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ASSET PURCHASE AGREEMENT
By and Among
BPP ACQUISITION CORPORATION
BEAVER PRECISION PRODUCTS, INC.
ROLLER BEARING COMPANY OF AMERICA, INC.
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Dated as of October 18, 1996
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS...................................................1
1.01. Definitions.........................................................1
ARTICLE II. TRANSFER OF ASSETS............................................6
2.01. Transfer of Assets by Seller........................................6
2.02. Excluded Assets.....................................................8
2.03. Assumption of Liabilities...........................................8
2.04. Excluded Liabilities................................................8
2.05. Assignment of Contracts and Rights..................................8
2.06. Closing.............................................................9
2.07. Purchase Price Allocation...........................................9
2.08. Determination of Selected Accounts Receivable, Trade Payables and
Inventory...........................................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER......................9
3.01. Corporate Existence and Power.......................................9
3.02. Authorization......................................................10
3.03. Subsidiaries.......................................................10
3.04. Governmental Authorization.........................................10
3.05. Non-Contravention..................................................10
3.06. Balance Sheets; Undisclosed........................................10
3.07. Absence of Certain Changes.........................................11
3.08. Properties; Leases; Tangible Assets................................12
3.09. Sufficiency of and Title to the Transferred Assets.................13
3.10. Affiliates.........................................................14
3.11. No Undisclosed Liabilities.........................................14
3.12. Litigation.........................................................14
3.13. Contracts..........................................................14
3.14. Permits; Required Consents.........................................15
3.15. Compliance with Applicable Laws....................................16
3.16. Employment Agreements; Change in Control; and Employee Benefits....16
3.17. Labor and Employment Matters.......................................18
3.18. Intellectual Property..............................................19
3.19. Advisory Fees......................................................20
3.20. Environmental Compliance...........................................20
3.21. Insurance..........................................................20
3.22. Tax Matters........................................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND RBC..............21
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4.01. Organization and Existence.........................................21
4.02. Corporate Authorization............................................22
4.03. Governmental Authorization.........................................22
4.04. Non-Contravention..................................................22
4.05. Advisory Fees......................................................22
4.06. Litigation.........................................................22
ARTICLE V. COVENANTS OF SELLER..........................................22
5.01. Conduct of the Business; Distributions.............................22
5.02. Access to Information..............................................24
5.03. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents......................................25
5.04. Maintenance of Insurance Policies..................................25
5.05. Confidentiality....................................................25
5.06. Taxes..............................................................26
5.07. Use of Name; Obtaining of Trademark................................26
5.08. Intentionally Omitted..............................................27
5.09. Collection of Selected Accounts Receivable.........................27
5.10. Compliance with Bulk Sales Laws....................................27
5.11. Notice of Third Party Interest.....................................27
5.12. Reconveyance Fee...................................................27
ARTICLE VI. COVENANTS OF BUYER...........................................27
6.01. Confidentiality....................................................27
6.02. Collection of Accounts Receivable..................................28
6.03. No Solicitation of Employees.......................................28
ARTICLE VII. COVENANTS OF ALL PARTIES.....................................29
7.01. Further Assurances.................................................29
7.02. Certain Filings....................................................29
7.03. Public Announcements...............................................29
7.04. Administration of Accounts.........................................30
ARTICLE VIII. CONDITIONS TO CLOSING........................................30
8.01. Conditions to Obligation of Buyer..................................30
8.02. Conditions to Obligation of Seller.................................34
ARTICLE IX. INDEMNIFICATION..............................................36
9.01. Agreement to Indemnify.............................................36
9.02. Survival of Representation and Warranties..........................36
9.03. Claims for Indemnification.........................................37
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9.04. Defense of Claims..................................................37
ARTICLE X. TERMINATION..................................................39
10.01.Grounds for Termination............................................39
10.02.Effect of Termination..............................................39
ARTICLE XI. MISCELLANEOUS................................................39
11.01.Notices............................................................39
11.02.Amendments; No Waivers.............................................41
11.03.Expenses...........................................................41
11.04.Successors and Assigns.............................................41
11.05.Governing Law......................................................41
11.06.Counterparts; Effectiveness........................................41
11.07.Entire Agreement...................................................41
11.08.Captions...........................................................42
11.09.Severability.......................................................42
▇▇.▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.......................................................42
11.11.Cumulative Remedies................................................42
11.12.Third Party Beneficiaries..........................................42
Index of Other Defined Terms. In addition to those terms defined in
Section 1.01 below, the following terms shall have the respective meanings given
thereto in the sections indicated below:
Defined Term Section
"1995 Balance Sheet" 3.06(a)
"Approval Hearing" 8.01(u)(ii)
"Approval Order" 8.01(u)(ii)
"Assumed Liabilities" 2.03
"Balance Sheets 3.06(a)
"Bankruptcy Court" 8.01(u)
"Business" Recitals
"Buyer Indemnitees" 9.01(a)
"Buyer" Preamble
"Closing Date" 2.06(a)
"Closing" 2.06(a)
"Contracts" 2.01(d)
"Distributions" 3.07(h)
"Encumbrances" 3.08(a)
"Equipment" 2.01(b)
"Equity Securities" 5.01(b)
"Excluded Assets" 2.02
"Excluded Environmental Liabilities" 2.04(c)
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"Excluded Liabilities" 2.04
"Financial Statements" 3.06(a)
"Insurance Policies" 3.21
"Intellectual Property Rights" 3.18(a)
"Inventory" 2.01(c)
"Leased Real Property" 3.08(a)
"Leases" 3.08(b)
"Lien Escrow Agreement" 8.01(r)
"LJB" Preamble
"Permits" 3.14(a)
"Personal Property Leases" 3.08(b)
"Petition" 8.01(u)
"Petition Date" 8.01(u)
"Procedures Order" 8.01(u)
"Proceedings" 3.12
"Purchase Price" 2.06(b)
"RBC" Preamble
"Real Property Leases" 3.08(b)
"Required Consents" 3.14(b)
"Required Contractual Consent" 3.14(b)
"Required Governmental Approval" 3.14(b)
"Retained Accounts Receivable" 6.02
"Scheduled Contracts" 3.13(a)
"Selected Accounts Receivable" 2.01(e)
"Seller Indemnitee" 9.01(d)
"Seller" Preamble
"Subsequent Material Contract" 5.01(b)(iv)
"Transferred Assets" 2.01
EXHIBITS
EXHIBIT A Balance Sheets
EXHIBIT B Form of ▇▇▇▇▇▇ and Sanwa Side Letter Agreement
EXHIBIT C Form of Non-Competition Agreement
EXHIBIT D Form of Opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
EXHIBIT E Form of Services Support Agreement
EXHIBIT F Form of Supply and Service Agreement
EXHIBIT G Form of Lien Escrow Agreement
EXHIBIT H Form of Technical Support Agreement
EXHIBIT I Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
EXHIBIT J Form of Opinion of Adelman, Gettleman, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, Ltd.
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SCHEDULES
Schedule 1.01 Permitted Liens
Schedule 2.01 Equipment
Schedule 2.02 Excluded Assets
Schedule 3.01 Qualification to do Business
Schedule 3.03 Subsidiaries
Schedule 3.04 Governmental Authorizations
Schedule 3.07 Absence of Certain Changes
Schedule 3.08(a) Leased Real Property
Schedule 3.08(c) Leases
Schedule 3.08(d) Land-Use Compliance
Schedule 3.10(a) Affiliate Interests
Schedule 3.10(b) Affiliate Agreements
Schedule 3.11 No Undisclosed Liabilities
Schedule 3.12 Litigation
Schedule 3.13(a) Scheduled Contracts
Schedule 3.13(b) Non-Binding Scheduled Contracts
Schedule 3.13(c) Primary Customers and Suppliers
Schedule 3.14(a) Permits
Schedule 3.14(b) Required Consents
Schedule 3.15 Compliance with Applicable Laws
Schedule 3.16(a) Employment Agreements
Schedule 3.16(b) Benefit Plans and Arrangements
Schedule 3.16(f) Prohibited Transactions
Schedule 3.16(g) Benefit Plan Claims
Schedule 3.16(i) ERISA Compliance
Schedule 3.16(j) Group Health Plan Compliance
Schedule 3.17 Labor and Employment Matters
Schedule 3.18(a) Intellectual Property
Schedule 3.18(b) Proceedings Applicable to Intellectual Property
Schedule 3.18(c) Ownership of Intellectual Property Rights
Schedule 3.20(a) Environmental Permits
Schedule 3.20(b) Environmental Compliance
Schedule 3.20(c) Continuing Compliance with Environmental Laws
Schedule 3.21 Insurance Policies
Schedule 3.22 Tax Matters
Schedule 6.02 Selected Retained Accounts Receivable Customers
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of October 18, 1996 is by and
among BPP Acquisition Corporation, a Delaware corporation ("Buyer"), Beaver
Precision Products, Inc., an Illinois corporation ("Seller"), Roller Bearing
Company of America, Inc., a Delaware corporation ("RBC"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
an individual ("LJB").
R E C I T A L S
A. Among other things, Seller is engaged in the business of
designing, manufacturing, repairing, overhauling and/or selling ball screws and
splines for commercial or industrial use other than aerospace and military use
(the "Business"); and
B. Seller desires to sell and transfer to Buyer all of its assets
related to the Business in consideration for the delivery by Buyer to Seller of
the Purchase Price (as defined herein).
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.
ARTICLE I.
DEFINITIONS
1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, policy, guidance, order, writ, injunction,
directive, judgment, decree or other requirement of any Governmental Authority
(including any Environmental Law) applicable to such Person or any of its
Affiliates or Plan Affiliates or any of their respective properties, assets,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person or any of its Affiliates or Plan Affiliates).
"Associate" or "Associated With" means, when used to indicate a
relationship with any Person, (a) any other Person of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities issued by such other
Person, (b) any trust or other estate in which such Person has a substantial
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beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, and (c) any relative or spouse of such Person, or any
relative of such spouse who has the same home as such Person or who is a
director or officer of such Person or any Affiliate thereof.
"Benefit Arrangement" means any material benefit arrangement that is
not an Employee Benefit Plan, including, without limitation, (i) each employment
or consulting agreement, (ii) each arrangement providing for insurance coverage
or workers' compensation benefits, (iii) each incentive bonus or deferred bonus
arrangement, (iv) each arrangement providing termination allowance, severance or
similar benefits, (v) each equity compensation plan, (vi) each deferred
compensation plan and (vii) each compensation policy and practice maintained by
Seller or any ERISA Affiliate of Seller covering the employees, former
employees, directors and former directors of Seller and the beneficiaries of any
of them.
"Benefit Plan" means an Employee Benefit Plan or Benefit
Arrangement.
"Business Day" means a day other than a Saturday, Sunday or other
day on which national banking institutions are authorized or required by law to
close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement net of
insurance proceeds actually received, including without limitation (i) interest
on cash disbursements in respect of any of the foregoing at the Reference Rate
in effect from time to time, compounded quarterly, from the date each such cash
disbursement is made until the Person incurring the same shall have been
indemnified in respect thereof and (ii) reasonable costs, fees and expenses of
attorneys, accountants and other agents of such Person.
"Employee Benefit Plan" means any employee benefit plan, as defined
in Section 3(3) of ERISA, that is sponsored or contributed to by Seller or any
ERISA Affiliate thereof covering employees or former employees of Seller.
"Employee Pension Benefit Plan" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA,
including a Multiemployer Plan.
"Environmental Laws" means all Applicable Laws relating to the
protection of human health or the environment including, without limitation, (i)
all Applicable Laws pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, (ii) all Applicable
Laws relating to the anufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature; and (iii) the
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Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Clean Air Act, the
Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance
Control Act ("TSCA") and all requirements promulgated pursuant to any of these
or analogous state or local statutes.
"Environmental Liabilities" means Liabilities of a Person that arise
under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was or
is required to be treated as a single employer under Section 414 of the Code.
"Escrow Agent" means a state or nationally chartered bank with
unrestricted surplus of at least $250,000,000 selected by Buyer to act as escrow
agent under the Lien Escrow Agreement.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Group Health Plan" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"Hazardous Substance" means any substance or material: (i) the
presence of which requires investigation or remediation under any Applicable
Law; or (ii) the generation, storage, treatment, transportation, disposal,
remediation, removal, handling or management of which is regulated by any
Environmental Law; or (iii) that is defined as a "hazardous waste" or "hazardous
substance" under any Applicable Law; or (iv) that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or
otherwise hazardous and is regulated by any Governmental Authority having or
asserting jurisdiction over the Business or any of the Transferred Assets; or
(v) the presence of which poses a hazard to the health or safety of Persons; or
(vi) the presence of which constitutes a nuisance, trespass or other tortious
condition for which Seller could be or is alleged to be liable; or (vii) without
limitation, that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs) or asbestos.
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"Indemnification Limit" as of any given date means the positive
amount, if any, equal to (i) $2,000,000 minus (ii) all amounts paid by Seller
and LJB prior to such date pursuant to Section 9.01(a).
"Indemnifying Party" means: (1) Seller or LJB when any Buyer
Indemnitee is asserting a claim under Section 9.01(a) or (2) Buyer or RBC when
any Seller Indemnitee is asserting a claim under Section 9.01(b).
"Indemnitee" means: (1) each of Buyer, RBC and their respective
Affiliates with respect to any claim for which Seller is an Indemnifying Party
under Section 9.01(a); or (2) Seller, LJB and their Affiliates with respect to
claims for which Buyer is an Indemnifying Party under Section 9.01(b).
"IRS" means the Internal Revenue Service.
"Knowledge" means, with respect to any Person, all things known to,
or which should be known after reasonable inquiry by, such Person, if an
individual, or if a corporation, the executive officers and directors of such
corporation.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, whether or
not the same is required to be accrued on the financial statements of such
Person and whether or not the same is disclosed on any schedule to this
Agreement.
"Lien" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, Encumbrance, interest, claim or charge of any kind in respect of
such asset.
"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of the Business or Seller that
results in a material adverse effect on, or a material adverse change in, the
Transferred Assets taken as a whole, or a material adverse effect on the
Business taken as a whole, including, but not limited to, the following: (i) a
decline of 15% or more in the aggregate dollar amount of purchase orders
received by Seller in the 30 days immediately preceding the Closing Date as
compared to the aggregate dollar amount of purchase orders received by Seller in
the corresponding one-month period of the prior year; (ii) any decline in
Seller's Working Capital as of the Closing Date as compared to Seller's Working
Capital on the corresponding date in the prior year; (iii) any decline in
Seller's backlog of orders relating to the Business resulting in such backlog
amounting to less than $850,000; or (iv) any failure to timely pay Seller's
payroll or Taxes.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
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"Permitted Liens" means (i) Liens securing the repayment of Assumed
Liabilities and (ii) Liens set forth on Schedule 1.01.
"Person" means an individual, corporation, partnership, joint
venture, association, trust, estate or other entity or organization, including a
Governmental Authority.
"Plan Affiliate" means, with respect to any Person, any employee
benefit plan or arrangement sponsored by, maintained by or contributed to by
such Person, and with respect to any employee benefit plan or arrangement, any
Person sponsoring, maintaining or contributing to such plan or arrangement.
"Prohibited Transaction" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"Reference Rate" means the per annum rate of interest publicly
announced from time to time by Bank of America, N.T. & S.A. as its prime rate
(or reference rate). Any change in the Reference Rate shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Subsidiary" means, with respect to any Person, (i) any corporation
as to which more than 10% of the outstanding stock having ordinary voting rights
or power (and excluding stock having voting rights only upon the occurrence of a
contingency unless and until such contingency occurs and such rights may be
exercised) is owned or controlled, directly or indirectly, by such Person and/or
by one or more of such Person's Subsidiaries, and (ii) any partnership, joint
venture or other similar relationship between such Person (or any Subsidiary
thereof) and any other Person (whether pursuant to a written agreement or
otherwise).
"Tax" means all taxes imposed of any nature including federal,
state, local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition of
any such tax.
"Tax Return" means all returns, reports, forms or other information
required to be filed with respect to any Tax.
"Trade Payables" means the trade accounts payable relating to the
Business that arise in the ordinary course of business and are outstanding as of
the Closing Date.
"Working Capital" means the remainder of (i) Seller's total current
assets minus current assets that are Excluded Assets minus (ii) Seller's total
current liabilities minus current
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liabilities that are Excluded Liabilities, with each of the above calculated in
accordance with GAAP.
ARTICLE II.
TRANSFER OF ASSETS
2.01. Transfer of Assets by Seller. Upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees to purchase from Seller
and Seller agrees to sell, assign, convey and transfer to Buyer at the Closing,
free and clear of all Liens, other than Permitted Liens, all the assets,
properties, rights, licenses, permits, contracts, causes of action and claims of
every kind and description as the same shall exist on the Closing Date (other
than the Excluded Assets), wherever located, whether tangible or intangible,
real, personal or mixed, that are used, owned by, leased by or in the possession
of Seller in connection with the Business, whether or not reflected on the books
and records of Seller, including all assets shown on the 1995 Balance Sheet and
not disposed of in the ordinary course of business or as permitted by this
Agreement prior to the Closing Date (the collective assets, properties, rights,
licenses, permits, contracts, causes of action and claims in connection with the
Business to be transferred to Buyer by Seller pursuant hereto are referred to
collectively herein as the "Transferred Assets") and including without
limitation all right, title and interest of Seller in, to and under the
following, to the extent used, owned by, leased by or in the possession of
Seller to the extent that such assets are used in or relate to or are generated
by the Business:
(a) all real property and leases, capitalized or operating,
of, and other interests in, real property of Seller, in each case together with
all buildings, fixtures and improvements erected thereon and appurtenances
thereto;
(b) all machinery, equipment (including, but not limited to,
tools and dies), furniture, office equipment, computer equipment (including all
hardware and software), communications equipment, vehicles, storage tanks, spare
and replacement parts, fuel and other tangible property (and interests in any of
the foregoing) of Seller set forth on Schedule 2.01 ("Equipment");
(c) all items of inventory notwithstanding how classified in
the financial records of Seller, including all raw materials, work-in-process,
inventory in transit, finished goods, supplies, spare parts, samples, cores and
stores (collectively, the "Inventory");
(d) all contracts (including, but not limited to, contracts
for the sale of goods), agreements, options, leases, licenses, sales and
purchase orders, commitments and other instruments of any kind, whether written
or oral, to which Seller is a party, including the Scheduled Contracts and the
Subsequent Material Contracts (collectively, the "Contracts");
(e) all accounts, accounts receivable and notes receivable,
together with any unpaid interest or fees accrued thereon or other amounts due
with respect thereto, of Seller, and any security or collateral therefor,
including recoverable advances and deposits,
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which are outstanding as of the Closing Date not more than 90 days from the date
of invoices relating thereto, as selected by Buyer on the Closing Date (the
"Selected Accounts Receivable");
(f) all prepaid charges and expenses of Seller (including any
such charges and expenses with respect to ad valorem taxes, leases and rentals
and utilities) with respect to Seller's Peoria, Illinois facility;
(g) all rights of Seller under any insurance policy;
(h) all of Seller's rights, claims, credits, causes of action
or rights of set-off against third parties relating to the Business or the
Transferred Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to Seller affecting any of
the Transferred Assets;
(i) all of Seller's Intellectual Property Rights, including,
without limitation, all of Seller's patents, copyrights, trademarks, trade
names, service marks, service names, logos, part numbers, designs, know-how,
processes, trade secrets, inventions, and other proprietary data, including, but
not limited to, the right to use the name "Beaver Ball Screws" for the purpose
of conducting any lawful business other than the military and aerospace business
of Seller;
(j) all transferable franchises, licenses, permits or other
authorizations, including, without limitation, those issued or granted by any
Governmental Authority that are owned by, granted to or held or used by Seller
in connection with the Business, whether or not actually utilized by Seller;
(k) all books, records, files and papers of Seller, whether in
hard copy or computer format, including bank account records, books of account,
invoices, engineering information, sales and promotional literature, manuals and
data, sales and purchase correspondence, lists of present and former suppliers,
personnel and employment records of present and former employees, and
documentation developed or used for accounting, marketing, engineering,
manufacturing or any other purpose related to the conduct of the Business;
(l) all lists of present customers and lists of former
customers; and
(m) all goodwill associated with the Business or the
Transferred Assets.
Without limiting the foregoing, except as specifically provided in Section 2.02,
the Transferred Assets shall include (i) all other assets and properties of
Seller that exist on the Closing Date, whether tangible or intangible, real or
personal, that are located at Seller's Walterboro, South Carolina facility or
its Peoria, Illinois refurbishment plant and (ii) all other assets and
properties of Seller relating to the Business that exist on the Closing Date,
whether tangible or intangible,
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real or personal, that are located at Seller's Troy, Michigan facility. Those
tangible Transferred Assets located in Michigan will be used or consumed in
industrial processing.
2.02. Excluded Assets. Buyer expressly understands and agrees that
the assets and properties set forth on Schedule 2.02 (the "Excluded Assets")
shall be excluded from the Transferred Assets and shall be retained by Seller.
2.03. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees, effective at the time
of Closing, to assume and in due course perform, pay and discharge all Trade
Payables (the "Assumed Liabilities"). No Liability that is the subject of a
Permitted Lien shall be an Assumed Liability unless such Liability is a Trade
Payable.
2.04. Excluded Liabilities. Buyer does not hereby assume, and shall
not at any time hereafter (including on or after the Closing Date) become liable
for, any of the Liabilities, including, without limitation, the Environmental
Liabilities, of Seller or any of its Affiliates or any Plan Affiliate of any of
the foregoing other than the Assumed Liabilities (the "Excluded Liabilities").
2.05. Assignment of Contracts and Rights.
(a) With respect to any Contract and any claim, right or
benefit arising thereunder or resulting therefrom that constitute Transferred
Assets, promptly after the date hereof, to the extent requested by Buyer, Seller
will use its best efforts to obtain the written consent of the other parties to
any such Contract to the assignment thereof to Buyer or written confirmation
from such parties reasonably satisfactory in form and substance to Buyer
confirming that such consent is not required.
(b) If (i) such consent, waiver or confirmation is not
obtained with respect to any such Contract and (ii) notwithstanding the
provisions of Section 8.01(c), Buyer shall elect to consummate the Closing,
Seller and Buyer shall cooperate in an arrangement reasonably satisfactory to
Buyer and Seller under which Buyer would obtain, to the extent practicable, the
claims, rights and benefits and assume the corresponding obligations thereunder
in accordance with this Agreement, including subcontracting, sub-licensing or
sub-leasing to Buyer, or under which Seller would enforce for the benefit of
Buyer, with Buyer assuming Seller's obligations, any and all claims, rights and
benefits of Seller against a third party thereto. Seller will promptly pay to
Buyer when received all monies received by Seller under any Transferred Asset or
any claim, right or benefit arising thereunder not transferred to Buyer pursuant
to this Section 2.05.
2.06. Closing.
(a) Subject to Article VIII and the other terms and
conditions of this Agreement, the closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, One Prudential Plaza, Suite 3800, 130
▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ on October 30, 1996 or such other date as
to which Buyer and Seller may agree (the "Closing Date").
(b) At the Closing Buyer shall pay and deliver the
Purchase Price in cash to the Escrow Agent pursuant to the Lien Escrow
Agreement. As used herein, "Purchase Price" means $2,733,000 plus (i) the sum of
(x) the value of the Inventory as of the Closing Date and (y) the amount of the
Selected Accounts Receivable as of the Closing Date plus (ii) the amount, if
any, by which the Trade Payables as of the Closing Date are less than $322,000
or minus (iii) the amount, if any, by which the Trade Payables as of the Closing
Date are greater than $322,000.
(c) Seller shall deliver to Buyer such bills of sale,
certificates of title, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (which in the case of
Intellectual Property Rights, shall be documents immediately recordable in the
respective countries of origin) of such rights as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Buyer all of Seller's right, title and interest in, to and under the Transferred
Assets.
2.07. Purchase Price Allocation. Within 120 days after the Closing
Date, Buyer and Seller shall agree upon the final allocation of the Purchase
Price among the Transferred Assets for purposes of complying with Section 1060
of the Code and making any required filings under state or local law and shall
set forth such allocation on a statement (the "Allocation Statement"). After the
Closing, from time to time, Buyer and Seller shall agree upon revisions to the
Allocation Statement for tax purposes. Buyer and Seller shall report the tax
consequences of the transactions contemplated by this Agreement in a manner
consistent with the Allocation Statement, as it may be revised from time to
time, and shall not take any position inconsistent therewith.
2.08. Determination of Selected Accounts Receivable, Trade Payables
and Inventory. For the purposes of determining the Purchase Price, immediately
prior to the Closing Date (i) Seller's accountants and Buyer's accountants shall
jointly determine the amount of the Selected Accounts Receivable as of the
Closing Date and the amount of Trade Payables as of the Closing Date and (ii)
Ernst & Young LLP shall conduct an inventory to determine the value of the
Inventory as of the Closing Date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and LJB jointly and severally represent and warrant to Buyer
as follows:
3.01. Corporate Existence and Power. Seller is a corporation duly
organized and validly existing and in good standing under the laws of the state
of its incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on the Business as now
conducted and to own and operate the Transferred Assets as now owned and
operated. Seller is not required to be qualified to conduct the Business
9
in any state other than the states set forth in Schedule 3.01, in which states
Seller is duly qualified to do business and is in good standing.
3.02. Authorization. The execution, delivery and performance by
Seller and LJB of this Agreement and the consummation by Seller and LJB of the
transactions contemplated hereby are within Seller's corporate powers and LJB's
personal power and have been duly authorized by all necessary corporate action
on the part of Seller, including the affirmative vote of the holders of a
majority of the outstanding capital stock of Seller. This Agreement has been
duly and validly executed by Seller and LJB and constitutes the legal, valid and
binding agreement of Seller and LJB, jointly and severally enforceable against
each of Seller and LJB in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and subject to general principles of
equity.
3.03. Subsidiaries. Except as set forth on Schedule 3.03, Seller
does not have any Subsidiaries.
3.04. Governmental Authorization. The execution, delivery and
performance by Seller and LJB of this Agreement require no action by, consent or
approval of, or filing with, any Governmental Authority other than any actions,
consents, approvals or filings otherwise expressly referred to in this Agreement
or set forth on Schedule 3.04 or 3.14(b). There are no facts relating to the
identity or circumstances of Seller that would prevent or materially delay
obtaining any of the Required Consents.
3.05. Non-Contravention. The execution, delivery and performance by
Seller and LJB of this Agreement do not and will not (a) contravene or conflict
with the Articles of Incorporation or Bylaws of Seller, true and correct copies
of which have been delivered to Buyer by Seller, (b) assuming receipt of the
Required Consents, contravene or conflict with or constitute a violation of any
provision of any Applicable Law binding upon or applicable to Seller or LJB, the
Business or any of the Transferred Assets, (c) assuming receipt of the Required
Consents, constitute a default under or give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to which Seller or
LJB is entitled under, any material Contract or any Permit or similar
authorization relating to Seller or LJB or by which any of the Transferred
Assets may be bound, or (d) result in the creation or imposition of any Lien on
any Transferred Asset, other than Permitted Liens.
3.06. Balance Sheets; Undisclosed Liabilities.
(a) Attached hereto as Exhibit A are true and complete copies
of the balance sheet of Seller as of December 31, 1995 (the "1995 Balance
Sheet") and the balance sheet of Seller as of September 30, 1996 (collectively,
the "Balance Sheets").
(b) Each of the Balance Sheets (i) has been prepared based on
the books and records of Seller in accordance with Seller's normal accounting
practices, consistently applied with past practice and with each other, which
practices constitute sound accounting principles, and presents fairly the
financial condition of Seller as of the date indicated,
10
(ii) contains and reflects all necessary adjustments and accruals for a fair
presentation of its financial condition as of the date indicated, (iii) contains
and reflects adequate provisions for all reasonably anticipated liabilities for
all taxes, federal, state, local or foreign, with respect to the period then
ended and all prior periods, and (iv) with respect to contracts and commitments
for the sale of goods or the provision of services by Seller, contains and
reflects adequate reserves for all reasonably anticipated losses and costs and
expenses in excess of expected receipts.
3.07. Absence of Certain Changes. Except as set forth on Schedule
3.07, since the date of the 1995 Balance Sheet, the Business has been conducted
in the ordinary course, and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts or change in the Transferred Assets or the Business
(including any damage, destruction or other casualty loss, but excluding any
event, occurrence, development or state of circumstances or facts or change
resulting from changes in general economic conditions) affecting the Business or
any Transferred Assets that has had or that may be reasonably expected to have,
either alone or together with all such events, occurrences, developments, states
of circumstances or facts or changes, a Material Adverse Effect;
(b) (i) any change in any Liability other than in the ordinary
course of business, or (ii) any incurrence of any Liability by Seller in
connection with the Business, any of the Transferred Assets or otherwise, other
than in the ordinary course of business;
(c) any transaction or commitment made, or any Contract
entered into, by Seller (including the acquisition or disposition of any
Transferred Assets), or any waiver, amendment, termination or cancellation of
any Contract by Seller, or any relinquishment of any rights thereunder by
Seller, or of any other right or debt owed to Seller, to the extent that any of
the foregoing relate to the Business, other than in each such case actions taken
in the ordinary course of business consistent with past practice;
(d) any (i) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any person employed by Seller in connection with the Business,
(ii) increase in benefits payable or potentially payable under any severance,
continuation or termination pay policies or employment agreements with any
person employed by Seller in connection with the Business, (iii) increase in
compensation, bonus or other benefits payable or potentially payable to any
person employed by Seller in connection with the Business, (iv) change in the
terms of any bonus, pension, insurance, health or other Benefit Plan of Seller
relating to the Business, or (v) representation of Seller to any employee or
former employee of Seller that Buyer would assume, continue to maintain or
implement any Benefit Plan after the Closing Date;
(e) any change by Seller in its accounting principles, methods
or practices or in the manner it keeps its books and records or any change by
Seller of its current practices with regards to sales, receivables, payables or
accrued expenses that would affect the timing of collection of receivables or
the payment of payables;
11
(f) the entering into of any Contract or other arrangement
between Seller and any officer, director, stockholder or Affiliate of Seller of
any of their respective Affiliates or Associates with respect to the Business;
or
(g) any labor dispute (other than routine individual
grievances), or any activity or proceeding by a labor union or representative
thereof to organize any persons employed by Seller in connection with the
Business, who were not subject to a collective bargaining agreement as of the
date of the 1995 Balance Sheet, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to any such employees.
3.08. Properties; Leases; Tangible Assets.
(a) Seller does not own any real property and does not have a
leasehold interest in any real property used in the conduct of the Business
other than the real property identified on Schedule 3.08(a) (the "Leased Real
Property"), which constitutes all of the real property used in the Business.
Seller has a good, valid and enforceable leasehold interest in the Leased Real
Property and the property subject to the Personal Property Leases and has good
and valid title to its other tangible assets and as of the Closing Buyer shall
succeed to such interest. Seller holds title to each such property and asset
free and clear of all Liens, adverse claims, easements, rights of way,
servitudes, zoning or building restrictions, or any other rights of others or
other adverse interests of any kind, including chattel mortgages, conditional
sales contracts, collateral security arrangements and other title or interest
retention arrangements (collectively, "Encumbrances"), except the Leases,
Permitted Liens or Liens that will be released on or prior to the Closing Date.
(b) All tangible properties and assets (other than inventory)
included in the Transferred Assets are in all material respects structurally
sound and are in good operating condition and repair and are adequate for the
uses to which they are put, and no properties or assets necessary for the
conduct of the Business in substantially the same manner as the Business has
heretofore been conducted are in need of replacement, maintenance or repair
except for routine and not materially deferred replacement, maintenance and
repair.
(c) Schedule 3.08(c) sets forth a true and complete list of
all personal property leases or licenses (i) to which Seller is a party or by
which Seller is bound that relate to the Business and (ii) that provide for
annual payments by Seller in excess of $10,000 or that contain other affirmative
material obligations that cannot be terminated by Seller within 30 days (the
"Personal Property Leases") and all leases or licenses of Leased Real Property
that provide for annual payments by Seller in excess of $10,000 or that cannot
be terminated by Seller within 30 days (the "Real Property Leases" and
collectively with the Personal Property Leases, the "Leases") entered into in
connection with the Business. With respect to the Leases, except as set forth on
Schedule 3.08(c), there exist no defaults by Seller, or, to the Knowledge of
Seller, any default or threatened default by any lessor or third party
thereunder, that has affected or could reasonably be expected to affect the
rights and privileges thereunder of Seller, and there has not been any failure
to perform any covenant or agreement which constitutes an event of default (with
the giving of notice or passage of time or otherwise) pursuant to any Lease.
Assuming the
12
Required Consents are obtained, all Leases to which Seller is a party with
non-Affiliates or by which it is bound may be assigned, transferred and conveyed
to Buyer without default, penalty or modification thereof.
(d) Except as disclosed in Schedule 3.08(d) or Schedule
3.20(c), the current use and operation of all Leased Real Property is in
compliance with all Applicable Laws (including without limitation laws relating
to zoning and land use) and public and private covenants and restrictions, and
Seller has not received any notice of non-compliance with any Applicable Laws.
(e) Except as disclosed Schedule 3.08(d) or Schedule 3.20(c),
there are no zoning or other land-use regulation proceedings or, to Seller's
Knowledge, any proposed change in any Applicable Laws, which could detrimentally
affect the use or operation of any Leased Real Property, nor has Seller received
notice of any special assessment proceedings affecting the Leased Real Property,
or applied for any change to the zoning or land use status of the Leased Real
Property.
(f) Except as disclosed in Schedule 3.08(d) or Schedule
3.20(c), all water, sewer, gas, electric, telephone and drainage facilities and
all other utilities required by law or for the normal use and operation of the
Leased Real Property are (i) installed to the property lines of each Leased Real
Property, (ii) in compliance with all Applicable Laws, (iii) adequate to service
the Leased Real Property as improved and to permit full compliance with all
Applicable Laws and normal usage of each Leased Real Property and (iv) connected
to each Leased Real Property by means of one or more public or private easements
extending from the Leased Real Property to one or more public streets, public
rights-of-way or utility facilities.
(g) Seller has obtained all licenses, permits, approvals,
easements and rights of way (and all such items are currently in full force and
effect) required from any Governmental Authority having jurisdiction over each
Leased Real Property or from private parties for the current use and operation
of each Leased Real Property.
(h) Each item in the Inventory is free from defect in
workmanship and material, is merchantable and is suitable for its intended
purpose. The tools, dies, machinery and other equipment used to manufacture
finished Inventory items are capable of manufacturing such items free of defect.
3.09. Sufficiency of and Title to the Transferred Assets. Upon
consummation of the transactions contemplated by this Agreement, Seller will
have sold, assigned, transferred and conveyed to Buyer all of the Transferred
Assets free and clear of all Liens other than the Leases or Permitted Liens,
which Transferred Assets constitute all of the properties and assets now held or
employed by Seller in connection with the Business (other than the Excluded
Assets). The Business is a going concern, and, with the transfer of the
Transferred Assets to Buyer pursuant to this Agreement, Buyer will have all
assets necessary to operate the Business as a going concern with all operations
of the Business unimpaired in any material respect immediately after the
Closing.
13
3.10. Affiliates.
(a) Except as set forth in Schedule 3.10(a), neither Seller
nor any shareholder, officer or director of Seller (or any immediate family
member of any such shareholder, officer or director) now has or at any time
subsequent to December 31, 1994, had, either directly or indirectly, an equity
or debt interest in any Person which furnishes or sells or during such period
furnished or sold services or products to Seller or purchases or during such
period purchased from Seller any goods or services, or otherwise does or during
such period did business with Seller of a material nature or amount; provided,
however, that neither Seller, nor any shareholder of Seller nor any of Seller's
officers and directors or other Affiliates shall be deemed to have such an
interest solely by virtue of the ownership of less than five percent (5%) of the
outstanding voting stock or debt securities of any publicly held company, the
stock or debt securities of which are traded on a national stock exchange or
quoted on the National Association of Securities Dealers Automated Quotation
System; or
(b) Except as set forth in Schedule 3.10(b), no shareholder,
officer or director of Seller (or any immediate family member of any such
shareholder, officer or director) now is or at any time subsequent to December
31, 1994, was, a party to any contract, commitment or agreement to which Seller
is or during such period was a party or under which Seller is or was obligated
or bound or to which any of its properties may be or may have been subject.
3.11. No Undisclosed Liabilities. Except (i) for Liabilities set
forth on the 1995 Balance Sheet, (ii) for Liabilities incurred in the ordinary
course of business since December 31, 1995, or (iii) as set forth on Schedule
3.11, there are no Liabilities of Seller individually or collectively that
exceed $200,000.
3.12. Litigation. Except as disclosed on Schedule 3.12, (i) there
are no actions, suits, hearings, arbitrations, proceedings (public or private)
or governmental investigations that have been brought by or against any
Governmental Authority or any other Person (collectively, "Proceedings") pending
or, to Seller's Knowledge, threatened, against or affecting Seller, the Business
or any of the Transferred Assets or which seek to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent Seller from
complying with the terms and provisions of this Agreement; (ii) there are no
existing orders, judgments or decrees of any Governmental Authority or any legal
tribunal affecting any of the Transferred Assets or the Business; and (iii) to
Seller's Knowledge, there are no events, occurrences, developments, states of
circumstances or facts or changes that could give rise to any Liability that may
be reasonably expected to have a Material Adverse Effect.
3.13. Contracts.
(a) Schedule 3.13(a) sets forth a complete list of the
following contracts, commitments and obligations (whether written or oral) of
Seller that relate to the Business (collectively with the Leases and the
Employment Agreements, the "Scheduled Contracts"):
14
(i) each Contract between Seller and (A) any supplier of
services or products to Seller whose dollar volume of sales to Seller
exceeded $10,000 in 1995, and (B) any Person in which the aggregate
payments made to Seller under such Contract exceeded $10,000 in 1995;
(ii) each other agreement or arrangement of Seller that (y)
requires the payment or incurrence of Liabilities or the rendering of
services by Seller, subsequent to the date of this Agreement of more than
$10,000 and (z) cannot be terminated by Seller within 30 days;
(iii) all Contracts relating to, and evidences of or
guarantees of, or providing security for, indebtedness for borrowed money
or the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset);
(iv) to the extent that any of the following provide for
annual payments by Seller in excess of $10,000 and cannot be terminated by
Seller within 30 days, all license, distribution, commission, marketing,
agent, franchise, technical assistance or similar agreements relating to
or providing for the marketing and/or sale of the products or services to
which Seller is a party or by which Seller is otherwise bound; and
(v) all other contracts, commitments and obligations that are
not in the ordinary course of the Business.
(b) Except as disclosed in Schedule 3.13(b), each Scheduled
Contract and Subsequent Material Contract relating to the Business or any of the
Transferred Assets is a legal, valid and binding obligation of Seller and, to
the Knowledge of Seller, each other party thereto, enforceable (except to the
extent such enforceability may be limited by bankruptcy, equity and creditors'
rights generally) against Seller and, to the Knowledge of Seller, each such
other party in accordance with its terms, and neither Seller nor, to the
Knowledge of Seller, any other party thereto is in material default or has
failed to perform any material obligation thereunder. Complete and correct
copies of each Scheduled Contract have been delivered to Buyer.
(c) Schedule 3.13(c) sets forth a list (by name, address and
persons to contact) of the 10 largest customers of and the five primary vendors
providing services to Seller for each of the 12-month periods ended December 31,
1994 and 1995 and the nine-month period ended September 30, 1996 together with
the approximate dollar amount of sales or services provided to Seller during
said periods and a summary description of the services provided by such vendors.
3.14. Permits; Required Consents.
(a) Schedule 3.14(a) sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities (and all other Persons)
necessary for the operation of the Transferred
15
Assets or the Business in substantially the same manner as currently operated or
affecting or relating in any way to the Business (the "Permits").
(b) Schedule 3.14(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver (each, a "Required Governmental Approval") required
under Applicable Law to be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the loss of any material Permit or otherwise, and (ii) each
Scheduled Contract with respect to which the consent of the other party or
parties thereto must be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach or default thereunder or any other change or modification to
the terms thereof (each, a "Required Contractual Consent" and collectively with
the Required Governmental Approvals, the "Required Consents"). Except as set
forth in Schedule 3.14(a) or (b) each Permit is valid and in full force and
effect in all material respects and, assuming the related Required Consents have
been obtained prior to the Closing Date, are or will be transferable by Seller,
and assuming the related Required Consents have been obtained prior to the
Closing Date, none of the Permits will be terminated or become terminable or
impaired in any material respect as a result of the transactions contemplated
hereby.
3.15. Compliance with Applicable Laws. Except as set forth in
Schedule 3.15, the operation of the Business by Seller and the condition of the
Transferred Assets have not violated or infringed, and do not violate or
infringe, any material Applicable Law, or any order, writ, injunction or decree
of any Governmental Authority.
3.16 Employment Agreements; Change in Control; and Employee
Benefits.
(a) Except as set forth on Schedule 3.16(a), there are no
employment, consulting, severance pay, continuation pay, termination pay or
indemnification agreements or other similar agreements of any nature whatsoever
(collectively, "Employment Agreements") between Seller, on the one hand, and any
current or former stockholder, officer, director, employee or Affiliate of
Seller or any of their respective Associates or any consultant or agent of
Seller, on the other hand, that are currently in effect and relate to the
Business. Except as set forth on Schedule 3.16(a), there are no Employment
Agreements or any other similar agreements to which Seller is a party under
which the transactions contemplated by this Agreement (i) will require any
payment by Seller, Buyer, or any consent or waiver from any stockholder,
officer, director, employee or Affiliate of Seller or any of their respective
Associates or any consultant or agent of Seller, or Buyer, or (ii) will result
in any change in the nature of any rights of any stockholder, officer, director,
employee or Affiliate of Seller or any of their respective Associates or any
consultant or agent of Seller under any such Employment Agreement or other
similar agreement.
(b) Schedule 3.16(b) sets forth all Benefit Plans and Benefit
Arrangements of Seller. Seller has made true and correct copies of all governing
instruments
16
and related agreements pertaining to such Benefit Plans and Benefit Arrangements
available to Buyer. Seller has made available to Buyer a copy of (i) the three
most recently filed Federal Form 5500 series and accountant's opinion, if
applicable, for each Employee Benefit Plan.
(c) The funding method used in connection with each Employee
Pension Benefit Plan subject to the minimum funding requirements of ERISA is
acceptable and the actuarial assumptions used in connection with funding each
such plan are reasonable. No accumulated funding deficiency, as defined in Code
Section 412 has been incurred with respect to any plan year, whether or not
waived. Except as set forth on Schedule 3.16(i), Seller has not failed to pay
when due any required installment, within the meaning of Code Section 412(m),
with respect to any Employee Pension Benefit Plan. There has been no reportable
event, within the meaning of ERISA Section 4043(b) with respect to any Employee
Pension Benefit Plan. Except as set forth on Schedule 3.16(i), no proceeding has
ever been commenced by the Pension Benefit Guaranty Corporation to terminate any
such plan, and no condition exists and no event has occurred that could
reasonably constitute grounds for the termination of any such plan by the
Pension Benefit Guaranty Corporation.
(d) Neither Seller nor any ERISA Affiliates of Seller sponsors
or has ever sponsored, maintained, contributed to, or incurred an obligation to
contribute to any Multiemployer Plan.
(e) No individual shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under any Benefit Plan,
including the right to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated by this Agreement.
(f) Except as set forth on Schedule 3.16(f), no Employee
Benefit Plan has participated in, engaged in or been a party to any non-exempt
Prohibited Transaction, and neither Seller nor any ERISA Affiliates of Seller
has had asserted against it any claim for taxes under Chapter 43 of Subtitle D
of the Code and Sections 5000 of the Code, or for penalties under ERISA Section
502(c), (i) or (l), with respect to any Employee Benefit Plan nor, to the
Knowledge of Seller, is there a basis for any such claim. Except as set forth on
Schedule 3.16(f), no officer, director or employee of Seller has committed a
material breach of any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Employee Benefit Plan.
(g) Except as set forth on Schedule 3.16(g), other than
routine claims for benefits, there is no claim pending or to the Knowledge of
Seller threatened, involving any Benefit Plan by any Person against such plan or
Seller or any ERISA Affiliate. Except as set forth on Schedule 3.16(g), there is
no pending or to the Knowledge of Seller threatened proceeding involving any
Employee Benefit Plan before the IRS, the United States Department of Labor or
any other Governmental Authority.
17
(h) Except as set forth on Schedule 3.16(g), there is no
violation of any reporting or disclosure requirement imposed by ERISA or the
Code with respect to any Benefit Plan.
(i) Except as set forth on Schedule 3.16(i), each Benefit Plan
has at all times prior hereto been maintained in all material respects, by its
terms and in operation, in accordance with ERISA and the Code including, but not
limited to, all applicable reporting and disclosure requirements. Each Employee
Pension Benefit Plan intended to be a qualified plan under Code Section 401(a)
has received a favorable determination letter to that effect from the Internal
Revenue Service, and nothing has occurred since such determination that would
adversely affect such plan's qualified status. Except as set forth on Schedule
3.16(i), Seller and each ERISA Affiliate have made full and timely payment of
all amounts required to be contributed under the terms of each Benefit Plan and
Applicable Law or required to be paid as expenses under such Benefit Plan, and
Seller and each ERISA Affiliates shall continue to do so through the Closing.
(j) With respect to any Group Health Plans maintained by
Seller or its ERISA Affiliate, whether or not for the benefit of Seller and its
ERISA Affiliate, Seller and its ERISA Affiliates have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and Section 4980B of
the Code. Except as set forth in Schedule 3.16(j), Seller is not obligated to
provide health care benefits of any kind to its retired employees pursuant to
any Employee Benefit Plan, including without limitation any Group Health Plan,
or pursuant to any agreement or understanding.
3.17 Labor and Employment Matters.
(a) Except as set forth on Schedule 3.17, no collective
bargaining agreement exists that is binding on Seller and relates to Employees
of the Business and, except as described on Schedule 3.17, no petition has been
filed or proceedings instituted by an employee of the Business or group of
employees of the Business with any labor relations board seeking recognition of
a bargaining representative. Schedule 3.17 describes any organizational effort
currently being made or threatened by or on behalf of any labor union to
organize any employees of the Business .
(b) Except as set forth on Schedule 3.17, (i) there is no
labor strike, dispute, slow down or stoppage pending or, to Seller's Knowledge,
threatened against or directly affecting the Business, (ii) no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement relating to the Business is pending, and no claims therefor exist; and
(iii) neither Seller, nor of its Affiliates has received any notice or has any
Knowledge of any threatened labor or civil rights dispute, controversy or
grievance or any other unfair labor practice proceeding or breach of contract
claim or action with respect to claims of, or obligations to, any employee or
group of employees of the Business.
(c) If required under the Workers Adjustment and Retraining
Notification Act or other applicable state law regulating plant closing or mass
layoffs, Seller and
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its Affiliates have timely caused there to be filed or distributed, as
appropriate, all required filings and notices with respect to employment losses
occurring through the Closing Date.
(d) Seller and its Affiliates have complied and are currently
complying, in respect of all employees of the Business, with all Applicable Laws
respecting employment and employment practices and the protection of the health
and safety of employees, from whatever source such law may be derived,
including, without limitation, statutes, ordinances, laws, rules, regulations,
policies, standards, judicial or administrative precedents, judgments, orders,
decrees, awards, citations, licenses, official interpretations and guidelines.
(e) All individuals who are performing or have performed
services for Seller, or any Affiliate thereof and are or were classified by
Seller or any Affiliate as "independent contractors" qualify for such
classification under Section 530 of the Revenue Act of 1978 or Section 1706 of
the Tax Reform Act of 1986, as applicable, except for such instances which are
not, in the aggregate, material.
3.18. Intellectual Property.
(a) Schedule 3.18(a) sets forth a complete and correct list of
each patent, patent application and docketed invention, trademark, trade name,
trademark or tradename registration, logo, product number or application,
copyright or copyright registration or application for copyright registration,
and each license or licensing agreement for any of the foregoing relating to any
Transferred Asset or relating to the Business (the "Intellectual Property
Rights").
(b) Except as disclosed in Schedule 3.18(b), Seller has not
during the three years preceding the date of this Agreement been a party to any
Proceeding, nor to the Knowledge of Seller is any Proceeding threatened as to
which there is a reasonable possibility of a determination adverse to Seller
that involved or may involve a claim of infringement by any Person (including
any Governmental Authority) of any Intellectual Property Right. Except as
disclosed in Schedule 3.18(b), no Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by Seller, or restricting the licensing thereof by Seller to any
Person. The use of the Intellectual Property Rights does not conflict with,
infringe upon or violate any patent, patent license, patent application,
trademark, tradename, trademark or tradename registration, copyright, copyright
registration, service ▇▇▇▇, brand ▇▇▇▇ or brand name or any pending application
relating thereto, or any trade secret, know-how, programs or processes, or any
similar rights, of any Person.
(c) Except as set forth in Schedule 3.18(c), Seller either
owns the entire right, title and interest in, to and under, or, to Seller's
knowledge, has acquired in connection with the acquisition of Equipment or
Inventory an implied license to use, any and all inventions, processes, computer
programs, know-how, formulae, trade secrets, patents, chip designs, mask works,
trademarks, tradenames, brand names and copyrights which are necessary for the
conduct of the Business in the manner that the Business has heretofore been
conducted. No other inventions, processes, computer programs, know-how,
formulae, trade secrets, patents, chip designs, mask works, trademarks,
tradenames, brand names, copyrights, licenses or
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applications for any of the foregoing are necessary for the unimpaired continued
operation of the Business in the manner that such business has heretofore been
conducted.
3.19. Advisory Fees. There is no investment banker, broker, finder
or other intermediary or advisor that has been retained by or is authorized to
act on behalf of Seller or its Affiliates who might be entitled to any fee,
commission or reimbursement of expenses from Buyer or any of its Affiliates or
any of their respective Associates upon consummation of the transactions
contemplated by this Agreement.
3.20. Environmental Compliance.
(a) Except as disclosed in Schedule 3.20(a), Seller has
obtained all approvals, authorizations, certificates, consents, licenses, orders
and permits or other similar authorizations of all Governmental Authorities, or
from any other Person, that are required under any Environmental Law in
connection with the operation of the Business. Schedule 3.20(a) sets forth all
permits, licenses and other authorizations issued under any Environmental Law to
Seller relating to the Business or the Transferred Assets.
(b) Except as disclosed in Schedule 3.20(b), Seller is in
compliance in all respects with all terms and conditions of all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities (and all other Persons)
required under all Environmental Laws and used in the Business or that relate to
the Transferred Assets, and is also in compliance in all respects with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws in connection with
the operation of the Business.
(c) Except as disclosed in Schedule 3.20(c), there are no past
or present events, conditions, circumstances, activities, practices, incidents,
actions, omissions or plans relating to or in any way affecting Seller, the
Business or the Transferred Assets that may interfere with or prevent continued
compliance with any Environmental Law by Buyer after the Closing, or that may
give rise to any Environmental Liability, or otherwise form the basis of any
claim, action, demand, suit, Proceeding, hearing, study or investigation (i)
under any Environmental Law, (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any Hazardous Substance, or (iii)
resulting from exposure to workplace hazards.
(d) Seller has delivered to Buyer all environmental studies
and reports known to Seller relating to the Business or the Transferred Assets.
3.21. Insurance. Schedule 3.21 sets forth a complete and correct
list of all insurance policies of any kind or nature whatsoever currently in
force or in force at any time subsequent to December 31, 1995 with respect to
the Business (the "Insurance Policies"), including all "occurrence based"
liability policies regardless of the periods to which they relate. For each
Insurance Policy, Schedule 3.21 indicates the type of coverage, the name of the
insureds, the insurer, the premium, the expiration date, the period to which it
relates, the
20
deductibles and loss retention amounts and the amounts of coverage. The
Insurance Policies described as currently in effect are in full force and effect
and are valid, outstanding and enforceable, and all premiums due thereon have
been paid in full.
3.22. Tax Matters. Except as set forth on Schedule 3.22:
(a) Seller has timely filed all Tax Returns required to have
been filed by it, and has timely paid all Taxes due to any taxing authority with
respect to all taxable periods ending on or prior to the Closing Date, or
otherwise attributable to all periods prior to the Closing Date. All taxes
payable by Seller with respect to all taxable periods ending on or prior to the
Closing Date have been provided for, and all Returns are true, correct, and
complete in all respects. Seller is currently not the beneficiary of any
extension of time within which to file any Tax Return.
(b) Seller has not received notice that the IRS or any other
taxing authority has asserted against Seller any deficiency in Taxes or claim
for additional Taxes in connection with any tax period. There are no liens for
Taxes on any of the Transferred Assets, except for liens arising from Taxes
which are due but not yet payable.
(c) Seller has withheld and paid over all Taxes required to
have been withheld and paid over in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party;
(d) Seller has not been included in any consolidated, combined
or unitary Tax Return provided for under the laws of the United States, any
state or locality with respect to Taxes for any taxable period for which the
statute of limitations has not expired.
(e) Seller does not have any unpaid liability for Taxes under
Sections 1363(d), 1374, or 1375 of the Code (or any successor or predecessor
provision) or any similar provision of state or local law for any period on or
prior to or including the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND RBC
Buyer and RBC hereby jointly and severally represent and warrant to
Seller and LJB that:
4.01. Organization and Existence. Each of Buyer and RBC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby. Each of
Buyer and RBC is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary to carry on its
business as now
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conducted, except for those jurisdictions where the failure to be so qualified
has not been, and may not reasonably be expected to be, material.
4.02. Corporate Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement and the consummation by
each of Buyer and RBC of the transactions contemplated hereby are within their
respective corporate powers and have been duly authorized by all necessary
corporate action on the part of Buyer and RBC, subject to the receipt of
approval by their respective Boards of Directors. This Agreement constitutes a
legal, valid and binding agreement of each of Buyer and RBC, enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
4.03. Governmental Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than as
set forth in this Agreement.
4.04. Non-Contravention. The execution, delivery and performance by
each of Buyer and RBC of this Agreement do not (a) contravene or conflict with
the Certificate of Incorporation or Bylaws of Buyer or RBC, or (b) contravene or
conflict with or constitute a violation of any provision of any Applicable Law
binding upon or applicable to Buyer or RBC.
4.05. Advisory Fees. Except for W.E. ▇▇▇▇▇ & Company and Aurora
Capital Partners L.P. (whose fees and expenses will be paid by Buyer or RBC),
there is no investment banker, broker, finder or other intermediary or advisor
that has been retained by or is authorized to act on behalf of Buyer who might
be entitled to any fee, commission or reimbursement of expenses from Seller or
any of its respective Affiliates upon consummation of the transactions
contemplated by this Agreement.
4.06. Litigation. There is no Proceeding pending against, or to the
Knowledge of Buyer or RBC, threatened against or affecting, Buyer or RBC before
any court or arbitrators or any governmental body, agency or official that in
any matter challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
5.01. Conduct of the Business; Distributions. From the date hereof
until the Closing Date, Seller shall conduct the Business in the ordinary course
and in substantially the same manner as it has prior to the date of this
Agreement and agrees, with respect to the Business and other than in the
ordinary course of business, not to enter into any material agreements or take
any other significant actions without the prior written consent of Buyer, which
shall not be unreasonably withheld. Seller shall use its reasonable efforts to
preserve intact the Transferred Assets, the Business and the business
organizations and relationships and goodwill of Seller with third parties with
respect to the Business and keep available the services
22
of the present employees, agents and other personnel of Seller with respect to
the Business. Without limiting the generality of the preceding sentence and
except as otherwise expressly provided in this Agreement, from the date hereof
until the Closing Date:
(a) Seller will:
(i) (A) maintain the Transferred Assets in the ordinary
course of business consistent with past practice in good operating order
and condition, reasonable wear and tear excepted, (B) promptly repair,
restore or replace any Transferred Assets in the ordinary course of
business consistent with past practice, (C) upon any damage, destruction
or loss to any of the Transferred Assets, apply any and all insurance
proceeds received with respect thereto to the prompt repair, replacement
and restoration thereof to the condition of the Transferred Assets before
such event, (D) use its best efforts to obtain, prior to the Closing Date,
all Required Consents, and (E) take all actions necessary to be in
compliance with, and to maintain the effectiveness of, all material
Permits;
(ii) comply with all material Applicable Laws;
(iii) file all foreign, Federal, state and local Tax
Returns required to be filed and make timely payment of all applicable
Taxes when due;
(iv) promptly notify Buyer in writing of (A) any action,
event, condition or circumstance, or group of actions, events, conditions
or circumstances, that results in, or could reasonably be expected to
result in, a Material Adverse Effect, other than changes in general
economic conditions, (B) the commencement of any Proceeding by or against
Seller, or Seller becoming aware of any threat, claim, action, suit,
inquiry, proceeding, notice of violation, demand letter, subpoena,
government audit or disallowance that could reasonably be expected to
result in a Proceeding, and (C) the occurrence of any breach by Seller or
LJB of any representation or warranty, or any covenant or agreement,
contained in this Agreement.
(b) without Buyer's prior consent, Seller will not and will
not agree to, and LJB will cause Seller not to:
(i) purchase or otherwise acquire assets with respect to
the Business from any other Person other than in the ordinary course of
the Business;
(ii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with Permitted
Liens), any of the Transferred Assets, including Leased Real Property,
except in the ordinary course of the Business;
(iii) amend or modify in any material respect or
terminate any Scheduled Contract or any other Contract entered into by
Seller after the date hereof which, if in existence on the date hereof,
would be required to be set forth in the Schedule 3.13(a) as a Scheduled
Contract (each, a "Subsequent Material Contract");
23
(iv) except in the ordinary course of Seller's Business,
waive, cancel or take any other action materially impairing any of its
rights relating to the Business;
(v) make or commit to make any capital expenditure, or
group of related capital expenditures with respect to the Business in
excess of $10,000, other than (A) capital expenditures set forth on
Schedule 5.01(b) and (B) capital expenditures expressly required under any
Scheduled Contract;
(vi) enter into or commit or propose to enter into any
Subsequent Material Contract;
(vii) with respect to the Business, (A) increase the
rate or terms of compensation payable or to become payable to its
employees except in the ordinary course of business, (B) pay or agree to
pay any pension, retirement allowance or other employee benefit not
provided for by any Employee Plan, Benefit Arrangement or Employment
Agreement set forth in the Schedules hereto, (C) commit itself to any
additional pension, profit sharing, bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, continuation pay, termination pay,
retirement or other employee benefit plan, agreement or arrangement, or
increase the rate or terms of any Employee Plan or Benefit Arrangement,
(D) enter into any employment agreement with or for the benefit of any
Person, or (E) increase the rate of compensation under or otherwise change
the terms of any Employment Agreement set forth in Schedule 3.16(a);
(viii) make any change in its accounting methods or in
the manner of keeping its books and records or any change in its current
practices with respect to sales, receivables, payables or accrued
expenses; or
(ix) move any of the Transferred Assets between or among
any of Seller's facilities.
5.02. Access to Information. Subject to compliance with Applicable
Laws, from the date hereof until the Closing Date, Seller will promptly: (a)
give Buyer and its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and records
relating to the Business and the Transferred Assets upon reasonable prior
notice, (b) furnish to Buyer and its counsel, financial advisors, auditors and
other authorized representatives such information relating to the Business or
the Transferred Assets as Buyer may reasonably request and (c) instruct the
directors, officers, employees, counsel, auditors and financial advisors of
Seller to cooperate with Buyer and its counsel, financial advisors, auditors and
other authorized representatives in their investigation of the Business and the
Transferred Assets. Such investigation shall include, but shall not be limited
to:
(i) A business and financial performance review of the
Business;
24
(ii) A review of the financial statements and tax
returns of Seller;
(iii) An environmental review as to the presence and
nature of any hazardous materials in or on any real property owned or
leased by Seller; and
(iv) A standard legal due diligence examination relating
to Seller and the Business.
5.03. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents. On and after the Closing Date, Seller shall
comply at its own expense with all conditions and requirements affecting Seller
set forth in (a) all Required Governmental Approvals as necessary to keep the
same in full force and effect assuming continued compliance with the terms
thereof by Buyer and (b) all Required Contractual Consents as necessary to keep
the same effective and enforceable against the Persons giving such Required
Contractual Consents assuming continued compliance with the terms thereof by
Buyer.
5.04. Maintenance of Insurance Policies. On and after the date
hereof (including after the Closing Date), Seller shall not take or fail to take
any action if such action or inaction, as the case may be, would adversely
affect the applicability of any insurance in effect on the date hereof that
covers all or any part of the Transferred Assets or the Business with respect to
the period of time ending on the Closing Date. Notwithstanding the foregoing,
Seller shall not have any obligation to make any monetary payment to maintain
the effectiveness of any such insurance policy after the Closing Date.
5.05. Confidentiality.
(a) Seller and LJB will, and will cause their representatives
to, treat any data and information obtained with respect to Buyer or any of its
Affiliates from any representative, officer, director, or employee of Buyer, or
from any books or records of Buyer in connection with this Agreement,
confidentially and with commercially reasonable care and discretion, and will
not disclose any such information to third parties; provided, however, that the
foregoing shall not apply to (i) information in the public domain or that
becomes public through disclosure by any party other than Seller or its
Affiliates or representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that may be required to be
disclosed by Applicable Law or (iii) information required to be disclosed to
obtain any Required Consents.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Seller and LJB, upon the written request of Buyer,
will, and will cause their representatives to, promptly deliver to Buyer any and
all documents or other materials furnished by Buyer or any of its Affiliates to
Seller or LJB in connection with this Agreement without retaining any copy
thereof. In the event of such request, all other documents, whether analyses,
compilations or studies, that contain or otherwise reflect the information
furnished by Buyer to Seller or LJB, shall be destroyed by Seller or shall be
returned to Buyer, and Seller shall confirm to Buyer in writing that all such
materials have been returned or destroyed. No failure or delay by Buyer in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof,
25
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 5.05, money damages would not be an adequate remedy
to Buyer or its Affiliates for such breach and, even if money damages were
adequate, it would be impossible to ascertain or measure with any degree of
accuracy the damages sustained therefrom. Accordingly, if there should be a
breach or threatened breach of any of the provisions of this Section 5.05, Buyer
and its Affiliates shall be entitled to an injunction restraining Seller and LJB
from any breach without showing or proving actual damage sustained by Buyer or
its Affiliates, as the case may be. Nothing in the preceding sentence shall
limit or otherwise affect any remedies that Buyer may otherwise have under
Applicable Law.
5.06. Taxes.
(a) All sales, value added, use, transfer, registration, stamp
and similar Taxes imposed in connection with the sale of the Transferred Assets
shall be borne by Seller.
(b) Seller agrees that no new elections with respect to Taxes
or any changes in current elections with respect to Taxes affecting the
Transferred Assets shall be made after the date of this Agreement without the
prior written consent of Buyer.
(c) Seller shall (i) provide Buyer with such assistance as may
reasonably be requested in connection with the preparation of any Tax Return and
the conduct of any audit or other examination by any taxing authority or in
connection with judicial or administrative proceedings relating to any liability
for Taxes, (ii) retain and provide Buyer with all records or other information
that may be relevant to the preparation of any Tax Returns, or the conduct of
any audit or examination, or other Tax Proceeding. Seller shall retain all
relevant documents, including prior year's Tax Returns, supporting work
schedules and other records or information that may be relevant to such returns
and shall not destroy or otherwise dispose of any such records without the prior
written consent of Buyer. Notwithstanding the foregoing, Seller shall have no
obligation to obtain records that exist as of the date hereof but that were not
under Seller's dominion and control prior to the date hereof.
(d) Seller shall provide Buyer with all tax clearance
certificates or similar documents that may be required by any state or local
taxing authority in order to relieve Buyer of any obligations to withhold any
portion of the Purchase Price.
(e) Pursuant to Section 1445(b)(2) of the Code, Seller shall
furnish Buyer an affidavit, stating under penalty of perjury Seller's United
States taxpayer identification number and that Seller is not a foreign person.
5.07. Use of Name; Obtaining of Trademark. From and after the
Closing, Seller shall not use the name "Beaver Ball Screws" in any context.
Following the Closing, Buyer intends to make application for a trademark
registration of the name "Beaver Ball Screws" for use in connection with the
Business. Seller shall take any and all actions and execute and
26
deliver any and all documents reasonably necessary to assist Buyer in obtaining
such trademark registration if and to the extent that Buyer would otherwise be
unsuccessful due to the existence of any similar registered trademark of Seller.
If, notwithstanding Seller's best efforts pursuant to the preceding sentence,
Buyer is unable to obtain a trademark registration of the name "Beaver Ball
Screws," then (i) Buyer shall have a license in perpetuity to use the name
"Beaver Ball Screws" without payment of royalties or fees and (ii) Seller, at
Buyer's request and expense, will prosecute from time to time all actions
against other Persons for infringements against or improper usage of the name
"Beaver Ball Screws."
5.08. Intentionally Omitted.
5.09. Collection of Selected Accounts Receivable. If Seller receives
partial or full payment of any Selected Accounts Receivable after the Closing
Date, such payment shall be paid promptly to Buyer. Seller shall use its
reasonable best efforts to enter into an agreement with Sanwa Business Credit
Corporation in the form attached hereto as Exhibit B.
5.10. Compliance With Bulk Sales Laws. Seller shall comply prior to
the Closing Date with all applicable provisions of Article 6 of the Uniform
Commercial Code as adopted in the States of South Carolina and Michigan relating
to bulk sales.
5.11. Notice of Third Party Interest. Seller shall promptly
communicate to Buyer the fact that Seller or LJB has received any proposal or
inquiry regarding the purchase or acquisition of all or substantially all of the
Transferred Assets or the Business or a merger, consolidation or other business
combination or arrangement pursuant to which any other Person would directly or
indirectly acquire the Transferred Assets or the Business or any substantial
equity interest therein.
5.12. Reconveyance Fee. If Buyer reconveys the Transferred Assets to
Seller pursuant to the Lien Escrow Agreement, LJB shall pay to Buyer a fee of
$250,000 in cash within three business days after such reconveyance.
ARTICLE VI
COVENANTS OF BUYER
6.01. Confidentiality.
(a) Buyer will, and will cause its representatives to, treat
any data and information obtained with respect to Seller from any
representative, officer, director or employee of Seller, or from any books or
records of Seller in connection with this Agreement, confidentially and with
commercially reasonable care and discretion, and will not disclose any such
information to third parties; provided, however, that the foregoing shall not
apply to (i) information in the public domain or that becomes public through
disclosure by any party other than Buyer, or its Affiliates or representatives,
so long as such other party is not in breach of a confidentiality obligation,
(ii) information that may be required to be disclosed by Applicable Law, (iii)
information required to be disclosed to obtain any Required Consents;
27
(iv) any information that is disclosed by Buyer or its Affiliates to any of
their actual or prospective lenders or investors in connection with financing
the transactions contemplated by this Agreement; or (v) any information that is
disclosed by Buyer after the Closing shall have occurred; provided, however,
that in the event the Closing has occurred, this Section 6.01(a) shall cease to
be effective with respect to any data and information obtained with respect to
the Transferred Assets or the Business.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Buyer, upon the written request of Seller, will, and
will cause its representatives to, promptly deliver to Seller any and all
documents or other materials furnished by Seller to Buyer in connection with
this Agreement without retaining any copy thereof. In event of such request, all
other documents, whether analyses, compilations or studies, that contain or
otherwise reflect the information furnished by Seller to Buyer, shall be
destroyed by Buyer or shall be returned to Seller, and Buyer shall confirm to
Seller in writing that all such materials have been returned or destroyed. No
failure or delay by Seller in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 6.01, money damages would not be an adequate remedy
to Seller for such breach and, even if money damages were adequate, it would be
impossible to ascertain or measure with any degree of accuracy the damages
sustained by Seller therefrom. Accordingly, if there should be a breach or
threatened breach of any of the provisions of this Section 6.01, Seller shall be
entitled to an injunction restraining Buyer from any breach without showing or
proving actual damage sustained by Seller. Nothing in the preceding sentence
shall limit or otherwise affect any remedies that Seller may otherwise have
under Applicable Law.
6.02. Collection of Accounts Receivable. During the 90-day period
immediately following the Closing Date, Buyer shall use it reasonable best
efforts to collect on behalf of Seller all accounts receivable relating to the
Business that are not Selected Accounts Receivable (the "Retained Accounts
Receivable"); provided, however, that Buyer shall not be required to institute
legal action to collect any Retained Accounts Receivables. Any amount collected
by Buyer with respect to the Retained Accounts Receivable will be promptly paid
to Seller. Seller shall take no action to collect Retained Accounts Receivable
from the customers listed on Schedule 6.02 during the 90-day period without the
prior written consent of Buyer.
6.03. No Solicitation of Employees. Prior to the Closing Buyer shall
not solicit any employee of the Business to become an employee of Buyer other
than any offer of employment that is conditioned upon Buyer acquiring the
Transferred Assets.
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ARTICLE VII
COVENANTS OF ALL PARTIES
7.01. Further Assurances. Subject to the terms and conditions of
this Agreement, each party will use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law and this Agreement to consummate the transactions
contemplated by this Agreement. Buyer and Seller agree to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be reasonably necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement. Following the Closing, Buyer shall make the employees and records of
Seller reasonably available to Seller, at no charge to Seller other than for out
of pocket expenses incurred by Buyer for items such as photocopying or travel,
for the purposes of providing accounting information reasonably required by
Seller, providing testimony or information in connection with any legal
proceeding or for any other appropriate purpose arising out of Seller's
ownership and operation of the Business.
7.02. Certain Filings. The parties hereto shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Contract is required or
reasonably appropriate, in connection with the consummation of the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to
obtain any such actions, consents, approvals or waivers.
7.03. Public Announcements. Up to (and including) the Closing Date,
the parties agree that they shall not make any disclosures with respect to this
Agreement or the transactions contemplated hereby or cause to be publicized in
any manner whatsoever by way of interview, responses to questions or inquiries,
press releases or otherwise any aspect of this Agreement or the transactions
contemplated hereby without prior written notice to and approval of the other
parties hereto, unless the party proposing disclosure reasonably concludes that
such release of information is required by Applicable Law and the parties hereto
cannot reach agreement upon a mutually acceptable form of release prior to the
time that such release of information is required by Applicable law.
Notwithstanding the foregoing, the parties may, on a confidential basis (except
in the case of clause (iv) below), advise and release information regarding the
existence and content of this Agreement or the transactions contemplated hereby
to (i) their respective Affiliates or any of their agents, accountants,
attorneys and prospective lenders or investors in connection with or related to
the transactions contemplated by this Agreement, including without limitation
the financing of such transactions, (ii) Sanwa Business Credit Corporation,
(iii) ▇▇▇▇ Corporation, (iv) any other secured creditor of Seller for the
purposes of obtaining the release of such creditor's Lien, (v) such Persons as
are necessary in order for Seller to satisfy its obligation under Section 5.10,
(vi) such Persons as are necessary to
29
obtain all Required Governmental Approvals and Required Contractual Consents and
(vii) such Persons as are necessary for Buyer to obtain all Permits.
7.04. Administration of Accounts. All payments and reimbursements
made in the ordinary course by any third party in the name of or to Seller or
any Affiliate thereof in connection with or arising out of the Transferred
Assets, the Business or the Assumed Liabilities after the Closing Date shall be
held by Seller or such Affiliate in trust for the benefit of Buyer and,
immediately upon receipt by Seller or any such Affiliate of any such payment or
reimbursement, Seller shall pay, or cause to be paid, over to Buyer the amount
of such payment or reimbursement without right of set off. All payments and
reimbursements made in the ordinary course by any third party in the name of or
to Buyer or any Affiliate thereof in connection with or arising out of the
Excluded Assets or the Excluded Liabilities after the Closing Date shall be held
by Buyer or such Affiliate in trust for the benefit of Seller and, immediately
upon receipt by Buyer or any such Affiliate of any such payment or
reimbursement, Buyer shall pay, or cause to be paid, over to Seller the amount
of such payment or reimbursement without right of set off.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated hereby is subject to the satisfaction
of each of the following conditions:
(a) (i) Seller and LJB shall have performed and satisfied in
all material respects each of their material obligations hereunder required to
be performed and satisfied on or prior to the Closing Date, (ii) each of the
representations and warranties of Seller and LJB contained in this Agreement
shall have been true and correct in all material respects when made and shall
contain no misstatement or omission that would make any such representation or
warranty materially misleading when made and shall be true and correct in all
material respects, and shall not contain any misstatement or omission that would
make any such representation or warranty materially misleading, at and as of the
Closing Date with the same force and effect as if made as of the Closing Date
and (iii) Buyer shall have received certificates signed by a duly authorized
executive officer of Seller to the foregoing effect and to the effect that to
the Knowledge of such officer the conditions specified within this Section 8.01
have been satisfied.
(b) All Required Governmental Approvals for the transactions
contemplated by this Agreement shall have been obtained without the imposition
of any conditions that are or would become applicable to the Business, the
Transferred Assets or Buyer (or any of its Affiliates) after the Closing that
Buyer in good faith reasonably determines would be materially burdensome upon
the Business, the Transferred Assets or Buyer (or any of its Affiliates) or
their respective businesses substantially as such businesses have been conducted
prior to the Closing Date or as said businesses, as of the date hereof, would be
reasonably
30
expected to be conducted after the Closing Date. All such Required Governmental
Approvals shall be in effect, and no Proceedings shall have been instituted or
threatened by any Governmental Authority with respect thereto as to which, in
Buyer's good faith opinion, there is a material risk of a determination that
would terminate the effectiveness of, or otherwise materially and adversely
modify the terms of, any such Required Governmental Approval; all applicable
waiting periods with respect to such Required Governmental Approvals shall have
expired; and all conditions and requirements prescribed by Applicable Law or by
such Required Governmental Approvals to be satisfied on or prior to the Closing
Date shall have been satisfied to the extent necessary such that all such
Required Governmental Approvals are, and will remain, in full force and effect
assuming continued compliance with the terms thereof after the Closing.
(c) All Required Contractual Consents shall have been obtained
without the imposition of any conditions that are or would become applicable to
the Business, the Transferred Assets, Buyer or any of its Affiliates after the
Closing that Buyer in good faith determines would be materially burdensome upon
the Business, the Transferred Assets, Buyer or any of its Affiliates or their
respective businesses substantially as such businesses have been conducted prior
to the Closing Date or as said businesses, as of the date hereof, would be
reasonably expected to be conducted after the Closing Date. All such Required
Contractual Consents (and with respect to the Subsequent Material Contracts,
such other consents as may be required) shall be in effect. All conditions and
requirements prescribed by any Required Contractual Consent (or any such other
consent) to be satisfied on or prior to the Closing Date shall have been
satisfied to the extent necessary such that all such Required Contractual
Consents (and all such other consents) are effective and enforceable, and will
remain effective and enforceable against the Persons giving such Required
Contractual Consents (and such other consents) assuming continued compliance
with the terms thereof.
(d) The transactions contemplated by this Agreement and the
consummation of the Closing shall not violate any Applicable Law. No temporary
restraining order, preliminary or permanent injunction, cease and desist order
or other order issued by any court of competent jurisdiction or any competent
Governmental Authority or any other legal restraint or prohibition preventing
the transfer and exchange contemplated hereby or the consummation of the
Closing, or imposing Damages in respect thereto, shall be in effect, and there
shall be no pending or threatened actions or proceedings by any Governmental
Authority (or determinations by any Governmental Authority) or by any other
Person (i) challenging or in any manner seeking to restrict or prohibit the
transfer and exchange contemplated hereby or the consummation of the Closing, or
to impose conditions that Buyer in good faith determines would be materially
burdensome upon the Business, the Transferred Assets, Buyer or any of its
Affiliates or their respective businesses substantially as such businesses have
been conducted prior to the Closing Date or as said businesses, as of the date
hereof, would be reasonably expected to be conducted after the Closing Date.
(e) Since the date hereof, there shall not have been any
event, occurrence, development or state of circumstances or facts or change in
the Transferred Assets or the Business (including any damage, destruction or
other casualty loss, but excluding any
31
event, occurrence, development or state of circumstances or facts or change
resulting from changes in general economic conditions) affecting the Business or
any Transferred Asset that has had or that may be reasonably expected to have,
either alone or together with all other such events, occurrences, developments,
states of circumstances or facts or changes, a Material Adverse Effect.
(f) Each of Seller and LJB shall have executed and delivered
to Buyer a Non-Competition Agreement in the form attached hereto as Exhibit C.
(g) Buyer shall have received an opinion of counsel from
▇▇▇▇▇▇▇▇, Roche & Zwirner in substantially the form attached hereto as Exhibit
D.
(h) Buyer shall be reasonably satisfied that there has been no
material degradation of the Transferred Assets since the completion by Buyer of
its inspection of the Transferred Assets.
(i) Buyer shall have completed its customary due diligence as
contemplated by Section 5.02(c) and Buyer shall be satisfied, in its reasonable
judgment, with both the quantity and the substance of the information provided
to it.
(j) ▇▇▇▇▇▇ Bank & Trust and Sanwa Business Credit Corporation
shall have executed and delivered a side letter agreement in substantially the
form attached hereto as Exhibit B.
(k) Seller shall have executed and delivered a services
support agreement in substantially the form attached hereto as Exhibit E.
(l) ▇▇▇▇ Corporation shall have executed and delivered (i) a
lease for the facility in Walterboro, South Carolina, (ii) an environmental
indemnification agreement relating to the facility in Walterboro, South Carolina
and (iii) a sales and supply agreement relating to the Business, each containing
terms reasonably acceptable to Buyer.
(m) The applicable provisions of any statutory provision
applicable to the transactions contemplated by this Agreement in the states of
Illinois, Michigan and South Carolina, including, without limitation, Article 6
of the Uniform Commercial Code as adopted in the States of South Carolina and
Michigan relating to bulk sales with respect to the sale of the Transferred
Assets, shall have been complied with to the satisfaction of Buyer.
(n) No Liens of any third party shall encumber any of the
Transferred Assets, except Permitted Liens and Liens that will be released upon
the filing of Uniform Commercial Code termination statements deposited with the
Escrow Agent pursuant to the Lien Escrow Agreement.
(o) There shall not exist any pending or threatened litigation
(excluding any litigation set forth on Schedule 3.12), claims, assessments, or
other loss contingencies against or otherwise affecting the Business or any of
the Transferred Assets
32
seeking damages in excess of $50,000, or relief materially interfering with the
Business or the Transferred Assets.
(p) Seller shall have executed and delivered a supply and
service agreement in substantially the form attached hereto as Exhibit F.
(q) If a petition under title 11 of the United States Code is
filed by or against Seller (a "Petition") prior to the Closing (whether or not
an order for relief has been entered), Buyer's obligations hereunder are
conditioned on the following:
(i) The entry of an order (the "Procedures Order") by
the Bankruptcy Court in which the Petition is filed (the "Bankruptcy
Court"), no later than 15 days following the date on which the Petition is
filed (the "Petition Date") establishing the procedures for the obtaining
of the Approval Order. The Procedures Order shall be in form and substance
acceptable to Buyer and if the Procedures Order permits Persons other than
Buyer to bid for all or any portion of the Transferred Assets, the
obligations of Buyer are conditioned on the Procedures Order providing:
(A) All bids shall be for not less than all of the
Transferred Assets;
(B) Buyer shall be deemed to have made the opening
bid in the amount set forth in this Agreement and providing that
except for the cash portion of the Purchase Price, all bids shall be
on the terms and conditions of this Agreement;
(C) All prospective bidders (including Buyer)
shall, not less than 10 days before the Approval Hearing, qualify as
a bidder by posting with Seller (or with the trustee in bankruptcy
if one has been appointed) cash, letters of credit, certificates of
deposit or other financial instruments, in amounts at least equal to
the amount to be bid, in form and substance sufficient to establish
the ability of such bidders to consummate the transactions
contemplated by this Agreement within the time specified in this
Agreement;
(D) Permitting only persons who have qualified to
bid;
(E) Specifying the initial overbid shall be not
less than $500,000 with bidding increments of $100,000 thereafter,
and requiring that a non-refundable deposit in the amount bid be
tendered to Seller at the Approval Hearing; and
(F) If the Bankruptcy Court enters its order
approving any sale of the Purchased Assets, other than to Buyer in
accordance with this Agreement, Seller shall (whether or not a sale
to such Person is consummated) pay to Buyer within 10 days of entry
of such order, a fee in the amount of $500,000 to compensate and
reimburse Buyer for its management time, costs and
33
expenses incurred in entering into this Agreement, with such fee
having priority over all other liens, claims and expenses relating
to the Transferred Assets.
(ii) The giving of notice by Seller, no later than 20
days following the Petition Date, to all creditors, parties in interest,
Persons requesting special notice and Persons entitled to notice under
applicable law and rules, of the hearing (the "Approval Hearing") to
consider the motion by Seller for an order of the Bankruptcy Court, and
such portions of the Procedures Order as the Bankruptcy Court may direct,
which notice shall be in form and substance acceptable to Buyer, and which
motion requests the entry of an order in form and substance acceptable to
Buyer providing:(x) for the assumption of this Agreement, (y) authorizing
the transactions contemplated by this Agreement, including, without
limitation, the sale of the Transferred Assets to Buyer pursuant to
Sections 363 and 365 of the U.S. Bankruptcy Code free and clear of all
Liens other than Permitted Liens, and (z) finding the Buyer is acting in
good faith within the meaning of Section 363(m) of the U.S. Bankruptcy
Code ( the "Approval Order");
(iii) The entry no later than 50 days following the
Petition Date of the Approval Order as a final and non-appealable order
unless the requirement of finality is waived by Buyer;
(iv) The enforcement of the Approval Order not being
stayed by order of any court;
(v) The consummation of the transactions contemplated by
this Agreement no later than 55 days following the Petition Date.
(r) Seller shall have executed a Lien Escrow Agreement in
substantially the form attached hereto as Exhibit G (the "Lien Escrow
Agreement").
(s) Seller shall have executed and delivered a technical
support agreement in substantially the form attached hereto as Exhibit H.
(t) The Boards of Directors of Buyer and RBC shall have
approved this Agreement and the transactions contemplated hereby.
8.02. Conditions to Obligation of Seller. The obligation of Seller
to consummate the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions:
(a) (i) Buyer shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, and the aggregate
effect of all failures to perform or satisfy all obligations of Buyer on or
prior to the Closing Date shall not be materially adverse to Seller; (ii) the
representations and warranties of Buyer contained in this Agreement shall be
true, complete and accurate in all material respects at and as of the Closing
Date, as if made at and as of such date and (iii) Seller shall have received a
certificate signed by a duly authorized executive officer of
34
Buyer to the foregoing effect and to the effect that to such officer's Knowledge
the conditions specified within this Section 8.02 have been satisfied.
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without the
imposition of any conditions that are or would become applicable to Seller or
any of its Affiliates after the Closing that Seller in good faith reasonably
determines would be materially burdensome upon such Seller or any such
Affiliate. All such Required Governmental Approvals shall be in effect, and no
Proceedings shall have been instituted or threatened by any Governmental
Authority with respect thereto as to which, in Seller's good faith opinion,
there is a material risk of a determination that would terminate the
effectiveness of, or otherwise materially and adversely modify the terms of, any
such Required Governmental Approval. All applicable waiting periods with respect
to such Required Governmental Approvals shall have expired, and all conditions
and requirements prescribed by Applicable Law or by such Required Governmental
Approvals to be satisfied on or prior to the Closing Date shall have been
satisfied to the extent necessary such that all such Required Governmental
Approvals are, and will remain, in full force and effect assuming continued
compliance with the terms thereof after the Closing.
(c) All Required Contractual Consents shall have been obtained
without the imposition of any conditions that are or would become applicable to
Seller or any of its Affiliates after the Closing that Seller in good faith
reasonably determines would be materially burdensome upon Seller or any such
Affiliate. All such Required Contractual Consents (and with respect to the
Subsequent Material Contracts, such other consents) shall be in effect, and no
Proceeding shall have been instituted or threatened with respect thereto that,
in Seller's good faith judgment, creates a material risk that any material
Liability will be imposed on Seller. All conditions and requirements prescribed
by any required Contractual Consent (or any such other consent) to be satisfied
on or prior to the Closing Date shall have been satisfied to the extent
necessary such that no material Liability will be imposed on Seller.
(d) The sale and transfer contemplated by this Agreement and
the consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or any
competent Governmental Authority or any other legal restraint or prohibition
preventing the transfer and exchange contemplated hereby or the consummation of
the Closing, or imposing Damages in respect thereto, shall be in effect, and
there shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) or by
any other Person challenging or in any manner seeking to restrict or prohibit
the transfer and exchange contemplated hereby or the consummation of the
Closing.
(e) Seller shall have received opinions of counsel from
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and Adelman, Gettleman, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ Ltd.
in substantially the forms attached hereto as Exhibit I and J, respectively.
35
ARTICLE IX
INDEMNIFICATION
9.01. Agreement to Indemnify.
(a) Subject to the limitations provided herein, Buyer, RBC and
their respective Affiliates (collectively, the "Buyer Indemnitees") shall each
be indemnified and held harmless to the extent set forth in this Article IX on a
joint and several basis by Seller and LJB in respect of any Damages reasonably
and proximately incurred by any Buyer Indemnitee (i) as a result of any
inaccuracy or misrepresentation in or breach of or failure to perform any
representation, warranty, covenant, agreement or obligation of Seller or LJB in
this Agreement or (ii) in connection with any Excluded Liability, including,
without limitation, all liability relating to Seller's pension plan for hourly
employees and all Environmental Liabilities. The aggregate liability of Seller
and LJB collectively under this Section 9.01(a) shall not exceed the
Indemnification Limit, except in the case of Damages due to Seller's or LJB's
fraud or willful misconduct.
(b) Seller, LJB and their Affiliates (collectively the "Seller
Indemnitees") shall each be indemnified and held harmless to the extent set
forth in this Article IX on a joint and several basis by Buyer and RBC in
respect of any and all Damages reasonably and proximately incurred by any Seller
Indemnitee as a result of (i) any inaccuracy or misrepresentation in or breach
of or failure to perform any representation, warranty, covenant, agreement or
obligation of Buyer or RBC in this Agreement; (ii) the Assumed Liabilities; or
(iii) Buyer's conduct of the Business after the Closing.
(c) Notwithstanding Section 9.01(a), Seller and LJB shall not
be liable as Indemnifying Parties until all claims by the Buyer Indemnitees for
indemnification, other than claims referred to in the proviso to this sentence,
exceed $25,000 in the aggregate, and thereafter Seller and LJB shall be liable,
subject to the other limitations provided for elsewhere in this Agreement, for
all indemnification claims except the first $25,000 of claims arising after the
Closing Date; provided, however, that Seller and LJB shall be liable, subject to
the other limitations provided for elsewhere in this Agreement, for all claims
by the Buyer Indemnitees arising out of (i) the fraud or willful misconduct of
Seller or LJB or (ii) any Lien that does not constitute a Permitted Lien.
9.02. Survival of Representation and Warranties.
(a) Except as hereinafter provided in this Section 9.02, all
representations and warranties of each Indemnifying Party contained herein and
all claims of any Indemnitee in respect of any inaccuracy or misrepresentation
in or breach of any representation or warranty of any Indemnifying Party
contained in this Agreement, shall be deemed to have been remade at the Closing
and shall survive the Closing and shall expire on the first anniversary of the
Closing Date.
36
(b) Notwithstanding Section 9.02(a) the representations and
warranties of Seller and LJB shall survive the Closing Date until the expiration
of any applicable statute of limitations, including extensions thereof, with
respect to: (i) the inaccuracy or misrepresentation in or breach of any
representation or warranty made by Seller or LJB in this Agreement arising out
of fraud or willful misconduct; and (ii) any inaccuracy or misrepresentation in
or breach of any representation or warranty made in Sections 3.01, 3.02, 3.19,
3.20 and 3.22 regardless of whether such inaccuracy or misrepresentation or
breach arises out of fraud or willful misconduct.
(c) Notwithstanding Section 9.02(a), each of the following
representations and warranties of Buyer and RBC shall survive the Closing Date
until the expiration of any applicable statute of limitations, including
extensions thereof, with respect to: any inaccuracy or misrepresentation in or
breach of any representation or warranty made by Buyer or RBC in this Agreement
arising out of fraud or willful misconduct.
9.03. Claims for Indemnification. If any Indemnitee shall believe
that such Indemnitee is entitled to indemnification pursuant to this Article IX
in respect of any Damages, such Indemnitee shall give the appropriate
Indemnifying Party prompt written notice thereof. Any such notice shall set
forth in reasonable detail and to the extent then known the basis for such claim
for indemnification. The failure of such Indemnitee to give notice of any claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder unless such Indemnifying Party would have the right to
defend against such claim pursuant to Section 9.04(b) and then only to the
extent that such failure materially adversely affects the right of the
Indemnifying Party to assert any reasonable defense to such claim.
9.04. Defense of Claims.
(a) In connection with any claim which may give rise to
indemnity under this Article IX resulting from or arising out of any claim or
Proceeding brought by a third party against an Indemnitee by a Person that is
not a party hereto, the Indemnifying Party may, subject to Section 9.04(b),
assume the defense of any such claim or Proceeding, upon written notice to the
relevant Indemnitee, if all Indemnifying Parties with respect to such claim or
Proceeding jointly acknowledge to the Indemnitee its right to indemnity pursuant
hereto in respect of the entirety of such claim (as such claim may have been
modified through written agreement of the parties or arbitration hereunder) and
provides assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Parties will be financially able to satisfy such claim in full
(subject to the Indemnification Limit) if such claim or Proceeding is decided
adversely. If the Indemnifying Parties assume the defense of any such claim or
Proceeding, the Indemnifying Parties shall select counsel reasonably acceptable
to such Indemnitee to conduct the defense of such claim or Proceeding, shall
take all steps necessary in the defense or settlement thereof and shall at all
times diligently and promptly pursue the resolution thereof. If the Indemnifying
Parties shall have assumed the defense of any claim or Proceeding in accordance
with this Section 9.04, the Indemnifying Parties shall be authorized to consent
to a settlement of, or the entry of any judgment arising from, any such claim or
Proceeding, without the prior written consent of such Indemnitee; provided,
however, that the Indemnifying Parties
37
shall pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; provided, further, that
the Indemnifying Parties shall not be authorized to encumber any of the assets
of any Indemnitee or to agree to any restriction that would apply to any
Indemnitee or to its conduct of business; and provided, further, that a
condition to any such settlement shall be a complete release of such Indemnitee
and its Affiliates, officers, employees, consultants and agents with respect to
such claim. Subject to Section 9.04(b), such Indemnitee shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. Notwithstanding the preceding sentence, an
Indemnitee shall have the right to conduct the defense of any claim or
Proceeding until such time as the Indemnifying Parties assume the defense
thereof in accordance with the terms hereof, provided that such Indemnitee may
not (i) take any action that would materially adversely affect the right of the
Indemnifying Parties to assert any reasonable defense or (ii) settle such claim
or Proceeding without the written consent of the Indemnifying Parties, which
consent may not be unreasonably withheld. Each Indemnitee shall, and shall cause
each of its Affiliates, officers, employees, consultants and agents to,
cooperate fully with the Indemnifying Parties in the defense of any claim or
Proceeding being defended by the Indemnifying Parties pursuant to this Section
9.04. If the Indemnifying Parties do not assume the defense of any claim or
Proceeding resulting therefrom in accordance with the terms of this Section
9.04(a), such Indemnitee may defend against such claim or Proceeding.
(b) Notwithstanding Section 9.04(a), the Indemnifying Parties
may not assume the defense of any claim or Proceeding and the Indemnitee may
assume such defense if (i) in the reasonable opinion of the Indemnitee there are
one or more legal defenses available to the Indemnitee that conflict with those
available to an Indemnifying Party, (ii) the maximum damages sought in such
claim or Proceeding exceed the Indemnification Limit then in effect by more than
100% or (iii) the Indemnitee elects not to seek indemnification hereunder for
such claim. If the Indemnitee assumes defense of any such claim or Proceeding
(except a claim or Proceeding the defense of which is assumed pursuant to clause
(iii)), (A) the Indemnifying Parties may participate in, but not control, the
defense of such claim or Proceeding, and (B) if the Indemnitee receives a
settlement proposal from the Person asserting such claim or instituting such
Proceeding and is notified by an Indemnifying Party that such Indemnifying Party
wants to accept such settlement proposal, the liability of the Indemnifying
Parties with respect to such claim or Proceeding shall equal the lesser of (x)
the amount offered in such settlement proposal, (y) the amount of actual Damages
of the Indemnitee with respect to such claim or Proceeding or (z) the
Indemnification Limit then in effect.
(c) If the Indemnitee elects to defend any claim or Proceeding
pursuant to the last sentence of Section 9.04(a) or pursuant to Section 9.04(b),
the Indemnitee shall conduct such defense in such manner as it shall deem
appropriate, including settling such claim or Proceeding after giving notice of
the same to the Indemnifying Parties, on such terms as such Indemnitee shall
deem appropriate. Each Indemnifying Party shall, and shall cause each of its
Affiliates, officers, employees, consultants and agents to, cooperate fully with
the Indemnitee in the defense of such claim or Proceeding. If the Indemnifying
Parties seek to question the manner in which such Indemnitee defended such claim
or Proceeding or the amount of or nature of any such settlement, the
Indemnifying Parties shall have the burden to prove by a
38
preponderance of the evidence that such Indemnitee did not defend such claim or
Proceeding in a reasonably prudent manner.
ARTICLE X
TERMINATION
10.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of all of the parties hereto;
(b) by Buyer or by Seller, if the Closing shall not have been
consummated by December 31, 1996 (the "Outside Date") as each of Buyer and
Seller acknowledge that time is of the essence; provided, however, that a party
may not terminate this Agreement pursuant to this clause (b) if the Closing
shall not have been consummated within such time period by reason of the failure
of such party or any of its Affiliates to perform in all material respects any
of its or their respective covenants or agreements contained in this Agreement;
and
(c) by any party hereto if any Federal, state or foreign law
or regulation thereunder shall hereafter be enacted or become applicable that
makes the transactions contemplated hereby or the consummation of the Closing
illegal or otherwise prohibited, or if any judgment, injunction, order or decree
enjoining either party hereto from consummating the transactions contemplated
hereby is entered, and such judgment, injunction, order or decree shall become
final and nonappealable.
The party desiring to terminate this Agreement pursuant to clause
(b) or (c) shall give written notice of such termination to the other party.
10.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 10.01, such termination shall be without liability of any
party to any other party to this Agreement; provided, however, that if such
termination shall result from the breach by any party of its representations,
warranties or covenants contained in this Agreement, such party shall be fully
liable for any and all Damages incurred or suffered by the other parties as a
result of such failure or breach notwithstanding such termination. The
provisions of Sections 5.05, 6.01, 10.02, 11.03, 11.05 11.07, 11.08, 11.10 and
11.12 shall survive any termination of this Agreement pursuant to Article X.
ARTICLE XI.
MISCELLANEOUS
11.01. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so
39
delivered, (ii) if mailed, two Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by telex
or telecopier, once such notice or other communication is transmitted to the
telex or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through an overnight delivery service in
circumstances to which such service guarantees next day delivery, the day
following being so sent:
If to Seller or LJB:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, Roche & Zwirner
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
BPP Acquisition Corporation
c/o Roller Bearing Company of America, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until
40
it actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
11.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
11.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
11.04. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of each other party, which approval shall not be unreasonably withheld.
11.05. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws (without reference to choice
or conflict of laws) of the State of Illiniois.
11.06. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
11.07. Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
41
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
11.08. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
11.09. Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
11.10. Construction.
(a) The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against either party. Any reference
to any Applicable Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. Whenever required
by the context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. The words
"herein," "hereof," "hereunder," and words of similar import refer to the
Agreement as a whole and not to a particular section. Whenever the word
"including" is used in this Agreement, it shall be deemed to mean "including,
without limitation," "including, but not limited to" or other words of similar
import such that the items following the word "including" shall be deemed to be
a list by way of illustration only and shall not be deemed to be an exhaustive
list of applicable items in the context thereof.
(b) The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
11.11. Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.12. Third Party Beneficiaries. No provision of this Agreement
shall create any third party beneficiary rights in any Person, including any
employee of Buyer or employee or former employee of Seller or any Affiliate
thereof (including any beneficiary or dependent thereof).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
SELLER:
BEAVER PRECISION PRODUCTS, INC.
By:
-----------------------------------
Name:
Title:
LJB:
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BUYER:
BPP ACQUISITION CORPORATION
By:
-----------------------------------
Name:
Title:
RBC:
ROLLER BEARING COMPANY OF AMERICA, INC.
By:
-----------------------------------
Name:
Title:
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SCHEDULE 2.02
EXCLUDED ASSETS
(a) all books, records, files and papers, whether in hard copy or
computer format, that Seller or any of its Affiliates shall be required to
retain pursuant to Applicable Law (provided, that copies thereof shall be
delivered to Buyer to the extent that the relate to the Business);
(b) all rights of Seller under this Agreement and the agreements and
instruments delivered to Seller by Buyer pursuant to this Agreement;
(c) any asset of Seller that would constitute a Transferred Asset
(if owned by Seller on the Closing Date) that is conveyed or otherwise disposed
of during the period from the date hereof until the Closing Date (i) in the
ordinary course of business and not in violation of the terms of this Agreement
or (ii) as otherwise expressly permitted by the terms of this Agreement;
(d) any cash on hand of Seller or Deposits by Seller with financial
institutions;
(e) any tangible personal property of Seller (including, without
limitation, Inventory) that is located at Seller's Troy, Michigan facility
except any assets listed on Schedule 2.01;
(f) any assets of Seller that are not used in, relate to or
generated by the Business;
(g) any accounts receivable of Seller that do not constitute
Selected Accounts Receivable; and
(h) the leases between ▇▇▇▇ Corporation, as lessor, and Seller, as
lessee, relating to Seller's Walterboro, South Carolina and Troy, Michigan
facilities.
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