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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into
this 31st day of July, 1997, by and among EFJ Partners, a New York general
partnership ("Seller"), Transcrypt International, Inc., a Delaware corporation
("Buyer"), with respect to Article III hereof only, X.X. Xxxxxxx Company, a
Minnesota corporation (the "Company"), and with respect to Section 9.10 hereof
only, Xxxxxxx Xxxxxx.
BACKGROUND
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock (the "Shares") of the Company;
WHEREAS, the Company, together with its subsidiaries, is engaged in
the business of designing and manufacturing two-way land radio communications
equipment for distribution and sale (the "Business");
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Seller, and subject to the terms and conditions
contained in this Agreement, Buyer wishes to purchase and acquire the Shares
from Seller;
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Buyer, and subject to the terms and conditions
contained in this Agreement, Seller wishes to sell and transfer the Shares to
Buyer;
WHEREAS, Seller and Buyer wish to provide for the above-described
sale and transfer of the Shares; and
WHEREAS, the Buyer is concurrently herewith entering into preferred
stock purchase agreements with NorAm Energy Corp. and Securicor Radiocoms Ltd.
providing for the purchase of all outstanding shares of the Company's preferred
stock for newly-issued securities of Buyer valued at Ten Million Dollars
($10,000,000) in the aggregate which, together with the Four Hundred and
Thirty-Six Thousand Dollars ($436,000) provided for in Section 2 hereof and the
Two Million Dollars ($2,000,000) in aggregate letters of credit paid to date
pursuant to Section 4 of the Letter of Intent, constitutes the aggregate
purchase price of Twelve Million Four Hundred and Thirty-Six Thousand Dollars
($12,436,000) being paid for the Shares by Buyer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth below, the parties hereto hereby agree as
follows:
1. SALE AND PURCHASE OF SHARES. Subject to the terms and conditions
set forth in this Agreement and in reliance on the representations and
agreements contained herein, at the
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Closing (as defined in Section 5.1 hereof) Seller shall sell and transfer the
Shares to Buyer, and Buyer shall purchase and acquire the Shares from Seller.
2. CONSIDERATION. The total cash consideration to be paid for the
Shares pursuant hereto is Four Hundred and Thirty-Six Thousand ($436,000), which
consideration, subject to the terms and conditions of this Agreement, shall be
payable by Buyer to Seller at the Closing for Seller to distribute in accordance
with Section 7.11 herein.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and the Company
represent and warrant to Buyer as follows:
3.1. CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 10,000,000 shares of common stock, $.01 par value per share ("Common
Stock"), and 2,080,000 shares of preferred stock of which 80,000 shares are
designated as "Preferred Stock" having a par value of $100.00 per share
("Preferred Stock") and 2,000,000 shares are designated as Class B Preferred
Shares having a par value of $.01 per share ("Class B Preferred Stock"). There
are 3,800,000 shares of Common Stock issued and outstanding, 80,000 shares of
Preferred Stock issued and outstanding and 925,850 shares of Class B Preferred
Stock, designated as Series I Class B Preferred Stock, issued and outstanding.
Seller is the sole record and beneficial holder of all the issued and
outstanding shares of Common Stock. Such shares are owned by Seller free and
clear of any and all liens, claims or encumbrances of any nature whatsoever
(whether absolute, accrued, contingent or otherwise). All of the issued and
outstanding shares of Common Stock, Preferred Stock and Class B Preferred Stock
are validly issued, fully paid and nonassessable.
(b) (i) Except as set forth on Schedule 3.1 hereto, there is no
outstanding right, subscription, warrant, call, option or other agreement or
arrangement of any kind (collectively, "Rights") to purchase or otherwise to
receive from the Company any of the outstanding, authorized but unissued or
treasury shares of the capital stock or any other security of the Company, (ii)
there is no outstanding security of any kind convertible into or exchangeable
for such capital stock and (iii) there is no voting trust or other agreement or
understanding to which the Company is a party or is bound with respect to the
voting of the capital stock of the Company, including without limitation any
options granted pursuant to any written plan or otherwise.
3.2. CORPORATE ORGANIZATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Minnesota, and has the requisite corporate power and authority to own, lease
or otherwise hold the properties and assets owned, leased and held by it and to
carry on the Business as currently conducted by it. The Company is duly
qualified to conduct business as a foreign corporation in every state of the
United States in which its ownership or lease of property or conduct of the
Business makes such qualification necessary, except for such states in which the
Company's failure to be so qualified would not have a material adverse effect on
the business, financial condition or results of operations of the Company and
the Subsidiaries, as hereinafter defined, taken as a whole (a "Material Adverse
Effect").
3.3 SUBSIDIARIES. All of the Company's subsidiaries are as set forth
on Schedule 3.3 hereto (the "Subsidiaries"). Except for the Subsidiaries, the
Company does not directly or indirectly own any capital stock or other equity
interest in any entity.
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3.4 AUTHORIZATION AND EFFECT OF AGREEMENT. Seller has the requisite
partnership power to execute and deliver this Agreement and to perform the
transactions contemplated hereby to be performed by Seller. The execution and
delivery by Seller of this Agreement and the performance by Seller of the
transactions contemplated hereby to be performed by Seller have been duly
authorized by all necessary partnership action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement by Buyer, constitutes a valid and
binding obligation of Seller, enforceable in accordance with its terms.
3.5 ABSENCE OF CONFLICTS. Except as set forth on Schedule 3.5
hereto, the execution and delivery of this Agreement by Seller does not, and the
performance by Seller of the transactions contemplated hereby to be performed by
Seller will not, conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, (i) any provision of the General Partnership
Agreement of EFJ Partners dated as of July 31, 1992 between Xxxxxxx Xxxxxx and
Xxxxxx Xxxxxx (the "Partnership Agreement"), the articles of incorporation, as
amended, or bylaws of the Company or any contract to which Seller or the Company
is a party or by which either the Seller or the Company is bound, (ii) any
license, permit or approval ("Permit") of any domestic or foreign court,
government, governmental agency, authority or instrumentality ("Governmental
Authority"), (iii) any domestic or foreign statute, law, ordinance, rule,
regulation, order or common law obligation ("Law") of any Governmental Authority
issued or applicable to Seller , the Company, or to any of their respective
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancellations, accelerations or losses which would not have a
Material Adverse Effect; provided, however, that Seller makes no representation
or warranty herein with respect to the effects of the performance of the
transactions contemplated hereby under any antitrust, trade regulation or
similar Law. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by or with respect to Seller or the Company in connection with
the execution and delivery of this Agreement by Seller or the performance by
Seller of the transactions contemplated hereby to be performed by it, except (i)
as set forth on Schedule 3.5 hereto or (ii) such consents, approvals, orders or
authorizations which, if not obtained, or such registrations or filings which,
if not obtained or made, would not have a Material Adverse Effect.
3.6 BALANCE SHEET AND RELATED MATTERS. (a) Set forth on Schedule
3.6(a)(1) hereto are the audited financial statements of the Company as of, and
for the years ended, December 31, 1996, 1995 and 1994. Set forth on Schedule
3.6(a)(2) hereto are the unaudited financial statements of Seller (including the
balance sheet (the "Interim Balance Sheet") of the Company) as of, and for the
six-month period ended June 29, 1997. All such financial statements present
fairly, in all material respects, the financial position of the Company as of
such dates and the results of operations of the Company for the periods then
ended, all in accordance with generally accepted accounting principles,
consistently applied.
(b) Except as set forth on Schedule 3.6(b) hereto, and except
for such transactions as are provided for in this Agreement, since June 29, 1997
(the "Interim Balance Sheet Date"), the Company has conducted the Business in
the ordinary course and there has been no material adverse change in the
Business, or the financial position or results of operations of the Company.
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3.7 COMPLIANCE WITH LAWS. To the knowledge of Seller and the
Company, the Business is not being operated in violation of any applicable Law
of any Governmental Authority or in violation of any Permit or other specific
authorization issued by a Governmental Authority to the Company, other than
violations which do not have a Material Adverse Effect.
3.8 LEGAL PROCEEDINGS. Except (i) as set forth on Schedule 3.8
hereto, (ii) for routine claims for employee benefits, (iii) for claims for
money damages alone of less than $50,000 singly, or $100,000 in the aggregate,
and (iv) for warranty or similar claims not exceeding the aggregate amounts
reserved therefor in the Interim Balance Sheet, there are no lawsuits or other
legal proceedings pending against the Company or otherwise relating to the
conduct of the Business or, to the knowledge of Seller, threatened in writing
against the Company.
3.9 ASSETS. (a) Except for assets since sold in the ordinary course
of business, and assets valued on the books of the Company at less than $10,000,
the Company owns all assets reflected on the Interim Balance Sheet as owned by
the Company, free and clear of all liens, claims or encumbrances of any nature
whatsoever (collectively, "Liens") other than (A) Liens set forth on Schedule
3.9(a) hereto, (B) mechanics', carriers', workmen's, repairmen's or other like
Liens arising or incurred in the ordinary course of business, (C) Liens for
taxes, assessments and other governmental charges which are not due and payable
or which may thereafter be paid without penalty or which are being contested in
good faith, (D) other imperfections of title or encumbrances, if any, which do
not materially affect the marketability of the property subject thereto and do
not materially impair the use in the Business of the property subject thereto,
and (E) restrictions arising as a matter of any Law of any Governmental
Authority. (The items referred to in the exceptions to the immediately preceding
sentence are hereinafter referred to as "Permitted Liens".)
(b) The Company has good title to or, in the case of leases
and licenses, valid and subsisting leasehold interests or licenses in, all of
its material properties and assets, including without limitation all property
reflected on the Interim Balance Sheet, except as since sold or otherwise
disposed of in the ordinary course of business. All material equipment owned,
leased or used by the Company are maintained and kept in good condition, repair
and working order, except for normal wear and tear.
(c) Set forth on Schedule 3.9(c) hereto is a complete and
correct list of all material real property (including buildings and structures)
owned or leased by the Company (including a brief description of the property,
the record title holder, the location and the material buildings and structures
thereon). No condemnation or other proceeding is pending or, to the knowledge of
Seller, threatened, which would materially affect the use of any such property
by the Company.
3.10 ACCOUNTS RECEIVABLE. Set forth on Schedule 3.10 hereto is an
aged list of the Company's accounts receivable as of the Interim Balance Sheet
Date. The accounts receivable, except to the extent of reserves appropriately
created and except as set forth on Schedule 3.10(a) hereto, have arisen from
bona fide transactions in the ordinary and normal course of the Business of the
Company for goods or services delivered or rendered.
3.11 INVENTORIES. All inventory of the Company, except to the extent
of the reserves appropriately created or except as set forth on Schedule 3.11
hereto, (i) are in a marketable
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condition, (ii) do not include any items which are obsolete or damaged, (iii)
are of a quantity and quality usable or saleable in the normal and ordinary
course of the Business, at current applicable prices, and (iv) are adequate to
support the continued operation of the Business as currently conducted in the
normal and ordinary course. Finished goods in inventory substantially conform to
specifications including, without limitation, all applicable governmental
regulations, and are substantially free from defects.
3.12 INTELLECTUAL PROPERTY. Except as set forth on Schedule 3.12
hereto, the Company owns or possesses the right to use all patents, trademarks,
trade names, service marks, registered copyrights and applications therefor
(collectively, "Intellectual Property Rights") used in the Business as of the
date hereof. Except as set forth on Schedule 3.12(a) hereto, Seller is not aware
of any claim asserting against the Company a material conflict with the
Intellectual Property Rights of others in connection with the conduct of the
Business that has not been satisfied, withdrawn or abandoned.
3.13 MATERIAL CONTRACTS. Except as set forth on Schedule 3.13
hereto, the Company is not party to any written (i) contract of employment, (ii)
contract with any labor union,(iii) single contract for the purchase by the
Company of goods or services in excess of $100,000 (iv) lease as lessee of, or
other contract for the use of any real or personal property having in any
individual case annual rental or payment obligations of the Company in excess of
$10,000, (v) conditional sale agreement, chattel mortgage or other security
agreement in excess of $100,000 in any one case, (vi) contract for the
production, supply or servicing by the Company of any type of goods, parts or
components, or for the provision by the Company of services of any type,
involving more than $100,000 in any one case, (vii) lease of any real or
personal property as lessor, or (viii) agreement or indenture relating to the
borrowing of money, or material licenses, whether as licensee or licensor.
Except as set forth on Schedule 3.13(a) hereto(i) the Company has (and to the
knowledge of Seller, the other parties thereto have) complied in all material
respects with the contracts, leases, agreements, mortgages and the like listed
on Schedule 3.13 hereto (the "Scheduled Contracts") all of which, to the
knowledge of Seller, are valid and enforceable and (ii) the Scheduled Contracts
are in full force and effect and there exists no event or condition which with
or without notice or lapse of time would be a material default thereunder, give
rise to a right to accelerate or terminate any provision thereof or give rise to
any Lien on any material Assets.
3.14 EMPLOYEE RELATIONS. Except as set forth on Schedule 3.14
hereto, there are no material organized labor controversies pending or, to the
knowledge of Seller, threatened against the Company.
3.15 EMPLOYEE PLANS. (a) For purposes of this Agreement, the term
"Employee Plan" means such employee benefit plans as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by the Company or to which the Company is a participating employer or
is otherwise obligated to contribute and under which any person employed by the
Company (an "Employee") or formerly employed by the Company or their
predecessors (a "Former Employee") participates or has accrued any rights or
under which the Company is liable in respect of an Employee or Former Employee.
Set forth on Schedule 3.15 hereto are lists of all Employee Plans and other
employee benefit plans (other than de minimis arrangements).
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(b) Each Employee Plan has been maintained in all material
respects in accordance with its terms and with applicable Law, except that
certain Employee Plans may not yet have been amended to comply with the Tax
Reform Act of 1986 and subsequent laws and regulations.
3.16 TAXES. Except as set forth on Schedule 3.16 hereto, all tax
returns and reports which are required to be filed (subject to any extensions
appropriately obtained) by or on behalf of the Company have been duly filed or
caused to be filed with the appropriate Governmental Authorities. Payment has
been made or provided for as to all federal, state and local taxes, interest,
penalties, assessments or deficiencies of the Company shown to be due on such
tax returns and reports or assessed by and due to any such Governmental
Authority. Except as set forth on Schedule 3.16 hereto, there are no outstanding
waivers or extensions of time with respect to the assessment or audit of any tax
or tax return of the Company, or claims now pending or matters under discussion
with any taxing authority in respect of any tax of the Company.
3.17 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Seller
is a sophisticated person that was advised by knowledgeable counsel and other
advisors in connection with this Agreement. (i) Seller has not relied nor will
it rely upon any document or written or oral information previously furnished to
or discovered by it or its representatives, other than this Agreement, including
the schedules and exhibits attached hereto, (ii) there are no representations or
warranties by or on behalf of Buyer hereto or any of its Affiliates or
representatives other than those expressly set forth in this Agreement,
including the schedules and exhibits attached hereto, and (iii) the parties'
rights and obligations with respect to all of the foregoing matters will be
solely as set forth in Article 9 hereof. "Affiliate" means, with respect to any
person, any person in control of, controlled by, or under common control with,
such person, and the term "person" means any individual, corporation,
partnership, limited liability company, trust or other legal entity.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold the assets owned, leased or held by it and to carry on its business as
currently conducted. Buyer is duly qualified to conduct business as a foreign
corporation in every state of the United States in which its ownership or lease
of property or conduct of its business makes such qualification necessary except
for such states in which Buyer's failure to be so qualified would not have a
material adverse effect on the business, financial condition or results of
operations of the Buyer.
4.2 AUTHORIZATION AND EFFECT OF AGREEMENT. Buyer has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it. The
execution and delivery by Buyer of this Agreement and the performance by it of
the transactions contemplated hereby to be performed by it have been duly
authorized by all necessary corporate action on the part of Buyer. Buyer has the
requisite legal capacity to purchase, own and hold the Assets and to carry on
the Business upon the completion of the transactions contemplated by this
Agreement. This Agreement and each of the other documents and instruments
contemplated hereby have been duly executed and delivered by Buyer and,
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assuming the due execution and delivery of this Agreement by Seller, constitutes
a valid and binding obligation of Buyer, enforceable in accordance with their
terms.
4.3 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Buyer does not, and the performance by Buyer of the transactions
contemplated hereby to be performed by it will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, (i) any
provision of the [Certificate of Incorporation or Bylaws] of Buyer, or (ii) any
contract to which Buyer is a party or any Permit or Law issued or applicable to
Buyer or to any of its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Buyer in
connection with the execution and delivery of this Agreement by it or the
performance by it of the transactions contemplated hereby to be performed by it,
except any filings required under the HSR Act.
4.4 FINANCIAL RESOURCES AND BUYER COMMON STOCK. (a) Buyer has made
application to obtain credit facilities sufficient to make the cash payments to
be made in accordance with Sections 2 and 7.11 hereof and (b) Buyer has a
sufficient number of authorized but unissued shares of Buyer Common Stock to
make the payments in Buyer Common Stock to be made in accordance with Section
7.9 hereof.
4.5 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Buyer is
a sophisticated person that was advised by knowledgeable counsel and other
advisors in connection with this Agreement. Buyer (i) has not relied nor will it
rely upon any document or written or oral information previously furnished to or
discovered by it or its representatives, other than this Agreement, including
the schedules and exhibits attached hereto, (ii) there are no representations or
warranties by or on behalf of Seller or any of its Affiliates or representatives
other than those expressly set forth in this Agreement, including the schedules
and exhibits attached hereto, and (iii) Buyer's rights and obligations with
respect to all of the foregoing matters will be solely as set forth in Article 9
hereof.
5. CLOSING.
5.1 DATE OF CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. local time at the offices
of Proskauer Rose LLP ("Proskauer"), 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx on the
first business day following the fulfillment or waiver of the conditions
precedent set forth in Sections 6 and 7 hereof or at such other time and place
as the parties hereto may mutually agree. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date." The following transactions
shall take place at the Closing, all of which shall be deemed to have occurred
simultaneously and none of which shall be deemed completed unless and until all
of them shall have been completed (or waived in writing by the parties entitled
to performance):
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) one or more stock certificates representing the
Shares, duly endorsed for transfer to Buyer or accompanied by stock powers
executed in blank; and
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(ii) certificates of a general partner of Seller, in
form and substance reasonably satisfactory to Buyer, certifying Seller's valid
existence, the due authorization of the transactions contemplated hereby, and
the matters referred to in Section 6.1 hereof; and
(iii) the opinion of counsel for Seller, substantially
in the form appended hereto as Exhibit 5.1(b)(iii).
(c) At the Closing, Buyer shall deliver to Seller the
following:
(i) the payment provided for in Section 2 hereof; and
(ii) certificates of the chief executive officer of
Buyer, in form and substance reasonably satisfactory to Seller, certifying
Buyer's Certificate of Incorporation and Bylaws, Buyer's valid existence and
good standing in the state of its incorporation, the incumbency of officers or
others acting in a representative capacity, the due authorization of the
transactions contemplated hereby, and the matters referred to in Section 7.1
hereof.
6. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
following conditions, except to the extent waived by Buyer in writing at the
Closing:
6.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Seller contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date, except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Seller shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by it at or before such time.
6.2 SELLER'S DELIVERIES. Seller shall have delivered to Buyer the
documents set forth in Section 5.1(b) hereof.
6.3 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or seeking to obtain substantial damages with respect thereto,
or (b) which Buyer shall reasonably determine could have a material adverse
effect on the Business.
6.4 NO GOVERNMENTAL ACTION. There shall not have been any action
taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Buyer: (a) makes any of the transactions contemplated by this
Agreement illegal or (b) imposes material limitations on the ability of Buyer to
operate the Business or to exercise full rights of ownership of the Assets.
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6.5 STOCK LEDGER. Seller shall have delivered to Buyer a
reconciliation of the Company's stock ledger indicating that the capital stock
of the Company (including options and warrants therefor) issued and outstanding
is as represented by Seller in Section 3.1 hereof.
6.6 OTHER CLOSING DOCUMENTS. Seller shall have delivered to Buyer,
at or prior to the Closing, such other documents as Buyer may reasonably request
to carry out the provisions of and the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to Buyer.
7. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the following conditions, except to the extent waived by Seller in writing at
the Closing:
7.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Buyer contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Buyer shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by Buyer at or before such time.
7.2 BUYER'S DELIVERIES. Buyer shall have delivered to Seller the
funds and documents set forth in Section 5.1(c) hereto.
7.3 [Intentionally Omitted.]
7.4 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or to obtain substantial damages with respect thereto, or (b)
which Seller shall reasonably determine could have a material adverse effect on
the business, assets, liabilities, condition (financial or otherwise) or
prospects of Buyer (without giving effect to the transactions contemplated
hereby).
7.5 NO GOVERNMENTAL OR LEGAL ACTION. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Seller: (a) makes any of the transactions contemplated by this
Agreement illegal or (b) otherwise prohibits, restricts, or delays consummation
of the transactions contemplated by this Agreement or impairs the contemplated
benefits to Seller of any of the transactions contemplated by this Agreement.
7.6 OTHER CLOSING DOCUMENTS. Buyer shall have delivered to Seller,
at or prior to the Closing, such other documents as Seller may reasonably
request to carry out the provisions of, and the transactions contemplated by,
this Agreement, in form and substance reasonably satisfactory to Seller.
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7.7 RELEASES OF CERTAIN GUARANTIES. Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx
and Xxxxxx X. Xxxxxx shall have been released from any and all guaranties of the
obligations of the Company to Congress Financial Corporation ("Congress") and
Acstar Insurance Company. In addition, Xxxxxxx Xxxxxx shall have received an
executed undertaking by Buyer and the Company to secure the release of Xx.
Xxxxxx from any and all other obligations of the Company to any other person
substantially in the form annexed hereto as Exhibit 7.7.
7.8 REQUIRED CONSENTS. Seller shall have obtained all consents of
third parties that are required by contract or law for the consummation of the
transactions contemplated hereby.
7.9 PURCHASE OF PREFERRED STOCK AND CANCELLATION OF SUBORDINATED
NOTE. Buyer shall have purchased (a) all of the issued and outstanding shares of
Class B Preferred Stock (together with accrued and unpaid dividends thereon) for
a total consideration in the amount of $4,500,000 in common stock of Buyer and
(b) all of the issued and outstanding shares of Preferred Stock (together with
accrued and unpaid dividends thereon), for a total consideration in the amount
of $5,500,000 in common stock of Buyer. In addition, the 9.795% Senior
Subordinated Note in the principal amount of $10,00,000 issued by the Company on
July 31, 1992 to Arkla, Inc. (together with accrued and unpaid interest thereon)
shall have been cancelled.
7.10 MANUFACTURING AGREEMENT AND TERMINATION AND RELEASE AGREEMENT.
As additional consideration for the purchase of all of the issued and
outstanding shares of Class B Preferred Stock, (a) Buyer shall have entered into
the Manufacturing Agreement with Intek Diversified Corporation in substantially
the form annexed hereto as Exhibit 7.10(a) hereto and (b) the Company shall have
entered into a Termination and Release agreement with Linear Modulation
Technology Limited in substantially the form annexed hereto as Exhibit 7.10(b)
providing for the termination of intellectual property rights of the Company in
and to certain linear modulation technology.
7.11 ACCRUED AND UNPAID FEES. Buyer shall have paid, or provided the
Company sufficient funds to pay, all accrued and unpaid (i) fees and
disbursements of counsel to the Company and Seller, and (ii) fees payable to
Xxxxxxx and X. Xxxxxxxxxxxx, Inc.; provided, however, that the total of the
amounts described in (i) and (ii) shall be $436,000.
7.12 AMOUNTS DUE TO AND FROM SELLER'S AFFILIATES AND THE COMPANY.
All amounts categorized as receivables from related parties and liabilities due
to related parties on the Company's balance sheets shall have been cancelled.
8. FURTHER AGREEMENTS OF THE PARTIES.
8.1 PERFORMANCE OF COVENANTS. Seller covenants and agrees to perform
or cause to be performed the covenants of Seller under this Agreement. Buyer
covenants and agrees to perform or cause to be performed the covenants of Buyer
under this Agreement.
8.2 GENERAL.
(a) Seller will use all reasonable efforts and take all
reasonable steps, and will cooperate with Buyer to cause to be fulfilled, those
of the conditions set forth in this Agreement
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to the parties' respective obligations to consummate the transactions
contemplated by this Agreement that are dependent upon the actions or inactions
of Seller, and to execute and deliver such instruments and take such other
reasonable actions as may be necessary or appropriate in order to carry out the
intent of this Agreement and consummate the transactions contemplated hereby.
(b) Buyer will use all reasonable efforts and take all
reasonable steps, and will cooperate with the Seller to cause to be fulfilled,
those of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Buyer, and to execute and deliver
such instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
8.3 OTHER AGREEMENTS. Until the Closing Date, Seller will:
(a) use all reasonable efforts to cause all representations
and warranties made by Seller hereunder to be true and correct in all material
respects as of the Closing Date as if made on the Closing Date; and
(b) use all reasonable efforts to cause the Company to
preserve intact the business organization and operations of the Company, to keep
available the services of their present officers and employees, to preserve in
full force and effect their Contracts and to preserve the present business
relationships and goodwill of its officers, employees, suppliers, customers,
others having business relations with the Company and the Subsidiaries and
government regulators.
8.4 ACCESS PRIOR TO CLOSING. Between the date of this Agreement and
the Closing, Seller shall (i) cause the Company to give Buyer and its authorized
representatives full access to all offices and other facilities and properties
of the Company and to the books and records of the Company and the Subsidiaries
(and permit Buyer to make copies thereof), (ii) cause the Company to permit
Buyer to make inspections thereof, and (iii) cause the officers and advisers
(including, without limitation, their auditors, attorneys, financial advisors
and other consultants, agents and advisors) to the Company to furnish Buyer with
such financial and operating data and other information with respect to the
business and properties of the Company and the Subsidiaries, and to discuss with
Buyer and its authorized representatives the affairs of the Company and the
Subsidiaries, all as Buyer may from time to time reasonably request. Seller
shall also cause the Company to allow Buyer to meet with the Company's lenders,
banking institutions, primary suppliers and customers to evaluate their plans
for future business and intentions with respect to the Business with 48 hours
advance notice.
8.5 ORDINARY COURSE. Seller covenants and agrees that from the date
hereof until the Closing, Seller shall cause the Company to operate the Business
only in the ordinary course consistent with past practice.
8.6 LIENS. Prior to the Closing, Seller shall not cause, or permit,
the Company or any of the Subsidiaries to create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible) of the Company, whether now owned or hereafter acquired,
or sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of
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accounts receivable with recourse to Seller), or assign any right to receive
income or permit the filing of any financing statement under the Minnesota
Uniform Commercial Code or any other similar notice of Lien under any similar
recording or notice statute, or grant rights with respect to, or otherwise
encumber or create a security interest in, such property or assets or any
portion thereof or any other revenues therefrom or the proceeds payable upon the
sale, transfer or other disposition of such property or assets or any portion
thereof, or permit or suffer any such action to be taken, except Permitted
Liens.
8.7 NEW LINES OF BUSINESS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to enter into any line of
business other than the Business, or make any material change in the scope or
nature of their business, purposes or operations, or undertake or participate in
activities other than the continuance of the Business.
8.8 FORGIVENESS OF DEBT. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to cancel or otherwise
forgive, release or waive any claim or indebtedness owed to it by any person or
rights of substantial value, except as contemplated by Section 7.12 hereto.
8.9 DIVIDENDS, ETC. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to declare, set aside or pay any
dividends or distributions in respect of any capital stock nor issue or redeem
any equity securities of the Company or any of the Subsidiaries nor pay any
management fees or debt guarantee fees or make any other payments to any Related
Parties.
8.10 ASSET DISPOSITIONS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to purchase, sell, lease,
mortgage, pledge or otherwise acquire, dispose of or encumber any interest in
any of the properties or assets used in the Business, other than certain TCXO
equipment, automated insert line equipment, inventory in the ordinary course
consistent with past practices to the extent the proceeds are used to pay
Congress and such other assets the net proceeds of which are used exclusively to
reduce the outstanding indebtedness of the Company to Congress.
8.11 ACCOUNTING. Prior to the Closing, Seller shall not cause, or
permit, the Company to change any accounting principle or inventory practice of
the Company or any of its Subsidiaries without the consent of the Buyer.
8.12 FINANCIAL INFORMATION. Prior to the Closing, as soon as
available but in any event not later than twenty (20) days after the end of each
month (beginning with June 1997), Seller shall cause the Company to deliver to
Buyer a consolidated balance sheet and statement of income and cash flows for
the Company and the Subsidiaries for such month in such form as shall enable
Buyer to include such financial statements, if necessary, in any report required
by the Securities and Exchange Commission.
8.13 COMPENSATION INCREASES. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to increase the compensation
of any employee or grant any unusual or extraordinary bonuses, benefits or other
forms of direct or indirect compensation to
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any employee, officer, director or consultant except in amounts consistent with
past practices or written agreements in effect as of June 6, 1997.
8.14 CONTRACTS. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to cancel or terminate any agreement or
contract involving the payment by or to the Company or any Subsidiary of more
than $100,000 in any twelve month period.
8.15 EMPLOYEE BENEFIT PLAN. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to increase, terminate, amend
or otherwise modify any plan for the benefit of any employee other than as may
be required by law.
8.16 ARTICLES AND BYLAWS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to amend their respective
articles or certificates of incorporation, by-laws or other comparable charter
or organizational documents.
8.17 INDEBTEDNESS. Prior to Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to (a) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice, or (b) make any loans, advances or capital contributions to,
or investments in any other person.
8.18 ACQUISITIONS. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof except in the ordinary course of
business consistent with past practice, or (ii) any assets that are material,
individually or in the aggregate, to any of the Company or any of its
Subsidiaries, except purchases of inventory in the ordinary course of business
consistent with past practice and except capital assets, as contemplated by
Section 8.19 hereof.
8.19 CAPITAL EXPENDITURES. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to make or agree to make any
new capital expenditure or expenditures which, individually, is in excess of
$10,000, or, in the aggregate, are in excess of $100,000, without the consent of
the Buyer.
8.20 AFFILIATE TRANSACTIONS. Except for the transactions described
on Schedule 8.20 hereto, prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to enter into, be a party to, or
perform any transaction or arrangement with any Affiliate.
8.21 NO CONTRARY AGREEMENTS. Seller shall not cause, or permit, the
Company and the Subsidiaries to authorize, agree or otherwise commit, whether or
not in writing, to do anything which would not be permitted to be done under
this Agreement.
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8.22 EXPENSES. Except as otherwise provided in this Agreement, Buyer
and Seller shall bear their own respective expenses incurred by them in respect
of the transactions contemplated hereby.
8.23 SALES TAXES. Buyer shall pay any state or local sales, transfer
or use taxes or transfer taxes payable in connection with the sale of the Common
Stock to Buyer pursuant to this Agreement.
8.24 FURTHER ASSURANCES. At any time and from time to time after the
date hereof, each party hereto shall, without further consideration, execute and
deliver to the other such instruments of transfer and assumption, and shall take
such other action, as the other may reasonably request to carry out the
transactions contemplated by this Agreement.
8.25 SELLER'S ACCESS AFTER THE CLOSING. At any time, and from time
to time, after the Closing, Seller shall have the right to review and obtain
copies of any records, files, books, documents and other data relating to the
Company and the Subsidiaries and the Business with respect to any period prior
to the Closing that Seller may reasonably require for any lawful purpose,
including, without limitation, Seller's preparation of tax returns. Buyer shall
retain such records, files, books, documents and other data for a period of at
least six years after the Closing and, thereafter, shall give Seller at least 60
days' prior written notice of its intention to discard or destroy any such
records, files, books, documents or other data.
8.26 CERTAIN EMPLOYEE MATTERS. Seller shall use its best efforts to
assist Buyer in obtaining two-year employment commitments with Xxxxx Xxxxxxxx,
Xxxx Xxxxx, Xxxx Xxxx, Xxxx Xxxxx, Xxx Xxxxxxxxx and Xxxx Xxxxxxxx.
8.27 REQUIRED FUNDING. At the Closing, (i) Buyer shall pay, or
provide the Company sufficient funds to pay, the amounts required to satisfy the
conditions set forth in Section 7.11 hereof and (ii) Buyer shall deliver the
number of shares of Buyer Common Stock required to satisfy the condition set
forth in Section 7.9 hereof.
9. SURVIVAL OF REPRESENTATIONS; INDEMNITIES.
9.1 SURVIVAL; REMEDIES. Except as otherwise hereinafter provided,
the representations and warranties of Seller and of Buyer, contained in this
Agreement shall not survive the consummation of the transactions contemplated
hereby. The representations and warranties set forth in Sections 3.1, 3.4, 3.5,
4.2 and 4.3 hereof, shall survive for the longest period of time permitted by
the applicable statute(s) of limitations, and all other representations and
warranties set forth in Sections 3 and 4 hereof shall survive for a period
ending on the first anniversary of the Closing Date.
9.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer, and its Affiliates and the successors, assigns, officers,
directors, employees, partners and agents of any of them (the "Buyer Indemnified
Parties"), promptly upon demand at any time and from time to time, from and
against any and all actions, proceedings, demands and claims asserted against
any Buyer Indemnified Party, and shall reimburse Buyer Indemnified Parties for
any and all losses, liabilities (of every kind or nature, whether accrued,
absolute, contingent or otherwise and whether
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asserted or unasserted, known or unknown and whether due or to become due),
damages, charges, Liens, deficiencies or expenses of any nature, including,
without limitation, reasonable attorneys' fees and expenses (all of which shall
be recoverable hereunder, net of any tax benefit to any Buyer Indemnified Party)
(collectively, "Damages") incurred by or assessed against any Buyer Indemnified
Party, and arising out of or resulting from:
(i) the inaccuracy of any representation or warranty made by
Seller pursuant to Section 3 hereof; or
(ii) the failure by Seller to perform or observe any term or
provision of this Agreement or of any other document, Schedule or instrument
delivered in connection herewith.
9.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless Seller and their Affiliates and the successors, assigns, stockholders,
officers, directors, employees, partners and agents of any of them ("Seller
Indemnified Parties"), promptly upon demand at any time and from time to time,
from and against any and all actions, proceedings, demands and claims asserted
against any Seller Indemnified Party, and shall reimburse the Seller Indemnified
Parties for any and all Damages incurred by or assessed against any Seller
Indemnified Party, and arising out of or resulting from:
(a) the inaccuracy of any representation or warranty made by
Buyer pursuant to Section 4 hereof;
(b) the failure by Buyer to perform or observe any term or
provision of this Agreement or of any other document, Schedule or instrument
delivered in connection herewith; or
(c) any liability of the Company or any of the Subsidiaries.
9.4 NOTICE OF CLAIM. If any legal proceedings, claims or demands are
instituted or asserted in respect of which any of Buyer Indemnified Parties or
Seller Indemnified Parties may seek indemnification from another party hereto
pursuant to the provisions hereof (such legal proceedings, claims or demands
being referred to individually as a "Claim" and collectively as the "Claims"),
the indemnified party (after receipt by it of written notice of the commencement
or assertion of such Claim) shall promptly cause a written notice of such Claim
to be made to the indemnifying party (but the failure to give such notice shall
not relieve the indemnifying party of its indemnification obligation hereunder,
except to the extent of losses actually caused by such failure).
9.5 ELECTION TO DEFEND CLAIM. Subject to the next sentence and
Section 9.6 hereof, the indemnifying party shall have the right, at its option
and expense, to assume the defense, settlement or other disposition
(collectively "Defense") of any Claim, provided that within ten (10) days of
receiving the notice with respect to such Claim pursuant to Section 9.4 hereof
(or within such shorter period of time as an answer or other responsive motion
may be required), the indemnifying party, by notice delivered to the indemnified
party, elects to assume such Defense and each indemnifying party acknowledges
its obligation hereunder to indemnify the indemnified party with respect to such
Claim. Notwithstanding the foregoing, the indemnifying party shall not have the
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right to assume the Defense of any Claim if (a) representation of both the
indemnified and indemnifying parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (b) the
indemnified party determines in good faith that there is a significant
possibility that such Claim may materially and adversely affect it or its
Affiliates other than as a result of monetary damages.
9.6 PROCEDURE FOR DEFENSE BY INDEMNIFYING PARTY. If the indemnifying
party has assumed the Defense of a Claim in accordance with Section 9.5 hereof,
then the following shall apply:
(a) the indemnified party shall have the right to participate
and assist in the Defense of such Claim and to employ its own counsel in
connection therewith;
(b) the indemnifying party shall not be liable to the
indemnified party for the fees or expenses of the indemnified party's counsel or
other expenses incurred by the indemnified party in connection with
participating in the Defense of such Claim, except that the indemnifying party
shall be liable for (i) any such fees and expenses incurred prior to the time
the indemnifying party assumed such Defense and (ii) the reasonable costs of
investigation and preparation incurred by the indemnified party;
(c) counsel used by the indemnifying party in connection with
the Defense of such Claim shall be reasonably satisfactory to the indemnified
party;
(d) the indemnified party shall not effect any compromise or
settlement of such Claim without the consent of the indemnifying party, which
consent shall not be unreasonably withheld; and
(e) the indemnifying party shall not effect any compromise or
settlement of such Claim without the consent of the indemnified party, which
consent shall not be unreasonably withheld.
9.7 DEFENSE BY INDEMNIFIED PARTY. If the indemnifying party does not
assume the Defense of a Claim (whether because it elects not to or has no right
to), the indemnifying party shall have the right, at its sole cost and expense,
to participate in the Defense of such Claim and to employ its own counsel in
connection therewith; provided, however, the indemnified party may effect any
compromise or settlement of such Claim without the consent of the indemnifying
party.
9.8 COOPERATION. The parties hereto shall cooperate to the fullest
extent possible in connection with any Claim in respect of which indemnification
is sought under this Agreement.
9.9 LIMITATIONS ON INDEMNITY. The obligations of Seller pursuant to
Section 9.2(i) hereof shall arise only if the aggregate claims thereunder are in
excess of $50,000 and shall be limited to a total of claims thereunder not
exceeding $1 million in the aggregate, and Seller shall have no obligations
pursuant to such Section 9.2(i) with respect to any claim thereunder asserted by
any Buyer Indemnified Party after the first anniversary of the Closing Date.
Notwithstanding anything to the contrary contained in this Agreement, Seller
shall have no obligation pursuant to Section 9.2(i) hereof with respect to any
matter as to which (a) the Company has taken a reserve in
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respect of the Interim Balance Sheet or since the date thereof, or (b) the
Company has changed its accounting principles or has applied accounting
principles in a manner inconsistent with the manner of application reflected in
the audited financial statements of the Company as of and for the years ended
December 31, 1996, 1995 and 1994, or (c) a reference is made on Schedule 9.9
hereto.
9.10 ESCROW. Xxxxxxx Xxxxxx shall, upon receipt thereof, deposit
with an escrow agent mutually acceptable to Xxxxxxx Xxxxxx and Buyer, pursuant
to the terms of an escrow agreement in form and substance reasonably acceptable
to Xxxxxxx Xxxxxx and Buyer, the proceeds, if any, of the junior participation
of Xxxxxxx Xxxxxx in the advances, loans and other financial accommodations of
Congress Financial Corporation to the Company, when, as and if such proceeds are
paid to Xxxxxxx Xxxxxx. Any Buyer Indemnified Party shall be entitled to payment
from such escrowed proceeds of any amount due such Buyer Indemnified Party
pursuant to this Article IX and Xxxxxxx Xxxxxx shall give the escrow agent all
such notices as shall be necessary to permit such payment from such escrowed
proceeds. Subject to any Buyer Indemnified Party demand hereunder that may be
pending at such time, Xxxxxxx Xxxxxx shall be entitled to payment of all amounts
held in such escrow upon the first anniversary of the Closing Date.
9.11 EXCLUSIVE REMEDY. Notwithstanding anything to the contrary
contained in this Agreement, the sole and exclusive remedy of Buyer and Seller,
or any other Buyer Indemnified Parties or Seller Indemnified Parties with
respect to any matter under or relating to this Agreement, including, without
limitation, any breach of any representation or warranty hereunder or pursuant
hereto shall be the remedy provided for in Sections 9.2 and 9.3 hereof, subject
to the limitations in Section 9.9 hereof.
10. TERMINATION.
10.1 BASES FOR TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) by the mutual written consent of the parties hereto;
(b) by Buyer (i) if any representation or warranty of Seller
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Seller shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Seller's receipt of written notice from Buyer that such default
exists or has occurred; or (iii) if the conditions to Buyer's obligations to
consummate the transaction contemplated hereby are not or cannot be satisfied on
or before July 31, 1997 for any reason other than a breach by Buyer;
(c) by Seller (i) if any representation or warranty of Buyer
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Buyer shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Buyer's receipt of written notice from Seller that such default
exists or has occurred; or (iii)if the conditions to Seller's obligations to
consummate the transactions contemplated hereby are not or cannot be satisfied
on or before July 31, 1997 for any reason other than a breach by Seller.
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10.2 MANNER OF EXERCISE. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, written notice thereof
shall forthwith be given to the non-terminating party, and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by any party hereto.
10.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, all rights and
obligations of the parties hereunder shall terminate, except for the rights and
obligations of the parties under Section 8.22 hereof and the right of the
non-breaching party to seek damages from a breaching party.
11. MISCELLANEOUS.
11.1 FINDERS. Each party hereto represents and warrants that it has
not employed or utilized the services of any broker or finder in connection with
this Agreement or the transactions contemplated hereby, except for the persons
identified by Seller on Schedule 11.1(a) hereto and by Buyer on Schedule 11.1(b)
hereto.
11.2 ENTIRE AGREEMENT. This Agreement (together with the Schedules
and Exhibits hereto) contains, and is intended as, a complete statement of all
of the terms of the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any previous agreements and
understandings between the parties hereto with respect to those matters. This
Agreement does not affect any of the agreements listed on Schedule 11.2 hereto
or the obligations and rights thereunder of the parties thereto.
11.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Minnesota without regard to
the conflicts of laws provisions thereof. THE PARTIES HERETO AGREE THAT ANY
DISPUTE RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION,
PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS
UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION
SHALL TAKE PLACE IN MINNEAPOLIS, MINNESOTA AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF MINNESOTA. DECISIONS PURSUANT TO SUCH
ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE
CONCLUSION OF ARBITRATION, THE PARTIES MAY APPLY TO ANY COURT OF COMPETENT
JURISDICTION TO ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. THE PARTIES
HERETO WAIVE AND SHALL NOT SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM,
COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS
AGREEMENT.
11.4 HEADINGS. The Section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
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11.5 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller, to it at:
x/x Xxxxxx, Xxxxxx & Co., Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxx
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Buyer, to it at:
Transcrypt International, Inc.
0000 XX Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Chairman
with a copy to:
Manatt, Xxxxxx & Xxxxxxxx, LLP
Trident Center, East Tower
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
11.6 SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
11.7 WAIVERS AND AMENDMENTS. No waiver of any provision hereof shall
be construed as a waiver of any other provision. Any waiver or amendment of this
Agreement must be in writing and signed by the party to be charged therewith.
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11.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
right or obligation hereunder may be assigned or transferred by Seller without
Buyer's written consent or by Buyer without Seller's written consent.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
[END OF TEXT. SIGNATURE PAGE FOLLOWS.]
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This Agreement has been duly executed on the date hereinabove set
forth.
EFJ PARTNERS
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
General Partner
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman
With respect to Article III hereof only,
X. X. XXXXXXX COMPANY
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chairman
With respect to Section 9.10 hereof only,
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
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