Asset Purchase Agreement

EXHIBIT 10.2


EXECUTION COPY


ASSET PURCHASE AGREEMENT


DATED AS OF


JUNE 28, 2007


BY AND BETWEEN


GENERAL MOTORS CORPORATION


AND


CLUTCH OPERATING COMPANY, INC.


TABLE OF CONTENTS


Article I DEFINITIONS...................................................... 2
Section 1.1 Definitions............................................. 2 Article II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES....... 18
Section 2.1 Purchase of Assets and Assumption of Liabilities........ 18
Section 2.2 Purchased and Excluded Assets........................... 19
Section 2.3 Assumed and Excluded Liabilities........................ 22 Article III PURCHASE PRICE AND CLOSING..................................... 24
Section 3.1 Closing................................................. 24
Section 3.2 Closing Payment......................................... 25
Section 3.3 Closing Date Net Working Capital........................ 25
Section 3.4 Allocation of Purchase Price............................ 27 Article IV REPRESENTATIONS AND WARRANTIES OF GM............................ 27
Section 4.1 Organization............................................ 27
Section 4.2 Authorization of Transaction............................ 28
Section 4.3 Noncontravention; Consents.............................. 28
Section 4.4 Business Financial Statements; Absence of Undisclosed
Liabilities.......................................... 28
Section 4.5 Capitalization.......................................... 29
Section 4.6 Title to Transferred Stock.............................. 30
Section 4.7 Absence of Certain Changes.............................. 30
Section 4.8 Title and Sufficiency of Assets......................... 30
Section 4.9 Contracts............................................... 30
Section 4.10 Real Property........................................... 31
Section 4.11 Permits................................................. 32
Section 4.12 Intellectual Property................................... 32
Section 4.13 Legal Compliance........................................ 34
Section 4.14 Litigation.............................................. 34
Section 4.15 Employees and Employee Benefits......................... 34
Section 4.16 Environmental Matters................................... 35
Section 4.17 Tax Matters............................................. 36
Section 4.18 Customers and Suppliers................................. 37
Section 4.19 Accounts Receivable..................................... 38
Section 4.20 Related Party Transactions.............................. 38
Section 4.21 Product Liability; Product Warranties................... 38
Section 4.22 Brokers' Fees........................................... 38
Section 4.23 Government Contracts.................................... 38
Section 4.24 Business Relationships.................................. 39
Section 4.25 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES........... 39 Article V REPRESENTATIONS AND WARRANTIES OF THE BUYER...................... 39
Section 5.1 Organization............................................ 39
Section 5.2 Authorization of Transaction............................ 40
Section 5.3 Noncontravention; Consents.............................. 40
Section 5.4 Litigation.............................................. 40
Section 5.5 Availability of Funds................................... 40
Section 5.6 Brokers' Fees........................................... 41
Section 5.7 LIMITATIONS ON GM'S REPRESENTATIONS AND WARRANTIES...... 41 Article VI PRE-CLOSING COVENANTS........................................... 41
Section 6.1 General................................................. 41
Section 6.2 Notices and Consents.................................... 42
Section 6.3 Conduct of the Business................................. 43


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Section 6.4 Access to Business...................................... 45
Section 6.5 Notice of Developments.................................. 46
Section 6.6 Ancillary Documents..................................... 46
Section 6.7 Union Matters........................................... 46
Section 6.8 Financing............................................... 46
Section 6.9 Termination of Intercompany Agreements.................. 47
Section 6.10 Treatment of Synthetic Lease............................ 48
Section 6.11 Waiver of Right of First Refusal........................ 48 Article VII POST-CLOSING COVENANTS......................................... 48
Section 7.1 General................................................. 48
Section 7.2 Post-Closing Consents; Nonassignable Contracts.......... 48
Section 7.3 Litigation Support...................................... 50
Section 7.4 Compliance with the WARN Act............................ 50
Section 7.5 Apportioned Obligations................................. 50
Section 7.6 Agreements Regarding Tax Matters........................ 51
Section 7.7 Agreements Regarding Environmental Matters.............. 52
Section 7.8 Use of Excluded Marks................................... 56
Section 7.9 Non-Competition......................................... 56
Section 7.10 Preservation of Records................................. 61
Section 7.11 Novation of Government Prime Contracts.................. 61
Section 7.12 Compliance with Consent Decree.......................... 62
Section 7.13 Assumption of Union Agreements.......................... 62
Section 7.14 Guarantees.............................................. 62
Section 7.15 Insurance............................................... 63
Section 7.16 Confidentiality......................................... 63
Section 7.17 Hybrid JV Agreements.................................... 64
Section 7.18 DPIM Warranty Matters................................... 64 Article VIII CLOSING CONDITIONS............................................ 66
Section 8.1 General Conditions of the Parties....................... 66
Section 8.2 Conditions to Obligations of the Buyer.................. 66
Section 8.3 Conditions to Obligations of GM......................... 68 Article IX REMEDIES........................................................ 70
Section 9.1 Survival................................................ 70
Section 9.2 Indemnification by GM................................... 70
Section 9.3 Indemnification by the Buyer............................ 71
Section 9.4 Procedures for Indemnification of Third Party Claims.... 72
Section 9.5 Certain Limitations..................................... 73
Section 9.6 Treatment of Indemnity Payments......................... 74
Section 9.7 Exclusive Remedy........................................ 74
Section 9.8 Mitigation.............................................. 74
Section 9.9 Equitable Relief........................................ 74
Section 9.10 Informal Dispute Resolution............................. 74 Article X TERMINATION...................................................... 74
Section 10.1 Termination of Agreement................................ 74
Section 10.2 Effect of Termination................................... 75
Section 10.3 Termination Fee......................................... 75 Article XI MISCELLANEOUS................................................... 76
Section 11.1 Notices................................................. 76
Section 11.2 Expenses; No Offset..................................... 77
Section 11.3 Seller Disclosure Schedules............................. 78
Section 11.4 Bulk Sales or Transfer Laws............................. 78
Section 11.5 Assignment; Successors and Assigns...................... 78


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Section 11.6 Amendment; Waiver....................................... 78
Section 11.7 Severability............................................ 78
Section 11.8 Counterparts............................................ 79
Section 11.9 Descriptive Headings.................................... 79
Section 11.10 No Third-Party Beneficiaries............................ 79
Section 11.11 Exhibits and Schedules.................................. 79
Section 11.12 Governing Law........................................... 79
Section 11.13 Forum Selection; Consent to Service of Process;
Waiver of Jury Trial................................. 79
Section 11.14 Entire Agreement........................................ 79
Section 11.15 Confidentiality; Public Announcement.................... 80
Section 11.16 Interpretation; Construction............................ 80


EXHIBITS


Exhibit A Form of Employee Matters Agreement Exhibit B Form of Transition Services Agreement Exhibit C Form of Bill of Sale and Assignment and Assumption Agreement Exhibit D-1 Form of Assignment of Copyrights Exhibit D-2 Form of Assignment of Trademarks Exhibit E Form of Patent and Technology License Agreement Exhibit F Form of A1000 IP License Agreement Exhibit G Form of Software License Agreement Exhibit H-1 Form of DPG Proving Grounds Use Agreement Exhibit H-2 Form of MK Proving Grounds Use Agreement Exhibit I Form of Business to GM Edge Agreement Exhibit J Form of GMPT Germany Supply Contract Exhibit K Form of Sublease Agreement Exhibit L Form of Lease Agreement Exhibit M Form of Engineering Services Agreement Exhibit N Form of Hybrid Co-Branding Agreement Exhibit O Form of Transferred Subsidiary IP and Software Assignment Exhibit P Form of Government Related Subcontract Agreement Exhibit Q DPIM Standard Warranty Exhibit R Form of Non-compete Joinder Exhibit S Form of MOU Exhibit T Claim Header Summary Report


SCHEDULES


Schedule 1.1A Sellers Schedule 1.1B Business Locations Schedule 1.1C Transferred Subsidiaries Schedule 1.1D Shared Retained Facilities Schedule 1.1E Net Working Capital Schedule 1.1F Retained Real Property Schedule 1.1G Seller's Knowledge Schedule 1.1H Transferred Sub Real Property Schedule 1.1I 6L90 Transmission Criteria


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Schedule 2.2(a)(iii) Certain Purchased Contracts Schedule 2.2(a)(iv) Certain Purchased Equipment Schedule 2.2(a)(vii) Transferred Real Property Schedule 2.2(a)(ix) Transferred Intellectual Property Schedule 2.2(a)(xiii) Certain Purchased Assets Schedule 2.2(b)(xvi) Certain Excluded Intellectual Property Schedule 2.2(b)(xxi) Certain Excluded Assets Schedule 2.3(a)(vii) Certain Assumed Actions Schedule 2.3(b)(ii) Certain Excluded Environmental Liabilities Schedule 2.3(b)(iii) Certain Excluded Recent Balance Sheet Liabilities Schedule 2.3(b)(vi) Certain Excluded Liabilities Schedule 4.3 Noncontravention; Consents Schedule 4.4(a) Business Financial Statements Schedule 4.4(b) Liabilities and Obligations Schedule 4.4(c) Pro Forma Financial Statements Schedule 4.7 Absence of Certain Changes Schedule 4.8 Title and Sufficiency of Assets Schedule 4.9 Material Contracts Schedule 4.10 Real Property Schedule 4.12 Intellectual Property Schedule 4.13 Legal Compliance Schedule 4.14 Litigation Schedule 4.15 Employees and Employee Benefits Schedule 4.16 Environmental Matters Schedule 4.17 Tax Matters Schedule 4.18 Customers and Suppliers Schedule 4.20 Related Party Transactions Schedule 4.21 Product Liability; Product Warranties Schedule 4.22 Brokers' Fees Schedule 4.23 Government Contracts Schedule 5.5 Commitment Letters Schedule 6.1(b) Certain EMA Provisions Schedule 6.2(a) Required Notices and Consents Schedule 6.2(b) Required Antitrust Filings Schedule 6.3 Conduct of Business Schedule 6.9 Intercompany Agreements Schedule 7.7 General Deed Restrictions for Owned Real Property Schedule 7.9(a) Non-Competition Schedule 7.9(j) GMT 900 4500 Platform Schedule 8.2(e) Consents Required for Closing Schedule 11.2 Cost Sharing Understanding


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ASSET PURCHASE AGREEMENT


This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of June 28, 2007, is made by and between General Motors Corporation, a Delaware corporation ("GM"), and Clutch Operating Company, Inc., a Delaware corporation (the "Buyer").


WHEREAS, GM, together with certain of its Subsidiaries set forth on Schedule 1.1A (collectively with GM, the "Sellers," and each individually, a "Seller"), are engaged through their Allison Transmission operations ("Allison") in the business, conducted at the locations listed on Schedule 1.1B, of (i) researching, developing, designing, manufacturing, distributing, marketing, and selling (A) Automatic Transmissions for use in Vocational Vehicles, Military Vehicles and Off-Road Products, and (B) Hybrid Propulsion Systems for use in Vocational Vehicles and Military Vehicles (the "Transferred Hybrid Business"), (ii) remanufacturing such Automatic Transmissions for use in those applications, (iii) manufacturing and selling replacement parts and support equipment and providing related services, in each case, for such Automatic Transmissions and Hybrid Propulsion Systems, and (iv) researching, developing, designing, manufacturing, distributing, marketing and selling the products, and providing the services, currently researched, developed, designed, manufactured, distributed, marketed, sold or provided, as applicable, at or from the facilities listed on Schedule 1.1B (the foregoing, excluding the Retained Businesses, the "Business");


WHEREAS, the Business is also conducted by the Subsidiaries set forth on Schedule 1.1C (the "Transferred Subsidiaries"), all of the outstanding capital stock of which (all of the outstanding capital stock of all of the Transferred Subsidiaries, collectively, the "Transferred Stock") is, or will be prior to Closing, owned directly or indirectly by GM and one or more of the Sellers;


WHEREAS, GM and its Affiliates are engaged in the business, based out of the Castleton Facility and elsewhere, of designing, manufacturing, distributing and selling Hybrid Propulsion Systems for use in Non-vocational Vehicles (such business, including all businesses relating to Hybrid Propulsion Systems other than the Transferred Hybrid Business, the "Retained Hybrid Business");


WHEREAS, GM and its Affiliates are engaged in the business, based out of the Szentgotthard Facility, of assembling Automatic Transmissions sold by Allison outside of North America (the "Hungarian Manufacturing Business");


WHEREAS, GM and its Affiliates are engaged in the business, based out of the Baltimore Facility and other facilities in the United States and elsewhere (the Baltimore Facility, together with the Castleton Facility and the Szentgotthard Facility, the "Retained Facilities"), of designing, manufacturing, distributing and selling, among other things, (i) Automatic Transmissions (including A1000 Products) for use in Non-vocational Vehicles, and (ii) Non-vocational Vehicles and Vocational Vehicles employing those and other Automatic Transmissions (such business, together with the Retained Hybrid Business and the Hungarian Manufacturing Business, the "Retained Businesses");


WHEREAS, the Retained Businesses and the Retained Facilities, including any and all assets, rights and properties primarily used or held for use in connection with or at such Retained Businesses, are not included in the Business and are not being transferred to or acquired by the Buyer;


WHEREAS, GM and its Affiliates have certain interests in, and/or conduct various businesses and operations, not included in the Business, at, the facilities and other properties listed on Schedule 1.1D (the "Shared Retained Facilities"), which Shared Retained Facilities are also used in connection with the Business but are being retained by GM and its Affiliates and are not being transferred to or acquired by the Buyer; and


WHEREAS, this Agreement contemplates that the Buyer shall acquire substantially all of the assets of the Business (other than the Retained Businesses, the Retained Facilities and certain excluded assets), including the Transferred Stock, certain assets of the Business at the Shared Retained Facilities, and a right to continued use of portions of certain of the Shared Retained Facilities and shall assume substantially all of the liabilities of the Business, other than certain excluded liabilities, in each case on the terms and subject to the conditions set forth in this Agreement and the Ancillary Documents.


NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the Parties hereby agree as follows:


ARTICLE I
DEFINITIONS


Section 1.1 Definitions. For purposes of this Agreement, the following terms have the meanings set forth below:


"1000 Series Products" means Automatic Transmissions manufactured at the Business' operations in Indianapolis, Indiana and known by GM and the Business as the "Allison 1000 Series," in each case as of the date hereof, and any Derivations thereof, but excludes all Hybrid Propulsion Systems. For the avoidance of doubt, the manufacture of the 1000 Series Products (and any Derivations thereof) after the date hereof is not limited to such location.


"A1000 IP License Agreement" has the meaning set forth in SECTION 8.2(D).


"A1000 Products" means Automatic Transmissions manufactured at the Baltimore Facility and known by GM and the Business as the "A1000," in each case as of the date hereof, and any Derivations thereof, but excludes all Hybrid Propulsion Systems. For the avoidance of doubt, the manufacture of A1000 Products (and any Derivations thereof) is not limited to the Baltimore Facility.


"Adverse Buyer Modification" means any modification or modifications to the MOU that are materially adverse to the Buyer or that would reasonably be expected to have a material and adverse impact, cost or expense on or to the Buyer or the Business.


"Adverse GM Modification" means any modification or modifications to the MOU that are materially adverse to GM or that would reasonably be expected to have a material and adverse impact, cost or expense on or to GM.


"Automatic Transmission" means an electro/mechanical/hydraulic mechanism that transmits torque from the prime mover in a vehicle or Off-Road Product to propel the vehicle or product without power interruption to the drive wheels or mechanism during shifting between gear ranges and that changes gear ranges automatically without any operator input required


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beyond depressing the accelerator pedal, if applicable, and specifically excludes automated manual transmissions (i.e., AMTs, as such term is commonly understood in the United States automobile industry as of the date hereof).


"Action" means any claim, action, arbitration, charge, grievance, suit, inquiry, proceeding or investigation by or before any Governmental Entity or any arbitrator with legal and binding authority over such matter.


"Affiliates" has the meaning set forth in Rule l2b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.


"Agreed Accounting Conventions" means GAAP applied on a basis consistent with the past practices of the Sellers and the Transferred Subsidiaries.


"Agreement" has the meaning set forth in the Preamble.


"Allison" has the meaning set forth in the Recitals.


"Allison Indy Transmission Facilities" means the facilities used in the Business and consisting of Plants 3, 4, 6 and 7 located at 4700 West 10th Street, Speedway, Indiana, Plants 12 and 14 located at 901 Grande Avenue, Indianapolis, Indiana and the former Plant 2 located at 4500 West Gilman Street, Speedway, Indiana.


"Allison New Lease Facilities" means the facilities located at (i) Taeseok Building, #275-5 Yahggjae-dong, Seocho-gu, Seoul, Korea and (ii) Kalman Imre u. 1, Budapest, Hungary.


"Allocation" has the meaning set forth in SECTION 3.4.


"Ancillary Documents" means the Employee Matters Agreement, the Transition Services Agreement, the Bill of Sale and Assignment and Assumption Agreement, the Assignment of Trademarks, the Assignment of Copyrights, the Patent and Technology License Agreement, the A1000 IP License Agreement, the Software License Agreement, the Confidentiality Agreements, the Proving Grounds Use Agreements, the Business to GM Edge Agreement, the GMPT Germany Supply Contract, the Sublease Agreement, the Lease Agreement, the Engineering Services Agreement, the Government Related Subcontract Agreement, the Buyer Parent Guarantees, the Hybrid Co-Branding Agreement and each other agreement or document executed by the Parties pursuant to this Agreement or any of the foregoing and each certificate and other document to be delivered by the Parties pursuant to ARTICLE VIII.


"Antitrust Laws" has the meaning set forth in SECTION 6.2(C).


"Apportioned Obligations" means any Tax (including any additional Tax determined subsequent to the Closing Date) relating to the Business or any Purchased Asset that is due or becomes due for any Straddle Period.


"Article" means, except as otherwise expressly indicated herein, an article of this Agreement.


"Assigned GSCs" means those GSCs designated as "Assign" in Schedule D of the Transition Services Agreement, but only with respect to the applicable services, as more fully set forth in SECTION 2.2(C).


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"Assignment of Copyrights" has the meaning set forth in SECTION 8.2(D).


"Assignment of Trademarks" has the meaning set forth in SECTION 8.2(D).


"Assumed Liabilities" has the meaning set forth in SECTION 2.3(A).


"Baltimore Facility" means the facility located at 10301 Philadelphia Road White Marsh, Maryland.


"Basket" has the meaning set forth in SECTION 9.2(B).


"Benefit Plans" has the meaning set forth in SECTION 4.15(B).


"Bill of Sale and Assignment and Assumption Agreement" has the meaning set forth in SECTION 8.2(D).


"Business" has the meaning set forth in the Recitals.


"Business Assets" means the Purchased Assets and all of the assets, rights and properties of the Transferred Subsidiaries, collectively.


"Business Day" means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by Law to be closed in New York City, New York.


"Business Employee" has the meaning set forth in the Employee Matters Agreement.


"Business Financial Statements" has the meaning set forth in SECTION 4.4(A).


"Business to GM Edge Agreement" has the meaning set forth in SECTION 8.2(D).


"Buyer" has the meaning set forth in the Preamble.


"Buyer Claims" has the meaning set forth in SECTION 9.2(A).


"Buyer Competing Business" has the meaning set forth in SECTION 7.9(B).


"Buyer Cure" has the meaning set forth in SECTION 8.3(E).


"Buyer Indemnified Party" has the meaning set forth in SECTION 9.2(A).


"Buyer Material Adverse Effect" has the meaning set forth in SECTION 5.1.


"Buyer Military Vehicles" means Military Vehicles with a gross vehicle weight rating greater than 3500 kg.


"Buyer Parent Guarantees" means those certain Guarantees made and delivered to GM by the Guarantors as of the date hereof.


"Buyer Proposed Amount" has the meaning set forth in SECTION 3.3(C).


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"Buyer Restricted Products" means Automatic Transmissions and Hybrid Propulsion Systems manufactured or sold for use anywhere in the world in (i) Non-vocational Vehicles or (ii) GM Military Vehicles.


"Buyer Service Agent" has the meaning set forth in SECTION 11.13.


"Buyer Termination Fee" has the meaning set forth in SECTION 10.3(A).


"Cap" has the meaning set forth in SECTION 9.2(B).


"Castleton Facility" means the facility located at 7601 East 88th Place, Indianapolis, Indiana.


"CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.


"Claims" has the meaning set forth in SECTION 9.3(A).


"Closing" has the meaning set forth in SECTION 3.1.


"Closing Date" has the meaning set forth in SECTION 3.1.


"Closing Date Debt" means the aggregate Indebtedness of the Transferred Subsidiaries and, to the extent contained in the Assumed Liabilities, the Sellers as of the close of business on the day immediately preceding the Closing Date, as reflected on the Final Statement.


"Closing Date Net Working Capital" has the meaning set forth in SECTION 3.3(A).


"Closing Payment" has the meaning set forth in SECTION 3.2.


"Code" means the Internal Revenue Code of 1986, as amended (together with all rules and regulations promulgated thereunder).


"Commitment Letters" has the meaning set forth in SECTION 5.5.


"Competing Business" has the meaning set forth in SECTION 7.9(B).


"Confidentiality Agreements" means those certain confidentiality agreements dated February 9, 2007, between GM and each of Carlyle Investment Management, L.L.C. and Onex Partners Advisor LP, in each case as amended.


"Consent Decree" means the consent decree between the Directorate, Office of Defense Trade Controls, Bureau of Political Military Affairs, U.S. Department of State, the U.S. Department of Homeland Security, U.S. Immigration and Customs Enforcement, GM and General Dynamics Corporation dated November 1, 2004.


"Contracts" means any contracts, agreements, arrangements, leases, licenses, obligations, commitments and undertakings that are binding, or purport to be binding by their terms, on the parties thereto, and any outstanding bids or proposals (which bids or proposals if accepted by the recipient thereof would result in a binding contract), in each case, whether written or oral, express or implied.


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