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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 15, 1997
BY AND AMONG
ANGELES ACQUISITION COMPANY
A DELAWARE CORPORATION
AS BUYER
AND
ANGELES METAL TRIM COMPANIES
DBA
ANGELES METAL SYSTEMS, INC.
AND
CALIFORNIA BUILDING SYSTEMS INC.
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ARTICLE I SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Sale and Purchase of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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1.02 Payment of Purchase Price for the Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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1.03 Down Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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ARTICLE II THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.1. Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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Section 2.2. Sellers' Particular Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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ARTICLE III WARRANTIES AND REPRESENTATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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3.2. Title to the Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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3.3. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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3.4. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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3.5 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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3.6 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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3.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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3.8. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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3.9 Litigation and Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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3.10 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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3.11 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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3.12. No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.14. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.16. Shareholders, Directors and Officers; Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.17 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.18. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.19. Assets Necessary to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.20. Business of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.21. Compliance with Other Instruments and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.22. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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3.24. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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3.25. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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3.26. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.27. No Other Agreements to Sell the Assets of the Business or the Shares or Other Capital
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Stock of the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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3.28. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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3.29. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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3.30. Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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3.31. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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3.32. Licenses, Permits and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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3.33 True Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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3.34 Intellectual Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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3.35 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.36 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.37 No Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.38 Absence of Change of Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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ARTICLE IV REPRESENTATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Existence and Good Standing of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.2 No Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.3 Financing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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ARTICLE V FURTHER AGREEMENTS OF THE SELLERS AND CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . 27
5.1. Satisfaction of Conditions by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.2 Updating of Exhibits, Schedules, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.4 Consents and Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.5 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.6 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.7 Conduct of Business of the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.8 Review of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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5.10 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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5.11 Pay Off of Cable Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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5.12 Scheduled Leases and Entering Into Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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5.14 Period Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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5.15 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE VI CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Cable Non-Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.2 Shareholder Note Satisfied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.3 A Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.4 A Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.5 Opinion of Sellers' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.7 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.8 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.9 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.10 No Other Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.11 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.12 Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.13 Third Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.14 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.15 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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6.16 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE VII CONDITIONS TO SELLERS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Opinions of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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7.2 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.3 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.4 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE VIII SURVIVAL OF REPRESENTATIONS;EVENTS OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 34
8.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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8.2 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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8.3 Materiality of Actions Hereunder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.1 Indemnification by Cable and the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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9.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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9.3 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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9.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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9.5 Right to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE X MISCELLANEOUS....................................................................................... 37
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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10.2 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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10.3 Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.5 "Person" Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.8 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.10 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.13 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.15 Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of January 15,
1997, by and among ANGELES ACQUISITION CO., a Delaware company ("Buyer");
ANGELES METAL TRIM CO., INC., dba Angeles Metal Systems, Inc., ("Angeles") a
California corporation, and all of its wholly owned subsidiaries including but
not limited to CALIFORNIA BUILDING SYSTEMS, a Nevada Corporation ("CBS"), the
"Shareholders" listed on Schedule 1.0 attached hereto and D. Kingston Cable
("Cable") an individual having an address of ___________ , hereinafter Angeles
and its subsidiaries are collectively referred to as the "Companies" and
together with the Shareholders are referred to as the "Sellers".
WITNESSETH:
WHEREAS, Sellers own all of the outstanding stock of the Companies
(the "Shares"); and
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of
the Shares of the Companies and to assume certain liabilities of the Companies
as set forth in this Agreement;
WHEREAS, Angeles has executed a letter of intent dated October 17,
1996, (the "Letter of Intent") which sets forth certain terms and conditions to
be included in this Agreement and which contemplated the entering into of this
Agreement; the Letter of Intent shall be deemed superceded by this Agreement;
and
WHEREAS, it is the intention of the parties hereto that, upon
consummation of the purchase and sale of the Shares pursuant to this Agreement,
Buyer shall own all of the Shares of the Companies;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, Sellers and Buyer hereby agree
as follows:
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ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Sale and Purchase of Stock. At the Closing (defined
hereinbelow), subject to the terms and conditions of this Agreement, and in
reliance upon the representations, warranties and agreements contained in this
Agreement, the Sellers will convey, assign and deliver to the Buyer, and the
Buyer will purchase and acquire from the Sellers, the Shares.
1.2 Payment of Purchase Price for the Shares. The Purchase Price
for the sale and transfer of the Shares by Sellers to Buyer is hereby agreed to
be Three Million Four Hundred Fifty Thousand Dollars ($3,450,000) to be paid in
cash in full at the Closing.
ARTICLE II
THE CLOSING
Section 2.1. Time and Place of Closing. The "Closing" shall mean the
time at which the Sellers consummate the sale of the Shares owned by them to
the Buyer, by delivery of the documents referred to in this Article II, and as
otherwise required by this Agreement, against the delivery by the Buyer of the
payment provided for in Section 1.02, after the satisfaction (or a duly
executed waiver thereof) of the conditions set forth in Articles V and VI
hereof. Time is of the essence in this transaction, the closing of the sale
and purchase of the Shares (the "Closing") shall take place at 10:00 A.M. at
the offices of Harrington, Foxx, Xxxxxx & Xxxxxx, within (15) days of the
execution of this Agreement and in any event on or before January 15, 1997.
Section 2.2. Sellers' Particular Closing Deliveries. At the Closing,
the Sellers shall deliver to the Buyer the following instruments in form and
substance satisfactory to the Buyer and its counsel, against delivery of the
items specified in Section 2.2 hereof:
(a) Certificates evidencing all of the Shares, free and clear of any
claim, lien, pledge, option, charge, security interest, encumbrance or other
right of third parties of any nature whatsoever, duly endorsed in blank for
transfer or accompanied by stock powers duly executed in blank, together with
evidence of the payment of any applicable stock transfer taxes;
(b) The Certificates of Incorporation of Angeles and its subsidiary
CBS and any other subsidiary of Angeles at the date of Closing, certified by
the respective appropriate officials of each state of organization, and the
by-laws of each certified by their respective Secretary and a certificate of
good standing of each of the Companies dated within thirty (30) days of the
Closing;
(c) All required Shareholder and Board of Director consents,
approvals and resignations, as more fully described herein below;
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(d) All required consents, approvals, and documentation of
satisfaction or release of liens of creditors or lenders to the Sellers
including but not limited to: (a) the satisfaction and release of lien of Bank
of America of all indebtedness owed to it, (b) the statement of satisfaction
of the principal shareholder of Angeles verifying that the notes from Angeles
to the principal shareholder in an amount not to exceed Two Hundred Eighty Five
Thousand Dollars ($285,000.00) have been paid and all the indebtedness from the
Companies to any shareholder has been canceled;
(e) Copies of all UCC-3 Termination Statements and Discharges of
Mortgages or Leasehold Mortgages, if any, which evidence the termination of
any and all liens and encumbrances affecting the Business Assets;
(f) All required consents, waivers or agreements of third parties
to Leases or Scheduled Leases (as defined hereinbelow), contracts agreements,
commitments or other undertakings comprising a part of the assets used in the
Business, if any, in form and substance satisfactory to the Buyer and its
counsel, necessary to permit the operation of the Business as currently
conducted;
(h) All of the certificates, documents, contracts, assignments,
opinions, resignations, records, schedules and other exhibits required pursuant
to this Agreement.
(i) Any other documents or instruments of conveyance and transfer
as the Buyer may reasonably request for the purpose of assigning, transferring,
granting and conveying the Shares to the Buyer.
Section 2.3. Buyer's Particular Closing Deliveries. At the Closing,
in addition to any other documents specifically required to be delivered
pursuant to this Agreement, the Buyer shall:
(a) pay the Purchase Price set forth in Section 1.02 hereof; the
same shall be paid to the Trust Account of Harrington, Foxx, Xxxxxx and Xxxxxx
for the benefit of the Shareholders.
(b) deliver to the Sellers a certificate of the Buyer as to the
accuracy of its representations and warranties contained in this Agreement and
as to its compliance with and fulfillment of all covenants, agreements,
obligations and conditions required by this Agreement;
(c) deliver to the Sellers a certificate of good standing from the
Buyer from its jurisdiction of incorporation dated within thirty (30) days of
the Closing;
(d) deliver to the Sellers certified copies of the resolutions of
the Board of Directors of the Buyer authorizing the execution and delivery of
this Agreement and the transactions contemplated hereby; and
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(e) deliver to the Sellers such further certificates, records,
exhibits, opinions and documents as shall be reasonably requested by the
Sellers.
ARTICLE III
WARRANTIES AND REPRESENTATIONS OF SELLERS
CABLE REPRESENTS AND WARRANTS TO THE BUYER THAT THE FOLLOWING
REPRESENTATIONS AND WARRANTIES CONTAINED IN PARAGRAPHS 3.1 THROUGH 3.5
INCLUSIVE ARE AS OF THE DATE HEREOF, AND WILL BE AS OF THE CLOSING, TRUE AND
CORRECT:
3.1. Organization and Standing.
The Companies are corporations duly organized and validly
existing under the laws of their respective states of organization and are in
good standing under such laws. Each of the Companies have the requisite
corporate power, to own the properties owned by it and to conduct its business
as currently being conducted by it. Each of the Companies is qualified to do
business as foreign corporations in the jurisdictions in which it is required
to be so qualified by virtue of the nature of the business conducted by it or
the ownership or leasing of property by it makes such qualification necessary.
The Companies have furnished to the Buyer true and correct and complete copies
of the Articles of Incorporation and By-Laws, and all amendments to each to
date of each Company.
3.2. Title to the Shares. Cable owns beneficially and of record,
free and clear of any liens, encumbrances, options, rights of others, or
restrictions on transferability and has full power and authority to convey free
and clear of any lien or other encumbrance, all of Shares owned by Cable, the
ownership of which is set forth on Schedule 3.2 hereto, and, upon delivery of
the Shares owned by Cable, the Buyer will acquire good, valid and marketable
title thereto free and clear of any lien or other encumbrance.
3.3. Authorization. This Agreement is a valid and binding obligation
of each of the Companies and Cable and is enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally. The
execution, delivery and performance by each of the Companies of this Agreement
and compliance therewith and the issuance and sale of the Shares will not
result in any violation of and will not conflict with, or result in a breach of
any of the terms of, or constitute a default under, (a) any provisions of State
or Federal law to which any of the Companies are subject, (b) any of the
Companies' articles of incorporation, as amended, by-laws, as amended, or any
mortgage, indenture, agreement, instrument, judgment, decree, order, rule or
regulation or other restriction to which Cable or any of the Companies is a
party or by which they are bound, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any
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of the properties or assets of Cable or any of the Companies pursuant to any
such term, or result in the creation of any shareholder dissent rights or
appraisal rights. No shareholder of any of the Companies has any pre-emptive
rights or appraisal rights of first refusal by reason of the sale of the Shares
which has not been waived. The Shares owned by Cable, when sold in compliance
with the provisions of this Agreement, will be validly issued, fully paid and
non-assessable.
3.4. Subsidiaries. Other than CBS, Angeles has no subsidiaries and
does not own of record or beneficially any capital stock or equity interest or
investment in any corporation, association or business entity.
3.5. Minute Books. The minute books of each Companies contain a
complete summary of all meetings of the Directors and Shareholders of the
Companies since the time of incorporation or formation and reflect all
transactions referred to in such minutes accurately in all material respects.
All actions taken by the Companies requiring action by their Boards of
Directors or shareholders or Partners, as appropriate, have been duly
authorized or ratified as necessary and are evidenced in the minute books of
the Companies.
CABLE REPRESENTS AND WARRANTS TO THE BUYER ONLY TO THE BEST OF
HIS CURRENT KNOWLEDGE THAT THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
PARAGRAPHS 3.6 THROUGH 3.59 INCLUSIVE ARE AS OF THE DATE HEREOF AND WILL BE AS
OF THE CLOSING, TRUE AND CORRECT.
3.6. Capitalization. The capitalization of each Companies is set
forth on Schedule 3.6 hereto. All the Companies' issued and outstanding shares
of capital stock are duly authorized and validly issued, are fully paid and
non-assessable and were issued, sold and delivered by such Companies in
compliance with applicable Federal and state securities laws. In addition,
Schedule 3.6 hereto sets forth all outstanding pre-emptive, conversion and
other rights, options, warrants and agreements granted or issued by or binding
upon each Companies for the purchase or acquisition of any Shares, or
partnership interests, as appropriate, of its capital stock or partnership
interests, respectively. Schedule 3.6 hereto also sets forth as to each
security, right, option, warrant and agreement listed thereon the date of
acquisition by the owner thereof. Except as set forth on Schedule 3.6, there is
not outstanding any subscriptions, calls, commitments, warrants, options or
other agreements for the purchase of shares of any capital stock or other
securities of the Companies or any securities or agreements convertible into or
exchangeable for shares of capital stock or other securities, or partnership
interests, as appropriate, issued by the Companies, or any other commitments of
any kind for the issuance of any additional shares of capital stock or other
securities, or partnership interests, as appropriate, issued by any of the
Companies. Neither Cable nor the Companies are subject to any voting trusts,
shareholders agreements, or other agreements pertaining to the voting or
disposition of such securities.
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3.7 Financial Statements. (a) Cable has furnished Buyer with
reviewed balance sheets of the Companies (the "Reference Balance Sheet") as at
December 31, 1995 (the "Balance Sheet Date"), 1994, and 1993, respectively, and
the related statements, of income and cash flows for the periods then ended,
accompanied by the report of Xxxxx Xxxxxxxx. Such Reference Balance Sheet,
attached hereto as Schedule 3.7, including the footnotes thereto, except as
indicated therein, have been prepared as set forth in the report of the
auditors which is a part of the same and are substantially complete and correct
in all material respects and fairly present in all material respects the
financial condition and results of the operations of the Companies and the
changes in its financial position at such dates and for such periods and show
all material liabilities absolute or contingent of the Companies.
Notwithstanding anything in this Agreement to the contrary, Sellers, to the
best of their knowledge, make no representations or warranties to Buyer as to
the adequacy or sufficiency of any reserves set forth in such Reference Balance
Sheet.
(b) A physical inventory will be taken under the supervision
of Xxxxx Xxxxxxxx, a certified public accountant, as of November 30th, 1996 and
a copy of the same together with the unaudited internally prepared financial
statements for the period ending November 30, 1996 will be furnished to the
Buyer prior to the Closing.
(c) There are no liabilities, debts, obligations or claims
against the Companies which could have, with respect to any party, a Material
Adverse Effect or Material Adverse Change (as defined below), on the financial
condition, assets, liabilities, results of operations or business of Angeles,
CBS or any other subsidiary which is party to this transaction, except:
3.7.1(a) as and to the extent reflected or reserved against on
the Reference Balance Sheet; and
3.7.2(b) as incurred since Reference Balance Sheet Date, in
the ordinary course of business consistent with prior practice.
3.7.3(c) Buyer hereby acknowledges, warrants and represents
that CBS will be a wholly owned subsidiary of Angeles upon Closing, and such
ownership will be so reflected on Balance Sheet of Angeles.
3.8. Liabilities. Each of the Companies has no liabilities or
obligations (absolute, accrued, contingent or otherwise) except (i) liabilities
that are reflected and reserved against on the unaudited balance sheet of the
Companies dated November 30, 1996 , that have not been paid or discharged since
the date thereof and (ii) liabilities incurred since November 30, 1996 in the
ordinary course of business consistent with past practice and in accordance
with this Agreement (none of which relates to any breach of contract, breach of
warranty, tort, infringement or violation of any law or arose out of any
complaint, action, suit or proceeding and none of which individually or in the
aggregate could have material adverse effect (financial or otherwise) on the
property, liabilities, reserves, working capital, earnings, technologies,
prospects or relations with customers, suppliers, distributors or employees of
the Companies).
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3.9. Litigation and Bankruptcy Proceedings. (a) Except as set forth
on Schedule 3.9 attached hereto there is neither pending nor threatened any
action, suit, proceeding or claim, or any basis therefore or threat thereof,
whether or not purportedly on behalf of the Companies, to which the Companies,
is or may be named as a party or to which its property is or may be subject, or
after due inquiry, against any officer, principal shareholder or partner of the
Companies and in which an unfavorable outcome, ruling or finding in any such
matter or for all such matters taken as a whole might have a Material Adverse
Effect on the condition, financial or otherwise, prospects or operations or any
Companies; and the Companies have no knowledge of any unasserted claim, the
assertion of which is likely and which, if asserted, will seek damages, an
injunction or other legal, equitable, monetary or nonmonetary relief which
claim individually or collectively with other such unasserted claims if granted
would have a material adverse effect on the condition, financial or otherwise,
prospects or operations of any Companies and none of the Companies are a party
to any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or
investigation which the Companies currently intend to initiate.
(b) None of the Companies has admitted in writing their
inability to pay its debts generally as they become due, filed or consented to
the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the Federal bankruptcy laws or any
other law or statute of the United States of America or any other jurisdiction.
(c) Schedule 3.9 sets forth all legal actions, which have not
been completely determined with respect to every issue, so as to render a
decree or judgment res judicata ("Final Determination '), asserted or, to
Cable's best knowledge, threatened against the Company in respect of personal
injury, wrongful death or property damage alleged to have resulted from
products or services provided by the Companies, together with a description of
each such claim or action initiated with respect thereto and the disposition
thereof for the past three years. Schedule 3.9 sets forth all products
warrantee claims, actions or proceedings for which a Final Determination has
not been made and the Companies warranty and limitations of warranty used by
the Company in connection with the products or services provided by the
Companies. Cable further warrants and represents that the Companies have not
experienced product recall or warranty claims in excess of 5% of aggregate
gross sales for any of the past five years.
3.10 Title . Schedule 3.10 identifies all real and personal
property with a book value or replacement cost in excess of $25,000.00 owned or
leased by any Companies which together with the intellectual property set forth
on Schedule 3.34 comprise the "Business Assets". The Companies own free and
clear of any encumbrances or, as set forth on Schedule 3.10, leases or has the
right to use, the assets set forth on Schedule 3.10 except for encumbrances
specifically identified on Schedule 3.10. Each of the Companies owns all
assets reasonably necessary for the conduct of its business as presently
conducted. Such assets are free from substantial defects, have been maintained
in accordance with normal industry practice, are in
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good operating condition and repair (except for ordinary wear and tear). For
purposes of this Section 3.10, "encumbrances" shall mean any claim, lien,
pledge, option, charge, easement, security interest, right-of-way, encumbrance
or other right of third parties.
3.11 Liens. The Companies have good title to all their Business
Assets subject to no encumbrance, lien, charge or other restriction of any kind
or character, except for (a) liens reflected in the Reference Balance Sheet or
on Schedule 3.11 attached hereto, (b) liens arising by operation of law, (c)
liens for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent and (d) liens which do not materially
affect the operation of the business of the Company (the "Encumbrances") (liens
of the type described in clauses (a) through (e) above, inclusive, are
hereinafter sometimes referred to as "Permitted Liens"). Except as set forth in
Schedule 3.11, the Company's Business Assets are in reasonably good working
order and condition in the aggregate, ordinary wear and tear excepted. Pursuant
to its good title, Angeles has full power to transfer the Business Assets free
and clear of any and all liens, encumbrances, security interests, equities,
options, claims, charges, and restrictions, other than the Permitted Liens.
Business Assets include all of the assets reflected in the Companies' financial
statements and as otherwise described in the Schedules to this Agreement,
except the cars used by Cable, Cable's life insurance policies and other Cable
personalty all as scheduled on Schedule 3.11 attached hereto all of which will
be transferred to Cable at the closing.
3.12 No Violations. Except as set forth in Schedule 3.12 attached
hereto, and the execution and delivery of this Agreement by Cable and the
consummation of the transactions contemplated hereby (a) will not violate any
provision of the Articles of Incorporation or By-Laws of the Company, (b) will
not violate any statute, rule, regulation, order or decree of any public body
or authority by which the Companies are bound or binding upon any of its
properties or assets and (c) will not result in a violation or breach of or
constitute a default under, any material license, franchise, permit, indenture,
agreement or other instrument to which the Companies are a party, or by which
the Companies or any of its assets or properties are bound, excluding from the
foregoing clauses (b) and (c) violations, breaches or defaults which, either
individually or in the aggregate, would not have a Material Adverse Effect (as
defined in below) on the businesses, financial conditions or results of
operations of the Companies.
3.13. Taxes. Each of the Companies has filed or will file within the
time prescribed by law (including extensions of time approved by the
appropriate taxing authority) all tax returns and reports required to be filed
with the United States Internal Revenue Service and with the State of
California and with all other jurisdictions where such filing is required by
law; and the Companies have paid, or have made adequate provision in the
Companies' financial statements for the payment of, all taxes, interest,
penalties, assessments or deficiencies shown to be due or claimed to be due on
or in respect of such tax returns and reports. The Companies know, after
diligent inquiry, of (i) no other tax returns or reports which are required to
be filed which have not been so filed and (ii) no unpaid assessment for
additional taxes for any fiscal period or any basis therefor. The Companies'
Federal income tax returns have not, to the best of their knowledge and belief,
been audited by the Internal Revenue Service in the last three years.
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3.14. Contracts. Except for Contracts (as hereinafter defined)
listed on Schedule 3.14, the Companies are not a party to, or bound by, any
contract of any kind to be performed after the Closing with any Personnel
relating to employment or otherwise with or other affiliates of the Companies
or any agreement or contract limiting the freedom of the Companies to engage in
any line of business or to compete with any other person. To the best of
Cable's knowledge, there is no default by any party to any such Contract, which
default could have a Material Adverse Effect on any of the Companies' business,
prospects or financial condition. Schedule 3.14 lists the following Contracts,
agreements and other written arrangements to which the Companies are a party:
(i) any written arrangements (or group
of related written arrangements) for the lease of
personal property providing for lease payments;
(ii) any written arrangement (or group of
related written arrangements) for the purchase or
sale of raw materials, commodities, supplies,
products or other property or for the furnishing or
receipt of services, including, without limitation,
any customer or vendor contracts;
(iii) any written arrangement (or group of
related written arrangements) concerning a
partnership or joint venture with any other person;
(iv) any written arrangement (or group
of related written arrangements) under which it has
created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) indebtedness
(including capitalized lease obligations) or under
which it has imposed (or may impose) a security
interest or lien on any of its assets, tangible or
intangible;
(v) any written arrangement (or group
of related written arrangements) concerning
confidentiality or non-competition arrangements;
(vi) any written arrangement (or group
of related written arrangements) involving another
Company;
(vii) any employee compensation, incentive
or stock plan of such Companies and any written
arrangement with any of its directors, officers,
shareholders or employees in the nature of a
collective bargaining agreement, employment agreement
or severance agreement;
(viii) any written arrangement with any of
its directors, officers, shareholders or employees or
any member of any such person's immediate family (x)
providing for the furnishing of material services by,
(y) providing for the rental of material real or
personal property from, or (z) otherwise requiring
material payments to (other than for service as
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officers, directors or employees of the Companies),
any such person or any corporation, partnership,
trust or other entity in which any such person has a
substantial interest as a shareholder, officer,
director, trustee or partner;
(ix) any other written arrangement (or
group of related written arrangements) under which
the consequences of a default or termination could
have a material adverse effect on the business,
prospects or financial condition of the Companies;
(x) any other written arrangement (or
group of related written arrangements);
(xi) any written agreement concerning any
Intellectual Property Rights of the Companies; and
The Companies have delivered to the Buyer a correct and complete copy of each
written arrangement listed under the name of the Companies in Schedule 3.14.
With respect to each written arrangement listed, (A) the written arrangement is
legal, valid, binding, enforceable and in full force and effect; (B) the
written arrangement will continue to be legal, valid binding, enforceable and
in full force and effect on identical terms following the Closing; (C) no party
is in breach or default, and no event has occurred which with notice or lapse
of time could constitute a breach or default or permit termination,
modification or acceleration, under the written arrangement and (D) no party
has repudiated any term of the written arrangement.
3.15 Insurance. All policies of fire, liability, workmen's
compensation, products liability, and other policies of insurance maintained by
the Companies, are listed in Schedule 3.15 hereto (the "Policies") and are
valid, outstanding, and enforceable policies; which provide certain insurance
coverage for the property, assets, and operations of the Companies. The
Policies are in full force and effect as of the date hereof and will remain in
effect through the respective dates set forth in Schedule 3.15;. All
documentation and correspondence for the past three years concerning the
Policies including loss history, matters in controversy and all calculations
concerning retro-adjustments, if any, have been made available to Buyer.
3.16. Shareholders, Directors and Officers; Indebtedness. Set forth
on Schedule 3.16 hereof is a correct and complete list or description of all
indebtedness of any Companies' officers, directors, shareholders or partners
or any of their respective spouses or relatives and of all indebtedness of such
persons to any of the Companies. None of the officers or directors or
significant employees or consultants of any of the Companies or their
respective spouses or relatives, owns directly or indirectly, individually or
collectively, a material interest in any entity which is a competitor, customer
or supplier of (or has any existing contractual relationship with) the
Companies.
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3.17. Inventory. The values at which the inventories of the
Companies are shown on the financial statements have been determined in
accordance with the normal valuation policy of the Companies, consistently
applied. All inventory of each of the Companies, whether reflected in the
Financial Statements or otherwise, consists of a quality and quantity usable
and saleable in the ordinary course of business except for items of obsolete
materials and materials of below standard quality, all of which have been
written down in the Financial Statements to realizable market value or for
which reasonably adequate reserves have been provided therein. Except as
specifically indicated in the Financial Statements, the present quantities of
all inventory of the Companies are reasonable and warranted in the present
circumstances of the business of the Companies.
3.18 Accounts Receivable. The accounts receivable appearing on the
Reference Balance Sheet and all accounts receivable created since that date
through the Closing represent and will represent valid obligations (subject to
the effects of bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally) owing to the Companies and are
bona fide, subject to the reserve for doubtful accounts appearing on the
Reference Balance Sheet and which reserve may be adjusted for the passage of
time through the Closing in accordance with the past custom and practice of
the Companies.
3.19. Assets Necessary to Business. The Companies own or lease all
properties and assets, real, personal, and mixed, tangible and intangible, and
are a party to all licenses and other agreements necessary to permit it to
carry on its business. All plants, structures, and equipment are structurally
sound with no known substantial defects and in reasonably good operating
condition and repair, and none of the Companies have received any written
notification that there is any violation of any building, zoning, environmental
or other law, ordinance, or regulation in respect to such property plants, or
structures, and to the best of their knowledge no such violation exists.
3.20. Business of Companies. There is no pending claim or litigation
against or affecting the Companies relating to the operation of the business of
the Companies as currently operated or relating to or otherwise affecting or
contesting its right to: render or provide any services; to produce,
manufacture, sell, license or use any product, process, method, substance, part
or other material presently produced, manufactured, sold or used by the
Companies in connection with its business; and the Companies have no knowledge
or belief that (i) there exists, or there is pending or planned, any patent,
invention, device, software application or principle, or any statute, rule,
law, regulation, standard or code, including, without limitation, any
regulations, rules or interpretive position of the Agencies, which would
materially adversely affect the condition, financial or otherwise, prospects or
the operations of the Companies; or (ii) there is any other factor (other than
fire, flood, accident, act of war or civil commotion, market and competitive
factors or any other cause or event beyond the control of the Companies) which
may materially adversely affect the condition, financial or otherwise, or the
operations of any of the Companies and none of the Companies is in default with
respect to any judgment, order, writ, injunction or decree of any court or
governmental agency and there are no unsatisfied judgments against the
Companies or the business of the Companies.
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3.21. Compliance with Other Instruments and Laws. (a) None of the
Companies are in violation of any term of its Articles of Incorporation, as
amended, By-Laws as amended, or Partnership Agreement, as amended. None of the
Companies is in violation of any term of any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule or regulation to
which it is subject.
(b) The Companies are as of a date hereof and
will be as of the Closing, in compliance with all laws, municipal by-laws,
regulations, rules, orders, judgments, decrees and other requirements and
policies imposed by any governmental authority applicable to it, its properties
or the operation of its businesses. Without limiting the generality of the
foregoing, the Companies are as of the date hereof, and will be as of the
Closing in substantial compliance with:
(i) all laws relating to the protection
of human health and safety, including, without
limitation, the Occupational Safety and Health Act of
1970, as amended, and all regulations and standards
issued thereunder by the Secretary of Labor or the
Occupational Safety and Health Administrator or other
governmental agency or authority acting at any time
thereunder;
(ii) all laws relating to protection of the
environment, including, without limitation, the
Resource Conservation and Recovery Act ("RCRA") and
the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") and ISRA;
(iii) all laws relating to equal employment
opportunity; and
(iv) all zoning, building and other laws,
ordinances, rules, regulations, plans and directives
of governmental authorities, Boards of Fire
Underwriters and other entities having jurisdiction,
as well as all recorded restrictions and covenants.
Cable has no actual knowledge and has received no notice or citation for
noncompliance with any of the foregoing, and of the date hereof and as of the
Closing there exists no condition, situation or circumstance, which would
constitute any substantial noncompliance.
3.22. Labor Matters. The Companies are not a party to any labor
agreement with respect to its employees with any labor organization, group or
association. The Companies have not within the past three years experienced
any attempt by organized labor or its representatives to make the Companies
conform to demands or organized labor relating to its employees or to enter
into a binding agreement with organized labor that would cover the employees of
the Companies. The Companies are in material compliance with all applicable
laws respecting employment practices, terms and conditions of employment and
wages and hours and is not and has not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against the Companies
pending before the National Labor Relations Board or any other governmental
agency arising out of the Companies's activities, and the
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Companies have no knowledge of any facts or information that would give rise
thereto; there is no labor strike or labor disturbance pending or threatened
against the Companies nor is any grievance currently being asserted; and the
Companies have never experienced a work stoppage or other labor difficulty.
3.23. Disclosure. This Agreement, the Exhibits and Schedules hereto,
the Financial Statements furnished to the Buyer or any third party by or on
behalf of Cable or any Companies in connection with the transactions
contemplated hereby, do not contain any untrue statement of a material fact and
do not omit to state a material fact necessary in order to make the statements
contained therein or herein not misleading in the light of the circumstances
under which they were made. There is no fact or circumstance which Materially
Adversely Affects (so far as any of the Sellers can now reasonably foresee)
Materially Adversely Affect the assets, business, operations of the Companies
which have not been disclosed in writing to the Buyer.
3.24. Customers and Suppliers. Schedule 3.24 contains a
substantially complete and accurate list of (i) all customers of the Companies
during the Companies' last fiscal year, showing the approximate total sales by
the Companies to each such customer during such fiscal year; (ii) all suppliers
of the Companies from whom the Companies' last fiscal year, showing the
approximate total purchases by the Companies from each such supplier during
such fiscal year; and (iii) prospective customers of the companies for which a
proposal or other presentation has been made or for which the Companies have a
reasonable likelihood of selling or otherwise licensing any of its products.
3.25. Environmental Matters. (a) Except as set forth on Schedule
3.25, Cable represents and warrants that:
(b) All underground storage tanks have been removed from
the Cable Premises. Buyer has been afforded an opportunity to review and make
copies of all documentation with respect to the removal of any underground
storage tanks on the Cable Premises.
(c) Cable has received no actual written notification of
any investigation regarding any disposal, release or threatened release at any
of the Cable Premises of any Hazardous substances stored, generated or
transported by the Companies.
(d) Cable has advised Buyer that the Companies in the
ordinary course of their business utilize petroleum products and generate waste
water in the manufacturing process at the Cable Premises in accordance with
applicable governmental permits issued therefore.
(e) Except as set forth on Schedule 3.25, there are no
PCBs or asbestos located at or on the Cable Premises or any other owned or
leased property of the Companies.
(f) No environmental lien has attached to the Premises or
any real property owned or leased the Companies.
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(i) Definitions.
(i) For purposes of this Agreement,
"Environmental Laws" shall mean all federal, state,
district, local, and foreign laws, all rules or
regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits, or
demand letters issued, promulgated, or entered
pursuant thereto, relating to pollution or protection
of the environment (including without limitation
ambient air, surface water, ground water, land
surface, or subsurface strata), including without
limitation (i) laws relating to emissions,
discharges, releases, or threatened releases of
pollutants, contaminants, chemicals, materials,
wastes or other substances into the environment and
(ii) laws relating to the identification, generation,
manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport, or
other handling of pollutants, contaminants,
chemicals, industrial materials, wastes, or other
substances. Environmental Laws shall include without
limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended,
the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as
amended, the Clean Water Act, as amended, the Safe
Drinking Water Act, as amended, the Clean Air Act, as
amended, the Atomic Energy Act of 1954, as amended,
the Occupational Safety and Health Act, as amended,
and all analogous laws promulgated or issued by any
sate or other governmental authority.
(ii) For purposes of this Agreement,
"Environmental Claims" shall mean all notice of
violations, liens, claims, demands, suits, or causes
of action or any damage, including without
limitation, personal injury, property damage
(including any depreciation of property values), lost
use of property, or consequential damages, arising
directly or indirectly out of Environmental
Conditions or Environmental Laws. By way of example
only, Environmental Claims include (i) violations of
or obligations under any contract between the
Companies and any other person, (ii) actual or
threatened damages to natural resources, (iii) claims
for nuisance or its statutory equivalent, (iv) claims
for the recovery of response costs, or administrative
or judicial orders directing the performance of
investigations, response or remedial actions under
any Environmental Laws, (v) a requirement to
implement "corrective action" pursuant to any order
or permit issued pursuant to the Resource
Conservation and Recovery Act, as amended or similar
provisions of applicable state law, (vi) claims for
restitution, contribution, or indemnity, (vii) fines,
penalties, or liens of any kind against property,
(viii) claims for injunctive relief or other orders
or notices of violation from federal, state, or local
agencies or courts, and (ix) with regard to any
present or former employees, claims relating to
exposure to or injury from Environmental Conditions.
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(iii) For purposes of this Agreement,
"Environmental Conditions" shall mean the state of
the environment, including natural resources (e.g.,
flora and fauna), soil, surface water, ground water,
any present or potential drinking water supply,
subsurface strata, or ambient air, relating to or
arising out of the use, handling, storage, treatment,
recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal,
dumping, or threatened release of Hazardous
Substances by the Companies or successors in
interest, agents, representatives, employees, or
independent contractors. With respect to
Environmental Claims by third parties, Environmental
Conditions also include the exposure of persons to
Hazardous Substances at the work place or the
exposure of persons or property to Hazardous
Substances migrating from or otherwise emanating from
or located on property owned or occupied by the
Companies.
(iv) For purposes of this Agreement,
"Hazardous Substances" shall mean all pollutants,
contaminants, chemicals, wastes, and any other
carcinogenic, ignitable, corrosive, reactive, toxic,
or otherwise hazardous substances or materials
(whether solids, liquids or gases), including but not
limited to any substances, materials, or wastes
subject to regulation, control, or remediation under
Environmental Laws. By way of example only, the term
Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive
materials, PCBs, pesticides, herbicides, asbestos,
sludge, slag, acids, metals, solvents, or waste
waters.
3.26. Employee Benefit Plans.
(a) Definitions. The following terms, when used
in this Section 3.26, shall have the following meanings. Any of these terms
may, unless the context otherwise requires, be used in the singular or the
plural depending on the reference.
(i) Employee Plan. "Employee Plan" shall
mean with respect to the Companies any employee
benefit plan, program or arrangement, whether oral or
written, with respect to which Companies may incur
any liability or which covers any employee or former
employee of the Companies.
(ii) ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
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(iii) ERISA Affiliate. "ERISA Affiliate"
shall mean with respect to the Companies any entity
which is a member of a "controlled group of
corporations" with or is under "common control" with
the Companies as defined in section 414(b) or (c) of
the Internal Revenue Code of 1986, as amended (the
"Code").
(iv) Multiemployer Plan. "Multiemployer
Plan" shall mean with respect to the Companies any
Employee Plan with respect to Companies which are a
"multiemployer plan," as defined in Section
4001(a)(3) of ERISA.
(v) PBGC. "PBGC" shall mean the Pension
Benefit Guaranty Corporation.
(vi) Pension Plan. "Pension Plan" shall
mean with respect to each of the Companies any
Employee Plan with respect to the Companies which is
an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer
Plan).
(vii) Welfare Plan. "Welfare Plan" shall
mean with respect to each of the Companies any
Employee Plan with respect to the Companies which is
an "employee welfare benefit plan", as defined in
Section 3(1) of ERISA.
(b) Disclosure; Delivery of Copies of Relevant
Documents and Other Information. Schedule 3.26 contains a complete list of
Employee Plans with respect to the Companies. True and complete copies of each
of the following documents have been delivered to the Buyer: (i) each Employee
Plan (and each related trust agreement or other funding instrument) or written
description thereof (where an Employee Plan is not in writing), (ii) the most
recent determination letter issued by the Internal Revenue Service with respect
to each Pension Plan or 401K Plan, (iii) for the three most recent plan years,
Annual Reports on Form 5500 Series required to be filed with any governmental
agency for each Pension Plan, (iv) all actuarial reports prepared for the last
three plan years for each Pension Plan, (v) a description of complete age,
salary, service and related data as of the last day of the last plan year for
employees and former employees and (vi) a description setting forth the amount
of any liability as of the Closing Date for payments more than thirty days past
due with respect to each Welfare Plan with respect to the Companies.
(c) Representations. Except as set forth on
Schedule 3.26, the Companies represent as follows:
(i) As of the last day of the last plan
year of the Companies and as of the Closing, the
"amount of unfunded benefit liabilities" as defined
in Section 4001(a)(18) of ERISA (but excluding from
the definition of "current value" of "assets" of such
Pension Plan accrued but unpaid contributions) did
not and will not exceed zero. None of the companies
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nor any ERISA Affiliate of the Companies has any
liability for unpaid contributions with respect to
any Pension Plan.
(ii) There are no Multiemployer Plans with
respect to the Companies.
(iii) Each Pension Plan with respect to the
Companies and each related trust agreement, annuity
contract or other funding instrument is qualified and
tax-exempt under the provisions of Code Sections
401(a) (or 403(a) as appropriate) and 501(a) and has
been so qualified during the period from its adoption
to date.
(iv) There has been no "reportable event"
(as defined in Section 4043(b) of ERISA and the PBGC
regulations under such Section) with respect to any
Pension Plan with respect to the Companies. No
filing has been made by the Companies or any ERISA
Affiliate of the companies with the PBGC, and no
proceeding has been commenced by any person,
(including the PBGC), to terminate any Pension Plan
with respect to the Companies. No condition exists
and no event has occurred that could constitute
grounds for termination of any Pension Plan with
respect to the Companies. None of the Companies or
any ERISA Affiliate of the Companies has, at any
time, incurred any liability, contingent or
otherwise, pursuant to any provision of Title IV of
ERISA or the regulations thereunder, other than for
premiums due the PBGC.
(v) Each Employee Plan with respect to the
Companies and each related trust agreement, annuity
contract or other funding instrument presently
complies and has been maintained in compliance with
its terms and, both as to form and operation, with
the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to
such Employee Plan, including but not limited to
ERISA and the Code.
(vi) None of the Companies nor any ERISA
Affiliate of the Companies or any Welfare Plan with
respect to the Companies has any present or future
obligation to make any payment to or with respect to
any present or former employee of the Companies or
any ERISA Affiliate of the Companies pursuant to any
retiree medical benefit plan or other Welfare Plan
with respect to the Companies and no condition exists
which would prevent the Companies from amending or
terminating any such benefit program or Welfare Plan.
(vii) Except as provided by law and as set
forth in Schedule 3.26, the employment of all persons
presently employed or retained by the Companies is
terminable at will.
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(viii) There is no Employee Plan with respect
to the Companies that could give rise to the payment
of any amount that would not be deductible pursuant
to the terms of Sections 162(a)(1), 162(i)(2), 404 or
280G of the Code.
(ix) None of the Companies or any plan
fiduciary of any Welfare Plan or Pension Plan with
respect to the Companies has engaged in any
transaction in violation of Sections 404 or 406 of
ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no
exemption exists under Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Code.
(x) Each Employee Plan with respect to the
Companies and related trust agreement, annuity
contract or other funding instrument is legally valid
and binding and in full force and effect.
(xi) None of the Companies, any ERISA
Affiliate of the Companies or any Employee Plan with
respect to the Companies is a party to any litigation
relating to or seeking benefits under any Employee
Plan with respect to the Companies.
(xii) Neither the Companies nor any ERISA
Affiliate of the Companies has any announced plan or
legally binding commitment to create any additional
Employee Plans or to amend or modify any existing
Employee Plan with respect to the Companies.
(xiii) No event has occurred in connection
with which the Companies, any ERISA Affiliate of the
Companies or any Employee Plan with respect to the
Companies directly or indirectly, could be subject to
any material liability under ERISA, the Code or any
other law or regulation or governmental order or
under any agreement, instrument, statute, rule of law
or regulation pursuant to or under which the
Companies has agreed to indemnify or is required to
indemnity any person against liability incurred
under, or for a violation or failure to satisfy the
requirements of, any such statute, regulation or
order.
3.27. No Other Agreements to Sell the Assets of the Business or the
Shares or Other Capital Stock of the Companies. Neither Cable nor any of the
Companies has any legal obligation, absolute or contingent, to any other person
or firm to sell or effect a sale of the assets of Companies, to sell or effect
a sale of the Shares or partnership interests, as appropriate, of the Companies
or to effect any merger, consolidation or other reorganization of the Companies
or to enter into any agreement or cause the entering into of an agreement with
respect thereto.
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3.28. Consents. All consents, approvals, qualifications, orders or
authorizations of, or filings with, any lender, creditor, supplier, contracting
party, governmental authority, including any court, or other third party
required in connection with each the Cable's valid execution, delivery or
performance of this Agreement and for the consummation of any other transaction
contemplated on the part of Cable by this Agreement each as set forth in
Schedule 3.28 hereto, shall have been duly made and obtained and shall be
effective on and as of the Closing.
3.29. Real Property. Schedule 3.29 constitutes a true and complete
list of all real property (including, without limitation, all construction in
progress) owned or leased by the Companies or to which the Companies may have
any ownership or leasehold rights, in connection with the Business (such leased
real property hereinafter collectively referred to as the "Leased Premises").
Cable further represents and warrants to Buyer, with respect to the Cable
Premises, all appurtenant rights, privileges and easements belonging or
appertaining thereto and all buildings, structures and improvements thereon
that:
(a) except for the matter set forth on Schedule 3.29 hereto,
there are no outstanding written or oral leases or tenancies of any kind
(including tenancies by sufferance and/or holdover tenancies arising under
expired written or oral leases) covering or in any way affecting the Premises
or any Leased Premises or any part or parts thereof;
(b) except for the matter set forth on Schedule 3.29 hereto,
no person, firm or corporation other than the Companies has any rights,
(including rights arising under an installment contract, option to purchase,
easement, right of way, or otherwise) with respect to the Premises, the Leased
Premises or any part or parts thereof;
(c) each of the buildings and other improvements constituting
part of the Premises and the Leased Premises is of reasonably sound structural
integrity and is usable and adequate for its intended purpose and to conduct
Business as it is now being conducted.
(d) the Seller hereby warrants and represents that the present
zoning for the City of Commerce property is C-M.
3.30 Real Property Leases. The Lessor on the Commerce and
Vancouver Properties will continue to be D.K. Cable. Schedule 3.30 (attached
hereto) contains a list of all real property leases to which the Company is a
party, including the rentals of the Neth and the Railroad Property (the
"Scheduled Leases"). The Scheduled Leases are (a) in full force and effect and
the Company has not received any notice of default and does not possess any
knowledge of or notice of a material event, occurrence, condition or act
(including the entering into of this Agreement) which, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a default by the Company pursuant to the terms of the Scheduled
Leases; and (b) all rents and additional rents due to date on each Scheduled
Lease have been paid. The Companies and Cable warrant and represent to the
best of their knowledge that the "Cable Premises" (as defined in Section 5.13)
have no existing hazardous or other materials in violation of any EPA,
environmental or other local, state or federal laws or regulations (the
"Environmental Regulations") except as may be referenced in
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the Environmental Reports pertaining thereto which have been made available to
Buyer dated June 1993 and referred to in Section 5.13 hereof. The Cable
Premises will be leased by Sellers to Buyer pursuant to the form of the lease
attached hereto as Exhibit 3.30 as more fully set forth in Section 5.13 hereto.
Sellers hereby warrant and represent that to the best of their knowledge the
property subject to the Leases (as defined in Section 5.13) are not subject to
any immediate eminent domain proceeding.
Cable and the Companies, to the best of their knowledge, warrant and
represent that there are no significant costly impediments to obtaining
occupancy permits for the use by Buyer of the property pursuant to the Leases
or the Schedule Leases and Cable and the Companies will use their best efforts
obtain a current letter from the City of Commerce attesting to the conditions
under which such occupancy permits can be obtained by Buyer.
3.31. Utilities. There are no restrictions respecting availability
of public utilities, including, but not limited to, sewer, gas and electricity
and the Premises and Leased Premises are serviced by all such utilities; all
payments, assessments, deposits and other charges relating to such utilities
and any other existing on-site improvements (including public or quasi-public
utilities or services) have been paid in full to the extent they are due.
3.32. Licenses, Permits and Approvals. Schedule 3.32 hereto
constitutes a true and complete list of all licenses, permits, approvals,
qualifications or the like, issued or to be issued to the Companies by any
government or any governmental unit, agency, body or instrumentality, whether
federal, state, municipal or local (within the U.S. or otherwise) in connection
with the Business and/or the operation of the Business Assets, and all such
items are in full force and effect and are or will be renewable on their
existing or better terms. No registration with, approval by, consent or
clearance from or prenotification to any governmental agency is required in
connection with the execution and performance of this Agreement by any of the
Sellers except as set forth on Schedule 3.32 hereto. To the best of Cable's
current actual knowledge, except as set forth in Schedule 3.32 attached
hereto, the Company has received no written notification alleging any existing
violation of any applicable statutes, rules, regulations, ordinances, codes,
orders, licenses, permits or authorizations, including without limitation, any
applicable business, building, zoning, antipollution, occupational safety,
health or other law, ordinance or regulation.
3.33. True Copies. All documents furnished or caused to be furnished
to the Buyer by Sellers are true and correct copies, and there are no
amendments or modifications thereto except as set forth in such documents.
3.34 Intellectual Properties. To the best of Cable's knowledge and
belief, set forth in Schedule 3.34(a) attached hereto is a list of the material
domestic and foreign patents, patent applications, patent licenses, software,
corporate or other company names, trade names,
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trademarks, service marks, trademark registrations and applications,
servicemark registrations and applications, copyright registrations and
applications licensed or owned by the Companies, including, but not limited to,
"Angeles Metal Trim Company"', "Angeles Metal Systems, Inc.", "California
Building Systems, Inc.", "Model 640" or any variations of these (collectively,
the "Intellectual Property"). Schedule 3.34(b) sets forth any Intellectual
Property licenses from the Companies to third parties.
Except for the trade names "Gripper", "Stitcher" and "Driller", which
one Xxxxxxx Cable has the right to use, and unless otherwise indicated in
Schedule 3.34, the Companies own the entire right, title and interest in and to
the Intellectual Property (including, without limitation, the exclusive right
to use and license the same) and each item constituting part of the
Intellectual Property has been, to the extent indicated in Schedule 3.34, duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office or such other government entity, domestic or
foreign, as is indicated in Schedule 3.34 and, to Sellers' knowledge, such
registrations, filings and issuances remain in full force and effect. To
Sellers' knowledge, except as stated in Schedule 3.34, there are no pending
proceedings or litigation or other adverse claims made in writing affecting or
with respect to the Intellectual Property.
3.35 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of Sellers is, or will be, entitled to any commission or
broker's or finder's fees, deposits or damages from Sellers, in connection with
any of the transactions contemplated herein; except for Xxxxxxxx & Xxxxx, Inc.
("Xxxxxxxx"), whose total fees and expenses of $150,000 will be paid by the
Buyer in return for written confirmation from Xxxxxxxx that said payment is in
full satisfaction of all amounts due and owing to him, regardless of nature,
(fees, costs, expenses or claims).
3.36 Books and Records The Companies have made and will make
available for inspection by Buyer upon reasonable request all the books of
account, relating to the business of the Companies. Such books of account of
the Companies have been maintained in the ordinary course of business and shall
remain property of the Companies.
3.37 No Material Change. Since the Balance Sheet Date, there has
been no Material Adverse Change (defined below) in the Companies, except as
set forth on the attached Schedule 3.37. As used in this Agreement the terms
"Material Adverse Effect" or "Material Adverse Change" mean with respect to any
signatory to this Agreement an adverse change or effect on the financial
condition, assets, liabilities, results of operations, business of any such
party taken as a whole except as altered by the physical inventory taken
pursuant to Section 3.7 hereof.
3.38 Absence of Change or Event. Except as disclosed in Schedule
3.37 or as set forth in the Financial Statements or in the ordinary course,
since the Balance Sheet Date, the Companies have conducted their businesses
only in the ordinary course and have not:
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3.38(a) experienced a Material Adverse Change in the assets
liabilities or business condition (financial or otherwise) operations, results
of operations or prospects of any of the Companies or otherwise when considered
as a whole, incurred any obligation or liability, absolute, accrued, contingent
or otherwise, whether due or to become due, in excess of $100,000 in the
aggregate, except liabilities or obligations incurred in the ordinary course of
business and consistent with prior practice;
3.38(b) subjected to Encumbrance any of the property,
businesses or assets, tangible or intangible, of the Companies, except for the
loan as between the Companies and Bank of America, dated as of July 11, 1995,
with the outstanding principal balance on such loan not to exceed $1,000,000 at
the date of Closing as herein defined;
3.38(c) sold, transferred, leased to others or otherwise
disposed of any of its assets (or committed to do any of the foregoing),
including the payment of any loans owed to any affiliate, except for inventory
sold to customers or returned to vendors and payments to any non-affiliates on
account of accounts payable or scheduled payments in respect of indebtedness
for money borrowed disclosed on the Reference Balance Sheet or in the
Schedules, in each case in the ordinary course of business and consistent with
prior practice, or canceled, waived, released or otherwise compromised any debt
or claim, waived, released or otherwise compromised any debt or claim, or any
right of significant value, except in the ordinary course of business and
consistent with prior practice.
3.38(d) suffered any damage, destruction or loss (whether or
not covered by insurance) which has had or could have a Material Adverse Effect
on the Company considered as a whole;
3.38(e) when considered as a whole and except as set forth on
Schedule 3.40.(e), made or committed to make any capital expenditures or
capital additions or betterments in excess of an aggregate of $100,000;
3.38(f) encountered any labor union organizing activity or had
any actual or threatened employee strikes, work stoppages, slow-downs or
lock-outs;
3.38(g) instituted any litigation, action or proceeding before
any court, governmental body or arbitration tribunal relating to it or its
property, except for litigation, actions or proceedings instituted in the
ordinary course of business and consistent with prior practice;
3.38(h) declared or paid any dividend or made any other
payment or distribution in respect of its capital stock, or directly or
indirectly redeemed, purchased or otherwise acquired any of its capital stock;
3.38(i) (i) increased the compensation of any officer,
employee earning more than $100,000 per year or agent of the Company, directly
or indirectly, including by means of any bonus, pension plan, profit sharing,
deferred compensation, savings, insurance, retirement, or any other employee
benefit plan, except in the ordinary course of business consistent with
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prior practice, (ii) granted the payment or accrual contingent or otherwise,
for or to the credit of any Personnel with respect to any bonuses, incentive
compensation service award or like benefit, (iii) adopted, created or amended,
any employee compensation plan of any company, (iv) entered into any employment
agreement made to which one of the Companies is party or (v) other change in
employment terms for any of the Companies' officers or agents.
3.39 Canceled, compromised, waived or released any rights or
claims (or series of related rights or claims) either (i) involving an
affiliate of such Companies, (ii) involving more than $25,000 or (iii) outside
the ordinary course of business consistent with past practice;
3.40 Amendment, cancellation or termination of any contract,
agreement, license or other instrument (i) involving an affiliate of the
Companies, (ii) involving payments in excess of $25,000 in the aggregate, or
(iii) that are otherwise material to the Companies;
3.41 Capital expenditure or the execution of any lease, contract,
agreement, license, sublease or sublicense (or series of related contracts,
agreement leases, subleases, licenses and sublicenses) or any incurring of
liability therefore (i) involving an affiliate of the Companies, (ii) involving
payments in excess of $25,000 in the aggregate, or (iii) outside the ordinary
course of business consistent with past practice;
3.42 Delay or failure to repay when due any material obligation of
the Companies except for the past practice of paying supplier invoices in
greater than net thirty day terms;
3.43 Failure to operate the business of the Companies in the
ordinary course consistent with past practice (excepting the new accounting
computer system described by the Companies to Buyer so as to use reasonable
efforts to preserve the business intact, to keep available to the Buyer the
services of Personnel, and to preserve for Buyer the goodwill of the Companies'
suppliers, customers, distributors and others having business relations with
it;
3.44 Change in accounting methods or practices by the Companies;
3.45 Revaluation by the Companies of any of the assets of the
Companies in excess of $25,000, including without limitation, writing off notes
or accounts receivable;
3.46 Damage, destruction or loss (whether or not covered by
insurance) that has a material Adverse Effect or that may reasonably be
expected to have a material adverse effect on the business or financial
condition of the Companies;
3.47 Mortgage, pledge or other encumbrance of any of the assets of
any of the Companies;
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3.48 Declaration, setting aside for payment or payment of any
dividend or distribution in respect of any capital stock of the Companies or
any redemption, purchase, or other acquisition of the Companies' equity
securities or any bonus, fee or other payment, or any other transfer of the
assets to or on behalf of any shareholder of the Companies, any affiliate of
the Companies or any affiliate of any shareholder, including, but not limited
to, any payment of principal of or interest on any debt owed to any such
shareholder or affiliate;
3.49 Issuance by any of the Companies of, or commitment of the
Companies to issue, any shares of stock or other equity securities or
partnership interests, as appropriates, or obligations or securities
convertible into or exchangeable for shares of stock, other equity securities
or partnership interests, as appropriate;
3.50 Indebtedness incurred by any of the Companies for borrowed
money or any commitment to borrow money entered into by the Companies, or any
loans or guarantees made or agreed to be made by the Companies;
3.51 Liabilities involving $25,000 or more or otherwise material to
the business of the Companies except in the ordinary course of business and
consistent with past practice, or any increase or change in any assumptions
underlying or methods of calculating any bad debt, contingency or other
reserves;
3.52 Payment, discharge or satisfaction of any liabilities other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved against
on the Financial Statements (other than debt principal or interest repayment)
or incurred in the ordinary course of business and consistent with past
practice since December 31, 1993 (other than debt principal or interest
repayment);
3.53 Acceleration, termination, modification, cancellation or
threatened termination or cancellation of any contract or agreement to which
the Companies are a party or by which the Companies are bound;
3.54 Capital investment in, any loan to, or any acquisition of the
securities or assets of any other person (i) involving an affiliate of the
Companies, (ii) involving more than $5,000 in the aggregate, or (iii) outside
the ordinary course of business consistent with past practice;
3.55 Grant of any license or sublicense of any rights under or with
respect to any Intellectual Property rights of the Companies;
3.56 Loan to, or other agreement with any Personnel of the
Companies outside the ordinary course of business consistent with past practice
giving rise to any claim or right on its part against the person or on the part
of the person against it;
3.57 Charitable or other capital contribution made or pledged by
the Companies;
3.58 Agreement (either oral or written) by the Companies or any of
its Personnel to do any of the foregoing;
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3.59 Other event or condition of any character that in any one case
or in the aggregate has a material adverse effect, or any event or condition
known to the Companies which it is reasonable to expect will, in any one case
or in the aggregate, have a material adverse effect on the business, prospects
or financial condition of the Companies in the future.
ARTICLE IV
REPRESENTATIONS OF BUYER
Buyer represents and warrants as follows:
4.1 Existence and Good Standing of Buyer. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to make,
execute, deliver and perform this Agreement, and this Agreement has been duly
authorized and approved by all required corporate action of Buyer. This
Agreement is a valid and binding obligation of Buyer enforceable against Buyer
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights in general and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
4.2 No Restrictions. Assuming the execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
(a) will not violate any provision of the Certificate of Incorporation or
By-Laws of Buyer, (b) will not violate any statute' rule, regulation, order or
decree of any public body or authority by which Buyer or any of its properties
or assets is bound and (c) will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit, indenture,
agreement or other instrument to which Buyer is a party, or by which Buyer or
any of its properties or assets is bound, excluding from the foregoing clauses
(b) and (c) violations, breaches or defaults which, either individually or in
the aggregate, would not prevent Buyer from performing its obligations under
this Agreement or consummation of the transactions contemplated by this
Agreement.
4.3 Financing Arrangements. In addition to the equity
requirements for this action, Buyer has furnished to Sellers true and complete
copies of all proposed loan and equity commitments secured in contemplation of
this transaction at least 10 business days prior to Closing. All such proposed
loan commitments are listed in Schedule 4.3 hereto. Such proposed loan and
equity commitments shall clearly evidence that Buyer will have sufficient funds
on the Closing to consummate the transactions contemplated hereby including
adequate working capital for the Companies to meet their obligations as they
become due. Such proposed commitments are in effect on the date hereof and
will be converted to firm commitments at least ten (10) business days prior to
the Closing. In the event that Buyer does not meet these requirements at
Closing, Seller has the right to cancel this Agreement and Seller shall
thereupon
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have no responsibility to Buyer by reason of this Agreement and the
transactions contemplated hereby and the Down Payment shall be retained in full
together with any interest accrued thereon pursuant to Section 10.15 hereof.
4.4 Litigation. There is no action, suit or proceeding at law or
in equity by any Person or any arbitration or other administrative or other
proceeding by or before any governmental or other instrumentality or agency,
pending, or to Buyer knowledge, threatened, seeking to restrain, prevent or
change the transactions contemplated hereby or questioning the legality or
validity of any such transactions or seeking damages in connection with such
transactions or which, individually or in the aggregate, if adversely
determined, would have an adverse effect on the ability of Buyer to consummate
the transactions contemplated by this Agreement.
ARTICLE V
FURTHER AGREEMENTS OF THE SELLERS
AND CONDUCT OF BUSINESS;
5.1. Satisfaction of Conditions by the Sellers. Neither Cable nor
the Companies shall voluntarily undertake any course of action inconsistent
with the satisfaction of the requirements or the conditions applicable to them
set forth in this Agreement, Cable shall promptly do all such reasonable acts
and take all such reasonable measures as may be appropriate to enable him
perform as early as possible the obligations herein provided to be performed by
them.
5.2. Updating of Exhibits, Schedules, etc. From the date of this
Agreement until the Closing, Cable shall cause each of the Subject Companies to
keep up to date, the Schedules hereto, and will promptly notify Buyer of any
material change or addition, (in accordance with the applicable provision of
this Agreement defining the term "material") or event which may after the lapse
of time cause any such change or addition, in any such Schedule.
5.3. Further Assurances. From time to time after the Closing, without
additional consideration, Buyer shall cause Cable to execute and deliver all
such other instruments of sale, assignment, conveyance and transfer and shall
cause the Cable to take all such other action as Buyer may reasonably request
more effectively to transfer and vest in Buyer, and to put Buyer in possession
of, the Shares, the Business Assets and the Premises.
5.4 Consents and Best Efforts. As soon as practicable, Cable will
commence all reasonable action to obtain all applicable permits, consents,
approvals and agreements of, and to give all notices and make all filings with,
any third parties as may be necessary to authorize, approve or permit the
consummation of the transaction provided for hereby on or prior to the Closing
Date.
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5.5 Employee Matters. During the period between the date hereof and
the Closing, the Cable and the Companies shall use their best efforts to keep
available the current employees now employed with respect to the Business and
shall not disclose the terms or existence of this Agreement without the prior
written consent of Buyer. Buyer shall have the right to attend any meeting
called by Cable or any of the Companies with its employees for the purpose of
advising such employees as to the transactions contemplated by this Agreement
and the arrangements made, if any, for the continuation of employment of such
employees by Buyer following the Closing.
5.6 Notification of Certain Matters. Between the date of this
Agreement and the Closing, the Companies and/or Cable shall give prompt notice
to the Buyer of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
any time from the date hereof to the Closing and (ii) any material failure of
any of Cable or any officer, director, partner, employee, consultant or agent
of any of the Companies to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement or to satisfy any condition.
5.7 Conduct of Business of the Companies. During the period from
the date of this Agreement to the Closing, Cable shall cause the Companies to
conduct their operations in the ordinary course of business. Notwithstanding
the immediately preceding sentence, pending the Closing and except as may be
first approved by Buyer (such approval not to be unreasonably withheld) or as
is otherwise permitted or required by this Agreement, Cable shall cause (a) the
Companies' Articles of Incorporation and By-Laws to be maintained in their
respective forms on the date of this Agreement, (b) the compensation payable or
to become payable by the Companies to any director, officer or employee being
paid $100,000 per year or more to be maintained at the amount existing on the
date of this Agreement, (c) the Companies to refrain from making any bonus,
pension, retirement or insurance payment or arrangement to or with any persons
except those that have been accrued or accrue in the ordinary course of
business and except as set forth in this Agreement (d) the Companies to refrain
from entering into any contract or commitment except contracts and commitments
in the ordinary course of business, (e) the Companies to refrain from
increasing its indebtedness for borrowed money, except current borrowings in
the ordinary course of business, (f) the Companies to refrain from canceling or
waiving any claims or rights of substantial value which individually is or in
the aggregate are material to the Companies; and (g) the Companies to refrain
from declaring or paying any dividends, notwithstanding the above, nothing
contained herein prohibits the repayment of the shareholder note as provided in
Section 5._herein.
5.8 Review of the Company. Buyer and its representatives and
lenders have, prior to the Closing, reviewed the properties, operations, books
and records of the Companies to familiarize themselves with such properties and
the business of the Companies. Cable has caused the Companies to permit Buyer
and its representatives to have reasonable access to the premises and agreed to
furnish to Buyer its representatives and lenders, its books and records of the
Companies and furnish such financial and operating data and other information
with
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respect to the business and properties of the Companies as Buyer has requested.
The Buyer and Cable hereby agree that all such access and investigations
conducted by Buyer and its representatives, shall be conducted in such manner
as not to interfere with the normal conduct of Angeles' business; and further,
that, if this Agreement is not be closed for any reason whatsoever, Buyer and
its representatives shall return to Angeles all documentation and keep and
maintain all such information in strict confidence.
5.09 Confidentiality. The parties hereto acknowledge that Buyer
and the Companies have entered into a Confidentiality Agreement dated March 1,
1996 (the "Confidentiality Agreement") and Buyer confirms that it and its
affiliates and advisors will comply with their respective obligations
thereunder. Notwithstanding the foregoing, Buyer and/or Cable (a) only after
written approval may issue or make a press release, announcement or other
disclosure regarding this Agreement and the transactions contemplated hereby
which it determines necessary or desirable under applicable law, and (b) Buyer
at its own discretion may, at any time after the date of this Agreement, file
with the Securities and Exchange Commission (the "Commission") a Report on Form
8-K pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to the transactions contemplated by this Agreement.
5.10 Best Efforts. Each of the parties agrees to use its best
efforts to take, or cause to be taken, all action to do, or cause to be done,
and to assist and cooperate with the other parties hereto in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement, including, but not limited to, (a) the obtaining of all necessary
waivers, consents and approvals from governmental or regulatory agencies or
authorities and the making of all necessary registrations and filings
(including, but not limited to, filings with governmental or regulatory
agencies or authorities, if any) and the taking of all reasonable steps as may
be necessary to obtain any approval or waiver from, or to avoid any action or
proceeding by, any governmental agency or authority, (b) the obtaining of all
necessary consents, approvals or waivers from third parties and (c) the
defending of any lawsuits or any other legal proceedings whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby including, without limitation, seeking to have
any temporary restraining order entered by any court or administrative
authority vacated or reversed.
5.11 Pay off of Cable Note. The Cable Note of $285,000.00, plus
interest, will be paid in full as a condition of Closing by the Company.
5.12 Scheduled Leases and Entering into Leases. (a) Cable hereby
agrees to use its best efforts to obtain any consents required by the Scheduled
Leases to be obtained due to this change of control of the Companies.
5.12(b) Angeles will execute new leases (collectively, the "Leases")
with Cable for the real property owned by D.K. Cable and presently occupied by
Angeles (the "Cable Premises"), including 000 X Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx
(the "Y Street Lease") and 4817 and 0000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
(the "Xxxxxx Street Lease"). The Leases shall be in the form attached hereto
as exhibit 3.3 and shall be for a minimum term of three-years (the "Leases
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Term") with two (2) three year options to renew (the "Option Renewal Period")
at the then current market, but not less than the rent from the immediate prior
period. During the term of the lease, Buyer will pay all increased costs in
building insurance and property taxes above levels incurred during the 1995
base year. Buyer will represent and warrant that it will comply with all
governmental restrictions and requirements with respect to its use of the Cable
Premises excepting that Buyer will have no responsibility to take remedial
action which is required due to Sellers use of the property but may do so if
Cable fails to commence to do so after final written notice from Buyer and the
applicable Governmental Agency (which a notice from the Governmental Agency may
be provided by Buyer to Cable) in response to a environmental situation and
seek full indemnity from Sellers. Cable will provide a Phase 1 Environmental
Report dated June, 1993 on his Los Angeles properties located on East Sheila,
City of Commerce. Buyer acknowledges that the Los Angeles property is in a
redevelopment area and such Leases will contain provisions allowing for early
termination of the Lease without payment of any kind by Cable (Lessor) or any
governmental agency upon six (6) months notice in the event that the subject
property is transferred or sold for redevelopment. Purchaser assumes full
responsibility and expenses not to exceed $5,000 for obtaining the necessary
occupancy permits.
5.13 The monthly rental for the Cable Premises shall be (i) $5,000
for the Y Street Lease & $10,000 per month for the Xxxxxx Street Lease for the
first twelve months of the Leases; (ii) $6,000 per month for the Y Street Lease
and $11,000 per month for the Xxxxxx Street Lease, respectively, for the
balance of the Leases; and, (iii) with an annual cost of living allowance based
on National Consumer Price Index ("CPI") [U.S. City average all items indexed
0000-00-000 all urban consumers)] commencing thereafter for the Leases Term and
any Option Renewal Period of the Leases. The Leases shall provide for, without
cost to Cable the continued use by Cable of his existing office in its existing
use for a period of one year.
5.14 Period Prior to Closing. In consideration for the
substantial expenditures of time, effort and expense to be undertaken by Buyer
in connection with the preparation and execution of this Agreement, and the
various investigations and reviews referred to above, none of the Sellers, or
any officer or director of the Companies shall not, between the date of the
execution by them of the Letter of Intent and the Closing, enter into or
conduct any discussions with any other prospective purchaser relating to the
Shares which are the subject of this Agreement or the Letter of Intent or the
assets or operations of the Sellers or any subsidiary thereof except for
transaction in the ordinary course of Angeles' business.
5.15. Resignations. The Seller shall have delivered to the Buyer the
resignation of each member of the Board of Directors of each of the Companies,
which resignations shall be in the form attached hereto as Schedule 5.15. In
addition, each of the Companies shall have held a special meeting of its Board
of Directors to appoint the designees named by the Buyer to serve on the Board
of Directors of the Companies prior to the resignations and simultaneously with
the Closing contemplated hereunder. Cable shall have also delivered to the
Buyer such resignations of the officers of each of the Companies as Buyer shall
request in anticipation of Closing.
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ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
The purchase of the Assets by Buyer on the Closing is conditioned upon
the satisfaction or waiver, at or prior to the Closing, of the following
conditions:
6.1 Cable Non-Compete. The Consulting and Non-Compete Agreement
between Buyer and Cable must be executed prior to or at Closing.
6.2 Shareholder Note Satisfied. As a condition precedent to
closing Angeles will prepay and receive the canceled note evidencing the
satisfaction of the loan in the amount of $285,000 from the principal
shareholder to Angeles.
6.3 A Non-Competition Agreement. Mr. Cable will enter into a
Non-Competition Agreement in substantially the form of Schedule 6.2 attached
hereto, whereby he covenants and agrees that he will not, for a period of one
(1) year from the date of the Closing, directly or indirectly, on his own
behalf as a partner, officer, director, employee, consultant or member of the
board of directors or trustees of any person, firm, corporation, association,
entity or otherwise engage in any business or activity within the continental
United States which directly or indirectly competes with the Purchaser in the
operation of Angeles whereby the Purchaser will pay a total amount of $125,000
in quarterly payments.
6.4 A Consulting Agreement. Mr. Cable will enter into a
Consulting Agreement in substantially the form of Schedule 6.2 attached hereto
pursuant to which he agrees for a period of one year shall pay Mr. Cable
$75,000 in exchange for certain services as contained in such Consulting
Agreement.
6.5 Opinion of Sellers' Counsel. Buyer shall have received an
opinion, dated the Closing Date, of Harrington, Foxx, Xxxxxx & Cantor, counsel
to Seller, to the effect set forth in Schedule 6.5 attached hereto.
6.6 No Material Adverse Change. From the date of this Agreement
to the Closing, there shall not have been a Material Adverse Change or
discovery of a condition or the occurrence of any event which might result in
such change in the Companies or its business.
6.7 Truth of Representations and Warranties. The representations
and warranties of Cable contained in this Agreement or in any Schedule
delivered pursuant hereto shall be true and correct to the best of his current
knowledge in all material respects on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
such date, and Cable shall have delivered to Buyer a certificate, dated the
Closing, to such effect.
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6.8 Performance of Agreements. Each and all of the agreements of
Sellers to be performed at or prior to the Closing pursuant to the terms hereof
shall have been duly performed in all material respects, and Sellers shall have
delivered to Buyer a certificate, dated the date of the Closing, to such
effect.
6.9 No Injunction. No court or other government body or public
authority shall have issued an order which shall then be in effect restraining
or prohibiting the completion of the actions contemplated hereby.
6.10 No Other Litigation. There shall not be any pending claim,
litigation, arbitration or administrative proceeding against or affecting the
Companies, or the assets to be purchased hereunder, which in the reasonable
judgment of Buyer (i) makes it inadvisable for Buyer to consummate the
Closing; (ii) could have a material adverse effect upon the Companies business;
or (iii) seeks to enjoin or restrain the transaction contemplated by this
Agreement.
6.11 Stock Certificates. There shall be made available to Buyer
for review prior to the Closing (a) all stock certificates, stock books, stock
transfer ledgers, and minute books of the Companies.
6.12 Transfer Documents. There shall be transferred to Buyer the
Shares, in form reasonably satisfactory to Buyer, as are required to grant
Buyer title to, or Sellers' interest in the Shares.
6.13 Third Party Agreements. As set forth in Section 5.5 there shall
be provided to Buyer all appropriate original instruments of consent or waiver
executed by third parties with respect to any contracts, agreements, etc. being
transferred to Buyer hereunder in order more fully to effect any such transfer
of the Companies assets hereunder.
6.14 Other Documents. There shall be provided or copies made
available to Buyer, to the extent not previously furnished to Buyer, all of
Sellers' business records and papers and any orders, contracts, agreements,
purchase orders, accepted and unaccepted, quotations, and any other property or
records used or usable in connection with the continued operation of the
Companies business, all tax returns and tax bills, but Buyer shall have copies
upon request; and the parties shall make all of said documents available to
each other upon request at any reasonable time hereafter.
6.15 Resolutions. At Closing there shall be provided to Buyer,
true and complete copies of resolutions duly accepted by the Companies' Board
of Directors and all Shareholders entitled to vote hereon confirming this
Agreement and its related documentation, authorizing the carrying out of all
transactions contemplated herein and the execution and delivery by the
Companies of all instruments then or thereafter required to do so; said
resolutions to be duly certified by the Secretary of the Companies.
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6.16 Risk of Loss. The risk of any loss, destruction or other
damage, other than ordinary wear and tear, between the date of execution hereof
and the completion of the Closing, shall be solely that of the Companies. In
the event that prior to the completion of the Closing any Assets of the
Companies shall be damaged by fire, casualty or any other cause:
6.16(a) If the replacement cost of the damaged
property should replacement be required, or, if not, the repair cost, equal or
exceed $25,000 net loss after insurance, Buyer shall have the option of
(a)Terminating this Agreement, without liability; or (b) Completing the Closing
hereunder in which latter event Buyer shall be entitled to a credit equal to
the ace proceeds arising with respect to such damage.
6.16 (b) If such replacement or repair cost, as the
case may be, is less than $25,000, Buyer shall be obligated to complete the
Closing hereunder and shall be entitled to the insurance proceeds arising with
respect to such damage.
6.16(c) If (i) the replacement or repair cost of
damaged property equals or exceeds $25,000 and Buyer, pursuant to subparagraph
(1) hereof, elects to complete the Closing or if the replacement or repair cost
of the damaged property is less that $25,000 (in which event Buyer shall be
obligated to complete the Closing) and if (ii) in the case of damage less than
$25,000 the insurance proceeds arising with respect to such damage are not
sufficient to cover the full amount of such replacement or repair cost, Buyer
shall be entitled to a credit therefore in addition to the insurance proceeds
arising with respect to such damage.
6.17 Buyer, Cable and the Shareholders each agree
to bear their own legal and accounting fees and expenses; Cable and the
Shareholders agree to reimburse the Company (based on their individual
proportionate ownership) for legal and accounting fees and expenses paid by the
Companies, if any, related solely to the preparation, negotiation and drafting
of this Agreement for their benefit, which would not otherwise have been paid
or incurred by the Companies in the ordinary course of the Companies business.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
The sale of the Stock by Sellers on the Closing is conditioned upon
satisfaction or waiver, at or prior to the Closing, of the following
conditions:
7.1 Opinions of Buyer's Counsel. Buyer shall have furnished
Sellers with an opinion, dated the Closing, of Buyer's Counsel, to the effect
set forth in Schedule 7.1 hereto.
7.2 Truth of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be true and correct
in all material respects on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of such
date, and Buyer shall have delivered to Sellers a certificate, dated the
Closing, to such effect.
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7.3 Performance of Agreements. Each and all of the agreements of
Buyer to be performed at or prior to the Closing pursuant to the terms hereof
shall have been duty performed in all material respects, and Buyer shall have
delivered to Sellers a certificate, dated the Closing, to such effect.
7.4 No Injunction. No court or other government body or public
authority shall have issued an order which shall then be in effect restraining
or prohibiting the completion of the transactions contemplated hereby.
7.5 Consents and Approvals. All governmental and other consents
and approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
7.6 The Agreements and documentation therefor referred to in
Sections 6.2, 6.3, 6.4 and 5.12 duly executed shall be delivered at the
Closing.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS;
EVENTS OF TERMINATION
8.1 Survival of Representations. The representations and
warranties of Sellers and Buyer contained in this Agreement shall survive the
purchase and sale of the Shares for a period of one year unless a written claim
or action is filed prior thereto. Nothing in this paragraph shall effect the
obligation and indemnifications of the parties with respect to the covenants
and agreement contained in this agreement that are to be performed in whole or
part after the Closing.
8.2 Events of Termination. This Agreement may be terminated (a)
by Cable by written notice to Buyer, if the conditions and requirements set
forth in Articles II, IV, V, and VII hereof shall not have been complied with
or performed on or prior to the Closing and, (b) by Buyer by written notice to
the Companies, if the conditions set forth in Articles II and VI hereof shall
not have been complied with or performed on or prior to the Closing in any
material respect, and, in either case, such noncompliance or nonperformance
shall not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before January 15, 1997.
8.3 Materiality of Actions Hereunder. The parties hereto
understand and agree that no actions shall be brought in connection with this
Agreement unless such action(s) allege damages as provided for in Article IX
below.
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ARTICLE IX
INDEMNIFICATION
9.1. Indemnification by Cable and the Companies. Cable hereby
agree to indemnify, defend and hold Buyer harmless, from and against the amount
of any damage, loss, cost or expense not covered by insurance (including court
costs and attorneys' fees) to Buyer, of any kind or character (collectively,
"Indemnity Losses" and individually, an "Indemnity Loss", which shall not be
limited to matters asserted by third parties against the Companies or the
Buyer, but includes any damage, loss, cost or expense incurred or sustained by
the Companies or the Buyer in the absence of any third party claims) for an
individual claim in excess of $75,000, occasioned or caused by, resulting from
or arising out of:
(a) any failure by Cable to perform, abide by or fulfill any
agreement or obligation set forth in this Agreement to be so performed or
fulfilled by Cable;
(b) any breach of any of the representations, warranties or
covenants of Cable as set forth in this Agreement;
(c) all litigation pending against any of Cable and the Companies at
the Closing;
(d) any and all claims against Buyer for any of the Companies
relating to the operation of the Business and/or use of the Business Assets at
the Cable Premises prior to the Closing including, without limitation, any
claim, suit, proceeding, fine or otherwise arising from the environmental
condition of the Cable Premises as of the Closing or relating to the failure of
any of the Cable and the Companies to comply with applicable Federal and/or
state environmental statutes and regulations or any pre-existing environmental
condition existing at the Cable Premises prior to the Closing;
(e) any material (in accordance with the applicable provision of
this Agreement defining the term "material") or event which may after the lapse
of time cause any such change or addition, in any such Schedule. breach of any
of the representations, warranties or covenants or any failure of the Cable to
satisfy its indemnity obligations thereunder.
ALL CLAIMS UNDER THIS SECTION 9 MUST BE PRESENTED IN WRITING WITHIN ONE (1)
YEAR FOLLOWING THE CLOSING TO CABLE; ANY CLAIM NOT SO PRESENTED SHALL BE BARRED
FOR ALL PURPOSES. ANY INDIVIDUAL CLAIM OF LESS THAN $75,000 SHALL NOT BE
DEEMED MATERIAL AND SHALL BE OF NO EFFECT AND NOT SUBJECT TO INDEMNIFICATION.
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9.2 Notice. In the event that Buyer has suffered or incurred any
Indemnity Loss, Buyer shall promptly notify the Seller promptly in writing
describing such loss or expense, the amount thereof, if known, and the method
of computation of such loss or expense, all with reasonable particularity. If
any action at law, suit in equity or administrative action is instituted by or
against Buyer with respect to which Buyer intends to claim any liability or
expense as an Indemnity Loss under this Article IX, Buyer shall promptly notify
Cable and the Companies of such action or suit.
9.3 Defense of Claims. The Cable shall have 25 days after receipt
of either notice referred to in Section 9.3 hereof to notify the Buyer that it
elects to conduct and control any legal or administrative action or suit with
respect to an indemnifiable claim. If Cable and the Companies do not give such
notice, the Buyer shall have the right to defend, contest, and, only upon the
prior written consent of the Cable and the Companies, settle or compromise such
action or suit and the Cable and the Companies shall, upon request from the
Buyer, promptly pay the Buyer in accordance with the other terms of this
Article IX the amount of any individual Indemnity Loss resulting from its
liability to the third party claimant in excess if $75,000.00. If Cable and
the Companies give such notice, they shall have the right to undertake, conduct
and control, through counsel of their own choosing and at its sole expense, the
conduct and settlement of such action or suit, and the Buyer shall cooperate
with Cable and the Companies in connection therewith; provided, however, that
(i) Cable and the Companies shall not thereby consent to the imposition of any
injunction against the Buyer without the written consent of the Buyer, (ii)
Cable and the Companies shall permit the Buyer to participate in such conduct
or settlement through counsel chosen by the Buyer, but the fees and expenses of
such counsel shall be borne by the Buyer except as provided in clause (iii)
below, and (iii) upon a final determination of such action or suit, Cable and
the Companies shall agree promptly to reimburse to the extent required under
this Article IX the Buyer for the full amount of any Indemnity Loss resulting
from such action or suit and all reasonable and related expenses incurred by
the Buyer, except fees and expenses of counsel for the Buyer incurred after the
assumption of the conduct and control of such action or suit by Cable and the
Companies. So long as Cable and the Companies are contesting any such action
in good faith, the Buyer shall not pay or settle any such action or suit.
Notwithstanding the foregoing, the Buyer shall have the right to pay or settle
any such action or suit, provided that in such event the Buyer shall waive any
right to indemnity therefor from Cable and the Companies and no amount in
respect thereof shall be claimed as an Indemnity Loss under this Article IX.
9.4. Cooperation. If requested by Cable and the Companies, the
Buyer agrees to cooperate with Cable and the Companies and its counsel in
contesting any claim which Cable and the Companies elects to contest or, if
appropriate, in making any counterclaim against the person asserting the claim,
or any cross-complaint against any person and further agrees to take such other
action as reasonably may be requested by an Cable and the Companies to reduce
or eliminate any loss or expense for which Cable and the Companies would have
responsibility, but Cable and the Companies will reimburse the Buyer for any
reasonable expenses incurred by it in so cooperating or acting at the request
of Cable and the Companies.
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9.5 Right to Participate. The Buyer agrees to afford Cable and
the Companies and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any claim against the Buyer or conferences with
representatives of or counsel for such persons.
9.6 NOTWITHSTANDING ANY OTHER PROVISION HEREIN TO THE CONTRARY ANY
AMOUNT OF INDEMNIFICATION DUE FROM CABLE UNDER THIS SECTION 9 SHALL BE LIMITED
TO:
(A) A FINAL JUDGMENT UPON A CLAIM OF AN INDEPENDENT THIRD
PARTY; AND
(B) SHALL BE LIMITED SOLELY AND EXCLUSIVELY TO THE AMOUNT
DUE TO CABLE UNDER THE NON-COMPETITION AND CONSULTING AGREEMENT REFERRED TO IN
PARAGRAPHS 6.3 AND 6.4. AS OF THE INITIAL DATE OF THE WRITTEN CLAIM MADE UPON
CABLE; CABLE SHALL HAVE NO RESPONSIBILITY FOR ANY AGGREGATE AMOUNT IN EXCESS OF
SUCH AMOUNT THEN DUE TO CABLE ON SUCH NON-COMPETITION AND CONSULTING
AGREEMENTS. NO RECOURSE SHALL BE ALLOWED AS TO ANY OTHER ASSETS OF CABLE
INCLUDING BUT NOT LIMITED TO THE LEASES REFERRED TO IN PARAGRAPH 5.12 AND/OR
THE REAL PROPERTY WITH RESPECT TO SAME.
9.7 Designation of Roles in Joint Liability. For purposes of
interpretation of this Agreement only, in the event that any claim alleges
joint responsibility and liability of Cable and the Companies and Buyer, Cable
and the Companies shall be deemed to be Cable and the Companies and the Buyer
shall be deemed to be the Buyer for purposes of determining which party has the
right to defend any claim; provided, however, that such deemed designation
shall in no way affect any determination regarding the relative liabilities of
the parties.
ARTICLE IX
MISCELLANEOUS
10.1 Expenses. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective
counsel and financial advisors.
10.2 Transfer Taxes. All stamp, transfer, documentary, sales, use,
registration and other such taxes and fees (including any penalties and
interest incurred in connection with this Agreement and the transactions
contemplated hereby (collectively, the "Transfer Taxes") shall
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be paid by Buyer, and Buyer shall, at its own expense, procure any Share
transfer stamps required by, and properly file on a timely basis all necessary
tax returns and other documentation with respect to, any Transfer Tax and
provide to Sellers evidence of payment of all Transfer Taxes.
10.3 Notification. Until the Closing, Buyer shall promptly inform
Sellers in writing of any material variances discovered by Buyer or its
representatives in the representations and warranties of Sellers contained in
this Agreement. BUYER SHALL BE DEEMED TO WAIVE ANY CLAIM OR RIGHT OF OFFSET
WITH RESPECT TO ANY SUCH VARIANCE OR DEFICIENCY OF WHICH IT HAS KNOWLEDGE PRIOR
TO THE CLOSING.
10.4 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of
the State of California applicable to contracts made by California residents
and to be performed entirely within the State of California. All actions with
respect to the obligations of the parties hereto must be brought in the
appropriate forum at Los Angeles, California.
10.5 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
10.6 Captions. The Article, Section and Schedule captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
10.7 Publicity. Except as otherwise required by law or regulation,
neither of the parties hereto shall issue any press release or make any other
public statement, in each case relating to or connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
written approval of the other party to the contents and the manner of
presentation and publication thereof except for required government filings.
The requirements of this Section 8.7 shall be in addition to those included in
the Confidentiality Agreement.
10.8 Third Party Beneficiaries. Each party hereto intends that
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.
10.9 Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed as
follows: if to Buyer, Stone Pine Atlantic LLC, 000 00xx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, Attn: Xxxxxx Xxxxxxx; and if to Cable, to Angeles Metal
Trim Co., Inc., 0000 Xxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, FAX
number (000)000-0000, Attention: D.K. Cable; with a copy to Xxx X. Xxxxxx,
Esq., Harrington, Foxx,
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Xxxxxx & Xxxxxx, 000 X. Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000, FAX
number (000) 000-0000; or such other address or number as shall be furnished in
writing by any such party, and such notice or communication shall be deemed to
have been given as of the date so delivered, sent by telecopy or mailed.
10.10 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
10.12 Entire Agreement. This Agreement, including the Schedules and
other documents referred to herein which form a part hereof, and the
Confidentiality Agreement, contain the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter other than the Confidentiality
Agreement.
10.13 Amendments. This Agreement may not be changed orally, but
only by an agreement in writing signed by the parties hereto. Any provision of
this Agreement can be waived, amended, supplemented or modified by written
agreement of the parties hereto.
10.14 Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
10.15 LIQUIDATED DAMAGES. THE PARTIES HERETO, BEFORE ENTERING
THIS AGREEMENT, HAVE BEEN CONCERNED WITH THE FACT THAT SUBSTANTIAL DAMAGES
WILL BE SUFFERED BY SELLERS IN THE EVENT THAT BUYER SHOULD FAIL TO COMPLETE THE
PURCHASE OF SHARES ACCORDING TO THE TERMS OF THIS AGREEMENT. WITH THE
FLUCTUATION IN VALUES, THE HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, AND THE
PERIOD OF TIME BETWEEN THIS AGREEMENT AND THE CLOSING OF THE TRANSACTION AND
OTHER FACTORS WHICH DIRECTLY OR INDIRECTLY EFFECT THE VALUE OF THE SHARES AND
THE CONTINUING OPERATIONS OF THE SELLERS, IT IS AGREED THAT IT WOULD BE
EXTREMELY DIFFICULT TO ASCERTAIN THE AMOUNT OF DAMAGES WHICH WOULD BE SUFFERED
BY SELLERS IN THE EVENT OF BUYERS' FAILURE TO PURCHASE THE SHARES UNDER THE
TERMS OF THIS AGREEMENT. BUYER AND SELLERS HAVING MADE A DILIGENT ENDEAVOR TO
ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES WHICH SELLERS WOULD SUFFER IN THE
EVENT OF BUYER'S FAILURE TO PURCHASE THE SHARES, HEREBY AGREE THAT THE
REASONABLE ESTIMATE OF SAID DAMAGES IS THE AMOUNT OF THE DOWN PAYMENT, PLUS ANY
INTEREST WHICH MAY ACCRUE THEREON. IN THE
38
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EVENT THE PURCHASE OF SHARES BY THE BUYER IS CANCELED OR TERMINATED BY REASON
OF BUYERS'S BREACH AND/OR DEFAULT OF THIS AGREEMENT, SELLERS SHALL BE ENTITLED
TO AND MAY RETAIN THE AMOUNT OF THE DOWN PAYMENT TOGETHER WITH ANY INTEREST
ACCRUED THEREON AS LIQUIDATED DAMAGES. THE AMOUNT OF THE LIQUIDATED DAMAGES
HAS BEEN ESTABLISHED BY THE PARTIES AS THE AMOUNT OF THE MONETARY DAMAGES
SELLERS MAY SUFFER BASED SOLELY UPON A FAILURE OF BUYERS TO PURCHASE THE
SHARES AND SELLERS SHALL BE ENTITLED TO RECOVER NO OTHER DAMAGES FROM BUYER.
SELLERS HEREBY RELEASE BUYER AND AGREE THAT NO OTHER DAMAGES WILL BE SOUGHT BY
SELLER BASED SOLELY UPON A FAILURE BY BUYER TO PURCHASE THE SHARES. THE PARTIES
HERETO EXPRESSLY UNDERSTAND AND AGREE TO THE FOREGOING PROVISIONS RELATED TO
LIQUIDATED DAMAGES.
-------------------------- ----------------------------
10.16 This document may be executed in counterparts all of which may be
deemed a fully executed document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
after due consideration of the liquidated damages clause hereinabove, and the
Shareholders acknowledgement and disclaimer set forth below to be duly executed
as of the day and year first above written.
Buyer:
ANGELES ACQUISITION CO.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Sellers:
ANGELES METAL TRIM CO., INC.,
A California corporation
By: /s/ D.K. Cable
----------------------------------
Name: D.K. Cable
Title: Chairman
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46
CALIFORNIA BUILDING SYSTEMS, INC.,
a Nevada corporation
By: /s/ D.K. Cable
-----------------------------
Name: D.K. Cable
Title: Chairman
/s/ D. Kingston Cable
--------------------------------------
D. Kingston Cable, an Individual
Stock Certificate No.(s)
--------------------------------------
Number of Shares:
-------------------
SHAREHOLDERS:
Each of the following Shareholders acknowledges and agrees to Article I and
Section 2.2(a) of the foregoing Stock Purchase Agreement ("Agreement") but
specifically disclaims any obligations or liability (joint, several or
otherwise) for any other covenants, agreements, representations or warranties
contained in the Agreement, including but not limited to the representations
and warranties of Sellers set forth in Article III and the agreements of
Sellers set forth in Article V. By execution of the Agreement above, Buyer
acknowledges and agrees that notwithstanding the definition of "Sellers" set
forth in the introductory paragraph of the Agreement, the following
Shareholders will not be deemed included within the term "Sellers" except for
purposes of Article I and Section 2.2(a) of the Agreement. The Shareholders
further acknowledge that the Purchase Price for the Stock shall be paid to the
Trust Account of Harrington, Foxx, Xxxxxx & Xxxxxx for the benefit of the
Stockholders.
Cable and the Shareholders agree to reimburse the Company (based on their
individual proportionate ownership) for legal and accounting fees and expenses
paid by the Companies, if any, related solely to the preparation, negotiation
and drafting of this Agreement for their benefit, which would not otherwise
have been paid or incurred by the Companies in the ordinary course of the
Companies business.
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47
ANGELES METAL TRIM CO., INC.
[SUBSIDIARY]
/s/ Xxxxx Xxxxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxx Xxxxx, Trustee Officer
G.C. Cable Trust
STOCK CERTIFICATE NO.: 52
-----------------------------
NUMBER OF SHARES: 10.5
--------------------------
/s/ Xxxxx Xxxx Xxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxx Xxxx Xxx
STOCK CERTIFICATE NO.: 46
-----------------------------
NUMBER OF SHARES: 3.5
--------------------------
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxxxx X. Xxxxxxxx
STOCK CERTIFICATE NO.: 42
-----------------------------
NUMBER OF SHARES: 6
--------------------------
/s/ Xxxxxx Xxxxxxxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxxx Xxxxxxxx
STOCK CERTIFICATE NO.: 53
-----------------------------
NUMBER OF SHARES: 3.5
--------------------------
/s/ Xxxxx Xxxx Xxxxxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxx Xxxx Xxxxxx
STOCK CERTIFICATE NO.: 49
-----------------------------
NUMBER OF SHARES: 4
--------------------------
/s/ Xxxxx X. Xxxxxx
-----------------------------------------------------------------
SHAREHOLDER: Xxxxx X. Xxxxxx
STOCK CERTIFICATE NO.: 48
-----------------------------
NUMBER OF SHARES: 1
--------------------------
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48
/s/ Xxxxxxx Xxx Xxxxx
----------------------------------------------------------------
SHAREHOLDER: Xxxxxxx Xxx Xxxxx
STOCK CERTIFICATE NO.: 44
-----------------------------
NUMBER OF SHARES: 3.5
--------------------------
/s/ Xxxxxxxx Xxxxxxxxx
----------------------------------------------------------------
SHAREHOLDER: Xxxxxxxx Xxxxxxxxx
STOCK CERTIFICATE NO.: 32
-----------------------------
NUMBER OF SHARES: 4
--------------------------
/s/ Xxxxxx Xxxxxxxx Cable, /s/ Xxxxxxx Xxxxx Cable
----------------------------------------------------------------
SHAREHOLDER: Xxxxxx Xxxxxxxx Cable, Xxxxxxx Xxxxx Cable
STOCK CERTIFICATE NO.: 51
-----------------------------
NUMBER OF SHARES: 3
--------------------------
/s/ Xxxxxx Xxxxxxxx Cable
----------------------------------------------------------------
SHAREHOLDER: Xxxxxx Xxxxxxxx Cable
STOCK CERTIFICATE NO.: 50
-----------------------------
NUMBER OF SHARES: 95
--------------------------
/s/ Xxxxxx Xxxxxxxx Cable, as Custodian
----------------------------------------------------------------
SHAREHOLDER: D.K. Cable as Custodian for Xxxxxxx X. Cable
STOCK CERTIFICATE NO.: 33
-----------------------------
NUMBER OF SHARES: 4
--------------------------
/s/ Xxxxxx Xxxxxxxx Cable, as Custodian
----------------------------------------------------------------
SHAREHOLDER: D.K. Cable as Custodian for Xxx X. Cable
STOCK CERTIFICATE NO.: 34
-----------------------------
NUMBER OF SHARES: 4
--------------------------
42
