Exhibit 10.4

 

ASSET PURCHASE AGREEMENT

 

by and between

 

MERITOR HEAVY VEHICLE SYSTEMS, LLC

 

and

 

SYPRIS SOLUTIONS, INC.

 

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Dated as of July 9, 2015
 

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TABLE OF CONTENTS         

 

 

 

 

 

Page

ARTICLE I  

DEFINITIONS  

1

 

 

 

 

 

ARTICLE II  

SALE AND PURCHASE OF ASSETS  

1

 

Section 2.1.  

Sale and Purchase of Assets 

1

 

Section 2.2.  

Non-Assignable Contracts and Permits 

3

 

 

 

 

 

ARTICLE III  

ASSUMPTION OF LIABILITIES  

4

 

Section 3.1.  

Assumed Liabilities 

4

 

Section 3.2.  

Retained Liabilities 

5

 

 

 

 

 

ARTICLE IV  

PURCHASE PRICE

5

 

Section 4.1.  

Purchase Price

5

 

 

 

 

 

ARTICLE V  

CLOSING  

9

 

Section 5.1.  

Closing 

9

 

Section 5.2.  

Closing Deliveries of Seller 

9

 

Section 5.3.  

Closing Deliveries of Buyer 

9

 

Section 5.4.  

Transfer Taxes 

10

 

 

 

 

 

ARTICLE VI  

REPRESENTATIONS AND WARRANTIES OF SELLER  

10

 

Section 6.1.  

Organization 

10

 

Section 6.2.  

Authority 

10

 

Section 6.3.  

No Breach 

11

 

Section 6.4.  

Taxes 

11

 

Section 6.5.  

Proprietary Rights 

12

 

Section 6.6.  

Assets and Properties 

13

 

Section 6.7.  

Litigation 

16

 

Section 6.8.  

Environmental Matters 

16

 

Section 6.9.  

Governmental Approvals 

17

 

Section 6.10.  

Compliance With Applicable Law 

17

 

Section 6.11.  

Employees Matters 

18

 

Section 6.12.  

Sufficiency of Assets 

20

 

Section 6.13.  

Absence of Material Adverse Effect and Certain Changes or Events 

20

 

Section 6.14.  

Contracts 

20

 

Section 6.15.  

Financial Information 

21

 

Section 6.16.  

No Brokers 

22

 

 

 

 

 

ARTICLE VII  

REPRESENTATIONS AND WARRANTIES OF BUYER

22

 

Section 7.1.  

Organization 

22

 

Section 7.2.  

Authority 

22

  

 
 

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Section 7.3.  

No Breach

23

 

Section 7.4.  

Governmental Approvals 

23

 

Section 7.5.  

No Brokers 

23

 

 

 

 

 

ARTICLE VIII 

COVENANTS  

23

 

Section 8.1.  

Covenants of Seller 

23

 

Section 8.2.  

Public Announcements 

25

 

Section 8.3.  

Access to Information 

25

 

Section 8.4.  

Further Assurances 

26

  Section 8.5. Employment 26   Section 8.6. Morganton Facility 27   Section 8.7.
Insurance 29   Section 8.8. Removal of Proprietary Information 30          
ARTICLE IX INDEMNIFICATION 30   Section 9.1. Indemnification by Seller  30  
Section 9.2. Indemnification by Buyer  31   Section 9.3. Environmental/Defect
Indemnification  31   Section 9.4. Survival of Representations and Warranties 
33   Section 9.5. Deductible  34   Section 9.6. Cap  34   Section 9.7. Ancillary
Agreements  35   Section 9.8. Effect on Final Purchase Price  35          
ARTICLE X GENERAL PROVISIONS 35   Section 10.1. Assignment  35   Section 10.2.
Parties in Interest  35   Section 10.3. Amendment  35   Section 10.4. Waiver;
Remedies  35   Section 10.5. Fees and Expenses  36   Section 10.6. Notices  36  
Section 10.7. Waiver of Compliance With Bulk Transfer Laws  37   Section 10.8.
Captions; Currency  38   Section 10.9. Entire Agreement  38   Section 10.10.
Severability  38   Section 10.11. Consent to Jurisdiction  38   Section 10.12.
Exhibits and Schedules  39   Section 10.13. Governing Law  39   Section 10.14.
Counterparts  39   Section 10.15. Specific Performance  39   Section 10.16.
Performance by the Seller Subsidiaries  39   Section 10.17. Interpretation  39

  

 
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SCHEDULES

 

Schedule 2.1(a)

-

Excluded Assets

Schedule 2.1(c) 

-

Business Intellectual Property

Schedule 2.1(f)  

-

USM Purchase Orders

Schedule 2.1(g) 

-

Business Contracts

Schedule 2.1(h) 

-

Permits

Schedule 4.1(c)(i) 

-

Inventory Matters

Schedule 6.5(a) 

-

Patents

Schedule 6.5(b) 

-

IP Contracts

Schedule 6.5(c)  

-

Intellectual Property Matters

Schedule 6.6(a)

-

Title to Assets

Schedule 6.6(e)

-

Material Facility Services Contracts

Schedule 6.6(j)

-

Condition of Machinery and Equipment

Schedule 6.7 

-

Litigation

Schedule 6.8

-

Environmental Matters

Schedule 6.9 

-

Seller Governmental Approvals

Schedule 6.10 

-

Compliance with Applicable Law

Schedule 6.11(b)

-

Employee Benefit Plans

Schedule 6.11(c) 

-

Employment Related Arrangements

Schedule 6.11(d)  

-

Employee Information

Schedule 6.12  

-

Sufficiency of Assets

Schedule 6.13(a)

-

Material Adverse Effect

Schedule 6.13(b) 

-

Ordinary Course Matters

Schedule 6.14 

-

Contract Matters

Schedule 7.4 

-

Buyer Governmental Approvals

Schedule 8.5(a) 

-

Continued Employees

Schedule 8.5(b)   

-

Certain Employees

Schedule 8.9 

-

Vendor Payments

         

EXHIBITS 

        

Exhibit A   Definitions

Exhibit B-1

Form of Access Agreement

Exhibit B-2

Form of Accommodation Agreement

Exhibit C  Form of Lease Exhibit D Form of Transition Agreement Exhibit E
Certain Provisions of Morganton Facility Purchase Agreement

           

 
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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT dated as of July 9, 2015 by and between MERITOR HEAVY
VEHICLE SYSTEMS, LLC, a Delaware limited liability company ("Buyer"), and SYPRIS
SOLUTIONS, INC., a Delaware corporation ("Seller").

 

W I T N E S S E T H :

 

WHEREAS, Seller desires to sell and cause to be sold, and Buyer desires to
purchase, the Assets (as defined herein), and Seller desires to transfer and
cause to be transferred, and Buyer desires to assume, the Assumed Liabilities
(as defined herein), all pursuant to the terms and subject to the conditions set
forth in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter contained, the
parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

Capitalized terms used in this Agreement shall have the meanings specified in
Exhibit A.

 

ARTICLE II

SALE AND PURCHASE OF ASSETS

 

Section 2.1.     Sale and Purchase of Assets. Subject to the terms and
conditions set forth herein and in reliance upon the representations and
warranties contained herein, at the Closing, for the consideration specified in
Section 4.1, Seller will sell, assign, convey, transfer and deliver, and cause
the Seller Subsidiaries to sell, assign, convey, transfer and deliver, to Buyer,
and Buyer will purchase and acquire from Seller and the Seller Subsidiaries, all
of Seller's and the Seller Subsidiaries' right, title and interest in and to the
following, in each case free and clear of any Liens, other than Permitted Liens,
as the same shall exist on the Closing Date:

 

(a)     all machinery, equipment, tooling, furniture and fixtures, plant and
office equipment, repair parts, repair stock, tools and other personal property
located at the Morganton Facility (or located at another facility of Seller, a
Seller Subsidiary or a supplier of Seller or any Seller Subsidiary) that are
owned by or, to the extent assignable (after both parties have complied with
their obligations under Section 2.2 to facilitate such assignment), leased,
consigned, loaned or bailed to Seller or a Seller Subsidiary and that are used
in the Business, excluding those set forth on Schedule 2.1(a) (the "Excluded
Assets"), together with any rights, claims and interests arising out of
maintenance or service contracts relating thereto or the breach of any express
or implied warranty by the manufacturers or sellers of any such assets or any
component part thereof; provided, however, that the parties acknowledge that the
Excluded Assets list may be incomplete or inaccurate, and the parties agree to
work together cooperatively and in good faith for the thirty (30) days after the
Closing, to correct such list to add to such list any machinery, equipment,
tooling, furniture and fixtures, plant and office equipment, repair parts,
repair stock, tools, gauges and related inspection equipment, overhead equipment
material handling equipment and other personal property that is exclusively
related to the Excluded Business and to remove from such list any such items
that are not exclusively related to the Excluded Business.

  

 
 

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(b)     all computer hardware and software located at the Morganton Facility
that is owned by Seller and used by the Business;

 

(c)     all Patents and Other Intellectual Property, owned by or, to the extent
assignable (after both parties have complied with their obligations under
Section 2.2 to facilitate such assignment), licensed to Seller or any Seller
Subsidiary, that are used in, or necessary for the continued operation of, the
Business (excluding only those software licenses listed in item 16 of Schedule A
to the Transition Agreement (other than the software licenses listed in item 15
of Schedule A to the Transition Agreement which are contemplated to be
transferred to Buyer)) (the "Business Intellectual Property"), including those
set forth on Schedule 2.1(c);

 

(d)     all raw material inventory, work-in progress inventory and finished
goods inventory (including all such inventories that are held by third parties)
that directly relate to products of the Business manufactured for Buyer, Sisamex
or USM, or any of their respective Affiliates (the "Business-Related
Inventory"), which Business-Related Inventory shall be calculated in accordance
with Schedule 4.1(c)(i) for purposes of identifying the usable and non-obsolete
inventory acquired by Buyer. Any inventory falling into the categories called
excess, obsolete or scrap on Schedule 4.1(c)(i) which is not included in the
Business-Related Inventory calculation will be retained by Seller (and Seller
agrees that any such excluded inventory for Buyer or Sisamex will be scrapped by
Seller);

 

(e)     all accounts receivable that directly relate to the products of the
Business manufactured for Buyer, Sisamex or USM, or any of their respective
Affiliates (the "Business-Related Accounts Receivable");

  

 
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(f)     the purchase orders with USM set forth on Schedule 2.1(f) (the "USM
Purchase Orders");

 

(g)     all assignable (after both parties have complied with their obligations
under Section 2.2 to facilitate such assignment) rights under licenses or other
agreements that are necessary for the continued operation of the Business
(excluding only those software licenses listed in item 16 of Schedule A to the
Transition Agreement (other than the software licenses listed in item 15 of
Schedule A to the Transition Agreement which are contemplated to be transferred
to Buyer)), including those referenced in Section 2.1(c) and those set forth on
Schedule 2.1(g) (the "Business Contracts"); provided, however, that the parties
acknowledge such rights shall not be deemed "necessary" to the extent that
practical alternative sources of supply are reasonably available on a timely
basis under the circumstances (it being understood that nothing herein will
limit Buyer’s rights under the Transition Agreement);

 

(h)     all rights under Permits (to the extent transferable) that relate to the
Business, including those set forth in Schedule 2.1(h);

 

(i)     except to the extent based upon, arising out of, relating to or caused
by any Excluded Asset or Excluded Liability (or otherwise subject to
indemnification by Seller or Seller Subsidiaries or their Affiliates) and then
solely to the extent that Seller is not fulfilling any of its indemnification
obligations with respect thereto, those causes of action, claims, rights under
express or implied warranties, guarantees, indemnities and similar rights in
favor of Seller and/or any Seller Subsidiary, rights of recovery, rights of
set-off, rights of subrogation and all other rights and demands of any nature
available to Seller and/or any Seller Subsidiary to the extent related to the
Assets or the Business;

 

(j)     the benefits of coverage provided by insurance policies of Seller and
the Seller Subsidiaries (with respect to the Business or the Assets) in respect
of matters occurring on or prior to the Closing Date to the extent set forth in
Section 8.7; and

 

(k)     all books and records that are reasonably required to operate the
Business and other books and records as may be mutually agreed by the parties
acting reasonably and in good faith.

 

The assets, properties and rights of Seller and the Seller Subsidiaries to be
sold, assigned, conveyed, transferred and delivered to Buyer pursuant to this
Agreement are herein collectively referred to as the "Assets". 

 

 
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Section 2.2.     Non-Assignable Contracts and Permits. Anything contained herein
to the contrary notwithstanding, this Agreement will not constitute an
assignment, an attempted assignment or an agreement to assign any Contract (or
rights thereunder) or Permit (or rights thereunder) if an assignment or
attempted assignment of the same without the Consent of any other party or
parties thereto would constitute a breach thereof or in any way impair the
rights of Seller, any Seller Subsidiary or Buyer thereunder. If any such Consent
is not obtained or if an attempted assignment would be ineffective or would
impair Seller's, any Seller Subsidiary's or Buyer's rights under any such
Contract or Permit so that Buyer would not receive all such rights, then Seller
will, and will cause each Seller Subsidiary to, and Buyer will use its
commercially reasonable efforts to cause the full benefits of any such Contract
(or rights thereunder) or Permit (or rights thereunder) to be provided to Buyer
in the most cost-effective and practical manner available under the
circumstances. In addition, Seller will, and will cause each Seller Subsidiary
to, take such other actions (at Seller's reasonable expense) as may reasonably
be requested by Buyer in order to place Buyer, insofar as reasonably possible,
in the same position as if such Contract (or rights thereunder) or Permit (or
rights thereunder) had been transferred as contemplated hereby and so that all
the benefits relating thereto shall inure to Buyer. Notwithstanding the
foregoing, if any such Consent is not obtained prior to the Closing, Seller will
continue to use and will cause each Seller Subsidiary to continue to use, and
Buyer will use, its commercially reasonable efforts (at Seller's reasonable
expense) to obtain all such Consents (and, if and when such Consents are
obtained, the transfer of the applicable Contract (or rights thereunder) or
Permit (or rights thereunder) will be effected in accordance with the terms of
this Agreement). The parties agree that if such Consents relate to Contracts
that are necessary for the continued operation of the machinery and equipment at
the Morganton Facility or Permits that are necessary for the continued operation
of the plant, machinery and equipment at the Morganton Facility, Seller shall be
responsible for all expenses incurred in obtaining such Consent pursuant to this
Section 2.2. The parties further agree that if such Consents relate to other
Contracts or Permits not covered by the immediately preceding sentence, Seller
will be responsible for all expenses incurred in obtaining such Consents
pursuant to this Section 2.2 up to an aggregate amount of $20,000 and, if Buyer
determines to incur such expenses, Seller and Buyer will share equally such
expenses in excess of $20,000.

 

ARTICLE III

ASSUMPTION OF LIABILITIES

 

Section 3.1.     Assumed Liabilities. Subject to the terms and conditions set
forth herein, and in reliance upon the representations and warranties contained
herein, at the Closing, in consideration for the sale, assignment, conveyance,
transfer and delivery of the Assets to Buyer, Buyer will assume and undertake to
pay, perform and discharge, in accordance with the terms thereof, only the
following Liabilities of Seller and the Seller Subsidiaries (the "Assumed
Liabilities"):

 

 
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(a)      accounts payable balances of Seller and the Seller Subsidiaries with
suppliers, both direct and indirect, exclusively related to the Business, but
only to the extent and in the amounts provided for on the Final Closing
Statement; and

 

(b)     express contractual performance obligations arising after the Effective
Time of Seller and the Seller Subsidiaries arising under USM Purchase Orders
that constitute Assets, and Business Contracts listed on Schedule 2.1(g) that
constitute Assets and have been assigned to Buyer pursuant to Section 2.1(g),
and Permits listed on Schedule 2.1(h) that constitute Assets and have been
assigned to Buyer pursuant to Section 2.1(h); provided that, for the avoidance
of doubt, the Assumed Liabilities will not include any Liabilities based upon,
arising out of, related to or otherwise in connection with any tort, breach or
violation of or noncompliance with or relating to any USM Purchase Order, any
such Business Contract or any such Permit occurring or existing on or prior to
the Closing Date, whether asserted prior to, on or after the Closing Date.

 

Buyer will assume no other Liabilities whatsoever.

 

Section 3.2.     Retained Liabilities. Except as otherwise expressly provided
for herein, neither Buyer nor any Affiliate of Buyer will assume or undertake to
pay, perform or discharge and none thereof will be liable for, and Seller, the
Seller Subsidiaries and their Affiliates will remain liable for and pay, perform
and discharge when due, all Liabilities of Seller, the Seller Subsidiaries and
their respective Affiliates not constituting Assumed Liabilities.

 

ARTICLE IV

PURCHASE PRICE

 

Section 4.1.     Purchase Price.

 

(a)     Closing Payment. Subject to the terms and conditions set forth herein,
in consideration for the sale, assignment, conveyance, transfer and delivery of
the Assets, Buyer will, at the Closing (i) pay to Seller, by wire transfer of
immediately available U.S. Dollars to a bank account designated by Seller, an
amount equal to (A) $10,500,000, plus  (B) the aggregate amount of the
Business-Related Accounts Receivable and the Business-Related Inventory set
forth on the Estimated Closing Statement, minus (C) the aggregate amount of the
Assumed Liabilities set forth on the Estimated Closing Statement (the "Purchase
Price"), and (ii) assume the Assumed Liabilities.

 

(b)     Estimated Closing Statement. At the Closing, Seller shall deliver to
Buyer a statement (the "Estimated Closing Statement") setting forth the
aggregate amount of (i) the Business-Related Accounts Receivable; (ii) the
Business-Related Inventory; and (iii) the Assumed Liabilities, in each case
together with a breakdown thereof.

 

 
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(c)     Closing Statement.

 

(i)     Within 90 days after the Closing Date, Buyer will prepare and deliver to
Seller a statement (the "Closing Statement") setting forth the aggregate amount
of (i) the Business-Related Accounts Receivable, the Business-Related Inventory
and Assumed Liabilities, in each case as of the close of business on the Closing
Date. The amounts set forth on the Closing Statement will be determined in
accordance with GAAP utilizing the same accounting methods, practices, policies,
procedures, classifications, judgments, estimation methodologies and standards
as utilized by Seller in the preparation of its audited consolidated financial
statements for the year ended December 31, 2014, except that Business-Related
Inventory shall be calculated in accordance with Schedule 4.1(c)(i) for purposes
of identifying the usable and non-obsolete inventory acquired by Buyer. The date
on which the Statement is delivered to Seller is referred to herein as the
"Delivery Date". Seller will cause its employees and the employees of its
subsidiaries and Affiliates (including the Seller Subsidiaries) to assist Buyer
and its Representatives in the preparation of the Closing Statement, provided
such assistance will not interfere with the normal work duties of such
employees. Seller will cause Buyer and Buyer's Representatives to be provided
with access at all reasonable times, following reasonable notice, to the
personnel, properties, books and records of Seller and its subsidiaries and
Affiliates (including the Seller Subsidiaries) to the extent required for such
purposes.

 

(ii)     The Closing Statement will be deemed to be the final, binding and
conclusive Closing Statement (the "Final Closing Statement") for all purposes on
the 60th day after the Delivery Date unless Seller delivers to Buyer written
notice of its disagreement (a "Notice of Disagreement") prior to such date
specifying in reasonable detail the nature of Seller's objections to the Closing
Statement. Seller hereby waives the right to assert any objection to the Closing
Statement that is not asserted in a Notice of Disagreement delivered to Buyer
within 60 days after the Delivery Date. If a Notice of Disagreement is delivered
to Buyer within such 60 day period, then the Closing Statement (as adjusted, if
necessary) will be deemed to be the Final Closing Statement for all purposes on
the earlier of (x) the date Buyer and Seller resolve in writing all differences
they have with respect to the Closing Statement or (y) the date the disputed
matters are resolved in writing by the Arbitrator. In the event that disputed
matters are resolved by the Arbitrator (as set forth below in accordance with
the terms hereof), the Final Closing Statement will consist of the applicable
amounts from the Closing Statement (or amounts otherwise agreed to in writing by
Buyer and Seller) as to items that have not been submitted for resolution to the
Arbitrator, and the amounts determined by the Arbitrator as to items that were
submitted for resolution by the Arbitrator.

  

 
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(iii)     During the 30 day period following the delivery of a Notice of
Disagreement, Buyer and Seller will seek in good faith to resolve any
differences they may have with respect to matters specified in the Notice of
Disagreement. If, at the end of such 30 day period, Buyer and Seller have not
reached agreement, they will jointly engage a mutually acceptable arbitrator who
shall be a member of a recognized accounting firm and shall be independent and
impartial (the "Arbitrator") to resolve the matters which remain in dispute with
respect to the Closing Statement by arbitration in accordance with the
procedures set forth in this Section 4.1(c). In the event Buyer and Seller are
unable to agree on the Arbitrator within 7 days after the end of such 30 day
period, the parties agree the Arbitrator shall be appointed through the American
Arbitration Association’s List and Appointment service. In connection with such
engagement of the Arbitrator, each of Buyer and Seller agrees to execute, if
requested by the Arbitrator, a reasonable engagement letter including customary
indemnities. Promptly after such engagement of the Arbitrator, Buyer or Seller
will provide the Arbitrator with a copy of this Agreement, the Closing Statement
and the Notice of Disagreement. The Arbitrator will have the authority to
request in writing such additional written submissions from either Buyer or
Seller as it deems appropriate, provided that a copy of any such submission will
be provided to the other party at the same time as it is provided to the
Arbitrator. Neither party will make (or permit any of its subsidiaries or
Affiliates to make) any additional submission to the Arbitrator except pursuant
to such a written request by the Arbitrator. Neither party will communicate (nor
permit any of its subsidiaries or Affiliates to communicate) with the Arbitrator
without providing the other party a reasonable opportunity to participate in
such communication with the Arbitrator (other than with respect to written
submissions in response to the written request of the Arbitrator, which shall be
simultaneously provided to the other party). The Arbitrator will have 45 days to
review the documents provided to it pursuant to this Section 4.1(c)(iii). Within
such 45 day period, the Arbitrator will furnish simultaneously to both parties
its written determination with respect to each of the adjustments in dispute
submitted to it for resolution. The Arbitrator will resolve the differences
regarding the Closing Statement based solely on the information provided to the
Arbitrator by Buyer and Seller pursuant to the terms of this Agreement (and not
independent review). The Arbitrator's authority will be limited to resolving
disputes with respect to whether the Closing Statement was prepared in
accordance with Section 4.1(c)(i) with respect to the individual items on the
Closing Statement in dispute (it being understood that the Arbitrator will have
no authority to make any adjustments to any financial statements or amounts
other than amounts set forth in the Closing Statement that are in dispute). In
resolving any disputed item, the Arbitrator may not assign a value to such item
greater than the greatest value for such item asserted by either party or less
than the smallest value for such item asserted by either party.

 

 
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(iv)     The decision of the Arbitrator will be, for all purposes, conclusive,
non appealable, final and binding upon Buyer and Seller. Such decision will be
subject to specific performance pursuant to Section 10.15, and judgment may also
be entered thereon as an arbitration award pursuant to the Federal Arbitration
Act, 9 U.S.C. §§1-16, in any court of competent jurisdiction specified in
Section 10.12. The fees of the Arbitrator will be borne by Buyer and Seller in
the same proportion that the dollar amount of disputed items lost by a party
bears to the total dollar amount in dispute resolved by the Arbitrator. Each
party will bear the fees, costs and expenses of its own accountants and all of
its other expenses in connection with matters contemplated by this Section
4.1(c).

 

(d)     Adjustment Amount.

 

(i)     Upon the Closing Statement being deemed the Final Closing Statement in
accordance with Section 4.1(c), the Purchase Price will be adjusted, up or down,
as follows:

 

(A)     if the Adjustment Amount is a positive number (such amount, the
"Increase Amount"), the Purchase Price will be increased by the Increase Amount
and such amount will be paid by Buyer to Seller within three business days after
the date the Closing Statement is deemed the Final Closing Statement; and

 

(B)     if the Adjustment Amount is a negative number (such amount, the
"Decrease Amount"), the Purchase Price will be decreased by the Decrease Amount
and such amount will be paid by Seller to Buyer within three business days after
the date the Closing Statement is deemed the Final Closing Statement.

 

(ii)     The "Adjustment Amount", which may be positive or negative, shall mean
(i) the aggregate amount of Business-Related Accounts Receivable set forth in
the Final Closing Statement, minus the aggregate amount of Business-Related
Accounts Receivable set forth in the Estimated Closing Statement, plus (ii) the
aggregate amount of Business-Related Inventory set forth in the Final Closing
Statement, minus the aggregate amount of Business-Related Inventory set forth in
the Estimated Closing Statement, plus (iii) the aggregate amount of Assumed
Liabilities set forth in the Estimated Closing Statement, minus the aggregate
amount of Assumed Liabilities set forth in the Final Closing Statement.

 

 
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(iii)     Any payment required under this Section 4.1(d) will be made by wire
transfer of immediately available U.S. Dollars to a bank account designated by
Buyer or Seller, as the case may be.

 

ARTICLE V

CLOSING

 

Section 5.1.     Closing. The closing of the purchase and sale of the Assets and
the assumption of the Assumed Liabilities (the "Closing") will take place at the
offices of Chadbourne & Parke LLP, 1301 Avenue of the Americas, New York, New
York, at 10:00 a.m. local time, on the date hereof. The date of the Closing is
referred to herein as the "Closing Date". The Closing will be deemed to be
effective at the close of business on the Closing Date (the "Effective Time").

 

Section 5.2.     Closing Deliveries of Seller. At the Closing, Seller will
deliver and cause to be delivered:

 

(a)     such bills of sale and instruments of assignment, conveyance and
transfer as shall reasonably be requested by Buyer to effect or evidence the
sale, assignment, conveyance, transfer and delivery of the Assets to Buyer;

 

(b)     each of the Ancillary Agreements, executed by Seller and/or the
applicable Seller Subsidiary;

 

(c)     an amendment to the Subordinated Note and related documentation in a
form mutually agreed up on by Seller and Buyer;

 

(d)     lien releases executed by PNC and Gill in a form acceptable to Buyer;

 

(e)     a waiver letter duly executed by PNC pursuant to which PNC waives any
default under that certain Revolving Credit, Term and Loan and Security
Agreement, dated as of May 12, 2011 (as amended), among Seller, certain of its
affiliates and PNC, arising from the failure of the transactions contemplated by
this Agreement to close on or before July 7, 2015; and

 

(f)     all other documents required to be delivered by Seller, each Seller
Subsidiary and each of its and their Affiliates to Buyer at the Closing pursuant
to this Agreement.

 

Section 5.3.     Closing Deliveries of Buyer. At the Closing, Buyer will deliver
or cause to be delivered:

 

 
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(a)     the Purchase Price pursuant to Section 4.1(a);

 

(b)     such instruments of assumption as shall reasonably be requested by
Seller to effect or evidence the assumption by Buyer of the Assumed Liabilities;

 

(c)     each of the Ancillary Agreements, executed by Buyer;

 

(d)     an amendment to the Subordinated Note in a form mutually agreed upon by
Seller and Buyer; and

 

(e)     all other documents required to be delivered by Buyer to Seller or any
Seller Subsidiary at the Closing pursuant to this Agreement.

 

Section 5.4.     Transfer Taxes. All applicable sales and transfer Taxes
(including Taxes, if any, imposed upon the transfer of real or personal
property) and filing, recording, registration, stamp, documentary and other
Taxes and fees that are payable in connection with this Agreement, the
transactions contemplated by this Agreement or the documents giving effect to
such transactions will be split equally between Seller and Buyer.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer as follows:

 

Section 6.1.     Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Seller Subsidiary is a corporation or limited liability company duly organized
or formed, validly existing and in good standing under the laws of the State of
Delaware. Seller is the record or indirect beneficial owner of all of the issued
and outstanding shares of capital stock or other equity interests of each of the
Seller Subsidiaries. Each of Seller and each Seller Subsidiary has all requisite
power and authority, corporate or otherwise, to own, lease and operate the
Assets and to carry on the Business as presently conducted. Each of Seller and
each Seller Subsidiary is duly qualified to transact business and in good
standing as a foreign corporation in each jurisdiction in which the conduct or
nature of its business as it relates to the Business or the ownership, leasing
or holding of Assets by it makes such qualification necessary, except where the
failure to be so qualified would not have or reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

 
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Section 6.2.     Authority. Each of Seller, the Seller Subsidiaries and their
Affiliates has all requisite power and authority, corporate or otherwise, to
execute and deliver each Transaction Document delivered or to be delivered by it
and to perform all of its obligations hereunder and thereunder. The execution,
delivery and performance by each of Seller, the Seller Subsidiaries and their
Affiliates of each Transaction Document delivered or to be delivered by it and
the consummation by each of Seller, the Seller Subsidiaries and their Affiliates
of the Transaction has been duly authorized by all necessary and proper action
on the part of Seller, such Seller Subsidiary or such Affiliate, as the case may
be. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights in general and by
general principles of equity. Each other Transaction Document to be delivered by
each of Seller, the Seller Subsidiaries and their Affiliates will be duly
executed and delivered by Seller, such Seller Subsidiary or such Affiliate and,
when so executed and delivered, will constitute the legal, valid and binding
obligation of Seller, such Seller Subsidiary or such Affiliate, as the case may
be, enforceable against Seller, such Seller Subsidiary or such Affiliate, as the
case may be, in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights in general and by
general principles of equity.

 

Section 6.3.     No Breach. None of the execution, delivery or performance by
Seller, any Seller Subsidiary or any Affiliate of any thereof of any Transaction
Document, or the consummation by Seller, the Seller Subsidiaries and its and
their Affiliates of the Transaction, with or without the giving of notice or the
lapse of time or both, does or will result in the creation of any Lien upon any
of the Assets (except for Permitted Liens), or conflict with, or result in a
breach or violation of or a default under, or give rise to a right of amendment,
termination, cancellation or acceleration of any obligation or to a loss of a
benefit under (i) the Certificate of Incorporation or By-laws (or similar
governance document) of Seller, any Seller Subsidiary or any Affiliate of any
thereof, (ii) any Contract of Seller, any Seller Subsidiary or any Affiliate of
any thereof, (iii) any Law or Permit or other requirement to which Seller, any
Seller Subsidiary or any Affiliate of any thereof or their respective properties
or assets is subject, except, in the case of items (ii) and (iii) above only,
for those which would not have or reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

Section 6.4.     Taxes.

 

(a)     All federal, state, local and foreign Tax returns, reports,
declarations, statements and other documents ("Tax Returns") required to be
filed by or on behalf of Seller and each Seller Subsidiary or any predecessor
corporation of any of them or any consolidated, combined, affiliated or unitary
group of which Seller is or has been a member (together the "Seller Affiliated
Group") with respect to (or which include) the Business or the Assets have been
timely filed with the appropriate tax authorities or requests for extensions
have been timely filed and any such extensions have been granted and have not
expired. Each such Tax Return was complete and correct in all material respects.

 

 
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(b)     All Taxes with respect to taxable periods or portions thereof covered by
such Tax Returns and all other Taxes (without regard to whether a Tax Return was
or is required) for which Seller and each Seller Subsidiary or any predecessor
corporation of any thereof or any member of the Seller Affiliated Group is
otherwise liable with respect to (or which relate to) the Business or the Assets
is otherwise liable, that are due have been paid in full.

 

Section 6.5.     Proprietary Rights.

 

(a)     Set forth on Schedule 6.5(a) are all Patents owned by Seller or Seller
Subsidiaries which constitute Business Intellectual Property and the entity that
owns such Business Intellectual Property.

 

(b)     Except as set forth on Schedule 6.5(b), there are no Contracts of
Seller, the Seller Subsidiaries or any of their Affiliates relating to the
Business Intellectual Property, including the distribution or license of, or
royalty payments with respect to, Business Intellectual Property, whether as
licensor or licensee.

 

(c)     Except as set forth on Schedule 6.5(c):

 

(i)     Seller or a Seller Subsidiary owns all right, title and interest in and
to all of the Seller-owned or Seller Subsidiary-owned Business Intellectual
Property, free and clear of any Liens and free from any requirement of any past,
present or future payments (other than maintenance and similar payments),
charges or fees or conditions, rights or restrictions;

 

(ii)     no Business Intellectual Property or any service rendered by Seller,
any Seller Subsidiary or any Affiliate of any thereof in respect of the
Business, or any product, process or material developed, manufactured, produced
or used by Seller, any Seller Subsidiary or any Affiliate of any thereof in
respect of the Business, is alleged to infringe upon or, to Seller’s knowledge,
infringes upon any Intellectual Property or other rights owned or held by any
other Person;

 

(iii)     to Seller’s knowledge, there is no infringement or misappropriation of
any Business Intellectual Property by any Person; and

  

 
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(d)     Seller has taken and has caused each Seller Subsidiary to take
reasonable steps (including reasonable measures to protect secrecy and
confidentiality) to protect its right, title and interest in and to all Business
Intellectual Property.

 

(e)     All employees of Seller, the Seller Subsidiaries or any Affiliate of any
thereof who have access to confidential or proprietary information of Seller,
the Seller Subsidiaries or any Affiliate of any thereof included in the Business
Intellectual Property have a legal obligation of confidentiality to Seller, the
Seller Subsidiaries or any Affiliate of any thereof with respect to such
information.

 

(f)     The existing documentation relating to trade secrets and confidential
business and technical information included in the Business Intellectual
Property (excluding customer drawings and licensed software), together with the
undocumented knowledge of the employees of the Business, is current and
sufficient in all material respects to identify and explain such trade secrets
and confidential business and technical information and to allow its proper use.

 

(g)     The Business Intellectual Property, together with any rights under
Contracts covered by Section 2.2 but not yet assigned to Buyer, any services to
be provided under the Transition Agreement, constitute all rights in Patents and
Other Intellectual Property necessary to conduct in all material respects the
Business in the manner as currently conducted and as it will be conducted
through the Closing Date

 

Section 6.6.     Assets and Properties.

 

(a)     Except as set forth on Schedule 6.6(a), each of Seller and the Seller
Subsidiaries has good, valid and marketable title to all of the Assets, free and
clear of any Liens, other than Permitted Liens. The delivery by Seller or a
Seller Subsidiary of the bills of sale and other instruments of assignment,
conveyance and transfer pursuant to this Agreement will transfer to Buyer at the
Closing good, valid and marketable title to the Assets, free and clear of all
Liens, other than Permitted Liens.

 

(b)     Seller has good and marketable fee simple title to the Morganton
Facility, free and clear of all Liens, other than Permitted Liens.

 

(c)     One or more of Seller or the Seller Subsidiaries (and no other Person)
is in actual occupancy of the Morganton Facility and Seller and the Seller
Subsidiaries enjoy peaceful and undisturbed possession thereof. There are no
restrictions imposed by any Contract or by Law which preclude or restrict in any
material respect the ability to use the Morganton Facility for the purposes for
which it is currently being used. Except for the Lease Agreement, there are no
other leases, tenancies or occupancy agreements affecting the Morganton
Facility.

 

 
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(d)     All improvements at the Morganton Facility were constructed in
compliance in all material respects with all applicable Laws (including
building, planning and zoning Laws) and Permits affecting the Morganton Facility
(provided that the representation and warranty in this sentence is subject to
Seller’s knowledge only to the extent such representation and warranty relates
to the period prior to January 1, 2004). No improvements at the Morganton
Facility and none of the current uses or conditions thereof violate in any
material respect any applicable deed restrictions or other applicable covenants,
restrictions, agreements, site plan approvals or variances or the certificate of
occupancy for each of the improvements at the Morganton Facility. All
improvements at the Morganton Facility are wholly within the boundaries of the
real property covered by the deed relating thereto, and do not encroach upon the
property of, or otherwise conflict in any material respect with the property
rights of, any other Person.

 

(e)     Schedule 6.6(e) sets forth service Contracts of Seller and Seller
Subsidiaries that are material to the manufacturing operations at the Morganton
Facility ("Material Facility Services Contracts"). Seller and Seller
Subsidiaries have not received or given notice of any cancellation or
termination of any Material Facility Services Contract and Seller and Seller
Subsidiaries are not in material default (other than for delayed payments noted
on Schedule 6.6(e)) under any such Material Facility Services Contracts, nor has
any other event occurred which, but for the giving of notice or passage of time
would constitute an event of default under any of the Material Facility Services
Contracts.

 

(f)     No assessment for public improvements has been made with respect to the
Morganton Facility which remains unpaid including, but not limited to,
assessments for construction of sewer or water lines or mains, streets,
sidewalks or curbing. No notice or order by any Governmental Entity has been
served upon Seller or any Seller Subsidiary which (i) requires the performance
of any work or the making of any repairs or alterations on the premises of the
Morganton Facility or in the streets bounding thereon or (ii) orders the
installation, repair or alteration of any public improvements on or about the
premises of the Morganton Facility or the streets bounding thereon which may or
might create a lien on the premises of the Morganton Facility. The Morganton
Facility is connected to public water and sewer lines in sufficient capacity to
service the Morganton Facility for Buyer’s intended use. There are no
outstanding charges or fees in connection with the use, installation, connection
or tap-in to any utilities, public or private, serving the Morganton Facility.

 

(g)     Seller and Seller Subsidiaries have not received any notice of any
condemnation proceedings or other proceeding in the nature of eminent domain
with respect to the Morganton Facility and, to the knowledge of Seller, no such
proceedings are threatened.

 

 
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(h)     The structure (i.e., foundation, load-bearing and exterior walls and
roof) of the Morganton Facility is in good condition and free from material
defect. The currently used systems (i.e. the heating, ventilating, air
conditioning, electrical, plumbing, sprinkling, security and telecommunication
systems) at the Morganton Facility are in good and operable condition
considering the age of such systems and are in material compliance with
applicable building, fire and safety codes.

 

(i)     No notice has been received by Seller or any Seller Subsidiary from any
insurance company providing insurance coverage for the Morganton Facility that
policies insuring the Morganton Facility will not be renewed. No notice has been
received by Seller or any Seller Subsidiary from, or issued by, any insurance
company which has issued a policy with respect to the Morganton Facility or from
any board of fire underwriters (or any other body exercising similar functions)
claiming any defects or deficiencies or requiring the performance of any
repairs, alterations or other work. No notice has been received in the last two
years to the effect that any portion of the Morganton Facility has been
subjected to material damage by fire or other casualty which material damage is
unrepaired as of the date hereof.

 

(j)     Except as set forth on Schedule 6.6(j), to Seller’s knowledge, the
machinery, equipment and other items of tangible personal property included in
the Assets are structurally sound, are in good operating condition and repair
considering the age of such equipment, and are adequate for the uses to which
they are being put, and none of such machinery, equipment and other items of
tangible personal property is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are consistent with past
practice.

 

 
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Section 6.7.     Litigation. Except as set forth on Schedule 6.7, (i) no
judgment, ruling, order, writ, decree, stipulation, injunction or determination
by or with any arbitrator, court or other Governmental Entity to which Seller, a
Seller Subsidiary or any Affiliate of any thereof is party or by which Seller, a
Seller Subsidiary or any Affiliate of any thereof or any assets of any thereof
is bound, and which relates to or affects the Business (or the operation
thereof), the Assets, the Morganton Facility, the Assumed Liabilities, any
Transaction Document or the Transaction is in effect and (ii) none of Seller,
the Seller Subsidiaries or any Affiliate thereof is party to or engaged in or,
to the knowledge of Seller, threatened with any Action which relates to or
affects the Business (or the operation thereof), the Assets, the Morganton
Facility, the Assumed Liabilities, any Transaction Document or the Transaction,
and, to the knowledge of Seller, no event has occurred and no condition exists
which could reasonably be expected to result in any such Action.

 

Section 6.8.     Environmental Matters.

 

(a)     Except as disclosed on Schedule 6.8, the Morganton Facility has not been
used at any time: (i) as a site for the storage, except as authorized under
applicable Environmental Laws, or disposal of any Hazardous Material or (ii) so
as to cause a material violation of or to give rise to a material removal,
restoration or reimbursement Liability under any Environmental Law (provided
that the representations and warranties in this sentence are subject to Seller’s
knowledge, but only to the extent such representations and warranties relate to
such events or conditions as existed or occurred during the period prior to
January 1, 2004, including any continuing event or condition related thereto
after such date). Except as set forth on Schedule 6.8, (A) none of Seller, any
Seller Subsidiary or any Affiliate thereof has any material Environmental
Liability whether directly or pursuant to any Contract, including with respect
to or as a result of the presence, discharge, generation, treatment, storage,
handling, removal, disposal, transportation, Release or threatened Release of
any Hazardous Material at, onto or from the Morganton Facility, (B) each of
Seller, the Seller Subsidiaries and their Affiliates and the Morganton Facility
has complied and remains in compliance in all material respects with all
Environmental Laws related to or affecting the Business, the Assets or the
Morganton Facility, including in connection with the acquisition, storage,
handling, transportation, processing, use or disposal of any goods or materials,
whether as raw materials, work in process, finished goods or otherwise, and (C)
Seller, the Seller Subsidiaries and their respective Affiliates are not aware of
any facts, conditions or circumstances which could reasonably be expected to
result in material additional costs of compliance or other Environmental
Liabilities related to or affecting the Business, the Assets or the Morganton
Facility in the future (provided that the representations and warranties in this
sentence are subject to Seller’s knowledge, but only to the extent such
representations and warranties relate to such events or conditions as existed or
occurred during the period prior to January 1, 2004, including any continuing
event or condition related thereto after such date). Except as disclosed on
Schedule 6.8, to Seller’s knowledge, no underground tanks, asbestos containing
materials or polychlorinated biphenyls are, or have at any time been, present at
the Morganton Facility. No environmental assessment reports with respect to the
Morganton Facility are in the possession or control of Seller, any Seller
Subsidiary or any of their respective Affiliates that have not been made
available to Buyer.

 

 
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(b)     None of the products of the Business manufactured by or on behalf of
Seller or any Seller Subsidiary, including all such products manufactured
pursuant to Contracts with Seller or any Seller Subsidiary, are manufactured
with or contain any ozone depleting substance regulated pursuant to Section 611
of the Federal Clean Air Act and/or pursuant to any other Environmental Laws,
and no such products are required to be labeled as having been manufactured with
or containing a controlled substance pursuant to such Laws.

 

Section 6.9.     Governmental Approvals. Except as set forth on Schedule 6.9, no
material Consent or order of, with or to any Governmental Entity is required to
be obtained or made by or with respect to Seller, any Seller Subsidiary or any
Affiliate of any thereof in connection with the execution, delivery and
performance by Seller, the Seller Subsidiary or any Affiliate of any thereof of
any Transaction Document or any consummation by Seller, any Seller Subsidiary
and any Affiliate of any thereof of the Transaction.

 

Section 6.10.     Compliance With Applicable Law.

 

(a)     Except as set forth on Schedule 6.10, (i) each of Seller and each Seller
Subsidiary is in compliance in all material respects with all Laws applicable to
the Business, the Assets and the Morganton Facility (including housing, zoning,
building, safety and fire codes), (ii) no claims or complaints from any
Governmental Entities or other Persons have been asserted or received by Seller,
any Seller Subsidiary or any Affiliate of any thereof within the past three
years related to or affecting the Business, the Assets or the Morganton Facility
and, to the knowledge of Seller, no claims or complaints are threatened,
alleging that Seller, any Seller Subsidiary or any Affiliate of any thereof is
in violation in any material respect of any Laws or Permits applicable to the
Business, the Assets or the Morganton Facility, and (iii) to the knowledge of
Seller, no investigation, inquiry, or review by any Governmental Entity with
respect to the Business, the Assets or the Morganton Facility is pending or
threatened, nor has any Governmental Entity indicated to Seller, any Seller
Subsidiary or any Affiliate of any thereof an intention to conduct any such
investigation, inquiry or review.

 

(b)     All Permits necessary for the operation of the Morganton Facility in
accordance with its present use have been duly obtained and are in full force
and effect.

 

 
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(c)     None of Seller, any Seller Subsidiary or any Affiliate of any thereof,
with respect to the Business, nor any director, officer, agent, employee or
other Person associated with or acting on behalf of Seller, any Seller
Subsidiary or any Affiliate of any thereof, with respect to the Business, has,
directly or indirectly, used any corporate funds for any unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
made any unlawful payment to any Governmental Entity or governmental,
administrative or regulatory official or employee or to any political party or
campaign from corporate funds or made any bribe, unrecorded rebate, payoff,
influence payment, kickback or other unlawful payment.

 

Section 6.11.     Employees Matters.

 

(a)     None of Seller, the Seller Subsidiaries nor any ERISA Affiliate is a
party to any Contract regarding collective bargaining or other Contract with or
to any labor union or association representing any employee engaged in the
Business, nor does any labor union or collective bargaining agent represent any
employee engaged in the Business. No Contract regarding collective bargaining
has been requested by, or is under discussion between management of Seller, any
Seller Subsidiary or any ERISA Affiliate (or any management group or association
of which Seller, any Seller Subsidiary or any ERISA Affiliate is a member or
otherwise a participant) and, any group of employees engaged in the Business or
others, nor are there any representation proceedings or petitions seeking a
representation proceeding presently pending against Seller, any Seller
Subsidiary or any ERISA Affiliate with the National Labor Relations Board or any
labor relations tribunal related to the Business, nor are there any other
current activities, to the knowledge of Seller, to organize any employees
engaged in the Business into a collective bargaining unit. There is no unfair
labor practice charge or complaint pending or, to the knowledge of Seller,
threatened that is related to the Business. During the past five years, there
has not been any labor strike, material slow-down, material work stoppage,
arbitration, material grievances or other material work-related dispute
involving Seller, any Seller Subsidiary or any ERISA Affiliate with respect to
the Business or otherwise related to the Business, and no such dispute (whether
or not material) is now pending or, to the knowledge of Seller, threatened
against Seller, any Seller Subsidiary or any ERISA Affiliate or the Business.

 

(b)     Schedule 6.11(b) sets forth a complete and accurate list of each
pension, retirement, savings, profit sharing, cash balance, money purchase,
deferred compensation, medical, vision, dental, hospitalization, prescription
drug and other health plan, cafeteria, flexible benefits, short-term and
long-term disability, accident and life insurance plan, bonus, stock option,
stock purchase, stock appreciation, phantom stock, restricted stock, stock
appreciation rights, incentive and special compensation and other plan and each
other employee benefit plan, program or Contract, whether or not subject to
ERISA, which is related to the Business and to which Seller, any Seller
Subsidiary or any ERISA Affiliate contributes or is required to contribute, or
which Seller, any Seller Subsidiary or any ERISA Affiliate sponsors, maintains,
administers or participates in, and which is applicable to employees or
categories of employees engaged in the Business (hereinafter referred to
collectively as the "Plans").

 

 
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(c)     Schedule 6.11(c) sets forth, in all material respects, a complete and
accurate list of each employment, termination, retention, severance, termination
or change of control agreement, Contract and policy (whether written or oral)
with or for the benefit of, or otherwise related to, any employees engaged in
the Business. All such Contracts and policies are valid and enforceable, and
none of Seller, any Seller Subsidiary or any ERISA Affiliate of any thereof nor,
to the knowledge of Seller, any employee is in default in any material respect
under any thereof. Except as separately set forth on Schedule 6.11(c), none of
the execution, delivery and performance of any Transaction Document or the
consummation of the Transaction will result in any obligation to pay any
employees engaged in the Business severance pay or termination, retention or
other benefits.

 

(d)     Schedule 6.11(d) contains a complete and accurate list of the following
information (as of July 9, 2015) for each employee engaged in the Business,
including each employee on leave of absence, layoff or disability status: job
title; current base salary, commission or hourly rate and bonus eligibility paid
or payable and any change in compensation since December 31, 2014; vacation
accrued; job location, classification (full or part time and exempt or
non-exempt), leave status and service credited for purposes of vesting and
eligibility to participate under any Plans.

 

(e)     Seller, any Seller Subsidiary and each ERISA Affiliate is in compliance
with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and
similar state laws.

 

(f)     None of the Plans is subject to Title IV of ERISA or Section 412 of the
Code and none of Seller, any Seller Subsidiary or any ERISA Affiliate has during
any time in the six-year period immediately preceding the Closing Date
contributed to, approved, maintained or administered any "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA which is or was
subject to Title IV of ERISA or Section 412 of the Code and which is applicable
to employees or categories of employees related to the Business. Within the
six-year period immediately preceding the Closing Date, no ERISA Event has
occurred with respect to any Plan and no ERISA Event is reasonably expected to
occur with respect to any Plan. All contributions and premium payments in
respect of any Plan have been timely and no contributions or premium payments
are past due and owing. Each Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS with respect thereto and with respect to all amendments for which the
remedial amendment period has expired and no circumstances or event has occurred
which is reasonably expected to jeopardize the qualified status of such Plan.
Within the six-year period immediately preceding the Closing Date, there have
been no inquiries, audits or investigations (whether written or oral) from the
IRS, Department of Labor or Pension Benefit Guaranty Corporation or any other
Governmental Entity with respect to any Plan.

 

 
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(g)     None of Seller, any Seller Subsidiary or any ERISA Affiliate of any
thereof is required to contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) which is applicable to employees or categories of
employees related to the Business.

 

Section 6.12.     Sufficiency of Assets. The Assets, together with Buyer's
rights under the Lease Agreement and the Transition Agreement (and any rights
under Contracts covered by Section 2.2 but not yet assigned to Buyer) constitute
and will constitute on the Closing Date, (a) all of the material assets and
rights that are used in the operation of the Business as it is being conducted
as of the date hereof and as it will be conducted through the Closing Date and
(b) all the property, real and personal, tangible and intangible, reasonably
necessary for the conduct of the Business following the Effective Time as it is
being conducted as of the date hereof and as it will be conducted through the
Effective Time. Except as set forth on Schedule 6.12, no Affiliates of Seller
own or has ever owned any assets, properties or rights related to the trailer
beam business of the Morganton Facility or is engaged in or has ever engaged in
such business.

 

Section 6.13.     Absence of Material Adverse Effect and Certain Changes or
Events.

 

(a)     Except as set forth on Schedule 6.13(a), no conditions, circumstances or
state of facts exist, and since December 31, 2014 there have not been any
events, occurrences, changes, developments or circumstances, which would have or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(b)     Except as set forth on Schedule 6.13(b), without limiting the generality
of the foregoing, from and after December 31, 2014, Seller and the Seller
Subsidiaries have caused the Business to be conducted only in the ordinary
course of business consistent with past practices. Since December 17, 2014,
neither Seller nor any Seller Subsidiary has removed any assets listed in the
Appraisal Report from the Morganton Facility.

 

Section 6.14.     Contracts. Except as set forth on Schedule 6.14:

 

 
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(a)     The USM Purchase Orders constitute all of the Contracts of Seller or any
Seller Subsidiary with USM or any of its Affiliates with respect to the
Business.

 

(b)     Each USM Purchase Order and Business Contract is in full force and
effect and is legal, valid, binding and enforceable in accordance with its
terms.

 

(c)     Seller, a Seller Subsidiary or an Affiliate of any thereof (and to the
knowledge of Seller, the other party or parties thereto), have performed in all
material respects all obligations required to be performed by them under each
USM Purchase Order and Business Contract and are not in default under any USM
Purchase Order or Business Contract. Seller has heretofore delivered to Buyer
true and complete copies of all USM Purchase Orders and Business Contracts.

 

(d)     None of the execution, delivery or performance of any Transaction
Document or consummation of the Transaction will, under the terms, conditions or
provisions of any USM Purchase Order, any assignable Business Contract or any
Business Contract listed on Schedule 2.1(g) (A) require any Consent of, with or
to any Person, (B) result in any increase in any payment or change in any term,
(C) give rise to any right of amendment, termination, cancellation or
acceleration of any right or obligation or to a loss of benefit or (D) grant any
repayment or repurchase rights to any Person. (Seller will undertake to provide
a comprehensive list of the non-assignable Business Contracts to Buyer within
three days after the Closing.)

 

(e)     There are no pending, or to the knowledge of Seller, threatened claims
by USM, any customer of USM or any Governmental Authority relating to any USM
Purchase Order or any products produced by Seller or any Seller Subsidiary or
any Affiliate thereof relating to the Business, including products produced
under any USM Purchase Order and, to the knowledge of Seller, no event has
occurred and no condition exists, which could reasonably be expected to result
in any such claim.

 

Section 6.15.     Financial Information.

 

(a)     The books and records of Seller and its Subsidiaries as they relate to
the Assets and the Assumed Liabilities, and financial balance sheet information
relating thereto, have been maintained and prepared in accordance with GAAP in a
manner consistent with the audited consolidated financial statements of Seller
and its Subsidiaries as of and for the twelve month period ending December 31,
2014, excluding footnote disclosures or other aspects of GAAP which have not
been routinely applied at the Asset or Assumed Liability level.

 

(b)     All of the Business-Related Accounts Receivable (other than those due
from Buyer) arose from bona fide sales and deliveries of goods or performance of
services in the ordinary course of business. All such receivables are currently
due and payable and not subject to any performance obligations by Seller, any
Seller Subsidiary or any Affiliate of any thereof prior to collection. All such
receivables have been adequately reserved in the financial statements of Seller
in accordance with GAAP, excluding footnote disclosures or other aspects of GAAP
which have not been routinely applied at the accounts receivables level. There
are no known or anticipated material impairments related to any such
receivables, and, to Seller’s knowledge, there is no dispute with respect to the
amount or validity of any such receivables.

 

 
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(c)     The items of Business-Related Inventory are good and, in the case of
finished goods inventory, saleable in the ordinary course of business at
prevailing prices, except for inventory that a customer (other than Buyer) has
indicated, directly or indirectly, it does not intend to purchase. All items of
Business-Related Inventory have been procured and produced for sale in the
ordinary course of business and consistent with anticipated requirements as of
the time commitments were made, and the volume of production or purchases
thereof and of orders therefor have not been materially reduced or increased in
anticipation of the transactions contemplated by this Agreement.

 

Section 6.16.     No Brokers. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Seller or any of its Affiliates who is or might be entitled to any fee,
commission or payment in connection with the negotiation, preparation, execution
or delivery of this Agreement or the consummation of the Transaction.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller as follows:

 

Section 7.1.     Organization. Buyer is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware.

 

Section 7.2.     Authority. Buyer has all requisite power and authority, limited
liability company or otherwise, to execute and deliver each Transaction Document
delivered or to be delivered by Buyer and to perform all of its obligations
hereunder and thereunder. The execution, delivery and performance by Buyer of
each Transaction Document delivered or to be delivered by Buyer and the
consummation by Buyer of the Transaction have been or will be duly authorized by
all necessary and proper action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights in general and by general principles of equity.
Each other Transaction Document to be delivered by Buyer will be duly executed
and delivered by Buyer and, when so executed and delivered, will constitute the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting the enforcement of creditors' rights in general and by general
principles of equity.

 

 
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Section 7.3.     No Breach. None of the execution, delivery or performance by
Buyer of any Transaction Document or the consummation by Buyer of the
Transaction does or will, with or without the giving of notice or the lapse of
time or both, conflict with, or result in a breach or violation of or a default
under, or give rise to a right of amendment, termination, cancellation or
acceleration of any right or obligation or to a loss of a benefit under (a) the
Certificate of Formation or limited liability company agreement of Buyer, (b)
any Contract of Buyer or (c) any Law or Permit or other requirement to which
Buyer or its properties or assets is subject, except, in the case of items (b)
and (c) above only, for those which would not have or reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the ability
of Buyer to consummate the Transaction.

 

Section 7.4.     Governmental Approvals. Except as set forth on Schedule 7.4, no
material Consent or order of, with or to any Governmental Entity is required to
be obtained or made by or with respect to Buyer in connection with the
execution, delivery and performance by Buyer of any Transaction Documents or the
consummation by Buyer of the Transactions.

 

Section 7.5.     No Brokers. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Buyer or any of its Affiliates who is or might be entitled to any fee,
commission or payment in connection with the negotiation, preparation, execution
or delivery of this Agreement or the consummation of the Transaction.

 

ARTICLE VIII

COVENANTS

 

Section 8.1.     Covenants of Seller.

 

(a)     Books and Records. Seller will not, and will cause each Seller
Subsidiary and each of its and their Affiliates not to, dispose of or destroy
any business records or files related to the Business which do not constitute
Assets for the greater of (x) seven years after the Closing Date or (y) any
applicable statutory or retention period (including any extension thereof).
Prior to disposing of or destroying any such business records or files in
accordance with the preceding sentence, Seller will provide not less than 30
days' prior written notice to Buyer, specifying the business records and files
proposed to be disposed of or destroyed. If, prior to the scheduled date for
such disposal or destruction, Buyer requests in writing that any of the business
records or files proposed to be disposed of or destroyed be delivered to Buyer,
Seller will arrange promptly for the delivery of the requested business records
and files to a location specified by, and at the expense of, Buyer. Buyer agrees
that Seller and Seller Subsidiaries and their Affiliates will not be liable for
the inadvertent failure to so notify Buyer.

 

 
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(b)     Receipt of Assets. All assets, amounts and proceeds which are received
(whether received in lock boxes, via wire transfer, by check or otherwise) or
possessed by Seller, any Seller Subsidiary or any Affiliate of any thereof at or
after the Effective Time in respect of the Assets or the Assumed Liabilities
will be received or possessed and held in trust for the benefit of Buyer and
will be forthwith paid over to Buyer in the form so received or possessed (with
any necessary endorsement). Without limiting the generality of the foregoing,
Seller will, and will cause each Seller Subsidiary and each of its and their
Affiliates to, wire transfer to an account designated by Buyer all payments in
respect of Business-Related Accounts Receivable received by Seller, any Seller
Subsidiary or any Affiliate of any thereof within three business days after
receipt thereof. Effective as of the Effective Time, Seller, on behalf of itself
and its Affiliates, hereby grants to Buyer the right and authority to endorse
without recourse the name of Seller, any Seller Subsidiary or any Affiliate of
any thereof on any check or any other evidences of indebtedness or negotiable
instruments received by Buyer on account of any Business-Related Accounts
Receivable or other Assets transferred to Buyer hereunder.

 

(c)     Tax Identification Number. Prior to the Closing Date, Seller will, and
will cause each Seller Subsidiary to, furnish to Buyer an affidavit stating,
under penalties of perjury, either (i) such Person's United States taxpayer
identification number and confirming that such Person is not a foreign person
pursuant to Section 1445(b)(2) of the Code, or (ii) the respective Assets sold
by them hereunder do not constitute a "United States Real Property Interest"
within the meaning of Section 897 of the Code.

 

(d)     Confidential Information.

 

(i)     From and after the Closing, Seller will, and will cause each of its
Affiliates and its and their Representatives to, (A) maintain in strict
confidence any and all information concerning the Business and (B) refrain from
using any and all such information for its own benefit or to compete with or
otherwise to the detriment of Buyer or its Affiliates or the Business which is
related to trailer beams. It is understood that Seller shall not have any
liability hereunder with respect to information that (x) is in or, through no
fault of Seller or any of its Representatives, comes into the public domain or
(y)  Seller is legally required to disclose.

  

 
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(ii)     In the event that Seller or any of its Affiliates or its or their
Representatives are required by Law to disclose any such information, Seller
will promptly notify Buyer in writing so that Buyer may seek a protective order
and/or other motion to prevent or limit the production or disclosure of such
information. If such motion has been denied, then the Person required to
disclose such information may disclose only such portion of such information
which (A) in the written opinion of Seller's legal counsel is required by Law to
be disclosed or (B) Buyer consents in writing to having disclosed. Seller will
not, and will not permit any of its Affiliates or its or their Representatives
to, oppose any motion for confidentiality brought by Buyer. Seller, its
Affiliates and their respective Representatives will continue to be bound by its
obligations pursuant to this Section 8.1(d) for any information that is not
required to be disclosed, or that has been afforded protective treatment,
pursuant to such motion.

 

Section 8.2.     Public Announcements. No press release or announcement
concerning the Transaction will be issued by either party or any of its
Affiliates without the prior consent of the other party, except as such release
or announcement may be required by law, rule or regulation, in which case the
party required to make the release or announcement will allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance, and which comments will be given reasonable consideration under the
circumstances.

 

Section 8.3.     Access to Information.

 

(a)     From and after the Closing, Buyer will make or cause to be made
available to Seller and its agents and employees all business records and files
constituting Assets (other than information which is legally privileged, subject
to confidentiality obligations to third parties or the provision of which is
prohibited by law) during regular business hours as may be reasonably necessary
for (i) preparing tax returns and financial statements and responding to tax
audits covering operations and transactions at or prior to the Effective Time,
(ii) investigating, settling, preparing for the defense or prosecution of,
defending or prosecuting any Action, (iii) preparing reports to stockholders and
Governmental Entities or (iv) such other purposes for which access to such
documents is reasonably necessary; provided, however, that access to such
business records and files will not unnecessarily interfere with or adversely
affect the normal operations of Buyer and its subsidiaries and Affiliates and
the reasonable out of-pocket expenses of Buyer incurred in connection therewith
will be paid by Seller.

 

 
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(b)     From and after the Closing, Seller will make or cause to be made
available to Buyer and its agents and employees all business records and files
of Seller, the Seller Subsidiaries and its and their Affiliates related to the
Business which do not constitute Assets (other than information which is legally
privileged, subject to confidentiality obligations to third parties or the
provision of which is prohibited by law) during regular business hours for the
same purposes, to the extent applicable, as set forth in Section 8.3(a);
provided, however, that access to such business records and files will not
unnecessarily interfere with or adversely affect the normal operations of Seller
and its Affiliates and the reasonable out of-pocket expenses of Seller and its
Affiliates incurred in connection therewith will be paid by Buyer.

 

Section 8.4.     Further Assurances. From time to time, as and when requested by
either party to this Agreement, the other party will execute and deliver, or
cause to be executed and delivered, all such documents and instruments and will
take, or cause to be taken, all such reasonable actions, as such other party may
reasonably deem necessary or desirable to consummate the Transaction.

 

Section 8.5.     Employment.

 

(a)      Buyer will offer employment in accordance with Buyer's standard hiring
procedures and policies, commencing as of the Effective Time or any later
mutually agreed time, to each of the employees of Seller and the Seller
Subsidiaries at the Morganton Facility that Buyer determines, in its sole
discretion, are needed to support the Business; provided, however, that nothing
contained in this Section 8.5 is intended to confer upon any Continued Employee
any right to continued employment after evaluation by Buyer of its employment
needs after the Effective Time or such later mutually agreed time. Seller agrees
that it will promptly terminate any employees of Seller and the Seller
Subsidiaries employed as of the date hereof and located at the Morganton
Facility other than those employees listed on Schedule 8.5(a) (“Continued
Employees”) who accept Buyer’s offer of employment. Buyer agrees to pay to
Seller at the Closing an aggregate amount equal to $250,000 for Seller to apply
to severance amounts payable to employees terminated pursuant to the immediately
preceding sentence, it being understood and agreed that Seller shall be
responsible for any additional severance costs in excess of $250,000, except as
expressly provided herein: (i) Buyer shall be responsible for any severance
costs arising from the termination of any Continued Employee who accepts an
offer of employment from Buyer; (ii) Buyer shall fully cooperate with Seller in
good faith in the assignment of the employment agreements which apply to any
Continued Employee and listed in Schedule 8.5(b), and Seller shall be solely
responsible for, and shall defend and indemnify Buyer from and against any claim
that the assignment of any such employment agreement triggers, the employee’s
right to receive 30% of their salary (while employed by Seller) in addition to
their compensation from Buyer.     

 

 
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(b)     On the Closing Date, Seller shall notify Buyer of any “employment loss”
experienced by any employees of Seller or Seller Subsidiaries within ninety (90)
days prior to the Effective Time as defined by the Worker Adjustment and
Retraining Notification Act ("WARN Act"). Buyer shall provide any required
notice under, and otherwise be responsible for, all obligations relating to the
WARN Act with respect to any employees who accept an offer of employment from
Buyer on or after the Closing Date. Seller represents that no action by Seller
or Seller Subsidiaries resulting in an "employment loss" as defined under the
WARN Act in the ninety (90) days prior to the Closing Date have caused any
liabilities or obligations under the WARN Act and no such liabilities or
obligations under the WARN Act are being transferred to Buyer through this
Agreement or through any “employment loss” resulting from any action taken by
Seller to terminate any employees who do not receive any offer of employment
from Buyer. Buyer will defend and indemnify Seller and its Affiliates from and
against any and all Damages arising from the termination of any employee by
Buyer within 90 days following the Closing.

 

Section 8.6.     Morganton Facility.

 

(a)     On or before the date that is the earlier of (i) 30 days following the
Closing Date and (ii) August 12, 2015, Buyer will pay to Seller an amount equal
to $1,200,000, which amount will constitute, as applicable, funding for (i) the
additional lease payment with respect to an extension of the Lease Agreement
pursuant to Section 8.6(c) or Section 8.6(d) or (ii) the purchase price for the
Purchase of the Morganton Facility pursuant to Section 8.6(d).

 

(b)     As soon as practical, Buyer shall commission a building inspection (the
"Morganton Building Inspection"), a Phase I environmental study and a Phase II
environmental study (the "Morganton Phase II Study") to determine whether there
are any material defects or environmental contamination associated with the
Morganton Facility. Meritor will use its reasonable efforts to have the Phase II
Study completed within 60 days following the Closing Date.

 

(c)     For 30 days following the later of the completion of the Morganton
Building Inspection and Morganton Phase II Study, Seller will have the right,
but not the obligation, to, unless Buyer exercises its right under Section
8.6(d) to purchase the Morganton Facility, extend the term of the Lease
Agreement by 15 years (bringing the total term to 20 years) for an additional
$1,200,000 in lease payment, which additional payment shall have been funded as
set forth in Section 8.6(a).

 

(d)     For 30 days following completion of the later of the Morganton Building
Inspection and the Morganton Phase II Study, Buyer will have the right, but not
the obligation, to either (i) purchase the Morganton Facility from Seller at a
price equal to $3,200,000 (as such price may be adjusted as provided for in
Section 8.6(e)) or (ii) extend the term of the Lease Agreement by 15 years
(bringing the total term to 20 years) for an additional $1,200,000 in lease
payment, which additional payment shall have been funded as set forth in Section
8.6(a).

 

 
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(e)     If Buyer exercises its right to purchase the Morganton Facility pursuant
to Section 8.6(d), (i) Buyer will receive a credit toward the purchase price of
the Morganton Facility for the $2,000,000 paid at the Closing by Buyer to Seller
pursuant to the Lease Agreement and for the $1,200,000 paid by Buyer to Seller
pursuant to Section 8.6(a), and (ii) and the parties will mutually agree upon an
adjusted purchase price to reflect the cost of repairing any material defects
identified in the Morganton Building Inspection and cost of remediating any
Environmental Contamination identified in the Morganton Phase II Study, assuming
the most cost-effective approach that is legally feasible (the "Adjusted
Price"). Seller will refund to Buyer the amount by which $3,200,000 exceeds the
Adjusted Price (if applicable). For purposes hereof, “Environmental
Contamination” means environmental contamination that is required to be
remediated under any applicable federal, state, or local environmental or safety
statute, ordinance, regulation, common law, decree, order or agreement with a
Governmental Entity.

 

(f)     If Buyer exercises its right to purchase the Morganton Facility pursuant
to Section 8.6(d), then Seller and Buyer will negotiate in good faith
acquisition documents with respect to the Morganton Facility, which acquisition
documents shall (i) provide that Buyer shall acquire the Morganton Facility free
and clear of all Liens, other than Permitted Liens, (ii) subject to the last
sentence of this Section 8.6(f), assign to Buyer any indemnification rights of
Seller or any of its Affiliates relating to the Morganton Facility, and (iii)
include customary representations, warranties, closing conditions and
indemnification provisions, including with respect to pre-closing-related
building defects and environmental liabilities, including such provisions that
are set forth on Exhibit E hereto. The indemnification rights contemplated to be
assigned to Buyer pursuant to this Section 8.6(f) will remain with Seller and
Buyer will have no rights thereto if such rights relate to matters covered by
the indemnification obligations of Seller hereunder, except to the extent that
Seller fails to fulfill such indemnification obligations, including by failing
to assume or affirm that it has assumed the defense of such matter, attempting
to cancel such indemnification rights, or failing to reasonably cure Buyer’s
reasonable grounds for insecurity regarding the provision of such
indemnification, in which event such indemnification rights shall be assigned to
Buyer.

 

(g)     The parties understand that a portion of the roof, specifically panels
"L" and "M" that were installed in 1994, at the Morganton Facility is damaged
and in need of repair (the "Panel L/M Roof Damage"), and the estimated costs of
such repair is $335,000. The parties agree that Buyer may, at its option,
undertake after the date hereof to hire a contractor to make such repairs and
that Seller will reasonably cooperate with Buyer in connection therewith. The
parties agree that, within 5 days of Buyer’s entry into a contract with a
contractor to make such repairs and pursuant to which contract Buyer has agreed
to pay contractor for such repairs, the parties will amend the Subordinated Note
to increase the principal amount of the Subordinated Note by the cost of the
repairs set forth in such contract up to a maximum amount of $335,000.

 

 
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Section 8.7.     Insurance.

 

(a)     Rights in Insurance Policies. Subject to the last sentence of this
Section 8.7(a), Buyer will have the right to (i) assert claims (and Seller will
use and cause each Seller Subsidiary and each of its and their Affiliates to use
reasonable best efforts to assist Buyer in asserting claims) with respect to the
Business under insurance policies of Seller and its Affiliates which are
"occurrence basis" policies ("Occurrence Basis Policies") arising out of insured
incidents occurring from the date coverage thereunder first commenced until the
Effective Time to the extent that the terms and conditions of any such
Occurrence Basis Policies so allow and (ii) continue to prosecute claims with
respect to the Business asserted with the insurance carrier prior to the Closing
(and Seller will use and cause each Seller Subsidiary and each of its and their
Affiliates to use reasonable best efforts to assist Buyer in connection
therewith) under insurance policies of Seller and its Affiliates which are on a
"claims made" basis ("Claims Made Policies") arising out of insured incidents
occurring from the date coverage thereunder first commenced until the Effective
Time to the extent that the terms and conditions of any such Claims Made
Policies so allow, provided that Buyer shall reimburse Seller and its Affiliates
for all of their reasonable out-of-pocket costs and expenses in connection with
the foregoing. All recoveries in respect of such claims shall be for the account
of Buyer. Seller will not have the rights contemplated by this Section 8.7(a) if
such rights relate to matters covered by the indemnification obligations of
Seller hereunder, except to the extent that Seller fails to fulfill such
indemnification obligations, including by failing to assume or affirm that it
has assumed the defense of such matter, attempting to cancel such historical
insurance rights, or failing to reasonably cure Buyer’s reasonable grounds for
insecurity regarding the provision of such indemnification, in which event Buyer
shall have the rights contemplated by this Section 8.7(a) to the extent required
to resolve such failure, provided that Buyer shall exercise good faith efforts
to resolve claims within applicable policy coverages (it being understood that
Seller shall nevertheless remain responsible for any of its indemnification
obligations that exceed such coverages).

 

(b)     Seller Actions. Seller will not, and will cause each Seller Subsidiary
and each of its and their Affiliates not to, amend, commute, terminate, buy-out,
extinguish liability under or otherwise modify any Occurrence Basis Policies or
Claims Made Policies under which Buyer has rights to assert claims pursuant to
Section 8.7(a) in a manner that would adversely affect any such rights of Buyer.
In the event Buyer consents to any such action, Seller will pay to Buyer its
equitable share (based on the amount of premiums paid by or allocated to the
Business in respect of the applicable policy) of any proceeds received by Seller
or any of its Affiliates as a result of such action.

 

 
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Section 8.8.     Removal of Proprietary Information. Seller will take and  will
cause each Seller Subsidiary to take reasonable steps to isolate all third party
or Seller’s (or its Affiliates’) proprietary information located at the
Morganton Facility that is not related to (i) any trailer axle beam products or
(ii) the products and anything related to the product families currently being
produced at the Morganton Facility which is related to the Business (including
information relating to former customers) in a manner that allows such
information to be handled consistent with the terms of any agreement under which
it was received (including by destroying or returning such information) or
remove such information from the Morganton Facility.

 

Section 8.9.     Vendor Payments. Seller shall pay on the date hereof to the
vendors listed on Schedule 8.9 the amounts listed on Schedule 8.9, and Seller
shall provide Buyer with evidence on the Closing Date that such payments have
been made (including wire transfer information evidencing receipt of payment by
such vendors).

 

ARTICLE IX

INDEMNIFICATION

 

Section 9.1.     Indemnification by Seller. Seller and each Seller Subsidiary
shall jointly and severally indemnify, defend and hold harmless Buyer and its
Affiliates and their respective employees, directors, officers and
Representatives (collectively, the "Buyer Group") from and against, and pay or
reimburse, as the case may be, the Buyer Group for, any and all Damages, as
incurred, suffered by Buyer or any other member of the Buyer Group based upon,
arising out of, relating to or caused by:

 

(a)     any falsity, breach or inaccuracy of any representation or warranty made
by Seller, any Seller Subsidiary or any Affiliate of any thereof herein on the
date of this Agreement or on the Closing Date;

 

(b)     any breach or violation of any covenant or agreement of Seller, any
Seller Subsidiary or any Affiliate of any thereof contained herein; or

 

(c)     any Liabilities of Seller, any Seller Subsidiary or any Affiliate of any
thereof that do not constitute Assumed Liabilities (including any Liability
which is not an Assumed Liability that may become a Liability of Buyer by
statute, regulation or common law) or the assertion against any member of the
Buyer Group of any such Liability ("Excluded Liabilities"); provided that any
Excluded Liability with respect to any Environmental Liability or building
defects that is covered by the indemnification provision of Section 9.3 shall be
subject to indemnification exclusively pursuant to Section 9.3.

  

 
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Section 9.2.     Indemnification by Buyer. Buyer shall indemnify, defend and
hold harmless Seller and its Affiliates (including the Seller Subsidiaries) and
their respective employees, directors, officers and Representatives
(collectively, the "Seller Group") from and against, and pay or reimburse, as
the case may be, the Seller Group for, any and all Damages, as incurred,
suffered by Seller or any other member of the Seller Group based upon, arising
out of, relating to or caused by:

 

(a)     any falsity, breach or inaccuracy of any representation or warranty made
by Buyer herein on the date of this Agreement or on the Closing Date;

 

(b)     any breach or violation of any covenant or agreement of Buyer contained
herein;

 

(c)     the Assumed Liabilities or the assertion against any member of the
Seller Group of any Assumed Liability; or

 

(d)     any Liabilities arising from Buyer’s operation of the Business or the
use or possession of the Assets by Buyer after the Closing Date (other than with
respect to any Liabilities for which Seller is obligated to indemnify the Buyer
Group under this Article IX or under any Ancillary Agreement); provided that any
Liability that is covered by the indemnification provision of Section 9.3 shall
be subject to indemnification exclusively pursuant to Section 9.3.

 

Section 9.3.     Environmental/Defect Indemnification.

 

(a)     Without limiting Seller’s obligations under Section 9.1, Seller and each
Seller Subsidiary shall jointly and severally indemnify, defend and hold
harmless the Buyer Group from and against, and pay or reimburse, as the case may
be, the Buyer Group for, all Damages, as incurred, suffered by Buyer or any
other member of the Buyer Group based upon, arising out of, relating to or
caused by any Environmental Violations or Seller Hazardous Substances (including
any Hazardous Substances identified in the Morganton Phase II Study) or building
defects (including building defects identified in the Morganton Building
Inspection), in each case occurring or existing on or prior to the date hereof,
whether asserted prior to, on or after the date hereof (including such
circumstances or conditions that may continue to exist after the date hereof,
except to the extent resulting from actions taken by Buyer (other than the
leasing of the Morganton Facility under the Lease Agreement or the consummation
of the transactions contemplated by this Agreement) after the date hereof.
Notwithstanding the foregoing, if Buyer elects to repair the Panel L/M Roof
Damage and the Subordinated Note is amended in accordance with Section 8.6(g),
the Panel L/M Roof Damage will not be covered by this Section 9.3(a).

 

 
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(b)     Buyer shall indemnify, defend and hold harmless the Seller Group from
and against, and pay or reimburse, as the case may be, the Seller Group for, any
and all Damages, as incurred, suffered by Seller or any other member of the
Seller Group based upon, arising out of, relating to or caused by any
Environmental Violation occurring after the date hereof and during the time
period that Buyer is occupying the Morganton Facility as tenant under the Lease
Agreement (other than any Environmental Violation by Seller or any of its
Subsidiaries or Affiliates and other than with respect to any matters for which
Seller is obligated to indemnify the Buyer Group under this Article IX).

 

(c)     In the case of any alleged Environmental Violations with respect to
which Seller is obligated to indemnify the Buyer Group under Section 9.3(a) or
any requests from a Governmental Entity with respect to any Seller Hazardous
Substances, Seller shall have the obligations (which obligations shall be
performed within 45 days after (i) Seller is provided written notice of Seller’s
obligation to indemnify Buyer Group under Section 9.3(a) or (ii) requests from
any Governmental Entity with respect to such Seller Hazardous Substances unless
such time period is extended in Buyer’s reasonable discretion ) to, conduct,
direct, manage, implement, and retain exclusive control over any environmental
remediation, investigation, or correspondence with any Governmental Entity
regarding such environmental matters. In the event Seller does not comply with
its obligations in the prior sentence, Buyer shall have the right to conduct,
direct, manage, implement, and assume control over any remediation,
investigation, or correspondence with any Governmental Entity regarding such
environmental matters (and Seller shall reimburse Buyer for all costs and
expenses incurred in connection therewith). In any event, Seller and Buyer agree
that any investigation, remedial or compliance action shall be taken only if and
to the extent required by applicable Law (including any Environmental Law) or
Governmental Entity, and then only in the most reasonable, cost-effective method
that is legally feasible under the circumstances, and that such action shall not
exceed the least stringent requirements of applicable Environmental Laws and as
allowed by applicable Governmental Entities.

 

(d)     In the case of any alleged Environmental Violations with respect to
which Buyer is obligated to indemnify the Seller Group under Section 9.3(b) or
any requests from a Governmental Entity caused by any such Environmental
Violation with respect to which Buyer is obligated to indemnify the Seller Group
under Section 9.3(b), Buyer shall have the obligations (which obligations shall
be performed within 45 days after (i) Buyer is provided written notice of
Buyer’s obligation to indemnify Seller Group under Section 9.3(b) or (ii)
requests from any Governmental Entity with respect to such Environmental
Violations unless such time period is extended in Seller’s reasonable discretion
) to, conduct, direct, manage, implement, and retain exclusive control over any
environmental remediation, investigation, or correspondence with any
Governmental Entity regarding such environmental matters. In the event Buyer
does not comply with its obligations in the prior sentence, Seller shall have
the right to conduct, direct, manage, implement, and assume control over any
remediation, investigation, or correspondence with any Governmental Entity
regarding such environmental matters (and Buyer shall reimburse Seller for all
costs and expenses incurred in connection therewith). In any event, Seller and
Buyer agree that any investigation, remedial or compliance action shall be taken
only if and to the extent required by applicable Law (including Environmental
Law) or Governmental Entity, and then only in the most reasonable,
cost-effective method that is legally feasible under the circumstances, and that
such action shall not exceed the least stringent requirements of applicable
Environmental Laws and as allowed by applicable Governmental Entities.

 

 
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Section 9.4.     Survival of Representations and Warranties. The respective
representations and warranties of each of Seller and Buyer contained in this
Agreement (other than Seller's representations and warranties with respect to
organization contained in Section 6.1, authority contained in Section 6.2, no
conflicts contained in Section 6.3(i), Taxes contained in Section 6.4,
proprietary rights contained in Section 6.5, title contained in Section 6.6(a)
and (b), environmental matters contained in Section 6.8, employee matters
contained in Section 6.11 and brokers contained in Section 6.16 and Buyer’s
representations and warranties with respect to authority contained in Section
7.2 and brokers contained in Section 7.5) will survive the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the Closing Date and will continue in full force and effect until two
years after the Closing Date and then terminate and expire with respect to any
theretofore unasserted claims arising out of or otherwise in respect of any
falsity, breach or inaccuracy of such representations and warranties. Seller's
representations and warranties with respect to Taxes contained in Section 6.4,
proprietary rights contained in Section 6.5, environmental matters contained in
Section 6.8 and employee matters contained in Section 6.11 will survive the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the Closing Date until all applicable statutes of
limitation (including any extensions thereof) have expired and then expire with
respect to any theretofore unasserted claims arising out of or otherwise in
respect of any falsity, breach or inaccuracy of such representations and
warranties. Seller's representations and warranties with respect to organization
contained in Section 6.1, authority contained in Section 6.2, no conflicts
contained in Section 6.3(i), title contained in Section 6.6(a) and (b) and
brokers contained in Section 6.16 and Buyer’s representations and warranties
with respect to authority contained in Section 7.2 and brokers contained in
Section 7.5 will survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing Date
without time limitation. The obligations of each party to indemnify, defend and
hold harmless Indemnitees pursuant to Section 9.1(a) and 9.2(a) shall terminate
when the applicable representation or warranty expires pursuant to this Section
9.4; provided, however, that such obligations to indemnify, defend and hold
harmless shall not terminate with respect to any individual item as to which the
Indemnitee shall have, before the expiration of the applicable period, made a
claim by delivering notice (stating in reasonable detail the basis of such
claim) to the indemnifying Party.

 

 
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Section 9.5.     Deductible. No monetary amount shall be payable by Seller or
Buyer to any member of the Buyer Group or Seller Group, respectively, with
respect to the indemnification of any claims pursuant to Section 9.1(a), 9.1(b),
9.2(a) or 9.2(b) as the case may be (other than with respect to Seller's
representations and warranties with respect to organization contained in Section
6.1, authority contained in Section 6.2, no conflicts contained in Section
6.3(i), Taxes contained in Section 6.4, title contained in Section 6.6(a) and
(b) and brokers contained in Section 6.16 and Buyer’s representations and
warranties with respect to authority contained in Section 7.2 and brokers
contained in Section 7.5) until the aggregate amount of Damages actually
incurred by the Buyer Group or the Seller Group, as the case may be, with
respect to such claims exceeds $100,000 in the aggregate (the "Deductible"), in
which event Seller or Buyer, as the case may be, shall be responsible only for
the amount in excess of the Deductible. Claims made pursuant to the
representations and warranties contained in or made pursuant to Sections 6.1,
6.2, 6.3(i), 6.4, 6.6(a), 6.6(b), 6.16, 7.2 and 7.5 will not be subject to the
Deductible.

 

Section 9.6.     Cap. No monetary amount shall be payable by Seller or Buyer to
any member of the Buyer Group or Seller Group, respectively, with respect to the
indemnification of any claims pursuant to Section 9.1(a) or 9.2(a) (other than
with respect to Seller's representations and warranties with respect to
organization contained in Section 6.1, authority contained in Section 6.2, no
conflicts contained in Section 6.3(i), Taxes contained in Section 6.4,
proprietary rights contained in Section 6.5, title contained in Section 6.6(a)
and (b), environmental matters contained in Section 6.8, employee matters
contained in Section 6.11 and brokers contained in Section 6.16 and Buyer’s
representations and warranties with respect to authority contained in Section
7.2 and brokers contained in Section 7.5), if the aggregate amount of Damages
already paid by Seller or Buyer to members of the Buyer Group or Seller Group,
respectively, pursuant to such indemnification obligations exceeds $5,000,000
(the “Cap”). Claims made pursuant to the representations and warranties
contained in or made pursuant to Sections 6.1, 6.2, 6.3(i), 6.4, 6.5, 6.6(a),
6.6(b), 6.8, 6.11, 6.16, 7.2 and 7.5 will not be subject to the Cap.

 

 
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Section 9.7.     Ancillary Agreements. Nothing in this Article IX is intended to
limit the indemnity rights and obligations of the Parties and their Affiliates
under the Ancillary Agreements.

 

Section 9.8.     Effect on Final Purchase Price. Any indemnity payment made
pursuant to this Agreement will be treated as an adjustment to the Purchase
Price (and shall be allocated to the Purchase Price of the particular Assets to
which it relates) for Tax purposes unless a determination (as defined in Section
1313 of the Code) or similar event under applicable Tax law, rule or regulation
with respect to the Indemnitee causes such payment not to constitute an
adjustment to the Purchase Price for United States federal income Tax purposes
or foreign Tax purposes, as the case may be.

 

ARTICLE X

GENERAL PROVISIONS

 

Section 10.1.     Assignment. Neither party to this Agreement will convey,
assign or otherwise transfer any of its rights or obligations under any
Transaction Document without the prior written consent of the other party,
except that Buyer may (without obtaining any consent) assign its rights,
interests and/or obligations under any Transaction Document, in whole or in
part, to any successor to all or any portion of its business or to any Affiliate
of Buyer. Any conveyance, assignment or transfer requiring the prior written
consent of the other party which is made without such consent will be void ab
initio. No assignment of this Agreement will relieve the assigning party of its
obligations hereunder.

 

Section 10.2.     Parties in Interest. This Agreement is binding upon and is for
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not made for the benefit of any Person not a party
hereto, and no Person other than the parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement, except that members of the Buyer
Group and the Seller Group will be entitled to the rights to indemnification
provided to the Buyer Group and the Seller Group, respectively, hereunder.

 

Section 10.3.     Amendment. This Agreement may not be amended, modified or
supplemented except by a written agreement executed by Buyer and Seller.

 

Section 10.4.     Waiver; Remedies. No failure or delay on the part of either
Buyer or Seller in exercising any right, power or privilege under any
Transaction Document will operate as a waiver thereof, nor will any waiver on
the part of either Buyer or Seller of any right, power or privilege under any
Transaction Document operate as a waiver of any other right, power or privilege
under any Transaction Document, nor will any single or partial exercise of any
right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege under any
Transaction Document. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which the parties may otherwise have
at law or in equity.

 

 
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Section 10.5.     Fees and Expenses. Except as otherwise provided in this
Agreement, each of Seller and Buyer agrees to pay, without right of
reimbursement from the other, all of their respective costs and expenses
incurred by it (and, in the case of Seller, all costs and expenses incurred by
the Seller Subsidiaries and its and their Affiliates) incident to the
performance of their respective obligations hereunder, including the fees and
disbursements of counsel, accountants, financial advisors, experts and
consultants employed by the respective parties in connection with the
Transaction, whether or not the Transaction is consummated; provided that this
Section 10.6 shall not limit any Person's right to recover any Damages for
breach of this Agreement or any other Transaction Document.

 

Section 10.6.     Notices. All notices, requests, claims, demands and other
communications required or permitted to be given under any Transaction Document
will be in writing and will be delivered by hand, e-mailed or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and will be deemed given when so delivered by hand, when e-mail
confirmation is received if delivered by e-mail, or three business days after
being so mailed (one business day in the case of express mail or overnight
courier service). All such notices, requests, claims, demands and other
communications will be addressed as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such notice
in accordance with this Section 10.6:

 

(a)     If to Buyer:

 

Meritor Heavy Vehicle Systems, LLC
2135 West Maple Road
Troy, MI 48084

 

Attention:     Matthew Donley
E-mail:     Matthew.Donley@Meritor.com

 

with a copy to:

 

Meritor Heavy Vehicle Systems, LLC
2135 West Maple Road
Troy, MI 48084

 

Attention:     Office of the General Counsel
E-mail:     Mark.Schaitkin2@Meritor.com

 

and

 

Chadbourne & Parke LLP
1301 Avenue of the Americas
New York, New York 10018

Attention:     Marc A. Alpert, Esq.
E-mail:     malpert@chadbourne.com

 

 

 
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(b)     If to Seller:

 

Sypris Solutions, Inc.
101 Bullitt Lane, Suite 450
Louisville, KY 40222

Attention:     Jeffrey T. Gill, President and CEO
E-mail:     jeff.gill@sypris.com

 

with a copy to:

 

Sypris Solutions, Inc.
101 Bullitt Lane, Suite 450
Louisville, KY 40222

Attention:     John R. McGeeney, General Counsel
E-mail:     jmcgeeney@sypris.com

 

Section 10.7.     Waiver of Compliance With Bulk Transfer Laws. Buyer hereby
waives compliance by Seller and the Seller Subsidiaries with the provisions of
any bulk transfer laws which may be applicable to the transactions contemplated
by this Agreement. Seller and the Seller Subsidiaries shall jointly and
severally indemnify, defend and hold harmless the Buyer Group from and against,
and pay or reimburse, as the case may be, the Buyer Group for, any and all
Damages, as incurred, suffered by any member of the Buyer Group based upon,
arising out of or otherwise in any way relating to or in respect of such
noncompliance.

  

 
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Section 10.8.     Captions; Currency. The article and section captions herein
and the table of contents hereto are for convenience of reference only, do not
constitute part of this Agreement and will not be deemed to limit or otherwise
affect any of the provisions hereof. Unless otherwise specified, all references
herein to numbered articles and sections are to articles and sections of this
Agreement and all references herein to schedules and exhibits are to schedules
and exhibits to this Agreement. Unless otherwise specified, all references
contained in any Transaction Document, in any exhibit or schedule referred to
therein or in any instrument or document delivered pursuant thereto to dollars
or "$" shall mean United States Dollars.

 

Section 10.9.     Entire Agreement. This Agreement and the other Transaction
Documents collectively constitute the entire agreement between the parties with
respect to the subject matter hereof and this Agreement and the other
Transaction Documents supersede all prior negotiations, agreements and
understandings of the parties of any nature, whether oral or written, relating
thereto.

 

Section 10.10.     Severability. If any provision of any Transaction Document or
the application thereof to any Person or circumstance is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions thereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.

 

Section 10.11.     Consent to Jurisdiction. Each of Seller and Buyer irrevocably
submits to the exclusive jurisdiction of the state courts situated in Oakland
County, Michigan and federal courts situated in Wayne County, Michigan for the
purposes of any Action arising out of the Transaction, this Agreement or any
other Transaction Document, any provision hereof or thereof or the breach,
performance, enforcement, validity or invalidity hereof or thereof (and agrees
not to commence any Action relating thereto except in such courts). Each of
Seller and Buyer further agrees that service of any process, summons, notice or
document hand delivered or sent by U.S. first class mail to such party's
respective address set forth in Section 10.6 shall be effective service of
process for any Action in Michigan with respect to any matters to which it has
submitted to jurisdiction as set forth in the immediately preceding sentence.
Each of Seller and Buyer irrevocably and unconditionally waives any objection to
the laying of venue of any Action arising out of the Transaction, this Agreement
or any other Transaction Document, any provision hereof or thereof or the
breach, performance, enforcement, validity or invalidity hereof or thereof in
the state courts situated in Oakland County, Michigan and federal courts
situated in Wayne County, Michigan, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Action brought in any such court has been brought in an inconvenient
forum. Notwithstanding the foregoing, each party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment in any jurisdiction or in any other manner provided in Law
or in equity.

 

 
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Section 10.12.     Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Capitalized terms used in any other Transaction Document
or in the schedules hereto or thereto but not otherwise defined therein will
have the respective meanings assigned to such terms in this Agreement.

 

Section 10.13.     Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Michigan
applicable to contracts made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.

 

Section 10.14.     Counterparts. This Agreement may be executed in separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.

 

Section 10.15.     Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of any Transaction Document, the party or parties who are or are to be thereby
aggrieved will have the right of specific performance and injunctive relief
giving effect to its or their rights under such Transaction Document, in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies will be cumulative. The parties agree that any such
breach or threatened breach would cause irreparable injury, that the remedies at
law for any such breach or threatened breach, including monetary damages, are
inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.

 

Section 10.16.     Performance by the Seller Subsidiaries. Seller will cause to
be performed and hereby guaranties the performance of all actions, agreements
and obligations set forth herein to be performed by each Seller Subsidiary and
each of its and their Affiliates.

 

Section 10.17.     Interpretation. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any Federal, state, local, or
foreign Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. For the purposes
of this Agreement, (i) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other gender
as the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
(iii) the word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation" and (iv) the word "or"
shall not be exclusive.

 

 
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties on the date first hereinabove written.

 

 

MERITOR HEAVY VEHICLE SYSTEMS, LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Robert H. Speed 

 

 

Name: 

Robert H. Speed 

 

 

Title:  

Authorized Signer 

 

                  SYPRIS SOLUTIONS, INC.                     By: /s/ John R.
McGeeney      Name: John R. McGeeney      Title: Vice President, General Counsel
and Secretary     

  

 
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EXHIBIT A

 

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):

 

"Access Agreement" means the Access Agreement dated as of the Closing Date by
and between Seller and Buyer, substantially in the form attached hereto as
Exhibit B-1.

 

"Accommodation Agreement" means the Accommodation Agreement dated as of the
Closing Date by and between Seller and Buyer, substantially in the form attached
hereto as Exhibit B-2.

 

"Action" means any legal, administrative, governmental or regulatory proceeding
or other action, suit, proceeding, claim, arbitration, mediation, alternative
dispute resolution procedure, inquiry or investigation by or before any
arbitrator, mediator, court or other Governmental Entity.

 

"Adjustment Amount" shall have the meaning set forth in Section 4.1(d)(ii).

 

"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of the immediately preceding sentence, the term "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.

 

"Agreement" means this Asset Purchase Agreement, as the same may be amended,
modified or supplemented from time to time in accordance with its terms.

 

"A&R Commodities Supply Agreement" means the Amended and Restated Commodities
Supply Agreement Buyer and Sypris Technologies Kenton, Inc. dated as of the date
hereof, in a form mutually agreed to by Buyer and Seller, that amends and
restates the existing 2015 Amendment to Commodities Supply Agreement dated as of
November 4, 2014 between Sypris Technologies Kenton, Inc. and Buyer.

 

"Ancillary Agreements" means, collectively, the Access Agreement, the
Accommodation Agreement, the Lease Agreement, the Transition Agreement, the
Termination Agreement and the A&R Commodities Supply Agreement.

 

 

--------------------------------------------------------------------------------

 

  

"Appraisal Report" means the Machinery and Equipment Report of Great American
Group dated January 2015 and effective as of December 17, 2014.

 

"Arbitrator" shall have the meaning set forth in Section 4.1(c)(iii).

 

"Assets" shall have the meaning set forth in Section 2.1.

 

"Assumed Liabilities" shall have the meaning set forth in Section 3.1.

 

"Business" means the business engaged in by Seller and the Seller Subsidiaries
(and their respective predecessors) on or immediately prior to the Closing Date
at the Morganton Facility, provided, however, that the Business shall not
include the Excluded Business (it being understood that Assets are intended to
exclude assets related to the Excluded Business but only if such assets are
exclusively related to the Excluded Business).

 

"Business Contracts" shall have the meaning set forth in Section 2.1(g).

 

"Business Intellectual Property" shall have the meaning set forth in Section
2.1(c).

 

"Business-Related Accounts Receivable" shall have the meaning set forth in
Section 2.1(e).

 

"Business-Related Inventory" shall have the meaning set forth in Section 2.1(d).

 

"Buyer" shall have the meaning set forth in the preamble to this Agreement.

 

"Buyer Group" shall have the meaning set forth in Section 9.1.

 

"Cap" shall have the meaning set forth in Section 9.6.

 

"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended to the date hereof.

 

"Claims Made Policies" shall have the meaning set forth in Section 8.7(a).

 

"Closing" shall have the meaning set forth in Section 5.1.

 

"Closing Date" shall have the meaning set forth in Section 5.1.

 

"Closing Statement" shall have the meaning set forth in Section 4.1(c)(i).

  

 
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"Code" means the Internal Revenue Code of 1986, as amended from time to time.

 

"Consents" means consents, waivers, approvals, requirements, allowances,
novations, authorizations, declarations, filings, registrations and
notifications.

 

"Continued Employees" means those employees of Seller and the Seller
Subsidiaries to whom Buyer offers employment pursuant to Section 8.5, who accept
such an offer of employment by Buyer and who actually commence such employment
with Buyer.

 

"Contracts" means, with respect to any Person, all agreements, contracts,
obligations, purchase orders, commitments and arrangements (whether written or
oral and whether express or implied) (a) to which such Person is a party, (b)
under which such Person has any rights, (c) under which such Person has any
Liability or (d) by which such Person, or any of the assets or properties owned
or used by such Person, is bound, including, in each case, all amendments,
modifications and supplements thereto.

 

"Damages" means any and all losses, Liabilities, claims, damages, deficiencies,
diminutions in value, fines, payments, Taxes, Liens, costs and expenses, whether
known or unknown, asserted or unasserted, fixed, absolute or contingent, matured
or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to
become due, and, whenever or however arising and whether or not resulting from
Third Party Claims (including the costs and expenses of investigation and
defense of any claim, whether or not such claim is deemed to be without merit;
the costs and expenses of any and all Actions or other legal matters; all
amounts paid in connection with any demands, assessments, judgments, settlements
and compromises relating thereto; interest and penalties with respect thereto;
and costs and expenses, including attorneys', accountants' and other experts'
fees and expenses, incurred in investigating, preparing for or defending against
any such Actions or other legal matters or in asserting, preserving or enforcing
an Indemnitee's rights hereunder).

 

"Decrease Amount" shall have the meaning set forth in Section 4.1(d)(i)(B).

 

"Deductible" shall have the meaning set forth in Section 9.5.

 

"Delivery Date" shall have the meaning set forth in Section 4.1(c)(i).

 

"Effective Time" shall have the meaning set forth in Section 5.1.

 

"Environmental Laws" means any and all applicable Laws and Permits issued,
promulgated or entered into by any Governmental Entity relating to the
environment or the protection or preservation of human health or safety,
including the health and safety of employees, the preservation or reclamation of
natural resources, or the treatment, storage, disposal, management, Release or
threatened Release of Hazardous Materials, in each case as in effect on the date
hereof and as may be issued, promulgated, entered into or amended from time to
time.

 

 
A-3

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"Environmental Liabilities" means any and all Damages that are incurred as a
result of the presence, Release or threatened Release of Hazardous Materials or
a violation of Environmental Laws, including:

 

(i)     Damages for personal injury, or injury to property or natural resources
occurring upon, off of, or arising from any of the real properties used at any
time in the Business, including lost profits, consequential damages (including
from business interruptions and from diminution in the value of any property),
the cost of demolition and rebuilding of any improvements (including landscaping
on real property), interest and penalties;

 

(ii)     fees incurred for the services of attorneys, consultants, contractors,
experts, laboratories and all other costs incurred in connection with the
investigation or remediation of Hazardous Materials or violation of
Environmental Laws or the enforcement of any rights or remedies under
Environmental Laws; and

 

(iii)     Liability to any third person or Governmental Entity.

 

"Environmental Violation" shall mean (i) any violation of any Environmental Law
or (ii) any action, inaction or activity which is likely to result in any
liability to any Federal, state or local government or any other Person for the
costs of any investigation, removal or remedial action or natural resources
damage or for bodily injury or property damage.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

"ERISA Affiliate" means any Person, trade or business which, together with
Seller or any Seller Subsidiary, is or was treated as a single-employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.

 

"ERISA Event" means (a) the occurrence of a reportable event, within the meaning
of Section 4043 of ERISA, with respect to any Plan, (b) the application for a
minimum funding waiver with respect to any Plan; (c) the existence of an
accumulated funding deficiency with respect to any Plan; (d) the provision by
the administrator of any Plan of a notice of intent to terminate such Plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect
to a plan amendment referred to in Section 4041(e) of ERISA); (e) the cessation
of operations at a facility of Seller, any Seller Subsidiary or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA; (f) the
withdrawal by Seller, any Seller Subsidiary or any ERISA Affiliate from a
multiple employer plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (g) the conditions for the
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (h) the adoption of an amendment to any Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA; or (i) the
institution by the Pension Benefit Guaranty Corporation of proceedings to
terminate any Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that constitutes grounds
for the termination of, or the appointment of a trustee to administer, a Plan.

 

 
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"Estimated Closing Statement" shall have the meaning set forth in Section
4.1(b).

 

"Excluded Assets" shall have the meaning set forth in Section 2.1(a).

 

"Excluded Business" means manufacturing of axle shafts and activities related
thereto (including Mack/Volvo flanges and hubs), and the manufacturing of
products for Dana Corporation (or its applicable Affiliate).

 

"Excluded Liabilities" shall have the meaning set forth in Section 9.1(c).

 

"Final Closing Statement" shall have the meaning set forth in Section
4.1(c)(ii).

 

"GAAP" means United States generally accepted accounting principles as in effect
on the date of this Agreement.

 

"Gill" means Gill Family Capital Management.

 

"Governmental Entity" means, in any jurisdiction, any (i) federal, state, local,
foreign or international government, (ii) court, arbitral or other tribunal,
(iii) governmental or quasi-governmental authority of any nature (including any
political subdivision, instrumentality, branch, department, official or entity)
or (iv) agency, commission, authority or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.

 

 
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"Hazardous Materials" means those materials, substances or wastes that are
regulated by, or form the basis of liability under, any Environmental Law,
including PCBs, pollutants, solid wastes, explosive, radioactive or regulated
materials or substances, hazardous or toxic materials, substances, wastes or
chemicals, petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or asbestos containing materials, materials listed in 49
C.F.R. Section 172.101 and materials defined as hazardous substances pursuant to
Section 101(14) of CERCLA.

 

"Increase Amount" shall have the meaning set forth in Section 4.1(d)(i)(A).

 

"Indemnitee" means any member of the Buyer Group or the Seller Group who or
which may seek indemnification under this Agreement.

 

"IRS" means the Internal Revenue Service.

 

"knowledge", with respect to Seller, means the knowledge of any officer of
Seller or any Seller Subsidiary or of Rosa Crawford; Joel Gaudin; Paul Ingle;
Jonny McElrath; Travis Monk; Jennifer Nicholes; John Rhyne; Ray Robinson; Mike
Shows; or Steve Straub (i) if any such Person is actually aware of such fact or
other matter or (ii) if any such Person could be expected to discover or
otherwise become aware of such fact or other matter after due inquiry concerning
the existence of such fact or other matter (including review of applicable files
relating to such fact or other matter).

 

"Laws" means all laws, statutes, constitutions, treaties, rules, regulations,
policies, standards, directives, ordinances, codes, judgments, rulings, orders,
writs, decrees, stipulations, injunctions and determinations of all Governmental
Entities.

 

"Lease Agreement" means the Lease Agreement dated as of the Closing Date by and
between Seller (as a guarantor), Sypris Technologies, Inc. (as landlord) and
Buyer (as tenant), substantially in the form attached hereto as Exhibit C.

 

"Liabilities" means any and all claims, debts, liabilities, obligations and
commitments of whatever nature, whether known or unknown, asserted or
unasserted, fixed, absolute or contingent, matured or unmatured, accrued or
unaccrued, liquidated or unliquidated or due or to become due, and whenever or
however arising (including those arising out of any Contract or tort, whether
based on negligence, strict liability or otherwise) and whether or not the same
would be required by GAAP to be reflected as a liability in financial statements
or disclosed in the notes thereto.

 

"Lien" means any charge, claim, equitable interest, lien, encumbrance, option,
proxy, pledge, security interest, mortgage, right of first refusal, right of
first offer, retention of title agreement, defect of title or restriction of any
kind or nature, including any restriction on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership.

 

 
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"Material Adverse Effect" means any circumstance, condition, event, occurrence,
change, effect or development that, individually or in the aggregate, is
materially adverse to (a) the business, condition (financial or otherwise),
operations, results of operations, assets or liabilities of the Business or the
Assets or (b) the ability of Seller, the Seller Subsidiaries and its and their
Affiliates to consummate the Transaction.

 

"Material Facility Services Contracts" shall have the meaning set forth in
Section 6.6(e).

 

"Morganton Building Inspection" shall have the meaning set forth in
Section 8.6(b).

 

"Morganton Facility" means the Leased Premises (as defined in the Lease
Agreement).

 

"Morganton Phase II Study" shall have the meaning set forth in Section 8.6(b).

 

"Notice of Disagreement" shall have the meaning set forth in Section 4.1(c)(ii).

 

"Occurrence Basis Policies" shall have the meaning set forth in Section 8.7(a).

 

"Other Intellectual Property" means all (a) trade secrets and confidential
business and technical information (including ideas, research and development,
know-how, formulas, technology, compositions, manufacturing and production
processes and techniques, technical data, engineering, production and other
designs, plans, drawings, engineering notebooks, industrial models, software
specifications, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information); (b) works of authorship and all copyrights thereto; (c) copies and
tangible embodiments of any or all of the foregoing (in whatever form or medium,
including electronic media); and (d) other proprietary, intellectual property
and other rights.

 

"Panel L/M Roof Damage" shall have the meaning set forth in Section 8.6(g).

 

"Patents" means patents, patent applications and invention disclosures.

 

 
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"Permits" means all Consents, licenses, permits, certificates, variances,
exemptions, franchises and other approvals issued, granted, given, required or
otherwise made available by any Governmental Entity.

 

"Permitted Liens" means Liens for (a) Taxes, assessments and other governmental
charges, if such Taxes, assessments or charges shall not be due and payable; and
(b) inchoate workmen's, repairmen's or other similar Liens arising or incurred
in the ordinary course of business consistent with past practices in respect of
obligations which are not overdue, minor title defects and recorded easements,
which workmen's, repairmen's or other similar Liens, minor title defects and
recorded easements do not, individually or in the aggregate, impair the
continued use, occupancy, value or marketability of title of the property to
which they relate or the Business, assuming that the property is used on
substantially the same basis as such property is currently being used in the
Business.

 

"Person" means any individual, firm, partnership, joint venture, trust,
corporation, limited liability entity, unincorporated organization, estate or
other entity (including a Governmental Entity).

 

"Plans" shall have the meaning set forth in Section 6.11(b).

 

"PNC" means PNC Bank, National Association.

 

"Purchase Price" shall have the meaning set forth in Section 4.1(a).

 

"Release" shall have the meaning set forth in Section 101(22) of CERCLA.

 

"Representatives" means, with respect to any Person, such Person's Affiliates,
directors, officers, employees, agents, consultants, advisors and other
representatives, including legal counsel, accountants and financial advisors.

 

"Seller" shall have the meaning set forth in the preamble to this Agreement.

 

"Seller Affiliated Group" shall have the meaning set forth in Section 6.4(a).

 

"Seller Group" shall have the meaning set forth in Section 9.2.

 

"Seller Hazardous Substances" shall mean any Hazardous Materials that were
present in, on, under, or from the Morganton Facility on or prior to the date
hereof (including any Hazardous Materials that would reasonably be expected to
result from the degradation of such Hazardous Materials, whether such Hazardous
Materials reasonably expected to result from the degradation of such Hazardous
Materials were present on, prior to or after the date hereof).

 

 
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"Seller Subsidiaries" means Sypris Technologies, Inc., a Delaware corporation,
and Sypris Technologies Kenton, Inc., a Delaware corporation.

 

"Sisamex" means Sistemas Automotrices de Mexico, S.A. de C.V.

 

"Subordinated Note" means the Promissory Note dated July 2, 2015 by Seller and
certain other entities in favor of Buyer.

 

"Tax Returns" shall have the meaning set forth in Section 6.4(a).

 

"Taxes" means (a) all taxes, charges, duties, fees, levies or other assessments,
including income, excise, property, sales, use, gross receipts, recording,
insurance, value added, profits, license, withholding, payroll, employment, net
worth, capital gains, transfer, stamp, social security, environmental,
occupation and franchise taxes, imposed by any Governmental Entity, and
including any interest, penalties and additions attributable thereto; (b) any
Liability for the payment of any amounts described in clause (a) as a result of
being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferor or successor Liability or by operation of
Law; and (c) any Liability for the payment of any amounts as a result of being a
party to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other Person with respect to the payment of any
amounts of the type described in clauses (a) and (b).

 

"Termination Agreement" means the Termination Agreement between Buyer and Sypris
Technologies Kenton, Inc. dated as of the date hereof, in a form mutually agreed
to by Buyer and Seller, that terminates the Core Products and Housings Supply
Agreement dated as of May 3, 2004.

 

"Transaction" means the transactions contemplated by the Transaction Documents.

 

"Transaction Documents" means this Agreement, the Ancillary Agreements and all
other instruments, certificates and documents delivered or required to be
delivered by Buyer, Seller, any Seller Subsidiary or any Affiliate of any
thereof pursuant to this Agreement.

 

"Transition Agreement" means the Transition Agreement dated as of the Closing
Date by and between Seller, Sypris Technologies, Inc. and Buyer, substantially
in the form attached hereto as Exhibit D.

 

"USM" means U.S. Manufacturing Corporation.

 

"USM Purchase Orders" shall have the meaning set forth in Section 2.1(f).

 

 
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"WARN Act" shall have the meaning set forth in Section 8.5(b).

 

 

A-10

 

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