ASSET PURCHASE AGREEMENT
BY AND AMONG
AMHERST COMPUTER PRODUCTS SOUTHWEST, LP,
AMHERST TECHNOLOGIES, L.L.C.
AND
ALLSTAR SYSTEMS, INC.
▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇ PURCHASE AGREEMENT
BY AND AMONG
AMHERST COMPUTER PRODUCTS SOUTHWEST, LP,
AMHERST TECHNOLOGIES, L.L.C.
AND
ALLSTAR SYSTEMS, INC.
▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇ PURCHASE AGREEMENT
This Agreement is entered as of March 16, 2000, by and among Amherst
Computer Products Southwest, LP, a Texas limited partnership ("Amherst
Southwest"), Amherst Technologies, L.L.C., a Nevada limited liability company
("AmTech"), and Allstar Systems, Inc., a Delaware corporation ("Allstar"). Each
of Amherst Southwest and Allstar is referred to herein singularly as a "Party"
and collectively as the "Parties," except that for purposes of Article XI, the
terms "Party" and "Parties" shall include AmTech.
R E C I T A L S :
A. Allstar conducts business through three divisions and one
wholly-owned subsidiary. One of Allstar's divisions, the CP
Division, is principally engaged in the business of reselling new
computer hardware and software. Allstar's El Paso IT Business is
principally engaged in IT Services.
B. On the terms and conditions set forth in this Agreement, Allstar
desires to sell and Amherst Southwest desires to purchase specified
assets of the CP Division and El Paso IT Business.
In consideration of the premises and the mutual promises herein made, and
in consideration of the representations, warranties, and covenants herein
contained, Allstar, Amherst Southwest and AmTech agree as follows.
ARTICLE I
Definitions.
"Accounts Receivable" has the meaning set forth in Section 3.3(a) below.
"Acquired Assets" has the meaning set forth in Section 2.1 below.
"Acquired Customer Contracts" has the meaning set forth in Section 2.1(a)
below.
"Acquisition Proposal" has the meaning set forth in Section 6.8 below.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Allocated Inventory" has the meaning set forth in Section 2.1(b) below.
"Allstar's Cost" means Allstar's direct cost of the Inventory in
question, including shipping charges, as reflected in an invoice from the
supplier or manufacturer of such Inventory.
"Allstar Indemnitee" has the meaning set forth in Section 10.2 below.
"Allstar's Stockholders" means any Person who or which holds any Allstar
Shares.
"Allstar Shares" means shares of capital stock of Allstar entitled to
vote on the transactions contemplated by this Agreement.
"Amherst Material Adverse Effect" has the meaning set forth in Section
5.3 below.
"Amherst Southwest" has the meaning set forth in the preface above.
"Amherst Southwest Indemnitee" has the meaning set forth in Section 10.1
below.
"Amherst Southwest Orders" has the meaning set forth in Section 3.4(a)
below.
"AmTech" has the meaning set forth in the preface above.
"AmTech Financial Statements" has the meaning set forth in Section 5.11
below.
"Appraised Value" when used with respect to the Tangible Assets that
become Acquired Assets, means the fair market value of such Tangible
Assets as determined using the valuation criteria described in this
paragraph by a dealer in used items of the sort appraised selected by
Amherst Southwest and Allstar pursuant to Section 2.7. In determining the
Appraised Value, the appraised price of each item of Tangible Assets
shall: (a) be that which would be paid by a willing buyer to a willing
seller regularly engaged as a dealer of used items of the sort appraised;
(b) be based on the circumstance that neither the buyer or seller of the
item were motivated by unusual needs or influences; (c) be for use of the
item by the buyer in the same manner as the item is used by Allstar in
its CP Division; and (d) reflect the price of the item, with payment in
full for the item occurring thirty days after invoice date.
"Arbitrating Accountant" has the meaning set forth in Section 11.13
below.
"Assignment, ▇▇▇▇ of Sale and Assumption Agreement" means an Assignment,
▇▇▇▇ of Sale and Assumption Agreement substantially in the form of
Exhibit A attached hereto, as appropriately completed at the Closing.
"Assumed Leases" has the meaning set forth in Section 2.3(a)(3) below.
"Assumed Liabilities" has the meaning set forth in Section 2.3 below.
"Business Day" means a day other than a Saturday, Sunday or other day on
which the commercial banks in Houston, Texas are authorized or required
to close.
"Capital Leases" has the meaning set forth in Section 2.1(j) below.
"Closing" has the meaning set forth in Section 2.10 below.
"Closing Date" has the meaning set forth in Section 2.10 below.
"Code" has the meaning set forth in Section 2.12 below.
"Cooperative Advertising Credits" has the meaning set forth in Section
2.1(h) below.
"Cooperative Advertising Credit Purchase Price" has the meaning set forth
in Section 2.1(h) below.
"CP Division" means Allstar's business division (known as the Computer
Products Division) which is engaged in the sale and distribution of
computer hardware, software and related products, and does not include
the Retained Businesses or the Excluded Assets.
"Customer and Sales Records" means the identity of all customers of the
CP Division and the El Paso IT Business and all books and records
(whether in written or electronic form) of Allstar relating to such
customers and sales to such customers, including customer lists, mailing
lists, sales histories, pricing data, files and correspondence relating
to sales to customers, billing and collection records, advertising
materials, catalogues and price lists, including all records,
correspondence, notes, bids, proposals and information of Allstar
relating to the actual or proposed business relationship with SBC.
"Customer Inventory" has the meaning set forth in Section 2.1(c) below.
"Damages" has the meaning set forth in Article X below.
"Daily Purchasing Report" has the meaning set forth in Section 3.4(d)
below.
"Disclosure Schedule" has the meaning set forth in Article IV below.
"Dispute" has the meaning set forth in Section 11.13 below.
"Earn Out" has the meaning set forth in Section 2.9 below.
"Earn Out Calculation Period" with respect to the first Earn Out Payment
Date shall mean the period from the Closing Date through the end of the
calendar quarter in which the Closing Date occurs; with respect to each
subsequent Earn Out Payment Date other than the final Earn Out Payment
Date, the Earn Out Calculation Period shall be the calendar quarter
immediately preceding the Earn Out Payment Date; and with respect to the
final Earn Out Payment Date shall mean the period from the end of the
immediately preceding calendar quarter through the second anniversary of
the Closing Date. For purposes of computing the Earn Out, a calendar
quarter shall mean the three month period ending on the last day of
March, June, September and December.
The "Earn Out Payment" due on each Earn Out Payment Date shall be
calculated as fifty percent (50%) of the SBC Modified Gross Profit for
the preceding Earn Out Calculation Period.
"Earn Out Payment Date" shall mean the 45th day following the end of each
calendar quarter, with the first Earn Out Payment Date being May 15, 2000
and the last Earn Out Payment Date being May 15, 2002, or if any Earn Out
Payment Date falls on a date that is not a Business Day, the then Earn
Out Payment date shall fall on the next Business Day.
"Effective Time" means 12:01 a.m. Central Time on the Closing Date.
"El Paso Business Area" means the area within a 200 mile radius of the El
Paso, Texas city hall, and all of the State of New Mexico.
"El Paso IT Business" means the business of Allstar's El Paso, Texas
business office, which is engaged in IT Services, and does not include
the Excluded Assets.
"Encumbrance" means (a) any third party claim, restriction, preference,
priority, right or other preferential arrangement of any kind or nature
whatsoever, except for any of the foregoing arising in the Ordinary
Course of Business, or (b) any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (i) mechanic's,
materialmen's, landlord's and similar liens, (ii) liens for taxes not yet
due and payable, (iii) purchase money liens and liens securing rental
payments under capital lease arrangements, and (iv) other liens arising
in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Escrow Agent" has the meaning set forth in Section 2.8 below.
"Escrow Agreement" has the meaning set forth in Section 2.8 below.
"Escrow Period" has the meaning set forth in Section 2.8 below.
"Excluded Assets" has the meaning set forth in Section 2.2 below.
"Excluded Liability" has the meaning set forth in Section 2.4 below.
"Financial Statements" has the meaning set forth in Section 4.9 below.
"Financing Letter" has the meaning set forth in Section 5.6 below.
"Fulfillment Price" means the current lowest price at which a Party could
obtain the specified goods from such Party's customary third party
vendors without regard to manufacturer or dealer rebates based on future
purchases by such Party or its Affiliates.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States for accrual basis accounting as applied
on a consistent basis.
"Governmental Approval" means any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate, declaration or filing
with, or report or notice to, any federal, state or local government, or
any political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any governmental
authority, agency, department, board, commission or instrumentality of
the United States, any state of the United States or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Holdback" has the meaning set forth in Section 2.8 below.
"Inventory" means all goods held for resale by the CP Division, wherever
located, but excluding any such goods related to Allstar's Retained
Businesses.
"Inventory in Transit" has the meaning set forth in Section 2.6(b) below.
"Inventory Purchase Price" means Allstar's Cost of the Allocated
Inventory and the Customer Inventory at the Effective Time, as determined
pursuant to Section 2.6.
"IT Services" means the following: (1) warranty and non-warranty repair
and replacement of computer hardware and software, (2) diagnostic
services and support for computer hardware and software, (3) outsourced
network management, (4) on-site service parts stocking and computer asset
management and tracking, (5) recommendation, sale and installation, on a
turn-key basis, of voice and data networking solutions, including network
hubs, routers, servers and cabling, but excluding, without limitation,
the sale of desktop PCs and "off-the-shelf" office software, (6)
long-term and short-term technical staffing and recruiting, (7) computer
system design and project management of major roll-outs, installations
and networks, (8) programming services and website development, and (9)
sale, licensing or sublicensing of software owned, licensed or developed
by Allstar, its Affiliates or its Retained Businesses.
"Key IT Customers" has the meaning set forth in Section 8.3 below.
"Leased Premises" means those leased real properties of Allstar in the
Assumed Leases listed on Schedule 2.3(a)(3) attached hereto.
"Liability" means any liability, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due.
"Majority Shares" has the meaning set forth in Section 4.4 below.
"Material Adverse Effect" means any event, occurrence, fact, condition,
change or effect that is materially adverse to the business, operations,
results of operations or condition (financial or otherwise) of the CP
Division, the El Paso IT Business or the Acquired Assets, taken as a
whole.
"Mintech" means Mintech, Inc., a Texas corporation.
"MinTech Agreements" means (i) that certain Finance Agreement, dated as
of September 30, 1998, between Allstar and Mintech, and (ii) that certain
Revolving Loan Agreement, dated September 30, 1998, between Allstar and
Mintech, true and correct copies of which have been provided to Amherst
Southwest.
"MIS Software" means that certain software package custom designed by
Allstar to run its management information systems and which is referred
to by Allstar as the "Universe System."
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, partnership, corporation, association,
limited liability company, trust, joint venture, unincorporated
organization or governmental entity, or any department, agency or
political subdivision thereof.
"Prohibited Business" means the sale or disposition of computer hardware
and software in substantially the manner conducted by the CP Division;
provided, however, that "Prohibited Business" shall not include (1) the
Retained Businesses, (2) the sale, licensing or sublicensing of software
owned, licensed or developed by Allstar, its Affiliates or the Retained
Businesses, or (3) any activities of Allstar or any of its Affiliates
relating to (i) the sale or other disposition and installation of
Retained Inventory, as permitted by Section 3.4(e) hereof, (ii) the
exercise of Allstar's rights and the performance by Allstar of any of its
obligations under Sections 3.3 or 3.4, or (iii) the performance by
Allstar of any arrangements made by Amherst Southwest and Allstar
pursuant to Section 2.13(d) hereof regarding non-assignable contracts.
"Prohibited Persons" has the meaning set forth in Section 8.3 below.
"Proxy Statement" has the meaning set forth in Section 6.3 below.
"Purchase Price" has the meaning set forth in Section 2.5 below.
"Retained Businesses" means the following businesses conducted currently
by Allstar or its Affiliates: (a) the business of Allstar's Telecom
Division, which consists of the sale and servicing of business telephone
systems, including computer hardware and software for data and voice
integration, wide area connectivity and telephone system networking, and
wireless communications, where the sale of such computer hardware and
software products is ancillary and is required as an integral part of the
provision of a product or service by Allstar's Telecom Division and where
such computer hardware is sold at a gross profit margin to Allstar in
excess of 30%; (b) the business of Stratasoft, which is primarily engaged
in the development and marketing of proprietary software for the
integration of business telephone systems and networked computer systems,
which are sometimes bundled with computer hardware supplied by Allstar or
Stratasoft at the customer's request, but only where such computer
hardware is sold at a gross profit margin to Allstar in excess of 30%;
and (c) the business of Allstar's IT Services Division, which is engaged
in providing IT Services, excluding the El Paso IT Business within the El
Paso Business Area.
"Retained Customer Contracts" has the meaning set forth in Section 2.2(a)
below.
"Retained Inventory" has the meaning set forth in Section 2.2(c) below.
"SBC" means SBC Communications, Inc., its successors, assigns and
Affiliates, or any leasing company or companies or other agents
designated by SBC Communications, Inc., or its successors, assigns and
Affiliates.
"SBC Agreement" means any contract or agreement for the sale of computer
hardware or software that may be entered into between Allstar, Mintech or
any of their respective Affiliates, on the one hand, and SBC, on the
other hand, at any time prior to the Closing Date, as such contract or
agreement may be amended, restated or otherwise modified prior to the
Closing Date.
"SBC Gross Profit" means the difference between SBC Net Sales and the
cost of goods sold to SBC relating to such SBC Net Sales. For these
purposes, the cost of goods sold shall include (a) the direct cost to
Amherst Southwest and its Affiliates for inventory purchased to fulfill
such SBC Net Sales, together with the cost of shipping and freight, and
(b) the direct costs to Amherst Southwest and its Affiliates of
providing, or the costs to Amherst Southwest and its Affiliates of
subcontracting to third parties to provide, the installation,
configuration and other tasks required to fulfill such SBC Net Sales. The
cost of goods sold shall not include any selling, general or
administrative expenses of Amherst Southwest or its Affiliates.
"SBC Gross Sales" means all sales to SBC by Amherst Southwest and its
Affiliates.
"SBC Modified Gross Profit" means SBC Gross Profit minus sales
commissions and any amounts paid to MinTech on SBC Net Sales included in
the calculation of SBC Gross Profit; provided, however, that sales
commissions for purposes of calculating SBC Modified Gross Profit shall
not exceed the sales commissions that would be payable under Allstar's
sales commission programs and arrangements with MinTech in effect at the
Closing.
"SBC Net Sales" means SBC Gross Sales, less customer returns, adjustments
and cancellations.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Server" has the meaning set forth in Section 3.1 below.
"Stratasoft" means Stratasoft, Inc., a wholly-owned subsidiary of
Allstar.
"Supplier and Purchasing Records" shall mean the identity of all
suppliers of the CP Division and the El Paso IT Business and all books
and records of Allstar relating to such suppliers and purchases from such
suppliers, including supplier lists, purchasing histories, supplier
catalogues and price lists, correspondence with suppliers, invoicing and
payment records, rebate and volume discount policies of suppliers,
cooperative advertising files and records.
"Supplier Contracts" has the meaning set forth in Section 2.1(f) below.
"Supplier Warranties" has the meaning set forth in Section 2.1(g) below.
"Tangible Asset Purchase Price" means the Appraised Value of the Tangible
Assets.
"Tangible Assets" shall mean all furniture, fixtures and equipment listed
on Schedule 2.7 and owned by Allstar at the Effective Time, which
Schedule shall be prepared pursuant to Section 2.7 after the execution
and delivery of this Agreement, including any additional similar items of
furniture, fixtures and equipment subsequently acquired by Allstar, but
excluding any items subsequently disposed of prior to the Effective Time,
in each case in the Ordinary Course of Business.
"Tax" means any state, county, or local personal property tax.
"Transferred Employees" has the meaning set forth in Section 3.2(a)
below.
ARTICLE II
Purchase and Sale.
2.1 Purchase and Sale of Assets. On and subject to the terms and conditions
of this Agreement, at the Closing, Amherst Southwest agrees to purchase
from Allstar, and Allstar agrees to sell, transfer, convey, and deliver
to Amherst Southwest, all right, title and interest of Allstar in and to
the assets described below (other than Excluded Assets), whether now
existing or hereafter acquired, as such assets may exist at the Effective
Time (collectively, the "Acquired Assets"):
(a) each customer contract and purchase order of: (1) the CP Division at
the Effective Time, including the SBC Agreement, if, and only to the
extent that, shipment of goods to the customer (or in accordance
with the customer's instructions) by Allstar or Allstar's supplier
has not yet occurred at the Effective Time, and (2) the El Paso IT
Business, if, and only to the extent that, the IT Services have not
been provided at the Effective Time (collectively, the "Acquired
Customer Contracts");
(b) all Inventory held in stock that has been allocated to fill (in
whole or in part) an Acquired Customer Contract, whether or not in
the configuration required by the Acquired Customer Contract, but
excluding Inventory in Transit and Customer Inventory (the
"Allocated Inventory");
(c) all Inventory held in stock and that has been ordered pursuant to a
request from those customers of Allstar identified on Schedule
2.1(c), but excluding Allocated Inventory and Inventory in Transit
("Customer Inventory");
(d) the Tangible Assets;
(e) a duplicate copy of all Customer and Sales Records and a duplicate
copy of all Supplier and Purchasing Records;
(f) each contract with, and certification from, manufacturers and
suppliers of computer hardware and software products identified on
Schedule 2.1(f) (collectively "Supplier Contracts");
(g) all guarantees, warranties, indemnities and similar rights in favor
of Allstar with respect to any Acquired Asset (collectively,
"Supplier Warranties");
(h) all rights or credits to receive funds for advertising expenses (or
reimbursements of such expenses) at the Effective Time under
cooperative advertising programs offered by Hewlett-Packard
("Cooperative Advertising Credits"), including such rights and
credits listed on Schedule 2.1(h), and any additional Cooperative
Advertising Credits subsequently acquired by Allstar, but excluding
any Cooperative Advertising Credits subsequently used by Allstar
prior to the Effective Time, or which expire prior to the Effective
Time, in each case in the Ordinary Course of Business, at an
aggregate purchase price (the "Cooperative Advertising Credit
Purchase Price") equal to 50% of the amount of the Cooperative
Advertising Credits, if, and only to the extent that,
Hewlett-Packard consents to the sale of such Cooperative Advertising
Credits to Amherst Southwest prior to the Closing Date;
(i) the intangible assets consisting of business ideas and information,
know-how, copyrights and advertising and marketing concepts used by
the CP Division in connection with the sale of computer hardware,
software and related products and all goodwill associated therewith
and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions; and
(j) all capital leases of equipment listed on Schedule 2.1(j) (the
"Capital Leases").
At the Closing, Allstar shall assign the Acquired Assets to Amherst Southwest as
of the Effective Time by the execution and delivery to Amherst Southwest of the
Assignment, ▇▇▇▇ of Sale and Assumption Agreement in the form of Exhibit A,
appropriately completed as of the Closing.
2.2 Excluded Assets. Allstar will retain and Amherst Southwest will not
acquire any right, title or interest in any assets not identified in
Section 2.1, including the following assets (collectively, the "Excluded
Assets"):
(a) each customer contract and purchase order of: (1) the CP Division at
the Effective Time, including the SBC Agreement, if (and only to the
extent that) shipment of goods to the customer (or in accordance
with the customer's instructions) by Allstar or Allstar's suppliers
occurs before the Effective Time, and (2) the El Paso IT Business,
if, and only to the extent that, the IT Services have been provided
at the Effective Time (collectively, the "Retained Customer
Contracts"), it being agreed that with respect to each customer
contract and purchase order under which (1) shipment of goods occurs
in part before and in part after the Effective Time, such contract
and purchase order shall be considered both an Acquired Customer
Contract to the extent shipments thereunder occur after the
Effective Time and a Retained Customer Contract to the extent that
shipments thereunder occur before the Effective Time, and (2) IT
Services are performed in part before and in part after the
Effective Time, such contract and purchase order shall be considered
both an Acquired Customer Contract to the extent the performance of
IT Services thereunder occurs after the Effective Time and a
Retained Customer Contract to the extent that performance of IT
Services thereunder occurs before the Effective Time.
(b) all Inventory that is in transit from Allstar's suppliers to Allstar
or is in transit from Allstar's suppliers directly to (or as ordered
by) Allstar's customers, in each case at the Effective Time
("Inventory in Transit");
(c) Inventory at the Effective Time not constituting Allocated Inventory
or Customer Inventory (all such items of Inventory, together with
Inventory in Transit, are herein referred to as "Retained
Inventory");
(d) rights and benefits under contracts included in the Acquired Assets
but only to the extent that such rights and benefits accrue before
the Effective Time, including Acquired Customer Contracts, Supplier
Contracts, Supplier Warranties, and Assumed Leases; provided,
however, that Cooperative Advertising Credits shall be included in
the Acquired Assets even though they may have accrued before the
Effective Time and only if, and to the extent that, Hewlett-Packard
consents to the sale of such Cooperative Advertising Credits to
Amherst Southwest prior to the Closing Date;
(e) the assets described in Schedule 2.2(e);
(f) assets not used by the CP Division or the El Paso IT Business in the
Ordinary Course of Business, including assets used primarily by
Allstar in its Retained Businesses;
(g) assets used by Allstar to perform corporate, general and
administrative functions, including Allstar's accounting systems and
computer hardware and software used to operate such systems;
(h) the MIS Software; provided, however, that Allstar shall license the
MIS Software to Amherst Southwest as provided in Section 3.1;
(i) Allstar's name or any trade names or service marks used by Allstar
or any of its subsidiaries, and any name or ▇▇▇▇ derived therefrom,
including "Allstar Systems" and "Allstar Computer" or any other name
containing "Allstar" or "All Star"; provided, however, that Amherst
Southwest shall be entitled to use the name "Allstar Computer" under
Section 8.1 to the extent therein provided;
(j) all Accounts Receivable; including receivables due from suppliers
and rebates due from suppliers;
(k) all notes receivable;
(l) all cash and cash equivalents;
(m) all real property (except the Assumed Leases);
(n) the originals of all Customer and Sales Records, all Supplier and
Purchasing Records, all Personnel Records and all other books and
records, but excluding the duplicate copies of the foregoing which
are sold to Amherst under Section 2.1;
(o) the Mintech Agreements; and
(p) all intangible assets consisting of business ideas and information,
know-how, copyrights and advertising and marketing concepts by the
El Paso IT Business in connection with the sale of computer
hardware.
2.3 Assumption of Liabilities.
(a) At the Closing, upon the terms and conditions set forth in this
Agreement, Amherst Southwest agrees to assume and thereafter to
fully perform and pay in full when due, in accordance with their
respective terms, the following (and only the following) (the
"Assumed Liabilities"):
(1) all liabilities, obligations and commitments under all
contracts and purchase orders included in the Acquired Assets
that arise from and after the Effective Time, including those
under the Acquired Customer Contracts, Supplier Contracts and
Capital Leases;
(2) liabilities, obligations and commitments set forth on Schedule
2.3(a)(2);
(3) Allstar's obligations and duties under the real property leases
listed on Schedule 2.3(a)(3) (the "Assumed Leases"), either by
direct assumption of each Assumed Lease or by sublease
arrangements mutually acceptable to Amherst Southwest, Allstar
and the landlord under the Assumed Leases.
(b) At the Closing, Amherst Southwest shall assume the Assumed
Liabilities as of the Effective Time by the execution and delivery
to Allstar of the Assignment, ▇▇▇▇ of Sale and Assumption Agreement
in the form of Exhibit A, appropriately completed as of the Closing.
2.4 Excluded Liabilities. Amherst Southwest will not assume or have any
responsibility whatsoever, with respect to any other obligation or
liability of Allstar, whether known or unknown, disclosed or undisclosed,
matured or unmatured, contingent or otherwise (the "Excluded
Liabilities"), except for the Assumed Liabilities.
2.5 Purchase Price. The purchase price payable by Amherst Southwest (the
"Purchase Price") shall be (a) Fourteen Million Two Hundred Fifty
Thousand Dollars ($14,250,000) payable at the Closing by delivery to
Allstar by wire transfer of immediately available funds; plus (b) Five
Hundred Thousand Dollars ($500,000) (the "Holdback") payable as set forth
in Section 2.8 below; plus (c) the Earn Out; plus (d) the Inventory
Purchase Price, payable at the Closing by delivery to Allstar by wire
transfer of immediately available funds; plus (e) the Tangible Asset
Purchase Price, payable at the Closing by delivery to Allstar by wire
transfer of immediately available funds; plus (f) the Cooperative
Advertising Credit Purchase Price, as payment in full for the Cooperative
Advertising Credits, payable at the Closing by delivery to Allstar by
wire transfer of immediately available funds; plus (g) the assumption and
performance by Amherst Southwest of the Assumed Liabilities.
2.6 Inventory.
(a) Not more than one week before the Closing Date, Allstar, with
representatives of Amherst Southwest present, shall conduct a
physical inventory of all items of Inventory, which Inventory shall
be adjusted for receipts, shipments and adjustments through the
Closing Date, and shall then prepare the following two schedules
therefrom:
(1) Schedule 2.6(a), which shall list all items of Allocated
Inventory, Allstar's Cost of each such item, the identity of
the customer to which the item is allocated, Allstar's order
number, the customer's purchase order number (if any), and the
warehouse number for such item as carried on Allstar's books
and records; and
(2) Schedule 2.6(b), which shall list all items of Customer
Inventory, Allstar's Cost of each such item, the identity of
the customer that requested the inventory and the warehouse
number for such item as carried on Allstar's books and records.
At or prior to the Closing, Amherst Southwest and Allstar shall each
signify in writing their respective approval of Schedules 2.6(a) and
2.6(b), which approval shall not be unreasonably withheld, conditioned or
delayed, and which approval shall include the approval by Amherst
Southwest and Allstar of the quantities of Allocated Inventory and
Customer Inventory reflected on Schedules 2.6(a) and 2.6(b). Upon written
approval by Amherst Southwest and Allstar of Schedules 2.6(a) and 2.6(b),
such schedules shall become part of this Agreement for all purposes
without further action of the Parties. The total of Allstar's Cost for
such Allocated Inventory and Customer Inventory reflected on such
schedules shall become the Inventory Purchase Price to be paid under this
Agreement for the Allocated Inventory and the Customer Inventory.
(b) The Parties acknowledge and agree that there may be items of
Allocated Inventory and Customer Inventory that were either
erroneously omitted from, or erroneously included in, the
calculation of the Inventory Purchase Price for those categories of
Acquired Assets at the Closing. Accordingly, the Parties agree to
exchange pertinent information concerning any such items and to
confer in good faith to resolve the proper treatment of any items
erroneously omitted or erroneously included in the calculation of
the Inventory Purchase Price under this Agreement. Any amount owed
by one Party to another as a result of such errors shall be paid to
the Party to which it is due on or before the 90th day after the
Closing Date.
2.7 Tangible Assets. Promptly after the execution and delivery of this
Agreement, Allstar, with representatives of Amherst Southwest present,
shall conduct an inventory of all Tangible Assets and shall prepare
Schedule 2.7 which shall list all such items and their location. At or
prior to the Closing, Amherst Southwest and Allstar shall each signify in
writing their respective approval of Schedule 2.7, which approval shall
not be unreasonably withheld, conditioned or delayed. Upon written
approval by Amherst Southwest and Allstar of Schedule 2.7, such schedule
shall become part of this Agreement for all purposes without further
action of the Parties. The Parties further agree to jointly engage a
dealer in used items of the sort included in the Tangible Assets to
determine the Appraised Value of the Tangible Assets listed on Schedule
2.7, and that the aggregate Appraised Value of the items on Schedule 2.7
shall constitute the Tangible Asset Purchase Price to be paid under this
Agreement for the Tangible Assets. The cost of such valuation, if any,
shall be paid one-half by Allstar and one-half by Amherst Southwest,
regardless of whether the Closing occurs.
2.8 Holdback. On the Closing Date, the Holdback shall be paid by wire
transfer to Bank of America, N.A., Houston, Texas (the "Escrow Agent"),
to be held by the Escrow Agent to satisfy any claims by Amherst Southwest
against Allstar pursuant to Sections 10.1(a) and 10.1(b) of this
Agreement for a period of one (1) year after the Closing Date (the
"Escrow Period"), in accordance with the terms of the Escrow Agreement in
the form attached to this Agreement as Exhibit B (the "Escrow
Agreement"). Interest on the Holdback shall be paid in accordance with
the terms of the Escrow Agreement. Following the expiration of the Escrow
Period, the Parties shall cause the remaining balance of the Holdback
together with interest or income thereon, if any, after the payment of
all such claims and reservation of amounts reasonably deemed sufficient
to satisfy unresolved claims, to be distributed by the Escrow Agent to
Allstar within five (5) Business Days in accordance with the terms of the
Escrow Agreement.
2.9 Earn Out.
(a) On each Earn Out Payment Date, Amherst Southwest shall pay to
Allstar the Earn Out Payment, if any, for the immediately preceding
Earn Out Calculation Period. Each Earn Out Payment shall be
calculated as fifty percent (50%) of the SBC Modified Gross Profit
for the appropriate Earn Out Period, but Amherst Southwest shall
have no obligation to make any Earn Out Payments to Allstar with
respect to SBC Modified Gross Profit on SBC Net Sales in excess of
Two Hundred Forty Million Dollars ($240,000,000) in the aggregate.
(b) All Earn Out Payments shall be calculated in accordance with GAAP,
but paid only for SBC Modified Gross Profit actually received by
Amherst Southwest on a cash basis, and shall be made by Amherst
Southwest by wire transfer of immediately available funds on or
before the Earn Out Payment Date to such bank account as Allstar may
specify from time to time in writing. Allstar's share of any SBC
Modified Gross Profit that is accrued but not actually received by
Amherst Southwest at the end of an Earn Out Calculation Period shall
be included in the Earn Out Payment to Allstar for the Earn Out
Calculation Period in which such payment was actually received by
Amherst Southwest or, if such payment is received after the end of
the last Earn Out Payment Date, within thirty (30) days after the
date such payment was received by Amherst Southwest.
(c) All Earn Out Payments shall be accompanied by a written report of
Amherst Southwest detailing the calculation of such Earn Out
Payment, which report shall be prepared in accordance with GAAP and
shall include invoice numbers, and for each invoice, the cost of
goods sold, sales commissions, freight in, freight out and
subcontracted costs. All Earn Out Payments shall also be accompanied
by a written report of Amherst Southwest's independent auditor
(which shall be a firm with national recognition) certifying that
such auditors have reviewed Amherst Southwest's written report,
compared the information contained in Amherst Southwest's report to
a sampling of the original records of Amherst Southwest and vouched
such sampling in accordance with generally accepted auditing
standards, and verified that the calculations in the report are
accurate.
(d) In the event that Allstar disagrees with, or has questions
concerning, an Earn Out Payment, Allstar may, within 30 days after
receipt of Amherst Southwest's written report, request a meeting
with the Chief Financial Officer of Amherst Southwest for the
purpose of discussing such written report. Amherst Southwest and
Allstar shall cause such meeting to occur within a reasonable period
of time not more than 30 days after the date of Allstar's request,
at a mutually acceptable time and place. Amherst Southwest and
Allstar shall cooperate in good faith and in a commercially
reasonable manner to resolve any disputes concerning the calculation
of any Earn Out Payment. If such disputes cannot be mutually
resolved within 30 days after the date of the meeting, either Party
may submit the dispute to resolution in accordance with Section
11.13 of this Agreement.
(e) Amherst Southwest agrees that it and its Affiliates will use good
faith, commercially reasonable efforts to perform the SBC Agreement
in accordance with its terms. Neither Amherst Southwest nor its
Affiliates shall enter into any transaction or take any action with
any Affiliate the effect of which is to decrease the Earn Out
Payments payable to Allstar hereunder.
(f) The Earn Out Payments payable to Allstar hereunder are herein
referred to collectively as the "Earn Out."
2.10 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P. in Houston, Texas, commencing at 9:00 a.m. Central Time on
the Business Day following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the "Closing Date").
2.11 Deliveries at the Closing. At the Closing, (a) Allstar will deliver to
Amherst Southwest the various certificates, instruments, and documents
referred to in Section 7.1 below; (b) Amherst Southwest will deliver to
Allstar the various certificates, instruments, and documents referred to
in Section 7.2 below; and (c) Allstar will execute, acknowledge (if
appropriate), and deliver to Amherst Southwest such other instruments of
sale, transfer, conveyance, and assignment as Amherst Southwest and its
counsel reasonably may request.
2.12 Allocation of Purchase Price. The sale of the Acquired Assets may
constitute an "applicable asset acquisition" as defined in section
1060(c) of the Internal Revenue Code ("Code"). The Parties have agreed,
pursuant to section 1060(a) of the Code, to allocate the Purchase Price
among the Acquired Assets under the "residual method" in section
1.1060-1T of the Treasury Regulations. The Parties agree to use good
faith, commercially reasonable efforts to agree upon the allocation of
the Purchase Price before the Closing Date, and to reflect this agreement
by letter agreement which when executed by the Parties shall become part
of this Agreement for all purposes. In accordance with section
1.1060-1T(h) of the Treasury Regulations, Allstar and Amherst Southwest
will each file Form 8594 with their federal income tax returns for the
taxable year that includes the Closing Date and such Forms 8594 shall
reflect the allocation of the Purchase Price so agreed upon.
2.13 Consent of Third Parties.
(a) Despite anything to the contrary in this Agreement, this Agreement
shall not constitute an assignment or transfer of, or an agreement
to assign or transfer, any Governmental Approval, contract,
instrument, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if
an assignment or transfer or an attempt to make such an assignment
or transfer without the consent of a third party would constitute a
breach or violation thereof or would violate any applicable law or
regulation, or would otherwise affect adversely the rights of
Allstar or Amherst Southwest thereunder; and any transfer or
assignment by Allstar of any interest under any such Governmental
Approval, contract, instrument, lease, permit or other agreement or
arrangement that requires the consent or approval of a third party
shall be made subject to such consent or approval being first
obtained.
(b) Allstar will give any required notices, and the Parties agree to
cooperate and use their respective commercially reasonable efforts,
in order to obtain necessary third party consents to the sale and
transfer of the Acquired Assets as contemplated by this Agreement;
provided, however, that with respect to the Acquired Customer
Contracts, Allstar shall only be required to notify and seek any
necessary approvals from the customers listed on Schedule 7.1(h).
Amherst Southwest agrees, if requested by any third party from whom
Allstar is seeking such consent, to supply performance bonds in
replacement of any current performance bonds supplied by Allstar
with respect to any Acquired Customer Contracts. In the event any
such consent or approval is not obtained on or before the Closing
Date, Allstar and Amherst Southwest shall continue to cooperate and
to use their respective commercially reasonable efforts to obtain
such consent for a period of 90 days following the Closing. Neither
Allstar nor Amherst Southwest shall be required to pay or incur more
than nominal out-of-pocket expenses in obtaining any third party
consent or approval, including for consent or processing fees
requested by third parties.
(c) Each of the Parties will give any notices to, make any filings with,
and use its commercially reasonable efforts to obtain any
Governmental Approval in connection with the consummation of the
transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each of the Parties will file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will use its reasonable commercial efforts to
obtain (and Allstar and Amherst Southwest will cause each of their
respective Affiliates and Subsidiaries to use their reasonable
commercial efforts to obtain) an early termination of the applicable
waiting period, and will make (and Allstar and Amherst Southwest
will cause each of their respective Affiliates and Subsidiaries to
make) any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith.
(d) With respect to any consents or approvals that are not obtained on
or before the Closing Date, Allstar and Amherst Southwest shall
cooperate in any lawful arrangement that is reasonable for both
Amherst Southwest and Allstar (considering all relevant factors
including practicality, financial burden and risk) to provide that
Amherst Southwest shall receive the interest of Allstar in the net
benefits under any such Governmental Approval, contract, instrument,
lease, permit or other agreement or arrangement or any claim, right
or benefit arising thereunder or resulting therefrom. Such
arrangements may include (if lawful and reasonable considering all
relevant factors) the performance by Allstar as agent for the
benefit of Amherst Southwest and the payment by Amherst Southwest
(in advance if so requested by Allstar) of all corresponding
liabilities for the enjoyment of such benefit to the extent that
Amherst Southwest would have been responsible therefor under this
Agreement if the necessary third party consent or approval had been
obtained. Allstar and Amherst Southwest agree to use their
respective good faith, commercially reasonable efforts to negotiate
and document any such arrangements.
(e) Nothing in this Section 2.13 shall be deemed a waiver by Amherst
Southwest or Allstar of their respective rights to have received all
necessary consents and approvals required to be obtained under
Sections 7.1 and 7.2 of this Agreement as a condition to their
respective obligations to proceed with the Closing, except that if
Allstar is unable to obtain any such consent due to the refusal of
Amherst Southwest to provide the party from whom consent is being
sought with copies of its financial statements, then Amherst
Southwest shall be deemed to have waived its right to receive the
consent of such party as a condition to Closing under Section 7.1.
ARTICLE III
Other Agreements
3.1 Licensing of MIS Software. On the Closing Date, Allstar shall assign,
transfer, convey and deliver to Amherst Southwest a Compaq computer
server (the "Server"). The Server shall be loaded with the MIS Software
and all other compiled software used by the CP Division; provided,
however, that the source code for the MIS Software and such other
software shall not be provided to Amherst Southwest. In addition, the
Server shall be loaded with any Customer and Sales Records and Supplier
and Purchasing Records maintained by Allstar on its computer system.
Effective as of the Closing, Allstar hereby grants to Amherst Southwest a
limited, royalty-free, worldwide license and right to use the MIS
Software solely for the management of its information systems in
connection with the operations of the CP Division and the El Paso IT
Business for a period of twelve (12) months following the Closing Date.
Amherst Southwest may not copy the MIS Software or use it for any other
purpose. Within 10 Business Days after the first anniversary of the
Closing Date, Amherst Southwest will cease using the MIS Software for all
purposes except to the extent necessary to retrieve historical data
relating to the twelve (12) month period following the Closing Date, and
will provide a sworn affidavit, reasonably acceptable to Allstar and
Amherst Southwest and executed by an executive officer of Amherst
Southwest, certifying that Amherst Southwest is no longer using the MIS
Software except for such historical purposes. For a period of one (1)
year after the Closing Date, Allstar agrees to use its commercially
reasonable efforts to provide technical support reasonably requested by
Amherst Southwest with respect to the MIS Software at a cost of $45 per
hour for normal support including training, answering questions and
normal MIS Software maintenance, and at a cost of $85 per hour services
by Allstar's Senior Systems Analyst or its Vice President of MIS Systems.
3.2 Employment of CP Division Employees.
(a) Schedule 3.2(a) lists the employees of Allstar who will be offered
employment by Amherst Southwest from and after the Closing Date, and
categorizes each such employee as either a "Key Employee" or "Other
Employee." Allstar shall use its reasonable efforts to encourage
employees listed on Schedule 3.2(a) to make available their
employment services to Amherst Southwest. At least 30 days prior to
the Closing Date, Amherst Southwest shall offer employment to those
employees listed on Schedule 3.2(a) on terms and conditions
acceptable to Amherst Southwest in its sole discretion; provided
that Amherst Southwest shall offer employment to such employees at
wage and salary levels at least equal to their wage and salary
levels from Allstar in effect immediately prior to the Closing.
Those employees who accept such offers of employment effective as of
the Closing Date are hereinafter referred to as the "Transferred
Employees."
(b) Amherst Southwest shall provide the Transferred Employees and their
dependents and beneficiaries coverage under any welfare and fringe
benefits plans, programs, policies or arrangements established by
Amherst Southwest in its sole discretion for such Persons.
3.3 Accounts Receivable.
(a) Allstar and Amherst Southwest acknowledge and agree that all
customer accounts receivable of the CP Division and the El Paso IT
Business which arise prior to the Effective Time (including those
arising from Retained Customer Contracts, from the sale by Allstar
of Retained Inventory and under the Mintech Agreements), and all
trade accounts receivable of Allstar and all rebates receivable from
vendors (other than the Cooperative Advertising Credits) arising at
any time (the "Accounts Receivable") are and shall remain the assets
of Allstar. Subject to the rights of Amherst Southwest contained in
the last sentence of this Section 3.3(a), Allstar shall have sole
and exclusive authority to invoice and collect Accounts Receivable
and to issue correction invoices and credit memos with respect to
such accounts, and nothing in this Agreement shall prevent Allstar
from retaining all rights of a creditor under applicable law,
including, without limitation, the right to take legal action
against its account debtors seeking to collect amounts owed. Allstar
shall use its commercially reasonable efforts to keep Amherst
Southwest reasonably informed of any disputes with any customers
relating to Accounts Receivable and Allstar's denial of any customer
request for a credit or correction in respect of an Account
Receivable. Notwithstanding the foregoing, in the event that Allstar
proposes to take collection action in respect of an Account
Receivable, Allstar shall first give Amherst Southwest written
notice at least five (5) Business Days in advance of taking any such
collection action.
(b) Amherst Southwest and Allstar shall cooperate with each other and
use commercially reasonable efforts to maximize the collection by
Allstar of all Accounts Receivable. Amherst Southwest shall allow
Allstar reasonable access to Transferred Employees for that purpose,
but Allstar shall not unreasonably disrupt the duties of Transferred
Employees in so exercising its rights of access to Transferred
Employees.
(c) Any payment received by one Party after the Closing Date that
properly belongs to another Party shall be held in trust for the
benefit of the Party properly entitled to the payment and shall be
paid over by the receiving Party to the proper Party as herein
provided.
(d) In the event that Amherst Southwest receives a payment on an Account
Receivable that is identified by Allstar's invoice number, or that
is otherwise accompanied by information identifying it as a payment
belonging to Allstar (an "Allstar Payment"), Amherst Southwest shall
turn such Allstar Payment over to Allstar. Such Allstar Payments
shall be turned over to Allstar without representation, warranty, or
guaranty by, or recourse against, Amherst Southwest.
(e) Allstar acknowledges that after the Closing, Amherst Southwest will
generate accounts receivable from former customers of the CP
Division and the El Paso IT Business. In the event that Allstar
receives a payment that is identified by Amherst Southwest's invoice
number, or that is otherwise accompanied by information identifying
it as a payment belonging to Amherst Southwest (an "Amherst
Southwest Payment"), Allstar shall turn such Amherst Southwest
Payment over to Amherst Southwest. Such Amherst Southwest Payments
shall be turned over to Amherst Southwest without representation,
warranty, or guaranty by, or recourse against, Allstar.
(f) In the event that either Party receives a payment from a former
customer of Allstar on or after the Closing Date as to which the
owner is not clearly indicated on or with the payment (an
"Unidentified Payment"), the Party receiving the payment shall,
within five (5) Business Days after its receipt, notify the other of
the amount of the Unidentified Payment and the customer from which
it was received, and the Parties shall exchange pertinent records
and otherwise cooperate in good faith to determine the Party to
which the Unidentified Payment belongs. If the Parties are unable to
resolve ownership of the Unidentified Payment from their records,
the Party who received the payment shall promptly contact the
customer from whom the payment was received to obtain instructions
as to which invoice(s) the customer intended its payment to be
applied, and the instructions of the customer shall be binding on
the Parties.
(g) Each Allstar Payment and each Amherst Southwest Payment shall be
paid over by the Party to which it belongs within five (5) Business
Days after receipt. Each Unidentified Payment shall be paid to the
Party to which it belongs within five (5) Business Days after
ownership of the payment is resolved. All payments belonging to
another Party but not timely paid over to the proper Party shall
bear interest from and after the next Business Day after the payment
was due until paid at the rate of 15% per annum.
3.4 Post-Closing Inventory Matters.
(a) Fulfillment of Amherst Southwest Orders. Prior to the shipment of
each order shipped after the Effective Time by Amherst Southwest,
without regard to whether such order was received before or after
the Effective Time (each an "Amherst Southwest Order"), Amherst
Southwest shall communicate such order to Allstar via a mutually
agreed upon method, and shall indicate in such communication the
Fulfillment Price for each of the goods needed to fill the Amherst
Southwest Order. If Allstar has any of the goods specified in the
communication in its Retained Inventory, and is willing to sell such
goods to Amherst Southwest, then Allstar shall so notify Amherst
Southwest within thirty (30) minutes if the order is communicated
before 7:30 p.m. Central Time on a Business Day, or otherwise by
9:00 a.m. Central Time on the next Business Day, and Amherst
Southwest shall purchase, and Allstar shall sell to Amherst
Southwest, such goods at the Fulfillment Price. Payment for such
purchases shall be made in full within 30 days after the invoice
date. If, and to the extent that, Amherst Southwest is unable to
obtain the specified goods from Allstar as described in this
Section, or if Allstar fails to notify Amherst Southwest within the
time periods set forth in this Section, Amherst Southwest may
fulfill the Amherst Southwest Order from its own inventory or from
such other source as Amherst Southwest may determine. Amherst
Southwest's obligations under this Section 3.4(a) shall expire six
(6) months after the Closing Date.
(b) Fulfillment of Retained Customer Contracts. Despite anything in this
Agreement to the contrary, Allstar shall be entitled to fulfill
after the Closing Date each Retained Customer Contract. Allstar
shall first satisfy a Retained Customer Contract from its Retained
Inventory. If, and to the extent that, Allstar does not have
sufficient quantities or types of Retained Inventory on hand to
fulfill a Retained Customer Contract, then Allstar shall, prior to
filling the order from any other source, communicate such order to
Amherst Southwest by a mutually agreed upon method, and shall
indicate in such communication the Fulfillment Price for each of the
goods needed to fill the Retained Customer Contract. If Amherst
Southwest has any of the goods specified in the communication in its
inventory, and is willing to sell such goods to Allstar at the
Fulfillment Price, then Amherst Southwest shall so notify Allstar
within thirty (30) minutes if the order is communicated before 7:30
p.m. Central Time on a Business Day, or otherwise by 9:00 a.m.
Central Time on the next Business Day, and Allstar shall purchase
and Amherst Southwest shall sell the goods at the Fulfillment Price.
Payment for such purchases shall be made in full within 30 days
after the invoice date. If, and to the extent that, Allstar is
unable to obtain goods to fulfill Retained Customer Contracts from
its Retained Inventory or from Amherst Southwest as described in
this Section, or if Amherst Southwest fails to notify Allstar within
the time periods set forth in this Section, Allstar may fulfill the
Retained Customer Contracts from any other source as Allstar may
determine.
(c) Defective Goods, Shortages, Returns and Cancellations.
(1) Defective Goods and Shortages. Amherst Southwest shall have the
right and obligation to satisfy delivery requirements with
respect to defective goods and shortages of goods delivered
with respect to all Acquired Customer Contracts and, likewise,
Allstar shall have the right and obligation to satisfy delivery
requirements with respect to defective goods and shortages of
goods delivered with respect to all Retained Customer
Contracts. Redeliveries to replace defective goods and
shipments of goods shorted from earlier shipments shall be made
in accordance with Section 3.4(a) and 3.4(b), as applicable.
(2) Returns. Goods returned by customers after the Closing Date
with respect to Acquired Customer Contracts and Amherst
Southwest Orders fulfilled out of Allstar's Retained Inventory
shall be handled by Amherst Southwest. Allstar shall within two
(2) Business Days after notice by Amherst Southwest of a return
of defective goods, credit Amherst Southwest for the amount
paid by Amherst Southwest on any returned defective goods that
were purchased by Amherst Southwest out of Allstar's Retained
Inventory, other than returns arising under Acquired Customer
Contracts, which returns shall be the sole responsibility of
Amherst Southwest. Goods returned to Allstar and goods returned
to Amherst Southwest that were purchased out of Allstar's
Retained Inventory (other than returns arising under Acquired
Customer Contracts) shall be considered Retained Inventory for
all purposes. If any Party receives delivery of returned goods
which are to be handled by another Party under this Agreement,
the receiving Party shall within five (5) Business Days after
such receipt so notify the other Party and redeliver the goods
to the proper recipient at the cost and expense of the Party to
which the goods should be properly returned.
(3) Cancellations. Cancellations of customer orders for goods to be
fulfilled by Amherst Southwest from Allocated Inventory shall
be handled by Amherst Southwest, at its sole cost and expense.
(4) Segregation of Retained Inventory. Amherst Southwest and
Allstar acknowledge and agree that inventory of both Amherst
Southwest and Allstar shall be stored in the same Dallas, Texas
warehouse which is the subject of one of the Assumed Leases.
For a period of six months after the Closing Date, Amherst
Southwest shall sublease to Allstar, at a monthly rental based
upon the cost of the square footage used, and pursuant to a
sublease agreement mutually acceptable to the Parties and the
landlord, a portion of such warehouse for the storage of all
Retained Inventory. Such subleased space shall be separated by
means of a chain-link fence erected by and at the expense of
Allstar. Allstar shall have unlimited access to such subleased
space and Retained Inventory during Amherst Southwest's normal
business hours and may station employees of Allstar in such
subleased space.
(d) Verification. During the six (6) month period following the Closing
Date, Amherst Southwest shall provide to Allstar for each Business
Day, by 9:00 a.m. Central Time on the following Business Day, a copy
of a Daily Purchasing Report for the purpose of enabling Allstar to
verify Amherst Southwest's compliance with its obligations under
this Section. Any such information received shall be considered
confidential and subject to Section 8.4. In the event that Allstar
believes that Amherst Southwest is not in compliance with its
obligations under this Section, Allstar must give Amherst Southwest
written notice thereof on the Business Day immediately following the
Business Day on which such Daily Purchasing Report was received by
Allstar. Failure to give such timely notice shall constitute a
waiver by Allstar of Amherst Southwest's noncompliance with its
obligations under this Section with respect to the Daily Purchasing
Report in question. In the event of such notice, the Parties shall
cooperate in good faith to resolve the dispute. If such dispute is
not mutually resolved within 30 days after the date of written
notice of the dispute to Amherst Southwest, either party may submit
the dispute for resolution in accordance with Section 11.13 of this
Agreement.
(e) Disposition of Retained Inventory. Notwithstanding anything to the
contrary in this Agreement, at any time and from time to time after
the Closing Date, Allstar may dispose of any of the Retained
Inventory through warehouse sales, bulk disposition, returns to
vendors, public advertisement, retail sales or sales to resellers,
or by any other means, all in addition to the sales transactions
contemplated by this Agreement; provided, however, that Allstar
shall not sell Retained Inventory to those Persons who were
customers of the CP Division or El Paso IT Business prior to the
Effective Time.
ARTICLE IV
Representations and Warranties of Allstar
Allstar represents and warrants to Amherst Southwest that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), except as set forth in the disclosure
schedule accompanying this Agreement (the "Disclosure Schedule").
4.1 Organization of Allstar. On the date hereof Allstar is, and on the
Closing Date Allstar will be: (a) a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware;
and (b) duly qualified or licensed to do business and in good standing as
a foreign corporation authorized to do business in all jurisdictions in
which the ownership, use and operation of the CP Division, the El Paso IT
Business and the Acquired Assets would make such qualification or
licensing necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect.
4.2 Authorization of Transaction. Allstar has full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder, subject only on the date hereof (but not on the
Closing Date) to the approval of Allstar's Stockholders of the execution,
delivery and performance of this Agreement by Allstar. Without limiting
the generality of the foregoing, the board of directors of Allstar has,
and as of the Closing Date Allstar's Stockholders holding a majority of
outstanding Allstar Shares have, duly authorized the execution, delivery
and performance of this Agreement by Allstar. This Agreement constitutes
the valid and legally binding obligation of Allstar, enforceable in
accordance with its terms and conditions, except as such enforcement may
be limited by bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally and to general principles of
equity, and except that Allstar makes no representation or warranty with
respect to the enforceability against Allstar and its Affiliates of
Section 8.2(a) to the extent it purports to restrict activities outside
of the states of Texas, New Mexico, Oklahoma, Louisiana, Arkansas,
Florida and California.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including, without limitation, the assignments and assumptions referred
to in Article II above), will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to
which Allstar is subject, the violation of which would have a Material
Adverse Effect, or any provision of the charter or bylaws of Allstar or
(b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or, except for required by
third party consents and approvals, require any notice under, any
agreement, contract, lease, license, instrument, or other arrangement
constituting or relating to an Acquired Asset to which Allstar is a party
or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Encumbrance upon any of its assets),
except where said failure to give notice, file or obtain authorization,
consent or approval could not have a Material Adverse Effect. Except for
filings and approvals required by the Securities Exchange Act and
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, Allstar does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement and to convey title to
the Acquired Assets to Amherst Southwest free and clear of all
Encumbrances.
4.4 Majority Status. ▇▇▇▇▇ ▇. ▇▇▇▇ owns legally and beneficially a majority
of the issued and outstanding shares of Allstar having voting rights (the
"Majority Shares"), and has all rights to vote such Majority Shares, free
of any proxies and other agreements or arrangements with respect to the
ownership or voting of the Majority Shares, except for that certain
Voting and Support Agreement dated as of the date hereof between ▇▇▇▇▇ ▇.
▇▇▇▇ and Amherst Southwest pursuant to which ▇▇. ▇▇▇▇ has agreed, among
other things, to vote his Majority Shares in favor of the transactions
contemplated by this Agreement, subject to the terms and conditions set
forth therein.
4.5 Brokers' Fees. Allstar has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Amherst Southwest
could become liable or obligated. Other than the fee payable by Allstar
to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, which fee shall remain Allstar's Liability, Allstar
has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by
this Agreement. Allstar acknowledges that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a member of
Allstar's Board of Directors, has also acted as broker for Amherst
Southwest in connection with the transactions contemplated by this
Agreement and that Amherst Southwest has agreed to pay a fee to Mr.
Darrell. Allstar has complied with Section 144 of the Delaware General
Corporate Law and any applicable provisions of Allstar's governing
corporate documents, and the transactions contemplated hereby are not
void or voidable by reason of such relationships and fee.
4.6 Title to and Condition of Acquired Assets. Allstar has, and, subject to
the receipt of any required third party consents and approvals to the
assignment thereof to Amherst Southwest, on the Closing Date will
transfer and assign to Amherst Southwest, good and marketable title to
the Acquired Assets owned by Allstar and good and valid leasehold
interests in the Acquired Assets leased by Allstar, free and clear of all
Encumbrances. Each of the Tangible Assets is in good and operating
condition, reasonable wear and tear excepted.
4.7 Inventory. All Allocated Inventory and Customer Inventory consists of
products which are currently available for shipping in the computer
distribution channel, are not discontinued or announced as discontinued
(other than end-of-life products held at the request of and for sale to
existing customers of Allstar), are salable to the customer to whom such
products were allocated or for whom such products are held in the
ordinary course of business, and, when sold by Amherst Southwest or
Allstar to the initial customer, will carry the full extent of any
applicable manufacturer's warranties. Schedule 4.7(a) sets forth all
items of Allocated Inventory as of September 30, 1999; Schedule 4.7(b)
sets forth all items of Allocated Inventory as of December 31, 1999;
Schedule 4.7(c) sets forth all items of Customer Inventory as of
September 30, 1999; and Schedule 4.7(d) sets forth all items of Customer
Inventory as of December 31, 1999 (the foregoing schedules are
collectively referred to as "Schedule 4.7"). Schedule 4.7 sets forth
Allstar's Cost with respect to each item listed thereon. All information
included in Schedules 2.6(a), 2.6(b), 2.7 and 4.7 shall be true and
correct in all material respects, except that Allstar makes no
representation and warranty as to the quantity of items on Schedules
2.6(a) and 2.6(b), except to the extent that Amherst Southwest has paid
for such quantity of items at the Closing in the Inventory Purchase
Price.
4.8 MIS Software; Server; Daily Purchasing Reports. The MIS Software
contained on the Server delivered to Amherst Southwest at the Closing, on
a "plug-and-play" basis without modification or customization, will be
fully able to generate daily purchasing reports ("Daily Purchasing
Reports") containing the information with respect to purchasing and sales
listed on Schedule 4.8. The Server, when delivered to Amherst Southwest
pursuant to this Agreement, will be fully functional and in good
operating condition, and will contain fully functional copies of the MIS
Software and all other compiled software used by the CP Division and El
Paso IT Business, plus all Customer and Sales Records and Supplier and
Purchasing Records maintained by Allstar on its computer system.
4.9 Financial Statements. Attached hereto as Exhibit C are the following
financial statements (collectively the "Financial Statements"): (a) pro
forma income statement as of and for the fiscal years ended December 31,
1997 and December 31, 1998 of the CP Division; (b) separate,
unconsolidated pro forma income statements and balance sheets as of and
for the 9 months ended September 30, 1999 of the CP Division and the El
Paso IT Business; (c) audited consolidated statements of income and cash
flow and balance sheets for the fiscal years ended December 31, 1997 and
1998 of Allstar; and (d) consolidated statements of income and cash flow
and balance sheets for the 9 months ended September 30, 1999 of Allstar.
The Financial Statements (including any notes thereto) present fairly the
financial condition of Allstar, the CP Division or the El Paso IT
Business, as the case may be, as of such dates and the results of
operations of Allstar, the CP Division or the El Paso IT Business, as the
case may be, for such periods, all in conformity with GAAP, except as
otherwise set forth in the notes thereto and provided, however, that the
Financial Statements set forth in (a), (b) and (d) above lack footnotes,
schedules and other presentation items and are subject to normal year-end
and other adjustments. The Financial Statements are correct and complete
in all material respects, and are consistent with the books and records
of Allstar (which books and records are correct and complete in all
material respects).
4.10 Events Subsequent to December 31, 1998. Except as set forth on the
Disclosure Schedule, since December 31, 1998, (a) there has not been any
material adverse change in the business, operations, or future prospects
of the CP Division, the El Paso IT Business and the Acquired Assets,
taken as a whole (provided, however, that the failure to enter into the
SBC Agreement shall not be deemed to be a material adverse change), and
(b) there has not been any material adverse occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the CP Division, the El Paso IT Business and the
Acquired Assets, except as contemplated by this Agreement.
4.11 Undisclosed Liabilities. Since the date of the most recent balance sheet
for the CP Division, the El Paso IT Business or Allstar, as applicable,
included in the Financial Statements, Allstar has not incurred any
Liabilities relating to the CP Division, the El Paso IT Business or the
Acquired Assets that remain unpaid and which would have been required to
be reflected in such most recent balance sheet had such liabilities been
in existence on the date of such most recent balance sheet, other than
(a) Liabilities incurred in the Ordinary Course of Business since the
date of such most recent balance sheet, or that individually or in the
aggregate would not have a Material Adverse Effect, (b) broker's fees
payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as contemplated by Section 4.5, or (c) costs
and expenses incurred in connection with the transactions contemplated by
this Agreement, which costs and expenses shall remain the obligations of
Allstar.
4.12 Contracts. Schedule 4.12 lists the following contracts and other
agreements to which Allstar is a party and that are included in the
Acquired Assets (subject only to the receipt of all necessary consents to
the assignment of such contracts and agreements to Amherst Southwest):
(a) any agreement (or group of related agreements) for the lease of real
or personal property to or from any Person providing for lease
payments, other than the Assumed Leases and Capital Leases;
(b) all Customer Contracts as of the date of this Agreement (the Parties
acknowledge that purchase orders included on Schedule 4.12 are
subject to change in the Ordinary Course of Business);
(c) any agreement (or group of related agreements) not included in
Schedule 4.12 pursuant to Section 4.12(b) or in other Schedules
delivered pursuant to this Agreement for the purchase or sale of
supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will
extend over a period of more than one year;
(d) any agreement concerning a partnership or joint venture;
(e) any agreement or group of related agreements, other than Capital
Leases, under which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, or under which it has imposed an Encumbrance on any of
the Acquired Assets, tangible or intangible;
(f) any agreement concerning confidentiality or non-competition with
respect to the business of the CP Division;
(g) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect.
Allstar has delivered to Amherst Southwest a correct and complete copy of each
written agreement required to be listed in the Disclosure Schedule (as amended
to date) pursuant to Section 4.12 and a written summary setting forth the terms
and conditions of each oral agreement referred to in the Disclosure Schedule.
With respect to each such agreement and each Supplier Contract, Capital Lease
and Assumed Lease: (A) the agreement is legal, valid, binding, enforceable, and
in full force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby, subject to the receipt
of all necessary consents to the assignment of such agreements to Amherst
Southwest) and, with respect to enforcement, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and to general principles of equity, (C) Allstar is
not in breach or default, and to Allstar's knowledge, no other party is in
breach or default, under the agreement, and, to Allstar's knowledge, no event
has occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) Allstar has not repudiated, and to Allstar's knowledge, no
other party has repudiated, any provision of the agreement.
4.13 Certain Business Relationships With Allstar. None of Allstar's officers,
directors or stockholders owning more than 5% of the outstanding Allstar
Shares or their Affiliates has been involved in any business arrangement
or relationship with Allstar relating to its CP Division or El Paso IT
Business within the past 12 months. Neither Allstar nor any of its
Affiliates is a party to any contract or agreement with Mintech or its
Affiliates other than the Mintech Agreements.
4.14 No SBC Bonus Arrangements. Allstar does not now have or contribute to,
and will not create or contribute to, any program or arrangement for the
payment of bonuses on sales to SBC.
4.15 Disclosure; Disclaimer of Other Representations and Warranties. The
representations and warranties contained in this Article V do not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained
in this Article IV not misleading when taken in the context of other
Schedules and documents required to be delivered by Allstar pursuant to
this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV, ALLSTAR
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF ANY OF ITS ASSETS (INCLUDING, WITHOUT LIMITATION,
THE ACQUIRED ASSETS), LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED.
ARTICLE V
Representations and Warranties of Amherst Southwest and AmTech.
Amherst Southwest represents and warrants to Allstar that the statements
contained in Sections 5.1 through 5.6 of this Article V, and AmTech represents
and warrants to Allstar that the statements contained in Sections 5.7 through
5.12 of this Article V, are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V), except as set forth in the Disclosure
Schedule.
5.1 Organization of Amherst Southwest. Amherst Southwest is a limited
partnership duly formed, validly existing, and in good standing under the
laws of the State of Texas. AmTech is the 99% limited partner of Amherst
Southwest, and ACP Sales SE, LLC is the 1% general partner of Amherst
Southwest. At the Closing, Amherst Southwest will have a valid Texas
Sales and Use Tax Resale Certificate and a Texas Sales and Use Tax
Permit, true and correct copies of which will be delivered to Allstar at
Closing. Amherst Southwest is a newly formed limited partnership, and has
not conducted any business, incurred any liabilities or acquired any
assets other than in connection with the transactions contemplated by
this Agreement.
5.2 Authorization of Transaction. Amherst Southwest has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Amherst Southwest, enforceable in accordance with
its terms and conditions, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium and similar laws affecting creditors'
rights generally and to general principles of equity.
5.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article II
above), will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Amherst
Southwest is subject, the violation of which would have a material
adverse effect on the operations, results of operations or condition
(financial or otherwise) of Amherst Southwest (an "Amherst Material
Adverse Effect"), or any provision of its certificate of limited
partnership or agreement of limited partnership or (b) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which Amherst
Southwest is a party or by which it is bound or to which any of its
assets is subject. Except for filings and approvals required by the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, Amherst Southwest does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Article II
above).
5.4 Brokers' Fees. Except and to extent set forth in Section 4.5 above,
Amherst Southwest has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Allstar could
become liable or obligated.
5.5 Financing Commitment. AmTech has delivered to Allstar a true and correct
copy of a letter from IBM Credit Corp. (the "Lender") to Allstar,
pursuant to which Lender has advised Allstar that AmTech has acquisition
financing available under its credit facility with Lender sufficient to
finance the Purchase Price for the Acquired Assets, subject to the terms
and conditions of such credit facility (the "Financing Letter"). Since
the date of such Financing Letter, no event or condition has occurred, or
has failed to occur, that could reasonably be expected to have a material
adverse effect on Amherst Southwest's or AmTech's ability to finance the
Purchase Price as set forth in the Financing Letter.
5.6 Amherst Southwest Information. All information and data provided by
Amherst Southwest for inclusion in the Proxy Statement will not contain
any untrue statement of a material fact or admit to state a material fact
necessary in order to make the statements contained therein not
misleading.
5.7 Organization of AmTech. AmTech is a limited liability company duly
formed, validly existing, and in good standing under the laws of the
State of Nevada.
5.8 Authorization of Transaction. AmTech has full limited liability company
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of AmTech, enforceable in accordance with its
terms and conditions, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium and similar laws affecting creditors'
rights generally and to general principles of equity.
5.9 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which AmTech is subject, the
violation of which would have a material adverse effect on the
operations, results of operations or condition (financial or otherwise)
of AmTech, or any provision of its articles of organization, agreement of
limited liability company and other organizational documents, or (b)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which
AmTech is a party or by which it is bound or to which any of its assets
is subject. Except for filings and approvals required by the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, AmTech does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement.
5.10 Brokers' Fees. Except and to the extent set forth in Section 4.5 above,
AmTech has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Allstar could become liable or
obligated.
5.11 AmTech Financial Statements. AmTech has provided Allstar with true and
correct copies of the following financial statements of AmTech
(collectively the "AmTech Financial Statements"): (a) balance sheet and
income statement as of and for the fiscal year ended December 31, 1998;
and (b) balance sheet and income statement as of and for the nine months
ended September 30, 1999. The AmTech Financial Statements (including the
Notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, except as noted
therein, present fairly the financial condition of AmTech as of such
dates and the results of operations of AmTech for such periods, are
correct and complete, and are consistent with the books and records of
AmTech (which books and records are correct and complete in all material
respects); provided, however, that the AmTech Financial Statements as of,
and for the period ended September 30, 1999 lack footnotes, schedules and
other presentation items and are subject to normal year-end and other
adjustments.
5.12 AmTech Information. All information and data provided by AmTech for
inclusion in the Proxy Statement will not contain any untrue statement of
a material fact or admit to state a material fact necessary in order to
make the statements contained therein no misleading.
ARTICLE VI
Pre-Closing Covenants.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
6.1 General. Each of the Parties will use its commercially reasonable efforts
to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated
by this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Article VII below).
6.2 Notices and Consents. Allstar will give any notices to third parties, and
Allstar will use its commercially reasonable efforts to obtain any third
party consents, that Amherst Southwest reasonably may request in
connection with the transactions contemplated by this Agreement; provided
that, with respect to the Acquired Customer Contracts, Allstar shall only
be required to take such actions with respect to the customers listed on
Schedule 7.1(h). Without limiting the generality of the foregoing, the
Parties shall cooperate in good faith using commercially reasonable
efforts to obtain the consent of SBC to the performance by Amherst
Southwest of the obligations of Allstar under the SBC Agreement. Each of
the Parties will give any notices to, make any filings with, and use its
commercially reasonable efforts to obtain any Governmental Approvals that
the other Party reasonably may request in connection with the
transactions contemplated by this Agreement.
6.3 Compliance with Securities Laws; Stockholder Approval. As promptly as
practicable after the execution of this Agreement, Allstar shall prepare
and file with the SEC a proxy statement (the "Proxy Statement") to
solicit the proxies of the stockholders of Allstar with respect to the
transactions contemplated by this Agreement. Allstar shall use its
commercially reasonable efforts to cause such Proxy Statement to be
cleared by the SEC for mailing to the Allstar Stockholders as promptly as
practicable, shall mail such Proxy Statement and related proxy
solicitation materials to the Allstar Stockholders as promptly as
practicable thereafter, and shall as promptly as practicable hold a
special meeting of the Allstar Stockholders to act upon resolutions
approving the transactions contemplated by this Agreement. The Proxy
Statement and related proxy solicitation materials shall include the
recommendation of Allstar's board of directors in favor of approval of
this Agreement and the transactions contemplated hereby, unless Allstar's
board of directors has approved an Acquisition Proposal other than
Amherst Southwest's under the circumstances and subject to the
limitations contained in Section 6.9 below. Amherst Southwest and AmTech
shall promptly provide to Allstar and its counsel such information
concerning Amherst Southwest or AmTech as applicable and their respective
Affiliates as is required in the determination of counsel for Amherst
Southwest to be included in the Proxy Statement under the Securities
Exchange Act and the rules and regulations promulgated thereunder;
provided, however, that Allstar shall not be required to file a Proxy
Statement which, in the determination of counsel to Allstar, omits to
include information believed in good faith by counsel to Allstar to be
required in the Proxy Statement under the Securities Exchange Act and the
rules and regulations promulgated thereunder. Allstar shall concurrently
with their preparation and/or receipt provide Amherst Southwest with
complete copies of each draft of the Proxy Statement and related proxy
materials and all other filings and communications with and from the SEC
in connection therewith.
6.4 Operation of Business. With respect to the operation of the CP Division
and the El Paso IT Business, Allstar will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary
Course of Business of the CP Division or the El Paso IT Business. Without
limiting the generality of the foregoing, Allstar will not sell, transfer
or otherwise dispose of, or agree to sell, transfer, or otherwise dispose
of, any of the Acquired Assets, other than in the Ordinary Course of
Business, or subject any of the Acquired Assets to any Encumbrance.
6.5 Preservation of Business. Allstar will keep its CP Division and El Paso
IT Business substantially intact, including its present operations,
physical facilities and working conditions, and will use reasonable
commercial efforts to keep its relationships with lessors, licensors,
suppliers, customers, and employees substantially intact.
6.6 Access. Allstar will permit representatives of Amherst Southwest to have
full access at all reasonable times, upon reasonable prior notice to
Allstar, and in a manner so as not to interfere with the normal business
operations of Allstar, to all premises, properties, books, records
(including tax records), contracts, and documents of or pertaining to the
CP Division, the El Paso IT Business, the Acquired Assets and Assumed
Liabilities. Any such Amherst Southwest representatives shall be escorted
at all times by an Allstar representative specified by the Chief
Executive Officer of Allstar.
6.7 Training of Personnel; Access to Server. Beginning two weeks before the
estimated Closing Date:
(a) Allstar will allow Amherst Southwest reasonable access to the sales
management and sales representatives of the CP Division and El Paso
IT Business who are listed on Schedule 3.2(a) for training sessions
with Amherst Southwest. A representative of Allstar designated by
the Chief Executive Officer of Allstar shall be present at all times
for such training sessions. All training sessions will be scheduled
so as to cause minimal disruption to the business of the CP Division
and the El Paso IT Business. Except in and for the purposes of such
training sessions, without the prior consent of the Chief Executive
Officer, neither Amherst Southwest nor its Affiliates shall make any
contact with any employees of Allstar other than ▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, and Amherst Southwest shall
promptly report to Allstar any contact with ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇ initiated by any such employee of Allstar and the substance of
the contact in reasonable detail; and
(b) Allstar will provide Amherst Southwest with access to the MIS
Software and the Server hosting the MIS Software for purposes of
verifying the functionality of the MIS Software and the Server and
facilitating Amherst Southwest's transitional use of the MIS
Software after the Closing pursuant to Section 3.1.
6.8 Exclusivity. From the date of this Agreement through the Closing Date,
Allstar will not, and will cause its directors, officers, stockholders,
accountants, financial advisors, attorneys and agents not to: (a)
solicit, initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets, of Allstar
or the CP Division or El Paso IT Business (including any acquisition
structured as a merger, consolidation, or share exchange, but excluding
from the prohibitions of this subsection (a) any sale or other
disposition of the assets of Allstar's Telecom Division); or (b)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or seek any of
the foregoing. Allstar will notify Amherst Southwest in writing on the
next Business Day if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing. Notwithstanding the
foregoing, nothing in this Agreement shall prohibit Allstar or its board
of directors from furnishing information to, or entering into discussions
or negotiations with, any person or entity in connection with an
unsolicited bona fide written proposal to acquire the Acquired Assets or
all or substantially all of the capital stock or assets of Allstar,
whether by means of merger, consolidation or other business combination
(an "Acquisition Proposal"), by such person or entity or recommending an
Acquisition Proposal to the stockholders of Allstar if, and only to the
extent that, the board of directors of Allstar believes in good faith
that such Acquisition Proposal would, if consummated, result in a
transaction more favorable to Allstar's stockholders from a financial
point of view than the transactions contemplated under this Agreement and
the board of directors of Allstar determines in good faith that such
action is necessary for the board of directors to comply with its
fiduciary duties to stockholders under applicable law. Allstar shall
immediately notify Amherst Southwest in writing of the receipt of any
Acquisition Proposal, and shall immediately provide Amherst Southwest
with copies of all documents, correspondence and written information
constituting and/or relating to such Acquisition Proposal, except for
such documents, correspondence and written information (i) relating
solely to the business of the person or entity making such Acquisition
Proposal, and (ii) which Allstar shall be prohibited from disclosing to
Amherst Southwest pursuant to the terms of a written confidentiality
agreement entered into in good faith by Allstar and such person or
entity.
6.9 Updating Information. Prior to the Closing Date, if Allstar, Amherst
Southwest or AmTech discovers that any representation or warranty made by
it in this Agreement or in any Schedule was false or misleading in any
material respect when made, or that any event has occurred such that any
such representation, warranty or Schedule would, if made or delivered as
of the time of the occurrence of such event, or after giving effect
thereto, be incomplete or incorrect in any material respect, such party
shall notify the other party in reasonable detail of the facts with
respect thereto. If the subject matter of any such notification would
have a Material Adverse Effect, or would materially and adversely affect
the ability of the Parties to consummate the transactions contemplated by
this Agreement, or would result in a material breach of any
representation, warranty or covenant of the notifying party contained in
this Agreement, the receipt of such notification shall give Amherst
Southwest or Allstar, as applicable, the right to terminate this
Agreement pursuant to Section 9.1(b)(4) or Section 9.1(c)(4), as
applicable.
6.10 1999 Financial Statements. On or before March 31, 2000, Allstar shall
deliver to Amherst Southwest audited consolidated statements of income
and cash flow and balance sheets for the fiscal year ended December 31,
1999, of Allstar, prepared in accordance with GAAP and that present
fairly the financial condition of Allstar as of such date and the results
of operations of Allstar for such period, except as otherwise set forth
in the notes thereto. Such financial statements shall be correct and
complete in all material respects, and consistent with the books and
records of Allstar (which books and records shall be correct and complete
in all material respects). Within five (5) Business Days after delivery
to Amherst Southwest of such financial statements, Amherst Southwest may
terminate this Agreement if such financial statements indicate a Material
Adverse Effect (other than as a result of any matter disclosed on the
Disclosure Schedule to Section 4.10) has occurred when compared to the
audited consolidated statements of income and cash flow and balance
sheets for the fiscal year ended December 31, 1998 of Allstar included in
the Financial Statements.
ARTICLE VII
Conditions to Obligation to Close.
7.1 Conditions to Obligation of Amherst Southwest. The obligation of Amherst
Southwest to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) Amherst Southwest shall have received confirmations reasonably
satisfactory to it that all of the employees identified on Schedule
3.2(a) as "Key Employees" (including ▇▇▇▇▇ ▇▇▇▇) and at least 90% of
the employees identified on Schedule 3.2(a) as "Other Employees"
will become employed by Amherst Southwest from and after the Closing
Date;
(b) the representations and warranties set forth in Article IV above
shall be true and correct in all material respects at and as of the
Closing Date;
(c) Allstar shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(d) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (1)
prevent consummation of any of the transactions contemplated by this
Agreement, (2) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (3) affect
adversely the right of Amherst Southwest to acquire or own any
material portion of the Acquired Assets, or (4) result in the
imposition on or against Amherst Southwest of any material Damages;
(e) Allstar shall have delivered a certificate to the effect that each
of the conditions specified in Sections 7.1(b), (c) and (d) has been
satisfied in all respects;
(f) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents, and approvals and Governmental Approvals
necessary to consummate the transactions contemplated hereby (except
those relating to Acquired Customer Contracts and Supplier
Contracts, which are covered by Sections 7.1(g) and (h));
(g) all other third party consents and Governmental Approvals for the
assignment of the Supplier Contracts to Amherst Southwest shall have
been obtained, except where the failure to obtain such consent would
not have a Material Adverse Effect;
(h) all other third party consents and Governmental Approvals for the
assignment to Amherst Southwest of those Acquired Customer Contracts
relating to the top ten (10) customers of the CP Division based on
1999 invoiced revenue, as reflected on Schedule 7.1(h), and except
as provided in Section 2.13(e), shall have been obtained;
(i) each lessor shall have consented to the assumption by or sublease to
Amherst Southwest of the applicable Assumed Lease, and Amherst
Southwest, Allstar and such lessor, as applicable, shall have
entered into an assignment or sublease agreement in form and
substance reasonably satisfactory to such parties with respect to
each Assumed Lease;
(j) ▇▇▇▇▇ ▇. ▇▇▇▇ shall have executed and delivered to Amherst Southwest
a Consulting and Non-Competition Agreement substantially in the form
attached hereto as Exhibit D;
(k) Amherst Southwest shall have received from counsel to Allstar an
opinion substantially in form and substance as set forth in Exhibit
E attached hereto, addressed to Amherst Southwest, and dated as of
the Closing Date;
(l) Allstar and the Escrow Agent shall have executed and delivered the
Escrow Agreement;
(m) Allstar shall have executed and delivered the Assignment, ▇▇▇▇ of
Sale and Assumption Agreement;
(n) Allstar shall have executed and delivered to Amherst Southwest the
purchase price allocation letter referred to in Section 2.12;
(o) Allstar shall have caused to be completed and delivered to Amherst
Southwest a customer satisfaction survey of the customers of the CP
Division, conducted at the expense of Amherst Southwest by an
independent market research firm reasonably acceptable to Amherst
Southwest;
(p) Mintech shall have entered into contracts with Amherst Southwest
with substantially similar terms and provisions as the Mintech
Agreements; and
(q) all actions to be taken by Allstar in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Amherst Southwest.
Amherst Southwest may waive any condition specified in this Section 7.1;
provided such waiver is in writing.
7.2 Conditions to Obligation of Allstar. The obligation of Allstar to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article V above
shall be true and correct in all material respects at and as of the
Closing Date;
(b) Amherst Southwest shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (1) prevent
consummation of any of the transactions contemplated by this
Agreement, (2) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect), or (3) result in the imposition on or against Allstar of
any material Damages;
(d) Amherst Southwest shall have delivered to Allstar a certificate to
the effect that each of the conditions specified above in Sections
7.2(a)-(c) is satisfied in all respects;
(e) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents and approvals and Governmental Approvals
necessary to consummate the transactions contemplated hereby (except
those relating to Supplier Contracts and Acquired Customer
Contracts, which are covered by Sections 7.2(g) and (h));
(f) each lessor shall have consented to the assumption by or sublease to
Amherst Southwest of the applicable Assumed Lease, and Amherst
Southwest, Allstar and such lessor, as applicable, shall have
entered into an assignment or sublease agreement in form and
substance reasonably satisfactory to such parties with respect to
each Assumed Lease;
(g) all third party consents and Governmental Approvals for the
assignment of the Supplier Contracts to Amherst Southwest shall have
been obtained, except where the failure to obtain such consent would
not have a Material Adverse Effect;
(h) all other third party consents and Governmental Approvals for the
assignment to Amherst Southwest of those Acquired Customer Contracts
relating to the top ten (10) customers of the CP Division based on
1999 invoiced revenue, as reflected on Schedule 7.1(h) and except as
provided in Section 2.13(e), shall have been obtained;
(i) Amherst Southwest and the Escrow Agent shall have executed and
delivered the Escrow Agreement;
(j) Amherst Southwest shall have executed and delivered the Assignment,
▇▇▇▇ of Sale and Assumption Agreement;
(k) Allstar shall have received from counsel to Amherst Southwest an
opinion substantially in form and substance as set forth in Exhibit
F attached hereto, addressed to Allstar and dated as of the Closing
Date;
(l) Amherst Southwest shall have obtained and provided to Allstar true
and correct copies of a valid Texas Sales and Use Tax Certificate
and a Texas Sales and Use Tax Permit;
(m) Amherst Southwest shall have executed and tendered to Allstar the
purchase price allocation letter contemplated by Section 2.12; and
(n) all actions to be taken by Amherst Southwest in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Allstar.
Allstar may waive any condition specified in this Section 7.2; provided such
waiver is in writing.
ARTICLE VIII
Post-Closing Covenants.
8.1 Transitional Use of Name. Effective as of the Closing Date, Allstar
hereby grants to Amherst Southwest the limited, royalty-free right and
license to use the trade name "Allstar Computer," but only in connection
with Amherst Southwest's continuation of the business of the CP Division
and El Paso IT Business, for a period of six (6) months after the Closing
Date. Amherst Southwest agrees that neither Amherst Southwest nor its
Affiliates shall use the name "Allstar Systems" or any other name
incorporating the name "Allstar" or "All Star," unless agreed to in
writing by Allstar. Following the expiration of said six (6) month
period, such license shall terminate automatically, and Amherst Southwest
shall have no further right to use the trade names "Allstar Computer,"
"Allstar," or "All Star" or any derivations thereof or names
substantially similar thereto.
8.2 Covenant Not to Compete; Non-Solicitation. As an inducement for Amherst
Southwest to enter into this Agreement, Allstar agrees that from and
after the Closing and continuing for three (3) years from the Closing
Date, neither Allstar nor any Affiliate of Allstar, shall do any one or
more of the following, directly or indirectly, including through its
officers or directors:
(a) engage or participate, anywhere in North America, as an owner,
member, stockholder, officer, director, partner, employee,
consultant or otherwise in a Prohibited Business; provided, however,
that this Section shall not prohibit any such person from owning up
to 5% of any class of securities registered under the Securities
Exchange Act;
(b) solicit any Person that is or was a customer of the CP Division for
or on behalf of any Prohibited Business, or solicit any Person that
is or was a customer of the El Paso IT Business for any IT Services
to be provided in the El Paso Business Area;
(c) induce or attempt to induce any employee of Amherst Southwest or its
Affiliates to leave the employ of Amherst Southwest or its
Affiliates, or in any way interfere with the relationship between
Amherst Southwest or its Affiliates and any employee, vendor,
supplier or other business relation of Amherst Southwest; or
(d) employ ▇▇▇▇▇ ▇▇▇▇ in any capacity.
In the event of any breach of this Section 8.2, the time period of the breached
covenant shall be extended for the period of such breach. Allstar recognizes
that the territorial, time and scope limitations set forth in this Section 8.2
are included herein for the protection of Amherst Southwest and in the event
that any such territorial, time or scope limitation is deemed to be unreasonable
by a court or other tribunal of competent jurisdiction, Amherst Southwest and
Allstar agree to the reduction of either or any of said territorial, time or
scope limitations to such an area, period or scope as said tribunal shall deem
reasonable under the circumstances. Allstar shall not contest as unreasonable or
unenforceable the territorial coverage, duration or scope of this Section 8.2 in
any suit, action or other proceeding before a court, arbitrator or other
tribunal or governmental authority.
8.3 Non-Solicitation by Amherst Southwest and AmTech. As an inducement for
Allstar to enter into this Agreement, each of Amherst Southwest and
AmTech agrees that from and after the Closing and continuing for the
lesser of (a) three (3) years from the Closing Date, or (b) the date on
which Allstar and its Affiliates cease to provide IT Services due to a
cessation of business, other than a cessation due to a sale of its IT
Services business to a third party primarily engaged in a Prohibited
Business (whether such sale is by merger, consolidation, sale of
substantially all of the assets of its IT Services business or
otherwise), neither Amherst Southwest, AmTech nor any Affiliate of
Amherst Southwest or AmTech, nor any officer or director of Amherst
Southwest, AmTech or their respective Affiliates ("Prohibited Persons"),
shall, directly or indirectly:
(1) solicit any of the customers of Allstar listed on Schedule 8.3
(which schedule shall be delivered at or prior to the Closing)
(the "Key IT Customers") for IT Services; provided, however,
that this Section shall not prohibit any Prohibited Person,
from (i) providing to SBC or any customer of the El Paso IT
Business, or soliciting SBC or any customer of the El Paso IT
Business for, IT Services to be provided solely within the El
Paso Business Area, (ii) selling computer networking equipment
and cabling, and (iii) providing warranty service on any
product sold by Amherst Southwest, AmTech or any of their
respective Affiliates, even if such warranty service is
provided to a Key IT Customer of Allstar; or
(2) induce or attempt to induce any employee of Allstar or its
Affiliates who is not listed on Schedule 3.2(a) to leave the
employ of Allstar or its Affiliates or in any way interfere
with the relationship between Allstar or any of its Affiliates,
on the one hand, and any employee, vendor or customer of
Allstar or any of its Affiliates, on the other hand.
In the event of any breach of this Section, the time period of the breached
covenant shall be extended for the period of such breach. Each of Amherst
Southwest and AmTech recognizes that the territorial, time and scope limitations
set forth in this Section are reasonable and are required for the protection of
Allstar and in the event that any such territorial, time or scope limitation is
deemed to be unreasonable by a court or other tribunal of competent
jurisdiction, Allstar and Amherst Southwest and AmTech agree to the reduction of
either or any of said territorial, time or scope limitations to such an area,
period or scope as said tribunal shall deem reasonable under the circumstances.
8.4 Disclosure of Confidential Information. As a further inducement for
Amherst Southwest to enter into this Agreement, Allstar agrees that for a
period of five (5) years after the Closing Date, Allstar shall, and shall
cause its Affiliates to, hold in strictest confidence, and not, without
the prior written approval of Amherst Southwest, use or disclose to any
person, firm or corporation other than Amherst Southwest (other than as
required by law) any information of any kind relating to (a) the Acquired
Assets, (b) the AmTech Financial Statements, or (c) the business,
financial condition, results of operations or ownership of Amherst
Southwest or AmTech (including in each case, without limitation, all such
information that is in written, computerized, machine readable, model,
sample, or other form capable of physical delivery), except that the
confidentiality obligations of this Section shall not apply to: (a) such
information as was generally available to the public prior to the Closing
Date or thereafter becomes available to the public other than as a result
of the breach of this Agreement by Allstar; (b) the use or disclosure by
Allstar or its Affiliates of information to the extent required to
enforce its rights under this Agreement or in connection with the
transactions contemplated hereby; or (c) any disclosure of information to
the extent disclosure of such information is required by law, including
post-closing reporting obligations of Allstar under the Securities
Exchange Act; provided that Allstar may use information which relates to
the Customer and Sales Records and Supplier and Purchasing Records in any
manner not related to any Prohibited Business or the provision of IT
Services in the El Paso Business Area, and provided further that in no
event shall Allstar disclose the AmTech Financial Statements or any
financial information of AmTech or Amherst Southwest without the prior
written consent of Amherst Southwest, unless (y) such information is
required to be disclosed pursuant to a valid order of a court or
regulatory agency or other governmental body, in which case Allstar shall
immediately provide Amherst Southwest with written notice and a copy of
such order so that Amherst Southwest may seek a protective order or other
relief prior to such disclosure by Allstar; or (z) Allstar reasonably
believes, based upon the advice of its counsel, that disclosure by
Allstar of such information to a court or arbitrator is necessary in
connection with the enforcement by Allstar of its rights under this
Agreement or any document or agreement executed in connection herewith,
in which case Allstar shall provide Amherst Southwest with written notice
of Allstar's intent to disclose such information to such court or
arbitrator so that Amherst Southwest may seek any available assurances of
confidentiality from such court or arbitrator. Any breach by Allstar of
its obligations contained in the immediately preceding sentence shall be
deemed a material breach of this Agreement and shall, if such breach
occurs prior to the Closing, entitle Amherst Southwest to terminate this
Agreement without opportunity for Allstar to cure, or, if such breach
occurs after the Closing, entitle Amherst Southwest to refer such alleged
breach to arbitration in accordance in Section 11.13, in each case in
addition to seeking such other remedies to which Amherst Southwest may be
entitled under this Agreement, at law or in equity. The award of the
arbitrator for such breach may include the right of Amherst Southwest to
set off any Damages found by such arbitrator to have been suffered by
Amherst Southwest as a result of such breach against any amounts payable
to Allstar under this Agreement.
8.5 Maintenance and Use of Original Documents. If at any time from the
Closing Date through the fifth anniversary of the Closing Date, Amherst
Southwest shall require access to or use of any of the originals of
Customer and Sales Records, Supplier and Purchasing Records and other
original books and records of Allstar relating to the CP Division or the
El Paso IT Business, Allstar shall provide such access and use to Amherst
Southwest upon reasonable advance notice. Allstar shall not destroy or
otherwise dispose of any such original documents prior to the fifth
anniversary of the Closing Date without the prior written approval of
Amherst Southwest.
8.6 Taxes. Within two (2) Business Days after Allstar's receipt of a ▇▇▇▇ for
Taxes and determination of Taxes payable by it with respect to the
Acquired Assets for any period occurring in 2000, which Taxes are payable
by Allstar in arrears in 2001, Allstar shall provide to Amherst Southwest
a copy of the ▇▇▇▇ and all other materials and filings with respect to
such Taxes, a written report detailing Allstar's calculation of the Taxes
due, and all information and supporting documentation concerning such
calculations. Within fifteen (15) Business Days of receipt of all such
information, Amherst Southwest shall pay to Allstar its pro rata share of
such Taxes determined by multiplying the total amount of Taxes paid by
Allstar with respect to the Acquired Assets by a fraction, the numerator
of which is the number of days elapsed from the Closing Date through
December 31, 2000, and the denominator of which is 365. Notwithstanding
the foregoing, if the Taxes payable by Amherst Southwest pursuant to the
preceding formula with respect to any Tax on the Tangible Assets or
Inventory is greater than the Taxes that would be payable for such period
by Amherst Southwest if such Taxes were calculated using the Appraised
Value of the Tangible Assets as determined in Section 2.7 or the
Inventory Purchase Price, as appropriate, then Amherst Southwest shall
only be obligated to pay such lesser amount of Taxes to Allstar based
upon the lower value of Inventory and Acquired Assets used by the Parties
under this Agreement.
8.7 IT Services and Certifications. The Parties agree as follows with respect
to IT Services:
(a) To the extent that Allstar and its Affiliates provide IT Services to
customers that are also customers of the CP Division or Amherst
Southwest post-Closing, such IT Services shall be provided in a
commercially reasonable manner consistent with Allstar's past
practices.
(b) For a period of one year after the Closing Date, Allstar will take
no action to reduce its IT Services personnel from commercially
reasonable levels.
8.8 Employee Loans. After the Closing, Amherst Southwest shall observe all
written wage assignments delivered to Amherst Southwest and signed by
Transferred Employees instructing Amherst Southwest to withhold from such
employees and pay over to Allstar amounts previously advanced by Allstar
to such employees. Allstar shall indemnify and hold harmless Amherst
Southwest, its Affiliates and their respective directors, officers,
employees and agents, from and against all Damages any of them may incur
arising out of or relating to the observance of such wage assignments or
the performance by Amherst Southwest of its obligations contained in this
Section.
8.9 Mintech Business. On and after the Effective Time, Allstar shall cease
selling computer hardware and software to Mintech and shall not make any
additional loans or advances to Mintech pursuant to the Mintech
Agreements or otherwise. The Parties agree that during a period of 120
days after the Closing Date, as between the Parties: (a) Allstar shall
continue for such period to be a first position secured party with
respect to the obligations of Mintech arising prior to the Effective Time
under the Mintech Agreements, and (b) Amherst Southwest shall be for such
period a junior secured party with respect to the obligations of Mintech
to Amherst Southwest arising after the Effective Time. Upon termination
of such 120 day period: (x) Allstar shall execute and deliver to Amherst
Southwest such assignment documents and instruments as Amherst Southwest
reasonably may request in order to assign to Amherst Southwest all first
position Encumbrances in favor of Allstar under the Mintech Agreements,
and (y) Amherst Southwest shall execute and deliver to Allstar such
assignment documents as Allstar reasonably may request in order to assign
to Allstar all junior Encumbrances in favor of Amherst Southwest with
respect to the obligations of Mintech to Amherst Southwest.
8.10 Intangible Asset License. Effective as of the Closing Date, Allstar
hereby grants to Amherst Southwest a limited, royalty free and
irrevocable right and license to use, solely in the El Paso Business
Area, the intangible assets consisting of the business ideas and
information, know-how, copyrights and advertising and marketing concepts
used by the El Paso IT Business in connection with the sale of computer
hardware, software and related products in the El Paso Business Area.
ARTICLE IX
Termination.
9.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) Amherst Southwest, AmTech and Allstar may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) Amherst Southwest may terminate this Agreement by giving written
notice to Allstar pursuant to Section 6.10 or, at any time prior to
the Closing, (1) in the event that Allstar has breached any
representation, warranty, or covenant contained in this Agreement,
Amherst Southwest has notified Allstar of the breach, and the breach
has continued without cure for a period of ten (10) days after the
notice of breach, (2) if the Closing shall not have occurred on or
before June 30, 2000, by reason of the failure of any condition
precedent under Section 7.1 hereof (unless the failure results
primarily from Amherst Southwest or AmTech breaching any
representation, warranty, or covenant contained in this Agreement)
and other than by reason of the occurrence of the event specified in
9.1(b)(3), (3) in the event that the board of directors of Allstar
shall have approved any Acquisition Proposal other than that of
Amherst Southwest, or (4) if any notification delivered by Allstar
pursuant to Section 6.9 gives rise to Amherst Southwest's right of
termination pursuant to Section 6.9; and
(c) Allstar may terminate this Agreement by giving written notice to
Amherst Southwest and AmTech at any time prior to the Closing (1) in
the event Amherst Southwest or AmTech has breached any
representation, warranty, or covenant contained in this Agreement,
Allstar has notified Amherst Southwest or AmTech (as the case may
be) of the breach, and the breach has continued without cure for a
period of ten (10) days after the notice of breach, (2) if the
Closing shall not have occurred on or before June 30, 2000, by
reason of the failure of any condition precedent under Section 7.2
hereof (unless the failure results primarily from Allstar itself
breaching any representation, warranty, or covenant contained in
this Agreement), and other than by reason of the occurrence of the
event specified in 9.1(c)(3), (3) in the event that the board of
directors of Allstar shall have approved any Acquisition Proposal
other than that of Amherst Southwest or (4) if any notification
delivered by Amherst Southwest or AmTech pursuant to Section 6.9
gives rise to Allstar's right of termination pursuant to Section
6.9.
9.2 Termination Fee. In the event that this Agreement is terminated by
Amherst Southwest pursuant to Section 9.1(b)(3) or by Allstar pursuant to
Section 9.1(c)(3), Allstar shall within two Business Days after such
termination pay to Amherst Southwest Five Hundred Thousand Dollars
($500,000) as compensation for lost opportunities and reimbursement of
out-of-pocket expenses, and AmTech and Amherst Southwest agree that upon
payment of such amount to Amherst Southwest, Allstar shall have no
further liability to either of them arising under this Agreement.
9.3 Effect of Termination. Except as provided in Section 9.2 and except for
the provisions of Sections 9.4 and 11.13, if any Party terminates this
Agreement pursuant to Section 9.1 above, all rights and obligations of
the Parties hereunder shall terminate without any Liability of any Party
to any other Party (except for any Liability of any Party then in
breach).
9.4 Certain Covenants Upon Termination. If this Agreement is terminated
pursuant to this Article IX (except in the event of termination of this
Agreement under Sections 9.1(b)(3) or 9.1(c)(3), in which case the
covenants in this Section 9.4 shall be void and of no effect), each of
Amherst Southwest and AmTech agrees (a) to be bound by the terms and
provisions of that certain Confidentiality Agreement dated August 27,
1999, between Allstar and Knightsbridge, Inc., a Nevada corporation
("Knightsbridge"), which is incorporated into this Section 9.4 as if set
forth herein in its entirety, as if they were each substituted for
Knightsbridge as parties thereto, (b) that the non-solicitation covenants
contained in Section 4 of such Confidentiality Agreement shall extend for
a period of two (2) years from and after the date of termination of this
Agreement, and (c) that for a period of one (1) year after the date of
termination of this Agreement, no Prohibited Person shall, directly or
indirectly, solicit any of the top ten (10) customers of the CP Division
listed on Schedule 7.1(h) for the sale or disposition of computer
hardware and software in substantially the manner conducted by the CP
Division; provided, however, that this Section shall not prohibit any
Prohibited Person from soliciting or selling to any of such customers to
which any of the Prohibited Persons have sold computer hardware or
software at any time within the twelve (12) month period ending on the
date of this Agreement.
ARTICLE X
Indemnification.
The Parties shall be entitled to indemnification as provided in this Article X.
As used herein, the term "Damages" shall mean all liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial proceedings or
investigations, assessments, levies, losses, fines, penalties, damages, costs
and expenses, including, without limitation, reasonable attorneys',
accountants', investigators', and experts' fees and expenses, sustained or
incurred in connection with the defense or investigation of any such claim.
10.1 Indemnification by Allstar. Subject to the limitations contained in this
Article X, Allstar shall indemnify and hold harmless Amherst Southwest,
its Affiliates and its and their respective partners, members, managers,
officers, directors, shareholder, agents and employees, and their
successors and assigns (each an "Amherst Southwest Indemnitee" and
collectively the "Amherst Southwest Indemnitees") against and from all
Damages sustained or incurred by any Amherst Southwest Indemnitee, as a
result of or arising out of or by virtue of:
(a) any breach of any representation and warranty made by Allstar to
Amherst Southwest herein or in any closing document delivered to
Amherst Southwest in connection herewith;
(b) the breach by Allstar or failure of Allstar, directly or indirectly,
including by virtue of action taken by its directors or officers
acting in their capacity as such, to comply with any of the
covenants or obligations of Allstar under this Agreement, or the
failure of Allstar to comply with any applicable bulk transfer laws
or regulations;
(c) any Excluded Liability; or
(d) the ownership, use or operation by Allstar of the Acquired Assets,
the CP Division or the El Paso IT Business prior to the Effective
Time (other than with respect to the Assumed Liabilities).
10.2 Indemnification by Amherst Southwest. Subject to the limitations
contained in this Article X, Amherst Southwest shall indemnify and hold
harmless Allstar, its Affiliates and its and their respective officers,
directors, shareholders, agents and employees and their successors and
assigns (each an "Allstar Indemnitee" and collectively the "Allstar
Indemnitees") against and from all Damages sustained or incurred by any
Allstar Indemnitee, as a result of or arising out of or by virtue of:
(a) any breach of any representation and warranty made by Amherst
Southwest or AmTech to Allstar herein or in any closing document
delivered to Allstar in connection herewith;
(b) the breach by Amherst Southwest or AmTech or failure of Amherst
Southwest or AmTech, directly or indirectly, including by virtue of
any action taken by their respective partners, members, managers or
officers in their capacity as such, to comply with any of the
covenants or obligations of Amherst Southwest or AmTech under this
Agreement, or the failure of Amherst Southwest or AmTech to comply
with any applicable bulk transfer laws or regulations;
(c) any Assumed Liability; or
(d) the ownership, use or operation of the Acquired Assets, the CP
Division or the El Paso IT Business from and after the Effective
Time, the use by Amherst Southwest of the names licensed to it under
Section 8.1 of this Agreements or the use of the intangible assets
licensed to Amherst Southwest pursuant to Section 8.10.
10.3 Indemnification Thresholds and Limits. Neither the Allstar Indemnitees
nor the Amherst Southwest Indemnitees shall be entitled to
indemnification pursuant to the terms of this Article X until the
aggregate amount of all claims for indemnification by such indemnitees
exceeds $100,000, but once such claims exceed $100,000, the Allstar
Indemnitees, on the one hand, or the Amherst Southwest Indemnitees, on
the other hand, shall be entitled to indemnification for all
indemnification claims up to a maximum of $500,000 plus interest earned
on such amount while it is held in the Escrow, as provided in Section
10.4 below. Notwithstanding the foregoing, there shall be no threshold or
time or dollar limit on (a) claims for indemnification pursuant to
Sections 10.1(c) or (d) or Sections 10.2(c) or (d); and (b) breach by a
Party of its obligations to make payments to the other Party pursuant to
Sections 2.3, 2.5, 2.7, 2.9, 3.3, 3.4, 8.6, 8.7 or 9.2.
10.4 Holdback; Claims.
(a) On the Closing Date, the Holdback will be deposited into the Escrow
with the Escrow Agent pursuant to the terms of the Escrow Agreement.
Amherst Southwest agrees that it shall have recourse solely to the
Escrow and solely during the Escrow Period for claims against
Allstar for indemnification under Section 10.1(a) and 10.1(b).
(b) Amherst Southwest Indemnitees shall be entitled to make claims for
indemnification from the Holdback which arise during the Escrow
Period, provided such claims are asserted by Amherst Southwest
within the Escrow Period. Within ten (10) days following the end of
the Escrow Period, if no such claims for indemnification are
asserted prior to the expiration of the Escrow Period, or if any
such claims were asserted prior to the Expiration of the Escrow
Period, no such claims remain pending, the Escrow Agent shall
disburse the remaining funds, after payment of prior claims by
Amherst Southwest that are undisputed by Allstar or that have been
fully and finally resolved in accordance with Section 11.13 of this
Agreement. If any such claims asserted prior to the expiration of
the Escrow Period are pending, then the Escrow Agent shall make
reasonable provision for such pending claims and disburse the
balance, if any, of the Holdback within ten (10) days following the
end of the Escrow Period, pursuant to the terms of the Escrow
Agreement.
(c) In the event an indemnified party seeks or expects to seek indemnity
for any Damage arising out of or in connection with a claim, demand,
cause of action or proceeding by a third party, the indemnifying
shall promptly notify the indemnified party in writing of the nature
of the Damage. The indemnifying party shall have the right to assume
the defense thereof and the indemnifying party shall not be liable
to any indemnified parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such indemnified
parties in connection with the defense thereof, except that if the
indemnifying party elects not to assume such defense or counsel for
the indemnifying parties advise that because of conflicts of
interest between the indemnifying party and the indemnified parties
such counsel cannot, as a matter of professional responsibility,
represent both the indemnified parties and the indemnifying parties
(it being agreed by the Parties that the indemnified party shall not
be obligated to waive any conflict of interest of such counsel),
then the indemnified parties may retain counsel satisfactory to
them, and the indemnifying party shall pay all reasonable fees and
expenses of such counsel for the indemnified parties promptly as
statements therefor are received. In no event shall an indemnifying
party be liable for the fees and expenses of more than one separate
law firm for all indemnified parties. So long as the indemnifying
party is defending in good faith such third party Damage, the
indemnified party shall not settle or compromise such third party
claim without the indemnifying party's prior written consent. The
indemnified party shall make available to the indemnifying party or
its representatives all personnel records and other materials
reasonably required by them for use in contesting any third party
Damage and shall cooperate fully with the indemnifying party in the
defense of such Damage.
(d) In case any event shall occur which would otherwise entitle an
indemnified party to assert a claim for indemnification hereunder,
no loss, damage or expense shall be deemed to have been sustained by
such party to the extent of (1) any tax savings realized by such
party with respect thereto, or (2) any proceeds received by such
party from any insurance policies with respect thereto.
10.5 Exclusive Remedy. Notwithstanding any provision herein to the contrary,
the indemnification provisions of this Article shall be the sole and
exclusive remedy of each of the Parties for any Damages in any way based
on, arising out of or attributable to matters specified in Sections
10.1(a) 10.1(b), 10.2(a) and 10.2(b), whether such Damages are based on
contract or tort, at law or in equity, or otherwise, except for the
rights of a Party to seek equitable remedies or specific performance in
accordance with Section 11.14. Each of the Parties hereby irrevocably
waives any other remedies available to it, whether at law or in equity,
for any such Damages, except for its rights to seek equitable remedies in
accordance with Section 11.14. Nothing contained in this Section shall
limit or otherwise effect the remedies available to a Party for Damages
in any way based on, arising out of or attributable to matters specified
in Sections 10.1(c) 10.1(d), 10.2(c) and 10.2(d).
ARTICLE XI
General Terms.
11.1 Survival of Representations and Warranties. All of the representations
and warranties contained in this Agreement shall survive for a period of
one year after Closing Date and shall thereafter terminate and be of no
force and effect, except to the extent that a written claim for breach of
a representation or warranty has been received by an indemnifying party
within such one-year period.
11.2 Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of
the other Party; provided, however, that any Party may make any public
disclosure which, in the written opinion of counsel to such Party, is
required by applicable law or any listing or trading agreement concerning
its publicly-traded securities (in which case the disclosing Party will
advise the other Party prior to making the disclosure and provide such
other Party with a written statement certifying that the disclosing
Party's counsel has provided it with a written opinion stating that such
disclosure is required as provided in this Section).
11.3 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.4 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes
any prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
11.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns, and the agreements of Allstar contained in Section 8.2 shall be
binding upon any Person who acquires all or a substantial portion of the
assets of Allstar. Neither Allstar, Amherst Southwest nor AmTech may
assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
Parties; provided, however, that (a) Amherst Southwest may (i) assign any
or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Amherst Southwest
nonetheless shall remain responsible for the performance of all of its
obligations hereunder); and (b) Allstar may undertake a reorganization
prior to the Closing Date pursuant to which it shall transfer all of the
Acquired Assets into a limited partnership directly or indirectly
wholly-owned by Allstar, and designate such limited partnership to convey
the Acquired Assets to Amherst Southwest as provided hereunder (in which
case Allstar nonetheless shall remain responsible for the performance of
all of its obligations hereunder).
11.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
11.7 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Allstar: Allstar Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to AmTech or Amherst Southwest:
Amherst Southwest, LP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
with a copy to: ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
11.8 GoverningLaw. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
11.9 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the
Parties. Allstar may consent to any such amendment at any time prior to
the Closing with the prior authorization of its board of directors. No
waiver by Allstar or Amherst Southwest of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.10 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
11.11 Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
11.12 Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.13 Arbitration Provisions.
(a) All disputes arising out of or relating to (i) this Agreement or any
agreement or instrument delivered pursuant to the terms hereof, or
the transactions contemplated hereby or thereby, or (ii) the
validity, interpretation, breach, or violation or termination hereof
or thereof (including disputes arising under this Section 11.13
(each a "Dispute"), shall be finally and solely determined and
settled by a nationally recognized certified public accounting firm
selected by mutual agreement of the parties, which firm is not
rendering (and during the preceding two-year period, has not
rendered) services to any of the parties or their respective
Affiliates (the "Arbitrating Accountant"). In connection with the
resolution of any Dispute hereunder, the Arbitrating Accountant
shall have access to all documents, records, work papers, facilities
and personnel necessary to perform its function as arbitrator. The
award of the Arbitrating Accountant shall be (1) the sole and
exclusive remedy of the parties, (2) enforceable in any court of
competent jurisdiction and (3) final and binding (absent manifest
error) on the parties hereto. Notwithstanding the foregoing, either
party may seek injunctive relief in a court of competent
jurisdiction in accordance with Section 11.14. Amherst Southwest, on
the one hand, and Allstar, on the other hand, shall each pay
one-half of the fees and expenses of the Arbitrating Accountant with
respect to any Dispute.
(b) In the event that the parties are unable to mutually agree on the
Arbitrating Accountant within thirty (30) days, the Dispute shall be
finally and solely determined and settled by arbitration in Houston,
Texas in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and this Section 11.13. Such
arbitration shall be conducted by a single arbitrator, whom the
Parties shall request to be experienced in legal, financial and
accounting matters. In any such arbitration proceedings, the
arbitrator shall adopt and apply the provisions of the Federal Rules
of Civil Procedure relating to discovery so that each party shall
allow and may obtain discovery of any matter not privileged which is
relevant to the subject matter involved in the arbitration to the
same extent as if such arbitration were a civil action pending in a
United States District Court for the Southern District of Texas. The
arbitrator may proceed to an award notwithstanding the failure of
any party to participate in such proceedings. The prevailing party
in the arbitration proceeding shall be entitled to an award of
reasonable attorneys' fees incurred in connection with the
arbitration in such amount as may be determined by the arbitrator.
The award of the arbitrator shall be (i) the sole and exclusive
remedy of the parties, (ii) enforceable in any court of competent
jurisdiction and (iii) final and binding (absent manifest error) on
the parties hereto. Notwithstanding the foregoing, either party may
seek injunctive relief in a court of competent jurisdiction in
accordance with Section 11.14.
11.14 Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and
to enforce specifically this Agreement and the terms and provisions
hereof in any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in
equity. In any such action, the Party against whom injunctive relief is
sought shall be entitled to assert any matters in the nature of defenses
(but not counterclaims or cross actions) without regard to the
arbitration agreements contained in Section 11.13.
11.15 Knowledge, Gender and Certain References. A representation or statement
made herein to the knowledge of Allstar means the actual, but not
constructive or imputed, knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇ and each member of the board of directors of Allstar. Unless
otherwise specified, all references herein to days, weeks, months or
years shall be calendar days, weeks, months, or years. Whenever the
context requires, the gender of all words used herein shall include the
masculine, feminine and neuter, and the number of all words shall include
the singular and plural. References to Articles or Sections shall be to
Articles or Sections of this Agreement unless otherwise specified. The
headings and captions used in this Agreement are solely for convenient
reference and shall not affect the meaning or interpretation of any
Article, Section or Paragraph herein or this Agreement. The words
"hereof," "herein" or "hereunder" shall refer to this Agreement as a
whole not to any particular Article, Section or Paragraph. The words
"including" or "include" are used herein in an illustrative sense and not
to limit a more general statement. When computing time periods described
by a number of days before or after a stated date or event, the stated
date or date on which the specified event occurs shall not be counted and
the last day of the period shall be counted. Unless otherwise specified
herein any obligation otherwise due on a non-Business Day shall not be
due until the next Business Day. 11.16 Time is of the Essence.
11.16 Time is of the essence in the performance of this Agreement.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
AMHERST COMPUTER PRODUCTS SOUTHWEST, LP
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
ALLSTAR SYSTEMS, INC.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive Officer
AMHERST TECHNOLOGIES, L.L.C., solely with
respect to Sections 5.5, 5.7, 5.8, 5.9,
5.10, 5.11, 5.12, 8.3 and Article XI.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer