STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), is entered into effective
October 1, 1997, among INTERNATIONAL FIBERCOM, INC., an Arizona corporation
("IFC"), COMPASS COMMUNICATIONS, INC., a Georgia corporation (the "Company"),
and the parties set forth on Exhibit A, who are all of the holders of capital
stock of the Company (the "Selling Shareholders").
R E C I T A L S :
WHEREAS, the Company is in the business of providing
engineering/consulting and other technical assistance to the telecommunications
industry;
WHEREAS, IFC desires to purchase all of the issued and outstanding
shares of capital stock of the Company owned by the Selling Shareholders on the
terms and conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, IFC, the Company and the Selling Shareholders hereby agree as follows:
C O V E N A N T S :
1. Purchase and Sale. Subject to the terms and conditions of this
Agreement, on the Closing Date, as defined in Paragraph 3, "Closing Date," the
Selling Shareholders shall sell, convey, transfer and assign to IFC and IFC
shall purchase from the Selling Shareholders, 4,070,536 shares of Common Stock
of the Company ("Company Shares") representing all of the issued and outstanding
capital stock of the Company. The certificates represented by the Company Shares
shall be endorsed in blank, or accompanied by stock powers duly executed in
blank, by each Selling Shareholder transferring all of the Company Shares owned
by such Selling Shareholder. Each Selling Shareholder agrees to cure any
deficiencies with respect to the endorsement of the certificates representing
the Company Shares owned by such Selling Shareholder or with respect to the
stock power accompanying any such certificates at any time subsequent to the
closing of the transaction. All of the Exhibits and Schedules referred to in
this Agreement are made a part of the Agreement by this reference.
2. Exchange of IFC Shares for the Company Shares.
2.1. Exchange. IFC will acquire the Company Shares in exchange
for Two Million Dollars ($2,000,000) in restricted shares of voting Common
Stock, no par value, of IFC ("IFC
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Shares"). The number of IFC Shares to be issued on the Closing Date will be
determined by dividing two million dollars ($2,000,000) by $4.25 per IFC Share.
The IFC Shares will be issued to the Selling Shareholders in accordance with
Exhibit A.
2.2. Financial Statements and Income Tax Returns. The parties
contemplate that (i) after the Closing Date, as defined below, IFC will own Four
Million Seventy Thousand Five Hundred and Thirty-Six (4,070,536) Company Shares,
which is one hundred percent (100%) of the issued and outstanding capital stock
of the Company and (ii) the Company, as a new subsidiary of IFC's consolidated
group, will include its financial results in IFC's consolidated financial
statements covering the periods after joining IFC's consolidated group. The
transaction contemplated by this Agreement shall be structured to qualify for
pooling of interests accounting treatment.
3. Closing Date.
3.1. The closing under this Agreement shall take place at the
offices of Xxxxxxx Xxxx, P.A., Renaissance Xxx, Xxx Xxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxx 00000-0000 on a date ("Closing Date") as soon as practicable after:
3.1.1. Execution of this Agreement;
3.1.2. Consent of the Selling Shareholders and the
Company to the transactions contemplated in this Agreement;
3.1.3. Completion of the due diligence investigation
contemplated under Paragraph 6, "Due Diligence Inspection and Confidential
Information";
3.1.4. Satisfaction of all conditions to closing set
forth in Paragraph 7, "Conditions Precedent to Obligations of IFC," and
Paragraph 8, "Conditions Precedent to the Obligations of the Company and the
Selling Shareholders"; and
3.1.5. Receipt by IFC of any required approvals under
Arizona and Georgia corporate law and any other required regulatory approvals.
3.2. The Closing Date shall be no later than thirty (30) days
after delivery of the audited financial statements of the Company for the fiscal
years ended December 31, 1995 and December 31, 1996, and the unaudited financial
statements for the period through September 30, 1997, which are attached hereto
as Exhibits B, C and D ("Financial Statements"), respectively, or October 31,
1997, whichever comes first, provided that IFC may extend the Closing Date for
an additional thirty (30) days upon written notice to the Company and the
Selling Shareholders. Any further extension of the Closing Date may be made only
with the written consent of IFC, the Company and the Selling Shareholders.
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4. Representations and Warranties of the Company and the Selling
Shareholders. The Selling Shareholders and the Company represent and warrant to
IFC that:
4.1. Validity of Agreement. This Agreement is valid and
binding upon the Selling Shareholders and the Company and neither the execution
nor delivery of this Agreement by such parties nor the performance by such
parties of any of their covenants or obligations hereunder will constitute a
material default under any contract, agreement or obligation to which any of
them is a party or by which they or any of their respective properties are
bound. This Agreement is enforceable severally against the Company and the
Selling Shareholders in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium, receivership or
other similar laws relating to or affecting creditors' rights generally.
4.2. Organization and Good Standing. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Georgia. The Company has full corporate power and authority to carry on
its business as now conducted and to own or lease and operate the properties and
assets now owned or leased and operated by it. The Company is duly qualified to
transact business in the State of Georgia and in all states and jurisdictions in
which the business or ownership of its property makes it necessary so to
qualify, except for jurisdictions in which the nature of the property owned or
business conducted, when considered in relation to the absence of serious
penalties, renders qualification as a foreign corporation unnecessary as a
practical matter.
4.3. Title. Each Selling Shareholder has full right and title
to the Company Shares to be exchanged by such Selling Shareholder and such
Company Shares constitute all the Company Shares which each Selling Shareholder,
directly or indirectly, owns. Each Selling Shareholder holds his or its Company
Shares free and clear of all liens, encumbrances, restrictions and claims of
every kind. Each Selling Shareholder has the legal right, power and authority to
enter into this Agreement and to sell, assign, transfer and convey the Company
Shares so owned by him or it pursuant to this Agreement and the delivery to IFC
of the Company Shares pursuant to the provisions of this Agreement will transfer
to IFC valid title thereto, free and clear of all liens, encumbrances,
restrictions and claims of every kind. There are no outstanding options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase or sale of
any Company Shares by any Selling Shareholder.
4.4. Exclusive Dealing. The Selling Shareholders are not
engaged in any discussions or negotiations for the purchase or sale of any
Company Shares except those discussions with the Company which are embodied in
this Agreement. Neither the Company nor the Selling Shareholders is or are
engaged in any discussions or negotiations for the sale of any Company Shares or
Company Shares held in the treasury, except those discussions with the Company
which are embodied in this Agreement.
4.5. Capitalization. The authorized capital stock of the
Company consists solely of 10,000,000 shares of Common Stock, $.001 par value
per share. The 4,070,536 Company Shares
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shown as outstanding on the Financial Statements constitute the only outstanding
shares of the capital stock of the Company of any nature whatsoever, voting and
non-voting. The Company Shares owned by the Selling Shareholders are validly
issued, fully paid and non-assessable and are subject to no restrictions on
transfer. All Company Shares are required to be certificated, and the Company
has executed and delivered no certificates for shares in excess of the number of
Company Shares set forth in Paragraph 1. There are, and as of the Closing Date
there will be, no outstanding options, warrants, rights, calls, commitments,
conversion rights, plans or other agreements of any character providing for the
purchase, issuance or sale of, or any securities convertible into, capital stock
of the Company, whether issued, unissued or held in its treasury.
4.6. No Subsidiaries. The Company has no subsidiaries and does
not own five percent (5%) or more of the securities having voting power of any
corporation (or would own such securities in such amount upon the closing of any
existing purchase obligations for securities).
4.7. Ownership and Authority. The execution, delivery and
performance of this Agreement by the Company has been duly authorized by its
Board of Directors. This Agreement is valid and binding upon the Company, and is
enforceable against the Company in accordance with its terms, subject to
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium,
receivership or other similar laws relating to or affecting creditors' rights
generally. The execution, delivery and performance of this Agreement by the
Company will not result in the violation or breach of any term or provision of
charter instruments applicable to the Company or constitute a material default
under any indenture, mortgage, deed of trust or other contract or agreement to
which the Company is a party or by which the Company or any of its properties is
bound and will not cause the creation of a lien or encumbrance on any properties
owned by or leased to or by the Company.
4.8. Liabilities and Obligations. Except to the extent set
forth in the Financial Statements, the Company has no liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) secured by a
pledge or a lien on the Assets.
4.9. Financial Statements. The audited Financial Statements
(i) have been prepared from the books and records of the Company by its
independent certified public accountant, Xxxxxx X. Clash, C.P.A., (ii) fairly
and accurately present the financial condition of the Company as of the dates
thereof in conformity with generally accepted accounting principles consistently
applied, and (iii) contain and reflect all necessary adjustments for fair and
accurate presentation of the financial condition as of such dates. The financial
statements for the period ended September 30, 1997 were prepared by management
and are unaudited but were prepared in conformity with generally accepted
accounting principles consistently applied. Except as set forth in Schedule 4.9,
there has not been any change between the date of the Financial Statements and
the date of this Agreement, and there will not be any such change in the
Financial Statements between the date of this Agreement and the Closing Date,
which has had or will have an adverse effect on the financial position or
results of operations of the Company. Except as and to the extent reflected or
reserved against in such Financial Statements, or otherwise expressly disclosed
therein, the Company has no
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liabilities or obligations, contingent or otherwise, of a nature required to be
reflected in the Financial Statements in accordance with generally accepted
accounting principles consistently applied.
4.10. Absence of Certain Changes. During the period from
December 31, 1996 through and including the Closing Date, the Company has not:
4.10.1. Suffered any adverse change affecting its
Assets, liabilities, financial condition or business;
4.10.2. Made any change in the compensation payable
or to become payable to any of its employees or agents, or made any bonus
payments or compensation arrangements to or with any of its employees or agents
except as set forth on Schedule 4.10.2 of the Disclosure Schedule, whether
direct or indirect;
4.10.3. Paid or declared any dividends, distributions
or other payments due or owing to the Selling Shareholders which will result in
a reduction of the book value of the Company, calculated as of September 30,
1997 in accordance with generally accepted accounting principles consistently
applied, prior to or as of the Closing Date;
4.10.4. Issued any stock, or granted any stock
options or warrants to purchase stock or issued any securities convertible into
common stock of the Company, except as set forth on Schedule 4.10.4;
4.10.5. Sold or transferred any of its assets or
canceled any indebtedness or claims owing to it, except in the ordinary course
of business and consistent with its past practices;
4.10.6. Sold, assigned or transferred any formulas,
inventions, patents, patent applications, trademarks, trade names, copyrights,
licenses, computer programs or software, know-how or other intangible assets;
4.10.7. Amended or terminated any contract, agreement
or license to which it is a party otherwise than in the ordinary course of
business or as may be necessary or appropriate for the consummation of the
transactions described herein;
4.10.8. Borrowed any money or incurred, directly or
indirectly (as a guarantor or otherwise), any indebtedness in excess of $25,000,
except in the ordinary course of business and consistent with its past
practices;
4.10.9. Discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent), other
than current liabilities shown in the Financial Statements or current
liabilities incurred since such date in the ordinary course of business,
consistent with its past practices;
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4.10.10. Mortgaged, pledged or subjected to lien,
charge or other encumbrance any of its Assets, except in the ordinary course of
business and consistent with its past practices; or
4.10.11. Entered into or committed to any other
transaction other than in the ordinary course of business, consistent with past
practices.
4.11. Taxes. The Company (and any predecessor corporation or
partnership as to which either of them is the transferee or successor) has
timely filed, or has timely secured an extension and will (within the permitted
extension) file, all tax returns, including federal, state, local and foreign
tax returns, tax reports and forms, as to which the due date for filing is prior
to the Closing Date; has reported all reportable income on such returns; has
adopted and followed in the preparation of such returns methods of accounting
accepted by law, and has not changed any methods of accounting without
compliance with procedures required by law; has not deducted any expenses or
charges or claimed any credits which are not allowable; and except as set forth
in Schedule 4.11.1 of the Disclosure Schedule, has paid, or accrued and reserved
for, all taxes, penalties and interest shown to be due or required to be paid
pursuant to the returns as filed, or as adjusted pursuant to amendment or
correction. The Company shall also provide copies of all federal and state
income and sales tax returns filed, FICA and state income taxes withholding
returns filed and evidence of payment of such taxes as listed in Schedule 4.11.2
hereto. The Selling Shareholders have (i) paid or will pay by the Closing Date
any property taxes owed with respect to any real or personal property through
the Closing Date; and (ii) no knowledge of any deficiency or assertion of any
deficiency relating to property taxes on such assets. No examination, audit, or
inquiry of any tax return, federal, state or otherwise of the Company is
currently in progress and neither the Company nor the Selling Shareholders have
received notice of intent to commence any inquiry, audit or examination of any
tax return from any taxing authority. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of the Company.
4.12. Title to Properties and Assets. The Company presently
own or leases real property from which it conducts its business and owns or
leases certain personal property. The Company has good and marketable title to
all real and personal property reflected on its books and records as owned or
leased by it, free and clear of all security interests, liens, encumbrances,
mortgages or charges of any nature, except as set forth on Schedule 4.12. Any
security interests, liens, encumbrances, mortgages or charges not set forth in
the Company's Financial Statements shall be discharged in full on or before the
Closing Date and evidenced by UCC Releases delivered by the Company on the
Closing Date. Such improved real property or tangible personal property is in
satisfactory condition and suitable for the purpose for which it is being used,
subject in each case to consumption in the ordinary course, ordinary wear and
tear and ordinary repair, maintenance and periodic replacement.
4.13. Accounts Receivable. The amount of all accounts
receivable, unbilled invoices and other debts due as recorded in the records and
books of account of the Company as being due to the Company as of the Closing
Date (less the amount of any provision or reserve therefor made
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in the records and books of account of the Company) will be good and collectible
in full in the ordinary course of business and in any event not later than
ninety (90) days after the Closing Date; and none of such accounts receivable or
other debts is or will at the Closing Date be subject to any counterclaim or
set-off except to the extent of any such provision or reserve. There have been
no material adverse changes since September 30, 1997 in the amount of accounts
receivable or other debts due the Company or the allowances with respect
thereto, or accounts payable of the Company from that reflected in the Financial
Statements.
4.14. Material Documents. Set forth in Schedule 4.14 is a
complete list of all material documents to which the Company is a party. All
such documents listed on and attached to Schedule 4.14 are valid, enforceable
and accurate and complete copies of such material documents (or, with the
consent of IFC, forms thereof) as have been requested by IFC have been provided
to IFC. Except as disclosed in Schedule 4.14, the Company is not or will not be,
merely with the passage of time, in default under any such material document nor
is there any requirement for any of such material documents to be novated or to
have the consent of the other contracting party in order for such material
documents to be valid, effective and enforceable by the Company after the
Closing Date as it was immediately prior thereto.
4.15. Intellectual Properties. Except as set forth on Schedule
4.15, the Company has no interest in and owns no domestic and foreign letters,
patent, patents, patent applications, patent licenses, software licenses and
know how licenses, trade names, trademarks, copyrights, unpatented inventions,
service xxxx registrations and applications and copyright registrations and
applications owned or used by the Company in the operation of its business
(collectively, the "Intellectual Property").
4.16. No Default. The Company and the Selling Shareholders are
not in default under any provision of any contract, commitment, or agreement
respecting the Company or its assets to which the Company or the Selling
Shareholders are parties or by which they are bound.
4.17. Litigation. Except as described in Section 4.17 of the
Disclosure Schedule, there are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or,
threatened, and there are no investigations pending or threatened against the
Company which relate to and could have a material adverse effect on the
properties, business, assets or financial condition of the Company or which
could adversely affect the validity or enforceability of this Agreement or the
obligation or ability of the Selling Shareholders or the Company to perform
their respective obligations under this Agreement or to carry out the
transactions contemplated by this Agreement.
4.18. Finders. The Company and the Selling Shareholders owe no
fees or commissions, or other compensation or payments to any broker, finder,
financial consultant, or similar person claiming to have been employed or
retained by or on behalf of the Company or the Selling Shareholders in
connection with this Agreement or the transactions contemplated hereby.
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4.19. Employees. Schedule 4.19 of the Disclosure Schedule sets
forth the name and current monthly salary and any accrued benefit for each
employee of the Company, and there will be no changes in Schedule 4.19 through
the Closing Date.
4.20. Absence of Pension Liability. Except as described on
Schedule 4.20, the Company has no liability of any nature to any person or
entity for pension or retirement obligations, vested or unvested, to or for the
benefit of any of its existing or former employees. The consummation of the
transactions contemplated by this Agreement will not entitle any employee of the
Company to severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement, including the Exhibits, or accelerate
the time of payment or increase the amount of compensation due to any such
employee. Except as described on Schedule 4.20, the Company presently has no
employee benefit plans and has no announced plan or legally binding commitment
to create any employee benefit plans.
4.21. Compliance With Laws. The Company has conducted and is
continuing to conduct its business in compliance with, and is in compliance
with, all applicable statutes, orders, rules and regulations promulgated by
governmental authorities relating in any respect to its operations, conduct of
business or use of properties, including, without limitation, any applicable
statute, order, rule or regulation relating to (i) wages, hours, hiring,
nondiscrimination, retirement, benefits, pensions, working conditions, and
worker safety and health; (ii) air, water, toxic substances, noise, or solid,
gaseous or liquid waste generation, handling, storage, disposal or
transportation; (iii) zoning and building codes; (iv) the production, storage,
processing, advertising, sale, distribution, transportation, disposal, use and
warranty of products; or (v) trade and antitrust regulations. The execution,
delivery and performance of this Agreement by the Selling Shareholders and the
Company and the consummation by the Selling Shareholders and the Company of the
transactions contemplated by this Agreement will not, separately or jointly,
violate, contravene or constitute a default under any applicable statutes,
orders, rules and regulations promulgated by governmental authorities or cause a
lien on any property used, owned or leased by the Company to be created
thereunder. There are no proposed changes in any applicable statutes, orders,
rules and regulations promulgated by governmental authorities that would cause
any representation or warranty contained in this Paragraph 4.21 to be untrue or
have an adverse effect on its operations, conduct of business or use of
properties.
4.22. Filings. The Company and the Selling Shareholders have
made all filings and reports required under all local, state and federal laws
with respect to its business and of any predecessor entity or partnership,
except filings and reports in those jurisdictions in which the nature of the
property owned or business conducted, when considered in relation to the absence
of serious penalties, renders the required filings or reports unnecessary as a
practical matter.
4.23. Certain Activities. The Company has not, directly or
indirectly, engaged in or been a party to any of the following activities:
4.23.1. Bribes, kickbacks or gratuities to any person
or entity, including domestic or foreign government officials or any other
payments to any such persons or entity,
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whether legal or not legal, to obtain or retain business or to receive favorable
treatment of any nature with regard to business (excluding commissions or
gratuities paid or given in full compliance with applicable law and constituting
ordinary and necessary expenses incurred in carrying on its business in the
ordinary course);
4.23.2. Contributions (including gifts), whether
legal or not legal, made to any domestic or foreign political party, political
candidate or holder of political office;
4.23.3. Holding of or participation in bank accounts,
funds or pools of funds created or maintained in the United States or any
foreign country, without being reflected on the corporate books of account, or
as to which receipts or disbursements therefrom have not been reflected on such
books, the purpose of which is to obtain or retain business or to receive
favorable treatment with regard to business;
4.23.4. Receiving or disbursing monies, the actual
nature of which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
4.23.5. Paying fees to domestic or foreign
consultants or commercial agents which exceed the reasonable value of the
ordinary and customary consulting and agency services purported to have been
rendered;
4.23.6. Paying or reimbursing (including gifts)
personnel of the Company for the purpose of enabling them to expend time or to
make contributions or payments of the kind or for the purposes referred to in
Paragraphs 4.23.1 through 4.23.5 above;
4.23.7. Participating in any manner in any activity
which is illegal under the international boycott provisions of the Export
Administration Act, as amended, or the international boycott provisions of the
Internal Revenue Code, or guidelines or regulations thereunder; and
4.23.8. Making or permitting unlawful charges,
mischarges or defective or fraudulent pricing under any contract or subcontract
under a contract with any department, agency or subdivision thereof, of the
United States government, state or municipal government or foreign government.
4.24. Employment Relations. The Company is in compliance with
all Federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice
which would result in a material adverse effect on the Company; no unfair labor
practice complaint against the Company is pending before the National Labor
Relations Board; there is no labor strike, dispute, slow down or stoppage
actually pending or threatened against or involving the Company; no labor
representation question exists respecting the employees of the Company; no
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grievance which might have an adverse effect upon the Company or the conduct of
its business exists; no arbitration proceeding arising out of or under any
collective bargaining agreement is currently being negotiated by the Company;
and the Company has not experienced any material labor difficulty during the
last three (3) years.
4.25. Insurance Coverage. The policies of fire, liability or
other forms of insurance of the Company are described in Schedule 4.25 of the
Disclosure Schedule.
4.26. Charter and By-Laws. The Company has heretofore
delivered to IFC true, accurate and complete copies of the Articles of
Incorporation and By-Laws of the Company, together with all amendments to each
of the same as of the date hereof.
4.27. Corporate Minutes. The minute books of the Company
provided to IFC at the Closing are the correct and only such minute books and do
and will contain complete and accurate records of any and all proceedings and
actions at all meetings, including written consents executed in lieu of meetings
of its shareholders, Board of Directors and committees thereof through the
Closing Date. The stock records of the Company delivered to IFC at the Closing
are the correct and only such stock records and accurately reflects all issues
and transfers of record of the capital stock of the Company.
4.28. Default on Indebtedness. The Company is not in monetary
default or in material default in any other respect under any evidence of
indebtedness for borrowed money.
4.29. Indebtedness. Except as described in Schedule 4.29 of
the Disclosure Schedule, the Selling Shareholders and any corporation or entity
with which they are affiliated are not indebted to the Company, and the Company
has no indebtedness or liability to the Selling Shareholders or any corporation
or entity with which they are affiliated.
4.30. Agreements, Judgment and Decrees Affecting the Company
and the Selling Shareholders. The Company and the Selling Shareholders jointly
and severally represent and warrant that the Selling Shareholders and the
Company are not subject to any agreement, judgment or decree adversely affecting
their or its ability to enter into this Agreement, to consummate the
transactions contemplated herein, or, in the case of the Selling Shareholders,
to continue as employees or consultants of the Company after Closing. The
Company and the Selling Shareholders further represent and warrant that there
are no laws or regulations prohibiting the consummation of the transactions
contemplated by this Agreement.
4.31. Governmental Approvals. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by the Selling
Shareholders or the Company.
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4.32. Investment Intent. The Selling Shareholders are taking
the IFC Shares for their own account and for investment, with no present
intention of dividing their interest with others or of reselling or otherwise
disposing of all or any portion of the IFC Shares. The Selling Shareholders do
not intend to sell the IFC Shares, either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or non-occurrence of
any predetermined event or circumstance. The Selling Shareholders have no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for, or which is likely to compel, a
disposition of the IFC Shares. The Selling Shareholders are not aware of any
circumstances presently in existence which are likely in the future to prompt a
disposition of the IFC Shares. The Selling Shareholders possess the experience
in business in which IFC is involved necessary to make an informed decision to
acquire the IFC Shares and the Selling Shareholders have the financial means to
bear the economic risk of the investment in the IFC Shares as of the Closing
Date. The Selling Shareholders have received and read IFC's Annual Report on
Form 10-KSB for the year ended December 31, 1996; Quarterly Reports on Form
10-QSB for the three and six months ended March 31, 1997 and June 30, 1997,
respectively; the Proxy Statement for its 1997 Annual Meeting of Shareholders;
and any additional information they have requested. The Selling Shareholders
have had the opportunity to ask questions of the directors and officers of IFC
concerning IFC.
4.33. Completeness of Representations and Schedules. The
Disclosure Schedule, where applicable to the Selling Shareholders and the
Company, completely and correctly presents in all material respects the
information required by this Agreement. This Agreement, the certificates to be
delivered by the Company and the Selling Shareholders at the Closing, the
Disclosure Schedule and the representations and warranties contained in this
Paragraph 4, and the documents and written information pertaining to the Company
furnished to IFC or its agents by or on behalf of the Selling Shareholders or
the Company, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make this Agreement, or such
certificates, Disclosure Schedule, documents or written information not
misleading.
5. Representations and Warranties of IFC. IFC represent and warrant to
the Selling Shareholders and the Company that:
5.1. Organization and Good Standing.
5.1.1. IFC is a corporation duly organized and
existing in good standing under the laws of the State of Arizona. IFC has full
corporate power and authority to carry on its business as now conducted. IFC is
duly qualified to transact business in the state of Arizona and in all states
and jurisdictions in which the business or ownership of the Company's properties
or assets makes it necessary so to qualify (other than jurisdictions in which
the nature of the property owned or business conducted, when considered in
relation to the absence of serious penalties, renders qualification as a foreign
corporation unnecessary as a practical matter).
5.1.2. IFC is a publicly held company and is a
reporting company under the Securities Exchange Act of 1934, as amended
("Exchange Act"). All reports due under the Exchange
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Act have been filed as of the date of this Agreement and are true, correct and
complete in all material respects.
5.2. Capacity. IFC represents and warrants to the Company and
the Selling Shareholders that IFC has read and understands this Agreement, has
consulted legal and accounting representatives to the extent deemed necessary
and has the capacity to enter into this Agreement and to carry out the
transactions contemplated hereby without the consent of any third party.
5.3. Finders. No agent, broker, person or firm acting on
behalf of IFC is, or will be, entitled to any commission or broker's or finder's
fees from any of the parties to this Agreement, or from any person controlling,
controlled by or under common control with any of the parties to this Agreement,
in connection with any of the transactions contemplated in this Agreement.
5.4. Authority and Consent. The execution, delivery and
performance of this Agreement by IFC have been duly authorized by its Board of
Directors. This Agreement is valid and binding upon IFC, and is enforceable
against IFC in accordance with its terms, subject to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership or other similar
laws relating to or affecting creditors' rights generally.
5.5. Validity of Agreement. Neither the execution nor the
delivery of this Agreement by IFC, nor the performance by IFC of any of the
covenants or obligations to be performed by IFC hereunder, will result in any
violation of any order, decree or judgment of any court or other governmental
body, or statute or law applicable to IFC, or in any breach of any terms or
provisions of either the Articles of Incorporation or Bylaws of IFC, or
constitute a default under any indenture, mortgage, deed of trust or other
contract to which IFC is a party or by which IFC is bound.
5.6. Government Approvals. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by IFC.
5.7. Financial Statements and Public Reports. The audited
consolidated financial statements of IFC for the fiscal years ended December 31,
1996 and 1995, with accompanying notes, all as contained in IFC's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1996, and the financial
statements contained in IFC's Quarterly Reports on Form 10-QSB for the three and
six months ended March 31, 1997 and June 30, 1997, respectively, delivered to
the Selling Shareholders, fairly and accurately present, in all material
respects, the financial position of IFC at such dates, the results of its
operation and changes in its financial position for the periods and years ended
on such dates, in conformity with generally accepted accounting principles
consistently applied. Such financial statements contain and reflect all
necessary adjustments for a fair and accurate presentation of the financial
condition as of the date of such statements.
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5.8. Subsidiaries. IFC currently has four subsidiaries as of
the date of this Agreement: Xxxxxx Construction, Inc., an Arizona corporation
("Xxxxxx"), Concepts in Communication, Inc., a Tennessee corporation
("Concepts"), Trans Sierra Communications, Inc., a California corporation
("Trans Sierra"), and SCP Acquisition Corp., an Arizona corporation ("SCP"). IFC
owns all of the outstanding capital stock of Xxxxxx, Concepts, Trans Sierra and
SCP.
5.9. Completeness of Representations and Schedules. The
Disclosure Schedule and Exhibits hereto completely and correctly present in all
material respects the information required by this Agreement. This Agreement,
the certificates to be delivered by the officers of IFC at the Closing, any
Schedules and Exhibits to be delivered under this Agreement and the
representations and warranties of this Paragraph 5, and the documents and
written information pertaining to IFC furnished to the Company or its agents and
the Selling Shareholders by or on behalf of IFC, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make this Agreement, or such certificates, schedules, documents or written
information, not misleading.
6. Due Diligence Inspection and Confidential Information.
6.1. Due Diligence Inspection. During the period after
execution of this Agreement and prior to the Closing Date, IFC and its
representatives shall have the right to inspect all plant, equipment and
operations of the Company, its premises and its financial and other records at
reasonable times upon the approval of the Company and the Selling Shareholders,
which approval will not be unreasonably withheld. IFC shall also have the right
to discuss the affairs of the Company with the Selling Shareholders, managers,
customers, prospective customers, employees, suppliers, advertisers, retailers,
banking and other financial institutions, lessors and such other parties as IFC
deems appropriate, upon reasonable notice of the proposed times and dates
thereof. IFC shall complete its preliminary due diligence within 15 days after
the execution of this Agreement, and shall complete its comprehensive due
diligence within 30 days after execution of this Agreement, provided it has
received the cooperation of the Company and Selling Shareholders contemplated in
this Paragraph 6.1. The Company and the Selling Shareholders shall likewise have
the right, upon the execution of this Agreement, to inspect IFC, its financial
and other records and to discuss the affairs of IFC with appropriate parties
under the same terms and conditions and upon the same schedule as IFC shall have
to complete its preliminary due diligence. IFC, the Company and the Selling
Shareholders will cooperate with all reasonable requests by the other party for
information and will use their best efforts to secure the cooperation of the
foregoing third parties who may reasonably be requested to furnish information
to each other.
6.2. Confidential Information. IFC shall keep all confidential
information derived from the Selling Shareholders or from the Company relating
to the business of the Company confidential pending the Closing of the
transaction contemplated by this Agreement. The Company and the Selling
Shareholders shall keep all confidential information derived from IFC relating
to the business of IFC confidential pending the Closing. No party to this
Agreement shall be liable for
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disclosure of confidential information if such disclosure is required by law or
if the disclosure is of information already publicly available.
6.3. Return of Confidential Information. If this Agreement
should be terminated pursuant to this Agreement, IFC, the Company and the
Selling Shareholders shall return all such confidential information and
documents which they have received and agree not to disclose or use such
information in any manner which damages the businesses or prospects of the
Company or of IFC, as the case may be.
7. Conditions Precedent to the Obligations of IFC. The obligations of
IFC pursuant to this Agreement are, at the option of IFC, subject to the
fulfillment to IFC's satisfaction on or before the Closing Date of each of the
following conditions:
7.1. Execution of this Agreement. The Company and the Selling
Shareholders have duly executed and delivered this Agreement to IFC.
7.2. Representations and Warranties Accurate.
7.2.1. The Company and the Selling Shareholders shall
deliver the Disclosure Schedule to this Agreement. IFC shall have fourteen (14)
days after its receipt of the Disclosure Schedule to determine, in its sole
discretion, whether or not IFC shall accept the representations and warranties
as modified or amplified by the Disclosure Schedule ("Acceptance Date"). If IFC
determines that any part of the Disclosure Schedule is unacceptable, IFC may
provide the Company and the Selling Shareholders additional time to remedy the
matter or may terminate this Agreement in accordance with its provisions.
7.2.2. All representations and warranties of the
Selling Shareholders and the Company contained in this Agreement shall have been
true in all respects when made on the date of execution of this Agreement, and
also at and as of the Closing Date as if such representations and warranties
were made at and as of the Closing Date. The Company and the Selling
Shareholders shall furnish IFC with a certificate, dated the Closing Date and
signed on behalf of the Company by a duly authorized officer thereof, and by
each of the Selling Shareholders, stating the above in such form as IFC may
reasonably request. The acceptance of the Purchase Price by the Company and the
Selling Shareholders shall constitute an affirmation by the Company and the
Selling Shareholders of the truth, as of the Closing Date, of the
representations and warranties made by the Company and the Selling Shareholders
in this Agreement.
7.3. Performance of Company and Selling Shareholders. The
Company and the Selling Shareholders shall have performed and complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them, and the Company and the Selling Shareholders shall
deliver a certificate, in form and substance satisfactory to IFC, to that
effect, dated the Closing Date, and signed in the manner set forth in Paragraph
7.2.2 above on or before the Closing Date.
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7.4. Tender of Company Shares. Each of the Selling
Shareholders shall deliver to IFC all Company Shares, options, warrants or other
rights to acquire Company Shares owned by such Selling Shareholder free and
clear of any liens, encumbrances and other obligations.
7.5. Title. On or prior to the Closing Date, the Company shall
deliver to IFC duly executed UCC-2 releases, as described in Paragraph 4.12,
"Title to Properties and Assets," or evidence that no liens have been recorded
against any of the Company's properties or assets.
7.6. Consent of Material Customers. Prior to Closing the
Company shall have obtained all approvals in connection with the transfer of the
Company Shares by the Selling Shareholders to IFC as may be required by any
material contracts between the Company and any of its principal customers, and
such approvals shall have been issued in written form and substance satisfactory
to IFC and its counsel or IFC shall have waived such requirements.
7.7. Obligations to Third Parties. There shall be no loans or
obligations outstanding from the Company to any third party, except those
incurred in the ordinary course of business.
7.8. Outstanding Obligations to Employees. There shall be no
outstanding claims, loans or obligations of the Company owed to any of its
employees or officers provided that IFC shall give notice to the Selling
Shareholders and the Company of its approval or withholding of approval of any
claims, loans or obligations then known to IFC on or before the Closing Date.
7.9. Employment Agreements. As of the Closing Date, the
employees identified in Schedule 7.9 of the Disclosure Schedule shall have
entered into employment and non-compete agreements with the Company in a form
satisfactory to IFC on the terms and conditions and annual salaries set out in
Schedule 7.9.
7.10. Private Placement. The Company will provide IFC with all
the information regarding the Company required by IFC in connection with IFC's
preparation of any private placement of IFC's debt or equity securities.
7.11. Opinion of Counsel. IFC shall have received an opinion
of counsel from the Company and the Selling Shareholders in the form set forth
in Exhibit E.
7.12. Lock-Up Agreements. Each Selling Shareholder shall have
duly executed and delivered a lock-up agreement, in the form set forth in
Exhibit F, relating to the IFC Shares issued to each respective Selling
Shareholder under this Agreement.
7.13. Financial and Other Conditions. The Company shall have
no contingent or other liabilities connected with its business, except as
disclosed in the Financial Statements. The review of the business, premises and
operations of the Company and the Financial Statements by IFC
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at its expense shall not have revealed any matter which, in the sole judgment of
IFC, makes the acquisition on the terms herein set forth inadvisable for IFC.
7.14. Legal Prohibition. On the Closing Date, there shall
exist no injunction or final judgment, law or regulation prohibiting the
consummation of the transactions contemplated by this Agreement.
7.15. Key Man Insurance. IFC shall have been able to obtain
key man insurance for each of the persons executing employment agreements with
IFC in an amount not less than $250,000 for each individual, with the insurance
proceeds payable to IFC.
7.16. All Contracts Continued. Except as set forth on Schedule
7.16, all lines of credit, debts, financing arrangements, leases and other
contracts of the Company shall be acceptable to IFC and shall continue under
their present terms and conditions after the Closing Date and all approvals
relating to the sale of the Company Shares by the Selling Shareholders, and to
effect the transactions contemplated hereby, required by the foregoing
instruments and arrangements shall have been obtained by the Closing Date.
8. Conditions Precedent to the Obligations of the Company and the
Selling Shareholders. The obligations of the Company and the Selling
Shareholders under this Agreement are, at the option of the Company or the
Selling Shareholders, subject to the fulfillment to the satisfaction of Company
and the Selling Shareholders on or before the Closing Date of each of the
following conditions:
8.1. Execution and Approval of Agreement. IFC shall have duly
executed and delivered this Agreement to the Company and the Selling
Shareholders.
8.2. Payment. Subject to the terms and conditions hereof, IFC
shall have transferred the IFC Shares, in exchange for the Company Shares as
described in Paragraph 2, "Exchange of IFC Shares for the Company Shares."
8.3. Employment Agreements. As of the Closing Date, the
employees identified in Schedule 7.9 shall have entered into employment and
non-compete agreements with the Company in a form satisfactory to IFC on the
terms and conditions and annual salaries set out in Schedule 7.9.
8.4. Registration Rights. IFC shall have prepared and duly
executed a Registration Rights Agreement, attached hereto as Exhibit G,
respecting the IFC Shares to be issued to the Selling Shareholders.
8.5. Opinion of Counsel. The Company and the Selling
Shareholders shall have received an opinion of counsel from IFC in the form set
forth in Exhibit H.
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8.6. Payment of Finder's Fee. In addition to the Purchase
Price, IFC shall pay a finder's fee to KM Financial, Inc. ("KM Financial") in
connection with the transactions contemplated by this Agreement under the terms
of management between IFC and KM Financial. The Company and the Selling
Shareholders agree to hold IFC harmless from all other claims, commissions, and
finder's or broker's fees because of the act, omission, or statement of the
Company or the Selling Shareholders pertaining to the transactions contemplated
herein.
8.7. Payment of Credit Facility. IFC shall have arranged for
the payment in full of the credit facility of the Company and the release of the
guarantees of such credit facility by the Selling Shareholders on or before the
Closing Date.
8.8. Representations and Warranties. The representations and
warranties made to the Company and the Selling Shareholders in this Agreement or
in any document, statement, list or certificate furnished pursuant hereto shall
be true and correct when made and shall be true and correct on and as of the
Closing Date.
9. Indemnification.
9.1. Survival of Representations, Warranties and Certain
Covenants. The representations and warranties made by the parties in this
Agreement and in the certificates delivered at the Closing, and all of the
covenants of the parties in this Agreement, shall survive the execution and
delivery of this Agreement and the Closing Date and shall expire on the third
anniversary of the Closing Date. Any claim for indemnification shall be
effective only if notice of such claim is given by the party claiming
indemnification or other relief to the party against whom such indemnification
or other relief is claimed on or before the third anniversary of the Closing
Date.
9.2. Indemnification by IFC.
9.2.1. IFC agrees to indemnify and hold the Selling
Shareholders harmless, from and after the Closing Date, against and in respect
of all matters in connection with any losses, liabilities, costs or damages
(including reasonable attorneys' fees) incurred by the Selling Shareholders that
result from any misrepresentation or breach of the warranties by IFC in
Paragraph 5, "Representations and Warranties of IFC," or any breach or
nonfulfillment of any agreement or covenant on the part of IFC contained in this
Agreement, and all suits, actions, proceedings, demands, judgments, costs and
expenses incident to the foregoing matters, including reasonable attorneys'
fees.
9.2.2. In no event shall IFC's liability under
Paragraph 9.2.1 above to the Selling Shareholders (other than for costs and
reasonable attorneys' fees incurred by such Selling Shareholders to which they
may be entitled pursuant to Paragraph 9.4 or 11.3) collectively exceed Two
Million Dollars ($2,000,000). No claim for indemnification may be made under
this Paragraph 9 after the third anniversary of the Closing Date.
-17-
9.3. Indemnification by the Selling Shareholders.
9.3.1. The Selling Shareholders agree, on a several
and not on a joint basis, to indemnify and hold IFC harmless, from and after the
Closing Date, against and in respect of all matters in connection with any
losses, liabilities or damages (including reasonable attorneys' fees) incurred
by IFC resulting from any misrepresentation or breach of their warranties in
Paragraph 4, "Representations and Warranties of the Company and the Selling
Shareholders," or any breach or nonfulfillment of any agreement or covenant on
the part of the Company and the Selling Shareholders contained in this Agreement
and all suits, actions, proceedings, demands, judgments, costs and expenses
incident to the foregoing matters, including reasonable attorneys' fees.
9.3.2. Notwithstanding the provisions of Paragraph
9.3.1 above, IFC shall be entitled to seek indemnification from the Selling
Shareholders pursuant to Paragraph 9.3.1 only for the portion of the aggregate
of the losses, liabilities, costs and damages (including reasonable attorneys'
fees) incurred by IFC which it would be entitled to claim under such Paragraph
9.3.1 that exceeds $50,000. Upon such occurrence, the collective liability of
the Selling Shareholders under Paragraph 9.3.1 above to IFC (other than for
costs and reasonable attorneys' fees incurred by IFC to which it may be entitled
pursuant to Paragraphs 9.4 or 11.3) will not exceed Two Million Dollars
($2,000,000). No claim for indemnification may be made under this Paragraph 9
after the third anniversary of the Closing Date
9.4. Arbitration. If IFC believes that a matter has occurred
that entitles it to indemnification under Paragraph 9.3, "Indemnification by the
Selling Shareholders," or the Selling Shareholders believe that a matter has
occurred that entitles them to indemnification under Paragraph 9.2,
"Indemnification by IFC," IFC or the Selling Shareholders, as the case may be
(the "Indemnified Party"), shall give written notice to the party or parties
against whom indemnification is sought (each of whom is referred to herein as an
"Indemnifying Party") describing such matter in reasonable detail. The
Indemnified Party shall be entitled to give such notice prior to the
establishment of the amount of its losses, liabilities, costs or damages, and to
supplement its claim from time to time thereafter by further notices as they are
established. Each Indemnifying Party shall send a written response to such claim
for indemnification within thirty (30) days after receipt of the claim stating
its acceptance or objection to the indemnification claim, and explaining its
position in respect thereto in reasonable detail. If such Indemnifying Party
does not timely so respond, it will be deemed to have accepted the Indemnified
Party's indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute,
and upon the expiration of an additional thirty (30) day period from the date of
the objection notice or such longer period as to which the Indemnified and
Indemnifying Parties may agree, any such dispute shall be submitted to
arbitration in Phoenix, Arizona to a member of the American Arbitration
Association mutually appointed by the Indemnified Party and Indemnifying Party
(or, in the event the Indemnified Party and Indemnifying Party cannot agree on a
single such member, to a panel of three members of such Association selected in
accordance with the rules of such Association), who shall promptly arbitrate
such dispute in accordance with the rules of such Association and report to the
parties upon such disputed items, and such report shall be final,
-18-
binding and conclusive on the parties. Judgment upon the award by the
arbitrator(s) may be entered in any court having jurisdiction. The prevailing
party in any such arbitration shall be entitled to recover from, and have paid
by, the other party hereto all fees and disbursements of such arbitrator or
arbitrators. For this purpose, a party shall be deemed to be the prevailing
party only if such party would be deemed to be a prevailing party under
Paragraph 11.3.
9.5. No Finders. IFC represents and warrants to the Company
and the Selling Shareholders and the Company and the Selling Shareholders
represent and warrant there are no obligations to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement, except for the fee payable to KM Financial under
Paragraph 8.5, "Payment of Finder's Fee." IFC agrees to indemnify and hold the
Selling Shareholders harmless from any breach of IFC's representation in the
previous sentence, and the Selling Shareholders agree to indemnify and hold IFC
harmless from any breach of their representation in the previous sentence.
9.6. Third Person Claim Procedures. If any third person
asserts a claim against an Indemnified Party in connection with the matter
involved in such claim, the Indemnified Party shall promptly (but in no event
later than ten (10) days prior to the time at which an answer or other
responsive pleading or notice with respect to the claim is required) notify the
Indemnifying Party of such claim. The Indemnifying Party shall have the right,
at its election, to take over the defense or settlement of such claim by giving
prompt notice to the Indemnified Party that it will do so, such election to be
made and notice given in any event at least five (5) days prior to the time at
which an answer or other responsive pleading or notice with respect thereto is
required. If the Indemnifying Party makes such election, the Indemnifying Party
may conduct the defense of such claim through counsel of its choosing (subject
to the Indemnified Party's approval, not to be unreasonably withheld), will be
responsible for the expenses of such defense, and shall be bound by the results
of its defense or settlement of the claim to the extent it produces damage or
loss to the Indemnified Party. The Indemnifying Party shall not settle such
claims without prior notice to and consultation with the Indemnified Party, and
no such settlement involving any injunction or material and adverse effect on
the Indemnified Party may be agreed to without its consent. As long as the
Indemnifying Party is diligently contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. If the Indemnifying
Party does not make such election, or having made such election does not proceed
diligently to defend such claim prior to the time at which an answer or other
responsive pleading or notice with respect thereto is required, or does not
continue diligently to contest such claim, then the Indemnified Party may take
over defense and proceed to handle such claim in its exclusive discretion, and
the Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. The parties
agree to cooperate in defending such third party claims, and the defending party
shall have access to records, information and personnel in control of the other
part which are pertinent to the defense thereof.
9.7. Limitation of Remedies. No party to this Agreement shall
be liable to any other party or parties or have any remedies against any other
party or parties under this Agreement other than as provided in Paragraph 9,
"Indemnification," and Paragraph 10, "Termination." The
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parties understand that this requires that all disputed claims shall be
submitted to arbitration in accordance with Paragraph 9.4, "Arbitration."
9.8. Indemnification Limits. The indemnification rights and
obligations of the parties shall cease with respect to any matter as to which
notice has not been given to the Indemnifying Party prior to the third
anniversary of the Closing Date. The maximum amount for which IFC or the Selling
Shareholders as a group shall be liable is Two Million Dollars ($2,000,000). The
maximum amount for which any Selling Shareholder shall be liable is the value of
the IFC Shares each Selling Shareholder receives on the Closing Date, valued at
$4.25 per share.
10. Termination.
10.1. Termination Events. This Agreement may be terminated and
abandoned, by notice given in the manner hereinafter provided:
10.1.1. By IFC, if without the fault of IFC, all of
the conditions set forth in Paragraph 7, "Conditions Precedent to the
Obligations of IFC," shall not have been satisfied (or are incapable of being
satisfied) on or before the Closing Date and have not been waived by IFC on or
before such dates, as the case may be.
10.1.2. By the Company or the Selling Shareholders,
if without their fault all of the conditions set forth in Paragraph 8,
"Conditions Precedent to the Obligations of the Company and the Selling
Shareholders," shall not have been satisfied (or are incapable of being
satisfied) on or before the Closing Date and have not been waived by the Company
and the Selling Shareholders on or before such date.
10.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Paragraph 10.1, "Termination Events," this Agreement
shall forthwith become void and there shall be no liability or continuing
obligations on the part of the parties hereunder.
11. Expenses and Transfer Taxes.
11.1. IFC shall be solely responsible for paying its own
expenses and costs incident to the preparation of this Agreement and to the
consummation of the transactions contemplated by this Agreement, and shall have
no obligation for paying such expenses or costs of the other parties.
11.2. The Company and the Selling Shareholders shall be solely
responsible for paying their own expenses and costs incident to the preparation
of this Agreement and to the consummation of the transactions contemplated by
this Agreement. The Company and the Selling Shareholders shall have no
obligation to reimburse the expenses or costs of IFC.
11.3. Notwithstanding any of the other provisions hereof, in
the event of arbitration and/or litigation with respect to the interpretation or
enforcement of this Agreement or any provisions
-20-
hereof, the prevailing party in any such matter shall be entitled to recover
from the other party their or its reasonable costs and expense, including
reasonable attorneys' fees, incurred in such arbitration and/or litigation. For
purposes of this Agreement, a party shall be deemed to be the prevailing party
only if such party (A)(i) receives an award or judgment in such arbitration
and/or litigation for more than 50% of the disputed amount involved in such
matter, or (ii) is ordered to pay the other party less than 50% of the disputed
amount involved in such matter or (B)(i) succeeds in having imposed a material
equitable remedy on the other party (such as an injunction or order compelling
specific performance), or (ii) succeeds in defeating the other party's request
for such an equitable remedy.
12. Notification of Claims. Each party will promptly notify the other
of any third party claims against any party relating to the Company of which it
receives knowledge or notice so as to permit such party an opportunity to
prepare a timely defense to such claim or to attempt settlement.
13. Company Board of Directors. On the Closing Date, the Board of
Directors and officers of the Company shall consist of such persons as IFC shall
select.
14. Risk of Loss. The risk of loss or destruction of all or any part of
any of the Company's properties or assets prior to the Closing Date from any
cause (including, without limitation, fire, theft, acts of God or public enemy)
shall be upon the Company and the Selling Shareholders. Such risk shall be upon
IFC if such loss occurs after the Closing Date.
15. Miscellaneous.
15.1. Binding Agreement. The parties covenant and agree that
this Agreement, when executed and delivered by the parties, will constitute a
legal, valid and binding agreement between the parties and will be enforceable
in accordance with its terms.
15.2. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto,
their legal representatives, successors and assigns.
15.3. Entire Agreement. This Agreement and its exhibits and
schedules constitute the entire contract among the parties hereto with respect
to the subject matter thereof, superseding all prior communications and
discussions and no party hereto shall be bound by any communication on the
subject matter hereof unless such is in writing signed by any necessary party
thereto and bears a date subsequent to the date hereof. The exhibits and
schedules shall be construed with and deemed as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Information set forth in any exhibit, schedule or provision of this Agreement
shall be deemed to be set forth in every other exhibit, schedule or provision of
this Agreement and therefore shall be deemed to be disclosed for all purposes of
this Agreement.
15.4. Modification. This Agreement may be waived, changed,
amended, discharged or terminated only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, amendment, discharge or
termination is sought.
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15.5. Notices. All notices, requests, demands and other
communications shall be deemed to have been duly given three (3) days after
postmark of deposit in the United States mail, if mailed, certified or
registered mail, postage prepaid:
If to the Company or the Selling Shareholders:
Compass Communications, Inc.
0000 Xxx Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
With copy to:
Xxxxxx X. Xxxxxxx, Esq.
Vice President and General Counsel
0000 Xxx Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
If to IFC:
International FiberCom, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
With a copy to:
Xxxxxxxxx X. Xxxxxxxx, III, Esq.
Xxxxxxx Xxxx, P.A.
Renaissance Xxx
Xxx X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
or to such other address as any party shall designate to the other in writing.
The parties shall promptly advise each other of changes in addresses for such
notices.
15.6. Choice of Law. This Agreement shall be governed by,
construed, interpreted and enforced according to the laws of the State of
Arizona.
15.7. Severability. If any portion of this Agreement shall be
finally determined by any court or governmental agency of competent jurisdiction
to violate applicable law or otherwise not to conform to requirements of law
and, therefore, to be invalid, the parties will cooperate to remedy or avoid the
invalidity, but, in any event, will not upset the general balance of
relationships
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created or intended to be created between them as manifested by this Agreement
and the instruments referred to herein. Except insofar as it would be an abuse
of the foregoing principle, the remaining provisions hereof shall remain in full
force and effect.
15.8. Other Documents. The parties shall upon reasonable
request of the other, execute such documents as may be necessary or appropriate
to carry out the intent of this Agreement.
15.9. Headings and the Use of Pronouns. The paragraph headings
hereof are intended solely for convenience of reference and shall not be
construed to explain any of the provisions of this Agreement. All pronouns and
any variations thereof and other words, as applicable, shall be deemed to refer
to the masculine, feminine, neuter, singular or plural as the identity of the
person or matter may require.
15.10. Time is of the Essence. Time is of the essence of this
Agreement.
15.11. No Waiver and Remedies. No failure or delay on a
parties part to exercise any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by a party of a right or
remedy hereunder preclude any other or further exercise. No remedy or election
hereunder shall be deemed exclusive but it shall, where ever possible, be
cumulative with all other remedies in law or equity.
15.12. Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15.13. Further Assurances. Each of the parties hereto shall
use commercially practicable efforts to fulfill all of the conditions set forth
in this Agreement over which it has control or influence (including obtaining
any consents necessary for the performance of such party's obligations
hereunder) and to consummate the transactions contemplated hereby, and shall
execute and deliver such further instruments and provide such documents as are
necessary to effect this Agreement.
15.14. Rules of Construction. The normal rules of construction
which require the terms of an agreement to be construed most strictly against
the drafter of such agreement are hereby waived since each party have been
represented by counsel in the drafting and negotiation of this Agreement.
15.15. Third Party Beneficiaries. Each party hereto intends
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
[This portion of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: IFC:
COMPASS COMMUNICATIONS, INC., a INTERNATIONAL FIBERCOM, INC., an
Georgia Corporation Arizona corporation
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxx
----------------------------------------- -----------------------------------
By Xxxxx X. Xxxxxxxx By Xxxxxx X. Xxxxx
Its President and Chief Executive Officer Its Chairman of the Board and
President
SELLING SHAREHOLDERS:
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
XXXXX X. XXXXXXXX
/s/ Xxxx Xxxxxxx
-----------------------------------------
XXXX XXXXXXX
/s/ Xxxx Xxxxxx
-----------------------------------------
XXXX XXXXXX
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXX
/s/ Xxx Xxxxx
-----------------------------------------
XXX XXXXX
/s/ Xxxxx Xxxxxxx
-----------------------------------------
XXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
XXXXXX XXXXXXX
-24-
EXHIBIT A SELLING SHAREHOLDERS, NUMBER OF SHARES OWNED AND
NUMBER OF IFC SHARES TO BE ISSUED
EXHIBIT B AUDITED FINANCIAL STATEMENTS FOR FISCAL 1995
EXHIBIT C AUDITED FINANCIAL STATEMENTS FOR FISCAL 1996
EXHIBIT D UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD THROUGH
SEPTEMBER 30, 1997
EXHIBIT E OPINION OF COUNSEL FOR COMPANY AND SELLING
SHAREHOLDERS
EXHIBIT F LOCK UP AGREEMENTS
EXHIBIT G REGISTRATION RIGHTS AGREEMENT
EXHIBIT H OPINION OF COUNSEL FOR IFC
SCHEDULE 4.9 CHANGES IN FINANCIAL STATEMENTS
SCHEDULE 4.10.2 COMPENSATION OR BONUS PAYMENTS TO EMPLOYEES
SCHEDULE 4.10.4 ISSUANCE OF STOCK
SCHEDULE 4.11.1 UNPAID TAX LIABILITIES
SCHEDULE 4.11.2 TAX RETURNS AND PAYMENT OF TAXES
SCHEDULE 4.12 TITLE TO PROPERTIES AND ASSETS
SCHEDULE 4.14 MATERIAL DOCUMENTS
SCHEDULE 4.15 INTELLECTUAL PROPERTY
SCHEDULE 4.17 LITIGATION
SCHEDULE 4.19 EMPLOYEE LIST AND ACCRUED BENEFITS
SCHEDULE 4.20 ABSENCE OF PENSION LIABILITY
SCHEDULE 4.25 INSURANCE POLICIES
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SCHEDULE 4.29 INDEBTEDNESS OF THE SELLING SHAREHOLDERS AND
AFFILIATES TO THE COMPANY
SCHEDULE 7.9 EMPLOYMENT AGREEMENTS AND TERMS
SCHEDULE 7.16 CONTRACTS NOT CONTINUED
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