STOCK PURCHASE AGREEMENT
among
BATTERIES BATTERIES, INC.
("Buyer")
BATTERY NETWORK, INC.
("BATTERY NETWORK")
and
THE STOCKHOLDERS
OF BATTERY NETWORK
("Stockholders")
Dated January 3, 1997 as of December 31, 1996
TABLE OF CONTENTS
PAGE
----
ARTICLE I - SALE AND PURCHASE OF STOCK ................................ 2
1.1. Sale and Purchase of Stock.......................... 2
ARTICLE II - PRICE AND TERMS........................................... 2
2.1. Consideration....................................... 3
2.2. Adjustment of Purchase Price; Determination of
the Closing Combined Net Worth.................... 6
2.3. Resolution of Audit Disputes........................ 8
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS....... 11
3.1. Organization and Qualification of Battery Network... 11
3.2. Capitalization...................................... 11
3.3. Transfer and Title to the Shares.................... 12
3.4. Authorization of Agreements; No Violations.......... 12
3.5. Financial Statements................................ 13
3.6. Tangible Assets..................................... 14
3.7. Intangible Assets................................... 14
3.8. Books and Records................................... 15
3.9. Accounts Receivable................................. 15
3.10. Inventory........................................... 16
3.11. Contracts and Commitments........................... 16
3.12. Leases.............................................. 19
3.13. Liabilities......................................... 20
3.14. Litigation.......................................... 20
3.15. Permits, Licenses, Etc.............................. 21
3.16. Taxes............................................... 21
3.17. Absence of Certain Changes or Events................ 22
3.18. Employee Benefit Plans; ERISA....................... 23
3.19. Insurance........................................... 25
3.20. Compliance with Applicable Law...................... 26
3.21. Investment.......................................... 27
3.22. No Consents......................................... 27
3.23. Full Disclosure..................................... 27
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER................... 28
4.1. Organization and Qualification...................... 28
4.2. Authorization of Agreements......................... 28
4.3. Authority to Buy.................................... 28
4.4. No Consents......................................... 28
4.5. No Violation........................................ 29
4.6. Litigation.......................................... 29
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4.7. Capitalization...................................... 29
4.8. Securities Law Disclosures.......................... 30
4.9. The Common Stock Consideration.................... 30
4.10. Full Disclosure..................................... 30
ARTICLE V - CERTAIN ADDITIONAL AGREEMENTS.............................. 31
5.1. Payment of Affiliated Loans......................... 31
5.2. Employment Agreements............................... 31
5.3. Transfer Taxes...................................... 31
5.4. Resignations........................................ 31
5.5. Employee Stock Options.............................. 32
5.6. Receivables......................................... 32
ARTICLE VI - NON-COMPETITION........................................... 32
6.1. Non-Competition..................................... 32
6.2. Injunctive Relief................................... 33
ARTICLE VII - REMEDIES............................................... 34
7.1. Survival of Representations and Warranties.......... 34
7.2. Indemnification by the Stockholders................. 34
7.3. Indemnification by Buyer............................ 34
7.4. Claims for Indemnification.......................... 35
7.5. Right to Defend..................................... 35
7.6. Limitations......................................... 36
7.7. Litigation; Remedies Cumulative..................... 38
ARTICLE VIII - MISCELLANEOUS......................................... 38
8.1. Expenses............................................ 38
8.2. Further Actions..................................... 38
8.3. Commissions and Finders' Fees....................... 38
8.4. Injunctive Relief................................... 39
8.5. Knowledge of Battery Network....................... 39
8.6. Further Assurances.................................. 39
8.7. Reformation and Severability........................ 39
8.8. Entire Agreement; Modification...................... 40
8.9. Notices............................................. 40
8.10. Waiver.............................................. 41
8.11. Binding Effect; Assignment.......................... 41
8.12. No Third-Party Beneficiaries........................ 42
8.13. Headings............................................ 42
8.14. Counterparts........................................ 42
8.15. Governing Law....................................... 42
-ii-
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated January 3, 1997 as of December 31,
1996, by and among BATTERIES BATTERIES, INC., a Delaware corporation, c/o
Founders Management Services, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Buyer"), BATTERY NETWORK, INC., an Illinois corporation with
offices at 0000 Xxxxxx Xxxxxx, XxXxxxx, Xxxxxxxx 00000 ("Battery Network") and
XX. XXXXXXX XXXXXX XXXX, residing at 00000 Xxx Xxxxxx Xxx, Xxxxx, Xxxxxxxxxx
00000 ("WSS"), XX. XXXXX XXXXXX, residing at 0000 Xxxxxx Xxxx, XxXxxxx,
Xxxxxxxx 00000 ("SG"), and XX. XXXXX XXXX, residing at 0000 Xxxxxx Xxxxxx
Xxxx, Xxx Xxxxx, Xxxxxx 00000 ("JS" who along with SG, and WSS are hereinafter
referred to as the "Stockholders").
WHEREAS, the Stockholders are the record and beneficial
owners of all of the issued and outstanding shares of the capital stock of
Battery Network;
WHEREAS, Battery Network is engaged in the business of the
assembly, packaging and wholesale and retail distribution of batteries
(collectively, the " Battery Network Business"); and
WHEREAS, the Buyer desires to acquire the assets of Battery
Network and the Battery Network Business through the acquisition of the
outstanding shares of the capital stock of the Battery Network, and the
Stockholders desire to effect the sale of the outstanding capital stock of the
Battery Network to the Buyer.
WHEREAS, prior to the closing hereof, Alexander Battery Co.
East, Inc., Alexander Battery Co. South, Inc. and Alexander Battery Co. West,
Inc. (collectively the "Merged Companies") were merged effective December 12,
1996 with and into Battery Network, the Surviving Corporation, pursuant to an
Agreement and Plan of Merger , dated December 1, 1996 (the"Merger Agreement")
(References hereinafter to "Batteries Network" shall include historically the
Merged Companies").
WHEREAS, simultaneously with the execution and Closing
hereof, the Buyer will be acquiring all of the outstanding capital stock of
W.S. Battery & Sales Company, Inc ("WSB") pursuant to a Stock Purchase
Agreement among Buyer, WSB and the WSB Employee Stock Ownership Plan and Trust
(the "ESOP Plan and Trust") which is the sole stockholder of WSB (the "WSB
Stock Agreement") and Battery Acquisition Corp., a subsidiary of the Buyer
("BAC") will be acquiring substantially all the assets of WSJ Enterprises Inc.
("Enterprises") pursuant to an Asset Purchase Agreement among BAC, the Buyer,
Enterprises, the Stockholders, Xxxxxxx Xxxx and Xxxxxxx X. Xxxx ("WS Senior")
(the "Enterprises Asset Agreement") (References in this Agreement to the
"Battery Network Business" shall also include the businesses of WSB and
Enterprises).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements, covenants, representations and warranties hereinafter set
forth, the parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK
1.1. Sale and Purchase of Stock. Subject to all of the
terms and conditions set forth in this Agreement, at the Closing (as defined
herein) the Stockholders shall sell, and transfer and deliver to Buyer, and
Buyer shall purchase and acquire from the Stockholders, all and not less than
all the outstanding shares of the Common Stock, no par value of Battery
Network (the "Shares") with the number of shares being sold by each
Stockholder and his or her Aliquot Percentage as follows:
Name Number of Shares Aliquot Percentage
---- ---------------- ------------------
Xxxxx Xxxxxx 2,167.33 33.92
Xxxxxxx X. Xxxx 2,160.33 33.81
Xxxxx Xxxx 2,062.33 32.27
---------- -----
Total 6,390.00 100%
2
ARTICLE II
PRICE AND TERMS
2.1. Consideration. Subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties and agreements
of Battery Network and each Stockholder contained herein, and in consideration
of the sale, conveyance, assignment, transfer and delivery of the Shares,
Buyer shall deliver or cause to be delivered to the Stockholders in full
payment to the Stockholders for the sale, conveyance, assignment, transfer and
delivery of the Shares at the Closing, the Purchase Price, as adjusted
pursuant to Section 2.2, consisting of:
(i) $231,220.83 less Foreign Receivables of the
same face amount which are being assigned to Enterprises
pursuant to Section 5.6 of this Agreement.
(ii) an aggregate of 550,000 shares of the Common
Stock, par value $.001 of the Buyer (the "Common Stock
Consideration") with each Stockholder to receive his or her
Aliquot Percentage of the Common Stock Consideration;
(iii) five-year options to the Stockholders in the
form of Exhibit A hereto to purchase at $4.50 per share an
aggregate of 225,000 shares of the Common Stock of the
Company (the "Option Consideration") with each
Stockholder's option to represent the right to acquire the
Stockholder's Aliquot Percentage of the Option
Consideration; and
(iv) the Contingent Right to receive as an
Additional Purchase Price ("APP"): (A) up to an aggregate
of $1,000,000 (the "Additional Cash Consideration") in the
form of wire transfers of federal funds to the bank
accounts designated by the Stockholders, (B) up to an
aggregate of 350,000 shares of the Common Stock, par value
$.001 per share of the Company (the "Additional Stock
Consideration"), (C) options in the form of Exhibit B
hereto to purchase up to an aggregate of 125,000 shares of
the
3
Common Stock at $4.50 per share during the five year period
commencing with the end of the Designated Period giving
rise to the issuance of the Options ("Additional $4.50
Option Consideration") and (D) options to purchase up to an
aggregate of 125,000 shares at $6.00 per share during the
five year period commencing the end of the Designated
Period giving rise to the issuance of the Options in the
form of Exhibit B (the "Additional $6.00 Option
Consideration"), in the event the Pre-Tax Earnings of
Battery Network and its subsidiaries ("PTE") amounts to a
Maximum Threshold for a Designated Period. To the extent
the PTE is less than the Maximum Threshold but more than
the Minimum Threshold for a Designated Period (the amount
by which the PTE exceeds the Minimum Threshold is referred
to herein as the "Excess"), the percentage of the APP
payable shall equal (i) the percentage of the Maximum
Excess for that Designated Period represented by the Excess
for that Period less (ii) the sum of the percentages of the
APP paid or payable for prior Designated Periods. In no
event shall the Additional Cash Consideration exceed
$1,000,000, the Additional Stock Consideration exceed
350,000 shares, the Additional $4.50 Option Consideration
exceed 125,000 Options and the Additional $6.00 Option
Consideration exceed 125,000 options.
The following are the Minimum Threshold and Maximum Threshold of PTE
and Maximum Excess for each Designated Period.
Maximum Maximum
Designated Periods Minimum Threshold Threshold Excess
------------------ ----------------- --------- ------
One Year Period - Year ended $2,100,000 $2,500,000 $ 400,000
December 31, 1997 ("1997
Year")
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Maximum Maximum
Designated Periods Minimum Threshold Threshold Excess
------------------ ----------------- --------- ------
Two Year Period - 1997 Year $4,200,000 $5,000,000 $ 800,000
plus year ending December 31,
1998 ("1998 Year")
Three Year Period - 1997 Year $6,300,000 $7,500,000 $1,200,000
plus 1998 Year plus year ending
December 31, 1999 ("1999
Year")
For example, if the PTE for the One Year, Two Year and Three Year
Periods were respectively $2,300,000, $4,700,000 and $7,100,000, the
Stockholders would be entitled to receive 50% ($200,000/$400,000) of the APP
with respect to the One Year Period, 12 1/2% ($500,000/$800,000 or 62 1/2%
-50%) of the APP with respect to the Two Year Period, and 4 1/6%
($800,000/$1,200,000 or 66 2/3% - the sum of 50% + 12 1/2%) of the APP with
respect to the Three Year Period, or an aggregate of 66 2/3%.
Pre-Tax Earnings of Battery Network means the sum of (i) earnings
before extraordinary items and provision for all applicable federal and state
income taxes of Battery Network and WSB, and (ii) earnings before
extraordinary items and provision for applicable federal and state income
taxes of Xxxxxx Electronics, Inc., a subsidiary of Buyer ("Xxxxxx"). Such
determination shall be in accordance with generally accepted accounting
principles consistently applied. In computing such Pre-Tax Earnings, the
following principles shall apply: (i) no allocation to the operations of
Battery Network, WSB or Xxxxxx of the general corporate overhead incurred by
the Buyer or its other subsidiaries including the management fee paid by the
Buyer to Founders Management Services, Inc. shall be made; (ii) a charge shall
be made for the allocable portion of the interest paid or issued by the Buyer
with respect to funds borrowed to the extent such funds are made available,
with the consent of WSS and JS, to Battery Network, WSB or Xxxxxx, which
consent shall not be unreasonably withheld; (iii) the annual management
compensation of WSS, JS and SG shall amount to aggregate salaries of $300,000
plus
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benefits paid or payable in connection with their employment; (iv) no charge
will be made for either the rental expense for Xxxxxx under its lease covering
00000 Xxxxxxx Xx., Xxx Xxxxx, Xxxxxxxxxx after the date the operations of
Xxxxxx are physically relocated to a building or buildings occupied by Battery
Network or one of its subsidiaries or the cost of relocating such operations;
and (v) to the extent the inventory reserve is reduced to an amount which is
below $500,000.00 during or at the close of the year in accordance with
generally accepted accounting principles, a like amount shall be deducted from
the PTE. The Buyer agrees that until the APP is finally determined the
operations of Battery Network, WSB and Xxxxxx as conducted immediately prior
to the date hereof will be only conducted by Battery Network , WSB and Xxxxxx
(the latter two corporations under the control of Battery Network) and that no
sale of any of such operations or acquisition or introduction of any other
operations by Battery Network will be effected without the written consent of
all of the Stockholders, which consent may not be unreasonably withheld.
Payment, if any, of the Additional Purchase Price shall be made
within 30 days following the delivery of the audited consolidated financial
statement or statements of operations of Buyer and its subsidiaries, which
includes the results of operations of Battery Network, WSB and Xxxxxx, which
statement or statements shall disclose the achievement of PTE giving rise to
an APP payment (the "Related APP Financials"), with each Stockholder to
receive his or her Aliquot Percentage of the Additional Cash Consideration,
Additional Stock Consideration and Additional Option Consideration to be paid.
2.2. Adjustment of Purchase Price; Determination of the
Closing Combined Net Worth.
(a) The Purchase Price shall be increased or decreased by
the amount by which the Combined Net Worth determined pursuant to Section
2.2(c) (the "Closing Combined Net Worth") does not equal $8,000,000. For
purposes of this Section, the Closing Combined Net Worth shall be the
6
sum of the amounts of combined capital stock, additional paid-in capital,
retained earnings and amounts due to the Stockholders and WS Senior
immediately prior to the payment provided in Section 5.1 set forth in the
Closing Combined Balance Sheet as defined and prepared pursuant to Section 2.2
(c) adjusted to (i) reduce the foregoing sum by the amount, if any, by which
the inventory reserves exceed $500,000, and (ii) to eliminate the reserve for
doubtful accounts applicable to the "Foreign Receivables" being assigned to
Enterprises pursuant to Section 5.1 under this Agreement and those retained by
Enterprises under the Enterprises Asset Agreement.
(b) To the extent the Closing Combined Net Worth set forth
in the Closing Combined Balance Sheet is greater or less than $8,000,000, the
Purchase Price shall be adjusted to the extent of the difference. Accordingly,
if the Closing Combined Net Worth is greater than $8,000,000, then the Buyer
shall pay the amount of such excess to the Stockholders with each Stockholder
to receive his or her Aliquot Percentage of the excess; but if the amount of
the Closing Combined Net Worth is less than $8,000,000, each Stockholder shall
pay his or her Aliquot Percentage of the deficiency to the Buyer,
notwithstanding that such deficiency exceeds the Cash Consideration paid to
the Stockholders at the Closing. Payment in either case shall be by means of
certified check to the order of the party to whom such payment is to be made
within thirty (30) days following the later of receipt of the Closing Combined
Balance Sheet by the Stockholders or the resolution of any dispute.
(c) For purposes of determining the Closing Combined Net
Worth, as soon as practicable after the Closing, but in no event later than
ninety (90) days after the Closing, Buyer shall prepare and deliver to the
Stockholders a Combined Balance Sheet of Battery Network, WSB and Enterprises
(the "Combined Corporations") as of the close of business on December 31, 1996
(the "Closing Combined Balance Sheet") prepared in accordance with generally
accepted accounting principles ("GAAP") applied consistently with those
applied in the preparation of the September 30, 1996 Balance Sheet provided
pursuant to Section 3.5. During the course of the preparation of the
7
Closing Combined Balance Sheet, Buyer shall permit the Stockholders and their
representatives to review determinations made in connection with the
preparation of the Closing Combined Balance Sheet and to review the documents
underlying such preparation. Buyer shall afford to Stockholders and
Stockholders' Accountants as defined in Section 2.3(a) access to the books and
records of the Combined Corporations as of the Closing Date in order to permit
a review by the Stockholders of the preparation by Buyer of the Closing
Combined Balance Sheet. Buyer and Stockholders agree to use their respective
best efforts to cause Buyer's Accountants and Stockholders' Accountants to
cooperate fully with each other in preparing the Closing Combined Balance
Sheet. Such cooperation shall include, without limitation, the exchange of all
relevant information and documentation. The amount of the Closing Combined Net
Worth shall be the amount reflected on the Closing Combined Balance Sheet,
unless Stockholders shall dispute the amount and shall demand a review (as
hereinafter defined), in which case the amount of the Combined Net Worth shall
be finally determined pursuant to Section 2.3.
2.3. Resolution of Audit Disputes.
(a) If the Stockholders dispute the amount of the Closing
Combined Net Worth set forth on the Closing Combined Balance Sheet pursuant to
Section 2.2(c) or the amount of the APP as determined by Buyer pursuant to
Section 2.1(iv), they shall so notify Buyer within twenty (20) days after the
date upon which the Stockholders shall have received such Balance Sheet or the
Related APP Financials, specifying in detail the points of disagreement and
demand a review (the "Review"). Buyer shall promptly consult with Stockholders
with respect to such points of disagreement in an effort to resolve such
disputes. If any such dispute cannot be resolved by Buyer and Stockholders
within five (5) business days after Buyer receives notice from Sellers of the
existence of such dispute, GLM Financial Group Ltd., the accountants for the
Stockholders ("Stockholders' Accountants"), and Deloitte & Touche LLP, the
accountants for the Buyer ("Buyer's Accountants"), shall jointly select a firm
of independent public accountants which has not performed any services since
January 1, 1993 for any of Buyer,
8
Battery Network , the Merged Companies, WSB, Xxxxxx, Enterprises, the
Stockholders, WS Senior, Xxxxxxx Xxxx or any of their affiliates to act as an
arbitrator (the "Arbitrator") to determine all points of remaining
disagreement with respect to such disputed items. All determinations made by
the Arbitrator shall be final, conclusive and binding with respect to such
disputed items on the Closing Date.
(b) Audit Expenses. The fees and expenses of Buyer's
Accountants and Stockholders' Accountants incurred in connection with the
final determination of the amount of the Closing Combined Net Worth shall be
paid by Buyer and Stockholders, respectively. The fees and expenses of the
Arbitrator (if any) incurred in connection with the final determination of any
such items shall be paid by the party, or in the proportions by the parties,
designated by the Arbitrator based on the fault or relative fault of the
parties. In making such determination, the Arbitrator shall consider the
amount in dispute and the net change as finally resolved.
2.4. Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the time
and at the offices of Brock, Fensterstock, Xxxxxxxxxxx, XxXxxxxxx & Xxxx, LLC,
One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. on
January 3, 1997, (the "Closing Date")."
(a) Deliveries by the Stockholders. At the Closing, the
Stockholders shall deliver and shall cause to be delivered to Buyer (unless
delivered previously) the following:
(1) the stock certificates evidencing the Shares,
duly endorsed or accompanied by a duly executed stock power
or powers transferring the ownership to the Buyer;
(2) the Employment Agreements executed by WS and JS
each in the form and substance as annexed hereto as Exhibit
C, and an Employment Agreement executed by SG in form and
substance as annexed hereto as Exhibit C-1;
9
(3) the written consents of third persons referred
to in Section 3.10 and Schedule 3.11 (other than consents
of certain lessors of personal property specified in
Schedule 3.11);
(4) the executed leases or amendments as provided
in Section 3.11;
(5) the opinion of counsel in the form of Exhibit D
hereof;
(6) the resignations of the Directors provided in
Section 5.4; and
(7) all other previously undelivered documents,
instruments and writings required to be delivered by the
Battery Network or the Stockholders to Buyer at or prior to
the Closing pursuant to this Agreement or otherwise
required in connection herewith.
(b) Deliveries by Buyer. At the Closing, Buyer shall
deliver to or on behalf of the Stockholders (unless delivered previously) the
following:
(1) three stock certificates evidencing the Common
Stock Consideration, of which one is registered in the name
of SG for 186,560 shares, one is registered in the name of
WSS for 185,955 shares and one is registered in the name of
JS for 177,485 shares; each Certificate bearing the
following legend:
"The shares evidenced by this certificate have not
been registered under the Securities Act of 1933,
as amended, and no transfer, disposition or
hypothecation may be effected of such shares or any
interest therein unless registered under the Act
or, in the opinion of counsel to the issuer, such
transaction is exempt from registration
thereunder."
(2) three Option Certificates, executed by the
Buyer, one registered in the name of SG for options with
respect to 76,320 shares, one registered in the name of WSS
for options with respect to 76,072 shares and one
registered in the name of JS for options with respect to
72,608 shares, each in the form of Exhibit A;
(3) the opinion of counsel in the form of Exhibit
D-1;
10
(4) the wire transfer of federal funds to the
Stockholders and WS Senior in the amount set forth in
Section 5.1;
(5) the wire transfer of federal funds to the
Stockholders in the amount of $75,000 pursuant to Section
6.1; and
(6) all other previously undelivered documents,
instruments and writings required to be delivered by Buyer
to the Stockholders at or prior to the Closing pursuant to
this Agreement or otherwise required in connection
herewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
To induce Buyer to enter into this Agreement and consummate
the transactions contemplated hereby, the Stockholders and Battery Network
jointly and severally represent and warrant to Buyer as follows:
3.1. Organization and Qualification of Battery Network.
Battery Network is a corporation duly organized and validly existing under the
laws of Illinois and in each jurisdiction where it owns property or conducts
business except where the failure to do so would not in the aggregate
adversely affect the financial condition or results of operations of Battery
Network . Battery Network has the corporate power to own its assets and to
conduct its business as it is presently being conducted. Copies of the
Certificate of Incorporation and the By-Laws, each as amended to date, of
Battery Network have been previously delivered to Buyer and are correct and
complete. Battery Network does not own any equity interest in any other
corporation.
3.2. Capitalization. The authorized capital stock of
Battery Network consists of 1,000,000 shares of common stock, no par value, of
which the Shares are the only issued and outstanding shares; and there are no
shares of the capital stock of Battery Network held in its treasury. The
Shares are validly issued, fully paid and nonassessable and owned of record
and beneficially by
11
the Stockholders. Neither Battery Network nor the Stockholders has executed or
granted any, and there is, and at the Closing there will be, no outstanding,
option, warrant or other right or any agreement (other than this Agreement) of
any kind providing for the purchase, or the right to purchase, issuance, sale
or other disposition of any shares of capital stock or security convertible
into or exchangeable for such shares of Battery Network.
3.3. Transfer and Title to the Shares. The Shares are being
sold to the Buyer free and clear of any liens or encumbrances. Upon delivery
of the Shares to Buyer at the Closing, the Buyer will receive good and
marketable title to the Shares, free and clear of any lien, pledge, option,
contractual right, equitable right, charge or other encumbrances of any kind
whatsoever.
3.4. Authorization of Agreements; No Violations.
(a) This Agreement has been, and the instruments and
agreements contemplated herein, including, but not limited to, the Employment
Agreements (collectively, the "Related Instruments") and other agreements and
documents to be executed in connection with the closing of the transaction
contemplated hereby (the "Closing Documents") have been duly executed and
delivered by Battery Network and the Stockholders and constitute the valid and
binding obligations of Battery Network and the Stockholders; and the Agreement
, and each of the Related Instruments and Closing Documents are enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
except to the extent that the remedy of specific enforcement or injunctive
relief is subject to the discretion of the court before which any proceedings
therefor may be brought.
(b) The execution and delivery and the performance of this
Agreement, the Related Instruments and the Closing Documents (other than the
Employment Agreements) and, to the knowledge
12
of Battery Network and the Stockholders, the execution, delivery and
performance of the Employment Agreements, do not, with or without the giving
of notice and/or the passage of time:
(i) violate in any material respect any law
applicable to Battery Network and the Stockholders or the
corporate charter or By-Laws of Battery Network;
(ii) violate, conflict with, result in the breach
or termination of, any provision of, constitute a default
under any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which Battery Network or a
Stockholder is a party or by which Battery Network or a
Stockholder or any material asset or property of Battery
Network is or may be bound (the "Binding Agreements") or
give any party, other than a Stockholder or Battery
Network, the right to accelerate any material obligation
thereunder, except where such violation, conflict, breach,
default or termination would not have a materially adverse
effect upon the Battery Network Business or the combined
financial condition or combined results of operations or
prospects of Battery Network, WSB and Enterprises
(collectively, the "Combined Financial Condition" and the
"Combined Results of Operations") or the transferability or
value of the Shares; or
(iii) result in the creation of any lien, charge or
encumbrance upon the Shares, or upon any of the properties
or assets of Battery Network pursuant to any of the Binding
Agreements. Neither such execution, delivery and
performance nor compliance by Battery Network or a
Stockholder with the terms and provisions hereof violate
any law or, with or without the giving of notice and/or the
passage of time, conflict with or result in a breach of any
judgment, order, injunction, decree, regulation or ruling
of any court or other governmental authority to which
Battery Network or a Stockholder is subject or by which any
of the assets of Battery Network or the Shares may be
bound.
13
3.5. Financial Statements. The Stockholders have caused
Battery Network to deliver to Buyer the Combined Balance Sheets of Battery
Network, WSB and Enterprises as of September 30, 1996, December 31, 1995 and
December 31, 1994 and their combined statements of income, cash flows and
stockholders' equity for the nine months ended September 30, 1996 and for each
of the years ended December 31, 1995, and December 31, 1994 accompanied by the
unqualified report of Deloitte & Touche, independent public accountants
(collectively the "Audited Financial Statements"). The foregoing financial
statements fairly present the Combined Financial Position of Battery Network ,
WSB and Enterprises as of September 30, 1996, December 31, 1995 and December
31, 1994 and the Combined Results of Operations of Battery Network, WSB and
Enterprises for the nine month period ended September 30, 1996 and the years
ended December 31, 1995 and December 31, 1994. The Audited Financial
Statements have been prepaid in conformity with GAAP, consistently applied.
The Closing Combined Net Worth of Battery Network, WSB and Enterprises as
defined in Section 2.2 will be at least $8,000,000.
3.6. Tangible Assets. Battery Network does not own any real
property. Schedule 3.6 hereto is a complete and correct list of all material
items (a book value of at least $25,000) of tangible personal property , other
than inventory, and fixtures of Battery Network, all of which were included on
the September 30, 1996 Balance Sheet, and all of which are currently used or
useable in the conduct of the Battery Network Business and are in the
aggregate in good condition and repair, reasonable wear and tear excepted.
3.7. Intangible Assets.
(a) Schedule 3.7 identifies all patents, trademarks, trade
names, service marks, copyrights, registrations or applications with respect
to any of the foregoing, renewals or assignments, and all rights in, to, or
respecting such renewals and licenses or rights under the same presently
owned, being used, or presently intended to be acquired (identified as such)
by Battery Network (collectively
14
referred to herein as the "Business Rights"). To the extent indicated in
Schedule 3.7, the same have been duly registered in the offices indicated
therein. There are no claims or demands of any other person, firm, corporation
or entity of which the Stockholders are aware pertaining to any of such
rights; and no proceedings have been instituted, are pending, or, to the
knowledge of Battery Network and the Stockholders, are threatened, which
challenge, oppose or threaten interference, cancellation, nullification or
concurrent use with any of the Business Rights. To the knowledge of Battery
Network and the Stockholders, none of the Business Rights infringed on or
otherwise violate the rights of others or are being infringed on by others;
and none are subject to any outstanding order, decree, judgment or
stipulation. No licenses, sublicenses or agreements pertaining to any of the
Business Rights are in effect, other than as set forth in Schedule 3.7.
Neither Battery Network nor any of the Stockholders has been formally charged
with infringement of any adversely-held Business Right with respect to Battery
Network or any Business Right used in connection with the Battery Network
Business.
(b) Battery Network owns and possesses all Business Rights
which, to the knowledge of Battery Network and the Stockholders, are necessary
for, and being used in the conduct of, or in connection with, the Battery
Network Business as was conducted on September 30, 1996 and as is currently
being conducted; all are in full force and effect and have not been amended or
modified. Except as set forth in Schedule 3.7, Battery Network has not sold,
assigned, transferred, licensed, sublicensed or conveyed all or any interest
in any of the Business Rights to any person, and Battery Network has the
right, title and interest (free and clear of all security interests, liens and
encumbrances of every nature) in and to the Business Rights set forth on the
Schedule.
3.8. Books and Records. The books and records of Battery
Network, WSB and Enterprises have been maintained on a basis consistent with
prior years and accurately reflect the basis for amounts set forth on the
Financial Statements delivered pursuant to Sections 2.2 and 3.5.
15
3.9. Inventory. All of the inventory included on the
September 30, 1996 Combined Balance Sheet and the Closing Combined Balance
Sheet is of a quality and quantity currently usable in the ordinary course of
the Battery Network Business. The present quantity of all current and usable
inventory, after giving effect to the inventory reserve established in
accordance with GAAP, is at a level consistent with the past practice of
Battery Network, WSB and Enterprises.
3.10. Contracts and Commitments.
(a) Except as set forth in Schedule 3.10 or Schedule 3.11,
on the date of this Agreement:
(i) Battery Network is not a party to or bound by
any distribution agreement, sales representative agreement,
dealer agreement, collective bargaining agreement, loan
agreement, agreement guaranteeing the obligations of
liabilities of others, construction or building
modification agreement, or any other agreement, contract or
commitment relating to its operation, condition (financial
or otherwise), liabilities, assets, earnings, working
capital or the prospects of the Battery Network Business
and which provides for future payments or receipts for any
consecutive twelve month period in an amount of at least
$50,000 (or, with respect to purchase orders, $50,000);
(ii) The enforceability of the agreements,
contracts, commitments and licenses referred to in Schedule
3.7 or Schedule 3.10 will not be affected in any manner by
the execution and delivery of this Agreement, the Related
Instruments or the consummation of the transactions
contemplated hereby, except for the need to obtain the
consents set forth in Schedule 3.10 and Schedule 3.11, all
of which consents have been obtained other than those
relating to those equipment leases which have been
specifically indicated on the Schedules as having not been
obtained;
16
(iii) No outstanding purchase contract or
commitment of Battery Network relates to any business other
than the Battery Network Business, is materially in excess
of the ordinary and usual requirements of such business at
the time entered into or, to the knowledge of Battery
Network and the Stockholders, was entered into at any price
materially in excess of the price paid or payable by
Battery Network, WSB, Enterprises, or any of the Merged
Companies during the nine months ended September 30, 1996
or the year ended December 31, 1995, comparing where
applicable prices paid or payable for similar quantities;
(iv) Other than the "Affiliated Leases" referred to
in Section 3.11, the "Plans" listed on Schedule 3.17 and as
permitted under Section 3.16, neither Battery Network nor
any of the Stockholders is a party to or bound by any
outstanding agreements, arrangements or contracts relating
to the Battery Network Business or the assets of Battery
Network with any of the officers, employees, agents,
consultants, advisors or salesmen of Battery Network that
(A) is not cancelable by it on notice of not longer than 30
days and without liability, penalty or premium, except for
those agreements set forth, along with their expiration
dates, on Schedule 3.10, or (B) provides for the payment of
any bonus or commission based on sales or earnings.
(v) Battery Network is not a party to or bound by
any employment agreement, consulting agreement or any other
agreement which contains any severance or termination pay
liabilities;
(vi) To the knowledge of Battery Network and the
Stockholders, Battery Network is not in default under or in
violation in a material respect of, nor, is there any basis
for any valid claim of default under or violation of, in a
material respect, any contract, agreement or commitment
made or obligation of Battery Network or relating
17
to the Battery Network Business, including, but not
limited to, any material distribution agreement, sales
representative agreement or dealer agreement;
(vii) Battery Network does not have (A)
indebtedness for borrowed money or the deferred purchase
price for property, including guarantees of, or agreements
to acquire, any such indebtedness of others, or (B)
contract, commitment or arrangement for the borrowing of
money or for a line of credit; and
(viii) None of Battery Network, the Stockholders,
any "Affiliate" of a Stockholder (meaning a member of the
immediate family of, or any person controlling or
controlled by, any Stockholder ), an officer or director of
Battery Network is a party to or bound by any agreement or
arrangement for the sale of shares of Battery Network, or
(other than in the ordinary course of business and
consistent with past practice) any of the assets or rights
of Battery Network or which provides for the grant of any
preferential rights to purchase any of the assets or rights
of Battery Network.
(b) With respect to each contract and agreement listed on
Schedule 3.10 attached hereto, except as set forth therein, (A) it is valid,
binding and in full force and effect and is enforceable by Battery Network in
accordance with its terms, subject to bankruptcy, insolvency, reorganization
and other laws and judicial decisions of general applicability relating to or
affecting creditors' rights and to general principles of equity; (B) to the
knowledge of Battery Network and the Stockholders, neither Battery Network nor
any other party thereto is in material breach of any obligation thereunder;
and (C) there does not exist any material default under, or, to the knowledge
of Battery Network and the Stockholders , any event or condition which, with
the giving of notice or passage of time or both, would become a breach or
default in any material respect under the terms of such contract or agreement
on the part of Battery Network or on the part of any other party thereto.
18
(c) Since September 30, 1996, none of Battery Network, WSB,
Enterprises and the Merged Companies has written up the value of any
inventory, or written off as uncollectible any notes or accounts receivable or
any portion thereof, except for write-offs and write-ups in accordance with
GAAP consistently applied; waived any rights of substantial value; or, to the
knowledge of Battery Network and Stockholders, omitted to do any act, or
permitted any act or omission to act, which will cause a material breach of
any contract, commitment or obligation, or any breach of any representation,
warranty, covenant or agreement made herein.
3.11. Leases. Schedule 3.11 attached hereto contains an
accurate and complete list of leases (including all amendments thereof and
modifications thereto, the "Leases") pursuant to which Battery Network leases
real property and leases providing for rentals of at least $10,000 per annum
of personal property. None of the Leases relate to any property or equipment
owned or leased by any Stockholder or an Affiliate except those which are in
the form of Exhibits E and F to this Agreement (the "Affiliated Leases"). To
the knowledge of Battery Network and the Stockholders, Battery Network is not
in default in any material respect with respect to any of the Leases which
would permit the lessor thereunder to terminate such Lease and no event or
condition has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a default in
any material respect thereunder, or would permit the lessor thereunder to
terminate such Lease, increase any of the lessee's obligations or reduce the
lessee's rights thereunder. All Leases are valid, binding and enforceable in
accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and are in full force and
effect, and, except for the consents of lessors set forth in Schedule 3.11
which consents have been obtained, other than as to those equipment leases so
indicated on the Schedule, the execution and delivery of this Agreement and
consummation of the transactions contemplated hereby, will not require Battery
Network or Buyer to procure the consent of
19
any lessor in order for Battery Network to continue as lessee thereunder
without any additional cost to or Buyer or Battery Network or a diminution of
lessee's rights thereunder.
3.12. Liabilities. To the knowledge of Battery Network and
the Stockholders, Battery Network is not, except as set forth in Schedule
3.12, subject to any liabilities other than (i) those included in the
September 30, 1996 Combined Balance Sheet; and (ii) accounts payable and
accrued expenses which have arisen in the ordinary course of the Battery
Network Business subsequent to September 30, 1996.
3.13. Litigation. Except as set forth on Schedule 3.13
attached hereto, there are no claims, actions, proceedings pending and, to the
knowledge of Battery Network and the Stockholders, threatened, and to the
knowledge of Battery Network and the Stockholders, there are no investigations
or inquiries in progress, pending, threatened, against any Stockholder or
Battery Network, that could adversely affect the Shares, Battery Network, its
assets, or the transactions contemplated hereby; nor, to the knowledge of
Battery Network and the Stockholders, is there any valid basis for any such
claim, action, suit, proceeding, inquiry or investigation. As a result of
either the lack of a valid basis for, or the availability of an appropriate
defense to, any claims, actions, suits, proceedings, inquiries or investiga
tions set forth in Schedule 3.13, none of such claims, actions, suits,
proceedings, inquiries or investiga tions will have a material adverse effect
on the Battery Network Business or Combined Financial Condition or Combined
Results of Operations. None of the Stockholders and Battery Network is subject
to any judgment, order or decree entered in any lawsuit or proceeding which
has had or may have a significant adverse effect on the Battery Network
Business or the Combined Financial Condition or Combined Results of
Operations.
3.14. Permits, Licenses, Etc. To the knowledge of Battery
Network and the Stockholders, Battery Network does not require any permits,
licenses, orders or approvals of governmental or administrative authorities
(collectively the "Permits") to permit them to carry on the
20
Battery Network Business as presently conducted (including, without
limitation, those required under federal, state or local laws or regulations
relating to pollution or protection of the environment) other than the Permits
which they currently hold, all of which are described in Schedule 3.14. The
conduct by Battery Network of the Battery Network Business through the date
hereof has not and, to the knowledge of Battery Network and the Stockholders,
the continuation of such business by Battery Network under the control of
Buyer after the Closing in the same manner as currently conducted will not
violate or infringe, and has not and, to the knowledge of Battery Network and
the Stockholders, will not cause a default in any material respect under, any
of the Permits or require Battery Network or the Buyer to obtain any
additional Permits, and neither any Stockholder nor Battery Network has
received any written notification of any threatened suspension or cancellation
of any of the Permits which might be reasonably expected to have a material
adverse effect on the Battery Network Business or the Combined Financial
Condition or Combined Results of Operations.
3.15. Taxes. Battery Network has been, and each of the
Merged Companies until the effective date of its merger was, a Subchapter S
corporation under the Internal Revenue Code. Battery Network has: (i) filed
all returns required to be filed with respect to all federal, state, local and
foreign income, payroll, withholding, excise, sales, use, real and personal
property, occupancy, business and occupation, mercantile, real estate, capital
stock and franchise or other tax (all the foregoing taxes, including interest
and penalties thereon and including estimated taxes thereof, are hereinafter
collectively referred to as "Taxes"), (ii) paid all Taxes required by law to
be paid, and (iii) paid all other Taxes for which a notice of assessment or
demand for payment has been received, except, with respect to all of the
foregoing, to the extent that any claimed tax, fee, interest, assessment or
penalty is not due or is being contested in good faith. No reserve is or will
be required of Battery Network with respect to any Taxes relating to the
income of Battery Network or any of the Merged Companies through the Closing
Date. Battery Network has not received any notice of an examination having
been made of Battery Network's
21
or any of the Merged Companies' federal income tax returns by the Internal
Revenue Service at least since December 31, 1992. Battery Network has not
agreed to extend the time of assessment or collection of Taxes and is not a
party to any action or proceeding by any governmental authority for the
determination, assessment or collection of any Taxes. There is no examination
pending or, to the knowledge of Battery Network or the Stockholders,
threatened by taxing authorities relating to the determination, assessment or
collection of any Taxes from Battery Network.
3.16. Absence of Certain Changes or Events.
(a) Since September 30, 1996:
(i) Battery Network has not sold or suffered any
material adverse change or loss or termination of or breach
or default of any of the Business Rights set forth or
referred to on the Schedules to this Agreement and there
has been no material adverse change, or, to the knowledge
of Battery Network and the Stockholders, is any material
adverse change threatened or anticipated, in the combined
net sales, Combined Financial Condition or Combined Results
of Operations of Battery Network, WSB and Enterprises from
the amounts reflected on the September 30, 1996 Combined
Balance Sheet and the Combined Statement of Income for the
nine months then ended or, to the knowledge of Battery
Network and the Stockholders, in the prospects for the
Battery Network Business, and Battery Network and the
Stockholders do not know of any event which is or might
reasonably be expected to have a material adverse effect on
such combined net sales, condition or results or prospects;
(ii) Battery Network has not: permitted, allowed or
suffered any of its assets (tangible or intangible) to be
subjected to any mortgage, pledge, lien, encumbrance,
restriction or charge of any kind; canceled any material
indebtedness (individually or in the aggregate) owing to it
or waived any claims or rights of substantial value; or
sold,
22
transferred or otherwise disposed of any of its property or
assets (tangible or intangible) except in the ordinary
course of business and consistent with past practice;
(iii) Battery Network has not paid, loaned or
advanced any amount to, or sold, transferred or leased any
properties or assets (tangible or intangible) to, or
entered into any agreement or arrangement with, any of its
officers, directors or employees, or increased the
compensation to its officers and employees at rates
exceeding the rates of compensation paid during the nine
months ended September 30, 1996;
(iv) Battery Network has not experienced any
material labor dispute or difficulty;
(v) Battery Network has not made capital
expenditures or commitments for additions to property,
plant, equipment or for any other purpose which are more
than Fifty Thousand Dollars ($50,000) in the aggregate,
except an acquisition of certain assets from Enterprises;
or suffered any casualty loss or losses with respect to its
assets (whether or not insured against) which in the
aggregate exceed Twenty-Five Thousand Dollars ($25,000).
3.17. Employee Benefit Plans; ERISA.
(a) Except for the profit-sharing, medical and health
plans set forth on Schedule 3.17, Battery Network does not maintain,
administer or otherwise contribute to any Employee Benefit Plan, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to any provision of ERISA and covers any
employee, whether active or retired ("Employee Plans"). None of the Employee
Plans set forth on Schedule 3.17 is a "multi-employer plan," as defined in
Section 3(37) of ERISA, and Battery Network has not been obligated to make a
contribution to any Employee Plan within the past five years on behalf of any
employee. Except for those which will be terminated or canceled on or prior to
the Closing, Battery
23
Network does not maintain any form of current or deferred compensation (other
than base salary and base wages), bonus, incentive compensation, profit
sharing, stock option, stock appreciation right, severance pay, retirement,
pension, salary continuation, group or individual health, dental, medical,
life insurance, survivor benefit or similar plan, policy or arrangement for
the benefit of any employee, whether active or retired, of any class or
classes of its employees ("Benefit Arrangements"). The Stockholders have
provided or caused to be provided to Buyer (i) a copy of each Employee Plan
and Benefit Arrangement, and a copy of each of the documents (including trust
agreements and other funding arrangements and summary plan descriptions) under
which each such Employee Plan and Benefit Arrangement is operated; (ii) the
most recent annual report, if any, required to be filed with the government or
any agency thereof; (iii) with respect to any Employee Plans which are
intended to be qualified under Section 401(a) of the Code, a copy of the most
recent determination letter from the Internal Revenue Service on the Plan's
qualified status and a copy of the application for such letter; and (iv) a
schedule showing either the annual cost or the current value of all benefits
of each Employee Plan and Benefit Arrangement. With respect to all Employee
Plans and Benefit Arrangements, Battery Network is in compliance in all
material respects with the terms of each such plan or arrangement and, to the
knowledge of Battery Network and the Stockholders, with the requirements
prescribed by any and all Laws as defined in Section 3.19 currently in effect,
including but not limited to ERISA and the Code, applicable to such plans or
arrangements. Since December 31, 1995, the Employee Plans and Benefit
Arrangements have not been amended nor, except pursuant to their terms as in
effect on December 31, 1995, have any payments or contributions been made
under such Plans or Arrangements. Since December 31, 1995, Battery Network has
not failed to make any contribution to, or pay any amount due and owing as
required by applicable law or by the terms of, any Employee Plan or Benefit
Arrangement. The obligations of Battery Network with respect to any Employee
Plan and Benefit Arrangement is fully funded. There is no pending or, to the
knowledge of Battery Network or the
24
Stockholders, threatened legal action, proceeding or investigation against
Battery Network or any Employee Plan or Benefit Arrangement with respect to
the employees of Battery Network, other than routine claims for benefits,
which could result in liability to such plans or Battery Network. The
execution of this Agreement and the consummation of the transactions
contemplated hereby will not result in any payment (whether of separation pay
or otherwise) becoming due from Battery Network to any current or former
consultant or employee of Battery Network or will result in the vesting,
accelera tion of payment or increase in the amount of any benefit payable to
or in respect of any such current or former consultant or employee of Battery
Network.
(b) The Stockholders, who have been employees of WSB and
the sole participants of the ESOP Plan and Trust, represent and warrant to
Buyer that the ESOP Plan and Trust has complied with all Laws, not limited to
ERISA and the Code and regulations thereunder, in connection with its
administration and operation and the sale to the Buyer of the outstanding
shares of Common Stock of WSB pursuant to the WSB Stock Agreement and that any
failure to comply has not and will not result in any loss, liability, expense
or claim against Buyer or any of its subsidiaries, including WSB.
3.18. Insurance. Since December 31, 1992, Battery Network
has, in full force and effect, insurance against fire, liability, and other
claims set forth in Schedule 3.18 hereto in amounts and against such losses
and risks as therein set forth. The Schedule lists all the insurance policies
maintained by Battery Network, each of which is valid, outstanding and
binding. Such policies, to the knowledge of Battery Network and the
Stockholders, are sufficient for compliance with all requirements of law and
of all agreements with respect to the operation of Battery Network and the
Battery Network Business and the coverage provided thereby with respect to any
act or event occurring on or prior to the Closing will not in any way be
affected by or terminate or lapse by reason of this Agreement or the
transactions contemplated by this Agreement.
25
3.19. Compliance with Applicable Law. Except as set forth
in Schedule 3.19 attached hereto: (a) Battery Network has complied in all
material respects with respect to its operations, practices, real property,
plants, structures, machinery, equipment, vehicles and other property, and all
other aspects of its business, with all applicable laws (whether statutory or
otherwise), rules, regulations, orders, ordinances, judgments, decrees,
orders, writs and injunctions of all governmental authorities (federal, state,
local, foreign or otherwise) (collectively, "Laws"), including, but not
limited to, all Laws relating to the safe conduct of business, environmental
protection and conservation, antitrust, taxes, consumer protection, currency
exchange, equal opportunity, health, sanitation, fire, zoning, building,
occupational safety, pension, securities, trademark and copyright except where
the failure or failures to comply would not have in the aggregate a materially
adverse effect on the Battery Network Business or its prospects or the
Combined Financial Condition or Results of Operations; and (b) neither Battery
Network nor any of the Stockholders have received notification which is
currently outstanding or uncured of any asserted present or past failure to so
comply. There has not been any storage, generation, manufacture, refinement,
transportation, production, treatment or disposal of solid wastes, toxic
wastes or hazardous wastes or substances by Battery Network or, to the
knowledge of Battery Network and the Stockholders, at the real properties
leased or owned by Battery Network in violation of any applicable Law or
Permit or which would require significant remedial action under any applicable
Law or Permit. There has never been any spill, discharge, leak, emission,
injection, escape, dumping or any other release by Battery Network of any kind
onto any real property into the environment surrounding such real properties
of any solid wastes, toxic wastes or hazardous wastes or substances as such
terms are defined under any law.
3.20. Investment. The Stockholders are acquiring the Common
Stock Consideration, and Option Consideration and will acquire the Contingent
Common Stock Consideration and the
26
Contingent Option Consideration for their own respective accounts and for
investment purposes only and not with the view to the distribution thereof.
3.21. No Consents. No consent, authorization, approval,
order, license, certificate or permit of or from, or declaration or filing
with, any federal, state, local or other governmental authority or any court
or other tribunal, and no consent or waiver of any party to any distribution
agreement, sales representative agreement, dealer agreement, or any other
contract, agreement, instrument or lease to which Battery Network or any
Stockholder is a party, is required for the execution, delivery or performance
of this Agreement or any of the Related Instruments by Battery Network or any
Stockholder, as applicable, or the consummation by such party or parties of
the transactions contemplated hereby or thereby, except for those written
consents set forth on Schedules 3.10 and 3.11, all of which have been obtained
by Battery Network or the Stockholders other than those indicated on Schedule
3.11.
3.22. Full Disclosure. No representation or warranty of
Battery Network and Stockholders made in this Agreement, the Related
Instruments or any written statement furnished to the Buyer pursuant hereto or
the Related Instruments or Closing Documents contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements or facts contained herein or therein not
materially misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Battery Network and the Stockholders to enter
into this Agreement and consummate the transactions contemplated hereby, Buyer
represents and warrants to Battery Network and the Stockholders as follows:
4.1. Organization and Qualification. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware.
27
4.2. Authorization of Agreements. This Agreement has been
duly authorized. This Agreement and the Closing Documents have been duly
executed and delivered by Buyer, constitute the valid and binding obligation
of Buyer and are enforceable against Buyer in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and, except to the extent that the
remedy of specific enforcement or injunctive relief is subject to the
discretion of the court before which any proceedings therefor may be brought.
4.3. Authority to Buy. Buyer has all requisite corporate
power and authority: (i) to execute, deliver and perform this Agreement and
the Closing Documents, and (ii) to carry out the transactions contemplated
hereby and thereby. All necessary corporate proceedings of Buyer have been
duly taken to authorize the execution and delivery of this Agreement by Buyer
and the performance of the transactions contemplated hereby.
4.4. No Consents. No consent, authorization, approval,
order, license, certificate or permit of or from, or declaration or filing
with, any federal, state, local or other governmental authority or any court
or other tribunal, and no consent or waiver of any party to any agreement to
which Buyer is a party, is required for the execution, delivery or performance
by Buyer of this Agreement, except the consent required under the loan
agreement as of the date hereof with IBJ Xxxxxxxx Bank & Trust Company (the
"Xxxxxxxx Loan Agreement") which consent has been obtained.
4.5. No Violation. The execution and delivery do not and
the performance of this Agreement and the Closing Documents will not, with or
without the giving of notice and/or the passage of time, violate any
provisions of law applicable to the Buyer or conflict with, result in the
breach or termination of, any provision of, constitute a default under, or
give any party other than the Buyer the right to accelerate any obligation
under, the Buyer's certificate of incorporation, as amended or by-laws, as
amended, or any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which
28
Buyer is a party; violate any provision of the General Corporation Law of
Delaware or any other laws or, with or without the giving of notice and/or the
passage of time or conflict with or result in a material breach of any
judgment, order, injunction, decree, regulation or ruling of any court or
other governmental authority to which the Buyer is subject or by which any of
the assets of the Buyer may be bound.
4.6. Litigation. There are no claims, actions, proceedings,
pending or in progress, or, to the knowledge of Buyer, threatened, and to the
knowledge of the Buyer there are no investigations or inquiries in progress,
pending, or, threatened, against the Buyer, that could affect Buyer, or the
transactions contemplated hereby; nor, to the knowledge of the Buyer, is there
any valid basis for any such claim, action, suit, proceeding, inquiry or
investigation.
4.7. Capitalization. The authorized capitalization of the
Buyer consists of: (i) 2,000,000 shares of Preferred Stock, par value $.001
per share, of which 750,000 shares of Series A Preferred Stock are outstanding
and (ii)10,000,000 shares of Common Stock, par value $.001 per share, of which
4,000,000 shares are outstanding. The Buyer has not reserved for issue any
additional shares of Common Stock except for the Stock Consideration and the
shares to be issued: (i) as part of the Additional Stock Consideration, (ii)
upon exercise of the Options constituting the Option Consideration, the
Additional $4.50 Option Consideration and the Additional $6.00 Option
Consideration; (iii) upon exercise of options granted or to be granted under
the Buyer's Stock Option Plan; and (iv) warrants to purchase 2,300,000 shares
of Common Stock exercisable on or prior to April 9, 1999.
4.8. Securities Law Disclosures. Buyer has filed all forms,
reports, statements, or other documents required to be filed by Buyer with the
Securities and Exchange Commission ("SEC") and NASDAQ/ NMS, including, without
limitation: (a) its Registration Statement or Form S-1 as declared effective
by the SEC on Xxxxx 0, 0000, (x) its Quarterly Reports on Form 10-Q for the
quarters ended April 30, 1996 , June 30, 1996 and September 30, 1996, (c) all
reports on Form 8-K and (d) all
29
amendments and supplements to all such reports and registration statement
(collectively, the "Buyer SEC Reports"). As of the respective filing dates,
the Buyer SEC Reports complied as to form in all material respects with the
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") or
the Securities Act of 1933 (the "Securities Act"), as applicable. The Buyer
SEC Reports did not at the time they were filed contain any untrue statement
of material fact, or omit to state a material fact required to be stated
therein that was necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.9. The Common Stock Consideration. Buyer has duly
reserved for issuance the shares of its capital stock which will constitute
the Additional Stock Consideration and the shares of its Common Stock to be
issued upon exercise of the options constituting the Option Consideration, the
Additional $4.50 Option Consideration and the Additional $6.00 Option
Consideration. Such shares when issued in accordance with the terms of this
Agreement, the Option, the Additional $4.50 Options or the Additional $6.00
Options will be validly authorized, legally issued, and fully paid and
nonassessable.
4.10. Full Disclosure. No representation or warranty of
Buyer made in this Agreement or any written statement furnished by the Buyer
to Battery Network or the Stockholders pursuant hereto or the Closing
Documents contains any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
ARTICLE V
CERTAIN ADDITIONAL AGREEMENTS
5.1. Payment of Affiliated Loans. Buyer will cause Battery
Network to pay at the Closing to the Stockholders and WS Senior by means of a
wire transfer funds in the amount of $6,065,335.69 to the bank account at the
XxXxxxx State Bank designated by the Stockholders representing full payment
for loans payable to the following in the following amounts: $1,566,795.64
30
to JS, $1,772,480.01 to SG, $2,046,060.04 to WSS and $680,000.00 to WS Senior.
The Stockholders represent and warrant to the Buyer that the foregoing dollar
amounts constitute all, not less than all, of the loans and indebtedness owing
by Battery Network, WSB and Enterprises to the foregoing individuals
immediately prior to the Closing. The foregoing payments shall constitute
satisfaction for all the loans and indebtedness as of the Closing due and
owing by Battery Network, WSB and Enterprises to those individuals, including
WS Senior, and their affiliates.
5.2. Employment Agreements. WS, JS and SG agree to execute
and deliver to Buyer at the Closing the Employment Agreements with Battery
Network in the form of Exhibits C with respect to WS and JS and C-1 with
respect to SG, which agreements provide for the grants of five year options
under the Buyer's Stock Option Plan (the "Option Plan") to SG to purchase
16,960 Shares, to WSS to purchase 16,905 Shares and to JS to purchase 16,135
Shares of the Buyer's Common Stock.
5.3. Transfer Taxes. Buyer shall pay all transfer taxes
payable with respect to the transfer by the Stockholders to the Buyers of the
Shares.
5.4. Resignations. Stockholders are hereby delivering to
Buyer the resignations of all the Directors of Battery Network.
5.5. Employee Stock Options. Buyer shall grant at such time
or times designated by all the Stockholders options to purchase an aggregate
of 75,000 shares of the Common Stock of the Buyer under the Option Plan to
those key employees of Battery Network (other than a Stockholder or member of
his or her family) and in the respective proportions designated by the
Stockholders; such options to be not exercisable until the stockholders of the
Buyer approve an amendment to the Option Plan to increase the shares subject
to the Plan by at least 75,000 shares. Buyer agrees to effect such amendment
within a year from the Closing.
5.6. Receivables. At or immediately prior to this Closing,
the Stockholders will cause Battery Network to assign to Enterprises all of
its interest in those receivables outstanding at the Closing
31
in the amounts and from the customers outside the United States set forth in
Schedule 5.6 which the Stockholders represent and warrant to Buyer constitute
all the receivables of Battery Network as of the Closing from such customers
(the "Foreign Receivables"). To the extent the accounts receivables set forth
on the Closing Combined Balance Sheet, other than the Foreign Receivables, are
not collected in full on or prior to June 30, 1997 without deduction for
allowance for doubtful accounts (the "Uncollected Accounts"), Battery Network
will immediately thereafter assign to Enterprises all of the Uncollected
Accounts and the Stockholders jointly and severally agree to pay or cause
Enterprises to pay to Battery Network on or prior to August 1, 1997 by means
of a certified check or checks to the order of Battery Network the full amount
of the Uncollected Accounts less the amount by which the allowance for
doubtful accounts as of December 31, 1996 exceeded the allowance applicable to
the Foreign Receivables.
ARTICLE VI
NON-COMPETITION
6.1. Non-Competition. Each Stockholder agrees, in
consideration for the payment by Buyer of $25,000 (an aggregate of $75,000 for
the Stockholders) in the form of a certified check or wire transfer of federal
funds in the amount of $75,000 to a bank account at the McHenry State Bank,
XxXxxxx, Illinois designated by the Stockolders, that neither such Stockholder
nor his or her Affiliates will, at any time within a period of two years from
the later of the Closing or the date the Stockholder is no longer employed by
Battery Network, the Buyer or any of its subsidiaries (including Battery
Network) (i) compete, directly or indirectly, with Buyer or any of
subsidiaries, including Battery Network, in the conduct of their then battery
business, or (ii) except on behalf of the Buyer or a subsidiary of Buyer,
directly or indirectly solicit for employment by others any employees of Buyer
or a subsidiary of the Buyer to perform duties with respect to such battery
business; provided, however, that the Buyer or Battery Network is not then in
breach of any obligation to such Stockholder under this
32
Agreement or under the Stockholder's Employment Agreement; and nothing
contained in this Section 6.1 shall prevent (A) the Stockholders and their
Affiliates from purchasing in the aggregate as an investment less than 5% in
the aggregate of the outstanding securities of any corporation whose
securities are regularly traded on any national security exchange or in the
over-the-counter market, or (B) the wife and brother-in law of WS from
continuing to own and operate Battery Connection Inc., a battery catalogue
business.
6.2. Injunctive Relief. Each Stockholder hereby expressly
acknowledges that money damages might be difficult to calculate and may not
adequately compensate the Buyer or Battery Network in connection with an
actual or threatened breach by the Stockholder of the provisions of Sec tions
6.1 or 6.2 hereof. Accordingly, each Stockholder hereby expressly agrees that
each of Buyer and Battery Network shall be entitled to enforce by injunction
or other equitable relief the due and proper performance and observance of the
provisions of Sections 6.1 or 6.2 hereof without being required to provide
security or post any bond and, in addition, each of Buyer and Battery Network
shall be entitled to pursue any other available remedies at law or equity,
including the recovery of money damages, in respect of the actual or
threatened breach of the provisions of said Section.
ARTICLE VII
REMEDIES
7.1. Survival of Representations and Warranties. The right
of a party to maintain any proceeding or action against another party hereto
based on a breach of a representation and warranty or default of a covenant in
this Agreement or pursuant hereto made by any party shall survive the Closing
for a period of two years except with respect to this (i) representations and
warranties with respect to Taxes or the representations and warranties
contained in Section 3.17(b) which shall survive for the applicable statute of
limitations period and (ii) such right shall survive any investigation made at
any time by or on behalf of any other party.
33
7.2. Indemnification by the Stockholders. Subject to
Section 7.6, the Stockholders jointly and severally agree to indemnify, defend
and hold harmless Buyer and its controlling persons and controlled persons,
successors and assigns (hereinafter in this Article VII collectively referred
to as Buyer unless the context otherwise indicates) from and against any and
all claims, demands, losses, costs, obligations, liabilities, interest
thereon, penalties and expenses, including reasonable attorneys' fees and
expenses (all the foregoing being hereinafter sometimes collectively referred
to as "Article VII Damages") occasioned by, arising out of or resulting from
any breach or default of any of the representations and warranties of Battery
Network or the Stockholders or of the covenants of Battery Network or the
Stockholders in this Agreement, the Related Instruments or in any Exhibit or
Schedule to, or any certificate, agreement or other instrument furnished
pursuant to, this Agreement or the Related Instruments or any facts or
circumstances constituting such a breach or default.
7.3. Indemnification by Buyer. Subject to Section 7.6,
Buyer agrees to indemnify, defend and hold harmless the Stockholders and their
respective successors and assigns from and against any and all Article VII
Damages occasioned by, arising out of or resulting from any breach or default
of any of the representations, warranties or covenants of Buyer contained in
this Agreement or a Related Instrument or in any Exhibit or Schedule to, or
any certificate, agreement or other instrument furnished pursuant to, this
Agreement or a Related Instrument or any facts or circumstances constituting
such breach or default.
7.4. Claims for Indemnification. A party seeking
indemnification for Article VII Damages (the "Indemnified Party"), as a
condition of asserting claims for indemnification, shall notify the other
party (the "Indemnifying Party") in writing of any event, or of any facts,
which, in its opinion, entitle or may entitle the Indemnified Party to
indemnification under this Article VII. The notice from the Indemnified Party
shall specify all facts then known to it relating to its claim for
indemnification and the amount or estimated amount of the liability arising
therefrom. The right of the Indemnified Party
34
to indemnification and the amount or the estimated amount thereof, as set
forth in the notice, shall be deemed agreed to by the Indemnifying Party
unless, within 30 days after the mailing of such notice, the Indemnifying
Party notifies the Indemnified Party in writing that it disputes the right of
the Indemnified Party to indemnification as set forth or estimated in the
notice or that the Indemnifying Party elects to defend, in the manner provided
in Section 7.5 hereof, the claim giving rise to such indemnification right. If
the Indemnified Party shall be duly notified that the Indemnifying Party
disputes such claim as aforesaid, the parties shall endeavor to settle and
compromise such dispute but no such settlement or compromise shall be effected
without the consent of both. If unable to do any of the foregoing, such
dispute as to indemnification shall be determined by appropriate litigation
(which shall mean when the claim has been finally determined by a court or
tribunal from which determination no appeal is or may be taken or when the
defense thereto has been abandoned); and any right of an Indemnified Party to
indemnification established by reason of such settlement, compromise, or
litigation shall be promptly thereafter paid and satisfied by the Indemnifying
Party.
7.5. Right to Defend. If the facts giving rise to
indemnification shall involve any actual or threatened claim or demand by any
other third party against an Indemnified Party, the Indemnified Party may upon
written request require the Indemnifying Party, at the expense of the
Indemnifying Party through counsel of its own choosing, to defend or prosecute
such claim or demand in the name of the Indemnified Party, as the case may be
(without prejudice to the right of the Indemnified Party to participate
through counsel of its own choosing at its own expense). The Indemnified Party
shall cooperate in the defense or prosecution of said claim or demand,
including providing the Indemnifying Party with access to such books and
records of the Indemnified Party in the possession of the Indemnified Party,
which shall be reasonably deemed by the Indemnifying Party to relate to said
claim or demand, and shall be entitled to be reimbursed, as provided in
Sections 7.2, 7.3 or 7.7, for all costs and expenses incurred by it in
connection therewith. No settlement shall be effected
35
by an Indemnified Party to which it may claim indemnification from an
Indemnifying Party without the consent of the Indemnifying Party but such
consent shall not be unreasonably withheld.
7.6. Limitations. Other than Article VII Damages arising
with respect to the representations and warranties of the Stockholders in
Section 3.17(b) and the covenant of the Stockholders in Section 5.6 (hereafter
referred to as the "Unlimited Damages"), neither the Stockholders nor the
Buyer, as the case may be, will be obligated to indemnify, defend or hold the
other party harmless with respect to any Article VII Damages asserted by it
until such damages exceed the sum of $50,000 in the aggregate (the
"Threshold"), and then indemnification shall be to the extent of all Article
VII Damages above the Threshold amount. In determining the Threshold, there
should be included, with respect to the Stockholders' obligations hereunder,
all damages under Article VI of the WSB Stock Agreement (other than Unlimited
Damages as defined therein) and all damages under Article VII of the
Enterprises Asset Agreement (other than Unlimited Damages as defined therein)
suffered by the Buyer (collectively, along with the Article VII damages
hereunder, other than Unlimited Damages, hereinafter referred to as the
"Buyer's Aggregate Damages"). In no event shall the Buyer's Aggregate Damages
exclusive of the Unlimited Damages under this Article, Article VI of the WSB
Stock Agreement and Article VII of the Enterprises Asset Agreement for
purposes of indemnification of the Buyer exceed a limit (the "Damages Limit")
of $3,000,000 (the "Cash Portion") plus the shares of Common Stock of the
Buyer and options to purchase shares of Common Stock of the Buyer issued to
the Stockholders (such shares and options collectively referred to as the
"Equity Portion of the Damages Limit"). Buyer and the Stockholders agree that
(i) all Unlimited Damages shall be paid in cash; (ii) payment of the Buyer's
Aggregate Damages shall be first made in cash up to the Cash Portion and then
in Equity and (iii) payment of the Buyer's Aggregate Damages shall be sought
first from the Stockholders and then Enterprises and the stockholders parties
to the Enterprises Asset Agreement before Buyer requires payment from the
stockholder of WSB of Buyer's Aggregate Damages with the cash payments of
36
Buyer's Aggregate Damages pursuant to this Agreement and the Enterprises Asset
Agreement to be credited to the Buyer's Aggregate Damages. In no event shall
Buyer require payment of the Equity Portion of the Damages Limit from the ESOP
Plan and Trust, WS Senior or Xxxxxxx Xxxx.
For the purposes of this Section 7.6, shares of Common Stock of the
Buyer shall be valued at the average of the closing sales price of a share of
Common Stock for the sixty day period immediately preceding the date the
amount of indemnification is conclusively determined hereunder on the National
Market System of the National Association of Securities Dealers Automated
Quotation Systems ("NASDAQ") or if the Common Stock is then listed on one or
more national stock exchanges, the closing sales price for such sixty day
period on the exchange with largest number of issuers whose shares are listed
thereon. If the shares are not then listed on NASDAQ or an exchange, the value
shall be the average of the high bid and low asked price for such sixty day
period for the shares on the over-the-counter Bulletin Board maintained by the
NASD.
The value of the Options or Additional Options as of the date of the
conclusive determination of the amount to be indemnified shall be determined
by an investment banker with experience in valuing options mutually designated
by the Indemnified Party or Parties and the Indemnifying Party or Parties.
7.7. Litigation; Remedies Cumulative. In the event of
litigation to enforce this Agreement or any provision thereof, the prevailing
party, in addition to any other relief such party may be awarded, shall be
entitled to recover its reasonable attorneys' fees, including those incurred
with respect to any appellate proceeding. Except as herein expressly provided,
all remedies provided in this Agreement, including, but not limited to, those
pursuant to Section 6.2 and Articles VII and VIII shall be cumulative and
shall not preclude assertion by any party hereto of any other rights or the
seeking of any other remedies against any other party hereto.
37
ARTICLE VIII
MISCELLANEOUS
8.1. Expenses. Each party hereto shall pay its own expenses
incidental to the negotiation, preparation and consummation of this
Agreement, the Related Instruments and Closing Documents and all other
agreements executed and delivered by it hereunder or in connection herewith
and the transactions provided for herein and therein, including all fees and
expenses of its or their respective counsel and accountants, except that the
fees and expenses of Deloitte & Touche LLP for its services in auditing and
reviewing the Audited Financial Statements of Battery Network provided
pursuant to this Agreement shall be borne by Buyer.
8.2. Further Actions. At any time and from time to time
after the Closing, each party hereto agrees, at its own expense (except as
otherwise provided herein), to take such actions and to execute and deliver
such documents as may be reasonably necessary to effectuate the purposes of
this Agreement.
8.3. Commissions and Finders' Fees. Except for the fees of
Founders Management Services, Inc. ("Founders"), the fees of which shall be
the sole responsibility of Buyer, each of the parties represents that it has
not incurred any liability to any broker, finder or agent for any brokerage
fees, finder's fees or commissions with respect to the transactions
contemplated by this Agreement, which may be directly or indirectly asserted
against the other parties. Buyer agrees to be fully responsible to pay all
fees due to or claims of Founders and to indemnify and hold Battery Network
and the Stockholders harmless from and against all liability, loss, cost,
charge or expense, including reasonable counsel fees, arising from claims of
Founders for any fee or commission with respect to the transactions
contemplated by this Agreement or pursuant to all outstanding agreements
between Founders and Buyer.
8.4. Injunctive Relief. The Buyer and the Stockholders
acknowledge and agree that in view of the uniqueness of the Shares and the
Battery Network Business, damages at law would be
38
insufficient for breach of any of their respective covenants in this
Agreement. Accordingly, the parties hereto agree that in the event of a breach
or threatened breach of any provisions of this Agreement, the Buyer or the
Stockholders, as appropriate, shall be entitled to equitable relief in the
form of an injunction to prevent irreparable injury without being required to
provide any security or post any bond. Nothing herein shall be construed as
prohibiting any party hereto from pursuing any remedies, including damages,
for breach or threatened breach of this Agreement.
8.5. Knowledge of Battery Network. For purposes of this
Agreement "knowledge of Battery Network" shall mean the knowledge of any of
its officers or directors and other persons with managerial responsibilities
employed by Battery Network.
8.6. Further Assurances. Each party hereto shall, from time
to time after the Closing, at the request of any other party hereto and
without further consideration, execute and deliver such other instruments of
conveyance, assignments, transfer and assumption, and take such other actions
as such other party may reasonably request to more effectively consummate the
transactions contemplated by this Agreement.
8.7. Reformation and Severability. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws effective during the term hereof:
(a) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable; and
(b) the legality, validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
8.8. Entire Agreement; Modification. This Agreement, the
Related Instruments and the Exhibits hereto set forth the entire understanding
of the parties with respect to the subject matter hereof, supersede all
existing agreements and understandings between them (and all prior
representations
39
and warranties) concerning such subject matter and may be modified only by a
written instrument duly executed by each party hereto.
8.9. Notices. Any notice given pursuant to this Agreement
to any party hereto shall be deemed to have been duly given (i) when mailed by
registered or certified mail, return receipt requested, (ii) when telecopied,
provided a copy of the notice is mailed by registered or certified mail,
return receipt requested, within one business day following the date of the
telecopied transmission, or (iii) when hand delivered to the party to whom it
is to be given at the address of such party set forth below, as follows:
If to the Stockholders at his address set forth in the first
paragraph of this Agreement:
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxxx, P.C.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax (000) 000-0000
If to Buyer:
Batteries Batteries, Inc.
c/o Founders Equity, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Chairman of the Board
FAX: (000) 000-0000
with a copy to:
Xxx Xxxxxxxxxxx, Esq.
Brock, Fensterstock, Xxxxxxxxxxx, XxXxxxxxx & Xxxx, LLC
Citicorp Center, 56th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FAX: (000) 000-0000
If to Battery Network, c/o Buyer, with a copy to Xxx Xxxxxxxxxxx, Esq.
40
or at such other address as a party shall from time to time designate by
written notice, in the manner provided herein, to the other parties hereto.
8.10. Waiver. Any waiver must be in writing, and any waiver
by any party of a breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of that provision or of
any breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
8.11. Binding Effect; Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of Battery Network,
the Stockholders and the Buyer and their respective heirs, representatives,
successors and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties, and any
purported assignment without such consent shall be void, except that (A) Buyer
may collaterally assign its rights under this Agreement to IBJ Xxxxxxxx Bank
&Trust Company ("IBJ"), as Agent and Lender under the Revolving Credit, Term
Loan and Security Agreement among the Buyer, its subsidiaries, Battery
Network, WSB and IBJ, as Agent and Lender; and (B) the Buyer may assign this
Agreement to any corporation in which it owns 100% of the outstanding shares
of voting stock and which assignee agrees to be bound by the provisions of the
Agreement, provided that (i) the effect of such assignment will not result in
the reduction of the percentage of outstanding shares of the Buyer at the
Closing represented by the shares constituting the Stock Consideration and
Additional Stock Consideration, and (ii) Buyer guaranties the obligation of
the assignee.
8.12. No Third-Party Beneficiaries. Except for rights of
Indemnified Parties under Article VII hereof or the rights of the parties
under the Related Instruments or a permitted assignee under
41
Section 8.11, this Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement.
8.13. Headings. The headings in this Agreement are solely
for convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
8.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.15. Governing Law. This Agreement and all amendments
thereof shall be governed by, and construed in accordance with, the internal
laws of the State of Delaware applicable to contracts made and to be performed
entirely within the state, without giving effect to the principles of conflict
of laws which may be applied thereby. Service of process on Buyer, Battery
Network and Stockholders, as the case may be, in any action arising out of or
relating to this Agreement shall be effective upon Buyer, Battery Network or
the Stockholders, as the case may be, if mailed to the address listed in
Section 8.8 hereof.
42
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
BATTERIES BATTERIES, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
BATTERY NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx, Vice President
STOCKHOLDERS:
/s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Attorney & Agent
/s/ Xxxxxxx Xxxxxx Xxxx
--------------------------------------
Xxxxxxx Xxxxxx Xxxx
Attorney & Agent
/s/ Xxxxx Xxxx
--------------------------------------
Xxxxx Xxxx
43
EXHIBITS
A. Form of Option Agreement
B. Form Additional Options Agreement
C. Form of Employment Agreements with Xxxxxxx Xxxx and JS
C-1. Form of Employment Agreement with SG
D . Opinion of Counsel to Battery Network and Stockholders
D-1. Opinion of Buyer's Counsel
E & F. Affiliated Leases
SCHEDULES
Sections
3.6 Tangible Assets
3.7 Intangible Assets
3.10 Contracts and Commitments
3.11 Leases
3.12 Liabilities
3.13 Litigation
3.14 Permits, Licenses, Etc.
3.17 Employee Benefit Plans, ERISA
3.18 Insurance
3.19 Compliance with Applicable Law
44
STOCK PURCHASE AGREEMENT AMONG
BATTERIES BATTERIES, INC., BATTERY NETWORK, INC.
AND THE BATTERY NETWORK STOCKHOLDERS
SCHEDULE 3.6
Tangible Assets: None
SCHEDULES 3.7
Intangible Assets:
Pending trademark "Absolute"
Registered trademark - "Battery Network"
SCHEDULE 3.10
Contracts and Commitments
A. Manufacturer/Representative Agreements between Absolute Battery and:
Xxxxx Marketing, Inc. for Alaska, Washington, Western Oregon, Western
Mountana and Western Idaho, commencement 7/12/95
Marketing Services of Kansas for Iowa, Nebraska Missouri and Kansas,
except Intelligent Electronics and Inacom, commencement 9/1/95
New Horizons for Illinois and Wisconsin, commencement 2/23/1995
New Era Sales for Northern NJ and New York, commencement 5/17/95
Xxxxxxxxx Xxxxx Services for Florida except Tech Data, commencement
2/7/95
TCG, The Connection Group Inc. for Texas, Oklahoma, Louisiana, Arkansas
except Daisytek and CompuCom, commencement 9/1/95
Pioneer Marketing for New England, upstate New York, southern Connecticut
state line to northern Maine west to New York except MacWarehouse,
commencement 2/1/96
Xxx Brake & Associates for Colorado, Utah, Idaho, Wyoming and Montana,
commencement 12/7/95 - Note says there is an Addendum adding Arizona,
New Mexico and Southern Nevada.
Incremental Sales for Northern California, except Van Star, Momentum and
MicorSystems, and Northern Nevada
B. Agreement Between Burlington Northern Railroad Company, the Xxxxxxxx,
Topeka and Santa Fe Railway and Battery Network made on September 1, 1996
through November
C. Distributor Agreements Between Battery Network, Inc., Absolute Battery Co.
and the following distributors:
Absolute Battery Canada, Inc./Battery Network Canada/Xxxxxxx Xxxxxx Ind.
for the territory of Canada and Cuba
Absolute Battery UK LTD/Battery Network Europe LTD./Xxxxxx Xxxx Ind.
for the United Kingdom and the European Economic Community ("EEC")
SCHEDULE 3.10 CONTINUED
D. Summaries of XxXxxxx Agreements with:
Xxx Xxxxx
Xxxxxx Xxxxxxx
Xxx Xxxxx
Xxxx Xxxxxx
Xxxx Xxxxx
E. Summaries of New Jersey Agreements with:
Xxx Xxxxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxx
Xxxxx Xxxxxx
Pamco
Xxxx Xxxxxxxx
Greenshed Sales/Xxxx Xxxxxx
Xxxxx Xxxxxxx
Armondro Toral, Jr.
Canada: Contract
U.K.: Contract
Xxxxxx Mocskowicz
F. Summaries of San Diego Verbal Sales Agreements with:
Xxx Xxxxxxxxxx
Xxxx Xxxxx
PJH Sales and Marketing Inc. (Xxx Xxxxxxx)
Xxxxxx Xxxxx
Xxx Xxxxxxx
SCHEDULE 3.11
Lease Equipment:
Telephone system in North Branch, New Jersey
Commencement 6/6/94; term 60 months; monthly rental payment $1,022.30
Additional payment of $61.09 per month for 800 GS/LS Module
One Yale Sit Down Electric Forklift
SCHEDULE 3.12
Liabilities - None
SCHEDULE 3.13
Litigation:
Blenheim Group USA, Inc. vs. Battery Network
SCHEDULE 3.14
Permits - Licenses
California - Sellers Permit, California City of Escondido
New Jersey - Sales and Use Tax Recycling Permit
Illinois - Illinois Department of Revenue
Washington - Certificate of Coverage - Master License
License Agreement - De Pew Engineering Inc.
SCHEDULE 3.17
Employee Benefit Plan:
Alexander Battery Co. East, Inc. Specimen Profit Sharing Plan Adoption
Agreement and
Alexander Battery Co. East, Inc. Specimen Profit Sharing Plan & Trust
Alexander Battery Co. West, Inc. Specimen Profit Sharing Plan & Trust
Alexander Battery Co. South, Inc. Specimen Profit Sharing Plan Adoption
Agreement and
Alexander Battery Co. South, Inc. Specimen Profit Sharing Plan & Trust
W.S. Battery & Sales Co., Inc. Employee Stock Ownership Plan and Trust
and
W.S. Battery & Sales Co., Inc. Specimen Money Purchase Pension
Plan & Trust
Battery Network, Inc. Specimen Profit Sharing Plan Adoption Agreement
and
Battery Network, Inc. Specimen Profit Sharing Plan & Trust
SCHEDULE 3.18
Insurance:
Insurance Company Policy No. State Type of Insurance
----------------- ---------- ----- -----------------
Xxxxx Xxxx 00-00-0000-0 Xxxxxxxx Business & Liability
State Farm 98-07-3606-4 Washington Business & Liability
State Farm 93-Mo-1343-1 IL, WA, NJ Workers Comp. & Employers
Liability
Met Life 176866 EBPG IL Health/Life
Xxxx. Drier Co. WN96-538430-05 CA Workers Com. & Employers
Liability
Bankers Std. Co. D2 61 19 479 CA Commercial Property & General
Liability
Blue Xxxxxx XX X00000 CA HMO Health Plan
Private MedCare 8634 CA Group Dental Services
Sentry Ins. 44-66422-02-00-961 Commercial Property Liability and
00-00000-00 NJ Umbrella Coverage
Met Life k76892 NJ Health/Life
SCHEDULE 3.19
Compliance with Applicable Law: None
