UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: July 25, 1997
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 1000, Rosemont, Illinois 60018
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 518-8700
<PAGE>
Item 2. Acquisition or Disposition of Assets.
(a) On July 11, 1997, substantially all of the assets of the Energy Electric
Cable Division (the "Division") of Connectivity Products Incorporated ("CPI" or
"Seller") were acquired by a wholly-owned subsidiary of Registrant. The total
acquisition consideration consisted of $10,000,000 in cash, $17,000,000 in
retirement of Seller's bank debt, and 190,476 shares of Registrant's common
stock, $.001 par value per share ("Common Stock"). Registrant also granted to
CPI certain registration rights with respect to the 190,476 shares of Common
Stock.
All cash and consideration from Registrant in this transaction was paid out of
Registrant's existing working capital and from borrowings under Registrant's
credit facility with Harris Trust and Savings Bank, LaSalle National Bank and
NBD First Chicago. All shares of Common Stock issued in this transaction were
issued out of Registrant's authorized but unissued Common Stock.
Concurrently therewith, Registrant and CPI entered into a Supply Agreement dated
July 11, 1997 whereby Registrant agreed to purchase certain targeted amounts of
wire and cable products from CPI. The term of the Supply Agreement is five
years.
(b) Certain of the assets acquired pursuant to this transaction constitute
equipment or other physical property used by the Division 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 Statement and Exhibits.
(a) Financial Statements of Businesses Acquired.
Audited financial statements of CPI 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 date that this Report on Form 8-K must be
filed.
(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 date that this Report
on Form 8-K must be filed.
<PAGE>
(c) Exhibits.
2.1 Asset Purchase Agreement, by and among Anicom, Inc., Reel
Acquisition Corp., and Connectivity Products
Incorporated, dated as of July 11, 1997. Registrant
agrees to furnish supplementally to the Commission, upon
request, a copy of any omitted schedule.
<PAGE>
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: July 25, 1997 By: /s/ SCOTT C. ANIXTER
Scott C. Anixter
Chief Executive Officer
<PAGE>
Exhibit Index
Sequential
Exhibit # Item Page Number
_________ ____________________________________________________ ___________
2.1 Asset Purchase Agreement, by and among Anicom, Inc.,
Reel Acquisition Corp., and Connectivity Products
Incorporated, dated as of July 11, 1997. Registrant
agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted schedule. 6
EXHIBIT 2.1
================================================================================
ASSET PURCHASE AGREEMENT
================================================================================
ASSET PURCHASE AGREEMENT
by and between
ANICOM, INC.
("Parent"),
REEL ACQUISITION CORP.
("Purchaser"),
and
CONNECTIVITY PRODUCTS INCORPORATED
("Seller")
Dated July 11, 1997
<PAGE>
TABLE OF CONTENTS
Page
PARTIES AND RECITALS 1
ARTICLE I CERTAIN DEFINITIONS 1
Section 1.01. Definitions 1
ARTICLE II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
LIABILITIES 7
Section 2.01. Purchase and Sale of Assets; Assumption of
Liabilities 7
Section 2.02. Purchase Price 7
Section 2.03. Registration Rights 9
Section 2.04. Purchase Price Adjustment 9
Section 2.05. Allocation of Purchase Price 11
ARTICLE III CLOSING AND RELATED MATTERS 11
Section 3.01. Time and Place of Closing 11
Section 3.02. Purchaser's Deliveries at the Closing 12
Section 3.03. Seller's Deliveries at the Closing 13
Section 3.04. Escrow Agreement 14
Section 3.05. Non-Assignable Instruments 14
Section 3.06. Interdependence 14
Section 3.07. Further Assurances 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 15
Section 4.01. Corporate Organization and Good Standing 15
Section 4.02. Authorization, Execution and Binding Effect 15
Section 4.03. Consents and Approvals 16
Section 4.04. Compliance With Laws 16
Section 4.05. Financial Statements; Accounts Receivable;
Inventories 16
Section 4.06. Absence of Certain Changes 17
Section 4.07. Legal Proceedings 18
Section 4.08. Title to Properties and Related Matters 18
Section 4.09. Employee Benefit Plans; ERISA 19
Section 4.10. Taxes and Tax Returns 21
Section 4.11. Contracts 21
Section 4.12. Patents, Trademarks, Trade Names, etc. 22
Section 4.13. Condition of Assets 23
Section 4.14. Insurance 23
Section 4.15. Environmental Matters 23
Section 4.16. Finders 24
Section 4.17. Employees; Labor Controversies 24
Section 4.18. Customers 25
Section 4.19. Suppliers 25
Section 4.20. Sales Representatives 25
Section 4.21. Interest in Customers, etc. 25
Section 4.22. Operation of Business Prior to Closing 26
Section 4.23. Completeness of Warranties 26
<PAGE>
Page
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND PARENT 26
Section 5.01. Corporate Organization 26
Section 5.02. Authorization, Execution and Binding Effect 26
Section 5.03. Consents and Approvals 27
Section 5.04. Finders 27
Section 5.05. Legal Proceedings 27
Section 5.06. Capitalization 28
Section 5.07. SEC Filings; Offer Documents 28
Section 5.08. Financial Statements 28
Section 5.09. Absence of Certain Changes 29
Section 5.10. Completeness of Warranties 29
ARTICLE VI COVENANTS 29
Section 6.01. Post-Closing Cooperation 29
Section 6.02. Records 30
Section 6.03. Employee and Related Matters 30
ARTICLE VII SURVIVAL AND INDEMNIFICATION 31
Section 7.01. Survival of Representations and Warranties,
etc. 31
Section 7.02. Indemnification 32
Section 7.03. Procedure for Indemnification 32
Section 7.04. Limitation on Seller's Indemnification
Obligations 33
Section 7.05. Use of Escrowed Parent Stock 34
Section 7.06. Limitation on Purchaser's Indemnification
Obligations 34
Section 7.07. Sole Remedy 34
Section 7.08. Dispute Resolution 34
Section 7.09. Special Notice 35
Section 7.10. Environmental Matters 35
<PAGE>
Page
ARTICLE VIII MISCELLANEOUS 36
Section 8.01. Headings; Grammatical Usage 36
Section 8.02. Notices 37
Section 8.03. Assignment; Third Parties 37
Section 8.04. Expenses and Transfer Taxes 38
Section 8.05. Preamble; Preliminary Recitals 38
Section 8.06. Reliance 38
Section 8.07. Obligation of Parent; Joint and Several
Obligations 38
Section 8.08. Complete Agreement 38
Section 8.09. Amendments and Waivers 39
Section 8.10. Counterparts 39
Section 8.11. Governing Law 39
Section 8.12. Severability 39
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated July 11, 1997, is entered into by and among (1)
ANICOM, INC., a Delaware corporation ("Parent"), (2) REEL ACQUISITION CORP., a
Delaware corporation and a wholly-owned subsidiary of Parent ("Purchaser"), and
(2) CONNECTIVITY PRODUCTS INCORPORATED, a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller, through its Energy Electric Cable Division, is engaged in the
wire and cable distribution business (the "Division"); and
WHEREAS, Purchaser is a wholly-owned subsidiary of Parent and was formed to
consummate the transactions described herein; and
WHEREAS, the parties desire that Purchaser purchase from Seller, and that Seller
sell to Purchaser, the assets of the Division, and that Purchaser assume the
liabilities of the Division, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, Seller and Parent have each heretofore filed with the Antitrust
Division of the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice a Notification and Report
form as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, in respect of the transactions contemplated hereby and the waiting
period under such Act has heretofore expired or otherwise terminated;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, conditions, agreements, and undertakings
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Definitions
The following terms, as used herein, shall have the meanings set forth below:
A. "Affiliate" shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such other
Person.
B. "Agreement" shall mean this Asset Purchase Agreement, including the Exhibits
and Schedules hereto.
<PAGE>
C. "Acquired Assets" shall mean the following properties and assets of Seller
used or held for future use by the Division, in each case as the same shall
exist on the Closing Date, but not including the Excluded Assets:
(i) all trade accounts receivable of the Division;
(ii) all inventories of the Division;
(iii) Seller's leasehold interests in the real property and facilities described
on Schedule 4.08(b) hereto, together with all of Seller's interest in and to all
improvements, buildings and structures thereon and all fixtures and
appurtenances thereto;
(iv) all of the furniture, fixtures and equipment owned by Seller and located in
the facilities described on Schedule 4.08(b) hereto (and any of the foregoing
used by the Division in the ordinary course of business but not located in said
facilities), and Seller's leasehold interest in any such furniture, fixtures and
equipment leased by Seller and located in such facilities;
(v) all cash (including cash held in the Division's bank accounts), marketable
securities, deposits and prepaid assets and expenses reflected on the Closing
Balance Sheet (plus or minus any amounts deposited in or withdrawn from such
accounts from and after July 1, 1997 and prior to the Closing as described in
Section 4.22 hereof);
(vi) all of Seller's rights and claims under all of the Division Contracts other
than the Division Contracts listed on Schedule 1.01(l) hereto;
(vii) all of the office, operating and other supplies of the Division;
(viii) all of Seller's common law and statutory rights in, and the goodwill
associated with, the name "Energy Electric Cable" and the Division Intellectual
Property;
(ix) all books and records of Seller to the extent they relate exclusively to
the Division;
(x) all claims, demands, judgments and rights of set-off of the Division;
(xi) to the extent transferable, all licenses, authorizations and permits issued
by any governmental or regulatory agency relating exclusively to the Division,
and all applications therefor pending or filed; and
(xii) all other assets owned by Seller and used exclusively by the Division in
the ordinary course of business as presently conducted.
<PAGE>
D. "Assumed Liabilities" shall mean, collectively, any and all debts,
obligations or liabilities of Seller (other than Excluded Liabilities) that: (i)
are outstanding on the Closing Date and that are reflected on the March Balance
Sheet (whether or not arising in the ordinary course of business) or arose or
arise in the ordinary course of business in connection with the operation of the
Division after the date of the March Balance Sheet;
(ii) arise out of or relate to any event occurring after the Closing in
connection with the use or ownership of any of the Acquired Assets after the
Closing;
(iii) arise out of or relate to any Environmental Matters, but only to the
extent so provided by Section 7.10 hereto; or
(iv) relate to vacation benefits (not to exceed $135,000) for the Continued
Employees accruing on or prior to the Closing Date.
E. "Code" shall mean the Internal Revenue Code of 1986, as amended.
F. "Coopers" shall mean Coopers & Lybrand L.L.P.
G. "Division Financial Statements" shall mean those unaudited financial
statements of the Division that are listed on Schedule 4.05 hereto.
H. "Environmental Laws" shall mean all foreign, federal, state, local and
municipal statutes, ordinances, and other laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, chemicals, or
industrial, hazardous, or toxic materials or wastes into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface, or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial, hazardous, or
toxic materials or wastes, or any regulation, rule, code, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder (including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act of 1976, 42.
U.S.C. Sec. 6901 et seq. ("RCRA"), the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sec. 11001 et seq., the Clean Air Act, 42 U.S.C.
Sec. 7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251
et seq., the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. Sec. 300f et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801, all as amended, and any regulations,
rules, directives, ordinances adopted or publications promulgated pursuant
thereto).
I. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
J. "Escrow Agent" shall mean Harris Trust & Savings Bank.
K. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
<PAGE>
L. "Excluded Assets", collectively, shall mean:
(i) all assets and properties of Seller not used primarily by the Division;
(ii) all rights and claims (including, without limitation, refunds and claims
thereto) of Seller with respect to the Excluded Liabilities;
(iii) any and all minute books, stock transfer records, corporate seals and tax
returns of Seller and all other books and records of Seller not used primarily
by the Division;
(iv) all cash on hand and in banks, prepaid expenses and marketable securities
held by Seller, other than those reflected on the books of the Division or the
Closing Balance Sheet;
(v) all claims for refunds of Taxes paid by Seller;
(vi) all rights of Seller under this Agreement and the agreements and
instruments delivered to Seller by Purchaser pursuant to this Agreement;
(vii) all rights of Seller under the Stock Redemption and Purchase Agreement;
and
(vii) all other assets of Seller listed on Schedule 1.01(l) hereto.
M. "Excluded Liabilities" shall mean any and all debts, obligations or
liabilities of Seller:
(i) arising on or prior to March 31, 1997 but that are not reflected or reserved
for on the March Balance Sheet, except as expressly included in the definition
of "Assumed Liabilities";
(ii) arising after March 31, 1997 other than in the ordinary course of business
in connection with the operation of the Division.
(iii) in respect of indebtedness for borrowed money;
(iv) relating to Taxes payable by Seller in respect of periods ending on or
prior to the Closing Date, including without limitation Taxes for income earned
by Seller or property owned by Seller on or prior to the Closing Date and those
matters set forth on Schedule 4.10(a) hereto;
(v) relating to the payment of severance benefits arising out of any agreement,
between Seller and any of its employees or any other person;
(vi) relating to or arising from the Stock Redemption and Purchase Agreement;
(vii) relating to or arising from the Excluded Assets;
(viii) arising out of or relating to any Environmental Matters, but only to the
extent so provided by Section 7.10 hereto;
<PAGE>
(ix) arising out of or relating to employment-related claims with respect to
employees, including claims relating to the conduct of such employees (in each
case to the extent relating to periods prior to the Closing) or former employees
of the Division, including without limitation any claims by employees or former
employees of the Division alleging wrongful acts by Seller, other than as
reflected on the March Balance Sheet or as otherwise included in the definition
of "Assumed Liabilities"; and
(x) arising out of or relating to those matters set forth on Schedule 4.07
hereto.
N. "GAAP" shall mean generally accepted accounting principles, applied on a
basis consistent with past practice.
O. "Knowledge", with respect to Seller, shall mean the actual knowledge after
due inquiry of James S. Harrington, Gregory C. Kowert, Duane A. Gawron, Donald
T. Pascal and James Hopkins.
P. "March Balance Sheet" shall mean the balance sheet of the Division as of
March 31, 1997, included in the Division Financial Statements.
Q. "Material Adverse Effect" shall mean, with respect to any Person, or to the
Division individually, any change(s), effect(s), circumstance(s) or condition(s)
that, individually or in the aggregate, are or may reasonably be expected to be
materially adverse to (i) the assets, business, operations, income or condition
(financial or otherwise) of such Person or such Person and its Affiliates taken
as a whole, or the transactions contemplated by this Agreement or (ii) the
ability of such Person to perform its obligations under this Agreement.
R. "Net Asset Value" shall mean, with respect to the Division, the Acquired
Assets minus the Assumed Liabilities, calculated in accordance with GAAP.
S. "Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation or governmental
entity (or any department, agency or political subdivision thereof).
T. "Securities Act" shall mean the Securities Act of 1933, as amended.
U. "SEC" shall mean the United States Securities and Exchange Commission.
V. "Taxes" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
<PAGE>
W. "Tax Return" shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
X. "Transaction Documents" shall mean each of the agreements, documents,
certificates and instruments being delivered at the Closing by Seller, Purchaser
or Parent, as the case may be, pursuant to this Agreement.
Y. "Transfer Taxes" shall mean all sales, use, value added, transfer, and
similar taxes or fees imposed by any governmental entity in connection with the
transfers carried out pursuant to this Agreement.
The following additional terms are defined in the Sections of this Agreement set
forth below:
Term Section
"AAA" 7.08
"Adjusted Purchase Price" 2.04
"Allocation Schedule" 2.05
"Banks" 2.02
"Basket Amount" 7.04
"Cap Amount" 7.04
"Cash Purchase Price" 2.02
"CERCLA" 1.01
"Closing" 3.01
"Closing Balance Sheet" 2.04
"Closing Date" 3.01
"Closing Date Purchase Price" 2.02
"Continued Employees" 6.03
"Division" Recitals
"Division Contracts" 4.11
"Division Intellectual Property" 4.12
"Employee Benefits Plans" 4.09
"Encumbrances" 4.08
"Environmental Matters" 7.10
"Escrow Agreement" 3.04
"Gawron Employment Agreement" 2.02
"Indemnifiable Loss" 7.02
"Indemnifiable Losses" 7.02
"Indemnifying Party" 7.03
"Indemnitee" 7.03
"Independent Accounting Firm" 2.04
"Intra-Seller Transactions" 4.21
"Loan Satisfaction Amount" 2.02
<PAGE>
Term Section
"Material Consents" 3.03
"Net Asset Value Statement" 2.04
"Novation" 2.02
"Parent" Preamble
"Permissible Exceptions" 4.08
"Purchase Price" 2.02
"Purchaser" Preamble
"Parent's SEC Filings" 5.07
"Parent Stock" 2.02
"Records" 6.02
"RCRA" 1.01
"Registration Rights Agreement" 2.03
"Seller" Preamble
"Shared Services and
Facilities Agreement" 3.02
"Stock Redemption and
Purchase Agreement" 4.11
"Supply Agreement" 3.02
"Survival Period" 7.01
"Third Party Claim" 7.03
"Valuation Price" 2.02
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.01. Purchase and Sale of Assets; Assumption of Liabilities
(a) Upon the terms and subject to the conditions hereof, at the Closing, (i)
Seller shall sell, convey, assign, transfer, and deliver to Purchaser and
Purchaser's permitted successors and assigns forever, all of the Acquired
Assets, free and clear of all Encumbrances other than Permissible Exceptions,
and (ii) Purchaser shall purchase, acquire and accept all of the Acquired Assets
and assume the Assumed Liabilities.
(b) Purchaser shall not assume any of the Excluded Liabilities, and Seller shall
and does hereby retain responsibility for such liabilities.
Section 2.02. Purchase Price
(a) The aggregate purchase price for the Acquired Assets shall be $29,000,000
(the "Closing Date Purchase Price"), subject to adjustment as hereinafter
provided in Section 2.04 and payable by Purchaser as follows, plus the amount,
if any, payable by Purchaser pursuant to paragraph (b) of this Section 2.02
(collectively, the "Purchase Price"):
<PAGE>
(i) $10,000,000 (the "Cash Purchase Price") shall be payable at the Closing to
Seller, in same day funds, by a bank or certified check or by wire transfer to
an account or accounts in the United States designated in writing by Seller not
later than three business days prior to the Closing Date;
(ii) $17,000,000.00 (the "Loan Satisfaction Amount") shall be payable at the
Closing either (x) by Purchaser's delivery of such amount to Seller's bank
lenders identified on Schedule 2.02 hereto (the "Banks"), on behalf of Seller in
repayment (to the extent of such amount) of Seller's obligations to the Banks,
such delivery to be made at Closing, in same day funds, by a bank or certified
check, or wire transfer to an account or accounts in the United States
designated in writing by the Banks, or (y) at Purchaser's election (but only
with the consent of the Banks), by Purchaser's assumption at the Closing of
$17,000,000.00 of Seller's indebtedness to the Banks, but only if Purchaser
shall also cause Seller to be released by the Banks at the Closing from all
liability in respect of such indebtedness (the "Novation"); and
(iii) 190,476 shares of Parent's common stock, par value $.001 per share
("Parent Stock") shall be delivered at the Closing to, and registered in the
name of, Seller or its designee in accordance with the terms of the Escrow
Agreement (such number of shares having been determined based upon the average
closing price of Parent's common stock, as reported by the Nasdaq Stock Market,
for each of the ten consecutive trading days on which Parent's common stock was
traded ending on (and including) the second trading day prior to the Closing
Date (the "Valuation Price"); provided, however, that if such average closing
price is greater than $10.50 per share, then the Valuation Price shall be deemed
to be $10.50 per share, and if such average closing price is less than $9.50 per
share, then the Valuation Price shall be deemed to be $9.50 per share).
(b) As part of the Purchase Price, Purchaser shall pay Seller an amount equal to
fifty percent (50%) of the amounts, if any, that are or become payable to (or in
the case of benefits, on behalf of) Duane Gawron from and after the Closing in
respect of salary, benefits and/or severance (but not in respect of bonus
payments), plus related payroll and employment taxes, under or pursuant to
either (i) the Employment Agreement dated May 17, 1996 between Mr. Gawron and
Seller (the "Gawron Employment Agreement") or (ii) any agreement entered into
after the Closing between Seller and Mr. Gawron amending or terminating the
Gawron Employment Agreement (provided that the amounts payable under such
agreement are less than the amounts that would otherwise by payable under the
Gawron Employment Agreement), in either case with such reimbursement to be made
not later than the date or dates that such payments are required to be made to
Mr. Gawron. The maximum aggregate amount payable by Purchaser to Seller pursuant
to this paragraph shall be $200,000. Seller agrees (x) that to the extent
permitted by applicable law and the terms of the relevant contracts or
agreements, Seller shall enforce on behalf of itself and Purchaser (other than
against Purchaser and its affiliates) the non-competition and any other
restrictive covenants between Seller and Mr. Gawron, and (y) not to amend or
terminate nor agree to amend or terminate such non-competition or other
restrictive covenants without the prior written consent of Purchaser.
<PAGE>
Section 2.03. Registration Rights
Seller shall be entitled to the registration rights set forth in the
Registration Rights Agreement attached as Exhibit A hereto with respect to the
Parent Stock (the "Registration Rights Agreement").
Section 2.04. Purchase Price Adjustment
(a) Within 60 days after the Closing Date, Seller shall cause to be prepared and
shall deliver to Purchaser a balance sheet of the Division (the "Closing Balance
Sheet"), as of the close of business on June 30, 1997, which Closing Balance
Sheet shall (i) not include Excluded Assets or Excluded Liabilities, (ii) not
include an accrual for vacation benefits, (iii) be prepared in a manner
consistent with the preparation of the March Balance Sheet and, except as
described on Schedule 4.05 hereto, in accordance with GAAP, (iv) be audited by
Coopers (under the supervision of the Coopers audit partner who supervised the
most recent audit of Seller's financial statements), and (v) be accompanied by a
statement prepared by Seller (the "Net Asset Value Statement") of the Net Asset
Value of the Division at such date. In connection with the preparation of the
Closing Balance Sheet, after the Closing Purchaser shall provide Seller with
access to the Continued Employees (including without limitation temporary
(contract) Continued Employees Jay Rudolph, Mike Magyar and Dolores Lechkun)
who, prior to the Closing, worked on the preparation of the Closing Balance
Sheet, and such Continued Employees shall continue to work on the preparation of
the Closing Balance Sheet and shall assist Seller in the review and finalization
by Seller of such Closing Balance Sheet.
(b) A physical count of inventory (to the extent necessary for audited financial
statements) has been conducted by Seller prior to and as close as practicable to
June 30, 1997 for the purpose of preparing the Closing Balance Sheet. A copy of
all documents prepared in connection with such inventory (including without
limitation all count sheets) shall be provided or made available to both parties
promptly after such inventory shall have been conducted, and each party shall be
permitted to review the working papers relating to such Closing Balance Sheet
and to discuss the Closing Balance Sheet and the preparation thereof with
representatives of the other party familiar therewith.
(c) The Closing Balance Sheet and Net Asset Value Statement shall become final
and binding upon the parties unless Purchaser shall, within thirty (30) days
after the date on which Purchaser received the Closing Balance Sheet, notify
Seller in writing of Purchaser's disagreement. Any such notice of disagreement
shall (i) specify the nature of the dispute, (ii) provide in reasonable detail
the facts or accounting principles upon which such dispute is based, and
(iii) be accompanied by a certificate of Purchaser's Chief Financial Officer
stating his agreement with the facts or accounting principles upon which such
dispute is based. In the event of any such disagreement with respect to the
Closing Balance Sheet, Seller and Purchaser shall attempt in good faith to
resolve such disagreement. If Seller and Purchaser are unable to resolve any
such disagreement within twenty (20) days after Seller's receipt of such notice
of disagreement, Seller 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 Seller and Purchaser.
If Seller and Purchaser cannot agree upon such selection within thirty (30) days
after Seller's receipt of Purchaser's notice of disagreement, the Independent
Accounting Firm shall be selected by lot from among the six largest independent
public accounting firms in the United States, excluding Coopers. The dispute
shall be immediately submitted by Purchaser and Seller 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, Seller and
Purchaser shall each file with the Independent Accounting Firm a written
statement of its position with regard to any matters in dispute. Upon receipt of
written position statements by each of Seller and Purchaser, the Independent
Accounting Firm shall resolve the dispute in accordance with GAAP. The decision
of the Independent Accounting Firm shall be final and binding upon all parties
hereto.
<PAGE>
(d) The Purchase Price shall be increased by the amount by which the Net Asset
Value as of the close of business on June 30, 1997 exceeds $12,000,000; and the
Purchase Price shall be reduced by the amount by which the Net Asset Value as of
the close of business on June 30, 1997 is less than $12,000,000 (the Purchase
Price as so increased or decreased shall hereinafter be referred to as the
"Adjusted Purchase Price"). If the Purchase Price is less than the Adjusted
Purchase Price, Purchaser shall, and if the Purchase Price is more than the
Adjusted Purchase Price, Seller shall, within ten business days after the
delivery to Purchaser and Seller of the Net Asset Value Statement, make payment
to Seller or to Purchaser, as the case may be, by bank or certified check or by
wire transfer, of the amount of such difference. Any payments required to be
made by Seller to Purchaser or by Purchaser to Seller pursuant to this Section
2.04 shall not be subject to the limitations set forth in Sections 7.04 or 7.06
hereof.
(e) Purchaser and Seller shall each pay 50% of the cost of taking the physical
inventory referred to in paragraph (b) of this Section and of Coopers' fees and
expenses incurred in connection with the audit of the Closing Balance Sheet.
(f) In the event of a dispute as to the Closing Balance Sheet or the Net Asset
Value Statement, each party shall bear its own expenses, including expenses of
its accountants and attorneys in connection with the resolution of any such
dispute. In the event that any such dispute is submitted to an Independent
Accounting Firm as provided in this Section, the fees and expenses of the
Independent Accounting Firm shall be paid by the parties pro rata in proportion
to the decision of the Independent Accounting Firm. (By way of example, (A) if
(x) Purchaser asserts that Net Asset Value is $100,000 less than as reflected on
the Net Asset Value Statement prepared by Seller and (y) the Independent
Accounting Firm determines that Net Asset Value is $50,000 less than as set
forth on the Net Asset Value Statement prepared by Seller and $50,000 more than
as asserted by Purchaser, then Purchaser and Seller would each pay 50% of the
fees and expenses of the Independent Accounting Firm; and (B) if (x) Purchaser
asserts that Net Asset Value is $100,000 less than as reflected on the Net Asset
Value Statement prepared by Seller and (y) the Independent Accounting Firm
determines that Net Asset Value is $80,000 less than as set forth on the Net
Asset Value Statement and $20,000 more than as asserted by Purchaser, then
Seller would pay 80% and Purchaser would pay 20% of the fees and expenses of the
Independent Accounting Firm.)
<PAGE>
Section 2.05. Allocation of Purchase Price
The Purchase Price shall be allocated among the Acquired Assets as set forth on
Schedule 2.05 hereto. Schedule 2.05 (the " Allocation Schedule") shall be
prepared in accordance with Code Section 1060 and the regulations thereunder,
and shall allocate the Purchase Price (including, for purposes of this Section
2.05, any other consideration to be paid to Seller, including the Assumed
Liabilities) among the Acquired Assets. Promptly following the making of the
Purchase Price adjustments contemplated by Section 2.04, Purchaser and Seller
shall in good faith negotiate adjustments to the Allocation Schedule to reflect
any differences between the Purchase Price and the Adjusted Purchase Price (as
defined in Section 2.04(d)), and execute a revised Allocation Schedule. The
allocation of the Purchase Price among the Acquired Assets made pursuant to this
Section 2.05, and the following undertaking with respect to tax reporting, have
been specifically negotiated by Seller and Purchaser at arms' length and are a
part of the basis of this Agreement. Seller and Purchaser shall prepare their
federal, state and local income tax returns (including, but not limited to, IRS
Form 8594) employing the allocation of the Purchase Price made pursuant to this
Section 2.05 and shall not take a position in any tax proceeding, tax audit or
otherwise inconsistent with such allocation; provided, however, that nothing
contained herein shall require Seller or Purchaser to contest or exhaust
administrative remedies before any taxing authority or agency, and Seller and
Purchaser shall not be required to litigate before any court (including without
limitation the United States Tax Court), any proposed deficiency or adjustment
by any taxing authority or agency which challenges such allocation of the
Purchase Price. Seller and Purchaser shall give prompt notice to each other of
the commencement of any tax audit or the assertion of any proposed deficiency or
adjustment by any taxing authority or agency which challenges such allocation of
the Purchase Price.
ARTICLE III
CLOSING AND RELATED MATTERS
Section 3.01. Time and Place of Closing
The closing of the transactions contemplated by this Agreement (the "Closing")
shall take place, simultaneously with the execution and delivery of this
Agreement, at the offices of Zimet, Haines, Friedman & Kaplan, 460 Park Avenue,
New York, New York 10022, at 10:00 a.m., local time, on July 11, 1997 (the
"Closing Date").
<PAGE>
Section 3.02. Purchaser's Deliveries at the Closing
At the Closing, Purchaser shall:
(a) pay and deliver the Closing Date Purchase Price by: (i) delivery of the Cash
Purchase Price to Seller; (ii) delivery of the Loan Satisfaction Amount to the
Banks (or, at Purchaser's election with the consent of the Banks, effecting the
Novation); and (iii) delivery of a certificate representing the Parent Stock to
the Escrow Agent in accordance with the Escrow Agreement.
(b) deliver to Seller:
(i) the supply agreement between Purchaser and Seller in the form of Exhibit B
hereto (the "Supply Agreement"), duly executed by Purchaser;
(ii) a duly executed Bill of Sale, Assignment and Assumption Agreement
substantially in the form of Exhibit C hereto;
(iii) the Registration Rights Agreement, duly executed by Parent;
(iv) a transition agreement between Purchaser and Seller in the form of Exhibit
D hereto (the "Shared Services and Facilities Agreement") relating to the
facilities and services heretofore shared by the Division and Seller's EEA
division;
(v) the opinion of Katten, Muchin & Zavis, counsel to Purchaser, in
substantially the form attached as Exhibit E hereto (for which such firm may
assume that Michigan law is the same as Illinois law);
(vi) a certificate executed by the chief executive officer or the chief
financial officer of Purchaser certifying that each of the obligations of
Purchaser to be performed by it on or before the Closing Date pursuant to the
terms hereof has been duly performed and complied with (except to the extent
such performance and compliance has been waived by Purchaser);
(vii) certified copies of resolutions adopted by the Boards of Directors of
Purchaser and Parent authorizing the execution and delivery of this Agreement
and the Transaction Documents and consummation of the transactions contemplated
hereby; and
(viii) Certificates of Good Standing with respect to Purchaser and Parent issued
by the Office of the Secretary of State of the State of Delaware, dated not more
than ten (10) calendar days prior to the Closing Date.
<PAGE>
Section 3.03. Seller's Deliveries at the Closing
At the Closing, Seller shall deliver to Purchaser:
(i) a duly executed Bill of Sale, Assignment and Assumption Agreement
transferring to Purchaser all the Acquired Assets;
(ii) the Registration Rights Agreement, duly executed by Seller;
(iii) all other documents of title, deeds, endorsements, assignments and other
instruments as are reasonably necessary to vest in Purchaser good and valid
title to the Acquired Assets;
(iv) the consents and waivers of third parties listed on Schedule 3.03 hereto
(the "Material Consents");
(v) the Supply Agreement, duly executed by Seller;
(vi) the Shared Services and Facilities Agreement, duly executed by Seller;
(vii) the opinion of Zimet, Haines, Friedman & Kaplan, counsel to Seller, in
substantially the form of Exhibit F hereto (for which such firm may assume that
Michigan law is the same as New York law);
(viii) a certificate executed by the President of Seller certifying that each of
the obligations of Seller to be performed by it on or before the Closing Date
pursuant to the terms hereof has been duly performed and complied with (except
to the extent such performance and compliance has been waived by Purchaser);
(ix) a certified copy of resolutions adopted by the Board of Directors of Seller
authorizing the execution and delivery of this Agreement and the Transaction
Documents and consummation of the transactions contemplated hereby;
(x) reports of lien searches dated no earlier than May 28, 1997, showing that
there are no financing statements, judgments, taxes or other Encumbrances
outstanding against Seller or any of the Acquired Assets in the jurisdictions in
which the Division maintains facilities, other than Permissible Exceptions or
Encumbrances (to be released at Closing) in favor of the Banks;
(xi) a Certificate of Good Standing with respect to Seller issued by the Office
of the Secretary of State of the State of Delaware, dated not more than ten (10)
calendar days prior to the Closing Date; and
<PAGE>
(xii) an investor representation letter in the form attached hereto as Exhibit
G, duly executed by Seller.
Section 3.04. Escrow Agreement
At the Closing, Purchaser, Seller and the Escrow Agent shall execute and deliver
an escrow agreement in the form of Exhibit H hereto (the "Escrow Agreement").
Section 3.05. Non-Assignable Instruments
Nothing in this Agreement shall be construed as an attempt or agreement to
assign (i) any contract, agreement, license, lease, sales order, purchase order
or other commitment which is nonassignable without the consent of the other
party or parties thereto unless such consent shall have been given, or (ii) any
contract or claim as to which the remedies for the enforcement thereof enjoyed
by Seller would not pass to Purchaser as an incident of the assignments provided
for by this Agreement. In order, however, that the full value of every contract
and claim of the character described in clauses (i) and (ii) above and all
claims and demands on such contracts may be realized, Seller shall, by itself or
by its agents, at the request and under the direction of Purchaser, and at
Purchaser's expense, in the name of Seller or otherwise as Purchaser shall
specify and as shall be permitted by law, take all such action and do or cause
to be done all such things as shall be reasonably necessary and proper (x) in
order that the rights and obligations of Seller under such contracts shall be
preserved, (y) to the extent permitted by applicable law and the terms of the
relevant contracts or agreements, enforce any non-solicitation, non-competition,
non-interference or other restrictive covenant or agreement with respect to the
Division to which Seller is currently a party, and (z) for, and to facilitate,
the collection of the monies due and payable, and to become due and payable, to
Seller in and under every such contract and claim and in respect of every such
claim and demand, and Seller shall hold the same for the benefit of and shall
pay the same over promptly to Purchaser. Notwithstanding the foregoing, nothing
in this Section 3.05 shall effect the parties obligations under Section 3.07
hereof, including without limitation the provisions of that Section relating to
the payment of fees and expenses.
Section 3.06. Interdependence
The transfers and deliveries described in this Article III to take place at the
Closing are mutually interdependent and regarded as occurring simultaneously as
of the close of business on the Closing Date; and, unless waived by both
Purchaser and Seller, no such transfer or delivery shall become effective unless
and until all other transfers and deliveries provided for in this Article III
have also been consummated.
Section 3.07. Further Assurances
The parties hereto agree that each will execute and deliver to the other any and
all documents in addition to those expressly provided for in this Agreement that
may be reasonably necessary or appropriate to carry out the purposes of this
Agreement and the transactions contemplated hereby, whether at or after the
Closing. Without limiting the generality of the foregoing, Seller shall, (i) use
all reasonable efforts to cause to be removed of record any Encumbrances listed
on Schedule 4.08(a) hereto related to Taxes, and (ii) from time to time after
the Closing, upon the request of Purchaser or Parent, do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, all such
further acts, assignments, transfers, assurances and instruments as may
reasonably be required for the assignment, transfer, grant and conveyance to
Purchaser of the Acquired Assets. Seller on the one hand, and Purchaser and
Parent on the other hand, shall each be responsible for all fees and expenses
incurred by them in performance of their respective obligations under this
Section 3.07; provided, that Purchaser shall be responsible for any fees or
other amounts payable to any third parties (other than Seller's attorney's fees
and expenses, which shall be payable by Seller) in connection with the parties
obligations under this Section 3.07.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser and Parent as follows, and
acknowledges and confirms that Purchaser and Parent are relying upon such
representations and warranties notwithstanding any investigation made by
Purchaser or Parent or on their behalf:
Section 4.01. Corporate Organization and Good Standing
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is qualified to do business and is
in good standing as a foreign corporation in such jurisdictions where the nature
of its business or properties makes such qualification necessary, except where
the failure to so qualify would not have a Material Adverse Effect on Seller or
the Division. Seller has all requisite corporate power and authority to own,
operate, and lease its properties and to carry on its businesses as now being
conducted. Seller has heretofore delivered to Purchaser complete and correct
copies of its Certificate of Incorporation and By-Laws, each as amended and in
effect on the date hereof. Section 4.02. Authorization, Execution and Binding
Effect
Seller has full corporate power and authority to execute and deliver this
Agreement and each of the Transaction Documents executed and delivered by Seller
and to consummate the transactions contemplated hereby and thereby. The Board of
Directors of Seller has duly approved and authorized the execution and delivery
of this Agreement and such Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, and no other corporate proceedings
on the part of Seller are necessary to approve and authorize the execution and
delivery of this Agreement or any of such Transaction Documents or the
consummation of the transactions contemplated hereby or thereby. This Agreement
and such Transaction Documents have been duly executed and delivered by Seller
and constitute the valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
or other similar laws affecting creditors' rights generally and by general
principles of equity.
<PAGE>
Section 4.03. Consents and Approvals
Neither the execution and delivery by Seller of this Agreement and the
Transaction Documents being delivered by Seller, nor the consummation by Seller
of the transactions contemplated hereby and thereby, nor compliance by Seller
with any of the provisions hereof or thereof, will (i) violate or conflict with
any provision of the certificate of incorporation or by-laws of Seller,
(ii) result in a violation of any order, writ, injunction, decree, judgment,
ruling, law, rule, or regulation of any court or governmental authority,
applicable to Seller, the Division, or the Acquired Assets, (iii) result in the
breach of any note, bond, mortgage, indenture, deed of trust, license,
franchise, contract, agreement, or other instrument or commitment or obligation
of Seller relating to the Division or the Acquired Assets which breach would
have a Material Adverse Effect on Seller or the Division, or (iv) require any
consent, approval, or authorization of, or notice to, or declaration, filing, or
registration with, any governmental or regulatory authority or any other Person,
except for such consents, approvals, authorizations, notices, declarations,
filings or registrations (A) which have been obtained, given or made, as the
case may be, and which are unconditional and in full force and effect, (B) the
failure of which to obtain, give or make would not have a Material Adverse
Effect on Seller or the Division, or (C) which are listed on Schedule 4.03
hereto.
Section 4.04. Compliance With Laws
To the Knowledge of Seller, Seller is in compliance with all laws, regulations,
decrees and orders applicable to the Division, including without limitation the
Occupational Safety and Health Act (42 U.S.C. Sec. 651 et seq.), except where
noncompliance would not have a Material Adverse Effect on the Division. Seller
has duly filed all reports and returns required to be filed by it with
governmental authorities with respect to the Division and has obtained all
governmental permits and licenses and other governmental consents which are
required in connection with the Division, except for such reports, returns,
permits, licenses, and consents which, if not filed or obtained, would not,
individually or in the aggregate, have a Material Adverse Effect on the
Division. All of such permits, licenses and consents are in full force and
effect, and no proceedings for the suspension or cancellation of any of them is
pending or, to the Knowledge of Seller, threatened.
Section 4.05. Financial Statements; Accounts Receivable; Inventories
(a) Seller has heretofore delivered to Purchaser copies of the unaudited
Division Financial Statements listed on Schedule 4.05 hereto. Seller has
maintained its books of account relating to the Division in compliance in all
material respects with applicable laws, rules and regulations. Except as
described on Schedule 4.05, the Division Financial Statements have been prepared
in conformity with GAAP and, taken as a whole, are correct and complete in all
material respects and present fairly the financial position of the Division as
of the respective dates of such Division Financial Statements and the results of
operations of the Division for the periods covered by such Division Financial
Statements.
<PAGE>
(b) All accounts receivable reflected on the March Balance Sheet or on the
Closing Balance Sheet have arisen from bona fide transactions in the ordinary
course of the Division's business and have been collected or, to the Knowledge
of Seller, are collectable in the ordinary course of business in the recorded
amounts thereof without valid set-off or counterclaim, or are otherwise
adequately reserved against on the March Balance Sheet (or will be adequately
reserved against on the Closing Balance Sheet, as the case may be), in
accordance with GAAP.
(c) The inventories of the Division as of March 31, 1997 are properly recorded
on the March Balance Sheet, and the inventories of the Division as of June 30,
1997 will be properly recorded on the Closing Balance Sheet, in each case at the
lower of cost or market in accordance with GAAP, and such inventories consist or
consisted (as the case may be) only of material in merchantable condition and
saleable or usable in the ordinary course of business.
Section 4.06. Absence of Certain Changes
Except as contemplated by this Agreement or as described on Schedule 4.06
hereto, since March 31, 1997, (x) there has not been any material adverse change
in the operations, condition (financial or otherwise), operating results,
assets, liabilities or employee, customer or supplier relations of the Division
or its business, and (y) Seller has not, with respect to the Division or the
Acquired Assets:
(i) paid, discharged, or satisfied any claim, liability, or obligation
(absolute, accrued, contingent, or otherwise) relating to the Division, other
than the payment, discharge, or satisfaction of claims, liabilities and
obligations, in the ordinary course of business and consistent with past
practice;
(ii) disposed of or permitted to lapse any rights to the use of any Division
Intellectual Property;
(iii) sold, transferred, or otherwise disposed of any of the properties or
assets of Seller used by the Division, except for the sale of inventory in the
ordinary course of business;
(iv) waived or released any rights of material value relating to the Division;
(v) entered into any agreement, whether in writing or otherwise, to do any of
the foregoing;
(vi) suffered any casualty loss or damage (whether or not covered by insurance)
which affects in any material respect the Acquired Assets or the conduct of the
Division;
(vii) made any loan or advance to, or given a guarantee for the benefit of, any
Person, other than (x) intracompany cash management transactions and (y) loans
or advances made in the ordinary course of business consistent with past
practices;
<PAGE>
(viii) incurred any debts, liabilities or obligations except (w) current
liabilities incurred in connection with or for services rendered (including
benefits listed on Schedule 4.09) or finished goods supplied in the ordinary
course of business consistent with past practices, (x) liabilities on account of
Taxes and governmental charges (excluding penalties, interest or fines in
respect thereof), (y) obligations or liabilities incurred by virtue of the
execution of this Agreement, and (z) Excluded Liabilities;
(ix) made or committed to make capital expenditures by the Division in excess of
$25,000 individually or $75,000 in the aggregate; or
(x) increased the compensation payable to any Continued Employee or paid any
bonus to any Continued Employee, other than any compensation increases and
bonuses to which any such Continued Employee was entitled under employment
agreements listed on Schedule 4.11(a) hereto.
Section 4.07. Legal Proceedings
Except as described on Schedule 4.07 hereto, there are no material claims,
actions, suits, inquiries, investigations, or proceedings pending or, to the
Knowledge of Seller, threatened in writing or imminent before or by any court or
governmental body, (i) against Seller relating to the Acquired Assets or the
Division, (ii) which question or challenge the validity of this Agreement or any
of the Transaction Documents or any action taken or to be taken by Seller
pursuant hereto or thereto, or (iii) which relate to actual or claimed
violations of Environmental Law by or with respect to the Division or constitute
requests for environmental clean-up actions, cost reimbursement or contribution
by any Federal, state or local agencies or any private parties with respect to
any property leased by Seller and used by the Division. The Division is not
subject to any judgment, order or decree, or to any governmental restriction
(other than those applicable generally to companies engaged in the same business
as the Division) which is likely to have a Material Adverse Effect on the
Division.
Section 4.08. Title to Properties and Related Matters
(a) Seller has, and pursuant to this Agreement will convey, sell, transfer,
assign and deliver to Purchaser good and valid title to all of the Acquired
Assets, except that with respect to Acquired Assets leased by Seller, Seller has
and will convey, sell, transfer, assign and deliver to Purchaser valid and
enforceable leasehold interests therein (assuming that the consents to
assignment listed on Schedule 4.03 hereto shall have been obtained). Such
Acquired Assets and properties and title thereto are free and clear of all title
defects and all liens, mortgages, pledges, claims, charges, security interests,
and other encumbrances ("Encumbrances") except Encumbrances which are disclosed
on Schedule 4.08(a) hereto or which do not, individually or in the aggregate,
impair the current use, occupancy, or value, or the validity of title, of the
property subject thereto (such exceptions being referred to herein as the
"Permissible Exceptions"). Notwithstanding the foregoing, Encumbrances in favor
of the Banks and the Encumbrance listed as item 5 of Schedule 4.08(a) shall not
be deemed to be Permissible Exceptions.
<PAGE>
(b) Schedule 4.08(b) hereto lists and describes all real property leased by
Seller and included in the Acquired Assets. Except as described on Schedule
4.08(b), such real property represents all real property currently used or
occupied by the Division. All facilities on such real property included in the
Acquired Assets have received all approvals of governmental authorities
(including licenses and permits) required in connection with the operation
thereof, except where the failure to obtain such approvals, licenses or permits
would not, individually or in the aggregate, have a Material Adverse Effect on
the Division. To the Knowledge of Seller, all facilities operated by the
Division have been operated and maintained in compliance in all material
respects with all applicable laws, rules, and regulations. With respect to each
parcel of leased real property listed on Schedule 4.08(b) hereto:
(i) Seller has delivered to Purchaser a correct and complete copy of the
relevant lease, which lease is legal, valid, binding, enforceable and in full
force and effect;
(ii) there are no disputes, oral agreements or forbearance in effect as to the
relevant lease and to the Knowledge of Seller neither party to the relevant
lease is in breach or default of the terms thereof;
(iii) to the Knowledge of Seller, no event has occurred which, with the giving
of notice or passage of time or both, would constitute a default under such
lease; and
(iv) all rental and other amounts required to be paid under the relevant lease
has been duly paid.
Section 4.09. Employee Benefit Plans; ERISA
(a) Schedule 4.09 hereto lists each pension, retirement, profit-sharing,
deferred compensation, bonus or other incentive plan, or other employee benefit
program, arrangement, agreement or understanding, or medical, vision, dental or
other health plan, or life insurance or disability plan, or any other employee
benefit plan, including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of ERISA, to which the Division contributes or has
contributed, within the last three years (or, in the case of a plan subject to
Title IV of ERISA, within the last six years), or has been required to
contribute or is a party or is bound or under which it may have liability or
under which employees or former employees of the Division (or their
beneficiaries) are or were eligible to participate or derive a benefit
("Employee Benefit Plans"). Seller has delivered to Purchaser true, correct and
complete copies of all Employee Benefit Plans and any related funding agreements
as pertain to employees or former employees of the Division, including all
amendments, supplements, and modifications thereto, all of which are legally
valid and binding and in full force and effect, and not in default in any
respect, and copies of the most recent determination letter received from the
Internal Revenue Service and the most recent Form 5500 Annual Report with
respect to each such plan. The Division has not been a participating employer in
any "multiemployer plan" within the meaning of Section 3(37) of ERISA. None of
the assets of the Division is subject to any lien in favor of, or enforceable
by, the Pension Benefit Guaranty Corporation or the Internal Revenue Service.
<PAGE>
(b) The execution and delivery of this Agreement by Seller and the consummation
of the transactions contemplated hereunder do not constitute and will not result
in any "prohibited transaction" within the meaning of Section 406 of ERISA, or
Section 4975 of the Code.
(c) The Employee Benefit Plans and any trusts thereunder as pertain to the
employees or former employees of the Division have been maintained and
administered in all material respects in accordance with their terms and with
all provisions of ERISA and other laws applicable thereto and to the extent
intended to qualify under Section 401 of the Code are so qualified, and nothing
has occurred which might cause the loss of such qualification or the imposition
of any liability, penalty or tax thereunder with respect to the operation of
such Employee Benefit Plans. The Division has not incurred, and neither
Purchaser nor the Division will incur as a result of the transactions under this
Agreement, any liability to the Pension Benefit Guaranty Corporation or the
Internal Revenue Service. Neither any of the Employee Benefit Plans which are
covered by Title IV of ERISA nor any trusts thereunder as pertain to the
employees or former employees of the Division have been terminated or have
incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA or Section 412 of the Code (whether or not waived), nor
have there been any "reportable events", as such term is defined in Section 4043
of ERISA, with respect thereto since the effective date of ERISA, nor does the
present value of accrued benefits (vested or non-vested) of the participants of
any such Employee Benefit Plan or trust thereunder exceed the assets of such
Employee Benefit Plan. No proceeding by the Pension Benefit Guaranty Corporation
to terminate any such Employee Benefit Plan has been instituted. No action,
suit, proceeding, hearing or investigation with respect to the administration or
the investment of the assets of any Employee Benefit Plan as pertains to the
employees or former employees of the Division is pending.
(d) The execution and delivery of this Agreement by Seller and the consummation
of the transactions contemplated hereunder will not result in any obligation or
liability of Division or Purchaser (with respect to accrued benefits or
otherwise) to any employee or former employee of the Division or to the Pension
Benefit Guaranty Corporation or the Internal Revenue Service in respect of any
such Employee Benefit Plans or any trust thereunder.
(e) All required reports, returns and descriptions have been filed or
distributed appropriately with respect to each Employee Benefit Plan.
(f) All contributions (including without limitation all employer contributions
and all employee salary reduction contributions) which are due with respect to
employees or former employees of the Division have been paid to each Employee
Benefit Plan and all contributions with respect to employees or former employees
of the Division for any period ending on or before the Closing Date which are
not yet due have been paid to each such Employee Benefit Plan or accrued in
accordance with past custom and practice of the Division. All premiums or other
payments for all periods ending on or before the Closing Date with respect to
employees or former employees of the Division have been paid with respect to
each such Employee Benefit Plan which is a welfare benefit plan within the
meaning of Section 3(1) of ERISA.
<PAGE>
Section 4.10. Taxes and Tax Returns
(a) Except as described in Schedule 4.10(a) hereto, the Division (or Seller, on
behalf of or with respect to the Division) has timely filed all Tax Returns that
it was required to file with respect to the Division and all of such Tax Returns
were correct and complete in all material respects. All Taxes which are due and
payable by the Division (or Seller, on behalf of or with respect to the
Division) have been paid in full, and the Division (or Seller, on behalf of or
with respect to the Division) is not delinquent in the payment of any Tax and
has no tax deficiency or claim outstanding, proposed or assessed against it.
There is no dispute or claim concerning any Taxes of or relating to the Division
either (i) claimed or raised by any authority in writing or (ii) as to which
Seller has Knowledge. There is not now in force any waiver or agreement by the
Division (or Seller, on behalf of or with respect to the Division) for the
extension of time for the assessment of any Tax. There are no liens on any of
the assets of the Division that arose in connection with any failure (or alleged
failure) to pay any Tax. No claim has ever been made in any jurisdiction where
the Division does not file Tax Returns that the Division is or may be subject to
taxation by that jurisdiction.
(b) The Division (or Seller, on behalf of or with respect to the Division) has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other Person.
(c) The Division (or Seller, on behalf of or with respect to the Division) (i)
has not filed a consent under Code Sec. 341(f) concerning collapsible
corporations, (ii) is not or was not party to any Tax allocation or sharing
agreement, (iii) has not been a member of an affiliated group filing a
consolidated federal income Tax Return, and (iv) has no liability for the Taxes
of any other person under Treasury Regulation Sec. 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(d) Seller shall, with respect to the Division, prepare and file all Tax Returns
and will pay all applicable Taxes relating to the Division with respect to the
taxable period which includes the Closing Date.
(e) At or prior to Closing, Seller shall have paid or discharged all Taxes that
may result in the filing of a lien on the assets purchased hereunder or that may
result in the imposition of successor, transferee or other liability on
Purchaser for the payment of such Taxes, except for Taxes not yet due and
payable (such Taxes to be paid when due by Seller).
<PAGE>
Section 4.11. Contracts
(a) Schedule 4.11(a) hereto lists all contracts, agreements, instruments,
arrangements, understandings, leases, and rental agreements, whether written or
oral, to which Seller is a party or is otherwise bound and which relate to the
Division or the Acquired Assets, other than immaterial contracts (which for
purposes of this Agreement shall mean contracts which (i) do not provide for
aggregate payments by or to Seller in excess of $35,000 and (ii) are not
otherwise material to the Division) (collectively, including such immaterial
contracts, "Division Contracts")). (Notwithstanding the foregoing, the Stock
Redemption and Purchase Agreement dated as of May 17, 1996, by and among
James S. Harrington; Duane A. Gawron, trustee of the Living Trust of Duane
Gawron; Margo Gawron; John Pylak, trustee of the John E. Pylak Living Trust;
Rebecca Pylak; Kurt Cieszkowski; Tigera Group, Inc. (now known as Connectivity
Technologies Inc.); and Seller (the "Stock Redemption and Purchase Agreement"),
and promissory notes, agreements, contracts and other instruments between Seller
and the Banks or executed by Seller in favor of the Banks relating to Seller's
credit facilities shall not be deemed to be "Division Contracts".) True and
correct copies of all Division Contracts listed on Schedule 4.11(a) have
heretofore been delivered to Purchaser.
(b) Except as set forth and described (including a reference in each case to the
relevant clause of this Section 4.11(b)) on Schedule 4.11(b) hereto:
(i) the Division Contracts do not include any contracts with any of Seller's
officers, directors, employees (other than employment agreements listed on
Schedule 4.11(a) hereto) or Affiliates;
(ii) to the Knowledge of Seller, all Division Contracts are valid and in full
force and effect and constitute the legal, valid and binding obligations of
Seller and the other parties thereto;
(iii) there are no existing material defaults by Seller or, to the Knowledge of
Seller, by any other party, under any Division Contract, and to the Knowledge of
Seller, no event, act or omission has occurred which (with or without notice,
lapse of time or the happening or occurrence of any other event) would result in
a default thereunder;
(iv) no other party to any Division Contract has asserted the right, and to the
Knowledge of Seller, no basis exists for the assertion of any right, to
renegotiate the terms or conditions of any such Division Contract; and
(v) assuming that the consents to assignment listed on Schedule 4.03 hereto
shall have been obtained, all Division Contracts are assignable by Seller in
connection with the transactions contemplated by this Agreement.
Section 4.12. Patents, Trademarks, Trade Names, etc.
(a) Schedule 4.12(a) hereto lists all material patents, patent applications,
common law and registered trademarks, service marks, trade names, logos, and
assumed names and pending registrations thereof owned or licensed by Seller and
used by or in the Division, including for each such patent, trademark, or
service mark, if registered (and to the extent applicable), the registration
number, application and registration dates, and expiration dates, and class, and
including for each such patent, trademark, service mark, trade name, logo and
assumed name used by the Division but not owned by Seller, a description of the
license agreement or other arrangement pursuant to which each is so used. All of
the foregoing, together with all other trade secrets, copyrights, know-how,
processes, and proprietary information owned by Seller and used by the Division
which are entitled to legal protection (but excluding any of the foregoing used
by Seller primarily in connection with Seller's divisions other than the
Division), are sometimes referred to collectively herein as the "Division
Intellectual Property."
<PAGE>
(b) Except as described on Schedule 4.12(b) hereto, Seller has not received any
notice that its current use of any of the Division Intellectual Property
constitutes infringement or any other violation of the intellectual property of
any third party, and to the Knowledge of Seller, such current use of the
Division Intellectual Property does not constitute infringement or any other
violation of the intellectual property of any third party. Except as described
on Schedule 4.12(b), Seller has no Knowledge that any third party is infringing
or otherwise violating any of the Division Intellectual Property. None of the
Division Intellectual Property is subject to any outstanding order, decree,
judgment, stipulation, injunction, or settlement agreement restricting the use
thereof by Seller.
Section 4.13. Condition of Assets
The material improvements, fixtures and appurtenances on or to the real property
included in the Acquired Assets or on or to any real property the subject of any
lease included in the Acquired Assets, and the material tangible property
included in the Acquired Assets, or the subject of any lease included in the
Acquired Assets, are in good operating condition, subject to ordinary wear and
tear, and are suitable for the purposes for which they are presently being used.
Section 4.14. Insurance
Schedule 4.14 hereto sets forth a list and brief description (specifying the
insurer, the policy number, the deductible amount, the policy limits, the policy
dates, and descriptions of outstanding claims) of all policies or binders of
insurance maintained by Seller with respect to the Division and in effect on the
date hereof, including, without limitation, workers' compensation, personal
liability, fire and theft. Seller has not received any notice from any of its
insurance carriers that any insurance premiums will be materially increased in
the future or that any insurance coverage listed on such Schedule 4.14 will not
be available in the future on substantially the same terms as now in effect.
None of the insurance policies carried by Seller with respect to the Division at
any time within the six months prior to the Closing Date has lapsed, been
cancelled or otherwise terminated.
Section 4.15. Environmental Matters
(a) Seller has obtained all permits, licenses and other authorizations which are
required to be held or obtained by Seller in connection with the Division under
all Environmental Laws, except for such permits, licenses and other
authorizations the failure of which to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on the Division. Seller is in
compliance in all material respects with the terms and conditions of such
permits, licenses and authorizations, and to the Knowledge of Seller, with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws and applicable to the Division.
<PAGE>
(b) To the Knowledge of Seller, there is no pending or, threatened civil or
criminal litigation, notice of violation, or administrative proceeding relating
in any way to the Environmental Laws involving the Division or any of the
Acquired Assets. To the Knowledge of Seller, there have not been and there are
not any events, conditions, circumstances, activities, practices, incidents,
actions, plans, studies or reports which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing, or
investigation against Seller relating to the Division or the Acquired Assets,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the environment, of any
pollutant, contaminant, chemical, industrial, hazardous, or toxic material or
waste, including, without limitation, any liability arising, or any claim,
action, demand, suit, proceeding, hearing, or investigation which may be
brought, under RCRA, CERCLA, or similar state or local laws.
Section 4.16. Finders
Neither Seller nor any of its Affiliates has paid or become obligated to pay any
fee or commission to any broker, finder, or intermediary for or on account of
the transactions provided for in this Agreement. Seller agrees to indemnify
Purchaser against, and to hold Purchaser harmless from, any claims for brokerage
or similar commission or other compensation which may be made against Purchaser
by any third party in connection with the transactions contemplated hereby,
which claim is based upon such third party having acted as broker, finder,
investment banker, or in any similar capacity on behalf of Seller or any of its
Affiliates.
Section 4.17. Employees; Labor Controversies
Seller has heretofore delivered to Purchaser a full and complete list of all
employees of the Division, together with a description of each such employee's
compensation arrangements (including without limitation salaries and bonus
compensation) affecting them. Except as described on Schedule 4.17 hereto, there
have been no changes to the information set forth on such list since the date
thereof. Except as described on Schedule 4.17 hereto, there are no controversies
between Seller and any of its employees which might reasonably be expected to
have a Material Adverse Effect on the Division, or any unresolved labor
grievances or unfair labor practice or labor arbitration proceedings pending or,
to the Knowledge of Seller, threatened relating to the Division. None of the
employees of the Division is covered by a collective bargaining agreement, and
no union or other organization is authorized to bargain on behalf of any of the
employees of the Division, and, to the Knowledge of Seller, there are not any
union organizational efforts presently being made or threatened involving any
employees of the Division. Seller has not received notice of any claim that the
Division has not complied with any laws relating to the employment of labor,
including any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination and employment safety, or that Seller is
liable for any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing with respect to employees of the Division.
<PAGE>
Section 4.18. Customers
No single customer of the Division accounted for more than 10% of the Division's
1996 revenue. Seller has heretofore delivered to Purchaser an accurate and
complete list of the Division's 25 largest customers (by revenue) and the amount
of gross revenue attributable to each such customer during 1996 and for the
period from January 1, 1997 to May 31, 1997. To the Knowledge of Seller, the
Division has not received any notice that any such customer of the Division
intends to discontinue or substantially diminish its relationship with the
division on account of the transaction contemplated hereby or otherwise,
although during 1997 some of such customers have, on an annualized basis,
purchased products from the Division at above 1996 levels and some of such
customers have purchased products from the Division at below 1996 levels.
Section 4.19. Suppliers
Seller has heretofore delivered to Purchaser an accurate and complete list of
the Division's 25 largest suppliers (by dollar volume of sales to the Division
during 1996). No such supplier has canceled or otherwise terminated, modified in
a manner materially adverse to the Division or, to Seller's Knowledge,
threatened to cancel or otherwise terminate, or to modify in a manner materially
adverse to the Division, its relationship with the Division on account of the
transaction contemplated hereby or otherwise.
Section 4.20. Sales Representatives
Seller has heretofore delivered to Purchaser an accurate and complete list of
the Division's commissions paid in 1996 to the Division's sales representatives,
and of employees (including sales representatives) terminated (whether at the
employee's or Seller's initiative) from and after January 1, 1996 and through
the date hereof. None of such sales representatives, other than those listed as
having been terminated, has to Seller's Knowledge, threatened to cancel or
otherwise terminate, or to modify in a manner materially adverse to the
Division, its relationship with the Division.
Section 4.21. Interest in Customers, etc.
(a) Except for business conducted by Seller and business relationships between
the Division and other divisions of Seller (the "Intra-Seller Transactions"), or
as described on Schedule 4.21 hereto, neither Seller nor any of its Affiliates
has any direct or indirect interest in any competitor, supplier or customer of
the Division or in any Person from whom or to whom the Division leases any real
or personal property or in any other Person with whom the Division has any
business relationship.
<PAGE>
(b) The Intra-Seller Transactions have been conducted in a manner substantially
similar to Seller's transactions with third parties with regard to matters of
pricing, timeliness of shipment, timeliness of payment and collection and
completeness and quality of products purchased or sold.
Section 4.22. Operation of Business Prior to Closing
All receivables collected by the Division from and after July 1, 1997 and
through the Closing Date have been deposited into the Division's bank accounts,
and Seller has not written checks or withdrawn any amounts from the Division's
bank accounts during such period other than in payment of accounts payable
arising and paid in the ordinary course of business (which may include accounts
payable to other divisions of Seller to the extent arising and paid in the
ordinary course of business).
Section 4.23. Completeness of Warranties
No warranty or representation by Seller in this Agreement or any Transaction
Document or any statement or certificate furnished or to be furnished by Seller
to Purchaser pursuant to this Agreement or any Transaction Document contains or
will contain any untrue statement of material fact or omits or will omit to
state a material fact required in order to make such warranty, representation,
statement or certificate not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND PARENT
Purchaser and Parent each jointly and severally represents and warrants to
Seller as follows and acknowledges and confirms that Seller is relying upon such
representations and warranties notwithstanding any investigation made by Seller
or on its behalf:
Section 5.01. Corporate Organization
Purchaser and Parent are corporations duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Purchaser and Parent have
all requisite corporate power and authority to own, operate, and lease their
respective properties and to carry on their respective businesses as now being
conducted. Purchaser and Parent have heretofore delivered to Seller complete and
correct copies of their respective Certificates of Incorporation and By-Laws, as
amended and in effect on the date hereof. Purchaser is a wholly-owned subsidiary
of Parent.
Section 5.02. Authorization, Execution and Binding Effect
Purchaser and Parent have full corporate power and authority to execute and
deliver this Agreement and each of the Transaction Documents executed and
delivered by Purchaser or Parent, as the case may be, and to consummate the
transactions contemplated hereby and thereby. The Boards of Directors of
Purchaser and Parent have duly approved and authorized the execution and
delivery of this Agreement and such Transaction Documents and the consummation
of the transactions contemplated hereby and thereby, and no other corporate
proceedings on the part of Purchaser or Parent are necessary to approve and
authorize the execution and delivery of this Agreement or any of such
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. This Agreement and such Transaction Documents have been duly
executed and delivered by Purchaser and Parent and constitutes the valid and
binding agreements of Purchaser and Parent, enforceable against Purchaser and
parent in accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
or other similar laws affecting creditors' rights generally and by general
principles of equity.
<PAGE>
Section 5.03. Consents and Approvals
Neither the execution and delivery by Purchaser and Parent of this Agreement and
the Transaction Documents being delivered by Purchaser and/or Parent, nor the
consummation by Purchaser and Parent of the transactions contemplated hereby and
thereby, nor compliance by Purchaser and Parent with any of the provisions
hereof and thereof, will (i) violate or conflict with any provision of the
certificate of incorporation or by-laws of Purchaser or Parent, (ii) result in a
violation of any order, writ, injunction, decree, judgment, ruling, law, rule,
or regulation of any court or governmental authority, applicable to Purchaser or
Parent, (iii) result in the breach of any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, contract, agreement, or other instrument
or commitment or obligation of Purchaser or Parent which breach would have a
Material Adverse Effect on Purchaser or Parent, (iv) require any consent,
approval, or authorization of, or notice to, or declaration, filing, or
registration with, any governmental or regulatory authority or any other Person,
except for such consents, approvals, authorizations, notices, declarations,
filings or registrations (A) which have been obtained, given or made, as the
case may be, and which are unconditional and in full force and effect, or (B)
the failure of which to obtain, give or make would not have a Material Adverse
Effect on Purchaser or Parent.
Section 5.04. Finders
Neither Purchaser, Parent nor any of their respective Affiliates has paid or
become obligated to pay any fee or commission to any broker, finder, or
intermediary, for or on account of the transactions provided for in this
Agreement. Purchaser and Parent jointly and severally agree to indemnify Seller
against, and to hold Seller harmless from, any claims for brokerage or similar
commission or other compensation which may be made against Seller by any other
third party in connection with the transactions contemplated hereby, which claim
is based upon such third party having acted as broker, finder, investment
banker, or in any similar capacity on behalf of Purchaser, Parent or any of
their respective Affiliates.
Section 5.05. Legal Proceedings
There are no material claims, actions, suits, inquiries, investigations or
proceedings pending, or to the actual knowledge after due inquiry of Purchaser
and Parent, threatened in writing or imminent, against Purchaser or Parent
before or by any court or governmental body (i) against Purchaser, or (ii) which
questions or challenges the validity of this Agreement or any of the Transaction
Documents or any action taken or to be taken by Purchaser or Parent pursuant
hereto or thereto.
<PAGE>
Section 5.06. Capitalization
As of the date hereof, the authorized capital stock of Parent consists of
60,000,000 shares of common stock, par value $.001 per share, and 1,000,000
shares of preferred stock, par value $.01 per share. As of the date hereof (and
giving effect to the transactions contemplated hereby), there are issued and
outstanding 15,811,105 shares of such common stock, all of which is of one
class, and 27,000 shares of Series A Convertible Preferred Stock, which by its
terms is convertible into 3,130,425 shares of common stock (without taking into
account the anti-dilution and pay-in-kind dividend provisions of such Series A
Convertible Preferred Stock); provided, that in July 1997, 9,000 shares of
Series A convertible Preferred Stock were deemed converted into 1,043,478 shares
of Parent's common stock which have not yet been issued. Additionally, there are
outstanding warrants to purchase 104,364 shares of Parent's common stock. The
Parent Stock is duly authorized, validly issued, fully paid and nonassessable,
and is listed for trading on the Nasdaq Stock Market. As of the date hereof,
1,750,159 shares of Parent's common stock are issuable upon exercise of options
to purchase such stock, which options were issued pursuant to Parent's stock
option plan. Except as set forth in this Section, as of the date hereof there
are no other outstanding shares of, no securities of Parent convertible into or
exchangeable for, no options or other rights (including any pre-emptive rights)
to acquire from Parent, and no other contracts, understandings, arrangements or
obligations (whether or not contingent) providing for the issuance or sale by
Parent, directly or indirectly, of any capital stock or other equity or debt
security of Parent.
Section 5.07. SEC Filings; Offer Documents
Parent has previously delivered to Seller a true, correct and complete copy of
Parent's Annual Report on Form 10-KSB for the year ended December 31, 1996,
Parent's proxy statement relating to its annual meeting of shareholders held on
May 21, 1997, all other reports or registration statements filed by Parent with
the SEC since January 1, 1996 and all amendments and supplements to the
foregoing (together, "Parent's SEC Filings"). Each of Parent's SEC Filings has
been timely filed, subject to any allowable extensions, and was prepared in all
material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be. Parent's SEC Filings constitute all of the
documents required to be filed by Parent with the SEC since January 1, 1996.
Section 5.08. Financial Statements
The audited and unaudited consolidated financial statements (including the notes
thereto) of Parent included in Parent's SEC Filings have been prepared in
conformity with GAAP and, taken as a whole, are correct and complete in all
material respects and present fairly the financial position of Parent as of the
respective dates thereof and its results of operations for the respective
periods covered by such financial statements.
<PAGE>
Section 5.09. Absence of Certain Changes
Since March 31, 1997, Parent has not suffered any Material Adverse Effect, and
no event has occurred (or failed to occur) which is likely to result in a
Material Adverse Effect with respect to Parent. In addition, and without
limiting the generality of the foregoing, since March 31, 1997, Parent has not:
(i) declared, set aside or paid any dividend or other distribution with respect
to its capital stock (other than dividends required to be paid pursuant to the
terms of Parent's Series A Convertible Preferred Stock);
(ii) made any material change in accounting principles; or
(iii) entered into any agreement, whether in writing or otherwise, to do any of
the foregoing.
Section 5.10. Completeness of Warranties
No warranty or representation by Purchaser or Parent in this Agreement or any
Transaction Document or any statement or certificate furnished or to be
furnished by Purchaser or Parent to Seller pursuant to this Agreement or any
Transaction Document contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact required in order to make
such warranty, representation, statement or certificate not misleading.
ARTICLE VI
COVENANTS
Section 6.01. Post-Closing Cooperation
Purchaser, Parent and Seller shall cooperate and shall cause their officers,
employees, agents, auditors and representatives to cooperate with each other
during the period prior to the Closing (in order to effect the Closing) and
after the Closing (i) to ensure the orderly transition of the Acquired Assets
from Seller to Purchaser, (ii) to assist Seller in its closing of the Division's
books and other accounting functions relating to Seller's winding up of the
affairs of the Division, and (iii) to ensure the orderly transition to another
of Seller's divisions of the accounting and tax functions, currently provided to
Seller's EEA division by the Division and to effect the other transitional
services and functions described in the Shared Services and Facilities
Agreement. In addition, Seller will request that its auditors, at Parent's
expense (provided, that prior to the Closing Seller shall be responsible for
Seller's auditors' fees for work performed by such auditors, whether for the
benefit of Seller or Parent, at Seller's request), (x) provide Parent's auditors
with the work papers used in preparing the Division's financial reports (y)
consent to the inclusion of its unaudited financial statements of the Division
into Parent's present and future filings with the Securities and Exchange
Commission, as reasonably required (and in that connection Seller shall
cooperate with Parent's auditors as reasonably requested and Seller shall not
unreasonably refuse to execute and deliver to Parent's auditors customary
representation letters as from time to time are requested by such auditors), and
(z) work with Parent's auditors to assist such auditors in their review of the
Division. Neither Seller, Purchaser nor Parent shall be required by this Section
to take any action that would unreasonably interfere with the conduct of its
business. Section 6.02. Records
<PAGE>
(a) On the Closing Date, Seller shall deliver or cause to be delivered to
Purchaser all of Seller's original agreements, documents, books, records and
files relating to the Division (collectively, " Records"), subject to the
following exceptions:
(i) Seller shall not be required to deliver any Records that constitute Excluded
Assets;
(ii) Seller may retain the originals of any and all Records relating to Tax
Returns (including without limitation payroll records and paid invoices);
(iii) Purchaser shall not destroy any Records delivered by Seller hereunder
without first offering to turn over possession thereof to Seller by written
notice to Seller at least 30 days prior to the proposed date of such disposition
or destruction;
(b) (i) Seller may retain such copies of Records delivered to Purchaser
hereunder to the extent such Records relate to Seller's continuing operations or
are or may be required for tax, accounting or financial reporting purposes (and
such Records, other than those relating to Seller's continuing operations, shall
only be used for such purposes), and, (ii) after the Closing, upon reasonable
written notice, Purchaser agrees to furnish or cause to be furnished to Seller
and its representatives, employees, counsel and accountants reasonable access,
during normal business hours, such information and Records pertinent to the
Division and assistance (relating to the Division), as are reasonably necessary
for financial reporting, benefits administration and accounting matters, the
preparation and filing of any Tax Returns or other filings required to be made
with any governmental entity or the defense of any Tax claim or assessment or
other claim; provided, however, that such access shall not unreasonably disrupt
the normal operations of Purchaser or Parent.
(c) After the Closing, upon reasonable written notice, Seller agrees to furnish
or cause to be furnished to Purchaser, Parent and their representatives,
employees, counsel and accountants reasonable access, during normal business
hours, to the books and records of the Division retained by Seller pursuant to
the terms of this Agreement; provided, however, that such access shall not
unreasonably disrupt the normal operations of Seller.
<PAGE>
Section 6.03. Employee and Related Matters
(a) Purchaser and Seller agree that all employees of the Division included on
the list of employees heretofore delivered by Purchaser to Seller (the
"Continued Employees") shall be offered employment with Purchaser, and that any
Continued Employees who accept such offer of employment shall, for purposes of
eligibility, vesting and level of benefits under Purchaser's employee benefit
plans, receive credit for such Continued Employee's service with Seller;
provided, however, that after the Closing Date Purchaser shall not be obligated
by this Agreement to continue the employment of any Continued Employee on any
particular terms or for any particular period of time. In connection with this
transaction, each Continued Employee shall receive from Parent ten (10) shares
of Parent's common stock.
(b) Promptly after the Closing, Seller shall transfer to Purchaser any records
or copies of such records (including, but not limited to, Forms W-4 and Employee
Withholding Allowance Certificates) relating to withholding and payment of
income and employment taxes (federal, state and local) and FICA taxes with
respect to wages paid by Seller during the 1997 calendar year to any Continued
Employees. Purchaser shall, to the extent permitted by applicable law, provide
all such employees with properly completed Forms W-2, Wage and Tax Statements
for the 1997 calendar year setting forth the wages and taxes withheld with
respect to such employees for the 1997 calendar year by Seller and Purchaser as
predecessor and successor employers, respectively. Purchaser and Seller shall
also comply with the filing requirements set forth in Revenue Procedure 96-60,
1996-53 I.R.B. 24 to implement this Section 6.03. If Purchaser shall determine
that it is not permitted by applicable law to provide such Forms W-2, Purchaser
shall so inform Seller and shall return such records to Seller not later than
sixty (60) days prior to the time that Seller is required to provide such
employees with such Forms W-2.
(c) Nothing in this Agreement, express or implied, is intended to confer or
shall confer upon any of Seller's employees or former employees, or any
Continued Employee, any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement, including, without limitation, any rights
of employment.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.01. Survival of Representations and Warranties, etc.
Except as otherwise expressly provided by this Agreement or any of the
Transaction Documents, all representations and warranties, covenants, agreements
and other undertakings of the parties contained in this Agreement or in any
writing delivered pursuant hereto (including without limitation the
indemnification obligations contained in this Article VII), shall survive the
Closing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any party hereto, for a period commencing
on the date hereof and ending on May 31, 1999 (the "Survival Period"); provided,
however, that all representations and warranties of Seller made in Sections
4.08(a), 4.09 and 4.10 hereof (and Seller's indemnification obligations with
respect thereto as provided in this Article VII) shall survive until the
expiration of all applicable statutes of limitation; and provided further, that
the expiration of any representation or warranty shall not affect any claim
asserted prior to the date of such expiration.
<PAGE>
Section 7.02. Indemnification
(a) Subject to the limitations set forth in this Article VII, Seller shall
indemnify, defend, and hold harmless Purchaser, Parent and their respective
Affiliates from and against any and all losses, liabilities, damages (whether
direct or consequential), obligations, payments, duties, demands, claims,
diminutions in value, penalties, fines, costs and expenses (including, without
limitation, losses in the absence of third party claims, the costs and expenses
of any and all actions, suits, proceedings, judgments, settlements and
compromises relating thereto, and reasonable legal costs and attorneys' fees in
connection therewith) (collectively, "Indemnifiable Losses"; each being an
"Indemnifiable Loss") of Purchaser, Parent and their respective Affiliates,
related to, arising out of or due to, directly or indirectly:
(i) any inaccuracy in or breach of any of the representations, warranties,
covenants, agreements or undertakings of Seller contained in this Agreement or
in any agreement, document or instrument executed and delivered pursuant hereto
or in connection herewith;
(ii) any Excluded Liability or Excluded Asset; or
(iii) the failure of Seller to comply with any bulk sales or transfer laws of
any jurisdiction.
(b) Subject to the limitations set forth in this Article VII, Purchaser and
Parent shall, jointly and severally, indemnify, defend, and hold harmless Seller
and Seller's Affiliates from and against any and all Indemnifiable Losses of
Seller and Seller's Affiliates related to, arising out of or due to, directly or
indirectly:
(i) any inaccuracy in or breach of any of the representations, warranties,
covenants, agreements or undertakings of Purchaser or Parent contained in this
Agreement or in any agreement, document or instrument executed and delivered
pursuant hereto in connection herewith; or
(ii) any Assumed Liability.
(c) The amount of any Indemnifiable Loss for which indemnification is provided
under this Section 7.02 shall be net of (i) any amounts actually recovered by
the indemnified party under insurance policies with respect to such
Indemnifiable Loss and (ii) the amount of any adjustment to the Purchase Price
pursuant to Section 2.04 hereof resulting from such Indemnifiable Loss or from
the facts or circumstances underlying, resulting in or giving rise to such
Indemnifiable Loss.
<PAGE>
Section 7.03. Procedure for Indemnification
(a) If a party entitled to indemnification pursuant to Section 7.02 (the
"Indemnitee") receives notice of the assertion by a Person who is not a party to
this Agreement of any claim or of the commencement by any such Person of any
action or proceeding (a "Third Party Claim") with respect to which another party
to this Agreement (the "Indemnifying Party") is obligated to provide
indemnification, the Indemnitee shall give the Indemnifying Party written notice
thereof after becoming aware of such Third Party Claim. Such notice shall
describe the Third Party Claim in reasonable detail, and shall indicate the
amount (estimated if necessary) of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. With respect to any Third Party Claim, the
Indemnifying Party may elect to compromise or defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, any Third
Party Claim; provided, however, that without the consent of the Indemnitee,
which consent shall not unreasonably be withheld or delayed, the Indemnifying
Party shall not settle or compromise any claim unless such settlement or
compromise (i) is for money damages only, which damages are paid solely by the
Indemnifying Party, (ii) includes a release of the Indemnitee, and (iii) does
not involve an admission of liability or fault on the part of the Indemnitee. If
the Indemnifying Party elects to compromise or defend such Third Party Claim, it
shall within 30 days (or sooner if the nature of the Third Party Claim so
requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Third Party Claim. If the Indemnifying Party elects not to
compromise or defend against the Third Party Claim, or fails to notify the
Indemnitee of its election as herein provided, the Indemnitee may defend such
Third Party Claim without waiving its claim for indemnification hereunder;
provided, however, that the Indemnitee shall not settle or compromise any such
claim without the consent of the Indemnifying Party. In any event, the
Indemnitee and the Indemnifying Party may each participate, at its own expense,
in the defense of such Third Party claim, it being understood that the
Indemnifying Party may, if it so elects, control such defense. If the
Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available on a reasonable basis to the Indemnifying Party any personnel or any
books, records, or other documents within its control that are necessary for
such defense.
(b) Any claim for indemnity between the parties other than with respect to a
Third Party Claim shall be asserted by written notice given by the Indemnitee to
the Indemnifying Party, setting forth in reasonable detail the basis for such
claim. The Indemnifying Party shall have a period of 45 days within which to
respond thereto. If the Indemnifying Party does not respond within such 45-day
period, the Indemnifying Party shall be deemed to have accepted responsibility
to make payment, and shall have no further right to contest the validity of such
claim. If the Indemnifying Party does respond within such 45-day period and
rejects such claim in whole or in part, the Indemnitee shall, subject to the
limitations as to liability and otherwise as set forth in this Article VII, be
free to pursue such remedies as may be available to such party by applicable
law.
Section 7.04. Limitation on Seller's Indemnification Obligations
Purchaser's and Parent's indemnification rights provided by this Article VII,
other than with respect to Excluded Liabilities, shall be subject to the
following limitations:
(i) Purchaser, Parent and their respective Affiliates shall not be entitled to
assert any claim with respect to any Indemnifiable Losses until such time as the
aggregate amount of all of such Indemnifiable Losses exceed $150,000 (the
"Basket Amount").
<PAGE>
(ii) At such time as Purchaser's, Parent's and their respective Affiliates'
Indemnifiable Losses exceed, in the aggregate, the Basket Amount, then
Purchaser, Parent and their respective Affiliates may assert all of their claims
for such Indemnifiable Losses up to a maximum aggregate amount of $2,000,000
(the "Cap Amount").
Section 7.05. Use of Escrowed Parent Stock
So long as shares of Parent Stock continue to be held by the Escrow Agent
pursuant to the Escrow Agreement, any claim by Purchaser, Parent or their
Affiliates for indemnification under this Article VII hereof shall, to the
extent that Purchaser, Parent or their Affiliates are entitled to such
Indemnification, first be satisfied by delivery of shares of Parent Stock held
in escrow by the Escrow Agent equal in value to the relevant Indemnifiable Loss,
which Parent Stock shall be valued at the Valuation Price.
Section 7.06. Limitation on Purchaser's Indemnification Obligations
Seller's indemnification rights provided by this Article VII, other than with
respect to Assumed Liabilities, shall be subject to the following limitations:
(i) Seller and its Affiliates shall not be entitled to assert any claim with
respect to any Indemnifiable Losses until such time as the aggregate amount of
all of such Indemnifiable Losses exceed the Basket Amount.
(ii) At such time as Seller's and its Affiliates' Indemnifiable Losses exceed,
in the aggregate, the Basket Amount, then Seller and its Affiliates may assert
all of their claims for such Indemnifiable Losses up to a maximum aggregate
amount equal to the Cap Amount.
Section 7.07. Sole Remedy
Except as otherwise expressly provided by this Agreement or the Transaction
Documents (including without limitation the Registration Rights Agreement), the
indemnification provisions of this Article VII shall from and after the Closing
be the sole remedy for any breach or alleged breach of any the representations,
warranties or covenants contained in this Agreement.
Section 7.08. Dispute Resolution
(a) If the Indemnifying Party disputes any claim for indemnification, or its
obligation to indemnify any claim, pursuant to this Article VII, the
Indemnifying Party shall notify the Indemnitee of such dispute within twenty
(20) days of receipt of notice of the claim. If the matter cannot be reconciled
by mutual agreement within sixty (60) days of the date of the notice of the
claim, the matter shall be submitted to arbitration. The dispute shall be
resolved by three (3) arbitrators in Detroit, Michigan, according to the
Commercial Arbitration Rules of the American Arbitration Association ("AAA") as
then in effect, and be binding on all of the parties hereto. The three (3)
arbitrators shall be selected as follows: (i) the AAA shall provide a list of
ten (10) potential arbitrators, each familiar with the distribution industry (or
in the case of an accounting dispute, a list consisting of the "Big Six"
accounting firms, excluding Coopers), (ii) the Indemnifying Party and the
Indemnitee shall each select one arbitrator and (iii) the third arbitrator shall
be selected by the other two. Such arbitrators shall each agree to be bound by
the terms and delivery requirements of this Agreement, the Escrow Agreement and
the other Transaction Documents. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
<PAGE>
(b) If the Indemnifiable Loss subject to dispute relates to a Third Party Claim
which is a final non-appealable judgment, then the Indemnifying Party may not
dispute the substance of the claim, but only its liability therefor.
(c) Each party shall pay its own costs and expenses (including attorneys' fees
and expenses) in connection with any arbitration pursuant to this Section 7.08,
and the fees and expenses of the arbitrator in any such arbitration shall be
paid by the non-prevailing party as determined by the arbitrator.
Section 7.09. Special Notice
Seller agrees to provide Purchaser with written notice of any and all formal
claims for indemnity it makes or receives to or from any third party under the
Stock Redemption Agreement if and to the extent that such claim relates to the
operation of the Division.
Section 7.10. Environmental Matters
(a) For the period beginning on the Closing Date and ending on the third
anniversary of the Closing Date (the "Environmental Survival Period"), Purchaser
and Seller shall each be responsible for fifty percent (50%) of the first
$500,000 of the cost of any debt, liability, payment or obligation relating to
any Environmental Law or otherwise relating to the environment or environmental
cleanup costs, or disposal of any contaminants, to the extent relating to the
Acquired Assets or any of the properties or facilities leased by Seller
immediately prior to the Closing in connection with the Division, and which
leases are being assumed by Purchaser pursuant to this Agreement, and
attributable to events, circumstances or actions occurring on or prior to the
Closing Date ("Division Environmental Liabilities"), but only to the extent that
(i) such Division Environmental Liabilities result from or relate to (x) a Third
Party Claim made during the Environmental Survival Period, or (y) an affirmative
obligation arising under any Environmental Law during the Environmental Survival
Period, and (ii) during the Environmental Survival Period, Purchaser has given
written notice to Seller of such Third Party Claim or affirmative obligation in
accordance with Section 7.03 hereof (such Division Environmental Liabilities
being referred to herein as "Shared Environmental Liabilities").
(b) To the extent that the aggregate amount of all Shared Environmental
Liabilities exceeds $500,000, then the excess of such Shared Environmental
Liabilities over $500,000 shall be deemed to be Excluded Liabilities and Seller
shall be liable for 100% of such excess.
<PAGE>
(c) Any Division Environmental Liabilities (i) that do not result from or relate
to (x) a Third Party Claim made during the Environmental Survival Period, or (y)
an affirmative obligation arising under any Environmental Law during the
Environmental Survival Period, or (ii) with respect to which Purchaser has not
given written notice to Seller during the Environmental Survival Period, and any
debts, liabilities, payments and obligations in the nature of Division
Environmental Liabilities but attributable to events, circumstances or actions
occurring after the Closing Date, shall be deemed to be Assumed Liabilities and
Purchaser shall be liable for 100% thereof; provided, however, that Divisional
Environmental Liabilities of which Seller has Knowledge as of the date hereof
shall be deemed Excluded Liabilities and not Assumed Liabilities.
(d) During the Environmental Survival Period, Purchaser's and Seller's
respective liabilities under paragraphs (a), (b) and (c) of this Section shall
be deemed to be Indemnifiable Losses subject to the indemnification provisions
and procedures of Sections 7.02 and 7.03 hereof, and the parties' obligations
under indemnification provisions and procedures shall, notwithstanding the
provisions of Section 7.01 hereof, survive until the termination of the
Environmental Survival Period. After the termination of the Environmental
Survival Period, the provisions of Sections 7.02 and 7.03 shall cease to apply
with respect to such respective liabilities of the parties, except with respect
to claims asserted prior to the termination of the Environmental Survival
Period. During the Environmental Survival Period, Purchaser's and Seller's
respective liabilities under paragraphs (a), (b) and (c) of this Section shall
not be subject to the "basket" and "cap" limitations contained in Sections 7.04
and 7.06 hereof.
(e) Notwithstanding the provisions of Section 7.07, nothing in this Agreement
shall prohibit Seller from asserting in any legal proceedings, or from causing
Purchaser to be named a party to any such proceedings for the purpose of
asserting and establishing, that such Divisional Environmental Liabilities
referred to in paragraph (c) of this Section are Assumed Liabilities and the
sole responsibility of Purchaser.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Headings; Grammatical Usage
The descriptive headings of the several Articles and Sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement. In construing this Agreement, feminine or neuter pronouns shall be
substituted for those masculine in form and vice versa, and plural terms shall
be substituted for singular terms and vice versa, in any place in which the
context so requires.
<PAGE>
Section 8.02. Notices
Any notices or other communications required or permitted hereunder shall be
given in writing and shall be sufficient if delivered personally or sent by
certified or registered mail, postage prepaid, or by reputable overnight
carrier, addressed as follows:
If to Seller, to:
Connectivity Products Incorporated
680 Mechanic Street, Suite 1201
Leominster, Massachusetts 01453
Attention: Mr. James S. Harrington
with a copy to:
Zimet, Haines, Friedman & Kaplan
460 Park Avenue
New York, New York 10022
Attention: Herbert M. Friedman, Esq.
If to Purchaser or Parent, to:
Anicom, Inc. or
Reel Acquisition Corp.
6133 North River Road, Suite 1000
Rosemont, Illinois 60018
Attention: Mr. Donald C. Welchko
in each case, with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Jeffrey R. Patt, Esq.
or to such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
when so personally delivered, or if mailed, three days after mailing, or if sent
by overnight courier, on the following business day; provided, that any notice
or communications changing any of the addresses set forth above shall be
effective and deemed given only upon its receipt.
Section 8.03. Assignment; Third Parties
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interest,
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties. Neither this Agreement nor any
other agreement contemplated hereby shall be deemed to confer upon any Person
not a party hereto or thereto any rights or remedies.
<PAGE>
Section 8.04. Expenses and Transfer Taxes
(a) Except as expressly provided to the contrary in this Agreement, all fees and
expenses incurred by Seller in connection with this Agreement shall be borne by
Seller, and all fees and expenses incurred by Purchaser or Parent in connection
with this Agreement shall be borne by Purchaser or Parent.
(b) Seller shall pay all Transfer Taxes which may be payable in connection with
the transactions contemplated by this Agreement, other than any Transfer Taxes
which may be payable in connection with the sale or other transfer to Purchaser
of any vehicles included in the Acquired Assets, which Transfer Taxes shall be
paid by Purchaser.
Section 8.05. Preamble; Preliminary Recitals
The preliminary recitals set forth in the preamble hereto are hereby
incorporated and made a part of this Agreement.
Section 8.06. Reliance
All covenants, warranties and representations made herein by any party shall be
deemed to be material and relied upon by the other party, notwithstanding any
investigation by or knowledge of such other party.
Section 8.07. Obligation of Parent; Joint and Several Obligations
Whenever this Agreement requires Purchaser to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause
Purchaser to take such action. Without limiting the generality of the foregoing,
Purchaser and Parent shall be jointly and severally liable and responsible for
all representations, warranties, covenants, agreements, liabilities and
obligations of Purchaser and Parent under this Agreement and the Transaction
Documents.
Section 8.08. Complete Agreement
This Agreement, which includes each of the Exhibits and Schedules hereto,
contains the entire understanding of the parties with respect to the
transactions contemplated hereby and supersedes all prior arrangements or
understandings with respect thereto (including without limitation the letter
agreement dated June 9, 1997 between Purchaser and Connectivity Technologies
Inc.). There are no restrictions, agreements, promises, warranties, covenants,
or undertakings other than those expressly set forth herein or therein.
<PAGE>
Section 8.09. Amendments and Waivers
This Agreement may be amended or modified, and the terms hereof may be waived,
only by a written instrument signed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
Section 8.10. Counterparts
This Agreement may be executed in counterparts, all of which shall be considered
one and the same Agreement and each of which shall be deemed an original.
Section 8.11. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF MICHIGAN APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT THAT THE TRANSFER AND CONVEYANCE OF ANY REAL PROPERTY
OR INTEREST THEREIN SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH SUCH
REAL PROPERTY IS SITUATED. EACH OF THE PARTIES HERETO HEREBY AGREES THAT ANY
SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT OF THIS AGREEMENT SHALL BE
BROUGHT ONLY IN THE STATE COURTS OF OR FEDERAL COURTS SITTING IN THE STATE OF
MICHIGAN. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF
SUCH COURTS AND TO SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
BEING MADE UPON SUCH PARTY BY REGISTERED OR CERTIFIED MAIL AT THE ADDRESS
SPECIFIED IN SECTION 8.02 HEREOF. EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
OR ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT COURT.
Section 8.12. Severability
This Agreement shall be deemed severable; the invalidity or unenforceability of
any term or provision of this Agreement shall not affect the validity or
enforceability of this Agreement or of any other term hereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the day and year first above written.
Purchaser:
REEL ACQUISITION CORP.
By:/s/ CARL E. PUTNAM
_____________________
Carl E. Putnam
President
Parent:
ANICOM, INC.
By:/s/ CARL E. PUTNAM
_____________________
Carl E. Putnam
President and Chief
Operating Officer
Seller:
CONNECTIVITY PRODUCTS INCORPORATED
By:/s/ JAMES S. HARRINGTON
______________________
James S. Harrington
President and Chief Executive
Officer
