Exhibit 2.1
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ASSET PURCHASE AGREEMENT
By and Between
MCPc, INC.
and
MCSi, INC.,
Dated as of April 28, 2002
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TABLE OF CONTENTS
1. PURCHASE AND SALE...............................................................................
1.1. Acquired Assets.......................................................................
1.2. Excluded Assets.......................................................................
2. PAYMENT OF PURCHASE PRICE.......................................................................
3. ASSUMPTION OF CERTAIN OBLIGATIONS...............................................................
4. CLOSING.........................................................................................
5. ADJUSTMENTS.....................................................................................
5.1. Taxes, etc............................................................................
5.2. Purchase Price Adjustments............................................................
6. REPRESENTATIONS AND WARRANTIES OF THE SELLERS...................................................
6.1. Organization of Seller; Authority.....................................................
6.2. Approvals of Seller; Binding Effect...................................................
6.3. Non-Contravention.....................................................................
6.4. Governmental Consents.................................................................
6.5. Absence of Certain Changes............................................................
6.6. Litigation, etc.......................................................................
6.7. Conformity to Law.....................................................................
6.8. Title to Acquired Assets..............................................................
6.9. Labor Relations.......................................................................
6.10. Trademarks, Patents, etc..............................................................
6.11. Suppliers and Customers...............................................................
6.12. Brokers...............................................................................
6.13. Taxes.................................................................................
6.14. Accounts Receivable...................................................................
6.15. Inventories...........................................................................
6.16. Equipment.............................................................................
6.17. Material Agreements...................................................................
6.18. Condemnation..........................................................................
6.19. Disclosure............................................................................
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER.....................................................
7.1. Organization and Standing of Buyer....................................................
7.2. Corporate Approval; Binding Effect....................................................
7.3. Non-Contravention.....................................................................
7.4. Brokers...............................................................................
7.5. Investigation.........................................................................
7.6. Litigation, Etc.......................................................................
7.7. Financing.............................................................................
7.8. Knowledge of Matters..................................................................
7.9. Use of Seller's Name or Intellectual Property.........................................
8. CONDUCT OF BUSINESS BY SELLER PENDING CLOSING...................................................
8.1. Access................................................................................
8.2. Carry on in Regular Course............................................................
8.3. No General Increases..................................................................
i
8.4. Sale of Capital Assets................................................................
8.5. Insurance.............................................................................
8.6. Preservation of Business Relationhips.................................................
8.7. Consents of Third Parties.............................................................
8.8. Transition Actions....................................................................
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS......................................................
9.1. Representations and Warranties True at Closing........................................
9.2. Compliance With Agreement.............................................................
9.3. Officers' Certificates................................................................
9.4. Consents and Approvals................................................................
9.5. Delivery of Documents.................................................................
9.6. No Litigation.........................................................................
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS....................................................
10.1. Representations and Warranties True at Closing........................................
10.2. Compliance with Agreement.............................................................
10.3. Closing Certificate...................................................................
10.4. Consents and Approvals................................................................
10.5. Delivery of Documents.................................................................
10.6. No Litigation.........................................................................
10.7 Payment of the Purchase Price.........................................................
11. CERTAIN COVENANTS...............................................................................
11.1. Confidential Information..............................................................
11.2. Hiring of Seller's Employees..........................................................
11.3 Books and Records.....................................................................
12. INDEMNIFICATION.................................................................................
12.1. Indemnity by Seller...................................................................
12.2. Indemnity by Buyer....................................................................
12.3. Claims................................................................................
12.4. Limitations of Liability..............................................................
12.5 Survival of Representations and Warranties............................................
13. BULK SALES COMPLIANCE...........................................................................
14. GENERAL.........................................................................................
14.1. Expenses..............................................................................
14.2. Notices...............................................................................
14.3. Entire Agreement; Amendment...........................................................
14.4. Governing Law.........................................................................
14.5. Sections and Section Headings.........................................................
14.6. Assigns...............................................................................
14.7. Further Assurances....................................................................
14.8. Tax Treatment.........................................................................
14.9. No Implied Rights or Remedies.........................................................
14.10. Counterparts..........................................................................
14.11. Satisfaction of Conditions Precedent..................................................
14.12. Public Statements or Releases.........................................................
14.13. Index of Defined Terms................................................................
14.14. Severability..........................................................................
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14.15. Termination...........................................................................
14.16. Negotiation and Preparation...........................................................
SIGNATURES...................................................................................
iii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
1.1(a) Leased Real Property List
1.1(b) Equipment List
1.1(c) Leased Personal Property List
1.1(d) Inventory List
1.1(e) Other Contracts List
1.1(f) Permit List
1.1(g) Intangibles List
1.1(h) Accounts Receivable
3 Assumed Obligations
6.3 Non-Contravention
6.4 Governmental Consents
6.5 Absence of Charges
6.6 Litigation
6.7 Conformity to Law
6.8 Encumbrances on Acquired Assets
6.9 Labor Relations
6.11 Suppliers and Customers
6.12 Brokers, etc.
6.17 Material Agreements
8.3 Employees to be Offered Employment by Buyer
EXHIBITS
A Form of Convertible Promissory Note
B Form of IRS Form 8594
C Form of Non-Competition Agreement
D Form of Transition Agreement
E Form of Loan and Security Agreement
F Form of Press Release
G Form of Assignment and Assumption Agreement
H Form of ▇▇▇▇ of Sale
I Form of Assignment of Intellectual Property
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ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (this "AGREEMENT") is dated as of
April 28, 2002, by and between MCSi, INC., a Maryland corporation (the
"SELLER"), and MCPc, INC., an
Ohio corporation (the "BUYER"). Each of the
Buyer and the Seller are a "party" to this Agreement, and together they are
the "parties" hereto.
WHEREAS, the Seller is engaged, INTER ALIA, in the business of the
marketing, distribution and sale of computer technology products and related
services to end-users in the corporate, government, healthcare, education and
various other industries (the "BUSINESS");
WHEREAS, the Buyer desires to purchase certain assets owned by the
Seller, subject to certain obligations, and Seller desires to sell such assets
and assign to Buyer such obligations, on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the Buyer and the Seller hereby agree as follows:
1. PURCHASE AND SALE.
1.1. ACQUIRED ASSETS. Subject to the terms and conditions set
forth in this Agreement, at the Closing referred to in Section 4 hereof, the
Seller shall sell, assign, transfer and deliver, free and clear of all
Encumbrances except Permitted Encumbrances (as defined in Section 6.8), to the
Buyer, and the Buyer shall purchase, acquire and take assignment and delivery
of, all of the following assets wherever situated (all of which assets are
hereinafter referred to collectively as the "ACQUIRED ASSETS"):
(a) All of the Seller's title to, interest in and
rights and claims under the real property leases (the "REAL ESTATE LEASES")
described on SCHEDULE 1.1(a), relating to the properties therein described and
the buildings and other structures or improvements thereon and, to the extent
located on the property subject to the Real Estate Leases, any and all fixtures,
attached thereto or located thereon (the "LEASED REAL PROPERTY");
(b) All machinery, installations, equipment,
furniture, computers, spare parts, supplies, materials and other personal
property located at the Leased Real Property, whether or not reflected on the
books or financial statements of the Seller, as set forth on SCHEDULE 1.1(b)
hereto or as may otherwise be located at the Leased Real Property, with such
additions thereto and deletions therefrom as may hereafter arise in the ordinary
course of business prior to the Closing (the "EQUIPMENT");
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(c) All of the Seller's title to, interest in and
rights under the leases of personal property described on SCHEDULE 1.1(c) hereto
(the "PERSONAL PROPERTY LEASES");
(d) The inventories, including raw materials, work in
process and finished goods, directly related to the Business, whether or not
reflected on the books or financial statements of the Seller, set forth on
SCHEDULE 1.1(d) hereto (the "INVENTORIES");
(e) To the extent listed on SCHEDULE 1.1(e) hereto,
all contract rights, manufacturer's warranties on the Acquired Assets, the
unfilled sales for computer technology products made by the Seller and the
unfilled purchase orders issued by Seller as of the Closing Date (the "OTHER
CONTRACTS");
(f) To the extent assignable by Seller, the Seller's
rights under the licenses, permits, regulatory or governmental approvals or
authorizations or consents described on SCHEDULE 1.1(f) (the "PERMITS");
(g) The Seller's rights, title and interest in and to
the trademarks, trade names, service marks, corporate names, copyrights,
licenses and applications with respect to the foregoing, production records,
technical information, manufacturing know-how, processes, trade secrets,
internet domain names, e-mail addresses, goodwill, customer and supplier lists,
price lists and other intangible assets, only as set forth on SCHEDULE 1.1(g)
hereto (the "INTANGIBLES");
(h) The trade accounts receivable, notes receivable,
deposits, commissions, refunds and miscellaneous receivables of the Seller,
directly related to the Business in each case as of the Closing Date hereof, as
set forth on SCHEDULE 1.1(h) (the "ACCOUNTS RECEIVABLE"); and
(i) The books and records relating to the Acquired
Assets, including but not limited to, business records, financial, tax,
manufacturing and purchase records, repair and warranty records, production and
inventory records, sales records, and promotional, marketing and advertising
literature, documents relating to ownership, use, maintenance or repair of any
of the Acquired Assets, such as specifications, inspection records and inventory
records, price lists, customer and supplier lists, payroll and personnel records
for the Hired Employees (as defined in Section 11.2) and correspondence with
customers, manufacturers, vendors and suppliers.
1.2. EXCLUDED ASSETS. It is the intent of the parties that
Seller is selling to Buyer, and Buyer is purchasing from Seller, assets relating
to Seller's computer technology product activities. Notwithstanding the
foregoing, the Seller is not selling and the Buyer is not purchasing, pursuant
to this Agreement, any tangible or intangible properties, assets or rights of
the Seller not specifically included in the Acquired Assets (collectively,
"EXCLUDED ASSETS").
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2. PAYMENT OF PURCHASE PRICE. (a) Upon the terms and subject to the
conditions contained in this Agreement, in consideration for the Acquired
Assets, at the Closing Buyer shall pay to Seller the aggregate sum of
approximately $45,509,627.00,subject to the determination of the Pre-Closing
Estimate as set forth in Section 5.2(a) and subject to the post-Closing
adjustments described in Sections 5.2(b), (c), (d) and (e) (the "PURCHASE
PRICE"), as follows:
(i) payment of not less than $25,509,627.00 by wire transfer
of immediately available funds at the Closing, to an account designated by
Seller; and,
(ii) delivery by Buyer to Seller of a two year secured
promissory note in the original principal amount of approximately $8,000,000.00,
with interest payable quarterly in arrears on the first $6,000,000 of original
principal amount from time to time outstanding (the "CONVERTIBLE AMOUNT") at the
rate of 10% per annum, and with interest payable quarterly in arrears on the
remaining original principal amount from time to time outstanding at the rate of
18% per annum, with the Convertible Amount being convertible, in whole or in
part, from time to time until maturity into a number of shares of the common
stock or other voting equity securities of the Buyer which, if fully converted,
would, as of the Closing Date hereof, equal 15% ("CONVERSION RATE") of the
issued and outstanding shares of common stock or other voting equity securities
of the Buyer, the form of which is attached hereto as EXHIBIT A (the
"CONVERTIBLE PROMISSORY NOTE"). If the Buyer pays down the original principal
amount within the ninety (90) days immediately following the Closing Date, 75%
of such prepayment shall be used to reduce the Convertible Amount and 25% of
such prepayment shall be used to reduce the non-Convertible Amount. The
Conversion Rate will be proportionately reduced on a percentage rate basis to
not less than 5% of the total issued and outstanding shares of Buyer's common
stock or other voting equity securities as of the Closing Date to the extent
that Buyer pays down the Convertible Amount within such ninety (90) day period
(i.e., if 10% of the Convertible Amount is paid within such time period, then
the Conversion Rate shall be decreased by 1.5% to 13.5%), provided, however,
that if Buyer pays the original principal balance and all accrued but unpaid
interest in full to Seller within such time period or pays the Convertible
Amount, plus all accrued but unpaid interest, in full on or prior to the
maturity date, the conversion rights hereunder (to the extent not previously
exercised) shall terminate.
(b) In addition, at the Closing, Buyer shall assume and become
liable for all of the Assumed Obligations (as defined in Section 3 of this
Agreement).
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3. ASSUMPTION OF CERTAIN OBLIGATIONS.
Except as hereinbelow provided, at the Closing, the Buyer
shall assume, and agree to pay, perform, fulfill and discharge, (i) those
obligations of the Seller which accrue after the Closing Date and which relate
to events which transpire subsequent to the Closing Date, under the Real Estate
Leases, Personal Property Leases and Other Contracts together with any and all
other obligations connected to, arising from or relating to the operation of the
Buyer's business after the Closing Date, (ii) the debt obligations set forth on
SCHEDULE 3 hereto, (iii) the trade accounts payable as set forth on SCHEDULE 3
as offset (in accordance with Seller's GAAP (as defined in Section 5.2(a)) by
co-op advertising amounts due from vendors, and (iv) the accrued,
ordinary-course liabilities of the Seller as set forth on SCHEDULE 3 hereto
(collectively, the "ASSUMED OBLIGATIONS"). Except as expressly set forth in this
Agreement, the Buyer shall NOT assume, and shall NOT be deemed to have assumed,
any liability or obligation of the Seller whatsoever including, without
limitation: (i) any liability or obligation relating to or arising out of the
ownership of the Acquired Assets by the Seller prior to the Closing Date, (ii)
any obligations not expressly assumed pursuant to this Section 3, including
non-assumed Seller's obligations arising prior to the Closing Date, such as
Taxes (as defined in Section 6.13), violations of law, employee liabilities,
product liability claims, customer claims for rebates, refunds or allowances,
environmental liabilities, or intellectual property infringement claims, or
amounts owed to vendors who have, as of the Closing Date, prepaid booth
registration fees to Seller for Seller's October 2002 "Conversion Expo" and
subsequent to the Closing Date such vendor cancels its registration and seeks a
refund of such fees, (iii) any bank debt of the Seller, and (iv any obligations
relating to any Excluded Assets.
4. CLOSING.
The closing of the purchase of the Acquired Assets and the
transactions contemplated hereby and the delivery of all documents and
instruments necessary to consummate the transactions contemplated by this
Agreement (the "CLOSING") shall be held at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
L.L.P., 3200 National City Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m. on ___________________, 2002 [intentionally left blank] or at
such other place, as the Buyer and the Seller may agree, it being understood
and agreed that time is of the essence of this Agreement. The exact amounts
of the cash payment and the original principal amount of the Convertible
Promissory Note shall be agreed on by the parties on or before the Closing
Date. The date on which the Closing is actually held hereunder is referred
to herein as the "CLOSING DATE". Title and risk of loss to the Acquired
Assets shall pass to the Buyer at 11:59 p.m. on the Closing Date.
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5. ADJUSTMENTS.
5.1. TAXES, ETC. The parties will use their commercially
reasonable efforts to arrange the transfer to Buyer of all utility services
relating to the Leased Real Property as of the Closing Date. All utilities and
water and sewer use charges and rent and related deposits and prepayments, real
estate taxes, insurance and other charges with respect to the Leased Real
Property and the Personal Property Leases for the current tax year, all personal
property taxes with respect to the Equipment, all co-op advertising prepaid by
vendors, and all other similar expenses, charges and payments or credits shall
be apportioned and shall be adjusted, as of close of business on the Closing
Date, and the net amount thereof shall be added to or deducted from, as the case
may be, the amount paid by the Buyer as the cash portion of the Purchase Price.
If the amount of any item is not known at the time of payment of the cash
portion of the Purchase Price, it shall be apportioned on a basis which is
agreed to by the Buyer and the Seller prior to the Closing Date with a
reapportionment after the Closing Date as soon as definitive data are available.
5.2. PURCHASE PRICE ADJUSTMENTS.
(a) On or prior to the Closing Date, the Seller shall
provide to the Buyer the Seller's good faith estimate as of March 31, 2002
("PRE-CLOSING ESTIMATE") of the value of the Accounts Receivable ("ORIGINAL
ACCOUNTS RECEIVABLE VALUATION"), Equipment ("ORIGINAL EQUIPMENT VALUATION"),
Inventories ("ORIGINAL INVENTORIES VALUATION"), and the Assumed Obligations
("ORIGINAL ASSUMED OBLIGATIONS VALUATION"), all of which shall be valued in
accordance with generally accepted accounting principles ("GAAP") as
consistently applied by the Seller ("SELLER'S GAAP") and as set forth below:
(i) Accounts Receivable will be valued based on the
outstanding balance of the Accounts Receivable, adjusted for an appropriate bad
debt reserve consistent with the Seller's prior reserve practice.
(ii) Inventory will be valued at the lower of cost or
market. Cost will be determined using the weighted average or specific
identification method, consistent with Seller's past practices. Market will be
determined by the current selling price to Seller's customers at the time of
valuation.
(iii) Equipment will be valued at historical cost
reduced by the appropriate accumulated depreciation.
(iv) Assumed Obligations representing debt will be
valued at the outstanding principal balance plus accrued but unpaid interest
plus any costs or expenses due and payable. Assumed Obligations representing
capital leases will be valued at the total future payments as required by the
subject lease reduced by an appropriate discount factor to represent the
"interest" element.
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(v) Assumed Obligations representing trade payables
will be valued at their stated amounts as shown on the vendor invoices plus any
interest due and payable, decreased by the amount of any rebate or price
protection or any co-op advertising (as adjusted as set forth in Section 5.1,
above) paid as of the Closing Date.
(vi) Assumed Obligations representing accrued
ordinary-course liabilities will be valued as supported by reasonable and
customary documentation.
(b) Within ten (10) Business Days after the Closing
Date: the Buyer and Seller shall jointly conduct an actual physical count of the
Inventories as of the Closing Date. Within thirty (30) Business Days after the
Closing Date, Seller shall notify Buyer in writing (the "ADJUSTMENT NOTICE") of
the value of the Inventories (the "ACTUAL INVENTORIES VALUATION"), the Accounts
Receivable (the "ACTUAL ACCOUNTS RECEIVABLE VALUATION"), the Equipment (the
"ACTUAL EQUIPMENT VALUATION") and the Assumed Obligations (the "ACTUAL ASSUMED
OBLIGATIONS VALUATION") as of the Closing Date and the sales price of any
Equipment sold to third parties from the date of the Pre-Closing Estimate to and
including the Closing Date (the "ACTUAL ASSET VALUATION"). All such values shall
be determined as of the Closing Date in accordance with Seller's GAAP on a basis
consistent with the calculation of the Pre-Closing Estimate. During that 30
Business Day period and during the periods referred to in this Section 5.2(b),
Buyer and its representatives shall be permitted to discuss with Seller and its
representatives the basis of the preparation of the Actual Asset Valuation and
Buyer and its representatives shall have, subject to the confidentiality
provisions of Section 11.1, access, upon reasonable prior notice at all
reasonable times during normal business hours in a manner which will not unduly
interfere with the operations of Seller, to the work papers and supporting
records of Seller and its representatives (except privileged materials) prepared
in connection with the Actual Asset Valuation so as to permit Buyer and its
representatives to become fully informed relating to the preparation of the
Actual Asset Valuation.
(c) If for any reason Buyer does not agree as to the
Actual Asset Valuation, such dispute shall be noticed (the "DISPUTE NOTICE") to
the Seller in writing within ten (10) Business Days after receipt of the
Adjustment Notice and the parties shall, within ten (10) Business Days after
receipt of the Dispute Notice, meet to discuss the Actual Asset Valuation, and
attempt to negotiate a settlement of the dispute. If such a settlement cannot be
reached within ten (10) Business Days after the first such meeting, the parties
shall engage Deloitte & Touche, L.L.P. (the "INDEPENDENT ACCOUNTANTS") that
shall resolve the dispute in writing within forty-five (45) Business Days after
its appointment. Both parties shall cooperate with, and provide such information
as may be requested by, such Independent Accountants. The Independent
Accountants shall assess the party who is not the substantially prevailing party
to pay its fees. The parties shall pay their own costs and expenses relating to
this dispute resolution procedure. The determination of the Independent
Accountants shall be noticed to each party in writing and shall be final and
binding on the parties. No adjustment payment need be made by a disputing party
until the Independent Accountants have made their
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determination and no interest shall begin to accrue on any payment due until
five (5) Business Days after receipt of the notice of the Independent
Accountants' determination.
(d) Within five (5) Business Days following the final
determination of the Actual Asset Valuation pursuant to Section 5.2(c), the
following payment adjustments, if any, shall be made by wire transfer of
immediately available funds to an account designated by the applicable party:
(i) if the value of the Actual Accounts
Receivable Valuation is less than the Original Accounts Receivable Valuation,
then the Purchase Price shall be reduced by the amount of the difference between
the Actual Accounts Receivable Valuation and the Original Accounts Receivable
Valuation;
(ii) if the value of the Actual Accounts
Receivable Valuation is greater than the Original Accounts Receivable Valuation,
then the Purchase Price shall be increased by the amount of the difference
between the Actual Accounts Receivable Valuation and the Original Accounts
Receivable Valuation:
(iii) if the value of the Actual Inventories
Valuation is less than the Original Inventories Valuation, then the Purchase
Price shall be reduced by the amount of the difference between the Actual
Inventories Valuation and the Original Inventories Valuation;
(iv) if the value of the Actual Inventories
Valuation is greater than the Original Inventories Valuation, then the Purchase
Price shall be increased by the amount of the difference between the Actual
Inventories Valuation and the Original Inventories Valuation;
(v) if the value of the Actual Equipment
Valuation is less than the Original Equipment Valuation, then the Purchase Price
shall be reduced by the amount of the difference between the Actual Equipment
Valuation and the Original Equipment Valuation;
(vi) if the value of the Actual Equipment
Valuation is greater than the Original Equipment Valuation, then the Purchase
Price shall be increased by the amount of the difference between the Actual
Equipment Valuation and the Original Equipment Valuation;
(vii) if the value of the Actual Assumed
Obligations Valuation is less than the Original Assumed Obligations Valuation,
than the Purchase Price shall be increased by the amount of the difference
between the Actual Assumed Obligations Valuation and the Original Assumed
Obligations Valuation; and
(viii) if the value of the Actual Assumed
Obligations Valuation is greater than the Original Assumed Obligations
Valuation, then the Purchase
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Price shall be reduced by the amount of the difference between the Actual
Assumed Obligations Valuation and the Original Assumed Obligations Valuation.
(e) No interest shall be payable on any overpayment
or underpayment if the adjusted payments are timely made in accordance with the
terms hereof. However, if such adjusted payments are not timely paid for reasons
other than a good faith dispute that is prosecuted in due course, interest shall
accrue and be due and payable on such amounts at the rate of 5% per annum. For
purposes of this Agreement, a "BUSINESS DAY" is any day other than a Saturday,
Sunday or Federal holiday.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this Article 6 are
true and correct as of the Closing Date except as set forth in the disclosure
schedules attached hereto (the "SCHEDULES") and except that the Seller shall be
permitted to revise and update the Schedules attached hereto through and
including the date that is two (2) days prior to the Closing Date, except that
any revised schedule which contains a material adverse change of the Acquired
Assets or Assumed Obligations ("MATERIAL ADVERSE CHANGE") shall be included
herein only with the prior consent of Buyer. Except as otherwise set forth
herein, the Schedules shall be arranged in sections corresponding to the
numbered and lettered sections contained in this Section 6, and the disclosures
in any section of the Schedules shall qualify any other paragraph in this
Section 6 to the extent it is clear from a reading of the disclosure that such
disclosure is applicable to such other paragraphs. The effect of the Schedules
is to modify the applicable representations and warranties in Section 6 and
disclosure in any section of the Schedules shall be effectively made whether or
not expressly excepted in the corresponding section of this Agreement. The
phrase "delivered to Buyer" or "made available to Buyer" or any phrase of
similar import means that the Seller has delivered or provided access to certain
items or copies thereof to Buyer or its representatives. For purposes of this
Section 6, the phrase "to the knowledge of Seller" or "known to the Seller" or
any phrase of similar import shall be deemed to refer to the best knowledge of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, in their capacity as
the senior executive management of the Seller. Subject to the foregoing, the
Seller hereby represents and warrants to the Buyer as follows:
6.1. ORGANIZATION OF SELLER; AUTHORITY. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland. Seller is qualified to do business as a foreign
corporation in each jurisdiction in which the nature of Seller's assets or the
operation of Seller's business requires such qualification. Seller has all
requisite power and authority to own and hold the Acquired Assets owned or held
by it, to carry on its business and to own or lease and operate its properties
as such Business is now conducted and such properties are now owned, leased or
operated, to execute and deliver this Agreement and the Ancillary Agreements, as
defined below, to which it is a party and to carry out all actions required of
it pursuant to the terms of this Agreement and the Ancillary Agreements to which
it is a party.
6.2. APPROVALS OF SELLER; BINDING EFFECT. The Seller has
obtained all necessary authorizations and approvals from its Board of Directors,
stockholders, and/or
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other persons required for the execution and delivery of this Agreement, ▇▇▇▇(s)
of sale and other instrument(s) of conveyance and each other agreement, filing,
certificate and document being delivered by the Seller (the "ANCILLARY
AGREEMENTS") and the consummation of the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the Seller and
constitutes, and when executed and delivered hereunder each of the Ancillary
Agreements will have been duly executed and delivered and will constitute, the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, reorganization, insolvency, or other laws affecting the
enforcement of creditors' rights generally or the availability of equitable
remedies subject to the discretion of the subject court.
6.3. NON-CONTRAVENTION. Except as set forth in SCHEDULE 6.3,
neither the execution and delivery of this Agreement or any of the Ancillary
Agreements by the Seller, nor the consummation by the Seller of the transactions
contemplated hereby or thereby, will constitute a violation of, or be in
conflict with, or constitute or create a default under, or result in the
creation or imposition of any Encumbrance (as defined in Section 6.8 below) upon
any of the Acquired Assets pursuant to, (i) the Articles of Incorporation or
By-Laws (or similar charter documents) of the Seller, each as amended to date;
(ii) any material agreement or commitment to which the Seller is a party or by
which the Seller or the Acquired Assets is bound or to which the Seller or any
of such properties is subject; or (iii) any statute or any judgment, decree,
order, regulation or rule of any court or governmental authority, except any
violation, conflict or default which would not reasonably be expected to have a
material adverse effect on the Acquired Assets or Assumed Obligations (a
"MATERIAL ADVERSE EFFECT").
6.4. GOVERNMENTAL CONSENTS. Except as set forth on SCHEDULE
6.4, no consent, approval or authorization of, or registration, qualification or
filing with, any governmental agency or authority is required for the execution
and delivery of this Agreement or any of the Ancillary Agreements by the Seller
or for the consummation by the Seller of the transactions contemplated hereby or
thereby.
6.5. ABSENCE OF CERTAIN CHANGES. Since December 31, 2001 and
except as set forth in SCHEDULE 6.5, the Seller has carried on the Business only
in the ordinary course, consistent with past practices, and there has been no
Material Adverse Change in the Acquired Assets or Assumed Obligations.
6.6. LITIGATION, ETC. Except as disclosed on SCHEDULE 6.6
hereto, no action, suit, proceeding or, to Seller's knowledge, investigation is
pending or, to the knowledge of the Seller, threatened, relating to or affecting
the Business, or any of the Acquired Assets or relating to or affecting the
activities of the Seller carried on with any of the Acquired Assets, or which
questions the validity of this Agreement or challenges any of the transactions
contemplated hereby.
6.7. CONFORMITY TO LAW. To the knowledge of the Seller, the
Seller has in all material respects complied with, and is in material compliance
with, (i) all U.S.
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federal, state and local laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments, writs, injunctions,
decrees or similar commands applicable to the Business, or any of the Acquired
Assets, (ii) all unwaived terms and provisions of all contracts, agreements and
indentures to which such Seller is a party and by which the Business or any of
the Acquired Assets is subject, except to the extent that any such noncompliance
would not reasonably be expected to result in a Material Adverse Effect, and
(iii) its Articles of Incorporation and By-Laws, each as amended to date.
6.8. TITLE TO ACQUIRED ASSETS. The Seller is the lawful owner
of, has good and valid record and marketable title to, and has the full right to
sell, convey, transfer, assign and deliver the Acquired Assets, without any
restrictions of any kind whatsoever, except for Permitted Encumbrances. Except
for encumbrances described on SCHEDULE 6.8 hereto and except for Permitted
Encumbrances, all of the Acquired Assets are, or on the Closing Date will be,
free and clear of any security interests, liens, claims, charges, options,
mortgages, debts, leases (or subleases), conditional sales agreements, title
retention agreements, encumbrances of any kind, material defects as to title or
restrictions against the transfer or assignment thereof (collectively,
"ENCUMBRANCES"), and, to the knowledge of the Seller, there are no filings under
the Uniform Commercial Code or similar statute in any jurisdiction showing the
Seller as a debtor which creates or perfects or which purports to create or
perfect any Encumbrance in or on any of the Acquired Assets. At and as of the
Closing, the Seller will convey the Acquired Assets to the Buyer by deeds,
invoice, bills of sale, certificates of title and instruments of assignment and
transfer effective to vest in the Buyer, and the Buyer will have, good and valid
record and marketable title to all of the Acquired Assets, free and clear of all
Encumbrances other than Permitted Encumbrances, or encumbrances created by
Buyer. For purposes of this Agreement, a "PERMITTED ENCUMBRANCE" shall mean (i)
minor imperfections of title and encumbrances, if any, which are not substantial
in amount, do not detract from the value of the property subject thereto and do
not preclude or materially adversely affect the continued use of the property to
which they relate as used in the operation of the Seller's Business as currently
conducted, (ii) liens specifically listed on SCHEDULE 3 as Permitted
Encumbrances on Acquired Assets which secure specified liabilities which will be
part of the Assumed Obligations as set forth on SCHEDULE 3 and (iii) liens for
current Taxes not yet due which shall be pro-rated as set forth in Section 5.1.
6.9 LABOR RELATIONS. Except as set forth on SCHEDULE 6.9, to
the knowledge of Seller, the Seller is in material compliance with all
applicable federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and
nondiscrimination in employment, and is not engaged in any unfair labor
practice. Except as set forth on SCHEDULE 6.9, there is no charge pending or, to
the knowledge of the Seller, threatened against the Seller alleging unlawful
discrimination in employment or unlawful dismissal practices before any court or
agency or failure to comply with any applicable wage and hour, age
discrimination or workplace safety laws or any applicable federal or state
executive order or regulation and there is no charge of or proceeding with
regard to any unfair labor practice against the Seller
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pending before the National Labor Relations Board. There is no labor strike,
dispute, slow-down or work stoppage actually pending or, to Seller's knowledge,
threatened against or involving the Seller. No representation question exists
respecting the employees of the Seller. Except as set forth on SCHEDULE 6.9
hereto, no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending against the Seller and no claim
therefor has been asserted. None of the employees of the Seller is covered by
any collective bargaining agreement, and no collective bargaining agreement is
currently being negotiated by the Seller. The Seller has not experienced any
work stoppage or other material labor difficulty during the last five (5) years.
6.10 TRADEMARKS, PATENTS, ETC. SCHEDULE 1.1(g) hereto sets
forth a complete and accurate list of (i) all patents, trademarks, trade names,
internet domain names and copyrights registered in the name of the Seller, all
applications therefor, and all licenses and other agreements relating thereto
which are to be transferred pursuant to this Agreement, and (ii) all written
agreements relating to technology, know-how and processes which the Seller is
licensed or authorized to use by others, or which the Seller has licensed or
authorized for use by others and which are to be transferred pursuant to this
Agreement. Except to the extent set forth in SCHEDULE 1.1(g), the Seller owns or
has the sole and exclusive right to use all such patents, trademarks, trade
names, internet domain names and copyrights, in the jurisdictions in which they
are shown as registered, used or necessary for the ordinary course of business
as presently conducted or proposed to be conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any such right. No
claims have been asserted, and no claims are pending, by any person regarding
the use of any such trademarks, trade names, copyrights, technology, know-how,
internet domain names or processes, or challenging or questioning the validity
or effectiveness of any license or agreement. The use by the Seller of such
patents, trademarks, trade names, copyrights, technology, know-how, internet
domain names or processes used by the Seller in the ordinary course of business
does not, to the knowledge of the Seller, infringe on the rights of any person.
All of Seller's patents, patent applications, registered trademarks, and
trademark applications, and registered copyrights set forth on SCHEDULE 1.1(g)
remain in good standing, with all fees and filings due as of the Closing Date
having been duly made.
6.11 SUPPLIERS AND CUSTOMERS. The relationships of the Seller
with the suppliers and customers of the Business are good commercial working
relationships and, except as set forth on SCHEDULE 6.11, no supplier or customer
of material importance to such Business has canceled or otherwise terminated, or
threatened in writing to cancel or otherwise to terminate, its relationship with
the Seller or has during the last 6 months decreased materially, or threatened
to decrease or limit materially, its services, supplies or materials to the
Seller or its usage or purchase of the services or products of the Seller except
for normal cyclical changes related to customers' businesses. The Seller has no
knowledge that any such supplier or customer intends to cancel or otherwise
substantially modify its relationship with it or to decrease materially or limit
its services, supplies or materials to it, or its usage or purchase of its
services or products, and, only with the Seller's prior consent, the
communication of the transactions contemplated hereby will
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not, to the knowledge of the Seller, adversely affect the relationship of Seller
with any such supplier or customer.
6.12. BROKERS. Except as set forth in SCHEDULE 6.12, the
Seller has not retained, utilized or been represented by any broker, agent,
financial advisor intermediary or finder in connection with the transactions
contemplated by this Agreement.
6.13. TAXES. Since March 1, 1999, the Seller has duly and
timely filed with the appropriate government agencies all of the income, sales,
use, employment and other Tax returns and reports required to have been filed by
it. Since March 1, 1999 all Taxes, assessments, withholdings, fees and other
governmental charges upon the Seller or upon the Business or any of the
properties, assets, revenues, income and franchises of or relating to the
Business which are owed by the Seller with respect to any period ending on or
before the Closing Date have been duly and timely paid, other than those which
are being disputed in good faith or those currently payable without penalty or
interest which, to the extent not paid on the Closing Date, will be accurately
accrued for on the Seller's financial statements and paid when due and pro-rated
as set forth in Section 5.1. Seller has received no written notice that any of
the Tax returns filed by the Seller or the Taxes paid by the Seller relating to
the Business is or has been the subject of an audit, action, suit, proceeding,
claim, examination, deficiency or assessment by any government or taxing
authority including the United States Internal Revenue Service (the "IRS"). No
such audit, action, suit, proceeding, claim, examination, deficiency or
assessment is currently pending or, to the knowledge of the Seller, threatened
or contemplated. Neither the IRS nor any other government or taxing authority is
now asserting or, to the knowledge of the Seller, threatening to assert against
the Seller any deficiency or claim for additional Taxes or any adjustment that
would have a Material Adverse Effect on the Acquired Assets. The term "TAX"
shall mean any U.S. federal, state or local and other income, profits,
franchise, capital, net worth, withholding, unemployment insurance, social
security, occupational, production, severance, gross receipts, value added,
sales, use, excise, real and personal property, ad valorem, occupancy, transfer,
employment, disability, workers' compensation or other similar tax, duty, fee,
assessment or other governmental charge or surcharge (including all interest and
penalties thereon and additions thereto). The Seller has not waived any statute
of limitations with respect to Taxes or agreed to an extension of time with
respect to a Tax assessment or deficiency.
6.14. ACCOUNTS RECEIVABLE. All Accounts Receivable of Seller
set forth in SCHEDULE 1.1(h) will represent sales actually made in the ordinary
course of business and are, to the knowledge of the Seller, not subject to any
counterclaims, setoffs or defenses. The Accounts Receivable as of December 31,
2001 are fairly reflected on the Seller's audited financial statements for the
year ended December 31, 2001.
6.15. INVENTORIES. Except as will be set forth in SCHEDULE
1.1(d), the Inventories of the Seller consists of goods of a quality and
quantity which are useable or saleable in the normal course of the businesses
carried on by the Seller as of the date of this Agreement. The Inventories are
adequate for present needs of the Seller and the Business, are fairly reflected
on the books of account of the Seller, valued in accordance
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with the normal inventory valuation policies of the Seller, in accordance with
Seller's GAAP, with, in the reasonable judgment of management of the Seller,
adequate allowance for excessive or obsolete inventory.
6.16. EQUIPMENT. The Equipment set forth in SCHEDULE 1.1(b)
and the personal property held by the Seller under the Personal Property Leases
set forth in SCHEDULE 1.1(c) are utilized by the Seller in the ordinary course
of business and are in good condition and repair for their present use in the
Business, with the exception of reasonable and ordinary wear and tear.
6.17. MATERIAL AGREEMENTS. The agreements set forth in
SCHEDULES 1.1(a), 1.1(c) and 1.1(e) are referred to herein as the "MATERIAL
AGREEMENTS." The Material Agreements are binding on the Seller, in full force
and effect and enforceable against Seller in accordance with their terms. Except
as set forth in SCHEDULE 6.17, Seller has not assigned, mortgaged, pledged,
encumbered or otherwise hypothecated any of its right, title or interest under
the Material Agreements. Seller is not in violation of, or default in respect
of, nor, to Seller's knowledge, has there occurred an event or condition which,
with the passage of time or the giving of notice (or both) would constitute a
violation or default of any Material Agreement and, to Seller's knowledge, no
other party is in default or violation of any Material Agreement. No notice has
been received by Seller claiming any default by Seller or indicating the desire
or intention of any other party thereto to amend, modify, rescind or terminate
any Material Agreement. To Seller's knowledge, no real property leased under any
of the Real Estate Leases is subject to any lien, encumbrance, easement, right
of way, building or use restriction, exception, variance, reservation or
limitation which may, in any material respect, interfere with or impair the
present use thereof in the usual conduct of the Seller's business. Seller has
provided Buyer with a copy of each Material Agreement, including any amendments
or alterations thereto.
6.18. CONDEMNATION. The buildings, improvements and fixtures
included as a part of the Leased Real Property are in good condition and repair,
reasonable wear and tear excepted, for their present use in the Seller's
operations. The Seller has not received any written notice of: (i) any
condemnation or taking by eminent domain with respect to the Leased Real
Property from any person, agency, governmental authority or other entity with
the power of same, (ii) any zoning changes which would prohibit the use of the
Acquired Assets or materially and adversely affect the use of the Leased Real
Property, or (iii) any improvements by any public authority to any part of the
Leased Real Property, the cost of which would be assessed against the lessee
thereof.
6.19. DISCLOSURE. No representation or warranty by the Seller
in this Agreement as modified by the Schedules contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller as follows:
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7.1. ORGANIZATION AND STANDING OF BUYER. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
Ohio. Buyer has full power and authority under its Articles of
Incorporation and Code of Regulations and applicable laws to own and acquire the
Acquired Assets to be purchased hereunder, to carry on its business and to own
or lease and operate its properties as such business is now conducted and such
properties are now owned, leased or operated, to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby.
7.2. CORPORATE APPROVAL; BINDING EFFECT. The Buyer has
obtained all necessary authorizations and approvals required for the execution
and delivery of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby.
This Agreement has been duly executed and delivered by the Buyer and
constitutes, and when executed and delivered hereunder by the Buyer, the
Ancillary Agreements to which it is a party will have been duly executed by the
Buyer and will constitute, the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, reorganization, insolvency or
other laws affecting the enforcement of creditors' rights generally or the
availability of equitable remedies subject to the discretion of the subject
court.
7.3. NON-CONTRAVENTION. Neither the execution and delivery of
this Agreement nor any of the Ancillary Agreements to which the Buyer is a party
by the Buyer nor the consummation by the Buyer of the transactions contemplated
hereby or thereby will constitute a violation of, or be in conflict with,
constitute or create a default under, or result in the creation or imposition of
any Encumbrance (other than in the ordinary course of the Buyer's business or in
connection with any existing or other debt or other financing arrangements
entered into by Buyer in connection with the transactions contemplated by this
Agreement and/or the Ancillary Agreements) upon any property of the Buyer
pursuant to (i) the Articles of Incorporation or Code of Regulations of the
Buyer, as amended to date; (ii) any agreement or commitment to which the Buyer
is a party or by which the Buyer or any of its properties is bound or to which
the Buyer or any of its properties is subject; or (iii) any statute or any
judgment, decree, order, regulation or rule of any court or governmental
authority relating to the Buyer.
7.4. BROKERS. The Buyer has not retained, utilized or been
represented by any broker, agent, financial advisor, intermediary or finder in
connection with the transactions contemplated by this Agreement.
7.5. INVESTIGATION. Buyer has performed its own due diligence
with respect to the Business, the Acquired Assets and the Assumed Obligations
and has had the opportunity to ask questions of, and receive answers from, the
Seller.
7.6. LITIGATION, ETC. No action, suit, proceeding or, to
Buyer's knowledge, investigation is pending or, to the knowledge of Buyer,
threatened, which
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questions the validity of this Agreement or challenges any of the transactions
contemplated hereby or by the other Ancillary Agreements.
7.7. FINANCING. Buyer will, as of the Closing Date, have
sufficient funds to pay the cash portion of, the Purchase Price in full pursuant
to the terms hereof and the Closing and performance by Buyer of its obligations
under this Agreement are not contingent upon Buyer obtaining any financing in
respect thereof. Buyer shall not be in breach of this Section 7.7 if its
inability to obtain financing is a direct result of Seller's failure to provide
Buyer's lender or its representatives information requested causing said lender
to be unable to make an underwriting decision. In the event of a breach by Buyer
of this provision which results in the termination of this Agreement pursuant to
Section 14.15, Buyer's liability to Seller shall not exceed the sum of $100,000.
7.8 KNOWLEDGE OF MATTERS. The Buyer (whose knowledge for
purposes of this representation is limited to that known to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as the President of MCSi's Great Lakes Region) has no knowledge that any
representation or warranty made by the Seller contained in this Agreement or in
any Ancillary Agreement, certificate, affidavit, statutory declaration or other
document delivered or given pursuant to this Agreement is false or inaccurate in
any material respect.
7.9 USE OF SELLER'S NAME OR INTELLECTUAL PROPERTY. Except for
the intellectual property set forth in SCHEDULE 1.1(g), (a) Buyer shall not
acquire any patent, trademark, service ▇▇▇▇, trade name, trade secret, copyright
or any other intellectual property of the Seller, (b) except as set forth in the
Transition Agreement, Buyer shall not utilize any patent, trademark, trade name,
service ▇▇▇▇, copyright or other intellectual property of the Seller in the
Business after the Closing Date, nor shall Buyer use the Seller's name, logo or
other indicia of identity in public commerce, and (c) Buyer shall not hold
itself out to the public as the Seller or as a successor to, affiliate of,
related to or in any way associated with Seller. After the Closing Date, except
as set forth in the Transition Agreement, the Buyer shall not be the agent,
partner, servant, employee, affiliate or associate of the Seller and shall have
no power to bind the Seller in any way whatsoever.
8. CONDUCT OF BUSINESS BY SELLER PENDING CLOSING. The Seller covenants
and agrees that, from and after the date of this Agreement and until the
Closing, except as otherwise specifically consented to or approved by Buyer in
writing, which approval shall not be unreasonably withheld, conditioned or
delayed:
8.1. ACCESS. The Seller shall afford to Buyer and its
authorized representatives and financing participants reasonable access during
normal business hours and in a manner which shall not interfere with Seller's
conduct of its business to all properties, books, records, contracts and
documents, financial statements, facilities, and certain key employees of the
Seller relating only to the Business, and a full opportunity to make such
investigations as it shall desire to make of the Seller with respect to the
Business, the Leased Real Property, the Acquired Assets and the Assumed
Obligations, and the Seller shall furnish or cause to be furnished to Buyer and
its authorized
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representatives all such information with respect to the Business, THE Leased
Real Property, Acquired Assets and the Assumed Obligations, as Buyer may
reasonably request, except that Buyer shall not contact any customer, lender or
supplier of the Seller without the prior consent of the Seller, which shall not
be unreasonably withheld, conditioned or delayed.
8.2. CARRY ON IN REGULAR COURSE. The Seller shall maintain the
Leased Real Property in good operating condition and repair (reasonable wear and
tear excepted), and make all necessary renewals, additions and replacements
thereto as the Seller shall determine is necessary or appropriate, in accordance
with its normal business practice, and shall carry on its business diligently
and substantially in the same manner as heretofore and shall not make or
institute any unusual or novel methods of the Seller's business, purchase, sale,
lease, management, accounting or operation. From the date of this Agreement up
to and including the Closing Date, the Seller will not, without the prior
consent of the Buyer, offer any customer a discount for the early payment of any
Account Receivable of the Seller. Seller will not enter into any contract or
commitment relating to the Acquired Assets that is not in the usual and ordinary
course of business.
8.3. NO GENERAL INCREASES. Except as set forth in SCHEDULE
8.3, the Seller shall not grant any general or uniform increase in the rates of
pay of employees of the Seller who participate in the Business and are listed on
SCHEDULE 8.3 (the "BUSINESS EMPLOYEES"), nor grant any general or uniform
increase in the benefits under any bonus or pension plan or other contract or
commitment to the Business Employees; and the Seller shall not increase the
compensation payable or to become payable to the Business Employees, or increase
any bonus, insurance, pension or other benefit plan, payment or arrangement made
to, for or with any such Business Employees.
8.4. SALE OF CAPITAL ASSETS. Other than pursuant to this
Agreement, the Seller shall not sell or otherwise dispose of any capital asset
used in the Business with a market value in excess of $5,000, or of capital
assets of market value aggregating with respect to the Business in excess of
$25,000, and in no event shall sell or otherwise dispose of any capital asset
other than in the ordinary course of business.
8.5. INSURANCE. The Seller shall maintain with its current
insurer or with other financially sound and reputable insurance companies, funds
or underwriters adequate insurance of the kinds, covering such risks and in such
amounts and with such deductibles and exclusions as are consistent with its
current business practice, on the Acquired Assets up to and including the
Closing Date.
8.6. PRESERVATION OF BUSINESS RELATIONSHIPS. The Seller shall
use its best efforts to preserve for Buyer the present relationships of the
Seller with its suppliers and customers and others having business relations
with it.
8.7. CONSENTS OF THIRD PARTIES. The parties will employ their
reasonable efforts to: (i) secure, before the Closing Date, the consent to the
consummation of the transactions contemplated by this Agreement and the
Ancillary
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Agreements by each party to any of the Real Estate Leases, Personal Property
Leases, and Other Contracts under which such transactions would constitute a
default, would accelerate obligations of the Seller or any successor of such
Seller, or would permit cancellation of any such contract, or which is required
for the assignment of such contract to Buyer pursuant to this Agreement, and
(ii) to file the required notice with the Federal Trade Commission and the
Anti-Trust Division of the U.S. Justice Department under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Anti-Trust Improvements Act of 1976, as amended, and the rules thereunder, if
deemed to be necessary by the parties hereto. The parties shall spilt equally
any filing fee required thereby.
8.8. TRANSITION ACTIONS.
(a) The Seller shall make arrangements as of the
Closing Date, reasonably satisfactory to the Buyer, to ensure that all checks or
other payments received by the Seller from and after the Closing Date which
relate to the Accounts Receivable shall be promptly endorsed over without
recourse and delivered to the Buyer within fifteen (15) days of receipt. Any
amount not so delivered shall result in a penalty to Seller in an amount equal
to 5% per annum interest on the face amount of such non-delivered check or other
payment. During the first six (6) months after the Closing Date, Seller shall
prepare and deliver to Buyer weekly reports of such receipts and payments.
(b) The Seller will after the Closing Date, at its
own expense, notify each customer with an Account Receivable that remittances in
payment after the Closing Date thereof should be directed to the Buyer at an
address specified by the Buyer. If the Seller receives any payment from any
customer after the Closing Date, it will promptly remit such payment to the
Purchaser.
(c) The Seller will use reasonable efforts to
transfer to the Buyer the rights in the telephone and fax numbers for the
offices identified in SCHEDULE 1.1(a).
(d) Prior to and after the Closing Date, Seller and
Buyer will coordinate the transition of the suppliers and customers and other
matters as set forth on SCHEDULE 1.1(g) and on the Closing Date, the parties
will enter into a Transition Agreement as defined in Section 9.5(b).
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions (to the extent noncompliance
is not waived in writing by the Buyer):
9.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Seller in this Agreement shall be
true and correct at and as of the Closing Date with the same effect as though
such representations and warranties had been made or given at and as of the
Closing Date.
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9.2. COMPLIANCE WITH AGREEMENT. The Seller shall have
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it on or prior to the
Closing Date.
9.3. OFFICERS' CERTIFICATES. The Seller shall have delivered
to the Buyer in writing, at and as of the Closing Date, a certificate duly
executed by the President of the Seller, certifying that the conditions in each
of Sections 9.1 and 9.2 have been satisfied.
9.4. CONSENTS AND APPROVALS. All necessary consents and
approvals of the directors and/or stockholders of the Seller, any governmental
authority or any third party required for consummation of the transactions
contemplated by this Agreement shall have been obtained, and all waiting periods
shall have expired or been terminated by the appropriate governmental authority.
9.5. DELIVERY OF DOCUMENTS. At or before the Closing, the
Seller shall have executed and delivered to the Buyer all documents described
herein and as otherwise may be reasonably required to consummate this Agreement
and the Ancillary Agreements and the transactions contemplated hereby and
thereby, including:
(a) the Non-Competition Agreement substantially in
the form as set forth in EXHIBIT C hereto;
(b) an agreement (the "TRANSITION AGREEMENT")
containing the terms set forth on EXHIBIT D hereto and/or such other terms and
conditions as Buyer and Seller shall mutually agree;
(c) the Assignment and Assumption Agreement
substantially in the form as set forth in EXHIBIT G hereto;
(d) the ▇▇▇▇ of Sale substantially in the form as set
forth in EXHIBIT H hereto; and,
(e) the Assignment of Intellectual Property
substantially in the form as set forth in EXHIBIT I hereto.
9.6 NO LITIGATION. None of the parties hereto shall be a party
to, or shall have received notice of, any suit, claim or proceeding or
threatened suit, claim or proceeding to enjoin or restrain any or all of the
transactions contemplated herein or to nullify or render ineffective all or any
part of such transactions if accomplished or alleging damages in connection
therewith.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by the Seller):
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10.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Buyer in this Agreement shall be true
at and as of the Closing Date with the same effect as though made or given at
and as of the Closing Date.
10.2. COMPLIANCE WITH AGREEMENT. The Buyer shall have
performed and complied in all material respects with all of its obligations
under this Agreement that are to be performed or complied with by it at or prior
to the Closing.
10.3. CLOSING CERTIFICATE. The Buyer shall have delivered to
the Seller in writing, at and as of the Closing, a certificate duly executed by
the President of the Buyer to the effect that the conditions in Sections 10.1
and 10.2 have been satisfied.
10.4. CONSENTS AND APPROVALS. All necessary consents and
approvals of the directors and/or stockholders of the Buyer, any governmental
authority or any third party required for consummation of the transactions
contemplated by this Agreement shall have been obtained, and all waiting periods
shall have expired or been terminated by the appropriate governmental authority.
10.5. DELIVERY OF DOCUMENTS. At or before the Closing, the
Buyer shall have executed and delivered to the Seller all documents described
herein and as otherwise may be reasonably required by Buyer to consummate this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, including:
(a) the Non-Competition Agreement substantially in
the form as set forth in EXHIBIT C hereto; -
(b) the Transition Agreement;
(c) the Loan and Security Agreement in the form
substantially as set forth in EXHIBIT E hereto;
(d) the Assignment and Assumption Agreement
substantially in the form of EXHIBIT G hereto;
(e) the ▇▇▇▇ of Sale substantially in the form of
EXHIBIT H hereto; and,
(f) Assignment of Intellectual Property substantially
in the form of EXHIBIT I hereto.
10.6. NO LITIGATION. None of the parties hereto shall be a
party to, or shall have received notice of, any suit, claim or proceeding or
threatened suit, claim or proceeding to enjoin or restrain any or all of the
transactions contemplated herein or to nullify or render ineffective all or any
part of such transactions if accomplished or alleging damages in connection
therewith.
Asset Purchase Agreement
Page 19
10.7. PAYMENT OF THE PURCHASE PRICE. The Buyer shall have
paid, on the Closing Date, to the Seller in immediately available funds the cash
portion of the Purchase Price and shall have executed and delivered to the
Seller the Convertible Promissory Note, as set forth in Section 2 hereof.
11. CERTAIN COVENANTS.
11.1. CONFIDENTIAL INFORMATION. Any and all information
disclosed by the Buyer to the Seller or by the Seller to the Buyer as a result
of the negotiations leading to the execution of this Agreement, or in
furtherance thereof, which information was not already known to the Seller or to
the Buyer, as the case may be, shall remain confidential to the Seller and the
Buyer and their respective directors, officers, employees and agents, except to
the extent that the Buyer in its reasonable judgment must disclose any such
information to its counsel, accountants and/or to banks and other institutional
lenders in the process of procuring the loan or loans of funds for the purchase
contemplated herein and Buyer shall ensure that any such counsel, accountants
and/or lenders maintain the confidentiality of such information, including the
fact of the negotiations and the existence of this Agreement. If the Closing
does not take place for any reason, each of the Seller and the Buyer agrees to
return all such information (and all copies, summaries, extracts or analyses
thereof) and not to further divulge or disclose or use for its benefit or
purposes any such information at any time in the future unless it has otherwise
become public. The information intended to be protected hereby shall include,
but not be limited to, proprietary, non-public financial information, customers,
sales representatives, and anything else having an economic, proprietary or
pecuniary benefit to the Buyer or the Seller, respectively. This provision shall
survive the consummation or termination of this Agreement for a period of three
(3) years from the Closing Date or termination date, as applicable.
11.2. HIRING OF SELLER'S EMPLOYEES. Simultaneously and on the
Closing Date, the Seller shall terminate, and the Buyer shall extend offers of
employment to, each of the employees of the Seller identified on SCHEDULE 8.3
hereto pursuant to the terms and subject to such employment and hiring policies
as Buyer shall determine. Buyer shall notify Seller of the names of the
employees accepting its offers of employment ("HIRED EMPLOYEES") within thirty
(30) days after their acceptance of the offer of employment by Buyer. Except to
the extent assumed by Buyer in SCHEDULE 3, Seller shall make all necessary
filings and shall pay to or for the benefit of all terminated employees all
accrued salary, wages, bonus, severance, unemployment compensation, sick and
other leave (if any) which shall be due and payable up to the date of the
termination of their employment, provided, however, that no person shall, by
virtue of the preceding language, become a third party beneficiary to this
Agreement. All Hired Employees shall be released by MCSi as of the Closing Date
from any non-competition or other restrictive covenants of Seller.
11.3. BOOKS AND RECORDS. From the Closing Date until the
seventh anniversary thereafter, the parties shall provide to each other, their
counsel, auditors and other authorized representatives full access (during
normal business hours and upon
Asset Purchase Agreement
Page 20
reasonable notice) to the books and records relating only to the Acquired Assets
and Assumed Obligations, and each party shall have the right to examine and make
copies, at such party's own expense, of any such records which, for the Seller
will include only records dated on or before the Closing Date, and for the Buyer
shall include only records dated after the Closing Date, provided that any such
access or copying shall be performed in such a manner so as not to interfere
with the normal conduct of the non-examining party's business or operations.
12. INDEMNIFICATION.
12.1. INDEMNITY BY SELLER. The Seller shall indemnify, defend
and hold harmless the Buyer (and its directors, officers, employees, affiliates,
successors and assigns, collectively with the Buyer referred to as "BUYER" in
this Section 12) from and with respect to any and all claims, liabilities,
losses, damages, costs and expenses, including without limitation the reasonable
and documented fees and disbursements of counsel (collectively, "LOSSES"),
whether known or unknown as of the Closing Date, asserted or incurred, related
to or arising, directly or indirectly, out of any of the following:
(a) Any inaccuracies in any representation or
warranty made by the Seller in this Agreement or any failure or breach by the
Seller of any covenant, obligation, or undertaking made by the Seller in this
Agreement;
(b) The ownership or the operation of the Acquired
Assets, the Business, the Leased Real Property, the Leased Personal Property or
any business carried on by the Seller prior to the Closing Date;
(c) Pursuant to Section 13 hereof, any claim or
liability arising under the Bulk Sales Acts of any jurisdiction in connection
with transactions contemplated by this Agreement;
(d) Any claims, liability or obligation to any
broker, agent, financial advisor, intermediary or finder in connection with the
transactions contemplated by this Agreement;
(e) Any claims, liability or obligation with respect
to any employee of any of the Seller in connection with his or her employment or
termination of employment on or prior to the Closing Date by the Seller; or
(f) Any liability not assumed by Buyer hereunder,
including Taxes.
12.2. INDEMNITY BY BUYER. The Buyer shall indemnify, defend
and hold harmless the Seller (and its directors, officers, employees,
affiliates, successors and assigns, collectively with the Seller referred to as
"SELLER" in this Section 12) from and with respect to any and all Losses,
whether known or unknown as of the Closing Date,
Asset Purchase Agreement
Page 21
asserted or incurred, related to or arising, directly or indirectly, out of any
of the following:
(a) Any inaccuracies in any representation or
warranty made by the Buyer in this Agreement or any failure or breach by the
Buyer of any covenant, obligation, or undertaking made by the Buyer in this
Agreement;
(b) Any and all claims, liabilities and obligations
arising in connection with or out of the operation of the Acquired Assets, the
Leased Real Property, the Leased Personal Property, the Assumed Obligations,
other liabilities of, or any business carried on by, the Buyer on or subsequent
to the Closing Date;
(c) Any claims, liability or obligation to any
broker, agent, financial advisor, intermediary, lender or finder in connection
with the transactions contemplated by this Agreement; or,
(d) Any claims, liability or obligation with respect
to any employee of Buyer in connection with his or her employment or termination
of employment subsequent to the Closing Date by the Buyer.
12.3. CLAIMS.
(a) If any party (the "INDEMNIFIED PARTY") desires to make a
claim against any other party (the "INDEMNIFYING PARTY") under Section 12.1 or
12.2 in connection with any action, suit, proceeding or demand at any time
instituted against or made upon the Indemnified Party for which the Indemnified
Party may seek indemnification hereunder (a "CLAIM"), the Indemnified Party
shall notify the Indemnifying Party of such Claim (a "CLAIM NOTICE") and of the
Indemnified Party's claim of indemnification with respect thereto, PROVIDED that
failure of the Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 12 except to the
extent, if at all, that the Indemnifying Party shall have been prejudiced
thereby. Upon receipt of such notice from the Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense of such
Claim, and if, and only if, each of the following conditions are satisfied, the
Indemnifying Party may assume the defense of such Claim, and in the case of such
an assumption, the Indemnifying Party shall have the authority to negotiate,
compromise and settle such Claim so long as:
(i) Any such settlement includes a complete
release, in form and substance satisfactory to the Indemnified Party, of the
Indemnified Party as to all claims arising out of or relating to the settled
claim;
(ii) The applicable Indemnifying Party
confirms in writing that it is obligated hereunder to indemnify, defend and hold
harmless the Indemnified Party with respect to such Claim;
Asset Purchase Agreement
Page 22
(iii) The Indemnified Party does not give
any Indemnifying Party written notice that it has determined, in the exercise of
its reasonable discretion, that matters of corporate or management policy or a
conflict of interest make separate representation by the Indemnified Party's own
counsel advisable; and
(iv) The Indemnified Party shall have
determined in its reasonable discretion that the Indemnifying Party has
sufficient financial and other resources to undertake any such defense.
The Indemnified Party shall retain the right to employ its own counsel
and to participate in the defense of any Claim, the defense of which has been
assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party
shall bear and shall be solely responsible for its own costs and expenses in
connection with such participation.
(b) In the event of any Claims under Section 12.1 or
12.2, the Indemnified Party shall advise the Indemnifying Party in writing of
the amount and circumstances surrounding such Claim and the contractual basis
for requesting indemnification. If, within thirty (30) days, the Indemnifying
Party (as applicable) has not contested such Claim in writing, the Indemnifying
Party will pay the full amount thereof as demanded within ten (10) days after
the expiration of such thirty-day period.
(c) The party controlling such defense (the
"CONTROLLING PARTY") shall keep the non-controlling party ("NON-CONTROLLING
PARTY") advised of the status of such suit or proceeding and the defense thereof
and shall consider in good faith recommendations made by the Non-Controlling
Party with respect thereto. The Non-Controlling Party shall reasonably furnish
the Controlling Party with such information as it may have with respect to such
suit or proceeding (including without limitation copies of any summons,
complaint or other pleading that may have been served upon such party and any
written claim, demand, invoice, billing or other document evidencing or
asserting the same) and shall otherwise cooperate with and assist the
Controlling Party in the defense of such suit or proceeding as the Controlling
Party may request.
12.4. LIMITATIONS ON LIABILITY. Notwithstanding the other
provisions of this Article 12, the following limitations shall apply to the
obligation of the Seller to indemnify the Buyer hereunder:
(a) The Seller shall not be required to indemnify the
Buyer hereunder until the amount of all Claims hereunder exceed, in the
aggregate, $250,000, at which time the Seller shall be obligated to indemnify
the Buyer in respect of the amount of all Claims in excess of such amount (it
being agreed and understood that such amount is intended as a deductible and
that the Seller shall only be liable to the extent that all Claims, in the
aggregate, exceed $250,000). In no event shall Seller's liability hereunder for
any Claim or for all Claims in the aggregate exceed $10,000,000.
(b) The indemnification obligations of the Seller
hereunder in respect of any Claim shall be reduced to the extent of the net
benefit (if any) of any insurance proceeds and/or tax benefits actually realized
by the Buyer in respect of such
Asset Purchase Agreement
Page 23
Claim. Buyer shall pursue all insurance or potential insurance coverage prior to
making a claim against the Seller under this Section 12. Buyer agrees to take
commercially reasonable steps promptly to file claims under any applicable
insurance policies and/or to elect and/or take appropriate deduction(s) in
respect of any Claim to the extent permitted by Tax and other applicable laws.
(c) In the absence of any Claim involving fraud, the
indemnification provisions hereof shall constitute the sole and exclusive
remedies of Buyer in respect of claims brought hereunder, except as to claims
arising under or in respect of Section 11.1, above, for which the Buyer may seek
equitable relief.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Seller set forth in Section 6 and the representations and
warranties of the Buyer set forth in Section 7, above, and the right to file
Claim(s) for indemnification under this Section 12, shall terminate twenty-four
(24) months after the Closing Date, except that any such representation or
warranty that has been made the subject of a Claim by the giving of written
notice thereof prior to such expiration shall survive with respect to such Claim
until the final resolution of such Claim.
13. BULK SALES COMPLIANCE. The parties hereto believe that, assuming
compliance with this Agreement by both the Seller and the Buyer, it is both
unnecessary for the protection of the Seller's creditors and impracticable to
comply with the bulk sales acts ("BULK SALES ACTS") that may exist in the
various jurisdictions in which the Acquired Assets are located and the Buyer
therefore hereby waives compliance with the applicable Bulk Sales Acts as a
condition to Closing and otherwise. In the event that any creditor of the Seller
should make any claim against either the Buyer or the Acquired Assets which is
wholly or partially based on the premise that the sale of the Acquired Assets
did not conform in any particular to the requirements of the Bulk Sales Acts of
any such jurisdiction, the Seller agrees to indemnify and save the Buyer
harmless from and against any claim for principal, interest and costs, including
reasonable legal and accounting fees, whether or not the claim is ultimately
proved to be well founded, except to the extent that the claim relates to an
Assumed Obligation.
14. GENERAL.
14.1. EXPENSES. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby,
including, without limitation, attorneys', accountants' and outside advisers'
fees and disbursements, shall be borne by the party incurring such expenses. All
transfer and sales Taxes and all filing fees and expenses payable in connection
with the sale of the Acquired Assets shall be split and paid in equal amounts by
the Buyer and the Seller.
14.2. NOTICES. All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally, or if sent by reputable
overnight delivery
Asset Purchase Agreement
Page 24
courier service, or if mailed by certified U.S. mail, return
receipt requested, postage prepaid, or sent by written telecommunication, as
follows:
If to the Seller, to:
MCSi, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
with a copy (which shall not constitute notice) sent
contemporaneously to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to:
MCPc, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
with a copy (which shall not constitute notice) sent
contemporaneously to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
3200 National City Center
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed by
certified mail with return receipt requested, then five (5) days after being
mailed, and (d) if sent by written telecommunication, when dispatched upon
printing of a confirmation of receipt by the sending facsimile machine.
14.3. ENTIRE AGREEMENT; AMENDMENT. This Agreement, including
all exhibits and Schedules hereto, together with each of the Ancillary
Agreements, contains the entire understanding of the parties, supersedes all
prior agreements and
Asset Purchase Agreement
Page 25
understandings relating to the subject matter, and shall not be amended except
by a written instrument hereafter signed by both of the parties hereto.
14.4. GOVERNING LAW. The validity and construction of this
Agreement shall be governed by the internal laws (and not the choice-of-law
rules) of the State of
Ohio. Any action, suit or other proceeding arising out of
any of the obligations hereunder or with respect to the transactions
contemplated hereby may be commenced in the Court of Common Pleas of ▇▇▇▇▇▇▇▇▇▇
County,
Ohio, or in the federal district court in the Southern District, Western
Division, of the State of
Ohio, and each of the parties hereto hereby consents
to the jurisdiction and venue in such courts and waives any claim that the
action, suit or proceeding has been brought in an inconvenient forum.
14.5. SECTIONS AND SECTION HEADINGS. All enumerated
subdivisions of this Agreement are herein referred to as "SECTION" or
"SUBSECTION." The headings of sections and subsections are for reference only
and shall not limit or control the meaning thereof.
14.6. ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Agreement, nor any of the Ancillary Agreements
nor the obligations of any party hereunder or thereunder shall be assignable or
transferable by such party without the prior written consent of the other party
hereto or thereto; PROVIDED, HOWEVER, that nothing contained in this Section
14.6 shall prevent the Buyer, without the consent of the Seller from assigning
all or part of its rights or obligations hereunder by way of collateral
assignment to any bank or financing institution providing financing for the
acquisition contemplated hereby and PROVIDED FURTHER, that nothing contained in
this Section 14.6 will restrict the structure and/or ownership of Buyer.
14.7. FURTHER ASSURANCES. From time to time, at the request of
the Buyer and without further consideration, subsequent to the Closing Date the
Seller shall execute and deliver such further instruments of conveyance and
transfer and take such other actions as the Buyer may reasonably request to more
effectively convey and transfer any of the Acquired Assets or Assumed
Obligations to the Buyer. The Seller and the Buyer shall also execute and
deliver to the appropriate other party such other instruments as may be
reasonably required in connection with the performance of its obligations under
this Agreement and each shall take all such further actions as may be reasonably
required to carry out the transactions contemplated by this Agreement and the
Ancillary Agreements.
14.8. TAX TREATMENT. The Buyer and the Seller shall treat and
report the transactions contemplated by this Agreement in all respects
consistently for purposes of any federal, state or local tax, including without
limitation, with respect to calculation of gain, loss and basis with reference
to the Purchase Price allocations made pursuant to Section 2 hereof. The parties
hereto shall not take any actions or positions inconsistent with the obligations
set forth herein. Both Buyer and Seller agree to file with the Internal Revenue
Service an IRS Form 8594 (Asset Acquisition Statement under Section 1060)
Asset Purchase Agreement
Page 26
with respect to the acquisition by Buyer of the Acquired Assets, with their
respective Federal income tax returns for the year in which the Closing Date
occurs, substantially in the form attached hereto as EXHIBIT B.
14.9. NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm or corporation
(including any employees of Seller or Buyer), other than the Seller and the
Buyer, any rights or remedies under or by reason of this Agreement.
14.10. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.11. SATISFACTION OF CONDITIONS PRECEDENT. The Seller and
the Buyer will each use their reasonable efforts to cause the satisfaction of
the conditions precedent contained in this Agreement; PROVIDED, HOWEVER, that
nothing contained in this Section 14.11 shall obligate any party hereto to waive
any right or condition under this Agreement.
14.12. PUBLIC STATEMENTS OR RELEASES. Unless otherwise
required by applicable law or regulation or court or administrative order, the
parties hereto each agree that neither party will make, issue or release any
public announcement, statement or acknowledgment of the existence of, or reveal
the status of, this Agreement or the transactions provided for herein prior to
the Closing Date, without first obtaining the consent of the other party, which
shall not be unreasonably withheld, conditioned or delayed. Nothing contained in
this Section 14.12 shall prevent any party from making such public announcements
as such party may consider necessary in order to satisfy such party's legal or
contractual obligations. In any event, neither party will issue a public
announcement without providing the other party a reasonable opportunity to
review and comment on the proposed public announcement, except that public
announcement to be published promptly after the execution of this Agreement
substantially in the form of EXHIBIT F.
14.13. INDEX OF DEFINED TERMS. The following terms are defined
herein in the sections identified below:
TERM SECTION
---- -------
Accounts Receivable 1.1(h)
Acquired Assets 1.1
Actual Accounts Receivable Valuation 5.2(b)
Actual Asset Valuation 5.2(b)
Actual Assumed Obligations Valuation 5.2(b)
Actual Equipment Valuation 5.2(b)
Actual Inventories Valuation 5.2(b)
Adjustment Notice 5.2(b)
Asset Purchase Agreement
Page 27
Agreement Preamble
Ancillary Agreements 6.2
Assumed Obligations 3.1
Bulk Sales Acts 13
Business Preamble
Business Day 5.2(b)
Business Employees 8.3
Buyer Preamble and 12.1
Claim 12.3(a)
Claim Notice 12.3(a)
Closing 4.1
Closing Date 4.1
Controlling Party 12.3(c)
Conversion Rate 2(b)
Convertible Promissory Note 2
Encumbrances 6.8
Equipment 1.1(b)
Excluded Assets 1.2
GAAP 5.2(a)
Hired Employees 11.2
Indemnified Party 12.3(a)
Indemnifying Party 12.3(a)
Independent Accountants 5.2(c)
Intangibles 1.1(g)
Inventories 1.1(d)
IRS 6.14
Leased Real Property 1.1(a)
Losses 12.1
Material Adverse Change 6
Material Adverse Effect 6.3
Material Agreements 6.17
Non-Assignable Contracts 11.4
Non-Controlling Party 12.3(c)
Other Contracts 1.1(e)
Original Accounts Receivable Valuation 5.2(a)
Original Assumed Obligations Valuation 5.2(a)
Original Equipment Valuation 5.2(a)
Original Inventories Valuation 5.2(a)
party; parties Preamble
Permitted Encumbrances 6.8
Permits 1.1(f)
Personal Property Leases 1.1(c)
Pre-Closing Estimate 5.2(a)
Purchase Price 2
Real Estate Leases 1.1(a)
Schedules 6
Asset Purchase Agreement
Page 28
Seller Preamble and 12.2
Seller's GAAP 5.2(a)
Tax 6.14
Transition Agreement 9.5(b)
14.14. SEVERABILITY. If any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, then the same shall be deemed to be severable from
the remainder of this Agreement and shall in no way affect, impair, or
invalidate any other covenant, condition, or other provision contained herein.
14.15. TERMINATION. The parties hereto may terminate this
Agreement, (a) at any time, by mutual written consent of the Buyer and the
Seller hereto, (b) the Buyer may terminate this Agreement in writing if the
Seller is in material breach of any of the terms of this Agreement or Ancillary
Agreements, or the Seller may terminate this Agreement in writing if the Buyer
is in material breach of any of the terms of this Agreement or any of the
Ancillary Agreements, and in either such case any such breach is not cured
within twenty (20) days of the date on which written notice thereof by the party
seeking to terminate this Agreement is received (as applicable) by the Buyer or
the Seller, or (c) by the Buyer in the event of an material adverse change to
the Acquired Assets taken as a whole as of the Closing Date, PROVIDED, HOWEVER,
that the provisions of Sections 11.1, 12.1 through 12.5, 14.1 through 14.4,
14.12, and 14.15 shall survive any such termination. Buyer will consent in
writing to the termination of this Agreement upon the request of Seller if, at
the time of the delivery of such consent, Buyer is paid in immediately available
funds an amount equal to $1,000,000 plus the actual out-of-pocket expenses Buyer
has incurred for professional fees and expenses to the date it is notified that
such consent will be requested, which payment shall not exceed, in any case,
$1,500,000.00. If Seller provides notice to Buyer that it will not close this
Agreement and Buyer has complied with (or provides objective reasonable evidence
to Seller that it is ready, able and willing to comply with) its obligations
under Section 10 hereof, Seller will pay to Buyer by wire transfer of
immediately available funds the actual out-of-pocket expenses that Buyer has
incurred for professional fees and expenses to the date of such notice.
14.16. NEGOTIATION AND PREPARATION. This Agreement is the
result of negotiations between, and has been reviewed by counsel to, the Buyer
and the Seller and is the product of discussions and negotiations among both of
such parties. Accordingly, this Agreement is not intended to be construed
against either party merely on account of such party's drafting of such
document.
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Asset Purchase Agreement
Page 29
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the date and year first above
written.
BUYER: MCPc, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Title: CEO, President
-------------------------------------------
SELLER: MCSi, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Title: Chairman, President and CEO
-------------------------------------------
AGREEMENT
This Agreement, dated June 28, 2002 ("Effective Date"), is by and
between MCSi, Inc., a Maryland corporation, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Seller"), and MCPc, Inc., an
Ohio corporation,
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Buyer").
WHEREAS, Buyer is purchasing certain assets owned by the Seller
pursuant to an Asset Purchase Agreement, April 28, 2002 (the "Purchase
Agreement"); and
WHEREAS, Buyer and Seller desire to amend said Purchase Agreement as
set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is acknowledged, the parties hereto agree as follows:
1. The reference to "$45,509,627" set forth in Section 2(a) of the Asset
Purchase Agreement is hereby deleted in its entirety and "$24,778,694"
is inserted in lieu thereof.
2. The Pre-Closing Estimate of the value of the Accounts Receivable,
Equipment, Inventories and Assumed Obligations, each as required by
Section 5.2(a) of the Purchase Agreement, is set forth on Schedule A
attached hereto.
3. Section 5.2(a)(iii) and Sections 5.2(d)(v), (vi), (vii) and (viii) of
the Purchase Agreement are hereby deleted in their entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
MCSi, INC. MCPc, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Title: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
President and President
Chief Executive Officer
