EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
AMONG
AFC CABLE SYSTEMS, INC.
AND
THE STOCKHOLDERS
OF
B&B ELECTRONICS MANUFACTURING COMPANY
January 7, 1997
TABLE OF CONTENTS
1. Definitions....................................................-1-
2. Purchase and Sale of Target Shares.............................-5-
(a) Basic Transaction........................................-5-
(b) Initial Purchase Price...................................-5-
(c) Additional Purchase Price................................-6-
(d) The Closing..............................................-7-
(e) Deliveries at the Closing................................-7-
3. Representations and Warranties Concerning the Transaction............-7-
(a) Representations and Warranties of the Sellers..................-7-
(b) Representations and Warranties of the Buyer....................-8-
4. Representations and Warranties Concerning the Target.................-9-
(a) Organization, Qualification, and Corporate Power..............-10-
(b) Capitalization................................................-10-
(c) Noncontravention..............................................-10-
(d) Brokers' Fees.................................................-11-
(e) Title to Assets...............................................-11-
(f) Subsidiaries..................................................-11-
(g) Financial Statements..........................................-11-
(h) Events Subsequent to Most Recent Fiscal Year End..............-11-
(i) Undisclosed Liabilities.......................................-13-
(j) Legal Compliance..............................................-14-
(k) Tax Matters...................................................-14-
(l) Real Property.................................................-15-
(m) Intellectual Property.........................................-17-
(n) Tangible Assets...............................................-19-
(o) Inventory.....................................................-20-
(p) Contracts.....................................................-20-
(q) Notes and Accounts Receivable.................................-21-
(r) Powers of Attorney............................................-21-
(s) Insurance.....................................................-21-
(t) Litigation....................................................-22-
(u) Product Warranty..............................................-22-
(v) Product Liability.............................................-23-
(w) Employees.....................................................-23-
(x) Employee Benefits.............................................-23-
(y) Guaranties....................................................-25-
(z) Environmental, Health, and Safety Matters.....................-25-
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(aa) Certain Business Relationships with the Target................-26-
(bb) Disclosure....................................................-27-
5. Pre-Closing Covenants...............................................-27-
(a) General.......................................................-27-
(b) Notices and Consents..........................................-27-
(c) Operation of Business.........................................-27-
(d) Preservation of Business......................................-27-
(e) Full Access...................................................-27-
(f) Notice of Developments........................................-27-
(g) Exclusivity...................................................-28-
(h) Title Insurance...............................................-28-
(i) Surveys.......................................................-28-
(j) Seller Taxes..................................................-28-
6. Post-Closing Covenants..............................................-29-
(a) General.......................................................-29-
(b) Litigation Support............................................-29-
(c) Transition....................................................-29-
(d) Confidentiality...............................................-29-
(e) Buyer Stock...................................................-30-
7. Conditions to Obligation to Close...................................-30-
(a) Conditions to Obligation of the Buyer.........................-30-
(b) Conditions to Obligation of the Sellers.......................-32-
8. Remedies for Breaches of This Agreement.............................-33-
(a) Survival of Representations and Warranties....................-33-
(b) Indemnification Provisions for Benefit of the Buyer...........-33-
(c) Indemnification Provisions for Benefit of the Sellers.........-34-
(d) Matters Involving Third Parties...............................-34-
(e) Determination of Adverse Consequences.........................-35-
(f) Recoupment Under Earnout Payments.............................-35-
(g) Other Indemnification Provisions..............................-36-
9. Tax Matters.........................................................-36-
(a) Section 338(h)(10) Election...................................-36-
(b) Tax Periods Ending on or Before the Closing Date..............-36-
(c) Cooperation on Tax Matters....................................-36-
(d) Certain Taxes.................................................-37-
10. Termination.........................................................-37-
(a) Termination of Agreement......................................-37-
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(b) Effect of Termination.........................................-38-
11 Miscellaneous.......................................................-38-
(a) Nature of Certain Obligations.................................-38-
(b) Press Releases and Public Announcements.......................-38-
(c) No Third-Party Beneficiaries..................................-38-
(d) Entire Agreement..............................................-38-
(e) Succession and Assignment.....................................-38-
(f) Counterparts..................................................-39-
(g) Headings......................................................-39-
(h) Notices.......................................................-39-
(j) Amendments and Waivers........................................-40-
(k) Severability..................................................-40-
(l) Expenses.....................................................-40-
(m) Construction..................................................-40-
(n) Incorporation of Exhibits, Annexes, and Schedules.............-40-
(o) Specific Performance..........................................-40-
(p) Submission to Jurisdiction....................................-41-
Exhibit A--Historical Financial Statements
Exhibit B--Form of Escrow Agreement
Exhibit C--Form of Xxxxxxx X. Xxxxxxxx Xx. Employment Agreement
Exhibit D--Form of Registration Rights Agreement
Exhibit E--Form of Opinion of Xxxxx, Xxxxxxxxxx Xxxxx & O'Conor
Exhibit F--Form of Opinion of Ropes & Xxxx
Annex I--Exceptions to the Sellers' Representations and Warranties
Concerning the Transaction
Annex II--Exceptions to the Buyer's Representations and Warranties
Concerning the Transaction
Disclosure Schedule--Exceptions to Representations and Warranties
Concerning the Target and Its Subsidiaries
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STOCK PURCHASE AGREEMENT
AGREEMENT entered into on January 7, 1997, by and among AFC Cable Systems,
Inc., a Delaware corporation (the "Buyer"), and Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxx
X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, III, Xxxxx X. Xxxx, Xxxx X. Boeing, Xxxxxx X.
Xxxxxx, and J. Xxxxxxx Xxxxxxx (collectively the "Sellers"). The Buyer and the
Sellers are referred to collectively herein as the "Parties."
The Sellers in the aggregate own all of the outstanding capital stock of
B&B Electronics Manufacturing Company, an Illinois corporation (the "Target").
This Agreement contemplates a transaction in which the Buyer will purchase
from the Sellers, and the Sellers will sell to the Buyer, all of the issued and
outstanding capital stock of the Target in return for the consideration set
forth in Section 2 hereof.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Applicable Rate" means the prime rate of interest publicly announced from
time to time by Fleet National Bank.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
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"Buyer" has the meaning set forth in the preface above.
"Buyer Stock" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Target and its Subsidiaries that is not already generally
available to the public.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"EBIT" means the earnings of the Target Business before provision for
interest and taxes determined in accordance with GAAP consistently applied by
Target and without giving effect to the Section 338(h)(10) Election described in
Section 9 hereof; provided, however, that for purposes of determining the
Earnout Payments for any period there shall be added to expenses for such period
an administrative charge in an amount equal to 1 1/2% of net sales for such
period to cover legal, audit, consulting, management and other expenses incurred
by Buyer in connection with its ownership of Target.
"Employee Benefit Plan" means any (a) non-qualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
-2-
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean State Street Bank and Trust Company or, if it is
not willing or able to act in such capacity, such other institution as the
parties may agree to.
"Escrow Agreement" shall mean the Escrow Agreement, dated as of the
Closing Date, by and among the Sellers, Buyer and Escrow Agent, in the form
attached hereto as Exhibit B.
"Excess Loss Account" has the meaning set forth in Reg. Section 1.1502-19.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means (a) all inventions, whether patentable or
unpatentable and whether or not reduced to practice, all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information, including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals, (f) all computer software, including data and
related documentation and (g) all copies and tangible embodiments thereof, in
whatever form or medium.
"Knowledge" means actual knowledge after reasonable investigation.
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"Liability" means any liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice, including with respect to quantity and
frequency.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Requisite Sellers" means Sellers holding a majority in interest of the
Target Shares as set forth in Section 4(b) of the Disclosure Schedule.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, attachment,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens and liens securing rental payments
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under capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Survey" has the meaning set forth in Section 5(i) below.
"Target" has the meaning set forth in the preface above.
"Target Business" has the meaning set forth in Section 2(d) below.
"Target Debt" means indebtedness of the Target for money borrowed
including accrued but unpaid interest thereon.
"Target Share" means any share of the Common Stock, per value $.01 par
share, of the Target.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means 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.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
2. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from each of the Sellers, and each of
the Sellers agrees to sell to the Buyer, all of his or its Target Shares for the
consideration specified below in this Section 2.
(b) Initial Purchase Price. The Buyer agrees to pay to the Sellers at the
Closing an aggregate amount of Five Million Nine Hundred Sixty Thousand Dollars
($5,960,000) (the "Initial Purchase Price") by delivery (i) to the Sellers of
(A) cash in the amount of Four Million Seven
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Hundred Fifty Thousand Dollars ($4,750,000) reduced by the amount of the Target
Debt as of the Closing Date, payable by wire transfer or delivery of other
immediately available funds and (B) Sixty Thousand (60,000) shares of Common
Stock of Buyer (the "Buyer Stock") at an agreed price per share equal to $16.00
and (ii) to the Escrow Agent, of Cash in the amount of Two Hundred Fifty
Thousand Dollars ($250,000) payable by wire transfer or delivery of other
immediately available funds in accordance with the instructions of the Escrow
Agent provided to the Buyer, to be held in escrow pursuant to the terms of the
Escrow Agreement. The Initial Purchase Price shall be allocated among the
Sellers in proportion to their respective holdings of Target Shares as set forth
in Section 4(b) of the Disclosure Schedule.
(c) Additional Purchase Price. The Buyer shall make additional payments to
the Sellers (the "Earnout Payments" and, together with the Initial Purchase
Price, the "Purchase Price") subsequent to the Closing Date in accordance with
the terms and conditions set forth below. The Earnout Payments shall be
allocated among the Sellers in proportion to their respective holdings of Target
Shares as set forth in Section 4(b) of the Disclosure Schedule.
(i) First Earnout Payment. The Buyer shall operate the business
acquired from the Sellers (the "Target Business") as a separate subsidiary
of Buyer, and for each fiscal year commencing after December 31, 1996
shall pay to the Sellers an amount equal to forty percent (40%) of the
EBIT of the Target Business in excess of the Base Amount for such fiscal
year, until the earlier of (A) the Buyer has paid to the Sellers an
aggregate amount of Two Million Dollars ($2,000,000) or (B) the expiration
of the Earnout Period, without regard to the aggregate amount which Buyer
has paid to the Sellers as of such date. The Base Amount for fiscal year
1997 shall be One Million Two Hundred Thousand Dollars ($1,200,000), and
for each fiscal year thereafter shall be increased by five percent (5%).
The Earnout Period shall be defined as fiscal 1997 and the four (4)
subsequent fiscal year periods.
(ii) Second Earnout Payment. If EBIT for the Target Business shall
exceed One Million Six Hundred Thousand Dollars ($1,600,000) in any one
fiscal year during the Earnout Period, the Buyer shall pay to the Sellers
an additional Five Hundred Thousand Dollars ($500,000). The Buyer may pay
this amount in any one of the following manners:
(A) Cash; or
(B) Common Stock of the Buyer, where the price per share used
to determine the number of shares of Common Stock of the Buyer to be
issued to the Sellers shall be the average of such price per share
over a thirty (30) day trading period selected jointly by Xxxxxxx X.
Xxxxxxxx, Xx. and Xxxxx X. Xxxxxxx, or their respective designees;
or
(C) Promissory Note, the principal of which shall be due and
payable in two equal annual installments, such installments becoming
due and payable on
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the first and second anniversaries of the date of issuance, and the
interest on which shall accrue thereon at a rate per annum equal to
the Applicable Rate and which shall be due and payable quarterly in
arrears; or
(D) any combination of A, B or C above.
The Buyer shall cause the Earnout Payments payable pursuant to Section s 2(c)(i)
and (ii) above, if any, to be determined based on the financial statements of
the Target Business prepared in accordance with GAAP consistently applied and
paid to the Sellers promptly upon the release of such financial statements;
provided, however, that in no event shall the Earnout Payments be paid to the
Sellers later than 120 days after the end of the fiscal year of the Target
Business. Any portion of the Earnout Payments to be paid in cash shall be
payable by wire transfer or delivery of other immediately available funds. The
Sellers shall be permitted to have one representative observe and review the
internal audit relating to the preparation of the financial statements of the
Target Business.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Ropes & Xxxx in
Boston, Massachusetts, commencing at 10:00 a.m. local time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Buyer and the Requisite Sellers
may mutually determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Buyer will deliver to the Sellers
the various certificates, instruments, and documents referred to in
Section 7(b) below, (iii) each of the Sellers will deliver to the Buyer stock
certificates representing all of his or her Target Shares, endorsed in blank
or accompanied by duly executed assignment documents,(iv) the Buyer and
Sellers will execute the Escrow Agreement and (v) the Buyer will deliver to
each of the Sellers and to the Escrow Agent the consideration specified in
Section 2(b) above.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
Section 3(a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)) with respect to himself or itself, except as
set forth in Annex I attached hereto.
(i) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform his or her
obligations hereunder. This
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Agreement constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and conditions. The
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
this Agreement and the Escrow Agreement, nor the consummation of the
transactions contemplated hereby and thereby, will violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject.
(iii) Brokers' Fees. The Seller 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 Buyer
could become liable or obligated.
(iv) Investment. The Seller (A) understands that the Buyer Stock has
not been, and will not be, registered under the Securities Act, or under
any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public
offering, (B) is acquiring the Buyer Stock solely for his or her own
account for investment purposes, and not with a view to the distribution
thereof, (C) is a sophisticated investor with knowledge and experience in
business and financial matters, (D) has received certain information
concerning the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in holding the Buyer Stock, (E) is able to bear the economic risk
and lack of liquidity inherent in holding the Buyer Stock, and (F) is an
Accredited Investor or is not otherwise required to be an Accredited
Investor for the reasons set forth on Annex I.
(v) Target Shares. The Seller holds of record and owns beneficially
the number of Target Shares set forth next to his or her name in
Section 4(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment that could require the
Seller to sell, transfer, or otherwise dispose of any capital stock of
the Target (other than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding with respect to
the voting of any capital stock of the Target.
(b) Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this Section 3(b)
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3(b)), except as set forth in Annex II attached hereto.
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(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement and the Escrow Agreement, nor the consummation of the
transactions contemplated hereby and thereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which
it is bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Buyer 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 any Seller could
become liable or obligated.
(v) Investment. The Buyer is not acquiring the Target Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
4. Representations and Warranties Concerning the Target. The Sellers
represent and warrant to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the disclosure schedule
delivered by the Sellers to the Buyer on the date hereof and initialed by the
Parties (the "Disclosure Schedule"). Nothing in the Disclosure Schedule shall
be deemed adequate to disclose an exception to a representation or warranty
made herein, however, unless the Disclosure Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing
(or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
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(a) Organization, Qualification, and Corporate Power. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized
to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Target has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used
by it. Section 4(a) of the Disclosure Schedule lists the directors and
officers of the Target. The Sellers have delivered to the Buyer correct and
complete copies of the charter and bylaws of the Target (as amended to date).
The minute books (containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of the Target are correct and
complete. The Target is not in default under or in violation of any provision
of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the Target
consists of One Thousand (1,000) Target Shares, of which Five Hundred (500)
Target Shares are issued and outstanding and none of which Target Shares are
held in treasury. All of the issued and outstanding Target Shares have been
duly authorized, are validly issued, fully paid, and nonassessable, and are
held of record by the respective Sellers as set forth in Section 4(b) of the
Disclosure Schedule. 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 Target to
issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Target.
There are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of the capital stock of the Target. Section 4(b)
of the Disclosure Schedule sets forth the Target Debt as of the date hereof
by lender and specifies the interest rate with respect thereto and scheduled
amortization and interest payments through January 1997. All Target Debt is
prepayable without penalty.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement and the Escrow Agreement, nor the consummation of the transactions
contemplated hereby and thereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Target
is subject or any provision of the charter or bylaws of the Target or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Target is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). The Target is not required to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
-10-
(d) Brokers' Fees. The Target does not 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.
(e) Title to Assets. The Target has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, wherever
located, or shown on the Most Recent Balance Sheet or acquired after the date
thereof, free and clear of all Security Interests, charges, easements, covenants
or other restrictions, except for installments of special assessments not yet
delinquent and recorded easements, covenants or other restrictions which do not
impair the current use, occupancy, or value, or the marketability of title, of
the property subject thereto, and except for properties and assets disposed of
in the Ordinary Course of Business since the date of the Most Recent Balance
Sheet.
(f) Subsidiaries. The Target does not own or control, directly or
indirectly, or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association.
(g) Financial Statements. Attached hereto as Exhibit A are the following
financial statements (collectively the "Financial Statements"): (i) audited
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31, 1993, December 31,
1994, and December 31, 1995, (the "Most Recent Fiscal Year End") for the Target;
and (ii) unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent Financial Statements") as
of and for the nine months ended September 30, 1996 (the "Most Recent Fiscal
Month End") for the Target. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of the Target as of such dates and the results of operations of the
Target for such periods, are correct and complete, and are consistent with the
books and records of the Target (which books and records are correct and
complete) ; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, or results of operations, of the
Target. Without limiting the generality of the foregoing, since that date:
(i) the Target has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
-11-
(ii) the Target has not entered into any agreement, contract, lease
(including any lease of real property), or license (or series of related
agreements, contracts, leases, and licenses) either involving more than
$25,000 or outside the Ordinary Course of Business;
(iii) no party (including the Target) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving
more than $25,000 to which the Target is a party or by which it is bound;
(iv) the Target has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) the Target has not made any capital expenditure (or series of
related capital expenditures) either involving more than $10,000
individually or $50,000 in the aggregate, or outside the Ordinary Course
of Business;
(vi) the Target has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $25,000 or outside the Ordinary Course of Business;
(vii) the Target has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than
$5,000 singly or $50,000 in the aggregate;
(viii) the Target has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) the Target has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $10,000 or outside the Ordinary Course of Business;
(x) the Target has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the charter or
bylaws of the Target;
(xii) the Target has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
-12-
(xiii) the Target has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xiv) the Target has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) the Target has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvi) the Target has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(xvii) the Target has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) the Target has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract,
or commitment for the benefit of any of its directors, officers, and
employees, or taken any such action with respect to any other Employee
Benefit Plan;
(xix) the Target has not made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xx) the Target has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Target; and
(xxii) the Target has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Target does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability), except for (i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (ii) Liabilities which have
arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
-13-
(j) Legal Compliance. Each of the Target, and its respective predecessors
and Affiliates has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
(k) Tax Matters.
(i) Except as set forth in Section 4(k) of the Disclosure Schedule,
(A) all Tax Returns of, relating to or which include the Target which are
required to have been filed have been filed on a timely basis with the
appropriate authorities and all such Tax Returns are true, correct and
complete in all respects, (B) all Taxes required to have been paid by the
Target have been paid in full on a timely basis to the appropriate
authorities, and (C) all Taxes or other amounts required to have been
collected or withheld by the Target have been timely and properly
collected or withheld.
(ii) Except as set forth in Section 4(k) of the Disclosure Schedule,
(A) no Taxing authority has asserted in writing any adjustment,
deficiency, or assessment that could result in additional Taxes for which
the Target is or may be liable, (B) there is no pending audit,
examination, investigation, dispute, proceeding or claim for which the
Target has received notice relating to any Taxes for which the Target is
or may be liable, (C) no statute of limitations with respect to any Taxes
for which the Target is or may be liable has been waived or extended, (D)
the due date of any Tax Returns that the Target is required to file has
not been extended, and (E) the Target is not and has never been a party
to any Tax sharing or Tax allocation agreement, arrangement or
understanding.
(iii) There are no Security Interests on any of the assets of the
Target which arose in connection with any failure or asserted failure to
pay any Taxes, other than liens for current Taxes not yet due and payable.
(iv) The Target is not a party to any contract, agreement, plan or
arrangement that,individually or collectively, could give rise to any
payment that would be non-deductible by reason of Section 162, 280G or
404 of the Code. The Target has not made an election under Section
341(f) of the Code.
(v) The Target is not and has never been a member of an affiliated
group filing a consolidated federal income Tax Return or a consolidated,
combined or unitary state or local income Tax return.
(vi) Copies of (A) any Tax examinations, (B) extensions of statutory
limitations, (C) the federal, state and local income Tax Returns and
franchise Tax Returns of the
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Target, and (D) correspondence between the Target and all Taxing
authorities for its last three (3) taxable years have previously been
furnished to the Buyer.
(vii) The Target is and has been an S corporation as defined in
Section 1361(a) of the Code for all periods since January 1, 1990.
(l) Real Property.
(i) Section 4(l)(i) of the Disclosure Schedule lists and describes
briefly all real property that the Target owns. With respect to each such
parcel of owned real property:
(A) the Target has good and marketable fee simple title to
each parcel of real property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent and recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of
the property as described in 4(1)(i) of the Disclosure Schedule;
(B) there are no pending or, to the Knowledge of any of the
Sellers and the directors and officers (and employees with
responsibility for real estate matters) of the Target, threatened
condemnation proceedings, lawsuits, or administrative actions
relating to the property or other matters affecting materially and
adversely the current use, occupancy, or value thereof;
(C) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings
and improvements are located within the boundary lines of the
described parcels of land, are not in violation of applicable
setback requirements, zoning laws, and ordinances (and none of the
properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming
structure" classifications), and do not encroach on any easement
which may burden the land, and the land does not serve any adjoining
property for any purpose inconsistent with the use of the land, and
the property is not located within any flood plain or subject to any
similar type restriction for which any permits or licenses necessary
to the use thereof have not been obtained;
(D) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and
regulations;
(E) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties
the right of use or
-15-
occupancy of any portion of the parcel of real property except as
disclosed in 4(1)(i) of the Disclosure Schedule;
(F) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or any portion
thereof or interest therein;
(G) there are no parties (other than the Target) in possession
of the parcel of real property, other than tenants under any leases
disclosed in Section 4(l)(i) of the Disclosure Schedule who are in
possession of space to which they are entitled;
(H) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the
operation of such facilities, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer, all of which services
are adequate and in accordance with all applicable laws, ordinances,
rules, and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefitting the parcel
of real property; and
(I) each parcel of real property abuts on and has direct
vehicular access to a public road, or has access to a public road
via a permanent, irrevocable, appurtenant easement benefitting the
parcel of real property, and access to the property is provided by
paved public right-of-way with adequate curb cuts available.
(ii) Section 4(l)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to the Target including the
term thereof and a description of any available renewal periods, rental
payment terms, owner of the property subject to such lease, the identity
of any of the primary lessors from whom the property may be sublet and a
description of each such arrangement, if any, and whether any consents are
required under such lease in connection with the transactions contemplated
by this Agreement. The Sellers have delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 4(l)(ii) of
the Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in Section 4(l)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby;
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time or
both, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
-16-
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (E) above are true
and correct with respect to the underlying lease;
(G) the Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; and
(I) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities.
(m) Intellectual Property.
(i) The Target owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary
for the operation of the businesses of the Target as presently conducted
and as presently proposed to be conducted. Each item of Intellectual
Property owned or used by the Target immediately prior to the Closing
hereunder will be owned or available for use by the Target on identical
terms and conditions immediately subsequent to the Closing hereunder. The
Target has taken all necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Target, the Target has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of the Sellers and
the directors and officers (and employees with responsibility for
Intellectual Property matters) of the Target has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Target must license or refrain from using any Intellectual Property rights
of any third party). To the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Target, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Target.
-17-
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to the Target with respect
to any of its Intellectual Property, identifies each pending patent
application or application for registration which the Target has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which the Target has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). The Sellers have delivered to the Buyer correct and complete
copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and have made available
to the Buyer correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of
each such item. Section 4(m)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by the Target
in connection with its business. With respect to each item of Intellectual
Property required to be identified in Section 4(m)(iii) of the Disclosure
Schedule:
(A) the Target possess all right, title, and interest in and
to the item, free and clear of any Security Interest, license, or
other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of any of the Sellers and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the
Target, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Target has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that the
Target uses pursuant to license, sublicense, agreement, or permission. The
Sellers have delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property required to be
identified in Section 4(m)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms
-18-
following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2
above);
(C) neither the Target nor, to the knowledge of any of the
Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Target, any
other Person which is a party to the license, sublicense, agreement,
or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(D) neither the Target nor, to the knowledge of any of the
Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Target, any
other Person which is a party to the license, sublicense, agreement,
or permission has repudiated any provision thereof;
(E) to the knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for Intellectual
Property matters) of the Target, with respect to each sublicense,
the representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of any of the Sellers and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the
Target, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(H) the Target has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(v) To the Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Target, the Target will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation of
its businesses as presently conducted and as presently proposed to be
conducted.
(n) Tangible Assets. The Target owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating
-19-
condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used and presently is proposed to be used.
(o) Inventory. The inventory of the Target consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective, subject only to the reserve for inventory write down set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Target.
(p) Contracts. Section 4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which the Target is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a material loss to the Target, or involve consideration in
excess of $10,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money including Target Debt, or any capitalized lease obligation,
under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with any of the Sellers and their Affiliates
(other than the Target);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
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(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Target; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.
The Sellers have delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 4(p) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 4(p) of the Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (C) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
the Target are reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Target.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Target.
(s) Insurance. Section 4(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Target has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past 10 years:
(i) the name, address, and telephone number of the agent;
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(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (C) neither the Target nor any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. The Target has been
covered during the past 10 years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. Section 4(s) of the Disclosure Schedule describes any
self-insurance arrangements affecting the Target.
(t) Litigation. Section 4(t) of the Disclosure Schedule sets forth each
instance in which the Target (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of any of the Sellers and the directors and officers (and employees
with responsibility for litigation matters) of the Target, is threatened to
be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None
of the actions, suits, proceedings, hearings, and investigations set forth in
Section 4(t) of the Disclosure Schedule could result in any material adverse
change in the business, financial condition, operations, results of
operations, or future prospects of the Target. None of the Sellers and the
directors and officers (and employees with responsibility for litigation
matters) of the Target has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
any of the Target.
(u) Product Warranty. Each product manufactured, sold, leased, or
delivered by the Target has been in conformity with all applicable contractual
commitments and all express and implied warranties, and the Target does not have
any Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth
-22-
on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Target. No product
manufactured, sold, leased, or delivered by the Target is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease. Section 4(u) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or lease for the
Target (containing applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. The Target does not have any Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Target.
(w) Employees. To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for employment matters) of the
Target, no executive, key employee, or group of employees has any plans to
terminate employment with the Target. The Target is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Target has not committed any unfair labor practice. None of the
Sellers and the directors and officers (and employees with responsibility for
employment matters) of the Target has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Target.
(x) Employee Benefits.
(i) Section 4(x) of the Disclosure Schedule lists each Employee
Benefit Plan that the Target maintains or to which the Target contributes.
(A) Each 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.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part
6 of Subtitle B of Title I of ERISA and of Code Section 4980B have
been met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) 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
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contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and
practice of the Target. All premiums or other payments for all
periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and has received, within the last two
years, a favorable determination letter from the Internal Revenue
Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than
any Multiemployer Plan) equals or exceeds the present value of all
vested and nonvested Liabilities thereunder determined in accordance
with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date for
determination.
(F) The Sellers have delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Target
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted
or, to the Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for employee benefits
matters) of the Target, threatened.
(B) There have been no Prohibited Transactions with respect to
any 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
any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
-24-
investment of the assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge of
any of the Sellers and the directors and officers (and employees
with responsibility for employee benefits matters) of the Target,
threatened. None of the Sellers and the directors and officers (and
employees with responsibility for employee benefits matters) of the
Target has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) The Target has not incurred, and none of the Sellers and
the directors and officers (and employees with responsibility for
employee benefits matters) of the Target has any reason to expect
that the Target will incur, any Liability to the PBGC (other than
PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with respect
to any such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(iii) The Target does not contribute to, never has contributed to,
and never has been required to contribute to any Multiemployer Plan or has
any Liability (including withdrawal Liability) under any Multiemployer
Plan.
(iv) The Target does not maintain and never has maintained and does
not contribute, never has contributed, and never has been required to
contribute to any Employee Welfare Benefit Plan providing medical, health,
or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents (other
than in accordance with Code Section 4980B).
(y) Guaranties. The Target is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
(z) Environmental, Health, and Safety Matters.
(i) Each of the Target and its predecessors and Affiliates has
complied and is in compliance with all Environmental, Health, and Safety
Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Target and its Affiliates has obtained and complied with, and is in
compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of its business and a
list of all such permits, licenses and other authorizations is set forth
on the attached "Environmental and Safety Permits Schedule."
(iii) Neither the Target nor its predecessors or Affiliates has
received any written or oral notice, report or other information regarding
any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities
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(whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating
to any of them or its facilities arising under Environmental, Health, and
Safety Requirements.
(iv) None of the following exists at any property or facility owned
or operated by the Target: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of the Target or its predecessors or Affiliates has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney
fees, pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste Disposal
Act, as amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(vii) Neither the Target nor any of its predecessors or Affiliates
has, either expressly or by operation of law, assumed or undertaken any
liability, including without limitation any obligation for corrective or
remedial action, of any other Person relating to Environmental, Health,
and Safety Requirements.
(viii) No facts, events or conditions relating to the past or
present facilities, properties or operations of the Target or any of its
predecessors or Affiliates will prevent, hinder or limit continued
compliance with Environmental, Health, and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations pursuant to
Environmental, Health, and Safety Requirements, or give rise to any other
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health, and Safety Requirements,
including without limitation any relating to onsite or offsite releases or
threatened releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
(aa) Certain Business Relationships with the Target. None of the Sellers
and their Affiliates has been involved in any business arrangement or
relationship with the Target within
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the past 12 months, and none of the Sellers and their Affiliates owns any asset,
tangible or intangible, which is used in the business of any of the Target and
its Subsidiaries.
(bb) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 7 below).
(b) Notices and Consents. The Sellers will cause the Target to give any
notices to third parties, and will cause the Target to use its reasonable best
efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in Section 4(c) above. Each
of the Parties will (and the Sellers will cause the Target to) give any notices
to, make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(a)(ii),
Section 3(b)(ii), and Section 4(c) above.
(c) Operation of Business. The Sellers will not cause or permit the Target
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Sellers will not cause or permit the Target to (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 4(h) above.
(d) Preservation of Business. The Sellers will cause the Target to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Each of the Sellers will permit, and the Sellers will
cause the Target to permit, representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Target, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Target.
(f) Notice of Developments. The Sellers will give prompt written notice to
the Buyer of any material adverse development causing a breach of any of the
representations and warranties
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in Section 4 above. Each Party will give prompt written notice to the others of
any material adverse development causing a breach of any of his or her own
representations and warranties in Section 3 above. No disclosure by any Party
pursuant to this Section 5(f), however, shall be deemed to amend or supplement
Annex I, Annex II, or the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. None of the Sellers will (and the Sellers will not cause
or permit the Target to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Target (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. None of the Sellers will vote their Target Shares in favor
of any such acquisition structured as a merger, consolidation, or share
exchange. The Sellers will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) Title Insurance. The Sellers, at their expense, will cause the Target
to obtain, in preparation for the Closing and with respect to each parcel of
real estate that the Target owns, an ALTA Owner's Policy of Title Insurance Form
B-1987 (or equivalent policy reasonably acceptable to the Buyer if the real
property is located in a state in which an ALTA Owner's Policy of Title
Insurance Form B-1987 is not available) issued by a title insurer reasonably
satisfactory to the Buyer, in such amount as the Buyer reasonably may determine
to be the fair market value of such real property (including all improvements
located thereon), insuring title to such real property to be in the Target in
fee simple absolute as of the Closing (subject only to the title exceptions
described above in Section 4(l)(i) and in Section 4(l)(i) of the Disclosure
Schedule) and containing such endorsements as are reasonably requested by Buyer.
(i) Surveys. With respect to each parcel of real property that the
Target owns and as to which a title insurance policy is to be procured
pursuant to Section 5(h) above, the Sellers, at their expense, will cause the
Target to procure in preparation for the Closing a current survey of the real
property certified to the Buyer, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title
Surveys, disclosing the location of all improvements, easements, party walls,
sidewalks, roadways, utility lines, and other matters shown customarily on
such surveys, and showing access affirmatively to public streets and roads
(the "Survey"). The Survey shall not disclose any survey defect or
encroachment from or onto the real property which has not been cured or
insured over prior to the Closing.
(j) Seller Taxes. Prior to the Closing Date, the Sellers shall cause the
Target to declare cash distributions (the "Tax Distributions") payable to the
Sellers, in an amount sufficient to pay the Taxes of Sellers attributable to the
estimated income of the Company for fiscal 1996 and for the portion of 1997
ending at the close of the Closing Date (other than income that is attributable
to the Section 338(h)(10) Election as defined below). The Tax Distributions
shall be calculated
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assuming a Tax rate of 42.6% and shall be reduced by any prior distributions to
Sellers in 1996 in respect of 1996 Taxes. If the actual income of the Company
for fiscal 1996 and the portion of 1997 ending on the Closing Date (other than
income that is attributable to the Section 338(h)(10) Election as defined below)
differs from the estimated income for such periods, the Buyer and Sellers shall
make such payments to one another as shall be necessary to ensure that the
Sellers have received pursuant to this Section 5(j) a net amount equal to the
Tax Distributions that would have been payable based on the actual income for
such periods. Such additional amounts shall to be paid to the Buyer or Sellers
respectively by wire transfer or delivery of other immediately available funds
within five (5) days after such actual income is finally determined.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary 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 any other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8
below). The Sellers acknowledge and agree that from and after the Closing the
Buyer will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating
to the Target.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Target, each of the other Parties will cooperate with him or it
and his or her counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all 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 8 below).
(c) Transition. None of the Sellers will take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Target from maintaining the same
business relationships with the Target after the Closing as it maintained with
the Target prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the business of the Target to the Buyer from and after the
Closing.
(d) Confidentiality. Each of the Sellers will treat and hold as such all
of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information
-29-
which are in his or her possession. In the event that any of the Sellers is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Seller will
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this Section 6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his or her reasonable
best efforts to obtain, at the reasonable request of the Buyer, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Buyer shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
(e) Buyer Stock. Each certificate of the Buyer Stock will be imprinted
with a legend substantially in the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under the securities laws of
any state, and may not be sold, or otherwise transferred, in the absence
of such registration or an exemption therefrom under such Act and under
any such applicable state laws."
Each holder desiring to transfer any share of the Buyer Stock must furnish the
Buyer with (i) an opinion of counsel addressed to the Buyer, in form and
substance reasonably acceptable to the Buyer, to the effect that the proposed
transfer may be effected without registration under the Securities Act and (ii)
the written agreement of the proposed transferee to be bound by transfer
restrictions of this Agreement. Each certificate representing Buyer Stock issued
upon or in connection with such transfer shall bear the restrictive legend set
forth above, in each case unless the opinion delivered pursuant to this section
shall state that such restrictions are no longer required in order to assure
compliance with the Securities Act. Whenever any of such restrictions shall
terminate as to any share of Buyer Stock, the holder thereof shall be entitled
to have a new certificate issued with the legends removed and the restrictions
on transfer in this section shall no longer apply.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a)
and Section 4 above shall be true and correct in all material respects
at and as of the Closing Date;
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(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) the Target shall have procured all of the third party consents
specified in Section 5(b) above, all of the title insurance commitments
and policies specified in Section 5(h) above, and all of the surveys
specified in Section 5(i) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Target Shares and to control the Target, or (D) affect adversely the
right of the Target to own its assets and to operate its businesses
(and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(v) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in
Section 7(a)(i)-(iv) is satisfied in all respects and stating by lender
the amount of Target Debt as of the Closing Date;
(vi) the Parties and the Target shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section 3(b)(ii),
and Section 4(c) above;
(vii) the relevant parties shall have entered into the Escrow
Agreement in form and substance as set forth in Exhibit A attached hereto,
the Employment Agreement in form and substance as set forth in Exhibit C
attached hereto, and the Registration Rights Agreement in form and
substance as set forth in Exhibit D attached hereto, and the same shall be
in full force and effect;
(viii) the Buyer shall have received from counsel to the Sellers an
opinion in form and substance as set forth in Exhibit E attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(ix) the Buyer shall have received the resignations, effective as of
the Closing, of each director and officer of the Target other than those
whom the Buyer shall have specified in writing at least five business days
prior to the Closing; and
(x) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
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(xi) the Target shall have terminated or waived all of its rights
under each of the Incentive Compensation and Restrictions on Transfer of
Stock Agreements entered into with each of the Sellers.
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in
Section 7(b)(i)-(iii) is satisfied in all respects;
(v) the Parties and the Target shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(a)(ii), Section 3(b)(ii), and
Section 4(c) above;
(vi) the relevant parties shall have entered into the Escrow
Agreement in form and substance as set forth in Exhibit A attached hereto,
the Employment Agreement in form and substance as set forth in Exhibit C
attached hereto, and the Registration Rights Agreement in form and
substance as set forth in Exhibit D attached hereto and the same shall be
in full force and effect;
(vii) the Sellers shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit F attached hereto,
addressed to the Sellers, and dated as of the Closing Date; and
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(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Requisite Sellers.
(ix) Xxxxxxx X. Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxxxx shall have been
released from any and all personal guarantees executed by them and
relating to any Target Debt which will remain outstanding after the
Closing Date.
(x) the Buyer shall have granted to Xxxxxxx X. Xxxxxxxx, III a stock
option to purchase fifteen thousand (15,000) shares of its Common Stock
(the "Stock Option"), such Stock Option to vest at a rate of twenty
percent (20%) per year beginning on the first anniversary of the date of
this Agreement.
The Requisite Sellers may waive any condition specified in this Section 7(b)
if they execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Sellers contained in Section 4(a)-(j)
and Section 4(l)-(bb) above shall survive the Closing hereunder (even if the
Buyer knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect for a
period of three years thereafter. All of the other representations and
warranties of the Parties contained in this Agreement (including the
representations and warranties of the Sellers contained in Section 4(k) above)
shall survive the Closing (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing)
and continue in full force and effect forever thereafter (subject to any
applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) Except for the covenants in Section 2(a) above or Section 9
below, and the representations and warranties in Section 3(a) above, in
the event any of the Sellers breaches any of their representations,
warranties, and covenants contained herein, and, if there is an
applicable survival period pursuant to Section8(a) above, provided that
the Buyer makes a written claim for indemnification against any of the
Sellers pursuant to Section 11(h) below within such survival period, then
each of the Sellers agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach; provided, however, that the Sellers shall not have
any obligation to indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature
of, or caused by the breach of any
-33-
representation or warranty of the Sellers contained in Section 4(a)-(j)
and Section 4(l)-(bb) above until the Buyer has suffered Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of a $100,000 aggregate threshold (at which point the Sellers will
be obligated to indemnify the Buyer from and against all such Adverse
Consequences relating back to the first dollar). Notwithstanding the
above, in no event shall the liability of any Seller for indemnification
under this Section 8(b)(ii) exceed in the aggregate the product of the
entirety of the Adverse Consequences subject to indemnification under this
Section 8(b)(ii) multiplied by a fraction, the numerator of which is the
number of Target Shares sold by such Seller hereunder and the denominator
of which is the total number of Target Shares sold hereunder.
(ii) In the event any of the Sellers breaches any of his or her
covenants in Section 2(a) above or Section 9 below, or any of his or her
representations and warranties in Section 3(a) above, and, if there is an
applicable survival period pursuant to Section 8(a) above, provided that
the Buyer makes a written claim for indemnification against the Seller
pursuant to Section 11(h) below within such survival period, then the
Seller agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the
Buyer may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused
by the breach.
(c) Indemnification Provisions for Benefit of the Sellers. In the event
the Buyer breaches any of its representations, warranties, and covenants
contained herein, and, if there is an applicable survival period pursuant to
Section 8(a) above, provided that any of the Sellers makes a written claim for
indemnification against the Buyer pursuant to Section 11(h) below within such
survival period, then the Buyer agrees to indemnify each of the Sellers from and
against the entirety of any Adverse Consequences the Seller may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in
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writing within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim, (B)
the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified Party, and
(E) the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Section 8.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for insurance coverage and take into account the time
cost of money (using the Applicable Rate as the discount rate) in determining
Adverse Consequences for purposes of this Section 8. All indemnification
payments under this Section 8 shall be deemed adjustments to the Purchase
Price.
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(f) Recoupment Under Earnout Payments. The Buyer shall have the option of
recouping all or any part of any Adverse Consequences it may suffer (in lieu of
seeking any indemnification to which it is entitled under this Section 8) by
notifying each Seller that the Buyer is reducing the amounts owed to each Seller
pursuant to Section 2(d) hereof.
(g) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to the Target or the transactions contemplated by this Agreement.
Each of the Sellers hereby agrees that he or it will not make any claim for
indemnification against the Target by reason of the fact that he or it was a
director, officer, employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against such Seller (whether
such action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
9. Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax matters following
the Closing Date:
(a) Section 338(h)(10) Election. Each of Sellers agree to join with Buyer
in making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local, or foreign tax law) (collectively, a
"Section 338(h)(10) Election") with respect to the purchase and sale of the
stock of the Target hereunder. Buyer will pay any Tax imposed on Target for any
period ending on or before the Closing Date, including any liability of Target
for Tax resulting from the application to it of Section 1374 of the Code, and
will indemnify the Sellers and the Target against any Adverse Consequences
arising out of any failure to pay such Tax; provided, however, that in no event
shall Buyer be responsible for any Taxes attributable to the Target's failure to
qualify as an S corporation for any taxable year ending after December 31, 1990
and on or before the Closing Date (other than a failure caused by the
transactions contemplated by this Agreement). Buyer further agrees to reimburse
Sellers for the excess, if any, of (x) the Taxes actually imposed on the Sellers
as a result of the sale of the Target Shares over (y) the Taxes that would have
been imposed on the Sellers as a result of the sale of the Target Shares if no
Section 338(h)(10) Election had been made.
(b) Tax Periods Ending on or Before the Closing Date. Buyer shall prepare
or cause to be prepared and file or cause to be filed all Tax Returns for the
Target for all periods ending on or prior to the Closing Date which are filed
after the Closing Date. Buyer shall permit Target to review and comment on each
such Tax Return described in the preceding sentence prior to filing.
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(c) Cooperation on Tax Matters. Buyer, the Target and Sellers shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and interest
and including, without limitation, any Taxes applicable to the transfer of the
real property) incurred in connection with this Agreement, shall be paid by
Sellers when due, and Sellers will, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Requisite Sellers may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Requisite Sellers on or before the 30th day following the date of
this Agreement if the Buyer is not reasonably satisfied with the results
of its continuing business, legal, environmental, and accounting due
diligence regarding the Target; provided, however, upon termination of
this Agreement pursuant to this subparagraph (ii), Buyer shall pay to the
Target Twenty-Five Thousand Dollars ($25,000) within thirty (30) days of
such termination, payable by wire transfer or other immediately available
funds;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Requisite Sellers at any time prior to the Closing (A) in
the event any of the Sellers has breached any material representation,
warranty, or covenant contained in this Agreement, the Buyer has notified
the Requisite Sellers of the breach, and the breach has continued without
cure for a period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before January 31, 1997, by reason
of the failure of any condition precedent under Section 7(a) hereof
(unless the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(iv) the Requisite Sellers may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any
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material representation, warranty, or covenant contained in this
Agreement, any of the Sellers has notified the Buyer of the breach, and
the breach has continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before January 31, 1997, by reason of the failure of any condition
precedent under Section 7(b) hereof (unless the failure results primarily
from any of the Sellers themselves breaching any representation, warranty,
or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other
Party (except for any Liability of any Party then in breach).
11. Miscellaneous.
(a) Nature of Certain Obligations.
(i) The covenants of each of the Sellers in Section 2(a) above
concerning the sale of his or her Target Shares to the Buyer and the
representations and warranties of each of the Sellers in Section 3(a)
above concerning the transaction are several obligations. This means
that the particular Seller making the representation, warranty, or
covenant will be solely responsible to the extent provided in Section 8
above for any Adverse Consequences the Buyer may suffer as a result of
any breach thereof.
(ii) The remainder of the representations, warranties, and covenants
in this Agreement are joint and several obligations. This means that each
Seller will be responsible to the extent provided in Section 8 above for
the entirety of any Adverse Consequences the Buyer may suffer as a result
of any breach thereof.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Buyer and the Requisite
Sellers; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) 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,
written or oral, to the extent they related in any way to the subject matter
hereof.
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(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Requisite Sellers; provided, however, that the
Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(f) 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.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given upon personal
delivery or five (5) business days after delivery with the United States Post
Office, if by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to the Sellers: Copy to:
Xx. Xxxxxxx Xxxxxxxx, Xx. Xxxxxxx X. Xxxxx, Esq.
B&B Electronics Manufacturing Company Myers, Daugherty, Xxxxx
000 Xxxxxx Xxxx, X.X. Xxx 0000 & O'Conor
Xxxxxx, XX 00000 0 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Buyer: Copy to:
Xx. Xxxxx X. Xxxxxxx Xxxxxxx X. Xxxxx, Esq.
AFC Cable Systems, Inc. Ropes & Xxxx
00 Xxxxxxx Xxxxx, Xxxxx 0000 Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000 Xxxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.
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(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of law provision or rule (whether of The
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than The Commonwealth of
Massachusetts.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties and the Target will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Sellers agree
that the Target has not borne and will not bear any of the Sellers' costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
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(o) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties 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 Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically 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 (subject to the
provisions set forth in Section 10(p) below), in addition to any other remedy
to which they may be entitled, at law or in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Boston, Massachusetts,
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court. Each Party also agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto. Any Party may make service on any other Party by sending or
delivering a copy of the process (i) to the Party to be served at the address
and in the manner provided for the giving of notices in Section 10(h) above.
Nothing in this Section 10(p), however, shall affect the right of any Party to
serve legal process in any other manner permitted by law or at equity. Each
Party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any
other manner provided by law or at equity.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
BUYER AFC CABLE SYSTEMS, INC.
/s/ Xxxxxxx X. Xxxxxx
----------------------------
By: Xxxxxxx X. Xxxxxx
Title:
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
SELLERS ----------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, III
----------------------------
Xxxxxxx X. Xxxxxxxx, III
/s/ Xxxxx X. Xxxx
----------------------------
Xxxxx X. Xxxx
/s/ Xxxx X. Boeing
----------------------------
Xxxx X. Boeing
/s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
/s/ J. Xxxxxxx Xxxxxxx
----------------------------
J. Xxxxxxx Xxxxxxx
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Annex II
to
Stock Purchase Agreement
3(b)(ii) Buyer must obtain consent of the NASDAQ Stock Market for the listing of
the additional 75,000 shares to be issued in connection with the Stock
Purchase Agreement.
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