STOCK PURCHASE AGREEMENT
by and among
ZEBRA TECHNOLOGIES CORPORATION,
COMTEC INFORMATION SYSTEMS, INC.,
COMTEC INFORMATION SYSTEMS ACQUISITION CORPORATION
and
THE STOCKHOLDERS OF COMTEC INFORMATION SYSTEMS, INC.
AND COMTEC INFORMATION SYSTEMS ACQUISITION
CORPORATION
dated as of March 21, 2000
TABLE OF CONTENTS
Page
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ARTICLE I SALE OF COMPANY STOCK AND CISAC STOCK AND CLOSING
1.1 Purchase and Sale......................................................................1
1.2 Purchase Price.........................................................................2
1.3 Closing; Escrow........................................................................2
1.4 Balance Sheet and Estimated Closing Date Stockholders'Equity...........................2
1.5 Closing Date Stockholders'Equity.......................................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Buyer................................................4
(a) Corporate Organization and Qualification......................................5
(b) Authority Relative to this Agreement..........................................5
(c) Consents and Approvals; No Violation..........................................5
(d) Litigation....................................................................6
2.2 Representations and Warranties of the Company, CISAC and the Major Stockholders........6
(a) Corporate Organization and Qualification......................................7
(b) Capitalization................................................................7
(c) Authority Relative to this Agreement..........................................7
(d) Present Compliance with Obligations and Laws..................................8
(e) Consents and Approvals; No Violation..........................................8
(f) Litigation....................................................................9
(g) Financial Statements..........................................................9
(h) No Liabilities; Absence of Certain Changes or Events.........................10
(i) Brokers and Finders..........................................................13
(j) Taxes........................................................................13
(k) Employee Benefits............................................................15
(l) Company Intangible Property..................................................20
(m) Certain Contracts............................................................21
(n) Accounting Matters...........................................................22
(o) Unlawful Payments and Contributions..........................................22
(p) Environmental Matters........................................................23
(q) Title to Properties; Liens; Condition of Properties..........................23
(r) Inventories..................................................................24
(s) Accounts Receivable, Accounts Payable and Purchase Orders....................24
(t) Labor and Employee Relations.................................................25
(u) Permits......................................................................26
(v) Warranty or Other Claims.....................................................26
i
(w) Powers of Attorney...........................................................27
(x) Insurance....................................................................27
(y) Corporate Books and Records..................................................27
(z) Transactions with Affiliates.................................................27
(aa) No Investments or Subsidies..................................................27
(bb) Certain Customers and Suppliers..............................................28
2.3 Representations and Warranties of the Stockholders....................................28
ARTICLE III ADDITIONAL COVENANTS AND AGREEMENTS
3.1 Conduct of Business...................................................................30
3.2 No Solicitation.......................................................................31
3.3 [Reserved]............................................................................32
3.4 Access to Information.................................................................32
3.5 Publicity.............................................................................32
3.6 Maintenance of Insurance..............................................................33
3.7 Representations and Warranties........................................................33
3.8 Filings; Other Action.................................................................33
3.9 Notification of Certain Matters.......................................................33
3.10 Employment Agreements.................................................................33
3.11 Tax Matters...........................................................................33
3.12 Indemnification.......................................................................36
3.13 [Reserved]............................................................................42
3.14 Physical Inventory....................................................................42
ARTICLE IV CONDITIONS
4.1 Conditions to Each Party's Obligations................................................42
4.2 Conditions to the Obligations of the Stockholders.....................................42
4.3 Conditions to the Obligations of Buyer................................................43
ARTICLE V TERMINATION
5.1 Termination by Mutual Consent.........................................................46
5.2 Termination by either all of the Stockholders or Buyer................................46
5.3 Termination by the Stockholders.......................................................47
5.4 Termination by Buyer..................................................................47
5.5 Effect of Termination.................................................................48
ARTICLE VI MISCELLANEOUS AND GENERAL
6.1 Payment of Expenses...................................................................48
6.2 Modification or Amendment.............................................................48
6.3 Waiver of Conditions..................................................................48
6.4 Counterparts..........................................................................48
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6.5 Governing Law.........................................................................48
6.6 Notices ..............................................................................48
6.7 Entire Agreement; Assignment..........................................................49
6.8 Parties in Interest...................................................................50
6.9 Certain Definitions...................................................................50
6.10 Severability..........................................................................55
6.11 Specific Performance..................................................................55
6.12 Recovery of Attorney's Fees...........................................................55
6.13 Captions .............................................................................55
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EXHIBITS
Stockholders of the Company and CISAC Exhibit A
Form of Escrow Agreement Exhibit B
Employment Agreement (A) Exhibit C-1
Employment Agreement (B) Exhibit C-2
Employment Agreement (C) Exhibit C-3
Form of Buyer's Certificate re: Conditions Exhibit D
Form of Company and CISAC Certificate re: Conditions Exhibit E
Form of General Release and Covenant Not To Xxx Exhibit F
Form of Confidential Letter Agreement Exhibit G
Opinion of Xxxxxxx & Xxxxxx, LLP Exhibit H
Stockholders' Representative Agreement Exhibit I
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of March 21, 2000, by and
among Zebra Technologies Corporation, a Delaware corporation ("BUYER"), Comtec
Information Systems, Inc., a Rhode Island corporation (the "COMPANY"), Comtec
Information Systems Acquisition Corporation, a Rhode Island corporation
("CISAC"), and the stockholders of the Company and CISAC listed on attached
EXHIBIT A (each, a "STOCKHOLDER" and, collectively, the "STOCKHOLDERS"). Buyer,
the Company, CISAC and the Stockholders are referred to collectively herein as
the "PARTIES." Capitalized terms not otherwise defined have the meanings set
forth in SECTION 6.9.
RECITALS
A. The authorized capital stock of the Company consists of 1,000 shares
of Class A common stock, par value $1.00 per share and 7,000 shares of Class B
common stock, par value $1.00 per share (the "COMPANY STOCK") of which 43.105001
shares of Class A common stock and 4267.3949997 shares of Class B common stock
are issued and outstanding. The authorized capital stock of CISAC consists of
8,000 shares of common stock, par value $1.00 per share (the "CISAC STOCK") of
which 200 shares are issued and outstanding.
B. The Stockholders desire to sell, and Buyer desires to purchase, the
outstanding Company Stock and the outstanding CISAC Stock on the terms and
subject to the conditions set forth in this Agreement.
C. For federal income tax purposes, it is intended that the stock
purchase contemplated herein shall be treated and reported by the Parties as an
asset purchase under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "CODE").
D. Certain of the Parties desire to make representations, warranties,
covenants and agreements in connection with the transactions contemplated
herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, the Parties hereby agree
as follows:
ARTICLE I
SALE OF COMPANY STOCK AND CISAC STOCK AND CLOSING
1.1 PURCHASE AND SALE. The Stockholders agree to sell to Buyer, and
Buyer agrees to purchase from the Stockholders, all of the right, title and
interest of the Stockholders in and
to the Company Stock and the CISAC Stock at the Closing on the terms and subject
to the conditions set forth in this Agreement.
1.2 PURCHASE PRICE. The aggregate purchase price for the Company Stock,
and the CISAC Stock is U.S. $88.65 million (the "PURCHASE PRICE"), payable in
cash in the manner provided in SECTION 1.3, and subject to adjustment as
provided in SECTIONS 1.4 and 1.5, $1,000 of which is allocable to, and deemed to
be in consideration of, the CISAC Stock and the remainder of which is allocable
to, and deemed to be in consideration of, the Company Stock.
1.3 CLOSING; ESCROW. The Closing will take place at the offices of
Xxxxxx Xxxxxx Zavis, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 or at such
other place as Buyer and the Stockholders' Representative mutually agree, at
10:00 A.M., local time, on the Closing Date. At the Closing, Buyer will pay the
Purchase Price as follows: (a) $6.0 million (the "ESCROW AMOUNT") of the
Purchase Price shall be delivered by Buyer by wire transfer of immediately
available funds to a mutually acceptable third party financial institution, as
escrow agent (the "ESCROW AGENT") under an escrow agreement to be entered into
on the Closing Date by the Stockholders' Representative, Buyer and the Escrow
Agent substantially in the form of attached EXHIBIT B (the "ESCROW AGREEMENT")
with $2.0 million (the "EQUITY AMOUNT") of the Escrow Amount to secure
satisfaction of the minimum stockholders' equity requirement set forth in
SECTIONS 1.4 and 1.5; and (b) the balance of the Purchase Price shall be
delivered by Buyer by wire transfer of immediately available funds to such
accounts as the Stockholders' Representative directs by written notice delivered
to Buyer at least 2 Business Days before the Closing Date. Simultaneously with
the payments described in immediately preceding clauses (a) and (b), the
Stockholders will assign and transfer to Buyer good and valid title in and to
the Company Stock and the CISAC Stock, free and clear of all Liens, by
delivering to Buyer a certificate or certificates representing the Company Stock
and the CISAC Stock, duly endorsed in blank or accompanied by duly executed
stock powers endorsed in blank, with requisite stock transfer tax stamps, if
any, attached. At the Closing, there shall also be delivered to the Stockholders
and Buyer the opinions, certificates and other Contracts, documents and
instruments to be delivered under ARTICLE IV.
1.4 BALANCE SHEET AND ESTIMATED CLOSING DATE STOCKHOLDERS' EQUITY. Not
less than 5 days prior to the Closing, the Stockholders' Representative shall
prepare in good faith and in consultation with Buyer and shall deliver to Buyer
a balance sheet as of February 29, 2000 (the "BALANCE SHEET"), and a computation
setting forth an estimate of the Closing Date stockholders' equity of the
Company (the "ESTIMATED CLOSING DATE STOCKHOLDERS' EQUITY"). Each of the Balance
Sheet and the Estimated Closing Date Stockholders' Equity will be prepared in
accordance with the procedures and accounting principles of the Company
reflected in the Company Financial Statements (as defined in SECTION 2.2(g)) for
the year ended December 31, 1999, as audited by Ernst & Young, L.L.P. and
provided to Buyer, including all year-end adjustments that the Company and CISAC
do not customarily make at interim periods, except that the Balance Sheet shall
reflect the Company's investment in J&J Electronics, Inc. using the equity
method of accounting. The Balance Sheet and Estimated
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Closing Date Stockholders' Equity Computation shall reflect all distributions
and payments to be made by the Company prior to Closing, including distributions
in respect of the capital stock of the Company to Stockholders in their capacity
as stockholders of the Company, employee bonuses, professional fees and any
payments required to discharge any indebtedness of the Company or CISAC to Xxxxx
X. Xxxxxx or his wife, in each case as disclosed on SECTION 1.4 of the Company
Disclosure Schedule. In the event that the Estimated Closing Date Shareholders'
Equity is less than $15.0 million, the Purchase Price to be delivered by Buyer
at the Closing pursuant to SECTION 1.3(c) shall be decreased by the amount by
which $15.0 million exceeds the Estimated Closing Date Stockholders' Equity. The
Estimated Closing Date Stockholders' Equity shall be accepted by Buyer and the
Stockholders for purposes of determining the amount of cash payable at the
Closing but shall not affect their right to dispute the Closing Date
Stockholders' Equity Computation as provided in SECTION 1.5.
1.5 CLOSING DATE STOCKHOLDERS' EQUITY.
(a) As promptly as practicable, but in any event not later
than the later of 30 days after the Closing Date, Buyer, with the
Stockholders' Representative's cooperation, shall cause to be prepared
and delivered to the Stockholders' Representative a computation (the
"CLOSING DATE STOCKHOLDERS' EQUITY COMPUTATION") of the Closing Date
Stockholders' Equity as of March 31, 2000, which Closing Date
Stockholders' Equity Computation will be reviewed by KPMG Peat Marwick
L.L.P. (the "ACCOUNTING FIRM"). Such Closing Date Stockholders' Equity
Computation shall be prepared in accordance with the procedures and
accounting principles of the Company reflected in the Company Financial
Statements for the year ended December 31, 1999, as audited by Ernst &
Young, L.L.P. and provided to Buyer, including all year-end adjustments
that the Company and CISAC do not customarily make at interim periods,
except that the Balance Sheet shall reflect the physical inventory
referred to in SECTION 3.14 of this Agreement and the Company's
investment in J&J Electronics, Inc. using the equity method of
accounting. The Balance Sheet and Estimated Closing Date Stockholders'
Equity Computation shall reflect all distributions and payments to be
made by the Company prior to Closing, including distributions in
respect of the capital stock of the Company to Stockholders in their
capacity as stockholders of the Company, employee bonuses, professional
fees and any payments required to discharge any indebtedness of the
Company or CISAC to Xxxxx X. Xxxxxx or his wife, in each case as
disclosed on SECTION 1.4 of the Company Disclosure. Buyer shall, and
shall cause the Accounting Firm to, make available to the Stockholders'
Representative all work papers and related data used in connection with
the preparation of the Closing Date Stockholders' Equity Computation.
Except as provided in SECTION 1.5(b) below, within 10 days after
delivery to the Stockholders' Representative of the Closing Date
Stockholders' Equity Computation in the event that the Closing Date
Stockholders' Equity is (a) $15 million or more, the Escrow Agent shall
pay to the Stockholders the Equity Amount and Buyer shall pay to the
Stockholders the amount, if any, that Closing Date Stockholders' Equity
exceeds $15
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million in immediately available funds, (b) less than $15 million and
more than $13 million, the Escrow Agent shall pay to Buyer the
difference between actual Stockholders' Equity and $15 million, up to
the full amount of the Equity Amount, and the Escrow Agent shall
distribute any excess Equity Amount to the Stockholders, or (c) less
than $13 million, the Escrow Agent shall pay to Buyer the Equity Amount
and the Stockholders shall pay Buyer the amount that actual
Stockholders' Equity is less than $13 million in immediately available
funds. Any such payment required by this SECTION 1.5(a) is herein
referred to as the "NET CASH ADJUSTMENT."
(b) In the event the Stockholders' Representative disagrees
with the Closing Date Stockholders' Equity Computation, the
Stockholders' Representative shall give Buyer written notice of such
disagreement within 10 days following its receipt of the Closing Date
Stockholders' Equity Computation. Such Closing Date Stockholders'
Equity Computation shall become final and binding upon the Parties
unless such notice is given. During a period of 15 days following
delivery of such notice of disagreement, the Stockholders'
Representative and Buyer shall attempt in good faith to resolve any
differences which they may have with respect to the Closing Date
Stockholders' Equity Computation. If, at the end of such 15 day period,
the Stockholders' Representative and Buyer shall have failed to reach
agreement with respect to all of such differences, then all such
differences as to which agreement has not been so reached (the
"DISPUTED STOCKHOLDERS' EQUITY MATTERS") shall be submitted to and
reviewed by Deloitte & Touche LLP or its successor (the "STOCKHOLDERS'
EQUITY ARBITRATOR"). The Stockholders' Equity Arbitrator shall consider
only the Disputed Stockholders' Equity Matters. The Stockholders'
Equity Arbitrator shall act promptly to resolve all Disputed
Stockholders' Equity Matters in accordance with such rules and
procedures as it may prescribe, and its decision with respect to all
Disputed Stockholders' Equity Matters, a copy of which shall be
furnished to the Stockholders' Representative and Buyer, shall be final
and binding upon the Stockholders and Buyer. The payment of the Net
Cash Adjustment, if any, shall be made within 5 days of delivery to the
Stockholders' Representative and Buyer of such decision by the
Stockholders' Equity Arbitrator.
(c) All fees, costs and expenses of the Accounting Firm will
be for the account of, and paid by, the Buyer. All fees, costs and
expenses of the Stockholders' Equity Arbitrator shall be borne equally
by Buyer and the Stockholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to the Company, CISAC and the Stockholders that the statements
contained in this SECTION 2.1 are true and correct, except to the extent set
forth on the disclosure schedule
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previously delivered by Buyer to the Company (the "BUYER DISCLOSURE SCHEDULE").
The Buyer Disclosure Schedule shall be initialed by the Buyer, the Company,
CISAC and the Stockholders' Representative and shall be arranged in sections and
paragraphs corresponding to the letter and numbered paragraphs contained in this
SECTION 2.1.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Buyer is a
corporation duly organized, validly existing and in good standing under
Delaware law.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has the
requisite corporate power and authority to approve, authorize, execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by Buyer of
the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Buyer and no other corporate
proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer
and, assuming this Agreement constitutes the valid and binding
agreement of the Company, CISAC and the Stockholders, constitutes the
valid and binding agreement of Buyer, enforceable against Buyer in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement nor the consummation by Buyer
of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the Certificate of
Incorporation or By-Laws of Buyer or any of their respective
subsidiaries; (ii) require any consent, approval, authorization or
permit of, or registration or filing with or notification to, any
governmental or regulatory authority, except (A) in connection with the
applicable requirements, if any, of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (B) pursuant to
the applicable requirements of the Securities Act, and the rules and
regulations promulgated thereunder, and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations
promulgated thereunder, (C) such filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
triggered by the transactions contemplated by this Agreement, or (D)
where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not adversely
affect the ability of Buyer to consummate the transactions contemplated
hereby; (iii) result in a violation or breach of, or constitute a
default under any of the terms, conditions or provisions of any
indenture, note, license, lease, agreement or other instrument or
obligation to which Buyer or its assets may be bound, except for such
violations, breaches and defaults as to which requisite waivers or
consents have been obtained or which would not adversely affect the
ability of Buyer
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to consummate the transactions contemplated hereby; or (iv) assuming
the consents, approvals, authorizations or permits and filings or
notifications referred to in this SECTION 2.1(c) are duly and timely
obtained or made violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer or any of its assets,
except for violations which would not in the aggregate have a Material
Adverse Effect or adversely affect the ability of Buyer to consummate
the transactions contemplated hereby.
(d) LITIGATION. Except as disclosed in the Buyer SEC Reports
there are no actions, suits, investigations or proceedings pending or,
to the Knowledge of Buyer, threatened against Buyer or any of their
respective subsidiaries that, alone or in the aggregate, (i) question
the validity of this Agreement or any action to be taken by Buyer in
connection with the consummation of the transactions contemplated
hereby or (ii) would prevent Buyer from performing its obligations
under this Agreement, or (iii) would delay, limit or enjoin the
transactions contemplated by this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY, CISAC AND THE MAJOR
STOCKHOLDERS. The Company, CISAC and the Stockholders hereby jointly and
severally represent and warrant to Buyer that the statements contained in this
SECTION 2.2 are true and correct, except to the extent set forth on the
disclosure schedule previously delivered by the Company to Buyer (the "COMPANY
DISCLOSURE SCHEDULE"). The Company Disclosure Schedule shall be initialed by the
Buyer, the Company, CISAC and the Stockholders' Representative and shall be
arranged in sections and paragraphs corresponding to the letter and numbered
paragraphs contained in this SECTION 2.2.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. The Company,
CISAC and their respective subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and are qualified and
in good standing as foreign corporations in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by
them require such qualification, except where failure to so qualify or
be in good standing as a foreign corporation would not have a Material
Adverse Effect. Each of the Company and CISAC: (a) made a valid
election to be treated as an S-corporation pursuant to Section 1361,
et. seq. of the Code which election was duly made and filed with the
IRS and any applicable state Tax authority; (b) is currently a validly
existing S-corporation, and (c) since the respective date of such
election, has at all times met, and will continue to meet from the date
hereof until the Closing, all of the requirements of the Code to
maintain its S-corporation status. Each of the Company, CISAC and their
respective subsidiaries has all requisite power and authority
(corporate or otherwise) to own its properties and to carry on its
business in all material respects as it is now being conducted. All of
the subsidiaries of the Company and CISAC, together with an
organizational chart, are set forth in SECTION 2.2(a) of the Company
Disclosure Schedule. Each of the Company and CISAC and their respective
subsidiaries has
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heretofore made available to Buyer complete and correct copies of its
Articles of Incorporation and By-Laws or similar organizational
documents, as amended.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 1,000 Class A common shares, $1.00 par value
per share, of which 43.105001 shares are issued and outstanding and
(ii) 7,000 Class B shares, $1.00 par value per share, of which
4,267.3949997 are issued and outstanding. The authorized capital stock
of CISAC consists of 8,000 common shares, $1.00 par value per share, of
which 200 shares are issued and outstanding. All of the outstanding
shares of capital stock of the Company, CISAC and their respective
subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable. Each of the Stockholders is and (since becoming
a Stockholder) has been eligible to be a stockholder of an
S-corporation, from the date the Company and CISAC made such election.
None of the Stockholders has taken any action which would result in
such Stockholder failing to be an eligible S-corporation stockholder.
Each of the Company and CISAC has no outstanding stock appreciation
rights, phantom stock or similar rights. All outstanding shares of
capital stock or other equity interests of the subsidiaries of the
Company and CISAC are wholly-owned by the Company or CISAC, as
applicable, or a direct or indirect wholly-owned subsidiary of the
Company or CISAC, as applicable, free and clear of all Liens, except,
that, all of the outstanding capital stock of Comtec Europe B.V. is
owned by either the Company, which owns 79% of such stock, or CISAC,
which owns 21% of such stock. There are not as of the date hereof and
there will not be at the Closing any outstanding or authorized options,
warrants, calls, rights (including preemptive rights), commitments or
any other agreements of any character which the Company, CISAC or any
of their respective subsidiaries is a party to, or may be bound by,
requiring any of them to issue, transfer, grant, sell, purchase, redeem
or acquire any shares of capital stock or any of its securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of the Company, CISAC or any
of their respective subsidiaries. Except as described in SECTION 2.2(b)
of the Company Disclosure Schedule, there are not as of the date
hereof, and there will not be at the Closing, any stockholder
agreements, voting trusts or other agreements or understandings to
which the Company or CISAC is a party or to which either is bound
relating to the voting of any shares of the capital stock of the
Company or CISAC.
(c) AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Company
and CISAC has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation
by each of the Company and CISAC of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors
and Stockholders of the Company and CISAC, as applicable, and no other
corporate proceedings on the part of the Company or CISAC are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This
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Agreement has been duly and validly executed and delivered by each of
the Company and CISAC and, assuming this Agreement constitutes the
valid and binding agreement of Buyer, constitutes the valid and binding
agreement of each of the Company and CISAC, enforceable against the
Company and CISAC in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(d) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. None of the
Company, CISAC or any of their respective subsidiaries is: (i) in
violation of its Articles of Incorporation or By-Laws; (ii) in default
in the performance of any material obligation, agreement or condition
of any debt instrument which (with or without the passage of time or
the giving of notice, or both) affords to any Person the right to
accelerate any indebtedness or terminate any right; (iii) in default,
under or breach of (with or without the passage of time or the giving
of notice) any other material contract to which it is a party or by
which it or its assets are bound; or (iv) in violation of any law,
regulation, administrative order or judicial order, decree or judgment
(domestic or foreign) applicable to it or its business or assets.
(e) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company or CISAC nor
the consummation by the Company or CISAC of the transactions
contemplated hereby will (i) conflict with or result in any breach of
any provision of their respective Articles of Incorporation and
By-Laws; (ii) require any consent, approval, authorization or permit
of, or registration or filing with or notification to, any governmental
or regulatory authority, except (A) in connection with the applicable
requirements, if any, of the HSR Act, or (B) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not in the aggregate have a Material
Adverse Effect or materially and adversely affect the ability of the
Company or CISAC to consummate the transactions contemplated hereby;
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or lien or other
charge or encumbrance) under any of the terms, conditions or provisions
of any indenture, note, license, lease, agreement or other instrument
or obligation to which the Company, CISAC or any of their respective
subsidiaries or any of their respective subsidiaries assets may be
bound, except for such violations, breaches and defaults (or rights of
termination, cancellation, or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been
obtained or which, in the aggregate, would not materially and adversely
affect the ability of the Company or CISAC to consummate the
transactions contemplated hereby or operate the business of the
Company, CISAC and their respective subsidiaries substantially in the
manner currently operated from and after the Closing; (iv) cause the
suspension or revocation of any authorizations, consents, approvals or
licenses currently in effect which would materially and adversely
affect the
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ability of the Company or CISAC to consummate the transactions
contemplated hereby or operate the business of the Company, CISAC and
their respective subsidiaries substantially in the manner currently
operated from and after the Closing; or (v) assuming the consents,
approvals, authorizations or permits and filings or notifications
referred to in this SECTION 2.2(e) are duly and timely obtained or
made, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, CISAC or any of their respective
subsidiaries to any of their respective subsidiaries assets, except for
violations which would not in the aggregate materially and adversely
affect the ability of the Company or CISAC to consummate the
transactions contemplated hereby or operate the business of the
Company, CISAC and their respective subsidiaries substantially in the
manner currently operated from and after the Closing.
(f) LITIGATION. Except as disclosed in SECTION 2.2(f) of the
Company Disclosure Schedule:
(i) there are no actions, suits, investigations or
proceedings pending or, to the Knowledge of the Company or
CISAC, threatened against the Company or CISAC or any of their
respective subsidiaries;
(ii) there are not facts or circumstances known to
the Company, CISAC or any of their respective subsidiaries
that could reasonably be expected to give rise to any action,
suit, investigation or proceedings which if adversely
determined would have a Material Adverse Effect; and
(iii) there are no orders, writs, injunctions or
decrees outstanding against the Company, CISAC or any of their
respective subsidiaries.
(g) FINANCIAL STATEMENTS. Prior to the execution of this
Agreement, the Company delivered to Buyer true and complete copies of
the following financial statements (collectively, the "COMPANY
FINANCIAL STATEMENTS"):
(i) the audited balance sheets of the Company and its
consolidated subsidiaries as of December 31, 1999, 1998, 1997
and 1996, and the related audited consolidated statements of
operations, stockholders' equity and cash flows for each of
the fiscal years then ended and the related footnotes to such
financial statements, together with a true and correct copy of
the report on such audited information by Ernst & Young LLP,
and all substantive letters from such accountants with respect
to the results of such audits; and
-9-
(ii) the Balance Sheet and the related unaudited
consolidated statements of operations, stockholders' equity
and cash flows for the portion of the fiscal year then ended.
Except as set forth in the notes thereto, the Company Financial
Statements were prepared in accordance with GAAP and fairly present the
consolidated financial condition and results of operations of the
Company and its consolidated subsidiaries as of the respective dates
thereof and for the respective periods covered thereby. Except for
those subsidiaries of the Company listed in SECTION 2.2(g) of the
Company Disclosure Schedule, the financial condition and results of
operations of each subsidiary are, and for all periods referred to in
this SECTION 2.2 have been, consolidated with those of the Company.
Since January 1, 1999, there has not been any material change, or any
application or request for any material change, by the Company or any
of their respective subsidiaries in accounting principles, methods or
policies for financial accounting purposes that have affected or will
affect the Company Financial Statements or for tax purposes. The books
of account of the Company, CISAC and their respective subsidiaries are
complete and correct in all material respects and have been maintained
on a consistent basis.
(h) NO LIABILITIES; ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in Section 2.2(h) of the Company Disclosure
Schedule, none of the Company, CISAC nor any of their respective
subsidiaries has any indebtedness, obligations or liabilities of any
kind (whether accrued, absolute, contingent or otherwise, and whether
due or to become due or asserted or unasserted), and, to the Knowledge
of the Company or CISAC, there is no basis for the assertion of any
claim or liability of any nature against the Company or CISAC or any of
their respective subsidiaries, except for liabilities (i) which are
fully reflected in, reserved against or otherwise described in the
Company Financial Statements (in accordance with Statement of Financial
Accounting Standards #5, "ACCOUNTING FOR CONTINGENCIES"), or (ii) which
have been incurred since December 31, 1999 in the ordinary course of
business. Except as set forth on SECTION 2.2(h) of the Company
Disclosure Schedule, since December 31, 1999, the business of the
Company, CISAC and their respective subsidiaries has been carried on
only in the ordinary and usual course and there has not been any
material adverse change in its business, properties, operations, or
financial condition and no event has occurred, and no fact or set of
circumstances has arisen, which has resulted in or is reasonably likely
to result in a Material Adverse Effect with respect to the Company,
CISAC and their respective subsidiaries. Without limiting the
foregoing, except as disclosed in SECTION 2.2(h) of the Company
Disclosure Schedule, there has not occurred between December 31, 1999
and the date hereof:
(i) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock
of the Company, CISAC or any of their respective subsidiaries
not wholly owned by the Company, CISAC, or any
-10-
direct or indirect redemption, purchase or other acquisition
by the Company, CISAC or any of their respective subsidiaries
of any such capital stock of or any option with respect to the
Company, CISAC or any of their respective subsidiaries not
wholly owned by the Company or CISAC;
(ii) any authorization, issuance, sale or other
disposition by the Company, CISAC or any of their respective
subsidiaries of any shares of capital stock of or Option with
respect to the Company, CISAC or any of their respective
subsidiaries, or any modification or amendment of any right of
any holder of any outstanding shares of capital stock of or
Option with respect to the Company, CISAC or any of their
respective subsidiaries;
(iii) (x) any increase in the salary, wages or other
compensation of any officer, employee or consultant of the
Company, CISAC or any of their respective subsidiaries whose
annual salary is, or after giving effect to such change would
be, $100,000, or more; (y) any establishment or modification
of (A) targets, goals, pools or similar provisions in respect
of any fiscal year under any Company Scheduled Plan,
employment Contract or other employee compensation arrangement
or (B) salary ranges, increase guidelines or similar
provisions in respect of any Company Scheduled Plan,
employment Contract or other employee compensation
arrangement; or (z) any adoption, entering into, amendment,
modification or termination (partial or complete) of any
Company Scheduled Plan;
(iv) (A) incurrences by the Company, CISAC or any of
their respective subsidiaries of indebtedness in an aggregate
principal amount exceeding $50,000 (net of any amounts
discharged during such period), or (B) any voluntary purchase,
cancellation, prepayment or complete or partial discharge in
advance of a scheduled payment date with respect to, or waiver
of any right of the Company, CISAC or any of their respective
subsidiaries under, any indebtedness of or owing to the
Company, CISAC or any of their respective subsidiaries (in
either case other than any indebtedness of the Company, CISAC
or of their respective subsidiaries owing to the Company,
CISAC or a wholly-owned subsidiary);
(v) any physical damage, destruction or other
casualty loss (whether or not covered by insurance) affecting
any of the plant, real or personal property or equipment of
the Company, CISAC or any of their respective subsidiaries in
an aggregate amount exceeding $50,000;
(vi) any material change in (v) any pricing,
investment, accounting, financial reporting, inventory,
credit, allowance or tax practice or policy of the
-11-
Company, CISAC or any of their respective subsidiaries, (x)
any method of calculating any bad debt, contingency or other
reserve of the Company, CISAC or any of their respective
subsidiaries for accounting, financial reporting or Tax
purposes (y) the fiscal year of the Company, CISAC or any of
their respective subsidiaries or (z) the accounting systems or
staff of the Company, CISAC or any of their respective
subsidiaries;
(vii) any write-off or write-down of or any
determination to write off or down any of the assets and
properties of the Company, CISAC or any of their respective
subsidiaries in an aggregate amount exceeding $50,000;
(viii) any acquisition or disposition of, or
incurrence of a Lien (other than a Permitted Lien) on, any
assets and properties of the Company, CISAC or any of their
respective subsidiaries, other than in the ordinary course of
business consistent with past practice;
(ix) any (x) amendment of the articles of
incorporation or by-laws (or other comparable corporate
charter documents) of the Company, CISAC or any of their
respective subsidiaries, (y) reorganization, liquidation or
dissolution of the Company, CISAC or any of their respective
subsidiaries or (z) business combination involving the
Company, CISAC or any of their respective subsidiaries and any
other Person;
(x) any entering into, amendment, modification,
termination (partial or complete) or granting of a waiver
under or giving any consent with respect to (A) any Contract
which is required (or had it been in effect on the date hereof
would have been required) to be disclosed in the Company
Disclosure Schedule pursuant to SECTION 2.2(m) or (B) any
material license held by the Company, CISAC or any of their
respective subsidiaries;
(xi) capital expenditures or commitments for
additions to property, plant or equipment of the Company,
CISAC and of their respective subsidiaries constituting
capital assets in an aggregate amount exceeding $100,000;
(xii) any commencement or termination by the Company,
CISAC or any of their respective subsidiaries of any line of
business;
(xiii) any transaction by the Company, CISAC or any
of their respective subsidiaries with the Stockholders, any
officer, director, Affiliate or Associate of the Stockholders
or any Associate of any such officer, director or Affiliate
(other than the Company or any of their respective
subsidiaries) (A) outside the ordinary course of business
consistent with past practice or (B) other
-12-
than on an arm's-length basis, other than pursuant to any
Contract in effect on December 31, 1999 and disclosed to Buyer
in writing;
(xiv) make or revoke any material Tax election,
settle or compromise any material federal, state, local or
foreign Tax liability or change (or make a request to any
taxing authority to change) any material aspect of its method
of accounting for Tax purposes (except for Tax elections which
are consistent with prior such elections (in past years));
(xv) any entering into of an agreement to do or
engage in any of the foregoing after the date hereof; or
(xvi) any other transaction involving or development
affecting the Company, CISAC or any of their respective
subsidiaries outside the ordinary course of business
consistent with past practice.
(i) BROKERS AND FINDERS. Except for FleetBoston Xxxxxxxxx
Xxxxxxxx, Inc. ("FLEET"), none of the Company, CISAC nor their
respective subsidiaries has employed any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
(j) TAXES.
(i) The Company, CISAC and each of their respective
subsidiaries has timely filed all federal, state, local and
foreign returns, information statements, forms and reports
relating to Taxes ("RETURNS") required by applicable Tax law
to be filed by the Company, CISAC and each of their respective
subsidiaries. All Taxes owed by the Company, CISAC or any of
their respective subsidiaries to a taxing authority (including
any tax resulting from the transactions described herein), or
for which the Company, CISAC or any of their respective
subsidiaries is liable, whether to a taxing authority or to
other Persons or entities under a Significant Tax Agreement,
as of the date hereof, have been paid and, as of the Closing,
will have been paid. Each of the Company and CISAC has made
(A) accruals for Taxes on the Company Financial Statements and
(B) with respect to periods after the date of the Company
Financial Statements, provisions on a periodic basis
consistent with past practice on the Company's, CISAC's or any
of their respective subsidiaries' books and records or
financial statements, in each case which are adequate to cover
any Tax liability of the Company, CISAC and each of their
respective subsidiaries determined in accordance with GAAP
through the date of the
-13-
Company Financial Statements or the date of the provision, as
the case may be, except where failures to make such accruals
or provisions could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(ii) The Company, CISAC and each of their respective
subsidiaries have withheld with respect to its employees all
federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) There is no Tax deficiency outstanding,
proposed or assessed against the Company, CISAC or any of
their respective subsidiaries. None of the Company, CISAC nor
any of their respective subsidiaries executed or requested any
waiver of any statute of limitations on or extending the
period for the assessment or collection of any federal or
material state Tax.
(iv) No federal or state Tax audit, action, suit,
proceeding, investigation, claim or other examination of the
Company, CISAC or any of their respective subsidiaries is
presently in progress, nor has the Company, CISAC or any of
their respective subsidiaries been notified in writing of any
request for such federal or material state Tax audit or other
examination, and no such audit or other examination has been
threatened.
(v) None of the Company, CISAC nor any of their
respective subsidiaries has filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the
Company or CISAC.
(vi) None of the Company, CISAC nor any of their
respective subsidiaries is a party to (A) any agreement with a
party other than the Company, CISAC or any of their respective
subsidiaries providing for the allocation or payment of Tax
liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Return which Return includes
or included the Company, CISAC or any of their respective
subsidiary or (B) any Significant Tax Agreement other than any
Significant Tax Agreement described in (A).
(vii) Neither the Company, CISAC, nor any of their
respective subsidiaries has ever been a member of an
affiliated group of corporations within the meaning of
Sections 1504 of the Code.
(viii) Neither the Company, CISAC nor any of their
respective subsidiaries has agreed to make nor is it required
to make any adjustment under
-14-
Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(ix) Neither the Company nor CISAC is, or has at any
time been, a "UNITED STATES REAL PROPERTY HOLDING CORPORATION"
within the meaning of Section 897(c)(2) of the Code).
(x) Neither the Company, CISAC nor any of their
respective subsidiaries has constituted either a "DISTRIBUTING
CORPORATION" or a "CONTROLLED CORPORATION" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of
the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution which otherwise
constitutes part of a "PLAN" or "SERIES OF RELATED
TRANSACTIONS" (within the meaning of Section 355(e) of the
Code) in conjunction with the purchase and sale of stock
contemplated herein.
(xi) No closing agreement that could affect the Taxes
of the Company, CISAC or any of their respective subsidiaries
for periods ending after the Closing Date pursuant to Section
7121 of the Code (or any predecessor provision) or any similar
provision of any state, local or foreign law has been entered
into by or with respect to the Company, CISAC or any of their
respective subsidiaries.
(xii) There exist no Tax Liens on any assets of the
Company, CISAC or any of their respective subsidiaries.
(xiii) There is no Contract, plan or arrangement
covering any Person that, individually or collectively, could
give rise to the payment of any amount that would not be
deductible by the Company, CISAC or any of their respective
subsidiaries by reason of Section 162(m) or Section 280G of
the Code and neither the Company, CISAC nor any of their
respective subsidiaries has made any such payments.
(k) EMPLOYEE BENEFITS. SECTION 2.2(k) of the Company
Disclosure Schedule lists the Company Scheduled Plans that are not
reflected in the Company Financial Statements.
(i) Except for liabilities reflected in the accruals
and reserves on the Company Financial Statements, neither the
Company nor CISAC has at any time maintained, sponsored,
adopted, made contributions to, obligated itself or had any
liability, including any liability or potential liability that
arises because of a current or former Plan Affiliate, with
respect to: any "EMPLOYEE PENSION
-15-
BENEFIT PLAN" (as such term is defined in SECTION 3(2) of
ERISA); any "EMPLOYEE WELFARE BENEFIT PLAN" (as such term is
defined in SECTION 3(1) of ERISA); any personnel or payroll
policy (including vacation time, holiday pay, service awards,
moving expense reimbursement programs and sick leave) or
material fringe benefit; any severance agreement or plan or
any medical, hospital, dental, life or disability plan; any
excess benefit plan, bonus or incentive plan (including any
equity or equity-based plan), tuition reimbursement,
automobile use, club membership, parental or family leave,
top hat plan or deferred compensation plan, salary reduction
agreement, change-of-control agreement, employment agreement,
consulting agreement, or collective bargaining agreement,
indemnification agreement, retainer agreement; or any other
benefit plan, policy, program, arrangement, agreement or
contract, whether or not written or terminated, with respect
to any employee, former employee, director, independent
contractor, or any beneficiary or dependent thereof (all such
plans, policies, programs, arrangements, agreements and
Contracts, whether or not set forth in SECTION 2.2(k) of the
Company Disclosure Schedule are referred to in this Agreement
as "COMPANY SCHEDULED PLANS").
(ii) The Company has delivered or made available to
Buyer a complete and accurate copy, as of the Closing, of each
written Company Scheduled Plan, together with, if applicable,
a copy of audited financial statements, actuarial reports and
Form 5500 Annual Reports (including required schedules), if
any, for the 3 most recent plan years, the most recent IRS
determination letter or IRS recognition of exemption; each
other material letter, ruling or notice issued by a
governmental body with respect to each such plan, a copy of
each trust agreement, insurance contract or other funding
vehicle, if any, with respect to each such plan, the most
recent PBGC Form 1 with respect to each such plan, if any, the
current summary plan description or summary of material
modifications with respect to each such plan, Form 5310 and
any related filings with the PBGC and with respect to the last
six Plan years for each Plan subject to Title IV of ERISA,
general notification to employees of their rights under Code
Section 4980B and form of letter(s) distributed upon the
occurrence of a qualifying event described in Code Section
4980B, in the case of a Plan that is a "GROUP HEALTH PLAN" as
defined in Code Section 162(i), and a copy or description of
each other general explanation or written or oral
communication which describes a material term of each such
plan that has not previously been disclosed to Buyer pursuant
to this Section. SECTION 2.2(k) of the Company Disclosure
Schedule contains a description of the material terms of any
unwritten Company Scheduled Plan as comprehended to the
Closing Date.
(iii) Except as could not reasonably give rise,
whether individually or in the aggregate, to material
liability to the Company, CISAC or Buyer:
-16-
(1) each Company Scheduled Plan (A) has been
and currently complies in form and in operation in
all material respects with all applicable
requirements of ERISA and the Code, and any other
legal requirements; (B) has been and is operated and
administered in compliance with its terms (except as
otherwise required by law); (C) has been and is
operated in compliance with applicable legal
requirements in such a manner as to qualify, where
appropriate, for both Federal and state purposes, for
income tax exclusions to its participants, tax-exempt
income for its funding vehicle, and the allowance of
deductions and credits with respect to contributions
thereto; and (D) where appropriate, has received a
favorable determination letter or recognition of
exemption from the Internal Revenue Service.
(2) with respect to each Company Scheduled
Plan, there are no claims or other proceedings
pending or, to the Knowledge of the Company or CISAC,
threatened with respect to the assets thereof (other
than routine claims for benefits), and there are no
facts which could reasonably give rise to any
liability, claim or other proceeding against any
Company Scheduled Plan, any fiduciary or plan
administrator or other Person dealing with any
Company Scheduled Plan or the assets of any such
plan.
(3) with respect to each Company Scheduled
Plan, to the Knowledge of the Company or CISAC no
Person: (A) has entered into any "PROHIBITED
TRANSACTION," as such term is defined in ERISA or the
Code and the regulations, administrative rulings and
case law thereunder for which an exemption is not
available; (B) has breached a fiduciary obligation
under Section 404 of ERISA or violated Sections 402,
403, 405, 503, 510 or 511 of ERISA; (C) has any
liability for any failure to act or comply in
connection with the administration or investment of
the assets of such plans; or (D) engaged in any
transaction or otherwise acted with respect to such
plans in such a manner which could subject Buyer, or
any fiduciary or plan administrator or any other
Person dealing with any such plan, to liability under
Sections 409 or 502 of ERISA or Sections 4972 or 4976
through 4980B of the Code.
(4) each Company Scheduled Plan may be
amended, terminated, modified or otherwise revised by
the Company, CISAC or Buyer, on and after the
Closing, pursuant to the terms of said Company
Scheduled Plan, and there exists no documents nor
oral statements limiting or restricting the ability
of the Company, CISAC or Buyer on and after the
Closing to amend, terminate, modify or otherwise
revise such Company Scheduled Plan. For purposes of
this paragraph,
-17-
termination of a Company Scheduled Plan includes
the requirement of a cessation of liability for
claims incurred after the termination date
regardless of any status having been obtained or
achieved.
(5) none of the Company, CISAC or any
current or former Plan Affiliate has at any time
participated in, made contributions to or had any
other liability with respect to any Company Scheduled
Plan which is a "MULTI-EMPLOYER PLAN" as defined in
Section 4001 of ERISA, a "MULTI-EMPLOYER PLAN" within
the meaning of Section 3(37) of ERISA, a "MULTIPLE
EMPLOYER PLAN" within the meaning of Section 413(c)
of the Code or a "MULTIPLE EMPLOYER WELFARE
ARRANGEMENT" within the meaning of Section 3(40) of
ERISA.
(6) none of the Company, CISAC or any
current or former Plan Affiliate has at any time
maintained, contributed to or obligated itself or
otherwise had any liability with respect to any
funded or unfunded employee welfare plan, whether or
not terminated, which provides medical, health, life
insurance or other welfare-type benefits for current
or future retirees or current or future former
employees, their spouses or dependents or any other
Persons (except for limited continued medical benefit
coverage for former employees, their spouses and
other dependents as required to be provided under
Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA and the accompanying proposed
regulations or state continuation coverage laws
("COBRA")).
(7) no Company Scheduled Plan is an
"EMPLOYEE PENSION PLAN" (as defined in Section 3(2)
of ERISA) that is subject to (i) Title IV of ERISA,
(ii) Section 412 of the Code, or (iii) the minimum
funding requirements of Title I of ERISA.
(8) the requirements of COBRA have been
satisfied with respect to each Company Scheduled Plan
to which COBRA is applicable.
(9) all contributions, payments, premiums,
expenses, reimbursements or accruals for all periods
ending prior to or as of the Closing for each Company
Scheduled Plan (including periods from the first day
of the then current plan year to the Closing) shall
have been made or accrued on the Company Financial
Statements (in accordance with generally applied
accounting principal, including FAS 87, 88, 106 and
112) and each such plan otherwise does not have nor
could have any unfunded liability (including benefit
liabilities as defined in Section 4001(a)(16) of
ERISA) which is not reflected on the Company
Financial Statements. Any contribution accrued with
respect to any
-18-
Company Scheduled Plan is fully deductible by the
Company or CISAC, as applicable.
(10) none of the Company, CISAC nor a
Plan Affiliate has any liability (A) for the
termination of any single employer plan under
Section ERISA Section 4062 of ERISA or any
multiple employer plan under Section ERISA
Section 4063 of ERISA, (B) for any lien imposed
under Section Section 302(f) of ERISA or Section
412(n) of the Code, (C) for any interest payments
required under Section Section 302(e) of ERISA or
Section 412(m) of the Code, (D) for any excise tax
imposed by Code Sections 4971, 4972, 4977, or
4979, or (E) for any minimum funding contributions
under Section Section 302(c)(11) of ERISA or Code
Section 412(c)(11).
(11) all the Company Scheduled Plans to the
extent applicable, are in compliance with Section
1862(b)(1)(A)(i) of the Social Security Act and none
of the Company, CISAC or any Plan Affiliate has any
liability for any excise tax imposed by Code Section
5000.
(12) with respect to any Company Scheduled
Plan which is a welfare plan as defined in Section
3(1) of ERISA; (A) each such welfare plan which is
intended to meet the requirements for tax-favored
treatment under Subchapter B of Chapter 1 of the Code
meets such requirements; and (B) there is no
disqualified benefit (as such term is defined in Code
Section 4976(b)) which would subject the Company,
CISAC or any Plan Affiliate to a tax under Code
Section 4976(a).
(13) Other than by reason of actions taken
by Buyer following the Closing, the consummation of
the transactions contemplated by this Agreement will
not (A) entitle any current or former employee of the
Company or CISAC to severance pay, unemployment
compensation or any other payment, (B) accelerate the
time of payment or vesting of any payment, forgive
any indebtedness, or increase the amount of any
compensation due to any such employee or former
employee, or (C) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of
the Code for which an exemption is not available.
(14) As used in this Agreement, with respect
to the Company or CISAC ("FIRST PERSON") the term
"PLAN AFFILIATE" shall mean each other Person or
entity with whom the First Person constitutes or has
constituted all or part of a controlled group, or
which would be treated or has been treated with the
First Person as under common control or
-19-
whose employees would be treated or have been
treated as employed by the First Person, under
Section 414 of the Code or Section 4001(b) of
ERISA and any regulations, administrative rulings
and case law interpreting the foregoing.
(l) COMPANY INTANGIBLE PROPERTY.
(i) SECTION 2.2(l) of the Company Disclosure Schedule
sets forth a true, correct and complete list of all Company
Intangible Property owned or used in business by the Company,
CISAC and their respective subsidiaries, as well as all
registrations thereof and pending applications therefor, and
indicates, with respect to each item of Company Intangible
Property listed thereon, the owner thereof and, if applicable,
the name of the licensor and licensee thereof and the material
terms of such license or other contract relating thereto.
Except as set forth in SECTION 2.2(l) of the Company
Disclosure Schedule, each of the foregoing is owned free and
clear of any and all Liens, and none of the Company, CISAC or
any of their respective subsidiaries has received any notice
to the effect that any other entity has any claim of ownership
with respect thereto. Except as set forth in SECTION 2.2(l) of
the Company Disclosure Schedule, to the Knowledge of the
Company or CISAC, the use of the foregoing by the Company,
CISAC and their respective subsidiaries does not conflict
with, infringe upon, violate or interfere with or constitute
an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property
right, patent, trademark, trade name, service xxxx, brand
xxxx, brand name, computer program, industrial design,
copyright or any pending application therefor of any other
Person or entity. Except as set forth in SECTION 2.2(l) of the
Company Disclosure Schedule, no claims have been made, and
none of the Company, CISAC or any of their respective
subsidiaries has received any notice, nor does the Company,
CISAC or any of their respective subsidiaries have any
Knowledge of any basis for any claims that any of the
foregoing is invalid, conflicts with the asserted rights of
other entities, or has been used or enforced (or has failed to
be used or enforced) in a manner that would result in the
abandonment, cancellation or unenforceability of any material
item of Company Intangible Property. There are no restrictions
on the ability of the Company, CISAC or any of their
respective subsidiaries to use any portion of the Company
Intangible Property in connection with any customer or among
the various customers of any of them.
(ii) The Company, CISAC and each of their respective
subsidiaries possesses all Company Intangible Property,
including, without limitation, all know-how, formulae,
software and other proprietary and trade rights and trade
secrets, necessary for the conduct of their businesses in all
material respects as now conducted. None of the Company, CISAC
or any of their respective
-20-
subsidiaries has taken or failed to take any action that
would result in the forfeiture or relinquishment of any
such Company Intangible Property used in the conduct of
their respective businesses as now conducted. The execution
of this Agreement or the completion of the transactions
contemplated hereby will not result in the forfeiture,
relinquishment, violation, breach, termination,
cancellation or right of termination of any agreement or
license relating to the Company Intangible Property used in
the conduct of the Company's, CISAC's or their
subsidiaries' respective businesses as now conducted.
(m) CERTAIN CONTRACTS. SECTION 2.2(m) of the Company
Disclosure Schedule lists all of the following Contracts, to which the
Company, CISAC or their respective subsidiaries is a party or by which
any one of them or any of their properties or assets may be bound (the
"COMPANY LISTED AGREEMENTS"): (i) all employment or other Contracts
with any executive officer or director of the Company, CISAC or their
respective subsidiaries and any employment Contracts with any employee
which are not terminable at will without any payment upon termination;
(ii) union, guild or collective bargaining Contracts relating to
employees of the Company, CISAC or their respective subsidiaries; (iii)
instruments for credit or money borrowed (including, without
limitation, any indentures, guarantees, loan agreements, sale and
leaseback agreements, or purchase money obligations incurred in
connection with the acquisition of property other than in the ordinary
course of business) involving individually or in the aggregate in
excess of $100,000; (iv) underwriting, purchase, liquidation or similar
Contracts entered into in connection with the Company, CISAC or any of
their respective subsidiaries' currently existing indebtedness; (v)
Contracts for material acquisitions or dispositions (by merger,
purchase, liquidation or sale of assets or stock or otherwise) of
assets entered into within the last 3 years (other than in the ordinary
course of business), as to which the transactions contemplated have
been consummated or are currently pending; (vi) joint venture,
strategic alliance or similar partnership Contracts; (vii) material
merchandising and distribution Contracts; (viii) Contracts granting any
Person or other entity registration rights; (ix) guarantees,
suretyships, indemnification and contribution Contracts, involving
individually or in the aggregate in excess of $100,000; (x) Contracts
regarding the use, license or other disposition of intellectual
property; (xi) material franchise Contracts; (xii) Contracts regarding
the purchase of supplies, equipment, materials or components greater
than $250,000 (other than purchase orders); (xiii) Contracts for the
sale of products to any of the Key Companies, as defined in SECTION
2.2(bb); (xiv) Contracts restricting competition; (xv) material
Contracts with any governmental or quasi-governmental entity; (xvi)
existing leases of real or personal property and material Contracts to
purchase or sell real property; (xvii) Contracts relating to the
agreement of the Stockholders to appoint and empower the Stockholders'
Representative; and (xviii) other Contracts which materially affect the
business, properties or assets of the Company, CISAC and their
respective subsidiaries taken as a whole, and are not otherwise
disclosed in this Agreement or which were entered into other than in
the ordinary course of business on a basis consistent with past
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practice. Except as set forth on SECTION 2.2(m) of the Company
Disclosure Schedule, a true and complete copy (including all
amendments) of each Company Listed Agreement, or a summary of each oral
contract, has been made available to the Buyer. None of the Company,
CISAC or any of their respective subsidiaries (i) is in breach or
default in any material respect under any of the Company Listed
Agreements or (ii) has any Knowledge of any other material breach or
default under any Company Listed Agreement by any other party thereto
or by any other Person bound thereby. Except as set forth in the
Company Schedules, there is no agreement, judgment, injunction, order
or decree binding upon the Company, CISAC or their respective
subsidiaries or their properties (including, without limitation, their
intellectual properties) which has or could reasonably be expected to
have (a) the effect of prohibiting or materially impairing any material
acquisition of property by the Company, CISAC or any of their
respective subsidiaries or the conduct of the business by the Company
or any of their respective subsidiaries or (b) a Material Adverse
Effect. Except as provided for herein, at the Closing, no Person will
have the right, by contract or otherwise, to become, nor does any
entity have the right to designate or cause the Company or CISAC to
appoint a Person as, a director of the Company, CISAC, or any of their
respective subsidiaries.
(n) ACCOUNTING MATTERS. None of the Stockholders, the Company,
CISAC or any of their respective Affiliates, has taken or agreed to
take any action that would prevent the Buyer from accounting for the
stock purchase to be effected by this Agreement as an asset purchase
under Section 338(h)(10) of the Code or any applicable state or local
law. Neither the Company nor CISAC has failed to bring to the attention
of Buyer any actions, agreements or understandings, whether written or
oral, that would be reasonably likely to prevent Buyer from accounting
for the stock purchase as described in the immediately preceding
sentence. Buyer and the Stockholders shall report the purchase and sale
of the stock of the Company and CISAC consistent with the Section
338(h)(10) Election and any corresponding state or local elections, and
shall take no position contrary thereto or inconsistent therewith in
any tax return, or in any discussion with or any proceeding before any
taxing authority or any other governmental authority or otherwise.
(o) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge of
the Company or CISAC, none of the Company, CISAC or any of their
respective subsidiaries nor any of their respective directors,
officers, employees or agents has, with respect to the businesses of
the Company, CISAC or their respective subsidiaries, (i) used any funds
for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or (iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any Person or entity.
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(p) ENVIRONMENTAL MATTERS. Except as disclosed on SECTION
2.2(p) of the Company Disclosure Schedule, (i) the Company, CISAC and
their respective subsidiaries and the operations, assets and properties
thereof are in material compliance with all applicable Environmental
Laws; (ii) there are no judicial or administrative actions, suits,
proceedings or investigations pending or threatened against the
Company, CISAC or their respective subsidiaries of the Company or CISAC
alleging the violation of any Environmental Law and none of the
Company, CISAC or their respective subsidiaries has received notice
from any governmental body or Person alleging any violation of or
liability under any Environmental Laws, in either case which could
reasonably be expected to result in material Environmental Costs and
Liabilities; (iii) there are no facts, circumstances or conditions
relating to, arising from, associated with or attributable to the
Company, CISAC or their respective subsidiaries or any real property
currently owned, operated or leased or, to the Knowledge of the
Company, CISAC or their respective subsidiaries previously owned,
operated or leased by the Company, CISAC or their respective
subsidiaries that could reasonably be expected to result in material
Environmental Costs and Liabilities; and (iv) neither the Company nor
CISAC has not ever generated, transported, treated, stored, handled or
disposed of any Hazardous Material at any site, location or facility in
a manner that could create any material Environmental Costs and
Liabilities under any Environmental Law; and no such Hazardous Material
has been or is currently present on, in, at or under any real property
owned or used by the Company or CISAC or, to the Knowledge of the
Company, CISAC or their respective subsidiaries previously owned,
operated or lease by the Company or CISAC in a manner that could create
any Environmental Costs and Liabilities (including without limitation,
containment by means of any underground or aboveground storage tank).
(q) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(i) The Company, CISAC and their respective
subsidiaries have good and marketable title to, or a valid
leasehold interest in, the real and personal property shown on
the most recent Company Financial Statement or acquired after
the date thereof. Except as set forth on SECTION 2.2(q) of the
Company Disclosure Schedule, none of the property owned or
used by the Company, CISAC or any of their respective
subsidiaries is subject to any mortgage, pledge, deed of
trust, lien (other than for taxes not yet due and payable),
conditional sale agreement, security title, encumbrance, or
other adverse claim or interest of any kind. There has not
been, since December 31, 1999, any sale, lease, or any other
disposition or distribution by the Company or CISAC of any of
its material assets or properties, now owned or hereafter
acquired, except transactions in the ordinary and regular
course of business.
(ii) The Company or CISAC has delivered, or made
available, to Buyer true, correct and complete copies of all
material leases, subleases, rental
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agreements, Contracts of sale, tenancies or licenses
related to any of the real or personal property used by the
Company, CISAC or any of their respective subsidiaries in
their respective businesses. None of the Company, CISAC or
any of their respective subsidiaries has received written
notice that any party to any such lease intends to cancel,
terminate or refuse to renew the same or to exercise or
decline to exercise any option or any right thereunder.
(iii) All buildings, machinery and equipment of the
Company, CISAC and any of their respective subsidiaries
necessary to conduct the business of the Company and CISAC as
presently conducted are in good condition, working order and
repair, normal wear and tear and excepted, and adequate for
the uses to which they are being put, have been appropriately
maintained, conform in all material respects with all
applicable ordinances, regulations and zoning, safety or other
laws, and, to the Knowledge of the Company or CISAC, do not
encroach on property of others. As of the date hereof, none of
the Company, CISAC or any of their respective subsidiaries has
received written notice of, or otherwise have Knowledge of,
any pending or threatened change of any such ordinance,
regulation or zoning, safety or other law and there is no
pending or, to the Knowledge of the Company or CISAC,
threatened condemnation of any such property.
(r) INVENTORIES. All inventories of finished goods and work in
process of the Company, CISAC and their respective subsidiaries are as
of the date hereof, and those existing at the Closing will be good and
merchantable and of a quality and quantity saleable in the ordinary
course of the business of the Company, CISAC and their respective
subsidiaries in accordance with past practice at prevailing market
prices without discounts, except for inventory fully and adequately
reserved against in the Company Financial Statements. All inventories
of raw materials are of a quality and quantity useable in the ordinary
course of business of the Company, CISAC and their respective
subsidiaries in accordance with past practice. The Company's and
CISAC's purchase commitments for raw materials and parts are not in
excess of normal requirements, and none are at prices materially in
excess of current market prices and no inventory items have been sold
or disposed of except through sales in the ordinary course of business
and consistent with past practice at prices no less than prevailing
market prices, and in no event less than cost.
(s) ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND PURCHASE ORDERS.
The Company's and CISAC's accounts receivable have arisen in bona-fide
arms length transactions in the ordinary course of business and
represent valid and binding obligations of the account debtors and will
be collected on or before December 31, 2000, or are fully and
adequately reserved against in the Company Financial Statements. No
account debtors are disputing, or, to the Knowledge of the Company and
CISAC, have threatened to dispute the validity or amount of any account
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receivable. To the extent required under GAAP, the Company's and
CISAC's accounts payable reflect all amounts owed by the Company and
CISAC, respectively, in respect of trade accounts due and other
payables and the actual liability of the Company and CISAC in respect
of such obligations is reflected on the Company Financial Statements.
All purchase orders and similar documents relating to orders for the
Company's products or services have arisen in bona-fide arms-length
transactions in the ordinary course of business and other than as set
forth on SECTION 2.2(s) of the Company Disclosure Schedule represent
valid orders for such goods and services in all material respects. No
purchase order or similar documents relating to orders for the
Company's products or services has been cancelled or modified to the
detriment of the Company, CISAC or any of their respective
subsidiaries, or, to the Knowledge of the Company and CISAC, are
threatened to be so cancelled or modified.
(t) LABOR AND EMPLOYEE RELATIONS.
(i) Except as disclosed on SECTION 2.2(t) of the
Company Disclosure Schedule, the Company is not a party to any
employment, consulting, non-competition, severance, golden
parachute, indemnification agreement or any other agreement
providing for payments or benefits or the acceleration of
payments or benefits upon the change of control of the Company
or CISAC (including, without limitation, any contract to which
the Company or CISAC is a party involving employees of the
Company or CISAC).
(ii) (A) None of the employees of the Company, CISAC
or any of their respective subsidiaries is represented in his
or her capacity as an employee of such company by any labor
organization; (B) neither the Company, CISAC or any of their
respective subsidiaries has recognized any labor organization
nor has any labor organization been elected as the collective
bargaining agent of any of their employees, nor has the
Company, CISAC or any of their respective subsidiaries signed
any collective bargaining agreement or union contract
recognizing any labor organization as the bargaining agent of
any of their employees; and (C) to the Knowledge of the
Company or CISAC, there is no active or current union
organization activity involving the employees of the Company,
CISAC or any of their respective subsidiaries, nor has there
ever been union representation involving employees of the
Company, CISAC or any of their respective subsidiaries.
(iii) Except as disclosed in SECTION 2.2(t) of the
Company Disclosure Schedule, there are no complaints against
the Company, CISAC or any of their respective subsidiaries
pending or, to the Knowledge of the Company or CISAC, overtly
threatened before the National Labor Relations Board or any
similar foreign, state or local labor agencies, or before the
Equal Employment Opportunity Commission or any similar
foreign, state or local agency, or before
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any other governmental agency or entity by or on behalf of
any employee or former employee of the Company, CISAC or any
of their respective subsidiaries.
(iv) Neither the Company, CISAC nor any of their
respective subsidiaries have any material contingent liability
for severance pay or similar items. Except as disclosed in
SECTION 2.2(t) of the Company Disclosure Schedule, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
trigger any severance pay obligation under any contract or at
law.
(v) The Company and CISAC have provided to Buyer a
description of all written and other material employment
policies under which the Company, CISAC and each of their
respective subsidiaries has operated.
(vi) The Company, CISAC and each of their respective
subsidiaries is in compliance in all material respects with
all Federal, foreign (as applicable), and state laws regarding
employment practices, including laws relating to workers'
safety, sexual harassment or discrimination.
(vii) To the Knowledge of the Company or CISAC, no
executive or group of employees has any plans to terminate his
or her employment with the Company, CISAC or any of their
respective subsidiaries.
(u) PERMITS. The Company, CISAC and each of their respective
subsidiaries hold all licenses, permits, registrations, orders,
authorizations, approvals and franchises which are required to permit
it to conduct its businesses as presently conducted, except where the
failure to hold such licenses, permits, registrations, orders,
authorizations, approvals or franchises would not, individually or in
the aggregate, have a Material Adverse Effect. All such material
licenses, permits, registrations, orders, authorizations, approvals and
franchises are listed in SECTION 2.2(u) of the Company Disclosure
Schedule and are now, and will be at the Closing, valid and in full
force and effect, and Buyer shall have full benefit of the same, except
where the failure to have the benefit of any such license, permit,
registration, order, authorization, approval or franchise would not,
individually or in the aggregate, have a Material Adverse Effect.
Neither the Company, CISAC nor any of their respective subsidiaries has
received any notification of any asserted present failure (or past and
unremedied failure) by it to have obtained any such license, permit,
registration, order, authorization, approval or franchise.
(v) WARRANTY OR OTHER CLAIMS. No product manufactured, sold,
leased or delivered by the Company, CISAC or any of their respective
subsidiaries is subject to
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any guaranty, warranty, right of return or other indemnity beyond
the applicable standard terms and conditions of sale or lease, which
have been provided to Buyer. There are no existing or, to the
Knowledge of the Company or CISAC, threatened claims or any facts
upon which a claim could be based, against the Company, CISAC or any
of their respective subsidiaries for services or merchandise which
are defective or fail to meet any service or product warranties
which would, individually or in the aggregate, have a Material
Adverse Effect. No claim has been asserted against the Company,
CISAC or any of their respective subsidiaries for renegotiation or
price redetermination of any business transaction with any of the
Key Companies, and the Company or CISAC has no Knowledge of any
facts upon which any such claim could be based.
(w) POWERS OF ATTORNEY. To the Knowledge of the Company or
CISAC, neither the Company, CISAC nor any of their respective
subsidiaries has granted any outstanding powers of attorney or similar
powers of agency.
(x) INSURANCE. SECTION 2.2(x) of the Company Disclosure
Schedule lists all insurance policies in force covering the businesses,
properties and assets of the Company, CISAC and their respective
subsidiaries and all material outstanding claims against such policies.
All such policies are currently in effect, and neither the Company,
CISAC nor any of their respective subsidiaries has received notice of
cancellation or termination of, or material premium increase with
respect to, of any such insurance in effect on the date hereof or
within the past 2 years. All such policies are issued by an insurer
that is financially sound and reputable and provide reasonably adequate
insurance coverage for the assets and operations of the Company, CISAC
or their respective subsidiaries for all risks customarily insured
against by a Person or entity engaged in a similar businesses as the
Company, CISAC and their respective subsidiaries.
(y) CORPORATE BOOKS AND RECORDS. The minute books and stock
ledgers of the Company and CISAC, copies of which have been made
available for inspection by Buyer, accurately record all material
action taken by the Company's and CISAC's stockholders, boards of
directors and committees thereof and are complete in all material
respects.
(z) TRANSACTIONS WITH AFFILIATES. Except as disclosed on
SECTION 2.2(z) of the Company Disclosure Schedule, each of the Company
and CISAC is not a party to any Affiliate transactions through the date
of this Agreement and has no existing commitments to engage in any
Affiliate transactions in the future.
(aa) NO INVESTMENTS OR SUBSIDIES. Except as set forth in
SECTION 2.2(aa) of the Company Disclosure Schedule, none of the
Company, CISAC or their respective
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subsidiaries have any obligation to make or continue any investment
in any Person or to make or continue any subsidy of any Person in
whatever form.
(bb) CERTAIN CUSTOMERS AND SUPPLIERS. SECTION 2.2(bb) of the
Company Disclosure Schedule lists the top 10 customers and suppliers of
the Company and CISAC (collectively, the "KEY COMPANIES"). To the
Knowledge of the Company, CISAC or any of their respective
subsidiaries, none of the Key Companies intend to, have overtly
threatened to executive officers of the Company, or are reasonably
likely to, as a result of this Agreement, or the transactions
contemplated hereby, modify its relationship or other agreement with
the Company or CISAC in a manner that would result in a Material
Adverse Effect.
2.3 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
(a) As an inducement to Buyer to enter into this Agreement,
the Stockholders each individually hereby represent and warrant to
Buyer that:
(b) SHARES. The Stockholders have legal title to and own of
record an aggregate of 4310.500007 shares of Company Stock and an
aggregate of 200 shares of CISAC Stock representing all of the issued
and outstanding Company Stock and CISAC Stock, free and clear of Liens
or any other restrictions on transfer (other than any restrictions
under the Securities Act of 1933, as amended, and state securities
laws). EXHIBIT A is a true and accurate list of each of the
Stockholders, the number of shares of Company Stock and CISAC Stock
held by each Stockholder and the percentage ownership of the Company
and CISAC represented by such shares of Company Stock and CISAC Stock.
(c) CAPACITY. The individual, non-trust Stockholders as set
forth in EXHIBIT A have full right, capacity, power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by such Stockholders, and, assuming the due authorization,
execution and delivery hereof by Buyer, constitutes a valid and legally
binding agreement of such Stockholders, enforceable against such
Stockholders in accordance with its terms, except that such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors'
rights generally and general equitable principles.
(d) TRUSTEES. EXHIBIT A is a true and accurate list of the
names and addresses of the Trustees and the name of each trust with
respect to which the trustee acts as trustee. Each trust is eligible to
be a stockholder of an S-corporation, and has been eligible from the
time the Company and CISAC made such election. None of the trusts has
taken any action which would result in such trust failing to be an
eligible S-
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corporation stockholder. Each trustee: (i) is a trustee of the trust
described with the reference to the trustee on EXHIBIT A, (ii) has
the power and authority to act on behalf of the respective trust and
to execute, deliver and perform the obligations of the respective
trust under this Agreement and the transactions contemplated hereby,
and the exercise of power and authority of each trustee is proper,
consistent and complies, in all material respects, with the terms of
the respective trust for which each trustee acts as trustee and is
in the best interests of the beneficiaries of such trust, and does
not constitute a breach of the respective trust, either under its
terms or under applicable law. Trustee has the authority and power
under the terms of the trust agreement of each Stockholder and
applicable law to make the warranties, representations, covenants
and indemnities made in this Agreement and any certificate,
document, or agreement delivered pursuant to this Agreement.
(e) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by any of the Stockholders nor
the consummation by any of the Stockholders of the transactions
contemplated hereby will (i) require any consent, approval,
authorization or permit of, or registration or filing with or
notification to, any governmental or regulatory authority, except where
the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not adversely affect the
ability of any of the Stockholders to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or lien or other charge or encumbrance) under any of the
terms, conditions or provisions of any trust agreement, indenture,
note, license, lease, agreement or other instrument or obligation to
which any of the Stockholders or any of their respective assets may be
bound, except for such violations, breaches and defaults (or rights of
termination, cancellation, or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been
obtained or which, in the aggregate, would not materially and adversely
affect the ability of any of the Stockholders to consummate the
transactions contemplated hereby; (iv) cause the suspension or
revocation of any authorizations, consents, approvals or licenses
currently in effect which would materially and adversely affect the
ability of any of the Stockholders to consummate the transactions
contemplated hereby; or (v) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
this SECTION 2.3(e) are duly and timely obtained or made, violate any
order, writ, injunction, decree, statute, rule or regulation applicable
to any of the Stockholders or to any of their respective assets, except
for violations which would not materially and adversely affect the
ability of any of the Stockholders to consummate the transactions
contemplated hereby.
(f) LITIGATION. Except as disclosed in Company Disclosure
Schedule:
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(i) there are no actions, suits, investigations or
proceedings pending or, to the Knowledge of the Stockholders,
threatened against any of the Stockholders, relating to the
Company or CISAC;
(ii) there are not facts or circumstances known to
any of the Stockholders that could reasonably be expected to
give rise to any action, suit, investigation or proceedings
which if adversely determined would have a Material Adverse
Effect on the Company or CISAC; and
(iii) there are no orders, writs, injunctions or
decrees outstanding against any of the Stockholders relating
to the Company or CISAC.
(g) NO TRANSFER. There are no outstanding subscriptions,
options, calls, Contracts, commitments, undertakings, restrictions,
arrangements, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement
to deliver or sell, or cause to be delivered or sold, shares of Company
Stock or CISAC Stock owned by the Stockholders or obligating any of the
Stockholders to grant, extend or enter into any such agreement or
commitment or obligating any of the Stockholders to convey or transfer
any Company Stock or CISAC Stock. Except as disclosed on SECTION 2.2(g)
of the Company Disclosure Schedule, as of the Closing Date, there will
be no voting trusts, proxies or other agreements or understandings to
which any of the Stockholders are a party or are bound with respect to
the voting of any shares of capital stock or other equity interests of
the Company, CISAC or their respective subsidiaries.
(h) STOCKHOLDER BROKERAGE. Except for Fleet, there are no
claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement
based on any agreement or arrangement made by or on behalf of any of
the Stockholders.
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
3.1 CONDUCT OF BUSINESS.
(a) The Company and CISAC each covenant and agree that, during
the period from the date of this Agreement to the Closing (unless the
Parties shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), the Company and CISAC each will, and
will cause each of their subsidiaries to, conduct
-30-
their operations according to their ordinary and usual course of
business consistent with past practice and seek to preserve intact
their current business organizations, use their best efforts to keep
available the service of its current officers and employees and
preserve their relationships with customers, suppliers and others
having business dealings with them to the end that goodwill and
ongoing businesses shall be unimpaired at the Closing.
(b) Without limiting the generality of the foregoing, and
except as otherwise permitted in SECTIONS 1.4 and 1.5 this Agreement,
prior to the Closing, none of the Company, CISAC or any of their
respective subsidiaries will, without the prior written consent of
Buyer, take any action described in SECTION 2.2(h) or authorize,
recommend, propose or announce an intention to do any such action, or
enter into any contract, agreement, commitment or arrangement to do any
such action.
(c) Between the date hereof and the Closing, except as
contemplated herein, the Company, CISAC and their respective
subsidiaries shall not (without the prior written consent of the
Buyer): (A) grant any increases in the compensation of any of their
directors or officers and, except in the ordinary course of business
and in accordance with its customary past practices, grant increases to
any key employees; (B) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or contemplated by any
of the existing benefit, severance, pension or employment plans,
agreements or arrangements as in effect on the date hereof to any such
director, officer or key employee, whether past or present; (C) enter
into any new or amend any existing employment or severance agreement
with any such director, officer or key employee; or (D) except as may
be required to comply with applicable law, become obligated under any
new pension plan, welfare plan, multi-employer plan, employee benefit
plan, severance plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, or amend
any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing any benefits thereunder.
3.2 NO SOLICITATION.
(a) From and after the date of this Agreement until first to
occur of (i) the Closing, (ii) termination of this Agreement in
accordance with its terms or (iii) April 30, 2000, the Stockholders,
the Company, CISAC and their respective subsidiaries will not, and will
not permit their respective directors, officers, investment bankers and
Affiliates to, and will use their best efforts to cause their
respective employees, representatives and other agents not to, directly
or indirectly, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to,
any Acquisition Proposal, (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any Person or
entity relating to, any Acquisition Proposal, or (iii) agree to,
approve, recommend or otherwise endorse or
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support any Acquisition Proposal. The Stockholders, Company and
CISAC will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
(b) The Company will (i) notify Buyer within 48 hours if any
Acquisition Proposal is made with respect to the Company or CISAC and
(ii) within 48 hours communicate to Buyer the principal terms and
conditions of any such Acquisition Proposal or potential Acquisition
Proposal or inquiry (and will disclose any written materials received
by the Company or CISAC in connection with such Acquisition Proposal,
potential Acquisition Proposal or inquiry and the identity of the party
making such Acquisition Proposal, potential Acquisition Proposal or
inquiry).
(c) Except as set forth herein, neither the Board of Directors
of the Company or CISAC nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Buyer,
the approval or recommendation by the Board of Directors of the Company
or such committee of this Agreement, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or (iii)
enter into any agreement with respect to any Acquisition Proposal.
3.3 [Reserved].
3.4 ACCESS TO INFORMATION. Upon reasonable notice, the Company and
CISAC shall (and shall cause each of their subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of Buyer
(the "AUTHORIZED REPRESENTATIVES") reasonable access, during normal business
hours throughout the period prior to the Closing, to their properties, assets,
books and records and, during such period, shall (and shall cause each of their
subsidiaries to) furnish promptly to such Authorized Representatives all
information concerning their business, properties, assets and personnel as may
reasonably be requested for purposes of this Agreement, provided that no
investigation pursuant to this SECTION 3.4 shall affect or be deemed to modify
any of the representations or warranties made by the Parties. The Parties each
agree to treat (and cause their Authorized Representatives to treat) any and all
information provided pursuant to this SECTION 3.4 in strict compliance with the
terms of that certain Non-Disclosure Agreement between the Company and Buyer,
dated November 19, 1999, as amended by that certain letter of intent, entered by
and between the Company, CISAC, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx
Xxxxxxxxx and Buyer, dated February 17, 2000 (collectively, the "CONFIDENTIALITY
AGREEMENT").
3.5 PUBLICITY. Any proposed press release or public announcement
pertaining to the transactions contemplated hereby shall be made by Buyer, which
will provide the text of any such press release or public announcement to the
Stockholders' Representative in advance of
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such release or announcement for the approval of the Stockholders'
Representative, which approval will not be unreasonably withheld or delayed.
3.6 MAINTENANCE OF INSURANCE. Between the date hereof and through the
Closing each of the Company and CISAC will maintain in full force and effect all
of their presently existing policies of insurance or insurance comparable to the
coverage afforded by such policies.
3.7 REPRESENTATIONS AND WARRANTIES. Neither Buyer, on the one hand, nor
the Company, CISAC or the Stockholders, on the other, will take any action that
would cause any of their respective representations and warranties set forth in
SECTION 2.1, 2.2 or 2.3, as the case may be, not to be true and correct in all
material respects at and as of the Closing.
3.8 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Parties shall: (a) make any required submissions following their
initial filing under the HSR Act; (b) cooperate in the preparation of such
submissions under the HSR Act; and (c) use best efforts promptly to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable.
3.9 NOTIFICATION OF CERTAIN MATTERS. Each of CISAC and the Company
shall give prompt notice to the Buyer of: (a) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by it or any of their respective
subsidiaries subsequent to the date of this Agreement and prior to the Closing,
under any contract with or relating to any of the Key Companies or otherwise
listed on SECTION 2.2(h) of the Company Disclosure Schedule; (b) any written
notice or other written communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; or (c) any Material Adverse Change.
3.10 EMPLOYMENT AGREEMENTS. As of the date hereof, each of Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxxxx shall enter into an employment
agreement with the Company in the forms attached hereto as EXHIBITS C-1, C-2 and
C-3, respectively, which agreements shall be effective as of the Closing.
3.11 TAX MATTERS.
(a) SECTION 338(h)(10) ELECTION.
(i) The Stockholders and Buyer shall make a timely Section
338(h)(10) Election with respect to the purchase and sale of the
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Company Stock and the CISAC Stock and any corresponding election under
any applicable state or local law. Stockholders' Representative and
Buyer shall be jointly responsible for preparing and timely filing any
forms used to make a Section 338(h)(10) Election. Such forms shall be
filed timely following the final determination of the Purchase Price,
assumed liabilities, and other relevant items pursuant to SECTIONS 1.4
AND 1.5. The Stockholders shall sign at or prior to the Closing all
federal and state forms used to make a Section 338(h)(10) Election
requiring their signature, which forms shall be held in escrow by
Xxxxxx Xxxxxx Zavis until allocation of the Purchase Price is completed
pursuant to this SECTION 3.11 and thereafter filed by Buyer and the
Stockholders' Representative as described in the preceding sentence.
The Stockholders hereby authorize the Stockholders' Representative to
prepare the Section 338(h)(10) Election as the authorized
representative of the Company, CISAC and the Stockholders.
(ii) The Stockholders shall pay any federal, state and local
income tax attributable to the making of a Section 338(h)(10) Election.
(iii) Promptly after the Closing Date, the Stockholders shall
provide to Buyer any information (including Tax elections made by or on
behalf to he Company) reasonably requested by Buyer in connection with
its filing of a Section 338(h)(10) Election.
(iv) The Purchase Price, the assumed liabilities and other
relevant items shall be allocated among the Company's and CISAC's
respective assets as determined by Buyer in accordance with the
Treasury Regulations promulgated under Section 338 of the Code. Buyer
shall deliver a schedule setting forth the fair market value of the
assets and such allocation within 60 days after the Closing Date, and
such allocation shall become final upon the Stockholders'
Representative's written approval thereof; PROVIDED, THAT, if Buyer and
the Stockholders' Representative are unable to agree on such
allocation, Buyer and the Stockholders' Representative thereafter shall
negotiate in good faith to resolve any such disagreements. If Buyer and
the Stockholders' Representative are unable to resolve any such
disagreements within 20 days after Buyer submits such allocation to the
Stockholders' Representative, Buyer and the Stockholders'
Representative shall submit any dispute regarding the amount of the
purchase price to be allocated to the Company's assets to the
Stockholders' Equity Arbitrator for resolution with the costs, fees and
expenses therefor being borne equally by Buyer and the Stockholders'
Representative. A final resolution by the Stockholders' Equity
Arbitrator shall be binding on the Parties. Buyer and the Stockholders'
Representative shall file any Tax Returns and any other governmental
filings on a basis consistent with such allocation of fair market
value.
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(b) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Stockholders' Representative, with such assistance from the Company and
CISAC, as applicable, as is necessary, shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Company
and CISAC, as applicable, for all periods ending on or prior to the
Closing Date. Such Tax Returns shall include the gain or loss resulting
from the Section 338(h)(10) Election (and any corresponding election
under state or local law) and otherwise be prepared in accordance with
the procedures and accounting principles reflected in the Company
Financial Statements for the year ended December 31, 1999. Buyer shall
have the right to review and consent to (which consent shall not be
unreasonably withheld) such Tax Returns prior to their filing.
(c) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Buyer shall prepare, or cause to be prepared, and file, or cause
to be filed, any Tax Returns of the Company and CISAC, as applicable,
for Tax periods which begin before the Closing Date and end after the
Closing Date ("STRADDLE TAX Returns"). Any Straddle Tax Return shall be
prepared in accordance with past practice and applicable law. The
Stockholders' Representative shall have the right to review and consent
to (which not be unreasonably withheld) any Straddle Tax Return. With
respect to any Tax Return described in SECTION 3.11(b) or any Straddle
Tax Return described in SECTION 3.11(c), if Buyer or the Stockholders'
Representative, as the case may be, does not approve of any such
return, such disputes shall be submitted for resolution to the
Stockholders' Equity Arbitrator after the procedures in SECTION
3.11(a)(IV) have been followed.
(d) COOPERATION ON TAX MATTERS.
(i) Buyer, the Company, CISAC and the Stockholders
shall fully cooperate, as and to the extent reasonably
requested by the other party, in connection with the filing of
Tax Returns pursuant to this SECTION 3.11 and any audit,
litigation or other proceeding with respect to Taxes. Such
cooperation shall include signing any Tax Return, amended Tax
Returns, claims or other documents necessary to settle any Tax
controversy, the retention and (upon the other party's
request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other
proceeding, making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder and the
execution and delivery of such powers of attorney and other
such documents to carry out the intent of this Section. The
Company, CISAC, Buyer and the Stockholders agree to retain all
books and records with respect to Tax matters pertinent to the
Company and CISAC relating to any taxable period beginning
before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or the
Stockholders' Representative, any extensions
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thereof) of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing
authority.
(ii) Buyer shall have the right to participate in any
Tax proceeding related to a pre-Closing Tax year of the
Company or CISAC which may have the effect of increasing
Buyer's, the Company's or CISAC's Tax liability for any Tax
period ending after the Closing, and the Stockholders shall
not settle or compromise any such proceeding without Buyer's
prior written consent which shall not be unreasonably
withheld.
(iii) Buyer and the Stockholders further agree, upon
request, to use reasonable efforts to obtain any certificate
or other document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed (including, but not limited to,
with respect to the transactions contemplated hereby).
(iv) The Stockholders may not make or change any
election, change an annual accounting period, file any amended
Tax Return, enter into any closing agreement, settle any Tax
claim or assessment relating to the Company or CISAC,
surrender any right to claim a refund of Taxes, or take any
other similar action, or omit to take any action relating to
the filing of any Tax Return or the payment of any Tax, if
such action or omission for Tax periods ending on or prior to
the Closing Date would have the effect of increasing the Tax
liability or decreasing any Tax asset of the Company, CISAC,
Buyer or any Affiliate of Buyer, with respect to any Tax
period beginning after the Closing Date without Buyer's
consent. The Shareholders shall notify Buyer of any consent to
any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to the Company or CISAC
within 15 days of making such consent or waiver.
(e) TAX SHARING AGREEMENTS. All tax-sharing agreements or
similar agreements with respect to or involving the Company or CISAC
shall be terminated as of the Closing Date and, after the Closing Date,
the Company or CISAC shall not be bound thereby nor shall either of
them have any liability thereunder.
3.12 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE STOCKHOLDERS. Subject to the terms
hereof, from and after the Closing, Stockholders agree to jointly and
severally indemnify, defend and save Buyer and its Affiliates and Plan
Affiliates, and each of its respective officers, directors, employees,
agents, Employee Benefit Plans, and fiduciaries, plan administrators or
other parties dealing with any such plans (each, a "BUYER
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INDEMNIFIED PARTY"), forever harmless from and against, and to pay
to a Buyer Indemnified Party or reimburse a Buyer Indemnified Party
for (in either case within 10 Business Days of its receipt of notice
in accordance with the terms of this Article from any Buyer
Indemnified Party), any and all liabilities (whether contingent,
fixed or unfixed, liquidated or unliquidated, or otherwise),
obligations, deficiencies, demands, claims, suits, actions, or
causes of action, assessments, losses, costs, expenses, interest,
fines, penalties, actual or punitive damages or reasonable costs or
expenses of any and all reasonable investigations, proceedings,
judgments, environmental analyses, remediations, settlements and
compromises (including reasonable fees and expenses of attorneys,
accountants and other experts) (individually and collectively, the
"LOSSES") actually sustained or incurred by any Buyer Indemnified
Party relating to, resulting from, arising out of or otherwise by
virtue of any of the following:
(i) any misrepresentation or breach of a
representation or warranty made in this Agreement by any of
the Stockholders, or non-compliance with or breach by any of
the Stockholders of any of the covenants or agreements
contained in this Agreement to be performed by the
Stockholders or any of their respective Affiliates;
(ii) any action, demand, proceeding, investigation or
claim (whenever made) by Xxxxx X. Xxxxxx, his wife and their
respective successors and assigns against or affecting Zebra,
the Company, CISAC or any of their respective subsidiaries;
(iii) any Tax liability of the Company, CISAC or the
Stockholders with respect to any Tax period or a portion of
any Tax period ending on or prior to the Closing Date whether
or not disclosed in this Agreement or the Company Disclosure
Schedule;
(iv) any violations of or obligations under
Environmental Laws relating to acts, omissions, circumstances
or conditions to the extent existing or arising on or prior to
the Closing Date whether or not disclosed in this Agreement or
the Company Disclosure Schedule;
(v) any action, demand, proceeding, investigation or
claim (whenever made) by any third party (including
governmental agencies) against or affecting Buyer or its
Affiliates which, if successful, would give rise to or
evidence the existence of or relate to a misrepresentation or
breach of any of the representations, warranties or covenants
contained in the Agreement of the Stockholders;
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(vi) any claim for payment of fees and/or expenses as
a broker or finder in connection with the origin, negotiation,
execution or consummation of this Agreement based upon any
alleged agreement between the claimant and the Stockholders;
or
(vii) any action, demand, proceeding, investigation
or claim (whenever made) by any of Xxxxxxx Xxxxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx against or
affecting Buyer or its Affiliates relating to any insurance
providers' denial of, or any failure to pay, claims made by
such Persons or any increase in premiums paid by Buyer and its
Affiliates to insurance providers resulting from or relating
to insurance claims made by such Persons.
(b) INDEMNIFICATION BY BUYER. Subject to the terms hereof, from and
after the Closing, Buyer agrees to indemnify, defend and save the Stockholders
and their respective Affiliates, and their respective employees, trustees,
agents, representatives, heirs and executors (each, a "STOCKHOLDER INDEMNIFIED
Party") harmless from and against, and to pay to a Stockholder Indemnified Party
or reimburse a Stockholder Indemnified Party for (in either case within 10
Business Days of its receipt of notice in accordance to the terms of this
Article from any Stockholder Indemnified Party), any and all Losses actually
sustained or incurred by any Stockholder Indemnified Party relating to,
resulting from, arising out of or otherwise by virtue of any of the following:
(i) any misrepresentation or breach of a representation or
warranty made in the Agreement by Buyer, or non-compliance with or
breach by Buyer of any of the covenants or agreements contained in the
Agreement to be performed by Buyer or any of its Affiliates;
(ii) any action, demand, proceeding, investigation or claim
(whenever made) by any third party (including governmental agencies)
against or affecting the Stockholders which, if successful, would give
rise to or evidence the existence of or relate to a misrepresentation
or breach of any of the representations, warranties or covenants in the
Agreement of Buyer;
(iii) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation, execution
or consummation of this Agreement based upon any alleged agreement
between the claimant and Buyer; or
(iv) the amount of any ordinary income taxes actually paid by
the Stockholders in excess of capital gain taxes otherwise payable by
the Stockholders, which excess results from the allocation of Purchase
Price to the
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fixed assets, intangibles and inventory of the Company or CISAC in
connection with the Section 338(h)(10) Election.
(c) INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. In the event that
subsequent to the Closing any Person entitled to indemnification under this
Agreement (an "INDEMNIFIED PARTY") asserts a claim for indemnification or
receives notice of the assertion of any claim or of the commencement of any
action or proceeding by any entity that is not a party to this Agreement or an
Affiliate of a party to this Agreement (including, but not limited to any
domestic or foreign court or governmental authority, federal, state or local) (a
"THIRD PARTY CLAIM") against such Indemnified Party, against which a party to
this Agreement is required to provide indemnification under this Agreement (an
"INDEMNIFYING PARTY"), the Indemnified Party shall give written notice together
with a statement of any available information regarding such claim to the
Indemnifying Party within 60 days after learning of such claim (or within such
shorter time as may be necessary to give the Indemnifying Party a reasonable
opportunity to respond to such claim). The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party (the "DEFENSE NOTICE")
within 30 days after receipt from the Indemnified Party of notice of such claim,
which notice by the Indemnifying Party shall specify the counsel it will appoint
to defend such claim ("DEFENSE COUNSEL"), to conduct at its expense the defense
against such claim in its own name, or if necessary in the name of the
Indemnified Party; PROVIDED, HOWEVER, that the Indemnified Party shall have the
right to approve the Defense Counsel, which approval shall not be unreasonably
withheld or delayed, and in the event the Indemnifying Party and the Indemnified
Party cannot agree upon such counsel within 10 days after the Defense Notice is
provided, then the Indemnifying Party shall propose an alternate Defense
Counsel, which shall be subject again to the Indemnified Party's approval. If
Parties still fail to agree on Defense Counsel, then, at such time, they shall
mutually agree in good faith on a procedure to determine the Defense Counsel.
(i) In the event that the Indemnifying Party shall fail to
give the Defense Notice, it shall be deemed to have elected not to
conduct the defense of the subject claim, and in such event the
Indemnified Party shall have the right to conduct such defense in good
faith and to compromise and settle the claim without prior consent of
the Indemnifying Party and the Indemnifying Party will be liable for
all costs, expenses, settlement amounts or other Losses paid or
incurred in connection therewith.
(ii) In the event that the Indemnifying Party does deliver a
Defense Notice and thereby elects to conduct the defense of the subject
claim, the Indemnified Party will cooperate with and make available to
the Indemnifying Party such assistance and materials as it may
reasonably request, all at the expense of the Indemnifying Party, and
the Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own
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choosing, provided that the Indemnified Party shall have the right
to compromise and settle the claim only with the prior written
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(iii) Without the prior written consent of the Indemnified
Party, the Indemnifying Party will not enter into any settlement of any
Third Party Claim or cease to defend against such claim, if pursuant to
or as a result of such settlement or cessation, (i) injunctive or other
equitable relief would be imposed against the Indemnified Party, or
(ii) such settlement or cessation would lead to liability or create any
financial or other obligation on the part of the Indemnified Party for
which the Indemnified Party is not entitled to indemnification
hereunder.
(iv) The Indemnifying Party shall not be entitled to control,
and the Indemnified Party shall be entitled to have sole control over,
the defense or settlement of any claim to the extent that claim seeks
an order, injunction or other equitable relief against the Indemnified
Party which, if successful, could materially interfere with the
business, operations, assets or condition (financial or otherwise) of
the Indemnified Party (and the cost of such defense shall constitute an
amount for which the Indemnified Party is entitled to indemnification
hereunder).
(v) If a firm decision is made to settle a Third Party Claim,
which offer the Indemnifying Party is permitted to settle under this
SECTION 3.12, and the Indemnifying Party desires to accept and agree to
such offer, the Indemnifying Party will give written notice to the
Indemnified Party to that effect. If the Indemnified Party fails to
consent to such firm offer within 15 calendar days after its receipt of
such notice, the Indemnified Party may continue to contest or defend
such Third Party Claim and, in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will not exceed the
amount of such settlement offer, plus costs and expenses paid or
incurred by the Indemnified Party through the end of such 15-day
period.
(vi) Any judgment entered or settlement agreed upon in the
manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to
which the Indemnified Party is entitled to prompt indemnification
hereunder.
(d) FAILURE TO GIVE TIMELY NOTICE. A failure by an Indemnified Party to
give timely, complete or accurate notice as provided in SECTION 3.12 will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a
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result of such failure, any party entitled to receive such notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise directly and materially damaged as a result of such
failure to give timely notice.
(e) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; TIME LIMITS
ON INDEMNIFICATION OBLIGATIONS. Notwithstanding any right of Buyer to fully
investigate the affairs of the Company, CISAC and their respective subsidiaries,
and notwithstanding any knowledge of facts determined or determinable by Buyer
pursuant to such investigation or right of investigation, Buyer has the right to
rely fully upon the representations, warranties, covenants and agreements of the
Company, CISAC and the Stockholders contained in this Agreement or in any
certificate delivered pursuant to any of the foregoing. All representations,
warranties, covenants and agreements contained in this Agreement, including any
right to indemnification, shall survive the Closing Date and remain in effect
for a period of 15 months after the Closing Date, at which time such provisions
will terminate, except that with respect to claims for indemnification based
upon, arising out of or otherwise in respect of any inaccuracy or omission in or
any breach of any representation or warranty of the Stockholders contained in
SECTIONS 2.2(a), (b), (c), (j), (k) and (p), such representations and warranties
which could give rise to claims against Buyer shall survive until the date that
all such claims are barred by all applicable statutes of limitations (giving
effect to any waiver, mitigation or extension thereof); PROVIDED, THAT claims
for which the party asserting such claim shall have given notice on or prior to
the expiration of the applicable survival period, shall survive until the
resolution of all such claims.
(f) RIGHT OF OFFSET. If the Stockholders are the Indemnifying Party and
fail to make any payment as contemplated by this ARTICLE 3, or shall fail to
make any payment when due under the terms of any of the Agreement then, Buyer
may elect to (i) offset such amount against any amount due and owing by Buyer to
Stockholders pursuant to the terms of any of the Agreement or (ii) to recover a
portion of the Purchase Price held pursuant to the Escrow Agreement, if any,
equal to the amount of any Loss. Any Loss arising from a breach of the Company's
CISAC's or the Stockholders' representations at SECTIONS 2.2 and 2.3 shall be
treated for all purposes, including reporting purposes, as a purchase price
adjustment.
(g) LIMITATION. No amounts of indemnity shall be payable as a result of
any claim arising under SECTION 3.12(a) in respect of a misrepresentation or
breach of warranty by the Stockholders unless and until the Buyer Indemnified
Parties have suffered, incurred, sustained or become subject to Losses in excess
of $750,000 in the aggregate, in which event the Indemnified Parties shall be
entitled to seek indemnity from Stockholders for the full amount of such Losses,
provided that this paragraph (g) shall not apply to a misrepresentation or
breach of warranty by Stockholders contained in SECTIONS 2.2(a), (b), (c), (j),
(k) and (p).
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3.13 [Reserved].
3.14 PHYSICAL INVENTORY. On April 1 and 2, 2000, the Company and CISAC
shall conduct a complete physical inventory of all inventory included in the
Company Financial Statements, wherever held and shall allow Buyer and its
Authorized Representatives to observe such physical inventory, conduct audits
and test counts at such physical inventory and compare to the Company's counts
and perpetual inventory records. Procedures and times of the physical inventory
shall be established by the Company, CISAC and their respective subsidiaries,
and must be reasonably satisfactory in form and substance to Buyer. The results
of such physical inventory shall be included in the Closing Date Stockholders'
Equity Computation.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each Party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver by each of the Parties that no writ,
order, decree or injunction of a court of competent jurisdiction or governmental
entity shall have been entered against the Stockholders, the Company, CISAC,
Buyer or their respective subsidiaries which prohibits the consummation of the
transactions contemplated hereby.
4.2 CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS. The obligations
of the Stockholders to consummate the transactions contemplated hereby are
subject to the fulfillment at or prior to the Closing of the following
conditions, any or all of which may be waived, in writing, in whole or in part
by the Stockholders' Representative to the extent permitted by applicable law:
(a) Buyer shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to in SECTION 2.1(c) that
are reasonably deemed necessary by the Stockholders, upon advice of
counsel, to consummate the transactions contemplated hereby;
(b) the representations and warranties of Buyer set forth in
SECTION 2.1 shall be true and correct in all material respects (except
for representations qualified by materiality or Material Adverse Effect
which shall be correct in all respects) as of the Closing, with the
same force and effect as if made on and as of the Closing;
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(c) Buyer shall have performed or complied in all material
respects with its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Closing;
(d) Buyer shall have delivered to the Company a certificate
substantially in the form of attached EXHIBIT D, to the effect that
each of the conditions specified in SECTION 4.1 and SECTION 4.2(a),
(b), (c) and (e) are satisfied in all respects;
(e) no action, suit or proceeding shall be pending or
threatened before any governmental entity or authority wherein an
unfavorable judgment, order, decree, stipulation or injunction would
(i) prevent consummation of any of the transactions contemplated by
this Agreement, or (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation;
(f) all necessary filings with regulatory authorities shall
have been made and all waiting periods shall have expired; and
(g) all actions to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Company and its counsel.
4.3 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate the transactions contemplated hereby is subject to the fulfillment at
or prior to the Closing of the following conditions, any or all of which may be
waived, in writing, in whole or in part by Buyer to the extent permitted by
applicable law:
(a) CISAC, the Company and their respective subsidiaries shall
have obtained all of the waivers, permits, approvals or other
authorizations, and effected all of the registrations, filings and
notices, referred to in SECTION 2.2(e) and obtained all of the consents
set forth on SECTION 4.3(a) of the Company Disclosure Schedule, to
provide for the continuation of the business as presently conducted and
all material agreements and to consummate the transactions contemplated
hereby;
(b) the representations and warranties of the Company and
CISAC and the Stockholders set forth in SECTIONS 2.2 and SECTION 2.3,
respectively, shall be true and correct in all material respects
(except for representations qualified by materiality or Material
Adverse Effect which shall be correct in all respects) as of the
Closing;
(c) CISAC, the Company and their respective subsidiaries shall
have performed or complied with in all material respects the agreements
and covenants
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required to be performed or complied with by them under this Agreement
as of or prior to the Closing;
(d) the Company, CISAC and the Stockholders' Representative
(on behalf of the Stockholders) shall each have delivered to Buyer a
certificate substantially in the form of attached EXHIBIT E, to the
effect that each of the conditions specified in SECTION 4.1 and SECTION
4.3(a), (b), (c), and (e) is satisfied in all respects;
(e) no action, suit or proceeding shall be pending or
threatened before any governmental entity or authority wherein an
unfavorable judgment, order, decree, stipulation or injunction would
(i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation or (iii) affect
adversely the right of Buyer to own, operate or control any of the
assets and operations of the Company, CISAC and their respective
subsidiaries following completion of the transactions contemplated
hereby, except as would not adversely affect Buyer's ability to carry
on the business of the Company, CISAC and their respective subsidiaries
substantially in the manner currently conducted and no such judgment,
order, decree, stipulation or injunction shall be in effect;
(f) all necessary filings with regulatory authorities shall
have been made and all waiting periods shall have expired;
(g) Buyer shall have received an opinion, dated the Closing
Date, of Xxxxxxx & Xxxxxx, LLP with respect to the matters set forth in
attached EXHIBIT H and in form and substance reasonably satisfactory to
Buyer and its counsel;
(h) the Stockholders shall have tendered certificates
representing all of the outstanding Company Stock and CISAC Stock,
accompanied by duly executed stock powers, endorsed in blank, on the
Closing Date;
(i) Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxxxx
shall each have entered into and delivered to Buyer an Employment
Agreement in the form attached as EXHIBITS C-1, C-2 and C-3,
respectively;
(j) each of the Stockholders shall have signed and delivered
to Xxxxxx Xxxxxx Zavis an executed copy of Internal Revenue Service
Form 8023 as required by SECTION 3.11 which will be completed as soon
as purchase price allocation information is available;
(k) the Company, CISAC and the Stockholders, as applicable,
shall have delivered to Buyer each of the following:
-44-
(i) certified copies of (a) the resolutions duly
adopted by the Company's and CISAC's stockholders and Boards
of Directors authorizing the execution, delivery and
performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions
contemplated hereby and thereby and ratifying all past actions
of the officers and directors of the Company and CISAC and
electing and appointing officers and directors of the Company
and CISAC, together with a good standing certificate issued by
the Rhode Island Secretary of State for each of the Company
and CISAC issued not later than 10 days prior to the Closing
Date and (b) the Company's, CISAC's and their respective
subsidiaries' Articles of Incorporation and By-Laws (or
similar organizational documents);
(ii) resignation letters of each of the directors of
the Company and CISAC and of the officers of the Company and
CISAC (except as contemplated by SECTION 4.3(i));
(iii) the Company's, CISAC's minute books containing
records of meetings of the stockholders and Boards of
Directors, the stock certificate books and the stock record
books of the Company and CISAC;
(iv) copies of all necessary governmental and third
party consents, approvals, releases and filings required in
order for the Company, CISAC and the Stockholders to effect
the transactions contemplated by this Agreement and the other
agreements contemplated hereby, including, without limitation,
the consents set forth on SECTION 4.3(k) of the Company
Disclosure Schedule;
(v) such instruments of sale, transfer, assignment,
conveyance and delivery, in form and substance satisfactory to
counsel for Buyer, as are required in order to transfer to
Buyer good and marketable title to the Company Stock and the
CISAC, free and clear of all Liens; and
(vi) such other documents or instruments as Buyer
reasonably and timely requests to effect the transactions
contemplated hereby.
(l) the Company shall have, in accordance with applicable law,
sold any and all capital stock of Zebra which it owned as of the date
hereof, and shall not own any such stock.
(m) [Reserved];
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(n) the Company and CRE Corporation shall have executed and
delivered a confidential letter agreement concerning the terms of the
Sublease, substantially in the form of attached EXHIBIT G, effective as
of the Closing Date;
(o) the Stockholders shall have entered into and delivered to
Buyer an Escrow Agreement in the form attached as EXHIBIT B;
(p) each of the Stockholders shall have entered into and
delivered to Buyer a general release and covenant not to xxx with
respect to Buyer, the Company and CISAC in the form attached as EXHIBIT
F;
(q) from December 31, 1999 to the Closing, there shall not
have been any event or development which results in a Material Adverse
Effect upon the business of the Company, CISAC or their respective
subsidiaries, nor shall there have occurred any event or development
which could reasonably be likely to result in a Material Adverse Effect
upon the business of the Company, CISAC or their respective
subsidiaries in the future;
(r) the Stockholders shall have paid to Buyer, or shall have
caused the payment to Buyer of, an amount equal to the cost of 6 months
insurance premiums and any other health care benefits costs for Xxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx;
and
(s) all actions to be taken by the Company, CISAC and the
Stockholders in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and
other documents required to effect the transactions contemplated hereby
shall be reasonably satisfactory in form and substance to Buyer and its
counsel.
ARTICLE V
TERMINATION
5.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Closing, by the mutual written consent of the Buyer and
all of the Major Stockholders.
5.2 TERMINATION BY EITHER ALL OF THE STOCKHOLDERS OR BUYER. This
Agreement may be terminated by action of the Buyer or the Major Stockholders if:
-46-
(a) the Closing shall not have occurred by April 30, 2000
(provided that the right to terminate this Agreement under this SECTION
5.2(a) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in
the failure of the Closing to occur on or before such date); or
(b) any court of competent jurisdiction in the United States
or some other governmental body or regulatory authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the completion of the
transaction contemplated hereby and such order, decree, ruling or other
action shall have become final and nonappealable.
5.3 TERMINATION BY THE STOCKHOLDERS. This Agreement may be terminated
upon written notice to Buyer at any time prior to the Closing, after the
approval by the Major Stockholders, if:
(a) Buyer shall have failed to comply in any material respect
with any of the covenants or agreements contained in this Agreement to
be complied with or performed by Buyer at or prior to such date of
termination, which failure to comply has not been cured within 5
Business Days following receipt by Buyer of notice of such failure to
comply; or
(b) any representation or warranty of Buyer contained in this
Agreement shall not be true in all material respects when made or, if a
representation or warranty relates to a particular date, shall not be
true in all material respects as of such date (provided such breach is
capable of being cured and has not been cured within 5 Business Days
following receipt by Buyer of notice of the breach) or on and as of the
Closing as if made on and as of the Closing.
5.4 TERMINATION BY BUYER. This Agreement may be terminated upon written
notice to the Company and the Stockholders' Representative, by action of the
Buyer, if:
(a) the Company, CISAC or any Stockholder shall have failed to
comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by them at
or prior to such date of termination, which failure to comply has not
been cured within 5 Business Days following receipt by the breaching
party of notice of such failure to comply; or
(b) any representation or warranty of the Company, CISAC or
the Stockholders contained in this Agreement shall not be true in all
material respects when made or, if a representation or warranty relates
to a particular date, shall not be true in all material respects as of
such date (provided such breach is capable of being cured and
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has not been cured within 5 Business Days following receipt by the
breaching party of notice of the breach) or on and as of the Closing
as if made on and as of the Closing.
5.5 EFFECT OF TERMINATION. Except as set forth in this SECTION 5.5, in
the event of termination of this Agreement by either Buyer or the Company as
provided in this ARTICLE V, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of the Parties or their
respective Affiliates, officers, directors or stockholders and there shall be no
liability on the part of any Party, except to the extent that such termination
results from the breach of a Party of any of its representations or warranties,
or any of its covenants or agreements, in each case, as set forth in this
Agreement.
ARTICLE VI
MISCELLANEOUS AND GENERAL
6.1 PAYMENT OF EXPENSES. Whether or not the transactions contemplated
hereby are consummated, each Party shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
6.2 MODIFICATION OR AMENDMENT. At any time prior to the Closing, the
Parties may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of Buyer or the Stockholders'
Representative, as applicable.
6.3 WAIVER OF CONDITIONS. The conditions to each of the Parties'
obligations to consummate the transactions contemplated hereby are for the sole
benefit of such party and may be waived, in writing, by such party in whole or
in part to the extent permitted by this Agreement and applicable law.
6.4 COUNTERPARTS. For the convenience of the Parties, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
6.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to the
principles of conflicts of law thereof.
6.6 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the other Parties shall be deemed delivered upon
actual receipt and shall be in writing and delivered personally or sent by
registered or certified mail, postage
-48-
prepaid, reputable overnight courier, or by facsimile transmission (with a
confirming copy sent by nationally recognized overnight courier), as follows:
(a) If to Buyer, to:
Zebra Technologies Corporation
000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company, CISAC, or the Stockholders to:
Comtec Information Systems, Inc.
00 Xxxx Xxx
Xxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, LLP
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Attention: Xxxxxx X.X. Xxxx, Esq.
Facsimile: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice.
6.7 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the
Disclosure Schedules and Confidentiality Agreement, (a) constitutes the entire
agreement among the Parties with respect to the subject matter hereof and
supersedes all other prior agreements and
-49-
understandings, both written and oral, among the Parties or any of them with
respect to the subject matter hereof, and (b) shall not be assigned by
operation of law or otherwise.
6.8 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each of the Parties and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, other than the
right to receive the consideration payable pursuant to ARTICLE I, is intended to
or shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement; PROVIDED, HOWEVER, that
the provisions of SECTION 3.12 shall inure to the benefit of and be enforceable
by the Indemnified Parties.
6.9 Certain Definitions. As used herein:
(a) "ACQUISITION PROPOSAL" means any proposal or actual (i)
merger, consolidation or similar transaction involving the Company,
CISAC or any of their subsidiaries, (ii) sale, lease or other
disposition, directly or indirectly, by merger, consolidation, share
exchange or otherwise, of any assets of the Company, CISAC or any of
their respective subsidiaries representing 20% or more of the assets of
the Company or CISAC on a consolidated basis, (iii) issue, sale or
other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or
warrants to purchase or securities convertible into, such securities)
representing 20% or more of the votes attached to the outstanding
securities of the Company or CISAC, (iv) transaction in which any
Person shall acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 20% or more of the outstanding the
shares of Company Stock or CISAC Stock, (v) liquidation, dissolution,
or other similar type of transaction with respect to the Company, CISAC
or any of their respective subsidiaries, or (vi) transaction which is
similar in form, substance or purpose to any of the foregoing
transactions; provided, however, that the term "Acquisition Proposal"
shall not include the transactions contemplated hereby.
(b) "AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is
under common control with the Person specified. For purposes of this
definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
Person whether by Contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning 10% or more of
the voting securities of a second Person shall be deemed to control
that second Person.
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(c) "AGREEMENT" means this Stock Purchase Agreement, the Buyer
Disclosure Schedule, the Company Disclosure Schedule, and any
agreement, document, certificate or instrument delivered pursuant to
this Agreement or in connection with the transactions contemplated
hereby.
(d) "ASSOCIATE" means, with respect to any Person, any
corporation or other business organization of which such Person is an
officer or partner or is the beneficial owner, directly or indirectly,
of 10% or more of any class of equity securities, any trust or estate
in which such Person has a substantial beneficial interest or as to
which such Person serves as a trustee or in a similar capacity and any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person.
(e) "BONDS" means the bonds issued under the Indenture.
(f) "BUSINESS DAY" means a day other than Saturday, Sunday or
any day on which banks located in the States of Rhode Island and
Illinois are authorized or obligated to close.
(g) "BUYER SEC REPORTS" means all forms, reports and documents
Buyer has filed with the Securities and Exchange Commission (the "SEC")
required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder.
(h) "CLOSING DATE" means April 3, 2000, or such other date as
Buyer and the Stockholders' Representative mutually agree.
(i) "COMPANY INTANGIBLE PROPERTY" means any patent, trademark,
trade name, service xxxx, brand xxxx, brand name, industrial design,
special protocol and copyright owned or used in, and required to be
owned or used in, business by the Company, CISAC and their respective
subsidiaries, as well as all registrations thereof and pending
applications therefor, and each license or other contract relating
thereto (collectively with any other intellectual property owned or
used in the business by the Company, CISAC and their respective
subsidiaries, and all of the goodwill associated therewith).
(j) "CONTRACT" means any agreement, lease, evidence of
indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
(k) "ENVIRONMENTAL COSTS AND LIABILITIES" means any and all
claims, demands, penalties, fines, liabilities, settlements, damages,
losses, costs and expenses (including, without limitation, reasonable
attorneys' and consultants' fees and disbursements, court costs and
litigation expenses) of whatever kind or nature, arising
-51-
out of or in any way related to: (a) the presence, disposal, migration
or release of any Hazardous Materials; (b) any personal injury
(including wrongful death) or property damage (real or otherwise)
arising out of or related to such Hazardous Materials; (c) any legal
action or settlement, or government order or directive relating to
such Hazardous Materials; and/or (d) any violation of any requirement
of existing Environmental Laws or existing requirements or demands of
any governmental authority which are based upon or are in any way
related to Hazardous Materials.
(l) "ENVIRONMENTAL LAWS" means any law relating to human
health, safety or protection of the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants
or Hazardous Materials in the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or otherwise relating to the treatment, storage,
disposal, transport or handling of any Hazardous Material.
(m) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(n) "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or any successor authority) that are applicable as the date of
determination, consistently applied.
(o) "HAZARDOUS MATERIAL" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals, materials,
substances or wastes which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import, under any Environmental Law; and (C) any
other chemical, material, substance or waste, exposure to which is now
or hereafter prohibited, limited or regulated by any governmental or
regulatory authority.
(p) "INDENTURE" means that certain Trust Indenture, dated as
of March 1, 1994, by and between the Rhode Island Industrial Facilities
Corporation and CRE Corporation.
(q) "KNOWLEDGE" means (i) with respect to an individual, that
an individual will be deemed to have "Knowledge" of a particular fact
or other matter if such
-52-
individual is actually aware of such fact or matter; and (ii) with
respect to a Person (other than an individual) that such Person will
be deemed to have "Knowledge" of a particular fact or other matter if
any Person who is a shareholder or who is otherwise serving as a
director, executive officer, partner, stockholder or trustee (or any
similar capacity) of such Person has, or at any time had (i) actual
knowledge of such fact or other matter, or (ii) a reasonably prudent
individual serving in such capacity would reasonably be expected to
be aware of such fact or other matter.
(r) "LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge, option or other
encumbrance of any kind, or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing.
(s) "MAJOR STOCKHOLDERS" means the Stockholders other than The
Xxxxx Xxxxxxx GRAT-1997, The Xxxxxxx Family Irrevocable Trust-1995,
Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxx Xxxxxxx.
(t) "MATERIAL ADVERSE EFFECT" means any adverse change in the
properties, financial condition, business or results of operations of
Buyer and its subsidiaries or the Company, CISAC or any of their
respective subsidiaries, as the case may be, which is material to Buyer
and its subsidiaries, taken as a whole, or the Company, CISAC and their
respective subsidiaries, taken as a whole, as the case may be, other
than changes caused by general economic conditions.
(u) "OPTION" means with respect to any Person means any
security, right, subscription, warrant, option, "phantom" stock right
or other Contract that gives the right to (i) purchase or otherwise
receive or be issued any shares of capital stock of such Person or any
security of any kind convertible into or exchangeable or exercisable
for any shares of capital stock of such Person or (ii) receive any
benefits or rights similar to any rights enjoyed by or accruing to the
holder of shares of capital stock of such Person, including any rights
to participate in the equity, income or election of directors or
officers of such Person.
(v) "PERMITTED LIEN" means (i) any Lien for Taxes not yet due
or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that
is not yet due or delinquent and (iii) any minor imperfection of title
or similar Lien which individually or in the aggregate with other such
Liens does not materially impair the value of the property subject to
such Lien or the use of such property in the conduct of the business of
the Company, CISAC or any of their respective subsidiaries.
-53-
(w) "PERSON" means any natural Person, corporation, general
partnership, limited partnership, proprietorship, other business
organization, trust, union, association or governmental or regulatory
authority.
(x) "SECTION 388(h)(10) ELECTION" means the election made by
the Stockholders and Buyer hereunder and under Code Section 338(h)(10)
(and any provision of state, local, or foreign law corresponding to
Section 338(h)(10) or under Section 338(g)).
(y) "SIGNIFICANT TAX AGREEMENT" is any agreement to which any
Party or any subsidiary of any Party is a party under which such Party
or such subsidiary could reasonably be expected to be liable to another
party under such agreement in an amount in excess of $10,000 in respect
of Taxes payable by such other party to any taxing authority.
(z) "SOFTWARE" means all computer software and subsequent
versions thereof, including but not limited to, source code, object
code, objects, comments, screens, user interfaces, report formats,
templates, menus, buttons and icons, and all files, data, materials
manuals, design notes and other items and documentation related thereto
or associated therewith.
(aa) "STOCKHOLDERS' REPRESENTATIVE" means Xxxxxx Xxxxxxxxx, or
his successor designated in accordance with the Stockholders'
Representative Agreement.
(bb) "STOCKHOLDERS' REPRESENTATIVE AGREEMENT" means the
agreement by and among the Stockholders to, among other things, appoint
and empower the Stockholders Representative, substantially in the form
of attached EXHIBIT I.
(cc) "SUBSIDIARY" means, when used with reference to any
entity, any entity 20% or more of the outstanding voting securities or
interests of which are owned directly or indirectly by such former
entity.
(dd) "TAX" or "TAXES" means any and all federal, state, local
and foreign, taxes, assessments and other governmental charges, duties,
impositions and liabilities relating to taxes, including taxes based
upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
together with all interest, penalties and additions imposed with
respect to such amounts and including any liability for taxes of a
predecessor entity.
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Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"HEREOF," "HEREIN," "HEREBY" and derivative or similar words refer to the
Agreement; (iv) the terms "ARTICLE" or "SECTION" refer to the specified Article
or Section of this document; and (v) the phrases "ORDINARY COURSE OF BUSINESS"
and "ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE" refer to the
business and practice of the Company, CISAC or their respective subsidiaries.
All accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP.
6.10 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any Parties.
6.11 SPECIFIC PERFORMANCE. The Parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
6.12 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation
between the Parties relating to this Agreement, the prevailing party shall be
entitled to recover its reasonable attorney's fees and costs (including court
costs) from the non-prevailing party; PROVIDED, THAT, if both Parties prevail in
part, the reasonable attorney's fees and costs shall be awarded by the court in
such manner as it deems equitable to reflect the relative merits of the Parties'
claims.
6.13 CAPTIONS. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
* * * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the Parties (or their duly authorized officers, as applicable) and shall be
effective as of the date first hereinabove written.
ZEBRA TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
___________________________________________
Xxxxxx X. Xxxxxx,
President and Chief Executive Officer
COMTEC INFORMATION SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
___________________________________________
Name: Xxxxxx X. Xxxxxxxxx
__________________________________________
Its: President
__________________________________________
COMTEC INFORMATION SYSTEMS
ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
___________________________________________
Name: Xxxxxx X. Xxxxxxxxx
__________________________________________
Its: Vice President, Secretary and Treasurer
__________________________________________
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------------
XXXX X. XXXXXXXXX, being a Stockholder of the
Company and CISAC
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------------------
XXXXXX X. XXXXXXXXX, being a Stockholder of the
Company and CISAC
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------------------
XXXXXX X. XXXXXXXXX, being a Stockholder of the
Company and CISAC
/s/ Xxx Xxxxx Xxxxxx
-----------------------------------------------------
XXX XXXXX XXXXXX
(a/k/a XXX-XXXXX XXXXXXXXX), being a Stockholder
of the Company and CISAC
/s/ Xxxxx Xxxxxxx
-------------------------------------------------------
XXXXX XXXXXXX, being a Stockholder of the Company
and CISAC
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------------
XXXXXXX X. XXXXX, being a Stockholder of the
Company only
/s/ Xxxxx X. Xxxxx
---------------------------------------------------
XXXXX X. XXXXX, being a Stockholder of the
Company only
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------------------
XXXXXX X. XXXXXXXXX, being a Stockholder of the
Company and CISAC
THE XXXXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1998
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
________________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1998
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
_________________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX FAMILY IRREVOCABLE TRUST - 1994
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX FAMILY IRREVOCABLE TRUST - 1994
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
______________________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1997
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1997
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1997
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1997
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX IRREVOCABLE TRUST - 1994
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX FAMILY IRREVOCABLE TRUST - 1994
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXXX FAMILY IRREVOCABLE TRUST - 1995
(being a Stockholder of the Company only)
By: /s/ Xxxx X. Xxxxxxx
______________________________________
Name: Xxxx X. Xxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX 1997 GRAT NO. 2
(being a Stockholder of the Company only)
By: /s/ Xxxxxx X. Xxxxxxxxx
______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXXX X. XXXXXXXXX 1997 GRAT NO. 3
(being a Stockholder of the Company only)
By: Xxxxxx X. Xxxxxxxxx
______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX 1997 GRAT NO. 2
(being a Stockholder of the Company only)
By: /s/ Xxxx X. Xxxxxxxxx
______________________________________
Name: Xxxx X. Xxxxxxxxx
Its: Trustee
THE XXXX X. XXXXXXXXX 1997 GRAT NO. 3
(being a Stockholder of the Company only)
By: /s/ Xxxx X. Xxxxxxxxx
_______________________________________
Name: Xxxx X. Xxxxxxxxx
Its: Trustee
THE XXXXX XXXXXXX GRAT - 1997
(being a Stockholder of the Company only)
By: /s/ Xxxxx Xxxxxxx
______________________________________
Name: Xxxxx Xxxxxxx
Its: Trustee
