<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended DECEMBER 25, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ___________ to
_____________
Commission file number: 333-33085
ROLLER BEARING COMPANY OF AMERICA, INC.
----------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3426227
-------- -----------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation)
60 ROUND HILL ROAD, FAIRFIELD, CT 06430
---------------------------------------
(Address of principal executive offices)
(Zip Code)
203-255-1511
------------
(Registrant's telephone number, including area code)
Indicate by check mark the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
preceding twelve (12) months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----------- -------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 4, 2000
------------------------------- ---------------------------------
Common stock, $.01 par value 100
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
INDEX
PAGE
Part I Financial Information
Item 1. Consolidated Balance Sheets
At December 25, 1999 (unaudited) and April 3, 1999 3
Consolidated Statements of
Operations - Three months and nine months ended
December 25, 1999 (unaudited) and December 26, 1998
(unaudited) 4
Consolidated Statements of Cash
Flows - Nine months ended December 25, 1999
and December 26, 1998 (unaudited) 5
Notes to Consolidated Financial Statements 6 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
Part II Other Information 14
Signatures 15
Exhibit 27 16
2
<PAGE>
PART I
ITEM 1. FINANCIAL INFORMATION
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 25, APRIL 3,
1999 1999
------------ ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,534 $ 291
Accounts receivable, net 25,162 26,693
Inventories 61,962 44,939
Prepaid expenses and other current assets 4,809 2,098
--------- ---------
Total current assets 95,467 74,021
--------- ---------
Property, plant and equipment, net of accumulated depreciation
of $38,559 at December 25, 1999 and $33,718 at April 3, 1999 57,892 49,309
Restricted marketable securities 4,811 5,118
Goodwill, net of accumulated amortization of $4,822 at
December 25, 1999 and $4,221 at April 3, 1999 26,952 27,553
Deferred financing costs, net of accumulated amortization
of $2,459 at December 25, 1999 and $1,735 at April 3, 1999 5,822 6,344
Other assets 2,535 2,474
--------- ---------
Total assets $ 193,479 $ 164,819
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 11,746 $ 11,214
Accrued expenses and other current liabilities 17,081 13,655
Current portion of long-term debt 17,000 10,500
Obligations under capital leases, current portion 850 1,208
--------- ---------
Total current liabilities 46,677 36,577
Long term debt 144,983 134,575
Capital lease obligations, less current portion 1,516 1,635
Other noncurrent liabilities 6,158 3,059
--------- ---------
Total liabilities 199,334 175,846
--------- ---------
Stockholder's equity (deficit):
Common stock - $.01 par value; 1,000 shares
authorized; issued and outstanding shares:
100 shares at December 25, 1999 and at April 3, 1999 -- --
Additional paid-in capital (759) (759)
Stock warrants 6,600 6,600
Retained earnings (deficit) (11,696) (16,868)
--------- ---------
Total stockholder's (deficit) (5,855) (11,027)
Total liabilities and stockholder's (deficit) $ 193,479 $ 164,819
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- -------------------------
DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 41,326 $ 34,063 $125,525 $107,544
Cost of sales 28,164 23,804 87,117 75,744
-------- -------- -------- --------
Gross margin 13,162 10,259 38,408 31,800
Operating expenses:
Selling, general and administrative 6,467 5,714 18,152 16,627
Other expense, net of other income 186 177 509 514
-------- -------- -------- --------
6,653 5,891 18,661 17,141
Operating income 6,509 4,368 19,747 14,659
Interest expense, net 3,838 3,663 10,981 10,854
-------- -------- -------- --------
Income before taxes 2,671 705 8,766 3,805
Income tax expense 1,095 289 3,594 1,560
-------- -------- -------- --------
Net income $ 1,576 $ 416 $ 5,172 $ 2,245
======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 25, DECEMBER 26,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,172 $ 2,245
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 6,390 6,210
Deferred income taxes -- (428)
Amortization of goodwill 601 601
Amortization of deferred financing costs 724 736
Changes in working capital, net of acquisition:
(Increase) decrease in accounts receivable 5,744 4,835
(Increase) decrease in inventories (6,440) (7,146)
(Increase) decrease in prepaid expenses & other current assets 267 (69)
(Increase) decrease in other non current assets (260) (188)
Increase (decrease) in accounts payable 697 (2,243)
Increase (decrease) in accrued expenses & other current liabilities (2,709) (3,177)
Increase (decrease) in other non-current liabilities -- (159)
-------- --------
Net cash provided by operating activities 10,186 1,217
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of subsidiaries (12,055) (11,088)
Purchase of property, plant & equipment, net (3,867) (7,806)
Sale of restricted marketable securities (4,800) (3,000)
Purchase of restricted marketable securities 5,107 993
-------- --------
Net cash used in investing activities (15,615) (20,901)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in revolving credit facility 6,000 10,500
Issuance of Industrial Revenue Bonds 4,800 3,000
Payments of bank term loan (1,250) (875)
Principal payments on capital lease obligations (878) (840)
-------- --------
Net cash provided by financing activities 8,672 11,785
Net increase (decrease) in cash 3,243 (7,899)
Cash, at beginning of year 291 10,625
-------- --------
Cash, at end of period $ 3,534 $ 2,726
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 13,235 $ 12,691
======== ========
Income taxes $ 421 $ 1,211
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The consolidated financial statements included herein have been prepared by
Roller Bearing Company of America, Inc. (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. The
fiscal year end balance sheet data was derived from the Company's audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. The interim financial statements furnished with
this report have been prepared on a consistent basis with the Company's audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended April 3, 1999 (the "Form 10-K"). These
statements reflect all adjustments, consisting only of items of a normal
recurring nature, which are, in the opinion of management, necessary for the
fair statement of the consolidated financial condition and consolidated results
of operations for the interim periods presented. These financial statements
should be read in conjunction with the Company's audited financial statements
and notes thereto included in the Form 10-K.
The results of operations for the three month and nine month periods ended
December 25, 1999 are not necessarily indicative of the operating results for
the full year.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Industrial Tectonics Bearings Corporation
("ITB"), RBC Linear Precision Products ("LPP"), RBC Nice Bearings, Inc.
("Nice"), Bremen Bearings, Inc. ("Bremen"), Miller Bearings, Inc. ("Miller"),
Tyson Bearings, Inc. ("Tyson"), RBC Schaublin SA ("Schaublin") and Roller
Bearing Company FSC, Inc. ("FSC"). All material intercompany balances and
transactions have been eliminated.
All references to "Holdings" refer to Roller Bearing Holding Company, Inc., a
Delaware corporation, and the parent and sole stockholder of the Company.
1. ACQUISITION OF WHOLLY OWNED SUBSIDIARIES
On December 27, 1999, Schaublin, a wholly-owned subsidiary of the Company,
completed an asset and stock purchase of Schaublin SA, a manufacturer of collets
and bearings whose principal operations are located in Delemont, Switzerland.
The acquisition was economically effective as of January 1, 1999. The earnings
of Schaublin for the period from January 1, 1999 through September 30, 1999
effectively reduced the aggregate purchase price for the acquisition to
14,450,000 Swiss Francs ("CHF"), or approximately $9,088. The results of
operations of Schaublin for the period commencing October 1, 1999 are included
in the results of operations of the Company.
On June 11, 1999, Tyson, a wholly-owned subsidiary of the Company, completed the
acquisition of certain assets of SKF USA, Inc.'s taper roller bearing operations
whose principal operations are located in Glasgow, Kentucky. The aggregate
purchase price for the acquisition, which was effective as of April 1, 1999, was
$10,200 plus the assumption of certain selected liabilities. The acquisition was
accounted for under the purchase method of accounting.
On June 3, 1998, Miller completed the acquisition of the assets of Miller
Bearing Company, Inc. ("MBC"), a manufacturer of pins, rollers and screw machine
products with facilities in Bremen, Indiana. The aggregate purchase price for
the acquisition, which was effective as of March 1, 1998, was approximately
$11,088. The acquisition was accounted for under the purchase method of
accounting, resulting in approximately $2,139 allocable to tangible assets and
$8,949 of excess of purchase price over net assets acquired allocable to
goodwill.
6
<PAGE>
The results of operations of Miller and Tyson subsequent to the respective
effective dates of acquisition are included in the results of operations of the
Company. Therefore, the results of the Company for the nine months ended
December 25, 1999 include Miller and Tyson results for the entire three month
and nine month periods, respectively. The results of operations of Schaublin
subsequent to September 30, 1999 are included in the results of operations of
the Company. Pro forma results for the Company, as if the Schaublin operation
were included for the entire fiscal year are as follows:
<TABLE>
<CAPTION>
------------------------------- ----------------------------------------------------------
NINE MONTHS ENDED DECEMBER 25, 1999
------------------------------- ----------------------------------------------------------
AS REPORTED SCHAUBLIN PRO FORMA
4/1 - 9/30/99
------------------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C>
Net Sales $125,525 $9,187 $134,712
------------------------------- ------------------- ------------------ -------------------
Operating Income $ 19,747 $1,119 $ 20,866
------------------------------- ------------------- ------------------ -------------------
Net Income $ 5,172 $1,065 $ 6,237
------------------------------- ------------------- ------------------ -------------------
</TABLE>
2. DEBT
On June 23, 1997, pursuant to a Redemption and Warrant Purchase Agreement dated
May 20, 1997, Holdings effected a recapitalization of its outstanding capital
stock (including the financing and other transactions consummated by Holdings,
the Company and its subsidiaries in connection therewith, the
"Recapitalization"). In connection with the financing of the Recapitalization,
the Company issued $110,000 aggregate principal amount of 9 5/8% Senior
Subordinated Notes due 2007 (the "Notes"). The Notes pay interest semiannually
and mature on June 15, 2007, but may be redeemed at the Company's option
beginning on June 15, 2002, or earlier under certain conditions specified in the
indenture pursuant to which the Notes were issued (the "Indenture"). The Notes
are unsecured and subordinated to all existing and future Senior Indebtedness
(as defined in the Indenture) of the Company. The Notes are fully and
unconditionally and irrevocably guaranteed, jointly and severally, on a senior
subordinated basis by each of the wholly owned subsidiaries of the Company.
The separate financial statements of the subsidiary guarantors have not been
presented because management has determined that they would not be material to
investors. However, the summarized combined financial information of the
subsidiary guarantors are as follows:
<TABLE>
<CAPTION>
AS OF
------------------------- ------------------
DECEMBER 25, APRIL 3,
1999 1999
Balance Sheet Data: ------------------------ ------------------
<S> <C> <C>
Current assets $42,587 $27,475
Noncurrent assets 39,734 34,825
------- -------
Total assets $82,321 $62,300
======= =======
Current liabilities $46,913 $42,129
Noncurrent liabilities 4,241 4,207
------- -------
Total liabilities $51,154 $46,336
------- -------
Stockholder's equity $31,167 $15,964
======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------ ---------------------
DECEMBER 25, DECEMBER 26,
1998 1999
Operating Results: -------------------------- ----------------------
<S> <C> <C>
Net sales $45,323 $32,921
Gross margin $10,071 $ 7,602
Net income $ 4,171 $ 2,738
</TABLE>
7
<PAGE>
Total current liabilities include intercompany liabilities of $22,700 and
$26,717 as of December 25, 1999 and April 3, 1999, respectively. Net income
includes a provision for income taxes of $4,092 and $1,902 in fiscal years 2000
and 1999, respectively.
In addition, in connection with the Recapitalization, the Company entered into
bank credit facilities (the "Senior Credit Facilities") with a group of lenders
providing for $16,000 of term loans (the "Term Loans") and up to $54,000 of
revolving credit loans and letters of credit (the "Revolving Credit Facility").
Approximately $18,600 of the Revolving Credit Facility is being utilized to
provide letters of credit to secure the Company's obligations relating to
certain Industrial Development Revenue Bonds. As of December 25, 1999, the
Company had the ability to borrow up to an additional $21,900 under the
Revolving Credit Facility.
In addition, in connection with the purchase of Schaublin, the Company entered
into a bank credit facility (the "Swiss Credit Facility) with Credit Suisse
providing for 10,000,000 CHF, or approximately $6,289 of term loans (the "Swiss
Term Loans") and up to 1,000,000 CHF, or approximately $628, of revolving credit
loans and letters of credit (the "Swiss Revolving Credit Facility"). Also in
connection with the purchase of Schaublin, the Company entered into a two-year
term loan (the "Schaublin Loan") with the Seller for 1,700,000 CHF, or
approximately $1,069.
8
<PAGE>
The balances payable under all borrowing facilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 25, APRIL 3,
1999 1999
-------------------- -----------------
<S> <C> <C>
SENIOR SUBORDINATED NOTES PAYABLE $ 110,000 $ 110,000
CREDIT FACILITY
Term Loan, payable in quarterly installments of $250,
commencing December 30, 1997, increasing annually thereafter to $1,375 from
December 20, 2001 with final payment due June 30, 2002; bears interest at
variable rates, payable monthly and quarterly for prime and LIBOR-based
elections, respectively
12,625 13,875
Revolving Credit Facility borrowings outstanding 13,500 7,500
SWISS CREDIT FACILITY
Term Loan, payable in quarterly installments of approximately
$314, commencing March 2001, increasing thereafter to
approximately $471 from March 2004; bears interest at variable
rates, payable quarterly 6,289 --
SCHAUBLIN NOTE
Term Loan, payable in two annual installments; approximately
$441 due December, 2000 and approximately $628 due December, 2001, bears
interest at 6% 1,069 --
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Series 1994 A due in annual installments of $180 beginning December 1, 2006,
graduating to $815 on December 1, 2014 with final payment due on December 1,
2017; bears interest at a variable rate, payable monthly through December 2017
7,700 7,700
Series 1994 B; bears interest at a variable rate, payable monthly through
December 2017 3,000 3,000
Series 1998 tax-exempt industrial development bonds; bearing interest at
variable rates, payable monthly through December 2021 3,000 3,000
Series 1999 tax-exempt industrial development bonds; bearing
interest at variable rates, payable monthly through April, 2024 4,800 --
------- --------
Total debt 161,983 145,075
Less: current portion 17,000 10,500
------ -------
Long term debt $144,983 $134,575
======== ========
The debt agreements require that the Company meet certain financial covenants, principally limiting the
incurrence of additional indebtedness, the payment of dividends, and certain other transactions.
</TABLE>
9
<PAGE>
RECENTLY ISSUED PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is required
to be adopted in years beginning after June 15, 2000. Because of the Company's
minimal exposure to the use of derivatives, management does not anticipate that
the adoption of the new statement will have a significant effect on earnings or
the financial position of the Company.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for the historical information and current statements contained in this
Quarterly Report on Form 10-Q, certain matters discussed herein, including,
without limitation, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" are forward looking statements that involve risks and
uncertainties, including, without limitation, the effect of economic and market
conditions and competition, the cyclical nature of the Company's target markets,
particularly, the aerospace industry, the cost of raw materials and the
Company's ability to pass cost increases to its customers, the reliance of the
Company on certain customers, the ability of the Company to expand into new
markets and the ability of the Company to integrate acquisitions and other
factors discussed from time to time in the reports filed by the Company with the
Securities and Exchange Commission, which could cause actual results to differ
materially.
The following discussion addresses the financial condition of the Company as of
December 25, 1999 and the results of its operations for the three and nine month
periods ended December 25, 1999, compared to the comparable periods last year.
The discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations for the fiscal year
ended April 3, 1999 included in the Form 10-K.
THREE MONTHS ENDED DECEMBER 25, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER 26,
1998
Net sales for the three months ended December 25, 1999 were $41.3 million, an
increase of $7.3 million or 21.3% over the three months ended December 26, 1998.
Net sales included sales totaling $4.8 million from Tyson, acquired effective
April 1, 1999 and $3.7 million from Schaublin, whose results of operations are
included in the results of operations of the Company as of October 1, 1999. Net
sales decreased $1.2 million or 3.7% without Tyson and Schaublin sales. The
decrease in net sales is primarily attributed to cyclical factors in the
aerospace business, and softness in agriculture and construction businesses and
a major customer falling behind on contractually committed orders.
Gross margin increased by $2.9 million or 28.3% to $13.2 million for the three
months ended December 25, 1999, as compared to the comparable period last year.
Gross margin as a percentage of net sales increased 1.7%, from 30.1% for the
third quarter of fiscal 1999, to 31.8% in the third quarter of fiscal 2000.
Gross margin as a percentage of net sales increased 3.8% to 33.9% in the third
quarter of this year without Tyson or Schaublin results. The increase is
primarily the result of strategic pricing increases, better operational
performance through Kaizen management techniques and machine tool capital
enhancements.
Selling, general and administrative ("SG&A") expenses increased by $0.8 million
or 13.2% to $6.5 million for the three month period ended December 25, 1999, as
compared to the comparable period last year. The increase was primarily due to
additional expenses related to Tyson and Schaublin. SG&A as a percentage of net
sales decreased from 16.8% for the third quarter of fiscal 1999 to 15.6% for the
third quarter of fiscal 2000. The decrease of 1.2% is primarily due to the
Company's increased sales volume as a result of the inclusion of Tyson and
Schaublin sales.
Operating income increased by $2.1 million or 49.0% to $6.5 million for the
three months ended December 25, 1999, as compared to $4.4 million for the
corresponding period in the prior year. The increase primarily resulted from
higher gross margin and was partially offset by higher operating expenses.
Income before taxes increased for the third quarter to $2.7 million from $0.7
million for the same period last year as a result of higher operating income.
Net income for the current quarter reflects a tax provision of $1.1 million
compared to a tax provision of $0.3 million for the third quarter of fiscal
1999. Net income increased by $1.2 million to $1.6 million from $0.4 million for
the corresponding period last year.
11
<PAGE>
NINE MONTHS ENDED DECEMBER 25, 1999 COMPARED TO NINE MONTHS ENDED DECEMBER 26,
1998
Net sales for the nine months ended December 25, 1999 were $125.5 million, an
increase of $18.0 million or 16.7% over the nine months ended December 26, 1998.
Net sales included sales totaling $22.5 million from Tyson, acquired effective
April, 1999 and $3.7 million from Schaublin, whose results of operations are
included in the results of operations of the Company as of October 1, 1999. Net
sales decreased $8.2 million or 7.7% without Tyson and Schaublin sales. The
decrease in net sales is primarily attributed to cyclical factors in the
aerospace business, and softness in agriculture and construction businesses and
a major customer falling behind on contractually committed orders.
Gross margin increased by $6.6 million or 20.8% to $38.4 million for the nine
months ended December 25, 1999, as compared to the comparable period last year.
Gross margin as a percentage of net sales increased 1.0%, from 29.6% for the
first nine months of fiscal 1999, to 30.6% in the first nine months of fiscal
2000. Gross margin as a percentage of net sales increased 3.8% to 33.4% in the
first nine months of this year without Tyson or Schaublin results. These
increases are primarily the result of strategic pricing increases, better
operational performance through Kaizen management techniques and machine tool
capital enhancements.
Selling, general and administrative ("SG&A") expenses increased by $1.5 million
or 9.2% to $18.2 million for the nine month period ended December 25, 1999, as
compared to the comparable period last year. The increase was primarily due to
additional expenses related to Tyson and Schaublin. SG&A as a percentage of net
sales decreased from 15.5% for the first nine months of fiscal 1999 to 14.5% for
the first nine months of fiscal 2000. The decrease of 1.0% is primarily due to
the Company's increased sales volume as a result of the inclusion of Tyson and
Schaublin sales.
Operating income increased by $5.1 million or 34.7% to $19.7 million for the
nine months ended December 25, 1999, as compared to $14.7 million for the
corresponding period in the prior year. The increase primarily resulted from
higher gross margin and was partially offset by higher operating expenses.
Income before taxes increased for the nine month period ended December 25, 1999
to $8.8 million from $3.8 million for the same period last year as a result of
higher operating income.
Net income for the current nine months reflects a tax provision of $3.6 million
compared to a tax provision of $1.6 million for the first nine months of fiscal
1999. Net income increased by $3.0 million to $5.2 million from $2.2 million for
the corresponding period last year.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 25, 1999 was $48.8 million compared to $37.4 million
at April 3, 1999, an increase of $11.4 million. For the nine months ended
December 25, 1999, the Company provided cash of $10.2 million from operating
activities compared to $1.2 million for the comparable period last year. The
increase of $9.0 million is primarily the result of an increase in non-cash
working capital of $5.4 million, an increase in net income of $3.0 million, and
all other of $0.6 million.
Cash used for investing activities for the nine months ended December 25, 1999
was $15.6, million which included $10.2 million and $1.9 million for the
acquisitions of Tyson and Schaublin, respectively. Capital expenditures during
the first nine months of the fiscal year were $3.8 million . Sales of $4.8
million of industrial revenue bonds were placed in a trust account, and $5.1
million was remitted to the Company in connection with qualifying equipment
purchases.
The Company had net cash inflows from financing activities of $8.7 million
partially resulting from a draw down on its revolving credit facility of $6.0
million. Additionally, in April 1999, the Company issued $4.8 million in secured
industrial revenue bonds which are due in 2024, and which were used for
construction
12
<PAGE>
and purchase of building improvements, fixtures, machinery and equipment in for
a manufacturing facility of the Company. During the nine month period ended
December 25, 1999, the Company used $0.9 million of funds for capital lease
obligations.
Principal and interest payments under the Senior Credit Facilities, interest
payments on the Notes, the Swiss Credit Facility, the Schaublin noteand the
funding of acquisitions represent significant liquidity requirements for the
Company. With respect to the Term Loans, the Company is required to make
scheduled principal payments which commenced in December 1997. The Term Loans
bear interest at a floating rate based upon the interest rate option elected by
the Company. As a result of the indebtedness incurred in connection with the
Recapitalization, the Company's post-Recapitalization interest expense will be
higher and will have a greater proportionate impact on net income in comparison
to pre-Recapitalization periods. With respect to the Swiss Term Loans, the
Company is required to make scheduled principal payments which commence in March
2001. The Swiss Term Loans bear interest at a floating rate based upon the
interest rate option elected by the Company. The Schaublin note is payable in
two annual installments and bears interest at 6% per annum.
The Company believes that cash flows from operations and amounts available under
the Revolving Credit Facility will provide adequate funds for ongoing
operations, planned capital expenditures (including acquisitions) and debt
service payments for at least the next twelve months. The Company's ability to
borrow is limited by the terms of the Senior Credit Facilities and the Indenture
under which the Notes were issued.
YEAR 2000
The Company experienced no material problems with its information systems, or
those of its vendors, customers or financial institutions, as a result of the
date change to the Year 2000. The Company developed a detailed Year 2000
compliance plan, which was completed by November 1999, utilizing both internal
and external resources to ensure Year 2000 compliance. Costs related to this
conversion to date were approximately $0.3 million. The Company does not
anticipate expending any additional funds on Y2K related activities.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims and legal proceedings against the Company relating to
its operations in the normal course of business, none of which the Company
believes is material. The Company currently maintains insurance coverage for
product liability claims. There can be no assurance that indemnification from
its customers and coverage under insurance policies will be adequate to cover
any future product liability claims against the Company.
ITEMS 2, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Asset And Stock Purchase Agreement, dated as of December 17, 1999, by
and among Schaublin France SA, Schaublin USA Inc., Schaublin SA, Andrbc
Schaublin SA and RBD Schaublin SA.
10.2 Lease Agreement, dated as of December 17, 1999, between Schaublin SA
and RBC Schaublin SA.
10.3 Credit Agreement, dated as of December 27, 1999, between RBC Schaublin
S.A. Delemont and Credit Suisse.
27 Financial Data Schedule - filed herewith
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the undersigned
thereunto duly authorized.
ROLLER BEARING COMPANY OF AMERICA, INC.
February 4, 2000 By: /S/ MICHAEL J. HARTNETT
----------------------------------------
Michael J. Hartnett
President & Chief Executive Officer
Principal Executive Officer
February 4, 2000 By: /S/ ANTHONY S. CAVALIERI
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Anthony S. Cavalieri
Vice President & Chief Financial Officer
Principal Financial and Accounting Officer
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Exhibit 10.1
ASSET AND STOCK PURCHASE AGREEMENT
BY AND AMONG
SCHAUBLIN FRANCE SA,
SCHAUBLIN USA INC.,
SCHAUBLIN SA,
AND
RBC SCHAUBLIN SA
DATED AS OF DECEMBER 19, 1999
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TABLE OF CONTENTS
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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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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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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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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 SCHAUBLIN SA, 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 SCHAUBLIN SA, 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:
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Defined Term Section Page
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Accounting Principles 1.2 4
Affiliate 1.2 4
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Defined Term Section Page
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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
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Defined Term Section Page
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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) 24
Schaublin France Preface 1
Schaublin France Filing 2.10(b) 18
Schaublin USA Preface 1
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Defined Term Section Page
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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
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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,
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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: H.J. Meier, Charles Schaublin, Roland Hagenbuchle, Pierre
Mossiman, Christian Rey and David Atwood. With respect to Buyer, Knowledge shall
refer to the Knowledge of the following Persons: Michael Hartnett, Michael
Gostomski, Hans Rosner, Gregory Ceuch and Thomas King.
"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.
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"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;
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(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
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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;
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(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 Baker & McKenzie 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:
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(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
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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
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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
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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;
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(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 Baker & McKenzie, 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 bill 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 Charles
Schaublin 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
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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 bill 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;
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(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
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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
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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
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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:
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(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;
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(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, 22 rue Gustave-Eiffel, Poissy Cedex and
575 Madison Avenue, Warminster, Pennsylvania (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
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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
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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
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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
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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
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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 Schaublin
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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
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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,
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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,
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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
Schaublin SA" 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 Schaublin SA" 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 Schaublin SA" 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 Schaublin SA" 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 Schaublin SA" 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
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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 mark,
brand mark 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 Dr. Matthias U. Jermann, 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 Dr. Matthias U. Jermann.
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
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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.
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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.
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(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
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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 Bechler SA 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,
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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
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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
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Fabrique de machines Schaublin SA" and the "Caisse de retraite et de prevoyance
de Schaublin SA" 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 Schaublin SA" or the "Caisse
de retraite et de prevoyance de Schaublin SA". 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
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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 billings 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 WWW.SCHAUBLIN.CH 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.
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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
Charles Schaublin 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
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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
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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
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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
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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
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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.
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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:
Schaublin SA
Rue Principale 2 - 4
2735 Bevilard
If to Buyer:
c/o Roller Bearing Company of America, Inc.
60 Round Hill Road
Fairfield, Connecticut 06430
Attn: Michael Gostomski
Telecopier No.: 203-256-0775
with a copy (which shall not constitute notice) to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attn: C. David Goldman, Esq.
Telecopier No.: 212-547-5444
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
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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
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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.
57
<PAGE>
(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).
58
<PAGE>
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.
59
<PAGE>
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 SCHAUBLIN SA
By: /s/ Michael S. Gostomski
-------------------------------
Name: Michael S. Gostomski
Title: Executive Vice President
SELLERS:
SCHAUBLIN S.A.
By: /s/ Dr. Matthias V. Jermann
-------------------------------
Name:
Title:
SCHAUBLIN FRANCE SA
By: /s/ Dr. Matthias V. Jermann
-------------------------------
Name:
Title:
SCHAUBLIN USA INC.
By: /s/ Dr. Matthias V. Jermann
-------------------------------
Name:
Title:
60
<PAGE>
SCHEDULE 2.1(b)
RBC Nice Bearings, Inc.
RBC France SAS
<PAGE>
Exhibit 10.2
LEASE AGREEMENT
between
SCHAUBLIN SA
Rue Principale 2-4
2735 Bevilard
(hereinafter the "Lessor")
and
RBC SCHAUBLIN SA
Rue de la Blancherie 9
2800 Delemont
(hereinafter the "Lessee")
(hereinafter together the "Parties/Party")
regarding
THE SITE ON RUE DE LA BLANCHERIE 9, IN 2800 DELeMONT
(hereinafter the "Lease Agreement")
1. LEASE OBJECT
The "Lease Object" are the entire premises of Schaublin SA at Rue de la
Blancherie 9, in 2800 Del6mont, including all manufacturing and offices
facilities and all park fields. (A site map is enclosed as Appendix 1 hereto.)
2. TERM OF THE LEASE
The lease shall start on December 13, 1999 for a fix initial term until 31.
December 2009.
3. OPTIONS
Lessee shall have two options to extend this Lease Agreement for two terms of
five years each.
Lessee shall give written notice to Lessor of the use of such option twelve
months in advance. Therefore Lessee shall notify Lessor by December 31, 2008 if
Lessee wants to make use of its first option and Lessee shall notify Lessor by
December 31, 2013 Lessee wants to make use of its second option.
<PAGE>
4. REGISTRATION
Lessor herewith consents that Lessee will register (vormerken) this Lease
Agreement in accordance with art. 216 III OR, 261 (b) OR and 959 ZGB.
5. LEASE
The annual lease for the Lease Object shall be:
<TABLE>
<CAPTION>
Calendar Year Amount In CHF
- ------------ -------------
<S> <C>
2000 800'000
2001 822'000
2002 844'500
2003 866'500
2004 989'000
2005 911'500
2006 933'500
2007 956'000
2008 978'500
2009 1'000'000
</TABLE>
The above amounts do not include VAT.
The lease shall be paid in quarterly installment. The installments shall be due
monthly in advance.
The lease for the time period as of December 13, 1999 until December 31, 1999
shall be free of charge for Lessee.
There is not deposit to be paid for the lease. Clause 11 of Appendix 2 shall not
be applicable.
6. MODIFICATION OF LEASE
The lease applicable for the term of the options according to clause 3
hereinabove shall be mutually agreed by the Parties. Clause 6 of Appendix 2
shall not apply. There is no reserve according to clause 17 of Appendix 2.
7. RIGHT OF FIRST REFUSAL
The Lessee shall have the first right to purchase the Lease Object. Lessor shall
not sell the Lease Object prior to notify its intention to sell to Lessee. Such
notification shall name the purchase price. If Lessee, within thirty days after
having been notified, does not declare his intention to buy the Lease Object,
Lessor may sell the Lease Object within one year after notification to Lessee,
however, for a price not lower than the price notified to Lessee. If Lessee does
not answer to a notification received from Lessor, this shall be deemed to be a
refusal to buy the Lease Object.
2
<PAGE>
The same right of first refusal shall apply if Lessor intends to assign the
Lease Object free of charge. However, Lessee shall not be entitled to obtain the
Lease Object free of charge. In such case, the purchase price for the Lease
Object shall either be mutually agreed between the parties or by a third party
mutually agreed by the parties or, in the absence of such agreement, by a third
party to be designated by the president of the Swiss association of owners of
real estate (Schweizerischer Hauseigentumer Verband).
8. ADDITIONAL COST ACCORDING TO CLAUSE 5 OF APPENDIX 2
Lessee shall pay the cost for electricity directly.
For all other additional cost according to clause 5 of Appendix 2, Lessee shall
pay to Lessor an amount of CHF 17'000.-- monthly in advance.
Lessor shall make yearly accounts on such additional cost and submit it to
Lessee for review. Lessee shall be entitled to audit such accounts. The balance
resulting of the accounts as approved by the parties shall be paid by the owing
party within 20 days after approval of such accounts.
9. TAKE OVER PROTOCOL AND MODIFICATIONS OF THE LEASE OBJECT
The Parties agree to set up a take over protocol for the Lease Object during
January 2000.
Lessee shall have no obligations to put the Lease Object back into original
condition when handing the Lease Object back to the Lessor upon termination of
this Lease Agreement and clause 8.2.2 of Appendix 2 shall not apply. Lessee
shall only be obliged to remove all machinery and equipment and all furniture
and computer installations from the Lease Object and to hand over the Lease
Object empty, and reasonably clean (besenrein). Lessor is aware of the fact that
upon termination of the Lease Agreement and upon moving out there will be major
reconstruction and redecoration work to be performed.
The Lease Object can be used for all activities of Lessee. Lessor, however,
shall not be under any obligation to reinforce the buildings of the Lease
Object, except for reinforcement required due to maintenance.
Modifications of the Lease Object by Lessor according to clause 8.1 of Appendix
2 shall require Lessees prior consent.
10. PANELS
Lessee shall be entitled to fix panels to the outside of the buildings of the
Lease Object ac-cording to his sole an free discretion, however, within the
limits of the applicable laws and regulations, but with no prior consent of
Lessor being required.
11. GENERAL TERMS AND CONDITIONS
In addition to the above provisions, which shall supersede and overwrite any
provisions to the contrary, the general terms and conditions as per Appendix 2
shall apply.
3
<PAGE>
12. GOVERNING LAW
This Lease Agreement shall be subject to the Swiss Federal Code of Obligations,
art. 253 ff.
Zurich, ____________
Dr. Matthias V. Jermann Michael S. Gostomski
- ----------------------- ------------------------
Schaublin SA RBC Schaublin SA
Appendix 1 Site Map to be provided by Lessor by December 31, 1999
Appendix 2 Bail a loyer bernois pour locaux commerciaux (Association des
proprietaires foncier du canton de Berne)
4
<PAGE>
Exhibit 10.3
C R E D I T A G R E E M E N T
Between
RBC SCHAUBLIN S.A.
DELEMONT
(hereinafter referred to as the [[Borrower]])
and
CREDIT SUISSE
(hereinafter referred to as the [[Bank]])
Dated December 27, 1999
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
<S> <C> <C>
1. FACILITIES...................................................................................4
1.2 Amounts and Commitments..................................................................4
1.3 Availability.............................................................................4
1.4 Purpose..................................................................................4
1.5 Commitment Periods.......................................................................5
1.6 Draw down................................................................................5
1.7. Collateral / Security....................................................................5
2. ADVANCES.....................................................................................5
2.1 Utilisation..............................................................................5
2.2 Notice to the Bank.......................................................................5
2.3 Determination of Currency................................................................6
2.4 Maximum Number of Advances...............................................................6
2.5 Maximum outstanding......................................................................6
3. INTEREST.....................................................................................7
3.1 Payment..................................................................................7
3.2 Rate and Calculation.....................................................................7
3.3 Margin...................................................................................7
3.4 Additional Interest Rate.................................................................8
4. REPAYMENT, REDUCTION AND CANCELLATION........................................................8
4.1 Repayment................................................................................8
4.2 Reduction................................................................................8
4.3 Automatic reduction of amounts available.................................................9
4.4 Final Repayment Date / Cancellation......................................................9
4.6 Cancellation by the Borrower............................................................10
4.7 Prepayment and Cancellation.............................................................10
5. PAYMENT AND TAXES...........................................................................10
5.1 Manner of Payment.......................................................................10
5.2 Taxation of the Bank, etc...............................................................10
5.3 Business Days...........................................................................11
5.4 Partial Payment.........................................................................11
6. CHANGES IN CIRCUMSTANCES....................................................................11
6.1 Increased Costs.........................................................................11
6.2 Escape Clause...........................................................................12
6.3 Restriction Clause......................................................................12
6.4 Illegality..............................................................................12
7. UNDERTAKINGS, COVENANTS, ETC................................................................13
7.1 General Undertakings....................................................................13
7.2 Representations and Warranties..........................................................14
7.3 Specific Undertakings...................................................................15
7.4 Financial Covenants.....................................................................15
7.5 Other Covenants.........................................................................17
8. SELLER'S NOTE...............................................................................18
9. EVENTS OF DEFAULT...........................................................................19
9.1 Events:.................................................................................19
9.2 Consequences............................................................................22
10. SET-OFF.....................................................................................22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.1 Set-off.................................................................................22
10.2 Currency Conversion.....................................................................22
11. INDEMNITIES.................................................................................23
11.1 General Indemnity.......................................................................23
11.2 Currency Indemnity......................................................................23
12. FEES AND EXPENSES...........................................................................23
12.1 Arrangement Fee.........................................................................23
12.2 Expenses................................................................................24
12.3 Value Added Tax.........................................................................24
13. ASSIGNMENT, TRANSFER AND LENDING OFFICES....................................................24
13.1 No assignment by the Borrower...........................................................24
13.2 Assignment and transfer by the Bank:....................................................24
14. NOTIFICATION................................................................................25
14.1 By the Borrower:........................................................................25
14.2 By the Bank.............................................................................25
14.3 Objections..............................................................................26
15. GOVERNING LAW AND JURISDICTION..............................................................26
</TABLE>
Annex A - Conditions precedent
Annex B - Short term advance request
Annex C - The Controlling Shareholders' Group
<PAGE>
Whereas the Borrower has requested the Bank for credit facilities
(hereafter referred to as [[Facilities]]); and
Whereas the Bank is prepared to grant such Facilities to the Borrower under
certain terms and conditions, therefore the parties agree as follows:
1. FACILITIES
1.1 TYPES OF CREDIT FACILITIES
The Bank has agreed to make various credit facilities ([[facilities]])
available to the Borrower on the terms of this Agreement up to the maximum
amounts specified under Clause 1.2.
1.2 AMOUNTS AND COMMITMENTS
The Bank has agreed to make available to the Borrower Facilities in an aggregate
amount not to exceed CHF 11'000'000.- (Swiss Francs 11 million or equivalent in
any freely convertible currency) divided in 2 sub facilities as defined
hereafter :
Facility A : CHF 10'000'000.-
Facility B : CHF 1'000'000.-
(in aggregate : [[Facilities]])
1.3 AVAILABILITY
During the commitment periods the Borrower may borrow under the Facilities once
the Bank has received and is satisfied with any and all items listed in the
Annex A hereto.
1.4 PURPOSE
The Facilities are available for the following
Facility A : for the financing of the acquisition of the
operating assets of Schaublin S.A., the shares of
Bovagnet and to fund the acquisition of Schaublin
France through a newly created subsidiary of RBC
Schaublin S.A.
Facility B : for general corporate purposes including working
capital financing.
<PAGE>
1.5 COMMITMENT PERIODS
The Facilities expiry dates will be the final repayment dates (termination
dates) specified in Clause 4.4.
1.6 DRAW DOWN
Shall be carried out by notification to the Bank by the Borrower pursuant to
clause 2.1.
1.7. COLLATERAL / SECURITY
The Shareholders of the Borrower will pledge and assign according to separate
agreement 100% of their present and future share capital in favour of the Bank.
These shares have to be endorsed in favour of the bearer and deposited with the
Bank with a resolution of the Board of Director of the Borrower to accept any
inscription of a shareholder, without any restriction, as designated by the
Bank. This last requirement does not apply to the qualification shares
("Qualifikationsaktien").
2. ADVANCES
2.1 UTILISATION
The Facilities shall be available :
Facility A : in form of fixed term advances (hereafter
collectively referred to as [[Advances]] and
individually "Advance") for periods of up to 12 months.
The Bank may from time to time grant exceptions to the
periods of availability upon the Borrower's request.
Facility B : in the form of current account(s) and or issuance of
guarantees or letters of credit.
The Advance will represent the principal amount initially drawn. In case any one
Advance shall be renewed or its term be extended, the Bank may agree that
accrued interest (if any) shall be added to the original principal amount of
such Advance.
Interest shall be determined separately for each Advance.
2.2 NOTICE TO THE BANK
The Bank's decision to make an Advance on the occasion of each borrowing
requested shall further be subject to the condition precedent that the Bank
shall have received the
<PAGE>
draw-down request, as defined in Annex B, at the latest by 12.00 a.m. Zurich
time, three business days prior to the date of such borrowing, however, not
earlier than the second day after the date of this Agreement, specifying (i) the
currency (whether in CHF or any other currency freely convertible into Swiss
Francs) (ii) the term of the Advance and (iii) unless previously supplied,
details of an account to which the Borrower wishes the payments in the currency
specified to be made. Business Day means a day on which banks are open in
Delemont.
2.3 DETERMINATION OF CURRENCY
If the Borrower requests a currency other than Swiss Francs in the Notice to the
Bank, the Advance shall be denominated in the currency specified by the Borrower
unless:
(i) the Bank does not expect to be able to fund the Advance for that
term by obtaining a matching deposit in that currency in the
international inter-bank market and/or the London inter-bank
market at the relevant time; or
(ii) it would be impossible for the Bank or unlawful or contrary to any
present or future directive, regulation, request, requirement,
rule or credit restraint programme of any Agency to make the
currency available.
Should any event mentioned under this clause 2.3 (i) and 2.3 (ii) occur, the
Bank shall immediately and in any event not later than 4.00 p. m. on that second
Business day notify the Borrower. In this event the Advance shall be denominated
in Swiss Francs during such term unless the Bank agree with the Borrower that
the Advance shall be denominated in another currency for the term.
2.4 MAXIMUM NUMBER OF ADVANCES
No more than 8 Advances (Facility A) may be outstanding at any time.
2.5 MAXIMUM OUTSTANDING
The aggregate amount of the Advances requested and drawn by the Borrower under
Facility A may not exceed the amount specified in Clause 1.2 above
The aggregate outstanding under current account(s) or other obligations under
Facility B may not exceed the amount determined by the Bank to be the maximum
amount of such Facility under Clause 1.2 above.
<PAGE>
3. INTEREST
3.1 PAYMENT
The Borrower will pay interest accrued on each Advance under Facility A on the
date of maturity of such Advance. Current account debit interest on Facility B
which will be charged on a quarterly basis.
3.2 RATE AND CALCULATION
(i) the interest rate applicable, per annum to each Advance under
Facility A will be the London Interbank Offered Rate ([[LIBOR]]), for the
relevant term & currency plus a margin as defined in clause 3.3.
[[LIBOR]] is defined, in respect of any Advance or unpaid sum, as
the annual percentage rate determined by the Bank to be the rate
which would have been offered to the Bank by prime banks in the
London interbank market at or about 11 a.m. (London time) on the
quotation date for deposits of a comparable amount to that Advance
or other sum, in the same currency and for a period comparable to
its term.
LIBOR shall be the rate displayed on Telerate page 3750 two
business days prior to any draw-down or renewal of such Advances,
rounded to the next 1/16 of a percent. Any and all interest and
fees shall accrue from day to day and shall be calculated on the
basis of a year of 360 days and the actual number of days elapsed
[or in the case of an Advance drawn in Pound Sterling on the basis
of a year of 365 days].
(ii) the interest rate applicable to the Facility B current account
credit limit will be for Swiss francs 5.375% p.a. increased by a
quarterly utilisation fee of 1/4% calculated on the highest used amount
of Facility B. In case of change of the money market conditions, the Bank
has the right to adapt, without notice period and at its sole discretion
the current account debit interest rate. Such change shall only occur in
case the Bank changes the rate on current account credit limits
applicable to borrowers similarly situated to the Borrower or if the Bank
adapts its internal rating.
3.3 MARGIN
The applicable interest margin on Advances drawn under Facility A is set at 275
basis points above the applicable LIBOR rate.
<PAGE>
3.4 ADDITIONAL INTEREST RATE
For delayed payments of principal and/or interest, the Bank will notify the
Borrower and charge interest in arrears at 5% above the 30 day LIBOR rate in the
relevant currency fixed at 11.00 London time on the first Business Day following
the occurrence of such delay, calculated on the amount outstanding as from the
respective maturity date until receipt of the amount outstanding.
4. REPAYMENT, REDUCTION AND CANCELLATION
4.1 REPAYMENT
The Borrower shall repay each Advance, in the same currency as the one in which
the Advance was disbursed and on the account to be designated by the Bank, from
time to time, on its repayment date, together with the interest accrued thereon.
4.2 REDUCTION
Following reductions of Facility A are mandatory and such reduction shall
permanently reduce the amount available under Facility A.
MANDATORY REDUCTION OF FACILITY A :
-----------------------------------------------------
Date Reduction in CHF
-----------------------------------------------------
31 March 2001 500'000.--
-----------------------------------------------------
30 June 2001 500'000.--
-----------------------------------------------------
30 September 500'000.--
2001
-----------------------------------------------------
31 December 2001 500'000.--
-----------------------------------------------------
31 March 2002 625'000.--
-----------------------------------------------------
30 June 2002 625'000.--
-----------------------------------------------------
30 September 625'000.--
2002
-----------------------------------------------------
31 December 2002 625'000.--
-----------------------------------------------------
31 March 2003 625'000.--
-----------------------------------------------------
30 June 2003 625'000.--
-----------------------------------------------------
30 September 625'000.--
2003
-----------------------------------------------------
<PAGE>
31 December 2003 625'000.--
-----------------------------------------------------
31 March 2004 750'000.--
-----------------------------------------------------
30 June 2004 750'000.--
-----------------------------------------------------
30 September 750'000.--
2004
-----------------------------------------------------
31 December 2004 750'000.--
-----------------------------------------------------
4.3 AUTOMATIC REDUCTION OF AMOUNTS AVAILABLE.
Any amount not drawn under Facility A (the unused portion) 1 month after the
signing of this Agreement or thereafter any unused amount for more than 45 days
under Facility A, will be deemed to be cancelled. Any amount so cancelled shall
permanently reduce the amount available under Facility A.
4.4 FINAL REPAYMENT DATE / CANCELLATION
The Borrower shall repay in full all Advances, principal and accrued interest
including fees and similar expenses or remuneration at the latest :
for Facility A : on 31.12.2004, if a Business Day, otherwise on the last
preceding Business Day (Termination Date Facility A). The Bank's
commitment for Facility A shall automatically terminate on the close of
business of the Termination Date A. The Borrower may not borrow any
Advance, should the last day of its term fall after that date;
for Facility B : within 180 days after notification by the Bank of the
cancellation (cancellation can be made at the Bank's sole discretion) of
Facility B if a Business Day, otherwise on the last preceding Business
Day (Termination Date Facility B).
4.5 Prepayment
The Borrower may prepay at any time, without penalty, advances under Facility A
in minimum amounts of CHF 500'000.-- or equivalent in the currency drawn,
subject to five business days prior written notice to the Bank, provided that
Advances prepaid at any time other than at maturity, including payments prior to
maturity pursuant to Clause 4.7 hereinafter, shall be subject to reimbursement
of funding breakage costs and related expenses, if any. For the purposes hereof,
"funding breakeage costs" shall be solely the actual value of the losses to the
Bank for the balance of the terms of any outstanding Advances under Facility A
arising by reason of a change in LIBOR rates. No such payments are applicable to
reimbursements under Facility B.
<PAGE>
4.6 CANCELLATION BY THE BORROWER
On the giving of fifteen days' prior written notice to the Bank, cancellation of
the Facilities will be permitted in minimum amounts of CHF 500'000.-- or
multiple for Facility A. Any amount so cancelled shall permanently reduce the
amount available under the Facility.
4.7 PREPAYMENT AND CANCELLATION
If the Borrower is required to make any payment to the Bank under Clause 5.2
(Taxation of the Bank, etc.) or under Clause 6 (Changes in circumstances), it
may prepay all or any one of the Advances to which the provisions of these
clauses apply by giving the Bank an irrevocable notice of prepayment and
cancellation and the Borrower will prepay the Advances ten Business Days after
such notice is given. The unused portion of the commitment will be deemed to be
cancelled on the date notice is given.
5. PAYMENT AND TAXES
5.1 MANNER OF PAYMENT
Each payment to be made by the Borrower must be:
(a) remitted to any account which the Bank specifies;
(b) made for value on the due date, in the currency in which it is
stated to be payable;
(c) made in the currency of the Advance, freely disposable outside
of bilateral or multilateral payment agreements which may
exist at the time of payment, free and clear of any and all
present and future taxes, levies, imposts, duties, deductions,
withholdings, fees, liabilities and similar charges, now or
hereafter imposed by or on behalf of any taxing authority.
If deduction of any such taxes shall at any time during the
continuance of these Facilities be required by or under the
authority of any government, the Borrower shall pay such
amount in respect of principal and interest as may be
necessary in order that the amounts effectively received by
the Bank after such deduction shall be equal to the respective
amount of principal and interest which would have been paid to
the Bank if no such deduction had been made.
5.2 TAXATION OF THE BANK, ETC.
If the Bank is required to make any payment on account of tax (other than tax
imposed on the net income of its lending office by the jurisdiction in which it
is incorporated or in
<PAGE>
which its lending office is located) in respect of any sum received or
receivable by it under this Agreement, or if any liability in respect of any
such payment is asserted, imposed, levied or assessed against the Bank, the
Borrower shall on the Bank's demand, pay the Bank an amount equal to the amount
which the Bank is required to pay, together with any interest, penalties and
expenses payable or incurred in connection with it.
5.3 BUSINESS DAYS
If any payment under this Agreement becomes due on a day which is not a Business
Day, the due date for that payment will be extended to the next day which is a
Business Day, unless such Business Day shall fall in the following calendar
month, in which event the due date will be the immediately preceding Business
Day.
5.4 PARTIAL PAYMENT
If at any time the Bank receives a smaller payment than the amount of any
payment due, it may apply the amount effectively received in or towards
discharge of the Borrower's liabilities in any order selected by the Bank.
6. CHANGES IN CIRCUMSTANCES
6.1 INCREASED COSTS
If the result of any change in any law, regulation or official directive
(whether or not having the force of law), or in the interpretation or
application thereof, or compliance by the Bank with any request or directive of
any applicable monetary or fiscal Bank or authority or banking authority
(whether or not having the force of law) is to increase the cost (including an
increase of costs resulting from an adverse change in the calculation basis of
the Bank's own fund requirements) of the Bank of maintaining or funding any
Advance or is to reduce the amount of principal or interest receivable, then
upon demand by the Bank, the Borrower shall pay to the Bank such amount as shall
compensate the Bank for such additional cost or reduction.
In this case, the Borrower will also have the option to immediately and fully
repay the outstanding amounts without penalty subject to payment to the Bank of
the difference, if negative, if any, of:
(a) the amount of interest which the Bank is able to obtain by placing
an amount equal to the amount prepaid on deposit with prime banks
in the relevant interbank market for the remainder of relevant
interest period, as soon as reasonably practicable after receipt
thereof from the Borrower, less
<PAGE>
(b) the amount of interest which would otherwise be payable to the
Bank on the relevant amount received for the remainder of the
relevant interest period (less the margin).
The certificate of the Bank setting out the amount shall, in the absence
of a manifest error, be conclusive evidence thereof.
6.2 ESCAPE CLAUSE
In case the Bank should not be able to grant or renew Advances in the currency
requested by the Borrower owing to any present or future currency restrictions
or similar circumstances (i.e. initiated by Central Banks, Governments or any
other public authority or body) the Bank reserves the right to advance another
freely transferable currency available at that date. The Bank's opinion as to
whether a currency is available or not shall be conclusive and binding on the
Borrower, except in case of a manifest error.
6.3 RESTRICTION CLAUSE
Should the Swiss National Bank or any other government body or authority impose
restrictions of any kind or nature on the Bank affecting these Facilities, the
Bank shall have the right to request that the conditions of the present
Facilities be renegotiated by sending without delay written notice to the
Borrower.
Should no consent be reached following a negotiation period of thirty days, the
Borrower and the Bank shall have the right to cancel the Facilities with
immediate effect and without having to pay any penalty, whereby any and all
amounts owed by the Borrower to the Bank shall immediately become due for
repayment.
6.4 ILLEGALITY
The Bank will notify the Borrower if it reasonably believes that it is, or will
be, acting illegally or contrary to any applicable rules and regulations in
relation to the Facilities ("Notice of Illegality"), specifying the reason
therefor. The Bank shall thereupon use its best efforts to transfer the
commitment under these Facilities to another bank not affected by such
illegality or violation of rules and regulations. If the Bank notifies the
Borrower in writing within twenty Business Days after despatching a copy of the
aforementioned Notice of Illegality to the Borrower, the commitment of the Bank
under this Agreement will thereupon terminate. If the Bank so requires, the
Borrower will prepay any Advance which is affected by any such illegality or
violation on the date specified by the Bank in the notice.
<PAGE>
7. UNDERTAKINGS, COVENANTS, ETC.
7.1 GENERAL UNDERTAKINGS
The Borrower agrees that until all of its liabilities under this Agreement have
been discharged and as long as any commitment is outstanding:
(a) DEFAULT: it will notify the Bank immediately if any Event of
Default and if any potential Event of Default occurs or may
reasonably be expected to occur;
(b) INFORMATION: it shall inform the Bank without delay of any
event which is appropriate to adversely affect the credit
quality of these Facilities, in particular major disposals
of assets or acquisitions. It will supply the Bank with any
information regarding the Borrower and any of its
subsidiarie and its financial affairs and those of any of
its subsidiaries which the Bank may request;
(c) PARI PASSU: it will ensure that its liabilities under this
Agreement will rank at least equally with any and all other
present and future liabilities of the Borrower and/or its
subsidiaries other than those which are mandatorily privileged
by law;
(d) NEGATIVE UNDERTAKINGS: it will not without the Bank's prior
written consent:
(i) NEGATIVE PLEDGE: create any encumbrance or permit any
encumbrance to exist over all or any of its assets or
revenues or of the assets or revenues of all or any of its
subsidiaries, other than liens to secure equipment
financing or future permitted loans; or
(ii) MERGER: consolidate with or merge into any other body
corporate, or merge any other body corporate into itself;
or
(iii) DISPOSAL OF ASSETS OR REVENUES: dispose, transfer, grant or
lease its assets or assets of its subsidiaries, other than
in the ordinary course of business, except :
1. if the disposal of equipment and assets is executed
at fair value and the proceeds are redeployed in the
business within a period of 12 months; or
2. if the disposal is made with the prior written
consent of the Bank;
(iv) MAJOR ACQUISITIONS: purchase or undertake to purchase
(either itself or through any of its subsidiaries) assets
other than the planned Capex in kind and amounts as defined
in the Business Plan remitted to the Bank and as limited in
clause 7.5 (b), which will result in a major change in
<PAGE>
the ability of the Borrower to fulfil its present and
future obligations in relation to these Facilities, or a
change of its business activities unless approved by the
Bank.
(v) REORGANISATION ETC.: enter into a de-merger or
reorganisation which will result in a major change in the
ability of the Borrower to fulfil its present and future
obligations in relation to the Facilities; or
(vi) GUARANTEES: give any guarantee, indemnity or other security
in connection with any other liability of any other person
otherwise than in the normal course of its business; or
(vii) CAPITAL COMMITMENTS: authorise or accept any capital
commitments outside the normal course of its business.
7.2 REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
(a) the Borrower is a company duly organised and existing in good
standing under the laws of its country of incorporation with full
power and authority under such laws to own its properties and to
conduct its business;
(b) the making and performance of these Facilities as well as any
other signed agreement, has been duly authorised by all necessary
corporate action of the Borrower and
(i) does not contravene any provision of any applicable law or
of the Borrower's Articles of Association, and
(ii) will not result in a breach of or constitute a default
under any contractual provisions;
(c) this Agreement is valid and legally enforceable in accordance with
its terms against the Borrower in its country of incorporation;
(d) there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower or any
of its subsidiaries before any court, tribunal or governmental
body, agency, authority or other instrumentality which might
substantially adversely affect the financial condition of the
Borrower and/or of any of its subsidiaries or its ability to
perform its obligations hereunder.
<PAGE>
7.3 SPECIFIC UNDERTAKINGS
The Borrower agrees that until all of its liabilities under this Agreement have
been discharged and no commitment is outstanding:
(a) the Borrower will remit before the end of each fiscal year a
restated 5 year business plan with key financial projections,
including a liquidity plan for the following year;
(b) the Borrower's accounts and the consolidated accounts of the
Borrower and subsidiaries will be established in line with
accounting standard acceptable to the Bank, for the first time for
the opening balance on 1.1.2000. Such accounts as well as the
audit report have to be provided to the bank at latest 120 days
after the closing of the fiscal year.
(c) the Borrower represent and warrant that it has no knowledge of any
past present or future fact related to the environment, health and
safety, which could affect negatively the Borrower and/or its
subsidiaries.
7.4 FINANCIAL COVENANTS
The following financial covenants to be calculated each based on the
consolidated accounts of the Borrower must be permanently satisfied by the
Borrower and its subsidiaries on a consolidated basis. The calculation of the
ratio shall as a rule be carried out by the Borrower quarterly for the past 12
months (rolling calculation period) and be remitted at the latest to the Bank 60
days after the end of the calculation period. The first calculation period shall
be April 1, 2000 until March 2001. The financial covenants will be restated and
amended in case of a change of the Borrower's and/or any of its subsidiaries
accounting principles/policies (especially in case of dissolution of hidden
reserves, revaluation of assets, capital gains from disposal of assets, change
in accounting method(s), change in depreciation and amortisation policy, etc..)
<TABLE>
(a) MINIMUM INTEREST COVERAGE RATIO
DEFINITION:
INTEREST COVERAGE RATIO: EBITDA divided by total gross interest expenses
Minimum ratios as per :
-----------------------------------------------------------------------
<S> <C> <C> <C>
31.3.2001 31.3.2002 31.3.2003 31.3.2004
-----------------------------------------------------------------------
7.5x 9x 10x 10x
-----------------------------------------------------------------------
</TABLE>
(b) MINIMUM FIXED CHARGE COVERAGE RATIO
<PAGE>
<TABLE>
DEFINITION:
FIXED CHARGE COVERAGE RATIO: (EBITDA + leasing expenses + rent
expenses) divided by (total gross interests expenses + leasing
expenses + rent expenses + capital expenditures)
Minimum ratios as per :
-----------------------------------------------------------------------
<S> <C> <C> <C>
31.3.2001 31.3.2002 31.3.2003 31.3.2004
-----------------------------------------------------------------------
2.20x 2.25x 2.50x 2.25x
-----------------------------------------------------------------------
</TABLE>
<TABLE>
(c) MAXIMUM LEVERAGE RATIO
DEFINITION:
Maximum net debt capacity ratio : Senior Bank debt / EBITDA.
Senior Bank Debt is being defined as the amount due to the Bank as
of the end of the measuring period, after giving effect to the
principal payment due on such date.
Maximum ratios as per :
------------------------------------------------------------------------
<S> <C> <C> <C>
31.3.2001 31.3.2002 31.3.2003 31.3.2004
------------------------------------------------------------------------
2.25x 2.00x 1.25x 1.00x
------------------------------------------------------------------------
</TABLE>
(d) DEBT RESTRICTION FOR THE BORROWER AND ITS SUBSIDIARIES:
No other financial debt or similar obligations, provided to the
Borrower and/or its subsidiaries shall be possible without prior
written consent the Bank. Not included are lease obligations
clearly subordinated to the Bank's debt. The Borrower shall not
make available loans to its subsidiaries. The intercompany
accounts receivable of the Borrower shall not exceed the
intercompany payables of the Borrower, not including any
intercompany accounts receivable resulting from ordinary course
intercompany business transactions.
(e) VIOLATION OF FINANCIAL COVENANTS
A violation of any financial covenant described above may be cured
by a capital contribution by the Borrower's parent, i.e. any such
capital contribution shall effectively be treated as an increase
to EBITDA for compliance measurement purposes.
<PAGE>
7.5 OTHER COVENANTS
(a) DIVIDEND RESTRICTIONS.
Nor the Borrower nor any one of its subsidiary is allowed to pay
dividends without prior consent of the Bank. However, subsidiaries
are allowed to pay dividends to the Borrower.
(b) CAPITAL EXPENDITURES [[CAPEX]]
Capex are limited to the amounts projected in the business plan,
unless prior written consent of the Bank to increase such Capex.
PROJECTED CAPEX
------------------------------------------------------------------
Period (fiscal year) Max. amounts in CHF
------------------------------------------------------------------
1.1.2000 to 31.3.2001 900'000.--
------------------------------------------------------------------
31.3.2001 to 31.3.2002 950'000.--
------------------------------------------------------------------
31.3.2002 to 31.3.2003 800'000.--
------------------------------------------------------------------
31.3.2003 to 31.3.2004 925'000.--
------------------------------------------------------------------
31.3.2004 to 31.3.2005 925'000.--
------------------------------------------------------------------
The portion of Capex which is not effectively invested within the
planned fiscal year will be rolled over to the next period.
The Bank is allowed to limit the Capex below projected amounts, in
case the EBITDA of the Borrower are not in line with its Business
Plan.
(d) TRANSACTION WITH SHAREHOLDERS / RELATED PARTIES
The Borrower undertakes for itself and its subsidiaries, unless
authorised otherwise by the Bank, for the whole duration of this
credit not to provide any credit or similar financial support to
its Shareholders or any related parties to them as well as to
enter into any obligation or provide any financial or other
support which is not in due course of business.
All transactions in normal course of business between the Borrower
and its ultimate parent company in the USA and the latter's
affiliated companies have to be done on an arm length basis.
(e) INSURANCE COVERAGE AND ENVIRONMENTAL RISK
<PAGE>
The Borrower confirms and undertakes for itself and its
subsidiaries and for the whole duration of this Agreement to have
an adequate insurance coverage for its assets, losses due to
interruption of business activities, responsibility claim of third
parties as well as all other usual insurance coverage for such
business activities.
The Borrower confirms and undertakes for itself and its
subsidiaries and for the whole duration of this Agreement not to
enter in business activities which could bear any environmental
risk without prior authorisation of the Bank.
8. SELLER'S NOTE
As part of the purchase price, the Company will issue a Seller's Note to the
order of Schaublin SA in the amount of CHF 1.7 mio. This Seller's Note will be
subordinated to the Bank's Debt and will bear an interest rate of 5%. The
following amounts are due under the Seller's Note:
December 17, 2000 CHF 700'000.-
December 17, 2001 CHF 1'000'000.-
The Company may make cash payments of up to CHF 700'000.- in respect of the
Seller's Note at any time on or after December 17, 2000 (any amounts of the
Seller's Note set off by the Company against indemnification liabilities of
Schaublin SA shall not be considered payments for the purpose of this sentence).
Additional payments in respect of the Seller's Note can only be made if one of
the following two conditions is satisfied:
1) The full payment of CHF 1'000'000.- may be made if the then
reported Consolidated Net Worth of the Borrower reaches at least
CHF 10 mio.; or
2) A payment of less than CHF 1'000'000.- may be made if the Debt
to Capital ratio (defined as net debt divided by net debt plus net
worth) remains below 45% following such payment.
<PAGE>
9. EVENTS OF DEFAULT
9.1 EVENTS:
The occurrence of any of the following is an Event of Default:
(a) NON-PAYMENT: the Borrower, after a remedy period of seven days
from the repayment date shall fail to pay any amount of principal
or interest, or any other amount due hereunder, when same becomes
due and payable under this Agreement; or
(b) BREACH OF OBLIGATIONS: the Borrower and/or any one of its
subsidiaries and/or any third party mentioned in this Agreement
fails to perform or to observe any of the terms and conditions
and/or undertakings contained in this Agreement and (if capable of
remedy) such failure is not remedied within twenty days of its
occurrence; or
(c) MISREPRESENTATION: any representation or warranty made by the
Borrower or any third party under or in connection with this
Agreement shall turn out to have been incorrect or misleading in
any substantial material respect ; or
(d) CROSS-DEFAULT: the Borrower or any of its subsidiaries in respect
of any indebtedness in a principal amount in excess of CHF
250'000.-
(i) after giving effect to any applicable grace period, shall
fail to pay for borrowed money [other than money referred
to under (a) of this clause], or any interest or premium
thereon, when due (whether at scheduled maturity or by
prepayment, acceleration, demand or otherwise) or any other
default under any agreement or instrument relating to any
such indebtedness, or any other event shall occur, if the
effect of such default or event is to accelerate, or to
permit the acceleration of the maturity of such
indebtedness, or any such indebtedness shall be declared to
be due and payable, or required to be prepaid to the stated
maturity thereof; or
(ii) (a) becomes bound to repay prematurely any other loan or
obligation by reason of a default by the Borrower or (as
the case may be) any one of its subsidiaries which is
followed by an appropriate demand of such repayment except
where the Borrower or (as the case may be) any one of its
subsidiaries is taking action in good faith to dispute the
validity of the obligation to repay such other loan or
obligation prematurely; or (b) fails to make any payment of
principal, premium or interest in respect of such other
loan or obligation, or any payment under a guarantee in
respect of any loan or other obligation, on the due date
for such repayment or within any grace period specified in
the agreement or other instrument
<PAGE>
constituting such other loan, obligation or guarantee as
aforesaid;
<PAGE>
(e) WINDING UP OR DISSOLUTION ETC: any order is made by any competent
court or other authority or resolution passed by the Borrower for
the dissolution or winding-up of the Borrower or any order is made
by any competent court or other authority for the dissolution or
winding-up of any of its subsidiaries or for the appointment of a
liquidator, receiver or trustee of the Borrower or (as the case
may be) any of its subsidiaries or of the whole or any part of the
undertaking or assets of the Borrower or (as the case may be) any
of its subsidiaries which would be material in the context of this
Agreement or the Borrower or (as the case may be) any of its
subsidiaries applies for [[Sursis Concordataire]] (within the
meaning ascribed to that expression by the laws of Switzerland) or
an equivalent legal institution in case of any subsidiary, or
(F) INSOLVENCY: the Borrower or (as the case may be) any of its
subsidiaries stops or threatens or declares its intention to cease
payments or is unable to, or admits to creditors generally its
inability to pay its debts as they fall due, or is finally
adjudicated or found bankrupt or insolvent, or makes any
conveyance or assignment for the benefit of or enters into any
composition or other arrangement with its creditors generally ; or
(G) CHANGE OF CONTROL: any change of control in the Borrower:
For the present purposes "change of control" shall mean:
That RBC Schaublin S.A. is not anymore controlled 100%
directly or indirectly by Roller Bearings Company of
America, Inc.
(i) SECURITY ENFORCEABLE: any present or future Security on, over or
with respect to the Assets of the Borrower and/or any one of its
subsidiaries becomes enforceable or any beneficiary of
encumbrances takes possession or a receiver is appointed of the
whole or any material part of the undertaking, property and Assets
of the Borrower and/or any one of its subsidiaries or a distress
or execution is levied or enforced upon or sued for all or any
material part of the Assets of the Borrower and/or any one of its
subsidiaries; or
(j) GENERAL MATERIAL ADVERSE CHANGE: a change in the business,
operations, sales, costs, assets or liabilities of the Borrower
and/or one of its subsidiaries which, in the opinion of the Bank
has materially affected or is likely in the future to materially
affect the financial condition, net worth and profitability of the
Borrower; or
(l) UNLAWFULNESS, INVALIDITY: it is or becomes unlawful for the
Borrower to perform promptly any of its obligations under this
Agreement or for the Bank to exercise any of its rights under this
Agreement, or if this Agreement for any
<PAGE>
other reason becomes invalid or unenforceable or ceases to be in
full force and effect, or if the Borrower does or causes or
permits to be done anything which evidences an intention to
contest or repudiate this Agreement wholly or in part; or
(m) COMPLIANCE WITH LAWS: the Borrower and/or any one of its
subsidiaries ceases or will cease to comply with any law,
regulation or requirement applicable to it in the carrying out of
its business.
9.2 CONSEQUENCES
If an Event of Default occurs, the Bank may and shall within 7 days after notice
of the Event of Default upon notice in writing to the Borrower immediately
terminate the commitment and declare all Advances and all other Bank debts
hereunder to be forthwith due and payable, whereupon the unpaid principal amount
of such Advances and of the current account (Facility B) together with accrued
interest to the date of declaration and all other amounts due hereunder shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower.
10. SET-OFF
10.1 SET-OFF
The Bank may at any time take all or any of the following steps:
(a) open a new account in the name of the Borrower and debit that
account, or debit an existing account of the Borrower, with any
amount due to the Bank;
(b) combine or consolidate, regardless of currency, all or any of the
accounts with the Bank in the name of the Borrower or to which the
Borrower is beneficially entitled at any of the Bank's branches in
any country or territory; and
(c) (after taking into account any combination or consolidation of
accounts), set off any amount standing to the credit of any such
account by applying any such credit balance in or towards payment
of any amount due to the Bank.
10.2 CURRENCY CONVERSION
The Bank may at any time use any of the Borrower's credit balances with the Bank
to purchase at the Bank's applicable spot rate of exchange any other currency or
currencies which the Bank considers necessary to reduce or discharge any amount
due to the Bank,
<PAGE>
and may apply that currency or those currencies in or towards payment of those
amounts.
11. INDEMNITIES
11.1 GENERAL INDEMNITY
The Borrower will indemnify the Bank against all losses (including but not
limited to losses from liquidating or re-employing deposits from third parties
which were acquired to effect or maintain the Facilities or any part of them)
and expenses which the Bank may incur (after taking into account any payments to
the Bank of interest at a default rate) as a result of the occurrence of:
(a) an Event of Default; and/or
(b) the failure of the Borrower to pay any amount due under this
Agreement on the due date; and/or
(c) any Advance being repaid or prepaid for any reason otherwise than
on the last day of its Term; and/or
(d) any Advance not being borrowed for any reason (excluding default
by the Bank) after a notice requesting that Advance has been sent
to the Bank by the Borrower.
11.2 CURRENCY INDEMNITY
If any payment in connection with this Agreement is made or recovered in a
currency other than that in which it is required to be paid then, if the payment
to the Bank (when converted at the Bank's rate of exchange on the date of
payment or, in the case of a liquidation of the Borrower, the latest date for
the determination of liabilities permitted by the applicable law) falls short of
the amount remaining unpaid under this Agreement, the Borrower will indemnify
the Bank against the amount of such shortfall.
12. FEES AND EXPENSES
12.1 ARRANGEMENT FEE
The Borrower will pay to the Bank an arrangement fee payable within 5 days as
from the signing of this arrangement in the amount of CHF 175'000.--.
<PAGE>
12.2 EXPENSES
All out-of-pocket expenses, costs, charges, tax and expenses, including legal
fees, incurred by the Bank in connection with the negotiation, preparation and
completion of this agreement shall be taken in charge by the Bank. For the
avoidance of doubt, any costs incurred by the Bank in reviewing and proposing
amendments to this agreement and in checking on the commercial soundness of
participating in this agreement shall be borne by the Bank.
Out-of-pocket expenses, including legal fees, incurred in connection with any
change, reorganisation, amendment of this Agreement after the signing date shall
be borne by the Borrower.
12.3 VALUE ADDED TAX
All amounts stated in this agreement to be payable by the Borrower are exclusive
of value added tax or any similar tax properly chargeable in respect of services
under this Agreement, and the Borrower will pay all tax of this nature together
with the amounts on which such tax shall be levied.
13. ASSIGNMENT, TRANSFER AND LENDING OFFICES
13.1 NO ASSIGNMENT BY THE BORROWER
The Borrower may not assign or transfer any of its rights or obligations under
this Agreement, except with the prior written approval of the Bank.
13.2 ASSIGNMENT AND TRANSFER BY THE BANK:
The Bank shall be entitled to transfer or assign the whole or any part of its
rights and obligations under these Facilities to an affiliated, controlled or
related company or other entity, provided that such Bank shall retain a majority
interest in or otherwise control such company for the duration of the loan and
provided further, that such assignment will not be prejudicial to the Borrower
from a tax perspective, subject to prior notification of the Borrower. Any other
assignment may be effected with the prior written approval of the Borrower only,
which approval shall not be unduly withheld.
<PAGE>
14. NOTIFICATION
14.1 BY THE BORROWER:
All notification by the Borrower to the Bank as well as all correspondence in
connection with these Facilities shall be delivered either in person, or sent
registered express or A-mail and shall be deemed to have been duly given if
addressed to the Bank as follows:
-------------------------------------------------------
CREDIT SUISSE
-------------------------------------------------------
Attn: C. Saucy
-------------------------------------------------------
Rue de la Maltiere 2
-------------------------------------------------------
Case postale 237
-------------------------------------------------------
2800 Delemont 1
-------------------------------------------------------
14.2 BY THE BANK
All notification by the Bank to the Borrower as well as all correspondence in
connection with these Facilities shall be delivered either in person, or sent by
registered express or A-mail or tested telex and shall be deemed to have been
duly given if addressed to:
RBC Schaublin SA
c/o Roller Bearing Company of America, Inc.
60 Round Hill Road
Fairfield, CT 06430
USA
Attention: Michael S. Gostomski
Tel: 001/(203) 255-1511
Fax: 001/(203) 256-0775
With a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, NY 10020
USA
Attention: C. David Goldman
Tel: 001/(212) 547-5400
Fax: 001/(212) 547-5444
<PAGE>
14.3 OBJECTIONS
Any objection by the Borrower relating to the execution or non-execution of any
order of any kind as well as any objection to any statement of account or to any
other communication, must be made within seven working days upon receipt of the
respective communication; otherwise the execution or non-execution of the order
as well as the pertinent statements and communications are deemed to have been
approved.
15. GOVERNING LAW AND JURISDICTION
This Agreement will be governed by and construed in accordance with Swiss law,
which shall also govern any decision as to the validity of this choice of law
clause.
Any dispute arising out of or in connection with this Agreement shall be settled
by the competent courts of the canton of Jura and the Swiss Confederation, venue
being Delemont, provided always, that the Bank shall be entitled to institute
proceedings against the Borrower before any competent court, including, but not
limited to the court competent at the place or registered office of the Borrower
or any of its subsidiaries.
<PAGE>
16. MISCELLANEOUS
The parties hereto have executed this Agreement - constituting the legally
binding Agreement - in four originals:
You will find here enclosed an exemplar of our Bank's general conditions. They
are part and parcel of this Agreement unless stated otherwise within this
Agreement. Accordingly, in the event of any conflicts or inconsistencies between
this Agreement and the general conditions, the provisions of this Agreement
shall apply.
SIGNED on behalf of each of the parties:
[Delemont, 27 December 1999]
THE BORROWER:
Michael S. Gostomski
RBC SCHAUBLIN S.A. ------------------------------
NAMES
THE BANK:
Daniel Wegner
CREDIT SUISSE ------------------------------
NAMES
ANNEXES
- -------
Annex A, B, C
<PAGE>
ANNEXE A
CONDITIONS PRECEDENT -
ITEMS REQUIRED BEFORE AN ADVANCE OR OTHER FUNDS MAY BE
BORROWED
1. Copies of the documents which contain or relate to the Borrower's
constitution, up to date and in full force and effect, namely:
a) Certificate of incorporation
b) Memorandum and articles of association
c) Proof of formation and due standing of RBC Schaublin SA with due
subscription and fully-paid-in share capital
2. Provide evidence of compliance with clause 1.9 (Security) and 8.1 (Events
of Default), in a form satisfactory to the Bank
3. Provide evidence of compliance signature of general conditions of the Bank
4. Provide organisational chart of the Borrower
5. Copy of the signed sale agreement for the assets of RBC Schaublin S.A.,
including the name "Schaublin"
7. The documents of the Borrowers.
8. The purchase price of CHF 13.7 mio. will be satisfied by a cash payment of
CHF 12 mio. and the issuance of a 5% Subordinated Seller's Note of CHF 1.7
mio., payable in two tranches of CHF 0.70 mio. on the First Anniversary of
the Promissory Note dated December 17, 1999 and CHF 1.0 mio. on the Second
Anniversary of the Promissory Note dated December 17, 1999 1), subject to
Article 8 of the Credit Agreement. A minimum cash contribution of CHF 2.75
mio. in fully liberated capital of the Company will have been made.
<PAGE>
9. All necessary corporate authorizations for the entry into the transaction
documents.
10. Documentation of the Facilities.
11. Legal opinions given by the legal advisors to the Lenders that the
following is in place: legally binding arrangements between the owners of
Schaublin S.A. to purchase all the acquired assets.
12. Legal opinion by the legal advisors to the Lenders that the securities are
legally binding and enforceable.
13. Representation and warranties remain true and correct as of the proposed
date of making such draw down
<PAGE>
ANNEXE B
ADVANCE REQUEST
From: RBC Schaublin S.A., Blancherie 9, 2800 Delemont ([[Borrower]])
To: Credit Suisse, 2800 Delemont ([[Agent]])
Date
Dear Sirs,
We refer to the agreement (as from time to time amended, varied, novated or
supplemented, the [[Facility]]) dated XXX, 1999, and made between RBC Schaublin
S.A. and the Bank.
We hereby give you notice that we wish to make a short term Advance under this
Facility as follows:
Facility A
--------------------------------------------------
Currency:
---------------------------------------------------
Amount:
---------------------------------------------------
First value date:
---------------------------------------------------
Duration:
---------------------------------------------------
To be transferred to account: No
---------------------------
Beneficiary:
----------------
<PAGE>
Bank:
------------------------
We confirm that at the date thereof the representations and undertakings set out
in the Agreement are true and no event which is or may become (with the passage
of time, the giving notice, the making of any determination under the Facility
Agreement or any combination thereof) an Event of default has occurred
Yours Sincerely,
- -------------------------------------
For and on behalf of RBC Schaublin SA
<PAGE>
ANNEXE C
COMPLIANCE CERTIFICATE
The undersigned officer of RBC Schaublin S.A., hereby certifies that he is the
Chief Financial Officer of the Borrower, and that as such he is authorised to
execute this compliance certificate required to be furnished pursuant to the
credit agreement, dated xxx, 1999 and further certifies that:
1) Attached hereto is a copy of the Borrowers quarterly statements for the
period ending [ ____________ ], which contains the consolidated balance
sheet of RBC Schaublin S.A. and its subsidiaries [ ______________ ], and
the related consolidated statements of income and cash flows of RBC
Schaublin S.A. and its subsidiaries for the period ending [ ____________ ],
setting forth in each case in comparable form the figures for the previous
year (collectively the "Financial Statements").
2) The Financial Statements are complete and correct in all material respects
and were prepared in reasonable detail an in accordance with the general
accepted accounting rules applied consistently throughout the periods
reflected therein.
3) The undersigned has no knowledge of any Default or Event of Default.
4) The following calculations as of [ ______________ ] support the statement
made in paragraph 3 above with respect to the credit agreement, dated
______________.
i) Minimum Interest Coverage Ratio
Consolidated Net Income _____________
+ Taxes _____________
+ TOTAL GROSS INTEREST EXPENSES "B" _____________
----------------------------------
EBIT _____________
+ Amortisation of Goodwill _____________
+ DEPRECIATION _____________
-------------
EBITDA "A" _____________
Minimum Interest Coverage Ratio I ("A" divided by "B") _____________
<PAGE>
Covenant Minimum _____________
<PAGE>
Page 2
ii) Minimum Fixed Charges Coverage
Consolidated EBITDA (as determined in ii) above) _____________
Leasing Expenses _____________
Rent Expenses _____________
Capital Expenditures _____________
Minimum Fixed Charges Coverage
(EBITDA + Leasing expenses + Rent expenses) divided by
(Total Gross Interest Expenses + Leasing Expenses +
Rent Expenses + Capital Expenditures) _____________
Covenant Minimum _____________
iii) Maximum debt capacity ratio
Consolidated Senior Bank Debt "A" _____________
Consolidated EBITDA (as determined in ii) above) "B" _____________
Maximum debt capacity ratio ("A" divided by "B") _____________
Covenant Maximum _____________
RBC Schaublin S.A.
----------------------------
(Name, Title)
----------------------------
(Date)
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-01-2000
<PERIOD-START> APR-04-1999
<PERIOD-END> DEC-25-1999
<CASH> 3,534
<SECURITIES> 0
<RECEIVABLES> 25,326
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0
0
<COMMON> 0
<OTHER-SE> (5,855)
<TOTAL-LIABILITY-AND-EQUITY> 193,479
<SALES> 125,525
<TOTAL-REVENUES> 125,525
<CGS> 87,117
<TOTAL-COSTS> 105,269
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<INTEREST-EXPENSE> 10,981
<INCOME-PRETAX> 8,766
<INCOME-TAX> 3,594
<INCOME-CONTINUING> 5,172
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