CONFIDENTIAL
Execution Copy
ASSET PURCHASE AGREEMENT
BY AND AMONG
BFM AEROSPACE CORPORATION,
GROUND SUPPORT, INC.,
RBC TRANSPORT DYNAMICS CORPORATION
AND
ROLLER BEARING HOLDING COMPANY, INC.
Dated as of October 26, 1992
TABLE OF CONTENTS
Section Page
1. The Acquisition .................................................... 1
1.1. Purchase and Sale .......................................... 1
1.2. Purchase Price ............................................. 3
1.3. The Closing ................................................ 3
1.4. Deliveries by GSI at the Closing ........................... 3
1.5. Deliveries by Buyer at the Closing ......................... 4
2. Representations and Warranties of GSI .............................. 5
2.1. Organization of GSI; Authorization ......................... 5
2.2. No Conflict ................................................ 5
2.3. Government Consents and Approvals .......................... 6
2.4. Financial Statements ....................................... 6
2.5. Title to Properties ........................................ 6
2.6. No Undisclosed Liabilities ................................. 7
2.7. Litigation ................................................. 7
2.8. Taxes ..................................................... 7
2.9. Absence of Certain Changes ................................. 8
2.10. Patents, Trademarks, Etc ................................... 8
2.11. Leases ..................................................... 8
2.12. Contracts and Commitments .................................. 8
2.13. Status of Agreements ....................................... 9
2.14. Pension and Employee Benefit Plans ......................... 9
2.15. Compliance with Law ........................................ 10
2.16. Labor Relations; Employees ................................. 10
2.17. Permits and Licenses ....................................... 10
2.18. Government Contracts ....................................... 10
2.19. Environmental Matters ...................................... 12
3. Representations and Warranties of Buyer ............................ 12
3.1. Organization of Buyer; Authorization ....................... 12
3.2. No Conflict as to Buyer .................................... 13
3.3. Investigation .............................................. 13
3.4. Government Consents and Approvals .......................... 13
4. Covenants by Buyer and GSI ......................................... 13
4.1. Employees .................................................. 13
4.2. Business Records and Files ................................. 15
4.3. Tax Worksheets ............................................. 15
4.4. Sales Taxes Arising from Sale of Assets .................... 16
4.5. Sales Tax Clearance Certificate ............................ 16
4.6. Mail and Other Communications .............................. 16
4.7. Governmental Contract Novations ............................ 16
5. Survival of Representations and Warranties;
Indemnification .................................................... 16
5.1. Survival ..................................................... 16
5.2. Time Limitations ............................................. 16
5.3. Indemnification by BFM and GSI. .............................. 17
i
Section Page
5.4. Indemnification by RBC and Buyer ............................. 17
5.5. Limitations as to Amount ..................................... 18
5.6. Brokers ...................................................... 18
5.7. Bulk Sales Law ............................................... 18
5.8. Procedure for Indemnification ................................ 19
6. Definitions ........................................................ 19
7. Notices ............................................................ 22
8. Jurisdiction; Service of Process ................................... 23
8.1. Jurisdiction ................................................. 23
8.2. Service of Process ........................................... 23
9. Miscellaneous ...................................................... 23
9.1. Expenses ..................................................... 23
9.2. Captions ..................................................... 23
9.3. No Waiver .................................................... 23
9.4. Exclusive Agreement; Amendment ............................... 23
9.5. Counterparts ................................................. 24
9.6. Governing Law ................................................ 24
9.7. Representation By Counsel; Interpretation .................... 24
9.8. Damages ...................................................... 24
9.9. Further Assurances; Knowledge ................................ 24
9.10. Permitted Assignment ......................................... 25
ii
INDEX OF EXHIBITS
Exhibit 1.4(a) - Xxxx of Sale
Exhibit 1.4(b) - Assumption of Lease
Exhibit 1.4(c) - Opinion of O'Melveny & Xxxxx
Exhibit 1.5(b) - Assumption Agreement
iii
INDEX OF SCHEDULES
Schedule 1.1(a)(iii) - Inventory
Schedule 1.1(a)(iv) - Machinery, Furniture and
Leasehold Improvements
Schedule 1.1(a)(ix) - Contracts
Schedule 1.1(a)(x) - Patent and Trademark Rights
Schedule 1.1(b) - Assumed Liabilities
Schedule 2.2 - No Conflict
Schedule 2.3 - Government Consents and
Approvals (GSI)
Schedule 2.5 - Encumbrances
Schedule 2.8 - Taxes
Schedule 2.10 - Disclosure Regarding Patents
and Trademark Rights
Schedule 2.11 - Leases
Schedule 2.14 - Employee Plans
Schedule 2.16 - Labor Relations; Employees
Schedule 2.17 - Permits and Licenses
Schedule 3.4 - Government Consents and
Approvals (Buyer)
iv
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 26, 1992, by and among BFM AEROSPACE CORPORATION, a Delaware
corporation ("BFM"), GROUND SUPPORT, INC., a California corporation ("GSI"), RBC
TRANSPORT DYNAMICS CORPORATION, a Delaware corporation ("Buyer"), and ROLLER
BEARING HOLDING COMPANY, INC., a Delaware corporation ("RBC").
R E C I T A L S:
A. GSI manufactures and sells pre-conditioned air systems for ground
support of aircraft. The business of GSI is hereinafter referred to as the
"Business."
B. GSI desires to sell to Buyer, and Buyer desires to purchase from
GSI, substantially all of the assets of GSI, upon the terms and subject to the
conditions set forth herein (all capitalized terms used herein without
definition shall have the meanings assigned to them in Section 6 hereof).
C. BFM is the owner of all of the issued and outstanding capital
stock of GSI.
D. RBC is the owner of all of the issued and outstanding capital
stock of Roller Bearing Company of America, Inc., a Delaware corporation
("Roller Bearing"). Roller Bearing is the owner of all of the issued and
outstanding capital stock of Buyer.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. The Acquisition.
1.1. Purchase and Sale; Assumption of Liabilities.
(a) Subject to the terms and conditions contained in this Agreement,
on the date hereof, GSI shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase, acquire and accept from GSI, all of the assets,
properties, rights, privileges, claims and contracts of every kind and nature
owned by GSI and used by GSI in the operation of the Business as of the date
hereof (the "Assets"), free and clear of all Encumbrances other than Permitted
Encumbrances, and including, without limitation, the assets described below:
1
(i) Cash. All of the cash on hand or in bank or in other
accounts of GSI.
(ii) Accounts Receivable. All trade accounts receivable and
other receivables.
(iii) Inventory. All of the inventories of raw materials,
work-in-process, finished products, scraps and rejects, spare parts
and supplies, including, without limitation, the items set forth in
Schedule 1.1(a) (iii) attached hereto, except for the items sold
after the date of such schedule in the ordinary course of business
of GSI.
(iv) Machinery and Equipment. All machinery, apparatus,
commercial tooling, equipment and trade fixtures, including, without
limitation, the items set forth in Schedule 1.1(a) (iv) attached
hereto.
(v) Office Furniture and Fixtures. All office furniture and
fixtures, including, without limitation, the items set forth in
Schedule 1.1(a) (iv) attached hereto.
(vi) Leasehold Improvements. All of GSI's leasehold
improvements located at the premises occupied by GSI at 11135 and
00000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx (the "Premises"),
including, without limitation, the items set forth in Schedule
1.1(a) (iv) attached hereto.
(vii) Goodwill. The goodwill incident to the Business.
(viii) Records and Other Information. All records of the
Business, including, without limitation, property, production,
engineering, contract and accounting records, sales data and
records, customer lists and other information relating to customers,
catalogs, brochures, suppliers' names, mailing lists and any
photographic and advertising materials.
(ix) Contracts. All rights in, to and under all purchase and
sales orders and commitments, personal property leases and other
agreements made in the ordinary course of business, including,
without limitation, those set forth in Schedule 1.1(a) (ix) attached
hereto (the "Contracts"); provided, however, that to the extent such
Contracts are Government Contracts (as hereinafter defined), only to
the extent the same are assignable.
2
(x) Intellectual Property. All right, title and interest in
and to all copyrights, service marks, trademarks, logos, trade names
(including the name "Ground Support, Inc."), patents, patent
applications, licenses (including patent licenses), royalty rights
and inventions, processes, know-how, formulae, trade secrets,
compositions, designs, drawings, specifications, patterns,
blueprints, plans, files, notebooks and records relating to
research, engineering and development activities, production data
and shop rights, including, without limitation, the items set forth
in Schedule 1.1(a)(x) attached hereto (the "Patent and Trademark
Rights").
(b) Buyer shall assume, perform and discharge only the liabilities
and obligations identified in Schedule 1.1(b) and only to the extent set
forth therein (the "Assumed Liabilities"). Except as provided in Schedule
1.1(b), or as set forth in Section 4.1 or 5.4 hereof, Buyer shall not
purchase, assume or have any liability whatsoever with regard to any
Employee Benefit Plan (as such term is hereinafter defined).
1.2. Purchase Price.
(a) The aggregate purchase price for the Assets as defined herein
and the Assets as defined in that certain Asset Purchase Agreement, dated
as of the date hereof, by and among BFM, BFM Transport Dynamics
Corporation, a California corporation ("TDC"), Buyer and RBC (the "TDC
Purchase Agreement"), shall consist of (i) $4,500,000, payable by Buyer to
GSI and TDC to a bank account designated by BFM to be held for the benefit
of each, and such shall be payable at the Closing in immediately available
funds, (ii) 6,000 shares of preferred stock of RBC, which shares are
consideration for the Assets as defined in the TDC Purchase Agreement, and
(iii) the assumption of the Assumed Liabilities as defined herein and in
the TDC Purchase Agreement.
(b) The purchase price shall be allocated among the Assets as
defined herein and the Assets as defined in the TDC Purchase Agreement,
based on a schedule to be prepared by Buyer and approved by GSI, which
approval shall not be unreasonably withheld, and GSI and Buyer agree to
report the purchase and sale of the Assets in a manner consistent with
such allocation of purchase price.
1.3. The Closing. The closing of the sale and purchase of the Assets
(the "Closing") shall take place at the offices of Xxxxxx & Xxxxxxx (counsel to
RBC's acquisition financing lender, Xxxxxx Financial, Inc.) at 000 Xxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, at 9:00 a.m. (local time) on the
date hereof.
1.4. Deliveries by GSI at the Closing. At the Closing, GSI shall
deliver the following to Buyer:
3
(a) A Xxxx of Sale in substantially the form attached hereto as
Exhibit 1.4(a);
(b) An Assignment and Assumption of Lease (the "Assumption of
Lease") executed by GSI and TDC, in substantially the form attached hereto
as Exhibit 1.4(b);
(c) An opinion of O'Melveny & Xxxxx ("OMM"), special counsel to GSI,
in substantially the form of Exhibit 1.4(c) attached hereto, dated as of
the date hereof and addressed to Buyer and a letter from OMM as to
reliance thereon addressed to Xxxxxx Financial, Inc.;
(d) UCC-2 release forms, executed by Xxxxx Fargo Bank, N.A. ("Xxxxx
Fargo"), pursuant to which Xxxxx Fargo shall release its security interest
in the Assets;
(e) An officers' certificate for GSI as to the Articles of
Incorporation and Bylaws of GSI, the resolutions adopted by the Board of
Directors and sole shareholder of GSI authorizing the execution and
delivery of this Agreement and the transactions contemplated hereby, and
the incumbency of certain officers of GSI;
(f) An officers' certificate for BFM as to the Certificate of
Incorporation and Bylaws of BFM, the resolutions adopted by the Board of
Directors of BFM authorizing the execution and delivery of this Agreement
and the transactions contemplated hereby, and the incumbency of certain
officers of BFM; and
(h) All other documents, instruments and writings required by this
Agreement to be delivered by GSI at the Closing or otherwise reasonably
requested by Buyer to complete the transactions contemplated hereby.
1.5. Deliveries by Buyer at the Closing. At the Closing, Buyer
shall deliver the following to GSI:
(a) By wire transfer of immediately available funds to the account
of GSI designated in writing to Buyer prior to the date hereof, the amount
of the cash portion of the purchase price set forth in Section 1.2(a)
hereof;
(b) An Assumption Agreement executed by Buyer in substantially the
form attached hereto as Exhibit 1.5(b);
(c) The Assumption of Lease executed by Buyer;
4
(d) An officers' certificate for Buyer as to the Certificate of
Incorporation and Bylaws of Buyer, the resolutions adopted by the Board of
Directors and sole stockholder of Buyer authorizing the execution and
delivery of this Agreement, the Assumption Agreement and the Lease and the
transactions contemplated hereby and thereby and the incumbency of certain
officers of Buyer;
(e) An officers' certificate for RBC as to the Certificate of
Incorporation and Bylaws of RBC, the resolutions adopted by the Board of
Directors of RBC authorizing the execution and delivery of this Agreement
and the transactions contemplated hereby and the incumbency of certain
officers of RBC; and
(f) All other documents, instruments and writings required by this
Agreement to be delivered by. Buyer at the Closing or otherwise reasonably
requested by GSI to complete the transactions contemplated hereby.
2. Representations and Warranties of GSI.
GSI represents and warrants to, and agrees with, Buyer as follows:
2.1. Organization of GSI; Authorization. GSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California with full corporate power and corporate authority to execute and
deliver this Agreement and the Assumption of Lease and to perform its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the Assumption of Lease have been duly authorized by all
necessary corporate action on the part of GSI and this Agreement and the
Assumption of Lease constitute legally valid and binding obligations of GSI,
enforceable against GSI in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
2.2. No Conflict. Except as set forth in Schedule 2.2 attached
hereto, neither the execution and delivery of this Agreement or the Assumption
of Lease nor the sale of the Assets to Buyer will (a) violate any provision of
the Articles of Incorporation or Bylaws of GSI or (b) violate, conflict with, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any material agreement or commitment to which
GSI is a party or (c) to the best knowledge of GSI, violate any material statute
or law or any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to GSI.
5
2.3. Government Consents and Approvals. Except as set forth in
Schedule 2.3 attached hereto, no consent, license, permit, approval or
authorization of, or declaration, filing or registration, or any novation or
assignment of any contract, with, any Governmental Body is required to be
obtained by GSI in connection with its execution and delivery of this Agreement
or the Assumption of Lease or the sale of the Assets to Buyer.
2.4. Financial Statements. GSI has delivered to Buyer: (a) an
unaudited balance sheet of GSI as at October 31, 1991 and unaudited statements
of income and cash flow for the fiscal year then ended, and (b) an unaudited
balance sheet of GSI as at August 31, 1992, and unaudited statements of income
and cash flow for the ten months then ended, including in each case the notes
thereto. The financial statements described in clause (a) of the preceding
sentence are referred to collectively as the "GSI Financial Statements," the
balance sheet as at August 31, 1992 is referred to as the "GSI Balance Sheet"
and the financial statements described in clause (b) of the preceding sentence
are referred to collectively as the "GSI Interim Statements." The GSI Financial
Statements and notes thereto present fairly the financial condition and results
of operations of GSI as at the respective dates thereof and for the period
therein referred to, in accordance with GAAP, except as otherwise disclosed
therein. The GSI Interim Statements present fairly the financial condition and
results of operations of GSI as at the date thereof and for the period therein
referred to in accordance with GAAP on a basis consistent with the GSI Financial
Statements, except that the GSI Interim Statements do not contain complete
footnote disclosure and are subject to normal year-end adjustments, which will
not be material.
2.5. Title to Properties. GSI has good and marketable title to all
the Assets (including those reflected on the Balance Sheet, except for assets
sold, consumed or otherwise disposed of in the ordinary course of business since
the date of the Balance Sheet,), and on the date hereof Buyer shall receive good
and marketable title to the Assets, free and clear of all Encumbrances, except
for (a) Encumbrances set forth in Schedule 2.5 attached hereto, (b) liens for
taxes not yet due or being contested in good faith by appropriate proceedings
(which proceedings, if any, are identified in Schedule 2.5) or (c) other
Encumbrances which, individually or in the aggregate, do not (i) have a material
adverse effect on the use of the asset in question or (ii) materially or
adversely affect the value of the asset in question or the operation of the
Business (the Encumbrances referred to in (a) through (c) above are collectively
referred to herein as "Permitted Encumbrances"). Since the date of the Balance
Sheet, GSI
6
has not sold or disposed of any of its assets outside of the ordinary course of
business. The Assets comprise all of the assets, and the only assets, used by
GSI in conducting the Business as presently operated.
2.6. No Undisclosed Liabilities. GSI has no liabilities or
obligations that were not reflected or reserved against in the Balance Sheet,
except for liabilities and obligations incurred since the date of the GSI
Balance Sheet in the ordinary course of business and consistent with past
practice.
2.7. Litigation. There is no claim, action, suit or proceeding by or
before any court or Governmental Body pending or, to the best knowledge of GSI,
threatened against GSI, nor does GSI know of any facts that would form the basis
of any such claim, action, suit or proceeding.
2.8. Taxes
(a) GSI (and any affiliated group of which GSI is now or has been a
member), has duly and timely filed with the appropriate taxing authorities all
returns (including, without limitation, information returns and reports) in
respect of Taxes required to be filed through the date hereof. The information
filed is complete and accurate in all material respects. Neither GSI, nor any
group of which GSI is now or was a member, has requested any extension of time
within which to file returns (including, without limitation, information
returns) in respect of any Taxes.
(b) All Taxes in respect of periods beginning before the date
hereof, have been paid, or an adequate reserve has been established therefor and
GSI has no liability for such taxes in excess of the amounts so paid or reserves
so established.
(c) (i) No deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other governmental authority; (ii) there are no
pending or threatened audits, investigations or claims for or relating to any
liability in respect of Taxes, and there are no matters under discussion with
any governmental authorities with respect to Taxes that are likely to result in
an additional amount of Taxes; (iii) no issues have been raised in any pending
or completed audit of GSI which could reasonably be expected to affect the tax
liability of GSI for a taxable year which has either not been audited or as to
which no audit is pending; (iv) audits of federal, state, and local returns for
Taxes by the relevant taxing authorities have been completed for each period set
forth in Schedule 2.8; (v) GSI has not been notified that any taxing authority
intends to audit a return for any other period;
7
and (vi) no extension of a statute of limitations relating to Taxes
is in effect with respect to GSI, and no Tax lien has been filed by any Tax
authority against any property or assets of GSI.
(d) GSI is not a "foreign person" as defined in Section 1445(f)(3)
of the Code.
2.9. Absence of Certain Changes. Since the date of the Balance
Sheet, (a) there has been no material adverse change in the business, financial
condition, prospects or operations of GSI (other than changes resulting from
general economic conditions and matters generally affecting companies engaged in
businesses similar to GSI) and (b) the Business has been conducted by GSI only
in the ordinary course and consistent with past practices.
2.10. Patents, Trademarks, Etc. Schedule 1.1(a) (x) sets forth a
list of the Patent and Trademark Rights, which are all United States and foreign
patents, registered trademarks, registered trade names, copyrights, and
applications therefor owned or used by GSI in the conduct of the Business.
Except as disclosed in Part A of Schedule 2.10 attached hereto, (a) GSI owns (or
possesses licenses or other rights to use) all material Patent and Trademark
Rights necessary to the conduct of its business as currently conducted and (b)
there are no existing or, to the best knowledge of GSI, threatened claims by any
Person with respect to the use, or challenging the ownership, of the Patent and
Trademark Rights by GSI. To the best knowledge of GSI, there is no material
infringing use by any Person of the Patent and Trademark Rights and GSI has not
granted a license or sub-license in the Patent and Trademark Rights to any third
parties except for such licenses in the Trademark Rights granted to
distributors, pursuant to those certain agreements, a complete list of which is
contained in Part B of Schedule 2.10, as are necessary for such distributors to
effectively advertise and sell GSI's goods.
2.11. Leases. Schedule 2.11 attached hereto contains a list of all
real property leases and material personal property leases pursuant to which GSI
is a party. All such leases are valid, binding and enforceable in accordance
with their terms, and are in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable
principles relating to or affecting the rights of creditors generally; there are
no existing material defaults (or events which, with notice or lapse of time or
both, would constitute a material default) by GSI thereunder.
2.12. Contracts and Commitments. Except as set forth in Schedule
2.12, Schedule 2.11, Schedule 1.1(a) (ix)
8
or Schedule 2.5, GSI is not a party to or bound by, and the
Contracts shall not include, any written agreement, contract or commitment (a)
having a remaining term of more than two years or providing for payments to or
by GSI in excess of $50,000; (b) providing for employment or the payment of any
bonus or commission based on sales or earnings, or which contains any severance
or termination pay liabilities or obligations; (c) with any union or other
collective bargaining representative of its employees; (d) providing for or
evidencing indebtedness for borrowed money; (e) providing for capital
expenditures in excess of $100,000 in the aggregate; (f) with an Affiliate; (g)
with a distributor or dealer, franchiser, retail sales organization, sales
agency or manufacturer's representative; or (h) granting any preferential rights
to purchase any of GSI's assets, property or rights or requiring the consent of
any party to the transfer to or assignment of such assets, properties or rights
or expressly limiting or restricting the ability to transfer or assign such
assets, property or rights other than in the ordinary course of business.
2.13. Status of Agreements. All Contracts are valid and in full
force and effect and there are no existing material defaults (or events which,
with notice or lapse of time or both, would constitute a material default) by
GSI or, to the best knowledge of GSI, by any other party thereunder
2.14. Pension and Employee Benefit Plans.
(a) Schedule 2.14 attached hereto lists each plan sponsored by BFM
or GSI that covers employees of GSI and is subject to Part 6 of Title I of ERISA
(the "Employee Plans"). Notwithstanding the foregoing, the term "Employee Plans"
shall exclude the GSI Security 90 Plan for all purposes under this Agreement.
True and complete copies of all Employee Plans have been delivered or made
available to Buyer.
(b) Schedule 2.14 discloses each Multiemployer Plan to which GSI or
any ERISA Affiliate has at any time within the last six years had an obligation
to contribute or with respect to which it may be secondarily liable for
withdrawal liability payments under Section 4201 of ERISA.
(c) Except as disclosed in Schedule 2.14 hereto, there has been no
withdrawal by GSI or any of its ERISA Affiliates from any Multiemployer Plan
within the past six years, and if a complete or partial withdrawal were to occur
as of the Closing, there is no basis to expect that any withdrawal liability
would be imposed on GSI, either primarily or secondarily, with respect to any
Multiemployer Plan.
9
2.15. Compliance with Law. To the best knowledge of GSI, the
Business has been operated by GSI in compliance in all material respects with
all laws, rules, regulations and orders applicable to the Business (including,
without limitation, any such laws, rules, regulations and orders pertaining to
the discharge or release of any pollutants, contaminants, chemicals or
industrial, toxic or hazardous materials into the environment), except for
failures to comply that would not, individually or in the aggregate, have a
Material Adverse Effect.
2.16. Labor Relations; Employees. Except as set forth in Schedule
2.16, GSI is not delinquent in any material payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them to the date hereof or amounts required to be
reimbursed to such employees, there is no unfair labor practice complaint
against GSI pending before the National Labor Relations Board or any comparable
state, local or foreign agency and neither any grievance which might have a
Material Adverse Effect nor any arbitration proceeding arising out. of or under
any collective bargaining agreement is currently pending. There is no strike,
work stoppage, slowdown or other labor difficulty actually occurring or, to the
knowledge of GSI, threatened against or directly affecting the operations of
GSI.
2.17. Permits and Licenses. Schedule 2.17 lists, and GSI currently
has in full force and effect, all governmental licenses and permits required for
the conduct of the Business as now conducted, the absence of which would have a
Material Adverse Effect, and within the past three years GSI has conducted its
operations pursuant to then effective governmental licenses and permits.
2.18. Government Contracts.
(a) Government Contracts Compliance. With respect to each Government
Contract or Bid to which GSI is a party, to the best knowledge of GSI, (i) GSI
has complied with all material terms and conditions of such Government Contract
or Bid, including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of law therein; (ii) GSI has complied
with all requirements of any statute, rule, regulation, order or agreement
pertaining to such Government Contract or Bid; (iii) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract or Bid were current, accurate and complete as of their
effective date, and GSI has fully complied with all such representations and
certifications;
10
(iv) neither the U.S. Government nor any prime contractor, subcontractor or
other person has notified GSI, either orally or in writing, that GSI has
breached or violated any statute, rule, regulation, certification,
representation, clause, provision or requirement; (v) no termination for
convenience, termination for default, cure notice or show cause notice has been
issued; (vi) no cost incurred by GSI has been questioned or disallowed; and
(vii) no money due to GSI has been (or has been attempted to be) withheld or set
off.
(b) Investigations and Audits. To the best knowledge of GSI, (i)
neither GSI, any of GSI's Affiliates nor any of GSI's directors, officers,
employees, agents or consultants is (or for the last five years has been) under
administrative, civil or criminal investigation, indictment, audit or internal
investigation with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract or Bid; (ii) neither GSI
nor any of GSI's Affiliates has made a voluntary disclosure to the U.S
Government with respect to any alleged irregularity, misstatement or omission
arising under or relating to a Government Contract or Bid; (iii) there is no
irregularity, misstatement or omission arising under or relating to any
Government Contract or Bid that has led or could lead, either before or after
the date hereof, to any of the consequences set forth in (i) - (ii) above or any
other damage, penalty assessment, recoupment of payment or disallowance of cost.
(c) Financing Arrangements and Claims. To the best knowledge of GSI,
there exists (i) no financing arrangement with respect to performance of any
current Government Contract; (ii) no outstanding claim against GSI, either by
the U.S. Government or by any prime contractor, subcontractor, vendor or other
third party, arising under or relating to any Government Contract or Bid; (iii)
no fact upon which such a claim may be based on the future; (iv) no dispute
between GSI and the U.S. Government or any prime contractor, subcontractor or
vendor arising under or relating to any Government Contract or Bid; and (v) no
fact known by GSI over which such a dispute may arise in the future. To the best
knowledge of GSI, GSI has no interest in any pending or potential claim against
the U.S. Government or any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Bid.
(d) No Suspension or Debarment. Neither GSI nor any of its
directors or officers, nor, to the best knowledge of GSI, any employee of GSI is
(or for the last five years has been) suspended or debarred from doing business
with the U.S. Government or has been declared nonresponsible or ineligible for
U.S. Government contracting. GSI knows of no
11
circumstances that, to the best knowledge of GSI, would warrant the institution
of suspension or debarment proceedings or the finding of nonresponsibility or
ineligibility on the part of GSI in the future.
2.19. Environmental Matters. No Environmental Condition relating to
the Assets or the Business exists in violation of any Environmental Laws. For
purposes of this Section 2.19, "Environmental Condition" means the existence,
release, emission, discharge, generation, removal or disposition of any
Hazardous Substance; "Hazardous Substance" means (i) any chemical, compound,
material or substance that is defined, listed in, or otherwise classified
pursuant to, any Environmental Laws as a "hazardous substance", "hazardous
material", "hazardous waste", "toxic substance'1 or "toxic pollutant", and (ii)
asbestos, petroleum, natural gas, natural gas liquids, liquified natural gas,
synthetic gas usable for fuel and drilling fluids, produced waters, and other
wastes associated with the exploration, development or production of crude oil,
natural gas, or geothermal resources; and "Environmental Laws" means any and all
federal, state and local laws (whether under common law, statute, rule,
regulation or otherwise) and other requirements of governmental authorities
relating to the environment or to any Hazardous Substance or Environmental
Condition (including, without limitation, CERCLA and the applicable provisions
of the California Health and Safety Code and the California Water Code).
3. Representations and Warranties of Buyer.
Buyer represents and warrants to, and agrees with, GSI as follows:
3.1. Organization of Buyer; Authorization. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and corporate authority to execute
and deliver this Agreement, the Assumption Agreement and the Assumption of Lease
and to perform its obligations hereunder and thereunder. The execution, delivery
and performance of this Agreement, the Assumption Agreement and the Assumption
of Lease have been duly authorized by all necessary corporate action (including,
but not limited to, approval by the Board of Directors) on the part of Buyer and
each of this Agreement, the Assumption Agreement and the Assumption of Lease
constitutes a valid and binding obligation of Buyer, enforceable against it in
accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
12
affecting the enforcement of creditors' rights generally.
3.2. No Conflict as to Buyer. Neither the execution and delivery of
this Agreement, the Assumption Agreement or the Assumption of Lease nor the
performance of Buyer's obligations hereunder or thereunder will (a) violate any
provision of the Certificate of Incorporation or Bylaws of Buyer, (b) violate,
conflict with or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under any agreement or commitment
to which Buyer is party or (c) to the best knowledge of Buyer, violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or other Governmental Body applicable to Buyer.
3.3. Investigation.
(a) Buyer has performed extensive due diligence and investigations
with respect to GSI with the intention of forming its own conclusions
regarding GSI (financial and otherwise) in response to the parties'
express intention and agreement that as of the Closing the sale hereunder
shall be without representation or warranty of any kind (express or
implied) regarding the Assets, except as set forth in this Agreement and
the Xxxx of Sale. Buyer will rely solely on its own business judgment and
investigation with respect to the Assets.
(b) In connection with Buyer's investigation of GSI, Buyer has
received from GSI certain projections and other forecasts, including the
projections and other forecasts contained in the Confidential Offering
Memorandum provided to Buyer. Buyer acknowledges that GSI makes no
representation or warranty with respect to such projections or forecasts.
3.4. Government Consents and Approvals. Except as set forth in
Schedule 3.4 attached hereto, no consent, approval or authorization of, or
declaration, filing or registration with any Governmental Body is required to
be. obtained by Buyer in connection with the execution and delivery of this
Agreement, the Assumption Agreement or the Assumption of Lease or the purchase
of the Assets by Buyer.
4. Covenants by Buyer and GSI.
4.1. Employees.
(a) Effective as of the Closing, Buyer shall offer employment to
all persons who are employees of GSI immediately prior to the Closing on
terms of
13
employment and compensation comparable to that received by such employees
immediately prior to the Closing; provided, however, that "compensation"
for this purpose shall not be deemed to include benefits under any
employee benefit plan within the meaning of Section 3(3) of ERISA and
provided further that such employees shall not be third party
beneficiaries of this Agreement and shall remain terminable at will. All
employees of GSI who accept employment with Buyer shall be referred to
herein as "Transferred Employees." Effective as of the Closing, Buyer
shall assume sponsorship for the Employee Plans (as defined in Section
2.14(a)), and shall be responsible for all liabilities arising under such
plans on or after the Closing, but shall be permitted to amend or
terminate any of such plans at any time after the Closing. Buyer agrees
that it shall use its reasonable efforts to cause the insurer under the
Employee Plans to give Transferred Employees full credit under the
Employee Plans for all expenses incurred by Transferred Employees and
their beneficiaries under the benefit deductible and co-payment provisions
of the Employee Plans. Buyer agrees that it shall be liable for any
continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") (i) imposed as the result of a "Qualifying Event"
(as that term is defined in ERISA Section 603 or Code Section 4980B(f)(3))
that occurs on or after the Closing with respect to any Transferred
Employee or (ii) imposed under the Employee Plans for any period extending
beyond the Closing with respect to a Qualifying Event which occurred on or
before the Closing, provided that GSI (or the plan administrator appointed
by it) has met all relevant notice requirements under Section 606 or
Section 4980B(f) (6) of the Code pertaining to any Covered Employee or
Qualified Beneficiary (as such terms are defined in Section 607 of ERISA
and Sections 4980B(f) and (g) of the Code) affected by such Qualifying
Event. Furthermore, Buyer shall indemnify BFM and TDC for any liability or
penalty imposed under COBRA (i) with respect to any Transferred Employee
as the result of a Qualifying Event that occurs on or after the Closing,
and (ii) with respect to any employee of GSI (including GSI employees who
are not Transferred Employees) who is eligible to receive continuation
coverage under the Employee Plans in accordance with COBRA for any period
of time extending beyond the Closing, but excluding for purposes of this
Section 4.1(a) any liability for which BFM and GSI are liable under
Section 5.3(e).
(b) Buyer understands that certain employees of GSI have accrued
benefits in the LS, Inc. Plan and that in
14
accordance with Section 9.02(b)(2) of that agreement between BFM Acquisition
Corp. and Xxxx Xxxxxxx Aerospace Products Holding Corp., dated July 30, 1987,
the LS, Inc. Plan provides (i) that certain service by employees of BFM and its
Affiliates is taken into account for purposes of vesting (but not benefit
accrual) under the LS, Inc. Plan and (ii) that certain compensation of employees
of BFM and its Affiliates is used in computing the benefit of such employees
under the L5, Inc. Plan ("Rollup Agreement"). BFM, TDC and Buyer agree that any
benefits payable under the Rollup Agreement are an obligation solely of the LS,
Inc. Plan and neither BFM, TDC nor Buyer shall have any liability for any
benefits payable under the Roll-Up Agreement and that neither BFM, TDC nor Buyer
is responsible in any way for any effect on benefits otherwise payable under the
Rollup Agreement caused by the transactions contemplated under this Agreement.
Buyer agrees that it shall notify LS, Inc. or its designee promptly after the
end of each calendar year and at such other times as LS, Inc. or its designee
may reasonably request as to the employment status of each Transferred Employee
(as defined in Section 4.1) who has an accrued benefit under the LS, Inc. Plan.
4.2. Business Records and Files. For a period of five years with
respect to Tax records of GSI and three years with respect to other business
records of GSI from and after the date hereof:
(a) Buyer shall not dispose of or destroy any of such records and
files of the Business without first offering to turn over possession
thereof to GSI by notice to GSI at least 30 days prior to the proposed
date of such disposition or destruction.
(b) Buyer shall allow GSI and its agents access to all such records
and files of GSI that are transferred to Buyer in connection herewith for
any reasonable purpose upon 10 business days notice that sets forth the
documents to be reviewed and the purpose for such review, during normal
working hours at Buyer's principal place of business or at any location
where such records are stored, and GSI shall have the right, at its own
expense, to make copies of any such records and files; any such access or
copying shall be had or done in such a manner so as not to interfere with
the normal conduct of Buyer's business.
4.3. Tax Worksheets. Within three months after the date hereof,
Buyer shall prepare and deliver to BFM, at the sole expense of Buyer, tax
worksheets as at the date hereof of the type customarily prepared by GSI prior
to the date hereof, for the purpose of enabling BFM and GSI to file Tax Returns
for tax periods ending prior to the date hereof.
15
4.4. Sales Taxes Arising from Sale of Assets. Buyer shall be liable
for the payment of any and all sales taxes arising out of or related to the
transfer of the Assets by GSI to Buyer hereunder. Seller shall be liable for the
payment of any and all sales taxes arising out of or related to GSI's operation
of the Business through the date hereof.
4.5. Sales Tax Clearance Certificate. After the date hereof, Buyer
intends to file a request with the California State Board of Equalization (the
"Board") for a sales tax clearance certificate as to the satisfaction by GSI of
all sales and use tax liability arising from GSI's operation of the Business
through the date hereof. GSI will use its reasonable efforts to cooperate with
Buyer in connection with Buyer's efforts to obtain such certificate, including,
without limitation, making its records available to the Board for audit upon its
request.
4.6. Mail and Other Communications. After the date hereof, Buyer
shall forward to GSI all mail, telegrams and other communications, and all
express or other packages, addressed to GSI or its agents, promptly after
Buyer's receipt thereof. GSI thereupon shall promptly return to Buyer any and
all of the same to the extent they relate to the Assets or the Assumed
Liabilities.
4.7. Governmental Contract Novations. After the date hereof, GSI
shall use its reasonable efforts to assist Buyer in obtaining all necessary
novations to the Government Contracts and any and all other approvals as may be
reasonably requested by Buyer in connection with the transfer and assignment of
the Government Contracts to Buyer hereunder and GSI shall take such other
actions as may be reasonably requested by Buyer in connection therewith.
5. Survival of Representations and Warranties; Indemnification.
5.1. Survival. Subject to Section 5.2 hereof, all representations,
warranties and agreements contained in this Agreement shall survive the Closing.
5.2. Time Limitations. Neither BFM nor GSI shall have any liability
(for indemnification or otherwise) with respect to any representation or
warranty or any claim under Section 5.3(h) hereof, unless on or before the first
anniversary of the date hereof (or the second anniversary of the date hereof, in
the case of a claim with respect to the breach of Section 2.19 or any claim
under Section 5.3(h) hereof), GSI and BFM are given notice asserting a claim
with respect thereto and specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. Neither RBC nor Buyer shall
have any liability (for
16
indemnification or otherwise) with respect to any representation or warranty
unless on or before the first anniversary of the date hereof, Buyer and RBC are
given notice of a claim with respect thereto and specifying the factual basis of
that claim in reasonable detail to the extent then known by GSI.
5.3. Indemnification by BFM and GSI. BFM and GSI shall indemnify and
hold harmless Buyer, and shall reimburse Buyer for, any debt, obligation, claim,
loss, liability, damage or expense (including, but not limited to, costs of
investigation and defense and reasonable attorneys' fees) (collectively,
"Damages") relating to, arising from or in connection with (a) any inaccuracy in
any of the representations and warranties of GSI in this Agreement, (b) any
failure by GSI to perform or comply with any agreement contained in this
Agreement, (c) the operation of the Business prior to and on the date hereof
other than the Assumed Liabilities and other than claims for breach of warranty
or product liabilities (except as specified in clause (d) of this Section 5.3),
(d) all claims made, whether on, after or prior to the date hereof, for breach
of warranty or product liability arising out of (i) products shipped by GSI on
or prior to the date hereof and (ii) products shipped by Buyer after the date
hereof with respect to which Buyer provides GSI with written or other reasonable
evidence that such products were manufactured by GSI and constituted finished
goods on or prior to the date hereof, (e) any liability or claim of liability
arising from the failure of GSI or BFM to comply with the continuation coverage
requirements of Sections 601 through 608 of ERISA regarding continued insurance
coverage with respect to any Qualified Event occurring prior to the Closing
under the Employee Plans, (f) any and all sales and payroll tax liabilities
arising out of GSI's operation of the Business through the date hereof, (g) the
remaining 50% of the amount of the liability, if any, not assumed by Buyer
pursuant to Section 1.1(b) hereof, for severance payments or termination
benefits owing to Xxxxx X. Xxxx pursuant to that certain Termination Benefits
Agreement, dated January 31, 1990, by and between TDC and Xxxxx X. Xxxx, and (h)
the existence or occurrence of any Environmental Condition in violation of any
Environmental Law relating to the Business or the Premises prior to the Closing,
except to the extent that such Environmental Condition continues to exist solely
because of the operation of Buyer's business on the Premises.
5.4. Indemnification by RBC and Buyer. RBC and Buyer shall indemnify
and hold harmless GSI, and shall reimburse GSI for, any Damages relating to,
arising from or in connection with (a) any inaccuracy in any of the
representations and warranties of Buyer in this Agreement, and (b) any failure
by Buyer to perform or comply with any
17
covenant or agreement contained in this Agreement, (c) the Assumed Liabilities,
(d) the operation of the Business after the date hereof, including, without
limitation, the performance of the Government Contracts, (e) all claims made
after the date hereof for breach of warranty or product liability arising out of
products shipped by Buyer after the date hereof with respect to which Buyer is
unable to provide to GSI written or other reasonable evidence that such products
were manufactured by GSI and constituted finished goods on or prior to the date
hereof, (f) any and all sales taxes arising out of or related to the transfer of
the Assets by GSI to Buyer hereunder, and (g) any liability imposed on TDC or
BFM for benefit payments under the GSI Severance Policy on account of the
termination of any Transferred Employee occurring on or after the Closing.
5.5. Limitations as to Amount. Neither BFM nor GSI shall have any
liability with respect to any claim made by Buyer pursuant to Section 5.3 until
the total of all Damages exceeds $100,000 in the aggregate, at which time BFM
and GSI shall be liable only for the amount by which such Damages exceed
$100,000 in the aggregate. Neither RBC nor Buyer shall have any liability with
respect to any claim made by TDC pursuant to Section 5.4 until the total of all
Damages exceeds $50,000 in the aggregate, at which time Buyer and/or RBC shall
be liable only for the amount by which such Damages exceed $50,000 in the
aggregate. BFM and GSI's collective aggregate liability with respect to matters
described in Section 5.3 shall be limited to the amount of the cash portion of
the purchase price set forth in Section 1.2 hereof.
5.6. Brokers. RBC and Buyer shall indemnify and hold harmless GSI,
and shall reimburse BFM and GSI for, and GSI shall indemnify and hold harmless
Buyer, and shall reimburse Buyer for, all Damages resulting from any claims made
by any Person for brokerage or finder's fees or commissions in connection with
the transactions contemplated by this Agreement based on any agreement or
understanding alleged to have been made by such Person with RBC and Buyer or its
Affiliates (in the case of Buyer as the indemnifying party) or BFM and GSI or
its Affiliates (in the case of GSI as the indemnifying party).
5.7. Bulk Sales Law. The parties agree to waive compliance with the
provisions of the bulk transfer and bulk sales laws of any applicable state or
jurisdiction (the "Bulk Sales Laws") in connection with the purchase and sale of
the Assets hereunder. RBC and Buyer shall indemnify and hold harmless GSI, and
shall reimburse GSI for, any Damages that GSI may suffer as a result of or due
to noncompliance with the provisions of the Bulk Sales Law insofar as they
relate to any of the Assumed Liabilities. BFM and GSI shall
18
indemnify and hold harmless Buyer, and shall reimburse Buyer for, any Damages
that Buyer may suffer as a result of or due to noncompliance with the provisions
of the Bulk Sales Law insofar as they relate to liabilities of GSI other than
the Assumed Liabilities.
5.8. Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 5.3, 5.41 5.6 or 5.7 of notice of the
commencement of any action brought by a third party, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such section, give notice to the indemnifying party of the commencement
thereof. In case any such action shall be brought against an indemnified party
and it shall give notice to the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such section for any fees of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation. If an
indemnifying party assumes the defense of such an action, no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party's consent (which shall not be unreasonably withheld) unless
(i) there is no finding or admission of any violation of law or any violation of
the rights of any Person and no effect on any other claims that may be made
against the indemnified party and (ii) the sole relief provided is monetary
damages that are paid in full by the indemnifying party. In any event, the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld).
6. Definitions.
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 6:
"Affiliate" -- A Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, another Person.
"Assets" -- See Section 1.1(a).
"Assumed Liabilities" -- See Section 1.1(b).
19
Business" -- See Section l.1(a)(vii).
"Business Day" -- Any day that is not a Saturday or Sunday or a day
on which banks located in the City of Los Angeles are authorized or required to
be closed.
"Buyer" -- See the first paragraph of this Agreement.
"Closing" -- See Section 1.3.
"Code" -- The Internal Revenue Code of 1986, as amended.
"Company Pension Plan" -- Each employee pension benefit plan within
the meaning of Section 3(2) of the ERISA, covered by Part 2 of Title I of ERISA,
excluding multiemployer plans within the meaning of Section .3(37) of ERISA
maintained within the last six years of GSI or any of its ERISA Affiliates.
"Company Welfare Plan" -- Each employee welfare benefit plan within
the meaning of Section 3(1) of ERISA maintained by GSI or any of its ERISA
Affiliates.
"Contracts" -- See Section 1.1(a) (ix).
"Damages" -- See Section 5.3.
"Employee Benefit Plans" -- Each Company Pension Plan, Company
Welfare Plan and each other profit sharing, group insurance, bonus, deferred
compensation, stock option, severance pay, insurance, pension or retirement plan
or written agreement relating to employment or "fringe benefits" for employees
or officers of GSI.
"Employee Plans" -- See Section 2.14.
"Encumbrance" -- Any security interest, mortgage, lien, charge or
other adverse claim.
"ERISA" -- The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" -- Any company that, as of the relevant measuring
date under ERISA, is a member of a controlled group of corporations or under
common control with TDC within the meaning of Section 414 of the Code.
"Excluded Assets" -- See Section 1.1(a).
"GAAP" -- Generally accepted accounting principles in the United
States, consistently applied.
20
"Governmental Body" -- Any domestic or foreign national, state or
municipal or other local government or multi-national body, any subdivision,
agency, commission or authority thereof, or any quasi-governmental or private
body exercising any regulatory or taxing authority thereunder.
"Government Contract" or "Government Contract or Bid" -- Any
contract with an agency or instrumentality of the U.S. government and all U.S.
government sub-contracts.
"GSI" -- See the first paragraph of this Agreement.
"GSI Balance Sheet" -- See Section 2.5.
"GSI Financial Statements" -- See Section 2.5.
"GSI Interim Statements" -- See Section 2.5.
"IRS" -- See Section 2.14.
"Material Adverse Effect" -- A material adverse effect on the Assets
or on the financial condition, prospects or affairs of the Business.
"Multiemployer Plan" -- Each multiemployer plan within the meaning
of Section 3(37) of ERISA.
"PBGC" -- See Section 2.14(i).
"Patent and Trademark Rights" -- See Section 1.1(a) (x)
"Permitted Encumbrances" -- See Section 2.5.
"Person" -- Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity or Governmental
Body.
"Plans" -- See Section 2.14.
"Premises" -- See Section 1.1(a)(vi).
"Subsidiary" -- With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
"Taxes" -- All taxes, charges, fees, levies, interest, penalties,
additions to tax or other assessments, including, but not limited to, income,
excise, property,
21
sales, use, value added and franchise taxes, imposed by any Governmental Body.
"Tax Returns" -- Any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any Governmental Body in connection with the determination,
assessment or collection of any Taxes or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
7. Notices.
All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate as to itself by notice to the other
parties):
(a) If to Buyer or RBC:
Roller Bearing Holding Company, Inc.
c/o TRIBOS Management Company, Inc.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
(b) If to BFM or GSI:
c/o Oak Hill Partners, Inc.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
22
with a copy to:
O'Melveny & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
8. Jurisdiction; Service of Process.
8.1. Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of California, or,
if it has or can acquire jurisdiction, in the United States District Court for
the Central District of California, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any obligation to venue laid therein.
8.2. Service of Process. Process in any action or proceeding
referred to in Section 8.1 may be served on any party anywhere in the world,
whether within or without the State of California.
9. Miscellaneous.
9.1. Expenses. Each party shall bear its own expenses incident to
the preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
9.2. Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.
9.3. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.
9.4. Exclusive Agreement; Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter (other
than any confidentiality agreement), is intended (with the documents referred to
herein) as a complete and exclusive statement of the terms of the agreement
among the parties with respect thereto and cannot be changed or terminated
orally.
23
9.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
9.6. Governing Law. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof.
9.7. Representation By Counsel; Interpretation. BFM, GSI, RBC and
Buyer each acknowledges that it has been represented by legal counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law, including but not limited to Section
1654 of the California Civil Code, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of Buyer, BFM, RBC and GSI.
9.8. Damages. Notwithstanding anything to the contrary elsewhere in
this Agreement, no party (or its Affiliates) shall, in any event, be liable to
the other party (or its Affiliates) for any consequential damages, including,
but not limited to, loss of revenue or income, cost of capital, or loss of
business reputation or opportunity relating to the breach or alleged breach of
this Agreement. Each party agrees that it will not seek punitive damages as to
any matter under, relating to or arising out of this Agreement.
9.9. Further Assurances; Knowledge.
(a) Further Assurances. Each party shall execute and deliver both
before and after the Closing such further certifications, agreements and
other documents and take such other actions as the other party may
reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
(b) Knowledge. As used in this Agreement, the terms "knowledge" or
"knowledge and belief" when used with respect to any party shall mean the
actual "knowledge" or actual "knowledge and belief" of any one or more of
the executive officers of such party.
24
9.10. Permitted Assignment. Notwithstanding anything herein to the
contrary, Buyer and RBC are permitted to grant to Xxxxxx Financial, Inc., a
Delaware corporation, for the benefit of the Lenders (as defined in the Amended
and Restated Credit Agreement dated as of October 26, 1992) a continuing
security interest in and to all right, title and interest of Buyer and RBC in
this Agreement.
25
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date and year first written above.
BFM AEROSPACE CORPORATION
By: /s/ [Illegible]
----------------------------
Title: Secretary
GROUND SUPPORT, INC.
By: /s/ [Illegible]
----------------------------
Title: Secretary
RBC TRANSPORT DYNAMICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Title: President & CEO
ROLLER BEARING HOLDING
COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Title: President & CEO
EXHIBIT 1.4(a)
XXXX OF SALE
THIS XXXX OF SALE is made as of the 26th day of October, 1992, by
BFM TRANSPORT DYNAMICS CORPORATION, a California corporation ("GSI").
W I T N E S S E T H:
That for the consideration set forth in that certain Asset Purchase
Agreement, dated as of October 26, 1992 (the "Agreement"), by and between GSI
and RBC Holding Company, Inc., a Delaware corporation ("Buyer"), GSI hereby
conveys, transfers, assigns and delivers to and vests in Buyer, free and clear
of all Encumbrances except Permitted Encumbrances (all capitalized terms used
herein and not otherwise defined having the meanings given to them in the
Agreement) all of GSI's good and marketable title, right and interest in and to
the Assets, which are all the assets of every type and nature (tangible or
intangible) owned by GSI as of the date hereof, including, without limitation:
(i) all of the cash of GSI on hand or in bank or in other accounts of GSI, (ii)
all trade accounts receivable and other receivables of GSI, (iii) all of the
inventories of raw materials, work-in-process, finished products, scrap and
rejects, spare parts and supplies identified in Schedule 1 attached hereto,
except for the items sold after the date of such schedule in the ordinary course
of business of GSI; (iv) all machinery, apparatus, commercial tooling, equipment
and trade fixtures identified in Schedule 2 attached hereto; (v) all office
furniture and fixtures identified in Schedule 3 attached hereto; (vi) all of
GSI's leasehold improvements located at the premises occupied by GSI at 11135
and 00000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx and identified in Schedule
4 attached hereto; (vii) the goodwill incident to the business of GSI; (viii)
all records of the Business including, without limitation, property, production,
engineering, contract and accounting records, sales data and records, customer
lists and other information relating to customers, catalogs, brochures,
suppliers' names, mailing lists and any photographic and advertising materials;
(ix) all rights in, to and under all Contracts, including purchase and sales
orders and commitments, personal property leases and other agreements made in
the ordinary course of business, including, without limitation, those set forth
in Schedule 5 attached hereto; and (x) all of GSI's right, title and interest in
and to all copyrights, service marks, trademarks, logos, trade names (including
the name "Ground Support, Inc."), patents, patent applications, licenses
(including patent licenses) royalty rights and inventions, processes, know-how,
formulae, trade secrets,
1.4(a)-l
compositions, designs, drawings, specifications, patterns, blueprints, plans,
files, notebooks and records relating to research, engineering and development
activities, production data and shop rights, including, without limitation, the
items set forth in Schedule 6 attached hereto.
EXCEPT AS SET FORTH HEREIN AND IN SECTION 2 OF THE AGREEMENT, THE
ASSETS HAVE BEEN EXAMINED BY BUYER AND ARE CONVEYED BY GSI TO BUYER "AS IS" AND
"WHERE IS" AND GSI HEREBY EXPRESSLY DISCLAIMS THE EXISTENCE OF ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO CONDITION, MERCHANTABILITY,
OPERATION, FITNESS FOR USE OR AS TO ANY MATTER WHATSOEVER.
Subject to the terms and conditions of the Agreement, GSI hereby
constitutes and appoints Buyer and its successors and assigns as GSI's true and
lawful attorney and stead, on behalf of and for the benefit of Buyer, its
successors and assigns, to demand and receive any and all of the Assets and to
give receipts and releases for and in respect of the same and any part thereof,
and from time to time to institute and prosecute in GSI's name or otherwise for
the benefit of Buyer, its successors and assigns, any and all proceedings at
law, in equity or otherwise, which Buyer, its successors and assigns, may deem
proper for the collection or reduction to possession of any of the Assets or
Assumed Liabilities or for the collection and enforcement of any claim or right
of any kind hereby sold, conveyed, transferred, assigned and delivered, or
intended so to be, and to do all acts and things in relation to the Assets and
Assumed Liabilities that Buyer, its successors and assigns, shall deem
desirable; GSI hereby declaring that the foregoing powers are coupled with an
interest and are not and shall not be revocable by GSI in any manner for any
reason whatsoever.
From time to time after the date hereof, at the request of Buyer,
GSI shall, without consideration, deliver such further instruments of transfer
and shall take such other action as Buyer may reasonably request in order to
convey more effectively any of the Assets transferred hereunder to Buyer.
This Xxxx of Sale may be assigned and a security interest in this
Xxxx of Sale may be granted by Buyer and may be enforced by any financial
institution or other entity providing financing to Buyer for the transactions
contemplated herein.
This Xxxx of Sale is executed and delivered by GSI pursuant to the
Agreement and shall be binding upon GSI, its successors and assigns for the uses
and purposes above set
1.4(a)-2
forth and referred to, effective on the date first written above.
1.4(a)-3
IN WITNESS WHEREOF, GSI has executed this Xxxx of Sale on the day
and year first written above.
GROUND SUPPORT, INC.,
a California corporation
By:
-----------------------------
Title:
----------------------
1.4(a)-4
STATE OF NEW YORK )
) ss:
COUNTY OF KINGS )
On October __, 1992, before me, the undersigned a Notary Public in
and for said County and State, personally appeared __________________________,
known or proved to me on the basis of satisfactory evidence to be the
_______________ of the corporation that executed the within instrument, and
known to me to be the person who executed the within instrument on behalf of the
corporation therein named, and acknowledged to me that, acting on behalf of such
corporation, he executed the same.
WITNESS my hand and official seal.
-----------------------------
Notary Public in and for said
County and State
1.4(a)-5
EXHIBIT 1.5(b)
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Assumption Agreement") is made as
of the 26th day of October, 1992, by RBC TRANSPORT DYNAMICS CORPORATION, a
Delaware corporation ("Buyer").
R E C I T A L S:
A. Buyer, Roller Bearing Holding Company, Inc., a Delaware
corporation, BFM Aerospace Corporation, a Delaware corporation, and Ground
Support, Inc., a California corporation ("GSI"), have entered into that certain
Asset Purchase Agreement, dated as of the date hereof (the "Agreement")
B. Pursuant to the Agreement, Buyer has agreed to assume certain of
the debts, obligations, liabilities and claims of GSI as of the date hereof.
C. All capitalized terms used herein without definition shall have
the meanings given to them in the Agreement
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer agrees as follows:
Section 1. Assumption of Liabilities.
Buyer hereby assumes as of the date hereof and shall hereafter
perform and discharge the following and only the following debts, obligations
and liabilities of and claims against GSI: (i) all agreements, contracts,
commitments, purchase orders, personal property leases and sales orders relating
to the Business, including, without limitation, those items identified in
Schedule 1 attached hereto; (ii) all debts, obligations, liabilities and claims
identified in Schedule 2 attached hereto to the extent set forth therein; (iii)
all debts, liabilities, obligations and claims arising from the operation of the
Business after the date hereof; and (iv) all claims made after the date hereof
for breach of warranty or product liability arising out of products shipped by
Buyer after the date hereof with respect to which Buyer is unable to provide to
GSI written or other reasonable evidence that such products were manufactured by
GSI and constituted finished goods on or prior to the date hereof.
1.5(b)-l
Section 2. Governing Law.
This Assumption Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.
Section 3. Construction.
This Assumption Agreement is subject to the terms and conditions of
the Agreement and, notwithstanding anything contained herein to the contrary,
this Assumption Agreement shall not be deemed to limit, enlarge or extinguish
any obligation of GSI, Buyer or the other parties to the Agreement under the
Agreement, all of which obligations shall survive the execution and delivery of
this Agreement in accordance with the terms of the Agreement.
1.5(b)-2
IN WITNESS WHEREOF, Buyer has duly executed this Assumption
Agreement as of the day and year first set forth above.
RBC TRANSPORT DYNAMICS
CORPORATION,
a Delaware corporation
By:
-------------------------
Title:
----------------------
l.5(b)-3
SCHEDULE 1
Contracts
SCHEDULE 2
Other Assumed Liabilities
Schedule 1.1(a) (iii)
Inventories
AUGUST 31, 1992
($ IN 000'S)
GROUND SUPPORT
--------------
RAW MATERIAL --
WORK-IN-PROCESS $ 1,108
FINISHED GOODS --
RESERVES FOR INVENTORY
EVALUATION (28)
-------
TOTAL $ 1,080
=======
GSI-l
Schedule 1.1(a)(iv)
Machinery, Furniture and Leasehold Improvements
See attached lists. The cost of each item referenced to therein
reflects the original book cost.
GSI-2
This Schedule is also referenced
in Section 2.12 of the Purchase Agreement.
Schedule 1.1(a)(ix)
Contracts
1. The following Purchase Order agreements from customers:
Order Contract
Customer Date in 000's Ship Date
-------- ---- -------- ---------
United Air Lines 5-92 $ 143 10-92
United Airlines 6-92 137 10-92
Qantas 8-92 129 11-92
Xxxxx AFB 8-92 433 1-93
VIASA (SAISA) 8-92 350 10-93
BAE (AeroTech) 7-92 72 10-92
See Schedule 2.3 which schedule is incorporated herein by reference.
2. Distributor Agreements:
(a) Agreement with Aviation Parts & Support Corp. dated January 1, 1990
for sale of ground support equipment. Agreement is subject to
automatic one-year renewals.
(b) Agreements with AVIA Equipment Pte. Ltd. dated January 1, 1991 for
sale of ground support equipment. Agreement expires December 31,
1991 and, thereafter, is subject to automatic one-year renewals.
(c) Agreement with AeroTech World Trade Corp. dated June 5, 1991, for
sale of mobile and fixed pre-conditioned air equipment.
(d) Agreement with Mudira Internacional dated June 10, 1991, for sale of
mobile and fixed pre-conditioned air equipment, solid state power
converters and pantographs.
(e) Agreement with AviaTech Ltd. dated January 1, 1991, for sale of
mobile and fixed pre-conditioned air equipment, pantographs and
cables.
(f) Agreement with S&S Motors dated October 26, 1990 for sale of ground
support equipment.
GSI-3
Schedule 1.1(a)(ix) (continued)
(g) Agreement with SAISA (U.S.A.) dated February 1, 1992 for sale of
ground support equipment.
3. Union agreements:
(a) Union Agreement dated June 1, 1989 between GSI and District 720
International Association of Machinists & Aerospace Workers.
(Agreement expired May 31, 1992. The employees have continued to
work without an agreement and the parties are attempting to
negotiate a new contract.]
(b) Union Agreement dated September 1, 1991 between GSI and United
Association of Journeymen and Apprentices of the Plumbing and Pipe
Fitting Industry, Air-Conditioning and Refrigeration Fitters
Division of Local Union 250, AFL-CIO. Agreement expires August 31,
1994.
4. Lease Agreement between TDC and Xerox Corporation for lease of copying
equipment at GSI facilities. Lease expires in October of 1993.
TDC and GSI
1. Compensation Agreements:
(a) Letter Agreement dated March 14, 1990 regarding payment to Xxxxx
Xxxx of Deferred Bonus.
(b) Letter dated April 10, 1992 regarding proposals for the 1992 Key
Employee Incentive Bonus Program.
2. Security Maintenance Agreement dated July 19g1991 between Sea Coast
Security System and TDC. Security Agreement expires June 30, 1994.
3. Equipment Maintenance and Service Agreement dated October 1,
1991 between MS-COM Telecommunications and TDC.
4. Maintenance Agreement dated June 15, 1987 between IDEA Servcom and TDC.
This agreement is terminable by either party to the agreement upon 90 days
prior written notice.
5. Personal Property Leases:
(a) Vehicle lease agreements between TDC and McCullagh-Gelco for the use
of seven company vehicles by TDC's
GSI-4
Schedule 1.l(a)(ix) (continued)
president and field sales personnel. Leases have various expiration
dates.
(b) Lease agreement between TDC and G. E. Capital Business Center for
lease of ROLM VXCBX telephone system. Lease expires December 31,
1992.
GSI-5
This Schedule is also referenced in
Section 2.10 of the Purchase Agreement.
Schedule 1.1(a)(x)
Patent and Trademark Rights
U.S. Patents
-------------
U.S. Patent No. Issue Date Title
--------------- ---------- -----
No. 4,272,967 June 16, 1981 Self-contained
Portable Air-
Conditioning
System
No. 5,031,690 July 16, 1991 Portable
Unitary
Aircraft Air-
Conditioner
GSI-6
Schedule 1.1(b)
Assumed Liabilities
1. Workers' compensation liabilities accrued on the balance sheet of TDC as
of the date hereof (the "Balance Sheet"), which, as of August 31, 1992,
were $3,000.
2. All Employee Plans listed on Schedule 2.14.
3. Xxxxx Xxxx'x deferred compensation pursuant to that certain Deferred Bonus
Agreement dated March 14, 1990 (approximately $43,000).
4. Fifty percent of the amount of the liability, if any, for severance
payments or termination benefits owing to Xxxxx X. Xxxx pursuant to that
certain Termination Benefits Agreement dated January 31, 1990.
5. Liability for benefit payments under the Severance Policy on account of
the termination of any Transferred Employee occurring on or after the
Closing.
6. The Contracts (as defined in Section 1.1(a)(ix) of the Agreement).
7. Trade accounts payable accrued on the Balance Sheet, which, as of August
31, 1992, were $38,000.
8. Accrued payroll as accrued on the Balance Sheet, which, as of August 31,
1992, was $7,000.
9. Accrued payroll taxes and property taxes as accrued on the Balance Sheet,
which, as of August 31, 1992, were $10,000.
10. The leases as set forth in Schedule 2.11, other than the lease agreement
described in Schedule 1.1(a).
11. Product warranties for products shipped by Buyer after the date hereof
with respect to which Buyer is unable to provide to TDC written or other
reasonable evidence that such products were manufactured by TDC and
constituted finished goods on or prior to the date hereof.
12. Vacation, holiday and sick leave accruals on the Balance Sheet, which, as
of August 31, 1992, were $69,000.
13. Bonuses accrued on the Balance Sheet, if any, with respect to the Employee
Incentive Bonus Proposal dated April 10, 1992, which, as of August 31,
1992, were zero.
GSI-7
14. Any other liabilities on the Balance Sheet not listed herein, which, as of
August 31, 1992, were approximately $21,000.
GSI-8
Schedule 2.2
No Conflict
The terms of the lease between GSI and Xerox Corporation ("Xerox"), require the
prior written consent of Xerox in connection with the assignment of such lease
by GSI. GSI has undertaken to obtain such consent, which Xerox has informed GSI
will be forthcoming.
GSI-9
Schedule 2.3
Government Consents and Approvals
A novation agreement, in accordance with Federal Acquisition Regulations System
subpart 42.12, is required on the following Government Contracts:
Open U.S. Government Contracts as of September 30, 1992
Dept. of the Air Force
F41608-92-C-1259 Xxxxx AFB
Defense Logistics Agency, Richmond, VA
DLA430-92-M-H232
Defense General Supply Center, Richmond, VA
DLA 430-92-M-M418
DLA 441-92-M-P575
Navy Ships Parts Control Center, Mechanicsburg, PA
N00104-92-P-AL40
GSI-l0
Schedule 2.5
Encumbrances
None.
GSI-11
Schedule 2.8
Taxes
Federal income tax returns of BFM have not been audited. California income tax
returns of BFM have been audited through October 31, 1989.
Sales tax returns have been audited through calendar year 1990. Property tax
statements have been audited for the 1992-93 tax year.
GSI-12
Schedule 2.10
Disclosure Regarding Patents
and Trademark Rights
A. A producer of ground support central air-conditioning systems has been
issued a patent regarding the cooling of air to a temperature below the freezing
point of water for delivery to passenger air-crafts. Two other manufacturers of
ground air-conditioning equipment have settled patent infringement actions
brought by the patent holder.
Although GSI manufactures air-conditioning systems, it does not
manufacture products that generate air below the freezing point of water. For
that reason, GSI believes that it will not be served with an action regarding
that patent.
B. None.
GSI-13
This Schedule is also referenced in Section 2.12
of the Purchase Agreement.
Schedule 2.11
Leases
1. Lease agreement dated February 1, 1992 between TDC and Condor Associates,
Ltd. for lease of GSI facilities at 11135 and 00000 Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx, Xxxxxxxxxx. Lease expires July 31, 1993.
2. Lease Agreement between TDC and Xerox Corporation for lease of copying
equipment at GSI facilities. Lease expires in October of 1993.
TDC and GSI
1. Vehicle lease agreements between TDC and McCullagh-Gelco for the use of
seven company vehicles by TDC's president and field sales personnel.
Leases have various expiration dates.
2. Lease agreement between TDC and G. E. Capital Business Center for lease of
ROLM VXCBX telephone system. Lease expires December 31, 1992.
GSI-14
Schedule 2.12
(Contracts and Commitments)
1. Severance policy.
2. Documents executed by GSI in connection with BFM's Credit Agreement with
Xxxxx Fargo.
GSI-15
Schedule 2.14
Employee Benefit Plans
A. Employee Plans
1. Medical Benefit Plans for Salaried Employees:
(a) Blue Cross Prudent Buyer Plan;
(b) Pacificare HMO (for I.A.M. Union Hourly Employees only);
(C) Blue Cross California Care HMO; and
(d) Blue Cross Out-of-State Plan.
2. Dental Benefit Plans for Salaried and Hourly Employees:
(a) Confederation Life;
(b) Denticare HMO; and
(c) Dental Net HMO.
B. Multi-Employer Plans
1. I.A.M. National Pension Fund Trust Agreement.
2. Vision Care Plan for I.A.M. Union Employees.
3. Air-Conditioning and Refrigeration Industry Retirement Trust Fund.
4. Air-Conditioning and Refrigeration Industry Health and Welfare Trust
Fund.
GSI-16
Schedule 2.16
Labor Relations; Employees
The Union Agreement dated June 1, 1989 between GSI and District 720
International Association of Machinists and Aerospace Workers expired May 31,
1992. The employees have continued to work without an agreement and the parties
are attempting to negotiate a new contract.
GSI-17
Schedule 2.17
Permits and Licenses
1. City of Fountain Valley
Business License Certificate #67-850688A
Hazardous Material Disclosure #6696
2. South Coast Air Quality
Management District
Spray Booth Paint and Solvent #D37989
3. State Board of Equalization
Hazardous Waste EPA
3CAD000039681
GSI-18
Schedule 3.4
Governmental Consents and Approvals (Buyer)
Consents required pursuant to the Federal Assignment of Contracts
Act, 41 U.S.C. Section 15, the Assignment of Claims Act, 31 U.S.C. Section 3727
(the "Statutes") and the regulations implementing the Statutes.
GSI-19
