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Exhibit 99.4
SHARE PURCHASE AND SALE AGREEMENT
This SHARE PURCHASE AND SALE AGREEMENT effective as of February 24, 2001,
is entered into by and among BE Aerospace, Inc., a Delaware corporation (the
"Company"), Xxxxxxx Precision, Inc., a California corporation ("Xxxxxxx"), and
all of the shareholders of Xxxxxxx set forth on Schedule 1 hereto (collectively,
the "Shareholders").
RECITALS
A. The Shareholders are the record and beneficial holders of all the issued
and outstanding capital stock (collectively, the "Xxxxxxx Shares") of Xxxxxxx.
B. The Company desires to acquire the Xxxxxxx Shares from the Shareholders,
and the Shareholders desire to transfer the Xxxxxxx Shares to the Company in
exchange for shares of BE Stock (as defined in Section 1).
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises
and agreements of the parties herein contained, the parties hereby agree as
follows:
TERMS AND CONDITIONS
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings set forth below:
"Actual Knowledge" means Knowledge without the requirement of reasonable
due inquiry outside of Xxxxxxx, but includes reasonable due inquiry within
Xxxxxxx with respect to the matter, as well as all information existing in the
books, records and files of Xxxxxxx and its Affiliates.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Agreement" means this SHARE PURCHASE AND SALE AGREEMENT, as the same may
be amended from time to time in accordance with the terms hereof and shall
include the Exhibits hereto and any Disclosure Schedule attached hereto.
"Audit" has the meaning set forth in Section 6.1(c).
"Xxxxxxx" has the meaning set forth in the preamble to this Agreement.
"Arbiter" has the meaning set forth in Section 2.3(b).
"BE Closing Price" means $23.3625 per share of BE Stock.
"BE Stock" means common stock of the Company presently trading under the
symbol "BEAV" on the NASDAQ National Market.
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"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.2.
"Closing Date Net Consideration Calculation" has the meaning set forth in
Section 2.3(a).
"Closing Period Returns" has the meaning set forth in Section 6.1(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preamble to this Agreement.
"Company Indemnified Parties" has the meaning set forth in Section 11.2.
"Company's Accounting Firm" means Deloitte & Touche, LLP or any successor
organization.
"Confidential Information" includes all information, in whatever form or
medium, concerning the operations or affairs of Xxxxxxx, but does not include
information that (i) was in the public domain before the date of this Agreement
or subsequently came into the public domain other than as a direct or
consequential result of disclosure by any Shareholder or, before the Closing
Date, Xxxxxxx; or (ii) was lawfully received by a Shareholder from a third
party, other than Xxxxxxx prior to the Closing Date, free of any obligation of
confidence to or through such third party, or (iii) is independently developed
by any Shareholder as of the Closing Date without the use of any information
from Xxxxxxx.
"Contract" or "Contracts" mean, collectively, all written or oral
contracts, agreements, commitments, leases, licenses, instruments, bids and
proposals to which Xxxxxxx is a party as of the Closing Date, including, without
limitation, those listed on Schedule 4.11, all unfilled orders outstanding as of
the Closing Date for the purchase of goods or services by Xxxxxxx and all
unfilled orders outstanding as of the Closing Date for the sale of goods or
services by Xxxxxxx.
"Custody Agreement" has the meaning set forth in Section 8.5(a).
"Disclosure Schedule" has the meaning set forth in Section 4.
"DTC" means the Depository Trust Company.
"Effective Date" has the meaning set forth in Section 3.1.
"Employee Benefit Plan" means an Employee Pension Benefit Plan or an
Employee Welfare Benefit Plan, where no distinction is intended by the context
in which the term is used.
"Employee Pension Benefit Plan" has the meaning set forth in Section 3(2)
of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section 3(1)
of ERISA.
"Environment" or "Environmental" mean soil, land surface or subsurface
strata, real property, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage
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basins and wetlands), groundwater, water body sediments, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal life and
any other environmental medium or natural resource.
"Environmental Law" or "Environmental Laws" mean any Law with respect to
the preservation of the Environment or the promotion of worker health and
safety, including but not limited to any Law whatsoever relating to Hazardous
Materials, drinking water, surface water, groundwater, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste water, storm
water run-off, noises, odors, air quality, air emissions, waste emissions or
xxxxx. Without limiting the generality of the foregoing, the term will encompass
each of the following statutes and the regulations promulgated thereunder, and
any similar applicable state, local or foreign Law, each as amended (a) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
(b) the Solid Waste Disposal Act, (c) the Hazardous Materials Transportation
Act, (d) the Toxic Substances Control Act, (e) the Clean Water Act, (f) the
Clean Air Act, (g) the Safe Drinking Water Act, (h) the National Environmental
Policy Act of 1969, (i) the Superfund Amendments and Reauthorization Act of
1986, (j) Title III of the Superfund Amendments and Reauthorization Act, (k) the
Federal Insecticide, Fungicide and Rodenticide Act (l) the provisions of the
Occupational Safety and Health Act of 1970 relating to the handling of and
exposure to Hazardous Materials and similar substances; (m) California
Environmental Quality Act; and (n) National Environmental Policy Act.
"Environmental Liabilities and Costs" and similar phrases mean all Losses
incurred: (i) to comply with any Environmental Law; (ii) as a result of a
Release of any Hazardous Materials; or, (iii) as a result of any Environmental
conditions present at, created by or arising out of the past or present
operations of Xxxxxxx through the Closing Date or of any prior owner or operator
of a facility or site at which Xxxxxxx now operates or has previously operated.
"Environmental Permits" means any Permit or authorization from any
Governmental Entity required under, issued pursuant to, or authorized by any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow" has the meaning set forth in Section 2.4.
"Escrow Agent" has the meaning set forth in Section 2.4.
"Escrow Agreement" has the meaning set forth in Section 2.4.
"Escrowed Shares" has the meaning set forth in Section 2.4.
"GAAP" means United States generally accepted accounting principles, as in
effect as of the date of this Agreement.
"Governmental Entity" or "Governmental Entities" mean any government or any
agency, bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
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"Hazardous Materials" means each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance that is
defined, determined or identified as hazardous, toxic or controlled under any
Environmental Law or the Release of which is prohibited under any Environmental
Law. Without limiting the generality of the foregoing, the term will include,
without limitation, (a) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, or Title III of the Superfund
Amendments and Reauthorization Act and regulations promulgated thereunder, each
as amended, (b) "hazardous waste" as defined in the Solid Waste Disposal Act and
regulations promulgated thereunder, each as amended, (c) "hazardous materials"
as defined in the Hazardous Materials Transportation Act and the regulations
promulgated thereunder, each as amended, (d) "chemical substance or mixture" as
defined in the Toxic Substances Control Act and regulation promulgated
thereunder, each as amended, (e) petroleum and petroleum products and byproducts
and (f) asbestos.
"Indemnitee" has the meaning set forth in Section 11.5.
"Indemnitor" has the meaning set forth in Section 11.5.
"Intellectual Property" means the entire right, title and interest in and
to all Technology and proprietary rights of every kind and nature, including
without limitation patents, patent disclosures, copyrights, Trademarks, mask
works, trade secrets and proprietary information, all applications for any of
the foregoing, all registrations, applications, re-issuances, continuations,
continuations-in-part, revisions, extensions, re-examinations and associated
good will with respect to each of the foregoing, computer software (including
source and object codes), computer programs, computer data bases and related
documentation and materials, data, other documentation, trade secrets, all
confidential business information (including ideas, formulas, compositions,
inventions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, designs, plans, proposals and
technical data, financial, marketing and business data and pricing and cost
information) and all other intellectual property rights (in whatever form or
medium) and any license or agreements granting rights related to any of the
foregoing (i) subsisting in, covering, relying on, directly applicable to or
existing in the Products or the Technology, (ii) that are owned, licensed or
controlled in whole or in part by Xxxxxxx or any Subsidiary of Xxxxxxx and
relate to the business of Xxxxxxx or any Subsidiary of Xxxxxxx, or (iii) that
are used in or necessary to the development, manufacture, sale, marketing or
testing of the Products.
"Interim Financial Statements" has the meaning set forth in Section 4.5.
"Inventory" or "Inventories" mean all inventory, merchandise, finished
goods, raw materials, packaging, supplies and other personal property related to
the business of Xxxxxxx that is maintained, held or stored by or for Xxxxxxx.
"IRS" means the Internal Revenue Service of the United States Department of
the Treasury.
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"Key Employees" mean individually and collectively: Xxxxxx X. Xxxxxxx, Xxxx
X. Xxxxxxx, Xxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx
Xxxxxxxx and Xxxxxxx Xxxxxxx.
"Knowledge" of Xxxxxxx and/or the Shareholders means knowledge after
reasonable due inquiry with respect to the matter represented.
"Law" means any constitutional provision, statute, law, rule, regulation,
Permit, decree, injunction, judgment, order, ruling, determination, finding or
writ of any Governmental Entity.
"Liability" or "Liabilities" mean any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether due, or to become due), including without limitation any liability for
Taxes.
"Lien" or "Liens" mean any mortgage, pledge, security interest, charge,
claim or other encumbrance, other than (a) liens for Taxes not yet due and
payable or that are being contested in good faith by appropriate proceedings,
(b) statutory or common law liens to secure obligations to landlords, lessors or
renters under leases or rental agreements confined to the premises rented, (c)
deposits or pledges made in connection with, or to secure payment of, workers'
compensation, unemployment insurance, old age pension or other social security
programs mandated under Law; (d) statutory or common law liens in favor of
carriers, warehousemen, mechanics and materialmen to secure claims for labor,
materials or supplies and other like liens that are not material, (e) as to real
property, recorded easements, rights of way, restrictions, encroachments, and
also any minor title defects that do not, singly or in the aggregate, interfere
with the use of such property, (f) restrictions on transfer of securities
imposed by Law, and (g) liens securing rental payments under capital lease
arrangements. Nothing herein limits the Shareholders' obligations to discharge
and release all Liens for Taxes and all Taxes to the extent described elsewhere
in this Agreement.
"Losses" has the meaning set forth in Section 11.2.
"Material Adverse Effect" means any adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of Xxxxxxx
which, when considered singly or in the aggregate together with all other such
effects constitutes a material adverse effect on the business, assets,
operations, prospects or condition, financial or otherwise, of Xxxxxxx taken as
a whole.
"Multi-employer Plan" has the meaning set forth in Section 3(37) of ERISA.
"Net Cash" means net cash on the Xxxxxxx balance sheet as of the close of
business on the day prior to the Closing Date, which shall include deposits in
transit, less checks, drafts or notes made payable by Xxxxxxx not cleared, in
transit or not paid as of the day prior to the Closing Date.
"Net Consideration" means (I) Reference Price, plus (II) Net Cash, and less
(III) Net Debt.
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"Net Debt" means: (a) any debt owed for money borrowed, including all
capitalized leases, loans from Shareholders or corporate affiliates, bank lines
of credit, equipment installment notes or other bank notes payable, prior to the
Closing Date; plus (b) an amount equal to the discounted net present value of
all operating leases (excluding real estate leases) calculated on a monthly
basis using a monthly discount rate of 0.875% per month; plus (c) any accounts
payable that, prior to the Closing Date, are unpaid more than 30 days past their
due dates; plus (d) any accrued Taxes on the Xxxxxxx balance sheet as of the
Closing Date and any additional Taxes of Xxxxxxx attributable to periods on or
prior to the Closing Date; plus (e) all of the transaction expenses of the
Shareholders', or their Affiliates, accrued on the day after the Closing Date
and payable by Xxxxxxx after the Closing Date.
"Net Proceeds" has the meaning given in Section 2.5.
"Non-Compete and Non-Solicitation Agreement" shall mean, as to each
Shareholder set forth on Schedule 1 hereof, a Non-Compete and Non-Solicitation
Agreement among the Company, Xxxxxxx and such Shareholder in substantially the
form of Exhibit C attached hereto.
"Offering Termination Date" shall have the meaning given in Section 8.5(a).
"Ordinary Course of Business" means the ordinary course of business of
Xxxxxxx consistent with past custom and practice (including with respect to
quantity and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" or "Permits" mean any license, permit, franchise, certificate of
authority or order, or any waiver of the foregoing, issued by any Governmental
Entity.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"Product" or "Products" mean all past and current products and services of
Xxxxxxx and, to the extent that they are currently being developed by Xxxxxxx,
(i) any subsequent versions of such products or services, (ii) any products or
services which are designed to supersede, replace or function as a component of
such products or services, (iii) any upgrades, enhancements, improvements and
modifications to the foregoing, and (iv) any data or information associated with
the foregoing that is either provided to the customer, or required by the
customer to be delivered.
"Product Recall" means a request in writing from Xxxxxxx to any Person for
the return of any Products for reasons of health, safety or compliance with any
Law.
"Prohibited Transactions" has the meaning set forth in Section 406 of ERISA
and Section 4975 of the Code.
"Public Offering" has the meaning set forth in Section 8.5.
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"Reference Price" means the amount of Twelve Million One Hundred Thousand
dollars ($12,100,000).
"Registrable Securities" has the meaning set forth in Section 8.5(a).
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping,
discarding, burying, abandoning or disposing into the Environment.
"Reportable Event" has the meaning set forth in Section 4043 of ERISA.
"Safety Law" or "Safety Laws" mean any Law or legal requirement relating to
health or safety, including the Occupational Safety and Health Act, as amended,
as now or hereinafter in effect relating to (a) exposure of employees to any
Hazardous Materials or (b) the physical structure, use or condition of a
building, facility, fixture or other structure, including, without limitation,
those relating to equipment or manufacturing processes, or the management,
Release, cleanup or removal of any Hazardous Materials.
"Safety Liabilities and Costs" and similar phrases mean all Losses incurred
to comply with any Safety Law or as a result of any health or safety conditions
present at, created by or arising out of the past or present operations of
Xxxxxxx through the Closing Date
"Schedule" means, unless the context otherwise requires, the referenced
Schedule included in the Disclosure Schedule.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Shareholder" means each person set forth on Schedule 1 to this Agreement.
"Shareholders" has the meaning set forth in the Preamble to this Agreement.
"Shareholder Indemnified Parties" has the meaning set forth in Section
11.3.
"Shareholders' Ancillary Agreement" or "Shareholders' Ancillary Agreements"
shall mean, as to each Shareholder set forth on Schedule 1 hereof, the
Consulting Agreements in substantially the form of Exhibit B attached hereto,
and the Non-Compete and Non-Solicitation Agreements among the Company, Xxxxxxx
and such Shareholder in substantially the form of Exhibit C attached hereto.
"Short Period Return" has the meaning set forth in Section 6.1.
"Subsidiary" means with respect to any Person, (i) any entity (including
any partnership) a majority of whose outstanding voting securities (however
designated, including all equivalent or similar interests) are owned or
controlled, directly or indirectly, by such Person or by one or
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more of such person's Subsidiaries, or collectively by such Person and one or
more of its Subsidiaries.
"Substitution Right" has the meaning set forth in Section 2.5.
"Tax" or "Taxes" mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions, assessments or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local, or foreign taxing
authority, including, without limitation, income, gross receipts, license,
lease, service, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar, including FICA), unemployment, disability, real property,
personal property, sales, use, ad valorem, transfer, registration, value added,
alternative or add-on minimum, estimated, or of any other kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" or "Tax Returns" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, ideas, research and development, formulae, compositions,
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier information, pricing and cost information, business and
marketing plans, proposals, documentation, manuals, software, firmware,
hardware, integrated circuits and integrated circuit masks, electronic,
electrical or mechanical equipment, machinery and tools, and all other forms and
embodiments of technology of all kinds whatsoever, including without limitation
improvements, modifications, derivatives or changes, whether tangible or
intangible, embodied in any form, whether or not protectible or protected by
patent, copyright, mask work right, trade secret law or otherwise.
"Trademarks" means any trademarks, service marks, trade dress, logos and
trade names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.
"Warranties" shall mean all Product return policies, service, repair,
replacement and other obligations based upon or arising out of express or
implied warranties made or deemed applicable in connection with the sale of
goods or the performance of services by Xxxxxxx.
"Wash Custodian" means the Bank of New York.
"Year-End Financial Statements" has the meaning set forth in Section 4.5.
SECTION 2. EXCHANGE OF SHARES.
2.1 Sale and Transfer of Xxxxxxx Shares. On the terms and subject to the
conditions set forth in this Agreement, at the Closing the Shareholders shall
transfer and convey to the Company, and the Company shall acquire, all right,
title and interest in and to the Xxxxxxx Shares, free and clear of all Liens,
claims, encumbrances, pledges, options, security interests and any other adverse
claims or interests. At the Closing, each Shareholder shall deliver to the
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Company all certificates evidencing the Xxxxxxx Shares owned by him, her or it,
properly endorsed for transfer or accompanied by properly executed stock powers.
2.2 Consideration from Company for the Xxxxxxx Shares. On the terms and
subject to the conditions set forth in this Agreement, the Company covenants and
agrees that in exchange for the transfer of the Xxxxxxx Shares to Company by the
Shareholders, the Company shall: (i) deliver at Closing to each of the
Shareholders (or their designee or custodian) in proportion to the ownership of
the capital stock of Xxxxxxx as set forth on Schedule 1 cash in the aggregate
amount of Nine Hundred Thousand Dollars ($900,000) by wire transfer
clearinghouse funds; and (ii) and instruct the Company's transfer agent, via an
irrevocable transfer letter, to deliver to the Escrow Agent at Closing, or as
soon as possible thereafter, an aggregate number of shares of BE Stock valued at
the BE Closing Price equal to the Reference Price, minus Nine Hundred Thousand
Dollars ($900,000). The Escrow Agent, pursuant to the Escrow Agreement, will be
instructed to release the Escrowed Shares or proceeds from the sale thereof as
follows:
(a) Within thirty (30) days after the Closing Date, and after the
Company and any Arbiter, if applicable, renders its confirmation of the Net
Consideration pursuant to Section 2.3(a) and Section 2.3(b), Escrowed Shares
valued at the BE Closing Price, or proceeds therefrom, shall be released from
Escrow, subject to the terms of the Escrow Agreement, (i) to the Wash Custodian
for the benefit of the Shareholders, in proportion to the ownership of capital
stock of Xxxxxxx as set forth on Schedule 1, such that the total amount, if any,
that shall be distributed to the Shareholders is equal to any positive result of
(A) Ninety Two and One-Half percent (92.5%) of Net Consideration minus (B) Nine
Hundred Thousand Dollars ($900,000), and (ii) to the Company, any amount of
Escrowed Shares, valued at the BE Closing Price, or proceeds therefrom, in
excess of Seven and One-Half percent (7.5%) of Net Consideration;
(b) Subject to adjustments described in Section 2.3 and 11.2, Escrowed
Shares valued at the BE Closing Price, or proceeds from the sale thereof, in an
amount equal to Three and Three-Quarters percent (3.75%) percent of the Net
Consideration, less claims made, will be distributed from Escrow, subject to the
Escrow Agreement, to the Shareholders fifteen (15) days after receipt from the
Company's Accounting Firm of the audit for the Company's fiscal year ending
February 2002, but in no case later than June 1, 2002; and
(c) Subject to adjustments described in Sections 2.3 and 11.2, Escrowed
Shares valued at the BE Closing Price, or proceeds from the sale thereof, in an
amount equal to the balance in Escrow, less claims made, will be disbursed from
Escrow, subject to the Escrow Agreement, to Shareholders within fifteen (15)
days after the receipt from the Company's Accounting Firm of the audit for the
Company's fiscal year ending February 2003, but in no case later than June 1,
2003.
2.3 Adjustments of Reference Price.
(a) Within thirty (30) days after the Closing Date, and after the
Company renders its confirmation of Net Consideration, the Company will deliver
to the Shareholders the calculation with respect to the Net Consideration, along
with any associated work papers (the "Closing Date Net Consideration
Calculation").
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(b) Within fifteen (15) days after the delivery of the Closing Date Net
Consideration Calculation, the Shareholders will deliver written notice to the
Company of any objections thereto, and will attempt in good faith to reach an
agreement with the Company as to any matters in dispute. If the Shareholders do
not give such notice within such fifteen (15) days, then Shareholders shall be
deemed to have waived the right to dispute the Closing Date Net Consideration
Calculation. If Shareholders give such notice within such fifteen (15) days, and
if the Company and the Shareholders, notwithstanding such good faith effort at
resolution, fail to resolve all matters in dispute within fifteen (15) days
after Company's receipt of Shareholders' objections, then any remaining disputed
matters will be finally and conclusively determined by an independent auditing
firm of recognized national standing (the "Arbiter") selected by the Company and
the Shareholders, which firm will not be the regular auditing firm of the
Company, Xxxxxxx, Shareholders, or any Affiliate thereof. Promptly, but not
later than forty-five (45) days after acceptance of its appointment, the Arbiter
will determine (based solely on presentations by the Shareholders and the
Company and not by independent review) only those matters in dispute and will
render a written report as to the disputed matters and the resulting calculation
of the Net Consideration under Section 2.2(a), which report will be conclusive
and final as to the Net Consideration for purposes of Section 2.2(a), but shall
not detract from the parties' remedies under Section 11. The fees and expenses
of the Arbiter will be paid by the non-prevailing party with respect to the
determination of the Arbiter as set forth in the Arbiter's report. The Arbiter's
final report shall be submitted to the Escrow Agent within ten (10) days after
it has been delivered to the Shareholders and the Company.
(c) For purposes of complying with the terms set forth in Section
2.3(b), each party will cooperate with and make available to the other party and
its auditors and representatives all information, records, data and auditors'
working papers, as may be reasonably required in connection with the preparation
and analysis of the Closing Date Net Consideration Calculation.
(d) In addition to all other rights and remedies under Section 11 of
this Agreement, the Company shall have recourse, subject to the Escrow
Agreement, to withhold and set off any unpaid portions of the Escrowed Shares or
proceeds from the sale thereof held in Escrow, in partial satisfaction of
Shareholders' obligations to the Company Indemnified Parties under Section 11 on
a dollar-for-dollar basis. No failure to withhold by Escrow Agent or the Company
any amount held in Escrow from Shareholders shall constitute a waiver or release
of any kind whatsoever.
2.4 Escrow. At the Closing, the Company shall cause to be deposited shares
of BE Stock valued at the BE Closing Price in an aggregate amount equal to the
Reference Price, minus Nine Hundred Thousand dollars ($900,000) (the "Escrowed
Shares"), into an escrow account ("Escrow") to be established with an escrow
agent (the "Escrow Agent") selected by the Company, reasonably acceptable to the
Shareholders, pursuant to an escrow agreement, dated the Effective Date,
substantially in the form of Exhibit E (the "Escrow Agreement"). The Escrow
Agent will hold the Escrowed Shares, or proceeds from the sale thereof, as
provided by the Escrow Agreement as security for the obligations of the
Shareholders under Sections 2.2 and 11.2 hereof. The Escrow Agreement shall
provide for the distribution of the Escrowed Shares (or proceeds from the sale
thereof) from the Escrow pursuant to Sections 2.2(a), (b), and (c), subject to
claims of the Company under Section 11.2 or reduction in the Net Consideration
under
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Section 2.2. Following the initial distribution from Escrow of Escrowed Shares,
or proceeds from the sale thereof, pursuant to Section 2.2(a), the Escrow Agent
shall hold the remaining Escrowed Shares, or proceeds therefrom, equal to Seven
and One-Half percent (7.5%) of the Net Consideration, subject to further
distribution under the Escrow Agreement.
Investment earnings on any balances of reinvested Net Proceeds of BE
Stock in the Escrow shall accrue to the benefit of the Shareholders, and any
fees from and after the Effective Date for maintaining the Escrow shall be paid
from the investment earnings balances in the Escrow, and if either not practical
or if necessary paid directly by the Shareholders. After payment or provision
for all Escrow expenses, the investment earnings may be from time to time
withdrawn from the Escrow at the request of the Shareholder's Representative to
the Escrow Agent and after giving notice thereof to the Company. No Escrowed
Shares, or proceeds from the sale thereof, shall be distributed to any
Shareholder except pursuant to the Escrow Agreement in compliance with the terms
and conditions of this Agreement. With respect to any Escrowed Shares released
from the Escrow to either the Shareholders or the Company such shares shall be
valued for purposes of satisfying the obligations owing under this Agreement at
the BE Closing Price without reference to the then actual market price of the BE
Stock. The Company and the Shareholders shall be responsible for, as applicable,
pro rata based on the distributions made under Sections 2.2(a), (b), and (c),
and without using any assets in the Escrow shall pay when due, any and all Taxes
imposed upon or arising from the Escrowed Shares. The Shareholders and Company
agree that all Escrowed Shares shall be sold by the Escrow Agent at the earliest
opportunity and the proceeds from the sale thereof shall be substituted in place
of the Escrowed Shares. Accordingly, the Shareholders hereby irrevocably
authorize and direct the Escrow Agent and any agents or representatives of the
Company to take any and all actions necessary or appropriate, in such Person's
sole and absolute discretion, to effect sales of Escrowed Shares on such terms
and conditions (and only on such terms and conditions), and at such times and
utilizing such underwriters and brokers, as shall be directed and approved by
the Company in a written notice (a "Sale Notice") to be delivered to the Escrow
Agent.
2.5 Guaranteed Proceeds; Mandatory and Optional Cash Payments. In the event
that the aggregate Net Proceeds (as defined below) received by the Shareholders
or the Escrow Agent from sales in the Public Offering of the BE Stock divided by
the number of shares of BE Stock sold are less than the BE Closing Price, then,
within five (5) days after closing of the Public Offering, the Company shall pay
to the Shareholders (or their designee or custodian), or, in regard to Escrowed
Shares, to the Escrow Agent, an aggregate amount equal to the Net Consideration
minus Nine Hundred Thousand dollars ($900,000) minus the sum of the Net Proceeds
received on account of the sales of BE Stock by the Shareholders or the Escrow
Agent, allocated according to actual amounts of the deficiency for each. In the
event that the aggregate Net Proceeds received by the Shareholders and the
Escrow Agent from the sale of BE Stock exceeds the Net Consideration minus Nine
Hundred Thousand dollars ($900,000), the Company shall have no obligation to
make any payment pursuant to this Section 2.5, and the Shareholders and the
Escrow Agent shall remit or cause to be remitted to the Company such excess
amounts within the five (5) day period described in the first sentence of this
Section 2.5. As used herein, "Net Proceeds" means (x) in the case of an
underwritten sale of BE Stock, the gross proceeds received by the Shareholders
and the Escrow Agent in such sale, net of underwriter's discounts, commissions
and other expenses paid by the Shareholders (whether incurred by the
Shareholders, the Company, the underwriters or any advisors) in connection with
such sale and
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(y) in the case of any other sale of such shares, the gross proceeds received by
the Shareholders and the Escrow Agent, net of selling commissions paid in
connection with such sale and all other expenses paid by the Shareholders
(whether incurred by the Shareholders, the Company, placement agents or any
broker dealers, in connection with such sale). In the event that not all of the
BE Stock received by the Shareholders or held in Escrow are sold in the Public
Offering, the Company shall have the right to terminate or withdraw any
registration initiated by it and to elect, at its sole option by giving written
notice to the Shareholders and the Escrow Agent, to pay the Shareholders or the
Escrow Agent in cash an amount per share of unsold BE Stock equal to the BE
Closing Price, and in exchange for such payment, the Shareholders and the Escrow
Agent shall transfer to the Company all right and interest in and to the shares
of BE Stock that they have not previously sold. If all unsold shares of BE Stock
are not theretofore paid for by the Company, then on or before the 175th day
after the Closing Date, each Shareholder may give written notice to the Company
requiring it to substitute cash on the 181st day after the Closing Date for any
or all of the unsold shares of BE Stock for an amount equal to the BE Closing
Price multiplied by the number of shares for which the Shareholder requires a
cash substitution from the Company (the "Substitution Right"). The Shareholders
may provide the Company with written notice of their election to exercise their
Substitution Right at any time prior to or on the 175th day after the Closing
Date, which election shall be revocable in writing by the Shareholder in whole
or in part at any time on or before said 175th day. The Company shall use
clearinghouse funds in exchange for each applicable Shareholder's BE Shares
pursuant to their exercise of the Substitution Right.
SECTION 3. CLOSING AND CLOSING DATE.
3.1 Closing. Subject to the provisions of Section 10, the consummation of
the transactions contemplated by this Agreement (the "Closing") will take place
at the offices of Yocca Patch & Yocca, LLP, 00000 XxxXxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxx, Xxxxxxxxxx, on March 21, 2001, or at such other place or on such
other date as the Company and the Shareholders may mutually agree, until fully
concluded. Notwithstanding the foregoing, the parties agree that the Company
intends, for financial reporting purposes, to treat the Closing as if it had
occurred on February 24, 2001 (the "Effective Date").
3.2 Closing Date. The date on which the Closing actually takes place is
referred to in this Agreement as the "Closing Date." Except as provided in
Section 3.1 for financial reporting purposes, the Closing will be deemed for all
other purposes under this Agreement to have occurred as of 12:01 A.M.,
California time, on the Closing Date.
3.3 Deliveries at the Closing. At the Closing, (a) the Shareholders will
deliver to the Company the various certificates, instruments, documents and
agreements referred to in Section 10.1, and (b) the Company will deliver to the
Shareholders the various certificates, instruments, documents and agreements
referred to in Section 10.2.
3.4 Bank Signature Cards. At closing, Xxxxxxx and the Shareholders, as
applicable, will deliver to the Company signature cards for all Xxxxxxx Bank
Accounts.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND SHAREHOLDERS. Each
representation and warranty contained in this Article 4 is qualified by the
disclosures made in the disclosure schedule attached hereto as Schedule 4 (the
"Disclosure Schedule"). Each part of the Disclosure Schedule is numbered to
correspond to the subsections of this Section 4. The Shareholders, severally and
jointly, and Xxxxxxx represent and warrant to the Company that the statements
contained in this Section 4 are correct and complete (except if the aggregate of
all Losses that could arise from the inaccuracy or incompleteness of any
statements, individually or in the aggregate, contained in this Section 4 do not
exceed One Hundred Thousand Dollars ($100,000)) as of the date of this Agreement
and will be correct and complete (except if the aggregate of all Losses that
could arise from the inaccuracy or incompleteness of any statements,
individually or in the aggregate, contained in this Section 4 do not exceed One
Hundred Thousand Dollars ($100,000)) as of the Closing Date.
4.1 Organization. Xxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, with full
corporate power and authority to carry on the business in which it is presently
engaged, and to own and use the properties owned and used by it and to
consummate the transactions contemplated hereby. Xxxxxxx is duly qualified to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where failure to be so qualified
would not have a Material Adverse Effect.
4.2 Authorization of Transaction. Each of the Shareholders has the capacity
and full power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement, and the other agreements
required to be executed and delivered by Xxxxxxx or the Shareholders pursuant
hereto, have been or at the Closing Date shall have been duly executed and
delivered by Xxxxxxx or the Shareholders, as the case may be, and constitute or
at such time shall constitute the valid and legally binding obligation of
Xxxxxxx or the Shareholders, enforceable in accordance with its terms and
conditions, except as such enforceability may be limited by general principles
of equity and bankruptcy, insolvency, reorganization and moratorium and other
similar laws relating to creditors' rights.
4.3 Noncontravention; Consents.
(a) Neither the execution nor delivery of this Agreement, nor the
consummation by Xxxxxxx and the Shareholders of the transactions contemplated
hereby, will violate any Law to which Xxxxxxx or the Shareholders are subject or
any provision of the articles of incorporation or bylaws of Xxxxxxx. Except as
set forth on Schedule 4.3(a), neither the execution and delivery of this
Agreement by the Shareholders, nor the consummation by Xxxxxxx or the
Shareholders of the transactions contemplated hereby, will constitute a
violation of, be in conflict with, constitute or create a default under or
result in the creation or imposition of any Lien upon any property of Xxxxxxx
pursuant to any agreement or commitment to which Xxxxxxx or any of the
Shareholders is a party or by which Xxxxxxx, the Shareholders or any of their
respective properties (including Xxxxxxx Shares) is bound or to which Xxxxxxx,
the Shareholders or any of such properties is subject.
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(b) Except as set forth on Schedule 4.3(b), Xxxxxxx and the
Shareholders have given all required notices and obtained all licenses, Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities as are required in order to enable the Shareholders to perform their
obligations under this Agreement, including all consents and approvals required
to permit the Shareholders to transfer all of the Xxxxxxx Shares to the Company.
No Contract relating to Xxxxxxx has been amended to increase the amount payable
thereunder or otherwise modify the terms thereof in order to obtain any such
consent, approval or authorization.
4.4 Capitalization. Schedule 4.4 sets forth for Xxxxxxx (i) the number of
shares of authorized capital stock of each class of its capital stock, (ii) the
number of issued and outstanding shares of each class of its capital stock,
(iii) the names of its directors and elected officers, and (iv) the owners of
its capital stock. The Shareholders have delivered to the Company correct and
complete copies of the articles of incorporation and bylaws of Xxxxxxx as
amended to date. All of the issued and outstanding shares of capital stock of
Xxxxxxx have been duly authorized and are validly issued, fully paid and
nonassessable. As of immediately prior to the Closing the Shareholders hold of
record and own beneficially, and upon the Closing the Shareholders shall
transfer, assign and convey to Company, all right, title and interest in and to
all of the outstanding shares of stock of Xxxxxxx, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act, and
applicable state securities laws), Taxes, Liens, options, warrants, purchase
rights, contracts, commitments, equities, claims or demands. Except as set forth
on Schedule 4.4, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other contracts or commitments that could require the Shareholders or Xxxxxxx to
sell, transfer or otherwise dispose of any capital stock of Xxxxxxx or that
could require Xxxxxxx to issue, sell or otherwise cause to become outstanding
any of its own capital stock. There are no outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to Xxxxxxx.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of Xxxxxxx. Xxxxxxx is not in default
under or in violation of any provision of its articles of incorporation or
bylaws. Except as set forth on Schedule 4.4, Xxxxxxx neither controls directly
or indirectly, nor has any direct or indirect equity participation in, any
Person.
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4.5 Financial Statements. Set forth in Schedule 4.5(a-1) are correct and
complete copies of the unaudited balance sheets of Xxxxxxx as of June 30, 1998,
June 30, 1999 and June 30, 2000 and the related statements of income for the
years then ended (the "Year-End Financial Statements"). The Year-End Financial
Statements were prepared consistent with past accounting practices and present
fairly the financial condition and the results of operations of Xxxxxxx on a
consolidated basis as of the dates and for the periods indicated therein in
accordance with GAAP (except as set forth in Schedule 4.5(a-2)). Set forth in
Schedule 4.5(a-3) are correct and complete copies of the unaudited balance sheet
of Xxxxxxx as of February 28, 2001 and the related statements of income for the
four months then ended (the "Interim Financial Statements"). The Interim
Financial Statements were prepared consistent with past accounting practices and
present fairly the financial condition and the results of operations of Xxxxxxx
on a consolidated basis as of the date and for the period indicated in
accordance with GAAP (except as set forth in Schedule 4.5(a-2)), except for
normal year-end adjustments.
4.6 Undisclosed Liabilities. Xxxxxxx has no Liabilities that exceed,
individually or in the aggregate, One Hundred Thousand Dollars ($100,000),
except for liabilities and obligations (i) reflected or reserved for on the
Interim Financial Statements, (ii) that have arisen since the date of the
Interim Financial Statements in the ordinary course of the operation of Xxxxxxx
(none of which results from, arises out of, relates to, any breach of contract,
breach of warranty, tort, infringement or violation of Law) or (iii) as set
forth on Schedule 4.6.
4.7 Customers and Suppliers. Except as set forth in Schedule 4.7(a-1),
since June 30, 2000, to Xxxxxxx'x Actual Knowledge, no event or condition has
arisen that would reasonably be expected to result in any of the major customers
or sole-source or key suppliers of Xxxxxxx to cease doing business with Xxxxxxx
or to curtail its business with Xxxxxxx in any material respect. Xxxxxxx and the
Shareholders have received no notice from any major customers or major suppliers
that the transactions contemplated by this Agreement will result in a material
change in the manner of conducting business with Xxxxxxx. Listed in Schedule
4.7(a-2) are the names and addresses of Xxxxxxx'x customers for the year ended
June 30, 2000 and the eight months ended February 28, 2001. Listed in Schedule
4.7(a-3) are the names and addresses of all suppliers and all sole source
suppliers to Xxxxxxx for the year ended June 30, 2000 and the eight months ended
February 28, 2001.
4.8 Events Subsequent to Most Recent Fiscal Year End. Since June 30, 2000,
there has not been any Material Adverse Effect in the business, financial
condition, operations, results of operations or future prospects of Xxxxxxx,
except as disclosed on Schedule 4.8.
4.9 Accounts Receivable. The accounts receivable reflected on the Interim
Financial Statements, including any associated reserves, are bona fide
receivables, accounted for on a basis consistent with that used in the
preparation of the Interim Financial Statements, representing amounts due with
respect to actual transactions in the ordinary course of the operation of
Xxxxxxx.
4.10 Tax Matters.
(a) Except as set forth in Schedule 4.10, (i) all Tax Returns that are
required to be filed by or with respect to Xxxxxxx, have been duly filed, and
Xxxxxxx is not the
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beneficiary of any extension of time within which to file any Tax Return, (ii)
the Shareholders have delivered to the Company correct and complete copies of
all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by Xxxxxxx for the last three taxable
years, (iii) such Tax Returns are true, complete and correct in all material
respects, (iv) all Taxes due and payable by Xxxxxxx have been paid in full, (v)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of Xxxxxxx, (vi) to Xxxxxxx'x Actual Knowledge there is no
claim or assessment threatened by any taxing authority against Xxxxxxx, (vii)
Xxxxxxx has withheld and timely paid to the appropriate taxing authority the
required amounts in compliance with all Tax withholding provisions of applicable
Laws, (viii) no written claim has ever been made by an authority in a
jurisdiction where Xxxxxxx does not file Tax Returns that Xxxxxxx may be subject
to taxation by that jurisdiction, and (ix) there are no Liens (other than Liens
attributable to Taxes not yet due and payable) on any of the assets of Xxxxxxx
that arose in connection with any failure (or alleged failure) to pay any Tax.
(b) Except as set forth in Schedule 4.10(b), no Shareholder, director
or officer (or employee responsible for Tax matters) of Xxxxxxx expects any
authority to assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of Xxxxxxx either (i) claimed or
raised by any authority in writing or (ii) as to which any of Xxxxxxx or the
Shareholders have Knowledge based upon contact with any such authority. No
federal, state, local, and foreign income Tax Returns filed with respect to
Xxxxxxx have been audited and none are currently open or the subject of audit.
(c) Xxxxxxx does not have any Liability for the Taxes of any Person
other than Xxxxxxx under Treasury Regulation Section 1.1502-6 (or any similar
provision of Law), as a transferee or successor, by contract, or otherwise.
(d) Xxxxxxx has not filed a consent under Code Section 341(f)
concerning collapsible corporations. Xxxxxxx has not to its Knowledge made any
payments that were treated as deductible that should be nondeductible under Code
Section 162 or Code Section 404. Xxxxxxx has not made any payments, nor is it
obligated to make any payments, nor is it a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. Maynard has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii). Xxxxxxx has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of the Code Section 6662.
(e) No Xxxxxxx asset is property which Xxxxxxx is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code. None of the Xxxxxxx assets
is "Tax-exempt use property" within the meaning of Section 168(h) of the Code.
Xxxxxxx has not agreed to make, nor is it required to make, any adjustment under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise. Xxxxxxx has not participated in (and will not participate in) an
international boycott within the meaning of Section 999 of the Code. Xxxxxxx is
not a person other than a United States person within the meaning of the Code.
The payments contemplated in Section 2, other than as to investment earnings,
are not subject to the Tax withholding
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provisions of Code Section 3406, or of subchapter A of Chapter 3, of the Code or
of any other provision of Law. Xxxxxxx does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States of America and such foreign country.
Xxxxxxx is not a party to any joint venture, partnership, or other arrangement
or contract that could be treated as a partnership for federal income Tax
purposes.
(f) Except as disclosed on Schedule 4.10(f), Xxxxxxx has duly and
timely paid all Taxes relating to the business of Xxxxxxx (whether or not shown
on any Tax Return) due to any Governmental Entity prior to the Closing, and all
such Taxes have been taken into account, as applicable in determining Net Taxes
or Net Consideration calculation.
4.11 Contracts.
(a) Schedule 4.11 contains a list of all material Contracts, including
a description of the terms of all material Contracts not in writing. Without
limiting the foregoing, all non-cancelable Contracts involving consideration in
excess of $100,000 or having a duration of more than one year shall be deemed
material.
(b) The Shareholders have made available to the Company correct and
complete copies of all items, as amended, listed on Schedule 4.11 that are in
writing, and the descriptions contained on Schedule 4.11 of all items listed
therein that are not in writing are complete and correct in all material
respects. Each Contract listed on Schedule 4.11 is a valid, binding and
enforceable obligation of Xxxxxxx and to Xxxxxxx'x Actual Knowledge, the other
party or parties thereto and is in full force and effect. Except as set forth on
Schedule 4.11, (i) neither Xxxxxxx nor, to Xxxxxxx'x Actual Knowledge, any other
party thereto, is in material breach of any term of any Contract listed on
Schedule 4.11 or has repudiated any term of any Contract listed on Schedule
4.11, (ii) no event, occurrence or condition exists that, with the lapse of
time, the giving of notice, or both, would become a material default under any
Contract listed on Schedule 4.11 by Xxxxxxx or, to Xxxxxxx'x Knowledge, any
other party thereto, (iii) Xxxxxxx has not waived or released any of its
material rights under any Contract listed on Schedule 4.11, and (iv) neither
Xxxxxxx nor the Shareholders have received any communication questioning the
validity or enforceability of any Contract listed on Schedule 4.11. Except as
set forth on Schedule 4.11, the execution, delivery and consummation of the
transactions contemplated by this Agreement shall not constitute a breach or
default under, or give rise to a right of termination under or otherwise
adversely affect any provision of any of the Contracts listed on Schedule 4.11.
4.12 Real Property.
(a) Schedule 4.12(a-1) lists all lease and sublease agreements relating
to real property leased or subleased by Xxxxxxx. Except as set forth on Schedule
4.12(a-2), with respect to each such lease and sublease:
(i) such lease or sublease constitutes the entire agreement to which
Xxxxxxx is a party with respect to the real property leased thereunder;
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(ii) Xxxxxxx has not assigned, sublet, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or sub
leasehold;
(iii) all facilities leased or subleased thereunder have received
all material approvals of Governmental Entities (including all material Permits)
required in connection with the operation thereof and have been operated and
maintained in all material respects in accordance with all applicable Laws; and
(iv) there is no action, suit or proceeding pending against Xxxxxxx
or, to Shareholders' Knowledge, any action, suit or proceeding pending or
threatened against Xxxxxxx or any third party that would interfere with the
quiet enjoyment of such leased real property after the Closing Date;
(v) each lease and sublease is a valid, binding, and enforceable
obligation of Xxxxxxx and is in full force and effect;
(vi) there is no breach of any term of any such lease and sublease
and no event, occurrence or condition exists that, with the lapse of time, the
giving of notice, or both, would become a default under any such lease or
sublease by Xxxxxxx, or to Xxxxxxx'x Actual Knowledge any other party thereto;
(vii) neither Xxxxxxx, nor the Shareholders have waived nor released
any of Xxxxxxx'x rights under any such lease or sublease;
(viii) neither Xxxxxxx, nor the Shareholders, have received any
communication questioning the validity or enforceability of any such lease or
sublease; and
(ix) the execution, delivery and consummation of the transaction
contemplated by this Agreement shall not constitute a breach or default under,
or give rise to a right of termination under or, to Xxxxxxx'x Actual Knowledge
otherwise adversely affect any provision of any such leases and subleases.
(b) All of the real property and facilities currently used by Xxxxxxx,
and all components of all improvements included within such property, are in
good working order and repair, reasonable wear and tear excepted, and do not
require material repair or replacement in order to serve their intended purposes
in all material respects, including use and operation consistent with their
present use and operation, except for scheduled maintenance, repairs and
replacements conducted or required in the ordinary course of the operation of
such real property or improvements.
(c) Other than options, rights of first refusal or other similar
arrangements in favor of Xxxxxxx under the leases and subleases relating to the
real property leased by Xxxxxxx, Xxxxxxx has not entered into any contract,
arrangement or understanding with respect to the future ownership, development,
use, occupancy or operation of any parcel of real property.
(d) There are no pending or threatened or contemplated condemnation or
eminent domain proceedings that affect the real property leased by Xxxxxxx, and
Xxxxxxx has
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not received any notice, oral or written, of the intention of any Governmental
Entity or other Person to take or use all or any part thereof.
(e) Since Xxxxxxx'x leasing of the real property currently leased or
subleased by Xxxxxxx, none of such property or any part thereof has suffered any
material damage by fire or other casualty that has not been completely restored.
(f) Xxxxxxx has not received any written notice from any insurance
company that has issued a policy to Xxxxxxx with respect to any of its leased
real property requiring the performance of any structural or other repairs or
alterations to such property.
(g) Disclosed in Schedule 4.12(g) is a list of real properties that
Xxxxxxx now owns, and a list to Xxxxxxx'x Knowledge of any other real property
that Xxxxxxx has ever owned previously. All real property previously leased by
Xxxxxxx, to Xxxxxxx'x Knowledge, is identified as such in Schedule 4.12(g).
4.13 Title and Related Matters. Except as set forth on Schedule 4.13(1),
Xxxxxxx now has, and on the Closing Date will have, good and marketable title to
(or a valid leasehold interest in) all the properties and assets used by Xxxxxxx
in its business or as shown on the Interim Financial Statements, free and clear
of all Liens, except for properties and assets disposed of in the Ordinary
Course of Business. Schedule 4.13(2) lists all asset used by Xxxxxxx in its
business that are, or as of the Closing Date shall become, the property of the
Shareholders.
4.14 Intellectual Property.
(a) Xxxxxxx owns or has the right to use pursuant to a valid license,
sublicense, agreement or permission all Intellectual Property necessary for the
operations of Xxxxxxx as presently conducted. Xxxxxxx owns common law Trademark
rights to the Xxxxxxx Precision name and xxxx.
(b) To Xxxxxxx'x Actual Knowledge, Xxxxxxx has not interfered with, nor
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties. Xxxxxxx has not received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including any claim that it must
license or refrain from using any Intellectual Property rights of any third
party). To Xxxxxxx'x Actual Knowledge, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of Xxxxxxx.
(c) Schedule 4.14(c) identifies each patent and each registered
Trademark, and copyright owned by Xxxxxxx and identifies each pending patent
application or application for registration that has been filed by Xxxxxxx. The
Shareholders have made available to the Company correct and complete copies of
all such patents, registrations and applications, each as amended to date, and
correct and complete copies of all other written documentation evidencing
ownership and prosecution of each such item. With respect to each such item of
Intellectual Property required to be identified in Schedule 4.14(c):
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(i) Xxxxxxx possesses all right, title and interest in and to such
item, free and clear of any Lien, license or other restriction;
(ii) such item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to Xxxxxxx'x Actual Knowledge,
threatened that challenges the legality, validity, enforceability, use or
ownership of such item; and
(iv) Xxxxxxx has not agreed to indemnify any Person for or against
any interference, infringement, misappropriation or other conflict with respect
to such item except to the extent specifically disclosed in Schedule 4.14(c).
(d) Schedule 4.14(d) identifies each license, sublicense, agreement or
permission pursuant to which Xxxxxxx uses any item of Intellectual Property.
With respect to each such license, sublicense, agreement or permission:
(i) to Xxxxxxx'x Actual Knowledge, the underlying item of
Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, ruling or charge;
(ii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to Xxxxxxx'x Actual Knowledge,
threatened that challenges the legality, validity or enforceability of the
underlying item of Intellectual Property;
(iii) the execution, delivery and consummation of transactions
contemplated by this Agreement shall not constitute a breach or default or, give
rise to a right of termination thereunder, or otherwise adversely affect the
ability of Xxxxxxx, the Company or its Affiliates to use the Intellectual
Property in conducting the business of Xxxxxxx after the Closing Date;
(iv) Xxxxxxx has not granted any sublicense or similar right with
respect to such license, sublicense, agreement or permission; and
(v) each such license, sublicense and permission listed in Schedule
4.14(d) is a valid, binding and enforceable obligation of Xxxxxxx, and to
Xxxxxxx'x Actual Knowledge of the other party or parties thereto, and is in full
force and effect. Except as set forth on Schedule 4.14(d), (A) neither Xxxxxxx
nor, to Xxxxxxx'x Actual Knowledge, any other party thereto, is in breach of any
term of any license, sublicense and permission, and has repudiated any term of
any license, sublease or permission; (B) no event, occurrence or condition
exists that, with the lapse of time, the giving of notice, or both, would become
a default under any license, sublease, or permission by Xxxxxxx, or, to
Xxxxxxx'x Actual Knowledge any other party thereto; (C) Xxxxxxx has neither
waived nor released any of its rights under any license, sublease or permission;
and (D) neither Xxxxxxx, nor the Shareholders, have received any communication
questioning the validity or enforceability of any license, sublicense, or
permission. Except as set forth on Schedule 4.14(d), the execution, delivery and
consummation of the transactions contemplated by this Agreement shall not
constitute a breach or default under,
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or give rise to a right of termination under or, to the Actual Knowledge of
Xxxxxxx otherwise adversely affect any provision of any of the license,
sublicense or permission.
4.15 Litigation. Schedule 4.15 sets forth each instance in which Xxxxxxx is
(a) subject to any unsatisfied judgment order, decree, stipulation, injunction
or charge or (b) a party to or, to Xxxxxxx'x Actual Knowledge, is threatened to
be made a party to any charge, complaint, action, suit, proceeding, hearing or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction, or (c) subject to any Product
Recall relating to Xxxxxxx since Xxxxxxx'x incorporation. There are no judicial
or administrative actions, proceedings or investigations pending or, to
Xxxxxxx'x Actual Knowledge, threatened that question the validity of this
Agreement or any action taken or to be taken by Xxxxxxx or the Shareholders in
connection with this Agreement or that, if adversely determined, would have a
material adverse effect upon Xxxxxxx or the Shareholders' ability to enter into
or perform their respective obligations under or contemplated by this Agreement
to which any of them is a party.
4.16 Employee Benefits.
(a) Schedule 4.16(a) lists each Employee Benefit Plan that Xxxxxxx
maintains with respect to the current or former employees of Xxxxxxx, or to
which Xxxxxxx contributes with respect to any of the current or former employees
of Xxxxxxx. With respect to each such Employee Benefit Plan:
(i) such Employee Benefit Plan (and each related trust, insurance
contract or fund) complies in form and in operation in all respects with the
applicable requirements of ERISA, the Code and other applicable Laws;
(ii) all required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions) have been
filed or distributed appropriately with respect to such Employee Benefit Plan
and the requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Code have been met with respect to each such Employee Benefit Plan
which is a "group health plan" as such term is defined in Section 5000(b)(1) of
the Code;;
(iii) all contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to, or
accrued for, each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending before the Closing Date
which are not yet due have been paid to each such Employee Pension Benefit Plan.
All premiums or other payments for all periods ending before the Closing Date
have been paid with respect to each such Employee Benefit Plan that is an
Employee Welfare Benefit Plan. Nothing has occurred or is expected to occur
which would cause a material increase in the cost of providing benefits under
such Employee Benefit Plan;
(iv) each such Employee Benefit Plan which is an Employee Pension
Benefit Plan was at all times in its existence intended to satisfy the
requirements of a "qualified plan" under Section 401(a) of the Code, has at all
such times met such requirements in all material respects to Xxxxxxx'x Knowledge
and has received, within the last two years, a
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favorable determination letter from the IRS, and its related trust has been
determined to be exempt from taxation under Section 501(a) of the Code. Nothing
has occurred since the date of such favorable determination letter that would
adversely affect such qualification or exemption, and Xxxxxxx will not incur
costs or expenses, including any Taxes, as a result of an Employee Benefit Plan
failing of any condition of such qualification or exemption for Pre-Closing
Periods or by reason of pre-closing actions or omissions; and
(v) the Shareholders have made available to the Company correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the IRS, the most recent Form 5500
Annual Report, and all related trust agreements, insurance contracts and other
funding agreements which implement such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that Xxxxxxx maintains
or ever has maintained, or to which it contributes, ever has contributed or ever
has been required to contribute, there have been no Prohibited Transactions with
respect to such Employee Benefit Plan, no fiduciary has any liability for breach
of fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of such Employee Benefit Plan, and no
action, suit, proceeding, hearing or investigation with respect to the
administration or the investment of the assets of such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to Xxxxxxx'x Knowledge,
threatened.
(c) Except as set forth on Schedule 4.16(c), Xxxxxxx does not
contribute to, nor has ever contributed to or has ever been required to
contribute to any Multi-employer Plan or has any liability (including withdrawal
liability) under any Multi-employer Plan. None of the transactions contemplated
by this Agreement or any Shareholders' Ancillary Agreements will trigger any
withdrawal or termination liability under any Multi-employer Plan set forth on
Schedule 4.16(c).
4.17 Environmental Matters.
(a) (i) Xxxxxxx is and has been in compliance with all applicable
Environmental Laws and Safety Laws, the violation of which could have a Material
Adverse Effect;
(ii) Xxxxxxx has obtained, and is and has been in compliance in all
material respects with the conditions of, all applicable Environmental Permits
required heretofore and all required continuations or renewals thereof through
the Closing Date;
(iii) there are no past or present events, conditions or
circumstances related to environmental or health and safety matters that are
likely to have a Material Adverse Effect or which would interfere with
compliance with any Environmental Law or Permit or Safety Law is likely to have
a Material Adverse Effect;
(iv) there are no circumstances or conditions present at or arising
out of the present or, to the Knowledge of the Shareholders, the former, assets,
properties, leaseholds, businesses or operations of Xxxxxxx in respect of
off-site storage, transportation or disposal of,
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or any off-site Release of, Hazardous Materials which reasonably may be expected
to give rise to any Environmental Liabilities and Costs which could have a
Material Adverse Effect;
(v) there are no circumstances or conditions present at or arising
out of the present or, to the Knowledge of the Shareholders, the former, assets,
properties, leaseholds, businesses or operations of Xxxxxxx, including but not
limited to any on-site storage, use, disposal or Release of Hazardous Materials,
which reasonably may be expected to give rise to any Environmental Liabilities
and Costs or Safety Liability and Costs which could have a Material Adverse
Effect;
(vi) neither Xxxxxxx nor the Shareholders nor the present nor, to
the Knowledge of the Shareholders, the past, assets, properties, business,
leaseholds or operations of Xxxxxxx has received or is subject to, or within the
past three years has been subject to, any outstanding order, decree, judgment,
complaint, agreement, claim, citation, or notice or is subject to any ongoing
judicial or administrative proceeding indicating that Xxxxxxx or any of the past
assets, properties, real property business, leaseholds or operations of Xxxxxxx
of which Xxxxxxx has Knowledge or any of the present such property and assets of
Xxxxxxx are or may be: (A) in violation of any Environmental Laws; (B) in
violation of any Safety Laws; (C) responsible for the on-site or off-site
storage or Release of any Hazardous Materials; or, (D) liable for any
Environmental Liabilities and Costs or Safety Liabilities and Costs;
(vii) no investigation or review with respect to such matters is
pending or, to the Knowledge of Xxxxxxx or the Shareholders, is threatened;
(viii) neither the business of Xxxxxxx nor any of its properties or
assets is subject to, or as a result of the transactions contemplated by this
Agreement will be subject to, the requirements of any Environmental Laws which
require notice, disclosure, cleanup or approval prior to transfer of the shares
or the business of Xxxxxxx or which will impose Liens on any such asset or
property or otherwise interfere with or affect the business of Xxxxxxx;
(ix) Schedule 4.17(a)(ix) lists all off-site locations, including,
without limitation, commercial waste disposal facilities or municipal landfills,
to which or at which Hazardous Materials originating from Xxxxxxx, or its
assets, properties or business have been sent (or otherwise have come to be
located) in amounts that would require a waste manifest under the Resource
Conservation and Recovery Act of 1976 as now in effect for treatment, storage,
disposal, reuse or recycling;
(x) Schedule 4.17(a)(x) of the Disclosure Schedule sets forth a list
of all underground storage tanks owned or operated by Xxxxxxx to its Actual
Knowledge and except as disclosed in Schedule 4.17(a)(x) of the Disclosure
Schedule, no such tank is leaking or has leaked at any time in the past, and
there is no pollution or contamination of the Environment caused by or
contributed to or threatened by a Release of a Hazardous Materials from any such
tank;
(xi) Schedule 4.17(a)(xi) lists all environmental audits,
inspections, assessments, investigations or similar reports in Xxxxxxx'x
possession relating to the assets, properties, or business of Xxxxxxx currently
or to the Knowledge of Xxxxxxx, the past assets,
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properties or business of Xxxxxxx, or the compliance of the same with applicable
Environmental Laws and Safety Laws;
(xii) Schedule 4.17(a)(xii) sets forth to Xxxxxxx'x Knowledge the
nature and quantities of any Hazardous Materials (as defined below) generated,
transported or disposed of by Xxxxxxx during the past three years (other than
raw material awaiting manufacturing, work-in-process or finished goods and
through the sale of products in the ordinary course of business), together with
a description of the location of each such activity; and
(xiii) Schedule 4.17(a)(xiii) sets forth to Xxxxxxx'x Knowledge a
summary of the nature and quantities of any Hazardous Materials that have been
disposed of or found at any site or facility owned or operated presently or at
any previous time by Xxxxxxx (other than raw material awaiting manufacturing,
work-in-process or finished goods and through the sale of products in the
ordinary course of business).
For purposes of this Section 4.17 only, all references to "Xxxxxxx"
are intended to include any and all other Persons that may be considered a
successor under applicable Environmental Laws.
4.18 Legal Compliance. Except as set forth on Schedule 4.18, Xxxxxxx has
complied in all material respects with all applicable Laws and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against or, to Xxxxxxx'x Knowledge, has been
threatened against Xxxxxxx alleging any failure to so comply, and Xxxxxxx has
not been debarred from bidding on any project for any Governmental Entity nor
subject to any debarment proceedings involving any Governmental Entity.
4.19 Insurance. Schedule 4.19 contains a correct and complete list of all
insurance policies pursuant to which Xxxxxxx is insured as of the date of this
Agreement, and no such policies subject Xxxxxxx to any obligations for
retrospective claims or adjustments.
4.20 Bank Accounts and Powers. Schedule 4.20 lists by name, address and
account number each bank, trust company, savings institution, brokerage firm,
mutual fund or other financial institution with which Xxxxxxx has an account or
safe deposit box and the names and identification of all Persons authorized to
draw thereon or to have access thereto. Schedule 4.20 lists the names of each
Person holding powers of attorney or agency authority from Xxxxxxx, and a
summary of the terms thereof.
4.21 Brokers' Fees. Except as set forth in Schedule 4.21, neither Xxxxxxx
nor the Shareholders have any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Company could become liable or
obligated or for which Xxxxxxx, after the Closing Date, will have any continuing
obligation.
4.22 RESERVED.
4.23 Equipment.
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(a) Schedule 4.23(a-1) lists all lease agreements relating to equipment,
furniture or trade fixtures leased by Xxxxxxx with an annual cost in excess of
$50,000. Except as set forth on Schedule 4.23(a-1), all equipment, furniture or
trade fixtures used or located in the business or operations of Xxxxxxx is in
good working order and repair, reasonable wear and tear excepted, have been
operated and maintained in all material respects in accordance with all
applicable Laws; and do not require material repair or replacement in order to
serve their intended purposes in all material respects, including use and
operation consistent with their present use and operation, except for scheduled
maintenance, repairs and replacements conducted or required in the ordinary
course of the operation thereof. Xxxxxxx has not received any written notice
from any insurance company that has issued a policy to Xxxxxxx with respect to
any of its equipment, including trade fixtures, requiring the performance of any
structural or other repairs or alterations to such property.
(b) Schedule 4.23(b-1) lists all material personal property owned by
Xxxxxxx. Except as listed on Schedule 4.23(b-2), all material personal property
used in connection with, or in furtherance of Xxxxxxx'x business or operations
is listed on Schedule 4.23(b-1) and is the property of Xxxxxxx subject to any
leases identified in Schedule 4.23 (a-1).
4.24 Product Warranties and Liabilities. Schedule 4.24 sets forth all
Warranties given or made by Xxxxxxx. Xxxxxxx has not extended or granted any
return rights or given or made any Warranties with respect to any Products sold
or services performed by it, except for those set forth in Schedule 4.24. None
of the customers of Xxxxxxx has claimed to Xxxxxxx or to Xxxxxxx'x suppliers,
that Xxxxxxx'x Products are defective. None of the Shareholders nor any of the
Key Employees of Xxxxxxx has any Actual Knowledge of any Products which have
been shipped by Xxxxxxx in a condition that such products might reasonably be
expected to be returned by the customer, or of any intention on the part of any
customer to return any of Xxxxxxx'x Products, except returns by customers in the
ordinary course of business and consistent with the return policies and which,
in any event, are not expected to be material in amount. Xxxxxxx has never
received nor been subject to any claim, and none of the Shareholders has any
Actual Knowledge of any fact or of the occurrence of any event forming the basis
of any present or future claim against Xxxxxxx, whether or not fully covered by
insurance, for liability on account of negligence or product liability or on
account of any Warranties.
4.25 Aerospace Records. Xxxxxxx has maintained complete and accurate
records relating to all products in accordance with industry standards and as
required by all applicable Laws or regulations.
4.26 Securities Law Compliance.
(a) In connection with the issuance of the BE Stock as of the Closing,
the Shareholders have been advised and understand and agree that the issuance by
the Company to the Shareholders of the BE Stock will not be registered under the
Securities Act, nor qualified under any state securities laws before the
Closing, on the ground (among others) that no distribution or public offering of
the BE Stock is to be effected in connection with the issuance to such
Shareholder as contemplated herein and, in issuing the BE Stock to such
Shareholder hereunder, the Company is relying on the accuracy and completeness
of the representations of the Shareholder set forth in this Section 4.26(a).
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(b) The Shareholder is acquiring the BE Stock for the Shareholder's own
account, for investment and not with a view to distribution or resale thereof.
The Shareholder will immediately notify the Company if such intent changes prior
to the Closing. The Shareholder's only present intention to sell the BE Stock
would be pursuant to an effective registration and qualification under
applicable federal and states securities law or pursuant to the Substitution
Right.
(c) The Shareholder acknowledges that the Shareholder has been informed
and understands that the BE Stock may not be sold or transferred except in
compliance with the Securities Act or any exemption thereunder, and there is no
assurance that any exemption from registration, including Rule 144, under the
Securities Act will become available to permit resales of the BE Stock. This
acknowledgement does not limit or constitute a waiver of the Company's
obligations set forth in Sections 2.5 and 8.5.
(d) The Shareholder (i) is familiar with the business of the Company,
(ii) has had an opportunity to discuss with representatives of the Company the
condition of and prospects for the continued operation of the Company and such
other matters as the Shareholder deemed appropriate in considering whether to
invest in the BE Stock, and (iii) has been provided access to publicly available
information about the Company requested by the Shareholder.
(e) The Shareholder has made the Shareholder's own investigation
whether or not to exchange the Xxxxxxx Shares for the BE Stock and the
Shareholder has sufficient business and financial experience so as to enable the
Shareholder to evaluate the merits and risks associated with the BE Stock and
the transactions contemplated by this Agreement.
(f) The Shareholder is an accredited investor and sophisticated, as
defined under Sections 501(a) and 506, respectively, of Regulation D promulgated
under the Securities Act.
(g) The Shareholder acknowledges and agrees that the certificates
representing the BE Stock shall contain a restrictive legend substantially in
the form below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(h) The Shareholder's investor representations made in any separately
signed writing are true and were true when made.
(i) The Shareholder acknowledges that he has been fully informed of,
and has had full opportunity to discuss with the Company's management, the
status of the Company and its operating, investment, financial and strategic
plans.
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4.27 Permits and Licenses. Set forth in Schedule 4.27(a-1) are the material
Permits, licenses, franchises and other authorizations necessary for the conduct
of Xxxxxxx'x business as currently conducted. Except as set forth in Schedule
4.27(a-2), all such Permits, licenses, franchises and authorizations identified
on Schedule 4.27(a-1), are valid and in full force and effect and the business
is in compliance with the terms and conditions of such Permits.
4.28 Experience Matters. Schedule 4.28 contains a reasonably detailed
description of the history of the experience of Xxxxxxx'x business during the
two (2) years ending on the date hereof with respect to (i) product liability
claims and general liability claims exceeding $10,000, and (ii) all workers'
compensation claims.
4.29 Related Party Transactions. Except as described on Schedule 4.29,
neither the Shareholders nor any officer, director or employee of Xxxxxxx, and
none of their relatives or Affiliates, owns any interest in any competitor,
lessor, lessee or customer or supplier of Xxxxxxx; and Xxxxxxx is not a party to
any transaction or arrangement with any of the Shareholders or with any of its
respective officers, directors or employees, or any relative or Affiliate of any
of them, which relates to or affects the ownership, lease or use or disposition
of any assets, properties or the operations of Xxxxxxx or the sale, lease or use
of goods or services, or the loan of money or any extension of credit or
guaranty, by or to Xxxxxxx, other than the payment of wages, salaries and
bonuses to employees of Xxxxxxx for services performed in the Ordinary Course of
Business. Except as disclosed in the Financial Statements or described on
Schedule 4.29, none of the assets or properties of Xxxxxxx include any
receivables or contract rights from, or notes payable or evidences of
indebtedness of, either of the Shareholders or any of the officers, directors or
employees of Xxxxxxx or any relative or Affiliate of any of them.
4.30 Full Disclosure. No representation or warranty of the Shareholders
contained in this Agreement contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
not misleading.
4.31 Minute Books. Xxxxxxx'x minute books contain complete and accurate
records in all material respects of all meetings and other corporate actions of
its Shareholders and boards of directors and committees thereof.
4.32 Government Contracts. Except as set forth on Schedule 4.32, Xxxxxxx
has not been and is not a party to any Contract with a Governmental Entity.
4.33 Inventory. Except as set forth on Schedule 4.33, all Inventories are
stored at the principal manufacturing facility of Xxxxxxx. Except as set forth
on Schedule 4.33, as of the Closing Date Xxxxxxx owns free of any Liens all
Inventory at its manufacturing facility, and all Inventory in process at third
parties' facilities.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Shareholders that the statements contained in this Section 5
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though then made and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 5).
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5.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. The Company is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company.
5.2 Authorization of Transaction. The Company has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. All corporate and other actions or proceedings
to be taken by or on the part of the Company to authorize and permit the
execution and delivery by the Company of this Agreement and the other agreements
required to be executed and delivered by the Company pursuant hereto, the
performance by the Company of its obligations hereunder, and the consummation by
the Company of the transactions contemplated herein, have been duly and properly
taken. This Agreement has been duly executed and delivered by the Company and
constitutes the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms and conditions, except to the
extent that enforceability hereof may be limited by bankruptcy, insolvency and
other similar Laws affecting the enforcement of creditors' rights generally.
5.3 Noncontravention; Consents.
Neither the execution and the delivery of this Agreement, nor the
consummation by the Company of the transactions contemplated hereby will (i)
violate any Law or other restriction of any Governmental Entity to which the
Company is subject or violate any provision of the Company's charter or bylaws
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement to which the
Company is a party or by which it is bound or to which any of its assets are
subject. The Company does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Entity in
order for the parties to consummate the transactions contemplated by this
Agreement, except for such filings as may be required to comply with all
applicable securities laws.
5.4 Brokers' Fees. The Company has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Shareholders could
become liable or obligated.
5.5 Investment Intent. The Company is acquiring the Xxxxxxx Shares for its
own account and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act.
5.6 Information Concerning Company. The Company's Annual Report on Form
10-K for its fiscal year ended February 26, 2000 (the "10-K"), the Company's
Quarterly Report on
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Form 10-Q for the quarter ended November 25, 2000 (the "10-Q"), and the Form S-3
filed in March 2001, each as filed with the SEC, copies of which have been
furnished to the Shareholders, as of its respective filing dates did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein under the
circumstances in which they were made, not misleading.
5.7 Capitalization of Company. The authorized BE Stock consists of
50,000,000 authorized shares at $0.01 par value per share. Each holder of BE
Stock is entitled to one vote per share of BE Stock owned by such holder. As of
February 23, 2001, there were issued and outstanding 26,003,203 shares of BE
Stock. The authorized Preferred Stock of the Company consists of 1,000,000
shares, all of which is unissued.
5.8 Full Disclosure. Not including Section 5.6, no representation or
warranty of the Company contained in this Agreement contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained therein not misleading.
5.9 Status of BE Stock. When issued to the Shareholders, the shares of BE
Stock, so issued will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of any Liens other than normal restrictions
under federal or state securities law.
5.10 No Adverse Proceedings. The Company is not a party to any court
actions, arbitrations, or regulatory proceedings in which the Company's
acquisition of the Xxxxxxx Shares is contested.
SECTION 6. TAXES.
6.1 Tax Returns; Audits. (a) (i) The Shareholders shall be responsible for
preparing or causing to be prepared, at Shareholders' expense, Xxxxxxx'x federal
income tax returns and comparable state and local income and franchise tax
returns for Xxxxxxx'x taxable year ending on the Closing Date (each, a "Short
Period Return"), and all other income Tax Returns of Xxxxxxx for the taxable
periods ending on or prior to the Closing Date (together with the Short Period
Return, the "Closing Period Returns"). Such Tax Returns shall be prepared in a
manner consistent with applicable Tax laws consistent with prior practice. The
Company shall cause Xxxxxxx to cooperate in the preparation and filing of such
Tax Returns (including providing Shareholders with access to all information
reasonably requested by the Shareholders in connection with the preparation of
such Tax Returns). The Shareholders shall be jointly and severally responsible
for payment of all Taxes due or to become due from Xxxxxxx in respect of taxable
periods ending on or before the Closing Date and the share of Taxes due or to
become due for the portion of any taxable period that is on or prior to the
Closing Date. Unless paid separately by Xxxxxxx prior to the Closing Date, any
such Taxes shall be payable and reportable by or at the direction of the
Shareholders from sources outside of Xxxxxxx'x bank accounts or cash
equivalents. Tax liabilities, if any, assumed by the Shareholders under this
Agreement either will be treated as a reduction from the Net Consideration in
the manner described in Section 2.2 or otherwise be the financial obligation of
the Shareholders. The Shareholders shall provide the Company with a copy of such
Tax Returns together with the schedules thereto, and a
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statement setting forth the amount of Tax shown due on such Tax Return for which
the Shareholders are liable, at least 30 days prior to the due date (including
any extensions thereof) for the filing of such Closing Period Returns, and the
Company shall have the right to review such Closing Period Returns prior to the
filing of such Closing Period Returns. At the direction of the Shareholders, the
Company shall cause Xxxxxxx to execute and file the Closing Period Returns after
the review period and on or prior to their due date. Filing these returns is not
an assumption by the Company or Xxxxxxx of any responsibilities of the
Shareholders for such Taxes or the accuracy of the Closing Period Returns or any
Short Period Return.
(ii) The Company will, to the extent permitted by applicable
Law, elect with the relevant Taxing authority to close the taxable period of
Xxxxxxx on the Closing Date. In any case where applicable Law does not permit
Xxxxxxx to close its taxable year on the Closing Date, then Taxes, if any,
attributable to the taxable period of Xxxxxxx beginning before and ending after
the Closing Date shall be allocated between (A) the period up to and including
the Closing Date, and (B) the period subsequent to the Closing Date by means of
a closing of the books and records of Xxxxxxx as of the close of business on the
Closing Date.
(b) Except as provided in Section 6.1, following the Closing, Xxxxxxx
or its Affiliates shall be responsible for preparing or causing to be prepared
all Tax Returns required to be filed by Xxxxxxx for taxable periods beginning
after the Closing Date.
(c) In the event that, following the Closing Date, any Governmental
Entity notifies the Company or Xxxxxxx or any Affiliate thereof of its intention
to audit, assess, examine or otherwise review (collectively, "Audit") any Tax
Return of Xxxxxxx relating to a taxable period ending on or before the Closing
Date, the Company shall promptly notify the Shareholders of the receipt of such
notice. Upon receipt of notice of the Audit from the Company, the Shareholders
may, at the Shareholders' option and sole expense, control all further
determinations with respect to the conduct of such Audit or any administrative
or judicial proceeding arising in respect thereof, including but not limited to
all negotiation and correspondence with such Governmental Entity and the
compromise or settlement of such matter; provided, however, with respect to any
Tax year or taxable period of Xxxxxxx beginning before and ending on the Closing
Date, the Company and the Shareholders shall jointly control the defense and
settlement of any Tax audit or administrative or court proceeding and each party
shall cooperate with the other party at their own expense and there shall be no
settlement or closing or other agreement with respect thereto without the
consent of the other party, which consent will not be unreasonably withheld. The
Company shall cooperate and provide or cause Xxxxxxx to cooperate and provide
the Shareholders with access to such records and personnel of Xxxxxxx as the
Shareholders determine may be necessary in connection with the conduct of such
Audit or any administrative or judicial proceeding in respect thereof. Each of
the parties shall provide the others concerning any audit with copies of all
correspondence, notices and other written materials received from any
Governmental Entity.
(d) Any Taxes imposed upon or incurred by any of the Shareholders in
connection with the sale of BE Stock pursuant to this Agreement, and any Taxes
in connection with pre-closing distributions to any Shareholder or any payment
to or for the Shareholders contemplated by this Agreement, and any legal or
other expenses incurred by the Shareholders in connection with such Taxes, shall
be borne solely by the Shareholders.
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6.2 Cooperation and Exchange of Information. The Shareholders and the
Company will provide each other with such cooperation and information as either
of them reasonably may request of the other in filing any Tax Return, amended
Tax Return or claim for refund, determining a liability for Taxes or a right to
a refund of Taxes, participating in or conducting any audit or other proceeding
in respect of Taxes. Such cooperation and information shall include providing
copies of relevant Tax Returns of Xxxxxxx or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by Tax authorities. No amended Tax Return shall be filed
for Xxxxxxx for any taxable period ending on or before the Closing Date without
the prior written consent of the Shareholders, which may not be withheld or
delayed unreasonably. The Company shall retain all Tax Returns, schedules and
work papers, records and other documents ("Tax Materials") of Xxxxxxx for each
taxable period ending on or before the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such Tax Returns and other documents relate, (ii) 6
years following the due date (without extension) for such Tax Returns, or (iii)
the completion of all legal proceedings (if any) relating to any such Tax
Return.
6.3. Exchange of Shares and Related Taxes.
(a) Each Shareholder hereby waives and releases Xxxxxxx, the Company,
and their respective Affiliates from any claims or Liabilities relating to or
arising from, any and all Taxes imposed upon such Shareholder or any of its
Affiliates as a result of the consummation of the transactions contemplated
hereby. Each of the Shareholders has had an opportunity to seek and obtain his
or her own legal and tax advice, and whether or not such advice was sought, has
determined the tax treatment of the transactions without reliance upon anything
that the Company or its representatives may have said or done. None of the
Shareholders shall make any claim against the Company or Xxxxxxx on account of
any of Shareholder's Tax treatment of the transactions contemplated by this
Agreement or the Taxes on the Shareholders or other Persons that may arise from
such transactions.
(b) The obligations of the parties set forth in this Agreement relating
to Taxes shall, except as otherwise agreed in writing, be unconditional and
absolute and shall remain in effect without limitation as to time or amount of
recovery by the Company, Xxxxxxx and the Shareholders.
(c) There shall be withheld by Company, Xxxxxxx and/or Escrow Agent
from any amount payable to Shareholders hereunder such amounts as may be
required to be withheld under applicable Law.
(d) The Shareholders shall be liable for, shall hold Xxxxxxx and the
Company harmless against, and agree to pay on a timely basis all Taxes incurred
by Shareholders or Xxxxxxx in connection with the transactions contemplated by
this Agreement, for all tax periods ending on the Closing Date, and for the
portion of any tax period prior to and including the Closing Date.
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SECTION 7. PRE-CLOSING COVENANTS. The parties agree as follows with respect to
the period prior to the Closing Date.
7.1 General. Each of the parties will use its reasonable efforts to take
all action and to do all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement (including
satisfying the closing conditions set forth in Section 10).
7.2 Notices and Consents. Except for The Boeing Company, the Shareholders,
prior to the Closing Date, will give, or cause Xxxxxxx to give, all notices to
third parties and will cooperate at their expense to assist the Company to
obtain all third party consents that are required of the Shareholders or Xxxxxxx
in connection with the transactions contemplated by this Agreement, and will
make all further filings pursuant thereto that may be necessary, proper or
advisable.
7.3 Conduct Business in Regular Course. The Shareholders will cause Xxxxxxx
to maintain its owned and leased properties used or held for use in its business
in good operating condition and repair and make all necessary renewals,
additions and replacements thereto, reasonable wear and tear excepted, and will
cause Xxxxxxx to carry on its operations substantially in the Ordinary Course of
Business.
7.4 No General Increases. (a) Without prior written consent of the Company,
the Shareholders will not cause or permit Xxxxxxx to grant any general or
uniform increase in the rates of pay of employees of Xxxxxxx outside the
Ordinary Course of Business, nor grant any general or uniform increase in the
benefits under any bonus or pension plan or other contract or commitment outside
the Ordinary Course of Business, and (b) the Shareholders will not cause or
permit Xxxxxxx to increase the compensation payable or to become payable to
officers, salaried employees or agents of Xxxxxxx, or increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any such officers, salaried employees or agents outside the Ordinary Course
of Business.
7.5 Contracts and Commitments. Without prior written consent of the Company
the Shareholders will not cause or permit Xxxxxxx to tender any bid, enter into
any contract or commitment or engage in any transaction, including any contract,
commitment or engagement with the Shareholders or any division, unit or
Affiliate of the Shareholders or effect any change to any program, not in the
Ordinary Course of Business.
7.6 Dividends and Distributions. Without prior written consent of the
Company the Shareholders will not cause or permit Xxxxxxx to declare or
otherwise commit to repurchase, redeem or otherwise acquire for value any shares
of its capital stock from and after the Effective Date.
7.7 Sale of Capital Assets. Except as otherwise contemplated by this
Agreement, without prior written consent of the Company, the Shareholders will
not cause or permit Xxxxxxx to sell or otherwise dispose of any of its capital
assets outside the Ordinary Course of Business.
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7.8 Preservation of Organization. The Shareholders will cause Xxxxxxx to
use their commercially reasonable efforts to preserve its business organization
intact, to keep available to Xxxxxxx after the Closing Date the present officers
and employees of Xxxxxxx, other than the Shareholders, and, subject to Section
7.9 below, to preserve for the benefit of the Company the present relationships
and goodwill of Xxxxxxx with its suppliers, customers, landlords and others
having business relations with Xxxxxxx.
7.9 No Default. Except as otherwise contemplated by this Agreement, the
Shareholders will not cause or permit Xxxxxxx to commit or omit to take any act
which will cause a termination of or breach or default under any contract,
commitment or obligation to which Xxxxxxx is a party or by which its assets are
bound, except to the extent that such termination, breach or default will not
result in a Material Adverse Effect to Xxxxxxx.
7.10 Compliance with Laws. The Shareholders will cause Xxxxxxx to comply in
its operations in all material respects with all applicable Laws and to perform
such further actions as may be required for the valid and effective transfer to
the Company of the Xxxxxxx Shares.
7.11 Full Access. The Shareholders will cause Xxxxxxx to permit
representatives of the Company to have full access at all reasonable times to
all premises, properties, personnel, books, records (including Tax Records),
contracts and documents of or pertaining to Xxxxxxx, and access, at the request
of Company with Xxxxxxx'x prior approval, which will not be unreasonably denied,
to customers and vendors of or pertaining to Xxxxxxx.
7.12 Notice of Developments. The Shareholders will give prompt written
notice to the Company of any material development affecting Xxxxxxx. Each party
hereto will give prompt written notice to the other of any material development
affecting the ability of such party or its Affiliates to consummate the
transactions contemplated by this Agreement. No disclosure by any party hereto
pursuant to this Section 7.12, however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentations, breach of
warranty, or breach of covenant.
7.13 Exclusivity. Neither Xxxxxxx nor the Shareholders will (and Xxxxxxx
will not cause or permit any of its officers, directors, agents or Affiliates
to) (i) solicit, initiate, or encourage the submission of any proposal or offer
from, or enter into or consummate any transaction with any Person, relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets (other than sales of inventory for a fair
value in the Ordinary Course of Business), including any acquisition structured
as a merger, consolidation, or share exchange or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Xxxxxxx will notify
the Company as soon as is reasonably practicable if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing, and
such notice shall describe such proposal in detail.
7.14 RESERVED.
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7.15 Tax Matters. Xxxxxxx shall, and the Shareholders shall cause Xxxxxxx
to, accrue no transaction expenses of Xxxxxxx before the Closing Date to the
extent permitted by Law. To the extent that a Shareholder receives any tax
benefit on account of the accrual before the Closing Date of transaction
expenses, then the Shareholder shall be obligated to pay over to the Company
immediately the amount of such tax benefit, determined based on the
Shareholder's marginal tax rates, and until such payment is delivered to the
Company, such Shareholder shall hold any proceeds of such tax benefit in trust
for the benefit of the Company. No new elections with respect to Taxes, or any
changes in current elections with respect to Taxes, relating to or affecting
Xxxxxxx will be made by Xxxxxxx or the Shareholders after December 31, 2000
without the prior written consent of the Company. On or prior to the Closing
Date, the Shareholders will provide the Company, at the Company's request, with
all clearance certificates or similar documents that may be required by any
state, local or other Taxing authority in order to relieve the Company of any
obligation to withhold or escrow any portion of the Reference Price and to
evidence compliance by Shareholders and Xxxxxxx with the obligations under
Section 6. On or prior to the Closing Date, the Shareholders will furnish to the
Company an affidavit stating, under penalty of perjury, Xxxxxxx'x and each of
the Shareholders' United States tax identification numbers and that no
Shareholder is a foreign person, pursuant to Section 1445(b)(2) of the Code.
7.16 Title Insurance. The Shareholders will deliver to the Company the most
recent title insurance policies and all riders and endorsements thereto for each
parcel of real estate that Xxxxxxx owns.
7.17 Confidentiality. Neither the Company, Xxxxxxx, nor the Shareholders
shall issue any press release or otherwise make public statements or other
statements except on a need to know basis to its employees, agents or
representatives with an obligation of confidentiality with respect to the
transactions contemplated by this Agreement, without the prior consent of
Xxxxxxx and the Shareholders (in the case of the Company) or the Company (in the
case of Xxxxxxx or the Shareholders), which consent may be given or withheld in
any party's sole discretion, except (i) as contemplated by this Agreement or in
furtherance of the purposes hereof and (ii) as may be required by Law, or by the
rules and regulations of, or pursuant to any agreement with, the NASDAQ National
Market. The Shareholders, Xxxxxxx and the Company shall immediately notify the
other parties hereto of any actual, anticipated or suspected disclosure of the
negotiation, existence, terms or provisions of this Agreement to any Person who
is not bound by an obligation to keep the information confidential.
SECTION 8. POST-CLOSING COVENANTS. The parties agree as follows with respect to
the period following the Closing Date.
8.1 General. In case at any time after the Closing Date any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and delivery
of such further instruments and documents) as the other party reasonably may
request, at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefore under Section 11).
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8.2 Litigation Support. In the event and for so long as any party is
actively contesting or defending against any charge, complaint, action, audit,
suit, proceeding, hearing, investigation, claim or demand in connection with (i)
any third party transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving Xxxxxxx that is not related to the transactions
contemplated by this Agreement, the other party will provide its reasonable
cooperation to the contesting or defending party and its counsel in the contest
or defense, make available its personnel and provide such testimony and access
to its books and records as may be necessary in connection with the contest or
defense, at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefore under Section 11).
8.3 Confidential Information and Non-Competition.
(a) Confidential Information. From the date hereof until the Closing
Date and for a period of five years thereafter commencing on the Closing Date,
the Shareholders will treat and hold as such, and will not use for the benefit
of themselves or others, any Confidential Information. In the event the
Shareholders or any of their respective Affiliates are requested or required (by
oral request or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, then the relevant
Shareholder(s) will notify the Company promptly in writing of the request or
requirement so that the Company may seek an appropriate protective order or
waive compliance with this Section 8.3. If, in the absence of a protective order
or receipt of a waiver hereunder, the Shareholders are, on the advice of outside
counsel, compelled to disclose any Confidential Information to any Governmental
Entity or else stand liable for contempt, then the Shareholders may disclose
such Confidential Information to such Governmental Entity, provided, that the
Shareholders will use its reasonable best efforts to obtain at the request of
the Company an order or other assurance that confidential treatment will be
accorded to such Confidential Information.
(b) Non-Competition. On the Closing Date, each Shareholder shall enter
into a Non-Compete and Non-Solicitation Agreement substantially in the form
attached hereto as Exhibit "B" and incorporated herein by reference.
(c) Use of Tradename and Marks. On and after the Closing Date each
Shareholder shall not use, either directly or indirectly, any of the
Intellectual Property of Xxxxxxx. In addition, each Shareholder shall not use,
either directly or indirectly, the names "Xxxxxxx," "Xxxxxxx Precision" and any
derivation thereof in any business, operation or venture in the aerospace,
defense or machining industries.
(d) In the event of a breach, or facts indicating the likelihood of a
breach, by any Shareholder of the provisions of this Section 8.3, Company and
Xxxxxxx shall be entitled to a temporary restraining order and an injunction
restraining such Shareholder from such breach. Nothing herein, however, shall be
construed as prohibiting Company or Xxxxxxx from pursuing any other remedies
available to it for such actual or threatened breach, including, without
limitation, the recovery of damages. If it is determined that any Shareholder
has violated any of the covenants in this Section 8.3, the term of any such
covenant violated shall be automatically
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extended for the period of time of the violation either from the date on which
such Shareholder ceases such violation or from the date of the entry by a court
of competent jurisdiction of an order or judgment enforcing such covenants,
whichever period is later.
8.4 Post-Closing Receipts. In the event that either party after the Closing
Date receives any funds properly belonging to the other party in accordance with
the terms of this Agreement, the receiving party will promptly so advise such
other party, will segregate and hold such funds in trust for the benefit of such
other party and will promptly deliver such funds, together with any interest
earned thereon, to an account or accounts designated in writing by such other
party.
8.5 Registration Rights.
(a) General. On or prior to the Closing, holders of Registrable Shares,
including the Escrow Agent, shall execute and deliver a custody agreement (the
"Custody Agreement"), in substantially the form attached hereto as Exhibit E-2,
and perform or deliver each of the acts or things therein required of such
holders. Within 15 business days of the Closing, the Company shall file (and
shall use its commercially reasonable efforts to cause to become effective as
soon as practicable thereafter) a registration statement on Form S-3 under the
Securities Act, covering the Registrable Securities, which registration
statement shall be kept in effect in the manner and for the period specified in
Section 8.5(c)(ii). The Company shall use its best efforts to enter into an
underwriting agreement with an underwriter of national reputation to distribute
the Registrable Securities (the "Public Offering"). The Shareholders (consistent
with the Custody Agreement) and the Escrow Agent shall be required to sell as
many shares of BE Stock in the Public Offering as the underwriter(s) and the
Company shall request, up to the entire amount of BE Stock received by them in
connection with the transactions contemplated hereby (including shares held in
escrow pursuant to the arrangements described in Section 2.4 hereof).
As used herein, the term "Registrable Securities" shall mean (i) the BE
Stock at any time outstanding and that are owned by any of the Shareholders or
by other Persons granted similar rights as provided in this Section 8.5, (ii)
any shares of common stock or other securities issued as (or issuable upon the
conversion or exercise of any warrant, right, class of common stock or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange by the Company generally for, or in replacement by the Company
generally of, such BE Stock, and (iii) any securities issued in exchange for
such BE Stock in any merger or reorganization of the Company; provided, however,
that once issued, such BE Stock and other securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (y) they shall have been sold pursuant to Rule 144 or shall no longer
be subject to restriction on resale due to the termination of the holding period
requirements (as in effect from time to time) of Rule 144, or (z) they shall
have ceased to be outstanding. The Shareholders and the Escrow Agent shall be
required to sell as many shares of BE Stock in the Public Offering (defined as
the Company's registering any BE Stock for its own or others' account under the
Securities Act for a public offering) as the underwriter(s) and the Company
shall request, up to the entire amount of BE Stock received by them in
connection with the transactions contemplated hereby (including
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shares held in escrow pursuant to the arrangements described in Section 2.4
hereof). The Public Offering will comply with the prospectus delivery
requirements of the Securities Act with respect to any registration statement
filed pursuant to this Agreement. Each Shareholder agrees to make customary
representations and warranties to the Company and the underwriters or
distributors, if any, in form, substance and scope as are customarily made as to
ownership of stock by selling stockholders in underwritten public offerings, but
each Shareholder shall not be required to make any representation or warranty as
to the accuracy or completeness of the registration statement (except as to
written information furnished to the Company by such Shareholder expressly for
use therein).
(b) Expenses. The Company shall pay all expenses incident to the
Company's performance of or compliance with its obligations under Section 8.5 to
effect the registration of Registrable Securities required hereunder, including,
without limitation, all registration, filing, securities exchange listing and
NASDAQ fees, all registration, filing, qualification and other fees and expenses
of complying with federal, state and other securities or blue sky Laws, all word
processing, duplicating and printing expenses, messenger, shipping, telephone
and delivery expenses, the fees and disbursement of counsel for the Company and
of its independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such performance and
compliance, and fees and expenses of other Persons retained by the Company in
connection with the registration of the Registrable Securities, underwriting
discounts and commissions and transfer taxes, if any, in respect of Registrable
Securities, but excluding any legal fees and expenses of counsel retained by the
holders of the Registrable Securities being registered (with the sole exception
of the fees of one special counsel to the holders of all Registrable Securities,
selected by a majority in interest thereof, up to a maximum of $10,000).
(c) Further Obligations. The Company will:
(i) within 15 days of the Closing Date, prepare, and file with
the SEC, the registration statement on Form S-3 to effect such registration
(including such audited financial statements as may be required by the
Securities Act) and use commercially reasonable efforts to cause such
registration statement to become and continue to be effective for the timeframe
outlined in Section 8.5(a).
(ii) prepare, and file with the SEC, such amendments and
supplements to the registration statement referred to above and any prospectus
used in connection therewith as may be necessary to maintain the effectiveness
of such registration statement and to comply in all material respects with the
requirements of the Securities Act with respect to the disposition of all
Registrable Securities included in such registration statement, in accordance
with the intended methods of disposition thereof, until the earlier of (A) such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the Shareholders set forth in such
registration statement or (B) with respect to any registration statement filed
pursuant to Section 8.5, the date one hundred twenty (120) days from the Closing
Date.
(iii) promptly notify in writing each holder of Registrable
Securities and the underwriter or underwriters, if any:
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(A) when such registration statement or
any prospectus used in connection therewith, or any amendment or supplement
thereto, has been filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(B) of any written request by the SEC
or any other regulatory body or other body having jurisdiction over the
securities for amendments or supplements to such registration statement or
prospectus or for supplemental information;
(C) of the notification to the Company
by the SEC of its initiation of any proceeding with respect to the issuance by
the SEC of any stop order suspending the effectiveness of such registration
statement; and
(D) of the receipt by the Company of
any notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the applicable securities or blue sky laws
of any jurisdiction;
(iv) furnish to each holder of Registrable Securities included
in the registration statement such number of conformed copies of the
registration statement and of each amendment and supplement thereto (in each
case including all exhibits and documents incorporated by reference), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any prospectus supplement) and any
other prospectus filed under Rule 424 promulgated under the Securities Act
relating to such holder's Registrable Securities, and such other documents, as
such seller may reasonably request to facilitate the disposition of such
holder's Registrable Securities;
(v) use commercially reasonable efforts to register or qualify
all Registrable Securities included in the registration statement under such
other securities or blue sky laws of such jurisdictions as each holder thereof
shall reasonably request which request is made within ten (10) days following
the original filing of the registration statement and to keep such registration
or qualification in effect for so long as the registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable
to enable such holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such holder, except that the Company shall not
for any such purpose be required (a) to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this paragraph (v) to be obligated to be so qualified, (b) to
consent to general service of process in any such jurisdiction or (c) to subject
itself to taxation in any such jurisdiction by reason of such registration or
qualification; and
(vi) use its commercially reasonable efforts to obtain
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting any suspension of qualification (or exemption from
qualification) of the offer and sale of any of the Registrable Securities in any
jurisdiction.
Each Shareholder whose Registrable Securities are being registered
shall, furnish the Company and any underwriters with such information and
affidavits regarding such holder and
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the distribution of such securities as the Company and such underwriters may
from time to time reasonably request in writing and to otherwise cooperate in
connection with such registration. At any time during the effectiveness of the
registration statement covering Registrable Securities offered by a holder, if
such holder becomes aware of any change materially affecting the accuracy of the
information contained in such registration statement or the prospectus (as then
amended or supplemented) relating to such holder, such holder will promptly
notify in writing the Company of such change.
Upon receipt of any notice from the Company of the happening of any
event as a result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, each holder of Registrable Securities will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement until such holder receives copies of a supplemented or
amended prospectus from the Company and, if so directed by the Company, shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period referred
to in paragraph (ii) of this Section 8.5(c) shall be extended by a number of
days equal to the number of days during the period from the giving of such
notice from the Company to stop trading to the date when the copies of the
supplemented or amended prospectus are sent to holders whose Registrable
Securities are included in such registration statement. In the event that the
SEC issues a stop order suspending the effectiveness of any registration
statement filed under this Section 8.5(c), the period referred to in paragraph
(ii) of this Section 8.5(c) shall also be extended by a number of days equal to
the number of days during which such stop order is in effect.
Each Shareholder agrees in connection with any registration of the
Company's securities that, upon request of the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in such registration) except
pursuant to Section 2.5, without the prior written consent of the Company or
such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters.
Notwithstanding anything to the contrary contained herein, the Company
may, upon written notice to the Shareholders whose Registrable Securities are
included in any registration statement filed pursuant to this Agreement, suspend
the use of a prospectus which is a part of such registration statement if, in
the reasonable judgment of the Company, the Company possesses material nonpublic
information and the Company determines in good faith that the disclosure of such
information would have a material adverse effect on the Company or would
materially and adversely effect the ability of the Company to consummate any
pending strategic transaction; provided that the Company may not suspend any use
of a prospectus for more than an aggregate of 90 consecutive days or for more
than an aggregate of 180 days in any period of twelve consecutive months.
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(d) Indemnification.
(i) The Company shall, to the full extent permitted by Law,
indemnify and hold harmless each seller of Registrable Securities included in
any registration statement filed pursuant to this Section 8.5, its directors,
officers, and partners, and each other Person, if any, who controls any such
seller within the meaning of the Securities Act, against any Losses to which
such seller or any such director, officer, partner or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
claims, actions, suits, proceedings, arbitration or investigations in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained in such registration statement, any preliminary prospectus, final
prospectus or prospectus supplement contained therein or filed with the SEC, or
any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading; provided, that the
Company shall not be liable in any such case to the extent that any such Loss
(or any claim, action, suit, proceeding, arbitration or investigation in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement, preliminary prospectus, final prospectus, amendment or supplement in
reliance upon and in conformity with information furnished in writing to the
Company for inclusion in such registration statement by the holder of the
securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the holders of the securities or any
such director, officer, partner or controlling Person, and shall survive the
transfer of such securities by such holder.
(ii) Each Person and Shareholder whose Registrable Securities
are included or are to be included in any registration statement filed pursuant
to this Section 8.5, as a condition to including such holder's Registrable
Securities in each registration statement, shall to the full extent permitted by
Law, indemnify and hold harmless the Company, its directors and officers, and
each other Person, if any, who controls the Company within the meaning of the
Securities Act, against any Losses to which the Company or any such director or
officer or controlling Person may become subject under the Securities Act or
otherwise, insofar as such Losses (or claims, actions, suits, proceedings,
arbitrations or investigations in respect thereof) arise out of or are based
upon any untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus or
prospectus supplement contained therein or filed with the SEC, or any amendment
or supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, if such untrue statement or omission was
made in reliance upon and in conformity with information furnished in writing to
the Company for inclusion in such registration statement by such seller.
Notwithstanding any contrary provision of Section 11, the indemnification
obligation of the Shareholders and holders of said Registrable Securities under
this Section 8.5(d) shall in no way be limited to (and the Company shall not be
constrained to seek in response to any failure to provide indemnity pursuant to
this Section 8.5(d)) recourse against Escrowed Shares. The foregoing indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by such seller. Such holders shall
also indemnify each other Person who participates
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(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to the Company.
(iii) Promptly after receipt by any party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding paragraph (i) or (ii) of this Section 8.5(d), such party shall, if a
claim in respect thereof is to be made against another party pursuant to such
paragraphs, give written notice to the latter of the commencement of such
action, provided that any failure of any Person to give notice as provided
herein shall not relieve any other Person of its obligations under the preceding
paragraph of this Section 8.5(d), except to the extent that such other Person is
actually prejudiced by such failure. In case any such action is brought, the
party obligated to indemnify pursuant to the foregoing provisions of this
Section 8.5(d) shall be entitled to participate in and, unless, in the
reasonable judgment of any indemnified party, a conflict of interest between
such indemnified party and any indemnifying party exists with respect to such
claim, to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation; provided that the indemnified party may participate in such
defense at the indemnified party's expense. No indemnifying party shall consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect to such claim or
litigation without the consent of the indemnified party. No indemnifying party
shall be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(iv) If the indemnity and reimbursement obligation provided
for in any paragraph of this Section 8.5 is unavailable or insufficient to hold
harmless a party entitled to indemnification hereunder in respect of any Losses
(or claims, actions, suits, proceedings, arbitrations or investigations with
respect thereto) for which indemnification is provided therein, the party
obligated to indemnify hereunder shall contribute to the amount paid or payable
by the indemnified party as a result of such Losses (or claims, actions, suits,
proceedings, arbitration or investigations) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other hand in connection with statements or omissions
which resulted in such Losses, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this paragraph were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this paragraph. Notwithstanding anything herein to the
contrary, no participating holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the net proceeds of
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the offering (before deducting expenses, if any) received by such participating
holder exceeds the amount of any damages that such participating holder has
otherwise been required to pay by reason of such untrue statement or omission,
or allegedly untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation.
8.6 Release or Indemnity for Personal Guarantee. The Company and Xxxxxxx
shall use commercially reasonable efforts to obtain releases of the personal
guarantees by Shareholders of the Union Bank of California's Commercial
Promissory Note, Loan Number 6017243839. The Company shall indemnify such
guarantor from any Losses incurred pursuant to such personal guarantee after the
Closing Date.
SECTION 9. EMPLOYEES.
9.1 As of immediately prior to the Closing Date, Xxxxxxx shall have
responsibility to pay in full any otherwise eligible claims of any employees
under the Employee Benefit Plans prior to the Closing Date that have not been
paid prior to the Closing Date.
SECTION 10. CLOSING CONDITIONS.
10.1 Conditions to Obligation of the Company. The obligation of the Company
to consummate the transactions to be performed by it in connection with the
Closing is subject to fulfillment, prior to or at the Closing, of each of the
following conditions (any or all of which may be waived by the Company in
writing at or prior to the Closing):
(a) all representations and warranties of the Shareholders set forth in
Section 4 shall be correct and complete (except to the extent that the aggregate
of all Losses that could arise from the inaccuracy or incompleteness of any
statements, individually or collectively, contained in Section 4 do not exceed
One Hundred Thousand Dollars ($100,000)) at and as of the Closing Date;
(b) the Shareholders shall have performed and complied with all of
their covenants hereunder in all material respects prior to or at the Closing;
(c) there will not be any action, suit or proceeding pending or
threatened before any Governmental Entity or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or any Shareholders' Ancillary Agreement, (ii) cause any of the transactions
contemplated by this Agreement or any Shareholders' Ancillary Agreement to be
rescinded following consummation, (iii) affect materially and adversely the
right of the Company following the Closing to own Xxxxxxx Shares or to control
Xxxxxxx, or (iv) affect materially and adversely, the right of Xxxxxxx to own
its assets or to operate its businesses as presently operated (and no such
injunction, judgment, order, decree, ruling or charge will be in effect);
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(d) the Shareholders will have obtained all consents, releases, waivers
and other documentation required in order for the Shareholders to transfer and
deliver all of the Xxxxxxx Shares to the Company and to fulfill their other
obligations hereunder, including but not limited to the spousal consents
substantially in the form attached hereto as Exhibit A;
(e) the Company shall have received the resignations, effective as of
the Closing, of each of the directors, officers, signing agents and
attorneys-in-fact of Xxxxxxx, other than those whom the Company has specified in
writing at least five business days prior to the Closing to continue in such
capacities;
(f) Xxxxxxx shall have, in all material respects, taken and
accomplished all actions that Shareholders are required to cause Xxxxxxx to
take;
(g) each of the Shareholders shall have executed and delivered to the
Company a counterpart executed by such Shareholder of the following documents:
(i) Consulting Agreement substantially in the form attached
hereto as Exhibit B;
(ii) Non-Compete and Non-Solicitation Agreement substantially
in the form attached hereto as Exhibit C;
(iii) the First Addendum dated the Closing Date to that
certain American Industrial Real Estate Association Standard
Industrial/Commercial Single-Tenant Lease-Net dated February 1, 1998 by and
between Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx as Lessor therein and Xxxxxxx
Precision, Inc., a California corporation as Lessee therein, in substantially in
the form attached hereto as Exhibit D;
(h) all actions to be taken by the Shareholders or Xxxxxxx in
connection with consummation of the transactions contemplated hereby and all
certificates, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Company;
(i) the Shareholders shall have delivered to the Company a good
standing certificate for Xxxxxxx from the Secretary of State of the State of
California dated within thirty (30) days of the Closing Date;
(j) the Shareholders shall have executed and delivered to the Company
the Escrow Agreement substantially in the form attached hereto as Exhibit E-1
and the Custody Agreement substantially in the form attached hereto as Exhibit
E-2;
(k) the Shareholders shall have delivered an opinion by Xxxxxxx'x
counsel, in the form and substance as set forth in Exhibit F attached hereto,
addressed to the Company, and dated as of the Closing Date; and
(l) the Shareholders shall have delivered a signatory card in blank for
all Xxxxxxx bank accounts acceptable to each bank where Xxxxxxx maintains an
account.
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10.2 Conditions to Obligation of the Shareholders. The obligation of the
Shareholders to consummate the transactions to be performed by them in
connection with the Closing is subject to fulfillment, prior to or at the
Closing, of each of the following conditions (any or all of which may be waived
by the Shareholders in writing prior to the Closing):
(a) all representations and warranties of the Company set forth in
Section 5 shall be true and correct in all material respects at and as of the
Closing Date;
(b) the Company will have performed and complied with all of its
covenants hereunder in all material respects prior to or at the Closing;
(c) there will not be any action, suit or proceeding pending or
threatened before any Governmental Entity or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation;
(d) all actions to be taken by the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments and other documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance to the
Shareholders;
(e) the Company shall have executed and delivered to the Shareholders
the following documents:
(i) the Escrow Agreement substantially in the form attached hereto
as Exhibit E dated the Effective Date;
(ii) evidence of wire transfers of clearinghouse funds to DTC
accounts of the Shareholders (or their custodian) of the cash portion of the
Reference Price in the amount of Nine Hundred Thousand dollars($900,000).
(iii) the First Addendum dated the Closing Date to that certain
American Industrial Real Estate Association Standard Industrial/Commercial
Single-Tenant Lease-Net dated February 1, 1998 by and between Xxxxxx X. Xxxxxxx
and Xxxx X. Xxxxxxx as Lessor therein and Xxxxxxx Precision, Inc., a California
corporation as Lessee therein, in substantially in the form attached hereto as
Exhibit D;
(f) the Company shall have executed and delivered the following
documents:
(i) evidence of an irrevocable transfer letter to the
Company's transfer agent authorizing the transfer of BE Stock to the Escrow
Agent representing the BE Stock portion of the Reference Price that is to be
delivered to the Escrow Agent at Closing pursuant to Section 2.2(ii); and
(ii) the Escrow Agreement substantially in the form attached
hereto as Exhibit E to the Escrow Agent.
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(g) the Company shall have delivered an opinion of the Company's
counsel, in the form and substance as set forth in Exhibit G attached hereto,
addressed to the Shareholders, and dated as of the Closing Date.
SECTION 11. REMEDIES FOR BREACHES OF THIS AGREEMENT.
11.1 Survival of Representations and Warranties. All of the representations
and warranties of the Shareholders contained in Section 4 of this Agreement or
in any certificate delivered by the Shareholders pursuant to this Agreement and
all of the representations and warranties of the Company contained in Section 5
of this Agreement or in any certificate delivered by the Company pursuant to
this Agreement will survive the Closing and continue in full force and effect
until the third anniversary of the Closing Date; provided, however, that (a) the
representations and warranties contained in Sections 4.2 (Authorization of
Transaction), 4.4 (Capitalization), 4.13 (Title and Related Matters) shall
continue in full force and effect until the expiration of the applicable statute
of limitations; and (b) the representations and warranties contained in Sections
4.10 (Tax Matters) and 4.17 (Environmental Matters), or contained in any
certificate delivered by the Shareholders relating thereto, and any Tax-related
liabilities pursuant to Section 6 hereof shall remain in full force and effect
until 30 days after the expiration of the applicable statute of limitations with
respect to the matter to which the claim relates, as such limitation period may
be extended from time to time. Notwithstanding the foregoing, as to any matter
or claim which is based upon fraud, the representations and warranties set forth
in this Agreement shall expire not earlier than upon expiration of the
applicable statute of limitations. No party will be liable to another under any
representation or warranty after the applicable expiration of such warranty or
representation; provided, however, if a claim or notice is given under this
Section 11 with respect to any representation or warranty prior to the
applicable expiration date, such claim may be pursued to resolution
notwithstanding expiration of the representation or warranty under which the
claim was brought. Any investigations made by or on behalf of any of the parties
prior to the date hereof shall not affect any of the parties' obligations
hereunder. Notwithstanding anything to the contrary in this Agreement, any
alleged or actual breach of Section 8.3 or of the Shareholders' Ancillary
Agreements is not subject to any of the provisions of this Section 11.
11.2 Indemnification Provisions for Benefit of the Company. The
Shareholders shall indemnify, defend and hold harmless the Company and Xxxxxxx
from and against the entirety of any and all Liabilities, obligations,
judgments, Liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, expenses, fees, costs, amounts
paid in settlement (including reasonable attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action (collectively, "Losses") that by the Company, Xxxxxxx, or
any of their Affiliates, or any of their respective stockholders, directors,
officers, employees and agents (collectively, the "Company Indemnified
Parties"), have or reasonably shall have incurred resulting from or arising out
of (a) the inaccuracy or breach of any representation or warranty made by the
Shareholders, herein or in or any schedule or certificate delivered in
connection herewith, or (b) nonfulfillment of any agreement or covenant of the
Shareholders contained herein, or (c) any Taxes imposed on or accrued by Xxxxxxx
for taxable periods (or portions thereof) on or prior to
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the Closing Date. The liability of the Shareholders hereunder shall be joint and
several. Subject to Section 11.4, the liability of Shareholders pursuant to this
Section 11.2 shall be limited, in the aggregate, to 25% of the Net
Consideration. Subject to Section 11.4, the Shareholders will be obligated to
indemnify, defend and hold harmless the Company Indemnified Parties from and
against Losses only if the aggregate amount of such Losses exceeds $100,000, in
which cases the Shareholders shall be obligated to indemnify, defend and hold
harmless the Company Indemnified Parties from and against 100% of such Losses.
11.3 Indemnification Provisions for Benefit of the Shareholders. The
Company and Xxxxxxx will indemnify, defend and hold harmless the Shareholders
and against the entirety of any and all Losses the Shareholders or their
Affiliates, or any of their directors, officers, employees or agents
(collectively, the "Shareholder Indemnified Parties") have or reasonably shall
have incurred resulting from or arising out of (a) the inaccuracy or breach of
any representation or warranty made by the Company herein or in any schedule or
certificate delivered by the Company in connection herewith, (b) nonfulfillment
of any agreement or covenant of the Company contained herein, or (c) any lawsuit
by a third party for a claim based on the operations of Xxxxxxx after the
Closing brought against any of the Shareholders after the Closing for
occurrences that arise from conditions that did not exist prior to or at the
Closing, and then only to the extent that such Losses do not arise from any
alleged breach of any representation, warranty, or covenant of the Shareholders
contained in this Agreement or from any alleged breach by Xxxxxxx that occurred
on or prior to the Closing with respect to any agreement, representation,
warranty, or obligation involving Xxxxxxx. The Company will be obligated to
indemnify, defend and hold harmless the Shareholders from and against Losses
only if the aggregate amount of such Losses exceeds $100,000 (in which case the
Company shall be obligated to indemnify, defend and hold harmless the
Shareholders from and against 100% of such Losses, including, without
limitation, the initial $100,000.
11.4 Exception to Limits on Indemnification. The maximum limit and the
minimum threshold on the liability of Shareholders to Company Indemnified
Parties set forth in Section 11.2 above shall not apply to the representations
and warranties in Sections 4.2 (Authorization of Transaction), 4.4
(Capitalization) and 4.13 (Title and Related Matters) and any costs or expenses,
including but not limited to attorney's fees and costs, incurred by Company
Indemnified Parties to enforce their rights under Section 11. The maximum limit
on the liability of Shareholders to Company Indemnified Parties set forth in
Section 11.2 above shall not apply to the representations and warranties in
Sections 4.17 (Environmental Matters), 4.10 (Tax Matters), any Tax-related
liabilities pursuant to Section 6 hereof, and any costs or expenses, including
but not limited to attorney's fees and costs, incurred by Company Indemnified
Parties to enforce their rights under Section 11. The minimum threshold on the
liability of Shareholders to Company Indemnified Parties set forth in Section
11.2 above shall not apply to the representations and warranties in Section 4.10
(Tax Matters), any Tax-related liabilities pursuant to Section 6 hereof to the
extent such Losses arise from periods on or prior to the Closing Date for which
no Tax Return has been filed with the applicable Governmental Entity, and any
costs or expenses, including but not limited to attorney's fees and costs,
incurred by Company Indemnified Parties to enforce their rights under Section
11. The maximum limit on the liability of all of the Shareholders to Company
Indemnified Parties under Section 11, when the limits in Section 11.2 are
inapplicable by virtue of this Section 11.4, shall be 100% of the Net
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Consideration. Nothing agreed between the parties shall limit or affect any
rights of third parties.
11.5 Indemnification Procedures. Except for claims for indemnification made
pursuant to Section 6 hereof, to which the procedures set forth in such Section
shall be applicable to the extent of any conflict herewith,, if any third party
notifies any party hereto (the "Indemnitee") with respect to any matter that may
give rise to a claim for indemnification against the other party hereto (the
"Indemnitor") under this Section 11, then the Indemnitee will notify the
Indemnitor thereof promptly and in any event within 30 days after receiving any
written notice from a third party; provided, that no delay on the part of the
Indemnitee in notifying the Indemnitor will relieve the Indemnitor from any
obligation hereunder unless, and then solely to the extent that, the Indemnitor
is prejudiced thereby. Once the Indemnitee has given notice of the matter to the
Indemnitor, the Indemnitee may defend against the matter in any manner it
reasonably may deem appropriate. In the event the Indemnitor notifies the
Indemnitee within 30 days after the date the Indemnitee has given notice of the
matter that the Indemnitor is assuming the defense of such matter (a) the
Indemnitor will defend the Indemnitee against the matter with counsel of its
choice reasonably satisfactory to the Indemnitee, (b) the Indemnitee may retain
separate counsel at its sole cost and expense (except that the Indemnitor will
be responsible for the fees and expenses of such separate co-counsel as and when
incurred to the extent the Indemnitee concludes in good faith that the counsel
the Indemnitor has selected has a conflict of interests), (c) the Indemnitee
will not consent to the entry of a judgment or enter into any settlement with
respect to the matter without the written consent of the Indemnitor (not to be
withheld or delayed unreasonably) and (d) the Indemnitor will not consent to the
entry of a judgment with respect to the matter or enter into any settlement that
does not include a provision whereby the plaintiff or claimant in the matter
releases the Indemnitee from all liability with respect thereto, without the
written consent of the Indemnitee (not to be withheld or delayed unreasonably).
Should the Indemnitee reasonably incur Losses in advance of the conclusion of a
matter, the Indemnitor shall pay or provide compensation of the Indemnitees for
their Losses as and when incurred from time to time promptly after notice of an
indemnified Loss.
11.6 Specific Performance. Each of the parties acknowledges and agrees that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the other
party shall be entitled to an injunction or injunctions to prevent breaches of
Sections 8.3 and 11.8 of this Agreement and to enforce specifically those
sections of this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter in addition to any other remedy to
which it may be entitled, at law or in equity.
11.7 Exclusive Remedy. Except as otherwise provided in this Agreement, the
indemnification provisions under this Section 11 shall provide the sole and
exclusive remedy for any and all Losses sustained or incurred by the Company,
the Shareholders, Xxxxxxx or their respective successors and assigns other than
for specific performance, equitable actions, and fraud. Notwithstanding anything
to the contrary in this Agreement, no breach of any representation, warranty,
covenant, or agreement contained herein shall give rise to any right on the part
of any party hereto to rescind this Agreement other than rescission predicated
upon fraud.
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11.8 Arbitration.
(a) Generally. Except solely as set forth in Section 8.3, the parties
agree that when any claim or controversy that arises out of or relates to this
Agreement, or the breach thereof arises, in lieu of litigation, they shall
submit such claim, dispute or controversy, or difference or question to be
finally settled under the Commercial Arbitration Rules ("Rules") of the American
Arbitration Association (the "AAA") by an arbitral tribunal composed of one
arbitrator, who must be experienced in relevant corporate transactions,
appointed by agreement of the parties in accordance with said Rules. In the
event the Parties fail to agree upon an arbitrator from the first list of
potential arbitrators proposed by the AAA, the AAA will submit a second list in
accordance with said Rules. In the event the parties shall have failed to agree
upon an arbitrator from said second list, the arbitrator to be selected shall be
appointed by the AAA in accordance with said Rules. If, at the time of the
arbitration, the parties agree in writing to submit the dispute to a single
arbitrator, said single arbitrator shall be appointed by agreement of the
parties in accordance with the foregoing procedure, or, failing such agreement,
by the AAA in accordance with said Rules. Any party may commence the foregoing
arbitration proceedings by notice to all other parties.
(b) Place of Arbitration. The venue of such arbitration shall be Orange
County, California.
(c) Recourse to Courts. Subject to Section 11.6, the parties hereby
exclude any right of appeal to any court on the merits of the dispute. The
provisions of this Section 11.8 may be enforced in any court having jurisdiction
over the award or any of the parties or any of their respective assets, and
judgment on the award (including without limitation equitable remedies) granted
in any arbitration hereunder may be entered in any such court. Nothing contained
in this Section 11.8 shall prevent any party from seeking interim measures of
protection in the form of pre-award attachment of assets or preliminary or
temporary equitable relief.
(d) Decision of Arbitral Tribunal. In the event of a dispute between
the parties hereunder, the Shareholders and the Company shall each present an
offer of settlement, which shall address all issues in dispute such that
adoption of such offer of settlement would conclusively settle all items then in
dispute. The arbitral tribunal shall not be limited in its decision to choosing
one of the two offers of settlement presented to it. The decision of the
arbitral tribunal shall be final and binding on the parties and non-appealable.
The party whose offer of settlement is determined to have been the less fair by
the arbitral tribunal shall pay all of the expenses of the arbitration, which,
in the event the Shareholders are held responsible for any such expenses prior
to the Escrow Termination Date, shall be subject to satisfaction by application
of the Escrowed Shares pursuant to Sections 2.2 and 11.2 and Article 4 of the
Escrow Agreement. Notwithstanding the above, each party shall bear his, her, its
own attorney fees and costs related to any arbitration proceeding.
11.9 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE SHAREHOLDERS, Xxxxxxx AND THE COMPANY HEREBY
WAIVE, AND COVENANT THAT HE, SHE OR IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR
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OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR PASSED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.
SECTION 12. TERMINATION.
12.1 Termination of Agreement. The parties may terminate this Agreement as
provided below:
(a) the Company and the Shareholders may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) either the Shareholders or the Company may terminate this Agreement
by giving written notice to the other at any time prior to the Closing if the
Closing has not occurred on or before March 31, 2001.
12.2 Effect of Termination. If any party terminates this Agreement pursuant
to Section 12.1, all obligations of the parties hereunder will terminate without
liability of any party to the other party; provided, that the expense allocation
provisions contained in Section 13.2 will survive termination and remain in full
force and effect thereafter.
SECTION 13. MISCELLANEOUS.
13.1 Press Releases and Announcements. No party will issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing Date without the prior approval of the other party; provided,
that either party may make any public disclosure it believes in good faith is
required by Law or by the rules and regulations of any stock exchange on which
the securities of such party are listed.
13.2 Expenses; Transfer Taxes. Each of the parties hereto will bear all
legal, accounting, investment banking and other expenses incurred by it or on
its behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated. The Shareholders will each be
responsible for the payment of all income, sales, use, transfer, documentary or
stamp taxes and recording and filing fees applicable to the assignment of
Xxxxxxx Shares to the Company, any distributions or payments to the Shareholders
in any capacity, or to any other transaction contemplated by this Agreement or
any of the Shareholders' Ancillary Agreements.
13.3 Consent to Amendments. The provisions of this Agreement may be amended
or waived only by a written agreement executed and delivered by the Shareholders
and the Company, or by the Shareholder to be bound and benefited thereby and the
Company. No other
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course of dealing between the parties to this Agreement or any delay in
exercising any rights hereunder will operate as a waiver of any rights of such
parties.
13.4 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties that are signatories hereto and their respective
successors and permitted assigns. No party hereto may assign or delegate any of
such party's rights or obligations under or in connection with this Agreement or
the Shareholders' Ancillary Agreements without the written consent of the other
parties hereto provided, however, that the Company may without the written
consent of Xxxxxxx or the Shareholders assign its rights under this Agreement or
any of the Shareholders' Ancillary Agreements to one or more Affiliates of the
Company or to any Person acquiring all or substantially all of the stock or
assets of Xxxxxxx from the Company, provided that the Company shall not be
relieved of any obligation assigned and assumed.
13.5 Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable Law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable Law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
13.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Any signature page
delivered by facsimile or telecopy shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party who requests it.
13.7 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
13.8 Notices. All notices, demands, requests, consents, approvals, or other
communications required or permitted to be given or delivered with respect to
this Agreement shall be delivered charges prepaid, receipt confirmed or return
receipt requested (if available) by hand, by internationally and nationally
recognized air courier service or by facsimile, addressed as set forth below or
to such other address as such party shall have specified most recently by
written notice. Notice shall be deemed given and effective (i) if delivered by
hand or by internationally or nationally recognized air courier service, when
delivered to the address specified in this Section 13.8 (or in accordance with
the latest unrevoked written direction from such party) or (ii) if given by
facsimile when such facsimile is transmitted to the facsimile number specified
in this Section 13.8. (or in accordance with the latest unrevoked written
direction from such party); provided, that, appropriate confirmation is received
and that any such facsimile is promptly followed by delivery of written notice
delivered by hand or by internationally or nationally recognized air courier
service.
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If to Xxxxxxx or the Company:
BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Fax no. (000) 000-0000
Attn: Xxxxxx X. XxXxxxxxx or Xxxxxx X. Xxxxxxxx
With a copy (which will not constitute notice) to:
Yocca, Patch & Yocca
00000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax no. (000) 000-0000
Attn: Xxxx X. Patch/ Xxxxxxxx X. Xxxxx
If to the Shareholders:
Xxxxxx X. and Xxxx X. Xxxxxxx
0000 Xxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax no. 760/000-0000
With a copy (which will not constitute notice) in either case to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax no. 949/000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
13.9 No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the Shareholders, Xxxxxxx, and the
Company and their respective successors and permitted assigns.
13.10 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties
(whether written or oral) that may have related in any way to the subject matter
hereof.
13.12 Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent and no rule
of strict construction will be applied against any party. The use of the word
"including" in this Agreement means "including" without limitations and is
intended by the parties to be by way of example rather than limitation.
13.13 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
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13.14 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO WILL
BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
CALIFORNIA.
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IN WITNESS WHEREOF, the parties hereto have executed and deliver this Share
Purchase and Sale Agreement on the date first written above.
BE AEROSPACE, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Corporate Senior Vice President of
Administration and Chief Financial
Officer
XXXXXXX PRECISION, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
SHAREHOLDERS:
/s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx, an individual
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx, an individual
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SCHEDULE 1
Xxxx X. Xxxxxxx, an individual 510 SHARES OF COMMON STOCK
Xxxxxx X. Xxxxxxx, an individual 490 SHARES OF COMMON STOCK
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