ASSET PURCHASE AGREEMENT
BY AND AMONG
SKF USA INC.,
TYSON BEARING COMPANY, INC.
AND
ROLLER BEARING COMPANY OF AMERICA, INC.
DATED AS OF JUNE 11, 1999
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.................................................1
1.1 Index of Defined Terms......................................1
1.2 General Defined Terms.......................................4
ARTICLE 2 TRANSFER OF ASSETS..........................................9
2.1 Transfer of Assets by Seller................................9
2.2 Excluded Assets............................................11
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 Closing Balance Sheet......................................15
2.8 Purchase Price Allocation..................................16
2.9 Interim Period Payments....................................16
2.10 Post-Closing Purchase Price Adjustment.....................18
2.11 Commission Payments........................................19
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...................19
3.1 Existence and Power........................................19
3.2 Authorization..............................................20
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.........................................22
3.8 Sufficiency of and Title to the Transferred Assets; Year
2000 Readiness Disclosure Statement........................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
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 4 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 5 COVENANTS OF SELLER AND BUYER..............................31
5.1 Compliance with Terms of Required Governmental Approvals
and Required Contractual Consents..........................31
5.2 Confidentiality............................................32
5.3 Taxes......................................................32
5.4 Year 2000 Compliance.......................................33
5.5 SKF Product Designations...................................33
5.6 Grinding Area..............................................34
5.7 Aiken Purchase Order.......................................34
5.8 IVECO Orders...............................................34
ARTICLE 6 COVENANTS OF ALL PARTIES...................................34
6.1 Further Assurances.........................................34
6.2 Employees and Employee Benefit Matters.....................35
6.3 Allocation of Environmental Liabilities....................38
6.4 TRB Product Warranty Claims................................40
6.5 Excluded Product Liability Claims..........................40
6.6 Excluded Worker's Compensation Claims......................40
ARTICLE 7 INDEMNIFICATION............................................41
7.1 Agreement to Indemnify.....................................41
7.2 Survival of Representations and Warranties and Covenants...42
7.3 Claims for Indemnification.................................43
7.4 Defense of Claims..........................................43
ARTICLE 8 COVENANT NOT TO COMPETE....................................44
8.1 Non-Compete................................................44
8.2 Chicago Rawhide Non-Compete................................45
8.3 Severability...............................................46
8.4 Enforcement................................................46
ARTICLE 9 MISCELLANEOUS..............................................47
9.1 Notices....................................................47
9.2 Amendments; No Waivers.....................................48
9.3 Expenses...................................................48
9.4 Successors and Assigns.....................................48
9.5 Governing Law..............................................48
9.6 Counterparts; Effectiveness................................48
9.7 Entire Agreement...........................................48
9.8 Captions...................................................49
9.9 Severability...............................................49
9.10 Construction...............................................49
9.11 Arbitration of Claims......................................49
9.12 Cumulative Remedies........................................51
9.13 Third Party Beneficiaries..................................51
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of
June 11, 1999 is by and among SKF USA INC., a Delaware corporation ("Seller"),
TYSON BEARING COMPANY, 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 is engaged in the design, development,
manufacture, assembly and sale of TRB Products in Glasgow, Kentucky (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 1
DEFINITIONS
1.1 INDEX OF DEFINED TERMS. The following is an index of defined terms
utilized in this Agreement:
Defined Term Section Page
401(k) Plan Employee 6.2(e)(i) 36
Active Employees 6.2(a) 35
Affiliate 1.2 4
Aftermarket Resellers 1.2 4
Aiken 5.7 34
Agreement Preface 1
Allocation Statement 2.8 16
Applicable Law 1.2 4
Assumed Liabilities 2.3(a) 12
Benefit Arrangement 1.2 5
Benefit Plan 1.2 5
▇▇▇▇ of Sale 2.6(c)(vi) 14
Business Preface 1
Business Day 1.2 5
Buyer Preface 1
Buyer Environmental Liabilities 6.3(c) 40
Buyer Indemnitees 7.1(a) 41
Buyer Premises 6.3(b)(iii) 39
Buyer's Union Contract 6.2(c) 36
Buyer's Union Plan 6.2(c) 36
CERCLA 1.2 6
Chicago Rawhide 2.6(c)(xii) 15
Closing 2.6(a) 14
Closing Balance Sheet 2.7 15
Closing Date 2.6(a) 14
Code 1.2 5
Competitive Activity 8.1 45
Contingent Liabilities 1.2 5
Contracts 1.2 5
Cost Sharing Agreement 2.6(c)(xiii) 15
Covered Period 8.1 44
CR Competitive Activity 8.2 46
CR Covered Period 8.2 45
CR Supply Agreement 2.6(c)(xii) 15
Damages 1.2 5
Detroit Supply Agreement 2.6(c)(xii) 15
Effective Time 2.6(a) 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 6.3(a) 38
Equipment 2.1(b) 9
ERISA 1.2 6
ERISA Affiliate 1.2 6
Excluded Assets 2.2 11
Excluded Environmental Parcel 6.3(a) 38
Excluded Liabilities 2.4 12
Excluded Product Liability Claims 6.5 40
Excluded Product Warranty Claims 6.4 40
Excluded Worker's Compensation Claims 6.6 41
Existing Known Environmental Conditions 1.2 6
Existing Lease 2.2(s) 12
Export Supply Agreement 2.6(c)(xii) 15
Final Environmental Study 6.3(a)(iv) 39
Financials 3.5(a)(ii) 20
First Choice 2.9(a) 16
GAAP 1.2 6
GL Reports 3.5(a)(ii) 20
Governmental Authority 1.2 7
Group Health Plan 1.2 7
Hazardous Substance 1.2 7
hourly Transferred Employees 6.2(c) 36
Included Environmental Parcel 6.3(a) 38
Indemnifying Party 1.2 7
Indemnitee 1.2 7
Insurance Policies 3.21 30
Intellectual Property Rights 3.17(a) 28
Interim Period 2.6(a) 14
Interim Period Cash Flow Statement 2.9(a) 16
Interim Services Agreement 2.6(c)(i) 14
Inventory 2.1(c) 10
Inventory Statement 3.5(a)(iii) 36
IRS 1.2 7
IT 1.2 4
Knowledge 1.2 7
Leasehold Assignments 2.6(c)(v) 14
Leases 3.7(b) 22
Leave Employees 6.2(a) 35
Liability 1.2 7
License Agreement 2.6(c)(xi) 15
Lien 1.2 8
March 31 Balance Sheet 3.5(a)(i) 20
Material Adverse Effect 1.2 8
New 502 Rollers 5.7 34
New Business 2.10(a) 18
New Customers 2.10(a)(i) 18
New Lease 2.6(c)(ix) 15
Pension Plans 6.2(b) 35
Permits 3.13(a) 25
Permitted Liens 1.2 8
Person 1.2 8
Personal Property Leases 3.7(b) 22
Post-Closing Liabilities 2.3(b) 12
Proceedings 3.11 24
Product Designations 2.1(h) 10
Prohibited Transaction 1.2 8
Proposed Interim Period Cash Flow Statement 2.9(a) 16
Purchase Price 2.6(b) 14
RBC Preface 1
RCRA 1.2 6
Real Property 3.7(a) 22
Real Property Leases 3.7(b) 22
Required Consents 3.13(b) 26
Required Contractual Consent 3.13(b) 26
Required Governmental Approval 3.13(b) 25
Retired Employees 6.2(a) 35
Salaried Plan 6.2(b) 35
Scheduled Contracts 3.12(a) 24
Selected Firm 2.9(a) 16
Seller Environmental Liabilities 6.3(b) 39
Seller Indemnitees 7.1(b) 41
Seller Preface 1
Seller's 401(k) Plan 6.2(e) 36
Seller's Contingent Liabilities 1.2 8
Severance Payments 6.2(p) 36
SKF Product Designations 3.17(d) 28
SKF Retirees 6.2(f) 37
Study Date 6.3(d) 40
Sublease 2.6(c)(x) 15
Subsequent Event 6.3(b)(iii) 39
Supply Agreements 2.6(c)(xii) 15
Tax 1.2 8
Tax Return 1.2 9
Third Party Claim 7.4(a) 43
Transferred Assets 2.1 9
Transferred Employee 6.2(a) 35
TRB Products 1.2 9
TSCA 1.2 6
Union 1.2 9
Union Contract 1.2 9
Union Plan 6.2(b) 35
Year 2000 Compliant 1.2 9
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 Person.
"Aftermarket Resellers" means distributors who supply replacement parts
for the maintenance, repair and overhaul of automobiles, trucks, buses, trailers
and other transportation equipment, and including, without limitation, both
independent retailers and wholesalers as well as the services parts
organizations of original equipment manufacturers of the foregoing and large
independent transmission differential and engine rebuilders.
"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, 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 the Business; 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.
"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
exclusively with respect to the Business, 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), 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, 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 the Business.
"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 in respect of the Business or the Real 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.
"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.
"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
the Business.
"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 Buyer or any RBC Indemnitee
is asserting a claim under Sections 7.1(a) or 9.11 or (2) Buyer or RBC jointly
or severally when any Seller Indemnitee is asserting a claim under Sections
7.1(b) or 9.11.
"Indemnitee" means: (1) each of Buyer, RBC and their respective
Affiliates with respect to any claim for which Seller is an Indemnifying Party
under Sections 7.1(a) or 9.11; or (2) Seller and its Affiliates with respect to
claims for which Buyer or RBC is an Indemnifying Party under Sections 7.1(b) or
9.11.
"IRS" means the Internal Revenue Service.
"IT" means the information technology contained in the Transferred
Assets.
"Knowledge" means: (1) with respect to Seller, the actual knowledge of
any one or more of the following Persons: ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (2) with respect to Buyer, the actual knowledge of any one or
more of the following Persons: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"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.
"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 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 Closing 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.
"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.
"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 Closing 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.
"TRB Products" means those case-hardened inch-dimensioned tapered
roller bearings ranging from four (4) to eight (8) inches in outside diameter,
together with components and sub-assemblies thereof, which are set forth on
Schedule 1.2(b).
"Union" means the United Steelworkers of America, Local Union No. 7461.
"Union Contract" means the Agreement by and between SKF USA Inc.
Glasgow, Kentucky Plant and the Union, dated March 27, l999.
"Year 2000 Compliant" means that with respect to the IT, no value for
the current date will cause any material interruption in the current operation
of the Transferred Assets and that date-based functionality will behave
consistently for dates prior to, during and after the calendar year 2000. "Year
2000 Compliant" does not mean that the operation of the Transferred Assets or
the IT will be unaffected by noncompliant third party programs or tools or that
the Transferred Assets or that the IT will successfully interface with third
party programs or hardware irrespective of whether such third party programs or
hardware are Year 2000 Compliant.
ARTICLE 2
TRANSFER OF ASSETS
2.1 TRANSFER OF ASSETS BY SELLER. Subject to the provisions of Section
2.2, 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, wherever located, whether
tangible or intangible, real, personal or mixed, that are used, owned by, leased
by or in the possession of Seller primarily in connection with the Business,
whether or not reflected on the books and records of Seller, including all
assets shown on the Closing Balance Sheet (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 primarily 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"), including all Inventory located in the
Crossville, Tennessee warehouse of Seller;
(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;
(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 or with respect to the Year 2000 Compliant nature 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, including, to the extent transferable,
all product designations used by Seller with respect to the TRB Products (the
"Product Designations");
(i) all tools, dies, jigs, molds, patterns, machinery and equipment,
whether owned or leased, whether in the possession of 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 the Transferred 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 of Seller's right, title and interest, if any, in and to the
trademarks "Tyson Bearing Company" and "Tyson" and all derivatives thereof; and
(p) 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.
2.2 EXCLUDED ASSETS. Buyer expressly understands and agrees that the
following assets and properties (the "Excluded Assets") shall be excluded from
the Transferred Assets and shall be retained by Seller:
(a) all books, records, files and papers, whether in hard copy or
computer format, that Seller or any of its Affiliates shall be required to
retain pursuant to Applicable Law; provided that copies thereof shall be
delivered to Buyer;
(b) all rights of Seller under this Agreement and the agreements and
instruments delivered to Seller by Buyer pursuant to this Agreement;
(c) all refunds or claims for refunds of taxes paid by Seller or
accrued prior to the Closing Date;
(d) all cash and cash equivalents as of the Effective Time;
(e) all right, title and interest of Seller in and to the name and
trademark "SKF" and related trademarks, corporate names, and trade names
incorporating "SKF" or the stylized "SKF" logo;
(f) all computer software which is by its terms nonassignable;
(g) all computer software used for intracompany communications or for
tracking and managing its accounts payable (e.g. D&B financial systems),
employee benefits, or any successor software;
(h) all equipment used in the conduct of the Business that is located
at any of Seller's facilities other than its Glasgow, Kentucky facility;
(i) all inventory located at any of Seller's facilities other than its
Glasgow, Kentucky and Crossville, Tennessee facilities;
(j) all assets that primarily relate to other parts of Seller's
business, other than the Business;
(k) all accounts receivable of the Business as of the Effective Time;
(l) all accounts that pertain to duty drawback arising out of
transactions prior to the Effective Time;
(m) all claims against administrators and payors of employee medical
benefits in respect of periods prior to the Closing Date;
(n) all leasehold improvements set forth on the March 31 Balance Sheet;
(o) all patents owned by Seller's Affiliates;
(p) all trade secrets owned by Seller's Affiliates;
(q) all assets of Seller which will be used by Seller from and after
the Closing in the performance of its duties under the Cost Sharing Agreement;
(r) all rights of Seller under Contracts which do not relate
exclusively to the Business; and
(s) all rights of Seller under that certain Plant Lease, dated November
6, 1964, as amended, by and between Tyrol, Inc. and Seller (the "Existing
Lease").
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 2.9 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
(the "Post-Closing Liabilities") except to the extent such Liabilities and
obligations constitute Excluded Liabilities; provided that any such Post-Closing
Liabilities satisfied by Seller during the Interim Period shall be allocated by
Buyer and Seller as set forth in Section 2.9 hereof.
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 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 to any other division or operation of Seller or any
Affiliates of Seller, other than Liabilities (i) reserved for on the Closing
Balance Sheet or (ii) pursuant to a Scheduled Contract;
(l) any Liability under the Contracts from and after the Effective Time
to the extent such Liability arises (1) by reason of a default by Seller on or
before the Effective Time under a Contract or (2) from a failure by Seller to
take steps reasonably required in order to satisfy obligations of the Business
following the Effective Time;
(m) any Liability under Contracts with third parties which do not
relate exclusively to the Business, except to the extent such Contracts relate
to services to be provided by Buyer pursuant to the Cost Sharing Agreement;
(n) any Liability under the Union Contract;
(o) any Liability or obligations with respect to the Benefit Plans,
except as expressly assumed by Buyer pursuant to Section 6.2; and
(p) 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 constitutes a Transferred
Asset, 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).
2.6 CLOSING.
(a) The closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on the date hereof (the "Closing Date").
Upon consummation, the Closing shall be deemed to have taken place as of 12:01
a.m. on April 1, 1999 (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 2.9 hereof;
provided that any temporal references contained in this Agreement to the Closing
shall be deemed to mean the Closing Date.
(b) At the Closing, Buyer shall pay to Seller $10,200,000 (the
"Purchase Price"), 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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., counsel
to Seller, in the form attached hereto as Exhibit B.
(iii) UCC-3 termination statements with respect to financing
statements filed against the Business or the Transferred Assets (other than
the Permitted Liens).
(iv) 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.
(v) assignments of leasehold interests in all leased personal
property included in the Transferred Assets (collectively, the "Leasehold
Assignments").
(vi) a ▇▇▇▇ 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 "▇▇▇▇ of Sale").
(vii) all material Governmental Approvals for the transactions
contemplated by this Agreement to be obtained by Seller, in form and
substance acceptable to Buyer.
(viii) all material Required Contractual Consents, in form and
substance acceptable to Buyer.
(ix) an Option Agreement, pursuant to which Tyrol, Inc. shall
provide Buyer with an option to enter into a new agreement of lease (the
"New Lease") with Buyer for the Real Property upon the expiration or
earlier termination of the Existing Lease, in form and substance acceptable
to Buyer.
(x) a Sublease Agreement, pursuant to which Seller shall sublease
to Buyer that portion of the Real Property not presently used in the
Business, in the form attached hereto as Exhibit C, duly executed and
delivered by Seller (the "Sublease").
(xi) a Trademark License Agreement, substantially in the form
attached hereto as Exhibit D, duly executed and delivered by Seller (the
"License Agreement").
(xii) a Supply Agreement with Chicago Rawhide Americas, a unit of
Seller ("Chicago Rawhide") (the "CR Supply Agreement"), a Supply Agreement
(Automotive) with Seller (the "Detroit Supply Agreement") and a Supply
Agreement (Export) with Seller (the "Export Supply Agreement" and, together
with the CR Supply Agreement and the Detroit Supply Agreement, the "Supply
Agreements"), in form and substance acceptable to Buyer.
(xiii) a Cost Sharing Agreement, in the form attached hereto as
Exhibit E, duly executed and delivered by Seller (the "Cost Sharing
Agreement").
(xiv) a Supply/Consignment Agreement with Ovako Steel, in form and
substance reasonably acceptable to Buyer, duly executed and delivered by
Ovako Steel.
(xv) a new union contract with the Union covering the hourly
Transferred Employees who are presently subject to the Union Contract, on
substantially the terms and conditions of the Union Contract.
(xvi) new contracts with those suppliers of the Business set forth
on Schedule 2.6(c)(xvi), in form and substance acceptable to Buyer.
(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 ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel
to Buyer, in the form attached hereto as Exhibit F.
2.7 CLOSING BALANCE SHEET. Attached hereto as Schedule 2.7 is a balance
sheet (the "Closing Balance Sheet") setting forth, as of the close of business
on March 31, 1999, the book value of the Transferred Assets and the Assumed
Liabilities.
2.8 PURCHASE PRICE ALLOCATION. Within 120 days after the Closing Date,
Buyer and Seller shall agree upon the final allocation of the Purchase Price
among the Transferred Assets for purposes of complying with Section 1060 of the
Code and making any required filings under state or local law and shall set
forth such allocation on a statement (the "Allocation Statement"). After the
Closing, from time to time, Buyer and Seller shall agree upon revisions to the
Allocation Statement for tax purposes, whether as a result of payments pursuant
to Section 2.10 or otherwise. 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.
2.9 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 Seller shall have remained in control of the operations of the Business
between the Effective Time and the Closing Date (the "Interim Period"), Buyer
and Seller shall make the following payments, adjustments and agreements:
(a) (i) 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") on account of the conduct of
the business during the Interim Period. The Proposed Interim Period Cash
Flow Statement shall be prepared so that it presents fairly the cash
inflows and outflows in respect of the operations of the Business during
the Interim Period, but in any case using the practices and procedures
described in subsection (ii) below. 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 30 days after delivery to it of the Proposed
Interim Period Cash Flow Statement, specifying, to the extent possible, 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 during such 30 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 such 30 day period shall be extended for
additional periods of up to 30 days if Buyer determines that it reasonably
requires such additional time to complete such verification. If Buyer and
Seller are unable to resolve any such disagreement, the disagreement shall
be referred for final determination to PricewaterhouseCoopers (the "First
Choice") or, if such firm is not available, such other independent
accounting firm selected by mutual agreement of Buyer and Seller (the
"Selected Firm"). The Proposed Interim Period Cash Flow Statement, as
adjusted as a result of such resolution by the First Choice or the Selected
Firm, as the case may be, shall be final and binding upon the parties
hereto for the purposes of this Agreement. If Buyer and Seller cannot
agreement on the Selected Firm, it shall be chosen by the First Choice and
shall be a nationally recognized accounting firm. The Proposed Interim
Period Cash Flow Statement as finally determined shall be the "Interim
Period Cash Flow Statement." 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.
(ii) The Proposed Interim Period Cash Flow Statement shall be
prepared using the following practices and procedures:
(A) No effect shall be given to transactions involving Excluded
Assets and Excluded Liabilities (including, without limitation,
collections of accounts receivable included in the Excluded Assets
and payments made in satisfaction of Excluded Liabilities).
(B) All transfers of goods made by the Business to other divisions
or operations of Seller or Affiliates of Seller shall be deemed to
create a cash inflow equal to the transfer price of such goods
from the Business to such other divisions or operations of Seller
or such Affiliates of Seller using the prices set forth on
Schedule 2.9.
(C) All goods received by the Business from other divisions or
operations of Seller or Affiliates of Seller shall be deemed to
create a cash outflow equal to the transfer price of such goods
and services to the Business from such other divisions or
operations of Seller or such Affiliates of Seller; provided that
the method of determination of such transfer prices will not
differ from that in effect immediately prior to the Effective
Time.
(D) The Proposed Interim Period Cash Flow Statement shall contain
no cash outflows in respect of allocations made to the Business
directly or indirectly by other divisions or operations of Seller
or Affiliates of Seller in excess of $65,800 per month; provided
that such amount shall be reduced for the month of June, 1999 in
accordance with the number of days elapsed.
(E) The Proposed Interim Period Cash Flow Statement shall contain
a cash inflow in the amount of $94,000 in respect of the export
backlog and vacation accruals.
(b) Upon the Closing, Buyer shall be the legal and beneficial owner of
all accounts receivable and all accounts payable created during the Interim
Period, including the proceeds thereof.
(c) (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 (5) 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 (5) 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.
(d) Buyer and Seller agree that the adjustments described in
subparagraphs (a) through (c) 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, by reason of the payment described in
subparagraph (c), 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.
(e) Notwithstanding anything in this Section 2.9 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.
2.10 POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) Buyer shall pay Seller an amount equal to five percent (5%) of the
annual dollar amount of New Business during each of the three (3) years
immediately following the Closing Date. As used herein, "New Business" means
Buyer's receipt and acceptance of a firm purchase order placed by the following
Persons for the following products; provided that Buyer shall have the right to
accept or reject purchase orders in its sole and absolute discretion:
(i) firm purchase orders placed by Seller for tapered roller
bearing products (or components thereof) for delivery to Persons ("New
Customers") who (A) are not Aftemarket Resellers, (B) did not have an open
purchase order with the Business on the Closing Date and (C) prior to
having become New Customers, were not direct or indirect customers of the
Business between the Closing Date and the date such order is received by
Buyer;
(ii) firm purchase orders placed by Seller for tapered roller
bearing products (or components thereof) for delivery to Persons who (A)
are not Aftemarket Resellers and (B) did have an open purchase order with
the Business on the Closing Date, but only to the extent that such purchase
orders are for tapered roller bearing products (or components thereof)
which such Persons (x) did not purchase from the Business within the two
(2) year period prior to the Closing Date and (y) had not purchased from
the Business between the Closing Date and the date such order is received;
provided that a repeat purchase -------- order from a Person for a tapered
roller bearing product (or component thereof) in a case where the original
order qualified under this subsection (ii) shall be deemed to qualify under
this subsection (ii);
(iii) firm purchase orders placed by Seller or Seller's Affiliates
for tapered roller bearing products (or components thereof) in support of
production by Seller or Seller's Affiliates, but only to the extent that
such orders are for tapered roller bearing products (or components thereof)
not provided by the Business to Seller or such Affiliate within the two (2)
year period prior to the Closing Date; and
(iv) firm purchase orders of Persons not Affiliates of Seller or
Seller's Affiliates who are not Aftermarket Resellers and which are placed
with Buyer by Seller or Seller's Affiliates, but only to the extent that
such purchase orders are for tapered roller bearing products (or components
thereof) which such Persons (A) did not have an open purchase order with
the Business on the Closing Date and (B) had not purchased from the
Business between the Closing Date and the date such order is received
(excepting a repeat purchase order for a tapered roller bearing product (or
component thereof) in a case where the original order qualified under
subsection (ii) or this subsection (iv).
(b) Payments required pursuant to subsection (a), if any, shall be made
within sixty (60) days following the end of each year of the three (3) year
period specified above. Any such payment shall be treated by the parties for all
purposes as an adjustment to the Purchase Price. In the event Seller and Buyer
disagree about any calculation of New Business, they shall negotiate in good
faith for a period of thirty (30) days and, if the disagreement has not been
resolved at the end of such thirty (30) day period, the matter shall be referred
for final determination to an arbitrator in accordance with Section 9.11.
2.11 COMMISSION PAYMENTS.
(a) Buyer shall pay Seller an amount equal to five percent (5%) of the
annual dollar amount of New Business during each twelve (12) month period
beginning on the third (3rd) anniversary of the Closing Date and ending upon the
termination of the CR Supply Agreement; provided that Buyer shall continue to
have the right to accept or reject purchase orders in its sole and absolute
discretion.
(b) Payments required pursuant to subsection (a), if any, shall be made
within sixty (60) days following the end of each twelve (12) month period
specified above. In the event Seller and Buyer disagree about the calculation of
New Business, they shall negotiate in good faith for a period of thirty (30)
days and, if the disagreement has not been resolved at the end of such thirty
(30) day period, the matter shall be referred to final determination to an
arbitrator in accordance with Section 9.11.
ARTICLE 3
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. 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.
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 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:
(i) the unaudited "TRB Glasgow 3/31/99 Balance Sheet Accounts"
(the "March 31 Balance Sheet");
(ii) the unaudited "Trial Balance Corp. #025 Glasgow Report ID:
GL-705-706" as at March 31, 1999 and as at December 31, 1998, 1997 and 1996
(the "GL Reports" and, together with the March 31 Balance Sheet, the
"Financials"); and
(iii) (iii) the unaudited "TRB Inventory at Crossville" as of
March 31, 1999 (the "Inventory Statement").
(b) The March 31 Balance Sheet presents fairly the financial condition
of the Business as of March 31, 1999.
(c) The GL Reports have been derived from the books and records of the
Business and fairly reflect in all material respects the incurred and allocated
factory costs of the Business for the periods indicated.
(d) The units of Inventory set forth on the Inventory Statement were in
existence and located at Seller's facility in Crossville, Tennessee as of the
Effective Time.
3.6 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.6,
since the Effective Time, the Business has been conducted by Seller on Buyer's
behalf 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 the Business 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, 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.
(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.
(a) Seller does not own any real property that is used in connection
with the Business. The only real property that is used in the manufacturing
operations of the Business is leased real property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Real Property"). Seller has a good and valid
leasehold interest in the Real Property.
(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 would provide for
annual payments by Buyer after the assignment thereof by Seller on the Closing
Date in excess of $10,000 or that contain other affirmative material obligations
that could not be terminated by Buyer after the assignment thereof by Seller
within 30 days (the "Personal Property Leases") and all leases or licenses of
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 Seller is a party or by which it is bound may be assigned, transferred and
conveyed to Buyer without default, penalty or modification thereof.
(c) Except as disclosed on 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; YEAR 2000
READINESS DISCLOSURE STATEMENT.
(a) 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).
(b) Except for the services to be provided by Seller under the Interim
Services Agreement and the Cost Sharing 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.
(c) Seller has made a good faith effort to determine whether the IT is
Year 2000 Compliant. As part of this effort, Seller has mapped and assessed the
risk of applications (computer programs and databases), platforms (hardware and
operating systems), and embedded Systems (electronic components and chips) and,
as required, has contracted with consultants, manufacturers and other suppliers
for remediation and/or replacement equipment and software which has been
represented to Seller as Year 2000 Compliant. Seller's efforts as herein
described were based on information derived from processes which are inherently
subjective and imprecise including the difficulty of discovering many systems
and technical information regarding them and derived from historical records
which may, in fact, not be complete, accurate or verified. Consequently, no
representation or warranty is made as to the completeness of accuracy of such
information or that such information was verified. Seller cannot, therefore,
warrant the results of its Year 2000 Compliance efforts or that the IT is Year
2000 Compliant and any express and implied warranties as to the Year 2000
Compliant nature of the Transferred Assets are expressly excluded.
3.9 AFFILIATES. Except as set forth on 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):
(a) now has or at any time subsequent to December 31, 1997, 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 the Business or purchases or during such period purchased from
Seller any goods or services relating to the Business, or otherwise does or
during such period did business with Seller relating to the Business 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, 1997, 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
Closing Balance Sheet and except as disclosed on 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; (d) is not obsolete; and (e) to Seller's Knowledge, on the basis
of current information and reasonable forecasts of the needs of the Business, is
saleable in the ordinary course of the Business.
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
Employee of the Business (including, without limitation, confidentiality
and non-competition agreements), (B) any supplier of services or products
to Seller whose dollar volume of sales to Seller exceeded $25,000 in 1998,
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 1998;
(ii) each other agreement or arrangement of Seller that (y)
requires the payment or incurrence of Liabilities or the rendering of
services by Buyer, subsequent to the date hereof of more than $25,000 or
(z) cannot be terminated by Buyer after the date hereof within 30 days of
its decision to so terminate such agreement or arrangement;
(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 Buyer subsequent to the date hereof in excess of $25,000 or
cannot be terminated by Buyer after the date hereof within 30 days of its
decision to so terminate any of the following, 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 on 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 customers of the Business for each of the 12-month periods ended
December 31, 1997 and 1998, and the ten largest vendors, based on the dollar
amounts paid to such vendors, providing services to the Business for the
12-month periods ended December 31, 1997 and 1998 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.
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 on
Schedule 3.13(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 on 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.
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 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 of its ERISA Affiliates with respect to the Business. 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 of its ERISA Affiliates 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 of its ERISA Affiliates 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.
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 the Business.
(b) Except as set forth on Schedule 3.16(b), 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) there is no 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 the Business.
(c) With respect to the Business, Seller has complied and is currently
complying, in all material respects, in respect of all employees of the
Business, with all Applicable Laws respecting employment and employment
practices and the protection of the health and safety of employees.
(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 the Business 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.
(f) Schedule 3.16(f) sets forth all salaried Employees of the Business
whose employment with the Business has been terminated, voluntarily or
involuntarily, during the two year period ending on the Closing Date.
(g) Except as provided by the contract to be entered into by Buyer and
the Union, there will be no severance costs payable by Buyer in connection with
any layoff of any hourly or salaried employees of the Business following the
Closing.
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").
(b) Except as disclosed on 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 on 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
▇▇▇▇, brand ▇▇▇▇ or brand name or any pending application relating thereto, or
any trade secret, know-how, programs or processes, or any similar rights, of any
Person.
(c) There are no outstanding warranty or product liability claims
against the Business. To Seller's Knowledge, if Buyer manufactures TRB Products
in accordance with Seller's design specifications therefor, such TRB Products
will be free of design defects which could form the basis of a warranty or
product liability claim.
(d) To Seller's Knowledge, the use of the Product Designations set
forth on Schedule 1.2(b) which are labeled "SKF Designation" (the "SKF Product
Designations") does not conflict with, infringe upon or violate any trademark,
trade name, trademark or trade name registration, copyright, copyright
registration, service ▇▇▇▇, brand ▇▇▇▇ or brand name or any pending application
relating thereto, or any trade secret, know-how, programs or processes, or any
similar rights, of any Person. Except as disclosed on 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 SKF Product Designation. Seller makes no
representation or warranty as to the nature or extent of its ownership of the
those Product Designations which are not SKF Product Designations. 3.18 ADVISORY
FEES. There is no investment banker, broker, finder or other intermediary or
advisor that has been retained by or is authorized to act on behalf of Seller or
its Affiliates who might be entitled to any fee, commission or reimbursement of
expenses from Buyer or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
3.19 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed on 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 on 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 on 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 Assets or
the 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.
(a) Schedule 3.22(a) sets forth an accurate, correct and complete
statement of all written or, to Seller's Knowledge, oral, warranties, warranty
policies, service and maintenance agreements of the Business.
(b) Except as set forth on Schedule 3.22(b), Schedule 1.2(b) sets forth
an accurate, correct and complete list of all TRB Products manufactured by
Seller and/or its Affiliates in Glasgow, Kentucky from January 1, 1997 to the
Closing Date.
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 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 4
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.
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 5
COVENANTS OF SELLER AND BUYER
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) (i) Seller shall, and shall cause its 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 (A)
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,
(B) information that may be required to be disclosed by Applicable Law or
(C) information required to be disclosed to obtain any Required Consents.
(ii) Buyer shall, and shall cause its representatives to treat the
following specification and standards of Seller obtained by Buyer under
this Agreement, confidentially and with commercially reasonable care and
discretion, and will not disclose such information to third parties without
the prior written consent of Seller; provided, however, that the foregoing
shall not apply in the event said specifications and standards (i) enter
into the public domain or become public through disclosure by any party
other than Buyer or its Affiliates or representatives, so long as such
other party is not in breach of a confidentiality obligation, or (ii) are
required to be disclosed by Applicable Law:
(A) Specifications:
D10, D11-2 (consisting of binders ▇, ▇, ▇, ▇ ▇▇▇ ▇▇),
▇▇▇, ▇▇▇, D33-1, D33-2.
(B) Standards:
A5, A20, A71
(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 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, Seller, Buyer, RBC and their respective
Affiliates shall be entitled to an injunction restraining the defaulting party
from any breach without showing or proving actual damages. Nothing in the
preceding sentence shall limit or otherwise affect any remedies that any party
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 equally by
Buyer and Seller; provided, that any interest and/or penalties which may be
imposed in connection therewith shall be borne solely by Seller. 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) 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 years' 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.
5.4 YEAR 2000 COMPLIANCE. On or before December 31, 1999, Seller shall
replace the equipment described on Schedule 5.4 with equipment with respect to
which Seller will have received a warranty from its supplier that such equipment
is Year 2000 Compliant. Such replacement equipment shall perform the functions
presently performed by the equipment on Schedule 5.4 in substantially the same
manner as such existing equipment. Seller shall pass on to Buyer the benefit of
such warranty and Seller makes no independent warranty in connection therewith.
5.5 SKF PRODUCT DESIGNATIONS.
(a) Buyer hereby grants Seller and its Affiliates a non-transferable
right and license to use the SKF Product Designations.
(b) Buyer and its Affiliates assume no liability to Seller, Seller's
Affiliates or to third parties with respect to the performance characteristics
of any goods manufactured or sold by Seller or Seller's Affiliates bearing the
SKF Product Designations or arising out of the use by Seller or its Affiliates
of the SKF Product Designations and Seller hereby indemnifies and holds harmless
Buyer and its Affiliates against all losses, damage and expenses, including
attorneys' fees, incurred as a result of or related to claims arising out of
such manufacture or sale of goods or such use of the SKF Product Designations
(including, without limitation, any losses, damages and expenses that Buyer may
incur in connection with any claims that the SKF Product Designations infringe
the intellectual properties of a third party). In the event of a conflict
between the terms of this Section 5.5(b) and the terms of a Supply Agreement,
the terms of such Supply Agreement shall control.
(c) Subject to Section 5.5(a), Seller acknowledges Buyer's exclusive
right, title, and interest in and to the SKF Product Designations and will not
at any time do or cause to be done any act contesting or in any way impairing or
tending to impair any part of such right, title and interest. Buyer reserves the
world-wide right, for itself and its Affiliates, to use the SKF Product
Designations.
5.6 GRINDING AREA. Within thirty (30) days following the Closing Date,
Seller shall, at its sole risk, cost and expense, engage a reputable third-party
contractor to remove the grinding fluid and other residues on the ceiling, walls
and floor of the grinding area contained in the Buyer Premises.
5.7 AIKEN PURCHASE ORDER. Seller shall cause its Aiken, South Carolina
operation ("Aiken") to issue a purchase order to Buyer calling for Buyer to
supply Aiken's requirements of rollers based on Seller's proprietary redesign of
the standard 502 roller ("New 502 Rollers") for a period ending twelve (12)
months from the date of such order. The price for the New 502 Rollers during
such twelve (12) month period shall be $0.12 per roller. Such New 502 Rollers
shall be manufactured in accordance with the specifications set forth in Aiken's
purchase order. Following such twelve (12) month period, the parties shall
negotiate in good faith the continuation of such relationship. Buyer
acknowledges that the design for New 502 Rollers is proprietary to Seller and
covenants and agrees that it shall not sell such New 502 Rollers to any Person
other than Seller or an Affiliate of Seller. Seller acknowledges that such
purchase order shall not constitute New Business for the purposes of Section
2.10.
5.8 IVECO ORDERS. For a period of three (3) years from the date hereof,
Seller shall cause SKF Germany to continue to place purchase orders in respect
of its requirements for part numbers HM 813811/CL7A; HM 813841/CL7A; and HM
813849/CL7A arising from orders required from IVECO in the manner which it has
placed such orders with the Business prior to the date hereof. The products
supplied under the purchase orders shall be at the price and of the quality
supplied by the Business prior to the date hereof, unless, in the case of the
price, as may otherwise be agreed by the parties, or, in the case of quality, as
may otherwise be required by IVECO. Seller acknowledges that such "support"
production shall not constitute New Business for the purposes of Section 2.10.
ARTICLE 6
COVENANTS OF ALL PARTIES
6.1 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 the
Business 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. Following the
Closing, Seller shall obtain all required governmental consents to the
assignment of the Permits to Buyer which were not obtained on or prior to the
Closing Date and Buyer shall cooperate with Seller in respect thereof.
6.2 EMPLOYEES AND EMPLOYEE BENEFIT MATTERS.
(a) Effective as of the Closing, each of the employees of the Business
who is actively employed in the Business on the Closing Date and set forth on
Schedule 6.2(a)(i) (collectively, the "Active Employees") shall cease to be an
employee of Seller and, unless such employee elects otherwise, shall become an
employee of Buyer. As used herein, the term "Active Employees" shall not include
employees of the Business who (i) have elected to be classified as a retiree of
Seller (all such employees being hereinafter collectively referred to as the
"Retired Employees") or (ii) are on layoff, leave of absence, workers
compensation leave or any other leave other than normal vacation (all such
employees being set forth on Schedule 6.2(b)(ii) and hereinafter collectively
referred to as the "Leave Employees"). Each Leave Employee who is not a Retired
Employee shall cease to be an employee of Seller when he returns from layoff or
leave, as the case may be, and, unless such employee elects otherwise, shall
become an employee of Buyer. Buyer may, but shall have no obligation to, offer
employment to one or more of the Retired Employees. Any Active Employee and
Leave Employee who becomes an employee of Buyer by operation of this Section
6.2(a) and each Retired Employee who accepts an offer of employment made by
Buyer shall become a "Transferred Employee" as follows: (1) an Active Employee
shall become a Transferred Employee as of the Closing, unless he elects
otherwise; (2) a Leave Employee shall become a Transferred Employee upon his
return from layoff or leave, as the case may be, unless he elects otherwise; and
(3) a Retired Employee shall become a Transferred Employee upon his acceptance
of Buyer's offer of employment. Buyer shall have no obligation to provide the
Transferred Employees with credit for past service with Seller for any purpose
whatsoever. During the eighteen (18) month period following the Closing, Seller
will neither employ nor offer employment to (i) any Transferred Employee or (ii)
any Leave Employee or Retired Employee to whom Buyer has offered employment
without the prior written consent of Buyer. During the eighteen (18) month
period following the Closing, Buyer will neither employ nor offer employment to
any employee of Seller's Glasgow, Kentucky HUB operation without the prior
written consent of Seller.
(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. (the "Union Plan") covering, inter alia, hourly
employees of the Business who are represented by the Union. (For purposes
hereof, the Salaried Plan and the Union Plan, as in effect immediately prior to
the Closing, are referred to collectively as the "Pension Plans"). With respect
to the Pension Plans, the following shall apply:
(i) Neither Buyer nor RBC will become a sponsor of, maintain, or
continue the Salaried Plan or the Union Plan and no assets or liabilities
of either such plan will be transferred to or assumed by Buyer or RBC or
any plan or trust maintained by Buyer or RBC. Buyer and RBC acknowledge
that neither they or any of their Affiliates shall have any right, title,
or interest in any assets of the Pension Plans.
(ii) Seller agrees that the Pension Plans shall be administered
and, as necessary, be amended, within thirty (30) days after the Closing,
to provide that effective as of the Closing (A) any individual, including a
Transferred Employee, who is an employee of the Business immediately prior
to the Closing and who is covered by either of the Pension Plans shall
cease to be covered by such Plan as of the Closing except as to benefits
accrued prior to the Closing and (B) the accrued benefit under such Plan of
any such employee shall become fully vested as of the Closing.
(c) As soon as practicable after the Closing, Buyer shall establish a
pension plan ("Buyer's Union Plan") for the benefit of Transferred Employees
previously covered by the Union Plan (the "hourly Transferred Employees") in
full compliance with the requirements therefor contained in the collective
bargaining agreement between the Buyer and the Union ("Buyer's Union Contract").
Notwithstanding the foregoing, for purposes of computing the amount of accrued
pension benefit payable to a Transferred Employee (including the hourly
Transferred Employees), no service with Seller before the Closing will be given
credit under pension plans established or maintained by Buyer, RBC or RBC's
Affiliates (including Buyer's Union Plan) and no service with Buyer, RBC or RBC
Affiliates after the Closing will be given credit under the Salaried Plan or the
Union Plan.
(d) Seller and Buyer shall provide each other with such records and
information as may be necessary or appropriate to carry out their obligations
hereunder.
(e) 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) Seller agrees that Seller's 401(k) Plan shall be administered
and, as necessary, amended within thirty (30) days after the Closing, to
provide that effective as of the Closing: (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) and Treas. Reg.ss.ss.1.401(k)-1(d)(l)(iv) and
1.401(k)-1(d)(4).
(ii) Buyer agrees that RBC's 401(k) Plan shall accept (or, as
necessary, be amended to accept) a direct rollover of any amount
distributable from Seller's 401(k) Plan to any 401(k) Plan Employee who is
or becomes a Transferred Employee and who elects to have such direct
rollover made in accordance with the provisions of Seller's 401(k) Plan and
applicable law.
(iii) Except as otherwise specifically provided in this Section
6.2(e), 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.
(f) Seller provides medical benefit coverage under Seller's applicable
retiree medical benefit plans to retirees of Seller. Seller acknowledges that
certain Retired Employees who become employees of Buyer and certain Transferred
Employees who may hereafter elect to be classified as a retiree of Seller
(collectively, the "SKF Retirees") may elect to waive coverage to receive
medical benefits under Buyer's medical benefit plans applicable to such
individuals (or their dependents) and be covered only by Seller's applicable
retiree medical benefit plans. Seller further acknowledges that Buyer intends to
offer a cash incentive to the SKF Retirees to decline coverage under Buyer's
medical benefit plans.
(g) With respect to salaried employees of the Business, Buyer shall,
effective as of the Closing, make available to salaried Transferred Employees
(including salaried Transferred Employees who are SKF Retirees and, as a result,
are entitled to medical benefit coverage under Seller's applicable retiree
medical benefit plans) medical benefit coverage under Buyer's standard medical
benefit plan for its salaried employees. With respect to salaried Transferred
Employees who receive medical benefit coverage under both Seller's applicable
retiree medical benefits plans and Buyer's standard medical benefit plan for its
salaried employees, Buyer's plan shall be the primary payor and Seller's plan
shall be the secondary payor.
(h) With respect to hourly employees of the Business, Buyer will,
effective as of the Closing, make available to hourly Transferred Employees
(including hourly Transferred Employees who are SKF Retirees and, as a result,
are entitled to medical benefit coverage under Seller's applicable retiree
medical benefit plans) medical benefit coverage as required by the Buyer's Union
Contract. With respect to hourly Transferred Employees who receive medical
benefit coverage under both Seller's applicable retiree medical benefits plans
and Buyer's standard medical benefit plan for its hourly employees, Buyer's plan
shall be the primary payor and Seller's plan shall be the secondary payor.
(i) With respect to SKF Retirees who, after active service with Buyer,
are eligible to receive retiree medical benefits under any medical benefit plan
maintained by Buyer for the benefit of its retirees, Buyer shall make available
to each such individual (and his dependents) coverage under such medical plans
at the time of his retirement from Buyer's employ. The parties agree that such
SKF Retirees shall have the right to elect, from time to time, whether Seller's
retiree medical benefit plan or plans or Buyer's retiree medical benefit plan
shall offer primary coverage and be the primary payor.
(j) Each party reserves the right to change its employee and retiree
medical benefits plans in the future and as it deems appropriate.
(k) Seller shall provide life insurance coverage under Seller's retiree
life insurance benefit plans to all employees of the Business who retire prior
to the Closing.
(l) As of the Closing, Buyer shall provide salaried Transferred
Employees with life insurance coverage under Buyer's standard life insurance
plan applicable to its salaried employees, if any.
(m) As of the Closing, Buyer shall provide hourly Transferred Employees
with such life insurance coverage as is required by Buyer's Union Contract.
(n) As of the Closing, Buyer shall 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). To the extent reserved for on the Closing Balance Sheet or arising
in the ordinary course during the Interim Period, Buyer shall assume Seller's
obligations to salaried employees for accrued vacation.
(o) To the extent reserved for on the Closing Balance Sheet or arising
in the ordinary course during the Interim Period, Buyer shall assume all
obligations of Seller to hourly Transferred Employees for accrued vacation under
the Union Contract.
(p) Seller shall bear the entire cost and expense of any severance
payments payable under the terms of any applicable severance plan maintained by
Seller or imposed by Applicable Law (collectively, "Severance Payments") on
account of periods up to and including the Closing. Buyer will bear the entire
cost and expense of Severance Payments payable to employees of the Business on
account of periods from and after the Closing; provided that such payments shall
be paid and determined solely in accordance with Buyer's severance plan or
policy.
(q) Nothing in this Section 6.2 shall be construed to entitle any
Transferred Employee who retires from Seller at or before the Closing to a
particular rate of pay as an employee of Buyer.
6.3 ALLOCATION OF ENVIRONMENTAL LIABILITIES.
(a) At any time within twenty-four (24) months following the Closing,
Seller shall have the right but not the obligation to conduct an environmental
investigation (the "Environmental Study") respecting the 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 Real Property
designated by Seller (the portion of the Real Property not subject to the
Environmental Study being the "Excluded Environmental Parcel" and the portion of
the 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,
(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 and Excluded Environmental Parcels if
no Environmental Study is conducted, Environmental Liabilities relating to
the Business or the Transferred Assets or otherwise associated with the
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 resulting from the operation of the Business by Buyer on that
portion of the Real Property which shall be sublet to Buyer pursuant to the
Sublease (the "Buyer Premises") and 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 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, or
(ii) If an Environmental Study is conducted, Environmental
Liabilities arising out of Environmental Conditions on the Buyer Premises,
but only to the extent constituting a part of the Included Environmental
Parcel and 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.
6.4 TRB 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 TRB Products manufactured on or prior to the Closing Date
pursuant either to (i) express TRB 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) TRB Product warranties or obligations implied or
provided by applicable law (together, the "Excluded Product Warranty Claims")
with respect to any such TRB Products, the following shall apply:
(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 $100,000 in the
aggregate, it being understood that Buyer shall absorb the first $100,000 of
costs associated with Excluded Product Warranty Claims.
6.5 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 TRB Products manufactured on
or prior to the Closing Date (and whether or not sold prior to the Closing Date)
("Excluded Product Liability Claims").
6.6 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 or illnesses 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 9.11 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 6.6
shall hereinafter be referred to as "Excluded Worker's Compensation Claims."
ARTICLE 7
INDEMNIFICATION
7.1 AGREEMENT TO INDEMNIFY.
(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 7 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 arising in the ordinary course of
the Business. 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 $75,000 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 7.1(a) of this Agreement shall not exceed $5,000,000, 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; or (4) any Lien that does not constitute a Permitted Lien.
(b) Seller and its Affiliates (collectively the "Seller Indemnitees")
shall each be indemnified and held harmless to the extent set forth in this
Article 7 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 from 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.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
(a) The representations and warranties contained in this Agreement
shall survive as follows:
(i) Except as otherwise provided in Section 7.2(a)(ii), (iii) or
(iv), all representations and warranties shall expire on the first
anniversary of the Closing Date.
(ii) Notwithstanding Section 7.2(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 7.2(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 (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 Assumed Liability.
(iv) Notwithstanding Section 7.2(a)(i), the representations and
warranties of Seller set forth in Sections 3.1, 3.2, 3.4 and 3.8(a) 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 7.2(a).
(b) The covenants contained in this Agreement shall survive without
expiration unless otherwise expressly provided in such covenant.
7.3 CLAIMS FOR INDEMNIFICATION. If any Indemnitee shall believe that
such Indemnitee is entitled to indemnification pursuant to this Article VII 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
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 such 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 ▇▇▇▇▇ 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 9.11.
7.4 DEFENSE OF CLAIMS.
(a) In connection with any claim which may give rise to indemnity under
this Article 7 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 7.4(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 7.4, 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 7.4(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
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 7.4. If the Indemnifying Parties do not assume the defense of any
claim or Proceeding resulting therefrom in accordance with the terms of this
Section 7.4(a), such Indemnitee may defend against such claim or Proceeding.
(b) Notwithstanding Section 7.4(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 7.1(a).
(c) If the Indemnitee elects to defend any claim or Proceeding pursuant
to the last sentence of Section 7.4(a) or pursuant to Section 7.4(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 8
COVENANT NOT TO COMPETE
8.1 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 of less
than twenty percent (20%) of the outstanding voting stock or debt securities of
any publicly held company of which it (and its Affiliates) do 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 8.1 do 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 Competitive 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 TRB Product (i) manufactured
by the Business 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 8.1, "Competitive Activity" shall mean (x)
the sale in North America (i.e. the continental United States, Mexico, Canada
and Alaska) of (A) any TRB Product (either by itself or as a component of
another product) or (B) any similar or modified tapered roller bearing product
(either by itself or as a component of another product) for the same application
as the TRB Products, and (y) the sale to any Person who was, to the Knowledge of
Seller, a direct or indirect customer of the Business outside of North America
at any time within five (5) years preceding the Closing Date of (A) any TRB
Product (either by itself or as a component of another product) or (B) any
similar or modified tapered roller bearing product (either by itself or as a
component of another product) for the same application as TRB Products; provided
that the sale of a TRB Product or any similar or modified tapered roller bearing
product for the same application as the TRB Products, in each case as an
incidental component of another product, shall not be deemed a "Competitive
Activity" if made at the express direction of a third-party customer.
8.2 CHICAGO RAWHIDE NON-COMPETE. From and after the Covered Period,
Seller will not, and will advise its Affiliates to not, directly or indirectly,
individually or collectively, engage in any CR Competitive Activity during the
CR Covered Period; provided, however, that, notwithstanding the foregoing, (a)
neither Seller, nor any of its Affiliates shall be deemed to be engaged in a CR
Competitive Activity solely by virtue of the ownership of less than twenty
percent (20%) of the outstanding voting stock or debt securities of any publicly
held company of which it (and its Affiliates) do 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; and (b) Seller and its Affiliates
shall not be deemed to be engaged in a CR Competitive Activity by virtue of
their sale or resale of any product (i) purchased from or manufactured by Buyer
or (ii) manufactured by the Business and transferred to Chicago Rawhide prior to
the Closing Date.
If Seller becomes aware that any one or more of its Affiliates is
engaged in a CR Competitive Activity, it shall use its best efforts to cause
such Affiliate(s) to cease, forthwith, such CR Competitive Activity. Upon
becoming aware of such a CR Competitive Activity, Seller shall promptly notify
Buyer of such CR Competitive Activity and the nature of its efforts to cause
such CR Competitive Activity to cease.
For purposes of this Section 8.2, (x) "CR Competitive Activity" shall
mean the sale to Aftermarket Resellers of any product which Chicago Rawhide has
agreed to purchase from Buyer pursuant to the CR Supply Agreement and (y) "CR
Covered Period" shall mean a period of time beginning on the Closing Date and
ending on the date the CR Agreement is terminated (regardless of the reason for
such termination).
8.3 SEVERABILITY. The invalidity or unenforceability of this Article 8
in any respect shall not affect the validity or enforceability of this Article 8
in any other respect, or of any other provision of this Agreement. In the event
that any provision of this Article 8 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 8 or the enforcement of
such provision in other circumstances, and, to the fullest extent permitted by
law, this Article 8 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.
8.4 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 8 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
8 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 8, 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 8 by Seller and to
enjoin Seller from any further violations. The remedies available to Buyer
pursuant to this Section 8.4 may be exercised cumulatively by Buyer in
conjunction with all other rights and remedies provided by law. Notwithstanding
the foregoing, in the event of a breach of Section 8.2 that also constitutes, or
gives rise to, a breach by Chicago Rawhide of the CR Supply Agreement, (i) Buyer
shall not be entitled to the remedy of specific performance hereunder or
injunctive relief, and (ii) Buyer shall not be entitled to obtain the benefit of
duplicative damages or recourse from Seller and Chicago Rawhide.
ARTICLE 9
MISCELLANEOUS
9.1 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.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
SKF USA Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary and General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Roller Bearing Company of America, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until 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.
9.2 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 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.
9.3 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.
9.4 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.
9.5 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.
9.6 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.
9.7 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.
9.8 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.
9.9 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 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.
9.10 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.
9.11 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 VII 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 7.3 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 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 9.11
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 9.11 or any judicial action or proceeding seeking to
enforce the agreement to arbitrate disputes as set forth in this Section 9.11 or
seeking to enforce any order or award of any arbitration commenced pursuant to
this Section 9.11 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.
9.12 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.
9.13 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).
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: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
President
BUYER:
TYSON BEARING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
RBC:
ROLLER BEARING COMPANY OF AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
SCHEDULE 2.3
ASSUMED LIABILITIES
(a) Those Liabilities of the Business which are accrued as a Liability on the
Closing Balance Sheet.
(b) All Liabilities and obligations of the Business arising after the
Effective Time under Contracts included in the Transferred Assets,
except to the extent constituting Excluded Liabilities.
SCHEDULE 2.9
Business Unit Percentage of 1999 "P.S."
Export 0.95000
Industrial 1.2896
Paccor 0.8581
Truck 0.9780
Volvo 0.8391
Chicago Rawhide 1.0510