SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 16, 1998
INTERNATIONAL FIBERCOM, INC.
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(Exact name of registrant as specified in its charter)
Arizona
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(State or other jurisdiction of incorporation)
1-9690 86-0271282
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(Commission File Number) (IRS Employer Identification Number)
3410 East University, Suite 180, Phoenix, Arizona 85034
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 941-1900
Former Address - 3615 South 28th Street, Phoenix, Arizona 85040
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Effective September 1, 1998, the Company acquired all of the issued
and outstanding capital stock of United Tech, Inc., a Florida corporation
("United Tech"), from the former shareholders of United Tech, in exchange for
1,502,000 restricted shares of Common Stock of the Company. The transaction
closed on September 16, 1998.
Effective September 1, 1998, the Company acquired all of the issued and
outstanding capital stock of Diversitec, Inc., a Virginia corporation
("Diversitec"), from the former shareholders of Diversitec, in exchange for
1,752,000 restricted shares of Common Stock of the Company. The transaction
closed on September 18, 1998.
(b) United Tech designs, builds and installs the systems used in central
offices of the Regional Bell Operating Companies ("RBOC's"), independent
telephone companies and competitive local exchange carriers ("CLEC's").
Diversitec buys, sells, assembles and repairs the digital plug-in switching
circuit boards and systems used in the central offices of RBOC's, independent
telephone companies and CLEC's. It is a value-added reseller of central office
telecommunications equipment of Lucent Technologies, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) THE FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The financial
statements of United Tech and Diversitec are currently being audited and are not
available at this date. Such financial statements will be filed not later than
60 days after the date of this report.
(b) PRO FORMA FINANCIAL INFORMATION. See (a) above.
(c) EXHIBITS.
1. Stock Purchase Agreement, dated as of September 1, 1998, by
and among the Company, United Tech, and the holders of the capital stock of
United Tech. (Exhibits and Schedules omitted).
2. Stock Purchase Agreement, dated as of September 1, 1998, by
and among the Company, Diversitec, and the holders of the capital stock of
Diversitec. (Exhibits and Schedules omitted).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL FIBERCOM, INC.
/s/ Joseph P. Kealy
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Joseph P. Kealy
Chairman of the Board and President
Dated: October 1, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), is entered into as of
September 1, 1998, among, INTERNATIONAL FIBERCOM, INC., an Arizona corporation
("IFC"), UNITED TECH, INC., a Florida corporation (the "Company"), and the
parties set forth on Exhibit A, who are all of the holders of capital stock of
the Company (the "Selling Shareholders").
R E C I T A L S :
WHEREAS, the Company is in the business of purchasing, selling and
otherwise dealing in telecommunications products;
WHEREAS, IFC desires to purchase all of the issued and outstanding
shares of capital stock of the Company owned by the Selling Shareholders on the
terms and conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, IFC, the Company and the Selling Shareholders hereby agree as follows:
C O V E N A N T S :
1. PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, on the Closing Date, as defined in Paragraph 3, "Closing Date," the
Selling Shareholders shall sell, convey, transfer and assign to IFC and IFC
shall purchase from the Selling Shareholders, 980 shares of Common Stock of the
Company ("Company Shares") representing all of the issued and outstanding
capital stock of the Company. The certificates represented by the Company Shares
shall be endorsed in blank, or accompanied by stock powers duly executed in
blank, by each Selling Shareholder transferring all of the Company Shares owned
by such Selling Shareholder. Each Selling Shareholder agrees to cure any
deficiencies with respect to the endorsement of the certificates representing
the Company Shares owned by such Selling Shareholder or with respect to the
stock power accompanying any such certificates at any time subsequent to the
closing of the transaction. All of the Exhibits and Schedules referred to in
this Agreement are made a part of the Agreement by this reference.
2. EXCHANGE OF IFC SHARES FOR THE COMPANY SHARES.
2.1 EXCHANGE. IFC will acquire the Company Shares in exchange
for 1,502,000 in restricted shares of voting Common Stock, no par value, of IFC
("IFC Shares"). Such Shares shall be allocated between the Selling Shareholders
as set forth on Exhibit A hereto.
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2.2 FINANCIAL STATEMENTS AND INCOME TAX RETURNS. The parties
contemplate that (i) after the Closing Date, as defined below, IFC will own Nine
Hundred Eighty (980) Company Shares, which is one hundred percent (100%) of the
issued and outstanding capital stock of the Company, and (ii) the Company, as a
new subsidiary of IFC's consolidated group, will include its financial results
in IFC's consolidated financial statements covering the periods after joining
IFC's consolidated group. The transaction contemplated by this Agreement shall
be structured to qualify for pooling of interests accounting treatment.
3. CLOSING DATE.
3.1 The closing under this Agreement shall take place at the
offices of Streich Lang, P.A., Renaissance One, Two North Central, Phoenix,
Arizona 85004-2391 or by facsimile transfer of documents on a date ("Closing
Date") as soon as practicable after:
3.1.1 Execution of this Agreement;
3.1.2 Consent of the Selling Shareholders and the
Company to the transactions contemplated in this Agreement;
3.1.3 Completion of the due diligence investigation
contemplated under Paragraph 6, "Due Diligence Inspection; Covenants";
3.1.4 Satisfaction of all conditions to closing set
forth in Paragraph 7, "Conditions Precedent to Obligations of IFC," and
Paragraph 8, "Conditions Precedent to the Obligations of the Company and the
Selling Shareholders"; and
3.1.5 Receipt by IFC of any required approvals under
Arizona and Florida corporate law and any other required regulatory approvals.
3.2 The Closing Date shall be no later than forty-five (45)
days after delivery of the unaudited financial statements of the Company for the
fiscal years ended December 31, 1996 and December 31, 1997, and the unaudited
financial statements for the period through August 31, 1998, which are attached
hereto as Exhibits B, C and D ("Financial Statements"), respectively, or
September 1, 1998, whichever comes first, provided that IFC may extend the
Closing Date for an additional sixty (60) days upon written notice to the
Company and the Selling Shareholders. Any further extension of the Closing Date
may be made only with the written consent of IFC, the Company and the Selling
Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS. The Selling Shareholders and the Company represent and warrant to
IFC that:
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4.1 VALIDITY OF AGREEMENT. This Agreement is valid and binding
upon the Selling Shareholders and the Company and neither the execution nor
delivery of this Agreement by such parties nor the performance by such parties
of any of their covenants or obligations hereunder will constitute a material
default under any contract, agreement or obligation to which any of them is a
party or by which they or any of their respective properties are bound. This
Agreement is enforceable severally against the Company and the Selling
Shareholders in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium, receivership or
other similar laws relating to or affecting creditors' rights generally.
4.2 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Florida. The Company has full corporate power and authority to carry on
its business as now conducted and to own or lease and operate the properties and
assets now owned or leased and operated by it. The Company is duly qualified to
transact business in the State of Florida and in all states and jurisdictions in
which the business or ownership of its property makes it necessary so to
qualify, except for jurisdictions in which the nature of the property owned or
business conducted, when considered in relation to the absence of serious
penalties, renders qualification as a foreign corporation unnecessary as a
practical matter.
4.3 TITLE. Each Selling Shareholder has full right and title
to the Company Shares to be exchanged by such Selling Shareholder and such
Company Shares constitute all the Company Shares which each Selling Shareholder,
directly or indirectly, owns or has any right to acquire. Each Selling
Shareholder holds his or its Company Shares free and clear of all liens,
encumbrances, restrictions and claims of every kind. Each Selling Shareholder
has the legal right, power and authority to enter into this Agreement and to
sell, assign, transfer and convey the Company Shares so owned by him or it
pursuant to this Agreement and the delivery to IFC of the Company Shares
pursuant to the provisions of this Agreement will transfer to IFC valid title
thereto, free and clear of all liens, encumbrances, restrictions and claims of
every kind. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase or sale of any Company Shares by any
Selling Shareholder.
4.4 EXCLUSIVE DEALING. The Selling Shareholders are not
engaged in any discussions or negotiations for the purchase or sale of any
Company Shares except those discussions with the Company which are embodied in
this Agreement. Neither the Company nor the Selling Shareholders is or are
engaged in any discussions or negotiations for the sale of any Company Shares or
Company Shares held in the treasury, except those discussions with the Company
which are embodied in this Agreement.
4.5 CAPITALIZATION. The authorized capital stock of the
Company consists solely of 980 shares of Common Stock, $1.00 par value per
share. The 980 Company Shares shown as outstanding on the Financial Statements
constitute the only outstanding shares of the capital stock of the Company of
any nature whatsoever, voting and non-voting. The Company Shares owned by the
Selling Shareholders are validly issued, fully paid and non-assessable and are
subject to no restrictions on transfer. All Company Shares are required to be
certificated, and the Company has
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executed and delivered no certificates for shares in excess of the number of
Company Shares set forth in Paragraph 1. There are, and as of the Closing Date
there will be, no outstanding options, warrants, rights, calls, commitments,
conversion rights, plans or other agreements of any character providing for the
purchase, issuance or sale of, or any securities convertible into, capital stock
of the Company, whether issued, unissued or held in its treasury. There are no
treasury shares.
4.6 NO SUBSIDIARIES. The Company has no subsidiaries and does
not own five percent (5%) or more of the securities having voting power of any
corporation (or would own such securities in such amount upon the closing of any
existing purchase obligations for securities).
4.7 OWNERSHIP AND AUTHORITY. The execution, delivery and
performance of this Agreement by the Company has been duly authorized by its
Board of Directors and all other required corporate approvals have been
obtained. This Agreement is valid and binding upon the Company, and is
enforceable against the Company in accordance with its terms, subject to
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium,
receivership or other similar laws relating to or affecting creditors' rights
generally. The execution, delivery and performance of this Agreement by the
Company will not result in the violation or breach of any term or provision of
charter instruments applicable to the Company or constitute a material default
under any indenture, mortgage, deed of trust or other contract or agreement to
which the Company is a party or by which the Company or any of its properties is
bound and will not cause the creation of a lien or encumbrance on any properties
owned by or leased to or by the Company.
4.8 LIABILITIES AND OBLIGATIONS. Except to the extent set
forth in the Financial Statements, the Company has no liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) secured by a
pledge or a lien on any of its assets.
4.9 FINANCIAL STATEMENTS. The Financial Statements (i) have
been prepared from the books and records of the Company by its independent
certified public accountants, Hamic, Jones, Hamic, Nalley & Sturwold, P.A.,
Lakeland, Florida, (ii) are true, complete, and correct, and fairly and
accurately present the financial condition and assets and liabilities or the
results of operations of the Company as of the dates thereof and for the periods
indicated in conformity with generally accepted accounting principles
consistently applied, and (iii) contain and reflect all necessary adjustments
for fair and accurate presentation of the financial condition as of such dates.
The Financial Statements for the period ended August 31, 1998 were prepared by
management and are unaudited but were prepared in conformity with generally
accepted accounting principles consistently applied, are true, complete and
correct and fairly and accurately present the financial condition and assets and
liabilities or the results of operation of the Company as of the date thereof
and for the periods indicated (including but not limited to the inclusion of all
necessary adjustments). Except as set forth in Schedule 4.9, there has not been
any change between the date of the Financial Statements and the date of this
Agreement, and there will not be any such change in the Financial Statements
between the date of this Agreement and the Closing Date, which has had or will
have an adverse effect on the financial position or results of operations of the
Company. Except as and to the extent reflected or reserved against in such
Financial Statements, or otherwise expressly
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disclosed therein, the Company has no liabilities or obligations, contingent or
otherwise, of a nature required to be reflected in the Financial Statements in
accordance with generally accepted accounting principles consistently applied.
4.10 ABSENCE OF CERTAIN CHANGES. During the period from
December 31, 1997 through and including the Closing Date, the Company has not:
4.10.1 Suffered any adverse change affecting its
assets, liabilities, financial condition or business;
4.10.2 Made any change in the compensation payable or
to become payable to any of its employees or agents, or made any bonus payments
or compensation arrangements to or with any of its employees or agents except as
set forth on Schedule 4.10.2 of the Disclosure Schedule, whether direct or
indirect;
4.10.3 Paid or declared any dividends, distributions or
other payments due or owing to the Selling Shareholders or redeemed or
repurchased (or agreed to redeem or repurchase) any of its capital stock;
4.10.4 Issued any stock, or granted any stock options
or warrants to purchase stock or issued any securities convertible into common
stock of the Company, except as set forth on Schedule 4.10.4;
4.10.5 Sold or transferred any of its assets or
canceled any indebtedness or claims owing to it, except in the ordinary course
of business and consistent with its past practices;
4.10.6 Sold, assigned or transferred any formulas,
inventions, patents, patent applications, trademarks, trade names, copyrights,
licenses, computer programs or software, know-how or other intangible assets;
4.10.7 Amended or terminated any contract, agreement or
license to which it is a party otherwise than in the ordinary course of business
or as may be necessary or appropriate for the consummation of the transactions
described herein;
4.10.8 Borrowed any money or incurred, directly or
indirectly (as a guarantor or otherwise), any indebtedness in excess of $25,000,
except in the ordinary course of business and consistent with its past
practices;
4.10.9 Discharged or satisfied any lien or encumbrance
or paid any obligation or liability (absolute or contingent), other than current
liabilities shown in the Financial Statements or current liabilities incurred
since such date in the ordinary course of business, consistent with its past
practices;
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4.10.10 Mortgaged, pledged or subjected to lien, charge
or other encumbrance any of its assets, except in the ordinary course of
business and consistent with its past practices; or
4.10.11 Entered into or committed to any other
transaction other than in the ordinary course of business, consistent with past
practices.
4.11 TAXES. The Company (and any predecessor corporation or
partnership as to which either of them is the transferee or successor) has
timely filed, or has timely secured an extension and will (within the permitted
extension) file, all tax returns, including federal, state, local and foreign
tax returns, tax reports and forms, as to which the due date for filing is prior
to the Closing Date; has reported all reportable income on such returns; has
adopted and followed in the preparation of such returns methods of accounting
accepted by law, and has not changed any methods of accounting without
compliance with procedures required by law; has not deducted any expenses or
charges or claimed any credits which are not allowable; and except as set forth
in Schedule 4.11.1 of the Disclosure Schedule, has paid, or accrued and reserved
for, all taxes, penalties and interest shown to be due or required to be paid
pursuant to the returns as filed, or as adjusted pursuant to amendment or
correction. The Company shall also provide copies of all federal and state
income and sales tax returns filed, FICA and state income taxes withholding
returns filed and evidence of payment of such taxes as listed in Schedule 4.11.2
hereto. The Selling Shareholders have (i) paid or will pay by the Closing Date
any property taxes owed with respect to any real or personal property through
the Closing Date; and (ii) no knowledge of any deficiency or assertion of any
deficiency relating to property taxes on such assets. No examination, audit, or
inquiry of any tax return, federal, state or otherwise of the Company is
currently in progress and neither the Company nor the Selling Shareholders have
received notice of intent to commence any inquiry, audit or examination of any
tax return from any taxing authority. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of the Company.
4.12 TITLE TO PROPERTIES AND ASSETS. The Company presently own
or leases real property from which it conducts its business and owns or leases
certain personal property. The Company has good and marketable title to all real
and personal property reflected on its books and records as owned by it or
otherwise required or used in the operation of its business, free and clear of
all security interests, liens, encumbrances, mortgages or charges of any nature,
except as set forth on Schedule 4.12. Also set forth on Schedule 4.12 is a list
of property leased by the Company. Any security interests, liens, encumbrances,
mortgages or charges not set forth in the Company's Financial Statements shall
be discharged in full on or before the Closing Date and evidenced by UCC
Releases delivered by the Company on the Closing Date. Such improved real
property or tangible personal property is in good operating condition and
repair, and suitable for the purpose for which it is being used, subject in each
case to consumption in the ordinary course, ordinary wear and tear and ordinary
repair, maintenance and periodic replacement.
4.13 ACCOUNTS RECEIVABLE. The amount of all accounts
receivable, unbilled invoices and other debts due as recorded in the records and
books of account of the Company as being due to the Company as of the Closing
Date (less the amount of any provision or reserve
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therefor made in the records and books of account of the Company) will be good
and collectible in full in the ordinary course of business, subject to a bad
debt allowance of $100,000 and for which bad debt allowance neither the Selling
Shareholders nor the Company shall have liability under Paragraph 9.3,
"Indemnification by the Selling Shareholders," or otherwise. There have been no
material adverse changes since August 31, 1998 in the amount of accounts
receivable or other debts due the Company or the allowances with respect
thereto, or accounts payable of the Company from that reflected in the Financial
Statements.
4.14 MATERIAL DOCUMENTS. Set forth in Schedule 4.14 is a
complete list of all material documents to which the Company is a party. All
such documents listed on and attached to Schedule 4.14 are valid, enforceable
and accurate and complete copies of such material documents (or, with the
consent of IFC, forms thereof) as have been requested by IFC have been provided
to IFC. Except as disclosed in Schedule 4.14, neither the Company nor any of the
other parties thereto, is or will be, merely with the passage of time, in
default under any such material document nor is there any requirement for any of
such material documents to be novated or to have the consent of the other
contracting party in order for such material documents to be valid, effective
and enforceable by the Company after the Closing Date as it was immediately
prior thereto.
4.15 INTELLECTUAL PROPERTIES. Except as set forth on Schedule
4.15, the Company has no interest in and owns no domestic and foreign letters
patent, patents, patent applications, patent licenses, software licenses and
know how licenses, trade names, trademarks, copyrights, unpatented inventions,
service mark registrations and applications and copyright registrations and
applications owned or used by the Company in the operation of its business
(collectively, the "Intellectual Property"). No Intellectual Property other than
as set forth on Schedule 4.15 is required or used in the operation of the
business of the Company. There are no pending or threatened claims of
infringement upon the rights to any intellectual property of others or, except
as set forth on Schedule 4.15, any agreement undertakings with respect to any
such rights.
4.16 NO DEFAULT. The Company and the Selling Shareholders are
not in default under any provision of any contract, commitment, or agreement
respecting the Company or its assets to which the Company or the Selling
Shareholders are parties or by which they are bound.
4.17 LITIGATION. Except as described in Section 4.17 of the
Disclosure Schedule, there are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or,
threatened, and there are no investigations pending or threatened against the
Company which relate to and could have a material adverse effect on the
properties, business, assets or financial condition of the Company or which
could adversely affect the validity or enforceability of this Agreement or the
obligation or ability of the Selling Shareholders or the Company to perform
their respective obligations under this Agreement or to carry out the
transactions contemplated by this Agreement or otherwise affecting the Shares.
4.18 FINDERS. The Company and the Selling Shareholders owe no
fees or commissions, or other compensation or payments to any broker, finder,
financial consultant, or
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similar person claiming to have been employed or retained by or on behalf of the
Company or the Selling Shareholders in connection with this Agreement or the
transactions contemplated hereby.
4.19 EMPLOYEES. Schedule 4.19 of the Disclosure Schedule sets
forth the name and current monthly salary and any accrued benefit for each
employee of the Company, and there will be no changes in Schedule 4.19 through
the Closing Date. The Company has no employment agreements, written or oral with
any of its employees. Except as set forth on Schedule 4.19, the Company does not
currently use the services of nor has it at any time engaged any independent
contractor.
4.20 ABSENCE OF PENSION LIABILITY. Except as set forth on
Schedule 4.20, the Company has no liability of any nature to any person or
entity for pension or retirement obligations, vested or unvested, to or for the
benefit of any of its existing or former employees. The consummation of the
transactions contemplated by this Agreement will not entitle any employee of the
Company to severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement, including the Exhibits, or accelerate
the time of payment or increase the amount of compensation due to any such
employee. Except as described on Schedule 4.20, the Company does not presently
have nor has it ever had any employee benefit plans and has no announced plan or
legally binding commitment to create any employee benefit plans.
4.21 COMPLIANCE WITH LAWS. Except as set forth on Schedule
4.21, the Company has conducted and is continuing to conduct its business in
compliance with, and is in compliance with, all applicable statutes, orders,
rules and regulations promulgated by governmental authorities relating in any
respect to its operations, conduct of business or use of properties, including,
without limitation, any applicable statute, order, rule or regulation relating
to (i) wages, hours, hiring, nondiscrimination, retirement, benefits, pensions,
working conditions, and worker safety and health; (ii) air, water, toxic
substances, noise, or solid, gaseous or liquid waste generation, handling,
storage, disposal or transportation; (iii) zoning and building codes; (iv) the
production, storage, processing, advertising, sale, distribution,
transportation, disposal, use and warranty of products; or (v) trade and
antitrust regulations. The execution, delivery and performance of this Agreement
by the Selling Shareholders and the Company and the consummation by the Selling
Shareholders and the Company of the transactions contemplated by this Agreement
will not, separately or jointly, violate, contravene or constitute a default
under any applicable statutes, orders, rules and regulations promulgated by
governmental authorities or cause a lien on any property used, owned or leased
by the Company to be created thereunder. There are no proposed changes in any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities that would cause any representation or warranty contained in this
Paragraph 4.21 to be untrue or have an adverse effect on its operations, conduct
of business or use of properties.
4.22 FILINGS. The Company and the Selling Shareholders have
made all filings and reports required under all local, state and federal laws
with respect to its business and of any predecessor entity or partnership,
except filings and reports in those jurisdictions in which the nature
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of the property owned or business conducted, when considered in relation to the
absence of serious penalties, renders the required filings or reports
unnecessary as a practical matter.
4.23 CERTAIN ACTIVITIES. The Company has not, directly or
indirectly, engaged in or been a party to any of the following activities:
4.23.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course);
4.23.2 Contributions (including gifts), whether legal
or not legal, made to any domestic or foreign political party, political
candidate or holder of political office;
4.23.3 Holding of or participation in bank accounts,
funds or pools of funds created or maintained in the United States or any
foreign country, without being reflected on the corporate books of account, or
as to which receipts or disbursements therefrom have not been reflected on such
books, the purpose of which is to obtain or retain business or to receive
favorable treatment with regard to business;
4.23.4 Receiving or disbursing monies, the actual
nature of which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
4.23.5 Paying fees to domestic or foreign consultants
or commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
4.23.6 Paying or reimbursing (including gifts)
personnel of the Company for the purpose of enabling them to expend time or to
make contributions or payments of the kind or for the purposes referred to in
Paragraphs 4.23.1 through 4.23.5 above;
4.23.7 Participating in any manner in any activity
which is illegal under the international boycott provisions of the Export
Administration Act, as amended, or the international boycott provisions of the
Internal Revenue Code, or guidelines or regulations thereunder; and
4.23.8 Making or permitting unlawful charges,
mischarges or defective or fraudulent pricing under any contract or subcontract
under a contract with any department, agency or subdivision thereof, of the
United States government, state or municipal government or foreign government.
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4.24 EMPLOYMENT RELATIONS. The Company is in compliance with
all Federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice; no
unfair labor practice complaint against the Company is pending before the
National Labor Relations Board; there is no labor strike, dispute, slow down or
stoppage actually pending or threatened against or involving the Company; no
labor representation question exists respecting the employees of the Company; no
grievance which might have an adverse effect upon the Company or the conduct of
its business exists; no arbitration proceeding arising out of or under any
collective bargaining agreement is currently being negotiated by the Company;
and the Company has not experienced any material labor difficulty during the
last three (3) years.
4.25 INSURANCE COVERAGE. The policies of fire, liability or
other forms of insurance of the Company are described in Schedule 4.25 of the
Disclosure Schedule. The Company has complied with the terms and provisions of
such policies including, without limitation, all riders and amendments thereto.
Such insurance is adequate and the Company will keep all current insurance
policies in effect through the Closing. The Company has not been refused any
insurance by an insurance carrier to which it has applied for insurance.
4.26 CHARTER AND BY-LAWS. The Company has heretofore delivered
to IFC true, accurate and complete copies of the Articles of Incorporation and
By-Laws of the Company, together with all amendments to each of the same as of
the date hereof.
4.27 CORPORATE MINUTES. The minute books of the Company
provided to IFC at the Closing are the correct and only such minute books and do
and will contain complete and accurate records of any and all proceedings and
actions at all meetings, including written consents executed in lieu of meetings
of its shareholders, Board of Directors and committees thereof through the
Closing Date. The stock records of the Company delivered to IFC at the Closing
are the correct and only such stock records and accurately reflects all issues
and transfers of record of the capital stock of the Company. The Company does
not have any of its records or information recorded, stored, maintained or held
off the premises of the Company.
4.28 DEFAULT ON INDEBTEDNESS. The Company is not in default
under any evidence of indebtedness for borrowed money.
4.29 INDEBTEDNESS. Except as described in Schedule 4.29 of the
Disclosure Schedule, the Selling Shareholders and any corporation or entity with
which they are affiliated are not indebted to the Company, and the Company has
no indebtedness or liability to the Selling Shareholders or any corporation or
entity with which they are affiliated.
4.30 AGREEMENTS, JUDGMENT AND DECREES AFFECTING THE COMPANY
AND THE SELLING SHAREHOLDERS. The Company and the Selling Shareholders jointly
and severally represent and warrant that the Selling Shareholders and the
Company are not subject to any agreement, judgment or decree adversely affecting
their or its ability to enter into this Agreement, to consummate
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the transactions contemplated herein, or, in the case of the Selling
Shareholders, to continue as employees or consultants of the Company after
Closing. The Company and the Selling Shareholders further represent and warrant
that there are no laws or regulations prohibiting the consummation of the
transactions contemplated by this Agreement.
4.31 GOVERNMENTAL APPROVALS. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by the Selling
Shareholders or the Company.
4.32 INVESTMENT INTENT. The Selling Shareholders are taking
the IFC Shares for their own account and for investment, with no present
intention of dividing their interest with others or of reselling or otherwise
disposing of all or any portion of the IFC Shares other than pursuant to
available exemptions under applicable securities laws. The Selling Shareholders
do not intend to sell the IFC Shares, either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or non-occurrence of
any predetermined event or circumstance. The Selling Shareholders have no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for, or which is likely to compel, a
disposition of the IFC Shares. The Selling Shareholders are not aware of any
circumstances presently in existence which are likely in the future to prompt a
disposition of the IFC Shares. The Selling Shareholders possess the experience
in business in which IFC is involved necessary to make an informed decision to
acquire the IFC Shares and the Selling Shareholders have the financial means to
bear the economic risk of the investment in the IFC Shares as of the Closing
Date. The Selling Shareholders have received and read IFC's Annual Report on
Form 10-KSB for the year ended December 31, 1997 Quarterly Reports on Form
10-QSB for the three and six months ended March 31, 1998 and June 30, 1998,
respectively; the Proxy Statement for its 1998 Annual Meeting of Shareholders;
and any additional information they have requested. The Selling Shareholders
have had the opportunity to ask questions of the directors and officers of IFC
concerning IFC.
4.33 LICENSES, PERMITS AND REQUIRED CONSENTS. The Company has
all required franchises, tariffs, licenses, ordinances, certifications,
approvals, authorizations and permits ("Authorizations") necessary to the
conduct of its business as currently conducted. A list of such Authorizations is
set forth on Schedule 4.33 attached hereto, true, correct and complete copies of
which have previously been delivered to IFC. All Authorizations relating to the
business of the Company are in full force and effect, no violations have been
made in respect thereof, and no proceeding is pending or threatened which could
have the effect of revoking or limiting any such Authorizations and the same
will not cease to remain in full force and effect by reason of the transactions
contemplated by this Agreement.
4.34 INVENTORY. All of the inventory reflected on the
Financial Statements and all such inventory acquired or produced since such date
is and will be valued at the lower of cost or market with appropriate markdowns
for obsolete or slow moving inventory, except for immaterial differences in
valuation.
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4.35 VENDORS AND CUSTOMERS. Set further on Schedule 4.35
hereto is a list of all customers of and vendors to the Company accounted for
over ten percent (10%) of the total sales and purchases, respectively, of the
Company during the calendar year 1997. As of the date hereof, neither the
Company nor any of the Selling Shareholders have received any notice, written or
oral, that lead them to believe that there is a substantial probability that any
of the vendors or customers set forth the Schedule 4.35 hereto will terminate
its business relationship with the Company.
4.36 HART-SCOTT-RODINO MATTERS. For purposes of, and as
defined or provided in, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), the Company is an "ultimate parent entity" and a "person" which includes
no other "entities".
4.37 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The
Disclosure Schedule, where applicable to the Selling Shareholders and the
Company, completely and correctly presents in all material respects the
information required by this Agreement. This Agreement, the certificates to be
delivered by the Company and the Selling Shareholders at the Closing, the
Disclosure Schedule and the representations and warranties contained in this
Paragraph 4, and the documents and written information pertaining to the Company
furnished to IFC or its agents by or on behalf of the Selling Shareholders or
the Company, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make this Agreement, or such
certificates, Disclosure Schedule, documents or written information not
misleading.
5. REPRESENTATIONS AND WARRANTIES OF IFC. IFC represent and warrant to
the Selling Shareholders and the Company that:
5.1 ORGANIZATION AND GOOD STANDING.
5.1.1 IFC is a corporation duly organized and existing
in good standing under the laws of the State of Arizona. IFC has full corporate
power and authority to carry on its business as now conducted. IFC is duly
qualified to transact business in the state of Arizona and in all states and
jurisdictions in which the business or ownership of the Company's properties or
assets makes it necessary so to qualify (other than jurisdictions in which the
nature of the property owned or business conducted, when considered in relation
to the absence of serious penalties, renders qualification as a foreign
corporation unnecessary as a practical matter).
5.1.2 IFC is a publicly held company and is a reporting
company under the Securities Exchange Act of 1934, as amended ("Exchange Act").
All reports due under the Exchange Act have been filed as of the date of this
Agreement and are true, correct and complete in all material respects.
5.2 CAPACITY. IFC represents and warrants to the Company and
the Selling Shareholders that IFC has read and understands this Agreement, has
consulted legal and accounting
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representatives to the extent deemed necessary and has the capacity to enter
into this Agreement and to carry out the transactions contemplated hereby
without the consent of any third party.
5.3 FINDERS. No agent, broker, person or firm acting on behalf
of IFC is, or will be, entitled to any commission or broker's or finder's fees
from any of the parties to this Agreement, or from any person controlling,
controlled by or under common control with any of the parties to this Agreement,
in connection with any of the transactions contemplated in this Agreement.
5.4 AUTHORITY AND CONSENT. The execution, delivery and
performance of this Agreement by IFC have been duly authorized by its Board of
Directors. This Agreement is valid and binding upon IFC, and is enforceable
against IFC in accordance with its terms, subject to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership or other similar
laws relating to or affecting creditors' rights generally.
5.5 VALIDITY OF AGREEMENT. Neither the execution nor the
delivery of this Agreement by IFC, nor the performance by IFC of any of the
covenants or obligations to be performed by IFC hereunder, will result in any
violation of any order, decree or judgment of any court or other governmental
body, or statute or law applicable to IFC, or in any breach of any terms or
provisions of either the Articles of Incorporation or Bylaws of IFC, or
constitute a default under any indenture, mortgage, deed of trust or other
contract to which IFC is a party or by which IFC is bound.
5.6 GOVERNMENT APPROVALS. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by IFC.
5.7 FINANCIAL STATEMENTS AND PUBLIC REPORTS. The audited
consolidated financial statements of IFC for the fiscal years ended December 31,
1997 and 1996, with accompanying notes, all as contained in IFC's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997, and the financial
statements contained in IFC's Quarterly Reports on Form 10-QSB for the three and
six months ended March 31, 1998 and June 30, 1998, respectively, delivered to
the Selling Shareholders, fairly and accurately present, in all material
respects, the financial position of IFC at such dates, the results of its
operation and changes in its financial position for the periods and years ended
on such dates, in conformity with generally accepted accounting principles
consistently applied. Such financial statements contain and reflect all
necessary adjustments for a fair and accurate presentation of the financial
condition as of the date of such statements.
5.8 SUBSIDIARIES. IFC currently has six (6) subsidiaries as of
the date of this Agreement: Kleven Construction, Inc., an Arizona corporation
("Kleven"), Concepts in Communication, Inc., a Tennessee corporation
("Concepts"), Trans Sierra Communications, Inc., a California corporation
("Trans Sierra"), Southern Communications Products, Inc., an Arizona corporation
("SCP"), and Compass Communications, Inc., a Virginia corporation ("Compass")
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and General Communications Corp., a Tennessee corporation ("GCC"). IFC owns all
of the outstanding capital stock of Kleven, Concepts, Trans Sierra, SCP, Compass
and GCC.
5.9 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The
Disclosure Schedule and Exhibits hereto completely and correctly present in all
material respects the information required by this Agreement. This Agreement,
the certificates to be delivered by the officers of IFC at the Closing, any
Schedules and Exhibits to be delivered under this Agreement and the
representations and warranties of this Paragraph 5, and the documents and
written information pertaining to IFC furnished to the Company or its agents and
the Selling Shareholders by or on behalf of IFC, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make this Agreement, or such certificates, schedules, documents or written
information, not misleading.
6. DUE DILIGENCE INSPECTION AND COVENANTS.
6.1 DUE DILIGENCE INSPECTION. During the period after
execution of this Agreement and prior to the Closing Date, IFC and its
representatives shall have the right to inspect all plant, equipment and
operations of the Company, its premises and its financial and other records at
reasonable times upon the approval of the Company and the Selling Shareholders,
which approval will not be unreasonably withheld. IFC shall also have the right
to discuss the affairs of the Company with the Selling Shareholders, managers,
customers, prospective customers, employees, suppliers, advertisers, retailers,
banking and other financial institutions, lessors and such other parties as IFC
deems appropriate, upon reasonable notice of the proposed times and dates
thereof. IFC shall complete its preliminary due diligence within thirty (30)
days after the execution of this Agreement, and shall complete its comprehensive
due diligence within sixty (60) days after execution of this Agreement, provided
it has received the cooperation of the Company and Selling Shareholders
contemplated in this Paragraph 6.1. The Company and the Selling Shareholders
shall likewise have the right, upon the execution of this Agreement, to inspect
IFC, its financial and other public records and to discuss the affairs of IFC
with appropriate parties upon the same schedule as IFC shall have to complete
its preliminary due diligence. IFC, the Company and the Selling Shareholders
will cooperate with all reasonable requests by the other party for information
and will use their best efforts to secure the cooperation of the foregoing third
parties who may reasonably be requested to furnish information to each other.
6.2 CONFIDENTIAL INFORMATION. IFC shall keep all confidential
information derived from the Selling Shareholders or from the Company relating
to the business of the Company confidential pending the Closing of the
transaction contemplated by this Agreement. The Company and the Selling
Shareholders shall keep all confidential information derived from IFC relating
to the business of IFC confidential pending the Closing. No party to this
Agreement shall be liable for disclosure of confidential information if such
disclosure is required by law or if the disclosure is of information already
publicly available. If this Agreement should be terminated pursuant to this
Agreement, IFC, the Company and the Selling Shareholders shall return all such
confidential information and documents which they have received and agree not to
disclose or use such
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information in any manner which damages the businesses or prospects of the
Company or of IFC, as the case may be.
6.3 COVENANTS. Each of the Company and the Selling
Shareholders hereby covenants and agrees as follows:
6.3.1 OPERATIONAL CONTINUITY. From the date hereof
through the Closing:
(a) The business of the Company will be
conducted in the usual and ordinary course as
theretofore conducted in accordance with sound and
prudent business practice;
(b) the Company has not and will not, without
IFC's prior written approval: (1) take any action, or
permit any event or condition to occur that would
materially affect the value of the shares and/or the
corporation, its business, or its assets; (2) enter into
any material agreement, contract, commitment, or
undertaking; (3) alter any existing Agreement or pay or
agree to pay any salary, bonus, raise or advances, to
any employee or officer except in the ordinary course of
business consistent with past practice or fund any
discretionary retirement or other benefit plans; (4)
increase or decrease materially its level of inventory;
(5) dispose of or alter any marketable asset or any
material amount of its assets; (6) institute any
material litigation, claim, or other proceeding before
any court or governmental authority; (7) make any
extraordinary capital expenditures or prepay any lease
obligations or incur any additional indebtedness; (8)
issue additional shares of the Company's capital stock
or grant any options, warrants, or other rights to
acquire any such shares; or (9) declare or pay any
dividends, distributions or other payments to Company
shareholders, direct or indirect, which would result in
a reduction of the net book value of the Company as of
June 1, 1998 and thereafter through the closing date or
which would cause this transaction not to qualify for
pooling of interests accounting treatment;
(c) All books and records (both corporate and
financial) of the Company have been and will be
maintained completely and accurately without any change
in accounting methods or practices except as
specifically approved by IFC; and
(d) Selling Shareholders and the Company has and
shall have maintained, the good will of, and good
business relations with, its employees, agents,
contractors, suppliers, customers, vendors, and others
having business relationships with it, so as to keep
such fully available to the Company after Closing.
6.3.2 CONSENTS TO ASSIGNMENTS. Prior to Closing, the Company and
Selling Shareholders will use their best efforts to obtain all necessary
consents and any additional consents as may be required to effect the
transaction contemplated hereby.
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6.3.3 NEGOTIATIONS WITH THIRD PARTIES. Each of the Company and
the Selling Shareholders agrees not to enter into or pursue any arrangements or
negotiations with any party relative to the sale of all or substantially all of
the assets of the Company or to merger or to otherwise transfer shareholder
control of the Company. Neither of the Selling Shareholders shall sell or
otherwise transfer any of the Company Shares.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF IFC. The obligations of
IFC pursuant to this Agreement are, at the option of IFC, subject to the
fulfillment to IFC's satisfaction on or before the Closing Date of each of the
following conditions:
7.1 EXECUTION OF THIS AGREEMENT. The Company and the Selling
Shareholders have duly executed and delivered this Agreement to IFC.
7.2 REPRESENTATIONS AND WARRANTIES ACCURATE.
7.2.1 The Company and the Selling Shareholders shall deliver
the Disclosure Schedule to this Agreement. IFC shall have fourteen (14) days
after its receipt of the Disclosure Schedule to determine, in its sole
discretion, whether or not IFC shall accept the representations and warranties
as modified or amplified by the Disclosure Schedule ("Acceptance Date"). If IFC
determines that any part of the Disclosure Schedule is unacceptable, IFC may
provide the Company and the Selling Shareholders additional time to remedy the
matter or may terminate this Agreement in accordance with its provisions.
7.2.2 All representations and warranties of the Selling
Shareholders and the Company contained in this Agreement shall have been true in
all respects when made on the date of execution of this Agreement, and also at
and as of the Closing Date as if such representations and warranties were made
at and as of the Closing Date. The Company and the Selling Shareholders shall
furnish IFC with a certificate, dated the Closing Date and signed on behalf of
the Company by a duly authorized officer thereof, and by each of the Selling
Shareholders, stating the above in such form as IFC may reasonably request. The
acceptance of the Purchase Price by the Company and the Selling Shareholders
shall constitute an affirmation by the Company and the Selling Shareholders of
the truth, as of the Closing Date, of the representations and warranties made by
the Company and the Selling Shareholders in this Agreement.
7.3 PERFORMANCE OF COMPANY AND SELLING SHAREHOLDERS. The
Company and the Selling Shareholders shall have performed and complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them, and the Company and the Selling Shareholders shall
deliver a certificate, in form and substance satisfactory to IFC, to that
effect, dated the Closing Date, and signed in the manner set forth in Paragraph
7.2.2 above on or before the Closing Date.
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7.4 TENDER OF COMPANY SHARES. Each of the Selling Shareholders
shall deliver to IFC all Company Shares, options, warrants or other rights to
acquire Company Shares owned by such Selling Shareholder free and clear of any
liens, encumbrances and other obligations.
7.5 TITLE. On or prior to the Closing Date, the Company shall
deliver to IFC duly executed UCC-2 releases, as described in Paragraph 4.12,
"Title to Properties and Assets," or evidence that no liens have been recorded
against any of the Company's properties or assets.
7.6 CONSENT OF MATERIAL CUSTOMERS. Prior to Closing the
Company shall have obtained all approvals in connection with the transfer of the
Company Shares by the Selling Shareholders to IFC as may be required by any
material contracts between the Company and any of its principal customers, and
such approvals shall have been issued in written form and substance satisfactory
to IFC and its counsel or IFC shall have waived such requirements.
7.7 OBLIGATIONS TO THIRD PARTIES. There shall be no loans or
obligations outstanding from the Company to any third party, except those
incurred in the ordinary course of business.
7.8 OUTSTANDING OBLIGATIONS TO EMPLOYEES. There shall be no
outstanding claims, loans or obligations of the Company owed to any of its
employees or officers provided that IFC shall give notice to the Selling
Shareholders and the Company of its approval or withholding of approval of any
claims, loans or obligations then known to IFC on or before the Closing Date.
7.9 EMPLOYMENT AGREEMENTS. As of the Closing Date, the
employees identified in Schedule 7.9 of the Disclosure Schedule shall have
entered into employment and non-compete agreements with the Company in a form
satisfactory to IFC on the terms and conditions and annual salaries set out in
Schedule 7.9, and the remaining Selling Shareholders, if any, shall have entered
into non-compete agreements with the Company in a form satisfactory to IFC. The
Company shall have received written resignations and releases from the remaining
officers and directors of the Company, in a form acceptable to IFC and its
counsel. All of such documents, as executed, are hereby incorporated by
reference.
7.10 OPINION OF COUNSEL. IFC shall have received an opinion of
counsel from the Company and the Selling Shareholders in the form set forth in
Exhibit E.
7.11 LOCK-UP AGREEMENTS. Each Selling Shareholder shall have
duly executed and delivered a lock-up agreement, in the form set forth in
Exhibit F, relating to the IFC Shares issued to each respective Selling
Shareholder under this Agreement.
7.12 FINANCIAL AND OTHER CONDITIONS. The Company shall have no
contingent or other liabilities connected with its business, except as disclosed
in the Financial Statements. The review of the business, premises and operations
of the Company and the Financial Statements by IFC at its expense shall not have
revealed any matter which, in the sole judgment of IFC, makes the
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acquisition on the terms herein set forth inadvisable for IFC. There shall be no
dividends, distributions, or other payments to Company Shareholders, direct or
indirect, which would result in a reduction of the book value of the Company as
of August 31, 1998 or thereafter through the Closing Date.
7.13 LEGAL PROHIBITION; REGULATORY CONSENTS. On the Closing
Date, there shall exist no injunction or final judgment, law or regulation
prohibiting the consummation of the transactions contemplated by this Agreement.
Any required governmental or regulatory consents shall have been obtained.
7.14 KEY MAN INSURANCE. IFC shall have been able to obtain key
man insurance for each of the persons executing employment agreements with IFC
in an amount not less than $250,000 for each individual, with the insurance
proceeds payable to IFC.
7.15 ALL CONTRACTS CONTINUED. Except as set forth on Schedule
7.15, all lines of credit, debts, financing arrangements, leases and other
contracts of the Company shall be acceptable to IFC and shall continue under
their present terms and conditions after the Closing Date and all approvals
relating to the sale of the Company Shares by the Selling Shareholders, and to
effect the transactions contemplated hereby, required by the foregoing
instruments and arrangements shall have been obtained by the Closing Date. IFC
shall have received estoppel letters in form and substance reasonably acceptable
to it from other parties to any Contracts, if and as requested by IFC.
7.16 OPINION OF ACCOUNTANTS. IFC shall have received comfort
from its accountants that the acquisition qualifies for pooling of interests
treatment in accordance with Accounting Principles Board Opinion No. 16 and the
accounting staff of the Commission shall not have asserted or threatened in
writing to assert a determination to the contrary.
7.17 NO ADVERSE CHANGE. There shall not have occurred any
material adverse change in the assets, business, condition or prospects of the
Company.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND THE
SELLING SHAREHOLDERS. The obligations of the Company and the Selling
Shareholders under this Agreement are, at the option of the Company or the
Selling Shareholders, subject to the fulfillment to the satisfaction of Company
and the Selling Shareholders on or before the Closing Date of each of the
following conditions:
8.1 EXECUTION AND APPROVAL OF AGREEMENT. IFC shall have duly
executed and delivered this Agreement to the Company and the Selling
Shareholders.
8.2 PAYMENT. Subject to the terms and conditions hereof, IFC
shall have transferred the IFC Shares, in exchange for the Company Shares as
described in Paragraph 2, "Exchange of IFC Shares for the Company Shares."
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8.3 EMPLOYMENT AGREEMENTS. As of the Closing Date, the Selling
Shareholders and employees identified in Schedule 7.9 shall have entered into
employment and non-compete agreements, as the case may be, with the Company in a
form satisfactory to IFC on the terms and conditions and annual salaries set out
in Schedule 7.9.
8.4 OPINION OF COUNSEL. The Company and the Selling
Shareholders shall have received an opinion of counsel from IFC in the form set
forth in Exhibit H.
8.5 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made to the Company and the Selling Shareholders in this Agreement or
in any document, statement, list or certificate furnished pursuant hereto shall
be true and correct when made and shall be true and correct on and as of the
Closing Date.
9. INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS. The representations and warranties made by the parties in this
Agreement and in the certificates delivered at the Closing, and all of the
covenants of the parties in this Agreement, shall survive the execution and
delivery of this Agreement and the Closing Date
9.2 INDEMNIFICATION BY IFC.
9.2.1 IFC agrees to indemnify and hold the Selling
Shareholders harmless, from and after the Closing Date, against and in respect
of all matters in connection with any losses, liabilities, costs or damages
(including reasonable attorneys' fees whether incurred at trial or in
arbitration proceedings, or in connection with an appeal, petition for review,
petition for certiorari or special action) incurred by the Selling Shareholders
that result from any misrepresentation or breach of the warranties by IFC in
Paragraph 5, "Representations and Warranties of IFC," or any breach or
nonfulfillment of any agreement or covenant on the part of IFC contained in this
Agreement, and all suits, actions, proceedings, demands, judgments, costs and
expenses incident to the foregoing matters, including reasonable attorneys'
fees.
9.3 INDEMNIFICATION BY THE SELLING SHAREHOLDERS.
9.3.1 The Selling Shareholders agree, jointly and severally,
to indemnify and hold IFC harmless, from and after the Closing Date, against and
in respect of all matters in connection with any losses, liabilities or damages
(including reasonable attorneys' fees whether incurred at trial or in
arbitration proceedings, or in connection with an appeal, petition for review,
petition for certiorari or special action) incurred by IFC resulting from any
misrepresentation or breach of their warranties in Paragraph 4, "Representations
and Warranties of the Company and the Selling Shareholders," or any breach or
nonfulfillment of any agreement or covenant on the part of the Company and the
Selling Shareholders contained in this Agreement or any liabilities, obligations
and commitments of, or claims against the Company arising out of the operation
of the Business
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prior to the Closing and not disclosed in or reflected in this Agreement or the
Financial Statements, and all suits, actions, proceedings, demands, judgments,
costs and expenses incident to the foregoing matters, including reasonable
attorneys' fees.
9.4 ARBITRATION. If IFC believes that a matter has occurred
that entitles it to indemnification under Paragraph 9.3, "Indemnification by the
Selling Shareholders," or the Selling Shareholders believe that a matter has
occurred that entitles them to indemnification under Paragraph 9.2,
"Indemnification by IFC," IFC or the Selling Shareholders, as the case may be
(the "Indemnified Party"), shall give written notice to the party or parties
against whom indemnification is sought (each of whom is referred to herein as an
"Indemnifying Party") describing such matter in reasonable detail. The
Indemnified Party shall be entitled to give such notice prior to the
establishment of the amount of its losses, liabilities, costs or damages, and to
supplement its claim from time to time thereafter by further notices as they are
established. Each Indemnifying Party shall send a written response to such claim
for indemnification within thirty (30) days after receipt of the claim stating
its acceptance or objection to the indemnification claim, and explaining its
position in respect thereto in reasonable detail. If such Indemnifying Party
does not timely so respond, it will be deemed to have accepted the Indemnified
Party's indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute,
and upon the expiration of an additional thirty (30) day period from the date of
the objection notice or such longer period as to which the Indemnified and
Indemnifying Parties may agree, any such dispute shall be submitted to
arbitration in Phoenix, Arizona to a member of the American Arbitration
Association mutually appointed by the Indemnified Party and Indemnifying Party
(or, in the event the Indemnified Party and Indemnifying Party cannot agree on a
single such member, to a panel of three members of such Association selected in
accordance with the rules of such Association), who shall promptly arbitrate
such dispute in accordance with the rules of such Association and report to the
parties upon such disputed items, and such report shall be final, binding and
conclusive on the parties. Judgment upon the award by the arbitrator(s) may be
entered in any court having jurisdiction. The prevailing party in any such
arbitration shall be entitled to recover from, and have paid by, the other party
hereto all fees and disbursements of such arbitrator or arbitrators. For this
purpose, a party shall be deemed to be the prevailing party only if such party
would be deemed to be a prevailing party under Paragraph 11.3.
9.5 NO FINDERS. IFC represents and warrants to the Company and
the Selling Shareholders and the Company and the Selling Shareholders represent
and warrant there are no obligations to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement. IFC agrees to indemnify and hold the Selling Shareholders
harmless from any breach of IFC's representation in the previous sentence, and
the Selling Shareholders agree to indemnify and hold IFC harmless from any
breach of their representation in the previous sentence.
9.6 THIRD PERSON CLAIM PROCEDURES. If any third person asserts
a claim against an Indemnified Party in connection with the matter involved in
such claim, the Indemnified Party
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shall promptly (but in no event later than ten (10) days prior to the time at
which an answer or other responsive pleading or notice with respect to the claim
is required) notify the Indemnifying Party of such claim. The Indemnifying Party
shall have the right, at its election, to take over the defense or settlement of
such claim by giving prompt notice to the Indemnified Party that it will do so,
such election to be made and notice given in any event at least five (5) days
prior to the time at which an answer or other responsive pleading or notice with
respect thereto is required. If the Indemnifying Party makes such election, the
Indemnifying Party may conduct the defense of such claim through counsel of its
choosing (subject to the Indemnified Party's approval, not to be unreasonably
withheld), will be responsible for the expenses of such defense, and shall be
bound by the results of its defense or settlement of the claim to the extent it
produces damage or loss to the Indemnified Party. The Indemnifying Party shall
not settle such claims without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any injunction or material
and adverse effect on the Indemnified Party may be agreed to without its
consent. As long as the Indemnifying Party is diligently contesting any such
claim in good faith, the Indemnified Party shall not pay or settle any such
claim. If the Indemnifying Party does not make such election, or having made
such election does not proceed diligently to defend such claim prior to the time
at which an answer or other responsive pleading or notice with respect thereto
is required, or does not continue diligently to contest such claim, then the
Indemnified Party may take over defense and proceed to handle such claim in its
exclusive discretion, and the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make in good faith with respect to
such claim. The parties agree to cooperate in defending such third party claims,
and the defending party shall have access to records, information and personnel
in control of the other part which are pertinent to the defense thereof.
9.7 LIMITATION OF REMEDIES. The parties understand that this
requires that all disputed claims shall be submitted to arbitration in
accordance with Paragraph 9.4, "Arbitration."
10. TERMINATION.
10.1 TERMINATION EVENTS. This Agreement may be terminated and
abandoned, by notice given in the manner hereinafter provided:
10.1.1 By IFC, if without the fault of IFC, all of the
conditions set forth in Paragraph 7, "Conditions Precedent to the Obligations of
IFC," shall not have been satisfied (or are incapable of being satisfied) on or
before the Closing Date and have not been waived by IFC on or before such dates,
as the case may be.
10.1.2 By the Company or the Selling Shareholders, if
without their fault all of the conditions set forth in Paragraph 8, "Conditions
Precedent to the Obligations of the Company and the Selling Shareholders," shall
not have been satisfied (or are incapable of being satisfied) on or before the
Closing Date and have not been waived by the Company and the Selling
Shareholders on or before such date.
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10.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Paragraph 10.1, "Termination Events," this Agreement
shall forthwith become void and there shall be no liability or continuing
obligations on the part of the parties hereunder.
11. EXPENSES AND TRANSFER TAXES.
11.1 IFC shall be solely responsible for paying its own
expenses and costs incident to the preparation of this Agreement and to the
consummation of the transactions contemplated by this Agreement, and shall have
no obligation for paying such expenses or costs of the other parties.
11.2 The Company and the Selling Shareholders shall be solely
responsible for paying their own expenses and costs incident to the preparation
of this Agreement and to the consummation of the transactions contemplated by
this Agreement. The Company and the Selling Shareholders shall have no
obligation to reimburse the expenses or costs of IFC.
11.3 Notwithstanding any of the other provisions hereof, in
the event of arbitration and/or litigation with respect to the interpretation or
enforcement of this Agreement or any provisions hereof, the prevailing party in
any such matter shall be entitled to recover from the other party their or its
reasonable costs and expense, including reasonable attorneys' fees, incurred in
such arbitration and/or litigation. For purposes of this Agreement, a party
shall be deemed to be the prevailing party only if such party (A)(i) receives an
award or judgment in such arbitration and/or litigation for more than 50% of the
disputed amount involved in such matter, or (ii) is ordered to pay the other
party less than 50% of the disputed amount involved in such matter or (B)(i)
succeeds in having imposed a material equitable remedy on the other party (such
as an injunction or order compelling specific performance), or (ii) succeeds in
defeating the other party's request for such an equitable remedy.
12. NOTIFICATION OF CLAIMS. Each party will promptly notify the other
of any third party claims against any party relating to the Company of which it
receives knowledge or notice so as to permit such party an opportunity to
prepare a timely defense to such claim or to attempt settlement.
13. COMPANY BOARD OF DIRECTORS. On the Closing Date, the Board of
Directors and officers of the Company shall consist of such persons as IFC shall
select.
14. RISK OF LOSS. The risk of loss or destruction of all or any part
of any of the Company's properties or assets prior to the Closing Date from any
cause (including, without limitation, fire, theft, acts of God or public enemy)
shall be upon the Company and the Selling Shareholders. Such risk shall be upon
IFC if such loss occurs after the Closing Date.
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15. MISCELLANEOUS.
15.1 BINDING AGREEMENT. The parties covenant and agree that
this Agreement, when executed and delivered by the parties, will constitute a
legal, valid and binding agreement between the parties and will be enforceable
in accordance with its terms.
15.2 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto,
their legal representatives, successors and assigns.
15.3 ENTIRE AGREEMENT. This Agreement and its exhibits and
schedules constitute the entire contract among the parties hereto with respect
to the subject matter thereof, superseding all prior communications and
discussions and no party hereto shall be bound by any communication on the
subject matter hereof unless such is in writing signed by any necessary party
thereto and bears a date subsequent to the date hereof. The exhibits and
schedules shall be construed with and deemed as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Information set forth in any exhibit, schedule or provision of this Agreement
shall be deemed to be set forth in every other exhibit, schedule or provision of
this Agreement and therefore shall be deemed to be disclosed for all purposes of
this Agreement.
15.4 MODIFICATION. This Agreement may be waived, changed,
amended, discharged or terminated only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, amendment, discharge or
termination is sought.
15.5 NOTICES. All notices, requests, demands and other
communications shall be deemed to have been duly given on the earlier of
receipt, receipt by the sending party of a return receipt, or notification from
the Post Office that such mail was not accepted or delivered, if mailed,
certified or registered mail, postage prepaid:
If to the Company or the Selling Shareholders:
United Tech, Inc.
2222 South Cornbee Road, Suite 9
Lakeland, Florida 33801
Attn: Terry D. Lipham
Randy C. Jensen
With copy to:
John Parks, Esq.
Wendel, Chritton & Parks
5300 South Florida Avenue
Lakeland, Florida 33813
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If to IFC:
International FiberCom, Inc.
3615 South 28th Street
Phoenix, Arizona 85040
Attn: Joseph P. Kealy
With a copy to:
Christian J. Hoffmann, III, Esq.
Streich Lang, P.A.
Renaissance One
Two N. Central Avenue
Phoenix, Arizona 85004-2391
or to such other address as any party shall designate to the other in writing.
The parties shall promptly advise each other of changes in addresses for such
notices.
15.6 CHOICE OF LAW. This Agreement shall be governed by,
construed, interpreted and enforced according to the laws of the State of
Arizona.
15.7 SEVERABILITY. If any portion of this Agreement shall be
finally determined by any court or governmental agency of competent jurisdiction
to violate applicable law or otherwise not to conform to requirements of law
and, therefore, to be invalid, the parties will cooperate to remedy or avoid the
invalidity, but, in any event, will not upset the general balance of
relationships created or intended to be created between them as manifested by
this Agreement and the instruments referred to herein. Except insofar as it
would be an abuse of the foregoing principle, the remaining provisions hereof
shall remain in full force and effect.
15.8 OTHER DOCUMENTS. The parties shall upon reasonable
request of the other, execute such documents as may be necessary or appropriate
to carry out the intent of this Agreement.
15.9 HEADINGS AND THE USE OF PRONOUNS. The paragraph headings
hereof are intended solely for convenience of reference and shall not be
construed to explain any of the provisions of this Agreement. All pronouns and
any variations thereof and other words, as applicable, shall be deemed to refer
to the masculine, feminine, neuter, singular or plural as the identity of the
person or matter may require.
15.10 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
15.11 NO WAIVER AND REMEDIES. No failure or delay on a parties
part to exercise any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise
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by a party of a right or remedy hereunder preclude any other or further
exercise. No remedy or election hereunder shall be deemed exclusive but it
shall, where ever possible, be cumulative with all other remedies in law or
equity.
15.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, and by the different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15.13 FURTHER ASSURANCES. Each of the parties hereto shall use
commercially practicable efforts to fulfill all of the conditions set forth in
this Agreement over which it has control or influence (including obtaining any
consents necessary for the performance of such party's obligations hereunder)
and to consummate the transactions contemplated hereby, and shall execute and
deliver such further instruments and provide such documents as are necessary to
effect this Agreement.
15.14 RULES OF CONSTRUCTION. The normal rules of construction
which require the terms of an agreement to be construed most strictly against
the drafter of such agreement are hereby waived since each party have been
represented by counsel in the drafting and negotiation of this Agreement.
15.15 THIRD PARTY BENEFICIARIES. Each party hereto intends
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
16. POST CLOSING DELIVERIES. The parties hereby agree that,
notwithstanding the provisions of this Agreement to the contrary, the Closing
shall occur concurrently with execution of this Agreement, subject to delivery
as provided below after the Closing Date of mutually reasonably agreeable forms
of the exhibits, Disclosure Schedules and other documents contemplated by this
Agreement and approval by IFC, in its sole discretion, of the exhibits,
Disclosure Schedules and other documents. Within ten (10) days following
execution of this Agreement, Seller shall deliver the exhibits, Disclosure
Schedules and other documents to IFC. IFC shall have fourteen (14) days after
its receipt of the exhibits, Disclosure Schedules and other documents to
determine, in its sole discretion, whether or not IFC shall accept the
representations and warranties as modified or amplified by the exhibits,
Disclosure Schedules and other documents.
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IN WITNESS WHEREOF, the parties have executed this Agreement on
September 16, 1998 to be effective as of the day and year first above written.
COMPANY: IFC:
UNITED TECH, INC., a Florida Corporation INTERNATIONAL FIBERCOM, INC., an
Arizona corporation
/s/ Terry D. Lipham /s/ Joseph P. Kealy
- --------------------------- -------------------------------
By Terry D. Lipham By Joseph P. Kealy
Its President Its Chairman of the Board and
President
SELLING SHAREHOLDERS:
/s/ Terry D. Lipham
- ---------------------------
TERRY D. LIPHAM
/s/ Randy C. Jensen
- ---------------------------
RANDY C. JENSEN
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), is entered into effective
as of September 1, 1998, among INTERNATIONAL FIBERCOM, INC., an Arizona
corporation ("IFC"), DIVERSITEC, INC., a Virginia corporation (the "Company"),
and the parties set forth on Exhibit A, who are all of the holders of capital
stock of the Company (the "Selling Shareholders").
R E C I T A L S :
WHEREAS, the Company is in the business of purchasing, selling and
otherwise dealing in telecommunications products;
WHEREAS, IFC desires to purchase all of the issued and outstanding
shares of capital stock of the Company owned by the Selling Shareholders on the
terms and conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, IFC, the Company and the Selling Shareholders hereby agree as follows:
C O V E N A N T S :
1. PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, on the Closing Date, as defined in Paragraph 3, "Closing Date," the
Selling Shareholders shall sell, convey, transfer and assign to IFC and IFC
shall purchase from the Selling Shareholders, 533 shares of Common Stock of the
Company ("Company Shares") representing all of the issued and outstanding
capital stock of the Company. The certificates represented by the Company Shares
shall be endorsed in blank, or accompanied by stock powers duly executed in
blank, by each Selling Shareholder transferring all of the Company Shares owned
by such Selling Shareholder. Each Selling Shareholder agrees to cure any
deficiencies with respect to the endorsement of the certificates representing
the Company Shares owned by such Selling Shareholder or with respect to the
stock power accompanying any such certificates at any time subsequent to the
closing of the transaction. All of the Exhibits and Schedules referred to in
this Agreement are made a part of the Agreement by this reference.
2. EXCHANGE OF IFC SHARES FOR THE COMPANY SHARES.
2.1 EXCHANGE. IFC will acquire the Company Shares in exchange
for One Million Seven Hundred Fifty-Two Thousand (1,752,000) restricted shares
of voting Common Stock, no par value, of IFC (the "IFC Shares").
2.2 REGISTRATION. Concurrently herewith the parties have
executed a Registration Right Agreement in the form attached as Exhibit G.
Pursuant to the demand of the Selling
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Shareholders under the Registration Rights Agreement, IFC will file a
Registration Statement covering such Shares on or before November 18, 1998,
subject to the terms and conditions of such Registration Rights Agreement.
2.3 FINANCIAL STATEMENTS AND INCOME TAX RETURNS. The parties
contemplate that (i) after the Closing Date, as defined below, IFC will own Five
Hundred Thirty-three (533) Company Shares, which is one hundred percent (100%)
of the issued and outstanding capital stock of the Company and (ii) the Company,
as a new subsidiary of IFC's consolidated group, will include its financial
results in IFC's consolidated financial statements covering the periods after
joining IFC's consolidated group. The transaction contemplated by this Agreement
shall be structured to qualify for pooling of interests accounting treatment.
3. CLOSING DATE.
3.1 The closing under this Agreement shall take place at the
offices of Streich Lang, P.A., Renaissance One, Two North Central, Phoenix,
Arizona 85004-2391 on a date ("Closing Date") as soon as practicable after:
3.1.1 Execution of this Agreement;
3.1.2 Consent of the Selling Shareholders and the Company to
the transactions contemplated in this Agreement;
3.1.3 Completion of the due diligence investigation
contemplated under Paragraph 6, "Due Diligence Inspection; Covenants";
3.1.4 Satisfaction of all conditions to closing set forth in
Paragraph 7, "Conditions Precedent to Obligations of IFC," and Paragraph 8,
"Conditions Precedent to the Obligations of the Company and the Selling
Shareholders"; and
3.1.5 Receipt by IFC of any required approvals under Arizona
and Virginia corporate law and any other required regulatory approvals.
3.2 The Closing Date shall be no later than forty-five (45)
days after delivery of the unaudited financial statements of the Company for the
fiscal years ended December 31, 1996 and December 31, 1997, and the unaudited
financial statements for the period through July 31, 1998, which are attached
hereto as Exhibits B, C and D ("Financial Statements"), respectively, or
September 1, 1998, whichever comes first, provided that IFC may extend the
Closing Date for an additional sixty (60) days upon written notice to the
Company and the Selling Shareholders. Any further extension of the Closing Date
may be made only with the written consent of IFC, the Company and the Selling
Shareholders.
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<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS. The Selling Shareholders and the Company represent and warrant to
IFC that:
4.1 VALIDITY OF AGREEMENT. This Agreement is valid and binding
upon the Selling Shareholders and the Company and neither the execution nor
delivery of this Agreement by such parties nor the performance by such parties
of any of their covenants or obligations hereunder will constitute a material
default under any contract, agreement or obligation to which any of them is a
party or by which they or any of their respective properties are bound. This
Agreement is enforceable severally against the Company and the Selling
Shareholders in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium, receivership or
other similar laws relating to or affecting creditors' rights generally.
4.2 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized and existing in good standing under the laws of the
Commonwealth of Virginia. The Company has full corporate power and authority to
carry on its business as now conducted and to own or lease and operate the
properties and assets now owned or leased and operated by it. The Company is
duly qualified to transact business in the Commonwealth of Virginia and in all
states and jurisdictions in which the business or ownership of its property
makes it necessary so to qualify, except for jurisdictions in which the nature
of the property owned or business conducted, when considered in relation to the
absence of serious penalties, renders qualification as a foreign corporation
unnecessary as a practical matter.
4.3 TITLE. Each Selling Shareholder has full right and title
to the Company Shares to be exchanged by such Selling Shareholder and such
Company Shares constitute all the Company Shares which each Selling Shareholder,
directly or indirectly, owns or has any right to acquire. Each Selling
Shareholder holds his or its Company Shares free and clear of all liens,
encumbrances, restrictions and claims of every kind. Each Selling Shareholder
has the legal right, power and authority to enter into this Agreement and to
sell, assign, transfer and convey the Company Shares so owned by him or it
pursuant to this Agreement and the delivery to IFC of the Company Shares
pursuant to the provisions of this Agreement will transfer to IFC valid title
thereto, free and clear of all liens, encumbrances, restrictions and claims of
every kind. Except as set forth on Schedule 4.3 hereto there are no, and as of
the Closing Date there will be no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase or sale of any Company Shares by any
Selling Shareholder.
4.4 EXCLUSIVE DEALING. The Selling Shareholders are not
engaged in any discussions or negotiations for the purchase or sale of any
Company Shares except those discussions with the Company which are embodied in
this Agreement. Neither the Company nor the Selling Shareholders is or are
engaged in any discussions or negotiations for the sale of any Company Shares or
Company Shares held in the treasury, except those discussions with the Company
which are embodied in this Agreement.
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4.5 CAPITALIZATION. The authorized capital stock of the
Company consists solely of five thousand shares of Common Stock, no par value
per share. The 533 Company Shares shown as outstanding on the Financial
Statements constitute the only outstanding shares of the capital stock of the
Company of any nature whatsoever, voting and non-voting. The Company Shares
owned by the Selling Shareholders are validly issued, fully paid and
non-assessable and, except as set forth on Schedule 4.5 are not, and as of the
Closing Date will not be subject to any agreements understandings liens or
encumbrances restricting transfer or any other restriction preventing transfer
to IFC. All Company Shares are required to be certificated, and the Company has
executed and delivered no certificates for shares in excess of the number of
Company Shares set forth in Paragraph 1. Except as set forth on Schedule 4.5,
there are, and as of the Closing Date there will be, no outstanding options,
warrants, rights, calls, commitments, conversion rights, plans or other
agreements of any character providing for the purchase, issuance or sale of, or
any securities convertible into, capital stock of the Company, whether issued,
unissued or held in its treasury. There are no treasury shares.
4.6 NO SUBSIDIARIES. The Company has no subsidiaries and does
not own five percent (5%) or more of the securities having voting power of any
corporation (or would own such securities in such amount upon the closing of any
existing purchase obligations for securities).
4.7 OWNERSHIP AND AUTHORITY. The execution, delivery and
performance of this Agreement by the Company has been duly authorized by its
Board of Directors and all other required corporate approvals have been
obtained. Assuming that this Agreement has been duly executed and delivered by
IFC, this Agreement is valid and binding upon the Company, and is enforceable
against the Company in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium, receivership or
other similar laws relating to or affecting creditors' rights generally. The
execution, delivery and performance of this Agreement by the Company will not
result in the violation or breach of any term or provision of charter
instruments applicable to the Company or except as set forth in Schedule 4.7,
constitute a material default under any indenture, mortgage, deed of trust or
other contract or agreement to which the Company is a party or by which the
Company or any of its properties is bound and will not cause the creation of a
lien or encumbrance on any properties owned by or leased to or by the Company.
4.8 LIABILITIES AND OBLIGATIONS. Except to the extent set
forth in the Financial Statements and in Schedule 4.8, the Company has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) secured by a pledge or a lien on any of its assets.
4.9 FINANCIAL STATEMENTS. The Financial Statements for the
periods ended December 31, 1996, December 31, 1997, and July 31, 1998 were
prepared by management and are unaudited but were prepared in conformity with
generally accepted accounting principles consistently applied, are true,
complete and correct and fairly and accurately present the financial condition
and assets and liabilities or the results of operation of the Company as of the
date thereof and for the periods indicated (including but not limited to the
inclusion of all necessary adjustments). Except as set forth in Schedule 4.9,
there has not been any change between the date of the Financial
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Statements and the date of this Agreement, and there will not be any such change
in the Financial Statements between the date of this Agreement and the Closing
Date, which has had or will have a material adverse effect on the financial
position or results of operations of the Company. Except as and to the extent
reflected or reserved against in such Financial Statements, or otherwise
expressly disclosed therein, the Company has no liabilities or obligations,
contingent or otherwise, of a nature required to be reflected in the Financial
Statements in accordance with generally accepted accounting principles
consistently applied.
4.10 ABSENCE OF CERTAIN CHANGES. During the period from
December 31, 1997 through and including the date this Agreement is signed and
delivered, the Company has not:
4.10.1 Except as set forth in Schedule 4.10.1, suffered any
material adverse change affecting its assets, liabilities, financial condition
or business;
4.10.2 Made any change in the compensation payable or to
become payable to any of its employees or agents, or made any bonus payments or
compensation arrangements to or with any of its employees or agents except as
set forth on Schedule 4.10.2 of the Disclosure Schedule, whether direct or
indirect;
4.10.3 Except as reflected in the Financial Statements or
set forth in Schedule 4.10.3, paid or declared any dividends, distributions or
other payments due or owing to the Selling Shareholders or redeemed or
repurchased (or agreed to redeem or repurchase) any of its capital stock;
4.10.4 Issued any stock, or granted any stock options or
warrants to purchase stock or issued any securities convertible into common
stock of the Company, except as set forth on Schedule 4.10.4;
4.10.5 Sold or transferred any of its assets or canceled any
indebtedness or claims owing to it, except in the ordinary course of business
and consistent with its past practices;
4.10.6 Sold, assigned or transferred any formulas,
inventions, patents, patent applications, trademarks, trade names, copyrights,
licenses, computer programs or software, know-how or other intangible assets;
4.10.7 Amended or terminated any contract, agreement or
license to which it is a party otherwise than in the ordinary course of business
or as may be necessary or appropriate for the consummation of the transactions
described herein;
4.10.8 Borrowed any money or incurred, directly or
indirectly (as a guarantor or otherwise), any indebtedness in excess of $25,000,
except in the ordinary course of business and consistent with its past
practices;
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4.10.9 Discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent), other than current
liabilities shown in the Financial Statements or current liabilities incurred
since such date in the ordinary course of business, consistent with its past
practices;
4.10.10 Mortgaged, pledged or subjected to lien, charge or
other encumbrance any of its assets, except in the ordinary course of business
and consistent with its past practices; or
4.10.11 Entered into or committed to any other transaction
other than in the ordinary course of business, consistent with past practices.
4.11 TAXES. The Company (and any predecessor corporation or
partnership as to which either of them is the transferee or successor) has
timely filed, or has timely secured an extension and will (within the permitted
extension) file, all tax returns, including federal, state, local and foreign
tax returns, tax reports and forms, as to which the due date for filing is prior
to the Closing Date; has reported all reportable income on such returns; has
adopted and followed in the preparation of such returns methods of accounting
accepted by law, and has not changed any methods of accounting without
compliance with procedures required by law; has not deducted any expenses or
charges or claimed any credits which are not allowable; and except as set forth
in Schedule 4.11.1 of the Disclosure Schedule, has paid, or accrued and reserved
for, all taxes, penalties and interest due or required to be paid pursuant to
the returns as filed, or as adjusted including any adjustments or corrections
pursuant to amendment or correction. The Company has made available to IFC
copies of all federal and state income and sales tax returns filed, FICA and
state income taxes withholding returns filed and evidence of payment of such
taxes. The Selling Shareholders have (i) paid or will pay by the Closing Date
any property taxes owed with respect to any real or personal property through
the Closing Date; and (ii) no knowledge of any deficiency or assertion of any
deficiency relating to property taxes on such assets. No examination, audit, or
inquiry of any tax return, federal, state or otherwise of the Company is
currently in progress and neither the Company nor the Selling Shareholders have
received notice of intent to commence any inquiry, audit or examination of any
tax return from any taxing authority. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of the Company. The Company is a subchapter S corporation and at all
times since its formation has maintained such status, and has not taken any
actions which have resulted or could result in the termination of such status.
4.12 TITLE TO PROPERTIES AND ASSETS. The Company presently
leases real property from which it conducts its business and owns or leases
certain personal property. The Company has good and marketable title to all
personal property reflected on its books and records as owned or leased by it or
otherwise required or used in the operation of its business, free and clear of
all security interests, liens, encumbrances, mortgages or charges of any nature,
except as set forth on Schedule 4.12. The Company does not own any real
property. To the extent set forth in Schedule 7.5, security interests, liens,
encumbrances, mortgages or charges shall be discharged in full on or before the
Closing Date and evidenced by UCC Releases delivered by the Company on the
Closing Date. Such
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improved real property or tangible personal property is in good operating
condition and repair, and suitable for the purpose for which it is being used,
subject in each case to consumption in the ordinary course, ordinary wear and
tear and ordinary repair, maintenance and periodic replacement.
4.13 ACCOUNTS RECEIVABLE. The amount of all accounts
receivable, unbilled invoices and other debts due as recorded in the records and
books of account of the Company as being due to the Company as of the Closing
Date (less the amount of any provision or reserve therefor made in the records
and books of account of the Company) will be good and collectible in full in the
ordinary course of business and in any event not later than ninety (90) days
after the Closing Date; and none of such accounts receivable or other debts is
or will at the Closing Date be subject to any counterclaim or set-off except to
the extent of any such provision or reserve. There have been no material adverse
changes since July 31, 1998 in the amount of accounts receivable or other debts
due the Company or the allowances with respect thereto, or accounts payable of
the Company from that reflected in the Financial Statements.
4.14 MATERIAL CONTRACTS. Set forth in Schedule 4.14 is a
complete list of all material contracts to which the Company is a party. All
such contracts listed on and attached to Schedule 4.14 are valid, enforceable
against the Company and accurate and complete copies of such material contracts
(or, with the consent of IFC, forms thereof) as have been requested by IFC have
been provided to IFC. Except as disclosed in Schedule 4.14, neither the Company
nor, to the best of Company's and the Selling Shareholders' knowledge, any of
the other parties thereto, is or will be, merely with the passage of time, in
default under any such material contracts nor is there any requirement for any
of such material contracts to be novated or to have the consent of the other
contracting party in order for any such material contracts to be valid,
effective and enforceable by the Company after the Closing Date as it was
immediately prior thereto.
4.15 INTELLECTUAL PROPERTIES. Except as set forth on Schedule
4.15, the Company has no interest in and owns no domestic and foreign letters
patent, patents, patent applications, patent licenses, software licenses and
know how licenses, trade names, trademarks, copyrights, unpatented inventions,
service mark registrations and applications and copyright registrations and
applications owned or used by the Company in the operation of its business
(collectively, the "Intellectual Property"). No Intellectual Property other than
as set forth on Schedule 4.15 is required or used in the operation of the
business of the Company. There are no pending or, to the best of the Company's
and the Selling Shareholders' knowledge, threatened claims of infringement upon
the rights to any intellectual property of others or, except as set forth on
Schedule 4.15, any agreement undertakings with respect to any such rights. To
the best of the knowledge of the Company and the Selling Shareholders, after
reasonable inquiry, all of the software used by the Company is Year 2000
compliant, and will continue to perform in accordance with its specifications
and will be able to accurately process and manipulate date data before, on and
subsequent to January 1, 2000.
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4.16 [INTENTIONALLY OMITTED]
4.17 LITIGATION. Except as described in Section 4.17 of the
Disclosure Schedule, there are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or, to the
best of the Company's and the Selling Shareholders= knowledge, threatened, and
there are no investigations pending or, to the best of the Company's and the
Selling Shareholders' knowledge, threatened against the Company, which relate to
and could have a material adverse effect on the properties, business, assets or
financial condition of the Company or which could adversely affect the validity
or enforceability of this Agreement or the obligation or ability of the Selling
Shareholders or the Company to perform their respective obligations under this
Agreement or to carry out the transactions contemplated by this Agreement or
otherwise affecting the Shares.
4.18 FINDERS. Except as set forth in Section 9.5 hereof, the
Company and the Selling Shareholders owe no fees or commissions, or other
compensation or payments to any broker, finder, financial consultant, or similar
person claiming to have been employed or retained by or on behalf of the Company
or the Selling Shareholders in connection with this Agreement or the
transactions contemplated hereby.
4.19 EMPLOYEES. Schedule 4.19 of the Disclosure Schedule sets
forth the name and current monthly salary and any accrued benefit for each
employee of the Company, and there will be no changes in the monthly salary set
forth on Schedule 4.19 or the basis by which accrued benefits are calculated
through the Closing Date. Except as set forth on Schedule 4.19, the Company has
no employment agreements, written or oral with any of its employees. Except as
set forth on Schedule 4.19, the Company does not currently use the services of
nor has it at any time engaged any independent contractor.
4.20 ABSENCE OF PENSION LIABILITY. Except as described on
Schedule 4.20, the Company has no liability of any nature to any person or
entity for pension or retirement obligations, vested or unvested, to or for the
benefit of any of its existing or former employees. The consummation of the
transactions contemplated by this Agreement will not entitle any employee of the
Company to severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement, including the Exhibits, or accelerate
the time of payment or increase the amount of compensation due to any such
employee. Except as described on Schedule 4.20, the Company does not presently
have nor has it ever had any employee benefit plans and has no announced plan or
legally binding commitment to create any employee benefit plans.
4.21 COMPLIANCE WITH LAWS. The Company has conducted and is
continuing to conduct its business in compliance with, and is in compliance
with, all applicable statutes, orders, rules and regulations promulgated by
governmental authorities relating in any respect to its operations, conduct of
business or use of properties, including, without limitation, any applicable
statute, order, rule or regulation relating to (i) wages, hours, hiring,
nondiscrimination, retirement, benefits, pensions, working conditions, and
worker safety and health; (ii) air, water, toxic substances,
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noise, or solid, gaseous or liquid waste generation, handling, storage, disposal
or transportation; (iii) zoning and building codes; (iv) the production,
storage, processing, advertising, sale, distribution, transportation, disposal,
use and warranty of products; or (v) trade and antitrust regulations. The
execution, delivery and performance of this Agreement by the Selling
Shareholders and the Company and the consummation by the Selling Shareholders
and the Company of the transactions contemplated by this Agreement will not,
separately or jointly, violate, contravene or constitute a default under any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities or cause a lien on any property used, owned or leased by the Company
to be created thereunder. To the best of the Company's and the Selling
Shareholders= knowledge there are no proposed changes in any applicable Virginia
or Virginia local statutes, orders, rules and regulations promulgated by
Virginia or Virginia local governmental authorities that would cause any
representation or warranty contained in this Paragraph 4.21 to be untrue in any
material respect or have a material adverse effect on its operations, conduct of
business or use of properties.
4.22 FILINGS. The Company and the Selling Shareholders have
made all filings and reports required under all local, state and federal laws
with respect to its business and of any predecessor entity or partnership,
except filings and reports in those jurisdictions in which the nature of the
property owned or business conducted, when considered in relation to the absence
of serious penalties, renders the required filings or reports unnecessary as a
practical matter.
4.23 CERTAIN ACTIVITIES. The Company has not, directly or
indirectly, engaged in or been a party to any of the following activities:
4.23.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course);
4.23.2 Contributions (including gifts), whether legal or not
legal, made to any domestic or foreign political party, political candidate or
holder of political office;
4.23.3 Holding of or participation in bank accounts, funds
or pools of funds created or maintained in the United States or any foreign
country, without being reflected on the corporate books of account, or as to
which receipts or disbursements therefrom have not been reflected on such books,
the purpose of which is to obtain or retain business or to receive favorable
treatment with regard to business;
4.23.4 Receiving or disbursing monies, the actual nature of
which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
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4.23.5 Paying fees to domestic or foreign consultants or
commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
4.23.6 Paying or reimbursing (including gifts) personnel of
the Company for the purpose of enabling them to expend time or to make
contributions or payments of the kind or for the purposes referred to in
Paragraphs 4.23.1 through 4.23.5 above;
4.23.7 Participating in any manner in any activity which is
illegal under the international boycott provisions of the Export Administration
Act, as amended, or the international boycott provisions of the Internal Revenue
Code, or guidelines or regulations thereunder; and
4.23.8 Making or permitting unlawful charges, mischarges or
defective or fraudulent pricing under any contract or subcontract under a
contract with any department, agency or subdivision thereof, of the United
States government, state or municipal government or foreign government.
4.24 EMPLOYMENT RELATIONS. The Company is in compliance with
all Federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice; no
unfair labor practice complaint against the Company is pending before the
National Labor Relations Board; there is no labor strike, dispute, slow down or
stoppage actually pending or threatened against or involving the Company; no
labor representation question exists respecting the employees of the Company; no
grievance which might have an adverse effect upon the Company or the conduct of
its business exists; no arbitration proceeding arising out of or under any
collective bargaining agreement is currently being negotiated by the Company;
and the Company has not experienced any material labor difficulty during the
last three (3) years.
4.25 INSURANCE COVERAGE. The policies of fire, liability or
other forms of insurance of the Company are described in Schedule 4.25 of the
Disclosure Schedule. The Company has complied with the terms and provisions of
such policies including, without limitation, all riders and amendments thereto.
Such insurance is adequate and the Company will keep all current insurance
policies in effect through the Closing. The Company has not been refused any
insurance by an insurance carrier to which it has applied for insurance.
4.26 CHARTER AND BY-LAWS. The Company has heretofore delivered
to IFC true, accurate and complete copies of the Articles of Incorporation and
By-Laws of the Company, together with all amendments to each of the same as of
the date hereof.
4.27 CORPORATE MINUTES. The minute books of the Company
provided to IFC at the Closing are the correct and only such minute books and do
and will contain complete and accurate records of any and all proceedings and
actions at all meetings, including written consents executed in lieu of meetings
of its shareholders, Board of Directors and committees thereof through
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the Closing Date. The stock records of the Company delivered to IFC at the
Closing are the correct and only such stock records and accurately reflects all
issues and transfers of record of the capital stock of the Company. The Company
does not have any of its records or information recorded, stored, maintained or
held off the premises of the Company.
4.28 DEFAULT ON INDEBTEDNESS. The Company is not in default
under any evidence of indebtedness for borrowed money.
4.29 INDEBTEDNESS. Except as described in Schedule 4.29 of the
Disclosure Schedule, the Selling Shareholders and any corporation or entity with
which they are affiliated are not indebted to the Company, and the Company has
no indebtedness or liability to the Selling Shareholders or any corporation or
entity with which they are affiliated.
4.30 AGREEMENTS, JUDGMENT AND DECREES AFFECTING THE COMPANY
AND THE SELLING SHAREHOLDERS. The Company and the Selling Shareholders jointly
and severally represent and warrant that the Selling Shareholders and the
Company are not subject to any agreement, judgment or decree adversely affecting
their or its ability to enter into this Agreement, to consummate the
transactions contemplated herein. The Company and the Selling Shareholders
further represent and warrant that to the best of their knowledge there are no
laws or regulations prohibiting the consummation by the Company or the Selling
Shareholders of the transactions contemplated by this Agreement.
4.31 GOVERNMENTAL APPROVALS. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by the Selling
Shareholders or the Company.
4.32 INVESTMENT INTENT. The Selling Shareholders are taking
the IFC Shares for their own account and for investment, with no present
intention of dividing their interest with others or of reselling or otherwise
disposing of all or any portion of the IFC Shares. The Selling Shareholders do
not intend to sell the IFC Shares, either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or non-occurrence of
any predetermined event or circumstance. The Selling Shareholders have no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for, or which is likely to compel, a
disposition of the IFC Shares. The Selling Shareholders are not aware of any
circumstances presently in existence which are likely in the future to prompt a
disposition of the IFC Shares. The Selling Shareholders possess the experience
in the business in which IFC is involved necessary to make an informed decision
to acquire the IFC Shares and the Selling Shareholders have the financial means
to bear the economic risk of the investment in the IFC Shares as of the Closing
Date. The Selling Shareholders have received and read IFC's Annual Report on
Form 10-KSB for the year ended December 31, 1997 and Quarterly Reports on Form
10-QSB for the three and six months ended March 31, 1998 and June 30, 1998,
respectively; the Proxy Statement for its 1998 Annual Meeting of Shareholders;
and any additional information they have requested. The Selling
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Shareholders have had the opportunity to ask questions of the directors and
officers of IFC concerning IFC.
4.33 LICENSES, PERMITS AND REQUIRED CONSENTS. The Company has
all required franchises, tariffs, licenses, certifications, approvals,
authorizations and permits ("Authorizations") necessary to the conduct of its
business as currently conducted. A list of such Authorizations is set forth on
Schedule 4.33 attached hereto, true, correct and complete copies of which have
previously been delivered to IFC. All Authorizations relating to the business of
the Company are in full force and effect, no violations have been made in
respect thereof, and no proceeding is pending or threatened which could have the
effect of revoking or limiting any such Authorizations and the same will not
cease to remain in full force and effect by reason of the transactions
contemplated by this Agreement.
4.34 INVENTORY. All of the inventory reflected on the
Financial Statements and all such inventory acquired or produced since such date
is and will be valued at the lower of cost or market with appropriate markdowns
for obsolete or slow moving inventory. All finished goods and all work in
process are and will be free of defect, useable in the ordinary course of
business of the Company, as of the Closing, shall be saleable at market prices
in the ordinary course of business.
4.35 VENDORS AND CUSTOMERS. Set further on Schedule 4.35
hereto is a list of all customers of and vendors to the Company that accounted
for over ten percent (10%) of the total sales and purchases, respectively, of
the Company during the calendar year 1997. As of the date hereof, neither the
Company nor any of the Selling Shareholders have received any notice, written or
oral, that lead them to believe that there is a substantial probability that any
of the vendors or customers set forth the Schedule 4.35 hereto will terminate
its business relationship with the Company.
4.36 HART-SCOTT-RODINO MATTERS. For purposes of, and as
defined or provided in, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), the Company is an "ultimate parent entity" and a "person" which includes
no other "entities".
4.37 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The
Disclosure Schedule, where applicable to the Selling Shareholders and the
Company, completely and correctly presents in all material respects the
information required by this Agreement. This Agreement, the certificates to be
delivered by the Company and the Selling Shareholders at the Closing, the
Disclosure Schedule and the representations and warranties contained in this
Paragraph 4, and the documents and written information pertaining to the Company
furnished to IFC or its agents by or on behalf of the Selling Shareholders or
the Company, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made by the
Company or the Selling Shareholders in this Agreement, or such certificates,
Disclosure Schedule, documents or written information, in light of the
circumstances under which they were made, not misleading.
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4.38 RESIDENCE. Each of the Selling Shareholders represents
and warrants to IFC that Virginia is not a community property state and such
Selling Shareholder and his spouse are residents of the Commonwealth of
Virginia.
5. REPRESENTATIONS AND WARRANTIES OF IFC. IFC represents and warrants
to the Selling Shareholders and the Company that:
5.1 ORGANIZATION AND GOOD STANDING.
5.1.1 IFC is a corporation duly organized and existing in
good standing under the laws of the State of Arizona. IFC has full corporate
power and authority to carry on its business as now conducted. IFC is duly
qualified to transact business in the state of Arizona and in all states and
jurisdictions in which the business or ownership of the Company's properties or
assets makes it necessary so to qualify (other than jurisdictions in which the
nature of the property owned or business conducted, when considered in relation
to the absence of serious penalties, renders qualification as a foreign
corporation unnecessary as a practical matter).
5.1.2 IFC is a publicly held company and is a reporting
company under the Securities Exchange Act of 1934, as amended ("Exchange Act")
and is S-3 eligible and satisfies the informational reporting requirements under
Rule 144 promulgated under the Securities Act. IFC has filed all the material
required to be filed under the Exchange Act for a period of twelve (12) months
preceding the date hereof and such reports are true, correct and complete in all
material respects and comply as to form with the applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder.
5.2 CAPACITY. IFC represents and warrants to the Company and
the Selling Shareholders that IFC has read and understands this Agreement, has
consulted legal and accounting representatives to the extent deemed necessary
and has the capacity to enter into this Agreement and to carry out the
transactions contemplated hereby without the consent of any third party.
5.3 FINDERS. No agent, broker, person or firm acting on behalf
of IFC is, or will be, entitled to any commission or broker's or finder's fees
from any of the parties to this Agreement, or from any person controlling,
controlled by or under common control with any of the parties to this Agreement,
in connection with any of the transactions contemplated in this Agreement.
5.4 AUTHORITY AND CONSENT. The execution, delivery and
performance of this Agreement by IFC have been duly authorized by its Board of
Directors. This Agreement is valid and binding upon IFC, and is enforceable
against IFC in accordance with its terms, subject to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership or other similar
laws relating to or affecting creditors= rights generally.
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5.5 VALIDITY OF AGREEMENT. Neither the execution nor the
delivery of this Agreement by IFC, nor the performance by IFC of any of the
covenants or obligations to be performed by IFC hereunder, will result in any
violation of any order, decree or judgment of any court or other governmental
body, or statute or law applicable to IFC, or in any breach of any terms or
provisions of either the Articles of Incorporation or Bylaws of IFC, or
constitute a default under any indenture, mortgage, deed of trust or other
contract to which IFC is a party or by which IFC is bound.
5.6 GOVERNMENT APPROVALS. No consent, approval or
authorization of, or notification to or registration with, any governmental
authority, either federal, state or local, is required in connection with the
execution, delivery and performance of this Agreement by IFC.
5.7 FINANCIAL STATEMENTS AND PUBLIC REPORTS. The audited
consolidated financial statements of IFC for the fiscal years ended December 31,
1997 and 1996, with accompanying notes, all as contained in IFC's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997, and the financial
statements contained in IFC's Quarterly Reports on Form 10-QSB for the three and
six months ended March 31, 1998 and June 30, 1998, respectively, delivered to
the Selling Shareholders, fairly and accurately present, in all material
respects, the financial position of IFC at such dates, the results of its
operation and changes in its financial position for the periods and years ended
on such dates, in conformity with generally accepted accounting principles
consistently applied. Such financial statements contain and reflect all
necessary adjustments for a fair and accurate presentation of the financial
condition as of the date of such statements.
5.8 SUBSIDIARIES. IFC currently has seven (7) subsidiaries as
of the date of this Agreement: Kleven Construction, Inc., an Arizona corporation
("Kleven"), Concepts in Communication, Inc., a Tennessee corporation
("Concepts"), Trans Sierra Communications, Inc., a California corporation
("Trans Sierra"), Southern Communications Products, Inc., an Arizona corporation
("SCP"), Compass Communications, Inc., a Virginia corporation ("Compass"),
General Communications Corp., a Tennessee corporation ("GCC") and United Tech,
Inc. ("United"). IFC owns all of the outstanding capital stock of Kleven,
Concepts, Trans Sierra, SCP, Compass, GCC and United.
5.9 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The
Disclosure Schedule and Exhibits hereto completely and correctly present in all
material respects the information required by this Agreement. This Agreement,
the certificates to be delivered by the officers of IFC at the Closing, any
Schedules and Exhibits to be delivered under this Agreement and the
representations and warranties of this Paragraph 5, and the documents and
written information pertaining to IFC furnished to the Company or its agents and
the Selling Shareholders by or on behalf of IFC, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make this Agreement, or such certificates, schedules, documents or written
information, not misleading.
5.10 CAPITALIZATION. As of June 30, 1998, the authorized
capital stock of IFC consisted of 100,000,000 shares of Common Stock, no par
value per share, and 10,000,000 shares
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of Preferred Stock, no par value per share. All IFC Shares are required to be
certificated. Upon issuance, the IFC Shares will be duly authorized, validly
issued, fully paid and non-assessable.
6. DUE DILIGENCE INSPECTION AND COVENANTS.
6.1 DUE DILIGENCE INSPECTION. During the period after
execution of this Agreement and prior to the Closing Date, IFC and its
representatives shall have the right to inspect all plant, equipment and
operations of the Company, its premises and its financial and other records at
reasonable times upon the approval of the Company and the Selling Shareholders,
which approval will not be unreasonably withheld. IFC shall also have the right
to discuss the affairs of the Company with the Selling Shareholders, managers,
customers, prospective customers, employees, suppliers, advertisers, retailers,
banking and other financial institutions, lessors and such other parties as IFC
deems appropriate, upon reasonable notice of the proposed times and dates
thereof. IFC shall complete its preliminary due diligence within thirty (30)
days after the execution of this Agreement, and shall complete its comprehensive
due diligence within sixty (60) days after execution of this Agreement, provided
it has received the cooperation of the Company and Selling Shareholders
contemplated in this Paragraph 6.1. The Company and the Selling Shareholders
shall likewise have the right, upon the execution of this Agreement, to inspect
IFC, its financial and other public records and to discuss the affairs of IFC
with appropriate parties upon the same schedule as IFC shall have to complete
its preliminary due diligence. IFC, the Company and the Selling Shareholders
will cooperate with all reasonable requests by the other party for information
and will use their best efforts to secure the cooperation of the foregoing third
parties who may reasonably be requested to furnish information to each other.
6.2 CONFIDENTIAL INFORMATION. IFC shall keep all confidential
information derived from the Selling Shareholders or from the Company relating
to the business of the Company confidential pending the Closing of the
transaction contemplated by this Agreement. The Company and the Selling
Shareholders shall keep all confidential information derived from IFC relating
to the business of IFC confidential pending the Closing. No party to this
Agreement shall be liable for disclosure of confidential information if such
disclosure is required by law or if the disclosure is of information already
publicly available. If this Agreement should be terminated pursuant to this
Agreement, IFC, the Company and the Selling Shareholders shall return all such
confidential information and documents which they have received and agree not to
disclose or use such information in any manner which damages the businesses or
prospects of the Company or of IFC, as the case may be.
6.3 COVENANTS. Each of the Company and the Selling
Shareholders hereby covenants and agrees as follows:
6.3.1 OPERATIONAL CONTINUITY. From the date hereof through
the Closing:
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(a) The business of the Company will be conducted in
the usual and ordinary course as theretofore conducted in
accordance with sound and prudent business practice;
(b) the Company has not and will not, without IFC's
prior written approval: (1) take any action, or permit any
event or condition to occur that would materially affect the
value of the shares and/or the corporation, its business, or
its assets; (2) enter into any material agreement, contract,
commitment, or undertaking; (3) alter any existing Agreement
or pay or agree to pay any salary, bonus, raise or advances,
to any employee or officer except in the ordinary course of
business consistent with past practice; (4) increase or
decrease materially its level of inventory; (5) dispose of
or alter any marketable asset or any material amount of its
assets; (6) institute any material litigation, claim, or
other proceeding before any court or governmental authority;
(7) make any extraordinary capital expenditures or prepay
any lease obligations; (8) issue additional shares of the
Company's capital stock or grant any options, warrants, or
other rights to acquire any such shares; or (9) declare or
pay any dividends, distributions or other payments to
Company shareholders, direct or indirect, except as set
forth in Schedule 6.3.1 hereto, which have been approved by
IFC;
(c) All books and records (both corporate and
financial) of the Company have been and will be maintained
completely and accurately without any change in accounting
methods or practices except as specifically approved by IFC;
and
(d) Selling Shareholders and the Company have and shall
have maintained, the good will of, and good business
relations with, the Company's employees, agents,
contractors, suppliers, customers, vendors, and others
having business relationships with it, so as to keep such
fully available to the Company after Closing.
6.3.2 CONSENTS TO ASSIGNMENTS. Prior to Closing, the Company and
Selling Shareholders will use their best efforts to obtain all necessary
consents and any additional consents as may be required to effect the
transaction contemplated hereby.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF IFC. The obligations of
IFC pursuant to this Agreement are, at the option of IFC, subject to the
fulfillment to IFC's satisfaction on or before the Closing Date of each of the
following conditions:
7.1 EXECUTION OF THIS AGREEMENT. The Company and the Selling
Shareholders have duly executed and delivered this Agreement to IFC.
7.2 REPRESENTATIONS AND WARRANTIES ACCURATE.
7.2.1 The Company and the Selling Shareholders shall deliver the
Disclosure Schedule to this Agreement. IFC shall have fourteen (14) days after
its receipt of the Disclosure
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Schedule to determine, in its sole discretion, whether or not IFC shall accept
the representations and warranties as modified or amplified by the Disclosure
Schedule ("Acceptance Date"). If IFC determines that any part of the Disclosure
Schedule is unacceptable, IFC may provide the Company and the Selling
Shareholders additional time to remedy the matter or may terminate this
Agreement in accordance with its provisions.
7.2.2 All representations and warranties of the Selling
Shareholders and the Company contained in this Agreement shall have been true in
all material respects when made on the date of execution of this Agreement, and
also, except for such changes as are contemplated by this Agreement, at and as
of the Closing Date as if such representations and warranties were made at and
as of the Closing Date. The Company and the Selling Shareholders shall furnish
IFC with a certificate, dated the Closing Date and signed on behalf of the
Company by a duly authorized officer thereof, and by each of the Selling
Shareholders, stating the above in such form as IFC may reasonably request. The
acceptance of the Purchase Price by the Company and the Selling Shareholders
shall constitute an affirmation by the Company and the Selling Shareholders of
the truth, as of the Closing Date, of the representations and warranties made by
the Company and the Selling Shareholders in this Agreement.
7.3 PERFORMANCE OF COMPANY AND SELLING SHAREHOLDERS. The
Company and the Selling Shareholders shall have performed and complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them, and the Company and the Selling Shareholders shall
deliver a certificate, in form and substance satisfactory to IFC, to that
effect, dated the Closing Date, and signed in the manner set forth in Paragraph
7.2.2 above on or before the Closing Date.
7.4 TENDER OF COMPANY SHARES. Each of the Selling Shareholders
shall deliver to IFC all Company Shares, options, warrants or other rights to
acquire Company Shares owned by such Selling Shareholder free and clear of any
liens, encumbrances and other obligations.
7.5 TITLE. On or prior to the Closing Date, the Company shall
deliver to IFC duly executed UCC-3 Termination Statements, as described in
Paragraph 4.12 and set forth in Schedule 7.5, or evidence that no liens have
been recorded against any of the Company's properties or assets except as set
forth in Schedule 4.12.
7.6 CONSENT OF MATERIAL CUSTOMERS. Prior to Closing the
Company shall have obtained all approvals in connection with the transfer of the
Company Shares by the Selling Shareholders to IFC identified on Schedule 7.6 as
to material contracts between the Company and any of its principal customers,
and such approvals shall have been issued in written form and substance
satisfactory to IFC and its counsel or IFC shall have waived such requirements.
7.7 OBLIGATIONS TO THIRD PARTIES. There shall be no loans or
material obligations outstanding from the Company to any third party, except
those reflected in the Financial Statements, set forth in the Disclosure
Schedules, or incurred in the ordinary course of business.
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7.8 OUTSTANDING OBLIGATIONS TO EMPLOYEES. There shall be no
outstanding claims or loans of the Company owed to any of its employees or
officers provided that IFC shall give notice to the Selling Shareholders and the
Company of its approval or withholding of approval of any claim or loans then
known to IFC on or before the Closing Date.
7.9 EMPLOYMENT AGREEMENTS. As of the Closing Date, the
employees identified in Schedule 7.9 of the Disclosure Schedule shall have
entered into employment and non-compete agreements with the Company in a form
satisfactory to IFC on the terms and conditions and annual salaries set out in
Schedule 7.9, and the remaining Selling Shareholders, if any, shall have entered
into non-compete agreements with the Company in a form satisfactory to IFC. The
Company shall have received written resignations and releases from the remaining
officers and directors of the Company, in a form reasonably acceptable to IFC
and its counsel.
7.10 OPINION OF COUNSEL. IFC shall have received an opinion of
counsel from the Company and the Selling Shareholders in the form set forth in
Exhibit E.
7.11 LOCK-UP AGREEMENTS. Each Selling Shareholder shall have
duly executed and delivered a lock-up agreement, in the form set forth in
Exhibit F, relating to the IFC Shares issued to each respective Selling
Shareholder under this Agreement.
7.12 FINANCIAL AND OTHER CONDITIONS. The Company shall have no
contingent or other liabilities connected with its business, except as disclosed
in the Financial Statements. The review of the business, premises and operations
of the Company and the Financial Statements by IFC at its expense shall not have
revealed any matter which, in the sole judgment of IFC, makes the acquisition on
the terms herein set forth inadvisable for IFC. There shall be no dividends,
distributions, or other payments to Company Shareholders, direct or indirect,
except as permitted by Section 6.3.1(b) of this Agreement.
7.13 LEGAL PROHIBITION; REGULATORY CONSENTS. On the Closing
Date, there shall exist no injunction or final judgment, law or regulation
prohibiting the consummation of the transactions contemplated by this Agreement.
Any required governmental or regulatory consents shall have been obtained.
7.14 KEY MAN INSURANCE. IFC or the Company shall have been
able to obtain key man insurance for each of the persons executing employment
agreements with IFC in an amount not less than $250,000 for each individual,
with the insurance proceeds payable to IFC.
7.15 ESTOPPEL CERTIFICATES; LEASE. Except as set forth on
Schedule 7.15, all lines of credit, debts, financing arrangements, leases and
other contracts of the Company shall be acceptable to IFC, and all approvals set
forth in Schedule 7.15 relating to the sale of the Company Shares by the Selling
Shareholders, and to effect the transactions contemplated hereby, required by
the foregoing instruments and arrangements shall have been obtained by the
Closing Date. IFC shall have received estoppel letters in form and substance
reasonably acceptable to it from other parties
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to any Contracts, if and as set forth in Schedule 7.15. IFC or Diversitec shall
have concurrently with the Closing entered into a one year lease for the real
property located at 14321 Sommerville Court, Midlothian, Virginia 23113, on
terms acceptable to IFC and its counsel.
7.16 OPINION OF ACCOUNTANTS. IFC shall have received an
opinion of its outside accountants to its satisfaction regarding pooling of
interests treatment in accordance with Accounting Principles Board Opinion No.
16 and the accounting staff of the Commission shall not have asserted or
threatened in writing to assert a determination to the contrary.
7.17 NO ADVERSE CHANGE. There shall not have occurred any
material adverse change in the assets, business, condition or prospects of the
Company.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND THE
SELLING SHAREHOLDERS. The obligations of the Company and the Selling
Shareholders under this Agreement are, at the option of the Company or the
Selling Shareholders, subject to the fulfillment to the satisfaction of Company
and the Selling Shareholders on or before the Closing Date of each of the
following conditions:
8.1 EXECUTION AND APPROVAL OF AGREEMENT. IFC shall have duly
executed and delivered this Agreement to the Company and the Selling
Shareholders.
8.2 PAYMENT. Subject to the terms and conditions hereof, IFC
shall have transferred the IFC Shares, in exchange for the Company Shares as
described in Paragraph 2, "Exchange of IFC Shares for the Company Shares."
8.3 [INTENTIONALLY OMITTED]
8.4 REGISTRATION RIGHTS. IFC shall have prepared and duly
executed a Registration Rights Agreement, attached hereto as Exhibit G,
respecting the IFC Shares to be issued to the Selling Shareholders.
8.5 OPINION OF COUNSEL. The Company and the Selling
Shareholders shall have received an opinion of counsel from IFC in the form set
forth in Exhibit H.
8.6 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by IFC in this Agreement or in any document, statement, list or
certificate furnished pursuant hereto shall be true and correct when made and
shall be true and correct on and as of the Closing Date.
8.7 NO ADVERSE CHANGE. There shall not have occurred any
material adverse change in the assets, business, condition or prospects of IFC.
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9. INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS. The representations and warranties made by the parties in this
Agreement and in the certificates delivered at the Closing, and all of the
covenants of the parties in this Agreement, shall survive the execution and
delivery of this Agreement and the Closing Date and shall expire on the March
15, 2000 (the "Survival Date"). Any claim for indemnification shall be effective
only if notice of such claim is given by the party claiming indemnification or
other relief to the party against whom such indemnification or other relief is
claimed on or before the Survival Date.
9.2 INDEMNIFICATION BY IFC.
9.2.1 IFC agrees to indemnify and hold the Selling
Shareholders harmless, from and after the Closing Date, against and in respect
of all matters in connection with any losses, liabilities, costs or damages
(including reasonable attorneys' fees) incurred by the Selling Shareholders that
result from any misrepresentation or breach of the warranties by IFC in
Paragraph 5, "Representations and Warranties of IFC," or any breach or
nonfulfillment of any agreement or covenant on the part of IFC contained in this
Agreement, and all suits, actions, proceedings, demands, judgments, costs and
expenses incident to the foregoing matters, including reasonable attorneys'
fees.
9.2.2 In no event shall IFC's liability under Paragraph
9.2.1 above to the Selling Shareholders collectively exceed Twelve Million
Dollars ($12,000,000). No claim for indemnification may be made under this
Paragraph 9 after the Survival Date.
9.3 INDEMNIFICATION BY THE SELLING SHAREHOLDERS.
9.3.1 The Selling Shareholders agree, on a several and not
on a joint basis, to indemnify and hold IFC harmless, from and after the Closing
Date, against and in respect of all matters in connection with any losses,
liabilities or damages (including reasonable attorneys' fees) incurred by IFC
resulting from any misrepresentation or breach of their warranties in Paragraph
4, "Representations and Warranties of the Company and the Selling Shareholders,"
or any breach or nonfulfillment of any agreement or covenant on the part of the
Company and the Selling Shareholders contained in this Agreement and all suits,
actions, proceedings, demands, judgments, costs and expenses incident to the
foregoing matters, including reasonable attorneys' fees.
9.3.2 Notwithstanding the provisions of Paragraph 9.3.1
above, IFC shall be entitled to seek indemnification from the Selling
Shareholders pursuant to Paragraph 9.3.1 only for the portion of the aggregate
of the losses, liabilities, costs and damages (including reasonable attorneys'
fees) incurred by IFC which it would be entitled to claim under such Paragraph
9.3.1 that exceeds $25,000. Upon such occurrence, the collective liability of
the Selling Shareholders under Paragraph 9.3.1 above to IFC will not exceed
Twelve Million Dollars ($12,000,000).
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9.4 ARBITRATION. If IFC believes that a matter has occurred
that entitles it to indemnification under Paragraph 9.3, "Indemnification by the
Selling Shareholders," or the Selling Shareholders believe that a matter has
occurred that entitles them to indemnification under Paragraph 9.2,
"Indemnification by IFC," IFC or the Selling Shareholders, as the case may be
(the "Indemnified Party"), shall give written notice to the party or parties
against whom indemnification is sought (each of whom is referred to herein as an
"Indemnifying Party") describing such matter in reasonable detail. The
Indemnified Party shall be entitled to give such notice prior to the
establishment of the amount of its losses, liabilities, costs or damages, and to
supplement its claim from time to time thereafter by further notices as they are
established. Each Indemnifying Party shall send a written response to such claim
for indemnification within thirty (30) days after receipt of the claim stating
its acceptance or objection to the indemnification claim, and explaining its
position in respect thereto in reasonable detail. If such Indemnifying Party
does not timely so respond, it will be deemed to have accepted the Indemnified
Party's indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute,
and upon the expiration of an additional thirty (30) day period from the date of
the objection notice or such longer period as to which the Indemnified and
Indemnifying Parties may agree, any such dispute shall be submitted to
arbitration in Phoenix, Arizona to a member of the American Arbitration
Association mutually appointed by the Indemnified Party and Indemnifying Party
(or, in the event the Indemnified Party and Indemnifying Party cannot agree on a
single such member, to a panel of three members of such Association selected in
accordance with the rules of such Association), who shall promptly arbitrate
such dispute in accordance with the rules of such Association and report to the
parties upon such disputed items, and such report shall be final, binding and
conclusive on the parties. Judgment upon the award by the arbitrator(s) may be
entered in any court having jurisdiction. The prevailing party in any such
arbitration shall be entitled to recover from, and have paid by, the other party
hereto all fees and disbursements of such arbitrator or arbitrators. For this
purpose, a party shall be deemed to be the prevailing party only if such party
would be deemed to be a prevailing party under Paragraph 11.3.
9.5 NO FINDERS. IFC represents and warrants to the Company and
the Selling Shareholders and the Company and the Selling Shareholders represent
and warrant there are no obligations to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement, except for the fee payable by IFC to Robert Mahlum. IFC agrees
to indemnify and hold the Selling Shareholders harmless from any breach of IFC's
representation in the previous sentence, and the Selling Shareholders agree to
indemnify and hold IFC harmless from any breach of their representation in the
previous sentence.
9.6 THIRD PERSON CLAIM PROCEDURES. If any third person asserts
a claim against an Indemnified Party in connection with the matter involved in
such claim, the Indemnified Party shall promptly (but in no event later than ten
(10) days prior to the time at which an answer or other responsive pleading or
notice with respect to the claim is required) notify the Indemnifying Party of
such claim. The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving prompt notice to the
Indemnified Party that it will do so, such
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election to be made and notice given in any event at least five (5) days prior
to the time at which an answer or other responsive pleading or notice with
respect thereto is required. If the Indemnifying Party makes such election, the
Indemnifying Party may conduct the defense of such claim through counsel of its
choosing (subject to the Indemnified Party's approval, not to be unreasonably
withheld), will be responsible for the expenses of such defense, and shall be
bound by the results of its defense or settlement of the claim to the extent it
produces damage or loss to the Indemnified Party. The Indemnifying Party shall
not settle such claims without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any injunction or material
and adverse effect on the Indemnified Party may be agreed to without its
consent. As long as the Indemnifying Party is diligently contesting any such
claim in good faith, the Indemnified Party shall not pay or settle any such
claim. If the Indemnifying Party does not make such election, or having made
such election does not proceed diligently to defend such claim prior to the time
at which an answer or other responsive pleading or notice with respect thereto
is required, or does not continue diligently to contest such claim, then the
Indemnified Party may take over defense and proceed to handle such claim in its
exclusive discretion, and the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make in good faith with respect to
such claim. The parties agree to cooperate in defending such third party claims,
and the defending party shall have access to records, information and personnel
in control of the other part which are pertinent to the defense thereof.
9.7 LIMITATION OF REMEDIES. The parties understand that all
disputed claims for Indemnification pursuant hereto shall be submitted to
arbitration in accordance with Paragraph 9.4, "Arbitration."
9.8 INDEMNIFICATION LIMITS. The indemnification rights and
obligations of the parties shall cease with respect to any matter as to which
notice has not been given to the Indemnifying Party prior to the Survival Date.
The maximum amount for which IFC or the Selling Shareholders as a group shall be
liable is Twelve Million Dollars ($12,000,000).
10. TERMINATION.
10.1 TERMINATION EVENTS. This Agreement may be terminated and
abandoned, by notice given in the manner hereinafter provided:
10.1.1 By IFC, if without the fault of IFC, all of the
conditions set forth in Paragraph 7, "Conditions Precedent to the Obligations of
IFC," shall not have been satisfied (or are incapable of being satisfied) on or
before the Closing Date and have not been waived by IFC on or before such dates,
as the case may be.
10.1.2 By the Company or the Selling Shareholders, if
without their fault all of the conditions set forth in Paragraph 8, "Conditions
Precedent to the Obligations of the Company and the Selling Shareholders," shall
not have been satisfied (or are incapable of being satisfied) on
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or before the Closing Date and have not been waived by the Company and the
Selling Shareholders on or before such date.
10.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Paragraph 10.1, "Termination Events," this Agreement
shall forthwith become void and, except as set forth in sections 6.2, 11.1 and
11.2, there shall be no liability or continuing obligations on the part of the
parties hereunder.
11. EXPENSES AND TRANSFER TAXES.
11.1 IFC shall be solely responsible for paying its own
expenses and costs incident to the preparation of this Agreement and to the
consummation of the transactions contemplated by this Agreement, and shall have
no obligation for paying such expenses or costs of the other parties.
11.2 The Company and the Selling Shareholders shall be solely
responsible for paying their own expenses and costs incident to the preparation
of this Agreement and to the consummation of the transactions contemplated by
this Agreement. The Company and the Selling Shareholders shall have no
obligation to reimburse the expenses or costs of IFC.
11.3 In the event of arbitration and/or litigation with
respect to the interpretation or enforcement of this Agreement or any provisions
hereof, the prevailing party in any such matter shall be entitled to recover
from the other party their or its reasonable costs and expense, including
reasonable attorneys' fees, incurred in such arbitration and/or litigation. For
purposes of this Agreement, a party shall be deemed to be the prevailing party
only if such party (A)(i) receives an award or judgment in such arbitration
and/or litigation for more than 50% of the disputed amount involved in such
matter, or (ii) is ordered to pay the other party less than 50% of the disputed
amount involved in such matter or (B)(i) succeeds in having imposed a material
equitable remedy on the other party (such as an injunction or order compelling
specific performance), or (ii) succeeds in defeating the other party's request
for such an equitable remedy.
12. [INTENTIONALLY OMITTED]
13. COMPANY BOARD OF DIRECTORS. On the Closing Date, the Board of
Directors and officers of the Company shall consist of such persons as IFC shall
select.
14. [INTENTIONALLY OMITTED]
15. MISCELLANEOUS.
15.1 BINDING AGREEMENT. The parties covenant and agree that
this Agreement, when executed and delivered by the parties, will constitute a
legal, valid and binding agreement between the parties and will be enforceable
in accordance with its terms.
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15.2 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto,
their legal representatives, successors and assigns.
15.3 ENTIRE AGREEMENT. This Agreement and its exhibits and
schedules together with the letter dated August 13, 1998 from Doug Kimball to
the Selling Shareholders constitute the entire contract among the parties hereto
with respect to the subject matter thereof, superseding all prior communications
and discussions and no party hereto shall be bound by any communication on the
subject matter hereof unless such is in writing signed by any necessary party
thereto and bears a date subsequent to the date hereof. The exhibits and
schedules shall be construed with and deemed as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Information set forth in any exhibit, schedule or provision of this Agreement
shall be deemed to be set forth in every other exhibit, schedule or provision of
this Agreement and therefore shall be deemed to be disclosed for all purposes of
this Agreement.
15.4 MODIFICATION. This Agreement may be waived, changed,
amended, discharged or terminated only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, amendment, discharge or
termination is sought.
15.5 NOTICES. All notices, requests, demands and other
communications shall be deemed to have been duly given three (3) days after
postmark of deposit in the United States mail, if mailed, certified or
registered mail, postage prepaid:
If to the Company:
Diversitec, Inc.
14321 Sommerville Court, Suite 102
Midlothian, Virginia 23113
Attn: Joseph P. Kealy
If to the Selling Shareholders:
Commercial Business Systems, Inc.
14321 Sommerville Court
Midlothian, Virginia 23113
Attn: Steve R. Shapiro
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With copy to:
Charles Wm. McIntyre, Jr., Esq.
McGuire, Woods, Battle & Boothe LLP
One James Center
901 East Cary Street
Richmond, Virginia 23219
If to IFC:
International FiberCom, Inc.
3615 South 28th Street
Phoenix, Arizona 85040
Attn: Joseph P. Kealy
With a copy to:
Christian J. Hoffmann, III, Esq.
Streich Lang, P.A.
Renaissance One
Two N. Central Avenue
Phoenix, Arizona 85004-2391
or to such other address as any party shall designate to the other in writing.
The parties shall promptly advise each other of changes in addresses for such
notices.
15.6 CHOICE OF LAW. This Agreement shall be governed by,
construed, interpreted and enforced according to the laws of the State of
Arizona.
15.7 SEVERABILITY. If any portion of this Agreement shall be
finally determined by any court or governmental agency of competent jurisdiction
to violate applicable law or otherwise not to conform to requirements of law
and, therefore, to be invalid, the parties will cooperate to remedy or avoid the
invalidity, but, in any event, will not upset the general balance of
relationships created or intended to be created between them as manifested by
this Agreement and the instruments referred to herein. Except insofar as it
would be an abuse of the foregoing principle, the remaining provisions hereof
shall remain in full force and effect.
15.8 OTHER DOCUMENTS. The parties shall upon reasonable
request of the other, execute such documents as may be necessary or appropriate
to carry out the intent of this Agreement.
15.9 HEADINGS AND THE USE OF PRONOUNS. The paragraph headings
hereof are intended solely for convenience of reference and shall not be
construed to explain any of the provisions of this Agreement. All pronouns and
any variations thereof and other words, as
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applicable, shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or matter may require.
15.10 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
15.11 NO WAIVER AND REMEDIES. No failure or delay on a party's
part to exercise any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by a party of a right or
remedy hereunder preclude any other or further exercise. No remedy or election
hereunder shall be deemed exclusive but it shall, where ever possible, be
cumulative with all other remedies in law or equity.
15.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, and by the different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15.13 FURTHER ASSURANCES. Each of the parties hereto shall use
commercially practicable efforts to fulfill all of the conditions set forth in
this Agreement over which it has control or influence (including obtaining any
consents necessary for the performance of such party's obligations hereunder)
and to consummate the transactions contemplated hereby, and shall execute and
deliver such further instruments and provide such documents as are necessary to
effect this Agreement.
15.14 RULES OF CONSTRUCTION. The normal rules of construction
which require the terms of an agreement to be construed most strictly against
the drafter of such agreement are hereby waived since each party have been
represented by counsel in the drafting and negotiation of this Agreement.
15.15 THIRD PARTY BENEFICIARIES. Each party hereto intends
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
[This portion of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on
September 18, 1998, to be effective as of the day and year first above written.
COMPANY: IFC:
DIVERSITEC, INC., a Virginia Corporation INTERNATIONAL FIBERCOM, INC., an
Arizona corporation
/s/ Steve R. Shapiro /s/ Joseph P. Kealy
- -------------------------------- --------------------------------
By Steve R. Shapiro By Joseph P. Kealy
Its Treasurer Its Chairman of the Board and
President
SELLING SHAREHOLDERS:
/s/ Thomas Clayton
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THOMAS CLAYTON
/s/ Steve R. Shapiro
- --------------------------------
STEVE R. SHAPIRO
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