EXHIBIT 10.49
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into as of July 1,
1996, by Letronix Acquisition Corp., a Florida corporation ("Buyer"), and
Polyphase Corporation, a Nevada corporation, ("Seller").
RECITALS
Seller desires to sell, and Buyer desires to purchase, 200 shares (the
"Shares") of capital stock of Micro Configurations, Inc., a New York corporation
(the "Company"), being one hundred percent (100%) of the outstanding shares of
the Common Stock, no par value per share, of the Company (the "Common Stock"),
for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING.
------------------------------------
1.1 SHARES. Subject to the terms and conditions of this Agreement, at the
------
Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
--------------
Shares will be Nine Hundred Fifty One Thousand Four Hundred Thirty-two Dollars
and Ninety-nine Cents ($951,432.99), payable in the form of a non-recourse
promissory note in the form of attached hereto as ANNEX A.
1.3 CLOSING The purchase and sale (the "Closing") provided for in this
------
Agreement will take place at the offices of Seller at 00000 Xxxxxx Xxxxxxx, 0xx
Xxxxx, Xxxxxx, Xxxxx, at 10:00 a.m. (local time) on July 12, 1996 or at such
other time and place as the parties may agree (the "Closing Date"). Subject to
the provisions of SECTION 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this SECTION 1.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
-------------------
(a) Seller will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) (which Buyer will return to Seller as
collateral as hereinafter described);
(ii) a certificate executed by Seller to the effect that, except as
otherwise stated in such certificate, each of Seller's representations and
warranties in this Agreement was accurate in all material respects as of the
date of this Agreement and is accurate in all material respects as
1
of the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Schedule (as hereinafter defined) that were
delivered by Seller to Buyer at or prior to the Closing Date);
(b) Buyer will deliver to Seller the Purchase Price, as follows:
(i) A secured non-recourse promissory note in the amount of Nine
Hundred Fifty One Thousand Four Hundred Thirty-two Dollars and Ninety-nine Cents
($951,432.99) (the "Note") having the terms and provisions set forth in the form
thereof attached hereto as ANNEX A; and
(ii) a certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's representations and
warranties in this Agreement was accurate in all material respects as of the
date of this Agreement and is accurate in all material respects as of the
Closing Date as if made on the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
Seller represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
------------------------------
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
2.2 AUTHORITY; NO CONFLICT.
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms. Seller has the
absolute and unrestricted right, power, authority, and capacity to execute,
deliver and perform this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated by this
Agreement will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of any
provision of the certificate of incorporation or bylaws of the Company;
(ii) contravene, conflict with, or result in a violation of, or give
any governmental body or other person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any federal, state or local order, law, ordinance or
regulation or any injunction, judgment, order or decree of any court,
2
administrative agency or other governmental body to which the Company, or any of
the assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any contracts applicable to the Company that
would have a material adverse effect on the Company; or
(iv) result in the imposition or creation of any charge, claim, lien,
option, pledge, security interest or restriction of any kind upon or with
respect to any of the assets owned or used by any the Company.
2.3 OWNERSHIP; CAPITALIZATION.
-------------------------
(a) Seller is or will be on the Closing Date the record and beneficial
owner and holder of the Shares, free and clear of any charge, claim, lien,
option, pledge, security interest or restriction of any kind.
(b) The authorized equity securities of the Company consist of 200 shares
of common stock, no par value per share, of which 200 shares are issued and
outstanding. Upon transfer of the Shares to Buyer at the Closing, Buyer will own
the entire legal and beneficial interest in the Shares, free and clear of all
liens, claims and encumbrances and subject to no legal or equitable restriction
of any kind. All of the outstanding equity securities and other securities of
the Company are owned of record and beneficially by the Seller, free and clear
of any charge, claim, lien, option, pledge, security interest or restriction of
any kind. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
agreements, contracts, obligations, promises or undertakings relating to the
issuance, sale, or transfer of any equity securities or other securities of the
Company.
2.4 FINANCIAL MATTERS. Seller has delivered to Buyer: (i) the balance
-----------------
sheets of the Company as at Sptember 30 in each of the years 1995 and 1994, and
the related consolidated statements of income for each of the fiscal years then
ended (the "Financial Statements"), and (ii) an unaudited balance sheet of the
Company as at March 31, 1996, and the related unaudited statement of income for
the six months then ended (the "Interim Financial Statements"). Such Financial
Statements fairly present in all material respects the financial condition and
the results of operations of the Company as at the respective dates of and for
the periods referred to in such financial statements, all in accordance with
generally accepted accounting principles, subject, in the case of the Interim
Financial Statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse); the
financial statements referred to in this SECTION 2.4 reflect the consistent
application of such accounting principles throughout the periods.
2.5 BOOKS AND RECORDS. The books of account, minute books, stock record
-----------------
books, and other records of the Company, all of which have been made available
to Buyer, are complete and correct in all material respects. The minute book of
the Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders and the
3
Boards of Directors. At the Closing, all of those books and records will be in
the possession of the Company.
2.6 TITLE TO PROPERTIES. The Company owns (with good and marketable
-------------------
title in the case of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own, including all
of the properties and assets reflected in the Financial Statements and the
Interim Financial Statements (except for assets held under capitalized leases
and personal property sold since the date of the Financial Statements and the
Interim Financial Statements, as the case may be, in the ordinary course of
business), and all of the properties and assets purchased or otherwise acquired
by the Company since the date of the Financial Statements (except for personal
property acquired and sold since the date of the Financial Statements in the
ordinary course of business and consistent with past practice).
2.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, structures, and
-----------------------------------
equipment of the Companies are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being put,
and none of such buildings, structures, or equipment is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, structures, and equipment of the
Company are sufficient for the continued conduct of the Company's business after
the Closing in substantially the same manner as conducted prior to the Closing.
2.8 NO UNDISCLOSED LIABILITIES. The Company has no material liabilities
--------------------------
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Financial Statements or the Interim
Financial Statements and current liabilities incurred in the ordinary course of
business since the respective dates thereof.
2.9 TAXES. (a) All federal, state and local tax returns, reports,
-----
declarations, information returns and estimates that the Acquired Companies were
required to file ("Tax Returns") have been filed for the Company for all periods
for which such were due. All Taxes (as defined below) of the Company, whether
or not disclosed in the Tax Returns, have been paid in full and all such Tax
Returns are true, correct and complete in all material respects. The federal
income tax returns of the Company have not been examined by the Internal
Revenue Service. There is not in force any extension of the date on which any
Tax Return was or is due to be filed by or with respect to the Company, or any
waiver or agreement by them for the extension of time for the payment of any
Tax. The reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the Financial Statements is adequate to cover the liability of the Company for
all Taxes (including employee income tax withholding, social security and
unemployment taxes) to the date thereof.
(b) There is no claim against the Company with respect to any Taxes and no
assessment, deficiency or adjustment has been asserted or proposed with respect
to any Tax Return which would, if determined adversely to the Company, have a
material adverse effect on the Company. All prior audits and examinations of
the Company have been disclosed to Buyer.
4
(c) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(d) For purposes of this Agreement, "Tax" (and, with correlative meaning,
"Taxes") shall mean any federal, state, local or foreign income, gross receipts,
windfall profit, severance, property, alternative minimum or add-on minimum
production, sales, use, license, excise, franchise, employment, payroll,
withholding, ad valorem, or other taxes, assessments, duties, fees, levies or
other governmental charges, together with any interest, penalty or addition to
tax, or additional amount imposed by any governmental authority.
2.10 EMPLOYEE BENEFITS. PART 2.10 of the Disclosure Schedule contains a
-----------------
complete and accurate list of all plans or other obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents ("Benefits"). The Company, with respect to all
Benefits are, and each Benefit is, in material compliance with the Employee
Retirement Income Security Act of 1974 ("ERISA"), the IRC, and other applicable
laws.
2.11 PROCEEDINGS. There are currently no pending lawsuits, administrative
-----------
proceedings or investigations ("Proceedings") against the Company or to which
any of its assets is subject and Seller is not aware of any threatened
Proceedings. The Company is not subject to any currently existing order, writ,
injunction or decree relating to its operations.
2.12 ABSENCE OF CERTAIN CHANGES AND EVENTS Since the date of the
-------------------------------------
Financial Statements, there has not been any material adverse change in the
financial condition, results of operation, business, prospects, assets or
liabilities, of the Company, except for changes in the ordinary course of
business consistent with historical experience.
2.13 CONTRACTS. PART 2.13 of the Disclosure Schedule contains a complete
---------
and accurate list of (i) all current or pending contracts, commitments and
leases (of real or personal property), written or otherwise, between the Company
and any party of more than $50,000 or which are otherwise material to the
operations of the Company, that cannot be canceled without penalty upon thirty
(30) days' notice or which otherwise are material to the Company; (ii) all
patents, copyrights, tradenames, trademarks and service marks used or owned by
the Company, and all licenses or agreements relating thereto; (iii) a list of
all leases, contracts or agreements for which consents of any private persons or
governmental bodies is required for the consummation of the transactions
contemplated by this Agreement, or for the preventing of any termination of any
material right, privilege, license or agreement of, or any loss or disadvantage
to, the Company or Buyer upon consummation of the transactions contemplated by
this Agreement; and (iv) all real property owned or leased by the Company.
2.14 ENVIRONMENTAL MATTERS. To Seller's knowledge, the Company is, and at
---------------------
all times has been, in material compliance with, and has not been and is not in
material violation of or liable under, any environmental law. To Seller's
knowledge, no toxic chemicals or hazardous wastes have been deposited or
disposed of on any property owned by the Company and none of such property has
suffered any material environmental damage due to the Company's operations.
5
2.15 EMPLOYEES. PART 2.15 of the Disclosure Schedule contains a complete
---------
and accurate list of the following information for each employee of the Company,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since December 31, 1995.
2.16 CERTAIN PAYMENTS. To Seller's knowledge, neither the Company nor
----------------
director, officer, agent, or employee of the Company, or any other person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Affiliate (as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of the
Company, or (iv) in violation of any federal, state or local order, law,
ordinance or regulation, (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company.
2.17 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty of
-----------------------------
Seller in this Agreement and no statement in the Disclosure Schedule omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
2.18 RELATIONSHIPS WITH AFFILIATES No Seller or any Affiliate of Seller
-----------------------------
or of the Company has, or since January 1, 1995, has had, any:
(a) interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Company's business.
(b) equity interest or any other financial or profit interest in, a person
that has had business dealings or a material financial interest in any
transaction with any the Company other than business dealings or transactions
conducted in the ordinary course of business with the Company at substantially
prevailing market prices and on substantially prevailing market terms. No Seller
or any Affiliate of Seller or of the Company is a party to any agreement,
contract, obligation, promise or undertaking with, or has any claim or right
against, the Company.
2.19 BROKERS OR FINDERS. Seller and its agents have incurred no
------------------
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
6
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as follows:
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
------------------------------
organized, validly existing, and in good standing under the laws of the State of
Nevada.
3.2 AUTHORITY; NO CONFLICT.
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Buyer has the
absolute and unrestricted right, power, and authority to execute, deliver and
perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the transactions contemplated by this
Agreement by Buyer will give any person the right to prevent, delay, or
otherwise interfere with any of the transactions contemplated by this Agreement
pursuant to:
(i) any provision of Buyer's certificate of incorporation or bylaws;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any federal, state or local order, law, ordinance or regulation
or injunction, judgment, order or decree of any court, administrative agency or
other governmental body to which Buyer may be subject; or
(iv) any agreement, contract, obligation, promise or undertaking to
which Buyer is a party or by which Buyer may be bound.
(c) Buyer is not and will not be required to obtain any consent from any
person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated by this
Agreement.
3.3 CERTAIN PROCEEDINGS. There is no pending proceeding against Buyer
-------------------
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement. To Buyer's knowledge, no such proceeding has been threatened.
3.4 BROKERS OR FINDERS. Buyer and its officers and agents have incurred
------------------
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
7
4. COVENANTS OF SELLER PRIOR TO CLOSING DATE.
-----------------------------------------
4.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and the
------------------------
Closing Date, Seller will, and will cause the Company and its directors,
officers and agents to, (a) afford Buyer and its directors, officers and agents
and prospective lenders and their representatives (collectively, "Buyer's
Advisors") full and free access to the Company's personnel, properties,
contracts, books and records, and other documents and data, (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books and records, and
other existing documents and data as Buyer may reasonably request, and (c)
furnish Buyer and Buyer's Advisors with such additional financial, operating,
and other data and information as Buyer may reasonably request.
4.2 OPERATION OF THE BUSINESS OF THE COMPANY. Between the date of this
----------------------------------------
Agreement and the Closing Date, Seller will, and will cause the Company to
conduct its business only in the ordinary course of business and in material
compliance with all applicable laws, rules and regulations.
4.3 NEGATIVE COVENANTS. Between the date of this Agreement and the
------------------
Closing Date, Seller will not, and will cause the Company not to, without prior
notice to Buyer: (i) make any changes in its capital structure, (ii) incur any
liability or obligation other than current liabilities incurred in the ordinary
and usual course of business, (iii) incur any indebtedness for borrowed money,
(iv) make any loans or advances other than advances to employees and owner-
operators, in the ordinary and usual course of business, (v) mortgage, pledge or
subject to any encumbrance any of its assets or properties, (vi) sell or
transfer any of its assets or properties except in the ordinary and usual course
of business, (vii) make any investment of a capital nature, except in the
ordinary and usual course of business, (viii) adopt or amend in any material
respect any collective bargaining agreement or employee benefit plan, or (ix)
enter into any contract, agreement, or other commitment which is material to the
business, assets, properties, or financial position of the Company.
4.4 BEST EFFORTS. Between the date of this Agreement and the Closing
------------
Date, Seller will use its best efforts to cause the conditions in SECTIONS 6 and
7 to be satisfied.
5. COVENANTS OF BUYER.
------------------
5.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after
--------------------------------
the date of this Agreement, Buyer will, and will cause each of its Affiliates
to, make all filings required by federal, state or local laws, orders,
ordinances or regulations to be made by them to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer will, and will cause each Affiliate to, (i) cooperate with
Seller with respect to all filings that Seller is required by federal, state or
local laws, orders, ordinances or regulations to make in connection with the
transactions contemplated by this Agreement, and (ii) cooperate with Seller in
obtaining all consents identified in PART 2.13 of the Disclosure Schedule.
5.2 BEST EFFORTS. Between the date of this Agreement and the Closing
------------
Date, Buyer will use its best efforts to cause the conditions in SECTIONS 6 and
7 to be satisfied.
5.3 ACTIONS WITH RESPECT TO THE COMPANY AND BUYER. Buyer covenants and
---------------------------------------------
agrees
8
that, after the Closing and for so long as any amounts under the Note remain
outstanding:
(a) it will comply, and cause the persons it elects or causes to be elected
as directors and officers of the Company to comply, with its and their
obligations under federal and state securities laws and its and their fiduciary
duties to the Company's shareholders;
(b) it will acquire shares, receive payments and otherwise engage in
transactions with the Company only on terms that are fair to the Company and its
shareholders;
(c) it will, and it will cause the Company, to:
(i) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state of incorporation or
organization and all other states where it is legally required to be qualified
to do business as a foreign corporation;
(ii) use its reasonable efforts, in the ordinary course, to preserve
its business organization and preserve the goodwill and business of the
customers, suppliers and others having business relations with it;
(iii) maintain and preserve all its property in good working order
and condition, ordinary wear and tear excepted, except where failure to do so
would not have a material adverse effect.
(iv) except to the extent that the failure to do so would have a
material adverse effect, it will and it will cause the Company to, pay and
discharge as the same shall become due and payable, all their respective
obligations and liabilities
(v) comply, and will cause the Company to, comply, in all material
respects with all requirements of law and with the directions of any
governmental authority having jurisdiction over it or its business, except such
(A) as may be contested in good faith or as to which a bona fide
dispute may exist, and
(B) as to which such failure to comply would not have a material
adverse effect on Buyer or the Company.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
---------------------------------------------------
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of Seller's representations and
---------------------------
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
9
6.2 SELLER'S PERFORMANCE.
--------------------
(a) All of the covenants and obligations that Seller is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing, must
have been duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to SECTION 1.4 must
have been delivered.
6.3 CONSENTS. Each of the consents identified in PART 2.13 of the
--------
Disclosure Schedule must have been obtained and must be in full force and
effect.
6.4 ADDITIONAL DOCUMENTS. Each of the following documents must have been
--------------------
delivered to Buyer:
(a) the documents necessary to effect the resignation of each of the
noncontinuing directors and officers of the Company, to be effective not later
than the Closing Date;
(b) such other documents as Buyer may reasonably request for the purpose of
(i) evidencing the accuracy of any of Seller's representations and warranties,
(ii) evidencing the performance by Seller of, or the compliance by Seller with,
any covenant or obligation required to be performed or complied with by Seller,
or (iii) evidencing the satisfaction of any condition referred to in this
SECTION 6; and
6.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
--------------
have been with respect to Buyer (i) any effective injunction, writ, or temporary
restraining order of any nature issued by a court or governmental agency of
competent jurisdiction directing that the proposed acquisition not be
consummated or (ii) any action, suit, or proceeding pending or threatened by or
before any court or governmental body in which it is or may be sought to
prohibit, substantially delay, or rescind the proposed acquisition, or to limit
in any way Buyer's right to acquire the Company.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
-----------------------------------------------------
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
---------------------------
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
7.2 BUYER'S PERFORMANCE.
-------------------
10
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must
have been performed and complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to SECTION 1.4 and must have paid the Purchase Price
required to be made by Buyer pursuant to SECTION 1.4(b).
7.3 CONSENTS. Each of the consents identified in PART 2.13 of the
--------
Disclosure Schedule must have been obtained and must be in full force and
effect.
7.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following documents
--------------------
to be delivered to Seller:
(a) such documents as Seller may reasonably request for the purpose of (i)
evidencing the accuracy of any representation or warranty of Buyer, (ii)
evidencing the performance by Buyer of, or the compliance by Buyer with, any
covenant or obligation required to be performed or complied with by Buyer, or
(iii) evidencing the satisfaction of any condition referred to in this
SECTION 7; and
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not have
--------------
been with respect to Seller (i) any effective injunction, writ, or temporary
restraining order of any nature issued by a court or governmental agency of
competent jurisdiction directing that the proposed acquisition not be
consummated or (ii) any action, suit, or proceeding pending or threatened by or
before any court or governmental body in which it is or may be sought to
prohibit, substantially delay, or rescind the proposed acquisition, or to limit
in any way Seller's right to sell the Acquired Companies.
8. TERMINATION.
-----------
8.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
------------------
at the Closing, be terminated:
(a) by either Buyer or Seller if a material breach of any provision of this
Agreement has been committed by the other party and such breach has not been
waived;
(b) (i) by Buyer if any of the conditions in SECTION 6 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller, if any of the conditions in SECTION
7 has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by either Buyer or Seller if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under
11
this Agreement) on or before August 31, 1996, or such later date as the parties
may agree upon.
8.2 EFFECT OF TERMINATION. Each party's right of termination under
---------------------
SECTION 8.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to SECTION 8.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in SECTIONS 10.1 and 10.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
9. INDEMNIFICATION; REMEDIES.
-------------------------
9.1 SURVIVAL. Only the representations of Seller contained in SECTIONS
--------
2.17 and 2.19 will survive the Closing.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
------------------------------------------------
indemnify and hold harmless Buyer, the Company, and their respective directors,
officers, stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with any breach of the
representations made in SECTION 2.19.
The remedies provided in this SECTION 9.2 will be the exclusive remedies
available to Buyer or the other Indemnified Persons for any breach of this
Agreement or the conduct of the business of the Company prior to the Closing
Date.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will indemnify
-----------------------------------------------
and hold harmless Seller from and will pay to Seller the amount of any Damages
arising, directly or indirectly, from or in connection with any breach of the
representations made in SECTIONS 3.2(a), 3.3 or 3.4.
The remedies provided in this SECTION 9.3 will be the exclusive remedies
available to Seller for any breach of this Agreement.
9.4 TIME LIMITATIONS. If the Closing occurs, neither party will have
----------------
liability (for indemnification or otherwise) with respect to any representation,
unless on or before the first anniversary of the Closing Date the other party
notifies the party of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by the other party.
12
9.5 LIMITATIONS ON AMOUNT--SELLER. Seller will have no liability (for
-----------------------------
indemnification or otherwise) to Buyer unless the amount of Damages sought is in
the aggregate at least $50,000, and will have no liability (for indemnification
or otherwise) to Buyer in excess of the Purchase Price.
9.6 LIMITATIONS ON AMOUNT--BUYER. Buyer will have no liability (for
----------------------------
indemnification or otherwise) to Seller in other than the non-recourse
promissory note that comprises the Purchase Price.
9.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
-------------------------------------------------
(a) Promptly after receipt by an indemnified party of notice of the
commencement of any proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnifying party's failure to give such notice.
(b) If any proceeding referred to in SECTION 9.7(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such proceeding, the indemnifying party will be entitled to
participate in such proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such proceeding and
provide indemnification with respect to such proceeding), to assume the defense
of such proceeding with counsel satisfactory to the indemnified party and, after
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the indemnified party under
this SECTION 9 for any fees of other counsel or any other expenses with respect
to the defense of such proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a proceeding, (i) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of federal, state or local
laws, orders, ordinances or regulations or any violation of the rights of any
person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (ii) the indemnified party will have
no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith
13
that there is a reasonable probability that a proceeding 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,
at its own expense, participate in the defense, compromise, or settlement of
such proceeding, but the indemnifying party will not be bound by any
determination of a proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
9.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
-------------------------------------------
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10. GENERAL PROVISIONS.
------------------
10.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
--------
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants.
10.2 PUBLIC ANNOUNCEMENTS. Buyer will keep this Agreement strictly
--------------------
confidential and may not make any disclosure of this Agreement or the
transactions contemplated by this Agreement to any person. The Company will
issue any press release or other publicity, if at all, at such time and in such
manner as it shall determine in its sole discretion. Buyer will not contact or
have any dealings with the Company's employees, customers, and suppliers without
the consent of Seller.
10.3 CONFIDENTIALITY. Between the date of this Agreement and the Closing
---------------
Date, Buyer and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
transactions contemplated by this Agreement, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
transactions contemplated by this Agreement, or (c) the furnishing or use of
such information is required by legal proceedings.
If the transactions contemplated by this Agreement are not consummated,
each party will return all of such written information as the other party has
provided.
10.4 NOTICES. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or
14
to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Seller:
Polyphase Corporation
00000 Xxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx,
A Professional Corporation
0000 Xxxx Xxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Buyer:
Letronix Acquisition Corp.
P. O. Xxx 00000
Xxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Law Offices of Xxxxxx X. Xxxxx, Xx.
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile No.: (000) 000-0000
15
10.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
--------------------------------
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Texas, County of Dallas, and each of the parties consents to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
10.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
------------------
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
10.7 WAIVER. The rights and remedies of the parties to this Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
---------------------------------
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
10.9 DISCLOSURE SCHEDULE. The Disclosure Schedule is incorporated into
-------------------
and shall be part of this Agreement.
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party may
--------------------------------------------------
assign any of its rights under this Agreement without the prior consent of the
other parties, except that Buyer may assign any of its rights under this
Agreement to any subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
10.11 SEVERABILITY. If any provision of this Agreement is held invalid or
------------
unenforceable
16
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
10.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
------------------------------
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
10.13 TIME OF ESSENCE. With regard to all dates and time periods set
---------------
forth or referred to in this Agreement, time is of the essence.
10.14 GOVERNING LAW. This Agreement will be governed by the laws of the
-------------
State of Texas without regard to conflicts of laws principles.
10.15 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer:
POLYPHASE CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Seller:
LETRONIX ACQUISITION CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
17
