25
STOCK PURCHASE AGREEMENT
By and Between
THE JPM COMPANY OF DELAWARE
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
ULMIN S.A.
DATALINK PARTICIPACOES S/C LTDA.
AF DATALINK EQUIPAMENTOS DE TELECOMUNICACAOES LTDA.
Dated November 1st, 1998
TABLE OF CONTENTS
1. Definition: Page 6
2. Sale and Transfer of Shares; Closing; Operations After Closing Page 11
2.1 Shares Page 11
2.2 Purchase Price Page 11
2.3 Working Capital Page 12
2.4 Lease Page 12
2.5 Closing Page 12
2.6 Closing Obligations Page 13
2.7 Buy-Sell Restrictions of Datalink Shares Page 13
2.8 Operations After Closing Page 14
3. Representations and Warranties of Seller Page 14
3.1 Organization and Good Standing Page 15
3.2 Authority; No Conflict Page 15
3.3 Capitalization Page 16
3.4 Financial Statements Page 16
3.5 Books and Records Page 17
3.6 Owned Real Estate Page 17
3.7 Leased Real Property Page 18
3.8 Owned And Leased Tangible Personal Property Page 18
3.9 Conditions of Buildings And Tangible Personal Property Page 18
3.10 Accounts And Notes Receivables Page 19
3.11 Contracts Page 19
3.12 Inventories And Supplies Page 19
3.13 Prepaid Items And Deposits Page 20
3.14 Other Assets Page 20
3.15 Bank And Personnel Matters Page 20
3.16 No Undisclosed Liabilities Page 20
3.17 Taxes Page 20
3.18 No Material Adverse Change Page 21
3.19 Employee Matters Page 21
3.20 Compliance With Legal Requirements; Governmental Authorizations Page 23
3.21 Legal Proceedings; Orders Page 24
3.22 Absence of Certain Changes And Events Page 25
3.23 Insurance Page 26
3.24 Environmental Matters Page 26
3.25 Labor Relations; Compliance Page 28
3.26 Intellectual Property Assets Page 28
3.27 Material And Affiliate Contracts Page 29
3.28 Certain Payments Page 30
3.29 Computer Programs And Software Page 30
3.30 Disclosure Page 31
3.31 Brokers or Finders Page 31
4. Representations And Warranties of Buyer Page 31
4.1 Organization And Good Standing Page 31
4.2 Authority; No Conflict Page 31
4.3 Investment Intent Page 32
4.4 Certain Proceedings Page 32
4.5 Brokers or Finders Page 32
5. Covenants of The Acquired Companies And The Sellers Page 32
5.1 Access And Investigation Page 32
5.2 Operation of The Business of The Acquired Companies Page 32
5.3 Negative Covenant Page 33
5.4 Required Approvals Page 33
5.5 Notification Page 33
5.6 Payment of Indebtedness By Related Persons Page 33
5.7 No Negotiation Page 34
5.8 Best Efforts Page 34
6. Covenants of Jpm Page 34
6.1 Approvals of Governmental Bodies Page 34
6.2 Best Efforts Page 34
6.3. Undisclosed Datalink Assets Page 34
6.4 Conducting Business Page 35
7. Conditions Precedent To Jpm's Obligation To Close Page 35
7.1 Accuracy of Representations Page 35
7.2 No Material Adverse Change Page 35
7.3 No Loss Page 35
7.4 Certificate Page 35
7.5 Performance Page 35
7.6 Consents Page 36
7.7 Additional Documents Page 36
7.8 No Proceedings Page 36
7.9 No Claim Regarding Stock Ownership or Sale Proceeds Page 36
7.10 No Prohibition Page 36
7.11 Due Diligence Page 37
8. Conditions Precedent To The Sellers' Obligation To Close Page 37
8.1 Accuracy of Representations Page 37
8.2 Certificates Page 37
8.3 Buyer's Performance Page 37
8.4 Additional Documents Page 38
8.5 No Injunction Page 38
9. Termination. Page 38
9.1 Termination Events Page 38
9.2 Effect of Termination Page 38
10. Indemnification; Remedies. Page 39
10.1 Survival; Right To Indemnification Not Affected By Knowledge Page 39
10.2 Indemnification And Payment of Damages By Seller Page 39
10.3 Indemnification And Payment of Damages By Sellers--
Environmental Matters Page 40
10.4 Indemnification And Payment of Damages By Buyer Page 41
10.5 Procedure For Indemnification--Third Party Claims Page 41
10.6 Procedure For Indemnification--Other Claims Page 42
11. General Provisions. Page 42
11.1 Expenses Page 42
11.2 Public Announcements Page 42
11.3 Confidentiality Page 42
11.4 Notices Page 43
11.5 Jurisdiction; Service of Process Page 44
11.6 Further Assurances Page 44
11.7 Waiver Page 44
11.8 Entire Agreement And Modification Page 45
11.9 Schedules Page 45
11.10 Assignments, Successors, And No Third-Party Rights Page 45
11.11 Severability Page 45
11.12 Section Headings; Construction Page 45
11.13 Time of Essence Page 46
11.14 Governing Law Page 46
11.15 Counterparts Page 46
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made this 1st day of
October, 1998, by and between The JPM Company of Delaware, a Delaware
corporation with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (referred to herein as "JPM" or the "Buyer"),
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., an adult individual (referred to herein as "▇▇▇▇▇"),
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an adult individual (referred to herein as "Junginger")
(collectively, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ are sometimes referred to herein as the
"Selling Shareholders" or the "Sellers"), Ulmin S.A., a Uruguayan corporation
with its principal place of business at ▇▇▇▇▇▇, 602 - Piso 2 - 11000 Montevideo,
(referred to herein as "Ulmin"), Datalink Participacoes S/C Ltda., a Brazilian
limited liability company with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇/▇▇, ▇▇▇▇▇▇ (referred to herein as "Holding
Company") and AF Datalink Equipamentos de Telecomunicacoes Ltda., a Brazilian
limited liability company with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇-▇▇▇, ▇▇▇ ▇▇▇▇▇/▇▇, ▇▇▇▇▇▇ (hereinafter referred to as "Datalink")
Ulmin, Holding Company and Datalink are collectively referred to herein as the
"Acquired Companies").
WITNESSETH:
WHEREAS, JPM is engaged in the manufacture of cable assemblies and wire
harnesses for original equipment manufacturers ("OEMs") in the computer,
telecommunications and networking sectors of the electronics industry; and
WHEREAS, the Selling Shareholders own all of the outstanding capital stock
of ULMIN; and
WHEREAS, ULMIN owns all of the outstanding capital stock of Holding
Company; and
WHEREAS, Holding Company owns sixty percent (60%) of the outstanding
capital stock of Datalink; and
WHEREAS, Datalink is engaged in the manufacture of, among other things,
cable assemblies and related components and operates manufacturing facilities in
Sao Paulo, Brazil; and
WHEREAS, the Selling Shareholders desire to sell, and JPM desires to
purchase all of the outstanding capital stock of ULMIN, upon the terms and
conditions set forth in this Agreement.
NOW THEREFORE, for and in consideration of the mutual promises, covenants
and conditions set forth herein, and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Applicable Contract"--any Contract (a) under which any Acquired Company
has or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound.
"Acquired Companies"--as defined in the first paragraph of this Agreement.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.5.
"Closing Date"--the date and time as of which the Closing actually takes
place as set forth in Section 2.5.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including, but not limited to:
(a) the sale of the Shares by the Selling Shareholders to Buyer;
(b) the execution, delivery, and performance of the Management Agreements
and the Lease;
(c) the performance by Buyer, the Selling Shareholders and the Acquired
Companies of their respective covenants and obligations under this Agreement;
and
(d) Buyer's acquisition and ownership of the Shares and exercise of control
over the Acquired Companies.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 10.2.
"Datalink Shares"- the entire outstanding capital stock of Datalink.
"Disclosure Schedule"-- as defined in Section 3.
"Management Agreements"- as defined in Section 2.6(a)(ii).
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basin, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlement, legal or administrative
proceedings, damages, losses, claims, demands and response, investigative,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational Safety and
Health Law for cleanup costs or corrective action, including any investigation,
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss 9601 et seq., as amended
("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials, violations
of discharge limits, or other prohibitions and of the commencement of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so that
they do not present unreasonable risks to human health or the Environment when
used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law and regulations and rules issued pursuant to that Act or any successor law,
"Facilities"--any real property, leaseholds, or other interests currently or
formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"GAAP"--generally accepted United States accounting principles.
"Governmental Authorization"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;
b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);
d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or Acquired
Companies.
"Hazardous Materials"--any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"Indemnified Persons"--as defined in Section 10.2.
"Intellectual Property Assets"--as defined in Section 3.26.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
Knowledge"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise become aware
of such fact or other matter if the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Lease"-- as defined in Section 2.4.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Occupational Safety and Health Law"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar authority);
and
(c) such action is similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or group
of Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
"Organizational Documents"--(a) the articles or certificate of incorporation or
the articles of association and the bylaws of a corporation; (b) the partnership
agreement and any statement of partnership of a general partnership; (c) the
limited partnership agreement and the certificate of limited partnership of a
limited partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"Penalty"--as defined in Section 9.
"Person"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Release"--any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
"Representative"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Selling Shareholders"--as defined in the first paragraph of this Agreement.
"Shares"--as defined in Section 2.1.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of any Acquired Company.
"Tax"--any tax (including any income tax, capital gains tax, value-added tax,
sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff,
duty (including any customs duty), deficiency, or other fee, and any related
charge or amount (including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other Contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
"Tax Return"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any Tax
or in connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax. "Threat of
Release"--a substantial likelihood of a Release that may require action in order
to prevent or mitigate damage to the Environment that may result from such
Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING; OPERATIONS AFTER CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, on the Closing Date, the
Selling Shareholders shall sell, transfer, convey, assign and deliver to Buyer,
and Buyer shall purchase and assume all of the outstanding shares of ULMIN
(hereinafter referred to as the "Shares").
2.2 PURCHASE PRICE
As consideration for the Shares, Buyer shall pay to the Selling Shareholders the
following purchase price (hereinafter referred to as the "Purchase Price"):
(a) As partial consideration for the Shares, on the Closing Date, Buyer shall
pay to the Selling Shareholders the sum of Six Million United States Dollars
(US $6,000,000.00) by delivery of cash by wire transfer or other immediately
available United States funds.
(b) As partial consideration for the Shares, on the Closing Date, Buyer shall
deliver to Selling Shareholders a note in the amount of Two Million United
States Dollars (US $2,000,000.00) payable in one year after Closing, bearing
interest at an annual rate of 8.75%, which note may be prepaid without penalty.
(c) As partial consideration for the Shares, on the Closing Date, Buyer shall
deliver to Selling Shareholders common stock of Buyer with a value of ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars ($2,500,000.00). The number
of shares shall be determined by dividing the value due by the closing price on
Tuesday, November 10, 1998. (As an example, if the closing price on Tuesday,
November 10, 1998 is Ten Dollars ($10.00) per share, Buyer would transfer
250,000 shares of stock in Buyer company to Sellers.) Buyer shall be
responsible for registering the shares at the earliest practicable opportunity
after consultation with sellers. Sellers shall be responsible for compliance
with all rules and regulations governing the sale and trade of such stock..
(d) As partial consideration for the Shares, the Selling Shareholders shall
receive an aggregate amount equal to sixteen and two-thirds percent (16 2/3%) of
the Net Income of Datalink earned until the later of
(i) One year from the effective date of Closing; or
(ii) Payment of the note referred to in paragraph 2.2 (b) above.
The amount due hereunder shall be due and payable to the Selling Shareholders
within ninety (90) days of completion of the audit for the fiscal year, for
the period until September 30, 1999. For any period thereafter, the amount
due shall be due within ninety days (90) days of the date for which it is
due. "Net Income" shall mean income after taxes as determined in accordance
with GAAP.
2.3 WORKING CAPITAL
For purposes of this Section 2.3, "Working Capital" shall be defined as the
current assets of Datalink, as determined in accordance with GAAP, less the
current liabilities of Datalink, as determined in accordance with GAAP.
(a) Immediately prior to the Closing Date, the Working Capital of Datalink shall
be paid and distributed to the Selling Shareholders by and from Datalink in
proportion to their ownership interests. Pursuant to Section 3.22 hereof, such
distribution of Working Capital shall be disclosed and set forth in Section 3.22
of the Disclosure Schedule.
(b) Buyer and the Selling Shareholders agree that an aggregate total of One
Million United States Dollars (US $1,000,000.00) shall be invested in Datalink
for working capital purposes to be paid as follows: (i) on the Closing Date,
Buyer shall invest in and pay to Datalink cash in the aggregate amount of Six
Hundred Thousand United States Dollars (US $600,000.00) (the "Buyer's Initial
Capital"), and (ii) on the Closing Date, the Selling Shareholders, collectively,
shall invest in and pay to Datalink cash in the aggregate amount of Four Hundred
Thousand United States Dollars (US $400,000.00) (the "Sellers' Initial
Capital").
2.4 LEASE
On the Closing Date, the Selling Shareholders shall lease to the Buyer the real
property situate at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇/▇▇ ▇▇▇▇▇▇ pursuant to
a lease agreement substantially in the form of Exhibit 2.4 attached hereto and
made a part hereof (the "Lease"). The terms of such Lease shall include an
initial lease term of three (3) years at a lease price of R $18,333.00 per month
which shall be adjusted annually based on the Consumer Price Index. Buyer shall
have the option to renew the term of the Lease for an additional three (3) year
period at a lease price increase of no greater than the Consumer Price Index.
2.5 CLOSING
The purchase and sale provided for in this Agreement (the "Closing") will take
place at the office of Datalink on or before November 13, 1998; provided,
however, the effective date for reconciliation of accounts and determination of
payments due shall be November 1, 1998. Subject to the provisions of Section 9,
failure to consummate the purchase and sale provided for in this Agreement on
the date and time and at the place determined pursuant to this Section 2.5 will
not result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
2.6 CLOSING OBLIGATIONS
At the Closing:
(a) The Selling Shareholders shall deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock powers);
(ii) management agreements in the form of Exhibit 2.6(a)(ii), executed by each
of the Selling Shareholders (collectively, the "Management Agreements");
iii) the Lease executed by each of the Selling Shareholders;
(iv) each of the documents required to be delivered pursuant to Section 7; and
(v) Evidence in the Datalink's books that Seller's credit presently shown as
"current liabilities" are transferred to position "shareholders equity" in the
amount of Sellers' Initial Capital set forth in Section 2.3, above.
(b) Buyer shall deliver to the Selling Shareholders:
(i) the following amounts by bank cashier's or certified check payable to the
order of, or by wire transfer to the accounts of, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇,
respectively: US$ 3,000,000.00 to ▇▇▇▇▇ and US$3,000,000.00 to Junginger;
(ii) a note or notes in the aggregate amount of US$2,000,000.00, per the terms
set forth in paragraph 2.2(b) above;
iii) stock in the amount required under the formula set forth in paragraph
2.2(c) above;
iv) the Management Agreements executed by Buyer;
v) the Lease executed by Buyer;
vi) each of the documents required to be delivered pursuant to Section 8
hereof;
(vii) bank cashier's or certified check, or evidence of wire transfer to the
account of Datalink, or other credit acceptable to Selling Shareholders, in the
amount of Buyer's Initial Capital as set forth in Section 2.3 and payable to
Datalink. By mutual agreement of Buyer and Selling Shareholders, the payment of
any amounts due hereunder, together with the deposit of Selling Shareholders'
share of such capital as required under paragraph 2.3 above, may be delayed
pending final calculation of the "Working Capital." Upon such determination,
which the parties intend to conclude by the week of November 23, 1998, the
payments set forth under paragraph 2.3 shall be exchanged.
.7 BUY-SELL RESTRICTIONS OF DATALINK SHARES
During the first three (3) years following the Closing Date, Buyer, ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ shall not sell his or its ownership interest in the Datalink
Shares. Following the third year from the Closing Date, Buyer, ▇▇▇▇▇ or
Junginger, at its or his sole discretion, may sell its or his ownership interest
in the Datalink Shares subject to the provisions of this Section 2.7.
(a) In the event ▇▇▇▇▇ and/or Junginger, as the case may be, has received a bona
fide offer to purchase his ownership interest in the Datalink Shares from a
third party, or in the event ▇▇▇▇▇ and/or Junginger, as the case may be, has
offered for sale his ownership interest in the Datalink Shares to a third party,
Buyer shall have the right of first refusal to purchase such ownership interest
in the Datalink Shares upon the same terms and conditions as such initial offer.
Buyer shall have thirty (30) days from receipt of written notice by ▇▇▇▇▇ and/or
Junginger of any such offer to exercise or waive its right of first refusal.
(b) In the event Buyer has received a bona fide offer to purchase its ownership
interest in the Datalink Shares from a third party, or in the event Buyer has
offered for sale its ownership interest in the Datalink Shares to a third party,
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ shall have the right of first refusal to purchase such
ownership interest in the Datalink Shares upon the same terms and conditions as
such initial offer. ▇▇▇▇▇ and Junginger shall have thirty (30) days from receipt
of written notice by Buyer of any such offer to exercise or waive his right of
first refusal.
(c) In the event ▇▇▇▇▇ and/or Junginger, either individually or collectively,
desire to sell his ownership interest in the Datalink Shares to Buyer, or in the
event Buyer desires to sell its ownership interest in the Datalink Shares to
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, such offeror may do so upon the following terms and
conditions:
(i) Any offer to sell an ownership interest in the Datalink Shares must be in
writing which sets forth an offering price. The offeree must either accept or
reject such offer in writing within thirty (30) days from the date of receipt of
the written offer.
(ii) In the event such offer is rejected and the offeror and offeree cannot
agree on the price and terms of such sale, then the price and terms shall be
determined by an appraisal performed by either (A) a well-known and recognized
independent appraiser selected by the offeror and offeree, or (B) in the event
the offeror and offeree cannot agree on any such appraiser, then by a panel of
three (3) well-known and recognized appraisers, the offeree and offeror to each
select one such appraiser within fifteen (15) days of the written rejection of
the offer and the two selected appraisers to select the third such appraiser
within fifteen (15) days thereafter. Any such appraisal shall be performed
within sixty (60) days of the selection of all such appraisers and shall
establish the price and terms as of the close of the amount immediately prior to
the date of receipt of the written offer.
(iii) In the event the offeree refuses to purchase the ownership interest in the
Datalink Shares upon the price and terms established by the appraisal as set
forth above, the offeror may sell his or its ownership interest in the Datalink
Shares to a third party subject to the provisions of Sections 2.7(a) and 2.7(b)
above.
2.8 OPERATIONS AFTER CLOSING
Sellers and Holding Company have executed the 6th Amendment to the Articles of
Association of Datalink, in which all the provisions referred to the management,
first refusal rights and control of Datalink have been established and Schedule
2.8 hereto contains an English translation of the 6th Amendment to the Articles
of Association of Datalink.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Acquired Companies and the Selling Shareholders jointly and severally
represent and warrant to Buyer that the statements contained in this Section 3
are true, correct and complete as of the date of this Agreement and the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3), except as set forth in
the disclosure schedule delivered by the Acquired Companies and the Selling
Shareholders to the Buyer (the "Disclosure Schedule"). Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
3.1 ORGANIZATION AND GOOD STANDING
(a) Section 3.1 of the Disclosure Schedule contains a complete and accurate list
for each Acquired Company of its name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each stockholder and the number of shares held by
each). Each Acquired Company is a corporation duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
(b) Each Acquired Company has delivered to Buyer copies of its Organizational
Documents, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of the
Acquired Companies and the Sellers, enforceable against the Acquired Companies
and the Sellers in accordance with its terms. Upon the execution and delivery by
Sellers of the Management Agreements and the Lease (collectively, the "Sellers'
Closing Documents"), the Sellers' Closing Documents will constitute the legal,
valid, and binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms. The Acquired Companies and the Sellers,
respectively, have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and the Sellers' Closing
Documents and to perform each of their obligations under this Agreement and the
Sellers' Closing Documents, respectively.
(b) Except as set forth in Section 3.2(b) of the Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time);
(i) contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Acquired Companies or (B) any resolution
adopted by the Board of Directors or the stockholders of the Acquired Companies;
(ii) contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Contemplated
Transactions, or to exercise any remedy or obtain any relief under any Legal
Requirement or any Order to which the Acquired Companies or any Seller, or any
of the assets owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any Governmental Authorization that is
held by the Acquired Companies or that otherwise relates to the business of, or
any of the assets owned or used by, the Acquired Companies;
(iv) cause Buyer or the Acquired Companies to become subject to, or to become
liable for the payment of, any Tax;
(v) cause any of the assets owned by the Acquired Companies to be reassessed or
revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon or with
respect to any of the assets owned or used by the Acquired Companies.
(c) Except as set forth in Section 3.2(c) of the Disclosure Schedule, neither
any of the Acquired Companies nor any Seller is or will be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION
(a) The authorized equity securities of ULMIN consist of 600.000 shares of
common stock, par value $ 1,00 per share, of which 600.000 shares are issued and
outstanding and constitute the Shares. The Selling Shareholders are and will be
on the Closing Date the record and beneficial owners and holders of the Shares,
free and clear of all Encumbrances. ▇▇▇▇▇ owns 50% (fifty percent) of the Shares
and Junginger owns 50% (fifty percent) of the Shares. With the exception of the
Shares (which are owned by Selling Shareholders), all of the outstanding equity
securities of each Acquired Company are owned of record and beneficially by one
or more of the Acquired Companies, free and clear of all Encumbrances. No legend
or other reference to any purported Encumbrance appears upon any certificate
representing equity securities of any Acquired Company. All of the outstanding
equity securities of the Acquired Companies have been duly authorized and
validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Acquired Companies. None of the outstanding equity securities
or other securities of the Acquired Companies was issued in violation of any
Legal Requirement. The Acquired Companies do not own, or have any Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
Sellers shall bear all annual fees, taxes, costs and expenses related to the
maintenance and to the eventual liquidation/substitution of ULMIN, in case of
its future take over by the Buyer.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) audited balance sheets of Datalink as of
June 30, 1998 (including the notes thereto) and the related consolidated
statements of income, together with the report thereon of Price Waterhouse
Auditores Independentes, independent accountants; (b) an unaudited consolidated
balance sheet of Acquired Companies as at July 31, 1998 as prepared by GAAP,
Inc. Auditors and Consultores and the related unaudited consolidated statements
of income and changes in stockholders' equity, and cash flow for the months then
ended. Such financial statements fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of
Datalink as at the of and for the periods referred to in such financial
statements, all in accordance with GAAP (Generally Accepted Accounting
Principles), subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those included in the Balance
Sheet); the financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than Datalink are required
by GAAP to be included in the consolidated financial statements of the Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records of the
Acquired Companies, all of which have been made available to Buyer, are true,
complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
The minute books of the Acquired Companies contain accurate and complete records
of all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Acquired
Companies, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minutes books. At the Closing, all of those books and records
will be in the possession of the Acquired Companies.
3.6 OWNED REAL ESTATE
Section 3.6 of the Disclosure Schedule sets forth a true and correct and
complete list of all parcels of real estate owned by the Acquired Companies (the
"Real Property"). Sellers have delivered or made available to Buyer copies of
the deeds and other instruments (as recorded) by which the Acquired Companies
acquired such Real Property and interests, and copies of all title insurance
policies, opinions, abstracts and surveys in the possession of the Acquired
Companies or the Selling Shareholders and relating to such property or
interests. Each Acquired Company has good and marketable title to all of the
Real Property owned by it and owns the Real Property in fee simple absolute,
free and clear of any assessment, claim, lease, charge, mortgage, security
interest, conditional sale agreement or other title retention agreement,
restriction (including any zoning use or building restriction) easement or lien
or Encumbrance of any kind or nature whatsoever and free and clear of any
pending proposed or threatened zoning or use or building change or condemnation
proceeding.
All permits and authorizations required by any Governmental Body with respect to
the use, occupancy or operation of the Real Property and of all real estate
leased by the Acquired Companies have been obtained and are in full force and
effect, and all the buildings and improvements erected thereon and the present
use of the Real Property and of any such leased real estate is in compliance in
all respects with all applicable zoning, development, fire, health and building
Legal Requirement. There are no service, management, employment, collective
bargaining or pension agreements, or any other agreements which in any way
affect any of the Real Property or any real estate leased by the Acquired
Companies or the use, occupancy, ownership or operation thereof, and there exist
neither contracts nor agreements which contain covenants relating to
compensation or occupation or possession of any such Real Property or leased
real estate. No parties have rights or options to occupy, lease or purchase any
such property. There is no claim or proceeding pending or, to the Knowledge of
the Acquired Companies or the Sellers, Threatened by any Person or Governmental
Body which would affect the use, occupancy for value of any other Real Property
or the real estate leased by the Acquired Companies. The Acquired Companies and
the Sellers have no knowledge, nor has either received notice, of any violation
of any federal, state, foreign or local Legal Requirement in respect of any such
property.
3.7 LEASED REAL PROPERTY
The Acquired Companies, either individually or collectively, is the lessee under
the real estate leases described Section 3.7 of the Disclosure Schedule. True,
correct and complete copies of said leases and any amendments, extensions and
renewals thereof have heretofore been delivered by the Acquired Companies. The
Acquired Companies enjoy quiet and undisturbed possession under each of said
leases. Except as set forth in Section 3.7 of the Disclosure Schedule the
Acquired Companies' interest in each of such leases is free and clear of any
mortgages and liens, is not subject to any deeds of trust, assignment, subleases
or rights of any third parties other than the lessor thereof, is fully
assignable without the consent of any third party and may be subleased without
the consent of any third party. Such leased real estate is free and clear of any
zoning or use or building restriction or any pending, proposed or Threatened
zoning or use or building restriction which would now, or on the Closing Date or
thereafter, interfere with the present use of any of such leased real estate.
Except as set forth in Section 3.7 of the Disclosure Schedule, said leases are
valid and binding and in full force and effect, and are not now, and on the
Closing Date will not be, in default as to the payment of rent or otherwise.
None of the Contemplated Transactions will constitute an event of default under
any of said leases and the continuation, validity and effectiveness of such
leases will not be adversely affected by the Contemplated Transactions.
3.8 OWNED AND LEASED TANGIBLE PERSONAL PROPERTY
Section 3.8 of the Disclosure Schedule sets forth a true and correct list and
brief description of all of the machinery, tools, software programs, firmware,
equipment, automobiles, furniture, fixtures, other tangible property in any form
whatsoever embodying information and know-how with respect to the business of
the Acquired Companies and other items of tangible personal property owned or
leased by the Acquired Companies, all being located as indicated thereon, and
all being freely removable by the Acquired Companies unless otherwise stated
hereinafter (collectively, "Tangible Personal Property"). The Acquired Companies
have, and will have on the Closing Date, all right, title and interest in, and
good and marketable title to, the Tangible Personal Property, free and clear of
any claim, lease, pledge, mortgage, security interest, conditional sale
agreement or other title retention agreement, restriction, lien or Encumbrance
of any kind or nature whatsoever. Except as set forth Section 3.8 of the
Disclosure Schedule, each lease and license relating to any of the Tangible
Personal Property is valid and binding and in full force and effect, and is not
in default as to the payment of rent or otherwise. True, complete and correct
copies of all leases and licenses relating to the Tangible Personal Property
have heretofore been delivered by the Acquired Companies to Buyer. None of the
Contemplated Transactions will constitute an event of default under any of said
leases or licenses and the continuation, validity and effectiveness of such
leases and licenses will not be adversely affected by the Contemplated
Transactions.
3.9 CONDITIONS OF BUILDINGS AND TANGIBLE PERSONAL PROPERTY
All of the Real Property and items of Tangible Personal Property owned, leased
or used by the Acquired Companies are in good operating condition and repair,
comply in all respects with applicable Legal Requirements, including but not
limited to zoning, building and fire codes, and are suitable and sufficient for
the present and intended conduct of the businesses of the Acquired Companies and
none of such Real Property and Tangible Personal Property is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The Real Property and each item of Tangible
Personal Property owned or leased by the Acquired Companies is adequately
covered by one of the insurance policies described in Section 3.23 hereto.
3.10 ACCOUNTS AND NOTES RECEIVABLES
The accounts and notes receivable reflected on the Balance Sheet of each
Acquired Company are free and clear of any claim, security interest, pledge or
lien or Encumbrance of any kind or nature whatsoever, and are good and fully
collectible (net of reserves) in the normal course of business within ninety
(90) days of said date without setoff, third-party collection efforts or suit,
and the subsequently created accounts and notes receivable of the Acquired
Companies from the date of the Balance Sheet to the Closing Date will be free
and clear of any claim, pledge, security interest or lien or Encumbrance of any
kind or nature whatsoever, and will be good and fully collectible in the normal
course of business within ninety (90) days of the Closing Date without setoff,
third-party collection efforts or suit. There are no pending, nor to the best
Knowledge of the Acquired Companies or the Sellers, Threatened disputes with
third-party payors as to any claim or receivable of the Acquired Companies, and
there are no claims by third-party payors for the repayment or refund or offset
of alleged overpayments to the Acquired Companies except those which,
individually or in the aggregate, will not have an adverse effect on any of the
Acquired Companies' results of operations, financial condition, liquidity,
business or prospects.
Sellers and Buyers acknowledge that a certain account receivable, currently
entered on the books at R$ 478.737,00 has not been credited as an asset in the
calculation of working capital. In the event Datalink collects all or part of
that account receivable, the proceeds shall be payable to Sellers. The same
shall prevail in the case that the right of the Fiscal Authorities to claim
against the credit has elapsed.
3.11 CONTRACTS
Except as set forth in Section 3.11 of the Disclosure Schedule, all contracts
and agreements, including any amendments or supplements thereto, of any nature
to which any of the Acquired Companies is a party have been duly and validly
executed by all parties, and are in full force and effect as of the date hereof.
Except as set forth in Section 3.11 of the Disclosure Schedule, no event has
occurred or condition or state of facts exists which, after notice or the
passage of time, would constitute a default under any such contract as to time
or manner of performance, or as to warranties thereunder, or otherwise. Except
as set forth in Section 3.11 of the Disclosure Schedule, all such contracts will
continue to be binding in accordance with their respective terms until their
respective expiration dates, and none are reasonably anticipated to result in a
loss to any Acquired Company, or in a margin of profit lower than normal, upon
completion.
3.12 INVENTORIES AND SUPPLIES
The inventories and/or supplies of the Acquired Companies are reflected
accurately on the Balance Sheet. In addition, all inventory of the Acquired
Companies, whether or not reflected in the Balance Sheet, consists of a quality
and quantity usable and saleable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheet or on
the accounting records of the Acquired Companies as of the Closing Date, as the
case may be. All inventories not written off have been priced at the lower of
cost or net realizable value on a first in, first out basis. The quantities of
each item of inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable in the present circumstances of the
Acquired Companies.
3.13 PREPAID ITEMS AND DEPOSITS
Section 3.13 of the Disclosure Schedule describes all of the prepaid items and
deposits of the Acquired Companies as of the date hereof.
3.14 OTHER ASSETS
All other assets, both tangible and intangible, owned by the Acquired Companies
are reflected accurately on the Balance Sheet and the Interim Balance Sheet and
are free and clear of any claim, lease, pledge, mortgage, security interest,
collateral assignment, conditional sale agreement or other title retention
agreement, restriction or lease or lien or Encumbrance of any kind or nature
whatsoever.
In the event that any asset is subsequently discovered which, under the
calculations set forth in Paragraph 2.3, would have resulted in additional
payments to Sellers, Datalink shall pay the value of such asset to Sellers.
3.15 BANK AND PERSONNEL MATTERS
Section 3.15 of the Disclosure Schedule contains a true, complete and correct
list of: (i) the names of all banks and other financial institutions (with
account numbers) in which any of the Acquired Companies has an account or safety
deposit box, and all of the brokerage firms and other entities and persons
holding funds or investments of the Acquired Companies, and the names of all
persons authorized to draw thereon or have access thereto; (ii) the names of all
incumbent directors and officers of the Acquired Companies; (iii) the names and
job designations, descriptions and locations of all consultants and agents of
the Acquired Companies, the remuneration of each for the years 1995, 1996, 1997,
and 1998 including fringe benefits, and the basis for determining such
remuneration if other than a fixed salary rate; and (iv) the names of all
persons holding powers of attorney from the Acquired Companies and a summary
statement of the terms thereof. There shall be no change in any of the foregoing
from the date hereof through the Closing Date without the prior written consent
of Buyer.
3.16 NO UNDISCLOSED LIABILITIES
Except as set forth in Section 3.16 of the Disclosure Schedule, the Acquired
Companies have no liabilities or obligations of any nature (whether Known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheet or
the Interim Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
In the event that any liability is subsequently discovered which, under the
calculations set forth in Paragraph 2.3, would have resulted in reduced
withdrawals from Datalink, Sellers shall pay the value of such liability to
Datalink.
3.17 TAXES
(a) Datalink has filed or caused to be filed (on a timely basis since 1994) all
Tax Returns that are or were required to be filed by it pursuant to applicable
Legal Requirements. Since Uruguay Company and Holding Company have been
incorporated on 1998, they have been not subject to any Tax Return taxation.
Sellers have delivered to Buyer copies of, and Schedule 3.17 hereto contains a
complete and accurate list of, all such Tax Returns of Datalink filed since
1994. Acquired Companies has paid, or made provisions for the payment of, all
Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by Sellers or Acquired
Companies, except such Taxes, if any, as are listed in Schedule 3.17 and are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Balance Sheet and the Interim
Balance Sheet.
(b) The charges, accruals, and reserves with respect to Taxes on the books of
Acquired Companies are adequate (determined in accordance with GAAP) and are at
least equal to Acquired Companies's liability for Taxes. There exists no
proposed tax assessment against Acquired Companies except as disclosed in the
Balance Sheet or on Schedule 3.17. All Taxes that Acquired Companies is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.
(c) All Tax Returns filed by Acquired Companies are true, correct, and complete.
There is no tax sharing agreement that will require any payment by Acquired
Companies after the date of this Agreement.
3.18 NO MATERIAL ADVERSE CHANGE.
Since the date of the Balance Sheet, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of the Acquired Companies, and no event has occurred or circumstance exists that
may result in such a material adverse change.
3.19 EMPLOYEE MATTERS
(a) Acquired Companies is not at present nor during the five (5) year period
preceding the Closing Date has been, a sponsor of, party to or obligated to
contribute to any employee benefit plan (as defined in ss 3 (3) of ("ERISA"), or
any employment contract, employee loan, incentive compensation, profit sharing,
retirement, pension, deferred compensation, severance, termination pay, stock
option or purchase plan, guaranteed annual income plan, fund or arrangement,
payroll incentive, policy, fund, agreement or arrangement, non-competition or
consulting agreement, hospitalization, disability, life or other insurance plan,
or other employee fringe benefit program or plan, or any other plan, payroll
practice, policy fund agreement or arrangement similar to or in the nature of
the foregoing, oral or written ("Employee Benefit Plans" or "Plans"), and has
not been a party to any collective bargaining agreements currently in effect or
in effect during the five-year period preceding the Closing Date, except as set
forth on Schedule 3.19 hereto. Schedule 3.19 identifies which of such Plans is a
multiemployer plan as defined in Section 3(37) of ERISA. True, correct and
complete copies of all written Plans and labor agreements, and true, correct and
complete written descriptions of all of the oral Plans described in Schedule
3.19 have heretofore been delivered by Acquired Companies to Buyer.
(b) Except as disclosed on Schedule 3.19 Acquired Companies does not have any
unfunded liabilities, or potential, contingent or actual multiemployer plan
withdrawal liabilities, on account of or in connection with any of the Plans or
otherwise, all contributions or premium payments due from Acquired Companies to
such Plans have been paid in a timely manner, and any additional contributions
or premium payments due on or before the Closing Date shall have been paid by
that date.
(c) With respect to each Employee Benefit Plan (other than a Plan which is a
multiemployer plan as defined in Section 3(37) of ERISA):
(i) all disclosures to employees relating to each such Plan and required to have
been made on or before the Closing Date have been or will be duly made by that
date;
(ii) there is no litigation, disputed claim (other than routine claims for
benefits), Proceeding, inquiry or investigation pending or Threatened with
respect to each such Plan, its related trust, or any fiduciary, administrator or
sponsor of such Plan;
(iii) each such Plan has been established, maintained, funded and administered
in all respects in accordance with its governing documents, and any applicable
provisions of ERISA, the Internal Revenue Code, other applicable law, and all
regulations promulgated thereunder;
(iv) Acquired Companies has delivered to Buyer a true, correct and complete copy
of (A) each trust or custodial agreement and each deposit administration, group
annuity, insurance or other funding contract associated with each such Plan, (B)
the most recent financial information for each such Plan, (C) the most recent
actuarial or valuation report relating to each such Plan, (D) if applicable, the
most recent return/report of each Plan (including attachments) required to be
filed with any Governmental Body, (E) the Plan document for each such Plan, (F)
the summary Plan description (including summaries of material modifications, if
any) for each such Plan and (G) if applicable, each Form 5310 (application for
Determination Upon Termination, etc.) filed with the IRS or the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to any Plan in the current Plan
year or any of the five (5) Plan years preceding the current Plan year;
(v) neither any such Plan nor any fiduciary has engaged in a prohibited
transaction as defined in ERISA sec 406 or IRC sec 4975 (for which no individual
or class exemption exists under ERISA sec 408 or IRC sec 4975, respectively);
(vi) all filings and reports as to each such Plan required to have been made on
or before the Closing Date to the IRS, or to the United States Department of
Labor or to the PBGC, have been or will be duly made by that date;
(vii) each such Plan which is intended to qualify as a tax-qualified retirement
plan under IRC s 401(a) has received a favorable determination letter(s) from
the IRS as to qualification of such Plan for the period from its adoption
through the Closing Date, other than with respect to amendments timely made to
each such Plan to comply with the requirements of the Tax Reform Act of 1986 for
which an application for determination letter for each such Plan is pending with
the IRS as of the Closing date; nothing has occurred, whether by action or
failure to act, which has resulted in or would cause the loss of such
qualification; and each trust thereunder is exempt from tax pursuant to IRC s
501(a);
(viii) no event has occurred and no condition exists relating to any such Plan
that would subject Acquired Companies to any tax under IRC ss 4972 or 4979, or
to any liability under ERISA s 502; and
(ix) to the extent applicable, each such Plan has been funded in accordance with
its governing documents, ERISA and the IRC, has not experienced any accumulated
funding deficiency (whether or not waived) and has not exceeded its full funding
limitation (within the meaning of IRC s 412) at any time.
(d) Acquired Companies has not had and does not have any Plan subject to the
Title IV of ERISA ("Pension Plan") which covers employees of Acquired Companies
(or any person, firm or corporation which is or was under common control within
the meaning of s 4001(b) of ERISA with Acquired Companies ("affiliate") during
the period of such common control).
(e) Acquired Companies has not had and does not contribute to any Pension Plan
which is a multiemployer plan as defined in Section 3(37) of ERISA.
(f) With respect to any Plan which provides group health benefits to employees
of Acquired Companies and is subject to the requirements of IRC s 4980B and
ERISA Title I Part 6 ("COBRA"):
(i) such group health plan has been administered in every respect in accordance
with its governing documents and COBRA; and
(ii) all filings, reports, premium payments (if any) and notices as to each such
group health plan required to have been made on or before the Closing Date to
Government Bodies, participants and/or beneficiaries have been or will be duly
made by that date.
(g) Except as disclosed on Schedule 3.19, Acquired Companies is not obligated to
nor does it (directly or indirectly) provide death benefits or health care
coverage to any former employees or retirees.
(h) Set forth on Schedule 3.19 is a true and correct list of all employees of
Acquired Companies, together with the remuneration (for period identified on the
schedule) of each such employee for the years 1995, 1996, and 1997.
3.20 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Section 3.20 of the Disclosure Schedule:
(i) Each Acquired Company is in full compliance with each Legal Requirement that
is or was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or without notice
or lapse of time) (A) may constitute or result in a violation by the Acquired
Companies of, or a failure on the part of the Acquired Companies to comply with,
any Legal Requirement, or (B) may give rise to any obligation on the part of the
Acquired Companies to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
(iii) Each Acquired Company has not has received at any time any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of,
or failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature.
(b) Section 3.20 of the Disclosure Schedule sets forth a complete and accurate
list of each Governmental Authorization that is held by the Acquired Companies
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Acquired Companies. Each Governmental Authorization listed or
required to be listed in Section 3.20 of the Disclosure Schedule is valid and in
full force and effect. Except as set forth in Section 3.20 of the Disclosure
Schedule:
(i) The Acquired Companies are, and at all times have been, in full compliance
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Section 3.20 of the Disclosure
Schedule;
(ii) no event has occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of, or a failure to comply with, any term or requirement of any
Governmental Authorization listed or required to be listed in Section 3.20 of
the Disclosure Schedule, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in Section 3.20
of the Disclosure Schedule;
(iii) the Acquired Companies have not received at any time any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of,
or failure to comply with, any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Section 3.20 of
the Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Section 3.20 of the Disclosure
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit the Acquired Companies to lawfully conduct and operate its
businesses in the manner it currently conducts and operates such businesses and
permits the Acquired Companies to own and use its assets in the manner in which
it currently owns and uses such assets.
3.21 LEGAL PROCEEDINGS; ORDERS
a) Except as set forth in Section 3.21 of the Disclosure Schedule, there is no
pending Proceeding:
(i) that has been commenced by or against the Acquired Companies or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, the Acquired Companies; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of the Acquired Companies and the Selling Shareholders, (1) no
such Proceeding has been Threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Sellers have delivered to Buyer copies of
all pleadings, correspondence, and other documents relating to each Proceeding
listed in Section 3.21 of the Disclosure Schedule. The Proceedings listed in
Section 3.21 of the Disclosure Schedule will not have a material adverse effect
on the businesses, operations, assets, condition, or prospects of the Acquired
Companies.
(b) Except as set forth in Section 3.21 of the Disclosure Schedule:
(i) there is no Order to which any Acquired Company, or any of the assets owned
or used by any Acquired Company, is subject;
(ii) neither Seller is subject to any Order that relates to the business of, or
any of the assets owned or used by, the Acquired Companies; and
(iii) no officer, director, agent, or employee of the Acquired Companies is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the businesses of the Acquired Companies.
c) Except as set forth in Section 3.21 of the Disclosure Schedule:
(i) The Acquired Companies are and at all times have been in full compliance
with all of the terms and requirements of each Order to which each, or any of
the assets owned or used by each, is or has been subject;
(ii) no event has occurred or circumstance exists that may constitute or result
in (with or without notice or lapse of time) a violation of, or failure to
comply with, any term or requirement of any Order to which the Acquired
Companies, or any of the assets owned or used by the Acquired Companies, are
subject; and
(iii) the Acquired Companies have not received at any time any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
or has been subject.
3.22 ABSENCE OF CERTAIN CHANGES AND EVENTS.
Except as set forth in Section 3.22 of the Disclosure Schedule, since the date
of the Balance Sheet, the Acquired Companies have conducted their businesses
only in the Ordinary Course of Business, and there has not been any:
(a) change in the Acquired Companies' authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of any of the
Acquired Companies; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any of the Acquired Companies of any shares of any such
capital stock; or declaration or payment of any dividend or other distribution
or payment in respect of shares of capital stock;
b) amendment to the Organizational Documents of any of the Acquired Companies;
(c) payment or increase by any of the Acquired Companies of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of any of the Acquired
Companies;
(e) damage to or destruction or loss of any asset or property of any of the
Acquired Companies whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
any of the Acquired Companies, taken as a whole;
(f) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any asset or property of any of the Acquired
Companies or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any of the Acquired Companies, including the
sale, lease, or other disposition of any of the Intellectual Property Assets;
g) material change in the accounting methods used by the Acquired Companies; or
(h) agreement, whether oral or written, by the Acquired Companies to do any of
the foregoing.
3.23 INSURANCE.
Section 3.23 of the Disclosure Schedule lists all polices of insurance and all
surety and other bonds to which the Acquired Companies now is a party,
specifying for each policy or bond the insurer, the amount of coverage, the type
of insurance and any pending claims thereunder. All of such policies and bonds
which have expired were valid and in full force and effect during their
respective terms, and all other of such policies and bonds are valid and in full
force and effect at present, and no claim has been made, or notice given, and to
the best Knowledge of the Acquired Companies and the Selling Shareholders, there
exists no ground to cancel or avoid any of said policies or bonds or to reduce
the coverage provided thereby. No claims have been made or amounts paid pursuant
to such insurance policies except as set forth in Section 3.23 of the Disclosure
Schedule. Such policies provide reasonably adequate coverage in adequate amounts
to insure the assets of the Acquired Companies and the risks of the business of
the Acquired Companies in accordance with practices in the industry. All of said
insurance policies and bonds which are now in effect shall continue to remain in
full force and effect during their respective terms. The Acquired Companies have
not during the past three (3) years been denied or had revoked or rescinded by a
carrier any policy of insurance. Each of the Acquired Companies is not in
default regarding the provisions of any policy insuring the Acquired Companies
and has not failed to give any notice or present any claim required under any
such policy in due and timely fashion. There are no outstanding requirements or
recommendations by any current insurer or underwriter with respect to the
businesses of the Acquired Companies which require or recommend changes in the
conduct of the businesses of the Acquired Companies or require any repairs or
other work to be done with respect to any of the properties, assets or
operations of the Acquired Companies. Except as disclosed on Section 3.23 of the
Disclosure Schedule, any policies expiring prior to the Closing Date will be
renewed or extended upon substantially the same terms and at substantially the
same premiums.
3.24 ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 3.24 hereto:
(a) Acquired Companies is, and at all times has been, in full compliance with,
and has not been and is not in violation of or liable under, any Environmental
Law. Neither Sellers nor Acquired Companies have any basis to expect, nor has
any of them or any other person for whose conduct that are or may be held to be
responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or Acquired Companies has had an interest,
or with respect to any property or Facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported, used, or processed
by Sellers, Acquired Companies, or any other person for whose conduct they are
or may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of Sellers and Acquired Companies,
Threatened claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health, and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which Sellers or Acquired Companies has or had an interest.
(c) Neither Sellers nor Acquired Companies has Knowledge of any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, (or of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Sellers or Acquired
Companies had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by Sellers, Acquired Companies, or any other Person for whose
conduct they are or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) Neither Sellers nor Acquired Companies, or any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or to the Knowledge of Sellers
and Acquired Companies, with respect to any other properties and assets (whether
real, personal, or mixed) in which Sellers or Acquired Companies (or any
predecessor), has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the Environmental at the
Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. No
Seller, Acquired Companies, any other Person for whose conduct they are or may
be held responsible, or to the Knowledge of Sellers and Acquired Companies, any
other Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or Acquired Companies has or
had an interest.
(f) There has been no Release or, to the Knowledge of Sellers and Acquired
Companies, Threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Sellers or Acquired Companies
has or had an interest, or to the Knowledge of Sellers and Acquired Companies,
any geologically or hydrologically adjoining property, whether by Sellers,
Acquired Companies, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Sellers or Acquired Companies pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by Sellers,
Acquired Companies, or any other Person for whose conduct they are or may be
held responsible, with Environmental Laws.
3.25 LABOR RELATIONS; COMPLIANCE
Acquired Companies has not been or is not a party to any collective bargaining
or other labor Contract. There has never been, there is not presently pending or
existing, and there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
Acquired Companies relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with any Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting Acquired Companies or its premises, or (c) any application for
certification of a collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by Acquired Companies, and
no such action is contemplated by Acquired Companies. Acquired Companies has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. Acquired Companies is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.26 INTELLECTUAL PROPERTY ASSETS
(a) The Acquired Companies have all right, title and interest, free and clear of
any liens, charges, encumbrances, restrictions, royalties or any claims of
ownership by third parties whatsoever, to all intellectual property assets of
the Acquired Companies used in connection with businesses of the Acquired
Companies, including without limitation all patents and reissues, divisions,
continuations and extensions of such patents, patents pending and applications
for patents, patent disclosures docketed, registered and unregistered trademarks
and service marks and applications for such trademarks and service marks, trade
names, registered and unregistered copyrights and applications for copyright
registration, all trade secrets, know-how, and all rights under any leases,
licenses, franchises, permits, authorizations, agreements and arrangements with
respect to such intellectual property assets (hereinafter all of the foregoing
are collectively referred to as "Intellectual Property Assets"), whether owned
by the Acquired Companies or owned by others and used by the Acquired Companies.
All true and correct and complete copies of all such leases, licenses,
franchises, permits, authorizations, agreements and arrangements have heretofore
been delivered by the Acquired Companies to Buyer. Section 3.26 of the
Disclosure Schedule describes all of such Intellectual Property Assets of the
Acquired Companies in full. The Acquired Companies have full right and power to
assign all lease and license rights with respect to such Intellectual Property
Assets.
(b) The Intellectual Property Assets of the Acquired Companies are fully
sufficient to enable the Acquired Companies to produce and sell all products
sold or presently intended to be sold by the Acquired Companies and such
products will operate in accordance with the functional specifications and
instructions set forth in the Acquired Companies' written documentation, whether
published or unpublished, as such documentation is identified in Section 3.26 of
the Disclosure Schedule, and in accordance with any other descriptions included
in the Disclosure Schedule.
(c) There exist no pending or, to the Knowledge of the Acquired Companies and
the Selling Shareholders, Threatened litigation, actions, lawsuits or claims,
including without limitation to the filing or Threatened filing, whether
voluntary or involuntary, of insolvency or bankruptcy proceedings or forfeiture
proceedings against the Acquired Companies, claims of infringement or
misappropriation, or other claims adverse to the ownership rights of the
Acquired Companies with respect to the Intellectual Property Assets of the
Acquired Companies.
(d) No failure to maintain and adequately protect exists with respect to any of
the Intellectual Property Assets, including maintenance payments thereof and
renewals or extensions thereof, except as expressly disclosed in Section 3.26 of
the Disclosure Schedule.
(e) The Acquired Companies own or is a licensee of all Intellectual Property
Assets, and the Acquired Companies have all rights to assign all such license
rights and/or to sublicense such rights and/or to grant sublicense rights to
others as necessary to conduct the present businesses of the Acquired Companies.
(f) The Acquired Companies have not consented to or otherwise knowingly
acquiesced in the use by another person or entity of any of the Acquired
Companies' name or a name that is substantially similar to any of the Acquired
Companies' name.
3.27 MATERIAL AND AFFILIATE CONTRACTS
Section 3.27 of the Disclosure Schedule sets forth a list of all other (i.e.,
not identified on one or more of the sections to the Disclosure Schedule) oral
and written contracts, commitments, or other agreements to which any of the
Acquired Companies is a party or by which any of the Acquired Companies or any
of the assets or properties of the Acquired Companies are bound or subject (a)
requiring or reasonably anticipated to require the payment by any of the
Acquired Companies of more than $10,000 in any twelve-month period, (b) under
which any of the Acquired Companies is entitled to receive $10,000 or more
annually, (c) covering indebtedness of any of the Acquired Companies in the
principal amount of $10,000 or more, (d) covering the employment of any employee
of any of the Acquired Companies, (e) not terminable by any of the Acquired
Companies, without penalty, within thirty (30) days following the Closing Date,
(f) terminable by or on behalf of the other party thereto on sixty (60) days'
notice or less, (g) which obligates any of the Acquired Companies to act as a
guarantor or surety irrespective of the amount involved, (h) which are provider,
service or similar agreements, or (i) which are capital leases, loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements or equipment financing
agreements (collectively, the "Material Contracts"). True, correct and complete
copies of the written Material Contracts and true, correct and complete written
descriptions of the oral Material Contracts have heretofore been delivered by
the Acquired Companies to Buyer.
There are no contracts, agreements, purchase orders, commitments, leases,
agreements, understandings or arrangements, including loan arrangements, between
any of the Acquired Companies and any of their officers, directors or
shareholders, or any related or affiliated person, corporation or other entity,
except as set forth in Section 3.27 of the Disclosure Schedule (a true, correct
and complete copy of each such written document and a true, correct and complete
written description of each such oral relationship having heretofore been
delivered by the Acquired Companies to Buyer) (collectively, the "Affiliate
Contracts"), and none shall be entered into by any of the Acquired Companies
from the date hereof through the Closing Date without the prior written consent
of Buyer.
Except as set forth in Section 3.27 of the Disclosure Schedule, all of the
Material Contracts and Affiliate Contracts are in full force and effect, and
there exists no default by any of the Acquired Companies or to the best
Knowledge of the Acquired Companies or the Selling Shareholders, any other party
thereto, and no event has occurred which, through notice or the passage of time
or otherwise, would result in a default by any of the Acquired Companies from
the date hereof through the Closing Date without the prior written consent of
Buyer.
3.28 CERTAIN PAYMENTS.
Neither the Acquired Companies nor any director, officer, agent, or employee of
the Acquired Companies, or any other Person associated with or acting for or on
behalf of the Acquired Companies, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Acquired Companies or any affiliate of the Acquired Companies, or
(iv) in violation of any Legal Requirement, (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Acquired Companies.
3.29 COMPUTER PROGRAMS AND SOFTWARE.
All software developed by any Acquired Company or Selling Shareholder and used
by any Acquired Company (the "Software") and all updates thereto will, and to
the best Knowledge of the Acquired Companies and the Sellers, all other software
used by any Acquired Company (the "Other Software") will, prior to December 1,
1999, correctly handle the change of the century in a standard and compliant
manner, including the year 2000 and beyond as well as the leap year and the
absence of leap year, and will operate accurately in all respects with respect
to date related operations. For purposes of this Agreement, compliance with the
foregoing shall mean that the Software and the Other Software will operate and
correctly process such that (i) calculations using dates execute utilizing a
four digit year, (ii) the Software and the Other Software functionality,
including, but not limited to, entry, inquiry, maintenance, update and display
(whether online, batch or otherwise) shall support four digit year processing,
(iii) interfaces and reports shall support four digit year processing, (iv)
successful transition to the year 2000, processing with a four digit year shall
occur without human intervention, (vi) all leap years shall be calculated
correctly, (vii) correct results shall be produced in forward and backward date
calculations spanning century boundaries, including the conversion of previous
years currently stored as two digits, and (viii) the Software and the Other
Software complies with industry standards regarding the change of the century
and year 2000 compliance.
All Software and Other Software have been validly acquired by Acquired Companies
and are duly registered on the name of Datalink.
3.30 DISCLOSURE.
(a) No representation or warranty of the Acquired Companies or the Selling
Shareholders in this Agreement and no statement in the Disclosure Schedule omits
to state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to this Agreement will contain any untrue statement
or omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.
(c) There is no fact Known to the Acquired Companies or the Selling Shareholders
that has specific application to the Acquired Companies (other than general
economic or industry conditions) and that materially adversely affects or, as
far as the Acquired Companies or the Selling Shareholders can foresee,
materially threatens the assets, business, prospects, financial condition, or
results of operations of the Acquired Companies that has not been set forth in
this Agreement or the Disclosure Schedule.
3.31 BROKERS OR FINDERS.
The Acquired Companies and the Selling Shareholders and their agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to the Acquired Companies and the Selling
Shareholders and covenants and agrees with the Acquired Companies and the
Selling Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the Commonwealth of Pennsylvania. Buyer has the corporate
power and authority to carry on its business as presently conducted.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Management Agreements and the Lease
(collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms. Buyer has the absolute
and unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer's Closing Documents and to perform its obligations under
this Agreement and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
i) any provision of Buyer's Organizational Documents;
ii) any resolution adopted by the board of directors or the stockholders of
Buyer;
iii) any Legal Requirement or Order to which Buyer may be subject; or
iv) any Contract to which Buyer is a party or by which Buyer may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 INVESTMENT INTENT.
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS.
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS.
or finders' fees or agents' commissions or other similar payment in connection
with this Agreement.
5. COVENANTS OF THE ACQUIRED COMPANIES AND THE SELLERS.
he Acquired Companies and the Selling Shareholders covenant and agree to the
following:
5.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, the Acquired Companies
and the Selling Shareholders will, and will cause its or their Representatives
to, (a) afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer's Advisors") full and free access to the
Acquired Companies' personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data, (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books and records, and
other existing documents and data as Buyer may reasonably request, and (c)
furnish Buyer and Buyer's Advisors with such additional financial, operating,
and other data and information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE ACQUIRED COMPANIES.
Between the date of this Agreement and the Closing Date, the Acquired Companies
and the Selling Shareholders will:
a) conduct the businesses of the Acquired Companies only in the Ordinary Course
of Business;
(b) use their Best Efforts to preserve intact the current business organization
of the Acquired Companies, keep available the services of the current officers,
employees, and agents of the Acquired Companies, and maintain the relations and
goodwill with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with the Acquired Companies;
(c) confer with Buyer concerning operational matters of a material nature; and
(d) otherwise report periodically to Buyer concerning the status of the
businesses, operations, and finances of the Acquired Companies.
5.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, the Acquired Companies and the Selling
Shareholders will not, without the prior written consent of Buyer, take any
affirmative action, or fail to take any reasonable action within its or their
control, as a result of which any of the changes or events listed in Section
3.22 is likely to occur.
5.4 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, the Acquired
Companies and the Selling Shareholders will make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, the
Acquired Companies and the Selling Shareholders will (a) cooperate with Buyer
with respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in Schedule 4.2.
5.5 NOTIFICATION.
Between the date of this Agreement and the Closing Date, the Acquired Companies
and the Selling Shareholders will promptly notify Buyer in writing if either the
Acquired Companies or any Selling Shareholder becomes aware of any fact or
condition that causes or constitutes a Breach of any of the representations and
warranties of the Acquired Companies and the Selling Shareholders as of the date
of this Agreement, or if the Acquired Companies or any Selling Shareholder
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the disclosure Schedule if the Disclosure Schedule were dated the date of the
occurrence or discovery of any such fact or condition, the Acquired Companies or
any Selling Shareholder will promptly deliver to Buyer a supplement to the
Disclosure Schedule specifying such change. During the same period, the Acquired
Companies or any Selling Shareholder will promptly notify Buyer of the
occurrence of any Breach of any covenant of the Acquired Companies or the
Selling Shareholders in this Section 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, the Acquired Companies and the
Selling Shareholders will cause all indebtedness owed to any of the Acquired
Companies by either a Selling Shareholder or any related Person of the Acquired
Companies or a Selling Shareholder to be paid in full prior to Closing.
5.7 NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to Section9,
the Acquired Companies and the Selling Shareholders will not, and will cause the
Acquired Companies' Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of the Acquired Companies, or any of the
capital stock of the Acquired Companies, or any merger, consolidation, business
combination, or similar transaction involving the Acquired Companies.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, the Acquired Companies
and the Selling Shareholders will use their Best Efforts to cause the conditions
in Sections 7 and 8 to be satisfied.
6. COVENANTS OF JPM
The Buyer covenants and agrees to the following:
6.1 APPROVALS OF GOVERNMENTAL BODIES.
As promptly as practicable after the date of this Agreement, Buyer will make all
filings required by Legal Requirements to be made by them to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyer will cooperate with Sellers with respect to all filings that
Acquired Companies or the Selling Shareholders are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with Sellers in obtaining all consents identified in Section 3.2 of
the Disclosure Schedule; provided that this Agreement will not require Buyer to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.2 BEST EFFORTS.
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
6.3. UNDISCLOSED DATALINK ASSETS
Following the Closing Date, in the event any asset of Datalink becomes known
which is attributable to, and arose during, the period prior to the Closing
Date, which was not disclosed on the Balance Sheet and/or Interim Balance Sheet,
and which the Selling Shareholders had no prior Knowledge of, Buyer will pay and
distribute such asset to the Selling Shareholders.
6.4 CONDUCTING BUSINESS
So long as Buyer has any ownership interest in Datalink, whether directly or
indirectly through one or more Subsidiaries, Buyer will not manufacture,
distribute or sell any product in Sao Paulo, Brazil which is substantially
similar to those manufactured, distributed and sold by Datalink except through
Datalink.
7. CONDITIONS PRECEDENT TO JPM'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and Buyer's obligation to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS.
All of the Acquired Companies' and the Selling Shareholders' representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to any Schedule hereto.
7.2 NO MATERIAL ADVERSE CHANGE.
Since the date of the Balance Sheet, there shall have been no material adverse
change in the financial condition, assets, or liabilities of the Acquired
Companies.
7.3 NO LOSS.
Since the date of the Balance Sheet, the Acquired Companies shall not have
suffered any loss on account of fire, flood, accident, strike or other calamity
which has a material adverse effect on the financial condition or any assets of
the Acquired Companies, whether or not such loss shall have been covered by
insurance.
7.4 CERTIFICATE.
The President or Chief Executive Officer, as the case may be, of ULMIN shall
have executed and delivered to Buyer on the Closing Date a Certificate, dated
that date, in form and substance reasonably satisfactory to Buyer and its legal
counsel, to the effect that each of the provisions of Sections 7.1, 7.2 and 7.3
of this Article 7 is true and correct in every respect.
7.5 PERFORMANCE.
(a) All of the covenants and obligations that the Acquired Companies and the
Selling Shareholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
(b) The Acquired Companies and the Selling Shareholders shall have delivered
each of the documents required to be delivered by them pursuant to Section
2.6(a).
7.6 CONSENTS
Each of the Consents identified in Section 3.2 of the Disclosure Schedule must
have been obtained and must be in full force and effect.
7.7 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Sellers' and the Acquired Companies' counsel, dated the
Closing Date, in the form of Exhibit 7.7(a);
(b) a good standing certificate or similar certificate and certified
Organizational Documents of the Acquired Companies, as of the Closing Date and a
good standing certificate from each jurisdiction in which each of the Acquired
Companies is qualified to do business;
(c) copies of the resolutions duly adopted by the Board of Directors and
shareholders of the Acquired Companies, respectively, authorizing the execution,
delivery and performance of this Agreement and the Sellers' Closing Documents
and other agreements, instruments and documents contemplated hereby, and to be
delivered hereunder, duly certified by the Secretary of each of the Acquired
Companies, which resolutions shall be in full force and effect at the time of
delivery on the Closing Date.
7.8 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a)involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.9 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Acquired Companies, or (b)
is entitled to all or any portion of the purchase price payable for the Shares.
7.10 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
7.11 DUE DILIGENCE
Buyer shall be satisfied, in its sole discretion and without regard to
materiality, with the results of its due diligence with respect to the
businesses, operations, condition (financial or otherwise), assets or property
of the Acquired Companies and without regard to any Knowledge of such facts
prior to execution of this Agreement.
8. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE.
The Selling Shareholders' obligation to sell the Shares and the Acquired
Companies and the Selling Shareholders' obligation to take the other actions
required to be taken by the Acquired Companies and the Selling Shareholders at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by the Acquired
Companies and the Selling Shareholders, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS.
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 CERTIFICATES.
An executive officer of Buyer shall have executed and delivered to the Acquired
Companies and the Selling Shareholders on the Closing Date a Certificate, dated
that date, in form and substance reasonably satisfactory to the Acquired
Companies and the Selling Shareholders and their legal counsel, to the effect
that the provisions of Section 8.1 hereof are true and correct in every respect.
8.3 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(b) Buyer shall have delivered each of the documents required to be delivered by
Buyer pursuant to Section 2.6(b).
8.4 ADDITIONAL DOCUMENTS.
uyer shall have delivered to Acquired Companies and the Selling Shareholders
the following:
(a) an opinion of Buyer's counsel dated the Closing Date, in the form of Exhibit
8.4(a) attached hereto;
(b) Such other documents as the Acquired Companies and the Selling Shareholders
may reasonably request for the purpose of (i) enabling their counsel to provide
the opinion referred to in Section 7.7(a), (ii) evidencing accuracy of any
representation or warranty of Buyer, (iii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iv) evidencing the satisfaction of any
condition referred to in this Section 8, or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
8.5 NO INJUNCTION.
There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
9. TERMINATION.
9.1 TERMINATION EVENTS.
This Agreement and the Contemplated Transactions may, by written notice given
prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived;
(b)(i) by Buyer if any of the conditions in Section 7 have not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in Section
8 have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date; or
(c) by mutual consent of Buyer and Sellers.
9.2 EFFECT OF TERMINATION.
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 11.1
(relating to Expenses) and 11.3 (relating to Confidentiality) will survive;
provided, however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES.
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
All representations, warranties, covenants, and obligations in this Agreement,
made by the Sellers, the Schedules hereto, any supplements to the Schedules
hereto, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing. The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER.
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Acquired Companies, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in this
Agreement (without giving effect to any supplement to the Schedules hereto), the
Disclosure Schedule hereto, the supplements to the Schedules hereto, or any
other certificate or document delivered by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by Sellers in this
Agreement as if such representation or warranty were made on and as of the
Closing Date without giving effect to any supplement to the Schedules hereto,
other than any such Breach that is disclosed in a supplement to any Schedules
hereto and is expressly identified in the certificate delivered pursuant to
Section 7.4 as having caused the condition specified in Section 7.1 not to be
satisfied;
c) any Breach by Sellers of any covenant or obligation of Sellers in this
Agreement;
(d) any product shipped or manufactured by, or any services provided by, the
Acquired Companies prior to the Closing Date; or
(e) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by any such Person with Sellers or the Acquired Companies (or any Person
acting on their behalf) in connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
0.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--ENVIRONMENTAL MATTERS.
In addition to the provisions of Section 10.2, Sellers, jointly and severally,
will indemnify and hold harmless Buyer, the Acquired Companies and the other
Indemnified Persons for, and will pay to Buyer, the Acquired Companies, and the
other Indemnified Persons the amount of, any Damages (including costs of
cleanup, containment, or other remediation) arising, directly or indirectly,
from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out of or relating
to: (i)(A) the ownership, operation, or condition at any time on or prior to the
Closing Date of the Facilities or any other properties and assets (whether real,
personal, or mixed and whether tangible or intangible) in which Sellers or
Acquired Companies has or had an interest, or (B) any Hazardous Materials or
other contaminants that were present on the Facilities or such other properties
and assets at any time on or prior to the Closing Date; or (ii)(A) any Hazardous
Materials or other contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise handled by
Sellers or Acquired Companies or by any other Person for whose conduct they are
or may be held responsible at any time on or prior to the Closing Date, or (B)
any Hazardous Activities that were, or were allegedly, conducted by Sellers or
Acquired Companies or by any other Person for whose conduct they are or may be
held responsible; or
(b) any bodily injury (including illness, disability, and death, and regardless
of when any such bodily injury occurred, was incurred, or manifested itself),
personal injury, property damage (including trespass, nuisance, wrongful
eviction, and deprivation of the use of real property), or other damage of or to
any Person, including any employee or former employee of Sellers or Acquired
Companies or any other Person for whose conduct they are or may be held
responsible, in any way arising from or allegedly arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Facilities or the
operation of Acquired Companies prior to the Closing Date, or from Hazardous
Material that was (i) present or suspected to be present on or before the
Closing Date on or at the Facilities (or present or suspected to be present on
any other property, if such Hazardous Material emanated or allegedly emanated
from any of the Facilities and was present or suspected to be present on any of
the Facilities on or prior to the Closing Date) or (ii) Released or allegedly
Released by Sellers or Acquired Companies or any other Person for whose conduct
they are or may be held responsible, at any time on or prior to the Closing
Date.
Buyer will be entitled to control any cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.5 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER.
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 10.2, 10.4, or
(to the extent provided in the last sentence of Section 10.3) Section 10.3 of
notice of the commencement of any Proceeding against it, such indemnified party
will, if a claim is to be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect to any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court in
which a Proceeding is brought against any Indemnified Person for purposes of any
claim that an Indemnified Person may have under this Agreement with respect to
such Proceeding or the matters alleged therein, and agree that process may be
served on Sellers with respect to such a claim anywhere in the world.
10.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS.
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants; provided, however, that the Selling Shareholders shall
be responsible for any and all expenses incurred by Buyer of or relating, either
directly of indirectly, the formation and organization of the Acquired Companies
or the assignment by the Selling Shareholders or the Acquired Companies of his
or its rights hereunder, including, without limitation, expenses in connection
with any due diligence, professional fees, taxes, or translation of documents.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing, Sellers shall, and shall
cause the Acquired Companies to, keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any Person. Seller and Buyer
will consult with each other concerning the means by which the Acquired
Companies' employees, customers, and suppliers and others having dealings with
the Acquired Companies will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer, the Acquired Companies and Sellers to maintain in
confidence, and not use to the detriment of another party, any written, oral, or
other information obtained in confidence from another party in connection with
this Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, Sellers waive, and will upon
Buyer's request cause the Acquired Companies to waive, any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information of the Acquired Companies except
for the intentional competitive misuse by Buyer of such trade secrets or
confidential information.
11.4 NOTICES.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
written notice to the other parties):
Notice to JPM shall be sufficient if given to:
The JPM Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Duane, Morris & Heckscher, LLP
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Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
otice to the Acquired Companies and the Selling Shareholders shall be
sufficient if given to:
AF DATALINK Equipamentos de Telecomunicaco Ltda.
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Attn.: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Telecopy: (011) 247-2501
with copies to:
ADVOCACIA International
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ - conjs. 1601/1612
01311-100
Sao Paulo - SP
Brazil
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (011) 288-0047
11.5 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the Commonwealth of Pennsylvania, County of Union, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Middle District of Pennsylvania, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
However, in the event the Buyer decides to file a claim against the Acquired
Companies and/or against the Selling Shareholders, Buyer is entitled at is own
discretion to choose the alternative jurisdiction of the Courts of the city of
Sao Paulo, Estate of Sao Paulo, Brazil. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
11.6 FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior and contemporaneous agreements between the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by written agreement executed
by the parties.
11.9 SCHEDULES.
(a) The disclosures in the Schedules hereto, and those in any supplement
thereto, must relate only to the representations and warranties in the Section
of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the body of this
Agreement and those in the Schedules (other than an exception expressly set
forth as such in any Schedule with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties except that Buyer may assign any of its
rights under this Agreement to any Subsidiary of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 SECTION HEADINGS; CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
11.13 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 GOVERNING LAW.
This Agreement will be governed by the internal laws of the Commonwealth of
Pennsylvania, United States of America without giving effect to any conflict or
choice of law provision or rule. In the event the Buyer decides to file a claim
against the Acquired Companies and/or against the Selling Shareholders, Buyer is
entitled at is own discretion to choose the applicable law of the Federative
Republic of Brazil.
11.15 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered, or caused to be
executed and delivered, this Agreement as of the date first written above.
ATTEST: THE JPM COMPANY
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chief Executive Officer
ATTEST: Acquired Companies
Authorized Officer By:
Its:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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