STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated October 8, 1998 ("Agreement") between
AFC Cable Systems, Inc., a Delaware corporation ("Buyer"), on the one hand, and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Uuranniemi and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, on the other hand
(collectively, the "Shareholders" and individually, a "Shareholder").
W I T N E S S E T H:
WHEREAS, Buyer wishes to buy from Shareholders, and Shareholders wish to
sell to Buyer, on the terms and for the consideration hereinafter provided,
capital stock of Georgia Pipe Company, a Georgia corporation (the "Company"),
which represents one hundred (100%) percent of the issued and outstanding
capital stock of the Company.
NOW, THEREFORE, in consideration of the premises and of the
representations and warranties, covenants and agreements hereinafter made, the
parties hereto do hereby agree as hereinafter set forth:
1. AGREEMENT TO BUY AND SELL COMPANY STOCK.
1.1 Sale of Stock. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations, warranties, covenants and
agreements of Buyer herein contained, Shareholders agree that they will sell,
convey, transfer, assign and deliver to Buyer at the Closing provided for in
Article 2, 1,000 shares of the Company's common stock, no par value per share,
(collectively, the "Company Stock"), representing one hundred (100%) percent of
the issued and outstanding capital stock of the Company.
1.2 Consideration for Sale and Transfer of the Company Stock.
Subject to the terms and conditions of this Agreement and in reliance upon the
representations, warranties, covenants and agreements of Shareholders herein
contained, and in full consideration of such sale, conveyance, transfer,
assignment and delivery of the Company Stock to Buyer, Buyer agrees to pay and
deliver to Shareholders a purchase price (the "Purchase Price") equal to the sum
of:
(a) the difference between (i) US $24,500,000 and (ii) the sum
of (aa) the fair market value of the Uuranniemi Parcel (as defined in Section
4.7 hereof) as jointly determined by Buyer and Shareholders (the "Real Estate
Fair Market Value") based upon a mutually satisfactory appraisal thereof
conducted as of a recent date prior to the Closing plus (bb) the book value of
any titanium dioxide inventory of the Company on hand as of the Closing (the
"Excluded Inventory Value") plus
(b) an amount equal to the "Earnings of the Company for the
Seven Month Period Beginning June 1, 1998 and Ending December 31, 1998" (as
defined in Section 2.4(d) hereof) .
The Purchase Price shall be paid as provided in Sections 2.2 and 3 hereof.
The Purchase Price shall be subject to possible adjustment as provided in
Section 2.4 hereof.
1.3 Section 338(h)(10) Election. (a) The parties intend and agree
that, if requested by Buyer in writing no later than ten (10) days prior to the
Closing Date (as hereinafter defined) (the "Notice"), the transactions provided
for herein shall be covered by an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code"). All of the parties
hereto agree that they will, if so requested by Buyer, before and after the
Closing, file such elections and take such other actions, and cause the Company
to file such elections and take such other actions, as and when Buyer shall deem
necessary to make a timely and effective election under Section 338(h)(10) of
the Code (the "Election") in connection with the transactions contemplated by
this Agreement.
(b) The allocation of the Purchase Price (the "Purchase Price
Allocation") for federal and state income tax purposes shall be as specified by
Buyer and provided to Shareholders, and the parties agree to file all returns,
reports and elections required by law in a manner consistent therewith. The
interim calculation referenced in Section 1.3(d)(i) below shall be based on the
initial Purchase Price Allocation provided by Buyer to Shareholders. To enable
Buyer to formulate its initial Purchase Price Allocation, Shareholders will give
to Buyer and its advisers access to the Company's books and records, the
Company's auditors and such other information as Buyer may reasonably request.
Such initial Purchase Price Allocation may be refined to a final Purchase Price
Allocation by Buyer prior to payment of the Section 1.2(b) amount to reflect
more current and accurate information. The Purchase Price Allocation shall be
prepared in compliance with applicable provisions of the Code.
(c) In the event that the Election is made pursuant to this Section
1.3, the Purchase
Price shall be adjusted (the "338(h)(10) Adjustment"), as provided in Sections
1.3(d) and 1.3(e) herein for the amount of any additional federal and state
income taxes which the Shareholders may be required to pay in connection with
the transactions contemplated by this Agreement and which arise solely as a
result of the making of the Election, so as to ensure that the Shareholders' net
after tax proceeds are no less than the net after tax proceeds the Shareholders
would have otherwise realized in the absence of the making of the Election.
(d)(i) Within five (5) days after receipt by Shareholders of the
Notice and initial Purchase Price Allocation from Buyer, Shareholders shall
prepare or cause to be prepared a calculation of the 338(h)(10) Adjustment with
respect to the payment to be made pursuant to Section 1.2(a) hereof, and shall
provide such calculation to Buyer. Such calculation shall be an interim
calculation based on the initial Purchase Price Allocation, but shall be binding
on Buyer and Shareholders at the Closing, and the amount of such 338(h)(10)
Adjustment shall be paid to Shareholders at Closing, unless Buyer, prior to
Closing, notifies Shareholders in writing that it has determined not to file the
Election. In such event, the Notice shall be deemed withdrawn and no Election
shall be filed.
(ii) In the event the decision is made to file the Election,
then with respect to the calculation of the 338(h)(10) Adjustment to the
payments to be made under Section 1.2(a) and Section 1.2(b) hereof, the
following procedures shall apply: within 10 days after determination of the
amount to be paid pursuant to Section 1.2(b), Shareholders shall prepare or
cause to be prepared a calculation of the final 338(h)(10) Adjustment with
respect to the Section 1.2(a) and Section 1.2(b) amounts reflecting the final
Purchase Price Allocation, and shall provide such calculations to Buyer. Such
calculations shall each be final, conclusive and binding on Buyer and
Shareholders, unless Buyer, within ten (10) days after receipt of the
calculation notifies Shareholders of its disagreement in writing with either or
both of the calculations. If Buyer notifies Shareholders in writing of its
disagreement with Shareholder's calculations within such ten (10) day period,
the Buyer and Shareholders shall attempt to resolve their differences with
respect thereto within 10 business days after Shareholder's receipt of Buyer's
written notice of disagreement. In this regard, Buyer and Shareholders shall
each make available to the other their respective accountants for consultation
with one another. Any disputes not resolved by Buyer and Shareholders within
such 10 day period will be resolved by an accounting firm mutually acceptable to
both parties or, in the absence of agreement as to the selection of such
accounting firm, by a "big five" accounting firm selected by lot after
eliminating any of such firms then or previously engaged by Buyer or any of the
Shareholders. The determination of the calculations by any accounting firm so
selected shall be final, conclusive and binding upon the parties. The fees and
expenses of such accounting firm in acting under this section shall be borne
one-half by the Shareholders, on the one hand, and one-half by the Buyer on the
other hand. Upon final determination, the remaining 338(h)(10) Adjustment amount
(which amount shall be
adjusted to reflect any appropriate adjustments resulting from differences
between the initial and final Purchase Price Allocation and/or the procedures
for review and resolution of disputes provided for in this subsection (d)(ii))
shall be paid promptly to Shareholders. Simultaneously therewith, Shareholders
will pay to Buyer interest on the amount of the 338(h)(10) Adjustment paid by
Buyer to Shareholders at Closing, at the prime rate of interest published in the
Wall Street Journal on the Closing Date, for the period from the Closing Date
until the date such 338(h)(10) Adjustment is paid to the appropriate taxing
authority or authorities. In addition, when the Shareholders remit to the
appropriate taxing authority the 338(h)(10) Adjustment to be paid by Buyer to
Shareholders in respect of the payment made under Section 1.2(b) hereof,
Shareholders shall simultaneously (with such remittance to the taxing authority)
pay to Buyer interest thereon at the aforesaid prime rate for the period from
the date such 338(h)(10) Adjustment is paid to Shareholders until the date of
such remittance.
(e) In determining the 338(h)(10) Adjustment, the parties
specifically agree that the following assumptions shall be used:
(i) The Purchase Price Allocation shall be as specified by
Buyer pursuant to Section 1.3(b) hereof.
(ii) It shall be assumed that the applicable federal ordinary
income tax rate is 39.6% and that the applicable federal capital gains tax rate
is 20%.
(iii) It shall be assumed that the applicable state income tax
rate or rates are the highest stated marginal tax rates of the applicable state
net of any federal tax benefits derived from the payment of state tax, assuming:
(i) that the state tax is paid in the year of receipt of the income upon which
the state tax is so payable, (ii) the state tax for 1998 shall be deductible for
federal income tax purposes without regard to the alternative minimum tax and
(iii) the state tax for 1999 shall be deductible for federal income tax purposes
subject to the alternative minimum tax, if applicable, as documented by
Shareholders.
(iv) It shall be assumed that the State of Georgia would not
impose any taxes on the transactions contemplated by this Agreement in the
absence of a Section 338(h)(10) election, and, accordingly, that any 338(h)(10)
Adjustment shall include, at a minimum, additional Georgia state income taxes.
(v) All calculations shall be "grossed up" to reflect the
taxes that would be payable on each 338(h)(10) Adjustment amount itself so that
the net after tax proceeds to the Shareholders in the event of the Election are
no less than the net after tax proceeds to the Shareholders without an Election.
(f) Notwithstanding any provision of this Section 1.3 to the
contrary, in the event that the federal or state individual income tax return of
any Shareholder for the calendar years 1998 or 1999 is finally adjusted after
examination by the relevant taxing authority, and a final determination of taxes
is made (whether by agreement, compromise, or as the result of litigation),
then, upon presentation to Buyer of the appropriate documentation, Buyer shall
promptly reimburse the Shareholder for any additional federal and state income
taxes, penalties and interest which the Shareholder may be required to pay, and
Shareholders shall promptly reimburse Buyer for any refunds of federal or state
income taxes which Shareholders may be entitled to receive, in connection with
the transactions contemplated by this Agreement and which arise solely as a
result of making the Election, so as to ensure that the Shareholders net after
tax proceeds are no less than the net after tax proceeds the Shareholders would
otherwise have realized in the absence of making the Election.
2. CLOSING AND PAYMENT OF A PORTION OF THE PURCHASE PRICE.
2.1 Closing. Subject to the satisfaction of the conditions precedent
of Buyer and Shareholders set forth in Article 9 and Article 10 hereof, the
closing of the transactions contemplated hereby (the "Closing") shall be held at
the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., 2300 BankBoston Plaza, Providence,
Rhode Island at 10:00 A.M. on Friday, October 30, 1998 or on such later time and
date, not to exceed November 30, 1998, as the conditions specified in Articles 9
and 10 hereof shall have been satisfied or waived. The time and date of the
Closing is herein called the "Closing Date".
2.2 Payment of a Portion of Purchase Price. At the Closing, against
transfer of title to the Company Stock from Shareholders to Buyer, the Buyer
shall:
(a) pay by wire transfer of immediately available United
States funds to Shareholders (to and among them in proportion to their relative
percentage ownership interests in the Company Stock) a portion of the Purchase
Price equal to the difference between (i) US $24,500,000 and (ii) the sum of
(aa) the Real Estate Fair Market Value plus (bb) the Excluded Inventory Value
plus (cc) US $1,500,000;
(b) pay by wire transfer of immediately available United
States Funds to State Street Bank and Trust Company (the "Escrow Agent") a
portion of the Purchase Price equal to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ DOLLARS (US $1,500,000), which shall be held by the Escrow Agent and
administered and disposed of by the Escrow Agent in accordance with the terms
and provisions of an escrow agreement by and among Shareholders, Buyer and
Escrow Agent in the form of Exhibit A attached hereto (the
"Escrow Agreement"). To the extent that distributions from the funds under the
Escrow Agreement are insufficient to pay Buyer any amounts payable to Buyer
under any of Sections 4.10(d) or 12.1 hereof, Shareholders, jointly and
severally, shall immediately pay any deficiencies to Buyer.
The balance of the Purchase Price shall be paid as provided in Section 3
hereof, and the Purchase Price shall be subject to possible adjustment as
provided in Section 2.4 hereof. The parties intend that all amounts of cash and
stock payable to Shareholders under this Section 2.2 hereof and Section 3
hereof, and all incentive compensation payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Teppo
Uuranniemi and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ under their respective Employment Agreements (as
defined in Section 9.14 hereof), shall be treated as purchase price for tax and
book accounting purposes.
2.3 Transfer of Company Stock. At the Closing, Shareholders shall
transfer to Buyer or its nominee all right, title and interest in the Company
Stock as provided herein. Said transfer shall be effected by delivery to Buyer
of the stock certificates representing the Company Stock accompanied by stock
assignment forms executed by Shareholders in favor of Buyer.
2.4 Possible Adjustment to Purchase Price.
(a) Following the Closing, if the "Net Worth" (as defined in
Section 2.4(d) hereof and determined as hereinafter provided) of the Company as
of the Closing Date is less than an amount (the "Minimum Net Worth") equal to
the sum of (1) US $11,317,683 plus (2) "Net Income" of the Company (as defined
in Section 2.4(d) hereof and determined as hereinafter provided) for the period
between June 30, 1998 and the Closing Date, then the Purchase Price shall be
adjusted by an amount equal to, and Shareholders shall pay Buyer (by wire
transfer of immediately available United States funds) an amount equal to, the
difference between (i) the Minimum Net Worth and (ii) the Net Worth of the
Company as of the Closing Date. Shareholders shall pay the amount of any such
payment to Buyer within ten (10) business days following the final determination
of both (i) the Net Worth of the Company as of Closing Date and (ii) Net Income
of the Company for the period between June 30, 1998 and the Closing Date,
determined as hereinafter provided.
(b) Within forty-five (45) days after the Closing,
Shareholders shall prepare or cause to be prepared and will furnish to Buyer:
(1) unaudited but reviewed statements of income and retained earnings of the
Company for the period between June 30, 1998 and the Closing Date, which shall
have
been prepared in accordance with United States generally accepted accounting
principles ("US GAAP"), consistently applied with prior periods, (2) an
unaudited but reviewed balance sheet of the Company as of the Closing Date,
which shall have been prepared in accordance with US GAAP, consistently applied
with prior periods, (3) an unqualified report of the Company's presently serving
auditors stating that they have reviewed such statements of income and balance
sheet in accordance with the generally accepted standards for a review, (4) a
statement showing Shareholders' determination and calculation ("Shareholders'
Determination") of: (i) Net Income of the Company for the period beginning June
30, 1998 and ending on the Closing Date and (ii) the Net Worth of the Company as
of the Closing Date, and (5) a certificate of the Company's presently serving
auditors certifying that the foregoing financial statements and Shareholders'
Determination have been prepared in accordance with the requirements of this
Section 2.4. For purposes of preparing the balance sheet referred to in clause
(2) above, inventory shall be physically taken as of the Closing Date by
Shareholders, and Buyer shall be entitled to participate therein.
(c) Following Shareholders' delivery to Buyer of the
statements, reports and certificates to be delivered by Shareholders to Buyer
pursuant to subsection (b) of this Section 2.4 hereof, unless Buyer notifies
Shareholders in writing that Buyer disagrees with Shareholder's Determination
within 20 business days after Buyer's receipt thereof, Shareholder's
Determination shall be final, conclusive and binding on Buyer and Shareholders.
If Buyer notifies Shareholders in writing of its disagreement with the
Shareholder's Determination within such 20 day period, then Buyer and
Shareholders shall attempt to resolve their differences with respect thereto
within 30 business days after Shareholder's receipt of Buyer's written notice of
disagreement. Any disputes not resolved by Buyer and Shareholders within such 30
day period will be resolved by an accounting firm mutually acceptable to both
parties or, in the absence of agreement as to the selection of such accounting
firm, by a "big five" accounting firm selected by lot after eliminating any of
such firms then or previously engaged by Buyer or any of the Shareholders. The
determination of any accounting firm so selected as to the Net Worth of the
Company as of the Closing Date and/or Net Income of the Company for the period
between June 30, 1998 and the Closing Date, either or both, as applicable, shall
be final, conclusive and binding upon the parties. The fees and expenses of such
accounting firm in acting under this section shall be borne one-half by
Shareholders, on the one hand, and one-half by Buyer on the other hand.
(d) As used herein, (1) "Net Worth" of the Company shall mean
the Total Stockholders' Equity of the Company, calculated in accordance with US
GAAP, consistently applied with prior periods, (2) "EBIT" of the Company shall
mean earnings before interest and taxes, calculated in accordance with US GAAP,
consistently applied with prior periods, (3) "Net Income" of the Company shall
mean Net Income, calculated in accordance with US GAAP, consistently applied
with prior periods, and (4) "Earnings of the Company for the Seven Month Period
Beginning June 1, 1998 and Ending December 31, 1998" shall mean the sum of (a)
Net Income of the Company for the period between June 1, 1998 and the Closing
Date plus (b) EBIT of the Company for the period between the Closing Date and
December 31, 1998.
(e) For purposes of Section 2.4 and 3.3 hereof, and without
impairment of or departure from the procedures therein set forth: (A)
Shareholders shall be entitled to consult with, and engage the assistance of,
the Company's presently serving auditors in taking any action or making any
decision required to be taken or made by Shareholders, and (B) Buyer shall be
entitled to consult with, and engage the assistance of, Buyer's auditors in
taking any action or making any decision required to be taken or made by Buyer.
In addition, the parties agree to cause their respective auditors to make
available to each other, at all reasonable times, their respective workpapers,
if any, relating to the financial statements, reports and certificates to be
prepared and delivered pursuant to Sections 2.4 and 3.3. For purposes of
Sections 2.4 and 3.3 hereof, and notwithstanding any other provisions of this
Agreement, any required calculations shall be made as if no election under Code
Section 338, including but not limited to the Election under 338(h)(10), had
been made.
3. POST CLOSING PAYMENT OF BALANCE OF PURCHASE PRICE.
3.1 Payment of Balance of Purchase Price; and Time of Payment.
Following the Closing, Buyer shall also pay to Shareholders (to and among them
in proportion to their relative percentage ownership interests in the Company
Stock) the balance of the Purchase Price which shall be equal to Earnings of the
Company for the Seven Month Period Beginning June 1, 1998 and Ending December
31, 1998 (as defined in Section 2.4(d) hereof), determined as hereinafter
provided. The balance of the Purchase Price shall be paid to Shareholders within
ten (10) business days following the final determination of EBIT of the Company
for such period.
3.2 INTENTIONALLY LEFT BLANK.
3.3 Determination of Earnings of the Company for the Seven Month
Period Beginning June 1, 1998 and Ending December 31, 1998.
(a) After the end of calendar year 1998, Buyer shall prepare
or caused to be prepared and will furnish to Shareholders not later than
February 28, 1999: (1) statements of income of the Company for the 7 month
period beginning June 1, 1998 and ending December 31, 1998, which shall have
been prepared in accordance with US GAAP, consistently applied with prior
periods, (2) a statement showing Buyer's determination and calculation ("Buyer's
Determination") of Earnings of the Company for the Seven Month Period Beginning
June 1, 1998 and Ending December 31, 1998 and (3) a certificate of Buyer's Chief
Financial Officer certifying that the foregoing financial statements and Buyer's
Determination have been prepared in accordance with this Section 3 hereof.
(b) Following Buyer's delivery to Shareholders of the
statements and certificates to be delivered by Buyer to Shareholders pursuant to
subsection (a) of this Section 3.3 hereof, unless Shareholders notify Buyer in
writing that Shareholders disagree with Buyer's Determination within twenty (20)
business days after Shareholders' receipt thereof, Buyer's Determination shall
be final, conclusive and binding on Buyer and Shareholders. If Shareholders
notify Buyer in writing of their disagreement with the Buyer's Determination
within such twenty (20) day period, then Buyer and Shareholders shall attempt to
resolve their differences with respect thereto within thirty (30) business days
after Buyer's receipt of Shareholders' written notice of disagreement. Any
disputes not resolved by Buyer and Shareholders within such thirty (30) day
period will be resolved by an accounting firm mutually acceptable to both
parties or, in the absence of agreement as to the selection of such accounting
firm, by a "big five" accounting firm selected by lot after eliminating any of
such firms then or previously engaged by Buyer or any of the Shareholders. The
determination of any accounting firm so selected, as to the amount of Earnings
of the Company for the Seven Month Period Beginning June 1, 1998 and Ending
December 31, 1998, shall be final, conclusive and binding upon the parties. The
fees and expenses of such accounting firm in acting under this section shall be
borne one-half by Shareholders, on the one hand, and one-half by Buyer on the
other hand.
3.4 Form of Payments. All payments of the Purchase Price payable by Buyer
to Shareholders shall be paid by wire transfer of immediately available United
States funds. Notwithstanding the foregoing or anything to the contrary
elsewhere herein contained, Buyer may elect to pay all or a portion of the
balance of the Purchase Price (payable following the Closing pursuant to Section
3.1 hereof) in either of, or in a combination of: (i) shares of Buyer's Common
Stock, $0.01 par value per share ("Common Stock") or (ii) Buyer's two-year,
unsecured promissory notes bearing interest at the prime rate, with interest
paid quarterly, provided that shares of Buyer's Common Stock and Buyer's
promissory notes may not be used to pay more than US $3,300,000 of such balance
of the Purchase Price. Any portion of the balance of the Purchase Price which
Buyer elects to pay in shares of Buyer's Common Stock shall be paid by delivery
from Buyer to Shareholders of stock certificates, representing a number of
shares of Buyer's Common Stock having a value (as hereinafter determined) equal
to the portion of the balance of the Purchase Price which Buyer elects to pay in
shares of Buyer's Common Stock. In the case of any portion of the balance of the
Purchase Price which Buyer elects to pay in shares of Buyer's Common Stock, the
number of shares of Buyer's Common Stock to be delivered to Shareholders to pay
such portion of the balance of the Purchase Price shall be determined by
dividing the portion of the balance of the Purchase Price which is to be paid in
Buyer's Common Stock by a price per share (the "Stipulated Value Per Share")
which is equal to the arithmetic average of the mean of the closing bid and
asked prices for Buyer's Common Stock on the NASDAQ National Market, or such
other nationally recognized market in which the Common Stock trades if such
Common Stock is no longer listed on the NASDAQ National Market, for the
twenty (20) trading days consisting of the last ten (10) trading days in October
1998 and the first ten (10) trading days in March 1999. Any portion of the
balance of the Purchase Price which Buyer elects to pay with Buyer's promissory
notes shall be paid by delivery from Buyer to Shareholders of promissory notes
of Buyer in the form of Exhibit B attached hereto (the "Buyer's Promissory
Notes").
3.5 Purchase of Additional Shares by Shareholders. If the balance of
the Purchase Price payable pursuant to Section 3.1 hereof is less than US
$3,300,000, and if Buyer elects to pay the entire balance of the Purchase Price
in shares of Buyer's Common Stock, then, if so directed by Buyer, Shareholders
will purchase from Buyer, at the same time that Buyer pays the balance of the
Purchase Price pursuant to Section 3.1 hereof, a number of shares of Buyer's
Common Stock (the "Number of Additional Shares") equal to (A) the difference
between US $3,300,000 and the balance of the Purchase Price payable pursuant to
Section 3.1 hereof divided by (B) the Stipulated Value Per Share. For each such
share of Buyer's Common Stock to be purchased by Shareholders, Shareholders will
pay Buyer a purchase price per share equal to the Stipulated Value Per Share,
payable in full in United States Dollars, against simultaneous delivery from
Buyer to Shareholders of stock certificates representing a number of shares of
Buyer's Common Stock as is equal to the Number of Additional Shares.
The number of shares of Buyer's Common Stock to be issued by Buyer to
Shareholders pursuant to Sections 3.4 and 3.5 hereof and the Stipulated Value
Per Share shall be equitably adjusted to reflect any stock split or
recapitalization by Buyer occurring at any time (i) during or after the last 10
trading days in October 1998 and (ii) up to and including the date of issuance
of Buyer's Common Stock pursuant to Sections 3.4 and 3.5 hereof.
3.6 Interim Covenants. Until Buyer has paid to Shareholders the
balance of the Purchase Price pursuant to Section 3.1 hereof, Buyer will: (a)
not sell the Company to a person not affiliated with Buyer, (b) operate the
Company's business in substantially the same manner as currently operated, (c)
not terminate the employment of Jaako Uuranniemi, Teppo Uuranniemi, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ or any other Shareholder employed by the Company after the Closing
(except that nothing herein shall prevent a termination "for cause") and (d)
without Shareholders' prior approval not to be unreasonably withheld or delayed,
and for so long as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ is President of the Company not (i) make
any material change to the Company's management team or (ii) reduce the salary
and bonus compensation payable to any of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇ below the levels specified on Schedule 4.13 attached hereto (except that
nothing herein shall prevent a termination "for cause"). For the purpose of this
Section 3.6 only, any portion of the balance of the Purchase Price which Buyer
elects to pay with Buyer's Promissory Notes shall be deemed paid upon the
delivery of such notes to the Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Except as any representations and warranties in this Section 4 may
be qualified by disclosures made in the Schedules attached to this Agreement,
Shareholders, jointly and severally, represent, warrant and agree to and with
Buyer as of the date hereof and as of the Closing Date as follows:
4.1 Organization and Qualification of the Company. The Company is
duly organized and validly existing under the laws of the State of Georgia. The
Company has the requisite corporate power and authority to own or lease all of
its properties and assets and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is now
conducted. The Company is duly qualified, licensed and authorized to do business
as a foreign corporation and is in good standing as a foreign corporation in
each jurisdiction where such qualification, licensing or authorization is
required.
4.2 Authority of Shareholders and the Company. This Agreement and
each of the other agreements and other documents and instruments delivered or to
be delivered to Buyer pursuant to or in contemplation of this Agreement will
constitute, when so delivered, the valid and binding obligations of such of the
Company and the Shareholders as are parties thereto and shall be enforceable
against such parties in accordance with their respective terms .except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally, or by the
exercise of judicial discretion in accordance with general equitable principles.
Each of the Shareholders has full power and authority to execute, deliver and
perform his or her obligations under this Agreement and each of the other
agreements and other documents and instruments to be delivered hereunder and to
perform his or her obligations.
The execution, delivery and performance of this Agreement or any
such other agreement, document or instrument by the Company or Shareholders,
except as specifically identified on the Schedule of Breaches, Defaults and
Required Consents attached hereto as Schedule 4.2, does not and will not with
the passage of time or the giving of notice or both:
(a) result in a breach of or constitute a default by
Shareholders or the Company or result in any right of termination or other
effect adverse to the Company or Shareholders under any indenture or loan or
credit agreement of Shareholders or the Company, or any other agreement, lease
or instrument to which Shareholders or the Company is a party or by which the
property of the Company or Shareholders is bound or affected;
(b) result in, or require, the creation or imposition of any
mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance or claim
of any nature whatsoever on the assets of the Company or on the Company Stock;
(c) result in a violation of or default under any law, rule,
or regulation, or any order, writ, judgment, injunction, decree, determination
or award, now in effect having applicability to Shareholders, the Company or the
Company Stock;
(d) violate any provisions of the Articles of Incorporation or
By-Laws of the Company, as amended; or
(e) except as disclosed on Schedule 4.2 hereof, require any
approval, consent or waiver of, or filing with, any person.
4.3 Subsidiaries. The Company has no subsidiaries and does not own
any securities issued by any other individual, corporation, partnership, joint
venture, trust, association, estate, joint stock company or organization, except
temporary investments in the ordinary course of business.
4.4 Capitalization. The authorized capital stock of the Company
consists of: 100,000 shares of common stock, no par value per share, of which
1,000 shares are issued and outstanding and no shares are held in the treasury.
All of the Company's issued and outstanding shares of capital stock are
hereinafter collectively referred to as the "Company Stock." The Company Stock
has been duly and validly authorized, and the Company Stock is duly and validly
issued, fully paid and non-assessable; and was issued in compliance with federal
and applicable state securities laws. Except as set forth on Schedule 4.4
hereto, the Company Stock is owned by Shareholders free and clear of any and all
claims, liens, pledges, charges, encumbrances, mortgages, security interests,
options, restrictions on transfer (other than any restrictions under federal and
state securities laws), rights of first refusal, preemptive or other rights or
other interests or equities or imperfections of title whatsoever. There are no
other equity or debt securities of the Company authorized or issued and
outstanding on the date hereof and there are no existing warrants, preemptive or
other rights, options, calls, commitments, conversion privileges, or other
agreements obligating the Company to issue any capital stock, or any security
convertible into and/or exchangeable for capital stock of the Company.
4.5 Valid Title to Company Stock. Except as disclosed on Schedule
4.5, shareholders have and Buyer will receive at the Closing valid and
marketable title to the Company Stock, free and clear of any claims, liens,
pledges, charges, encumbrances, mortgages, security interests, options,
restrictions on transfer, rights of first refusal, preemptive or other rights or
other agreements, interests or equities or any other imperfections of title
whatsoever.
4.6 Assets.
(a) Except for assets disposed of since the Interim Date (as
hereinafter defined in Section 4.10 hereof) in the ordinary course of business
consistent with past practice, the Company owns, or has enforceable rights to
use under valid and binding leases with third parties, all assets included in
the Interim Date Balance Sheet (as hereinafter defined in Section 4.10 hereof)
and such assets constitute all assets necessary to the business and operations
of the Company as presently conducted. Except as set forth on the Schedule of
Machinery and Equipment attached hereto as Schedule 4.6(a), the machinery and
equipment owned or leased by the Company (i) is in an operating condition
suitable to the conduct of the Company's business, subject to normal wear and
tear; (ii) has been maintained in accordance with normal industry practice;
(iii) is adequate for the Company's current needs and the Company's current
production levels; and (iv) conforms with all applicable laws, ordinances and
regulations.
(b) Except as listed on the Schedule of Liens and Encumbrances
attached hereto as Schedule 4.6(b) and except for assets disposed of since the
Interim Date in the ordinary course of business consistent with past practice,
the Company has good and marketable title to all of its assets (including,
without limitation, those reflected in the Interim Date Balance Sheet), free and
clear of all claims, liens, pledges, charges, mortgages, security interests,
encumbrances, equities or other imperfections of title of any nature whatsoever,
except for liens for current taxes and assessments not yet due and payable.
(c) The inventories of the Company reflected on the Interim
Date Balance Sheet and the inventories of the Company existing on the date
hereof and on the Closing Date are of a quality and quantity saleable in the
ordinary course of the Company's business at prevailing market prices, are
valued at the lower of cost or market and reflect write-downs to realizable
values in the case of items which have become obsolete, unusable or unsaleable
(except at prices less than cost) through regular distribution channels in the
Company's business. Subject to write-downs complying with the preceding
sentence, the values of the inventories stated in the Interim Date Balance Sheet
reflect the Company's normal inventory valuation policies and were determined in
accordance with US GAAP, practices and methods consistently applied. Purchase
commitments for raw materials and inventory are not, individually or in the
aggregate, in excess of normal requirements and none are at prices in excess of
the lowest prices reasonably available in the current market. Sales commitments
for finished goods are all at prices in excess of prices used in valuing
inventory items or of estimated costs of manufacture of items not in inventory
after allowing for selling expenses and a normal profit margin except in
instances of sale promotions or product introductions consistent with past
practices. Since the Interim Date, no inventory items have been sold or disposed
of except through sales in the ordinary course of
business.
(d) All of the personal property leased by the Company is
listed on the Schedule of Personal Property Leases attached hereto as Schedule
4.6(d), and true and complete copies of all of the lease documents have been
delivered to the Buyer. All such lease documents are unmodified and in full
force and effect, and there are no other agreements, written or oral, between
the Company and any third parties claiming an interest in the Company's interest
in any leased property or otherwise relating to the Company's use and occupancy
thereof, and all covenants, conditions, restrictions, easements and similar
matters affecting the leased property have been complied with by the Company.
(e) Except for the assets located at the premises described on
the Schedule of Assets at Other Locations attached hereto as Schedule 4.6(e),
all of the assets of the Company are located on the Real Property (as defined in
Section 4.7 hereof), and all the assets located on such other premises are owned
or leased by the Company.
4.7 Real Property.
(a) With the exception of the real estate and building and
improvements thereon which the Company leases at ▇▇▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Uuranniemi Parcel") and the other real property and
buildings and improvements thereon which the Company leases as disclosed on the
Schedule of Real Property attached hereto as Schedule 4.7, the Company does not
own, lease or otherwise use any real estate in the conduct of its business. (All
of such real property owned or leased by the Company, including but not limited
to the Uuranniemi Parcel, together with the buildings and improvements thereon,
is herein referred to as the "Real Property"; and, solely for purposes of this
Section 4.7 hereof and Articles 11 and 12 hereof, the term "Real Property" shall
also include any other real property previously owned, operated or leased by the
Company.) The legal description of the Uuranniemi Parcel is set forth on
Schedule 4.7.
(b) Except as otherwise specifically disclosed on Schedule
4.7: (i) the Real Property, and the operations thereon and the uses made
thereof, and the Company's business, are in compliance with all, and are not in
violation of any, Environmental Laws (as hereinafter defined); (ii) there has
been no generation, use, treatment, handling, storage or disposal, or
arrangement for the use, treatment, handling, storage or disposal, of Hazardous
Materials on, or release or transportation of Hazardous Materials to or from,
the Real Property at any time by the Company or any of its past or present
officers, employees, agents or independent contractors or, to the best of
Shareholders' knowledge, any other person, except in full compliance with all
Environmental Laws; (iii) the Real Property has not been used at any time by the
Company or
any of its past or present officers, employees, agents or independent
contractors or, to the best of Shareholders' knowledge, any other person, in
such a manner as to cause a violation of any Environmental Law or to give rise
to any liability or obligation for the remediation or restoration of the Real
Property or for the treatment, storage, removal, disposal, release, arrangement
for removal or disposal or transportation of any Hazardous Materials; (iv) no
such violation, liability or obligation has been created by the removal,
disposal or transportation of any Hazardous Materials to or from the Real
Property at any time by the Company or any of its past or present officers,
employees, agents or independent contractors or, to the best of Shareholders'
knowledge, any other person; (v) neither the Company nor any of the Shareholders
has received notice of an Environmental Action (as hereinafter defined) arising
out of or relating to the Real Property or the generation, use, treatment,
handling, storage or disposal, or arrangement for the use, treatment, handling,
storage or disposal, of Hazardous Materials thereon, or the release or
transportation of Hazardous Materials thereto or therefrom; (vi) the Real
Property is not listed or proposed for listing on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the Environmental
Protection Agency or any analogous state list of sites requiring investigation
or clean-up and is not adjacent to any such property; (vii) none of the
buildings and improvements included within the Real Property contain asbestos,
and there are no underground storage tanks or polychlorinated biphenyl (PCBs)
located on or at the Real Property; (viii) the Company has obtained all permits,
approvals, identification numbers, licenses and other authorizations, and
renewals thereof, required under Environmental Laws; all of the same are
currently effective; and the Company is complying in all respects therewith;
(ix) no employees of the Company have been exposed to Hazardous Materials in
violation of any Environmental Laws; and (x) the Shareholders have delivered to
Buyer true, complete and correct copies or results of any and all reports,
studies or tests in the possession of the Shareholders or the Company pertaining
to the existence of Hazardous Materials and other environmental concerns on any
part of the Real Property or concerning compliance with or liability under
Environmental Laws in the operation of the business of the Company.
As used in this Section 4.7 and elsewhere in this Agreement: (1) "Environmental
Action" means any action, suit, demand, demand letter, claim, notice of
non-compliance or violation, investigation, proceeding, consent order or consent
agreement under any Environmental Law, including, without limitation (a) any
claim by any governmental or regulatory authority for enforcement, clean-up,
removal, response, remedial or other actions or damages pursuant to any
Environmental Law and (b) any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat of
injury to the environment; (2) "Environmental Laws" and "Environmental Law"
means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment or Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, the Resource Conservation and Recovery Act, the Hazardous Materials
Transportation Act, the Clean Water Act, the Toxic Substances Control Act, the
Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act and the
Federal Insecticide, Fungicide and Rodenticide Act, in each case, as amended
from time to time; and (3) "Hazardous Materials" means (a) petroleum or
petroleum products, natural or synthetic gas, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and radon gas, (b) any
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials" "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants"
"contaminants" or "pollutants" or words of any similar import, under any
Environmental Law and (c) any other substance exposure to which is regulated
under any Environmental Law.
(c) The Real Property, and the operations thereon and the uses
made thereof, are in compliance with all fire, building and zoning laws,
statutes, ordinances, codes, rules, regulations and decrees.
(d) No notice of violation of any applicable federal, state,
or local statute, ordinance, order, requirement, law, rule, regulation
(including, without limitation, any Environmental Law), or of any covenant,
condition, restriction or easement affecting the Real Property with respect to
the use or occupancy of the Real Property has been received by the Shareholders
or the Company.
(e) To the best of Shareholders' knowledge, there is no plan,
study or effort by any governmental authority or any other person which may
prevent or hinder the continued use of the Real Property as heretofore used in
the conduct of the business by the Company.
(f) There is not (i) to the best of Shareholders' knowledge,
any intended or proposed federal, state, or local statute, ordinance, order,
requirement, law, rule or regulation (including, but not limited to, zoning
changes) which may prevent or hinder the continued use of the Real Property as
heretofore used in the conduct of the business by the Company or (ii) any suit,
action, claim or legal, administrative, arbitration or other proceeding or
governmental investigation (other than Environmental Actions) pending or, to the
best of Shareholders' knowledge, threatened or contemplated against or affecting
either the Real Property or the use thereof.
(g) There is no existing or, to the best of Shareholders'
knowledge, proposed or contemplated eminent domain proceeding that would or
could result in the taking of
all or any part of the Real Property that would prevent or hinder the continued
use of the Real Property as heretofore used in the conduct of the business by
the Company.
(h) Except as set forth on Schedule 4.7, there are no
encroachments onto the Real Property by any improvements on any adjoining
property.
(i) Except as set forth on Schedule 4.7, there are no
encroachments onto any adjoining property by any improvements on the Real
Property.
(j) There are no unpaid taxes, local improvement levies,
assessments (special, general or otherwise) or bonds of any nature affecting the
Real Property or any portion thereof.
(k) Except as set forth on Schedule 4.7, neither the Company
nor, to the best of Shareholders' knowledge, any owner of the Real Property has
subjected the Real Property to any lease, sublease, tenancy, concession,
license, occupancy agreement or similar right other than the Company's leasehold
interest in the Real Property.
(l) ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ owns good and marketable fee simple
absolute title to the Real Property, free and clear of any and all mortgages,
deeds of trust, liens, encumbrances, claims, charges, security interests,
equities, covenants, conditions, restrictions, easements, rights of way or other
matters, whether or not of record, except as set forth on Schedule 4.7.
(m) To the best of Shareholders' knowledge, all covenants,
conditions, restrictions, easements and similar matters affecting the Real
Property have been complied with.
(n) Except as set forth on Schedule 4.2, neither this
Agreement nor anything provided to be done under this Agreement violates or
shall violate any contract, document, understanding, agreement, arrangement or
instrument affecting the Real Property.
(o) The buildings and improvements included among the Real
Property are in a state of condition, maintenance and repair suitable to the
conduct of the Company's business, subject to normal wear and tear.
4.8 Conduct of the Business. Neither Shareholders nor the Company is
a party to, or subject to or bound by, nor are any of the Company's assets
subject to or bound by, any agreement, oral or written, or any judgment, law,
rule, regulation, order, writ, injunction or decree of any court or governmental
or administrative body which prohibits or adversely affects
or upon the consummation of the transactions contemplated hereby would prohibit
or adversely affect: (i) the use of any or all of the assets and property of the
Company necessary for its operation in the ordinary course of business; or (ii)
the conduct of the business and operations of the Company, in each case in
substantially the same manner as such business has heretofore been conducted by
it. Shareholders have no specific knowledge that business relations currently
maintained with the suppliers, customers and persons having business relations
with the Company will not be similarly maintained after the date hereof and the
date of the Closing. Without limiting the generality of the foregoing, no
supplier, distributor or customer of the Company has notified the Company or any
of the Shareholders that it intends to discontinue its relationship with the
Company.
4.9 Permits and Licenses. Except as set forth on the Schedule of
Regulatory Licenses, Consents, Permits and Authorizations attached hereto as
Schedule 4.9, the Company is not required by any person, entity or governmental
authority, foreign or domestic, federal, state or local, to obtain or maintain
any consents, authorizations, licenses, permits, orders, certificates,
registrations, security and other clearances, and qualifications which are
necessary to the conduct of its business as presently conducted or required by
applicable laws. Except as set forth on Schedule 4.9, the Company has obtained
all such consents, authorizations, licenses, permits, orders, certificates,
registrations, security and other clearances, and qualifications which are
necessary to the conduct of its business or required by applicable laws; and the
same are valid and subsisting. The Company is not required to have any form of
security clearance from any governmental agency in order to conduct its business
and operations in the manner it is presently conducted.
4.10 Financial Statements and Undisclosed Liabilities.
(a) Shareholders have delivered to Buyer (1) the regularly
prepared unaudited balance sheets of the Company as of May 31, 1998 and June 30,
1998, and regularly prepared unaudited statements of income of the Company for
each of the interim periods then ended, (2) restated unaudited balance sheets of
the Company as of May 31, 1998 and June 30, 1998, and restated unaudited
statements of income of the Company for each of the interim periods then ended,
(3) the audited balance sheets of the Company as of December 31 , 1997, December
31, 1996 and December 31, 1995, and the audited statements of income and
retained earnings and cash flows of the Company for each of the fiscal years
then ended, including, in each case, the related notes and (4) a restated
balance sheet of the Company as of December 31, 1997, and restated statements of
income of the Company for the fiscal year then ended, (all of which financial
statements and notes referred to in clauses (1), (2), (3) and (4) of this
subsection (a) of this section 4.10 hereof are collectively referred to as the
"Financial Statements"). The regularly prepared balance sheet of the Company as
of May 31, 1998 is hereinbefore and hereinafter referred to as the "Interim Date
Balance Sheet", and May 31, 1998 is hereinbefore and
hereinafter referred to as the "Interim Date". Prior to the Closing,
Shareholders will promptly furnish to Buyer both regularly prepared and
similarly restated balance sheets and income statements of the Company as of and
for the period ending at the end of each month following June 30, 1998 which
ends prior to the Closing.
(b) All of the Financial Statements: (i) are true, complete
and correct and present fairly the financial position of the Company as of the
dates thereof and the results of operations and changes in financial position
for the respective periods covered by such statements; (ii) are consistent with
the books and records of the Company; and (iii) have been prepared in accordance
with US GAAP applied on a consistent basis except, with respect to interim
statements, normal year-end adjustments.
(c) The Company, as of the Interim Date and the Closing Date,
has no indebtedness, liability, claim or obligation of any nature, fixed or
contingent, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured
or otherwise, except: (i) liabilities specifically described and reflected
dollar for dollar on the Interim Date Balance Sheet; (ii) fixed liabilities
incurred in the ordinary course of business on commercially reasonable terms
since the Interim Date, in kind and amounts consistent with past practices;
(iii) fixed commercial obligations to perform pursuant to executory contracts
entered into in the ordinary course of business, consistent with past practices,
and not in default, as disclosed pursuant to Section 4.13; and (iv) liabilities
specifically disclosed and reflected dollar for dollar on the Schedule of
Liabilities attached hereto as Schedule 4.10(c). There is no existing condition,
situation or set of circumstances which will result in any such liabilities
except for the liabilities identified in clauses (i) through (iv) of this
Section 4.10(c).
(d) All receivables of the Company including accounts
receivable, contracts receivable, loans receivable, notes receivable and
advances shown on the Interim Date Balance Sheet or those acquired after the
Interim Date and, in either case, not collected on or prior to the Closing Date
(collectively, the "Accounts") arose from bona fide transactions in the ordinary
course of business, represent accounts validly due for goods sold or services
rendered or validly incurred indebtedness on the part of those obligated
thereon, and are fully collectible dollar for dollar in the normal course of
business in the aggregate face amounts thereof without offset, counterclaim or
resort to litigation, except to the extent of an allowance for doubtful accounts
equal to US $4,491 (the "Reserve for Doubtful Accounts"). There has not been
asserted nor does there exist any counterclaim or claim for offset against any
of the Accounts. None of the Accounts have been outstanding for more than one
hundred (120) days from the date of the respective invoice.
At Buyer's election, following the Closing, within ten (10) business days after
Buyer delivers to Shareholders a schedule of all of the Accounts which remain
unpaid after the expiration of a collection period commencing on the Closing
Date and expiring one hundred twenty (120) days thereafter, Shareholders will
immediately pay to Buyer an amount equal to the difference between (A) the
aggregate face amount of such unpaid Accounts (less the aggregate amount of any
unpaid Accounts forgiven by Buyer) and (B) the Reserve for Doubtful Accounts,
against simultaneous delivery by Buyer to Shareholders of an appropriate ▇▇▇▇ of
sale conveying the unpaid Accounts to Shareholders and entitling Shareholders to
collect such Accounts in their own name. Any and all payments received by Buyer
or the Company after the collection period for which Buyer has heretofore been
reimbursed by Shareholders shall promptly be paid over to Shareholders. Buyer
shall cause the Company to exercise its reasonable best efforts to collect all
such unpaid Accounts consistent with past practices before the end of the
aforesaid collection period; however, the Company will not be required to
initiate legal proceedings for this purpose. For purposes of determining payment
of a receivable under this guaranty of payment, all amounts paid by a customer
after the Closing shall first be applied to the specific receivable account, if
any, identified by the customer with the payment or, failing such
identification, applied to the oldest outstanding receivable account of such
customer.
(e) Since the Interim Date, there have been no reserves taken
or reversed or assets written down or written up except as set forth on the
Schedule of Reserves Taken and Assets Written Down or Up attached hereto as
Schedule 4.10(e).
4.11 Compliance with Laws. Except as set forth on the Schedule of
Noncompliance with Laws attached hereto as Schedule 4.11 and excluding
Environmental Laws, the Company has been and is, and its business has been and
is being conducted and operated, in compliance with the requirements of all
applicable statutes, laws, ordinances, regulations, rules, codes or decrees,
whether foreign or domestic, federal, state or local, which affect the Company
or its business or to which the Company is subject, including, without
limitation, those relating to fair labor practices and standards; equal
employment practices; occupational safety and health; export/import licenses or
controls; foreign exchange controls; restraint of trade and unfair competition;
immigration and federal procurement. Except as set forth on Schedule 4.11,
neither the Company nor the Shareholders has received any notice or other
communication from any person with respect to an alleged, actual or potential
violation and/or failure to comply with any of the foregoing.
4.12 Patents, Trade Names, Trademarks and Copyrights. All patents,
patent applications, trade names, registered or common law trademarks, trademark
applications, registered copyrights, unregistered copyrights and copyright
applications owned by or licensed to or used by the Company are listed on the
Schedule of Patents, Trademarks and Copyrights
attached hereto as Schedule 4.12 and have been duly registered in, filed in or
issued by the United States Patent and Trademark Office, the United States
Register of Copyrights or the corresponding offices of other countries, states
or other jurisdictions to the extent set forth on said Schedule 4.12, and have
been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations in the United States and each
such country, state or other jurisdiction. Except as set forth in said Schedule
4.12, the Company's use of said patents, trade names, trademarks or copyrights
does not require the consent of any third party and the same are freely
transferable and are owned exclusively by the Company free and clear of any
attachments, liens, royalties, encumbrances, adverse claims, licenses or any
other ownership or other interest of any other person whatsoever (including,
without limitation, Shareholders). Except as described in Schedule 4.12, no
person has a license to use any of such patents, trade names, trademarks or
copyrights or applications therefor. No order, decree, judgment or stipulation
has ordered, decreed, adjudged, stipulated, found or determined that the Company
or any of the Shareholders has infringed any adversely held patent, trade name,
trademark or copyright; and no claim or proceeding charging the Company or any
of the Shareholders with infringement of any adversely held patent, trade name,
trademark or copyright, has been asserted or served upon the Company or the
Shareholders at any time during the six (6) year period prior to and ending upon
the Closing Date or, to the best of Shareholders' knowledge, is threatened to be
asserted or filed; and the conduct of the business of the Company, as heretofore
conducted by the Company, and the manufacture and sale by the Company of its
products and services, as heretofore manufactured and sold by the Company, do
not and will not infringe any patents, patent applications, trade names,
trademarks, copyrights or other rights of any third person. Except as set forth
on Schedule 4.12, to the best of Shareholders' knowledge after a review of the
current files of the Company, no person is infringing upon the patents, trade
names, trademarks or copyrights or applications therefor set forth on Schedule
4.12. Except as specifically disclosed on Schedule 4.12, the Company has not
used any patent, trade name, trademark or copyright in order to conduct its
business as presently being conducted.
The Company owns and has the right to use, free and clear of any
claims or rights of any other person, including without limitation, Shareholders
or any affiliate thereof, all trade secrets, customer lists, manufacturing
processes, secret processes, technology, know-how and any other confidential
information (collectively, the "Trade Secrets") required for or used in the
manufacture or marketing of all products either being, or proposed to be, sold
or manufactured by the Company, including, without limitation, any products
licensed by the Company from others. No person or entity is now infringing upon
or misappropriating, or has in the past infringed upon or misappropriated, any
of the Trade Secrets. The Company is not in any way making any unlawful or
wrongful use of any trade secrets, customer lists, manufacturing processes,
secret processes, know-how or any other confidential information of any other
person, including, without limitation, any former employer of any present or
past employee of the
Company. All inventions, manufacturing processes, secret processes, know-how,
and any other intellectual property and confidential information resulting from
the development activities engaged in by any employees of the Company (including
without limitation the Shareholders) and relating to or used in, or useful to,
the Company's business is the property of the Company. Neither the Company nor
any officer, director or key employee of the Company is a party to any
non-competition agreement, non-disclosure agreement, or similar agreement with
any other person.
4.13 List of Contracts. Except for the contracts, commitments,
plans, agreements and licenses described in the Schedule of Contracts,
Commitments and Intercompany Transactions attached hereto as Schedule 4.13, the
Company is not a party to nor is it or any of its properties or assets or the
Stock subject to or otherwise bound by any oral or written:
(a) Contract for the employment of any officer or employee;
(b) Collective bargaining agreement (or any side agreement,
local understanding or settlement agreement relating to such collective
bargaining agreement) or any agreement or contract with any labor union or other
employees' association;
(c) Lease or agreement to it or by it of real property or
personal property;
(d) Any individual contract, agreement, order, commitment or
letter of intent involving more than $25,000 for the future purchase of
commodities, materials, ingredients, supplies, merchandise, services or
equipment;
(e) Bonus, pension, profit-sharing, stock option, retirement,
deferred compensation, hospitalization, insurance or similar plan or practice,
or sick pay, vacation pay, severance pay or other policy or practice, formal or
informal, in effect with respect to employees or any other person or entity;
(f) Franchise, dealer, distribution, sales or agency contract
or commitment;
(g) Any individual contract of sale, letter of intent, order
or commitment involving more than $25,000 creating any obligation of the Company
to manufacture, sell or distribute products or services;
(h) Guarantees or indemnities, direct or indirect, current or
contingent, of the obligations of customers or any other person or entity;
(i) Advertising contract or commitment;
(j) License agreement (as licensor or licensee);
(k) Insurance policy;
(l) Bank account, lock box or similar depository arrangements;
(m) Real estate mortgage, loan or credit agreement with any
lender, indenture, pledge, conditional sale or title retention agreement,
equipment obligation or lease, or lease purchase agreement; or
(n) Other material contract affecting the Company.
All the contracts and commitments listed in said Schedule 4.13 are
valid and binding obligations of the Company and, to Shareholders' knowledge, of
the other parties thereto, in accordance with their respective terms and
conditions.
There has been no uncured breach or default of any provision of any
such contract, commitment, lease or other agreement by the Company, or to the
knowledge of Shareholders, any other party thereto, and nothing has occurred
which with lapse of time or the giving of notice or both would constitute a
breach or default by the Company, or to the knowledge of Shareholders, by any
other party thereto with respect to any such contract or commitment or which
would cause acceleration of any obligation of any party thereto or the creation
of any lien, encumbrance, security interest in or upon the assets of the Company
or the Stock. Buyer has been furnished with true and complete copies of all
scheduled contracts and commitments marked for identification.
Except for the contracts and transactions described on Schedule 4.13
and except as otherwise disclosed on any other Schedule to this Agreement, (i)
the Company is not a party to nor is it or any of its properties or assets or
the Company Stock subject to or otherwise bound by any existing contracts,
whether oral or written, between the Company, on the one hand, and Shareholders
or any of Shareholders' or the Company's affiliates, on the other hand, (ii) the
Company has no asserted or unasserted claims against Shareholders or any of
Shareholders' or the Company's affiliates, and (iii) none of Shareholders or any
of Shareholders' or the Company's affiliates has any asserted or unasserted
claims against the Company.
4.14 Litigation. Except as set forth on the Schedule of Litigation
attached hereto as Schedule 4.14, there is no action, suit, investigation
(whether formal or informal), subpoena or
proceeding pending against the Company, and, to the best of Shareholders'
knowledge, there is no threatened action, suit, investigation (whether formal or
informal), subpoena or proceeding against the Company or any basis therefor, nor
have Shareholders or the Company received any actual written or oral notice of
any such action, suit, investigation, subpoena or proceeding. Except as set
forth on Schedule 4.14, no subpoena, order, writ, injunction or decree has been
issued by, or requested of any court or governmental agency, foreign or
domestic, federal, state or local, which pertains to the Company or which will,
or which could reasonably be expected to, result in an adverse change in the
business, property or assets or in the condition, financial or otherwise, of the
Company or which might adversely affect the transactions contemplated by this
Agreement. The Company has never been subject to or a party to any bankruptcy or
other insolvency proceedings.
4.15 Absence of Changes. Since the Interim Date, the Company has
conducted its business only in the ordinary course, and, except as set forth in
this Agreement and on the Schedule of Changes attached hereto as Schedule 4.15,
the Company has not, as of the date hereof or the date of the Closing, either
directly or indirectly since the Interim Date:
(a) suffered any change in the condition (financial or
otherwise), properties, assets, liabilities, net worth, business, operations,
earnings, affairs or prospects of the Company, whether or not in the ordinary
course of business, which change by itself or in conjunction with any or all
other such changes has had, or will or could reasonably be expected to have, a
material adverse effect on the condition (financial or otherwise), properties,
assets, liabilities, net worth, business, operations, earnings, affairs or
prospects of the Company;
(b) incurred any obligation or liability (absolute, accrued,
contingent or otherwise) outside the ordinary course of business other than as
permitted by Section 4.10(c);
(c) mortgaged, pledged or subjected to lien, charge or any
encumbrance or other imperfections of title any of its assets, tangible or
intangible;
(d) written up or down the value of any inventory or other
assets or written off as uncollectible any notes or accounts receivable or any
portion thereof, except in amounts which, in the aggregate, are not in excess of
pre-existing reserves therefor or taken or set aside any reserves or charges in
its books against earnings or assets or reversed any reserves;
(e) purchased, sold, assigned, transferred, abandoned or
otherwise disposed of any assets other than in the ordinary course of its
business, or cancelled any debts or claims, other than in the ordinary course of
business and in amounts which in the aggregate are not in excess of US $25,000;
(f) INTENTIONALLY LEFT BLANK;
(g) entered into any transaction or agreement other than in
the ordinary course of business consistent with past practice;
(h) issued any stock, bonds, convertible securities or other
securities, or become obligated to issue any such securities or granted any
stock options, warrants, calls, conversion privileges, commitments or rights
with respect to such securities;
(i) entered into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the Company or
its assets, properties, rights or business or the Stock;
(j) declared, set aside or paid any dividend on, or any other
distribution made in respect of, the capital stock of the Company or made any
direct or indirect redemption, purchase or other acquisition by the Company of
its own capital stock (or entered into any agreement under which the Company has
become obligated to do any of the foregoing);
(k) changed or amended its Articles of Incorporation, or
equivalent, or Bylaws;
(l) failed to pay, satisfy, perform or otherwise discharge any
debt, lien, obligation or liability shown on the Interim Date Balance Sheet or
incurred thereafter as the same may have become due and payable unless such
debt, lien, obligation or liability was or is being contested in good faith and
is disclosed on Schedule 4.15 attached hereto;
(m) suffered any damage, destruction or loss whether or not
covered by insurance which has had, or will or could reasonably be expected to
have, a material adverse effect upon the condition (financial or otherwise),
properties, assets, liabilities, business, operations or affairs of the Company;
(n) made or suffered any amendment, modification or
termination of any contract or agreement which has had, or will or could
reasonably be expected to have, a material adverse effect upon the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or affairs of the Company;
(o) received notice or acquired knowledge of any labor dispute
or organizing effort involving employees of the Company;
(p) except as set forth on Schedule 4.15, made any loans
(other than travel expense advances) to any stockholders, directors, officers or
employees of the Company;
(q) changed the number or kind of shares of capital stock
authorized, issued or outstanding;
(r) formed any subsidiaries or merged or consolidated, or
obligated itself to do so, with or into any other person;
(s) repaid any loans or other advances from stockholders or
repaid any indebtedness of the Company for which any stockholder was a guarantor
or was otherwise directly or indirectly liable;
(t) INTENTIONALLY LEFT BLANK;
(u) changed the compensation payable or to become payable by
the Company to any of its officers, directors, employees or agents other than
normal merit increases and bonuses made for the benefit of non-shareholder
employees in accordance with (and consistent in amount with) its usual
practices;
(v) paid or discharged a lien or liability of the Company
which was not shown on the Interim Date Balance Sheet or incurred in the
ordinary course of business thereafter;
(w) incurred any obligation or liability on behalf of the
Company to any of its officers, directors, employees or Shareholders or any
loans or advances made by the Company to any of its officers, directors,
employees or stockholders except normal compensation and expense allowances
payable to such persons in the ordinary course of business consistent with past
practice;
(x) entered into any lease or sublease, pledge or
hypothecation of real or personal property or of the assets of the Company;
(y) forgiven or cancelled any debts or claims, or waived any
rights, except in the ordinary course of business; or
(z) suffered any loss of employees, except for normal employee
turnover in the ordinary course of business or, to the knowledge of the
Shareholders suffered any loss of
suppliers or customers.
4.16 Insurance. The physical properties, business, operations and
assets of the Company are insured by such insurers, under such policies, against
such risks, in such amounts, and upon such other terms and conditions as are
disclosed in the Schedule of Insurance attached hereto as Schedule 4.16, and all
other insurance policies and similar arrangements of the Company are disclosed
in said Schedule. Said insurance policies and arrangements are, and through the
Closing Date will be, in full force and effect. Except as specifically
identified and disclosed dollar for dollar on the Interim Date Balance Sheet or
on Schedule 4.16, the Company has no liability, whether fixed or contingent or
otherwise, under any workers' compensation or other insurance policy, in respect
of the current policy periods or prior periods, for premiums, retrospective
rating adjustments or additional premiums which may arise out of subsequent
audits of such policy periods or otherwise.
4.17 INTENTIONALLY LEFT BLANK.
4.18 Employee Benefit Plans. The Schedule of Employee Benefit Plans
attached hereto as Schedule 4.18 sets forth a complete and accurate description
of all employee benefit plans, agreements, policies and arrangements (whether or
not written) and all existing collective bargaining agreements relating to
employee benefits with respect to which the Company has incurred any past,
current or contingent obligations, including, without limitation, all plans,
agreements, arrangements or policies relating to sick pay, vacation pay or
severance pay, deferred compensation, pensions, profit sharing, retirement
income or other benefits, stock purchase and stock option plans, bonuses,
severance arrangements, health benefits, disability benefits, insurance benefits
and all other employee benefits or fringe benefits, including any employee
welfare benefit plans and employee pension benefit plans within the meaning of
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (individually referred to as a "Plan" and collectively
referred to as the "Plans"). Except as set forth in Schedule 4.18:
(a) True, correct and complete copies of each such Plan (or in
the case of any unwritten Plan, a description thereof), the most recent
actuarial reports and trustee's reports relating thereto (if applicable), the
most recent annual report on Form 5500 filed with the Internal Revenue Service
for any Plan (if applicable), the most recent summary plan description for each
Plan for which a summary plan description is required by law, and each trust
agreement, insurance contract or other funding vehicle relating to any Plan,
have been furnished to Buyer;
(b) Each Plan has been administered and operated in accordance
with its
terms and applicable law, and to the extent applicable, each Plan is "qualified"
within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and each related trust is exempt from tax under Section
501(a) of the Code. No Plan which is so qualified has been amended since the
date of its most recent determination letter in any respect that would adversely
affect its qualification or materially increase its costs. No liability under
ERISA or otherwise has been incurred or, based upon existing facts, may be
expected to be incurred with respect to any Plan;
(c) All reports and disclosures relating to such Plans
required to be filed or distributed as of the Closing Date have been filed or
distributed in compliance with applicable law;
(d) None of such Plans, any trusts related thereto, any
trustee or administrator thereof, any "party in interest" or any "disqualified
person" with respect thereto has engaged in any nonexempted "prohibited
transaction" under section 4975 of the Code or section 406 of ERISA with respect
to such Plans or has acted or failed to act in a manner that could subject the
Company or any Plan to any liability for breach of fiduciary duty under ERISA or
any other applicable law;
(e) No liability to the Pension Benefit Guaranty Corporation
("PBGC") has been or is expected to be incurred with respect to any Plan by the
Company and PBGC has not instituted proceedings to terminate any Plan. No
reportable event within the meaning of Section 4043(b) of ERISA has occurred
with respect to any Plan. There exists no condition or set of circumstances
which presents a risk of the termination or partial termination of any Plan;
(f) The Company has received determination letters from the
Internal Revenue Service that each of such Plans is qualified under section
401(a) of the Code (if applicable) and such determination letters are in effect,
and the Company does not know of any fact which would adversely affect the
qualified status of any such Plan;
(g) Full payment has been made of all amounts which the
Company was required under the terms of any of the Plans to have paid as
contributions to such Plans on or prior to the date hereof, and no accumulated
funding deficiencies (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exist with respect to any such Plan;
(h) Other than for claims in the ordinary course for benefits
under the Plans, there are no actions, suits, claims or proceedings, pending or,
to the best of Shareholders' knowledge, threatened, nor, to the best of
Shareholders' knowledge does there exist any basis therefor, which would result
in any liability with respect to any Plan of the Company;
(i) The current value of vested accrued benefits under each
Plan which is subject to Title IV of ERISA does not exceed the current value of
all of the assets of such Plan allocable to such vested accrued benefits. For
purposes of the representations in the preceding sentences, the terms "current
value" and "accrued benefit" have the meanings specified in Section 3 of ERISA;
(j) The Company is not a participant in any Multiemployer Plan
within the meaning of Section 3(37) of ERISA. The Company has not, with respect
to any Multiemployer Plan, suffered or otherwise caused a "complete withdrawal"
or "partial withdrawal," as such terms are respectively defined in Sections 4203
and 4205 of ERISA. In the event that the Company were to withdraw from any of
such Multiemployer Plans set forth on Schedule 4.18 as of the Closing Date,
there would be no withdrawal liability, so-called, or any corresponding
obligation to post a bond, letter of credit or other collateral to secure future
payment obligations. To the knowledge of the Company after making reasonable
inquiry of the Plan Administrator and the Plan Investment Manager(s), if any,
each such Multiemployer Plan was determined to be a "qualified plan" under Code
Section 401(a), a determination letter having been issued by the Internal
Revenue Service to such effect and no fact or circumstance which should have
been known by the Company, including those discoverable by reasonable inquiry,
exists which would affect the status of the Plan as a "qualified plan" or which
would subject the Plans to "excise taxes";
(k) There are no accrued liabilities under any Plans, programs
or practices maintained on behalf of the employees of the Company which are not
provided for on their books or financial statements or which have not been fully
provided for by contributions to such Plans, programs, or practices;
(l) The Company does not maintain any employee welfare benefit
plans, as defined in Section 3(1) of ERISA, which provide post-retirement
benefits to employees;
(m) The Company has complied with the health care coverage
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985;
(n) All accrued liabilities of the Company with respect to
sick pay, vacation pay, severance pay, deferred compensation, or other
obligations for the benefit of any personnel of the Company including pension
benefits (vested or unvested) have been reflected dollar for dollar in
accordance with GAAP on the Financial Statements of the Company; and
(o) Each Plan (including any Plan covering retirees or former
employees)
may be amended or terminated at any time after the Closing Date without
liability to the Company.
4.19 Governmental and Other Approvals. Except for any information
reports, applications or notices required to be filed under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder (the "HSR Act"), under existing law, neither
Shareholders nor the Company are required to obtain or make any approval,
license, permit or other action by or filing with, any foreign or domestic,
federal, state, municipal or other governmental body, commission, board,
department or agency in order to execute this Agreement and/or consummate the
transactions contemplated hereby in accordance with applicable laws and
regulations.
4.20 Brokerage. Shareholders have not dealt with any broker or
finder in connection with the transactions contemplated herein, and Shareholders
agree to indemnify and hold Buyer harmless in connection with any claims for
commissions or other compensation made by any broker or finder claiming to have
been employed by or on behalf of Shareholders in connection with the
transactions contemplated herein.
4.21 Labor Relations. There is no unfair labor practice complaint
against the Company pending or, to the best of Shareholders' knowledge,
threatened. There are no proceedings pending or, to the best of Shareholders'
knowledge, threatened before the National Labor Relations Board with respect to
the Company. There is no labor strike or similar dispute pending or, to the best
of Shareholders' knowledge, threatened against or involving the Company. There
is no pending or past representation question involving an attempt to organize a
bargaining unit including any employees of the Company and no labor grievance
has been filed within the past 12 months with the Company. The Company is not a
party to or bound by any collective bargaining agreement. No collective
bargaining agreement is currently being negotiated by the Company with respect
to employees of the Company.
4.22 Discrimination Charges. There are no discrimination charges
(relating to sex, age, race, national origin, handicap or veteran status)
pending or, to the best of Shareholders' knowledge, threatened against the
Company, or involving the Company, before any federal, state, county or local
agency, board, commission, authority or other subdivision thereof.
4.23 Related Transactions. Except as specifically disclosed on the
Schedule of Affiliation attached hereto as Schedule 4.23 or on Schedule 4.13,
and except for payment by the Company of normal compensation to regular
employees of the Company on a current basis (and not in arrears) in the ordinary
course of business, in kind and amounts consistent with past practices, no
current or former director, officer, employee or shareholder of the Company, or
any
of their affiliates or family members or any other person in which any of them
has any beneficial interest (other than an investment in a publicly held
corporation not exceeding 1% of the outstanding capital stock of such
corporation), is, or since January 1, 1997 has been: (i) a party to any
transaction with the Company or its affiliates (including but not limited to any
contract, agreement, commitment or other arrangement providing for the
furnishing of services by or to, or rental of real or personal property to or
from, or otherwise requiring payments to or from, any such director, officer,
employee or shareholder of the Company or any of their affiliates or family
members or any other person in which any of them has any beneficial interest
(other than an investment in a publicly held corporation not exceeding 1% of the
outstanding capital stock of such corporation)); (ii) entitled to receive any
fee or other payment of consideration in connection with this Agreement and/or
the consummation of the transactions contemplated herein; (iii) the direct or
indirect owner of any interest in any corporation, firm, association or business
organization which is a present competitor of, customer of or supplier of
products and/or services to the Company or (iv) the recipient of income from any
source other than the Company which relates to the business of, or should
properly accrue to, the Company.
4.24 Shareholders. Except as set forth on the Schedule of
Shareholders attached hereto as Schedule 4.24, the Company has no shareholders.
4.25 Taxes.
(a) The amounts set up as accruals for federal, state, county,
local and foreign taxes on the Interim Date Balance Sheet will be sufficient to
cover in full the payment of all unpaid federal, state, county, local and
foreign taxes (including, without limitation, income, excise, sales, use,
property, franchise, withholding, unemployment and FICA taxes, and any interest
and penalties thereon) of Company accrued for or applicable to the periods ended
on the Closing Date and all years and periods prior thereto, including, without
limitation, taxes arising out of the consummation of the transactions
contemplated hereby.
(b) Set forth on Schedule 4.25 is a list of all federal,
state, county, local and foreign income, excise, property, franchise, sales,
use, withholding, unemployment and other tax returns or information which have
been filed by the Company for all taxable years beginning on May 9, 1990 and
continuing through December 31, 1997. The Company has paid all taxes which are
required to be paid, whether or not shown on such returns, or which have become
due pursuant to such returns or to any assessment which has been received by it
and will continue to do so up to the Closing Date. Such returns are true,
complete and correct in all respects and copies of the same for the six (6)
years ended December 31, 1996 have been delivered to Buyer.
(c) The federal income tax returns of the Company have been
audited by the Internal Revenue Service or are closed by the applicable statute
of limitations for all taxable periods through December 31, 1994. All
deficiencies asserted as a result of such examinations have been paid and no
extension of time for the assessment of deficiencies for any such year is in
effect. There is no current audit of any of the Company's tax returns. The
Company has not given nor been requested to give waivers of any statutes of
limitations relating to the payment of taxes of the Company for taxable periods
for which the applicable statutes of limitations have not expired. The
provisions for federal taxes reflected in the above-mentioned Financial
Statements are adequate to cover any and all federal tax liabilities of the
Company in respect of its business, property and operations. Neither the
Internal Revenue Service nor any other taxing authority is now asserting or, to
the best of Shareholders' knowledge, threatening to assert against the Company
any deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith. The Company has made adequate provisions for all current
taxes, and there will not be any additional assessments for any fiscal periods
prior to and including the date hereof and the Closing Date in excess of the
amounts reserved therefor. Copies of all audit reports prepared by Internal
Revenue Service agents or state or local tax examiners in connection with any
tax audit conducted on the Company have been delivered to Buyer.
(d) On May 9, 1990, the Company filed an election pursuant to
Section 1362 of the Internal Revenue Code of 1986, as amended, to be treated as
an "S" corporation for federal income tax purposes, and such election is valid
and effective for all taxable years of the Company beginning on May 9, 1990 and
continuing through the Closing Date.
4.26 Product Warranties. Set forth on the Schedule of Product
Warranties attached hereto as Schedule 4.26 are the standard forms of product
warranties and guarantees used by the Company in the conduct of its business.
Except as specifically disclosed on said Schedule 4.26, the Company has not
given, used or made any product warranties or guarantees. Except as specifically
described on Schedules 4.26, no product warranty or similar claims have been
made against the Company except routine claims as to which, in the aggregate,
losses and expenses in respect of repair or replacement of merchandise do not
and will not exceed the warranty reserve reflected on the Interim Date Balance
Sheet. The aggregate loss and expense attributable to all product warranty and
similar claims now pending or hereafter asserted with respect to products
manufactured on or prior to the Closing Date will not exceed the warranty
reserve reflected on the Interim Date Balance Sheet. No person or party
(including, but not limited to, governmental agencies of any kind) has any
claim, or basis for any action or proceeding, against the Company under any U.S.
federal, state or local law or foreign law applicable to product warranties or
guarantees used by the Company.
4.27 Product Liability Claims. Except as described on the Schedule
of Product
Liability Claims attached hereto as Schedule 4.27, the Company has not received
notice or information as to any claim or allegation of personal injury, death,
or property or economic damages, any claim for punitive or exemplary damages,
any claim for contribution or indemnification, or any claim for injunctive
relief in connection with any product manufactured, sold or distributed by or in
connection with any service provided by the Company.
4.28 Product Safety Authorities. No person has been required to file
any notification or other report with or provide information to any governmental
agency or product safety standards group concerning actual or potential defects
or hazards with respect to any product manufactured, sold or distributed by the
Company, and there exists no grounds for the recall of any products of the
Company.
4.29 Investment Representation. Each Shareholder: (A) is acquiring
his proportionate part of any shares of Buyer's Common Stock issued pursuant to
Section 3 hereof (collectively the "AFC Shares") for his own account, for
investment only, and not with a view to, or for sale in connection with, any
distribution in violation of the Securities Act of 1933, as amended (the
"Securities Act") or any rule or regulation under the Securities Act, (B) alone
or together with his or her personal representative, is a sophisticated investor
and has sufficient knowledge and experience in financial and business matters to
be able to evaluate the merits and risks of his investment in the AFC Shares,
(C) acknowledges that he has been furnished with copies of Buyer's annual report
to shareholders/Form 10-K for the year ended December 31, 1997; Buyer's first
and second quarter 1998 reports on Form 10-Q; Buyer's Proxy Statement for the
Annual Meeting of Stockholders held on May 27, 1998, and the final prospectus
dated May 12, 1998 for Buyer's most recently completed public offering, all as
filed with the Securities and Exchange Commission (the "Commission"), (D)
acknowledges that Buyer has made available to him the opportunity to ask
questions of (and to receive answers from) Buyer's officers and directors about
Buyer and the AFC Shares and to acquire such additional information about Buyer
as he has requested and as is necessary for him to evaluate the merits and risks
of his investment in Buyer and to verify the accuracy of the information
contained in the aforesaid documents filed with the Commission, (E) understands
that the AFC Shares have not been registered under the Securities Act or under
any state securities laws; are being offered and sold to him in reliance on
exemptions from the registration requirements of the Securities Act and such
state securities laws; are "restricted securities" within the meaning of Rule
144 under the Securities Act; and may not be sold, transferred or otherwise
disposed of unless they are subsequently registered under the Securities Act and
applicable state securities laws or an exemption from registration is then
available, (F) is able to bear the economic risk and lack of liquidity inherent
in holding the AFC Shares, (G) understands that any sale of the AFC Shares which
might be made by him in reliance upon Rule 144 under the Securities Act may be
made only in compliance with the terms and conditions of that Rule and (H) is an
"accredited investor"
within the meaning of Regulation D under the Securities Act.
Each Shareholder agrees that (A) he will not make any offer, sale, transfer,
pledge, hypothecation or other disposition of the AFC Shares unless they have
been registered under the Securities Act and applicable state securities laws or
unless Buyer is furnished with an opinion of counsel satisfactory to Buyer that
the proposed offer, sale, transfer, pledge, hypothecation or other disposition
is exempt from registration and (B) Buyer may effect a "stop transfer" as to the
AFC Shares and may, in order to reflect the undertakings herein set forth,
impress a legend on any certificates for such shares as follows:
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or under
state securities laws. The holder hereof has
represented to the issuer that he or she has acquired
these securities for investment and not with a view to
the distribution thereof, and they have been issued in
reliance on that representation. These shares may,
therefore, not be sold, transferred, pledged,
hypothecated or otherwise disposed of unless they have
been registered under said Act and state securities
laws or unless counsel satisfactory to the Company has
given an opinion that registration is not required."
4.30 Disclosure. No representation or warranty in this Article 4,
and no statement contained elsewhere in this Agreement or in any Schedule,
Exhibit or Certificate furnished or to be furnished to Buyer pursuant hereto or
in connection with the transactions contemplated under this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading. With respect to any representation and warranty herein
which is made "to the best of Shareholders' knowledge" or "to the knowledge of
the Shareholders", each and all of the Shareholders shall be deemed to have
knowledge of any matter or fact: (a) if any Shareholder has actual personal
knowledge of such matter or fact or (b) if any of the Company's senior
management has actual personal knowledge of such matter or fact.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
As of the date hereof and as of the Closing Date, Buyer represents
and warrants to Shareholders as follows:
5.1 Organization of Buyer. Buyer is duly organized, validly existing
and in
good standing under the laws of the State of Delaware. Buyer has full corporate
power and authority to (i) own or lease all of its properties and to conduct its
business in the manner and in the places where such properties are owned and
leased or such business is now conducted and (ii) to enter into and perform the
transactions contemplated by this Agreement.
5.2 Authority of Buyer. This Agreement and each of the other
agreements and documents and instruments delivered or to be delivered by Buyer
pursuant to or in contemplation of this Agreement will constitute, when so
delivered, the valid and binding obligation of Buyer and shall be enforceable
against Buyer in accordance with their respective terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally, or by the
exercise of judicial discretion in accordance with general equitable principles.
The execution, delivery and performance of this Agreement and each such other
agreement, document and instrument has been duly authorized by all necessary
corporate action of Buyer and is within Buyer's corporate powers. The execution,
delivery and performance by Buyer of this Agreement and each such other
agreement, document and instrument does not and will not with the passage of
time or the giving of notice or both:
(a) result in a breach of or constitute a default by Buyer or result in
any right of termination or other effect adverse to Buyer under any indenture or
loan or credit agreement of Buyer, or any other agreement, lease or instrument
to which Buyer is a party or by which the property of Buyer is bound or
affected;
(b) result in a violation of or default under any law, rule, or
regulation, or any order, writ, judgment, injunction, decree, determination or
award, now in effect having applicability to Buyer;
(c) violate any provisions of the Certificate of Incorporation, or
equivalent, or By-Laws of Buyer, as amended; or
(d) require any approval, consent or waiver of, or filing with, any
person.
5.3 Governmental Approvals. Except for any information reports,
applications or notices required to be filed under the HSR Act, under existing
law, Buyer is not required to obtain or make any approval, license, permit or
other action by or filing with any foreign or domestic, federal, state,
municipal or other governmental body, commission, board, department or agency in
order to execute this Agreement and/or consummate the transactions contemplated
hereby in accordance with applicable laws and regulations.
5.4 Brokerage. Buyer has not dealt with any broker or finder in
connection
with the transaction contemplated herein and agrees to indemnify and hold
Shareholders harmless in connection with any claims or commissions or other
compensation made by any broker or finder claiming to have been employed by or
on behalf of Buyer in connection with the transactions contemplated herein.
5.5 Litigation. There is no action, suit, investigation (whether
formal or informal), subpoena or proceeding pending, or to the best of Buyer's
knowledge, threatened against Buyer, nor has any order, writ, injunction,
subpoena or decree been issued by any court or governmental agency to Buyer
which, in either case, prohibits or seeks to enjoin the transactions
contemplated by this Agreement.
5.6 Capitalization. On the date hereof, the authorized capital stock
of Buyer consists of (1) 50,000,000 shares of common stock, $0.01 par value per
share, of which 12,740,968 shares were issued and outstanding as of July 23,
1998 and (2) 1,000,000 shares of preferred stock, $0.01 par value per share,
none of which are issued and outstanding. All of the AFC Shares which are to be
issued to Shareholders pursuant to this Agreement will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid and
nonassessable and free of all preemptive rights.
5.7 Buyer's Investigation of Company. Buyer acknowledges that it has
had the opportunity to meet with each of Shareholders and the officers and
representatives of the Company to discuss the business and the assets,
liabilities, financial condition, cash flow and operations of the Company. All
materials and information requested of the Company or Shareholders by Buyer have
been provided to Buyer's reasonable satisfaction.
5.8 Investment Representation. Buyer represents that it is acquiring
the Company Stock for its own account, for investment only, and not with a view
to, or for sale in connection with, any distribution in violation of the
Securities Act or any rule or regulation thereunder.
5.9 Disclosure. No representation or warranty in this Article 5, and
no statement contained elsewhere in this Agreement or in any Schedule, Exhibit
or Certificate furnished or to be furnished to Shareholders pursuant hereto or
in connection with the transactions contemplated under this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading.
6. COVENANTS OF SHAREHOLDERS PRIOR TO CLOSING.
Shareholders, jointly and severally, covenant and agree with Buyer as follows
throughout the
period from the date hereof through and including the Closing:
6.1 Restrictions. Shareholders shall cause the Company to conduct
its business and operations only in the ordinary course of business, in
substantially the manner in which such business and operations have been
previously conducted prior to the date hereof and consistently with those
practices, policies, customs and usages which were in effect from time to time
throughout that period and which remained in effect as of the Interim Date and,
furthermore, without limiting the generality of the foregoing, Shareholders
shall not permit the Company to (except with the prior written consent of
Buyer):
(a) Redeem, purchase, repurchase or retire any of the capital
stock of the Company, or declare or pay any dividends (including stock
dividends), or make any other payments or distribution upon any of the capital
stock of the Company;
(b) Make any change in the nature of its business or cease in
whole or in part its present business; or engage in any other activities apart
from its present business or enter into any transaction not in the ordinary
course of business;
(c) Enter into any sale-leaseback transaction; or sell, lease,
transfer or otherwise dispose of all or any portion of its assets including,
without limitation, rights to patents, know-how, intellectual property or other
intangible assets or cancel any debts or claims, except sales of inventory in
the ordinary course of business and except as contemplated by this Agreement;
(d) Incur, enter into, create, assume or permit to exist any
indebtedness or liability for borrowed money or any other indebtedness except:
(i) financing arrangements in existence at the date hereof which have heretofore
been disclosed to Buyer in writing; (ii) indebtedness to Buyer; or (iii) trade
accounts payable incurred in the ordinary course of business;
(e) Enter into, amend, modify or terminate any material
contract or agreement to which the Company is a party;
(f) Increase or commit to increase, the compensation
(including fringe benefits) payable to any officer, director, employee or agent
of the Company other than routine salary increases for non-shareholder employees
made in the ordinary course of business; or enter into any agreement with
respect to the employment of any employee;
(g) Make any change in the Articles of Incorporation or Bylaws
of the Company;
(h) Make any change in the authorized or issued and
outstanding capital stock of the Company including any changes involving
treasury shares;
(i) Grant any options, warrants, rights or any similar
securities or instruments to purchase directly or indirectly any securities of
the Company;
(j) Make any alteration in the manner of keeping the books,
accounts or records of the Company, or in the accounting practices therein
reflected;
(k) Enter into any transaction in which any officer or
director of the Company or any record or beneficial holder of any securities of
the Company has any interest, directly or indirectly;
(l) Suffer or permit any event or condition, whether or not
occurring in the ordinary course of business, which event or condition by itself
or in conjunction with any or all other such events or conditions, will have, or
could reasonably be expected to have, a material adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, business, operations,
affairs or prospects of the Company;
(m) Effect any dissolution, winding up, liquidation or
termination of the Company or the business of the Company;
(n) Effect any merger or consolidation of the Company whether
or not it is the survivor thereof or effect any reorganization or
recapitalization;
(o) Terminate the employment of the auditors of the Company;
(p) Effect any acquisition by the Company of any interest or
participation in any entity of any kind, whether represented by shares or
otherwise, or effect the formation of a subsidiary or purchase or otherwise
invest in or hold securities, non-operating real estate or other non-operating
assets, except direct obligations of the United States of America, or
Certificates of Deposit or equivalent securities issued by financial
institutions;
(q) Mortgage, pledge, grant or permit to exist a security
interest in or lien or encumbrance on any of its assets or property, real or
personal, tangible or intangible, now owned or hereafter acquired except: (i)
liens in favor of Buyer; (ii) liens in existence at the date hereof which have
been disclosed to Buyer on Schedule 4.6(b) hereof; and (iii) liens arising by
operation of law with respect to obligations of the Company not yet due and
payable;
(r) Make any investment in, or make any loan, advance or
credit to any person, including, without limitation, officers, stockholders or
directors of the Company, other than credits to customers and distributors in
the ordinary course of business and travel advances to officers, directors and
employees of the Company made in the ordinary course of business in amounts
consistent with past practices;
(s) Assume, endorse, guarantee or otherwise become liable for
or upon the obligation of any person (other than endorsements for deposit in the
ordinary course of business);
(t) Delegate to any person or entity any of the powers of the
Board of Directors;
(u) Effect any agreement for (i) the leasing or hire of any
real property or (ii) the leasing or hire of any personal property outside the
ordinary course of business consistent with past practice;
(v) Make any change in the executive management or the key
personnel of the Company;
(w) Without a demonstrably valid business reason, accelerate
or defer any item of income or expense of the Company; or
(x) Institute, settle or dismiss any litigation, claim or
other proceeding before any court or governmental agency.
6.2 Notice of Breach. To the extent Shareholders obtain knowledge
that any of the representations or warranties contained in Article 4 hereof
would be incorrect in any respect were those representations or warranties made
immediately after such knowledge was obtained, Shareholders shall notify Buyer
in writing promptly of such fact and exercise their commercially reasonable
efforts to remedy same.
6.3 Access. Shareholders will permit Buyer, its counsel, auditors,
environmental consultants, appraisers and other advisers and representatives to
review, inspect and copy all financial and business records and documents
relating to the Company in the Company's and/or Shareholders' custody, care or
control and to have access to the Company's customers and all places of the
Company's business throughout all regular business hours, provided that, in the
reasonable opinion of the Shareholders, the same will not disrupt the conduct of
the Company's business.
6.4 No Transfer of Interest. Shareholders shall not sell, transfer,
assign, alienate, encumber, pledge or otherwise convey to any person or entity
other than Buyer any of the Company Stock, or any interest therein.
6.5 Authorization from Others. Shareholders shall use their
commercially reasonable efforts and due diligence to obtain all authorizations,
consents and approvals of third persons and governmental authorities that may be
required to permit the consummation of the transactions contemplated by this
Agreement.
6.6 Consummation of Agreement. Shareholders shall use their
commercially reasonable efforts and due diligence to satisfy all conditions to
the Closing that are within their control to the end that the transactions
contemplated by this Agreement shall be fully carried out.
6.7 Business Intact; Relationships with Customers and Suppliers.
Shareholders shall use their commercially reasonable efforts and due diligence
to keep intact the business of the Company, to keep available its key employees
and to maintain the goodwill of its customers, distributors and suppliers and
other persons having business dealings with it.
6.8 Air Permit. Without impairing or derogating from their
indemnification obligations herein set forth, Shareholders shall cause the
Company to apply for, as soon as practicable and prior to the Closing, any air
or other permits required for the conduct of the Company's business which have
not been obtained.
7. COVENANTS OF BUYER.
Buyer covenants and agrees with Shareholders as follows throughout
the period from the date hereof through and including the Closing:
7.1 Notice of Breach. To the extent Buyer obtains knowledge that any
of the representations or warranties contained in Article 5 hereof would be
incorrect in any respect were those representations or warranties made
immediately after such knowledge was obtained, Buyer shall notify Shareholders
in writing promptly of such fact and exercise its commercially reasonable
efforts to remedy same.
7.2 Authorization from Others. Buyer shall use its commercially
reasonable efforts to obtain all authorizations, consents and approvals of third
persons and governmental authorities that may be required to permit the
consummation of the transactions contemplated by this Agreement.
7.3 Consummation of Agreement. Buyer shall use its commercially
reasonable efforts to satisfy all conditions to the Closing that are within its
control to the end that the transactions contemplated by this Agreement shall be
fully carried out.
8. MUTUAL COVENANTS OF SHAREHOLDERS AND BUYER.
8.1 Regulatory Filings. Each of the parties hereto will furnish to
the other party hereto such necessary information and reasonable assistance as
such other party may reasonably request in connection with its preparation of
filings or submissions to any governmental agency required in connection with
this Agreement and the transactions contemplated hereby. Without limiting the
generality of the foregoing, Buyer and Shareholders each agree to timely file
any information reports, applications or notices required to be filed in
connection with the transaction contemplated by this Agreement by the HSR Act
and as appropriate to procure early termination of the waiting period
thereunder.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE.
The obligation of Buyer to acquire the Company Stock as contemplated
hereby, and to perform its other obligations hereunder to be performed on or
after the Closing, shall be subject to the fulfillment, which Shareholders agree
to use their commercially reasonable efforts to fulfill, on or prior to the
Closing Date, unless otherwise waived in writing by Buyer, of the following
conditions:
9.1 Representations and Warranties. The representations and
warranties of Shareholders set forth in Article 4 hereof shall be true and
correct in all material respects when made and shall be true and correct in all
material respects on the Closing Date as if made on and as of such date, and
Buyer shall have received a certificate to such effect, executed by each of the
Shareholders and dated as of the Closing Date, in form satisfactory to Buyer.
Shareholders shall be entitled to update the Schedules attached to this
Agreement prior to the Closing, provided that no such update (or disclosures
contained therein) shall cure the failure of Shareholders to satisfy the
condition set forth in this Section 9.1 hereof.
9.2 Performance of Covenants. Shareholders shall have performed in
all material respects all of their obligations contained in this Agreement to be
performed on or prior to the Closing Date, and Buyer shall have received a
certificate to such effect, executed by each of the Shareholders and dated as of
the Closing Date, in form satisfactory to Buyer.
9.3 Threatened or Pending Proceedings. No proceedings shall have
been initiated or threatened by any person seeking to enjoin or otherwise
restrain or to obtain an award for damages in connection with the consummation
of the transactions contemplated hereby.
9.4 Delivery of Certificates and Documents to Buyer. Shareholders
shall have delivered, or cause to be delivered, to Buyer the certificates as to
the legal existence and tax good standing of the Company and copies of its
Articles of Incorporation, or equivalent, as amended, issued or certified by the
appropriate governmental official of the state of its incorporation..
9.5 Legal Opinion. The Buyer shall have received the written opinion
of counsel to Shareholders, dated as of the Closing Date, in form reasonably
acceptable to Buyer and its counsel.
9.6 Resignation of Directors and Officers. Each member of the Board
of Directors of the Company and each officer of the Company, except those
designated by Buyer, shall have tendered to the Company a written resignation as
a director and/or officer of the Company, as the case may be, effective as of
the Closing.
9.7 Minute Books. Shareholders shall have delivered to Buyer all
minute books and stock ledgers for the Company.
9.8 Consents. Buyer, Shareholders and the Company shall have
obtained the approvals, consents and authorizations of all third persons and
governmental agencies necessary for the consummation of the transactions
contemplated hereby in accordance with the requirements of applicable laws and
agreements.
9.9 Damage or Destruction. The Company shall not have suffered prior
to the Closing Date any loss on account of fire, flood, accident or any other
calamity to an extent that would materially adversely affect the conduct of its
business or materially adversely impair the value of the Company as a going
concern, regardless of whether any such loss or losses have been insured
against.
9.10 Releases. Shareholders shall have executed and delivered to the
Company a general release in form and substance reasonably satisfactory to
Shareholders and Buyer and their respective counsel.
9.11 Delivery of Company Stock. All of the Company Stock shall have
been
delivered to Buyer as required by Sections 1.1 and 2.3 hereof.
9.12 INTENTIONALLY LEFT BLANK.
9.13 Payment in Full and Discharge of Intercompany Items. All
indebtedness owing from any of the Shareholders and their affiliates to the
Company, and all indebtedness owing from the Company to the Shareholders and
their affiliates, shall have been paid in full in cash, and the Company shall
have no bank debt (and all liens on the Company's assets securing any
preexisting bank debt shall have been released).
9.14 Employment Agreements. The Company and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
shall have entered into an employment agreement in the form of Employment
Agreement attached hereto as Exhibit C and made a part hereof; the Company and
▇▇. ▇▇▇▇▇ Uuranniemi shall have entered into an employment agreement in the form
of Employment Agreement attached hereto as Exhibit D and made a part hereof; and
the Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have entered into an employment agreement
in the form of Employment Agreement attached hereto as Exhibit E and made a part
hereof (these three employment agreements are hereinafter collectively referred
to as the "Employment Agreements").
9.15 Sale of Residence. The Company shall have conveyed its entire
right, title and interest in the residence at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, to one or more of the Shareholders or their designee, by quitclaim
deed, on an "as is" basis; and, in exchange therefor, the Company shall have
received US $227,500 in cash.
9.16 Escrow Agreement. Buyer, Shareholders and Escrow Agent shall
have entered into the Escrow Agreement.
9.17 Employment and Non-competition agreement. ▇▇▇▇▇ ▇▇▇▇▇▇ shall
have entered into an employment and non-competition agreement with the Company
upon terms and conditions reasonably satisfactory to the Buyer and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇.
9.18 Conveyance of Uuranniemi Parcel to Buyer's designee. ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ shall have conveyed, by warranty deed, his entire right, title and
interest in the Uuranniemi Parcel to either AFC Realty Holding Corp., a Delaware
corporation and a wholly-owned subsidiary of Buyer, or such other person as may
be designated by Buyer, against simultaneous payment to ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of
a purchase price equal to the Real Estate Fair Market Value (as defined in
Section 1.2 hereof) and, in addition:
Buyer shall have received: (1) evidence satisfactory to Buyer that the
Uuranniemi Parcel, the improvements thereon and the use of same are not in
violation of the zoning and other ordinances, rules and regulations of the City
of Thomasville, County of ▇▇▇▇▇▇ and/or State of Georgia; (2) a current survey
satisfactory to Buyer (including confirmation that the Uuranniemi Parcel is
abutting and has access to a public street), certified to Buyer, containing no
statement or facts which are not reasonably satisfactory to Buyer; (3) a
commitment of Chicago Title Insurance Company to issue its Owner's Policy in the
amount of the Real Estate Fair Market Value, at standard premium rates, upon
recording of the deed, such title policy to have no standard exceptions and no
other exceptions other than those set forth in Chicago Title Insurance Company
Commitment No. ▇▇-▇▇▇▇-▇▇▇▇, at Schedule B2, Items 6 and 7; and such title
insurance policy to also insure, in addition to the Uuranniemi Parcel, the
Encroachment Easement Agreement with the City of Thomasville referenced in said
item 7 and also title to that property which is subject to a Lease dated January
27, 1998 (the "▇▇▇▇▇ Petroleum Lease") between ▇▇▇▇▇ Petroleum Company and the
Company; (4) such other documents as may be reasonably required by Buyer's title
insurer including, but not limited to: (i) an instrument terminating the Lease
Agreement between Jaako Uuranniemi, as Lessor, and the Company, as Lessee, dated
March 7, 1991 and (ii) discharges and/or releases of all mortgages, security
deeds and assignments encumbering the Uuranniemi Parcel; and
(B) Buyer shall be satisfied that following the Closing the
Company will have the right to continue to use, upon
terms and conditions reasonably satisfactory to Buyer,
the sidetrack and related facilities heretofore used by
the Company.
9.19 HSR Act. If applicable, Buyer and Shareholders shall each have
timely filed all information, reports, application or notices and satisfied all
requests for additional information pursuant to the HSR Act, and the applicable
waiting periods shall have expired.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS TO CLOSE.
The obligation of Shareholders to sell the Company Stock as
contemplated hereby, and to perform their other obligations hereunder to be
performed on or after the Closing, shall be subject to the fulfillment, which
Buyer agrees to use its commercially reasonable efforts to fulfill, on or prior
to the Closing Date, unless otherwise waived in writing by Shareholders, of the
following conditions:
10.1 Representations and Warranties. The representations and
warranties of Buyer
set forth in Article 5 hereof shall be true and correct in all material respects
when made and shall be true and correct in all material respects on the Closing
Date as if made on and as of such date, and the Shareholders shall have received
a certificate to such effect, executed by a duly authorized officer of Buyer and
dated as of Closing Date, in form satisfactory to the Shareholders.
10.2 Performance of Covenants. Buyer shall have performed in all
material respects all of its obligations contained in this Agreement to be
performed on or prior to the Closing Date, and the Shareholders shall have
received a certificate to such effect, executed by a duly authorized officer of
the Buyer and dated as of the Closing Date, in form satisfactory to
Shareholders.
10.3 Corporate Action. All corporate action necessary to authorize
(i) the execution, delivery and performance by Buyer of this Agreement and any
other agreements or instruments contemplated hereby to which Buyer is a party;
and (ii) the consummation of the transactions contemplated hereby and thereby,
shall have been duly and validly taken by Buyer, and Shareholders shall have
been furnished with copies of all applicable resolutions adopted by the Board of
Directors of Buyer, certified by the Secretary or Assistant Secretary of Buyer.
10.4 Pending Proceedings. No proceedings shall have been initiated
or threatened by any person seeking to enjoin or otherwise restrain or to obtain
an award for damages in connection with the consummation of the transactions
contemplated hereby.
10.5 Delivery of Certificates and Documents to Shareholders. Buyer
shall have delivered, or cause to be delivered, to Shareholders certificates as
to the legal existence and corporate good standing of Buyer and copies of its
Certificate of Incorporation issued or certified by the appropriate governmental
official of the state of its incorporation.
10.6 Legal Opinion. Shareholders shall have received the opinion of
counsel to Buyer, dated as of the Closing Date, in form reasonably acceptable to
Shareholders and their counsel.
10.7 Consents. Buyer, the Company and Shareholders shall have
obtained the approvals, consents and authorizations of all third persons and
governmental agencies necessary for the consummation of the transactions
contemplated hereby in accordance with the requirements of applicable laws and
agreements.
10.8 Certain Agreements. Each of the Employment Agreements and the
Escrow Agreement shall have been entered into by the parties thereto.
10.9 HSR Act. If applicable, Buyer and Shareholders shall each have
timely filed all information, reports, applications or notices and satisfied all
requests for additional information pursuant to the HSR Act, and the applicable
waiting periods shall have expired.
10.10 Transfer of Certain Inventory from Company to Shareholders.
The Company shall have executed and delivered to the Shareholders or their
designee a ▇▇▇▇ of sale, in form and substance satisfactory to the Shareholders
and their counsel, transferring from the Company to the Shareholders, on an "as
is" basis, all of the Company's right, title and interest in and to any titanium
dioxide inventory of the Company on hand as of the Closing; and Shareholders
shall have obtained the right to market and sell such inventory under the NSF
International Listing ▇▇▇▇ heretofore utilized by the Company.
11. CERTAIN RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
11.1 Survival of Representations, Warranties, Agreements, Covenants
and Obligations. All representations and warranties contained in Sections 4.1
through 4.30 hereof, inclusive, and in Sections 5.1 through 5.9 hereof,
inclusive, and all agreements and covenants contained anywhere else in this
Agreement or in any other agreement delivered by either party to the other party
incident to the transactions contemplated hereby, shall be deemed to have been
relied upon by the other party, shall survive the execution and delivery of this
Agreement, any investigation made by any party hereto, and the sale and purchase
of the Company Stock and payment therefor; provided, however, that (a) the
representations and warranties of Shareholders contained in Section 4.7(a) and
4.7(b) (with respect to, among other things, the Real Property and compliance
with Environmental Laws) shall expire and terminate on the fifth (5th)
anniversary of the Closing Date, (b) the representations and warranties of
Shareholders contained in Section 4.25 (with respect to taxes) shall expire, as
they relate to any taxable year of the Company, sixty (60) days after the
expiration of the statute of limitations applicable to the making of adjustments
or assessments by any taxing authority as the same may be extended by the Buyer
or the Company, (c) all of the other representations and warranties made by
Shareholders in Sections 4.1 through 4.30 hereof, inclusive, (with the exception
of the representations and warranties of Shareholders contained in Sections 4.1,
4.2, 4.3, 4.4 and 4.5, which shall survive indefinitely) shall expire and
terminate on February 28, 2001, and (d) all of the representations and
warranties made by Buyer in Sections 5.1 through 5.9 hereof, inclusive, (with
the exception of the representations and warranties of Buyer contained in
Sections 5.1 and 5.2 which shall survive indefinitely) shall expire and
terminate on February 28, 2001.
11.2 Rule 144 Requirements. With a view to making available to the
Shareholders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the
Commission that may at any time permit the Shareholders to sell any AFC Shares
acquired hereunder to the public without registration, the Buyer agrees to use
its reasonable efforts to do the following until the second (2nd) anniversary of
the Closing Date:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and
other documents required of the Buyer under the Securities Act and the Exchange
Act; and
(c) furnish to any of the Shareholders upon request a written
statement by the Buyer as to its compliance with the reporting requirements of
said Rule 144, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Buyer, and such other reports and
documents of the Buyer as such holder may reasonably request to avail itself of
any similar rule or regulation of the Commission allowing it to sell any such
securities without registration.
11.3 Registration Rights. (a) Registration on Form S-3. Subject to
the limitations hereinafter set forth in this Section 11.3, prior to the
issuance by Buyer to Shareholders of any AFC Shares pursuant to Section 3, Buyer
shall cause a Registration Statement (the "Registration Statement") to be filed
with Commission on Form S-3 (or a substantially equivalent successor Form, any
such successor Form being included for purposes of this Section within the
definition of "Form S-3") in order to permit the offering of all AFC Shares
issued to the Shareholders pursuant to this Agreement (collectively, the
"Registrable Securities") on a continuous basis pursuant to Rule 415 of the
General Rules and Regulations under the Securities Act. Buyer shall use its best
efforts to cause the Registration Statement to become effective as soon as
practicable following such filing and to maintain the effectiveness of the
Registration Statement until the earlier of (i) the expiration of a period of
ninety (90) days following the effective date thereof, not counting any period
during which the holders of the Registrable Securities are obligated to refrain
from selling in accordance with the provisions hereof or (ii) the date when all
AFC Shares issued to the Shareholders pursuant to this Agreement registered
thereunder have been sold. None of the Shareholders shall sell any shares of
Buyer's Common Stock prior to the effective date of the Registration Statement,
and during the period of effectiveness of the Registration Statement shall sell
AFC Shares only pursuant to the Registration Statement. Buyer will notify the
Shareholders of the effectiveness of the Registration Statement. Buyer shall
supply to each Shareholder a number of Prospectuses for delivery under said
Registration Statement which shall be reasonably sufficient to meet such
Shareholder's requirements for delivery in connection with sales of AFC Shares
under said Registration Statement.
Buyer, at its option, may register under the Registration Statement any
number of unissued shares of Buyer's Common Stock or any shares owned by any
shareholder of Buyer other than a Shareholder. Notwithstanding the foregoing, in
no event shall less than all of the Registrable Securities be registered under
the Registration Statement filed in accordance with this Section 11.3.
(b) Limitations on Obligation to Register. (i) Except as provided in
this Section 11.3, Buyer will have no obligation to the Shareholders to register
under the Securities Act any shares of Buyer's Common Stock. Buyer shall have
such obligation with respect to the filing and effectiveness of one Registration
Statement with respect to an offering which may or may not be underwritten, at
the option of a majority in interest of the Shareholders, subject to the
approval of Buyer in the case of an underwritten offering. The underwriter or
underwriters of an underwritten offering shall be selected by the Shareholders,
subject to Buyer's satisfaction with the proposed underwriter. After the filing
and effectiveness of one Registration Statement in conformity with the
foregoing, Buyer shall have no further obligation to register any such shares.
(ii) INTENTIONALLY LEFT BLANK.
(iii) INTENTIONALLY LEFT BLANK.
(iv) Buyer's obligation to register the Registrable Securities
under this Section 11.3 shall be further subject to the condition that each
Shareholder shall have provided such information and executed such documents as
may reasonably be required in connection with such registration.
(v) The Buyer may, by written notice to the Shareholders,
delay the filing or effectiveness of, or suspend, the Registration Statement,
and require that the Shareholders immediately cease sales of shares pursuant to
such Registration Statement, in any period during which the Buyer is engaged in
any activity or transaction or preparations or negotiations for any activity or
transaction ("Buyer Activity") that the Buyer desires to keep confidential for
business reasons, if the Board of Directors of Buyer determines in good faith
that the public disclosure requirements imposed on the Buyer under the
Securities Act in connection with such Registration Statement would require
disclosure of the Buyer Activity; provided, however, that (i) the Buyer shall
use commercially reasonable efforts to minimize the length of any such period of
delay or suspension; and (ii) the Buyer shall not be permitted to so delay or
suspend the Registration Statement for a period of more than 60 days in any 12
month period.
(vi) If the Buyer delays or suspends the Registration
Statement or requires the Shareholders to cease sales of shares pursuant to
paragraph (v) above, the Buyer
shall, as promptly as practicable following the termination of the circumstance
which entitled the Buyer to do so, take such actions as may be necessary to file
or reinstate the effectiveness of such Registration Statement and/or give
written notice to all Shareholders authorizing them to resume sales pursuant to
such Registration Statement. If as a result thereof the prospectus included in
such Registration Statement has been amended to comply with the requirements of
the Securities Act, the Buyer shall enclose such revised prospectus with the
notice to Shareholders given pursuant to this paragraph (vi), and the
Shareholders shall make no offers or sales of shares pursuant to such
Registration Statement other than by means of such revised prospectus.
(c) Expenses. The expenses of the registration to be made pursuant
to this Section 11.3 (including, without limitation, any printing, legal and
accounting expenses incurred by Buyer but excluding any underwriting discounts
or commissions) shall be paid by Buyer, and each Shareholder shall be
responsible for his own legal and accounting expenses, any underwriting
discounts or commissions attributable to his shares being registered and other
expenses incurred by such Shareholder for his own account.
(d) State Securities Laws. In connection with the registration to be
made pursuant to this Section 11.3, Buyer will take such action as may be
necessary to qualify or register, or obtain exemptions from such registration or
qualification of, the shares to be sold under the securities or "blue sky" laws
of such jurisdictions as the Shareholders may reasonably request; provided,
however, that Buyer will not be obligated to qualify as a foreign corporation to
do business under the laws of any such jurisdiction in which it is not then
qualified or to file any general consent to service of process.
(e) Subject to the provisions of subsection (b) of this Section
11.3, upon the happening of any event which makes any statement made in the
Registration Statement untrue or which requires the making of any changes
therein so that it will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, the Buyer shall
prepare and file with the Commission, as promptly as practicable thereafter, a
supplement or amendment to the Registration Statement so that it will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. If the Buyer has
delivered preliminary or final prospectuses to the Shareholders and after having
done so the prospectus is amended to comply with the requirements of the
Securities Act, the Buyer shall promptly notify the Shareholders and, if
requested by the Buyer, the Shareholders shall immediately cease making offers
or sales of shares under such Registration Statement and return all prospectuses
to the Buyer. The Buyer shall promptly provide the Shareholders with revised
prospectuses and, following receipt of the revised prospectuses, the
Shareholders shall be free to resume making offers and sales under such
Registration Statement.
(f) Registration Procedures. In connection with effecting the
registration of the Registrable Securities pursuant to subsection 11.3(a) of
this Agreement, Buyer shall (subject to subsection 11.3(b) above) as
expeditiously as possible:
(i) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement, effective for
so long as such registration statement is required to remain effective pursuant
to the terms of this Agreement and to cause the prospectus to comply with the
provisions of the Securities Act and the rules and regulations of the Commission
thereunder with respect to the disposition of all securities covered by such
registration statement;
(ii) furnish to each Shareholder and underwriter, if any,
prior to filing the Registration Statement or Prospectus or any amendment or
supplement thereto, if requested, copies of such Registration Statement as
proposed to be filed and thereafter furnish to such Shareholder and underwriter,
if any, such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such Registration Statement (including each preliminary prospectus)
and such documents incorporated by reference therein as such Shareholder or
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(iii) use its commercially reasonable efforts to cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities, if any, as may be necessary by virtue of
the business and operations of the Buyer or its subsidiaries to enable the
Shareholders to consummate the disposition of such Registrable Securities;
(iv) promptly notify each Shareholder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such registration statement or prospectus (including any request by
the commission for the amending or supplementing of such registration statement
or prospectus) and thereafter prepare and file, as promptly as practicable, any
such necessary amendments or supplements.
(v) promptly notify the Shareholders of any stop order issued
or threatened by the Commission and take all commercially reasonable steps
required to prevent the entry of such order or to remove it if entered;
(vi) prepare and file with the Commission such amendments or
supplements to such registration statement or prospectus as may be necessary to
correct any statements or omissions if at the time when a prospectus relating to
such securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which such prospectus as then in effect
would include an untrue statement of a material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading:
(vii) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;
(viii) use its commercially reasonable efforts to cause all
such Registrable Securities to be listed on each securities exchange or
authorized to be quoted on the Nasdaq National Market, as applicable, on which
similar securities issued by Buyer are then listed or authorized for quotation;
and
(ix) cooperate with each Shareholder and each underwriter, if
any, participating in the disposition of such Registration Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(g) Indemnification. (i) Buyer will indemnify and hold harmless each
of the Shareholders against any losses, claims, damages or liabilities, joint or
several, to which such Shareholder may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or prospectus filed as a part thereof, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each of the Shareholders for any legal or other expenses
reasonably incurred by such Shareholder in connection with investigating or
defending any such action or claim; provided, however, that Buyer shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission made in the Registration Statement, any preliminary
prospectus or the prospectus or any such amendment or supplement in reliance
upon and in conformity with information furnished to Buyer expressly for use
therein by the Shareholder claiming indemnification.
(ii) Each of the Shareholders will indemnify and hold harmless
Buyer
against any losses, claims, damages or liabilities to which Buyer may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus or the prospectus or any such
amendment or supplement in reliance upon and in conformity with information
furnished to Buyer by such Shareholder expressly for use therein; and will
reimburse Buyer for any legal or other expenses reasonably incurred by Buyer in
connection with investigating or defending any such action or claim.
(h) Rights Non-Assignable. No Shareholder may assign any of his or
her rights under this Section 11.3.
(i) Specific Performance. In addition to any other remedies which
Shareholders may have at law or in equity, Buyer hereby acknowledges that the
registration rights provided pursuant to this Section 11.3 are unique, and that
the harm to the Shareholders resulting from a breach by Buyer of its obligation
to register the Registrable Securities as provided herein, or for the term of
the registration, as extended pursuant to subsection 11.3(a) if applicable,
cannot be adequately compensated by damages. Accordingly, Buyer agrees that the
Shareholders shall have the right to have this Section 11.3 specifically
performed by Buyer and hereby agrees not to asset any objections to the
imposition of the remedy of specific performance or any other equitable remedy
by any court of competent jurisdiction.
11.4 Shared Space and Rent. With respect to the premises at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, which the Company now leases from ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ on a month-to-month basis: (a) Shareholders shall be entitled to use
the portion of such premises not currently used by the Company until such time
as Buyer notifies Shareholders that the Company intends to occupy all of such
premises and (b) until such time as Buyer so notifies the Shareholders,
Shareholders will promptly, on a monthly basis, reimburse the Company for
one-half of all rent and other charges paid by the Company pursuant to such
tenancy at will, provided that upon 60 days' written notice to Buyer and removal
of Shareholders' personal property on such premises, Shareholders shall have no
further obligations to Buyer with respect to such space.
12. INDEMNIFICATION.
12.1 Indemnification by Shareholders. Shareholders, jointly and
severally, agree to defend, indemnify and hold Buyer, the Company and their
respective officers, directors, affiliates, employees and agents, harmless from
and against any claims by third persons (including, without limitation, the
Environmental Protection Agency or any other federal, state or local government
agency, board, department or body having jurisdiction over environmental matters
or Environmental Laws), damages, diminution in value, liabilities, losses and
expenses (including, without limitation, reasonable attorney's fees incurred in
seeking indemnification hereunder or defending any claim by a third person,
amounts paid in settlement of any claim or suit and costs of clean-up,
restoration, remediation and removal), taxes, fines, penalties and interest, of
any kind or nature whatsoever which may be sustained or suffered by Buyer or the
Company or their respective officers, directors, affiliates, employees or
agents, arising out of, based upon, or by reason of:
(a) a breach of any representation or warranty made by
Shareholders in Sections 4.1 through 4.30 hereof, inclusive, or a failure to
perform any agreement or covenant made by Shareholders anywhere else in this
Agreement or in any other agreement delivered hereunder,
(b) any claim, action or proceeding asserted or instituted
growing out of any matter or thing covered by such breached representation,
warranty, agreement or covenant,
(c) the matters, if any, set forth on the Schedule of
Specifically Indemnified Matters attached hereto as Schedule 12.1,
(d) INTENTIONALLY LEFT BLANK,
(e) any claim made by any person to, for or in respect of
shares of the Company's capital stock or any interest therein or payment
therefor,
(f) the generation, use, treatment, handling, storage or
disposal, or arrangement for the use, treatment, handling, storage or disposal,
of Hazardous Materials on, or release of Hazardous Materials to or from, the
Real Property permitted, taken or made by the Company or any of its past or
present officers, employees, agents or independent contractors, at any time
prior to the Closing, whether or not in compliance with Environmental Laws then
in force,
(g) the removal of Hazardous Materials from the Real Property
and/or the
ultimate disposition of such Hazardous Materials, by the Company or any of its
past or present officers, employees, agents or independent contractors, at any
time prior to the Closing, whether or not in compliance with Environmental Laws
then in force,
(h) the use of the Real Property by the Company or any of its
past or present officers, employees, agents or independent contractors, at any
time prior to the Closing, in such a manner as to cause a violation of any
Environmental Law or to give rise to any liability or obligation for the
remediation or restoration of the Real Property or any other affected property,
or for the treatment, storage, removal, disposal, release, arrangement for
removal or disposal or transportation of any Hazardous Materials,
(i) any violations by the Company of Environmental Laws in
relation to the Real Property occurring at any time prior to the Closing Date,
(j) a failure by the Company, at any time prior to the
Closing, to obtain, maintain current, and comply with the terms and conditions
of, all permits, approvals, identification numbers, licenses and other
authorizations, and renewals thereof, required under Environmental Laws for the
use and operation of the Real Property,
(k) the exposure of employees of the Company to Hazardous
Materials on or in relation to the Real Property occurring at any time prior to
the Closing Date, and
(l) any claim alleging that this Agreement or the consummation
of the transactions contemplated hereby violates any obligation or duty owed by
the Company or any of Shareholders to any person (other than Buyer and its
affiliates) who was previously involved in discussions or negotiations with the
Company or any of Shareholders for the acquisition by such person of the Company
or its business.
provided, however, that (A) no indemnification shall be payable by Shareholders
with respect to any claim by Buyer for breach of any representation or warranty
made by Shareholders in Sections 4.1 through 4.30 hereof, inclusive, asserted by
Buyer after the expiration or termination date, if any, prescribed for such
representation or warranty in the proviso of the first sentence of Section 11.1
hereof, provided that once notice of any claim has been timely given, additional
related claims arising out of substantially the same circumstances may be made
at any time prior to the final resolution of such claim (by means of a final,
non-appealable judgment of a court of competent jurisdiction, a binding
arbitration decision or a settlement approved by the parties involved) even if
such resolution occurs after the expiration or termination date, if any,
prescribed for such representation or warranty in the proviso of the first
sentence of Section 11.1 hereof, (B) no indemnification shall be payable by
Shareholders with respect to any claim by
Buyer under any of clauses (f) through (k) of this Section 12.1 hereof asserted
by Buyer after the fifth (5th) anniversary of the Closing Date, provided that
once notice of any such claim has been timely given, additional related claims
arising out of substantially the same circumstances may be made at any time
prior to the final resolution of such claim (by means of a final, non-appealable
judgment of a court of competent jurisdiction, a binding arbitration decision or
a settlement approved by the parties involved) even if such resolution occurs
after the fifth (5th) anniversary of the Closing Date, (C) INTENTIONALLY LEFT
BLANK, (D) no indemnification shall be payable by Shareholders with respect to
any claim by Buyer for breach of any representation or warranty made by
Shareholders in Sections 4.1 through 4.30 hereof, inclusive (with the exception,
however, of the representations and warranties in Sections 4.7(a), 4.7(b) and
4.25 hereof) until the total of such claims for indemnification shall exceed US
$100,000 (the "Deductible"), in which event Buyer shall be entitled to recover
the amount of such claims in excess of the Deductible, and (E) the aggregate
liability of Shareholders for indemnification payable hereunder shall not exceed
the Purchase Price. Any indemnification due from Shareholders to Buyer shall be
paid in United States dollars. Notwithstanding anything to the contrary
elsewhere herein contained, and without otherwise affecting the joint and
several obligations of the Shareholders hereunder, neither Teppo Uuranniemi nor
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have any liability or indemnification obligation to Buyer
arising out of a breach of the representation and warranty made by Shareholders
in subsection 4.7(l) hereof, it being the intention of the parties that only
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall be responsible for any breach of subsection 4.7(l)
hereof.
12.2 Indemnification by Buyer. Buyer agrees to defend, indemnify and
hold Shareholders, their officers, directors, affiliates, employees and agents,
harmless from and against any claims by third persons, damages, diminution in
value, liabilities, losses and expenses (including, without limitation,
reasonable attorneys' fees incurred in seeking indemnification hereunder or
defending any claim by a third person, and amounts paid in settlement of any
claim or suit) of any kind or nature whatsoever which may be sustained or
suffered by Shareholders or their officers, directors, affiliates, employees or
agents, arising out of, based upon, or by reason of: (a) a breach of any
representation or warranty made by Buyer in Sections 5.1 through 5.9 hereof,
inclusive, or a failure to perform any agreement or covenant made by Buyer
anywhere else in this Agreement or in any other agreement delivered hereunder
and (b) any claim, action or proceeding asserted or instituted growing out of
any matter or thing covered by such breached representation, warranty, agreement
or covenant; provided, however, that (A) no indemnification shall be payable by
Buyer with respect to any claim for breach of any representation or warranty
made by Buyer in Sections 5.1 through 5.9 hereof, inclusive, asserted by
Shareholders after the expiration or termination date, if any, prescribed for
such representation or warranty in the proviso of the first sentence of Section
11.1 hereof, provided that once notice of any claim has been timely given,
additional related claims arising out of substantially the same
circumstances may be made at any time prior to the final resolution of such
claim (by means of a final, non-appealable judgment of a court of competent
jurisdiction, a binding arbitration decision or a settlement approved by the
parties involved) even if such resolution occurs after the expiration or
termination date, if any, prescribed for such representation or warranty in the
proviso of the first sentence of Section 11.1 hereof, (B) no indemnification
shall be payable by Buyer with respect to any claim for breach of any
representation or warranty made by Buyer in Sections 5.1 through 5.9 hereof,
inclusive, until the total of such claims for indemnification shall exceed the
Deductible, in which event Shareholders shall be entitled to recover the amount
of such claims in excess of the Deductible, and (C) the aggregate liability of
Buyer for indemnification payable hereunder shall not exceed the Purchase Price.
Any indemnification payments due from Buyer to Shareholders shall be paid in
United States dollars.
12.3 Notice, Defense of Claims. (a) Each party to this Agreement
shall give prompt written notice to the other party to this Agreement of each
claim for indemnification hereunder specifying the amount and nature of the
claim, and of any matter which is likely to give rise to an indemnification
claim. Failure to give timely notice of a matter which may give rise to an
indemnification claim shall not affect the rights of the indemnified party to
collect such claim from the indemnifying party except to the extent that failure
to so notify causes actual prejudice to the indemnifying party's ability to
defend such claim against a third party. In any case in which a claim for
indemnification involves a claim brought by a third party ("Third Party Claim")
and the indemnifying party has not exercised its rights to assume and control
the defense of such matter as provided under subparagraph (b) of this Section
12.3, the indemnified party shall have the right (but not the obligation) to
assume and control the defense of any such matter or its settlement at the
indemnifying party's reasonable expense, provided that the indemnifying party
may participate in the defense at its own expense and provided, further, that
the indemnified party shall keep the indemnifying party informed as to the
status of the defense and shall not take any significant action in the defense
thereof or consent to entry of judgment or enter into any settlement thereof
without the consent of the indemnifying party which shall not be unreasonably
withheld or delayed. Where the indemnified party does not exercise its right to
assume and control the defense of such matter or its settlement or the
indemnifying party has exercised its rights to assume and control the defense of
such matter as provided under subparagraph (b) of this Section 12.3, the
indemnifying party shall assume and control the defense of such matter or its
settlement at its own expense, provided that the indemnified party may
participate in the defense at its own expense and, provided, further, that the
indemnifying party will keep the indemnified party informed as to the status of
the defense and will not, except with the consent of the indemnified party
(which shall not be unreasonably withheld or delayed), consent to entry of any
judgment or enter into any settlement which involves more than the payment of
money or which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such
claim or litigation.
(b) The indemnifying party will within thirty (30) days (or
ten (10) days in the case of a Third Party Claim with respect to which a
complaint has been filed) after receipt by the indemnifying party of the written
notification from the indemnified party of the Third Party Claim advise the
indemnified party whether the indemnifying party elects to assume and control
the defense and settlement of the Third Party Claim. If the indemnifying party
elects to assume and control the defense and settlement of the Third Party
Claim, the indemnifying party shall provide to the indemnified party at the time
of such election the following documents: (i) written notice that the
indemnifying party undertakes such obligations and (ii) an agreement to
indemnify the indemnified party for all damages, diminution in value,
liabilities, losses and expenses with respect to such Third Party Claim in
accordance with this Section 12. Upon the delivery of the above items, the
indemnifying party will have the right to diligently, through counsel of its own
choice, control the good faith defense or settlement of such Third Party Claim
provided the indemnified party will have the right to participate in such
defense and settlement discussions, through counsel of its own choice and at its
own expense, and the indemnified party will have the right to approve any
proposed settlement to the extent provided for in Section 12.3(a). Any failure
on the part of the indemnifying party of notifying the indemnified party within
the time period provided above regarding the election shall be deemed an
election by the indemnifying party not to assume and control the defense and
settlement of the Third Party Claim.
12.4 No Tax Effect; Insurance Effect. (a) Indemnification for
damages, liabilities, losses and expenses payable pursuant to the
indemnification provisions in this Article 12 shall be on a dollar for dollar
basis and shall be determined without regard to deductibility for tax purposes
or other tax benefits to the indemnified party or any other person or entity
resulting therefrom.
(b) The indemnifying party shall make any indemnification
payments determined to be payable to the indemnified party hereunder promptly
after such determination is made, without delay, and without regard to any
expectation that the indemnified party will recover insurance proceeds as a
direct result of the matter giving rise to the claim for which indemnification
payments are to be made. The indemnified party shall have no obligation
whatsoever to seek to recover or make a claim for insurance proceeds as a result
of any matter giving rise to an indemnification claim of the indemnified party
against the indemnifying party. Notwithstanding the foregoing, (1) if the
indemnified party receives any insurance proceeds as a direct result of the
matter giving rise to any indemnification claim of the indemnified party against
the indemnifying party prior to the date upon which an indemnification payment
in respect of such claim becomes due and payable, the indemnifying party's
indemnification
obligation with respect to such claim shall be reduced by the amount of any such
insurance proceeds actually received by the indemnified party and (2) if the
indemnified party receives any insurance proceeds as a direct result of the
matter giving rise to any indemnification claim of the indemnified party against
the indemnifying party after the indemnifying party has paid such
indemnification claim to the indemnified party, then the indemnified party shall
promptly turn over any such insurance proceeds received to the indemnifying
party to the extent of the payments made by the indemnifying party to the
indemnified party on the claim. As used in this Section 12.4(b), the term
"insurance proceeds" shall mean and refer to payments made by an insurer in the
nature of "true insurance" (excluding any payments, proceeds or recoveries under
a so-called "self insurance" system).
13. TERMINATION OF AGREEMENT.
13.1 Termination. At any time prior to the Closing Date, this
Agreement may be terminated (i) by the consent of Buyer and Shareholders; (ii)
by Shareholders if there has been a material misrepresentation, breach of
warranty or breach of agreement or covenant by Buyer in its representations,
warranties, agreements and covenants set forth herein; (iii) by Buyer if there
has a been a material misrepresentation, breach of warranty or breach of
agreement or covenant by Shareholders in their representations, warranties,
agreements and covenants set forth herein; (iv) by Shareholders if the
conditions stated in Article 10 have not been satisfied at or prior to the
Closing Date; (v) by Buyer if the conditions stated in Article 9 have not been
satisfied at or prior to the Closing Date; or (vi) by Buyer or Shareholders if
the Closing has not occurred before the close of business on November 30, 1998.
13.2 Effect of Termination. If this Agreement shall be terminated as
above provided, all obligations of the parties hereunder shall terminate without
liability of any party to the other; provided however, that nothing in this
Section 13.2 shall prevent any party from seeking or obtaining damages or
appropriate equitable relief for the breach of any representation, warranty,
agreement or covenant made by any other party hereto.
13.3 Right to Proceed. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article 9 hereof have not
been satisfied at or prior to the Closing, Buyer shall have the right to proceed
with the transactions contemplated hereby without waiving any of its rights
hereunder, and if any of the conditions specified in Article 10 hereof have not
been satisfied at or prior to the Closing, Shareholders may determine to proceed
with the transactions contemplated hereby without waiving any of their rights
hereunder.
14. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ NON-COMPETITION COVENANT.
14.1 Non-Competition. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ agrees and covenants with
Buyer and the Company that, for a period (the "Restrictive Period") from the
date hereof until the third (3rd) anniversary of the Closing Date, she will not,
without the prior written consent of Buyer and Company, directly or indirectly:
(a) form, acquire, finance, assist, support, provide premises, facilities, goods
or services to, represent as a distributor or otherwise, or become associated in
any capacity or to any extent, directly or indirectly with, an enterprise (a
"Competing Business") which is engaged in the business of manufacturing, selling
or distributing PVC pipe and/or pipe fittings anywhere within the territory (the
"Territory") consisting of the United States of America and Canada; (b)
interfere with or attempt to interfere with any officers, employees,
representatives or agents of Buyer or the Company, or any of their affiliates,
or induce or attempt to induce any of them to leave the employ of Buyer or the
Company or any of their affiliates, or violate the terms of their contract with
any of them; or (c) for the purpose of conducting or engaging in a Competing
Business, call upon, solicit, advise or otherwise do, or attempt to do, business
with any clients, suppliers, customers or accounts of Buyer or the Company or
any of their affiliates or take away or interfere or attempt to interfere with
any custom, trade, business or patronage of Buyer or the Company or any of their
affiliates.
14.2 Injunctive Relief. The parties hereto acknowledge and agree
that any breach by any of Shareholders or his or her affiliates of the
restrictive covenant contained in this Article 14 would cause irreparable injury
to Buyer and/or the Company and that the remedy at law for any such breach would
be inadequate, and Shareholders agree and consent that, in addition to any other
available remedy, temporary and permanent injunctive relief may be granted in
any proceeding which may be brought by Buyer or the Company to enforce such
restrictive covenant without necessity of proof that any other remedy at law is
inadequate.
14.3 Enforcement. Buyer and Shareholders intend that the covenants
of Section 14.1 shall be deemed to be a series of separate covenants, one for
each county or province of each and every state, territory or jurisdiction of
each country included within the Territory and one for each month of the
Restrictive Period. If, in any judicial proceeding, a court shall refuse to
enforce any of such covenants, then such unenforceable covenants shall be deemed
eliminated from the provisions hereof for the purpose of such proceeding to the
extent necessary to permit the remaining separate covenants to be enforced in
such proceeding. If, in any judicial proceeding, a court shall refuse to enforce
any one or more of such separate covenants because the total time thereof is
deemed to be excessive or unreasonable, then it is the intent of the parties
hereto that such covenants, which would otherwise be unenforceable due to such
excessive or unreasonable period of time, be in force for such lesser period of
time as shall be deemed reasonable and not excessive by such court.
15. SHAREHOLDERS' NON-DISCLOSURE COVENANT.
15.1 Non-Disclosure of Confidential Information. It is understood
that the business of the Company acquired by Buyer hereunder is of a
confidential nature. Prior to the date hereof the Company may have revealed and
on or after the date hereof the Company may reveal to Shareholders Confidential
Information (as hereinafter defined) concerning the Company or any of its
affiliates which, if known to competitors thereof, would damage the business and
operations of the Company. Each of the Shareholders agrees with Buyer and the
Company that, for a period of five (5) years following the later of the Closing
or the termination of his or her employment with the Company, he or she will not
divulge or appropriate to his or her own use, or to the use of any third person,
any Confidential Information.
15.2 Definition of Confidential Information. As used herein, the
term "Confidential Information" means the following oral or written information
relating to the Company: know-how, technology, inventions, designs,
methodologies, trade secrets, patents, secret processes and formulae,
information and data relating to the development, research, testing,
manufacturing, marketing, sale, distribution and uses of products, sources of
supplies, budgets and strategic plans, the identity and special needs of
customers, plants and other properties, and any other information which may give
the Company an opportunity to obtain an advantage over its competitors who do
not know or use such information, provided that the term "Confidential
Information" shall not include (i) any such information that, prior to its use
or disclosure by a Shareholder, can be shown to have been in the public domain
or generally known or available to customers, suppliers or competitors of the
Company through no breach of the provisions of this Article 15 or other
non-disclosure covenants; (ii) any such information that, prior to its
disclosure by a Shareholder, was rightfully in the receiving third party's
possession, without violation of the provisions of this Article 15 or other
non-disclosure covenants; and (iii) any such information that, prior to its
disclosure by a Shareholder, was independently developed by the receiving third
party without violation of the provisions of this Article 15 or other
non-disclosure covenants.
15.3 Injunctive Relief. The parties hereto acknowledge and agree
that the breach by a Shareholder of the restrictive covenant contained in this
Article 15 would cause irreparable injury to Buyer and/or the Company and that
the remedy at law for any such breach would be inadequate, and Shareholders
agree and consent that, in addition to any other available remedy, temporary and
permanent injunctive relief may be granted in any proceeding which may be
brought by Buyer or the Company to enforce such restrictive covenant without
necessity of proof that any other remedy at law is inadequate.
16. MISCELLANEOUS.
16.1 Expenses.
(a) Buyer and Shareholders shall pay the fees and expenses of
their respective accountants and legal counsel incurred in connection with the
transactions contemplated by this Agreement.
(b) Shareholders represent that no legal or accounting fees
incurred in connection with the transactions contemplated hereby have been or
will be paid by the Company.
(c) Buyer will pay the filing fee required in connection with
any filing made under the HSR Act, provided that if this Agreement shall be
terminated for any reason (whether by Buyer or Shareholders or both), or if the
transactions contemplated hereby are not consummated for any reason, then, in
either case, Shareholders shall promptly reimburse Buyer for one-half of such
filing fee even if Buyer is in breach hereof or otherwise at fault.
(d) Shareholders agree to pay one-half of the cost of any
environmental site assessment of the Real Property undertaken in connection with
the transactions contemplated hereby, provided that the amount required to be
paid by Shareholders under this subsection (d) of this Section 16.1 shall not in
any event exceed US $3,500.
16.2 Notices. Any notice or other communication required or
permitted to be given to any party hereunder shall be in writing and shall be
given to such party at such party's address set forth below or such other
address as such party may hereafter specify by notice in writing to the other
party. Any such notice or other communication shall be addressed as aforesaid
and given by (1) certified mail, return receipt requested, with first class
postage prepaid, (2) hand delivery, (3) reputable overnight courier or (4)
facsimile transmission. Any notice or other communication will be deemed to have
been duly given (1) on the fifth day after mailing, provided receipt of delivery
is confirmed, if mailed by certified mail, return receipt requested, with first
class postage prepaid, (2) on the date of service if served personally, (3) on
the business day after delivery to an overnight courier service, provided
receipt of delivery has been confirmed or (4) on the date of transmission if
sent via facsimile transmission, provided confirmation of receipt is obtained
promptly after completion of transmission.
If to Shareholder c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
or Shareholders: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇. ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Fax: ___________________
With a Copy to: Alexander & Van
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Hill ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇; and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
5200 NationsBank Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To Buyer: AFC Cable Systems, Inc.
50 ▇▇▇▇▇▇▇ Plaza
Suite 1250
Providence, Rhode Island 02903
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chairman and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
16.3 Waiver. The failure of any party hereto at any time or times
hereafter to exercise any right, power, privilege or remedy hereunder or to
require strict performance by the other or another party of any of the
provisions, terms or conditions contained in this Agreement or in any other
document, instrument or agreement contemplated hereby or delivered in connection
herewith shall not waive, affect, or diminish any right, power, privilege or
remedy of such party at any time or times thereafter to demand strict
performance thereof; and no rights of any party hereto shall be deemed to have
been waived by any act or knowledge of such party, or any of its agents,
officers or employees, unless such waiver is contained in an instrument in
writing, signed by such party. No waiver by any party hereto of any of its
rights on any one occasion shall operate as a waiver of any other of its rights
or any of its rights on a future occasion.
16.4 Section Headings. The section headings in this Agreement are
for convenience of reference only and shall not be deemed to be a part of this
Agreement or to alter or affect any provisions, terms or conditions contained
herein.
16.5 Exhibits and Schedules. Any exhibits and schedules referenced
herein shall be deemed to be attached hereto and made a part hereof. All
references herein to this Agreement shall include all such exhibits and
schedules. Any matter or fact which is disclosed in any numbered Schedule
attached hereto by way of qualifying a correspondingly numbered representation
and warranty made by Shareholders in Section 4 hereof shall be deemed to be
disclosed in any other relevant Schedule attached hereto and to qualify the
correspondingly numbered other representation and warranty made by Shareholders
in Section 4 hereof if the relevance of such matter or fact to such other
Schedule (and the correspondingly numbered other representation and warranty
made by Shareholders in Section 4 hereof) is plainly apparent.
16.6 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any portion of this Agreement is declared invalid for
any reason in any jurisdiction, such declaration shall have no effect upon the
remaining portions of this Agreement which shall continue in full force and
effect as if this Agreement had been executed with the invalid portions thereof
deleted. Furthermore, the entirety of this Agreement shall continue in full
force and effect in all other jurisdictions.
16.7 Entire Understanding. This Agreement sets forth the entire
agreement and understanding between the parties with respect to the subject
matter hereof and merges any and all discussions, negotiations, letters of
intent or agreements in principle between them. Neither of the parties shall be
bound by any conditions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein, or as
duly set forth on or subsequent to the date hereof in writing and signed by a
duly authorized officer of the party to be bound thereby. Shareholders shall not
be deemed to have made to Buyer any representation or warranty other than as
expressly made by Shareholders herein. Without derogating from or impairing the
representations and warranties made by Shareholders in Sections 4.1 through 4.30
hereof, inclusive, Buyer acknowledges that Shareholders make no representation
or warranty to Buyer with respect to any projections, estimates or budgets,
whether written or oral, heretofore delivered to or made available to Buyer, of
future revenues, expenses or expenditures or future results of operations.
16.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, legal
representatives, successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, this Agreement is not intended to, nor shall it,
create any rights in any person other than the parties hereto and the Company.
16.9 Governing Law. This Agreement is and shall be deemed to be a
contract entered into and made pursuant to the laws of the State of Rhode Island
and shall in all respects be governed, construed, applied and enforced in
accordance with the laws of said State, without reference to its conflict of
laws principles.
16.10 Assignability. Neither this Agreement nor any rights or
obligations hereunder are assignable by Shareholders without the prior written
consent of Buyer. Buyer may at any time, without Shareholders' consent, assign
all or any part of the rights and/or obligations of Buyer under this Agreement
to any affiliate of Buyer, and any assignee of Buyer shall succeed to and be
possessed of the rights of Buyer hereunder to the extent of the assignment made,
provided, however, that any such assignment by Buyer shall not relieve Buyer of
its obligations hereunder. In addition, at any time after the Closing, Buyer
may, without Shareholders' consent, assign all or any part of its rights and/or
obligations under this Agreement to any person who acquires either the stock of
Buyer or the Company, or substantially all of the assets of the Company, by
sale, merger or otherwise; provided, however, that any such assignment by Buyer
shall not relieve Buyer of its obligations hereunder.
16.11 Counterparts; Delivery by Facsimile. This Agreement may be
executed in counterparts and by each party hereto on a separate counterpart, all
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier or
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
16.12 Certain Definitions. For the purposes of this Agreement: (a)
an "affiliate" of any specified person shall mean and include any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such person, (b) an "affiliate"
of any specified natural person shall mean and include not only any persons
specified in clause (a) above but also the members of such person's immediate
family, and (c) a "person" shall mean and include any natural person, firm,
partnership, association, corporation, limited liability company, company,
enterprise, unincorporated organization, trust, public body or government or any
department, board, commission or agency thereof.
16.13 Pronouns and Plurals. All pronouns used herein shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons may
require in the context, and the singular form of nouns, pronouns and verbs will
include the plural, and vice versa, whichever the context may require.
16.14 Public Announcements. No announcement of the transactions
contemplated hereby shall be made publicly by any party hereto without the
advance written approval of Buyer and Shareholders, except such notice as is
required by law. The content or text of such announcement shall be agreed upon
by the Buyer and Shareholders, except such notice as is required by law where
each party shall use its reasonable efforts to obtain the prior consent of the
other party.
16.15 Choice of Forum and Consent to Jurisdiction. Any action
arising out of or under this Agreement, any other document, instrument or
agreement contemplated herein or delivered pursuant hereto, or the transactions
contemplated by this Agreement or any of such other documents, instruments or
agreements, shall be brought only in a federal or state court having
jurisdiction and venue in Rhode Island or Georgia, U.S.A., and each of the
parties hereto hereby irrevocably submits to the jurisdiction of such courts and
agrees that venue in Rhode Island and Georgia is proper. Shareholders hereby
irrevocably designate, appoint and empower ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, 5200
NationsBank Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and its
successors as their authorized special agent to receive, for and on behalf of
Shareholders and their affiliates, service of process in any such legal action
or proceeding, a copy of such process to be sent in the manner required above
for notices to such party. Buyer hereby irrevocably designates, appoints and
empowers ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ and its successors, as its authorized special agent to receive, for
and on behalf of Buyer and its affiliates, service of process in any such legal
action or proceeding, a copy of such process to be sent in the manner require
above for notices to such party. To the extent permitted by applicable law,
final judgment against such party (a certified copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness of such party
hereunder) in any such legal action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on an unsatisfied judgment or similar
proceeding. Each of the parties hereto hereby irrevocably waives and agrees not
to assert, by way of motion, as a defense, or otherwise, in any legal action or
proceeding, any defense or any claim that it is not personally subject to the
jurisdiction of the above-named Rhode Island or Georgia courts for any reason,
including claims that such party may be immune from the above-described legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise), or that such proceeding is
brought in an inconvenient or otherwise improper forum or that this Agreement or
any of the other aforementioned documents, instruments or agreements, or the
subject matter hereof or thereof, may not be enforced in or by such courts, or
that the same are governed by the laws of a jurisdiction other than Rhode
Island. Each of the parties hereby specifically agrees that it shall
not bring any actions, suits or proceedings arising out of or under this
Agreement, any other document, instrument or agreement contemplated herein or
delivered pursuant hereto, or the transactions contemplated by this Agreement or
any of such other documents, instruments or agreements, in the courts of any
jurisdiction other than the above-named courts of Rhode Island and Georgia, that
any such action brought by either party shall be dismissed upon the basis of the
agreements, terms and provisions set forth in this Section 16.15, and that any
order or judgment obtained in any such action from a court other than the courts
of Rhode Island or Georgia, shall be void ab initio provided that,
notwithstanding the foregoing provisions of this Section 16.15, either party may
bring and enforce an action seeking injunctive or other equitable relief in any
court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
BUYER:
AFC CABLE SYSTEMS, INC.
By:______________________________
Print Name:_______________________
Title:_____________________________
SHAREHOLDERS:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Teppo Uuranniemi
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
SCHEDULES
Schedule 4.2 - Schedule of Breaches, Defaults and Required Consents
Schedule 4.4 - Capitalization
Schedule 4.5 - Valid Title to Company Stock
Schedule 4.6(a) - Schedule of Machinery and Equipment
Schedule 4.6(b) - Schedule of Liens and Encumbrances
Schedule 4.6(d) - Schedule of Personal Property Leases
Schedule 4.6(e) - Schedule of Assets at Other Locations
Schedule 4.7 - Schedule of Real Property
Schedule 4.9 - Schedule of Regulatory Licenses, Consents, Permits
and Authorizations
Schedule 4.10(c) - Schedule of Liabilities
Schedule 4.10(e) - Schedule of Reserves Taken and Assets Written Down or Up
Schedule 4.11 - Schedule of Noncompliance with Laws
Schedule 4.12 - Schedule of Patents, Trademarks and Copyrights
Schedule 4.13 - Schedule of Contracts, Commitments and Intercompany
Transactions
Schedule 4.14 - Schedule of Litigation
Schedule 4.15 - Schedule of Changes
Schedule 4.16 - Schedule of Insurance
Schedule 4.18 - Schedule of Employee Benefit Plans
Schedule 4.23 - Schedule of Affiliation
Schedule 4.24 - Schedule of Shareholders
Schedule 4.25 - Taxes
Schedule 4.26 - Schedule of Product Warranties
Schedule 4.27 - Schedule of Product Liability Claims
Schedule 12.1 - Schedule of Specifically Indemnified Matters
EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Form of Buyer's Promissory Notes
Exhibit C - Employment Agreement for Jaako Uuranniemi
Exhibit D - Employment Agreement for Teppo Uuranniemi
Exhibit E - Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
