PLAN OF MERGER
AND
STOCK PURCHASE AGREEMENT
dated as of
August 14, 1998
by and among
PENTACON, INC.,
PENTACON AEROSPACE ACQUISITION, INC.,
THE STOCKHOLDERS OF
WEST COAST AERO PRODUCTS HOLDING CORP., INC.
and
XXXXX XXXXX AND XXXX XXXXX
TABLE OF CONTENTS
ARTICLE I
THE MERGER...............................................................................................2
Section 1.1 The Merger.............................................................................2
Section 1.2 Effective Time of the Merger...........................................................2
Section 1.3 Conversion of Shares...................................................................2
Section 1.4 Surrender and Payment..................................................................3
Section 1.5 Lost Stock Certificates................................................................3
Section 1.6 Certificate of Incorporation...........................................................3
Section 1.7 Bylaws.................................................................................3
Section 1.8 Directors and Officers.................................................................3
ARTICLE II
SALE AND PURCHASE OF STOCK...............................................................................4
Section 2.1 Sale and Purchase......................................................................4
Section 2.2 Purchase Price.........................................................................4
Section 2.3 Surrender and Payment..................................................................4
ARTICLE III
REPRESENTATIVE...........................................................................................4
Section 3.1 Authority..............................................................................4
Section 3.2 Allocation of Funds....................................................................4
ARTICLE IV
CLOSING..................................................................................................5
Section 4.1 Closing................................................................................5
Section 4.2 Documents to be Delivered in Connection with the Merger
and Stock Purchase at the Closing......................................................5
Section 4.3 Additional Conditions to Closing.......................................................7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE WEST COAST
STOCKHOLDERS AND THE ASI SELLERS.........................................................................8
Section 5.1 Organization and Qualification.........................................................9
Section 5.2 Capitalization; Ownership..............................................................9
Section 5.3 Authorization.........................................................................10
Section 5.4 Consents and Approvals; No Violation..................................................10
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Section 5.5 Affiliate Relationships...............................................................11
Section 5.6 Financial Statements..................................................................11
Section 5.7 Undisclosed Liabilities...............................................................11
Section 5.8 Accounts and Notes Receivables........................................................11
Section 5.9 Assets................................................................................11
Section 5.10 Material Contracts, Commitments and Customers.........................................13
Section 5.11 Operating Authority...................................................................13
Section 5.12 Bank Account Information..............................................................13
Section 5.13 Litigation; Orders....................................................................14
Section 5.14 Labor Matters.........................................................................14
Section 5.15 Compliance with Laws..................................................................14
Section 5.16 Insurance.............................................................................14
Section 5.17 Environmental Matters.................................................................14
Section 5.18 Taxes.................................................................................15
Section 5.19 Employee Benefit Plans................................................................16
Section 5.20 Brokerage Fees and Commissions........................................................17
Section 5.21 No Warranties or Insurance............................................................17
Section 5.22 Relations with Governments............................................................17
Section 5.23 Absence of Changes....................................................................17
Section 5.24 Year 2000.............................................................................18
Section 5.25 Disclosure............................................................................19
ARTICLE VI
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDERS............................................................................................19
Section 6.1 Authority; Ownership; Validity of Obligations.........................................19
Section 6.2 Preemptive Rights.....................................................................19
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PENTACON..............................................................20
Section 7.1 Organization and Qualification........................................................20
Section 7.2 Authorization.........................................................................20
Section 7.3 Consents and Approval; No Violation...................................................20
ARTICLE VIII
ADDITIONAL COVENANTS AND AGREEMENTS.....................................................................21
Section 8.1 Reasonable Best Efforts...............................................................21
Section 8.2 Public Announcements..................................................................21
Section 8.3 Expenses..............................................................................21
Section 8.4 Repayment of Related Party Indebtedness...............................................22
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Section 8.5 Conduct of Business by the Company Pending the Closing................................22
Section 8.6 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 (the "Xxxx-Xxxxx-Xxxxxx Act").............................................23
Section 8.7 Records...............................................................................23
Section 8.8 West Coast North......................................................................24
ARTICLE IX
INDEMNIFICATION.........................................................................................24
Section 9.1 Indemnification by the Stockholders...................................................24
Section 9.2 Indemnification Related to West Coast North...........................................25
Section 9.3 Indemnification by Pentacon...........................................................25
Section 9.4 Indemnification Proceedings...........................................................25
Section 9.5 Provisions Relating to Indemnification................................................26
Section 9.6 Limitation Upon Indemnity.............................................................27
Section 9.7 Update to Schedules...................................................................28
Section 9.8 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE...........................................28
Section 9.9 Reimbursement.........................................................................28
Section 9.10 No Third Party Beneficiaries..........................................................28
ARTICLE X
NONCOMPETITION COVENANTS................................................................................29
Section 10.1 Prohibited Activities.................................................................29
Section 10.2 Equitable Relief......................................................................29
Section 10.3 Reasonable Restraint..................................................................29
Section 10.4 Material and Independent Covenant.....................................................30
ARTICLE XI
NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................................30
Section 11.1 General...............................................................................30
Section 11.2 Equitable Relief......................................................................30
Section 11.3 Non-Public Information................................................................30
Section 11.4 Survival..............................................................................31
ARTICLE XII
TERMINATION.............................................................................................31
Section 12.1 Termination...........................................................................31
Section 12.2 Termination by Stockholders...........................................................31
Section 12.3 Effect of Termination.................................................................32
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ARTICLE XIII
MISCELLANEOUS...........................................................................................32
Section 13.1 Governing Law.........................................................................32
Section 13.2 Entire Agreement......................................................................32
Section 13.3 Notices...............................................................................32
Section 13.4 Successors and Assigns................................................................33
Section 13.5 Headings; Definitions.................................................................33
Section 13.6 Amendments and Waivers................................................................33
Section 13.7 Agreement for the Parties' Benefit....................................................34
Section 13.8 Severability..........................................................................34
Section 13.9 Jurisdiction..........................................................................34
Section 13.10 Waiver of Jury Trial..................................................................34
Section 13.11 Specific Performance..................................................................34
Section 13.12 Counterparts; Effectiveness...........................................................35
Section 13.13 Definitions and Usage.................................................................35
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EXHIBITS AND SCHEDULES
Exhibit A Form of Opinion of Counsel to West Coast Stockholders and ASI Sellers
Exhibit B Form of Certificate and Release to West Coast Stockholders
Exhibit C-1 Form of Certificate of Stockholders
Exhibit C-2 Form of Certificate of the Company
Exhibit D Form of Opinion of Counsel to Pentacon
Exhibit E Form of Certificate of the Secretary of Pentacon
Exhibit F Form of Certificate and Release for ASI Sellers
Exhibit G Form of Certificate of ASI Officers
Schedule 4.3(a) Suppliers
Schedule 5.1 Organization and Qualification of Company and Subsidiaries
Schedule 5.2(a) Ownership of Company Shares
Schedule 5.2(b) Ownership of ASI Stock
Schedule 5.2(c) Subsidiary Corporate History, Subsidiary Stock, Other Securities
and Non-Corporate Entity Participation
Schedule 5.4 Company Consents and Approvals; No Violation
Schedule 5.5 Affiliate Relationships
Schedule 5.6 Company Financial Statements
Schedule 5.7 Company Undisclosed Liabilities
Schedule 5.8 Company Accounts and Notes Receivables
Schedule 5.9 Company Assets
Schedule 5.10 Material Contracts, Commitments and Customers
Schedule 5.11 Company Operating Authority
Schedule 5.12 Company Bank Account Information
Schedule 5.13 Company Litigation; Orders
Schedule 5.14 Company Labor Agreements
Schedule 5.16 Company Insurance
Schedule 5.17 Company Disposal Sites
Schedule 5.18 Company Taxes
Schedule 5.19 Company Employee Benefit Plans
Schedule 5.20 Company Brokerage Fees and Commissions
Schedule 5.21 Warranties or Insurance
Schedule 5.23 Absence of Changes
Schedule 8.4 Repayment of Advances, Receivables and Loans
Schedule 8.5 Conduct of Business by the Company Pending the Closing
Schedule 13.13 Seller Notes
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PLAN OF MERGER AND STOCK PURCHASE AGREEMENT
PLAN OF MERGER AND STOCK PURCHASE AGREEMENT ("Agreement")
dated as of August 14, 1998 among Pentacon, Inc., a Delaware corporation
("Pentacon"), Pentacon Aerospace Acquisition, Inc., a Delaware corporation and a
wholly-owned subsidiary of Pentacon ("Acquisition Sub"), West Coast Aero
Products Holding Corp., Inc., a Delaware corporation (the "Company"), the common
stockholders of the Company set forth on the signature page hereto ("West Coast
Stockholders"), Xxxxx Xxxxx and Xxxx Xxxxx (the "ASI Sellers"), who are
stockholders of ASI Aerospace Group, Inc., a Delaware corporation ("ASI") (the
ASI Sellers, together with the West Coast Stockholders, the "Stockholders") and
Xxxxxx Xxxxxxxx, as the Representative (as defined below).
RECITALS:
WHEREAS, Pentacon and the West Coast Stockholders desire to enter into
a merger transaction pursuant to which Acquisition Sub merges with and into the
Company, upon the terms and conditions hereinafter set forth;
WHEREAS, the ASI Sellers desire to sell to Pentacon the shares of ASI
common stock owned by them (the "ASI Stock"), and Pentacon desires to purchase
the capital stock of the Company and such ASI Stock, upon the terms and
conditions hereinafter set forth;
WHEREAS, Acquisition Sub is a corporation duly organized and
existing under the laws of the State of Delaware, having been formed solely for
the purpose of completing the transactions set forth herein, and is a
wholly-owned subsidiary of Pentacon;
WHEREAS, the respective boards of directors of Acquisition Sub and the
Company deem it advisable and in the best interests of the respective
corporations and their respective stockholders that the Acquisition Sub merge
with and into the Company pursuant to this Agreement and the applicable
provisions of the laws of the State of Delaware;
WHEREAS, as of the date hereof, the West Coast Stockholders own all of
the outstanding common stock of the Company (the "Company Stock");
WHEREAS, as of the date hereof, the Company owns shares of ASI common
stock representing a 88.5% interest in ASI and the ASI Sellers own, and as of
the Closing Date the ASI Sellers will own the ASI Stock representing a 11.5%
interest in ASI; and
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the meanings for all purposes of this Agreement set forth in Section
13.13 below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as hereinafter
defined) and upon the delivery of the documents listed in Section 4.2,
Acquisition Sub shall be merged (the "Merger") with and into the Company in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law"), whereupon the separate existence of Acquisition Sub shall cease, and the
Company shall be the surviving corporation (the "Surviving Corporation").
Section 1.2 Effective Time of the Merger. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in certificate
of merger, in a form mutually acceptable to Pentacon and the Company, to be
filed with the Secretary of State of the State of Delaware in accordance with
Delaware Law (the "Certificate of Merger"). The Certificate of Merger shall be
filed simultaneously with or as soon as practicable after the closing of the
transactions contemplated by Articles I and II hereof. The parties shall,
subject to the provisions hereof and to the fiduciary duties of their respective
boards of directors, use all reasonable efforts to consummate the Merger, as
soon as practicable. The West Coast Stockholders agree to execute a plan of
merger (the "Plan of Merger") summarizing those provisions of this Agreement
which are required to be set forth with the Certificate of Merger pursuant to
the Delaware Corporation Laws and to attach such Plan of Merger to the
Certificate of Merger to be filed with the Secretary of State of Delaware. From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, assets, powers, privileges, and franchises and be subject to all of the
obligations, liabilities, restrictions, and disabilities of the Company and
Acquisition Sub, all as provided under Delaware law.
Section 1.3 Conversion of Shares. At the Effective Time (i) each
outstanding share of common stock of the Company outstanding immediately prior
to the Effective Time shall be converted into the right to receive, an amount in
cash equal to: (A) $86,400,000, less, (B) the sum of: (1) the Bank Debt (as
hereinafter defined); plus (2) the amount (including accrued dividends) required
to be paid by the Company and/or its Subsidiaries to redeem all of the Company's
preferred stock and warrants and ASI's shares of preferred stock outstanding
immediately prior to the Effective Time, which shall be paid by Buyer to
Representative at the Closing (collectively, the "Redemption Amount"); plus (3)
all principal and interest outstanding as of April 30, 1998, plus any increase
in such indebtedness (including accrued interest) through the Effective Time in
respect of the Seller Notes (as hereinafter defined), which shall be paid by
Buyer at Closing; plus (4) all principal and interest outstanding as of April
30, 1998, plus any increase in such indebtedness (including accrued interest)
through the Effective Time in respect of any indebtedness owing by the Company
or any of the Subsidiaries to any Stockholder or any Affiliate thereof, which
shall be paid by Buyer at the Closing (collectively, the "Stockholder Loan
Amount"); plus (5) $1,834,156.40 which is the estimated amount of federal, state
or other Taxes payable by the Company or any of its Subsidiaries for the period
through December 31, 1997, arising out of or in connection with the spin-off or
disposition of the West Coast North (as defined below) capital stock to the West
Coast Stockholders prior to the Closing (the "North Reduction Amount"); plus (6)
the ASI Stock Purchase
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Consideration (as hereinafter defined) (the aggregate amount computed by
subtracting (B) above from subsection (A) above being referred to herein as the
"West Coast Merger Consideration"), divided by (C) the number of outstanding
shares of common stock of the Company outstanding immediately prior to the
Effective Time, and (ii) the shares of Acquisition Sub's common stock
outstanding immediately prior to the Effective Time shall be converted into
1,000 outstanding shares of capital stock of the Surviving Corporation.
Section 1.4 Surrender and Payment. At the Effective Time, (i) the West
Coast Stockholders will deliver to Pentacon the stock certificates listed on
Schedule 5.2(a) (the "West Coast Stock Certificates") representing all of the
outstanding shares of Company Stock, and (ii) the holders of Company Preferred
Shares will deliver the stock certificates representing all of the outstanding
shares of Company Preferred Stock and (iii) the holders of warrants issued by
the Company will deliver to Pentacon the original Company warrants, and Pentacon
will deliver to the Representative, in exchange therefor, payment of the West
Coast Merger Consideration by wire transfer of immediately available funds. The
West Coast Stock Certificates and certificates representing the Company
Preferred Shares will be duly endorsed (or accompanied by duly executed stock
powers) with all necessary transfer tax and other revenue stamps, acquired at
the West Coast Stockholders' and holders of Company Preferred Shares' expense,
affixed. The West Coast Stockholders and holders of Company Preferred Shares
agree promptly to cure any deficiencies with respect to the endorsement of the
certificates or other documents of conveyance with respect to such Company Stock
or Company Preferred Shares or with respect to the stock powers accompanying any
Company Stock or Company Preferred Shares.
Section 1.5 Lost Stock Certificates. If any stock certificate shall
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the Person claiming such stock certificate to be lost, stolen, or
destroyed, Pentacon will issue in exchange for such lost, stolen, or destroyed
stock certificate the West Coast Merger Consideration to be paid in respect of
the shares represented by such stock certificates as contemplated by this
Article I.
Section 1.6 Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.7 Bylaws. The bylaws of the Acquisition Sub in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.8 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Acquisition Sub at the Effective Time shall
be the directors of the Surviving Corporation and (ii) the officers of
Acquisition Sub at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE II
SALE AND PURCHASE OF STOCK
Section 2.1 Sale and Purchase. Upon the terms and subject to the
conditions contained in this Agreement and in reliance upon the representations,
warranties, covenants and agreements contained in this Agreement, on the Closing
Date (as hereinafter defined), the ASI Sellers shall sell, convey, transfer,
assign and deliver the ASI Stock to Pentacon, and Pentacon shall purchase and
accept the ASI Stock from the ASI Sellers (the "ASI Stock Purchase").
Section 2.2 Purchase Price. The aggregate purchase price for the ASI
Stock shall be total cash in the amount of $7,347,092 (the "ASI Stock Purchase
Consideration")
Section 2.3 Surrender and Payment. At the Closing, (i) the ASI Sellers
will deliver to Pentacon the stock certificates listed on Schedule 4.2(b) (the
"ASI Stock Certificates") representing the ASI Sellers' outstanding shares of
ASI Stock, and (ii) the holders of ASI Preferred Shares will deliver to Pentacon
the stock certificates representing the ASI Preferred Shares and Pentacon will
deliver, in exchange therefor, the ASI Stock Purchase Consideration to the
Representative. The stock certificates will be duly endorsed (or accompanied by
duly executed stock powers) with all necessary transfer tax and other revenue
stamps, acquired at the ASI Sellers' or holders of the ASI Preferred Shares'
expense, affixed. The ASI Sellers and holders of the ASI Preferred Shares agree
promptly to cure any deficiencies with respect to the endorsement of the stock
certificates or other documents of conveyance with respect to such ASI Stock or
ASI Preferred Shares or with respect to the stock powers accompanying any ASI
Stock.
ARTICLE III
REPRESENTATIVE
Section 3.1 Authority. The Representative represents and warrants as
of the Closing he will be duly appointed as the Representative for and on behalf
of each of the West Coast Stockholders, West Coast Preferred Stockholders, West
Coast Warrant Holders, ASI Sellers and ASI Preferred Stockholders for purposes
of receiving and allocating payments to such persons in accordance with Section
4.2(b) below.
Section 3.2 Allocation of Funds. The Representative covenants and
agrees to allocate the West Coast Merger Consideration, the ASI Stock Purchase
Consideration, the Redemption Amount and the Stockholder Loan Amount to the West
Coast Stockholders, West Coast Preferred Stockholders, West Coast
Warrantholders, ASI Sellers and ASI Preferred Stockholders in such manner to
effect full payment for and redemption and cancellation of all equity interests
(including warrants) and indebtedness of the Company and ASI held by such
persons.
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ARTICLE IV
CLOSING
Section 4.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place as promptly as practicable (and
in any event within five days) following the date on which the last of the
conditions set forth in Section 4.3 is fulfilled or waived at the offices of
Xxxxxxx & Xxxxx L.L.P., 0000 Xxxxx Xxxxx, 000 Xxxxxx, Xxxxxxx, Xxxxx 00000, or
such other place as Pentacon and the Stockholders may agree (the "Closing
Date").
Section 4.2 Documents to be Delivered in Connection with the Merger
and Stock Purchase at the Closing.
(a) At the Closing, the Company and the West Coast Stockholders will
deliver to Pentacon:
(i) an opinion of counsel to the West Coast Stockholders in the
form attached hereto as Exhibit A;
(ii) a Certificate of the Secretary of the Company certifying the
corporate charter, bylaws and resolutions of the Company;
(iii) a Certificate and Release executed by the West Coast
Stockholders, the West Coast Preferred Stockholders and the West Coast
Warrantholders in the form attached hereto as Exhibit B;
(iv) a Certificate executed by the Company in the form attached
hereto as Exhibit C-1 and a Certificate executed by the West Coast
Stockholders in the form attached hereto as Exhibit C-2;
(v) the resignations of the directors of the Company;
(vi) the minute book, corporate seal and stock records of the
Company;
(vii) Certificate of Merger and Plan of Merger in a form required
to be filed in the office of the Secretary of State of the State of
Delaware to effect the Merger;
(viii) a completed Form W-9 for each West Coast Stockholder, West
Coast Preferred Stockholder and West Coast Warrant- holder; and
(ix) copies of the power of attorney or other documentation
appointing the Representative as the agent and representative of the
West Coast Stockholders, West Coast Preferred Stockholders and West
Coast Warrantholders.
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(b) At the Closing, Pentacon will deliver to the Representative, by
wire transfer of immediately available funds, the (i) West Coast Merger
Consideration, (ii) the ASI Stock Purchase Consideration, (iii) the
Redemption Amount and (iv) the Stockholder Loan Amount.
(c) At the Closing, Pentacon will deliver to the West Coast
Stockholders:
(i) an opinion of Xxxxx Xxxxx, Esq., Senior Vice President and
General Counsel and Secretary of Pentacon in the form attached hereto
as Exhibit D; and
(iii) a Certificate of the Secretary of Pentacon in the form
attached hereto as Exhibit E.
(d) At the Closing, the ASI Sellers will deliver to Pentacon:
(i) ASI Stock Certificates endorsed in blank with respect to the
ASI Stock;
(ii) an opinion of counsel to the ASI Sellers in the form
attached hereto as Exhibit A;
(iii) a Certificate of the Secretary of ASI certifying the
corporate charter, bylaws and resolutions of ASI;
(iv) a Certificate and Release executed by the ASI Sellers and
ASI Preferred Stockholders in the form attached hereto as Exhibit F;
(v) a Certificate executed by the ASI Sellers in the form
attached hereto as Exhibit F;
(vi) the minute book, corporate seal and stock records of
ASI; and
(vii) a completed Form W-9 for each ASI Seller and ASI Preferred
Stockholder.
(e) At the Closing, Pentacon will deliver to the ASI Sellers:
(i) an opinion of Xxxxx X. Xxxxx, Senior Vice President and
General Counsel of Pentacon in the form attached hereto as Exhibit D;
and
(ii) a Certificate of the Secretary of Pentacon in the form of
Exhibit E attached hereto.
Section 4.3 Additional Conditions to Closing.
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(a) Unless waived by Pentacon in writing, the obligations of Pentacon
and Acquisition Sub to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the additional following conditions:
(i) the Company and the Stockholders shall have performed in all
material respects their agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the
representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date as if made at and
as of such date, except for changes permitted by this Agreement, and
Pentacon shall have received a Certificate to that effect;
(ii) since the date hereof, there shall have been no changes that
constitute, and no event or events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, a Company Material Adverse Effect;
(iii) all governmental waivers, consents, orders and approvals
legally required for the consummation of the transactions contemplated
by this Agreement, including, by way of example only and without
limitation, filings required under the Xxxx- Xxxxx-Xxxxxx Act, shall
have been obtained and be in effect at the Closing Date except for
such waivers, consents, orders and approvals the failure of which to
have been obtained would not have a Company Material Adverse Effect;
(iv) the Company shall have obtained all of the consents and
approvals identified on Schedule 5.4;
(v) the suppliers identified in Schedule 4.3(a) shall have
delivered to Pentacon and Acquisition Sub a written consent to the
Merger;
(vi) the Company shall have entered into employment contracts and
non-competition agreements in form satisfactory to Pentacon with Xxxxx
Xxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxxxxxx, and Xxxxx
Xxxxx;
(vii) there shall be no actions, suits, arbitrations
or proceedings pending or threatened, before any court or Governmental
Authority challenging or affecting the right of the parties to execute
and deliver this Agreement or any related agreements hereunder, to
consummate the transactions contemplated herein or to take any other
action required hereunder to consummate the transaction contemplated
herein; and
(viii) the spin-off or disposition of the capital stock of West
Coast North to the stockholders of the Company shall have been
consummated in a manner reasonably satisfactory to Pentacon.
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(b) Unless waived by the West Coast Stockholders and the ASI Sellers
in writing, the obligations of the West Coast Stockholders to effect the
Merger and the ASI Sellers to effect the ASI Stock Purchase shall be
subject to the fulfillment at or prior to the Closing Date of the
additional following conditions:
(i) Pentacon shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of
Pentacon contained in this Agreement shall be true and correct in all
material respects on and as of the date made and on and as of the
Closing Date as if made at and as of such date, except for changes
expressly permitted by this Agreement, and the Company shall have
received a Certificate to that effect;
(ii) since the date hereof, there shall have been no changes that
constitute, and no event or events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, a Pentacon Material Adverse Effect; and
(iii) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and ASI Stock
Purchase, including, by way of example only and without limitation,
filings required under the Xxxx-Xxxxx-Xxxxxx Act, shall have been
obtained and be in effect at the Closing Date except for such waivers,
consents, orders and approvals the failure of which to have been
obtained would not have a Pentacon Material Adverse Effect.
(iv) there shall be no actions, suits, arbitrations or
proceedings pending or threatened, before any court or Governmental
Authority challenging or affecting the right of the parties to execute
and deliver this Agreement or any related agreements hereunder, to
consummate the transactions contemplated herein or to take any other
action required hereunder to consummate the transaction contemplated
herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE WEST COAST STOCKHOLDERS
AND THE ASI SELLERS
Each of the West Coast Stockholders and ASI Sellers (each
individually a "Stockholder" and collectively the "Stockholders"), jointly and
severally, represent and warrant to Pentacon as follows:
Section 5.1 Organization and Qualification. The Company, and each of
its (direct or indirect) subsidiaries, if any, listed on Schedule 5.1 of the
Disclosure Schedule delivered in connection with this Agreement (the "Disclosure
Schedule") (the "Subsidiaries"), is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its incorporation
and has the requisite corporate power to carry on its business as it is now
being conducted. The
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Company, and each of the Subsidiaries, is duly qualified to conduct business as
a foreign corporation in every state of the United States in which its ownership
or lease of property or the conduct of its business and operations makes such
qualification necessary except where such failure would not have a Company
Material Adverse Effect. Schedule 5.1 of the Disclosure Schedule contains a list
of all Subsidiaries and of all jurisdictions in which the Company and each of
the Subsidiaries is authorized or qualified to do business. The Company has
heretofore delivered to Pentacon true and complete copies of the articles of
incorporation and bylaws of the Company and each of the Subsidiaries, in each
instance including any amendments thereto, as currently in effect.
Section 5.2 Capitalization; Ownership. (a) The authorized capital
stock of the Company consists of (i) 1,500 shares of Company Stock, of which 900
shares of Company Stock are issued and outstanding (the "Company Shares"), and
(ii) 1,500 shares of Company Preferred Stock, of which 1,150 shares of Company
Preferred Stock are issued and outstanding (the "Company Preferred Shares"). The
Company Shares and Company Preferred Shares are all of the issued and
outstanding shares of capital stock of the Company and have been duly authorized
and validly issued and are fully paid and nonassessable and free of preemptive
rights other than such rights as might exist by operation of law. Except as
disclosed in Schedule 5.2(a) of the Disclosure Schedule there are not, as of the
date hereof, any outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments, or any other agreements of any character (any of the
foregoing, a "Commitment") obligating the Company to issue any additional shares
of capital stock of the Company, or any other securities convertible into or
evidencing the right to subscribe for any shares of capital stock of the
Company. The West Coast Stockholders own the respective number of shares of
Company Stock set forth on Schedule 5.2 (a) of the Disclosure Schedule, free and
clear of all Liens. Each of the West Coast Stockholders has full legal right,
power and authority to exchange, assign and transfer or cause to be exchanged,
assigned or transferred their respective shares of Company Stock. The delivery
to Pentacon of the Company Shares pursuant to the terms of this Agreement will
transfer good and valid title thereto, free and clear of all Liens.
(b) The authorized capital stock of each of the Subsidiaries consists
of the number and type of shares of capital stock set forth on Schedule 5.2(c)
of the Disclosure Schedule (collectively, "Subsidiary Stock"). Schedule 5.2(c)
of the Disclosure Schedule also sets forth the number and type of shares of
Subsidiary Stock which are issued and outstanding (collectively, "Subsidiary
Shares"), the securities of any other corporation owned by the Company or any of
the Subsidiaries, as well as the names of any joint venture, partnership or
other noncorporate entity in which the Company or any of the Subsidiaries is a
participant. The Subsidiary Shares are all of the issued and outstanding shares
of capital stock of the Subsidiaries and have been duly authorized and validly
issued and are fully paid and nonassessable and free of preemptive rights other
than such rights as might exist by operation of law. Also set forth in Schedule
5.2(c) of the Disclosure Schedule is a listing of all names under which the
Company and the Subsidiaries have done business, as well as the names of all
predecessors of the Company and the Subsidiaries, including the names of any
entities from whom the Company or the Subsidiaries previously acquired
significant assets. There are not, as of the date hereof, any Commitments
obligating any of the Subsidiaries to issue any additional shares of capital
stock of any such Subsidiaries, or any other securities convertible into
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or evidencing the right to subscribe for any shares of capital stock of any such
Subsidiary. The Company and the ASI Sellers, respectively, own the respective
number of shares of ASI Stock set forth on Schedule 5.2(b) of the Disclosure
Schedule attached hereto, free and clear of any Liens.
Section 5.3 Authorization. (a) The Company has the requisite corporate
power and corporate authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The West Coast
Stockholders and the Board of Directors of the Company have by written consent
or by resolutions duly adopted (i) determined that participating in the Merger
is in the best interests of the Company and its stockholders and (ii) approved
this Agreement and the transactions set forth herein. No other corporate
proceedings on the part of the Company or the West Coast Stockholders are
necessary to authorize the execution and delivery of this Agreement or the
consummation by the Company and the West Coast Stockholders of the transactions
contemplated hereby.
(b) Each of the ASI Sellers has full legal right, power and authority
to exchange, assign and transfer or cause to be exchanged, assigned or
transferred their respective shares of ASI Stock. The delivery to Pentacon
of the ASI Stock will transfer good and valid title thereto, free and clear
of all Liens.
(c) This Agreement has been duly authorized, executed, and delivered
by the Company and the Stockholders and constitutes the valid and binding
obligation of the Company and the Stockholders, enforceable against the
Company and the Stockholders in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other
similar laws of general application with respect to creditors, (ii) general
principles of equity, and (iii) the power of a court to deny enforcement of
remedies generally based upon public policy.
Section 5.4 Consents and Approvals; No Violation. Except as
set forth in Schedule 5.4 of the Disclosure Schedule, including, without
limitation, those filings required pursuant to the Xxxx-Xxxxx-Xxxxxx Act,
neither the execution and delivery of this Agreement by the Company or the
Stockholders, nor the consummation by the Company or the Stockholders of the
transactions contemplated by this Agreement, will: (a) require any consent,
approval, authorization, or permit of, or filing with or notification to, any
Governmental Authority; (b) result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions,
or provisions of any material contract, commitment or similar agreement to which
the Company or any of the Subsidiaries is a party; or (c) violate any order,
writ, injunction, decree, statute, rule, or regulation applicable to the
Company, any of the Subsidiaries, or any of their respective assets.
Section 5.5 Affiliate Relationships. Except as set forth on Schedule
5.5 of the Disclosure Schedule, none of the Stockholders nor any Affiliate of
any of the Stockholders, and no director, officer, employee or agent of or
consultant to the Company or any of the Subsidiaries, owns, directly or
indirectly, in whole or in part, any property, assets or right, tangible or
intangible, which is used in connection with any property, asset or right owned
by the Company or any of the Subsidiaries or which the Company or any of the
Subsidiaries is operating or using or the use of
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which is necessary for its business. Also included in Schedule 5.5 of the
Disclosure Schedule is disclosure of any business relationships which any of the
Stockholders have, or any director, officer, employee, or agent of or consultant
to the Company (other than sales representatives) or any of the Subsidiaries
has, with any other corporation, partnership, firm, association or business
organization, entity or enterprise which is a competitor, supplier or customer
of the Company or any of the Subsidiaries.
Section 5.6 Financial Statements. Pentacon has been provided with the
Financial Statements of the Company and the Subsidiaries as reflected on
Schedule 5.6 of the Disclosure Schedule including, without limitation, the
consolidated balance sheet of the Company and the Subsidiaries dated April 30,
1998 (the "April Balance Sheet") (collectively, the "Financial Statements"). The
Financial Statements present fairly the financial position and results of
operations, of the Company and the Subsidiaries for the periods covered thereby
in accordance with United States generally accepted accounting principles,
consistently applied ("GAAP").
Section 5.7 Undisclosed Liabilities. Except as set forth on Schedule
5.7 of the Disclosure Schedule or as reflected, reserved against, or otherwise
disclosed in the Financial Statements, except as incurred in the ordinary course
of business (including Taxes accrued in the ordinary course of business) neither
the Company nor any of the Subsidiaries had as of April 30, 1998, at the date of
the unaudited balance sheet (the "Balance Sheet Date") and do not have, at the
date hereof, any liabilities or obligations, whether accrued, contingent,
absolute, determined, determinable or otherwise which are of a nature required
to be reflected on a balance sheet prepared in accordance with GAAP.
Section 5.8 Accounts and Notes Receivables. Schedule 5.8 of the
Disclosure Schedule sets forth an accurate list as of the Balance Sheet Date and
as of July 31, 1998, of the accounts and notes receivable of the Company and the
Subsidiaries, including receivables from and advances to employees of the
Company, employees of the Subsidiaries and the Stockholders. Included in
Schedule 5.8 of the Disclosure Schedule is an aging of all accounts and notes
receivable showing amounts due in 30-day aging categories. The trade and other
accounts receivable of the Company and the Subsidiaries which are classified as
current assets on the books and records of the Company and its subsidiaries are
bona fide receivables, were acquired in the ordinary course of business, are
stated in accordance with GAAP and, subject to the reserve for doubtful
accounts, are collectible and need not be written-off as uncollectible.
Section 5.9 Assets. Schedule 5.9 of the Disclosure Schedule sets forth
an accurate list of all real and personal property included in "property and
equipment" on the April Balance Sheet and its Subsidiaries as of the Balance
Sheet Date and all other tangible assets with a value in excess of $5,000 (i)
owned by the Company or its Subsidiaries as of the Balance Sheet Date and (ii)
acquired by the Company or its Subsidiaries since the Balance Sheet Date,
including in each case, complete copies of leases for significant equipment and
for all real property currently leased by the Company or the Subsidiaries and
descriptions of all real property currently owned, leased or used by the Company
or the Subsidiaries in the operation of the business of the Company and the
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Subsidiaries are situated. Except as specifically identified on Schedule 5.9 of
the Disclosure Schedule, all of the tangible assets, vehicles and other
significant machinery and equipment of the Company and the Subsidiaries listed
on Schedule 5.9 of the Disclosure Schedule are in working order and condition,
ordinary wear and tear excepted, and have been maintained in accordance with
commercially reasonable practices, provided that with respect to property leased
pursuant to any lease which property is required to be maintained by lessor
thereunder, such representation is made only to the extent of the Company's
knowledge. All fixed assets used by the Company and the Subsidiaries that are
material to the operation of the Company's and the Subsidiaries' business are
either owned by the Company or the Subsidiaries or leased under an agreement
identified on Schedule 5.9 of the Disclosure Schedule. All leases set forth on
Schedule 5.9 of the Disclosure Schedule are in full force and effect and
constitute valid and binding agreements of the parties thereto in accordance
with their respective terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application with
respect to creditors, (ii) general principles of equity, and (iii) the power of
a court to deny enforcement of remedies generally based on public policy.
Schedule 5.9 contains true, complete and correct copies of all title
reports and title insurance policies received or owned by the Company and the
Subsidiaries. Schedule 5.9 also includes a summary description of all plans or
projects involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing business, to
which management of the Company and the Subsidiaries has devoted any significant
effort or expenditure in the two-year period prior to the date of this
Agreement, which if pursued by the Company or the Subsidiaries would require
additional expenditures of capital.
The Company and the Subsidiaries have good and indefeasible title to
or with respect to leased properties has valid leasehold interest in the
tangible and intangible personal property and the real property owned and used
in their business, including the properties identified on Schedule 5.9 of the
Disclosure Schedule, subject to no Lien, except for (i) Liens reflected on
Schedule 5.9 of the Disclosure Schedule, (ii) Liens for current taxes not yet
payable or being contested in good faith and disclosed in Schedule 5.9, (iii)
Liens disclosed on the Financial Statements or pursuant to this Agreement or the
Schedules hereto, (iv) rights of owners of real property to fixtures and
leasehold improvements, (v) Liens, deposits or pledges to secure the performance
of contracts, leases or other obligations arising in the ordinary course of
business, and (vi) purchase-money liens or Liens incurred in connection with any
conditional sale or other title retention agreement or any lease, (vii) Liens
which do not materially detract from the value of the property or assets as now
used, or materially interfere with the use of such property or assets and (viii)
assessments not in default, (ix) easements for utilities serving only the
property, and (x) easements, covenants and restrictions and other exceptions to
title shown of record in the appropriate public records in the jurisdictions in
which the properties, assets and leasehold estates are located, which do not
adversely affect the Company's or the Subsidiaries' use of the property.
Section 5.10 Material Contracts, Commitments and Customers. Schedule
5.10 of the Disclosure Schedule sets forth an accurate list as of the Balance
Sheet Date of (a) all material
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contracts, commitments and similar agreements to which the Company or any of the
Subsidiaries is a party or by which they or any of their property is bound
including, without limitation, those contracts which involve payment obligation
of the Company in excess of $25,000 per annum and the Stockholders have
delivered true and complete copies of such agreements to Pentacon and (b) all
customers representing 5% or more of the Company's and the Subsidiaries'
revenues, taken as a whole, in any of the periods covered by the Company Audited
Financial Statements or the Company Unaudited Financial Statements. Except as
disclosed on Schedule 5.10 of the Disclosure Schedule, none of such contracts or
agreements unduly burdens or restricts the Company or any of the Subsidiaries in
the ordinary course of its business. Except to the extent set forth on Schedule
5.10 of the Disclosure Schedule, (i) the Company and the Subsidiaries have
complied with, in all material respects, all material commitments and
obligations and are not in default in any material respects under any such
contracts and agreements and no notice of default has been received and (ii)
none of the Company's or the Subsidiaries' customers listed pursuant to (b)
above has canceled or substantially reduced or has notified the Company in
writing of its intent to cancel or substantially reduce its use of the Company's
products or services. Except as set forth on Schedule 5.10 of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is now, nor has been
in the last two years, a party to any contracts subject to price redetermination
or renegotiation.
Section 5.11 Operating Authority. The Company and each of the
Subsidiaries, as applicable, possess all material governmental licenses,
permits, franchises, and other authorizations of any Governmental Authority
("Licenses") that are necessary to the ownership or operation of their business
as currently conducted, and all such Licenses are in full force and effect, in
all material respects, and neither the Company nor any of the Subsidiaries is in
default in any material respect relating thereto. No proceeding is pending or,
to the Stockholders' Knowledge, is threatened seeking the revocation or
limitation of any such License.
Schedule 5.11 of the Disclosure Schedule sets forth an accurate list
and summary description as of the Balance Sheet Date of all Licenses,
certificates, trademarks, trade names, patents, patent applications and
registered copyrights related to the assets owned or held by the Company or the
Subsidiaries.
Section 5.12 Bank Account Information. Schedule 5.12 of the Disclosure
Schedule contains an accurate list of the names and addresses of every bank and
other financial institution in which Company or any of the Subsidiaries
maintains an account (whether checking, savings or otherwise), lock box, or safe
deposit box, and the account numbers and Persons having signature authority or
legal access thereto.
Section 5.13 Litigation; Orders. Except as set forth on Schedule 5.13
of the Disclosure Schedule, as of the date hereof, there are no Actions pending
or, to the Stockholders' Knowledge, threatened against the Company or any of the
Subsidiaries or that would prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement. Except as set
forth on Schedule 5.13 of the Disclosure Schedule, as of the date hereof and the
Closing Date there are no judgments or outstanding orders, injunctions, decrees,
stipulations,
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or awards (whether rendered by a court or administrative agency or by
arbitration) against the Company or any of the Subsidiaries or that would
prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement.
Section 5.14 Labor Matters. Except as set forth on Schedule 5.14 of
the Disclosure Schedule, there are no agreements with labor unions or
associations representing employees of the Company or any of the Subsidiaries.
No work stoppage against the Company or any of the Subsidiaries is pending or,
to the Stockholders' Knowledge, threatened. Neither the Company nor any of the
Subsidiaries is involved in or, to the Stockholders' Knowledge, is threatened
with any labor dispute, arbitration, lawsuit, or administrative proceeding
relating to labor matters involving the employees of the Company or the
Subsidiaries (excluding routine workers' compensation claims).
Section 5.15 Compliance with Laws. The conduct of the business by the
Company and each of the Subsidiaries complies with all statutes, laws,
regulations, ordinances, rules, judgments, orders, or decrees applicable thereto
(other than Environmental Laws which are governed solely by Section 5.17),
except where failure to comply with any such statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees would not, in the aggregate,
have a Company Material Adverse Effect.
Section 5.16 Insurance. Schedule 5.16 of the Disclosure Schedule sets
forth a list of all insurance policies issued in favor of the Company and the
Subsidiaries which relate to their businesses, and all such policies are
currently in force and effect. True and complete copies of all such policies
have been delivered to Pentacon. Such insurance policies evidence all of the
insurance that the Company is required to carry pursuant to all of its material
contracts and other agreements and pursuant to all applicable laws, and, in the
reasonable judgment of the Company's management, provide adequate coverage
against the risks involved in the Company's business. All of such insurance
policies are currently in full force and effect and are scheduled to remain in
full force and effect through the Closing Date. Since January 1, 1995, no
insurance carried by the Company has been canceled by the insurer and the
Company has not been denied coverage.
Section 5.17 Environmental Matters. The Company and the Subsidiaries
are in compliance with all applicable Environmental Laws except where such
noncompliance would not have a Company Material Adverse Effect. Without
limitation of the foregoing, there are no existing, pending or, to the
Stockholders' Knowledge, threatened actions, suits, investigations, inquiries,
proceedings or clean-up obligations by any Governmental Authority relating to
any Environmental Laws with respect to the Company or any of the Subsidiaries.
All notices, permits, or similar authorizations, if any, required to be obtained
or filed in connection with the operations of the Company or the Subsidiaries,
including, without limitation, treatment, storage, disposal, or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed except where such failure would not result in a Company Material
Adverse Effect. The term "release" has the meaning specified in CERCLA (as
hereinafter defined), and the term "disposal" (or "disposed") has the meaning
specified in RCRA (as hereinafter defined). For the purposes
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hereof, "Environmental Laws" shall mean any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Authority
pertaining to the environment in effect on the date of this Agreement in any and
all jurisdictions in which the Company or any of the Subsidiaries operate,
including, without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Federal Water Pollution Control Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, comparable state and local laws
and other material environmental protection laws in effect on the date of this
Agreement and the Closing Date. Schedule 5.17 of the Disclosure Schedule lists
all disposal sites which the Company and the Subsidiaries have utilized as of
the Balance Sheet Date.
Section 5.18 Taxes. (a) (i) Except as set forth on Schedule 5.18 of
the Disclosure Schedule, the Company and each of the Subsidiaries have filed
when due (taking into account any extensions) all Company Returns required to be
filed prior to the Effective Time by the Company and its Subsidiaries with any
taxing authority, and have, except for Taxes (as hereinafter defined) that are
being contested in good faith and set forth on Schedule 5.18 of the Disclosure
Schedule, timely paid and discharged all Tax obligations shown thereon, (ii) the
Company Returns are correct, complete and accurate in all material respects, and
are not subject to penalties under the Code, relating to accuracy-related
penalties, or any corresponding provision of applicable state, local, or foreign
Tax law or any predecessor provision of law, and (iii) neither the Company nor
any of the Subsidiaries has received any notice of any Tax deficiency
outstanding, proposed, or assessed against or allocable to it, nor has either of
them executed any waiver of any statute of limitations on the assessment or
collection of any Tax, or executed or filed with the Internal Revenue Service or
any other governmental body any agreement now in effect extending the period for
assessment or collection of any Taxes against the Company or any of the
Subsidiaries. For purposes of this Agreement, "Tax" or "Taxes" means taxes of
any kind, levies, or other like assessments, customs, duties, imposts, charges,
or fees, including, without limitation, income, gross receipts, ad valorem,
value added, excise, real or personal property, asset, sales, use, license,
payroll, transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer, and gains taxes or other governmental taxes imposed or
payable to the United States, or any state, county, local, or foreign government
or subdivision or agency thereof, and in each instance such term shall include
any interest, penalties, or additions to tax attributable to any such Tax,
including penalties for the failure to file any Tax return or report.
(b) Except for the group of which the Company is currently the parent,
neither the Company nor any of the Subsidiaries has ever been a member of
an affiliated group of corporations, within the meaning of Section 1504 of
the Code, other than as a common parent corporation.
Section 5.19 Employee Benefit Plans. Schedule 5.19 of the Disclosure
Schedule contains a list of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee
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Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Company Pension Plans"), "employee welfare benefit plans"
(as defined in Section 3(l) of ERISA, hereinafter a "Company Welfare Plan"),
stock option, stock purchase, incentive, deferred compensation plans or
arrangements, vacation, change in control, stay-on bonus plans or arrangements,
and other material employee compensation and fringe benefit plans or agreements,
maintained, contributed to, or pursuant to which the Company or any of the
Subsidiaries has any liability (all the foregoing being herein called "Company
Benefit Plans"). The Company has made available to Pentacon complete copies of
(i) each Company Benefit Plan and any subsequently adopted amendments thereto
(or, in the case of unwritten Company Benefit Plans, descriptions thereof), (ii)
the most recent annual report on Form 5500 filed with respect to each Company
Benefit Plan (if any such report was required), (iii) the most recent summary
plan description for each Company Benefit Plan for which such a summary plan
description is required (with all summaries of material modifications provided
after the most recent summary plan description was distributed), (iv) each trust
agreement and group annuity contract relating to any Company Benefit Plan and
(v) each favorable determination letter from the Internal Revenue Service with
respect to each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code.
(a) All Company Benefit Plans are and have been administered, in all
material respects, in compliance with their terms and all applicable laws,
including, without limitation, ERISA and the Code. There are no pending or,
to the Stockholders' Knowledge, threatened investigations by any
governmental entity, termination proceedings, or other claims (except
claims for benefits payable in the normal operation of the Company Benefit
Plans), suits or proceedings against or involving any Company Benefit Plan.
(b) All contributions to, and payments from, the Company Benefit Plans
required to be made in accordance with the Company Benefit Plans have been
timely made.
(c) No Company Benefit Plan is subject to Section 302 or Title IV of
ERISA or Section 412 of the Code or is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
(d) (i) No "prohibited transaction" (under Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Company Benefit Plan
and (ii) there has been no breach of any fiduciary duty with respect to any
Company Benefit Plan.
(e) Neither the Company nor any of the Subsidiaries maintains or
contributes to any Company Welfare Plan which could not be terminated by
the Company or any of the Subsidiaries without material liability.
Section 5.20 Brokerage Fees and Commissions. Except as set forth on
Schedule 5.20 of the Disclosure Schedule, the Company has not incurred any
obligation or entered into any agreement for any investment banking, brokerage
or finder's fee, or commission in respect of the
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transactions contemplated by this Agreement for which Pentacon or the Company
shall incur any liability.
Section 5.21 No Warranties or Insurance. Except as set forth on
Schedule 5.21, the Company has no liability or potential liability to any person
under any product or service warranty and the Company does not offer or sell
insurance or consumer protection plans or other similar arrangements that could
result in the Company being required to make any material payment to or perform
any material service for any person thereunder.
Section 5.22 Relations with Governments. None of the Company, any of
the Stockholders, or any Affiliate of any of them has given or offered anything
of value to any governmental official, political party or candidate for
government office in violation of any applicable laws, rules or regulations, nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended or
any applicable law of similar effect.
Section 5.23 Absence of Changes. Since the Balance Sheet Date, except
as set forth on Schedule 5.23 of the Disclosure Schedule or as otherwise
specifically contemplated by this Agreement, there has not been:
(i) any Company Material Adverse Effect with respect to the
Company and its Subsidiaries;
(ii) any damage, destruction or loss (whether or not covered by
insurance), alone or in the aggregate, materially adversely affecting
the properties or business of the Company or any Subsidiary;
(iii) any change in the authorized capital of the Company or any
Subsidiary or its outstanding securities or any change in its
ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock
of the Company or any Subsidiary;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company or any
Subsidiary to any of its officers, directors, Stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(vi) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Company or any Subsidiary
outside of the ordinary course of business to any person, including,
without limitation, the Stockholders and their Affiliates;
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(vii) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company or any Subsidiary, including
without limitation any indebtedness or obligation of any Stockholders
or any affiliate thereof;
(viii) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
assets, property or rights of the Company or any Subsidiary or
requiring consent of any party to the transfer and assignment of any
such assets, property or rights;
(ix) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's or any Subsidiary's
business;
(x) any waiver of any material rights or claims of the Company or
any Subsidiary;
(xi) any amendment or termination of any material Contract of the
Company or any Subsidiary;
(xii) any transaction by the Company or any Subsidiary outside
the ordinary course of its business;
(xiii) any cancellation or termination of a material customer
contract with a customer or client prior to the scheduled termination
date;
(xiv) (a) incurred or been contingently liable for any
indebtedness for borrowed money other than Bank Debt incurred in the
ordinary course of business or (b) prepaid any indebtedness for
borrowed money other than Bank Debt; or
(xv) any other distribution of property or assets by the Company
or any Subsidiary other than in the ordinary course of business.
Section 5.24 Year 2000. Except as disclosed in Schedule 5.24 hereto
and to the knowledge of the Stockholders, the assets of the Company and its
Subsidiaries, including but not limited to all computer software, hardware,
firmware, business processes and business systems, process controls and
equipment containing date-sensitive chips, processes or systems are now and will
in the future be Year 2000 compliant so that they are able to correctly
recognize, process, interface with, exchange or receive date-related data for
the dates within and between the 20th and 21st centuries and all other
centuries.
Section 5.25 Disclosure. This Agreement, including the Annexes and
Schedules hereto, furnished to Pentacon by the Company and the Stockholders in
connection herewith, do not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the
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statements herein and therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE VI
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Stockholder severally, but not jointly, represents and warrants
that the representations and warranties set forth below are true as of the date
of this Agreement as they relate to such Stockholder and that the
representations and warranties set forth in this Article shall survive the
execution hereof.
Section 6.1 Authority; Ownership; Validity of Obligations. Such
Stockholder has the full legal right, power and authority to enter into this
Agreement. Such Stockholder owns beneficially and of record all of the shares of
the Company Stock or ASI Stock identified on Schedules 5.2(a) or 5.2(b) as being
owned by such Stockholder, and, such Company Stock or ASI Stock is owned free
and clear of all Liens. This Agreement is a legal, valid, and binding obligation
of each Stockholder, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application with
respect to creditors, (ii) general principals of equity, and (iii) the power of
a court to deny enforcement of remedies generally based on public policy.
Section 6.2 Preemptive Rights. Such Stockholder does not have, or
hereby waives, any preemptive or other right to acquire shares of Company Stock,
ASI Stock or Pentacon Stock that such Stockholder has or may have had. Nothing
herein, however, shall limit or restrict the rights of any Stockholder to
acquire Pentacon Stock pursuant to (i) this Agreement or (ii) any option
hereafter granted by Pentacon.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PENTACON
Pentacon represents and warrants to each Stockholder as follows:
Section 7.1 Organization and Qualification. Each of Pentacon and
Acquisition Sub is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and Pentacon has the
requisite corporate power to carry on its business as it is now conducted.
Pentacon is duly qualified to conduct business as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the conduct of its
business and operations makes such qualification necessary, except for such
jurisdictions in which Pentacon's failure to be so qualified is not reasonably
expected to have, individually or in the aggregate, a Pentacon Material Adverse
Effect. Pentacon has heretofore delivered to the Company true and complete
copies of the certificate of incorporation and bylaws of Pentacon and
Acquisition Sub as currently in effect. From
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the date of its incorporation, Acquisition Sub has not engaged in any activities
other than in connection with or as contemplated by this Agreement.
Section 7.2 Authorization. The execution, delivery and performance by
Pentacon of this Agreement, and the consummation by Pentacon and Acquisition Sub
of the transactions contemplated hereby, are within the corporate powers of
Pentacon and Acquisition Sub and have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by
Pentacon and Acquisition Sub and constitutes the valid and binding obligation of
Pentacon and Acquisition Sub enforceable against Pentacon and Acquisition Sub in
accordance with its terms, subject to (a) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application with
respect to creditors, (b) general principles of equity, and (c) the power of a
court to deny enforcement of remedies generally based upon public policy.
Section 7.3 Consents and Approval; No Violation. Neither the execution
and delivery of this Agreement by Pentacon and Acquisition Sub, nor the
consummation by Pentacon and Acquisition Sub of the transactions contemplated by
this Agreement, will: (a) contravene or conflict with the certificates of
incorporation or by-laws of Pentacon or the Acquisition Sub; (b) require any
consent, approval, authorization, or permit of, or filing with or notification
to, any Governmental Authority, except (i) the filing of certificates of merger
in accordance with applicable law, (ii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act, and foreign or state securities or
Blue Sky laws, (iii) any regulatory approvals or routine governmental consents
normally acquired after the consummation of transactions such as transactions of
the nature contemplated by this Agreement or (iv) where the failure to obtain
such consent, approval, authorization, or permit, or to make such filing or
notification, does not have, individually or in the aggregate, a Pentacon
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement; (c) result in a
default (or give rise to any right of termination, cancellation, or
acceleration) under any of the terms, conditions, or provisions of any agreement
or other instrument binding upon Pentacon or any of its Subsidiaries, except for
such defaults (or rights of termination, cancellation, or acceleration) as to
which requisite waivers or consents have been obtained or which do not have,
individually or in the aggregate, a Pentacon Material Adverse Effect or prevent
or delay, the consummation of the transactions contemplated by this Agreement;
or (d) assuming compliance with the matters referred to in Section 5.4(a),
violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to Pentacon or any of its Subsidiaries or any of their assets, except
for violations which do not have, individually or in the aggregate, a Pentacon
Material Adverse Effect or prevent or delay, the consummation of the
transactions contemplated by this Agreement.
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ARTICLE VIII
ADDITIONAL COVENANTS AND AGREEMENTS
Section 8.1 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper, or
advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
(b) The Company, Stockholders and Pentacon shall cooperate with one
another (i) in determining whether any action by or in respect of, or
filing with, any Governmental Authority is required, or any actions,
consents, approvals, or waivers are required to be obtained from parties to
any material agreements, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions
or making such filings, furnishing information required in connection
therewith and seeking timely to obtain such actions, consents, approvals,
or waivers.
(c) The Stockholders will cooperate and use their reasonable best
efforts to have the present officers, directors and employees of the
Company and its Subsidiaries cooperate with Pentacon at and after the
Effective Time in furnishing information, evidence, testimony and other
assistance in each case without incurring additional expense therefor in
connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the
Effective Time.
Section 8.2 Public Announcements. Without the prior consent of
the other, which consent shall not be unreasonably withheld, none of Pentacon,
the Company or any of its Subsidiaries or the Stockholders will issue, or permit
any agent or Affiliate to issue, any press releases or otherwise make or permit
any agent or Affiliate to make, any public statements with respect to this
Agreement or the transactions contemplated by this Agreement.
Section 8.3 Expenses. Pentacon and the Stockholders will each
pay their own fees, expenses and disbursements of their respective agents,
representatives, accountants and counsel incurred in connection with the
negotiation, execution, delivery and performance of this Agreement and any
amendment thereto.
Section 8.4 Repayment of Related Party Indebtedness. Concurrently with
the Closing, the Stockholders shall repay to the Company or its Subsidiaries all
amounts outstanding as advances to or receivables from the Stockholders. Such
advances and receivables, and the amounts thereof, are listed on Schedule 8.4.
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Section 8.5 Conduct of Business by the Company Pending the Closing.
Except as otherwise contemplated by this Agreement or disclosed in Schedule 8.5,
after the date hereof and prior to the Closing Date or earlier termination of
this Agreement, unless Pentacon shall otherwise agree in writing, the Company
shall (and shall cause any Subsidiaries of the Company to):
(a) conduct their respective business in the ordinary and usual course
of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charter or
by-laws, (ii) split, combine or reclassify their outstanding capital stock
or (iii) declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any
class or any debt or equity securities convertible into or exchangeable for
such capital stock;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than Bank Debt incurred in the
ordinary course of business, (ii) prepay any indebtedness for borrowed
money other than Bank Debt, (iii) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock, (iv) make any
acquisition of any assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for fixed or
capital assets in the ordinary course of business, (v) sell, pledge,
dispose of or encumber any material assets or businesses other than sales
in the ordinary course of business or (vi) enter into any binding contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all commercially reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services
of their respective present officers and key employees, and preserve the
business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) subject to restrictions imposed by applicable law, confer on a
regular and frequent basis with one or more representatives of Pentacon to
report operational matters of materiality and the general status of ongoing
operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees;
provided, however, that the
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Company and its Subsidiaries shall in no event enter into any written
employment agreement;
(h) not adopt, enter into or amend any bonus, profit-sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law;
(i) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are
consistent with past practice; and
(j) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority.
Section 8.6 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (the "Xxxx-Xxxxx-Xxxxxx Act"). All parties to this
Agreement hereby recognize that one or more filings under the Xxxx-Xxxxx-Xxxxxx
Act may be required in connection with the transactions contemplated herein. If
it is determined by the parties to this Agreement that filings under the Xxxx-
Xxxxx-Xxxxxx Act are required, then: (i) each of the parties hereto agrees to
cooperate and use its best efforts to comply with the Xxxx-Xxxxx-Xxxxxx Act and
(ii) the parties agree to cooperate and use their best efforts to cause all
filings required under the Xxxx-Xxxxx-Xxxxxx Act to be made. If filings under
the Xxxx-Xxxxx-Xxxxxx Act are required, the filing fees shall be borne by
Pentacon. The obligation of each party to consummate the transactions
contemplated by this Agreement is subject to the expiration or termination of
the waiting period under the Xxxx-Xxxxx-Xxxxxx Act, if applicable (the "H-S-R
Waiting Period").
Section 8.7 Records. (a) On reasonable notice at any time and from
time to time after the Closing Date, Pentacon and Acquisition Sub shall permit
representatives of Stockholders reasonable access, during normal business hours,
to all correspondence, contracts, agreements, orders and other books and records
of the Company for purposes of inspection and/or copying at the Stockholder's
expense. Pentacon and Acquisition Sub shall preserve all such materials for at
least six (6) years after the Closing Date and prior to any disposition or
destruction thereof shall provide Stockholders with reasonable notice and
opportunity to take possession of same.
(b) Without limiting the foregoing, Pentacon and Acquisition Sub agree
that, for a period of six (6) years after the Closing Date, it shall
cooperate with Stockholders in collecting and assembling information
relating to the business of the Company prior to the Closing Date, which
customarily has been provided or used in connection with the preparation of
any and all tax returns, information returns or other reports required to
be filed by the Company, to enable Stockholders or any affiliates of
Stockholders to prepare and file any and all tax returns, information
returns or other
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reports required to be filed by the Company for such pre-Closing Date
periods and/or to respond to and conduct any and all tax audits or other
tax determinations or proceedings.
Section 8.8 West Coast North. Pentacon agrees that any Returns filed
by the Company with respect to the gain resulting from the spin-off of West
Coast North shall be consistent with the determination of the North Reduction
Amount, to the full extent permitted by law.
ARTICLE IX
INDEMNIFICATION
The Stockholders and Pentacon each make the following covenants:
Section 9.1 Indemnification by the Stockholders. Subject to Sections
9.3 and 9.6, following the Closing the Stockholders covenant and agree that
they, jointly and severally, will indemnify, defend, protect, and hold harmless
Pentacon, the Company, and the Surviving Corporation, and their respective
officers, directors, employees, stockholders, agents, representatives, and
Affiliates (the "Pentacon Indemnitees") from and against all claims, losses,
liabilities (joint or several), costs, and expenses (including specifically, but
without limitation, reasonable fees, disbursements, and expenses of attorneys,
accountants, other professional advisors and of expert witnesses and costs of
investigation and preparation), directly or indirectly resulting from, relating
to or arising out of:
(a) any breach of or inaccuracy in any representation or warranty by
the Stockholders set forth herein or in the Schedules or certificates
delivered in connection herewith; and
(b) any breach or non-performance, partial or total, by the Company or
any of the Stockholders of any covenant or agreement of the Company (or any
Affiliate or Subsidiary thereof) or the Stockholders (or any Affiliate or
Subsidiary thereof) contained in this Agreement; and
(c) THE BREACH OF OR INACCURACY IN ANY REPRESENTATION OR WARRANTY
RELATING TO ENVIRONMENTAL MATTERS SET FORTH IN SECTION 5.17.
Section 9.2 Indemnification Related to West Coast North. The
Stockholders shall retain liability, and shall, jointly and severally,
indemnify, defend, protect and hold harmless Pentacon , the Company from and
against all claims, losses, liabilities, costs and expenses (including
specifically, but without limitation, reasonable fees, disbursements and
expenses of attorneys, accountants, other professional advisors and of expert
witnesses and costs of investigation and preparation) directly or indirectly
resulting from, relating to or arising out of :
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(i) the conduct of operations, business and activities, of West
Coast North prior to the Effective Time including all contacts,
agreements, obligations, commitments and liabilities of West Coast
North of any kind and character relating in any way to the assets,
employees, or business of West Coast North prior to the Effective
Time;
(ii) any claim or proceeding by the Internal Revenue Service or
any other Governmental Authority against the Company, ASI or any of
their respective Subsidiaries or Affiliates challenging the validity
of any of the net operating losses generated by the operations and
activities of West Coast North prior to the Effective Time; and
(iii) taxes and other liabilities, costs and expenses relating to
the spin-off or disposition of the West Coast North assets or capital
stock to the West Coast Stockholders in excess of the North Reduction
Amount.
Section 9.3 Indemnification by Pentacon. Pentacon covenants and agrees
that it will indemnify, defend, protect and hold harmless each Stockholder (the
"Stockholder Indemnitees") at all times from and after the Closing Date from and
against all claims, losses, liabilities (joint or several), costs, and expenses
(including specifically, but without limitation, reasonable fees, disbursements,
and expenses of attorneys, accountants, other professional advisors and of
expert witnesses and costs of investigation and preparation), directly or
indirectly resulting from, relating to or arising out of:
(a) any breach of any representation or warranty of Pentacon set forth
herein or in the Schedules or certificates delivered in connection
herewith; and
(b) any breach or non-performance, partial or total, by Pentacon of
any covenant or agreement of Pentacon (or any Affiliate or Subsidiary
thereof) contained in this Agreement.
Section 9.4 Indemnification Proceedings. Promptly after a party
indemnified pursuant to this Article IX ("Indemnitee") has received notice of or
has knowledge of any claim by a person not a party to this Agreement ("Third
Party") or the commencement of any action or proceeding by a third party, the
Indemnitee shall promptly, and in any event within 20 days of the assertion of
any claim or the discovery of any fact upon which Indemnitee intends to base a
claim for indemnification under this Agreement ("Indemnitee Claim"), as a
condition precedent to the Indemnitee Claim, give written notice to the party or
parties from whom indemnification is sought ("Indemnitor") of such claim by the
third party, provided, however, no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless the Indemnifying Party is prejudiced thereby. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. In the event of any Indemnitee Claim,
Indemnitor, at its option, shall have the right to defend or settle, at its own
expense and by its own counsel, any such matter so long as the Indemnitor
pursues the same in good faith and diligently. If the Indemnitor undertakes to
defend or settle, it shall promptly notify the
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Indemnitee of its intention to do so, and the Indemnitee shall cooperate with
the Indemnitor and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnitor with any books, records, or information reasonably requested by
the Indemnitor that are in the Indemnitee's possession or control.
Notwithstanding the foregoing, the Indemnitor shall have the right to
participate in any matter through counsel of its own choosing at its own
expense; provided that the Indemnitor's counsel shall always be lead counsel and
shall determine all litigation and settlement steps, strategy and the like.
After the Indemnitor has notified the Indemnitee of its intention to undertake
to defend or settle any such asserted liability, and for so long as the
Indemnitor diligently pursues such defense, the Indemnitor shall not be liable
for any additional legal expenses incurred by the Indemnitee in connection with
any defense or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnitor, in which event the Indemnitee
shall be reimbursed by the Indemnitor for reasonable additional legal expenses,
out-of-pocket expenses and allocable share of employee compensation incurred in
connection with such participation for any employee whose participation is so
requested. If the Indemnitor desires to accept a final and complete settlement
of any such third party claim and the Indemnitee refuses to consent to such
settlement, then the Indemnitor's liability under this Section with respect to
such third party claim shall be limited to the amount so offered in settlement
by said third party, and the Indemnitee shall reimburse the Indemnitor for any
additional costs of defense which it subsequently incurs with respect to such
claim. If the Indemnitor does not undertake to defend such matter to which the
Indemnitee is entitled to indemnification hereunder, or fails diligently to
pursue such defense, the Indemnitee may undertake such defense through counsel
of its choice, at the cost and expense of the Indemnitor, and the Indemnitee may
settle such matter, without the consent of the Indemnitor, and the Indemnitor
shall reimburse the Indemnitee for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnitee in connection
therewith. Except as above provided, under no circumstances shall the Indemnitee
settle any third party claim without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld.
Section 9.5 Provisions Relating to Indemnification. (a) Any Indemnitee
pursuant to this Article IX shall not be entitled to any indemnification for any
Indemnitee Claim arising from any misrepresentation or breach of warranty under
this Agreement or agreement, certificate or instrument delivered pursuant hereto
to the extent that the existence of such Indemnitee Claim, the breach of
warranty or the falsity of the representation upon which such Indemnitee Claim
would be based is specifically disclosed in the Disclosure Schedule attached
hereto in a manner which would put a reasonable person on notice of the
existence of and extent of such claim or liability without the need for
extrapolation, conjecture or further inquiry.
(b) In the event the Closing shall occur, the provisions of Article IX
shall, absent fraud, constitute the sole and exclusive remedy and liability
of each party hereto, the transactions contemplated hereby and the
representations, warranties and covenants contained herein, and the parties
hereto hereby waive any and all claims, causes of action and rights in
connection with any of the foregoing under any applicable statute, law,
rule or regulation, including, without limitation, under any Environmental
Laws.
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(c) The effect of any misrepresentation, breach of warranty, covenant
or agreement of, or any indemnifiable claim against, any Stockholder under
or in respect of, this Agreement or any of the transactions contemplated
hereby, or any document executed in connection herewith, and any damages
resulting therefrom, shall be determined based solely on actual damages on
a net after-tax basis (that is, with the amount thereof reduced to reflect
the tax benefit resulting therefrom), and net of any amounts actually
recovered by or on behalf of Pentacon and/or Acquisition Sub (and/or their
respective successors and/or assigns), or the Company and/or the
Subsidiaries following the Closing, in respect thereof or in connection
therewith under any one or more policies of insurance maintained by it or
any third party.
(d) Anything to the contrary contained in this Agreement
notwithstanding, no party hereto shall be liable to any other party for any
indirect, special or consequential damages (including lost profits)
sustained or incurred in connection with this Agreement or any of the
transactions contemplated by this Agreement.
(e) Each representation and warranty (and the related indemnities) of
each of the parties hereto shall expire two (2) years after the Closing,
except as expressly provided therein, and none of the parties hereto shall
be entitled to assert claims against any other for any misrepresentation or
breach of warranty under or pursuant to this Agreement unless the party
asserting such claim shall notify such other party in writing of such
claim, in reasonable detail and setting forth the specific facts and
circumstances pertaining thereto, before the expiration of such two-year
period, provided (i) that such two-year period shall with respect to
Sections 5.17 and 5.18 be extended to the duration of the applicable
statute of limitations (or if there is no applicable statute of limitation
for five years) and (ii) the representations and warranties in Sections
5.2, 5.3, 6.1 and 6.2 shall survive indefinitely.
(f) In the event any remediation is required in order to correct or
cure a violation of any Environmental Law (a "Violation"), the liability of
the Stockholders for such remediation costs shall be limited to the costs
of remediation performed in accordance with the most cost effective methods
and manner among potential approaches and which is acceptable to regulatory
authorities and fully addresses and resolves the problem.
Section 9.6 Limitation Upon Indemnity. The Stockholders, on the one
hand, and Pentacon, on the other hand, shall be entitled to indemnification from
the other under the provisions of this Article IX for all claims subject to
indemnification by such party, but only after such time that the amount of such
claims exceed, in the aggregate $250,000; provided, however, the foregoing
limitation in this Section 9.6 shall not apply to indemnification with respect
to any claims arising under or in connection with any misrepresentation under or
breach of Sections 5.1, 5.2, 5.18, 6.1 or 6.2 or indemnification claims under
Section 9.2, and in such event Pentacon shall be entitled to indemnification for
the full amount of any such claims.
(b) In no event whatsoever shall the aggregate liability of the West
Coast Stockholders under this Agreement (including all costs, expenses and
attorneys' fees paid or incurred
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by the Company and/or the West Coast Stockholders in connection therewith or
with respect to the curing of any and all misrepresentations or breaches under
this Agreement) exceed the amount of the West Coast Consideration plus the sum
of (1) the Redemption Amount and (2) the Stockholder Loan Amount.
(c) In no event whatsoever shall the aggregate liability of the ASI
Sellers under this Agreement (including all costs, expenses and attorneys'
fees paid or incurred by the Company and/or the ASI Sellers in connection
therewith or with respect to the curing of any and all misrepresentations
or breaches under this Agreement) exceed the amount of the ASI Stock
Purchase Consideration paid to the ASI Sellers as provided in Section 2.3
hereof.
Section 9.7 Update to Schedules. In the event that the West Coast
Stockholders or ASI Sellers provide written notice of an update to the Schedules
prior to the Closing, then Pentacon and Acquisition Sub may (i) consent to such
amendment and proceed with the Closing or (ii) terminate the Agreement. If
Pentacon and Acquisition consent to such amendment whereby the Schedules are
amended, then the representation or warranty in question shall not be deemed to
have been breached as a consequence of such express additional disclosure and
Pentacon and Acquisition Sub shall have no indemnification right with respect to
matters as expressly disclosed in the notice.
Section 9.8 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE. THE
INDEMNIFICATION PROVIDED IN THIS ARTICLE IX SHALL BE APPLICABLE WHETHER OR NOT
NEGLIGENCE OF THE INDEMNITEE IS ALLEGED OR PROVEN.
Section 9.9 Reimbursement. In the event that the Indemnitor shall
undertake, conduct, or control the defense or settlement of any alleged
liability and it is later determined that such alleged liability was not one for
which the Indemnitor is required to indemnify the Indemnitee under this Article
IX, the Indemnitee shall reimburse the Indemnitor for all its costs and expenses
with respect to such settlement or defense, including reasonable attorneys' fees
and disbursements.
Section 9.10 No Third Party Beneficiaries. The foregoing
indemnification is given solely for the purpose of protecting the Pentacon
Indemnitees and the Stockholder Indemnitees and shall not be deemed extended to,
or interpreted in a manner to confer any benefit, right, or cause of action
upon, any other Person.
ARTICLE X
NONCOMPETITION COVENANTS
Section 10.1 Prohibited Activities. The Stockholders will not, for a
period of one year following the Effective Time, directly or indirectly, for
themselves or on behalf of or in conjunction with any or Person:
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(a) engage, in an operational or management capacity, as an employee,
independent contractor, consultant, advisor or otherwise, in the day-to-day
operations of any business a substantial portion of which is offering
services or products in competition with the business conducted by the
Subsidiaries prior to the Closing, within a 200 mile radius of where
Pentacon or the Company or any subsidiaries of either conducts its business
as of the Closing Date (the "Territory"); provided, however, that it is
specifically agreed that the Stockholders shall not be precluded from (i)
making debt investments in (ii) making equity investments of up to 49%
equity ownership in (iii) obtaining and exercising rights as a security
holder, or, (iv) serving as a director on any boards of directors of, such
entity which conducts any business offering such competitive services or;
provided that the Stockholders do not (individually or collectively) or
directly or indirectly have affirmative control over the operations of the
competitive business.
(b) directly or indirectly, call upon any Person who is, at that time,
within the Territory, an employee of Pentacon or any of its Subsidiaries
for the purpose or with the intent of enticing such employees away from or
out of the employ of Pentacon or any of its Subsidiaries; or
(c) use any customer list or other information of Pentacon, to call
upon any Person who is, at that time, or which has been, within one (1)
year prior to that time, a customer of Pentacon or any of its Subsidiaries
within the Territory for the purpose of soliciting or selling services or
products in competition with within the Territory.
Section 10.2 Equitable Relief. Because of the difficulty of measuring
economic losses to Pentacon as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that could be caused to
Pentacon for which it would have no other adequate remedy, each Stockholder
agrees that the foregoing covenant may be enforced by Pentacon by injunctions,
restraining orders, and other equitable actions.
Section 10.3 Reasonable Restraint. It is agreed by the parties hereto
that the foregoing covenants in this Article X impose a reasonable restraint on
the Stockholders in light of the activities and business of Pentacon on the date
of the execution of this Agreement and the current plans of Pentacon.
Section 10.4 Material and Independent Covenant. The Stockholders
acknowledge that their agreements with the covenants set forth in this Article X
are material conditions to Pentacon's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article X shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of any Stockholder against Pentacon or one of its Subsidiaries,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Pentacon of such covenants. It is specifically
agreed that the one year period during which the agreements and covenants of
each Stockholder made in this Article X shall survive shall be computed by
excluding
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from such computation any time during which such Stockholder is in violation of
any provision of this Article X. The covenants contained in this Article X shall
not be affected by any breach of any other provision hereof by any party hereto.
ARTICLE XI
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 11.1 General. The Stockholders recognize and acknowledge that
they had in past, currently have, and in the future may possibly have, access to
certain confidential information of the Company or the Surviving Corporation,
such as lists of customers, operational policies, and pricing and cost policies
that are valuable, special, and unique assets of the Company and will be
valuable, special, and unique assets of the Surviving Corporation. The
Stockholders agree that they will not disclose such confidential information to
any Person for any purpose or reason whatsoever (except such information as the
Stockholders may be required to disclose to any Governmental Authority or to
authorized representatives of Pentacon). In the event of a breach or threatened
breach by the Stockholders of the provisions of this Section, Pentacon shall be
entitled to an injunction restraining the Stockholders from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Pentacon from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
Section 11.2 Equitable Relief. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company, the Surviving Corporation, and/or no other adequate remedy, the
parties hereto agree that the foregoing covenants of this Article XI may be
enforced against them by injunctions, restraining orders, and other equitable
actions.
Section 11.3 Non-Public Information. The Stockholders hereby
acknowledge that if they become aware of "material non-public information" (as
defined under applicable securities laws) regarding Pentacon or its
Subsidiaries, that they will be required, under applicable securities laws, to
refrain from trading in Pentacon securities or disclosing any such information
while such information is non-public. The Stockholders further agree to
communicate such requirement to all personnel of the Company, the Surviving
Corporation or others, having knowledge of such "material non-public
information" regarding Pentacon.
Section 11.4 Survival. The obligations of the parties under this
Article XI shall survive the termination of this Agreement.
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ARTICLE XII
TERMINATION
Section 12.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date, by the mutual written consent of the Company and
Pentacon. In addition, Pentacon shall have the right to terminate this Agreement
prior to the Closing Date, without liability hereunder, provided that neither
Pentacon nor Acquisition Sub is in breach in any material respect of their
respective representations, warranties, and/or constraints hereunder:
(a) if the representations and warranties of the Company or the
Stockholders shall fail to be true and correct in all material respects on
and as of the date made and on the Closing Date except for changes
permitted by this Agreement;
(b) if the Merger and ASI Stock Purchase are not completed by
September 30, 1998;
(c) if the Merger or ASI Stock Purchase is enjoined by a final,
unappealable court order not entered at the request or with the support of
Pentacon or the Company and if Pentacon and the Company shall have used
reasonable efforts to prevent the entry of such order; or
(d) if the Company or the Stockhol ders (i) fail to perform in any
material respect any of their covenants in this Agreement and (ii) do not
cure such default in all material respects within 30 days of notice of such
default by Pentacon.
Section 12.2 Termination by Stockholders. Each Stockholder shall have
the right to terminate this Agreement, prior to the Closing Date, without
liability hereunder, provided that such Stockholder or Stockholders are not in
breach in any material respect of their respective representations, warranties
and/or covenants hereunder:
(a) if the representations and warranties of Pentacon and/or
Acquisition Sub shall fail to be true and correct in all material respects
on and as of the date made and on the Closing Date, except for changes
permitted by this Agreement; or
(b) if the Merger or the ASI Stock Purchase are not complete by
September 30, 1998; or
(c) if the Merger or the ASI Stock Purchase is enjoined by final,
unappealable court order not entered into at the request or with the
support of the Stockholders and if the Stockholders have used reasonable
effort to prevent the entry of such order; or
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(d) if Pentacon and/or Acquisition Sub (i) fail to perform in any
material respect any of their respective covenants in this Agreement and
(ii) do not cure such default in all material respects within 30 days of
notice by any Stockholder of such default.
Section 12.3 Effect of Termination. In the event of termination of
this Agreement pursuant to the provisions of Article XII or Section 9.7, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, the Stockholders, Pentacon or Acquisition Sub, or
their respective officers or directors (except as set forth in Section 8.3 and
Article XI or as otherwise provided in this Agreement). Nothing in this Section
12.3 shall relieve any party from liability for any willful or intentional
breach of this Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without reference to
the choice of law principles thereof.
Section 13.2 Entire Agreement. This Agreement, together with the
Schedules and Exhibits hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no agreements,
understandings, representations, or warranties between the parties other than
those set forth or referred to herein.
Section 13.3 Notices. All notices hereunder shall be sufficient upon
receipt for all purposes hereunder if in writing and delivered personally, sent
by documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax, or other electronic transmission service to the appropriate
address or number as set forth below.
If to Pentacon or Acquisition Sub, to:
Pentacon, Inc.
0000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Fax Number: (000) 000-0000
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if to the Company or the West Coast Stockholders, to:
West Coast Aero Products Holding Corp.
c/o Xxxx Xxxxx & Co., Inc.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax Number: (000) 000-0000
if to the ASI Sellers, to:
Xxxxx Xxxxx
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax Number: (000) 000-0000
Xxxx Xxxxx
c/o Xxxx Xxxxx & Co., Inc.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Section 13.4 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party may assign, delegate,
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except Pentacon or Acquisition
Sub may transfer or assign, in whole or from time to time in part, to one or
more of their Affiliates, the right to enter into the transactions contemplated
by this Agreement, but any such transfer or assignment will not relieve Pentacon
or Acquisition Sub of its obligations hereunder.
Section 13.5 Headings; Definitions. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 13.6 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing, waive compliance
by any other party hereto with any term or provision of this Agreement on the
part of such other party hereto to be performed or complied with. The waiver by
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any party hereto of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
Section 13.7 Agreement for the Parties' Benefit. This
Agreement is not intended to confer upon any Person not a party hereto any
rights or remedies hereunder, and no Person other than the parties hereto or
such Persons described above is entitled to rely on any representation,
warranty, or covenant contained herein.
Section 13.8 Severability. If any term or provision of this
Agreement, including, without limitation, the provisions of Article X of this
Agreement, is invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal, or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible.
Section 13.9 Jurisdiction. Any legal action, suit, or
proceeding in law or equity arising out of or relating to this Agreement and
transactions contemplated by this Agreement may be instituted in any state or
federal court in Xxxxxx County, Houston, Texas, and each party agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit,
or proceeding, any claim that it is not subject personally to the jurisdiction
of such court, that its property is exempt or immune from attachment or
execution, that the action, suit, or proceeding is brought in an inconvenient
forum, that the venue of the action, suit, or proceeding is improper or that
this Agreement, or the subject matter hereof or thereof may not be enforced in
or by such court. Each party further irrevocably submits to the jurisdiction of
any such court in any such action, suit, or proceeding. Any and all service of
process and any other notice in any such action, suit, or proceeding shall be
effective against any party if given by registered or certified mail, return
receipt requested, or by any other means of mail which requires a signed
receipt, postage prepaid, mailed to such party at the address listed in Section
13.3. Nothing herein contained shall be deemed to affect the right of any party
to serve process in any manner permitted by law or to commence legal proceedings
or otherwise proceed against any other party in any jurisdiction other than
Texas.
Section 13.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 13.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.
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Section 13.12 Counterparts; Effectiveness. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party. In
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
Section 13.13 Definitions and Usage. For the purposes of this
Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Action" shall mean any action, suit, arbitration, or proceeding, by
or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"ASI Preferred Stockholders" means the holders of preferred stock of
ASI.
"Bank Debt" means all indebtedness of the Company and its Subsidiaries
to any bank or other financial or banking institution as of April 30, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"Company Material Adverse Effect" shall mean any fact, circumstance,
event, or condition which has or would have a materially adverse effect on the
business, operations, properties, financial condition, assets, liabilities,
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole (after taking into account insurance recoveries in respect thereof).
"Company Returns" shall mean all returns, declarations, reports,
statements, and other documents required to be filed by the Company or the
Subsidiaries in respect of Taxes, and the term "Company Return" means any one of
the foregoing Company Returns.
"Governmental Authority" shall mean (a) the United States of America,
(b) any state, county, municipality, or other governmental subdivision within
the United States of America, and (c) any court or any governmental department,
commission, board, bureau, agency, or other instrumentality of the United States
of America or of any state, county, municipality, water rights, taxing, or
zoning authority, or other governmental subdivision within the United States of
America in each case exercising competent jurisdiction with regard to the matter
referred to herein.
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"Knowledge" when used in relation to any Person shall mean the actual
knowledge of such Person or such Person's senior executive officers after
reasonable inquiry and when used in relation to the Company or the Subsidiaries
shall mean the actual knowledge of such entities' senior executive officers,
directors, managers and employees with supervisory authorization, after
reasonable inquiry.
"Liens" shall mean all liens, mortgages, security interests,
conditional sales agreement, pledges, claims, options, and other encumbrances of
any kind, it being understood that a Lien does not include a default under an
agreement which default would not itself constitute a Lien, but shall include a
Lien arising in consequence of such default.
"Officer" means in the case of Pentacon and the Company or any
Company, any executive officer of Pentacon or the Company, as applicable, within
the meaning of Rule 3b- 7 of the 1934 Act.
"Pentacon Material Adverse Effect" shall mean any fact, circumstance,
event, or condition which has or would have a materially adverse effect on the
business, operations, properties, condition (financial or otherwise), assets,
liabilities, results of operations or prospects of Pentacon and its
subsidiaries, taken as a whole (after taking into account insurance recoveries
in respect thereof).
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority
or other legal entity of any kind.
"Representative" shall mean Xxxxxx Xxxxxxxx as the authorized
representative and agent acting for and behalf of the West Coast Stockholders,
West Coast Preferred Stockholders, West Coast Warrantholders, ASI Sellers, and
ASI Preferred Stockholders.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Seller Notes" means those notes reflected on Schedule 13.13 attached
hereto.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
are at any time directly or indirectly owned by such Person.
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"Xxxx Xxxxx Xxxxx" means WCAD Acquisition Corp (formerly "West Coast
Aero Devices Corporation, Inc.").
"West Coast Preferred Stockholders" means the holders of preferred
stock of the Company.
"West Coast Warrantholders" means the holders of warrants to acquire
capital stock of the Company.
Terms otherwise used and defined in the Agreement are as follows:
TERM DEFINED IN
"Acquisition Sub" .......................................preamble
"Agreement" .......................................preamble
"ASI" ................................................preamble
"ASI Sellers"............................................preamble
"ASI Stock"..............................................Recitals
"ASI Stock Certificates".................................Section 2.3
"ASI Stock Purchase Consideration".......................Section 2.2
"Balance Sheet Date".....................................Section 5.7
"CERCLA".................................................Section 5.17
"Certificate of Merger"..................................Section 1.2
"Closing"................................................Section 4.1
"Closing Date"...........................................Section 4.1
"Commitment".............................................Section 5.2(a)
"Company"................................................preamble
"Company Benefit Plans"..................................Section 5.19
"Company Pension Plans...................................Section 5.19
"Company Preferred Shares"...............................Section 5.2(a)
"Company Preferred Stock"................................preamble
"Company Shares".........................................Section 5.2(a)
"Company Stock"..........................................Recitals
"Company Welfare Plan"...................................Section 5.19
"Delaware Law"...........................................Section 1.1
"Disclosure Schedule"....................................Section 5.1
"Effective Time".........................................Section 1.2
"Environmental Laws".....................................Section 5.17
"Expiration Date"........................................Section 4.1
"Financial Statements"...................................Section 5.6
"GAAP" ..................................................Section 5.6
"Indemnitee" ............................................Section 9.4
"Indemnitee Claim".......................................Section 9.4
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"Indemnitor".............................................Section 9.4
"Licenses"...............................................Section 5.11
"Merger".................................................Section 1.1
"Pentacon"...............................................preamble
"Pentacon Indemnitees"...................................Section 9.1
"Plan of Merger".........................................Section 1.2
"RCRA"...................................................Section 5.17
"Redemption Amount"......................................Section 1.3
"Stockholders"...........................................preamble
"Stockholder Indemnitees"................................Section 9.3
"Stockholder Loan Amount"................................Section 1.3
"Subsidiaries"...........................................Section 5.1
"Subsidiary Shares"......................................Section 5.2(b)
"Subsidiary Stock"....................................... Section 5.2(b)
"Surviving Corporation"..................................Section 1.1
"Tax" ................................................Section 5.18
"Territory...............................................Section 10.1(a)
"Third Party"............................................Section 9.4
"West Coast Merger Consideration"........................Section 1.3
"West Coast Stock Certificates"..........................Section 1.4
"West Coast Stockholders"................................preamble
A reference in this Agreement to any statute shall be to such statute
as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
PENTACON:
PENTACON, INC.
By:
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
ACQUISITION SUB:
PENTACON AEROSPACE ACQUISITION, INC.
By:
------------------------------
Name: Xxxxx X. Xxxxx
Title: President
THE COMPANY:
WEST COAST AERO PRODUCTS
HOLDING CORP.
By:
--------------------------------
Name:
Title:
WEST COAST STOCKHOLDERS:
CMNY CAPITAL L.P.
By:
---------------------------------
Name:
Title:
CMNY CAPITAL II L.P.
By:
-------------------------
Name:
Title:
-----------------------------------
Xxxxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxx
-----------------------------------
Xxxx Xxxxxxxxx, Voting Trustee
ASI SELLERS:
-----------------------------------
Xxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Schedule 5.1 - Organization and Qualification of Company and Subsidiaries
Jurisdiction of Jurisdiction(s) of Foreign
Entity Organization Qualification
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Schedule 5.2(a) - Ownership of Company Shares
Company Stock Number of Shares Merger
Certificate No. Record Holder of Company Stock Consideration
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Schedule 5.2(b) - Ownership of ASI Stock
ASI Stock Number of Shares Purchase
Certificate No. Record Holder of ASI Stock Consideration
----------------------------------------------------------------------------------------------------------------
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Schedule 5.2(c) - Subsidiary Corporate History, Subsidiary Stock, Other
Securities and Non-Corporate Entity Participation
(i) The Company owns of record or controls, directly or indirectly, the
following capital stock in the corporations named below, which are all
of the Subsidiaries of the Company, which have done business under the
names indicated and have the whose predecessors, if any, are those
indicated; also listed below are the names under which the Company has
done business and the names of its predecessors, if any:
Significant Issued and
Has Done Asset Authorized Outstanding
Entity Business As Predecessor(s) Acquisitions Capital Stock Capital Stock
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(ii) The Company owns, of record or beneficially, or controls, directly or
indirectly, the following capital stock, securities convertible into or
exchangeable for capital stock or other equity interests in the
corporations, associations or business entities named below:
(iii) The Company is, directly or indirectly, a participant in the following
joint ventures, partnerships and other noncorporate entities:
Schedule 5.4 - Company Consents and Approvals; No Violation
Set forth below is a list of all regulatory approvals or routine governmental
consents required for any of the transactions contemplated hereby to remain in
full force and effect, as well as a list of all material contracts, commitments
or similar agreements to which the Company or any of the Subsidiaries is a party
and under which the consummation of any of the transactions contemplated hereby
may result in a default (or give rise to any right of termination, cancellation
or acceleration):
Schedule 5.5 - Affiliate Relationships
(i) Set forth below is a list of all property, assets or right, tangible or
intangible, which is associated with any property, asset or right owned
or operated by the Company or any of the Subsidiaries, which is also
owned, directly or indirectly, in whole or in part, by any of the
Stockholders or any director, officer, employee of or consultant to the
Company or any of the Subsidiaries:
(ii) Set forth below is a list of any relationships which any of the
Stockholders have, or any director, officer, employee, or agent of or
consultant to the Company or any of the Subsidiaries has, with any
other corporation, partnership, firm, association or business
organization, entity or enterprise which is a competitor, potential
competitor, supplier or customer of the Company or any of the
Subsidiaries:
Schedule 5.6 - Company Financial Statements
Attached hereto are the Company Audited Financial Statements and the Company
Unaudited Financial Statements.
Schedule 5.7 - Company Undisclosed Liabilities
Attached hereto is an accurate list as of the Company Unaudited Balance Sheet
Date of (i) all liabilities of the Company and the Subsidiaries which are
reflected in the balance sheet contained in the Company Unaudited Financial
Statements and (ii) all liabilities of any kind of the Company or the
Subsidiaries which are not reflected in such balance sheet.
Schedule 5.8 - Company Accounts and Notes Receivables
(i) Attached hereto is an accurate list as of the Company Unaudited Balance
Sheet Date of the accounts and notes receivable of the Company and the
Subsidiaries, including an aging of all accounts and notes receivable
showing amounts due in 30-day aging categories.
(ii) Attached hereto is an accurate list of receivables from and advances to
employees of the Company, employees of the Subsidiaries and the
Stockholders.
Schedule 5.9 - Company Assets
(i) Attached hereto is an accurate list of all real and personal property
included in "property and equipment" on the balance sheet of the
Company as of the Company Unaudited Balance Sheet Date and all other
tangible assets of the Company with a value in excess of [$5,000] (a)
owned by the Company or the Subsidiaries as of the Company Unaudited
Balance Sheet Date and (b) acquired since the Company Unaudited Balance
Sheet Date, including in each case true, complete and correct copies of
leases for significant equipment and for all real property leased by
the Company or the Subsidiaries and descriptions of all real property
on which buildings, warehouses, workshops, garages and other structures
used in the operation of the business of the Company and the
Subsidiaries are situated.
(ii) Attached hereto is a list of those assets of the Company and the
Subsidiaries which are currently owned, or were formerly owned, by the
Stockholders or Affiliates of the Company or the Stockholders.
(iii) Attached hereto are true, complete and correct copies of all title
reports and title insurance policies received or owned by the Company
and the Subsidiaries.
(iv) Attached hereto is a summary description of all plans or projects
involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing
business, to which management of the Company and the Subsidiaries has
devoted any significant effort or expenditure in the [two-year period]
prior to the date hereof, which if pursued by the Company or the
Subsidiaries would require additional expenditures of capital.
(v) The real and personal property of the Company and the Subsidiaries are
subject to the following liens:
Schedule 5.10 - Material Contracts, Commitments and Customers
(i) Set forth below is an accurate list as of the Company Unaudited Balance
Sheet Date of (a) all material contracts, commitments and similar
agreements to which the Company or any of the Subsidiaries is a party
or by which they or any of their property is bound (including, but not
limited to, joint venture or partnership agreements, contracts with any
labor organizations, loan agreements, indemnity or guaranty agreements,
bonds, mortgages, liens, pledges or other security agreements) and (b)
all customers representing 5% or more of the Company's and the
Subsidiaries' revenues, taken as a whole, in any of the periods covered
by the Company Audited Financial Statements or the Company Unaudited
Financial Statements:
(ii) Set forth below is an accurate list of the Company's or the
Subsidiaries' customers or suppliers have canceled or substantially
reduced service or products during the period covered by the Company
Unaudited Financial Statements or is currently attempting or
threatening to cancel or substantially reduce its use of the Company's
products or services:
(iii) The Company and the Subsidiaries have not complied with all material
commitments and obligations or are in default under the following
contracts and agreements listed in (i) above:
(iv) The Company or the Subsidiaries is or has been a party to the following
contracts subject to price redetermination or renegotiation:
Schedule 5.11 - Company Operating Authority
Set forth below is an accurate list and summary description as of the Company
Unaudited Balance Sheet Date of all Licenses, certificates, trademarks, trade
names, patents, patent applications and copyrights related to the assets owned
or held by the Company or the Subsidiaries, all of which are in full force and
effect:
Schedule 5.12 - Company Bank Account Information
Set forth below is an accurate list of the names and addresses of every bank and
other financial institution in which Company or any of the Subsidiaries
maintains an account (whether checking, savings or otherwise), lock box, or safe
deposit box, and the account numbers and persons having signature authority or
legal access thereto:
Schedule 5.13 - Company Litigation; Orders
(i) Set forth below is an accurate list of all Actions pending or, to the
Stockholders' Knowledge, threatened against the Company or any of the
Subsidiaries:
(ii) Set forth below are all judgments or outstanding orders, injunctions,
decrees, stipulations, or awards (whether rendered by a court or
administrative agency or by arbitration) against the Company or any of
the Subsidiaries:
Schedule 5.14 - Company Labor Agreements
Set forth below is an accurate list of all agreements with labor unions or
associations representing employees of the Company or any of the Subsidiaries:
Schedule 5.16 - Company Insurance
Attached hereto is an accurate list of all insurance policies currently in
effect issued in favor of the Company and the Subsidiaries which relate to their
businesses:
Schedule 5.17 - Company Disposal Sites
Set forth below is an accurate list of all disposal sites which the Company and
the Subsidiaries have utilized as of the Company Unaudited Balance Sheet Date:
Schedule 5.18 - Company Taxes
Attached hereto are copies of (i) all documents relating to tax examinations
involving the Company or the Subsidiaries, (ii) extensions of statutory
limitations and (iii) the federal, state and local Tax returns of the Company
for the last three fiscal years. Set forth below is a description of all
examinations in progress or claims against the Company or the Subsidiaries
related to Taxes:
Schedule 5.19 - Company Employee Benefit Plans
(i) Set forth below and attached hereto is an accurate list and copies of
all Company Benefit Plans:
(ii) Attached hereto are copies of all determination letters from the IRS
qualifying the above-mentioned Company Benefit Plans under Section
401(A) of the Code.
(iii) Attached hereto are all reports and other documents which are required
to be filed with any governmental agency or distributed to plan
participants or beneficiaries.
Schedule 5.20 - Company Brokerage Fees and Commissions
Set forth below is an accurate list of any obligations or agreements incurred or
entered into by the Company relating to the payment of any investment banking,
brokerage or finder's fee or commission in respect of the transactions
contemplated by this Agreement:
Schedule 5.21 - Warranties or Insurance
Set forth below is a description of all warranty, insurance, consumer protection
plans or similar arrangements provided by the Company or under which the Company
could have liability:
Schedule 5.23 - Absence of Changes
Changes since the date of the balance sheet included in the Company Unaudited
Financial Statements are:
Schedule 8.4 - Repayment of Advances, Receivables and Loans
Schedule 8.5 - Conduct of Business by the Company Pending the Closing
Schedule 13.13 - Seller Notes
