EXHIBIT 2.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT BY AND AMONG
X.X. XXXX, INCORPORATED
SHAREHOLDERS OF X.X. XXXX, INCORPORATED
AND
HTM HOLDINGS, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (together with all Schedules and Exhibits,
this "Agreement"), dated as of September 3, 1999 is entered into by and among
all of those persons whose signatures are affixed to this Agreement under the
designation "Sellers" (collectively, "Sellers" and individually a "Seller"), X.
X. Xxxx, Incorporated, a Massachusetts corporation (the "Company"), and HTM
Holdings, Inc., a Delaware corporation ("Buyer").
RECITALS:
1. The Company operates an electronic manufacturing services business
providing customized product and manufacturing design, metal fabrication, wet
paint powder coat finishing and systems integration services to original
equipment manufacturers serving, inter alia, the electronics industry (the
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"Business").
2. Sellers are the owners, beneficially and of record, of all of the
outstanding capital stock of the Company (the "Shares").
3. Sellers desire to sell, and Buyer desires to buy, the Shares, on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
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1.1 Purchase and Sale. Sellers agree to sell to Buyer, and Buyer agrees
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to buy from Sellers, at the Closing (as defined below) all, and not less than
all, of the Shares, free and clear of all liabilities, obligations, liens,
security interests and other encumbrances.
1.2 Purchase Price.
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(a) General. The aggregate purchase price to be paid for the Shares
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(the "Purchase Price") shall be $19,250,000, subject to adjustment as provided
in Sections 1.2(f), 5.4, 6.3 and 6.4 and Article 10 below. Because the Purchase
Price is subject to adjustment both before and after the Closing Date, the
aggregate amount paid by Buyer on the Closing Date as determined pursuant to
Sections 1.2(f)(i), 6.3 and 6.4 is sometimes referred to in this Agreement as
the "Initial Purchase Price," and the Purchase Price as finally determined
pursuant to Section 1.2(f)(ii) is sometimes referred to as the "Final Purchase
Price." The Initial Purchase Price shall be payable on the Closing Date by
delivery of the following:
(i) a wire transfer of immediately available funds in the
amount of $1,000,000 to Xxxxx Brothers Xxxxxxxx & Co. (the "Escrow
Agent"), which shall
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hold such amount (together with interest accrued thereon pursuant to
the terms of the Escrow Agreement, the "Price Adjustment Holdback
Amount") in escrow pending final determination of the Closing Balance
Sheet and the Adjustments Statement (each as defined below), all in
accordance with the escrow agreement attached to this Agreement as
Exhibit 1.2(a)(i) (the "Escrow Agreement"), which will be executed and
delivered at the Closing;
(ii) wire transfers of immediately available funds, in the
amounts set forth in Schedule 7.11, in respect of Company debt repaid
at Closing; and
(iii) wire transfers of immediately available funds in an Amount
equal to the remainder of the Initial Purchase Price, which amount
shall be allocated among the Sellers in proportion to their respective
holdings of the Shares, with each Seller to receive the percentage set
forth opposite his or her name on Exhibit 1.2(a)(iii), and each
Seller's proportionate payment to be wired to a single account
designated by such Seller; and
(b) [Reserved.]
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(c) Closing Balance Sheet. Within 24 hours of the Effective Time,
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Seller and its independent auditors shall conduct a physical count and
inspection of the inventory of the Company located on the premises set forth in
Schedule 3.13 for use in preparation of the Closing Balance Sheet described in
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this paragraph. The inventory shall be valued on the Closing Balance Sheet as
described in Section 1.2(d) below. As soon as practicable following the Closing
Date, Seller shall cause to be prepared a balance sheet of the Company as of the
Effective Time (as finally determined in accordance with this Section 1.2, the
"Closing Balance Sheet"), and shall have the Closing Balance Sheet audited by
Canby, Xxxxxxx & Co., Inc. Buyer and its independent auditors shall be permitted
to observe the physical inventory count and to review the preparation of the
Pre-Closing Balance Sheet (as hereinafter defined), the Closing Balance Sheet
and all work papers, books and records associated with such preparation. Buyer
and Seller shall cooperate with each other and their respective auditors to the
extent reasonable and practical in the course of preparing the Closing Balance
Sheet. Seller shall use its commercially reasonable best efforts to cause the
Closing Balance Sheet, together with the auditor's report thereon, to be
delivered to Buyer within 60 days following the Closing Date, and agrees that it
shall be delivered to Buyer in any event no later than 90 days following the
Closing Date. The Closing Balance Sheet shall be prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
with those applied in preparation of the March 31 Balance Sheet of the Company
(as defined in Section 3.8 below); provided, however, the Closing Balance Sheet
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shall be determined after giving effect to the following transactions: (i) the
distribution of intercompany receivable due from Airedale Realty Trust (the
"Trust") to the Company, which as of June 30, 1999 was in the amount of
$431,609, to the Sellers, (ii) the payment of the employee bonuses set forth on
Exhibits 6.4(a) and 6.4(b), (iii) the payment by the Company prior to or at the
Closing of expenses to be borne by the Sellers in accordance with Section 6.3
and (iv) all debt to be repaid by the Company at the Closing pursuant to Section
7.11. In addition, the Closing Balance Sheet and the calculation of Working
Capital shall not include any accrual for the employee bonuses to be paid post
Closing pursuant to Exhibit 6.4(a) and any expenses to be borne by the
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Sellers pursuant to Section 6.3.
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The Closing Balance Sheet shall reflect, among other things, the
following items as of the Effective Time: (i) the amount of "Working Capital,"
which is defined for purposes of this Agreement to include (A) non-cash current
assets, (B) negative cash, (C) current liabilities and (D) the asset of $66,950
and liability of $7,130 associated with corporate income taxes for the periods
prior to Closing, excluding matters described by Section 5.4(b) (subject to
audit confirmation); and (ii) capitalized equipment lease and loan obligations
(determined in accordance with GAAP) of the Company. The following items shall
be specifically excluded from the definition of Working Capital: (A) receivable
due from Airedale Realty Trust, (B) payment and/or accrual for employee bonuses
described in Section 6.4, (C) all long term debt, including current portion, (D)
capitalized equipment lease and loan obligations, (E) any liabilities due to the
338(h)(10) election, (F) all bank debt, (G) any expenses to be borne by the
Sellers pursuant to Section 6.3, and (G) any other liabilities arising from this
transaction. Furthermore, the Closing Balance Sheet shall reflect any necessary
audit adjustments from the Pre-Closing Balance Sheet.
The Closing Balance Sheet shall form the basis for certain adjustments
to the Purchase Price, as described in Section 1.2(f) below. Seller shall
deliver to Buyer at the same time as the Closing Balance Sheet a statement (the
"Adjustments Statement") showing any adjustment to the Initial Purchase Price
required as a result of the amounts reflected on Closing Balance Sheet.
(d) Inventory. It is agreed and understood that in valuing the
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inventory for purposes of the Closing Balance Sheet and Pre-Closing Balance
Sheet: (i) the value attributed to each inventory item shall not exceed the
lower of cost and net realizable value as at the Effective Time; (ii) Obsolete
(as defined below), defective and/or Excess (as defined below) inventory items
shall not be included as inventory on the Closing Balance Sheet; provided,
however, that up to $150,000 of Excess inventory that is not associated with
pending customer orders for which the Company has been delivered a purchase
order consistent with past practice or MRPs as at the Effective Time may be
included as inventory on the Closing Balance Sheet; (iii) an unlimited amount of
sheet stock of the Company as of the Closing shall be included as inventory on
the Closing Balance Sheet, but only to the extent such sheet stock is returnable
by the Company without penalty; and (iv) an unlimited amount of inventory
subject to full customer reimbursement (via a cancellation charge) or cash
reimbursement shall be included as inventory of the Company on the Closing
Balance Sheet. For purposes hereof, inventory shall be deemed "Obsolete" to the
extent it is not useable, not returnable without penalty or not saleable within
twelve months from the date of this Agreement in the ordinary course of business
and "Excess" inventory shall mean all inventory that is not associated with a
pending customer order entered into in the ordinary course of business or an
MRP. Sellers shall have provided written procedures to determine the quantum of
inventory obsolescence and Buyer and Sellers shall use GAAP to determine the
quantum of inventory obsolescence and the inventory value. An open order report
summarizing all existing customer purchase orders and MRPs shall be provided by
the Sellers and the Company on the Closing Date. The set of such written
procedures and open order report documents is annexed as Schedule 1.2(d).
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(e) Dispute Resolution. If Buyer does not deliver to Seller, within
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21 business days following its receipt of the Closing Balance Sheet and the
Adjustments Statement, any objection thereto (an "Objection"), then Buyer shall
be deemed to agree with the Closing Balance Sheet and the Adjustments Statement,
and such documents shall be final and binding between the parties. If Buyer does
deliver an Objection within the 21 business day period described above, the
parties agree to negotiate in good faith to resolve their differences as to any
disputed amounts. If they are unable to resolve their differences within 15
business days after Buyer's Objection, the parties shall resolve their
differences pursuant to Section 12.14 hereof.
(f) Purchase Price Adjustments. The Initial Purchase Price shall be
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adjusted as provided in this Section 1.2(f).
(i) Closing. For purposes of determining the Initial Purchase
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Price, the Company shall deliver to Buyer at least two business days
prior to the Closing Date an unaudited balance sheet of the Company as
of July 31, 1999 (the "Pre-Closing Balance Sheet"). The Pre-Closing
Balance Sheet shall be prepared in accordance with the methodology
described in Sections 1.2(c) and 1.2(d) for preparing the Closing
Balance Sheet, including without limitation the definition of Working
Capital and the method for determining inventory set forth therein.
The Initial Purchase Price shall be equal to $19,250,000, increased or
decreased dollar for dollar to the extent that the Working Capital
shown on the Pre-Closing Balance Sheet is more or less than
$2,201,510, and shall be further decreased dollar for dollar to the
extent that the capitalized equipment lease and loan obligations shown
on the Pre-Closing Balance Sheet exceed $500,000.
(ii) Post-Closing. Following final determination of the Closing
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Balance Sheet in accordance with this Section 1.2, the Initial
Purchase Price shall be increased or decreased dollar for dollar to
the extent that the Working Capital shown on the Closing Balance Sheet
is more or less than the Working Capital shown on the Pre-Closing
Balance Sheet, and shall be further decreased dollar for dollar to the
extent that the capitalized equipment lease and loan obligations shown
on the Closing Balance Sheet exceed those shown on the Pre-Closing
Balance Sheet. The Initial Purchase Price, as so adjusted, is known as
the "Final Purchase Price." Additionally, the parties shall make such
payments as are calculated pursuant to Section 5.4 hereto, to be paid
in accordance with the terms of Section 5.4.
(g) Instructions to Escrow Agent; Other Payments. As soon as the
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Closing Balance Sheet and Adjustments Statement have become final, whether by
mutual agreement of the parties or the determination of the Arbitrator, Buyer
and Sellers' Agent agree to execute joint instructions to the Escrow Agent
regarding the disposition of the Price Adjustment Holdback Amount and to take
other actions, as described below. If either Buyer or Sellers' Agent fails to
execute such instructions to the Escrow Agent within three business days
following the final decision of the Arbitrator, then the parties agree that the
Arbitrator is authorized to execute such instructions and deliver them to the
Escrow Agent.
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(i) If the Final Purchase Price equals the Initial Purchase
Price, the Escrow Agent shall be instructed to distribute the entire
Price Adjustment Holdback Amount to Sellers in accordance with their
proportionate interests.
(ii) If the Final Purchase Price is greater than the Initial
Purchase Price, the Escrow Agent shall be instructed to distribute the
entire Price Adjustment Holdback Amount to Sellers in accordance with
their proportionate interests, and within three business days Buyer
shall pay by wire transfer to Sellers, in accordance with their
proportionate interests, the excess of the Final Purchase Price over
the Initial Purchase Price. Buyer shall additionally pay Sellers, in
accordance with their proportionate interest set forth on Exhibit
1.2(a)(iii), interest on the amount required to be paid in excess of
the Price Adjustment Holdback Amount at an annual rate of 8.5% for the
period beginning on the Closing Date and ending on the date on which
such required payment is made.
(iii) If the Final Purchase Price is less than the Initial
Purchase Price, the Escrow Agent shall be instructed to distribute to
Buyer so much of the Price Adjustment Holdback Amount as shall be
equal to such shortfall, and to distribute to Sellers in accordance
with their proportionate interests the remainder of the Price
Adjustment Holdback Amount, if any. If the Price Adjustment Holdback
Amount is less than the amount of the shortfall between the Final
Purchase Price and the Initial Purchase Price, then Sellers, jointly
and severally, agree to pay within three business days by wire
transfer to Buyer any additional amounts due to cover such shortfall.
Sellers shall additionally be jointly and severally responsible to pay
Buyer interest on the amount required to be paid in excess of the
Price Adjustment Holdback Amount at an annual rate of 8.5% for the
period beginning on the Closing Date and ending on the date on which
such required payment is made.
1.3 Noncompetition.
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(a) In consideration of Buyer's completion of the transactions
contemplated by this Agreement, and in order to ensure to Buyer the full
benefits of ownership of the Company, each Seller covenants and agrees that he
or she will not, at any time during the three year period following the Closing
Date, either individually or in partnership or in conjunction with any person or
persons, firm, association, syndicate, company or corporation, as principal,
agent, director, officer, employee, investor, or in any other manner whatsoever
(other than as provided in Section 1.3(b)), directly or indirectly, run, own,
manage, operate, control, provide consulting services to, broker business to or
otherwise transact business of any kind with, be an officer or director of,
carry on, be engaged in, be interested in, or be concerned with, or permit his
or her name or any part thereof to be used or employed by any person or persons,
firm, association, syndicate, company or corporation, that competes with the
Business in Canada, the United States or Mexico (the "Territory").
(b) Without limiting the generality of the foregoing, each Seller
further covenants and agrees (i) not to request any present or future customer
or supplier of the
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Company without regard to such person's location to curtail or cancel its
business with the Company or Buyer, not to solicit any such person for the
purpose of selling any product or service in competition with the Company, and
not to sell any such product or service to any such person; and (ii) not to
induce or attempt to influence any employee of the Company to terminate his or
her employment. Nothing in this Section 1.3 shall prevent any Seller from owning
or purchasing as a passive investor up to 5% of the outstanding publicly traded
shares or other securities of any class of any issuer, whether privately owned
or listed on a recognized stock exchange. The obligations arising pursuant to
this Section 1.3 are hereby expressly excluded from the dispute resolution
provisions of Section 12.14 of this Agreement. Each Seller acknowledges that the
covenants in this Section are reasonably necessary for the protection of the
Buyer and its conduct of the Business following the Closing Date, and that such
covenants are reasonably limited with respect to the activities prohibited, the
duration thereof, the geographic area thereof, the scope thereof and the effect
thereof on Seller and the general public. Each Seller agrees to waive all
defenses to the strict enforcement of the restrictions set out in this Section.
Each Seller acknowledges that violation of the covenants in this Section would
immeasurably and irreparably damage the Buyer and agree that the Buyer, in
addition to claiming for damages for breach of the covenants described in this
Section shall be entitled as a matter of right to seek specific performance of
the covenants contained herein and such right to such specific performance shall
be cumulative in addition to other remedies which may be available to the Buyer,
including without limitation the right to require one or more Sellers to account
for and to pay over to the Buyer all compensation, profits, monies, accruals,
increments or other benefits derived or received by such Sellers as the result
of any transaction constituting a breach of the covenants in this Section 1.3.
In the event that it shall be necessary for the Buyer to commence legal
proceedings as a result of the breach of the covenants contained in this
Section, against whom such proceedings are commenced, then the prevailing party
shall be entitled to collect from the other party its reasonable attorney fees
in respect thereof.
(c) The covenants in this Section 1.3 are severable and separate. The
unenforceability of any specific covenant in this Section 1.3 is not intended by
any party to, and shall not, affect the provisions of any other covenant in this
Section 1.3, all of which shall be given full effect, without regard to any
portions which may be deemed invalid. If any court of competent jurisdiction
determines that the scope, time or territorial restrictions set forth in
Sections 1.3(a) and 1.3(b) are unreasonable as applied to any Seller, the
parties, including the Seller in question, acknowledge their mutual intention
and agreement that those restrictions be enforced to the fullest extent the
court deems reasonable, and thereby shall be reformed to that extent as applied
to that Seller and any other Seller similarly situated.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES CONCERNING SELLERS
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Each Seller represents and warrants to Buyer, with respect to himself or
herself, as follows:
2.1 Authority. Each Seller has, and collectively the Sellers have, full
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power and authority to execute, deliver and perform this Agreement and the
agreements referred to in this Agreement to which he or she is party (the
"Ancillary Agreements") and to consummate the
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transactions contemplated by this Agreement and by the Ancillary Agreements.
This Agreement has been duly executed and delivered by each Seller, and the
Ancillary Agreements, when executed and delivered, will be duly executed and
delivered by each such Seller, and each such agreement is, or upon execution and
delivery will be, a valid and binding obligation of each Seller, enforceable
against him or her in accordance with its terms. If a Seller is acting otherwise
than in his, her or its individual capacity (whether as an executor or a
guardian or in any other fiduciary or representative capacity), all actions on
the part of such Seller and all other persons (including any court) necessary
for the authorization, execution, delivery and performance by such Seller of
this Agreement and the Ancillary Agreements have been duly taken.
2.2 No Conflict or Breach. The execution, delivery and performance of
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this Agreement and the Ancillary Agreements do not and will not (a) conflict
with or constitute a violation of any law, statute, judgment or regulation of
any legislative body, court, administrative agency, governmental authority or
arbitrator applicable to any Seller, or (b) constitute or cause a breach or
violation of any covenant, agreement or obligation binding upon any Seller or
affecting any of his or her properties.
2.3 Share Ownership. Each Seller is the owner, beneficially and of
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record, of all right, title and interest in and to the number of issued and
outstanding Shares set forth opposite his or her name on Schedule 2.3.
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Collectively, the Sellers own all the Shares issued and outstanding in the
Company, and there are no other ownership interests of any kind in the Company.
Each Seller has, and will have at the Closing, good and marketable title to all
such shares and the absolute right to sell, assign and transfer the same to
Buyer, free and clear of all liens, pledges, encumbrances, security interests,
options or other restrictions. Except as set forth on Schedule 2.3(a) or
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Schedule 3.5, no Seller is party to any option, warrant, right, contract, call,
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put or other agreement or commitment providing for the disposition or
acquisition of any of the Shares (other than this Agreement). Except as set
forth in Schedule 2.3(b), no Seller is party to any voting trust, proxy or other
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agreement or understanding with respect to any of the Shares.
2.4 Brokers. No finder, broker, agent or other intermediary has acted for
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or on behalf of any Seller in connection with the negotiation or consummation of
this Agreement, and there are no claims for any brokerage commission, finder's
fee or similar payment due from any Seller save and except for Stonebridge
Associates, LLC.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING COMPANY
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Xxxx X. Xxxxx and Xxxxxx X. Xxxxxxx III (together, the "Warranting
Shareholders") jointly and severally represent and warrant to Buyer as follows:
3.1 Organization and Good Standing; Governing Documents. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Massachusetts. The Company has all requisite power and authority
to own, operate and lease its properties and to carry on its business as now
being conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in all other jurisdictions in which the
character of the property owned, leased or operated by it or the nature of the
business
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conducted by it makes such qualification necessary, and such jurisdictions are
listed on Schedule 3.1. True and complete copies of the Articles of Organization
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and Bylaws of the Company, as in effect as of the date of this Agreement, have
been delivered to the Buyer.
3.2 Authority. The Company has all requisite power and authority to
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execute, deliver and perform this Agreement and to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, have been duly and validly authorized by all necessary corporate and
shareholder action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
3.3 No Conflict or Breach. Except as described in Schedule 3.3, the
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execution, delivery and performance of this Agreement do not and will not:
(a) conflict with or constitute a violation of the Articles of
Organization or Bylaws of the Company;
(b) assuming compliance with the requirements of the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), conflict with or constitute a violation
of any law, statute, judgment, order, decree or regulation of any legislative
body, court, administrative agency, governmental authority or arbitrator
applicable to or relating to the Company or its assets;
(c) conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party under any
contract, agreement, lease, commitment, mortgage, note, license or other
instrument or obligation to which the Company is party or by which it is bound
or by which its assets are affected; or
(d) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on any of the assets of the Company or on
the Shares.
3.4 Consents and Approvals. Except as described in Schedule 3.4, each of
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the following which is required in connection with the valid execution and
delivery by Sellers and the Company of this Agreement or the consummation by
Sellers and the Company of the transactions contemplated by this Agreement shall
have been obtained on or before the date hereof: (a) each consent, approval,
authorization, registration or filing with any federal, state or local judicial
or governmental authority or administrative agency, and (b) each consent,
approval, authorization of or notice to any other third party. The items
described in clauses (a) and (b) are referred to collectively as the "Required
Consents."
3.5 Capitalization. The authorized capital stock of the Company consists
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of 200,000 shares of common stock, no par value, of which 80,000 shares are
issued and outstanding. Such outstanding shares, all of which are Shares
transferred pursuant to this Agreement, represent all of the outstanding
ownership interests of the Company. All of the Shares are validly issued, fully
paid and nonassessable, are free from, and were not issued in violation of any,
preemptive
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rights, and are owned of record and beneficially by Sellers in the numbers set
forth opposite their respective names on Schedule 2.3. Except as described in
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Schedule 3.5, (i) there are no outstanding or authorized options, warrants,
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rights, contracts, calls, puts, right to subscribe, conversion rights or other
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or acquisition of any
of its capital stock (other than this Agreement); (ii) there are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect
to the Company; (iii) there are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
the Company; and (iv) the Company is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any of its capital
stock.
3.6 Subsidiaries; Investments. Except as described in Schedule 3.6, the
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Company does not own or hold any shares of stock or any other security or
interest in any other entity, or any rights to acquire any such security or
interest. The Company has never had any subsidiary corporation of which the
securities having a majority of the voting power in electing the board of
directors were, at the time as of which any determination was made, owned by the
Company either directly or indirectly.
3.7 Minute and Stock Transfer Books. The minute books of the Company, all
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of which have been made available to Buyer, are true, correct, complete and
current in all material respects and contain accurate and complete records of
all material actions taken by its shareholders, its Board of Directors and each
committee of its Board of Directors, and all signatures contained in such minute
books are the true signatures of the persons whose signatures they purport to
be. The stock transfer books of each Company are true, correct, complete and
current in all respects. At the Closing, all books and records will be delivered
to Buyer. Schedule 3.7 to this Agreement sets forth a true, correct and complete
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list of the names and titles of all officers and directors of the Company.
3.8 Financial Statements.
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(a) Sellers and the Company have previously delivered to Buyer true
and complete copies of (i) the audited balance sheets of the Company combined
with the Trust as of December 31, 1996, 1997 and 1998, and the related
statements of operations, shareholders' equity and cash flows for the fiscal
years then ended, including the footnotes to such statements, additional or
supplemental information supplied therewith and the report prepared in
connection therewith by the independent certified public accountants reviewing
such financial statements; and (ii) interim unaudited financial reports prepared
by the Company's management for each month since December 31, 1998 (the "Interim
Financial Statements"), including, without limitation, a balance sheet as of
March 31, 1999 (the "March 31 Balance Sheet") and a balance sheet as of June 30,
1999 (the "June 30 Balance Sheet"). The documents described in clauses (i) and
(ii) (collectively, the "Financial Statements") (A) are consistent with the
books and records of the Company; (B) present fairly the assets, liabilities and
financial condition of the Company (as so combined with the Trust) as of the
respective dates of the Financial Statements, and the results of operations for
the periods then ending; and (C) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved, subject in the
case of the Interim Financial Statements to normal recurring year end
adjustments, the absence of notes and
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any adjustments or the lack thereof on account of the Trust. The Interim
Financial Statements form part of Schedule 3.8.
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(b) Except as set forth on Schedule 3.8, the Company has no material
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liability or obligation, whether accrued, absolute or contingent, that is not
reflected or reserved against in the December 31, 1998 balance sheet or the June
30 Balance Sheet, except for current liabilities incurred in the ordinary course
of business since the respective dates thereof. Except as described in Section
3.8(a), any items of income or expense which are of a nonrecurring nature are
separately disclosed in the Financial Statements. Except as set forth on
Schedule 3.8 and Schedule 7.11, the Company has no indebtedness for borrowed
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money (including capitalized lease and loan obligations).
3.9 Books and Records. The books and records of the Company are true,
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accurate and complete and, where appropriate, have been maintained in accordance
with GAAP applied on a consistent basis. At Closing, all such books and records,
including, without limitation, all Tax Returns (as defined in Section 3.21) will
be in the possession of the Company.
3.10 Title to Assets. The Company has good and marketable title to all of
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the properties and assets (real or personal, tangible or intangible) owned by it
(including, without limitation, those properties and assets shown on the June 30
Balance Sheet), and a valid leasehold or other possessory interest in all other
properties and assets used, operated or occupied by it, located on its premises
or otherwise shown on the June 30 Balance Sheet, except for tangible personal
property sold or disposed of in the ordinary course of business of the Company
and consistent with past practice since June 30, 1999. All of the Company's
properties and assets (whether real or personal, tangible or intangible, owned,
leased or otherwise acquired) are free and clear of any liens, claims, charges,
security interests, mortgages, pledges or other encumbrances or restrictions of
any nature whatsoever (collectively, "Liens"), other than:
(a) Liens for taxes not yet due and payable; and
(b) Liens described on Schedule 3.10. There are no existing breaches
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or defaults of the Company, or to the best knowledge of the Warranting
Shareholders and the Company any existing breaches or defaults by any other
party, under, and no events or circumstances have occurred with respect to the
Company, or to the best knowledge of the Warranting Shareholders and the Company
with respect to any other party, which, with or without notice or lapse of time
or both, would constitute a breach of or a default under, any instrument,
agreement or other document that creates, evidences or constitutes any such Lien
or that evidences, secures or governs the terms of any indebtedness or
obligation secured by any such Lien (any such instrument, agreement or other
document is referred to herein as a "Lien Instrument"). Except as described in
paragraphs 4 and 5 of Schedule 3.10 , the sale of the Shares by Sellers to Buyer
will not, with respect to any Lien Instrument, (i) constitute a breach thereof
or a default thereunder; (ii) permit (with or without notice, lapse of time or
both), cause or result in (A) the acceleration of any indebtedness or other
obligation evidenced, secured or governed thereby or (B) the foreclosure or
other enforcement of any such Lien; (iii) permit or cause the terms thereof to
be renegotiated; or (iv) require the consent of the holder of any such
indebtedness or obligation or any third party.
10
3.11 Real Property.
-------------
(a) Owned. The Company presently owns no real property, and has
-----
never owned any real property.
(b) Leased. Schedule 3.11(b) contains a true and correct description
------ ----------------
of all real property leased by the Company (the "Leased Real Property"), of all
leases relating to the Leased Real Property (collectively, the "Real Property
Leases"), and of all Liens upon or affecting the Buyer's rights to or interest
in any of the Leased Real Property or any Real Property Lease. Except as set
forth in Schedule 3.11(b), (i) the Company has not sublet, or granted to any
----------------
other person any right of use, operation or occupancy of, any of the Leased Real
Property, (ii) the Company has not sold, transferred or assigned, or granted any
Lien on or otherwise encumbered, all or any portion of its interest under any
Real Property Lease, (iii) no person or entity has any sub-leasehold interest
in, and no person or entity (other than the Company) has any right to use,
operate or occupy, any Leased Real Property and (iv) all monies due by the
Company to the Trust or to any other person with respect to the Leased Real
Property as of the date of this Agreement, or which to the knowledge of the
Warranting Shareholders or the Company will be claimed by such persons, have
been paid in full. Sellers have delivered to Buyer true, correct and complete
copies of (A) all of the Real Property Leases, (B) all title insurance policies
insuring any leasehold or other interest of the Company in, and all surveys in
the Company's possession of, the Leased Real Property, (C) all instruments,
agreements and other documents creating, evidencing or constituting any Liens
upon any of the Leased Real Property or any Real Property Lease, and (D) all
instruments, agreements and other documents evidencing or otherwise relating to
any transaction or other arrangement described or referred to in the immediately
preceding sentence. Each of the Real Property Leases is valid, binding and
enforceable in accordance with its terms and is in full force and effect, and
there are no offsets or defenses by either landlord or tenant thereunder
(provided, however, that the foregoing statement is made to the best knowledge
of the Warranting Shareholders and the Company with respect to the Leased Real
Property in Franklin, Massachusetts). There are no existing breaches of or
defaults by the Company or the Trust, or to the best knowledge of the Warranting
Shareholders and the Company any existing breaches of or defaults by any other
party, under, and no events or circumstances have occurred which, with or
without notice or lapse of time or both, would constitute a breach of or a
default under, any of the Real Property Leases. The sale of the Shares by
Sellers to Buyer will not, with respect to any such Real Property Lease, (1)
constitute a breach thereof or a default thereunder; (2) permit (with or without
notice, lapse of time or both), cause or result in (x) the termination thereof
or (y) the acceleration of any of the rentals due thereunder; (3) permit or
cause the terms thereof to be renegotiated; or (4) require the consent of the
landlord or any third party.
(c) Improvements; Use. The Leased Real Property is zoned for the
-----------------
various purposes for which the buildings and other improvements located thereon
(the "Improvements") are presently being used (provided, however, that the
foregoing statement is made only as to the actual knowledge of the Warranting
Shareholders and the Company with respect to the Leased Real Property in
Franklin, Massachusetts). Except as described in Schedule 3.11(c), all
----------------
Improvements and all uses thereof are in compliance with all material applicable
zoning and land
11
use laws, ordinances and regulations. All Improvements are in good repair and in
good operating condition, ordinary wear and tear excepted. To the best knowledge
of Sellers and the Company, no part of any Improvement encroaches on any real
property not included in the Leased Real Property.
3.12 Tangible Personal Property. Except as described in Schedule 3.12,
-------------------------- -------------
the Company owns or leases all buildings, machinery, equipment and other
tangible assets used for the conduct of its business (the "Tangible Property").
Each item of Tangible Property used in the conduct of the Business is in good
operating order, condition and repair (ordinary wear and tear excepted) and is
suitable for immediate use in the ordinary course of business of the Company. No
item of Tangible Property is in need of repair or replacement, except for
routine maintenance in the ordinary course of business.
3.13 Inventories. All items classified as inventories on the Financial
-----------
Statements of the Company (i) are in materially good condition, not Obsolete and
nondefective; (ii) are materially useable or saleable within twelve months from
the date of this Agreement in the ordinary course of business of the Business;
(iii) are located on the premises described on Schedule 3.13; (iv) have been
--------------
acquired by the Company only in bona fide transactions entered into in the
ordinary course of business; and (v) as at March 31, 1999, were reasonable in
relation to the then existing circumstances of the Company and classified as
current assets in accordance with GAAP and fairly reflected the average
inventory levels maintained during the 12-month period ended on that date. The
inventory, taken as a whole, as reflected in the March 31 Balance Sheet and
books and records of the Company is reflected on the basis of a partial physical
count and is valued at the lower of cost and net realizable value. Since March
31, 1999, no inventory has been sold or disposed of except in anticipation of
and through sales in the ordinary course of business.
3.14 Contracts. Schedule 3.14 lists all contracts, commitments,
--------- -------------
guarantees, agreements (including agreements for the borrowing of money or the
extension of credit), leases (other than Real Property Leases), licenses,
understandings and obligations, whether written or oral, to which the Company is
party or by which the Company is bound, (i) that involve the expenditure by any
party to such contract, commitment, agreement, lease, license, understanding or
obligation of more than $10,000; (ii) that are not terminable by either party
without penalty on 30 days' notice; (iii) under which the Company has incurred
or may incur any severance pay or special compensation obligation which would
become payable by reason of this Agreement or the consummation of the
transactions contemplated hereby; (iv) under which the Company is or will after
Closing be restricted from carrying on any business or other activities or which
relates to confidentiality obligations; (v) under which the Company is obligated
to sell or otherwise dispose of any assets except in the ordinary course of
business; (vi) under which the Company has or will after the Closing have any
liability or obligation to or for the benefit of any Seller or any affiliate of
any Seller; (vii) under which the Company has any liability or obligation for
debt of another person or constituting or giving rise to a guarantee of any
liability or obligation of any person; or (viii) under which the Company is or
may become obligated to pay any amount in respect of indemnification
obligations, purchase price adjustment or otherwise (other than as contemplated
by the Articles of Organization or Bylaws of the Company or by this Agreement)
in connection with any acquisition or disposition of assets or securities or any
merger, consolidation or other business combination (each of which is referred
to herein as a "Contract").
12
The Company has delivered to Buyer true and complete copies of all written
Contracts and true and complete memoranda of all oral Contracts, including any
and all amendments and other modifications to such Contracts. Each of the
Contracts is valid, binding and enforceable in accordance with its terms and is
in full force and effect. With respect to the Company, there are no existing
breaches or defaults, and no events or circumstances have occurred which, with
or without notice or lapse of time or both, would constitute breaches or
defaults, under any of the Contracts. The sale of the Shares by Sellers to Buyer
will not, with respect to any Contract, (i) constitute a default thereunder;
(ii) require the consent of any person or party, except for the Required
Consents; or (iii) affect the continuation, validity and effectiveness of any
Contract or the terms of any Contract.
3.15 Receivables. All accounts receivable and trade accounts reflected on
-----------
the March 31 Balance Sheet (less any such receivables collected since March 31,
1999) and all accounts receivable and trade accounts presently owing and to be
owing to the Company on the Closing Date (collectively, the "Receivables"), in
each case net of the reserves established and reflected on the March 31 Balance
Sheet or the Closing Balance Sheet (as the case may be), are, and on the Closing
Date will be, legal, valid and binding obligations. Except as set forth on
Schedule 3.15, all such Receivables were and will be created in the ordinary
-------------
course of business of the Business and are reflected properly on its books and
records in accordance with GAAP. Except as set forth on Schedule 3.15, the
-------------
reserves established for doubtful or uncollected accounts as shown on the March
31 Balance Sheet, and to be shown on the Closing Balance Sheet, are consistent
in amount to those historically established with respect to the accounts
receivable of the Business. Prior to Closing, the ADD's receivable shall have
been written off in its entirety.
3.16 Intellectual Property. Schedule 3.16 sets forth a list of all
--------------------- -------------
trademarks, trade names and logos owned or used by the Company (the "Marks").
Each of the Marks has been in continuous use prior to the date the Company was
formed, and each of the Marks is now in use in interstate or intrastate
commerce, in each case as stated on Schedule 3.16, on or in connection with all
-------------
of the goods or services set forth on such Schedule. The Company owns all right,
title and interest in and to the Marks, free and clear of any Liens or licenses.
The Company has not licensed any of the Marks to any third party, and no third
party has any right to use any of the Marks. There are no claims or suits
pending or, to the best knowledge of the Warranting Shareholders or the Company,
threatened against the Company challenging the Company's ownership of or
unencumbered right to use any of the Marks or alleging that any of the Marks
infringes any rights of any third parties, nor does there exist any basis
therefor.
3.17 Suppliers and Customers. Schedule 3.17 sets forth the Company's top
----------------------- -------------
ten suppliers, together with the dollar amount of goods or services purchased
from each such supplier during the fiscal year ended December 31, 1998 and the
six-month period ended June 30, 1999, as well as the Company's top ten
customers, together with the dollar amount of goods or services sold to each
such customer during the twelve-month period ended June 30, 1999. Except as
otherwise set forth in Schedule 3.17, since December 31, 1998, there has been
-------------
no material adverse change in the business relationship of the Company with any
supplier or customer named in Schedule 3.17. No customer or supplier named in
-------------
Schedule 3.17 (i) has terminated or materially altered, or notified the Company
-------------
that it is considering terminating or materially altering, its relationship with
the Company, or (ii) since June 30, 1999, notified or
13
overtly threatened that it intends to modify or has modified such relationship
with the Company in a manner which is less favorable to the Company or have
agreed not to or will not agree to do business on such terms and subject to such
conditions at least as favorable as the terms and conditions as provided to the
Company as of June 30, 1999. The Company and the Sellers have no knowledge that
any customer intends to decrease its purchase of products or services from the
Company or to terminate or materially alter its relationship with the Company.
3.18 Litigation. Except as described on Schedule 3.18, there are no
---------- -------------
claims, actions, suits, inquiries, hearings or investigations ("Claims") pending
or, to the best knowledge of the Company and Sellers, overtly threatened,
against the Company or any Seller or to which the Company is party. Except as
described on Schedule 3.18, no Claims have been brought within the last three
-------------
years against the Company or any Seller or to which the Company or any Seller is
party. To the knowledge of the Warranting Shareholders and the Company, there
are no facts or circumstances which could serve as the basis for any Claim
against the Company, or, by virtue of the execution, delivery and performance of
this Agreement, against Buyer, except for claims which would not, individually
or in the aggregate, have a material adverse effect on the financial condition,
properties or business of the Company or the Buyer (a "Material Adverse
Effect").
3.19 Compliance with Decrees and Laws. There is not outstanding or, to
--------------------------------
the best knowledge of the Company or Sellers, threatened, any order, writ,
injunction or judgment of any court, governmental agency or arbitration tribunal
against or involving the Company. Except as described in Schedule 3.19, the
-------------
Company is currently, and has been at all times, in material compliance with all
laws, statutes, rules, regulations, orders and licensing requirements of
federal, state, local and foreign agencies and authorities applicable to the
business and properties of the Company (including, without limitation, those
relating to antitrust and trade regulation, civil rights, environment, labor and
employment discrimination, affirmative action, safety and health) ("Rules"),
except for instances of noncompliance which would not have a Material Adverse
Effect. No investigation or review by any federal, state or local body or agency
is pending, or to the best knowledge of the Company and Sellers, threatened or
planned with respect to the Company.
3.20 Permits. The Company has obtained and currently maintains all
-------
permits, authorizations, certificates, approvals, licenses, exemptions and
classifications required for the conduct of its business and the ownership and
operation of its assets, all of which are described on Schedule 3.20 (the
-------------
"Permits"). The Company is not in material violation of any of the Permits, and
no proceedings to revoke or limit any Permit are pending or, to the best
knowledge of the Company and Sellers, threatened, except for violations or
proceedings with respect to any Permits the forfeiture of which would not have a
Material Adverse Effect.
3.21 Taxes.
-----
(a) For purposes of this Section:
(i) "Tax" or "Taxes" means any federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under
14
Section 59A of the Internal Revenue Code of 1986, as amended (the
"Code")), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not; and
(ii) "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
(b) The Company has timely filed all Tax Returns that it was required
to file before the Closing Date. All such Tax Returns were correct and complete
in all respects. All Taxes owed by the Company (whether or not shown on any Tax
Return) have been paid. The Company currently is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Liens on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax.
(c) The Company has withheld and paid all Taxes required to have been
withheld and paid by it in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(d) No Seller or director or officer (or employee responsible for Tax
matters) of the Company expects any Governmental Authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax liability of the Company either (i)
claimed or raised by any Governmental Authority or (ii) as to which any of
Sellers and the directors and officers (and employees responsible for Tax
matters) of the Company has knowledge. To the knowledge of the Warranting
Shareholders and the Company, no such claim is threatened by any Governmental
Authority. Schedule 3.21 lists all federal, state, local and foreign income Tax
-------------
Returns filed with respect to the Company for taxable periods ended on or after
December 31 1993, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit. Sellers
have delivered to Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Company since December 31, 1993.
(e) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(f) The Company has not filed a consent under Code (S)341(f)
concerning collapsible corporations. The Company has not made any payments, is
not obligated to make any payments and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Code (S)280G. The Company has not been a United States real
property holding corporation within the meaning of Code (S)897(c)(2) during the
applicable period specified in Code (S)897(c)(1)(A)(ii). The Company is not a
party to any Tax allocation or sharing agreement. The Company (i) has not been a
member of an
15
affiliated group (within the meaning of Code (S)1504(a)) filing a consolidated
federal income Tax Return (other than a group the common parent of which was the
Company) or (ii) has no liability for the Taxes of any individual, partnership,
corporation, association, joint stock company, trust joint venture or
unincorporated organization (other than the Company) under Reg. (S)1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) Schedule 3.21 sets forth the following information with respect
-------------
to the Company as of December 31, 1998 (i) the tax basis of the Company in its
assets and (ii) the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution allocable to the Company.
(h) Excluding the tax effects of the purchase of the Shares
hereunder, the unpaid Taxes of the Company (i) did not, as of the most recent
fiscal month end, exceed the reserve for Tax liability (excluding any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income) set forth on the face of the most recent balance sheet (rather than
in any notes thereto) and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company in filing its Tax Returns.
(i) For the December 31, 1988 tax year and all subsequent tax years,
the Company has a valid election in effect under Section 1362(a) of the Code to
be treated for federal income tax purposes as an S corporation, and as a
consequence of the S election, the Company is and has been exempt from federal
and state income taxation as provided in Subchapter S of the Code and analogous
state provisions, with the exception of Massachusetts, which may impose excise
and/or income taxes on the Company's taxable income. The Company holds no assets
that are subject to Tax on built-in gains under Code (S)1374. All current and
former shareholders of the Company have at all times been persons eligible to be
shareholders of an S corporation under Section 1361(a)(1) of the Code and have
complied with all requirements of such section of the Code.
3.22 Environmental Matters. Except as described in Schedule 3.22,
--------------------- -------------
the Company has not materially violated and is not presently materially
violating any applicable federal, state, county or local statutes, laws,
regulations, rules, ordinances, codes, licenses or permits of any governmental
authorities relating to environmental matters, including by way of illustration
and not by way of limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation Recovery Act, the
Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, the
Toxic Substances Control Act, any "Superfund" or "Superlien" law, or any other
federal, state or local statute, law, ordinance, code, rule, regulation, order,
decree or guideline (whether published or unpublished) regulating, relating to
or imposing liability or standards of conduct concerning Hazardous Materials, in
each case as amended from time to time (collectively, "Environmental Laws"). No
event has occurred or condition exists or operating practice is being employed
that will give rise to any liability or losses on the part of the Company either
at the present or at any future time (including, without limitation, any
obligation to conduct any remedial or monitoring work) under any Environmental
Laws or otherwise resulting from or relating to the handling, storage,
treatment, generation, use, transportation or
16
disposal of any pollutants or contaminants, hazardous, noxious or toxic
materials, commodities or substances by or on behalf of either Company or any of
its predecessors or otherwise in or near the Leased Real Property. For purposes
of this Agreement, "Hazardous Materials" includes but is not necessarily limited
to asbestos, asbestos containing materials ("ACM"), polychlorinated biphenyls,
lead-based paints, any petroleum, petroleum by-product (including, but not
limited to, crude oil, diesel oil, fuel oil, gasoline, lubrication oil, oil
refuse, used motor oil, oil mixed with other waste, oil sludge, and all other
liquid hydrocarbons, regardless of specific gravity), natural or synthetic gas,
or other hazardous or toxic substances, materials, wastes, pollutants or
contaminants defined under or regulated by the Environmental Laws. Specifically,
but not in limitation of the foregoing:
(a) The Company has obtained and is in material compliance with the
terms and provisions of all licenses and permits necessary for the Company's
operations and its assets to be in compliance with the Environmental Laws, all
of which are disclosed on Schedule 3.22. The Company has filed such timely and
-------------
complete renewal applications as may be required prior to Closing. The Company
has materially complied with all reporting and record keeping requirements
applicable to the business under the Environmental Laws.
(b) The assets of the Company are free of Hazardous Materials, except
as used in the ordinary course of business and as permitted under the
Environmental Laws.
(c) The Company has at all times received, handled, used, stored,
treated, transported and disposed of all Hazardous Materials in material
compliance with all Environmental Laws. The Company has transported or arranged
for the transport of any Hazardous Materials from any property that it owns,
leases or uses in its operations.
(d) None of the Leased Real Property has been used at any time by any
person as a landfill or a waste disposal site (provided, however, that the
Warranting Shareholders and the Company have no knowledge regarding the
foregoing with respect to the Leased Real Property in Franklin, Massachusetts).
(e) No equipment containing or using polychlorinated biphenyls (PCBs)
is included in the assets of the Company.
(f) There are no monitoring xxxxx for monitoring Hazardous Materials
on, in, or coming from the Leased Real Property, except as disclosed in the
environmental site assessment prepared by Lycott Environmental Services in 1989
and the Phase I Environmental Assessment and Groundwater Sampling performed by
Xxxxxxxx Environmental Engineering in 1999, copies of which have been delivered
to Buyer.
(g) There are no underground or aboveground tanks or pipelines
situated on the Leased Real Property, except as disclosed in the environmental
site assessment prepared by Lycott Environmental Services in 1989 and the Phase
I Environmental Assessment and Groundwater Sampling performed by Xxxxxxxx
Environmental Engineering in 1999, copies of which has been delivered to Buyer.
The Company has provided Buyer with copies (or if not available, written
summaries) of all environmental investigations, studies, audits, reviews and
17
other analyses conducted by or on behalf, or which otherwise are in the
possession, of the Company respecting all Leased Real Property.
(h) There are no liens on the Leased Real Property resulting from any
cleanup or proposed cleanup under the Environmental Laws.
(i) Except as described in Schedule 3.22, no notices of any
-------------
violation, inquiries or requests for information relating to any of the matters
referred to in Subsections (a) through (h) above have been received by Sellers
or the Company, and there is no action of any kind pending (or, to the knowledge
of the Sellers, threatened) against the Company in respect of any alleged
breach, default, violation or noncompliance with any Environmental Law.
3.23 Insurance. Schedule 3.23 describes all insurance policies maintained
--------- -------------
or paid for by the Company with respect to the business of the Company
(including, without limitation, policies on the lives of any shareholders or key
employees). Such policies are valid, binding and enforceable in accordance with
their terms and are in full force and effect, and all premiums due thereon have
been paid and will be paid through the Closing Date.
3.24 Labor and Employment Matters. With respect to employment matters:
----------------------------
(a) No employees of the Company are or have been represented by a
union or other labor organization or covered by any collective bargaining
agreement. To the best knowledge of the Company and Sellers, no union is
currently attempting to organize any such employees nor has there been any
organizing activity or union elections or campaigns.
(b) There is no labor strike, dispute, slowdown, stoppage or similar
labor difficulty pending or, to the best knowledge of the Company and Sellers,
threatened against or affecting the Company, nor have there been any such events
pending or, to the best knowledge of the Company and Sellers, threatened during
the past five years.
(c) The Company is in material compliance with all federal, state and
local laws and regulations respecting employment and employment practices, terms
and conditions of employment and wages and hours, and there is no unfair labor
practice charge or complaint or charge of employment discrimination or
retaliation against the Company pending or, to the best knowledge of the Company
and Sellers, threatened.
(d) Except with respect to Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxx and
as described in Schedule 3.24(d), no representations have been made by the
----------------
Warranting Shareholders or the Company or its employees or agents to employees
of the Company with respect to Buyer's intentions to continue to employ, or not
to continue to employ, the Company's employees or with respect to the conditions
of any such employment.
(e) The Company's gain sharing plan is provided by the Company in its
sole discretion and may be altered, replaced or discontinued at any time without
cost to the Company and no representations have ever been made to the contrary
by Sellers or the Company or its employees or agents to employees of the
Company.
18
(f) No key employee or senior manager of the Company listed on
Schedule 3.24(f) has indicated a desire or plan to resign from the Company,
----------------
whether as a result of this transaction or otherwise.
(g) There have been no "layoffs" of Company employees or any "plant
closings" by the Company, as such terms are defined in the Work Adjustment and
Retaining Notification Act ("WARN"), within the past 90 days, nor has there been
any previous event which requires the giving of notice under WARN.
(h) Except as set forth in Schedule 3.24(h), the Company is not party
----------------
to any agreement which will require the Company to make any payment or pay any
consideration to any employees or other persons of the Company in connection
with the execution and delivery of this Agreement, any Ancillary Agreement or
the transactions contemplated hereby and thereby.
3.25 Employees; Compensation; Benefit Plans.
--------------------------------------
(a) Compensation. Schedule 3.25(a) contains an accurate and complete
------------ -------------
list of the name, hire date, position, rate of compensation and any incentive
compensation arrangements, bonuses or commissions or fringe or other benefits,
whether payable in cash or in kind, of each current employee, director,
independent contractor, consultant and agent of the Company and each other
person to whom the Company pays or provides, or has an obligation, agreement
(written or unwritten), policy or practice of paying or providing, retirement,
health, welfare or other benefits of any kind or description whatsoever.
(b) Employee Benefit Plans.
(i) Schedule 3.25(b) contains an accurate and complete list of
all Plans, as defined below, contributed to, maintained or sponsored
by the Company, to which the Company is obligated to contribute or
with respect to which the Company has any liability or potential
liability, whether direct or indirect, including all Plans contributed
to, maintained or sponsored by each member of the controlled group of
companies, within the meaning of Sections 414(b), 414(c), and 414(m)
of the Code, of which the Company is a member. For purposes of this
Agreement, the term "Plans" shall mean: (A) employee benefit plans as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether or not funded and whether or
not terminated; (B) written employment agreements; and (C) personnel
policies or fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA, whether or not funded, and whether or
not terminated, including without limitation, stock bonus, deferred
compensation, pension, severance, bonus, vacation, travel, incentive,
and health, disability and welfare plans.
(ii) Except as disclosed on Schedule 3.25(b), the Company does
not contribute to, has no obligation to contribute to or otherwise has
no liability or potential liability with respect to (A) any
Multiemployer Plan (as such term is
19
defined in Section 3(37) of ERISA), (B) any Plan of the type described
in Sections 4063 and 4064 of ERISA or in Section 413 of the Code (and
regulations promulgated thereunder), or (C) any plan which provides
health, life insurance, accident or other "welfare-type" benefits to
current or future retirees or current former employees, their spouses
or dependents, other than in accordance with Section 4980B of the Code
or applicable state continuation coverage law.
(iii) Except as disclosed on Schedule 3.25(b), none of the Plans
obligates the Company to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change in
control," as such term is used in Section 280G of the Code (and
regulations promulgated thereunder).
(iv) Each Plan and all related trusts, insurance contracts, and
funds have been maintained, funded and administered in material
compliance in all respects with all applicable laws and regulations,
including but not limited to ERISA and the Code. None of the Company,
any trustee or administrator of any Plan, or any other person has
engaged in any transaction with respect to any Plan which could
subject the Company, or any trustee or administrator of any Plan, or
any party dealing with any Plan, or Buyer to any tax or penalty
imposed by ERISA or the Code. No actions, suits, claims, complaints,
charges, proceedings, hearings, investigations or demands with respect
to the Plans (other than routine claims for benefits) are pending or,
to the best knowledge of the Warranting Shareholders or the Company,
overtly threatened, and the Company and Warranting Shareholders have
no knowledge of any actions, suits, claims, complaints, charges,
proceedings, hearings, investigations or demands. No Plan that is
subject to the funding requirements of Section 412 of the Code or
Section 302 of ERISA has incurred any "accumulated funding deficiency"
as such term is defined in such sections of ERISA and the Code,
whether or not waived. No liability to the Pension Benefit Guaranty
Corporation ("PBGC") (except for routine payment of premiums) has been
or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) has occurred with respect to any such Plan, and
the PBGC has not commenced or threatened the termination of any Plan.
None of the assets of the Company is the subject of any lien arising
under Section 302(f) or ERISA or Section 412(n) of the Code, the
Company has not been required to post any security pursuant to Section
307 of ERISA or Section 401(a)(29) of the Code, and neither the
Company, any officer or director of the Company nor any Seller has
knowledge of any facts which could be expected to give rise to such
lien or such posting of security.
(v) Each Plan that is intended to be qualified under Section
401(a) of the Code, and each trust (if any) forming a part of such
Plan, has received a favorable determination letter from the Internal
Revenue Service as to the qualification under the Code of such Plan
and the tax exempt status of such related trust, and nothing has
occurred since the date of such determination letter
20
that could adversely affect the qualification of such Plan or the tax
exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term is
defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
companies (within the meaning of Code Sections 414(b), (c) and (m)) of
which the Company is a member or was a member during such five-year
period.
(vii) As of the Closing Date, the fair market value of the
assets of each Plan that is a defined benefit pension plan equals or
exceeds the present value of all vested and non-vested liabilities
thereunder determined in accordance with applicable PBGC methods,
factors and assumptions applicable to a defined benefit pension plan
terminating on such date. With respect to each Plan that is subject to
the funding requirements of Section 412 of the Code and Section 302 of
ERISA, all required or recommended contributions for all periods
ending prior to or as of the Closing Date (including periods from the
first day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance with
Section 412(m) of the Code) shall have been made. With respect to each
other Plan, all required or recommended payments, premiums,
contributions, reimbursements or accruals for all periods ending prior
to or as of the Closing Date shall have been made. No Plan has any
material unfunded liabilities.
(viii) With respect to each Plan, the Company has provided Buyer
with true, complete and correct copies, to the extent applicable, of
(A) all documents pursuant to which the Plans are maintained, funded
and administered, (B) the two most recent annual reports (Form 5500
series) filed with the Internal Revenue Service (with attachments),
(C) the two most recent actuarial reports, (D) the two most recent
financial statements, (E) all governmental rulings, determinations,
and opinions (and pending requests for governmental rulings,
determinations, and opinions), and (F) the most recent valuation (but
in any case at least one that has been completed within the last
calendar year) of the present and future obligations under each Plan
that provides post-retirement or post-employment health, life
insurance, accident or other "welfare-type" benefits.
3.26 Absence of Certain Changes.
--------------------------
Excluding start up costs related to the leased premises in Franklin,
Massachusetts in an amount not to exceed $78,000 (exclusive of Company supplied
labor), the Company has not, since June 30, 1999, suffered a material adverse
change in the business, financial condition, operating results, earnings,
assets, customer, supplier, employee or sales representative relations, business
prospects, business condition or financing arrangements, or suffered any
material casualty loss or damage to its assets (whether or not covered by
insurance), all of the foregoing taken as a whole and excluding the effect of
general economic conditions. Except as set forth on Schedule 3.26, since
-------------
December 31, 1998, the Company has conducted its operations and business only in
the ordinary course, and has not:
21
(a) redeemed or repurchased, directly or indirectly, any shares of
capital stock or declared, set aside or paid any dividends or made any other
distributions with respect to any shares of its capital stock;
(b) issued, sold or transferred any notes, bonds or other debt
securities or any equity securities, securities convertible, exchangeable or
exercisable into equity securities, or warrants, options or other rights to
acquire equity securities, of the Company;
(c) borrowed any amount or incurred or become subject to any
liabilities, except liabilities incurred in the ordinary course of business;
(d) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, other than liabilities paid in the ordinary course of
business, or prepaid any amount of indebtedness for borrowed money;
(e) subjected any portion of its properties or assets to any Lien
except as disclosed on Schedule 3.10;
-------------
(f) sold, leased, assigned or transferred (including, without
limitation, transfers to Seller or any employees or affiliates of the Company)
any portion of its tangible assets, except in the ordinary course of business,
or canceled without fair consideration any debts or claims owing to or held by
it;
(g) suffered any extraordinary losses or waived any rights of value
in excess of $20,000 individually or $75,000 in the aggregate, whether or not in
the ordinary course of business or consistent with past custom and practice;
(h) entered into, amended or terminated any lease, contract,
agreement or commitment, or taken any other action or entered into any other
transaction other than in the ordinary course of business and in accordance with
past custom and practice, or entered into any transaction with any employee,
officer or director of the Company or with any Seller;
(i) entered into any transaction not in the ordinary course of
business, or materially changed any business practice;
(j) made or granted any bonus or any wage, salary or compensation
increase to any director, officer, employee or sales representative, group of
employees or consultant (whose regular compensation excluding overtime was in
excess of $30,000 per year as of December 31, 1998), other than individual
increases in the rates of hourly employees in the ordinary course of business,
or made or granted any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement;
22
(k) incurred intercompany charges or conducted its cash management
customs and practices and accounting methods other than in the usual and
ordinary course of business in accordance with past custom and practice;
(l) made any capital expenditures or commitments for capital
expenditures, except that the Company has made all such expenditures and
commitments in the ordinary course of business consistent with past practice and
current plans for future growth;
(m) made any loans or advances to, or guarantees for the benefit of,
any person or entity;
(n) made any charitable contributions or pledges in excess of $5,000
in the aggregate;
(o) entered into any lease of capital equipment or real estate except
in the ordinary course of business consistent with past practice and current
plans for future growth;
(p) changed or authorized any change in its Articles of Organization
or Bylaws
(q) delayed or postponed any payment of accounts payable or other
liabilities;
(r) modified or changed the application of GAAP from the manner it
was applied in the Financial Statements; or
(s) agreed, committed or planned to do any of the foregoing.
3.27 Related Party Transactions. Except as described on Schedule 3.27, the
-------------------------- -------------
Company is not a party to any agreement with, or any other commitment to (a) any
officer or director of the Company; (b) any person related by blood or marriage
to any such officer or director; (c) any Seller; or (d) any corporation,
partnership, trust or other entity in which the Company, any such officer,
director or related person or any Seller has an equity or participating interest
(collectively, "Affiliates"). Except as set forth in Schedule 3.27, all
-------------
transactions between the Company and any Affiliate which occurred during the
periods covered by the Financial Statements and are required by GAAP to be
reflected therein, are reflected in the Financial Statements at amounts which do
not overstate or understate the net worth or net income of the Company as
compared with fair market values and prices which would have been charged and
paid between parties at arms' length at the time of the entering into of the
transactions in question.
3.28 Brokers. No finder, broker, agent or other intermediary has acted for
-------
or on behalf of the Company in connection with the negotiation or consummation
of this Agreement, and there are no claims for any brokerage commission,
finder's fee or similar payment for which the Sellers or the Company could
become liable, save and except for Stonebridge Associates, LLC.
23
3.29 Names. During the term of its existence, the Company has not been
-----
known by or conducted business under any other name. All assets and rights are
held by, and all agreements, obligations, expenses and transactions have been
entered into, incurred and conducted by the Company. To the Warranting
Shareholders' and Company's best knowledge the Company has the unencumbered
right to use its name and neither the Company nor Sellers are aware of the use
of any corporate name, trade name, trademark, service xxxx or other designation
which could create a likelihood of confusion with the Company's name.
3.30 Bank Accounts. Schedule 3.30 sets forth (a) a true and complete list
------------- -------------
of the names of each bank, trust company, securities broker and other financial
institution at which the Company has an account or safe deposit box or maintains
a banking, custodial, trading or other similar relationship; and (b) a true and
complete list and description of each such account, box and relationship,
indicating in each case the account number and the names of the officers,
employees, agents or other representatives of the Company having access,
signatory power or power to give direction with respect to such account, box or
relationship.
3.31 Year 2000. None of the computer software (excluding "shrink wrap
---------
software"), computer hardware, other computer and microprocessor-based
equipment, or any other equipment which performs or is or may be required to
perform functions necessary in the operation of the business that is owned,
licensed or used by Company (collectively, the "Computer Devices") will suffer a
Year 2000 Problem. The Company has prepared and is implementing a written plan
of action to ensure that the Computer Devices will not have a Year 2000 Problem,
which plan of action is scheduled to be complete not later than October 31, 1999
and a copy of which is attached hereto as Schedule 3.31. No material supplier
-------------
of goods and services, including, but not limited to, any supplier of Computer
Devices, has notified Sellers or the Company that any of the computer software,
computer hardware or other computer and microprocessor-based equipment owned,
licensed or used by such supplier will have a Year 2000 Problem, and the
Warranting Shareholders and the Company have no knowledge of any material
supplier whose services may be interrupted by a Year 2000 Problem. For the
purposes of this Section 3.31, "Year 2000 Problem" shall mean any failure of a
Computer Device to: (a) store all date-related information and process all data
interfaces involving dates in a manner that unambiguously identifies the
century, for all date values before, during or after the Year 2000; (b)
calculate, sort, report and otherwise operate correctly and in a consistent
manner and without interruption, regardless whether the date on which the
Computer Device is operated or executed is before, during or after the Year
2000; (c) report and display all dates with a four-digit date so that the
century is unambiguously identified; and (d) handle all leap years, including,
but not limited to, Year 2000 leap year, correctly.
3.32 Disclosure. No representation, warranty or statement made by any
----------
Seller or the Company in this Agreement, or any Schedule attached to this
Agreement or in any of the Ancillary Agreements furnished or to be furnished to
Buyer pursuant to this Agreement, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary
to make the statements contained in this Agreement or such other document not
misleading. The fact that Sellers or the Company has delivered copies of certain
documents to Buyer shall not alone constitute disclosure of facts required to be
disclosed on any Schedule to this Agreement, unless such document is expressly
referenced in such Schedule. A reference to
24
a document in one Schedule shall not constitute a disclosure for purposes of
another Schedule unless such reference is in itself made with such specificity
that no other explanation or additional information is necessary for a
reasonable person to determine that the disclosure also applies with respect to
such other Schedule.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers and the Company as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Authority. Buyer has all requisite power and authority to execute,
---------
deliver and perform this Agreement and the other agreements referred to herein
to which it is a party (collectively, the "Buyer Agreements") and to consummate
the transactions contemplated by the Buyer Agreements. The execution, delivery
and performance of the Buyer Agreements, and the consummation of the
transactions contemplated by the Buyer Agreements, have been duly and validly
authorized by all necessary corporate and shareholder action on the part of
Buyer. The Buyer Agreements have been, or, with respect to Buyer Agreements to
be executed at the Closing, will be, duly executed and delivered by Buyer and
each constitutes, or will constitute when executed and delivered, a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
4.3 No Conflict or Breach. The execution, delivery and performance of the
---------------------
Buyer Agreements do not and will not:
(a) conflict with or constitute a violation of the Articles of
Incorporation or Bylaws of Buyer;
(b) assuming compliance with the HSR Act, conflict with or constitute
a violation of any statute, judgment, order, decree or regulation of any court,
administrative agency, governmental authority or arbitrator applicable to or
relating to Buyer; or
(c) conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party under any
contract, agreement, lease, commitment, mortgage, note, license or other
instrument or obligation to which Buyer is party or by which it is bound or by
which its assets are affected.
4.4 Approvals. Except as required by the HSR Act, no consent, approval,
---------
authorization, registration or filing with any federal, state or local judicial
or governmental authority or administrative agency or any other party is
required in connection with the valid execution and delivery by Buyer of the
Buyer Agreements or the consummation by Buyer of the transactions contemplated
in the Buyer Agreements.
25
4.5 Investment Intent. Buyer is acquiring the Shares for its own account
-----------------
and not with a view to their distribution within the meaning of applicable
federal and state securities laws.
4.6 Brokers. No finder, broker, agent or other intermediary has acted for
-------
or on behalf of Buyer in connection with the negotiation or consummation of this
Agreement, and there are no claims for any brokerage commission, finder's fee or
similar payment due from Buyer, other than amounts due, if any, from Buyer to
its affiliates and to Xxxx and Co.
4.7 Source of Funds. The Initial Purchase Price to be paid at Closing by
---------------
the Buyer to the Sellers shall be funded out of borrowings pursuant to the
Credit and Guarantee Agreement dated as of July 28, 1999 among SMTC Corporation,
the Buyer, the Surface Mount Technology Centre, Inc., Xxxxxx Commercial Paper
Inc., as general administrative agent, the lenders from time to time parties
thereto and the other parties listed therein.
ARTICLE 5
COVENANTS OF SELLERS AND THE COMPANY
------------------------------------
Sellers and the Company jointly and severally covenant and agree with Buyer
as follows:
5.1 Conduct of Business. In the event the Closing does not occur on the
-------------------
date hereof, between the date of this Agreement and the Closing Date (in the
event the parties agree that the Closing Date shall be subsequent to the date of
this Agreement), the Company shall, and Sellers shall cause the Company to,
except as otherwise specifically consented to in writing by Buyer:
(a) Conduct its operations in the normal and customary manner in the
ordinary course of business;
(b) Maintain and keep its tangible assets in good operating order,
repair and condition (ordinary wear and tear excepted);
(c) Keep in full force and effect the insurance described in Section
3.23;
(d) Perform all of its obligations in a timely manner and in the
ordinary course under and not amend, alter or modify any provision of the
Contracts and Real Property Leases;
(e) Use its best efforts to preserve its organization intact and
maintain its relationships with its employees, suppliers and customers;
(f) Promptly advise Buyer in writing of any material adverse change
in the condition (financial or otherwise) of its business or assets;
(g) Promptly advise Buyer in writing of the occurrence of any event
or circumstance which would reasonably be expected to affect the consummation of
the transactions contemplated by this Agreement or which, if in existence on the
date of this Agreement, would have been required to have been disclosed in a
Schedule to this Agreement;
26
(h) Promptly advise Buyer in writing of any material change in the
list of employees referred to in Section 3.25(a) or in the compensation payable
to any such employee;
(i) Maintain and collect the Receivables and extend credit terms to
its customers in the ordinary course of business consistent with past practices;
(j) Not declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock;
(k) Not make any capital expenditures without the prior written
consent of Buyer; and
(l) Not take any affirmative action, or fail to take any reasonable
action within Sellers' or the Company's control, as a result of which any of the
changes or events listed in Section 3.26 is likely to occur.
5.2 Access and Information. Sellers and the Company shall permit Buyer
----------------------
and its counsel, accountants and other representatives full access during normal
business hours to all the properties, assets, books, records, agreements and
other documents of the Company. Sellers and the Company shall furnish to Buyer
and its representatives all information concerning the Company as Buyer may
reasonably request. Sellers and the Company shall permit and facilitate
communications between Buyer and the Company's suppliers, customers, landlords
and other persons having relationships with the Company.
5.3 No Other Solicitations. Until the earlier of the Closing Date or the
----------------------
termination of this Agreement, Sellers and the Company agree that they will not,
and the Company will cause its affiliates, directors, officers, employees,
representatives and agents not to, directly or indirectly, solicit or initiate
or engage in discussions or transactions with, or engage, or provide any
information to, any corporation, partnership or other entity or group (other
than Buyer or its designees) concerning any merger, sale of ownership interests
or assets, recapitalization or similar transaction. The Company represents that
neither it nor any of its affiliates is bound by any agreement with respect to
any such transaction other than as contemplated by this Agreement. The Company
and the Sellers also agree to notify Buyer upon receipt of any inquiries from
any entity or group with respect to a potential transaction involving the
Company or its assets.
5.4 Tax Matters.
-----------
(a) Section 338(h)(10) Election. Each Seller agrees, if so directed
---------------------------
by Buyer, to join with Buyer in making an election under Section 338(h)(10) of
the Code (and any corresponding elections under state, local, or foreign tax
law) (collectively, a "338(h)(10) Election") with respect to the purchase and
sale of the Shares. In connection with the 338(h)(10) Election, the Buyer and
the Sellers shall execute and timely file Form 8023, Elections under Section 338
for Corporations Making Qualified Stock Purchases, wherein the "modified
aggregate deemed sales price," as determined by the Buyer, shall be allocated by
the Buyer among the Company's assets in accordance with Treasury Regulation (S)
1.338(h)(10)-1(f). Buyer
27
shall allocate such amounts no later than 21 days following the delivery of the
Closing Balance Sheet. Sellers shall cooperate and provide all reasonable
assistance to Buyer in the preparation of Form 8023. The Sellers shall timely
prepare and file the Company's final tax returns as an S corporation for its
taxable year ending with the Closing (the "S Termination Year"), in a manner
consistent with the 338(h)(10) Election and the Form 8023 filed thereunder,
subject to any adjustments determined by Buyer to be required under Treasury
Regulation (S) 1.338(b)-3T(h)(3), all subject to Buyer's review and approval.
The Sellers will timely file all of their respective required Tax returns for
their taxable years that include the S Termination Year (the "Shareholder
Returns") in a manner consistent with the 338(h)(10) Election and the Form 8023
filed thereunder, subject to any adjustments determined by Buyer to be required
by Treasury Regulation (S) 1.338(b)-3T(h)(3). The Sellers acknowledge that the
338(h)(10) Election will result in the Company being treated for Federal and
Massachusetts income Tax purposes as having distributed its assets to the
Sellers in complete liquidation on the date of the Closing and that the Company
will be deemed to have sold all of its assets in such liquidation at their fair
market value, with the result that any gain deemed realized by the Company will
be taxable to the Sellers on their respective Shareholder Returns and that some
of such gain may be treated as ordinary income, rather than capital gain. The
Sellers agree that they shall pay any individual state and federal income Taxes
resulting from the 338(h)(10) Election and acknowledge that no distribution
shall be made by the Company to them either at or before Closing or thereafter
with respect to any such Tax liabilities, subject to the provisions of Section
5.4(b) below. Any excise, transfer, documentation, sales use, stamp,
registration, mortgage recordation, or similar Taxes and fees ("Transfer Taxes")
resulting from the sale of the Shares shall be borne by Sellers and Sellers
will, at their own expense, file all necessary Tax Returns and other
documentation with respect to such Transfer Taxes. Any other Transfer Taxes,
including those resulting from the 338(h)(10) Election (except as described
below) shall be borne by the Buyer and Buyer will, at its own expense, file all
necessary Tax Returns and other documentation with respect to such Transfer
Taxes. The term "Transfer Taxes" shall specifically exclude the portion of the
Massachusetts corporation excise tax which is a tax on income. It is anticipated
that the 338(h)(10) Election will cause the company to incur a Massachusetts
corporation excise tax liability on income. It is understood by the Buyer that
the Massachusetts corporation excise tax liability on income will be paid
entirely by the Buyer and will not be reimbursed by the Sellers. If the payment
of such corporate excise tax results in additional income to the Sellers, such
amount shall also be subject to reimbursement under Section 5.4(b) below. It is
also anticipated that there will not be any corporate income tax under Sections
1374 or 1375 of the Code (or any similar provision under state law), but if such
tax is imposed, the Sellers, jointly and severally, shall indemnify the Buyer
for such tax.
(b) 338(h)(10) Reimbursement. Buyer shall pay to the Sellers as
------------------------
additional consideration, to be considered as part of the Purchase Price, an
amount equal to the calculated increase in the Sellers' Taxes resulting from
additional Taxes resulting from the 338(h)(10) Election over the amount of Taxes
that would have been payable had the 338(h)(10) Election not been made and,
instead, the Sellers were treated for Tax purposes as having sold their shares
(other than any additional Taxes under Sections 1374 or 1375 of the Code and
similar provisions of state law). Buyer and Sellers shall agree upon the
reimbursement amount and methodology no later than 15 days following receipt of
the Buyer's allocation of the adjusted purchase price among the Company's
assets. The reimbursement amount shall be paid by the Buyer to the
28
Sellers within 3 business days after the Buyer and Sellers have agreed to the
calculation of the reimbursement amount. If, subsequent to any reimbursement
under Section 5.4(b) hereof, the Internal Revenue Service finally determines a
tax liability based upon the Company's tax return intended to be covered by this
Section 5.4, the parties agree to make a reasonable equitable adjustment based
on the allocation of liabilities contained in this Section 5.4.
(c) Tax Periods Ending On or Before the Closing Date. Sellers shall
------------------------------------------------
prepare or cause to be prepared and file or cause to be filed all income Tax
Returns for the Company for all periods ending on or prior to the Closing Date
which are to be filed after the Closing Date. Sellers shall permit the Buyer to
review and comment on each such income Tax Return described in the preceding
sentence prior to filing and the calculation of the Final Election Amount.
Sellers shall reimburse Buyer for all Taxes (whether income or other Taxes) of
the Company with respect to such periods within fifteen (15) days before payment
by Buyer or the Company of such Taxes to the extent such Taxes are not reflected
in the reserve for Taxes (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) shown on the Closing
Balance Sheet (as finally determined in accordance with Section 1.2(e)) used in
calculating the Working Capital. This provision contemplates that there will be
a purchase price adjustment as described in Section 1.2.
-----------
Buyer shall prepare or cause to be prepared and file or cause to be
filed all other Tax Returns for the Company for all periods ending on or prior
to the Closing Date which are to be filed after the Closing Date. Buyer shall
permit the Sellers to review and comment on each such Tax Return described in
the preceding sentence prior to filing. Sellers shall reimburse Buyer for Taxes
of the Company with respect to such periods within fifteen (15) days before
payment by Buyer or the Company of such Taxes to the extent such Taxes are not
reflected in the reserve for Taxes (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the Closing balance sheet used in calculating the Working Capital. This
provision contemplates that there will be a purchase price adjustment as
described in Section 1.2.
-----------
(d) 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 for Tax periods which begin before the Closing Date
and end after the Closing Date. Sellers shall pay to Buyer within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Tax period ending on the Closing Date to the extent such Taxes are not reflected
in the reserve for Taxes (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) shown on the face of
the Closing balance sheet used in calculating the Final Purchase Price. For
purposes of this Section 5.4(d), in the case of any Taxes that are imposed on a
periodic basis and are payable for a Tax period that includes (but does not end
on) the Closing Date, the portion of such Tax which relates to the portion of
such Tax period ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Tax based upon or related to income or
receipts be deemed
29
equal to the amount which would be payable if the relevant Tax period ended on
the Closing Date. Any credits relating to a Tax period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
Tax period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the Company.
(e) Cooperation on Tax Matters. Buyer, the Company and Sellers shall
--------------------------
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and Sellers agree (i) to retain all
books and records with respect to Tax matters pertinent to the Company 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, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company or
Sellers, as the case may be, shall allow the other party to take possession of
such books and records. Buyer and Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
Governmental Authority 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). Buyer and Sellers further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder. After the Closing, if any Seller
receives notice (a "Tax Notice") of any examination or audit of any Company Tax
return, or of the imposition of any proposed assessment with respect to the
Company, by the Internal Revenue Service or any state taxing authority, the
recipient Seller shall notify the Buyer and the Company in writing (providing
copies of any written notices or correspondence from the Internal Revenue
Service or other taxing authority respecting such Tax Notice) within ten (10)
days of receiving such notice. If Buyer or the Company receives any Tax Notice,
Buyer or the Company, as applicable, shall notify the Sellers in writing
(providing copies of any written notices or correspondence from the Internal
Revenue Service or other taxing authority respecting such Tax Notice) within ten
(10) days of receiving such notice.
(f) [Reserved.]
-----------
(g) Inadvertent Termination of S Election. In the event at any
-------------------------------------
time prior to the Closing, the Company's election to be an S corporation should
be discovered to be an inadvertent invalid election or to have been
inadvertently terminated within the meaning of Section 1362(f) of the Code, the
Company and the Sellers shall promptly and at the Sellers' expense take all
steps necessary to cause the Company to be treated as an S corporation pursuant
to such Section 1362(f) notwithstanding such inadvertent invalid election or
inadvertent termination.
30
5.5 Release of Certain Guaranty and Lien
------------------------------------
(a) The Company has guaranteed the obligations of the Trust to the
Fleet National Bank (as indirect successor to the Bank of New England, N.A.) by
a Guaranty dated August 23, 1989 and reaffirmed on October 31, 1996 (the
"Guaranty"). On or before the Closing, the Sellers jointly and severally agree,
at their own cost and expense, to take such action as may be necessary to cause
such Guaranty to be released and to cause the Company to be discharged from any
further liability with respect to the obligations guaranteed thereby or
undertaken in connection therewith.
(b) On or before the Closing, the Company shall cause the liens
against certain fixtures of the Company located on its Leased Real Property and
against other assets pursuant to the Guaranty and Mortgage between the Trust and
New England Bank, N.A. (and its successors) dated August 23, 1989, to be
released and to cause the Company to be discharged from any further liability
with respect to the obligations guaranteed thereby or undertaken in connection
therewith.
5.6 Restrictions on Transfer of Capital Stock. At the Closing, the
-----------------------------------------
Sellers shall have caused the Shareholders' Agreement by and among the Company
and the Sellers, dated September 17, 1991, as amended from time to time, to be
terminated. Sellers additionally shall have caused the Company to waive the
provisions of Article V of the Articles of Organization.
5.7 Environmental Compliance. The Warranting Shareholders jointly and
------------------------
severally covenant and agree that they will, after the Closing, reimburse,
indemnify and hold harmless Buyer from and in respect of all Losses that arise
from, are based on or relate or otherwise are attributable to matters described
in Exhibit 5.7 (including without limitation the costs incurred by the Company
-----------
in becoming compliant with such matters).
ARTICLE 6
MUTUAL COVENANTS
----------------
Each of Buyer, Sellers and the Company covenants and agrees with the other
as follows:
6.1 Best Efforts. Each of Buyer and Sellers and the Company shall use its
------------
commercially reasonable best efforts to make or obtain all consents, approvals,
authorizations, registrations and filings with all federal, state or local
judicial or governmental authorities or administrative agencies as are required
to be obtained by such person in connection with the consummation of the
transactions contemplated by this Agreement, the Buyer Agreements and the Seller
Agreements, respectively. Each party shall cooperate with the other parities in
their efforts to obtain such consents, approvals, authorizations, registrations
and filings.
6.2 Confidentiality. In recognition of the confidential nature of certain
---------------
of the information which will be provided to each party by the others, each of
Buyer, Sellers and the
31
Company agrees to retain in confidence, and to require its directors, officers,
employees, consultants, professional representatives and agents (collectively,
its "Representatives") to retain in confidence all confidential information
transmitted or disclosed to it by another party to this Agreement, and further
agrees that it will not use for its own benefit and will not use or disclose to
any third party, or permit the use or disclosure to any third party of, any
confidential information obtained from or revealed by the other, except that
each of Buyer, Sellers and the Company may disclose the information to those of
its Representatives who need the information for the proper performance of their
assigned duties with respect to the consummation of the transactions
contemplated by this Agreement. In making such information available to its
Representatives, each of Buyer, Sellers and the Company shall take any and all
precautions necessary to ensure that its Representatives use the information
only as permitted by this Agreement. Notwithstanding anything to the contrary in
the foregoing provisions, such information may be disclosed (a) where it is
necessary to any regulatory authorities or governmental agencies, (b) if it is
required by court order or decree or applicable law, (c) if it is ascertainable
or obtained from public or published information, (d) if it is received from a
third party not known to the recipient to be under an obligation to keep such
information confidential, or (e) if the recipient can demonstrate that such
information was in its possession prior to disclosure of the information in
connection with this Agreement. If any party shall be required to make
disclosure of any such information by operation of law, such disclosing party
shall give the party from whom such information was received prior notice of the
making of such disclosure and shall use all reasonable efforts to afford such
other party an opportunity to contest the making of such disclosure. After the
Closing, Sellers agree to retain in confidence all confidential information
regarding the Company. Nothing in this Section 6.2 shall prevent Buyer from
disclosing confidential information regarding the Company to others, in its sole
discretion, following the Closing. In the event that the Closing shall not
occur, each of Buyer, Sellers and the Company shall immediately deliver, or
cause to be delivered, to the party from whom such information was received
(without retaining any copies) any and all documents, statements or other
written information obtained from the other that contain confidential
information.
6.3 Expenses of the Transactions. Whether or not the transactions
----------------------------
contemplated hereby are consummated, (i) Buyer will pay the fees, expenses and
disbursements of Buyer and their representatives which are incurred in
connection with the subject matter of this Agreement and any amendments to this
Agreement, including all costs and expenses incurred in the performance of and
compliance with all conditions to be performed by Buyer under this Agreement,
and (ii) the Sellers, jointly and severally, will pay from personal funds, and
not from funds of the Company, (A) all fees, expenses and disbursements incurred
by them, their representatives, or the Company, including without limitation the
fees and expenses of accountants and legal counsel incurred in connection with
the transactions contemplated hereby (except to the extent such fees and
expenses have been paid by the Company on or prior to the Closing) and (B) any
late fees, prepayment penalties or other charges beyond principal and interest
with respect to indebtedness required to be terminated by this Agreement.
6.4 Employee Bonus. Prior to or at the time of Closing, Sellers agree to
--------------
pay any and all amounts due to employees or other persons that are required to
be paid as a result of the execution and delivery by the Company of this
Agreement, the Ancillary Agreements or the
32
consummation of the transactions contemplated hereby and thereby, except as
provided in this Section 6.4. Notwithstanding the foregoing, Buyer agrees that
it will, on or after the Closing, as applicable, cause the Company to pay
employee bonuses to those persons named in Exhibit 6.4(a) and at the times and
--------------
in the full amounts ($500,000 in the aggregate) as therein provided. At the
Closing, Buyer will cause the Company to pay, and will fund with immediately
available funds the payment of, the employee bonuses to the persons and in the
amounts set forth on Exhibit 6.4(b). The employee bonus set forth on Exhibit
-------------- ------
6.4(a) will not reduce the Purchase Price. However, the Purchase Price shall be
------
reduced by the aggregate amount set forth on Exhibit 6.4(b).
--------------
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
-------------------------------------------
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of the following conditions on or
before the Closing Date, unless specifically waived in writing by Buyer prior to
the Closing Date:
7.1 Representations and Warranties. The representations and warranties of
------------------------------
Sellers and the Company contained in this Agreement shall have been true and
correct on the date of this Agreement and shall be true and correct in all
material respects on the Closing Date as though made on and as of the Closing
Date.
7.2 Compliance with Covenants. Sellers and the Company shall have duly
-------------------------
performed and complied with all covenants, agreements and obligations required
by this Agreement to be performed or complied with by them on or prior to the
Closing.
7.3 Absence of Litigation. No action or proceeding shall be pending or,
---------------------
in the reasonable opinion of Buyer, overtly threatened by or before any court or
other governmental body or agency seeking to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which would adversely affect
the right of Buyer to own the Shares, or to operate or control the Company after
the Closing Date.
7.4 Consents and Approvals. All (a) Required Consents, (b) licenses, (c)
----------------------
other orders or notifications of, or registrations, declarations or filings
with, or expiration of waiting periods imposed by, any applicable governmental
or judicial authority and (d) those consents, approvals, authorizations or
notifications of third parties that are described on Schedule 7.4, shall have
-------- ---
been made or obtained or shall have occurred, in a manner reasonably
satisfactory in form and substance to Buyer and in a manner which does not
affect any rights of the Company under any Contract or Real Property Lease.
7.5 [Reserved.]
-----------
7.6 Removal of Liens. All Liens, with the exception of those Liens
----------------
described in Schedule 7.6, indicated to exist by record searches made by Buyer
prior to the Closing Date (specifically including but not limited to those Liens
described on Schedule 3.10) shall have been
-------------
33
removed, and Sellers and the Company shall have provided evidence satisfactory
to Buyer of such removal; provided however that the Company and/or Sellers may
be permitted to make arrangement for a discharge of any such Lien
contemporaneously with the Closing.
7.7 Legal Opinion. Buyer shall have received from Xxxxxxx, Xxxxxx &
-------------
Weiner, P.C., counsel to Sellers and the Company, an opinion, dated the Closing
Date, in the form of Exhibit 7.7.
-----------
7.8 No Claim Regarding Shares. No claim shall have been made or
-------------------------
threatened that any person or entity (other than Sellers) (a) is the holder or
beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any of the Shares or any other voting, equity, or ownership
interest in, the Company, or (b) is entitled to all or any portion of the
Purchase Price.
7.9 Employees.
---------
(a) Each of Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxx shall have executed
new employment agreements (the "New Employment Agreements") with the Company in
the form attached hereto as Exhibits 7.9(a)(1) and 7.9(a)(2). The New
--------------------------------
Employment Agreements are to commence as at the Effective Time and shall
supersede existing employment arrangements made between the Company and these
senior employees and shall be in full force in effect as of the Closing.
(b) Each of Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxx shall have executed
Releases in the form attached hereto as Exhibits 7.9(b)(1) and 7.9(b)(2).
--------------------------------
(c) Xxxxxx X. Xxxxxxxxxx, Inc. shall have executed an agreement, in a
form satisfactory to the Buyer in its sole discretion, terminating the Agreement
among the Company, Xxxxxx X. Xxxxxxxxxx, Inc. and Xxxxxx Xxxxxxxxxx, dated as of
January 1, 1997.
7.10 Holliston Lease. Buyer shall have entered into a lease (the
---------------
"Holliston Lease") with Airedale Realty Trust, the owner of the premises at 00
Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, presently leased by the Company (the
"Holliston Facility"), in substantially the form attached hereto as Exhibit 7.10
------------
at a lease rate no greater than the Company's present lease rate (plus customary
annual increases).
7.11 Repayment of Debt. The Sellers shall have caused the Company to have
-----------------
paid off all of its outstanding indebtedness other than trade payables, accrued
payables and capitalized equipment lease and loan obligations; provided however
that the Company and/or a discharge of such indebtedness may occur
contemporaneously with the Closing in the amounts and to the persons set forth
in Schedule 7.11.
-------------
7.12 Escrow Agreement. The Sellers and the Escrow Agent shall have entered
----------------
into the Escrow Agreement with Buyer.
7.13 Resignations. Xxxx X. Xxxxx, Xxxxxx X. Xxxxxxx III, Xxxxxx X.
------------
Xxxxxxxxxx and Xxxxx Xxxx shall have resigned their positions as officers and
directors of the Company.
34
ARTICLE 8
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
--------------------------------------------
The obligations of Sellers to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of each of the following
conditions on or before the Closing Date, unless specifically waived in writing
by Sellers prior to the Closing:
8.1 Representations and Warranties. The representations and warranties of
------------------------------
Buyer contained in this Agreement shall have been true and correct on the date
of this Agreement, and shall be true and correct in all material respects on the
Closing Date as though made on and as of the Closing Date.
8.2 Compliance with Covenants. Buyer shall have duly performed and
-------------------------
complied with all covenants, agreements and obligations required by this
Agreement to be performed or complied with by it on or before the Closing Date.
8.3 Absence of Litigation. No action or proceeding shall be pending by or
---------------------
before any court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
8.4 Legal Opinion. Sellers shall have received from Ropes & Xxxx, counsel
-------------
to Buyer, an opinion, dated the Closing Date, in the form of Exhibit 8.4.
------------
8.5 Holliston Lease. The Company shall have entered into the Holliston
---------------
Lease.
8.6. Employment Agreements. The Company shall have executed the New
---------------------
Employment Agreements with Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxx.
ARTICLE 9
CLOSING
-------
9.1 Closing. The closing of the sale of the Shares (the "Closing") shall
-------
take place at the offices of Xxxxxxx, Xxxxxx & Weiner, P.C., Boston,
Massachusetts, at 10:00 a.m., local time, on the date hereof; provided, however,
as follows: (a) if one or more conditions to this Agreement is not satisfied by
such date, the party benefiting from such condition may elect, in its sole
discretion, one or more postponements of the Closing for the purpose of enabling
such condition to be satisfied; and (b) notwithstanding the provisions of the
preceding clause (a), in no event may the Closing be postponed beyond September
15, 1999. The date of the Closing is referred to as the "Closing Date", and
11:59 p.m. on the Closing Date is referred to as the "Effective Time."
9.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or cause
---------------------
to be delivered to Buyer the following:
35
(a) stock certificates representing the Shares, duly endorsed in
blank or accompanied by stock powers duly executed in blank, sufficient to
transfer the Shares on the books of the Company;
(b) a release in the form of attached Exhibit 9.2(b) executed by each
--------------
Seller ("Seller Release");
(c) all bank books, financial and bank records, bookkeeping and
accounting records, copies of all Tax Returns and amendments to all of the
foregoing, corporate minute books, stock ledgers and all other books and records
of or relating to the Company;
(d) a certificate signed by each Seller and the Company confirming
the satisfaction of the conditions set forth in Sections 7.1 and 7.2 above as to
representations, warranties and covenants;
(e) a copy of all corporate resolutions authorizing the execution,
delivery and performance of this Agreement by the Company, and the consummation
of the transactions contemplated in this Agreement, accompanied by the
certification of the Secretary of the Company to the effect that such
resolutions are in full force and effect and have not been amended, modified or
rescinded, in the form attached as Exhibit 9.2(e);
(f) the Company's good standing certificates from the Secretary of
State of Massachusetts and each of the states listed on Schedule 3.1, and
------------
certificates from the Departments of Revenue of each such jurisdiction stating
that all required taxes have been paid by the Company in full;
(g) the legal opinion referred to in Section 7.7; and
(h) satisfactory evidence that all Required Consents have been
obtained or satisfied;
(i) Tax Form W-9, executed by each of the Sellers; and
(j) the resignations referred to in Section 7.13.
9.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to
-------------------
be delivered to Sellers the following:
(a) a certificate of the President of Buyer confirming the
satisfaction of the conditions set forth in Sections 8.1 and 8.2 as to
representations, warranties and covenants;
(b) a copy of all corporate resolutions authorizing the execution,
delivery and performance of the Buyer Agreements, and the consummation of the
transactions contemplated in the Buyer Agreements, accompanied by the
certification of the Secretary of Buyer to the effect
36
that such resolutions are in full force and effect and have not been amended,
modified or rescinded;
(c) the legal opinion referred to in Section 8.4; and
(d) the Initial Purchase Price, payable as provided in Section 1.2.
9.4 Deliveries by Sellers and Buyer. Sellers and Buyer, as are parties
-------------------------------
thereto, shall execute and deliver, or cause to be executed and delivered, to
the other the following:
(a) Escrow Agreement;
(b) each of the New Employment Agreements; and
(c) the Holliston Lease.
9.5 Further Assurances. Sellers shall, at any time on or after the
------------------
Closing Date, take any and all steps requested by Buyer to transfer to Buyer
ownership of the Shares, and will do, execute, acknowledge and deliver all such
further commercially reasonable acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be required for the more
effective transfer to Buyer, or its successors or assigns, operating control of
the Company.
ARTICLE 10
INDEMNIFICATION
---------------
For purposes of this Section 10, an "Indemnified Party" is a party seeking
to be indemnified hereunder, and an "Indemnity Obligor" is a party from whom
indemnity is sought.
10.1 Indemnification by Sellers. The Warranting Shareholders shall jointly
--------------------------
and severally indemnify, defend and hold harmless Buyer and its officers,
directors and affiliates from, against, and with respect to any and all loss,
damage, claim, obligation, liability, cost and expense (including, without
limitation, reasonable attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), of any kind or character (a "Loss") arising out of
or in connection with any of the following:
(a) any inaccuracy, misrepresentation or breach of any of the
representations or warranties of Sellers, the Warranting Shareholders or the
Company contained in or made pursuant to this Agreement (including without
limitation the Schedules thereto), as if all qualifications as to knowledge and
materiality (including without limitation with respect to a Material Adverse
Effect) were not contained therein;
(b) any failure by the Company (prior to Closing) or Sellers or the
Warranting Shareholders (prior to or after Closing) to perform or observe, or to
have performed
37
or observed, in full, any covenant, agreement or condition to be performed or
observed by each pursuant to this Agreement or in any other agreement or
document; or
(c) any use, release, emission, generation, storage, transportation,
disposal, or arrangement for the disposal of Hazardous Materials by the
Company, including, without limitation, the cost of any environmental response
action or liability under the Comprehensive Environmental Response, Compensation
and Liability Act or similar state or local law, whether such Loss accrues, is
required or is necessary prior to the Closing Date, to the full extent that such
Loss is attributable, in whole or in part, directly or indirectly, to the
presence, use, emission, generation, storage, transportation, release, disposal,
or arrangements for disposal of Hazardous Materials by any person on any of the
properties of the Company or on any other properties to which the Company or
their affiliates have sent or arranged for the disposal of Hazardous Materials
prior to the Closing Date or the exposure of any person, including without
limitation, any third party and any employee or former employee of the Company,
to any Hazardous Material present, or previously present, in or on any of the
properties owned or leased by the Company (other than as a result of such
exposure at the Leased Real Property in Franklin, Massachusetts which was not
due to any act or omission of the Company). The foregoing right of indemnity
against Sellers shall not limit Buyer's or any other indemnified person's rights
of recovery against Sellers or any other person under any Environmental Law or
any other law, including, without limitation, the Comprehensive Environmental
Response, Compensation Liability Act.
10.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold
------------------------
harmless Sellers from, against and with respect to any Loss arising out of or
in connection with any of the following:
(a) any inaccuracy, misrepresentation or breach of any of the
representations and warranties, as if all qualifications as to knowledge and
materiality (including without limitation with respect to a Material Adverse
Effect) were not contained therein, of Buyer contained in or made pursuant to
this Agreement; or
(b) any failure by Buyer to perform or observe, or to have performed
or observed, in full, any covenant, agreement or condition to be performed or
observed by it pursuant to this Agreement or in any other agreement of document.
10.3 Notice of Claim. An Indemnified Party seeking to be indemnified
---------------
hereunder as a result of a claim made by a third party shall notify the
Indemnity Obligor promptly upon receipt of knowledge of the facts upon which
such third party claim is based; provided, however, that the failure to so
notify the Indemnity Obligor shall not reduce or affect the Indemnity Obligor's
obligations with respect thereto except to the extent that the Indemnity Obligor
is materially prejudiced as a result of such failure to notify. Such notice
shall be in writing and specify in reasonable detail the nature of the Loss and
the amount of the liability estimated to arise therefrom. The Indemnified Party
shall provide to the Indemnity Obligor as promptly as practicable thereafter all
information and documentation reasonably requested by the Indemnity Obligor to
verify the claim asserted, and the Indemnified Party shall make reasonable
efforts to mitigate the Loss.
38
10.4 Defense. If the facts pertaining to a Loss arise out of the claim of
-------
any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnity Obligor may, by giving
written notice to the Indemnified Party within 30 days following its receipt of
the notice of such claim, elect to assume the defense or the prosecution of such
claim, including the employment of counsel or accountants at its cost and
expense; provided, however, that during the interim the Indemnified Party shall
use its best efforts to take all action (not including settlement) reasonably
necessary to protect against further damage or loss with respect to the Loss;
provided that such counsel or accountants shall be reasonably satisfactory to
the Indemnified Party; provided that the Indemnity Obligor agrees prior to
assuming such defense or prosecution of the claim that it is obligated to
indemnify the Indemnified Party for the loss suffered by the Indemnified Party
as a result of such claim; provided that the Indemnity Obligor can demonstrate
to the reasonable satisfaction of the Indemnified Party that such Indemnity
Obligor has the financial ability to satisfy such indemnity obligation; and
provided that any compromise or settlement must be reasonably approved by the
Indemnified Party. Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Party may, by notice to the Indemnity Obligor, assume the exclusive
right to defend, compromise or settle such claim, but the Indemnity Obligor will
not be bound by any determination of a claim so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld). The Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnity Obligor in any such action and to
participate in such action, but the fees and expenses of such counsel shall be
at the Indemnified Party's own expense. Whether or not the Indemnity Obligor
chooses so to defend or prosecute such claim, all the parties to this Agreement
shall cooperate in the defense or prosecution of such claim and shall furnish
such records, information and testimony and shall attend such conferences,
discovery proceedings and trials as may be reasonably requested in connection
therewith. No Indemnity Obligor shall be liable for any settlement of any such
claim effected without its prior written consent, which shall not be
unreasonably withheld.
10.5 Time for Claims. Any claim asserted with respect to the items
---------------
enumerated in Sections 10.1(a) or 10.2(a) must be submitted to the Indemnity
Obligor in writing, or invoked in official proceedings, within one year after
the Closing Date, except for claims for Losses resulting from (i) an inaccuracy,
misrepresentation or breach of the representations and warranties made in
Sections 2.1, 2.3, 3.1, 3.2, 3.5, 4.1 or 4.2, which claims may be made at any
time, (ii) an inaccuracy, misrepresentation or breach of the representations and
warranties made in Sections 3.19 (except to the extent such claim also results
from an inaccuracy, misrepresentation or breach of the representations and
warranties made in Section 3.22), 3.21 and 3.25, which claims may be made at any
time on or prior to (but not after) the date which is 30 days after the
expiration of the applicable statute of limitations, (iii) an inaccuracy,
misrepresentation or breach of the representations and warranties Section 3.22,
which claims may be made at any time on or prior to (but not after) the third
anniversary of the Closing Date. Claims asserted pursuant to Section 1.2(a) or
(e) for payment of any element of the Purchase Price may be made at any time on
or prior to (but not after) the sixth anniversary of the Closing
39
Date. Claims asserted pursuant to Section 10.1(c) may be made at any time on or
prior to (but not after) the third anniversary of the Closing Date.
10.6 Limitation. Notwithstanding the provisions of Section 10.1,
----------
Warranting Shareholders shall not have any indemnification obligation under
Section 10.1(a) until such time as the aggregate amount of the Losses for which
any Buyer Indemnified Party is otherwise entitled to indemnification hereunder
exceeds one percent of the Final Purchase Price, whereupon Warranting
Shareholders shall be liable to indemnify the Indemnified Party for all Losses
in excess of such aggregate amount; provided, however, that the foregoing
limitation shall not apply to (i) claims resulting from an inaccuracy,
misrepresentation or breach of the representations and warranties made in
Sections 2.1, 2.3, 2.4, 3.1, 3.2, 3.5, 3.21, 3.22, 3.29, 4.1, 4.2 or 4.6 or (ii)
claims based upon fraud.
10.7 Maximum Indemnity Amount. Save and except as provided herein, in no
------------------------
event shall the aggregate amount for which Warranting Shareholders shall be
liable as Indemnity Obligors under Section 10.1(a) exceed ten percent of the
Final Purchase Price, except for (i) claims resulting from an inaccuracy,
------
misrepresentation or breach of the representations and warranties made in
Sections 2.1, 2.3, 2.4, 3.1, 3.2, 3.5, 3.21, 3.29, 4.1, 4.2, or 4.6, as to which
there shall be no limit (ii) claims based upon fraud, as to which there shall be
no limit or (iii) claims based upon Section 3.22, under which the aggregate
amount for which Warranting Shareholders shall be liable as Indemnity Obligors
shall not exceed thirty percent of the Final Purchase Price. The amount for
which Warranting Shareholders shall be liable as Indemnity Obligors pursuant to
claims made under Section 10.1(c), when aggregated with claims referred to in
Clause (iii) of the foregoing sentence, shall not exceed thirty percent of the
Final Purchase Price.
10.8 Exclusive Remedy. The indemnity contained herein shall be the
----------------
parties' exclusive remedy for claims resulting from an inaccuracy,
misrepresentation or breach of any representation or warranty, except for fraud
claims, claims relating to Taxes or environmental claims, with respect to which
Buyer shall retain all common law and statutory causes of action.
ARTICLE 11
TERMINATION
-----------
11.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a) By the mutual written consent of Sellers and Buyer;
(b) By Sellers and the Company (if Sellers and the Company are not
then in breach of any term of this Agreement), if Buyer shall (i) fail to
perform its agreements contained in this Agreement required to be performed on
or prior to the Closing Date, or (ii) breach any of its representations or
warranties contained in this Agreement, which failure or breach is not cured
within ten days after the Company and Sellers have notified Buyer of their
intent to terminate this Agreement pursuant to this subparagraph, which failure
or breach is not cured by Buyer within ten days after the Company and Sellers
have notified Buyer of their intent to terminate this Agreement pursuant to this
subparagraph;
40
(c) By Buyer (if Buyer is not then in breach of any term of this
Agreement), if Sellers or the Company shall (i) fail to perform its agreements
contained in this Agreement required to be performed on or prior to the Closing
Date, or (ii) breach any of its representations or warranties contained in this
Agreement, which failure or breach is not cured within ten days after Buyer has
notified Sellers or the Company of its intent to terminate this Agreement
pursuant to this subparagraph, which failure or breach is not cured by Sellers
or the Company within ten days after Buyer has notified them of its intent to
terminate this Agreement pursuant to this subparagraph.
(d) By Sellers and the Company or by Buyer, if there shall be any
order, writ, injunction or decree of any court or governmental or regulatory
agency binding on Sellers or the Company, or on Buyer, which prohibits or
restrains any party from consummating the transactions contemplated by this
Agreement; or
(e) By Sellers and the Company or by Buyer, if the Closing has not
occurred by September 15, 1999, for any reason other than delay or
nonperformance of the party seeking such termination.
11.2 Effect on Obligations. Termination of this Agreement pursuant to this
---------------------
Article shall terminate all obligations of the parties hereunder, except for the
obligations under Sections 6.3 (entitled "Expenses"), 12.3 (entitled
"Publicity") and 6.2 (entitled "Confidentiality"); provided, however, that
termination pursuant to subparagraphs (b) or (c) of Section 11.1 shall not
relieve the defaulting or breaching party from any liability to the other party
to this Agreement.
ARTICLE 12
MISCELLANEOUS
-------------
12.1 Survival of Representations. All representations and warranties of
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the parties contained in this Agreement (including without limitation the
schedules hereto) or otherwise made in writing in connection with the
transactions contemplated by this Agreement shall survive the execution and
delivery of this Agreement, as provided herein.
12.2 Publicity. Each of Sellers and Buyer agrees it will not make any
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press releases or other announcements prior to the Closing with respect to the
transactions contemplated by this Agreement, except as required by applicable
law, without the prior approval of the other party.
12.3 Appointment of Sellers' Agent. Sellers (i) hereby irrevocably
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designate and appoint Xxxxxx X. Xxxxxxx III ("Sellers' Agent") as Sellers'
exclusive agent and attorney-in-fact, to give and receive notices and generally
to act for and on behalf of the Sellers in connection with all matters related
to or arising out of the transactions contemplated by this Agreement; and (ii)
acknowledge and agree that the Sellers' Agent shall have no liability to the
Sellers or to the Company for their actions taken in such capacity, other than
in cases where the Sellers' Agent acted with gross negligence or willful
misconduct.
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12.4 Notices. All notices, demands and other communications made hereunder
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shall be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by facsimile
(with telephone confirmation), and shall be deemed to have been given or made
when personally delivered, the second day following the date deposited with such
overnight courier service or when transmitted to facsimile machine and confirmed
by telephone, addressed to the respective parties at the following addresses (or
such other address for a party as shall be specified by like notice):
If to the Company (prior to Closing) or to Sellers:
Xxxxxx X. Xxxxxxx III
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
With a copy (which shall not constitute notice) to:
Xxxxxxx, Xxxxxx & Weiner, P.C.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxx, Esquire
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company (after Closing) or to Buyer:
HTM Holdings, Inc.
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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12.5 Counterparts. This Agreement may be executed and delivered in one or
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more counterparts and/or by electronic facsimile. Each counterparts shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
12.6 Assignment. This Agreement shall be binding upon and inure to the
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benefit of the parties to this Agreement and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties to this Agreement
without the prior written consent of all other parties to this Agreement, and
any purported assignment without such consent shall be void, provided, however,
-----------------
that Buyer may assign this Agreement or the rights, interests or obligations
hereunder to any of its affiliates without the consent of any other party to
this Agreement so long as Buyer remains liable for all of Buyer's obligations
hereunder.
12.7 Third Party Beneficiaries. None of the provisions of this Agreement
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or any document contemplated by this Agreement is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.
12.8 Headings. The article and section headings contained in this
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Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
12.9 Recitals. The recitals set forth at the beginning of this Agreement
--------
are incorporated by reference in, and made a part of, this Agreement.
12.10 Amendments. Any waiver, amendment, modification or supplement of or
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to any term or condition of this Agreement shall be effective only if in writing
and signed by all parties hereto, and the parties to this Agreement waive the
right to amend the provisions of this Section orally.
12.11 Specific Performance. Sellers acknowledge that if Sellers fail to
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consummate the transactions contemplated by this Agreement such failure will
cause irreparable harm to Buyer for which there will be no adequate remedy at
law. Buyer shall be entitled, in addition to its other remedies at law, to
specific performance of this Agreement if Sellers shall, without cause, refuse
to consummate the transactions contemplated by this Agreement.
12.12 Governing Law. This Agreement shall be governed by the laws of the
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State of Delaware, without regard to conflicts of laws principles.
12.13 Jurisdiction: Service of Process. Each of the parties to this
--------------------------------
Agreement submits to the jurisdiction of any state or federal court sitting in
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of such action or proceeding may
be heard and determined in any such court. Each of the parties to this Agreement
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that may be
required of any party with respect thereto. Any party may make service on any
other party by sending or delivering a copy of the process to the party to be
served at the address and in a manner provided
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in Section 12.6 above; provided, however, that nothing in this Section 12.15
will affect the right of any party to serve legal process in any other manner
permitted by law or at equity. Each party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.
12.14 Resolution of Purchase Price Adjustment. If, within 15 business
---------------------------------------
days following the delivery of a timely Objection by the Buyer to the Sellers
pursuant to Section 1.2(e), the parties are unable to resolve their differences
with respect to such Objection (the "Disputed Items"), either the Buyer or the
Sellers' Agent may, within five business days after the end of such fifteen
business day period, request that the Disputed Items be resolved by means of an
arbitration conducted pursuant to this Section 12.14 (an "Arbitration"). Any
request for an Arbitration shall be made in writing to the Boston, Massachusetts
office of PriceWaterhouseCoopers or, in the event such firm declines to serve as
the Independent Accounting Firm (as defined below), to the Boston, Massachusetts
office of such other independent accounting firm of recognized national standing
that may be selected by the Buyer with the consent of the Sellers' Agent, which
consent will not be unreasonably withheld. The firm to which such request is
made shall, upon agreeing in writing to resolve the Disputed Items
submitted to it in accordance with the terms of this Agreement, be the
"Independent Accounting Firm", as that term is used in this Agreement. The
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Arbitration shall be conducted under the auspices of the Independent Accounting
Firm and, except to the extent said rules conflict with the terms of this
Section 12.14, shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The Independent Accounting Firm
shall, within five business days of its agreement to resolve the Disputed Items
submitted to it, provide to the Buyer and the Sellers' Agent with the names and
resumes (which shall include a description of the individual's substantial
experience in the preparation and audit of financial statements of corporations
engaged in distribution and a disclosure of the individual's existing or prior
business and/or personal relationships (if any) with the Buyer, the Sellers. or
any employees or counsel of any such Person) of at least three partners of the
Independent Accounting Firm located in its Boston office who are willing to
serve as the individual responsible for conducting the Arbitration (the
"Arbitrator"). If, on or before the third business day after their receipt of
the information called for by the preceding sentence, the Buyer and the Sellers'
Agent have been unable after good faith negotiation to agree upon and select one
of the individuals so identified to act as the Arbitrator, then the Buyer and
the Sellers' Agent shall each have the right on or before the fifth business day
after their receipt of such information to deliver to the Independent Accounting
Firm a confidential communication striking any or all of the individuals
previously identified as a potential Arbitrator as to whom an existing business
and/or personal relationship was disclosed pursuant to the preceding sentence,
and/or striking no more than one of the other individuals previously identified
as a potential Arbitrator.
The Independent Accounting Firm shall then proceed to select the Arbitrator
from among the previously identified individuals who have not been stricken from
consideration; if all such previously identified individuals are so stricken,
the Independent Accounting Firm shall designate at least three additional
partners who are eligible to serve as the Arbitrator and the foregoing selection
procedure shall be repeated until an Arbitrator is selected. Upon being
selected, the Arbitrator shall conduct an Arbitration to determine, with regard
to each of the Disputed Items that were submitted to the Independent Accounting
Firm pursuant to this Section
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12.14, whether the Closing Balance Sheet and/or the Adjustments Statement were
prepared in accordance with the requirements of this Agreement and, if not, the
dollar amount of any adjustment that may be required in order for the Disputed
Item in question to conform to the requirements of this Agreement. The locale of
all hearings conducted by the Arbitrator in connections with the Arbitrations
shall be the Boston, Massachusetts office of the Independent Accounting Firm.
The Arbitrator shall make such determination subsequent to conducting the
Arbitration and shall set forth such determination in a written ruling, which
ruling shall be rendered within 120 days of the date on which the Arbitrator was
selected and shall be delivered to the Buyer and the Sellers' Agent in
accordance with the terms of Section 12.4 of this Agreement. The ruling of the
Arbitrator shall be final, binding, and conclusive on the Buyer and the Sellers;
shall have the legal effect of an arbitral award; and shall be subject only to
the judicial review permitted by the Federal Arbitration Act. Judgment on the
ruling of the Arbitrator may be entered and enforced in any court having
jurisdiction over the parties or their assets. The fees and disbursements of the
Independent Accounting Firm shall be allocated between the Sellers on the one
hand (with each Seller responsible for his or her percentage interest) and the
Buyer on the other hand in the same proportion that the aggregate amount of such
Disputed Items so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by each such party (as finally determined by the
Independent Accounting Firm) bears to the total amount of such Disputed Items so
submitted.
12.15 Remedies. In the event litigation shall be necessary to enforce,
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interpret or rescind the provisions of this Agreement or any related matter, the
prevailing party shall be entitled to recover from the adverse party, in
addition to any other relief, the prevailing party's reasonable attorneys' fees
for services before trial, at trial, and on any subsequent appeal by the adverse
party.
12.16 Severability. In the event that any provision in this Agreement
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shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement shall not be in any way impaired, and the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement and there shall be automatically added a replacement provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
12.17 Entire Agreement. This Agreement and the Schedules and Exhibits to
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this Agreement, together with the documents and instruments delivered pursuant
to this Agreement, constitute the entire contract between the parties to this
Agreement pertaining to the subject matter of this Agreement, and supersede all
prior and contemporaneous agreements and understandings between the parties with
respect to such subject matter including without limitation the letter of intent
dated May 18, 1999.
12.18 Currency. All dollar amounts expressed in this Agreement shall be
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in United States Dollars.
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12.19 Knowledge. As used herein, the terms "to the best knowledge of,"
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"to the knowledge of" or words to similar effect shall mean (a) with respect to
the Company, the knowledge of Xxxxxx Xxxxxxxxxx or Xxxxxx Xxxxxxxx, including
their actual knowledge and that which a similarly situated prudent individual
could be expected to know, discover or otherwise become aware in the course of a
reasonable investigation concerning such fact or matter; (b) with respect to the
Warranting Shareholders or the Sellers, the knowledge of those individuals
constituting the Warranting Shareholders or the Sellers, as the case may be,
including such person's actual knowledge and that which such person should have
obtained through reasonable inquiry of Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxx.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has signed this Agreement, or has
caused this Agreement to be signed by its duly authorized officer, as of the
date first above written.
SELLERS:
-------
/s/ Xxxx X. Xxxxx
_______________________________________
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx III
_______________________________________
Xxxxxx X. Xxxxxxx, III for himself
/s/ Xxxxxx X. Xxxxxxx III
_______________________________________
Xxxxxx X. Xxxxxxx, III for
Xxxxxx X. Xxxxxxx XX
/s/ Xxxxxx X. Xxxxxxx III
_______________________________________
Xxxxxx X. Xxxxxxx, III for
Xxxxxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx, XX
_______________________________________
Xxxxxx X. Xxxxxxx, XX for himself
/s/ Xxxxxxxxx Xxxxxxx
_______________________________________
Xxxxxxxxx Xxxxxxx, for herself
COMPANY:
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X. X. XXXX, INCORPORATED
/s/ Xxxx X. Xxxxx
By: ___________________________________
Xxxx X. Xxxxx
Name:_______________________________
Title:______________________________
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BUYER:
-----
HTM HOLDINGS, INC.
/s/ Xxxx Xxxxxx
By:_______________________________________
Xxxx Xxxxxx
President
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List of Exhibits and Schedules to Stock Purchase Agreement (Exhibit 2.2)
We agree to furnish supplementally a copy of any omitted schedule to the
Commission upon request.
Exhibit# Document
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1.2(a)(i) Escrow agreement between HTM Holdings, Inc. and certain sellers.
1.2(a)(iii) List of sellers.
5.7 X.X. Xxxx facility audit findings.
6.4(a) X.X. Xxxx Employee Bonus Plan.
6.4(b) Additional employee bonuses.
7.7 Legal opinion of Xxxxxxx, Xxxxxx & Weiner, P.C., counsel to
sellers.
A List of transaction documents.
B Officer's certificate.
C Trustees' certificate.
D Beneficiaries' authorization to Trustees.
E Shareholders certificate.
7.9(a)(1) Employment agreement with Xxxxxx Xxxxxxxxxx.
7.9(a)(2) Employment agreement with Xxxxxx Xxxxxxxx.
7.10 Lease for premises in Holliston, MA.
8.4 Opinion of Ropes & Xxxx, counsel to buyers.
9.2(e) Certificate of clerk of X.X. Xxxx.
Schedule# Document
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1.2(d) Reports regarding inventory.
2.3 Share ownership schedule.
2.3(a) Agreements regarding disposition or acquisition of shares.
2.3(b) Schedule of proxies.
3.3 Violation of other agreements.
3.4 Required consents.
3.6 Investments in other companies.
3.7 Schedule of officers and directors.
3.8 Schedule of undisclosed liabilities and indebtedness for borrowed
money.
3.10 Schedule of existing liens, with UCC search reports.
3.13 Schedule of inventory locations.
3.14 Schedule of material contracts.
3.16 Schedule of intellectual property.
3.17 Schedule of suppliers and customers.
3.17(a) List of top ten suppliers.
3.17(b) List of top ten customers.
3.18 Schedule of litigation.
3.19 Schedule of noncompliance with decrees and laws.
3.19(a) X.X. Xxxx facility audit findings.
3.20 Schedule of permits and licenses.
3.21 Schedule of tax returns filed on or after December 31, 1993.
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Schedule Document
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3.23 Schedule of insurance policies.
3.24(d) Representations regarding employment and Employee Bonus Plan.
3.24(f) Schedule of key employees.
3.25(a) Schedule of employees and compensation.
3.25(b) Schedule of employee benefit plans.
3.26 Schedule regarding absence of changes.
3.27 Schedule of related party transactions.
3.30 Schedule of bank accounts.
3.31 Year 2000 plan.
7.4 Schedule of consents and approvals.
7.6 Schedule of permitted liens.
7.11 Schedule of repayment of debt.
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