Exhibit 4
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STOCK PURCHASE AGREEMENT
dated as of April 28, 2000
by and between
ABL ACQUISITION CORPORATION
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with respect to all
outstanding capital stock of
A.B.L. ELECTRONICS CORPORATION
This STOCK PURCHASE AGREEMENT dated as of April 28, 2000 is made and
entered into by and between ABL ACQUISITION CORPORATION ("Purchaser") and
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (each, a "Seller" and, together, the "Sellers"), who
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together own all of the outstanding shares of capital stock of A.B.L.
Electronics Corporation, a Maryland corporation. Capitalized terms used but not
otherwise defined herein have the respective meanings set forth in Section 7.01.
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WHEREAS, the Sellers together own 100 shares of Class A common stock,
par value $0.01 per share, and 100 shares of Class B common stock, par value
$0.01 per share, of A.B.L. Electronics Corporation, a Maryland corporation (the
"Company"), constituting all issued and outstanding shares of capital stock of
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the Company (such shares being referred to herein as the "Shares"); and
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WHEREAS, the Sellers desire to sell, and Purchaser desires to
purchase, the Shares on the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01. Purchase and Sale. The Sellers agree to sell to Purchaser, and
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Purchaser agrees to purchase from the Sellers, all of the right, title and
interest of the Sellers in and to the Shares at the Closing on the terms and
subject to the conditions set forth in this Agreement.
1.02. Purchase Price. The aggregate purchase price for the Shares
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(the "Purchase Price") shall be (a) $4,000,000 in cash and (b) an aggregate
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number of shares of common stock of the corporate parent of Purchaser, American
Power Conversion Corporation ("APC"), par value $0.01 per share, that, when
multiplied by the last sale price per share of such common stock (as reported at
the close of trading on the Closing Date) on the Nasdaq National Market System,
rounded downward to the nearest whole share, equals $4,000,000. The shares of
common stock of APC that constitute the stock portion of the Purchase Price are
referred to herein as the "Purchaser Stock."
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1.03. Closing; Holdback. (a) The Closing will take place at the
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offices of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, 607 14/th/ Street, N.W.,
Washington, D.C., or at such other place as Purchaser and the Sellers mutually
agree, simultaneously with the execution of this Agreement. At or as soon as
practicable following the Closing, Purchaser will (a) pay to Sellers an
aggregate of $4,000,000 by wire transfer of immediately available funds to such
accounts as the Sellers may reasonably direct by written notice signed by all of
the Sellers and delivered to Purchaser by the Sellers at least two (2) Business
Days before the Closing Date and (b) assign
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and transfer to the Sellers good and valid title in and to Purchaser Stock with
an aggregate value, determined in accordance with Section 1.02, of $3,000,000,
free and clear of all Liens, with the exception of any limitations or
encumbrances pursuant to any written agreements among the Sellers and Purchaser
of even date herewith, by delivering such shares of Purchaser Stock to such
accounts and in such proportions as the Sellers may reasonably direct by written
notice signed by all of the Sellers and delivered to Purchaser by the Sellers at
least two (2) Business Days before the Closing Date. The remaining number of
shares of Purchaser Stock with an aggregate value, determined in accordance with
Section 1.02, of $1,000,000 (such number of shares being referred to herein as
the "Holdback Amount") shall be held back by Purchaser in accordance with
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Section 1.03(b). Simultaneously, each of the Sellers will assign and transfer to
Purchaser good and valid title in and to all of the shares of both Class A and
Class B common stock of the Company beneficially owned by such Seller, free and
clear of all Liens, by delivering to Purchaser a certificate or certificates
representing such Shares, in genuine and unaltered form, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in blank, with requisite
stock transfer tax stamps, if any, attached. At the Closing, there shall also be
delivered to the Sellers and Purchaser the certificates and other Contracts,
documents and instruments to be delivered under this Agreement.
(b) Purchaser shall not be obligated to issue or transfer any of the
Holdback Amount to the Sellers until the date that is three (3) years following
the Closing Date, provided that Purchaser shall at all times during such three
(3)-year period have the right, in its reasonable discretion and upon compliance
with the notice procedures set forth in Section 1.03(c), to set off any portion
of the Holdback Amount in satisfaction of any obligation of any or all of the
Sellers to Purchaser pursuant to Article VI hereof, and the Sellers hereby agree
that they shall have no entitlement to any Purchaser Stock, or to the cash value
thereof, set off pursuant to this Agreement. On the date that is three (3)
years from the Closing Date, Purchaser shall assign and transfer to the Sellers
good and valid title in and to the number of shares of Purchaser Stock that
constitute the Holdback Amount (or the remaining portion thereof, if any, in the
event that Purchaser has set off any portion thereof), subject to the preceding
sentence, free and clear of all Liens, by delivering such shares of Purchaser
Stock to such accounts and in such proportions as the Sellers may reasonably
direct by written notice signed by all of the Sellers and delivered to Purchaser
by the Sellers at least two (2) Business Days before the date of such transfer.
For purposes of any set off by Purchaser of any portion of the Holdback Amount,
the number of shares of Purchaser Stock to be set off shall be calculated based
on the last sale price per share of APC's common stock (as reported at the close
of trading on the Set-Off Date) on the Nasdaq National Market System, rounded
downward to the nearest whole share.
(c) In the event that Purchaser determines in its reasonable
discretion to set off all or a portion of the Holdback Amount in accordance with
this Agreement, Purchaser shall as soon as practicable prepare and deliver to
the Sellers a notice (each, a "Set-Off Notice") setting forth (i) the specific
obligation of one or more of the Sellers that Purchaser seeks to satisfy in
whole or in part by means of such set off, (ii) the amount of such obligation or
of the portion of such obligation that Purchaser seeks to satisfy by means of
such set off, and (iii) a statement of the number of shares that are to be set
off, calculated in accordance with Section 1.03(b),
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including the per share price used in making such calculation. For purposes of
any set off under this Section 1.03, the "Set-Off Date" shall be the date of the
notice provided to the Sellers by Purchaser pursuant to this Section 1.03(c).
(d) Upon receipt of a Set-Off Notice, the Sellers shall have fifteen
(15) days to review the Set-Off Notice. In the event that the Sellers have one
or more objections to the contents of the Set-Off Notice, the Sellers shall
notify Purchaser in writing of such objections within such fifteen (15)-day
period, and such notice by Sellers shall set forth with reasonable specificity
the basis for the Sellers' objection(s). In the event that the Sellers do not
provide notice to Purchaser of any objection(s) within such fifteen (15)-day
period, the Sellers agree that they shall have no right to dispute Purchaser's
set off of such portion of the Holdback Amount and shall have no entitlement to
receive any of the shares of Purchaser Stock so set off. In the event that the
Sellers provide notice to Purchaser of one or more objections to the Set-Off
Notice within such fifteen (15)-day period, Purchaser shall contact the Sellers
or their designated representative (who may be designated in the Sellers' notice
of objection(s)) within five (5) days of Purchaser's receipt of such notice, and
the parties hereto agree to negotiate in good faith to reach a resolution of any
disagreements. In the event that the parties successfully reach such a
resolution, the number of shares that are to be set off by Purchaser in
accordance with such resolution, even if such number is zero (0), shall be set
forth in a writing signed by Purchaser and the Sellers (or by their designated
representative). In the event that the parties are unable to reach a resolution
of their disagreements, the parties hereby agree to submit such disagreements to
binding, nonappealable arbitration for a final determination of the number of
shares of Purchaser Stock to be set off, if any. Such arbitration shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association and shall take place in Boston, Massachusetts.
(e) Unless otherwise agreed to in writing by Purchaser and the
Sellers, Purchaser's cumulative right to set off all or a portion of the
Holdback Amount shall be limited to the number of shares of Purchaser Stock that
have an aggregate value, calculated in accordance with Section 1.03(b), of
$1,000,000.
1.04. Resale Registration.
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(a) Within ninety (90) days following the Closing Date, Purchaser
shall prepare and file with the SEC, pursuant to the Securities Act, a
registration statement on Form S-3 or other appropriate form covering the public
resale of the Purchaser Stock. Purchaser shall use reasonable best efforts to
cause such registration statement (and the related prospectus) to become
effective as promptly as practicable after filing and to remain effective until
the date that is twelve (12) months following the Closing Date. Purchaser shall
bear the fees and expenses incurred in connection with such registration, except
for any fees and expenses of counsel to any of the Sellers and taxes applicable
to the sale by the Sellers of any Purchaser Stock covered thereby. While the
aforementioned registration statement is effective, Purchaser shall use its best
efforts to ensure that the registration statement, as amended or supplemented,
does not contain any untrue statement of a material fact or omit to state a
material fact required to make the statements therein, in light of the
circumstances in which they were made, not misleading.
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Notwithstanding anything herein to the contrary, each Seller shall resell shares
of Purchaser Stock only in accordance with applicable securities laws and
regulations and subject to applicable Blackout Period Restrictions (as described
below).
(b) In the event that Purchaser is required to transfer to the Sellers
any Purchaser Stock that constitutes part of the Holdback Amount pursuant to
Section 1.03(b), Purchaser agrees that it shall, as soon as practicable
following such transfer, and in any event within ninety (90) days following the
date of such transfer, prepare and file with the SEC, pursuant to the Securities
Act, a registration statement on Form S-3 or other appropriate form covering the
public resale of the Purchaser Stock that constituted the Holdback Amount.
Purchaser shall use reasonable best efforts to cause such registration statement
(and the related prospectus) to become effective as promptly as practicable
after filing and to remain effective until the date that is twelve (12) months
following the date of such transfer. Purchaser shall bear the fees and expenses
incurred in connection with such registration, except for any fees and expenses
of counsel to any of the Sellers and taxes applicable to the sale of any
Purchaser Stock covered thereby. While the aforementioned registration statement
is effective, Purchaser shall use its best efforts to ensure that the
registration statement, as amended or supplemented, does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements therein, in light of the circumstances in which they were made,
not misleading. Notwithstanding anything herein to the contrary, each Seller
shall resell shares of Purchaser Stock only in accordance with applicable
securities laws and regulations and subject to applicable Blackout Period
Restrictions (as described below).
(c) "Blackout Period Restrictions" shall mean the following restrictions
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on the sale of shares of Purchaser Stock by any of the Sellers: (i) none of the
Sellers may sell any securities of Purchaser at any time in violation of the
written company-wide policies of Purchaser attached hereto as Exhibit A, as the
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same may be amended from time to time (the "Blackout Policy"); and (ii) at any
time subsequent to the Closing and while any of the Sellers continues to be the
beneficial owner of any shares of Purchaser's common stock, upon giving written
notice to the Sellers, Purchaser shall be entitled to suspend sales of its
securities by its employees (including the Sellers) for a period beginning on
the date of receipt of such notice and expiring on the date upon which Purchaser
notifies the Sellers in writing that such restriction has been lifted.
Purchaser represents that the Blackout Policy is applicable to all other
employees of APC. Purchaser agrees that it will exercise its rights under
Section 1.04(c)(ii) only in a manner that has a substantially similar effect on
all other employees of APC.
(d) Purchaser agrees that it will remove any restrictive legend set forth
on, and any stop transfer instructions relating to, shares of Purchaser Stock
received by the Sellers in connection with this Agreement if Purchaser shall
have: (i) received a copy of a letter from the staff of the SEC, or a written
opinion of counsel, in form and substance reasonably acceptable to Purchaser, to
the effect that such legend is not required for purposes of the Securities Act,
or (ii) been provided evidence or representations, reasonably acceptable to
Purchaser, that the shares represented by such certificates or held by such
holder in book entry form, as applicable, are being or have been transferred in
a transaction made in conformity with the provisions of Rule 144 or Rule 145, as
applicable, promulgated under the Securities Act. Purchaser agrees that it
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will use its reasonable best efforts to maintain adequate current public
information within the meaning of Rule 144 promulgated under the Securities Act
during the three (3)-year period following the Closing Date.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, solely with respect to himself, hereby represents and
warrants to Purchaser as follows:
2.01. Status of the Sellers. Each Seller has full legal power and
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capacity to enter into this Agreement and the Operative Agreements. This
Agreement has been duly and validly executed and delivered by each Seller and
constitutes, and upon the execution and delivery by such Seller of the Operative
Agreements to which such Seller is to be a party, such Contracts will
constitute, legal, valid and binding obligations of such Seller, enforceable
against such Seller in accordance with its, and their, terms.
2.02. Organization of the Company. The Company is a corporation duly
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organized, validly existing and in good standing under the Laws of the State of
Maryland, and has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its Assets and
Properties. The Company is duly qualified, licensed or admitted to do business
and is in good standing in those jurisdictions specified in Section 2.02 of the
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Disclosure Schedule, which are the only jurisdictions in which the ownership,
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use or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary and in
which the failure to be so qualified, licensed or admitted and in good standing
could reasonably be expected to have a material adverse effect on the validity
or enforceability of this Agreement or any of the Operative Agreements to which
it is to be a party or on the ability of Purchaser to perform its obligations
hereunder or thereunder. The name of each director and officer of the Company
on the date hereof, and the position with the Company held by each, are listed
in Section 2.02 of the Disclosure Schedule. The Company has prior to the
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execution of this Agreement delivered to Purchaser true and complete copies of
the certificate of incorporation (as amended) and by-laws of the Company as in
effect on the date hereof.
2.03. Capital Stock.
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(a) The authorized capital stock of the Company consists solely of
4,000 shares of Class A stock and 1,000 shares of Class B stock. As of the date
of this Agreement, (i) 100 shares of Class A stock were issued and outstanding
and no shares of Class A stock were held in the treasury of the Company, and
(ii) 100 shares of Class B stock were issued and outstanding and no shares of
Class B stock were held in the treasury of the Company. The shares of Class A
stock and Class B stock are held by the Sellers in the respective amounts set
forth opposite their names in Section 2.03(a) of the Disclosure Schedule. All of
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the issued and
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outstanding shares of common stock of the Company are duly authorized, validly
issued, fully paid and nonassessable. Except pursuant to this Agreement and
except as set forth on Section 2.03(a) of the Disclosure Schedule, there are
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no (i) Options obligating the Company or any of its Subsidiaries to issue or
sell any shares of capital stock of the Company or any Subsidiary of the Company
or to grant, extend or enter into any Option with respect thereto or (ii) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on any capital
stock of any Subsidiary of the Company.
(b) Except as set forth on Section 2.03(b) of the Disclosure
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Schedule, no employee of the Company or its Subsidiaries has been granted any
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"equity" interest in the Company or any Subsidiary, and the Sellers agree that
the Purchaser will have no liability with respect to any promises, undertakings
or statements made by any of the Sellers to any such employee or to any third
party relating to the granting of an equity interest in the Company or its
Subsidiaries to any such employee. The Sellers agree that any claims by one or
more employees of the Company or its Subsidiaries or by any third party based on
any such promises, undertakings or statements will be the sole responsibility of
the Sellers.
(c) Except as set forth on Section 2.03(c) of the Disclosure
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Schedule, each Seller owns the Shares set forth opposite such Seller's name on
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Section 2.03(a) of the Disclosure Schedule beneficially and of record, free and
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clear of all Encumbrances.
(d) The delivery of certificates at the Closing representing the
Shares in the manner provided in Section 1.03 will transfer to Purchaser good
and valid title to the Shares, free and clear of all Liens.
2.04. Subsidiaries. Section 2.04 of the Disclosure Schedule lists
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the name of each Subsidiary. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation (which jurisdiction is also identified in Section 2.04 of the
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Disclosure Schedule), and has full power and authority to own, use and lease its
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Assets and Properties. Each Subsidiary is duly qualified, licensed or admitted
to do business and is in good standing in each jurisdiction where the failure to
do so could have a material adverse effect (and such jurisdictions are
identified on Section 2.04 of the Disclosure Schedule). All of the outstanding
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shares of capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned, beneficially and of
record by the Company, free and clear of all Liens. There are no outstanding
options with respect to any Subsidiary. The Company has, prior to the execution
of this Agreement, delivered to Purchaser true and complete copies of the
certificate or articles of incorporation and by-laws (or other comparable
corporate charter documents) of each of the Subsidiaries as in effect on the
date hereof.
2.05. No Conflicts. To the knowledge of each Seller, the execution
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and delivery by such Seller of this Agreement do not, and the execution and
delivery by such Seller of the
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Operative Agreements to which he is to be a party, the performance by such
Seller of his obligations under this Agreement and such Operative Agreements and
the consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
of the Company;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.06 of the
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Disclosure Schedule, conflict with or result in a violation or breach of any
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term or provision of any Law or Order applicable to any Seller, the Company or
any of their respective Assets and Properties, other than such conflicts,
violations or breaches that could not reasonably be expected to have a Material
Adverse Effect; or
(c) except as disclosed in Section 2.06 of the Disclosure Schedule,
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(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require any
Seller or the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or
imposition of any Lien upon the Company or any of its Assets and Properties
under, any Contract or License to which any Seller or the Company is a party or
by which any of their respective Assets and Properties is bound.
2.06. Governmental Approvals and Filings. Except as disclosed in
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Section 2.06 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
the Sellers, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or any of the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
2.07. Books and Records. The minute books and other similar records
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of the Company and the Subsidiaries as made available to Purchaser prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, the boards of directors and committees of
the boards of directors of the Company and the Subsidiaries. The stock transfer
ledgers and other similar records of the Company and the Subsidiaries as made
available to Purchaser prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company and the Subsidiaries. Except as set forth in
Section 2.07 of the Disclosure Schedule, neither the Company nor any Subsidiary
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has any of its Books and Records recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including
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all means of access thereto and therefrom) are not under the exclusive ownership
and direct control of the Company or a Subsidiary.
2.08. Financial Statements.
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(a) Prior to the execution of this Agreement, the Sellers have
delivered to Purchaser true and complete copies of (i) the reviewed balance
sheets of the Company and its consolidated subsidiaries as of June 30, 1999,
1998 and 1997, and the related reviewed statements of operations and
stockholders' equity for each of the fiscal years then ended, together with a
true and correct copy of the report on such reviewed information by the
Company's independent accountants, and all letters from such accountants with
respect to the results of such reviews; and (ii) the unaudited balance sheet of
the Company and its consolidated Subsidiary as of January 31, 2000 (the "January
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31 Balance Sheet") and the related unaudited statement of operations and
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stockholders' equity for the month then ended.
(b) As soon as practicable following the Closing Date, the Sellers
will provide to Purchaser the unaudited balance sheet of the Company and its
consolidated Subsidiary as of April 30, 2000 (the "Closing Balance Sheet") and
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the unaudited statement of operations and stockholders' equity for the month
ended April 30, 2000. Such Closing Balance Sheet shall be prepared in
cooperation with, and subject to the mutual agreement of, Purchaser.
Except as set forth in the notes thereto, all such financial statements
described in (a) and (b) were or will be prepared in accordance with GAAP and in
accordance with the past accounting practices of the Company and fairly present
or will fairly present the financial condition and results of operations of the
Company and its consolidated subsidiaries as of the respective dates thereof and
for the respective periods covered thereby. Except as set forth in Section 2.08
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of the Disclosure Schedule, there are no contingent items that could reasonably
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be expected to have a material impact on the net asset value of the Company. In
the preparation of the Closing Balance Sheet, the Company will treat the items
listed on Section 2.08 of the Disclosure Schedule for accounting purposes in a
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manner that is consistent with the past accounting practices of the Company .
2.09. Absence of Changes.
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(a) Except for the execution and delivery of this Agreement and the
transactions to take place pursuant hereto on the Closing Date, and except as
disclosed in Section 2.09 of the Disclosure Schedule, since the Reviewed
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Financial Statement Date there has not been any material adverse change, or any
event or development which, individually or together with other such events,
could reasonably be expected to result in a Material Adverse Effect.
(b) There has not been a material reduction in the net asset value
of the Company since the January 31 Balance Sheet.
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(c) There has not been any material adverse development with
respect to (i) collectibility of accounts receivable, or (ii) existence and
condition of capital assets since the January 31 Balance Sheet.
2.10. No Undisclosed Liabilities. Except as reflected or reserved
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against in the balance sheet included in the Reviewed Financial Statements or in
the notes thereto or as disclosed in Section 2.10 of the Disclosure Schedule or
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any other Section of the Disclosure Schedule, there are no Liabilities against,
relating to or affecting the Company or any Subsidiary or any of their
respective Assets and Properties, other than Liabilities incurred in the
ordinary course of business consistent with past practice which in the aggregate
are not material to the Business or Condition of the Company.
2.11. Taxes. Except as set forth in Section 2.11 of the Disclosure
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Schedule:
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(a) The Company and each of its Subsidiaries have timely filed or
have had filed, after giving effect to any applicable extensions, all material
Tax Returns required to be filed by applicable law. All Tax Returns were (and,
as to Tax Returns completed, but not filed as of the date hereof, if any, will
be) true, complete and correct, in all material respects. No material claim has
been made by any Tax authority of a jurisdiction where the Company or its
Subsidiaries do not file Tax Returns that the Company or its Subsidiaries are
subject to Tax by that jurisdiction.
(b) The Company and each of its Subsidiaries have, within the time
and in the manner prescribed by law, paid (and until the Closing Date will pay
within the time and in the manner prescribed by law) all material Taxes that are
due and payable, including without limitation, the payment of material estimated
Taxes.
(c) There are no Tax liens with respect to any assets of the
Company or its Subsidiaries except liens for Taxes that are (as of the Closing
Date) not yet due.
(d) The Company and each of its Subsidiaries have not agreed to any
extension of time within which to file any Tax Return, which Tax Return has not
since been filed.
(e) The Company and each of its Subsidiaries have not executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns.
(f) No material deficiency for any Taxes has been proposed,
asserted or assessed against the Company.
(g) No audits or other administrative proceedings or court
proceedings are presently ongoing with regard to any Taxes or Tax Returns of the
Company or its Subsidiaries, and no Tax authority has notified the Company or
its Subsidiaries that it intends to investigate their Tax affairs.
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(h) No power of attorney currently in force has been granted by the
Company or any of its Subsidiaries concerning any Tax matter.
(i) The Company and each of its Subsidiaries has established on its
Books and Records in accordance with GAAP reserves adequate to pay all material
Taxes that are, as of the Closing Date, deferred or current and not yet due or
payable (which current reserves shall exclude all taxes related to so-called
"temporary" differences).
(j) The Company and each of its Subsidiaries has complied (and
until the Closing Date will comply) in all material respects with the provisions
of the Code relating to the payment and withholding of Taxes, including, without
limitation, the withholding and reporting requirements under Code (S)(S) 1441
through 1446, 3401 through 3406, and 6041 and 6049, as well as similar
provisions under any other laws, and have, within the time and in the manner
prescribed by law, withheld and paid over to the proper governmental authorities
all material amounts required in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(k) The Company and each of its Subsidiaries has not filed (and
will not file prior to the Closing) a consent pursuant to Code (S) 341(f).
(l) The Company and each of its Subsidiaries is not required to
include in income any adjustment pursuant to Code (S) 481(a) by reason of a
voluntary change in accounting method initiated by the Company or its
Subsidiaries, and to the knowledge of the Sellers, the IRS has not proposed any
such adjustment or change in accounting method.
(m) No election under Code (S) 338 (or any predecessor provisions)
has been made with respect to any of the assets of the Company or its
Subsidiaries.
(n) The Company has not received a Tax Ruling or entered into a
Closing Agreement with any Tax Authority that would have a continuing adverse
effect upon the Company after the Closing Date. For purposes of the preceding
sentence, "Tax Ruling" shall mean a written ruling of any Tax authority relating
to Taxes, and "Closing Agreement" shall mean a written and legally binding
agreement with a Tax authority relating to Taxes.
(o) No event, transaction, act or omission has occurred which could
result in the Company becoming liable to pay or to bear any Tax as a transferee,
successor or otherwise which is primarily or directly chargeable or attributable
to any other person, firm or company. The Company has no actual or contingent
liability (whether by reason of any indemnity, warranty, Tax sharing agreement
or otherwise) to any other person in respect of any actual, contingent or
deferred liability of such person for Taxes.
2.12. Legal Proceedings. Except as disclosed in Section 2.12 of the
----------------- -------------------
Disclosure Schedule (with paragraph references corresponding to those set forth
-------------------
below):
10
(a) there are no Actions or Proceedings pending or, to the knowledge
of the Sellers, threatened against, relating to or affecting any of the Sellers,
the Company or any Subsidiary or any of their respective Assets and Properties
which (i) could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements or otherwise result in a material diminution of the
benefits contemplated by this Agreement or any of the Operative Agreements to
Purchaser, or (ii) if determined adversely to the relevant Seller, the Company
or a Subsidiary, could reasonably be expected to result in a Material Adverse
Effect;
(b) there are no facts or circumstances known to the Sellers that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against the Company or any
Subsidiary.
2.13. Compliance With Laws and Orders. Except as disclosed in Section
------------------------------- -------
2.13 of the Disclosure Schedule, neither the Company nor any Subsidiary is or
-------------------------------
has at any time within the last five years been, or has received any notice that
it is or has at any time within the last five years been, in violation of or in
default under, in any material respect, any Law or Order applicable to the
Company or any Subsidiary or any of their respective Assets and Properties.
2.14. Benefit Plans; ERISA.
--------------------
(a) Section 2.14(a) of the Disclosure Schedule (i) contains a true
------------------------------------------
and complete list of each of the Benefit Plans and (ii) identifies each of the
Benefit Plans that is a Qualified Plan. Neither the Company nor any Subsidiary
has scheduled or agreed upon future increases of benefit levels (or creations of
new benefits) with respect to any Plan, and no such increases or creation of
benefits have been proposed, made the subject of representations to employees or
requested or demanded by employees under circumstances which make it reasonable
to expect that such increases will be granted. Except as disclosed in Section
-------
2.14(a) of the Disclosure Schedule, no loan is outstanding between the Company
----------------------------------
or any Subsidiary and any employee.
(b) Neither the Company nor any Subsidiary maintains or is
obligated to provide benefits under any life, medical or health plan (other than
as an incidental benefit under a Qualified Plan) which provides benefits to
retirees or other terminated employees other than benefit continuation rights
under the Consolidated Omnibus Budget Reconciliation of 1985, as amended.
(c) Each of the Benefit Plans is, and its administration is and has
been since inception, in all material respects, in compliance with, and neither
the Company nor any Subsidiary has received any claim or notice that any such
Benefit Plan is not in compliance with, all applicable Laws and Orders and
prohibited transactions exemptions. Each Qualified Plan has received a favorable
determination letter from the Internal Revenue Service that it is qualified
under Section 401(a) of the Code, and, if applicable, Section 401(k) of the
Code, and, to the
11
knowledge of Seller, nothing has occurred subsequent thereto that would
adversely affect such determination.
(d) Neither the Sellers, the Company nor any Subsidiary is in default
in performing any of its material contractual obligations under any of the
Benefit Plans or any related trust agreement or insurance contract. All
contributions and other payments required to be made by the Sellers, the Company
or any Subsidiary to any Benefit Plan with respect to any period ending at the
Closing Date have been made or reserves adequate for such contributions or other
payments have been or will be set aside therefor and have been or will be
reflected in Financial Statements in accordance with GAAP. There are no material
outstanding liabilities of any Benefit Plan other than liabilities for benefits
to be paid to participants in such Benefit Plan and their beneficiaries in
accordance with the terms of such Benefit Plan.
(e) Except as disclosed in Section 2.14(e) of the Disclosure
---------------------------------
Schedule, (i) no benefit under any Benefit Plan, including, without limitation,
--------
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested or payable solely by reason of any transaction
contemplated under this Agreement; and (ii) no Plan exists which could result in
the payment of money or any other property or rights, or accelerate or provide
any other rights or benefits, to any current or former employee of the Company
or any Subsidiary (or other current or former service provider thereto) that
would not have been required but for the transactions provided for herein, and
none of the Company or any Subsidiary, nor any of their respective affiliates,
is a party to any Plan, program, arrangement or understanding that would result,
separately or in the aggregate, in the payment (whether in connection with any
termination of employment or otherwise) of any "excess parachute payment" within
the meaning of Section 280G of the Code with respect to a current or former
employee of, or current or former independent contractor to, any of the Company
or any Subsidiary.
(f) To the knowledge of the Sellers, there are no pending or
threatened claims by or on behalf of any Benefit Plan, by any person covered
thereby, or otherwise, which allege violations of Law which could reasonably be
expected to result in liability on the part of Purchaser, the Company, any
Subsidiary or any fiduciary of any such Benefit Plan, nor, to the knowledge of
the Sellers, is there any basis for such a claim.
(g) Complete and correct copies of the following documents have been
made available to Purchaser prior to the execution of this Agreement: (i) the
Benefit Plans including, all amendments thereto; (ii) current summary Plan
descriptions of each Benefit Plan subject to ERISA, and any similar descriptions
of all other Benefit Plans; (iii) the most recent Form 5500 and Schedules
thereto for each Benefit Plan subject to ERISA reporting requirements, if any;
and (iv) the most recent determination letter of the IRS with respect to the
qualified status of each Qualified Plan.
(h) Neither the Company nor any of its Subsidiaries is or at any time
ever has been in a controlled group (other than in respect of the Company and
its Subsidiary) or otherwise aggregated with any other corporation or other
trade or business (except for each other) for
12
purposes of Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA. Neither the Company nor any of its Subsidiaries maintains, contributes to
or otherwise has any liability to or with respect to, or has ever maintained,
contributed to or otherwise had any liability to or with respect to, any
employee benefit plan subject to Title IV or ERISA or Section 412 of the Code.
Without limiting any other provision of this Section 2.14, no event has occurred
and no condition exists, with respect to any Benefit Plan, that has subjected or
could subject the Company or any Subsidiary, or any Benefit Plan or any
successor thereto, to any Tax, fine, penalty or other liability (other than a
liability arising in the normal course to make contributions or payments, as
applicable, when ordinarily due under a Benefit Plan with respect to employees
of the Company and the Subsidiaries). To the knowledge of the Sellers, no event
has occurred and no condition exists, with respect to any Benefit Plan that
could subject Purchaser or any of its Affiliates, or any Benefit Plan maintained
by Purchaser or any Affiliate thereof, to any Tax, fine, penalty or other
liability, that would not have been incurred by Purchaser or any of its
Affiliates, or any such Benefit Plan, but for the transactions contemplated
hereby. Except as disclosed in Section 2.14(a) of the Disclosure Schedule, no
------------------------------------------
Benefit Plan is or will be directly or indirectly binding on Purchaser by virtue
of the transactions contemplated hereby. Neither the Company nor any Subsidiary
nor Purchaser will have any liability under the Workers Adjustment and
Retraining Notification Act, as amended, with respect to any events occurring or
conditions existing on or prior to Closing.
2.15. Real Property. (a) Section 2.15(a) of the Disclosure Schedule
------------- ------------------------------------------
contains a true and correct list of all leases, tenancy agreements or other
occupancy agreements to which the Company or any Subsidiary is a party or may be
bound (each a "Lease" and collectively, the "Leases"). Neither the Company nor
----- ------
any Subsidiary owns or has any contractual obligation to purchase any material
interest in any real property. To the knowledge of the Sellers, none of the
real property, buildings, structures, facilities, fixtures or other improvements
leased by the Company or any Subsidiary, or the use thereof by the Company or
any Subsidiary, contravenes or violates any building, zoning, administrative,
occupational safety and health or other applicable Law in any material respect
(whether or not permitted on the basis of prior nonconforming use, waiver or
variance).
(b) With respect to each Lease: (i) the Lease is valid and in full
force and effect as against the parties thereto, and has not been amended,
modified or supplemented except as set forth in Section 2.15 of the Disclosure
------------------------------
Schedule; (ii) no notice of default has been sent or received by the Company or
--------
any Subsidiary under the Lease that remains uncured and, no event has occurred
and is continuing which, with notice or lapse of time or both, would constitute
a default by any party to the Lease; (iii) neither the Company nor any
Subsidiary owes any brokerage or leasing commissions pursuant to such Lease;
(iv) Seller has made available to Purchaser a true and complete copy of such
Lease; and (v) Section 2.15 of the Disclosure Schedule contains a complete and
---------------------------------------
accurate list of all security deposits under such Lease made by the Company or
any Subsidiary.
2.16. Tangible Personal Property. The Company or a Subsidiary is in
--------------------------
possession of and has good title to, or has valid leasehold interests in or
valid rights under Contract to use,
13
all tangible personal property used in the conduct of their business, including
all tangible personal property reflected on the balance sheet included in the
Reviewed Financial Statements and tangible personal property acquired since the
Reviewed Financial Statement Date other than property that, in the ordinary
course of business consistent with past practice, has been disposed of, used up
or that has been worn out since such date. All such tangible personal property
is free and clear of all Liens, other than Permitted Liens and Liens disclosed
in Section 2.16 of the Disclosure Schedule, and is in good working order and
---------------------------------------
condition, ordinary wear and tear excepted, and its use complies in all material
respects with all applicable Laws.
2.17. Intellectual Property Rights. Section 2.17 of the Disclosure
---------------------------- ------------------------------
Schedule discloses all Intellectual Property which is used in and, individually
--------
or in the aggregate with other such Intellectual Property, is material to the
Business or Condition of the Company, each of which the Company or a Subsidiary
either has all right, title and interest in or a valid and binding license to
use. No other Intellectual Property is used or necessary in the conduct of the
business of the Company or any Subsidiary. Except as disclosed in Section 2.17
------------
of the Disclosure Schedule, (i) all registrations with and applications to
--------------------------
Governmental or Regulatory Authorities in respect of Intellectual Property owned
by the Company or a Subsidiary and disclosed in Section 2.17 of the Disclosure
------------------------------
Schedule are valid and in full force and effect, (ii) there are no material
--------
restrictions on the direct or indirect transfer of any license, or any interest
therein, held by the Company or any Subsidiary in respect of Intellectual
Property disclosed in Section 2.17 of the Disclosure Schedule, (iii) neither the
---------------------------------------
Company nor any Subsidiary is in default (or with the giving of notice or lapse
of time or both, would be in default) in any material respect under any license
to use the Intellectual Property disclosed in Section 2.17 of the Disclosure
------------------------------
Schedule and (iv) to the knowledge of the Sellers, the Intellectual Property
--------
disclosed in Section 2.17 of the Disclosure Schedule is not being infringed by
---------------------------------------
any other Person. Neither the Sellers, the Company nor any Subsidiary has
received notice that the Company or any Subsidiary is infringing any
Intellectual Property of any other Person, no claim is pending or has been made
to such effect that has not been resolved and neither the Company nor any
Subsidiary is infringing any Intellectual Property Rights of any other Person
the effect of which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
2.18. Contracts. (a) Section 2.18(a) of the Disclosure Schedule
--------- ------------------------------------------
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts or other arrangements
(true and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchaser prior to the
execution of this Agreement), to which the Company or any Subsidiary is a party
or by which any of their respective Assets and Properties is bound:
(i) (A) all material Contracts (excluding Benefit Plans)
providing for a commitment of employment or consultation services for a
specified or unspecified term, the name, position and rate of compensation
of each Person party to such a Contract and the expiration date of each
such Contract; and (B) any written or unwritten representations,
commitments, promises, communications or courses of conduct
14
(excluding Benefit Plans embodied in a Contract) involving an obligation of
the Company or any Subsidiary to make payments in any year, other than with
respect to salary or incentive compensation payments in the ordinary course
of business, to any employee exceeding $50,000 or to any group of employees
exceeding $100,000 in the aggregate;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company or any
Subsidiary to engage in any business activity or compete with any Person or
prohibiting or limiting the ability of any Person to compete with the
Company or any Subsidiary;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or any
Subsidiary in excess of $25,000 or to preferred stock issued by the Company
or any Subsidiary (other than Indebtedness owing to or preferred stock
owned by the Company or any wholly owned Subsidiary);
(v) all material Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchisees;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice, and (B) any Business Combination;
(vii) all material Contracts between or among the Company or any
Subsidiary, on the one hand, and any of the Sellers, any Affiliate or
Associate of any of the Sellers or any Associate of any such Affiliate
(other than the Company or any Subsidiary), on the other hand;
(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts that (A) limit or contain restrictions on the
ability of the Company or any Subsidiary to declare or pay dividends on, to
make any other distribution in respect of or to issue or purchase, redeem
or otherwise acquire its capital stock, to incur Indebtedness, to incur or
suffer to exist any Lien, to purchase or sell any Assets and Properties, to
change the lines of business in which it participates or engages or to
engage in any Business Combination or (B) require the Company or any
Subsidiary to maintain specified financial ratios or levels of net worth or
other indicia of financial condition; and
(x) all other Contracts that (A) involve the payment or potential
payment, pursuant to the terms of any such Contract, by or to the Company
or any Subsidiary of more than $50,000 and (B) cannot be terminated within
thirty (30) calendar
15
days after giving notice of termination without resulting in any material
cost or penalty to the Company or any Subsidiary.
(b) Each Contract required to be disclosed in Section 2.18(a) of the
----------------------
Disclosure Schedule is in full force and effect and constitutes a legal, valid
-------------------
and binding agreement, enforceable in accordance with its terms, of each party
thereto; and except as disclosed in Section 2.18(b) of the Disclosure Schedule
------------------------------------------
neither the Company, any Subsidiary nor, to the knowledge of the Sellers, any
other party to such Contract is, or has received notice that it is, in violation
or breach of or default under any such Contract (or with notice or lapse of time
or both, would be in violation or breach of or default under any such Contract).
(c) Except as disclosed in Section 2.18(c) of the Disclosure
---------------------------------
Schedule, neither the Company nor any Subsidiary is a party to or bound by any
--------
Contract that has resulted or could reasonably be expected to result,
individually or in the aggregate with any other such Contracts, in a Material
Adverse Effect.
2.19. Licenses. Section 2.19 of the Disclosure Schedule contains a
-------- ---------------------------------------
true and complete list of all Licenses used in and material to the business or
operations of the Company or any Subsidiary, setting forth the owner, the
function and the expiration and renewal date of each. Prior to the execution of
this Agreement, the Sellers have delivered to Purchaser true and complete copies
of all such Licenses. Except as disclosed in Section 2.19 of the Disclosure
------------------------------
Schedule:
--------
(i) The Company and each Subsidiary owns or validly holds all
Licenses that are material to its business or operations;
(ii) each License listed in Section 2.19 of the Disclosure
------------------------------
Schedule is valid, binding and in full force and effect; and
--------
(iii) neither the Company nor any Subsidiary is, or has received
any notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any such License.
2.20. Insurance. Section 2.20 of the Disclosure Schedule contains
--------- ---------------------------------------
a true and complete list (including the names and addresses of the insurers, the
expiration dates thereof, the annual premiums and payment terms thereof and a
brief description of the interests insured thereby) of all liability, property,
workers' compensation, directors' and officers' liability and other insurance
policies currently in effect that insure the business, operations or employees
of the Company or any Subsidiary or affect or relate to the ownership, use or
operation of any of the Assets and Properties of the Company or any Subsidiary
and that (i) have been issued to the Company or any Subsidiary or (ii) have been
issued to any Person (other than the Company or any Subsidiary) for the benefit
of the Company or any Subsidiary. The insurance coverage provided by the
policies described in clause (i) above will not terminate or lapse by reason of
the transactions contemplated by this Agreement. Each policy listed in Section
-------
2.20 of the Disclosure Schedule is valid and binding and in full force and
-------------------------------
effect, no premiums due
16
thereunder have not been paid and neither the Company, any Subsidiary nor the
Person to whom such policy has been issued has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder. Neither the Company nor any Subsidiary has received notice that any
insurer under any policy referred to in this Section 2.20 is denying liability
with respect to a claim thereunder or defending under a reservation of rights
clause.
2.21. Affiliate Transactions. Except as disclosed in Section 2.21
---------------------- ------------
(a) of the Disclosure Schedule, as of the date of this Agreement, (i) there are
------------------------------
no Liabilities between the Company or any Subsidiary, on the one hand, and any
of the Sellers, any Affiliate or Associate of any of the Sellers or any
Associate of any such Affiliate (other than the Company or any Subsidiary), on
the other, (ii) neither any of the Sellers nor any such Affiliate or Associate
provides or causes to be provided any assets, services or facilities to the
Company or any Subsidiary, (iii) neither the Company nor any Subsidiary provides
or causes to be provided any assets, services or facilities to Seller or any
such Affiliate or Associate and (iv) neither the Company nor any Subsidiary
beneficially owns, directly or indirectly, any Investment Assets of any of the
Sellers or any such Affiliate or Associate. Except as disclosed in Section
-------
2.21(b) of the Disclosure Schedule, each of the Liabilities and transactions
----------------------------------
listed in Section 2.21(a) of the Disclosure Schedule was incurred or engaged in,
------------------------------------------
as the case may be, on an arm's-length basis. Except as disclosed in Section
-------
2.21(c) of the Disclosure Schedule, since the Reviewed Financial Statement Date,
----------------------------------
all settlements of intercompany Liabilities between the Company or any
Subsidiary, on the one hand, and any of the Sellers or any such Affiliate or
Associate, on the other, have been made, and all allocations of intercompany
expenses have been applied, in the ordinary course of business consistent with
past practice.
2.22. Employees; Labor Relations. (a) Section 2.22 of the
-------------------------- -------------------
Disclosure Schedule contains a list of the name of each officer and full-time
-------------------
employee of the Company and the Subsidiaries having an annual base salary or
wages of at least $50,000 at the date hereof, together with each such person's
position or function, annual base salary or wages and any incentive or bonus
arrangement with respect to such person in effect on such date. The Sellers have
not received any information that would lead them to believe that a material
number of such persons will or may cease to be employees, or will refuse offers
of employment from Purchaser, because of the consummation of the transactions
contemplated by this Agreement.
(b) Except as disclosed in Section 2.22 of the Disclosure
------------------------------
Schedule, (i) no employee of the Company or any Subsidiary is presently a
--------
member of a collective bargaining unit and, to the knowledge of the Sellers,
there are no threatened or contemplated attempts to organize for collective
bargaining purposes any of the employees of the Company or any Subsidiary, and
(ii) no unfair labor practice complaint or sex or age discrimination claim has
been brought during the last five years against the Company or any of the
Subsidiaries before the National Labor Relations Board or any other Governmental
or Regulatory Authority.
2.23. Substantial Customers and Suppliers. Section 2.23(a) of the
----------------------------------- ----------------------
Disclosure Schedule lists the ten (10) largest customers of the Company and the
-------------------
Subsidiaries, on the basis of revenues for goods sold or services provided for
the most recent fiscal year. Section 2.23(b) of
------------------
17
the Disclosure Schedule lists the ten (10) largest suppliers of the Company
-----------------------
and the Subsidiaries, on the basis of cost of goods or services purchased for
the most recent fiscal year. Except as disclosed in Section 2.23(c) of the
----------------------
Disclosure Schedule, no such customer or supplier has ceased or materially
-------------------
reduced its purchases from or sales or provision of services to the Company and
the Subsidiaries since the Reviewed Financial Statement Date, or to the
knowledge of the Sellers, has threatened to cease or materially reduce such
purchases or sales or provision of services after the date hereof. Except as
disclosed in Section 2.23(d) of the Disclosure Schedule, to the knowledge of the
------------------------------------------
Sellers, no such customer or supplier is threatened with bankruptcy or
insolvency.
2.24. Bank and Brokerage Accounts; Investment Assets. Section 2.24
---------------------------------------------- ------------
of the Disclosure Schedule sets forth (a) a true and complete list of the names
--------------------------
and locations of all banks, trust companies, securities brokers and other
financial institutions at which the Company or any Subsidiary has an account or
safe deposit box or maintains a banking, custodial, trading or other similar
relationship; (b) a true and complete list and description of each such account,
box and relationship, indicating in each case the account number and the names
of the respective officers, employees, agents or other similar representatives
of the Company or any Subsidiary having signatory power with respect thereto;
and (c) a list of each Investment Asset, the name of the record and beneficial
owner thereof, the location of the certificates, if any, therefor, the maturity
date, if any, and any stock or bond powers or other authority for transfer
granted with respect thereto.
2.25. No Powers of Attorney. Except as set forth in Section 2.2 of
--------------------- -----------
the Disclosure Schedule, neither the Company nor any Subsidiary has any
-----------------------
powers of attorney or comparable delegations of authority outstanding.
2.26. Accounts Receivable. Except as set forth in Section 2.26 of the
------------------- -------------------
Disclosure Schedule, the accounts and notes receivable of the Company and the
-------------------
Subsidiaries reflected on the balance sheet included in the Reviewed Financial
Statements, and all accounts and notes receivable arising subsequent to the
Reviewed Financial Statement Date, (i) arose from bona fide sales transactions
---- ----
in the ordinary course of business and are payable on ordinary trade terms, (ii)
are legal, valid and binding obligations of the respective debtors enforceable
in accordance with their terms, (iii) are not subject to any valid set-off or
counterclaim, (iv) do not represent obligations for goods sold on consignment,
on approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement, (v) are collectible in the ordinary course of business
consistent with past practice in the aggregate recorded amounts thereof, net of
any applicable reserve reflected in the balance sheet included in the Reviewed
Financial Statements, and (vi) are not the subject of any Actions or Proceedings
brought by or on behalf of the Company or any Subsidiary. Section 2.26 of the
-------------------
Disclosure Schedule sets forth a description of any security arrangements and
-------------------
collateral securing the repayment or other satisfaction of receivables of the
Company and the Subsidiaries. All steps necessary to render all such security
arrangements legal, valid, binding and enforceable, and to give and maintain for
the Company or a Subsidiary, as the case may be, a perfected security interest
in the related collateral, have been taken.
18
2.27. Inventory. As soon as practicable following the Closing Date,
---------
the Sellers will deliver to Purchaser a list of all inventory (the "Inventory")
---------
of the Company as of April 30, 2000 (the "Inventory List").
--------------
(a) The Inventory List will be a true and complete list of all
inventory of the Company as of the date thereof.
(b) The Inventory will be accurately reflected in the Closing
Balance Sheet.
(c) Except as set forth in Section 2.27(a) of the Disclosure
---------------------------------
Schedule, the Company or a Subsidiary will be in possession of and will have
--------
good title to all of the Inventory as of the date of the Inventory List. All of
the Inventory will be free and clear of all Liens, other than Permitted Liens
and Liens disclosed in Section 2.27(b) of the Disclosure Schedule, will be in
------------------------------------------
good working order and condition and will be saleable in accordance with past
practices of the Company and in accordance with historical prices for such
products, all as of the date of the Inventory List.
(d) Other than sales of Inventory in the ordinary course of
business, there will be no material changes in the inventory of the Company, or
in the condition of any inventory of the Company, between the Closing Date and
the date of the Inventory List.
2.28. Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by the Sellers directly
with Purchaser without the intervention of any Person on behalf of the Sellers
in such manner as to give rise to any valid claim by any Person against
Purchaser, the Company or any Subsidiary for a finder's fee, brokerage
commission or similar payment.
2.29. Environmental Matters. Each of the Company and the
---------------------
Subsidiaries has obtained all Licenses which are required in respect of its
business, operations or Assets and Properties under applicable Environmental
Laws. Each of the Company and the Subsidiaries is in compliance in all material
respects with the terms and conditions of all such Licenses and, to the
knowledge of the Sellers, with any applicable Environmental Law. Except as set
forth in Section 2.29 of the Disclosure Schedule (with paragraph references
---------------------------------------
corresponding to those set forth below):
(a) No Order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
knowledge of the Sellers, threatened by any Governmental or Regulatory Authority
with respect to any alleged failure by the Company or any Subsidiary to have any
License required in connection with the conduct of the business or operations of
the Company or any of the Subsidiaries or with respect to any treatment,
storage, recycling, transportation, disposal or "release" as defined in 42
U.S.C. (S) 9601(22) ("Release"), of any Hazardous Material, and the Sellers are
-------
not aware of any facts or circumstances which could reasonably be expected to
form the basis for any such Order, complaint, penalty or investigation.
19
(b) Neither the Company, any Subsidiary nor, to the knowledge of
the Sellers, any prior owner or lessee of any property now or previously owned
or leased by the Company or any Subsidiary has handled any Hazardous Material on
any property now or previously owned or leased by the Company or any Subsidiary;
and, without limiting the foregoing, (i) no polychlorinated biphenyl is or has
been present, (ii) no asbestos is or has been present, (iii) there are no
underground storage tanks, active or abandoned, and (iv) no Hazardous Material
has been Released in a quantity reportable under, or in violation of, any
Environmental Law, at, on or under any property now or previously owned or
leased by the Company or any Subsidiary, during any period that the Company or a
Subsidiary owned or leased such property or, to the knowledge of the Sellers,
the Company and the Subsidiaries, prior thereto.
(c) Neither the Company nor any Subsidiary has transported or
arranged for the transportation of any Hazardous Material to any location which
is the subject of any Action or Proceeding that could lead to claims against
Purchaser, the Company or any Subsidiary for clean-up costs, remedial work,
damages to natural resources or personal injury claims, including, but not
limited to, claims under CERCLA.
(d) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any Subsidiary and no
property now or, to the knowledge of the Sellers, previously owned or leased by
the Company or any Subsidiary is listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA or on any similar state list of
sites requiring investigation or clean-up.
(e) There are no Liens (other than Permitted Liens) arising under
or pursuant to any Environmental Law or Order on any real property owned or
leased by the Company or any Subsidiary, and no action of any Governmental or
Regulatory Authority has been taken or, to the knowledge of the Sellers, is in
process which could subject any of such properties to such Liens, and neither
the Company nor any Subsidiary would be required to place any notice or
restriction relating to the presence of Hazardous Material at any property owned
by it in any deed to such property.
(f) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or which are in the
possession of, the Company or any Subsidiary in relation to any property or
facility now or, to the knowledge of the Sellers, previously owned or leased by
the Company or any Subsidiary which have not been delivered to Purchaser prior
to the execution of this Agreement.
2.30. Acquisition for Investment. Each Seller is acquiring his share
--------------------------
of the Purchaser Stock for its own account, in consideration for the transfer of
his stock in the Company to Purchaser, for the purpose of investment, it being
understood that the right to dispose of such stock shall be entirely within the
discretion of each respective Seller. Each Seller will refrain from
transferring or otherwise disposing of any of the Purchaser Stock, or any
interest therein, in such manner as to cause Purchaser to be in violation of the
registration requirements of the Securities Act, or applicable state securities
or blue sky laws.
20
2.31. Disclosure. All material facts relating to the Business or
----------
Condition of the Company have been disclosed to Purchaser in or in connection
with this Agreement. No representation or warranty contained in this Agreement,
and no statement contained in the Disclosure Schedule or in any certificate,
list or other writing furnished to Purchaser pursuant to any provision of this
Agreement (including without limitation the Financial Statements), contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
2.32. Covenant to Deliver April 30, 2000 Information. The Sellers
----------------------------------------------
hereby covenant and agree to provide, as soon as practicable, and to use
reasonable best efforts to do so by May 31, 2000, all financial and other
information that the Sellers have agreed herein to provide to Purchaser as of
April 30, 2000, including the Closing Balance Sheet and the Inventory List.
2.33. Covenant to Operate Business in the Normal Course. The Sellers
-------------------------------------------------
hereby covenant and agree that they will operate the Company in all respects in
the normal course of business and consistent with past practice of the Company
from the Closing Date until the date on which all of the information referred to
in Section 2.32 has been delivered to Purchaser. In addition, the Sellers
hereby covenant and agree that, following the Closing Date, they shall not
individually or collectively sign or enter into any obligations, contractual or
otherwise, which bind the Company without the prior written consent of a
corporate officer of Purchaser.
ARTICLE III
COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers as follows:
3.01. Organization. Purchaser is a corporation duly organized,
------------
validly existing and in good standing under the Laws of the Commonwealth of
Massachusetts. Purchaser has full corporate power and authority to execute and
deliver this Agreement and the Operative Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Purchaser is duly qualified,
licensed or admitted to do business and is in good standing in all jurisdictions
in which the ownership, use or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary and in which the failure to be so qualified, licensed or
admitted and in good standing could reasonably be expected to have an adverse
effect on the validity or enforceability of this Agreement or any of the
Operative Agreements to which it is a party or on the ability of Purchaser to
perform its obligations hereunder or thereunder.
3.02. Authority. The execution and delivery by Purchaser of this
--------- ---------
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the Board of
21
Directors of Purchaser, no other corporate action on the part of Purchaser or
its stockholders being necessary. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes, and upon the execution and
delivery by Purchaser of the Operative Agreements to which it is a party, such
Operative Agreements will constitute, legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with its, and their,
terms.
3.03. Governmental Approvals and Filings. Except as disclosed in
----------------------------------
Schedule 3.03 hereto, no consent, approval or action of, filing with or notice
-------------
to any Governmental or Regulatory Authority on the part of Purchaser is required
in connection with the execution, delivery and performance of this Agreement or
the Operative Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
3.04. Capital Stock of the Purchaser. When issued, the Purchaser
------------------------------
Stock constituting the Purchase Price will be duly authorized, validly issued,
fully paid and nonassessable and will not be issued in violation of any pre-
emptive rights. There are no voting trusts, stockholder agreements, proxies or
other agreements in effect with respect to the voting or transfer of such
Purchaser Stock. Other than the requirement of compliance with the Securities
Act and the Securities Exchange Act of 1934, as amended, and the provisions of
Sections 1.03 and 1.04, there shall be no restrictions on the right of the
Sellers to sell and transfer the Purchaser Stock.
3.05. Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by Purchaser directly
with the Sellers without the intervention of any Person on behalf of Purchaser
in such manner as to give rise to any valid claim by any Person against the
Sellers, the Company or any Subsidiary for a finder's fee, brokerage commission
or similar payment.
3.06. Payment of Bank Debt. Purchaser hereby covenants and agrees to
--------------------
assume all indebtedness of the Company under the credit facilities listed on
Schedule 3.06 hereto (and all additional indebtedness under such facilities
-------------
incurred by the Company in the ordinary course of business subsequent to the
Closing Date) and to extinguish the personal guarantees of the credit facilities
listed on Schedule 3.06 made by ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
-------------
ARTICLE IV
TAX MATTERS AND POST-CLOSING TAXES
4.01. Transfer Taxes. The Sellers shall pay all sales, use, transfer,
--------------
real property transfer, recording, gains, stamp stock transfer and other similar
taxes and fees ("Transfer Taxes") arising out of or in connection with the
--------------
transactions effected pursuant to this Agreement, and the Sellers shall
indemnify, defend, and hold harmless Purchaser and the Company (on an after-Tax
basis) with respect to such Transfer Taxes. The Sellers shall file all
necessary documentation and Returns with respect to such Transfer Taxes.
4.02. Post-Closing Taxes.
------------------
22
(a) Purchaser shall, at its own expense, timely prepare and file
(or cause to be prepared and filed) all Tax Returns required by law for all
Taxes covering the Company for periods beginning prior to and ending after the
Closing Date ("Post-Closing Tax Returns"). Purchaser will independently
------------------------
determine in good faith the basis on which all Post-Closing Tax Returns are to
be filed. Purchaser shall timely pay or cause to be paid all Taxes relating to
Post-Closing Tax Returns ("Post-Closing Taxes"), which payments shall not reduce
------------------
the Holdback Amount.
(b) The Sellers shall be liable to Purchaser for the Sellers'
allocable portion of Post-Closing Taxes attributable to the Company ("Sellers'
--------
Post-Closing Taxes") to the extent such Sellers' Post-Closing Taxes plus unpaid
------------------
Pre-Closing Taxes plus Transfer Taxes exceed the accruals for such Taxes
contained in the Closing Date Balance Sheet. The Sellers' allocable portion of
Post-Closing Taxes shall be:
(i) in the case of any real or personal property Tax, an
amount equal to the Tax for the assets owned on the Closing Date for the
entire taxable period multiplied by a fraction the numerator of which is
the number of days in the period for which such Taxes are paid ending on
the Closing Date and the denominator of which is the number of days in the
entire taxable period;
(ii) in the case of any other tax, the amount that would be
payable by the Company if its taxable year ended on the Closing Date.
(iii) At least thirty (30) days prior to the filing of any
Post-Closing Tax Return which includes any Sellers' Post-Closing Taxes,
Purchaser shall, at the request of the Sellers, provide a copy of the
return along with Purchaser's calculation of Sellers' Post-Closing Taxes
related thereto. Within twenty (20) days of receipt of these items, the
Sellers shall pay to Purchaser the amount of Sellers' Post-Closing Taxes.
4.03. Sellers' Tax Costs. After the Closing date, the Sellers will
------------------
indemnify and hold harmless Purchaser and the Company from and against any and
all claims, actions, causes of action, liabilities, losses, damages and
reasonable out-of-pocket expenses and costs resulting from, arising out of or
relating to Pre-Closing Taxes, Sellers' Post-Closing Taxes, and Transfer Taxes
(the "Sellers' Tax Costs") in an amount equal to the excess, if any, of Sellers'
------------------
Tax Costs over the accruals therefor established on the Company's Closing Date
Balance Sheet.
4.04. Available Information. After the Closing Date, Purchaser and
---------------------
the Sellers shall make available to the other, as reasonably requested, all
information, records or documents relating to Tax liabilities or potential Tax
liabilities of the Company for the portion of any period allocated to the
Sellers under Section 4.02, and shall preserve all such information, records and
documents until the expiration of any applicable statute of limitations,
including extensions thereof, or such other period as required by law.
Purchaser and the Sellers shall also make available to each other as reasonably
requested by Purchaser or the Sellers, as the case may be, personnel responsible
for preparing or maintaining information, records and documents, in connection
with Tax matters. In case at any time after the Closing Date any further action
is
23
necessary to carry out the purposes of this Agreement, the parties hereto
shall take all such necessary action.
4.05. Tax Treatment. Any payments made to the Sellers, the Company or
-------------
Purchaser pursuant to this Article IV shall constitute an adjustment of the
Purchase Price for Tax purposes and shall be treated as such by Purchaser and
the Sellers on their Tax Returns to the extent permitted by law.
ARTICLE V
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
5.01. Survival of Representations, Warranties, Covenants and
------------------------------------------------------
Agreements. Notwithstanding any right of Purchaser (whether or not exercised)
----------
to investigate the affairs of the Company and the Subsidiaries or any right of
any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement,
the Sellers and Purchaser have the right to rely fully upon the representations,
warranties, covenants and agreements of the other party or parties contained in
this Agreement. The representations, warranties, covenants and agreements of the
Sellers and Purchaser contained in this Agreement shall survive the Closing (a)
indefinitely with respect to the representations and warranties contained in
Sections 2.01, 2.03, 2.04 (but only insofar as it relates to the capital stock
of the Subsidiaries), 2.28 and 3.02, (b) until sixty (60) calendar days after
the expiration of all applicable statutes of limitations (including all periods
of extension, whether automatic or permissive) with respect to matters covered
by Section 2.11 and Article IV and (insofar as it relates to ERISA or the Code)
Section 2.14, or (c) with respect to each other covenant or agreement contained
in this Agreement, for one year following the last date on which such covenant
or agreement is to be performed or, if no such date is specified, indefinitely,
provided, however, that all representations, warranties covenants and agreements
-------- -------
contained in this Agreement shall survive for a minimum of three (3) years from
the Closing Date, and provided further that any representation, warranty,
-------- -------
covenant or agreement that would otherwise terminate in accordance with clause
(b) or (c) above will continue to survive if a Claim Notice or Indemnity Notice
(as applicable) shall have been timely given under Article VI on or prior to
such termination date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in Article VI.
ARTICLE VI
INDEMNIFICATION
6.01. Indemnification.
---------------
24
(a) Subject to the limitations on liability of each respective
Seller set forth on Schedule 6.01 hereto, the Sellers shall jointly and
-------------
severally indemnify Purchaser and its officers, directors, employees, agents and
Affiliates in respect of, and hold each of them harmless from and against, any
and all Losses suffered, incurred or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to (i) any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of any of the Sellers contained in this
Agreement; (ii) any claims by one or more employees of the Company or its
Subsidiaries based on such employee's assertion of an entitlement to, or the
promise, undertaking or statement of any of the Sellers with respect to the
granting of, an equity interest in the Company to such employee; or (iii) a
claim by Sprint North Supply for indemnification in connection with, or a claim
by a third party relating to, an alleged violation of one or more environmental
laws or regulations relating to the use of PVC coating or other materials.
(b) Purchaser agrees to indemnify each of the Sellers and his
agents and Affiliates in respect of, and to hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
any misrepresentation, breach of warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of Purchaser contained in this
Agreement.
(c) No amounts of indemnity shall be payable as a result of any
claim arising under Section 6.01(a) in respect of a misrepresentation or breach
of warranty by any of the Sellers unless and until the Indemnified Parties
thereunder have suffered, incurred, sustained or become subject to Losses
referred to in such Section in excess of $50,000 in the aggregate, in which
event the Indemnified Parties shall be entitled to seek indemnity from the
Sellers on a joint and several basis for the full amount of such Losses (subject
to the limitations set forth on Schedule 6.01), provided that this paragraph (c)
------------- --------
shall not apply to a misrepresentation or breach of warranty by Seller contained
in Sections 2.01, 2.03, 2.04, 2.05, 2.06 and 2.28.
6.02. Method of Asserting Claims. All claims for indemnification by
--------------------------
any Indemnified Party under Section 6.01 shall be asserted and resolved as
follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 6.01 is asserted against or
sought to be collected from such Indemnified Party by a Person other than one of
the Sellers, the Company, any Subsidiary, Purchaser or any Affiliate of any of
the Sellers or Purchaser (a "Third Party Claim"), the Indemnified Party shall
-----------------
deliver a Claim Notice with reasonable promptness to the Indemnifying Party. If
the Indemnified Party fails to provide the Claim Notice with reasonable
promptness after the Indemnified Party receives notice of such Third Party
Claim, the Indemnifying Party will not be obligated to indemnify the Indemnified
Party with respect to such Third Party Claim to the extent that the Indemnifying
Party's ability to defend has been irreparably prejudiced by such failure of the
Indemnified Party. The Indemnifying Party will notify the Indemnified Party as
soon as practicable within the Dispute Period whether the Indemnifying Party
disputes its
25
liability to the Indemnified Party under Section 6.01 and whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Section 6.02(a), then the Indemnifying Party will have the right to defend,
with counsel reasonably satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of any settlement that
provides for any relief other than the payment of monetary damages or that
provides for the payment of monetary damages as to which the Indemnified
Party will not be indemnified in full pursuant to Section 6.01). The
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
-------- -------
Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this clause (i), file any motion,
answer or other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to protect its
interests; and provided further, that if requested by the Indemnifying
-------- -------
Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this clause (i), and except as provided
in the preceding sentence, the Indemnified Party will bear its own costs
and expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the defense
or settlement of a Third Party Claim at any time if it irrevocably waives
its right to indemnity under Section 6.01 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to
defend the Third Party Claim pursuant to Section 6.02(a), or if the
Indemnifying Party gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the Dispute Period, then the
Indemnified Party will have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnified Party
in a reasonable manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that if requested by
-------- -------
the Indemnified Party, the Indemnifying Party will, at the sole cost and
expense of the
26
Indemnifying Party, provide reasonable cooperation to the Indemnified Party
and its counsel in contesting any Third Party Claim which the Indemnified
Party is contesting. Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its
liability hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below, the Indemnifying Party
will not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this clause (ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this clause (ii), and the Indemnifying Party will bear
its own costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability to the Indemnified Party with
respect to the Third Party Claim under Section 6.01 or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third
Party Claim, the Loss in the amount specified in the Claim Notice will be
conclusively deemed a liability of the Indemnifying Party under Section
6.01 and the Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand, or, in the event that Purchaser is the
Indemnified Party and Purchaser has set off all or any portion of such Loss
from the Holdback Amount in accordance with Section 1.03, Purchaser shall
be entitled to payment on demand by the Indemnifying Party of any amount of
such Loss in excess of the amount so set off. If the Indemnifying Party
has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved
in accordance with the procedures set forth in Section 6.02(c).
(b) In the event any Indemnified Party should have a claim under
Section 6.01 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 6.01 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand, or, in the event that Purchaser is the Indemnified Party and
Purchaser has set off all or any portion of such Loss from the Holdback Amount
in accordance with Section 1.03, Purchaser shall be
27
entitled to payment on demand by the Indemnifying Party of any amount of such
Loss in excess of the amount so set off. If the Indemnifying Party has timely
disputed its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved in accordance with Section 6.02(c).
(c) Any dispute that arises under this Article VI that is not
resolved through negotiations during the applicable Resolution Period may be
referred by either party to arbitration, which shall be conducted in accordance
with the rules of the American Arbitration Association, and which shall take
place in Boston, Massachusetts. In the event that the decision of an arbitrator
under this Section 6.02(c) results in an award to the prevailing party of up to
$150,000, the decision of such arbitrator shall be binding, final and
unappealable by the parties. In the event that the decision of an arbitrator
under this Section 6.02(c) results in an award to the prevailing party of more
than $150,000, such decision shall be binding, provided that either party may
--------
appeal such decision to a court of competent jurisdiction at any time during the
six (6)-month period following the issuance of the final arbitral decision.
(d) In the event of any Loss resulting from a misrepresentation,
breach of warranty or nonfulfillment or failure to be performed of any covenant
or agreement contained in this Agreement as to which an Indemnified Party would
be entitled to claim indemnity under Section 6.01 but for the provisions of
paragraph (c) thereof, such Indemnified Party may nevertheless deliver a written
notice to the Indemnifying Party containing the information that would be
required in a Claim Notice or an Indemnity Notice, as applicable, with respect
to such Loss. If the Indemnifying Party notifies the Indemnified Party that it
does not dispute the claim described therein or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes the
claim described in such Claim Notice or Indemnity Notice, as the case may be,
the Loss specified in the notice will be conclusively deemed to have been
incurred by the Indemnified Party for purposes of making the determination set
forth in Section 6.01(c). If the Indemnifying Party has timely disputed the
claim described in such Claim Notice or Indemnity Notice, as the case may be,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved in accordance with
the procedures set forth in Section 6.02(c).
ARTICLE VII
DEFINITIONS
7.01. Definitions. (a) As used in this Agreement, the following
-----------
defined terms shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding,
----------------------
arbitration or Governmental or Regulatory Authority investigation or audit.
28
"Affiliate" means any Person that directly, or indirectly through one
---------
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of a second Person shall be
deemed to control that second Person.
"Agreement" means this Stock Purchase Agreement and the Exhibits, the
---------
Disclosure Schedule and the Schedules hereto, as the same shall be amended from
time to time.
"Assets and Properties" of any Person means all assets and properties
---------------------
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or
---------
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Benefit Plan" means any Plan established by the Company or any
------------
Subsidiary, or any predecessor or Affiliate of any of the foregoing, existing at
the Closing Date or prior thereto, to which the Company or any Subsidiary
contributes or has contributed, or under which any employee, former employee or
director of the Company or any Subsidiary or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights.
"Blackout Period Restrictions" has the meaning assigned to it in
----------------------------
Section 1.04(c).
"Blackout Policy" has the meaning assigned to it in Section 1.04(c).
---------------
"Books and Records" means as of the relevant date all files,
-----------------
documents, instruments, papers, books and records relating to the Business or
Condition of the Company, including without limitation financial statements, Tax
Returns and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans.
"Business Combination" means with respect to any Person any merger,
--------------------
consolidation or combination to which such Person is a party, any sale,
dividend, split or other
29
disposition of capital stock or other equity interests of such Person or any
sale, dividend or other disposition of all or substantially all of the Assets
and Properties of such Person.
"Business Day" means a day other than Saturday, Sunday or any day on
------------
which banks located in the State of New York are authorized or obligated to
close.
"Business or Condition of the Company" means the business, condition
------------------------------------
(financial or otherwise), results of operations, Assets and Properties and
prospects of the Company and the Subsidiaries taken as a whole.
"Claim Notice" means written notification pursuant to Section 6.02(a)
------------
of a Third Party Claim as to which indemnity under Section 6.01 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 6.01, together with
the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim.
"Closing" means the closing of the transactions contemplated by
-------
Section 1.03.
"Closing Date" means the date on which this Agreement is executed by
------------
Purchaser and the Sellers.
"Closing Balance Sheet" has the meaning set forth in Section 2.08.
---------------------
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
rules and regulations promulgated thereunder.
"Company" has the meaning ascribed to it in the forepart of this
-------
Agreement.
"Contract" means any agreement, lease, evidence of Indebtedness,
--------
mortgage, indenture, security agreement or other contract (whether written or
oral).
"Disclosure Schedule" means the record delivered to Purchaser by the
-------------------
Sellers herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by the Sellers pursuant to this Agreement.
"Dispute Period" means the period ending thirty (30) calendar days
--------------
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"Environmental Law" means all federal, state and local statutes,
-----------------
regulations, directives, ordinances and other rules, policies or guidelines
having the effect of law, and the common law, which pertain to environmental
matters, environmental contamination of any type whatsoever or health and safety
matters, as such have been amended, modified or supplemented from time to time
(including all amendments thereto and re-authorizations thereof) through the
date hereof. Environmental Laws include, without limitation, those relating to:
(i) the manufacture, processing, use, distribution, treatment, storage,
disposal, generation or transportation of Hazardous Materials; (ii) air, soil,
surface subsurface groundwater or noise pollution; (iii) Releases: (iv)
protection of wildlife, endangered species, wetlands or natural
30
resources; (v) Tanks; (vi) health and safety of employees and other persons; and
(vii) notification requirements relating to the foregoing. Without limiting the
above, Environmental Law also includes the following: (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)(S)
9601 et seq.), as amended; (ii) the Solid Waste Disposal Act, as amended by the
-- ----
Resource Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.), as
-- ----
amended; (iii) the Emergency Planning and Community Right to Know Act of 1986
(42 U.S.C. (S)(S) 11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C.
-- ----
(S)(S) 7401 et seq.), as amended; (v) the Clean Water Act (33 U.S.C. (S) 1251 et
-- ---- --
seq.), as amended: (vi) the Toxic Substances Control Act (15 U.S.C. (S) 2601 et
---- --
seq.), as amended; (vii) the Hazardous Materials Transportation Act (49 U.S.C.
----
(S)(S) 1801 et seq.), as amended; (viii) the Federal Insecticide, Fungicide and
-- ----
Rodenticide Act (7 U.S.C. (S) 136 et seq.), as amended; (ix) the Federal Safe
-- ----
Drinking Water Act (42 U.S.C. (S) 300f et seq.), as amended; (x) the Federal
-- ----
Radon and Indoor Air Quality Research Act (42 U.S.C. (S) 7401 note, et seq.);
-- ----
(xi) the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.), as
-- ----
amended; and (xii) any state, county, municipal or local statutes, laws or
ordinances similar or analogous to (including counterparts of) any of the
statutes listed above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is in the same controlled group
---------------
of corporations or who is under common control with Seller or, before the
Closing, the Company or any Subsidiary (within the meaning of Section 414 of the
Code).
"Financial Statements" means the consolidated financial statements of
--------------------
the Company and its consolidated Subsidiaries delivered to Purchaser pursuant to
Section 2.08.
"GAAP" means generally accepted accounting principles, consistently
----
applied throughout the specified period and in the immediately prior comparable
period.
"Governmental or Regulatory Authority" means any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Hazardous Material" means any chemical, pollutant, contaminant,
------------------
pesticide, petroleum or petroleum product or by-product, radioactive substance,
solid waste (hazardous or extremely hazardous), special, dangerous or toxic
waste, substance, chemical or material regulated, listed, limited or prohibited
under any Environmental Law, including without limitation: (i) asbestos,
asbestos-containing material, presumed asbestos-containing material,
polychlorinated biphenyls, solvents and waste oil; (ii) any chemicals or other
materials or substances which are defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants" or words of similar import under any Environmental Law; and (C) any
other chemical or other material or substance, exposure to which is prohibited,
limited or regulated by any Governmental or Regulatory Authority under any
Environmental Law, provided that this definition shall not include any amounts
--------
of such materials required for office use in the normal course of business.
31
"Holdback Amount" has the meaning assigned to it in Section 1.03.
---------------
"Indebtedness" of any Person means all obligations of such Person (i)
------------
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification under
-----------------
any provision of Article VI, including without limitation a Person asserting a
claim pursuant to paragraph (c) of Section 6.02.
"Indemnifying Party" means any Person against whom a claim for
------------------
indemnification are being asserted under any provision of Article VI, including
without limitation a Person against whom a claim is asserted pursuant to
paragraph (c) of Section 6.02.
"Indemnity Notice" means written notification pursuant to Section
----------------
6.02(b) of a claim for indemnity under Article VI by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim.
"Intellectual Property" means all patents and patent rights,
---------------------
trademarks and trademark rights, trade names and trade name rights, service
marks and service ▇▇▇▇ rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Inventory" has the meaning assigned to it in Section 2.27.
---------
"Inventory List" has the meaning assigned to it in Section 2.27.
--------------
"Investment Assets" means all debentures, notes and other evidences of
-----------------
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
any Subsidiary (other than securities issued by any Subsidiary).
"IRS" means the United States Internal Revenue Service.
---
"January 31 Balance Sheet" has the meaning assigned to it in Section
------------------------
2.08.
"Laws" means all laws, statutes, rules, regulations, ordinances and
----
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
32
"Liabilities" means all Indebtedness, obligations and other
-----------
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
--------
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
-----
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties,
----
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
"Material Adverse Effect" means any event or circumstance, or series
-----------------------
of events or circumstances, that is or would reasonably be expected to be
materially adverse to the assets, properties, or the Business or Condition of
the Company, individually or in the aggregate.
"Operative Agreements" means employment agreements between Purchaser
--------------------
and each of ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ substantially in the form of Exhibit B hereto.
---------
"Option" with respect to any Person means any security, right,
------
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive any benefits or rights similar to any rights enjoyed by or accruing
to the holder of shares of capital stock of such Person, including any rights to
participate in the equity, income or election of directors or officers of such
Person.
"Order" means any writ, judgment, decree, injunction or similar order
-----
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Pension Benefit Plan" means each Benefit Plan which is a pension
--------------------
benefit plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
--------------
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent; (iii) any minor
imperfection of title or similar Lien which individually or in the aggregate
with other such Liens does not materially impair the value of the property
subject to such Lien or the use of such property in the conduct of the business
of the Company or any Subsidiary; and (iv) the liens established by Provident
Bank of Maryland as evidenced by duly filed Uniform Commercial Code Financing
Statements available on the public record.
33
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
----
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"Post-Closing Taxes" shall have the meaning set forth in Section
------------------
4.02(i).
"Post-Closing Tax Returns" shall have the meaning set forth in Section
------------------------
4.02(i).
"Purchaser" has the meaning ascribed to it in the forepart of this
---------
Agreement.
"Purchase Price" has the meaning ascribed to it in Section 1.02.
--------------
"Purchaser Stock" has the meaning ascribed to it in Section 1.02.
---------------
"Qualified Plan" means each benefit plan which is intended to qualify
--------------
under Section 401 of the Code.
"Release" has the meaning ascribed to it in Section 2.29(a).
-------
"Representatives" means, as to any Person, such Person's officers,
---------------
directors, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives.
"Resolution Period" means the period ending thirty (30) calendar days
-----------------
following receipt by an Indemnified Party of a Dispute Notice.
"Return" means a report, return or other information statement
------
required to be supplied to a governmental entity with respect to Taxes
including, if applicable, combined or consolidated returns for any group of
entities that includes the Company.
"Reviewed Financial Statement Date" means June 30, 1999.
---------------------------------
"Reviewed Financial Statements" means the Financial Statements for the
-----------------------------
most recent fiscal year of the Company delivered to Purchaser pursuant to
Section 2.08.
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the U.S. Securities Act of 1933, as amended.
--------------
"Seller" has the meaning ascribed to it in the forepart of this
------
Agreement.
"Sellers' Post-Closing Taxes" shall have the meaning set forth in
---------------------------
Section 4.02(b).
34
"Sellers' Tax Costs" shall have the meaning set forth in Section 4.03.
------------------
"Set-Off Date" has the meaning assigned to it in Section 1.03(c).
------------
"Set-Off Notice" has the meaning assigned to it in Section 1.03(c).
--------------
"Shares" has the meaning ascribed to it in the forepart of this
------
Agreement.
"Subject Defined Benefit Plan" means each Defined Benefit Plan listed
----------------------------
and described in Section 2.14(a) of the Disclosure Schedule.
------------------------------------------
"Subsidiary" means any Person in which the Company, directly or
----------
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.
"Taxes" means any federal, state, county, local or foreign taxes,
-----
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties (civil or criminal)
on or additions to any such taxes and any expenses incurred in connection with
the determination, settlement or litigation of any Tax liability.
"Tax Ruling" shall have the meaning set forth in Section 2.11(n).
----------
"Third Party Claim" has the meaning ascribed to it in Section 6.02(a).
-----------------
"Transfer Taxes" shall have the meaning set forth in Section 4.01.
--------------
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; and (v) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the Company or a Subsidiary. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP.
ARTICLE VIII
MISCELLANEOUS
8.01. Notices. All notices, requests and other communications
-------
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by
35
facsimile transmission or mailed (first class postage prepaid) to the parties at
the following addresses or facsimile numbers:
If to Purchaser, to:
ABL Acquisition Corporation
c/o American Power Conversion Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Legal Department
with a copy to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to any of the Sellers, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
c/o A.B.L. Electronics Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Each respective Seller
with a copy to:
Bowie & ▇▇▇▇▇▇, LLC
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt,
36
and (iii) if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
8.02. Entire Agreement. This Agreement and the Operative Agreements
----------------
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof (including without limitation that
certain letter of intent between the parties dated April 5, 2000 and that
certain non-disclosure agreement between the parties dated December 21, 1999),
and contain the sole and entire agreement between the parties hereto with
respect to the subject matter hereof and thereof.
8.03. Attorneys' Fees. The prevailing party in any dispute arising
---------------
out of or in connection with this Agreement shall be entitled to recover from
the other party, or jointly and severally from the non-prevailing parties, its
reasonable attorneys' fees, costs and other professionals' fees, at the
customary rates charged by such professionals.
8.04. Public Announcements. Within five (5) days of the Closing,
--------------------
Purchaser and the Sellers shall issue a press release in a mutually agreed form.
Notwithstanding anything to the contrary in this Agreement, Purchaser may make
any disclosure that is required by law without the consent of the Sellers.
8.05. Confidentiality. Each party hereto will hold, and will use its
---------------
best efforts to cause its Affiliates, and their respective Representatives to
hold, in strict confidence from any Person (other than any such Affiliate or
Representative), unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law or (ii)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates furnished to it
by the other party or such other party's Representatives in connection with this
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (a) previously known by
the party receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential; provided that following the Closing the
--------
foregoing restrictions will not apply to Purchaser's use of documents and
information concerning the Company and the Subsidiaries furnished by the Sellers
hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates and their respective Representatives to, promptly
redeliver or cause to be
37
redelivered all copies of documents and information furnished by the other party
in connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by the
party furnished such documents and information or its Representatives.
8.06. Further Assurances; Post-Closing Cooperation. (a) At any time
--------------------------------------------
or from time to time after the Closing, the Sellers shall execute and deliver to
Purchaser such other documents and instruments, provide such materials and
information and take such other actions as Purchaser may reasonably request more
effectively to vest title to the Shares in Purchaser and, to the full extent
permitted by Law, to put Purchaser in actual possession and operating control of
the Company and the Subsidiaries and their Assets and Properties and Books and
Records, and otherwise to cause the Sellers to fulfill their obligations under
this Agreement and the Operative Agreements to which they are parties.
(b) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data relating to the Business or Condition of
the Company in its possession with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent that such access
may be reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or enforcement of
the rights and obligations of any Indemnified Party or (v) in connection with
any actual or threatened Action or Proceeding. Further, each party agrees for a
period extending six (6) years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless such party
shall first offer in writing to surrender such books, records and other data to
the other party and such other party shall not agree in writing to take
possession thereof during the ten (10)-day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of the Company not referred to
in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by the Sellers in accordance with this paragraph shall be held
confidential by the Sellers in accordance with Section 8.05.
(d) Notwithstanding anything to the contrary contained in this
Section 8.06, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section 8.06 shall be subject to applicable rules
relating to discovery.
38
8.07. Waiver. Any term or condition of this Agreement may be waived
------
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
8.08. Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of each
party hereto.
8.09. No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article VI.
8.10. No Assignment; Binding Effect. Neither this Agreement nor any
-----------------------------
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchaser may assign any or all of its rights, interests and
obligations hereunder (including without limitation its rights under Article VI)
to a wholly owned subsidiary, provided that any such subsidiary agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein, but no such assignment referred to in clause (b) shall relieve Purchaser
of its obligations hereunder. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
8.11. Headings. The headings used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
8.12. Consent to Jurisdiction and Service of Process. The Sellers
----------------------------------------------
hereby irrevocably appoint ▇▇▇▇▇▇▇ ▇▇▇▇, at the offices of the Company at the
address set forth in Section 8.01, and Purchaser hereby irrevocably appoints
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, at its offices at the address set forth in Section 8.01, its
lawful agent and attorney to accept and acknowledge service of any and all
process against it in any action, suit or proceeding arising in connection with
this Agreement or any of the Operative Agreements and upon whom such process may
be served, with the same effect as if such party were a resident of the
Commonwealth of Massachusetts and had been lawfully served with such process in
such jurisdiction, and waives all claims of error by reason of such service,
provided that in the case of any service upon such agent and attorney, the party
--------
effecting such service shall also deliver a copy thereof to the other party at
the address and in the manner specified in Section 8.01. The Sellers and
Purchaser will enter into such agreements with such agents as may be necessary
to constitute and continue the appointment of such agents hereunder. In the
event that such agent and attorney resigns or otherwise becomes incapable of
acting as such, such party will appoint a successor agent and attorney in
39
Massachusetts, reasonably satisfactory to the other party, with like powers.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
United States District Court for the Eastern District of Massachusetts or any
court of the Commonwealth of Massachusetts located in the City of Boston in any
such action, suit or proceeding, and agrees that any such action, suit or
proceeding shall be brought only in such court (and waives any objection based
on forum non conveniens or any other objection to venue therein), provided,
----- --- ---------- --------
however, that such consent to jurisdiction is solely for the purpose referred to
-------
in this Section 8.12 and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the Commonwealth of Massachusetts other than
for such purpose. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by Law or to commence legal proceedings or
otherwise proceed against the other in any other jurisdiction.
8.13. Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
8.14. Governing Law. This Agreement shall be governed by and
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construed in accordance with the Laws of the Commonwealth of Massachusetts
applicable to a Contract executed and performed in such Commonwealth, without
regard for the conflict of laws principles thereof.
8.15. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
40
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each party hereto as of the date first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ABL ACQUISITION CORPORATION
By:/s/ ▇▇▇▇▇▇ Loveti
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Name: ▇▇▇▇▇▇ Loveti
Title: President
41
ARTICLE I SALE OF SHARES AND CLOSING 1
1.01. Purchase and Sale 1
1.02. Purchase Price 1
1.03. Closing; Holdback 1
1.04. Resale Registration 3
ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SELLERS 5
2.01. Status of the Sellers 5
2.02. Organization of the Company 5
2.03. Capital Stock 5
2.04. Subsidiaries 6
2.05. No Conflicts 6
2.06. Governmental Approvals and Filings 7
2.07. Books and Records 7
2.08. Financial Statements 8
2.09. Absence of Changes 8
2.10. No Undisclosed Liabilities 9
2.11. Taxes 9
2.12. Legal Proceedings 10
2.13. Compliance With Laws and Orders 11
2.14. Benefit Plans; ERISA 11
2.15. Real Property 13
2.16. Tangible Personal Property 13
2.17. Intellectual Property Rights 14
2.18. Contracts 14
2.19. Licenses 16
2.20. Insurance 16
2.21. Affiliate Transactions 17
2.22. Employees; Labor Relations 17
2.23. Substantial Customers and Suppliers 17
2.24. Bank and Brokerage Accounts; Investment Assets 18
2.25. No Powers of Attorney 18
2.26. Accounts Receivable 18
2.27. Inventory 19
2.28. Brokers 19
2.29. Environmental Matters 19
2.30. Acquisition for Investment 20
2.31. Disclosure 21
2.32. Covenant to Deliver April 30, 2000 Information 21
2.33. Covenant to Operate Business in the Normal Course 21
ARTICLE III COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER 21
3.01. Organization 21
3.02. Authority 21
3.03. Governmental Approvals and Filings 22
3.04. Capital Stock of the Purchaser 22
3.05. Brokers 22
3.06. Payment of Bank Debt 22
ARTICLE IV TAX MATTERS AND POST-CLOSING TAXES 22
4.01. Transfer Taxes 22
4.02. Post-Closing Taxes 22
4.03. Sellers' Tax Costs 23
2
4.04. Available Information 23
4.05. Tax Treatment 24
ARTICLE V SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS 24
5.01. Survival of Representations, Warranties, Covenants and Agreements 24
ARTICLE VI INDEMNIFICATION 24
6.01. Indemnification 24
6.02. Method of Asserting Claims 25
ARTICLE VII DEFINITIONS 28
7.01. Definitions 28
ARTICLE VIII MISCELLANEOUS 35
8.01. Notices 35
8.02. Entire Agreement 37
8.03. Attorneys' Fees 37
8.04. Public Announcements 37
8.05. Confidentiality 37
8.06. Further Assurances; Post-Closing Cooperation 38
8.07. Waiver 39
8.08. Amendment 39
8.09. No Third Party Beneficiary 39
8.10. No Assignment; Binding Effect 39
8.11. Headings 39
8.12. Consent to Jurisdiction and Service of Process 39
8.13. Invalid Provisions 40
8.14. Governing Law 40
8.15. Counterparts 40
3
EXHIBITS
EXHIBIT A Blackout Policy
EXHIBIT B Form of Employment Agreement
4
