CONFIDENTIAL
Execution Copy
ASSET PURCHASE AGREEMENT
BY AND AMONG
BFM AEROSPACE CORPORATION,
BFM TRANSPORT DYNAMICS CORPORATION,
RBC TRANSPORT DYNAMICS CORPORATION
AND
ROLLER BEARING HOLDING COMPANY, INC.
Dated as of October 26, 1992
TABLE OF CONTENTS
Section Page
1. The Acquisition .................................................... 1
1.1. Purchase and Sale ........................................... 1
1.2. Purchase Price .............................................. 3
1.3. The Closing ................................................. 4
1.4. Deliveries by TDC at the Closing ............................ 4
1.5. Deliveries by Buyer at the Closing .......................... 5
2. Representations and Warranties of TDC .............................. 6
2.1. Organization of TDC; Authorization .......................... 6
2.2. No Conflict ................................................. 6
2.3. Government Consents and Approvals ........................... 6
2.4. Financial Statements ........................................ 6
2.5. Title to Properties ......................................... 7
2.6. No Undisclosed Liabilities .................................. 7
2.7. Litigation .................................................. 7
2.8. Taxes ....................................................... 7
2.9. Absence of Certain Changes .................................. 8
2.10. Patents, Trademarks, Etc .................................... 8
2.11. Leases ...................................................... 9
2.12. Contracts and Commitments ................................... 9
2.13. Status of Agreements ........................................ 10
2.14. Pension and Employee Benefit Plans .......................... 10
2.15. Compliance with Law ........................................ 10
2.16. Labor Relations; Employees ................................. 10
2.17. Permits and Licenses ....................................... 11
2.18. Government Contracts ....................................... 11
2.19. Environmental Matters ...................................... 12
3. Representations and Warranties of Buyer ............................ 13
3.1. Organization of Buyer; Authorization ........................ 13
3.2. No Conflict as to Buyer ..................................... 13
3.3. Investigation ............................................... 13
3.4. Government Consents and Approvals ........................... 14
4. Representations and Warranties of RBC .............................. 14
4.1. Organization of RBC; Authorization .......................... 14
4.2. No Conflict as to RBC ....................................... 14
4.3. RBC Preferred Shares. ....................................... 15
4.4. Capital Structure ........................................... 15
4.5. No Prior Activities ......................................... 15
4.6. Financial Statements ........................................ 15
4.7. Litigation .................................................. 16
4.8. Subsidiaries and Affiliates ................................. 16
4.9. Nonforeign Status ........................................... 16
5. Covenants by Buyer and TDC ......................................... 17
5.1. Employees ................................................... 17
5.2. Business Records and Files .................................. 18
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Section Page
5.3. Tax Worksheets .............................................. 18
5.4. Delivery of Financial Statements ............................ 19
5.5. Sales Taxes Arising from Sale of Assets ..................... 19
5.6. Sales Tax Clearance Certificate ............................. 19
5.7. Mail and Other Communications ............................... 19
5.8. Governmental Contract Novations ............................. 19
6. Survival of Representations and Warranties;
Indemnification ..................................................... 20
6.1. Survival .................................................... 20
6.2. Time Limitations ............................................ 20
6.3. Indemnification by BFM and TDC .............................. 20
6.4. Indemnification by RBC and Buyer ............................ 21
6.5. Limitations as to Amount .................................... 21
6.6. Brokers ..................................................... 22
6.7. Bulk Sales Law .............................................. 22
6.8. Procedure for Indemnification ............................... 22
7. Definitions ........................................................ 23
8. Notices ............................................................ 25
9. Jurisdiction; Service of Process ................................... 26
9.1. Jurisdiction ................................................ 26
9.2. Service of Process .......................................... 26
10. Miscellaneous ...................................................... 27
10.1. Expenses .................................................... 27
10.2. Captions .................................................... 27
10.3. No Waiver ................................................... 27
10.4. Exclusive Agreement; Amendment .............................. 27
10.5. Counterparts ................................................ 27
10.6. Governing Law ............................................... 27
10.7. Representation By Counsel; Interpretation ................... 27
10.8. Damages ..................................................... 27
10.9. Further Assurances; Knowledge ............................... 28
10.10. Permitted Assignment ........................................ 28
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INDEX OF EXHIBITS
Exhibit 1.2(a) - Certificate of Designations of
Preferred Stock of RBC
Exhibit 1.4(a) - Bill of Sale
Exhibit 1.4(b) - Standard Industrial Lease
Exhibit 1.4(c) - Opinion of O'Melveny & Myers
Exhibit 1.4(g) - Roller Bearing Holding
Company, Inc. Stock Subscription and
Shareholder Agreement
Exhibit 1.5(b) - Assumption Agreement
Exhibit 1.5(g) - Opinion of Gibson, Dunn &
Crutcher
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Index of Schedules
Schedule 1.1(a) - Excluded Assets
Schedule 1.1(a)(iii) - Inventory
Schedule 1.1(a)(iv) - Machinery and Furniture
Schedule 1.1(a)(vi) - Leasehold Improvements
Schedule 1.1(a)(ix) - Contracts
Schedule 1.1(a)(x) - Patent and Trademark Rights
Schedule 1.1(b) - Assumed Liabilities
Schedule 2.2 - No Conflict
Schedule 2.3 - Government Consents and
Approvals (TDC)
Schedule 2.5 - Encumbrances
Schedule 2.8 - Taxes
Schedule 2.10 - Disclosure Regarding Patents
and Trademark Rights
Schedule 2.11 - Leases
Schedule 2.14 - Employee Plans
Schedule 2.15 - Compliance with Law
Schedule 2.17 - Permits and Licenses
Schedule 2.19 - Environmental Matters
Schedule 3.4 - Government Consents and
Approvals (Buyer)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 26, 1992, by and among BFM AEROSPACE CORPORATION, a Delaware
corporation ("BFM"), BFM TRANSPORT DYNAMICS CORPORATION, a California
corporation ("TDC"), RBC TRANSPORT DYNAMICS CORPORATION, a Delaware corporation
("Buyer"), and ROLLER BEARING HOLDING COMPANY, INC., a Delaware corporation
("RBC").
R E C I T A L S:
A. TDC manufactures and sells plain bearings, primarily
self-lubricating types, used in various aerospace and industrial applications.
The business of TDC is hereinafter referred to as the "Business."
B. TDC desires to sell to Buyer, and Buyer desires to purchase from
TDC, substantially all of the assets of TDC, upon the terms and subject to the
conditions set forth herein (all capitalized terms used herein without
definition shall have the meanings assigned to them in Section 7 hereof).
C. BFM is the owner of all of the issued and outstanding capital
stock of TDC.
D. RBC is the owner of all of the issued and outstanding capital
stock of Roller Bearing Company of America, Inc., a Delaware corporation
("Roller Bearing"). Roller Bearing is the owner of all of the issued and
outstanding capital stock of Buyer.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. The Acquisition.
1.1. Purchase and Sale; Assumption of Liabilities.
(a) Subject to the terms and conditions contained in this Agreement,
on the date hereof, TDC shall sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase, acquire and accept from TDC, all of
the assets, properties, rights, privileges, claims and contracts of every
kind and nature owned by TDC and used by TDC in the operation of the
Business as of the date hereof (the "Assets"), free and clear of all
Encumbrances other than Permitted Encumbrances, and including, without
limitation, the assets described
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below, other than the assets specifically identified in Schedule 1.1(a)
attached hereto (the "Excluded Assets"):
(i) Cash. All of the cash on hand or in bank or in other
accounts of TDC.
(ii) Accounts Receivable. All trade accounts receivable and
other receivables.
(iii) Inventory. All of the inventories of raw materials,
work-in-process, finished products, scraps and rejects, spare parts
and supplies, including, without limitation, the items set forth in
Schedule 1.1(a) (iii) attached hereto, except for the items sold
after the date of such schedule in the ordinary course of business
of TDC.
(iv) Machinery and Equipment. All machinery, apparatus,
commercial tooling, equipment and trade fixtures, including, without
limitation, the items set forth in Schedule 1.1(a) (iv) attached
hereto.
(v) Office Furniture and Fixtures. All office furniture and
fixtures, including, without limitation, the items set forth in
Schedule 1.1(a) (iv) attached hereto.
(vi) Leasehold Improvements. All of TDC's leasehold
improvements located at the premises occupied by TDC at 3131 West
Segerstrom Avenue, Santa Ana, California 92702 (the "Premises"),
including, without limitation, the items set forth in Schedule
1.1(a) (vi) attached hereto.
(vii) Goodwill. The goodwill incident to the Business.
(viii) Records and Other Information. All records of the
Business, including, without limitation, property, production,
engineering, contract and accounting records, sales data and
records, customer lists and other information relating to customers,
catalogs, brochures, suppliers' names, mailing lists and any
photographic and advertising materials.
(ix) Contracts. All rights in, to and under all purchase and
sales orders and commitments, personal property leases and other
agreements made in the ordinary course of business, including,
without limitation, those set forth in Schedule 1.1(a) (ix) attached
hereto (the "Contracts");
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provided, however, that to the extent such Contracts are Government
Contracts (as hereinafter defined) only to the extent the same are
assignable.
(x) Intellectual Property. All right, title and interest in
and to all copyrights, service marks, trademarks, logos, trade names
(including the name "BFM Transport Dynamics Corporation"), patents,
patent applications, licenses (including patent licenses), royalty
rights and inventions, processes, know-how, formulae, trade secrets,
compositions, designs, drawings, specifications, patterns,
blueprints, plans, files, notebooks and records relating to
research, engineering and development activities, production data
and shop rights, including, without limitation, the items set forth
in Schedule l.1(a)(x) attached hereto (the "Patent and Trademark
Rights").
(b) Buyer shall assume, perform and discharge only the liabilities
and obligations identified in Schedule 1.1(b) and only to the extent set
forth therein (the "Assumed Liabilities"). Except as provided in Schedule
1.1(b), or as set forth in Section 5.1 or 6.4 hereof, Buyer shall not
purchase, assume or have any liability whatsoever with regard to any
Employee Benefit Plan (as such term is hereinafter defined).
1.2. Purchase Price.
(a) The aggregate purchase price for the Assets as defined herein
and the Assets as defined in that certain Purchase Agreement, dated as of
the date hereof by and among BFM, Ground Support, Inc., a California
corporation, Buyer and RBC (the "GSI Purchase Agreement"), shall consist
of (i) $4,500,000, payable by Buyer to TDC and GSI to a bank account
designated by BFM to be held for the benefit of each, and such shall be
payable at the Closing in immediately available funds, (ii) six thousand
(6,000) shares of preferred stock, $.O1 par value, of RBC issued to TDC,
having the rights, preferences and privileges set forth in the Certificate
of Designations (the "Certificate of Designations") attached hereto as
Exhibit 1.2(a) (the "RBC Preferred Shares"), which shares are
consideration for the Assets as defined herein, and (iii) the assumption
of the Assumed Liabilities as defined herein and in the GSI Purchase
Agreement.
(b) The purchase price shall be allocated among the Assets as
defined herein and the Assets as defined in the GSI Purchase Agreement,
based on a schedule to be prepared by Buyer and approved by TDC, which
approval shall not be unreasonably withheld, and TDC and Buyer agree to
report the purchase and sale of the Assets in a manner consistent with
such allocation of purchase price.
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1.3. The Closing. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at the offices of Latham & Watkins
(counsel to RBC's acquisition financing lender, Heller Financial, Inc.), 633
West Fifth Street, Suite 4000, Los Angeles, California, at 9:00 a.m. (local
time) on the date hereof.
1.4. Deliveries by TDC at the Closing. At the Closing, TDC shall
deliver the following to Buyer:
(a) A Bill of Sale in substantially the form attached hereto as
Exhibit 1.4(a);
(b) A Standard Industrial Lease - Net (the "Lease") executed by TD
Land, Inc., in substantially the form attached hereto as Exhibit 1.4(b);
(c) An opinion of O'Melveny & Myers ("OMM"), special counsel to TDC,
in substantially the form of Exhibit 1.4(c) attached hereto, dated as of
the date hereof and addressed to Buyer and a letter from OMM as to
reliance thereon addressed to Heller Financial, Inc.;
(d) UCC-2 release forms, executed by Wells Fargo Bank, N.A. ("Wells
Fargo"), pursuant to which Wells Fargo shall release its security interest
in the Assets;
(e) An officers' certificate for TDC as to the Articles of
Incorporation and Bylaws of TDC, the resolutions adopted by the Board of
Directors and sole shareholder of TDC authorizing the execution and
delivery of this Agreement and the transactions contemplated hereby, and
the incumbency of certain officers of TDC;
(f) An officers' certificate for BFM as to the Certificate of
Incorporation and Bylaws of BFM, the resolutions adopted by the Board of
Directors of BFM authorizing the execution and delivery of this Agreement
and the transactions contemplated hereby, and the incumbency of certain
officers of BFM;
(g) A Roller Bearing Holding Company, Inc. Stock Subscription and
Shareholder Agreement, in substantially the form of Exhibit 1.4(g)
attached hereto, executed by TDC; and
(h) All other documents, instruments and writings required by this
Agreement to be delivered by TDC at the Closing or otherwise reasonably
requested by Buyer to complete the transactions contemplated hereby.
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1.5. Deliveries by Buyer at the Closing. At the Closing, Buyer
shall deliver the following to TDC:
(a) By wire transfer of immediately available funds to the account
of TDC designated in writing to Buyer prior to the date hereof, the amount
of the cash portion of the purchase price set forth in Section 1.2(a)
hereof;
(b) An Assumption Agreement executed by Buyer in substantially the
form attached hereto as Exhibit 1.5(b);
(c) The Lease executed by Buyer;
(d) A certificate representing the RBC Preferred Shares issued to
TDC;
(e) An officers' certificate for Buyer as to the Certificate of
Incorporation and Bylaws of Buyer, the resolutions adopted by the Board of
Directors and sole stockholder of Buyer authorizing the execution and
delivery of this Agreement, the Assumption Agreement and the Lease and the
transactions contemplated hereby and thereby and the incumbency of certain
officers of Buyer;
(f) An officers' certificate for RBC as to the Certificate of
Incorporation and Bylaws of RBC, the resolutions adopted by the Board of
Directors of RBC authorizing the execution and delivery of this Agreement,
the filing with the Secretary of State of the State of Delaware of the
Certificate of Designations, the issuance of the Preferred Shares to TDC
and the transactions contemplated hereby and the incumbency of certain
officers of RBC;
(g) An opinion of Gibson, Dunn & Crutcher, special counsel to RBC,
in substantially the form of Exhibit 1.5(g) attached hereto, dated as of
the date hereof and addressed to TDC; and
(h) All other documents, instruments and writings required by this
Agreement to be delivered by Buyer at the Closing or otherwise reasonably
requested by TDC to complete the transactions contemplated hereby.
5
2. Representations and Warranties of TDC.
TDC represents and warrants to, and agrees with, Buyer as follows:
2.1. Organization of TDC; Authorization. TDC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California with full corporate power and corporate authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on the part of TDC and this Agreement constitutes a
legally valid and binding obligation of TDC, enforceable against TDC in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
2.2. No Conflict. Except as set forth in Schedule 2.2 attached
hereto, neither the execution and delivery of this Agreement nor the sale of the
Assets to Buyer will (a) violate any provision of the Articles of Incorporation
or Bylaws of TDC or (b) violate, conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, any material agreement or commitment to which TDC is a party or (c) to
the best knowledge of TDC, violate any material statute or law or any judgment,
decree, order, regulation or rule of any court or other Governmental Body
applicable to TDC.
2.3. Government Consents and Approvals. Except as set forth in
Schedule 2.3 attached hereto, no consent, license, permit, approval or
authorization of, or declaration, filing or registration, or any novation or
assignment of any contract, with, any Governmental Body is required to be
obtained by TDC in connection with its execution and delivery of this Agreement
or the sale of the Assets to Buyer.
2.4. Financial Statements. TDC has delivered to Buyer: (a) an
unaudited balance sheet of TDC as at October 31, 1991 and unaudited statements
of income and cash flow for the fiscal year then ended, and (b) an unaudited
balance sheet of TDC as at August 31, 1992, and unaudited statements of income
and cash flow for the ten months then ended, including in each case the notes
thereto. The financial statements described in clause (a) of the preceding
sentence are referred to collectively as the "TDC Financial Statements," the
balance sheet as at August 31, 1992 is referred to as the "TDC Balance Sheet"
and the financial statements described in clause (b) of the preceding sentence
are referred to collectively as the "TDC Interim
6
Statements." The TDC Financial Statements and notes thereto present fairly the
financial condition and results of operations of TDC as at the respective dates
thereof and for the period therein referred to, in accordance with GAAP, except
as otherwise disclosed therein. The TDC Interim Statements present fairly the
financial condition and results of operations of TDC as at the date thereof and
for the period therein referred to in accordance with GAAP on a basis consistent
with the TDC Financial Statements, except that the TDC Interim Statements do not
contain complete footnote disclosure and are subject to normal year-end
adjustments, which will not be material.
2.5. Title to Properties. TDC has good and marketable title to all
the Assets (including those reflected on the Balance Sheet, except for assets
sold, consumed or otherwise disposed of in the ordinary course of business since
the date of the Balance Sheet), and on the date hereof Buyer shall receive good
and marketable title to the Assets, free and clear of all Encumbrances, except
for (a) Encumbrances set forth in Schedule 2.5 attached hereto, (b) liens for
taxes not yet due or being contested in good faith by appropriate proceedings
(which proceedings, if any, are identified in Schedule 2.5) or (c) other
Encumbrances which, individually or in the aggregate, do not (i) have a material
adverse effect on the use of the asset in question or (ii) materially or
adversely affect the value of the asset in question or the operation of the
Business (the Encumbrances referred to in (a) through (c) above are collectively
referred to herein as "Permitted Encumbrances"). Since the date of the Balance
Sheet, TDC has not sold or disposed of any of its assets outside of the ordinary
course of business. The Assets and the Excluded Assets comprise all of the
assets, and the only assets, used by TDC in conducting the Business as presently
operated.
2.6. No Undisclosed Liabilities. TDC has no liabilities or
obligations that were not reflected or reserved against in the Balance Sheet,
except for liabilities and obligations incurred since the date of the TDC
Balance Sheet in the ordinary course of business and consistent with past
practice.
2.7. Litigation. There is no claim, action, suit or proceeding by or
before any court or Governmental Body pending or, to the best knowledge of TDC,
threatened against TDC, nor does TDC know of any facts that would form the basis
of any such claim, action, suit or proceeding.
2.8. Taxes
(a) TDC (and any affiliated group of which TDC is now or has been a
member), has duly and timely filed with
7
the appropriate taxing authorities all returns (including, without limitation,
information returns and reports) in respect of Taxes required to be filed
through the date hereof. The information filed is complete and accurate in all
material respects. Neither TDC, nor any group of which TDC is now or was a
member, has requested any extension of time within which to file returns
(including, without limitation, information returns) in respect of any Taxes.
(b) All Taxes in respect of periods beginning before the date
hereof, have been paid, or an adequate reserve has been established therefor and
TDC has no liability for such taxes in excess of the amounts so paid or reserves
so established.
(c) (i) No deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other governmental authority; (ii) there are no
pending or threatened audits, investigations or claims for or relating to any
liability in respect of Taxes, and there are no matters under discussion with
any governmental authorities with respect to Taxes that are likely to result in
an additional amount of Taxes; (iii) no issues have been raised in any pending
or completed audit of TDC which could reasonably be expected to affect the tax
liability of TDC for a taxable year which has either not been audited or as to
which no audit is pending; (iv) audits of federal, state, and local returns for
Taxes by the relevant taxing authorities have been completed for each period set
forth in Schedule 2.8; (v) TDC has not been notified that any taxing authority
intends to audit a return for any other period; and (vi) no extension of a
statute of limitations relating to Taxes is in effect with respect to TDC, and
no Tax lien has been filed by any Tax authority against any property or assets
of TDC.
(d) TDC is not a "foreign person" as defined in Section 1445(f)(3)
of the Code.
2.9. Absence of Certain Changes. Since the date of the Balance
Sheet, (a) there has been no material adverse change in the business, financial
condition, prospects or operations of TDC (other than changes resulting from
general economic conditions and matters generally affecting companies engaged in
businesses similar to TDC) and (b) the Business has been conducted by TDC only
in the ordinary course and consistent with past practices.
2.10. Patents, Trademarks, Etc. Schedule 1.1(a)(x) sets forth a
list of the Patent and Trademark Rights, which are all United States and foreign
patents, registered trademarks, registered trade names, copyrights, and
applications therefor owned or used by TDC in the
8
conduct of the Business. Except as disclosed in Part A of Schedule 2.10 attached
hereto, (a) TDC owns (or possesses licenses or other rights to use) all material
Patent and Trademark Rights necessary to the conduct of its business as
currently conducted and (b) there are no existing or, to the best knowledge of
TDC, threatened claims by any Person with respect to the use, or challenging the
ownership, of the Patent and Trademark Rights by TDC. To the best knowledge of
TDC, there is no material infringing use by any Person of the Patent and
Trademark Rights and TDC has not granted a license or sub-license in the Patent
and Trademark Rights to any third parties except for such licenses in the
Trademark Rights granted to distributors, pursuant to those certain agreements,
a complete list of which is contained in Part B of Schedule 2.10, as are
necessary for such distributors to effectively advertise and sell TDC's goods.
2.11. Leases. Schedule 2.11 attached hereto contains a list of all
real property leases and material personal property leases pursuant to which TDC
is a party. All such leases are valid, binding and enforceable in accordance
with their terms, and are in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable
principles relating to or affecting the rights of creditors generally; there are
no existing material defaults (or events which, with notice or lapse of time or
both, would constitute a material default) by TDC thereunder.
2.12. Contracts and Commitments. Except as set forth in Schedule
2.12, Schedule 2.11, Schedule 1.1(a) (ix) or Schedule 2.5, TDC is not a party to
or bound by, and the Contracts shall not include, any written agreement,
contract or commitment (a) having a remaining term of more than two years or
providing for payments to or by TDC in excess of $50,000; (b) providing for
employment or the payment of any bonus or commission based on sales or earnings,
or which contains any severance or termination pay liabilities or obligations;
(c) with any union or other collective bargaining representative of its
employees; (d) providing for or evidencing indebtedness for borrowed money; (e)
providing for capital expenditures in excess of $100,000 in the aggregate; (f)
with an Affiliate; (g) with a distributor or dealer, franchiser, retail sales
organization, sales agency or manufacturer's representative; or (h) granting any
preferential rights to purchase any of TDC's assets, property or rights or
requiring the consent of any party to the transfer to or assignment of such
assets, properties or rights or expressly limiting or restricting the ability to
transfer or assign such assets, property or rights other than in the ordinary
course of business.
9
2.13. Status of Agreements. All Contracts are valid and in full
force and effect and there are no existing material defaults (or events which,
with notice or lapse of time or both1 would constitute a material default) by
TDC or, to the best knowledge of TDC, by any other party thereunder.
2.14. Pension and Employee Benefit Plans.
(a) Schedule 2.14 attached hereto lists each plan sponsored by BFM
or TDC that covers employees of TDC and is subject to Part 6 of Title I of ERISA
(the "Employee Plans"). Notwithstanding the foregoing, the term "Employee Plans"
shall exclude the TDC Security 90 Plan for all purposes under this Agreement.
True and complete copies of all Employee Plans have been delivered or made
available to Buyer.
(b) Schedule 2.14 discloses each Multiemployer Plan to which TDC or
any ERISA Affiliate has at any time within the last six years had an obligation
to contribute or with respect to which it may be secondarily liable for
withdrawal liability payments under Section 4201 of ERISA.
(c) Except as disclosed in Schedule 2.14 hereto, there has been no
withdrawal by TDC or any of its ERISA Affiliates from any Multiemployer Plan
within the past six years, and if a complete or partial withdrawal were to occur
as of the Closing, there is no basis to expect that any withdrawal liability
would be imposed on TDC, either primarily or secondarily, with respect to any
Multiemployer Plan.
2.15. Compliance with Law. Except as set forth in Schedule 2.15, to
the best knowledge of TDC, the Business has been operated by TDC in compliance
in all material respects with all laws, rules, regulations and orders applicable
to the Business (including, without limitation, any such laws, rules,
regulations and orders pertaining to the discharge or release of any pollutants,
contaminants, chemicals or industrial, toxic or hazardous materials into the
environment), except for failures to comply that would not, individually or in
the aggregate, have a Material Adverse Effect.
2.16. Labor Relations; Employees. TDC is not delinquent in any
material payments to any of its employees for any wages, salaries, commissions,
bonuses or other direct compensation for any services performed by them to the
date hereof or amounts required to be reimbursed to such employees, there is no
unfair labor practice complaint against TDC pending before the National Labor
Relations Board or any comparable state, local or foreign agency and
10
neither any grievance which might have a Material Adverse Effect nor any
arbitration proceeding arising out of or under any collective bargaining
agreement is currently pending. There is no strike, work stoppage, slowdown or
other labor difficulty actually occurring or, to the knowledge of TDC,
threatened against or directly affecting the operations of TDC.
2.17. Permits and Licenses. Schedule 2.17 lists, and TDC currently
has in full force and effect, all governmental licenses and permits required for
the conduct of the Business as now conducted, the absence of which would have a
Material Adverse Effect, and within the past three years TDC has conducted its
operations pursuant to then effective governmental licenses and permits.
2.18. Government Contracts.
(a) Government Contracts Compliance. With respect to each Government
Contract or Bid to which TDC is a party, to the best knowledge of TDC, (i) TDC
has complied with all material terms and conditions of such Government Contract
or Bid, including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of law therein; (ii) TDC has complied
with all requirements of any statute, rule, regulation, order or agreement
pertaining to such Government Contract or Bid; (iii) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract or Bid were current, accurate and complete as of their
effective date, and TDC has fully complied with all such representations and
certifications; (iv) neither the U.S. Government nor any prime contractor,
subcontractor or other person has notified TDC, either orally or in writing,
that TDC has breached or violated any statute, rule, regulation, certification,
representation, clause1 provision or requirement; (v) no termination for
convenience, termination for default, cure notice or show cause notice has been
issued; (vi) no cost incurred by TDC has been questioned or disallowed; and
(vii) no money due to TDC has been (or has been attempted to be) withheld or set
off.
(b) Investigations and Audits. To the best knowledge of TDC, (i)
neither TDC, any of TDC's Affiliates nor any of TDC's directors, officers,
employees, agents or consultants is (or for the last five years has been) under
administrative, civil or criminal investigation, indictment, audit or internal
investigation with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract or Bid; (ii) neither TDC
nor any of TDC's Affiliates has made a voluntary disclosure to the U.S.
Government with respect to any alleged
11
irregularity, misstatement or omission arising under or relating to a Government
Contract or Bid; (iii) there is no irregularity, misstatement or omission
arising under or relating to any Government Contract or Bid that has led or
could lead, either before or after the date hereof, to any of the consequences
set forth in (i) - (ii) above or any other damage, penalty assessment,
recoupment of payment or disallowance of cost.
(c) Financing Arrangements and Claims. To the best knowledge of TDC,
there exists (i) no financing arrangement with respect to performance of any
current Government Contract; (ii) no outstanding claim against TDC, either by
the U.S. Government or by any prime contractor, subcontractor, vendor or other
third party, arising under or relating to any Government Contract or Bid; (iii)
no fact upon which such a claim may be based on the future; (iv) no dispute
between TDC and the U.S. Government or any prime contractor, subcontractor or
vendor arising under or relating to any Government Contract or Bid; and (v) no
fact known by TDC over which such a dispute may arise in the future. To the best
knowledge of TDC, TDC has no interest in any pending or potential claim against
the U.S. Government or any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Bid.
(d) No Suspension or Debarment. Neither TDC nor any of its directors
or officers, nor, to the best knowledge of TDC, any employee of TDC is (or for
the last five years has been) suspended or debarred from doing business with the
U.S. Government or has been declared nonresponsible or ineligible for U.S.
Government contracting. TDC knows of no circumstances that, to the best
knowledge of TDC, would warrant the institution of suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility on the part of
TDC in the future.
2.19. Environmental Matters. Except as set forth in Schedule 2.19
attached hereto, no Environmental Condition relating to the Assets or the
Business exists in violation of any Environmental Laws. For purposes of this
Section 2.19, "Environmental Condition" means the existence, release, emission,
discharge, generation, removal or disposition of any Hazardous Substance;
"Hazardous Substance" means (i) any chemical, compound, material or substance
that is defined, listed in, or otherwise classified pursuant to, any
Environmental Laws as a "hazardous substance", "hazardous material", "hazardous
waste", "toxic substance" or "toxic pollutant", and (ii) asbestos, petroleum,
natural gas, natural gas liquids, liquified natural gas, synthetic gas usable
for fuel and drilling fluids, produced waters, and other wastes associated with
the exploration, development or production
12
of crude oil, natural gas, or geothermal resources; and "Environmental Laws"
means any and all federal, state and local laws (whether under common law,
statute, rule, regulation or otherwise) and other requirements of governmental
authorities relating to the environment or to any Hazardous Substance or
Environmental Condition (including, without limitation, CERCLA and the
applicable provisions of the California Health and Safety Code and the
California Water Code).
3. Representations and Warranties of Buyer.
Buyer represents and warrants to, and agrees with, TDC as follows:
3.1. Organization of Buyer; Authorization. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and corporate authority to execute
and deliver this Agreement, the Assumption Agreement and the Lease and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement, the Assumption Agreement and the Lease have been
duly authorized by all necessary corporate action (including, but not limited
to, approval by the Board of Directors) on the part of Buyer and each of this
Agreement, the Assumption Agreement and the Lease constitutes a valid and
binding obligation of Buyer, enforceable against it in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
3.2. No Conflict as to Buyer. Neither the execution and delivery of
this Agreement, the Assumption Agreement or the Lease nor the performance of
Buyer's obligations hereunder or thereunder will (a) violate any provision of
the Certificate of Incorporation or Bylaws of Buyer, (b) violate, conflict with
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under any agreement or commitment to which
Buyer is party or (c) to the best knowledge of Buyer, violate any statute or law
or any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to Buyer.
3.3. Investigation.
(a) Buyer has performed extensive due diligence and investigations
with respect to TDC with the intention of forming its own conclusions
regarding TDC (financial and otherwise) in response to the parties'
express intention and agreement that as of the Closing
13
the sale hereunder shall be without representation or warranty of any kind
(express or implied) regarding the Assets, except as set forth in this
Agreement and the Bill of Sale. Buyer will rely solely on its own business
judgment and investigation with respect to the Assets.
(b) In connection with Buyer's investigation of TDC, Buyer has
received from TDC certain projections and other forecasts, including the
projections and other forecasts contained in the Confidential Offering
Memorandum provided to Buyer. Buyer acknowledges that TDC makes no
representation or warranty with respect to such projections or forecasts.
3.4. Government Consents and Approvals. Except as set forth in
Schedule 3.4 attached hereto, no consent, approval or authorization of, or
declaration, filing or registration with any Governmental Body is required to be
obtained by Buyer in connection with the execution and delivery of this
Agreement, the Assumption Agreement or the Lease or the purchase of the Assets
by Buyer.
4. Representations and Warranties of RBC.
RBC represents and warrants to, and agrees with, TDC as follows:
4.1. Organization of RBC; Authorization. RBC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and corporate authority to execute and
deliver this Agreement, to issue the RBC Preferred Shares and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the issuance of the RBC Preferred Shares have been duly
authorized by all necessary corporate action on the part of RBC and each of this
Agreement and the Certificate of Designations constitutes the legally valid and
binding obligation of RBC, enforceable against it in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
4.2. No Conflict as to RBC. Neither the execution and delivery of
this Agreement nor the performance of RBC's obligations hereunder, the issuance
of the RBC Preferred Shares nor the performance of the Certificate of
Designations by RBC will (a) violate any provision of the Certificate of
Incorporation or Bylaws of RBC, (b) violate, conflict with or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a
14
default) under any material agreement or commitment to which RBC is a party or
(c) to the best knowledge of RBC, violate any material statute or law or any
judgment, decree, order, regulation or rule of any court or other Governmental
Body applicable to RBC.
4.3. RBC Preferred Shares. The RBC Preferred Shares, when they are
issued, sold and delivered hereunder, shall be validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
The terms, designations, powers, preferences and relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions of the RBC Preferred Shares are as set forth in the Certificate of
Designations.
4.4. Capital Structure. The authorized capital stock of RBC consists
of (i) 200,000 shares of preferred stock, of which 150,000 shares are designated
as Redeemable Exchangeable Cumulative Preferred Stock (the "Preferred Stock")
and of which 123,319.534 shares are issued and outstanding immediately prior to
the Closing. All such outstanding shares are duly authorized, validly issued,
fully paid and nonassessable, and there are no preemptive rights to purchase or
otherwise acquire any shares of Preferred Stock pursuant to RBC's Certificate of
Incorporation or Bylaws.
4.5. No Prior Activities. RBC, since its inception, has not (a)
engaged in any business, (b) entered into any agreements, contracts, guarantees,
understandings or other commitments (written or oral) or (c) incurred any
liabilities or become subject to any obligations of any nature (matured or
unmatured, fixed or contingent), other than in connection with its formation,
the Existing Stockholders Agreement, this Agreement or the transactions
contemplated hereby or thereby or actions taken in its capacity as the sole
stockholder of Roller Bearing, including actions taken in connection with the
financing of the operations and acquisition of Roller Bearing and its direct and
indirect wholly owned subsidiaries.
4.6. Financial Statements. RBC has delivered to TDC: (a)
substantially final drafts of an audited consolidated balance sheet of RBC and
Roller Bearing as at March 31, 1992 (the "RBC Audited Balance Sheet") and
related consolidated statements of income and cash flow for the fiscal year then
ended (the "RBC Audited Statements"), and (b) an unaudited consolidated balance
sheet of RBC and Roller Bearing as at August 31, 1992 (the "RBC Unaudited
Balance Sheet") and unaudited statements of income and cash flow for the five
months then ended (together with the RBC Unaudited Balance Sheet, the "RBC
Unaudited Statements"),
15
including, with respect to each of items (a) and (b) above, the notes thereto.
To the best knowledge of RBC, the RBC Audited Statements and notes thereto
present fairly the financial condition and results of operations of RBC and
Roller Bearing, respectively, as at the date thereof and for the period therein
referred to, in accordance with GAAP; provided, however, that RBC did not
prepare such statements, although in the ordinary course of RBC's business it
has not discovered any fact that would cause RBC to believe that such statements
and notes do not present fairly such financial condition and results of
operation or were not prepared in accordance with GAAP. To the best knowledge of
RBC, the RBC Unaudited Statements present fairly the financial condition and
results of operations of RBC and Roller Bearing, respectively, as at the date
thereof and for the period therein referred to in accordance with GAAP on a
basis consistent with the RBC Audited Statements, except that such Unaudited
Statements do not contain complete footnote disclosure and are subject to normal
year-end adjustments, which will not be material. Neither RBC nor Roller Bearing
has any liabilities or obligations that were not reflected or reserved against
in the RBC Unaudited Balance Sheet, except liabilities and obligations incurred
since the date of the RBC Unaudited Balance Sheet in the ordinary course of
business and consistent with past practice.
4.7. Litigation. There is no claim, action, suit or proceeding by or
before any court or Governmental Body pending or, to the best knowledge of RBC,
threatened against RBC or Roller Bearing that could have a material adverse
effect on the financial condition, prospects or affairs of RBC or Roller
Bearing.
4.8. Subsidiaries and Affiliates. RBC is the legal and beneficial
owner of all of the issued and outstanding capital stock of Roller Bearing.
Roller Bearing is the legal and beneficial owner of all of the issued and
outstanding capital stock of Buyer. RBC has no Subsidiaries other than Roller
Bearing and the Subsidiaries of Roller Bearing.
4.9. Nonforeign Status. RBC is not a "foreign person" as defined
in Section 800.211 of the regulations proposed by the United States Department
of the Treasury under Section 721 of the Defense Production Act of 1950, as
amended.
16
5. Covenants by Buyer and TDC.
5.1. Employees.
(a) Effective as of the Closing, Buyer shall offer employment to all
persons who are employees of TDC immediately prior to the Closing on terms of
employment and compensation comparable to that received by such employees
immediately prior to the Closing; provided, however, that "compensation" for
this purpose shall not be deemed to include benefits under any employee benefit
plan within the meaning of Section 3(3) of ERISA and provided further that such
employees shall not be third party beneficiaries of this Agreement and shall
remain terminable at will. All employees of TDC who accept employment with Buyer
shall be referred to herein as "Transferred Employees." Effective as of the
Closing, Buyer shall assume sponsorship for the Employee Plans (as defined in
Section 2.14(a)), and shall be responsible for all liabilities arising under
such plans on or after the Closing, but shall be permitted to amend or terminate
any of such plans at any time after the Closing. Buyer agrees that it shall use
its reasonable efforts to cause the insurer under the Employee Plans to give
Transferred Employees full credit under the Employee Plans for all expenses
incurred by Transferred Employees and their beneficiaries under the benefit
deductible and co-payment provisions of the Employee Plans. Buyer agrees that it
shall be liable for any continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") (i) imposed as the result of a
"Qualifying Event" (as that term is defined in ERISA Section 603 or Code Section
4980B(f)(3)) that occurs on or after the Closing with respect to any Transferred
Employee or (ii) imposed under the Employee Plans for any period extending
beyond the Closing with respect to a Qualifying Event which occurred on or
before the Closing, provided that TDC (or the plan administrator appointed by
it) has met all relevant notice requirements under Section 606 of ERISA or
Section 4980B(f) (6) of the Code pertaining to any Covered Employee or Qualified
Beneficiary (as such terms are defined in Section 607 of ERISA and Sections
4980B(f) and (g) of the Code) affected by such Qualifying Event. Furthermore,
Buyer shall indemnify BFM and TDC for any liability or penalty imposed under
COBRA (i) with respect to any Transferred Employee as the result of a Qualifying
Event that occurs on or after the Closing, and (ii) with respect to any employee
of TDC (including TDC employees who are not Transferred Employees) who is
eligible to receive continuation coverage under the Employee Plans in accordance
with COBRA for any period of time extending beyond the Closing, but excluding
any purposes of this Section 5.1(a) any liability for which BFM and TDC are
liable under Section 6.3(e).
17
(b) Buyer understands that certain employees of TDC have accrued
benefits in the LS, Inc. Plan and that in accordance with Section 9.02(b)(2) of
that agreement between BFM Acquisition Corp. and Lear Siegler Aerospace Products
Holding Corp., dated July 30, 1987, the LS, Inc. Plan provides (i) that certain
service by employees of BFM and its Affiliates is taken into account for
purposes of vesting (but not benefit accrual) under the LS, Inc. Plan and (ii)
that certain compensation of employees of BFM and its Affiliates is used in
computing the benefit of such employees under the LS, Inc. Plan ("Rollup
Agreement"). BFM, TDC and Buyer agree that any benefits payable under the
Rollup Agreement are an obligation solely of the LS, Inc. Plan and neither BFM,
TDC nor Buyer shall have any liability for any benefits payable as a result of
the Rollup Agreement and that neither BFM, TDC nor Buyer is responsible in any
way for any effect on benefits otherwise payable under the Rollup Agreement
caused by the transactions contemplated under this Agreement. Buyer agrees that
it shall notify LS, Inc. or its designee promptly after the end of each calendar
year and at such other times at LS, Inc. or its designee may reasonably request
as to the employment status of each Transferred Employee (as defined in Section
5.1) who has an accrued benefit under the LS, Inc. Plan.
5.2. Business Records and Files. For a period of five years with
respect to Tax records of TDC and three years with respect to other business
records of TDC from and after the date hereof:
(a) Buyer shall not dispose of or destroy any of such records and
files of the Business without first offering to turn over possession
thereof to TDC by notice to TDC at least 30 days prior to the proposed
date of such disposition or destruction.
(b) Buyer shall allow TDC and its agents access to all such records
and files of TDC that are transferred to Buyer in connection herewith for
any reasonable purpose upon 10 business days notice that sets forth the
documents to be reviewed and the purpose for such review, during normal
working hours at Buyer's principal place of business or at any location
where such records are stored, and TDC shall have the right, at its own
expense, to make copies of any such records and files; any such access or
copying shall be had or done in such a manner so as not to interfere with
the normal conduct of Buyer's business.
5.3. Tax Worksheets. Within three months after the date hereof,
Buyer shall prepare and deliver to BFM, at the sole expense of Buyer, tax
worksheets as at the date hereof of the type customarily prepared by TDC prior
to the
18
date hereof, for the purpose of enabling BFM and TDC to file Tax Returns for tax
periods ending prior to the date hereof.
5.4. Delivery of Financial Statements. Until such time as the RBC
Preferred Shares have been redeemed in full, RBC shall furnish to TDC annual
financial information in the form and at the same time as such information is
supplied to any creditor to which RBC is obligated to provide such information
or, if RBC is not obligated to deliver annual financial information to any
creditor, RBC shall provide TDC a balance sheet as of each fiscal year end of
RBC and a statement of operations and cash flows for each such fiscal year then
ended, prepared in accordance with GAAP within 90 days after the end of each
such fiscal year.
5.5. Sales Taxes Arising from Sale of Assets. Buyer shall be liable
for the payment of any and all sales taxes arising out of or related to the
transfer of the Assets by TDC to Buyer hereunder. Seller shall be liable for the
payment of any and all sales taxes arising out of or related to TDC's operation
of the Business through the date hereof.
5.6. Sales Tax Clearance Certificate. After the date hereof, Buyer
intends to file a request with the California State Board of Equalization (the
"Board") for a sales tax clearance certificate as to the satisfaction by TDC of
all sales and use tax liability arising from TDC's operation of the Business
through the date hereof. TDC will use its reasonable efforts to cooperate with
Buyer in connection with Buyer's efforts to obtain such certificate, including,
without limitation, making its records available to the Board for audit upon its
request.
5.7. Mail and Other Communications. After the date hereof, Buyer
shall forward to TDC all mail, telegrams and other communications, and all
express or other packages, addressed to TDC or its agents, promptly after
Buyer's receipt thereof. TDC thereupon shall promptly return to Buyer any and
all of the same to the extent they relate to the Assets or the Assumed
Liabilities.
5.8. Governmental Contract Novations. After the date hereof, TDC
shall use its reasonable efforts to assist Buyer in obtaining all necessary
novations to the Government Contracts and any and all other approvals as may be
reasonably requested by Buyer in connection with the transfer and assignment of
the Government Contracts to Buyer hereunder and TDC shall take such other
actions as may be reasonably requested by Buyer in connection therewith.
19
6. Survival of Representations and Warranties; Indemnification.
6.1. Survival. Subject to Section 6.2 hereof, all representations,
warranties and agreements contained in this Agreement shall survive the Closing.
6.2. Time Limitations. Neither BFM nor TDC shall have any liability
(for indemnification or otherwise) with respect to any representation or
warranty or any claim under Section 6.3(h) hereof, unless on or before the first
anniversary of the date hereof (or the second anniversary of the date hereof, in
the case of a claim with respect to the breach of Section 2.19 or any claim
under Section 6.3(h) hereof), TDC and BFM are given notice asserting a claim
with respect thereto and specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. Neither RBC nor Buyer shall
have any liability (for indemnification or otherwise) with respect to any
representation or warranty unless on or before the first anniversary of the date
hereof, Buyer and RBC are given notice of a claim with respect thereto and
specifying the factual basis of that claim in reasonable detail to the extent
then known by TDC.
6.3. Indemnification by BFM and TDC. BFM and TDC shall indemnify and
hold harmless Buyer, and shall reimburse Buyer for, any debt, obligation, claim,
loss, liability, damage or expense (including, but not limited to, costs of
investigation and defense and reasonable attorneys' fees) (collectively,
"Damages") relating to, arising from or in connection with (a) any inaccuracy in
any of the representations and warranties of TDC in this Agreement, (b) any
failure by TDC to perform or comply with any agreement contained in this
Agreement, (c) the operation of the Business prior to and on the date hereof
other than the Assumed Liabilities and other than claims for breach of warranty
or product liabilities (except as specified in clause (d) of this Section 6.3),
(d) all claims made, whether on, after or prior to the date hereof, for breach
of warranty or product liability arising out of (i) products shipped by TDC on
or prior to the date hereof and (ii) products shipped by Buyer after the date
hereof with respect to which Buyer provides TDC with written or other reasonable
evidence that such products were manufactured by TDC and constituted finished
goods on or prior to the date hereof, (e) any liability or claim of liability
arising from the failure of TDC or BEM to comply with the continuation coverage
requirements of Sections 601 through 608 of ERISA regarding continued insurance
coverage with respect to any Qualifying Event occurring prior to the Closing
under the Employee Plans, (f) any and all sales and payroll tax liabilities
arising out of TDC's operation of the Business through the date hereof, (g) the
remaining 50% of the amount
20
of the liability, if any, not assumed by Buyer pursuant to Section 1.1(b)
hereof, for severance payments or termination benefits owing to Frank E. Cole
pursuant to that certain Termination Benefits Agreement, dated January 31, 1990,
by and between TDC and Frank E. Cole, and (h) the existence or occurrence of any
Environmental Condition in violation of any Environmental Law relating to the
Business or the Premises prior to the Closing, except to the extent that such
Environmental Condition continues to exist solely because of the operation of
Buyer's business on the premises.
6.4. Indemnification by RBC and Buyer. RBC and Buyer shall indemnify
and hold harmless TDC, and shall reimburse TDC for, any Damages relating to,
arising from or in connection with (a) any inaccuracy in any of the
representations and warranties of Buyer in this Agreement, and (b) any failure
by Buyer to perform or comply with any covenant or agreement contained in this
Agreement, (c) the Assumed Liabilities, (d) the operation of the Business after
the date hereof, including, without limitation, the performance of the
Government Contracts, (e) all claims made after the date hereof for breach of
warranty or product liability arising out of products shipped by Buyer after the
date hereof with respect to which Buyer is unable to provide to TDC written or
other reasonable evidence that such products were manufactured by TDC and
constituted finished goods on or prior to the date hereof, (f) any and all sales
taxes arising out of or related to the transfer of the Assets by TDC to Buyer
hereunder, and (g) liability imposed on TDC or BFM for benefit payments under
the TDC Severance Policy on account of the termination of any Transferred
Employee of TDC occurring on or after the Closing. RBC shall indemnify and hold
harmless TDC, and shall reimburse TDC for, any Damages relating to, arising from
or in connection with any inaccuracy in any of the representations and
warranties of RBC in this Agreement and any failure by RBC to perform or comply
with any covenant or agreement contained in this Agreement.
6.5. Limitations as to Amount. Neither BFM nor TDC shall have any
liability with respect to any claim made by Buyer pursuant to Section 6.3 until
the total of all Damages exceeds $100,000 in the aggregate, at which time BFM
and TDC shall be liable only for the amount by which such Damages exceed
$100,000 in the aggregate. Neither RBC nor Buyer shall have any liability with
respect to any claim made by TDC pursuant to Section 6.4 until the total of all
Damages exceeds $50,000 in the aggregate, at which time Buyer and/or RBC shall
be liable only for the amount by which such Damages exceed $50,000 in the
aggregate. BFM and TDC's collective aggregate liability with respect to matters
described in Section 6.3 shall be limited to the amount of
21
the cash portion of the purchase price set forth in Section 1.2 hereof.
6.6. Brokers. RBC and Buyer shall indemnify and hold harmless TDC,
and shall reimburse BFM and TDC for, and TDC shall indemnify and hold harmless
Buyer, and shall reimburse Buyer for, all Damages resulting from any claims made
by any Person for brokerage or finder's fees or commissions in connection with
the transactions contemplated by this Agreement based on any agreement or
understanding alleged to have been made by such Person with RBC and Buyer or its
Affiliates (in the case of Buyer as the indemnifying party) or BFM and TDC or
its Affiliates (in the case of TDC as the indemnifying party).
6.7. Bulk Sales Law. The parties agree to waive compliance with the
provisions of the bulk transfer and bulk sales laws of any applicable state or
jurisdiction (the "Bulk Sales Laws") in connection with the purchase and sale of
the Assets hereunder. RBC and Buyer shall indemnify and hold harmless TDC, and
shall reimburse TDC for, any Damages that TDC may suffer as a result of or due
to noncompliance with the provisions of the Bulk Sales Law insofar as they
relate to any of the Assumed Liabilities. BFM and TDC shall indemnify and hold
harmless Buyer, and shall reimburse Buyer for, any Damages that Buyer may suffer
as a result of or due to noncompliance with the provisions of the Bulk Sales Law
insofar as they relate to liabilities of TDC other than the Assumed Liabilities.
6.8. Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 6.3, 6.4, 6.6 or 6.7 of notice of the
commencement of any action brought by a third party, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such section, give notice to the indemnifying party of the commencement
thereof. In case any such action shall be brought against an indemnified party
and it shall give notice to the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such section for any fees of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation. If an
indemnifying party assumes the defense of such an action, no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party's consent
22
(which shall not be unreasonably withheld) unless (i) there is no finding or
admission of any violation of law or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified party
and (ii) the sole relief provided is monetary damages that are paid in full by
the indemnifying party. In any event, the indemnifying party shall have no
liability with respect to any compromise or settlement thereof effected without
its consent (which shall not be unreasonably withheld).
7. Definitions.
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 7:
"Affiliate" -- A Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, another Person.
"Assets" -- See Section 1.1(a).
"Assumed Liabilities" -- See Section 1.1(b).
"Business" -- See Section 1.1(a)(vii).
"Business Day" -- Any day that is not a Saturday or Sunday or a day
on which banks located in the City of Los Angeles are authorized or required to
be closed.
"Buyer" -- See the first paragraph of this Agreement.
"Closing" -- See Section 1.3.
"Code" -- The Internal Revenue Code of 1986, as amended.
"Company Pension Plan" -- Each employee pension benefit plan within
the meaning of Section 3(2) of the ERISA, covered by Part 2 of Title I of ERISA,
excluding multiemployer plans within the meaning of Section 3(37) of ERISA
maintained within the last six years of TDC or any of its ERISA Affiliates.
"Company Welfare Plan" -- Each employee welfare benefit plan within
the meaning of Section 3(1) of ERISA maintained by TDC or any of its ERISA
Affiliates.
"Contracts" -- See Section 1.1(a)(ix).
"Damages" -- See Section 6.3.
23
"Employee Benefit Plans" -- Each Company Pension Plan, Company
Welfare Plan and each other profit sharing, group insurance, bonus, deferred
compensation, stock option, severance pay, insurance, pension or retirement plan
or written agreement relating to employment or "fringe benefits" for employees
or officers of TDC.
"Employee Plans" -- See Section 2.14.
"Encumbrance" -- Any security interest, mortgage, lien, charge or
other adverse claim.
"ERISA" -- The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" -- Any company that, as of the relevant measuring
date under ERISA, is a member of a controlled group of corporations or under
common control with TDC within the meaning of Section 414 of the Code.
"Excluded Assets" -- See Section 1.1(a).
"GAAP" -- Generally accepted accounting principles in the United
States, consistently applied.
"Governmental Body" -- Any domestic or foreign national, state or
municipal or other local government or multi-national body, any subdivision,
agency, commission or authority thereof, or any quasi-governmental or private
body exercising any regulatory or taxing authority thereunder.
"Government Contract" or "Government Contract or Bid" -- Any
contract with an agency or instrumentality of the U.S. government and all U.S.
government sub-contracts.
"IRS" -- See Section 2.14.
"Material Adverse Effect" -- A material adverse effect on the Assets
or on the financial condition, prospects or affairs of the Business.
"Multiemployer Plan" -- Each multiemployer plan within the meaning
of Section 3(37) of ERISA.
"PBGC" -- See Section 2.14(i).
"Patent and Trademark Rights" -- See Section 1.1(a) (x).
"Permitted Encumbrances" -- See Section 2.5.
24
"Person" -- Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity or Governmental
Body.
"Plans" -- See Section 2.14.
"Premises" -- See Section 1.1(a)(vi).
"Subsidiary" -- With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
"Taxes" -- All taxes, charges, fees, levies, interest, penalties,
additions to tax or other assessments, including, but not limited to, income,
excise, property, sales, use, value added and franchise taxes, imposed by any
Governmental Body.
"Tax Returns" -- Any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any Governmental Body in connection with the determination,
assessment or collection of any Taxes or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
"TDC" -- See the first paragraph of this Agreement.
"TDC Balance Sheet" -- See Section 2.5.
"TDC Financial Statements" -- See Section 2.5.
"TDC Interim Statements" -- See Section 2.5.
8. Notices.
All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate as to itself by notice to the other
parties):
25
(a) If to Buyer or RBC:
Roller Bearing Holding Company, Inc.
c/o TRIBOS Management Company, Inc.
1800 Century Park East, Suite 1000
Los Angeles, California 90067
Telecopier No.: (310) 277-5591
Attention: Mr. Richard R. Crowell
with a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Telecopier No.: (213) 229-7520
Attention: Terrance L. Carlson, Esq.
(b) If to BFM or TDC:
c/o Oak Hill Partners, Inc.
65 East 55th Street
32nd Floor
Telecopier No.: (212) 421-4578
Attention: Mr. Anthony P. Scotto
with a copy to:
O'Melveny & Myers
610 Newport Center Drive, 17th Floor
Newport Beach, California 92660-6429
Telecopier No.: (714) 669-6994
Attention: Gary J. Singer, Esq.
9. Jurisdiction; Service of Process.
9.1. Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of California, or,
if it has or can acquire jurisdiction, in the United States District Court for
the Central District of California, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any obligation to venue laid therein.
9.2. Service of Process. Process in any action or proceeding
referred to in Section 9.1 may be served on any party anywhere in the world,
whether within or without the State of California.
26
10. Miscellaneous.
10.1. Expenses. Each party shall bear its own expenses incident to
the preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
10.2. Captions. The captions in this Agreement are for convenience
of reference only and shall not be given any effect in the interpretation of
this Agreement.
10.3. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.
10.4. Exclusive Agreement; Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter (other
than any confidentiality agreement), is intended (with the documents referred to
herein) as a complete and exclusive statement of the terms of the agreement
among the parties with respect thereto and cannot be changed or terminated
orally.
10.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
10.6. Governing Law. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof.
10.7. Representation By Counsel; Interpretation. BFM, TDC, RBC and
Buyer each acknowledges that it has been represented by legal counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law, including but not limited to Section
1654 of the California Civil Code, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of Buyer, BFM, RBC and TDC.
10.8. Damages. Notwithstanding anything to the contrary elsewhere
in this Agreement, no party (or its Affiliates) shall, in any event, be liable
to the other
27
party (or its Affiliates) for any consequential damages, including, but not
limited to, loss of revenue or income, cost of capital, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement. Each party agrees that it will not seek punitive damages as to any
matter under, relating to or arising out of this Agreement.
10.9. Further Assurances; Knowledge.
(a) Further Assurances. Each party shall execute and deliver both
before and after the Closing such further certifications, agreements and
other documents and take such other actions as the other party may
reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
(b) Knowledge. As used in this Agreement, the terms "knowledge" or
"knowledge and belief" when used with respect to any party shall mean the
actual "knowledge" or actual "knowledge and belief" of any one or more of
the executive officers of such party.
10.10. Permitted Assignment. Notwithstanding anything herein to the
contrary, Buyer and RBC are permitted to grant to Heller Financial, Inc., a
Delaware corporation, for the benefit of the Lenders (as defined in the Amended
and Restated Credit Agreement, dated as of October 26, 1992) a continuing
security interest in and to all right, title and interest of Buyer and RBC in
this Agreement.
28
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date and year first written above.
BFM AEROSPACE CORPORATION
By: /s/ [Illegible]
---------------------------
Title: Secretary
--------------------
BFM TRANSPORT DYNAMICS
CORPORATION
By: /s/ [Illegible]
---------------------------
Title: Secretary
--------------------
RBC TRANSPORT DYNAMICS
CORPORATION
By: /s/ [Illegible]
---------------------------
Title: President & CEO
--------------------
ROLLER BEARING HOLDING
COMPANY, INC.
By: /s/ [Illegible]
---------------------------
Title: President & CEO
--------------------
EXHIBIT 1.2(a)
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS OF PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
OF
REDEEMABLE EXCHANGEABLE CUMULATIVE PREFERRED STOCK
OF
ROLLER BEARING HOLDING COMPANY, INC.
---------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
---------------------------------
Roller Bearing Holding Company, Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in Article
Fourth of its Certificate of Incorporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors by unanimous written consent dated October 20,
1992, adopted the following resolution creating a series of its Preferred Stock,
par value $0.01 per share, designated as Redeemable Exchangeable Cumulative
Preferred Stock.
WHEREAS, on March 24, 1992, the Board of Directors of this
Corporation by Action by Unanimous Consent and the filing of a Certificate of
Designations, Preferences, and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof of Redeemable Exchangeable Cumulative Preferred Stock of
Roller Bering Holding Company, Inc. created a series of Preferred Stock, par
value $0.01 per share, designated as Redeemable Exchangeable Cumulative
Preferred Stock with the maximum number of shares issuable fixed at 125,000; and
WHEREAS, this Corporation authorized an additional 25,000 shares of
Preferred Stock having the same designations preferences, and relative,
participating optional and other special rights and qualifications, limitations
and restrictions as the Redeemable Exchangeable Cumulative Preferred Stock
created on March 24, 1992.
RESOLVED, that a series of the class of authorized Preferred Stock,
par value $0.01 per share, of the Corporation be hereby created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
1. Designation, Issuance and Stated Value. The designation of the
series of Preferred Stock authorized by this resolution shall be "Redeemable
Exchangeable Cumulative Preferred Stock" (the "Redeemable Preferred Stock"). The
maximum number of shares of Redeemable Preferred Stock issuable hereunder shall
be 25,000. The shares of Redeemable Preferred Stock shall be issued by the
Corporation for their Stated Value (as herein defined), in such amounts, at such
times and to such persons as shall be specified by the Corporation's Board of
Directors, from time to time. For the purposes hereof, the "Stated Value" of
each share of Redeemable Preferred Stock (regardless of its par value) shall be
$100 per share, which Stated Value shall be proportionately increased or
decreased for any stock consolidation or stock split, respectively, of the
outstanding shares of Redeemable Preferred Stock.
2. Rank. The Redeemable Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
junior to all classes and series of stock of the Corporation now or hereafter
authorized, issued or outstanding (collectively, the "Senior Securities") other
than the Corporation's "Junior Securities." For the purposes hereof, "Junior
Securities" means all series and classes of Common Stock, $.0l par value per
share (the "Common Stock") of the Corporation, and such classes or series of
stock of the Corporation as shall be designated as junior to the Redeemable
Preferred Stock.
3. Dividends.
(a) Amount. On the last business day of March in each calendar
year (the "Dividend Accrual Date"), the holder of each share of the Redeemable
Preferred Stock shall become entitled to receive (when as and if declared by the
Board of Directors of the Corporation) a dividend (the "Annual Dividend") equal
to the sum of (i) eight percent (8%) of the Stated Value of such share
(pro-rated for any portion of a full year that such share shall have been issued
and outstanding) plus (ii) eight percent (8%) of the Unpaid Dividend Amount (as
defined below) as of the previous Dividend Accrual Date. The Unpaid Dividend
Amount with respect to each share of the Redeemable Preferred Stock shall be
equal to the aggregate of all Annual Dividends that the holder of such share
shall have become entitled to receive for such share but that shall not have
been declared and paid by the Board of Directors of the Corporation.
(b) Accumulation And Time of Payment. Dividends on each share
of the Redeemable Preferred Stock shall be cumulative and shall accrue from day
to day, whether or not earned or declared, commencing with the date of issue of
such share.
2
Dividends shall be payable annually, when, as and if declared by the Board of
Directors of the Corporation.
(c) Payment of Accumulated Dividends. Accumulated dividends
not paid on prior Dividend Accrual Dates may be declared by the Board of
Directors and paid to the holders of record of outstanding shares of Redeemable
Preferred Stock as their names shall appear on the stock register of the
Corporation on a record date to be established by the Board of Directors, which
record date shall be not more than sixty (60) nor less than thirty (30) days
preceding the date of payment, whether or not such date is a Dividend Accrual
Date. Holders of outstanding shares of Redeemable Preferred Stock shall not be
entitled to receive any dividends in excess of the full cumulative dividends to
which such holders are entitled as provided in this Section 3.
(d) Priority of Cumulative Dividends. So long as any shares of
Redeemable Preferred Stock are outstanding, the Corporation shall not (i)
declare, pay or set apart for payment any dividend on, or make any distribution
in respect of, the Junior Securities or any warrants, rights, calls or options
exercisable or convertible into any of the Junior Securities, either directly or
indirectly, whether in cash, obligations or shares of the Corporation or other
property (other than distributions or dividends of a particular class or series
of Junior Securities, or warrants, rights or options exercisable for such Junior
Securities, to holders of such Junior Securities) (ii) make any payment on
account of, or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption, retirement or other acquisition for value of any
of, or redeem, purchase, retire or otherwise acquire for value any of, the
Junior Securities (other than as a result of a reclassification of Junior
Securities or the exchange or conversion of one class or series of Junior
Securities for or into another class or series of Junior Securities, other than
through the use of the proceeds of a substantially contemporaneous sale of other
Junior Securities) or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities, or (iii) permit any corporation
or other entity directly or indirectly controlled by the Corporation to
purchase, redeem, retire or otherwise acquire for value any of the Junior
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities, unless, prior to or concurrently
with such declaration, payment, setting apart for payment, purchase, redemption,
other acquisition for value or distribution, all accrued and unpaid dividends
(including accrued dividends, if any, not paid by reason of the terms and
conditions of Section 3(e) hereof), if any, on shares of Redeemable Preferred
Stock shall have been paid through the immediately preceding Dividend Accrual
Date or, if such declaration, payment, setting apart for payment, purchase,
other acquisition for value or distribution occurs on a Dividend Accrual Date,
through such Dividend Accrual Date; provided, however, that this restriction
shall not apply to the repurchase of shares of Common Stock held by employees,
officers, directors, or consultants of the Corporation (or their permitted
transferees) that are subject to restrictive stock purchase agreements under
which the Corporation has the option or obligation to repurchase such shares
upon the occurrence of certain events, such as termination of employment, and
shall not apply to the repurchase of warrants to purchase
3
Class B Nonvoting Common Stock of the Corporation issued to Heller Financial,
Inc. ("Heller") which the Corporation has the option or obligation to purchase
pursuant to the terms of the warrant certificate representing such warrants.
(e) Restrictions on Payment of Dividends. Notwithstanding
anything contained herein to the contrary, no dividends on shares of Redeemable
Preferred Stock shall be declared by the Board of Directors or paid or set apart
for payment by the Corporation: (i) unless, prior to or concurrently with such
declaration, payment or setting apart, all accrued and unpaid dividends, if any,
on shares of Senior Securities shall have been paid or declared and set apart
for payment through the dividend payment period with respect to such Senior
Securities which next precedes or coincides with the Dividend Accrual Date; or
(ii) at such time as such declaration, payment or setting apart is prohibited by
the Delaware General Corporation Law (the "DGCL); or (iii) at such time as the
terms and provisions of any contract or other agreement of the Corporation or
any of its subsidiaries entered into or assumed providing financing (including
acquisition financing) or working capital to the Corporation or any of its
subsidiaries (whether or not entered into prior to, at or after the issuance of
the Redeemable Preferred Stock), specifically prohibits such declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach thereof or a default
thereunder.
4. Liquidation Preference.
(a) The Liquidation Preference. In the event of any voluntary
or involuntary liquidation, dissolution or winding up the affairs of the
Corporation, the holders of shares of Redeemable Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, whether such assets are capital
or surplus and whether or not any dividends are declared, an amount equal to
$100 for each share outstanding plus an amount equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up
(the "Liquidation Preference"), before any payment shall be made or any assets
distributed to the holders of Junior Securities. If the assets of the
Corporation are not sufficient to pay in full the liquidation payments payable
to the holders of outstanding shares of the Redeemable Preferred Stock and any
series of preferred stock or any other class of stock on a parity, as to rights
on liquidation, dissolution or winding up, with the Redeemable Preferred Stock,
then the holders of all such shares shall share ratably in such distribution of
assets in accordance with the amount that would be payable on such distribution
if the amounts to which the holders of outstanding shares of Redeemable
Preferred Stock and the holders of outstanding shares of such other securities
are entitled were paid in full. Nothing herein contained shall be deemed to
prevent redemption of shares of the Redeemable Preferred Stock by the
Corporation in the manner provided in Section 5. The liquidation payment with
respect to each outstanding fractional share of Redeemable Preferred Stock shall
be equal to a ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Redeemable Preferred Stock. All payments
for
4
which this Section 4 provides shall be in cash, property (valued at its fair
market value, as determined by an independent nationally recognized investment
banking firm) or a combination thereof. After payment of the full amount of the
Liquidation Preference to which each holder is entitled, such holders of shares
of Redeemable Preferred Stock will not be entitled to any further participation
in any distribution of the assets of the Corporation.
(b) Events Not Constituting Liquidation. For the purposes of
this Section 4, neither the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation nor the
consolidation or merger of the Corporation with or into any other corporation
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.
5. Redemption.
(a) Optional Redemption. Subject to the restrictions set forth
in Section 5(d) hereof, the Corporation may, at the option of the Board of
Directors, at any time or from time to time, in whole or in part, redeem the
shares of Redeemable Preferred Stock at the time outstanding, upon notice given
as hereinafter specified and on a date as specified in such notice (the
"Optional Redemption Date"), at a redemption price equal to the Stated Value per
share, together with accrued and unpaid dividends thereon to the Optional
Redemption Date ("Optional Redemption Price").
(b) Mandatory Redemption. Subject to the restrictions set
forth in Section 5(d) hereof, the Corporation shall redeem in full the
Redeemable Preferred Stock at the earliest to occur of any of the following
circumstances (each a "Mandatory Redemption Date"): (i) if Annual Dividends
shall not have been declared or paid for twelve (12) consecutive years; (ii)
upon the sale, lease or transfer of all or substantially all of the assets of
the Corporation and its subsidiaries, taken as a whole; (iii) on the date that
RBC Equity Partners L.P. and its affiliates, considered as one entity, cease to
be the largest single holder of Class A Voting Common Stock of the Corporation;
or (iv) upon the consolidation or merger of the corporation with or into any
other corporation, in which the Corporation is not the surviving entity. The
price at which outstanding shares of Redeemable Preferred Stock shall be
redeemed pursuant to this subparagraph (b) of Section 5 shall be the Stated
Value per share, together with all accrued but unpaid dividends on such shares
to the date fixed for such redemption (the "Mandatory Redemption Price").
(c) Manner of Redemption. Notice of redemption of
outstanding shares of Redeemable Preferred Stock pursuant to Sections 5(a) and
5(b) shall be sent by or on behalf of the Corporation to the holders of record
of outstanding shares of Redeemable Preferred Stock selected for redemption in
the manner provided in Section 7(b) hereof. If, as a result of a redemption, a
holder would be left with fractions of a share of Redeemable
5
Preferred Stock ("Fractional Shares"), the Corporation shall redeem the number
of shares of such holder that it otherwise would redeem rounded up or down, in
the Corporation's sole discretion, to the nearest whole number.
(d) Restrictions on Redemptions. No shares of Redeemable
Preferred Stock shall be redeemed in whole or part under Sections 5(a) or 5(b)
hereof: (i) at any time that such redemption is prohibited by the DGCL; (ii) at
any time that the terms and provisions of any contract or other agreement of the
Corporation or any of its subsidiaries entered into or assumed providing
financing (including acquisition financing) or working capital to the
Corporation or any of its subsidiaries (whether or not entered into prior to, at
or after the issuance of the Redeemable Preferred Stock), specifically prohibits
such redemption or provides that such redemption would constitute a breach
thereof or a default thereunder; (iii) unless, prior to or concurrently with
such redemption, all unpaid and accrued dividends on Redeemable Preferred Stock
and on Senior Securities for dividend periods preceding or ending on the
redemption date have been paid in full or have been declared and set aside for
payment in full; or (iv) at any time that the Corporation shall be in default in
respect of any of its redemption obligations on or under Senior Securities.
(e) Priority As To Junior Securities. If the Corporation fails
to discharge its obligation to redeem any outstanding shares of Redeemable
Preferred Stock required to be redeemed pursuant to paragraph 5(b) hereof (the
"Mandatory Redemption Obligation"), (x) the Mandatory Redemption Obligation
shall be discharged as soon as the Corporation is able to discharge such
Mandatory Redemption Obligation, and (y) so long as such Mandatory Redemption
Obligation shall not be fully discharged, the Corporation shall not (i) declare,
pay or set apart for payment any dividend on, or make any distribution in
respect of, the Junior Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Securities, either
directly or indirectly, whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends of a
particular class or series of Junior Securities, or warrants, rights or options
exercisable for such Junior Securities, to holders of such Junior Securities),
or (ii) make any payment on account of, or set apart for payment money for a
sinking or other similar fund for, the purchase, redemption, retirement or other
acquisition for value of any of, or redeem, purchase, retire or otherwise
acquire for value any of, the Junior Securities (other than as a result of a
reclassification of Junior Securities or the exchange or conversion of one class
or series of Junior Securities for or into another class or series of Junior
Securities, other than through the use of the proceeds of a substantially
contemporaneous sale of other Junior Securities) or any warrants, rights, calls
or options exercisable for or convertible into any of the Junior Securities, or
(iii) permit any corporation or other entity directly or indirectly controlled
by the Corporation to purchase, redeem, retire or otherwise acquire for value
any of the Junior Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Securities, provided,
however, that this restriction shall not apply to the repurchase of shares of
Common Stock held by employees, officers, directors, or consultants of the
Corporation
6
(or their permitted transferees) that are subject to restrictive stock purchase
agreements under which the Corporation has the option or obligation to
repurchase such shares upon the occurrence of certain events, such as
termination of employment, and shall not apply to the repurchase of warrants to
purchase Class B Nonvoting Common Stock of the Corporation issued to Heller
which the Corporation has the option or obligation to purchase pursuant to the
terms of the warrant certificate representing such warrants.
6. Exchange.
The Redeemable Preferred Stock is exchangeable out of funds
legally available therefor, at the sole option of the Corporation, in whole or
in part, on any Dividend Accrual Date on or after March 31, 1994, for the
Corporation's Subordinated Exchange Debentures due March 31 , 2004 (the
"Exchange Debentures"). The Exchange Debentures shall be issued pursuant to an
indenture, the form of which shall have been approved by the Corporation and the
holders of a majority of the outstanding shares of Redeemable Preferred Stock;
provided, however, that if any terms of such Exchange Debentures are less
favorable in any material respect to the holders thereof than any comparable
term of the Redeemable Preferred Stock, such terms shall have been approved in
writing by the holders of 66-2/3% of the Redeemable Preferred Stock. Holders of
the outstanding shares of Redeemable Preferred Stock will be entitled to receive
$100.00 principal amount of the Exchange Debentures in exchange for each share
of Redeemable Preferred Stock held by them at the time of exchange and cash or
such principal amount of the Exchange Debentures equal to all accrued but unpaid
dividend amounts at the time of the exchange. Such holders may receive Exchange
Debentures in amounts less than $100.00 as may be necessary due to the issuance
of fractional shares of Redeemable Preferred Stock. On the date of exchange, the
rights of the holders of Redeemable Preferred Stock to be exchanged as
stockholders of the Corporation shall cease (except the right to receive on the
date of the exchange out of funds legally available therefore an amount equal to
the amount of accrued and unpaid dividends (in cash or Exchange Debentures) to
the Dividend Accrual Date that coincides with the date of exchange), and the
person or persons entitled to receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as the registered holder or holders
of such Exchange Debentures as of the Dividend Accrual Date that coincides with
the date of exchange. The Corporation will cause the Exchange Debentures to be
authenticated as of the date on which the exchange is effective and dated the
Dividend Accrual Date that coincides with the date of exchange.
7. Procedure for Redemption or Exchange
(a) Selection. In the event that fewer than all of the
outstanding shares of Redeemable Preferred Stock are to be redeemed or exchanged
pursuant to Section 5 or 6 hereof, the number of shares to be redeemed or
exchanged, shall be determined by the Board of Directors at its sole option and
shall be redeemed or exchanged pro rata among all holders of the Redeemable
Preferred Stock.
7
(b) Notice. If the Corporation redeems or exchanges shares of
Redeemable Preferred Stock, notice of every redemption or exchange of shares of
Redeemable Preferred Stock shall be mailed by first class mail, postage prepaid,
not less than thirty (30) days nor more than sixty (60) days prior to the
redemption or exchange date addressed to the holders of record of the shares to
be redeemed or exchanged at their respective last addresses as they shall appear
on the books of the Corporation; provided, however, that the failure to give
such notice or any defect therein or in the mailing thereof shall not affect the
validity of the redemption or exchange of any shares so to be redeemed or
exchanged except as to the holder to whom the Corporation has failed to give
such notice or except as to the holder to whom such notice was defective. Each
such notice shall state: (i) the redemption or exchange date; (ii) that shares
of Redeemable Preferred Stock are to be redeemed or exchanged and, if less than
all the shares held by such holder are to be redeemed or exchanged, the number
of such shares to be redeemed or exchanged; (iii) the redemption or exchange
price; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption or exchange price; and (v) that
dividends on the shares to be redeemed or exchanged will cease to accrue on such
redemption date.
(c) Effect of Redemption or Exchange. Notice having been
mailed as aforesaid, from and after the redemption date or as of the exchange
date, dividends on the shares of Redeemable Preferred Stock so called for
redemption or exchange shall cease to accrue, and said shares shall no longer be
deemed to be outstanding and shall be retired and shall have the status of
authorized but unissued shares of preferred stock, unclassified as to series,
and shall not be reissued as shares of Redeemable Preferred Stock, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price or the Exchange
Debentures upon exchange and any accrued and unpaid dividends, in cash or
Exchange Debentures) shall cease and terminate. In the event of redemption, if
notice of redemption shall have been mailed and if prior to the date of
redemption specified in such notice all said funds necessary for such redemption
shall have been irrevocably deposited in trust, for the account of the holders
of the shares of the Redeemable Preferred Stock to be redeemed (and so as to be
and continue to be available therefor), with a bank or trust company named in
such notice, thereupon and without awaiting the redemption date, all shares of
the Redeemable Preferred Stock with respect to which such notice shall have been
so mailed and such deposit shall have been so made, shall be deemed to be no
longer outstanding and all rights with respect to such shares of the Redeemable
Preferred Stock shall forthwith upon such deposit in trust cease and terminate
(except the right of the holders thereof on or after the redemption date to
receive from such deposit the amount payable upon the redemption). In case the
holders of shares of the Redeemable Preferred Stock that shall have been called
for redemption shall not within two years (or any longer period if required by
law) after the redemption date claim any amount so deposited in trust for the
redemption of such shares, such bank or trust company shall, upon demand and if
permitted by applicable law, pay over to the Corporation any such unclaimed
amount so
8
deposited with it and shall thereupon be relieved of all responsibility in
respect thereof, and thereafter the holders of such shares shall, subject to
applicable escheat laws, look only to the Corporation for payment of the
redemption price thereof. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed or exchanged (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed or
exchanged by the Corporation at the redemption price or exchange rate aforesaid.
In case fewer than all the shares represented by any such certificate are
redeemed or exchanged, a new certificate shall be issued representing the
unredeemed or unexchanged shares without cost to the holder thereof.
8. Voting Rights. Except as specifically set forth in the DGCL, the
holders of shares of Redeemable Preferred Stock shall not be entitled to any
voting rights with respect to any matters voted upon by stockholders of the
Corporation.
9. Section Headings. Section headings are for convenience of
reference only and shall not constitute a part of this Certificate or be
referred to in connection with the interpretation or construction hereof.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be executed, signed and acknowledged by Richard K. Roeder, its Vice President,
and to be attested by Kurt B. Larsen, its Secretary, this 20th day of October,
1992.
/s/ Richard K. Roeder
-------------------------
Richard K. Roeder
Vice President
Attest: /s/ Kurt B. Larsen
-------------------------
Kurt B. Larsen
Assistant Secretary
9
EXHIBIT 1.4(a)
BILL OF SALE
THIS BILL OF SALE is made as of the 26th day of October, 1992, by
BFM TRANSPORT DYNAMICS CORPORATION, a California corporation ("TDC").
W I T N E S S E T H:
That for the consideration set forth in that certain Asset Purchase
Agreement, dated as of October 26, 1992 (the "Agreement"), by and between TDC
and RBC Holding Company, Inc., a Delaware corporation ("Buyer"), TDC hereby
conveys, transfers, assigns and delivers to and vests in Buyer, free and clear
of all Encumbrances except Permitted Encumbrances (all capitalized terms used
herein and not otherwise defined having the meanings given to them in the
Agreement) all of TDC's good and marketable title, right and interest in and to
the Assets, which are all the assets of every type and nature (tangible or
intangible) owned by TDC as of the date hereof (other than the Excluded Assets
identified in Schedule 1.1(a) attached to the Agreement), including, without
limitation: (i) all of the cash of TDC on hand or in bank or in other accounts
of TDC, (ii) all trade accounts receivable and other receivables of TDC, (iii)
all of the inventories of raw materials, work-in-process, finished products,
scrap and rejects, spare parts and supplies identified in Schedule 1 attached
hereto, except for the items sold after the date of such schedule in the
ordinary course of business of TDC; (iv) all machinery, apparatus, commercial
tooling, equipment and trade fixtures identified in Schedule 2 attached hereto;
(v) all office furniture and fixtures identified in Schedule 3 attached hereto;
(vi) all of TDC's leasehold improvements located at the premises occupied by TDC
at 3131 West Segerstrom Avenue, Santa Ana, California and identified in Schedule
4 attached hereto; (vii) the goodwill incident to the business of TDC; (viii)
all records of the Business including, without limitation, property, production,
engineering, contract and accounting records, sales data and records, customer
lists and other information relating to customers, catalogs, brochures,
suppliers' names, mailing lists and any photographic and advertising materials;
(ix) all rights in to and under all Contracts, including purchase and sales
orders and commitments, personal property leases and other agreements made in
the ordinary course of business, including, without limitation, those set forth
in Schedule 5 attached hereto; and (x) all of TDC's right, title and interest in
and to all copyrights, service marks, trademarks, logos, trade names (including
the name "BFM Transport Dynamics Corporation") , patents, patent
1.4(a)-1
applications, licenses (including patent licenses) royalty rights and
inventions, processes, know-how, formulae, trade secrets, compositions, designs,
drawings, specifications, patterns, blueprints, plans, files, notebooks and
records relating to research, engineering and development activities, production
data and shop rights, including, without limitation, the items set forth in
Schedule 6 attached hereto.
EXCEPT AS SET FORTH HEREIN AND IN SECTION 2 OF THE AGREEMENT, THE
ASSETS HAVE BEEN EXAMINED BY BUYER AND ARE CONVEYED BY TDC TO BUYER "AS IS" AND
"WHERE IS" AND TDC HEREBY EXPRESSLY DISCLAIMS THE EXISTENCE OF ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO CONDITION, MERCHANTABILITY,
OPERATION, FITNESS FOR USE OR AS TO ANY MATTER WHATSOEVER.
Subject to the terms and conditions of the Agreement, TDC hereby
constitutes and appoints Buyer and its successors and assigns as TDC's true and
lawful attorney and stead, on behalf of and for the benefit of Buyer, its
successors and assigns, to demand and receive any and all of the Assets and to
give receipts and releases for and in respect of the same and any part thereof,
and from time to time to institute and prosecute in TDC's name or otherwise for
the benefit of Buyer, its successors and assigns, any and all proceedings at
law, in equity or otherwise, which Buyer, its successors and assigns, may deem
proper for the collection or reduction to possession of any of the Assets or
Assumed Liabilities or for the collection and enforcement of any claim or right
of any kind hereby sold, conveyed, transferred, assigned and delivered, or
intended so to be, and to do all acts and things in relation to the Assets and
Assumed Liabilities that Buyer, its successors and assigns, shall deem
desirable; TDC hereby declaring that the foregoing powers are coupled with an
interest and are not and shall not be revocable by TDC in any manner for any
reason whatsoever.
From time to time after the date hereof, at the request of Buyer,
TDC shall, without consideration, deliver such further instruments of transfer
and shall take such other action as Buyer may reasonably request in order to
convey more effectively any of the Assets transferred hereunder to Buyer.
This Bill of Sale may be assigned and a security interest in this
Bill of Sale may be granted by Buyer and may be enforced by any financial
institution or other entity providing financing to Buyer for the transactions
contemplated herein.
1.4(a)-2
This Bill of Sale is executed and delivered by TDC pursuant to the
Agreement and shall be binding upon TDC, its successors and assigns for the uses
and purposes above set forth and referred to, effective on the date first
written above.
1.4(a)-3
IN WITNESS WHEREOF, TDC has executed this Bill of Sale on the day
and year first written above.
BFM TRANSPORT DYNAMICS
CORPORATION,
a California corporation
By:
-------------------------------
Title:
------------------------
1.4(a)-4
STATE OF NEW YORK )
) ss:
COUNTY OF KINGS )
On October __, 1992, before me, the undersigned a Notary Public in
and for said County and State, personally appeared _________________________,
known or proved to me on the basis of satisfactory evidence to be the
_______________ of the corporation that executed the within instrument, and
known to me to be the person who executed the within instrument on behalf of the
corporation therein named, and acknowledged to me that, acting on behalf of such
corporation, he executed the same.
WITNESS my hand and official seal.
-----------------------------
Notary Public in and for said
County and State
1.4(a)-5
EXHIBIT 1.5(b)
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Assumption Agreement") is made as
of the 26th day of October, 1992, by RBC TRANSPORT DYNAMICS CORPORATION, a
Delaware corporation ("Buyer").
R E C I T A L S:
A. Buyer, Roller Bearing Holding Company, Inc., a Delaware
corporation, BFM Aerospace Corporation, a Delaware corporation, and BFM
Transport Dynamics Corporation, a California corporation ("TDC") , have entered
into that certain Asset Purchase Agreement, dated as of the date hereof (the
"Agreement").
B. Pursuant to the Agreement, Buyer has agreed to assume certain
of the debts, obligations, liabilities and claims of TDC as of the date hereof.
C. All capitalized terms used herein without definition shall have
the meanings given to them in the Agreement.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer agrees as follows:
Section 1. Assumption of Liabilities.
Buyer hereby assumes as of the date hereof and shall hereafter
perform and discharge the following and only the following debts, obligations
and liabilities of and claims against TDC: (i) all agreements, contracts,
commitments, purchase orders, personal property leases and sales orders relating
to the Business, including, without limitation, those items identified in
Schedule 1 attached hereto, but excluding, however, that certain Lease
Agreement, dated November 1, 1988, by and between TDC and TD Land, Inc. with
respect to the Premises; (ii) all debts, obligations, liabilities and claims
identified in Schedule 2 attached hereto to the extent set forth therein; (iii)
all debts, liabilities, obligations and claims arising from the operation of the
Business after the date hereof; and (iv) all claims made after the date hereof
for breach of warranty or product liability arising out of products shipped by
Buyer after the date hereof with respect to which Buyer is unable to provide to
TDC written or other reasonable
1.5(b)-1
evidence that such products were manufactured by TDC and constituted finished
goods on or prior to the date hereof.
Section 2. Governing Law.
This Assumption Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.
Section 3. Construction.
This Assumption Agreement is subject to the terms and conditions of
the Agreement and, notwithstanding anything contained herein to the contrary,
this Assumption Agreement shall not be deemed to limit, enlarge or extinguish
any obligation of TDC, Buyer or the other parties to the Agreement under the
Agreement, all of which obligations shall survive the execution and delivery of
this Agreement in accordance with the terms of the Agreement.
1.5(b)-2
IN WITNESS WHEREOF, Buyer has duly executed this Assumption
Agreement as of the day and year first set forth above.
RBC TRANSPORT DYNAMICS
CORPORATION,
a Delaware corporation
By:
----------------------------
Title:
---------------------
1.5(b)-3
SCHEDULE 1
Contracts
SCHEDULE 2
Other Assumed Liabilities
INDEX OF SCHEDULES
Schedule 1.1(a) - Excluded Assets
Schedule 1.1(a)(iii) - Inventory
Schedule 1.1(a)(iv) - Machinery and Furniture
Schedule 1.1(a)(vi) - Leasehold Improvements
Schedule 1.1(a)(ix) - Contracts
Schedule 1.1(a)(x) - Patent and Trademark Rights
Schedule 1.1(b) - Assumed Liabilities
Schedule 2.3 - Government Consents and
Approvals (TDC)
Schedule 2.5 - Encumbrances
Schedule 2.8 - Taxes
Schedule 2.10 - Disclosure Regarding Patents
and Trademark Rights
Schedule 2.11 - Leases
Schedule 2.14 - Employee Plans
Schedule 2.15 - Compliance with Law
Schedule 2.17 - Permits and Licenses
Schedule 2.19 - Environmental Matters
Schedule 3.4 - Government Consents and
Approvals (Buyer)
iv
Schedule 1.1(a)
Excluded Assets
1. Lease agreement, dated November 1, 1988 between TDC and TD Land, Inc. with
respect to the Premises.
TDC-1
Schedule 1.1(a)(iii)
Inventory
August 31, 1992
($ in 000's)
AEROSPACE INDUSTRIAL TOTAL
--------- ---------- -----
RAW MATERIAL $ 219 $ 156 $ 375
WORK-IN-PROCESS 1,723 189 1,912
FINISHED GOODS 1,074 74 1,148
RESERVES FOR INVENTORY
EVALUATION (65) (15) (80)
------ ----- ------
TOTAL $2,951 $ 404 $3,355
====== ===== ======
TDC-2
Schedu1e 1.1(a) (iv)
Machinery and Furniture
See attached lists. The cost of each item referred to therein reflects the
original book cost.
TDC-3
Schedule 1.1(a)(vi)
Leasehold Improvements
None
TDC-4
This Schedule is also referenced in
Section 2.12 of the Purchase Agreement.
Schedule 1.1(a)(ix)
Contracts
1. Multi-year Procurement Agreement with General Electric dated April 26,
1990 for purchase of various bearings. Agreement expires in three years,
with an option for two additional years.
2. The following Purchase Order agreements from customers:
Order Contract
Customer Date 000's Ship Date
- -------- ---- ----- ---------
Jet 1-92 82 2-92-Unscheduled
Western Methods 4-91 106 2-92-Unscheduled
FMC 1-92 167 7-92-1-94
Chalco 1-90 82 10-92-3-93
Ambel Prec. 9-91 96 1-93 Unscheduled
CPC 5-91 77 11-92-11-93
Bell H/C 5-90 62 5-94-10-94
U.S. Airforce 3-92 94 1-93
Rolls-Royce 7-91 122 Stop-Work
G.E. Ohio 3-91 354 9-92-8-93
G.E. Ohio 5-91 88 8-93-12-93
Lear Astronics 7-92 89 10-92-5-94
P&W Ct. 2-91 90 2-93-3-94
McDD H/C 5-91 169 5-92-10-93
Northrop 6-91 100 10-92-11-92
G.E. Lynn 7-90 302 2-93-1-95
G.E. Hooksett 7-91 162 10-92-11-92
G.E. Hooksett 2-92 98 12-92-8-93
G.E. Hooksett 7-91 138 1-93
G.E. Hooksett 7-91 138 12-91-11-92
G.E. Hooksett 7-91 78 11-92
G.E. Hooksett 7-91 59 1-93
G.E. Hooksett 7-91 78 11-92-7-93
Bell H/C 6-91 56 11-92-1-93
G.E. Hooksett 3-91 82 11-92-Unscheduled
P&W Ct. 5-89 96 8-92-6-94
G.E. Ohio 7-90 408 9-92
Northrop 8-92 60 6-93-10-93
Hill AFB 7-92 287 5-93-9-93
U.S. Army 5-92 195 Unscheduled
G.E. Lynn 1-90 293 8-92-3-95
G.E. Ohio 6-90 74 8-92-10-92
U.S. Army 9-92 68 6-93
TDC-5
Schedule 1.1(a)(ix) (continued)
G.E. Hooksett 1-91 132 10-92
G.E. Ohio 10-90 63 11-92
G.E. Hooksett 1-91 95 Unscheduled
G.E. Hooksett 2-92 98 2-93-10-93
G.E. Hooksett 2-92 116 3-93-9-93
P&W Ct. 3-87 79 Termination *
P&W Ct. 7-90 131 6-93
See Schedule 2.3 which schedule is incorporated herein by reference.
3. Manufacturers' Representative Agreements:
(a) Agreement with DP Aviation dated March 26, 1985.
(b) Two agreements with Mills Associates dated February 4, 1985
and June 1, 1987.
(c) Agreement with Magna Engineering Sales Co., Inc., dated
November 2, 1983.
(d) Agreement with Interfast, Inc. dated January 12,
1973.
(e) Agreement with Benson Engineering dated June 1,
1987.
(f) Agreement with East Air Corporation dated September 14, 1991.
(g) Agreement with Erma Werke GmbH dated February 3, 1992.
4. Personal Property Leases:
(a) Three lease agreements between TDC and Xerox Corporation for
lease of various copying equipment and engineering systems.
Leases expire between September 1993 and October 1995.
(b) Lease agreement between TDC and Bell Atlantic Tricon dated
April 10, 1989 for lease of a Cannon NP 3225F Copier. Lease
expires April 1993.
* Contract has been terminated by customer and certain termination charges
may be owed by customer.
TDC-6
Schedule 1.1(a)(ix) (continued)
(c) Lease agreement between TDC and KS&C Industries dated January
29, 1992 for the rental of various gauges and fixtures. Lease
expires December 31, 1992.
(d) Lease agreement between TDC and New Era Supplier dated
February 15, 1991 for lease of three hot/cold water coolers.
Lease expires February 14, 1994.
TDC and GSI
1. Compensation Agreements:
(a) Letter Agreement dated March 14, 1990 regarding payment to Frank
Cole of Deferred Bonus.
(b) Letter dated April 10, 1992 regarding proposals for the 1992 Key
Employee Incentive Bonus Program.
2. Security Maintenance Agreement dated July 19, 1991 between Sea Coast
Security System and TDC. Agreement expires June 30, 1994.
3. Equipment Maintenance and Service Agreement dated October 1, 1991 between
MS-COM Telecommunications and TDC.
4. Maintenance Agreement dated June 15, 1987 between IDEA Servcom and TDC.
5. Personal Property Leases:
(a) Vehicle lease agreements between TDC and McCullagh-Gelco for the use
of seven company vehicles by TDC's president and field sales
personnel. Leases have various expiration dates.
(b) Lease agreement between TDC and G.E. Capital Business Center for
lease of ROLM VXCBX telephone system. Lease expires December 31,
1992.
6. Erma Werke GmbH has a paid-up license for the use of the technological
know-how relating to FIBERGLIDE and the use of the FIBERGLIDE(R)
trademark.
TDC-7
Schedule 1.1(a)(x)
Patent and Trademark Rights
See also Section 2.10
1. U. S. Patents
U.S. Patent No. Issue Date Title
- --------------- ---------- -----
No. 4,080,015 March 21, 1978 Sealed Bearing
2. U. S. Trademark Registrations
Trademark Registration No. Expiration Date**
- --------- ---------------- -----------------
DYNASPHERE 781,731 12-15-2004
FABROID 651,079 09-03-1997
FIBERGLIDE 703,508 08-30-2000
FIBRILEX 1,081,557 01-10-1998
FIBRILOID 1,005,036 02-18-1995
THERMALOID 1,617,323 10-16-2000
3. Foreign Trademark Registrations
Expiration Class
Country Trademark Regis. No. Date** of Goods
- ------- --------- ---------- ------ --------
*Argentina FABROID 1,150,953 07-01-1995 Bearings (#6)
*Argentina FABROID 1,150,954 07-01-1995 Bearings (#7)
*Argentina FABROID 1,150,956 07-01-1995 Bearings (#12)
*Argentina FIBERGLIDE 1,150,955 07-01-1995 Bearings (#6)
*Argentina FIBERGLIDE 1,150,957 07-01-1995 Bearings (#7)
*Argentina FIBERGLIDE 1,150,958 07-01-1995 Bearings (#12)
Australia FABROID A186,490 03-13-1999 Bearings (#7)
Australia FABROID A196,586 03-13-1999 Bearings (#12)
Australia FIBERGLIDE 186,488 08-13-1999 Bearings (#7)
TDC-8
Schedule 1.l(a)(x) (continued)
Expiration Class
Country Trademark Regis. No. Date** of Goods
- ------- --------- ---------- ------ --------
Australia FIBERGLIDE 196,567 08-13-1999 Bearings (#12)
Canada FABROID 137,562 10-02-1994 Bearings
Canada FIBERGLIDE 123,503 08-09-2006 Bearings
Canada FIBRILOID 211,048 01-06-2006 Bearings
Italy FABROID 459,737 04-09-2004 Bearings (#1,7,17)
Italy FIBERGLIDE 291,535 02-14-1993 Bearings (#6,7)
Italy FIBRILOID 299,376 10-25-1993 Bearings
Japan FABROID 678,008 06-11-1995 Bearings (#9)
Sweden FIBERGLIDE 113,762 08-13-1995 Bearings (#7)
U.K. FIBERGLIDE 819,203 04-07-1996 Bearings (#7)
U.K. THERMALOID 1,400,234 10-16-2000 Bearings
W. Germany FABROID 810,100 03-13-1994 Bearings
W. Germany FIBERGLIDE 757,565 04-05-2001 Bearings (#6,7,12,17)
W. Germany FIBRILOID 939,229 11-14-1993 Bearings (#7)
* Argentina has not provided formal recording documents for the trademarks
listed herein:
(a) FABROID(R), and
(b) FIBERGLIDE(R)
Argentina has advised TDC that all documents have been filed and reports
are expected to be received in the near future from the patent and
trademark office.
** The expiration dates listed herein are provided for reference purposes
only and should not be considered as representations as to their accuracy.
TDC-9
Schedule 1.1(b)
Assumed Liabilities
1. Workers' compensation liabilities accrued on the balance sheet of TDC as
of the date hereof (the "Balance Sheet"), which, as of August 31, 1992,
were $28,000.
2. All Employee Plans listed on Schedule 2.14.
3. Frank Cole's deferred compensation pursuant to that certain Deferred Bonus
Agreement dated March 14, 1990 (approximately $170,000).
4. Fifty percent of the amount of the liability, if any, for severance
payments or termination benefits owing to Frank E. Cole pursuant to that
certain Termination Benefits Agreement dated January 31, 1990.
5. Liability for benefit payments under the Severance Policy on account of
the termination of any Transferred Employee occurring on or after the
Closing.
6. The Contracts (as defined in Section 1.1(a) (ix) of the Agreement).
7. Trade accounts payable accrued on the Balance Sheet, which, as of August
31, 1992, were $226,000.
8. Accrued payroll as accrued on the Balance Sheet, which, as of August 31,
1992, was $31,000.
9. Accrued payroll taxes and property taxes as accrued on the Balance Sheet,
which, as of August 31, 1992, were $36,000.
10. The leases as set forth in Schedule 2.11, other than the lease agreement
described in Schedule 1.1(a).
11. Product warranties for products shipped by Buyer after the date hereof
with respect to which Buyer is unable to provide to TDC written or other
reasonable evidence that such products were manufactured by TDC and
constituted finished goods on or prior to the date hereof.
12. Vacation, holiday and sick leave accruals on the Balance Sheet, which, as
of August 31, 1992, were $265,000.
13. Bonuses accrued on the Balance Sheet, if any, with respect to the Employee
Incentive Bonus Proposal dated April 10, 1992, which, as of August 31,
1992, were zero.
TDC-10
14. Any other liabilities on the Balance Sheet not listed herein, which, as of
August 31, 1992, were approximately $95,000.
TDC-11
Schedule 2.2
No Conflict
The terms of the lease between TDC and Xerox Corporation ("Xerox"), require the
prior written consent of Xerox in connection with the assignment of such leases
by TDC. TDC has undertaken to obtain such consents, which Xerox has informed TDC
will be forthcoming.
TDC-12
Schedule 2.3
Government Consents and Approvals
A novation agreement, in accordance with Federal Acquisition Regulations System
subpart 42.12, is required on the following Government Contracts:
Open U.S. Government Contracts as of September 30, 1992
Dept. of the Army-St. Louis, MO
F04606-91-G-0038-BSO1
DAAJO9-92-C-0864
DAAJO9-92-C-0865
DAAJO9-92-P-1051
DAAJO9-92-P-1160
DAAJO9-92-C-0503
Dept. of the Air Force
F04606-92-G-0021-QPOl Hill AFB
F04606-92-G-0021-RJOl Warner Robins AFB
F04606-92-G-0021-5A05 Kelly AFB
F42620-92-M-0995 Hill AFB
F42630-92-M-1313 Hill AFB
F41608-92-D-1523 Kelly AFB
F34601-92-M-2193 Kelly AFB
F04606-92-G-0021-SA03 Kelly AFB
F42630-92-C--721 Hill AFB
Defense Industrial Supply Center - Philadelphia, PA.
DLA5OO-92-M-MK06 DLA5OO-92-M-GBl6 DLA5OO-92-M-MAl7 DLA5OO-92-M-RV27
DLA5OO-92-M-UN28 DLA5OO-92-M-VC2S DLA5OO-92-M-TM9l DLA5OO-92-M-UC97
DLA5OO-92-C-1288 DLA5OO-92-M-EY55 DLA5OO-92-M-KF98 DLA5OO-92-M-LY77
DLA5OO-92-M-0E98 DLA5OO-92-M-5U17 DLA5OO-92-M-5N67
TDC-13
Schedule 2.3 (continued)
Defense Industrial Supply Center - Philadelphia, PA (continued)
DLA5OO-92-M-CXO7
DLA5OO-92-M-UG97
DLA5OO-92-M-VP4O
DLA5OO-93-M-0633
DLA5OO-93-M-0484
U.S. Army - Corpus Christi, Texas
DAAC83-92-D-0003
Defense Construction Supply Center, Columbus, OH
DLA750-92-M-7319
U.S. Navy Aviation Supply Office, Philadelphia, PA
N00383-92-P-Z984
U.S. Army AVN & Troop CMD, St. Louis, MO
DAAJO9-92-C-0894
TDC-14
Schedule 2.5
Encumbrances
Type of Filing Date and Place of Parties
Filing
- --------------------------------------------------------------------------------
1. UCC-l 12/07/89 BFM Transport Dynamics,
Financing California Secretary as Debtor, and Xerox
Statement of State Corporation, as Secured
Party
TDC-15
Schedule 2.8
Taxes
Federal income tax returns of BFM have not been audited. California income tax
returns of BFM have been audited through October 31, 1989.
Sales tax returns have been audited through calendar year 1990. Property tax
statements have been audited for the 1992-93 tax year.
TDC-16
Schedule 2.10
Disclosure Regarding Patents
and Trademark Rights
A. Argentina has not provided formal recording documents for the trademarks
listed herein:
(a) FABROID(R), and
(b) FIBERGLIDE(R)
Argentina has advised TDC that all documents have been filed and reports
are expected to be received in the near future from the patent and
trademark office.
B. Erma Werke GmbH has a paid-up license for the use of the technological
know-how relating to FIBERGLIDE and the use of the FIBERGLIDE(R)
trademark.
TDC-17
This Schedule is also referenced
in Section 2.12 of the Purchase Agreement.
Schedule 2.11
Leases
1. Three lease agreements between TDC and Xerox Corporation for lease of
various copying equipment and engineering systems. Leases expire between
September 1993 and October 1995.
2. Lease agreement between TDC and Bell Atlantic Tricon dated April 10, 1989
for lease of a Cannon NP 3225F Copier. Lease expires April 1993.
3. Lease agreement between TDC and KS&C Industries dated January 29, 1992 for
the rental of various gauges and fixtures. Lease expires December 31,
1992.
4. Lease agreement between TDC and New Era Supplier dated February 15, 1991
for lease of three hot/cold water coolers. Lease expires February 14,
1994.
5. Lease agreement dated November 1, 1988 between TDC and TD Land, Inc. with
respect to the Premises.
TDC and GSI
1. Vehicle lease agreements between TDC and McCullagh-Gelco for the use of
seven company vehicles by TDC's president and field sales personnel.
Leases have various expiration dates.
2. Lease agreement between TDC and G.E. Capital Business Center for lease of
ROLM VXCBX telephone system. Lease expires December 31, 1992.
TDC-18
Schedule 2.12
Contracts and Commitments
1. Severance Policy
2. Termination Benefits Agreement, dated January 31, 1990, by and between TDC
and Frank E. Cole
3. Documents executed by TDC in connection with BFM's Credit Agreement with
Wells Fargo.
TDC-19
Schedule 2.14
Employee Benefit Plans
A. Employee Plans
1. Medical Benefit Plans for Salaried Employees:
(a) Blue Cross Prudent Buyer Plan;
(b) Pacificare HMO (for I.A.M. Union Hourly Employees only);
(c) Blue Cross California Care HMO; and
(d) Blue Cross Out-of-State Plan.
2. Dental Benefit Plans for Salaried and Hourly Employees:
(a) Confederation Life;
(b) Denticare HMO; and
(c) Dental Net HMO.
B. Multi-Employer Plans
1. I.A.M. National Pension Fund Trust Agreement.
2. Vision Care Plan for I.A.M. Union Employees.
3. Air-Conditioning and Refrigeration Industry Retirement Trust Fund.
4. Air-Conditioning and Refrigeration Industry Health and Welfare Trust
Fund.
TDC-20
Schedule 2.15
Compliance with Law
The following is an index showing all communications between TDC and
the County Sanitation District of Orange County ("District") in connection with
a Probation Order issued to TDC pursuant to Section 602 of the District's
Wastewater Discharge Regulations for discharging cadmium and chromium
contaminated water into the District's sewer system. Copies of said
communications have been or will be provided to the Buyer upon its request.
DATE SUBJECT
- ---- -------
12/20/90 Probation Order Regarding Violations of Cadmium and Chromium
Discharge Limits.
05/28/91 Pre-Treatment System Drawing Review.
10/31/91 Amendment to Enforce Compliance Schedule Agreement.
01/22/92 Review of Operation and Maintenance Manual.
09/01/92 Notice of Violation Regarding Cadmium Discharge Limits.
TDC-21
Schedule 2.17
Permits and Licenses
Government Licenses and Permits.
a. County of Orange Health Care Agency Environmental Health Waste Management
(#929).
b. State Board of Equalization Special Tax Division Hazardous Waste Disposal
(EPA CAD # 046057063).
C. Division of Occupational Safety & Health Permit to operate liquified
petroleum gas tanks, expires 2/9/93.
d. City of Santa Ana 1992 Business License Tax Workers Compensation
Verification Statement for the 1992 tax period (#0142519).
e. State Water Resource Control Board Notice of Intent for General Permit to
Discharge Storm Water application submitted 3/31/92.
f. County Sanitation District of Orange County, California Industrial Waste
Division Class I Permit for discharge of waste water (#1-335) expired
3/31/92 and a new application has been submitted.
g. South Coast Air Quality Management District : D06962 - oven, plastic/resin
curing; D06963 - oven, plastic/resin curing; D06964 - oven, plastic/resin
curing; D07303 - degreaser solvent dip - greater than 1 pound/day scrubber
other; D06965 - absorber scrubber other; D34079 - soil treat vapor
extracts other VOC above; all expiring 12/16/92. An application has been
submitted for a waste water treatment system (application #261180).
TDC-22
Schedule 2.19
Environmental Matters
Copies of the following audit reports
have been provided to Buyer:
ENVIRONMENTAL AUDIT REPORTS
INDEX
Date From To Subject
3-1-89 Targhee Frank Cole Environmental Audit Report
7-3-89 Targhee Frank Cole Transmittal Letter and Report of
Phase II Sub-Surface
Investigation Report - Final
7-7-89 Targhee Water Bd. Subsurface Investigation Report
11-1-89 Water Bd. Frank Cole Phase II Subsurface Investigation Report
11-9-89 Targhee Frank Cole Proposed Workplan - Additional
Phase II Sub-surface
Investigation & Soil Remediation
1-29-90 Targhee Water Bd. Transmittal Letter - Supplement
to Approved Workplan for
Additional Phase II Subsurface
Investigation and Soil Remediation
2-28-90 Water Bd. Frank Cole Approval of Phase II Soil
Remediation Workplan
4-20-90 Targhee Water Bd. Site Remediation
5-21-90 Water Bd. Frank Cole Approval of Modifications to
Phase II Soil Remediation Workplan
6-6-90 Targhee Water Bd. Report of Soil Remediation
7-19-90 Targhee Water Bd. Groundwater Remediation Plan
7-31-90 Water Bd. Frank Cole Approval of Phase II Soil
Remediation
TDC-23
Schedule 2.19 (continued)
8-21-90 Targhee Frank Cole Report of Findings - Subfloor
Analysis at Plating Shop and
Report dated 8-22-90
9-24-90 Water Bd. Frank Cole Approval of Conceptual
Groundwater Remediation Workplan
10-23-90 Targhee Water Bd. Transmittal Letter with
Bioremediation Workplan
12-19-90 Water Bd. Frank Cole Approval of Workplan for
Excavated Soil Remediation
1-16-91 Targhee Water Bd. Groundwater Remediation Plan
2-28-91 Water Bd. Frank Cole Transmittal of Adapted Order No.
91-20 containing Waste Discharge
Requirements for Ground-Water
Cleanup Project
3-6-91 Water Bd. Frank Cole Groundwater Remediation Plan,
Approval of
6-18-91 Targhee Frank Cole Quarterly Report of Soil
Bioremediation Program
7-8-91 Targhee Water Bd. Groundwater Monitoring Results
of 5-24-91 Sampling
8-19-91 Targhee Water Bd. Final Analytical Data for Soil
Bioremediation
9-11-91 Targhee Frank Cole Closure Report for Soil
Bioremediation
9-16-91 Targhee Water Bd. Quarterly Groundwater Monitoring
Report
9-23-91 Targhee Frank Cole Estimated Yearly Operating Costs
for Groundwater Remediation
11-1-91 Targhee Frank Cole Closure Letter from City of
Santa Ana Fire Department for
Soil Bioremediation
12-16-91 Water Bd. Frank Cole Approval of Closure of Soil
Bioremediation
12-17-91 Targhee Water Bd. Quarterly Groundwater Monitoring
Report
TDC-24
Schedule 2.19 (continued)
3-24-92 Targhee Water Bd. Quarterly Groundwater Monitoring
Report
6-19-92 Targhee Water Bd. Quarterly Groundwater Monitoring
Report
6-26-92 Targhee Frank Cole Estimated Yearly Operating Costs
for Ground Water Remediation
9-11-92 Targhee Water Bd. Quarterly Groundwater Monitoring
Report
TDC-25
Schedule 3.4
Government Consents and Approvals (Buyer)
Consents required pursuant to the Federal Assignment of Contracts
Act, 41 U.S.C. Section 15, the Assignment of Claims Act, 31 U.S.C. Section 3727
(the "Statutes") and the regulations implementing the Statutes.
TDC-26