Exhibit 10.1
ASSET AND STOCK PURCHASE AGREEMENT
BY AND AMONG
SCHAUBLIN FRANCE SA,
SCHAUBLIN USA INC.,
XXXXXXXXX XX,
AND
RBC XXXXXXXXX XX
DATED AS OF DECEMBER 19, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................. 1
1.1. Index of Defined Terms................................... 1
1.2. General Defined Terms.................................... 4
ARTICLE II PURCHASE AND SALE........................................ 7
2.1. General.................................................. 7
2.2. Purchase and Sale of Bovagnet Shares..................... 8
2.3. Transfer of Assets by Sellers............................ 8
2.4. Excluded Assets........................................... 12
2.5. Assumption of Liabilities................................. 12
2.6. Excluded Liabilities...................................... 13
2.7. Assignment of Contracts and Rights........................ 15
2.8. Closing................................................... 15
2.9. Consideration............................................. 16
2.10. Payment of the Consideration.............................. 17
2.11. First Closing Deliveries.................................. 19
2.12. Second Closing Deliveries................................. 21
ARTICLE III REPRESENTATIONS AND WARRANTIES AS TO SCHAUBLIN ENTITIES... 22
3.1. Existence and Power....................................... 22
3.2. Authorization............................................. 23
3.3. Governmental Authorization................................ 23
3.4. Non-Contravention......................................... 24
3.5. Financial Statements; Undisclosed Liabilities............. 24
3.6. Absence of Certain Changes................................ 25
3.7. Real Property............................................. 27
3.8. Leased Personal Property.................................. 28
3.9. Shares.................................................... 29
3.10. Sufficiency of and Title to the Assets of the Business.... 29
3.11. Affiliates................................................ 30
3.12. Inventory................................................. 31
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.13. Litigation................................................ 31
3.14. Contracts................................................. 31
3.15. Customers and Suppliers................................... 32
3.16. Permits; Required Consent................................. 33
3.17. Compliance with Applicable Laws........................... 34
3.18. Employee Information...................................... 34
3.19. Labor Matters............................................. 35
3.20. Employee Benefit Plans.................................... 35
3.21. Intellectual Property..................................... 36
3.22. Advisory Fees............................................. 37
3.23. Disclosure of Business Secrets to Others;
Non-Competition Agreements .............................. 37
3.24. Environmental Matters..................................... 37
3.25. Tax Matters............................................... 38
3.26. Insurance................................................. 39
3.27. Products.................................................. 39
3.28. Material Disclosures...................................... 39
3.29. Payment of Consideration.................................. 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER................... 40
4.1. Organization and Existence................................ 40
4.2. Corporate Authorization................................... 40
4.3. Governmental Authorization................................ 40
4.4. Non-Contravention......................................... 40
4.5. Advisory Fees............................................. 40
4.6. Litigation................................................ 41
ARTICLE V COVENANTS OF SELLERS...................................... 41
5.1. Compliance with Terms of Required Governmental Approvals
and Required Contractual Consents......................... 41
5.2. Maintenance of Insurance Policies......................... 41
5.3. Confidentiality........................................... 41
5.4. Taxes..................................................... 42
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.5. Right to Corporate Name................................... 42
5.6. Asbestos Conditions....................................... 43
5.7. Schedules................................................. 43
5.8. Compliance by Sellers..................................... 43
ARTICLE VI COVENANTS OF BUYER AND SELLERS............................ 43
6.1. Further Assurances........................................ 43
6.2. Certain Filings........................................... 44
6.3. Public Announcements...................................... 44
6.4. Administration of Accounts................................ 44
6.5. Employees and Employee Benefit Matters.................... 45
6.6. Product Warranty Claims................................... 46
6.7. Receivables............................................... 46
6.8. Actions Prior to the Second Closing Date.................. 47
6.9. Internet Site............................................. 47
ARTICLE VII INDEMNIFICATION........................................... 47
7.1. Indemnity by Schaublin Swiss.............................. 47
7.2. Indemnity By Buyer........................................ 49
7.3. Procedure for Satisfaction of Indemnity Claims............ 49
7.4. Satisfaction of Indemnity Claims.......................... 51
7.5. Interest.................................................. 51
7.6. Payments.................................................. 51
7.7. No Limitation............................................. 52
ARTICLE VIII NON-COMPETITION, NON-DISCLOSURE, NON-SOLICITATION......... 52
8.1. Non-Competition........................................... 52
8.2. Non-Disclosure............................................ 52
8.3. Non-Solicitation of Customers............................. 53
8.4. Non-Solicitation of Employees............................. 53
8.5. Obligation for Employees' Actions......................... 53
8.6. Remedies.................................................. 53
8.7. Consideration............................................. 54
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE IX MISCELLANEOUS............................................. 54
9.1. Actions by Sellers........................................ 54
9.2. Notices................................................... 54
9.3. Amendments; No Waivers.................................... 55
9.4. Expenses.................................................. 55
9.5. Successors and Assigns.................................... 55
9.6. Governing Law............................................. 56
9.7. Counterparts; Effectiveness............................... 56
9.8. Entire Agreement.......................................... 56
9.9. Captions.................................................. 56
9.10. Severability.............................................. 56
9.11. Construction.............................................. 56
9.12. Arbitration of Claims..................................... 57
9.13. Cumulative Remedies....................................... 58
9.14. Third Party Beneficiaries................................. 58
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ASSET AND STOCK PURCHASE AGREEMENT
This ASSET AND STOCK PURCHASE AGREEMENT (this "Agreement") dated as of
December __, 1999 is by and among XXXXXXXXX XX, a Swiss corporation ("Schaublin
Swiss"), SCHAUBLIN FRANCE SA, a French corporation ("Schaublin France") and
SCHAUBLIN USA INC., a Delaware corporation ("Schaublin USA" and together with
Schaublin Swiss and Schaublin France, "Sellers"), and RBC XXXXXXXXX XX, a Swiss
corporation ("Buyer").
R E C I T A L S
WHEREAS, Sellers and J. Bovagnet SA, a French corporation ("Bovagnet" and
together with Sellers, the "Schaublin Entities"), are engaged in the design,
development, manufacture, assembly, sale and distribution of bearings, machine
tool collets and machine tools;
WHEREAS, Sellers desire to sell and transfer to Buyer substantially all
of their assets related to the design, development, manufacture, assembly, sale
and distribution of bearings and machine tool collets (the "Business") in
consideration for the delivery by Buyer of the Consideration and on the terms
and conditions set forth herein;
WHEREAS, Schaublin Swiss is the beneficial and record owner of the number
of issued and outstanding shares of stock of Bovagnet set forth opposite its
name on SCHEDULE 3.9(a) attached hereto (the "Bovagnet Shares"); and
WHEREAS, Schaublin Swiss wishes to sell, and Buyer wishes to purchase,
the Bovagnet Shares on the terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.
ARTICLE I
DEFINITIONS
1.1. INDEX OF DEFINED TERMS. The following is an index of defined terms
utilized in this Agreement:
Defined Term Section Page
------------ ------- ----
Accounting Principles 1.2 4
Affiliate 1.2 4
Defined Term Section Page
------------ ------- ----
Agreement Preface 1
Allocation Statement 2.9(b) 16
Annual Financials 3.5(a) 24
Applicable Law 1.2 4
Assumed Liabilities 2.5 12
Monetary Liabilities 2.5(a) 12
Bovagnet Shares Preface 1
Business 1.2 1
Business Area 1.2 4
Business Day 1.2 4
Business Secrets 8.2 53
Buyer Preface 1
Cash Portion 2.10(a)(i) 17
Closing 2.8(d) 15
Closing Date 2.8(d) 15
Closing Statement 2.10(c)(i) 18
Consideration 2.9(a) 16
Contracts 1.2 5
Controlled Entity 3.20(a) 36
Effective Time 2.8 15
Employee 1.2 5
Employment Agreements 3.18(b) 34
Encumbrances 2.2 8
Environmental Claim 1.2 5
Environmental Condition 1.2 5
Environmental Laws 1.2 5
Equipment 2.3(a)(ii) 9
Escrow Agent 2.10(b) 18
Estimated Net Book Value 2.9(a)(i) 16
Excluded Assets 2.4 12
Excluded Liabilities 2.6 13
Excluded Product Warranty Claims 6.6 46
Financials 3.5(a) 24
First Choice 2.10(c)(i) 18
First Closing 2.8(a) 15
First Closing Date 2.8(a) 15
Governmental Authority 1.2 5
Hazardous Materials 1.2 5
Indemnified Party 7.3(a) 49
Indemnifying Party 7.3(a) 49
Indemnity Claim 7.3(a) 49
2
Defined Term Section Page
------------ ------- ----
Insurance Policies 3.26 39
Intellectual Property Rights 2.3(a)(ix) 10
Interim Financials 3.5(a) 24
Interim Period 2.5 12
Interim Period Cash Flow 2.9(d) 16
Inventory 2.3(a)(iii) 9
Isomeric 3.1(f) 23
Knowledge 1.2 6
Leased Real Property 3.7(a) 27
Leases 3.8 28
Liability 1.2 6
Lien 1.2 6
Loss Contracts 3.15(d) 33
Losses 7.1(a) 48
Machine Tool Business 2.11(a)(xiii) 20
Material 1.2 6
Net Book Value 3.5(e) 25
1998 Balance Sheet 3.5(a) 24
Notification Procedure 5.4(a) 42
Permits 3.16(a) 33
Person 1.2 6
Personal Property Leases 3.8 28
Plans 3.20(a) 36
Pre-Closing Period 2.8 15
Prepaid Expenses 2.3(a)(vi) 9
Proceedings 3.13 31
Product 1.2 7
Proposed Closing Statement 2.10(b) 18
Real Property Leases 3.7(b) 27
Receivables 2.3(a)(v) 9
Related Agreements 3.2 23
Required Contractual Consent 3.16(b) 33
Required Consents 3.16(b) 33
Required Governmental Approval 3.16(b) 33
Restricted Period 8.1 52
Restrictive Covenants 2.9(a) 16
Schaublin Entities Preface 1
Schaublin Financials 3.5(a) 00
Xxxxxxxxx Xxxxxx Xxxxxxx 0
Xxxxxxxxx Xxxxxx Filing 2.10(b) 18
Schaublin USA Preface 1
3
Defined Term Section Page
------------ ------- ----
Scheduled Contracts 3.14(a) 31
SCI 3.1(e) 23
Second Closing Date 2.8(a) 15
Second Closing Payment 2.10(b) 18
Selected Firm 2.10(c)(i) 19
Seller Preface 1
Settlement Notice 7.3(c) 50
Tax 1.2 7
Tax Return 1.2 7
Third Party Claim 7.3(b) 49
Transferred Assets 1.2 7
Transferred Employees 6.5(a) 45
Year 2000 Compliant 1.2 7
1.2. GENERAL DEFINED TERMS. As used herein, the following terms
shall have the meaning indicated:
"ACCOUNTING PRINCIPLES" means, as to Schaublin USA, the Generally
Accepted Accounting Principles applied on a consistent basis and, as to the
other Schaublin Entities, the International Accounting Standards applied on a
consistent basis.
"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 for any reason whatsoever to such Person or any of its
Affiliates or any of their respective properties, assets, business operations,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person or any of its Affiliates).
"BUSINESS" means the design, development, manufacture, assembly, sale and
distribution of bearings and machine tool collets by the Schaublin Entities.
"BUSINESS AREA" means, as applicable to a Seller, the geographic areas in
which such Seller engaged in the Business prior to the Closing Date.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
that is an official holiday in Zurich, Switzerland.
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"CONTRACTS" means all contracts, agreements, options, leases, licenses,
sales and purchase orders, commitments and other instruments of any kind,
whether written or oral including the Scheduled Contracts (as defined herein),
but only those that satisfy the representations contained in Section 3.14.
"EMPLOYEE" means any Person employed by any of the Schaublin Entities in
connection with the Business as listed on SCHEDULE 3.18(a).
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
tests, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (i) the presence, or release into the environment, of any
Hazardous Materials at any location, (ii) any Environmental Condition, or (iii)
any other circumstance forming the basis of any violation, or alleged violation,
of any Environmental Law.
"ENVIRONMENTAL CONDITION" means a condition of the soil, surface waters,
groundwaters, stream sediments, air and similar environmental media both on and
off a property resulting from any activity, inactivity or operations occurring
on such property, that, by virtue of Environmental Laws, (i) requires
investigatory, corrective or remedial measures, and/or (ii) comprises a basis
for claims against, demands of and/or liabilities of the Schaublin Entities or
Buyer. "Environmental Condition" shall include those conditions identified or
discovered before or after the Closing Date resulting from any activity,
inactivity or operations whatsoever before the Closing Date.
"ENVIRONMENTAL LAWS" means any and all federal, cantonal or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, guidelines,
policies or requirements of any governmental authority regulating or imposing
standards of liability or of conduct (including common law) concerning air,
water, solid waste, Hazardous Materials, worker and community right-to-know,
hazard communication, noise, resource protection, subdivision, inland wetlands
and watercourses, health protection and other environmental, health, safety,
building, and land use concerns as may now or at any time hereafter be in
effect.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state, cantonal 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.
"HAZARDOUS MATERIALS" means any petroleum, petroleum products, fuel oil,
derivatives of petroleum products or fuel oil, explosives, reactive materials,
ignitable materials, corrosive materials, pollutants, contaminants, hazardous
chemicals, hazardous wastes, hazardous substances, extremely hazardous
substances, toxic substances, toxic chemicals, radioactive materials, medical
waste, biomedical waste, infectious materials and any other element,
5
compound, mixture, solution or substance which may pose a present or potential
hazard to human health or safety or to the environment.
"KNOWLEDGE" whether capitalized or not, when used to qualify a
representation, warranty or covenant contained in this Agreement means: (i) that
knowledge actually in the possession of the Person making the representation or
warranty or bound by the covenant, or of such other Person as is referred to and
(ii) that knowledge that could be obtained by any such Person following a
reasonable inquiry into the facts underlying the representation, warranty or
covenant. With respect to Sellers, Knowledge shall refer to the Knowledge of the
following Persons: X.X. Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxxxx Xxx and Xxxxx Xxxxxx. With respect to Buyer, Knowledge shall
refer to the Knowledge of the following Persons: Xxxxxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxx.
"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, convertible into money
or calculable 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", whether capitalized or not, when used to qualify a
representation, warranty, or covenant contained in this Agreement shall mean,
unless otherwise defined, as the case may be and to the extent that the context
so requires, either (i) that there is a reasonable probability under all the
circumstances and in view of the total mix of information available that a
reasonable Person, in the position relying thereon, would attach importance in
deciding whether to enter into and consummate this Agreement in accordance with
the specific terms contained herein; or (ii) that the magnitude of any
inaccuracy in, or noncompliance with, the representation, warranty or covenant
at issue is substantial enough to result in monetary liability or cost to the
party to this Agreement for whose benefit the representation, warranty or
covenant is made.
"MONETARY LIABILITIES" means, as applicable to a Schaublin Entity,
accounts payable, accrued liabilities and other monetary liabilities of such
Schaublin Entity, but only those that were (i) incurred prior to October 1, 1999
and are set forth on the Interim Financials or (ii) incurred after October 1,
1999 in the ordinary course of business.
"PERSON" means an individual, corporation, partnership, association,
trust, estate, joint-stock company, limited liability company, joint venture,
trust or other entity or organization, including a Governmental Authority.
6
"PRODUCT" means any product manufactured, processed, distributed, shipped
or sold by or for the account of the Schaublin Entities in connection with the
Business.
"TAX" means all taxes imposed of any nature including federal, state,
cantonal, 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, all employment related tax, 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.
"TRANSFERRED ASSETS" means the collective assets, properties, rights,
licenses, permits, contracts, causes of action and claims to be transferred to
Buyer by Schaublin Swiss, Schaublin France and Schaublin USA pursuant to this
Agreement.
"YEAR 2000 COMPLIANT" means with respect to information technology
designed to be used prior to, during or after calendar year 2000, such
information technology used during such time period will actually receive,
provide and process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into and between the 20th and 21st centuries,
including the years 1999 and 2000, and leap year calculations and will not
malfunction, cease to function, or provide invalid or incorrect results as a
result of date/time data, to the extent that other information technology, used
in combination with the information technology being acquired, properly
exchanges date/time data with it.
ARTICLE II
PURCHASE AND SALE
2.1. GENERAL.
(a) (i) Schaublin Swiss conducts the Business from its facility in
Delemont, Switzerland from which Schaublin Swiss designs, manufactures,
sells and distributes Products.
(ii) Bovagnet, which is owned by those stockholders listed on
SCHEDULE 3.9 attached hereto, conducts the Business by selling and
distributing Products in France.
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(iii) Schaublin France, a direct wholly owned subsidiary of
Schaublin Swiss, conducts the Business by selling and distributing
Products in France.
(iv) Schaublin USA, a direct wholly owned subsidiary of Schaublin
Swiss, conducts the Business in the United States by selling and
distributing Products throughout the United States.
(b) Buyer intends, and Sellers hereby agree, that Affiliates of Buyer,
which have been identified to Sellers prior to the Closing, shall be the actual
purchasers of some of the Transferred Assets and the Bovagnet Shares and shall
assume some of the Assumed Liabilities, all as set forth on SCHEDULE 2.1(b)
hereto. Such Affiliates shall have the same rights, privileges and obligations
of Buyer that were granted by or to, or created in, Buyer under this Agreement
as if such rights, privileges and obligations were granted by or to, or created
in, such Affiliate.
2.2. PURCHASE AND SALE OF BOVAGNET SHARES. Subject to the terms and
conditions herein contained, at the Closing on the Closing Date, Schaublin Swiss
shall sell, assign, transfer and deliver to Buyer all of the Bovagnet Shares
free and clear of all options, pledges, security interests, liens, mortgages,
claims, debts, charges, voting agreements, voting trusts or other encumbrances
or restrictions on transfer of any kind whatsoever (collectively, the
"Encumbrances").
2.3. TRANSFER OF ASSETS BY SELLERS.
(a) Upon the terms and subject to the conditions of this Agreement and in
reliance upon the representations, warranties and agreements herein set forth,
Buyer agrees to purchase from Schaublin Swiss and Schaublin USA, and Schaublin
Swiss and Schaublin USA agree to sell or cause to be sold to Buyer at the
Closing, all the assets, properties, rights, licenses, permits, contracts,
causes of action and claims, of every kind and description as the same shall
exist 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 Schaublin Swiss or Schaublin USA in
connection with the Business, whether or not (and regardless of how) reflected
on the books and records of Schaublin Swiss or Schaublin USA, including all
assets of theirs shown on the Interim Financials and not disposed of in the
ordinary course of business or as permitted by this Agreement prior to the
Closing Date and, including without limitation, all right, title and interest of
Schaublin Swiss and Schaublin USA in, to, and under the following, in any and
all such cases to the extent used, owned by, leased by or in the possession of
Schaublin Swiss or Schaublin USA in connection with the Business at the time of
Closing:
(i) all leases, capitalized or operating, of, and other interests
in, real property, in each case together with all buildings, structures,
fixtures, building equipment, easements and improvements erected thereon
and appurtenances and rights and interests thereto including, but
excluding all real property;
8
(ii) 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)
("Equipment") including, without limitation, the Equipment set forth on
SCHEDULE 2.3(a)(ii) hereto;
(iii) all items of inventory, including all raw materials,
purchased parts, work-in-process, finished goods, supplies, spare parts
and samples (collectively, the "Inventory");
(iv) all Contracts to which Schaublin Swiss or Schaublin USA is a
party on the Closing Date;
(v) all accounts receivable and notes receivable, together with
any unpaid interest or fees accrued thereon or other amounts due with
respect thereto, and any security or collateral therefor, including
recoverable advances and deposits (collectively, the "Receivables");
(vi) all prepaid charges and expenses, including any such charges
and expenses with respect to ad valorem taxes, leases and rentals and
utilities, but only to the extent that Buyer will benefit therefrom
following the Effective Time ("Prepaid Expenses");
(vii) all rights under any insurance policy to insurance proceeds
for any Losses in connection with the Business prior to the Closing Date;
(viii) all rights, claims, credits, causes of action or rights of
setoff against third parties relating to the Business or the Transferred
Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers, contractors and other third
parties in connection with products or services purchased by or furnished
to Schaublin Swiss or Schaublin USA affecting any of the Transferred
Assets or with respect to the Year 2000 Compliant nature of the
Transferred Assets;
(ix) all patents, trademarks, trade names (including the name
"Schaublin", those trademarks described on SCHEDULE 2.3(a)(ix) and all
variations and derivatives thereof), trade styles, logos, service marks
and Internet domain names and all applications and registrations therefor
and licenses thereof and all technical, processing, manufacturing or
marketing information, including new developments, inventions, know-how,
processes, ideas and trade secrets and documentation thereof (including
related papers, blueprints, drawings, chemical compositions, formulae,
diaries, notebooks, specifications, designs, methods of
9
manufacture and data processing software) and all claims and rights
related thereto (collectively, the "Intellectual Property Rights");
(x) all tools, dies, jigs, molds, patterns, machinery and
equipment, whether owned or leased, whether in the possession of
Schaublin Swiss or Schaublin USA or vendors;
(xi) all vehicles and rights under vehicle leases;
(xii) all rights under agreements with employees and others
concerning confidentiality and assignment of inventions;
(xiii) all information systems, programs, software and
documentation thereof (including all electronic data processing systems,
program specifications, source codes, logs, input data and report layouts
and formats, record file layouts, diagrams, functional specifications and
narrative descriptions, flow charts and other related material);
(xiv) 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 Schaublin Swiss or Schaublin USA,
whether or not actually utilized by any of them;
(xv) all books, records, files and papers, whether in hard copy or
computer format, including books of account, invoices, engineering
information, manufacturing guidelines, documents related to ISO
certification, sales and promotional literature, manuals and data, sales
and purchase correspondence, lists of present and former suppliers,
personnel and employment records of present and former employees, and
documentation developed or used for accounting, marketing, engineering,
manufacturing or any other purpose any time prior to the Closing;
(xvi) all lists of present customers and lists of former
customers;
(xvii) all goodwill;
(xviii) all product designations used in any catalog with respect
to Products;
(xix) except as specifically provided in Section 2.4 all other
assets and properties of Schaublin Swiss and Schaublin USA used in
connection with the Business that exist on the Closing Date, whether
tangible or intangible, real or personal.
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(b) Upon the terms and subject to the conditions of this Agreement and in
reliance upon the representations, warranties and agreements herein set forth,
Buyer agrees to purchase from Schaublin France, and Schaublin France agrees to
sell or cause to be sold to Buyer at the Closing, all the assets, properties,
rights, licenses, permits, contracts, causes of action and claims, of every kind
and description as the same shall exist 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
Schaublin France in connection with the Business, whether or not (and regardless
of how) reflected on the books and records of Schaublin France, including all
its assets shown on the Interim Financials and not disposed of in the ordinary
course of business or as permitted by this Agreement prior to the Closing Date
and, including without limitation, all right, title and interest of Schaublin
France in, to, and under the following, in any and all such cases to the extent
used, owned by, leased by or in the possession of Schaublin France in connection
with the Business at the time of Closing:
(i) all items of Inventory;
(ii) all Contracts to which Schaublin France is a party on the
Closing Date;
(iii) all rights, claims, credits, causes of action or rights of
setoff against third parties relating to the Business or the Transferred
Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers, contractors and other third
parties in connection with products or services purchased by or furnished
to Schaublin France affecting any of the Transferred Assets or with
respect to the Year 2000 Compliant nature of the Transferred Assets;
(iv) all Intellectual Property Rights;
(v) all rights under agreements with employees and others
concerning confidentiality and assignment of inventions;
(vi) all information systems, programs, software and documentation
thereof (including all electronic data processing systems, program
specifications, source codes, logs, input data and report layouts and
formats, record file layouts, diagrams, functional specifications and
narrative descriptions, flow charts and other related material);
(vii) 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 Schaublin France, whether or not
actually utilized by Schaublin France;
11
(viii) all books, records, files and papers, whether in hard copy
or computer format, including books of account, invoices, engineering
information, manufacturing guidelines, documents related to ISO
certification, sales and promotional literature, manuals and data, sales
and purchase correspondence, lists of present and former suppliers,
personnel and employment records of present and former employees, and
documentation developed or used for accounting, marketing, engineering,
manufacturing or any other purpose any time prior to the Closing;
(ix) all lists of present customers and lists of former customers;
(x) all goodwill; and
(xi) all product designations used in any catalog with respect to
Products.
2.4. EXCLUDED ASSETS. Buyer and Sellers expressly understand and agree
that the assets and properties set forth on SCHEDULE 2.4 (the "Excluded Assets")
shall be excluded from the Transferred Assets and shall be retained by Sellers.
2.5. 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 to assume and in due
course perform, pay and discharge only the following Liabilities of Schaublin
Swiss, Schaublin USA and Schaublin France, effective at the time of the Closing
(the "Assumed Liabilities"); provided that any such Assumed Liabilities
satisfied by Schaublin Swiss, Schaublin USA or Schaublin during the period from
October 1, 1999 to the Closing (the "Interim Period"), shall be allocated by
Buyer and Sellers as set forth in Section 2.9:
(a) Monetary Liabilities of Schaublin Swiss and Schaublin USA in respect
of the Business;
(b) Liabilities of Sellers which shall arise in respect of periods
subsequent to the Closing under (i) the Personal Property Leases, (ii) the Real
Property Leases and (iii), to the extent not constituting Excluded Liabilities
the Scheduled Contracts; provided that the Liabilities described in this
subparagraph (b) will not be Assumed Liabilities to the extent such Liabilities
relate to the period preceding the Closing and, unless assumed under
subparagraph (a), arise from actions or omissions of Sellers prior to the
Closing (e.g., (A) Liabilities arising by reason of a default by Sellers on or
before the Closing under a Contract will not be Assumed Liabilities, (B)
Liabilities arising from a failure by Sellers to take steps reasonably required
in order to satisfy obligations of the Business following the Closing will not
be Assumed Liabilities, and (C) Liabilities on account of products or services
produced or provided by Sellers prior to the Closing will not be Assumed
Liabilities, unless they are liabilities which are assumed under subparagraph
(a) above); and
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(c) Purchase orders and Sales orders of the Business set forth on
SCHEDULE 2.5 or entered into in the ordinary course of the Business since the
date set forth in such schedule.
2.6. 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 Sellers or any of their Affiliates of any of the
foregoing other than the Assumed Liabilities (the "Excluded Liabilities"). The
Excluded Liabilities shall include, without limitation, the following
Liabilities:
(a) any Liability of Schaublin France other than pursuant to Section
2.5(b) above;
(b) any Liability of Schaublin Swiss, Schaublin France or Schaublin USA
or any of their Affiliates 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;
(c) any Liability whether presently in existence or arising hereafter
directly or indirectly relating to an Excluded Asset;
(d) any Environmental Liability of Schaublin Swiss, Schaublin France or
Schaublin USA relating to the Business or the Transferred Assets, whether
presently in existence or arising hereafter except Environmental Liabilities
proximately caused by actions of Buyer after, and not constituting a
continuation of conditions existing prior to the Closing Date;
(e) 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 Sellers or any of
their Affiliates in connection with the transactions contemplated hereby or
arising in connection herewith;
(f) any Liability the existence of which constitutes, gives rise to, or
arises by reason of, a breach of any representation, warranty or covenant
hereunder;
(g) any contingent Liabilities of Schaublin Swiss, Schaublin France or
Schaublin USA related to any transactions by Schaublin Swiss, Schaublin France
or Schaublin USA prior to the Closing Date, except Liabilities that Buyer has
expressly agreed to assume pursuant to the terms of this Agreement;
(h) any Liability related to indebtedness of Schaublin Swiss or Schaublin
USA for borrowed money or capitalized leases, or the guarantee by Schaublin
Swiss, Schaublin France or Schaublin USA of the indebtedness of any other
Person, except as set forth on the Interim Financials or on SCHEDULE 2.6(h);
(i) any Liability of Sellers arising under this Agreement;
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(j) with respect to Products manufactured on or prior to the Closing Date
(and whether or not sold 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 (i) express product warranties
extended by Sellers prior to the Closing Date or by Buyer after the consummation
of the transactions contemplated by this Agreement (provided that the warranties
of Buyer are no more expansive than the warranties extended by Sellers prior to
the Closing Date) or (ii) product warranties or obligations implied or provided
by Applicable Law;
(k) with respect to Products manufactured by Schaublin Swiss prior to the
Closing Date (and whether or not sold prior to the Closing Date), any Liability
of Schaublin Swiss, Schaublin France or Schaublin USA arising out of, resulting
from, or relating to product liability claims;
(l) any Liability of Schaublin Swiss, Schaublin France or Schaublin USA
that cannot be assumed by Buyer as a matter of law;
(m) any Liability of Sellers which serves as basis of any claim for
indemnification under Article VII hereof;
(n) any Liability under Contracts set forth on SCHEDULE 2.4;
(o) any Liability of Sellers for Taxes;
(p) any Liabilities under Contracts with, or indebtedness to, Affiliates
of Schaublin Swiss, Schaublin France or Schaublin USA, except as set forth on
SCHEDULE 2.6(p);
(q) any Liabilities under Contracts with, or indebtedness to, Schaublin
Swiss, Schaublin France or Schaublin USA on account of activities not related to
the Business, including, without limitation, on account of the machine tool
business or activities of Schaublin Swiss, Schaublin France or Schaublin USA at
Schaublin Swiss's facility located in Bevilard, Switzerland, except as set forth
on SCHEDULE 2.6(q).
(r) any Liability under the Personal Property Leases, the Real Property
Leases and the Scheduled Contracts that is not an Assumed Liability under
Section 2.5; and
(s) any Liability of Schaublin Swiss, Schaublin France or Schaublin USA
relating to any employee benefit plan or program that does not appear on the
Interim Financials, including, without limitation, Liabilities for accumulated
holidays, contributions to social insurance, plans or programs, including, but
not limited to, UVG, AHV, IV, EO, ALV or BVG, whether arising or maturing prior
to or after the Closing Date.
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2.7. ASSIGNMENT OF CONTRACTS AND RIGHTS.
(a) With respect to any Contract and any claim, right or benefit arising
thereunder or resulting therefrom that constitutes a Transferred Asset, promptly
after the Closing Date, to the extent requested by Buyer, Sellers 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, Sellers and Buyer shall cooperate in an arrangement
reasonably satisfactory to Buyer and Sellers under which Buyer would obtain, to
the extent practicable, the claims, rights and benefits thereof and assume the
corresponding obligations thereunder in accordance with this Agreement,
including subcontracting, sub-licensing or sub-leasing to Buyer, or under which
Sellers would enforce for the benefit of Buyer, with Buyer assuming Sellers'
obligations, any and all claims, rights and benefits of Sellers against a third
party thereto. Sellers will promptly pay to Buyer when received all monies
received by Sellers under any Transferred Asset or any claim, right or benefit
arising thereunder not transferred to Buyer pursuant to this Section 2.7(b).
2.8. CLOSING.
(a) The closing (the "First Closing") of the transactions contemplated by
this Agreement relating to Schaublin Swiss, Schaublin USA and Bovagnet shall
take place on December 17, 1999 (the "First Closing Date"). The First Closing
shall take place at the offices of Xxxxx & XxXxxxxx in Zurich, Switzerland.
(b) The closing (the "Second Closing") of the transactions contemplated
by this Agreement relating to Schaublin France shall take place on January 5,
2000 or such date as may be agreed by the parties (the "Second Closing Date") or
such other date as to which Buyer and Schaublin France may agree. The Second
Closing shall take place at such place as Buyer and Schaublin France may agree.
(c) Upon consummation, both the First Closing and the Second Closing
shall be deemed to have taken place as of 12:01 a.m. on January 1, 1999 (the
"Effective Time"), and Buyer and Sellers shall allocate all economic matters
associated with the period of time between the Effective Time and the Closing
Date (the "Pre-Closing Period") as set forth in Section 2.9(b) hereof; provided
that any temporal references contained in this Agreement to the First Closing
shall be deemed to be the First Closing Date, and temporal references contained
in this Agreement to the Second Closing shall be deemed to be the Second Closing
Date.
(d) References in this Agreement to the "Closing" and the "Closing Date"
shall refer to either:
15
(i) the First Closing and the First Closing Date, respectively, in the
context of the transactions contemplated by this Agreement relating to Schaublin
Swiss, Schaublin USA and Bovagnet; or
(ii) the Second Closing and the Second Closing Date, respectively, in the
context of the transactions contemplated by this Agreement relating to Schaublin
France.
2.9. CONSIDERATION.
(a) The consideration for the Transferred Assets, the Bovagnet Shares and
for the agreements (the "Restrictive Covenants") contained in Article VIII below
(in aggregate, the "Consideration"), which shall be adjusted by operation of
subparagraph (c)(ii) below, shall be 13,700,000 Swiss Francs.
(b) As indicated in Section 2.8 above, both the First Closing and the
Second Closing shall be deemed to have taken place as of the Effective Time.
Pursuant thereto, except as otherwise set forth herein, the operations of the
Business conducted by the Schaublin Entities during the Pre-Closing Period shall
be for the economic account of Buyer.
(c) In order to give effect to subparagraph (b) above,
(i) the parties acknowledge that the Consideration took account of
the period from January 1, 1999 through September 30, 1999, and
(ii) with respect to the Interim Period, Sellers shall be
obligated to pay to Buyer, or Buyer shall be obligated to pay to Sellers,
as the case may be, the amount of the positive or negative Interim Period
Cash Flow, as the case may be, as provided in Section 2.10(c)(iii).
(d) The "Interim Period Cash Flow" shall mean the cash flow derived on
account of the operation of the Business during the Interim Period, determined
in accordance with the following:
(i) No effect shall be given to the following:
(A) transactions involving Excluded Assets unless otherwise
agreed by the parties hereto; and
(B) transactions involving Excluded Liabilities unless
otherwise agreed by the parties hereto.
(ii) Sales or purchases of goods or services to or from any other
operation or Affiliate of any of the Schaublin Entities shall be deemed
to have
16
made at such Schaublin Entity's customary prices for sales or purchases
of like goods or services to or from third parties.
(iii) Cash outflows shall be limited to the following:
(A) payroll and other payments actually made or which are
required to be made in the ordinary course to or on
account of the employees of the Business, but only
to the extent relating to work actually performed
during the Pre-Closing Period and in amounts
consistent with past practices as set forth in
SCHEDULE 3.18(a);
(B) payments to third-party suppliers of raw materials or
third-party service providers (specifically
excluding all Affiliates of the Schaublin Entities)
for materials actually received during the
Pre-Closing Period or for services actually rpovided
during the Pre-Closing Period;
(C) payments in respect of capital expenditures which were
approved in writing in advance by Buyer or which are
set forth on SCHEDULE 2.9(d)(iii)(c); and
(D) payments in satisfaction of Assumed Liabilities.
(iv) Without limiting the specificity of clause (iii) above, cash
outflows shall not include expenses relating to the transactions
contemplated by this Agreement.
(v) Cash inflows shall equal the aggregate amount of cash received
on account of the Receivables and in respect of receivables generated
during the Interim Period.
(e) SCHEDULE 2.9(e) sets forth the parties' allocation of the
Consideration among the Transferred Assets and the Bovagnet Shares and among the
Sellers (the "Allocation Statement").
2.10. PAYMENT OF THE CONSIDERATION.
(a) At the First Closing, Buyer shall:
(i) make a payment (the "Cash Portion") of 11,650,000 Swiss Francs
by wire transfer of immediately available funds to a bank account or bank
accounts designated by Schaublin Swiss (including any payment due
Schaublin
17
USA as to which Schaublin USA has delivered an instruction in Section
3.29); and
(ii) deliver to Schaublin Swiss a promissory note of Buyer (the
"Two Year Note") in the principal amount of 1,700,000 Swiss Francs in the
form attached hereto as Exhibit A, which shall accrue interest at the
rate of five percent (5%) per annum, and the principal of which shall be
paid in an installment of 700,000 Swiss Francs on the first anniversary
of the First Closing Date and in an installment of 1,000,000 Swiss Francs
on the second anniversary of the First Closing Date. Buyer shall be
entitled to prepay the principal thereof at any time on or before the
second anniversary of the First Closing Date without premium or penalty.
(b) Sellers shall cause the transactions relating to the transfer of the
Transferred Assets of Schaublin France to be published after the Second Closing
Date in the Journal des Annonces de la Seine in accordance with the law on March
17, 1909. Accordingly, at the Second Closing, Buyer shall make a payment (the
"Second Closing Payment") of 350,000 Swiss Francs by wire transfer of
immediately available funds to a bank account or bank accounts of the "Sequestre
de l'Ordre des Avocats au Barreau de Parts" (the "Escrow Agent") as designated
in the Asset Transfer Agreement to be entered into at the Second Closing by and
among Sellers and Buyer in the form attached hereto as Exhibit B (the "Schaublin
France Filing"). The Second Closing Payment shall be held by the Escrow Agent
until expiration of the publication of the transactions in the Journal des
Annonces de la Seine and the expiration of the period that a creditor of
Schaublin France could contest the transfer of the Transferred Assets of
Schaublin France, and shall be released by the Escrow Agent as provided under
the Schaublin France Filing.
(c) Within 90 days after the Second Closing Date, Buyer will prepare and
present to Sellers a statement setting forth the Interim Period Cash Flow on
account of all of the Schaublin Entities (the "Proposed Closing Statement"),
which shall be prepared in accordance with Section 2.9(d).
(i) The Proposed Closing Statement shall be binding upon the
parties to this Agreement unless Sellers give written notice of
disagreement with any of the amounts reflected thereon to Buyer within 15
days after delivery to it of the Proposed Closing Statement, specifying,
to the extent possible, in reasonable detail the nature and extent of
such disagreement. Buyer and Sellers shall thereafter negotiate to
resolve any such disagreement in good faith; provided that during such 15
day period, Buyer shall provide Sellers with such access to Buyer's books
and records as Sellers may reasonably request in order to verify the
information within the Proposed Closing Statement. If Buyer and Sellers
are unable to resolve any such disagreement, the disagreement shall be
referred for final determination to KPMG Peat Marwick (the "First
Choice") or, if such firm is
18
not available, such other independent accounting firm selected by mutual
agreement of Buyer and Sellers (the "Selected Firm"). The Proposed
Closing Statement, as adjusted as a result of such resolution by the
First Choice or the Selected Firm, as the case may be, shall be final and
binding upon the parties hereto for the purposes of this Agreement. If
Buyer and Sellers cannot reach agreement on the Selected Firm, it shall
be chosen by the First Choice and shall be one of the Big Five accounting
firms. The Proposed Closing Statement as finally determined shall be
referred to as the "Closing Statement."
(ii) The fees and disbursements of the First Choice or the
Selected Firm, as the case may be, shall be paid by Buyer and Schaublin
Swiss 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.
(iii) (A) If the Closing Statement indicates that the Interim
Period Cash Flow is positive, Schaublin Swiss shall
pay Buyer the Interim Period Cash Flow. Such payment
shall be made within five (5) Business Days of the
determination of the Closing Statement in cash in
immediately available funds by wire transfer to a
bank account or bank accounts designated in writing
by Buyer at least three days prior to the due date
thereof. If amounts are due to Buyer pursuant to this
clause (A), Buyer shall have the right, at its
election, to set-off such amounts against amounts
otherwise due to Schaublin Swiss under the Two Year
Note.
(B) If the Closing Statement indicates that the Interim
Period Cash Flow is negative, Buyer shall pay Sellers
the Interim Period Cash Flow. Such payment shall be
made within five (5) Business Days of the
determination of the Closing statement in cash in
immediately available funds by wire transfer to a
bank account or bank accounts designated in writing
by Sellers at least three days prior to the due date
thereof.
2.11. FIRST CLOSING DELIVERIES.
(a) At the First Closing, Sellers shall deliver to Buyer:
(i) such instruments of assignment and conveyance as may be
requested by Buyer in order effectively to transfer to Buyer good and
marketable title to the Bovagnet Shares all in form requested by Buyer;
19
(ii) the corporate minutes book of Bovagnet;
(iii) certified resolutions of the Board of Directors of Bovagnet
authorizing Buyer to become a shareholder of Bovagnet;
(iv) letters of resignation effective as of the Closing Date of
each of the members of the Board of Directors and each of the officers of
Bovagnet;
(v) an opinion of counsel from Xxxxx & XxXxxxxx, counsel to
Schaublin Swiss, in the form attached hereto as Exhibit C;
(vi) patent, trademark and copyright assignments, in form and
substance satisfactory to Buyer, effecting the transfer of the patents,
trademarks and copyrights included in the Transferred Assets;
(vii) assignments (with lessor's consents thereto) of leasehold
interests in any leased real or personal property included in the
Transferred Assets;
(viii) a xxxx 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 Schaublin Swiss and Schaublin
USA in and to the Transferred Assets, free and clear of all Liens to
Buyer;
(ix) a lease between Buyer and Schaublin Swiss for the premises
located in Delemont, Switzerland in substantially the form attached
hereto as Exhibit D;
(x) an employment agreement executed by Buyer and Xxxxxxx
Xxxxxxxxx in substantially the form attached hereto as Exhibit E;
(xi) non-competition declarations executed by each of the
stockholders of Schaublin Swiss in substantially the forms attached
hereto as Exhibit F;
(xii) a sales and supply agreement between Buyer and Roulement
Miniatures SA in substantially the form attached hereto as Exhibit G;
(xiii) a Trademark License Agreement, substantially in the form
attached hereto as Exhibit H, pursuant to which Buyer shall license to
Schaublin Swiss the "Schaublin" name and those trademarks described on
SCHEDULE 2.3(a)(ix), which was obtained pursuant to Section 2.3(a)(ix),
for the sole purposes of (A) Schaublin Swiss's use in connection with
Schaublin Swiss's design, development, manufacture, assembly, sale,
distribution, service and repair of machine tools generally of the nature
sold by Schaublin Swiss prior hereto (the "Machine Tool Business") and
(B) Schaublin Swiss's ownership of real property, but in no event
20
shall such Trademark License Agreement grant to Sellers the right to
use the "Schaublin" name or those trademarks described on SCHEDULE
2.3(a)(ix) for any other purpose;
(xiv) an Interim Services Agreement, substantially in the form
attached hereto as Exhibit I, between Schaublin Swiss and Buyer pursuant
to which Schaublin Swiss shall provide to Buyer operational support for a
period of one year, and Buyer shall reimburse Schaublin Swiss for the out
of pocket expenses incurred in connection with such operational support;
(xv) an agreement of Schaublin Swiss that shall be binding on
Schaublin Swiss's successor(s) to continue to sell conventional
mechanical lathes to Bovagnet and its Affiliates, successors and assigns
on a non-exclusive basis on terms no less favorable than those contained
in any other agreement of Schaublin Swiss or its successor(s) to sell
machine tools, substantially in the form attached hereto as Exhibit J;
(xvi) payment by Schaublin Swiss of all outstanding amounts due
and owing by Schaublin Swiss to Roller Bearing Company of America, Inc.
under the Royalty Agreement by and among Schaublin Swiss and Roller
Bearing Company of America, Inc.;
(xvii) such other documents as Buyer and its counsel may
reasonably request prior to the First Closing.
(b) At the First Closing, Buyer shall deliver to Sellers:
(i) the Cash Portion; and
(ii) the Two Year Note.
2.12. SECOND CLOSING DELIVERIES.
(a) At the Second Closing, Sellers shall deliver to Buyer:
(i) a bringdown certificate executed by an officer of Schaublin
Swiss certifying that the representations made herein by Schaublin Swiss
are true and correct as of the Second Closing Date;
(ii) a xxxx 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 Schaublin France in and to the
Transferred Assets, free and clear of all Liens to Buyer;
21
(iii) a Facility Sharing Agreement, substantially in the form
attached hereto as Exhibit I between Schaublin France and Buyer pursuant
to which Schaublin France and Buyer shall share space and other costs
associated with the facility of Schaublin France;
(iv) the Schaublin France Filing, substantially in the form
attached hereto as Exhibit B between Sellers and Buyer; and
(v) such other documents as Buyer and its counsel may reasonably
request prior to the Second Closing.
(b) At the Second Closing, Buyer shall deliver:
(i) the Second Closing Payment; and
(ii) a bringdown certificate executed by an officer of Buyer
certifying that the representations made herein by Buyer are true and
correct as of the Second Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AS TO SCHAUBLIN ENTITIES
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Schaublin Swiss represents and
warrants to Buyer as follows:
3.1. EXISTENCE AND POWER.
(a) Schaublin Swiss is a corporation duly organized and validly existing
and in good standing under the laws of Switzerland 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. Schaublin Swiss is qualified to conduct business and in
good standing in each jurisdiction where the nature of its activities in
connection with the conduct of the Business requires it to be so qualified.
(b) Bovagnet is a corporation duly organized and validly existing and in
good standing under the laws of France 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. Bovagnet is qualified to conduct business and in good
standing in each jurisdiction where the nature of its activities in connection
with the conduct of the Business requires it to be so qualified.
(c) Schaublin France is a corporation duly organized and validly existing
and in good standing under the laws of France and has all corporate power and
all governmental
22
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. Schaublin France is qualified to conduct business and in good standing
in each jurisdiction where the nature of its activities in connection with the
conduct of the Business requires it to be so qualified.
(d) Schaublin USA is a corporation duly organized and validly existing
and in good standing under the laws of the State of Delaware, USA 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. Schaublin USA is qualified to
conduct business and in good standing in each jurisdiction where the nature of
its activities in connection with the conduct of the Business requires it to be
so qualified.
(e) SCI de L'Avenue des Lacs ("SCI") is a civil partnership duly
organized and validly existing and in good standing under the laws of France 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. SCI is qualified to conduct
business and in good standing in each jurisdiction where the nature of its
activities in connection with the conduct of the Business requires it to be so
qualified.
(f) Service Outillage Mecanique (Isometric) ("Isometric") is a
corporation duly organized and validly existing and in good standing under the
laws of France 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.
Isometric is qualified to conduct business and in good standing in each
jurisdiction where the nature of its activities in connection with the conduct
of the Business requires it to be so qualified.
(g) Attached hereto as SCHEDULE 3.1(g) is a true and correct copy of the
Certificate of Incorporation (Statutes) and By-laws of each of the Schaublin
Entities and SCI.
3.2. AUTHORIZATION. The execution, delivery and performance by Schaublin
Swiss, Schaublin France and Schaublin USA of this Agreement and every other
agreement, document or instrument contemplated hereby (the "Related Agreements")
to which it is a party or to be executed by such party in connection herewith
and the consummation by such party of the transactions contemplated hereby and
under the Related Agreements are within such party's corporate powers and have
been duly authorized by all necessary corporate action on the part of such
party. This Agreement and the Related Agreements to which it is a party have
been duly and validly executed and delivered by such party and constitutes the
legal, valid and binding agreements of such party, enforceable against such
party in accordance with their terms.
3.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by Sellers of this Agreement and the Related Agreements require no action by,
consent or approval of, or filing with, any Governmental Authority other than
any actions, consents, approvals or filings otherwise expressly referred to in
this Agreement or set forth on SCHEDULE
23
3.3 or SCHEDULE 3.16(b). To the Knowledge of Sellers, there are no facts
relating to the identity or circumstances of the Schaublin Entities that would
prevent or materially delay obtaining any of the Required Consents.
3.4. NON-CONTRAVENTION. The execution, delivery and performance by
Sellers of this Agreement and the Related Agreements do not and will not (a)
contravene or conflict with the Certificate of Incorporation (Statutes) or
By-laws of any of the Schaublin Entities, (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 Sellers, Bovagnet, the
Business, any of the Transferred Assets or of the Bovagnet Shares, (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 Sellers or Bovagnet are 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 or of any Encumbrance on any of the Bovagnet Shares.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Attached hereto as SCHEDULE 3.5(a) are complete copies of (i) the
balance sheet of the Business as at December 31, 1998 (the "1998 Balance Sheet")
and as at December 31, 1997 and 1996 and the related statements of income and
statements of cash flows of the Business for the years ended December 31, 1996,
1997 and 1998 (collectively, the "Annual Financials"), (ii) the audited
consolidated balance sheet of Schaublin Swiss for the years ended December 31,
1997 and 1998 (collectively, "Sellers' Financials") and (iii) the balance sheet
of the Business as at September 30, 1999 and the related unaudited statement of
income and of cash flows of the Business for the nine months ended September 30,
1999 (collectively, the "Interim Financials" and, together with Sellers'
Financials and the Annual Financials, the "Financials").
(b) Subject to (c) below, the Financials (i) have been prepared based on
the books and records of the Schaublin Entities in accordance with the normal
accounting practices of the Schaublin Entities, consistent with past practice
and with each other, and present fairly the financial condition, results of
operations and statements of cash flow of the Schaublin Entities as to Sellers'
Financials, and of the Business as to the Annual Financials and the Interim
Financials, 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 the Schaublin Entities, contain and reflect adequate reserves for
all reasonably anticipated material losses and costs and expenses in excess of
expected receipts. Any differences between the Accounting Principles and the
accounting practices of the Schaublin Entities, as well as the estimated
magnitude of such impact on the Financials resulting from such differences, are
set forth on SCHEDULE 3.5(b).
(c) The Annual Financials and the Interim Financials were derived
internally by Sellers on the basis of their good faith attempt to allocate
properly the assets and liabilities, in the case of the underlying balance
sheets, and the results of operations and cash flows, in the
24
case of statements of income and cash flows, as between the Business and the
other operations of the Schaublin Entities. Accordingly, the representations set
forth in (b) above are subject to the qualification of Sellers' Knowledge.
(d) The Net Book Value of the Business as of September 30, 1999 equals
15,558,372 Swiss Francs.
(e) For the purposes hereof, the "Net Book Value" is the sum of the
following as of September 30, 1999, calculated in accordance with Section
3.5(f):
(i) the book value of the Equipment, Prepaid Expenses, Inventory
and Receivables of Schaublin Swiss and Schaublin USA, plus
(ii) the book value of the Inventory of Schaublin France, plus
(iii) the book value of all the assets of Bovagnet, minus
(iv) the Monetary Liabilities of each of the Schaublin Entities.
(f) The Net Book Value was determined in accordance with the Accounting
Principles applied in accordance with the past practices of the Schaublin
Entities, as described in Section 3.5(b) above; provided that:
(i) only the book value of inventory satisfying the
representations set forth in Section 3.12 were included, and such
inventory was valued in accordance with the policy set forth on SCHEDULE
3.5(b) hereto; and
(ii) only the book value of Equipment satisfying the
representations set forth in Section 3.10(b) were included.
(g) Except as set forth on SCHEDULE 3.5(g), as of September 30, 1999,
none of the Schaublin Entities had Monetary Liabilities other than those
Monetary Liabilities accrued as liabilities on the Interim Financials.
(h) Bovagnet is not liable for any of the Liabilities of SCI other than
those Monetary Liabilities accrued as liabilities on the Interim Financials.
(i) Attached hereto as SCHEDULE 3.5(i) are correct copies of internally
prepared quarterly balance sheets and statements of income of the Business for
the period January 1, 1998 through September 30, 1999.
3.6. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 3.6,
since the Effective Time, the Business has been conducted in the ordinary
course, and none of the following events has occurred with respect to the
Business:
25
(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 been or that may be reasonably expected to be, either alone or together
with all such events, occurrences, developments, states of circumstances or
facts or changes, Material;
(b) (i) any incurrence, assumption or guarantee of any indebtedness for
borrowed money by any of the Schaublin Entities 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 any of the Schaublin Entities in
connection with the Business or any of the Transferred Assets, (iii) any change
in any Liability of any of the Schaublin Entities other than in the ordinary
course of business, or (iv) any incurrence of any other Liability by any of the
Schaublin Entities 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 or Encumbrance on the Bovagnet Shares, except in the
ordinary course of business;
(d) any transaction or commitment made, or any Contract entered into, by
any of the Schaublin Entities (including on the acquisition or disposition of
any Transferred Assets), or any waiver, amendment, termination or cancellation
of any Contract by any of the Schaublin Entities, or any relinquishment of any
rights thereunder by such Schaublin Entity, or of any other right or debt owed
to such Schaublin Entity, 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 the Schaublin Entities that are not, in the
aggregate, material to the Business, any (i) grant of any severance,
continuation or termination pay to any Employee, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any Employee, (iii) increase in benefits
payable or potentially payable under any severance, continuation or termination
pay policies or employment agreements with any Employee, (iv) increase in
compensation, bonus or other benefits payable or potentially payable to any
Employee, (v) change in the terms of any bonus, pension, insurance, health or
other Plan of any of the Schaublin Entities, or (vi) representation of any of
the Schaublin Entities to any Employee that Buyer would assume, continue to
maintain or implement any 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;
26
(g) any material change by any of the Schaublin Entities in its
accounting principles, methods or practices or in the manner it keeps its books
and records or any material change by any of the Schaublin Entities 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 any of
the Schaublin Entities and any officer, director, stockholder or Affiliate of
any of the Schaublin Entities or any of their respective Affiliates; or
(i) any disposition of an asset by any of the Schaublin Entities, other
than inventory disposed of in the ordinary course of the Business, exceeding as
to all such assets in the aggregate of 20,000 Swiss Francs or the equivalent
thereof;
(j) any payment, discharge or satisfaction of any Liabilities of any of
the Schaublin Entities, other than payments, discharges or satisfactions in the
ordinary course of business.
3.7. REAL PROPERTY.
(a) The only real property that is used in the operations of the Business
is leased real property located at Rue de la Blancherie 9, Delemont, 220 Avenue
des Lacs, Scionzier, L'Espace Cristal, 00 xxx Xxxxxxx-Xxxxxx, Poissy Cedex and
000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx (the "Leased Real Property"). Each
of the Schaublin Entities has a good and valid leasehold interest in the Leased
Real Property.
(b) SCHEDULE 3.7(b) sets forth a true and complete list of all leases or
licenses respecting the Leased Real Property (the "Real Property Leases")
entered into in connection with the Business. With respect to the Real Property
Leases, except as set forth on SCHEDULE 3.7(b), there exists no defaults by any
of the Schaublin Entities, or, to the Knowledge of Sellers, any default or
threatened draft by any lessor third party thereunder, that has affected or
could reasonably be expected to materially affect the rights and privileges
thereunder of any of the Schaublin Entities. Except as set forth on SCHEDULE
3.7(b), assuming the Required Consents are obtained, all Real Property Leases to
which any of the Schaublin Entities is a party or by which it is bound may be
assigned, transferred and conveyed to Buyer without default, penalty or
modification thereof.
(c) Except as disclosed in SCHEDULE 3.7(c), none of the Schaublin
Entities is in violation or has received notice of any violation of any
applicable zoning ordinance, building code, use or occupancy restriction 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 Leased Real Property, nor has any of the Schaublin
Entities received notice of any special assessment proceedings affecting the
Leased
27
Real Property, or applied for any change to the zoning or land use status of
the Leased Real Property.
(d) Except as set forth in SCHEDULE 3.7(d), (i) there are no current
leases, subleases, options or other agreements, granting to any third person the
right to purchase or lease the Leased Real Property and (ii) there are no
written or oral agreements to permit third persons to use or occupy the Leased
Real Property.
(e) Except as disclosed on SCHEDULE 3.7(e), there are no existing
property tax abatement programs or other governmental assistance programs with
respect to the Leased Real Property. SCHEDULE 3.7(e) sets forth all documents to
which any of the Schaublin Entities is a party relating to any such programs.
Sellers will use commercially reasonable efforts to assist Buyer in obtaining
the benefit of all such programs.
(f) There is no pending, and none of the Schaublin Entities has received
written notice of, nor do Sellers have Knowledge of, threatened condemnation,
expropriation, eminent domain, special assessment or similar proceeding
affecting the Leased Real Property. None of the Schaublin Entities has received
notice of, and Sellers otherwise have no Knowledge of, any fire, health, safety,
building, environmental, hazardous substances, pollution control, zoning or
other land use regulatory proceedings, either instituted or planned to be
instituted, which would have an adverse effect on the use and operation of any
portion of the Leased Real Property for its intended purpose or the value of any
material portion of the Leased Real Property.
(g) Sellers have furnished copies of any and all title policies, surveys,
engineering and geologic reports and environmental reports in its possession
with respect to the Leased Real Property and any other previously leased, owned
or operated properties. Any certificates of occupancy required for any of the
Schaublin Entities' use and occupancy of the Leased Real Property have been
obtained and are valid and in effect. Except as set forth on SCHEDULE 3.7(g),
none of the structures or improvements erected on the Leased Real Property
encroaches on the property of others.
(h) Except as disclosed on SCHEDULE 3.7(h), the Schaublin Entities have
direct access to publicly dedicated rights-of-way from the Leased Real Property
and, to the Knowledge of Sellers, there does not exist any claims to such access
with respect to any Leased Real Property that could reasonably be expected,
individually or in the aggregate, to be Material.
3.8. LEASED PERSONAL PROPERTY. SCHEDULE 3.8 sets forth a true and
complete list of all personal property leases or licenses (i) to which any of
the Schaublin Entities is a party or by which any of the Schaublin Entities is
bound, (ii) that are related to the Business and (iii) that provide for annual
payments by any of the Schaublin Entities in excess of 7,500 Swiss Francs or
that contain other affirmative material obligations that cannot be terminated by
such Schaublin Entity within 30 days (the "Personal Property Leases" and
together with the Real Property Leases, the "Leases") entered into in connection
with the Business.
With respect to the
28
Personal Property Leases, except as set forth on SCHEDULE 3.8, there exist no
defaults by the Schaublin Entity party thereto, or, to the Knowledge of
Sellers, 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 such Schaublin Entity. Except
as set forth on SCHEDULE 3.8, assuming the Required Consents are obtained,
all Personal Property Leases to which any of the Schaublin Entities 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.
3.9. SHARES.
(a) SCHEDULE 3.9(a) attached hereto sets forth a true and complete list
of all the record and beneficial owners of shares of capital stock of Schaublin
Swiss and the number of shares held by such owners.
(b) The authorized capital stock of Bovagnet consists solely of 12,004
shares of common stock, of which 12,004 shares are issued and outstanding. All
outstanding shares of capital stock of Bovagnet are duly authorized, validly
issued, fully paid and non-assessable. There are no outstanding options,
warrants or other rights to acquire, or any securities or obligations
convertible into or exchangeable for, any shares of capital stock of Bovagnet
which have been issued or granted by or are binding upon Bovagnet or Schaublin
Swiss or any other Person. SCHEDULE 3.9(b) attached hereto sets forth a true and
complete list of all the record and beneficial owners of shares of capital stock
of Bovagnet and the number of shares held by such owners. Schaublin Swiss is the
record and beneficial owner of those shares of capital stock of Bovagnet, free
and clear of all Encumbrances, set forth opposite its name on SCHEDULE 3.9(b).
(c) Schaublin Swiss has, and shall transfer to Buyer at the Closing on
the Closing Date, good, valid and marketable title to the Bovagnet Shares free
and clear of all Encumbrances.
(d) All shares of capital stock of Isometric held by Bovagnet are duly
authorized, validly issued, fully paid and non-assessable. The shares of capital
stock of Isometric which are held by Bovagnet are held free and clear of all
Encumbrances.
(e) Bovagnet owns all of the issued and outstanding shares of common
stock of SCI. All outstanding shares of SCI are duly authorized, validly issued,
fully paid and non-assessable. There are no outstanding options, warrants or
other rights to acquire, or any securities or obligations convertible into or
exchangeable for, any shares of capital stock of SCI which have been issued or
granted by or are binding upon Bovagnet or SCI or any other Person.
3.10. SUFFICIENCY OF AND TITLE TO THE ASSETS OF THE BUSINESS.
(a) Except as set forth in SCHEDULES 3.16(a) and 3.16(b), Schaublin
Swiss, Schaublin France and Schaublin USA have the right to sell, assign,
transfer and convey, and
29
upon consummation of the transactions contemplated by this Agreement and the
Related Agreements, will have sold, assigned, transferred and conveyed, to Buyer
all of the Transferred Assets, free and clear of all Liens, which Transferred
Assets constitute all of the properties and assets now held or employed by
Schaublin Swiss, Schaublin France and Schaublin USA in connection with the
Business (other than the Excluded Assets).
(b) The Equipment of each of the Schaublin Entities is in good operating
condition and repair (reasonable wear and tear excepted).
(c) The Transferred Assets are suitable for the purposes for which they
are presently being used and are adequate to meet all present and reasonably
anticipated future requirements of the Business as presently conducted by
Sellers.
(d) The Business is a going concern, and, with the transfer of the
Transferred Assets to Buyer and the acquisition of the Bovagnet Shares by 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.
(e) All of the assets of Bovagnet are suitable for the purposes for which
they are presently being used and are adequate to meet all present and
reasonably anticipated future requirements of the Business as presently
conducted by Bovagnet.
(f) No material amounts of capital expenditures are required in order for
the Business to continue to be operated in the normal course.
(g) Except as set forth in SCHEDULE 3.10(g), Schaublin Swiss, Schaublin
France and Schaublin USA either own the entire right, title and interest in, to
and under, or have the legally enforceable right to use all Transferred Assets.
3.11. AFFILIATES. Except as set forth in SCHEDULE 3.11, none of the
Sellers nor any principal stockholder of any of the Schaublin Entities or any
officers or directors of any of the Schaublin Entities (or any immediate family
member of any such officer or director):
(a) now has or at any time subsequent to January 1, 1996, 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 any of
the Schaublin Entities or purchases or during such period purchased from any of
the Schaublin Entities any goods or services, or otherwise does or during such
period did business with any of the Schaublin Entities of a material nature or
amount; or
(b) now is or at any time subsequent to January 1, 1996, was, a party to
any contract, commitment or agreement relating to the Business to which any of
the Schaublin Entities is or during such period was a party or under which any
of the Schaublin Entities is or
30
was obligated or bound or to which any of their respective properties may be or
may have been subject, other than through such Schaublin Entity.
3.12. INVENTORY. Subject to any reserve therefor that is included in the
Interim Financials, except as disclosed in SCHEDULE 3.12, (a) that portion of
the Inventory of each of the Schaublin Entities comprised of finished goods: (i)
has been acquired or manufactured in the ordinary course of business, in
accordance with the normal inventory practices of the Schaublin Entities; (ii)
is free of any material defect or deficiency in design, material or workmanship;
(iii) is in merchantable and undamaged condition and, where applicable, meets
customer specifications; (iv) is not obsolete; (v) is at levels adequate and not
excessive in relation to the circumstances of the Business and in accordance
with good inventory stocking practices; and (vi) is of items that are currently
being purchased in the ordinary course by the Business' current customers, and
(b) that portion of the inventory of each of the Schaublin Entities comprised of
raw materials and work in process: (i) is at levels adequate and not excessive
in relation to the circumstances of the Business and in accordance with good
inventory stocking practices; and (ii) when manufactured into finished goods,
will satisfy all of the representations set forth in subsection (a) above.
3.13. LITIGATION. Except as disclosed on SCHEDULE 3.13, (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 Sellers' Knowledge, threatened, against or affecting the Business, any of
the Transferred Assets or any of the Bovagnet Shares or which seek to enjoin or
rescind the transactions contemplated by this Agreement or otherwise prevent
Sellers 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, the Bovagnet Shares or the Business.
3.14. CONTRACTS.
(a) SCHEDULE 3.14(a) sets forth a complete list of the following
contracts, commitments and obligations (whether written or oral) respecting the
Business (collectively with the Leases and the Employment Agreements, the
"Scheduled Contracts"):
(i) each Contract with (A) any present or former employee, (B) any
supplier of services or products whose dollar volume of sales exceeded
15,000 Swiss Francs in 1998 and (C) any Person in which the aggregate
payments made or to be made to any of the Schaublin Entities under such
Contract exceeded 15,000 Swiss Francs in 1998;
(ii) each other agreement or arrangement that (A) requires the
payment or incurrence of Liabilities or the rendering of services of more
than 15,000 Swiss Francs and (B) cannot be terminated by any of the
Schaublin Entities upon 30
31
days' notice without being exposed to any risk or claim for damages that
has the potential to exceed 15,000 Swiss Francs;
(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) all Contracts under which any of the Schaublin Entities is
required to manufacture Products according to specifications or the
design of the other party or parties to such Contract or third party
thereto;
(vi) all other contracts, commitments and obligations that (A) are
not in the ordinary course of the Business or (B) imposes upon any of the
Schaublin Entities an obligation to maintain or obtain information or
documents for a period of five years or more from the Closing Date.
(b) Except as disclosed in SCHEDULE 3.14(b), each Contract is a legal,
valid and binding obligation of the Schaublin Entity party thereto and, to the
Knowledge of Sellers, each other party thereto, enforceable (except to the
extent such enforceability may be limited by bankruptcy, equity and creditors'
rights generally) against such Schaublin Entity and, to the Knowledge of
Sellers, each such other party in accordance with its terms, and neither the
Schaublin Entity party thereto nor, to the Knowledge of Sellers, 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. Each of the Schaublin Entities is in full compliance with
the terms of provisions of each of the Scheduled Contracts. Following the
Closing, Buyer will be able to satisfy the terms and provisions of the Scheduled
Contracts in the ordinary course.
(c) All sales contracts and orders with customers and suppliers were
entered into by or on behalf of the Schaublin Entities and were entered into in
the ordinary course of the Business for usual quantities and at normal prices.
3.15. CUSTOMERS AND SUPPLIERS.
(a) SCHEDULE 3.15(a) sets forth a list (by name, address and persons to
contact) of the 20 largest customers of each of the Schaublin Entities for each
of the 12-month periods ended December 31, 1997 and 1998 and for the 9-month
period ended September 30, 1999, and the 20 primary suppliers providing services
or products to the Business for the 12-month period ended December 31, 1997 and
1998 and for the 9-month period ended September 30, 1999 together with the
approximate monetary amount of sales or services provided by the Xxxxxxxxx
00
Entities during said period to such customers and a summary description of
approximate dollar amount of the services or products provided to any of the
Schaublin Entities by such suppliers.
(b) Sellers have no reason to believe that any customer or supplier will
cease to do business with Buyer after, or as a result of, the consummation of
any transactions contemplated hereby or that any customer or supplier is
threatened with bankruptcy or insolvency. None of the Sellers knows of any fact,
condition or event which would adversely affect its relationship with any
customer or supplier. Since December 31, 1998, except as set forth on SCHEDULE
3.15(b), there have been no customer complaints other than minor complaints made
and dealt with in the ordinary course of business, returns, stop work orders or
the like relating to the Business.
(c) None of the Schaublin Entities has directly or indirectly sought to
increase its production or sales activities in anticipation, or by reason of the
within transaction.
(d) There are no presently outstanding orders calling for the sale by any
of the Schaublin Entities of any Products for prices that are below the cost
therefor (calculated with all appropriate allocations of overhead and
administrative expenses), except as to those contracts that in the aggregate
will not have an adverse effect on the Business ("Loss Contracts").
3.16. PERMITS; REQUIRED CONSENT.
(a) SCHEDULE 3.16(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 3.16(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 the Schaublin Entities 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
Contract with respect to which the consent of the other party or parties thereto
must be obtained by the Schaublin Entities 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").
(c) Except as set forth in SCHEDULE 3.16(a) or SCHEDULE 3.16(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 Sellers, and assuming the related Required
Consents have been obtained prior to the Closing Date, none of
33
the Permits will be terminated or become terminable or impaired in any material
respect as a result of the transactions contemplated hereby.
3.17. COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in SCHEDULE
3.17, the operation of the Business by the Schaublin Entities, the condition of
the Transferred Assets and the ownership of the Bovagnet Shares have not
violated or infringed, and do not violate or infringe, any Applicable Law, or
any order, writ, injunction or decree of any Governmental Authority. None of the
Schaublin Entities nor any officer, agent or employee of any of the Schaublin
Entities, nor, to the Knowledge of Sellers, any distributor, licensee or other
Person acting on behalf of any of the Schaublin Entities, (a) has made any
unlawful domestic or foreign political contributions, (b) has made any payment
or provided services which were not legal to make or provide or which any of the
Schaublin Entities or any such officer, employee or other Person should have
known were not legal for the payee or recipient of such services to receive, (c)
has had any transactions or payments which are not recorded in its accounting
books and records or disclosed in its financial statements, (d) has any off-book
bank or cash accounts or "slush funds", (e) has made any payments to
governmental officials in their individual capacities for the purpose of
affecting their action or the action of the Governmental Authority they
represent to obtain special concession, or (f) has made illegal payments to
obtain or retain business.
3.18. EMPLOYEE INFORMATION.
(a) SCHEDULE 3.18(a) contains the names and addresses of all Employees,
the job designations of each such Employee, the date such Employee commenced
employment with each of the Schaublin Entities and the compensation paid to each
such Employee and the basis thereof, presently, for the 9-month period ended
September 30, 1999 and for calendar year 1998. Such Schedule also sets forth
information concerning any disciplinary proceeding or action taken with respect
to any such employees, including without limitation any information concerning
positive drug tests. Sellers have no Knowledge of any reason why any Employee
would not agree to be employed by Buyer following the Closing Date, provided
that the terms of such employment are identical to those terms presently
applicable to him or her, as set forth in SCHEDULE 3.18(a).
(b) SCHEDULE 3.18(b) sets forth (i) all outstanding employment agreements
or commitments and a description of any oral employment agreements or
commitments to which any of the Schaublin Entities is a party or by which any of
the Schaublin Entities is bound, and (ii) all outstanding consulting, retainer
or service agreements or arrangements for rendition of services to any of the
Schaublin Entities or to which any of the Schaublin Entities is a party and by
which any of the Schaublin Entities is or may be bound (collectively,
"Employment Agreements").
(c) SCHEDULE 3.18(c) sets forth a list of all former employees of the
Business who left the employ of any of the Schaublin Entities for any reason
since January 1, 1998,
34
including the job designation of each such employee and the reason such employee
left such Schaublin Entity's employ.
(d) SCHEDULE 3.18(d) sets forth a list of any shareholders of any of the
Schaublin Entities, any relatives of a shareholder of any of the Schaublin
Entities and any non-full-time employees of any of the Schaublin Entities who,
in any such case, receive, or at any time since January 1, 1999 have received,
any direct or indirect benefits from, or at the direct or indirect expense of,
any of the Schaublin Entities (however characterized, i.e. whether as
compensation, consulting payments, retirement benefits or otherwise), together
with a description of such benefits.
(e) SCHEDULE 3.18(e) sets forth a complete and accurate list of all work
permits held by, or required to be held by, any Employee.
(f) None of the Schaublin Entities has employed any individual who (i) is
not a citizen of Switzerland or (ii) does not have a permit to work in
Switzerland.
3.19. LABOR MATTERS.
(a) Except as disclosed on SCHEDULE 3.19(a) attached hereto, there are no
labor or collective bargaining units applicable to any of the Schaublin
Entities, or with respect to which any of the Schaublin Entities is, or may be,
bound. SCHEDULE 3.19(a) also contains a description of all formal or informal
organization efforts, whether or not successful, related to any of the Schaublin
Entities since January 1, 1997, together with a description of any of the
Schaublin Entities' responses thereto.
(b) The Schaublin Entities are in compliance with all Applicable Laws
respecting employment and employment practices, terms and conditions of
employment, age and sex discrimination, and wages and hours. None of the
Schaublin Entities have engaged, and is not now engaging, in any unfair labor
practice or other unlawful employment practice. No unfair labor practice
complaints have been filed against any of the Schaublin Entities with any
governmental or regulatory agency. None of the Schaublin Entities has received
any notice or communication reflecting an intention or threat to file any such
complaint and has no knowledge of any such intention or threat. No person or
entity has made any claim against any of the Schaublin Entities arising out of
any Applicable Law relating to discrimination with respect to employees or
employment practices. There is no strike, work stoppage or formal or informal
labor disturbance pending or, to the Knowledge of Sellers, threatened against or
involving any of the Schaublin Entities.
3.20. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 3.20(a) attached hereto lists all employee benefit plans,
programs, practices, or arrangements, written or unwritten (including but not
limited to programs including pensions, profit sharing, stock options,
incentives, bonuses, vacations, severance,
35
disability, hospitalization, medical insurance, life insurance, and the like)
under which any of the Schaublin Entities or any subsidiary or any other
organization of any of the Schaublin Entities which is a member of a controlled
group of organizations (the "Controlled Entity") has any obligations in respect
of, or that otherwise cover, any of the current or former employees of any of
the Schaublin Entities or their beneficiaries, other than salary or wages (the
"Plans").
(b) As of the Closing Date, the Schaublin Entities will have performed
all obligations in form and in operation required to be performed by it as of
such date under the Plans and will not be in default under or in violation of
any of the Plans, and Sellers have no knowledge of any violation or default by
any other party with respect to the Plans. All reports, returns and similar
documents with respect to the Plans required to be filed with any government
agency or distributed to any Plan participant have been duly and timely filed or
distributed, and Buyer shall not be under any obligation to make any
contributions whatsoever to any Plan.
(c) No actions, suits or claims are pending or to the knowledge of
Sellers threatened, including any judicial proceedings, which allege a claim
against or a liability under any of the Plans (except claims for benefits in the
normal operation of the Plans), and Sellers have no knowledge, or any
information, which would constitute the basis for any such actions, suits,
claims or proceedings to arise against any of the Plans or against any of the
assets of such Plans.
(d) SCHEDULE 3.20(d) attaches a statement of the amount of money in the
"Fondation pour la prevoyance en faveur du personnel de la Fabrique de machines
Xxxxxxxxx XX" as of the date specified on the attachment to SCHEDULE 3.20(d).
All actions required to be taken on or prior to the Closing Date in connection
with "Fondation pour la prevoyance en faveur du personnel de la Fabrique de
machines Xxxxxxxxx XX" have been taken in accordance with all Applicable Laws,
and none of the monies under the "Fondation pour la prevoyance en faveur du
personnel de la Fabrique de machines Xxxxxxxxx XX" attributable to the
Transferred Employees were disbursed to any employee of any of the Schaublin
Entities or to any of the Transferred Employees. None of the Sellers has taken
any actions to prevent the monies in the "Fondation pour la prevoyance en faveur
du personnel de la Fabrique de machines Xxxxxxxxx XX" from being available, as
required under Applicable Law, to satisfy claims by any of the Transferred
Employees following the transactions contemplated by this Agreement and the
Related Agreements.
(e) The Schaublin Entities have performed all actions required to be
taken on or prior to the Closing Date in connection with the "Caisse de retraite
et de prevoyance de Xxxxxxxxx XX" with respect to the transactions contemplated
by this Agreement and the Related Agreements.
3.21. INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.21(a) sets forth a complete and correct list of each
patent, patent application and docketed invention, trademark, trade name,
trademark or trade name
36
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 any of the Schaublin Entities with respect to the Business.
(b) Except as disclosed in SCHEDULE 3.21(b), none of the Schaublin
Entities has during the three years preceding the Closing Date been a party to
any Proceeding, nor to the Knowledge of Sellers is any Proceeding threatened as
to which there is a reasonable possibility of a determination adverse to any of
the Schaublin Entities 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 3.21(b) no Intellectual Property Right is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by any of the Schaublin Entities, or restricting the
licensing thereof by any of the Schaublin Entities 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 xxxx,
brand xxxx 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.
3.22. ADVISORY FEES. There is no investment banker, broker, finder or
other intermediary or advisor, other than Xx. Xxxxxxxx X. Xxxxxxx, that has been
retained by or is authorized to act on behalf of any of the Schaublin Entities
or their 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. Sellers shall pay any fee,
commission or reimbursement of expenses due to Xx. Xxxxxxxx X. Xxxxxxx.
3.23. DISCLOSURE OF BUSINESS SECRETS TO OTHERS;NON-COMPETITION
AGREEMENTS.
(a) SCHEDULE 3.23(a) attached hereto sets forth a true and complete list
of all persons or entities (other than customers, current employees, directors
and shareholders of the Schaublin Entities and Buyer or Governmental Authorities
with regulatory authority) to which Sellers have disclosed any customer lists or
pricing data respecting the Business, the Transferred Assets or the Bovagnet
Shares during the last two (2) years, including the name and address of each
such person, a description of the information disclosed to each such person and
a copy of any non-disclosure or other agreement executed by such person with
respect to the disclosed information.
(b) No contracts, agreements or arrangements of any kind, whether written
or oral, currently exist to which any of the Schaublin Entities is a party and
which (i) restrict any person or entity from engaging in the Business or from
competing with any of the Schaublin Entities, or (ii) which restrict any of the
Schaublin Entities from engaging in the Business or from competing with any
other person or entity.
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3.24. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in SCHEDULE 3.24(a), to Sellers' Knowledge, each
of the Schaublin Entities is in full compliance with all applicable
Environmental Laws, which compliance includes, without limitation, the
possession of and compliance with the terms and conditions of any necessary
governmental or administrative licenses, permits and approvals required under
applicable Environmental Laws as such Environmental Laws relate to the operation
of the Business, all of which licenses, permits and approvals are set forth on
SCHEDULE 3.24(a) together with their respective expiration dates including the
deadlines for applying for renewals, name changes and reissuance, and the dates
on which any such license, permit or approval lapses by its terms.
(b) There exists no Environmental Condition at the Leased Real Property.
(c) None of the Schaublin Entities is subject to any pending or
threatened Environmental Claim (i) against it directly or indirectly, or (ii)
against any person or entity whose liability for Environmental Claims that any
of the Schaublin Entities may have assumed contractually or by operation of law,
and no facts, circumstances or conditions exist which could give rise to any
such Environmental Claim.
(d) None of the Schaublin Entities is or may be held responsible on
account of any Environmental Condition at any other facility to which any of the
Schaublin Entities sent or transported, directly or indirectly, Hazardous
Materials.
(e) There are not now and there have not been any minor complaints that
have not been resolved under Applicable Law, orders, citations or notices with
regard to air emissions, water discharges, noise emissions or Hazardous
Materials with respect to the Business or any properties occupied or used by any
of the Schaublin Entities in the conduct of the Business, and, to Sellers'
Knowledge, no facts, circumstances or conditions exist which could give rise to
such complaints, orders, citations or notices. There are not now and there have
not been Hazardous Materials used, generated or stored by any of the Schaublin
Entities in the conduct of the Business or on the Leased Real Property. Except
as set forth in SCHEDULE 3.24(e), there are no underground storage tanks at the
Leased Real Property. To Sellers' Knowledge, there has been no spill, discharge,
release, contamination or clean-up of Hazardous Materials at any properties now
or formerly occupied or utilized by any of the Schaublin Entities in the conduct
of the Business, including, without limitation, into or upon the soil, surface
water or ground water.
3.25. TAX MATTERS.
Except as set forth on SCHEDULE 3.25:
(a) The Schaublin Entities have timely filed all Tax Returns required to
have been filed by it, and have paid or accrued all Taxes due to any taxing
authority with respect to all taxable periods ending on or prior to October 1,
1999 or otherwise attributable to all periods
38
prior to October 1, 1999; and all such Tax Returns are true, correct and
complete in all respects. None of the Schaublin Entities are currently the
beneficiary of any extension of time within which to file any Tax Return.
(b) The Schaublin Entities are and always have been in full compliance
with all tax rules and regulations that the Business is subject to.
(c) None of the Schaublin Entities has received notice that any taxing
authority has asserted against any of the Schaublin Entities 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 the Schaublin Entities' assets or on the Bovagnet
Shares.
(d) The Schaublin Entities have 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
3.26. INSURANCE. SCHEDULE 3.26 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 "occurrence based" liability
policies regardless of the periods to which they relate. SCHEDULE 3.26 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.
3.27. PRODUCTS.
(a) All Products manufactured, processed, distributed, shipped or sold
by the Schaublin Entities in connection with the Business and any services
rendered by it have been in conformity with all applicable contractual
commitments and all express or implied warranties. No Liability exists or
will arise for repair, replacement or damage in connection with such sales or
deliveries, in excess of the reserve therefor on the Financial Statements.
SCHEDULE 3.27(a) sets forth an accurate, correct and complete statement of
all written warranties, warranty policies, service and maintenance agreements
of the Business. The product warranty and return experience for the three (3)
years ended December 31, 1998 and the nine month period ended September 30,
1999 is set forth on SCHEDULE 3.27(a).
(b) SCHEDULE 3.27(b) sets forth an accurate, correct and complete list
and summary description of all existing claims, duties, responsibilities,
liabilities or obligations arising from or alleged to arise from any injury
to person or property as a result of the ownership, possession or use of any
Product manufactured or sold by the Schaublin Entities in connection with the
Business prior to the Closing Date. Except as set forth in SCHEDULE 3.27(b),
the Business will not be subject to any claim, expense, liability or
obligation arising from any injury to person or property as a result of
ownership, possession or use of any Product manufactured, processed,
distributed, shipped or sold prior to the Closing Date.
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3.28. MATERIAL DISCLOSURES. No statement, representation or
warranty made by Sellers in this Agreement or in any certificate,
statement, list, schedule or other document furnished or to be furnished
to Buyer hereunder contains, or when so furnished will contain, any
untrue statement of a material fact, or fails to state, or when so
furnished will fail to state, a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in
which they are made, not misleading.
3.29. PAYMENT OF CONSIDERATION. Schaublin USA hereby agrees that
the portion of the Consideration allocable to Schaublin USA, if any,
shall be paid to the account of Schaublin Swiss pursuant to Section
2.10(a) and Schaublin USA acknowledges that such portion of the
Consideration paid to the account of Schaublin Swiss is adequate and
sufficient.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer hereby represents and
warrants to Sellers that:
4.1. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
Switzerland and has all corporate power and authority to enter into this
Agreement and consummate the transactions contemplated hereby. Buyer is duly
qualified to do business and in good standing 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.
4.2. CORPORATE AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby are within the corporate powers of Buyer and have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a legal, valid and binding agreement of Buyer, enforceable
in accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by Buyer of this Agreement require no action by, consent or approval of, or
filing with, any Governmental Authority other than as set forth in this
Agreement.
4.4. NON-CONTRAVENTION. The execution, delivery and performance by Buyer
of this Agreement does not (a) contravene or conflict with the Certificate of
Incorporation or By-laws of Buyer or (b) assuming compliance with the matters
referred to in Section 4.3, contravene or conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable to
Buyer.
40
4.5. ADVISORY FEES. There is no investment banker, broker, finder or
other intermediary or advisor that has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee, commission or reimbursement
of expenses from Sellers or any of their Affiliates upon consummation of the
transactions contemplated by this Agreement.
4.6. LITIGATION. There is no Proceeding pending against or to the
Knowledge of Buyer, threatened against or affecting Buyer before any court or
arbitrators or any governmental body, agency or official that in any matter
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLERS
5.1. COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS AND
REQUIRED CONTRACTUAL CONSENTS. On and after the Closing Date, Sellers shall
comply at their own expense with all conditions and requirements affecting
Sellers and Bovagnet set forth in (a) all Required Governmental Approvals as
necessary to keep the same in full force and effect assuming continued
compliance with the terms thereof by Buyer and (b) all Required Contractual
Consents as necessary to keep the same effective and enforceable against the
Persons giving such Required Contractual Consents assuming continued compliance
with the terms thereof by Buyer.
5.2. MAINTENANCE OF INSURANCE POLICIES. On and after the Closing Date,
Sellers 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 Closing Date 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.
5.3. CONFIDENTIALITY.
(a) Sellers shall, and shall cause their representatives to, treat any
data and information obtained with respect to Buyer or any of their Affiliates
from any representative, officer, director, or employee of Buyer, or from any
books or records of Buyer in connection with this Agreement or the Related
Agreements, 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 Sellers, or their
respective 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.
41
(b) The parties hereto recognize and agree that in the event of a breach
of this Section 5.3, money damages would not be an adequate remedy to Buyer 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 5.3, Buyer and their Affiliates
shall be entitled to an injunction restraining Sellers from any breach without
showing or proving actual damage sustained by Buyer or their Affiliates, as the
case may be. Nothing in the preceding sentence shall limit or otherwise affect
any remedies that Buyer and their Affiliates may otherwise have under Applicable
Law.
5.4. TAXES.
(a) Subject to the procedure described below, all sales, use and other
Taxes imposed in connection with or measured by the transactions contemplated by
this Agreement or any Related Agreement shall be borne by Sellers, including any
transfer Taxes imposed in connection with the Real Property Leases, and Sellers
shall address all issues related to Taxes, including, without limitation, the
declaration procedure concerning value added Taxes (the "Notification
Procedure"). The parties shall cooperate in good faith with one another to avoid
the withholding of value added Taxes by undertaking the Notification Procedure.
In the event that the parties are required to pay value added Taxes to Swiss
governmental authorities, Schaublin Swiss shall make such payment on behalf of
the parties, and Buyer shall reimburse Schaublin Swiss thereafter when, if and
to the extent that it is relieved from an obligation to pay value added Taxes as
a result of a credit it has received in respect of Schaublin Swiss's payment.
(b) Sellers agree that no new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting the Transferred
Assets or the Business shall be made after the date of this Agreement without
the prior written consent of Buyer.
(c) Buyer, on the one hand, and Sellers, on the other hand, 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.
5.5. RIGHT TO CORPORATE NAME.
(a) Sellers hereby acknowledge and agree that, as a Transferred Asset,
Buyer shall obtain the sole and exclusive right to use the tradename "Schaublin"
or any variation or
42
derivation thereof containing the name "Schaublin." Subject to the Trademark
License Agreement, Sellers shall not at any time claim any right, title or
interest to such name.
(b) Subject to the Trademark License Agreement, effective on the Closing
Date, Sellers shall take all necessary action to change by January 31, 1999
their respective corporate names in Switzerland and all countries in which they
are incorporated or authorized to transact business, to a name that does not
contain any words similar or reasonably likely be confused with the "Schaublin"
name or any use by Buyer thereof.
5.6. ASBESTOS CONDITIONS. During the course of its diligence activities,
Buyer identified the existence of asbestos materials at the Leased Real
Property, as described on SCHEDULE 5.6 hereto. Sellers agree to reimburse Buyer
for all costs incurred by Buyer in order to satisfy all legal obligations
respecting such asbestos conditions. Buyer shall have the right, at its
election, to set-off the amount of such costs against amounts otherwise due to
Schaublin Swiss under the Two Year Note.
5.7. SCHEDULES. From time to time prior to the Second Closing, Schaublin
Swiss shall promptly supplement or amend any Schedules hereto relating to
Schaublin France with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to have
been set forth in such Schedules hereto. No supplement or amendment of a
Schedule made pursuant to this Section 5.7 shall be deemed to cure any breach
of, affect or otherwise diminish any representation and warranty made in this
Agreement unless Buyer specifically agrees thereto in writing.
5.8. COMPLIANCE BY SELLERS. Schaublin Swiss shall ensure that the other
Sellers each comply in all respects with its covenants and agreements in this
Agreement and any Related Agreement to which it is a party.
5.9 LICENSE AGREEMENT. Upon request of Schaublin Swiss, Buyer shall
enter into a Trademark License Agreement on terms acceptable to Buyer under
which Buyer grants to Tornos Xxxxxxx XX and Tornos Holding France S.a.r.l. a
royalty-free and exclusive license for a term of four (4) years to use the
trademarks in connection with a business similar to the CCN and CNC business.
ARTICLE VI
COVENANTS OF BUYER AND SELLERS
6.1. FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement or any Related 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 or any Related Agreement. Buyer and
Sellers agree to execute and deliver such other documents, certificates,
43
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 or any Related
Agreement. Following the Second Closing Date, Buyer shall make the employees and
records of the Business reasonably available to Sellers during normal business
hours at no charge to Sellers 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 Sellers, providing testimony or
information in connection with any legal proceeding or for any other appropriate
purpose arising out of the ownership and operation of the Business by Schaublin
Swiss, Schaublin France and Schaublin USA.
6.2. CERTAIN FILINGS.
(a) At the Second Closing, Sellers and Buyer shall execute, and Buyer
shall subsequently publish, the Schaublin France Filing in the form attached
hereto as Exhibit B in accordance with Applicable Laws. The parties hereto
intend, and hereby agree, that the Schaublin France Filing is being entered into
by the parties thereto only for the purposes of complying with the French law of
March 17, 1909. Nothing contained in the Schaublin France Filing shall affect in
any way the rights or obligations of any of the parties hereto. In the event of
any inconsistency between any terms and conditions contained in the Schaublin
France Filing with those contained in this Agreement, this Agreement shall
govern.
(b) 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 or any Related Agreement. Subject to the terms
and conditions of this Agreement or any Related 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.
6.3. PUBLIC ANNOUNCEMENTS.
(a) Buyer may, at its election, cause the transactions contemplated by
this Agreement and the Related Agreements to be published after the First
Closing Date in the Schweizerisches Handelsamtsblatt in accordance with Article
181 of the Swiss Federal Code of Obligations.
(b) Except as provided in Sections 2.10(b) and (a) above, 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
44
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.
6.4. ADMINISTRATION OF ACCOUNTS. All payments and reimbursements made in
the ordinary course by any third party in the name of or to any of the Schaublin
Entities 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 such Schaublin Entity or such Affiliate in trust for the
benefit of Buyer and, immediately upon receipt by such Schaublin Entity or any
such Affiliate of any such payment or reimbursement, such Schaublin Entity shall
pay, or cause to be paid, over to Buyer the amount of such payment or
reimbursement without right of set off.
6.5. EMPLOYEES AND EMPLOYEE BENEFIT MATTERS.
(a) In connection with the transactions contemplated hereby, all of the
employment agreements between any of the Schaublin Entities and the Employees
who were actively at work in connection with the Business immediately prior to
the Closing Date were assigned to Buyer. All employees so hired by Buyer
pursuant to the transactions contemplated hereby are referred to as "Transferred
Employees". Except for any other arrangements with any Employees who were
formerly employed by any of the Schaublin Entities as disclosed on SCHEDULE
6.5(a), there are no other agreements with any Employee except as disclosed on
SCHEDULE 3.18(a).
(b) Buyer agrees to assume responsibility to the Transferred Employees
for the payment of any accrued wages, salaries, commissions, vacation pay, sick
pay, severance obligations and any other employee benefit or entitlement of any
kind or nature whatsoever accrued or accruing to such employees pursuant to any
employee benefit plan, fund, program, contract (oral or written), policy or
arrangement arising by reason of any Applicable Law or any agreement that any of
the Schaublin Entities may have with any such Transferred Employees, but only
if, and to the extent, accrued on the Interim Financials.
Sellers shall be responsible to satisfy and/or to reimburse Buyer on
account of, any claims made by any Transferred Employees against Buyer for
severance pay, unfair or unlawful termination, continued entitlement to benefits
beyond termination and the like in the event of, and regardless of the
circumstances of, termination by Buyer of the employment of any Transferred
Employees following the Closing Date to the extent that any such claims relate
to, or otherwise arise on account of, or are calculated in whole or in part by
reference to, the period prior to the Closing Date.
(c) Buyer and Sellers shall use their best efforts to cooperate in good
faith to take all actions required or necessary under Applicable Laws to
allocate and attribute properly and promptly the monies in the "Fondation pour
la prevoyance en faveur du personnel de la
45
Fabrique de machines Xxxxxxxxx XX" and the "Caisse de retraite et de prevoyance
de Xxxxxxxxx XX" to and on account of the Transferred Employees and the
transactions contemplated by this Agreement and the Related Agreements so that
(i) all such monies will be available to Buyer for Buyer's use in compliance
with Applicable Laws and (ii) the Transferred Employees do not suffer any
disadvantage on account of the transactions contemplated by this Agreement or
the Related Agreements with respect to either the Fondation pour la prevoyance
en faveur du personnel de la Fabrique de machines Xxxxxxxxx XX" or the "Caisse
de retraite et de prevoyance de Xxxxxxxxx XX". Without limiting the generality
of the foregoing, Sellers shall keep Buyer informed of all actions taken,
including all oral and written communications with any third party, to comply
with this Section 6.5(c), and Sellers shall confer with Buyer prior to any
application or submission to any Governmental Authority made in connection with
this Section 6.5(c).
6.6. PRODUCT WARRANTY CLAIMS. In the event of any Liability arising out
of, resulting from, or relating to, claims seeking return, replacement, and/or
repair of any Products manufactured on or prior to the Closing pursuant either
to (i) express Product warranties extended by Sellers or by Buyer after the
Closing Date (provided that the warranties of Buyer are no more expansive than
the warranties extended by the Schaublin Entities prior to the Closing Date), or
(ii) Product warranties or obligations implied or provided by applicable law
(together, the "Excluded Product Warranty Claims") with respect to any such
Products, the following shall apply:
(a) Buyer shall, on behalf of the Schaublin Entities, satisfy any such
Excluded Product Warranty Claims in the ordinary course of business, and
(b) Schaublin Swiss shall reimburse, within fifteen (15) days of
presentment of a written summary thereof, Buyer one hundred percent (100%) of
the costs incurred by Buyer in connection therewith.
6.7. RECEIVABLES.
(a) Buyer shall, in the ordinary course of business, include in its
billing to customers, and, subject to the following provisions hereof, collect
the Receivables; provided, however, that in no event shall Buyer be obligated to
take any action, including without limitation to institute legal action, to
collect any of the Receivables. Except as set forth in subsection (b) below, all
payments received by Buyer from account debtors indebted to any of the Sellers,
on the one hand, and Buyer, on the other hand, shall be applied first to the
indebtedness owed by the account debtor on account of the Receivables, and then
to any indebtedness owed by the account debtor to Buyer arising subsequent to
the Closing Date.
(b) Notwithstanding the foregoing, Buyer shall be entitled, at its
discretion, to sell Products to any customer on a C.O.D. basis or other
accelerated payment procedure, in which event any C.O.D. payment or other
accelerated payment received by Buyer from such customer shall be applied first
to the amount owed to Buyer on account of such sale and/or services and the
excess, if any, to the outstanding balance due on account of the Receivables.
In
46
addition, Buyer shall not be obligated to apply proceeds as set forth in
subsection (a) above with respect to any of the Receivables that are disputed,
for any reason whatsoever, by the applicable customer.
(c) Following or concurrently with the delivery of the Closing Statement,
Buyer shall provide Sellers with a list of the Receivables of each of the
Schaublin Entities that appeared on the Interim Financials, if any, that were
not actually collected by Buyer within 90 days following the Second Closing Date
(the "Uncollected Receivables"). Within five (5) Business Days following the
delivery by Buyer of such list, Sellers shall repurchase from Buyer, and Buyer
shall transfer, sell and assign to Sellers, free and clear of all Liens, all of
the Uncollected Receivables. Sellers' obligation to repurchase the Uncollected
Receivables may be satisfied in whole or in part, at Buyer's election, by way of
set off against the obligations of Buyer in respect of the Two Year Note.
(d) Sellers shall not take any action to collect any of the Receivables
prior to the transfer, sale or assignment of the Receivables pursuant to (d)
above, and Sellers shall promptly notify Buyer if any of the Sellers receives
payment in respect of any of the Receivables. Sellers covenant and agree that
following any such sale, transfer or assignment, it shall provide Buyer with
fifteen (15) Business Days' prior written notice before instituting any formal
collection proceedings against any account-debtor.
6.8. ACTIONS PRIOR TO THE SECOND CLOSING DATE. During the period between
the First Closing Date and the Second Closing Date, Sellers shall cause
Schaublin France to operate and carry on the Business only in the ordinary
course and substantially as presently operated. Consistent with, but without
limiting the generality of, the foregoing, Sellers shall cause Schaublin France:
(i) to keep and maintain all its assets in good and operating condition and
repair and shall use its reasonable efforts to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others
having business relations in respect of the Business, (ii) not to accelerate any
sales or xxxxxxxx in anticipation of the within transactions, (iii) not to make
any change to, or amend in any way, the contracts, salaries, wages, or other
compensation of any officer, director, employee, agent, or other similar
representative of Schaublin Swiss, and (iv) not to adopt, enter into, amend,
alter, or terminate (partially or completely) any Plan, except as contemplated
by this Agreement or to the extent required by Applicable Law. Except as
expressly contemplated by this Agreement, or except with the express written
approval of Buyer, Sellers shall not permit any change in the Business of
Schaublin France or the operations of the Business by Schaublin France other
than in the ordinary course of business consistent with past practices.
6.9. INTERNET SITE. Buyer shall include content on the Internet web site
located at XXX.XXXXXXXXX.XX concerning the Machine Tool Business as shall have
existed on such web site prior to the First Closing Date for a term commencing
on the Closing Date and expiring upon the earlier to occur of (x) the
consummation of the sale by Schaublin Swiss of substantially all of its assets
related to the Machine Tool Business or (y) six (6) months.
47
ARTICLE VII
INDEMNIFICATION
7.1. INDEMNITY BY SCHAUBLIN SWISS.
(a) Subject to the limitations set forth herein, Schaublin Swiss hereby
agrees to indemnify and to hold Buyer and Bovagnet harmless from and against any
and all injuries, losses, expenses, fees, penalties, demands, claims, actions,
causes of action, judgments, assessments, damages, obligations, liabilities and
costs, including all costs incurred in connection with any claim for
indemnification hereunder (e.g., legal fees, accounting fees, and all other
costs of investigation), of every nature and description and in any venue,
including, but not limited to, in Switzerland (collectively, "Losses"), and
shall pay Buyer or Bovagnet, as the case may be, on demand the full amount of
any such Losses relating to, arising out of, or resulting from (i) any
inaccuracy in any representation, or the breach of any warranty, covenant or
other agreement, made by Sellers in connection with this Agreement or any
Related Agreement; (ii) any failure by Sellers duly to perform or observe any
term, provision or covenant in this Agreement or any Related Agreement; (iii)
any matter or thing, or any state of fact or condition, relating to the
Schaublin Entities or the conduct of the Business arising or relating to the
period prior to the Closing, other than the Assumed Liabilities or Monetary
Liabilities of any of the Schaublin Entities; (iv) any Liabilities of the
Schaublin Entities during the Pre-Closing Period that are not Liabilities in
respect of the Business; (v) any of the Transferred Assets and related computer
systems of and concerning the Business not being Year 2000 Compliant, but only
to the extent (A) that Schaublin Swiss cannot establish that it has taken all
reasonable measures or precautions to assure that such Transferred Assets and
related computer systems were Year 2000 Compliant or (B) relating to those
software systems described in SCHEDULE 7.2; (vi) any failure by Bovagnet to file
in a timely manner any Tax Return; and (vii) the actions of Sylvain Lagenaux or
Xxxxxxx Xxxxxxxxx in their capacity as directors of Bovagnet during the period
from the Closing through the date before the resignations of such Persons as
directors of Bovagnet become effective.
By way of further clarification of the foregoing clauses (iii) and (iv),
this indemnification shall apply to all of the liabilities or obligations
arising or relating to the period prior to the Closing Date other than the
Assumed Liabilities, whether or not known as of the Closing Date, whether or not
asserted prior to the Closing Date, whether or not the circumstances giving rise
to such indemnification continue following the Closing Date, and whether or not
Buyer would become liable for any such matters by operation of law or otherwise.
(b) Notwithstanding subparagraph (a) above, Schaublin Swiss shall not be
liable as an Indemnifying Party (as defined herein) until all Losses sustained
by Buyer as the Indemnified Party (as defined herein) for indemnification exceed
250,000 Swiss Francs in the aggregate, and thereafter Schaublin Swiss shall be
liable, subject to the other limitations set forth elsewhere in this Agreement,
for all Indemnity Claims (as defined herein) (including the first
48
250,000 Swiss Francs of Losses); PROVIDED, HOWEVER, that Schaublin Swiss shall
be liable for all Indemnity Claims by Buyer as the Indemnified Party, regardless
of amount, arising out of (i) the fraud of any of Sellers or (ii) any Excluded
Liability.
(c) Buyer's sole recourse against Schaublin Swiss pursuant to this
Section 7.1 shall be against the Two Year Note; PROVIDED, HOWEVER, that there
shall be no limit on the aggregate liability of Schaublin Swiss for Losses
incurred by Buyer in connection with (i) the fraud of any of Sellers, (ii) any
Excluded Liability, (iii) a Third Party Claim (as defined herein) or (iv) any
Liability of Bovagnet that is not a Monetary Liability; PROVIDED, FURTHER, that
Buyer shall have the right to withhold from any payment on the Two Year Note an
amount equal to Buyer's good faith estimate of its pending Indemnity Claims, and
Buyer shall place such withheld amount into an escrow account mutually
established by Buyer and Schaublin Swiss until the resolution of such Indemnity
Claims.
7.2. INDEMNITY BY BUYER. Buyer hereby agrees to indemnify and to hold
Sellers harmless from and against any and all Losses of any kind or nature
whatsoever, and shall pay Sellers on demand the full amount of any such Losses
relating to, arising out of or resulting from (a) any inaccuracy in any
representation, or the breach of any warranty, covenant or other agreement made
by Buyer in this Agreement, (b) any failure by Buyer duly to perform or observe
any term, provision, covenant or agreement hereof or contained herein to be
performed or observed by Buyer, including, without limitation, any failure by
Buyer to satisfy the Assumed Liabilities after the Closing Date, (c) liabilities
of Sellers that would otherwise be Assumed Liabilities if Buyer elects to
publish the transactions contemplated by this Agreement and the Related
Agreements as described in Section 6.3(a) and (d) liabilities of Sellers that
would otherwise be Assumed Liabilities if the related creditor does not agree to
the change of the debtor.
7.3. PROCEDURE FOR SATISFACTION OF INDEMNITY CLAIMS. The obligations and
liabilities of each indemnifying party hereunder shall be subject to the
following terms and conditions:
(a) A party hereto who is responsible for indemnifying the other party
against any matter pursuant to this Agreement is referred to as the
"Indemnifying Party", and the other party claiming indemnity is referred to as
the "Indemnified Party." Any claim for indemnification made pursuant to this
Article VII is sometimes referred to as an "Indemnity Claim."
(b) The Indemnified Party shall give prompt written notice to the
Indemnifying Party of any Indemnity Claim after learning of the existence
thereof; provided, however, that the failure to provide such prompt notice shall
in no event impair the rights of the Indemnified Party or limit the obligations
of the Indemnifying Party hereunder except to the extent that such failure has a
material adverse effect on the ability of the Indemnifying Party adequately to
defend such claim. In the event of a claim brought by a third party (a "Third
Party Claim") which might give rise to an Indemnity Claim by the Indemnified
Party, such notice of
49
the Indemnity Claim shall state the nature and basis of said Indemnity Claim and
the amount thereof, to the extent known. In the event of any other Indemnity
Claim, including one for an alleged breach or misrepresentation hereunder, such
notice shall state the nature and basis thereof, the amount of the asserted
damages, and the method by which such alleged damages were calculated; provided,
however, that the Indemnified Party shall in all events have the right
subsequently to revise the basis for such Indemnity Claim and the amount of
damages asserted as well as the method by which such damages are calculated.
(c) In the event of a Third Party Claim:
(i) Provided that the Indemnifying Party (1) first irrevocably
admits in writing to the Indemnified Party that such claim is one in
respect of which the Indemnifying Party is obligated to indemnify the
Indemnified Party hereunder, and (2) has adequately evidenced to the
Indemnified Party its ability to satisfy such claim, the Indemnifying
Party shall be entitled to contest and to assume the defense of the claim
at the Indemnifying Party's expense, and further provided that it
utilizes reputable counsel reasonably satisfactory to the Indemnified
Party. Should the Indemnifying Party give notice to the Indemnified Party
of the Indemnifying Party's election to assume the contest or defense as
aforesaid, then the Indemnifying Party shall be obligated promptly to
defend such claim. The Indemnified Party shall, at the Indemnifying
Party's expense, make available to the Indemnifying Party and its
attorneys, accountants or other duly designated agents all books and
records of the Indemnified Party relating to any such action, suit or
proceeding, and the parties hereto agree to render to each other such
assistance (at the expense of the Indemnifying Party) as they may
reasonably require of each other in order to ensure the proper and
adequate contest or defense of any such action, suit or proceeding. The
Indemnified Party shall be entitled, with counsel selected by the
Indemnified Party, to participate in (but not to control), at its own
expense, the defense of any claim or litigation which the Indemnifying
Party has, in accordance with the provisions of this subsection (i),
elected to defend, and to be kept fully informed of the status thereof at
all stages, including the right to receive, at the Indemnifying Party's
expense, copies of all pleadings and other material papers in connection
with such claim or litigation.
The Indemnifying Party shall not settle any Third Party Claim
without the consent of the Indemnified Party unless (1) the Indemnifying
Party fully indemnifies the Indemnified Party for all Losses in
connection with such settlement of such claim, (2) there is no finding or
admission of any violation of Law by the Indemnified Party not agreeing
to the settlement, and (3) the relief granted in connection therewith
requires no action on the part of, and has no economic or other effect
on, the Indemnified Party.
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(ii) If the defense of a Third Party Claim is not assumed by the
Indemnifying Party as provided in subsection (i) above, then the
Indemnified Party may (to the extent that the Indemnified Party
determines to do so in its sole discretion) conduct any such proceeding
as it deems appropriate, and may take whatever action it deems necessary
or appropriate to resolve or settle such claim or dispute, but shall in
no event have any obligation to defend any such claim or proceeding or to
appeal any adverse finding or determination or to defend the appeal by
any other party to a favorable determination, it being understood and
agreed that any actions taken or omitted with respect to the foregoing
shall not avoid, reduce or mitigate the Indemnifying Party's liability
hereunder. The Indemnifying Party shall nevertheless, at its own expense,
make available to the Indemnified Party and its attorneys and accountants
all books and records of the Indemnifying Party relating to such
proceedings or litigation, and shall render to the Indemnified Party such
assistance as may be reasonably requested by the Indemnified Party.
The Indemnifying Party shall be entitled, with counsel selected by it, to
participate in (but not to control), at its own expense, the defense of any
claim or litigation which the Indemnifying Party has not elected to defend in
accordance with the provisions of subsection (i) above.
The Indemnified Party shall not settle any Third Party Claim without
first giving notice of the proposed settlement to the Indemnifying Party (the
"Settlement Notice"). The Indemnifying Party shall have the right, exercisable
within three (3) Business Days following receipt of the Settlement Notice, to
instruct the Indemnified Party not so to settle such Third Party Claim, provided
that, in such event, the Indemnifying Party shall be required to assume the
defense of any such Third Party Claim subject to and in accordance with the
provisions and prerequisites of subsection (i) above (including those set forth
in the first sentence thereof); provided that the Indemnified Party shall be
entitled to settle such Third Party Claim regardless of the instructions of the
Indemnifying Party to the contrary if the Indemnifying Party is unable or fails
to satisfy the requirements set forth in clauses (1) and (2) contained in the
first sentence of subsection (i) above.
7.4. SATISFACTION OF INDEMNITY CLAIMS. In the event Buyer shall assert an
Indemnity Claim pursuant to Section 7.1 hereof against Schaublin Swiss, such
claim may be satisfied by Schaublin Swiss, and in all events, Buyer may obtain
satisfaction of any such claim, by way of set-off against any amounts owing by
Buyer to Sellers, including against Buyer's obligations under the Two Year Note.
In all events, and notwithstanding anything to the contrary contained in this
Agreement, Schaublin Swiss agree and acknowledge that the provisions of this
Section 7.4 shall not be construed as a limitation on the amount or scope of the
obligations of Schaublin Swiss to indemnify Buyer under this Article VII;
further, nothing contained herein or elsewhere shall be construed as providing
that the right of Buyer of set-off pursuant to this Section 7.4 is the sole
source of Buyer for recourse against Schaublin Swiss, it
51
being understood that Schaublin Swiss shall remain fully liable hereunder in
accordance with the provisions hereof notwithstanding the unavailability or
exhaustion of such payment sources.
7.5. INTEREST. The Indemnifying Party shall pay the Indemnified Party
interest at the per annum rate of five percent (5%), compounded quarterly, for
any indemnifiable Loss from the date such indemnifiable Loss was actually paid,
incurred or suffered by the Indemnified Party until paid in full by the
Indemnifying Party.
7.6. PAYMENTS. All sums payable by any party pursuant to this Article VII
shall be paid free and clear of all deductions or withholdings, unless otherwise
required by law, in which event the Indemnifying Party shall pay such additional
amounts as shall be required to insure that the net amount received by the
Indemnified Party will equal the full amount that would have been received had
no such deduction or withholding been made.
7.7. NO LIMITATION. The representations, warranties and covenants of
Sellers contained in this Agreement shall not be limited in any respect by or on
account of (a) any facts and circumstances known or which should have been known
by Buyer or their agents, attorneys or other advisors as a result of any due
diligence investigations undertaken by Buyer on or before the Closing or
otherwise or (b) by any disclosure made by Sellers to Buyer, except as set forth
on the Schedules hereto.
ARTICLE VIII
NON-COMPETITION, NON-DISCLOSURE, NON-SOLICITATION
8.1. NON-COMPETITION. For a period of five (5) years from the Closing
Date (the "Restricted Period"), Sellers shall not engage, directly or
indirectly, in the Business in the Business Area. By way of further definition
and explanation of the preceding sentence, and without limiting the generality
of the preceding sentence, during such Restricted Period, Sellers shall not
devote any time or attention to acquiring, managing, operating, joining,
controlling, participating or becoming financially interested in, or being
connected with (in any capacity, whether as a partner, stockholder, investor,
consultant, independent contractor, agent, representative or otherwise), or
providing any direct or indirect financial assistance to, any person,
corporation, firm, business, partnership, or other entity which is engaged,
directly or indirectly, in the Business. Nothing contained herein, however,
shall prohibit Sellers from acquiring and owning, for investment purposes only,
up to one percent (1%) of the outstanding equity securities of an entity engaged
in the Business if such equity securities of any such entity are available to
the general public on a national securities exchange.
8.2. NON-DISCLOSURE. Sellers hereby acknowledge, covenant and agree that,
from and after the Closing Date and without regard to time, it/he/she will hold
any and all items constituting Business Secrets communicated or transmitted to,
or otherwise obtained by, it/him in strictest confidence; and Sellers shall not,
regardless of the reason therefor, directly or indirectly
52
make use of, exploit, disclose or divulge any Business Secrets to any other
person or entity (except to the extent such information is required to be
submitted to any federal, state or local governmental agent or to any third
party pursuant to subpoena or other court process), or make any false statement
or otherwise commit any act (including contacting any customers of the Business)
that could in any way be injurious or detrimental to the use of the Transferred
Assets by Buyer, including without limitation its image, business or customer
relations.
For the purposes hereof, "Business Secrets" shall mean all information
and materials pertaining to the Business or the Transferred Assets, including,
without limitation, customer information, business methods, policies,
procedures, techniques, sales and marketing strategies, financial statements,
sales and gross profit data, employee and independent contractor rosters and
profiles, pricing and cost data, contract information, know-how and all other
information relating to or dealing with the Business or the Transferred Assets.
Furthermore, the term Business Secrets shall apply to any of the foregoing,
whether or not in written form and whether or not Sellers have possession of
such writings.
8.3. NON-SOLICITATION OF CUSTOMERS. During the Restricted Period, Sellers
shall not, on their own behalf, or for the benefit of any other person or
entity, for any reason, accept any business with respect to the Business from,
or interfere in any manner with business relationship of Buyer with, any present
or former customer of the Business. Without limiting the generality of the
foregoing, Sellers shall not solicit or induce, or attempt to solicit or induce,
any business with respect to the Business (directly or indirectly through any
person or entity) from any customer, regardless of the purpose. Furthermore,
nothing contained in this Section 8.3 shall be construed to infer that Sellers
are, in any respect whatsoever, retaining any rights to, or in respect of, any
customer list, any customer information or any other Business Secrets for direct
or indirect use after the expiration of the Restricted Period, it being
understood that pursuant to this Agreement Buyer is acquiring all of Sellers
rights thereto without limitation as to time or otherwise.
8.4. NON-SOLICITATION OF EMPLOYEES. During the Restricted Period, Sellers
shall not solicit or induce, or attempt to solicit or induce (directly or
indirectly through any person or entity), for employment, any employee, agent,
consultant or other representative of Buyer.
8.5. OBLIGATION FOR EMPLOYEES' ACTIONS. Notwithstanding, and without in
any way limiting the generality of, the provisions of Section 8.2, Sellers
hereby covenant and agree that, in the event any present or former employee,
agent, representative or independent contractor of any of the Schaublin Entities
has disclosed or used for his own benefit any Business Secrets, Sellers shall,
at the request of Buyer, and at the cost and expense of Sellers, immediately
commence and diligently prosecute an appropriate action or proceeding to enjoin
permanently any such disclosure and/or use, and shall use its best efforts to
obtain a court order restraining any such disclosure and/or use during the
pendency of such action or proceeding and/or to seek other remedies in law or in
equity. At the request of Buyer, and at the cost and expense of
53
Sellers, Sellers shall assign to Buyer any cause of action or other claim that
Sellers may have against any present or former employee, agent, representative
or independent contractor, and Sellers will, at their cost and expense,
cooperate with Buyer, as reasonably requested by Buyer, in the prosecution of
such claim.
8.6. REMEDIES. Sellers acknowledge and agree that the agreements and
covenants contained in this Article VIII are of a unique and valuable nature and
may, if breached, result in irreparable damage to Buyer that may not be readily
susceptible to monetary valuation; and, accordingly, in the event of the breach
of any covenant or agreement contained in this Article VIII, Buyer shall be
entitled to seek and obtain injunctive or other equitable relief, in addition to
any other remedies provided by law or equity, in furtherance of the enforcement
thereof. In no event shall the amount or value of any consideration paid or
given by Buyer for the covenants and agreements contained in this Article VIII,
or otherwise in connection with this Agreement, be used to determine the scope
or extent of damages suffered by Buyer in the event of a breach by Sellers of
such covenants and agreements.
8.7. CONSIDERATION.
(a) Buyer shall pay Sellers a portion of the aggregate amount of
consideration on account of the covenants and agreements set forth in this
Article VIII, as set forth in Article II above; provided that, in addition to
such stated consideration, Sellers acknowledge that Buyer would not have
completed the within transaction absent the Restrictive Covenants.
(b) Each of the Sellers hereby agrees and acknowledges that the payment
of the Consideration shall be deemed adequate consideration for the transactions
contemplated by this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1. ACTIONS BY SELLERS. For the purposes of this Agreement, any action,
notice, determination, agreement, consent, approval or response, or lack or
failure of any of the foregoing, made or provided by Schaublin Swiss (or a
substitute appointed by Schaublin Swiss or its successor in interest) to Buyer
under or in connection with this Agreement, (a) shall constitute the action,
notice, determination, agreement, consent, approval or response, or lack or
failure thereof, of any group of Sellers to be made or provided by such group
under or in connection with this Agreement or any Related Agreement and (b) may
be relied upon as such by Buyer. Furthermore, for the purposes of this
Agreement, Buyer may deliver to Schaublin Swiss any notice, request, instruction
or other communication to be given hereunder by Buyer to any Seller; such
delivery shall constitute notice, request, instruction or other communication to
each or any of the Sellers, as the case may be.
54
9.2. NOTICES. Any notice, request, instruction or other communication to
be given hereunder by any party to another shall be given by hand delivery,
certified or registered mail (return receipt requested) or by overnight express
service, addressed to the respective party or parties at the following
addresses:
If to Sellers:
Xxxxxxxxx XX
Xxx Xxxxxxxxxx 0 - 0
0000 Xxxxxxxx
If to Buyer:
c/o Roller Bearing Company of America, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Telecopier No.: 000-000-0000
with a copy (which shall not constitute notice) to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: C. Xxxxx Xxxxxxx, Esq.
Telecopier No.: 000-000-0000
or to such other address or addresses as any party may designate to the others
by like notice as hereinabove set forth. Any notice given hereunder shall be
deemed given and received on the date of hand delivery, or one (1) day after
delivery to an overnight express service for next day delivery, as the case may
be.
9.3. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived if and only
if such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise
55
thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
9.4. EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
9.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No party hereto may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of each other party, except that Buyer may assign any and all of its
right, interests and obligations hereunder as security for obligations to its
lenders and except that Buyer may assign its rights and obligations under this
Agreement in whole or in part to an Affiliate; PROVIDED that Buyer shall not be
released from any of its obligations hereunder by reason of such assignment.
9.6. 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 State of New York, and the parties hereby expressly waive the
application of the law of any other state or country, including, without
limitation, Switzerland, unless the laws of Switzerland require the application
of the laws of Switzerland to certain provisions of this Agreement or any
Related Agreement.
9.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
9.8. ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
9.9. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
9.10. 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
56
applied to other Persons, places and circumstances shall remain in force and
effect only if, after excluding the portion deemed to be unenforceable, the
remaining terms shall provide for the consummation of the transactions
contemplated hereby in substantially the same manner as originally set forth
at the later of the date this Agreement was executed or last amended.
9.11. CONSTRUCTION.
(a) The language used in this Agreement will be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against either party. Any reference to any
Applicable Law shall be deemed also to refer to all rules and regulations
promulgated thereunder unless the context requires otherwise. Whenever required
by the context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. The words
"herein," "hereof," "hereunder," and words of similar import refer to the
Agreement as a whole and not to a particular section. Whenever the word
"including" is used in this Agreement, it shall be deemed to mean "including
without limitation," "including, but not limited to" or other words of similar
import such that the items following the word "including" shall be deemed to be
a list by way of illustration only and shall not be deemed to be an exhaustive
list of applicable items in the context thereof.
(b) The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) that the party has not breached shall not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or
covenant.
9.12. ARBITRATION OF CLAIMS.
(a) Except as otherwise provided elsewhere in this Agreement, any dispute
or difference between or among the parties arising out of this Agreement or the
transactions contemplated hereby, including without limitation any dispute
between an Indemnitee and any Indemnifying Party under Article VII, which the
parties are unable to resolve themselves shall be submitted to and resolved by
arbitration as herein provided. Within ten (10) days of a demand for
arbitration, 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 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
International 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.
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(b) The three arbitrators shall consider the dispute at issue in London,
England 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
International 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 or at the direction of the arbitrators) 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. All proceedings shall be conducted in the English language.
Notwithstanding the foregoing, the Indemnitee and Indemnifying Party agree that
they will attempt and they intend that they and the arbitrators should use their
best efforts in that attempt, to conclude the arbitration proceeding and have a
final decision from the arbitrators within ninety (90) days from the date of
selection of the arbitrators; PROVIDED, HOWEVER, that the arbitrators shall be
entitled to extend such 90-day period one or more times to the extent necessary
for such arbitrators to place a dollar value on any claim that may be
unliquidated. The arbitrators shall immediately deliver a written decision with
respect to the dispute to each of the parties, who shall promptly act in
accordance therewith. Each Indemnitee and Indemnifying Party to such arbitration
agrees that any decision of the arbitrators shall be final conclusive and
binding, absent fraud or manifest error, and that they will not contest any
action by any other party thereto in accordance with a decision of the
arbitrators, except if such factors are present. It is specifically understood
and agreed that any party may enforce any award rendered pursuant to the
arbitration provisions of this Section 9.12 by bringing suit in any court of
competent jurisdiction.
(c) All fees, costs and expenses (including attorneys' fees and expenses)
incurred by the party that prevails in any such arbitration commenced pursuant
to this Section 9.12 or any judicial action or proceeding seeking to enforce the
agreement to arbitrate disputes as set forth in this Section 9.12 or seeking to
enforce any order or award of any arbitration commenced pursuant to this Section
9.12 may be used against the party or parties that do not prevail in such
arbitration in such manner as the arbitrators or the court in such judicial
action, as the case may be, may determine to be appropriate under the
circumstances. All costs and expenses attributable to the arbitrators shall be
allocated among the parties to the arbitration in such manner as the arbitrators
shall determine to be appropriate under the circumstances.
9.13. 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; provided, however, that none of the parties
hereto shall be entitled to duplicative monetary remedies on account of the same
Loss (for example, the indemnification obligations of Schaublin Swiss under
Section 7.1 with respect to any Loss would be reduced by any insurance proceeds
that Buyer or Bovagnet received on account of such Loss).
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9.14. 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 the Schaublin Entities or any
Affiliate thereof (including any beneficiary or dependent thereof); provided,
however, that Roller Bearing Company of America, Inc. shall be the third party
beneficiary of all rights and privileges of Buyer granted or created by this
Agreement or any Related Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed by an authorized officer as of the day and year
first above written.
BUYER:
RBC XXXXXXXXX XX
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
SELLERS:
XXXXXXXXX X.X.
By: /s/ Xx. Xxxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title:
SCHAUBLIN FRANCE SA
By: /s/ Xx. Xxxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title:
SCHAUBLIN USA INC.
By: /s/ Xx. Xxxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title:
60
SCHEDULE 2.1(b)
RBC Nice Bearings, Inc.
RBC France SAS
