Exhibit 10.1
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this 1st day of December, 1997 (the "Closing Date") and effective as of
October 1, 1997 (the "Effective Date"), by and among FARMSTEAD TELEPHONE GROUP,
INC., a Delaware corporation ("FTG") and FTG VENTURE CORPORATION, a Delaware
corporation ("FVC") (collectively, FTG and FVC are referred to as "Sellers"),
and FAMS, L.L.C., a New Jersey limited liability company ("Buyer") and
FARMSTEAD ASSET MANAGEMENT SERVICES, LLC, a Delaware limited liability company
(the "Company").
RECITALS
FTG is the record owner of ninety-eight percent (98%) of the membership
units in the Company (the "FTG Units"), and FVC is the record owner of the
remaining two percent (2%) of the membership units in the Company (the "FVC
Units") (the FTG Units and the FVC Units are referred to collectively as the
"Units").
Sellers wish to sell and Buyer wishes to purchase the Units under the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective agreements, covenants
and representations and warranties set forth in this Agreement, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF UNITS
--------------------------
1.1 Purchase and Sale of Units. Subject to the terms and conditions of
this Agreement, each of the Sellers hereby sells, transfers, conveys and
assigns all of its right, title and interest in and to the Units to the Buyer,
and the Buyer hereby purchases the Units in consideration for payment of the
Purchase Price, as defined in Section 1.2 hereof. The Units evidence ownership
in the Company, which Company owns, as of the Effective Date, the assets and is
obligated for the liabilities listed in Schedule A attached hereto.
1.2 Purchase Price. The Purchase Price payable to Sellers shall be Four
Hundred Thousand Dollars ($400,000) payable as follows:
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(a) Twenty-Six Thousand Dollars ($26,000) (the "FTG Payment")
shall be paid by the Buyer to FTG on the Closing Date by certified check,
bank check, or by wire transfer of immediately available funds to an
account designated by FTG.
(b) Fourteen Thousand Dollars ($14,000) (the "FVC Payment") shall
be paid by the Buyer to FVC on the Closing Date by certified check, bank
check or wire transfer of immediately available funds to an account
designated by FVC, which payment shall constitute the consideration paid
by Buyer to FVC for the FVC Units.
(c) Three Hundred Sixty Thousand Dollars ($360,000) payable by
Buyer to FTG by delivery on the Closing Date of a promissory note
substantially in the form of Exhibit A attached hereto (the "Note").
1.3 The Note. The Note shall be payable in sixty (60) equal monthly
installments of principal and interest, the first such installment which shall
become due and payable on the first to occur of (i) the first day of the month
following the month in which the Company moves its offices located at 00
Xxxxxxxx Xxxxx, Xxx 0, Xxxxx 460-C, Centennial Corporate Park, Piscataway, New
Jersey (the "Premises") to a new location, or (ii) April 1, 1998, and the
remaining installments which shall be due and payable on the first day of the
next succeeding fifty-nine (59) months. Interest on the Note shall be one and
one-half percent (1.5%) above the prime rate of interest as published in the
Wall Street Journal on the Closing Date.
1.4 Guaranty Agreement. Buyer shall cause the Company to execute and
enter into a certain guaranty agreement substantially in the form of Exhibit B
attached hereto (the "Guaranty") pursuant to which the Company shall guaranty
the payment and performance of all of Buyer's obligations under this Agreement
and the Note.
1.5 Security Agreement. The obligations of the Company pursuant to the
Guaranty shall be secured by all of the assets of the Company under terms and
conditions set forth in a security agreement substantially in the form of
Exhibit C attached hereto (the "Security Agreement").
1.6 Additional Security. As additional security for the Buyer's
obligations under the Note, the Buyer shall, as of the Closing Date, post a
standby letter of credit (the "Letter of Credit") in a form acceptable to
Sellers and in the amount of Forty-Five Thousand Dollars ($45,000) which FTG
may, under the terms and conditions of the Letter of Credit, draw upon either
(i) in the event of a default in payment by the Buyer for amounts which become
due and payable to FTG under the Note which is not cured within ten (10) days
of the date of default; (ii) if there shall be an Event of Default by the
Company under the Guaranty or the Security Agreement; or (iii) in the event of
default by either Buyer or the Company under any loan agreements, credit
agreements, reimbursement agreements, or debt instruments of any kind or
description between either the Buyer or the Company and the issuer (the
"Issuer") of the Letter of Credit. The Letter of Credit shall be held in place
and maintained for the benefit of FTG until April 15, 2002.
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1.7 Employees and Benefits. Notwithstanding anything to the contrary
set forth herein, FTG shall be responsible for and pay wages and health
insurance and life insurance premiums covering employees of the Company for the
period commencing on October 1, 1997 and ending on October 31, 1997, after
which FTG shall have no further obligation to the Company relating to wages and
benefits paid to employees of the Company of any kind or description.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Each of the Sellers, with respect to itself only and not with respect to
the other Seller, represent and warrant to Buyer to the best knowledge and
belief of the directors and officers of each of the Sellers as follows:
2.1 Share Ownership. Each of the Sellers own either the FTG Interest or
the FVC Interest, as the case may be, beneficially and of record, free and
clear of any lien.
2.2 Power and Authority. Each of the Sellers has the full corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder.
2.3 Buyer's Ownership. Upon payment of the Purchase Price, Buyer will
acquire legal and beneficial ownership of each of the Units, free and clear of
any lien against the Units created by the Sellers.
2.4 Organization and Good Standing. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
2.5 Material Changes. Each of the Sellers represents and warrants that
during the period commencing on February 29, 1996 and ending on July 1, 1997
(the "Farmstead Period") neither of the Sellers or their affiliates, officers,
directors, agents or employees has entered into, agreed upon or otherwise made
commitments on its own behalf or on behalf of the Company which have not been
disclosed to Buyer or the Company.
2.6 Environmental Compliance. Each of the Sellers represents and
warrants that during the Farmstead Period, the Company has not been made aware
of any violation of any law, regulation or order of the United States or the
State of New Jersey relating to the environment, pollution, emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous materials or wastes into ambient air, surface water, ground water,
land or environmental medium, and each of the Sellers agrees to indemnify,
defend, and save the Buyer harmless against any claim, damage, liability,
costs, penalties, or fines which the Buyer may suffer as a result of air,
ground or water pollution caused by the Sellers in the Company's use of the
premises located at either 00 Xxxxxxxx Xxxxx, Xxx 0, Xxxxx 460-C, Centennial
Corporate Park, Piscataway, New Jersey (the "Premises") or 00 Xxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx Corporate Park, Piscataway, New Jersey, for
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actions or inactions of the Company occurring on or before the Closing Date,
provided, however, that the Sellers shall have no obligation to indemnify the
Buyer pursuant to this Section 2.6 if such air, ground or water pollution is
caused by the grossly negligent or willful actions or inactions, directly or
indirectly of Xxxxx X. Anger, Jr. occurring during the Farmstead Period.
2.7 Validity of Agreement. This Agreement has been duly executed and
delivered by each of the Sellers and a duly authorized officer of each of the
Sellers and constitutes the valid and binding obligation of each of the
Sellers, enforceable against each of the Sellers in accordance with its terms.
This Agreement and the performance by the Sellers of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each of the Sellers.
2.8 Books and Records. The minute books of the Company shall be made
available to Buyer by the Sellers for its inspection and contain accurate and
complete records of all meetings of and corporate actions or written consents
by the members and officers of the Company.
2.9 Disclosure. Neither of the Sellers has withheld from Buyer any
material facts relating to the assets, properties, liabilities, business,
operations, financial condition, results of operations or prospects of the
Company including, but not limited to, material facts relating to the physical
condition of the Premises on or before the Closing Date.
2.10 Further Obligations of the Company. Effective as of the Closing
Date, FTG and FVC acknowledge and agree that the Company shall have no further
obligation to FTG with respect to any and all intercompany obligations carried
on the books of FTG or FVC as an accounts receivable attributable to the
Company and accrued prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
3.1 Organization, Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has corporate power and authority to own, operate and lease its
properties and conduct its business as now conducted.
3.2 Validity of Agreement. Buyer has corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by a duly authorized officer of
Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. This Agreement and the performance
by Buyer of the transactions contemplated hereby have been duly authorized by
all necessary corporate action.
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3.3 No Breach. Neither the execution and delivery of, or the
performance by Buyer of its obligations under this Agreement, nor the
consummation of the transactions contemplated hereby, will (a) violate,
conflict with or result in the breach of, any applicable law or order or the
Articles of Incorporation or Bylaws of Buyer, (b) result in the creation of any
lien upon any of the assets or properties of Buyer, or (c) violate, conflict
with, result in the breach of or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
accelerate or permit the acceleration of the performance required by, or
otherwise give any Person additional rights or compensation under, any note,
deed, lease, instrument, security agreement or mortgage, any commitment,
contract, license, sales commitment or other instrument or oral understanding
to which Buyer is a party or by which any of its assets or properties are
bound.
3.4 No Consents Necessary. No consent is required to be obtained from,
made with or given to any Person by Buyer in connection with its execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
3.5 The Principals. Buyer, by virtue of the management of the Company
by one or more of its shareholders prior to the Closing Date, has had full and
complete access to the books, records, minutes and business operations of the
Company without limitation or restriction and acknowledges and agrees that all
aspects of the Company's business and operations up to the Closing Date are
known to them, and that Buyer is relying on its own investigation, and the
Sellers' representations in Article II herein with respect to the business of
the Company in agreeing to the terms and conditions in this Agreement.
3.6 Investment Purpose. The Units are being purchased for investment
only and not with a view to any public distribution thereof, and Buyer will not
offer to sell or otherwise dispose of the stock in violation of any of the
requirements of the federal securities laws or any applicable state securities
laws.
ARTICLE IV
CONDITIONS TO CLOSING
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4.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions (any
one or more of which may be waived in whole or in part in a writing signed by
Buyer):
(a) Accuracy of Representations and Warranties. The
representations and warranties of each of the Sellers contained in this
Agreement shall be true and correct in all material respects as made,
both on the date of this Agreement and at and as of the Closing Date.
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(b) Performance of Covenants and Agreements. Each of the Sellers
shall have performed or complied with, in all material respects, all
covenants and agreements contemplated by this Agreement to be performed
or complied with by them at or prior to the Closing Date.
(c) Receipt of Documents. Seller shall have delivered, or caused
to be delivered, to Buyer each of the documents required by Section 5.1.
4.2 Conditions to Obligations of Each of the Sellers. The obligation of
each of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions (any one or more of which may be waived in whole or
in part in a writing signed by each of the Sellers):
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall
be true and correct in all material respects as made, both on the date of
this Agreement and at and as of the Closing Date
(b) Performance of Covenants and Agreements. Buyer shall have
performed or complied with, in all material respects, all covenants and
agreements contemplated by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date.
(c) Receipt of Documents. Buyer shall have delivered, or caused
to be delivered, to Sellers each of the documents required by Section
5.2.
ARTICLE V
CLOSING
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5.1 Deliveries by Each of the Sellers. On or before the Closing Date,
each of the Sellers shall deliver to Buyer:
(a) a certificate signed by each of the Sellers to the effect
that the conditions set forth in Section 4.1 have been satisfied;
(b) a certificate of the Secretary of each of the Sellers, in
form and substance reasonably satisfactory to Buyer, certifying as to (i)
the resolutions of the Board of Directors of each of the Sellers
approving and authorizing this Agreement and the transactions
contemplated hereby, and (ii) copies of the Articles of Incorporation and
Bylaws of each of the Sellers;
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(c) a good standing certificate of each of the Sellers issued by
the Secretary of State of Delaware and each state where they are
qualified to do business as a foreign corporation;
(d) copies of any and all books and records in their possession
or under their control relating to the Company, including, without
limitation, all tax returns and other books and records relating to taxes
payable to any federal, state, local or foreign governmental entity or
agency; and
(e) the Units.
5.2 Deliveries by Buyer. At the closing, Buyer shall deliver to Seller:
(a) the FTG Payment;
(b) the FVC Payment;
(c) the Note;
(d) the Guaranty Agreement;
(e) the Security Agreement;
(f) the Letter of Credit;
(g) a certificate of an officer of Buyer to the effect that the
conditions set forth in Section 4.2 have been satisfied;
(h) a certificate of the Secretary or Members of Buyer, in form
and substance reasonably satisfactory to Sellers, certifying as to (i)
the resolutions of the Board of Directors of Buyer approving and
authorizing this Agreement and the transactions contemplated hereby, and
(ii) copies of the Articles of Incorporation and Bylaws of Buyer; and
(i) a good standing certificate of Buyer issued by the Secretary
of State of the State of New Jersey.
(j) by bank or certified check, a payment to FTG pursuant to
Section 1.7 hereof.
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ARTICLE VI
POST-CLOSING COVENANTS
----------------------
6.1 Name Change. Buyer covenants and agrees that upon the first to
occur of (i) October 1, 2002, or (ii) thirty (30) days after the receipt by the
Buyer (the "Notice Period") written notice from either of the Sellers that an
action or failure to act by the Company has caused "material damage", as
hereinafter defined, to the business of either of the Sellers (the "Notice")
pursuant to which the Buyer does not seek arbitration as provided for in
Section 8.12 hereof. Buyer shall cause the name of the Company to be changed
from Farmstead Asset Management Services, LLC to any other name that does not
include the name "Farmstead." This Section 6.1 shall apply to the Company, the
Buyer, and any heirs, successors or assigns of Buyer or any entity into which
the Buyer may be merged. For the purposes of this Section 6.1, "material
damage" shall mean damage to either of the Sellers resulting from any or all of
the following: (x) any Event of Default to the Company as defined in the Note
or the Security Agreement; (y) a material breach of this Agreement by the
Buyer; and (z) any action or failure to act by the Company, which shall
directly or indirectly materially injure either of the Sellers or their
affiliates in the conduct of their businesses by virtue of the use by the
Company of the name which includes the word "Farmstead" Notwithstanding all of
the foregoing, in the event that Buyer, at any time within the Notice Period,
serves written notice upon the Sellers of its intention to seek arbitration in
accordance with the terms and conditions of Section 8.12 hereof with respect to
the issues set forth by either of the Sellers in the Notice, such issues will
be resolved in binding arbitration as provided for in Section 8.12 hereof, and
Buyer and Sellers will act in accordance with the findings of the arbitrator.
6.2 Post-Closing Access. After the Closing Date, Buyer shall retain for
a period of seven (7) years all books and records of the Company for the period
commencing on February 23, 1996 through the Closing Date, and shall give to
each of the Sellers and their authorized representatives such access to the
books and records being transferred and assigned to Buyer by each of the
Sellers which relate to the operation of the business of the Company prior to
the Closing Date as may be reasonably required by either of the Sellers.
Sellers shall be entitled, at their own expense, to make extracts and copies of
such books and records and Buyer will cooperate with each of the Sellers
therewith.
6.3 Security Deposit. Buyer shall, immediately upon receipt by the
Company, cause the Company to return to FTG any and all funds received by Buyer
from its landlord in connection with the return of the Company's security
deposit paid to its landlord (the "Security Deposit") in order to secure the
Company's obligations under that certain Lease Agreement dated March 20, 1996,
by and between the Company, as Tenant, and X. Xxxxxxx Xxxxx, Xxxxx X.
Xxxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxxx X. Xxxxx, as Landlord (the "Lease").
Notwithstanding all of the foregoing, in the event that (i) the Buyer
moves out of the Premises into a new premises owned or managed by the Landlord,
which premises may include the current Premises in any modified form, on or
before January 1, 1998, and (ii) the Buyer obtains from the
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Landlord a written release from the Landlord releasing the Sellers from any
and all obligations under the Lease, and any other agreement, contract or
document binding either of the Sellers to obligations to the Landlord with
respect to the Premises, Buyer shall retain the Security Deposit for itself,
and shall have no further obligation to FTG with respect to the Security
Deposit.
6.4 Rent. Rent due and owing to the Company's landlord under the terms
and conditions set forth in the Lease for the period commencing on October 1,
1997 and ending on March 31, 1998 shall be paid monthly in full as follows:
Month Payable by:
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(a) October, 1997 FTG
(b) November, 1997 If the Company continues to occupy the
Premises as of November 1, 1997, then the
Company shall pay the rent due the Landlord
for the month of November in full. If the
Company no longer occupies the Premises as of
November 1, 1997, then FTG shall pay the rent
due for the month of November in full.
(c) December, 1997 If the Company continues to occupy the
Premises as of December 1, 1997, then the
Company shall pay the rent due the Landlord
for the month of December in full. If the
Company no longer occupies the Premises as of
December 1, 1997, then FTG shall pay the rent
due for the month of December in full.
(d) January, 1998 If the Company continues to occupy the
Premises as of January 1, 1998, then the
Company shall pay the rent due the Landlord
for the month of January in full. If the
Company no longer occupies the Premises as of
January 1, 1998, then FTG shall pay the rent
due for the month of January in full.
(e) February, 1998 If the Company continues to occupy the
Premises as of February 1, 1998, then the
Company shall pay the rent due the Landlord
for the month of February in full. If the
Company no longer occupies the Premises as of
February 1, 1998, then FTG shall pay the rent
due for the month of February in full.
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(f) March, 1998 If the Company continues to occupy the
Premises as of March 1, 1998, then the
Company shall pay the rent due the Landlord
for the month of March in full. If the
Company no longer occupies the Premises as of
March 1, 1998, then FTG shall pay the rent
due for the month of March in full.
Notwithstanding all of the foregoing, in the event that the Company
vacates the Premises prior to March 1, 1998 and occupies and leases a new
remises owned by the Landlord, the Buyer covenants and agrees that it shall use
its best efforts to obtain a release from the Landlord releasing the Company
and the Sellers from any and all obligations under the Lease effective as of
the day the Company vacates the Premises.
6.5 Financial Statements and Audits. Buyer shall, commencing on the
first day of the month after the Closing Date and ending when all of its
obligations under the Note have been satisfied, provide FTG with (i) monthly
financial statements of Company prepared in accordance with generally accepted
accounting principles consistently applied and certified by the Company as true
and correct as of the date of issuance to FTG which shall be provided no later
than twenty (20) days after the last day of each month; and (ii) audited
financial statements of the Company or any successor to the Company provided to
FTG within ninety (90) days of the close of the Company's or a successor's
fiscal year. In addition, Sellers shall, upon reasonable notice to the Company,
have a right of access to the books and records of the Company for the purposes
of auditing, at its own expense, the financial condition of the Company or
conducting appraisals of the Company's assets, provided, however, that Sellers
shall not, in the exercise of such rights of access, materially interfere with
the conduct of the Company's business.
6.6 Required Notice. Buyer shall provide FTG with written notice of any
event of default by either Buyer or the Company under any loan agreements,
credit agreements, reimbursement agreements or debt instruments of any kind or
description between either the Buyer or the Company and the Issuer.
ARTICLE VII
INDEMNIFICATION AND SURVIVAL
----------------------------
7.1 Indemnification by Each of the Sellers. Subject to the provisions
of this Article VII, each of the Sellers individually, and not jointly and
severally, agree to indemnify, defend and hold harmless Buyer, its respective
affiliates, successors, assigns, stockholders, partners, directors, officers,
employees, agents and representatives (collectively, "Buyer Indemnitees") from
and against any and
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all liabilities, obligations, damages, deficiencies, expenses, actions,
demands, fines, penalties, amounts paid in settlement, assessments, judgments,
payments, costs and expenses, including reasonable attorneys' fees
(collectively, "Damages"), incurred or suffered by any of the Buyer
Indemnitees resulting from, arising out of or relating to (i) any inaccuracy
in or breach of any representation or warranty of each of the Sellers
contained in this Agreement or any of the other documents, instruments or
certificates delivered by or on behalf of each of the Sellers in connection
herewith, (ii) any breach of or any default under any of the covenants or
agreements of each of the Sellers contained in this Agreement or in any of the
other documents, instruments or certificates delivered by or on behalf of each
of the Sellers, or the Company in connection herewith, and (iii) any actions of
Sellers or the Company, or their affiliates, officers, directors, agents or
employees relating to the conduct of the Company's business prior to the
Effective Date, except for those grossly negligent, fraudulent, illegal or
intentionally wrongful actions of Xxxxx X. Anger, Jr. in his capacity as an
employee of the Company.
7.2 Indemnification by Buyer. Subject to the provisions of this Article
VII, Buyer agrees to indemnify, defend and hold harmless each of the Sellers
and their respective successors, assigns, heirs, executors and personal
representatives (collectively, "Seller Indemnitees") from and against any and
all Damages incurred or suffered by any of the Seller Indemnitees resulting
from, arising out of our relating to (i) any inaccuracy in any representation
or warranty of Buyer contained in this Agreement or in any of the other
documents, instruments or certificates delivered by or on behalf of Buyer in
connection herewith, (ii) any breach of or any default under any of the
covenants and agreements of Buyer contained in this Agreement or in any of the
other documents, instruments or certificates delivered by or on behalf of Buyer
in connection herewith, or (iii) any grossly negligent, fraudulent, illegal or
intentionally wrongful acts of Xxxxx X. Anger, Jr. as determined in a court of
competent jurisdiction located in the State of New Jersey in his capacity as an
employee of the Company occurring prior to the Effective Date, and (iv) any
actions of Buyer or the Company, or their affiliates, officers, directors,
agents or employees relating to the conduct of the Company's business on or
after the Effective Date.
7.3 Notice of Claims: Defense.
(a) Promptly after receipt by any Buyer Indemnitee or Seller
Indemnitee (in any such case, the "Beneficiary") of notice of any claim
or potential claim, or the commencement of any action by any Person that
is not a party to this Agreement or a Buyer Indemnitee or a Seller
Indemnitee (a "Third Party Claim"), which could give rise to a right to
indemnification pursuant to Section 7.1 or Section 7.2 hereof, the
Beneficiary shall give the party who may become obligated to provide
indemnification hereunder (the "Indemnitor") written notice describing
the Third Party Claim in reasonable detail and specifying, to the extent
known, the nature, circumstances and the amount of such Third Party
Claim. The Indemnitor shall have twenty-one (21) calendar days from its
receipt of notice from the Beneficiary of a Third Party Claim to notify
the Beneficiary (i) whether the Indemnitor disputes the Beneficiary's
right of indemnity with respect to such Third Party Claim, and (ii) if,
except for the limitations set forth in Article VII, the Indemnitor does
not dispute such right of indemnity, whether or not the Indemnitor
desires to defend the Beneficiary against such Third Party Claim.
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(b) If the Indemnitor notifies the Beneficiary within such
twenty-one (21) day period that (i) the Indemnitor does not dispute the
Beneficiary's right of indemnification and (ii) the Indemnitor desires to
defend against such Third Party Claim, then the Indemnitor shall have the
right to assume and control, at its sole cost and expense, the defense
and/or settlement of such Third Party Claim by appropriate proceedings
with counsel reasonably acceptable to the Beneficiary. The Beneficiary
may participate in, but not control, any such defense or settlement, at
its sole cost and expense.
(c) If the Indemnitor (i) disputes the Beneficiary's right of
indemnity with respect to a Third Party Claim or (ii) does not dispute
such right of indemnity but either fails to promptly assume and prosecute
the defense and/or settlement of such Third Party Claim or ceases or
fails to diligently and in good faith defend and/or settle such Third
Party Claim, then the Beneficiary shall be entitled to assume and control
the defense and/or settlement of such Third Party Claim, and the
Beneficiary shall be entitled to indemnification for such defense. If the
Indemnitor does not assume the defense of a Third Party Claim for any
reason, Indemnitor may still participate in, but not control, the defense
of such Third Party Claim at the Indemnitor's sole cost and expense.
(d) The party responsible for the defense of any Third Party
Claim (the "Responsible Party") shall, to the extent reasonably requested
by the other party, keep such other party informed as to the status of
any Third Party Claim for which such party is not the Responsible Party,
including, without limitation, all settlement negotiations and offers.
The Indemnitor and the Beneficiary shall use reasonable efforts to
cooperate with each other in the defense and/or settlement of any Third
Party Claim.
(e) Neither the Indemnitor, on the one hand, nor the Beneficiary,
on the other hand, shall settle any Third Party Claim without the prior
written consent of the other party, which consent shall not be
unreasonably withheld. The Responsible Party shall promptly notify the
other party of each settlement offer (including whether or not the
Responsible Party is willing to accept the proposed settlement offer)
with respect to a Third Party Claim. Such other party agrees to notify
the Responsible Party with reasonable promptness whether or not such
party is willing to accept the proposed settlement offer.
(f) In the event that a party hereto has a claim for
indemnification that does not involve a Third Party Claim (a "Direct
Claim"), such party shall notify the Indemnitor of such Direct Claim with
reasonable promptness after such party becomes aware of the Direct Claim,
specifying, to the extent known, the nature, circumstances and amount of
such Direct Claim.
7.4 Survival of Representations, Warranties and Covenants.
Each of the representations and warranties set forth in Article II and
Article III hereof shall survive the Closing Date until the third anniversary
of the Closing Date, at which time all such
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representations and warranties, and any cause of action arising out of any
claim which is not asserted prior to said date, shall terminate and be of no
further force and effect, except that the expiration of such representations
and warranties shall not affect any right to pursue any claims (or any causes
of action arising out of such claims) asserted by any party prior to said
date. There shall be no time or other limits on the covenants of the parties
herein or in any other documents or instruments delivered in connection
herewith, except as expressly provided herein or in such other documents or
instruments.
ARTICLE VIII
MISCELLANEOUS
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8.1 Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given (a) upon personal delivery, (b) one business day after being
sent by recognized overnight delivery service, or (c) five business days after
being mailed by first-class mail, postage prepaid, and in each case addressed
as follows:
(a) if to Buyer, to:
FAMS, L.L.C.
00 Xxxxxxxx Xxxxx
Lot 1, Block 000-X
Xxxxxxxxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Anger, Jr.
with a copy to:
XxXxxxx, Xxxxx & DuPont P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
(b) if to either of the Sellers, to:
Farmstead Telephone Group, Inc.
00 Xxxxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
with a copy to:
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Pepe & Hazard LLP
Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
provided, however, that if any party shall have designated a different address
by notice to the other, then to the last address so designated.
8.2 Binding Effect; Assignment. This Agreement and the rights and
duties hereunder shall be binding upon and inure to the benefit of the
successors and permitted assigns of each of the parties to this Agreement.
Except for the assignment by Buyer of this Agreement and all or any of its
rights and obligations hereunder to any of its Affiliates, (which assignment
may be made without the consent of each of the Sellers), no party shall assign
or delegate this Agreement or any rights or obligations hereunder without the
prior written consent of the other parties.
8.3 Entire Agreement. This Agreement and the Exhibits and Schedules set
forth the entire understanding of the parties to this Agreement and supersede
all prior agreements, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any party or any officer, employee,
shareholder or representative of any party to this Agreement.
8.4 Governing Law: Construction. This Agreement shall be construed and
enforced in accordance with and governed by the internal substantive laws of
the State of New Jersey without giving effect to the principles of conflicts of
law thereof. The headings of the Articles and Sections of this Agreement and in
the Schedules and Exhibits to this Agreement are inserted for convenience of
reference only and shall not be used in interpreting this Agreement. Unless
specifically stated otherwise, references to Articles, Sections, Exhibits and
Schedules refer to the Articles, Sections, Exhibits and Schedules to this
Agreement.
8.5 No Third Party Rights. Nothing in this Agreement expressed or
implied is intended or shall be construed to confer upon or give to any Person,
other than the parties to this Agreement, any rights or remedies under or by
reason of this Agreement.
8.6 Amendment. This Agreement may be amended only by an instrument in
writing duly executed by the parties to this Agreement.
8.7 Waivers. Any waiver by any party of any breach of or failure to
comply with any provision of this Agreement by any other party shall be in
writing and shall not be construed as, or constitute, a continuing waiver of
such provision, or a waiver of any other breach of, or failure to comply with,
any other provision of this Agreement.
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8.8 Fees and Expenses of Transaction Taxes. Each Seller shall pay the
fees, costs and expenses incurred by it in connection with the negotiation of
this Agreement and the consummation of the transactions contemplated by this
Agreement. Buyer shall pay the fees, costs and expenses incurred by it in
connection with the negotiation of this Agreement and the consummation of the
transactions contemplated by this Agreement.
8.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
8.10 Publicity. Any public announcements with respect to this Agreement
or the transactions contemplated by this Agreement shall be made at such time
and in such manner as is determined by mutual agreement and consent of the
parties hereto, which mutual agreement shall be bargained for in good faith and
which consent shall not be unreasonably withheld by any party hereto.
Furthermore, no party to this Agreement shall make any public announcement with
regard to this Agreement or any of the transactions contemplated herein without
the written consent of the other parties hereto.
8.11 Severability. In case any provision or restriction of this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement will
not be affected or impaired thereby. The parties hereto further agree that any
such unenforceable provision or restriction shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law, and to the
extent that any court of competent jurisdiction determines any restrictions
herein to be overly broad or unenforceable, such court is hereby empowered and
authorized to limit such restriction so that it is enforceable for the longest
duration of time and largest geographical area possible.
8.12 Arbitration. Any disputes arising among the parties to this
Agreement with respect to the terms or conditions of this Agreement including,
but not limited to, disputes relating to the happening of an event which causes
"material damage" to either of Sellers or their affiliates as defined in
Section 6.1 hereof, or the fulfillment of such terms and conditions by the
parties hereto, shall be settled by binding arbitration in the State of New
Jersey in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. In the event that a dispute arises which requires
arbitration under this Section 8.12, the parties shall attempt to agree upon
one arbitrator to resolve such dispute. In the event that the parties are
unable to agree upon an arbitrator within fourteen (14) days, then each party
shall choose one arbitrator and the arbitrators chosen by the parties shall
choose a single arbitrator who shall resolve such dispute. Each party shall
bear its respective costs of the arbitration. The prevailing party in any such
arbitration shall be entitled to have the arbitrators' award enforced by any
court of competent jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
BUYER:
FAMS, L.L.C.
By: /s/ Xxxx Anger, Jr.
------------------------------------
, Manager
SELLERS:
FARMSTEAD TELEPHONE GROUP, INC.
By: /s/ Xxxxxx X. XxXxxxx
------------------------------------
Xxxxxx X. XxXxxxx, Secretary
Duly Authorized
FTG VENTURE CORPORATION
By: /s/ Xxxxxx X. XxXxxxx
------------------------------------
Xxxxxx X. XxXxxxx, Secretary
Duly Authorized
COMPANY:
FARMSTEAD ASSET MANAGEMENT SERVICES, LLC
By: /s/ Xxxxxx X. XxXxxxx
------------------------------------
Xxxxxx X. XxXxxxx, Secretary
Duly Authorized
Farmstead Telephone Group, Inc.
Member
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Schedule A
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Assets and Liabilities of the Company
1. The Assets of the Company include the balance sheet assets of the Company
as of 9/30/97 excluding the security deposit referenced in Section 6.3 of
this Agreement.
[A more particularized list of assets is to be provided via
Federal Express on 10/30/97]
2. The Liabilities of the Company include balance sheet liabilities of the
Company as of 9/30/97 excluding intercompany payables to FTG as provided
for in Section 2.10 of this Agreement.
[A more particularized list of liabilities is to be provided via
Federal Express on 10/30/97]
