<PAGE> 1
UNITED STATES
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): August 30, 1996
---------------
Anicom, Inc.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
- ---------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6133 North River Road, Suite 410, Rosemont, IL 60018
---------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (708)518-8700
-------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On August 30, 1996, Norfolk Wire & Electronics, Inc. ("Norfolk") was
merged into a wholly-owned subsidiary of Registrant. The total merger
consideration of approximately $8 million was paid in the form of
$4,000,000 in cash, and 258,062 shares of Registrant's common stock,
$.001 par value per share ("Common Stock"). Registrant also granted
to the shareholders of Norfolk certain registration rights under the
Securities Act of 1933, as amended, with respect to up to 38,709
shares of Common Stock.
All cash consideration from Registrant in this transaction was paid
out of Registrant's existing working capital. All shares of Common
Stock issued in this transaction were issued out of Registrant's
authorized but unissued Common Stock.
(b) Certain of the assets acquired pursuant to this transaction constitute
equipment or other physical property used by Norfolk in its business
as a distributor of wire and cable products. The Registrant will
continue to use these assets for the same purpose.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Audited financial statements of Norfolk required pursuant to
Regulation S-X cannot be provided at this time, but shall be filed as
soon as practicable and in no event later than 60 days after the
filing date of the Report on Form 8-K.
(b) Pro Forma Financial Information.
The pro forma financial information required pursuant to Article 11 of
Regulation S-X cannot be provided at this time, but shall be filed as
soon as practicable and in no event later than 60 days after the
filing date of this Report on Form 8-K.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization, by and among Anicom,
Inc., Anicom-Southeast, Inc., Norfolk Wire & Electronics,
Inc., and Ronald A. Hurley, Robert H. Jennings, Stephen M.
Mobley and Vonda M. Mall, dated as of August 30, 1996.
Registrant agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted schedule.
-2-
<PAGE> 3
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.
ANICOM, INC.
Dated: September 11, 1996 By: /s/ Donald C. Welchko
-----------------------
Donald C. Welchko
Vice President,
Chief Financial Officer
<PAGE> 4
Exhibit Index
Sequential
Page
Exhibit # Item Number
- ----------- ------------------------------------------------- ----------
2.1 Agreement and Plan of Reorganization by and 5
among Anicom, Inc., Anicom-Southeast, Inc.,
Norfolk Wire & Electronics, Inc., and Ronald
A. Hurley, Robert H. Jennings, Stephen M.
Mobley and Vonda M. Hall dated as of August
30, 1996. Registrant agrees to furnish
supplementally to the Commission, upon
request, a copy of any omitted schedule.
-4-
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of August 30, 1996 by and among ANICOM, INC., a Delaware
corporation ("Anicom"), ANICOM-SOUTHEAST, INC., Delaware corporation and wholly
owned subsidiary of Anicom ("Purchaser"), NORFOLK WIRE & ELECTRONICS, INC., a
Virginia corporation ("Norfolk"), and Ronald A. Hurley ("Hurley"), Robert H.
Jennings ("Jennings"), Stephen M. Mobley ("Mobley") and Vonda M. Hall ("Hall")
(Hurley, Jennings, Mobley and Hall are each a "Shareholder" and collectively,
the "Shareholders"). Capitalized terms that are not otherwise defined in this
Agreement are defined in Section 6 of this Agreement.
The Boards of Directors of each of Anicom, Purchaser and Norfolk and
the Shareholders of Norfolk believe that it is in the best interests of each
corporation and their respective stockholders that Norfolk and Purchaser
combine into a single company through the merger of Norfolk with and into
Purchaser (the "Merger") and, in furtherance thereof, have approved the Merger.
For Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
The parties, intending to be legally bound, agree as follows:
1. THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3)
and subject to the terms and conditions of this Agreement and the applicable
provisions of the Delaware General Corporate Law ("Delaware Law") and the
Virginia Stock Corporation Act ("Virginia Law"), Norfolk shall be merged with
and into Purchaser, the separate corporate existence of Norfolk shall cease and
Purchaser shall continue as the surviving corporation. Purchaser, as the
surviving corporation after the merger, is hereinafter sometimes referred to as
the "Surviving Corporation". As of the Effective Time, by virtue of the Merger
and without any action on the part of any Shareholder, the 1,000 shares of the
common stock, no par value, of Norfolk ("Norfolk Shares") which represent all
of the issued and outstanding shares of capital stock of Norfolk, shall be
converted into the right to receive in the aggregate the Merger Consideration
(as defined in Section 1.2) from Purchaser.
1.2 MERGER CONSIDERATION. At the Effective Time, by virtue of the
Merger and without any action on the part of Anicom, Purchaser, Norfolk or the
Shareholders, each Norfolk Share will be cancelled and extinguished and the
aggregate merger consideration (the "Merger Consideration") of $8,000,000, will
be payable to the various Shareholders as set forth in Section 1.2(d) below, in
accordance with the following:
(a) $3,000,039 in cash (the "Purchase Cash");
<PAGE> 2
(b) 193,547 shares of common stock of Anicom (the
"Purchase Shares").
(c) $1,000,000 in cash (the "Escrow Cash") and 64,515
shares of common stock of Anicom (the "Escrow Shares"). The Escrow
Cash and the Escrow Shares shall be delivered to Harris Trust and
Savings Bank, as Escrow Agent (the "Escrow Agent") and placed in an
escrow account pursuant to the terms of an escrow agreement attached
hereto as EXHIBIT A (the "Escrow Agreement").
(d) The percentage interest each Shareholder shall be
entitled to receive of the Merger Consideration is as set forth in
Part 1.2(d) of the disclosure letter delivered by Shareholders to
Purchaser and Anicom concurrently with the execution and delivery of
this Agreement (the "Disclosure Letter").
1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing on the
Closing Date the certificates of merger and any other documents required to be
filed with the Secretaries of State of Delaware and Virginia (the "Merger
Documents") in order to cause the Merger to become effective under Delaware and
Virginia Law as of 12:01 a.m., Delaware time, on September 1, 1996 (the
"Effective Time").
1.4 EFFECTS OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law and Virginia Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Norfolk shall vest in Purchaser,
and all debts, liabilities and duties of Norfolk shall become the debts,
liabilities and duties of Purchaser.
1.5 NAME; ARTICLES OF INCORPORATION; BYLAWS.
(a) The name of the Surviving Corporation will be
Anicom-Southeast, Inc.
(b) The Certificate of Incorporation of Purchaser, as in
effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of Purchaser as of and following the
Effective Time, until thereafter amended.
(c) The Bylaws of Purchaser, as in effect immediately
prior to the Effective Time, shall be the Bylaws of Purchaser as of
and following the Effective Time, until thereafter amended.
1.6 DIRECTORS AND OFFICERS. The directors of Purchaser shall
remain the directors of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified. The officers of
Purchaser shall remain the officers of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified.
1.7 SUPPLEMENTARY ACTION. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
assignments or assurances are necessary
-2-
<PAGE> 3
or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of Norfolk, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of Norfolk, in the name of and on behalf of Norfolk, to execute and
deliver any and all things necessary or proper to vest or to perfect or confirm
title to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.
1.8 FEDERAL INCOME TAX. It is intended by the parties hereto that
the Merger shall constitute a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
1.9 CLOSING. The closing of the Merger ("Closing") provided for
in this Agreement will take place upon execution of this Agreement at the
offices of Willcox & Savage P.C., counsel to Norfolk at 1800 NationsBank
Center, One Commercial Place, Norfolk, Virginia, at 10:00 a.m. (local time) on
August 30, 1996 (the "Closing Date").
1.10 PURCHASE PRICE ADJUSTMENT.
(a) Shareholders' Equity. The calculation of the Merger
Consideration was based upon the assumption that, as calculated under
generally accepted accounting principles ("GAAP"), consistently
applied, the Tangible Net Worth (as such term is defined in Part
1.10(a) of the Disclosure Letter) of the Company as of the Closing
Date would equal or exceed $1,900,000. If, and to the extent that, as
of the Closing Date the Tangible Net Worth of the Company is less than
$1,900,000, then Purchaser shall be entitled to a corresponding dollar
for dollar reduction in the Merger Consideration. Except in the case
of a Breach of Sections 2.27 or 4.1 by Shareholders or Norfolk, no Tax
liability on Norfolk, Anicom or Purchaser resulting from the Merger
failing to qualify as a tax-free reorganization shall be taken into
account hereunder.
(b) Closing Balance Sheet. Within sixty (60) days after
the Closing Date, Shareholders shall prepare or cause to be prepared
and delivered to Purchaser a balance sheet of Norfolk as of the
Closing Date prepared in accordance with GAAP, consistently applied
("Closing Balance Sheet"), provided, however, that (i) the Tangible
Net Worth stated on such Closing Balance Sheet shall be adjusted to
reflect the sale of Inventory identified on Part 1.10(b) of the
Disclosure Letter as if such sale had been booked in August of 1996,
(ii) an adjustment shall be made to accrue for accountant's fees and
costs incurred in connection with Norfolk's 1996 year-end audit (which
fees and costs shall be paid by Purchaser after Closing, but which
will not have been ordinarily accrued on the books as of August 31,
1996) and (iii) that no reduction will be taken from inventory based
on value being less than cost. If Purchaser disagrees with the
Closing Balance Sheet, Purchaser shall notify Shareholders in writing
of such disagreement within thirty (30) days after the date on which
Purchaser received the Closing Balance Sheet, which written notice
shall specify the nature of the dispute and shall provide in
reasonable detail the facts or accounting principles upon which such
dispute is based. Thereafter, Shareholders and Purchaser shall use
Best Efforts to resolve such disagreement with respect to the Closing
Balance Sheet.
-3-
<PAGE> 4
(c) Dispute Resolution. If Shareholders and Purchaser
are unable to resolve any disagreement within twenty (20) days after
Norfolk's receipt of such notice of disagreement, Shareholders and
Purchaser shall submit such disagreement to a certified independent
public accounting firm that is nationally recognized (the "Independent
Accounting Firm") and mutually agreeable to Shareholders and
Purchaser. If Shareholders and Purchaser cannot agree upon such
election within thirty (30) days after Shareholders' receipt of
Purchaser's notice of disagreement, the Independent Accounting Firm
shall be selected by lot from among the "big six" independent public
accounting firms in the United States, excluding Coopers & Lybrand
L.L.P. The dispute shall be immediately submitted by Purchaser and
Shareholders to the Independent Accounting Firm for resolution of such
dispute within twenty (20) days after submission to the Independent
Accounting Firm. At the time of the submission of such dispute to the
Independent Accounting Firm for resolution, Shareholders shall file
with the Independent Accounting Firm a written statement of their
position with regard to any matters in dispute, at which time
Purchaser shall have ten (10) days to respond in writing to
Shareholders' position. The decision of the Independent Accounting
Firm shall be final and binding upon all parties hereto. Each party
shall bear its own expenses, including expenses of its accountants and
attorneys in connection with the resolution of any such dispute, and
the fees and expenses of the Independent Accounting Firm shall be paid
by the party(s) as determined by the Independent Accounting Firm.
(d) Reduction of Purchase Price. If and to the extent
that any adjustment is made under this Section 1.10, such sums shall
be paid out of escrow pursuant to the terms of the Escrow Agreement.
1.11 PAYOFF OF SIGNET DEBT. Contemporaneous with Closing, Anicom
shall curtail Norfolk's entire bank indebtedness to Signet Bank and cause
Signet Bank to deliver to Hurley and Jennings releases of their respective
guaranties.
2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders, jointly and severally (except in the case of those
matters in Sections 2.2 and 2.3 that relate to a Shareholder individually which
are made severally), represent and warrant to Anicom and Purchaser as follows:
2.1 ORGANIZATION AND GOOD STANDING
(a) Norfolk is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Virginia, with full corporate power and authority to conduct its
business as it is now being conducted, to own, hold under lease, or
otherwise possess or use the properties and assets that it purports to
own, hold under lease, or otherwise possess or use, and to perform all
its obligations under the contracts to which it is a party or by which
it is bound. Part 2.1(a) of the Disclosure Letter sets forth all
other jurisdictions in which Norfolk is authorized to do business.
Norfolk is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction
in which such qualification is required by virtue
-4-
<PAGE> 5
of the nature of the activities conducted by it except to the
extent such failure to qualify would not have a Material Adverse
Effect on the Business taken as a whole.
(b) Shareholders have caused the Company to deliver to
Purchaser correct and complete copies of the Organizational Documents
of Norfolk, as currently in effect.
(c) Part 2.1(c) of the Disclosure Letter contains a
complete and accurate list of the current directors and officers of
Norfolk.
(d) Norfolk does not have any subsidiaries.
2.2 AUTHORITY; NO CONFLICT
(a) This Agreement and the Closing Agreements constitute
the legal, valid, and binding obligation of Shareholders and Norfolk,
enforceable against each such party in accordance with their terms.
Shareholders and Norfolk, as the case may be, have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Closing Agreements and to perform their
obligations under this Agreement and the Closing Agreements.
(b) Except as set forth in Part 2.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement or the
Closing Agreements nor the consummation or performance of any
of the Contemplated Transactions will, directly or indirectly:
(i) contravene, conflict with, or result in (with
or without notice or lapse of time) a violation or breach of
(A) any provision of the Organizational Documents of Norfolk;
(B) any resolution adopted by the board of directors or the
shareholders of Norfolk; (C) any Legal Requirement or any
Order to which Norfolk or any Shareholder, or any of the
assets owned or used by Norfolk, may be subject, or give any
Governmental Body or other Person the right (with or without
notice or lapse of time) to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under any such Legal Requirement or Order; (D) any of the
terms or requirements of, or give any Governmental Body the
right (with or without notice or lapse of time) to revoke,
withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Norfolk or that
otherwise relates to the business of, or any of the assets
owned or used by, Norfolk; or (E) any provision of, or give
any Person the right (with or without notice or lapse of time)
to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract; or
(ii) result in (with or without notice or lapse of
time) the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by Norfolk.
-5-
<PAGE> 6
Except as set forth in Part 2.2 of the Disclosure Letter, Norfolk is not and
will not be required to give any notice to or obtain any Consent from, and no
Shareholder is or will be required to give any notice to or obtain any Consent
from, any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
2.3 CAPITALIZATION. The authorized equity securities of Norfolk
consist of 5,000 shares of common stock, no par value, of which 1,000 shares
are issued and outstanding and constitute the Norfolk Shares. Shareholders are
and on the Closing Date will be the sole record and beneficial owners and
holders of Norfolk Shares. Except as set forth in Part 2.3 of the Disclosure
Letter, no legend or other reference to any purported Encumbrance appears upon
any certificate representing equity securities of Norfolk. All of the
outstanding equity securities of Norfolk have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in Part 2.3
of the Disclosure Letter, there are no Contracts relating to the issuance,
sale, or transfer of any equity securities or other securities (whether or not
convertible) of Norfolk, including options, rights, warrants, puts, or calls.
None of the outstanding equity securities or other securities of Norfolk was
issued, or has been redeemed or repurchased, in violation of the Securities Act
or any securities or "blue sky" Legal Requirements. Norfolk has not owned,
does not own, and has no Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business. Shareholders have provided Purchaser with complete
copies of any shareholders' agreements, voting agreements, and other agreements
relating to Norfolk Shares, all of which are listed on Part 2.3 of the
Disclosure Letter.
Additionally, each Shareholder on his or her own behalf only
represents that Shareholder has good and valid title to their Norfolk Shares,
which will be conveyed to Purchaser free and clear of all Encumbrances, in the
respective amounts set forth in Part 2.3 of the Disclosure Letter.
2.4 FINANCIAL STATEMENTS. Shareholders have caused Norfolk to
deliver to Anicom: (a) Norfolk's audited balance sheet, statement of income
and statement of stockholders' equity as of and for the fiscal year ended
August 31, 1995, and (b) Norfolk's unaudited balance sheet (the "Interim
Balance Sheet") and statement of income as of and for the nine months ended
June 30, 1996, including in each case the notes thereto. Except as set forth
in Part 2.4 of the Disclosure Letter, such financial statements and notes are
complete and correct in all material respects, are consistent with Norfolk's
books and records and fairly present the financial condition and results of
operations of Norfolk as at the respective dates thereof and for the periods
therein referred to, all in accordance with GAAP, except (i) that the financial
statements as at and for the nine months ended June 30, 1996 do not include
footnote disclosure of the type associated with audited financial statements
and were or are subject to normal and recurring year-end adjustments which were
not, or are not expected to be, material in amount and (ii) regarding the
Interim Balance Sheet only, the representations and warranties set forth in
this sentence are made to Shareholders' Knowledge. No financial statements of
any Person are required by GAAP to be consolidated with the financial
statements of Norfolk.
2.5 BOOKS AND RECORDS. To the Knowledge of Shareholders, the
books of account, minute books, stock record books, and other records of
Norfolk, all of which have been made
-6-
<PAGE> 7
available to Purchaser, are complete and correct and have been maintained in
accordance with sound business practices. Without limiting the generality of
the foregoing, the minute books of Norfolk contain complete and accurate
records of all meetings held of, and corporate action taken by, the
Shareholders, the boards of directors, and committees of the boards of
directors of Norfolk, and no meeting of any such Shareholders, board of
directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of Norfolk.
2.6 TITLE TO PROPERTIES; ENCUMBRANCES. Norfolk does not own any
real property. Part 2.6 of the Disclosure Letter contains a complete and
accurate list of all leaseholds or other interests in real property currently
or previously owned by Norfolk. Norfolk has good, valid, and marketable title
to all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) reflected as owned in the books and records of Norfolk,
and upon consummation of the Contemplated Transactions (which assumes that the
Merger Documents shall have been properly filed and become effective), the
Surviving Corporation will be vested with good and marketable title to all such
properties and assets, including all of the properties and assets reflected in
the Interim Balance Sheet (except for personal property sold since the date of
the Interim Balance Sheet in the Ordinary Course of Business) and all of the
properties and assets purchased or otherwise acquired by Norfolk since the date
of the Interim Balance Sheet (except for supplies, inventory, and personal
property acquired and sold since the date of the Interim Balance Sheet in the
Ordinary Course of Business) are listed in Part 2.6 of the Disclosure Letter.
Except as set forth in Part 2.6 of the Disclosure Letter, all properties and
assets reflected in the Interim Balance Sheet are free and clear of all
Encumbrances.
2.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth in
Part 2.7 of the Disclosure Letter, to the Knowledge of Shareholders, the
equipment and other tangible personal property used by Norfolk in the conduct
of its business, are in good operating condition and repair, ordinary wear and
tear excepted, are adequate for the uses to which they are being put, are not
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in cost to Norfolk, and are sufficient for the
continued conduct of Norfolk's business after the Closing in substantially the
same manner as conducted prior to the Closing.
2.8 ACCOUNTS RECEIVABLE. To the best of Shareholders' Knowledge,
all accounts receivable of Norfolk that are reflected on the Interim Balance
Sheet or on the accounting records of Norfolk as of the Closing Date
(collectively, the "Accounts Receivable"), represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date as stated on the
aging report described below with the respective reserves to be shown on the
Closing Balance Sheet (which reserves, to Shareholders' Knowledge, are adequate
and calculated in a manner consistent with past practice). To Shareholders'
Knowledge, there is no contest, claim, or right of set-off, other than returns
in the Ordinary Course of Business, in any agreement with any maker of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Part 2.8 of the Disclosure Letter contains a complete and accurate
list of all Accounts Receivable as of July 31, 1996, which list sets forth the
aging of such Accounts Receivable.
-7-
<PAGE> 8
2.9 INVENTORY. All inventory of Norfolk, whether or not reflected
in the Interim Balance Sheet, consists of a quality and quantity usable and
saleable in the Ordinary Course of Business, except for obsolete items and
items of below-standard quality. Obsolete items, items of below-standard
quality and unsalable inventory as of the Closing shall not exceed 10% of the
value of Norfolk's inventory (assuming the valuation of inventory at cost).
All inventories not written off have been priced on a first in-first out (FIFO)
basis. The quantities of each item of inventory are not excessive, but are
reasonable in the present circumstances of Norfolk.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 2.10
of the Disclosure Letter, Norfolk has no material liabilities or obligations of
any nature (whether absolute, accrued, or contingent) other than liabilities or
obligations reflected or reserved against in the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the date
of the Interim Balance Sheet.
2.11 TAXES. Norfolk has never been and is not a member of an
"affiliated group" as defined in Section 1504 of the Code. Except as set forth
in Part 2.10 of the Disclosure Letter, Norfolk has timely filed or caused to be
timely filed (on a timely basis since its incorporation) all Tax Returns that
are or were required to be filed by or with respect to it pursuant to the Legal
Requirements of each Governmental Body with taxing power over it or its assets.
Norfolk has delivered or made available to Purchaser copies of all such Tax
Returns. Norfolk has paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Norfolk. The United States federal and
state income Tax Returns of Norfolk subject to such Taxes have not been audited
by the IRS or relevant state tax authorities and Norfolk is not a party to any
action or proceeding by any Governmental Body for the collection or assessment
of Taxes. Neither Norfolk nor any Shareholder has given or been requested to
give waivers or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to the
payment of Taxes of Norfolk or for which Norfolk may be liable. The charges,
accruals, and reserves with respect to Taxes on the respective books of Norfolk
are adequate (determined in accordance with GAAP). To the Shareholders'
Knowledge, there exists no proposed tax assessment against Norfolk except as
disclosed in the Interim Balance Sheet or in Part 2.11 of the Disclosure
Letter. No consent to the application of Section 341(f)(2) of the Code has
been filed with respect to any property or assets held, acquired, or to be
acquired by Norfolk. All Taxes that Norfolk is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person. All Tax Returns previously filed by Norfolk were true, correct, and
complete. Norfolk is not a party to any Contract that has resulted or would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code. Norfolk has never
had a permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and such foreign
country.
2.12 NO MATERIAL ADVERSE CHANGE. Since the date of the Interim
Balance Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of Norfolk or any
event, condition, or contingency that is likely to result in such a material
adverse change.
-8-
<PAGE> 9
2.13 EMPLOYEE BENEFITS
(a) Part 2.13(a) of the Disclosure Letter lists every
"employee pension benefit plan" (as such term is defined in Section
3(2) of ERISA); any "employee welfare benefit plan" (as such term is
defined in Section 3(1) of ERISA); any collective bargaining
agreement, personnel policy (including vacation time, holiday pay,
bonus programs and sick leave) or material fringe benefit; any
severance agreement or plan or any other medical, life or disability
benefit; any excess benefit plan, bonus or incentive plan, top hat
plan or deferred compensation plan, change-of-control agreement,
employment agreement; or any other benefit plan, policy, program,
arrangement, agreement or contract, whether or not written or
terminated with respect to which Norfolk has or could have liability
(all such plans, policies, programs, arrangements, agreements and
contracts are referred to in this Agreement as "Scheduled Plans").
(b) Norfolk has delivered to Purchaser a complete and
accurate copy, as of the Closing, of each written Scheduled Plan,
together with, if applicable, a copy of Form 5500 Annual Reports
(including required schedules and attachments), if any, for the three
(3) most recent plan years; the most recent IRS determination letter
and each other material letter, ruling or notice issued by a
Governmental Body with respect to each such plan; and a copy of each
funding vehicle, if any, with respect to each such plan; the current
summary plan description or summary of material modifications with
respect to each such plan; and a copy or, if none, a description of
each other general explanation or communication which describes a
material term of a Scheduled Plan that has not previously been
disclosed to Purchaser pursuant to this Section. Part 2.13(b) of the
Disclosure Letter describes the material terms of each unwritten
Scheduled Plan as comprehended to the Closing Date.
(c) Except as set forth in Part 2.13(c), each Scheduled
Plan (i) has been and currently complies in form and in operation in
all respects with all applicable requirements of ERISA and the Code,
and any other Legal Requirements, and so as not to give rise to a
nonexempt prohibited transaction (as such term is defined under ERISA
and the Code) or liability for any other excise taxes, penalties or
fines; (ii) has been and is operated and administered in compliance
with its terms (except as otherwise required by law) and with
applicable Legal Requirements in such a manner as to qualify, where
appropriate, for both Federal and state purposes, for income tax
exclusions to its participants, tax-exempt income for its funding
vehicle, and the allowance of deductions and credits with respect to
contributions thereto; and (iii) where appropriate, has received a
favorable determination letter or recognition of exemption from the
Internal Revenue Service.
(d) Norfolk does not have nor could have any liability
(whether direct or indirect or resulting from Norfolk or any current
or former Plan Affiliate) with respect to any Scheduled Plan (i) which
is a "multi- employer plan" as defined in Section 4001 of ERISA, a
"multi-employer plan" within the meaning of Section 3(37) of ERISA, a
"multiple employer plan" within the meaning of Section 413(c) of the
Code or a "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA, (ii) which provides post-retirement or
post- employment medical, health, life insurance
-9-
<PAGE> 10
or other welfare-type benefits, their spouses or dependents
(except for limited continued medical benefit coverage, if any,
required to be provided under federal or state continuation coverage
laws), or (iii) which is subject to Title IV of ERISA or the minimum
funding standards of Section 412 of the Code.
(e) all contributions, payments, premiums, expenses,
reimbursements or accruals for each Scheduled Plan as of the Closing
(including periods from the first day of the then current plan year to
the Closing) shall have been made, accrued on Norfolk's financial
statements or funded through a funding arrangement that is separate
from the assets of Norfolk or its affiliates; and each such plan
otherwise does not have nor reasonably could have any unfunded
liability which is not reflected on Norfolk's financial statements.
(f) As used in this Agreement, with respect to any person
("First Person") the term "Plan Affiliate" shall mean each other
person or entity with whom the First Person constitutes or has
constituted all or part of a controlled group, or which would be
treated or has been treated with the First Person as under common
control or whose employees would be treated or have been treated as
employed by the First Person, under Section 414 of the Code and any
regulations, administrative rulings and case law interpreting the
foregoing.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 2.14(a) of the Disclosure
Letter:
(i) Norfolk is, and at all times has been, in
compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets, except
for any violation that would not have a Material Adverse
Effect on the operations of Norfolk taken as a whole;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or
lapse of time) a violation by Norfolk of, or a failure on the
part of Norfolk to comply with, any Legal Requirement, except
for any event that would not have a Material Adverse Effect on
the operations of Norfolk taken as a whole; and
(iii) Norfolk has not received any notice or other
communication (whether oral or written) from any Governmental
Body or any other Person regarding, and Shareholders are not
aware of, any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal
Requirement, or any obligation on the part of Norfolk to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Part 2.14(b) of the Disclosure Letter contains a
complete and accurate list of each material Governmental
Authorization that is held by Norfolk or that otherwise relates to the
business of, or to any of the assets owned or used by, Norfolk. Each
-10-
<PAGE> 11
Governmental Authorization listed or required to be listed in Part 2.14(b) of
the Disclosure Letter is valid and in full force and effect. Except as set
forth in Part 2.14(b) of the Disclosure Letter:
(i) Norfolk is, and at all times has been, in
compliance with all of the material terms and requirements of
each Governmental Authorization identified or required to be
identified in Part 2.14(b) of the Disclosure Letter;
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 2.14(b) of the Disclosure Letter, or (B) result directly
or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 2.14(b) of the Disclosure Letter;
(iii) Norfolk has not received any notice or other
communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or
(B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed
for the renewal of the Governmental Authorizations listed or
required to be listed in Part 2.14(b) of the Disclosure Letter
have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations
have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 2.14(b) of the Disclosure Letter
collectively constitute all of the Governmental Authorizations necessary to
permit Norfolk to lawfully conduct and operate its business in the manner they
currently conduct and operate such businesses and to permit Norfolk to own and
use its assets in the manner in which it currently owns and uses such assets.
2.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 2.15 of the Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against Norfolk
or any Scheduled Plan or that otherwise relates to or may
affect the business of, or any of the assets
-11-
<PAGE> 12
owned or used by, Norfolk and for which Norfolk has
been properly served under applicable Legal Requirements; or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
To the Knowledge of Shareholders, (1) no Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding. Shareholders have
delivered to Purchaser copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 2.15 of the Disclosure
Letter. The Proceedings listed in Part 2.15 of the Disclosure Letter will not
have a Material Adverse Effect on the business, operations, assets, condition,
or prospects of Norfolk or Purchaser. Also listed in Part 2.15 of the
Disclosure Letter are all Proceedings commenced or Threatened by or against
Norfolk within the last three years, and a description of the outcome thereof,
excluding any Proceedings at law where the claimant seeks or sought only
monetary damages in an amount less than $10,000.
(b) There is no Order to which Norfolk, or any of the
assets owned or used by Norfolk, is subject. No Shareholder is
subject to any Order that relates to the business of, or any of the
assets owned or used by Norfolk. No officer or director of Norfolk is
subject to any Order that prohibits such officer or director from
engaging in or continuing any conduct, activity, or practice relating
to the business of Norfolk, and to the Shareholders' Knowledge, no
agent or employee is subject to any Order that prohibits such agent or
employee from engaging in or continuing any conduct, activity or
practice relating to the business of Norfolk.
2.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Part 2.16 of the Disclosure Letter, since the date of the Interim Balance
Sheet, Norfolk has conducted its business only in the Ordinary Course of
Business and there has not been any:
(i) change in Norfolk's authorized or issued
capital stock; grant of any stock option or right to purchase
shares of capital stock of Norfolk; issuance of any security
convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition
by Norfolk of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution
or payment in respect of shares of capital stock;
(ii) amendment to the Organizational Documents of
Norfolk;
(iii) payment by Norfolk of any bonuses or
compensation other than regular salary payments and customary
commissions, or increase in the salaries, or payment on any
debt of Norfolk, to any stockholder, director, officer, or
employee, or entry into any employment, severance, or similar
Contract with any director, officer, or employee;
-12-
<PAGE> 13
(iv) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or
other Scheduled Plan for or with any employees of Norfolk;
(v) damage to or destruction or loss of any asset
or property of Norfolk, whether or not covered by insurance,
materially and adversely affecting the properties, assets,
business, financial condition, or prospects of Norfolk;
(vi) entry into, termination of, or receipt of
notice of termination of (A) any license, maintenance,
distributorship, dealer, sales representative, joint venture,
credit, or similar agreement with a total remaining commitment
of $25,000, or (B) any Contract or transaction involving a
total remaining commitment by Norfolk of at least $25,000,
excluding any acquisition or dispositions of inventory in the
Ordinary Course of Business;
(vii) loan or advance by Norfolk to any Person
other than sales to customers on credit in the Ordinary Course
of Business, or discharge or satisfaction of any material
liability except in the Ordinary Course of Business;
(viii) sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of
any asset or property of Norfolk or mortgage, pledge, or
imposition of any lien or other encumbrance on any material
asset or property of Norfolk;
(ix) cancellation or waiver of any claims or
rights with a value to Norfolk in excess of $10,000;
(x) material change in the accounting methods
used by Norfolk; or
(xi) agreement, whether oral or written, by
Norfolk to do any of the foregoing.
2.17 CONTRACTS; NO DEFAULTS
(a) Part 2.17 of the Disclosure Letter contains a
complete and accurate list, and Shareholders have delivered to
Purchaser true and complete copies (or forms thereof, where form
agreements are used; provided that any and all material deviations or
changes to the forms in any individual case are described in Part 2.17
of the Disclosure Letter), of every material Contract to which Norfolk
is a party or by which it is bound (the "Material Contracts").
(b) Except as set forth in Part 2.17 of the Disclosure
Letter, all of the Contracts listed or required to be listed in Part
2.17 of the Disclosure Letter are, to Shareholders' Knowledge, in full
force and effect and are valid and enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and equitable
principles of general applicability, and, to Shareholders' Knowledge,
no event has occurred or circumstance exists that
-13-
<PAGE> 14
would give any Person (including Norfolk) the right (with or without
notice or lapse of time) to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any such Material Contract.
(c) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts
paid or payable to Norfolk under current or completed Material
Contracts with any Person having the contractual or statutory right to
demand or require such renegotiation and no such Person has made
written demand for such renegotiation.
2.18 INSURANCE. Except for insurance contracts listed or referred
to in Section 2.13 hereof, Part 2.18 of the Disclosure Letter contains a
complete and accurate list of all insurance policies (including
"self-insurance" programs) now maintained by Norfolk (the "Insurance Policies")
and maintained by Norfolk since January 1, 1993. No claims have been made
under any such Insurance Policies. Except for those policies which have been
listed as expired on Part 2.18 of the Disclosure Letter, the Insurance Policies
are in full force and effect, Norfolk is not in default under any Insurance
Policy, and no claim for coverage under any Insurance Policy has been denied.
Except for those policies which have been listed as expired on Part 2.18 of the
Disclosure Letter, Norfolk covenants and agrees that all of the Insurance
Policies will remain in full force and effect as of the Closing Date.
2.19 ENVIRONMENTAL MATTERS
(a) Norfolk has never generated, transported, treated,
stored, or disposed, or, in any manner, arranged for disposal or
treatment (within the meaning of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq. ("CERCLA"), or any applicable federal,
state, or local law, regulation, ordinance or requirement, as amended
or hereafter amended) of any Hazardous Substances except in the normal
operation of its business and in accordance with any applicable Legal
Requirement and Shareholders have no Knowledge that such activities
have caused a release of Hazardous Substances which have had or could
have a Material Adverse Effect on Norfolk. Except as set forth in
Part 2.19 of the Disclosure Letter, to Shareholders' Knowledge, there
are no Hazardous Substances on, in, or under the Facilities (including
those that may be contained in underground storage tanks).
(b) Neither the Shareholders nor Norfolk has received, or
has Knowledge of, any notice of any Proceeding relating to the
presence or alleged presence of Hazardous Substances in, under, or
upon the Facilities or upon the properties of any sites to which any
of Norfolk's waste has been transported, whether for disposal or for
any other purpose, and whether against Norfolk or any other Person,
and Norfolk does not have Knowledge of any basis for any such notice
or action; and there are no pending, or, to Shareholders' Knowledge,
Threatened Proceedings (or notice of potential Proceedings) from any
Governmental Body or any other entity regarding any matter relating to
health, safety, or protection of the environment relating to the
Facilities, except as described in reasonable detail in Part 2.19 of
the Disclosure Letter.
-14-
<PAGE> 15
2.20 EMPLOYEES. Part 2.20 of the Disclosure Letter contains a
complete and accurate list of the following information for each employee of
Norfolk, including each employee on leave of absence or layoff status: name;
job title; current compensation paid or payable and any change in compensation
since January 1993; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under each of Norfolk's Scheduled Plans.
Except as set forth on Part 2.20 of the Disclosure Letter, to Shareholders'
Knowledge, no former or current employee or current or former officer or
director of Norfolk is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement, between such employee or officer or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affected,
affects, or will affect (i) the performance of his duties as an employee or
officer or director of Norfolk, or (ii) the ability of Norfolk to conduct its
business. To Shareholders' Knowledge, no director, officer or other employee
of Norfolk intends to terminate his employment with Norfolk.
2.21 LABOR DISPUTES; COMPLIANCE. Norfolk has never been a party to
any collective bargaining or other labor Contract. There has never been, there
is not presently pending or existing, and to Shareholders' Knowledge there is
not Threatened, any strike, slowdown, picketing, work stoppage, labor
arbitration, or proceeding in respect of the grievance of any employee,
application or complaint filed by an employee or union with the National Labor
Relations Board or any comparable Governmental Body, organizational activity,
or other labor dispute against or affecting Norfolk or the Facility, and no
application for certification of a collective bargaining agent is pending or,
to Shareholders' Knowledge, is Threatened. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by Norfolk, and no such
action is contemplated by Norfolk. Norfolk has complied in all respects with
all Legal Requirements, and there is no allegation, charge or complaint or
Proceeding pending or Threatened against Norfolk or any of its officers,
directors or employees, relating to employment, equal employment opportunity,
discrimination, harassment, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing, and to Shareholders' Knowledge there is
no basis for any such allegation, charge, complaint, or Proceeding.
2.22 INTELLECTUAL PROPERTY. Part 2.22(a) of the Disclosure Letter
contains a complete and correct list of all patented and registered Proprietary
Rights owned by Norfolk and all pending patent applications and applications
for the registration of other Proprietary Rights owned or filed by Norfolk.
Part 2.22(a) of the Disclosure Letter also contains a complete and correct list
of all trade or corporate names used by Norfolk and a complete and correct list
of all licenses and other rights granted by Norfolk to any third party with
respect to Proprietary Rights and licenses and other rights granted by any
third party to Norfolk. Except as set forth in Part 2.22(a) of the Disclosure
Letter, (a) Norfolk owns and possesses all right, title and interest in and to,
or has a valid license to use, all of the Proprietary Rights necessary for the
operation of Norfolk's business as presently conducted and none of such
Proprietary Rights have been abandoned; (b) no claim by any third party
contesting the validity, enforceability, use or ownership of any such
Proprietary Rights has been made, is currently outstanding or is threatened,
and there is no reasonable basis for any such claim; (c) neither Norfolk nor
any registered agent of Norfolk has received any notices of, nor is Norfolk
aware of any reasonable basis for, an allegation of, any infringement or
misappropriation by, or conflict with, any third
-15-
<PAGE> 16
party with respect to such Proprietary Rights, nor has Norfolk or any
registered agent of Norfolk received any claims of infringement or
misappropriation of or other conflict with any Proprietary Rights of any third
party; and (d) Norfolk has not infringed, misappropriated or otherwise violated
any Proprietary Rights of any third parties, and Shareholders are not aware of
any infringement, misappropriation or conflict which will occur as a result of
the continued operation of Norfolk's business.
2.23 BANK ACCOUNTS. Part 2.23 of the Disclosure Letter contains a
complete and accurate list of each bank at which Norfolk has an account or safe
deposit box, the number of each such account or box, and the names of all
persons authorized to draw on such accounts or to have access to such boxes.
2.24 DISCLOSURE.
(a) No representation or warranty of Shareholders in this
Agreement and no statement in the Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b) There is no fact known to Shareholders that has
specific application to either Shareholders or Norfolk (other than
general economic or industry conditions) and that materially and
adversely affects the assets, business, prospects, financial
condition, or results of operations of Norfolk that has not been set
forth in this Agreement or the Disclosure Letter.
2.25 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
Part 2.25 of the Disclosure Letter, no Shareholder or any Related Person of
Shareholders or of Norfolk has any interest in any property (whether real,
personal, or mixed and whether tangible or intangible) used in or pertaining to
Norfolk's business. No Shareholder and no Related Person of Shareholders or of
Norfolk owns, of record or as a beneficial owner, an equity interest or any
other financial or profit interest in any Person that has (i) had business
dealings or a material financial interest in any transaction with Norfolk, or
(ii) engaged in competition with Norfolk with respect to any line of products
or services of Norfolk (a "Competing Business") in any market presently served
by such Norfolk except for less than one percent of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Part 2.25
of the Disclosure Letter, no Shareholder and no Related Person of Shareholders
or of Norfolk is a party to any Contract with, or has any claim or right
against, Norfolk. All money owed by Norfolk to Related Persons (other than for
salary) are for bona fide debts.
2.26 BROKERS OR FINDERS. Shareholders, Norfolk and their agents
have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
2.27 ADDITIONAL TAX MATTERS.
-16-
<PAGE> 17
(a) The Purchaser will acquire at least 90 percent of the
fair market value of the net assets and at least 70 percent of the
fair market value of the gross assets held by Norfolk immediately
prior to the transaction. For purposes of this representation,
amounts paid by Norfolk to dissenters, amounts paid by Norfolk to the
Shareholders who receive cash or other property, Company assets used
to pay its reorganization expenses and all redemptions and
distributions (except for regular, normal dividends) made by Norfolk
immediately preceding the transfer will be included as assets of
Norfolk held immediately prior to the transaction.
(b) The liabilities of Norfolk assumed by Purchaser and
the liabilities to which Norfolk's assets are subject were incurred by
Norfolk in the ordinary course of its business.
(c) Norfolk and the Shareholders will pay their
respective expenses, if any, incurred in connection with the
transaction.
(d) There has been no significant sale, distribution,
dividend or other disposition of Norfolk's assets other than in the
ordinary course of business within the twelve (12) months preceding
the Closing Date.
(e) Norfolk is not an investment company as defined in
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(f) Norfolk is not under the jurisdiction of a court in a
Title 11 or similar case.
3. REPRESENTATIONS AND WARRANTIES OF ANICOM AND PURCHASER
Anicom and Purchaser jointly and severally represent and warrant to
Shareholders as follows:
3.1 ORGANIZATION AND GOOD STANDING. Each of Anicom and Purchaser
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware, its state of incorporation with full
corporate power and authority to conduct its business as it is now being
conducted. Neither Anicom nor any of its subsidiaries is in violation of any
of the provisions of its certificates of incorporation or bylaws.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement and the Closing Documents constitute
the legal, valid, and binding obligation of Anicom or Purchaser, as
the case may be, enforceable against Anicom or Purchaser, as the case
may be, in accordance with its terms. Anicom and Purchaser, as the
case may be, have the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing
Documents and to perform its obligations under this Agreement and the
Closing Documents.
-17-
<PAGE> 18
(b) Neither the execution and delivery of this Agreement
and the Closing Documents by Anicom or Purchaser, as the case may be,
nor the consummation or performance of any of the Contemplated
Transactions by Anicom or Purchaser, as the case may be, will give any
Person the right to prevent, delay, or otherwise interfere with any of
the Contemplated Transactions pursuant to: (i) any provision of
Anicom's or Purchaser's, as the case may be, Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Purchaser; (iii) any Legal Requirement or Order to
which Anicom or Purchaser, as the case may be, may be subject; or (iv)
any Contract to which Anicom or Purchaser, as the case may be, is a
party or may be bound. Anicom or Purchaser, as the case may be, is
not required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement
by Anicom or Purchaser, as the case may be, or the consummation or
performance of any of the Contemplated Transactions by Anicom or
Purchaser, as the case may be.
3.3 CAPITALIZATION.
(a) The authorized capital stock of Anicom consists of
(i) 10,000,000 shares of common stock, $.001 par value per share, of
which 6,281,928 shares were issued and outstanding as of August 1,
1996, and (ii) 1,000,000 shares of preferred stock, $.01 par value per
share, none of which are outstanding. All of the issued and
outstanding shares of capital stock of Anicom have been duly
authorized and validly issued and are fully paid and nonassessable.
(b) The Purchase Shares and Escrow Shares to be issued
pursuant to the Merger will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable.
(c) Purchaser is a wholly-owned subsidiary of Anicom.
3.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Anicom or Purchaser, as the case may be, and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Anicom's
and Purchaser's Knowledge, no such Proceeding has been Threatened.
3.5 BROKERS OR FINDERS. Anicom or Purchaser, as the case may be,
and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3.6 SEC FILINGS; ANICOM FINANCIAL STATEMENTS.
(a) Since February 22, 1995, Anicom has filed all forms,
reports and documents required to be filed with the SEC pursuant to
the federal securities laws and the SEC rules and regulations
thereunder (the "Anicom SEC Reports"). As of their respective dates,
the Anicom SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and the
-18-
<PAGE> 19
rules and regulations of the SEC thereunder applicable to such Anicom
SEC Reports and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Anicom SEC Reports (the "Anicom Financial") (i) complies as to form in
all material respects with the published rules and regulations of the
SEC with respect thereto, (ii) was prepared in accordance with GAAP
throughout the periods involved (except as may be indicated in the
notes thereto) and (iii) fairly presented the consolidated financial
position of Anicom and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements do not include footnote disclosure of the type associated
with audited financial statements and were or are subject to normal
and recurring year-end adjustments which were not or are not expected
to be material in amount.
3.7 ADDITIONAL TAX MATTERS.
(a) Immediately prior to the Merger, Anicom will be in
control of Purchaser within the meaning of Code Section 368(c)(1).
(b) Neither Anicom nor Purchaser is an investment company
as defined in Code Section 368(a)(2)(F).
3.8 NO UNDISCLOSED LIABILITIES. Neither Anicom nor any of its
subsidiaries has any material liabilities or obligations of any nature (whether
absolute, accrued or contingent) other than liabilities or obligations
reflected or reserved against in the latest Anicom Financial filed with the
Anicom SEC Reports and current liabilities incurred in the ordinary course of
business since the date of such last Financial in the Anicom SEC Reports.
3.9 NO MATERIAL ADVERSE CHANGE. Since the date of the last Anicom
SEC Report, there has not been any material adverse change in the business,
operations, properties, prospects, assets or condition of Anicom or any event,
condition or contingency that is likely to result in such a material adverse
change.
3.10 DISCLOSURES.
(a) No representation or warranty of Anicom or Purchaser
in this Agreement omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to Anicom or Purchaser that
has specific application to either Anicom or Purchaser or Norfolk
(other than general economic or industry conditions) and that
materially and adversely affects the assets, business,
-19-
<PAGE> 20
prospects, financial condition, or results of operations of Anicom or
Purchaser that has not been set forth in this Agreement.
4. POST-CLOSING COVENANTS
4.1 TAX COMPLIANCE. After Closing, the Parties agree to take such
further action as may be reasonably necessary to qualify the Merger as a
reorganization under the provisions of Section 368(a)(2)(D) of the Code. In
furtherance of the objective set forth in this Section 4.1, Shareholders
covenant that they are acquiring the Purchase Shares for investment purposes.
Shareholders agree not to sell, hedge, put or enter into any risk mitigation
device or otherwise dispose of the Purchase Shares for a period of two (2)
years after Closing, unless such Shareholder(s) provide(s) to Anicom and
Purchaser with a private letter ruling or an opinion of tax counsel (which tax
counsel shall be mutually acceptable to the parties) which ruling or opinion
shall state that such sale of Purchase Shares would not disqualify the Merger
as a tax-free reorganization under Section 368(a)(2)(D) of the Code and, in the
case of an opinion, the form of the opinion shall be acceptable to each of the
parties, in their sole discretion.
4.2 REGISTRATION. Shareholders may request registration of all
Purchase Shares at any time permitted by the Registration Rights Agreement
provided after such registration, the Shareholders continue to be bound by the
terms of this Agreement.
4.3 REQUIRED APPROVALS. After Closing, Shareholders will
cooperate with Anicom or Purchaser, as the case may be, in connection with any
filings required by Legal Requirements to be made by Anicom or Purchaser, as
the case may be, in furtherance of the Contemplated Transactions.
4.4 TREATMENT OF EMPLOYEES. For purposes of determining
eligibility and vesting under Anicom's employee pension plans and benefits
under Anicom's sick leave and vacation policies, Anicom shall credit each
Norfolk employee on the date of the Merger with all periods of service
completed by that employee for Norfolk prior to the Merger to the extent such
service was credited under the most comparable Norfolk benefit plan or policy
prior to the Merger.
5. INDEMNIFICATION; REMEDIES
5.1 SURVIVAL. All representations and warranties in this
Agreement, the Disclosure Letter, and any other certificate or document
delivered pursuant to this Agreement will survive the Merger until the second
anniversary of the Effective Date, except that (a) the representations and
warranties in Sections 2.11, 2.13, 2.19, 2.21 and 2.27 will survive, as they
relate to claims by third parties or claims by Purchaser and/or Anicom arising
out of such claims by third parties, until all applicable statutes of
limitation with respect to claims that could be made by such third parties have
elapsed, and (b) all representations and warranties in Section 2.3 shall
survive indefinitely. Anicom or Purchaser, as the case may be, shall be
entitled to indemnification under this Section 5 notwithstanding any
investigation Anicom or Purchaser has conducted in connection with this
transaction.
5.2 INDEMNIFICATION AND REIMBURSEMENT BY SHAREHOLDERS.
-20-
<PAGE> 21
(a) Subject to the terms of Section 5.1 and Sections 5.4
through 5.9 inclusive, Shareholders, jointly and severally, shall indemnify and
hold harmless Purchaser and Anicom and its employees, officers, directors,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons"), and shall reimburse the Indemnified Persons, for any
liability, claim (asserted by a third-party), damage or expense (including
costs of investigation and defense and reasonable attorneys' fees), whether or
not involving a third-party claim (collectively, "Damages"), arising from or in
connection with (a) any Breach of any representation or warranty made by
Shareholders in or pursuant to this Agreement, the Disclosure Letter or any
other certificate or document delivered by Shareholders pursuant to this
Agreement, or (b) any Breach by Shareholders of any covenant or obligation of
Shareholders in this Agreement.
(b) Notwithstanding any language to the contrary set
forth herein, Shareholders shall jointly and severally indemnify and hold
harmless Purchaser and Anicom for any and all Taxes, Claims, Damages or other
costs and expenses relating to or arising out of Norfolk's failure to timely
file that certain IRS Form 5500 relating to Norfolk's cafeteria plan for the
short plan year of 9/1/94 to 5/31/95 which indemnity shall not be subject the
Deductible (as defined in Section 5.7) or the Cap (as defined in Section 5.8).
(c) Notwithstanding anything to the contrary set forth
herein, Shareholders shall not be obligated to indemnify Anicom or Purchaser,
nor shall they otherwise be liable to Anicom or Purchaser, for any actual,
consequential or incidental damages arising out of claims asserted by customers
for product liability claims whether such claims are based on breach of
contract, tort or otherwise (collectively, "Product Claims"). The Parties
further acknowledge and agree that the Company and the Shareholders make no
representation or warranty in this Agreement with respect to any Product Claims
except as follows: no Product Claim is pending or, to Shareholders' knowledge,
Threatened against the Company on or prior to the date hereof.
5.3 INDEMNIFICATION AND REIMBURSEMENT BY ANICOM AND PURCHASER.
Anicom and Purchaser shall jointly and severally indemnify and hold harmless
Shareholders, and shall reimburse Shareholders, for any Damages arising from or
in connection with (a) any Breach of any representation or warranty made by
Anicom or Purchaser in this Agreement or in any certificate delivered by Anicom
or Purchaser pursuant to this Agreement, or (b) any Breach by Anicom or
Purchaser of any covenant or obligation of Anicom or Purchaser in this
Agreement.
5.4 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under
Section 5.2 or 5.3 of notice of a claim against it ("Claim"), such
indemnified party shall, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying
party of such Claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may
have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
-21-
<PAGE> 22
(b) If any Claim referred to in Section 5.4(a) is made
against an indemnified party and it gives notice to the indemnifying
party of such Claim, the indemnifying party will be entitled to
participate in the defense of such Claim and, to the extent that it
wishes (unless (i) the indemnifying party is also a party to such
Claim and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Claim and provide indemnification
with respect to such Claim), to assume the defense of such Claim with
counsel satisfactory to the indemnified party and, after notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such Claim, the indemnifying party will not, as
long as it diligently conducts such defense, be liable to the
indemnified party under such Section for any fees of other counsel or
any other expenses with respect to the defense of such Claim in each
case subsequently incurred by the indemnified party in connection with
the defense of such Claim, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a
Claim, (a) it will be conclusively established for purposes of this
Agreement that the claims made in that Claim are within the scope of
and subject to indemnification; (b) no compromise or settlement of
such claims may be effected by the indemnifying party without the
indemnified party's consent unless (i) there is no finding or
admission of any violation of Legal Requirements or any violation of
the rights of any Person and no effect on any other Claims that may be
made against the indemnified party, and (ii) the sole relief provided
is monetary damages that are paid in full by the indemnifying party;
and (c) the indemnifying party will have no liability with respect to
any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of a Claim and
the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Claim, the indemnifying party
will be bound by any determination with respect to said Claim or any
compromise or settlement effected by the indemnified party, provided
that the indemnified party shall not settle any such Claim without the
prior consent of the indemnifying party (which consent may not be
unreasonably withheld).
(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable probability
that a Claim may adversely affect it or its Related Persons other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Claim, but the indemnifying party
will not be bound by any determination of a Claim so defended or any
compromise or settlement effected without its consent (which consent
may not be unreasonably withheld).
5.5 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.
5.6 ESCROW. Any amounts owed by Shareholders to Anicom or
Purchaser pursuant to this Agreement shall first be subject to the terms of the
Escrow Agreement.
-22-
<PAGE> 23
5.7 DEDUCTIBLE. Shareholders shall not be required to indemnify
and hold harmless Anicom and Purchaser pursuant to this Agreement for any
Damages except to the extent such Damages (a) have a value, in the aggregate,
in excess of the "Deductible" and (b) have not been satisfied through a
Purchase Price Adjustment. The "Deductible" shall equal $70,680. (As an
example of the application of the Deductible, if Anicom or Purchaser sustained
a Damage in the amount of $125,000, Shareholders would only be required to
indemnify and hold harmless Anicom or Purchaser in the amount of $54,320).
5.8 CAP ON SHAREHOLDERS INDEMNITY. Shareholder's obligation(s) to
indemnify and hold harmless Anicom and Purchaser pursuant to this Agreement
shall not exceed $4,000,000 in the aggregate (the "Cap"). Each Shareholder's
respective liability to provide indemnification under this Agreement shall not
exceed his or her pro rata portion of the Cap which shall be determined based
upon the percentage interest such Shareholder has in the Merger Consideration
(as set forth on Part 1.2(d) of the Disclosure Letter) (for example, Hall's
total potential liability shall be 2% of $4 million, or $80,000).
5.9 RECOURSE AGAINST INSURANCE. Anicom and Purchaser acknowledge
and agree that none of the Shareholders shall be liable to indemnify Anicom or
Purchaser to the extent that such damage is satisfied by one or more insurance
policies which benefit Anicom or Purchaser.
6. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified then:
"BEST EFFORTS" -- the good faith efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure
that such result is achieved as expeditiously as possible.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement will be deemed to have
occurred if there is or has been (a) any breach of, or any failure to perform
or comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim by a third party alleging an occurrence or
circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other provision.
"CLOSING AGREEMENTS" -- the Escrow Agreement, Merger Documents,
employment agreements with each of Hurley and Mobley and the registration
rights agreement, each in such form as has been delivered to Willcox & Savage
P.C., as escrow agent pursuant to that certain Closing Escrow Agreement of even
date among the parties hereto and Willcox & Savage P.C.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CODE" -- the Internal Revenue Code of 1986, as amended, or any
successor law, and rules and regulations issued by the IRS pursuant to, or
promulgated under, the Internal Revenue Code or any successor law.
-23-
<PAGE> 24
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including:
(i) the merger of Norfolk with and into Purchaser;
(ii) the execution, delivery, and performance of the
Closing Agreements and the Closing Documents; and
(iii) the performance by Purchaser and Shareholders of
their respective covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) which is
legally binding.
"DISCLOSURE LETTER" -- the disclosure letter delivered by Shareholders
to Anicom concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE" -- any claim, lien, pledge, charge, security interest,
equitable interest, option, right of first refusal or preemptive right,
condition, or other restriction of any kind, including any restriction on use,
voting (in the case of any security), transfer, receipt of income, or exercise
of any other attribute of ownership.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended, or any successor law.
"FACILITIES" -- any real property, leaseholds, or other interests
currently or formerly owned or operated by Norfolk (or any predecessor Person)
and any buildings, plants, or structures currently or formerly owned, leased,
or operated by Norfolk (or any predecessor Person).
"GAAP" -- generally accepted accounting principles, applied on a
consistent basis.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(i) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
-24-
<PAGE> 25
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or other entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled or purporting to
exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature.
"HAZARDOUS SUBSTANCE" -- any substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Legal Requirement, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IRS" -- the United States Internal Revenue Service.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(i) such individual is actually aware of such fact or
other matter; or
(ii) in the event such individual is or was an officer or
director of Norfolk, a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the
course of such officer or director fulfilling his or her day to day
obligations and duties to Norfolk.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
or other constitution, ordinance, regulation, statute, treaty, or other law
adopted, enacted, implemented, or promulgated by or under the authority of any
Governmental Body or by the eligible voters of any jurisdiction, and any
agreement, approval, consent, injunction, judgment, license, order, or permit
by or with any Governmental Body or to which Shareholders or Norfolk is a party
or by which Shareholders or Norfolk is bound.
"MATERIAL ADVERSE EFFECT" -- any adverse change in the properties,
financial condition, business or results of operations of the subject company
and/or any of its subsidiaries, as the case may be, which is material to such
company and/or its subsidiaries, taken as a whole, as the case may be.
-25-
<PAGE> 26
"ORDER" -- any award, injunction, judgment, order, ruling, subpoena,
or verdict or other decision entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(i) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; and
(ii) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of
Persons exercising similar authority) and does not require any other
separate or special authorization of any nature.
"ORGANIZATIONAL DOCUMENTS" -- (i) the articles or certificate of
incorporation and the bylaws of a corporation; (ii) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (iii) any amendment to any of the foregoing.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"PROCEEDING" -- any suit, litigation, arbitration, hearing, audit,
investigation, or other action (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"PROPRIETARY RIGHTS" -- all proprietary information of Norfolk,
including all patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); all
trademarks, service marks, trade dress, trade names and corporate names; all
registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the foregoing; all trade
secrets, confidential information, ideas, formulae, compositions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, improvements, proposals,
technical and computer data, documentation and software, financial, business
and marketing plans, and customer and supplier lists/accounts and related
information and all other proprietary rights relating to the production, sale
or service of products and the conduct of Norfolk's business.
"RELATED PERSON" -- with respect to a particular individual:
(i) each other member of such individual's Family; and
(ii) any Person that is directly or indirectly controlled
by any one or more members of such individual's Family.
-26-
<PAGE> 27
With respect to a specified Person other than an individual:
(i) any Person that, directly or indirectly, controls, is
controlled by, or is under common control with such specified Person;
and
(ii) each Person that serves as a director, executive
officer, general partner, executor, or trustee of such specified
Person (or in a similar capacity);
For purposes of this definition, the "Family" of an individual includes (i)
such individual, (ii) the individual's spouse and former spouses, (iii) any
lineal ancestor or lineal descendant of the individual, or (iv) a trust for the
benefit of the foregoing. A Person will be deemed to control another Person,
for purposes of this definition, if the first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management
policies of the second Person, (x) through the ownership of voting securities,
(y) through common directors, trustees or officers, or (z) by contract or
otherwise.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SEC" -- Securities and Exchange Commission.
"SECURITIES ACT" -- the Securities Act of 1933, as amended, or any
successor law including the rules and regulations promulgated thereunder.
"TAX" -- any tax (including any income tax, capital gains tax,
value-added tax, transfer tax, sales tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty), deficiency,
or other fee, and any related charge or amount (including any fine, penalty, or
interest), imposed, assessed, or collected by or under the authority of any
Governmental Body.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made and received (orally or in writing) or any notice has been given and
received (orally or in writing), or if any other event has occurred or any
other circumstances exists, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future. 7.
GENERAL PROVISIONS
7. GENERAL PROVISIONS
-27-
<PAGE> 28
7.1 EXPENSES. Norfolk, on the one hand, and Anicom and Purchaser,
on the other, will each bear their own expenses incurred in connection with the
Contemplated Transactions which expenses in the case of Norfolk's legal fees
and legal expenses will be paid contemporaneously herewith.
7.2 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given (a) when delivered by hand; (b) when sent by telecopier,
provided that a copy is mailed by U.S. certified mail, return receipt
requested; (c) three days after sent by Certified U.S. Mail, return receipt
requested; or (d) one day after deposit with a nationally recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Shareholders: in each case, with a copy to:
Ronald A. Hurley Willcox & Savage P.C.
6000 Manor Park Terrace 1800 NationsBank Center
Glen Allen, Virginia 23060 One Commercial Place
Norfolk, Virginia 23510-2197
Robert H. Jennings Attention: Ross C. Reeves, Esq.
1010 Seville Drive Thomas C. Inglima, Esq.
Chesapeake, Virginia 23320 Telecopy No. (757) 628-5566
Stephen M. Mobley -and-
2204 Margaret Drive
Virginia Beach, Virginia 23456 John C. McLemore, Esq.
Livesay, McLemore and Isley P.C.
Vonda M. Hall 301 Columbia Street 3705
Appalachian Court P.O. Box 1137
Virginia Beach, Virginia 23452 Portsmouth, Virginia 23705
Telecopy No.: (757) 397-0699
Anicom and Purchaser: with a copy to:
Anicom-Southeast, Inc. Katten Muchin & Zavis
-or- 525 West Monroe Street
Anicom, Inc. Suite 1600
6133 N. River Road Chicago, IL 60661-3693
Suite 410 Attention: Jeffrey R. Patt, Esq.
Rosemont, IL 60018 Anthony L. Wanger, Esq.
Attention: Scott C. Anixter
Telecopy No.: (312) 902-1061 Telecopy No.: (847) 518-8791
7.3 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of the Contemplated Transactions.
-28-
<PAGE> 29
7.4 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power,
or privilege.
7.5 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes
all prior oral or written agreements between the parties with respect to its
subject matter and constitutes the complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement executed by all
parties hereto.
7.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party
may assign any of its rights under this Agreement without the prior consent of
the other parties. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the
parties to this Agreement any direct or incidental legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement.
7.7 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
7.8 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Sections" refer to the
corresponding Sections of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
7.9 GOVERNING LAW. This Agreement will be governed by and
construed under the laws of the State of Illinois without regard to conflicts
of laws principles and the parties hereto irrevocably consent to the personal
jurisdiction of any state or Federal court of competent subject matter
jurisdiction located in Cook County, Illinois.
7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
7.11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.
-29-
<PAGE> 30
[Remainder of this Page Intentionally Left Blank]
-30-
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Merger Agreement as
of the date first written above.
ANICOM, INC. NORFOLK WIRE & ELECTRONICS, INC.
By:_______________________________ By:________________________________
Donald C. Welchko Ronald A. Hurley
Chief Financial Officer Chief Executive Officer
and Secretary
ANICOM-SOUTHEAST, INC. SHAREHOLDERS:
By:_______________________________ _________________________________
Donald C. Welchko Ronald A. Hurley
Chief Financial Officer
_________________________________
Robert H. Jennings
_________________________________
Stephen M. Mobley
_________________________________
Vonda M. Hall
-31-
