EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
BEAR LINEAR LLC, SELLER,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ AND
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
COLLECTIVELY THE GUARANTORS
AND
WARNER ELECTRIC, LLC, BUYER
MAY 18, 2006
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (together with all the List of Schedules, the
List of Defined Terms, the Schedules, and the Exhibits, the "Agreement"), dated
as of May 18, 2006, is made by and between BEAR LINEAR LLC, an Illinois limited
liability company with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the
"Seller"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(collectively, the "Guarantors"), and WARNER ELECTRIC, LLC, a Delaware limited
liability company with offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
(the "Buyer"). All capitalized terms shall have the meanings ascribed to them
herein and in the List of Defined Terms attached to this Agreement.
BACKGROUND OF AGREEMENT:
A. Buyer agrees to purchase from Seller and Seller agrees to sell to Buyer
the Seller's business and substantially all of the Seller's assets upon all of
the terms and conditions of this Agreement.
B. Seller and Buyer are entering into this Agreement to set forth their
entire understanding with respect to such sale and purchase.
C. The Guarantors acknowledge that they will receive substantial benefits
from the performance by Seller and Buyer of the transactions contemplated by
this Agreement and join in this Agreement to affirm the covenants,
representations and warranties of Seller, to assure performance by Seller of its
indemnity obligations and to consent to the adjustments of Purchase Price and
rights of set-off to which Buyer is entitled under the terms of this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties contained herein, and intending to be legally bound hereby,
Seller and Buyer agree as follows:
1. SALE OF ASSETS.
1.1 Sale of Seller's Assets. Subject to the terms and conditions of
this Agreement, Seller shall sell and Buyer shall purchase all of the
properties, assets, names and business of Seller as a going concern, except
as set forth in Section 2 (the "Business"), and including, without
limitation:
1.1.1 Inventory and Raw Materials. Seller's entire inventory of
finished products, work in progress and raw materials.
1.1.2 Other Tangible Personal Property. All of Seller's other
tangible personal property.
1.1.3 Accounts Receivable. Seller's accounts receivable as of the
Closing Date.
1.1.4 Other Intangible Personal Property. Seller's other
intangible personal property, including without limitation the
following:
(i) All contracts (written and oral) to which Seller is a
party as Buyer, in its sole discretion, determines to acquire,
including sales or distribution agreements, license agreements,
service agreements, equipment leases, contracts or orders for the
sale of goods, contracts or orders for the purchase of equipment,
raw materials or goods and insurance policies (excluding policies
insuring the lives of Seller's officers);
(ii) All of Seller's trademarks, service marks, trade names
and franchises, and applications therefor;
(iii) All of Seller's copyrights, patent rights, trade
secrets, know-how, design and other proprietary information,
including, without limitation, all such rights with respect to
any process, design or machinery involved in the preparation of
Sellers' products; and
(iv) All of Seller's customer lists and customer records,
supplier lists and supplier records, and inventory and equipment
records.
1.1.5 Prepaid Expenses. All payments made by Seller with respect
to the Business that constitute prepaid expenses of the Business in
accordance with GAAP consistently applied.
1.1.6 Real Property. All of Seller's right, title and interest in
real property.
1.2 The Purchased Assets. The assets referred to in Section 1.1 above
are enumerated more specifically in Schedule 1.2 and are referred to
hereinafter as the "Purchased Assets."
2. RETAINED ASSETS. Notwithstanding the provisions of Section 1, the
Purchased Assets and the Business do not include, and Seller shall retain, the
assets specified in Schedule 2.0 (the "Retained Assets").
3. PURCHASE PRICE.
3.1 Purchase Price. The price (the "Purchase Price") to be paid by
Buyer to Seller for the Purchased Assets shall be Three Million Four
Hundred Forty-Four Thousand Eight Hundred Sixty-Four Dollars
($3,444,864.00), the assumption of those
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liabilities and obligations of Seller to be assumed by Buyer pursuant to
Section 5 and the additional deferred portion of the Purchase Price
established in accordance with Subsections 3.5.1 and 3.5.2 below. The
Purchase Price shall be paid as provided in Sections 3 and 4 hereof and
shall be applied by Seller to satisfy all indebtedness of Seller (including
line of credit debt, long-term debt, accrued rent, equity redemption rights
and deferred liabilities) existing as of the Closing Date, as that term is
defined in Section 11.1 below, with the exception of current trade debt
that Buyer may agree in writing to assume.
3.2 Closing Balance Sheets. At the Closing, the Seller shall deliver
an estimated balance sheet dated as of May 17, 2006, (a "Closing Balance
Sheet"), and an adjusted balance sheet for the Seller dated as of May 18,
2006 (the "Adjusted Closing Balance Sheet"). The Adjusted Closing Balance
Sheet for the Seller shall be created by deleting from the Closing Balance
Sheet of Seller the Retained Assets and the Retained Liabilities. The
Adjusted Closing Balance Sheet for the Seller shall show the Seller's
"Adjusted Net Asset Value at Closing," which shall be the amount by which
the Seller's total assets exceed the Seller's total liabilities, as
reflected on the Adjusted Closing Balance Sheet.
3.3 Allocation of Purchase Price. The Purchase Price shall be
allocated and reported for tax purposes by Buyer and Seller as provided in
Schedule 3.3
3.4 Purchase Price Adjustments.
3.4.1 Closing Inventory Count. On, or within five (5) days after,
the Closing Date, personnel assigned by each of Seller and Buyer shall
jointly inspect all inventory of the Business and prepare a physical
count of the inventory of the Business as of the Closing Date.
3.4.2 Working Capital Adjustment. As soon as practicable
following the Closing Date, but not later than sixty (60) days
thereafter, Buyer and Seller shall jointly determine the amount of the
Seller's Working Capital as of the Closing Date and shall execute a
certificate (the "Working Capital Certificate") setting forth the
final dollar amount of the Working Capital. If the dollar amount of
the Working Capital as reflected on the Working Capital Certificate is
less than the dollar amount of the Working Capital as reflected on
Seller's Adjusted Closing Balance Sheet, then Seller shall pay in cash
to Buyer the amount of the difference. Any payment to be made under
this Section shall be made, without interest thereon, within five
business days after final determination of the amount of the Working
Capital as of the Closing Date.
3.4.3 Definition of "Working Capital". For purposes of this
Agreement, "Working Capital" as of any date shall be deemed to be the
aggregate dollar value determined in accordance with GAAP consisting
of: (i) accounts receivable (net of an allowance for bad debts
determined in accordance with GAAP), (ii)
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inventory (net of an allowance for obsolete and damaged inventory) and
(iii) prepaid expenses, less (y) accounts payable and (z) accrued
expenses.
3.4.4 Arbitration of Disputes Over Working Capital. In the event
the parties fail to reach written agreement, within sixty (60) days
after the Closing Date, with respect to the determination of the
amount of the Working Capital as of the Closing Date, then the parties
shall (i) retain as arbitrator PriceWaterhouse Coopers or, failing its
agreement to act as arbitrator, such other independent accounting firm
as may be mutually agreed upon by the parties to review such matters
as to which written agreement has not been reached and (ii) request
such arbitrator to act as promptly as practicable in accordance with
its own rules to resolve all such disputed matters within thirty (30)
days after being retained by the parties. Upon resolution by such
arbitrator to its satisfaction of all such disputed matters, such
arbitrator shall cause to be prepared and shall deliver to the parties
a certificate setting forth the amount of Working Capital as of the
Closing Date. The decision of such arbitrator shall be final,
non-appealable and binding on Seller and Buyer, and the fees and
expenses, if any, of such arbitrator shall be paid one-half by Buyer
and one-half by Seller.
3.5 Additional Deferred Purchase Price Payments.
3.5.1 Minimum Deferred Purchase Price Payments. Buyer shall pay
to each of the Guarantors a minimum Deferred Purchase Price payment in
the amount of Three Hundred Thousand Dollars ($300,000.00) (each, a
"Minimum Deferred Purchase Price Payment") payable in three (3) annual
payments of One Hundred Thousand Dollars ($100,000.00) each as
provided in Section 3.5.3 hereinafter (each, an "Annual Minimum
Deferred Purchase Price Installment"). The initial installments of the
Minimum Deferred Purchase Price shall each be reduced by a
proportionate amount of the total Purchase Price reduction (estimated
to be approximately $23,323.00) resulting from inventory returned to
Seller before the Closing Date that may not be merchantable or
marketable by Buyer within sixty (60) days after the Closing Date.
3.5.2 Contingent Deferred Purchase Price Payments. In addition to
the Minimum Deferred Purchase Price Payments, Buyer shall pay to each
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Contingent Deferred
Purchase Price payments (the "Contingent Deferred Purchase Price
Payments") in an annual amount, if any, equal to EBITDA for the
Acquired Business during each of the periods covered in Section 3.5.3
below in excess (the "Annual EBITDA Excess") of $571,428.58 (the
"EBITDA Base Amount") multiplied by .175 (the "Annual Payment Rate").
The Annual EBITDA Excess shall not exceed the "Maximum Annual EBITDA
Excess" set forth in Section 3.5.3 below for purposes of calculating
the Contingent Deferred Purchase Price Payments.
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3.5.3 Periods of Payment and Maximum Contingent Deferred Purchase
Price Payments. The period for calculation of the Contingent Deferred
Purchase Price Payments for each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ are as follows, subject to the Maximum Annual EBITDA Excess
(the "MAEE"):
Maximum
Contingent Deferred
Annual Purchase Price Payment
Calendar Year MAEE Payment Rate for Each
------------- ------------- ------------ ----------------------
2006 $ 28,571.42 .175 $ 5,000.00
2007 $ 628,571.42 .175 $110,000.00
2008 $1,228,571.42 .175 $215,000.00
3.5.4 Time for Payment of Deferred Purchase Price Payments. The
Annual Minimum Deferred Purchase Price Payment payable to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ shall be paid out per the following: $100,000 at the time of
closing, $100,000 on the last business day of 2006 and $100,000 on the
last business day of 2007. The Annual Minimum Deferred Purchase Price
Payments shall be payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ on the last business day of calendar years 2006, 2007 and
2008. The annual Contingent Deferred Purchase Price Payments shall be
paid to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ within thirty (30)
days after EBITDA and the Annual EBITDA Excess (less corporate
allocations) have been calculated in each of the three (3) annual
calculation periods with cash payouts to be no later than March 31 of
each year, provided that the audited financial statements for the
Acquired Business, if required, have been completed.
3.5.5 Set-Off Against Minimum Deferred Purchase Price Payments.
Buyer shall be entitled to set off against the Minimum Deferred
Purchase Price Payments (i) any adjustments to the Purchase Price
based on a post-Closing reconciliation agreed upon by Buyer and Seller
(including the Working Capital Adjustments calculated in accordance
with Section 3.4 above and 12.1.5 below), and (ii) any amounts that
become payable to Buyer by Seller and by the Guarantors in accordance
with Sections 15.2 and 15.3 below.
4. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by delivery
from Buyer to Seller, on the Closing Date, of certified or bank cashier's
checks, or by wire transfer in immediately available funds, in the aggregate
amount of Three Million Four Hundred Forty-Four Thousand Eight Hundred
Sixty-Four Dollars ($3,444,864.00).
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5. LIABILITIES. As of and from the Closing Date, Buyer shall assume certain
of Seller's obligations and liabilities, limited, however to those liabilities
reflected on the Adjusted Closing Balance Sheet and expressly agreed in writing
to be assumed by Buyer (the "Assumed Liabilities"). The Assumed Liabilities
shall not include the liabilities listed on Schedule 5.0 attached hereto or any
other liabilities that the Buyer has not agreed in writing to assume. Except for
the Assumed Liabilities, Buyer shall not be responsible for, nor is Buyer
assuming, any debts, liabilities, or obligations of Seller, whether known,
unknown, contingent or otherwise, and whether arising before or after the
Closing Date (the "Retained Liabilities"). Without limiting the generality of
the foregoing sentence and by way of nonexclusive example, Buyer shall have no
liability to employees or former employees of Seller with respect to any
employment contract with Seller, any severance or change of control agreement or
accrued benefits under any employee benefit plan offered or adopted by Seller
prior to Closing, all of which are included in the Retained Liabilities.
6. INTENTION OF PARTIES REGARDING CLOSING. [Deleted by agreement of Buyer
and Seller].
7. REPRESENTATIONS AND WARRANTIES OF SELLER. As of the Closing Date, as
defined in Section 11.1 below, the Seller represents and warrants to Buyer as
follows:
7.1 Authority and Approvals.
7.1.1 Organization and Standing of Seller. The Seller is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Illinois, and has full limited
liability company power to own its properties and to carry on its
business as now being conducted. The Seller is duly qualified,
licensed, or domesticated and in good standing as a foreign
corporation and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such license, qualification or authorization, and a list of
those states where Seller is so licensed, qualified, or domesticated
is set forth in Schedule 7.1.1.
7.1.2 Limited Liability Company Approvals. The Seller has
obtained all authorizations and approvals, including, without
limitation, the authorization and approval of its Members and Managers
required for the execution and delivery of this Agreement as well as
the execution and delivery of all other instruments that are to be
executed by the Seller in connection with this transaction (the "Other
Seller Instruments") and the consummation of the transactions
contemplated by this Agreement. This Agreement and the Other Seller
Instruments are the valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective
terms, except to the extent that enforceability may be limited or
affected by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting generally the enforcement of
debtor's or contracting parties' rights, and to the extent that the
availability of the remedy of specific
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performance or of injunctive relief or other equitable relief with
respect to the enforceability of such obligations is subject to the
discretion of the court before which any proceeding therefor may be
brought.
7.1.3 No Violation of Other Instruments. Neither the execution
and delivery of this Agreement or the Other Seller Instruments by the
Seller nor the consummation of the transactions contemplated hereby
will conflict with, result in a breach of or constitute a default
under the certificate of organization and operating agreement of the
Seller or any contract, instrument, agreement or understanding to
which the Seller is a party or by which it or any of its properties is
bound, nor will it result in acceleration in the time for performance
of any obligation under any contract or instrument, nor will it result
in the creation or imposition of any lien, charge or encumbrance upon
any asset transferred under this Agreement, nor give rise to any right
of determination, nor will it result in the violation of any law,
statute, ordinance, rule or regulation applicable to the Seller.
7.1.4 Assumed and Fictitious Names. The attached Schedule 7.1.4
lists all assumed and fictitious names under which the Seller does
business, together with, for each such name, the list of the offices
in all states, counties, and all other localities where certificates
or other registrations have been filed, the dates such registrations
were filed, and the date when each of such registrations expires.
Seller has complied with all applicable laws and regulations regarding
assumed or fictitious name filings.
7.2 Financial Condition.
7.2.1 Financial Statements. Seller has furnished to Buyer copies
of its financial statements for the fiscal years ending on December
31, 2001, 2002, 2003, 2004 and 2005, respectively. Except as otherwise
disclosed to Buyer in writing, (A) such financial statements (i) are
complete and correct in all material respects, (ii) have been prepared
in accordance with generally accepted accounting principles,
consistently followed and applied throughout the periods involved, and
(iii) present fairly the financial condition of Seller as at their
respective dates and the results of Seller's operations for the
respective periods covered; and (B) the Closing Balance Sheet for
Seller, when delivered at Closing, will be complete and correct in all
material respects, will have been prepared on a basis consistent with
the foregoing financial statements for the Seller and will fairly
present the financial condition of the Seller as of the Closing Date.
7.2.2 Absence of Certain Changes.
(A) Since December 31, 2005, except as set forth in Schedule
7.2.2, the Seller has conducted its Business only in the ordinary
course and Seller has not:
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(i) Incurred or made any commitment to incur any material
obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, relating to the
Purchased Assets, except current liabilities for trade or
business obligations incurred in the ordinary course of business
and consistent with its prior practice, other than obligations
and liabilities arising out of or incident to this transaction or
contemplated by this Agreement;
(ii) Mortgaged, pledged or subjected to any lien, charge,
security interest or any other encumbrance or restriction (except
liens for current property taxes not yet due and payable) any
material portion of its property, Business or assets, tangible or
intangible, nor made any commitment to do any of the foregoing;
(iii) Received any notice of termination of any contract,
lease or other agreement or suffered any damage, destruction or
loss (whether or not covered by insurance) which, singly or in
the aggregate, has had or may have a materially adverse effect on
its assets, operations or prospects;
(iv) Experienced any actual or threatened employee strikes,
work stoppages, slowdowns or lockouts, or had any material change
in its relations with its employees, agents, customers or
suppliers;
(v) Transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, or
entered into any agreement or commitment relating to, any
material United States or foreign license, patent, copyright,
trademark, trade name, permit, consent, approval, invention,
design or similar rights, or modified any material existing
rights with respect thereto, nor made any commitments to do any
of the foregoing;
(vi) Made, or made any commitment to make, any material
change in the rate of compensation, commission, bonus, deferred
compensation arrangement or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation,
deferred compensation arrangement or severance or vacation pay,
to any of its officer's, employees, salesmen, manufacturer's
representatives, distributors or agents;
(vii) Made, or made any commitment to make, any material
capital expenditures or material capital additions or betterments
other than those of which Buyer has been informed in writing;
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(viii) Instituted, threatened to institute, settled or
agreed to settle, or suffered any adverse determination in, any
litigation, action or proceeding before any court, arbitrator or
governmental body relating to such Seller or its property or
products;
(ix) Made, or made any commitment to make, any change in its
selling, pricing, advertising or personnel practices inconsistent
with its prior practice;
(x) Entered into, or made any commitments to enter into, any
material transaction, contract or commitment other than in the
ordinary course of business except as to the transactions
contemplated by this Agreement;
(xi) Made, or made any commitments to make, full or partial
payment of any material outstanding obligations prior to the due
date thereof or in a manner inconsistent with prior practice;
(xii) Entered into or made any commitment to enter into any
contract, commitment or agreement under which it has outstanding
indebtedness, obligation or liability for borrowed money or for
the deferred purchase price of property;
(xiii) Sold, leased, subleased, assigned or transferred any
of its tangible or intangible assets, except in the ordinary
course of business, or cancelled any debts or claims, nor made
any commitments to do any of the foregoing;
(xiv) Suffered any substantial losses on the sale or
disposition of individual items of non-inventory property or
waived any rights of material value (other than in connection
with the cancellation of sales orders), whether or not in the
ordinary course of business, or received notice of cancellation
of any firm order in excess of $1,000; or
(xv) Made any change in its accounting procedures or
practices.
(B) Since December 31, 2005, except as set forth in Schedule
7.2.2:
(i) No material adverse change in the business, assets,
liabilities, financial condition, operations or prospects of
Seller has occurred, and no event has occurred or failed to occur
(nor, to the knowledge of the Seller, is any such event or
failure threatened), whether or not insured against, which has
had or may have, either alone or in conjunction with all other
such events and failures, a materially adverse effect on the
business, assets, liabilities, financial condition, operation or
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prospects of Seller, or on this Agreement or the consummation of
the transactions contemplated hereby, or on Buyer's ability to
conduct the business of Seller after the Closing as conducted by
Seller prior to the Closing; and
(ii) The Seller has not become aware of any fact or
circumstance which, either alone or in conjunction with all other
such facts and circumstances, has had or may have (so far as the
Seller can foresee) a materially adverse effect on the business,
assets, liabilities, financial condition, operations or prospects
of Seller, or on this Agreement or the consummation of the
transactions contemplated hereby, or on the ability of Buyer to
conduct the Business of Seller after the Closing as conducted by
Seller prior to the Closing, which fact or circumstance has not
been set forth or referred to in the financial statements
delivered pursuant to this Agreement or in any Schedule hereto or
in a writing specifically captioned "Disclosure Statement" and
delivered to Buyer prior to the date of this Agreement.
7.2.3 Undisclosed Liabilities. The Seller has no material
liabilities or obligations, whether accrued, absolute, contingent or
otherwise and whether due or to become due, and knows of no basis for
any claim against Seller for any such material liabilities or
obligations, except to the extent set forth on Schedule 7.2.3 or any
other Schedule to this Agreement, or in this Agreement itself, or in
Seller's financial statements or any other documents delivered to
Buyer.
7.2.4 Indebtedness to and from Officers, Managers and Others.
Except as set forth on Schedule 7.2.4, Seller is not indebted to any
of its managers, officers, employees or agents, except for amounts due
as normal salaries, wages, or reimbursement of ordinary business
expenses. Except as set forth on Schedule 7.2.4, no manager, officer,
employee or agent of Seller is indebted to Seller, except for ordinary
business expense advance not exceeding $500 for each individual.
7.2.5 Backlog. Schedule 7.2.5, which will be delivered and
attached to this Agreement as of Closing, is as of May 18, 2006, a
true, complete and accurate list of each signed but unfilled purchase
order or other written commitment for sale of the products and
services of Seller.
7.3 Description and Condition of Assets.
7.3.1 Inventory. The inventories reflected on the Adjusted
Closing Balance Sheets, are (i) stated at no more than the lower of
cost or market, (ii) usable and saleable in the ordinary course of
business of Seller at prevailing market prices without discount,
except for those items of inventory described as not so useable and
saleable in Schedule 7.3.1, and (iii) owned free and clear of all
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liens, claims, charges and encumbrances of any kind or nature.
Schedule 7.3.1 also presents a true and complete list of all locations
at which inventories are located as of the date of this Agreement, and
at which such inventories will be located on the Closing Date. Except
as disclosed in Schedule 7.3.1, purchase commitments by Seller for raw
materials and other materials to be used by Seller are not in excess
of six month's requirements or at prices in excess of current market
prices. Sales commitments for finished goods have all been made in the
ordinary course of Seller's Business. Since December 31, 2005, no
inventory items have been sold or disposed of except in the ordinary
course of Seller's business.
7.3.2 Machinery, Equipment and Other Tangible Personal Property.
The attached Schedule 7.3.2 is a true and complete list of all
tangible personal property owned by Seller or used by Seller in its
Business, except for (i) items of inventory that have been sold and
are held for delivery and (ii) items having an initial individual cost
of $500 or less. Schedule 7.3.2 also includes a separate list of all
tangible personal property owned by any third party (whether a
customer, supplier, or other person) for which Seller is responsible
together with copies of all agreements relating to such property. All
property of third parties in the possession of Seller is in such
condition that, upon the return of such property to its respective
owners, Seller will not be liable in any amount to these owners.
Except as stated in Schedule 7.3.2, the tangible personal property
owned by or used in the Business of Seller is in useable condition fit
for its intended purpose in all material respects, is in the actual
possession of Seller, and is owned free and clear of all liens,
claims, charges and encumbrances of any kind or nature.
7.3.3 Accounts Receivable. The attached Schedule 7.3.3 is a true,
complete, and accurate list of the amounts of all accounts receivable
of Seller as of a date no more than five (5) business days before
Closing, describing, in the case of each account debtor, the name of
the account debtor, the amounts owed, and the agings of the account.
All of the accounts receivable reflected on Schedule 7.3.3 are
accounts receivable acquired in the ordinary course of business from
customers believed to be commercially responsible, subject to no
asserted counterclaims, defenses, or setoffs, and collectible in the
ordinary course of business without resort to legal proceedings,
except as specified in Schedule 7.3.3. At least 97% of the accounts
receivable will be collected at the aggregate amount thereof within 90
days after the Closing, and the balance will be collected in full
within 180 days of the Closing. Except as specified in Schedule 7.3.3,
all of the accounts owned by Seller are free and clear of any liens or
encumbrances.
7.3.4 Real Property. The attached Schedule 7.3.4 contains a true
and complete description of all real property owned or leased by
Seller, with the leases separately so designated. Except as stated in
Schedule 7.3.4, Seller has good, marketable and legal title in fee
simple to, or a valid leasehold interest in,
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all of Seller's real property, free and clear of any mortgages, liens,
claims, charges, encumbrances or restrictions of any kind. No charges,
violations or claims to an interest in such property have been filed,
served, made or, to the knowledge of Seller, threatened, against or
relating to such property or structure referred to in Schedule 7.3.4
or any of the operations conducted at any such property or structure,
as a result of any violation or alleged violation of any applicable
ordinances, requirements, regulations, zoning laws or restrictive
covenants (including in any such case and without limitation those
relating to environmental protection) or as a result of any
encroachment on the property of others. Seller has no right or
obligation to acquire any interest in any real property. The buildings
and fixtures located on or comprising the real property described on
Schedule 7.3.4 are structurally sound with no known material defects
and are in good operating condition and repair. Neither the whole nor
any portion of such real property or leaseholds is subject to any
governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any governmental body or other
person with or without payment of compensation therefor, nor, to the
knowledge of Seller, has any such condemnation, expropriation or
taking been proposed.
7.3.5 Patents, Copyrights, Trademarks, Etc. Seller owns or
possesses licenses or other rights to use all patents, copyrights,
trademarks, service marks, service names, trade names, brand names,
trade dress, packaging, promotional material and advertising that are
required to conduct its Business as it is presently operated. A list
of such patents, copyrights, and other items described above is set
forth in Schedule 7.3.5. Seller knows of no adverse claims, liens,
charges or encumbrances of any kind affecting the items described in
Schedule 7.3.5. Seller represents and warrants that it is not
infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, service marks, service names, trade
names, brand names (whether registered or unregistered), patents,
patent rights, licenses or trade secrets, permits, approvals or
consents, trade dress, packaging, promotional material or advertising
owned or obtained by any other person or persons, and there is no
claim or action by any such person pending or, to the knowledge of
Seller, threatened with respect thereto or with respect to the rights
of Seller in any confidential information or trade secrets used in the
conduct of its Business.
7.3.6 Necessary Property. The real, tangible and intangible
personal property to be transferred or assigned to the Buyer at the
Closing constitutes all of such property necessary for the conduct of
Seller's Business in the manner and to the extent presently conducted
by it.
7.4 Contractual Relationships.
12
7.4.1 Labor and Employment Contracts. The attached Schedule 7.4.1
is a true and complete list of all employment agreements and other
labor agreements to which Seller is a party. Seller is not in breach
of any term or provision of, or in default under, any such agreement
or contract, and no event has occurred that, with the passage of time
or the giving of notice, or both, would constitute such a breach or
default. Seller has no knowledge or reason to know of any pending or
threatened demand for recognition, intention to hold an election of a
collective bargaining representative or labor dispute which might
disrupt Seller's continued operations. Schedule 7.4.1 contains a list
of all unfair employment or labor practice charges that are presently
pending, as well as a description and the status of each, filed with
any court or governmental authority by or on behalf of any employee of
Seller. No work stoppage exists at Seller or, to the knowledge of
Seller, is threatened.
7.4.2 Employee Benefit Plans and Arrangements. The attached
Schedule 7.4.2 is a true and complete list of all employment, profit
sharing, deferred compensation, severance pay, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement, welfare, or
incentive plans, contracts, arrangements or practices maintained or
contributed to by Seller and in which any one or more employees of
Seller participates or is eligible to participate, including, without
limitation, a complete list of all plans, agreements, arrangements or
practices which constitute "fringe benefits" to any of the employees
of Seller, including, but not limited to, vacation plans or programs,
sick leave plans or programs, group medical insurance, group life
insurance, disability insurance, workmen's compensation, supplemental
unemployment benefits, other insurance coverage (including any
self-insured arrangements) and related benefits, including, without
limitation, any employee benefit plan (as defined in Section 3(3) of
ERlSA), to which Seller is a party or by which it is bound
(collectively, the "Employee Plans"). Copies of such plans (and, if
applicable, related trust agreements) and all amendments and written
interpretations thereto, if any, have been furnished to Buyer together
with (i) the three most recent annual reports (Form 5500 including, if
applicable, Schedule B thereto) prepared in connection with any such
plan and (ii) the three most recent actuarial valuation reports
prepared in connection with any such plan. Each Employee Plan has been
maintained in substantial compliance with the requirements prescribed
by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Internal Revenue Code (the "Code"), that
are applicable to such Plans. No "prohibited transaction", as defined
in Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Employee Plan or any other employee benefit plan or
arrangement maintained by Seller that is covered by Title I of ERISA
and that could have a material adverse effect. No "accumulated funding
deficiency", as defined in Section 412 of the Code, has been incurred
with respect to any pension plan, whether or not waived. No condition
exists that could constitute grounds for
13
termination of the pension plan under Section 4042 of ERISA. Seller
has not incurred any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA,
which liability, or any portion thereof, could constitute a liability
of Buyer on or after the Closing Date. No civil or criminal action
brought pursuant to Part V of Title I of ERISA is pending or, to the
knowledge of Seller, is threatened against Seller, or any fiduciary of
any Employee Plan. All contributions and payments accrued under each
Employee Plan will be discharged and paid on or prior to the Closing
Date. All compensation and other benefit expenses arising with respect
to employees of Seller have been charged appropriately to Seller.
Except as set forth in the Schedule 7.4.2, there has been no amendment
to, written interpretation or announcement (whether or not written)
relating to, or change in employee participation or coverage under,
any Employee Plan that would increase materially the expense of
maintaining such Plan or Arrangement above the level of the expense
incurred in respect of such Plan or Arrangement for the year ended
December 31, 2005. Seller is not in breach of any term or provision
of, or in default under, any Employee Plan and no event has occurred
that, with the passage of time or the giving of notice, or both, would
constitute such a breach or default.
7.4.3 Insurance. The attached Schedule 7.4.3 is a true and
complete list of all insurance policies owned by Seller, all of which
are in full force and effect in the amounts stated in Schedule 7.4.3.
Except as otherwise provided in Schedule 7.4.3, Seller shall have
delivered to Buyer at the Closing all such insurance policies and
binders from Seller's brokers or insurance companies naming Buyer as a
named insured.
7.4.4 Other Contracts and Agreements. Except for the agreements
referred to in Schedules 7.4.1 and 7.4.2, the leases described in
Schedule 7.3.4, and the insurance policies listed in Schedule 7.4.3,
the attached Schedule 7.4.4 is a true and complete list categorized by
subject matter, of any and all contracts, agreements, arrangements or
understandings, written or oral, or other documents, if any, to which
Seller is, as of the date of this Agreement, a party, or by which it
or any of its assets or properties are bound. The Schedule shall
include, without limitation, all:
(a) purchase orders and agreements to or with any one
customer or supplier for the sale of materials, products or
supplies, except for those that are for a term of less than 12
months and that involve aggregate payments by or to such Seller
of less than $5,000;
14
(b) all employment contracts with any officer, consultant,
director or employee except for those terminable at will without
penalty or legal obligation to make payments;
(c) all contracts for construction or for the purchase of
equipment, machinery and other items that under generally
accepted accounting principles constitute capital expenditures;
(d) all contracts relating to the rental or use of
equipment, other personal property or fixtures, except for such
contracts involving payment of annual rentals or sums in any one
case of less than $1,000;
(e) all contracts relating in any way to direct or indirect
indebtedness for borrowed money, including intercompany debt
between Seller and any of Seller's affiliates or equity owners,
or evidenced by a bond, debenture, note or other evidence of
indebtedness (whether secured or unsecured) of or to Seller,
including, but not limited to, indebtedness by way of lease or
installment purchase arrangement, guarantee, purchase price
discount obligations, undertaking on which others rely in
extending credit, or otherwise, and all conditional sales
contracts, chattel and purchase money mortgages and other
security arrangements with respect to any equipment, other
personal property or fixtures, used or owned by such Seller,
except in each case for contracts individually involving not more
than $1,000;
(f) all contracts substantially limiting the freedom of
Seller to engage in or to compete in any line of business or with
any person or in any area or to use or disclose any information
in its possession (other than routine supplier and customer
confidentiality agreements);
(g) all license agreements, either as licensor or licensee;
(h) all joint venture contracts and agreements involving a
sharing of profits;
(i) all agreements granting to others the right to
manufacture or distribute Seller's products, including sales
agency agreements, to the extent not included above;
(j) all other contracts, except those that (i) are
cancelable on 30 day's or less notice without any penalty or
other financial obligation or (ii) if not so cancelable, involve
annual aggregate payments by or to Seller of $5,000 or less.
15
All of the agreements and contracts listed in Schedules 7.4.1, 7.4.2
and 7.4.4, the leases described in Schedule 7.3.4, and the insurance
policies listed in Schedule 7.4.3 (collectively, together with those
contracts omitted from Schedule 7.4.4 solely pursuant to the express
exceptions contained in Sections 7.4.4(a), (b), (d), (e) and (j), the
"Contracts") are valid and binding obligations of the parties to them,
and there are no liabilities arising from any breach or default prior
to the date of this Agreement of any provision of any such contract or
agreement by any party. No event has occurred that, with the passage
of time or the giving of notice, or both, would constitute a breach or
default by any party to any such contract or agreement or would cause
the acceleration of any obligation of any party or the creation of a
lien or encumbrance upon any asset of Seller or used in its business,
or would give rise to any right of termination. Seller is not a party
to, nor is Seller or any of its properties bound by, any contract,
lease, agreement or commitment, the performance of which could have a
materially adverse effect on the business condition, financial or
otherwise, operations or prospects of Seller.
7.4.5 Third Party Consents. Except as described in Schedule
7.4.5, no consent or other agreement of any persons other than Seller
is required for the transfer and assignment to Buyer of the assets to
be transferred under this Agreement and the Other Seller Instruments.
Any such consent or agreement that is required shall, as of the
Closing Date, have been duly obtained by Seller and copies supplied to
Buyer.
7.5 Conduct of Operations.
7.5.1 Customers. The attached Schedule 7.5.1 is a true and
complete list of all customers that purchased inventory from Seller
for the 24-month period ending December 31, 2005.
7.5.2 Suppliers. The attached Schedule 7.5.2 is a true and
complete list of all suppliers of goods and services to Seller (except
that employees of Seller shall be excluded from the Schedule).
7.5.3 Employees. Seller neither believes nor has reason to
believe that any officer or executive of, or any group of employees
of, Seller has or have any plans to terminate his, her, or their
employment with Seller. Attached as Schedule 7.5.3 is a list of all
employees of Seller and their respective wages.
7.5.4 Accrued Employee Benefits. None of Seller's employees is
now, or will by the passage of time hereafter become, entitled to
receive any vacation time, vacation pay or severance pay attributable
to services rendered prior to the Closing except as set forth in the
Schedule 7.5.4.
7.5.5 Product and Field Warranties. Seller has provided Buyer
true and accurate copies of each of Seller's standard form of product
warranty and
16
guaranty now outstanding and now being issued by Seller with respect
to its products. Schedule 7.5.5 attached hereto contains Seller's
policy with respect to the return of goods sold by Seller.
7.5.6 Litigation. Except as stated in the attached Schedule
7.5.6, there is no action, proceeding, governmental investigation or
other legal or administrative proceeding pending or, to the knowledge
of Seller, threatened, against or relating to Seller, or its officers
or employees, or its properties, assets or business or the
transactions contemplated by this Agreement, and Seller knows of no
basis for the same.
7.5.7 Taxes. Seller has no tax deficiency or claim outstanding,
proposed or assessed against it with respect to any taxes, including,
without limitation, income, property, sales, use, franchise, added
value, employee's income withholding and social security taxes,
imposed by the United States or by any foreign country or by any
state, municipality, subdivision or instrumentality of the United
States or of any foreign country, or by any other taxing authority,
and Seller has made timely filings of all tax returns due to all such
taxing authorities. The federal income tax returns of Seller have been
examined and accepted by the Internal Revenue Service (or closed by
applicable statutes) for its fiscal years as set forth in Schedule
7.5.7.
7.5.8 Permits; Governmental Approvals. Seller possesses all
franchises, licenses, permits and other authority as are necessary for
the conduct of Seller's business and is not in default under any of
such franchises, permits, licenses or other authority. Except as
specified in Schedule 7.5.8, no approval, consent, authorization or
other order of, and no consent, designation, filing, registration,
qualification or recordation with, any governmental authority is
required (i) in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, or (ii) to enable Buyer to continue the operation
of Seller's business in all material respects as conducted prior to
the Closing Date.
7.5.9 Operations in Conformity With Law. Except as provided in
the attached Schedule 7.5.9, Seller's operations, as presently
conducted, are not in material violation of any law or regulation,
including, without limitation, any applicable building code, zoning
ordinance, law relating to the employment of labor (including
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, age, pregnancy, disability and sex
discrimination and the payment of social security and other taxes),
regulation of the Federal Occupational Safety and Health
Administration, or any law regarding protection of the environment or
the use, storage or disposal of hazardous wastes. Seller does not know
or have reason to know of any basis on which Seller's present
operations when continued by Buyer would be held to violate any such
law or
17
regulation now in effect or scheduled to become effective. Schedule
7.5.9 contains a list of all notices from and related reports to
government authorities within three years prior to the date hereof
relating to the subject matter of this Section 7.5.9.
7.5.10 Environmental Matters. Except as provided in attached
Schedule 7.5.10:
(a) Seller is in compliance in all material respects with
applicable Environmental Laws (as defined below) and has not
received either written or oral notice from any governmental
entity that Seller is a potentially responsible party for a
federal or state environmental clean-up or for corrective action,
nor received any request for information from any governmental
entity under any Environmental Law with respect to any of the
real property described in Schedule 7.3.4 or any part thereof.
(b) There is no litigation or other proceeding pending or
threatened against Seller under any Environmental Law with
respect to any of the real property described in Schedule 7.3.4
or any part thereof.
(c) No Regulated Substances have been or are being
generated, used, processed, treated, stored, released,
transported or disposed of by Seller, except in compliance in all
material respects with applicable Environmental Laws.
(d) Seller has no knowledge of any unresolved notice,
citation, summons, complaint, demand or other communication
(written or oral) from any governmental entity or other person
regarding (i) any alleged violation of any Environmental Law with
respect to any of the real property described in Schedule 7.3.4
or any part thereof, or (ii) any alleged liability in connection
with any release or remediation of any Regulated Substances,
including any investigatory, remedial, or corrective obligations
related in any way to the real property described in Schedule
7.3.4 or any part thereof.
(e) None of the following exist at any of the real property
described in Schedule 7.3.4 or any part thereof: (i) underground
storage tanks, (ii) asbestos-containing materials in any form or
condition, (iii) materials or equipment contain polychlorinated
biphenyls, or (iv) landfills, surface impoundments or disposal
areas.
(f) No person who has owned, leased, occupied or used any of
the real property described in Schedule 7.3.4 or any part thereof
has generated, used, processed, treated, stored, released or
disposed of any
18
Regulated Substances on such properties in violation of
Environmental Laws.
(g) No Regulated Substances are present on, under or at any
of the real property described in Schedule 7.3.4 or any part
thereof (including without limitation any body of water located
thereon, or adjacent thereto or any groundwater located
thereunder), or in any improvement located thereon in quantities
or at levels that require reporting or remediation under any
applicable Environmental Law.
(h) Neither this Agreement nor consummation of the
transactions that are the subject of this agreement will result
in any obligations for state investigation or clean-up, or
notification to or the consent of governmental entities or
third-parties, pursuant to any of the "transaction triggered" or
"responsible property transfer" provisions of any Environmental
Law.
(i) The Seller has not assumed, guaranteed or otherwise
become responsible for the liability of any other person or
entity for any liability under any Environmental Law with respect
to any of the real property described in Schedule 7.3.4 or any
part thereof.
As used herein the term "Environmental Laws" shall mean any Law
as amended and as now in effect (including but not limited to the
Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq., the
Clean Air Act, 42 U.S.C. Sections 7401 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801 et seq., and the Federal Insecticide
Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et seq. and their
state, county, and municipal counterparts), or permit, license or
other operating authorization relating to (i) the protection of the
environmental or natural resources, (ii) clean air, clean water,
hazardous and solid waste disposal, safe drinking water, endangered
species, oil spill prevention, groundwater protection, and toxic
substances control, the protection of the public health, safety or
welfare from actual or potential exposure (or the effects of exposure)
to any actual or potential release, presence, discharge, disposal or
emission (whether past or present) of any Regulated Substance, or
(iii) the production, generation, manufacture, processing, labeling,
testing, control, distribution, use, treatment, storage, disposal,
transport or handling of any Regulated Substance.
As used herein the term "Regulated Substances" shall mean any
petroleum hydrocarbons or petroleum products or byproducts, any
pesticides, toxic chemicals, asbestos or asbestos-containing
materials, polychlorinated biphenyls,
19
toxic mold and any other chemical material, substance or waste that is
identified (by listing or characteristic) and any other substance
regulated by (or the clean-up of which can be required under) or that
constitutes, in whole or in part, a pollutant, contaminant or toxic or
hazardous substance or waste under, or the generation handling, use,
processing, treatment, storage, release, transport or disposal of
which is regulated by, any Environmental Law.
7.5.11 Absence of Certain Business Transactions. Except as set
forth on Schedule 7.5.11, all transactions by Seller with third
parties are and have been conducted on an arm's length basis. Seller
has no knowledge of any favorable pricing, purchase or lease
arrangements that will not continue to be available to Buyer after the
Closing. Except as disclosed in Schedule 7.5.11, neither Seller nor
any manager, officer or employee of Seller or any relative or company
controlled individually or collectively by Seller, has any interest in
(i) any property, real or personal, tangible or intangible, including,
but not limited to, any invention, patent, trade name or trademark
used in connection with or pertaining to Seller's Business or (ii) any
creditor, supplier, customer, manufacturer, representative or
distributor of Seller's products.
7.5.12 Brokers and Finders. Neither Seller nor any person acting
on behalf of Seller has employed any broker, agent or finder or
incurred any liability for any brokerage fees, agent's commissions or
finder's fees in connection with the transactions contemplated by this
Agreement.
7.6 Adequacy of Representations and Warranties. Neither the warranties
and representations made by Seller in this Agreement and the Other Seller
Instruments, nor the financial statements furnished by Seller, nor any
certificate or memorandum furnished or to be furnished by Seller, or on its
behalf, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the
statements herein or therein not misleading. All representations and
warranties of the Seller shall be true on and as of the Closing Date with
substantially the same effect as if made on and as of such date.
7.7 Affirmation by Guarantors. The Guarantors affirm, represent and
warrant that all of the representations and warranties of Seller enumerated
in this Section 7 are true and correct in all material respects.
8. COVENANTS OF SELLER AND GUARANTORS.
8.1 Covenant Not to Compete; Confidential Information.
8.1.1 After the Closing Date, neither Seller nor the Guarantors
shall compete directly or indirectly with the business of Buyer in any
country in which any product manufactured, marketed or sold by Buyer
is sold (the "Geographic Area"). In addition, neither the Seller nor
any of the Guarantors shall (without
20
limiting the generality of the restriction from competing in the
Geographic Area) (a) engage in or be interested in, directly or
indirectly (whether as owner of, partner, stockholder or capital
investor in, lender, advisor or consultant to, sales or marketing
representatives for, or otherwise, either alone or in association with
others) any business or enterprise competitive with the Business
currently conducted by Seller; (b) solicit any employees of Buyer to
leave the employ of Buyer; (c) solicit any customer of Buyer with
respect to any product or service currently furnished, made or sold by
Seller; or (d) disclose any proprietary information or trade secrets
relating to the Business purchased by Buyer to any party; provided
that the foregoing shall not prohibit any of the Guarantors from
owning in the aggregate less than 5% of the outstanding publicly
traded stock of any corporation. The obligations of Seller and the
Guarantors under this Section 8.1.1 shall continue in full force and
effect and be binding on the Guarantors, their respective successors,
heirs, executors, administrators and assigns for a period of two years
commencing with the Closing or such longer period of time as is set
forth in the respective Employment Agreements (as such term is defined
in Section 12.3 below) entered into by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ and the Buyer. To the extent that any clause, covenant,
limitation or restriction contained in this Section 8.1.1 is
inconsistent with any clause, covenant, limitation or restriction set
forth in Section 8 of the Employment Agreements, the Employment
Agreements shall govern the duties and obligations of the parties.
8.1.2 Seller and the Guarantors acknowledge that a breach of the
covenant not to compete contained in this Section will cause
irreparable harm to Buyer in an amount or amounts difficult to
ascertain and accordingly, in the event of a default under this
Section, in addition to any other relief to which Buyer may be
entitled, Buyer shall be entitled to injunctive relief offered by any
court of competent jurisdiction.
8.1.3 Seller and the Guarantors shall hold in strict confidence
all confidential data and information obtained from Buyer, or any
officer, agent or representative of Buyer.
8.2 Change of Name. It being understood by the parties that among the
assets being acquired by Buyer is the name of Seller and all contractions
or variations of that name, Seller agrees not to use any such name after
the Closing Date. As of the Closing Date, Seller will amend its certificate
of organization and take such other steps as may reasonably be required so
as to comply with this Section, and will assist Buyer in taking any action
that will preserve the unlimited use of Seller's name by Buyer. Seller
agrees to take any and all reasonable action requested by Buyer so as to
enable Buyer to secure all of Seller's right, title and interest in and to
the use of all such names in any jurisdiction in which Seller has used such
name and elsewhere in connection with all business or activities that are
or may be conducted by Buyer, including, without
21
limitation, furnishing a written consent to the adoption by Buyer of the
name "Bear Linear" for filing in any jurisdiction in which such consent is
required to be filed.
8.3 Access to Premises and Information. Prior to the Closing, Seller
shall permit Buyer and its authorized representatives to have full access
to the premises and books and records of Seller and shall allow Buyer at
any time to make copies of such financial and operating data and other
information with respect to Seller's business and properties as Buyer shall
reasonably request. Any investigation or inquiry made by Buyer shall not in
any way affect or lessen the representations and warranties made by Seller
in this Agreement or their survival of the Closing. Seller's obligations to
provide information to Buyer shall be subject to Seller's receipt of
undertakings satisfactory to Seller that Buyer will keep such information,
including business information as well as technical information, in
confidence until the Closing, and in the event that Closing does not take
place, that Buyer will return all copies of non-public documentary
information, will not use any of such information, and will hold all
confidential information in confidence until the same shall become public
by or through persons other than Buyer. Seller shall, for a period of seven
(7) years from the Closing Date, keep available for Buyer's inspection
those records, if any, retained under Section 2.
8.4 Limited Liability Company Approvals. At the Closing, Seller will
furnish to Buyer copies of (i) the resolutions of Seller's Board of
Managers appropriately certified by Seller's Secretary, reciting that the
execution and delivery of this Agreement has been authorized and that
appropriate action has been taken to approve this Agreement and the
transactions contemplated by it, and (ii) certified copies of the
resolutions of its members approving and authorizing this Agreement and its
implementation.
8.5 Expenses of Acquisition Transactions; Transfer Taxes. Seller shall
pay all its expenses in connection with the transactions contemplated by
this Agreement, including, without limitation, the fees and expenses of its
legal counsel and accountants and its liquidation expenses, if any. Seller
shall also pay any taxes payable in connection with the transfer of assets
contemplated by this Agreement.
8.6 Accounts Receivable Certificate. Seller shall furnish to Buyer at
the Closing, as Schedule 8.6, an Accounts Receivable Certificate signed by
Seller's President or Treasurer, which Certificate shall be a complete
schedule of all of Seller's accounts receivable dated no earlier than seven
(7) days prior to the Closing, describing, in the case of each account
debtor, the name of the account debtor, the amounts owed and the agings of
the account. Seller shall also deliver to Buyer, as a portion of the
records to be transferred to Buyer at Seller's place of business, records
indicating the address of each such account debtor and the dates on which
all shipments to such account debtor were made prior to the date of
Seller's Accounts Receivable Certificate for which full payment has not
been received.
8.7 Notice of Breach of Representation or Warranty. Promptly upon
Seller becoming aware of the occurrence of, or the impending or threatened
occurrence of, any
22
event that would cause or constitute a breach, or would have caused or
constituted a breach had such event occurred prior to the date hereof, of
any of the representations and warranties of the Seller contained in or
referred to in this Agreement, Seller shall give detailed written notice
thereof to Buyer and shall, prior to the Closing Date, use its best efforts
to prevent or promptly remedy the same.
8.8 Additional Information. Seller shall deliver such additional
information and documents, and shall revise schedules to this Agreement, as
Buyer may reasonably request.
9. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
that:
9.1 Organization of Buyer. Buyer is a limited liability company duly
organized and validly existing and in good standing under the laws of the
State of Delaware and has the limited liability company power to execute,
deliver and perform this Agreement.
9.2 Limited Liability Company Approvals. Buyer has obtained all
limited liability company authorizations and approvals, including, without
limitation, the authorization and approval of its Members and Managers,
required for the execution and delivery of this Agreement, as well as the
execution and delivery of all other instruments that are to be executed by
Buyer in connection with this transaction (the "Other Buyer Instruments")
and the consummation of the transactions contemplated by this Agreement.
This Agreement and the Other Buyer Instruments are the valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except to the extent that enforceability may be limited
or affected by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting generally the enforcement of debtor's or
contracting parties' rights, and to the extent that the availability of the
remedy of specific performance or of injunctive relief or other equitable
relief with respect to the enforceability of such obligations is subject to
the discretion of the court before which any proceeding therefor may be
brought.
9.3 Brokers and Finders. Neither the Buyer nor any person acting on
behalf of the Buyer has employed any broker, agent or finder or incurred
any liability for any brokerage fees, agent's commissions or finder's fees
in connection with the transactions contemplated by this Agreement.
10. COVENANTS OF BUYER.
10.1 Information Kept Confidential by Buyer. Until the transactions
contemplated by this Agreement are consummated, Buyer and its respective
Members, Managers, officers, agents and representatives shall hold in
strict confidence all confidential data and information obtained from
Seller or any of Seller's officers, agents, or representatives, except as
may be necessary to arrange for Buyer's financing of the
23
transactions contemplated by this Agreement or as otherwise agreed by Buyer
and Seller in writing.
10.2 Records of Seller. Buyer shall, for a period of seven (7) years
from the Closing, permit Seller or Seller's authorized representatives to
have reasonable access for purposes not inconsistent with this Agreement to
those records of Seller transferred from Seller to Buyer under the terms of
this Agreement.
11. THE CLOSING; ACQUISITION PROVISIONS.
11.1 Definition. The closing shall take place at the offices of Altra
Industrial Motion, Inc., at 11:00 a.m. on May 18, 2006 (sometimes referred
to as the "Closing Date" or as the "Closing"). The parties may by mutual
agreement set forth in writing any different time or place for the Closing
and may, but shall not be required to, extend the Closing Date. Time shall
be of the essence of this Agreement.
11.2 Transfer of Title. On the Closing Date, Seller will deliver to
Buyer bills of sale with appropriate warranties of title, assignments of
leasehold interests and deeds to real property interests, certificates of
ownership of vehicles and such other good and sufficient evidence of
transfer and conveyance as, in the reasonable opinion of Buyer's counsel,
shall be sufficient to transfer all the assets, properties and rights to be
transferred under this Agreement, including without limitation, patents,
copyrights, trademarks, and other intangibles, and to vest in Buyer good
and merchantable title to such property, subject only to the liens,
encumbrances and claims reflected in Schedules 7.3.2, 7.3.4, and 7.3.5. At
any time and from time to time after the Closing Date, upon request of
Buyer and without the payment of any further consideration, Seller shall
duly execute, acknowledge and deliver all such further assignments,
conveyances, and other instruments of transfer and other assurances and
documents and will take such other action consistent with the terms of this
Agreement as reasonably may be required by Buyer for the purpose of better
assigning, transferring, and conveying to Buyer or reducing to possession
of Buyer any or all of the assets transferred under this Agreement. At the
request of Buyer, Seller shall also prosecute or otherwise enforce in its
own name but for the benefit of Buyer, and at Buyer's expense (unless
prosecution or enforcement is necessitated by default of Seller), any and
all claims or rights in the name of Seller which, or the benefits of which,
are intended or purported to be transferred to Buyer under this Agreement
and which are required to be prosecuted or otherwise enforced in such
Seller's name. To the extent that the assignment of any contract whose
assignment to Buyer is provided for by this Section is not permitted
without the consent of any other party and such consent is not obtained
prior to Closing, (1) Seller shall use its best efforts to obtain such
consent and, if such consent is obtained, shall execute and deliver an
appropriate instrument effecting such assignment; and (2) if such consent
is not obtained, Seller shall cooperate with Buyer in any reasonably
requested manner to provide to and for Buyer the benefits under any such
contract, including, without limitation, enforcement of any and all rights
of Seller arising out of any breach or cancellation by any other party.
24
Nothing contained in this section shall be construed as modifying the
provisions of Section 7.4.5.
12. CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligations of Buyer are
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions, compliance with which, or the occurrence of which, may be
waived in whole or in part by Buyer in writing.
12.1 Representations, Warranties and Covenants; Certificates.
12.1.1 All representations and warranties of the Seller contained
in this Agreement shall be true and complete as of the Closing Date as
if made at and as of such date, except for changes permitted by the
provisions of this Agreement.
12.1.2 Seller shall have performed and satisfied all covenants
and conditions required by this Agreement to be performed or satisfied
by it on or prior to the Closing Date.
12.1.3 Buyer shall have received a certificate dated the Closing
Date to the effect that all representations and warranties of the
Seller contained in this Agreement are true and complete on such Date,
with the same effect as if made on such Date, except for changes
permitted by the provisions of this Agreement, and that Seller has
performed and satisfied all covenants and conditions required to be
performed or satisfied by it on or prior to the Closing Date, which
certificate shall be signed by Seller's President and Treasurer. The
delivery of any such certificate shall in no way diminish any
warranties and representations of the Seller contained in this
Agreement.
12.1.4 Seller shall have achieved cumulative revenues of Four
Million Four Hundred Fifty Thousand Dollars ($4,450,000.00) and EBITDA
of Two Hundred Seventy-One Thousand Dollars ($271,000.00) for the
calendar year ended on December 31, 2005.
12.1.5 As of Closing, Seller shall have sufficient Working
Capital as determined by Buyer, in its sole discretion, to operate the
Business in the ordinary course and to pay the Assumed Liabilities as
they become due and payable. Buyer and Seller have agreed that working
capital in the amount of Four Hundred Sixty-Nine Thousand Eight
Hundred Sixty-Four Dollars ($469,864.00) is sufficient to satisfy the
foregoing condition provided that the sale and purchase transaction is
consummated on or before May 19, 2006, and that the minimum working
capital requirement shall increase by Ten Thousand Dollars
($10,000.00) per week if Closing is postponed until after May 19,
2006.
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12.2 Opinion of Counsel. Sellers shall have furnished Buyer a
favorable opinion of Seller's counsel, Pearson Van Houten PLC, dated the
Closing Date, in form and substance satisfactory to Buyer and Buyer's
counsel, to the effect that:
12.2.1 Seller is a limited liability company duly organized and
validly existing and in good standing under the laws of the State of
Illinois and has all requisite power to own its assets and conduct its
Business as it is now being conducted, to execute and deliver this
Agreement and all agreements provided for in this Agreement, and to
consummate the transactions contemplated by it;
12.2.2 The execution and delivery of this Agreement and the Other
Instruments by Seller and the consummation of the transactions
contemplated by this Agreement do not and will not:
(a) result in a breach of any term or provision of or
constitute a default under the certificate of organization or the
operating agreement of Seller, or under any indenture, mortgage,
lease, agreement, instrument or understanding to which Seller is
a party or by which it or any of its properties may be bound;
(b) result in the acceleration of any commitment or
obligation of Seller;
(c) result in the creation or imposition of any lien, charge
or encumbrance upon any asset or property of Seller; and
(d) violate any provisions of law or rule or regulation, or
violate any order, decree or other requirement or restriction or
require the consent or approval of any court or any judicial,
arbitral or governmental authority or other regulatory authority.
12.2.3 The assets of Seller and those used in the Business
(including, without limitation, those located on the property of third
parties) are not subject to any liability, chattel mortgage,
conditional sales agreement, pledge, lien, charge or encumbrance,
except as set forth in this Agreement or in Schedules 7.3.2, 7.3.4,
and 7.3.5;
12.2.4 No consent or other agreement of any persons other than
Seller is required for the transfer and assignment to Buyer of the
assets to be transferred under this Agreement or, if required, all
such consents and agreements have been duly obtained by Seller and
copies supplied to Buyer; and the bills of sale and other instruments
of transfer, assignment and delivery tendered to Buyer on the Closing
Date are in all respects in compliance with this Agreement and are
sufficient in form to vest Buyer with good title to all such assets
and business as provided to be transferred;
26
12.2.5 No consent, approval, authorization, or order of any
governmental agency or body or of any court not obtained and in effect
on the Closing Date is required for the execution and delivery by
Seller of this Agreement or for the consummation by Seller of the
transactions contemplated by it;
12.2.6 This Agreement and the Other Seller Instruments have been
duly and validly authorized, executed and delivered by Seller and are
valid and binding agreements of Seller, enforceable in accordance with
their respective terms, except to the extent limited by bankruptcy,
insolvency or other laws of general application relating to the
enforcement of creditor's rights; and, if so required, the members of
Seller have approved this Agreement and the transactions contemplated
by it, and no further action or actions on the part of the members is
required;
12.2.7 To the knowledge of counsel, after due inquiry, but not
including, unless otherwise indicated, review of the docket of any
court, no action, suit or proceeding has been instituted or threatened
prior to or at the Closing Date in or before any court or governmental
authority (i) against or in any other way pertaining to the sale by
Seller to Buyer of the Purchased Assets and the Business to be
transferred under this Agreement or that would enjoin or make illegal
the performance and consummation of this Agreement and the
transactions contemplated hereby; or (ii) that, if adversely
determined, would have a material adverse effect on the financial
condition, business or prospects of Seller, except as set forth in the
attached Schedule 12.2.7.
12.3 Employment Agreements and/or Noncompetition Agreements by Key
Employees. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall have entered
into an employment and non-competition agreement with Buyer in the form of
Exhibit 12.3 attached hereto (the "Employment Agreement(s)").
13. CONDITIONS OF SELLER'S OBLIGATION TO CLOSE. The obligations of Seller
under this Agreement are subject to the condition that all representations and
warranties of Buyer contained in this Agreement shall be true as of the Closing
Date with the same force and effect as if made as of such date, and Buyer shall
have performed and satisfied all covenants and conditions of this Agreement to
be performed or satisfied by Buyer at or prior to the Closing Date.
14. TERMINATION OF AGREEMENT.
14.1 Permitted Termination. This Agreement may be terminated:
(a) by the mutual consent of Seller and Buyer;
27
(b) by either Seller or Buyer if Closing has not occurred on or
before May 31, 2006; provided, however, that a party then in breach of
its obligations under this Agreement shall not have the right to
terminate this Agreement;
(c) by Buyer if any of the representations and warranties of
Seller contained in Section 7 hereof were incorrect in any material
respect when made or become incorrect in any material respect; and
(d) by Seller if any of the representations and warranties of
Buyer contained in Section 9 hereof were incorrect in any material
respect when made or become incorrect in any material respect.
14.2 Return of Documents. If this Agreement is terminated for any
reason pursuant to Section 14.1 above, each party shall return to the other
party all documents and copies thereof which shall have been furnished to
it by such other party, or with the agreement of the other party, shall
destroy all such documents and copies thereof and certify in writing to the
other party any such destruction.
14.3 Limitations on Remedies. If this Agreement is terminated by
Seller or Buyer as permitted under Section 14.1 above and not as a result
of a breach of a representation or warranty or the failure of any party to
perform its obligations hereunder, such termination shall be without
liability of any party. If a party terminates this Agreement as a result of
a breach of a representation or warranty by the other party or the failure
of the other party to perform its obligations hereunder, the nonbreaching
party shall, in addition to other remedies provided by this Agreement, at
law, or in equity, be entitled to reimbursement from the breaching party
for all expenses incurred by the nonbreaching party in connection with this
Agreement and the transactions contemplated hereby.
15. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION.
15.1 Statements Deemed Representations and Warranties. All statements
contained in any exhibit, schedule, document, or certificate or Other
Seller Instrument or Other Buyer Instrument delivered by or on behalf of
any party, or in connection with the transactions contemplated by this
Agreement, shall be deemed representations and warranties by such party.
All representations and warranties made by the parties to this Agreement or
made in this Agreement shall survive (i) any investigations made by or on
behalf of the parties; (ii) the execution and delivery of this Agreement;
and (iii) the Closing.
15.2 Indemnification of Buyer by Seller. Seller agrees to indemnify
Buyer and hold it harmless against and in respect of any and all claims,
losses, expenses, obligations and liabilities (including costs of
collection and reasonable attorney's fees) that arise or result from or are
related to (i) the failure of any representation or warranty of Seller
under this Agreement, or any agreement provided for by it, to be accurate
or complete,
28
(ii) any liability or liabilities of Seller, whether known or unknown,
accrued or contingent, not assumed by Buyer under Section 5.0, (iii) the
failure of the Seller to perform any of its covenants under this Agreement
or any Other Seller Instrument, (iv) the failure of any account debtor to
pay in full the amount of any account receivable included in Seller's
Accounts Receivable Certificate, as defined in Section 8.6, or any portion
of any account receivable, within six months of shipment, provided that
Buyer shall use its best efforts to collect all accounts receivable
purchased from Seller, but that such best efforts shall not include
instituting legal proceedings, and provided further that, if Seller
indemnifies Buyer for any account receivable under this section or if Buyer
invokes the provisions of Section 15.4 regarding any account receivable,
Buyer shall assign to Seller all of Buyer's rights to such account.
15.3 Guaranty of Seller's Indemnity Obligation. The Guarantors,
absolutely, unconditionally, jointly and severally as between themselves
with Seller, guarantee the complete, full and prompt performance by Seller
of its obligations to indemnify Buyer as provided in Section 15.2 above.
15.4 Set-Off. Notwithstanding any other provision of this Agreement,
Buyer shall have the right to reduce any payment or payments otherwise owed
to Seller or the Guarantors under this Agreement or any of the agreements
executed in connection herewith by an amount or amounts equal to any or all
of the claims, losses, expenses, obligations and liabilities (including
costs of collection and reasonable attorney's fees) incurred by Buyer for
which Seller has agreed to indemnify Buyer as provided in Section 15.2.
Furthermore, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall forfeit all
amounts that would otherwise be payable to them (regardless of whether any
portion of such amount has accrued before the due date for payment) if the
employment of either of them is terminated pursuant to Section 6.1 or 6.2
of their respective Employment Agreements before the due date of any
Deferred Purchase Price Payment that would become payable under Section
3.5.5 of this Agreement; provided, however that neither ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
nor ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall forfeit the right to receive a Deferred
Purchase Price Payment because of termination of the employment of the
other individual pursuant to Section 6.1 or 6.2 of the Employment Agreement
between the Buyer and the other such individual.
15.5 Indemnification of Seller by Buyer. Buyer agrees to indemnify
Seller and hold harmless against and in respect of any and all claims,
losses, expenses, obligations and liabilities (including costs of
collection and reasonable attorney's fees) that arise after the Closing
Date and result from and are related to the Assumed Liabilities.
16. ENTIRE AGREEMENT, NOTICES, MODIFICATION, WAIVER, HEADINGS.
16.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter it describes and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether
29
oral or written, of the parties. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing
by the party to be bound. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
16.2 Notices. Any notice or other communication required or permitted
under this Agreement shall be in writing, and shall be given by personal
delivery, via facsimile transmission, by a nationally recognized overnight
courier service or by registered or certified United States mail, postage
prepaid, with return receipt requested. Notices shall be addressed to the
parties as follows:
Seller: Bear Linear LLC
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇ #▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Telecopy: 815.547.7206
Copy to: Pearson Van Houten PLC
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Telecopy: 515.327.8514
Buyer: Altra Industrial Motion, Inc.
Attn: ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Telecopy: 617.689.6202
Copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇ ▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Telecopy: 717.237.7438
30
Any party hereto shall be entitled to specify a different address by giving
notice to the other party.
16.3 Headings. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience and
are not intended to be full or accurate descriptions of the content of any
section or subsection.
16.4 Multiple Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
to be an original and all of which shall constitute one and the same
agreement.
16.5 Amendment or Modification. The parties may amend or modify this
Agreement in such manner as may be agreed upon by a written instrument
executed by such parties.
16.6 Severability. If any term, covenant, condition or provision of
this Agreement, or the application thereof to any circumstance, shall be
invalid or unenforceable to any extent, the remaining terms, covenants,
conditions and provisions shall not be adversely affected thereby, and each
remaining term, covenant, condition and provision of this Agreement shall
be valid and shall be enforceable to the fullest extent permitted by law.
If any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only as broad as is enforceable.
16.7 Exhibits and Schedules. Exhibits, schedules and documents
referred to in this Agreement are an integral part of this Agreement.
17. SUCCESSORS AND ASSIGNS. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective transferees, successors and assigns. Notwithstanding the
foregoing sentence, this Agreement and the obligations of the Seller and the
Guarantors hereunder shall not be assigned or delegated to any other person.
Buyer reserves the right, and is hereby authorized, to assign all of its right,
title and interest herein and hereunder to an affiliate or person under common
control with Buyer.
18. GOVERNING LAW. The parties agree that this Agreement shall be governed
by the laws of the State of Illinois.
19. CONSENT TO JURISDICTION. The parties hereby consent to the jurisdiction
of the state courts of the State of Illinois and the United States District
Court for the Northern District of Illinois (Western Division). With respect to
any such court action, all of the parties to this Agreement (a) submit to the
personal jurisdiction of such courts; (b) consent to service of process, and (c)
waive any other requirement (whether imposed by statute, rule of court, or
otherwise) with respect to personal jurisdiction or service of process.
31
The parties have executed this Agreement or, acting under authority given
by their respective Board of Managers, have caused this Agreement to be executed
in their respective entity names by their respective Presidents or Vice
Presidents, all as of the date and year first set forth above.
SELLER:
ATTEST: BEAR LINEAR LLC
By
------------------------------------- -------------------------------------
Title:
---------------------------------
WITNESS: GUARANTORS:
(SEAL)
------------------------------------- ----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(SEAL)
------------------------------------- ----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(SEAL)
------------------------------------- ----------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BUYER:
ATTEST: WARNER ELECTRIC, LLC
By
------------------------------------- -------------------------------------
Title:
---------------------------------
32
List of Schedules
Schedule 1.2 Purchased Assets
Schedule 2.0 Retained Assets
Schedule 3.3 Allocation of Purchase Price
Exhibit 4.0 Acquisition Notes
Schedule 5.0 Assumed Liabilities
Schedule 7.1.1 Organization and Standing of Seller
Schedule 7.1.4 Assumed and Fictitious Names
Schedule 7.2.2 Absence of Certain Changes
Schedule 7.2.3 Undisclosed Liabilities
Schedule 7.2.4 Indebtedness to and from Officers, Directors and Others
Schedule 7.2.5 Backlog
Schedule 7.3.1 Inventory
Schedule 7.3.2 Machinery, Equipment and Other Tangible Personal Property
Schedule 7.3.3 Accounts Receivable
Schedule 7.3.4 Real Property
Schedule 7.3.5 Patents, Copyrights, Trademarks, Etc.
Schedule 7.4.1 Labor and Employment Contracts
Schedule 7.4.2 Employee Benefit Plans and Arrangements
Schedule 7.4.3 Insurance
Schedule 7.4.4 Other Contracts and Agreements
Schedule 7.4.5 Third Party Consents
Schedule 7.5.1 Customers
Schedule 7.5.2 Suppliers
Schedule 7.5.3 Employees
Schedule 7.5.4 Accrued Employee Benefits
Schedule 7.5.5 Product and Field Warranties
Schedule 7.5.6 Litigation
Schedule 7.5.7 Taxes
Schedule 7.5.8 Permits; Governmental Approvals
Schedule 7.5.9 Operations in Conformity with Law
Schedule 7.5.10 Environmental Matters
Schedule 7.5.11 Absence of Certain Business Transactions
Schedule 8.6 Accounts Receivable Certificate
Schedule 12.2.7 Pending and Threatened Litigation
Exhibit 12.3 Employment and Non-Competition Agreement(s)
LIST OF DEFINED TERMS
"ACQUIRED BUSINESS" shall mean the Purchased Assets, the Business and the
Assumed Liabilities.
"ADJUSTED CLOSING BALANCE SHEET" shall have the meaning set forth in Section 3.2
of the Agreement.
"ADJUSTED NET ASSET VALUE AT CLOSING" shall have the meaning set forth in
Section 3.2 of the Agreement.
"AGREEMENT" shall mean the Asset Purchase Agreement dated as of May 18, 2006.
"ANNUAL EBITDA EXCESS" shall have the meaning set forth in Section 3.5.2 of the
Agreement.
"ANNUAL MINIMUM DEFERRED PURCHASE PRICE PAYMENT" shall have the meaning set
forth in Section 3.5.1 of the Agreement.
"ANNUAL PAYMENT RATE" shall have the meaning set forth in Section 3.5.2 of the
Agreement.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 5 of the
Agreement.
"BEAR LINEAR" shall mean Bear Linear LLC, an Illinois limited liability company.
"BUSINESS" shall have the meaning set forth in Section 1.1 of the Agreement.
"BUYER" shall mean Warner Electric, LLC, a Delaware limited liability company.
"CLOSING BALANCE SHEET" shall have the meaning set forth in Section 3 of the
Agreement.
"CLOSING DATE" or "CLOSING" shall have the meaning set forth in Section 11.1 of
the Agreement.
"CODE" shall have the meaning set forth in Section 7.4.2 of the Agreement.
"CONTINGENT DEFERRED PURCHASE PRICE PAYMENTS" shall have the meaning set forth
in Section 3.5.2 of the Agreement.
"CONTRACTS" shall have the meaning set forth in Section 7.4.4 of the Agreement.
"DEFERRED PURCHASE PRICE PAYMENTS" shall mean the Minimum Deferred Purchase
Price Payments and the Contingent Deferred Purchase Price Payments as such terms
are defined in Section 3.5.1 and 3.5.2 of the Agreement.
"EBITDA" shall mean the Buyer's operating income less operating expenses (but
excluding
interest, taxes, depreciation and amortization).
"EBITDA Base Amount" shall have the meaning set forth in Section 3.5.2 of the
Agreement.
"EMPLOYEE PLANS" shall have the meaning set forth in Section 7.4.2 of the
Agreement.
"EMPLOYMENT AGREEMENT(S)" shall have the meaning set forth in Section 12.3 of
the Agreement.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 7.5.10 of the
Agreement.
"GAAP" shall mean generally accepted accounting principles for financial
reporting in the United States applied on a consistent basis.
"GUARANTORS" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and J. ▇▇▇▇▇
▇▇▇▇▇▇▇▇.
"MAXIMUM ANNUAL EBITDA EXCESS" shall have the meaning set forth in Section 3.5.3
of the Agreement.
"MINIMUM DEFERRED PURCHASE PRICE PAYMENT" shall have the meaning set forth in
Section 3.5.1 of the Agreement.
"OTHER BUYER INSTRUMENTS" shall have the meaning set forth in Section 9.2 of the
Agreement.
"OTHER SELLER INSTRUMENTS" shall have the meaning set forth in Section 7.1.2 of
the Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1 of the
Agreement.
"PURCHASED ASSETS" shall have the meaning set forth in Section 1.2 of the
Agreement.
"REGULATED SUBSTANCE" shall have the meaning set forth in Section 7.5.10 of the
Agreement.
"RETAINED ASSETS" shall have the meaning set forth in Section 2 of the
Agreement.
"RETAINED LIABILITIES" shall have the meaning set forth in Section 5 of the
Agreement.
"SELLER" shall mean Bear Linear.
"WORKING CAPITAL" shall have the meaning set forth in Section 3.4.3 of the
Agreement.
"WORKING CAPITAL CERTIFICATE" shall have the meaning set forth in Section 3.4.2
of the Agreement.
2