ASSET PURCHASE AGREEMENT
By and Among
SKF USA INC.,
BREMEN BEARINGS, INC.
and
ROLLER BEARING COMPANY OF AMERICA, INC.
Dated as of August 8, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS.................................................................. 1
1.1 Index of Defined Terms.......................................... 1
1.2. General Defined Terms........................................... 4
ARTICLE II.
TRANSFER OF ASSETS........................................................... 10
2.1. Transfer of Assets by Seller.................................... 10
2.2. Excluded Assets................................................. 12
2.3. Assumption and Satisfaction of Liabilities...................... 12
2.4. Excluded Liabilities............................................ 12
2.5. Assignment of Contracts and Rights.............................. 13
2.6. Closing......................................................... 14
2.7. June 30 Balance Sheet........................................... 15
2.8. Post-Closing Adjustment......................................... 16
2.9. Purchase Price Allocation....................................... 16
2.10. Subsequent Payments............................................. 17
2.11. Interim Period Payments......................................... 17
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER..................................... 19
3.1. Existence and Power............................................. 19
3.2. Authorization................................................... 19
3.3. Governmental Authorization...................................... 20
3.4. Non-Contravention............................................... 20
3.5. Financial Statements; Undisclosed Liabilities................... 20
3.6. Absence of Certain Changes...................................... 21
3.7. Properties; Leases; Tangible Assets............................. 22
3.8. Sufficiency of and Title to the Transferred Assets.............. 23
3.9. Affiliates...................................................... 23
3.10. Inventory....................................................... 24
3.11. Litigation...................................................... 24
3.12. Contracts....................................................... 24
3.13. Permits; Required Consent....................................... 25
3.14. Compliance with Applicable Laws................................. 26
3.15. Employment Agreements; Change in Control,
and Employee Benefits ........................................ 26
3.16. Labor and Employment Matters.................................... 27
i
3.17. Intellectual Property........................................... 28
3.18. Advisory Fees................................................... 29
3.19. Environmental Compliance........................................ 29
3.20. Tax Matters..................................................... 29
3.21. Insurance....................................................... 30
3.22. Products........................................................ 30
3.23. Material Disclosures............................................ 30
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND RBC.............................. 30
4.1. Organization and Existence...................................... 30
4.2. Corporate Authorization......................................... 31
4.3. Governmental Authorization...................................... 31
4.4. Non-Contravention............................................... 31
4.5. Advisory Fees................................................... 31
4.6. Litigation...................................................... 31
ARTICLE V.
COVENANTS OF SELLER.......................................................... 31
5.1. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents................................... 31
5.2. Confidentiality................................................. 32
5.3. Taxes........................................................... 32
ARTICLE VI.
COVENANTS OF BUYER AND RBC................................................... 33
6.1. Indiana Responsible Property Transfer Law....................... 33
ARTICLE VII.
COVENANTS OF ALL PARTIES..................................................... 33
7.1. Further Assurances.............................................. 33
7.2. Bulk Sales Laws................................................. 34
7.3. Employees and Employee Benefit Matters.......................... 34
7.4. Allocation of Environmental Liabilities......................... 39
7.5. Product Warranty Claims......................................... 41
7.6. Excluded Product Liability Claims............................... 41
7.7. Excluded Worker's Compensation Claims........................... 41
ARTICLE VIII.
INDEMNIFICATION.............................................................. 42
8.1. Agreement to Indemnify.......................................... 42
8.2. Survival of Representations and Warranties and Covenants........ 43
ii
8.3. Claims for Indemnification...................................... 44
8.4. Defense of Claims............................................... 44
ARTICLE IX.
COVENANT NOT TO COMPETE...................................................... 46
9.1. Non-Compete..................................................... 46
9.2. Severability.................................................... 47
9.3. Enforcement..................................................... 47
ARTICLE X.
MISCELLANEOUS................................................................ 47
10.1. Notices....................................................... 48
10.2. Amendments; No Waivers........................................ 49
10.3. Expenses...................................................... 49
10.4. Successors and Assigns........................................ 49
10.5. Governing Law................................................. 49
10.6. Counterparts; Effectiveness................................... 49
10.7. Entire Agreement.............................................. 50
10.8. Captions...................................................... 50
10.9. Severability.................................................. 50
10.10. Construction.................................................. 50
10.11. Arbitration of Claims......................................... 50
10.12. Cumulative Remedies........................................... 52
10.13. Third Party Beneficiaries..................................... 52
iii
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of August
8, 1997 is by and among SKF USA INC., a Delaware corporation ("Seller"), BREMEN
BEARINGS, INC., a Delaware corporation ("Buyer") and a wholly owned subsidiary
of RBC (as defined below), and ROLLER BEARING COMPANY OF AMERICA, INC., a
Delaware corporation ("RBC").
R E C I T A L S
WHEREAS, Seller, through its Bremen Needle Division ("Bremen") is
engaged in the design, development, manufacture, assembly and sale of Products
(the "Business"); and
WHEREAS, Seller desires to sell and transfer to Buyer substantially
all of its assets related to the Business in consideration for the delivery by
Buyer to Seller of the Purchase Price (as defined herein) and on the terms and
conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.
ARTICLE I.
DEFINITIONS
1.1 Index of Defined Terms. The following is an index of defined
terms utilized in this Agreement:
Defined Term Section Page
- ------------ ------- ----
Affiliate 1.2 4
Agreed Upon Procedures 2.7 15
Agreement Preface 1
Allocation Statement 2.10 16
Annual Financials 3.5 20
Applicable Law 1.2 4
Assumed Liabilities 2.3 12
Benefit Arrangement 1.2 4
Benefit Plan 1.2 5
Bill of Sale 2.6(c)(vii) 14
Bremen Preface 1
Business Preface 1
Business Day 1.2 5
Buyer Preface 1
Buyer Indemnitees 8.1 42
Buyer's Actuary 7.3 35
Buyer's Auditors 1.2 5
Buyer's Union Plan 7.3 35
Closing 2.6 13
Closing Date 2.6 13
Code 1.2 5
Competitive Activity 9.1 46
Contingent Liabilities 1.2 5
Contracts 1.2 5
Covered Period 9.1 46
Damages 1.2 5
Effective Time 2.6 14
Employee 1.2 5
Employee Benefit Plan 1.2 6
Environmental Condition 1.2 6
Environmental Laws 1.2 6
Environmental Liabilities 1.2 6
Environmental Study 7.4 39
Equipment 2.1 10
ERISA 1.2 6
ERISA Affiliate 1.2 6
Excluded Assets 2.2 11
Excluded Environmental Parcel 7.4(a) 39
Excluded Liabilities 2.4 12
Excluded Product Warranty Claims 7.5 41
Excluded Product Liability Claims 7.6 41
Excluded Worker's Compensation Claims 7.7 42
Existing Known Environmental Conditions 1.2 6
Final Environmental Study 7.4 40
Financials 3.5 20
First Choice 2.7 15
401(k) Plan Employee 7.3 37
GAAP 1.2 7
Governmental Authority 1.2 7
Group Health Plan 1.2 7
Hazardous Substance 1.2 7
2
Included Environmental Parcel 7.4(a) 39
Indemnifying Party 1.2 7
Indemnitee 1.2 7
Insurance Policies 3.21 30
Interim Financials 3.5 20
Interim Period 2.6 14
Interim Period Cash Flow Statement 2.11 18
Inventory 2.1 10
IRS 1.2 7
June 30 Balance Sheet 2.7 16
Knowledge 1.2 7
Leased Real Property 3.7 22
Leasehold Assignments 2.6 14
Leases 3.7 23
Liability 1.2 8
Lien 1.2 8
Machine #5 2.10 17
Machine #6 2.10 17
Machine #6 Runoff Date 2.10 17
Machines 2.10 17
Material Adverse Effect 1.2 8
May 31 Balance Sheet 3.5 20
Multiemployer Plan 1.2 8
Net Transferred Asset Value 2.8 16
New Lease 2.6 15
1996 Balance Sheet 3.5 20
Overpayment 2.8 16
Owned Real Property 3.7 22
Permits 3.13 25
Permitted Liens 1.2 8
Person 1.2 9
Personal Property Leases 3.7 22
Premises 2.6 15
Proceedings 3.11 24
Product 1.2 9
Prohibited Transaction 1.2 9
Proposed Interim Period Cash Flow Statement 2.11 18
Proposed June 30 Balance Sheet 2.7 15
Purchase Price 1.2 9
RBC Preface 1
Real Property 3.7 22
Required Contractual Consent 3.13 26
3
Required Consents 3.13 26
Required Governmental Approval 3.13 25
Runoff Tests 2.10 17
Salaried Plan 7.3 34
Salaried Plan Employee 7.3 34
Scheduled Contracts 3.12 24
Selected Firm 2.7 16
Seller Preface 1
Seller Environmental Liabilities 7.4 40
Seller Indemnitees 8.1 42
Seller's Actuary 7.3 35
Seller's Auditors 1.2 9
Seller's Contingent Liabilities 1.2 9
Seller's 401(k) Plan 7.3 37
Seller's Union Plan 7.3 35
Study Date 7.4 41
Subsequent Event 7.4 41
Tax 1.2 9
Tax Return 1.2 9
Third Party Claim 8.4 45
Transfer Law 6.1 33
Transferred Assets 2.1 10
Transferred Employee 7.3 34
Union 1.2 9
Union Contract 1.2 9
Union Plan Employee 7.3 35
Unpaid Balance 2.8 16
Warranty 2.10 17
Workpapers 2.7 15
1.2. General Defined Terms. As used herein, the following terms
shall have the meaning indicated:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental
Law) applicable to such Person or any of its Affiliates or Plan Affiliates or
any of their respective properties, assets, business operations, officers,
directors, employees, consultants or agents (in connection with such officer's,
director's, employee's,
4
consultant's or agent's activities on behalf of such Person or any of its
Affiliates or ERISA Affiliates).
"Benefit Arrangement" means any material benefit arrangement, other
than an Employee Benefit Plan, maintained by Seller or any ERISA Affiliate that
covers the employees, former employees, directors, or former directors of Seller
and their beneficiaries with respect to Bremen; such term shall include, without
limitation, the following to the extent material: (i) each employment or
consulting agreement; (ii) each arrangement providing for insurance coverage or
workers' compensation benefits; (iii) each incentive bonus or deferred bonus
arrangement; (iv) each arrangement providing termination allowance, severance or
similar benefits; (v) each equity compensation plan; (vi) each deferred
compensation plan; and (vii) each compensation policy and practice.
"Benefit Plan" means an Employee Benefit Plan or Benefit
Arrangement.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"Buyer's Auditors" means Ernst & Young.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Liabilities" of a Person at a specific point in time
means Liabilities, regardless of how arising, that have not yet become fixed and
certain as of such time.
"Contracts" means all contracts, agreements, options, leases,
licenses, sales and purchase orders, commitments and other instruments of any
kind, whether written or oral, to which Seller is a party at the Effective Time
with respect to Bremen, including the Scheduled Contracts but excluding any
arrangements with Employees including any Benefit Plan.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, Liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement net of
insurance proceeds actually received, including without limitation (i) interest
on cash disbursements in respect of any of the foregoing at the per annum rate
of interest publicly announced from time to time by Citibank, N.A. as its prime
rate (or reference rate) in effect from time to time, compounded quarterly, from
the date each such cash disbursement is made until the Person incurring the same
shall have been reimbursed in respect thereof and (ii) reasonable costs, fees
and expenses of attorneys, accountants and other agents of such Person incurred
in connection with the defense of the claim giving rise to the Damages or in
seeking indemnification therefor or reimbursement thereof. Any change in the
rate referred to in clause (i) above shall take effect at the opening of
business on the day specified in the public announcement of such change. Without
limiting the generality of the foregoing,
5
Damages of a Person shall include any amounts paid by such Person pursuant to
any indemnification arrangement.
"Employee" means any Person employed by Seller in connection with
the Business.
"Employee Benefit Plan" means any employee benefit plan, as defined
in Section 3(3) of ERISA, sponsored or contributed to by Seller or any ERISA
Affiliate thereof that covers employees or former employees of Seller with
respect to Bremen.
"Environmental Condition" means a condition of the soil, surface
waters, groundwaters, stream sediments, air and similar environmental media both
on and off a property resulting from any activity, inactivity or operations
occurring on such property, that, by virtue of Environmental Laws or otherwise,
(i) requires investigatory, corrective or remedial measures, and/or (ii)
comprises a basis for claims, demands and/or Liabilities in respect of the
Business or the Leased Real Property.
"Environmental Laws" means all Applicable Laws relating to Hazardous
Substances, occupational health and safety, or the environment including,
without limitation, (i) all Applicable Laws pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of Hazardous Substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, (ii) all Applicable Laws relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature; and
(iii) the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air
Act, the Water Pollution Control Act, the Safe Drinking Water Act, the Toxic
Substance Control Act ("TSCA") and all requirements promulgated pursuant to any
of these or analogous state or local statutes.
"Environmental Liabilities" means (i) Liabilities of a Person that
arise in connection with any proceeding, claim, lawsuit, complaint, citation,
inquiry, demand, notice or action which was or is brought or issued (A) by any
Governmental Authority or (B) by a third party, in either case, pursuant to or
under any Environmental Law or by virtue of an Environmental Condition, or (ii)
Liabilities or costs incurred by a Person that arise in connection with any
investigatory or remedial activities by virtue of an Environmental Condition in
order (A) to comply with any Environmental Law or (B) to minimize any potential
liability to a third party in connection with an Environmental Condition.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
6
"ERISA Affiliate" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was or
is required to be treated as a single employer under Section 414 of the Code.
"Existing Known Environmental Conditions" means (i) those
Environmental Conditions identified on Schedules 3.19(a), 3.19(b) or 3.19(c) and
(ii) those Environmental Conditions of which Seller has Knowledge on or before
the Closing Date but are not so identified in any such Schedule.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Group Health Plan" means any group health plan, as defined in
Section 5000(b)(1) of the Code sponsored or contributed to by Seller or any
ERISA Affiliate that covers employees or former employees of Seller with respect
to Bremen.
"Hazardous Substance" means any substance or material: (i) the
presence of which requires investigation or remediation under any Applicable
Law; or (ii) the generation, storage, treatment, transportation, disposal,
remediation, removal, handling or management of which is regulated by any
Environmental Law; or (iii) that is defined as a "hazardous waste" or "hazardous
substance" under any Applicable Law; or (iv) that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or
otherwise hazardous and is regulated by any Governmental Authority having or
asserting jurisdiction over the Business or any of the Transferred Assets; or
(v) the presence of which constitutes a nuisance, trespass or other tortious
condition; or (vi) the presence of which on adjacent properties constitutes a
trespass by Seller in relation to the Business; or (vii) without limitation,
that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBS) or asbestos.
"Indemnifying Party" means: (1) Seller when any Buyer or RBC
Indemnitee is asserting a claim under Sections 8.1(a) or 10.11 or (2) Buyer or
RBC jointly or severally when any Seller Indemnitee is asserting a claim under
Sections 8.1(b) or 10.11.
"Indemnitee" means: (1) each of Buyer, RBC and their Affiliates with
respect to any claim for which Seller is an Indemnifying Party under Sections
8.1(a) or 10.11; or (2) Seller and its Affiliates with respect to claims for
which Buyer or RBC is an Indemnifying Party under Sections 8.1(b) or 10.11.
7
"IRS" means the Internal Revenue Service.
"Knowledge" means: (1) with respect to Seller, the actual knowledge
of the following Persons: Krister Peil, Donald Robison, William McGlocklin,
Thomas Ruth, John Lenart, Jeffrey Derda, Allen Belenson, Rex Thrasher; (2) with
respect to Buyer, the actual knowledge of the following Persons: Michael J.
Hartnett, Michael S. Gostomski, Greg Ceuch, Tom King, Anthony Cavalieri, Joe
Gentile, Ron Lemansky, R. Lawrence Knowlton, Pat Mulligan.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person and whether or not the same appears on any Schedule to this Agreement.
"Lien" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance or charge of any kind in respect of such asset.
"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of the Business that results
in a material adverse effect on, or a material adverse change in, the
Transferred Assets taken as a whole, or a material adverse effect on the
Business taken as a whole.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"Permitted Liens" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for Taxes
the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other Liens
imposed by Applicable Law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith, (iii) Liens relating to
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of leases, trade contracts or other similar agreements;
and (iv) other Liens set forth on Schedule 1.2(a) hereto. Notwithstanding the
foregoing, the following shall not be Permitted Liens: (a) any Lien arising
under the Code or ERISA with respect to the operation, termination, restoration
or funding of any Benefit Plan sponsored by, maintained by or contributed to by
Seller or any of its ERISA Affiliates or arising in connection with any excise
tax or penalty tax with respect to such Benefit Plan and (b) any Lien
8
arising under clause (i) or (ii) above that is the subject of a contest except
and to the extent that the Taxes or sums in questions are reflected as a
Liability on the 1996 Balance Sheet.
"Person" means an individual, corporation, partnership, association,
trust, estate, joint-stock company, limited liability company, joint venture,
trust or other entity or organization, including a Governmental Authority.
"Product" means those precision needle rollers, precision rollers,
thrust bearings and radial bearings set forth in Schedule 1.2(b) hereto.
"Prohibited Transaction" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"Purchase Price" means the sum of the amounts paid pursuant to
Sections 2.6(b) and 2.10, plus the Unpaid Balance or minus the Overpayment, as
the case may be.
"Seller's Auditors" means Arthur Andersen, LLP.
"Seller's Contingent Liabilities" means those Contingent Liabilities
of Seller relating to the Business prior to the Effective Time that are not
booked as a liability on the June 30 Balance Sheet.
"Tax" means all taxes imposed of any nature including federal,
state, local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition of
any such tax.
"Tax Return" means all returns, reports, forms or other information
required to be filed with respect to any Tax.
"Union" means the International Union, United Automobile, Aerospace
and Agricultural Workers of America, U.A.W. Local 1368.
"Union Contract" means the Agreement between Bremen, Indiana Plant
of SKF USA, Inc. and the Union dated July 20, 1996.
9
ARTICLE II.
TRANSFER OF ASSETS
2.1. Transfer of Assets by Seller. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees to purchase from Seller
and Seller agrees to sell or cause to be sold to Buyer at the Closing all the
assets, properties, rights, licenses, permits, contracts, causes of action and
claims, of every kind and description as the same shall exist at the Effective
Time (other than the Excluded Assets), wherever located, whether tangible or
intangible, real, personal or mixed, that are used, owned by, leased by or in
the possession of Seller in connection with the Business, whether or not
reflected on the books and records of Seller, including all assets shown on the
May 31 Balance Sheet and not disposed of in the ordinary course of business or
as permitted by this Agreement prior to the Effective Time (the collective
assets, properties, rights, licenses, permits, contracts, causes of action and
claims to be transferred to Buyer by Seller pursuant hereto are referred to
collectively herein as the "Transferred Assets") and including without
limitation all right, title and interest of Seller in, to and under the
following to the extent used, owned by, leased by or in the possession of Seller
in connection with the Business at the Effective Time:
(a) all real property and leases, capitalized or operating, of, and
other interests in, real property of Seller, in each case together with all
buildings, fixtures and improvements erected thereon and appurtenances thereto;
(b) all machinery, equipment, furniture, office equipment, computer
equipment (including all hardware and software), communications equipment,
vehicles, storage tanks, spare and replacement parts, fuel and other tangible
property (and interests in any of the foregoing) of Seller ("Equipment")
including, without limitation, the Equipment set forth on Schedule 2.1 hereto;
(c) all items of inventory, notwithstanding how classified in the
financial records of Seller, including all raw materials, purchased parts,
work-in-process, finished goods, supplies, spare parts and samples
(collectively, the "Inventory");
(d) the Contracts;
(e) to the extent relating to the Business and the conduct thereof
by Buyer following the Effective Time, all prepaid charges and expenses of
Seller, including any such charges and expenses with respect to ad valorem
taxes, leases and rentals and utilities;
(f) all rights of Seller under any insurance policy;
10
(g) all of Seller's rights, claims, credits, causes of action or
rights of setoff against third parties relating to the Business or the
Transferred Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to Seller affecting any of
the Transferred Assets;
(h) all of Seller's patents, copyrights, trademarks, trade names,
service marks, service names, designs, know-how, processes, trade secrets,
inventions, and other proprietary data;
(i) all tools, dies, jigs, molds, patterns, machinery and equipment,
whether owned or leased, whether in the possession of the Seller or vendors;
(j) all rights under agreements with employees and others concerning
confidentiality and assignment of inventions;
(k) all transferable franchises, licenses, permits or other
authorizations issued or granted by any Governmental Authority that are owned
by, granted to or held or used by Seller, whether or not actually utilized by
Seller;
(l) all books, records, files and papers of Seller, whether in hard
copy or computer format, including books of account, invoices, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, personnel and
employment records of present and former employees, and documentation developed
or used for accounting, marketing, engineering, manufacturing or any other
purpose any time prior to the Effective Time;
(m) all lists of present customers and lists of former customers;
(n) all goodwill;
(o) all product designations used in Seller's catalog with respect
to the Products;
(p) all accounts receivable of Seller as of the Effective Time which
remain uncollected as of the Closing Date; and
(q) except as specifically provided in Section 2.2, all other assets
and properties of Seller that exist at the Effective Time, whether tangible or
intangible, real or personal.
11
2.2. Excluded Assets. Buyer expressly understands and agrees that
the assets and properties set forth on Schedule 2.2 (the "Excluded Assets")
shall be excluded from the Transferred Assets and shall be retained by Seller.
2.3. Assumption and Satisfaction of Liabilities.
(a) Upon the terms and subject to the conditions of this Agreement
and in reliance upon the representations, warranties and agreements herein set
forth, Buyer agrees, effective at the time of Closing, to assume and in due
course perform, pay and discharge all the Liabilities set forth on Schedule 2.3
(the "Assumed Liabilities"); provided that any such Assumed Liabilities
discharged by Seller during the Interim Period shall be allocated by Buyer and
Seller as set forth in Section 2.11 hereof.
(b) Buyer shall be responsible for all Liabilities and obligations
arising out of the use and ownership of the Transferred Assets by Buyer after
the Effective Time or by the conduct of the Business after the Effective Time
except to the extent such Liabilities and obligations constitute Excluded
Liabilities; provided that any such Liabilities satisfied by Seller during the
Interim Period shall be allocated by Buyer and Seller as set forth in Section
2.11 hereof.
(c) Notwithstanding anything elsewhere contained herein to the
contrary, Buyer shall have the responsibilities associated with being a
successor employer under the Union Contract.
2.4. Excluded Liabilities. Buyer does not hereby assume, and shall
not at any time hereafter (including on or after the Effective Time) become
liable for, any of the Liabilities of Seller or any of its Affiliates or any
ERISA Affiliate of any of the foregoing other than the Assumed Liabilities (the
"Excluded Liabilities"). The Excluded Liabilities shall include, without
limitation, the following Liabilities:
(a) any Liability of any of Seller or any of its Affiliates or any
ERISA Affiliate of any of the foregoing whether currently in existence or
arising hereafter that is not attributable to, or that does not arise out of the
conduct of, the Business;
(b) any Liability whether presently in existence or arising
hereafter relating to an Excluded Asset;
(c) any Seller Environmental Liability;
(d) any Liability whether currently in existence or arising
hereafter relating to fees, commissions or expenses owed to any broker, finder,
investment banker, attorney or other
12
intermediary or advisor employed by Seller or any of its Affiliates or their
respective ERISA Affiliates in connection with the transactions contemplated
hereby or otherwise;
(e) any Liability the existence of which constitutes a breach of any
representation or warranty hereunder;
(f) any Seller Contingent Liabilities except Liabilities that Buyer
has expressly agreed to assume pursuant to the terms of this Agreement;
(g) any Liability related to indebtedness of Seller for borrowed
money or capitalized leases, or the guarantee by Seller of the indebtedness of
any other Person, except as set forth on Schedule 2.4(g);
(h) any Liability of Seller arising under this Agreement;
(i) Excluded Product Warranty Claims;
(j) Excluded Product Liability Claims;
(k) any Liability under Contracts with Affiliates of Seller, except
Liabilities under those Contracts identified on Schedule 2.4(k); and
(l) Excluded Worker's Compensation Claims.
2.5. Assignment of Contracts and Rights.
(a) With respect to any material Contract and any claim, right or
benefit arising thereunder or resulting therefrom that constitute Transferred
Assets, promptly after the date hereof, to the extent requested by Buyer, Seller
will use reasonable efforts to obtain the written consent of the other parties
to any such Contract to the assignment thereof to Buyer or written confirmation
from such parties reasonably satisfactory in form and substance to Buyer
confirming that such consent is not required.
(b) If such consent, waiver or confirmation is not obtained with
respect to any such Contract, Seller and Buyer shall cooperate in an arrangement
reasonably satisfactory to Buyer and Seller under which Buyer would obtain, to
the extent practicable, the claims, rights and benefits and assume the
corresponding obligations thereunder in accordance with this Agreement,
including subcontracting, sub-licensing or sub-leasing to Buyer, or under which
Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all claims, rights and benefits of Seller against a third
party thereto. Seller will promptly pay to Buyer when received all monies
received by Seller under any Transferred Asset or any claim, right or benefit
arising thereunder not transferred to Buyer pursuant to this Section 2.5(b).
13
2.6. Closing.
(a) The closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of McDermott, Will & Emery, 50
Rockefeller Plaza, New York, New York on August 8, 1997 or such other date as to
which Buyer and Seller may agree (the "Closing Date"). Upon consummation, the
Closing shall be deemed to have taken place as of 12:01 a.m. July 1, 1997 (the
"Effective Time") and Buyer and Seller shall allocate all economic matters
associated with the period between the Effective Time and the Closing Date (the
"Interim Period") as set forth in Section 2.11 hereof.
(b) At the Closing, Buyer shall pay to Seller $3,640,177 (the
"Closing Payment"), computed as shown on Schedule 2.6(b), in cash by wire
transfer of immediately available funds to a bank account or bank accounts
designated in writing by Seller prior to the Closing.
(c) At or prior to the Closing, Buyer shall have received:
(i) an Interim Services Agreement in the form attached as
Exhibit A, duly executed and delivered by Seller (the "Interim Services
Agreement").
(ii) an opinion of counsel from Allen G. Belenson, Esq.,
counsel to Seller, in the form attached hereto as Exhibit B.
(iii) UCC-11 searches with respect to the Transferred Assets.
(iv) UCC-3 termination statements with respect to financing
statements filed against the Business or the Transferred Assets (other than the
Permitted Liens).
(v) patent, trademark and copyright assignments, in form and
substance satisfactory to Buyer, effecting the transfer of the patents,
trademarks and copyrights included in the Transferred Assets.
(vi) assignments (with lessor's consents thereto) of leasehold
interests in a leased real or personal property included in the Transferred
Assets (collectively, the "Leasehold Assignments").
(vii) a bill of sale, grant deed and such other documents of
assignment, transfer and conveyance as Buyer shall reasonably request to
transfer all right, title and interest of Seller in and to the Transferred
Assets to Buyer (collectively, the "Bill of Sale").
14
(viii) all material Governmental Approvals for the
transactions contemplated by this Agreement to be obtained by Seller, in form
and substance acceptable to Buyer.
(ix) all material Required Contractual Consents, in form and
substance acceptable to Buyer.
(x) an agreement of Brem, Inc. (A) consenting to the
assignment of its agreement of lease with Seller to Buyer and (B) covenanting to
negotiate in good faith a new agreement of lease (the "New Lease") with respect
to the premises it leases to Seller (the "Premises"), pursuant to which Buyer
will lease the Premises from Brem, Inc. on substantially similar terms
(including, but limited to, the rental cost per square foot of the Premises and
the term of the New Lease) as may be contained in a new lease agreement
negotiated by Buyer with Bremen State Bank, as Trustee, relating to the
remainder of the facility used in the Business, duly executed and delivered by
Brem, Inc.
(xi) a consent to assignment of contract, duly executed and
delivered by SKF de Mexico, S.A. de C.V.
(d) At the Closing, Seller shall have received:
(i) all material Governmental Approvals for the transactions
contemplated by this Agreement to be obtained by Buyer, in form and substance
acceptable to Seller.
(ii) an opinion of counsel from McDermott, Will & Emery,
counsel to Buyer, in the form attached hereto as Exhibit C.
2.7. June 30 Balance Sheet.
(a) Within 30 days after the Closing Date, Seller will prepare and
present to Buyer a balance sheet (the "Proposed June 30 Balance Sheet") setting
forth as of June 30, 1997 the book value of the Transferred Assets and the
Assumed Liabilities. The Proposed June 30 Balance Sheet shall be prepared so
that it presents fairly the book value of the Transferred Assets and Assumed
Liabilities in accordance with GAAP (or on a basis consistent with prior
practices of Seller with the disclosure that such practice is not GAAP), but in
any case using practices and procedures and applying the types of adjustments
described in Schedule 2.6(b) consistent with the preparation of the May 31
Balance Sheet. Seller's Auditors shall perform selected procedures as agreed to
by Buyer and Seller (the "Agreed Upon Procedures") with respect to the Proposed
June 30 Balance Sheet. Buyer and Buyer's Auditors shall have the right to review
and copy, promptly upon request, the workpapers of Seller's Auditors (the
"Workpapers") utilized in performing the Agreed Upon Procedures with respect to
the Proposed June 30 Balance Sheet. The Proposed June
15
30 Balance Sheet shall be binding upon the parties to this Agreement unless
Buyer gives written notice of disagreement with any of said values or amounts to
Seller within 15 days after delivery to it of the Proposed June 30 Balance Sheet
and the Workpapers by Seller, specifying in reasonable detail the nature and
extent of such disagreement. If Buyer and Seller mutually agree upon the
Proposed June 30 Balance Sheet within 30 days after Seller's delivery of notice
of its disagreement, such agreement shall be binding upon the parties to this
Agreement. If Buyer and Seller are unable to resolve any such disagreement
within such period, the disagreement shall be referred for final determination
to Price Waterhouse & Company LLC (the "First Choice") or, if such firm is not
available, such other independent accounting firm of national reputation
selected by the mutual agreement of Buyer and Seller (the "Selected Firm"), and
the resolution of that disagreement and the Proposed June 30 Balance Sheet, as
adjusted as a result of such resolution, shall be final and binding upon the
parties hereto for purposes of this Agreement. If Buyer and Seller cannot agree
on the Selected Firm, it shall be chosen by the First Choice and shall be a
nationally recognized firm. The Proposed June 30 Balance Sheet as finally
determined is the "June 30 Balance Sheet."
(b) The fees and disbursements of Seller's Auditors shall be paid by
Seller and the fees and disbursements of Buyer's Auditors shall be paid by
Buyer. The fees and disbursements of the First Choice or the Selected Firm, as
the case may be, shall be paid by Buyer and Seller as the First Choice or the
Selected Firm, as the case may be, shall determine based upon its assessment of
the relative merits of the positions taken by each in any disagreement presented
to such firm.
2.8. Post-Closing Adjustment.
(a) If the Closing Payment is less than the book value of the
Transferred Assets as of June 30, 1997 net of the total amount of the Assumed
Liabilities as of June 30, 1997, as set forth on the June 30 Balance Sheet with
applicable adjustments thereto of the type described in Schedule 2.6(b) (the
"Net Transferred Asset Value") (such deficit being referred to herein as the
"Unpaid Balance"), then, within five Business Days after the final determination
of the June 30 Balance Sheet, Buyer shall deliver to Seller such Unpaid Balance
in cash in immediately available funds by wire transfer to a bank account or
bank accounts designated in writing by Seller prior to the due date thereof.
(b) If the Closing Payment is greater than the Net Transferred Asset
Value (such excess being referred to herein as the "Overpayment"), then, within
five Business Days after the final determination of the June 30 Balance Sheet,
Seller shall deliver to Buyer such Overpayment in cash in immediately available
funds by wire transfer to a bank account or bank accounts designated in writing
by Buyer prior to the due date thereof.
2.9. Purchase Price Allocation. Within 120 days after the Closing
Date, Buyer and Seller shall agree upon the final allocation of the Purchase
Price among the Transferred Assets
16
for purposes of complying with Section 1060 of the Code and making any required
filings under state or local law and shall set forth such allocation on a
statement (the "Allocation Statement"). After the Closing, from time to time,
Buyer and Seller shall agree upon revisions to the Allocation Statement for tax
purposes. Buyer and Seller shall report the tax consequences of the transactions
contemplated by this Agreement in a manner consistent with the Allocation
Statement, as it may be revised from time to time, and shall not take any
position inconsistent therewith.
2.10. Subsequent Payments.
(a) Buyer shall pay to Seller $727,255, on the first anniversary of
the date hereof, by wire transfer of immediately available funds to a bank
account or bank accounts designated in writing by Seller prior to the due date
thereof.
(b) Buyer shall pay to Seller $472,903.50, on the first anniversary
of the date hereof, by wire transfer of immediately available funds to a bank
account or bank accounts designated in writing by Seller prior to such date;
provided, however, that such payment shall not become due or payable if the
machine more fully described in Schedule 2.10(b)-(1) ("Machine #5") has not
satisfactorily completed the quality assurance tests set forth in Schedule
2.10(b)-(2) (the "Runoff Tests") prior to such date.
(c) Buyer shall pay to Seller $472,903.50, within 30 days following
the Machine #6 Runoff Date, by wire transfer of immediately available funds to a
bank account or bank accounts designated in writing by Seller prior to the due
date thereof. For the purposes of this subsection (c), "Machine #6 Runoff Date"
shall mean the date the machine more fully described in Schedule 2.10(c)
("Machine #6" and, together with Machine #5, the "Machines") has satisfactorily
completed the Runoff Tests.
(d) Except for (i) the cost of the purchase and installation of two
transformers relating to the Machines and (ii) labor costs of employees of the
Business after the Effective Time in connection with the installation of the
Machines which shall be borne by Buyer, Seller shall bear all costs and expenses
incurred in connection with the installation of, and conduct of the Runoff Tests
of, the Machines.
(e) Coincident with the date each Machine has satisfactorily
completed the Runoff Tests, Seller shall, at its sole expense, provide Buyer
with a warranty that such Machine will operate in accordance with applicable
specifications and otherwise be free of defects in material and workmanship (the
"Warranty") for a period of twelve (12) months from such date or 8,000 working
hours, which ever is first to occur.
(f) If either or both Machines shall fail to satisfy the Runoff
Tests prior to the first anniversary of the date hereof, title to either or both
such Machines shall revert to Seller and Seller shall, at its sole cost and
expense, remove said Machine from the premises of the Business.
17
2.11. Interim Period Payments. As indicated above, the Closing shall
be deemed to have taken place as of the Effective Time. In recognition of the
fact that the Seller shall have remained in control of the operations of the
Business between the Effective Time and the Closing Date (the "Interim Period"),
the Buyer and the Seller shall make the following payments, adjustments and
agreements:
(a) Within 30 days after the Closing Date, Seller will prepare and
present to Buyer a statement of the inflow and outflow of cash (the "Proposed
Interim Period Cash Flow Statement") with respect to conduct of the Business
during the Interim Period. The Proposed Interim Period Cash Flow Statement shall
be binding upon the parties to this Agreement unless Buyer gives written notice
of disagreement with any of the amounts reflected thereon to Seller within 15
days after delivery to it of the Proposed Interim Period Cash Flow Statement,
specifying in reasonable detail the nature and extent of such disagreement.
Buyer and Seller shall thereafter negotiate to resolve any such disagreement in
good faith; provided that (i) during such 15 day period Seller shall provide
Buyer with such access to Seller's books and records as Buyer may reasonably
request in order to verify the information within the Proposed Interim Period
Cash Flow Statement, and (ii) such 15 day period shall be extended for up to an
additional 30 days if Buyer determines that it reasonably requires such
additional time to complete such verification. The Proposed Interim Period Cash
Flow Statement as finally determined shall be the "Interim Period Cash Flow
Statement."
(b) (i) If the Interim Period Cash Flow Statement indicates that,
during the Interim Period, the cash inflows exceeded the cash outflows, Seller
shall deliver to Buyer the dollar amount of such excess. Such payment shall be
made within five Business Days of the final determination of the Interim Period
Cash Flow Statement in cash in immediately available funds by wire transfer to a
bank account or bank accounts designated in writing by Seller prior to the due
date thereof.
(ii) If the Interim Period Cash Flow Statement indicates that,
during the Interim Period, the cash outflows exceeded the cash inflows, Buyer
shall deliver to Seller the dollar amount of such excess. Such payment shall be
made within five Business Days of the final determination of the Interim Period
Cash Flow Statement in cash in immediately available funds by wire transfer to a
bank account or bank accounts designated in writing by Buyer prior to the due
date thereof.
(c) The Buyer and Seller agree that the adjustments described in
subparagraphs (a) and (b) are intended to reflect their intent for the
operations of the Business to be for the economic account of Buyer during the
Interim Period. Pursuant thereto,
(i) by reason of the payment described in subparagraph (b),
each of Buyer and Seller shall report the results of operations of the Business
during the Interim Period as being for the account of Buyer,
18
(ii) notwithstanding the generality of subparagraph (i) above,
the sole economic adjustments and undertakings respecting the Interim Period
shall be as set forth in this Agreement, and nothing contained herein shall
imply Buyer's agreement to accept responsibility for more Liabilities with
respect to the Interim Period than reflected by the Assumed Liabilities and the
payment set forth in subparagraph (b), and all subject to Seller's
indemnification obligations set forth in Section 8.1(a)(iii) hereof and
(iii) during the Interim Period, Seller shall pay no
Liabilities respecting Bremen or the Business other than Assumed Liabilities or
Liabilities of the Seller described in Section 2.3(b) hereof.
(d) Buyer acknowledges that certain of the Transferred Assets shall
have been disposed of for value in the ordinary course of the Business during
the Interim Period, to be accounted for as set forth in subsection (b) above.
(e) Notwithstanding anything in this Section 2.11 to the contrary,
the proceeds of accounts receivable of the Business as of the Effective Time
that are collected by Seller during the Interim Period shall be "Excluded
Assets" and, therefore, shall not be considered a cash inflow in the preparation
of the Interim Period Cash Flow Statement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller represents and warrants
to Buyer as follows:
3.1. Existence and Power.
(a) Seller is a corporation duly organized and validly existing and
in good standing under the laws of the State of Delaware and has all corporate
power and all governmental licenses, authorizations, consents and approvals
required to carry on the Business as now conducted and to own and operate the
Business as now owned and operated, except for those instances where, in the
aggregate, the failure to have such licenses, authorizations, consents and
approvals is not, and is not reasonably expected to have a Material Adverse
Effect. Seller is qualified to conduct business in each jurisdiction where the
nature of its activities in connection with the conduct of the Business requires
it to be so qualified. Seller is in good standing in each state where it is
qualified, except for those jurisdictions where in the aggregate the failure to
be so does not have, and is not reasonably expected to have, a Material Adverse
Effect.
19
3.2. Authorization. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes the legal, valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and subject to general principles of
equity.
3.3. Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement require no action by, consent or
approval of, or filing with, any Governmental Authority other than any actions,
consents, approvals or filings otherwise expressly referred to in this Agreement
or set forth on Schedule 3.3 or Schedule 3.13(b). To the Knowledge of Seller,
there are no facts relating to the identity or circumstances of Seller that
would prevent or materially delay obtaining any of the Required Consents.
3.4. Non-Contravention. The execution, delivery and performance by
Seller of this Agreement do not and will not (a) contravene or conflict with the
Certificate of Incorporation or Bylaws of Seller, true and correct copies of
which have been delivered to Buyer by Seller, (b) assuming receipt of the
Required Consents, contravene or conflict with or constitute a violation of any
provision of any Applicable Law binding upon or applicable to Seller, the
Business or any of the Transferred Assets, (c) assuming receipt of the Required
Consents, constitute a default under or give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to which Seller is
entitled under, any material Contract or any Permit or similar authorization
relating to the Business or included in any of the Transferred Assets or by
which any of the Transferred Assets may be bound, or (d) result in the creation
or imposition of any Lien on any Transferred Asset, other than Permitted Liens.
3.5. Financial Statements; Undisclosed Liabilities.
(a) Attached hereto as Schedule 3.5(a) are true and complete copies
of the unaudited balance sheets of Bremen as at May 31, 1997 (the "May 31
Balance Sheet"), as at December 31, 1996 (the "1996 Balance Sheet") and as at
December 31, 1994 and 1995 and the related unaudited statements of income and
statements of cash flows and changes in the home- office account for the years
ended December 31, 1994, 1995 and 1996 (collectively, the "Annual Financials")
and the related unaudited statement of income and statement of cash flows and
changes in the home office account for the fiscal quarters ended March 31, June
30, September 30 and December 31, 1994, 1995 and 1996 and March 31 and June 30,
1997 (the "Interim Financials" and, together with the Annual Financials, the
"Financials").
(b) The Financials (i) (A) in all cases have been prepared based on
the books and records of Bremen in accordance with the normal accounting
practices of Bremen and Seller;
20
(B) in each case other than the May 31 Balance Sheet, consistent with past
practice and with each other; and (C) in all cases present fairly the financial
condition, results of operations and statements of cash flow of Bremen as of the
dates indicated or the periods indicated; and (ii) with respect to contracts and
commitments for the sale of goods or the provision of services by Bremen,
contain and reflect adequate reserves for all reasonably anticipated material
losses and costs and expenses in excess of expected receipts. Any differences
between GAAP and Seller's accounting practices, as well as the estimated
magnitude of such impact on the Financials resulting from such differences, are
set forth on Schedule 3.5(b).
(c) Except as set forth on Schedule 3.5(c), there are no material
Liabilities relating to Bremen other than:
(i) any Liability accrued as a Liability on the 1996 Balance
Sheet; and
(ii) Liabilities specifically disclosed and identified as such
in the schedules to this Agreement.
3.6. Absence of Certain Changes. Except as set forth on Schedule
3.6, since the date of the 1996 Balance Sheet, the Business has been conducted
in the ordinary course, and none of the following events has occurred with
respect to the Business:
(a) any event, occurrence, development or state of circumstances or
facts or change in the Transferred Assets or the Business (including any damage,
destruction or other casualty loss, but excluding any event, occurrence,
development or state of circumstances or facts or change resulting from changes
in general economic conditions) affecting the Business or any Transferred Assets
that has had or that may be reasonably expected to have, either alone or
together with all such events, occurrences, developments, states of
circumstances or facts or changes, a Material Adverse Effect;
(b) (i) any incurrence, assumption or guarantee of any indebtedness
for borrowed money by Seller in connection with the Business or any of the
Transferred Assets, (ii) any incurrence of any Liability relating to a
documentary or standby letter of credit by Seller in connection with the
Business or any of the Transferred Assets, or (iii) any change in any Liability
of Bremen other than in the ordinary course of business, or (iv) any incurrence
of any other Liability by Seller in connection with the Business or any of the
Transferred Assets, other than in the ordinary course of business;
(c) any creation, assumption or sufferance of the existence of any
Lien on any Transferred Asset, other than Permitted Liens;
(d) any transaction or commitment made, or any Contract entered
into, by Seller (including the acquisition or disposition of any Transferred
Assets), or any waiver, amendment,
21
termination or cancellation of any Contract by Seller, or any relinquishment of
any rights thereunder by Seller, or of any other right or debt owed to Seller,
other than in each such case actions taken in the ordinary course of business
consistent with past practice;
(e) except for actions taken in the ordinary course of business
consistent with the past practice of Seller that are not, in the aggregate,
material to the Business, any (i) grant of any severance, continuation or
termination pay to any Employee, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any Employee, (iii) increase in benefits payable or potentially
payable under any severance, continuation or termination pay policies or
employment agreements with any Employee, (iv) increase in compensation, bonus or
other benefits payable or potentially payable to any Employee, (v) change in the
terms of any bonus, pension, insurance, health or other Benefit Plan of Seller,
or (vi) representation of Seller to any Employee that Buyer would assume,
continue to maintain or implement any Benefit Plan after the Closing Date;
(f) any loan to or guarantee or assumption of any loan or obligation
on behalf of any Employee, except travel advances occurring in the ordinary
course of business consistent with past practice;
(g) any material change by Seller in its accounting principles,
methods or practices or in the manner it keeps its books and records or any
material change by Seller of its current practices with regards to sales,
receivables, payables or accrued expenses that would affect the timing of
collection of receivables or the payment of payables;
(h) the entering into of any Contract or other arrangement between
Seller and any officer, director, stockholder or Affiliate of Seller or any of
their respective Affiliates, to the extent any such Contract or other
arrangement relates to the conduct of the Business;
(i) any disposition of an asset having either a net book value or a
fair market value in excess of $50,000, other than Inventory disposed of in the
ordinary course of the Business; or
(j) any payment, discharge or satisfaction of any Liabilities of
Seller, other than payments, discharges or satisfactions in the ordinary course
of business.
3.7. Properties; Leases; Tangible Assets.
(a) Schedule 3.7(a) sets forth a true and complete list of all real
property owned by Seller in connection with the Business (the "Owned Real
Property") such list setting forth the location of each parcel of Owned Real
Property, the record owner thereof, the acreage and a brief description of the
nature of the activities of Seller on such Owned Real Property. Seller has a
good and valid title to, or in the case of leasehold properties or properties
held under license and
22
identified on Schedule 3.7(a) (the "Leased Real Property" and, collectively with
the Owned Real Property, the "Real Property"), a good and valid leasehold or
license interest in, all of the Real Property, which constitutes all of the real
property used in the Business.
(b) Schedule 3.7(b) sets forth a true and complete list of all
personal property leases or licenses (i) to which Seller is a party or by which
Seller is bound, (ii) that are related to the Business and (iii) that provide
for annual payments by Seller in excess of $10,000 or that contain other
affirmative material obligations that cannot be terminated by Seller within 30
days (the "Personal Property Leases") and all leases or licenses of Leased Real
Property that provide for annual payments by Seller in excess of $10,000 or that
cannot be terminated by Seller within 30 days (the "Real Property Leases" and
collectively with the Personal Property Leases, the "Leases") entered into in
connection with the Business. With respect to the Leases, except as set forth on
Schedule 3.7(b), there exist no defaults by Seller, or, to the Knowledge of
Seller, any default or threatened default by any lessor or third party
thereunder, that has affected or could reasonably be expected to materially
affect the rights and privileges thereunder of Seller. Except as set forth on
Schedule 3.7(b), assuming the Required Consents are obtained, all Leases to
which a Seller is a party with non-Affiliates or by which it is bound may be
assigned, transferred and conveyed to Buyer without default, penalty or
modification thereof.
(c) Except as disclosed in Schedule 3.7(c) or Schedule 3.19(c),
Seller has not received notice of any pending zoning or other land-use
regulation proceedings or any proposed change in any Applicable Laws that could
reasonably be expected to materially and detrimentally affect the use or
operation of the Real Property, nor has Seller received notice of any special
assessment proceedings affecting the Real Property, or applied for any change to
the zoning or land use status of the Real Property.
3.8. Sufficiency of and Title to the Transferred Assets. Seller has
the right to sell, assign, transfer and convey, and upon consummation of the
transactions contemplated by this Agreement, will have sold, assigned,
transferred and conveyed, to Buyer all of the Transferred Assets free and clear
of all Liens, except for Permitted Liens, which Transferred Assets constitute
all of the properties and assets now held or employed by Seller in connection
with the Business (other than the Excluded Assets). Except for the services to
be provided by Seller under the Interim Services Agreement, the Business is a
going concern, and, with the transfer of the Transferred Assets to Buyer
pursuant to this Agreement, Buyer will have all assets necessary to operate the
Business as a going concern with all operations of the Business unimpaired in
any material respect immediately after the Closing.
3.9. Affiliates. Except as set forth in Schedule 3.9, neither Seller
nor any principal stockholder of Seller or any officers or directors of Seller
(or any immediate family member of any such officer or director):
23
(a) now has or at any time subsequent to December 31, 1994, had,
either directly or indirectly, an equity or debt interest in any Person which
furnishes or sells or during such period furnished or sold services or products
to Seller relating to Bremen or purchases or during such period purchased from
Seller any goods or services relating to Bremen, or otherwise does or during
such period did business with Seller relating to Bremen of a material nature or
amount; provided, however, that neither Seller, nor any stockholder of Seller
nor any of Seller's officers and directors or other Affiliates shall be deemed
to have such an interest solely by virtue of the ownership of less than five
percent (5%) of the outstanding voting stock or debt securities of any publicly
held company, the stock or debt securities of which are traded on a national
stock exchange or quoted on the National Association of Securities Dealers
Automated Quotation System; or
(b) now is or at any time subsequent to December 31, 1994, was, a
party to any contract, commitment or agreement relating to the Business to which
Seller is or during such period was a party or under which Seller is or was
obligated or bound or to which any of their respective properties may be or may
have been subject, other than through Seller.
3.10. Inventory. Subject to any reserve therefor that is included in
the 1996 Balance Sheet and except as disclosed in Schedule 3.10, the Inventory
which constitutes a portion of the Transferred Assets (a) has been acquired or
manufactured in the ordinary course of business, in accordance with Seller's
normal inventory practices; (b) is of a quality usable (including processing
into merchantable finished inventories for sale in the ordinary course of
business), free of any material defect or deficiency in design, material or
workmanship; (c) is in merchantable and undamaged condition and meets customer
specifications; and (d) is not obsolete.
3.11. Litigation. Except as disclosed on Schedule 3.11, (i) there
are no actions, suits, hearings, arbitrations, proceedings (public or private)
or governmental investigations that have been brought by or against any
Governmental Authority or any other Person (collectively, "Proceedings") pending
or, to Seller's Knowledge, threatened, against or affecting the Business or any
of the Transferred Assets or which seek to enjoin or rescind the transactions
contemplated by this Agreement or otherwise prevent Seller from complying with
the terms and provisions of this Agreement; and (ii) there are no existing
orders, judgments or decrees of any Governmental Authority affecting any of the
Transferred Assets or the Business.
3.12. Contracts.
(a) Schedule 3.12(a) sets forth a complete list of the following
contracts, commitments and obligations (whether written or oral) of Seller that
are in connection with the Business (collectively with the Leases and the
Employment Agreements, the "Scheduled Contracts"):
(i) each Contract between Seller and (A) each present or
former Bremen Employee, (B) any supplier of services or products to Seller
whose dollar volume of sales
24
to Seller exceeded $25,000 in 1996, and (C) any Person with respect to
whom the aggregate payments made or to be made to Seller under such
Contract exceeded $25,000 in 1996;
(ii) each other agreement or arrangement of Seller that (y)
requires the payment or incurrence of Liabilities or the rendering of
services by Seller, subsequent to the date of this Agreement of more than
$25,000 and (z) cannot be terminated by Seller within 30 days;
(iii) all Contracts relating to, and evidences of or
guarantees of, or providing security for, indebtedness for borrowed money
or the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset);
(iv) all partnership, joint venture or other similar
Contracts, arrangements or agreements;
(v) to the extent that any of the following provide for annual
payments by Seller in excess of $25,000 and cannot be terminated by Seller
within 30 days, all license, distribution, commission, marketing, agent,
franchise, technical assistance or similar agreements relating to or
providing for the marketing and/or sale of the products or services to
which Seller is a party or by which Seller is otherwise bound; and
(vi) all other contracts, commitments and obligations that are
not in the ordinary course of the Business.
(b) Except as disclosed in Schedule 3.12(b), each Contract is a
legal, valid and binding obligation of Seller and, to the Knowledge of Seller,
each other party thereto, enforceable (except to the extent such enforceability
may be limited by bankruptcy, equity and creditors' rights generally) against
Seller and to the Knowledge of Seller, each such other party in accordance with
its terms, and neither Seller nor, to the Knowledge of Seller, any other party
thereto is in material default or has failed to perform any material obligation
thereunder. Complete and correct copies of each Scheduled Contract have been
delivered to Buyer.
(c) Schedule 3.12(c) sets forth a list (by name, address and persons
to contact) of the 10 largest customers of the Business for each of the 12-month
periods ended December 31, 1995 and 1996, and the five largest vendors, based on
the dollar amounts paid to such vendors, providing services to the Business for
the 12-month period ended December 31, 1996 together with the approximate dollar
amount of sales or services provided by Seller during said period to such
customers and a summary description of approximate dollar amount of the services
provided to Seller by such vendors.
25
3.13. Permits; Required Consent.
(a) Schedule 3.13(a) sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities and all other Persons
necessary for the operation of the Transferred Assets or the Business in
substantially the same manner as currently operated or affecting or relating in
any way to the Business (the "Permits").
(b) Schedule 3.13(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver (each, a "Required Governmental Approval") required
under Applicable Law to be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the loss of any material Permit or otherwise, and (ii) each
Scheduled Contract with respect to which the consent of the other party or
parties thereto must be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of the transfer of such Scheduled Contract, the
termination thereof, a breach or default thereunder or any other change or
modification to the terms thereof (each, a "Required Contractual Consent" and
collectively with the Required Governmental Approvals, the "Required Consents").
Except as set forth in Schedule 3.13(b) or (b) each Permit is valid and in full
force and effect in all material respects and, assuming the related Required
Consents have been obtained prior to the Closing Date, are or will be
transferable by Seller, and assuming the related Required Consents have been
obtained prior to the Closing Date, none of the Permits will be terminated or
become terminable or impaired in any material respect as a result of the
transactions contemplated hereby.
3.14. Compliance with Applicable Laws. Except as set forth in
Schedule 3.14, the operation of the Business by Seller and the condition of the
Transferred Assets have not violated or infringed, and do not violate or
infringe, any material Applicable Law, or any order, writ, injunction or decree
of any Governmental Authority. Neither Seller nor any officer, agent or employee
of Seller, nor, to the Knowledge of Seller, any distributor, licensee or other
Person acting on behalf of Seller, (a) has made any unlawful domestic or foreign
political contributions, (b) has made any payment or provided services which
were not legal to make or provide or which Seller or any such officer, employee
or other Person should have known were not legal for the payee or recipient of
such services to receive, (c) has had any transactions or payments which are not
recorded in its accounting books and records or disclosed in its financial
statements, (d) has any off-book bank or cash accounts or "slush funds", (e) has
made any payments to governmental officials in their individual capacities for
the purpose of affecting their action or the action of the Governmental
Authority they represent to obtain special concession, or (f) has made illegal
payments to obtain or retain business.
26
3.15. Employment Agreements; Change in Control, and Employee
Benefits.
(a) Schedule 3.15(a) sets forth all Benefit Plans. Seller has made
true and correct copies of all governing instruments and related agreements
pertaining to such Benefit Plans available to Buyer.
(b) Except as set forth on Schedule 3.15(b) no individual shall
accrue or receive additional benefits, service or accelerated rights to payments
of benefits under any Benefit Plan, including the right to receive any parachute
payment, as defined in Section 28OG of the Code, or become entitled to
severance, termination allowance or similar payments as a direct result of the
transactions contemplated by this Agreement.
(c) No Employee Benefit Plan has participated in, engaged in or been
a party to any non-exempt Prohibited Transaction, and neither Seller nor any
ERISA Affiliates of Seller has pending, or to any of its Knowledge threatened,
against it any claim for taxes under Chapter 43 of Subtitle D of the Code and
Sections 5000 of the Code, or for penalties under ERISA Section 502(c), (i) or
(l), with respect to any Employee Benefit Plan nor, to the Knowledge of Seller
is there a basis for any such claim. No officer, director or employee of Seller
has committed a material breach of any responsibility or obligation imposed upon
fiduciaries by Title I of ERISA with respect to any Employee Benefit Plan.
(d) There is no material claim pending or to the Knowledge of Seller
threatened, involving any Benefit Plan by any Person against such plan or Seller
or any ERISA Affiliate with respect to Bremen. There is no pending or to the
Knowledge of Seller threatened proceeding involving any Employee Benefit Plan
before the IRS, the United States Department of Labor or any other Governmental
Authority.
(e) Each Benefit Plan has been maintained in all material respects,
by its terms and in operation, in accordance with ERISA and the Code including,
but not limited to, all applicable reporting and disclosure requirements. Seller
and each ERISA Affiliate have made full and timely payment of all amounts
required to be contributed under the terms of each Benefit Plan and Applicable
Law or required to be paid as expenses under such Benefit Plan, and Seller and
each ERISA Affiliate shall continue to do so through the Closing.
(f) With respect to any Group Health Plans maintained by Seller or
its ERISA Affiliates, Seller and its ERISA Affiliates have complied in a
material respects with the provisions of Part 6 Subtitle B of Title I of ERISA
and Section 4980B of the Code. Except as set forth on Schedule 3.15(f), Seller
is not obligated to provide health care benefits of any kind to its retired
employees pursuant to any Employee Benefit Plan, including without limitation
any Group Health Plan, or pursuant to any agreement or understanding.
(g) Seller's Union Plan is qualified under Section 401(a) of the
Code.
27
3.16. Labor and Employment Matters.
(a) Except as set forth on Schedule 3.16(a), with respect to the
Business, no collective bargaining agreement exists that is binding on Seller
and, except as described on Schedule 3.16(a), no petition has been filed or
proceedings instituted by an employee or group of employees with any labor
relations board seeking recognition of a bargaining representative. Schedule
3.16(a) describes any organizational effort related to the Business currently
being made or, to Seller's Knowledge, threatened by or on behalf of any labor
union to organize any employees of Bremen.
(b) Except as set forth on Schedule 3.16(a), with respect to the
Business, (i) there is no labor strike, dispute, slow down or stoppage pending
or, to Seller's Knowledge, threatened against or directly affecting the
Business, (ii) grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending, and no claims therefor exist; and
(iii) neither Seller, nor of its Affiliates has received any notice or has any
Knowledge of any threatened labor or civil rights dispute, controversy or
grievance or any other unfair labor practice proceeding or breach of contract
claim or action with respect to claims of, or obligations to, any employee or
group of employees of Bremen.
(c) With respect to the Business, Seller has complied and is
currently complying, in all material respects, in respect of all employees of
Bremen, with all Applicable Laws respecting employment and employment practices
and the protection of the health and safety of employees.
(d) With respect to the Business, all individuals who are performing
or have performed services for Seller, or any Affiliate thereof and are or were
classified by Seller or any Affiliate as "independent contractors" qualify for
such classification under Section 530 of the Revenue Act of 1978 or Section 1706
of the Tax Reform Act of 1986, as applicable, except for such instances which
are not, in the aggregate, material.
(e) Schedule 3.16(e) sets forth all Employees of Bremen receiving or
seeking worker's compensation benefits, as well as the following for each such
Employee: (i) brief description of the injury; (ii) weekly compensation; (iii)
estimated benefit period; and (iv) estimate of medical and other expenses
payable.
3.17. Intellectual Property.
(a) Schedule 3.17 sets forth a complete and correct list of each
patent, patent application and docketed invention, trademark, trade name,
trademark or trade name registration or application, copyright or copyright
registration or application for copyright registration, and each license or
licensing agreement for any of the foregoing relating to any Transferred Asset
or held by Seller with respect to the Business (the "Intellectual Property
Rights").
28
(b) Except as disclosed in Schedule 3.17, Seller has not during the
three years preceding the date of this Agreement been a party to any Proceeding,
nor to the Knowledge of Seller is any Proceeding threatened as to which there is
a reasonable possibility of a determination adverse to Seller that involved or
may involve a claim of infringement by any Person (including any Governmental
Authority) of any Intellectual Property Right. Except as disclosed in Schedule
3.17 no Intellectual Property Right is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by
Seller, or restricting the licensing thereof by Seller to any Person. The use of
the Intellectual Property Rights does not conflict with, infringe upon or
violate any patent, patent license, patent application, trademark, trade name,
trademark or trade name registration, copyright, copyright registration, service
mark, brand mark or brand name or any pending application relating thereto, or
any trade secret, know-how, programs or processes, or any similar rights, of any
Person.
(c) Except as set forth in Schedule 3.17, Seller either owns the
entire right, title and interest in, to and under, or has the legally
enforceable right to use all Transferred Assets.
3.18. Advisory Fees. Except for Rothschild & Company (whose fees and
expenses will be paid by Seller), there is no investment banker, broker, finder
or other intermediary or advisor that has been retained by or is authorized to
act on behalf of Seller or its Affiliates who might be entitled to any fee,
commission or reimbursement of expenses from Buyer or any of its Affiliates upon
consummation of the transactions contemplated by this Agreement.
3.19. Environmental Compliance.
(a) Except as disclosed in Schedule 3.19(a) Seller has obtained all
material approvals, authorizations, certificates, consents, licenses, orders and
permits or other similar authorizations of all Governmental Authorities, or from
any other Person, that are required with respect to the Business or the
Transferred Assets under any Environmental Law. Schedule 3.19(a) sets forth all
permits, licenses and other authorizations issued under any Environmental Law to
Seller relating to the Business or the Transferred Assets.
(b) Except as disclosed in Schedule 3.19(b) Seller is in compliance
in all material respects with all terms and conditions of all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities (and all other Persons)
required under any Environmental Law that is applicable to the Business or that
relate to the Transferred Assets, and is also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws.
(c) Except as disclosed in Schedule 3.19(c), there are no past or
present events, conditions, circumstances, activities, practices, incidents,
actions, omissions or plans (i.e. including any Environmental Conditions)
relating to or in any way affecting the Business or the Transferred
29
Assets or the Leased Real Property that (i) could reasonably be expected to
prevent, or make materially more expensive, continued compliance with any
Environmental Law by Buyer after the Closing, or (ii) that may give rise to any
Environmental Liability, or (iii) that may give rise to any Liability resulting
from exposure to workplace hazards.
3.20. Tax Matters.
Except as set forth on Schedule 3.20:
(a) Seller has timely filed all Tax Returns required to have been
filed by it, and has paid or accrued all Taxes due to any taxing authority with
respect to all taxable periods ending on or prior to the Closing Date, or
otherwise attributable to all periods prior to the Closing Date; and all such
Tax Returns are true, correct and complete in all respects. Seller is not
currently the beneficiary of any extension of time within which to file any Tax
Return.
(b) Seller has not received notice that the IRS or any other taxing
authority has asserted against Seller any deficiency in Taxes or claim for
additional Taxes in connection with any tax period. Except for liens arising
from Taxes which are due but not yet payable, there are no liens for Taxes on
any of Seller's assets;
(c) Seller has withheld and paid over all Taxes required to have
been withheld and paid over in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party;
and
(d) Seller has not been included in any consolidated, combined or
unitary Tax Return provided for under the laws of the United States, any state
or locality with respect to Taxes for any taxable period for which the statute
of limitations has not expired.
3.21. Insurance. Schedule 3.21 sets forth a complete and correct
list of all material insurance policies of any kind currently in force with
respect to the Business (the "Insurance Policies"), including all "occurrence
based" liability policies regardless of the periods to which they relate.
Schedule 3.21 sets forth for each Insurance Policy the type of coverage, the
name of the insureds, the insurer, the premium, the expiration date, the period
to which it relates, the deductibles and loss retention amounts and the amounts
of coverage.
3.22. Products. Schedule 3.22 sets forth an accurate, correct and
complete statement of all written warranties, warranty policies, service and
maintenance agreements of the Business.
3.23. Material Disclosures. No statement, representation or warranty
made by Seller in this Agreement or in any certificate, statement, list,
schedule or other document furnished or to be furnished to Buyer hereunder
contains, or when so furnished will contain, any untrue
30
statement of a material fact, or fails to state, or when so furnished will fail
to state, a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND RBC
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer and RBC hereby jointly
and severally represent and warrant to Seller that:
4.1. Organization and Existence. Each of Buyer and RBC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby. Each of
Buyer and RBC is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary to carry on its
business as now conducted, except for those jurisdictions where the failure to
be so qualified has not been, and may not reasonably be expected to be,
material.
4.2. Corporate Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement and the consummation by
each of Buyer and RBC of the transactions contemplated hereby are within the
corporate powers of each of Buyer and RBC and have been duly authorized by all
necessary corporate action on the part of each of Buyer and RBC. This Agreement
constitutes a legal, valid and binding agreement of each of Buyer and RBC,
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and subject to general principles of equity.
4.3. Governmental Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than as
set forth in this Agreement.
4.4. Non-Contravention. The execution, delivery and performance by
each of Buyer and RBC of this Agreement does not (a) contravene or conflict with
the Certificate of Incorporation or Bylaws of Buyer or RBC, or (b) assuming
compliance with the matters referred to in Section 4.3, contravene or conflict
with or constitute a violation of any provision of any Applicable Law binding
upon or applicable to Buyer or RBC.
31
4.5. Advisory Fees. There is no investment banker, broker, finder or
other intermediary or advisor that has been retained by or is authorized to act
on behalf of Buyer or RBC who might be entitled to any fee, commission or
reimbursement of expenses from Seller or any of its Affiliates upon consummation
of the transactions contemplated by this Agreement.
4.6. Litigation. There is no Proceeding pending against, or to the
Knowledge of Buyer or RBC, threatened against or affecting, Buyer or RBC before
any court or arbitrators or any governmental body, agency or official that in
any matter challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS OF SELLER
5.1. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents. On and after the Closing Date, Seller shall
comply at its own expense with all conditions and requirements affecting Seller
set forth in (a) all Required Governmental Approvals as necessary to keep the
same in full force and effect assuming continued compliance with the terms
thereof by Buyer and (b) all Required Contractual Consents as necessary to keep
the same effective and enforceable against the Persons giving such Required
Contractual Consents assuming continued compliance with the terms thereof by
Buyer.
5.2. Confidentiality.
(a) Seller will, and will cause their representatives to, treat any
data and information obtained with respect to Buyer, RBC or any of their
Affiliates from any representative, officer, director, or employee of Buyer or
RBC, or from any books or records of Buyer or RBC in connection with this
Agreement, confidentially and with commercially reasonable care and discretion,
and will not disclose any such information to third parties; provided, however,
that the foregoing shall not apply to (i) information in the public domain or
that becomes public through disclosure by any party other than Seller or its
Affiliates or representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that may be required to be
disclosed by Applicable Law or (iii) information required to be disclosed to
obtain any Required Consents.
(b) The parties hereto recognize and agree that in the event of a
breach of this Section 5.2, money damages would not be an adequate remedy to
Buyer, RBC or their Affiliates for such breach and, even if money damages were
adequate, it would be impossible to ascertain or measure with any degree of
accuracy the damages sustained therefrom. Accordingly, if there should be a
breach or threatened breach of provisions of this Section 5.2, Buyer, RBC and
their Affiliates shall be entitled to an injunction restraining Seller from any
breach without showing or
32
proving actual damage sustained by Buyer, RBC or their Affiliates, as the case
may be. Nothing in the preceding sentence shall limit or otherwise affect any
remedies that Buyer, RBC and their Affiliates may otherwise have under
Applicable Law.
5.3. Taxes.
(a) All sales, value added, use and other Taxes imposed in
connection with or measured by the sale of the Transferred Assets shall be borne
by Buyer. Real property transfer Taxes imposed in connection with the sale of
the Transferred Assets shall be borne equally by Buyer and Seller.
(b) Seller agrees that no new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting the Transferred
Assets shall be made after the date of this Agreement without the prior written
consent of Buyer.
(c) The Buyer and Seller shall (i) provide to each other such
assistance as may reasonably be requested in connection with the preparation of
any Tax Return relating to the Business and the conduct of any audit or other
examination by any taxing authority or in connection with judicial or
administrative proceedings relating to any liability for Taxes relating to the
Business, (ii) retain all records or other information that may be relevant to
the preparation of any Tax Returns relating to the Business, or the conduct of
any audit or examination, or other tax proceeding relating to the Business, and
(iii) retain all relevant documents, including prior year's Tax Returns relating
to the Business, supporting work schedules and other records or information that
may be relevant to such returns and shall not destroy or otherwise dispose of
any such records without the prior written consent of the other party.
(d) Seller shall provide Buyer with a FIRPTA certificate or similar
document in order to relieve Buyer of any obligations to withhold any portion of
the Purchase Price.
(e) Pursuant to Section 1445(b)(2) of the Code, Seller shall furnish
Buyer an affidavit stating under penalty of perjury Seller's United States
taxpayer identification number and that Seller is not a foreign person.
ARTICLE VI.
COVENANTS OF BUYER AND RBC
6.1. Indiana Responsible Property Transfer Law. Buyer covenants and
agrees that, to the extent the provisions of the Indiana Responsible Property
Transfer Law (the "Transfer Law") apply to the transactions contemplated by this
Agreement, to waive, and pursuant to Section 10(b) of the Transfer Law, it
hereby waives, any right to receive a disclosure document, as
33
described in Section 10 of the Transfer Law. Buyer further covenants and agrees
that it shall not seek to void this Agreement and the transactions contemplated
hereby on the grounds that the disclosure document required to be delivered
pursuant to the Transfer Law was not delivered to Buyer by Seller. Buyer makes
the covenants and grants the waivers herein contained with full awareness of the
purpose and intent of the Transfer Law.
ARTICLE VII.
COVENANTS OF ALL PARTIES
7.1. Further Assurances. Subject to the terms and conditions of this
Agreement, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law to consummate the transactions contemplated by
this Agreement. Buyer, RBC and Seller agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be reasonably necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
Following the Closing, Buyer shall make the employees and records of Bremen
reasonably available to Seller during normal business hours; at no charge to
Seller other than for out of pocket expenses incurred by Buyer for items such as
photocopying or travel for the purposes of providing accounting information
reasonably required by Seller, providing testimony or information in connection
with any legal proceeding or for any other appropriate purpose arising out of
Seller's ownership and operation of the Business.
7.2. Bulk Sales Laws. Buyer waives compliance by Seller with the
provisions of (i) Indiana's Department of Revenue Bulk Sales law and (ii) all
applicable provisions of Article 6 of the Uniform Commercial Code as adopted in
any state relating to bulk sales. Seller shall indemnify Buyer for any taxes
owed to the State of Indiana arising out of Seller's failure to comply with the
notification requirement referred to in the preceding sentence. It is understood
and agreed that nothing contained in this Section 7.2 is intended to relieve
Buyer of its obligations described in Section 5.3(a).
7.3. Employees and Employee Benefit Matters.
(a) Effective as of the Closing, each employee of the Business who
is actively employed in the Business on the Closing and not on layoff, leave of
absence, workman's compensation leave or any other leave other than normal
vacation will cease to be an employee of Seller and will, unless such employee
elects otherwise, become an employee of Buyer (each, a "Transferred Employee").
Seller will neither employ nor offer employment to any Transferred Employee
during the eighteen (18) month period following the Closing without the prior
written consent of Buyer. Any employee identified on Schedule 7.3(a), who is not
a Transferred Employee at such time by reason of not being actively employed in
the Business, will cease to be an employee
34
of Seller effective as of the date he returns to the Business from layoff or
leave, as the case may be, and such employee shall become a Transferred Employee
effective as of such date, unless he elects otherwise.
(b) Seller currently maintains the following pension plans covering
employees of the Business: the Pension Plan for Salaried Employees of SKF USA
Inc. (the "Salaried Plan") covering designated salaried and other employees of
Seller, including salaried employees of the Business, and the Pension Plan for
Hourly Employees of SKF USA Inc. ("Seller's Union Plan") covering hourly
employees of the Business who are represented by the Union.
(i) With respect to the Salaried Plan:
(A) Within thirty (30) days after, and effective as of,
the Closing, Seller shall execute such amendments to the Salaried Plan as are
necessary to provide that: (i) any individual including a Transferred Employee,
who is an employee of the Business immediately prior to the Closing and who is
covered by the Salaried Plan (a "Salaried Plan Employee") shall cease to be
covered by the Salaried Plan as of the Closing except as to benefits accrued
prior to the Closing; and (ii) the accrued benefit under the Salaried Plan of
any Salaried Plan Employee shall become fully vested as of the Closing. To the
extent permitted by law, each Salaried Plan Employee shall be deemed to have
terminated employment with the Seller as of the Closing for purposes of the
Salaried Plan, and the vested accrued benefit of each such Employee shall
thereafter be distributable in accordance with the terms of the Salaried Plan.
(B) There shall be no transfer of assets or liabilities
of the Salaried Plan to any retirement plan maintained by Buyer; neither Buyer
nor any of its affiliates shall become a sponsor of or otherwise maintain, the
Salaried Plan; and Buyer acknowledges that neither Buyer nor any of its
affiliates shall have any right, title, or interest in any of the assets of the
Salaried Plan.
(ii) With respect to Seller's Union Plan:
(A) Within thirty (30) days after, and effective as of,
the Closing, Seller shall execute such amendments to Seller's Union Plan as are
necessary to provide that any Transferred Employee who is covered by Seller's
Union Plan (a "Union Plan Employee") and any other individual who is an employee
of the Business immediately prior to the Closing and who is covered by Seller's
Union Plan shall cease to be covered by Seller's Union Plan as of the Closing,
except (to the extent required by Section 7.3(b)(ii)(E) or not inconsistent with
Section 7.3(b)(ii)(C)) as to benefits accrued prior to the Closing.
(B) As soon as practicable after (and no later than 30
days after), and effective as of, the Closing, Buyers shall establish a defined
benefit pension plan and trust ("Buyer's Union Plan") for the benefit of the
Union Plan Employees, which shall be intended to
35
qualify and to be exempt from tax under sections 401(a) and 501(a) of the Code,
and Buyer shall apply to the Internal Revenue Service for a determination letter
with respect thereto. Buyer's Union Plan shall cover the Union Plan Employees as
of the Closing or, in the case of any Union Plan Employee who becomes a
Transferred Employee after the Closing by reason of the last sentence of Section
7.3(a), as of the date such employee becomes a Transferred Employee, and shall
provide such participants with benefits substantially similar to those provided
by Seller's Union Plan. Buyer's Union Plan shall provide the Union Plan
Employees full credit for eligibility, vesting, and (except with respect to any
of such employees who make the election described in Section 7.3(b)(ii)(E))
benefit accrual purposes with respect to all service with Seller to the extent
such service was credited under the terms of Seller's Union Plan.
(C) As soon as practicable following Seller's receipt of
written evidence of the adoption of Buyer's Union Plan and of a copy of a
favorable determination letter issued by the Internal Revenue Service with
respect to Buyer's Union Plan, and except as otherwise provided in Section
7.3(b)(ii)(E), Seller shall direct the trustees of Seller's Union Plan to
transfer from the trust under Seller's Union Plan to the trust under Buyer's
Union Plan an amount which shall be determined by a certified actuary designated
by the Seller ("Seller's Actuary") and reasonably acceptable to an actuary
designated by the Buyer ("Buyer's Actuary") equal to: (i) the present value of
all accrued benefits, including ancillary benefits, under Seller's Union Plan as
of the Closing with respect to the Union Plan Employees (other than those making
the election described in Section 7.3(b)(ii)(E)); plus (ii) interest accrued
from the Closing to the date of transfer on the amount described in clause (i),
at a rate equal to 8.00 percent per annum, from the Closing to the date of
transfer; less (iii) the amount of any benefit payments made to the Union Plan
Employees (other than those making the election described in Section
7.3(b)(ii)(5)) from Seller's Union Plan after the Closing and prior to the date
of the transfer to Buyer's Union Plan, adjusted (at the interest rate described
in clause (ii) above) to reflect the time of such payments, and reasonable
administrative costs and expenses incurred during such period. The calculation
of the present value of the benefits described in clause (i) above shall be
determined using assumptions described on Schedule 7.3(b). Notwithstanding any
other provision in this Section 7.3(b)(ii)(C), the amount of assets to be
transferred pursuant to this Section 7.3(b)(ii)(C), shall satisfy the
requirements of section 414(l) of the Code and section 208 of the Employee
Retirement Income Security Act of 1974.
(D) At the time of transfer of the amount set forth in
Section 7.3(b)(i)(C) and except as otherwise provided in Section 7.3(b)(ii)(E),
Buyer and Buyer's Union Plan shall assume all liabilities for all accrued
benefits, including all ancillary benefits, under Seller's Union Plan in respect
of the Union Plan Employees, and Seller and Seller's Union Plan shall be
relieved of all liabilities for such benefits, including any liability under any
collective bargaining agreement to provide such benefits. Upon the transfer of
assets in accordance with Section 7.3(b)(ii)(C), Buyer agrees to indemnify and
hold harmless Seller, its officers, directors, employees, agents, and affiliates
from and against any and all costs, damages, losses, expenses, or other
liabilities arising out of or related to Buyer's obligations under this Section
7.3(b)(ii) or
36
Buyer's Union Plan, including benefits accrued by the Union Plan Employees prior
to the Closing which are to be provided by Buyer's Union Plan; provided,
however, that Buyer shall not indemnify or hold harmless such parties with
respect to any costs, damages, losses, expenses, or other liabilities that
result, directly or indirectly, from violations of law by such parties which
occurred prior to the Closing.
(E) Notwithstanding any other provision of this Section
7.3(b)(ii) to the contrary, there shall be no transfer under this Section
7.3(b)(ii) of any assets or liabilities with respect to the vested accrued
benefit of any of the Union Plan Employees who are eligible for retirement
benefits as of the Closing Date under Seller's Union Plan and who so elect by
notifying Seller in writing within 30 days after the Closing. To the extent
permitted by Applicable Law, each such employee shall be deemed to have
terminated employment with the Seller as of the Closing for purposes of Seller's
Union Plan, and his vested accrued benefit shall thereafter be distributable in
accordance with the terms of Seller's Union Plan.
(F) Seller and Buyer shall provide each other with such
records and information as may be necessary or appropriate to carry out their
obligations under this Section 7.3(b)(ii) or for the purposes of administering
Buyer's Union Plan (including, without limitation, schedules of the Union Plan
Employees and their service credits and accrued benefits under the Seller's
Union Plan), and they shall cooperate in the filing of documents required in
connection with the transfer of assets and liabilities described herein.
Notwithstanding anything contained herein to the contrary, no such transfer
shall take place until the 31st day following the filing of any Form 5310-A
required in connection therewith.
(c) Seller currently maintains the Pre-Tax Accumulation of Capital
for Employees Plan ("Seller's 401(k) Plan") for its eligible employees,
including eligible employees of the Business. With respect to Seller's 401(k)
Plan:
(i) Within thirty (30) days after, and effective as of the
Closing, Seller shall execute such amendments to Seller's 401(k) Plan as
are necessary to provide that: (1) any individual including a Transferred
Employee, who is an employee of the Business immediately prior to the
Closing and who is covered by Seller's 401(k) Plan (a "401(k) Plan
Employee") shall cease to be covered by Seller's 401(k) Plan as of the
Closing except as to benefits accrued with respect to periods prior to the
Closing; and (2) the accrued benefit under Seller's 401(k) Plan of any
401(k) Plan Employee shall, to the extent permitted by Applicable Law, be
distributable to such employee after the Closing in accordance with Code
section 401(k)(10) and Treas. Reg. ss.ss. 1.401(k)-1(d)(l)(iv) and
1.401(k)-1(d)(4).
(ii) Buyer's 401(k) Plan shall accept a direct rollover of any
amount distributable from Seller's 401(k) Plan to any 401(k) Plan Employee
who becomes an employee of Buyer at or after the Closing and who elects to
have such direct rollover made in accordance with the provisions of
Seller's 401(k) Plan and applicable law.
37
(iii) Except as otherwise specifically provided in this
Section 7.3(c), there shall be no transfer of assets or liabilities of
Seller's 401(k) Plan to any retirement plan maintained by Buyer; neither
Buyer nor any of its affiliates shall become a sponsor of, or otherwise
maintain, Seller's 401(k) Plan; and Buyer acknowledges that neither Buyer
nor any of its affiliates shall have any right, title, or interest in any
of the assets of Seller's 401(k) Plan.
(d) Seller will provide former salaried and hourly employees of the
Business who retire prior to the Closing with medical benefit coverage under
Seller's applicable retiree medical benefit plans, which plan shall be the
secondary payor with respect to any plan, arrangement, or agreement under which
such an individual may be covered pursuant to Section 7.3(e)(ii), 7.3(f)(ii), or
7.3(f)(iii).
(e) With respect to salaried employees of the Business:
(i) As of the Closing, Buyer will provide salaried Transferred
Employees (other than those described in Section 7.3(d)) with medical
benefit coverage under Buyer's standard medical benefit plan for its
salaried employees; provided that after the Closing, Buyer shall otherwise
have no obligation to provide such employees with any level of medical
benefit coverage.
(ii) Buyer will not provide medical benefit coverage to any
salaried employee of the Business described in Section 7.3(d) who has
again become an employee of the Business at or after the Closing except as
specifically provided by agreement between Buyer and such employee.
(f) With respect to hourly employees of the Business:
(i) As of the Closing, Buyer will provide hourly Transferred
Employees (other than those described in Section 7.3(d)) with medical
benefit coverage pursuant to the terms of the Union Contract under a
medical benefit plan or plans established or maintained by Buyer.
(ii) Buyer will provide an hourly employee of the Business
described in Section 7.3(d) who has again become an employee of the
Business at or after the Closing with medical benefit coverage pursuant to
the terms of the Union Contract (subject to any modification thereof as
agreed to by Buyer and the Union).
(iii) Buyer will provide hourly Transferred Employees who
retire after the Closing with retiree medical benefit coverage pursuant to
the terms of the union contract applicable to such hourly employees at the
time of their retirement under a retiree medical benefit plan or plans
established or maintained by Buyer. The parties agree that the amount
38
of Seller's liability for such coverage attributable to the period prior
to the Closing was $176,000, and that the consideration for Buyer's
agreement herein was taken into account by the parties in their
negotiation of the Purchase Price.
(g) Except as otherwise specifically provided in Sections
7.3(d)-(f), each party reserves the right to change its employee and retiree
medical benefits plans in the future when and as it deems appropriate.
(h) Seller will provide former employees of the Business who retire
prior to the Closing with life insurance coverage under Seller's retiree life
insurance benefit plans.
(i) As of the Closing, Buyer will provide salaried Transferred
Employees with coverage under Buyer's standard life insurance benefit plans for
its salaried employees; provided that after the Closing, Buyer shall otherwise
have no obligation to provide such employees with any level of life insurance
benefits.
(j) Buyer will provide hourly Transferred Employees with life
insurance coverage pursuant to the terms of the Union Contract under a life
insurance plan or plans established or maintained by Buyer.
(k) Except as otherwise provided in Sections 7.3(h)-(j), each party
reserves the right to change its employee and retiree life insurance plans in
the future when and as it seems appropriate.
(l) As of the Closing, Buyer will provide salaried Transferred
Employees with coverage under Buyer's standard vacation benefit plan for its
salaried employees (provided that the eligibility for vacation benefits shall be
determined solely under the terms of Buyer's vacation benefit plan for such
employees). Seller will have no obligation to make any payment to such employees
after the Closing with respect to any vacation pay entitlement.
(m) As of the Closing, Buyer will assume all obligations of Seller
to hourly Transferred Employees for accrued vacation under the Union Contract.
Seller will have no obligation to make any payment to such employees after the
Closing with respect to any vacation pay entitlement.
(n) Seller will bear the entire cost and expense of any severance
payments payable under the terms of any applicable severance plan maintained by
Seller or any Applicable Law to employees of the Business whose employment with
the Business is terminated by Seller before or at the Closing even if such
employees thereafter become employees of Buyer. Buyer will bear the entire cost
and expense of severance payments payable to employees of the Business whose
employment with the Business is terminated by Buyer after the Closing; provided
that such payments shall be paid and determined solely in accordance with
Buyer's severance plan or policy.
39
7.4. Allocation of Environmental Liabilities.
(a) At any time within twenty-four (24) months following the
Closing, Seller shall have the right but without obligation to conduct an
environmental investigation (the "Environmental Study") respecting the Leased
Real Property the purpose of which shall be to establish a so-called "base-line"
as of the Study Date of the environmental condition of such portions of the
Leased Real Property designated by the Seller (the portion of the Leased Real
Property not subject to the Environmental Study being the "Excluded
Environmental Parcel" and the portion of the Leased Real Property subject to the
Environmental Study being the "Included Environmental Parcel"). In connection
therewith:
(i) Seller shall be responsible for satisfying the cost of the
Environmental Study,
(ii) the Environmental Study shall be conducted by such
environmental engineers, and subject to such analytic protocol, as Buyer shall
reasonably approve prior to the beginning thereof,
(iii) the Environmental Study shall be conducted at such time
or times, and in such fashion, so as not to interfere unreasonably with the
conduct of the Business, and shall otherwise be subject to such access agreement
as may be reasonably required by Buyer; provided, that such access agreement
shall also provide that Buyer, at its expense, shall provide Seller with such
electricity and water as Seller shall reasonably require in connection with the
Environmental Study,
(iv) during and upon completion of the Environmental Study,
Seller shall provide Buyer with copies of all data collected thereunder and the
written conclusions thereof. In the event that Buyer disagrees with any of the
analyses or conclusions thereof, it shall so notify Seller within 30 days after
delivery thereof, and Buyer and Seller shall thereupon attempt in good faith to
resolve any differences, it being their mutual intent to arrive at a mutually
satisfactory conclusion to the Environmental Study. In the event Buyer and
Seller are unable to reach such conclusion on their own, they shall submit any
dispute for resolution pursuant to a mutually acceptable dispute resolution
process before a panel having expertise in environmental matters. The ultimate
Environmental Study, as approved by Buyer and Seller, shall be referred to
herein as the "Final Environmental Study."
(b) Seller shall in any and all events be responsible for the
following Environmental Liabilities (the "Seller Environmental Liabilities"):
(i) Environmental Liabilities arising out of Existing Known
Environmental Conditions,
40
(ii) Environmental Liabilities arising out of Environmental
Conditions identified by the Final Environmental Study as existing on the Study
Date, and
(iii) Prior to the Study Date with respect to the Included
Environmental Parcel, and at all times after the date hereof with respect to the
Excluded Environmental Parcel, and at all times after the date hereof with
respect to the Included Environmental Parcel if no Environmental Study is
conducted, Environmental Liabilities relating to the Business or the Transferred
Assets or otherwise associated with the Leased Real Property whether in
existence on the Closing Date or arising thereafter except Environmental
Liabilities arising from an Environmental Condition caused by a discrete release
or incident occurring after the Closing Date constituting a violation of an
Environmental Law or requiring reporting pursuant to an Environmental Law (a
"Subsequent Event"); provided that, without limiting Buyer's or Seller's
responsibilities hereunder, Buyer shall provide Seller with notice of (A) any
such discrete release or incident occurring between the Closing Date and the
Study Date with respect to the Included Environmental Parcel and at any time
with respect to the Excluded Environmental Parcel of which it obtains Knowledge,
and (B) any other Environmental Conditions with respect to the Included
Environmental Parcel of which the Buyer obtains Knowledge after the Closing Date
that Buyer believes require reporting pursuant to an Environmental Law and which
Buyer believes to have been existing prior to the Closing Date; provided
further, that Seller shall have the burden of proving the existence of a
Subsequent Event.
(c) Buyer shall be responsible for the following Environmental
Liabilities ("Buyer Environmental Liabilities"):
(i) Environmental Liabilities constituting a Subsequent Event,
and
(ii) If an Environmental Study is conducted, Environmental
Liabilities arising out of Environmental Conditions on the Included
Environmental Parcel not identified in the Final Environmental Study as existing
on the Study Date.
(d) The "Study Date" shall mean the date following commencement of
the Environmental Study designated by the environmental engineers engaged to
perform such Environmental Study as an appropriate date to establish a so-called
"base-line" of the environmental conditions of the Included Environmental
Parcel.
7.5. Product Warranty Claims. In the event of any Liability arising
out of, resulting from, or relating to claims seeking return, replacement,
and/or repair of any Products manufactured on or prior to the Closing Date
pursuant either to (i) express Product warranties extended by Seller prior to
the Closing Date or Buyer after the Closing Date (provided that Buyer's
warranties are no more expansive than the warranties extended by Seller prior to
the Closing Date), or (ii) Product warranties or obligations implied or provided
by applicable law (together, the "Excluded Product Warranty Claims") with
respect to any such Products, the following shall apply:
41
(a) Buyer shall, on behalf of Seller, satisfy any such Excluded
Product Warranty Claims in the ordinary course of business, and
(b) Seller shall reimburse Buyer all costs incurred by Buyer in
connection therewith, but only to the extent such costs exceed $150,000 in the
aggregate, it being understood that Buyer shall absorb the first $150,000 of
costs associated with Excluded Product Warranty Claims.
7.6. Excluded Product Liability Claims. Seller shall remain
responsible for satisfying all Liabilities arising out of, resulting from, or
relating to product liability claims associated with respect to Products
manufactured on or prior to the Closing Date (and whether or not sold prior to
the Closing Date) ("Excluded Product Liability Claims").
7.7. Excluded Worker's Compensation Claims. Buyer and Seller have
agreed to satisfy any payments required to be made to any Transferred Employee
in respect of injuries to such Employees as follows:
(a) Seller shall satisfy any such payments required in respect of
injuries occurring prior to the Effective Time, it being understood that Buyer
shall have the burden to prove the date on which any such injury occurred.
(b) As to injuries which occurred gradually, that is other than in
respect of a specific event or occurrence (which shall be covered by (a) above),
Buyer shall satisfy any payments required in respect thereof; provided, however,
Seller shall reimburse Buyer an equitable amount thereof, such contribution
amount to be based upon the time period over which such injury occurred, and the
extent to which such time period was prior to the Closing Date vis-a-vis the
extent to which such time period was after the Closing Date. Any dispute
regarding the allocation of liability and Seller's contribution obligations
hereunder shall be resolved by arbitration in accordance with Section 10.11
below.
(c) Buyer shall satisfy any such payments in respect in respect of
injuries occurring after the Effective Time.
For the purposes hereof, Seller's obligations under this Section 7.7
shall hereinafter be referred to as "Excluded Worker's Compensation Claims."
ARTICLE VIII.
INDEMNIFICATION
8.1. Agreement to Indemnify.
42
(a) Subject to the limitations provided herein, Buyer, RBC and their
Affiliates (collectively, the "Buyer Indemnitees") shall each be indemnified and
held harmless to the extent set forth in this Article VIII by Seller in respect
of any Damages reasonably and proximately incurred by any Buyer Indemnitee (i)
as a result of any inaccuracy or misrepresentation in or breach of or failure to
perform any representation, warranty, covenant, agreement or obligation of
Seller in this Agreement or any agreement, document or certificate delivered
hereunder, (ii) in connection with any Excluded Liability, or (iii) in
connection with any Liability arising during, or directly or indirectly
associated with, the Interim Period and not constituting an ordinary course
Liability of the type contained in the June 30 Balance Sheet. Notwithstanding
the foregoing, Seller shall not be liable as an Indemnifying Party with respect
to any claim relating to an inaccuracy or misrepresentation in or breach of any
representation or warranty under subsection (a)(i) above if Buyer had Knowledge
of such inaccuracy, misrepresentation or breach on or before the Closing Date.
Further, Seller shall not be liable as an Indemnifying Party until all claims by
the Buyer Indemnitees for indemnification exceed $100,000 in the aggregate, and
thereafter Seller shall be liable, subject to the other limitations provided for
elsewhere in this Agreement, for all indemnification claims; provided, however,
that Seller shall be liable, subject to the other limitations provided for
elsewhere in this Agreement, for all claims by the Buyer Indemnitees, regardless
of amount, arising out of (i) the fraud or willful misconduct of Seller, (ii)
any Lien that does not constitute a Permitted Lien, (iii) any Third Party Claim
or (iv) any Excluded Liability. The aggregate liability of Seller collectively
under this Section 8.1(a) of this Agreement shall not exceed $3,000,000,
provided, however, that there shall be no limit on the aggregate liability of
Seller for Damages incurred by Buyer in connection with: (1) Seller's fraud or
willful misconduct; (2) any Excluded Liability; or (3) a Third Party Claim
arising from an Excluded Liability.
(b) Seller and its Affiliates (collectively the "Seller
Indemnitees") shall each be indemnified and held harmless to the extent set
forth in this Article VIII by Buyer and RBC in respect of any and all Damages
reasonably and proximately incurred by any Seller Indemnitee as a result of (i)
any inaccuracy or misrepresentation in or breach of or failure to perform any
representation, warranty, covenant, agreement or obligation of Buyer or RBC in
this Agreement, (ii) failure of Buyer or RBC to pay and discharge the Assumed
Liabilities or (iii) the conduct of the Business after the Effective Time, but
only to the extent that (A) such Damages are directly attributable to periods
following the Effective Time, (B) such Damages are not proximately caused by
actions of Seller prior to the Effective Time, (C) such Damages do not arise
fr
om an Excluded Liability, (D) if the underlying act or omission giving rise to
such Damages began or occurred prior to the Effective Time and continued after
the Effective Time, such Damages increased following such time that Buyer
obtained Knowledge thereof and failed to take reasonable actions after the
Closing Date in response thereto, and (E) if such Damages arose by reason of
Liabilities incurred during, or with respect to, the Interim Period, they are
not subject to Seller's indemnification responsibilities set forth in subsection
(a)(iii) above.
8.2. Survival of Representations and Warranties and Covenants.
43
(a) The representations and warranties contained in this Agreement
shall survive as follows:
(i) Except as otherwise provided in Section 8.2(a)(ii), (iii)
or (iv), all representations and warranties shall expire on the first
anniversary of the Closing Date.
(ii) Notwithstanding Section 8.2(a)(i) the representations and
warranties of Seller as an Indemnifying Party shall survive the Closing
Date until the expiration of any applicable statute of limitations,
including extensions thereof, with respect to: (1) the inaccuracy or
misrepresentation in or breach of any representation or warranty made by
Seller in this Agreement (A) arising out of fraud or willful misconduct or
(B) relating to matters which are the subject of a Third Party Claim
arising from an Excluded Liability; and (2) any inaccuracy or
misrepresentation in or breach of any representation or warranty made in
Sections 3.14, 3.19 and 3.20 regardless of whether such inaccuracy or
misrepresentation or breach arises out of fraud or willful misconduct.
(iii) Notwithstanding Section 8.2(a)(i), the representations
and warranties of Buyer and RBC as Indemnifying Parties shall survive the
Closing Date until the expiration of the applicable statute of
limitations, including extensions thereof, with respect to any inaccuracy
or misrepresentation in or breach of any representation or warranty made
by Buyer or RBC in this Agreement arising out of fraud or willful
misconduct.
(iv) Notwithstanding Section 8.2(a)(i), the representations
and warranties of Seller set forth in Sections 3.1, 3.2, 3.4, 3.8 and 3.11
shall survive without expiration.
Any cause of action for breach of a representation or warranty contained herein
shall expire and terminate unless the party claiming that such breach occurred
delivers to the other party written notice and a reasonably detailed explanation
of the alleged breach on or before 5:00 P.M., New York City time, on the date on
which such representation or warranty expires pursuant to this Section 8.2(a).
(b) The covenants contained in this Agreement shall survive without
expiration unless otherwise expressly provided in such covenant.
8.3. Claims for Indemnification. If any Indemnitee shall believe
that such Indemnitee is entitled to indemnification pursuant to this Article
VIII in respect of any Damages, such Indemnitee shall give the appropriate
Indemnifying Party prompt written notice thereof. Any such notice shall set
forth in renewable detail and to the extent then known the basis for such claim
for indemnification. The failure of such Indemnitee to give notice of any claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder except to the extent that such failure materially
adversely affects the right of the Indemnifying Party to assert any reasonable
defense to such claim. Each such claim for indemnity shall expressly state that
the
44
Indemnifying Party shall have only the ten (10) Business Day period referred to
in the next sentence to dispute or deny such claim. The Indemnifying Party shall
have ten (10) Business Days following the delivery of such notice to it either
(a) to acquiesce in suc h claim by giving such Indemnitee written notice of such
acquiescence or (b) to object to the claim by giving such Indemnitee written
notice of the objection. If the Indemnifying Party does not object thereto
within such ten (10) Business Day period, such Indemnitee shall be entitled to
be indemnified for all Damages reasonably and proximately incurred by such
Indemnitee in respect of such claim. If the Indemnifying Patty objects to such
claim in a timely manner, and such Indemnitee and the Indemnifying Party are
unable to resolve their dispute within ten (10) Business Days following such
objection (or such additional period of time as may be mutually agreed to by
such Persons), the claim shall be submitted immediately to arbitration pursuant
to Section 10.11.
8.4. Defense of Claims.
(a) In connection with any claim which may give rise to indemnity
under this Article VIII resulting from or arising out of any claim or Proceeding
against an Indemnitee by a Person that is not a party hereto (a "Third Party
Claim"), the Indemnifying Party may, subject to Section 8.4(b), assume the
defense of any such claim or Proceeding (unless such Indemnitee elects not to
seek indemnity hereunder for such claim), upon written notice to the relevant
Indemnitee, if all Indemnifying Parties with respect to such claim or Proceeding
jointly acknowledge to the Indemnitee its right to indemnity pursuant hereto in
respect of the entirety of such claim (as such claim may have been modified
through written agreement of the parties or arbitration hereunder) and provides
assurances, reasonably satisfactory to such Indemnitee, that the Indemnifying
Parties will be financially able to satisfy such claim in full if such claim or
Proceeding is decided adversely. If the Indemnifying Parties assume the defense
of any such claim or Proceeding, the Indemnifying Parties shall select counsel
reasonably acceptable to such Indemnitee to conduct the defense of such claim or
Proceeding, shall take all steps necessary in the defense or settlement thereof
and shall at all times diligently and promptly pursue the resolution thereof. If
the Indemnifying Parties shall have assumed the defense of any claim or
Proceeding in accordance with this Section 8.4, the Indemnifying Parties shall
be authorized to consent to a settlement of, or the entry of any judgment
arising from, any such claim or Proceeding, without the prior written consent of
such Indemnitee; provided, however, that the Indemnifying Parties shall pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; provided, further, that the
Indemnifying Parties shall not be authorized to encumber any of the assets of
any Indemnitee or to agree to any restriction that would apply to any Indemnitee
or to its conduct of business; and provided, further, that a condition to any
such settlement shall be a complete release of such Indemnitee and its
Affiliates, officers, employees, consultants and agents with respect to such
claim. Subject to Section 8.4(b), such Indemnitee shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense and the Indemnifying Parties shall provide such
Indemnitee with reasonable access to all materials relating to the defense of
the action and otherwise cooperate with such Indemnitee and its counsel in
connection with the Indemnitee's participation in such defense. Each Indemnitee
45
shall, and shall cause each of its Affiliates, officers, employees, consultants
and agents to, cooperate fully with the Indemnifying Parties in the defense of
any claim or Proceeding being defended by the Indemnifying Parties pursuant to
this Section 8.4. If the Indemnifying Parties do not assume the defense of any
claim or Proceeding resulting therefrom in accordance with the terms of this
Section 8.4(a), such Indemnitee may defend against such claim or Proceeding.
(b) Notwithstanding Section 8.4(a), the Indemnifying Parties may not
assume the defense of any claim or Proceeding and the Indemnitee may at its own
cost and expense assume such defense if in the reasonable opinion of the
Indemnitee, (i) such claim or Proceeding involves an issue or matter that, if
determined adversely to the Indemnitee, is likely to have a material adverse
effect on the business, operations, assets, properties or prospects of the
Indemnitee, or (ii) there is one or more legal defenses available to the
Indemnitee that conflict with those available to an Indemnifying Party. If the
Indemnitee assumes defense of any such claim or Proceeding, (A) the Indemnifying
Parties may participate in, but not control, the defense of such claim or
Proceeding, and (B) if the Indemnitee receives a settlement proposal from the
Person asserting such claim or instituting such Proceeding and is notified by an
Indemnifying Party that such Indemnifying Party wants to accept such settlement
proposal, the liability of the Indemnifying Parties with respect to such claim
or Proceeding shall equal the lesser of (x) the amount offered in such
settlement proposal (y) the amount of actual Damages of the Indemnitee with
respect to such claim or Proceeding or (z) the maximum liability of the
Indemnifying Parties pursuant to Section 8.1(a).
(c) If the Indemnitee elects to defend any claim or Proceeding
pursuant to the last sentence of Section 8.4(a) or pursuant to Section 8.4(b),
the Indemnitee shall conduct such defense in such manner as it shall deem
appropriate, including settling such claim or Proceeding after giving notice of
the same to the Indemnifying Parties, on such terms as such Indemnitee shall
deem appropriate. If the Indemnifying Parties seek to question the manner in
which such Indemnitee defended such claim or Proceeding or the amount of or
nature of any such settlement, the Indemnifying Parties shall have the burden to
prove by a preponderance of the evidence that such Indemnitee did not defend
such claim or Proceeding in a reasonably prudent manner.
ARTICLE IX.
COVENANT NOT TO COMPETE
9.1. Non-Compete. From and after the Closing Date, Seller will not,
and will advise its Affiliates to not, directly or indirectly, individually or
collectively, engage in any Competitive Activity for five (5) years after the
Closing Date (the "Covered Period"); provided, however, that, notwithstanding
the foregoing, (a) neither Seller, nor any of its Affiliates shall be deemed to
be engaged in a Competitive Activity solely by virtue of the ownership without
of less
46
than twenty percent (20%) of the outstanding voting stock or debt securities of
any publicly held company of which it does not have voting or day-to-day
operational control, the stock or debt securities of which are traded on an
United States of foreign stock exchange or quoted on the National Association of
Securities Dealers Automated Quotation System; (b) Seller and any of its
Affiliates may acquire a Person or business engaged in a Competitive Activity if
(i) in the calendar year immediately preceding the acquisition, the revenues
derived from Competitive Activities do not exceed fifteen percent (15%) of the
total revenues of such Person or business and (ii) the aggregate revenues during
any calendar year during the Covered Period derived from Competitive Activities
of all Persons and businesses acquired in accordance with this Section 9.1(b)
shall not exceed $3,750,000; (c) Seller's Affiliates shall not be deemed to be
engaged in a Competitive Activity solely by virtue of incidental sales
constituting a Competing Activity during the Covered Period that were not known
by such Affiliate otherwise to constitute a violation hereof; and (d) Seller and
its Affiliates shall not be deemed to be engaged in a Competitive Activity by
virtue of their sale or resale of any Product (i) manufactured by Bremen prior
to the Closing Date or (ii) manufactured by Buyer after the Closing Date.
If Seller becomes aware that any one or more of its Affiliates is
engaged in a Competitive Activity, it shall use its best efforts to cause such
Affiliate(s) to cease, forthwith, such Competitive Activity. Upon becoming aware
of such a Competitive Activity, Seller shall promptly notify Buyer of such
Competitive Activity and the nature of its efforts to cause such Competitive
Activity to cease.
For purposes of this Section 9.1, "Competitive Activity" shall mean
(x) the manufacture, distribution or sale of any Product in North America and
(y) the sale to any Person who was, to the Knowledge of Seller, a direct or
indirect customer of Bremen outside of North America at any time within five (5)
years preceding the Closing Date of (A) any Product or (B) any similar or
modified product for the same application as the products identified in the
preceding subsection (A).
9.2. Severability. The invalidity or unenforceability of this
Article IX in any respect shall not affect the validity or enforceability of
this Article IX in any other respect, or of any other provision of this
Agreement. In the event that any provision of this Article IX shall be held
invalid or unenforceable by a court of competent jurisdiction by reason of the
geographic or business scope or the duration thereof or for any other reason,
such invalidity or unenforceability shall attach only to the particular aspect
of such provision found invalid or unenforceable as applied and shall not affect
or render invalid or unenforceable any other provision of this Article IX or the
enforcement of such provision in other circumstances, and, to the fullest extent
permitted by law, this Article IX shall be construed as if the geographic or
business scope or the duration of such provision or other basis on which such
provision has been challenged had been more narrowly drafted so as not to be
invalid or unenforceable.
47
9.3. Enforcement. Seller acknowledges and agrees that Buyer and its
Affiliates are engaged in a highly competitive business and that the protections
of Buyer and each such Affiliate set forth in this Article IX are fair and
reasonable and are of vital concern to Buyer and its Affiliates. Further, Seller
acknowledges and agrees that monetary damages for any violation of this Article
IX will not adequately compensate Buyer and its Affiliates with respect to any
such violation. Therefore, in the event of a breach by Seller of any of the
terms and provisions contained in this Article IX, Buyer shall be entitled to
obtain damages for any such breach (the amount of such damages being
irrespective of the consideration being allocated to the within provisions)
and/or to enforce the specific performance of this Article IX by Seller and to
enjoin Seller from any further violations. The remedies available to Buyer
pursuant to this Section 9.3 may be exercised cumulatively by Buyer in
conjunction with all other rights and remedies provided by law.
ARTICLE X.
MISCELLANEOUS
10.1. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified with return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through an overnight
delivery service in circumstances to which such service guarantees next day
delivery, the day following being so sent:
If to Seller:
SKF USA Inc.
1100 First Avenue
King of Prussia, PA 19406
Attn: President
Telecopier No.: (610) 265-0404
48
with a copy to:
SKF USA Inc.
1100 First Avenue
King of Prussia, PA 19406
Attn: Secretary and General Counsel
Telecopier No.: (610) 265-0404
If to Buyer:
Bremen Bearings, Inc.
c/o Roller Bearing Company of America, Inc.
60 Round Hill Road
Fairfield, Connecticut 06430
Attn: Michael Gostomski
Telecopier No: (203) 256-0775
with a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attn: C. David Goldman, Esq.
Telecopier No.: 212-547-5444
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request demand, claim or other communication shall be deemed
to have been duly given unless and until it actually is received by the
individual for whom it is intended. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
10.2. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if and
only if such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence. No failure or delay by a
49
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
10.3. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
10.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of each other party, except that Buyer may assign any and all of its
right, interests and obligations hereunder as security for obligations to its
lenders; provided that Buyer shall not be released from any of its obligations
hereunder by reason of such assignment.
10.5. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws (without reference to choice or conflict
of laws) of the Commonwealth of Pennsylvania.
10.6. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
10.7. Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
10.8. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
10.9. Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the
50
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of the date this Agreement was executed or last amended.
10.10. Construction.
(a) The language used in this Agreement will be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against either party. Any reference
to any Applicable Law shall be deemed also to refer to all rules and regulations
promulgated thereunder unless the context requires otherwise. Whenever required
by the context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. The words
"herein," "hereof," "hereunder," and words of similar import refer to the
Agreement as a whole and not to a particular section. Whenever the word
"including" is used in this Agreement, it shall be deemed to mean "including
without limitation," "including, but not limited to" or other words of similar
import such that the items following the word "including" shall be deemed to be
a list by way of illustration only and shall not be deemed to be an exhaustive
list of applicable items in the context thereof.
(b) The parties hereto intend that each representation, warranty,
and covenant contained herein shall have independent significance. If any party
has breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) that the party has not breached shall not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or
covenant.
10.11. Arbitration of Claims.
(a) Except as otherwise provided elsewhere in this Agreement, any
dispute or difference between or among the parties arising out of this Agreement
or the transactions contemplated hereby, including without limitation any
dispute between an Indemnitee and any Indemnifying Party under Article VIII
which the parties are unable to resolve themselves shall be submitted to and
resolved by arbitration as herein provided. Within ten (10) Business Days after
expiration of the ten (10) Business Day period referred to in Section 8.3 or
within such other time period as the parties may agree, the Indemnitee and the
Indemnifying Party shall each designate one arbitrator. Within ten (10) Business
Days after the appointment of the two arbitrators, the two arbitrators shall
designate a third arbitrator mutually acceptable to them who shall be a
certified public accountant not affiliated with any party in interest to such
arbitration and the two arbitrators chosen by the Indemnitees and Indemnifying
Party shall each be a retired or former judge of any appellate court of the
State of Delaware, any United States appellate court or the United States
District Court for any Delaware District who is not affiliated with any party in
interest to such arbitration and who has substantial professional experience
with regard to corporate legal matters. If the arbitrator chosen by the
Indemnitee and the arbitrator chosen by the Indemnifying Party fail to agree
upon the third arbitrator within such ten (10) Business Day period, the third
arbitrator shall
51
be appointed by the American Arbitration Association as soon as practicable and
shall be a certified public accountant who is not affiliated with any party in
interest to such arbitration and who has substantial professional experience
with regard to corporate legal matters.
(b) The three arbitrators shall consider the dispute at issue at
Philadelphia, Pennsylvania at a mutually agreed upon time within thirty (30)
days (or such longer period as may be acceptable to the Indemnitee and the
Indemnifying Party) of the designation of the arbitrators. The arbitrator shall
not have the authority to modify any term or provision of this Agreement. The
arbitration proceeding shall be held in accordance with the rules for commercial
arbitration of the American Arbitration Association in effect on the date of the
initial request by the Indemnitee or Indemnifying Party, as the case may be,
that gave rise to the dispute to be arbitrated (as such rules are modified by
the terms of this Agreement or may be further modified by mutual agreement of
the Indemnitee and Indemnifying Party) and shall include an opportunity for the
parties to conduct discovery in advance of the proceeding, which discovery may
be limited by rules established by the arbitrators. Notwithstanding the
foregoing, the Indemnitee and Indemnifying Party agree that they will attempt
and they intend that they and the arbitrators should use their best efforts in
that attempt, to conclude the arbitration proceeding and have a final decision
from the arbitrators within ninety (90) days from the date of selection of the
arbitrators; provided, however, that the arbitrators shall be entitled to extend
such 90-day period one or more times to the extent necessary for such
arbitrators to place a dollar value on any claim that may be unliquidated. The
arbitrators shall immediately deliver a written decision with respect to the
dispute to each of the parties, who shall promptly act in accordance therewith.
Each Indemnitee and Indemnifying Party to such arbitration agrees that any
decision of the arbitrators shall be final conclusive and binding, absent fraud
or manifest error, and that they will not contest any action by any other party
thereto in accordance with a decision of the arbitrators, except if such factors
are present. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section 10.11
by bringing suit in any court of competent jurisdiction.
(c) All fees, costs and expenses (including attorneys' fees and
expenses) incurred by the party that prevails in any such arbitration commenced
pursuant to this Section 10.11 or any judicial action or proceeding seeking to
enforce the agreement to arbitrate disputes as set forth in this Section 10.11
or seeking to enforce any order or award of any arbitration commenced pursuant
to this Section 10.11 may be used against the party or parties that do not
prevail in such arbitration in such manner as the arbitrators or the court in
such judicial action, as the case may be, may determine to be appropriate under
the circumstances. All costs and expenses attributable to the arbitrators shall
be allocated among the parties to the arbitration in such manner as the
arbitrators shall determine to be appropriate under the circumstances.
10.12. Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
52
10.13. Third Party Beneficiaries. No provision of this Agreement
shall create any third party beneficiary rights in any Person, including any
employee of Buyer or employee or former employee of Seller or any Affiliate
thereof (including any beneficiary or dependent thereof).
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
SELLER:
SKF USA INC.
By:
-------------------------------
Allen G. Belenson
Vice President
BUYER:
BREMEN BEARINGS, INC.
By:
-------------------------------
Michael S. Gostomski
Executive Vice President
RBC:
ROLLER BEARING COMPANY OF
AMERICA, INC.
By:
-------------------------------
Michael S. Gostomski
Executive Vice President
54
SCHEDULE 2.3
ASSUMED LIABILITIES
(a) Those Liabilities of the Business which are recorded and accrued as a
Liability on the June 30 Balance Sheet.
(b) All Liabilities and obligations of the Business arising after the
Effective Time under Contracts included in the Transferred Assets.
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "BPP ACQUISITION CORPORATION", CHANGING ITS NAME FROM "BPP ACQUISITION
CORPORATION" TO "RBC LINEAR PRECISION PRODUCTS, INC.", FILED IN THIS OFFICE ON
THE TWENTIETH DAY OF MAY, A.D. 1997, AT 3 O'CLOCK P.M.
/s/ Edward J. Freel
[ESTATE SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2633533 8100 AUTHENTICATION: 8484937
971173689 DATE: 05-28-97
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BPP ACQUISITION CORPORATION
(a Delaware corporation)
Michael S. Gostomski hereby certifies as follows:
FIRST: He is the Chief Financial Officer and Secretary of BPP
Acquisition Corporation, a Delaware corporation (the "Corporation").
SECOND: Article I of the Certificate of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
"The name of this corporation is:
RBC Linear Precision Products, Inc."
THIRD: The foregoing amendment of the Certificate of Incorporation
of the Corporation has been approved by the sole stockholder of the Corporation
by written consent in accordance with Sections 228 and 242 of the Delaware
General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Michael S. Gostomski, its Chief Financial Officer and
Secretary, as of this 15th day of May, 1997.
/s/ Michael S. Gostomski
-------------------------------------
Michael S. Gostomski
Chief Financial Officer and Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 pm 05/20/1997
971164960 - 2633533