SHARE PURCHASE AND SALE AGREEMENT
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This SHARE PURCHASE AND SALE AGREEMENT dated effective as of February
24, 2001, is entered into by and among BE Aerospace, Inc., a Delaware
corporation ("BE"), (the "Company"), and T.L. Windust Machine, Inc., a
California corporation ("TLW"), and the shareholders of TLW, set forth on
Schedule 1 hereof (collectively, the "Shareholders").
RECITALS
A. The Shareholders are the record and beneficial holders of all the
issued and outstanding capital stock (collectively, the "TLW Shares") of TLW.
B. The Company desires to acquire the TLW Shares from the Shareholders,
and the Shareholders desire to transfer the TLW Shares to the Company in
exchange for shares of BE Stock (as defined in Section 1).
NOW, THEREFORE, in consideration of the mutual promises and
agreements of the parties herein contained, the parties hereby agree as follows:
Terms and Conditions
Section 1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings set forth below:
"Additional Consideration" has the meaning set forth in Section 2.2(b).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Agreement" means this SHARE PURCHASE AND SALE AGREEMENT, as the same
may be amended from time to time in accordance with the terms hereof.
"Ancillary Agreements" means Company Ancillary Agreements and the
Shareholders' Ancillary Agreements.
"Arbiter" has the meaning set forth in Section 2.3(b).
"BE Closing Price" means Twenty-two Dollars and Forty Cents ($22.40).
"BE Stock" means common stock of the Company presently trading under
the symbol "BEAV" on the NASDAQ National Market.
"Change of Control" means the occurrence of either of the following
events:
(a) Any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in
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Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the total voting power represented
by the Company's then outstanding voting securities; or
(b) Consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) a majority of the
total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approving a plan of complete liquidation of the
Company or a consummation of the sale or disposition by the Company of all or
substantially all of the Company's assets.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.2.
"Closing Date Initial Consideration Calculation" has the meaning set
forth in Section 2.3(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preamble to this Agreement.
"Company Ancillary Agreements" mean (a) an employment agreement between
TLW and Xx. Xxxxxx Xxxxxxx and (b) an employment agreement between TLW and Xx.
Xxxxx Windust, both in standard form used by the Company's Affiliates, on terms
consistent with the Employment Term Sheets attached hereto as Exhibit A-1 and
A-2 respectively.
"Company Indemnified Parties" has the meaning set forth in Section
11.2.
"Company's Accounting Firm" means Deloitte & Touche, LLP or any
successor organization.
"Confidential Information" means any information, in whatever form or
medium, concerning the operations or affairs of TLW.
"Contracts" means, collectively, all written or oral contracts,
agreements, commitments, leases, licenses, instruments, bids and proposals to
which TLW is a party as of the Closing Date, including, without limitation,
those listed on Schedule 4.11, all unfilled orders outstanding as of the Closing
Date for the purchase of goods or services by TLW and all unfilled orders
outstanding as of the Closing Date for the sale of goods or services by TLW.
"Contribution Margin" means net revenues (defined as gross revenues
less discounts, less product returns, less freight), less material costs, less
direct labor costs, less the cost of outside processing
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"Disclosure Schedules" means, collectively, the various Schedules
referred to in this Agreement.
"EBITDA" means earnings before interest, tax, depreciation, and
amortization calculated in a manner substantially similar to past practices of
TLW and specifically excluding any costs relating to the relocation of TLW's
production facility, including all TLW's costs associated with such relocation,
and any corporate charges from the Company.
"Effective Date" has the meaning set forth in Section 3.1.
"Employee Benefit Plan" means an Employee Pension Benefit Plan or an
Employee Welfare Benefit Plan, where no distinction is intended by the context
in which the term is used.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA.
"Environment" means soil, land surface or subsurface strata, real
property, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater, water body sediments,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life and any other environmental medium or natural resource.
"Environmental Liabilities and Costs" means all Losses incurred: (i) to
comply with any Environmental Law; (ii) as a result of a Release of any
Hazardous Materials; or, (iii) as a result of any environmental conditions
present at, created by or arising out of the past or present operations of
Shareholders or TLW through the Closing Date or of any prior owner or operator
of a facility or site at which Shareholders or the TLW now operate or have
previously operated.
"Environmental Permits" means any Permit or authorization from any
Governmental Entity required under, issued pursuant to, or authorized by any
Environmental Law.
"Environmental Law" means any Law with respect to the preservation of
the environment or the promotion of worker health and safety, including but not
limited to any Law whatsoever relating to Hazardous Materials, drinking water,
surface water, groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm water run-off,
noises, odors, air quality, air emissions, waste emissions or xxxxx. Without
limiting the generality of the foregoing, the term will encompass each of the
following statutes and the regulations promulgated thereunder, and any similar
applicable state, local or foreign Law, each as amended (a) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, (b) the Solid
Waste Disposal Act, (c) the Hazardous Materials Transportation Act, (d) the
Toxic Substances Control Act, (e) the Clean Water Act, (f) the Clean Air Act,
(g) the Safe Drinking Water Act, (h) the National Environmental Policy Act of
1969, (i) the Superfund Amendments and Reauthorization Act of 1986, (j) Title
III of the Superfund Amendments and Reauthorization Act, (k) the Federal
Insecticide, Fungicide and Rodenticide Act (l) the provisions of the
Occupational Safety and Health Act of 1970 relating to the handling of and
exposure to Hazardous Materials and similar substances; (m) California
Environmental Quality Act; and (n) National Environmental Policy Act.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow" has the meaning set forth in Section 2.4.
"Escrow Agent" has the meaning set forth in Section 2.4.
"Escrow Agreement" has the meaning set forth in Section 2.4.
"Escrowed Shares" has the meaning set forth in Section 2.4.
"GAAP" means United States generally accepted accounting principles, as
in effect as of the date of this Agreement.
"Governmental Entity" or "Governmental Entities" mean any government or
any agency, bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Government Subcontract" means any Contract that is a subcontract
between TLW and any third party relating to a contract between such third party
and any Governmental Entity.
"Hazardous Materials" means each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance that is
defined, determined or identified as hazardous, toxic or controlled under any
Environmental Law or the Release of which is prohibited under any Environmental
Law. Without limiting the generality of the foregoing, the term will include,
without limitation, (a) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, or Title III of the Superfund
Amendments and Reauthorization Act and regulations promulgated thereunder, each
as amended, (b) "hazardous waste" as defined in the Solid Waste Disposal Act and
regulations promulgated thereunder, each as amended, (c) "hazardous materials"
as defined in the Hazardous Materials Transportation Act and the regulations
promulgated thereunder, each as amended, (d) "chemical substance or mixture" as
defined in the Toxic Substances Control Act and regulation promulgated
thereunder, each as amended, (e) petroleum and petroleum products and byproducts
and (f) asbestos.
"Indemnified Party" has the meaning set forth in Section 11.5.
"Indemnifying Party" has the meaning set forth in Section 11.5.
"Initial Consideration" means the Reference Price plus Net Cash less
Net Debt and less Taxes of TLW accrued on or before the Effective Date that are
not previously paid or provided for by Shareholders from sources outside the TLW
bank accounts or cash equivalents.
"Intellectual Property" means the entire right, title and interest in
and to all proprietary rights of every kind and nature, including without
limitation patents, patent disclosures, copyrights, Trademarks, mask works,
trade secrets and proprietary information, all applications for any of the
foregoing, and any license or agreements granting rights related to any of the
foregoing (i) subsisting in, covering, relying on, directly applicable to or
existing in the Products
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or the Technology, (ii) that are owned, licensed or controlled in whole or in
part by TLW or any Subsidiary of TLW and relate to the business of TLW or any
Subsidiary of TLW, or (iii) that are used in or necessary to the development,
manufacture, sale, marketing or testing of, the Products collectively, and all
registrations, applications, re-issuances, continuations, continuations-in-part,
revisions, extensions, reexaminations and associated good will with respect to
each of the foregoing, computer software (including source and object codes),
computer programs, computer data bases and related documentation and materials,
data, other documentation, trade secrets, all confidential business information
(including ideas, formulas, compositions, inventions, know-how, manufacturing
and production processes and techniques, research and development information,
drawings, designs, plans, proposals and technical data, financial, marketing and
business data and pricing and cost information) and all other intellectual
property rights (in whatever form or medium).
"Interim Financial Statements" has the meaning set forth in Section
4.5.
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"Knowledge" has the following meaning:
(a) Knowledge for purposes of this Agreement imposes an
obligation on the party to make reasonable due inquiry with respect to the
matter represented and, in any event, includes all information existing in the
books, records and files of such party or its Affiliates, as well as reasonable
due inquiry of TLW's employees
(b) Knowledge of the Shareholder or words or phrases of
similar import, as used in this Agreement, shall also include, without
limitation, the knowledge of any of the Shareholders.
"Law" means any constitutional provision, statute, law, rule,
regulation, Permit, decree, injunction, judgment, order, ruling, determination,
finding or writ of any Governmental Entity.
"Liability" or "Liabilities" mean any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether incurred or consequential and whether due or to become due), including
any liability for Taxes.
"Lien" or "Liens" mean any mortgage, pledge, security interest, charge,
claim or other encumbrance, other than (a) mechanics', materialmen's and 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.
"Losses" has the meaning set forth in Section 11.2.
"Material" means, when used with respect to any matter, any adverse
effect on the business, operations, assets or conditions, financial or
otherwise, of TLW, which when (a) considered singly results in Losses of $5,000
or more or (b) considered in the aggregate together with all other such effects,
events, occurrences or group of events or occurrences related by or to
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a single customer, single supplier, single event or single action results in
Losses of $5,000 or more, and it being understood that with respect to such
representations as to which such phrase is used in the Agreement, Losses shall
include the initial amount below such threshold if either threshold is reached.
"Material Adverse Effect" means any adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of TLW
which, when considered either singly or in the aggregate together with all other
such effects with respect to which such phrase is used in this Agreement,
constitutes a material adverse effect on the business, assets, operations,
prospects or condition, financial or otherwise, of TLW taken as a whole.
"Multi-employer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Net Cash" means net cash on the TLW balance sheet as of the close of
business on the Closing Date plus deposits in transit, less checks, drafts or
notes made payable by TLW not cleared, in transit or not paid as of the Closing
Date.
"Net Debt" means any debt owed by TLW for money borrowed, including all
capitalized leases, loans from Shareholders, bank lines of credit, equipment
installment notes or other notes payable as of the Closing Date, plus all
transaction costs and expenses accrued as of the Closing Date.
"Ordinary Course of Business" means the ordinary course of business of
TLW consistent with past custom and practice (including with respect to quantity
and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" or "Permits" mean any license, permit, franchise, certificate
of authority or order, or any waiver of the foregoing, issued by any
Governmental Entity.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"Product" or "Products" mean all past and current products and services
of TLW and, to the extent that they are currently being developed by TLW, (i)
any subsequent versions of such products or services, (ii) any products or
services which are designed to supersede, replace or function as a component of
such products or services, and (iii) any upgrades, enhancements, improvements
and modifications to the foregoing, and (iv) any data or information associated
with the foregoing that is either provided to the customer, or required by the
customer to be delivered.
"Product Recall" means a request in writing from TLW to any person for
the return of any Products for reasons of health, safety or compliance with any
Law.
"Prohibited Transactions" has the meaning set forth in Section 406 of
ERISA and Section 4975 of the Code.
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"Reference Price" means the amount of Four Million Eighty-five
Thousand dollars ($4,085,000.00).
"Registrable Securities" has the meaning set forth in Section 8.5(a).
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping,
discarding, burying, abandoning or disposing into the environment.
"Reportable Event" has the meaning set forth in Section 4043 of ERISA.
"Safety Laws and Costs" means all Losses incurred to comply with any
Safety Law or as a result of any health or safety conditions present at, created
by or arising out of the past or present operations of TLW through the Closing
Date
"Safety Law" or "Safety Laws" means any Law or legal requirement
relating to health or safety, including the Occupational Safety and Health Act,
as amended, as now or hereinafter in effect relating to (a) exposure of
employees to any Hazardous Materials or (b) the physical structure, use or
condition of a building, facility, fixture or other structure, including,
without limitation, those relating to equipment or manufacturing processes, or
the management, Release, cleanup or removal of any Hazardous Materials.
"Schedule" means, unless the context otherwise requires, the referenced
Schedule included in the Disclosure Schedules.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Shareholders" has the meaning set forth in the Preamble to this
Agreement.
"Shareholder" means each Person set forth on Schedule 1 to this
Agreement.
"Shareholder Indemnified Parties" has the meaning set forth in Section
11.3.
"Shareholders' Ancillary Agreements" means, as to each shareholder set
forth on Schedule 1 hereof, a Non-Compete and Non-Solicitation Agreement among
the Company, TLW and such Shareholder in substantially the form of Exhibit B
attached hereto.
"Shareholders' Representative" means Xxxxx X. Windust, or in the event
Xxxxx X. Windust is unable to continue, any successor appointed by a plurality
interest of the Shareholders, their successors, and assigns in and to the
Escrowed Shares, or the proceeds thereof.
"Subsidiary" means with respect to any Person, (i) any corporation of
such Person or any of its Subsidiaries, a majority of whose outstanding voting
stock is owned or controlled, directly
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or indirectly, by such Person or by one or more of its Subsidiaries, or
collectively by such Person and one or more of its Subsidiaries; (ii) any
general partnership, joint venture or similar entity, a majority of whose
outstanding partnership or similar interests is at the time owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
collectively by such Person and one or more of its Subsidiaries; (iii) any
limited partnership of which such Person or any of its Subsidiaries is a general
partner or a majority of whose ownership interests is owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
collectively by such Person and one or more of its Subsidiaries; and (iv) any
limited liability company of which such Person or any of its Subsidiaries is a
manager or a majority of whose ownership interests is owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
collectively by such Person and one or more of its Subsidiaries. For the
purposes of this definition, "voting stock" or "ownership interests" means
shares, interests, participations or other equity interests (however designated)
in such Person having voting power in the election of directors (or the
equivalents) of such Person (whether existing at the time or arising upon any
known or contingent event or circumstance).
"Tax" or "Taxes" mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions, assessments or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local, or foreign taxing
authority, including, without limitation, income, gross receipts, license,
lease, service, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar, including FICA), unemployment, disability, real property, personal
property, sales, use, ad valorem, transfer, registration, value added,
alternative or add-on minimum, estimated, or of any other kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" or "Tax Returns" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, ideas, research and development, formulae, compositions,
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier information, pricing and cost information, business and
marketing plans, proposals, documentation, manuals, software, firmware,
hardware, integrated circuits and integrated circuit masks, electronic,
electrical or mechanical equipment, machinery and tools, and all other forms and
embodiments of technology of all kinds whatsoever, including without limitation
improvements, modifications, derivatives or changes, whether tangible or
intangible, embodied in any form, whether or not protectible or protected by
patent, copyright, mask work right, trade secret law or otherwise.
"TLW" has the meaning set forth in the Preamble to this Agreement.
"TLW Customers" means those customers or contracts identified on
Schedule 4.7(a-2).
"TLW Shares" means, collectively, all of the issued and outstanding
common stock of TLW.
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"TLW Reference EBITDA" has the meaning set forth in Section 2.2(b).
"TLW Reference EBITDA Work Papers" has the meaning set forth in Section
2.2(b).
"Total Consideration" means the Initial Consideration subject to the
adjustments in Section 2.3 plus the Additional Consideration set forth in
Section 2.2(b).
"Trademarks" means any trademarks, service marks, trade dress, logos
and trade names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.
"Warranties" shall mean all Product returns, service, repair,
replacement and other obligations based upon or arising out of express or
implied warranties made or deemed applicable in connection with the sale of
goods or the performance of services by TLW.
"Year 2000 Compliant" means that systems and products accurately
process date and time data (including, without limitation, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, the years 1999, 2000, and 2001, and leap year calculations.
"Year-End Financial Statements" has the meaning set forth in Section
4.5.
Section 2. EXCHANGE OF SHARES.
2.1 Sale and Transfer of TLW Shares. On the terms and subject to the
conditions set forth in this Agreement, at the Closing the Shareholders shall
transfer and convey to the Company, and the Company shall acquire, all right,
title and interest in and to the TLW Shares, free and clear of all Liens,
claims, encumbrances, pledges, options, security interests and any other adverse
claims or interests. At the Closing, each Shareholder shall deliver to the
Company all certificates evidencing the TLW Shares owned by him, her or it,
properly endorsed for transfer or accompanied by properly executed stock powers.
2.2 Consideration from Company for the TLW Shares. On the terms and
subject to the conditions set forth in this Agreement, the Company covenants and
agrees that in exchange for the transfer of the TLW Shares to Company by the
Shareholders, Company shall deliver to the Shareholders' Representative and the
Company's Transfer Agent, irrevocable instructions to immediately issue to the
Escrow Agent an aggregate number of shares of BE Stock, valued at the BE Closing
Price, equal to One Hundred and Twenty (120%) percent of the Reference Price
plus an amount equal to Four Million Two Hundred Thousand ($4,200,000) dollars
(One Hundred and Twenty (120%) percent of the maximum Additional Consideration
set forth in Section 2.2(b)). The Escrow Agent, pursuant to the Escrow
Agreement, will be instructed to release the Escrowed Shares or proceeds from
the sale thereof as follows:
(a) (i) Within ten (10) business days after the Closing Date,
based on the Company's and any Arbiter's, if applicable, confirmation of the Net
Cash and Net Debt pursuant to Section 2.3(a) and Section 2.3(b). Escrowed Shares
valued at the BE Closing Price, or
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proceeds therefrom, shall be released from Escrow, subject to the terms of the
Escrow Agreement, to (i) the Shareholders, in proportion to the ownership of
capital stock of TLW as set forth on Schedule 1, such that the total amount
distributed to the Shareholders is equal to ninety-two percent (92%) of the
Initial Consideration, and (ii) the Company in an amount equal: (i) Twenty (20%)
of the Reference Price; plus (ii) the Reference Price less the Initial
Consideration; plus (iii) Twenty (20%) percent of the maximum Additional
Consideration;
(ii) If the aggregate Net Proceeds received by the
Shareholders and the Escrow Agent from the Sales in the Public Offering of the
BE Stock divided by the number of Shares of BE Stock sold is greater than the BE
Closing Price (the greater amount defined as the "Excess"), then within five (5)
days after the closing of the Public Offering the Shareholders and the Escrow
Agent shall remit and pay to the Company the Excess.
(b) Additional Consideration.
(i) Within thirty (30) calendar days (but in no case later
than June 1, 2002) after the receipt from the Company's Accounting Firm of the
audit for the Company fiscal year ending February 2002, Company will deliver to
Shareholders' Representative a calculation of the TLW Reference EBITDA and all
associated work papers ("TLW Reference EBITDA Work Papers"). TLW Reference
EBITDA, subject to Section 2.2(b)(ii) below, is defined as the calculation of
the sum of the following clauses I through VI inclusive: (I) TLW's EBITDA
(excluding any Contribution Margin from Clauses II, IV and V below already
included in TLW's EBITDA) for fiscal year ending February 2002; (II) thirty
(30%) percent of Contribution Margin with respect to production work performed
at TLW but originating from any entities subsequently acquired by the Company
that are substantially consolidated into TLW; (III) five (5%) percent of all
sales for fiscal year ending February 2002 to TLW Customers with respect to
production work performed by either the Company or any Subsidiary of the Company
other than TLW; (IV) thirty (30%) percent of the Contribution Margin with
respect to production work performed by TLW but referred to TLW by the Company
or any subsidiary of the Company other than TLW; (V) thirty (30%) percent of the
Contribution Margin with respect to production work (other than the work listed
in I through IV above) for which either Mr. Windust or Xx. Xxxxxxx is called
upon to perform any management or oversight activities; and (VI) any amount
received by TLW or the Company from the Escrow that was returned as a result of
an indemnity claim under Section 11.2. If within thirty (30) calendar days after
delivery of the TLW Reference EBITDA to Shareholders' Representative, no written
notice from Shareholders' Representative disputing the calculation of the TLW
Reference EBITDA accompanied by Shareholders' Representative's alternative
proposed TLW Reference EBITDA has been received by Company, then Shareholders
shall be deemed to have waived the right to dispute the calculation of the TLW
Reference EBITDA and, subject to adjustments described in Sections 2.3 and 11.2,
Escrowed Shares valued at the BE Closing Price, or proceeds therefrom, in an
amount equal to four (4) times that portion of the TLW Reference EBITDA that
exceeds Six Hundred Thousand ($600,000.00) dollars shall be distributed, subject
to the Escrow Agreement, to the Shareholders, provided that in no case shall the
distribution exceed Three Million Five Hundred Thousand dollars ($3,500,000.00)
(herein the "Additional Consideration"); and the difference, if any, between
Three Million Five Hundred Thousand ($3,500,000) dollars and the Additional
Consideration shall be distributed to the Company.
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(ii) if the Company undergoes a Change of Control before
the one year anniversary of the Closing Date, then the Company shall perform and
deliver to the Shareholders two calculations of TLW Reference EBITDA. The first
calculation shall be made by calculating the TLW Reference EBITDA on the date
the Company underwent a Change of Control and annualizing that calculation. The
second calculation shall be made as described in Section 2.4(b)(i) above. The
Shareholders, in their sole discretion, shall decide which calculation shall be
used in the calculation of Additional Consideration.
(c) Subject to adjustments described in Sections 2.3 and 11.2,
Escrowed Shares valued at the BE Closing Price, or proceeds from the sale
thereof, in an amount equal four (4%) percent of the Initial Consideration will
be disbursed from Escrow, subject to the Escrow Agreement, to the Shareholders
fifteen (15) days after the receipt from the Company's Accounting Firm of the
audit for the Company fiscal year ending February 2002, but in no case later
than June 1, 2002;
(d) Subject to adjustments described in Sections 2.3 and 11.2,
Escrowed Shares valued at the BE Closing Price, or proceeds from the sale
thereof, in an amount equal to the balance of the Initial Consideration in
Escrow will be disbursed from Escrow, subject to the Escrow Agreement, to
Shareholders within fifteen (15) days after the receipt from the Company's
Accounting Firm of the audit for the Company fiscal year ending February 2003,
but in no case later than June 1, 2003.
(e) All remaining Escrowed Shares of BE Stock, or proceeds
therefrom, shall be distributed, subject to the Escrow Agreement, to the
Company.
(f) For purposes of complying with the terms set forth in
Section 2.2(b), each party promptly will cooperate with and make available to
the other party and its auditors and representatives all information, records,
data and auditors' working papers, as may be reasonably required in connection
with the analysis of the TLW Reference EBITDA and TLW Reference EBITDA Work
Papers
2.3 Adjustments of Total Consideration.
(a) Within ten (10) days after the Closing Date, based on the
Company's and any Arbiter's, if applicable, confirmation of Net Cash and Net
Debt, the Company will deliver to Shareholders' Representative, the calculation
with respect to the Net Cash and Net Debt, along with any associated work papers
(the "Closing Date Initial Consideration Calculation").
(b) Within thirty (30) days after the delivery of the Closing
Date Initial Consideration Calculation, the Shareholders' Representative will
deliver written notice to the Company of any objections thereto, and will
attempt in good faith to reach an agreement with the Company as to any matters
in dispute. If Shareholders' Representative does not give such notice within
such thirty (30) days, then Shareholders shall be deemed to have waived the
right to dispute the Closing Date Initial Consideration Calculation. If
Shareholders' Representative gives such notice within such thirty (30) days, and
if the Company and the Shareholders' Representative, notwithstanding such good
faith effort at resolution, fail to resolve all matters in dispute within
fifteen (15) days after Company's receipt of Shareholders' objections, then any
remaining disputed matters will be finally and conclusively determined by an
independent
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auditing firm of recognized national standing (the "Arbiter") promptly selected
by the Company and the Shareholders' Representative, which firm will not be the
regular auditing firm of the Company, TLW, Shareholders, or any Affiliate
thereof. Promptly, but not later than forty-five (45) days after acceptance of
its appointment, the Arbiter will determine (based solely on presentations by
the Shareholders' Representative and the Company and not by independent review)
only those matters in dispute and will render a written report as to the
disputed matters and the resulting calculation of the Initial Consideration
under Section 2.2(a), which report will be conclusive and final as to the
Initial Consideration for purposes of Section 2.2(a), but shall not detract from
the parties' remedies under Section 11. In resolving the dispute the Arbiter
shall be limited to choosing the final proposal of either the Company or
Shareholders' Representative. The fees and expenses of the Arbiter will be paid
by the non-prevailing party with respect to the determination of the Arbiter as
set forth in the Arbiter's report. The Arbiter's final report shall be submitted
to the Escrow Agent within ten (10) days after it has been delivered to
Shareholders' Representative and the Company. Following said delivery, the
Escrow Agent will be instructed to act accordingly pursuant to Section 2.2.
(c) For purposes of complying with the terms set forth in
Section 2.3(b), each party will promptly cooperate with and make available to
the other party and its auditors and representatives all information, records,
data and auditors' working papers, as may be reasonably required in connection
with the preparation and analysis of the Closing Date Initial Consideration
Calculation.
(d) If within thirty (30) calendar days after delivery of the
TLW Reference EBITDA and TLW Reference EBITDA Work Papers to Shareholders'
Representative, written notice from Shareholders' Representative disputing the
calculation of the TLW Reference EBITDA accompanied by Shareholders'
Representative's alternative proposed TLW Reference EBITDA is received by
Company, and if the Company and the Shareholders' Representative,
notwithstanding such good faith effort at resolution, fail to resolve all
matters in dispute with respect to the calculation of the TLW Reference EBITDA
within fifteen (15) days after Shareholders' objections are received by Company,
then such remaining disputed matters will be finally and conclusively determined
by binding arbitration administered by an Arbiter promptly selected by the
Company and the Shareholders' Representative, which firm will not be the regular
auditing firm of the Company, TLW, Shareholder or any Affiliate thereof.
Promptly, but not later than forty-five (45) days after its acceptance of its
appointment, the Arbiter will determine (based solely on presentations by the
Shareholders' Representative and the Company and not by independent review) only
those matters in dispute and will render a written report as to the disputed
matters and the resulting calculation of the TLW Reference EBITDA under Section
2.2(b), which report will be conclusive and final as to the TLW Reference EBITDA
for purposes of Section 2.2(b), but shall not detract from the parties' remedies
under Section 11. In resolving the dispute the Arbiter shall be limited to
choosing the final proposal of either Company or Shareholders' Representative.
The fees and expenses of the Arbiter will be paid by the non-prevailing party
with respect to the determination of the Arbiter as set forth in the Arbiter's
report. Within ten (10) days after the Arbiter's determination of the TLW
Reference EBITDA pursuant to this Section 2.3(d), Shareholders and the Company
shall receive from Escrow, subject to the Escrow Agreement, an amount as
determined pursuant to Section 2.2(b).
12
(e) For purposes of complying with the terms set forth in
Section 2.3(d), each party promptly will cooperate with and make available to
the other party and its auditors and representatives all information, records,
data and auditors' working papers, as may be reasonably required in connection
with the analysis of the TLW Reference EBITDA and TLW Reference EBITDA Work
Papers.
(f) In addition to all other rights and remedies under Section
11 of this Agreement, the Company shall have recourse, subject to the Escrow
Agreement, to withhold and set off any unpaid portions of the Escrowed Shares or
proceeds from the sale thereof held in Escrow, in partial satisfaction of
Shareholders' obligations to the Company Indemnified Parties under Section 11 on
a dollar-for-dollar basis. No failure to withhold by Escrow Agent or the Company
any amount held in Escrow from Shareholders shall constitute a waiver or release
of any kind whatsoever.
2.4 Escrow. At the Closing, the Company shall deposit or cause to be
deposited, shares of BE Stock valued at the BE Closing Price in an aggregate
amount equal to One Hundred and Twenty (120%) percent of the Reference Price,
plus an amount equal to Four Million Two Hundred Thousand ($4,200,000) dollars
(One Hundred and Twenty (120%) percent of the maximum Additional Consideration
set forth in Section 2.2(b)) ("the Escrowed Shares"), into an escrow account
("Escrow") to be established with an escrow agent (the "Escrow Agent") selected
by the Company, reasonably acceptable to the Shareholders, pursuant to an escrow
agreement, dated the Effective Date, substantially in the form of Exhibit C-1
(the "Escrow Agreement"). The Escrow Agent will hold the Escrowed Shares as
provided by, and in accordance with, the obligations of the Shareholders under
Sections 2.2 and 11.2 hereof. The Escrow Agreement shall provide for the
distribution of the Escrowed Shares (or proceeds from the sale thereof) from the
Escrow pursuant to Sections 2.2(a), (b), (c), (d) and (e), subject to claims of
the Company under Section 11.2 or reduction in the Initial Consideration under
Section 2.2 or reduction in the Additional Consideration under Sections 2.2 and
2.3. Following the initial distribution from Escrow of Escrowed Shares, or
proceeds therefrom, pursuant to Section 2.2(a), the Escrow Agent shall hold the
remaining Escrowed Shares or proceeds therefrom equal to eight (8%) of the
Initial Consideration, plus the maximum amount of the Additional Consideration,
subject to further distribution under the Escrow Agreement.
Investment earnings on any balances in the Escrow shall accrue to the benefit of
the Shareholders and the Company, pro rata to the distributions made under
Sections 2.2(a), (b), (c), and (d), and any fees for maintaining the Escrow,
shall be paid from the balances in the Escrow, and if either not practical or if
necessary paid directly by the Shareholders and the Company, pro rata to the
distributions made under Sections 2.2(a), (b), (c), and (d). No Escrowed Shares,
or proceeds from the sale thereof, shall be distributed to Shareholders'
Representative or any Shareholder except pursuant to the Escrow Agreement in
compliance with the terms and conditions of this Agreement. Any Escrowed Shares
released from the Escrow to either the Shareholders, Shareholders'
Representative or the Company shall be valued for purposes of satisfying the
Total Consideration owing under this Agreement to the Shareholders at the BE
Closing Price without reference to the stock's then actual market price. The
Company and Shareholders shall be responsible for, as applicable, pro rata based
on the distributions made under Sections 2.2(a), (b), (c), and (d), and shall
pay when due, any and all Taxes imposed upon or arising from the Escrowed
Shares, as well as any fees and costs of Escrow Agent for
13
maintaining the Escrow. The Shareholders and Company agree that the Escrow Agent
will be instructed to sell the Escrowed Shares at the earliest opportunity and
that the proceeds from the sale thereof shall be substituted in place of the
Escrowed Shares. Accordingly, the Shareholders and the Company hereby
irrevocably authorize and direct the Escrow Agent and any agents or
representatives of the Company to take any and all actions necessary or
appropriate, in such Person's sole and absolute discretion, to effect sales of
Escrowed Shares on such terms and conditions (and only on such terms and
conditions), and at such times and utilizing such underwriters and brokers, as
shall be directed and approved by the Company in a written notice (a "Sale
Notice") to be delivered to the Escrow Agent.
2.5 Guarantied Proceeds; Mandatory and Optional Cash Payments. In the
event that the aggregate Net Proceeds (as defined below) received by the
Shareholders or the Escrow Agent from sales in the Public Offering of the BE
Stock divided by the number of shares of BE Stock sold are less than the BE
Closing Price, then, within 5 days after closing of the Public Offering, the
Company shall pay to the Shareholders (or their designee or custodian), or, in
regard to Escrowed Shares, to the Escrow Agent, an aggregate amount equal to the
Initial Consideration minus the sum of the Net Proceeds received on account of
the sales of BE Stock by the Shareholders or the Escrow Agent, allocated
according to actual amounts of the deficiency for each. In the event that the
aggregate Net Proceeds received by the Shareholders and the Escrow Agent from
the sale of BE Stock exceeds the Initial Consideration, the Company shall have
no obligation to make any payment pursuant to this Section 2.5, and the
Shareholders and the Escrow Agent shall remit or cause to be remitted to the
Company such excess amounts within the five (5) day period described in the
first sentence of this Section 2.5 As used herein, "Net Proceeds" means (x) in
the case of an underwritten sale of BE Stock, the gross proceeds received by the
Shareholders and the Escrow Agent in such sale, net of underwriter's discounts,
commissions and other expenses paid by the Shareholders (whether incurred by the
Shareholders, the Company, the underwriters or any advisors) in connection with
such sale and (y) in the case of any other sale of such shares, the gross
proceeds received by the Shareholders and the Escrow Agent, net of selling
commissions paid in connection with such sale and all other expenses paid by the
Shareholders (whether incurred by the Shareholders, the Company, placement
agents or any broker dealers), in connection with such sale. In the event that
not all of the BE Stock received by the Shareholders or held in escrow are sold
in the Public Offering, the Company shall have the right to terminate or
withdraw any registration initiated by it and to elect, at its sole option by
giving written notice to the Shareholders and the Escrow Agent, to pay the
Shareholders or the Escrow Agent in cash an amount per share of unsold BE Stock
equal to the BE Closing Price multiplied by the number of unsold shares of BE
Stock, and in exchange for such payment, the Shareholders and the Escrow Agent
shall transfer to the Company all right and interest in and to the shares of BE
Stock that they have not previously sold. If all unsold shares of BE Stock are
not theretofore paid for by the Company, then during the week of August 26,
2001, each Shareholder may require the Company to purchase any or all of the
unsold shares of BE Stock for an amount equal to the BE Closing Price multiplied
by the number of shares that the Shareholder requires that the Company purchase,
plus an amount, as interest, that would accrue at the rate of 8% per annum from
the Closing Date to the 180th day after the Closing Date.
Section 3. CLOSING AND CLOSING DATE.
14
3.1 Closing. Subject to the provisions of Section 10, the consummation
of the transactions contemplated by this Agreement (the "Closing") will take
place at the offices of Yocca Patch & Yocca, LLP, 00000 XxxXxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx, on February 26, 2001, or at such other place or
on such other date as the Company and the Shareholders may mutually agree.
Notwithstanding the foregoing, the parties agree that the Company intends, for
financial reporting purposes, to treat the Closing and transfer of effective
control of TLW as if it had occurred on February 24, 2001 (the "Effective
Date").
3.2 Closing Date. The date on which the Closing actually takes place is
referred to in this Agreement as the "Closing Date." Except as provided in
Section 3.1 for financial reporting purposes, the Closing will be deemed for all
other purposes under this Agreement to have occurred as of 12:01 A.M.,
California time, on the Closing Date.
3.3 Deliveries at the Closing. At the Closing, (a) the Shareholders
will deliver to the Company the various certificates, instruments, documents and
agreements referred to in Section 10.1, (b) the Company will deliver to the
Shareholders the various certificates, instruments, documents and agreements
referred to in Section 10.2, (c) the Shareholders will deliver to the Company
stock certificates evidencing all of the TLW Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (d) the Company will
deliver to the the Escrow Agent an aggregate number of shares of BE Stock valued
at the BE Closing Price equal to One Hundred Twenty (120%) percent of the
Reference Price plus and amount equal to Four Million Two Hundred Thousand
($4,200,000) dollars (One Hundred Twenty (120%) percent of the maximum
Additional Consideration).
3.4 Bank Signature Cards. At closing, TLW and the Shareholders, as
applicable, will deliver to the Company signature cards for all TLW Bank
Accounts.
Section 4. REPRESENTATIONS AND WARRANTIES OF TLW AND SHAREHOLDERS. The
Shareholders, severally and jointly, and TLW represent and warrant to the
Company that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).
4.1 Organization. TLW is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. TLW is duly
qualified to conduct business and in good standing under the laws of each
jurisdiction where such qualification is required. TLW has full corporate power
and authority and all Permits and authorizations necessary to carry on the
businesses in which they are engaged and in which they presently propose to
engage and to own and use the properties owned and used by them.
4.2 Authorization of Transaction. Each of the Shareholders has the
capacity and authority to execute and deliver this Agreement and to perform
their respective obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Shareholders, enforceable in accordance with
its terms and conditions.
15
4.3 Noncontravention; Consents.
(a) Neither the execution and delivery of this Agreement, nor
the consummation by TLW and the Shareholders of the transactions contemplated
hereby, will violate any Law to which TLW or the Shareholders are subject or any
provision of the charter or bylaws of TLW. Except as set forth on Schedule
4.3(a), neither the execution and delivery of this Agreement by the
Shareholders, nor the consummation by TLW or the Shareholders of the
transactions contemplated hereby, will constitute a violation of, be in conflict
with, constitute or create a default under or result in the creation or
imposition of any Lien upon any property of TLW or the Shareholders pursuant to
any agreement or commitment to which TLW or any of the Shareholders is a party
or by which TLW, the Shareholders or any of their respective properties
(including TLW Shares) is bound or to which TLW, the Shareholders or any of such
properties is subject.
(b) Except as set forth on Schedule 4.3(b), TLW and the
Shareholders have given all required notices and obtained all licenses, Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities as are required in order to enable the Shareholders to perform their
obligations under this Agreement, including all consents and approvals required
to permit the Shareholders to transfer all of the TLW Shares to the Company. No
Contract relating to TLW has been amended to increase the amount payable
thereunder or otherwise modify the terms thereof in order to obtain any such
consent, approval or authorization.
4.4 Capitalization. Schedule 4.4 sets forth for TLW (i) the number of
shares of authorized capital stock of each class of its capital stock, (ii) the
number of issued and outstanding shares of each class of its capital stock,
(iii) the names of its directors and elected officers, and (iv) the owners of
its capital stock. The Shareholders have delivered to the Company correct and
complete copies of the charter and bylaws of TLW as amended to date. All of the
issued and outstanding shares of capital stock of TLW have been duly authorized
and are validly issued, fully paid and nonassessable. As of immediately prior to
the Closing the Shareholders hold of record and own beneficially, and upon the
Closing the Shareholders shall transfer, assign and convey to Company, all
right, title and interest in and to all of the outstanding shares of stock of
TLW, free and clear of any restrictions on transfer (other than restrictions
under the Securities Act, and applicable state securities laws), Taxes, Liens,
options, warrants, purchase rights, contracts, commitments, equities, claims or
demands. Except as set forth on Schedule 4.4, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require the
Shareholders or TLW to sell, transfer or otherwise dispose of any capital stock
of TLW or that could require TLW to issue, sell or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to TLW. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of TLW. TLW is
not in default under or in violation of any provision of its charter or bylaws.
Except as set forth on Schedule 4.4, TLW neither controls directly or
indirectly, nor has any direct or indirect equity participation in, any Person.
16
4.5 Financial Statements. Set forth in Schedule 4.5(a-1) are correct
and complete copies of the unaudited balance sheets of TLW as of June 30, 1998,
June 30, 1999 and June 30, 2000 and the related statements of income and cash
flow for the years then ended (the "Year-End Financial Statements"). The
Year-End Financial Statements were prepared consistent with past accounting
practices and present fairly the financial condition and the results of
operations of TLW as of the dates and for the periods indicated therein in
accordance with GAAP (except as set forth in Schedule 4.5(a-2)). Set forth in
Schedule 4.5(a-3) are correct and complete copies of the unaudited balance sheet
of TLW as of January 31, 2001 and the related statements of income and cash flow
for the seven months then ended (the "Interim Financial Statements"). The
Interim Financial Statements were prepared consistent with past accounting
practices and present fairly the financial condition and the results of
operations of TLW as of the date and for the period indicated in accordance with
GAAP (except as set forth in Schedule 4.5(a-2)), except for normal year-end
adjustments.
4.6 Undisclosed Liabilities. TLW has no Liabilities that exceed,
individually or in the aggregate, Five Thousand Dollars ($5,000), except for
liabilities and obligations (i) reflected or reserved for on the Interim
Financial Statements, (ii) that have arisen since the date of the Interim
Financial Statements in the ordinary course of the operation of TLW (none of
which results from, arises out of, relates to, any breach of contract, breach of
warranty, tort, infringement or violation of Law) or (iii) as set forth on
Schedule 4.6.
4.7 Customers and Suppliers. Except as set forth in Schedule 4.7(a-1),
since December 31, 2000, no event or condition has arisen that would reasonably
be expected to result in any of the major customers or sole-source or key
suppliers of TLW to cease doing business with TLW or to curtail its business
with TLW in any Material respect. TLW and Shareholders' have received no notice
from any major customers or major suppliers that the transactions contemplated
by this Agreement will result in a Material change in the manner of conducting
business with TLW. Listed in Schedule 4.7(a-2) are the names and addresses of
TLW's customers for 1999 and for 2000. Listed in Schedule 4.7(a-3) are the names
and addresses of all major suppliers and all sole source suppliers to TLW for
1999 and for 2000, and the amount for which each supplier invoiced TLW during
such period.
4.8 Events Subsequent to Most Recent Fiscal Year End. Since June 30,
2000, there has not been any Material adverse change in the business, financial
condition, operations, results of operations, or future prospects of TLW except
as disclosed on Schedule 4.8.
4.9 Accounts Receivable. The accounts receivable reflected on the
Interim Financial Statements are bona fide receivables, accounted for on a basis
consistent with that used in the preparation of the Interim Financial
Statements, including any associated reserves, representing amounts due with
respect to actual transactions in the ordinary course of the operation of TLW.
4.10 Tax Matters.
(a) Except as set forth in Schedule 4.10, (i) all Tax Returns
that are required to be filed by or with respect to TLW, have been duly filed,
and TLW is not the beneficiary of any extension of time within which to file any
Tax Return, (ii) the Shareholders have delivered to the Company correct and
complete copies of all federal income Tax Returns, examination
17
reports and statements of deficiencies assessed against or agreed to by TLW for
the last three taxable years, (iii) such Tax Returns are true, complete and
correct in all Material respects, (iv) all Taxes due and payable by TLW have
been paid in full, (v) no waivers of statutes of limitation have been given by
or requested with respect to any Taxes of TLW, (vi) there is no claim or
assessment threatened by any taxing authority against TLW, (vii) TLW has
withheld and timely paid to the appropriate taxing authority the required
amounts in compliance with all Tax withholding provisions of applicable Laws,
(viii) no claim has ever been made by an authority in a jurisdiction where TLW
does not file Tax Returns that TLW may be subject to taxation by that
jurisdiction, and (ix) there are no Liens on any of the assets of TLW that arose
in connection with any failure (or alleged failure) to pay any Tax.
(b) No Shareholder, director or officer (or employee
responsible for Tax matters) of TLW expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute, audit, investigation, proceeding or claim concerning any Liability
with respect to Taxes of TLW either (i) claimed or raised by any authority in
writing or (ii) as to which any of TLW or the Shareholders have Knowledge based
upon contact with any such authority. No federal, state, local, and foreign
income Tax Returns filed with respect to TLW have been audited and none are
currently open or the subject of audit.
(c) TLW does not have any Liability for the Taxes of any
Person other than TLW under Treasury Regulation ss. 1.1502-6 (or any similar
provision of Law), as a transferee or successor, by contract, or otherwise.
(d) TLW has not filed a consent under Code ss. 341(f)
concerning collapsible corporations. TLW has not made any payments, nor is it
obligated to make any payments, nor is it a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code xx.xx. 162, 280G or 404. TLW has not been a United States
real property holding corporation within the meaning of Code ss. 897(c)(2)
during the applicable period specified in Code ss. 897(c)(1)(A)(ii). TLW has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of the Code ss. 6662.
(e) No TLW asset is property which TLW is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code. None of the TLW assets is
"Tax-exempt use property" within the meaning of Section 168(h) of the Code. TLW
has not agreed to make, nor is it required to make, any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise. TLW
has not participated in (and will not participate in) an international boycott
within the meaning of Section 999 of the Code. TLW is not a person other than a
United States person within the meaning of the Code. The transaction
contemplated herein is not subject to the Tax withholding provisions of Code
Section 3406, or of subchapter A of Chapter 3, of the Code or of any other
provision of Law. TLW does not have and has not had a permanent establishment in
any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country. TLW is not a
party to any joint venture, partnership, or other arrangement or contract that
could be treated as a partnership for federal income Tax purposes.
18
(f) Except as disclosed on Schedule 4.10(f), TLW has duly and timely
paid all Taxes relating to the business of TLW (whether or not shown on any Tax
Return) due to any Governmental Entity prior to the Closing, or has set up an
adequate reserve for all such Taxes outside of any source of funds of TLW.
4.11 Contracts.
(a) Schedule 4.11 contains a list of all material Contracts,
including a description of the terms of all material Contracts not in writing.
Without limiting the foregoing, all Contracts with terms exceeding one year or
involving consideration in excess of $5,000 shall be deemed material.
(b) The Shareholders have made available to the Company
correct and complete copies of all items, as amended, listed on Schedule 4.11
that are in writing, and the descriptions contained on Schedule 4.11 of all
items listed therein that are not in writing are complete and correct. Each
Contract is a valid, binding and enforceable obligation of TLW and the other
party or parties thereto and is in full force and effect. Except as set forth on
Schedule 4.11, (i) neither TLW nor, to TLW's Knowledge, any other party thereto,
is in material breach of any term of any Contract or has repudiated any term of
any Contract, (ii) no event, occurrence or condition exists that, with the lapse
of time, the giving of notice, or both, would become a material default under
any Contract by TLW, or, to TLW's Knowledge, any other party thereto, (iii) TLW
has neither waived nor released any of its material rights under any Contract,
and (iv) neither TLW, nor the Shareholders, have received any communication
questioning the validity or enforceability of any Contract. The execution,
delivery and consummation of the transactions contemplated by this Agreement
shall not constitute a breach or default under, or give rise to a right of
termination under or otherwise adversely affect any provision of any of the
Contracts.
4.12 Real Property.
(a) Schedule 4.12(a-1) lists all lease and sublease agreements
relating to real property leased or subleased by TLW. Except as set forth on
Schedule 4.12(a-2), with respect to each such lease and sublease:
(i) such lease or sublease constitutes the entire
agreement to which TLW is a party with respect to the real property leased
thereunder;
(ii) TLW has not assigned, sublet, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(iii) all facilities leased or subleased thereunder have
received all material approvals of Governmental Entities (including all Permits)
required in connection with the operation thereof and have been operated and
maintained in all material respects in accordance with all applicable Laws; and
(iv) there is no action, suit or proceeding pending
against TLW or, to Shareholders' Knowledge, any action, suit or proceeding
pending or threatened against TLW or
19
any third party that would interfere with the quiet enjoyment of such leased
real property after the Closing Date.
(b) All of the real property and facilities used by TLW, and
all components of all improvements included within such property, are in good
working order and repair, reasonable wear and tear excepted, and do not require
Material repair or replacement in order to serve their intended purposes in all
Material respects, including use and operation consistent with their present use
and operation, except for scheduled maintenance, repairs and replacements
conducted or required in the ordinary course of the operation of such real
property or improvements.
(c) Other than options, rights of first refusal or other
similar arrangements in favor of TLW under the leases and subleases relating to
the real property leased by TLW, TLW has not entered into any contract,
arrangement or understanding with respect to the future ownership, development,
use, occupancy or operation of any parcel of real property.
(d) There are no pending or threatened or contemplated
condemnation or eminent domain proceedings that affect the real property leased
by TLW, and TLW has not received any notice, oral or written, of the intention
of any Governmental Entity or other Person to take or use all or any part
thereof.
(e) Since TLW's leasing of the real property leased by TLW,
none of such property or any part thereof has suffered any Material damage by
fire or other casualty that has not been completely restored.
(f) TLW has not received any written notice from any insurance
company that has issued a policy to TLW with respect to any of its leased real
property requiring the performance of any structural or other repairs or
alterations to such property.
(g) TLW does not now own, and has never owned any real
property. All real property previously leased by TLW is identified as such in
Schedule 4.12(g).
4.13 Title and Related Matters. Except as set forth on Schedule 4.13,
TLW now has, and on the Closing Date will have, good and marketable title to all
the properties and assets used by TLW in its business or as shown on the Interim
Financial Statements, free and clear of all Liens, except for properties and
assets disposed of in the Ordinary Course of Business.
4.14 Intellectual Property.
(a) TLW owns or has the right to use pursuant to valid
license, sublicense, agreement or permission all Intellectual Property necessary
or desirable for the operations of TLW as presently conducted. TLW owns common
law Trademark rights to the T. L. Windust Machine and T. L. Windust names and
marks.
(b) TLW has neither interfered with, nor infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of third parties. TLW has not received any charge, complaint, claim,
demand or notice alleging any such interference, infringement, misappropriation
or violation (including any claim that it must license or refrain
20
from using any Intellectual Property rights of any third party). To TLW's
Knowledge, no third party has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Intellectual Property rights of TLW.
(c) Schedule 4.14(c) identifies each patent and each
registered Trademark, and copyright owned by TLW and identifies each pending
patent application or application for registration that has been filed by TLW.
The Shareholders have made available to the Company correct and complete copies
of all such patents, registrations and applications, each as amended to date,
and correct and complete copies of all other written documentation evidencing
ownership and prosecution of each such item. With respect to each such item of
Intellectual Property required to be identified in Schedule 4.14(c):
(i) TLW possesses all right, title and interest in and to
such item, free and clear of any Lien, license or other restriction;
(ii) such item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to TLW's Knowledge, threatened
that challenges the legality, validity, enforceability, use or ownership of such
item; and
(iv) TLW has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other conflict with
respect to such item except to the extent specifically disclosed in Schedule
4.14(c).
(d) Schedule 4.14(d) identifies each license, sublicense,
agreement or permission pursuant to which TLW uses any item of Intellectual
Property. With respect to each such license, sublicense, agreement or
permission:
(i) to TLW's Knowledge, the underlying item of
Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, ruling or charge;
(ii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to TLW's Knowledge, threatened
that challenges the legality, validity or enforceability of the underlying item
of Intellectual Property;
(iii) the execution, delivery and consummation of
transactions contemplated by this Agreement shall not constitute a breach or
default or, give rise to a right of termination thereunder, or otherwise
adversely affect the ability of TLW, Company or its Affiliates to use the
Intellectual Property in conducting the business of TLW after the Effective
Date; and
(iv) TLW has not granted any sublicense or similar right
with respect to such license, sublicense, agreement or permission.
4.15 Litigation. Schedule 4.15 sets forth each instance in which TLW is
(a) subject to any unsatisfied judgment order, decree, stipulation, injunction
or charge or (b) a party to or, to
21
TLW's Knowledge, is threatened to be made a party to any charge, complaint,
action, suit, proceeding, hearing or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction, or (c) subject to any Product Recall relating to TLW Products
since TLW's incorporation. There are no judicial or administrative actions,
proceedings or investigations pending or, to TLW's Knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken by
TLW or the Shareholders in connection with this Agreement or that, if adversely
determined, would have a Material Adverse Effect upon TLW or the Shareholders'
ability to enter into or perform their respective obligations under or
contemplated by this Agreement to which any of them is a party.
4.16 Employee Benefits.
(a) Schedule 4.16(a) lists each Employee Benefit Plan that TLW
maintains with respect to the current or former employees of TLW or to which TLW
contributes with respect to any of the current or former employees of TLW. With
respect to each such Employee Benefit Plan:
(i) such Employee Benefit Plan (and each related trust,
insurance contract or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code and other applicable Laws;
(ii) all required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions) have
been filed or distributed appropriately with respect to such Employee Benefit
Plan and the requirements of Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan;
(iii) all contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before the
Effective Date which are not yet due have been paid to each such Employee
Pension Benefit Plan. All premiums or other payments for all periods ending on
or before the Effective Date have been paid with respect to each such Employee
Benefit Plan that is an Employee Welfare Benefit Plan. Nothing has occurred or
is expected to occur which would cause a Material increase in the cost of
providing benefits to each such Employee Benefit Plan;
(iv) each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan" under Section
401(a) of the Code and has received, within the last three years, a favorable
determination letter from the IRS, and its related trust has been determined to
be exempt from taxation under Section 501(a) of the Code. Nothing has occurred
since the date of such favorable determination letter that would adversely
affect such qualification or exemption; and
(v) the Shareholders have made available to the Company
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the IRS, the most recent Form
5500 Annual Report, and all
22
related trust agreements, insurance contracts and other funding agreements which
implement such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that TLW
maintains or ever has maintained, or to which it contributes, ever has
contributed or ever has been required to contribute, there have been no
Prohibited Transactions with respect to such Employee Benefit Plan, no fiduciary
has any liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of such
Employee Benefit Plan, and no action, suit, proceeding, hearing or investigation
with respect to the administration or the investment of the assets of such
Employee Benefit Plan (other than routine claims for benefits) is pending or, to
TLW's Knowledge, threatened.
(c) Except as set forth on Schedule 4.16(c), TLW neither
contributes to, nor has ever contributed to or has ever been required to
contribute to any Multi-employer Plan or has any liability (including withdrawal
liability) under any Multi-employer Plan. None of the transactions contemplated
by this Agreement or any Ancillary Agreement will trigger any withdrawal or
termination liability under any Multi-employer Plan set forth on Schedule
4.16(c).
4.17 Environmental Matters
(a) Except as set forth on Schedule 4.17(a):
(i) TLW is and has been in compliance with all applicable
Environmental Laws and Safety Laws the violation of which could have a Material
Adverse Effect;
(ii) TLW has obtained, and is and has been in Material
compliance with the conditions of, all Environmental Permits required for the
continued conduct of the business of TLW in the manner now conducted and
presently proposed to be conducted;
(iii) TLW has filed all required applications, notices and
other documents necessary to effect the timely renewal or issuance of all
Environmental Permits for the continued conduct of the business of TLW in the
manner now conducted and presently proposed to be conducted;
(iv) there are no past or present events, conditions or
circumstances related to environmental or health and safety matters that are
likely to have a Material Adverse Effect or which would interfere with
compliance with any Environmental Law or Permit or Safety Law;
(v) there are no circumstances or conditions present at or
arising out of the present or, to the Knowledge of the Shareholders, former
assets, properties, leaseholds, businesses or operations of TLW in respect of
off-site storage, transportation or disposal of, or any off-site Release of
Hazardous Materials which reasonably may be expected to give rise to any
Environmental Liabilities and Costs;
23
(vi) there are no circumstances or conditions present at
or arising out of the present or former assets, properties, leaseholds,
businesses or operations of TLW, including but not limited to any on-site
storage, use, disposal or Release of Hazardous Materials, which reasonably may
be expected to give rise to any Environmental Liabilities and Costs or Safety
Liability and Costs;
(vii) none of TLW or the Shareholders or the present or
past assets, properties, business, leaseholds or operations of TLW has received
or is subject to, or within the past three years has been subject to, any
outstanding order, decree, judgment, complaint, agreement, claim, citation, or
notice or is subject to any ongoing judicial or administrative proceeding
indicating that TLW, the Shareholders or the past and present assets,
properties, business, leaseholds, or operations of TLW are or may be: (A) in
violation of any Environmental Laws; (B) in violation of any Safety Laws; (C)
responsible for the on-site or off-site storage or Release of any Hazardous
Materials; or, (D) liable for any Environmental Liabilities and Costs or Safety
Liabilities and Costs;
(viii) none of TLW or the Shareholders have any reason to
believe that TLW will become subject to a matter identified in subsection (vii);
and, no investigation or review with respect to such matters is pending or, to
the Knowledge of TLW or the Shareholders, is threatened, nor has any authority
or other third-party indicated an intention to conduct the same;
(ix) neither the business of TLW nor any of its properties
or assets is subject to, or as a result of the transactions contemplated by this
Agreement will be subject to, the requirements of any Environmental Laws which
require notice, disclosure, cleanup or approval prior to transfer of the shares
or the business of TLW or which will impose Liens on any such asset or property
or otherwise interfere with or affect the business of TLW;
(x) Schedule 4.17(a)(x) lists all property presently or
previously leased, owned or operated by TLW and identifies all such property
(and the area within that property) that has been used by TLW or, to the
Knowledge of the Shareholders, by any other Person (including a prior owner or
operator) for the storage or disposal of Hazardous Materials);
(xi) Schedule 4.17(a)(xi) lists all off-site locations,
including, without limitation, commercial waste disposal facilities or municipal
landfills, to which or at which Hazardous Materials originating from TLW, or its
assets, properties or business have been sent (or otherwise have come to be
located) in amounts that would require a waste manifest under the Resource
Conservation and Recovery Act of 1976 as now in effect for treatment, storage,
disposal, reuse or recycling;
(xii) Schedule 4.17(a)(xii) of the Disclosure Schedule
sets forth a list of all underground storage tanks owned or operated at any time
by TLW and except as disclosed in
24
Schedule 4.17(xii) of the Disclosure Schedule, no such tank is leaking or has
leaked at any time in the past, and there is no pollution or contamination of
the Environment caused by or contributed to or threatened by a Release of a
Hazardous Materials from any such tank; and
(xiii) Schedule 4.17(a)(xiii) lists all environmental
audits, inspections, assessments, investigations or similar reports in TLW's
possession or of which the Shareholders or TLW have Knowledge relating to the
assets, properties, or business of TLW or the compliance of the same with
applicable Environmental Laws and Safety Laws.
(xiv) Schedule 4.17(a)(xiv) sets forth the nature and
quantities of any Hazardous Materials (as defined below) generated, transported
or disposed of by TLW during the past three years (other than raw material
awaiting manufacturing, work-in-process or finished goods and through the sale
of products in the ordinary course of business), together with a description of
the location of each such activity; and
(xv) Schedule 4.17(a)(xv) sets forth a summary of the
nature and quantities of any Hazardous Materials that have been disposed of or
found at any site or facility owned or operated presently or at any previous
time by TLW (other than raw material awaiting manufacturing, work-in-process or
finished goods and through the sale of products in the ordinary course of
business).
For purposes of this Section 4.17 only, all references to
"TLW" are intended to include any and all other entities to which, to the
Knowledge of the Shareholders, TLW may be considered a successor under
applicable Environmental Laws.
4.18 Legal Compliance. Except as set forth on Schedule 4.18, TLW has
complied in all Material respects with all applicable Laws and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against or, to TLW's Knowledge, has been threatened
against TLW alleging any failure to so comply, and TLW has neither been debarred
from bidding on any project for any Governmental Entity nor subject to any
debarment proceedings involving any Governmental Entity.
4.19 Insurance. Schedule 4.19 contains a correct and complete list of
all insurance policies pursuant to which TLW is insured as of the date of this
Agreement or, to Shareholders' knowledge, were insured prior to the date hereof,
and no such policies subject TLW to any obligations for retrospective claims or
adjustments.
4.20 Bank Accounts and Powers. Schedule 4.20 lists by name, address and
account number, each bank, trust company, savings institution, brokerage firm,
mutual fund or other financial institution with which TLW has an account or safe
deposit box and the names and identification of all Persons authorized to draw
thereon or to have access thereto. Schedule 4.20 lists the names of each Person
holding powers of attorney or agency authority from TLW and a summary of the
terms thereof.
25
4.21 Brokers' Fees. Neither TLW nor the Shareholders have any liability
or obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the Company
could become liable or obligated or for which TLW, after the Closing Date, will
have any continuing obligation.
4.22 Year 2000 Compliance. Except as set forth on Schedule 4.22, all
software, hardware, databases, and devices that run under the control of a
microprocessor used by TLW, and each of the Products of TLW, are Year 2000
Compliant.
4.23 Equipment.
(a) Schedule 4.23(a-1) lists all lease agreements relating to
equipment, furniture or trade fixtures leased by TLW. Except as set forth on
Schedule 4.23, all equipment, furniture or trade fixtures used or located in the
business or operations of TLW is in good working order and repair, reasonable
wear and tear excepted, have been operated and maintained in all Material
respects in accordance with all applicable Laws; and do not require Material
repair or replacement in order to serve their intended purposes in all Material
respects, including use and operation consistent with their present use and
operation, except for scheduled maintenance, repairs and replacements conducted
or required in the ordinary course of the operation thereof. TLW has not
received any written notice from any insurance company that has issued a policy
to TLW with respect to any of its equipment, including trade fixtures, requiring
the performance of any structural or other repairs or alterations to such
property.
(b) Schedule 4.23(b-1) lists all personal property owned by
TLW. Except as listed on Schedule 4.23(b-2) all personal property used in
connection with or in furtherance of TLW's business or operations listed on
Schedule 4.23(b-1) is property of TLW, subject to any leases identified in
Schedule 4.23(a-1).
4.24 Product Warranties and Liabilities. Schedule 4.24(a-1) sets forth
all Warranties (as hereinafter defined) given or made by TLW. TLW has not
extended or granted any return rights or given or made any Warranties with
respect to any Products sold or services performed by it, except for those set
forth in Schedule 4.24. Set forth in Schedule 4.24(a-2) are TLW's warranty and
re-work costs for 1998, 1999 and 2000. None of the customers of TLW has claimed
to TLW or to TLW suppliers, that TLW's Products are defective. None of the
Shareholders nor any of the employees of TLW has any particular knowledge of any
Products which have been shipped by TLW in a condition that such products might
reasonably be expected to be returned by the customer, or of any intention on
the part of any customer to return any of TLW's Products, except returns by
customers in the ordinary course of business and consistent with the return
policies and which, in any event, are not expected to be Material in amount. TLW
has never received nor been subject to any claim, and none of the Shareholders
has any Knowledge of any fact or of the ocurrence of any event forming the basis
of any present or future claim against TLW, whether or not fully covered by
insurance, for liability on account of negligence or product liability or on
account of any Warranties.
4.25 Aerospace Records. TLW has maintained complete and accurate
records relating to all products in accordance with industry standards and as
required by all applicable laws or regulations, including the Federal Aviation
Authority CFR 21.607.
26
4.26 Securities Law Compliance.
(a) In connection with the issuance of the BE Stock as of the
Closing, the Shareholders have been advised and understand and agree that the
issuance by the Company to the Shareholders of the BE Stock will not be
registered under the Securities Act, nor qualified under any state securities
laws before the Closing, on the ground (among others) that no distribution or
public offering of the BE Stock is to be effected in connection with the
issuance to such Shareholder as contemplated herein and, in issuing the BE Stock
to such Shareholder hereunder, the Company is relying on the accuracy and
completeness of the representations of the Shareholder set forth in this Section
4.26. This acknowledgement does not limit or constitute a waiver of the
Company's obligation set forth in Section 8.5.
(b) The Shareholder is acquiring the BE Stock for the
Shareholder's own account, for investment and not with a view to distribution or
resale thereof. The Shareholder will immediately notify the Company if such
intent changes prior to the Closing. The Shareholder's only present intention to
sell the BE Stock would be pursuant to an effective registration and
qualification under applicable federal and states securities law. This
acknowledgement does not limit or constitute a waiver of the Company's
obligation set forth in Section 8.5.
(c) The Shareholder acknowledges that the Shareholder has been
informed and understands that the BE Stock may not be sold or transferred except
in compliance with the Securities Act or any exemption thereunder, and there is
no assurance that any exemption from registration, including Rule 144, under the
Securities Act will become available to permit resales of the BE Stock. This
acknowledgement does not limit or constitute a waiver of the Company's
obligation set forth in Section 8.5.
(d) The Shareholder (i) is familiar with the business of the
Company, (ii) has had an opportunity to discuss with representatives of the
Company the conditions of and prospects for the continued operation of the
Company and such other matters as the Shareholder deemed appropriate in
considering whether to invest in the BE Stock, and (iii) has been provided
access to publicly available information about the Company requested by the
Shareholder.
(e) The Shareholder has made the Shareholder's own
investigation whether or not to exchange the TLW Shares for the BE Stock and the
Shareholder has sufficient business and financial experience so as to enable the
Shareholder to evaluate the merits and risks associated with the BE Stock and
the transactions contemplated by this Agreement.
(f) The Shareholder is able to bear the economic risk of a
total loss of the investment in the Company, and the Shareholder has adequate
means of providing for the current needs and foreseeable personal contingencies
and has no need for the Shareholder's investment in the BE Stock to be liquid.
(g) The Shareholder acknowledges and agrees that the
certificates representing the BE Stock shall contain a restrictive legend
substantially in the form below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
27
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR UNLESS THE CORPORATION HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
(h) The Shareholder is an accredited investor, and
sophisticated, as defined under Section 501(a) of Regulation D promulgated under
the Securities Act, except as set forth in Schedule 4.26(h)
(i) The Shareholder acknowledges that he has been fully
informed of, and has had full opportunity to discuss with the Company's
management, the status of the Company and its operating, investment, financial
and strategic plans.
4.27 Permits and Licenses. Set forth in Schedule 4.27(a-1) are the
Permits, licenses, franchises and other authorizations necessary for the conduct
of TLW's business as currently conducted. Except as set forth in Schedule
4.27(a-2), all such Permits, licenses, franchises and authorizations identified
on Schedule 4.27(a-1), are valid and in full force and effect and the business
is in compliance with the terms and conditions of such Permits.
4.28 Experience Matters. Schedule 4.28 contain a reasonably detailed
description of the history of the experience of TLW's business during the two
(2) years ending on the date hereof with respect to (i) product liability claims
and general liability claims exceeding $10,000, and (ii) all workers'
compensation claims.
4.29 Related Party Transactions. Except as described on Schedule 4.29,
neither the Shareholders nor any officer, director or employee of TLW, and none
of their relatives or Affiliates, owns any interest in any competitor, lessor,
lessee or customer or supplier of TLW; and TLW is not a party to any transaction
or arrangement with any of the Shareholders or with any of its respective
officers, directors or employees, or any relative or Affiliate of any of them,
which relates to or affects the ownership, lease or use or disposition of any
assets, properties or the operations of TLW or the sale, lease or use of goods
or services, or the loan of money or any extension of credit or guaranty, by or
to TLW, other than the payment of wages, salaries and bonuses to employees of
TLW for services performed in the ordinary course of business. Except as
disclosed in the Financial Statements or described on Schedule 4.29, none of the
assets or properties of TLW include any receivables or contract rights from, or
notes payable or evidences of indebtedness of, either of the Shareholders or any
of the officers, directors or employees of TLW or any relative or Affiliate of
any of them.
4.30 Full Disclosure. No representation or warranty of the Shareholders
contained in this Agreement contains an untrue statement of a Material fact or
omits to state a Material fact necessary to make the statements contained herein
not misleading. There is no fact that the Shareholders have not disclosed to the
Company in writing that the Shareholders believe has or will have a Material
Adverse Effect on TLW or a Material Adverse Effect on the ability of TLW or the
Shareholders to perform this Agreement.
28
4.31 Minute Books. TLW's minute books contain complete and accurate
records in all Material respects of all meetings and other corporate actions of
its Shareholders and boards of directors and committees thereof.
4.32 Government Contracts. Except as set forth on Schedule 4.32, TLW
has not been and is not a party to any Contract with a Governmental Entity.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Shareholders that the statements contained in this Section 5
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though then made and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 5).
5.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.2 Authorization of Transaction. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its respective obligations hereunder. All
corporate and other actions or proceedings to be taken by or on the part of the
Company to authorize and permit the execution and delivery by the Company of
this Agreement and the respective instruments required to be executed and
delivered by the Company pursuant hereto, the performance by the Company of
their respective obligations hereunder, and the consummation by the Company of
the transactions contemplated herein, have been duly and properly taken. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms and conditions, except to the extent that
enforceability may be limited by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors' rights generally.
5.3 Noncontravention: Consents.
(a) Neither the execution and the delivery of this Agreement,
nor the consummation by the Company of the transactions contemplated hereby will
(i) violate any Law or other restriction of any Governmental Entity to which the
Company is subject or any provision of its respective charter or bylaws or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement to which the Company is a
party or by which it is bound or to which any of their assets are subject. The
Company does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Entity in order for the
parties to consummate the transactions contemplated by this Agreement, except
for such filings as may be required to comply with all applicable securities
laws.
5.4 Brokers' Fees. The Company has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Shareholders could
become liable or obligated.
29
5.5 Investment Intent. The Company is acquiring the TLW Shares for its
own account and not with a view to their distribution within the meaning
ofss.2(11) of the Securities Act.
5.6 Status of BE Stock. When issued to the Shareholders at the Closing,
the shares of BE Stock so issued will be duly authorized, validly issued, fully
paid,nonassessable, and free and clear of encumbrances or other claims affecting
the title thereto, caused, suffered or permitted by the Company or its agents.
5.7 Information Concerning Company. The Company's Annual Report on Form
10-K for its fiscal year ended February 2000 (the "10-K"), the Company's
Quarterly Report on Form 10-Q for the quarter ended November 25, 2000 (the
"10-Q"), each as filed with the SEC, copies of which have been furnished to the
Shareholders, as of its respective filing dates did not contain any untrue
statement of a Material fact or omit to state a Material fact necessary in order
to make the statements contained therein under the circumstances in which they
were made not misleading.
5.8 Capitalization of Company. The authorized BE Stock consists of
50,000,000 authorized shares at $.01 par value per share. Each holder of BE
Stock is entitled to one vote per share of BE Stock owned by such holder. As of
February 23, 2001, there were issued and outstanding 26,003,203 shares of BE
Stock. The authorized Preferred Stock of the Company consists of 1,000,000
shares, all of which is unissued.
Section 6. TAXES.
6.1 Agreement to Allocate Tax Obligations and Short Tax Year. The
Shareholders shall be responsible for (and shall pay) all Taxes shown to be due
from TLW on account of all taxable periods up to and including the Closing Date.
The Shareholders shall be required to pay all Taxes due with respect to said tax
periods on and before the Closing Date. To the extent that any refunds are due
pursuant to Tax returns filed by the Shareholders, the parties agree that said
refunds absolutely belong to the Shareholders. Without obligating the Company
for such Taxes in any way, unless paid separately by TLW or the Shareholders
prior to the Closing Date, all tax liabilities of TLW accrued to the Closing
Date will be allocated to the Shareholders' Tax liabilities and treated as a
reduction from the Total Consideration in the manner described in Section 2.2.
TLW and the Shareholders shall take any and all actions requested by the Company
in order that TLW close each open tax period as of the end of the day of the
Closing Date, as well as to implement, as directed by the Company, a change in
TLW's fiscal year end.
6.2 Taxes Accrued at June 30, 2000. Prior to the Closing Date, TLW
shall have filed all Tax Returns and paid all Taxes concerning periods ended on
or prior to June 30, 2000 and shall have paid all Taxes accrued for the periods
prior to June 30, 2000. TLW shall nevertheless separately account for all items
of revenue, expense, or otherwise as the case may be, recognized on and before
the Closing Date, and Shareholders shall be responsible for the Tax due on
account of such period on and before the Closing Date at the effective tax rate.
Where the tax rates are progressive, the effective tax rate shall be determined
based on the rate that would apply if the income for such period were
annualized.
30
6.3 Exchange of Shares and Related Taxes.
(a) Each Shareholder hereby waives and releases TLW, the
Company, and their respective Affiliates from any claims or Liabilities relating
to or arising from, any and all Taxes imposed upon such Shareholder or any of
its Affiliates as a result of the consummation of the transactions contemplated
hereby.
(b) The parties hereto shall, and shall cause TLW to, provide
such necessary information as any other party hereto may reasonably request in
connection with the preparation of such party's Tax Returns, or respond to or
contest any audit, prosecute any claim for refund or credit or otherwise satisfy
any legal requirement relating to Taxes and TLW.
(c) The obligations of the parties set forth in this Agreement
relating to Taxes shall, except as otherwise agreed in writing, be unconditional
and absolute and shall remain in effect without limitation as to time or amount
of recovery by the Company, TLW and the Shareholders.
(d) There shall be withheld by Company, TLW and/or Escrow
Agent from any amount payable to Shareholders hereunder such amounts as may be
required to be withheld under applicable Law.
(e) The Shareholders shall be liable for, shall hold the TLW
and the Company harmless against, and agree to pay on a timely basis all Taxes
incurred by Shareholders or TLW in connection with the transactions contemplated
by this Agreement, for all tax periods ending on and before the Closing Date,
and for the portion of any tax period on and before prior to the Closing Date.
6.4 Short Period Tax Returns. The Shareholders' Representative
shall be responsible for preparing or causing to be prepared, at the
Shareholders' expense, TLW's federal income tax return and comparable state and
local income and franchise tax returns, for TLW's taxable year ending on the day
preceding the Closing Date (collectively, the "Short Period Tax Returns") or
prior to the Closing Date and all other income Tax Returns (together with the
Short Period Tax Returns, the "Pre-Closing Period Returns") of TLW for any
taxable periods ending on or before the day preceding the Closing Date (the
"Pre-Closing Period"). Such Tax Returns shall be prepared in a manner consistent
with applicable Tax laws consistent with prior practice. The Company shall cause
TLW to cooperate in the preparation and filing of such Tax Returns (including
providing Shareholders with access to all information reasonably requested by
the Shareholders in connection with the preparation of such Tax Returns).
(b) The Shareholders shall be joint and severally responsible
for the payment of all Taxes imposed on TLW due or to become due from TLW in
respect of all periods prior to the Closing Date, and the pro rata portion of
any taxable period commencing on or before the day preceding the Closing Date
and ending after the day preceding the Closing Date determined in accordance
with subsection (a)(iv) below.
31
(c) In connection with the preparation of the Short Period Tax
Returns, the Shareholders' Representative shall use his best efforts to cause
the accountants selected by him to deliver a draft of each Short Period Tax
Return to the Company within a reasonable period of time so that the Company may
be able to review and comment on each Short Period Tax Return prior to the due
date (including extension, if any) for filing such Tax Returns. If the Company
agrees with the information in the Short Period Tax Returns, the Company will
cause the appropriate officers of TLW to sign and file such returns with the
applicable taxing authority as prepared by the accountants selected by the
Shareholders' Representative within ten (10) days, if reasonably practicable. In
the event that the Company disputes any item in a Short Period Tax Return, the
Company shall use its commercially reasonable efforts to provide to the
Shareholders' Representative and the accountant its comments on, and proposed
changes to, the draft of each disputed Short Period Tax Return within a
reasonable period of time, for this purpose ten (10) days being deemed
reasonable, so that the Shareholders' Representative may be able to review and
comment on such proposed changes prior to the due date (including extensions, if
any) of such Tax Return. If any aspect of any Short Period Tax Return remains in
dispute within 20 days before the due date (including extensions, if any) for
filing such Tax Return, the matter in dispute shall be submitted to a mutually
acceptable accounting firm for resolution. The decision of the accounting firm
concerning any disputed item shall be final and binding on the parties and the
fees and expenses of the accounting firm shall be paid by the non-prevailing
party. After any dispute is resolved by the mutually acceptable accounting firm,
the Company will cause the appropriate officers of TLW to sign and file the
Short Period Tax Returns (as resolved) with the applicable taxing authority.
Section 7. PRE-CLOSING COVENANTS. The parties agree as follows with respect to
the period prior to the Closing Date.
7.1 General. Each of the parties will use its reasonable efforts to
take all action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 10).
7.2 Notices and Consents. The Shareholders prior to the Closing Date
will give, or cause TLW to give, all notices to third parties and will use their
reasonable efforts at their expense to obtain all third party consents that are
required of the Shareholders or TLW in connection with the transactions
contemplated by this Agreement, and will make all further filings pursuant
thereto that may be necessary, proper or advisable.
7.3 Conduct Business in Regular Course. The Shareholders will cause TLW
to maintain its owned and leased properties used or held for use in its business
in good operating condition and repair and make all necessary renewals,
additions and replacements thereto, reasonable wear and tear excepted, and will
cause TLW to carry on its operations substantially in the same manner as
heretofore conducted and will not cause or permit TLW to make or institute any
unusual or novel methods of purchase, sale, lease, management, accounting or
operation.
7.4 No General Increases. (a) The Shareholders will not cause or permit
TLW to grant any general or uniform increase in the rates of pay of employees of
TLW, nor grant any
32
general or uniform increase in the benefits under any bonus or pension plan or
other contract or commitment, and (b) the Shareholders will not cause or permit
TLW to increase the compensation payable or to become payable to officers,
salaried employees or agents of TLW, or increase any bonus, insurance, pension
or other benefit plan, payment or arrangement made to, for or with any such
officers, salaried employees or agents.
7.5 Contracts and Commitments. The Shareholders will not cause or
permit TLW to tender any bid, enter into any contract or commitment or engage in
any transaction, including any contract, commitment or engagement with the
Shareholders or any division, unit or Affiliate of the Shareholders, or effect
any change to any program, not in the usual and Ordinary Course of Business and
consistent with the past operation of TLW.
7.6 Dividends and Distributions. The Shareholders will not cause or
permit TLW to declare or pay any dividend or distribution with respect to its
capital stock or to repurchase, redeem or otherwise acquire for value any shares
of its capital stock from and after December 31, 2000.
7.7 Sale of Capital Assets. The Shareholders will not cause or permit
TLW to sell or otherwise dispose of any of its capital assets.
7.8 Preservation of Organization. The Shareholders will cause TLW to
use its reasonable best efforts to preserve its business organization intact, to
keep available to TLW after the Closing Date the present officers and employees
of TLW and to preserve for the benefit of the Company the present relationships
and goodwill of TLW with its suppliers, customers, landlords and others having
business relations with TLW.
7.9 No Default. The Shareholders will not cause or permit TLW to commit
or omit to take any act which will cause a termination of or breach or default
under any contract, commitment or obligation to which TLW is a party or by which
its assets are bound, including the Contracts.
7.10 Compliance with Laws. The Shareholders will cause TLW to comply in
its operations in all Material respects with all applicable Laws and to perform
such further actions as may be required for the valid and effective transfer to
the Company of the TLW Shares.
7.11 Full Access. The Shareholders will cause TLW to permit
representatives of the Company to have full access at all reasonable times to
all premises, properties, personnel, books, records (including Tax Records),
contracts and documents of or pertaining to TLW, and access, at the request of
Company with TLW's prior approval, which will not be unreasonably denied, to
customers and vendors of or pertaining to TLW.
7.12 Notice of Developments. The Shareholders will give prompt written
notice to the Company of any Material development affecting TLW. Each party
hereto will give prompt written notice to the other of any Material development
affecting the ability of such party or its Affiliates to consummate the
transactions contemplated by this Agreement. No disclosure by any party hereto
pursuant to this Section 7.12, however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentations, breach of
warranty, or breach of covenant.
33
7.13 Exclusivity. Neither TLW nor the Shareholders will (and TLW will
not cause or permit any of its officers, directors, agents or Affiliates to) (i)
solicit, initiate, or encourage the submission of any proposal or offer from, or
enter into or consummate any transaction with any Person relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets (other than sales of inventory for a fair value in the
Ordinary Course of Business), including any acquisition structured as a merger,
consolidation, or share exchange or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. TLW will notify the Company
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing, and such notice shall describe such proposal in
detail.
7.14 Debt Obligations. Prior to the Effective Date, any and all
indebtedness of TLW, except for leases, shall be paid in full.
7.15 Tax Matters. No new elections with respect to Taxes, or any
changes in current elections with respect to Taxes, relating to or affecting TLW
will be made by TLW or the Shareholders after December 31, 2000 without the
prior written consent of the Company. On or prior to the Closing Date, the
Shareholders will furnish to the Company an affidavit stating, under penalty of
perjury, TLW's and each of the Shareholders' United States tax identification
numbers and that no Shareholder is a foreign person, pursuant to Section
1445(b)(2) of the Code.
7.16 Title Insurance. The Shareholders will deliver to the Company the
most recent title insurance policies and all riders and endorsements thereto for
each parcel of real estate that TLW owns.
7.17 Confidentiality. The existence of this Agreement or its
negotiation, terms or provisions, shall be kept confidential by the Company, the
Shareholders, TLW, and each of their representatives until the Closing, and
thereafter except to the extent that the existence of this Agreement or its
terms and provisions, as the case may be, shall have been previously publicly
disseminated by the Company or filed with the SEC as a public document. Any
publicity or announcements concerning this transaction before the Closing shall
be effected only by or with the prior written consent of the Company and its
legal counsel, the Shareholders and their legal counsel, and TLW and its legal
counsel and at such times and in such manner as the parties deem necessary or
appropriate under applicable law. The Company, the Shareholders and TLW shall
immediately notify the other party of any actual, anticipated or suspected
disclosure of the negotiation, existence, terms or provisions of this Agreement
to any Person who is not bound by an obligation to keep the information
confidential.
7.18 Building Lease. On the Effective Date, the Company shall
conclusively be deemed to have assumed the lease on TLW's facilities.
Section 8. POST-CLOSING COVENANTS. The parties agree as follows with respect to
the period following the Closing Date.
8.1 General. In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further
34
action (including the execution and delivery of such further instruments and
documents) as the other party reasonably may request, at the sole cost and
expense of the requesting party (unless the requesting party is entitled to
indemnification therefor under Section 11).
8.2 Litigation Support. In the event and for so long as any party is
actively contesting or defending against any charge, complaint, action, audit,
suit, proceeding, hearing, investigation, claim or demand in connection with (i)
any transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving TLW, the other party will provide its reasonable cooperation to the
contesting or defending party and its counsel in the contest or defense, make
available its personnel and provide such testimony and access to its books and
records as may be necessary in connection with the contest or defense, at the
sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification therefor under
Section 11).
8.3 Confidential Information and Non-Competition.
(a) Confidential Information. From the date hereof until the
Closing Date, and for a period of five years thereafter commencing on the
Closing Date, the Shareholders will treat and hold as such, and will not use for
the benefit of themselves or others, any Confidential Information. In the event
the Shareholders or any of their respective Affiliates are requested or required
(by oral request or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, then the relevant
Shareholder(s) will notify the Company promptly in writing of the request or
requirement so that the Company may seek an appropriate protective order or
waive compliance with this Section 8.3. If, in the absence of a protective order
or receipt of a waiver hereunder, the Shareholders are, on the advice of outside
counsel, compelled to disclose any Confidential Information to any Governmental
Entity or else stand liable for contempt, then the Shareholders may disclose
such Confidential Information to such Governmental Entity, provided, that the
Shareholders will use its reasonable best efforts to obtain at the request of
the Company an order or other assurance that confidential treatment will be
accorded to such Confidential Information.
(b) Non-Competition. Each Shareholder, in consideration of the
acquisition by Company hereunder, shall execute and deliver to the Company prior
to the Closing Date, a Non-Compete and Non-Solicitation Agreement substantially
in the form as attached hereto as Exhibit "B" and incorporated herein by
reference.
(c) Each of the Shareholders further agrees that for a period
of five (5) years after the Closing Date such Shareholder will not directly or
indirectly, without the prior written consent of Company, recruit, offer
employment, employ, engage as a consultant, lure or entice away or in any other
manner persuade or attempt to persuade any person who is an employee of TLW,
Company, any of their Subsidiaries or Affiliates to leave such employment.
35
(d) In the event of a breach, or facts indicating the
likelihood of a breach, by any Shareholder of the provisions of this Section
8.3, Company and TLW shall be entitled to a temporary restraining order and an
injunction restraining such Shareholder from such breach. Nothing herein,
however, shall be construed as prohibiting Company or TLW from pursuing any
other remedies available to it for such actual or threatened breach, including,
without limitation, the recovery of damages. If it is determined that any
Shareholder has violated any of the covenants in this Section 8.3, the term of
any such covenant violated shall be automatically extended for the period of
time of the violation either from the date on which such Shareholder ceases such
violation or from the date of the entry by a court of competent jurisdiction of
an order or judgment enforcing such covenant, whichever period is later.
8.4 Post-Closing Receipts. In the event that either party 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.
8.5 Registration Rights.
(a) General. Within 15 business days of the Closing, the
Company shall file (and shall use its commercially reasonable efforts to cause
to become effective as soon as practicable thereafter) a registration statement
on Form S-3 under the Securities Act, covering the Registrable Securities, which
registration statement shall be kept in effect in the manner and for the period
specified in Section 8.5(c)(ii). The Company shall use its best efforts to enter
into an underwriting agreement with an underwriter of national reputation to
distribute the Registrable Securities (the "Public Offering"). The Shareholders
and the Escrow Agent shall be required to sell as many shares of BE Stock in the
Public Offering as the underwriter(s) and the Company shall request, up to the
entire amount of BE Stock received by them in connection with the transactions
contemplated hereby (including shares held in escrow pursuant to the
arrangements described in Section 2.4 hereof).
As used herein, the term "Registrable Securities" shall mean
(i) all BE Stock owned by any of the Shareholders or by other Persons granted
similar rights as provided in this Section 8.5, (ii) any shares of common stock
or other securities issued as (or issuable upon the conversion or exercise of
any warrant, right, class of common stock or other security which is issued as)
a dividend or other distribution with respect to, or in exchange by the Company
generally for, or in replacement by the Company generally of, such BE Stock, and
(iii) any securities issued in exchange for such BE Stock in any merger or
reorganization of the Company; provided, however, that once issued, such BE
Stock and other securities shall cease to be Registrable Securities when (x) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (y) such securities
shall have been sold pursuant to Rule 144 or shall no longer be subject to
restriction on resale due to the termination of the holding period requirements
(as in effect from time to time) of Rule 144 or satisfaction of the
36
requirements for resale under Rule 144(d) as evidenced by a legal opinion
delivered to the Company and its transfer agent, or (z) they shall have ceased
to be outstanding. Each Shareholder covenants that he will comply with the
prospectus delivery requirements of the Securities Act with respect to any
registration statement filed pursuant to this Agreement. Each Shareholder agrees
to make customary representations and warranties to the Company and the
underwriters or distributors, if any, in form, substance and scope as are
customarily made as to ownership of stock by selling stockholders in
underwritten public offerings, but each Shareholder shall not be required to
make any representation or warranty as to the accuracy or completeness of the
registration statement (except as to written information furnished to the
Company by such Shareholder expressly for use therein). The Company shall
deliver a copy to the Shareholders' Representative of legal opinions and
accountants' comfort letters in the forms delivered to the underwriters in the
Public Offering.
(b) Expenses. The Company shall pay all expenses incident to
the Company's performance of or compliance with its obligations under Section
8.5 to effect the registration of Registrable Securities required hereunder,
including, without limitation, all registration, filing, securities exchange
listing and NASDAQ fees, all registration, filing, qualification and other fees
and expenses of complying with federal, state and other securities or blue sky
Laws, all word processing, duplicating and printing expenses, messenger,
shipping, telephone and delivery expenses, the fees and disbursement of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, and fees and expenses of other Persons
retained by the Company in connection with the registration of the Registrable
Securities, underwriting discounts and commissions and transfer taxes, if any,
in respect of Registrable Securities, but excluding any legal fees and expenses
of counsel retained by the holders of the Registrable Securities being
registered (with the sole exception of the fees of one special counsel to the
holders) of all Registrable Securities, selected by a majority in interest
thereof, up to a maximum of $10,000.
(c) Further Obligations. The Company will:
(i) within 15 days of the Closing Date, prepare, and file
with the SEC, the registration statement on Form S-3 to effect such registration
(including such audited financial statements as may be required by the
Securities Act) and use commercially reasonable efforts to cause such
registration statement to become and continue to be effective for the timeframe
outlined in Section 8.5(a).
(ii) prepare, and file with the SEC, such amendments and
supplements to the registration statement referred to above and any prospectus
used in connection therewith as may be necessary to maintain the effectiveness
of such registration statement and to comply in all Material respects with the
requirements of the Securities Act with respect to the disposition of all
Registrable Securities included in such registration statement, in accordance
with the intended methods of disposition thereof, until the such time as all of
such securities have been disposed of in accordance with the intended methods of
disposition by the Shareholders set forth in such registration statement.
37
(iii) promptly notify in writing each holder of
Registrable Securities and the underwriter or underwriters, if any:
(A) when such registration statement or any
prospectus used in connection therewith, or any amendment or supplement thereto,
has been filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(B) of any written request by the SEC or any other
regulatory body or other body having jurisdiction over the securities for
amendments or supplements to such registration statement or prospectus or for
supplemental information;
(C) of the notification to the Company by the SEC of
its initiation of any proceeding with respect to the issuance by the SEC of any
stop order suspending the effectiveness of such registration statement; and
(D) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky laws of any
jurisdiction;
(iv) furnish to each holder of Registrable Securities
included in the registration statement such number of conformed copies of the
registration statement and of each amendment and supplement thereto (in each
case including all exhibits and documents incorporated by reference), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any prospectus supplement) and any
other prospectus filed under Rule 424 promulgated under the Securities Act
relating to such holder's Registrable Securities, and such other documents, as
such seller may reasonably request to facilitate the disposition of such
holder's Registrable Securities;
(v) use commercially reasonable efforts to register or
qualify all Registrable Securities included in the registration statement under
such other securities or blue sky laws of such jurisdictions as each holder
thereof shall reasonably request which request is made within ten (10) days
following the original filing of the registration statement and to keep such
registration or qualification in effect for so long as the registration
statement remains in effect, and take any other action which may be reasonably
necessary or advisable to enable such holder to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such holder, except
that the Company shall not for any such purpose be required (a) to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this paragraph (v) to be obligated to be
so qualified, (b) to consent to general service of process in any such
jurisdiction or (c) to subject itself to taxation in any such jurisdiction by
reason of such registration or qualification; and
(vi) use its commercially reasonable efforts to obtain
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting any suspension of qualification (or exemption from
qualification) of the offer and sale of any of the Registrable Securities in any
jurisdiction.
38
Each Shareholder whose Registrable Securities are being
registered shall, furnish the Company and any underwriters with such information
and affidavits regarding such holder and the distribution of such securities as
the Company and such underwriters may from time to time reasonably request in
writing and to otherwise cooperate in connection with such registration. At any
time during the effectiveness of the registration statement covering Registrable
Securities offered by a holder, if such holder becomes aware of any change
materially affecting the accuracy of the information contained in such
registration statement or the prospectus (as then amended or supplemented)
relating to such holder, such holder will promptly notify in writing the Company
of such change.
Upon receipt of any notice from the Company of the happening
of any event as a result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a Material fact or
omits to state any Material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, each holder of Registrable Securities will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement until such holder receives copies of a supplemented or
amended prospectus from the Company and, if so directed by the Company, shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period referred
to in paragraph (ii) of this Section 8.5(c) shall be extended by a number of
days equal to the number of days during the period from the giving of such
notice from the Company to stop trading to the date when the copies of the
supplemented or amended prospectus are sent to holders whose Registrable
Securities are included in such registration statement. In the event that the
SEC issues a stop order suspending the effectiveness of any registration
statement filed under this Section 8.5(c), the period referred to in paragraph
(ii) of this Section 8.5(c) shall also be extended by a number of days equal to
the number of days during which such stop order is in effect.
Each Shareholder agrees in connection with any registration of the
Company's securities that, upon request of the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in such registration), without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) from the effective date of
such registration as may be requested by the Company or such managing
underwriters.
Notwithstanding anything to the contrary contained herein, the Company
may, upon written notice to the Shareholders whose Registrable Securities are
included in any registration statement filed pursuant to this Agreement, suspend
the use of a prospectus which is a part of such registration statement if, in
the reasonable judgment of the Company, the Company possesses Material nonpublic
information and the Company determines in good faith that the disclosure of such
information would have a Material Adverse Effect on the Company or would
materially and adversely effect the ability of the Company to consummate any
pending strategic transaction; provided that the Company may not suspend any use
of a prospectus for more than an aggregate of 90 consecutive days or for more
than an aggregate of 180 days in any period of
39
twelve consecutive months. This paragraph shall not in any way impair or limit
the rights of the Shareholders to require the Company to purchase any or all of
the unsold shares of BE Stock pursuant to Section 2.5.
(d) Indemnification.
(i) The Company shall, to the full extent permitted by
Law, indemnify and hold harmless each seller of Registrable Securities included
in any registration statement filed pursuant to this Section 8.5, its directors,
officers, and partners, and each other Person, if any, who controls any such
seller within the meaning of the Securities Act, against any Losses to which
such seller or any such director, officer, partner or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
claims, actions, suits, proceedings, arbitration or investigations in respect
thereof) arise out of or are based upon any untrue statement of any Material
fact contained in such registration statement, any preliminary prospectus, final
prospectus or prospectus supplement contained therein or filed with the SEC, or
any amendment or supplement thereto, or any omission or alleged omission to
state therein a Material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading; provided, that the
Company shall not be liable in any such case to the extent that any such Loss
(or any claim, action, suit, proceeding, arbitration or investigation in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement, preliminary prospectus, final prospectus, amendment or supplement in
reliance upon and in conformity with information furnished in writing to the
Company for inclusion in such registration statement by the holder of the
securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the holders of the securities or any
such director, officer, partner or controlling Person, and shall survive the
transfer of such securities by such holder. The Company shall also indemnify
each other Person who participates (including as an underwriter) in the offering
or sale of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the meaning of
the Securities Act to the same extent as provided above with respect to the
sellers of Registrable Securities.
(ii) Each Person and Shareholder whose Registrable
Securities are included or are to be included in any registration statement
filed pursuant to this Section 8.5, as a condition to including such holder's
Registrable Securities in each registration statement, shall to the full extent
permitted by Law, indemnify and hold harmless the Company, its directors and
officers, and each other Person, if any, who controls the Company within the
meaning of the Securities Act, against any Losses to which the Company or any
such director or officer or controlling Person may become subject under the
Securities Act or otherwise, insofar as such Losses (or claims, actions, suits,
proceedings, arbitrations or investigations in respect thereof) arise out of or
are based upon any untrue statement of any Material fact contained in any such
registration statement, any preliminary prospectus, final prospectus or
prospectus supplement contained therein or filed with the SEC, or any amendment
or supplement thereto, or any omission or alleged omission to state therein a
Material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, if such untrue statement or omission
40
was made in reliance upon and in conformity with information furnished in
writing to the Company for inclusion in such registration statement by such
seller. Notwithstanding any contrary provision of Section 11, the
indemnification obligation of the Shareholders and holders of said Registrable
Securities under this Section 8.5(d) shall in no way be limited to (and the
Company shall not be constrained to seek in response to any failure to provide
indemnity pursuant to this Section 8.5(d)) recourse against Escrowed Shares. The
foregoing indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director, officer
or controlling Person and shall survive the transfer of such securities by such
seller. Such holders shall also indemnify each other Person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to the Company. The foregoing indemnity
shall only be enforceable to the extent that the Person or Shareholder has had
an opportunity to review and approve any part of a registration statement that
contains an aforementioned Material fact.
(iii) Promptly after receipt by any party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding paragraphs (i) or (ii) of this Section 8.5(c), such party shall, if a
claim in respect thereof is to be made against another party pursuant to such
paragraphs, give written notice to the latter of the commencement of such
action, provided that any failure of any Person to give notice as provided
herein shall not relieve any other Person of its obligations under the preceding
paragraphs of this Section 8.5(d), except to the extent that such other Person
is actually prejudiced by such failure. In case any such action is brought, the
party obligated to indemnify pursuant to the foregoing provisions of this
Section 8.5(d) shall be entitled to participate in and, unless, in the
reasonable judgment of any indemnified party, a conflict of interest between
such indemnified party and any indemnifying party exists with respect to such
claim, to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation; provided that the indemnified party may participate in such
defense at the indemnified party's expense. No indemnifying party shall consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect to such claim or
litigation without the consent of the indemnified party. No indemnifying party
shall be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(iv) If the indemnity and reimbursement obligation
provided for in any paragraph of this Section 8.5 is unavailable or insufficient
to hold harmless a party entitled to indemnification hereunder in respect of any
Losses (or claims, actions, suits, proceedings, arbitrations or investigations
with respect thereto) for which indemnification is provided therein, the party
obligated to indemnify hereunder shall contribute to the amount paid or payable
by the
41
indemnified party as a result of such Losses (or claims, actions, suits,
proceedings, arbitration or investigations) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other hand in connection with statements or omissions
which resulted in such Losses, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a Material fact or the
omission or alleged omission to state a Material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this paragraph were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this paragraph. Notwithstanding anything herein to the
contrary, no participating holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the net proceeds of the
offering (before deducting expenses, if any) received by such participating
holder exceeds the amount of any damages that such participating holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation.
Section 9. EMPLOYEES.
9.1 TLW employees will be requested to submit substantially all expense
reimbursement requests for purposes of payment a reasonable time prior to the
Closing, and TLW shall pay amounts due, applying standards of documentation and
approval consistent with past practice prior to Closing.
9.2 Nothing in this Agreement will limit or restrict in any way the
Company's right to cause TLW to modify, amend, terminate or establish employee
benefit plans or arrangements in whole or in part at any time after the Closing
Date and this Agreement will not, in any way or at any time, create any third
party beneficiary rights for or on behalf of any Person.
Section 10. CLOSING CONDITIONS.
10.1 Conditions to Obligation of the Company. The obligation of the
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to fulfillment, prior to or at the Closing, of each of
the following conditions (any or all of which may be waived by the Company if it
executes a writing unambiguously so stating at or prior to the Closing.):
(a) all representations and warranties of the Shareholders set
forth in Section 4 shall be true and correct in all Material respects at and as
of the Closing;
(b) the Shareholders shall have performed and complied with
all of its covenants hereunder in all Material respects prior to or at the
Closing;
42
(c) there will not be any action, suit or proceeding pending
or threatened before any Governmental Entity or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or any Company Ancillary Agreement, (ii) cause any of the transactions
contemplated by this Agreement or any Company Ancillary Agreement to be
rescinded following consummation, (iii) affect materially and adversely the
right of the Company following the Closing to own TLW Shares or to control TLW,
or (iv) affect materially and adversely, the right of TLW to own its assets or
to operate its businesses as presently operated (and no such injunction,
judgment, order, decree, ruling or charge will be in effect);
(d) the Shareholders will have obtained all consents,
releases, waivers and other documentation required in order for the Shareholders
to transfer and deliver all of the TLW Shares to the Company and to fulfill
their other obligations hereunder;
(e) the Shareholders' Representative shall have delivered to
the Company a certificate to the effect that each of the conditions specified in
Section 10.1 above are satisfied in all respects;
(f) any relevant Shareholders shall have delivered to the
Company an executed counterpart of each of the Company Ancillary Agreements to
which such Shareholders are a signatory;
(g) the Company shall have received the resignations,
effective as of the Closing, of each of the directors, officers, signing agents
and attorneys-in-fact of TLW on the Closing Date of TLW, other than those whom
the Company has specified in writing at least five business days prior to the
Closing to continue in such capacities;
(h) the Company shall have received consents, to the extent
requested by Company, substantially in the form attached hereto as Exhibit A,
executed by the respective spouse of each Shareholders;
(i) TLW shall have, in all Material respects, taken and
accomplished all actions that Shareholders are required to cause TLW to take;
(j) each of the Shareholders shall have executed and delivered
to the Company a counterpart executed by such Shareholder of the Shareholder
Ancillary Agreements;
(k) all actions to be taken by the Shareholders or TLW in
connection with consummation of the transactions contemplated hereby and all
certificates, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Company;
(l) an affidavit, in a form reasonably satisfactory to the
Company, of the Shareholders stating under penalties of perjury such
Shareholder's United States taxpayer identification number and that such
Shareholder is not a foreign person within the meaning of Section 1445(b)(2) of
the Code;
43
(m) a good standing certificate for TLW from the Secretary of
State of the State of its incorporation or formation dated the Closing Date;
(n) the Escrow Agreement, dated the Closing Date, executed by
the Shareholders, together with any counterparts signed by the Escrow Agent and
blank stock powers executed by such Shareholder with respect to the Escrowed
Shares;
(o) an opinion by TLW's counsel, in the form and substance as
set forth in Exhibit D attached hereto, addressed to the Company, and dated as
of the Closing Date; and
(p) signatory card in blank for all TLW bank accounts
acceptable to each bank where TLW maintains an account.
10.2 Conditions to Obligation of the Shareholders. The obligation of
the Shareholders to consummate the transactions to be performed by it in
connection with the Closing is subject to fulfillment, prior to or at the
Closing, of each of the following conditions (any or all of which may be waived
by the Shareholders if they execute a writing unambiguously so stating at or
prior to the Closing):
(a) all representations and warranties of the Company set
forth in Section 5 shall be true and correct in all Material respects at and as
of the Closing Date;
(b) the Company will have performed and complied with all of
its covenants hereunder in all Material respects prior to or at the Closing;
(c) there will not be any action, suit or proceeding pending
or threatened before any Governmental Entity or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation;
(d) the Company shall have delivered to the Shareholders'
Representative a certificate to the effect that each of the conditions specified
above in Section 10.2 is satisfied in all respects;
(e) all actions to be taken by the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments and other documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance to the
Shareholders' Representative;
(f) the Escrow Agreement, dated effective February 25, 2001,
executed by the Company; and
(g) a certificate or certificates representing the BE Stock
and to be delivered to Escrow Agent pursuant to Section 2.2;
44
Section 11. REMEDIES FOR BREACHES OF THIS AGREEMENT.
11.1 Survival of Representations and Warranties. All of the
representations and warranties of the Shareholders contained in Section 4 of
this Agreement or of the Company contained in Section 5 of this Agreement or in
any certificate delivered by the Shareholders or the Company, respectively,
pursuant to this Agreement will survive the Closing and continue in full force
and effect until the third anniversary of the Closing Date; provided, however,
that (a) the representations and warranties contained in Sections 4.2
(Authorization of Transaction), 4.4 (Capitalization), and 4.13 (Title and
Related Matters) shall continue in full force and effect forever; and (b) the
representations and warranties contained in Sections 4.10 (Tax Matters)and 4.17
(Environmental Matters), or contained in any certificate delivered by the
Shareholders relating thereto, and any Tax-related liabilities pursuant to
Section 6 hereof shall remain in full force and effect until 30 days after the
expiration of the applicable statute of limitations with respect to the matter
to which the claim relates, as such limitation period may be extended from time
to time by Law.
11.2 Indemnification Provisions for Benefit of the Company.
Notwithstanding any investigation at any time made by or on behalf of the
Company or any knowledge or information the Company may have or be deemed to
have, in the event the Shareholders breach (or in the event a third party
alleges facts that, if true, would mean the Shareholders have breached) any of
their representations, warranties or covenants or agreements contained in this
Agreement or any certificate delivered by the Shareholders pursuant to this
Agreement, and provided that the Company makes a written claim for
indemnification against the Shareholders prior to the expiration of any
applicable survival period, then the Shareholders shall indemnify, defend and
hold harmless the Company and TLW from and against the entirety of any and all
Liabilities, obligations, judgments, Liens, injunctions, charges, orders,
decrees, rulings, damages, dues, assessments, Taxes, losses, fines, penalties,
expenses, fees, costs, amounts paid in settlement (including reasonable
attorneys' and expert witness fees and disbursements in connection with
investigating, defending or settling any action or threatened action
(collectively, "Losses") suffered or incurred by the Company, TLW, or any of
their Affiliates, or any of their respective stockholders, directors, officers,
employees and agents (collectively, the "Company Indemnified Parties"),
resulting from or arising out of either (a) the inaccuracy or breach of any
representation or warranty made by Shareholders, or resulting from any
misrepresentation or breach of warranty, or from any misrepresentation in or
omission from any schedule, document, certificate or other instrument required
to be furnished by Shareholders hereunder, (b) nonfulfillment of any agreement
or covenant of Shareholders contained herein or in any agreement or instrument
required to be entered into in connection herewith, or (c) and Taxes imposed on
or accrued by TLW for tax periods (or portions thereof) prior to the Effective
Date. The liability of the Shareholders hereunder shall be joint and several.
Subject to Section 11.4, the liability of Shareholders pursuant to this Section
11.2 shall be limited, in the aggregate, to 25% of the Initial Consideration.
Subject to Section 11.4, Shareholders will be obligated to indemnify, defend and
hold harmless the Company Indemnified Parties from and against Losses only if
the aggregate amount of such Losses exceeds $50,000 (in which case Shareholders
shall be obligated to indemnify, defend and hold harmless the Company
Indemnified Parties from and against 100% of such Losses, including, without
limitation, the initial $50,000).
45
11.3 Indemnification Provisions for Benefit of the Shareholders.
Notwithstanding any investigation at any time made by or on behalf of the
Shareholders or any knowledge or information the Shareholders may have or be
deemed to have, in the event the Company breaches (or in the event any third
party alleges facts that, if true, would mean the Company has breached) any of
its representations, warranties or covenants contained in this Agreement, and
provided that the Shareholders make a written claim for indemnification against
the Company, then the Company will indemnify, defend, and hold harmless the
Shareholders against the entirety of any Losses the Shareholders, or any of
their Affiliates, or any of their respective shareholders, directors, officers,
employees and agents(collectively, the "Shareholder Indemnified Parties") may
suffer or incur resulting from, arising out of, relating to, in the nature of,
or caused by such breach. The liability of the Company pursuant to this Section
11.3 shall be limited in the aggregate to 25% of the Initial Consideration.
Subject to Section 11.4, the Company will be obligated to indemnify, defend and
hold harmless the Shareholder Indemnified Parties from and against Losses only
if the aggregate amount of such Losses exceeds $50,000 (in which case the
Company shall be obligated to indemnify, defend and hold harmless the
Shareholder Indemnified Parties from and against 100% of such Losses, including,
without limitation, the initial $50,000).
11.4 Exception to Limits on Indemnification.
(a) The maximum limits and the minimum threshold on the
liability of Shareholders to Company Indemnified Parties set forth in Section
11.2 above shall not apply to the representations and warranties in Sections 4.2
(Authorization of Transaction), 4.4 (Capitalization), 4.13 (Title and Related
Matters), 4.17 (Environmental Matters), or 4.10 (Tax Matters), any Tax-related
liabilities pursuant to Section 6 hereof, and any costs or expenses, including
but not limited to attorney's fees and costs, incurred by Company Indemnified
Parties to enforce their rights under Section 11.
(b) The maximum limits and the minimum threshold on the
liability of Company to Shareholders set forth in Section 11.3 above shall not
apply to the representations and warranties in Sections 5.1 (Organization), 5.2
(Authorization of Transaction), 5.5 (Investment Intent), or 5.6 (Status of BE
Stock), hereof, and any costs or expenses, including but not limited to
attorney's fees and costs, incurred by Shareholders to enforce their rights
under Section 11
11.5 Indemnification Procedures. Except for claims for indemnification
made pursuant to Section 6 hereof, which claims shall follow the procedures set
forth in such Section, if any third party notifies any party hereto (the
"Indemnified Party") with respect to any matter that may give rise to a claim
for indemnification against the other party hereto (the "Indemnifying Party")
under this Section 11, then the Indemnified Party will notify the Indemnifying
Party thereof promptly and in any event within 60 days after receiving any
written notice from a third party; provided, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless, and then solely to the
extent that, the Indemnifying Party is prejudiced thereby. Once the Indemnified
Party has given notice of the matter to the Indemnifying Party, the Indemnified
Party may defend against the matter in any manner it reasonably may deem
appropriate. In the event the Indemnifying Party notifies the Indemnified Party
within 30 days after the date the Indemnified Party has given notice of the
matter that the Indemnifying Party is assuming the defense of such matter (a)
the
46
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (b) the
Indemnified Party may retain separate counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of such separate co-counsel to the extent the Indemnified Party
concludes in good faith that the counsel the Indemnifying Party has selected has
a conflict of interest), (c) the Indemnified Party will not consent to the entry
of a judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably) and (d) the Indemnifying Party will not consent to the entry of a
judgment with respect to the matter or enter into any settlement that does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
11.6 Specific Performance. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of Sections 8.3(a), (b) (c) and (d), 8.5(a), and 11.7 of this Agreement
and to enforce specifically those sections of this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter in
addition to any other remedy to which it may be entitled, at law or in equity.
11.7 Arbitration.
(a) Generally. Prior to implementation of arbitration pursuant
to this Section 11.7, the parties will attempt in good faith to reach an
agreement as to any matters in dispute ("Mediation"). The Mediation shall last
for a minimum of 15 business days before either of the parties requests
arbitration pursuant to this Section 11.7. Except solely as set forth in
Sections 8.3(a), (b), (c) (d) and 8.5, the parties agree that when any claim or
controversy that arises out of or relates to this Agreement, or the breach
thereof arises, in lieu of litigation, they shall submit such claim, dispute or
controversy, or difference or question to be finally settled under the
Commercial Arbitration Rules ("Rules") of the American Arbitration Association
(the "AAA") by an arbitral tribunal composed of three arbitrators, at least one
of whom shall be an attorney experienced in corporate transactions, appointed by
agreement of the parties in accordance with said Rules. In the event the Parties
fail to agree upon a panel of arbitrators from the first list of potential
arbitrators proposed by the AAA, the AAA will submit a second list in accordance
with said Rules. In the event the parties shall have failed to agree upon a full
panel of arbitrators from said second list, any remaining arbitrators to be
selected shall be appointed by the AAA in accordance with said Rules. If, at the
time of the arbitration, the parties agree in writing to submit the dispute to a
single arbitrator, said single arbitrator shall be appointed by agreement of the
parties in accordance with the foregoing procedure, or, failing such agreement,
by the AAA in accordance with said Rules. Any party may commence the foregoing
arbitration proceedings by notice to all other parties.
47
(b) Place of Arbitration. The venue of such arbitration shall
be Orange County, California, or any other place mutually agreed to by Company
and Shareholders' Representative.
(c) Recourse to Courts. Subject to Section 11.6, the parties
hereby exclude any right of appeal to any court on the merits of the dispute.
The provisions of this Section 11.7 may be enforced in any court having
jurisdiction over the award or any of the parties or any of their respective
assets, and judgment on the award (including without limitation equitable
remedies) granted in any arbitration hereunder may be entered in any such court.
Nothing contained in this Section 11.7 shall prevent any party from seeking
interim measures of protection in the form of pre-award attachment of assets or
preliminary or temporary equitable relief.
(d) Decision of Arbitral Tribunal. In the event of a dispute
between the parties hereunder, the Shareholders' Representative and the
Company's representative shall each present an offer of settlement, which shall
address all issues in dispute such that adoption of such offer of settlement
would conclusively settle all items then in dispute. The arbitral tribunal shall
be limited in its decision to choosing one of the two offers of settlement
presented to it that the arbitral tribunal determines to be most fair, and that
offer of settlement shall constitute the settlement of the claims, dispute and
other matters. The decision of the arbitral tribunal shall be final and binding
on the parties and non-appealable. The party whose offer of settlement is not
chosen by the arbitral tribunal shall pay all of the expenses of the
arbitration, which, in the event the Shareholders are held responsible for any
such expenses prior to the Escrow Termination Date, shall be subject to
satisfaction by application of the Escrowed Shares pursuant to Sections 2.2 and
11.2 and Article 4 of the Escrow Agreement. Notwithstanding the above, each
party shall bear his, her, its own attorney fees and costs related to any
arbitration proceeding.
11.8 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE SHAREHOLDERS, TLW AND THE COMPANY HEREBY
WAIVE, AND COVENANT THAT HE,SHE OR IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR PASSED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.
Section 12. TERMINATION.
12.1 Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) the Company and the Shareholders may terminate this
Agreement by mutual written consent at any time prior to the Closing;
48
(b) either the Shareholders or the Company may terminate this
Agreement by giving written notice to the other at any time prior to the Closing
if the Closing has not occurred on or before February 26, 2001.
12.2 Effect of Termination. If any party terminates this Agreement
pursuant to Section 12.1, all obligations of the parties hereunder will
terminate without liability of any party to the other party; provided, that the
expense allocation provisions contained in Section 13.2 will survive termination
and remain in full force and effect thereafter.
Section 13. MISCELLANEOUS.
13.1 Press Releases and Announcements. No party will issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing Date without the prior approval of the other party; provided,
that the Company may make any public disclosure it believes in good faith is
required by Law or by the rules and regulations of any stock exchange on which
the securities of such party are listed.
13.2 Expenses; Transfer Taxes. Each of the parties hereto will bear all
legal, accounting, investment banking and other expenses incurred by it or on
its behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated. Expenses, including expenses
and costs of legal counsel, related to the transactions contemplated by this
Agreement and the Ancillary Agreements on the part of the Shareholders will be
borne by the Shareholders rather than TLW. The Shareholders will each be
responsible for the payment of all income, sales, use, transfer, documentary or
stamp taxes and recording and filing fees applicable to the assignment of TLW
Shares to the Company, and any distributions or payments to the Shareholders in
any capacity.
13.3 Remedies. Any party having any rights under any provision of this
Agreement will have all rights and remedies set forth in this Agreement and all
rights and remedies that such party may have been granted at any time under any
other agreement or contract and all of the rights that such party may have under
any Law. Any such party will be entitled to enforce such rights specifically,
without posting a bond or other security, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by Law.
13.4 Consent to Amendments. The provisions of this Agreement may be
amended or waived only by a written agreement executed and delivered by the
Shareholders' Representative (on behalf of all Shareholders) and the Company, or
by the Shareholder to be bound and benefited thereby and the Company. No other
course of dealing between the parties to this Agreement or any delay in
exercising any rights hereunder will operate as a waiver of any rights of such
parties.
13.5 Successors and Assigns. No Shareholder may assign or delegate any
of such party's rights or obligations under or in connection with this Agreement
or any Ancillary Agreement without the written consent of the Company, and no
assignment by a Shareholder shall release the Shareholder from its obligations
and liabilities under this Agreement and Ancillary Agreement to which it is a
party. The Company may without the written consent of TLW or the Shareholders
assign its rights under this Agreement or any of the Ancillary
49
Agreements to one or more Affiliates of the Company or to any Person acquiring
all or substantially all of the stock or assets of TLW from the Company, and the
Company shall be relieved of any obligation hereunder assigned and assumed. All
covenants and agreements contained in this Agreement or in any Ancillary
Agreement by or on behalf of any of the parties hereto or thereto will be
binding upon and enforceable against the respective successors and assigns of
such party and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
13.6 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
Law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable Law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
13.7 Attorney-in-Fact. Each Shareholder hereby irrevocably constitutes
and appoints the Shareholder Representative as the Shareholder's
Attorney-in-Fact and agent, with full power of substitution, to act in the
Shareholders name, place and stead and do any and all things that the
Shareholder could do if present including, but not limited to, executing,
delivering, and performing this Agreement, the Escrow Agreement, and any and all
documents ancillary to this Agreement or any amendment or supplement to this
Agreement, to give receipts on behalf of the Shareholder, and to execute and
deliver share certificates and stock powers or assignments. All persons dealing
with the Attorney-in-Fact in such capacity may rely and act upon any writing
believed by them in good faith to be genuine and to have been signed by the
Attorney-in-Fact.
13.8 Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
13.9 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13.10 Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or three business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Company and the Shareholders at the addresses indicated
below:
50
If to BE or the Company:
c/o BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Fax no. (000) 000-0000
Attn: Xxxxxx X. XxXxxxxxx or Xxxxxx X. Xxxxxxxx
With a copy (which will not constitute notice) to:
Yocca, Patch & Yocca
00000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax no. 949/000-0000
Attn: Xxxx X. Patch/ Xxxxxxxx X. Xxxxx
If to the Shareholders:
Xxxxx X. Xxxxxxx
Shareholders' Representative
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxx Xxx, Xx. 00000
With a copy (which will not constitute notice)
in either case to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxxx
00000 Xx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Fax no. (000)000-0000
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
13.11 No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the Shareholders and the Company
and their respective successors and permitted assigns.
13.12 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties (whether written or oral) that may have related in any way to the
subject matter hereof.
13.13 Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent and no
rule of strict construction will be applied against any party. The use of the
word "including" in this Agreement means
51
"including" without limitations and is intended by the parties to be by way of
example rather than limitation.
13.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
13.15 Shareholders' Representative. The Shareholders hereby irrevocably
constitute and appoint the Shareholders' Representative, as their
attorney-in-fact and agent, with full power of substitution, to serve as
Shareholders' Representative and to take all actions, and refrain from taking
all actions, as are contemplated in this Agreement or incidental thereto, in the
name, place and stead of the Shareholders.
13.16 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES
HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have executed and deliver this
Agreement on the date first written above.
BE AEROSPACE, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
T. L. WINDUST MACHINE, INC.
By: /s/ Xxxxx X. Windust
-------------------------------------
Name: Xxxxx X. Windust
Title: President
SHAREHOLDERS:
/s/ Xxxxx X. Windust
----------------------------------------
Name: Xxxxx X. Windust, an individual
52
----------------------------------------
Name: Xxxxxxx Windust, an individual
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx, an individual
/s/ Xxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxxx, an individual
53
