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DRAFT -- 9/27/97 6:11 AM
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ASSET PURCHASE AGREEMENT
By and Among
SKF USA INC.,
RBC NICE BEARINGS, INC.,
and
ROLLER BEARING COMPANY OF AMERICA, INC.
Dated as of February 28, 1997
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS........................................................1
1.01. Definitions......................................................1
ARTICLE II. TRANSFER OF ASSETS..............................................5
2.01. Transfer of Assets by Seller.....................................5
2.02. Excluded Assets..................................................7
2.03. Assumption of Liabilities........................................7
2.04. Excluded Liabilities.............................................7
2.05 Assignment of Contracts and Rights...............................9
2.06. Closing..........................................................9
2.07. First Anniversary Payments.......................................10
2.08. 1/31/97 Balance Sheet............................................10
2.09. Post-Closing Purchase Price Adjustment...........................10
2.10. Accounting Expenses..............................................11
2.11. Purchase Price Allocation........................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.......................11
3.01. Existence and Power..............................................11
3.02. Authorization....................................................11
3.03. Intentionally omitted............................................12
3.04. Governmental Authorization.......................................12
3.05. Non-Contravention................................................12
3.06. Financial Statements; Undisclosed Liabilities....................12
3.07. Absence of Certain Changes.......................................13
3.08. Properties; Leases; Tangible Assets..............................14
3.09. Sufficiency of and Title to the Transferred Assets...............15
3.10. Affiliates.......................................................15
3.11. Inventory........................................................15
3.12. Litigation.......................................................16
3.13. Contracts........................................................16
3.14. Permits; Required Consents.......................................17
3.15. Compliance with Applicable Laws..................................17
3.16. Employment Agreements; Change in Control; and Employee Benefits..18
3.17. Labor and Employment Matters.....................................19
3.18. Intellectual Property............................................19
3.19. Advisory Fees....................................................20
3.20. Environmental Compliance.........................................20
3.21. Tax Matters......................................................21
3.22. Insurance........................................................21
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3.23. Material Disclosures.............................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER.........................22
4.01. Organization and Existence.......................................22
4.02. Corporate Authorization..........................................22
4.03. Governmental Authorization.......................................22
4.04. Non-Contravention................................................22
4.05. Advisory Fees....................................................22
4.06. Litigation.......................................................22
ARTICLE V. COVENANTS OF SELLER..............................................23
5.01. Conduct of the Business..........................................23
5.02. Access to Information............................................24
5.03. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents..................................25
5.04. Maintenance of Insurance Policies................................25
5.05. Confidentiality..................................................25
5.06. Taxes............................................................26
5.07. Accounts Receivable and Accounts Payable.........................27
5.08. Oil/Water Separator Replacement or Repair........................27
5.09. Supply of Steel from Ovako.......................................27
ARTICLE VI. COVENANTS OF BUYER...............................................28
6.01. Confidentiality..................................................28
6.02. Worker's Compensation Reimbursement..............................29
6.03. Sales and Use Tax Permits........................................29
ARTICLE VII. COVENANTS OF ALL PARTIES.........................................29
7.01. Further Assurances...............................................29
7.02. Certain Filings..................................................29
7.03. Public Announcements.............................................30
7.04. Administration of Accounts.......................................30
7.05. Intentionally omitted............................................30
7.06. Bulk Sales Laws..................................................30
7.07. Employees and Employee Benefit Matters...........................30
7.08. Trademark License................................................35
ARTICLE VIII. CONDITIONS TO CLOSING.........................................36
8.01. Conditions to Obligation of Buyer................................36
8.02. Conditions to Obligation of Seller...............................38
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ARTICLE IX. INDEMNIFICATION.................................................40
9.01. Agreement to Indemnify...........................................40
9.02. Survival of Representations and Warranties and Covenants.........40
9.03. Claims for Indemnification.......................................41
9.04. Defense of Claims................................................42
ARTICLE X. TERMINATION......................................................43
10.01. Grounds for Termination.........................................43
10.02. Effect of Termination...........................................44
ARTICLE XI. MISCELLANEOUS...................................................44
11.01. Notices.........................................................44
11.02. Amendments; No Waivers..........................................45
11.03. Expenses........................................................46
11.04. Successors and Assigns..........................................46
11.05. Governing Law...................................................46
11.06. Counterparts; Effectiveness.....................................46
11.07. Entire Agreement................................................46
11.08. Captions........................................................46
11.09. Severability....................................................46
11.10. Construction....................................................47
11.11. Arbitration of Claims...........................................47
11.13. Cumulative Remedies.............................................48
11.14. Third Party Beneficiaries.......................................48
Index of Other Defined Terms. In addition to those terms defined in
Section 1.01 below, the following terms shall have the respective meanings given
thereto in the sections indicated below:
Defined Term Section
"1995 Balance Sheet".................... 3.06(a)
"1/31/97 Sheet"......................... 2.08
"Agreement"............................. Preamble
"Assumed Liabilities"................... 2.03
"Annual Financials"..................... 3.06(a)
"Business".............................. Recitals
"Buyer"................................. Preamble
"Buyer Indemnitees"..................... 9.01(a)
"Closing"............................... 2.06(a)
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"Closing Date".......................... 2.06(a)
"Contracts"............................. 2.01(d)
"Equipment"............................. 2.01(b)
"Excluded Assets"....................... 2.02
"Excluded Environmental Liabilities".... 2.04(c)
"Excluded Liabilities".................. 2.04
"Extent of License" 7.08(c)
"First Choice".......................... 2.08
"Goods"................................. 7.08(a)
"Grant" 7.08(a)
"Indemnity" 7.08(e)
"Insurance Policies".................... 3.22
"Intellectual Property Rights".......... 3.18(a)
"Inventory"............................. 2.01(c)
"Leases"................................ 3.08(b)
"Leased Real Property".................. 3.08(a)
"Maintenance of Trademark" 7.08(d)
"Net Transferred Asset Value"........... 2.09(a)
"Nice".................................. Recitals
"Ovako"................................. 5.09
"Overpayment"........................... 2.09(b)
"Permits"............................... 3.14(a)
"Personal Property Leases".............. 3.08(b)
"Proceedings"........................... 3.12
"Proposed 1/31/97 Balance Sheet"........ 2.08
"RBC"................................... Preamble
"Real Property Leases".................. 3.08(b)
"Required Consents"..................... 3.14(b)
"Required Contractual Consent".......... 3.14(b)
"Required Governmental Approval"........ 3.14(b)
"Scheduled Contracts"................... 3.13(a)
"Selected Firm"......................... 2.08
"Seller"................................ Preamble
"Seller Indemnitees".................... 9.01(b)
"Subsequent Material Contract".......... 5.01(b)(iv)
"Term".................................. 7.08(b)
"Territory"............................. 7.08(a)
"Trademark"............................. 7.08(a)
"Transferred Assets".................... 2.01
"Unpaid Balance"........................ 2.09(a)
"Workpapers"............................ 2.08
EXHIBITS
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EXHIBIT A Seller's Financials
EXHIBIT B Form of Sales and Supply Agreement
EXHIBIT C Interim Services Agreement
EXHIBIT D Form of Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
EXHIBIT E Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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SCHEDULES
Schedule 1.01 Permitted Liens
Schedule 2.01 Specified Equipment
Schedule 2.02 Excluded Assets
Schedule 2.03 Assumed Liabilities
Schedule 2.04(g) Certain Excluded Liabilities
Schedule 2.06(b) 12/31/96 Net Transferred Asset Value
Schedule 3.04 Governmental Authorizations
Schedule 3.06(b) Accounting Differences
Schedule 3.06(c) No Undisclosed Liabilities
Schedule 3.07 Absence of Certain Changes
Schedule 3.08(a) Real Property
Schedule 3.08(b) Leases
Schedule 3.10 Affiliates
Schedule 3.11 Inventories
Schedule 3.12(a) Litigation
Schedule 3.13(a) Scheduled Contracts
Schedule 3.13(b) Non-Binding Scheduled Contracts
Schedule 3.13(c) Primary Customers and Suppliers
Schedule 3.14(a) Permits
Schedule 3.14(b) Required Consents
Schedule 3.15 Compliance with Applicable Laws
Schedule 3.16(a) Benefit Plans of Seller
Schedule 3.16(b) Additional Benefits
Schedule 3.16(f) Retiree Benefits
Schedule 3.17(a) Labor and Employment Matters
Schedule 3.17(e) Worker's Compensation Matters
Schedule 3.18(a) Intellectual Property Rights
Schedule 3.18(b) Proceedings Applicable to Intellectual Property
Schedule 3.18(c) Ownership of Intellectual Property Rights
Schedule 3.20(a) Environmental Permits
Schedule 3.20(b) Environmental Compliance
Schedule 3.20(c) Continuing Compliance with Environmental Laws
Schedule 3.21 Tax Matters
Schedule 3.22 Insurance Policies
Schedule 5.01(b) Capital Expenditures
Schedule 5.08 Oil/Water Separator Repair Procedures
Schedule 7.07(b) Present Value Calculation Assumptions
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of
February 28, 1997 is by and among SKF USA INC., a Delaware corporation
("Seller"), RBC NICE BEARINGS, INC., a Delaware corporation ("Buyer") and a
wholly-owned subsidiary of RBC (as defined below), and ROLLER BEARING COMPANY OF
AMERICA, INC., a Delaware corporation ("RBC").
R E C I T A L S
WHEREAS, Seller, through Nice Specialty Bearings Division, a
division of Seller ("Nice") is engaged in the design, development, manufacture,
assembly and sale of inch dimension, single row deep groove ball bearings of a
grade of ABEC-1 or less and having an outside diameter of four inches or less
(the "Business"); and
WHEREAS, Seller desires to sell and transfer to Buyer substantially
all of its assets related to the Business in consideration for the delivery by
Buyer to Seller of the Purchase Price (as defined herein) and on the terms and
conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.
ARTICLE I.
DEFINITIONS
1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental
Law) applicable to such Person or any of its Affiliates or Plan Affiliates or
any of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person or any
of its Affiliates or 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,
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former employees, directors, or former directors of Seller and their
beneficiaries with respect to Nice; 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 Los Angeles, California are authorized or
required by law to close.
"Buyer's Auditors" means the independent certified public
accountants retained by Buyer.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means all contracts, agreements, options, leases,
licenses, sales and purchase order, commitments and other instruments of any
kind, whether written or oral, to which Seller is a party on the Closing Date,
including the Scheduled Contracts and the Subsequent Material Contracts.
"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 Bank of America, N.T. & S.A.
as its prime rate (or reference rate) in effect from time to time, compounded
quarterly, from the date each such cash disbursement is made until the Person
incurring the same shall have been indemnified in respect thereof and (ii)
reasonable costs, fees and expenses of attorneys, accountants and other agents
of such Person. 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 Nice.
"Environmental Laws" means all Applicable Laws relating to Hazardous
Substances, occupational health and safety, or the environment including,
without limitation,
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(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 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 by any Governmental
Authority or by a third party pursuant to or under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was or
is required to be treated as a single employer under Section 414 of the Code.
"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 Nice.
"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
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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.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Indemnifying Party" means: (1) Seller when any Buyer or RBC
Indemnitee is asserting a claim under Sections 9.01(a) or 11.11 or (2) Buyer or
RBC jointly or severally when any Seller Indemnitee is asserting a claim under
Sections 9.01(b) or 11.11.
"Indemnitee" means: (1) each of Buyer, RBC and their Affiliates with
respect to any claim for which Seller is an Indemnifying Party under Sections
9.01(a) or 11.11; or (2) Seller and its Affiliates with respect to claims for
which Buyer or RBC is an Indemnifying Party under Sections 9.01(b) or 11.11.
"IRS" means the Internal Revenue Service.
"Knowledge" means, with respect to any corporation, all things known
to the executive officers of such corporation.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person and whether or not the same appears on any Schedule to this Agreement.
"Lien" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance or charge of any kind in respect of such asset.
"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of the Business that results
in a material adverse effect on, or a material adverse change in, the
Transferred Assets taken as a whole, or a material adverse effect on the
Business taken as a whole.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"Permitted Liens" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for Taxes
the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other Liens
imposed by Applicable Law incurred in the ordinary course of business for sums
not yet
4
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 1.01 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 have been reserved for on the
1995 Balance Sheet.
"Person" means an individual, corporation, partnership, association,
trust, estate or other entity or organization, including a Governmental
Authority.
"Product" means any ball bearing or other product sold in the
ordinary course of the Business.
"Prohibited Transaction" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"Purchase Price" means the sum of the amounts paid pursuant to
Sections 2.06(b) and 2.07 plus the Unpaid Balance or minus the Overpayment, as
the case may be.
"Seller's Auditors" means the independent certified public
accountants retained by Seller.
"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.
ARTICLE II.
TRANSFER OF ASSETS
2.01. Transfer of Assets by Seller. Upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and
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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, free and clear of
all Liens, other than Permitted Liens, all the assets, properties, rights,
licenses, permits, contracts, causes of action and claims, of every kind and
description as the same shall exist on the Closing Date (other than the Excluded
Assets), wherever located, whether tangible or intangible, real, personal or
mixed, that are used, owned by, leased by or in the possession of Seller in
connection with the Business, whether or not reflected on the books and records
of Seller, including all assets shown on the 1995 Balance Sheet and not disposed
of in the ordinary course of business or as permitted by this Agreement prior to
the Closing Date (the collective assets, properties, rights, licenses, permits,
contracts, causes of action and claims in connection with the Business to be
transferred to Buyer by Seller pursuant hereto are referred to collectively
herein as the "Transferred Assets") and including without limitation all right,
title and interest of Seller in, to and under the following, to the extent used,
owned by, leased by or in the possession of Seller in connection with the
Business at the time of Closing:
(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
2.01 hereto;
(c) all items of inventory notwithstanding how classified in
the financial records of Seller, including all raw materials, purchased parts,
work-in-process, finished goods, supplies, spare parts and samples
(collectively, the "Inventory");
(d) 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 on the Closing Date,
including the Scheduled Contracts and the Subsequent Material Contracts
(collectively, the "Contracts");
(e) all accounts receivable and notes receivable, together
with any unpaid interest or fees accrued thereon or other amounts due with
respect thereto, of Seller, and any security or collateral therefor, including
recoverable advances and deposits;
(f) all prepaid charges and expenses of Seller, including any
such charges and expenses with respect to ad valorem taxes, leases and rentals
and utilities;
(g) all rights of Seller under any insurance policy;
(h) all of Seller's rights, claims, credits, causes of action
or rights of set-off against third parties relating to the Business or the
Transferred Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations
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and guarantees made by suppliers, manufacturers, contractors and other third
parties in connection with products or services purchased by or furnished to
Seller affecting any of the Transferred Assets;
(i) all of Seller's patents, copyrights, trademarks, trade
names, service marks, service names, designs, know-how, processes, trade
secrets, inventions, and other proprietary data;
(j) 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 in connection with the Business,
whether or not actually utilized by Seller;
(k) all books, records, files and papers of Seller, whether in
hard copy or computer format, including books of account, invoices, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, personnel and
employment records of present and former employees, and documentation developed
or used for accounting, marketing, engineering, manufacturing or any other
purpose related to the conduct of the Business at any time prior to the Closing;
(l) all lists of present customers and lists of former
customers;
(m) all goodwill associated with the Business or the
Transferred Assets;
(n) all product designations used in Seller's catalog with
respect to the Products; and
(o) except as specifically provided in Section 2.02, all other
assets and properties of Seller that exist on the Closing Date and are used in
connection with the Business, whether tangible or intangible, real or personal.
2.02. Excluded Assets. Buyer expressly understands and agrees
that the assets and properties set forth on Schedule 2.02 (the "Excluded
Assets") shall be excluded from the Transferred Assets and shall be retained
by Seller.
2.03. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees, effective at the time
of Closing, to assume and in due course perform, pay and discharge all the
Liabilities set forth on Schedule 2.03 (the "Assumed Liabilities").
2.04. Excluded Liabilities. Buyer does not hereby assume, and shall
not at any time hereafter (including on or after the Closing Date) become liable
for, any of the Liabilities 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:
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(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 Environmental Liability relating to the Business or
the Transferred Assets, whether presently in existence or arising hereafter
except Environmental Liabilities arising out of actions or inaction of Buyer
after the Closing Date (collectively, the "Excluded Environmental Liabilities");
(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 contingent Liabilities of Seller related to any
transactions by Seller prior to the date hereof 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 2.04(g);
(h) any Liability of Seller arising under this Agreement;
(i) with respect to Products manufactured on or prior to the
Closing Date, any Liability arising out of, resulting from, or relating to
claims seeking return, replacement, and/or repair of such Products pursuant
either to (1) express product warranties extended by Seller prior to the Closing
Date or by 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 (2) product warranties or obligations implied or provided by Applicable Law,
except where such Liability constitutes an Assumed Liability under clause(c) of
Schedule 2.03; and
(j) with respect to Products manufactured on or prior to the
Closing Date, any Liability arising out of, resulting from, or relating to
product liability claims.
8
2.05. Assignment of Contracts and Rights.
(a) With respect to any material Contract and any claim, right
or benefit arising thereunder or resulting therefrom that constitute Transferred
Assets, promptly after the date hereof, to the extent requested by Buyer, Seller
will use reasonable efforts to obtain the written consent of the other parties
to any such Contract to the assignment thereof to Buyer or written confirmation
from such parties reasonably satisfactory in form and substance to Buyer
confirming that such consent is not required.
(b) If such consent, waiver or confirmation is not obtained
with respect to any such Contract and notwithstanding the provisions of Section
8.01(c) Buyer elects to consummate the Closing, Seller and Buyer shall cooperate
in an arrangement reasonably satisfactory to Buyer and Seller under which Buyer
would obtain, to the extent practicable, the claims, rights and benefits and
assume the corresponding obligations thereunder in accordance with this
Agreement, including subcontracting, sub-licensing or sub-leasing to Buyer, or
under which Seller would enforce for the benefit of Buyer, with Buyer assuming
Seller's obligations, any and all claims, rights and benefits of Seller against
a third party thereto. Seller will promptly pay to Buyer when received all
monies received by Seller under any Transferred Asset or any claim, right or
benefit arising thereunder not transferred to Buyer pursuant to this Section
2.05(b).
2.06. Closing.
(a) The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on February 24, 1997 or such other
date as to which Buyer and Seller may agree (the "Closing Date").
Notwithstanding the foregoing, pursuant to Section 10.01(f) Seller or Buyer may
terminate this Agreement if the Closing shall not have been consummated by the
Outside Date.
(b) At the Closing, Buyer shall pay to Seller $5,960,411,
computed as shown on Schedule 2.06(b), in cash by wire transfer of immediately
available funds to a bank account or bank accounts designated in writing by
Seller prior to the Closing.
(c) Seller shall deliver to Buyer such bills of sale,
certificates of title, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (which in the case of
Intellectual Property Rights, shall be documents immediately recordable in the
respective countries of origin) of such rights as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Buyer all of Seller's right, title and interest in, to and under the Transferred
Assets.
2.07. First Anniversary Payments. As part of the Purchase Price,
Buyer shall pay to Seller $841,000, on the first anniversary of the date hereof,
in cash by wire transfer of immediately available funds to a bank account or
bank accounts designated in writing by Seller prior to the due date thereof.
9
2.08. 1/31/97 Balance Sheet. Within 30 days after the Closing Date,
Seller will prepare and present to Buyer a balance sheet (the "Proposed 1/31/97
Balance Sheet") setting forth as of January 31, 1997 the book value of the
Transferred Assets and the Assumed Liabilities. The Proposed 1/31/97 Balance
Sheet shall be prepared so that it presents fairly the book value of the
Transferred Assets and Assumed Liabilities in accordance with GAAP (or on a
basis consistent with prior practices of Seller with the disclosure that such
practice is not GAAP) using practices and procedures consistent with the
preparation of the 1995 Balance Sheet. Seller's Auditors shall perform selected
procedures as agreed to by Buyer and Seller with respect to the Proposed 1/31/97
Balance Sheet (the "Agreed Upon Procedures"). Buyer and Buyer's Auditors shall
have the right to review and copy, promptly upon request, the workpapers of
Seller's Auditors (the "Workpapers") utilized in performing the Agreed Upon
Procedures with respect to the Proposed 1/31/97 Balance Sheet. The Proposed
1/31/97 Balance Sheet shall be binding upon the parties to this Agreement unless
Buyer gives written notice of disagreement with any of said values or amounts to
Seller within 15 days after its receipt of the Proposed 1/31/97 Balance Sheet
and the Workpapers, specifying in reasonable detail the nature and extent of
such disagreement. If Buyer and Seller mutually agree upon the Proposed 1/31/97
Balance Sheet within 30 days after Buyer's receipt of notice of disagreement
from Seller, such agreement shall be binding upon the parties to this Agreement.
If Buyer and Seller are unable to resolve any such disagreement within such
period, the disagreement shall be referred for final determination to Price
Waterhouse & Company LLC (the "First Choice") or, if such firm is not available,
such other independent accounting firm of national reputation selected by the
mutual agreement of Buyer and Seller (the "Selected Firm"), and the resolution
of that disagreement and the Proposed 1/31/97 Balance Sheet, as adjusted as a
result of such resolution, shall be final and binding upon the parties hereto
for purposes of this Agreement. If Buyer and Seller cannot agree on the Selected
Firm, it shall be chosen by the First Choice and shall be a nationally
recognized firm. The Proposed 1/31/97 Balance Sheet as finally determined is the
"1/31/97 Balance Sheet."
2.09. Post-Closing Purchase Price Adjustment.
(a) If $6,801,411 is less than the book value of the
Transferred Assets as of January 31, 1997 net of the total amount of the Assumed
Liabilities as of January 31, 1997, as determined from the 1/31/97 Balance Sheet
with applicable adjustments thereto of the type described in Schedule 2.06(b)
plus the sum of $500,000 (the "Net Transferred Asset Value") (such deficit being
referred to herein as the "Unpaid Balance"), then, within five Business Days
after the final determination of the 1/31/97 Balance Sheet, Buyer shall deliver
to Seller such Unpaid Balance in cash in immediately available funds by wire
transfer to a bank account or bank accounts designated in writing by Seller
prior to the due date thereof.
(b) If $6,801,411 is greater than the Net Transferred Asset
Value (such excess being referred to herein as the "Overpayment"), then, within
five Business Days after the final determination of the 1/31/97 Balance Sheet,
Seller shall deliver to Buyer such Overpayment in cash in immediately available
funds by wire transfer to a bank account or bank accounts designated in writing
by Buyer prior to the due date thereof.
10
2.10. Accounting Expenses. The fees and disbursements of Seller's
Auditors shall be paid by Seller and the fees and disbursements of Buyer's
Auditors shall be paid by Buyer. The fees and disbursements of the First Choice
or the Selected Firm, as the case may be, shall be paid by Buyer and Seller as
the First Choice or the Selected Firm, as the case may be, shall determine based
upon its assessment of the relative merits of the positions taken by each in any
disagreement presented to such firm.
2.11. Purchase Price Allocation. Within 120 days after the Closing
Date, Buyer and Seller shall agree upon the final allocation of the Purchase
Price among the Transferred Assets for purposes of complying with Section 1060
of the Code and making any required filings under state or local law and shall
set forth such allocation on a statement (the "Allocation Statement"). After the
Closing, from time to time, Buyer and Seller shall agree upon revisions to the
Allocation Statement for tax purposes. Buyer and Seller shall report the tax
consequences of the transactions contemplated by this Agreement in a manner
consistent with the Allocation Statement, as it may be revised from time to
time, and shall not take any position inconsistent therewith.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller represents and warrants
to Buyer as follows:
3.01. Existence and Power.
(a) Seller is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware and has
all corporate power and all governmental licenses, authorizations, consents and
approvals required to carry on the Business as now conducted and to own and
operate the Business as now owned and operated, except for those instances
where, in the aggregate, the failure to have such licenses, authorizations,
consents and approvals is not, and is not reasonably expected to have a Material
Adverse Effect. Seller is qualified to conduct business in each jurisdiction
where the nature of its activities in connection with the conduct of the
Business requires it to be so qualified. Seller is in good standing in each
state where it is qualified, except for those jurisdictions where in the
aggregate the failure to be so is not, and is not reasonably expected to have a
Material Adverse Effect.
3.02. 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 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.
11
3.03. [Intentionally omitted.]
3.04. 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 (a)
compliance with any applicable requirements of the HSR Act and (b) any actions,
consents, approvals or filings otherwise expressly referred to in this Agreement
or set forth on Schedule 3.04 or 3.14(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.
3.05. Non-Contravention. The execution, delivery and performance by
Seller of this Agreement do not and will not (a) contravene or conflict with the
Articles of Incorporation or Bylaws of Seller, true and correct copies of which
have been delivered to Buyer by Seller, (b) assuming receipt of the Required
Consents, contravene or conflict with or constitute a violation of any provision
of any Applicable Law binding upon or applicable to Seller, the Business or any
of the Transferred Assets, (c) assuming receipt of the Required Consents,
constitute a default under or give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to which Seller is
entitled under, any material Contract or any Permit or similar authorization
relating to the Business or included in any of the Transferred Assets or by
which any of the Transferred Assets may be bound, or (d) result in the creation
or imposition of any Lien on any Transferred Asset, other than Permitted Liens.
3.06. Financial Statements; Undisclosed Liabilities.
(a) Attached hereto as Exhibit A are true and complete copies
of the unaudited balance sheet of Nice as at December 31, 1995 (the "1995
Balance Sheet") and the related unaudited statements of income and statements of
cash flows and changes in the home-office account for the years ended December
31, 1993, 1994 and 1995 (collectively, the "Annual Financials") and the related
unaudited statements of income and statements of cash flows and changes in the
home-office account for the fiscal quarters ended March 31, June 30, and
September 30, 1996 (collectively, the "Interim Financials and, together with the
Annual Financials, the "Financials").
(b) The Financials (i) have been prepared based on the books
and records of Nice in accordance with the normal accounting practices of Nice
and Seller, consistent with past practice and with each other, and present
fairly the financial condition, results of operations and statements of cash
flow of Nice as of the dates indicated or the periods indicated; and (ii) with
respect to contracts and commitments for the sale of goods or the provision of
services by Nice, contain and reflect adequate reserves for all reasonably
anticipated material losses and costs and expenses in excess of expected
receipts. Any differences between GAAP and Seller's accounting practices, as
well as the estimated magnitude of such impact on the Financials resulting from
such differences, are set forth on Schedule 3.06(b)
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(c) Except as set forth on Schedule 3.06(c), there are no
material Liabilities relating to Nice other than:
(i) any Liability accrued as a Liability on the 1995
Balance Sheet; and
(ii) Liabilities specifically disclosed and identified
as such in the schedules to this Agreement.
3.07. Absence of Certain Changes. Except as set forth on
Schedule 3.07, since the date of the 1995 Balance Sheet, the Business has
been conducted in the ordinary course, and 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 Nice 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,
13
insurance, health or other Benefit Plan of Seller, or (vi) representation of
Seller to any Employee that Buyer would assume, continue to maintain or
implement any Benefit Plan after the Closing Date;
(f) any loan to or guarantee or assumption of any loan or
obligation on behalf of any Employee, except travel advances occurring in the
ordinary course of business consistent with past practice;
(g) any material change by Seller in its accounting
principles, methods or practices or in the manner it keeps its books and records
or any material change by Seller of its current practices with regards to sales,
receivables, payables or accrued expenses that would affect the timing of
collection of receivables or the payment of payables;
(h) the entering into of any Contract or other arrangement
between Seller and any officer, director, stockholder or Affiliate of Seller or
any of their respective Affiliates, to the extent any such Contract or other
arrangement relates to the conduct of the Business; or
(i) any payment, discharge or satisfaction of any Liabilities
of Seller, other than payments, discharges or satisfactions in the ordinary
course of business.
3.08. Properties; Leases; Tangible Assets.
(a) Schedule 3.08(a) sets forth a true and complete list of
all real property owned by Seller in connection with the Business (the "Owned
Real Property) such list setting forth the location of each parcel of Owned Real
Property, the record owner thereof, the acreage and a brief description of the
nature of the activities of Seller on such Owned Real Property. Seller has a
good and valid title to, or in the case of leasehold properties or properties
held under license and identified on Schedule 3.08(a) (the "Leased Real
Property" and, collectively with the Owned Real Property, the "Real Property"),
a good and valid leasehold or license interest in, all of the Real Property,
which constitutes all of the real property used in the Business.
(b) Schedule 3.08(b) sets forth a true and complete list of
all personal property leases or licenses (i) to which Seller is a party or by
which Seller is bound, (ii) that are related to the Business and (iii) that
provide for annual payments by Seller in excess of $10,000 or that contain other
affirmative material obligations that cannot be terminated by Seller within 30
days (the "Personal Property Leases") and all leases or licenses of Leased Real
Property that provide for annual payments by Seller in excess of $10,000 or that
cannot be terminated by Seller within 30 days (the "Real Property Leases" and
collectively with the Personal Property Leases, the "Leases") entered into in
connection with the Business. With respect to the Leases, except as set forth on
Schedule 3.08(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 3.08(b), assuming the Required Consents are obtained,
14
all Leases to which a Seller is a party with non-Affiliates or by which it is
bound may be assigned, transferred and conveyed to Buyer without default,
penalty or modification thereof.
(c) Except as disclosed in 3.08(c) or Schedule 3.20(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.
3.09. Sufficiency of and Title to the Transferred Assets. Seller has
the right to sell, assign, transfer and convey, and upon consummation of the
transactions contemplated by this Agreement, will have sold, assigned,
transferred and conveyed, to Buyer all of the Transferred Assets free and clear
of all Liens, except for Permitted Liens, which Transferred Assets constitute
all of the properties and assets now held or employed by Seller in connection
with the Business (other than the Excluded Assets). Except for the services
performed for Nice by the SKF Shared Services Center, the SKF Data Center and
the SKF Corporate Headquarters Group, all of which have been disclosed to Buyer,
the Business is a going concern, and, with the transfer of the Transferred
Assets to Buyer pursuant to this Agreement, Buyer will have all assets necessary
to operate the Business as a going concern with all operations of the Business
unimpaired in any material respect immediately after the Closing.
3.10. Affiliates. Except as set forth in Schedule 3.10, 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, 1993, 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 Nice or purchases or during such period purchased from
Seller any goods or services relating to Nice, or otherwise does or during such
period did business with Seller relating to Nice 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, 1993, 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.
3.11. Inventory. Subject to any reserve therefor that is included in
the 1995 Balance Sheet and except as disclosed in Schedule 3.11, the Inventory
(a) has been acquired or manufactured in the ordinary course of business, in
accordance with Seller's normal inventory
15
practices; (b) is of a quality usable (including processing into merchantable
finished inventories for sale in the ordinary course of business), free of any
material defect or deficiency in design, material or workmanship; (c) is in
merchantable and undamaged condition and meets customer specifications; and (d)
is not obsolete.
3.12. Litigation. Except as disclosed on Schedule 3.12, (i) there
are no actions, suits, hearings, arbitrations, proceedings (public or private)
or governmental investigations that have been brought by or against any
Governmental Authority or any other Person (collectively, "Proceedings") pending
or, to Seller's Knowledge, threatened, against or affecting 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.
3.13. Contracts.
(a) Schedule 3.13(a) sets forth a complete list of the
following contracts, commitments and obligations (whether written or oral) of
Seller that 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 Nice Employee, (B) any supplier of services or products to Seller
whose dollar volume of sales to Seller exceeded $25,000 in 1995, and (C)
any Person in which the aggregate payments made or to be made to Seller
under such Contract exceeded $25,000 in 1995;
(ii) each other agreement or arrangement of Seller that
(y) requires the payment or incurrence of Liabilities or the rendering of
services by Seller, subsequent to the date of this Agreement of more than
$25,000 and (z) cannot be terminated by Seller within 30 days;
(iii) all Contracts relating to, and evidences of or
guarantees of, or providing security for, indebtedness for borrowed money
or the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset);
(iv) all partnership, joint venture or other similar
Contracts, arrangements or agreements;
(v) to the extent that any of the following provide for
annual payments by Seller in excess of $25,000 and cannot be terminated by
Seller within 30 days, all license, distribution, commission, marketing,
agent, franchise, technical assistance or similar agreements relating to
or providing for the marketing and/or sale of the products or services to
which Seller is a party or by which Seller is otherwise bound; and
16
(vi) all other contracts, commitments and obligations
that are not in the ordinary course of the Business.
(b) Except as disclosed in Schedule 3.13(b), each Scheduled
Contract and Subsequent Material Contract is a legal, valid and binding
obligation of Seller and, to the Knowledge of Seller, each other party thereto,
enforceable (except to the extent such enforceability may be limited by
bankruptcy, equity and creditors' rights generally) against Seller and, to the
Knowledge of Seller, each such other party in accordance with its terms, and
neither Seller nor, to the Knowledge of Seller, any other party thereto is in
material default or has failed to perform any material obligation thereunder.
Complete and correct copies of each Scheduled Contract have been delivered to
Buyer.
(c) Schedule 3.13(c) sets forth a list (by name, address and
persons to contact) of the 10 largest customers of the Business for each of the
12-month periods ended December 31, 1995 and 1996, and the five primary vendors
providing services to the Business for the 12-month period ended December 31,
1996 together with the approximate dollar amount of sales or services provided
to Seller during said period and a summary description of the services provided
by such vendors.
3.14. Permits; Required Consents.
(a) Schedule 3.14(a) sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities and all other Persons
necessary for the operation of the Transferred Assets or the Business in
substantially the same manner as currently operated or affecting or relating in
any way to the Business (the "Permits").
(b) Schedule 3.14(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver (each, a "Required Governmental Approval") required
under Applicable Law to be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the loss of any material Permit or otherwise, and (ii) each
Scheduled Contract with respect to which the consent of the other party or
parties thereto must be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach or default thereunder or any other change or modification to
the terms thereof (each, a "Required Contractual Consent" and collectively with
the Required Governmental Approvals, the "Required Consents"). Except as set
forth in Schedule 3.14(a) or (b) each Permit is valid and in full force and
effect in all material respects and, assuming the related Required Consents have
been obtained prior to the Closing Date, are or will be transferable by Seller,
and assuming the related Required Consents have been obtained prior to the
Closing Date, none of the Permits will be terminated or become terminable or
impaired in any material respect as a result of the transactions contemplated
hereby.
3.15. Compliance with Applicable Laws. Except as set forth in
Schedule 3.15, the operation of the Business by Seller and the condition of the
Transferred
17
Assets have not violated or infringed, and do not violate or
infringe, any material Applicable Law, or any order, writ, injunction or decree
of any Governmental Authority.
3.16. Employment Agreements; Change in Control; and Employee
Benefits.
(a) Schedule 3.16(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 3.16(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 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a direct result of the
transactions contemplated by this Agreement.
(c) No Employee Benefit Plan has participated in, engaged in
or been a party to any non-exempt Prohibited Transaction, and neither Seller nor
any ERISA Affiliates of Seller has pending, or to any of its Knowledge
threatened, against it any claim for taxes under Chapter 43 of Subtitle D of the
Code and Sections 5000 of the Code, or for penalties under ERISA Section 502(c),
(i) or (l), with respect to any Employee Benefit Plan nor, to the Knowledge of
Seller, is there a basis for any such claim. No officer, director or employee of
Seller has committed a material breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA with respect to any Employee
Benefit Plan.
(d) There is no material claim pending or to the Knowledge of
Seller threatened, involving any Benefit Plan by any Person against such plan or
Seller or any ERISA Affiliate with respect to Nice. There is no pending or to
the Knowledge of Seller threatened proceeding involving any Employee Benefit
Plan before the IRS, the United States Department of Labor or any other
Governmental Authority.
(e) Each Benefit Plan has been maintained in all material
respects, by its terms and in operation, in accordance with ERISA and the Code
including, but not limited to, all applicable reporting and disclosure
requirements. Seller and each ERISA Affiliate have made full and timely payment
of all amounts required to be contributed under the terms of each Benefit Plan
and Applicable Law or required to be paid as expenses under such Benefit Plan,
and Seller and each ERISA Affiliate shall continue to do so through the Closing.
(f) With respect to any Group Health Plans maintained by
Seller or its ERISA Affiliates, Seller and its ERISA Affiliates have complied in
all 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 3.16(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.
18
3.17. Labor and Employment Matters.
(a) Except as set forth on Schedule 3.17(a), with respect to
the Business, no collective bargaining agreement exists that is binding on
Seller and, except as described on Schedule 3.17(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
3.17(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 Nice.
(b) Except as set forth on Schedule 3.17(a), with respect to
the Business, (i) there is no labor strike, dispute, slow down or stoppage
pending or, to Seller's Knowledge, threatened against or directly affecting the
Business, (ii) 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 Nice.
(c) With respect to the Business, Seller has complied and is
currently complying, in all material respects, in respect of all employees of
Nice, 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 3.17(e) sets forth all Employees of Nice
receiving or seeking worker's compensation benefits, as well as the following
for each such Employee: (i) brief description of the injury; (ii) weekly
compensation; (iii) estimated benefit period; and (iv) estimate of medical and
other expenses payable.
3.18. Intellectual Property.
(a) Schedule 3.18(a) sets forth a complete and correct list of
each patent, patent application and docketed invention, trademark, trade name,
trademark or 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 in Schedule 3.18(b), Seller has not
during the three years preceding the date of this Agreement been a party to any
Proceeding, nor to the
19
Knowledge of Seller is any Proceeding threatened as to which there is a
reasonable possibility of a determination adverse to Seller that involved or may
involve a claim of infringement by any Person (including any Governmental
Authority) of any Intellectual Property Right. Except as disclosed in Schedule
3.18(b), no Intellectual Property Right is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by
Seller, or restricting the licensing thereof by Seller to any Person. The use of
the Intellectual Property Rights does not conflict with, infringe upon or
violate any patent, patent license, patent application, trademark, 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) Except as set forth in Schedule 3.18(c), Seller either
owns the entire right, title and interest in, to and under, or has the legally
enforceable right to use all Transferred Assets.
3.19. Advisory Fees. Except for Rothschild & Company (whose fees and
expenses will be paid by Seller), there is no investment banker, broker, finder
or other intermediary or advisor that has been retained by or is authorized to
act on behalf of Seller or its Affiliates who might be entitled to any fee,
commission or reimbursement of expenses from Buyer or any of its Affiliates upon
consummation of the transactions contemplated by this Agreement.
3.20. Environmental Compliance.
(a) Except as disclosed in Schedule 3.20(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 3.20(a)
sets forth all permits, licenses and other authorizations issued under any
Environmental Law to Seller relating to the Business or the Transferred Assets.
(b) Except as disclosed in Schedule 3.20(b), Seller is in
compliance in all material respects with all terms and conditions of all
approvals, authorizations, certificates, consents, licenses, orders and permits
or other similar authorizations of all Governmental Authorities (and all other
Persons) required under any Environmental Law that is applicable to the Business
or that relate to the Transferred Assets, and is also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, requirements, schedules and timetables required or imposed under all
Environmental Laws.
(c) Except as disclosed in Schedule 3.20(c), there are no past
or present events, conditions, circumstances, activities, practices, incidents,
actions, omissions or plans relating to or in any way affecting the Business or
the Transferred Assets that could reasonably be expected to prevent, or make
materially more expensive, continued compliance with any Environmental Law by
Buyer after the Closing, or that may give rise to any Environmental Liability,
or otherwise form the basis of any claim, action, demand, suit, Proceeding,
hearing, study or investigation (i) under any Environmental Law, (ii) based on
or
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related to the manufacture, processing, distribution, use, treatment, storage
(including without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any
Hazardous Substance, or (iii) resulting from exposure to workplace hazards.
3.21. Tax Matters.
Except as set forth on Schedule 3.21:
(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.
3.22. Insurance. Schedule 3.22 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 3.22 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.
3.23. 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 the 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND RBC
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer and RBC hereby jointly
and severally represent and warrant to Seller that:
4.01. Organization and Existence. Each of Buyer and RBC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby. Each of
Buyer and RBC is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary to carry on its
business as now conducted, except for those jurisdictions where the failure to
be so qualified has not been, and may not reasonably be expected to be,
material.
4.02. Corporate Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement and the consummation by
each of Buyer and RBC of the transactions contemplated hereby are within 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.
4.03. Governmental Authorization. The execution, delivery and
performance by each of Buyer and RBC of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than as
set forth in this Agreement.
4.04. Non-Contravention. The execution, delivery and performance by
each of Buyer and RBC of this Agreement 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 4.03, contravene or conflict
with or constitute a violation of any provision of any Applicable Law binding
upon or applicable to Buyer or RBC.
4.05. Advisory Fees. Except for Aurora Capital Partners L.P. (whose
fees and expenses will be paid by Buyer), 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.
4.06. Litigation. There is no Proceeding pending against, or to the
Knowledge of Buyer or RBC, threatened against or affecting, Buyer or RBC before
any court or arbitrators or any governmental body, agency or official that in
any matter challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
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ARTICLE V
COVENANTS OF SELLER
5.01. Conduct of the Business. From the date hereof until the
Closing Date, Seller shall conduct the Business in the ordinary course and in
substantially the same manner as it has prior to the date of this Agreement and
agrees, with respect to the Business and other than in the ordinary course of
business, not to enter into any material agreements or take any other
significant actions without the prior written consent of Buyer, which shall not
be unreasonably withheld or delayed. Seller shall use its reasonable efforts to
preserve intact the Transferred Assets, the Business and the business
organizations and relationships and goodwill of Seller with third parties and
keep available the services of the present officers, employees, agents and other
personnel of Seller relating to the Business. Without limiting the generality of
this Section 5.01(a) and except as otherwise expressly provided in this
Agreement, from the date hereof until the Closing Date:
(a) Seller will:
(i) (A) maintain the Transferred Assets in the ordinary
course of business consistent with past practice in operating order and at
least the condition in effect as of the date hereof, reasonable wear and
tear excepted, (B) promptly repair, restore or replace any Transferred
Assets in use on the date hereof except Transferred Assets sold in the
ordinary course of business consistent with past practice, (C) upon any
damage, destruction or loss to any of the Transferred Assets, apply any
and all insurance proceeds received with respect thereto to the prompt
repair, replacement and restoration thereof to the condition of the
Transferred Assets before such event, (D) use its reasonable efforts to
obtain, prior to the Closing Date, all Required Consents, and (E) take all
actions necessary to be in compliance with, and to maintain the
effectiveness of, all material Permits;
(ii) comply with all material Applicable Laws;
(iii) promptly notify Buyer in writing of (A) any action,
event, condition or circumstance, or group of actions, events, conditions
or circumstances, that results in, or could reasonably be expected to
result in, a Material Adverse Effect, other than changes in general
economic conditions, (B) the commencement of any Proceeding by or against
Seller, or Seller becoming aware of any threat, claim, action, suit,
inquiry, proceeding, notice of violation, demand letter, subpoena,
government audit or disallowance that could reasonably be expected to
result in a Proceeding, and (C) the occurrence of any breach by Seller of
any representation or warranty, or any covenant or agreement, contained in
this Agreement.
(b) without Buyer's prior consent (which shall not
unreasonably be withheld or delayed), Seller will not and will not agree to:
23
(i) purchase or otherwise acquire assets that would
constitute Transferred Assets other than in the ordinary course of the
Business;
(ii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with Permitted
Liens), any of the Transferred Assets except (A) pursuant to existing
obligations of Seller as set forth in Schedule 3.08 or (B) in the ordinary
course of the Business;
(iii) enter any agreement or arrangement that requires
or allows payment, acceleration of payment or incurrence of Liabilities
relating to the Business, or the rendering of services by Seller outside
the ordinary course of the Business;
(iv) amend or modify in any material respect or
terminate any Scheduled Contract or any other Contract entered into by
Seller after the date hereof which, if in existence on the date hereof,
would be required to be set forth in the Schedule 3.13(a) as a Scheduled
Contract (each, a "Subsequent Material Contract");
(v) make or commit to make any capital expenditure, or
group of related capital expenditures relating to the Business, in excess
of $25,000, other than (A) capital expenditures set forth on Schedule
5.01(b) and (B) capital expenditures expressly required under any
Scheduled Contract;
(vi) enter into or commit or propose to enter into any
Subsequent Material Contract; and
(vii) (A) increase the rate or terms of compensation
payable or to become payable to any Employee except in the ordinary course
of business, (B) pay or agree to pay any pension, retirement allowance or
other employee benefit to an Employee not provided for by any Employee
Plan, Benefit Arrangement or Employment Agreement set forth in the
Schedules hereto, (C) commit itself to any additional pension, profit
sharing, bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay,
continuation pay, termination pay, retirement or other employee benefit
plan, agreement or arrangement for Employees, or increase the rate or
terms of any Employee Plan or Benefit Arrangement, (D) enter into any
employment agreement with or for the benefit of any Employee, or (E)
increase the rate of compensation under or otherwise change the terms of
any Employment Agreement set forth in Schedule 3.16(a).
5.02. Access to Information. Subject to compliance with Applicable
Laws, from the date hereof until the Closing Date, Seller will promptly: (a)
give Buyer and its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and records
relating to the Business and the Transferred Assets upon reasonable prior
notice, (b) furnish to Buyer and its counsel, financial advisors, auditors and
other authorized representatives such information relating to the Business or
the Transferred Assets as Buyer may reasonably request and (c) instruct the
directors, officers, employees, counsel, auditors and financial advisors of
Seller to cooperate with Buyer and its counsel,
24
financial advisors, auditors and other authorized representatives in their
investigation of the Business and the Transferred Assets. Such investigation
shall include, but shall not be limited to:
(i) A review of the business and operations of the Business;
(ii) A review of the financial statements and related work
papers and tax returns and any tax audits, other Governmental
Authority audits or internal audits of Seller;
(iii) An environmental review as to the presence and nature of
any hazardous materials in or on any of the Real Property; and
(iv) A standard legal due diligence examination relating to
Seller and the Business.
5.03. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents. On and after the Closing Date, Seller shall
comply at its own expense with all conditions and requirements affecting Seller
set forth in (a) all Required Governmental Approvals as necessary to keep the
same in full force and effect assuming continued compliance with the terms
thereof by Buyer and (b) all Required Contractual Consents as necessary to keep
the same effective and enforceable against the Persons giving such Required
Contractual Consents assuming continued compliance with the terms thereof by
Buyer.
5.04. Maintenance of Insurance Policies. On and after the date
hereof (including after the Closing Date), Seller shall not take or fail to take
any action if such action or inaction, as the case may be, would adversely
affect the applicability of any insurance in effect on the date hereof that
covers all or any part of the Transferred Assets or the Business with respect to
the period of time ending on the Closing Date. Notwithstanding the foregoing,
Seller shall not have any obligation to make any monetary payment to maintain
the effectiveness of any such insurance policy after the Closing Date.
5.05. Confidentiality.
(a) Seller will, and will cause their representatives to,
treat any data and information obtained with respect to Buyer, RBC or any of
their Affiliates from any representative, officer, director, or employee of
Buyer or RBC, or from any books or records of Buyer or RBC in connection with
this Agreement, confidentially and with commercially reasonable care and
discretion, and will not disclose any such information to third parties;
provided, however, that the foregoing shall not apply to (i) information in the
public domain or that becomes public through disclosure by any party other than
Seller or its Affiliates or representatives, so long as such other party is not
in breach of a confidentiality obligation, (ii) information that may be required
to be disclosed by Applicable Law or (iii) information required to be disclosed
to obtain any Required Consents.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Seller, upon the written request of Buyer or RBC, will,
and will cause its
25
representatives to, promptly deliver to Buyer or RBC any and all documents or
other materials furnished by Buyer or RBC or any of their Affiliates to Seller
in connection with this Agreement without retaining any copy thereof. In the
event of such request, all other documents, whether analyses, compilations or
studies, that contain or otherwise reflect the information furnished by Buyer or
RBC to Seller, shall be destroyed by Seller or shall be returned to Buyer or
RBC, and Seller shall confirm to Buyer in writing that all such materials have
been returned or destroyed. No failure or delay by Buyer or RBC in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 5.05, money damages would not be an adequate remedy
to Buyer, RBC or their Affiliates for such breach and, even if money damages
were adequate, it would be impossible to ascertain or measure with any degree of
accuracy the damages sustained therefrom. Accordingly, if there should be a
breach or threatened breach of provisions of this Section 5.05, Buyer, RBC and
their Affiliates shall be entitled to an injunction restraining Seller from any
breach without showing or proving actual damage sustained by Buyer, RBC or their
Affiliates, as the case may be. Nothing in the preceding sentence shall limit or
otherwise affect any remedies that Buyer, RBC and their Affiliates may otherwise
have under Applicable Law.
5.06. Taxes.
(a) All sales, value added and use Taxes imposed in connection
with the sale of the Transferred Assets shall be borne by Buyer. Real property
transfer Taxes imposed in connection with the sale of the Transferred Assets
shall be borne equally by Buyer and Seller.
(b) Seller agrees that no new elections with respect to Taxes
or any changes in current elections with respect to Taxes affecting the
Transferred Assets shall be made after the date of this Agreement without the
prior written consent of Buyer.
(c) The Buyer and Seller shall (i) provide to each other such
assistance as may reasonably be requested in connection with the preparation of
any Tax Return relating to the Business and the conduct of any audit or other
examination by any taxing authority or in connection with judicial or
administrative proceedings relating to any liability for Taxes relating to the
Business, (ii) retain all records or other information that may be relevant to
the preparation of any Tax Returns relating to the Business, or the conduct of
any audit or examination, or other tax proceeding relating to the Business, and
(iii) retain all relevant documents, including prior year's Tax Returns relating
to the Business, supporting work schedules and other records or information that
may be relevant to such returns and shall not destroy or otherwise dispose of
any such records without the prior written consent of the other party.
(d) Seller shall provide Buyer with a FIRPTA certificate or
similar document in order to relieve Buyer of any obligations to withhold any
portion of the Purchase Price.
26
(e) Pursuant to Section 1445(b)(2) of the Code, Seller shall
furnish Buyer an affidavit, stating under penalty of perjury Seller's United
States taxpayer identification number and that Seller is not a foreign person.
5.07 Accounts Receivable and Accounts Payable.
(a) From and after the Closing Date, Seller shall (i) pay or
cause to be paid all accounts payable that constitute Assumed Liabilities, to
the extent that Seller receives invoices for such payables, and (ii) collect or
cause to be collected all accounts receivable that constitute Transferred
Assets, to the extent that Seller has sent invoices for such receivables to the
payor. Such payments shall be made in a timely manner and such collections shall
be made in accordance with past practices and in no event in other than a
commercially reasonable manner.
(b) Within three days after the end of each month, Seller
shall deliver to Buyer a statement setting forth the accounts payable paid by
Seller and the accounts receivable collected by Seller during such month
pursuant to Section 5.07(a). If the receivables collected exceed the payables
paid, Seller shall include with the statement a check in the amount of such
excess. If the receivables collected are less than the payables paid, Buyer
shall, within three days after its receipt of the statement, deliver to Seller a
check in the amount of such shortfall.
5.08 Oil/Water Separator Replacement or Repair. Within 45 days of
the Closing Date, Seller shall undertake, at Seller's sole expense, to replace
or repair the oil/water separator located outside the Southeastern wall of the
Nice facility in Kulpsville, Pennsylvania. Such repairs shall be undertaken
pursuant to the repair plan referenced in Schedule 5.08 to this Agreement, which
repair plan has been approved by Buyer. Should the repairs described in the plan
referenced in Schedule 5.08 be inadequate to prevent leakage to the subsurface,
Seller shall, at its sole expense, make additional repairs or, if required,
replace the oil/water separator. Any releases of Hazardous Substances from such
oil/water separator occurring prior to Seller's replacement or repair of this
equipment shall not be considered to have arisen out of "actions or inaction of
Buyer after the Closing Date" for purposes of Section 2.04(c) of this Agreement.
5.09. Supply of Steel from Ovako. Seller covenants and agrees that,
for a period commencing on the Closing Date and ending on the second anniversary
thereof, it will cause its affiliate, Ovako Steel, Inc. ("Ovako"), to continue
to sell to Buyer the types of steel products that Ovako has supplied to Nice
prior to the date hereof on terms and conditions similar to the terms and
conditions governing transactions between Ovako and Seller in respect of such or
similar types of steel that are prevailing at the time such sales transactions
are entered into between Ovako and Buyer.
27
ARTICLE VI
COVENANTS OF BUYER AND RBC
6.01. Confidentiality.
(a) Buyer and RBC will, and will cause their representatives
to, treat any data and information obtained with respect to Seller from any
representative, officer, director or employee of Seller, or from any books or
records of Seller in connection with this Agreement, confidentially and with
commercially reasonable care and discretion, and will not disclose any such
information to third parties; provided, however, that the foregoing shall not
apply to (i) information in the public domain or that becomes public through
disclosure by any party other than Buyer or RBC or their Affiliates or
representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that may be acquired to be
disclosed by Applicable Law, (iii) information required to be disclosed to
obtain any Required Consents; (iv) any information that is disclosed by Buyer or
RBC or their Affiliates to any of their actual or prospective lenders or
investors in connection with financing the transactions contemplated by this
Agreement; or (v) any information that is disclosed by Buyer or RBC after the
Closing shall have occurred; provided, however, that in the event the Closing
has occurred, this Section 6.01(a) shall cease to be effective with respect to
any data and information obtained with respect to the Business.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Buyer and RBC, upon the written request of Seller,
will, and will cause their representatives to, promptly deliver to Seller any
and all documents or other materials furnished by Seller to Buyer or RBC in
connection with this Agreement without retaining any copy thereof. In event of
such request, all other documents, whether analyses, compilations or studies,
that contain or otherwise reflect the information furnished by Seller to Buyer
or RBC, shall be destroyed by Buyer or RBC or shall be returned to Seller, and
Buyer and RBC shall confirm to Seller in writing that all such materials have
been returned or destroyed. No failure or delay by Seller in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 6.01, money damages would not be an adequate remedy
to Seller for such breach and, even if money damages were adequate, it would be
impossible to ascertain or measure with any degree of accuracy the damages
sustained by Seller therefrom. Accordingly, if there should be a breach or
threatened breach of provisions of this Section 6.01, Seller shall be entitled
to an injunction restraining Buyer or RBC from any breach without showing or
proving actual damage sustained by Seller. Nothing in the preceding sentence
shall limit or otherwise affect any remedies that Seller may otherwise have
under Applicable Law.
28
6.02. Worker's Compensation Reimbursement. Buyer shall reimburse
Seller for any worker's compensation benefits paid by Seller after the Closing
Date to any Nice Employee (a) identified on Schedule 3.17(e) with respect to the
injury set forth on such schedule or (b) with respect to any injury incurred but
not reported as of the Closing Date, provided that Buyer shall have no
obligation to reimburse Seller for (i) the first $1,500,000 of such benefits
paid by Seller after the Closing Date and (ii) any benefits that are not
documented consistent with past practices. In calculating the amount of benefits
paid by Seller pursuant to clause (i) of the preceding sentence, the amount paid
shall be reduced by any reimbursement payments received by Seller from any
insurance. Buyer shall be entitled to receive copies of all documents relating
to all worker's compensation claims that are subject to this Section 6.02.
6.03. Sales and Use Tax Permits. Prior to the Closing, Buyer shall
obtain such sales and use tax permits as are required by Applicable Law and
shall provide Seller with valid sales/use tax exemption certificates covering
the inventory and manufacturing equipment included among the Transferred Assets.
ARTICLE VII
COVENANTS OF ALL PARTIES
7.01. Further Assurances. Subject to the terms and conditions of
this Agreement, each party will use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law 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 Nice
reasonably available to Seller during normal business hours, at no charge to
Seller other than for out of pocket expenses incurred by Buyer for items such as
photocopying or travel, for the purposes of providing accounting information
reasonably required by Seller, providing testimony or information in connection
with any legal proceeding or for any other appropriate purpose arising out of
Seller's ownership and operation of the Business.
7.02. Certain Filings. The parties hereto shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Contract is required or
reasonably appropriate, in connection with the consummation of the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to
obtain any such actions, consents, approvals or waivers. Without limiting the
foregoing, the parties hereto shall each promptly complete and file all reports
and forms, and respond to all requests or further requests for additional
information, if any, as may be required or authorized under the HSR Act.
29
7.03. Public Announcements. Up to (and including) the Closing Date,
the parties agree that they will not make any disclosure with respect to this
Agreement or the transactions contemplated hereby or cause to be publicized in
any manner whatsoever by way of interviews, responses to questions or inquiries,
press releases or otherwise any aspect of this Agreement or the transactions
contemplated hereby without prior written notice to and approval of the other
parties hereto, unless such party reasonably concludes that such release of
information is required by applicable law or stock exchange regulations, and the
parties hereto cannot reach agreement upon a mutually acceptable form of
release. Notwithstanding the foregoing, the parties hereto may, on a
confidential basis, advise their respective agents, accountants, attorneys and
financing sources with respect to the contents of this Agreement and the
transactions contemplated hereby.
7.04. Administration of Accounts. All payments and reimbursements
made in the ordinary course by any third party in the name of or to Seller or
any Affiliate thereof in connection with or arising out of the Transferred
Assets, the Business or the Assumed Liabilities after the Closing Date shall be
held by Seller or such Affiliate in trust for the benefit of Buyer and,
immediately upon receipt by Seller or any such Affiliate of any such payment or
reimbursement, Seller shall pay, or cause to be paid, over to Buyer the amount
of such payment or reimbursement without right of set off.
7.05. [Intentionally omitted.]
7.06. Bulk Sales Laws. Buyer waives compliance by Seller with the
provisions of (i) Pennsylvania's Department of Revenue Bulk Sales ten-day
written notification requirement and (ii) all applicable provisions of Article 6
of the Uniform Commercial Code as adopted in any state relating to bulk sales.
Seller shall indemnify Buyer for any taxes owed to the Commonwealth of
Pennsylvania arising out of Seller's failure to comply with the notification
requirement referred to in the preceding sentence. It is understood and agreed
that nothing contained in this Section 7.06 is intended to relieve Buyer of its
obligations described in Section 5.06(a).
7.07. Employees and Employee Benefit Matters.
(a) Effective as of the Closing, each employee of the Business
who is actively employed in the Business on the Closing and not on layoff, leave
of absence, ▇▇▇▇▇▇▇'▇ compensation leave or any other leave other than normal
vacation will cease to be an employee of Seller and will become an employee of
Buyer ("Transferred Employee"). Seller will neither employ nor offer employment
to any Transferred Employee during the eighteen (18) month period following the
Closing without the prior written consent of Buyer. Any employee of the Business
at the Closing who is not a Transferred Employee at such time by reason of not
being actively employed in the Business will cease to be an employee of Seller
and will become an employee of Buyer effective as of the date he or she returns
to the Business from layoff or leave, as the case may be, and such employee
shall become a Transferred Employee effective as of such date.
30
(b) Seller currently maintains the following pension plans
covering employees of the Business: the Pension Plan for Salaried Employees of
SKF USA Inc. (the "Salaried Plan") covering designated salaried and other
employees of Seller, including salaried employees of the Business, and the
Pension Plan for Hourly Employees of SKF USA Inc. ("Seller's Union Plan")
covering hourly employees of the Business who are represented by the Union.
(i) With respect to the Salaried Plan:
(1) Within thirty (30) days after, and effective
as of, the Closing, Seller shall execute such amendments to the Salaried Plan as
are necessary to provide that: (i) any individual, including a Transferred
Employee, who is an employee of the Business immediately prior to the Closing
and who is covered by the Salaried Plan (a "Salaried Plan Employee") shall cease
to be covered by the Salaried Plan as of the Closing except as to benefits
accrued prior to the Closing; and (ii) the accrued benefit under the Salaried
Plan of any Salaried Plan Employee shall become fully vested as of the Closing.
To the extent permitted by law, each Salaried Plan Employee shall be deemed to
have terminated employment with the Seller as of the Closing for purposes of the
Salaried Plan, and the vested accrued benefit of each such Employee shall
thereafter be distributable in accordance with the terms of the Salaried Plan.
(2) There shall be no transfer of assets or
liabilities of the Salaried Plan to any retirement plan maintained by Buyer;
neither Buyer nor any of its affiliates shall become a sponsor of, or otherwise
maintain, the Salaried Plan; and Buyer acknowledges that neither Buyer nor any
of its affiliates shall have any right, title, or interest in any of the assets
of the Salaried Plan.
(ii) With respect to Seller's Union Plan:
(1) Within thirty (30) days after, and effective
as of, the Closing, Seller shall execute such amendments to Seller's Union Plan
as are necessary to provide that any Transferred Employee who is covered by
Seller's Union Plan (a "Union Plan Employee") and any other individual who is an
employee of the Business immediately prior to the Closing and who is covered by
Seller's Union Plan shall cease to be covered by Seller's Union Plan as of the
Closing, except (to the extent required by Section 7.07(b)(ii)(5) or not
inconsistent with Section 7.07(b)(ii)(3)) as to benefits accrued prior to the
Closing.
(2) As soon as practicable after (and no later
than 30 days after), and effective as of, the Closing, Buyer shall establish a
defined benefit pension plan and trust ("Buyer's Union Plan") for the benefit of
the Union Plan Employees, which shall be intended to qualify and to be exempt
from tax under sections 401(a) and 501(a) of the Code, and Buyer shall apply to
the Internal Revenue Service for a determination letter with respect thereto.
Buyer's Union Plan shall cover the Union Plan Employees as of the Closing or, in
the case of any Union Plan Employee who becomes a Transferred Employee after the
Closing by reason of the last sentence of Section 7.07(a), as of the date such
employee becomes a Transferred Employee, and shall provide such participants
with benefits substantially similar to those provided by Seller's Union Plan.
Buyer's Union Plan shall provide the Union Plan
31
Employees full credit for eligibility, vesting, and (except with respect to any
of such employees who make the election described in Section 7.07(b)(ii)(5))
benefit accrual purposes with respect to all service with Seller to the extent
such service was credited under the terms of Seller's Union Plan.
(3) As soon as practicable following Seller's
receipt of written evidence of the adoption of Buyer's Union Plan and of a copy
of a favorable determination letter issued by the Internal Revenue Service with
respect to Buyer's Union Plan, and except as otherwise provided in Section
7.07(b)(ii)(5), Seller shall direct the trustees of Seller's Union Plan to
transfer from the trust under Seller's Union Plan to the trust under Buyer's
Union Plan an amount which shall be determined by a certified actuary designated
by the Seller ("Seller's Actuary") and reasonably acceptable to an actuary
designated by the Buyer ("Buyer's Actuary") equal to: (i) the present value of
all accrued benefits, including ancillary benefits, under Seller's Union Plan as
of the Closing with respect to the Union Plan Employees (other than those making
the election described in Section 7.07(b)(ii)(5)); plus (ii) interest accrued
from the Closing to the date of transfer on the amount described in clause (i),
at a rate equal to 7 1/2 percent per annum, from the Closing to the date of
transfer; less (iii) the amount of any benefit payments made to the Union Plan
Employees (other than those making the election described in Section
7.07(b)(ii)(5)) from Seller's Union Plan after the Closing and prior to the date
of the transfer to Buyer's Union Plan, adjusted (as the interest rate described
in clause (ii) above) to reflect the time of such payments, and reasonable
administrative costs and expenses incurred during such period. The calculation
of the present value of the benefits described in clause (i) above shall be
determined using assumptions described on Schedule 7.07(b). Notwithstanding any
other provision in this Section 7.07(b)(ii)(3), the amount of assets to be
transferred pursuant to this Section 7.07(b)(ii)(3), shall satisfy the
requirements of section 414(1) of the Code and section 208 of the Employee
Retirement Income Security Act of 1974.
(4) At the time of transfer of the amount set
forth in Section 7.07(b)(ii)(3) and except as otherwise provided in Section
7.07(b)(ii)(5), Buyer and Buyer's Union Plan shall assume all liabilities for
all accrued benefits, including all ancillary benefits, under Seller's Union
Plan in respect of the Union Plan Employees, and Seller and Seller's Union Plan
shall be relieved of all liabilities for such benefits, including any liability
under any collective bargaining agreement to provide such benefits. Upon the
transfer of assets in accordance with Section 7.07(b)(ii)(3), Buyer agrees to
indemnify and hold harmless Seller, its officers, directors, employees, agents,
and affiliates from and against any and all costs, damages, losses, expenses, or
other liabilities arising out of or related to Buyer's obligations under this
Section 7.07(b)(ii) or Buyer's Union Plan, including benefits accrued by the
Union Plan Employees prior to the Closing which are to be provided by Buyer's
Union Plan; provided, however, that Buyer shall not indemnify or hold harmless
such parties with respect to any costs, damages, losses, expenses, or other
liabilities that result, directly or indirectly, from violations of law by such
parties which occurred prior to the Closing.
(5) Notwithstanding any other provision of this
Section 7.07(b)(ii) to the contrary, there shall be no transfer under this
Section 7.07(b)(ii) of any assets or liabilities with respect to the vested
accrued benefit of any of the Union Plan
32
Employees who are eligible for retirement benefits as of the Closing Date under
Seller's Union Plan and who so elect by notifying Seller in writing within 30
days after the Closing. To the extent permitted by Applicable Law, each such
employee shall be deemed to have terminated employment with the Seller as of the
Closing for purposes of Seller's Union Plan, and his vested accrued benefit
shall thereafter be distributable in accordance with the terms of Seller's Union
Plan.
(6) Seller and Buyer shall provide each other with
such records and information as may be necessary or appropriate to carry out
their obligations under this Section 7.07(b)(ii) or for the purposes of
administering Buyer's Union Plan (including, without limitation, schedules of
the Union Plan Employees and their service credits and accrued benefits under
the Seller's Union Plan), and they shall cooperate in the filing of documents
required in connection with the transfer of assets and liabilities described
herein. Notwithstanding anything contained herein to the contrary, no such
transfer shall take place until the 31st day following the filing of any Form
5310-A required in connection therewith.
(c) Seller currently maintains the Pre-Tax Accumulation of
Capital for Employees Plan ("Seller's 401(k) Plan") for its eligible employees,
including eligible employees of the Business. With respect to Seller's 401(k)
Plan:
(i) Within thirty (30) days after, and effective as of,
the Closing, Seller shall execute such amendments to Seller's 401(k) Plan as are
necessary to provide that: (1) any individual, including a Transferred Employee,
who is an employee of the Business immediately prior to the Closing and who is
covered by Seller's 401(k) Plan (a "401(k) Plan Employee") shall cease to be
covered by Seller's 401(k) Plan as of the Closing except as to benefits accrued
with respect to periods prior to the Closing; and (2) the accrued benefit under
Seller's 401(k) Plan of any 401(k) Plan Employee shall, to the extent permitted
by Applicable Law, be distributable to such employee after the Closing in
accordance with Code section 401(k)(10) and Treas. Reg. ▇▇.▇▇.
1.401(k)-1(d)(1)(iv) and 1.401(k)-1(d)(4).
(ii) Buyer's 401(k) Plan shall accept a direct
rollover of any amount distributable from Seller's 401(k) Plan to any 401(k)
Plan Employee who becomes an employee of Buyer at or after the Closing and who
elects to have such direct rollover made in accordance with the provisions of
Seller's 401(k) Plan and applicable law.
(iii) Except as otherwise specifically provided in
this Section 7.07(c), there shall be no transfer of assets or liabilities of
Seller's 401(k) Plan to any retirement plan maintained by Buyer; neither Buyer
nor any of its affiliates shall become a sponsor of, or otherwise maintain,
Seller's 401(k) Plan; and Buyer acknowledges that neither Buyer nor any of its
affiliates shall have any right, title, or interest in any of the assets of
Seller's 401(k) Plan.
(d) Seller will provide former salaried and hourly employees
of the Business who retire prior to the Closing with medical benefit coverage
under Seller's applicable retiree medical benefit plans, which plan shall be the
secondary payor with respect to any plan,
33
arrangement, or agreement under which such an individual may be covered pursuant
to Section 7.07(e)(ii), 7.07(f)(ii), or 7.07(f)(iii).
(e) With respect to salaried employees of the Business:
(i) As of the Closing, Buyer will provide salaried
Transferred Employees (other than those described in Section 7.07(d)) with
medical benefit coverage under Buyer's standard medical benefit plan for its
salaried employees; provided that after the Closing, Buyer shall otherwise have
no obligation to provide such employees with any level of medical benefit
coverage.
(ii) Buyer will not provide medical benefit coverage to
any salaried employee of the Business described in Section 7.07(d) who has again
become an employee of the Business at or after the Closing except as
specifically provided by agreement between Buyer and such employee.
(f) With respect to hourly employees of the Business:
(i) As of the Closing, Buyer will provide hourly
Transferred Employees (other than those described in Section 7.07(d)) with
medical benefit coverage pursuant to the terms of the Union Contract under a
medical benefit plan or plans established or maintained by Buyer.
(ii) Buyer will provide an hourly employee of the
Business described in Section 7.07(d) who has again become an employee of the
Business at or after the Closing with medical benefit coverage pursuant to the
terms of the Union Contract (subject to any modification thereof as agreed to by
Buyer and the Union).
(iii) Buyer will provide hourly Transferred Employees
who retire at or after the Closing with retiree medical benefit coverage
pursuant to the terms of the union contract applicable to such hourly employees
at the time of their retirement under a retiree medical benefit plan or plans
established or maintained by Buyer. The amount of Seller's liability for such
coverage attributable to the period prior to the Closing (which amount shall
reduce the purchase price under this Agreement) shall be $226,496.
(g) Except as otherwise specifically provided in this
Sections 7.07(d)-(f), each party reserves the right to change its employee and
retiree medical benefits plans in the future when and as it deems appropriate.
(h) Seller will provide former employees of the Business who
retire prior to the Closing with life insurance coverage under Seller's retiree
life insurance benefit plans.
(i) As of the Closing, Buyer will provide salaried
Transferred Employees with coverage under Buyer's standard life insurance
benefit plans for its salaried
34
employees; provided that after the Closing, Buyer shall otherwise have no
obligation to provide such employees with any level of life insurance benefits.
(j) Buyer will provide hourly Transferred Employees with life
insurance coverage pursuant to the terms of the Union Contract under a life
insurance plan or plans established or maintained by Buyer.
(k) Except as otherwise provided in Sections 7.07(h)-(j),
each party reserves the right to change its employee and retiree life insurance
plans in the future when and as it seems appropriate.
(l) As of the Closing, Buyer will provide salaried
Transferred Employees with coverage under Buyer's standard vacation benefit plan
for its salaried employees (provided that the eligibility for vacation benefits
shall be determined solely under the terms of Buyer's vacation benefit plan for
such employees). Seller will have no obligation to make any payment to such
employees after the Closing with respect to any vacation pay entitlement.
(m) As of the Closing, Buyer will assume all obligations of
Seller to hourly Transferred Employees for accrued vacation under the Union
Contract. Seller will have no obligation to make any payment to such employees
after the Closing with respect to any vacation pay entitlement.
(n) Seller will bear the entire cost and expense of any
severance payments payable under the terms of any applicable severance plan
maintained by Seller to employees of the Business whose employment with the
Business is terminated by Seller before the Closing even if such employees
thereafter become employees of Buyer. Buyer will bear the entire cost and
expense of severance payments payable to employees of the Business whose
employment with the Business is terminated by Buyer at or after the Closing, and
such payments are to be paid and determined solely in accordance with Buyer's
severance plan or policy.
(o) Between the date hereof and the Closing, the parties will
negotiate in good faith their respective obligations to employees of the
Business under other employee benefit plans maintained by Seller and by Buyer.
7.08. Trademark License.
(a) Grant. Buyer hereby grants to Seller the exclusive and
nontransferable right and license to use the trademark "NICE" (the "Trademark")
in all countries of the world except the United States, Canada and Mexico (the
"Territory") in connection with the manufacture, use and sale of antifriction
bearings (the "Goods").
(b) Term. The license granted shall remain in full force until
the termination or expiration of the Sales and Supply Agreement referred to in
Section 8.01(g).
35
(c) Extent of License. The right granted in Section 7.08(a)
shall not be transferable without the consent of Buyer, provided, however, that
Seller shall have the right to use the Trademark and to sublicense its use to
Seller's affiliates in the Territory.
(d) Maintenance of Trademark. Buyer shall have no obligation
to register or maintain the Trademark in the Territory.
(e) Indemnity. Except for Goods manufactured by or for Buyer
and sold to Seller pursuant to the Sales and Supply Agreement referred to in
Section 8.01(g), which shall be governed by the terms of such agreement, Buyer
assumes no liability to Seller or to third parties with respect to the
performance characteristics of the Goods manufactured or sold by Seller under
the Trademark or arising out of the use of the Trademark in the Territory and
Seller hereby indemnifies and holds harmless Buyer against all losses, damage
and expenses, including attorneys' fees, incurred as a result of or related to
claims arising out of the manufacture or sale of the Goods or the use of the
Trademark (including, without limitation, any losses, damages and expenses that
Buyer may incur in connection with any claims that the Trademark infringes
another trademark in the Territory).
(f) Seller acknowledges Buyer's exclusive right, title, and
interest in and to the Trademark 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
title, title and interest. Upon termination or expiration of the Sales and
Supply Agreement, Seller will cease and desist from all use of the Trademark in
any way. Buyer reserves the right, for itself and its affiliates, to use the
Trademark both inside and outside the Territory.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated hereby is subject to the satisfaction
of each of the following conditions:
(a) (i) Seller shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, (ii) each of the
representations and warranties of Seller contained in this Agreement shall have
been true and correct in all material respects when made and shall contain no
misstatement or omission that would make any such representation or warranty
materially misleading when made and shall be true and correct in all material
respects, and shall not contain any misstatement or omission that would make any
such representation or warranty materially misleading, at and as of the Closing
Date with the same force and effect as if made as of the Closing Date and (iii)
Buyer shall have received certificates signed by a duly authorized executive
officer of Seller to the foregoing effect and to the effect that to the
Knowledge of such officer the conditions specified within this Section 8.01 have
been satisfied.
36
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without the
imposition of any conditions that are or would become applicable to the
Business, the Transferred Assets or Buyer (or any of its Affiliates) after the
Closing that Buyer in good faith reasonably determines would be materially
burdensome upon the Business, the Transferred Assets or Buyer (or any of its
Affiliates) or their respective businesses substantially as such businesses have
been conducted prior to the Closing Date or as said businesses, as of the date
hereof, would be reasonably expected to be conducted after the Closing Date. All
such Required Governmental Approvals shall be in effect, and no Proceedings
shall have been instituted or threatened by any Governmental Authority with
respect thereto as to which, in Buyer's good faith opinion, there is a material
risk of a determination that would terminate the effectiveness of, or otherwise
materially and adversely modify the terms of, any such Required Governmental
Approval; all applicable waiting periods with respect to such Required
Governmental Approvals shall have expired; and all conditions and requirements
prescribed by Applicable Law or by such Required Governmental Approvals to be
satisfied on or prior to the Closing Date shall have been satisfied to the
extent necessary such that all such Required Governmental Approvals are, and
will remain, in full force and effect assuming continued compliance with the
terms thereof after the Closing.
(c) All material Required Contractual Consents shall have been
obtained without the imposition of any conditions that are or would become
applicable to the Business, the Transferred Assets, Buyer or any of its
Affiliates after the Closing that Buyer in good faith determines would be
materially burdensome upon the Business, the Transferred Assets, Buyer or any of
its Affiliates or their respective businesses substantially as such businesses
have been conducted prior to the Closing Date or as said businesses, as of the
date hereof, would be reasonably expected to be conducted after the Closing
Date. All such Required Contractual Consents (and with respect to the Subsequent
Material Contracts, such other consents as may be required) shall be in effect.
All conditions and requirements prescribed by any Required Contractual Consent
(or any such other consent) to be satisfied on or prior to the Closing Date
shall have been satisfied to the extent necessary such that all such Required
Contractual Consents (and all such other consents) are effective and
enforceable, and will remain effective and enforceable against the Persons
giving such Required Contractual Consents (and such other consents) assuming
continued compliance with the terms thereof.
(d) The transactions contemplated by this Agreement and the
consummation of the Closing shall not violate any material Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or any
competent Governmental Authority or any other legal restraint or prohibition
preventing the transfer and exchange contemplated hereby or the consummation of
the Closing, or imposing Damages in respect thereto, shall be in effect, and
there shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) or by
any other Person (i) challenging or in any manner seeking to restrict or
prohibit the transfer and exchange contemplated hereby or the consummation of
the Closing, or to impose conditions that Buyer in good faith determines would
be materially burdensome upon the Business, the Transferred Assets, Buyer or any
of its
37
Affiliates or their respective businesses substantially as such businesses have
been conducted prior to the Closing Date or as said businesses, as of the date
hereof, would be reasonably expected to be conducted after the Closing Date.
(e) Since the date hereof, there shall not have been any
event, occurrence, development or state of circumstances or facts or change in
the Transferred Assets or the Business (including any damage, destruction or
other casualty loss, but excluding any event, occurrence, development or state
of circumstances or facts or change resulting from changes in general economic
conditions) affecting the Business or any Transferred Asset that has had or that
may be reasonably expected to have, either alone or together with all such
events, occurrences, developments, states of circumstances or facts or changes,
a Material Adverse Effect.
(f) Seller shall have executed and delivered to Buyer a Sales
and Supply Agreement in the form attached hereto as Exhibit B.
(g) Seller shall have executed and delivered to Buyer an
Interim Services Agreement in the form attached as Exhibit C.
(h) Buyer shall have received an opinion of counsel from ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq. in the form attached hereto as Exhibit D.
(i) Buyer shall be reasonably satisfied that there has been no
material degradation of the Transferred Assets since the completion by Buyer of
its inspection of the Transferred Assets.
(j) Buyer shall have completed its customary due diligence as
contemplated by Section 5.02 and Buyer shall be satisfied, in its reasonable
judgment, with both the quantity and the substance of the information provided
to it.
(k) Seller shall have executed and delivered 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.
8.02. Conditions to Obligation of Seller. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions:
(a) (i) Buyer shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, and the aggregate
effect of all failures to perform or satisfy all obligations of Buyer on or
prior to the Closing Date shall not be materially adverse to Seller; (ii) the
representations and warranties of Buyer contained in this Agreement shall be
true, complete and accurate in all material respects at and as of the Closing
Date, as if made at and as of such date and (iii) Seller shall have received a
certificate signed by a duly authorized executive officer of
38
Buyer to the foregoing effect and to the effect that to such officer's Knowledge
the conditions specified within this Section 8.02 have been satisfied.
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without the
imposition of any conditions that are or would become applicable to Seller or
any of its Affiliates after the Closing that Seller in good faith reasonably
determines would be materially burdensome upon such Person. All such Required
Governmental Approvals shall be in effect, and no Proceedings shall have been
instituted or threatened by any Governmental Authority with respect thereto as
to which, in Seller's good faith opinion, there is a material risk of a
determination that would terminate the effectiveness of, or otherwise materially
and adversely modify the terms of, any such Required Governmental Approval. All
applicable waiting periods with respect to such Required Governmental Approvals
shall have expired, and all conditions and requirements prescribed by Applicable
Law or by such Required Governmental Approvals to be satisfied on or prior to
the Closing Date shall have been satisfied to the extent necessary such that all
such Required Governmental Approvals are, and will remain, in full force and
effect assuming continued compliance with the terms thereof after the Closing.
(c) All material Required Contractual Consents shall have been
obtained without the imposition of any conditions that are or would become
applicable to Seller. All such Required Contractual Consents (and with respect
to the Subsequent Material Contracts, such other consents) shall be in effect,
and no Proceeding shall have been instituted or threatened with respect thereto
that, in Seller's good faith judgment, creates a material risk that any material
Liability will be imposed on Seller. All conditions and requirements prescribed
by any such Required Contractual Consent (or any such other consent) to be
satisfied on or prior to the Closing Date shall have been satisfied to the
extent necessary such that no material Liability will be imposed on Seller.
(d) The sale and transfer contemplated by this Agreement and
the consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or any
competent Governmental Authority or any other legal restraint or prohibition
preventing the transfer and exchange contemplated hereby or the consummation of
the Closing, or imposing Damages in respect thereto, shall be in effect, and
there shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) or by
any other Person challenging or in any manner seeking to restrict or prohibit
the transfer and exchange contemplated hereby or the consummation of the
Closing.
(e) Seller shall have received an opinion of counsel from
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in the form attached hereto as Exhibit E.
39
ARTICLE IX
INDEMNIFICATION
9.01. 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 IX 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 (ii) in connection with
any Excluded Liability, provided that in connection with any Environmental
Liability, Buyer Indemnitees shall include any party acquiring title directly
from Buyer of some or all of that portion of the Owned Real Property consisting
of unimproved land located on the ▇▇▇▇▇▇ Road side of the existing factory
facility. Notwithstanding the foregoing, Seller shall not be liable as an
Indemnifying Party until all claims by the Buyer Indemnitees for indemnification
exceed $100,000 in the aggregate, and thereafter Seller shall be liable, subject
to the other limitations provided for elsewhere in this Agreement, for all
indemnification claims arising after the Closing Date; 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 or (ii) any
Lien that does not constitute a Permitted Lien. The aggregate liability of
Seller collectively under this Section 9.01(a) of this Agreement shall not
exceed $3,000,000, provided, however, that there shall be no limit on the
aggregate liability of Seller for Damages incurred by Buyer in connection with:
(1) Seller's fraud or willful misconduct; or (2) any Environmental Liability.
(b) Seller and its Affiliates (collectively the "Seller
Indemnitees") shall each be indemnified and held harmless to the extent set
forth in this Article IX 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) conduct of the Business after the Closing.
9.02. 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 9.02(a)(ii),
(iii) or (iv), all representations and warranties shall expire on the
first anniversary of the Closing Date.
(ii) Notwithstanding Section 9.02(a)(i) the
representations and warranties of Seller as an Indemnifying Party shall
survive the Closing Date until the
40
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
arising out of fraud or willful misconduct; and (2) any inaccuracy or
misrepresentation in or breach of any representation or warranty made in
Sections 3.15, 3.20 and 3.21 regardless of whether such inaccuracy or
misrepresentation or breach arises out of fraud or willful misconduct.
(iii) Notwithstanding Section 9.02(a)(i), the
representations and warranties of Buyer and RBC as Indemnifying Parties
shall survive the Closing Date until the expiration of the applicable
statute of limitations, including extensions thereof, with respect to any
inaccuracy or misrepresentation in or breach of any representation or
warranty made by Buyer or RBC in this Agreement arising out of fraud or
willful misconduct.
(iv) Notwithstanding Section 9.02(a)(i), the
representations and warranties of Seller set forth in Sections 3.01, 3.02,
3.04, 3.05, 3.09, 3.12 and 3.14 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., eastern time, on the date on which
such representation or warranty expires pursuant to this Section 9.02(a).
(b) The covenants contained in this Agreement shall survive
without expiration unless otherwise expressly provided in such covenant.
9.03. Claims for Indemnification. If any Indemnitee shall believe
that such Indemnitee is entitled to indemnification pursuant to this Article IX
in respect of any Damages, such Indemnitee shall give the appropriate
Indemnifying Party prompt written notice thereof. Any such notice shall set
forth in reasonable detail and to the extent then known the basis for such claim
for indemnification. The failure of such Indemnitee to give notice of any claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder 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 its receipt of such notice 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 Party 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
41
of time as may be mutually agreed to by such Persons), the claim shall be
submitted immediately to arbitration pursuant to Section 11.12.
9.04. Defense of Claims.
(a) In connection with any claim which may give rise to
indemnity under this Article IX resulting from or arising out of any claim or
Proceeding against an Indemnitee by a Person that is not a party hereto, the
Indemnifying Party may, subject to Section 9.04(b), assume the defense of any
such claim or Proceeding (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 9.04, the Indemnifying Parties shall
be authorized to consent to a settlement of, or the entry of any judgment
arising from, any such claim or Proceeding, without the prior written consent of
such Indemnitee; provided, however, that the Indemnifying Parties shall pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; provided, further, that the
Indemnifying Parties shall not be authorized to encumber any of the assets of
any Indemnitee or to agree to any restriction that would apply to any Indemnitee
or to its conduct of business; and provided, further, that a condition to any
such settlement shall be a complete release of such Indemnitee and its
Affiliates, officers, employees, consultants and agents with respect to such
claim. Subject to Section 9.04(b), such Indemnitee shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense 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 9.04. If the Indemnifying Parties do not assume the defense of any
claim or Proceeding resulting therefrom in accordance with the terms of this
Section 9.04(a), such Indemnitee may defend against such claim or Proceeding.
(b) Notwithstanding Section 9.04(a), the Indemnifying Parties
may not assume the defense of any claim or Proceeding and the Indemnitee may 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
42
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 9.01(a).
(c) If the Indemnitee elects to defend any claim or Proceeding
pursuant to the last sentence of Section 9.04(a) or pursuant to Section 9.04(b),
the Indemnitee shall conduct such defense in such manner as it shall deem
appropriate, including settling such claim or Proceeding after giving notice of
the same to the Indemnifying Parties, on such terms as such Indemnitee shall
deem appropriate. 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 X
TERMINATION
10.01. Grounds for Termination.
(a) This Agreement may be terminated at any time prior to the
Closing under the following circumstances:
(i) by mutual written agreement of all of the parties
hereto;
(ii) by either party if the other party has breached any
of its representations or warranties contained herein or materially
defaulted in the performance of any of its covenants or agreements
contained herein and such breach or default is not curable prior to the
Outside Date;
(iii) by Buyer or by Seller, if the Closing shall not
have been consummated by February 28, 1997 (the "Outside Date"); provided,
however, that neither Buyer nor Seller may terminate this Agreement
pursuant to this Section 10.01(a)(iii) if the Closing shall not have been
consummated within such time period by reason of the failure of such party
or any of its Affiliates to perform in all material respects any of its or
their respective covenants or agreements contained in this Agreement.
The party desiring to terminate this Agreement pursuant to Section 10.01(a)(ii)
or (iii) shall give written notice of such termination to the other party.
43
(b) This Agreement shall automatically terminate if any
Federal, state or foreign law or regulation thereunder shall hereafter be
enacted or become applicable that makes the transactions contemplated hereby or
the consummation of the Closing illegal or otherwise prohibited, or if any
judgment, injunction, order or decree enjoining either party hereto from
consummating the transactions contemplated hereby is entered, and such judgment,
injunction, order or decree shall become final and nonappealable.
10.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 10.01, such termination shall be without liability of any
party to any other party to this Agreement; provided, however, that if such
termination shall result from the breach by any party of its representations,
warranties or covenants contained in this Agreement, such party shall be fully
liable for any and all Damages incurred or suffered by the other parties as a
result of such failure or breach notwithstanding such termination. The
provisions of Sections 5.05, 6.01, 10.02, 11.03, 11.05 11.07, 11.08, 11.10,
11.11 and 11.13 shall survive any termination of this Agreement pursuant to this
Article X.
ARTICLE XI
MISCELLANEOUS
11.01. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through an overnight
delivery service in circumstances to which such service guarantees next day
delivery, the day following being so sent:
If to Seller:
SKF USA Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
44
with a copy to:
SKF USA Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary and General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
RBC Nice Bearings, Inc.
c/o Roller Bearing Company of America
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
individual for whom it is intended. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
11.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further
45
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
11.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
11.04. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of each other party, which approval shall not be unreasonably withheld.
11.05. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws (without reference to choice
or conflict of laws) of the Commonwealth of Pennsylvania.
11.06. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
11.07. Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
11.08. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
11.09. Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
46
11.10. Construction.
(a) The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against either party. Any reference
to any Applicable Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. Whenever required
by the context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. The words
"herein," "hereof," "hereunder," and words of similar import refer to the
Agreement as a whole and not to a particular section. Whenever the word
"including" is used in this Agreement, it shall be deemed to mean "including,
without limitation," "including, but not limited to" or other words of similar
import such that the items following the word "including" shall be deemed to be
a list by way of illustration only and shall not be deemed to be an exhaustive
list of applicable items in the context thereof.
(b) The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
11.11. 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 IX,
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 9.03 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.
47
(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 11.11
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 11.11 or any judicial action or proceeding
seeking to enforce the agreement to arbitrate disputes as set forth in this
Section 11.11 or seeking to enforce any order or award of any arbitration
commenced pursuant to this Section 11.11 may be assessed 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.
11.13. Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.14. 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).
48
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:___________________________________
Name:
Title:
BUYER:
RBC NICE BEARINGS, INC.
By:___________________________________
Name:
Title:
RBC:
ROLLER BEARING COMPANY OF AMERICA, INC.
By:___________________________________
Name:
Title:
49
SCHEDULE 2.03
ASSUMED LIABILITIES
(a) The following Liabilities of Seller arising in the ordinary
course of the Business prior to the Closing Date:
o Current trade payables (including payables booked after
the Closing Date and incurred to purchase or maintain
Transferred Assets); and
o Accrued expenses.
(b) All Liabilities and obligations of Seller arising after the
Closing under Contracts included in the Transferred Assets.
(c) All Liabilities and obligations described in Section 2.04(i) but
only to the extent that such Liabilities do not exceed $150,000 in the
aggregate.
(d) All Liabilities and obligations arising out of the use and
ownership of the Transferred Assets by Buyer after the Closing or by conduct of
the Business by Buyer after the Closing except to the extent that such
Liabilities and obligations are listed as Excluded Liabilities under any of
clauses (a) through (j) of Section 2.04.
1