EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ANIXTER INTERNATIONAL INC.
AND
PENTACON, INC.
PENTACON DELAWARE, INC.
JIT HOLDINGS, INC.
PENTACON PROPERTIES, L.P.
PENTACON INTERNATIONAL SALES, INC.
PENTACON AEROSPACE GROUP, INC.
PENTACON USA, L.P.
PENTACON INDUSTRIAL, INC
PENTACON EUROPE LIMITED
PENTACON MEXICO S.A. DE C.V.
PENTACON CANADA CORPORATION
MAY 22, 2002
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made as of May ____,
2002, by and between Anixter International Inc., a Delaware corporation
("BUYER") and Pentacon, Inc., a Delaware corporation ("PENTACON"), and the
following subsidiaries of Pentacon: Pentacon Delaware, Inc., a Delaware
corporation, JIT Holdings, Inc., a Texas corporation, Pentacon Properties, L.P.,
a Texas limited partnership, Pentacon International Sales, Inc., a United States
Virgin Islands corporation, Pentacon Aerospace Group, Inc., a Nevada
corporation, Pentacon USA, L.P., a Texas limited partnership, Pentacon
Industrial Group, Inc, a Nevada corporation, Pentacon Europe Limited, a company
incorporated under the laws of the United Kingdom, Pentacon Mexico S.A. de C.V.,
a company incorporated under the laws of Mexico, Pentacon Canada Corporation, a
company incorporated under the laws of Canada (each a "SELLER," and together the
"SELLERS").
PRELIMINARY STATEMENT
A. Sellers are filing a voluntary petition (the "BANKRUPTCY PETITION") for
relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
Sections 101, et seq. (the "BANKRUPTCY CODE"), in the United States Bankruptcy
Court for the Southern District of Texas (the "BANKRUPTCY COURT") and are
filing, contemporaneously therewith, a pre-negotiated plan of reorganization
("PLAN") and disclosure statement ("DISCLOSURE STATEMENT"); and
B. Subject to the approval of the Bankruptcy Court, Sellers desire to sell
to Buyer, and Buyer desires to purchase from Sellers, substantially all of
Sellers' assets, through the Plan and Disclosure Statement in accordance with
the Bankruptcy Code, upon the terms and subject to the conditions set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
CONSTRUCTION AND DEFINITIONS
1.1 CONSTRUCTION
Any reference in this Agreement to an "Article," "Section" or
"Schedule" refers to the corresponding Article, Section or Schedule of or to
this Agreement, unless the context indicates otherwise. The headings of Articles
and Sections are provided for convenience only and should not affect the
construction or interpretation of this Agreement. All words used in this
Agreement should be construed to be of such gender or number as the
circumstances require. The terms "include" and "including" indicate examples of
a foregoing general statement and not a limitation on that general statement.
Any reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the
statute, as in effect at the relevant time. Any reference to a Contract or other
document as of a given date means the Contract or other document as amended,
supplemented and modified from time to time through such date.
1.2 DEFINITIONS
For the purposes of this Agreement, the following terms and variations
on them have the meanings specified in this Section:
"ACCOUNTANTS" is defined in Section 2.6.
"ACCOUNTS RECEIVABLE" means (a) all trade accounts receivable and other
rights to payment from customers of Sellers and the full benefit of all security
for such accounts or rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped, products sold or
services rendered to customers of Sellers, (b) all other accounts or notes
receivable of Sellers and the full benefit of all security for such accounts or
notes, and (c) any claim, remedy or other right related to any of the foregoing.
"ACCRUED LIABILITIES" is defined in Section 2.3.
"ACTIVE EMPLOYEE" means an employee of a Seller immediately prior to
the Closing Date, including an employee on temporary leave of absence, family
medical leave, military leave, temporary disability leave or sick leave, but
excluding an employee on long-term disability leave or any employee employed at
a Facility which is an Excluded Asset.
"ACTUAL CUMULATIVE EBITDA RATIO" is defined in Section 9.1(g).
"ACTUAL MONTHLY EBITDA RATIO" is defined in Section 9.1(g).
"ADVERSE CONSEQUENCE" means any Liability, loss, damage (including
incidental and consequential damages), claim, cost, deficiency, diminution of
value, or expense (including costs of investigation and defense, penalties and
reasonable legal fees and costs), whether or not involving a third-party claim.
"ANCILLARY AGREEMENTS" is defined in Section 2.9.
"ASSETS" is defined in Section 2.1.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined in Section 2.9(a)(ii).
"ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENTS" is defined in Section
2.9(a)(iii).
"ASSUMED LIABILITIES" is defined in Section 2.3.
"BALANCE SHEET" is defined in Section 3.3.
"BANKRUPTCY CASE" meansthe bankruptcy case filed by Sellers in the
United States Bankruptcy Court for the Southern District of Texas.
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"BENEFIT PLAN" means each "employee pension benefit plan" as defined
in Section 3(2) of ERISA, each "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, and each agreement, plan, program, fund, policy, contract
or arrangement (whether written or unwritten) providing compensation, benefits,
pension, retirement, profit sharing, stock bonus, stock option, stock purchase,
phantom or stock equivalent, bonus, incentive, deferred compensation,
hospitalization, medical, dental, vision, vacation, life insurance, death
benefit, sick pay, disability, severance, termination indemnity, redundancy pay,
educational assistance, holiday pay, housing assistance, moving expense
reimbursement, fringe benefit or similar employee benefits covering any
employee, former employee, or the beneficiaries and dependents of any employee
or former employee.
"BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible.
"BID PROCEDURES ORDER" is defined in Section 10.2.
"XXXX OF SALE" is defined in Section 2.9(a)(i).
"BREAK-UP FEE" is defined in Section 10.2(f).
"BUSINESS PLAN" means Sellers' 2002 business plan, approved by
Pentacon's board of directors, as provided to Buyer by Xxxxxx X. Xxxx during his
visit to Buyer the week of March 18, 2002.
"BUYER" is defined in the first paragraph of this Agreement.
"BUYER DIP" is defined in Section 2.11.
"BUYER'S DISCLOSURE SCHEDULE" means the disclosure schedule delivered
pursuant to Article 4 by Buyer to Sellers concurrently with the execution and
delivery of this Agreement, together with any updates to it permitted by this
Agreement.
"BUYER INDEMNITEES" is defined in Section 11.2.
"CASH" means all cash, including cash held in lock-boxes, and cash
equivalents, marketable securities and short-term investments of a Seller.
"CASH PORTION OF THE PURCHASE PRICE" means, subject to the adjustment
contemplated by Section 2.6, $121,000,000, minus (i) the amount of the Scheduled
Liabilities, (ii) the outstanding principal balance under the Buyer DIP and
accrued but unpaid interest thereon, and (iii) any payment made by Sellers
between the date of the Closing Balance Sheet and the Closing Date to satisfy
any Liability other than the Assumed Liabilities.
"CLEANUP" means any investigative, monitoring, cleanup, removal,
containment or other remedial or response action required by any Environmental
Law. The terms "removal," "remedial" and "response action" include the types of
activities covered by the Comprehensive Environmental Response, Compensation,
and Liability Act.
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"CLOSING" means the consummation and completion of the purchase and
sale of the Assets.
"CLOSING BALANCE SHEET" is defined in Section 2.6.
"CLOSING DATE" means the date on which the Closing actually takes
place.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPETING AGREEMENT" is defined in Section 10.2(a).
"COMPETING TRANSACTION" is defined in Section 10.1.
"CONFIDENTIAL INFORMATION" means all non-public information of Sellers
in any form, including: (i) all information relating to Sellers' trade secrets
(including all information that applicable law defines as "trade secrets"); (ii)
all information concerning products, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions, ideas, know-how, past, current, and planned
research and development, current and planned methods and processes, customer
lists, current and anticipated customer requirements, price lists, market
studies, business plans, business opportunities, computer hardware, computer
software (including object and source codes), and computer software and database
technologies, systems, structures and architectures; (iii) all information
concerning Sellers' business and affairs, historical and current financial
statements, financial projections and budgets, historical, current and projected
sales, capital spending budgets, strategic plans, marketing and advertising
plans, publications, agreements, client and customer lists and files, the names
and backgrounds of key personnel, and personnel training techniques and
materials; and (iv) all third-party confidential information lawfully in the
possession of Seller.
"CONFIRMATION ORDER" means an order or orders of the Bankruptcy Court,
in form and substance reasonably acceptable to Sellers and Buyer, which
contain(s), without limitation, the following: (1) confirmation of the Plan; (2)
approval of this Agreement and all terms and conditions hereof; (3) transfer of
the Assets to Buyer free and clear of all interests (as such term is used in the
Bankruptcy Code) other than Assumed Liabilities; and (4) a finding that the
Buyer has acted in good faith within the meaning of 11 U.S.C. 363(m).
"CONSENT" means any approval, consent, ratification, waiver or other
authorization.
"CONTEMPLATED TRANSACTIONS" means all of the transactions to be carried
out in accordance with this Agreement, including the purchase and sale of the
Assets, the assumption of the Assumed Liabilities, the performance by the
parties of their other obligations under this Agreement, the filing of the
Bankruptcy Petition and the correspondent Plan and Disclosure Statement, and the
execution, delivery and performance of the Ancillary Agreements.
"CONTINUED EMPLOYEES" is defined in Section 13.2.
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"CONTRACT" means any contract, agreement, commitment, understanding,
lease, license, franchise, warranty, guaranty, mortgage, note, bond or other
instrument or consensual obligation (whether written or oral and whether express
or implied) that is legally binding.
"CONTRAVENE" -- an act or omission would "Contravene" something if, as
the context requires:
(a) the act or omission would conflict with it, violate it, result in a
breach or violation of or failure to comply with it, or constitute a default
under it;
(b) the act or omission would give any Governmental Body or other
Person the right to challenge, revoke, withdraw, suspend, cancel, terminate or
modify it, to exercise any remedy or obtain any relief under it, or to declare a
default or accelerate the maturity of any obligation under it; or
(c) the act or omission would result in the creation of an Encumbrance
on the stock or assets of any Seller.
"CURE" means the amount of cash required for the cure necessary to
assume, or assume and assign, a Contract which is a Contract that is part of the
Assets, pursuant to the requirements of Section 365(b) of the Bankruptcy Code.
"ENCUMBRANCE" means any charge, claim, mortgage, servitude, easement,
right of way, community or other marital property interest, covenant, equitable
interest, license, lease or other possessory interest, lien, option, pledge,
security interest, preference, priority, right of first refusal or similar
restriction; provided, however, that the term "Encumbrance" does not include (a)
mechanic's, materialman's or similar liens with respect to amounts not yet due
and payable, (b) liens for Taxes not yet due and payable and (c) liens securing
rental payments under capital lease arrangements.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters (including navigable water and ocean waters), groundwaters, drinking
water supply, stream sediments, ambient air, plant life, animal life, and any
other similar medium or natural resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" means any Adverse
Consequence arising from or under Environmental Law or Occupational Safety and
Health Law, including those consisting of or relating to (a) any environmental,
health or safety matter or condition (including on-site or off-site
contamination, occupational safety and health and regulation of any chemical
substance or product) or (b) any other compliance, corrective or remedial
measures required under any Environmental Law or Occupational Safety and Health
Law.
"ENVIRONMENTAL LAW" means any applicable Law that relates to the
protection of the Environment, including those related to the storage, use
treatment, transport, disposal and remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA AFFILIATE" means any other Person that, together with a Seller,
would be treated as a single employer under Code Section 414.
"ESCROW AGENT" is defined in Section 2.9(a)(vii).
"ESCROW AGREEMENT" is defined in Section 2.9(a)(vii).
"EXCLUDED ASSETS" is defined in Section 2.2.
"EXCLUDED CONTRACTS" is defined in Section 2.2.
"FACILITY" means any Real Property or any equipment (including motor
vehicles, tank cars and rolling stock) owned or operated by any Seller,
including the Real Property and equipment used or operated by a Seller at the
respective locations of the Real Property listed in SECTION 3.7(a) of Sellers'
Disclosure Schedule, excluding those constituting Excluded Assets.
"GAAP" means generally accepted accounting principles for financial
reporting in the United States.
"GOVERNING DOCUMENT" means any charter, articles, bylaws, certificate,
statement, statutes or similar document adopted, filed or registered in
connection with the creation, formation or organization of an entity, and any
Contract among all equityholders, partners or members of an entity.
"GOVERNMENTAL AUTHORIZATION" means any Consent, license, permit or
registration issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Law.
"GOVERNMENTAL BODY" means any (a) nation, region, state, county, city,
town, village, district or other jurisdiction, (b) federal, state, local,
municipal, foreign or other government, (c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department
or other entity and any court or other tribunal), (d) multinational
organization, or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, policy, regulatory or taxing authority or
power of any nature, or (e) official of any of the foregoing.
"HAZARDOUS ACTIVITY" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about or from any of the Facilities or any part thereof into the Environment.
"HAZARDOUS MATERIAL" means any waste or other substance that is listed,
defined, designated or classified as, or otherwise determined to be, hazardous
waste, radioactive or a pollutant or contaminant under any Environmental Law,
and specifically including petroleum and asbestos or asbestos-containing
materials.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
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"IMPROVEMENTS" means all buildings, structures, fixtures and other
improvements located on the Real Property.
"INCLUDE" and "INCLUDING" as used in this Agreement indicate examples
of a foregoing general statement and not a limitation on that general statement.
"INDEMNIFIED PERSON" is defined in Section 11.7(a).
"INDEMNIFYING PERSON" is defined in Section 11.7(a).
"INSURANCE POLICY" means any written contract whereby one party
undertakes to defend, indemnify or guaranty another party against loss by
certain specified risks, contingencies or perils, including payment bonds,
performance bonds, fidelity bonds, financial guaranty bonds and similar
instruments and arrangements.
"INTELLECTUAL PROPERTY" means any intellectual property owned, used or
licensed (as licensor or licensee) by a Seller, including (a) such Seller's
name, assumed business names and corporate names, (b) patents, patent
disclosures, trademarks, service marks, trade dress, trade names, logos,
copyrights and mask works, and all registrations, applications and goodwill
associated with the foregoing, (c) all computer software (including source and
object codes), databases, data models or structures, algorithms, system
architectures and related documentation, data and manuals, (d) trade secrets,
know-how and confidential business information (including information concerning
products, product specifications, data, formulae, compositions, designs,
sketches, photographs, graphs, drawings, samples, inventions, discoveries,
ideas, past, current, and planned research and development, current and planned
methods and processes, client and customer lists and files, current and
anticipated client and customer requirements, vendor and supplier lists and
files, price lists, market studies, business plans, business opportunities and
financial data), (e) rights in Internet web sites and domain names used by such
Seller and (f) rights in electronic mail addresses and in telephone, facsimile,
cable or similar numbers used by such Seller.
"INTERIM BALANCE SHEET" is defined in Section 3.3.
"INVENTORIES" means all inventories of a Seller, wherever located,
including all finished goods, work in process, raw materials, spare parts and
all other materials and supplies to be used or consumed by a Seller in the
production of finished goods.
"IRS" means the Internal Revenue Service or any successor agency and,
to the extent relevant, the Department of Treasury.
"KNOWLEDGE" means, with respect to Sellers, the actual knowledge after
reasonable investigation of Xxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxx X. XxXxxxxx,
Xxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxx or Xxxxxx Xxxx.
"LAW" means any constitution, law, statute, treaty, rule, regulation,
ordinance, code, relevant case law or principle of common law of any
Governmental Body.
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"LIABILITIES" includes liabilities or obligations of any nature,
whether known or unknown, whether absolute, accrued, contingent, xxxxxx,
inchoate or otherwise, whether due or to become due, and whether or not required
to be reflected on a balance sheet prepared in accordance with GAAP.
"MATERIAL ADVERSE EFFECT" means any effect that is reasonably likely to
be materially adverse to the business, condition (financial or otherwise),
operations or results of operations of business represented by the Assets and
Assumed Liabilities.
"MULTIEMPLOYER PLAN" has the meaning specified in ERISA Section
3(37)(A).
"NET ASSETS" is defined on SCHEDULE 2.5.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Law designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards.
"ORDER" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Body or arbitrator and any
Contract with any Governmental Body pertaining to compliance with Law.
"ORDINARY COURSE OF BUSINESS" refers to actions taken in Sellers'
normal operation, consistent with past practice and financial condition and
having no Material Adverse Effect.
"OTHER BENEFIT OBLIGATION" means any material obligation, arrangement
or customary practice owed, adopted or followed by any Seller or any ERISA
Affiliate, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
officers, employees or agents, other than obligations, arrangements and
practices that are Benefit Plans. Other Benefit Obligations include material
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies and severance payment policies.
"PERSON" refers to an individual or an entity, including a corporation,
share company, limited liability company, partnership, trust, association,
Governmental Body or any other body with legal personality separate from its
equityholders or members.
"PETITION DATE" means the date on which Sellers file the Bankruptcy
Petition.
"PLAN" is defined in the Preliminary Statement.
"PLAN SPONSOR" has the meaning specified in ERISA Section 3(16)(B).
"PROCEEDING" means any action, arbitration, audit, examination,
investigation, hearing, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, and
whether public or private) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" is defined in Section 2.5.
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"QUALIFIED PLAN" means any Benefit Plan that meets or purports to meet
the requirements of Code Section 401(a).
"REAL PROPERTY" is defined in Section 3.8(b).
"REAL PROPERTY LEASES" is defined in Section 3.8(b).
"REAL ESTATE PERMITTED ENCUMBRANCES" shall mean:
(i) All building codes and zoning ordinances and other laws,
ordinances, regulations, rules, orders or determinations of any federal, state,
county, municipal or other governmental authority heretofore, now or hereafter
enacted, made or issued by any such governmental authority affecting the Real
Property;
(ii) All easements, rights-of-way, covenants, conditions,
restrictions, reservations, licenses, agreements and other similar matters of
record incurred or suffered that would not have a Material Adverse Effect;
(iii) All encroachments, overlaps, boundary line disputes, shortages
in area, drainage and other similar easements, rights of persons in possession
and other matters not of record which would be disclosed by an accurate survey
or inspection of the Real Property and that would not have a Material Adverse
Effect;
(iv) All electric power, telephone, gas, sanitary sewer, storm sewer,
water, steam, compressed air and other utility lines, pipelines, service lines
and similar facilities now located on, over or under the Real Property, and all
licenses, easements, flowage rights, rights of way and other similar agreements
relating thereto that would not have a Material Adverse Effect; and
(v) All existing public and private roads and streets (whether
dedicated or undedicated), and all railroad lines and rights-of-way affecting
the Real Property.
"RECORDS" means information relating to the operations of a Seller that
is inscribed on a tangible medium or that is stored in an electronic or other
medium and is retrievable in perceivable form, including all client and customer
lists, price lists, competitive analyses, referral sources, research and
development reports and records, production reports and records, service and
warranty records, equipment logs, operating guides and manuals, plans,
specifications, confidential information, financial and accounting records,
creative materials, advertising materials, promotional materials, studies,
reports, correspondence and similar documents, and personnel and employee
benefits records.
"REFUNDABLE INCOME TAX AMOUNT" means the refundable income tax amount
of $3,789,000 identified in Pentacon's 2002 1st Quarter filing on Form 10-Q.
"RELATED PERSON" means, with respect to a particular Person, any other
Person directly or indirectly controlling, controlled by or under common control
with, such Person and, with respect to an individual, any other individual that
is a member of the individual's immediate
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family (by blood, marriage or adoption), a member of the individual's household,
an entity in which the individual participates in management or an employee or
employer of the individual. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or otherwise, and will be construed in accordance
with the rules promulgated under the Securities Act.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the Environment or into or out of any property.
"RELEASE AGREEMENT" is defined in Section 2.9(a)(viii).
"REPRESENTATIVE" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, investment banker,
legal counsel, accountant or other representative of that Person.
"RETAINED LIABILITIES" is defined in Section 2.4.
"SCHEDULED LIABILITIES" is defined in Section 2.3.
"SECURITIES ACT" means the Securities Act of 1933.
"SELLER" and "SELLERS" are defined in the first paragraph of this
Agreement.
"SELLER BENEFIT PLAN" means any Benefit Plan covering any Active
Employee or any dependent or beneficiary thereof, of which a Seller or an ERISA
Affiliate is a Plan Sponsor, to which any Seller or an ERISA Affiliate
contributes, has contributed, or with respect to which has any liability, or in
which any Seller or an ERISA Affiliate otherwise participates or has
participated.
"SELLER CONTRACT" means any Contract under or by which (a) a Seller has
or may acquire rights, (b) a Seller is or may become subject to any Liability or
(c) a Seller or any of the Assets is or may become bound.
"SELLER INDEMNITEES" is defined in Section 11.3.
"SELLERS' DISCLOSURE SCHEDULE" means the disclosure schedule delivered
pursuant to Article 3 by Sellers to Buyer concurrently with the execution and
delivery of this Agreement, together with any updates to it permitted by this
Agreement. Each section or subsection of Article 3, as applicable, will be
accompanied by a corresponding section of Sellers' Disclosure Schedule. If no
qualification to a representation or warranty made in such section or subsection
of Article 3 is warranted, Sellers will indicate "none" on the corresponding
section of Sellers' Disclosure Schedule.
"SENIOR SUBORDINATED DEBT" is defined in Section 5.3.
"STOCKHOLDERS" means the stockholders of Pentacon.
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"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by a Seller, together with any express or implied warranty
by the manufacturers or sellers or lessors of any item or component part
thereof, and all maintenance records and other documents relating thereto.
"TAX" or "TAXES" means all federal, state, local, foreign and other
taxes, charges, fees, duties (including customs duties), levies or assessments,
including income, gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, turnover, real and personal property (tangible and intangible),
sales, use, franchise, excise, value added, stamp, leasing, lease, user,
transfer, fuel, excess profits, occupational, interest equalization, windfall
profits, severance, license, payroll, environmental, capital stock, disability,
employee's income withholding, other withholding, unemployment and social
security taxes, that are imposed by any Governmental Body, including obligations
under abandoned property laws, and including any interest, penalties or
additions to tax attributable thereto.
"TAX RETURN" means any report, return or other information required to
be supplied to a Governmental Body in connection with any Taxes.
"365 ORDER" means a final, non-appealable order, in a form reasonably
acceptable to the Buyer which provides that the Sellers have assumed and
assigned to Buyer all Contracts which are Assets pursuant to 11 U.S.C. s.
365(b), (c) & (f).
"TRANSITION EMPLOYEES" means Xxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxx X.
Xxxxxxxxx and Xxx X. XxXxxxxx.
"TRANSITION SERVICES AGREEMENT" means the agreement substantially in
the form of Exhibit 2.9(a)(vi), providing for the transition payments described
in SCHEDULE 2.9.
"VENDOR LIABILITIES" is defined in Section 2.3.
"WARN ACT" means the Worker Adjustment and Retraining Notification
Act."
ARTICLE 2
SALE AND TRANSFER OF ASSETS; CLOSING
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, each Seller will sell, convey, assign, transfer and
deliver to Buyer, and Buyer will purchase and acquire from each Seller, all of
such Seller's right, title and interest in and to substantially all of such
Seller's assets on the Closing Date, including the following (the "ASSETS"): (a)
all Cash and related bank accounts; (b) all customer Contracts and
relationships; (c) all Accounts Receivable; (d) all Inventories; (e) all prepaid
and other assets, including lease, utility and similar deposits, service or
maintenance contracts, dues and subscriptions, guarantees, bonds or other
rights; (f) all Real Property and Tangible Personal Property; (g) all books and
Records insofar as the same relate to Assets otherwise described in this Section
2.1 or to Assumed Liabilities; (h) all
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Intellectual Property; (i) all operating leases, capital leases and Contracts to
which such Seller is a party as of the Closing Date or the full benefits of all
operating leases, capital leases and Contracts used in the business of Sellers
to which such Seller is a third-party beneficiary; (j) all vendor Contracts; (k)
all rights and interests under each Insurance Policy, including claims and
rights to insurance proceeds, refunds or awards, to the extent they relate to
the Assets or Assumed Liabilities; (l) all Tax refunds of Sellers, including the
Refundable Income Tax Amount, other than property Tax refunds and other Tax
refund amounts specifically related to Excluded Assets or Retained Liabilities;
(m) all claims, rights and defenses of a Seller against third parties relating
to any of the Assets or Assumed Liabilities, whether xxxxxx or inchoate, known
or unknown, contingent or non-contingent, including all attorney work-product
protections, attorney-client privileges and other legal protections and
privileges to which such Seller may be entitled in connection with any of the
Assets or Assumed Liabilities; and (n) all Seller Benefit Plans and any related
assets, trusts and Insurance Policies.
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of each Seller (collectively,
the "EXCLUDED ASSETS") are not part of the sale and purchase contemplated by
this Agreement, are excluded from the Assets, and will remain the property of
such Seller after the Closing: (a) subject to Section 5.10, all Contracts
identified on SCHEDULE 2.2(a) (the "EXCLUDED CONTRACTS"); (b) all minute books,
stock records and corporate seals; (c) all shares of the capital stock of a
Seller held in treasury and capital stock, limited partnership interests and
other equity interests of direct and indirect subsidiaries of Pentacon; (d)
assets designated as being excluded on SCHEDULE 2.2(d); (e) all personnel
records and other Records that a Seller is required by law to retain in its
possession; (f) all insurance proceeds, refunds or awards with respect thereto
and returns of premium with respect thereto, to the extent they relate to the
Excluded Assets or the Excluded Liabilities; (g) all inter-company accounts
receivable; (h) all rights of a Seller under this Agreement or any of the
Ancillary Agreements to which a Seller is a party; (i) any claims, actions,
causes of action or rights which Sellers may now or hereafter possess that are
not related to the Assets or the Assumed Liabilities; and (j) all preference
actions and fraudulent transfer or conveyance claims arising out of or related
to any case under the Bankruptcy Code except to the extent such claims relate to
Assumed Liabilities or the Assets.
2.3 ASSUMED LIABILITIES
Effective as of the Closing, Buyer will pay or assume and agree to
discharge only the following Liabilities of Sellers (collectively, the "ASSUMED
LIABILITIES"): (a) the accounts payable of Sellers on the Closing Date relating
to the Assets
(i) which were outstanding on the Petition Date, or
(ii) which were incurred after the Petition Date in
accordance with this Agreement,
provided that Buyer shall not assume the accounts payable of Sellers set forth
on SCHEDULE 2.3(a) ("EXCLUDED PAYABLES") (the accounts payable assumed by Buyer
in clause (i) and (ii) are referred
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to as the "PRE-PETITION PAYABLES" and "POST PETITION PAYABLES," respectively,
and collectively as the "VENDOR LIABILITIES"), (b) such other contract
liabilities in the amounts set forth on SCHEDULE 2.3(b) ("SCHEDULED
LIABILITIES"), (c) such accrued expenses as are set forth on SCHEDULE 2.3(c)
("ACCRUED LIABILITIES"), (d) all obligations and liabilities under the written
terms of any Contracts, operating leases, capital leases or other agreements
included within the Assets, including the Cure which has been finally determined
in the Bankruptcy Case on or prior to the Closing and included on the Closing
Balance Sheet, and (e) all principal and interest outstanding under the Buyer
DIP.
2.4 RETAINED LIABILITIES
The Retained Liabilities will remain the sole responsibility of and
will be retained, paid, performed and discharged solely by Sellers. "RETAINED
LIABILITIES" will mean every Liability of each Seller, whether known or unknown,
fixed or contingent, other than the Assumed Liabilities.
2.5 PURCHASE PRICE
Subject to the adjustment contemplated by Section 2.6, the purchase
price for the Assets will be $121,000,000, plus the assumption of the Assumed
Liabilities, plus interest on the amount of the Pre-Petition Payables from the
Petition Date to the Closing Date at the per annum rate of 5%, minus (i) the
amount of the Scheduled Liabilities, (ii) the outstanding principal balance and
accrued but unpaid interest of the Buyer DIP and (iii) any payment made by
Sellers between the date of the Closing Balance Sheet and the Closing Date to
satisfy any Liability other than the Assumed Liabilities (the "PURCHASE PRICE").
The Purchase Price will be paid at the Closing in the following manner: (a)
Buyer will pay to Pentacon in cash for distribution pursuant to the Plan the
Cash Portion of the Purchase Price less $1,000,000; (b) Buyer will deposit with
the Escrow Agent the sum of $1,000,000, which will be held in escrow for a
period of 6 months following the Closing to secure the performance of each
Seller's obligations under this Agreement; and (c) Buyer will pay the
Pre-Petition Payables, plus interest thereon from the Petition Date to the
Closing Date at the rate of 5% per annum, (d) Buyer will pay any other Assumed
Liabilities, due and payable at the Closing and will discharge all other Assumed
Liabilities, as and when they become due and payable. If Sellers' Net Assets (as
defined in SCHEDULE 2.5) as of the date of the Closing Balance Sheet are higher
or lower than the Net Assets set forth on the Interim Balance Sheet, the
Purchase Price will be adjusted upward or downward, respectively, on a
dollar-for-dollar basis by such amount in accordance with Section 2.6 below.
2.6 ADJUSTMENT
Pentacon will prepare and deliver to Buyer, within ten business days
after the last day of the month immediately prior to Closing, Pentacon's pro
forma consolidated balance sheet for such month, which shall contain such pro
forma adjustments to reflect the elimination from such balance sheet of any
assets which are not Assets and any liabilities which are not Assumed
Liabilities (the "CLOSING BALANCE SHEET") and all supporting schedules. The
Closing Balance Sheet (i) will include as a liability the amount of the Cure
constituting an Assumed Liability, and (ii) will be prepared in accordance with
GAAP applied on a basis consistent with the preparation of the Interim Balance
Sheet without giving effect to any purchase accounting adjustments arising from
the Contemplated Transactions. If Sellers' Net Assets as of the date of the
Closing
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Balance Sheet are higher or lower than the Net Assets as of the date of the
Interim Balance Sheet, the Purchase Price will be adjusted upward or downward,
on a dollar-for-dollar basis by such amount. Sellers and Buyer will act in good
faith to resolve between themselves any disputes regarding the Closing Balance
Sheet. If they are unable to do so within five business days after Buyer's
receipt of the Closing Balance Sheet, then the issues in dispute will be
submitted to Deloitte Touche Tohmatsu, certified public accountants (the
"ACCOUNTANTS"), for resolution. Each party will furnish to the Accountants such
work papers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity to present
to the Accountants any material relating to the disputed issues and to discuss
the issues with the Accountants. The resolution of the issues in dispute by the
Accountants, as set forth in a notice delivered to Buyer and Sellers by the
Accountants, will be binding and conclusive on the parties. Buyer and Sellers
will each bear 50% of the Accountants' fees and expenses for such resolution.
Sellers will revise the Closing Balance Sheet to reflect the resolution of the
issues in dispute, and the Purchase Price will be adjusted accordingly.
2.7 ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES
The Purchase Price will be allocated in accordance with Exhibit 2.7.
After the Closing, the parties will make consistent use of the allocation, fair
market values and useful lives specified in Exhibit 2.7 for all Tax purposes and
in all filings, declarations and reports with the IRS in respect thereof,
including the reports required to be filed under Section 1060 of the Code. The
Plan shall provide that (a) within 45 days after the date the Purchase Price is
determined, Buyer will prepare and deliver IRS Form 8594 to Seller to be filed
with the IRS and (b) in any Proceeding related to the determination of any Tax,
neither Buyer nor Seller will contend or represent that such allocation is not a
correct allocation. The foregoing allocation will not be determinative of the
appropriate allocation of the Purchase Price among any creditors of Sellers
asserting the right to receive a portion of the Purchase Price as a distribution
under the Bankruptcy Code.
2.8 CLOSING
The Closing will take place at the offices of Xxxxxx and Xxxxx, L.L.P.,
0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 at 10:00 a.m. (local time) on
the later of (a) the 11th day after the date of entry of the Confirmation Order
so long as such Confirmation Order is not subject to a stay, (b) the date that
is two business days following the satisfaction or waiver of each of the
conditions set forth in Articles 7 and 8, unless Buyer and Sellers agree
otherwise, and (c) after the Net Asset adjustment described in Section 2.6 has
been finally determined. Subject to Article 9, failure to consummate the
purchase and sale provided for in this Agreement at the place and on the date
determined by the previous sentence will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
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2.9 CLOSING DELIVERIES
At the Closing:
(a) Pentacon will deliver to Buyer:
(i) a xxxx of sale substantially in the form of
Exhibit 2.9(a)(i) ("XXXX OF SALE") executed by Seller;
(ii) an assignment and assumption agreement
substantially in the form of Exhibit 2.9(a)(ii) providing in part for the
assignment of Sellers' rights under each Seller Contract to be included in the
Assets ("ASSIGNMENT AND ASSUMPTION AGREEMENT") executed by Sellers which
Assignment and Assumption Agreement will also contain Buyer's undertaking to
assume and discharge those obligations under the applicable Seller Contract that
are Assumed Liabilities;
(iii) for each leasehold or sub-leasehold interest in
Real Property included in the Assets, an assignment of Sellers' rights under
each Seller Contract evidencing such interest substantially in the form of
Exhibit 2.9(a)(iii) (collectively, "ASSIGNMENT AND ASSUMPTION OF LEASE
AGREEMENTS") executed by Sellers, which Assignment and Assumption of Lease
Agreement will also contain Buyer's undertaking to assume and discharge those
obligations under the applicable Seller Contract that are Assumed Liabilities;
(iv) separate assignments of certain
Intellectual Property included in the Assets substantially in the forms of
Exhibit 2.9(a)(iv) executed by Seller;
(v) such other deeds, bills of sale, assignments,
certificates of title and other instruments of transfer and conveyance as may
reasonably be requested by Buyer, each in form and substance satisfactory to
Buyer, Seller and their legal counsel and executed by Seller;
(vi) a Transition Services Agreement with each
Transition Employee;
(vii) an escrow agreement substantially in the form
of Exhibit 2.9(a)(vii) (the "ESCROW AGREEMENT"), executed by Pentacon and
Southwest Bank of Texas (the "ESCROW AGENT");
(viii) a release substantially in the form of
Exhibit 2.9(a)(viii) executed by Sellers (the "RELEASE AGREEMENT");
(ix) a certificate executed by the president of
Pentacon Aerospace Group and the president of Pentacon's Industrial Group as to
the accuracy of Sellers' representations and warranties as of the date of this
Agreement and as of the Closing and as to their compliance with and performance
of its covenants and obligations to be performed or complied with on or before
the Closing Date in accordance with Article 7;
(x) a certificate of the Secretary of Pentacon
certifying, as accurate and complete as of the Closing, attached copies of the
Governing Documents of each Seller, certifying and attaching all requisite
resolutions or actions of each Seller's board of directors
15
approving the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions, and certifying the incumbency and signatures of
the officers of each Seller executing this Agreement and any other document
relating to the Contemplated Transactions; and
(xi) a certificate from the chief accounting officer
of Pentacon that identifies all the payments made by Sellers to satisfy all
Liabilities other than Assumed Liabilities from the Closing Balance Sheet date
through the day prior to the Closing Date.
(b) Buyer will deliver to Sellers:
(i) the Cash Portion of the Purchase Price,
adjusted as described in Section 2.6 (less $1,000,000 to be delivered to the
Escrow Agent) by wire transfer to an account specified by Sellers in a writing
delivered to Buyer at least two business days before the Closing Date;
(ii) the Escrow Agreement executed by Buyer,
together with the delivery of $1,000,000 to the Escrow Agent by wire transfer to
an account specified by the Escrow Agent;
(iii) the Assignment and Assumption Agreement
executed by Buyer;
(iv) the Assignment and Assumption of Lease
Agreements executed by Buyer;
(v) the Transition Services Agreements executed by
Buyer;
(vi) a certificate executed by the chief financial
officer of Buyer as to the accuracy of Buyer's representations and warranties as
of the date of this Agreement and as of the Closing in accordance with Article
8; and
(vii) a release substantially in the form of
Exhibit 2.9(b)(vii) executed by Buyer.
In addition, on the Closing Date, Buyer will pay the Pre-Petition
Payables, together with interest thereon at the rate of 5% per annum from the
Petition Date to the date of payment.
The Assignment and Assumption Agreement, Assignment and Assumption of
Lease Agreements, Release Agreements and Escrow Agreement are collectively
referred to as the "ANCILLARY AGREEMENTS."
2.10 PLAN
(a) Subject to the terms and conditions of this Agreement, the
Sellers agree to propose and file with the Bankruptcy Court, and use their best
efforts to obtain confirmation of, the Plan pursuant to which the Assets shall
be sold and conveyed to Buyer in accordance with Section 363 of the Bankruptcy
Code in exchange for the Purchase Price and subject to the assumption of the
Assumed Liabilities. Copies of the Plan and Disclosure Statement are attached
hereto as Exhibits 2.10(a)(1) and 2.10(a)(2), respectively. Sellers will provide
to Buyer
16
the Plan and the Disclosure Statement and any amendments thereto before the
filing thereof and a copy of the proposed Confirmation Order before the
submission thereof to the Bankruptcy Court.
(b) Sellers will be the sole proponent of the Plan, and as such may
make such additions to and amendments of the Plan and Disclosure Statement as
they may determine in their discretion. The Plan will not be amended to change
the following terms of the Plan in a manner that is adverse to Buyer, without
Buyer's consent, which will not be unreasonably withheld.
(i) The Assets will be transferred to the Buyer pursuant to
the Confirmation Order, free and clear of all liens, claims and
encumbrances of any kind, nature and description, other than the
Assumed Liabilities;
(ii) Subject to the entry of the 365 Order, Sellers will
assume, pursuant to Section 365 of the Bankruptcy Code those executory
Contracts to be assigned and conveyed to Buyer as part of the Assets
and Buyer will pay the Cure which constitutes an Assumed Liability and
assume those Contracts and provide adequate assurance of future
performance pursuant to Section 365 of the Bankruptcy Code.
(c) Sellers shall promptly file a motion in the Bankruptcy Case, in
a form acceptable to Buyer, to establish a bar date for filing claims for Cure
for Contracts constituting part of the Assets.
2.11 BUYER DIP
Buyer will make available to Sellers up to $20 million in
debtor-in-possession financing ("BUYER DIP"). All principal and interest
outstanding under the Buyer DIP will be deducted dollar-for-dollar from the cash
portion of the Purchase Price as described in Section 2.5. The Buyer DIP will be
used to fund prepayments, deposits, COD payments, and similar payments to trade
creditors for goods and services provided to Sellers prior to Closing. The Buyer
DIP will be subordinate only to the debtor-in-possession financing being made
available to Sellers from their existing bank group, will be on terms and
conditions substantially equivalent thereto, and will otherwise be accorded the
highest available priority available to them under Section 364 of the Bankruptcy
Code. The Buyer DIP will have to be approved by the Bankruptcy Court after
notice to Seller's creditors and a hearing before the Bankruptcy Court.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer, jointly and severally, that,
except as set forth in Sellers' Disclosure Schedule:
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3.1 ORGANIZATION AND GOOD STANDING
Each Seller is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, with requisite power and
authority to conduct its business as presently conducted, to own or use the
properties and assets that it purports to own or use, and to perform its
obligations hereunder and under the Ancillary Agreements. Each Seller is duly
qualified to do business as a foreign entity and is in good standing in each
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, except where the failure to be so qualified will not affect
Sellers' ability to consummate the transactions contemplated by this Agreement.
3.2 ENFORCEABILITY; NO CONFLICT; SUBSIDIARIES
(a) Subject to receipt of the Confirmation Order and the 365
Order, each Seller has the requisite power, authority and capacity to execute
and deliver this Agreement and the Ancillary Agreements to which it is a party
and to perform its obligations under this Agreement and such Ancillary
Agreements. Assuming due authorization, execution and delivery of this Agreement
by Buyer, following the approval of this Agreement and the transactions
contemplated by this Agreement by the Bankruptcy Court pursuant to the
Confirmation Order and the 365 Order, this Agreement will constitute the legal,
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and other laws affecting creditors' rights generally
from time to time in effect and to general equitable principles. Assuming due
authorization, execution and delivery by the other parties thereto, following
the approval of this Agreement and the transactions contemplated by this
Agreement by the Bankruptcy Court pursuant to the Confirmation Order and the 365
Order, each Ancillary Agreement to which a Seller becomes a party will, upon
execution and delivery, constitute the legal, valid and binding obligation of
such Seller, enforceable against such Seller in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium, and
other laws affecting creditors' rights generally from time to time in effect and
to general equitable principles.
(b) SECTION 3.2(b) of Sellers' Disclosure Schedule lists all
Consents and Governmental Authorizations other than as required by the
Bankruptcy Court that Sellers are required to obtain from, and all notices that
Sellers are required to give to any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions except those Consents, Governmental Authorizations or
notices for which the failure to obtain would not have a Material Adverse
Effect.
(c) Except with respect to another Seller, no Seller owns,
or has any Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.
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3.3 FINANCIAL STATEMENTS
Sellers have delivered to Buyer (a) an audited consolidated balance
sheet of Sellers as at December 31, 2001 (including the notes thereto, the
"BALANCE SHEET"), and the related consolidated statements of income, changes in
stockholders' equity and cash flow for the fiscal year then ended, together with
the report thereon of Ernst & Young LLP, independent certified public
accountants, and (b) an unaudited consolidated balance sheet of Sellers as at
March 31, 2002 (the "INTERIM BALANCE SHEET") and the related unaudited
consolidated statements of income, changes in stockholders' equity and cash flow
for the three months then ended. Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of Sellers as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP, subject in the case of interim financial statements to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Balance Sheet). The
financial statements referred to in this Section reflect the consistent
application of accounting principles throughout the periods involved other than
as disclosed therein.
3.4 ACCOUNTS RECEIVABLE
All Accounts Receivable that are reflected on the Balance Sheet, the
Interim Balance Sheet or the accounting records of Seller as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. There is no
contest, claim, defense or right of setoff, other than in the Ordinary Course of
Business, under any Contract with any obligor of an Account Receivable relating
to the amount or validity of such Account Receivable.
3.5 BOOKS AND RECORDS
The books of account, minute books, equity record books and other
financial records of each of the Sellers, all of which have been made available
to Buyer, are accurate and complete in all material respects and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, including the
maintenance of an adequate system of internal controls. Each transaction of
Sellers is properly and accurately recorded in all material respects on the
books and records of Sellers, and each document (including any Contract, invoice
or receipt) on which entries in Sellers' books and records are based is accurate
and complete in all material respects.
3.6 INVENTORIES
All items included in the Inventories are of a quality and quantity
usable and, with respect to finished goods, salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard quality, all of
which have been or will be reserved against, written off or written down to net
realizable value on the Balance Sheet, the Interim Balance Sheet, the Closing
Balance Sheet or the accounting records of Seller as of the Closing Date, as the
case may be. Except for customer items that have been consigned or bailed,
Seller is not in possession of any inventory not owned by Seller, including
goods already sold. All of the Inventories now on hand
19
that were purchased after the date of the Balance Sheet were purchased in the
Ordinary Course of Business at a cost not materially exceeding market prices
prevailing at the time of purchase. All Inventories are maintained at one of the
locations of Real Property listed in SECTION 3.8(b) of Sellers' Disclosure
Schedule.
3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth on SECTION 3.7 of the Sellers' Disclosure Schedule,
since the date of the Balance Sheet, Sellers have conducted their business only
in the Ordinary Course of Business and there has not been any:
(a) change in payment or increase by Seller of any bonuses,
salaries or other compensation to any Stockholder, director, officer or
employee, except in each case for annual salary increases and otherwise in the
Ordinary Course of Business;
(b) adoption of, amendment to or increase in the payments to or
benefits under, any Seller Benefit Plan or material Other Benefit Obligation,
except in each case in the Ordinary Course of Business;
(c) damage to or destruction or loss of any Asset, whether or
not covered by insurance, with an aggregate value to Seller in excess of
$100,000;
(d) (i) modification, cancellation or termination of, or receipt
of, notice of, termination of, any license, distributorship, dealer, sales
representative, joint venture, credit, guaranty or similar Contract, which is
material either individually or in the aggregate, except in each case in the
Ordinary Course of Business or (ii) entry into any Contract or transaction
involving a total remaining commitment by any Seller of at least $100,000;
(e) sale, lease or other disposition of any Asset (other than in
the Ordinary Course of Business) having a value in excess of $25,000;
(f) cancellation or waiver of any claims or rights with a value
to any Seller in excess of $50,000;
(g) material acceleration or delay in the payment of accounts
payable or in the collection of Accounts Receivable;
(h) material change in the accounting methods used by Seller;
(i) closure, cessation, consolidation or relocation of
operations at any Facility, except for the Facilities identified in SECTION
3.7(i) of Sellers' Disclosure Schedule; or
(j) Contract by Seller to do any of the foregoing.
3.8 PROPERTIES
(a) Sellers own no fee simple interest in Real Property, and
have no obligation to purchase or acquire, now or in the future, any fee simple
interest in Real Property.
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(b) SECTION 3.8(b) of Sellers' Disclosure Schedule sets forth a
true, correct and complete list of all leases and other agreements, including
all amendments thereto (collectively, the "REAL PROPERTY LEASES"), under which
Sellers have the right to use or occupy, now or in the future, any real
property, including the land, buildings and other improvements (the "REAL
PROPERTY"). Except in connection with the Bankruptcy Petition, each Real
Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by Sellers or their affiliates as tenants
thereunder are current, no notice of default or termination under any Real
Property Lease is outstanding, no termination event or condition or charged
default on the part of Sellers or their affiliates as tenants or landlords
exists under any Real Property Lease. Sellers have not received notice, and have
no Knowledge, of any event that has occurred or condition that exists which,
with the giving of notice or the lapse of time or both, would constitute such a
default or termination event or condition.
(c) Sellers have not received notice, and have no Knowledge, of
any pending, threatened or contemplated condemnation proceeding affecting the
Real Property or any part thereof, or of any sale or other position of the Real
Property or any part thereof, in lieu of condemnation.
(d) Sellers have valid leasehold interests in the Real Property,
free and clear of any Encumbrances, except for Real Estate Permitted
Encumbrances or as otherwise set forth in SECTION 3.8(b) of Sellers' Disclosure
Schedule.
(e) Use of the Real Property for the various purposes for which
it is presently being used is permitted under applicable zoning Laws and is not
subject to "permitted non-conforming" use or structure classifications. All
Improvements are in material compliance with applicable Laws, including those
pertaining to zoning, building and the disabled. No part of any Improvement
encroaches on any real property not included in the Real Property, and there are
no buildings, structures, fixtures or other improvements primarily situated on
adjoining property which encroach on any part of the Real Property, in a manner
that would cause a Material Adverse Effect.
3.9 SUFFICIENCY OF ASSETS
Except with respect to the Excluded Assets, the Assets constitute all
such assets necessary for the continued operation of Sellers' current business
after the Closing in substantially the same manner as before the Closing.
Sellers have accurately accounted for substantially all of the consolidated
assets and liabilities of Pentacon as reflected on, and as of, the date of the
Interim Balance Sheet, and, since such date Sellers have not shifted any
material assets or material liabilities between Sellers and any of their Related
Persons.
3.10 INTELLECTUAL PROPERTY
(a) Sellers own or have the right to use pursuant to a valid
Contract all material items of Intellectual Property necessary for the operation
of the business of Sellers as presently conducted. Each material item of
Intellectual Property owned or used by Sellers as of the date of this Agreement
will be owned or available for use by Buyer on substantially identical terms
immediately subsequent to the Closing, other than Intellectual Property that may
not be assigned
21
under Section 365 of the Bankruptcy Code. Sellers have taken all necessary and
desirable actions within their control to maintain and protect each item of
Intellectual Property that they own or use except for such actions that would
not have a Material Adverse Effect.
(b) Sellers have not, in any material respect, interfered with,
infringed upon, misappropriated or otherwise Contravened any intellectual
property rights of third parties, and Sellers have not received any written
notice and have no Knowledge of any other communication regarding any actual,
alleged or potential such interference, infringement, misappropriation or
Contravention. No event has occurred or circumstance exists that may (with or
without notice or lapse of time) constitute or result, nor will the continued
operation by Buyer of Sellers' business after the Closing as presently conducted
constitute or result, directly or indirectly, in any such material interference,
infringement, misappropriation or Contravention. To Sellers' Knowledge, no third
party has interfered with, infringed upon, misappropriated or otherwise
Contravened any Intellectual Property rights of Sellers.
(c) SECTION 3.10(c) of Sellers' Disclosure Schedule identifies
each issued patent and each registered trademark, service xxxx and copyright
owned by any Seller and identifies each pending patent application or
application for registration that has been made with respect to any Intellectual
Property owned by any Seller. Sellers have made available to Buyer true and
complete copies of all such patents, registrations and applications, each as
amended to date, and all other written documentation evidencing ownership and
prosecution of each such item.
3.11 CONTRACTS
(a) SECTION 3.11(a) of Sellers' Disclosure Schedule contains an
accurate and complete list of each of the following Seller Contracts to be
included in the Assets (other than the Seller Contracts listed on SECTION
3.11(a)(x) of Sellers' Disclosure Schedule which may be identified as Excluded
Contracts subject to Section 5.10):
(i) each Seller Contract that was not entered into in
the Ordinary Course of Business;
(ii) each Seller Contract that is a letter of credit,
bond or other indemnity (including letters of credit, bonds or other indemnities
as to which Seller is the beneficiary but excluding endorsements of instruments
for collection in the Ordinary Course of Business) or guarantee of a third
party's obligation;
(iii) each Seller Contract with respect to Intellectual
Property (including Contracts with current or former employees, consultants or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property) except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available software programs with a
value of less than $25,000 under which a Seller is the licensee;
(iv) each Seller Contract with any labor union or
other employee representative of a group of employees;
(v) each Seller Contract other than Seller Benefit
Plans involving a sharing of profits, losses, costs or Liabilities by a Seller
with any other Person;
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(vi) each Seller Contract containing covenants that in
any way purport to restrict the business activity of any Seller or limit the
freedom of any Seller to engage in any line of business or to compete with any
Person;
(vii) each Seller Contract providing for payments over
$10,000 to or by any Person based on or determined by reference to sales,
purchases or profits, other than direct payments for goods or standard form
employee bonus plans;
(viii) each power of attorney that is currently
effective and outstanding, other than limited powers of attorneys issued in the
Ordinary Course of Business, such as to custom brokers;
(ix) each Seller Contract for capital expenditures in
excess of $100,000; and
(x) each Seller Contract that is not a vendor
contract, a customer contract or a Real Property Lease, which Seller Contract
provides for payments in excess of $100,000 in the aggregate.
(b) Sellers have made available to Buyer a true and complete
copy of each of the Seller Contracts listed in SECTION 3.11(a) of Sellers'
Disclosure Schedule.
(c) Except as may result from the Contemplated Transactions,
each Seller Contract listed in SECTION 3.11(a) of Sellers' Disclosure Schedule
is in full force and effect and is valid and enforceable in accordance with its
terms, subject to bankruptcy, reorganization, insolvency, moratorium, and other
laws affecting creditors' rights generally from time to time in effect and to
general equitable principles. Sellers have not given or received notice and have
no Knowledge of any other communication (written or oral) regarding any actual,
alleged or potential Contravention of any Seller Contract listed in SECTION
3.11(a) of Sellers' Disclosure Schedule.
3.12 CUSTOMERS AND SUPPLIERS
Sellers have made available to Buyer the names and addresses of the 10
largest customers and the 10 largest suppliers (measured in each case by dollar
volume of purchases or sales during the year ended December 31, 2001) of Sellers
taken as a whole and the dollar amount of purchases or sales which each such
customer or supplier represented during the year ended December 31, 2001.
Sellers have communicated to Buyer any actual or threatened termination,
cancellation or material limitation of, or any material change in, the business
relationship of Sellers with any such customer or supplier.
3.13 INSURANCE
Sellers maintain in full force and effect Insurance Policies covering
its insurable business risks and Liabilities in adequate amounts to provide
reasonable protection for the business of and the properties owned and used by
Sellers, including the Assets. Sellers have complied with each such Insurance
Policy and program, and since December 31, 2001, Sellers have not, and will not
have as of the Closing, made any material changes to any such Insurance
Policies.
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3.14 TAXES
(a) All material Taxes that Sellers are required by law to
withhold or collect, including sales and use Taxes and amounts required to be
withheld for Taxes of employees, have been duly withheld or collected and, to
the extent required, have been paid over to the proper taxing authority or are
held in separate bank accounts for such purpose.
(b) There are no Encumbrances upon any of the Assets arising
from any failure or alleged failure to pay any Tax (other than Encumbrances
relating to Taxes not yet due and payable).
(c) Sellers have not made or become obligated to make, and
neither Sellers nor Buyer will as a result of any Contemplated Transaction
become obligated to make, any payments that could be nondeductible by reason of
Section 280G (without regard to subsection (b)(4) thereof) or 162(m) of the
Code, nor will Sellers or Buyer be required to "gross up" or otherwise
compensate any individual because of the imposition of any excise tax on such a
payment to the individual.
3.15 EMPLOYEE BENEFITS
(a) SECTION 3.15 of Sellers' Disclosure Schedule contains an
accurate and complete list of each Seller Benefit Plan and, subject to Section
5.10, identifies exceptions to the representations and warranties regarding the
Seller Benefit Plans set forth herein. Sellers have made available to Buyer (i)
all documents that set forth the terms of each Seller Benefit Plan or Other
Benefit Obligation, and of any related trust, including all summary plan
descriptions, summaries and descriptions furnished to participants and
beneficiaries, (ii) all personnel, payroll, and employment manuals and policies,
(iii) a written description of any Seller Benefit Plan or Other Benefit
Obligation that is not otherwise in writing, (iv) all registration statements
filed with respect to any Seller Benefit Plan, (v) all Insurance Policies
purchased by or to provide benefits under any Seller Benefit Plan, (vi) all
reports submitted to Sellers since December 31, 1999, by third-party
administrators, actuaries, investment managers, trustees, consultants, or other
independent contractors with respect to any Seller Benefit Plan or Other Benefit
Obligation, (vii) the Form 5500 filed in each of the most recent three plan
years with respect to each Seller Benefit Plan and Other Benefit Obligation,
including all schedules thereto and the opinions of independent accountants,
(viii) all notices that were given by any Seller, any ERISA Affiliate or any
Seller Benefit Plan to the IRS or any participant or beneficiary, pursuant to
statute, since December 31, 1999, (ix) all notices that were given by any
Governmental Body to any Seller, any ERISA Affiliate or any Seller Benefit Plan
since December 31, 1999, and (x) with respect to each Seller Benefit Plan that
is a Qualified Plan, the most recent determination letter for each such Seller
Benefit Plan.
(b) Sellers have performed all of their obligations under each
Seller Benefit Plan and with respect to each Other Benefit Obligation. Each
Seller Benefit Plan has been administered in accordance with its terms. Sellers
have made appropriate entries in their financial records and statements for all
obligations and liabilities under the Seller Benefit
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Plans and Other Benefit Obligations that have accrued but are not due. Sellers,
with respect to all Seller Benefit Plans and Other Benefit Obligations, is and
each Seller Benefit Plan and Other Benefit Obligation are in compliance in all
material respects with ERISA, the Code and other applicable Laws, including the
provisions of such Laws expressly mentioned in this Section 3.18, and with any
applicable collective bargaining agreement. No non-exempt transaction prohibited
by ERISA Section 406 and no non-exempt "prohibited transaction" under Code
Section 4975(c) has occurred with respect to any Seller Benefit Plan. Sellers
have no Liability to any Governmental Body with respect to any Seller Benefit
Plan, including any Liability imposed by Chapter 43 of the Code. All employer
and employee contributions which are due and owing as of the Closing Date with
respect to the Seller Benefit Plans have been or will be made in accordance with
local law and past practice. All contributions and payments made or accrued with
respect to all Seller Benefit Plans and Other Benefit Obligations are deductible
under Code Section 162 or 404. No event has occurred or circumstance exists that
may result in a material increase in premium costs of Seller Benefit Plans and
Other Benefit Obligations that are insured or a material increase in benefit
costs of Seller Benefit Plans and Other Benefit Obligations that are
self-insured. There is no materially unfunded liability under any Seller Benefit
Plan. Other than routine claims for benefits submitted by participants or
beneficiaries, no claim against, or Proceeding involving, any Seller Benefit
Plan or Other Benefit Obligation is pending or, to Seller's Knowledge, is
threatened.
(c) Each Qualified Plan of Sellers has received a favorable
determination letter from the IRS that it is qualified under Code Section 401(a)
and that its related trust is exempt from federal income tax under Code Section
501(a), and each such Benefit Plan materially complies in form and in operation
with the requirements of the Code and materially meets the requirements of a
"qualified plan" under Section 401(a) of the Code. No event has occurred or
circumstance exists that may give rise to disqualification or loss of tax-exempt
status of any such Benefit Plan or trust.
(d) Neither any Seller nor any ERISA Affiliate has ever
established, maintained or contributed to, or had an obligation to maintain or
contribute to, any Benefit Plan that is subject to Section 412 of the Code,
Section 302 of ERISA, or Title IV of ERISA. Neither Seller nor any ERISA
Affiliate has terminated any Benefit Plan subject to Title IV of ERISA. No
Seller has ever established, maintained or contributed to, or had an obligation
to maintain or contribute to, any voluntary employees' beneficiary association
under Code Section 501(c)(9), any organization or trust described in Code
Section 501(c)(17) or 501(c)(20), or any welfare benefit fund as defined in Code
Section 419(e). Neither any Seller nor any ERISA Affiliate has ever established,
maintained, contributed to or otherwise participated in, or had an obligation to
maintain, contribute to or otherwise participate in, or has any liability with
respect to, any Multiemployer Plan. Except to the extent required under ERISA
Section 601 et seq. and Code Section 4980B, no Seller provides health or welfare
benefits for any retired or former employee nor is it obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(e) Sellers have the right to modify and terminate benefits to
retirees (other than pensions) with respect to both retired and active
employees. Sellers have complied with the provisions of ERISA Section 601 et
seq. and Code Section 4980B and with the provisions of ERISA Section 701 et seq.
and Subtitle K of the Code.
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(f) No individual classified as a non-employee for purposes of
receiving employee benefits (such as an independent contractor, leased employee,
consultant or special consultant), regardless of treatment for other purposes,
is eligible to participate in or receive benefits under any Seller Benefit Plan.
(g) Neither any Seller nor any ERISA Affiliate is a party to any
agreement, whether written or oral, with change-in-control or similar
provisions. Except as set forth in SECTION 3.15(g) of Seller's Disclosure
Schedule, neither the execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement will: (1) entitle any employee to
severance pay, (2) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other obligation
pursuant to, any Seller Benefit Plan or Other Benefit Obligation in respect of
any employee or (3) result in any breach or violation of, or a default under,
any Seller Benefit Plan or Other Benefit Obligation.
3.16 EMPLOYEE RESTRICTIONS
Neither Xxxxxx X. Xxxx nor any employee of Sellers who reports directly
to him, all of whom are listed on SECTION 3.16 of Sellers' Disclosure Schedule,
is a party to, or is otherwise bound by, any Contract, including any
confidentiality, noncompetition or proprietary rights agreement with any Person
other than a Seller that adversely affects or could adversely affect (a) the
performance of his or her duties for Sellers or Buyer, (b) his or her ability to
assign to Sellers or Buyer rights to any invention, improvement, discovery or
information relating to the business of Sellers or Buyer, or (c) the ability of
Sellers or Buyer to conduct its business.
3.17 LABOR RELATIONS; EMPLOYMENT LAW COMPLIANCE; EMPLOYEES
(a) Except as set forth on SECTION 3.17 of the Sellers
Disclosure Schedule, no Seller has been, nor is any Seller currently a party to
any collective bargaining agreement or other labor contract. To Sellers'
Knowledge, no application or petition is pending for an election of or for
certification of a collective bargaining agent representing Sellers' employees.
(b) Sellers have provided to Buyer a complete list of the
following information for each director, officer, Active Employee, employee on
layoff status or long-term disability leave, independent contractor, consultant
and agent of Sellers: name, job title, date of hiring or engagement, date of
commencement, current compensation paid or payable and any change in
compensation since April 1, 2002, sick and vacation leave that is accrued but
unused, and service credited for purposes of vesting and eligibility to
participate under any Seller Benefit Plan.
(c) There is not pending or, to Sellers' Knowledge, threatened
any formal Proceeding against or affecting Sellers relating to the alleged
violation of any applicable Law pertaining to labor relations or employment
matters. No formal grievance or arbitration Proceeding exists that might have an
adverse effect on Sellers or the conduct of their business. There has been no
charge of discrimination filed against or, to Sellers' Knowledge, threatened
against Sellers with the Equal Employment Opportunity Commission or similar
Governmental Body.
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3.18 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
Except as set forth in SECTION 3.18 of Sellers' Disclosure Schedule:
(a) Sellers are in material compliance with all Environmental
Laws or Occupational Safety and Health Laws, in each case applicable to such
Sellers. Sellers have not received any actual or threatened Order, notice or
other communication from (i) any Governmental Body or other Person acting in the
public interest, or (ii) the current or prior owner or operator of any Facility,
of any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or bear the cost of
any Environmental, Health and Safety Liabilities with respect to any Facility or
other property or asset (whether real, personal or mixed) in which any Seller
has an interest, or with respect to any property or Facility at or to which
Hazardous Materials were used, processed or disposed of by such Seller.
(b) There are no pending or, to Sellers' Knowledge, threatened,
claims, Encumbrances or other restrictions of any nature, resulting from any
Environmental, Health and Safety Liabilities or arising under any Environmental
Law or Occupational Safety and Health Law, with respect to or affecting any
Facilities or any other properties and assets (whether real, personal or mixed)
in which any Seller has an interest.
(c) Sellers have no basis to expect, nor have they received, any
citation, directive, inquiry, notice, Order, summons, warning or other
communication of any actual, alleged or potential obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect
to any Facility or other property or asset (whether real, personal or mixed) in
which any Seller has an interest.
(d) There are no Hazardous Materials resulting from Sellers'
operations present on or in the Environment at any Facility in violation of
Environmental Laws.
(e) There has been no Release of any Hazardous Materials from
Sellers' operations at or from any Facility.
(f) Sellers have delivered to Buyer true and complete copies of
any reports, studies, analyses, tests or monitoring results possessed by Sellers
pertaining to Hazardous Materials or Hazardous Activities in, on or under any
Facilities.
3.19 LEGAL PROCEEDINGS; ORDERS
(a) SECTION 3.19(a) of Sellers' Disclosure Schedule lists any
pending Proceedings (i) by or against any Seller that relate to or may affect
the business of Sellers or any of the Assets, or (ii) that challenge, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the Contemplated Transactions (other than the
Bankruptcy Case). To Sellers' Knowledge, no other such Proceeding has been
threatened, and no event has occurred or circumstance exists that is reasonably
likely to give rise to or serve as a basis for the commencement of any such
Proceeding (other than the Bankruptcy Case). Except for the Bankruptcy Petition,
no such Proceedings will have a Material Adverse Effect.
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(b) SECTION 3.19(b) of Sellers' Disclosure Schedule lists each
Order to which a Seller, or any of the Assets, is or has been subject. To
Sellers' Knowledge, no officer, agent or employee of a Seller is subject to any
Order that prohibits such officer, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the business of
Sellers.
(c) Each Seller is, and at all times since December 31, 1999,
has been, in full compliance with all of the terms and requirements of each
Order to which it or any of the Assets is or has been subject. No event has
occurred or circumstance exists that may constitute or result in (with or
without notice or lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which such Seller or any of the Assets is
subject. No Seller has received, at any time since December 31, 1999, any
written notice or, to Sellers' Knowledge any other communication (whether oral
or written) from any Governmental Body or any other Person regarding any actual,
alleged or potential violation of, or failure to comply with, any term or
requirement of any Order to which such Seller or any of the Assets is or has
been subject.
3.20 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
Except as set forth in SECTION 3.20 of Sellers' Disclosure Schedule:
(a) Without limiting the scope of any other representation in
this Agreement, Sellers are, and at all times since December 31, 1999, have
been, in material compliance with each Law that is applicable to it or to the
conduct of its business or the ownership or use of any of the Assets except to
the extent that noncompliance would not result in a Material Adverse Effect.
Sellers have not received at any time since December 31, 1999 any notice or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged or potential material Contravention
of any applicable Law or any actual, alleged or potential obligation on the part
of Sellers to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature with respect to the Assets.
(b) SECTION 3.20(b) of Sellers' Disclosure Schedule contains an
accurate and complete list of each material Governmental Authorization that is
held by Sellers or that otherwise relates to the business of Sellers or to any
of the Assets, each of which is valid and in full force and effect. Sellers are,
and at all times since December 31, 1999, have been, in material compliance with
all of the material terms and requirements of each such Governmental
Authorization. Sellers have not received at any time since December 31, 1999,
any written notice from any Governmental Body or any other Person regarding any
actual, alleged or potential material Contravention of any material Governmental
Authorization.
(c) The Governmental Authorizations listed in SECTION 3.20(b) of
Sellers' Disclosure Schedule collectively constitute all of the material
Governmental Authorizations not held by Sellers which are necessary to permit
Sellers to conduct their business lawfully in the manner in which they currently
conduct such business and to permit Sellers to own and use the Assets in the
manner in which they currently own and use the Assets.
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3.21 DISCLOSURE
No statement in Sellers' Disclosure Schedule or notification given
pursuant to Section 5.5 will contain any untrue statement or omit to state a
material fact necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that, except as set forth in
Buyer's Disclosure Schedule:
4.1 ORGANIZATION
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
4.2 ENFORCEABILITY; NO CONFLICT
(a) Buyer has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and its Ancillary Agreements and
to perform its obligations under this Agreement and its Ancillary Agreements,
which actions have been duly authorized and approved by all necessary corporate
action of Buyer. Assuming the execution and delivery of this Agreement by
Sellers, this Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Assuming their
execution and delivery by the other parties thereto, the Ancillary Agreements to
which Buyer becomes a party will, upon execution and delivery, constitute legal,
valid and binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms.
(b) Buyer is not and will not be required to obtain any Consent
or Governmental Authorization in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
(c) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Governing Documents, (ii) any resolution adopted by the
board of directors or the stockholders of Buyer, (iii) any Law, Order or
Governmental Authorization to which Buyer may be subject or (iv) any Contract to
which Buyer is a party or by which Buyer may be bound.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer
and that challenges, or may have the effect of preventing, delaying, making
illegal or otherwise
29
interfering with, any of the Contemplated Transactions. To Buyer's knowledge, no
such Proceeding has been threatened.
4.4 BROKERS OR FINDERS
Neither Buyer nor any of its Representatives have incurred any
Liability for brokerage or finders' fees or agents' commissions or other similar
payment in connection with the Contemplated Transactions.
4.5 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(a) BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS AND TO THE
EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLERS (OR ANYONE ACTING ON THEIR
BEHALF) HAVE NOT MADE, DO NOT MAKE AND SPECIFICALLY DISCLAIM ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, OF, AS TO, OR CONCERNING THE ASSETS, THE ASSUMED
LIABILITIES OR THE BUSINESS OF SELLERS.
(b) BUYER FURTHER ACKNOWLEDGES AND AGREES THAT BUYER HAS HAD
ADEQUATE OPPORTUNITIES TO INSPECT, EXAMINE AND INVESTIGATE THE ASSETS. BUYER
FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED
BY SELLERS OR ANYONE ON THEIR BEHALF WITH RESPECT TO THE ASSETS WAS OBTAINED
FROM A VARIETY OF SOURCES AND THAT, EXCEPT AS SET FORTH HEREIN, NO SELLER HAS
MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKE
NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BUYER
FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SET FORTH HEREIN, THE SALE OF
THE ASSETS AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS," "WHERE IS" BASIS.
NOTHING HEREIN SHALL AFFECT THE WARRANTY OF TITLE IN THE SPECIAL WARRANTY DEEDS
AND OTHER TRANSACTION DOCUMENTS CONVEYING THE ASSETS FROM SELLERS TO BUYER AT
THE CLOSING.
4.6 FINANCING
Buyer has cash on hand and/or available credit in amounts sufficient to
pay the Purchase Price and otherwise consummate the Contemplated Transactions.
ARTICLE 5
COVENANTS OF SELLERS BEFORE CLOSING
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date and upon
reasonable advance notice from Buyer, each Seller will (a) afford Buyer and its
Representatives during normal
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business hours full and free access to Sellers' personnel, properties (including
subsurface testing), Contracts, books and records, and other documents and data,
(b) furnish such Persons with copies of all such Contracts, books and records,
and other documents and data as Buyer may reasonably request, and (c) furnish
such Persons with such additional financial, operating and other data and
information as Buyer may reasonably request. Additionally, Sellers will provide
Buyer with all schedules, statements and operating reports filed by Sellers with
the Bankruptcy Court. To the extent Buyer conducts an environmental
investigation involving testing, Buyer shall take any and all actions necessary
or advisable to minimize the inconvenience to Sellers and shall indemnify and
hold harmless Sellers from and against any and all claims, lawsuits,
liabilities, damages, and expenses (including strict liability claims under the
Comprehensive Environmental Response Compensation and Liability Act and similar
state statutes) resulting from Buyer's actions. Buyer shall be responsible for
restoring the Facility or other location to its pre-investigation condition, for
any damage caused by its testing activities, and for the proper disposal of any
wastes generated by its testing. Buyer will, upon Sellers' request, provide to
Sellers a copy of any report, sample results or analysis generated by its
environmental investigation.
5.2 OPERATION OF THE BUSINESS OF SELLER
Except as otherwise contemplated by this Agreement, between the date of
this Agreement and the Closing Date, each Seller will (a) conduct its business
only in the Ordinary Course of Business, (b) use its Best Efforts to preserve
intact its current business organization (including the maintenance of existing
insurance coverage), keep available the services of its current officers,
employees and agents, and maintain relations and goodwill with its suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships, (c) confer with Buyer concerning operational matters of a
material nature, and (d) otherwise conduct its business subject to the
limitations and restrictions imposed by the Bankruptcy Code and the Bankruptcy
Court; provided, however, that Sellers will terminate or consolidate operations
at certain Facilities and will close certain Facilities as provided in the
Facility Consolidation Plan, dated April 25, 2002 and as communicated to Buyer
on May 3, 2002 during due diligence.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, Sellers will not without the prior
written consent of Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events in Section 3.7 would be likely to occur, (b) make any modifications to
any other material Seller Contract or Governmental Authorization, permit the
levels of Inventories, Accounts Receivable and pre-paid assets to vary
materially from the levels customarily maintained, which consent will not be
unreasonably withheld, or (d) enter into any compromise or settlement of any
pending or threatened material Proceeding outside the Ordinary Course of
Business relating to the Assets or the Assumed Liabilities. Sellers will use
their Best Efforts not to pay or satisfy on the Closing Date (i) any principal
or interest on debtor-in-possession financing; (ii) any principal or interest on
the Second Amended and Restated Loan Agreement dated September 30, 1999 (and as
subsequently amended or replaced) between Pentacon and Bank of America NA, as
agent; (iii) any principal or interest on the 12.25% Senior Subordinated Notes
due 2009 and related Indenture (the "SENIOR SUBORDINATED DEBT"); or (iv)
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any Liabilities other than Assumed Liabilities; provided that if any such
payment is made, the Confirmation Order shall provide that the amount of such
payment will be refunded in full to Buyer following the Closing.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers
will make all filings that they are required by applicable Law to make to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, Sellers will (a) cooperate reasonably with Buyer with respect
to all filings that Buyer elects to make or that Buyer is required by Law to
make in connection with the Contemplated Transactions, and (b) cooperate
reasonably with Buyer in obtaining any Governmental Authorizations and Consents
required to consummate the Contemplated Transactions.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Sellers become aware of (a) any fact or
condition that causes or constitutes a breach of any of Sellers' representations
and warranties as of the date of this Agreement, or (b) the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in Sellers' Disclosure Schedule,
Seller will promptly deliver to Buyer a supplement to Sellers' Disclosure
Schedule specifying such change. Such delivery shall be deemed to update the
Sellers' Disclosure Schedule as of the date of delivery, and shall be deemed to
qualify Sellers' representations and warranties from and after the date of
delivery, including any requirement that Sellers' representations and warranties
be materially true at Closing. Such delivery, however, will not affect any
rights of Buyer under Article 9 and Article 11 for breaches of representations
and warranties made or deemed made prior to the date of delivery of such revised
Sellers' Disclosure Schedule. During the same period, Sellers will promptly
notify Buyer of the occurrence of any breach of any covenant of Sellers in this
Article or of the occurrence of any event that may make the satisfaction of the
conditions in Article 7 impossible or unlikely.
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5.6 NO SOLICITATION
Except as required by the Bankruptcy Code or other applicable Law,
until such time, if any, as this Agreement is terminated pursuant to Article 9,
Sellers will not, and will cause each of their Representatives not to, directly
or indirectly, solicit, initiate, or otherwise encourage any inquiries,
proposals or offers from, or discussions or negotiations with, any Person (other
than Buyer) relating to any business combination transaction involving any
Seller, including the sale of any of the shares of any Seller, any merger or
consolidation, or the sale of any of the Assets (other than in the Ordinary
Course of Business). Notwithstanding the foregoing, Sellers may respond to any
such inquiries, proposals or offers that were not solicited, initiated or
encouraged by Sellers or any of Sellers' Representatives, as contemplated by
Article 10, provided Sellers fully comply with Article 10.
5.7 BEST EFFORTS
Sellers will use their Best Efforts to cause the conditions in Article
7 and Section 8.2 to be satisfied.
5.8 INTERIM FINANCIAL STATEMENTS
Until the Closing Date, Pentacon will deliver to Buyer within fifteen
business days after the end of each month a copy of its consolidated balance
sheet, income statement and supporting schedules for such month prepared in a
manner and containing information consistent with Sellers' current practices and
certified by Sellers' chief accounting officer as to compliance with Section
3.3. Monthly operating reports will be provided to Buyer as soon as they become
available.
5.9 BULK TRANSFER; REFUNDABLE INCOME TAX AMOUNT
(a) Buyer and Sellers hereby waive compliance with the bulk
transfer provisions of the Uniform Commercial Code (or any similar law) in
connection with the Contemplated Transactions. Notwithstanding any provision of
this Agreement to the contrary, any and all claims, losses, damages,
liabilities, costs and expenses incurred by Buyer, Sellers or any of their
respective affiliates as a result of any failure to comply with any such bulk
transfer provisions shall be borne by Sellers.
(b) The Confirmation Order shall provide that, if the Refundable
Income Tax or any other Tax refund amount included in the Assets has not been
received by Sellers prior to Closing, Sellers shall be required to deliver such
Refundable Income Tax Amount to Buyer promptly following receipt.
5.10 SPECIFIED SCHEDULE UPDATES
Sellers will deliver to Buyer on or before 12:00 p.m. Central Daylight
Time on May 29, 2002 an update to SECTION 3.11(a)(x) and SECTION 3.15 of
Sellers' Disclosure Schedule. Within one business day of Buyer's receipt
thereof, Buyer will deliver to Sellers an update to SCHEDULE 2.2(a) reflecting
any additional Seller Contracts to be identified thereon as Excluded Contracts.
If any update made to SECTION 3.15 of Sellers' Disclosure Schedule results in a
cost, expense or
33
other Liability to Buyer identified prior to Closing, Buyer will be entitled to
receive a dollar-for-dollar reduction in the Purchase Price, or, if such
Liability is identified subsequent to the Closing, a claim for indemnification
and a right of setoff under the Escrow Agreement that will not be subject to any
limitation set forth in Section 11.5 hereof.
ARTICLE 6
COVENANTS OF BUYER BEFORE CLOSING
6.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Buyer will
make all filings that it is required by Law to make to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyer will (a) cooperate reasonably with Sellers with respect to all
filings that Sellers elect to make or that they may be required by Law to make
in connection with the Contemplated Transactions, and (b) cooperate reasonably
with Sellers in obtaining any Governmental Authorizations and Consents required
to consummate the Contemplated Transactions.
6.2 BEST EFFORTS
Buyer will use its Best Efforts to cause the conditions in Article 8
and Section 7.2 to be satisfied.
6.3 CONFIDENTIALITY
Buyer shall hold, and shall cause its employees, agents, affiliates,
consultants, representatives and advisors to hold, any information which it or
they receive in connection with Section 5.1 of this Agreement in strict
confidence in accordance with and subject to the terms of the Confidentiality
Agreement, dated as of March 8, 2002, between Buyer and Pentacon (the
"Confidentiality Agreement").
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, on
or before the Closing Date, of each of the following conditions (any of which
may be waived by Buyer, in whole or in part):
7.1 PERFORMANCE
All of the covenants and obligations that Sellers are required to
perform or to comply with under this Agreement on or before the Closing Date
(considered both collectively and individually) must have been duly performed
and complied with in all material respects.
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7.2 CONSENTS
Each of the Governmental Authorizations and Consents identified in
SCHEDULE 7.2 must have been obtained and must be in full force and effect.
7.3 ADDITIONAL DOCUMENTS
Sellers will have delivered to Buyer:
(a) if requested by Buyer, any consents or other instruments
that may be required to permit Buyer's qualification under each Seller's name in
each jurisdiction in which a Seller is licensed or qualified to do business as a
foreign corporation;
(b) all schedules, statements and operating reports filed with
the Bankruptcy Court; and
(c) such other documents as Buyer may reasonably request for the
purpose of evidencing the satisfaction of any condition referred to in this
Article.
7.4 CONFIRMATION ORDER; 365 ORDER; THIRD PARTIES
(a) The Confirmation Order and the 365 Order must have been
entered.
(b) The Confirmation Order must include a finding that all third
parties entitled to notice of the Contemplated Transactions (including, without
limitation, the third parties to the assumed and assigned executory contracts
and unexpired leases which are part of the Assets) have been properly served by
the Sellers.
(c) More than 120 days must not have elapsed from the filing of
the Bankruptcy Petition without the entry of the Confirmation Order and the 365
Order, unless the delay in obtaining such order is solely due to the schedule of
the Bankruptcy Court or to the breach of this Agreement by Buyer.
7.5 INJUNCTION
No order shall be in effect that enjoins, restrains, conditions or
prohibits the consummation of the Contemplated Transactions.
7.6 FORCE MAJEURE
No acts of God or war or terrorism will have occurred that has a
Material Adverse Effect.
7.7 OPPORTUNITY TO CURE
In the event that Buyer notifies Sellers of its decision not to
consummate the sale and purchase of the Assets due to the failure of any of the
conditions contained in this Article 7 to be satisfied, Sellers shall have the
opportunity for a period of 10 business days to take such actions
35
as may be necessary to remedy the circumstances which have resulted in the
failure of such condition or conditions to be satisfied.
ARTICLE 8
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Assets and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
on or before the Closing Date, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 BUYER'S PERFORMANCE
All of the covenants and obligations that Buyer is required to perform
or to comply with under this Agreement on or before the Closing Date (considered
both collectively and individually) must have been performed and complied with
in all material respects.
8.2 CONSENTS
Each of the Governmental Authorizations and Consents required to be
obtained as a condition to the Closing must have been obtained and must be in
full force and effect.
8.3 INJUNCTION
No order shall be in effect that enjoins, restrains, conditions or
prohibits the consummation of the Contemplated Transactions.
8.4 CONFIRMATION ORDER; 365 ORDER
The Confirmation Order and the 365 Order must have been entered.
ARTICLE 9
TERMINATION
9.1 TERMINATION EVENTS
Subject to Section 9.2, this Agreement may, by notice given before or
at the Closing, be terminated:
(a) by mutual written consent of Buyer and Sellers;
(b) by Buyer if a Seller has committed a material breach of any
provision of this Agreement and Buyer has not waived such breach, provided,
however, that prior to terminating this Agreement pursuant to this Section,
Buyer will notify Sellers of such breach and give Sellers 15 days to cure such
breach and provide an updated Sellers' Disclosure Schedule.
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(c) by Sellers if Buyer has committed a material breach of any
provision of this Agreement and Sellers have not waived such breach; provided,
however, that prior to terminating this Agreement pursuant to this Section,
Pentacon will notify Buyer of such breach and give Buyer 15 days to cure such
breach and provide an updated Buyer's Disclosure Schedule.
(d) by Buyer if it is or becomes impossible to satisfy any
condition in Article 7 (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition;
(e) by Sellers if it is or becomes impossible to satisfy any
condition in Sections 8.1, 8.2 and 8.3 (other than through the failure of
Sellers to comply with its obligations under this Agreement) and Sellers have
not waived such condition;
(f) by Buyer if the Confirmation Order and the 365 Order have
not been entered as provided in Section 7.4 above;
(g) by Buyer in accordance with the following:
(i) The "ACTUAL CUMULATIVE EBITDA RATIO" will equal
(i) the EBITDA of Seller for the three months ending on the last day of the
month preceding the Closing divided by (ii) the EBITDA of Sellers set forth in
Sellers' Business Plan for such period. EBITDA for any period means Pentacon's
consolidated earnings for such period, plus, to the extent deducted in
calculating such earnings, all net interest expense, including the interest
component of capital lease obligations, all income tax expenses, all
depreciation and amortization expense, and all costs and expenses of Sellers
attributable to severance expenses, the filing of the Bankruptcy Petition,
preparation of the Plan and Disclosure Statement, the consummation of the Plan
and this Agreement and costs of the Contemplated Transactions and alternative
restructuring transactions. If the Actual Cumulative EBITDA Ratio is 0.60 or
less, Buyer may terminate the Definitive Agreement.
(ii) The "ACTUAL MONTHLY EBITDA RATIO" will equal (i)
the EBITDA of Seller for any single month starting after March 31, 2002 and
ending prior to the Closing divided by (ii) the EBITDA of Seller set forth in
Business Plan for such period. If the Actual Monthly EBITDA Ratio is 0.50 or
less, Buyer may terminate the Definitive Agreement; and
(h) by Buyer at its discretion upon notice from Sellers or the
Bankruptcy Court that Sellers (i) have entered into a definitive agreement
providing for a Competing Transaction or (ii) have filed a pleading with the
Bankruptcy Court to enter into any Competing Transaction.
9.2 EFFECT OF TERMINATION
(a) Each party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of such right of termination will not be an election of remedies.
Subject to Section 9.2(b) below, if this Agreement is terminated pursuant to
Section 9.1, all obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 6.3, 9.2, 14.1, 14.2, 14.3, 14.15
37
and 14.16 will survive; PROVIDED, HOWEVER, that if this Agreement is terminated
by a party because of the breach of the Agreement by another 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 any 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.
(b) Subject to Bankruptcy Court approval to be included as part
of the Bid Procedures Order, Seller will promptly, but in no event later than
five business days after the first to occur of any of the events described in
the following clauses, pay to Buyer in cash the amount of Buyer's out-of-pocket
costs and expenses incurred in connection with pursuing, negotiating and/or
consummating the Contemplated Transactions, including all fees and expenses of
Buyer's investment bankers, counsel, auditors, consultants and other
representatives, which amount will not exceed $1,500,000:
(i) Buyer terminates this Agreement due to a material
breach by any Seller of any provision hereunder;
(ii) Sellers terminate this Agreement for any reason
other than Buyer's material breach of any provision hereunder; or
(iii) Buyer terminates this Agreement pursuant to
Section 9.1(f) and at the time of such termination Sellers have entered into a
definitive agreement for a Competing Transaction.
ARTICLE 10
BREAK-UP FEE AND OVERBID PROCEDURES
10.1 COMPETITIVE BIDDING
Buyer acknowledges that, from the date hereof and any prior time and
until the transaction contemplated by this Agreement is consummated, Sellers may
be debtors-in-possession under the Bankruptcy Code, to the extent required by
the the Bankruptcy Code or applicable Law, Sellers will cause their
Representatives and affiliates to consider the submission of any inquiries,
proposals or offers by, any Person (in addition to Buyer) to (i) make a tender
or exchange offer for and/or acquire 50% or more of the outstanding shares of
any class of capital stock of any Seller, (ii) acquire 50% or more of the
outstanding principal amount of the Senior Subordinated Debt or (iii) enter into
an agreement to acquire and/or consummate any transaction providing for the
acquisition of any Seller by merger, consolidation, recapitalization,
reorganization or purchase of 50% or more of its assets, either in or out of
bankruptcy (a "COMPETING TRANSACTION"). In addition, Sellers shall have the
responsibility and obligation to respond to any inquiries or offers to purchase
the Assets and perform any and all other acts related thereto which are required
under the Bankruptcy Code or other applicable law, including, without
limitation, supplying information relating to the business of Sellers and the
Assets to prospective purchasers. Sellers shall promptly notify Buyer of the
existence of any inquiry, proposal or offer received by Sellers with respect to
any Competing Transaction, and Sellers shall communicate to Buyer the material
terms of any inquiry, proposal or offer which it may
38
receive with respect to any Competing Transaction but not the identity of the
party making such inquiry, proposal or offer. Sellers shall promptly provide to
Buyer any non-public information regarding the Assets or the business of Sellers
provided to any other party which was not previously provided to Buyer.
10.2 BIDDING PROCEDURES
This Agreement contemplates that there shall be a sale of Sellers'
Assets to Buyer pursuant to the Plan in accordance with Section 363 of the
Bankruptcy Code. The sale of Assets to Buyer may become subject to a competitive
bidding process. Such bidding process shall include a break-up fee for Buyer
which shall be implemented pursuant to an order of the Bankruptcy Court
establishing the competitive bidding procedures and related break-up fee (the
"BID PROCEDURES ORDER"). Within ten (10) business days after the Petition Date,
Sellers shall file a motion with the Bankruptcy Court seeking approval of the
Bid Procedures Order. The Bid Procedures Order shall approve competitive
bidding, overbid, and sales procedures and, among other provisions, provide:
(a) that a proposal for a Competing Transaction must be in writing
and submitted using this Agreement as a form (the "COMPETING AGREEMENT"). A
Competing Agreement shall be made upon terms and conditions substantially
similar to those contained in this Agreement (except as may constitute an
improvement on the terms set forth therein), and must be accompanied by a
"clean" and "black-lined" version of the Competing Agreement marked to show
changes from this Agreement;
(b) that, to be a qualified bid, a Competing Transaction shall
provide additional cash consideration in an amount not less than $4,000,000, and
that any successive overbids (by any Person) shall be made in increments not
less than $1,000,000 in excess of the last submitted, highest qualified bid for
the Assets;
(c) that Sellers retain sole discretion to evaluate successive
overbids based on the aggregate net consideration provided in light of any
Break-Up Fee to be paid as well as any other factor Sellers determine has
bearing on whether a successive overbid is a higher and better offer;
(d) that any Person submitting a Competing Transaction shall provide
an Xxxxxxx Money Deposit in an amount at least equal to the Break-Up Fee;
(e) that the deadline for any Person submitting a qualified bid for
a Competing Transaction be five business days prior to the hearing to be held to
approve the Sellers' Disclosure Statement; and
(f) for the payment of a break-up fee of $3,000,000 (the "BREAK-UP
FEE") to Buyer in the event a Competing Transaction is consummated and Sellers
do not consummate a transaction with Buyer as contemplated in this Agreement.
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ARTICLE 11
INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement will survive the Closing and the consummation of the Contemplated
Transactions, subject to the limitations set forth in this Article.
11.2 INDEMNIFICATION BY SELLERS
Sellers will indemnify and hold harmless Buyer and its Representatives
(collectively, the "BUYER INDEMNITEES") for, and will pay to the Buyer
Indemnitees the monetary value of, any Adverse Consequences arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by any
Seller in this Agreement or in any certificate or document delivered by
Sellers pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation
in this Agreement;
(c) any Retained Liability;
(d) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller
or any Stockholder (or any Person acting on their behalf) in connection
with any of the Contemplated Transactions; and
(e) any Proceedings, demands or assessments incidental to
any of the matters set forth in Sections 11.2(a) through (d).
11.3 INDEMNIFICATION BY BUYER
Buyer will indemnify and hold harmless Sellers and their
Representatives (collectively, the "SELLER INDEMNITEES"), and will pay to Seller
Indemnitees the monetary value of any Adverse Consequences arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by
Buyer in this Agreement or in any certificate or document delivered by
Buyer pursuant to this Agreement;
(b) any breach by Buyer of any covenant or obligation in
this Agreement;
(c) any of the Assumed Liabilities;
(d) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or
understanding alleged to have been made
40
by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions; and
(e) any Proceedings, demands or assessments incidental to
any of the matters set forth in Section 11.3(a) through (d).
11.4 TIME LIMITATIONS
(a) If the Closing occurs, Sellers will have no Liability (for
indemnification or otherwise) for breach of (i) a covenant or obligation to be
performed or complied with before the Closing Date or (ii) a representation or
warranty, other than those in Sections 3.1, 3.2, 3.15, 3.16 or 3.18, unless on
or before the six month anniversary of the Closing Date, and with respect to a
claim under Sections 3.1, 3,2, 3.15, 3.16 or 3.18, unless on or before the one
year anniversary of the Closing Date, Buyer notifies Sellers of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Buyer. A claim for indemnification or reimbursement based upon
fraud or intentional misrepresentation or for a breach of Section 12.3(d) may be
made at any time.
(b) If the Closing occurs, Buyer will have no Liability (for
indemnification or otherwise) for breach of (i) a covenant or obligation to be
performed or complied with before the Closing Date or (ii) a representation or
warranty, unless on or before the six month anniversary of the Closing Date,
Sellers notify Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers.
11.5 LIMITATIONS ON AMOUNT -- SELLERS
Sellers shall have no liability or obligation to Buyer under this
Agreement, except to the extent that the amount thereof exceeds $500,000 as to
all events or occurrences in the aggregate. In addition, Sellers will have no
liability for the amount by which the total monetary value of all Adverse
Consequences or other claims or damages exceeds $1,500,000. Notwithstanding the
foregoing, the limitations of this Section 11.5 will not apply to any fraud or
any intentional misrepresentation by a Seller or any breach of a covenant
herein.
11.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability for the amount by which the total monetary
value of all Adverse Consequences exceeds $1,000,000.
11.7 PROCEDURE FOR INDEMNIFICATION--DEFENSE OF THIRD-PARTY CLAIMS
(a) Promptly after receipt by a Person entitled to indemnity under
Section 11.2 or 11.3 (an "INDEMNIFIED PERSON") of notice of the assertion of a
third-party claim against it, the Indemnified Person will, if a claim is to be
made against a Person obligated to indemnify under such Section (an
"INDEMNIFYING PERSON"), give notice to the Indemnifying Person of the assertion
of such claim. An Indemnified Person's failure to notify an Indemnifying Person
will not relieve the Indemnifying Person of any Liability that it may have to
the Indemnified Person, except to
41
the extent that the Indemnifying Person demonstrates that the resolution of such
claim is prejudiced by the Indemnified Person's failure to give such notice.
(b) If any claim referred to in Section 11.7(a) is brought against
an Indemnified Person by means of a Proceeding and the Indemnified Person gives
notice to the Indemnifying Person of the commencement of such Proceeding, the
Indemnifying Person will be entitled to participate in such Proceeding and, to
the extent that it wishes, to assume the defense of such Proceeding with counsel
satisfactory to the Indemnified Person (unless (i) the Indemnifying Person is
also a party to such Proceeding and the Indemnified Person determines in good
faith that joint representation would be inappropriate or (ii) the Indemnifying
Person fails to provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding). After notice from the Indemnifying Person to the
Indemnified Person of its election to assume the defense of such Proceeding, the
Indemnifying Person will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Article 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 Person in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
Indemnifying Person assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification, (ii) no
compromise or settlement of such claims may be effected by the Indemnifying
Person without the Indemnified Person's consent unless (A) there is no finding
or admission of any violation of Laws or any violation of the rights of any
Person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person, and (iii) the Indemnified Person
will have no Liability with respect to any compromise or settlement of such
claims effected without its consent.
(c) If notice is given to an Indemnifying Person of the commencement
of any Proceeding and the Indemnifying Person does not, within ten days after
the Indemnified Person's notice is given, give notice to the Indemnified Person
of its election to assume the defense of such Proceeding, the Indemnifying
Person will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the Indemnified Person.
(d) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith 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 Person may, by notice to the Indemnifying Person,
assume the exclusive right to defend, compromise or settle such Proceeding, but
the Indemnifying Person 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).
(e) Notwithstanding the provisions of Sections 11.7(a) through (d),
Buyer will be entitled to assume control of any Cleanup and related Proceeding
arising from a claim relating to any Environmental, Health and Safety Liability
on a Facility or Real Property then owned or used by Buyer in its operations.
42
11.8 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 obligated to indemnify and will be
paid promptly after such notice.
11.9 TREATMENT OF INDEMNIFICATION PAYMENTS
Any indemnification payment made pursuant to this Article will be
treated by the parties to the extent permitted under applicable Law as an
adjustment to the Purchase Price for Tax, accounting and all other purposes.
11.10 ESCROW; RIGHT OF SETOFF
Buyers shall have rights of setoff as provided in the Escrow Agreement.
Neither the exercise of nor the failure to exercise such right of setoff or to
give a notice of a claim under the Escrow Agreement will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.
ARTICLE 12
ADDITIONAL COVENANTS
12.1 TRANSACTION TAXES
Sellers will pay in a timely manner all Taxes resulting from or payable
in connection with the sale of the Assets pursuant to this Agreement, including
all transfer, documentary, recording, notarial, sales, use, registration, stamp
and similar Taxes and fees, regardless of the Person on whom Laws impose such
Taxes.
12.2 DISTRIBUTION OF PROCEEDS
In addition to payment of Taxes pursuant to Section 12.1, Sellers will
provide for the distribution of the Purchase Price proceeds in accordance with
the Plan.
12.3 ASSISTANCE IN PROCEEDINGS; PRIVILEGES; ACCESS TO RECORDS
(a) Each party will cooperate reasonably with the other party and
its counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and Records in connection with,
any Proceeding involving or relating to (i) any Contemplated Transaction or (ii)
any action, activity, circumstance, condition, conduct, event, fact, failure to
act, incident, occurrence, plan, practice, situation, status or transaction on
or before the Closing Date involving Sellers or their business or any
Stockholder.
(b) Sellers and Buyer acknowledge that the Assets include all
attorney work-product protections, attorney-client privileges and other legal
protections and privileges to which Sellers may be entitled in connection with
any of the Assets or Assumed Liabilities. Sellers are not waiving, and will not
be deemed to have waived or diminished, any of its attorney work-product
43
protections, attorney-client privileges or similar protections or privileges as
a result of the disclosure of information to Buyer and its Representatives in
connection with this Agreement and the Contemplated Transactions. Sellers and
Buyer (i) share a common legal and commercial interest in all of the information
and communications that may subject to such protections and privileges, (ii) are
or may become joint defendants in Proceedings to which such protections and
privileges may relate and (iii) intend that such protections and privileges
remain intact should either party become subject to any actual or threatened
Proceeding to which such information or communications relate. Sellers agree
that they will have no right or power after the Closing Date to assert or waive
any such protection or privilege included in the Assets. Sellers will take any
actions reasonably requested by Buyer, at the sole cost and expense of Buyer
unless Buyer is entitled to indemnification therefor under the provisions of
Article 10, in order to permit Buyer to preserve and assert any such protection
or privilege included in the Assets.
(c) After the Closing Date, Buyer will retain for a period
consistent with Buyer's record retention policies and practices but for a
minimum of 6 years, those Records of Sellers delivered to Buyer. Buyer also will
provide Sellers and their Representatives reasonable access thereto, during
normal business hours and on at least three days' prior written notice, to
enable them to prepare financial statements or Tax Returns or deal with Tax
audits or other Proceedings or for any other reasonable business purpose
specified in such notice. After the Closing Date, Sellers will provide Buyer and
its Representatives reasonable access to Records that are Excluded Assets,
during normal business hours and on at least three days' prior written notice,
for any reasonable business purpose specified by Buyer in such notice.
(d) After the Closing Date, Sellers will take all actions reasonably
requested by Buyer, at Buyer's expense, to preserve, collect, and promptly
assign and/or endorse over to Buyer any and all Tax refunds included in the
Assets, and not collected by Sellers as of the Closing Date. If any Governmental
Body takes any action to reduce the amount of any Tax refund claimed by Sellers
on a Tax Return filed before the Closing date, or on a Tax Return filed after
the Closing Date but relating to a Tax period ending on or before the Closing
Date, Sellers will promptly notify Buyer of such action, and take such
responsive action, at Buyer's expense, as Buyer may reasonably request. Sellers
will keep Buyer informed quarterly of the progress of all such refund claims
until the last refund or portion thereof has been collected by Buyer.
12.4 POST-CLOSING ASSISTANCE
Buyer agrees to make available to Sellers from and after the Closing
the services of such Continued Employees and any other senior managers of
Sellers then employed by Buyer as Sellers may reasonably request, having due
regard for the employment obligations of such Continued Employees and other
senior managers, to Buyer, for the purposes of assisting Sellers with respect to
(i) claims reconciliation, (ii) other administrative matters related to the Plan
and (iii) the winding-up of the affairs of Sellers.
12.5 FURTHER ASSURANCES
Subject to the provisos in Section 6.1, the parties will cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (a) to furnish
44
upon reasonable 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 Contemplated Transactions. If
Sellers or Buyer after the Closing Date receives any funds properly belonging to
the other party in accordance with the terms of this Agreement, the receiving
party will promptly so advise such other party, will segregate and hold such
funds in trust for the benefit of such other party and will promptly deliver
such funds, together with any interest earned thereon, to an account or accounts
designated in writing by such other party.
ARTICLE 13
EMPLOYEES AND EMPLOYEE BENEFITS
13.1 PRE-CLOSING EMPLOYMENT LIABILITIES
Through the Closing, Sellers will continue to be responsible for (i)
the payment of all wages to Active Employees with respect to their services as
employees of Sellers, (ii) the payment to Active Employees of any termination or
severance payments under Seller Benefit Plans or Other Benefit Obligations and
the provision of group health plan continuation coverage in accordance with the
requirements of ERISA Section 601 et seq. and Code Section 4980 B, and (iii) all
payments to Active Employees required under the WARN Act.
13.2 EMPLOYMENT; SELLER BENEFIT PLANS
(a) Buyer agrees to offer employment to all Active Employees
employed by Sellers effective as of the Closing Date, other than the Transition
Employees. Except as otherwise agreed by Buyer and Sellers' employees, all such
offers shall be for employment at will. Employees of Sellers accepting such
offers of employment with Buyer, other than those senior managers of Sellers who
execute employment contracts with Buyer at the Closing, ("CONTINUED EMPLOYEES")
shall be provided with substantially similar positions as such employees held
immediately prior to the Closing Date and at compensation and benefits that are
substantially equivalent to or better than the compensation and benefits
provided by Sellers to such employees as of the date of this Agreement and which
compensation and benefits will extend for a period of at least twenty four
months thereafter so long as such employees continue to remain employed by
Buyer. Sellers shall terminate all persons who are to become Continued Employees
on the Closing Date in compliance with all applicable Laws, rules, regulations
and order requirements.
(b) Sellers agree to take all action and execute such documents as
may be necessary or advisable to show that Buyer has assumed the Seller Benefit
Plans and that Buyer has become the Plan Sponsor of such Benefit Plans. Buyer
agrees to take all reasonable actions and execute such documents as may be
reasonably necessary for the Buyer to assume the Seller Benefit Plans and to
become the Plan Sponsor of such Benefit Plans on the Closing Date.
(c) Buyer and its Affiliates will take into account all service of
the Continued Employees earned while employed by Sellers prior to the Closing
Date and will treat such service as service with Buyer for purposes of
determining such employees' eligibility for holidays, sick days and vacation
benefits. Any group health, disability or other welfare benefit
45
plan made available by Buyer for the benefit of any Continued Employee and his
or her dependents and beneficiaries will not contain any exclusion or limitation
with respect to any preexisting condition for such Continued Employee or his or
her dependents or other beneficiaries and Buyer will credit all such individuals
with deductibles and out-of-pocket maximums incurred or paid by on behalf of
such individuals for the applicable plan year containing the Closing Date. Buyer
will take into account all service of the Continued Employees with Sellers prior
to the Closing Date for purposes of participation and vesting under the Benefit
Plans of Buyer, but will not take such services into account for the purpose of
calculating any benefit under Buyer's pension and excess benefit plans.
(d) The parties hereto agree that, as soon as practicable following
the execution of this Agreement, they will undertake a joint review of the
liabilities under the Seller Benefit Plans. Sellers will use their reasonable
best efforts to disclose to Buyer as promptly as possible all such information
as Buyer or its advisors may reasonably request pertaining to the amount and
funding of such liabilities.
(e) As soon as practicable following the Closing Date, Sellers will
cause to be transferred to Buyer any trust, Insurance Policy (other than
director and officer insurance policies), cash and other assets set aside or
designated to fund or finance any Seller Benefit Plan or Other Benefit
Obligation or other employee benefit or employment-related liabilities related
to the Continued Employees and assumed by the Buyer under this Agreement.
(f) Buyer shall, or shall cause a subsidiary of Buyer to, during the
period commencing on the Closing Date and ending on the second anniversary of
the Closing Date, provide Continued Employees and their dependents and
beneficiaries with Benefit Plans and Other Benefit Obligations which in the
aggregate are no less favorable than those provided to such employees,
dependents and beneficiaries immediately prior to the Closing Date.
(g) Except as expressly provided herein, nothing contained herein,
expressed or implied, is intended to confer upon any employee of Sellers any
right to employment or continued employment with Buyer, or any benefits under
any Benefit Plan, including without limitation severance benefits, by reason of
this Agreement. In addition, the provisions of this Agreement, in particular
Article 13, are for the sole benefit of the parties to this Agreement and their
respective affiliates and are not for the benefit of any third parties.
13.3 OTHER ACTIONS
Sellers and Buyer will give any notices required by Law and take
whatever other actions as may be necessary to carry out the arrangements
described in this Article. Sellers and Buyer will provide each other with such
plan documents and summary plan descriptions, employee data or other information
as may be reasonably required to carry out the arrangements described in this
Article. Sellers will provide Buyer with completed I-9 forms and attachments
with respect to all Continued Employees, except for such employees as Sellers
will certify in writing to Buyer are exempt from such requirement.
46
ARTICLE 14
GENERAL PROVISIONS
14.1 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 Contemplated
Transactions, including all fees and expenses of its Representatives. Each party
will pay all amounts payable to its respective broker and/or investment banker
in connection with this Agreement and the Contemplated Transactions. If this
Agreement is terminated, the obligation of each party to pay its own expenses
will be subject to any rights of such party arising from a breach of this
Agreement by another party.
14.2 PUBLIC ANNOUNCEMENTS
Sellers and Buyer will consult with each other concerning public
disclosures of this Agreement and the Contemplated Transactions and the means by
which Sellers' employees, customers, suppliers and others having dealings with
Sellers will be informed of the Contemplated Transactions, and Buyer will have
the right to be present for any such communication. Except as required by
applicable Law, any public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as Buyer and Sellers mutually determine.
14.3 CONFIDENTIALITY
(a) For a period of two years after the Closing Date, Sellers will
treat and hold as such, and will not use for the benefit of itself or others,
any confidential information, in whatever form or medium, concerning the
operations or affairs of Sellers in respect of the Assets or the Assumed
Liabilities of the types that, as of the date of this Agreement, are deemed to
be Confidential Information. If Sellers are requested or required (by oral
request or written request for information or documents in any Proceeding,
interrogatory, subpoena, civil investigative demand or similar process) to
disclose any such Confidential Information, then Sellers will notify Buyer
promptly in writing of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with this Section. If, in the
absence of a protective order or receipt of a waiver hereunder, Sellers are, on
the advice of outside counsel, required to disclose any such Confidential
Information to any Governmental Body, then Sellers may disclose such
Confidential Information to such Governmental Body; PROVIDED, HOWEVER, that
Sellers will use their commercially reasonable efforts to obtain at the request
and expense of Buyer an order or other assurance that confidential treatment
will be accorded to such Confidential Information.
(b) Sellers will be deemed to have assigned and conveyed to Buyer at
the Closing all rights and remedies to which it is or may in the future be
entitled under any confidentiality agreement between Sellers and any prospective
purchaser of Sellers or any of their material assets or properties. If any such
agreements prohibit assignment to Buyer, then Sellers will
47
cooperate with Buyer, at Buyer's request and expense, to permit Buyer to assert
all rights and remedies to which Sellers may be entitled under such agreements.
14.4 NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment, or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the individual (by name or title) designated
below (or to such other address, facsimile number, e-mail address or individual
as a party may designate by notice to the other parties):
If to Seller:
Pentacon, Inc.
c/x XxXxxxxxx, Xxxxxxxx & Company, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx, Chairman
Facsimile No.: 000-000-0000
E-mail Address: xxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
with a copy (which will not constitute notice) to:
Pentacon, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx XxXxxxxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail Address: xxx.xxxxxxxx@xxxxxxxx.xxx
Xxxxxx and Xxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention:
Facsimile No.: (000) 000-0000
E-mail Address:
48
If to Buyer:
Anixter International Inc.
0000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Senior Vice President - Finance
Facsimile No.: (000) 000-0000
E-mail Address: xxxxxx.xxxxxx@xxxxxxx.xxx
with a copy (which will not constitute notice) to:
Anixter International Inc.
0000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail Address: xxxx.xxx@xxxxxxx.xxx
with a copy (which will not constitute notice) to:
Xxxxx & XxXxxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Suse
Facsimile No.: (000) 000-0000
E-mail Address: xxxxxx.x.xxxx@xxxxxxxx.xxx
14.5 FURTHER ACTIONS
Upon the reasonable request of any party to this Agreement, the other
parties will (a) furnish to the requesting party any additional information, (b)
execute and deliver, at their own expense, any other documents and (c) take any
other actions as the requesting party may reasonably require to more effectively
carry out the intent of this Agreement and the Contemplated Transactions.
14.6 INCORPORATION OF SCHEDULES AND EXHIBITS
The Schedules and Exhibits identified in this Agreement, including
Sellers' Disclosure Schedule and Buyer's Disclosure Schedule, are incorporated
herein by reference and made a part of this Agreement.
14.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the Confidentiality
Agreement and the documents delivered pursuant to 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
49
amended, supplemented or otherwise modified except in a written document
executed by the party against whose interest the modification will operate.
14.8 DISCLOSURE SCHEDULES
Sellers' Disclosure Schedule and Buyer's Disclosure Schedule will be
arranged in sections corresponding to the numbered and lettered sections of
Articles 3 and 4, as applicable. The statements in such Disclosure Schedules,
and those in any supplements to them, relate only to the provisions in the
Section of this Agreement which they expressly address and not to any other
provision. Nothing in such Disclosure Schedules will be adequate to disclose an
exception to any representation or warranty made in Article 3 or Article 4
unless the applicable Disclosure Schedule identifies the exception with
reasonable particularity and describes the facts relating to such exception in
reasonable detail. Without limiting the generality of the foregoing, the listing
or inclusion of a copy of a document or other item will not be adequate to
disclose an exception to any representation or warranty made in this Agreement
unless the representation or warranty relates to the existence of the document
or item itself. In the event of any inconsistency between the statements in the
body of this Agreement and those in such Disclosure Schedules (other than an
exception expressly set forth as such in a Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
14.9 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
14.10 DRAFTING AND REPRESENTATION
The parties have participated jointly in the negotiation and drafting
of this Agreement. No provision of this Agreement will be interpreted for or
against any party because that party or its legal representative drafted the
provision.
14.11 SEVERABILITY
If a court of competent jurisdiction holds any provision of this
Agreement invalid or unenforceable, 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.
14.12 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other
parties, except that Buyer may without the consent of Sellers assign any of its
rights and delegate any of its obligations under this Agreement to any entity
that is a Related Person of Buyer or to any subsequent acquirer of the Assets or
of all or substantially all of the business of Buyer or any Related Person of
Buyer; provided, however, that Buyer will remain primarily liable for all
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of Buyer's and Sellers' successors and permitted assigns.
50
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 except such rights as may inure to a successor or permitted assignee
under this Section.
14.13 ENFORCEMENT OF AGREEMENT
Each party acknowledges and agrees that the other party could be
damaged irreparably if any of the provisions of this Agreement are not performed
in accordance with the specific terms and that any breach of this Agreement
could not be adequately compensated in all cases by monetary damages alone.
Accordingly, each party agrees that, in addition to any other right or remedy to
which Buyer or a Seller may be entitled, at law or in equity, each party will be
entitled to enforce any provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent injunctive relief to
prevent breaches or threatened breaches of any of the provisions of this
Agreement, without posting any bond or other undertaking.
14.14 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of 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 any of 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 a written document 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 that 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.
14.15 GOVERNING LAW
This Agreement will be governed by and construed under the laws of
Illinois without regard to conflicts of laws principles that would require the
application of any other law.
14.16 JURISDICTION; SERVICE OF PROCESS
Any action, hearing, suit or proceeding arising out of or relating to
this Agreement or any Contemplated Transaction will be subject to the
jurisdiction of the Bankruptcy Court.
14.17 COUNTERPARTS
This Agreement may be executed in one or more counterparts.
51
The parties have executed and delivered this Agreement as of the date
indicated in the first sentence of this Agreement.
ANIXTER INTERNATIONAL INC.
By:
-------------------------------------------------
NAME
TITLE
PENTACON, INC.
By:
-------------------------------------------------
NAME: XXXXXX X. XXXX
TITLE: CHIEF EXECUTIVE OFFICER
PENTACON DELAWARE, INC.
By:
-------------------------------------------------
NAME: XXXXXX X. XXXX
TITLE: PRESIDENT
JIT HOLDINGS, INC.
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: PRESIDENT
PENTACON PROPERTIES, L.P.
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: PRESIDENT OF JIT HOLDINGS, INC.
GENERAL PARTNER OF PENTACON USA, L.P.
52
PENTACON INTERNATIONAL SALES, INC.
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: PRESIDENT
PENTACON AEROSPACE GROUP, INC.
By:
-------------------------------------------------
NAME: XXXXXX X. XXXX
TITLE: PRESIDENT
PENTACON USA, L.P.
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: PRESIDENT OF JIT HOLDINGS, INC.
GENERAL PARTNER OF PENTACON USA, L.P.
PENTACON INDUSTRIAL, INC
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: VICE PRESIDENT AND GENERAL COUNSEL
PENTACON EUROPE LIMITED
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: VICE PRESIDENT
53
PENTACON MEXICO S.A. DE C.V.
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: GENERAL MANAGER AND SALE
ADMINISTRATOR
PENTACON CANADA CORPORATION
By:
-------------------------------------------------
NAME: XXX X. XXXXXXXX
TITLE: PRESIDENT
54
