SHARE PURCHASE AND SALE AGREEMENT
This SHARE PURCHASE AND SALE AGREEMENT effective as of February 24,
2001, is entered into by and among BE Aerospace, Inc., a Delaware corporation
(the "Company"), Xxxxx Industries, Inc., a California corporation ("Xxxxx"), and
the shareholders of Xxxxx, set forth on Schedule 1 hereto (collectively, the
"Shareholders").
RECITALS
A. The Shareholders are the record and beneficial holders of all the
issued and outstanding capital stock (collectively, the "Xxxxx Shares") of
Xxxxx.
B. The Company desires to acquire the Xxxxx Shares from the
Shareholders, and the Shareholders desire to transfer the Xxxxx Shares to the
Company in exchange for shares of BE Stock (as defined in Section 1).
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and agreements of the parties herein contained, the parties hereby
agree as follows:
Terms and Conditions
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Section 1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings set forth below:
"Actual Knowledge" means Knowledge without the requirement of
reasonable due inquiry.
"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.
"Xxxxx" has the meaning set forth in the preamble to this Agreement.
"Ancillary Agreements" means the Consulting Agreement and the
Shareholders' Ancillary Agreements.
"Arbiter" has the meaning set forth in Section 2.3(b).
"BE Closing Price" means the amount that is equal to the arithmetic
average of the quoted closing sale prices of a share of BE Stock for the five
(5) NASDAQ National Market trading days ending on the fourth (4th) business day
prior to the Closing Date.
"BE Stock" means common stock of the Company presently trading under
the symbol "BEAV" on the NASDAQ National Market.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble to this Agreement.
"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" includes all information, in whatever form
or medium, concerning the operations or affairs of Xxxxx, but does not include
information that (i) was in the public domain before the date of this Agreement
or subsequently came into the public domain other than as a direct or
consequential result of disclosure by any Shareholder or, before the Closing
Date, Xxxxx; or (ii) was lawfully received by a Shareholder from a third party,
other than Xxxxx, prior to the Closing Date, free of any obligation of
confidence to or through such third party, or (iii) is independently developed
by any Shareholder as of the Closing Date without the use of any information
from Xxxxx.
"Consulting Agreement" means a consulting agreement between Xxxxx and
Xx. Xxx Xxxxxxxxxxxx substantially in the form attached hereto as Exhibit A.
"Contracts" means, collectively, all written or oral contracts,
agreements, commitments, leases, licenses, instruments, bids and proposals to
which Xxxxx 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 Xxxxx and all unfilled orders
outstanding as of the Closing Date for the sale of goods or services by Xxxxx.
"Custody Agreement" has the meaning set forth in Section 8.5(a).
"Disclosure Schedules" has the meaning set forth in Section 4.
"DTC" means the Depository Trust 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
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(including indoor air), plant and animal life and any other environmental medium
or natural resource.
"Environmental Liabilities and Costs" and similar phrases mean 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 condition of
the Environment present at, created by or arising out of the past or present
operations of Shareholders or Xxxxx through the Closing Date or of any prior
owner or operator of a facility or site at which Xxxxx now operates or has
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; and (m) the California
Environmental Quality Act.
"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 Xxxxx and any third party relating to a contract between such third
party and any Governmental Entity.
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"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.
"Indemnitee" has the meaning set forth in Section 11.5.
"Indemnitor" has the meaning set forth in Section 11.5.
"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 or the Technology, (ii) that are owned, licensed or
controlled in whole or in part by Xxxxx or any Subsidiary of Xxxxx and relate to
the business of Xxxxx or any Subsidiary of Xxxxx, 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, re-examinations 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" of Xxxxx and/or the Shareholders means actual knowledge of
the Management Group after reasonable due inquiry with respect to the matter
represented.
"Law" means any constitutional provision, statute, law, rule,
regulation, Permit, decree, injunction, judgment, order, ruling, determination,
finding or writ of any Governmental Entity.
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"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),
including without limitation any liability for Taxes.
"Lien" or "Liens" mean any mortgage, pledge, security interest, charge,
claim or other encumbrance, other than (a) liens for Taxes not yet due and
payable or that are being contested in good faith by appropriate proceedings,
(b) statutory or common law liens to secure obligations to landlords, lessors or
renters under leases or rental agreements confined to the premises rented, (c)
deposits or pledges made in connection with, or to secure payment of, workers'
compensation, unemployment insurance, old age pension or other social security
programs mandated under Law; (d) statutory or common law liens in favor of
carriers, warehousemen, mechanics and materialmen to secure claims for labor,
materials or supplies and other like liens that are not material, (e) as to real
property, recorded easements, rights of way, restrictions, encroachments, and
also any minor title defects that do not, singly or in the aggregate, interfere
with the use of such property, (f) restrictions on transfer of securities
imposed by Law, and (g) liens securing rental payments under capital lease
arrangements. Nothing herein limits the Shareholders' obligations to discharge
and release all Liens for Taxes and all Taxes to the extent described elsewhere
in this Agreement.
"Losses" has the meaning set forth in Section 11.2.
"Management Group" means Xx. Xxx Xxxxxxxxxxxx, Xx. Xxxx Xxxxxxxxxxxx,
Xx. Xx Xxxxxxxxxxxx, and Xx. Xxx Xxxxxxxxx.
"Material Adverse Effect" means any adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of Xxxxx
which, when considered singly or in the aggregate together with all other such
effects constitutes a material adverse effect on the business, assets,
operations, prospects or condition, financial or otherwise, of Xxxxx 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 Xxxxx balance sheet as of the close of
business on the day prior to the Closing Date plus deposits in transit, less
checks, drafts or notes made payable by Xxxxx not cleared, in transit or not
paid as of the day prior to the Closing Date.
"Net Consideration" means (I) Reference Price, plus (II) Net Cash, less
(III) Net Debt, and less (IV) Taxes of Xxxxx accrued prior to the Closing Date
that are neither (A) previously paid or provided for by Shareholders from
sources outside the Xxxxx bank accounts or cash equivalents nor (B) the Tax
described in Section 6.3(f)(i).
"Net Debt" means: (a) any debt owed by Xxxxx for money borrowed,
including all capitalized leases, loans from Shareholders, bank lines of credit,
equipment installment notes or other bank notes payable, prior to the Closing
Date; plus (b) an amount equal to the discounted net present value of all
operating leases (excluding real estate leases) calculated on a monthly basis
using a monthly discount rate of 0.875% per month; plus (c) any accounts payable
that, prior to the Effective Date, are unpaid more than 30 days past their due
dates.
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"Net Proceeds" has the meaning given in Section 2.5.
"Non-Compete and Non-Solicitation Agreement" shall mean, as to each
shareholder set forth on Schedule 2.1 hereof, a Non-Compete and Non-Solicitation
Agreement among the Company, Xxxxx and such Shareholder in substantially the
form of Exhibit B attached hereto.
"Offering Termination Date" shall have the meaning given in Section
8.5(c)(i).
"Ordinary Course of Business" means the ordinary course of business of
Xxxxx 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 Xxxxx and, to the extent that they are currently being developed by Xxxxx,
(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, (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 Xxxxx 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.
"Public Offering" has the meaning given in Section 8.5.
"Reference Price" means the amount of Seventeen Million One Hundred
Sixty-Six Thousand Six Hundred Sixty Seven dollars ($17,166,667).
"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.
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"Safety Liabilities and Costs" and similar phrases mean 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 Xxxxx through the Closing Date
"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" shall mean, as to each Shareholder
set forth on Schedule 1 hereof, a Non-Compete and Non-Solicitation Agreement
among the Company, Xxxxx and such Shareholder in substantially the form of
Exhibit B attached hereto.
"Shareholders' Representative" means Xxxx Xxxxxxxxxxxx, or in the event
Xxxx Xxxxxxxxxxxx is unable to continue, the Shareholder's Representative shall
be, in the event of the death of Xxxx Xxxxxxxxxxxx while he is the Shareholder's
Representative, the personal representative of Xxxx Xxxxxxxxxxxx, and during his
life, Xxxx Xxxxxxxxxxxx may elect to name in writing a successor specifically as
Shareholder's Representative, which this definition also shall include.
"Subsidiary" means with respect to any Person, (i) any entity
(including any partnership) a majority of whose outstanding voting securities
(however designated, including all equivalent or similar interests) are owned or
controlled, directly or indirectly, by such Person or by one or more of such
person's Subsidiaries, or collectively by such Person and one or more of its
Subsidiaries.
"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,
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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.
"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 return policies, service, repair,
replacement and other obligations based upon or arising out of express
warranties made in connection with the sale of goods or the performance of
services by Xxxxx.
"Year-End Financial Statements" has the meaning set forth in Section
4.5.
Section 2. EXCHANGE OF SHARES.
2.1 Sale and Transfer of Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx Shares to Company by the
Shareholders, the Company shall: (i) deliver to a DTC account of each of the
Shareholders (or their designee or custodian), at Closing, in proportion to the
ownership of the capital stock of Xxxxx as set forth on Schedule 1, an aggregate
number of shares of BE Stock valued at the BE Closing Price equal to Fourteen
Million Five Hundred Ninety Thousand Dollars ($14,590,000) plus an amount in
cash of Ten Thousand Dollars ($10,000); and (ii) deliver to the Escrow Agent at
Closing an aggregate number of shares of BE Stock valued at the BE Closing Price
equal to the Reference Price
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multiplied by One Hundred and Twenty percent (120%) minus Fourteen Million Six
Hundred Thousand Dollars ($14,600,000). 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) Within thirty (30) days after the Closing Date, and after the
Company and any Arbiter, if applicable, renders its confirmation of the Net
Consideration pursuant to Section 2.3(a) and Section 2.3(b), Escrowed Shares
valued at the BE Closing Price, or proceeds therefrom, shall be released from
Escrow, subject to the terms of the Escrow Agreement, (i) to the Shareholders,
in proportion to the ownership of capital stock of Xxxxx as set forth on
Schedule 1, such that the total amount, if any, that shall be distributed to the
Shareholders is equal to any positive result of (A) Ninety percent (90%) of Net
Consideration minus (B) Fourteen Million Six Hundred Thousand Dollars
($14,600,000), and (ii) to the Company, such that the total amount, if any, that
shall be distributed to the Company is equal to the total value of the Escrowed
Shares (based on the BE Closing Price) minus (A) the total amount distributed to
the Shareholders pursuant to Section 2.2(a)(i) above, and minus (B) ten percent
(10%) of Net Consideration. The remaining 10% of Net Consideration shall
thereafter remain in the Escrow until distributed as provided below;
(b) (i) If Ninety percent (90%) of the Net Consideration is less
than Fourteen Million Six Hundred Thousand Dollars ($14,600,000), then the
Shareholders shall, within three business days after the Company and any
Arbiter, if applicable, renders its confirmation of the Net Consideration, remit
to the Escrow any positive result of Fourteen Million Six Hundred Thousand
Dollars ($14,600,000), minus Ninety percent (90%) of the Net Consideration (the
"Net Consideration Pay Back"); and
(ii) If the Net Proceeds exceed the Net Consideration, then
the Shareholders shall remit or cause to be remitted to the Company the excess
as provided in Section 2.5;
(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 to five (5%) percent of the Net Consideration will
be distributed from Escrow, subject to the Escrow Agreement, to the Shareholders
fifteen (15) days after receipt from the Company's Accounting Firm of the audit
for the Company's fiscal year ending February 2002, but in no case later than
June 1, 2002; and
(d) Subject to adjustments described in Sections 2.3 and 11.2, and
after payment of all Escrow Account fees then due, the balance of the Escrowed
Shares, or proceeds from the sale thereof, 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's
fiscal year ending February 2003, but in no case later than June 1, 2003.
2.3 Adjustments of Reference Price.
(a) Within thirty (30) days after the Closing Date, and after the
Company renders its confirmation of the Net Consideration, the Company will
deliver to Shareholders'
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Representative, the calculation with respect to the Net Cash and Net Debt, along
with any associated work papers (the "Closing Date Net Consideration
Calculation").
(b) Within fifteen (15) days after the delivery of the Closing
Date Net 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 fifteen (15) days, then Shareholders shall be deemed to have waived the
right to dispute the Closing Date Net Consideration Calculation. If
Shareholders' Representative gives such notice within such fifteen (15) 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 auditing firm of recognized national standing (the "Arbiter")
selected by the Company and the Shareholders' Representative, which firm will
not be the regular auditing firm of the Company, Xxxxx, 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 Net
Consideration under Section 2.2(a), which report will be conclusive and final as
to the Net 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.
(c) For purposes of complying with the terms set forth in Section
2.3(b), each party 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 preparation
and analysis of the Closing Date Net Consideration Calculation.
(d) 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 cause to be deposited,
cash and shares of BE Stock valued at the BE Closing Price in an aggregate
amount equal to One Hundred and Twenty (120%) percent multiplied by the
Reference Price, less Fourteen Million Six Hundred Thousand Dollars
($14,600,000) ("the Escrowed Shares"), into an escrow account ("Escrow") to be
established with an escrow agent (the "Escrow Agent") selected by the
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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 cash and Escrowed
Shares as provided by the Escrow Agreement as security for the obligations of
the Shareholders under Sections 2.2 and 11.2 hereof. The Escrow Agreement shall
provide for the distribution of the cash and Escrowed Shares (or proceeds from
the sale thereof) from the Escrow pursuant to Sections 2.2(a), (b), (c) and (d),
subject to claims of the Company under Section 11.2. Following the initial
distribution from Escrow of cash and Escrowed Shares, or proceeds from the sale
thereof, pursuant to Section 2.2(a), the Escrow Agent shall hold the remaining
Escrowed Shares, or proceeds therefrom, equal to ten (10%) of the Net
Consideration, subject to further distribution in accordance with Sections
2.2(b), (c) and (d). All interest, dividends or other amounts earned with
respect to the proceeds from the Escrowed Shares (excluding the Escrowed Shares
that are to be distributed to the Company under Section 2.2(a)(ii)) shall accrue
to the benefit of the Shareholders. The Shareholder Representative shall have
the right to direct the Escrow Agent with respect to the investment of all cash
proceeds in the Escrow as and to the extent permitted in the Escrow Agreement.
Any fees from and after the Effective Date for maintaining the Escrow shall be
paid from earnings on all amounts in the Escrow, and if either is not practical
or if necessary, paid directly by the Shareholders. After payment or provision
for all Escrow expenses, the investment earnings may be, from time to time,
withdrawn from the Escrow by the Shareholder's Representative for the benefit of
the Shareholders. The Shareholder's Representative shall give prompt notice to
the Company of its intent to make any withdrawal from the Escrow Account and the
Company agrees that it shall issue any joint instruction that may be necessary
to authorize the Escrow Agent to release such amounts to the Shareholders. 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. With
respect to any Escrowed Shares released from the Escrow to either the
Shareholders, Shareholders' Representative or the Company, such shares shall be
valued at the BE Closing Price without reference to the stock's then actual
market price. The Shareholders shall be responsible for, and without using any
assets in the Escrow (other than interest, dividends and other earnings) shall
pay when due, any and all Taxes imposed upon or arising from the Escrowed
Shares. The Shareholders and Company agree that all Escrowed Shares shall be
sold by the Escrow Agent at the earliest opportunity and the proceeds from the
sale thereof shall be substituted in place of the Escrowed Shares. Accordingly,
the Shareholders 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 Guaranteed Proceeds; Mandatory and Optional Cash Payments.
(a) 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 five (5) days after the earlier of
the closing of the Public Offering or the Offering Termination Date, the Company
shall pay to the Shareholders (or their designee or custodian),
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or, in regard to Escrowed Shares, to the Escrow Agent, an aggregate amount equal
to the Net 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 Net 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 amount within the five-day period described above in this Section 2.5(a).
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).
(b) Optional Cash Payment. As to all of the BE Stock received by
the Shareholders or held in Escrow not theretofore sold in the Public Offering,
the Company shall have the right at any time 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 repurchase all unsold shares
of BE Stock held by any Shareholder or the Escrow Agent. The Company shall pay
to each Shareholder and the Escrow Agent in cash an amount per each share of
unsold BE Stock held by the Shareholders and the Escrow Agent, respectively,
equal to the BE Closing Price, 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 so repurchased.
(c) Mandatory Cash Payment. If all shares of BE Stock held by the
Shareholders and the Escrow Agent are not sold within 180 days of the Closing
Date or repurchased by the Company pursuant to Section 2.5(b), then on the 180th
day after the Closing Date, the Company shall purchase all the shares of BE
Stock then held by each Shareholder and the Escrow Agent for an amount per share
equal to the BE Closing Price. 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 so repurchased.
(d) Payment of Interest. If the BE Stock received by the
Shareholders or held in Escrow is not sold or repurchased by the Company
pursuant to Section 2.5(b) on or prior to the 91st day after the Closing Date,
then the Company shall pay the Shareholders and the Escrow Agent, monthly, in
cash, the first payment due on the 91st day following the Closing Date, an
amount equal to the amount of interest on the Net Consideration that would
accrue at a rate of 10% per annum if the Shareholders and the Escrow Agent had
made a loan to the Company, on the Closing Date, in the aggregate amount of the
Net Consideration. Such interest shall continue to accrue until the earlier of
the date all shares of BE Stock held by the Shareholders and the Escrow Agent
are sold to the public or are repurchased by the Company pursuant to Sections
2.5(b) or (c).
Section 3. CLOSING AND CLOSING DATE.
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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 28, 2001, or at such other place or
on such other date as the Company and the Shareholders may mutually agree, until
fully concluded. Notwithstanding the foregoing, the parties agree that the
Company intends, for financial reporting purposes, to treat the Closing 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, and (b) the Company will deliver to the
Shareholders the various certificates, instruments, documents and agreements
referred to in Section 10.2.
3.4 Bank Signature Cards. At closing, Xxxxx and the Shareholders, as
applicable, will deliver to the Company signature cards for all Xxxxx Bank
Accounts.
Section 4. REPRESENTATIONS AND WARRANTIES OF XXXXX AND SHAREHOLDERS. Each
representation and warranty contained in this Section 4 is qualified by the
disclosures made in the disclosure schedule attached hereto as Schedule 4 (the
"Disclosure Schedule"). Each part of the Disclosure Schedule is numbered to
correspond to the subsections of this Section 4. The Shareholders, severally and
jointly, and Xxxxx represent and warrant to the Company that the statements
contained in this Section 4 are correct and complete (except to the extent that
the aggregate of all Losses that could arise from the inaccuracy or
incompleteness of any statements, individually or in the aggregate, contained in
this Section 4 do not exceed One Hundred Thousand Dollars ($100,000)) as of the
date of this Agreement and will be correct and complete (except to the extent
that the aggregate of all Losses that could arise from the inaccuracy or
incompleteness of any statements, individually or in the aggregate, contained in
this Section 4 do not exceed One Hundred Thousand Dollars ($100,000)) as of the
Closing Date.
4.1 Organization. Xxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, with
full corporate power and authority to carry on the business in which it is
presently engaged, and to own and use the properties owned and used by it and to
consummate the transactions contemplated hereby. Xxxxx is duly qualified to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where failure to be so qualified
would not have a Material Adverse Effect. All trusts and other organizations or
entities that are Shareholders are duly organized, validly existing and in good
standing in the state where organized.
4.2 Authorization of Transaction. Each of the Shareholders has the
capacity and full power and authority (including full trustee power and
authority) to execute and deliver this Agreement and to perform their respective
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement, and the other agreements required to be
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executed and delivered by Xxxxx or the Shareholders pursuant hereto, have been
or at the Closing Date shall have been duly executed and delivered by Xxxxx or
the Shareholders, as the case may be, and constitute, or at the time of delivery
shall constitute the valid and legally binding obligation of Xxxxx or the
Shareholders, enforceable in accordance with its terms and conditions, except as
such enforceability may be limited by general principles of equity and
bankruptcy, insolvency, reorganization and moratorium and other similar laws
relating to creditors' rights. All trusts or similar proceedings needed for each
of the Shareholders to authorize this Agreement and the transactions
contemplated hereby have been duly and validly taken.
4.3 Noncontravention; Consents.
(a) Neither the execution and delivery of this Agreement, nor the
consummation by Xxxxx and the Shareholders of the transactions contemplated
hereby, will violate any Law to which Xxxxx or the Shareholders are subject or
any provision of the articles of incorporation or bylaws of Xxxxx. Except as set
forth on Schedule 4.3(a), neither the execution and delivery of this Agreement
by the Shareholders, nor the consummation by Xxxxx 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 Xxxxx pursuant to any agreement or
commitment to which Xxxxx or any of the Shareholders is a party or by which
Xxxxx, the Shareholders or any of their respective properties (including Xxxxx
Shares) is bound or to which Xxxxx, the Shareholders or any of such properties
is subject.
(b) Except as set forth on Schedule 4.3(b), Xxxxx 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 Xxxxx Shares to the Company.
No Contract relating to Xxxxx 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 Xxxxx (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 articles of incorporation and bylaws of Xxxxx as amended
to date. All of the issued and outstanding shares of capital stock of Xxxxx 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 Xxxxx, 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, 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 Xxxxx to sell, transfer or otherwise
dispose of any capital stock
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of Xxxxx or that could require Xxxxx 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 Xxxxx. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of Xxxxx. Xxxxx
is not in default under or in violation of any provision of its articles of
incorporation or bylaws. Except as set forth on Schedule 4.4, Xxxxx neither
controls directly or indirectly, nor has any direct or indirect equity
participation in, any Person.
4.5 Financial Statements. Set forth in Schedule 4.5(a-1) are correct
and complete copies of the unaudited balance sheets of Xxxxx as of December 31,
1998, December 31, 1999 and December 31, 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 Xxxxx on a consolidated basis 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 Xxxxx as of January 31, 2001 and the
related statements of income and cash flow for the one month 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 Xxxxx on a consolidated basis 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. Xxxxx has no Liabilities that exceed,
individually or in the aggregate, One Hundred Thousand Dollars ($100,000),
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 Xxxxx
(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 Xxxxx to cease doing business with Xxxxx or to curtail its business
with Xxxxx in any material respect. Xxxxx 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 Xxxxx. Listed in Schedule 4.7(a-2) are the names and
addresses of Alson'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 Xxxxx for 1999 and for 2000, and the amount for which each supplier
invoiced Xxxxx during such period(s).
4.8 Events Subsequent to Most Recent Fiscal Year End. Since December
31, 2000, there has not been any material adverse change in the business,
financial condition, operations, results of operations or future prospects of
Xxxxx except as disclosed on Schedule 4.8.
4.9 Accounts Receivable. The accounts receivable reflected on the
Interim Financial Statements, including any associated reserves, are bona fide
receivables, accounted for on a basis
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consistent with that used in the preparation of the Interim Financial
Statements, representing amounts due with respect to actual transactions in the
ordinary course of the operation of Xxxxx.
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 Xxxxx, have been duly filed, and
Xxxxx 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 reports and
statements of deficiencies assessed against or agreed to by Xxxxx 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 Xxxxx have been paid in
full, (v) no waivers of statutes of limitation have been given by or requested
with respect to any Taxes of Xxxxx, (vi) there is no claim or assessment
threatened by any taxing authority against Xxxxx, (vii) Xxxxx 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
written claim has ever been made by an authority in a jurisdiction where Xxxxx
does not file Tax Returns that Xxxxx may be subject to taxation by that
jurisdiction, and (ix) there are no Liens (other than Liens attributable to
Taxes not yet due and payable) on any of the assets of Xxxxx 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 Xxxxx 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 Xxxxx either (i) claimed or raised by any authority in writing or
(ii) as to which any of Xxxxx 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 Xxxxx have been audited. Except as set forth
in Schedule 4.10, no federal, state, local or foreign income Tax Returns are
currently the subject of audit.
(c) Xxxxx does not have any Liability for the Taxes of any Person
other than Xxxxx under Treasury Regulation ss. 1.1502-6 (or any similar
provision of Law), as a transferee or successor, by contract, or otherwise.
(d) Xxxxx has not filed a consent under Code ss. 341(f) concerning
collapsible corporations. Xxxxx has not to its Knowledge made any payments that
were treated as deductible that should be nondeductible under Code ss. 162 or
Code ss. 404. Xxxxx 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
ss. 280G. Xxxxx 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). Xxxxx 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 Xxxxx asset is property which Xxxxx is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section
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168(f)(8) of the Code. None of the Xxxxx assets is "Tax-exempt use property"
within the meaning of Section 168(h) of the Code. Xxxxx 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. Xxxxx has not participated
in (and will not participate in) an international boycott within the meaning of
Section 999 of the Code. Xxxxx is not a person other than a United States person
within the meaning of the Code. The payments contemplated in Section 2, other
than as to investment earnings, are 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. Xxxxx 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. Xxxxx
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.
(f) Except as disclosed on Schedule 4.10(f), Xxxxx has duly and
timely paid all Taxes relating to the business of Xxxxx (whether or not shown on
any Tax Return) due to any Governmental Entity prior to the Closing, and all
such Taxes have been taken into account, as applicable, in determining Net Taxes
or Net Consideration calculation.
(g) At all times since January 1, 1987, Xxxxx has had in effect a
valid election under Section 1362(a) of the Code to be taxed as an S corporation
for federal income tax purposes (an "S Election") and, except as set forth in
Schedule 4.10(g), (i) a comparable election in each state in which it conducts
business or is subject to Tax, and (ii) a comparable election in each locality
in which it both conducts business and is subject to a local Tax. Xxxxx has not
received written notice of and is not aware of any proposal from the IRS or any
Tax authority to disallow such S Election or such comparable election for any
taxable year.
4.11 Contracts.
(a) Schedule 4.11 contains a list of all material Contracts,
including a description of the terms of any material Contracts not in writing.
Without limiting the foregoing, all Contracts involving consideration in excess
of $100,000 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 in all respects. Each
Contract listed on Schedule 4.11 is a valid, binding and enforceable obligation
of Xxxxx and the other party or parties thereto and is in full force and effect.
Except as set forth on Schedule 4.11, (i) neither Xxxxx nor, to Alson's
Knowledge, any other party thereto, is in material breach of any term of any
Contract listed on Schedule 4.11 or has repudiated any term of any Contract
listed on Schedule 4.11, (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 listed on Schedule 4.11 by Xxxxx, or, to Alson's
Knowledge, any other party thereto, (iii) Xxxxx has neither waived nor released
any of its material rights under any Contract listed on Schedule 4.11, and (iv)
neither Xxxxx, nor the Shareholders, have received any communication questioning
the validity or enforceability of any Contract listed on Schedule 4.11. 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
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under or otherwise adversely affect any provision of any of the Contracts listed
on Schedule 4.11.
4.12 Real Property.
(a) Schedule 4.12(a-1) lists all lease and sublease agreements
relating to real property leased or subleased by Xxxxx. 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 Xxxxx is a party with respect to the real property leased thereunder;
(ii) Xxxxx 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 material
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
Xxxxx or, to Shareholders' Knowledge, any action, suit or proceeding pending or
threatened against Xxxxx or 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 currently used by
Xxxxx, 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 Xxxxx under the leases and subleases relating to the
real property leased by Xxxxx, Xxxxx 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 Xxxxx, and Xxxxx 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 Alson's leasing of the real property currently leased or
subleased by Xxxxx, none of such property or any part thereof has suffered any
material damage by fire or other casualty that has not been completely restored.
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(f) Xxxxx has not received any written notice from any insurance
company that has issued a policy to Xxxxx with respect to any of its leased real
property requiring the performance of any structural or other repairs or
alterations to such property.
(g) Xxxxx does not currently own any real property. All real
property previously leased by Xxxxx, to Xxxxx'x Knowledge, is identified, to
Alson's Knowledge, as such in Schedule 4.12(g).
4.13 Title and Related Matters. Except as set forth on Schedule 4.13,
Xxxxx now has, and on the Closing Date will have, good and marketable title to
(or a valid leasehold interest in) all the properties and assets used by Xxxxx
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) Xxxxx owns or has the right to use pursuant to a valid
license, sublicense, agreement or permission all Intellectual Property necessary
for the operations of Xxxxx as presently conducted.
(b) Xxxxx has neither interfered with, nor infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of third parties. Xxxxx 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 from using any
Intellectual Property rights of any third party). To Alson's Actual Knowledge,
no third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of Xxxxx.
(c) Schedule 4.14(c) identifies each patent and each registered
Trademark, and copyright owned by Xxxxx and identifies each pending patent
application or application for registration that has been filed by Xxxxx. 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) Xxxxx 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 Alson's Knowledge,
threatened that challenges the legality, validity, enforceability, use or
ownership of such item; and
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(iv) Xxxxx 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 Xxxxx uses any item of Intellectual
Property. With respect to each such license, sublicense, agreement or
permission:
(i) to Alson's Actual 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 Alson's Actual 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 Xxxxx, Company or its Affiliates to use the
Intellectual Property in conducting the business of Xxxxx after the Closing
Date; and
(iv) Xxxxx 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 Xxxxx
is (a) subject to any unsatisfied judgment order, decree, stipulation,
injunction or charge or (b) a party to or, to Alson'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 Xxxxx Products since Alson's incorporation. There are
no judicial or administrative actions, proceedings or investigations pending or,
to Alson's Knowledge, threatened that question the validity of this Agreement or
any action taken or to be taken by Xxxxx or the Shareholders in connection with
this Agreement or that, if adversely determined, would have a material adverse
effect upon Xxxxx 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 Xxxxx
maintains with respect to the current or former employees of Xxxxx or to which
Xxxxx contributes with respect to any of the current or former employees of
Xxxxx. 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;
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(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 a "group health plan" as such term is defined in Section
5000(b)(1) of the Code;
(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 before the Closing 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 before the Closing 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 under such Employee Benefit
Plan;
(iv) each such Employee Benefit Plan which is an Employee
Pension Benefit Plan was at all times in its existence intended to satisfy the
requirements of a "qualified plan" under Section 401(a) of the Code, has at all
such times met such requirements in all material respects to Alson's Knowledge
and has received, within the last two 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 the Company and Xxxxx will not incur costs or
expenses, including any Taxes, as a result of an Employee Benefit Plan failing
of any condition of such qualification or exemption for Pre-Closing Periods or
by reason of pre-closing actions or omissions; 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 related trust agreements, insurance contracts and
other funding agreements which implement such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that Xxxxx
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
Alson's Knowledge, threatened.
(c) Except as set forth on Schedule 4.16(c), Xxxxx 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).
-21-
4.17 Environmental Matters.
(a) Except as set forth on Schedule 4.17(a):
(i) Xxxxx 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) Xxxxx has obtained, and is and has been in compliance in
all material respects with the conditions of, all applicable Environmental
Permits required heretofore and all required continuations or renewals thereof
through the Closing Date;
(iii) 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 is likely to have
a Material Adverse Effect;
(iv) there are no circumstances or conditions present at or
arising out of the present or, to the Knowledge of the Shareholders, the former,
assets, properties, leaseholds, businesses or operations of Xxxxx 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 which could have a Material Adverse Effect;
(v) there are no circumstances or conditions present at or
arising out of the present or, to the Knowledge of the Shareholders, the former,
assets, properties, leaseholds, businesses or operations of Xxxxx, 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 which could have a Material
Adverse Effect;
(vi) none of Xxxxx or the Shareholders or the present or, to
the Knowledge of the Shareholders, the past, assets, properties, business,
leaseholds or operations of Xxxxx 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 Xxxxx, or any of the past
assets, properties, real property business, leaseholds or operations of Xxxxx of
which Xxxxx has Knowledge or any of the present such property and assets of
Xxxxx 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;
(vii) no investigation or review with respect to such matters
is pending or, to the Knowledge of Xxxxx or the Shareholders, is threatened;
(viii) neither the business of Xxxxx 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 Xxxxx or which will impose Liens on
any such asset or property or otherwise interfere with or affect the business of
Xxxxx;
-22-
(ix) Schedule 4.17(a)(ix) lists all off-site locations,
including, without limitation, commercial waste disposal facilities or municipal
landfills, to which or at which Hazardous Materials originating from Xxxxx, 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;
(x) Schedule 4.17(a)(x) of the Disclosure Schedule sets forth
a list of all underground storage tanks owned or operated by Xxxxx to its Actual
Knowledge and except as disclosed in Schedule 4.17(x) 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;
(xi) Schedule 4.17(a)(xi) lists all environmental audits,
inspections, assessments, investigations or similar reports in Alson's
possession relating to the assets, properties, or business of Xxxxx currently or
to the Knowledge of Xxxxx, the past assets, properties or business of Xxxxx, or
the compliance of the same with applicable Environmental Laws and Safety Laws;
(xii) Schedule 4.17(a)(xii) sets forth to Alson's Knowledge
the nature and quantities of any Hazardous Materials (as defined below)
generated, transported or disposed of by Xxxxx 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
(xiii) Schedule 4.17(a)(xiii) sets forth to Alson's Knowledge
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 Xxxxx (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 "Xxxxx"
are intended to include any and all other entities to which, to the Knowledge of
the Shareholders, Xxxxx may be considered a successor under applicable
Environmental Laws.
4.18 Legal Compliance. Except as set forth on Schedule 4.18, Xxxxx 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 Alson's Knowledge, has been
threatened against Xxxxx alleging any failure to so comply, and Xxxxx 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 Xxxxx is insured as of the date of this
Agreement, and no such policies subject Xxxxx to any obligations for
retrospective claims or adjustments.
-23-
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 Xxxxx 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 Xxxxx and a summary
of the terms thereof.
4.21 Brokers' Fees. Neither Xxxxx 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 Xxxxx, after the
Closing Date, will have any continuing obligation.
4.22 RESERVED.
4.23 Equipment.
(a) Schedule 4.23(a-1) lists all lease agreements relating to
equipment, furniture or trade fixtures leased by Xxxxx with an annual cost in
excess of $100,000. Except as set forth on Schedule 4.23, all equipment,
furniture or trade fixtures used or located in the business or operations of
Xxxxx 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. Xxxxx has not received any written notice from
any insurance company that has issued a policy to Xxxxx 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 material personal property owned
by Xxxxx. Except as listed on Schedule 4.23(b-2), all personal property used in
connection with, or in furtherance of Alson's business or operations is listed
on Schedule 4.23(b-1) and is the property of Xxxxx subject to any leases
identified in Schedule 4.23 (a-1).
4.24 Product Warranties and Liabilities. Schedule 4.24 sets forth all
Warranties given or made by Xxxxx. Xxxxx 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. None of
the customers of Xxxxx has claimed to Xxxxx or to Xxxxx suppliers, that Alson's
Products are defective. None of the Shareholders nor any of the employees of
Xxxxx has any actual knowledge of any Products which have been shipped by Xxxxx
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
Alson'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. Xxxxx has never received nor been subject to
any claim, and none of the Shareholders has any actual knowledge of any fact or
of the ocurrence of any event forming the basis of any present or future claim
-24-
against Xxxxx, 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. Xxxxx 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
Xxxxxxxxxxxxxx 00 XXX 21.607.
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(a).
(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.
(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 condition 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 Xxxxx 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.
-25-
(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 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's investor representations made in any
separately signed writing are true and were true when made.
(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
Material Permits, licenses, franchises and other authorizations necessary for
the conduct of Alson'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 contains a list of the
experience during the two (2) years ending on the date hereof of Xxxxx with
respect to (i) any product liability claims (excluding among other things
express warranties and ordinary returns), (ii) any general liability claims
exceeding $100,000, and (iii) 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 Xxxxx, and
none of their relatives or Affiliates, owns any interest in any competitor,
lessor, lessee or customer or supplier of Xxxxx; and Xxxxx 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 Xxxxx 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 Xxxxx, other than the payment of wages, salaries and bonuses
to employees of Xxxxx 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 Xxxxx 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 Xxxxx or any
relative or Affiliate of any of them.
-26-
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.
4.31 Minute Books. Alson'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, Xxxxx
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 and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. The Company is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company.
5.2 Authorization of Transaction. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement, to perform its respective obligations hereunder and to
consummate the transactions contemplated hereby. 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 other
agreements required to be executed and delivered by the Company pursuant hereto,
the performance by the Company of its 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 against the Company in accordance with its terms and
conditions, except to the extent that enforceability hereof 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 violate any provision of the Company's charter or bylaws
or (ii) conflict with, result in a breach of,
-27-
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.
5.5 Investment Intent. The Company is acquiring the Xxxxx Shares for
its own account and not with a view to their distribution within the meaning of
ss.2(11) of the Securities Act.
5.6 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. The Company timely filed the 10-K and the 10-Q.
5.7 Capitalization of Company. The authorized capital stock of the
Company consists of 50,000,000 shares of common stock, $0.01 par value per
share, of which, as of February 23, 2001, 26,003,203 shares were issued and
outstanding, and 1,000,000 shares of preferred stock, par value $0.01 per share,
none of which are outstanding. All of the outstanding shares are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Certificate of Incorporation or Bylaws
of the Company or any agreement or document to which the Company is a party or
by which it is bound. When issued to the Shareholders, the shares of BE Stock so
issued will be duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights.
5.8 Full Disclosure. No representation or warranty of the Company
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
therein not misleading.
Section 6. TAXES.
6.1 Tax Returns; Audits. (a) (i) The Shareholders shall be responsible
for preparing or causing to be prepared, at Shareholders' expense, Alson's
federal income tax return on Form 1120S and comparable state and local income
and franchise tax returns (each, an "S Period Return"), for Alson's taxable year
ending on the day preceding the Closing Date or on the Closing Date if an
election is made under Section 338(h)(10) of the Code (collectively, the "Final
S Period Tax Returns") and all other income Tax Returns of Xxxxx for the taxable
periods ending on or prior to the Closing Date. Such Tax Returns shall be
prepared in a manner
-28-
consistent with applicable Tax laws consistent with prior practice. The Company
shall cause Xxxxx 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). The Shareholders shall be jointly and severally responsible for
payment of all Taxes due or to become due from Xxxxx in respect of taxable
periods ending, on or before the Closing Date and the share of Taxes due or to
become due for the portion of any taxable period that is prior to the Closing
Date except only the Tax described in Section 6.3(f)(i). Unless paid separately
by Xxxxx prior to the Closing Date, any such Taxes shall be payable and
reportable by or at the direction of the Shareholders from sources outside of
Alson's bank accounts or cash equivalents. Tax liabilities, if any, assumed by
the Shareholders under this Agreement either will be treated as a reduction from
the Net Consideration in the manner described in Section 2.2 or otherwise be the
financial obligation of the Shareholders. The Shareholders shall provide the
Company with a copy of such Tax Returns together with the schedules thereto, and
a statement setting forth the amount of Tax shown due on such Tax Return for
which the Shareholders are liable, at least 30 days prior to the due date
(including any extensions thereof) for the filing of such Final S Period Tax
Returns, and the Company shall have the right to review such Final S Period Tax
Returns prior to the filing of such Final S Period Tax Returns. At the direction
of the Shareholders' Representative, the Company shall cause Xxxxx to execute
and file the Final S Period Tax Returns after the review period and on or prior
to their due date. Filing these returns is not an assumption by the Company or
Xxxxx of any responsibilities the Shareholders have for such Taxes or the
accuracy of the Final S Period Tax Returns or any S Period Return.
(ii) The Company will, to the extent permitted by applicable
Law, elect with the relevant Taxing authority to close the taxable period of
Xxxxx on the day preceding the Closing Date. In any case where applicable Law
does not permit Xxxxx to close its taxable year on the day preceding the Closing
Date, then Taxes, if any, attributable to the taxable period of Xxxxx beginning
before and ending on or after the Closing Date shall be allocated between (A)
the period up to but not including the Closing Date, and (B) the period on and
subsequent to the Closing Date by means of a closing of the books and records of
Xxxxx as of prior to the opening of business on the Closing Date.
(b) Except as provided in Section 6.1, following the Closing,
Xxxxx or its Affiliates shall be responsible for preparing or causing to be
prepared all Tax Returns required to be filed by Xxxxx for taxable periods
beginning on or after the Closing Date.
(c) In the event that, following the Closing Date, any
Governmental Entity notifies the Company or Xxxxx or any Affiliate thereof of
its intention to audit, assess, examine or otherwise review (collectively,
"Audit") an S Period Return of Xxxxx relating to a taxable period ending on or
before the Closing Date, the Company shall promptly notify the Shareholders of
the receipt of such notice. Upon receipt of notice of the Audit from the
Company, the Shareholders may, at the Shareholders' option and sole expense,
control all further determinations with respect to the conduct of such Audit or
any administrative or judicial proceeding arising in respect thereof, including
but not limited to all negotiation and correspondence with such Governmental
Entity and the compromise or settlement of such matter; provided, however, that
if and to the extent that the Audit involves an adjustment or issue which will
produce a Tax for which the Company will be liable, the Company shall be
entitled to
-29-
jointly control with the Shareholders such adjustment or issue, and the
Shareholders shall not enter into a settlement or closing or other agreement
with respect to such issue or adjustment without the consent of the Company,
which consent shall not be unreasonably withheld. The Company shall cooperate
and provide or cause Xxxxx to cooperate and provide the Shareholders with access
to such records and personnel of Xxxxx as the Shareholders determine may be
necessary in connection with the conduct of such Audit or any administrative or
judicial proceeding in respect thereof. Each of the parties shall provide the
others concerning any audit with copies of all correspondence, notices and other
written materials received from any Governmental Entity.
(d) (i) On and after the Closing Date, the Company or Xxxxx will
promptly notify the Shareholders in writing of the commencement of any claim,
Audit, or other proposed change or adjustment by any taxing authority concerning
any Tax period ending on or prior to the Closing Date.
(ii) The Shareholders shall have the right to represent
Alson's interests in any Tax Audit or administrative or court proceeding
relating to taxable periods of Xxxxx ending on or prior to the Closing Date and
to employ counsel of its choice at its sole expense; provided that (A) if the
results of such Audit or proceeding (i) involves an issue that recurs for a
taxable period of Xxxxx beginning on or after the Closing Date (whether or not
such subsequent taxable period is the subject of such Audit or proceeding at
such time), (ii) would be binding on the Company or Xxxxx for any taxable period
beginning on or after the Closing Date, and (iii) would materially and
detrimentally affect the Tax liability of Xxxxx for a taxable period beginning
on or after the Closing Date, then the Shareholders shall not enter into a
settlement or closing or other agreement with respect thereto without the
consent of the Company, which consent shall not be unreasonably withheld and (B)
if the Tax Claim involves an adjustment or issue which will produce a Tax for
which the Company or Xxxxx will be liable, the Company shall be entitled to
jointly control with the Shareholders such adjustment or issue in the Audit or
proceeding, and neither the Shareholders nor the Company shall enter into a
settlement or closing or other agreement with respect to such issue or
adjustment without the consent of the other party, which consent shall not be
unreasonably withheld.
(iii) With respect to any taxable period of Xxxxx beginning
before and ending after the Closing Date, the Company and the Shareholders shall
jointly control the defense and settlement of any Tax audit or administrative or
court proceeding and each party shall cooperate with the other party at their
own expense and there shall be no settlement or closing or other agreement with
respect thereto without the consent of the other party, which consent will not
be unreasonably withheld.
(e) Any Taxes, except the Tax described in Section 6.3(f)(i),
imposed upon or incurred by any of the Shareholders in connection with the sale
of BE Stock pursuant to this Agreement, and any Taxes in connection with
pre-closing distributions to any Shareholder or any payment to or for the
Shareholders contemplated by this Agreement, and any legal or other expenses
incurred by the Shareholders in connection with such Taxes, shall be borne
solely by the Shareholders.
-30-
6.2 Cooperation and Exchange of Information. The Shareholders and the
Company will provide each other with such cooperation and information as either
of them reasonably may request of the other in filing any Tax Return, amended
Tax Return or claim for refund, determining a liability for Taxes or a right to
a refund of Taxes, participating in or conducting any audit or other proceeding
in respect of Taxes. Such cooperation and information shall include providing
copies of relevant Tax Returns of Xxxxx or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by Tax authorities. No amended Tax Return shall be filed
for Xxxxx for any taxable period ending on or before the Closing Date without
the prior written consent of the Shareholder's Representative, which may not be
withheld or delayed unreasonably The Company shall retain all Tax Returns,
schedules and work papers, records and other documents ("Tax Materials") of
Xxxxx for each taxable period ending on or before the Closing Date and for all
prior taxable periods until the later of (i) the expiration of the statute of
limitations of the taxable periods to which such Tax Returns and other documents
relate, (ii) 6 years following the due date (without extension) for such Tax
Returns, or (iii) the completion of all legal proceedings (if any) relating to
any such Tax Return.
6.3. Exchange of Shares and Related Taxes.
(a) Except for the Tax described in Section 6.3(f)(i), each
Shareholder hereby waives and releases Xxxxx, 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 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, Xxxxx and the Shareholders.
(c) There shall be withheld by Company, Xxxxx and/or Escrow Agent
from any amount payable to Shareholders hereunder such amounts as may be
required to be withheld under applicable Law.
(d) The Shareholders shall be liable for, shall hold Xxxxx and the
Company harmless against, and agree to pay on a timely basis all income, sales,
transfer, stamp, value added, use, real property transfer and similar Taxes
incurred by Shareholders or Xxxxx in connection with the transactions
contemplated by this Agreement, for all tax periods ending on the day before the
Closing Date or, if the Election is made, ending on the Closing Date, and for
the portion of any tax period prior to the Closing Date, except for the Tax, if
any, described in Section 6.3(f)(i).
(e) The Company shall elect to file an election under Section
338(h)(10) of the Code and under any comparable provisions of state or local law
with respect to the purchase of the Xxxxx Shares (the "Election"). The Company
and the Shareholder's Representative, on behalf of the Shareholders, will agree
upon an allocation schedule, which will allocate the purchase price and the
Liabilities of Xxxxx (plus any other relevant items) among the assets of Xxxxx.
Tax returns and amendments thereof concerning such allocation filed by the
Company,
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Xxxxx or the Shareholders shall be consistent with that agreed allocation. A
reputable valuation firm's appraisal of fair market value shall be used to
establish the allocation. The Shareholders and the Company shall report, in
connection with the determination of income, franchise or other Taxes measured
by net income, the transactions being undertaken pursuant to this Agreement in a
manner consistent with the Election. The Company shall be responsible for the
preparation and filing of all forms and documents required in connection with
the Election. In connection with the Election, the Company shall provide the
Shareholders with copies of (i) Form 8023 as reasonably agreed to by the Company
and Xxxxx, (ii) all attachments required to be filed therewith pursuant to
applicable Treasury Regulations, and (iii) any comparable forms and attachments
with respect to any applicable state or local elections being made pursuant to
the Election. The Shareholders shall execute and deliver to the Company within
60 days of the Company's written request such documents or forms as are required
by any Tax laws to complete properly the Election and to jointly file such
Election on a timely basis. The Shareholders and the Company shall cooperate
fully with each other and make available to each other such Tax data and other
information as may be reasonably required by the Shareholders or the Company in
order to timely file the Election and any other required statements or
schedules. The Shareholders shall promptly execute and deliver to the Company
any amendments subsequent to the filing of the Election, to Form 8023 (and any
comparable state and local forms) and attachments which are required to be filed
under applicable law and are reasonably agreed to by the Company, Xxxxx and the
Shareholders' Representative.
(f) If the Election is made, then (i) the Net Consideration shall
not be reduced by any California income tax of Xxxxx that results solely from
making the Election and (ii) notwithstanding anything in this Agreement to the
contrary, the Company agrees to indemnify Shareholders for any Taxes (including
Taxes on any indemnity paid pursuant to this Section 6.3(f)) incurred by
Shareholders that arise directly or indirectly from the sale of Shareholder's
stock in Xxxxx accompanied by the Election, and that would not have been
incurred upon a sale of Shareholder's stock in Xxxxx but for the making of the
Election, with such indemnification obligation based on the difference between
(A) the Tax liability of Shareholders with respect to the sale of Shareholders'
stock in Xxxxx pursuant to the Election and (B) the deemed Tax liability of
Shareholders with respect to a deemed sale of Shareholders' stock in Xxxxx
unaccompanied by the Election. The Company shall indemnify the Shareholders for
reasonable attorneys' fees and other costs reasonably incurred by Shareholders
in successfully enforcing the indemnification obligation of this Section 6.3(f).
At least 60 days prior to the time when the first of Form 8023 or any comparable
form under state and local law is required to be filed, Shareholders shall
propose the amount of the initial indemnification pursuant to this Section
6.3(f) to the Company based upon the allocation schedule agreed to between the
parties, for the Company's approval. If the Company does not approve the
proposed amount, the Company must notify Shareholders of the disagreement within
20 days of the delivery of the proposed amount. If the Company provides timely
notice of disagreement to Shareholders, the Company and Shareholders shall
promptly negotiate in good faith to reconcile the differences. If no agreement
is reached within 15 days of the Company's notice of disagreement, the Company
will within the next 15 days obtain and deliver to Shareholders a calculation of
the amount of indemnification pursuant to this Section 6.3(f) prepared by a
nationally known firm of certified public accountants. The Company shall bear
the cost of any such calculation. Without limiting the indemnification agreed to
in this Section, Shareholders shall have no obligation to join in, and the
Company shall not file the Election, unless prior to the time for filing the
Company has paid to Shareholders the
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Shareholder's initial indemnification amount, as calculated in this Section. In
the event of any subsequent adjustment of the Taxes incurred by Shareholders, or
by Xxxxx for the account of Shareholders, that arise directly or indirectly from
the making of the Election, the amount of the Company's indemnity obligation
pursuant to Section 6.3(f) shall be recomputed and appropriate payments made
between Shareholders and the Company as appropriate.
(g) At the Closing, Xxxxx shall distribute in liquidation to the
Shareholders its right to receive payments under a split-dollar life insurance
agreement. The Company agrees to indemnify Shareholders for any increase in
Taxes (including Taxes on any indemnity paid pursuant to this Section 6.3(g))
resulting from the treatment of any portion of the distribution as ordinary
rather than capital gain income.
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 Xxxxx 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 Xxxxx 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
Xxxxx 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 Xxxxx to carry on its operations substantially in the Ordinary Course of
Business.
7.4 No General Increases. (a) Without prior written consent of the
Company, the Shareholders will not cause or permit Xxxxx to grant any general or
uniform increase in the rates of pay of employees of Xxxxx outside the Ordinary
Course of Business, nor grant any general or uniform increase in the benefits
under any bonus or pension plan or other contract or commitment outside the
Ordinary Course of Business, and (b) the Shareholders will not cause or permit
Xxxxx to increase the compensation payable or to become payable to officers,
salaried employees or agents of Xxxxx, 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 outside the Ordinary Course of Business.
7.5 Contracts and Commitments. Without prior written consent of the
Company the Shareholders will not cause or permit Xxxxx 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
Ordinary Course of Business.
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7.6 Dividends and Distributions. Without prior written consent of the
Company the Shareholders will not cause or permit Xxxxx to declare or otherwise
commit to repurchase, redeem or otherwise acquire for value any shares of its
capital stock from and after the Effective Date.
7.7 Sale of Capital Assets. Except as otherwise contemplated by this
Agreement, without prior written consent of the Company, the Shareholders will
not cause or permit Xxxxx to sell or otherwise dispose of any of its capital
assets.
7.8 Preservation of Organization. The Shareholders will cause Xxxxx to
use its commercially reasonable efforts to preserve its business organization
intact, to keep available to Xxxxx after the Closing Date the present officers
and employees of Xxxxx and, subject to Section 7.9 below, to preserve for the
benefit of the Company the present relationships and goodwill of Xxxxx with its
suppliers, customers, landlords and others having business relations with Xxxxx.
7.9 No Default. Except as otherwise contemplated by this Agreement, the
Shareholders will not cause or permit Xxxxx 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 Xxxxx is a party or by which its assets are
bound, except to the extent that such termination, breach or default will not
result in a Material Adverse Effect to Xxxxx.
7.10 Compliance with Laws. The Shareholders will cause Xxxxx 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 Xxxxx Shares.
7.11 Full Access. The Shareholders will cause Xxxxx 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 Xxxxx, and access, at the request of
Company with Alson's prior approval, which will not be unreasonably denied, to
customers and vendors of or pertaining to Xxxxx.
7.12 Notice of Developments. The Shareholders will give prompt written
notice to the Company of any material development affecting Xxxxx. 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.
7.13 Exclusivity. Neither Xxxxx nor the Shareholders will (and Xxxxx
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
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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. Xxxxx will
notify the Company as soon as is reasonably practicable 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 RESERVED.
7.15 Tax Matters. Xxxxx shall, and the Shareholders shall cause Xxxxx
to, accrue, incur and pay all deductible expenses of this transaction or
otherwise incurred by Xxxxx before the Closing Date to the maximum extent
permitted by Law. No new elections with respect to Taxes, or any changes in
current elections with respect to Taxes, relating to or affecting Xxxxx will be
made by Xxxxx or the Shareholders after the Effective Date without the prior
written consent of the Company. The Shareholders will provide the Company, at
the Company's request, with all clearance certificates or similar documents that
may be required by any state, local or other Taxing authority in order to
relieve the Company of any obligation to withhold or escrow any portion of the
amount payable in connection with this Agreement and to evidence compliance by
Shareholders and Xxxxx with the obligations under Section 6.
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 Xxxxx owns.
7.17 Confidentiality. Neither the Company, Xxxxx, nor the Shareholders
shall issue any press release or otherwise make public statements or other
statements except on a need to know basis to its employees, agents or
representatives with an obligation of confidentiality with respect to the
transactions contemplated by this Agreement, without the prior consent of Xxxxx
and the Shareholders (in the case of the Company) or the Company (in the case of
Xxxxx or the Shareholders), which consent may be given or withheld in any
party's sole discretion, except (i) as contemplated by this Agreement or in
furtherance of the purposes hereof and (ii) as may be required by Law, or by the
rules and regulations of, or pursuant to any agreement with, the Nasdaq National
Market. The Shareholders, Xxxxx, and the Company shall immediately notify the
other parties hereto 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.
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 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).
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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 third party 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 Xxxxx that is not related to the transactions
contemplated by this Agreement, 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. On the Closing Date, each Shareholder shall
enter into a Non-Compete and Non-Solicitation Agreement substantially in the
form attached hereto as Exhibit "B" and incorporated herein by reference.
(c) 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 Xxxxx 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 Xxxxx 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 covenants, whichever period is later.
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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. On or prior to the Closing, holders of Registrable
Shares, including the Escrow Agent, shall execute and deliver a custody
agreement (the "Custody Agreement"), in substantially the form attached hereto
as Exhibit C-2, and perform or deliver each of the acts or things therein
required of such holders. 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)(i). 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 (on the terms of the Custody Agreement)
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, or (y) such
securities they 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
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
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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 until the earlier
of (A) such time as all Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the Shareholders set
forth in such registration statement or (B) the date that is 180 days after the
Closing Date (the "Offering Termination Date").
(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 earlier of (A) 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 or (B) the Offering Termination Date.
(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;
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(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.
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
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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 affect 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 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
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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.
(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 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.
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(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(d), 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
paragraph 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 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
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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 As of immediately prior to the Closing Date, Xxxxx shall have
responsibility to pay in full any otherwise eligible claims of any Shareholders
or their respective Affiliates under the Employee Benefit Plans prior to the
Closing Date but which have not been paid prior to the Effective Date.
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 in
writing at or prior to the Closing):
(a) all representations and warranties of the Shareholders set
forth in Section 4 shall be correct and complete (except to the extent that the
aggregate of all Losses that could arise from the inaccuracy or incompleteness
of any statements, individually or collectively, contained in Section 4 do not
exceed One Hundred Thousand Dollars ($100,000)) at and as of the Closing Date;
(b) the Shareholders shall have performed and complied with all of
their 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 the 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 Xxxxx Shares or to control
Xxxxx, or (iv) affect materially and adversely, the right of Xxxxx 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 Xxxxx 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;
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(f) Xxx Xxxxxxxxxxxx shall have delivered to the Company an
executed counterpart of the Consulting Agreement;
(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 Xxxxx, 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 D,
executed by the respective spouse of each Shareholder;
(i) Xxxxx shall have, in all material respects, taken and
accomplished all actions that Shareholders are required to cause Xxxxx to take;
(j) each of the Shareholders shall have executed and delivered to
the Company a counterpart executed by such Shareholder of the Non-Compete and
Non-Solicitation Agreement;
(k) all actions to be taken by the Shareholders or Xxxxx in
connection with the 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) the Shareholders shall have delivered to the Company a good
standing certificate for Xxxxx from the Secretary of State of the State of
California dated within thirty (30) days of the Closing Date;
(m) the Shareholders' Representative shall have executed and
delivered to the Company the Escrow Agreement;
(n) the Shareholders' Representative shall have delivered an
opinion by Alson's counsel, in the form and substance as set forth in Exhibit E
attached hereto, addressed to the Company, and dated as of the Closing Date; and
(o) the Shareholders shall have delivered a signatory card in
blank for all Xxxxx bank accounts acceptable to each bank where Xxxxx maintains
an account.
10.2 Conditions to Obligation of the Shareholders. The obligation of
the Shareholders to consummate the transactions to be performed by them 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 in writing 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;
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(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 the 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) There will not be any adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of the
Company, which, when considered singly or in the aggregate together with all
other such effects, constitutes a material adverse effect on the business,
assets, operations, prospects or condition, financial or otherwise, of the
Company taken as a whole;
(e) 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;
(f) all actions to be taken by the Company in connection with the
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;
(g) the Company shall have executed and delivered to the
Shareholders' Representative the following documents which shall be dated the
Effective Date:
(i) the Consulting Agreement;
(ii) the Escrow Agreement;
(iii) a real property lease in such form as may be agreed
upon between each of Alson's landlords and the Company with respect to each
location at which Xxxxx is conducting business as of the Closing Date; and
(iv) evidence of wire transfers to DTC accounts of the
Shareholders (or their custodian) of that portion of the BE Stock which
represents $14,600,000 of the Net Consideration.
(h) the Company shall have executed and delivered to the Escrow
Agent the following documents which shall be dated the Effective Date:
(i) evidence of a wire transfer to a DTC account of the
Escrow Agent representing that portion of the BE Stock which is to be delivered
to the Escrow Agent at the Closing; and
(ii) the Escrow Agreement.
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(i) the Company shall have delivered an opinion of the Company's
counsel, in the form and substance as set forth in Exhibit F attached hereto,
addressed to the Shareholders in care of the Shareholder's Representative, and
dated as of the Closing Date.
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 in any certificate delivered by the Shareholders pursuant to
this Agreement and all of the representations and warranties of the Company
contained in Section 5 of this Agreement or in any certificate delivered by the
Company 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), 4.13 (Title and Related
Matters), shall continue in full force and effect after the expiration of the
applicable statute of limitations; 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. Notwithstanding the
foregoing, as to any matter or claim which is based upon fraud, the
representations and warranties set forth in this Agreement shall expire not
earlier than upon expiration of the applicable statute of limitations. No party
will be liable to another under any representation or warranty after the
applicable expiration of such warranty or representation; provided, however, if
a claim or notice is given under this Section 11 with respect to any
representation or warranty prior to the applicable expiration date, such claim
may be pursued to resolution notwithstanding expiration of the representation or
warranty under which the claim was brought. Any investigations made by or on
behalf of any of the parties prior to the date hereof shall not affect any of
the parties' obligations hereunder.
11.2 Indemnification Provisions for Benefit of the Company. The
Shareholders shall indemnify, defend and hold harmless the Company and Xxxxx
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") that the Company, Xxxxx, or any of
their Affiliates, or any of their respective stockholders, directors, officers,
employees and agents (collectively, the "Company Indemnified Parties"), have or
reasonably shall have incurred resulting from or arising out of (a) the
inaccuracy or breach of any representation or warranty made by the Shareholders,
herein or in any schedule or certificate delivered in connection herewith, or
(b) nonfulfillment of any agreement or covenant of the Shareholders contained
herein, or (c) any Taxes (excluding the Tax described in Section 6.3(f)(i))
imposed on or accrued by Xxxxx for taxable periods (or portions thereof) prior
to the Closing Date or on or prior to the Closing Date if the Election shall
have been made by the Company, including all such Taxes as may be imposed after
the Closing for
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periods prior to the Closing. 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
Net Consideration. Subject to Section 11.4, the Shareholders will be obligated
to indemnify, defend and hold harmless the Company Indemnified Parties from and
against (I) all Losses inclusive of any Environmental Liabilities and Costs if
the amount of Losses arising from Environmental Liabilities and Costs exceeds
$250,000, notwithstanding any disclosure in the Disclosure Schedules, or (II)
all Losses excluding any Environmental Liabilities and Costs if the amount of
Losses other than Environmental Liabilities and Costs exceeds $100,000, in which
cases the Shareholders shall be obligated to indemnify, defend and hold harmless
the Company Indemnified Parties from and against 100% of such Losses (in the
former case inclusive of Environmental Liabilities and Costs and including the
initial $250,000, and in the latter case the indemnity being exclusive of
Environmental Liabilities and Costs, but including, without limitation, the
initial $100,000 of all Losses aside from Environmental Liabilities and Costs).
11.3 Indemnification Provisions for Benefit of the Shareholders. The
Company shall indemnify, defend and hold harmless the Shareholders from and
against the entirety of any and all Losses that the Shareholders or their
Affiliates, or any of their directors, officers, employees or agents
(collectively, the "Shareholder Indemnified Parties") have or reasonably shall
have incurred resulting from or arising out of (a) the inaccuracy or breath of
any representation or warranty made by the Company herein or in any schedule or
certificate delivered in connection herewith or (b) nonfulfillment of any
agreement or covenant of the Company contained herein. The Company will be
obligated to indemnify, defend and hold harmless the Shareholders from and
against Losses only if the aggregate amount of such Losses exceeds $100,000 (in
which case the Company shall be obligated to indemnify, defend and hold harmless
the Shareholders from and against 100% of such Losses, including, without
limitation, the initial $100,000).
11.4 Exception to Limits on Indemnification. 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. The maximum limit on the liability of all of the Shareholders
to Company Indemnified Parties under Section 11, when the limits in Section 11.2
are inapplicable by virtue of this Section 11.4, shall be 100% of either the Net
Consideration or the Shareholders' aggregate Net Proceeds, whichever is greater.
Nothing agreed between the parties shall limit or affect any rights of third
parties.
11.5 Indemnification Procedures. Except for claims for indemnification
made pursuant to Section 6 hereof, to which the procedures set forth in such
Section shall be applicable to the extent of any conflict herewith, if any third
party notifies any party hereto (the "Indemnitee") with respect to any matter
that may give rise to a claim for indemnification against the other party hereto
(the "Indemnitor") under this Section 11, then the Indemnitee will notify the
Indemnitor thereof promptly and in any event within 30 days after receiving any
written notice from a third party; provided, that no delay on the part of the
Indemnitee in notifying the Indemnitor will relieve the Indemnitor from any
obligation hereunder unless, and then solely to
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the extent that, the Indemnitor is prejudiced thereby. Once the Indemnitee has
given notice of the matter to the Indemnitor, the Indemnitee may defend against
the matter in any manner it reasonably may deem appropriate. In the event the
Indemnitor notifies the Indemnitee within 30 days after the date the Indemnitee
has given notice of the matter that the Indemnitor is assuming the defense of
such matter (a) the Indemnitor will defend the Indemnitee against the matter
with counsel of its choice reasonably satisfactory to the Indemnitee, (b) the
Indemnitee may retain separate counsel at its sole cost and expense (except that
the Indemnitor will be responsible for the fees and expenses of such separate
co-counsel as and when incurred to the extent the Indemnitee concludes in good
faith that the counsel the Indemnitor has selected has a conflict of interests),
(c) the Indemnitee 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
Indemnitor (not to be withheld or delayed unreasonably) and (d) the Indemnitor
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 Indemnitee from all liability with respect
thereto, without the written consent of the Indemnitee (not to be withheld or
delayed unreasonably). Should the Indemnitee reasonably incur Losses in advance
of the conclusion of a matter, the Indemnitor shall pay or provide compensation
to the Indemnitees for their Losses as and when incurred from time to time
promptly after notice of an indemnified Loss if the Indemnitees undertake in
writing to repay any such advances in the event that it is ultimately determined
that the Indemnitee is not entitled to indemnification under the terms of this
Agreement.
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), and 11.8 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 Exclusive Remedy. Except for fraud and intentional
misrepresentation, and except for equitable remedies, including injunctive
relief, the parties hereto hereby acknowledge and agree that the sole and
exclusive remedy of any Indemnitee from and after the Closing with respect to
Losses and any and all claims for any breach or liability arising under, or in
connection with, this Agreement, or otherwise relating to the subject matter of
this Agreement, and the transactions contemplated hereby and thereby, shall be
in accordance with, and limited by, the indemnification limiting provisions set
forth in this Section 11; including the maximum limits of indemnification set
forth in Section 11. The parties hereto hereby waive on behalf of each
applicable Indemnitee who is a party to this Agreement, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action
it or they have or may have against the other party(ies) to this Agreement, as
the case may be, arising under or based upon any Law but only to the extent that
such Law provides for greater recoveries than are permitted to an Indemnittee by
Section 11 or provides for other procedural matters so long as the Indemnitor
has submitted to the procedures described in this Agreement (including without
limitation, (i) any such rights, claims or causes of action arising under or
based upon common law or otherwise and
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(ii) any and all claims for Losses or contribution arising under any
environmental law). Except to the extent necessary to maintain the express
limits on indemnification, claims based upon or arising under any Law are not
waived. Nothing herein constitutes any waiver not expressly and specifically set
forth immediately above. Notwithstanding anything to the contrary in this
Agreement, no breach of any representation, warranty, covenant or agreement
contained herein shall give rise to any right on the part of any party hereto to
rescind this Agreement other then rescission predicated upon fraud.
11.8 Arbitration.
(a) Generally. Except solely as set forth in Sections 8.3(a), (b),
(c) and (d), 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 Judicial Arbitration and Mediation Service (the "JAMS") by an
arbitral tribunal composed of one arbitrator, who must be experienced in
relevant corporate transactions, appointed by agreement of the parties in
accordance with said Rules. In the event the Parties fail to agree upon an
arbitrator from the first list of potential arbitrators proposed by the JAMS,
the JAMS will submit a second list in accordance with said Rules. In the event
the parties shall have failed to agree upon an arbitrator from said second list,
the arbitrator to be selected shall be appointed by the JAMS 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 JAMS in accordance with said
Rules. Any party may commence the foregoing arbitration proceedings by notice to
all other parties.
(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 11.8 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 11.8 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
not be limited in its decision to choosing one of the two offers of settlement
presented to it. The decision of the arbitral tribunal shall be final and
binding on the parties and non-appealable. The party whose offer of settlement
is determined to have been the less fair by the arbitral tribunal shall pay all
of the expenses of the arbitration, which, in the event the Shareholders are
held
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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, XXXXX 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;
(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 March 15, 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 either party 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. 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 Xxxxx
Shares to the Company, any distributions or payments to the Shareholders
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in any capacity, or to any other transaction contemplated by this Agreement or
any of the Ancillary Agreements.
13.3 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.
13.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties that are signatories hereto and their
respective successors and permitted assigns. No party hereto 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
other parties hereto provided, however, that the Company may without the written
consent of Xxxxx or the Shareholders assign its rights under this Agreement or
any of the Ancillary Agreements to one or more Affiliates of the Company or to
any Person acquiring all or substantially all of the stock or assets of Xxxxx
from the Company, provided that the Company shall not be relieved of any
obligation assigned and assumed.
13.5 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.
13.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Any signature page
delivered by facsimile or telecopy shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party who requests it.
13.7 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13.8 Notices. All notices, demands, requests, consents, approvals, or
other communications required or permitted to be given or delivered with respect
to this Agreement shall be delivered charges prepaid, receipt confirmed or
return receipt requested (if available) by hand, by internationally and
nationally recognized air courier service or by facsimile, addressed as set
forth below or to such other address as such party shall have specified most
recently by written notice. Notice shall be deemed given and effective (i) if
delivered by hand or by internationally or nationally recognized air courier
service, when delivered to the address specified in this Section 13.8 (or in
accordance with the latest unrevoked written direction from such party) or (ii)
if given by facsimile when such facsimile is transmitted to the facsimile number
specified in this Section 13.8. (or in accordance with the latest unrevoked
written
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direction from such party); provided, that, appropriate confirmation is received
and that any such facsimile is promptly followed by delivery of written notice
delivered by hand or by internationally or nationally recognized air courier
service.
If to the Company:
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. (000) 000-0000
Attn: Xxxx X. Patch/ Xxxxxxxx X. Xxxxx
If to Xxxxx or the Shareholders:
Xxxx Xxxxxxxxxxxx
Shareholders' Representative
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
With a copy (which will not constitute notice)
in either case to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
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.
13.9 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.
13.10 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.
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13.12 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 "including" without limitations and is
intended by the parties to be by way of example rather than limitation.
13.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
13.14 Shareholders' Representative. 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, the Custody
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.
13.15 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUC- TION,
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.
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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: Vice President
-------------------------------------
XXXXX INDUSTRIES, INC.
By: /s/ X.X. Xxxxxxxxxxxx
----------------------------------------
Name: X.X. Xxxxxxxxxxxx
--------------------------------------
Title: President
-------------------------------------
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SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxx
----------------------------------- -------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx, an Name: Xxxx X. Xxxxxxxxxxxx 1999 Children's
individual Trust No. 2
Trustee: Xxxx X. Xxxxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxx
----------------------------------- -------------------------------------------
Name: Xxxx X. Xxxxxxxxxxxx 1999 Name: Xxxxxx X. Xxxxxxxxxxxx 1999
Children's Trust No. 1 Children's Trust No. 2
Trustee: Xxxx X. Xxxxxxxxxxxx Trustee: Xxxx X. Xxxxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxx
----------------------------------- -------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx 1999 Name: Xxxxxxxx X. Xxxxxxxxxxxx 1999
Children's Trust No. 1 Children's Trust No. 2
Trustee: Xxxx X. Xxxxxxxxxxxx Trustee: Xxxx X. Xxxxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxx
----------------------------------- -------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxxxx 1999 Name: Xxxxxx X. Xxxxxxxxxxxx 1999
Children's Trust No. 1 Children's Trust No. 2
Trustee: Xxxx X. Xxxxxxxxxxxx Trustee: Xxxx X. Xxxxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx 1999
Children's Trust No. 1
Trustee: Xxxx X. Xxxxxxxxxxxx
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