recitals hereof.
EFFECTIVE DATE -- Section 6.
EVENT OF DEFAULT -- means and includes any "Event of Default" as
defined in the Note Agreement.
EXISTING NOTE AGREEMENT -- the introductory paragraph hereof.
FUEL PUMP TRANSACTION -- the proposed sale by the Company of certain
assets of its fuel, pump product line, as more particularly described on
Schedule 2 hereto.
GUARANTORS -- Reno Standard, Incorporated, a Nevada corporation,
Stanric, Inc., a Delaware corporation, and Mardevco Credit Corp., a New York
corporation.
INVESTMENT GRADE RATING -- a long term unsecured debt rating (which may
be a private rating) of BBB- or better by Standard & Poor's, Duff & Phelps or
Fitch IBCA, Inc., a rating of Baa3 or better by Moody's Investors Services, or
such other rating as shall be reasonably acceptable to the holders of all of the
Notes.
1992 NOTEHOLDERS -- the holders of the Company's $46,428,572 aggregate
principal amount Notes, due December 15, 2002 (the "1992 Notes") issued pursuant
to Note Agreement dated as of December 15, 1992, as amended.
1995 NOTEHOLDERS -- the holders of the Company's $73,000,000 aggregate
principal amount Notes, due February 25, 2006 (the "1995 Notes") issued pursuant
to Note Purchase Agreement dated as of December 1, 1995, as amended.
NOTE AGREEMENT -- the introductory paragraph hereof.
3
<PAGE>
NOTES -- the $30,000,000 aggregate principal amount Notes due November
1, 2004 issued pursuant to the Note Agreement.
OTHER DOCUMENTS -- Section 7(a).
REQUIRED HOLDERS -- means, at any time, the holders of more than fifty
percent (50%) in aggregate principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any one or more of the Company, any Subsidiary
or any Affiliate).
SERVICE LINE TRANSACTION -- the proposed sale by the Company of its
Service Line division, as more particularly described on Schedule 2 hereto.
SUBSIDIARY GUARANTY -- that certain guaranty of the Notes, dated the
date hereof, executed by the Guarantors.
2. WAIVER OF EXISTING EVENTS OF DEFAULT.
Subject to Section 6 of this Agreement, the 1989 Noteholders hereby
waive the Current Events of Default.
3. CONSENT TO CERTAIN TRANSACTIONS.
Subject to Section 6 of this Agreement, the 1989 Noteholders hereby
consent to the Cooper Swap, the Cooper Financing, the Service Line Transaction
and the Fuel Pump Transaction, provided that each such transaction is
consummated (a) substantially in accordance with the descriptions thereof set
forth in Schedule 2 hereto, and (b) the net after-tax cash proceeds, if any, of
such dispositions are utilized for nonpermanent reductions of the amounts
outstanding under the Bank Loan Agreement and for working capital. Other than
the Amendment Fee payable in connection with this Agreement, no fee shall be
payable by the Company to the holders of the Notes in connection with such
transactions.
4. PAYMENTS OF INTEREST.
The Company acknowledges and agrees that:
(a) The aggregate outstanding principal amount of the Notes on the
date hereof is $30,000,000.
(b) Prior to April 1, 1998, interest on the Notes shall accrue in
accordance with the terms of the Existing Note Agreement. From and
after April 1, 1998, interest on the outstanding principal amount of
the Notes shall accrue at the rate of 10.72% per annum, and interest
shall accrue on any overdue principal, overdue Make-Whole Amount and
(to the extent legally enforceable) on any overdue installment of
interest on the Notes at a rate per annum equal to the greater of
12.72% or 3.25% over the prime rate of The Chase Manhattan Bank (or its
successors) from time to time in effect. The rate of interest then
payable upon the Notes shall decrease to 9.97% per annum
4
<PAGE>
on the first day on which the Company shall have achieved an Investment
Grade Rating and no Default or Event of Default shall exist. Upon the
first to occur of (i) the closing of an Acceptable Replacement
Facility, or (ii) the Company's being in compliance with all covenants
contained in Section 5 of the Note Agreement at all times during the
fourth fiscal quarter of 1998 and the first fiscal quarter of 1999,
and, in either event, no Default or Event of Default shall exist, the
rate of interest then payable upon the Notes shall decrease by 0.50%
per annum; provided that the rate of interest shall never be less than
9.97% per annum. The rate of interest then payable upon the Notes shall
increase by 0.25% per annum on October 1, 1998 if Consolidated EBITDA
(as defined in Section 3 of Schedule 3 to this Agreement) for the first
three fiscal quarters of 1998 is not at least $48,371,000 on a
cumulative basis and the Company has not earlier obtained an Investment
Grade Rating.
(c) Accrued interest on the outstanding principal balance of the
Notes shall be payable quarterly in arrears on March 31, June 30,
September 30, and December 31 of each year beginning June 30, 1998.
(d) For purposes of computing the Make-Whole Amount due at any time
with respect to the Notes, the rate of interest payable on the Notes
shall be assumed to be the rate determined in accordance with the
Existing Note Purchase Agreement rather than the rate determined in
accordance with Section 4(b) above.
(e) The provisions of this Section 4 shall override and permanently
supersede any provisions to the contrary contained in the Existing Note
Agreement and the Notes, and the Existing Note Agreement and the Notes
are hereby deemed amended to be consistent with this Section 4.
5. CERTAIN COVENANTS AND AGREEMENTS.
(a) OVERRIDE OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, Sections 5.7 and 5.9 of the Existing
Note Agreement are hereby overridden and replaced by the financial covenants set
forth in Schedule 3 to this Agreement. A breach of any of the covenants set
forth on Schedule 3 shall constitute an immediate Event of Default under the
Note Agreement; provided that no acceleration of the Notes may be effected as a
result of any such breach unless the holders of a majority in aggregate
principal amount of the Notes, the 1992 Notes and the 1995 Notes (voting as a
single class) shall have consented in writing to such acceleration. On October
1, 1998, the covenants hereby overridden shall once again be in full force and
effect and the enforcement rights of the 1989 Noteholders shall be as set forth
in the Note Agreement without giving effect to this Section 5(a). The provisions
of this Section 5(a) shall override and supersede any provisions to the contrary
contained in the Existing Note Agreement and the Notes.
(b) AMENDMENT OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, certain covenants and related
definitions in the Existing Note Agreement are amended in the manner set forth
on Schedule 4 to this Agreement. A breach of any of such amended covenants shall
constitute an immediate Event
5
<PAGE>
of Default under the Note Agreement. On October 1, 1998, such amendments shall
terminate, and the covenants and definitions hereby amended shall once again be
in full force and effect as set forth in the Existing Note Agreement.
(c) ADDITIONAL COVENANTS. The Company covenants with the 1989
Noteholders as follows. A failure to comply with any of the covenants set forth
in this Section 5(c) shall constitute an immediate Event of Default under the
Note Agreement.
(i) The Company shall not at any time pay any additional
consideration to any Bank, in respect of any financial accommodation
required to be made available by such Bank pursuant to the Bank Loan
Agreement as in effect on the Effective Date, without making a
proportionate payment at such time (based on relative principal amounts
then outstanding) in respect of the Notes, the 1992 Notes and the 1995
Notes. Additional consideration which would require a proportionate
payment to the 1989 Noteholders pursuant to this subsection would
include, without limitation, an increase in interest rate, or an
increase or imposition (as the case may be) of any commitment fee,
facility fee, or amendment fee, but would not include the payment of
fees, interest rate stepups or other amounts provided for in the Bank
Loan Agreement and usual and customary fees for administrative matters.
(ii) On or before the Credit Extension Date, the Company shall have
entered into an Acceptable Replacement Facility.
(iii) The Company shall not at any time permit a permanent
reduction of the Tranche A Commitment under (and as defined in) the
Bank Loan Agreement (it being agreed that reductions contemplated by
Sections 6.18, 6.19 and 6.20 of the Bank Loan Agreement shall not be
deemed to constitute reductions of the Tranche A Commitment); provided
that:
(1) the Company may permit such a reduction if,
contemporaneously therewith, the Company makes a proportionate
payment (based on relative principal amounts then outstanding) in
respect of the Notes, the 1992 Notes and the 1995 Notes, and
(2) the Company may effect such a reduction in connection with
the replacement of the Bank Loan Agreement by an Acceptable
Replacement Facility.
(iv) The Cooper Swap and the Cooper Financing shall be consummated
not later than April 15, 1998.
(v) Any reserve for losses from discontinued operations at any time
established by the Company shall be applied only to losses related to
the specific discontinued operations for which such reserve was
originally established, and to no other losses.
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<PAGE>
(vi) As soon as practicable the Company shall furnish to each
holder of the Notes the Company's strategic plan, including, when
available, all material modifications thereto, and make its senior
officers available to discuss the same with the holders of the Notes.
(d) LIMITED CROSS DEFAULT TO BANK LOAN AGREEMENT. Notwithstanding
anything in the Existing Note Agreement to the contrary, a failure to comply
with any covenant contained in Section 5 or Section 6 of the Bank Loan Agreement
during the period from the Effective date through October 31, 1998 shall not
constitute an Event of Default under the Note Agreement so long as the Banks
have not (i) accelerated the maturity of their indebtedness, or (ii) taken any
enforcement action against the Company, (iii) terminated or reduced any of the
Commitments (as defined in the Bank Loan Agreement), it being agreed that
reductions contemplated by Sections 6.18, 6.19 and 6.20 of the Bank Loan
Agreement shall not be deemed to constitute reductions of the Tranche A
Commitment, or (iv) failed to make a requested advance under the Bank Loan
Agreement.
6. CONDITIONS TO EFFECTIVENESS OF AGREEMENT.
The effectiveness of this Agreement shall be subject to and conditioned
upon satisfaction of all of the following conditions precedent (the date of such
satisfaction being herein referred to as the "Effective Date").
(a) REPRESENTATIONS AND WARRANTIES TRUE. The warranties and
representations set forth in Section 7 hereof shall be true and correct
on and as of the Effective Date.
(b) AUTHORIZATION OF TRANSACTIONS. The execution and delivery by
the Company and the Guarantors of this Agreement, the Subsidiary
Guaranty and each of the documents executed and delivered in connection
herewith and therewith, shall have been duly authorized by all
necessary corporate action.
(c) EXECUTION AND DELIVERY OF THIS AGREEMENT. The Company and the
holders of all of the Notes shall have executed and delivered a
counterpart of this Agreement.
(d) OTHER AMENDMENTS. The Company shall have entered into
agreements substantially to the same effect as this Agreement with the
1992 Noteholders and the 1995 Noteholders, and such agreements shall be
satisfactory to the 1989 Noteholders in all respects.
(e) OTHER FINANCING. The transactions contemplated by the Bank Loan
Agreement shall have closed; and the 1989 Noteholders shall have
satisfied themselves that the Clipper Facility is in full force and
effect.
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<PAGE>
(f) SUBSIDIARY GUARANTY. Each of the Guarantors shall have
unconditionally guarantied the Company's obligations under the Note
Purchase Agreement and the Notes by executing and delivering to each
1989 Noteholder a counterpart of the Subsidiary Guaranty.
(g) PAYMENT OF INTEREST. The Company shall have paid all interest
on the Notes accrued or accruing through March 31, 1998.
(h) AMENDMENT FEE. The Company shall have paid the Amendment Fee to
the 1989 Noteholders.
(i) FINANCIAL AND OPERATING INFORMATION. The 1989 Noteholders shall
have received copies of such financial statements, projections,
budgets, reports, agings and other financial and business information
relating to the Company as they may have reasonably requested, all in
form and substance satisfactory to the 1989 Noteholders.
(j) COMPANY COUNSEL'S OPINION. The 1989 Noteholders shall have
received from Kelley Drye & Warren LLP, special counsel for the
Company, a closing opinion dated the Effective Date in form and
substance satisfactory to the 1989 Noteholders. The Company hereby
requests and directs such counsel to deliver such closing opinion to
the 1989 Noteholders.
(k) PAYMENT OF EXPENSES. The Company shall have paid all of the
Costs and Expenses, including, without limitation, the fees of Hebb &
Gitlin and The Finley Group billed as of the Effective Date.
(l) PROCEEDINGS SATISFACTORY. All proceedings taken in connection
with this Agreement and the Other Documents and all documents and
papers relating thereto shall be reasonably satisfactory to the 1989
Noteholders and their special counsel. The 1989 Noteholders and their
special counsel shall have received copies of such documents and papers
as they may reasonably request in connection therewith.
7. REPRESENTATIONS AND WARRANTIES.
To induce the 1989 Noteholders to enter into this Agreement, the
Company warrants and represents as follows:
(a) ORGANIZATION, EXISTENCE AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of New York, and has all requisite power and
authority (a) to execute and deliver (i) this Agreement and (ii) each
of the other documents and instruments to be executed by it as
contemplated by this Agreement (collectively referred to herein as the
"Other Documents") and (b) to perform its respective obligations under
this Agreement, the Note Agreement and the Other Documents.
8
<PAGE>
(b) LITIGATION. Except for proceedings which have been adequately
reserved for in the Company's financial statements delivered to the
holders of the Notes, there are no proceedings pending, or to the
knowledge of the Company threatened, against or affecting the Company
or any Subsidiary or any of their respective properties in any court or
before any governmental authority or arbitration board or tribunal
which, either individually or in the aggregate, could (i) have a
Material Adverse Effect, or (ii) conflict with or interfere with the
ability of the Company to execute and deliver this Agreement or any of
the Other Documents or to perform its obligations hereunder and
thereunder.
(c) AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
(i) THE COMPANY. The execution and delivery by the Company of
this Agreement and the Other Documents and the performance by it of
its obligations under this Agreement, the Note Agreement and the
Other Documents have been duly authorized by all necessary action
on the part of the Company. This Agreement and the Other Documents
have been duly executed and delivered by the Company. Each of this
Agreement, the Note Agreement and the Other Documents is a valid
and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms, except that the
enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors'
rights generally; and subject to the availability of equitable
remedies.
(ii) GUARANTORS. The execution and delivery of the Subsidiary
Guaranty by each Guarantor and the performance by it of its
obligations thereunder has been duly authorized by all necessary
action on the part of each Guarantor. The Subsidiary Guaranty has
been duly executed and delivered by each Guarantor, and is a valid
and binding obligation of each Guarantor enforceable in accordance
with its terms, except that the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights generally, and subject to
the availability of equitable remedies.
(d) NO CONFLICTS OR DEFAULTS. Neither the execution and delivery by
the Company of this Agreement and the Other Documents, nor the
performance by the Company of its obligations under this Agreement, the
Note Agreement and the Other Documents, conflicts with, results in any
breach in any of the provisions of, constitutes a default under,
violates, or results in the creation of any Lien upon any property of
the Company under the provisions of:
(i) the certificate of incorporation of the Company;
(ii) any agreement, instrument or conveyance to which the
Company or any of its properties may be bound; or
9
<PAGE>
(iii) any statute, rule or regulation or any order, judgment or
award of any court, tribunal or arbitrator by which the Company or
any of its respective properties may be bound.
(e) GOVERNMENTAL CONSENT. Neither the execution and delivery by the
Company of this Agreement and the Other Documents, nor the performance
by the Company of its obligations under this Agreement, the Note
Agreement and the Other Documents, is such as to require a consent,
approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company as a
condition thereto under the circumstances and conditions contemplated
by this Agreement.
(f) DISCLOSURE OF DEFAULTS UNDER NOTE AGREEMENTS AND OTHER
AGREEMENTS. Except for the Current Events of Default listed on Schedule
1 of this Agreement, there exists no Default or Event of Default under
the Existing Note Agreement. After giving effect to this Agreement, the
similar agreements with the 1992 Noteholders and the 1995 Noteholders,
the Bank Loan Agreement, and the amendments made contemporaneously
herewith to the CIBC Other Credits, neither the Company nor any
Subsidiary shall be in default with respect to any indebtedness for
borrowed money or any contract which is material to the business of the
Company or any Subsidiary.
(g) COMPLIANCE WITH LAW. Neither the Company nor any Subsidiary:
(i) is in violation of any law, ordinance, governmental rule or
regulation to which it is subject; or
(ii) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its
property or to the conduct of its business;
which violation or failure to obtain might, either individually or in
the aggregate, (i) have a Material Adverse Effect, or (ii) materially
adversely affect the ability of the Company to perform its obligations
under this Agreement, the Note Agreement or the Other Documents.
(h) SOLVENCY. After giving effect to this Agreement, to the best of
the Company's knowledge, the fair saleable value of the assets of the
Company, taken as a whole, exceeds, as of the Effective Date, the
liabilities of the Company, taken as a whole as of such date. After
giving effect to this Agreement, the Company will be able to meet its
liabilities as they mature. The Company is entering into this Agreement
without any intent to hinder, delay or defraud either current creditors
or future creditors.
8. NO IMPLIED AMENDMENT.
10
<PAGE>
The actions taken in Sections 2, 3 and 5 hereof shall be limited
precisely as written, and neither such actions nor any other provision of this
Agreement shall, or shall be deemed or construed to:
(a) be a consent to any other waiver, amendment or modification of
any term, provision or condition of the Existing Note Agreement,
(b) impose upon any holder of Notes any obligation, express or
implied, to consent to any further amendment or further modification of
the Note Agreement, or
(c) be a consent to any waiver of any future Event of Default.
9. ACKNOWLEDGEMENT OF VALIDITY AND ENFORCEABILITY OF NOTE AGREEMENT
The Company acknowledges and agrees that the Note Agreement and the
Notes constitute legal, valid and binding obligations of the Company enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar law affecting creditors'
rights generally, and the Company expressly reaffirms its obligations under the
Note Agreement.
10. COSTS AND EXPENSES.
Without in any way limiting the duties of the Company under Section 9.4
of the Note Agreement, the Company shall pay or, if paid by any holder of Notes
reimburse such holder for, all reasonable out-of-pocket fees, costs and expenses
(including reasonable fees of Hebb & Gitlin) paid or incurred by any holder of
Notes in connection with the consideration, negotiation, preparation, drafting,
implementation, amendment, modification, administration and enforcement of this
Agreement, the Note Agreement, the Notes and the Other Documents, and for
auditing, appraising, evaluating or otherwise monitoring any collateral or other
credit support which at any time may secure the Notes (all such fees, costs and
expenses, whether incurred in connection with this Agreement, the Note
Agreement, any amendment or otherwise, being "Costs and Expenses"). All Costs
and Expenses shall be due and payable by the Company fifteen (15) days following
the Company's receipt of an invoice in reasonable detail reflecting such Costs
and Expenses. Without limiting the generality of the foregoing, on the Effective
Date the Company shall pay all Costs and Expenses for which an invoice in
reasonable detail has been received, including, but not limited to, the
statement for reasonable fees and disbursements of Hebb & Gitlin, the 1989
Noteholders' special counsel, and The Finley Group, the 1989 Noteholders'
financial advisor.
11
<PAGE>
11. AMENDMENTS; WAIVERS.
No amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Required Holders and the
Company, and no termination or waiver of any provision of this Agreement, or
consent to any departure therefrom, shall in any event be effective without the
written concurrence of the Required Holders; provided that any waiver or
amendment of Section 4 of this Agreement shall require the written consent of
the holders of all of the Notes; and any amendment of Section 5(c)(ii) of this
Agreement or the defined term "Acceptable Replacement Facility" may be effected
only with the written agreement of the holders of a majority in aggregate
principal amount of the Notes, the 1992 Notes and the 1995 Notes voting as a
single class. No notice to or demand upon the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances. Any failure, at any time or times hereafter, to require strict
performance by the Company of any provision or term of this Agreement or the
Note Agreement shall not waive, affect or diminish any right of any holder of
Notes thereafter to demand strict compliance and performance herewith or
therewith.
12. BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
the 1989 Noteholders and the Company and their respective successors and
assigns. This Agreement is solely for the benefit of the parties hereto and
their respective successors and assigns, and no other Person shall have any
right, benefit or interest under or because of the existence of this Agreement.
13. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
conflict of law principles of such state other than General Obligations Law ss.
5-1401.
14. ASSIGNMENT.
This Agreement shall not be assignable by the Company without the
written consent of the 1989 Noteholders. The 1989 Noteholders may assign to one
or more Persons all or any part of, or any participation interest in, its rights
and benefits hereunder in connection with an assignment of, or sale of a
participation interest in, the Notes held by it.
15. SECTION HEADINGS.
The titles of the Sections and subsections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and shall not
affect the construction hereof.
16. COUNTERPARTS.
12
<PAGE>
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
STANDARD MOTOR PRODUCTS, INC.
By____________________________________________
Name:
Title:
AMERICAN UNITED LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
GENERAL AMERICAN LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
14
<PAGE>
CROWN LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
GREAT-WEST LIFE AND ANNUITY INSURANCE COMPANY
By____________________________________________
Name:
Title:
THE SECURITY MUTUAL LIFE INSURANCE COMPANY OF LINCOLN
By____________________________________________
Name:
Title:
WOODMEN ACCIDENT AND LIFE COMPANY
By____________________________________________
Name:
Title:
NOMURA HOLDING AMERICA, INC.
By____________________________________________
Name:
Title:
15
<PAGE>
Schedule 1-1
SCHEDULE 1
CURRENT EVENTS OF DEFAULT
Section 5.7 Consolidated Tangible Net Worth
Section 5.9 Fixed Charge Ratio
<PAGE>
Schedule 2-1
SCHEDULE 2
DESCRIPTION OF COOPER SWAP, FUEL PUMP TRANSACTION AND SERVICE LINE TRANSACTION
------------------------------------------------------------------------------
I. Cooper Financing: See definition in Section 1.
II. Cooper Swap: See definition in Section 1.
<PAGE>
Schedule 3-2
SCHEDULE 3
OVERRIDE COVENANTS
Capitalized terms used in this Schedule 3 and not defined shall have the
meanings ascribed to such terms in the Bank Loan Agreement.
1. TANGIBLE NET WORTH.
During each of the fiscal quarters set out below, the Company will not
allow the remainder of Tangible Net Worth to be less than the amount set forth
opposite such quarter:
1st Quarter 1998 $143,000,000
2nd Quarter 1998 $145,000,000
3rd Quarter 1998 $150,000,000
2. NET SALES.
During each of the fiscal quarters set out below, Net Sales of the
Company and its Subsidiaries shall be not less than the amount set forth below
opposite such period:
1st Quarter 1998 $145,000,000
2nd Quarter 1998 $167,000,000
3rd Quarter 1998 $153,000,000
3. CUMULATIVE EBITDA.
EBITDA on a cumulative basis for the periods set out below shall be not
less than the amounts set out below opposite such period:
First Quarter 1998 $ 8,300,000
First Two Quarters 1998 $22,400,000
First Three Quarters 1998 $36,300,000
4. CAPITAL EXPENDITURES.
Capital Expenditures of the Company and its Subsidiaries on a
cumulative basis shall not be in excess of the following amounts as of the end
of the period set out below opposite such amount:
First Quarter 1998 $ 4,100,000
First Two Quarters 1998 $ 9,700,000
First Three Quarters 1998 $13,300,000
<PAGE>
Schedule 4-6
SCHEDULE 4
AMENDMENTS TO EXISTING COVENANTS
1. SECTION 5.8(A) OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
5.8(A) INDEBTEDNESS.
(a) From and after March 31, 1998, neither the Company nor any
Subsidiary shall incur or in any manner become liable in respect of any
Funded Debt or Current Debt except:
(i) the Notes, the 1992 Notes (as defined in the Override
Agreement) and the 1995 Notes (as defined in the Override Agreement),
(ii) Funded Debt or Current Debt outstanding pursuant to The
Bank Loan Agreement and the Cooper Financing (as such terms are defined
in the Override Agreement) (the "Bank Loan Agreement" and the "Cooper
Financing" respectively),
(iii) Funded Debt owed to the Company or a Wholly-Owned
Subsidiary,
(iv) Funded Debt secured by purchase money Liens or Capitalized
Leases, provided that the aggregate principal amount thereof does not
exceed $6,000,000.
(v) Funded Debt and Current Debt the payment of which is
subordinated to the payment of the Notes pursuant to subordination
provisions acceptable to you in all respects,
(vi) the CIBC Other Credits (as defined in the Override
Agreement),
(vii) obligations outstanding under the Clipper Facility (as
such term is defined in the Override Agreement) not to exceed
$25,000,000,
(viii) Funded Debt or Current Debt of Intermotor Holdings Ltd. (
a corporation organized under the laws of the United Kingdom), provided
that the principal amount thereof does not exceed (pound)5,000,000 over
the amount such entity is presently permitted to borrow pursuant to the
terms of its credit facility with The Royal Bank of Scotland, and none
of such indebtedness is guarantied by the Company or any Subsidiary
(the "Intermotor Loan"), and
<PAGE>
(ix) indebtedness associated with a consignment of $15,000,000
of inventory arising in connection with the Cooper Swap.
2. SECTION 5.8 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO ADD
THERETO A NEW SUBSECTION (E) WHICH WILL READ IN ITS ENTIRETY AS
FOLLOWS:
(e) The Company will not permit any Subsidiary to create, assume, incur
or otherwise become liable for, directly or indirectly, any Indebtedness, other
than (i) Indebtedness of a Subsidiary to the Company or a Wholly-Owned
Subsidiary, (ii) Guaranties of the Notes, the 1992 Notes (as defined in the
Override Agreement), the 1995 Notes (as defined in the Override Agreement) and
the Indebtedness outstanding pursuant to the Bank Loan Agreement and the Cooper
Financing , (iii) the CIBC Other Credits (as such term is defined in the
Override Agreement), (iv) the Intermotor Loan, and (v) obligations of SMP Credit
Corp. in respect of the Clipper Facility.
3. SECTION 5.10 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
5.10 LIENS.
The Company will not, and will not permit any Subsidiary to, permit to
exist, create, assume or incur, directly or indirectly, any Lien on its
properties or assets, whether now owned or hereafter acquired, except:
(b) Liens existing on property or assets of the Company or any
Subsidiary as of the date of this Agreement that are described on
Schedule 3.06 of the Bank Loan Agreement;
(c) Liens for taxes, assessments or governmental charges not
then due and delinquent or the validity of which is being contested in
good faith and as to which the Company has established adequate
reserves on its books;
(d) Deposits or pledges in connection with or to secure payment
of workers' compensation, unemployment insurance, old-age pensions or
other social security, or in connection with the good faith contest of
any tax Lien;
(e) Construction, mechanics', materialmen's or warehousemen's
Liens securing obligations not due or, if overdue, being contested in
good faith by appropriate proceedings;
(f) Liens arising in connection with court proceedings, provided
the execution of such Liens is effectively stayed, such Liens are being
contested in good faith and the Company has established adequate
reserves therefor on its books;
<PAGE>
(g) Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money (including
encumbrances in the nature of zoning restrictions, easements, rights
and restrictions of record on the use of real property and landlord's
and lessor's liens) that in the aggregate do not materially interfere
with the conduct of the business of the Company and its Subsidiaries
taken as a whole or materially impair the value of the property or
assets subject thereto;
(h) Liens securing Indebtedness of a Subsidiary to the Company
or to a Wholly-Owned Subsidiary;
(i) Liens or Capitalized Leases on fixed assets created within
twelve (12) months of the date of acquisition or improvement thereof to
secure or provide for all or a portion of the purchase price or cost of
construction or improvement of such fixed assets, PROVIDED that such
Liens do not extend to other property of the Company or any Subsidiary,
the incurrence of the Indebtedness secured by such Liens is otherwise
permitted by this Agreement, and the aggregate principal amount of
Indebtedness secured by such Liens does not exceed $6,000,000;
(j) Liens upon receivables sold pursuant to the Clipper Facility
(as such term is defined in the Override Agreement);
(k) Liens securing the Intermotor Loan provided that such Liens
encumber only the property of Intermotor Holdings, Limited; and
(l) a consignment of $15,000,000 of inventory arising in
connection with the Cooper Swap.
4. SECTION 5.11 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
5.11 DIVIDENDS; STOCK PURCHASES.
The Company will not declare or make any dividend or redemption on or
of any of its capital stock unless, after giving effect thereto, (a) no Default
or Event of Default would exist, (b) the Company would be in compliance with
Section 6.06 of the Bank Loan Agreement.
5. SECTION 5.13 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
(a) MERGER OR CONSOLIDATION.
Except for the Cooper Swap (as defined in the Override Agreement), the
Company will not, and will not permit any Subsidiary to, merge or consolidate
with, or sell all or substantially all of its assets to, any Person, except that
any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary or
(ii) sell, transfer or lease all or any part of its assets to the
<PAGE>
Company or to a Wholly-Owned Subsidiary or (iii) merge into any Person which, as
a result of such merger, becomes a Wholly-Owned Subsidiary; provided in each
such instance that immediately after giving effect thereto there shall exist no
Default or Event of Default.
(b) SALE OF ASSETS; SALE OF RECEIVABLES.
The Company will not, and will not permit any Subsidiary to, sell,
lease, transfer or otherwise (including by way of merger) dispose of
(collectively a "Disposition") any assets (including capital stock of
Subsidiaries) in one or a series of transactions to any Person other than the
Company or a Wholly-Owned Subsidiary other than:
(m) sales of inventory in the ordinary course of business;
(n) Dispositions of other properties no longer used or useful in
the business, provided that all such Dispositions shall be for fair
market value, and the aggregate fair market value of the properties so
disposed of does not exceed $5,000,000;
(o) the Cooper Swap (as such term is defined in the Override
Agreement);
(p) the Service Line Transaction (as such term is defined in the
Override Agreement);
(q) the Fuel Pump Transaction (as such term is defined in the
Override Agreement);
(r) the sale or compromise of the Borrower's claim in the APS
bankruptcy case;
(s) sales of accounts receivable pursuant to the Clipper
Facility (as such term is defined in the Override Agreement), and
(h) dispositions of surplus or unneeded property obtained in
connection with the Cooper Swap.
(C) DISPOSITION OF STOCK OF SUBSIDIARIES.
The Company will not, and will not permit any Subsidiary to, issue,
sell or transfer the capital stock of a Subsidiary unless (i) all shares of
capital stock of such Subsidiary and all Indebtedness of such Subsidiary owned
by the Company and by every other Subsidiary shall simultaneously be sold,
transferred or otherwise disposed of, (ii) such Subsidiary does not thereafter
own any shares of capital stock or Indebtedness of the Company or another
Subsidiary, (iii) such sale would be permitted by Section 5.13(b), and (iv) the
board of directors of the Company shall have made a good faith determination
that such sale or transfer is in the best interests of the Company.
<PAGE>
6. SECTION 5.12 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
5.12 PERMITTED INVESTMENTS.
The Company will not, and will not permit any Subsidiary to, make any
Investment other than Investments of the type described in clauses (i) through
(v) of the definition of Restricted Investment in Section 8.1.
7. SECTION 5.14 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
5.14 GUARANTIES.
The Company will not, and will not permit any Subsidiary to, become or
be liable in respect to any Guaranties of Indebtedness, except Guaranties of the
Indebtedness outstanding under the Notes, the 1992 Notes, the 1995 Notes, the
Bank Loan Agreement and the CIBC Other Credits (as such terms are defined in the
Override Agreement).
8. A NEW SECTION 5.22 IS HEREBY ADDED TO THE EXISTING NOTE AGREEMENT AS
FOLLOWS:
5.22 LIMITS ON MANAGEMENT COMPENSATION.
Make or permit any material change from the 1997 Management
Compensation Plan as approved by the Company's Board of Directors
9. SECTION 8.1 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED BY ADDING
THERETO, IN PROPER ALPHABETICAL ORDER, THE FOLLOWING DEFINED TERM:
Override Agreement -- That certain Override Amendment Agreement between
you and the Company, dated as of March 27, 1998.
EXHIBIT 10.18
OVERRIDE AND AMENDMENT AGREEMENT
This OVERRIDE AND AMENDMENT AGREEMENT (this "Agreement") is made and
entered into as of March 27, 1998, by and among STANDARD MOTOR PRODUCTS, INC.
(the "Company") and each of the entities set forth on the signature pages hereto
(collectively, the "1992 Noteholders"). All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Note Agreement
dated as of November 15, 1992 (as amended from time to time prior to the date
hereof, the "Existing Note Agreement", and as modified and overridden hereby,
the "Note Agreement") among the Company and the 1992 Noteholders (or their
respective predecessors in interest).
R E C I T A L S
---------------
WHEREAS, various Events of Default under the Existing Note Agreement
presently exist, as more particularly set forth on Schedule 1 of this Agreement
(collectively referred to herein as the "Current Events of Default"); and
WHEREAS, as a result of the Current Events of Default, the 1992
Noteholders are entitled, among other things, to enforce their rights and
remedies provided for in the Existing Note Agreement, including without
limitation, the right to accelerate and immediately demand payment in full of
the Notes; and
WHEREAS, the Company has requested that the 1992 Noteholders waive the
Current Events of Default and agree to certain modifications to the Existing
Note Agreement; and
WHEREAS, the 1992 Noteholders are willing to waive the Current Events
of Default and make such modifications, but only upon full and complete
compliance by the Company with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings (or the meanings set forth in the Section of this Agreement
referred to opposite such term) and the following definitions shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined. Terms used herein and not defined shall have the respective meanings
ascribed to them in the Note Agreement.
ACCEPTABLE REPLACEMENT FACILITY -- shall mean, collectively, one or
more financing transactions with one or more banks, insurance companies or other
institutional investors, which transactions,
<PAGE>
(i) constitute, in the aggregate, a legally binding commitment
to provide to the Company unsecured revolving credit and/or term debt
and/or equity financing in an aggregate amount of at least $100,000,000
and having a maturity not earlier than two years from the date the full
$100,000,000 first becomes available to the Company; and
(ii) do not (individually or in the aggregate) violate any
provision of the Note Agreement in effect at the time any of such
transactions is entered into.
AGREEMENT -- the introductory paragraph hereof.
AMENDMENT FEE -- one and one half percent (1.50%) of the outstanding
principal amount of the Notes.
BANK LOAN AGREEMENT -- the Revolving Credit and Guaranty Agreement
dated as of March 30, 1998 among the Company as borrower, certain of its
subsidiaries as guarantors, the Banks as lenders, The Chase Manhattan Bank, as
Administrative Agent, and The Bank of New York, as Documentation Agent, as in
effect on the date hereof.
BANKS -- The Chase Manhattan Bank, The Bank of New York, Fleet Bank,
National Association, NBD Bank, Comerica Bank, and Canadian Imperial Bank of
Commerce.
CIBC OTHER CREDITS -- the term loan in the outstanding principal amount
of CDN $20,000,000 extended by Canadian Imperial Bank of Commerce to SMP Motor
Products, Inc., and the letter of guaranty by Canadian Imperial Bank of Commerce
for the account of SMP Motor Products, Inc., in the aggregate amount of CDN
$60,000 evidenced by letter of guarantee No. T374406000 issued December 30,
1996, as in effect on the date hereof.
CLIPPER FACILITY -- collectively, the Purchase and Sale Agreement dated
as of March 19, 1997 between the Company and SMP Credit Corp., the Receivables
Purchase Agreement dated as of March 19, 1997 among SMP Credit Corp., the
Company, Clipper Receivables Corporation, State Street Boston Capital
Corporation and State Street Bank and Trust Company and any other instrument or
agreement executed and delivered in connection therewith, in each case as in
effect on the date hereof.
COMPANY -- the introductory paragraph hereof.
COOPER -- collectively, Cooper Industries, Inc., an Ohio corporation,
Cooper Industries (Canada) Inc., Moog Automotive Company, a Delaware corporation
and Moog Automotive Products, Inc., a Missouri corporation.
COOPER FINANCING -- a $22,500,000 loan from Cooper to the Company
substantially on the terms set forth in that certain letter from Michael J.
Bailey to Brad McWilliams, dated January 28, 1998.
COOPER SWAP -- the proposed exchange of the assets of the Company's
brake division for the assets of Cooper's climate control division, as more
particularly described in the
-2-
<PAGE>
"Standard Motor Products, Inc. Cooper Swap Deal Summary" signed on behalf of
both the Company and Cooper on March 17, 1998, and all transactions between
Cooper and its subsidiaries and the Company and its Subsidiaries related to such
exchange.
COSTS AND EXPENSES -- Section 10.
CREDIT EXTENSION DATE -- October 31, 1998; PROVIDED that if on October
31, 1998 the Company is in compliance with Sections 6.15 and 6.16 of the Bank
Loan Agreement, the Credit Extension Date shall be November 30, 1998; and
PROVIDED FURTHER that if (a) the Maturity Date (as defined in the Bank Loan
Agreement) is extended beyond November 30, 1998 and (b) the Banks receive no
permanent reduction of the Tranche A Commitment (as defined in the Bank Loan
Agreement), no collateral, and no increase in interest rates or fees as a result
of such extension, the Credit Extension Date will be extended to the earlier of
the extended Maturity Date under the Bank Loan Agreement or the date on which an
Event of Default shall exist.
CURRENT EVENTS OF DEFAULT -- the recitals hereof.
EFFECTIVE DATE -- Section 6.
EVENT OF DEFAULT -- means and includes any "Event of Default" as
defined in the Note Agreement.
EXISTING NOTE AGREEMENT -- the introductory paragraph hereof.
FUEL PUMP TRANSACTION -- the proposed sale by the Company of certain
assets of the fuel pump product line, as more particularly described on Schedule
2 hereto.
GUARANTORS -- Reno Standard, Incorporated, a Nevada corporation,
Stanric, Inc., a Delaware corporation and Mardevco Credit Corp., a New York
corporation.
INVESTMENT GRADE RATING -- a long term unsecured debt rating (which may
be a private rating) of BBB- or better by Standard & Poor's, Duff & Phelps or
Fitch IBCA, Inc., a rating of Baa3 or better by Moody's Investors Services, or
such other rating as shall be reasonably acceptable to the holders of all of the
Notes.
1989 NOTEHOLDERS -- the holders of the Company's $30,000,000 aggregate
principal amount Notes, due November 1, 2004 (the "1989 Notes") issued pursuant
to Note Agreement dated as of October 15, 1989, as amended.
1995 NOTEHOLDERS -- the holders of the Company's $73,000,000 aggregate
principal amount Notes, due February 25, 2006 (the "1995 Notes") issued pursuant
to Note Purchase Agreement dated as of December 1, 1995, as amended.
NOTE AGREEMENT -- the introductory paragraph hereof.
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<PAGE>
NOTES -- the $46,428,572 aggregate principal amount Notes due December
15, 2002 issued pursuant to the Note Agreement.
OTHER DOCUMENTS -- Section 7(a).
REQUIRED HOLDERS -- means, at any time, the holders of more than fifty
percent (50%) in aggregate principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any one or more of the Company, any Subsidiary
or any Affiliate).
SERVICE LINE TRANSACTION -- the proposed sale by the Company of its
Service Line division, as more particularly described on Schedule 2 hereto.
SUBSIDIARY GUARANTY -- that certain guaranty of the Notes, dated the
date hereof, executed by the Guarantors.
2. WAIVER OF EXISTING EVENTS OF DEFAULT.
Subject to Section 6 of this Agreement, the 1992 Noteholders hereby
waive the Current Events of Default.
3. CONSENT TO CERTAIN TRANSACTIONS.
Subject to Section 6 of this Agreement, the 1992 Noteholders hereby
consent to the Cooper Swap, the Cooper Financing, the Service Line Transaction
and the Fuel Pump Transaction, provided that each such transaction is
consummated (a) substantially in accordance with the descriptions thereof set
forth in Schedule 2 hereto, and (b) the net after-tax cash proceeds, if any, of
such dispositions are utilized for nonpermanent reductions of the amounts
outstanding under the Bank Loan Agreement and for working capital. Other than
the Amendment Fee payable in connection with this Agreement, no fee shall be
payable by the Company to the holders of the Notes in connection with such
transactions.
4. PAYMENTS OF INTEREST.
The Company acknowledges and agrees that:
(a) The aggregate outstanding principal amount of the Notes on the date
hereof is $46,428,572.
(b) Prior to April 1, 1998, interest on the Notes shall accrue in
accordance with the terms of the Existing Note Agreement. From and after
April 1, 1998, interest on the outstanding principal amount of the Notes
shall accrue at the rate of 9.10% per annum, and interest shall accrue on
any overdue principal, overdue Make-Whole Amount and (to the extent legally
enforceable) on any overdue installment of interest on the Notes at a rate
per annum equal to the greater of 11.10% or 3.25% over the prime rate of The
Chase Manhattan Bank (or its successors) from time to time in effect. The
rate of interest then payable upon the Notes shall decrease to 8.35% per
annum
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<PAGE>
on the first day on which the Company shall have achieved an Investment
Grade Rating and no Default or Event of Default shall exist. Upon the first
to occur of (i) the closing of an Acceptable Replacement Facility, or (ii)
the Company's being in compliance with all covenants contained in Section 7
of the Note Agreement at all times during the fourth fiscal quarter of 1998
and the first fiscal quarter of 1999, and, in either event, no Default or
Event of Default shall exist, the rate of interest then payable upon the
Notes shall decrease by 0.50% per annum; provided that the rate of interest
shall never be less than 8.35% per annum. The rate of interest then payable
upon the Notes shall increase by 0.25% per annum on October 1, 1998 if
Consolidated EBITDA (as defined in Section 3 of Schedule 3 to this
Agreement) for the first three fiscal quarters of 1998 is not at least
$48,371,000 on a cumulative basis and the Company has not earlier obtained
an Investment Grade Rating.
(c) Accrued interest on the outstanding principal balance of the Notes
shall be payable quarterly in arrears on March 31, June 30, September 30,
and December 31 of each year beginning June 30, 1998.
(d) For purposes of computing the Make-Whole Amount due at any time
with respect to the Notes, the rate of interest payable on the Notes shall
be assumed to be the rate determined in accordance with the Existing Note
Purchase Agreement rather than the rate determined in accordance with
Section 4(b) above.
(e) The provisions of this Section 4 shall override and permanently
supersede any provisions to the contrary contained in the Existing Note
Agreement and the Notes, and the Existing Note Agreement and the Notes are
hereby deemed amended to be consistent with this Section 4.
5. CERTAIN COVENANTS AND AGREEMENTS.
(a) OVERRIDE OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, Sections 7.1 and 7.4 of the Existing
Note Agreement are hereby overridden and replaced by the financial covenants set
forth in Schedule 3 to this Agreement. A breach of any of the covenants set
forth on Schedule 3 shall constitute an immediate Event of Default under the
Note Agreement; provided that no acceleration of the Notes may be effected as a
result of any such breach unless the holders of a majority in aggregate
principal amount of the Notes, the 1989 Notes and the 1995 Notes (voting as a
single class) shall have consented in writing to such acceleration. On October
1, 1998, the covenants hereby overridden shall once again be in full force and
effect and the enforcement rights of the 1992 Noteholders shall be as set forth
in the Note Agreement without giving effect to this Section 5(a). The provisions
of this Section 5(a) shall override and supersede any provisions to the contrary
contained in the Existing Note Agreement and the Notes.
(b) AMENDMENT OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, certain covenants and related
definitions in the Existing Note Agreement are amended in the manner set forth
on Schedule 4 to this Agreement. A breach of any of such amended covenants shall
constitute an immediate Event
-5-
<PAGE>
of Default under the Note Agreement. On October 1, 1998, such amendments shall
terminate, and the covenants and definitions hereby amended shall once again be
in full force and effect as set forth in the Existing Note Agreement.
(c) ADDITIONAL COVENANTS. The Company covenants with the 1992
Noteholders as follows. A failure to comply with any of the covenants set forth
in this Section 5(c) shall constitute an immediate Event of Default under the
Note Agreement.
(i) The Company shall not at any time pay any additional
consideration to any Bank, in respect of any financial accommodation
required to be made available by such Bank pursuant to the Bank Loan
Agreement as in effect on the Effective Date, without making a
proportionate payment at such time (based on relative principal amounts
then outstanding) in respect of the Notes, the 1989 Notes and the 1995
Notes. Additional consideration which would require a proportionate
payment to the 1992 Noteholders pursuant to this subsection would
include, without limitation, an increase in interest rate, or an
increase or imposition (as the case may be) of any commitment fee,
facility fee, or amendment fee, but would not include the payment of
fees, interest rate stepups or other amounts provided for in the Bank
Loan Agreement and usual and customary fees for administrative matters.
(ii) On or before the Credit Extension Date, the Company shall
have entered into an Acceptable Replacement Facility.
(iii) The Company shall not at any time permit a permanent
reduction of the Tranche A Commitment under (and as defined in) the
Bank Loan Agreement (it being agreed that reductions contemplated by
Sections 6.18, 6.19 and 6.20 of the Bank Loan Agreement shall not be
deemed to constitute reductions of the Tranche A Commitment); provided
that:
(1) the Company may permit such a reduction if,
contemporaneously therewith, the Company makes a proportionate
payment (based on relative principal amounts then outstanding)
in respect of the Notes, the 1989 Notes and the 1995 Notes,
and
(2) the Company may effect such a reduction in
connection with the replacement of the Bank Loan Agreement by
an Acceptable Replacement Facility.
(iv) The Cooper Swap and the Cooper Financing shall be consummated
not later than April 15, 1998.
(v) Any reserve for losses from discontinued operations at any
time established by the Company shall be applied only to losses related
to the specific discontinued operations for which such reserve was
originally established, and to no other losses.
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<PAGE>
(vi) As soon as practicable the Company shall furnish to each
holder of the Notes the Company's strategic plan, including, when
available, all material modifications thereto, and make its senior
officers available to discuss the same with the holders of the Notes.
(d) LIMITED CROSS DEFAULT TO BANK LOAN AGREEMENT. Notwithstanding
anything in the Existing Note Agreement to the contrary, a failure to comply
with any covenant contained in Section 5 or Section 6 of the Bank Loan Agreement
during the period from the Effective date through October 31, 1998 shall not
constitute an Event of Default under the Note Agreement so long as the Banks
have not (i) accelerated the maturity of their indebtedness, or (ii) taken any
enforcement action against the Company, (iii) terminated or reduced any of the
Commitments (as defined in the Bank Loan Agreement), it being agreed that
reductions contemplated by Sections 6.18, 6.19 and 6.20 of the Bank Loan
Agreement shall not be deemed to constitute reductions of the Tranche A
Commitment, or (iv) failed to make a requested advance under the Bank Loan
Agreement.
(e) AMENDED DEFINED TERM. Section 5.1 of the Existing Note
Agreement is hereby amended by deleting the present definition of Funded Debt
appearing therein, and substituting in place thereof the following:
FUNDED DEBT - shall mean (i) all Indebtedness of the Company
and its Subsidiaries which by its terms matures more than one
year from the date of creation thereof, excluding any portion
thereof payable within one year and any portion thereof
outstanding pursuant to a revolving credit or similar
agreement that obligates the lender or lenders thereunder to
extend credit over a period of more than one year, and (ii)
amounts deemed to be Funded Debt pursuant to Section 7.2 of
that certain Note Purchase Agreement, dated as of December 1,
1995, between the Company and certain institutional purchasers
as such agreement is in effect on March 27, 1998, whether or
not the notes issued under said agreement are at any time
outstanding.
6. CONDITIONS TO EFFECTIVENESS OF AGREEMENT.
The effectiveness of this Agreement shall be subject to and conditioned
upon satisfaction of all of the following conditions precedent (the date of such
satisfaction being herein referred to as the "Effective Date").
(a) REPRESENTATIONS AND WARRANTIES TRUE. The warranties and
representations set forth in Section 7 hereof shall be true and correct
on and as of the Effective Date.
(b) AUTHORIZATION OF TRANSACTIONS. The execution and delivery by
the Company and the Guarantors of this Agreement, the Subsidiary
Guaranty and each of the documents executed and delivered in connection
herewith and therewith, shall have been duly authorized by all
necessary corporate action.
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<PAGE>
(c) EXECUTION AND DELIVERY OF THIS AGREEMENT. The Company and the
holders of all of the Notes shall have executed and delivered a
counterpart of this Agreement.
(d) OTHER AMENDMENTS. The Company shall have entered into
agreements substantially to the same effect as this Agreement with the
1989 Noteholders and the 1995 Noteholders, and such agreements shall be
satisfactory to the 1992 Noteholders in all respects.
(e) OTHER FINANCING. The transactions contemplated by the Bank
Loan Agreement shall have closed; and the 1992 Noteholders shall have
satisfied themselves that the Clipper Facility is in full force and
effect.
(f) SUBSIDIARY GUARANTY. Each of the Guarantors shall have
unconditionally guarantied the Company's obligations under the Note
Purchase Agreement and the Notes by executing and delivering to each
1992 Noteholder a counterpart of the Subsidiary Guaranty.
(g) PAYMENT OF INTEREST. The Company shall have paid all interest
on the Notes accrued or accruing through March 31, 1998.
(h) AMENDMENT FEE. The Company shall have paid the Amendment Fee
to the 1992 Noteholders.
(i) FINANCIAL AND OPERATING INFORMATION. The 1992 Noteholders
shall have received copies of such financial statements, projections,
budgets, reports, agings and other financial and business information
relating to the Company as they may have reasonably requested, all in
form and substance satisfactory to the 1992 Noteholders.
(j) COMPANY COUNSEL'S OPINION. The 1992 Noteholders shall have
received from Kelley Drye & Warren LLP, special counsel for the
Company, a closing opinion dated the Effective Date in form and
substance satisfactory to the 1992 Noteholders. The Company hereby
requests and directs such counsel to deliver such closing opinion to
the 1992 Noteholders.
(k) PAYMENT OF EXPENSES. The Company shall have paid all of the
Costs and Expenses, including, without limitation, the fees of Hebb &
Gitlin and The Finley Group billed as of the Effective Date.
(l) PROCEEDINGS SATISFACTORY. All proceedings taken in connection
with this Agreement and the Other Documents and all documents and
papers relating thereto shall be reasonably satisfactory to the 1992
Noteholders and their special counsel. The 1992 Noteholders and their
special counsel shall have received copies of such documents and papers
as they may reasonably request in connection therewith.
-8-
<PAGE>
7. REPRESENTATIONS AND WARRANTIES.
To induce the 1992 Noteholders to enter into this Agreement, the
Company warrants and represents as follows:
(a) ORGANIZATION, EXISTENCE AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of New York, and has all requisite power and
authority (a) to execute and deliver (i) this Agreement and (ii) each
of the other documents and instruments to be executed by it as
contemplated by this Agreement (collectively referred to herein as the
"Other Documents") and (b) to perform its respective obligations under
this Agreement, the Note Agreement and the Other Documents.
(b) LITIGATION. Except for proceedings which have been adequately
reserved for in the Company's financial statements delivered to the
holders of the Notes, there are no proceedings pending, or to the
knowledge of the Company threatened, against or affecting the Company
or any Subsidiary or any of their respective properties in any court or
before any governmental authority or arbitration board or tribunal
which, either individually or in the aggregate, could (i) have a
Material Adverse Effect, or (ii) conflict with or interfere with the
ability of the Company to execute and deliver this Agreement or any of
the Other Documents or to perform its obligations hereunder and
thereunder.
(c) AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
(i) THE COMPANY. The execution and delivery by the Company of
this Agreement and the Other Documents and the performance by it
of its obligations under this Agreement, the Note Agreement and
the Other Documents have been duly authorized by all necessary
action on the part of the Company. This Agreement and the Other
Documents have been duly executed and delivered by the Company.
Each of this Agreement, the Note Agreement and the Other Documents
is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms,
except that the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and subject to the
availability of equitable remedies.
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<PAGE>
(ii) GUARANTORS. The execution and delivery of the Subsidiary
Guaranty by each Guarantor and the performance by it of its
obligations thereunder has been duly authorized by all necessary
action on the part of each Guarantor. The Subsidiary Guaranty has
been duly executed and delivered by each Guarantor, and is a valid
and binding obligation of each Guarantor enforceable in accordance
with its terms, except that the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights generally, and subject to
the availability of equitable remedies.
(d) NO CONFLICTS OR DEFAULTS. Neither the execution and delivery
by the Company of this Agreement and the Other Documents, nor the
performance by the Company of its obligations under this Agreement, the
Note Agreement and the Other Documents, conflicts with, results in any
breach in any of the provisions of, constitutes a default under,
violates, or results in the creation of any Lien upon any property of
the Company under the provisions of:
(i) the certificate of incorporation of the Company;
(ii) any agreement, instrument or conveyance to which the
Company or any of its properties may be bound; or
(iii) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which the Company
or any of its respective properties may be bound.
(e) GOVERNMENTAL CONSENT. Neither the execution and delivery by
the Company of this Agreement and the Other Documents, nor the
performance by the Company of its obligations under this Agreement, the
Note Agreement and the Other Documents, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the
Company as a condition thereto under the circumstances and conditions
contemplated by this Agreement.
(f) DISCLOSURE OF DEFAULTS UNDER NOTE AGREEMENTS AND OTHER
AGREEMENTS. Except for the Current Events of Default listed on Schedule
1 of this Agreement, there exists no Default or Event of Default under
the Existing Note Agreement. After giving effect to this Agreement, the
similar agreements with the 1989 Noteholders and the 1995 Noteholders,
the Bank Loan Agreement, and the amendments made contemporaneously
herewith to the CIBC Other Credits, neither the Company nor any
Subsidiary shall be in default with respect to any indebtedness for
borrowed money or any contract which is material to the business of the
Company or any Subsidiary.
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<PAGE>
(g) COMPLIANCE WITH LAW. Neither the Company nor any Subsidiary:
(i) is in violation of any law, ordinance, governmental rule
or regulation to which it is subject; or
(ii) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its
property or to the conduct of its business;
which violation or failure to obtain might, either individually or in
the aggregate, (i) have a Material Adverse Effect, or (ii) materially
adversely affect the ability of the Company to perform its obligations
under this Agreement, the Note Agreement or the Other Documents.
(h) SOLVENCY. After giving effect to this Agreement, to the best
of the Company's knowledge, the fair saleable value of the assets of
the Company, taken as a whole, exceeds, as of the Effective Date, the
liabilities of the Company, taken as a whole as of such date. After
giving effect to this Agreement, the Company will be able to meet its
liabilities as they mature. The Company is entering into this Agreement
without any intent to hinder, delay or defraud either current creditors
or future creditors.
8. NO IMPLIED AMENDMENT.
The actions taken in Sections 2, 3 and 5 hereof shall be limited
precisely as written, and neither such actions nor any other provision of this
Agreement shall, or shall be deemed or construed to:
(a) be a consent to any other waiver, amendment or modification of
any term, provision or condition of the Existing Note Agreement,
(b) impose upon any holder of Notes any obligation, express or
implied, to consent to any further amendment or further modification of
the Note Agreement, or
(c) be a consent to any waiver of any future Event of Default.
-11-
<PAGE>
9. ACKNOWLEDGEMENT OF VALIDITY AND ENFORCEABILITY OF NOTE AGREEMENT
The Company acknowledges and agrees that the Note Agreement and the
Notes constitute legal, valid and binding obligations of the Company enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar law affecting creditors'
rights generally, and the Company expressly reaffirms its obligations under the
Note Agreement.
10. COSTS AND EXPENSES.
Without in any way limiting the duties of the Company under Section
11.1 of the Note Agreement, the Company shall pay or, if paid by any holder of
Notes reimburse such holder for, all reasonable out-of-pocket fees, costs and
expenses (including reasonable fees of Hebb & Gitlin) paid or incurred by any
holder of Notes in connection with the consideration, negotiation, preparation,
drafting, implementation, amendment, modification, administration and
enforcement of this Agreement, the Note Agreement, the Notes and the Other
Documents, and for auditing, appraising, evaluating or otherwise monitoring any
collateral or other credit support which at any time may secure the Notes (all
such fees, costs and expenses, whether incurred in connection with this
Agreement, the Note Agreement, any amendment or otherwise, being "Costs and
Expenses"). All Costs and Expenses shall be due and payable by the Company
fifteen (15) days following the Company's receipt of an invoice in reasonable
detail reflecting such Costs and Expenses. Without limiting the generality of
the foregoing, on the Effective Date the Company shall pay all Costs and
Expenses for which an invoice in reasonable detail has been received, including,
but not limited to, the statement for reasonable fees and disbursements of Hebb
& Gitlin, the 1992 Noteholders' special counsel, and The Finley Group, the 1992
Noteholders' financial advisor.
11. AMENDMENTS; WAIVERS.
No amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Required Holders and the
Company, and no termination or waiver of any provision of this Agreement, or
consent to any departure therefrom, shall in any event be effective without the
written concurrence of the Required Holders; provided that any waiver or
amendment of Section 4 of this Agreement shall require the written consent of
the holders of all of the Notes; and any amendment of Section 5(c)(ii) of this
Agreement or the defined term "Acceptable Replacement Facility" may be effected
only with the written agreement of the holders of a majority in aggregate
principal amount of the Notes, the 1989 Notes and the 1995 Notes voting as a
single class. No notice to or demand upon the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances. Any failure, at any time or times hereafter, to require strict
performance by the Company of any provision or term of this Agreement or the
Note Agreement shall not waive, affect or diminish any right of any holder of
Notes thereafter to demand strict compliance and performance herewith or
therewith.
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<PAGE>
12. BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
the 1992 Noteholders and the Company and their respective successors and
assigns. This Agreement is solely for the benefit of the parties hereto and
their respective successors and assigns, and no other Person shall have any
right, benefit or interest under or because of the existence of this Agreement.
13. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
conflict of law principles of such state other than General Obligations Law ss.
5-1401.
14. ASSIGNMENT.
This Agreement shall not be assignable by the Company without the
written consent of the 1992 Noteholders. The 1992 Noteholders may assign to one
or more Persons all or any part of, or any participation interest in, its rights
and benefits hereunder in connection with an assignment of, or sale of a
participation interest in, the Notes held by it.
15. SECTION HEADINGS.
The titles of the Sections and subsections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and shall not
affect the construction hereof.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
STANDARD MOTOR PRODUCTS, INC.
By____________________________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
By____________________________________________
Name:
Title:
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY
By____________________________________________
Name:
Title:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
<PAGE>
TEACHERS INSURANCE AND ANNUITY ASSOCIATION
By____________________________________________
Name:
Title:
<PAGE>
Schedule 1-1
SCHEDULE 1
CURRENT EVENTS OF DEFAULT
-------------------------
Section 7.1 Tangible Net Worth
Section 7.3 Subsidiary Indebtedness
Section 7.4 Fixed Charge Ratio
Section 7.5 Liens
<PAGE>
Schedule 2-1
SCHEDULE 2
DESCRIPTION OF COOPER SWAP, FUEL PUMP TRANSACTION AND SERVICE LINE TRANSACTION
------------------------------------------------------------------------------
I. Cooper Financing: See definition in Section 1.
II. Cooper Swap: See definition in Section 1.
<PAGE>
Schedule 3-2
SCHEDULE 3
OVERRIDE COVENANTS
------------------
Capitalized terms used in this Schedule 3 and not defined shall have the
meanings ascribed to such terms in the Bank Loan Agreement.
1. TANGIBLE NET WORTH.
During each of the fiscal quarters set out below, the Company will not
allow the remainder of Tangible Net Worth to be less than the amount set forth
opposite such quarter:
1st Quarter 1998 $143,000,000
2nd Quarter 1998 $145,000,000
3rd Quarter 1998 $150,000,000
2. NET SALES.
During each of the fiscal quarters set out below, Net Sales of the
Company and its Subsidiaries shall be not less than the amount set forth below
opposite such period:
1st Quarter 1998 $145,000,000
2nd Quarter 1998 $167,000,000
3rd Quarter 1998 $153,000,000
3. CUMULATIVE EBITDA.
EBITDA on a cumulative basis for the periods set out below shall be not
less than the amounts set out below opposite such period:
First Quarter 1998 $ 8,300,000
First Two Quarters 1998 $22,400,000
First Three Quarters 1998 $36,300,000
4. CAPITAL EXPENDITURES.
Capital Expenditures of the Company and its Subsidiaries on a
cumulative basis shall not be in excess of the following amounts as of the end
of the period set out below opposite such amount:
First Quarter 1998 $ 4,100,000
Schedule 3-1
<PAGE>
First Two Quarters 1998 $ 9,700,000
First Three Quarters 1998 $13,300,000
Schedule 3-2
<PAGE>
Schedule 4-5
SCHEDULE 4
AMENDMENTS TO EXISTING COVENANTS
1. SECTION 7.2 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.2 INDEBTEDNESS.
From and after March 31, 1998, neither the Company nor any
Subsidiary shall incur or in any manner become liable in respect of any
Funded Debt or Current Debt except:
(i) the Notes, the 1989 Notes (as defined in the
Override Agreement) and the 1995 Notes (as defined in the
Override Agreement),
(ii) Funded Debt or Current Debt outstanding pursuant to
The Bank Loan Agreement and the Cooper Financing (as such
terms are defined in the Override Agreement) (the "Bank Loan
Agreement" and the "Cooper Financing" respectively),
(iii) Funded Debt owed to the Company or a Wholly-Owned
Subsidiary,
(iv) Funded Debt secured by purchase money Liens or
Capitalized Leases, provided that the aggregate principal
amount thereof does not exceed $6,000,000,
(v) Funded Debt and Current Debt the payment of which is
subordinated to the payment of the Notes pursuant to
subordination provisions acceptable to you in all respects,
(vi) the CIBC Other Credits (as defined in the Override
Agreement),
(vii) obligations outstanding under the Clipper Facility
(as such term is defined in the Override Agreement) not to
exceed $25,000,000,
(viii) Funded Debt or Current Debt of Intermotor
Holdings Ltd. ( a corporation organized under the laws of the
United Kingdom), provided that the principal amount thereof
does not exceed (pound)5,000,000 over the amount such entity
is presently permitted to borrow pursuant to the terms of its
credit facility with The Royal Bank of Scotland, and none of
such indebtedness is guarantied by the Company or any
Subsidiary (the "Intermotor Loan"), and
Schedule 4-1
<PAGE>
(ix) indebtedness associated with a consignment of
$15,000,000 of inventory arising in connection with the
Cooper Swap.
2. SECTION 7.3 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.3 SUBSIDIARY INDEBTEDNESS.
The Company will not permit any Subsidiary to create, assume, incur or
otherwise become liable for, directly or indirectly, any Indebtedness, other
than (i) Indebtedness of a Subsidiary to the Company or a Wholly-Owned
Subsidiary, (ii) Guaranties of the Notes, the 1989 Notes (as defined in the
Override Agreement), the 1995 Notes (as defined in the Override Agreement) and
the Indebtedness outstanding pursuant to the Bank Loan Agreement and the Cooper
Financing , (iii) the CIBC Other Credits (as such term is defined in the
Override Agreement), (iv) the Intermotor Loan, and (v) obligations of SMP Credit
Corp. in respect of the Clipper Facility.
3. SECTION 7.5 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.5 LIENS.
The Company will not, and will not permit any Subsidiary to, permit to
exist, create, assume or incur, directly or indirectly, any Lien on its
properties or assets, whether now owned or hereafter acquired, except:
(b) Liens existing on property or assets of the Company or any
Subsidiary as of the date of this Agreement that are described on
Schedule 3.06 of the Bank Loan Agreement;
(c) Liens for taxes, assessments or governmental charges not then
due and delinquent or the validity of which is being contested in good
faith and as to which the Company has established adequate reserves on
its books;
(d) Deposits or pledges in connection with or to secure payment of
workers' compensation, unemployment insurance, old-age pensions or
other social security, or in connection with the good faith contest of
any tax Lien;
(e) Construction, mechanics', materialmen's or warehousemen's
Liens securing obligations not due or, if overdue, being contested in
good faith by appropriate proceedings;
Schedule 4-2
<PAGE>
(f) Liens arising in connection with court proceedings, provided
the execution of such Liens is effectively stayed, such Liens are being
contested in good faith and the Company has established adequate
reserves therefor on its books;
(g) Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money (including
encumbrances in the nature of zoning restrictions, easements, rights
and restrictions of record on the use of real property and landlord's
and lessor's liens) that in the aggregate do not materially interfere
with the conduct of the business of the Company and its Subsidiaries
taken as a whole or materially impair the value of the property or
assets subject thereto;
(h) Liens securing Indebtedness of a Subsidiary to the Company or
to a Wholly-Owned Subsidiary;
(i) Liens or Capitalized Leases on fixed assets created within
twelve (12) months of the date of acquisition or improvement thereof to
secure or provide for all or a portion of the purchase price or cost of
construction or improvement of such fixed assets, PROVIDED that such
Liens do not extend to other property of the Company or any Subsidiary,
the incurrence of the Indebtedness secured by such Liens is otherwise
permitted by this Agreement, and the aggregate principal amount of
Indebtedness secured by such Liens does not exceed $6,000,000;
(j) Liens upon receivables sold pursuant to the Clipper Facility
(as such term is defined in the Override Agreement).
(k) Liens securing the Intermotor Loan, provided that such Liens
encumber only the property of Intermotor Holdings Limited; and
(l) a consignment of $15,000,000 of inventory arising, in
connection with the Cooper Swap.
4. SECTION 7.6 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.6 RESTRICTED PAYMENTS.
The Company will not declare or make any dividend or redemption on or
of any of its capital stock unless, after giving effect thereto, (a) no Default
or Event of Default would exist, (b) the Company would be in compliance with
Section 6.06 of the Bank Loan Agreement.
5. SECTION 7.7 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.7 MERGER OR CONSOLIDATION.
Schedule 4-3
<PAGE>
Except for the Cooper Swap (as defined in the Override Agreement), the
Company will not, and will not permit any Subsidiary to, merge or consolidate
with, or sell all or substantially all of its assets to, any Person, except that
any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary or
(ii) sell, transfer or lease all or any part of its assets to the Company or to
a Wholly-Owned Subsidiary or (iii) merge into any Person which, as a result of
such merger, becomes a Wholly-Owned Subsidiary; provided in each such instance
that immediately after giving effect thereto there shall exist no Default or
Event of Default.
6. SECTION 7.8 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.8 SALE OF ASSETS; SALE OF RECEIVABLES.
The Company will not, and will not permit any Subsidiary to, sell,
lease, transfer or otherwise (including by way of merger) dispose of
(collectively a "Disposition") any assets (including capital stock of
Subsidiaries) in one or a series of transactions to any Person other than the
Company or a Wholly-Owned Subsidiary other than:
(m) sales of inventory in the ordinary course of business;
(n) Dispositions of other properties no longer used or useful in
the business, provided that all such Dispositions shall be for fair
market value, and the aggregate fair market value of the properties so
disposed of does not exceed $5,000,000;
(o) the Cooper Swap (as such term is defined in the Override
Agreement);
(p) the Service Line Transaction (as such term is defined in the
Override Agreement);
(q) the Fuel Pump Transaction (as such term is defined in the
Override Agreement);
(r) the sale or compromise of the Borrower's claim in the APS
bankruptcy case;
(s) sales of accounts receivable pursuant to the Clipper Facility
(as such term is defined in the Override Agreement), and
(h) dispositions of surplus or unneeded property obtained in
connection with the Cooper Swap.
7. SECTION 7.9 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.9 DISPOSITION OF STOCK OF SUBSIDIARIES.
Schedule 4-4
<PAGE>
The Company will not, and will not permit any Subsidiary to, issue,
sell or transfer the capital stock of a Subsidiary unless (i) all shares of
capital stock of such Subsidiary and all Indebtedness of such Subsidiary owned
by the Company and by every other Subsidiary shall simultaneously be sold,
transferred or otherwise disposed of, (ii) such Subsidiary does not thereafter
own any shares of capital stock or Indebtedness of the Company or another
Subsidiary, (iii) such sale would be permitted by Section 7.8, and (iv) the
board of directors of the Company shall have made a good faith determination
that such sale or transfer is in the best interests of the Company.
8. SECTION 7.10 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.10 PERMITTED INVESTMENTS.
The Company will not, and will not permit any Subsidiary to, make any
Investment other than a Permitted Investment; provided that the Company shall
make no Permitted Investment of the type described in clause (iv), clause (vii)
or clause (x) of the definition of Permitted Investment.
9. SECTION 7.14 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.14 GUARANTIES.
The Company will not, and will not permit any Subsidiary to, become or
be liable in respect to any Guaranties of Indebtedness, except Guaranties of the
Indebtedness outstanding under the Notes, the 1989 Notes, the 1995 Notes, the
Bank Loan Agreement and the CIBC Other Credits (as such terms are defined in the
Override Agreement).
10. A NEW SECTION 7.15 IS HEREBY ADDED TO THE EXISTING NOTE AGREEMENT AS
FOLLOWS:
7.15 LIMITS ON MANAGEMENT COMPENSATION.
Make or permit any material change from the 1997 Management
Compensation Plan as approved by the Company's Board of Directors
11. SECTION 5.1 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED BY ADDING
THERETO, IN PROPER ALPHABETICAL ORDER, THE FOLLOWING DEFINED TERM:
Override Agreement -- That certain Override Amendment Agreement between
you and the Company, dated as of March 27, 1998.
Schedule 4-5
EXHIBIT 10.19
OVERRIDE AND AMENDMENT AGREEMENT
This OVERRIDE AND AMENDMENT AGREEMENT (this "Agreement") is made and
entered into as of March 27, 1998, by and among STANDARD MOTOR PRODUCTS, INC.
(the "Company") and each of the entities set forth on the signature pages hereto
(collectively, the "1995 Noteholders"). All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Note Purchase
Agreement dated as of December 1, 1995 (as amended from time to time prior to
the date hereof, the "Existing Note Agreement", and as modified and overridden
hereby, the "Note Agreement") among the Company and the 1995 Noteholders (or
their respective predecessors in interest).
R E C I T A L S
---------------
WHEREAS, the Company has requested that the 1995 Noteholders agree to
certain modifications to the Existing Note Agreement; and consent to the Cooper
Swap, the Cooper Financing, the Service Line Transaction and the Fuel Pump
Transaction; and
WHEREAS, the 1995 Noteholders are willing to make such modifications
and consent to the Cooper Swap, the Cooper Financing, the Service Line
Transaction and the Fuel Pump Transaction, but only upon full and complete
compliance by the Company with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings (or the meanings set forth in the Section of this Agreement
referred to opposite such term) and the following definitions shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined. Terms used herein and not defined shall have the respective meanings
ascribed to them in the Note Agreement.
ACCEPTABLE REPLACEMENT FACILITY -- shall mean, collectively, one or
more financing transactions with one or more banks, insurance companies or other
institutional investors, which transactions,
(i) constitute, in the aggregate, a legally binding commitment
to provide to the Company unsecured revolving credit and/or term debt
and/or equity financing in an aggregate amount of at least $100,000,000
and having a maturity not earlier than two years from the date the full
$100,000,000 first becomes available to the Company; and
(ii) do not (individually or in the aggregate) violate any
provision of the Note Agreement in effect at the time any of such
transactions is entered into.
<PAGE>
AGREEMENT -- the introductory paragraph hereof.
AMENDMENT FEE -- one and one half percent (1.50%) of the outstanding
principal amount of the Notes.
BANK LOAN AGREEMENT -- the Revolving Credit and Guaranty Agreement
dated as of March 30, 1998 among the Company as borrower, certain of its
subsidiaries as guarantors, the Banks as lenders, The Chase Manhattan Bank, as
Administrative Agent, and The Bank of New York, as Documentation Agent, as in
effect on the date hereof.
BANKS -- The Chase Manhattan Bank, The Bank of New York, Fleet Bank,
National Association, NBD Bank, Comerica Bank, and Canadian Imperial Bank of
Commerce.
CIBC OTHER CREDITS -- the term loan in the outstanding principal amount
of CDN $20,000,000 extended by Canadian Imperial Bank of Commerce to SMP Motor
Products, Inc.,
and the letter of guaranty by Canadian Imperial Bank of Commerce for the account
of SMP Motor Products, Inc., in the aggregate amount of CDN $60,000 evidenced by
letter of guarantee No. T374406000 issued December 30, 1996, as in effect on the
date hereof.
CLIPPER FACILITY -- collectively, the Purchase and Sale Agreement dated
as of March 19, 1997 between the Company and SMP Credit Corp., the Receivables
Purchase Agreement dated as of March 19, 1997 among SMP Credit Corp., the
Company, Clipper Receivables Corporation, State Street Boston Capital
Corporation and State Street Bank and Trust Company and any other instrument or
agreement executed and delivered in connection therewith, in each case as in
effect on the date hereof.
COMPANY -- the introductory paragraph hereof.
COOPER -- collectively, Cooper Industries, Inc., an Ohio corporation,
Cooper Industries (Canada) Inc., Moog Automotive Company, a Delaware corporation
and Moog Automotive Products, Inc., a Missouri corporation.
COOPER FINANCING -- a $22,500,000 loan from Cooper to the Company
substantially on the terms set forth in that certain letter from Michael J.
Bailey to Brad McWilliams, dated January 28, 1998.
COOPER SWAP -- the proposed exchange of the assets of the Company's
brake division for the assets of Cooper's climate control division, as more
particularly described in the "Standard Motor Products, Inc. Cooper Swap Deal
Summary" signed on behalf of both the Company and Cooper on March 17, 1998, and
all transactions between Cooper and its subsidiaries and the Company and its
Subsidiaries related to such exchange.
COSTS AND EXPENSES -- Section 10.
CREDIT EXTENSION DATE -- October 31, 1998; PROVIDED that if on October
31, 1998 the Company is in compliance with Sections 6.15 and 6.16 of the Bank
Loan Agreement, the
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<PAGE>
Credit Extension Date shall be November 30, 1998; and PROVIDED FURTHER that if
(a) the Maturity Date (as defined in the Bank Loan Agreement) is extended beyond
November 30, 1998 and (b) the Banks receive no permanent reduction of the
Tranche A Commitment (as defined in the Bank Loan Agreement), no collateral, and
no increase in interest rates or fees as a result of such extension, the Credit
Extension Date will be extended to the earlier of the extended Maturity Date
under the Bank Loan Agreement or the date on which an Event of Default shall
exist.
EFFECTIVE DATE -- Section 6.
EVENT OF DEFAULT -- means and includes any "Event of Default" as
defined in the Note Agreement.
EXISTING NOTE AGREEMENT -- the introductory paragraph hereof.
FUEL PUMP TRANSACTION -- the proposed sale by the Company of certain
assets of its fuel, pump product line, as more particularly described on
Schedule 2 hereto.
GUARANTORS -- Reno Standard, Incorporated, a Nevada corporation,
Stanric, Inc., a Delaware corporation and Mardevco Credit Corp., a New York
corporation.
INVESTMENT GRADE RATING -- a long term unsecured debt rating (which may
be a private rating) of BBB- or better by Standard & Poor's, Duff & Phelps or
Fitch IBCA, Inc., a rating of Baa3 or better by Moody's Investors Services, or
such other rating as shall be reasonably acceptable to the holders of all of the
Notes.
1989 NOTEHOLDERS -- the holders of the Company's $30,000,000 aggregate
principal amount Notes, due November 1, 2004 (the "1989 Notes") issued pursuant
to Note Agreement dated as of October 15, 1989, as amended.
1992 NOTEHOLDERS -- the holders of the Company's $46,428,572 aggregate
principal amount Notes, due December 15, 2002 (the "1992 Notes") issued pursuant
to Note Agreement dated as of December 15, 1992, as amended.
NOTE AGREEMENT -- the introductory paragraph hereof.
NOTES -- the $73,000,000 aggregate principal amount Notes due February
25, 2006 issued pursuant to the Note Agreement.
OTHER DOCUMENTS -- Section 7(a).
REQUIRED HOLDERS -- means, at any time, the holders of more than fifty
percent (50%) in aggregate principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any one or more of the Company, any Subsidiary
or any Affiliate).
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<PAGE>
SERVICE LINE TRANSACTION -- the proposed sale by the Company of its
Service Line division, as more particularly described on Schedule 2 hereto.
SUBSIDIARY GUARANTY -- that certain guaranty of the Notes, dated the
date hereof, executed by the Guarantors.
INTENTIONALLY OMITTED.
CONSENT TO CERTAIN TRANSACTIONS.
Subject to Section 6 of this Agreement, the 1995 Noteholders hereby
consent to the Cooper Swap, the Cooper Financing, the Service Line Transaction
and the Fuel Pump Transaction, provided that each such transaction is
consummated (a) substantially in accordance with the descriptions thereof set
forth in Schedule 2 hereto, and (b) the net after-tax cash proceeds, if any, of
such dispositions are utilized for nonpermanent reductions of the amounts
outstanding under the Bank Loan Agreement and for working capital. Other than
the Amendment Fee payable in connection with this Agreement, no fee shall be
payable by the Company to the holders of the Notes in connection with such
transactions.
PAYMENTS OF INTEREST.
The Company acknowledges and agrees that:
The aggregate outstanding principal amount of the
Notes on the date hereof is $73,000,000.
Prior to April 1, 1998, interest on the Notes shall
accrue in accordance with the terms of the Existing Note Agreement.
From and after April 1, 1998, interest on the outstanding principal
amount of the Notes shall accrue at the rate of 8.06% per annum, and
interest shall accrue on any overdue principal, overdue Make-Whole
Amount and (to the extent legally enforceable) on any overdue
installment of interest on the Notes at a rate per annum equal to the
greater of 10.06% or 3.25% over the prime rate of The Chase Manhattan
Bank (or its successors) from time to time in effect.
The rate of interest then payable upon the Notes shall decrease to
7.31% per annum on the first day on which the Company shall have
achieved an Investment Grade Rating and no Default or Event of Default
shall exist. Upon the first to occur of (i) the closing of an
Acceptable Replacement Facility, or (ii) the Company's being in
compliance with all covenants contained in Section 7 of the Note
Agreement at all times during the fourth fiscal quarter of 1998 and the
first fiscal quarter of 1999, and, in either event, no Default or Event
of Default shall then exist, the rate of interest then payable upon the
Notes shall decrease by 0.50% per annum; provided that the rate of
interest shall never be less than 7.31% per annum. The rate of interest
then payable upon the Notes shall increase by 0.25% per annum on
October 1, 1998 if Consolidated EBITDA (as defined in Section 3 of
Schedule 3 to this Agreement) for the first three fiscal quarters of
1998 is not at least $48,371,000 on a cumulative basis and the Company
has not earlier obtained an Investment Grade Rating.
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<PAGE>
(c) Accrued interest on the outstanding principal balance of
the Notes shall be payable quarterly in arrears on March 31, June 30,
September 30, and December 31 of each year beginning June 30, 1998.
(d) For purposes of computing the Make-Whole Amount due at any
time with respect to the Notes, the rate of interest payable on the
Notes shall be assumed to be the rate determined in accordance with the
Existing Note Purchase Agreement rather than the rate determined in
accordance with Section 4(b) above.
(e) The provisions of this Section 4 shall override and
permanently supersede any provisions to the contrary contained in the
Existing Note Agreement and the Notes, and the Existing Note Agreement
and the Notes are hereby deemed amended to be consistent with this
Section 4.
CERTAIN COVENANTS AND AGREEMENTS.
(a) OVERRIDE OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, Sections 7.1 and 7.4 of the Existing
Note Agreement are hereby overridden and replaced by the financial covenants set
forth in Schedule 3 to this Agreement. A breach of any of the covenants set
forth on Schedule 3 shall constitute an immediate Event of Default under the
Note Agreement; provided that no acceleration of the Notes may be effected as a
result of any such breach unless the holders of a majority in aggregate
principal amount of the Notes, the 1989 Notes and the 1992 Notes (voting as a
single class) shall have consented in writing to such acceleration. On October
1, 1998, the covenants hereby overridden shall once again be in full force and
effect and the enforcement rights of the 1995 Noteholders shall be as set forth
in the Note Agreement without giving effect to this Section 5(a). The provisions
of this Section 5(a) shall override and supersede any provisions to the contrary
contained in the Existing Note Agreement and the Notes.
(b) AMENDMENT OF CERTAIN COVENANTS. During the period from the
Effective Date through September 30, 1998, certain covenants and related
definitions in the Existing Note Agreement are amended in the manner set forth
on Schedule 4 to this Agreement. A breach of any of such amended covenants shall
constitute an immediate Event of Default under the Note Agreement. On October 1,
1998, such amendments shall terminate, and the covenants and definitions hereby
amended shall once again be in full force and effect as set forth in the
Existing Note Agreement.
(c) ADDITIONAL COVENANTS. The Company covenants with the 1995
Noteholders as follows. A failure to comply with any of the covenants set forth
in this Section 5(c) shall constitute an immediate Event of Default under the
Note Agreement.
The Company shall not at any time pay any additional
consideration to any Bank, in respect of any financial accommodation
required to be made available by such Bank pursuant to the Bank Loan
Agreement as in effect on the Effective Date, without making a
proportionate payment at such time (based on relative principal
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<PAGE>
amounts then outstanding) in respect of the Notes, the 1989 Notes and
the 1992 Notes. Additional consideration which would require a
proportionate payment to the 1995 Noteholders pursuant to this
subsection would include, without limitation, an increase in interest
rate, or an increase or imposition (as the case may be) of any
commitment fee, facility fee, or amendment fee, but would not include
the payment of fees, interest rate stepups or other amounts provided
for in the Bank Loan Agreement and usual and customary fees for
administrative matters.
On or before the Credit Extension Date, the Company
shall have entered into an Acceptable Replacement Facility.
The Company shall not at any time permit a permanent
reduction of the Tranche A Commitment under (and as defined in) the
Bank Loan Agreement (it being agreed that reductions contemplated by
Sections 6.18, 6.19 and 6.20 of the Bank Loan Agreement shall not be
deemed to constitute reductions of the Tranche A Commitment); provided
that:
(1) the Company may permit such a reduction if,
contemporaneously therewith, the Company makes a proportionate
payment (based on relative principal amounts then outstanding)
in respect of the Notes, the 1989 Notes and the 1992 Notes;
and
(2) the Company may effect such a reduction in
connection with the replacement of the Bank Loan Agreement by
an Acceptable Replacement Facility.
The Cooper Swap and the Cooper Financing shall be
consummated not later than April 15, 1998.
Any reserve for losses from discontinued operations
at any time established by the Company shall be applied only to losses
related to the specific discontinued operation for which such reserve
was originally established, and to no other losses.
As soon as practicable the Company shall furnish to
each holder of the Notes the Company's strategic plan, including, when
available, all material modifications thereto, and make its senior
officers available to discuss the same with the holders of the Notes.
(d) LIMITED CROSS DEFAULT TO BANK LOAN AGREEMENT.
Notwithstanding anything in the Existing Note Agreement to the contrary, a
failure to comply with any covenant contained in Section 5 or Section 6 of the
Bank Loan Agreement during the period from the Effective date through October
31, 1998 shall not constitute an Event of Default under the Note Agreement so
long as the Banks have not (i) accelerated the maturity of their indebtedness,
or (ii) taken any enforcement action against the Company, (iii) terminated or
reduced any of the Commitments (as defined in the Bank Loan Agreement), it being
agreed
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<PAGE>
that reductions contemplated by Sections 6.18, 6.19 and 6.20 of the Bank Loan
Agreement shall not be deemed to constitute reductions of the Tranche A
Commitment, or (iv) failed to make a requested advance under the Bank Loan
Agreement.
CONDITIONS TO EFFECTIVENESS OF AGREEMENT.
The effectiveness of this Agreement shall be subject to and conditioned
upon satisfaction of all of the following conditions precedent (the date of such
satisfaction being herein referred to as the "Effective Date").
REPRESENTATIONS AND WARRANTIES TRUE. The warranties
and representations set forth in Section 7 hereof shall be true and
correct on and as of the Effective Date.
AUTHORIZATION OF TRANSACTIONS. The execution and
delivery by the Company and the Guarantors of this Agreement, the
Subsidiary Guaranty and each of the documents executed and delivered in
connection herewith and therewith, shall have been duly authorized by
all necessary corporate action.
EXECUTION AND DELIVERY OF THIS AGREEMENT. The Company
and the holders of all of the Notes shall have executed and delivered a
counterpart of this Agreement.
OTHER AMENDMENTS. The Company shall have entered into
agreements substantially to the same effect as this Agreement with the
1989 Noteholders and the 1992 Noteholders, and such agreements shall be
satisfactory to the 1995 Noteholders in all respects.
OTHER FINANCING. The transactions contemplated by the
Bank Loan Agreement shall have closed; and the 1995 Noteholders shall
have satisfied themselves that the Clipper Facility is in full force
and effect.
SUBSIDIARY GUARANTY. Each of the Guarantors shall
have unconditionally guarantied the Company's obligations under the
Note Purchase Agreement and the Notes by executing and delivering to
each 1995 Noteholder a counterpart of the Subsidiary Guaranty.
PAYMENT OF INTEREST. The Company shall have paid all
interest on the Notes accrued or accruing through March 31, 1998.
AMENDMENT FEE. The Company shall have paid the
Amendment Fee to the 1995 Noteholders.
FINANCIAL AND OPERATING INFORMATION. The 1995
Noteholders shall have received copies of such financial statements,
projections, budgets, reports, agings
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<PAGE>
and other financial and business information relating to the Company as
they may have reasonably requested, all in form and substance
satisfactory to the 1995 Noteholders.
COMPANY COUNSEL'S OPINION. The 1995 Noteholders shall
have received from Kelley Drye & Warren LLP, special counsel for the
Company, a closing opinion dated the Effective Date in form and
substance satisfactory to the 1995 Noteholders. The Company hereby
requests and directs such counsel to deliver such closing opinion to
the 1995 Noteholders.
PAYMENT OF EXPENSES. The Company shall have paid all
of the Costs and Expenses, including, without limitation, the fees of
Hebb & Gitlin and The Finley Group billed as of the Effective Date.
PROCEEDINGS SATISFACTORY. All proceedings taken in
connection with this Agreement and the Other Documents and all
documents and papers relating thereto shall be reasonably satisfactory
to the 1995 Noteholders and their special counsel. The 1995 Noteholders
and their special counsel shall have received copies of such documents
and papers as they may reasonably request in connection therewith.
REPRESENTATIONS AND WARRANTIES.
To induce the 1995 Noteholders to enter into this Agreement, the
Company warrants and represents as follows:
ORGANIZATION, EXISTENCE AND AUTHORITY. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has all requisite power
and authority (a) to execute and deliver (i) this Agreement and (ii)
each of the other documents and instruments to be executed by it as
contemplated by this Agreement (collectively referred to herein as the
"Other Documents") and (b) to perform its respective obligations under
this Agreement, the Note Agreement and the Other Documents.
LITIGATION. Except for proceedings which have been
adequately reserved for in the Company's financial statements delivered
to the holders of the Notes, there are no proceedings pending, or to
the knowledge of the Company threatened, against or affecting the
Company or any Subsidiary or any of their respective properties in any
court or before any governmental authority or arbitration board or
tribunal which, either individually or in the aggregate, could (i) have
a Material Adverse Effect, or (ii) conflict with or interfere with the
ability of the Company to execute and deliver this Agreement or any of
the Other Documents or to perform its obligations hereunder and
thereunder.
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<PAGE>
AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
THE COMPANY. The execution and delivery by
the Company of this Agreement and the Other Documents and the
performance by it of its obligations under this Agreement, the
Note Agreement and the Other Documents have been duly
authorized by all necessary action on the part of the Company.
This Agreement and the Other Documents have been duly executed
and delivered by the Company. Each of this Agreement, the Note
Agreement and the Other Documents is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms, except that the
enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforceability
of creditors' rights generally; and subject to the
availability of equitable remedies.
GUARANTORS. The execution and delivery of
the Subsidiary Guaranty by each Guarantor and the performance
by it of its obligations thereunder has been duly authorized
by all necessary action on the part of each Guarantor. The
Subsidiary Guaranty has been duly executed and delivered by
each Guarantor, and is a valid and binding obligation of each
Guarantor enforceable in accordance with its terms, except
that the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforceability
of creditors' rights generally, and subject to the
availability of equitable remedies.
NO CONFLICTS OR DEFAULTS. Neither the execution and
delivery by the Company of this Agreement and the Other Documents, nor
the performance by the Company of its obligations under this Agreement,
the Note Agreement and the Other Documents, conflicts with, results in
any breach in any of the provisions of, constitutes a default under,
violates, or results in the creation of any Lien upon any property of
the Company under the provisions of:
the certificate of incorporation of the Company;
any agreement, instrument or conveyance to which
the Company or any of its properties may be bound; or
any statute, rule or regulation or any order,
judgment or award of any court, tribunal or arbitrator by
which the Company or any of its respective properties may be
bound.
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<PAGE>
GOVERNMENTAL CONSENT. Neither the execution and
delivery by the Company of this Agreement and the Other Documents, nor
the performance by the Company of its obligations under this Agreement,
the Note Agreement and the Other Documents, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the
Company as a condition thereto under the circumstances and conditions
contemplated by this Agreement.
DISCLOSURE OF DEFAULTS UNDER NOTE AGREEMENTS AND
OTHER AGREEMENTS. There exists no Default or Event of Default under the
Existing Note Agreement. After giving effect to this Agreement, the
similar agreements with the 1989 Noteholders and the 1992 Noteholders,
the Bank Loan Agreement, and the amendments made contemporaneously
herewith to the CIBC Other Credits, neither the Company nor any
Subsidiary shall be in default with respect to any indebtedness for
borrowed money or any contract which is material to the business of the
Company or any Subsidiary.
COMPLIANCE WITH LAW. Neither the Company nor any
Subsidiary:
is in violation of any law, ordinance,
governmental rule or regulation to which it is subject; or
has failed to obtain any license, permit,
franchise or other governmental authorization necessary to the
ownership of its property or to the conduct of its business;
which violation or failure to obtain might, either individually or in
the aggregate, (i) have a Material Adverse Effect, or (ii) materially
adversely affect the ability of the Company to perform its obligations
under this Agreement, the Note Agreement or the Other Documents.
SOLVENCY. After giving effect to this Agreement, to
the best of the Company's knowledge, the fair saleable value of the
assets of the Company, taken as a whole, exceeds, as of the Effective
Date, the liabilities of the Company, taken as a whole as of such date.
After giving effect to this Agreement, the Company will be able to meet
its liabilities as they mature. The Company is entering into this
Agreement without any intent to hinder, delay or defraud either current
creditors or future creditors.
NO IMPLIED AMENDMENT.
The actions taken in Sections 3 and 5 hereof shall be limited precisely
as written, and neither such actions nor any other provision of this Agreement
shall, or shall be deemed or construed to:
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be a consent to any other amendment or
modification of any term, provision or condition of the
Existing Note Agreement,
impose upon any holder of Notes any obligation,
express or implied, to consent to any further amendment or
further modification of the Note Agreement, or
be a consent to any waiver of any Event of
Default.
ACKNOWLEDGEMENT OF VALIDITY AND ENFORCEABILITY OF NOTE AGREEMENT
The Company acknowledges and agrees that the Note Agreement and the
Notes constitute legal, valid and binding obligations of the Company enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar law affecting creditors'
rights generally, and the Company expressly reaffirms its obligations under the
Note Agreement.
COSTS AND EXPENSES.
Without in any way limiting the duties of the Company under Section
11.1 of the Note Agreement, the Company shall pay or, if paid by any holder of
Notes reimburse such holder for, all reasonable out-of-pocket fees, costs and
expenses (including reasonable fees of Hebb & Gitlin) paid or incurred by any
holder of Notes in connection with the consideration, negotiation, preparation,
drafting, implementation, amendment, modification, administration and
enforcement of this Agreement, the Note Agreement, the Notes and the Other
Documents, and for auditing, appraising, evaluating or otherwise monitoring any
collateral or other credit support which at any time may secure the Notes (all
such fees, costs and expenses, whether incurred in connection with this
Agreement, the Note Agreement, any amendment or otherwise, being "Costs and
Expenses"). All Costs and Expenses shall be due and payable by the Company
fifteen (15) days following the Company's receipt of an invoice in reasonable
detail reflecting such Costs and Expenses. Without limiting the generality of
the foregoing, on the Effective Date the Company shall pay all Costs and
Expenses for which an invoice in reasonable detail has been received, including,
but not limited to, the statement for reasonable fees and disbursements of Hebb
& Gitlin, the 1995 Noteholders' special counsel, and The Finley Group, the 1995
Noteholders' financial advisor.
-11-
<PAGE>
AMENDMENTS; WAIVERS.
No amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Required Holders and the
Company, and no termination or waiver of any provision of this Agreement, or
consent to any departure therefrom, shall in any event be effective without the
written concurrence of the Required Holders; provided that any waiver or
amendment of Section 4 of this Agreement shall require the written consent of
the holders of all of the Notes; and any amendment of Section 5(c)(ii) of this
Agreement or the defined term "Acceptable Replacement Facility" may be effected
only with the written agreement of the holders of a majority in aggregate
principal amount of the Notes, the 1989 Notes and the 1992 Notes voting as a
single class. No notice to or demand upon the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances. Any failure, at any time or times hereafter, to require strict
performance by the Company of any provision or term of this Agreement or the
Note Agreement shall not waive, affect or diminish any right of any holder of
Notes thereafter to demand strict compliance and performance herewith or
therewith.
BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
the 1995 Noteholders and the Company and their respective successors and
assigns. This Agreement is solely for the benefit of the parties hereto and
their respective successors and assigns, and no other Person shall have any
right, benefit or interest under or because of the existence of this Agreement.
GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
conflict of law principles of such state other than General Obligations Law ss.
5-1401.
ASSIGNMENT.
This Agreement shall not be assignable by the Company without the
written consent of the 1995 Noteholders. The 1995 Noteholders may assign to one
or more Persons all or any part of, or any participation interest in, its rights
and benefits hereunder in connection with an assignment of, or sale of a
participation interest in, the Notes held by it.
SECTION HEADINGS.
The titles of the Sections and subsections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and shall not
affect the construction hereof.
COUNTERPARTS.
-12-
<PAGE>
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
STANDARD MOTOR PRODUCTS, INC.
By____________________________________________
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By____________________________________________
Name:
Title:
By____________________________________________
Name:
Title:
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By CIGNA Investments, Inc.
By____________________________________________
Name:
Title:
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, ON
BEHALF OF ONE OR MORE
SEPARATE ACCOUNTS By CIGNA
Investments, Inc.
-13-
<PAGE>
By____________________________________________
Name:
Title:
CIGNA PROPERTY AND CASUALTY
INSURANCE
COMPANY
By CIGNA Investments, Inc.
By____________________________________________
Name:
Title:
LIFE INSURANCE COMPANY OF NORTH
AMERICA
By CIGNA Investments, Inc.
By____________________________________________
Name:
Title:
THE TRAVELERS INSURANCE COMPANY
By____________________________________________
Name:
Title:
AMERICAN UNITED LIFE INSURANCE
COMPANY
<PAGE>
By____________________________________________
Name:
Title:
<PAGE>
SCHEDULE 1
INTENTIONALLY OMITTED
Schedule 1-1
<PAGE>
SCHEDULE 2
DESCRIPTION OF COOPER SWAP, FUEL PUMP TRANSACTION AND SERVICE LINE TRANSACTION
I. Cooper Financing: See definition in Section 1.
II. Cooper Swap: See definition in Section 1.
Schedule 2-1
<PAGE>
SCHEDULE 3
OVERRIDE COVENANTS
Capitalized terms used in this Schedule 3 and not defined shall have the
meanings ascribed to such terms in the Bank Loan Agreement.
1. TANGIBLE NET WORTH.
During each of the fiscal quarters set out below, the Company will not
allow the remainder of Tangible Net Worth to be less than the amount set forth
opposite such quarter:
1st Quarter 1998 $143,000,000
2nd Quarter 1998 $145,000,000
3rd Quarter 1998 $150,000,000
2. NET SALES.
During each of the fiscal quarters set out below, Net Sales of the
Company and its Subsidiaries shall be not less than the amount set forth below
opposite such period:
1st Quarter 1998 $145,000,000
2nd Quarter 1998 $167,000,000
3rd Quarter 1998 $153,000,000
3. CUMULATIVE EBITDA.
EBITDA on a cumulative basis for the periods set out below shall be not
less than the amounts set out below opposite such period:
First Quarter 1998 $ 8,300,000
First Two Quarters 1998 $22,400,000
First Three Quarters 1998 $36,300,000
4. CAPITAL EXPENDITURES.
Schedule 3-1
<PAGE>
Capital Expenditures of the Company and its Subsidiaries on a
cumulative basis shall not be in excess of the following amounts as of the end
of the period set out below opposite such amount:
First Quarter 1998 $ 4,100,000
First Two Quarters 1998 $ 9,700,000
First Three Quarters 1998 $ 13,300,000
Schedule 3-2
<PAGE>
SCHEDULE 4
AMENDMENTS TO EXISTING COVENANTS
1. SECTION 7.2(A) OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.2 INDEBTEDNESS.
(a) From and after March 31, 1998, neither the Company nor any
Subsidiary shall incur or in any manner become liable in respect of any
Funded Debt or Current Debt except:
the Notes, the 1989 Notes (as defined in the
Override Agreement) and the 1992 Notes (as defined in the
Override Agreement),
Funded Debt or Current Debt outstanding
pursuant to The Bank Loan Agreement and the Cooper Financing
(as such terms are defined in the Override Agreement) (the
"Bank Loan Agreement" and the "Cooper Financing"
respectively),
Funded Debt owed to the Company or a
Wholly-Owned Subsidiary,
Funded Debt secured by purchase money Liens
or Capitalized Leases, provided that the aggregate principal
amount thereof does not exceed $6,000,000,
Funded Debt and Current Debt the payment of
which is subordinated to the payment of the Notes pursuant to
subordination provisions acceptable to you in all respects,
the CIBC Other Credits (as defined in the
Override Agreement),
obligations outstanding under the Clipper
Facility (as such term is defined in the Override Agreement)
not to exceed $25,000,000,
Funded Debt or Current Debt of Intermotor
Holdings Ltd. ( a corporation organized under the laws of the
United Kingdom), provided that the principal amount thereof
does not exceed (pound) 5,000,000 over the amount such entity
is presently permitted to borrow pursuant to the terms of its
credit facility
Schedule 4-1
<PAGE>
with The Royal Bank of Scotland, and none of such indebtedness
is guarantied by the Company or any Subsidiary (the
"Intermotor Loan"), and
indebtedness associated with a consignment
of $15,000,000 of inventory arising in connection with the
Cooper Swap.
2. SECTION 7.3 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.3 SUBSIDIARY INDEBTEDNESS.
The Company will not permit any Subsidiary to create, assume, incur or
otherwise become liable for, directly or indirectly, any Indebtedness, other
than (i) Indebtedness of a Subsidiary to the Company or a Wholly-Owned
Subsidiary, (ii) Guaranties of the Notes, the 1989 Notes, the 1992 Notes and the
Indebtedness outstanding pursuant to the Bank Loan Agreement and the Cooper
Financing , (iii) the CIBC Other Credits (as such term is defined in the
Override Agreement), (iv) the Intermotor Loan, and (v) obligations of SMPJ
Credit Corp. in respect of the Clipper Facility.
3. SECTION 7.5 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.5 LIENS.
The Company will not, and will not permit any Subsidiary to, permit to
exist, create, assume or incur, directly or indirectly, any Lien on its
properties or assets, whether now owned or hereafter acquired, except:
Liens existing on property or assets of the Company
or any Subsidiary as of the date of this Agreement that are described
on Schedule 3.06 of the Bank Loan Agreement;
Liens for taxes, assessments or governmental charges
not then due and delinquent or the validity of which is being contested
in good faith and as to which the Company has established adequate
reserves on its books;
Deposits or pledges in connection with or to secure
payment of workers' compensation, unemployment insurance, old-age
pensions or other social security, or in connection with the good faith
contest of any tax Lien;
Schedule 4-2
<PAGE>
Construction, mechanics', materialmen's or
warehousemen's Liens securing obligations not due or, if overdue, being
contested in good faith by appropriate proceedings;
Liens arising in connection with court proceedings,
provided the execution of such Liens is effectively stayed, such Liens
are being contested in good faith and the Company has established
adequate reserves therefor on its books;
Liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money (including
encumbrances in the nature of zoning restrictions, easements, rights
and restrictions of record on the use of real property and landlord's
and lessor's liens) that in the aggregate do not materially interfere
with the conduct of the business of the Company and its Subsidiaries
taken as a whole or materially impair the value of the property or
assets subject thereto;
Liens securing Indebtedness of a Subsidiary to the
Company or to a Wholly-Owned Subsidiary;
Liens or Capitalized Leases on fixed assets created
within twelve (12) months of the date of acquisition or improvement
thereof to secure or provide for all or a portion of the purchase price
or cost of construction or improvement of such fixed assets, PROVIDED
that such Liens do not extend to other property of the Company or any
Subsidiary, the incurrence of the Indebtedness secured by such Liens is
otherwise permitted by this Agreement, and the aggregate principal
amount of Indebtedness secured by such Liens does not exceed
$6,000,000;
Liens upon receivables sold pursuant to the Clipper
Facility (as such term is defined in the Override Agreement).
Liens securing the Intermotor Loan, provided that
such Liens encumber only the property of Intermotor Holdings Limited;
and
a consignment of $15,000,000 of inventory arising in
connection with the Cooper Swap.
4. SECTION 7.6 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.6 RESTRICTED PAYMENTS.
Schedule 4-3
<PAGE>
The Company will not declare or make any Restricted Payment unless,
after giving effect thereto, (a) no Default or Event of Default would exist, (b)
the Company would be in compliance with Section 6.06 of the Bank Loan Agreement.
5. SECTION 7.7 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.7 MERGER OR CONSOLIDATION.
Except for the Cooper Swap (as defined in the Override Agreement), the
Company will not, and will not permit any Subsidiary to, merge or consolidate
with, or sell all or substantially all of its assets to, any Person, except that
any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary or
(ii) sell, transfer or lease all or any part of its assets to the Company or to
a Wholly-Owned Subsidiary or (iii) merge into any Person which, as a result of
such merger, becomes a Wholly-Owned Subsidiary; provided in each such instance
that immediately after giving effect thereto there shall exist no Default or
Event of Default.
6. SECTION 7.8 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.8 SALE OF ASSETS; SALE OF RECEIVABLES.
The Company will not, and will not permit any Subsidiary to, sell,
lease, transfer or otherwise (including by way of merger) dispose of
(collectively a "Disposition") any assets (including capital stock of
Subsidiaries) in one or a series of transactions to any Person other than the
Company or a Wholly-Owned Subsidiary other than:
sales of inventory in the ordinary course of business;
Dispositions of other properties no longer used or
useful in the business, provided that all such Dispositions shall be
for fair market value, and the aggregate fair market value of the
properties so disposed of does not exceed $5,000,000;
the Cooper Swap (as such term is defined in the
Override Agreement);
the Service Line Transaction (as such term is defined
in the Override Agreement);
the Fuel Pump Transaction (as such term is defined in
the Override Agreement);
Schedule 4-4
<PAGE>
the sale or compromise of the Borrower's claim in the
APS bankruptcy case;
sales of accounts receivable pursuant to the Clipper
Facility (as such term is defined in the Override Agreement); and
(h) dispositions of surplus or unneeded property
obtained in connection with the Cooper Swap.
7. SECTION 7.9 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ IN
ITS ENTIRETY AS FOLLOWS:
7.9 DISPOSITION OF STOCK OF SUBSIDIARIES.
The Company will not, and will not permit any Subsidiary to, issue,
sell or transfer the capital stock of a Subsidiary unless (i) all shares of
capital stock of such Subsidiary and all Indebtedness of such Subsidiary owned
by the Company and by every other Subsidiary shall simultaneously be sold,
transferred or otherwise disposed of, (ii) such Subsidiary does not thereafter
own any shares of capital stock or Indebtedness of the Company or another
Subsidiary, (iii) such sale would be permitted by Section 7.8, and (iv) the
board of directors of the Company shall have made a good faith determination
that such sale or transfer is in the best interests of the Company.
8. SECTION 7.10 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.10 PERMITTED INVESTMENTS.
The Company will not, and will not permit any Subsidiary to, make any
Investment other than a Permitted Investment; provided that the Company shall
make no Permitted Investment of the type described in clause (vi) of the
definition of Permitted Investment.
9. SECTION 7.13 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED TO READ
IN ITS ENTIRETY AS FOLLOWS:
7.13 GUARANTIES.
The Company will not, and will not permit any Subsidiary to, become or
be liable in respect to any Guaranties of Indebtedness, except Guaranties of the
Indebtedness outstanding under the Notes, the 1989 Notes, the 1992 Notes, the
Bank Loan Agreement and the CIBC Other Credits (as such term is defined in the
Override Agreement).
Schedule 4-5
<PAGE>
10. A NEW SECTION 7.14 IS HEREBY ADDED TO THE EXISTING NOTE AGREEMENT AS
FOLLOWS:
7.14 LIMITS ON MANAGEMENT COMPENSATION.
Make or permit any material change from the 1997 Management
Compensation Plan as approved by the Company's Board of Directors
11. SECTION 5.1 OF THE EXISTING NOTE AGREEMENT IS HEREBY AMENDED BY ADDING
THERETO, IN PROPER ALPHABETICAL ORDER, THE FOLLOWING DEFINED TERM:
Override Agreement -- That certain Override Amendment Agreement between
you and the Company, dated as of March 27, 1998.
Schedule 4-6
<PAGE>
Schedule 4-7
EXHIBIT 10.20
================================================================================
================================================================================
REVOLVING CREDIT AND GUARANTY AGREEMENT
================================================================================
================================================================================
Among
STANDARD MOTOR PRODUCTS, INC.
as Borrower,
RENO STANDARD INCORPORATED,
MARDEVO CREDIT CORP.,
STANRIC, INC.,
as Guarantors,
THE BANKS PARTY HERETO,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
THE BANK OF NEW YORK
as Documentation Agent
================================================================================
================================================================================
Dated as of March 30, 1998
================================================================================
================================================================================
<PAGE>
REVOLVING CREDIT AND GUARANTY AGREEMENT
TABLE OF CONTENTS
PAGE NO.
--------
INTRODUCTORY STATEMENT ....................................................1
SECTION 1. DEFINITIONS. ..................................................3
SECTION 1.01 DEFINED TERMS ..................................3
SECTION 1.02 TERMS GENERALLY................................20
SECTION 2. AMOUNT AND TERMS OF CREDIT...................................20
SECTION 2.01 RESTRUCTURING OF EXISTING
EXTENSIONS OF CREDIT.......................................20
SECTION 2.02 COMMITMENT OF THE BANKS........................21
SECTION 2.03 BORROWING BASE.................................21
SECTION 2.04 MAKING OF LOANS................................22
SECTION 2.05 NOTES; REPAYMENT OF LOANS.....................23
SECTION 2.06 INTEREST ON LOANS .............................23
SECTION 2.07 DEFAULT INTEREST .............................24
SECTION 2.08 OPTIONAL TERMINATION OR REDUCTION OF
COMMITMENT.....................................25
SECTION 2.09 MANDATORY PREPAYMENT; COMMITMENT
TERMINATION....................................25
i
<PAGE>
SECTION 2.10 OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF
BANKS .........................................26
SECTION 2.11 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES..27
SECTION 2.12 PRO RATA TREATMENT, ETC........................27
SECTION 2.13 TAXES ........................................28
SECTION 2.14 FACILITY FEES .................................31
SECTION 2.15 AGENTS' FEE ...................................31
SECTION 2.16 NATURE OF FEES ................................31
SECTION 2.17 RIGHT OF SET-OFF ..............................31
SECTION 3. REPRESENTATIONS AND WARRANTIES ................31
SECTION 3.01 ORGANIZATION AND AUTHORITY ....................31
SECTION 3.02 DUE EXECUTION .................................32
SECTION 3.03 STATEMENTS MADE ..............................32
SECTION 3.04 FINANCIAL STATEMENTS ..........................32
SECTION 3.05 OWNERSHIP ....................................33
SECTION 3.06 LIENS ........................................33
SECTION 3.07 COMPLIANCE WITH LAW ...........................33
SECTION 3.08 INSURANCE ....................................34
SECTION 3.09 USE OF PROCEEDS ..............................34
SECTION 3.10 LITIGATION ...................................34
SECTION 3.11 LABOR MATTERS..................................34
SECTION 3.12 OWNERSHIP OF PROPERTY; LIENS ..................34
ii
<PAGE>
SECTION 3.13 TAXES .........................................34
SECTION 3.14 FILING OF STATEMENTS AND REPORTS...............34
SECTION 3.15 ERISA..........................................35
SECTION 3.16 MATERIAL AGREEMENTS............................35
SECTION 3.17 ENVIRONMENTAL MATTERS..........................35
SECTION 4. CONDITIONS OF LENDING.........................................36
SECTION 4.01 CONDITIONS PRECEDENT TO EFFECTIVENESS OF
RESTRUCTURING .................................36
SECTION 4.02 CONDITIONS PRECEDENT TO EACH LOAN ............39
SECTION 5. AFFIRMATIVE COVENANTS.........................................40
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. ...........40
SECTION 5.02 CORPORATE EXISTENCE ..........................43
SECTION 5.03 INSURANCE ....................................43
SECTION 5.04 OBLIGATIONS AND TAXES ........................43
SECTION 5.05 NOTICE OF EVENT OF DEFAULT, ETC. ..............44
SECTION 5.06 ACCESS TO BOOKS AND RECORDS ..................44
SECTION 5.07 MAINTENANCE OF BANK ACCOUNTS ..................44
SECTION 5.08 BORROWING BASE CERTIFICATE.....................44
SECTION 5.09 STRATEGIC BUSINESS PLAN........................44
SECTION 5.10 MATERIAL ADVERSE EFFECT........................44
SECTION 5.11 MAINTENANCE OF PROPERTIES .....................45
iii
<PAGE>
SECTION 5.12 FISCAL YEAR; ACCOUNTING .......................45
SECTION 5.13 COMPLIANCE WITH TERMS OF LEASEHOLD ...........45
SECTION 5.14 RETENTION OF FINANCIAL ADVISORS................45
SECTION 5.15 MAINTENANCE OF CLIPPER RECEIVABLES FINANCING ..45
SECTION 5.16 APPLICATION OF ASSET SALE PROCEEDS.............45
SECTION 5.17 FURTHER ASSURANCES ............................45
SECTION 6. NEGATIVE COVENANTS...........................................46
SECTION 6.01 LIENS ........................................46
SECTION 6.02 MERGER, ETC. .................................46
SECTION 6.03 INDEBTEDNESS ..................................46
SECTION 6.04 CAPITAL EXPENDITURES .........................46
SECTION 6.05 GUARANTEES AND OTHER LIABILITIES ..............47
SECTION 6.06 DIVIDENDS; CAPITAL STOCK ......................47
SECTION 6.07 TRANSACTIONS WITH AFFILIATES ..................47
SECTION 6.08 INVESTMENTS, LOANS AND ADVANCES ...............47
SECTION 6.09 DISPOSITION OF ASSETS ........................48
SECTION 6.10 NATURE OF BUSINESS ............................48
SECTION 6.11 CHARTER AMENDMENTS ............................48
SECTION 6.12 ACCOUNTING CHANGES.............................48
SECTION 6.13 CHANGE IN MANAGEMENT COMPENSATION..............48
SECTION 6.14 MINIMUM CONSOLIDATED TANGIBLE NET WORTH .......48
iv
<PAGE>
SECTION 6.15 NON-CUMULATIVE EBITDA..........................49
SECTION 6.16 CUMULATIVE EBITDA..............................49
SECTION 6.17 NET SALES......................................49
SECTION 6.18 MAXIMUM LOAN BALANCES..........................49
SECTION 6.19 MAXIMUM PEAK BALANCES..........................50
SECTION 6.20 MAXIMUM BORROWED FUNDS.........................50
SECTION 6.21 SUBSIDIARIES...................................51
SECTION 6.22 ADDITIONAL INTERMOTOR DEBT.....................51
SECTION 6.23 INACTIVE SUBSIDIARIES..........................51
SECTION 7. EVENTS OF DEFAULT............................................51
SECTION 7.01 EVENTS OF DEFAULT ............................51
SECTION 8. THE AGENTS....................................................54
SECTION 8.01 ADMINISTRATION BY AGENTS ....................54
SECTION 8.02 ADVANCES AND PAYMENTS .........................55
SECTION 8.03 SHARING OF SETOFFS ............................55
SECTION 8.04 AGREEMENT OF REQUIRED BANKS ..................56
SECTION 8.05 LIABILITY OF AGENTS ...........................57
SECTION 8.06 REIMBURSEMENT AND INDEMNIFICATION .............57
SECTION 8.07 RIGHTS OF THE AGENTS ..........................58
SECTION 8.08 INDEPENDENT BANKS ............................58
v
<PAGE>
SECTION 8.09 NOTICE OF TRANSFER ...........................59
SECTION 8.10 SUCCESSOR AGENT ..............................59
SECTION 9. GUARANTY.....................................................59
SECTION 9.01 GUARANTY......................................59
SECTION 9.02 NO IMPAIRMENT OF GUARANTY .....................60
SECTION 9.03 SUBROGATION ...................................60
SECTION 10. MISCELLANEOUS...............................................60
SECTION 10.01 NOTICES ......................................60
SECTION 10.02 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND
WARRANTIES, ETC. ..............................61
SECTION 10.03 SUCCESSORS AND ASSIGNS .......................61
SECTION 10.04 CONFIDENTIALITY ..............................63
SECTION 10.05 EXPENSES .....................................64
SECTION 10.06 INDEMNITY ....................................64
SECTION 10.07 CHOICE OF LAW ................................64
SECTION 10.08 NO WAIVER ....................................65
SECTION 10.09 EXTENSION OF MATURITY ........................65
SECTION 10.10 AMENDMENTS, ETC. ..............................65
SECTION 10.11 SEVERABILITY .................................66
SECTION 10.12 HEADINGS .....................................66
SECTION 10.13 EXECUTION IN COUNTERPARTS ....................66
vi
<PAGE>
SECTION 10.14 PRIOR AGREEMENTS .............................66
SECTION 10.15 FURTHER ASSURANCES ...........................66
SECTION 10.16 WAIVER OF JURY TRIAL .........................66
ANNEX A - COMMITMENT AMOUNTS
EXHIBIT A-1 - FORM OF TRANCHE A NOTE
EXHIBIT A-2 - FORM OF TRANCHE B NOTE
EXHIBIT B - FORM OF OPINION OF COUNSEL
EXHIBIT C - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE
SCHEDULE 2.09(d) - BORROWER'S PERMITTED INVESTMENTS
SCHEDULE 3.04 - MATERIAL ADVERSE CHANGES
SCHEDULE 3.05 - SUBSIDIARIES
SCHEDULE 3.06 - LIENS
SCHEDULE 3.10 - LITIGATION
SCHEDULE 3.15 - ERISA
SCHEDULE 3.16 - MATERIAL AGREEMENTS
SCHEDULE 5.07 - EXISTING DEPOSITORY ACCOUNTS
SCHEDULE 6.03 - INDEBTEDNESS
vii
<PAGE>
SCHEDULE 6.05 - GUARANTIES AND OTHER LIABILITIES
SCHEDULE 6.07 - TRANSACTIONS WITH AFFILIATES
SCHEDULE 6.08 - INVESTMENTS
viii
<PAGE>
REVOLVING CREDIT AND GUARANTY AGREEMENT
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of March 30, 1998
among STANDARD MOTOR PRODUCTS, INC., a New York corporation (the "BORROWER"),
RENO STANDARD INCORPORATED, a Nevada corporation, MARDEVCO CREDIT CORP., a New
York corporation, and STANRIC, INC., a Delaware corporation (each, a "GUARANTOR"
and collectively, the "GUARANTORS"), THE CHASE MANHATTAN BANK ("CHASE"), THE
BANK OF NEW YORK ("BNY"), FLEET BANK, NATIONAL ASSOCIATION ("FLEET"), NBD BANK,
formerly known as NBD Bank, N.A. ("NBD"), CANADIAN IMPERIAL BANK OF COMMERCE
("CIBC") and COMERICA BANK ("COMERICA" and, together with BNY, Chase, Fleet, NBD
and CIBC, the "BANKS") and THE CHASE MANHATTAN BANK, as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT") for the Banks and THE BANK OF NEW
YORK, as documentation agent (in such capacity, the "DOCUMENTATION AGENT", and
together with the Administrative Agent, the "AGENTS") for the Banks.
W I T N E S S E T H :
WHEREAS, the Borrower is obligated to Chase in respect of (i) demand
loans in the aggregate outstanding principal amount of $3,000,000, together with
accrued interest through March 29, 1998 in the amount of $2,125.00 and
thereafter in accordance with the agreement between the parties (the "EXISTING
CHASE LOANS") evidenced by that certain promissory note dated August 2, 1993
(the "EXISTING CHASE NOTE") and (ii) accrued and unreimbursed fees and expenses
in the aggregate amount of $100,215.68 (the "EXISTING CHASE FEES AND EXPENSES"
and together with the Existing Chase Loans, the "EXISTING CHASE OBLIGATIONS");
WHEREAS, the Borrower is obligated to BNY in respect of (i) demand
loans in the aggregate outstanding principal amount of $9,100,000, together with
accrued interest through March 29, 1998 in the amount of $6,779.17 and
thereafter in accordance with the agreement between the parties (the "EXISTING
BNY LOANS") evidenced by that certain promissory note dated June 14, 1995 (the
"EXISTING BNY NOTE") and (ii) letters of credit issued by BNY for the account of
the Borrower in the aggregate amount of $553,835 (the "EXISTING BNY L/C
OBLIGATION") evidenced by that certain letter of credit No. S00030319 dated
March 9, 1994 as amended by that certain amendment to letter of credit dated
July 16, 1996 (the "EXISTING BNY L/C"), and (iii) accrued and unreimbursed fees
and expenses in the aggregate amount of $0.00 (the "EXISTING BNY FEES AND
EXPENSES" and together with the Existing BNY Loans and the Existing BNY L/C
Obligation, the "EXISTING BNY OBLIGATIONS");
WHEREAS, the Borrower is obligated to Fleet in respect of (i) demand
loans in the aggregate outstanding principal amount of $12,000,000, together
with accrued interest through March 29, 1998 in the amount of $6,333.33 and
thereafter in accordance with the agreement between the parties (the "EXISTING
FLEET LOANS") evidenced by that certain promissory note dated September 30, 1997
(the "EXISTING FLEET NOTE") issued in connection with that certain letter
agreement dated
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July 31, 1996, as amended and (ii) accrued and unreimbursed fees and expenses in
the aggregate amount of $9,567.23 (the "EXISTING FLEET FEES AND EXPENSES" and
together with the Existing Fleet Loans, the "EXISTING FLEET OBLIGATIONS");
WHEREAS, the Borrower is obligated to NBD in respect of (i) demand
loans in the aggregate outstanding principal amount of $13,800,000, together
with accrued interest through March 29, 1998 in the amount of $418,765.28 and
thereafter in accordance with the agreement between the parties (the "EXISTING
NBD LOANS") evidenced by that certain promissory note dated February 28, 1994
(the "EXISTING NBD NOTE") issued in connection with that certain Credit
Agreement dated as of December 20, 1991, as amended and (ii) accrued and
unreimbursed fees and expenses in the aggregate amount of $13,341.09 (the
"EXISTING NBD FEES AND EXPENSES" and together with the Existing NBD Loans, the
"EXISTING NBD OBLIGATIONS");
WHEREAS, the Borrower is obligated to CIBC under a Guarantee dated June
7, 1996 in respect of (i) a term loan in the aggregate outstanding principal
amount of C$20,000,000, together with accrued interest through March 29, 1998 in
the amount of C$0.00 and thereafter in accordance with the agreement between the
parties (the "CIBC TERM LOAN") extended by CIBC to SMP Motor Products, Inc. (as
successor to Blue Streak-Hygrade Motor Products, Ltd., EIS Brake Manufacturing,
Ltd. and Unimotor, Ltd. ("SMP CANADA")) evidenced by that certain promissory
note dated May 1, 1996 (the "CIBC TERM NOTE") issued in connection with that
certain Credit Agreement dated as of May 1, 1996, as amended, (ii) revolving
loans in the aggregate outstanding amount of C$0.00 (the "EXISTING CIBC
REVOLVING LOANS") evidenced by that certain promissory note dated May 1, 1996
(the "EXISTING CIBC REVOLVING NOTE") issued in connection with that certain
Credit Agreement dated as of May 1, 1996, (iii) a letter of guarantee by CIBC
for the account of SMP Canada in the aggregate amount of C$60,000 (the "EXISTING
CIBC L/G OBLIGATION") evidenced by that certain letter of guarantee No.
T374406000 issued December 30, 1996 (the "EXISTING CIBC L/G") under that certain
Credit Agreement dated as of May 1, 1996 and (iv) accrued and unreimbursed fees
and expenses in the aggregate amount of $9,336.33 (the "EXISTING CIBC FEES AND
EXPENSES" and together with the CIBC Term Loan, the Existing CIBC Revolving
Loans and the Existing CIBC L/G Obligation, the "EXISTING CIBC OBLIGATIONS").
WHEREAS, the Borrower is obligated to Comerica in respect of (i) demand
loans in the aggregate outstanding principal amount of $15,000,000, together
with accrued interest through March 29, 1998 in the amount of $12,499.98 and
thereafter in accordance with the agreement between the parties (the "EXISTING
COMERICA LOANS" and together with the Existing Chase Loans, the Existing BNY
Loans, the Existing Fleet Loans, the Existing NBD Loans and the Existing CIBC
Revolving Loans, the "EXISTING LOANS") evidenced by that certain promissory note
dated as of February 19, 1998 (the "EXISTING COMERICA NOTE" and together with
the Existing Chase Note, the Existing BNY Note, the Existing Fleet Note, the
Existing NBD Note and the Existing CIBC Revolving Note, the "EXISTING NOTES")
and (ii) accrued and unreimbursed fees and expenses in the aggregate amount of
$7,800.00 (the "EXISTING COMERICA FEES AND EXPENSES" and together with the
Existing Comerica Loans, the "EXISTING COMERICA OBLIGATIONS") (the Existing
Chase Obligations, the Existing BNY Obligations, the Existing Fleet Obligations,
the Existing NBD Obligations, the Existing
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CIBC Obligations and the Existing Comerica Obligations are hereinafter
collectively referred to as the "EXISTING OBLIGATIONS");
WHEREAS, concurrently with the execution of the Agreement, the terms of
the CIBC Term Loan are being restructured;
WHEREAS, the Borrower has requested the Banks, and the Banks have
agreed to restructure the Existing Obligations other than the CIBC Term Loan,
all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree to restructure the
Existing Obligations other than the CIBC Term Loan and amend and restate the
Existing Loan Documents as follows:
SECTION 1. DEFINITIONS.
SECTION 1.01 DEFINED TERMS.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR" shall mean Alternate Base Rate.
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Section 2.
"APS" shall mean APS, Inc.
"APS BANKRUPTCY CASE" shall mean the Chapter 11 cases of APS Holding
Corp. and APS, Inc. currently pending in the United States Bankruptcy Court for
the District of Delaware.
"ACCOUNT DEBTOR" shall mean any person who is or who may become
obligated to the Borrower or any of its Subsidiaries under, with respect to, or
on account of, an Account Receivable.
"ACCOUNTS RECEIVABLE" shall mean any and all rights of the Borrower or
any of its Subsidiaries to payment for goods sold or leased, including any such
right evidenced by chattel paper, or services rendered, whether due or to become
due, whether or not it has been earned by performance, and whether now existing
or hereafter acquired or arising in the future, which Account Receivable arose
from the sale of goods and the rendering of services to unaffiliated parties in
the ordinary course of business of the Borrower or its Subsidiaries, and which,
to the best knowledge of the Borrower, is in full force and effect and
constitutes a legal, valid and binding obligation of the Account Debtor with
respect thereto enforceable in accordance with its terms.
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"ADMINISTRATIVE AGENT" shall have the meaning given such term in the
first paragraph of this Agreement.
"AFFILIATE" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"CONTROLLED PERSON") shall be deemed to be "controlled by" another Person (a
"CONTROLLING PERSON") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"AGENTS" shall have the meaning given such term in the first paragraph
of this Agreement.
"AGENTS' FEE" shall have the meaning given such term in Section 2.15
hereof.
"AGREEMENT" shall mean this Revolving Credit and Guaranty Agreement, as
the same may from time to time be amended, modified or supplemented.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "PRIME RATE" shall mean the rate of interest per
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced.
"BASE CD RATE" shall mean the sum of (a) the quotient of (i) the Three-Month
Secondary CD Rate divided by (ii) a percentage expressed as a decimal equal to
100% minus Statutory Reserves and (b) the Assessment Rate. "THREE-MONTH
SECONDARY CD RATE" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day (or,
if such day shall not be a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "FEDERAL FUNDS EFFECTIVE
RATE" shall mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability or failure
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of the Administrative Agent to obtain sufficient quotations in accordance with
the terms hereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"AMOUNTS" shall have the meaning given such term in Section 2.13.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or any successor) of time deposits made in Dollars at the
Administrative Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the
Documentation Agent, substantially in the form of Exhibit D.
"BNY" shall have the meaning given such term in the first paragraph of
this Agreement.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 ET SEQ.
"BANKS" shall have the meaning given such term in the first paragraph
of this Agreement.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"BORROWED FUNDS" shall mean, on any day, the sum of (i) the then
outstanding principal amount of Loans plus (ii) the then outstanding principal
amount of the Cooper Loan.
"BORROWER" shall have the meaning given such term in the first
paragraph of this Agreement.
"BORROWING" shall mean the incurrence of Tranche A Loans or Tranche B
Loans made from all the Tranche A Banks or Tranche B Banks on a single date.
"BORROWING BASE" shall mean, on any day, an amount equal to (a) the sum
of (i) 85% of the then Eligible Accounts Receivable PLUS (ii) 35% of the
Inventory PLUS (iii) 50% of PP&E PLUS (iv) 100% of the cash then held by the
Borrower and its Subsidiaries in accounts maintained in the continental United
States MINUS (b) the Borrowing Base Debt; PROVIDED, that during the period from
April 1, 1998 through July 30, 1998, "Borrowing Base" shall mean, on any day
during such period,
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an amount equal to (a) the sum of (i) 85% of the then Eligible Accounts
Receivable PLUS (ii) 50% of the Inventory PLUS (iii) 55% of PP&E PLUS (iv) 100%
of the cash then held by the Borrower and its Subsidiaries in accounts
maintained in the continental United States MINUS (b) the Borrowing Base Debt.
The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate delivered pursuant to Sections 5.08 and
4.02(e), and shall be subject at all times to audit confirmation and review.
"BORROWING BASE CERTIFICATE" shall mean a certificate substantially in
the form of the Exhibit C (with such changes therein as may be required by the
Administrative Agent to reflect the components of, and reserves against, the
Borrowing Base as provided for hereunder from time to time), executed and
certified by a Financial Officer of the Borrower and accompanied by appropriate
supporting documentation that verifies the amounts shown thereon.
"BORROWING BASE DEBT" shall mean, on any day, the sum of (i) the then
outstanding principal amount of the Cooper Loan (ii) the then outstanding
principal amount of the notes issued pursuant to the Note Agreements and (iii)
all other long term debt (including the current portion thereof) of the Borrower
and its Subsidiaries as set forth on Schedule 6.03 hereof, as same may be
reduced from time to time.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which banks in the State of New York are required or permitted to
close.
"CIBC" shall have the meaning given such term in the first paragraph of
this Agreement.
"CIBC TERM LOAN" shall have the meaning given such term in the recitals
to this Agreement.
"CANADIAN LENDER" shall have the meaning given to such term in Section
2.13(a).
"CAPITAL EXPENDITURES" shall mean, for any period, the aggregate of all
cash expenditures (whether paid in cash or accrued as liabilities during such
period and excluding that portion of Capitalized Leases which is capitalized on
the consolidated balance sheet of the Borrower and the Guarantors), net of cash
amounts received by the Borrower and the Guarantors from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
the Guarantors, excluding interest capitalized during construction, made by the
Borrower and the Guarantors during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, equipment or
similar fixed asset accounts reflected in the consolidated balance sheet of the
Borrower and the Guarantors (including equipment which is purchased
simultaneously with the trade-in of existing equipment owned by the Borrower or
any of the Guarantors to the extent of the gross amount of such purchase price
less the book value of the equipment being traded in at such time), but
excluding expenditures made in connection with the replacement or restoration of
assets, to the extent reimbursed or financed from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored, or
from awards of compensation arising from the taking by condemnation or eminent
domain of such assets being replaced.
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"CAPITALIZED LEASE" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"CARL MARKS" shall mean The Carl Marks Consulting Group, Co.
"CERTIFICATE" shall have the meaning given such term in Section 4.01(o)
hereof.
"CLIPPER RECEIVABLES FINANCING AGREEMENT" shall mean, collectively,
that certain Purchase and Sale Agreement dated as of March 19, 1997 between the
Borrower and SMP Credit Corp., that certain Receivables Purchase Agreement dated
as of March 19, 1997 among SMP Credit Corp., the Borrower, Clipper Receivables
Corporation, State Street Boston Capital Corporation and State Street Bank &
Trust Company and any other instrument or agreement executed and delivered in
connection therewith pursuant to which SMP Credit Corp. purchases receivables
from the Borrower and sells up to a $25,000,000 interest therein.
"CHASE" shall have the meaning given such term in the first paragraph
of this Agreement.
"CLOSING DATE" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.01 have been satisfied or waived.
"CODE" shall mean the Internal Revenue Code of 1986, as from time to
time amended.
"COMERICA" shall have the meaning given such term in the first
paragraph of this Agreement.
"COMMITMENTS" shall mean, collectively, the Tranche A Commitments and
the Tranche B Commitments.
"COOPER" shall mean Cooper Industries, Inc.
"COOPER LOAN" shall mean the loan to be made by Cooper or an Affiliate
of Cooper to the Borrower in the principal amount of $22,500,000 in connection
with the Cooper Transaction, on terms satisfactory to the Required Banks.
"COOPER TRANSACTION" shall mean the contemplated exchange of the assets
of the brake division of Borrower for the climate control division of Cooper and
all transactions between Cooper and its Subsidiaries and the Borrower and its
Subsidiaries related to such exchange.
"DEFAULT" shall mean any event or condition which constitutes an Event
of Default or which, upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCONTINUED OPERATIONS" shall mean the EIS Brake Division and the
Service Line.
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"DOCUMENTATION AGENT" shall have the meaning given such term in the
first paragraph of this Agreement.
"DOLLARS" shall mean lawful money of the United States of America.
"$" shall mean lawful money of the United States of America, except
where the letter "C" appears before the dollar sign, as in "C$", which symbol
shall mean lawful money of Canada.
"EBITDA" shall mean, with respect to the Borrower and its Subsidiaries
for any period, all as determined in accordance with GAAP except for the
operating results and any reserve adjustments from Discontinued Operations, an
amount equal to (i) Net Income for such period PLUS (ii) interest expense PLUS
(iii) net total Federal, state, local and foreign income tax expense PLUS (iv)
depreciation expense PLUS (v) amortization expense.
"ELIGIBLE ACCOUNTS RECEIVABLE" shall mean all Accounts Receivable of
the Borrower and its Subsidiaries which are and at all times shall continue to
be reasonably acceptable to the Administrative Agent in all respects but
(without duplication) shall not include: (i) Accounts Receivable which arise
from a sale to an Account Debtor which is not a bona fide, valid or legally
enforceable sale of goods or rendition of services or which does not arise from
the actual sale and delivery of goods or rendition and acceptance of services in
the ordinary course of business to such Account Debtor; (ii) Accounts Receivable
which are not free and clear of any and all Liens except for Accounts
Receivables subject to a Lien in favor of Clipper Receivables Corporation in an
amount in excess of the amount of the Asset Interest as defined in the Clipper
Receivables Financing Agreement, (iii) Accounts Receivable which do not
constitute an enforceable obligation of the Account Debtor; (iv) Accounts
Receivable which are not evidenced by an invoice issued in the ordinary course
of business; (v) Accounts Receivable which are not recorded in the records of
the Borrower or its Subsidiaries; (vi) Accounts Receivable which remain unpaid
more than sixty (60) days after the due date thereof; (vii) Accounts Receivable
where the customer is (a) insolvent or a debtor, voluntarily or involuntarily,
in a case or proceeding under any bankruptcy, reorganization, insolvency,
adjustment of debt, dissolution, liquidation or similar law of any jurisdiction
or (b) experiencing financial difficulties and been given an extension of time
to pay by the Borrower or any of its Subsidiaries; (viii) Accounts Receivable
which have been sent by the Borrower or any of its Subsidiaries to a collection
agency; (vix) Accounts Receivable which have been written off by the Borrower or
any of its Subsidiaries; (ix) Accounts Receivable which are not denominated in
Dollars or C$; (x) Accounts Receivable which are subject to any asserted
defense, setoff, charge-back or any dispute to the extent of such asserted
defense, setoff, chargeback or dispute; (xi) Accounts Receivable for which the
Account Debtor is an Affiliate or a Subsidiary of the Borrower; (xii) Accounts
Receivable from customers located outside the United States unless Accounts
Receivable from such customer are paid, as a matter of course, from an office of
such customer located in the United States or Canada; (xv) Accounts Receivable
representing credits from Account Debtors which are over sixty (60) days past
due; (xvi) if more than 50% of the Accounts Receivable of any Account Debtor are
over sixty (60) days past due, the Accounts Receivable of such Account Debtor;
(xvii) Accounts Receivable from an Account Debtor for which any trade payable,
rebate obligation or other similar liability is owing to such Account Debtor by
the Borrower or any of its Subsidiaries to the extent of
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the amount of such trade payable, rebate obligation or similar liability,
(xviii) Accounts Receivable for which the Borrower has established a reserve on
its books and records and (xix) Accounts Receivable from a customer if the
Administrative Agent is not satisfied with the credit standing of such customer
in relation to the amount of credit extended. Notwithstanding the foregoing, the
Administrative Agent, in its sole discretion, may determine eligibility based on
such additional considerations as the Administrative Agent may deem appropriate.
"ELIGIBLE ASSIGNEE" shall mean (i) a commercial bank having total
assets in excess of $1,000,000,000; (ii) a finance company, insurance company or
other financial institution or fund, in each case acceptable to the Agents,
which in the ordinary course of business extends credit of the type similar to
the Loans and has total assets in excess of $200,000,000 and whose becoming an
assignee would not constitute a prohibited transaction under Section 4975 of
ERISA; and (iii) any other financial institution satisfactory to the Borrower
and the Agents.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Guarantor directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ENVIRONMENTAL LIEN" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under Environmental Laws, or (ii) damages
arising from or costs incurred by such Governmental Authority in response to a
release or threatened release of a hazardous or toxic waste, substance or
constituent, or other substance into the environment.
"EQUITY-RELATED AGREEMENTS" shall have the meaning given such term in
Section 3.16 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.
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"EVENT OF DEFAULT" shall have the meaning given such term in Section
7.01.
"EXISTING BNY FEES AND EXPENSES" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING BNY L/C" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING BNY L/C OBLIGATIONS" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING BNY LOANS" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING BNY NOTE" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING BNY OBLIGATIONS" shall have the meaning given such term in
the recitals to this Agreement.
"EXISTING CIBC FEES AND EXPENSES" shall have the meaning given such
term in the recitals to this Agreement.
"EXISTING CIBC OBLIGATIONS" shall have the meaning given such term in
the recitals to this Agreement.
"EXISTING CIBC REVOLVING LOANS" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING CIBC REVOLVING NOTE" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING CHASE FEES AND EXPENSES" shall have the meaning given such
term in the recitals to this Agreement.
"EXISTING CHASE LOANS" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING CHASE NOTE" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING CHASE OBLIGATIONS" shall have the meaning given such term in
the recitals to this Agreement.
"EXISTING COMERICA FEES AND EXPENSES" shall have the meaning given such
term in the recitals to this Agreement.
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"EXISTING COMERICA LOANS" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING COMERICA NOTE" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING COMERICA OBLIGATIONS" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING FLEET FEES AND EXPENSES" shall have the meaning given such
term in the recitals to this Agreement.
"EXISTING FLEET LOANS" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING FLEET NOTE" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING FLEET OBLIGATIONS" shall have the meaning given such term in
the recitals to this Agreement.
"EXISTING LOAN DOCUMENTS" shall mean, collectively, the Existing Notes
and any other documents evidencing or supporting the Existing Obligations.
"EXISTING LOANS" shall have the meaning given to such term in the
recitals to this Agreement.
"EXISTING NBD FEES AND EXPENSES" shall have the meaning given such term
in the recitals to this Agreement.
"EXISTING NBD LOANS" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING NBD NOTE" shall have the meaning given such term in the
recitals to this Agreement.
"EXISTING NBD OBLIGATIONS" shall have the meaning given such term in
the recitals to this Agreement.
"EXISTING NOTES" shall have the meaning given such term in the recitals
to this Agreement.
"EXISTING OBLIGATIONS" shall have the meaning given such term in the
recitals to this Agreement.
"FACILITY FEES" shall have the meaning given such term in Section 2.14
hereof.
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"FEES" shall collectively mean the Facility Fees and the Agents' Fees.
"FINANCIAL OFFICER" shall mean the Chief Financial Officer, Vice
President Finance or the Treasurer of the Borrower.
"FLEET" shall have the meaning given such term in the first paragraph
of this Agreement.
"FUEL PUMP SALE" shall mean the proposed sale by the Borrower of its
fuel pump business.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements referred
to in Section 3.04.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, provincial,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"GUARANTORS" shall have the meaning given such term in the first
paragraph of this Agreement.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"INACTIVE SUBSIDIARIES" shall have the meaning given such term in
Section 6.23 hereof.
"INDEBTEDNESS" shall mean, at any time and with respect to any Person,
(i) all indebtedness of such Person for borrowed money; (ii) all indebtedness of
such Person for the deferred purchase price of property or services (other than
property, including inventory, and services purchased, and trade payables, other
expense accruals (including coupon accruals) and deferred compensation items
arising, in the ordinary course of business); (iii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments (other
than performance, surety and appeal bonds arising in the ordinary course of
business); (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property); (v) all obligations of such Person under leases which
are required to be, in accordance with GAAP, recorded as capital leases, to the
extent required to be so recorded; (vi) all reimbursement, payment or similar
obligations of such Person, contingent or otherwise, under acceptance, letter of
credit or similar facilities and all obligations of such Person that would arise
in respect of (x) currency swap agreements, currency future or option contracts
and other similar agreements designed to hedge against fluctuations in foreign
interest rates, and (y) interest rate swap, cap or collar agreements and
interest rate future or option contracts; (vii) all Indebtedness referred to in
clauses (i) through (vi) above guaranteed directly or indirectly by such Person,
or in effect guaranteed directly or indirectly by such Person through an
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agreement (A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss in respect of such
Indebtedness; (C) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (D) otherwise to
assure a creditor against loss in respect of such Indebtedness; and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"INSUFFICIENCY" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA using reasonable actuarial assumptions as to interest rates
and mortality.
"INSURANCE COMPANIES" shall mean, at any date, the institutions that
are then holders of the outstanding notes issued under the Note Agreements.
"INTANGIBLE ASSETS" shall mean, on any day, all assets of the Borrower
and its Subsidiaries which would be classified as intangible under GAAP
including, without limitation, unamortized debt discount and expense,
unamortized acquisition, organization and reorganization expense, experimental
expense, patents, copyrights, trademarks, trade names, franchises, goodwill and
other similar intangible assets, as determined on a consolidated basis in
accordance with GAAP.
"INTEREST EXPENSE" shall mean interest expense as determined in
accordance with GAAP.
"INTEREST PAYMENT DATE" shall mean the last calendar day of each month;
PROVIDED, HOWEVER, that if any Interest Payment Date would fall on a day which
shall not be a Business Day, such Interest Payment Date shall be the next
preceding Business Day.
"INTERMOTOR" shall mean Intermotor Holdings Limited.
"INVENTORY" shall mean all goods now owned or hereafter acquired by the
Borrower or any of its Subsidiaries (wherever located, whether in the possession
of the Borrower or any Subsidiary or of a bailee or other person for sale,
storage, transit, processing, use or otherwise consisting of whole goods,
components, supplies, materials or consigned, returned or repossessed goods)
which are held for sale or to be furnished (or have been furnished) under any
contract of service or which are raw materials, work in process, or materials
used or consumed in the Borrower's or its Subsidiaries' business or processed by
or on behalf of the Borrower or its Subsidiaries; PROVIDED, that Inventory shall
not include consigned Inventory received by the Borrower in connection with the
Cooper Transaction. Inventory shall be based upon the Borrower's books and
records, consistently
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applied in accordance with the historical practices of the Borrower, which are
updated monthly by no later than the tenth (10th) Business Day of each month for
the end of the preceding month.
"INVESTMENTS" shall have the meaning given such term in Section 6.08.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).
"LOANS" shall mean the Tranche A Loans and the Tranche B Loans.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, and any other
instrument or agreement executed and delivered in connection herewith.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrowers and the Guarantors taken as a whole, (b) material
impairment of the ability of any of the Borrowers or Guarantors to perform any
of its Obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits and remedies available to
the Agents or any of the Banks under any Loan Document.
"MATURITY DATE" shall mean November 30, 1998.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"NBD" shall have the meaning given such term in the first paragraph of
this Agreement.
"NET INCOME" shall mean, with respect to any fiscal period, net income
for the Borrower and its Subsidiaries for such fiscal period, as determined on a
consolidated basis in accordance with GAAP except for the operating results and
any reserve adjustments arising from Discontinued Operations.
"NET INCOME TARGET" shall have the meaning given such term in Section
2.06.
"NET SALES" shall mean, for any quarter, the amount of net sales as
reported on the quarterly consolidated income statement of the Borrower and its
Subsidiaries for such quarter which shall include net sales arising from
Discontinued Operations.
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"NET WORTH" shall mean, on any day, all amounts which would be included
under stockholders' equity on the consolidated balance sheet of the Borrower and
its Subsidiaries as at such date, as determined on a consolidated basis in
accordance with GAAP.
"NOTE AGREEMENTS" shall mean, collectively, (i) that certain Note
Purchase Agreement dated as of December 1, 1995 among the Borrower and each of
the purchasers listed therein pursuant to which notes in the aggregate principal
amount of $73,000,000 were issued, (ii) that certain Note Agreement dated as of
November 15, 1992 among the Borrower and each of the purchasers listed therein
pursuant to which notes in the aggregate principal amount of $65,000,000 were
issued and (iii) that certain Note Agreement dated as of October 15, 1989 among
the Borrower and each of the purchasers listed therein pursuant to which notes
in the aggregate principal amount of $30,000,000 were issued, each as amended
from time to time.
"NOTES" shall mean the promissory notes of the Borrower, substantially
in the forms of Exhibit A-1 and A-2 hereto, each payable to the order of each
Tranche A Bank or Tranche B Bank, respectively, evidencing Tranche A Loans or
Tranche B Loans.
"OBLIGATIONS" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the reimbursement of all amounts
drawn under the Existing BNY L/C, and (b) the due and punctual payment of the
Fees and all other present and future, fixed or contingent, monetary obligations
of the Borrower and the Guarantors to the Banks and the Agents under the Loan
Documents and in respect of Indebtedness permitted by Section 6.03 (vii).
"OTHER TAXES" shall have the meaning given such term in Section 2.13.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"PP&E" shall mean property, plant and equipment as reported on the
Borrower's consolidated balance sheet net of depreciation and amortization.
"PENSION PLAN" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the Code.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below, investments
in commercial paper maturing within six months from the date of acquisition
thereof and having, at such date of
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acquisition, a rating of at least "A" or the equivalent thereof from Standard &
Poor's Corporation or of at least "A2" or the equivalent thereof from Moody's
Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within six months
from the date of acquisition thereof issued or guaranteed by or placed with (i)
any domestic office of the Administrative Agent or the bank with whom the
Borrower and the Guarantors maintain their cash management system, or (ii) any
domestic office of any other commercial bank of recognized standing organized
under the laws of the United States of America or any State thereof that has a
combined capital and surplus and undivided profits of not less than $250,000,000
and is the principal banking Subsidiary of a bank holding company having a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Corporation or at least "A2" or the equivalent thereof from
Moody's Investors Service, Inc.;
(d) investments in commercial paper maturing within six months from the
date of acquisition thereof and issued by (i) the holding company of the
Administrative Agent or (ii) the holding company of any other commercial bank of
recognized standing organized under the laws of the United States of America or
any State thereof that has (A) a combined capital and surplus in excess of
$250,000,000 and (B) commercial paper rated at least "A" or the equivalent
thereof from Standard & Poor's Corporation or of at least "A2" or the equivalent
thereof from Moody's Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above; and
(f) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (a) through
(e) above.
"PERMITTED LIENS" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory and other Liens of landlords, Liens of
tenants arising from occupancy rights and statutory Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv)
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easements (including, without limitation, reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially with
the ordinary conduct of the business of the Borrower or any Guarantor, as the
case may be, and which do not materially detract from the value of the property
to which they attach or materially impair the use thereof to the Borrower or any
Guarantor, as the case may be; (v) purchase money Liens (including Capitalized
Leases) upon or in any property acquired or held in the ordinary course of
business to secure the purchase price of such property or to secure Indebtedness
permitted by Section 6.03(iii) solely for the purpose of financing the
acquisition of such property; and (vi) extensions, renewals or replacements of
any Lien referred to in paragraphs (i) through (v) above, PROVIDED that the
principal amount of the obligation secured thereby is not increased and that any
such extension, renewal or replacement is limited to the property originally
encumbered thereby.
"PERSON" shall mean any natural person, corporation, division of a
corporation, limited liability company, partnership, trust, joint venture,
association, company, estate, unincorporated organization or Governmental
Authority.
"PLAN" shall mean a Single Employer Plan or a Multiemployer Plan.
"REAL PROPERTY" shall have the meaning given such term in Section 3.17
hereof.
"REGISTER" shall have the meaning given such term in Section 10.03(d).
"REMAINING OBLIGATIONS" shall mean the obligations of the Borrower in
respect of the Tranche A Loans and the CIBC Term Loan.
"REQUIRED BANKS" shall mean, at any time, the Banks (including CIBC in
its capacity as lender under the CIBC Term Loan) holding at least 51% of the
then outstanding aggregate principal amount of the Loans (or, if no such Loans
are outstanding, the Commitments) and the CIBC Term Loan.
"SERVICE LINE" shall mean the Borrower's Service Line Division.
"SERVICE LINE SALE" shall mean the proposed sale by the Borrower of the
Service Line scheduled to take place on or before June 30, 1998.
"SINGLE EMPLOYER PLAN" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
the Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.
"STATUTORY RESERVES" shall mean on any date the percentage (expressed
as a decimal) established by the Board and any other banking authority which is
the then stated maximum rate of all reserves (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City, for new three
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month negotiable nonpersonal time deposits in Dollars of $100,000 or more. Such
reserve percentages shall include, without limitation, those imposed pursuant to
Regulation D of the Board. The Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in such percentage.
"SUBSIDIARY" shall mean, with respect to any Person (herein referred to
as the "PARENT"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more Subsidiaries of the
parent or by the parent and one or more Subsidiaries of the parent.
"TANGIBLE NET WORTH" shall mean, on any day, Net Worth MINUS Intangible
Assets.
"TAXES" shall have the meaning given such term in Section 2.13.
"TAXES REGARDING BORROWER PAYMENTS TO CANADIAN LENDERS" shall have the
meaning given such term in Section 2.13(a).
"TERMINATION DATE" shall mean the earliest to occur of (i) the Maturity
Date and (ii) the acceleration of the Loans and the termination of the Total
Commitment in accordance with the terms hereof.
"TERMINATION EVENT" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC under Section 4043 of
ERISA or such regulations) or an event described in Section 4068 of ERISA
excluding events described in Section 4043(c)(9) of ERISA or 29 CFR
ss.ss.2615.21 or 2615.23, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer", as such term is defined in Section 4001(c) of ERISA, or
the incurrence of liability by the Borrower or any ERISA Affiliate under Section
4064 of ERISA upon the termination of a Multiple Employer Plan, or (iii)
providing notice of intent to terminate a Plan pursuant to Section 4041(c) of
ERISA or the treatment of a Plan amendment as a termination under Section 4041
of ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA, or (v) any other event or condition which would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
imposition of any liability under Title IV of ERISA (other than for the payment
of premiums to the PBGC).
"TOTAL COMMITMENT" shall mean, at any time, the sum of the Total
Tranche A Commitment and the Total Tranche B Commitment at such time.
"TOTAL TRANCHE A COMMITMENT" shall mean, at any time, the sum of the
Tranche A Commitments at such time.
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"TOTAL TRANCHE B COMMITMENT" shall mean, at any time, the sum of the
Tranche B Commitments at such time.
"TRANCHE A BANK" shall mean each Bank having a Tranche A Commitment.
"TRANCHE A COMMITMENT" shall mean the commitment of each Tranche A Bank
to make Tranche A Loans hereunder in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to Section 2.08 and
Section 2.09.
"TRANCHE A COMMITMENT PERCENTAGE" shall mean at any time, with respect
to each Tranche A Bank, the percentage obtained by dividing its Tranche A
Commitment at such time by the Total Tranche A Commitment at such time.
"TRANCHE A FACILITY" shall mean the Tranche A Loans made and committed
to be made pursuant to Section 2.02(a).
"TRANCHE A FACILITY FEE" shall have the meaning given such term in
Section 2.14 hereof.
"TRANCHE A LOANS" shall have the meaning given such term in Section
2.02(a).
"TRANCHE B BANK" shall mean each Bank having a Tranche B Commitment.
"TRANCHE B COMMITMENT" shall mean the commitment of each Tranche B Bank
to make Tranche B Loans hereunder in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to Section 2.08 and
Section 2.09.
"TRANCHE B COMMITMENT PERCENTAGE" shall mean at any time, with respect
to each Tranche B Bank, the percentage obtained by dividing its Tranche B
Commitment at such time by the Total Tranche B Commitment at such time.
"TRANCHE B FACILITY" shall mean the Tranche B Loans made and committed
to be made pursuant to Section 2.02(b).
"TRANCHE B FACILITY FEE" shall have the meaning given such term in
Section 2.14 hereof.
"TRANCHE B LOANS" shall have the meaning given such term in Section
2.02(b).
"TRANSFEREE" shall have the meaning given such term in Section 2.13.
"UNUSED TOTAL COMMITMENT" shall mean, at any time, (i) the Total
Commitment LESS (ii) the aggregate outstanding principal amount of all Loans.
"UNUSED TOTAL TRANCHE A COMMITMENT" shall mean, at any time, (i) the
Total Tranche A Commitment LESS (ii) the aggregate outstanding principal amount
of all Tranche A Loans.
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"UNUSED TOTAL TRANCHE B COMMITMENT" shall mean, at any time, (i) the
Total Tranche B Commitment LESS (ii) the aggregate outstanding principal amount
of all Tranche B Loans.
"WITHDRAWAL LIABILITY" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, except for the
operating results and any reserve adjustments arising from Discontinued
Operations; PROVIDED, HOWEVER, that for purposes of determining compliance with
any covenant set forth in Section 6, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement (except for the operating
results and any reserve adjustments arising from Discontinued Operations),
applied on a basis consistent with the application used in the Borrower's
audited financial statements referred to in Section 3.04.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
SECTION 2.01 RESTRUCTURING OF EXISTING EXTENSIONS OF CREDIT. Subject to
the terms and conditions and relying upon the representations, warranties and
covenants herein set forth, each of the parties hereby agrees that, as of the
Closing Date, the Existing Obligations (other than the CIBC Term Loan) are
hereby restructured as Tranche A Loans (as hereinafter defined), on the terms
and conditions herein contained. Each of the Borrower and the Guarantors (i)
confirms and agrees that the Borrower is truly and justly indebted to the Banks
in the aggregate amount of the Existing Obligations without defense, offset or
counterclaim of any kind or nature whatsoever; and (ii) reaffirms and admits the
validity and enforceability of the Existing Notes and the other documents
evidencing the Existing Obligations. Principal amounts outstanding on the
Closing Date with respect to Existing Loans of each Bank (other than the CIBC
Term Loan) shall be deemed to be Tranche A Loans for each such Bank as of the
Closing Date. From and after the Closing Date the principal amounts of the
Existing Obligations shall be evidenced by the Tranche A Notes and each Bank
shall return the Existing Notes which it holds to the Borrower marked
"canceled."
SECTION 2.02 COMMITMENT OF THE BANKS.
(a) Each Tranche A Bank severally and not jointly with the other
Tranche A Banks agrees, upon the terms and subject to the conditions herein set
forth (including, without limitation, the provisions of Section 4.02(e)) to make
revolving credit loans (each a "TRANCHE A LOAN" and collectively, the "TRANCHE A
LOANS") to the Borrower at any time and from time to time during the
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period commencing on the Closing Date and ending on the Termination Date (or the
earlier date, if any, of termination of the Total Tranche A Commitment) in an
aggregate principal amount not to exceed the Tranche A Commitment of such Bank,
which Tranche A Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement. Each Borrowing comprising a Tranche A Loan shall
be funded by the Tranche A Banks as follows: (i) 95.5414% of a Borrowing shall
be funded by each of the Tranche A Banks (except for CIBC), in a percentage
amount equal to (x) the difference between (A) the outstanding amount of such
Tranche A Bank's Tranche A Loans on the day such Tranche A Loan is to be made
and (B) $15,000,000, divided by (y) the aggregate amounts to be funded by such
Banks such that (assuming full usage by the Borrower) each Tranche A Bank (other
than CIBC) would have extended $15,000,000 and (ii) 4.4586% by CIBC. At no time
shall the sum of the then outstanding aggregate principal amount of the Tranche
A Loans exceed the lesser of (i) the Total Tranche A Commitment, as the same may
be reduced from time to time pursuant to Section 2.08 or 2.09, and (ii) the
Borrowing Base.
(b) Each Tranche B Bank severally and not jointly with the other
Tranche B Banks agrees, upon the terms and subject to the conditions herein set
forth to make revolving credit loans (each, a "TRANCHE B LOAN" and collectively,
the "TRANCHE B LOANS") to the Borrower at any time and from time to time during
the period commencing on the Closing Date and ending on the Termination Date (or
the earlier date, if any, of termination of the Total Tranche B Commitment) in
an aggregate principal amount not to exceed, the Tranche B Commitment of such
Bank, which Tranche B Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement, PROVIDED, that (x) each Tranche B Loan shall be
made PRO RATA among the Tranche B Banks in accordance with their Tranche B
Commitment Percentages and (y) no Tranche B Loans shall be made by any Tranche B
Bank so long as there exists any unused Total Tranche A Commitment. At no time
shall the sum of the then outstanding aggregate principal amount of the Tranche
B Loans exceed the lesser of (i) the Total Tranche B Commitment, as the same may
be reduced from time to time pursuant to Section 2.08 or 2.09, and (ii) the
Borrowing Base.
(c) The failure of any Bank to make any Loan shall not relieve the
other Banks of their obligations to lend.
SECTION 2.03 BORROWING BASE.
(a) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate principal amount of all outstanding Tranche A Loans
shall not at any time exceed the Borrowing Base and no Tranche A Loan shall be
made in violation of the foregoing.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate principal amount of all outstanding Tranche B Loans
shall not at any time exceed the Borrowing Base and no Tranche B Loan shall be
made in violation of the foregoing.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate principal amount of all outstanding Tranche A Loans and
Tranche B Loans shall not at any time
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exceed the Borrowing Base and no Tranche A Loans or Tranche B Loans shall be
made in violation of the foregoing.
SECTION 2.04 MAKING OF LOANS.
(a) Each Tranche A Bank or Tranche B Bank may fulfill its respective
Tranche A Commitment or Tranche B Commitment by causing any lending office of
such Bank to make such Loan; PROVIDED that any such use of a lending office
shall not affect the obligation of the Borrower to repay such Loan in accordance
with the terms of this Agreement. Each Bank shall, subject to its overall policy
considerations, use reasonable efforts (but shall not be obligated) to select a
lending office which will not result in the payment of increased costs by the
Borrower pursuant to Section 2.11.
(b) The Borrower shall give the Administrative Agent prior notice of
each Borrowing hereunder of at least one Business Day; such notice shall be
irrevocable and shall specify the amount of the proposed Borrowing (which shall
not be less than $500,000) and the date thereof (which shall be a Business Day)
and shall contain disbursement instructions. Such notice, to be effective, must
be received by the Administrative Agent not later than 12:00 noon, New York City
time, on the first Business Day preceding the date on which such Borrowing is to
be made except as provided in the last sentence of this Section 2.04(b). Such
notice shall specify whether the Borrowing then being requested is to be a
Tranche A Loan or a Tranche B Loan (to the extent permitted pursuant to Section
4.02(h)). If no election is made as to whether the Loan is a Tranche A Loan or a
Tranche B Loan, such notice shall be deemed a request for a Tranche A Loan,
unless at that time, there is insufficient or no Unused Total Tranche A
Commitment, in which event such notice shall be deemed to be a request for a
Tranche B Loan to the extent of the Unused Total Tranche B Commitment and
thereafter for a Tranche B Loan to the extent the Borrowing requested exceeds
the Unused Total Tranche A Commitment. The Administrative Agent shall promptly
notify each Tranche A Bank or Tranche B Bank (as applicable) of its
proportionate share of such Borrowing and the date of such Borrowing. On the
borrowing date specified in such notice, each Tranche A Bank or Tranche B Bank
(as applicable) shall make its share of the Borrowing available in Dollars at
the office of the Administrative Agent at 270 Park Avenue, New York, New York
10017, no later than 12:00 noon, New York City time, in immediately available
funds. Upon receipt of the funds made available by the Banks to fund any
borrowing hereunder, the Administrative Agent shall disburse such funds in the
manner specified in the notice of borrowing delivered by the Borrower and shall
use reasonable efforts to make the funds so received from the Banks available to
the Borrower no later than 2:00 p.m. New York City time (other than as provided
in the following sentence). With respect to Loans (whether Tranche A Loans or
Tranche B Loans) of $5,000,000 or less, the Tranche A Banks or the Tranche B
Banks, as the case may be, shall make such Borrowings available to the Borrower
by 4:00 p.m., New York City time, on the same Business Day that the Borrower
gives notice to the Administrative Agent of such Borrowing by 12:00 noon, New
York City time.
(c) Unless the Administrative Agent shall have received notice from a
Bank prior to the proposed date of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has
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made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Bank has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Bank and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Bank, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to the Loans. If such Bank pays such
amount to the Administrative Agent, then such amount shall constitute such
Bank's Loan included in such Borrowing.
SECTION 2.05 NOTES; REPAYMENT OF LOANS. The Loans made by each Bank
shall be evidenced by a note, duly executed on behalf of the Borrower, dated the
Closing Date or the date of the effectiveness of the applicable Assignment and
Acceptance, as the case may be, in substantially the form attached hereto as
Exhibit A-1 in the case of the Tranche A Loans or A-2 in the case of Tranche B
Loans, payable to the order of the Tranche A Bank or Tranche B Bank (as the case
may be) in the aggregate principal amount equal to such Bank's Tranche A
Commitment or Tranche B Commitment, as the case may be. The outstanding
principal balance of all of the Loans, as evidenced by such Notes, shall be
payable on the Termination Date. Such Notes shall replace the Existing Notes.
Each Note shall bear interest from the date thereof on the outstanding principal
balance thereof as set forth in Section 2.06. Each Bank shall, and is hereby
authorized by the Borrower to, endorse on the schedule attached to each Note
delivered to such Bank (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Bank's internal
records, an appropriate notation evidencing the date and amount of each Loan
from such Bank, each payment and prepayment of principal of any such Loan, each
payment of interest on any such Loan and the other information provided for on
such schedule; PROVIDED, HOWEVER, that the failure of any Bank to make such a
notation or any error therein shall not affect the obligation of the Borrower to
repay the Loans made by such Bank in accordance with the terms of this Agreement
and the applicable Notes.
SECTION 2.06 INTEREST ON LOANS.
(a) Subject to the provisions of Section 2.07, each Tranche A Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the Alternate Base Rate
PLUS 1-1/2%; PROVIDED that in the event that the Borrower's Net Income shall
exceed (i) $1,784,000 for the Borrower's fiscal quarter ending March 31, 1998,
(ii) $7,013,000 for the Borrower's fiscal quarter ending June 30, 1998 and (iii)
$6,914,000 for the Borrower's fiscal quarter ending September 30, 1998 (each, a
"NET INCOME TARGET"), THEN, from the date following the delivery of the
Borrower's quarterly statement pursuant to Section 5.01(b) reflecting the
achievement of the Net Income Target for such quarter through the date of
delivery of the Borrower's next quarterly statement, the interest rate on the
Tranche A Loans shall be reduced to ABR plus 1%; PROVIDED, HOWEVER, that if
Borrower's quarterly statement for the next quarter reflects that the Borrower
has exceeded the Net Income Target for such quarter, the interest rate on the
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Tranche A Loans shall be further reduced to ABR plus 1/2%, it being understood,
however, that if at any time the Borrower delivers a quarterly statement that
shows that the Net Income Target has not been achieved for such quarter, then
the interest rate on the Tranche A Loans shall increase to ABR plus 1-1/2% for
the period from the date following the delivery of such quarterly statement
through the date of the delivery of the following quarterly statement reflecting
the achievement of the Net Income Target. Notwithstanding anything to the
contrary herein, (x) at no time shall the interest rate on the Tranche A Loans
be reduced below ABR plus 1/2% and (y) if a quarterly statement is not received
by the Administrative Agent by the 20th day after the close of such quarter, the
interest rate on the Tranche A Loans shall increase to ABR plus 1-1/2% for the
period from the 20th day after the close of such quarter until delivery of such
quarterly statement (and thereafter if such quarterly statement shows that the
Net Income Target has not been met).
(b) Subject to the provisions of Section 2.07, each Tranche B Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the Alternate Base Rate
plus 1% , PROVIDED, that in the event that the Borrower achieves the Net Income
Target for any quarter following the Closing Date, then from the date following
the delivery of the Borrower's quarterly statement pursuant to Section 5.01(b)
reflecting the achievement of the Net Income Target amount through the date of
delivery of the Borrower's next quarterly statement, the interest rate on the
Tranche B Loans shall be reduced to ABR plus 1/4%; it being understood, however,
that if the Net Income Target has not been achieved for such quarter, then the
interest rate on the Tranche B Loans shall increase to ABR plus 1% from the date
following delivery of such quarterly statement through the date of the delivery
of the following quarterly statement reflecting the achievement of the Net
Income Target. Notwithstanding anything to the contrary herein, (i) at no time
shall the interest rate on the Tranche B Loans be reduced below ABR plus 1/4%
and (ii) if a quarterly statement is not timely received by the Administrative
Agent by the 20th day after the close of the quarter, the interest rate on the
Tranche B Loans shall increase to ABR plus 1%, for the period from the 20th day
after the close of the quarter until delivery of such quarterly statement (and
thereafter if such quarterly statements shows that the Net Income Target has not
been met).
(c) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date, at maturity (whether by acceleration or otherwise), and
after such maturity on demand and upon any repayment or prepayment thereof (on
the amount prepaid).
SECTION 2.07 DEFAULT INTEREST. If the Borrower or any Guarantor, as the
case may be, shall default in the payment of the principal of or interest on any
Loan or in the payment of any other amount becoming due hereunder, whether at
stated maturity, by acceleration or otherwise, the Borrower or such Guarantor,
as the case may be, shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount up to (but not including) the
date of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to two percent (2%) above the then prevailing non-default rate of
interest on such Loan.
SECTION 2.08 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon at
least two Business Days' prior written notice to the Administrative Agent and
subject to compliance by the Borrower with the requirements of Section 2.09, the
Borrower may at any time in whole permanently terminate, or from time to time in
part permanently reduce, the Total Tranche A Commitment or the Total Tranche B
Commitment; PROVIDED, that at the time of any reduction or termination of the
Total Tranche A Commitment, the Total Tranche B Commitment shall have been
wholly and permanently terminated and all Tranche B Loans shall have been paid
in full. Each such reduction of the Commitments shall be in the principal amount
of $1,000,000 or any integral multiple thereof. Subject to the first sentence of
this Section, any reduction of the Total Tranche A Commitment or the Total
Tranche B Commitment pursuant to this Section shall be applied PRO RATA to
reduce the Tranche A Commitment or Tranche B Commitment of each Tranche A Bank
or Tranche B Bank.
SECTION 2.09 MANDATORY PREPAYMENT; COMMITMENT TERMINATION. The
outstanding Obligations shall be subject to mandatory prepayment as follows:
(a) if at any time the aggregate principal amount of the
outstanding Tranche A Loans exceeds the lesser of (x) the Total Tranche
A Commitment and (y) the Borrowing Base, the Borrower will within one
Business Day prepay the Tranche A Loans in an amount necessary to cause
the aggregate principal amount of the outstanding Tranche A Loans to be
equal to or less than the Total Tranche A Commitment and/or the
Borrowing Base, as the case may be;
(b) if at any time the aggregate principal amount of the
outstanding Tranche B Loans exceeds the lesser of (x) the Total Tranche
B Commitment and (y) the Borrowing Base, the Borrower will within one
Business Day prepay the Tranche B Loans in an amount necessary to cause
the aggregate principal amount of the outstanding Tranche B Loans to be
equal to or less than the Total Tranche B Commitment and/or the
Borrowing Base, as the case may be;
(c) if at any time the aggregate principal amount of the
Outstanding Loans exceeds the lesser of (x) the Total Commitment and
(y) the Borrowing Base, the Borrower will within one Business Day
prepay the Loans in an amount necessary to cause the aggregate
principal amount of the outstanding Loans to be equal to or less than
the Total Commitment and/or the Borrowing Base, as the case may be;
(d) if at any time the sum of the amounts on deposit in the
Borrower's operating, concentration or other depository accounts PLUS
the amount of the Borrower's Permitted Investments as set forth on
Schedule 2.09(d) exceeds $20,000,000, any such amounts in excess of
$20,000,000 shall be applied by the Borrower to the mandatory
prepayment of the Loans and the Administrative Agent may immediately
debit such accounts in the amount of such mandatory prepayment;
PROVIDED, that in the event that any of the Permitted Investments set
forth on Schedule 2.09(d) mature, then the amount set forth in the
preceding sentence shall be reduced by an amount equal to each such
matured Permitted Investment; and
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PROVIDED FURTHER, that the Borrower and its Subsidiaries shall use
their best efforts to repatriate funds outside the continental United
States; and
(e) upon the Termination Date, the Total Commitment shall be
terminated in full and the Borrower shall pay the Loans in full.
SECTION 2.10 OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF BANKS.
(a) The Borrower shall have the right at any time and from time to time
to prepay any Loans, in whole or in part, on the same Business Day if written,
telex or facsimile notice is received by the Administrative Agent prior to 12:00
noon, New York City time, and thereafter upon at least one Business Day's prior
written, telex or facsimile notice to the Administrative Agent; PROVIDED,
HOWEVER, that each such partial prepayment shall be in integral multiples of
$500,000. Each notice of prepayment shall specify the prepayment date and the
principal amount of the Loans to be prepaid and shall be irrevocable and shall
commit the Borrower to prepay such Loan by the amount and on the date stated
therein. The Administrative Agent shall, promptly after receiving notice from
the Borrower hereunder, notify each Tranche A Bank or Tranche B Bank of the
principal amount of the Loans held by such Bank which are to be prepaid, the
prepayment date and the manner of application of the prepayment; PROVIDED, that
as long as Tranche B Loans shall be outstanding, any prepayments received shall
be applied first PRO RATA to the Tranche B Banks in reduction of the then
outstanding Obligations under such Tranche B Loans.
(b) In the event the Borrower fails to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.10(a), the
Borrower on demand by any Bank shall pay to the Administrative Agent for the
account of such Bank any amounts required to compensate such Bank for any loss
incurred by such Bank as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition of
deposits or other funds by such Bank to fulfill deposit obligations incurred in
anticipation of such prepayment. Each Bank shall deliver to the Borrower from
time to time one or more certificates setting forth the amount of such loss as
determined by such Bank.
(c) Any partial prepayment of the Loans by the Borrower pursuant to
Sections 2.09 or 2.10 shall be applied FIRST, to the then outstanding
Obligations under the Tranche B Loans PRO RATA and SECOND, to the then
outstanding Obligations under the Tranche A Loans PRO RATA , as determined by
the Administrative Agent.
SECTION 2.11 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) If any Bank shall have determined that the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending office of such
Bank) or any Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force
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of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Bank's capital or on the
capital of such Bank's holding company, if any, as a consequence of this
Agreement, the Loans made by such Bank pursuant hereto or such Bank's Commitment
hereunder to a level below that which such Bank or such Bank's holding company
could have achieved but for such adoption, change or compliance (taking into
account such Bank's policies and the policies of such Bank's holding company
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such Bank's holding
company for any such reduction suffered.
(b) A certificate of each Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) above, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Bank the amount
shown as due on any such certificate delivered to it within 10 days after its
receipt of the same. Any Bank receiving any such payment shall promptly make a
refund thereof to the Borrower if the law, regulation, guideline or change in
circumstances giving rise to such payment is subsequently deemed or held to be
invalid or inapplicable.
(c) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 2.12 PRO RATA TREATMENT, ETC. (a) All payments, repayments and
prepayments of principal and interest in respect of the Tranche A Loans or
Tranche B Loans (whenever made and whether made before or after the occurrence
of an Event of Default) and including, without limitation, by way of dividend or
distribution in a case under the Bankruptcy Code or any other insolvency statute
(state or federal) shall be made PRO RATA among the Tranche A Banks (which after
the occurrence of an Event of Default shall be deemed to include CIBC in its
capacity as lender under the CIBC Term Loan) or the Tranche B Banks (as the case
may be) in accordance with the then outstanding principal amount of the Tranche
A Loans (which after the occurrence of an Event of Default shall be deemed to
include the outstanding principal amount of the CIBC Term Loan) or Tranche B
Loans (as the case may be); PROVIDED, HOWEVER, that all payments and prepayments
hereunder shall be applied FIRST, to the payment in full of all principal and
interest accrued prior to the commencement of a case under the Bankruptcy Code
on the Tranche B Loans, SECOND, to the payment in full of all principal and
interest accrued prior to the commencement of a case under the Bankruptcy Code
on the Tranche A Loans and THIRD, to the payment in full of any and all interest
accrued after the commencement of a case under the Bankruptcy Code PRO RATA
among the Tranche A Banks and the Tranche B Banks in accordance with their
respective Tranche A Commitments and Tranche B Commitments and (b) all payments
of the Tranche A Facility Fees and the Tranche B Facility Fees shall be made PRO
RATA among the Tranche A Banks in accordance with their Tranche A Commitments or
the Tranche B Banks in accordance with their Tranche B Commitments. All
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payments of interest in respect of the CIBC Term Loan made prior to the
occurrence of an Event of Default shall be retained by CIBC and all payments and
repayments of principal and interest in respect of the CIBC Term Loan made after
the occurrence of an Event of Default and including, without limitation, by way
of dividend or distribution in a case under the Bankruptcy Code or any other
insolvency statute (state or federal), shall be treated with the same priority
and parity hereunder as if such payment or repayment had been received by a
Tranche A Bank. All payments by the Borrower hereunder and under the Notes shall
be (i) net of any tax applicable to the Borrower or a Guarantor and (ii) made in
Dollars in immediately available funds at the office of the Administrative Agent
by 12:00 noon, New York City time, on the date on which such payment shall be
due. Interest in respect of any Loan hereunder shall accrue from and including
the date of such Loan to but excluding the date on which such Loan is paid in
full.
SECTION 2.13 TAXES.
(a) Any and all payments by the Borrower or any Guarantor hereunder
shall be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING (i) taxes imposed on or measured by
the net income or overall gross receipts of the Agents or any Bank (or any
transferee or assignee thereof, including a participation holder (any such
entity being called a "TRANSFEREE")) and franchise taxes imposed on the Agents
or any Bank (or Transferee) by the United States or any jurisdiction under the
laws of which the Agents or any such Bank (or Transferee) is organized or in
which the applicable lending office of any such Bank (or Transferee) is located
or any political subdivision thereof or by any other jurisdiction or by any
political subdivision or taxing authority therein other than a jurisdiction in
which the Agents or such Bank would not be subject to tax but for the execution
and performance of this Agreement and (ii) taxes, levies, imposts, deductions,
charges or withholdings ("AMOUNTS") with respect to payments hereunder to a Bank
(or Transferee) in accordance with laws in effect on the later of the date of
this Agreement and the date such Bank (or Transferee) becomes a Bank (or
Transferee, as the case may be), but not excluding, with respect to such Bank
(or Transferee), any increase in such Amounts solely as a result of any change
in such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement)
taken by the Borrower after such later date (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower or any Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to the
Banks (or any Transferee) or either of the Agents, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
such Bank (or Transferee) or such Agent (as the case may be) shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law. Notwithstanding this Section
2.13(a) and the provisions of Sections 2.13(f) and 2.13(g), any and all payments
by the Borrower to CIBC or to any assignee of CIBC which is not a non-resident
of Canada within the meaning of the INCOME TAX ACT (Canada) (a "CANADIAN
LENDER") hereunder or under the other Loan Documents shall be made free and
clear of and without deduction for any and all present or future
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taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto ("TAXES REGARDING BORROWER PAYMENTS TO CANADIAN LENDERS").
If any Taxes Regarding Borrower Payments to Canadian Lenders shall be required
by law to be deducted from or in respect of any sum payable hereunder or under
any other Loan Document to any Canadian Lender (i) the sum payable by the
Borrower shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.13(a)), such Canadian Lender receives an amount equal to
the amount it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any current or future stamp
or documentary taxes or any other excise or property taxes, charges, assessments
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES").
(c) The Borrower will indemnify each Bank (or Transferee) and each
Agent for the full amount of Taxes and Other Taxes paid by such Bank (or
Transferee) or such Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank (or
Transferee) or any Agent, as the case may be, makes written demand therefor. If
a Bank (or Transferee) or any Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section, it shall promptly notify
the Borrower of the availability of such refund and shall, within 30 days after
receipt of a request by the Borrower, apply for such refund at the Borrower's
expense. If any Bank (or Transferee) or any Agent receives a refund in respect
of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of such refund
and shall, within 30 days after receipt of a request by the Borrower (or
promptly upon receipt, if the Borrower has requested application for such refund
pursuant hereto), repay such refund to the Borrower (to the extent of amounts
that have been paid by the Borrower under this Section with respect to such
refund plus interest that is received by the Bank (or Transferee) or any Agent
as part of the refund), net of all out-of-pocket expenses of such Bank (or
Transferee) or such Agent and without additional interest thereon; PROVIDED that
the Borrower, upon the request of such Bank (or Transferee) or such Agent,
agrees to return such refund (plus penalties, interest or other charges) to such
Bank (or Transferee) or such Agent in the event such Bank (or Transferee) or
such Agent is required to repay such refund. Nothing contained in this
subsection (c) shall require any Bank (or Transferee) or any Agent to make
available any of its tax returns (or any other information relating to its taxes
that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Bank (or
Transferee) or any Agent, the Borrower will furnish to the Administrative Agent,
at its address referred to on the signature pages hereof, the original or a
certified copy of a receipt evidencing payment thereof.
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(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the immediately following due date of any payment by the Borrower hereunder,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
(A) Internal Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service
Form 1001 or Form 4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any
subsequent version thereof or successors thereto, properly completed and duly
executed by such Bank (or Transferee) establishing that such payment is (i) not
subject to United States Federal withholding tax under the Code because such
payment is effectively connected with the conduct by such Bank (or Transferee)
of a trade or business in the United States or (ii) totally exempt from United
States Federal withholding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the
Administrative Agent have received forms or other documents satisfactory to them
indicating that such payments hereunder are not subject to United States Federal
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Administrative Agent shall withhold taxes from
such payments at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional amounts to
any Bank (or Transferee) in respect of United States Federal withholding tax
pursuant to subsection (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank (or Transferee) to
comply with the provisions of subsection (f) above.
(h) Any Bank (or Transferee) claiming any additional amounts payable
pursuant to this Section 2.13 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole reasonable determination of such Bank, be otherwise materially
disadvantageous to such Bank (or Transferee).
SECTION 2.14 FACILITY FEES. The Borrower agrees to pay to the
Administrative Agent for the account of (a) the Tranche A Banks, a Facility Fee
in the aggregate amount of $785,000 (the "TRANCHE A FACILITY FEE"), which fee
shall be payable to each Tranche A Bank in accordance with its Tranche A
Commitment Percentage, as set forth on Annex A hereto and (b) the Tranche B
Banks, a Facility Fee in the aggregate amount of $600,000 (the "TRANCHE B
FACILITY FEE" and, together with the Tranche A Facility Fee, the "FACILITY
FEES"), which fee shall be payable to each Tranche B Bank in accordance with its
Tranche B Commitment Percentage, as set forth on Annex A hereto. The Tranche A
Facility Fee shall be payable on the Closing Date. The Tranche B Facility Fee
shall be payable (i) one-half on the Closing Date and (ii) one-half on the date
of the first drawing under the Tranche B Facility.
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SECTION 2.15 AGENTS' FEE. The Borrower agrees to pay to (i) the
Administrative Agent, an agency fee in the amount of $100,000 and (ii) to the
Documentation Agent, an agency fee in the amount of $100,000 (collectively, the
"AGENTS' FEE"), each for its own account, which fees shall be payable on the
Closing Date.
SECTION 2.16 NATURE OF FEES. All Fees shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for the respective
accounts of the Administrative Agent, the Documentation Agent and the Banks, as
provided herein. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.17 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each of the Agents and each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agents and each such Bank to or for the credit or the account
of the Borrower or any Guarantor against any and all of the obligations of such
Borrower or Guarantor now or hereafter existing under the Loan Documents,
irrespective of whether or not such Bank shall have made any demand under any
Loan Document and although such obligations may be unmatured. Any such set-off
shall be applied FIRST to the Tranche B Loans (and interest thereon) PRO RATA
and SECOND to the Tranche A Loans (and interest thereon) PRO RATA. Each Bank and
each of the Agents agrees promptly to notify the Borrower and Guarantors after
any such set-off and application made by such Bank or by the Agents, as the case
may be, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank and the Agents
under this Section are in addition to other rights and remedies which such Bank
and the Agents may have upon the occurrence and during the continuance of any
Event of Default.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans hereunder, the Borrower and
each of the Guarantors jointly and severally represent and warrant as follows:
SECTION 3.01 ORGANIZATION AND AUTHORITY. Each of the Borrower and the
Guarantors (i) is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation or organization and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect; (ii)
has the requisite corporate power and authority to effect the transactions
contemplated hereby, and by the other Loan Documents to which it is a party; and
(iii) has all requisite corporate power and authority and the legal right to
own, pledge, mortgage, lease and operate its properties, and to conduct its
business as now or currently proposed to be conducted.
SECTION 3.02 DUE EXECUTION. The execution, delivery and performance by
each of the Borrower and the Guarantors of each of the Loan Documents to which
it is a party (i) are within the respective corporate powers of each of the
Borrower and the Guarantors, have been duly
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authorized by all necessary corporate action, including the consent of
shareholders where required, and do not (A) contravene the charter or by-laws of
any of the Borrower or the Guarantors, (B) violate any law (including, without
limitation, the Securities Exchange Act of 1934) or regulation (including,
without limitation, Regulations G, T, U or X of the Board), or any order,
judgment or decree of any Governmental Authority, (C) violate or result in a
breach of, or constitute a default under, any indenture, mortgage or deed of
trust or any material lease, agreement or other instrument binding on the
Borrower or the Guarantors or any of their properties, or (D) result in or
require the creation or imposition of any Lien upon any of the property of any
of the Borrower or the Guarantors; and (iii) do not require the consent,
authorization by or approval of or notice to or filing or registration with any
Governmental Authority. This Agreement has been duly executed and delivered by
each of the Borrower and the Guarantors. This Agreement is, and each of the
other Loan Documents to which the Borrower and each of the Guarantors is or will
be a party, when delivered hereunder or thereunder, will be, a legal, valid and
binding obligation of the Borrower and each Guarantor, as the case may be,
enforceable against the Borrower and the Guarantors, as the case may be, in
accordance with its terms.
SECTION 3.03 STATEMENTS MADE. The information that has been delivered
in writing, and the statements that have been made, whether written or oral, by
the Borrower or any of the Guarantors to the Agents or to the Banks in
connection with any Loan Document, and any financial statement delivered
pursuant hereto or thereto (other than to the extent that any such statements
constitute projections, financial or otherwise), taken as a whole and in light
of the circumstances in which made, contains no untrue statement of a material
fact and does not omit to state a material fact necessary to make such
statements not misleading; and, to the extent that any such information
constitutes projections, such projections were prepared in good faith on the
basis of assumptions, methods, data, tests and information believed by the
Borrower or such Guarantor to be reasonable at the time such projections were
furnished.
SECTION 3.04 FINANCIAL STATEMENTS. The Borrower has furnished the Banks
with copies of (i) the audited consolidated financial statement and schedules of
the Borrower and its consolidated Subsidiaries for the fiscal year ended
December 31, 1996 and (ii) the unaudited consolidated financial statements of
the Borrower and its consolidated Subsidiaries for the fiscal quarter(s) ended
September 30, 1997. Such financial statements present fairly the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis as of such dates and for such periods; such
balance sheets and the notes thereto disclose all liabilities, direct or
contingent, of the Borrower and its consolidated Subsidiaries as of the dates
thereof required to be disclosed by GAAP and such financial statements were
prepared in a manner consistent with GAAP, subject to normal year end
adjustments. No material adverse change in the operations, business, properties,
assets, prospects or condition (financial or otherwise) of the Borrower and its
consolidated Subsidiaries, taken as a whole, has occurred from that set forth in
the Borrower's audited consolidated financial statements for the year ended
December 31, 1996 other than as set forth on (i) Schedule 3.04 or (ii) the draft
financial statements delivered hereunder for the year ended December 31, 1997.
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SECTION 3.05 OWNERSHIP. Each of the Persons listed on Schedule 3.05 is
a direct or indirect Subsidiary of the Borrower, and the Borrower owns no other
Subsidiaries, whether directly or indirectly, other than as set forth on
Schedule 3.05 which also sets forth the ownership interest of the Borrower in
such Subsidiaries. Except as set forth on Schedule 3.05, there are no
wholly-owned direct or indirect domestic Subsidiaries of the Borrower other than
the Guarantors. The Inactive Subsidiaries do not own or hold assets in excess of
$10,000 in the aggregate.
SECTION 3.06 LIENS. There are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Permitted Liens;
and (ii) other Liens permitted pursuant to Section 6.01. Neither the Borrower
nor any Guarantor is party to any contract, agreement, lease or instrument the
performance of which, either unconditionally or upon the happening of an event,
will result in or require the creation of a Lien on any assets of the Borrower
or any Guarantor or otherwise result in a violation of this Agreement except as
set forth on Schedule 3.06 hereto.
SECTION 3.07 COMPLIANCE WITH LAW.
(a) Except as set forth in Section 3.17, (i) the operations of the
Borrower and the Guarantors comply in all material respects with all applicable
environmental, health and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource Conservation and Recovery
Act (42 U.S.C. ss.ss.6901 ET SEQ.); (ii) to the Borrower's and each of the
Guarantor's knowledge, none of the operations of the Borrower or the Guarantors
is the subject of any Federal or state investigation evaluating whether any
remedial action involving a material expenditure by the Borrower or any
Guarantor is needed to respond to a release of any Hazardous Waste or Hazardous
Substance (as such terms are defined in any applicable state or Federal
environmental law or regulations) into the environment; and (iii) to the
Borrower's and each of the Guarantor's knowledge, the Borrower and the
Guarantors do not have any material contingent liability in connection with any
release of any Hazardous Waste or Hazardous Substance into the environment.
(b) Neither the Borrower nor any Guarantor is, to the best of its
knowledge, in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any Governmental
Authority the violation of which, or a default with respect to which, would have
a Material Adverse Effect.
SECTION 3.08 INSURANCE. All policies of insurance of any kind or nature
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of the same or similar
size, engaged in the same or similar businesses of the Borrower and the
Guarantors.
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SECTION 3.09 USE OF PROCEEDS. The proceeds of the Loans shall be used
for working capital and for other general corporate purposes of the Borrower and
the Subsidiaries.
SECTION 3.10 LITIGATION. Except as set forth on Schedule 3.10, there
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower or the Guarantors, threatened against or affecting the Borrower or the
Guarantors or any of their respective properties, before any court or
governmental department, commission, board, bureau, agency, arbitration body or
instrumentality, domestic or foreign, which have a reasonable possibility of
being determined adversely to the Borrower or a Guarantor and which, if
determined adversely, would have a Material Adverse Effect.
SECTION 3.11 LABOR MATTERS. Neither the Borrower nor any Guarantor has
experienced any strike, labor dispute, slowdown or work stoppage due to labor
disagreements which could reasonably be expected to have a Material Adverse
Effect, and to the best knowledge of the Borrower, there is no such strike,
dispute, slowdown or work stoppage threatened against the Borrower or any
Guarantor.
SECTION 3.12 OWNERSHIP OF PROPERTY; LIENS. The Borrower and each of the
Guarantors has good and marketable title to all of its properties and assets,
real and personal, other than those leased by the Borrower or any Guarantor and
there are no Liens (including Liens or retained security titles of conditional
vendors) of any nature whatsoever on the assets of the Borrower or any of the
Guarantors, other than as permitted under Section 6.01 hereof.
SECTION 3.13 TAXES. The Borrower and each Guarantor has filed or caused
to be filed all tax returns which to the knowledge of the Borrower and the
Guarantors are required to be filed, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against each of them (other
than those being contested in good faith by appropriate proceedings for which
adequate reserves have been provided on the books of the Borrower or the
Guarantors, as the case may be), and no tax liens have been filed and, to the
best knowledge of the Borrower and the Guarantors, no claims are being asserted
with respect to any taxes.
SECTION 3.14 FILING OF STATEMENTS AND REPORTS. Each of the Borrower and
the Guarantors has filed all statements and reports which, to the knowledge of
the Borrower and the Guarantors, are required to be filed with any Governmental
Authority and for which the failure to so file would have a Material Adverse
Effect.
SECTION 3.15 ERISA. Subject to the events described in Schedule 3.15
hereto, no Reportable Event has occurred during the immediately preceding
six-year period with respect to any Plan, and each Plan has complied with and
has been administered in all material respects in accordance with applicable
provisions of ERISA and the Code. The present value of all accrued benefits
under each Single Employer Plan maintained by the Borrower, any Subsidiary or
any Commonly Controlled Entity (based on those assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such benefits. Except as set
forth on Schedule 3.15, neither the Borrower nor any Subsidiary nor any
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Commonly Controlled Entity has during the immediately preceding six-year period
participated in any Multiemployer Plans. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Borrower, each
Subsidiary and each Commonly Controlled Entity for post retirement benefits to
be provided to their current and former employees during 1998 and 1999 under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, on an annual basis exceed $200,000.
SECTION 3.16 MATERIAL AGREEMENTS. Schedule 3.16 accurately and
completely lists all (i) material leases, contracts and agreements and (ii)
subscriptions, options, warrants, calls (including pre-emptive rights) or other
agreements or commitments of any nature relating to the capital stock of the
Borrower (the "EQUITY-RELATED AGREEMENTS") to which the Borrower or any
Guarantor and any other Person is a party, including those leases, contracts,
agreements and Equity-Related Agreements which are presently in effect and
involve the conduct of the Borrower and the Guarantors' businesses and under
which, by the terms thereof, could require the Borrower or the Guarantors to
make payments to any Person in excess of $50,000 per year.
SECTION 3.17 ENVIRONMENTAL MATTERS. (a) Except for any matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither the Borrower nor any Guarantor (i) has failed
to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
(b) None of the real property owned or leased by the Borrower
or any Guarantor (such property, the "REAL PROPERTY") contains, or to the best
knowledge of the Borrower and the Guarantors, has contained, any Hazardous
Materials or substances or underground storage tanks, except as is customary in
the industry in which the Borrower and the Guarantors are engaged and in
compliance with applicable laws and the presence of which has required, or is
expected to require, an expenditure, which when added to any expenditures
required under paragraphs (c), (d) and (f) hereof, is in excess of $1,000,000.
(c) The Real Property is in compliance with applicable
Environmental Laws and requirements affecting such Real Property except for
non-compliance which does not require and is not expected to require an
expenditure which, when added to any expenditures required under paragraphs (b),
(d) and (f) hereof, is in excess of $1,000,000, and, to the knowledge of the
Borrower and the Guarantors, there is no environmental condition which could
interfere with the continued use of the Real Property.
(d) No notice of violations or advisory action by regulatory
agencies regarding environmental control matters or permit compliance is
outstanding except for violations or actions which do not and would not require
expenditures which, when added to any expenditures required under paragraphs
(b), (c) and (f) hereof, are in excess of $1,000,000.
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(e) Hazardous Materials have not been transferred by the
Borrower or any of its Subsidiaries or to the best of the Borrower's knowledge
by any third party engaged by the Borrower or any of its Subsidiaries from any
of the Real Property to any other location which is not in compliance with all
applicable Environmental Laws.
(f) With respect to the Real Property, there is no proceeding,
governmental administrative action or judicial proceeding pending or, to the
best knowledge of the Borrower or any Guarantor, contemplated under any Federal,
state or local law regulating the discharge of Hazardous Materials into the
environment, to which the Borrower or any Guarantor is named as a party except
for actions or proceedings which require or would be expected to require an
expenditure which, when added to any expenditures required under paragraphs (b),
(c) and (d) hereof, is in excess of $1,000,000.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO EFFECTIVENESS OF RESTRUCTURING.
The obligation of the Banks to close this restructuring and to make any Loans is
subject to the following conditions precedent:
(a) SUPPORTING DOCUMENTS. The Agents shall have received for each
of the Borrower and the Guarantors:
(i) a copy of such entity's certificate of
incorporation, as amended, certified as of a recent date by
the Secretary of State of the state of its incorporation;
(ii) a certificate of such Secretary of State, dated
as of a recent date, as to the good standing of and payment of
taxes by, that entity and as to the charter documents on file
in the office of such Secretary of State; and
(iii) a certificate of the Secretary or an Assistant
Secretary of that entity dated the Closing Date, and
certifying (A) that attached thereto is a true and complete
copy of the by-laws of that entity as in effect on the date of
such certification, (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors
of that entity authorizing the Borrowings hereunder, the
execution, delivery and performance in accordance with their
respective terms of this Agreement, the Loan Documents and any
other documents required or contemplated hereunder or
thereunder, (C) that the certificate of incorporation of that
entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the
Secretary of State furnished pursuant to clause (i) above and
(D) as to the incumbency and specimen signature of each
officer of that entity executing this Agreement and the Loan
Documents or any other document delivered by it in connection
herewith or therewith (such certificate to contain a
certification by another
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officer of that entity as to the incumbency and signature of
the officer signing the certificate referred to in this
clause (iii)).
(b) AGREEMENT. This Agreement shall have been executed and
delivered by the Borrower, the Banks and the Agents, and the Documentation Agent
shall have received evidence satisfactory to it of such execution and delivery.
(c) NOTES. Each of the Tranche A Banks shall have received a
Tranche A Note executed by the Borrower in substantially the form of Exhibit A-1
hereof and each of the Tranche B Banks shall have received a Tranche B Note
executed by the Borrower in substantially the form of Exhibit A-2 hereof.
(d) OPINION OF COUNSEL TO THE BORROWER. The Agents and the Banks
shall have received the favorable written opinion of counsel to the Borrower and
the Guarantors reasonably acceptable to the Agents, dated the date of the
Closing Date, substantially in the form of Exhibit B
(e) PAYMENT OF FEES. The Borrower shall have paid to the
Administrative Agent the then unpaid balance of all accrued and unpaid Fees then
owed under and pursuant to this Agreement and all accrued interest due and owing
under the Existing Notes and all fees and expenses outstanding under the
Existing Agreements and this Agreement.
(f) CORPORATE AND JUDICIAL PROCEEDINGS. All corporate proceedings
and all instruments and agreements in connection with the transactions among the
Borrower, the Guarantors, the Agents and the Banks contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Agents,
and the Agents shall have received all information and copies of all documents
and papers, including records of corporate and judicial proceedings, which the
Agents may have reasonably requested in connection therewith, such documents and
papers where appropriate to be certified by proper corporate, governmental or
judicial authorities.
(g) INFORMATION. The Agents shall have received such information
(financial or otherwise) as may be reasonably requested by the Agents.
(h) COMPLIANCE WITH LAWS. The Borrower and the Guarantors shall
have granted the Agents access to and the right to inspect all reports, audits
and other internal information of the Borrower and the Guarantors relating to
environmental matters, and any third party verification of certain matters
relating to compliance with environmental laws and regulations requested by
either of the Agents, and the Agents shall be reasonably satisfied that the
Borrower and the Guarantors are in compliance in all material respects with all
applicable environmental laws and regulations in accordance with Section 3.17
and be satisfied with the costs of maintaining such compliance.
(i) COOPER LOAN ASSURANCES. Each of the Banks shall have received
from the Borrower (i) information and documents relating to the Cooper Loan
which shall be satisfactory to each of the Banks and (ii) reasonable assurances
that, in fact, the Cooper Loan will be made by Cooper on terms and conditions
satisfactory to each of the Banks.
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(j) NO DEFAULT. No event shall have occurred and be continuing on
the Closing Date, or would result from the extension of any Loan, which would
constitute a Default or Event of Default under this Agreement or under any
credit agreement, indenture or other agreement (including, without limitation,
the Note Agreements) related to any indebtedness for borrowed money or any other
material contract or purchase agreements (including collective bargaining
agreements) to which the Borrower or any of the Guarantors is a party.
(k) CIBC TERM LOAN AMENDMENT. The Borrower, CIBC and SMP Canada
shall have executed and delivered an amendment to the CIBC Term Loan on terms
satisfactory to each of the Banks.
(l) AMENDMENT TO NOTE AGREEMENTS. The Borrower and the Insurance
Companies shall have executed and delivered an amendment to the Note Agreements
on terms satisfactory to each of the Banks which amendment shall include, among
other things, the Insurance Companies' consent to the Cooper Transaction, the
Cooper Loan, the Service Line Sale and the Fuel Pump Sale and waivers of
existing defaults under the Note Agreements.
(m) FINANCIAL REPORTS. The Agents shall have received from the
Borrower in form satisfactory to the Banks rolling weekly cash flow projections
for the following three month period from March 1, 1998 through May 31, 1998.
(n) UCC-11 SEARCHES. The Agents shall have received results of
UCC-11 searches satisfactory to the Banks (in each case dated as of a date
reasonably satisfactory to the Banks) reflecting the absence of Liens on the
Borrower's and the Guarantors' assets.
(o) CERTIFICATE. The Documentation Agent shall have received a
certificate (the "CERTIFICATE") dated the Closing Date and signed by the
President or Chief Financial Officer of the Borrower and the Guarantors (i)
identifying material adverse change in the business, operations, assets,
properties, prospects or condition (financial or otherwise) of the Borrower from
that disclosed in the Borrower's draft of the audited financial statements for
the year ended December 31, 1997, and that the Borrower and the Guarantors are
not aware, as of the Closing Date, of any material undisclosed liability which
could result in a Material Adverse Effect, except as set forth in the
Certificate satisfactory to the Banks delivered pursuant to this subsection,
(ii) certifying that no Default or Event of Default exists, or would result from
the extension of any Loan, under this Agreement or under any credit agreement,
indenture or other agreement (including, without limitation, the Note
Agreements) relating to any Indebtedness or any other material contract or
purchase agreement to which the Borrower or any of the Guarantors is a party;
and (iii) certifying that the Borrower has received all required consents
necessary in connection with the execution, delivery and performance of this
Agreement, the Company's entry into the Cooper Transaction and the Service Line
Sale (including, without limitation, from the Insurance Companies).
(p) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Article IV hereof shall be true and correct in all
material respects on and as of the Closing Date.
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(q) BOARD RESOLUTIONS. The Agents shall have received a
certificate of the Secretary of the Borrower certifying the approval of the
following resolutions of the Borrower's Board of Directors: (i) the engagement
through November 30, 1998 of Carl Marks, or such other consultant of the
Borrower's choosing who is reasonably satisfactory to the Banks, the full scope
of whose engagement is satisfactory to the Banks, (ii) the development of a
strategic plan, (iii) the implementation of the recommendations made by Peat
Marwick in its management letter dated April 15, 1997, (iv) the Borrower's
execution and delivery of this Agreement and the Notes and (v) the
implementation of the organizational changes disclosed to the Banks during the
meeting held on January 7, 1998.
(r) BORROWING BASE CERTIFICATE. The Administrative Agent shall
have received a Borrowing Base Certificate dated the Closing Date in
substantially the form of Exhibit C demonstrating the ability of the Borrower to
incur Loans advanced on the Closing Date.
(s) CLOSING DOCUMENTS. The Agents shall have received all closing
documents required by this Agreement reasonably satisfactory in form and
substance to the Agents.
SECTION 4.02 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the
Banks to make each Loan is subject to the following conditions precedent:
(a) NOTICE. The Administrative Agent shall have received a
notice in accordance with Section 2.04 with respect to such borrowing
or issuance, as the case may be.
(b) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement and the other Loan Documents or
otherwise made in writing in connection herewith or therewith shall be
true and correct in all material respects on and as of the date of each
Borrowing hereunder with the same effect as if made on and as of such
date except to the extent such representations and warranties expressly
relate to an earlier date.
(c) NO DEFAULT. On the date of each Borrowing of a Loan
hereunder, the Borrower and Guarantors shall be in compliance with all
of the terms and provisions set forth herein to be observed or
performed and no Default or Event of Default shall have occurred and be
continuing.
(d) PAYMENT OF FEES. The Borrower shall have paid to the
Administrative Agent the then unpaid balance of all accrued and unpaid
Fees then payable under and pursuant to this Agreement.
(e) BORROWING BASE CERTIFICATE. The Administrative Agent shall
have received the timely delivery of the most recent Borrowing Base
Certificate (dated no more than seven (7) days prior to the making of a
Loan) required to be delivered hereunder demonstrating the Borrower's
ability to incur Loans.
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(f) COOPER LOAN. From and after April 13, 1998, the Cooper
Loan shall have been made.
(g) FULL TRANCHE A UTILIZATION. At the time of the making of a
request for a Borrowing consisting of Tranche B Loans, there shall be
no Unused Total Tranche A Commitment.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time and that after giving effect to such extension
of credit under the Tranche A or Tranche B Facility the outstanding balance of
the Loans shall not exceed the Borrowing Base.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect, or any amount shall remain outstanding or unpaid under this Agreement,
the Borrower and each of the Guarantors agrees that, unless the Required Banks
shall otherwise consent in writing, it will:
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower and the Guarantors, deliver to the Administrative Agent and each of the
Banks:
(a) by March 31, 1998, the Borrower's consolidated and
consolidating balance sheets and related statements of income and cash
flows, showing the financial condition of the Borrower and its
Subsidiaries on a consolidated and consolidating basis as of the close
of the fiscal year ended December 31, 1997 and the results of their
respective operations during such year, the consolidated statement of
the Borrower to be audited for the Borrower and its consolidated
Subsidiaries by KPMG Peat Marwick or by other independent public
accountants of recognized national standing acceptable to the Required
Banks and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect) and a copy of any related
management letter issued by such accountants, and the consolidating
statement to be subjected to the auditing procedures applied to such
audit of the consolidated statement, and to be certified by a Financial
Officer of the Borrower to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of the Borrower and its Subsidiaries on a consolidated basis
as at such date and for the period then ended in accordance with GAAP
consistently applied;
(b) within 20 days after the end of each of the first three
fiscal quarters of 1998, the Borrower's unaudited consolidated and
consolidating balance sheets and related statements of income and cash
flows, showing the financial condition of the Borrower and its
Subsidiaries on a consolidated and consolidating basis as of the close
of such fiscal quarter and the results of their operations during such
fiscal quarter and the then elapsed portion of the fiscal year, each
certified by a Financial Officer as fairly presenting the financial
condition and results of operations of the Borrower and it Subsidiaries
on a consolidated and
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consolidating basis as at the date thereof and for the period then
ended, in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(c) (i) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of a Financial Officer, (A)
certifying that no Default or Event of Default has occurred, or, if
such a Default or Event of Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be
taken with respect thereto and (B) setting forth computations in
reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the provisions of Sections 6.04, 6.06,
6.14, 6.15, 6.16, 6.17, 6.18, 6.19 and 6.20, (ii) concurrently with the
delivery of the audited consolidated financial statements under (a)
above, a certificate (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations) of such
accountants accompanying the audited consolidated financial statements
certifying that, in the course of their audit of the financial
statements of the Borrower and its consolidated Subsidiaries, such
accountants have obtained no knowledge that an Event of Default has
occurred and is continuing, or if, in the opinion of such accountants,
an Event of Default has occurred and is continuing, specifying the
nature thereof and all relevant facts with respect thereto;
(d) no later than the twentieth (20th) day after the end of
each fiscal month (commencing with the fiscal month ending on or about
February 28, 1998), the unaudited monthly cash flow reports of the
Borrower and its Subsidiaries on a consolidated basis as of the close
of such fiscal month and for the then elapsed portion of the fiscal
year, together with the Borrower's consolidated and consolidating
statements of income, showing the financial condition of the Borrower
and its Subsidiaries on a consolidated and consolidating
basis as of the close of such fiscal month and the results of their
operations during such fiscal month and the then elapsed portion of the
fiscal year, all certified by a Financial Officer as fairly presenting
the results of operations of the Borrower and the Guarantors on a
consolidated basis as at the date thereof and the period then ended,
subject to normal year-end audit adjustments;
(e) no later than the twentieth (20th) day of each fiscal
month, rolling weekly cash flow projections for the following three
months with details of collections and disbursements (consisting of
weekly cash flows, and monthly income and balance sheets), which shall
have been reviewed by Carl Marks or such other financial advisors as
shall be reasonably acceptable to the Banks;
(f) no later than the twentieth (20th) day following the end
of each fiscal month, an aging of the Borrower's accounts receivable
and accounts payable as at the end of such month, which shall have been
reviewed by Carl Marks or such other financial advisors as shall be
reasonably acceptable to the Banks;
(g) no later than the twentieth (20th) day following the end
of each fiscal month, an unaudited financial package consisting of (i)
unaudited earnings per share comparison, (ii) statement of consolidated
earnings, (iii) analysis of inventory, (iv) defective and overstock
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returns analysis, (v) stocklift and new business analysis, (vi) new
customer changeover analysis, (vii) analysis of sales by market line
and (viii) accounts payable aging, in each case relating to the
immediately preceding fiscal period.
(h) no later than Wednesday of each week, a summary of the
preceding week's sales information and a report summarizing the
collections, disbursements and accounts receivable for the preceding
week;
(i) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of or all the functions of
said commission, or with any national securities exchange, as the case
may be;
(j) as soon as available and in any event (A) within 30 days
after the Borrower or any of its ERISA Affiliates knows or has reason
to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Single Employer
Plan of the Borrower or such ERISA Affiliate has occurred and (B)
within 10 days after the Borrower or any of its ERISA Affiliates knows
or has reason to know that any other Termination Event with respect to
any such Plan has occurred, a statement of a Financial Officer of the
Borrower describing such Termination Event and the action, if any,
which the Borrower or such ERISA Affiliate proposes to take with
respect thereto;
(k) promptly and in any event within 10 days after receipt
thereof by the Borrower or any of its ERISA Affiliates from the PBGC
copies of each notice received by the Borrower or any such ERISA
Affiliate of the PBGC's intention to terminate any Single
Employer Plan of the Borrower or such ERISA Affiliate or to have a
trustee appointed to administer any such Plan;
(l) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan of the Borrower or any of its
ERISA Affiliates;
(m) within 10 days after notice is given or required to be
given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of
the Borrower or any of its ERISA Affiliates to make timely payments to
a Plan, a copy of any such notice filed and a statement of a Financial
Officer of the Borrower setting forth (A) sufficient information
necessary to determine the amount of the lien under Section 302(f)(3),
(B) the reason for the failure to make the required payments and (C)
the action, if any, which the Borrower or any of its ERISA Affiliates
proposed to take with respect thereto;
(n) promptly and in any event within 10 days after receipt
thereof by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (A) the imposition of Withdrawal Liability
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by a Multiemployer Plan, (B) the determination that a Multiemployer
Plan is, or is expected to be, in reorganization within the meaning of
Title IV of ERISA, (C) the termination of a Multiemployer Plan within
the meaning of Title IV of ERISA, or (D) the amount of liability
incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or
(C) above; and
(o) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower or any Subsidiary as either of the Agents or any Bank may
reasonably request.
SECTION 5.02 CORPORATE EXISTENCE. Do or cause to be done, and cause
each of the Guarantors to do or cause to be done, all things necessary to
preserve, renew and keep in full force and effect its corporate existence,
material rights, licenses, permits and franchises and comply in all material
respects with all laws and regulations applicable to it.
SECTION 5.03 INSURANCE. (a) Keep its insurable properties insured at
all times, against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar size,
engaged in the same or similar businesses; and maintain in full force and effect
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by the Borrower or any Guarantor, as
the case may be, in such amounts and with such deductibles as are customary with
companies of the same or similar size, engaged in the same or similar
businesses; and (b) maintain such other insurance or self insurance as may be
required by law.
SECTION 5.04 OBLIGATIONS AND TAXES. With respect to the Borrower and
each Guarantor, pay all its material obligations promptly and in accordance with
their terms and pay and ischarge promptly all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property before the same shall become in default, as well as
all material lawful claims for labor, materials and supplies or otherwise,
which, if unpaid, might become a Lien or charge upon such properties or any part
thereof; PROVIDED, HOWEVER, that the Borrower and each Guarantor shall not be
required to pay and discharge or to cause to be paid and discharged any such
obligation, tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower and the Guarantors shall have set aside on their books adequate
reserves therefor). For purposes of this Section 5.04, "MATERIAL OBLIGATIONS"
means obligations, the breach of which would have a Material Adverse Effect.
SECTION 5.05 NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the
Administrative Agent notice in writing of any Default or Event of Default.
SECTION 5.06 ACCESS TO BOOKS AND RECORDS. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower and the Guarantors; and provide the Agents and its
representatives access to all such books and records during regular business
hours, upon reasonable notice, in order that the Agents may examine and
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make abstracts from such books, accounts, records and other papers for the
purpose of verifying the accuracy of the various reports delivered by the
Borrower or the Guarantors to the Agents or the Banks pursuant to this Agreement
or for otherwise ascertaining compliance with this Agreement; and at any
reasonable time and from time to time during regular business hours, upon
reasonable notice, permit the Agents and any agents or representatives
(including, without limitation, appraisers) thereof to visit the properties of
the Borrower and the Guarantors.
SECTION 5.07 MAINTENANCE OF BANK ACCOUNTS. Continue to maintain (i)
with the Administrative Agent their existing account or accounts to be used by
the Borrower as its principal concentration account or accounts, (ii) the
existing lockbox accounts with NationsBank and Wachovia Bank or such other banks
reasonably satisfactory to the Administrative Agent notice of which has been
given to the Administrative Agent, and (iii) the existing depository accounts,
as each is listed on Schedule 5.07 hereto.
SECTION 5.08 BORROWING BASE CERTIFICATE. Furnish a Borrowing Base
Certificate to the Administrative Agent as soon as available and in any event on
or before the fifth Business Day of each month substantially in the form of
Exhibit C.
SECTION 5.09 STRATEGIC BUSINESS PLAN. As soon as practicable, furnish
to the Agents the Borrower's strategic plan, including, when available, all
material modifications thereto, and make its senior officers available to
discuss the same with the Agents.
SECTION 5.10 MATERIAL ADVERSE EFFECT. Promptly give to the
Administrative Agent notice in writing of (a) the filing or commencement of any
action, suit or proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any of its Subsidiaries that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;
(b) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect; PROVIDED, that each notice delivered under
this Section shall be accompanied by a statement of a Financial Officer or other
executive officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 5.11 MAINTENANCE OF PROPERTIES. Keep all properties useful and
necessary in the business of the Borrower and its Subsidiaries in good working
order and condition.
SECTION 5.12 FISCAL YEAR; ACCOUNTING. Maintain its present fiscal year,
method of accounting and current accounting policies (other than insignificant
changes of method) except as permitted by GAAP.
SECTION 5.13 COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
otherwise perform all obligations in respect of all leases of real property,
and, except for leases of property that the Borrower determines are no longer
necessary for the business of the Borrower and its Subsidiaries, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled.
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SECTION 5.14 RETENTION OF FINANCIAL ADVISORS. Continue to retain Carl
Marks or such other financial advisors as are reasonably acceptable to the Banks
to assist the Borrower and the Guarantors in reviewing cash flows and financial
projections, advising the Borrower and the Guarantors on operating strategy and
financial planning (including, without limitation, the development of a
strategic plan), and to analyze and prepare reports in a form satisfactory to
the Banks with respect to the foregoing and to make such advisors available to
the Banks to discuss such projections, operating strategy, financial planning
and strategic plan as may be reasonably requested by the Agents or any Bank.
SECTION 5.15 MAINTENANCE OF CLIPPER RECEIVABLES FINANCING. The Borrower
shall continue to maintain at least $25 million of receivables financing under
the Clipper Receivables Financing Agreement or such other receivables financing
arrangement which shall be acceptable to the Banks.
SECTION 5.16 APPLICATION OF ASSET SALE PROCEEDS. Without modification
to the provisions of Section 6.09, to the extent that the terms of the
agreements to which the Borrower is a party as of the date hereof do not
prohibit application of proceeds from sales of the Borrower's assets to the
repayment of the Loans, apply the proceeds (net of reasonable taxes and costs
payable or incurred in connection therewith) of such asset sales (other than the
sale of inventory in the ordinary course of business, the Service Line Sale and
the Fuel Pump Sale) to the repayment of the Loans in accordance with Section
2.12 hereof.
SECTION 5.17 FURTHER ASSURANCES. At the Borrower's cost and expense,
upon request of the Agents, duly execute and deliver, or cause to be duly
executed and delivered, such further instruments and do and cause to be done
such further acts as may be necessary or desirable in the opinion of the Agents
or their counsel to give effect to the provisions and purposes of this Agreement
and the other Loan Documents.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any amount shall remain outstanding or unpaid under this Agreement,
unless the Required Banks shall otherwise consent in writing, the Borrower and
each of the Guarantors will not:
SECTION 6.01 LIENS. Incur, create, assume or suffer to exist any Lien
on any asset of the Borrower or the Guarantors (including, without limitation,
any Inventory or Receivables), now owned or hereafter acquired by the Borrower
or any of such Guarantors, other than (i) Liens existing on the date of this
Agreement as reflected on Schedule 3.06 hereto and extensions, renewals,
refinancings or replacements thereof, PROVIDED, HOWEVER, that no such
extensions, renewals, refinancings or replacements will extend to or cover any
property not theretofore subject to the Lien being extended, renewed, refinanced
or replaced; (ii) Permitted Liens; and (iii) other Liens arising in the ordinary
course of business upon or on any other assets of the Borrower or the Guarantors
securing obligations (other than for borrowed money) in an aggregate amount not
to exceed $500,000 at any time outstanding.
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SECTION 6.02 MERGER, ETC. Merge with or into or consolidate with or
into, or convey, transfer or otherwise dispose of (whether in one transaction or
in a series of related transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, any Person, except that any
Guarantor may merge or consolidate with or transfer all or substantially all of
its assets to any other Guarantor or the Borrower.
SECTION 6.03 INDEBTEDNESS. Contract, create, incur, assume or suffer to
exist any Indebtedness, except for (i) Indebtedness under this Agreement, (ii)
Indebtedness existing on the date hereof and set forth on Schedule 6.03 and
renewals, extensions, modifications or refinancings of such Indebtedness that do
not increase the principal amount thereof, (iii) Indebtedness secured by
purchase money Liens and Capitalized Leases in an aggregate amount not to exceed
$6,000,000 at any one time outstanding, (iv) Indebtedness of the Borrower, the
repayment of which is expressly subordinated to the repayment of the Loans; (v)
Indebtedness of the Borrower to Cooper in the principal amount of approximately
$22.5 million and in respect of purchase price adjustments not in excess of
$15,000,000 in the aggregate arising in connection with the Cooper Transaction;
(vi) guarantees permitted under Section 6.05; and (vii) Indebtedness owing to
Chase or any banking Affiliate in respect of any overdrafts and related
liabilities arising from treasury, depository and cash management services or in
connection with any automated clearing house transfers of funds.
SECTION 6.04 CAPITAL EXPENDITURES. Make Capital Expenditures on a
cumulative basis in excess of the following amounts as of the end of each of the
fiscal quarters of the Borrower set forth below:
QUARTER TOTAL AMOUNT
------- ------------
March 31, 1998 $ 4,100,000
June 30, 1998 $ 9,700,000
September 30, 1998 $13,300,000
SECTION 6.05 GUARANTEES AND OTHER LIABILITIES. Except as set forth on
Schedule 6.05, purchase or repurchase (or agree, contingently or otherwise, so
to do) the Indebtedness of, or assume, guarantee (directly or indirectly or by
an instrument having the effect of assuring another's payment or performance of
any obligation or capability of so doing, or otherwise), endorse or otherwise
become liable, directly or indirectly, in connection with the obligations, stock
or dividends of any Person, except (i) by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business and (ii) for any
guaranty of Indebtedness or other obligations of the Borrower or any Guarantor
if the Person issuing such guaranty could have incurred such Indebtedness or
obligations under this Agreement.
SECTION 6.06 DIVIDENDS; CAPITAL STOCK. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of
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capital stock (or any options, warrants, rights or other equity securities or
agreements relating to any capital stock), or set apart any sum for the
aforesaid purposes, PROVIDED, that (i) any Guarantor may pay dividends or make
any other such distribution or payments to the Borrower and (ii) so long as no
Default or Event of Default shall have occurred and be continuing, commencing
with the second quarter of 1998, the Borrower may pay dividends (x) of no more
than $.04 per share for the fiscal quarter ending March 31, 1998 in the event
that its Net Income for such fiscal quarter is equal to or greater than
$1,400,000; and (y) of no more than $.08 per share for each of the fiscal
quarters ending June 30, 1998 and September 30, 1998 in the event that its Net
Income in respect of each of such fiscal quarters is equal to or greater than
(A) $5,800,000 for the fiscal quarter ending June 30, 1998 and (B) $5,700,000
for the fiscal quarter ending September 30, 1998; PROVIDED, that in no event
shall the Borrower pay dividends on a cumulative basis for the first three
quarters of 1998 in excess of $.16 per share on a maximum of 13,500,000 shares
in the aggregate.
SECTION 6.07 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 6.07, sell or transfer any property or assets to, or otherwise engage
in any other transactions with, any of its Affiliates, other than in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Guarantor than could be obtained on an
arm's-length basis from unrelated third parties.
SECTION 6.08 INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of Indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "INVESTMENTS"), except
for (i) ownership by the Borrower or the Guarantors of the capital stock of, and
other Investments in, each of the Subsidiaries listed on Schedule 3.05 and other
Investments set forth on Schedule 6.08, (ii) Permitted Investments and (iii)
short-term loans and advances to the Borrower's wholly-owned Subsidiaries for
the payment of ordinary course expenses in amounts not to exceed $500,000 in the
aggregate at any time outstanding PROVIDED, that at no time shall the Borrower
or any Guarantor make any short-term loans or advances to Reno Standard
Incorporated in excess of $50,000 in the aggregate.
SECTION 6.09 DISPOSITION OF ASSETS. Sell or otherwise dispose of any
assets (including, without limitation, the capital stock of any Subsidiary)
except for (i) sales of inventory, fixtures and equipment in the ordinary course
of business, (ii) dispositions of other properties no longer used or useful in
the business of the Borrower and the Guarantors, PROVIDED that all such
dispositions shall be for fair market value and PROVIDED FURTHER that the
aggregate fair market value of all such other properties disposed of shall not
exceed $5,000,000 in the aggregate, (iii) the disposition of the Borrower's
brake division in connection with the Cooper Transaction, (iv) the Service Line
Sale on terms reasonably satisfactory to the Required Banks (v) the Fuel Pump
Sale on terms reasonably satisfactory to the Required Banks, (vi) the
disposition of real property and machinery acquired by the Borrower in
connection with the Cooper Transaction, including the assets and business of the
Frostemp business line (formerly known as Wynn's Climate Systems), as set forth
in that certain letter dated March 25, 1998 from Michael Bailey to Michael
Reilly and (vii) the sale or compromise of the Borrower's claim in the APS
Bankruptcy Case on terms satisfactory to the Required Banks; it being understood
that if the Required Banks consent to the sale by the Borrower
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of any assets of the Borrower other than as described above, the Borrower shall
(to the extent not prohibited by any other agreement for borrowed money to which
the Borrower is a party) apply the proceeds of any such sale (net of taxes and
reasonable costs payable or incurred in connection therewith) to the repayment
of the Loans in accordance with Section 2.12 hereof.
SECTION 6.10 NATURE OF BUSINESS. Except for the consummation of the
Cooper Transaction, the Service Line Sale and the Fuel Pump Sale, modify or
alter, in any material manner the nature and type of its business as conducted
at or prior to the Closing Date or the manner in which such business is
conducted at or prior to the Closing Date.
SECTION 6.11 CHARTER AMENDMENTS. Amend its certificate of incorporation
or bylaws.
SECTION 6.12 ACCOUNTING CHANGES. Make or permit any change in
accounting or reporting practices, except as allowed by GAAP.
SECTION 6.13 CHANGE IN MANAGEMENT COMPENSATION. Make or permit any
material change from the 1997 Management Compensation Plan as approved by the
Borrower's Board of Directors.
SECTION 6.14 MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Permit at any
time the Borrower's Tangible Net Worth for any fiscal quarter of the Borrower
set forth below to be less than the amount set forth opposite such fiscal
quarter:
FISCAL QUARTER ENDING AMOUNT
--------------------- ------
March 31, 1998 $143,000,000
June 30, 1998 $147,000,000
September 30, 1998 $152,000,000
SECTION 6.15 NON-CUMULATIVE EBITDA. Permit EBITDA for any fiscal
quarter of the Borrower ending on the last day of each fiscal quarter set forth
below to be less than the amount set forth opposite such fiscal quarter:
FISCAL QUARTER ENDING AMOUNT
--------------------- ------
June 30, 1998 $14,000,000
September 30, 1998 $13,800,000
SECTION 6.16 CUMULATIVE EBITDA. Permit EBITDA for (i) the three-month
period ending March 31, 1998 to be less than $9,400,000, (ii) the six-month
period ending June 30, 1998
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to be less than $25,400,000 and (iii) the nine-month period ending September 30,
1998 to be less than $41,100,000.
SECTION 6.17 NET SALES. Permit Net Sales for each fiscal quarter of the
Borrower set forth below to be less than the amount set forth opposite such
fiscal quarter:
FISCAL QUARTER ENDING AMOUNT
--------------------- ------
March 31, 1998 $145,000,000
June 30, 1998 $167,000,000
September 30, 1998 $153,000,000
SECTION 6.18 MAXIMUM LOAN BALANCES. Permit the maximum amount of Loans
outstanding on the dates specified below to exceed the amount specified below
for such date:
DATE AMOUNT
---- ------
March 30, 1998 - $62,900,000
April 13, 1998
April 30, 1998 $71,700,000
May 31, 1998 $81,600,000
June 30, 1998 $85,000,000
July 31, 1998 $55,500,000
August 31, 1998 $37,600,000
September 30, 1998 $25,500,000
October 31, 1998 $18,100,000
November 30, 1998 $14,600,000
SECTION 6.19 MAXIMUM PEAK BALANCES. Permit the maximum amount of
Borrowed Funds outstanding at any time during the month specified below to
exceed the amount specified below for such month:
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DATE AMOUNT
---- ------
April 1998 $ 94,200,000
May 1998 $124,200,000
June 1998 $127,400,000
July 1998 $ 94,900,000
August 1998 $ 74,000,000
September 1998 $ 59,600,000
October 1998 $ 50,500,000
November 1998 $ 46,200,000
SECTION 6.20 MAXIMUM BORROWED FUNDS. Permit the maximum amount of
Borrowed Funds outstanding on the dates specified below to exceed the amount
specified below for such date:
DATE AMOUNT
---- ------
April 30, 1998 $ 94,200,000
May 31, 1998 $104,100,000
June 30, 1998 $107,500,000
July 31, 1998 $ 73,400,000
August 31, 1998 $ 51,500,000
September 30, 1998 $ 36,400,000
October 31, 1998 $ 26,700,000
November 30, 1998 $ 22,200,000
SECTION 6.21 SUBSIDIARIES. Create or permit the creation of any new
Subsidiary of the Borrower or any Guarantor.
SECTION 6.22 ADDITIONAL INTERMOTOR DEBT. Permit Intermotor to incur
Indebtedness in excess of (pound)5,000,000 over the amount currently permitted
under that certain agreement dated February 28, 1997, between Intermotor and The
Royal Bank of Scotland PLC.
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SECTION 6.23 INACTIVE SUBSIDIARIES. Make any Investments in Marathon
Auto Parts & Products, Inc., Motortronics, Inc. and Industrial & Automotive
Associates, Inc. (collectively, the "INACTIVE SUBSIDIARIES") or permit the
Inactive Subsidiaries to engage in any business or own any assets the value of
which is in excess of $10,000 in the aggregate.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. In the case of the happening of any of
the following events and the continuance thereof beyond the applicable period of
grace if any (each, an "EVENT OF DEFAULT"):
(a) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantor to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(b) default shall be made in the payment of any (i) Fees or interest on
the Loans when due, and such default shall continue unremedied for more than two
(2) Business Days or (ii) principal of the Loans or other amounts payable by the
Borrower hereunder, when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise; or
(c) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
Section 6 hereof and Section 5.15; or
(d) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied for more than
ten (10) days, (PROVIDED, that such period shall be three (3) Business Days in
the case of Section 5.08) ; or
(e) if the Borrower or any Guarantor shall (i) default in the payment
of principal or interest on any Indebtedness, beyond the period of grace, if
any, provided with respect thereto or (ii) default in the performance or
observance of any other term, condition or agreement on its part to be performed
under any agreement relating thereto if the effect thereof is to cause, or
permit the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due prior to its stated
maturity; or
(f) (i) if the Borrower or any of the Guarantors shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
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with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its property, or the Borrower or any of
the Guarantors shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against the Borrower or any of the Guarantors
any case, proceeding or other action of a nature referred to in clause (i) above
or seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its property, which case,
proceeding or other action (x) results in the entry of an order for relief or
(y) remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) the Borrower or any of the Guarantors shall take any action indicating its
consent to, approval of, or acquiescence in, or in furtherance of, any of the
acts set forth in clause (i) or (ii) above; or (iv) the Borrower or any of the
Guarantors shall generally not, or shall be unable to, pay its debts as they
become due or shall admit in writing its inability to pay its debts;
(g) default by any Guarantor of its obligations hereunder or if any of
the terms contained in Section 9 hereof shall cease to be in full force and
effect or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by any such Guarantor or such party
shall deny that it has any further liability to the Banks with respect thereto;
(h) there shall have occurred a material deterioration in the amount,
value or marketability of the Borrower's and any of the Guarantors' assets and
property taken as a whole;
(i) any Person or group (as defined in the Securities Exchange Act of
1934, as amended) shall acquire for the first time the ownership of, or the
direct or indirect power to vote, more than 40% of the issued outstanding voting
stock of the Borrower; or
(j) any material provision of any Loan Document shall, for any reason,
cease to be valid and binding on the Borrower or any of the Guarantors, or the
Borrower or any of the Guarantors shall so assert in any pleading filed in any
court; or
(k) any judgment or order as to a liability or debt for the payment of
money in excess of $750,000 shall be rendered against the Borrower, any of the
Guarantors or a combination thereof and either (i) enforcement proceedings shall
have been commenced and shall be continuing by any creditor upon such judgment
or order or (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(l) any non-monetary judgment or order shall be rendered against the
Borrower, any of the Guarantors or a combination thereof, which does or would
reasonably be expected to (i) cause a material adverse change in the financial
condition, business, prospects, operations or assets of the Borrower and the
Guarantors taken as a whole on a consolidated basis, (ii) have a Material
Adverse Effect on the ability of the Borrower or any of the Guarantors to
perform their respective obligations under any Loan Document, or (iii) have a
Material Adverse Effect on the rights and remedies of either of the Agents or
any Bank under any Loan Document, and there shall be any period of 10
consecutive
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days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(m) the Cooper Transaction shall not have been consummated by April 3,
1998 on terms satisfactory to each Bank; or
(n) the Cooper Loan shall not have been made by April 13, 1998; or
(o) the Agents and the Banks shall not have received the favorable
written opinions of counsel to Reno Standard Incorporated and Stanric, Inc. in
form and substance reasonably acceptable to the Agents by April 30, 1998; or
(p) any Termination Event described in clause (iii) or (iv) of the
definition of such term shall have occurred and shall continue unremedied for
more than 20 days and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of the Plan in respect of which such
Termination Event shall have occurred and be continuing and the Insufficiency of
any and all other Plans with respect to which such a Termination Event
(described in such clause (iii) or (iv)) shall have occurred and then exist is
equal to or greater than $200,000; or
(q) (i) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate
does not have reasonable grounds to contest such Withdrawal Liability and is not
in fact contesting such Withdrawal Liability in a timely and appropriate manner,
and (iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $200,000 or requires payments exceeding $200,000 per
annum in excess of the annual payments made with respect to such MultiEmployer
Plans by the Borrower or such ERISA Affiliate for the plan year immediately
preceding the plan year in which such notification is received; or
(r) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $750,000; or
(s) the Borrower or any ERISA Affiliate shall have committed a failure
described in Section 302(f)(1) of ERISA and the amount determined under Section
302(f)(3) of ERISA is equal to or greater than $200,000; or
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(t) it shall be determined that the Borrower or any Guarantor is liable
for the payment of claims arising out of any failure to comply (or to have
complied) with applicable Environmental Laws, the payment of which will have a
Material Adverse Effect;
then, and in every such event and at any time thereafter during the continuance
of such event, the Administrative Agent may, and at the request of the Required
Banks, shall, by notice to the Borrower, take one or more of the following
actions, at the same or different times: (i) terminate forthwith the Total
Commitment; (ii) declare the Loans then outstanding to be forthwith due and
payable, whereupon the principal of the Loans together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantors, anything contained herein or in any other Loan Document to the
contrary notwithstanding; (iii) set-off amounts in or any accounts maintained
with either of the Agents or any of the Banks and apply such amounts to the
obligations of the Borrower and the Guarantors hereunder and in the other Loan
Documents, and (iv) exercise any and all remedies under the Loan Documents and
under applicable law available to the Agents and the Banks.
SECTION 8. THE AGENTS
SECTION 8.01 ADMINISTRATION BY AGENTS. The general administration of
the Loan Documents shall be by the Agents. Each Bank hereby irrevocably
authorizes the Agents, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising such
powers under the Loan Documents as are delegated by the terms hereof or thereof,
as appropriate, together with all powers reasonably incidental thereto. The
Agents shall have no duties or responsibilities except as set forth in this
Agreement and the remaining Loan Documents.
SECTION 8.02 ADVANCES AND PAYMENTS.
(a) On the date of each Loan, the Administrative Agent shall be
authorized (but not obligated) to advance, for the account of each of the Banks,
the amount of the Loan to be made by it in accordance with its Commitment
hereunder. Should the Administrative Agent do so, each of the Banks agrees
forthwith to reimburse the Administrative Agent in immediately available funds
for the amount so advanced on its behalf by the Administrative Agent, together
with interest at the Federal Funds Effective Rate if not so reimbursed on the
date due from and including such date but not including the date of
reimbursement.
(b) Any amounts received by either of the Agents in connection with
this Agreement (other than amounts to which the Agents are entitled pursuant to
Sections 2.15, 8.06, 10.05 and 10.06), the application of which is not otherwise
provided for in this Agreement shall be applied, FIRST, in accordance with each
Bank's Commitment Percentage to pay accrued but unpaid Facility Fees, and
SECOND, in accordance with each Tranche B Bank's Tranche B Commitment Percentage
to pay accrued but unpaid interest and the outstanding principal balance on each
Tranche B Note and THIRD, in accordance with each Tranche A Bank's Tranche A
Commitment Percentage to pay accrued but
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unpaid interest and the outstanding principal balance on each Tranche A Note.
All amounts to be paid to a Bank by either of the Agents shall be credited to
that Bank, after collection by such Agent, in immediately available funds either
by wire transfer or deposit in that Bank's correspondent account with such
Agent, as such Bank and such Agent shall from time to time agree.
SECTION 8.03 SHARING OF SETOFFS. Each Tranche A Bank, Tranche B Bank
and CIBC in its capacity as lender under the CIBC Term Loan agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any Guarantor or as a result of the exercise of rights
in respect of collateral, other collection efforts or otherwise, obtain any
payment in respect of Indebtedness owed to such bank by the Borrower or a
Guarantor (including as a result of the purchase of a participation from another
bank pursuant to this Section), such payment shall be treated as follows: (i) if
the party receiving the payment is a Tranche B Bank and there are Tranche B
Loans outstanding, and as a result of such payment the unpaid portion of its
Tranche B Loans is proportionately less than the unpaid portion of the Tranche B
Loans of any other Tranche B Bank, such Tranche B Bank shall promptly purchase
at par (and shall be deemed to have thereupon purchased) from such other Tranche
B Banks a participation in the Tranche B Loans of such other Tranche B Banks,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Tranche B Loans held by
the Tranche B Banks shall be shared by the Tranche B Banks PRO RATA; (ii) if the
party receiving such payment is a Tranche A Bank or CIBC (as lender under the
CIBC Term Loan ) and there are Tranche B Loans outstanding, such Tranche A Bank
or CIBC, as the case may be, shall purchase a subordinated participation in the
Tranche B Loans in the amount of such payment which shall be allocated PRO RATA
among the Tranche B Banks (provided that such party shall not be entitled to
receive any payments in respect of such participation until all Tranche B Loans
in which participations have not been purchased pursuant to this Section shall
have been paid in full); (iii) if no Tranche B Loans are outstanding, and the
payment received by such party is of a proportion of the aggregate amount of
principal and interest due with respect to the Remaining Obligations held by or
owing to such party which is greater than the proportion received by any other
such party in respect of the aggregate amount of principal and interest due with
respect to the Remaining Obligations held by or owing to such other party, the
party receiving such proportionately greater payment shall purchase such
participations in the Remaining Obligations held by or owing to such other
parties, and such other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to the Remaining
Obligations held by or owing to such parties be shared by such parties PRO RATA;
and (iv) if no Tranche B Loans and Remaining Obligations are outstanding, then
to the payment of any other Indebtedness of the Borrower or any Guarantor to any
of the banks, PROVIDED, that in each case under (i), (ii), (iii) and (iv) above,
if any such non-PRO RATA payment is thereafter recovered or otherwise set aside
such purchase of participations shall be rescinded and each Bank which received
such payment shall immediately reimburse the Bank which purchased such
participation (all without the payment of interest). Any participations required
to be purchased under
REVOLV~1.WPD
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this Section shall be effectuated by paying over the amount of such
participations to the Administrative Agent for distribution in accordance with
this Section. The Banks and CIBC in its capacity as lender under the CIBC Term
Loan agree that prior to the date on which there shall be no Unused Total
Tranche A Commitment for the first time, NBD shall not be required to share cash
collateral in its possession. Nothing in this Agreement or otherwise shall
obligate or require Comerica to share with any other Bank any
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payments or proceeds paid to, or received or recovered by, Comerica in respect
of any Indebtedness secured by a certain deed of trust held by Comerica on real
estate located in Grapevine, Texas, whether such payments or proceeds result
from the voluntary payment of all or any portion of such Indebtedness, the
foreclosure of such deed of trust, the exercise of any rights in respect of any
other collateral for such Indebtedness, other collection efforts or otherwise,
with the sole exception that any right of banker's lien or setoff which Comerica
may exercise shall be subject to this Section 8.03. The Borrower and each
Guarantor expressly consents to the foregoing arrangements and agrees that any
bank holding (or deemed to be holding) a participation in a Loan may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrower to such bank as fully as if such bank held
a Note and was the original obligee thereon, in the amount of such
participation.
SECTION 8.04 AGREEMENT OF REQUIRED BANKS. Upon any occasion requiring
or permitting an approval, consent, waiver, election or other action on the part
of the Required Banks, action shall be taken by the Administrative Agent for and
on behalf of, or for the benefit of, all Banks upon the direction of the
Required Banks, and any such action shall be binding on all Banks. No amendment,
modification, consent, or waiver shall be effective except in accordance with
the provisions of Section 10.10.
SECTION 8.05 LIABILITY OF AGENTS.
(a) Each Agent when acting on behalf of the Banks, may execute any of
its respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither of the Agents nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. Each Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither of the Agents, nor any of its respective directors, officers, employees,
agents or Affiliates shall be responsible to any Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, this Agreement, any Loan Document
or any related agreement, document or order, or shall be required to ascertain
or to make any inquiry concerning the performance or observance by the Borrower
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(b) Neither of the Agents nor any of its respective directors,
officers, employees, agents or Affiliates shall have any responsibility to the
Borrower or the Guarantors on account of the failure or delay in performance or
breach by any Bank or by the Borrower or the Guarantors of any of their
respective obligations under this Agreement or the Notes or any of the Loan
Documents or in connection herewith or therewith.
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(c) Each Agent, in its capacity as an Agent hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by such person to be genuine or correct and to have been signed or sent
by a person or persons believed by such person to be the proper person or
persons, and such person shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by such person.
SECTION 8.06 REIMBURSEMENT AND INDEMNIFICATION. Each Bank agrees (i) to
reimburse (x) the Agents in accordance with such Bank's Tranche A Commitment
Percentage and Tranche B Commitment Percentage of any expenses and fees incurred
for the benefit of the Banks under this Agreement, the Notes and any of the Loan
Documents, including, without limitation, fees of counsel referred to in Section
10.05 and compensation of agents and employees paid for services rendered on
behalf of the Banks, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by the Borrower or the
Guarantors and (y) the Agents in accordance with such Bank's Tranche A
Commitment Percentage and Tranche B Commitment Percentage of any expenses of the
Agents incurred for the benefit of the Banks that the Borrower has agreed to
reimburse pursuant to Section 10.05 and has failed to so reimburse and (ii) to
indemnify and hold harmless the Agents and any of their respective directors,
officers, employees, agents or Affiliates, on demand, in the amount of its
proportionate share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against it or any of them in any way relating to or arising out
of this Agreement, the Notes or any of the Loan Documents or any action taken or
omitted by it or any of them under this Agreement, the Notes or any of the Loan
Documents to the extent not reimbursed by the Borrower or the Guarantors (except
such as shall result from their respective gross negligence or willful
misconduct).
SECTION 8.07 RIGHTS OF THE AGENTS. It is understood and agreed that
each of the Agents shall have the same rights and powers hereunder (including
the right to give such instructions) as the other Banks and may exercise such
rights and powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions
with the Borrower or any Guarantor, as though it were not an Agent of the Banks
under this Agreement.
SECTION 8.08 INDEPENDENT BANKS. Each Bank acknowledges that it has
decided to enter into this Agreement and to make the Loans hereunder based on
its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrower and the Guarantors and agrees that neither of
the Agents shall bear any responsibility therefor.
SECTION 8.09 NOTICE OF TRANSFER. The Agents may deem and treat a Bank
party to this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Documentation
Agent.
SECTION 8.10 SUCCESSOR AGENT. Either of the Agents may resign at any
time by giving written notice thereof to the Banks and the Borrower. Upon any
such resignation, the
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Required Banks shall have the right to appoint a successor Agent, which shall be
reasonably satisfactory to the Borrower. If no successor Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation, the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any state thereof and having a combined capital and surplus of a
least $100,000,000 and a banking office in New York City, which shall be
reasonably satisfactory to the Borrower. Upon the acceptance of any appointment
as an Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as an Agent, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Agreement.
SECTION 9. GUARANTY
SECTION 9.01 GUARANTY
(a) Each of the Guarantors unconditionally and irrevocably guarantees
the due and punctual payment and performance by the Borrower and the other
Guarantors of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and it will remain bound upon this guaranty
notwithstanding any extension or renewal of any of the Obligations. The
Obligations of the Guarantors shall be joint and several. Notwithstanding
anything to the contrary herein, the maximum aggregate amount of the Obligations
that are guaranteed hereunder by any Guarantor shall not exceed the maximum
amount that can be so guaranteed without rendering this guaranty by such
Guarantor voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor, and also waives notice
of protest for nonpayment. The Obligations of the Guarantors hereunder shall not
be affected by (i) the failure of any Agent or a Bank to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other
Guarantor under the provisions of this Agreement or any other Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the failure of any Agent or a Bank to exercise any right or remedy against
any other Guarantor; or (v) the release or substitution of any Guarantor or any
other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agents
or any Bank to any balance of any deposit, account or credit on the books of
either of the Agents or any Bank in favor of the Borrower or any other
Guarantor, or to any other Person.
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(d) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of the Borrower
and of any other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agents, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(f) Upon the Obligations becoming due and payable (by acceleration or
otherwise), the Banks shall be entitled to immediate payment of such Obligations
by the Guarantors upon written demand by either of the Agents.
SECTION 9.02 NO IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations including, without limitation, the unenforceability or disallowance
of any interest in a case under the Bankruptcy Code. Without limiting the
generality of the foregoing, the obligations of the Guarantors hereunder shall
not be discharged or impaired or otherwise affected by the failure of any Agent
or a Bank to assert any claim or demand or to enforce any remedy under this
Agreement or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the Guarantors or would otherwise operate as a discharge
of the Guarantors as a matter of law, unless and until the Obligations are paid
in full.
SECTION 9.03 SUBROGATION. Upon payment by any Guarantor of any sums to
either of the Agents or any Bank hereunder, all rights of such Guarantor against
the Borrower arising as a result thereof by way of right of subrogation or
otherwise, shall in all respects be subordinate and junior in right of payment
to the prior final and indefeasible payment in full of all the Obligations. If
any amount shall be paid to such Guarantor for the account of the Borrower, such
amount shall be held in trust for the benefit of the Agents and the Banks and
shall forthwith be paid to the Agents and the Banks to be credited and applied
to the Obligations, whether matured or unmatured.
SECTION 10. MISCELLANEOUS
SECTION 10.01 NOTICES. Notices and other communications provided for
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to the Borrower or any Guarantor at 37-18
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Northern Boulevard, Long Island City, NY 11101, Attention: Chief Financial
Officer, facsimile number (718) 729-4549, and to a Bank or each of the Agents at
its address or facsimile number set forth on the signature pages of this
Agreement, or such other address or facsimile number as such party may from time
to time designate by giving written notice to the other parties hereunder. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the fifth
Business Day after the date when sent by registered or certified mail, postage
prepaid, return receipt requested, if by mail; or when delivered to the
telegraph company, charges prepaid, if by telegram; or when receipt is
acknowledged, if by any telegraphic communications or facsimile equipment of the
sender; in each case addressed to such party as provided in this Section 10.01
or in accordance with the latest unrevoked written direction from such party;
PROVIDED, HOWEVER, that in the case of notices to the Agents notices pursuant to
the preceding sentence and pursuant to Section 2 shall be effective only when
received by such Agents.
SECTION 10.02 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES,
ETC. All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making of the Loans herein
contemplated and the issuance and delivery to the Banks of the Notes regardless
of any investigation made by any Bank or on its behalf and shall continue in
full force and effect so long as any amount due or to become due hereunder is
outstanding and unpaid and so long as the Commitments have not been terminated.
All statements in any such certificate or other instrument shall constitute
representations and warranties by the Borrower and the Guarantors hereunder with
respect to the Borrower.
SECTION 10.03 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Agents and the Banks and their respective successors and
assigns. Neither the Borrower nor any of the Guarantors may assign or transfer
any of their rights or obligations hereunder without the prior written consent
of all of the Banks. Each Bank may sell participations to any Person in all or
part of any Loan, or all or part of its Note or Commitment, in which event,
without limiting the foregoing, the provisions of Section 2.11 shall inure to
the benefit of each purchaser of a participation (provided that such participant
shall look solely to the seller of such participation for such benefits and the
Borrower's and the Guarantors' liability, if any, under Sections 2.11 and 2.13
shall not be increased as a result of the sale of any such participation) and
the PRO RATA treatment of payments, as described in Section 2.12, shall be
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this Agreement
(provided that such Bank may grant its participant the right to consent to such
Bank's execution of amendments, modifications or waivers which (i) reduce any
Fees payable hereunder to the Banks, (ii) reduce the amount of any scheduled
principal payment on any Loan or reduce the principal amount of any Loan or the
rate of interest payable hereunder or (iii) extend the maturity of
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the Borrower's obligations hereunder). The sale of any such participation shall
not alter the rights and obligations of the Bank selling such participation
hereunder with respect to the Borrower.
(b) Each Bank may assign to one or more Banks or Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Tranche A Commitment or
Tranche B Commitment and the same portion of the related Tranche A Loans or
Tranche B Loans at the time owing to it and the related Note or Notes held by
it), PROVIDED, HOWEVER, that (i) other than in the case of an assignment to a
Person at least 50% owned by the assignor Bank, or by a common parent of both,
or to another Bank, the Agents must give their prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) the aggregate
amount of the Tranche A Commitment or Tranche B Commitment and/or Tranche A
Loans or Tranche B Loans of the assigning Bank subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Documentation Agent) shall, unless otherwise
agreed to in writing by the Borrower (provided, however, that after the
occurrence and continuance of an Event of Default, no agreement of the Borrower
shall be necessary) and the Agents, in no event be less than $5,000,000 (or
$1,000,000 in the case of an assignment between Banks) unless the Tranche A
Commitment or Tranche B Commitment and/or Tranche A Loans or Tranche B Loans so
assigned constitute 100% of such Tranche A Commitment or Tranche B Commitment
and/or Tranche A Loans or Tranche B Loans of the assigning Bank and (iii) the
parties to each such assignment shall execute and deliver to the Documentation
Agent, for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance with blanks appropriately completed, together with a
processing and recordation fee of $3,500 (for which the Borrower shall have no
liability). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be within ten Business Days after the execution thereof
(unless otherwise agreed to in writing by the Agents), (A) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) the Bank thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement with respect
to its participation in the Tranche A or Tranche B Facility (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance by
the Borrower or any Guarantor of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or
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document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
copies of the financial statements referred to in Section 3.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such Bank
assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agents to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agents by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Documentation Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Banks and the Commitments of, and principal
amount of the Loans owing to, each Bank from time to time (the "REGISTER"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Guarantors, the Agents and the Banks shall treat each
Person the name of which is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with any Note subject to
such assignment and the fee payable in respect thereto, the Documentation Agent
shall, if such Assignment and Acceptance has been completed with blanks
appropriately filled and consented to by the Documentation Agent (to the extent
such consent is required hereunder), (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt written notice thereof to the Borrower (together with a copy thereof). No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph. Within five Business
Days after receipt of notice, the Borrower, at its own expense, shall execute
and deliver to the Documentation Agent in exchange for the surrendered Note or
Notes a new Note or Notes to the order of such assignee in an amount equal to
the Tranche A Commitment or Tranche B Commitment and/or Tranche A Loans or
Tranche B Loans assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained Tranche A Commitments or Tranche B Commitments
and/or Tranche A Loans or Tranche B Loans hereunder, a new Note or Notes to the
order of the assigning Bank in an amount equal to the Tranche A Commitment or
Tranche B Commitment and/or Tranche A Loans or Tranche B Loans retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the surrendered Note. Thereafter, such surrendered
Note shall be marked canceled and replaced pursuant to this Agreement and shall
be returned to the Borrower.
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(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 10.03, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of the Guarantors furnished to such Bank by or
on behalf of the Borrower or any of the Guarantors; PROVIDED, that prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
10.04.
SECTION 10.04 CONFIDENTIALITY. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; PROVIDED, that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank or either Agent, (ii)
upon the order of any court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having supervisory power over such
Bank, (iv) which has been publicly disclosed other than as a result of a
disclosure by either of the Agents or any Bank which is not permitted by this
Agreement, (v) in connection with any litigation to which either of the Agents,
any Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f) and
PROVIDED FURTHER before such Bank complies with (iii) or (iv) above, it shall
(to the extent practicable under the circumstances) use reasonable efforts to
provide the Borrower with notice of such request.
SECTION 10.05 EXPENSES. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to pay
all reasonable out-of-pocket expenses incurred by the Agents and the Banks
(including but not limited to the reasonable fees and disbursements of Zalkin,
Rodin & Goodman LLP, counsel for the Agents (or other counsel retained by the
Agents), in-house and outside counsel of the Banks, and any internal or
third-party consultants and auditors advising the Agents) in connection with the
preparation, execution, delivery and administration of this Agreement, the Notes
and the other Loan Documents and the making of the Loans, the reasonable and
customary costs, fees and expenses of the Agents in connection with their
periodic monitoring of assets of the Borrower or the Guarantors (including
reasonable and customary internal collateral monitoring fees) and publicity
expenses, and, following the occurrence of an Event of Default, all reasonable
out-of-pocket expenses incurred during the continuance of such Event of Default
by the Banks and the Agents in the enforcement or protection of the rights of
any one or more of the Banks or the Agents in connection with this Agreement,
the Notes or the other Loan Documents, including but not limited to the
reasonable fees and disbursements of any counsel for the Banks or the Agents.
Such payments shall be made on the Closing Date and thereafter on demand upon
delivery of a statement setting forth such costs and expenses. The Obligations
of the Borrower and the Guarantors under this Section shall survive the
termination of this Agreement and/or the payment of the Loans.
SECTION 10.06 INDEMNITY. The Borrower and each of the Guarantors agree
to indemnify and hold harmless each of the Agents and the Banks and their
respective directors, officers,
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employees, agents and Affiliates (each an "INDEMNIFIED PARTY") from and against
any and all expenses, losses, claims, damages and liabilities incurred by such
Indemnified Party arising out of claims made by any Person in any way relating
to the transactions contemplated hereby, but excluding therefrom all expenses,
losses, claims, damages, and liabilities arising out of or resulting from the
gross negligence or willful misconduct of such Indemnified Party. The
Obligations of the Borrower and the Guarantors under this Section shall survive
the termination of this Agreement and/or the payment of the Loans.
SECTION 10.07 CHOICE OF LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE OTHER THAN NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401.
SECTION 10.08 NO WAIVER. No failure on the part of any Agent or any of
the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or under the Notes or any of the other Loan Documents shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 10.09 EXTENSION OF MATURITY. Should any payment of principal or
interest on the Notes or any other amount due hereunder become due and payable
on a day other than a Business Day, then, except as otherwise expressly provided
herein, the maturity thereof shall be extended to the next succeeding Business
Day and, in the case of principal, interest shall be payable thereon at the rate
herein specified during such extension.
SECTION 10.10 AMENDMENTS, ETC. No modification, amendment or waiver of
any provision of this Agreement or the other Loan Documents, and no consent to
any departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required Banks,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given; PROVIDED, HOWEVER, that no such
modification or amendment shall without the written consent of the Bank affected
thereby (x) increase the Tranche A Commitment of a Tranche A Bank or the Tranche
B Commitment of a Tranche B Bank (it being understood that a waiver of an Event
of Default shall not constitute an increase in the Tranche A Commitment of a
Tranche A Bank or Tranche B Commitment of a Tranche B Bank), or (y) reduce the
principal amount of any Loan or the rate of interest payable thereon, or extend
any date for the payment of interest hereunder or reduce any Fees payable
hereunder or extend the final maturity of the Borrower's obligations hereunder;
and, PROVIDED, FURTHER, that no such modification or amendment shall without the
written consent of all of the Banks (i) amend or modify any provision of this
Agreement which provides for the unanimous consent or approval of the Banks, or
(ii) amend this Section 10.10 or the definition of Required Banks, or (iii)
release the obligations of any
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Guarantor hereunder; and, PROVIDED, FURTHER, that no such modification or
amendment shall amend or modify any provision of the Agreement relating to the
CIBC Term Loan without the consent of CIBC. No such amendment or modification
may adversely affect the rights and obligations of any Agent hereunder without
its prior written consent. No notice to or demand on the Borrower or any
Guarantor shall entitle the Borrower or any Guarantor to any other or further
notice or demand in the same, similar or other circumstances. Each holder of a
Note shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not a Note shall have been marked to indicate
such amendment, modification, waiver or consent and any consent by a Bank or any
holder of a Note shall bind any Person subsequently acquiring a Note. No
amendment to this Agreement shall be effective against the Borrower or any
Guarantor unless signed by the Borrower or such Guarantor, as the case may be.
SECTION 10.11 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.12 HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
SECTION 10.14 PRIOR AGREEMENTS. This Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and any Bank or any Agent prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement.
SECTION 10.15 FURTHER ASSURANCES. Whenever and so often as reasonably
requested by either of the Agents, the Borrower and the Guarantors will promptly
execute and deliver or cause to be executed and delivered all such other and
further instruments, documents or assurances, and promptly do or cause to be
done all such other and further things as may be necessary and reasonably
required in order to further and more fully vest in the Agents all rights,
interests, powers, benefits, privileges and advantages conferred or intended to
be conferred by this Agreement and the other Loan Documents.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTORS, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
STANDARD MOTOR PRODUCTS, INC.
By:______________________________
Title:
RENO STANDARD INCORPORATED
By:______________________________
Title:
MARDEVCO CREDIT CORP.
By:______________________________
Title:
THE CHASE MANHATTAN BANK,
INDIVIDUALLY AND AS ADMINISTRATIVE AGENT
By:______________________________
Title:
270 Park Avenue
New York, New York 10017
Facsimile No.: (212) 270-6238 and
(718) 830-9310
THE BANK OF NEW YORK,
INDIVIDUALLY AND AS DOCUMENTATION AGENT
By:_______________________________
Title:
One Wall Street
New York, New York 10286
Facsimile No.: (516) 294-2770 and
(212) 635-7498
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FLEET BANK, NATIONAL ASSOCIATION, AS A
BANK
By:_______________________________
Title:
c/o Fleet Managed Assets
777 Main Street
Hartford, Connecticut 06115
Facsimile No. (860) 986-2435
NBD BANK, AS A BANK
By:_______________________________
Title:
One First National Plaza
Chicago, Illinois 60670-0631
COMERICA BANK, AS A BANK
By:_______________________________
Title:
500 Woodward Avenue - 3rd Floor
Detroit, Michigan 48275-32005
CANADIAN IMPERIAL BANK OF COMMERCE, AS
A BANK AND AS LENDER UNDER THE CIBC TERM LOAN
By:_________________________________
Title:
One City Center Drive - Suite 200
Mississauga, Ontario L5B 1M2
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STANRIC, INC.
By:_______________________________
Title:
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