ASSET PURCHASE AGREEMENT
by and between
Anixter International Inc.
and
Pentacon, Inc.
Pentacon Delaware, Inc.
JIT Holdings, Inc.
Pentacon Properties, L.P.
Pentacon International Sales, Inc.
Pentacon Aerospace Group, Inc.
Pentacon USA, L.P.
Pentacon Industrial, Inc
Pentacon Europe Limited
Pentacon Mexico S.A. de C.V.
Pentacon Canada Corporation
May 23, 2002
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May ____, 2002,
by and between Anixter International Inc., a Delaware corporation ("Buyer") and
Pentacon, Inc., a Delaware corporation ("Pentacon"), and the following
subsidiaries of Pentacon: Pentacon Delaware, Inc., a Delaware corporation, JIT
Holdings, Inc., a Texas corporation, Pentacon Properties, L.P., a Texas limited
partnership, Pentacon International Sales, Inc., a United States Virgin Islands
corporation, Pentacon Aerospace Group, Inc., a Nevada corporation, Pentacon USA,
L.P., a Texas limited partnership, Pentacon Industrial Group, Inc, a Nevada
corporation, Pentacon Europe Limited, a company incorporated under the laws of
the United Kingdom, Pentacon Mexico S.A. de C.V., a company incorporated under
the laws of Mexico, Pentacon Canada Corporation, a company incorporated under
the laws of Canada (each a "Seller," and together the "Sellers").
PRELIMINARY STATEMENT
A. Sellers are filing a voluntary petition (the "Bankruptcy Petition") for
relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
Sections 101, et seq. (the "Bankruptcy Code"), in the United States Bankruptcy
Court for the Southern District of Texas (the "Bankruptcy Court") and are
filing, contemporaneously therewith, a pre-negotiated plan of reorganization
("Plan") and disclosure statement ("Disclosure Statement"); and
B. Subject to the approval of the Bankruptcy Court, Sellers desire to sell to
Buyer, and Buyer desires to purchase from Sellers, substantially all of Sellers'
assets, through the Plan and Disclosure Statement in accordance with the
Bankruptcy Code, upon the terms and subject to the conditions set forth in this
Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
Article 1
CONSTRUCTION AND DEFINITIONS
1.1 CONSTRUCTION
Any reference in this Agreement to an "Article," "Section" or "Schedule"
refers to the corresponding Article, Section or Schedule of or to this
Agreement, unless the context indicates otherwise. The headings of Articles and
Sections are provided for convenience only and should not affect the
construction or interpretation of this Agreement. All words used in this
Agreement should be construed to be of such gender or number as the
circumstances require. The terms "include" and "including" indicate examples of
a foregoing general statement and not a limitation on that general statement.
Any reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the statute,
as in effect at the relevant time. Any reference to a Contract or other document
as of a given date means the Contract or other document as amended, supplemented
and modified from time to time through such date.
1.2 DEFINITIONS
For the purposes of this Agreement, the following terms and variations on
them have the meanings specified in this Section:
"Accountants" is defined in Section 2.6.
"Accounts Receivable" means (a) all trade accounts receivable and other
rights to payment from customers of Sellers and the full benefit of all security
for such accounts or rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped, products sold or
services rendered to customers of Sellers, (b) all other accounts or notes
receivable of Sellers and the full benefit of all security for such accounts or
notes, and (c) any claim, remedy or other right related to any of the foregoing.
"Accrued Liabilities" is defined in Section 2.3.
"Active Employee" means an employee of a Seller immediately prior to the
Closing Date, including an employee on temporary leave of absence, family
medical leave, military leave, temporary disability leave or sick leave, but
excluding an employee on long-term disability leave or any employee employed at
a Facility which is an Excluded Asset.
"Actual Cumulative EBITDA Ratio" is defined in Section 9.1(g).
"Actual Monthly EBITDA Ratio" is defined in Section 9.1(g).
"Adverse Consequence" means any Liability, loss, damage (including
incidental and consequential damages), claim, cost, deficiency, diminution of
value, or expense (including costs of investigation and defense, penalties and
reasonable legal fees and costs), whether or not involving a third-party claim.
"Ancillary Agreements" is defined in Section 2.9.
"Assets" is defined in Section 2.1.
"Assignment and Assumption Agreement" is defined in Section 2.9(a)(ii).
"Assignment and Assumption of Lease Agreements" is defined in Section
2.9(a)(iii).
"Assumed Liabilities" is defined in Section 2.3.
"Balance Sheet" is defined in Section 3.3.
"Bankruptcy Case" meansthe bankruptcy case filed by Sellers in the United
States Bankruptcy Court for the Southern District of Texas.
"Benefit Plan" means each "employee pension benefit plan" as defined in
Section 3(2) of ERISA, each "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, and each agreement, plan, program, fund, policy, contract
or arrangement (whether written or unwritten) providing compensation, benefits,
pension, retirement, profit sharing, stock bonus, stock option, stock purchase,
phantom or stock equivalent, bonus, incentive, deferred compensation,
hospitalization, medical, dental, vision, vacation, life insurance, death
benefit, sick pay, disability, severance, termination indemnity, redundancy pay,
educational assistance, holiday pay, housing assistance, moving expense
reimbursement, fringe benefit or similar employee benefits covering any
employee, former employee, or the beneficiaries and dependents of any employee
or former employee.
"Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible.
"Bid Procedures Order" is defined in Section 10.2.
"Xxxx of Sale" is defined in Section 2.9(a)(i).
"Break-Up Fee" is defined in Section 10.2(f).
"Business Plan" means Sellers' 2002 business plan, approved by Pentacon's
board of directors, as provided to Buyer by Xxxxxx X. Xxxx during his visit to
Buyer the week of March 18, 2002.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer DIP" is defined in Section 2.11.
"Buyer's Disclosure Schedule" means the disclosure schedule delivered
pursuant to Article 4 by Buyer to Sellers concurrently with the execution and
delivery of this Agreement, together with any updates to it permitted by this
Agreement.
"Buyer Indemnitees" is defined in Section 11.2.
"Cash" means all cash, including cash held in lock-boxes, and cash
equivalents, marketable securities and short-term investments of a Seller.
"Cash Portion of the Purchase Price" means, subject to the adjustment
contemplated by Section 2.6 and Section 5.10, $121,000,000, minus (i) the amount
of the Scheduled Liabilities, (ii) the outstanding principal balance under the
Buyer DIP and accrued but unpaid interest thereon, (iii) any payment made by
Sellers between the date of the Closing Balance Sheet and the Closing Date to
satisfy any Liability other than the Assumed Liabilities.
"Cleanup" means any investigative, monitoring, cleanup, removal,
containment or other remedial or response action required by any Environmental
Law. The terms "removal," "remedial" and "response action" include the types of
activities covered by the Comprehensive Environmental Response, Compensation,
and Liability Act.
"Closing" means the consummation and completion of the purchase and sale of
the Assets.
"Closing Balance Sheet" is defined in Section 2.6.
"Closing Date" means the date on which the Closing actually takes place.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Agreement" is defined in Section 10.2(a).
"Competing Transaction" is defined in Section 10.1.
"Confidential Information" means all non-public information of Sellers in
any form, including: (i) all information relating to Sellers' trade secrets
(including all information that applicable law defines as "trade secrets"); (ii)
all information concerning products, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions, ideas, know-how, past, current, and planned
research and development, current and planned methods and processes, customer
lists, current and anticipated customer requirements, price lists, market
studies, business plans, business opportunities, computer hardware, computer
software (including object and source codes), and computer software and database
technologies, systems, structures and architectures; (iii) all information
concerning Sellers' business and affairs, historical and current financial
statements, financial projections and budgets, historical, current and projected
sales, capital spending budgets, strategic plans, marketing and advertising
plans, publications, agreements, client and customer lists and files, the names
and backgrounds of key personnel, and personnel training techniques and
materials; and (iv) all third-party confidential information lawfully in the
possession of Seller.
"Confirmation Order" means an order or orders of the Bankruptcy Court, in
form and substance reasonably acceptable to Sellers and Buyer, which contain(s),
without limitation, the following: (1) confirmation of the Plan; (2) approval of
this Agreement and all terms and conditions hereof; (3) transfer of the Assets
to Buyer free and clear of all interests (as such term is used in the Bankruptcy
Code) other than Assumed Liabilities; and (4) a finding that the Buyer has acted
in good faith within the meaning of 11 U.S.C. 363(m).
"Consent" means any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions" means all of the transactions to be carried out
in accordance with this Agreement, including the purchase and sale of the
Assets, the assumption of the Assumed Liabilities, the performance by the
parties of their other obligations under this Agreement, the filing of the
Bankruptcy Petition and the correspondent Plan and Disclosure Statement, and the
execution, delivery and performance of the Ancillary Agreements.
"Continued Employees" is defined in Section 13.2.
"Contract" means any contract, agreement, commitment, understanding, lease,
license, franchise, warranty, guaranty, mortgage, note, bond or other instrument
or consensual obligation (whether written or oral and whether express or
implied) that is legally binding.
"Contravene" -- an act or omission would "Contravene" something if, as the
context requires:
(a) the act or omission would conflict with it, violate it, result in a
breach or violation of or failure to comply with it, or constitute a default
under it;
(b) the act or omission would give any Governmental Body or other Person
the right to challenge, revoke, withdraw, suspend, cancel, terminate or modify
it, to exercise any remedy or obtain any relief under it, or to declare a
default or accelerate the maturity of any obligation under it; or
(c) the act or omission would result in the creation of an Encumbrance on
the stock or assets of any Seller.
"Cure" means the amount of cash required for the cure necessary to assume,
or assume and assign, a Contract which is a Contract that is part of the Assets,
pursuant to the requirements of Section 365(b) of the Bankruptcy Code.
"Encumbrance" means any charge, claim, mortgage, servitude, easement, right
of way, community or other marital property interest, covenant, equitable
interest, license, lease or other possessory interest, lien, option, pledge,
security interest, preference, priority, right of first refusal or similar
restriction; provided, however, that the term "Encumbrance" does not include (a)
mechanic's, materialman's or similar liens with respect to amounts not yet due
and payable, (b) liens for Taxes not yet due and payable and (c) liens securing
rental payments under capital lease arrangements.
"Environment" means soil, land surface or subsurface strata, surface waters
(including navigable water and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air, plant life, animal life, and any other
similar medium or natural resource.
"Environmental, Health and Safety Liabilities" means any Adverse
Consequence arising from or under Environmental Law or Occupational Safety and
Health Law, including those consisting of or relating to (a) any environmental,
health or safety matter or condition (including on-site or off-site
contamination, occupational safety and health and regulation of any chemical
substance or product) or (b) any other compliance, corrective or remedial
measures required under any Environmental Law or Occupational Safety and Health
Law.
"Environmental Law" means any applicable Law that relates to the protection
of the Environment, including those related to the storage, use treatment,
transport, disposal and remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any other Person that, together with a Seller,
would be treated as a single employer under Code Section 414.
"Escrow Agent" is defined in Section 2.9(a)(vii).
"Escrow Agreement" is defined in Section 2.9(a)(vii).
"Excluded Assets" is defined in Section 2.2.
"Excluded Contracts" is defined in Section 2.2.
"Facility" means any Real Property or any equipment (including motor
vehicles, tank cars and rolling stock) owned or operated by any Seller,
including the Real Property and equipment used or operated by a Seller at the
respective locations of the Real Property listed in Section 3.7(a) of Sellers'
Disclosure Schedule, excluding those constituting Excluded Assets.
"GAAP" means generally accepted accounting principles for financial
reporting in the United States.
"Governing Document" means any charter, articles, bylaws, certificate,
statement, statutes or similar document adopted, filed or registered in
connection with the creation, formation or organization of an entity, and any
Contract among all equityholders, partners or members of an entity.
"Governmental Authorization" means any Consent, license, permit or
registration issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Law.
"Governmental Body" means any (a) nation, region, state, county, city,
town, village, district or other jurisdiction, (b) federal, state, local,
municipal, foreign or other government, (c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department
or other entity and any court or other tribunal), (d) multinational
organization, or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, policy, regulatory or taxing authority or
power of any nature, or (e) official of any of the foregoing.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about or from any of the Facilities or any part thereof into the Environment.
"Hazardous Material" means any waste or other substance that is listed,
defined, designated or classified as, or otherwise determined to be, hazardous
waste, radioactive or a pollutant or contaminant under any Environmental Law,
and specifically including petroleum and asbestos or asbestos-containing
materials.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"Improvements" means all buildings, structures, fixtures and other
improvements located on the Real Property.
"include" and "including" as used in this Agreement indicate examples of a
foregoing general statement and not a limitation on that general statement.
"Indemnified Person" is defined in Section 11.7(a).
"Indemnifying Person" is defined in Section 11.7(a).
"Insurance Policy" means any written contract whereby one party undertakes
to defend, indemnify or guaranty another party against loss by certain specified
risks, contingencies or perils, including payment bonds, performance bonds,
fidelity bonds, financial guaranty bonds and similar instruments and
arrangements.
"Intellectual Property" means any intellectual property owned, used or
licensed (as licensor or licensee) by a Seller, including (a) such Seller's
name, assumed business names and corporate names, (b) patents, patent
disclosures, trademarks, service marks, trade dress, trade names, logos,
copyrights and mask works, and all registrations, applications and goodwill
associated with the foregoing, (c) all computer software (including source and
object codes), databases, data models or structures, algorithms, system
architectures and related documentation, data and manuals, (d) trade secrets,
know-how and confidential business information (including information concerning
products, product specifications, data, formulae, compositions, designs,
sketches, photographs, graphs, drawings, samples, inventions, discoveries,
ideas, past, current, and planned research and development, current and planned
methods and processes, client and customer lists and files, current and
anticipated client and customer requirements, vendor and supplier lists and
files, price lists, market studies, business plans, business opportunities and
financial data), (e) rights in Internet web sites and domain names used by such
Seller and (f) rights in electronic mail addresses and in telephone, facsimile,
cable or similar numbers used by such Seller.
"Interim Balance Sheet" is defined in Section 3.3.
"Inventories" means all inventories of a Seller, wherever located,
including all finished goods, work in process, raw materials, spare parts and
all other materials and supplies to be used or consumed by a Seller in the
production of finished goods.
"IRS" means the Internal Revenue Service or any successor agency and, to
the extent relevant, the Department of Treasury.
"Knowledge" means, with respect to Sellers, the actual knowledge after
reasonable investigation of Xxxxxx X. Xxxx, Xxxxx X. --------- Xxxxxxx, Xxx X.
XxXxxxxx, Xxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxx or Xxxxxx Xxxx.
"Law" means any constitution, law, statute, treaty, rule, regulation,
ordinance, code, relevant case law or principle of common law of any
Governmental Body.
"Liabilities" includes liabilities or obligations of any nature, whether
known or unknown, whether absolute, accrued, contingent, xxxxxx, inchoate or
otherwise, whether due or to become due, and whether or not required to be
reflected on a balance sheet prepared in accordance with GAAP.
"Material Adverse Effect" means any effect that is reasonably likely to be
materially adverse to the business, condition (financial or otherwise),
operations or results of operations of business represented by the Assets and
Assumed Liabilities.
"Multiemployer Plan" has the meaning specified in ERISA Section 3(37)(A).
"Net Assets" is defined on Schedule 2.5.
"Occupational Safety and Health Law" means any Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health
hazards.
"Order" means any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator and any Contract
with any Governmental Body pertaining to compliance with Law.
"Ordinary Course of Business" refers to actions taken in Sellers' normal
operation, consistent with past practice and financial condition and having no
Material Adverse Effect.
"Other Benefit Obligation" means any material obligation, arrangement or
customary practice owed, adopted or followed by any Seller or any ERISA
Affiliate, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
officers, employees or agents, other than obligations, arrangements and
practices that are Benefit Plans. Other Benefit Obligations include material
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies and severance payment policies.
"Person" refers to an individual or an entity, including a corporation,
share company, limited liability company, partnership, trust, association,
Governmental Body or any other body with legal personality separate from its
equityholders or members.
"Petition Date" means the date on which Sellers file the Bankruptcy
Petition.
"Plan" is defined in the Preliminary Statement.
"Plan Sponsor" has the meaning specified in ERISA Section 3(16)(B).
"Proceeding" means any action, arbitration, audit, examination,
investigation, hearing, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, and
whether public or private) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"Purchase Price" is defined in Section 2.5.
"Qualified Plan" means any Benefit Plan that meets or purports to meet the
requirements of Code Section 401(a).
"Real Property" is defined in Section 3.8(b).
"Real Property Leases" is defined in Section 3.8(b).
"Real Estate Permitted Encumbrances" shall mean:
(i) All building codes and zoning ordinances and other laws, ordinances,
regulations, rules, orders or determinations of any federal, state, county,
municipal or other governmental authority heretofore, now or hereafter enacted,
made or issued by any such governmental authority affecting the Real Property;
(ii) All easements, rights-of-way, covenants, conditions, restrictions,
reservations, licenses, agreements and other similar matters of record incurred
or suffered that would not have a Material Adverse Effect;
(iii) All encroachments, overlaps, boundary line disputes, shortages in
area, drainage and other similar easements, rights of persons in possession and
other matters not of record which would be disclosed by an accurate survey or
inspection of the Real Property and that would not have a Material Adverse
Effect;
(iv) All electric power, telephone, gas, sanitary sewer, storm sewer,
water, steam, compressed air and other utility lines, pipelines, service lines
and similar facilities now located on, over or under the Real Property, and all
licenses, easements, flowage rights, rights of way and other similar agreements
relating thereto that would not have a Material Adverse Effect; and
(v) All existing public and private roads and streets (whether dedicated or
undedicated), and all railroad lines and rights-of-way affecting the Real
Property.
"Records" means information relating to the operations of a Seller that is
inscribed on a tangible medium or that is stored in an electronic or other
medium and is retrievable in perceivable form, including all client and customer
lists, price lists, competitive analyses, referral sources, research and
development reports and records, production reports and records, service and
warranty records, equipment logs, operating guides and manuals, plans,
specifications, confidential information, financial and accounting records,
creative materials, advertising materials, promotional materials, studies,
reports, correspondence and similar documents, and personnel and employee
benefits records.
"Refundable Income Tax Amount" means the refundable income tax amount of
$3,789,000 identified in Pentacon's 2002 1st Quarter filing on Form 10-Q.
"Related Person" means, with respect to a particular Person, any other
Person directly or indirectly controlling, controlled by or under common control
with, such Person and, with respect to an individual, any other individual that
is a member of the individual's immediate family (by blood, marriage or
adoption), a member of the individual's household, an entity in which the
individual participates in management or an employee or employer of the
individual. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities or otherwise, and will be construed in accordance with the rules
promulgated under the Securities Act.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.
"Release Agreement" is defined in Section 2.9(a)(viii).
"Representative" means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, investment banker, legal counsel,
accountant or other representative of that Person.
"Retained Liabilities" is defined in Section 2.4.
"Scheduled Liabilities" is defined in Section 2.3.
"Securities Act" means the Securities Act of 1933.
"Seller" and "Sellers" are defined in the first paragraph of this
Agreement.
"Seller Benefit Plan" means any Benefit Plan covering any Active Employee
or any dependent or beneficiary thereof, of which a Seller or an ERISA Affiliate
is a Plan Sponsor, to which any Seller or an ERISA Affiliate contributes, has
contributed, or with respect to which has any liability, or in which any Seller
or an ERISA Affiliate otherwise participates or has participated.
"Seller Contract" means any Contract under or by which (a) a Seller has or
may acquire rights, (b) a Seller is or may become subject to any Liability or
(c) a Seller or any of the Assets is or may become bound.
"Seller Indemnitees" is defined in Section 11.3.
"Sellers' Disclosure Schedule" means the disclosure schedule delivered
pursuant to Article 3 by Sellers to Buyer concurrently with the execution and
delivery of this Agreement, together with any updates to it permitted by this
Agreement. Each section or subsection of Article 3, as applicable, will be
accompanied by a corresponding section of Sellers' Disclosure Schedule. If no
qualification to a representation or warranty made in such section or subsection
of Article 3 is warranted, Sellers will indicate "none" on the corresponding
section of Sellers' Disclosure Schedule. "Senior Subordinated Debt" is defined
in Section 5.3.
"Stockholders" means the stockholders of Pentacon.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by a Seller, together with any express or implied warranty
by the manufacturers or sellers or lessors of any item or component part
thereof, and all maintenance records and other documents relating thereto.
"Tax" or "Taxes" means all federal, state, local, foreign and other taxes,
charges, fees, duties (including customs duties), levies or assessments,
including income, gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, turnover, real and personal property (tangible and intangible),
sales, use, franchise, excise, value added, stamp, leasing, lease, user,
transfer, fuel, excess profits, occupational, interest equalization, windfall
profits, severance, license, payroll, environmental, capital stock, disability,
employee's income withholding, other withholding, unemployment and social
security taxes, that are imposed by any Governmental Body, including obligations
under abandoned property laws, and including any interest, penalties or
additions to tax attributable thereto.
"Tax Return" means any report, return or other information required to be
supplied to a Governmental Body in connection with any Taxes.
"365 Order" means a final, non-appealable order, in a form reasonably
acceptable to the Buyer which provides that the Sellers have assumed and
assigned to Buyer all Contracts which are Assets pursuant to 11 U.S.C. s.
365(b), (c) & (f).
"Transition Employees" means Xxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxx X.
Xxxxxxxxx and Xxx X. XxXxxxxx.
"Transition Services Agreement" means the agreement substantially in the
form of Exhibit 2.9(a)(vi), providing for the transition payments described in
Schedule 2.9.
"Vendor Liabilities" is defined in Section 2.3.
"WARN Act" means the Worker Adjustment and Retraining Notification Act."
Article 2
SALE AND TRANSFER OF ASSETS; CLOSING
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this Agreement,
at the Closing, each Seller will sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase and acquire from each Seller, all of such
Seller's right, title and interest in and to substantially all of such Seller's
assets on the Closing Date, including the following (the "Assets"): (a) all Cash
and related bank accounts; (b) all customer Contracts and relationships; (c) all
Accounts Receivable; (d) all Inventories; (e) all prepaid and other assets,
including lease, utility and similar deposits, service or maintenance contracts,
dues and subscriptions, guarantees, bonds or other rights; (f) all Real Property
and Tangible Personal Property; (g) all books and Records insofar as the same
relate to Assets otherwise described in this Section 2.1 or to Assumed
Liabilities; (h) all Intellectual Property; (i) all operating leases, capital
leases and Contracts to which such Seller is a party as of the Closing Date or
the full benefits of all operating leases, capital leases and Contracts used in
the business of Sellers to which such Seller is a third-party beneficiary; (j)
all vendor Contracts; (k) all rights and interests under each Insurance Policy,
including claims and rights to insurance proceeds, refunds or awards, to the
extent they relate to the Assets or Assumed Liabilities; (l) all Tax refunds of
Sellers, including the Refundable Income Tax Amount, other than property Tax
refunds and other Tax refund amounts specifically related to Excluded Assets or
Retained Liabilities; (m) all claims, rights and defenses of a Seller against
third parties relating to any of the Assets or Assumed Liabilities, whether
xxxxxx or inchoate, known or unknown, contingent or non-contingent, including
all attorney work-product protections, attorney-client privileges and other
legal protections and privileges to which such Seller may be entitled in
connection with any of the Assets or Assumed Liabilities; and (n) all Seller
Benefit Plans and any related assets, trusts and Insurance Policies.
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of each Seller (collectively,
the "Excluded Assets") are not part of the sale and purchase contemplated by
this Agreement, are excluded from the Assets, and will remain the property of
such Seller after the Closing: (a) subject to Section 5.10, all Contracts
identified on Schedule 2.2(a) (the "Excluded Contracts"); (b) all minute books,
stock records and corporate seals; (c) all shares of the capital stock of a
Seller held in treasury and capital stock, limited partnership interests and
other equity interests of direct and indirect subsidiaries of Pentacon; (d)
assets designated as being excluded on Schedule 2.2(d); (e) all personnel
records and other Records that a Seller is required by law to retain in its
possession; (f) all insurance proceeds, refunds or awards with respect thereto
and returns of premium with respect thereto, to the extent they relate to the
Excluded Assets or the Excluded Liabilities; (g) all inter-company accounts
receivable; (h) all rights of a Seller under this Agreement or any of the
Ancillary Agreements to which a Seller is a party; (i) any claims, actions,
causes of action or rights which Sellers may now or hereafter possess that are
not related to the Assets or the Assumed Liabilities; and (j) all preference
actions and fraudulent transfer or conveyance claims arising out of or related
to any case under the Bankruptcy Code except to the extent such claims relate to
Assumed Liabilities or the Assets.
2.3 ASSUMED LIABILITIES
Effective as of the Closing, Buyer will pay or assume and agree to
discharge only the following Liabilities of Sellers (collectively, the "Assumed
Liabilities"): (a) the accounts payable of Sellers on the Closing Date relating
to the Assets
(i) which were outstanding on the Petition Date, or
(ii) which were incurred after the Petition Date in accordance with
this Agreement,
provided that Buyer shall not assume the accounts payable of Sellers set forth
on Schedule 2.3(a) ("Excluded Payables") (the accounts payable assumed by Buyer
in clause (i) and (ii) are referred to as the "Pre-Petition Payables" and "Post
Petition Payables," respectively, and collectively as the "Vendor Liabilities"),
(b) such other contract liabilities in the amounts set forth on Schedule 2.3(b)
("Scheduled Liabilities"), (c) such accrued expenses as are set forth on
Schedule 2.3(c) ("Accrued Liabilities"), (d) all obligations and liabilities
under the written terms of any Contracts, operating leases, capital leases or
other agreements included within the Assets, including the Cure which has been
finally determined in the Bankruptcy Case on or prior to the Closing and
included on the Closing Balance Sheet, and (e) all principal and interest
outstanding under the Buyer DIP.
2.4 RETAINED LIABILITIES
The Retained Liabilities will remain the sole responsibility of and will be
retained, paid, performed and discharged solely by Sellers. "Retained
Liabilities" will mean every Liability of each Seller, whether known or unknown,
fixed or contingent, other than the Assumed Liabilities.
2.5 PURCHASE PRICE
Subject to the adjustment contemplated by Section 2.6 and Section 5.10, the
purchase price for the Assets will be $121,000,000, plus the assumption of the
Assumed Liabilities, plus interest on the amount of the Pre-Petition Payables
from the Petition Date to the Closing Date at the per annum rate of 5%, minus
(i) the amount of the Scheduled Liabilities, (ii) the outstanding principal
balance and accrued but unpaid interest of the Buyer DIP and (iii) any payment
made by Sellers between the date of the Closing Balance Sheet and the Closing
Date to satisfy any Liability other than the Assumed Liabilities (the "Purchase
Price"). The Purchase Price will be paid at the Closing in the following manner:
(a) Buyer will pay to Pentacon in cash for distribution pursuant to the Plan the
Cash Portion of the Purchase Price less $1,000,000; (b) Buyer will deposit with
the Escrow Agent the sum of $1,000,000, which will be held in escrow for a
period of 6 months following the Closing to secure the performance of each
Seller's obligations under this Agreement; and (c) Buyer will pay the
Pre-Petition Payables, plus interest thereon from the Petition Date to the
Closing Date at the rate of 5% per annum, (d) Buyer will pay any other Assumed
Liabilities, due and payable at the Closing and will discharge all other Assumed
Liabilities, as and when they become due and payable. If Sellers' Net Assets (as
defined in Schedule 2.5) as of the date of the Closing Balance Sheet are higher
or lower than the Net Assets set forth on the Interim Balance Sheet, the
Purchase Price will be adjusted upward or downward, respectively, on a
dollar-for-dollar basis by such amount in accordance with Section 2.6 below.
2.6 ADJUSTMENT
Pentacon will prepare and deliver to Buyer, within ten business days after
the last day of the month immediately prior to Closing, Pentacon's pro forma
consolidated balance sheet for such month, which shall contain such pro forma
adjustments to reflect the elimination from such balance sheet of any assets
which are not Assets and any liabilities which are not Assumed Liabilities (the
"Closing Balance Sheet") and all supporting schedules. The Closing Balance Sheet
(i) will include as a liability the amount of the Cure constituting an Assumed
Liability, and (ii) will be prepared in accordance with GAAP applied on a basis
consistent with the preparation of the Interim Balance Sheet without giving
effect to any purchase accounting adjustments arising from the Contemplated
Transactions. If Sellers' Net Assets as of the date of the Closing Balance Sheet
are higher or lower than the Net Assets as of the date of the Interim Balance
Sheet, the Purchase Price will be adjusted upward or downward, on a
dollar-for-dollar basis by such amount. Sellers and Buyer will act in good faith
to resolve between themselves any disputes regarding the Closing Balance Sheet.
If they are unable to do so within five business days after Buyer's receipt of
the Closing Balance Sheet, then the issues in dispute will be submitted to
Deloitte Touche Tohmatsu, certified public accountants (the "Accountants"), for
resolution. Each party will furnish to the Accountants such work papers and
other documents and information relating to the disputed issues as the
Accountants may request and are available to that party (or its independent
public accountants), and will be afforded the opportunity to present to the
Accountants any material relating to the disputed issues and to discuss the
issues with the Accountants. The resolution of the issues in dispute by the
Accountants, as set forth in a notice delivered to Buyer and Sellers by the
Accountants, will be binding and conclusive on the parties. Buyer and Sellers
will each bear 50% of the Accountants' fees and expenses for such resolution.
Sellers will revise the Closing Balance Sheet to reflect the resolution of the
issues in dispute, and the Purchase Price will be adjusted accordingly.
2.7 ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES
The Purchase Price will be allocated in accordance with Exhibit 2.7. After
the Closing, the parties will make consistent use of the allocation, fair market
values and useful lives specified in Exhibit 2.7 for all Tax purposes and in all
filings, declarations and reports with the IRS in respect thereof, including the
reports required to be filed under Section 1060 of the Code. The Plan shall
provide that (a) within 45 days after the date the Purchase Price is determined,
Buyer will prepare and deliver IRS Form 8594 to Seller to be filed with the IRS
and (b) in any Proceeding related to the determination of any Tax, neither Buyer
nor Seller will contend or represent that such allocation is not a correct
allocation. The foregoing allocation will not be determinative of the
appropriate allocation of the Purchase Price among any creditors of Sellers
asserting the right to receive a portion of the Purchase Price as a distribution
under the Bankruptcy Code.
2.8 CLOSING
The Closing will take place at the offices of Xxxxxx and Xxxxx, L.L.P.,
0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 at 10:00 a.m. (local time) on
the later of (a) the 11th day after the date of entry of the Confirmation Order
so long as such Confirmation Order is not subject to a stay, (b) the date that
is two business days following the satisfaction or waiver of each of the
conditions set forth in Articles 7 and 8, unless Buyer and Sellers agree
otherwise, and (c) after the Net Asset adjustment described in Section 2.6 has
been finally determined. Subject to Article 9, failure to consummate the
purchase and sale provided for in this Agreement at the place and on the date
determined by the previous sentence will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
2.9 CLOSING DELIVERIES
At the Closing:
(a) Pentacon will deliver to Buyer:
(i) a xxxx of sale substantially in the form of Exhibit 2.9(a)(i)
("Xxxx of Sale") executed by Seller;
(ii) an assignment and assumption agreement substantially in the
form of Exhibit 2.9(a)(ii) providing in part for the assignment of Sellers'
rights under each Seller Contract to be included in the Assets ("Assignment and
Assumption Agreement") executed by Sellers which Assignment and Assumption
Agreement will also contain Buyer's undertaking to assume and discharge those
obligations under the applicable Seller Contract that are Assumed Liabilities;
(iii) for each leasehold or sub-leasehold interest in Real
Property included in the Assets, an assignment of Sellers' rights under each
Seller Contract evidencing such interest substantially in the form of Exhibit
2.9(a)(iii) (collectively, "Assignment and Assumption of Lease Agreements")
executed by Sellers, which Assignment and Assumption of Lease Agreement will
also contain Buyer's undertaking to assume and discharge those obligations under
the applicable Seller Contract that are Assumed Liabilities;
(iv) separate assignments of certain Intellectual Property
included in the Assets substantially in the forms of Exhibit 2.9(a)(iv) executed
by Seller;
(v) such other deeds, bills of sale, assignments, certificates of
title and other instruments of transfer and conveyance as may reasonably be
requested by Buyer, each in form and substance satisfactory to Buyer, Seller and
their legal counsel and executed by Seller;
(vi) a Transition Services Agreement with each Transition
Employee;
(vii) an escrow agreement substantially in the form of Exhibit
2.9(a)(vii) (the "Escrow Agreement"), executed by Pentacon and Southwest Bank of
Texas (the "Escrow Agent");
(viii) a release substantially in the form of Exhibit
2.9(a)(viii) executed by Sellers (the "Release Agreement"); -----------------
(ix) a certificate executed by the president of Pentacon
Aerospace Group and the president of Pentacon's Industrial Group as to the
accuracy of Sellers' representations and warranties as of the date of this
Agreement and as of the Closing and as to their compliance with and performance
of its covenants and obligations to be performed or complied with on or before
the Closing Date in accordance with Article 7;
(x) a certificate of the Secretary of Pentacon certifying, as
accurate and complete as of the Closing, attached copies of the Governing
Documents of each Seller, certifying and attaching all requisite resolutions or
actions of each Seller's board of directors approving the execution and delivery
of this Agreement and the consummation of the Contemplated Transactions, and
certifying the incumbency and signatures of the officers of each Seller
executing this Agreement and any other document relating to the Contemplated
Transactions; and
(xi) a certificate from the chief accounting officer of Pentacon
that identifies all the payments made by Sellers to satisfy all Liabilities
other than Assumed Liabilities from the Closing Balance Sheet date through the
day prior to the Closing Date.
(b) Buyer will deliver to Sellers:
(i) the Cash Portion of the Purchase Price, adjusted as described
in Section 2.6 (less $1,000,000 to be delivered to the Escrow Agent) by wire
transfer to an account specified by Sellers in a writing delivered to Buyer at
least two business days before the Closing Date; (ii) the Escrow Agreement
executed by Buyer, together with the delivery of $1,000,000 to the Escrow Agent
by wire transfer to an account specified by the Escrow Agent;
(iii) the Assignment and Assumption Agreement executed by Buyer;
(iv) the Assignment and Assumption of Lease Agreements executed
by Buyer; (v) the Transition Services Agreements executed by Buyer;
(vi) a certificate executed by the chief financial officer of
Buyer as to the accuracy of Buyer's representations and warranties as of the
date of this Agreement and as of the Closing in accordance with Article 8; and
(vii) a release substantially in the form of Exhibit 2.9(b)(vii)
executed by Buyer.
In addition, on the Closing Date, Buyer will pay the Pre-Petition Payables,
together with interest thereon at the rate of 5% per annum from the Petition
Date to the date of payment.
The Assignment and Assumption Agreement, Assignment and Assumption of Lease
Agreements, Release Agreements and Escrow Agreement are collectively referred to
as the "Ancillary Agreements."
2.10 PLAN
(a) Subject to the terms and conditions of this Agreement, the Sellers
agree to propose and file with the Bankruptcy Court, and use their best efforts
to obtain confirmation of, the Plan pursuant to which the Assets shall be sold
and conveyed to Buyer in accordance with Section 363 of the Bankruptcy Code in
exchange for the Purchase Price and subject to the assumption of the Assumed
Liabilities. Copies of the Plan and Disclosure Statement are attached hereto as
Exhibits 2.10(a)(1) and 2.10(a)(2), respectively. Sellers will provide to Buyer
the Plan and the Disclosure Statement and any amendments thereto before the
filing thereof and a copy of the proposed Confirmation Order before the
submission thereof to the Bankruptcy Court.
(b) Sellers will be the sole proponent of the Plan, and as such may make
such additions to and amendments of the Plan and Disclosure Statement as they
may determine in their discretion. The Plan will not be amended to change the
following terms of the Plan in a manner that is adverse to Buyer, without
Buyer's consent, which will not be unreasonably withheld.
(i) The Assets will be transferred to the Buyer pursuant to the
Confirmation Order, free and clear of all liens, claims and encumbrances of any
kind, nature and description, other than the Assumed Liabilities;
(ii) Subject to the entry of the 365 Order, Sellers will assume,
pursuant to Section 365 of the Bankruptcy Code those executory Contracts to be
assigned and conveyed to Buyer as part of the Assets and Buyer will pay the Cure
which constitutes an Assumed Liability and assume those Contracts and provide
adequate assurance of future performance pursuant to Section 365 of the
Bankruptcy Code.
(c) Sellers shall promptly file a motion in the Bankruptcy Case, in a form
acceptable to Buyer, to establish a bar date for filing claims for Cure for
Contracts constituting part of the Assets.
2.11 BUYER DIP
Buyer will make available to Sellers up to $20 million in
debtor-in-possession financing ("Buyer DIP"). All principal and interest
outstanding under the Buyer DIP will be deducted dollar-for-dollar from the cash
portion of the Purchase Price as described in Section 2.5. The Buyer DIP will be
used to fund prepayments, deposits, COD payments, and similar payments to trade
creditors for goods and services provided to Sellers prior to Closing. The Buyer
DIP will be subordinate only to the debtor-in-possession financing being made
available to Sellers from their existing bank group, will be on terms and
conditions substantially equivalent thereto, and will otherwise be accorded the
highest available priority available to them under Section 364 of the Bankruptcy
Code. The Buyer DIP will have to be approved by the Bankruptcy Court after
notice to Seller's creditors and a hearing before the Bankruptcy Court.
Article 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer, jointly and severally, that, except
as set forth in Sellers' Disclosure Schedule:
3.1 ORGANIZATION AND GOOD STANDING
Each Seller is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, with requisite power and authority
to conduct its business as presently conducted, to own or use the properties and
assets that it purports to own or use, and to perform its obligations hereunder
and under the Ancillary Agreements. Each Seller is duly qualified to do business
as a foreign entity and is in good standing in each jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to be so qualified will not affect Sellers' ability to consummate the
transactions contemplated by this Agreement.
3.2 ENFORCEABILITY; NO CONFLICT; SUBSIDIARIES
(a) Subject to receipt of the Confirmation Order and the 365 Order, each
Seller has the requisite power, authority and capacity to execute and deliver
this Agreement and the Ancillary Agreements to which it is a party and to
perform its obligations under this Agreement and such Ancillary Agreements.
Assuming due authorization, execution and delivery of this Agreement by Buyer,
following the approval of this Agreement and the transactions contemplated by
this Agreement by the Bankruptcy Court pursuant to the Confirmation Order and
the 365 Order, this Agreement will constitute the legal, valid and binding
obligation of each Seller, enforceable against each Seller in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium, and other laws affecting creditors' rights generally from time to
time in effect and to general equitable principles. Assuming due authorization,
execution and delivery by the other parties thereto, following the approval of
this Agreement and the transactions contemplated by this Agreement by the
Bankruptcy Court pursuant to the Confirmation Order and the 365 Order, each
Ancillary Agreement to which a Seller becomes a party will, upon execution and
delivery, constitute the legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles.
(b) Section 3.2(b) of Sellers' Disclosure Schedule lists all Consents and
Governmental Authorizations other than as required by the Bankruptcy Court that
Sellers are required to obtain from, and all notices that Sellers are required
to give to any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions except those Consents, Governmental Authorizations or notices for
which the failure to obtain would not have a Material Adverse Effect.
(c) Except with respect to another Seller, no Seller owns, or has any
Contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
3.3 FINANCIAL STATEMENTS
Sellers have delivered to Buyer (a) an audited consolidated balance sheet
of Sellers as at December 31, 2001 (including the notes thereto, the "Balance
Sheet"), and the related consolidated statements of income, changes in
stockholders' equity and cash flow for the fiscal year then ended, together with
the report thereon of Ernst & Young LLP, independent certified public
accountants, and (b) an unaudited consolidated balance sheet of Sellers as at
March 31, 2002 (the "Interim Balance Sheet") and the related unaudited
consolidated statements of income, changes in stockholders' equity and cash flow
for the three months then ended. Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of Sellers as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP, subject in the case of interim financial statements to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Balance Sheet). The
financial statements referred to in this Section reflect the consistent
application of accounting principles throughout the periods involved other than
as disclosed therein.
3.4 ACCOUNTS RECEIVABLE
All Accounts Receivable that are reflected on the Balance Sheet, the
Interim Balance Sheet or the accounting records of Seller as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. There is no
contest, claim, defense or right of setoff, other than in the Ordinary Course of
Business, under any Contract with any obligor of an Account Receivable relating
to the amount or validity of such Account Receivable.
3.5 BOOKS AND RECORDS
The books of account, minute books, equity record books and other financial
records of each of the Sellers, all of which have been made available to Buyer,
are accurate and complete in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, including the maintenance of an
adequate system of internal controls. Each transaction of Sellers is properly
and accurately recorded in all material respects on the books and records of
Sellers, and each document (including any Contract, invoice or receipt) on which
entries in Sellers' books and records are based is accurate and complete in all
material respects.
3.6 INVENTORIES
All items included in the Inventories are of a quality and quantity usable
and, with respect to finished goods, salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been or will be reserved against, written off or written down to net realizable
value on the Balance Sheet, the Interim Balance Sheet, the Closing Balance Sheet
or the accounting records of Seller as of the Closing Date, as the case may be.
Except for customer items that have been consigned or bailed, Seller is not in
possession of any inventory not owned by Seller, including goods already sold.
All of the Inventories now on hand that were purchased after the date of the
Balance Sheet were purchased in the Ordinary Course of Business at a cost not
materially exceeding market prices prevailing at the time of purchase. All
Inventories are maintained at one of the locations of Real Property listed in
Section 3.8(b) of Sellers' Disclosure Schedule.
3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth on Section 3.7 of the Sellers' Disclosure Schedule,
since the date of the Balance Sheet, Sellers have conducted their business only
in the Ordinary Course of Business and there has not been any:
(a) change in payment or increase by Seller of any bonuses, salaries
or other compensation to any Stockholder, director, officer or employee, except
in each case for annual salary increases and otherwise in the Ordinary Course of
Business;
(b) adoption of, amendment to or increase in the payments to or
benefits under, any Seller Benefit Plan or material Other Benefit Obligation,
except in each case in the Ordinary Course of Business;
(c) damage to or destruction or loss of any Asset, whether or not
covered by insurance, with an aggregate value to Seller in excess of $100,000;
(d) (i) modification, cancellation or termination of, or receipt of,
notice of, termination of, any license, distributorship, dealer, sales
representative, joint venture, credit, guaranty or similar Contract, which is
material either individually or in the aggregate, except in each case in the
Ordinary Course of Business or (ii) entry into any Contract or transaction
involving a total remaining commitment by any Seller of at least $100,000;
(e) sale, lease or other disposition of any Asset (other than in the
Ordinary Course of Business) having a value in excess of $25,000;
(f) cancellation or waiver of any claims or rights with a value to any
Seller in excess of $50,000;
(g) material acceleration or delay in the payment of accounts payable
or in the collection of Accounts Receivable;
(h) material change in the accounting methods used by Seller;
(i) closure, cessation, consolidation or relocation of operations at
any Facility, except for the Facilities identified in Section 3.7(i) of Sellers'
Disclosure Schedule; or
(j) Contract by Seller to do any of the foregoing.
3.8 PROPERTIES
(a) Sellers own no fee simple interest in Real Property, and have no
obligation to purchase or acquire, now or in the future, any fee simple interest
in Real Property.
(b) Section 3.8(b) of Sellers' Disclosure Schedule sets forth a true,
correct and complete list of all leases and other agreements, including all
amendments thereto (collectively, the "Real Property Leases"), under which
Sellers have the right to use or occupy, now or in the future, any real
property, including the land, buildings and other improvements (the "Real
Property"). Except in connection with the Bankruptcy Petition, each Real
Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by Sellers or their affiliates as tenants
thereunder are current, no notice of default or termination under any Real
Property Lease is outstanding, no termination event or condition or charged
default on the part of Sellers or their affiliates as tenants or landlords
exists under any Real Property Lease. Sellers have not received notice, and have
no Knowledge, of any event that has occurred or condition that exists which,
with the giving of notice or the lapse of time or both, would constitute such a
default or termination event or condition.
(c) Sellers have not received notice, and have no Knowledge, of any
pending, threatened or contemplated condemnation proceeding affecting the Real
Property or any part thereof, or of any sale or other position of the Real
Property or any part thereof, in lieu of condemnation.
(d) Sellers have valid leasehold interests in the Real Property, free
and clear of any Encumbrances, except for Real Estate Permitted Encumbrances or
as otherwise set forth in Section 3.8(b) of Sellers' Disclosure Schedule.
(e) Use of the Real Property for the various purposes for which it is
presently being used is permitted under applicable zoning Laws and is not
subject to "permitted non-conforming" use or structure classifications. All
Improvements are in material compliance with applicable Laws, including those
pertaining to zoning, building and the disabled. No part of any Improvement
encroaches on any real property not included in the Real Property, and there are
no buildings, structures, fixtures or other improvements primarily situated on
adjoining property which encroach on any part of the Real Property, in a manner
that would cause a Material Adverse Effect.
3.9 SUFFICIENCY OF ASSETS
Except with respect to the Excluded Assets, the Assets constitute all such
assets necessary for the continued operation of Sellers' current business after
the Closing in substantially the same manner as before the Closing. Sellers have
accurately accounted for substantially all of the consolidated assets and
liabilities of Pentacon as reflected on, and as of, the date of the Interim
Balance Sheet, and, since such date Sellers have not shifted any material assets
or material liabilities between Sellers and any of their Related Persons.
3.10 INTELLECTUAL PROPERTY
(a) Sellers own or have the right to use pursuant to a valid Contract
all material items of Intellectual Property necessary for the operation of the
business of Sellers as presently conducted. Each material item of Intellectual
Property owned or used by Sellers as of the date of this Agreement will be owned
or available for use by Buyer on substantially identical terms immediately
subsequent to the Closing, other than Intellectual Property that may not be
assigned under Section 365 of the Bankruptcy Code. Sellers have taken all
necessary and desirable actions within their control to maintain and protect
each item of Intellectual Property that they own or use except for such actions
that would not have a Material Adverse Effect.
(b) Sellers have not, in any material respect, interfered with,
infringed upon, misappropriated or otherwise Contravened any intellectual
property rights of third parties, and Sellers have not received any written
notice and have no Knowledge of any other communication regarding any actual,
alleged or potential such interference, infringement, misappropriation or
Contravention. No event has occurred or circumstance exists that may (with or
without notice or lapse of time) constitute or result, nor will the continued
operation by Buyer of Sellers' business after the Closing as presently conducted
constitute or result, directly or indirectly, in any such material interference,
infringement, misappropriation or Contravention. To Sellers' Knowledge, no third
party has interfered with, infringed upon, misappropriated or otherwise
Contravened any Intellectual Property rights of Sellers.
(c) Section 3.10(c) of Sellers' Disclosure Schedule identifies each
issued patent and each registered trademark, service xxxx and copyright owned by
any Seller and identifies each pending patent application or application for
registration that has been made with respect to any Intellectual Property owned
by any Seller. Sellers have made available to Buyer true and complete copies of
all such patents, registrations and applications, each as amended to date, and
all other written documentation evidencing ownership and prosecution of each
such item.
3.11 CONTRACTS
(a) Section 3.11(a) of Sellers' Disclosure Schedule contains an
accurate and complete list of each of the following Seller Contracts to be
included in the Assets (other than the Seller Contracts listed on Section
3.11(a)(x) of Sellers' Disclosure Schedule which may be identified as Excluded
Contracts subject to Section 5.10):
(i) each Seller Contract that was not entered into in the
Ordinary Course of Business;
(ii) each Seller Contract that is a letter of credit, bond or
other indemnity (including letters of credit, bonds or other indemnities as to
which Seller is the beneficiary but excluding endorsements of instruments for
collection in the Ordinary Course of Business) or guarantee of a third party's
obligation;
(iii) each Seller Contract with respect to Intellectual Property
(including Contracts with current or former employees, consultants or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property) except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available software programs with a
value of less than $25,000 under which a Seller is the licensee;
(iv) each Seller Contract with any labor union or other employee
representative of a group of employees;
(v) each Seller Contract other than Seller Benefit Plans
involving a sharing of profits, losses, costs or Liabilities by a Seller with
any other Person;
(vi) each Seller Contract containing covenants that in any way
purport to restrict the business activity of any Seller or limit the freedom of
any Seller to engage in any line of business or to compete with any Person;
(vii) each Seller Contract providing for payments over $10,000 to
or by any Person based on or determined by reference to sales, purchases or
profits, other than direct payments for goods or standard form employee bonus
plans;
(viii) each power of attorney that is currently effective and
outstanding, other than limited powers of attorneys issued in the Ordinary
Course of Business, such as to custom brokers;
(ix) each Seller Contract for capital expenditures in excess of
$100,000; and
(x) each Seller Contract that is not a vendor contract, a
customer contract or a Real Property Lease, which Seller Contract provides for
payments in excess of $100,000 in the aggregate.
(b) Sellers have made available to Buyer a true and complete copy of
each of the Seller Contracts listed in Section 3.11(a) of Sellers' Disclosure
Schedule.
(c) Except as may result from the Contemplated Transactions, each
Seller Contract listed in Section 3.11(a) of Sellers' Disclosure Schedule is in
full force and effect and is valid and enforceable in accordance with its terms,
subject to bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles. Sellers have not given or received notice and have no
Knowledge of any other communication (written or oral) regarding any actual,
alleged or potential Contravention of any Seller Contract listed in Section
3.11(a) of Sellers' Disclosure Schedule.
3.12 CUSTOMERS AND SUPPLIERS
Sellers have made available to Buyer the names and addresses of the 10
largest customers and the 10 largest suppliers (measured in each case by dollar
volume of purchases or sales during the year ended December 31, 2001) of Sellers
taken as a whole and the dollar amount of purchases or sales which each such
customer or supplier represented during the year ended December 31, 2001.
Sellers have communicated to Buyer any actual or threatened termination,
cancellation or material limitation of, or any material change in, the business
relationship of Sellers with any such customer or supplier.
3.13 INSURANCE
Sellers maintain in full force and effect Insurance Policies covering its
insurable business risks and Liabilities in adequate amounts to provide
reasonable protection for the business of and the properties owned and used by
Sellers, including the Assets. Sellers have complied with each such Insurance
Policy and program, and since December 31, 2001, Sellers have not, and will not
have as of the Closing, made any material changes to any such Insurance
Policies.
3.14 TAXES
(a) All material Taxes that Sellers are required by law to withhold or
collect, including sales and use Taxes and amounts required to be withheld for
Taxes of employees, have been duly withheld or collected and, to the extent
required, have been paid over to the proper taxing authority or are held in
separate bank accounts for such purpose.
(b) There are no Encumbrances upon any of the Assets arising from any
failure or alleged failure to pay any Tax (other than Encumbrances relating to
Taxes not yet due and payable).
(c) Sellers have not made or become obligated to make, and neither
Sellers nor Buyer will as a result of any Contemplated Transaction become
obligated to make, any payments that could be nondeductible by reason of Section
280G (without regard to subsection (b)(4) thereof) or 162(m) of the Code, nor
will Sellers or Buyer be required to "gross up" or otherwise compensate any
individual because of the imposition of any excise tax on such a payment to the
individual.
3.15 EMPLOYEE BENEFITS
(a) Section 3.15 of Sellers' Disclosure Schedule contains an accurate
and complete list of each Seller Benefit Plan and, subject to Section 5.10,
identifies exceptions to the representations and warranties regarding the Seller
Benefit Plans set forth herein. Sellers have made available to Buyer (i) all
documents that set forth the terms of each Seller Benefit Plan or Other Benefit
Obligation, and of any related trust, including all summary plan descriptions,
summaries and descriptions furnished to participants and beneficiaries, (ii) all
personnel, payroll, and employment manuals and policies, (iii) a written
description of any Seller Benefit Plan or Other Benefit Obligation that is not
otherwise in writing, (iv) all registration statements filed with respect to any
Seller Benefit Plan, (v) all Insurance Policies purchased by or to provide
benefits under any Seller Benefit Plan, (vi) all reports submitted to Sellers
since December 31, 1999, by third-party administrators, actuaries, investment
managers, trustees, consultants, or other independent contractors with respect
to any Seller Benefit Plan or Other Benefit Obligation, (vii) the Form 5500
filed in each of the most recent three plan years with respect to each Seller
Benefit Plan and Other Benefit Obligation, including all schedules thereto and
the opinions of independent accountants, (viii) all notices that were given by
any Seller, any ERISA Affiliate or any Seller Benefit Plan to the IRS or any
participant or beneficiary, pursuant to statute, since December 31, 1999, (ix)
all notices that were given by any Governmental Body to any Seller, any ERISA
Affiliate or any Seller Benefit Plan since December 31, 1999, and (x) with
respect to each Seller Benefit Plan that is a Qualified Plan, the most recent
determination letter for each such Seller Benefit Plan.
(b) Sellers have performed all of their obligations under each Seller
Benefit Plan and with respect to each Other Benefit Obligation. Each Seller
Benefit Plan has been administered in accordance with its terms. Sellers have
made appropriate entries in their financial records and statements for all
obligations and liabilities under the Seller Benefit Plans and Other Benefit
Obligations that have accrued but are not due. Sellers, with respect to all
Seller Benefit Plans and Other Benefit Obligations, is and each Seller Benefit
Plan and Other Benefit Obligation are in compliance in all material respects
with ERISA, the Code and other applicable Laws, including the provisions of such
Laws expressly mentioned in this Section 3.18, and with any applicable
collective bargaining agreement. No non-exempt transaction prohibited by ERISA
Section 406 and no non-exempt "prohibited transaction" under Code Section
4975(c) has occurred with respect to any Seller Benefit Plan. Sellers have no
Liability to any Governmental Body with respect to any Seller Benefit Plan,
including any Liability imposed by Chapter 43 of the Code. All employer and
employee contributions which are due and owing as of the Closing Date with
respect to the Seller Benefit Plans have been or will be made in accordance with
local law and past practice. All contributions and payments made or accrued with
respect to all Seller Benefit Plans and Other Benefit Obligations are deductible
under Code Section 162 or 404. No event has occurred or circumstance exists that
may result in a material increase in premium costs of Seller Benefit Plans and
Other Benefit Obligations that are insured or a material increase in benefit
costs of Seller Benefit Plans and Other Benefit Obligations that are
self-insured. There is no materially unfunded liability under any Seller Benefit
Plan. Other than routine claims for benefits submitted by participants or
beneficiaries, no claim against, or Proceeding involving, any Seller Benefit
Plan or Other Benefit Obligation is pending or, to Seller's Knowledge, is
threatened.
(c) Each Qualified Plan of Sellers has received a favorable
determination letter from the IRS that it is qualified under Code Section 401(a)
and that its related trust is exempt from federal income tax under Code Section
501(a), and each such Benefit Plan materially complies in form and in operation
with the requirements of the Code and materially meets the requirements of a
"qualified plan" under Section 401(a) of the Code. No event has occurred or
circumstance exists that may give rise to disqualification or loss of tax-exempt
status of any such Benefit Plan or trust.
(d) Neither any Seller nor any ERISA Affiliate has ever established,
maintained or contributed to, or had an obligation to maintain or contribute to,
any Benefit Plan that is subject to Section 412 of the Code, Section 302 of
ERISA, or Title IV of ERISA. Neither Seller nor any ERISA Affiliate has
terminated any Benefit Plan subject to Title IV of ERISA. No Seller has ever
established, maintained or contributed to, or had an obligation to maintain or
contribute to, any voluntary employees' beneficiary association under Code
Section 501(c)(9), any organization or trust described in Code Section
501(c)(17) or 501(c)(20), or any welfare benefit fund as defined in Code Section
419(e). Neither any Seller nor any ERISA Affiliate has ever established,
maintained, contributed to or otherwise participated in, or had an obligation to
maintain, contribute to or otherwise participate in, or has any liability with
respect to, any Multiemployer Plan. Except to the extent required under ERISA
Section 601 et seq. and Code Section 4980B, no Seller provides health or welfare
benefits for any retired or former employee nor is it obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(e) Sellers have the right to modify and terminate benefits to
retirees (other than pensions) with respect to both retired and active
employees. Sellers have complied with the provisions of ERISA Section 601 et
seq. and Code Section 4980B and with the provisions of ERISA Section 701 et seq.
and Subtitle K of the Code.
(f) No individual classified as a non-employee for purposes of
receiving employee benefits (such as an independent contractor, leased employee,
consultant or special consultant), regardless of treatment for other purposes,
is eligible to participate in or receive benefits under any Seller Benefit Plan.
(g) Neither any Seller nor any ERISA Affiliate is a party to any
agreement, whether written or oral, with change-in-control or similar
provisions. Except as set forth in Section 3.15(g) of Seller's Disclosure
Schedule, neither the execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement will: (1) entitle any employee to
severance pay, (2) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other obligation
pursuant to, any Seller Benefit Plan or Other Benefit Obligation in respect of
any employee or (3) result in any breach or violation of, or a default under,
any Seller Benefit Plan or Other Benefit Obligation.
3.16 EMPLOYEE RESTRICTIONS
Neither Xxxxxx X. Xxxx nor any employee of Sellers who reports directly to
him, all of whom are listed on Section 3.16 of Sellers' Disclosure Schedule, is
a party to, or is otherwise bound by, any Contract, including any
confidentiality, noncompetition or proprietary rights agreement with any Person
other than a Seller that adversely affects or could adversely affect (a) the
performance of his or her duties for Sellers or Buyer, (b) his or her ability to
assign to Sellers or Buyer rights to any invention, improvement, discovery or
information relating to the business of Sellers or Buyer, or (c) the ability of
Sellers or Buyer to conduct its business.
3.17 LABOR RELATIONS; EMPLOYMENT LAW COMPLIANCE; EMPLOYEES
(a) Except as set forth on Section 3.17 of the Sellers Disclosure
Schedule, no Seller has been, nor is any Seller currently a party to any
collective bargaining agreement or other labor contract. To Sellers' Knowledge,
no application or petition is pending for an election of or for certification of
a collective bargaining agent representing Sellers' employees.
(b) Sellers have provided to Buyer a complete list of the following
information for each director, officer, Active Employee, employee on layoff
status or long-term disability leave, independent contractor, consultant and
agent of Sellers: name, job title, date of hiring or engagement, date of
commencement, current compensation paid or payable and any change in
compensation since April 1, 2002, sick and vacation leave that is accrued but
unused, and service credited for purposes of vesting and eligibility to
participate under any Seller Benefit Plan.
(c) There is not pending or, to Sellers' Knowledge, threatened any
formal Proceeding against or affecting Sellers relating to the alleged violation
of any applicable Law pertaining to labor relations or employment matters. No
formal grievance or arbitration Proceeding exists that might have an adverse
effect on Sellers or the conduct of their business. There has been no charge of
discrimination filed against or, to Sellers' Knowledge, threatened against
Sellers with the Equal Employment Opportunity Commission or similar Governmental
Body.
3.18 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
Except as set forth in Section 3.18 of Sellers' Disclosure Schedule:
(a) Sellers are in material compliance with all Environmental Laws or
Occupational Safety and Health Laws, in each case applicable to such Sellers.
Sellers have not received any actual or threatened Order, notice or other
communication from (i) any Governmental Body or other Person acting in the
public interest, or (ii) the current or prior owner or operator of any Facility,
of any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or bear the cost of
any Environmental, Health and Safety Liabilities with respect to any Facility or
other property or asset (whether real, personal or mixed) in which any Seller
has an interest, or with respect to any property or Facility at or to which
Hazardous Materials were used, processed or disposed of by such Seller.
(b) There are no pending or, to Sellers' Knowledge, threatened,
claims, Encumbrances or other restrictions of any nature, resulting from any
Environmental, Health and Safety Liabilities or arising under any Environmental
Law or Occupational Safety and Health Law, with respect to or affecting any
Facilities or any other properties and assets (whether real, personal or mixed)
in which any Seller has an interest.
(c) Sellers have no basis to expect, nor have they received, any
citation, directive, inquiry, notice, Order, summons, warning or other
communication of any actual, alleged or potential obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect
to any Facility or other property or asset (whether real, personal or mixed) in
which any Seller has an interest.
(d) There are no Hazardous Materials resulting from Sellers'
operations present on or in the Environment at any Facility in violation of
Environmental Laws.
(e) There has been no Release of any Hazardous Materials from Sellers'
operations at or from any Facility.
(f) Sellers have delivered to Buyer true and complete copies of any
reports, studies, analyses, tests or monitoring results possessed by Sellers
pertaining to Hazardous Materials or Hazardous Activities in, on or under any
Facilities.
3.19 LEGAL PROCEEDINGS; ORDERS
(a) Section 3.19(a) of Sellers' Disclosure Schedule lists any pending
Proceedings (i) by or against any Seller that relate to or may affect the
business of Sellers or any of the Assets, or (ii) that challenge, or that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions (other than the Bankruptcy Case). To
Sellers' Knowledge, no other such Proceeding has been threatened, and no event
has occurred or circumstance exists that is reasonably likely to give rise to or
serve as a basis for the commencement of any such Proceeding (other than the
Bankruptcy Case). Except for the Bankruptcy Petition, no such Proceedings will
have a Material Adverse Effect.
(b) Section 3.19(b) of Sellers' Disclosure Schedule lists each Order
to which a Seller, or any of the Assets, is or has been subject. To Sellers'
Knowledge, no officer, agent or employee of a Seller is subject to any Order
that prohibits such officer, agent or employee from engaging in or continuing
any conduct, activity or practice relating to the business of Sellers.
(c) Each Seller is, and at all times since December 31, 1999, has
been, in full compliance with all of the terms and requirements of each Order to
which it or any of the Assets is or has been subject. No event has occurred or
circumstance exists that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any Order to which such Seller or any of the Assets is subject. No Seller has
received, at any time since December 31, 1999, any written notice or, to
Sellers' Knowledge any other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged or potential
violation of, or failure to comply with, any term or requirement of any Order to
which such Seller or any of the Assets is or has been subject.
3.20 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
Except as set forth in Section 3.20 of Sellers' Disclosure Schedule:
(a) Without limiting the scope of any other representation in this
Agreement, Sellers are, and at all times since December 31, 1999, have been, in
material compliance with each Law that is applicable to it or to the conduct of
its business or the ownership or use of any of the Assets except to the extent
that noncompliance would not result in a Material Adverse Effect. Sellers have
not received at any time since December 31, 1999 any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged or potential material Contravention of any
applicable Law or any actual, alleged or potential obligation on the part of
Sellers to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature with respect to the Assets.
(b) Section 3.20(b) of Sellers' Disclosure Schedule contains an
accurate and complete list of each material Governmental Authorization that is
held by Sellers or that otherwise relates to the business of Sellers or to any
of the Assets, each of which is valid and in full force and effect. Sellers are,
and at all times since December 31, 1999, have been, in material compliance with
all of the material terms and requirements of each such Governmental
Authorization. Sellers have not received at any time since December 31, 1999,
any written notice from any Governmental Body or any other Person regarding any
actual, alleged or potential material Contravention of any material Governmental
Authorization.
(c) The Governmental Authorizations listed in Section 3.20(b) of
Sellers' Disclosure Schedule collectively constitute all of the material
Governmental Authorizations not held by Sellers which are necessary to permit
Sellers to conduct their business lawfully in the manner in which they currently
conduct such business and to permit Sellers to own and use the Assets in the
manner in which they currently own and use the Assets.
3.21 DISCLOSURE
No statement in Sellers' Disclosure Schedule or notification given pursuant
to Section 5.5 will contain any untrue statement or omit to state a material
fact necessary to make the statements therein or in this Agreement, in light of
the circumstances in which they were made, not misleading.
Article 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that, except as set forth in
Buyer's Disclosure Schedule:
4.1 ORGANIZATION
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
4.2 ENFORCEABILITY; NO CONFLICT
(a) Buyer has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and its Ancillary Agreements and to
perform its obligations under this Agreement and its Ancillary Agreements, which
actions have been duly authorized and approved by all necessary corporate action
of Buyer. Assuming the execution and delivery of this Agreement by Sellers, this
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Assuming their execution
and delivery by the other parties thereto, the Ancillary Agreements to which
Buyer becomes a party will, upon execution and delivery, constitute legal, valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms.
(b) Buyer is not and will not be required to obtain any Consent or
Governmental Authorization in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
(c) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay or otherwise interfere with any
of the Contemplated Transactions pursuant to (i) any provision of Buyer's
Governing Documents, (ii) any resolution adopted by the board of directors or
the stockholders of Buyer, (iii) any Law, Order or Governmental Authorization to
which Buyer may be subject or (iv) any Contract to which Buyer is a party or by
which Buyer may be bound.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
knowledge, no such Proceeding has been threatened.
4.4 BROKERS OR FINDERS
Neither Buyer nor any of its Representatives have incurred any Liability
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with the Contemplated Transactions.
4.5 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(a) BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS AND TO THE EXTENT
EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLERS (OR ANYONE ACTING ON THEIR BEHALF)
HAVE NOT MADE, DO NOT MAKE AND SPECIFICALLY DISCLAIM ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, OF, AS TO, OR CONCERNING THE ASSETS, THE ASSUMED LIABILITIES OR THE
BUSINESS OF SELLERS.
(b) BUYER FURTHER ACKNOWLEDGES AND AGREES THAT BUYER HAS HAD ADEQUATE
OPPORTUNITIES TO INSPECT, EXAMINE AND INVESTIGATE THE ASSETS. BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED BY
SELLERS OR ANYONE ON THEIR BEHALF WITH RESPECT TO THE ASSETS WAS OBTAINED FROM A
VARIETY OF SOURCES AND THAT, EXCEPT AS SET FORTH HEREIN, NO SELLER HAS MADE ANY
INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKE NO
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BUYER
FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SET FORTH HEREIN, THE SALE OF
THE ASSETS AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS," "WHERE IS" BASIS.
NOTHING HEREIN SHALL AFFECT THE WARRANTY OF TITLE IN THE SPECIAL WARRANTY DEEDS
AND OTHER TRANSACTION DOCUMENTS CONVEYING THE ASSETS FROM SELLERS TO BUYER AT
THE CLOSING.
4.6 FINANCING
Buyer has cash on hand and/or available credit in amounts sufficient to pay
the Purchase Price and otherwise consummate the Contemplated Transactions.
Article 5
COVENANTS OF SELLERS BEFORE CLOSING
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date and upon reasonable
advance notice from Buyer, each Seller will (a) afford Buyer and its
Representatives during normal business hours full and free access to Sellers'
personnel, properties (including subsurface testing), Contracts, books and
records, and other documents and data, (b) furnish such Persons with copies of
all such Contracts, books and records, and other documents and data as Buyer may
reasonably request, and (c) furnish such Persons with such additional financial,
operating and other data and information as Buyer may reasonably request.
Additionally, Sellers will provide Buyer with all schedules, statements and
operating reports filed by Sellers with the Bankruptcy Court. To the extent
Buyer conducts an environmental investigation involving testing, Buyer shall
take any and all actions necessary or advisable to minimize the inconvenience to
Sellers and shall indemnify and hold harmless Sellers from and against any and
all claims, lawsuits, liabilities, damages, and expenses (including strict
liability claims under the Comprehensive Environmental Response Compensation and
Liability Act and similar state statutes) resulting from Buyer's actions. Buyer
shall be responsible for restoring the Facility or other location to its
pre-investigation condition, for any damage caused by its testing activities,
and for the proper disposal of any wastes generated by its testing. Buyer will,
upon Sellers' request, provide to Sellers a copy of any report, sample results
or analysis generated by its environmental investigation.
5.2 OPERATION OF THE BUSINESS OF SELLER
Except as otherwise contemplated by this Agreement, between the date of
this Agreement and the Closing Date, each Seller will (a) conduct its business
only in the Ordinary Course of Business, (b) use its Best Efforts to preserve
intact its current business organization (including the maintenance of existing
insurance coverage), keep available the services of its current officers,
employees and agents, and maintain relations and goodwill with its suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships, (c) confer with Buyer concerning operational matters of a
material nature, and (d) otherwise conduct its business subject to the
limitations and restrictions imposed by the Bankruptcy Code and the Bankruptcy
Court; provided, however, that Sellers will terminate or consolidate operations
at certain Facilities and will close certain Facilities as provided in the
Facility Consolidation Plan, dated April 25, 2002 and as communicated to Buyer
on May 3, 2002 during due diligence.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the date
of this Agreement and the Closing Date, Sellers will not without the prior
written consent of Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events in Section 3.7 would be likely to occur, (b) make any modifications to
any other material Seller Contract or Governmental Authorization, permit the
levels of Inventories, Accounts Receivable and pre-paid assets to vary
materially from the levels customarily maintained, which consent will not be
unreasonably withheld, or (d) enter into any compromise or settlement of any
pending or threatened material Proceeding outside the Ordinary Course of
Business relating to the Assets or the Assumed Liabilities. Sellers will use
their Best Efforts not to pay or satisfy on the Closing Date (i) any principal
or interest on debtor-in-possession financing; (ii) any principal or interest on
the Second Amended and Restated Loan Agreement dated September 30, 1999 (and as
subsequently amended or replaced) between Pentacon and Bank of America NA, as
agent; (iii) any principal or interest on the 12.25% Senior Subordinated Notes
due 2009 and related Indenture (the "Senior Subordinated Debt"); or (iv) any
Liabilities other than Assumed Liabilities; provided that if any such payment is
made, the Confirmation Order shall provide that the amount of such payment will
be refunded in full to Buyer following the Closing.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will
make all filings that they are required by applicable Law to make to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Sellers will (a) cooperate reasonably with Buyer with respect to
all filings that Buyer elects to make or that Buyer is required by Law to make
in connection with the Contemplated Transactions, and (b) cooperate reasonably
with Buyer in obtaining any Governmental Authorizations and Consents required to
consummate the Contemplated Transactions.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Sellers become aware of (a) any fact or
condition that causes or constitutes a breach of any of Sellers' representations
and warranties as of the date of this Agreement, or (b) the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in Sellers' Disclosure Schedule,
Seller will promptly deliver to Buyer a supplement to Sellers' Disclosure
Schedule specifying such change. Such delivery shall be deemed to update the
Sellers' Disclosure Schedule as of the date of delivery, and shall be deemed to
qualify Sellers' representations and warranties from and after the date of
delivery, including any requirement that Sellers' representations and warranties
be materially true at Closing. Such delivery, however, will not affect any
rights of Buyer under Article 9 and Article 11 for breaches of representations
and warranties made or deemed made prior to the date of delivery of such revised
Sellers' Disclosure Schedule. During the same period, Sellers will promptly
notify Buyer of the occurrence of any breach of any covenant of Sellers in this
Article or of the occurrence of any event that may make the satisfaction of the
conditions in Article 7 impossible or unlikely.
5.6 NO SOLICITATION
Except as required by the Bankruptcy Code or other applicable Law, until
such time, if any, as this Agreement is terminated pursuant to Article 9,
Sellers will not, and will cause each of their Representatives not to, directly
or indirectly, solicit, initiate, or otherwise encourage any inquiries,
proposals or offers from, or discussions or negotiations with, any Person (other
than Buyer) relating to any business combination transaction involving any
Seller, including the sale of any of the shares of any Seller, any merger or
consolidation, or the sale of any of the Assets (other than in the Ordinary
Course of Business). Notwithstanding the foregoing, Sellers may respond to any
such inquiries, proposals or offers that were not solicited, initiated or
encouraged by Sellers or any of Sellers' Representatives, as contemplated by
Article 10, provided Sellers fully comply with Article 10.
5.7 BEST EFFORTS
Sellers will use their Best Efforts to cause the conditions in Article 7
and Section 8.2 to be satisfied.
5.8 INTERIM FINANCIAL STATEMENTS
Until the Closing Date, Pentacon will deliver to Buyer within fifteen
business days after the end of each month a copy of its consolidated balance
sheet, income statement and supporting schedules for such month prepared in a
manner and containing information consistent with Sellers' current practices and
certified by Sellers' chief accounting officer as to compliance with Section
3.3. Monthly operating reports will be provided to Buyer as soon as they become
available.
5.9 BULK TRANSFER; REFUNDABLE INCOME TAX AMOUNT
(a) Buyer and Sellers hereby waive compliance with the bulk transfer
provisions of the Uniform Commercial Code (or any similar law) in connection
with the Contemplated Transactions. Notwithstanding any provision of this
Agreement to the contrary, any and all claims, losses, damages, liabilities,
costs and expenses incurred by Buyer, Sellers or any of their respective
affiliates as a result of any failure to comply with any such bulk transfer
provisions shall be borne by Sellers.
(b) The Confirmation Order shall provide that, if the Refundable
Income Tax or any other Tax refund amount included in the Assets has not been
received by Sellers prior to Closing, Sellers shall be required to deliver such
Refundable Income Tax Amount to Buyer promptly following receipt.
5.10 SPECIFIED SCHEDULE UPDATES
Sellers will deliver to Buyer on or before 12:00 p.m. Central Daylight Time
on May 29, 2002 an update to Section 3.11(a)(x) and Section 3.15 of Sellers'
Disclosure Schedule. Within one business day of Buyer's receipt thereof, Buyer
will deliver to Sellers an update to Schedule 2.2(a) reflecting any additional
Seller Contracts to be identified thereon as Excluded Contracts. If any update
made to Section 3.15 of Sellers' Disclosure Schedule results in a cost, expense
or other Liability to Buyer identified prior to Closing, Buyer will be entitled
to receive a dollar-for-dollar reduction in the Purchase Price, or, if such
Liability is identified subsequent to the Closing, a claim for indemnification
and a right of setoff under the Escrow Agreement that will not be subject to any
limitation set forth in Section 11.5 hereof.
Article 6
COVENANTS OF BUYER BEFORE CLOSING
6.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Buyer will
make all filings that it is required by Law to make to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyer will (a) cooperate reasonably with Sellers with respect to all
filings that Sellers elect to make or that they may be required by Law to make
in connection with the Contemplated Transactions, and (b) cooperate reasonably
with Sellers in obtaining any Governmental Authorizations and Consents required
to consummate the Contemplated Transactions.
6.2 BEST EFFORTS
Buyer will use its Best Efforts to cause the conditions in Article 8 and
Section 7.2 to be satisfied.
6.3 CONFIDENTIALITY
Buyer shall hold, and shall cause its employees, agents, affiliates,
consultants, representatives and advisors to hold, any information which it or
they receive in connection with Section 5.1 of this Agreement in strict
confidence in accordance with and subject to the terms of the Confidentiality
Agreement, dated as of March 8, 2002, between Buyer and Pentacon (the
"Confidentiality Agreement").
Article 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, on
or before the Closing Date, of each of the following conditions (any of which
may be waived by Buyer, in whole or in part):
7.1 PERFORMANCE
All of the covenants and obligations that Sellers are required to perform
or to comply with under this Agreement on or before the Closing Date (considered
both collectively and individually) must have been duly performed and complied
with in all material respects.
7.2 CONSENTS
Each of the Governmental Authorizations and Consents identified in Schedule
7.2 must have been obtained and must be in full force and effect.
7.3 ADDITIONAL DOCUMENTS
Sellers will have delivered to Buyer:
(a) if requested by Buyer, any consents or other instruments that may
be required to permit Buyer's qualification under each Seller's name in each
jurisdiction in which a Seller is licensed or qualified to do business as a
foreign corporation;
(b) all schedules, statements and operating reports filed with the
Bankruptcy Court; and
(c) such other documents as Buyer may reasonably request for the
purpose of evidencing the satisfaction of any condition referred to in this
Article.
7.4 CONFIRMATION ORDER; 365 ORDER; THIRD PARTIES
(a) The Confirmation Order and the 365 Order must have been entered.
(b) The Confirmation Order must include a finding that all third
parties entitled to notice of the Contemplated Transactions (including, without
limitation, the third parties to the assumed and assigned executory contracts
and unexpired leases which are part of the Assets) have been properly served by
the Sellers.
(c) More than 120 days must not have elapsed from the filing of the
Bankruptcy Petition without the entry of the Confirmation Order and the 365
Order, unless the delay in obtaining such order is solely due to the schedule of
the Bankruptcy Court or to the breach of this Agreement by Buyer.
7.5 INJUNCTION
No order shall be in effect that enjoins, restrains, conditions or
prohibits the consummation of the Contemplated Transactions.
7.6 FORCE MAJEURE
No acts of God or war or terrorism will have occurred that has a Material
Adverse Effect.
7.7 OPPORTUNITY TO CURE
In the event that Buyer notifies Sellers of its decision not to consummate
the sale and purchase of the Assets due to the failure of any of the conditions
contained in this Article 7 to be satisfied, Sellers shall have the opportunity
for a period of 10 business days to take such actions as may be necessary to
remedy the circumstances which have resulted in the failure of such condition or
conditions to be satisfied.
Article 8
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Assets and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
on or before the Closing Date, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 BUYER'S PERFORMANCE
All of the covenants and obligations that Buyer is required to perform or
to comply with under this Agreement on or before the Closing Date (considered
both collectively and individually) must have been performed and complied with
in all material respects.
8.2 CONSENTS
Each of the Governmental Authorizations and Consents required to be
obtained as a condition to the Closing must have been obtained and must be in
full force and effect.
8.3 INJUNCTION
No order shall be in effect that enjoins, restrains, conditions or
prohibits the consummation of the Contemplated Transactions.
8.4 CONFIRMATION ORDER; 365 ORDER
The Confirmation Order and the 365 Order must have been entered.
Article 9
TERMINATION
9.1 TERMINATION EVENTS
Subject to Section 9.2, this Agreement may, by notice given before or at
the Closing, be terminated:
(a) by mutual written consent of Buyer and Sellers;
(b) by Buyer if a Seller has committed a material breach of any
provision of this Agreement and Buyer has not waived such breach, provided,
however, that prior to terminating this Agreement pursuant to this Section,
Buyer will notify Sellers of such breach and give Sellers 15 days to cure such
breach and provide an updated Sellers' Disclosure Schedule.
(c) by Sellers if Buyer has committed a material breach of any
provision of this Agreement and Sellers have not waived such breach; provided,
however, that prior to terminating this Agreement pursuant to this Section,
Pentacon will notify Buyer of such breach and give Buyer 15 days to cure such
breach and provide an updated Buyer's Disclosure Schedule.
(d) by Buyer if it is or becomes impossible to satisfy any condition
in Article 7 (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition;
(e) by Sellers if it is or becomes impossible to satisfy any condition
in Sections 8.1, 8.2 and 8.3 (other than through the failure of Sellers to
comply with its obligations under this Agreement) and Sellers have not waived
such condition;
(f) by Buyer if the Confirmation Order and the 365 Order have not been
entered as provided in Section 7.4 above;
(g) by Buyer in accordance with the following:
(i) The "Actual Cumulative EBITDA Ratio" will equal (i) the
EBITDA of Seller for the three months ending on the last day of the month
preceding the Closing divided by (ii) the EBITDA of Sellers set forth in
Sellers' Business Plan for such period. EBITDA for any period means Pentacon's
consolidated earnings for such period, plus, to the extent deducted in
calculating such earnings, all net interest expense, including the interest
component of capital lease obligations, all income tax expenses, all
depreciation and amortization expense, and all costs and expenses of Sellers
attributable to severance expenses, the filing of the Bankruptcy Petition,
preparation of the Plan and Disclosure Statement, the consummation of the Plan
and this Agreement and costs of the Contemplated Transactions and alternative
restructuring transactions. If the Actual Cumulative EBITDA Ratio is 0.60 or
less, Buyer may terminate the Definitive Agreement.
(ii) The "Actual Monthly EBITDA Ratio" will equal (i) the EBITDA
of Seller for any single month starting after March 31, 2002 and ending prior to
the Closing divided by (ii) the EBITDA of Seller set forth in Business Plan for
such period. If the Actual Monthly EBITDA Ratio is 0.50 or less, Buyer may
terminate the Definitive Agreement; and
(h) by Buyer at its discretion upon notice from Sellers or the
Bankruptcy Court that Sellers (i) have entered into a definitive agreement
providing for a Competing Transaction or (ii) have filed a pleading with the
Bankruptcy Court to enter into any Competing Transaction.
9.2 EFFECT OF TERMINATION
(a) Each party's right of termination under Section 9.1 is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of such right of termination will not be an election of remedies.
Subject to Section 9.2(b) below, if this Agreement is terminated pursuant to
Section 9.1, all obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 6.3, 9.2, 14.1, 14.2, 14.3, 14.15 and
14.16 will survive; provided, however, that if this Agreement is terminated by a
party because of the breach of the Agreement by another party or because one or
more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of any other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
(b) Subject to Bankruptcy Court approval to be included as part of the
Bid Procedures Order, Seller will promptly, but in no event later than five
business days after the first to occur of any of the events described in the
following clauses, pay to Buyer in cash the amount of Buyer's out-of-pocket
costs and expenses incurred in connection with pursuing, negotiating and/or
consummating the Contemplated Transactions, including all fees and expenses of
Buyer's investment bankers, counsel, auditors, consultants and other
representatives, which amount will not exceed $1,500,000:
(i) Buyer terminates this Agreement due to a material breach by
any Seller of any provision hereunder;
(ii) Sellers terminate this Agreement for any reason other than
Buyer's material breach of any provision hereunder; or
(iii) Buyer terminates this Agreement pursuant to Section 9.1(f)
and at the time of such termination Sellers have entered into a definitive
agreement for a Competing Transaction.
Article 10
BREAK-UP FEE AND OVERBID PROCEDURES
10.1 COMPETITIVE BIDDING
Buyer acknowledges that, from the date hereof and any prior time and until
the transaction contemplated by this Agreement is consummated, Sellers may be
debtors-in-possession under the Bankruptcy Code, to the extent required by the
the Bankruptcy Code or applicable Law, Sellers will cause their Representatives
and affiliates to consider the submission of any inquiries, proposals or offers
by, any Person (in addition to Buyer) to (i) make a tender or exchange offer for
and/or acquire 50% or more of the outstanding shares of any class of capital
stock of any Seller, (ii) acquire 50% or more of the outstanding principal
amount of the Senior Subordinated Debt or (iii) enter into an agreement to
acquire and/or consummate any transaction providing for the acquisition of any
Seller by merger, consolidation, recapitalization, reorganization or purchase of
50% or more of its assets, either in or out of bankruptcy (a "Competing
Transaction"). In addition, Sellers shall have the responsibility and obligation
to respond to any inquiries or offers to purchase the Assets and perform any and
all other acts related thereto which are required under the Bankruptcy Code or
other applicable law, including, without limitation, supplying information
relating to the business of Sellers and the Assets to prospective purchasers.
Sellers shall promptly notify Buyer of the existence of any inquiry, proposal or
offer received by Sellers with respect to any Competing Transaction, and Sellers
shall communicate to Buyer the material terms of any inquiry, proposal or offer
which it may receive with respect to any Competing Transaction but not the
identity of the party making such inquiry, proposal or offer. Sellers shall
promptly provide to Buyer any non-public information regarding the Assets or the
business of Sellers provided to any other party which was not previously
provided to Buyer.
10.2 BIDDING PROCEDURES
This Agreement contemplates that there shall be a sale of Sellers' Assets
to Buyer pursuant to the Plan in accordance with Section 363 of the Bankruptcy
Code. The sale of Assets to Buyer may become subject to a competitive bidding
process. Such bidding process shall include a break-up fee for Buyer which shall
be implemented pursuant to an order of the Bankruptcy Court establishing the
competitive bidding procedures and related break-up fee (the "Bid Procedures
Order"). Within ten (10) business days after the Petition Date, Sellers shall
file a motion with the Bankruptcy Court seeking approval of the Bid Procedures
Order. The Bid Procedures Order shall approve competitive bidding, overbid, and
sales procedures and, among other provisions, provide:
(a) that a proposal for a Competing Transaction must be in writing and
submitted using this Agreement as a form (the "Competing Agreement"). A
Competing Agreement shall be made upon terms and conditions substantially
similar to those contained in this Agreement (except as may constitute an
improvement on the terms set forth therein), and must be accompanied by a
"clean" and "black-lined" version of the Competing Agreement marked to show
changes from this Agreement;
(b) that, to be a qualified bid, a Competing Transaction shall provide
additional cash consideration in an amount not less than $4,000,000, and that
any successive overbids (by any Person) shall be made in increments not less
than $1,000,000 in excess of the last submitted, highest qualified bid for the
Assets;
(c) that Sellers retain sole discretion to evaluate successive
overbids based on the aggregate net consideration provided in light of any
Break-Up Fee to be paid as well as any other factor Sellers determine has
bearing on whether a successive overbid is a higher and better offer;
(d) that any Person submitting a Competing Transaction shall provide
an Xxxxxxx Money Deposit in an amount at least equal to the Break-Up Fee;
(e) that the deadline for any Person submitting a qualified bid for a
Competing Transaction be five business days prior to the hearing to be held to
approve the Sellers' Disclosure Statement; and
(f) for the payment of a break-up fee of $3,000,000 (the "Break-Up
Fee") to Buyer in the event a Competing Transaction is consummated and Sellers
do not consummate a transaction with Buyer as contemplated in this Agreement.
ARTICLE 11
INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement will survive the Closing and the consummation of the Contemplated
Transactions, subject to the limitations set forth in this Article.
11.2 INDEMNIFICATION BY SELLERS
Sellers will indemnify and hold harmless Buyer and its Representatives
(collectively, the "Buyer Indemnitees") for, and will pay to the Buyer
Indemnitees the monetary value of, any Adverse Consequences arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by any
Seller in this Agreement or in any certificate or document delivered by Sellers
pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation in
this Agreement;
(c) any Retained Liability;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Seller or any Stockholder (or
any Person acting on their behalf) in connection with any of the Contemplated
Transactions; and
(e) any Proceedings, demands or assessments incidental to any of
the matters set forth in Sections 11.2(a) through (d).
11.3 INDEMNIFICATION BY BUYER
Buyer will indemnify and hold harmless Sellers and their
Representatives (collectively, the "Seller Indemnitees"), and will pay to Seller
Indemnitees the monetary value of any Adverse Consequences arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer in
this Agreement or in any certificate or document delivered by Buyer pursuant to
this Agreement;
(b) any breach by Buyer of any covenant or obligation in this
Agreement;
(c) any of the Assumed Liabilities;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions; and
(e) any Proceedings, demands or assessments incidental to any of
the matters set forth in Section 11.3(a) through (d).
11.4 TIME LIMITATIONS
(a) If the Closing occurs, Sellers will have no Liability (for
indemnification or otherwise) for breach of (i) a covenant or obligation to be
performed or complied with before the Closing Date or (ii) a representation or
warranty, other than those in Sections 3.1, 3.2, 3.15, 3.16 or 3.18, unless on
or before the six month anniversary of the Closing Date, and with respect to a
claim under Sections 3.1, 3,2, 3.15, 3.16 or 3.18, unless on or before the one
year anniversary of the Closing Date, Buyer notifies Sellers of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Buyer. A claim for indemnification or reimbursement based upon
fraud or intentional misrepresentation or for a breach of Section 12.3(d) may be
made at any time.
(b) If the Closing occurs, Buyer will have no Liability (for
indemnification or otherwise) for breach of (i) a covenant or obligation to be
performed or complied with before the Closing Date or (ii) a representation or
warranty, unless on or before the six month anniversary of the Closing Date,
Sellers notify Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers.
11.5 LIMITATIONS ON AMOUNT - SELLERS
Sellers shall have no liability or obligation to Buyer under this
Agreement, except to the extent that the amount thereof exceeds $500,000 as to
all events or occurrences in the aggregate. In addition, Sellers will have no
liability for the amount by which the total monetary value of all Adverse
Consequences or other claims or damages exceeds $1,500,000. Notwithstanding the
foregoing, the limitations of this Section 11.5 will not apply to any fraud or
any intentional misrepresentation by a Seller or any breach of a covenant herein
or as provided under Section 5.10.
11.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability for the amount by which the total monetary
value of all Adverse Consequences exceeds $1,000,000.
11.7 PROCEDURE FOR INDEMNIFICATION--DEFENSE OF THIRD-PARTY CLAIMS
(a) Promptly after receipt by a Person entitled to indemnity under Section
11.2 or 11.3 (an "Indemnified Person") of notice of the assertion of a
third-party claim against it, the Indemnified Person will, if a claim is to be
made against a Person obligated to indemnify under such Section (an
"Indemnifying Person"), give notice to the Indemnifying Person of the assertion
of such claim. An Indemnified Person's failure to notify an Indemnifying Person
will not relieve the Indemnifying Person of any Liability that it may have to
the Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the resolution of such claim is prejudiced by the Indemnified
Person's failure to give such notice.
(b) If any claim referred to in Section 11.7(a) is brought against an
Indemnified Person by means of a Proceeding and the Indemnified Person gives
notice to the Indemnifying Person of the commencement of such Proceeding, the
Indemnifying Person will be entitled to participate in such Proceeding and, to
the extent that it wishes, to assume the defense of such Proceeding with counsel
satisfactory to the Indemnified Person (unless (i) the Indemnifying Person is
also a party to such Proceeding and the Indemnified Person determines in good
faith that joint representation would be inappropriate or (ii) the Indemnifying
Person fails to provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding). After notice from the Indemnifying Person to the
Indemnified Person of its election to assume the defense of such Proceeding, the
Indemnifying Person will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Article for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the Indemnified Person in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
Indemnifying Person assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification, (ii) no
compromise or settlement of such claims may be effected by the Indemnifying
Person without the Indemnified Person's consent unless (A) there is no finding
or admission of any violation of Laws or any violation of the rights of any
Person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person, and (iii) the Indemnified Person
will have no Liability with respect to any compromise or settlement of such
claims effected without its consent.
(c) If notice is given to an Indemnifying Person of the commencement of any
Proceeding and the Indemnifying Person does not, within ten days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such Proceeding, the Indemnifying Person
will be bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Person.
(d) Notwithstanding the foregoing, if an Indemnified Person determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such Proceeding, but the
Indemnifying Person will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(e) Notwithstanding the provisions of Sections 11.7(a) through (d), Buyer
will be entitled to assume control of any Cleanup and related Proceeding arising
from a claim relating to any Environmental, Health and Safety Liability on a
Facility or Real Property then owned or used by Buyer in its operations.
11.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party obligated to indemnify and will be
paid promptly after such notice.
11.9 TREATMENT OF INDEMNIFICATION PAYMENTS
Any indemnification payment made pursuant to this Article will be treated
by the parties to the extent permitted under applicable Law as an adjustment to
the Purchase Price for Tax, accounting and all other purposes.
11.10 ESCROW; RIGHT OF SETOFF
Buyers shall have rights of setoff as provided in the Escrow Agreement.
Neither the exercise of nor the failure to exercise such right of setoff or to
give a notice of a claim under the Escrow Agreement will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.
ARTICLE 12
ADDITIONAL COVENANTS
12.1 TRANSACTION TAXES
Sellers will pay in a timely manner all Taxes resulting from or payable in
connection with the sale of the Assets pursuant to this Agreement, including all
transfer, documentary, recording, notarial, sales, use, registration, stamp and
similar Taxes and fees, regardless of the Person on whom Laws impose such Taxes.
12.2 DISTRIBUTION OF PROCEEDS
In addition to payment of Taxes pursuant to Section 12.1, Sellers will
provide for the distribution of the Purchase Price proceeds in accordance with
the Plan.
12.3 ASSISTANCE IN PROCEEDINGS; PRIVILEGES; ACCESS TO RECORDS
(a) Each party will cooperate reasonably with the other party and its
counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and Records in connection with,
any Proceeding involving or relating to (i) any Contemplated Transaction or (ii)
any action, activity, circumstance, condition, conduct, event, fact, failure to
act, incident, occurrence, plan, practice, situation, status or transaction on
or before the Closing Date involving Sellers or their business or any
Stockholder.
(b) Sellers and Buyer acknowledge that the Assets include all attorney
work-product protections, attorney-client privileges and other legal protections
and privileges to which Sellers may be entitled in connection with any of the
Assets or Assumed Liabilities. Sellers are not waiving, and will not be deemed
to have waived or diminished, any of its attorney work-product protections,
attorney-client privileges or similar protections or privileges as a result of
the disclosure of information to Buyer and its Representatives in connection
with this Agreement and the Contemplated Transactions. Sellers and Buyer (i)
share a common legal and commercial interest in all of the information and
communications that may subject to such protections and privileges, (ii) are or
may become joint defendants in Proceedings to which such protections and
privileges may relate and (iii) intend that such protections and privileges
remain intact should either party become subject to any actual or threatened
Proceeding to which such information or communications relate. Sellers agree
that they will have no right or power after the Closing Date to assert or waive
any such protection or privilege included in the Assets. Sellers will take any
actions reasonably requested by Buyer, at the sole cost and expense of Buyer
unless Buyer is entitled to indemnification therefor under the provisions of
Article 10, in order to permit Buyer to preserve and assert any such protection
or privilege included in the Assets.
(c) After the Closing Date, Buyer will retain for a period consistent with
Buyer's record retention policies and practices but for a minimum of 6 years,
those Records of Sellers delivered to Buyer. Buyer also will provide Sellers and
their Representatives reasonable access thereto, during normal business hours
and on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or other Proceedings
or for any other reasonable business purpose specified in such notice. After the
Closing Date, Sellers will provide Buyer and its Representatives reasonable
access to Records that are Excluded Assets, during normal business hours and on
at least three days' prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
(d) After the Closing Date, Sellers will take all actions reasonably
requested by Buyer, at Buyer's expense, to preserve, collect, and promptly
assign and/or endorse over to Buyer any and all Tax refunds included in the
Assets, and not collected by Sellers as of the Closing Date. If any Governmental
Body takes any action to reduce the amount of any Tax refund claimed by Sellers
on a Tax Return filed before the Closing date, or on a Tax Return filed after
the Closing Date but relating to a Tax period ending on or before the Closing
Date, Sellers will promptly notify Buyer of such action, and take such
responsive action, at Buyer's expense, as Buyer may reasonably request. Sellers
will keep Buyer informed quarterly of the progress of all such refund claims
until the last refund or portion thereof has been collected by Buyer.
12.4 POST-CLOSING ASSISTANCE
Buyer agrees to make available to Sellers from and after the Closing the
services of such Continued Employees and any other senior managers of Sellers
then employed by Buyer as Sellers may reasonably request, having due regard for
the employment obligations of such Continued Employees and other senior
managers, to Buyer, for the purposes of assisting Sellers with respect to (i)
claims reconciliation, (ii) other administrative matters related to the Plan and
(iii) the winding-up of the affairs of Sellers.
12.5 FURTHER ASSURANCES
Subject to the provisos in Section 6.1, the parties will cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (a) to furnish upon
reasonable request to each other such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such other acts and
things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement and the Contemplated Transactions. If
Sellers or Buyer after the Closing Date receives any funds properly belonging to
the other party in accordance with the terms of this Agreement, the receiving
party will promptly so advise such other party, will segregate and hold such
funds in trust for the benefit of such other party and will promptly deliver
such funds, together with any interest earned thereon, to an account or accounts
designated in writing by such other party.
ARTICLE 13
EMPLOYEES AND EMPLOYEE BENEFITS
13.1 PRE-CLOSING EMPLOYMENT LIABILITIES
Through the Closing, Sellers will continue to be responsible for (i) the
payment of all wages to Active Employees with respect to their services as
employees of Sellers, (ii) the payment to Active Employees of any termination or
severance payments under Seller Benefit Plans or Other Benefit Obligations and
the provision of group health plan continuation coverage in accordance with the
requirements of ERISA Section 601 et seq. and Code Section 4980 B, and (iii) all
payments to Active Employees required under the WARN Act.
13.2 EMPLOYMENT; SELLER BENEFIT PLANS
(a) Buyer agrees to offer employment to all Active Employees employed by
Sellers effective as of the Closing Date, other than the Transition Employees.
Except as otherwise agreed by Buyer and Sellers' employees, all such offers
shall be for employment at will. Employees of Sellers accepting such offers of
employment with Buyer, other than those senior managers of Sellers who execute
employment contracts with Buyer at the Closing, ("Continued Employees") shall be
provided with substantially similar positions as such employees held immediately
prior to the Closing Date and at compensation and benefits that are
substantially equivalent to or better than the compensation and benefits
provided by Sellers to such employees as of the date of this Agreement and which
compensation and benefits will extend for a period of at least twenty four
months thereafter so long as such employees continue to remain employed by
Buyer. Sellers shall terminate all persons who are to become Continued Employees
on the Closing Date in compliance with all applicable Laws, rules, regulations
and order requirements.
(b) Sellers agree to take all action and execute such documents as may be
necessary or advisable to show that Buyer has assumed the Seller Benefit Plans
and that Buyer has become the Plan Sponsor of such Benefit Plans. Buyer agrees
to take all reasonable actions and execute such documents as may be reasonably
necessary for the Buyer to assume the Seller Benefit Plans and to become the
Plan Sponsor of such Benefit Plans on the Closing Date.
(c) Buyer and its Affiliates will take into account all service of the
Continued Employees earned while employed by Sellers prior to the Closing Date
and will treat such service as service with Buyer for purposes of determining
such employees' eligibility for holidays, sick days and vacation benefits. Any
group health, disability or other welfare benefit plan made available by Buyer
for the benefit of any Continued Employee and his or her dependents and
beneficiaries will not contain any exclusion or limitation with respect to any
preexisting condition for such Continued Employee or his or her dependents or
other beneficiaries and Buyer will credit all such individuals with deductibles
and out-of-pocket maximums incurred or paid by on behalf of such individuals for
the applicable plan year containing the Closing Date. Buyer will take into
account all service of the Continued Employees with Sellers prior to the Closing
Date for purposes of participation and vesting under the Benefit Plans of Buyer,
but will not take such services into account for the purpose of calculating any
benefit under Buyer's pension and excess benefit plans.
(d) The parties hereto agree that, as soon as practicable following the
execution of this Agreement, they will undertake a joint review of the
liabilities under the Seller Benefit Plans. Sellers will use their reasonable
best efforts to disclose to Buyer as promptly as possible all such information
as Buyer or its advisors may reasonably request pertaining to the amount and
funding of such liabilities.
(e) As soon as practicable following the Closing Date, Sellers will cause
to be transferred to Buyer any trust, Insurance Policy (other than director and
officer insurance policies), cash and other assets set aside or designated to
fund or finance any Seller Benefit Plan or Other Benefit Obligation or other
employee benefit or employment-related liabilities related to the Continued
Employees and assumed by the Buyer under this Agreement.
(f) Buyer shall, or shall cause a subsidiary of Buyer to, during the period
commencing on the Closing Date and ending on the second anniversary of the
Closing Date, provide Continued Employees and their dependents and beneficiaries
with Benefit Plans and Other Benefit Obligations which in the aggregate are no
less favorable than those provided to such employees, dependents and
beneficiaries immediately prior to the Closing Date.
(g) Except as expressly provided herein, nothing contained herein,
expressed or implied, is intended to confer upon any employee of Sellers any
right to employment or continued employment with Buyer, or any benefits under
any Benefit Plan, including without limitation severance benefits, by reason of
this Agreement. In addition, the provisions of this Agreement, in particular
Article 13, are for the sole benefit of the parties to this Agreement and their
respective affiliates and are not for the benefit of any third parties.
13.3 OTHER ACTIONS
Sellers and Buyer will give any notices required by Law and take whatever
other actions as may be necessary to carry out the arrangements described in
this Article. Sellers and Buyer will provide each other with such plan documents
and summary plan descriptions, employee data or other information as may be
reasonably required to carry out the arrangements described in this Article.
Sellers will provide Buyer with completed I-9 forms and attachments with respect
to all Continued Employees, except for such employees as Sellers will certify in
writing to Buyer are exempt from such requirement.
ARTICLE 14
GENERAL PROVISIONS
14.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of its Representatives. Each party
will pay all amounts payable to its respective broker and/or investment banker
in connection with this Agreement and the Contemplated Transactions. If this
Agreement is terminated, the obligation of each party to pay its own expenses
will be subject to any rights of such party arising from a breach of this
Agreement by another party.
14.2 PUBLIC ANNOUNCEMENTS
Sellers and Buyer will consult with each other concerning public
disclosures of this Agreement and the Contemplated Transactions and the means by
which Sellers' employees, customers, suppliers and others having dealings with
Sellers will be informed of the Contemplated Transactions, and Buyer will have
the right to be present for any such communication. Except as required by
applicable Law, any public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as Buyer and Sellers mutually determine.
14.3 CONFIDENTIALITY
(a) For a period of two years after the Closing Date, Sellers will treat
and hold as such, and will not use for the benefit of itself or others, any
confidential information, in whatever form or medium, concerning the operations
or affairs of Sellers in respect of the Assets or the Assumed Liabilities of the
types that, as of the date of this Agreement, are deemed to be Confidential
Information. If Sellers are requested or required (by oral request or written
request for information or documents in any Proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any such Confidential
Information, then Sellers will notify Buyer promptly in writing of the request
or requirement so that Buyer may seek an appropriate protective order or waive
compliance with this Section. If, in the absence of a protective order or
receipt of a waiver hereunder, Sellers are, on the advice of outside counsel,
required to disclose any such Confidential Information to any Governmental Body,
then Sellers may disclose such Confidential Information to such Governmental
Body; provided, however, that Sellers will use their commercially reasonable
efforts to obtain at the request and expense of Buyer an order or other
assurance that confidential treatment will be accorded to such Confidential
Information.
(b) Sellers will be deemed to have assigned and conveyed to Buyer at the
Closing all rights and remedies to which it is or may in the future be entitled
under any confidentiality agreement between Sellers and any prospective
purchaser of Sellers or any of their material assets or properties. If any such
agreements prohibit assignment to Buyer, then Sellers will cooperate with Buyer,
at Buyer's request and expense, to permit Buyer to assert all rights and
remedies to which Sellers may be entitled under such agreements.
14.4 NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment, or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the individual (by name or title) designated
below (or to such other address, facsimile number, e-mail address or individual
as a party may designate by notice to the other parties):
If to Seller:
Pentacon, Inc.
c/x XxXxxxxxx, Xxxxxxxx & Company, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx, Chairman
Facsimile No.: 000-000-0000
E-mail Address: xxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
with a copy (which will not constitute notice) to:
Pentacon, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx XxXxxxxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail Address: xxx.xxxxxxxx@xxxxxxxx.xxx
Xxxxxx and Xxxxx, LLP 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, Xxxxx
00000-0000 Attention:
Facsimile No.: (000) 000-0000
E-mail Address:
If to Buyer:
Anixter International Inc.
0000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Senior Vice President - Finance
Facsimile No.: (000) 000-0000
E-mail Address: xxxxxx.xxxxxx@xxxxxxx.xxx
with a copy (which will not constitute notice) to:
Anixter International Inc.
0000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail Address: xxxx.xxx@xxxxxxx.xxx
with a copy (which will not constitute notice) to:
Xxxxx & XxXxxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Suse
Facsimile No.: (000) 000-0000
E-mail Address: xxxxxx.x.xxxx@xxxxxxxx.xxx
14.5 FURTHER ACTIONS
Upon the reasonable request of any party to this Agreement, the other
parties will (a) furnish to the requesting party any additional information, (b)
execute and deliver, at their own expense, any other documents and (c) take any
other actions as the requesting party may reasonably require to more effectively
carry out the intent of this Agreement and the Contemplated Transactions.
14.6 INCORPORATION OF SCHEDULES AND EXHIBITS
The Schedules and Exhibits identified in this Agreement, including Sellers'
Disclosure Schedule and Buyer's Disclosure Schedule, are incorporated herein by
reference and made a part of this Agreement.
14.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the Confidentiality
Agreement and the documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented
or otherwise modified except in a written document executed by the party against
whose interest the modification will operate.
14.8 DISCLOSURE SCHEDULES
Sellers' Disclosure Schedule and Buyer's Disclosure Schedule will be
arranged in sections corresponding to the numbered and lettered sections of
Articles 3 and 4, as applicable. The statements in such Disclosure Schedules,
and those in any supplements to them, relate only to the provisions in the
Section of this Agreement which they expressly address and not to any other
provision. Nothing in such Disclosure Schedules will be adequate to disclose an
exception to any representation or warranty made in Article 3 or Article 4
unless the applicable Disclosure Schedule identifies the exception with
reasonable particularity and describes the facts relating to such exception in
reasonable detail. Without limiting the generality of the foregoing, the listing
or inclusion of a copy of a document or other item will not be adequate to
disclose an exception to any representation or warranty made in this Agreement
unless the representation or warranty relates to the existence of the document
or item itself. In the event of any inconsistency between the statements in the
body of this Agreement and those in such Disclosure Schedules (other than an
exception expressly set forth as such in a Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
14.9 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence. 14.10 DRAFTING AND REPRESENTATION
The parties have participated jointly in the negotiation and drafting of
this Agreement. No provision of this Agreement will be interpreted for or
against any party because that party or its legal representative drafted the
provision.
14.11 SEVERABILITY
If a court of competent jurisdiction holds any provision of this Agreement
invalid or unenforceable, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
14.12 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties,
except that Buyer may without the consent of Sellers assign any of its rights
and delegate any of its obligations under this Agreement to any entity that is a
Related Person of Buyer or to any subsequent acquirer of the Assets or of all or
substantially all of the business of Buyer or any Related Person of Buyer;
provided, however, that Buyer will remain primarily liable for all obligations
under this Agreement. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of Buyer's
and Sellers' successors and permitted assigns. Nothing expressed or referred to
in this Agreement will be construed to give any Person, other than the parties
to this Agreement, any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement except such rights
as may inure to a successor or permitted assignee under this Section.
14.13 ENFORCEMENT OF AGREEMENT
Each party acknowledges and agrees that the other party could be damaged
irreparably if any of the provisions of this Agreement are not performed in
accordance with the specific terms and that any breach of this Agreement could
not be adequately compensated in all cases by monetary damages alone.
Accordingly, each party agrees that, in addition to any other right or remedy to
which Buyer or a Seller may be entitled, at law or in equity, each party will be
entitled to enforce any provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent injunctive relief to
prevent breaches or threatened breaches of any of the provisions of this
Agreement, without posting any bond or other undertaking.
14.14 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither any failure nor any delay by any party in exercising
any right, power or privilege under this Agreement or any of the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in a written document signed by the other party, (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given, and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of that party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
14.15 GOVERNING LAW
This Agreement will be governed by and construed under the laws of Illinois
without regard to conflicts of laws principles that would require the
application of any other law.
14.16 JURISDICTION; SERVICE OF PROCESS
Any action, hearing, suit or proceeding arising out of or relating to this
Agreement or any Contemplated Transaction will be subject to the jurisdiction of
the Bankruptcy Court.
14.17 COUNTERPARTS
This Agreement may be executed in one or more counterparts.
The parties have executed and delivered this Agreement as of the date
indicated in the first sentence of this Agreement.
ANIXTER INTERNATIONAL INC.
By: ____________________________________________________
Name
Title
PENTACON, INC.
By: ____________________________________________________
Name
Title
PENTACON DELAWARE, INC.
By: ____________________________________________________
Name
Title
JIT HOLDINGS, INC.
By: ____________________________________________________
Name
Title
PENTACON PROPERTIES, L.P.
By: ____________________________________________________
Name
Title
PENTACON INTERNATIONAL SALES, INC.
By: ____________________________________________________
Name
Title
PENTACON AEROSPACE GROUP, INC.
By: ____________________________________________________
Name
Title
PENTACON USA, L.P.
By: ____________________________________________________
Name
Title
PENTACON INDUSTRIAL, INC
By: ____________________________________________________
Name
Title
PENTACON EUROPE LIMITED
By: ____________________________________________________
Name
Title
PENTACON MEXICO S.A. DE C.V.
By: ____________________________________________________
Name
Title
PENTACON CANADA CORPORATION
By: ____________________________________________________
Name
Title
TABLE OF CONTENTS
(continued)
TABLE OF CONTENTS
PAGE
Article 1 CONSTRUCTION AND DEFINITIONS........................................1
1.1 CONSTRUCTION.................................................1
1.2 DEFINITIONS..................................................2
Article 2 SALE AND TRANSFER OF ASSETS; CLOSING...............................11
2.1 ASSETS TO BE SOLD...........................................11
2.2 EXCLUDED ASSETS.............................................12
2.3 ASSUMED LIABILITIES.........................................12
2.4 RETAINED LIABILITIES........................................13
2.5 PURCHASE PRICE..............................................13
2.6 ADJUSTMENT..................................................13
2.7 ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES........14
2.8 CLOSING.....................................................14
2.9 CLOSING DELIVERIES..........................................15
2.10 PLAN........................................................16
2.11 BUYER DIP...................................................17
Article 3 REPRESENTATIONS AND WARRANTIES OF SELLERS..........................17
3.1 ORGANIZATION AND GOOD STANDING..............................18
3.2 ENFORCEABILITY; NO CONFLICT; SUBSIDIARIES...................18
3.3 FINANCIAL STATEMENTS........................................19
3.4 ACCOUNTS RECEIVABLE.........................................19
3.5 BOOKS AND RECORDS...........................................19
3.6 INVENTORIES.................................................19
3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS.......................20
3.8 PROPERTIES..................................................20
3.9 SUFFICIENCY OF ASSETS.......................................21
3.10 INTELLECTUAL PROPERTY.......................................21
3.11 CONTRACTS...................................................22
3.12 CUSTOMERS AND SUPPLIERS.....................................23
3.13 INSURANCE...................................................23
3.14 TAXES.......................................................24
3.15 EMPLOYEE BENEFITS...........................................24
3.16 EMPLOYEE RESTRICTIONS.......................................26
3.17 LABOR RELATIONS; EMPLOYMENT LAW COMPLIANCE; EMPLOYEES.......26
3.18 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS....................27
3.19 LEGAL PROCEEDINGS; ORDERS...................................27
3.20 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS...........28
3.21 DISCLOSURE..................................................29
Article 4 REPRESENTATIONS AND WARRANTIES OF BUYER............................29
4.1 ORGANIZATION................................................29
4.2 ENFORCEABILITY; NO CONFLICT.................................29
4.3 CERTAIN PROCEEDINGS.........................................29
4.4 BROKERS OR FINDERS..........................................30
4.5 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES................30
4.6 FINANCING...................................................30
Article 5 COVENANTS OF SELLERS BEFORE CLOSING................................30
5.1 ACCESS AND INVESTIGATION....................................30
5.2 OPERATION OF THE BUSINESS OF SELLER.........................31
5.3 NEGATIVE COVENANT...........................................31
5.4 REQUIRED APPROVALS..........................................32
5.5 NOTIFICATION................................................32
5.6 NO SOLICITATION.............................................33
5.7 BEST EFFORTS................................................33
5.8 INTERIM FINANCIAL STATEMENTS................................33
5.9 BULK TRANSFER; REFUNDABLE INCOME TAX AMOUNT.................33
5.10 SPECIFIED SCHEDULE UPDATES..................................33
Article 6 COVENANTS OF BUYER BEFORE CLOSING..................................34
6.1 REQUIRED APPROVALS..........................................34
6.2 BEST EFFORTS................................................34
6.3 CONFIDENTIALITY.............................................34
Article 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE................34
7.1 PERFORMANCE.................................................34
7.2 CONSENTS....................................................34
7.3 ADDITIONAL DOCUMENTS........................................35
7.4 CONFIRMATION ORDER; 365 ORDER; THIRD PARTIES................35
7.5 INJUNCTION..................................................35
7.6 FORCE MAJEURE...............................................35
7.7 OPPORTUNITY TO CURE.........................................35
Article 8 CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE...............36
8.1 BUYER'S PERFORMANCE.........................................36
8.2 CONSENTS....................................................36
8.3 INJUNCTION..................................................36
8.4 CONFIRMATION ORDER; 365 ORDER...............................36
Article 9 TERMINATION........................................................36
9.1 TERMINATION EVENTS..........................................36
9.2 EFFECT OF TERMINATION.......................................37
Article 10 BREAK-UP FEE AND OVERBID PROCEDURES...............................38
10.1 COMPETITIVE BIDDING.........................................38
10.2 BIDDING PROCEDURES..........................................39
ARTICLE 11 INDEMNIFICATION; REMEDIES.........................................40
11.1 SURVIVAL....................................................40
11.2 INDEMNIFICATION BY SELLERS..................................40
11.3 INDEMNIFICATION BY BUYER....................................40
11.4 TIME LIMITATIONS............................................41
11.5 LIMITATIONS ON AMOUNT - SELLERS.............................41
11.6 LIMITATIONS ON AMOUNT--BUYER................................41
11.7 PROCEDURE FOR INDEMNIFICATION-DEFENSE OF THIRD-PARTY CLAIMS.41
11.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.................43
11.9 TREATMENT OF INDEMNIFICATION PAYMENTS.......................43
11.10 ESCROW; RIGHT OF SETOFF.....................................43
ARTICLE 12 ADDITIONAL COVENANTS..............................................43
12.1 TRANSACTION TAXES...........................................43
12.2 DISTRIBUTION OF PROCEEDS....................................43
12.3 ASSISTANCE IN PROCEEDINGS; PRIVILEGES; ACCESS TO RECORDS....43
12.4 POST-CLOSING ASSISTANCE.....................................44
12.5 FURTHER ASSURANCES..........................................44
ARTICLE 13 EMPLOYEES AND EMPLOYEE BENEFITS...................................45
13.1 PRE-CLOSING EMPLOYMENT LIABILITIES..........................45
13.2 EMPLOYMENT; SELLER BENEFIT PLANS............................45
13.3 OTHER ACTIONS...............................................46
ARTICLE 14 GENERAL PROVISIONS................................................47
14.1 EXPENSES....................................................47
14.2 PUBLIC ANNOUNCEMENTS........................................47
14.3 CONFIDENTIALITY.............................................47
14.4 NOTICES.....................................................48
14.5 FURTHER ACTIONS.............................................49
14.6 INCORPORATION OF SCHEDULES AND EXHIBITS.....................49
14.7 ENTIRE AGREEMENT AND MODIFICATION...........................49
14.8 DISCLOSURE SCHEDULES........................................50
14.9 TIME OF ESSENCE.............................................50
14.10 DRAFTING AND REPRESENTATION.................................50
14.11 SEVERABILITY................................................50
14.12 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS...............50
14.13 ENFORCEMENT OF AGREEMENT....................................51
14.14 WAIVER......................................................51
14.15 GOVERNING LAW...............................................51
14.16 JURISDICTION; SERVICE OF PROCESS............................51
14.17 COUNTERPARTS................................................51
EXHIBITS
Exhibit 2.7 ..............Allocation of Purchase Price and Assumed Liabilities
Exhibit 2.9(a)(i) ................................................Xxxx of Sale
Exhibit 2.9(a)(ii) ........................Assignment and Assumption Agreement
Exhibit 2.9(a)(iii) ..............Assignment and Assumption of Lease Agreement
Exhibit 2.9(a)(iv) .......................Assignments of Intellectual Property
Exhibit 2.9(a)(vi)...............................Transition Services Agreement
Exhibit 2.9(a)(vii)..........................................Escrow Agreement
Exhibit 2.9(a)(viii).........................................Release Agreement
Exhibit 2.9(b)(vii)..........................................Release Agreement
Exhibit 2.10(a)1..........................................................Plan
Exhibit 2.10(a)2..........................................Disclosure Statement
SCHEDULES
SCHEDULE 2.2(a)...................................EXCLUDED CONTRACTS
SCHEDULE 2.2(d)......................................EXCLUDED ASSETS
SCHEDULE 2.3(a)...................................VENDOR LIABILITIES
SCHEDULE 2.3(b)................................SCHEDULED LIABILITIES
SCHEDULE 2.3(c)..................................ACCRUED LIABILITIES
SCHEDULE 2.5..............................................NET ASSETS
SCHEDULE 7.2................................................CONSENTS
SELLERS' DISCLOSURE SCHEDULE
SECTION 3.1..............................ORGANIZATION AND GOOD STANDING
SECTION 3.2.................................ENFORCEABILITY; NO CONFLICT
SECTION 3.3........................................FINANCIAL STATEMENTS
SECTION 3.4.........................................ACCOUNTS RECEIVABLE
SECTION 3.5...........................................BOOKS AND RECORDS
SECTION 3.6.................................................INVENTORIES
SECTION 3.7.......................ABSENCE OF CERTAIN CHANGES AND EVENTS
SECTION 3.8..................................................PROPERTIES
SECTION 3.9.......................................SUFFICIENCY OF ASSETS
SECTION 3.10......................................INTELLECTUAL PROPERTY
SECTION 3.11..................................................CONTRACTS
SECTION 3.12....................................CUSTOMERS AND SUPPLIERS
SECTION 3.13..................................................INSURANCE
SECTION 3.14......................................................TAXES
SECTION 3.15..........................................EMPLOYEE BENEFITS
SECTION 3.16......................................EMPLOYEE RESTRICTIONS
SECTION 3.17......LABOR RELATIONS; EMPLOYMENT LAW COMPLIANCE; EMPLOYEES
SECTION 3.18...................ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
SECTION 3.19..................................LEGAL PROCEEDINGS; ORDERS
SECTION 3.20..........COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
SECTION 3.21.................................................DISCLOSURE
BUYER'S DISCLOSURE SCHEDULE
SECTION 4.2(b)..............................ENFORCEABILITY; NO CONFLICT
SECTION 4.4.........................................BROKERS AND FINDERS
Exhibit 1.2
Business Plan
See Attached.
Exhibit 2.7
Allocation of Purchase Price and Assumed Liabilities
See Attached.
Exhibit 2.9(a)(i)
Xxxx of Sale
See Attached.
Exhibit 2.9(a)(ii)
Assignment and Assumption Agreement
See Attached.
Exhibit 2.9(a)(iv)
Assignments of Intellectual Property
See Attached.
Exhibit 2.9(a)(vi)
Transition Services Agreement
See Attached.
Exhibit 2.9(a)(vii)
Escrow Agreement
See Attached.
Exhibit 2.9(a)(viii)
Release Agreement
See Attached.
Exhibit 2.9(b)(vii)
Release Agreement
See Attached.
Exhibit 2.10(a)1
Plan
See Attached.
Exhibit 2.10(a)2
Disclosure Statement
See Attached.
Schedule 2.2(a)
Excluded Contracts
See Attached.
Schedule 2.2(d)
Excluded Assets
See Attached.
Schedule 2.3(a)
Vendor Liabilities
See Attached.
Schedule 2.3(b)
Scheduled Liabilities
See Attached.
Schedule 2.3(c)
Accrued Liabilities
See Attached.
Schedule 2.5
Net Assets
See Attached.
Schedule 7.2
Consents
See Attached.
