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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 30, 1997
CHICAGO MINIATURE LAMP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
OKLAHOMA 0-25848 73-1412000
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
500 Chapman Street, Canton, Massachusetts 02021
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 828-2948
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ITEM 2. ACQUISITION OF ASSETS
On January 30, 1997, the Company consummated the purchase of all of
the outstanding shares of capital stock of Valmont Electric, Inc. ("Valmont"),
a wholly owned subsidiary of Valmont Industries, Inc. Valmont is a
manufacturer of magnetic and electronic ballasts for the fluorescent, sign and
high intensity discharge lighting markets. The Company intends to continue and
expand the operations of Valmont as presently being conducted. Valmont brings
to the Company a presence in the electrical wholesale distribution and "do it
yourself" (DIY) store markets. There was no relationship between the Seller
and the Registrant or any of its officers, directors or affiliates. The
purchase price was approximately $25 million and the source of funds was cash
realized from proceeds received from the Company's public offering which
occurred in October, 1996. For the year ended December 28, 1996, Valmont is
estimating revenues of $92 million and a net loss of $500,000. The acquisition
of Valmont is being treated as a purchase for accounting purposes and upon
allocation of the purchase price, Valmont expects to reflect a net equity of
approximately $25 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired. It is
impracticable at this time to provide the required financial
statements for the businesses acquired in the acquisition
described in Item 2 above. The Registrant is in the process
of preparing those financial statements. None are available
at this time. It is anticipated that such financial
statements will be available within 60 days from the date of
this report, and in any event will be filed as an amendment to
this report as soon as practicable, but no later than 60 days
after this report has been filed.
(b) Pro Forma Financial Information. No pro forma financial
information with respect to the acquisition described in Item
2 above is available at this time. It is anticipated that the
required pro forma financial information will be available
within 60 days from the date of this report, and in any event
will be filed as an amendment to this report as soon as
practicable, but no later than 60 days after this report has
been filed.
(c) Exhibits.
10.30 Copy of Stock Purchase Agreement dated January 3, 1997
between Valmont Industries, Inc. and the Company
SIGNATURE
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.
CHICAGO MINIATURE LAMP, INC.
By /s/ Ronald S. Goldstein
----------------------------------
Ronald S. Goldstein
Chief Financial Officer
Date: February 13, 1997
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Exhibit 10.30
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of January 3, 1997 by and between VALMONT
INDUSTRIES, INC., a Delaware corporation ("Seller") and CHICAGO MINIATURE LAMP,
INC., an Oklahoma corporation ("Buyer").
RECITALS:
This Agreement is made with reference to the following facts and
circumstances:
(a) Valmont Electric, Inc., a Delaware corporation ("the
Company") produces, markets and sells ballasts for the
lighting industry (the "Business").
(b) Seller owns all of the issued and outstanding capital stock
of the Company.
(c) Seller desires to sell, and Buyer desires to purchase, all
of the issued and outstanding shares of capital stock of the
Company for the consideration and upon the terms and
conditions hereinafter set forth.
AGREEMENT:
In consideration of the foregoing recitals and in further
consideration of the mutual covenants and agreements hereinafter contained, the
parties hereto agree, subject to the terms and conditions hereinafter set
forth, as follows.
1. SALE AND PURCHASE OF STOCK. Subject to the terms and
conditions contained herein, at Closing (as defined in Section 3), Seller will
sell, transfer, assign, convey and deliver to Buyer, and Buyer will purchase,
accept and acquire (in its own name or through a wholly-owned subsidiary) all
of the shares of common stock of the Company ("Purchased Stock").
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2. PURCHASE PRICE; PAYMENT.
2.1 PURCHASE PRICE. The purchase price payable by Buyer for the
Purchased Stock (the "Purchase Price") shall be an amount
equal to Twenty-Five Million Dollars ($25,000,000) plus (or
minus) the amount by which Closing Equity (as defined below)
is greater than (or less than) Thirty-Seven Million Three
Hundred Seventy-Three Thousand Dollars ($37,373,000).
"Closing Equity" shall mean the consolidated stockholders
equity of the Company (plus any net intercompany amounts due
to Seller that are forgiven pursuant to Section 12.2 hereof)
as reflected in the Closing Balance Sheet (as defined in
Section 4.1).
2.2 PAYMENT. Twenty-five Million Dollars ($25,000,000) of the
Purchase Price (the "Estimated Amount") shall be paid by
wire transfer of immediately available funds on the Closing
Date (as defined in Section 3). The balance of the Purchase
Price, if any, shall be paid on the Settlement Date (as
defined in Section 4.2).
3. CLOSING. Subject to the terms and conditions contained in
this Agreement, the closing of the transactions contemplated hereby (the
"Closing") will occur at the offices of McGrath, North, Mullin & Kratz, P.C.,
or by fax or mail if practical, as soon as practical following satisfaction of
the conditions set forth in Sections 9 and 10 below, or at such other place or
time or on such other date as the parties hereto may mutually agree (the
"Closing Date"). Closing shall be effective as of 5:01 p.m. central time on
the Closing Date (the "Effective Time").
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3.1 BUYER'S OBLIGATION AT CLOSING. At the Closing, Buyer shall:
3.1.1 PURCHASE PRICE. Pay to Seller the Estimated
Amount.
3.1.2 LEGAL OPINION. Cause to be delivered to Seller
the legal opinion of Bingham, Dana & Gould LLP,
counsel for Buyer, in a form mutually
acceptable.
3.1.3 CERTIFICATE. Execute and deliver the
certificate contemplated in Section 9.3.
3.1.4 TRANSITION AGREEMENT. Execute and deliver the
Transition Agreement (as defined in Section
4.6).
3.2 SELLER'S OBLIGATIONS AT CLOSING. At the Closing, Seller
shall:
3.2.1 STOCK CERTIFICATES. Deliver, or cause to be
delivered, to Buyer or its nominees a
certificate or certificates representing all of
the Purchased Stock and all shares of CCC (as
defined in Section 6.1) not held by the Company
(as to the latter in compliance with all
applicable Mexican laws and formalities), duly
endorsed to the Buyer or its nominees, free and
clear of liens and encumbrances.
3.2.2 LEGAL OPINION. Cause to be delivered to Buyer
the legal opinion of McGrath, North, Mullin &
Kratz, P.C., counsel for Seller, in a form
mutually acceptable.
3.2.3 CERTIFICATE. Execute and deliver the
certificate contemplated in Section 8.3.
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3.2.4 TRANSITION AGREEMENT. Execute and deliver the
Transition Agreement.
3.2.5 RESIGNATIONS. Deliver the resignations of all
officers and directors of the Company and the
Subsidiaries, other than those (if any) whom
Buyer has indicated in writing need not resign.
3.2.6 CORPORATE RECORDS. Deliver to Buyer the
original minute books, stock record books, and
other corporate records of the Company and each
of the Subsidiaries.
4. POST CLOSING MATTERS.
4.1 CLOSING BALANCE SHEET.
4.1.1 YEAR-END AUDIT. As soon as practicable
following the Closing Date, Seller shall
prepare and cause to be delivered to Buyer an
audited consolidated balance sheet of the
Company and the Subsidiaries as of December 28,
1996 (the "1996 Audited Balance Sheet") and the
related statements of income, stockholders
equity and cash flows for the year then ended
(collectively, the "1996 Audited Financial
Statements"), together with the report of
Deloitte & Touche LLP ("Deloitte") in customary
form stating that such consolidated financial
statements present fairly, in all material
respects, the financial position of the Company
and the Subsidiaries as of December 28, 1996,
and the results of their operations and their
cash flows for such year in conformity with
generally accepted accounting principles (the
"Deloitte Report"). The incremental cost of
such preparation and audit shall be shared
equally by Buyer and Seller.
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4.1.2 CONSENT. Seller hereby consents to Buyer's use
of the 1996 Audited Financial Statements
subject, however, to Buyer obtaining consent
from Deloitte. Seller will cooperate with, and
use reasonable efforts to assist, Buyer in its
efforts to obtain consent from Deloitte to use
the 1996 Audited Financial Statements and the
Deloitte Report. Buyer shall pay any
out-of-pocket costs associated with obtaining
such consent from Deloitte (including all costs
and charges of Deloitte).
4.1.3 PREPARATION. As soon as practicable following
the Closing Date (and, in any event, after
delivery to Buyer of the 1996 Audited Financial
Statements and the Deloitte Report), Seller
shall prepare and deliver to Buyer the special
purpose consolidated balance sheet of the
Company and its Subsidiaries (as defined in
Section 6.1) as at the Effective Time (the
"Preliminary Balance Sheet"). Buyer shall
provide to Seller, and shall cause the Company
and the Subsidiaries to provide to Seller, such
assistance and access to books and records as
is necessary to timely prepare and deliver the
Preliminary Balance Sheet, including but not
limited to access to the Company's and the
Subsidiaries' employees and books and records.
The Preliminary Balance Sheet shall be prepared
in accordance with generally accepted
accounting principles, applied in a manner
consistent with the 1996 Audited Balance Sheet;
provided, however, (i) no accrual or reserve
shall be made with respect to any current
Income Taxes (as hereinafter defined at Section
6.11.3 hereof) payable, deferred Income Taxes
or with respect to any other liabilities of the
Company retained or indemnified by Seller, (ii)
the aggregate reserve for warranty claims shall
be fixed at $2,874,000 and the aggregate
reserves with respect to obsolete and
slow-moving inventory shall be fixed at
$2,084,000, (iii) no assets (or reserves with
respect thereto)
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shall be reflected that are transferred to
Seller pursuant to Section 8.1(e), (iv)
all amounts owing by, or owed to, the Company
and/or the Subsidiaries in respect of
intercompany accounts with Seller and/or any of
its Affiliates shall be forgiven and treated as
part of contributed capital and (v) if the
Settlement (as defined in Section 8.5.1) occurs
prior to Closing, the amount of the EBT Payment
(as defined in Section 8.5.2), less the amount
of the EBT Accrual (as defined in Section 8.5)
shall be treated as an asset of the Company.
Each party shall make available all documents
or records reasonably requested by the other
(or its accountants) to permit the preparation
and review of the Preliminary Balance Sheet.
4.1.4 OBJECTIONS. Within 20 business days following
receipt thereof, Buyer shall submit to Seller
in writing any objections that it may have to
the Preliminary Balance Sheet. Such notice
shall specify in reasonable detail the nature
and basis of each such objection. Buyer and
Seller shall use reasonable efforts to resolve
such objections within 45 business days
following receipt by Seller of such objections;
failing which, such objections shall be
submitted to Arthur Andersen, LLP (the
"Arbitrator") within ten days following such
45-day period, for resolution pursuant to
binding arbitration. The Arbitrator as soon as
practicable thereafter will resolve all such
objections and report such resolution to the
parties in writing. Each party shall pay
one-half of the costs of the arbitration,
provided, that each party shall pay the fees
and expenses of its own counsel and
accountants. Upon the parties agreement to, or
the resolution in accordance with this
paragraph of, such objections, Seller shall
incorporate such resolutions into the
Preliminary Balance Sheet and shall deliver to
Buyer such resulting balance sheet (the
"Closing
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Balance Sheet") which shall then be final and
binding for purposes of this Agreement.
4.2 SETTLEMENT OF PURCHASE PRICE. On the second business day
following (i) the expiration of 20 business days following
receipt by Buyer of the Preliminary Balance Sheet, if Buyer
shall not have notified Seller of objections thereto within
such 20 business day period, or (ii) in any other case,
receipt by Buyer of the Closing Balance Sheet pursuant to
Section 4.1 (in either case, the "Settlement Date"), Buyer
shall pay to Seller an amount equal to the excess of the
Purchase Price over the Estimated Amount, or Seller shall
pay to Buyer an amount equal to the excess of the Estimated
Amount over the Purchase Price, as the case may be, in
either case with interest at an annual rate of six percent
(6%) per annum from the Closing Date through the date of
payment. The payment required to be made pursuant to this
Section 4 shall be made by wire transfer of immediately
available funds.
4.3 INSURANCE MATTERS.
4.3.1 COVERAGE. Buyer acknowledges that the Company
and the Subsidiaries are covered by certain
insurance policies and insurable risk programs
made available through Seller. As of the
Effective Time, such coverage shall be
discontinued.
4.3.2 INSURANCE CLAIMS. The parties acknowledge that
certain claims resulting from occurrences prior
to Closing may be subject to coverage under
Seller's existing insurance program, policies
or agreements. From and after Closing, the
Company and the Subsidiaries shall be entitled
to submit such claims to Seller with respect to
which insurance coverage existed under third
party insurance policies maintained by Seller
applicable to the Company
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and the Subsidiaries prior to the Closing,
which claims Seller shall forward to its
insurance carriers, and Buyer shall ensure that
the Company and the Subsidiaries do not submit
claims directly to any such insurance carrier.
Subject to the provisions of Section 12 hereof,
in no event shall Seller be responsible or
liable for such claims if not paid or covered
by insurance. Subject to the provisions in
Section 12, the Buyer and/or the Company shall
be obligated to pay and be responsible for any
deductible or self-insured retention with
respect to such claims.
4.3.3 DEFENSE OF CLAIMS. Buyer and the Company
(including the Company's employees) shall
cooperate fully with Seller and its insurance
carriers in connection with such claims and the
defense thereof, shall make all records and
personnel available at no cost to Seller and
its insurance carriers which are reasonably
necessary for handling such claims and defense,
and shall not take any action detrimental to
such defense. Seller shall keep Buyer informed
with respect to such matters and shall consult
and cooperate with Buyer in connection
therewith.
4.4 TRADEMARK AND TRADE NAME. Seller specifically and
exclusively retains, and Buyer acknowledges that it will not
acquire, and that neither the Company nor any Subsidiary
owns, any right, title or interest to the trade name
"Valmont" (or derivations thereof) or to any logos or
trademarks related thereto. Buyer agrees that promptly
after Closing it will cause the Company to change its name
to eliminate the name "Valmont" and, subject to the
provisions of the Transition Agreement (as defined in
Section 4.6) to discontinue the use of any advertising or
other form of media that uses or references any such names
or logos. Buyer further agrees that as soon as practicable,
but in no event longer than three (3) months after the
Closing Date, it shall remove all outside signs
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which refers to Valmont, and, subject to the provisions of
the Transition Agreement (as defined in Section 4.6) each of
Buyer and Seller shall take all such other action as may
be reasonably necessary on its part to dissociate the
"Valmont" name and Seller with the operations of the Company
and the Subsidiaries after Closing.
4.5 RECORD RETENTION. Buyer will cause all material books and
records of the Company and the Subsidiaries (the "Records")
to be retained for seven (7) years after Closing. During
such term, Buyer shall allow Seller and its representatives
access to inspect or copy the Records during normal business
hours upon reasonable prior notice. In the event Buyer
intends to destroy any Records at the end of such seven-year
term, Buyer shall first notify Seller at which time Seller
shall have the right to remove the Records at its own cost.
4.6 TRANSITION SERVICES. At Closing, Buyer shall execute the
Transition Services Agreement attached hereto as Exhibit 4.6
(the "Transition Agreement").
5. EMPLOYEE MATTERS.
5.1 GENERAL. As of the Effective Time, Buyer will cause the
Company and its Subsidiaries to continue to employ then
existing employees ("Company Employees") as at-will
employees on terms and conditions then existing, subject,
however, to the provisions set forth below, and subject to
changes as may be made by Buyer or the Company after the
Effective Time. Notwithstanding anything herein to the
contrary, Buyer, the Company and the Subsidiaries shall
honor and be responsible for all employee benefits that the
Company Employees are entitled to the extent accrued on the
Closing Balance Sheet. Subject to Section 12, Buyer, the
Company and the Subsidiaries shall be responsible for any
and all liabilities, obligations and claims of any kind
arising out of employment (or termination of employment,
whether actual or
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constructive) of the Company Employees on or after the
Closing Date, including, but not limited to, any severance,
termination pay, or similar obligations with respect to
employees terminated (whether actually or
constructively) at or after the Effective Time or resulting
from the change in any benefits provided to the Company
Employees, provided, however, none of Buyer, the Company or
the Subsidiaries shall have any liability in respect of any
of the benefit plans described in Sections 5.2 and 5.3.
5.2 401(K) PLANS. As of the Effective Time, Company Employees
shall cease to actively participate in the Valmont Employee
Retirement Savings Plan (the "401(k) Plan") and, except for
contributions due in respect of services performed through
the Effective Time, no further contributions shall be made
to the 401(k) Plan for the benefit of Company Employees. As
of the Closing Date, the interests of the Company Employees
in the 401(k) Plan shall be one hundred percent (100%)
vested and shall be fully nonforfeitable. In addition,
Seller shall make all basic and supplemental contributions
to such plan for Company Employees, for the fiscal year
ended December 28, 1996.
5.3 HEALTH WELFARE PLANS. The parties acknowledge that the
Company Employees participate in Seller's health and welfare
benefit plans and programs. As of the Effective Time,
Company Employees shall cease to participate in such health
and welfare plans and programs. Subject to the provisions
of Section 5.5 below, Buyer shall cause such Company
Employees to be permitted to participate in Buyer's employee
benefits plans as promptly as possible following the
Closing.
5.4 WARN. Buyer shall be responsible for, and shall indemnify
and hold Seller harmless against and in respect of any
liability, loss, claim, damage or deficiency that arises
pursuant to the Worker Adjustment and Retraining
Notification Act (29 U.S.C. Sections 2101-2109) or any
similar foreign, state
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or local laws or ordinances on account of, or in connection
with, the termination (whether actual or constructive) of
employees at or after the Effective Time. Seller
shall be responsible for, and shall indemnify and hold
harmless Buyer, the Company, and the Subsidiaries against
and in respect of any such liability, loss, claim, damage,
or deficiency to the extent caused by or arising out of
termination of employees occurring before the Effective
Time.
5.5 BUYER PLANS. Buyer shall cause prior periods of service
with the Seller, Company and the Subsidiaries to count for
purposes of eligibility and vesting under any benefit plans
provided to Company Employees after Closing. With respect
to currently insured employees of the Company and the
Subsidiaries, Buyer shall not permit the health and welfare
plans of the Company and the Subsidiaries adopted in
substitution for Seller's health and welfare plans to impose
any additional waiting period requirements or any similar
requirements and Buyer shall use its best efforts to cause
to be waived any pre-existing condition requirements,
evidence of insurability and similar provisions under such
plans, except to the extent that Seller's health and welfare
plans would have applied any such provisions to any such
Company Employees had the sale of the Purchase Stock not
occurred. After Closing, Buyer shall also use its best
efforts to cause the Company and the Subsidiaries to apply
toward any deductible requirements and out-of-pocket maximum
limits under its employee welfare benefit plans any amounts
paid (or accrued) by each Company Employee prior to Closing
under welfare benefit plans of Seller during the
then-current plan year.
5.6 COOPERATION. The parties shall cooperate with each other to
provide any information, filings or notices as appropriate
with respect to this Section 5. Buyer shall assist in
providing any information, filings or notices (including the
notice required by Section 204(h) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) as needed
to cease the benefit accruals.
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5.7 SATISFACTION OF CLOSING CONDITIONS. Each of the parties
shall use its best efforts to cause the satisfaction, on or
before the Closing Date, of such of the conditions precedent
to the other party's obligations hereunder as impose
obligations on such party or require actions on its part.
5.8 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Closing, and in any event immediately prior to the Closing,
Seller shall promptly advise the Buyer in writing of any
matter hereafter arising or becoming known to it that, if
existing, occurring, or known at the date of this Agreement,
would have been required to be set forth or described in the
Disclosure Schedule or that is necessary to correct any
information in the Disclosure Schedule that is or has become
inaccurate. No such disclosure shall be taken into account
in determining whether the conditions to Buyer's obligations
to consummate the transactions hereby contemplated have been
satisfied.
6. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to and with Buyer, both as of the date hereof and as of
the Effective Time, as set forth below. Such representations and warranties
are made subject to those matters set forth in the Seller Disclosure Schedule
dated as of the date hereof and delivered as a separate document but
incorporated herein by this reference (the "Disclosure Schedule"), provided,
that the representation(s) and warranty(ies) to which each such exception
relates is (are) specifically identified (by cross-reference or otherwise) in
the Disclosure Schedule as being qualified by such exception, or the relevance
of such exception is apparent on the face of the disclosure of such exception
set forth in the Disclosure Schedule.
6.1 ORGANIZATION, GOOD STANDING AND CORPORATE POWER. The
Company, CCC de Mexico, S.A. de C.V. ("CCC") and VBT, Inc.
("VBT") (CCC and VBT are herein sometimes referred to
individually as a "Subsidiary" and collectively as the
"Subsidiaries") are each corporations duly organized,
validly existing and in good standing under the laws of
their respective jurisdictions of incorporation
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and each has the corporate power to own, operate and lease
its properties and to carry on its business as now being
conducted. The Company and each Subsidiary is
qualified to conduct its business in all jurisdictions in
which such qualification or authorization is required,
except for those jurisdictions in which failure to be so
qualified or authorized would not have a material adverse
effect on the consolidated business or operations of the
Company and the Subsidiaries.
6.2 ARTICLES AND BY-LAWS. Seller has previously furnished to
Buyer complete and correct copies of (a) the Certificates of
Incorporation of the Company and VBT as amended, certified
by the Secretary of State of Delaware; (b) the By-Laws of
the Company and the Subsidiaries as in effect on the date
hereof, certified by the Secretary of the Company; (c) the
Articles of Incorporation of CCC, as amended, certified by
the Commercial Registry of Mexico; and (d) the minute books
and stock records of the Company and the Subsidiaries. Such
documents have not been further amended and are in full
force and effect, and neither the Company nor any Subsidiary
is in violation of any provisions thereof.
6.3 CORPORATE AUTHORIZATION; BINDING EFFECT. This Agreement and
the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary
corporate action on the part of Seller (including approval
by Seller's board of directors and (if necessary)
stockholders) and constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its
terms. Seller has previously furnished Buyer with a copy of
the resolutions of Seller's Board of Directors authorizing
the transactions contemplated herein, certified by the
Secretary or any Assistant Secretary of Seller.
6.4 EFFECT OF AGREEMENT. Subject to compliance with the HSR Act
(as defined below) and compliance with any applicable
Mexican anti-trust laws, the execution, delivery and
performance of this Agreement and the consummation
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of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time or both,
(a) violate any provision of law, statute, rule or
regulation to which Seller, the Company or any
Subsidiary is subject; (b) violate any judgment, order, writ
or decree of any court applicable to Seller, the Company or
any Subsidiary; or (c) result in the material breach of, or
conflict in any material respect with, any term, covenant or
condition of, result in the modification or termination of,
constitute a material default under, or result in the
creation or imposition of any lien, security interest or
encumbrance upon any of the Company's or any Subsidiary's
assets, pursuant to Seller's, the Company's or any
Subsidiary's respective charter documents, or any material
contract or material agreement to which Seller, the Company
or any Subsidiary is a party.
6.5 NO GOVERNMENT OR THIRD-PARTY AUTHORIZATION REQUIRED. Except
for compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no
consent, authorization or approval of, or exemption by, or
filings with, any governmental, public or self-regulatory
body or authority or any other Person (as defined in Section
14.14 hereof) is required in connection with the execution,
delivery and performance of this Agreement by Seller.
6.6 NO OPTIONS, WARRANTS, RIGHTS. The authorized and issued
capital stock of the Company and the Subsidiaries is set
forth in the Disclosure Schedule. Prior to Closing, Seller
shall cause the stock of CCC held by Seller to be
transferred to the Company. Any transfer taxes with respect
to the transfer of CCC's shares shall be paid by Seller.
All such shares are duly authorized, validly issued, fully
paid and nonassessable and free and clear of any and all
liens and/or encumbrances and owned by the entities listed
in the Disclosure Schedule. Except as described in the
Disclosure Schedule, neither the Company nor any Subsidiary
has any outstanding or authorized options, warrants or any
other
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agreements of any character obligating it to issue any
shares of its capital stock or any securities convertible
into or evidencing the right to purchase any shares of its
capital stock. Neither Seller nor the Company is a party
to any agreements, arrangements or understandings with
respect to the voting, transfer or assignment of the
Purchased Stock.
6.7 TITLE TO COMPANY SHARES. Seller is the lawful and equitable
owner of all of the shares of Purchased Stock, free and
clear of all liens, claims, options, charges and
encumbrances. The shares of Purchased Stock constitute all
of the authorized, issued and outstanding shares of capital
stock of the Company.
6.8 NO SUBSIDIARIES. Except for the Subsidiaries, the Company
does not control or own (legally and/or beneficially) any
interest in any corporation, partnership, limited liability
company or other entity (whether as direct subsidiaries or
through intervening subsidiaries).
6.9 FINANCIAL STATEMENTS. Seller has heretofore delivered to
Buyer copies of the unaudited consolidated balance sheets of
the Company and the Subsidiaries as of November 30, 1996,
December 30, 1995 and December 31, 1994, and the related
statements of income, stockholders equity and cash flows for
the respective eleven-month period and years then ended
(individually, the "Interim Financial Statements," "1995
Financial Statements" and "1994 Financial Statements,"
respectively, and collectively, the "Financial Statements").
Subject to the exceptions set forth in the Disclosure
Schedule, the Financial Statements present fairly, in all
material respects, the consolidated financial position of
the Company at their respective dates and the results of its
operations and its cash flows for the respective
eleven-month period and years then ended in conformity with
generally accepted accounting principles, consistently
applied.
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6.10 CONDUCT OF BUSINESS SINCE DECEMBER 30, 1995. Since December
30, 1995:
6.10.1 The Company and the Subsidiaries have conducted
their consolidated operations, in all material
respects, in the ordinary course of business
consistent with past practices.
6.10.2 Other than personal property or inventory
purchased, sold, leased or consumed in the
ordinary course of business consistent with
past practices and other than the transfer of
the "Danville Property" (as defined in Section
8.1.1(e)) to Seller, neither the Company nor
any Subsidiary has purchased, sold, leased,
mortgaged, pledged or otherwise acquired or
disposed of any material properties or assets.
6.10.3 The Company has not declared or paid any
dividend on, or made any other distribution or
payment (whether cash or in kind) in redemption
or otherwise in respect of, any shares of stock
or other securities (other than through
settlements of the intercompany accounts).
6.10.4 Except in the ordinary course of business
consistent with past practice or as required by
any written employment agreement entered into
before December 31, 1995, there has been no
material increase or other material change made
in the rate or nature of the compensation,
including wages, salaries and bonuses, which
has been paid, or will be paid or payable, by
the Company or any Subsidiary to any of its
directors, officers or employees.
6.10.5 There has been no material adverse change in
the consolidated financial condition, results
of operations, business or operations of the
Company and the Subsidiaries.
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6.11 TAXES AND TAX RETURNS.
6.11.1 GENERAL TAX REPRESENTATIONS.
(i) The Company and each Subsidiary has
duly filed (or has been included in)
all material federal, state, local
and foreign Tax returns required to
be filed and the Company and the
Subsidiaries have duly paid all
Taxes (as defined below) which are
due and payable pursuant to such
returns;
(ii) All deficiencies asserted as a
result of all foreign, if any, U.S.
federal, state and local Tax
examinations and relating to the
Company or any Subsidiary have been
paid, fully settled or, with respect
to non-Income Taxes, adequately
provided for as a current Tax
liability in the books and records
of the Company or such Subsidiary;
(iii) There are no pending examinations or
claims asserted for Taxes of the
Company or any Subsidiary or
outstanding agreements or waivers
extending the statutory period of
limitation applicable to any Tax
return of the Company or any
Subsidiary for any period or any
pending Tax litigation or
proceedings relating to the Company
or any Subsidiary;
(iv) Neither the Company nor any
Subsidiary has filed either a
consent to the application of
Section 341(f) of the Code (as
defined below) or an election to be
treated as a small business
corporation under Subchapter S of
the Code; and
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(v) The Company and each Subsidiary has
complied in all material respects
for all prior and current periods
with the Tax withholding provisions
of all applicable federal, state,
local and other laws.
(vi) None of the Company or the
Subsidiaries has been a United
States real property holding
corporation within the meaning of
Code Section 897(c)(2), during the
applicable period specified in Code
Section 897(c)(1)(A)(ii).
(vii) None of the property owned or used
by the Company or the Subsidiaries
is subject to a tax benefit transfer
lease executed in accordance with
Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended by
the Economic Recovery Tax Act of
1981.
(viii) Except as set forth in the
Disclosure Schedule, none of the
property owned by the Company or the
Subsidiaries is "tax-exempt use
property" within the meaning of
Section 168(h) of the Code.
(ix) None of the Company or the
Subsidiaries has made any payments,
is obligated to make any payments,
or is a party to any agreement that
under certain circumstances could
obligate it to make any payments,
that will not be deductible under
Code Section 162(m) or 280G.
6.11.2 TAXES SINCE DECEMBER 30, 1995. Since December
30, 1995, neither the Company nor any
Subsidiary has incurred any material
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Tax liability other than Taxes incurred
in the ordinary and regular course of its
business.
6.11.3 DEFINITIONS. For purposes of this Agreement,
(i) the term "Tax" or "Taxes" shall mean all
taxes, charges, fees, levies or other
assessments, including, without limitation,
income, gross receipts, excise, property,
sales, use, license, payroll, withholding,
franchise, duties, business occupation,
transfer and recording taxes, fees and charges,
imposed by the United States, or any state,
local or foreign authority (including Mexico or
any political subdivision or agency thereof),
government or subdivision or agency thereof
whether computed on a consolidated, unitary,
combined, separate or any other basis; and such
term shall include any and all interest,
penalties and additions to tax, as well as any
primary or secondary liability for taxes
(including, without limitation, any liability
under Treas. Reg. Section 1.1502-6 or any
state, local or foreign analog thereof); (ii)
the term "Tax Return" shall mean any report,
return or other document or information
required by law to be supplied to a taxing
authority in connection with Taxes; (iii) the
term "Income Taxes" shall mean all federal,
state, local, foreign and other governmental
Taxes imposed on or with respect to gross or
net income; and (iv) the term "Code" means the
Internal Revenue Code of 1986, as amended.
6.12 PROPERTIES. The Disclosure Schedule sets forth the
following information:
6.12.1 A list identifying all real estate owned or
leased by the Company or any Subsidiary
(collectively, the "Real Property").
6.12.2 A description of any equipment lease related to
equipment or vehicles leased by the Company or
any Subsidiary that requires an
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annual aggregate lease payment in excess of
$50,000, or that has a remaining term in
excess of two (2) years and was not entered
into in the ordinary course of business.
The Company and each Subsidiary, as the case may be, has
good title to all property reflected in its books and
records as owned, and the Company and each Subsidiary, as
the case may be, has valid leasehold interest in all leased
Real Property and leased personal property. The properties
and assets owned by the Company and any Subsidiary are
subject to no liens, mortgages, pledges, encumbrances or
charges of any kind except liens for real property taxes not
delinquent or being contested in good faith and, in either
case, for which adequate provision has been made, statutory
mechanics and material man's liens on the real estate for
work or goods supplied thereto in the ordinary course of
business, liens, covenants, restrictions, easements and
encumbrances disclosed on the public record, and such other
exceptions as are disclosed in the Disclosure Schedule. The
Company has received no notice from public authority having
jurisdiction over such matters that there is currently
existing any material violation of any building code, zoning
ordinance or similar laws or regulations pertaining to Real
Property or improvements owned by the Company or any
Subsidiary. The Seller has furnished to Buyer copies of all
leases referred to in the Disclosure Schedule.
6.13 LICENSES, PERMITS AND ORDERS. To Seller's knowledge, the
Company and each Subsidiary has all material registrations,
approvals, licenses and other permits (collectively, the
"Permits") which are necessary for the operation of its
business as now being conducted. To Seller's knowledge,
neither the Company nor any Subsidiary is in material breach
or operating in material violation of any such Permits or
any condition to the grant or continued effectiveness
thereto. To Seller's knowledge, such Permits will be in
full force and effect immediately following the Effective
Time.
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<PAGE> 21
6.14 DIRECTORS, OFFICERS. The Disclosure Schedule contains a
complete and accurate list of all officers and directors of
the Company and each Subsidiary. Buyer acknowledges that
Seller will retain and close all bank accounts and lock box
accounts presently used by the Company and the Subsidiaries.
6.15 LITIGATION. The Disclosure Schedule contains a list of each
pending lawsuit, claim, administrative proceeding,
arbitration or governmental investigation to which the
Company or any Subsidiary is a party. To the knowledge of
Seller, there are no other claims, legal actions or
governmental investigations threatened against the Company
or any Subsidiary which are reasonably likely to have a
material adverse effect on the Company's consolidated
business. There are no orders, decrees, judgments or
agreements with any court or governmental authority to which
the Company or any Subsidiary is a party or, to Seller's
knowledge, by which the Company's or any Subsidiary's
operations or assets are bound.
6.16 PROPRIETARY RIGHTS. The Disclosure Schedule sets forth a
list of all patents, trademarks, trade names, service marks,
copyrights and pending applications for any of the foregoing
that are material to the Company's and the Subsidiaries'
operations (the "Proprietary Rights"). The Company or the
Seller, as the case may be, owns those issued registrations
and those applications for registrations listed in the
Disclosure Schedule and has not sold, transferred, licensed
or encumbered any such issued registrations or applications.
Seller shall transfer to the Company any such registrations
or applications owned by Seller, other than the "Valmont
Electric" and "Valmont Electric plus design" marks which
shall be retained by Seller. To Seller's knowledge, all
such issued registrations are valid and subsisting. To the
knowledge of Seller, there are no impediments to the
Company's and the Subsidiaries' continued right to use
without additional consideration the Proprietary Rights and
other material trade secrets currently used in their
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<PAGE> 22
business. Neither the Company nor any Subsidiary is bound
by nor a party to any options, licenses or agreements that
affect the Company's or the Subsidiaries' current use of the
Proprietary Rights or other material trade secrets. Neither
the Company, any Subsidiary nor Seller have been
informed in writing of any claims or suits pending or
threatened against the Company or any Subsidiary which claim
an infringement by the Company or any Subsidiary of any
patents, copyrights, licenses, trademarks, service marks,
trade names or trade secrets of third parties, nor to
Seller's knowledge is there any basis therefor.
6.17 COMPLIANCE WITH LAWS. To Seller's knowledge, the Company
and the Subsidiaries are in compliance with all applicable
federal, foreign (including Mexico or any political
subdivision or agency thereof), state and local laws,
ordinances, rules and regulations. The Disclosure Schedule
sets forth for the past twelve (12) months, in respect to
the Company and the Subsidiaries, all investigations,
inspections or citations received by the Company or the
Subsidiaries, or of which the Seller has knowledge, under
any health, environmental, safety or other applicable laws
and regulations and under any other federal, state or local
laws or regulations, together with the results thereof and a
brief description of all corrective or other action taken
with respect thereto, together with any such investigations,
inspections or citations received by the Company or the
Subsidiaries during the four (4) years prior to such twelve
month period to the extent unresolved or unremedied.
6.18 LIST OF CONTRACTS AND OTHER DATA. The Disclosure Schedule
sets forth a listing of all contracts to which the Company
or any Subsidiary is a party, except: (a) purchase and sales
orders entered into in the ordinary course of business; (b)
any contract which has a remaining term of less than two (2)
years from the date of this Agreement involves an aggregate
receipt or expenditure after the date of this Agreement of
less than $50,000; (c) any contract which
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<PAGE> 23
has a term in excess of two (2) years and involves an
aggregate receipt or expenditure by the Company or any
Subsidiary of less than $50,000 and was entered into in the
ordinary course of business; and (d) any contract that may
be terminated by the Company or any Subsidiary on no more
than ninety (90) days notice without penalty (collectively,
the "Material Contracts"). Except as set forth in the
Disclosure Schedule:
(i) All Material Contracts are in full force and
effect and are valid and binding on the Company
or Subsidiary party thereto, and to Sellers'
knowledge, all other parties thereto, and none
of them is subject to any material amendment or
modification that is not set forth within the
four corners of the documents that have been
made available to Buyer pursuant to clause (iv)
below and listed in the Seller Disclosure
Schedule;
(ii) Neither the Company or any Subsidiary nor, to
Seller's knowledge, any other party to any
Material Contract is in material breach of any
provision of, in material violation of, or in
default under the terms of any Material
Contract.
(iii) No event has occurred which, with or without
the giving of notice or passage of time or
otherwise, would constitute a material default
under or result in the material breach of any
Material Contract by the Company or any
Subsidiary or to Seller's knowledge by any
other party.
(iv) Seller has made available to Buyer accurate and
complete copies of each Material Contract.
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<PAGE> 24
6.19 RELATED PARTY TRANSACTIONS. The Disclosure Schedule sets
forth a description of all significant services provided by
Seller or any of its Affiliates to the Company or any
Subsidiary, as well as material transactions between the
Company or any Subsidiary on one hand, and Seller or any of
its Affiliates on the other, except for those services or
transactions occurring in the ordinary course of business on
an arms' length basis.
6.20 LABOR RELATIONS. Neither the Company nor any Subsidiary is
or has been a party to or bound by any collective bargaining
agreement. There are no material controversies pending or,
to the knowledge of Seller, threatened between the Company
or any Subsidiary and their employees. There are no claims
pending or, to Seller's knowledge, threatened against the
Company or any Subsidiary in respect to any unfair labor
practices or age, sex, religion or national origin
discrimination complaints before any federal, state or local
board, department, commission or agency. There are no
existing or, to the knowledge of Seller, threatened labor
strikes or material disputes or grievances affecting the
Company or any Subsidiary. To Seller's knowledge, the
Company and each Subsidiary has complied and is in
compliance in all material respects with all foreign,
federal, state and local laws relating to employment,
employment discrimination, wages, hours, working conditions,
collective bargaining and the payment of social security,
unemployment and similar taxes, and neither the Company nor
any Subsidiary is liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the
foregoing; and there are no proceedings, investigations or
citations pending or to Seller's knowledge, threatened,
before any court, governmental agency or instrumentality or
arbitrator relating to any failure to comply therewith.
6.21 EMPLOYEE PLANS. For purposes of this Section 6.21, the term
"Employee Plan" includes all pension, retirement,
disability, medical, dental or other health insurance plans,
life insurance or other death benefit plans, profit sharing,
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<PAGE> 25
deferred compensation, stock option, bonus or other
incentive plans, vacation benefit plans, severance plans
or other employee benefit plans or arrangements, including,
without limitation, any "pension plan" ("Pension Plan") as
defined in Section 3(2) of ERISA, and any "welfare plan", as
defined in Section 3(1) of ERISA, whether or not any of the
foregoing is funded covering any current or former employee,
director or consultant of the Company or any Subsidiary, (a)
to which the Company or any Subsidiary is a party or by
which it is bound; or (b) with respect to which the Company
or any Subsidiary has made any payments or contributions; or
(c) to which the Company or any Subsidiary may otherwise
have any liability. "Employee Plan" shall not include any
government sponsored employee benefit arrangements. Except
as reflected in the Disclosure Schedule:
6.21.1 There are no Employee Plans.
6.21.2 The Company, each Subsidiary, each Employee
Plan, and the administrator and fiduciaries of
each Employee Plan have complied in all
material respects with all applicable legal
requirements governing each Employee Plan. No
material lawsuits, investigations or complaints
to, or by, any person or government entity, are
pending or to Seller's knowledge, threatened,
with respect to any Employee Plan.
6.21.3 Neither the Company, any Subsidiary, any
Employee Plan, nor to Seller's knowledge, any
administrator or fiduciary of any Employee Plan
has taken any action, or failed to take any
action, that could subject it or him or her or
any other person to any material liability for
any excise tax or for breach of fiduciary duty
with respect to or in connection with any
Employee Plan.
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<PAGE> 26
6.21.4 Neither the Company, any Subsidiary, any
Employee Plan, any administrator or fiduciary
of any Employee Plan nor any other person has
any material liability to any plan participant,
beneficiary or other person under any provision
of ERISA or any other applicable law by reason
of any payment of benefits or other amounts or
failure to pay benefits or any other amounts,
or by reason of any credit or failure to give
credit for any benefits or rights (such as, but
not limited to, vesting rights) with respect to
benefits under or in connection with any
Employee Plan.
6.21.5 Neither the Company nor any Subsidiary is a
participating employer in a multi-employer plan
(as defined in Section 3(37) of ERISA) or has
any liability (contingent or otherwise) by
reason of another employer's withdrawal from
any such plan.
6.21.6 None of the Pension Plans have incurred an
"accumulated funding deficiency" as defined in
Section 412 of the Code nor, in the case of any
Pension Plan subject to Title IV of ERISA, has
"benefit liabilities" (as defined in Section
4001 of ERISA) on a termination basis in excess
of its assets.
6.21.7 No liability under Subtitle C or D of Title IV
of ERISA or under any applicable Mexican law
has been or is expected to be incurred by the
Company or any Subsidiary with respect to any
ongoing, frozen or terminated "single employer
plan", within the meaning of Section
4001(a)(15) of ERISA.
6.21.8 All accrued obligations of the Company or any
Subsidiary for payments by it to trust or other
funds or to any governmental or administrative
agency, with respect to pension benefits,
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unemployment compensation benefits, social
security benefits or any other benefits for
employees of the Company or any Subsidiary have
been paid or adequate accruals therefor have
been made in the Financial Statements,
and none of the foregoing has been rendered not
due by reason of any extension, whether at the
request of the Company or any Subsidiary or
otherwise.
6.21.9 All obligations of the Company or any
Subsidiary for salaries, vacation and holiday
pay, bonuses and other forms of compensation
which were payable to its officers, directors
or other employees have been paid or adequate
accruals therefor have been made in the
Financial Statements.
6.21.10 The Company and the Subsidiaries are in
compliance with the requirements of Sections
162(k) (to the extent applicable prior to its
amendment by the Technical and Miscellaneous
Revenue Act of 1988) and 4980B of the Code and
Section 601 of ERISA.
6.21.11 No Employee Plan provides welfare benefits
subsequent to termination of employment to
employees or their beneficiaries (except to the
extent required by applicable state insurance
laws and Title I, Part 6 of ERISA). No
benefits due under any Employee Plan have been
forfeited subject to the possibility of
reinstatement (which possibility would still
exist at or after the Closing). Neither the
Seller, the Company nor any of its Subsidiaries
has undertaken to maintain any Employee Plan
for any specified period of time and each such
plan is terminable at the sole discretion of
the sponsor thereof, subject only to such
constraints as may be imposed by applicable
law.
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6.21.12 CCC has paid all monies due any governmental
agency with respect to any legally required
social programs such as health insurance,
pensions and any other programs.
6.22 ENVIRONMENTAL. To Seller's knowledge, (a) neither the
Company nor any Subsidiary: (i) has caused any releases of
any hazardous substance on, in, under, or at any real
property now, or previously owned, leased, or operated by
the Company or any Subsidiary which requires or may require
remediation or clean-up pursuant to applicable law, or (ii)
has disposed of hazardous wastes in, at or under the Real
Property except in compliance with applicable laws, and (b)
no hazardous substances which require or may require
remediation or clean up pursuant to applicable law are
present in, at, or under the Real Property. To Seller's
knowledge, neither the Company nor any Subsidiary has
conducted or engaged in any operation or activity involving
the use, storage or disposal of any hazardous substance
except as authorized by permit or applicable law. There is
no pending or, to Seller's knowledge, threatened, lawsuit,
action, claim or proceeding by any third party alleging or
asserting that the Company or any Subsidiary has violated or
is about to violate any applicable environmental law or
regulation or that the Company or any Subsidiary is
responsible for the clean up or remediation of any hazardous
substances nor to Seller's knowledge is there any basis
therefor. There are no underground storage tanks at any of
the Real Properties.
6.23 BROKERS AND FINDERS. Except for Goldman, Sachs & Co. (whose
fees shall be paid by the Seller), neither Seller, the
Company, or any Subsidiary has employed any investment
banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection
with the transactions contemplated by this Agreement.
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<PAGE> 29
6.24 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected or reserved against in the Interim Financial
Statements, or incurred in the ordinary course of business
after the date of such financial statements, to the
knowledge of Seller, neither the Company nor any of the
Subsidiaries has any material liabilities or obligations of
any nature, whether accrued, absolute, contingent, or
otherwise (including without limitation liabilities as
guarantor or otherwise with respect to obligations of
others) and whether due or to become due, provided, that no
representation or warranty is made in this Section 6.24 with
respect to warranty or product liability obligations.
6.25 ACCOUNTS RECEIVABLE. All accounts and notes receivable
reflected in the Interim Financial Statements, and all
accounts and notes receivable arising subsequent to the date
of such financial statements, have arisen in the ordinary
course of business of the Company and the Subsidiaries and
represent valid obligations to them.
6.26 SUPPLIERS AND CUSTOMERS. The Disclosure Schedule identifies
the ten largest suppliers and ten largest customers of the
Company and the Subsidiaries, taken as a whole, over the
twelve-month period ending on the date hereof.
6.27 EMPLOYMENT OF OFFICERS, EMPLOYEES. The Disclosure Schedule
sets forth an accurate and complete list setting forth the
name and current annual salary and other compensation
payable by the Company or any of the Subsidiaries to each
exempt non-hourly employee of any of them, including any
obligations of any of them to increase such salary and/or
other compensation in the future (whether based on any
contingency or otherwise).
6.28 DISCLOSURE. To Seller's knowledge, the representations and
warranties of Seller in this Agreement (including the
Disclosure Schedule and the other exhibits and schedules
hereto), do not contain any untrue statement of a material
fact or
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omit to state a material fact required to be stated herein
or therein or necessary to make the statements contained
herein not false or misleading in light of the circumstance
in which made.
6.29 INSURANCE. The Seller has not received any notices from any
insurer or its agent requiring performance of any work with
respect to any of the real property owned by the Company or
any Subsidiary (the "Owned Real Properties") or canceling or
threatening to cancel any policy of insurance.
6.30 TAXES; SPECIAL ASSESSMENTS. There are no unpaid or
outstanding real estate or other taxes or assessments on or
with respect to any of the Owned Real Properties or any part
thereof (except only real estate taxes not yet due and
payable). No abatement proceedings are pending with
reference to any real estate taxes assessed against any of
the Owned Real Properties. There are no betterment
assessments or other special assessments presently pending
with respect to any portion of any of the Owned Real
Properties, and Seller has not received any notice or has
any knowledge of any such special assessment being
contemplated.
6.31 EMINENT DOMAIN. There are no pending eminent domain
proceedings against any of the Owned Real Properties or any
part thereof, and to the Seller's knowledge, no such
proceedings are presently, threatened or contemplated by any
taking authority.
6.32 CONSTRUCTION WORK. All contractors, subcontractors and
other persons or entities furnishing work, labor, materials,
or supplies for construction of or additions to any of the
Owned Real Properties, or for tenant improvements, have been
paid in full or provided for in a manner satisfactory to the
Seller, and to the Seller's knowledge, there are no claims
pending in connection therewith.
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6.33 SPACE LEASES. For all purposes of this Agreement the term
Space Leases shall mean leases, licenses, and agreements,
whether written or oral, relating to the use or occupation
of space in or on the Owned Real Properties by persons other
than the Company or any Subsidiary. All of the Space Leases
are listed in the Disclosure Schedule, and constitute the
only agreements and understandings relating to leasing or
licensing of space in any of the Owned Real Properties, and
the copies of the Space Leases furnished by the Seller to
the Buyer are true and complete. There are no occupancies,
rights, privileges, or licenses in or to any of the Owned
Real Properties other than pursuant to the Space Leases so
listed in the Disclosure Schedule. The Space Leases are
unmodified and in full force and effect, in accordance with
their respective terms, without any default thereunder, nor
are there any defenses, counterclaims, offsets, concessions,
or rebates with respect thereto, and neither the Seller nor
the Company or any Subsidiary has given or made, or
received, any notice of default, or any claim, that remains
uncured or unsatisfied, with respect to any of the Space
Leases and, to the Seller's knowledge, there is no basis for
any such claim or notice of default by any tenant. No
leasing, brokerage or like commissions, fees or payments are
due from the Seller, the Company or any Subsidiary in
respect of the Space Leases.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents,
warrants and covenants to and with Seller as follows:
7.1 ORGANIZATION, POWER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Oklahoma and has the corporate power to own,
operate and lease its properties and to carry on its
business as now being conducted.
7.2 CORPORATE AUTHORIZATION; BINDING EFFECT. This Agreement and
the consummation of the transactions contemplated hereby
have been duly and
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validly authorized by all necessary corporate action on the
part of Buyer and constitutes the legal, valid and binding
obligation of Buyer enforceable in accordance with its
terms. Buyer has previously furnished Seller with a copy of
the resolutions of Buyer's Board of Directors authorizing
the transactions contemplated herein, certified by the
Secretary or any Assistant Secretary of Buyer.
7.3 NO GOVERNMENT OR THIRD-PARTY AUTHORIZATION REQUIRED. Except
for compliance with the HSR Act, and except for required
Mexican governmental filings, no consent, authorization or
approval of, or exemption by, or filings with, any
governmental, public or self-regulatory body or authority or
any other Person is required in connection with the
execution, delivery and performance of this Agreement by
Buyer.
7.4 BROKERS AND FINDERS. Buyer has not employed any investment
banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection
with the transactions contemplated by this Agreement.
7.5 EFFECT OF AGREEMENT. Subject to compliance with the HSR Act
and compliance with any applicable Mexican anti-trust laws,
the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby
will not, with or without the giving of notice or the lapse
of time or both, (a) violate any provision of law, statute,
rule or regulation to which Buyer is subject; (b) violate
any judgment, order, writ or decree of any court applicable
to Buyer; or (c) to Buyer's knowledge result in the breach
of, or conflict with, any term, covenant or condition of,
result in the modification or termination of, or constitute
a default under, any corporate charter, by-law, contract or
other material agreement to which Buyer is a party.
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7.6 FINANCING. Buyer has adequate financing as may be necessary
to pay the Purchase Price and to otherwise fulfill its
financial obligations set forth in this Agreement. The
transactions contemplated herein are not contingent upon
Buyer's ability to obtain financing from any third party.
7.7 TERMS OF SALE. Buyer acknowledges that EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT OR OTHER AGREEMENTS
OR DOCUMENTS EXECUTED AND DELIVERED BY SELLER PURSUANT TO
THIS AGREEMENT ("ANCILLARY AGREEMENTS"), THE PURCHASED STOCK
IS BEING SOLD TO BUYER WITHOUT ANY REPRESENTATIONS, OR
WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY ANCILLARY AGREEMENT. NO CLAIM SHALL BE
MADE AGAINST SELLER IN RESPECT OF ANY WARRANTY,
REPRESENTATION, INDEMNITY, COVENANT, UNDERTAKING OR
OTHERWISE ARISING OUT OF OR IN CONNECTION WITH THE
TRANSACTIONS, OR OTHERWISE RELATING TO THE COMPANY, THE
SUBSIDIARIES OR THEIR RESPECTIVE ASSETS, LIABILITIES OR
OPERATIONS CONTEMPLATED HEREIN EXCEPT WHERE THE SAME IS
EXPRESSLY CONTAINED IN THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT, AND BUYER CONFIRMS THAT IT HAS NOT RELIED ON ANY
WARRANTY, REPRESENTATION, INDEMNITY, COVENANT OR UNDERTAKING
OF ANY PERSON WHICH IS NOT EXPRESSLY CONTAINED IN THIS
AGREEMENT OR ANY ANCILLARY AGREEMENT.
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8. COVENANTS.
8.1 COVENANTS OF SELLER.
8.1.1 CONDUCT OF BUSINESS. During the period from
the date hereof to the Closing Date, Seller
covenants that the Company and the Subsidiaries
shall conduct and operate their business in the
usual and ordinary course and shall not,
without the prior written consent of Buyer:
(a) Except in the ordinary course of
business or as required by any
written employment agreement listed
in the Seller Disclosure Schedule,
increase the compensation of any
employee's pay or agree to pay a
pension, retirement allowance or
other employee benefit to any
employees not required by any
existing plan, agreement or
arrangement to any such person;
(b) Execute any agreement the terms of
which would be violated by the
consummation of the transactions
contemplated by this Agreement;
(c) Agree to become subject to any
material liability or obligation,
except liabilities and obligations
incurred in the ordinary course of
business;
(d) Enter into or terminate any material
lease of real or personal property;
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(e) Sell, abandon or otherwise dispose
of, or pledge, mortgage or otherwise
encumber any of the assets of the
other than in the ordinary course of
business, and other than the
transfer of the property and assets
described on Exhibit 8 hereto (the
"Danville Property"), any fixed
assets located at the Danville
Property and the note receivable
from A.J. Glazer to Seller;
(f) Amend any charter documents or
by-laws or take any action with
respect to any such amendment;
(g) Enter into any collective bargaining
agreement;
(h) Except as otherwise contemplated
herein (and other than adjustments
in the intercompany accounts
consistent with past practices),
declare or make any payment or
distribution to any shareholder, or
purchase, redeem or otherwise
acquire, any shares of Purchased
Stock; or
(i) Merge or consolidate with any other
corporation or acquire or agree to
acquire any stock or substantially
all of the assets of any other
person, firm, association,
corporation or other business
organization.
8.1.2 PRESERVATION OF BUSINESS. Seller covenants
that, from the date hereof through the Closing
Date, the Company and the Subsidiaries shall
use all reasonable efforts to preserve intact
their respective business organization, to keep
available the services of the present officers
and key employees thereof, and to preserve the
good will of those having business
relationships with the Company.
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8.1.3 INFORMATION AND ACCESS. Seller, the Company
and the Subsidiaries shall give Buyer and its
counsel, accountants and other representatives
access during normal business hours to all
properties, books, contracts, documents and
records with respect to the affairs of the
Company and the Subsidiaries as Buyer may
reasonably request at such times and in such
manner as will not disrupt or interfere with
the conduct of the Company's business. All
such information shall be held confidential by
Buyer pursuant to the terms of that certain
confidentiality agreement dated October 7, 1996
between Seller and Buyer (the "Confidentiality
Agreement").
8.1.4 CASH MANAGEMENT. The Company and the
Subsidiaries shall continue to participate in
Seller's cash management program and,
notwithstanding anything in this Agreement to
the contrary, all cash generated by the Company
or the Subsidiaries prior to the Effective Time
(including all lock box receipts) shall be
retained by Seller and shall not be included in
the Preliminary Closing Balance Sheet or the
Closing Balance Sheet.
8.2 ADDITIONAL AGREEMENTS. As soon as possible following the
date hereof (and in all events with respect to the HSR Act,
no later than seven (7) business days following the date
hereof), each of Buyer and Seller shall file all requisite
documents and notifications required under the HSR Act and
any applicable Mexican anti-trust laws. All filing fees
required by the HSR Act shall be paid by Buyer. Each of the
parties hereto agrees to use its best efforts to take, or
cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement,
including using its best efforts to satisfy the conditions
precedent to the obligations of any of the parties hereto,
to obtain all necessary waivers,
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consents and approvals required in connection with the
transactions contemplated hereby, to effect all necessary
registrations and filings (including, but not limited to,
filings under the HSR Act and any applicable Mexican
anti-trust laws). In order to obtain any necessary
governmental or regulatory action or non-action, waiver,
consent, extension or approval, Buyer agrees to take all
reasonable actions and to enter into all reasonable
agreements as may be necessary to obtain timely governmental
or regulatory approvals and to take such further action in
connection therewith as may be necessary.
8.3 CERTAIN COVENANTS. Seller shall comply and shall cause each
of its Affiliates to comply with all of the provisions of
this Section 8.3.
(a) CONFIDENTIAL INFORMATION. Seller and its
Affiliates shall maintain the confidentiality
of all confidential, sensitive, or proprietary
information of the Company and/or the
Subsidiaries, including without limitation with
respect to their respective businesses,
finances, affairs, and technology, which shall
be and remain the exclusive property of the
Company and/or its Subsidiaries, as the case
may be, and unless previously authorized in
writing by Buyer, and except with respect to
information that has otherwise become public
through no action or omission on the part of
Seller or any of its Affiliates, neither Seller
nor any of its Affiliates shall disclose any
such information to any third party, or use it
for any purpose.
Notwithstanding the foregoing, if Seller or any
of its Affiliates is required by law or
regulation to disclose any confidential,
sensitive, or proprietary information of the
Company and/or the Subsidiaries, the Seller or
such Affiliate will provide the Buyer with
prompt notice of such disclosure obligation so
that it may seek a protective order or take
other appropriate action and/or waive
compliance with this
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section to the extent of such required
disclosure. In the absence of such a waiver,
if Seller or any of its Affiliates is, in the
opinion of counsel, compelled to disclose any
such information upon pain of liability for
contempt or other censure or penalty, such
Person may disclose such information to the
relevant court or other tribunal or
governmental authority without liability
hereunder, but notwithstanding such disclosure,
such information shall remain confidential
under this section after such disclosure.
(b) NON-COMPETITION, ETC. For a period of five
years after the Closing Date (which period
shall automatically be extended by a period of
time equal to any period in which Seller and/or
any of its Affiliates is in breach of any
obligations under this Section 8.3; including
any such extension, the "Restricted Period"),
neither Seller nor any of its Affiliates shall
engage, directly or indirectly, anywhere in the
world (Seller hereby acknowledging that the
Company and the Subsidiaries currently are
doing business throughout the world) as a
proprietor, equityholder, investor (except as a
passive investor holding not more than 1% of
the outstanding capital stock of a publicly
held company), lender, partner, director,
officer, employee, consultant, or
representative, or in any other capacity, in
the development, manufacture, marketing, or
sale of ballasts for discharge lamps (the
"Restricted Business").
Notwithstanding the foregoing, in the event
Seller acquires or purchases during the
Restricted Period, directly or indirectly, any
corporation, assets, business or division or
affiliate thereof, partnership, sole
proprietorship, or any other legal entity,
engaged in a range of businesses that includes
a Restricted Business (provided that the Seller
shall not directly or indirectly acquire during
the
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Restricted Period any business that derives 50%
or more of its aggregate annual sales from the
Restricted Business), the Buyer is hereby given
an exclusive option to acquire the Restricted
Business on an "Allocated Basis" at any
time within 180 days following Buyer's receipt
of notice of such acquisition or purchase. The
Allocated Basis assigned to the Restricted
Business shall be determined by multiplying
that fraction consisting of the Restricted
Business' sales as the numerator and total
sales of the acquired company as the
denominator times the total purchase price
(including assumed debt) paid by Seller. In
the event Buyer elects not to acquire the
Restricted Business, Seller shall, within
twenty-four (24) months following receipt of
written notice of such election, either
discontinue or sell the Restricted Business.
Seller shall have the right to operate the
Restricted Business during such period without
restriction under this Section 8.3(b) or
Section 8.3(d). Seller shall give Buyer prompt
notice of any business so acquired, together
with such information as may reasonably be
required to permit Buyer to determine whether
to exercise its option to acquire the
Restricted Business.
(c) NON-SOLICITATION OF EMPLOYEES. For one (1)
year following the Closing Date, neither Seller
nor any of its Affiliates shall, without
Buyer's prior consent, hire or, directly or
indirectly, recruit, solicit, induce, or
attempt to induce any of the employees of the
Company or any of the Subsidiaries to terminate
their employment with the Company or such
Subsidiary.
(d) NON-SOLICITATION OF CUSTOMERS. During the
Restricted Period, neither Seller nor any of
its Affiliates shall directly or indirectly
solicit, divert, take away, or attempt to
divert or take away, from the
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Company or any of the Subsidiaries any of the
business or patronage of any of their
respective customers or induce or attempt to
induce any such Person to reduce the
amount of business it does with the Company or
any of the Subsidiaries, provided, however,
that nothing in this Section shall prevent or
restrict Seller from operating any Restricted
Business pursuant to the second paragraph of
Section 8.3(b).
(e) NON-DISPARAGEMENT. Neither Seller nor any of
its Affiliates shall disparage, deprecate, or
make any negative comment with respect to the
Company or any of the Subsidiaries or their
respective businesses, operations, properties
or prospects.
(f) EQUITABLE REMEDIES. Seller, for itself and
each of its Affiliates, hereby acknowledges
that any breach by any of them of their
respective obligations under this Section 8.3
would cause substantial and irreparable damage
to Buyer, the Company, and the Subsidiaries,
and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges
and agrees that Buyer, the Company, and/or the
Subsidiaries shall be entitled to an
injunction, specific performance, and/or other
equitable relief to prevent the breach of such
obligations (in addition to all other rights
and remedies to which Buyer, the Company,
and/or the Subsidiaries may be entitled in
respect of any such breach).
(g) MODIFICATION. In the event that a court of
competent jurisdiction determines that any of
the provisions of this Section 8.3 would be
unenforceable as written because they cover too
extensive a geographic area, too broad a range
of activities, or too long a period of time, or
otherwise, then such provisions shall
automatically be
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modified to cover the maximum geographic area,
range of activities, and period of time as may
be enforceable, and in addition, such court
is hereby expressly authorized so to modify
this Agreement and to enforce it as so
modified. No invalidity or unenforceability of
any section of this Agreement or any portion
thereof shall affect the validity or
enforceability of any other section or of the
remainder of such section.
8.4 SEC FINANCIAL STATEMENTS. Seller acknowledges that Buyer
may request Deloitte to audit (at Buyer's sole cost and
expense) the consolidated balance sheet of the Company and
the Subsidiaries as of December 30, 1995 and/or December 31,
1994 together with the related statements of income,
stockholders equity and cash flows for the years then ended.
In such event, Seller will reasonably cooperate with Buyer,
will not impede such an audit and will not withhold consent
to such an audit or to Buyer's use of such audited financial
statements. All out-of-pocket costs related to such audit
(including, without limitation, any costs or charges of
Deloitte) shall be paid by Buyer.
8.5 VBT/EBT. Seller represents that (i) the Company and
Electronic Ballast Technology, Inc. ("EBT") are parties to
(x) an Exclusive License Agreement dated July 14, 1988 (the
"License Agreement"), (y) a Joint Venture Agreement dated
July 14, 1988 (the "Joint Venture Agreement"), and (z) a
Shareholder Agreement dated November 9, 1988 (the
"Shareholder Agreement") (such Agreements referenced in (x),
(y) and (z) hereafter collectively referred to as the "EBT
Agreements"), (ii) pursuant to the Joint Venture Agreement
and the Shareholder Agreement, the Company and EBT have
caused VBT, Inc. ("VBT") to be formed, (iii) 80% of the
capital stock of VBT is owned by the Company and 20% is
owned by EBT, (iv) pursuant to the License Agreement, the
Company agreed to pay certain royalties to EBT (the
"Royalties"), (v) the Company has paid no Royalties to EBT
for sales made during calendar years
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1995 and 1996 and there is a dispute between the Company and
EBT with respect to whether such Royalties are payable and,
if so, in what amounts, (vi) notwithstanding the
non-payment of Royalties for sales made in 1995 and 1996,
the Company has accrued, and will continue to accrue, on a
monthly basis, a liability with respect to Royalties, which
accrual, as of November 30, 1996, was $948,075 (the "EBT
Accrual"). With respect to the foregoing, the parties
hereto agree as follows:
8.5.1 Seller shall use commercially reasonable
efforts pursuant to the terms of this Section
8.5.1 to negotiate a settlement with EBT on
commercially reasonable terms as soon as
reasonably practicable pursuant to which (i)
the Company will acquire EBT's interest in VBT,
(ii) the License Agreement shall be deemed
fully paid, and the Company and its Affiliates
shall not be required to pay any additional
Royalties and (iii) Seller will procure a
release of the Company and its Affiliates from
liability under the License Agreement, the
Joint Venture Agreement and the Shareholder
Agreement (such settlement, and whether or not
any such settlement is reached, any and all
royalty amounts paid or payable in respect of
sales during 1997 and 1998, and/or any amounts
that are finally determined by a court of
competent jurisdiction to be owed by the
Company and the Subsidiaries to EBT pursuant to
the License Agreement, the Joint Venture
Agreement and/or the Shareholder Agreement (net
of any amounts determined pursuant to such
settlement or such final determination to be
owed by EBT to the Company and/or the
Subsidiaries pursuant thereto) are herein
called the "Settlement").
8.5.2 The Company shall pay to EBT any amounts
pursuant to the Settlement (the "EBT
Payments"). In the event the aggregate EBT
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Payments are less than the sum of the accrual
on the Company's financial statements as of the
Closing Date relating to EBT royalties, plus
One Million Dollars ($1,000,000) (such sum the
"Accrual"), the Company or the Buyer shall pay
to Seller at Closing (or at such later date to
the extent the EBT Payments are made after
Closing), one-half ( 1/2) of the difference
between the Accrual and the EBT Payments. In
the event the aggregate EBT Payments exceed the
Accrual, the Seller shall pay to the Buyer at
Closing (or at such later date to the extent
EBT Payments are made after Closing) one-half
(1/2) of such excess.
8.5.3 Buyer acknowledges that Seller shall control
the Settlement and, subject to the other
provisions of this Section 8.5, Buyer shall
reasonably cooperate with Seller in connection
with the Settlement. Notwithstanding any other
provisions hereof to the contrary, Seller shall
not effect or enter into any Settlement in
excess of $2,000,000 without the Buyer's prior
consent, such consent not to be unreasonably
withheld.
8.5.4 Seller shall defend Buyer, the Company and the
Subsidiaries with respect to any claim or
litigation involving the EBT Agreements
including without limitation the Royalties, and
Seller shall control and pay the costs and
expenses relating to such defense. All amounts
owing to EBT which result from said litigation
(either through settlement or as determined by
the court hearing such matter) shall be paid
pursuant to the foregoing terms of this Section
8.5.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The
obligation of Buyer to consummate the transactions contemplated herein is
subject to the satisfaction, as of the Closing Date, of all of the following
conditions:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material
respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date.
9.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed all
material obligations and complied, in all material respects,
with all covenants and conditions contained in this
Agreement to be performed and complied with by it on or
prior to the Closing Date.
9.3 CERTIFICATE. At the Closing, Seller shall have delivered to
Buyer an officer's certificate, dated as of the Closing
Date, with respect to the obligations set forth in Sections
9.1 and 9.2.
9.4 HSR ACT. All applicable waiting periods specified under any
applicable Mexican anti-trust laws, as well as all
applicable waiting periods specified in the HSR Act, shall
have expired or terminated early without receipt from the
Mexican Federal Competition Commission or the Federal Trade
Commission or Department of Justice, as the case may be, of
any unwithdrawn objection or notice of possible objection to
the transactions contemplated hereby.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The
obligation of Seller to consummate the transactions contemplated herein is
subject to the satisfaction, at or prior to the Closing Date, of all of the
following conditions:
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10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material
respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date.
10.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed all
material obligations and complied, in all material respects,
with all covenants contained in this Agreement to be
performed and complied with by it at or prior to the Closing
Date.
10.3 CERTIFICATE. At the Closing, Buyer shall have delivered to
Seller an officer's certificate, dated as of the Closing
Date, with respect to the obligations set forth in Sections
10.1 and 10.2.
10.4 HSR ACT. All applicable waiting periods specified under any
applicable Mexican anti-trust laws, as well as all
applicable waiting periods specified in the HSR Act, shall
have expired or terminated early without receipt from the
Mexican Federal Competition Commission or the Federal Trade
Commission or Department of Justice, as the case may be, of
any unwithdrawn objection or notice of possible objection to
the transactions contemplated hereby.
11. TERMINATION.
(a) BY CONSENT OF PARTIES. This Agreement may be
terminated at any time by agreement of Buyer
and Seller.
(b) FOR OTHER REASONS. In the event that (i) the
Federal Trade Commission or Department of
Justice or the Mexican Federal
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Competition Commission raises any objection to
the transactions contemplated hereby, which
objection is not withdrawn within 45 days after
notice thereof is given, (ii) any temporary
restraining order, preliminary or permanent
injunction, or other order issued by any
court of competent jurisdiction, or other
binding legal restraint or prohibition
preventing the consummation of the transactions
contemplated hereby shall at any time be in
effect for a period of more than 20 consecutive
days, or (iii) the Closing does not occur on or
before March 1, 1997, either Buyer or Seller
may terminate this Agreement at any time after
the close of business on the date such
termination right arises hereunder by
delivering written notice to the other,
provided that such failure to close is not a
result of a breach by the terminating party of
any obligations hereunder.
(c) EFFECT OF TERMINATION; SURVIVAL OF CERTAIN
PROVISIONS. Any termination of this Agreement
shall not affect the rights or obligations of
any party arising, or based on actions or
omissions occurring, before such termination,
including without limitation any breach of any
representation or warranty set forth herein.
The provisions of Sections 6 ("Representations
and Warranties of Seller"), 7 ("Representations
and Warranties of Buyer"), 12 ("Releases and
Indemnifications") other than Section 12.2
("Releases"), and 14 ("Miscellaneous") hereof
shall survive any termination of this
Agreement. In addition, that certain
Confidentiality Agreement dated October 7, 1996
shall survive.
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12. INDEMNIFICATION AND RELEASES.
12.1 INDEMNIFICATION BY SELLER.
(a) Subject to the limitations set forth in Section
12.6 hereof, Seller shall indemnify, defend,
and hold harmless Buyer, the Company, and each
of the Subsidiaries, and each of their
respective directors, officers, employees,
representatives, and other Affiliates
(collectively, "Buyer Indemnified Parties"),
from and against any and all claims,
liabilities, obligations, losses, damages,
costs, and expenses, including without
limitation the fees and disbursements of
counsel (collectively, "Damages") related to or
arising out of or in connection with any of the
following:
(i) any breach by Seller of any of its
representations, warranties,
covenants, agreements, obligations,
and/or undertakings in this
Agreement (including the Disclosure
Schedule and the other exhibits and
schedules hereto), or any other
agreement, instrument, certificate,
or other document delivered by or on
behalf of Seller in connection with
this Agreement or any of the
transactions contemplated hereby;
and/or
(ii) the Danville Property (including the
ownership, control, use, and/or
environmental contamination of such
property by any Person, including
the Company and/or any of the
Subsidiaries); and/or
(iii) the litigation described in Exhibit
12.1, but only to the extent that
such Damages exceed the
corresponding
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reserve, if any, therefor set forth
in the final Closing Balance Sheet;
and/or
(iv) Damages in respect of any personal
injury, death, and/or property
damage caused by product sold by the
Company and/or any of the
Subsidiaries before the Effective
Time (except as set forth in Section
12.1(b)).
(b) Seller shall reimburse the Company and the
Subsidiaries for (i) one-half of the excess
over $4,000,000 of the aggregate amount of
out-of-pocket costs actually paid by them or
any of them in calendar 1997, and (ii) one-half
of the excess over $4,000,000 of the aggregate
amount of out-of-pocket costs incurred by them
or any of them in calendar year 1998, in
respect of the refunds with respect to, or
repair and/or replacement of, defective
products manufactured and/or sold by the
Company and/or any of the Subsidiaries before
the Effective Time (regardless of whether such
repairs and/or replacements are done under
warranty, or for purposes of customer goodwill,
or otherwise). The Buyer, the Company and/or
the Subsidiaries shall be responsible for the
first $4,000,000 of such costs incurred by them
in each of calendar 1997 and 1998, and for
one-half of the excess of such costs over such
$4,000,000/year threshold. Buyer shall keep,
or cause to be kept, and shall make available
to Seller and its representatives, all books
and records necessary to account for, and
track, all such costs (including information
identifying the products (and date of
manufacture thereof) repaired or replaced and
identifying such costs with such products).
Buyer shall provide written monthly reports
with respect to all repair and replacement
activity which shall set forth in reasonable
detail, the products repaired and replaced and
the cost
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thereof. Such reports shall be delivered to
the Seller within twenty-five (25) days
following each month end. Buyer shall use
reasonable commercial efforts to minimize such
costs and shall not manipulate the payment of
such costs so as to aggregate costs in any
particular calendar year.
12.2 RELEASES.
(a) Effective as of the Effective Time, Seller, for
itself and each of its respective Affiliates,
and all of their respective successors and
assigns, hereby fully and irrevocably releases,
remises, and discharges the Company, each of
the Subsidiaries, and each of their respective
officers, directors, employees, agents,
representatives, successors, and assigns, from
any and all Damages, regardless of whether
known or unknown, unknowable, or otherwise, and
regardless of whether absolute, contingent, or
otherwise, and regardless of whether at law, in
equity, or otherwise, without limitation,
whether now existing or arising in the future,
but in each case only to the extent based on or
relating to actions, omissions, or events
occurring before the Effective Time, including
without limitation any amounts owing by the
Company and/or any of the Subsidiaries to
Seller or any of its Affiliates on intercompany
accounts and any claims for indemnification or
contribution, whether in connection with any
misrepresentation contained in, or other breach
of, this Agreement or any other agreement or
document entered into or delivered in
connection herewith, or otherwise.
Furthermore, each of such releasing Persons
hereby irrevocably agrees not to sue, or to
commence, maintain, or aid in the prosecution
of any litigation, arbitration, or other action
or proceeding against or adverse to any of such
released Persons, or
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otherwise to seek any recourse against
any of such released Persons, in respect of any
matter hereby released or purported or
attempted to be released.
(b) Effective as of the Effective Time, Buyer, for
itself and each of its respective Affiliates
(including, without limitation, the Company and
the Subsidiaries), and all of their respective
successors and assigns, hereby fully and
irrevocably releases, remises, and discharges
the Seller and each of its respective officers,
directors, employees, agents, representatives,
successors, and assigns, from any and all
Damages, regardless of whether known, unknown,
unknowable, or otherwise, and regardless of
whether absolute, contingent, or otherwise, and
regardless of whether at law, in equity or
otherwise, without limitation, whether now
existing or arising in the future, but in each
case only to the extent based on or relating to
actions, omissions, or events occurring before
the Effective Time, including without
limitation any amounts owing by the Seller or
its Affiliates on intercompany accounts and any
claims for indemnification or contribution,
provided, however, nothing shall release the
Seller or its Affiliates from any liability or
obligation under this Agreement or any
agreement, instrument, certificate or other
document delivered pursuant hereto.
Furthermore, each of such releasing Person
hereby irrevocably agrees not to sue, or to
commence, maintain or aid in the prosecution of
any litigation, arbitration, or other action or
proceeding against or adverse to any of such
released Persons, or otherwise to seek any
recourse against any of such released Persons,
or otherwise seek any recourse against any of
such released Persons, in respect of any matter
hereby released or purported or attempted to be
released.
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12.3 INDEMNIFICATION OF BUYER. Subject to Section 12.6, Buyer
shall indemnify, defend, and hold harmless Seller and its
Affiliates and each of their respective officers, directors,
employees, agents, representatives, successors, and assigns,
from and against any and all Damages related to or arising
out of any breach by Buyer of any of its representations,
warranties, covenants, agreements, obligations, and/or
undertakings in this Agreement (including any schedule or
exhibit hereto), or any other agreement, instrument,
certificate, or other document delivered by or on behalf of
Buyer in connection with this Agreement or any of the
transactions contemplated hereby.
12.4 CLAIMS. In the event that any party hereto (the
"Indemnified Party") desires to make a claim against another
party hereto (the "Indemnifying Party," which term shall
include all indemnifying parties if more than one) in
connection with any third-party litigation, arbitration,
action, suit, proceeding, claim, or demand at any time
instituted against or made upon it for which it may seek
indemnification hereunder (as "Third-Party Claim"), the
Indemnified Party shall promptly notify the Indemnifying
Party of such Third-Party Claim and of its claims of
indemnification with respect thereto, provided, that failure
to give such notice shall not relieve the Indemnifying Party
of its indemnification obligations under this Section 12
except to the extent, if at all, that the Indemnifying Party
shall have been actually prejudiced thereby. Upon receipt
of such notice from the Indemnified Party, the Indemnifying
Party shall be entitled to participate in the defense of
such Third-Party Claim, and if the following conditions are
satisfied:
(i) The Indemnifying Party confirms in writing that
it is obligated hereunder to indemnify the
Indemnified Party in full (subject to the
limitations set forth in Section 12.6 hereof)
in respect of such Third-Party Claim; and
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(ii) The Indemnified Party does not give the
Indemnifying Party written notice that the
Indemnified Party has determined, in its
reasonable opinion, that a conflict of interest
makes advisable the separate representation of
the Indemnified Party by its own counsel;
then the Indemnifying Party may assume the defense of such
Third-Party Claim, and in the case of such an assumption,
the Indemnifying Party shall have the authority to
negotiate, compromise, and settle such Third-Party Claim
provided, that the Indemnifying Party shall not agree to the
settlement of such Third Party Claim unless either (x) such
settlement includes an unconditional release of all
liabilities of each Indemnified Party with respect to such
Third Party Claim, or (y) the Indemnifying Party
acknowledges and agrees to indemnify, defend and hold
harmless the Indemnified Party with respect to any portion
of such Third Party Claim that is not so released. The
Indemnified Party shall retain the right to employ its own
counsel and to participate in the defense of any Third-Party
Claim, the defense of which has been assumed by the
Indemnifying Party pursuant hereto, but such Indemnified
Party shall bear and shall be solely responsible for its own
costs and expenses in connection with such participation.
12.5 PAYMENT OF CLAIMS. In the event of any claims for
indemnification under this Section 12, the claimant shall
advise the party or parties who are required to provide
indemnification therefor in writing of the amount and
circumstances surrounding such claim. The Indemnifying
Party shall pay any amounts that it agrees is owed to an
Indemnifying Party within thirty (30) days following such
agreement.
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12.6 LIMITATIONS OF LIABILITY.
(a) Seller shall not be required to indemnify Buyer
Indemnified Parties hereunder except to the
extent that the aggregate amount of Damages for
which all Buyer Indemnified Parties are
otherwise entitled to indemnification pursuant
to this Section 12, exceeds $750,000, whereupon
such Buyer Indemnified Parties shall be
entitled (subject to the other limitations set
forth in this Section 12.6) to indemnification
in the amount of the excess over $750,000 of
the aggregate amount of all such Damages;
provided, that indemnification in respect of
Damages related to or arising directly or
indirectly out of or in connection with:
(i) any inaccuracy in or breach of any
representation or warranty made by
the Company in the first sentence of
Section 6.1 ("Organization, Good
Standing and Corporate Power"), or
in Sections 6.3 ("Corporate
Authorization; Binding Effect"), 6.6
("No Options, Warrants, Rights"),
6.7 ("Title to Company Shares"),
6.11 ("Taxes and Tax Returns"), 6.21
("Employee Plans"), 6.23 ("Brokers
and Finders") hereof; and/or
(ii) any breach of Sections 4.1 and/or
4.2 (which relate to the Purchase
Price adjustment based on the
Closing Equity), 5 ("Employee
Matters"), 8.3 ("Certain
Covenants"), 8.4 ("SEC Financial
Statements"), 8.5 ("VBT/EBT") and/or
13 ("Special Tax Indemnity") hereof;
and/or
(iii) the matters referred to in Sections
12.1(a)(ii)-(iv) and/or 12.1(b)
hereof;
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(collectively, all of the matters referred to
in this proviso, "Unlimited Claims"), shall not
be subject to any limitations.
(b) The aggregate Damages payable by Seller
pursuant to this Section 12 with respect to all
claims for indemnification shall not exceed
Five Million Dollars ($5,000,000), except that
(i) this limitation shall not apply to any
Damages related to or arising directly or
indirectly out of or in connection with any
Unlimited Claims, for which indemnification
hereunder shall not be subject to any
limitations, and (ii) any Damages related to or
arising directly or indirectly out of or in
connection with any Unlimited Claims shall not
count towards such $5,000,000 limitation.
(c) Seller shall not be liable for any Damages
pursuant to this Section 12 unless a written
claim for indemnification is given by an
Indemnified Party to the Indemnifying Party
with respect thereto within two years after the
Closing Date; provided, that these time
limitations shall not apply to any Unlimited
Claims, for which indemnification shall have no
limitation except as otherwise imposed by law.
(d) The amount of any Damages otherwise payable to
any Indemnified Party in respect of any breach
of the representations and warranties set forth
in Sections 6 and/or 7 of this Agreement shall
be reduced to the extent that such Indemnified
Party actually realizes, by reason of such
Damages, any Tax benefit that is not offset by
any corresponding Tax detriment of such
Indemnified Party (e.g. a reduction of any Tax
deduction available to such Indemnified Party)
in respect of such Damages).
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(e) No Indemnifying Party shall be liable pursuant
to this Section 12 for lost profits or special
or consequential Damages, even if notified in
advance of the possibility thereof.
(f) Each party shall use commercially reasonable
efforts to mitigate the Damages for which it
may become entitled to indemnification
hereunder.
(g) The provisions of this Section 12 and of
Section 13 hereof shall be the exclusive basis
for the assertion of claims against, or the
imposition of liability on, either party in
respect of the breach of any provision of this
Agreement.
12.7 NO THIRD-PARTY BENEFICIARY. The parties hereto acknowledge
and agree that the provisions of this Section 12 are solely
for the benefit of the Indemnified Parties and are not
intended, and shall not create, any third party beneficiary
rights in any other person or entity.
13. SPECIAL TAX INDEMNITY.
13.1 TRANSFER TAXES. Buyer and Seller shall equally pay all
non-Income Tax ("Transfer Taxes") imposed on or in
connection with the sale of the Purchased Stock or the
deemed or actual sale of assets of the Company or any
Subsidiary.
13.2 TAX SHARING AGREEMENTS. Any tax sharing or other allocation
agreement with respect to Taxes to which the Company or any
Subsidiary is a party is hereby terminated as of the Closing
Date and shall have no further effect for any taxable
period. This Section 13 and Section 6.11 above shall
control all of the parties' respective obligations for Taxes
affecting the Company and the
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Subsidiaries and supersede any and all prior agreements,
contracts or understandings regarding the Company's and any
such Subsidiary's Taxes.
13.3 SECTION 338(H)(10) JOINT ELECTION TAX RETURNS.
13.3.1 SECTION 338(H)(10) JOINT ELECTION. Buyer and
Seller each agree that they will make an
election or join in making an election under
Section 338(h)(10) of the Code (and if the
Buyer makes a written request of the Seller,
the Buyer and the Seller will make an election
or join in making an additional election under
Section 338(g) with respect to any foreign
Subsidiary), to treat the sale of the Purchased
Stock as a sale of all of the assets of the
Company and all of the assets of each of its
Subsidiaries (including, if requested by the
Buyer, a Section 338(g) election with respect
to any foreign Subsidiary) (collectively, a
"Section 338(h)(10) Joint Election") for
federal Income Tax purposes and an election
under the statutes of such states as permit an
equivalent election to treat the sale of the
Purchased Stock as a sale of all of the
Company's assets (and as the sale of the assets
of its Subsidiaries) as provided by such
states' applicable laws for state Income Tax
purposes. The parties agree that the Purchase
Price and the liabilities of the Companies
(plus other relevant items) shall be allocated
to the assets of the Companies in a manner
mutually acceptable that will provide Seller
with an ordinary loss with respect to the sale
of the Company Stock. Each party covenants to
report gain or loss or cost basis, as the case
may be, in a manner consistent therewith for
federal and state Income Tax purposes. If
required, the parties shall exchange mutually
acceptable IRS Forms 8594 (or equivalent
federal and state forms) reflecting such
allocations which shall be filed with the IRS
and any applicable state or local Tax
Authority. Seller shall pay all
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Income Taxes incurred in connection with the
Section 338(h)(10) Joint Election (or its state
equivalent) described in this Section 13.3.1
and will indemnify Buyer, the Company and the
Subsidiaries against any failure by Seller to
pay such Taxes. Buyer and Seller agree to take
all reasonable actions necessary to effect any
Section 338(h)(10) Joint Election,
including, without limitation, the timely
filing of IRS Form 8023-A or state equivalent;
provided, however, the parties hereby agree
that no equivalent election will be made or
filed with any foreign government or agency for
any foreign Tax purposes.
13.3.2 INCOME TAX RETURNS. To the extent necessary
under applicable law, Buyer shall cause the
Company and the Subsidiaries to consent to
join, for all Tax periods of the Company and
the Subsidiaries ending on or before the
Closing Date (the "Pre-Closing Period") for
which the Company and the Subsidiaries are
eligible to do so, in any consolidated or
combined federal, state or local Income Tax
Returns. Seller shall cause to be prepared and
timely filed any and all consolidated or
combined federal, state or local Income Tax
Returns as well as any separate federal, state,
local or foreign Income Tax Returns for the
Company and the Subsidiaries for all Tax
periods of the Company and the Subsidiaries
ending on or before the Closing Date. Buyer
shall cause to be prepared and timely filed any
and all Income Tax Returns for Tax periods of
the Company and Subsidiaries ending after the
Closing Date. The parties agree to cooperate
with each other and each other's affiliates in
the preparation of the portions of such returns
pertaining to the Company or the Subsidiaries.
For state Income Tax purposes and to the extent
permitted under applicable state law, the
parties acknowledge and agree that all state
Income Tax Returns shall be filed on the basis
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that the applicable state equivalent of the
Section 338(h)(10) Joint Election shall have
terminated the Tax period of the Company and
the Subsidiaries as of the Effective Time. The
parties agree to cooperate with each other and
each other's affiliates in the preparation of
the portions of the returns pertaining to the
Company and the Subsidiaries. The parties
shall also provide each other with full access
to applicable records to enable the preparation
of said returns. Seller shall pay on a timely
basis all Income Taxes in respect to the
Pre-Closing Period shown as due on such
returns. The parties shall make available to
each other relevant copies of the portions of
such returns relating to the Company and the
Subsidiaries for taxable years ending before or
including the Closing Date.
13.3.3 NON-INCOME TAX RETURNS. Seller shall cause to
be prepared and timely filed all non-Income
Tax Returns of the Company and the Subsidiaries
due on or before the Closing Date. Buyer shall
cause the Company and the Subsidiaries to
prepare and timely file all non-Income Tax
Returns due after the Closing Date. The
parties agree to cooperate with each other and
their affiliates in the preparation of such
non-Income Tax Returns. The parties shall also
provide each other with full access to
applicable records to enable the preparation of
such returns. Except to the extent accrued as
a current non-Income Tax liability in the
Closing Balance Sheet, Seller shall pay on a
timely basis all non-Income Taxes in respect
of the Pre-Closing Period as shown as due on
such returns; provided, that, Buyer shall pay
or cause the Company and the Subsidiaries to
pay on a timely basis the portion of such
Pre-Closing Period non-Income Taxes which has
been accrued as a current non-Income Tax
liability in the Company's and the
Subsidiaries' Closing Balance Sheet as of the
Closing Date. Buyer shall cause the Company
and the Subsidiaries
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to pay all non-Income Taxes to which such
non-Income Tax Returns relate for all periods
after the Closing Date. The parties shall make
available to each other copies of non-Income
Tax Returns of the Companies and the
Subsidiaries covering Tax periods ending before
or including the Closing Date.
13.3.4 ALLOCATIONS. Seller shall include the income
and deductions of the Company and the
Subsidiaries (including any deferred income
triggered into income by Treas. Reg. Section
1.1502-13 and Treas. Reg. Section 1.1502-19,
or equivalent provisions of state or local law)
on Seller's consolidated or combined federal,
state or local Income Tax Returns for all
periods through the Closing Date and shall pay
any Taxes attributable thereto. In any case
where any Tax Return covers a Tax period
beginning before and ending after the Closing
Date, the amount of Taxes allocable between
Seller on one hand, and Buyer, the Company and
the Subsidiaries on the other hand, shall be
determined by closing the books of the Company
and the Subsidiaries as of and including the
Closing Date. If the allocation of an item of
income, deduction or credit or non-Income Tax
cannot be specifically allocated based on such
closing of the books, such item shall be
apportioned on a daily basis; provided,
however, an appropriate adjustment shall be
made with respect to the Danville property and
other property to be transferred by the Company
to Seller prior to the Closing Date. In case
of the Taxes attributable to the Pre-Closing
Period, Seller shall be liable for such Taxes
except to the extent such Taxes are accrued as
a current Tax liability in the Closing Balance
Sheet. In case of (i) the Taxes attributable
to the portion of such Tax period following the
Closing Date and (ii) the portion of Taxes so
accrued as a current Tax liability, Buyer and
the Company shall be jointly and severally
liable for such Taxes.
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13.4 ALLOCATION OF INCOME TAX BENEFITS.
13.4.1 If any adjustments shall be made to any
federal, state, local, or foreign Income Tax
returns relating to the Company, the
Subsidiaries or Seller for the Pre-Closing
Period which result in any Income Tax detriment
to Seller or any affiliate of Seller with
respect to such period and any Income Tax
benefit to the Company, the Subsidiaries, Buyer
or any affiliate of Buyer for any period ending
after the Closing Date, Seller shall be
entitled to the benefit of such Income Tax
benefit as and when actually realized by the
Buyer to the extent of the related Income Tax
detriment, and Buyer shall or shall cause the
Company and the Subsidiaries to pay to Seller
such amount.
13.4.2 If any adjustment shall be made to any federal,
state, local, or foreign Income Tax returns
relating to the Company or any Subsidiary for
any Tax period ending after the Pre-Closing
Period which result in any Income Tax detriment
to Buyer, the Company, any Subsidiary or any
affiliate of Buyer with respect to such period
and any Income Tax benefit to Seller or any
affiliate of Seller for any Pre-Closing Period,
Buyer shall be entitled to the benefit of such
Income Tax Benefits as and when actually
realized by the Seller to the extent of the
related Income Tax detriment. Seller shall pay
to Buyer such amount.
13.5 TAX INDEMNITY. Seller shall be liable for, and agrees to
indemnify, defend and hold harmless each of the Buyer and
the Company and the Subsidiaries from and against all Taxes
(and all related costs and expenses) imposed on the Company
or the Subsidiaries in respect to the Pre-Closing Period,
except to the extent accrued as a current Tax liability on
the Closing Balance Sheet. For
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purposes of determining such Taxes, the principles of
Section 13.3.4 hereof shall apply.
13.6 REFUNDS. Any refunds of Taxes received by the Company or
any Subsidiary attributable to the periods through or
including the Closing Date shall be for the benefit of
Seller. Buyer shall or shall cause the Company to pay to
Seller or its order any such refunds within ten (10) days of
receipt thereof. Any refunds of Taxes received by the
Seller attributable to periods beginning after the Closing
Date shall be for the benefit of the Buyer. Seller shall
pay to Buyer or its order any such refunds within ten (10)
days of receipt thereof.
13.7 COOPERATION. After the Closing Date, Seller and Buyer shall
make available to the other, free of charge, cost or expense
and as reasonably requested, all information, records or
documents reasonably relevant to Tax liabilities or
potential Tax liabilities of the Company or the Subsidiaries
for all periods prior to or including the Closing Date (or
any matter, transaction or event occurring on or before the
Closing Date that may affect such a Tax liability) and each
such person shall preserve all such available information,
records and documents until the expiration of any applicable
statute of limitations or extensions thereof. Each such
person shall provide, free of charge, cost or expense, the
other(s) with all available information and documentation
reasonably necessary to comply with all Tax audit
information requests or inquiries made of any such periods
relevant to such Tax liabilities or potential Tax
liabilities (or any matter, transaction or event occurring
on or before the Closing date that reasonably may affect
such a Tax liability). Any information obtained pursuant to
this Section 13.7 shall be held in strict confidence and
shall be used solely in connection with the reason for which
it was requested.
13.8 TAX AUDITS. With respect to any Pre-Closing Period, Buyer
shall promptly notify Seller in writing upon receipt by
Buyer, any affiliate of Buyer, the
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Company, or any Subsidiary and Seller shall promptly notify
Buyer in writing upon receipt by Seller or any affiliate of
Seller, of notice of any pending or threatened
federal,state, local or foreign Tax audits, examinations or
assessments of the Company or any Subsidiary (other than
consolidated or combined Income Tax audits, examinations or
assessments), so long as Pre-Closing Period Taxable years
remain open. Seller shall have the sole right to represent
the Company, the Subsidiaries and their predecessors in any
Tax audit or administrative or court proceeding relating to
the Pre-Closing Period, and to employ counsel of its choice
at its expense, from and after the date on which the Seller
confirms in writing that it is obligated hereunder to
indemnify the Buyer, the Company, and/or a Subsidiary, as
applicable with respect to the Taxes subject to such audit,
examination, or assessment; provided, that:
(a) Buyer may participate at its sole cost and
expense therein, but only with respect to
issues directly related to a Pre-Closing Period
Tax liability (other than a federal Income Tax
liability or a state Income Tax liability to a
state with respect to which a Section
338(h)(10) Joint Election was made hereunder)
as to which such indemnification applies (a
"Covered Issue");
(b) Seller shall not enter into any compromise or
agreement (a "Settlement") with respect to any
such Covered Issue without providing the Buyer
with a written description of the proposed
terms and conditions thereof (the "Settlement
Proposal") and without the prior written
consent of the Buyer (which consent will not
unreasonably be withheld) if such Settlement
would have an adverse effect on Buyer, the
Company, or any Subsidiary (after giving effect
to Seller's indemnification obligations
hereunder and its obligations under Section
13.4) (an "Adverse Tax Effect");
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(c) For purposes of clause (b), consent will be
treated as reasonably withheld by Buyer as to
any Covered Issue if the Settlement Proposal is
based on a trade-off where decreased Tax
detriments (or increased Tax benefits) for
Pre-Closing Periods would result in an increase
in Adverse Tax Effects, or vice versa; and
(d) Where consent to Settlement of one or more
Covered Issues is withheld by Buyer pursuant to
clause (b) above, other than in cases described
in clause (c) above, (i) Buyer may continue to
initiate (and control the handling,
disposition, or settlement of) any further
proceedings solely with respect to such Covered
Issues at its own cost and expense (the parties
agree that Seller shall continue to control the
handling, disposition or settlement of all
other issues), and (ii) the indemnification
liability of the Seller under Section 13.5
hereof in respect to those Covered Issues shall
not exceed the liability that would have
resulted from Seller's proposed Settlement as
set forth in the Settlement Proposal.
13.9 BUYER'S TAXES. Buyer shall pay, or cause to be paid, and
shall indemnify and defend Seller and its affiliates against
and hold them harmless from any liability for Taxes for Tax
periods of the Company or any Subsidiary beginning, and
portions of Tax periods occurring after the Closing Date,
including, without limitation, any such liability with
respect to operations of the Company and the Subsidiaries
and dispositions of assets by any of them after the Closing
Date. For purposes of such Taxes, the principles of Section
13.3.4 hereof shall apply.
14. MISCELLANEOUS. The following miscellaneous provisions shall
apply to this Agreement:
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14.1 NOTICES. All notices, correspondence, requests,
instructions, and other documents to be given hereunder
shall be in writing or by written telecommunication, and
shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by
registered or certified mail, return receipt requested,
postage prepaid (effective five business days after
dispatch), (iii) sent by a reputable, established courier
service that guarantees next business day delivery
(effective the next business day), or (iv) sent by facsimile
telecopier following within 24 hours by confirmation by one
of the forgoing methods (effective upon receipt of the
telecopy in complete, readable form), addressed as follows
(or to such other address as the recipient party may have
furnished to the other party for the purpose pursuant to
this section):
(a) If to Seller:
Valmont Industries, Inc.
240 Guarantee Centre
8805 Indian Hills Drive
Omaha, Nebraska 68114
Attention; Vice President and Chief
Financial Officer
Telecopier No. (402) 343-0668
with a copy sent at the same time and by the
same means to:
Roger W. Wells, Esq.
McGrath, North, Mullin & Kratz, P.C.
Suite 1400, One Central Parka Plaza
Omaha, Nebraska 68102
Telecopier No. (402) 341-0216
(b) If to Buyer:
Chicago Miniature Lamp, Inc.
500 Chapman Street
Canton, Massachusetts 02021-2040
Attention: Frank Ward, Chief Executive Officer
Telecopier No. (617) 828-2012
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with a copy sent at the same time and by the
same means to:
David L. Engel, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
14.2 AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended, except by instrument or instruments in
writing, signed by the party against whom enforcement of any
such modification or amendment is sought. Either Seller or
Buyer may, by an instrument in writing, waive compliance by
the other party with any term or provision of this Agreement
on the part of such other party to be performed or complied
with. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty or
agreement contained herein. The waiver by any party hereto
of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
14.3 EXPENSES. Except as otherwise provided herein, whether or
not this Agreement shall be consummated, Seller and Buyer
shall each pay its own expenses incident to the preparation,
execution and consummation of this Agreement.
14.4 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedule
and the Confidentiality Agreement constitute the entire
agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements
and understandings, oral and written, among the parties
hereto with respect to the subject matter hereof.
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14.5 APPLICABLE LAW. This Agreement and the legal relations
among the parties hereto shall be governed by and construed
in accordance with the laws of the State of Delaware
applicable to contracts made and performed in Delaware.
14.6 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective
heirs, successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
14.7 ASSIGNABILITY. Neither this Agreement nor any of the
parties' rights or obligations hereunder shall be assignable
or delegable by any party hereto without the prior written
consent of the other party hereto, and any attempt to do so
will be void, provided, that Buyer may assign its rights,
but not delegate its obligations, hereunder to a
wholly-owned subsidiary of Buyer.
14.8 EFFECT OF HEADINGS. The headings of the various sections
and subsections herein are inserted merely as a matter of
convenience and for reference and shall not be construed as
in any manner defining, limiting, or describing the scope or
intent of the particular sections to which they refer, or as
affecting the meaning or construction of the language in the
body of such sections.
14.9 EXHIBITS; DISCLOSURE SCHEDULE. All exhibits and disclosures
referred to in this Agreement are attached hereto and are
incorporated herein by reference as if fully set forth
herein.
14.10 SEVERABILITY. Any term or provision of this Agreement,
which is invalid or unenforceable in any jurisdiction, shall
be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable
the
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remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or other provisions of this Agreement in any other
jurisdiction.
14.11 CONSTRUCTION. For purposes of this Agreement, the phrases
"Seller's knowledge" or "to the knowledge of Seller" mean
the actual knowledge of Seller's executive officers after
due inquiry of the persons listed on Exhibit 15.13. The
language in all parts of this Agreement shall in all cases
be construed as a whole according to its fair meaning,
strictly neither for nor against any party hereto, and
without implying a presumption that the terms thereof shall
be more strictly construed against one party by reason of
the rule of construction that a document is to be construed
more strictly against the person who himself drafted same.
It is hereby agreed that representatives of both parties
have participated in the preparation hereof.
14.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original
and all of which shall constitute one and the same
agreement.
14.13 PUBLICITY. The parties hereto agree that they will consult
with each other concerning any proposed press release or
public announcement pertaining to the transactions
contemplated and shall use their best efforts to agree upon
the text of any such press release or the making of such
public announcement. Except as mutually agreed, neither
Buyer nor Seller shall disclose (except as required by
applicable law) the terms and conditions contained in this
Agreement.
14.14 RELEASE OF GUARANTIES; INDEMNIFICATION. Buyer shall use its
best efforts to cause Seller to be released, as promptly as
possible following the Closing, from all obligations and
liabilities under or in respect of the Seller guaranties of
the obligations of the company and/or the Subsidiaries
described in Section 6.12
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of the Disclosure Schedule as well as from all obligations
and liabilities under or in respect of Seller serving as
tenant under the Denton, Texas office lease, as also
described in Section 6.12 of the Disclosure Schedule
(collectively, the "Seller Guaranties"). Buyer shall
indemnify, defend and hold harmless Seller and its
Affiliates and each of their respective officers, directors,
employees, agents, representatives, successors and assigns
from and against any and all Damages related to or arising
out of any failure by Buyer to have Seller released from the
Seller Guaranties.
14.15 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the following respective meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with such Person. "lien" (or its plurals,
"liens") means any and all liens, claims, mortgages,
security interest, charges, encumbrances, and restrictions
on transfer of any kind, except, in the case of references
to securities, any of the same arising under applicable
securities laws solely by reason of the fact that such
securities were issued pursuant to exemptions from
registration under such securities laws.
"Person" means any natural person, entity, or association,
including without limitation any corporation, partnership,
limited liability company, government (or agency or
subdivision thereof), trust, joint venture, or
proprietorship.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
VALMONT INDUSTRIES, INC. CHICAGO MINIATURE LAMP, INC.
a Delaware corporation an Oklahoma corporation
By: Terry McClain By: /s/ Frank M. Ward
---------------------------- ----------------------------------
Its: VP & CFO. Its: CEO
--------------------------- ----------------------------------
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