EXHIBIT 10.37
STOCK EXCHANGE AGREEMENT
▇▇▇▇▇ & ▇▇▇▇▇▇ COMPUTER GMBH
TABLE OF CONTENTS
SECTION PAGE
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1. EXCHANGE OF SHARES..................................................2
2. ADDITIONAL AGREEMENTS...............................................3
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF ▇▇▇▇▇..................6
4. REPRESENTATIONS AND WARRANTIES OF CHS..............................14
5. CONDUCT OF BUSINESS PENDING CLOSING................................18
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES...........................19
7. CONDITIONS TO OBLIGATIONS OF CHS...................................20
8. CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇.................................21
9. INDEMNITY..........................................................22
10. TERMINATION........................................................26
11. MISCELLANEOUS......................................................27
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is entered into this
19th day of December, 1996, by and between CHS ELECTRONICS, INC., a Florida
corporation ("CHS"), and MR. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇").
RECITALS
▇. ▇▇▇▇▇ & ▇▇▇▇▇▇ Computer GmbH (the "Company" or "F&W"), a German
limited liability company, is entered in the Register of Companies at the
Braunschweig Local Court under the number HRB 2417. The nominal capital of F&W
is currently DM 17,000,000 (17,000,000 million German marks) (the "F&W
Capital"), divided into eleven shares (the "F&W Shares") with the denominations
set forth in Exhibit "A" hereto. ▇▇▇▇▇▇▇ ▇▇▇▇▇ owns all (100%) of the F&W
Shares.
B. F&W owns interests in the following corporations (each a
"Subsidiary", and collectively the "Subsidiaries"):
- ▇▇▇▇▇ Handels- und Produktions GmbH, entered in the Register
of Companies at the Braunschweig Local Court under HRB 3243
("MHP");
- M&M Marketing and Media GmbH, entered in the Register of
Companies at the Braunschweig Local Court under HRB 3570
("M&M"); and
- Success Management Software GmbH, entered in the Register of
Companies at the Braunschweig Local Court under HRB 2932
("SMS").
F&W owns 100% of the nominal capital of MHP, 80% of the nominal capital of M&M
and 60% of the nominal capital of SMS.
C. F&W has sold its interests in: (i) Micro Computer DOS GmbH, entered
in the Register of Companies at the Bruhl Local Court under HRB 1628 ("MC DOS");
and (ii) ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ und ▇▇▇▇▇, a real estate partnership under the Civil
Code ("BKF"). F&W holds as trustee 50% of the nominal capital of MC DOS. F&W
also holds as trustee a 50% interest in BKF.
D. F&W is engaged in the development, production, acquisition, sales,
and distribution of hardware and software, office equipment, technical equipment
and components of all kinds, plus all related activities, including activities
such as technical and business consultancy services (collectively, the
"Business").
E. CHS has an authorized capital consisting of 5,000,000 shares of
Preferred Stock, none of which are issued or outstanding and 100,000,000 shares
of Common Stock, par value $.001 per share (the "CHS Common Stock"), 12,174,073
of which were issued and outstanding on June 30, 1996.
▇. ▇▇▇▇▇ desires to transfer to CHS all his F&W Shares, in exchange for
shares of CHS Common Stock to be issued by CHS to ▇▇▇▇▇ (the "Share Exchange"),
all on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises herein set
forth and certain other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EXCHANGE OF SHARES.
1.1 SHARE EXCHANGE. With effect as of the Closing Date (as
defined below), and subject to the conditions set forth herein, ▇▇▇▇▇ hereby
sells and transfers to CHS all of the F&W Shares, which CHS shall accept, in
exchange for 2,200,000 shares of CHS Common Stock (the "CHS Shares") to be
issued by CHS to ▇▇▇▇▇; PROVIDED, HOWEVER, that the number of CHS Shares to be
issued to ▇▇▇▇▇ is subject to adjustment as required to reflect any change in
the CHS Shares by way of stock split, stock dividend, combination,
recapitalization or similar transaction occurring between the date hereof and
the Closing Date. CHS shall issue and deliver the CHS Shares to ▇▇▇▇▇
simultaneously with the transfer of the F&W Shares. In addition, as additional
consideration for the F&W Shares, CHS shall pay $10,000 in cash to ▇▇▇▇▇ at
Closing.
1.2 TRANSACTIONS AND DOCUMENTS AT CLOSING. At the Closing (as
defined below), in addition to the other actions and deliveries required under
other provisions hereof,(i) CHS shall cause stock certificates representing the
CHS Shares to be duly issued and delivered to ▇▇▇▇▇; and (ii) the notary
recording this Agreement shall not provide the parties with an official copy
thereof until presentation of the following: (1) a letter from the German
Federal Cartel Office approving the Share Exchange; (2) a letter from the U.S.
Federal Trade Commission acknowledging early termination of the HSR Act (as
defined below) waiting period or a joint letter from the parties acknowledging
expiration thereof; (3) a certificate of ▇▇▇▇▇ acknowledging fulfillment and
satisfaction of the conditions specified in Sections 6 and 8; (4) a certificate
of CHS acknowledging fulfillment and satisfaction of the conditions
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specified in Sections 6 and 7; and (5) stock certificates representing the CHS
Shares. Upon presentation of items (1) through (5) above, the notary shall: (A)
attach copies of the foregoing documents as exhibits to this recorded Agreement,
which serves as part of the notarial deed; (B) provide the parties with an
official copy of the notarial deed, which shall transfer the F&W Shares to CHS;
and (C) deliver the stock certificates representing the CHS Shares to ▇▇▇▇▇.
1.3 CLOSING. Upon the satisfaction of the conditions precedent
set forth in Sections 2, 6, 7 and 8 hereof, the Share Exchange and the other
transactions contemplated hereby shall be consummated by the parties to this
Agreement (the "Closing"). The date of Closing is referred to herein as the
"Closing Date." If the Closing is consummated, then all profits earned by F&W,
and all losses incurred by F&W in the ordinary course of business, from and
after January 1, 1997, shall inure to the benefit or detriment of CHS; provided,
nothing contained in this Section 1.3 shall release ▇▇▇▇▇ from his
representations, warranties or covenants hereunder or his obligations to
indemnify CHS under Article 9.
1.4 CAPITAL CONTRIBUTION BY CHS. Immediately after Closing,
CHS shall pay, without right of offset, the sum of DM 8,500,000 to F&W, in cash
(the "CHS Contribution"), as a capital contribution.
2. ADDITIONAL AGREEMENTS.
2.1 MERGER CONTROL.
2.1.1 Notwithstanding anything to the contrary
contained herein, because the Share Exchange is subject to preventative merger
control (prior approval) according to section 24a, paragraph 1, GWB, and the HSR
Act, it shall be a condition precedent to the parties' obligations to complete
the Share Exchange that: (i) the Federal Cartel Office has made an announcement
approving the Share Exchange pursuant to section 24a, paragraph 4, GWB, or that
the planned Share Exchange cannot be prohibited in accordance with section 24a,
paragraph 2, GWB; and (ii) the FTC or Justice Department (as defined below) has
made an early termination of the waiting period or allowed the waiting period to
expire.
2.1.2 The parties shall promptly prepare and file
the appropriate Federal Cartel Office application forms (the "Application").
Each party shall furnish to the other copies of its Application prior to filing,
shall allow the other party reasonable opportunity to comment thereon, and shall
promptly notify the other party of any request by the Federal Cartel Office
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or other regulatory authority for additional information with respect to such
filings. The parties shall cooperate in responding promptly to any such request.
Such filings shall conform to the requirements of law applicable to the filing
party.
2.1.3 The parties shall promptly prepare and file
with the Federal Trade Commission ("FTC") and with the United States Department
of Justice ("Justice Department"), the Notification and Report Form required
with respect to the transactions contemplated hereby under the provisions of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"). The
parties shall each furnish to the other copies of the Notification and Report
Form, and shall each promptly notify the other party to this Agreement of any
request by the FTC or Justice Department for additional information with respect
to such filings. The parties shall cooperate in responding promptly to any such
request. Such filings shall conform to the requirements of the HSR Act and the
rules promulgated thereunder applicable to the filing party.
2.1.4 If there are indications that the Share
Exchange is threatened with prohibition by the aforesaid authorities, the
parties shall immediately contact each other and shall use their best efforts to
remove the items standing in the way of the Share Exchange, so long as such
removal does not adversely affect, or impose conditions on, the business of CHS
or F&W.
2.2 U.S. SECURITIES LAWS.
2.2.1 The issuance of CHS Common Stock to ▇▇▇▇▇
hereunder shall not be registered under the U.S. Securities Act of 1933 (the
"1933 Act") by reason of the exemption provided by Section 4(2) thereunder; and
such shares may not be further transferred unless such transfer is registered
under applicable securities laws or, in the reasonable opinion of CHS's counsel,
such transfer qualifies for an exemption from such registration. The
certificates evidencing the CHS shares to be transferred to ▇▇▇▇▇ shall be
legended to reflect the foregoing restriction.
2.2.2 ▇▇▇▇▇ has received and reviewed copies of
the following disclosure documents (collectively, the "SEC Documents") filed by
CHS with the SEC: (1) Quarterly Report on Form 10-Q for the nine month and
quarterly periods ended September 30, 1996 (the "10-Q Report"); (2) Information
Statements mailed to shareholders in connection with the shareholders meeting
held on June 28, 1996 (the "Information Statement"); (3) Annual Report and 10-K
Report for the year ended December 31, 1995 (the "10-K Report"); and (4)
Prospectus, dated June 7, 1996, relating to the sale of up to
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5,500,000 shares of CHS Common Stock (the "Prospectus"); and (5) the 8-K Report
and the 8-KA Report filed with the SEC relating to the Merisel Acquisition (as
defined below).
2.3 ACCESS AND INSPECTION, ETC. The parties have allowed and
shall allow each other and their authorized representatives full access during
normal business hours from and after the date hereof and prior to the Closing
Date to all of the properties, books, contracts, commitments and records of F&W
and CHS for the purpose of making such investigations as they may reasonably
request in connection with the transactions contemplated hereby, and shall
furnish CHS and ▇▇▇▇▇ (as appropriate) such information as such party may
reasonably request.
2.4 CONFIDENTIAL TREATMENT OF INFORMATION. From and after the
date hereof, the parties hereto shall and shall cause their representatives to
hold in confidence this Agreement (including the Schedules hereto), all matters
relating hereto and all data and information obtained with respect to the other
parties or their business, and not use this Agreement (including the Schedules
hereto) or such data or information or disclose the same to others (excluding
the parties' lawyers and auditors), except such data or information as is
published or is a matter of public record, or as compelled by legal process. In
the event this Agreement is terminated pursuant to Section 10 hereof, each party
shall promptly return to the other(s) any statements, documents, schedules,
exhibits or other written information obtained from them in connection with this
Agreement, and shall not retain any copies thereof.
2.5 PUBLIC ANNOUNCEMENTS. The parties will consult with each
other before issuing any press releases or otherwise making any public statement
with respect to this Agreement or any of the transactions contemplated hereby
and no party will issue any such press release or make any such public statement
without the prior written consent of the other parties, except as may be
required by law or by the rules and regulations of any governmental authority or
securities exchange.
2.6 EMPLOYMENT AGREEMENT. On the date hereof, but effective
only upon consummation of the Closing, ▇▇▇▇▇ shall enter into an employment
agreement with CHS in the form of Schedule 2.6 hereto (the "Employment
Agreement"). The Employment Agreement will be amended prior to Closing as
necessary to provide ▇▇▇▇▇ pension, disability and death benefits similar to
those provided in his contract with F&W dated March 24, 1994 and listed in
Schedule 3.17. At Closing, the Employment Agreement, as so amended, shall
replace and supersede all existing employment, benefit and similar contracts
between ▇▇▇▇▇ and F&W. So long as Frank's employment
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under the Employment Agreement has not been terminated, CHS shall not use its
position, as shareholder of F&W, to remove ▇▇▇▇▇ as Geschaftsfuhrer of F&W.
2.7 MC DOS; BKF. Upon payment of the purchase price due to F&W
for MC DOS and BKF, F&W shall transfer any and all of its remaining interest (as
trustee or otherwise) in MC DOS and BKF to the buyer of MC DOS and BKF.
2.8 RELEASE OF ▇▇▇▇▇ GUARANTEE. CHS shall use its best efforts
to cause the banks listed in Schedule 2.8 to release ▇▇▇▇▇, at Closing, from his
personal guarantee of the loans payable to such banks. If the banks do not
release ▇▇▇▇▇ as contemplated hereby, and F&W defaults on any of the bank loans
after Closing, CHS shall indemnify ▇▇▇▇▇ for any amounts ▇▇▇▇▇ is required to
pay such banks on account of their loans to F&W.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF ▇▇▇▇▇.
To induce CHS to enter into this Agreement and to consummate
the Share Exchange, ▇▇▇▇▇ represents and warrants to and covenants with CHS
that:
3.1 ORGANIZATION; COMPLIANCE. F&W and each Subsidiary are
limited liability companies, validly existing and in good standing under the
laws of Germany. F&W and each Subsidiary is: (i) entitled to own or lease its
properties and to carry on its business as and in the places where such business
is now conducted; and (ii) duly licensed in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license necessary. Schedule 3.1 lists all locations where F&W
or any Subsidiary has an office or place of business (the "Branch Locations")
and the nature of the ownership interest in such property (fee, lease, or
other).
3.2 CAPITALIZATION AND RELATED MATTERS.
3.2.1 F&W has a nominal capital consisting of
DM 17,000,000, as described in the recitals of this Agreement (the "F&W
Capital"). All of the F&W Capital, and all of the Subsidiary Capital (defined in
Section 3.3), is fully paid, properly registered and is not subject to any
further payment obligations, and none of the shares of F&W or any Subsidiary was
acquired by ▇▇▇▇▇ or F&W (as the case may be) in violation of the preemptive
rights of any person.
3.2.2 There are not outstanding any securities
convertible into shares, capital of, or ownership interests in, F&W
or any Subsidiary nor any rights to subscribe for or to purchase,
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or any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any such shares, capital or ownership interests. Neither
F&W nor any Subsidiary is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its shares or capital.
3.2.3 ▇▇▇▇▇: (i) owns and will transfer to CHS
at Closing 100% of the shares, capital or other ownership interest in F&W, free
and clear of all claims, liens, options, agreements, usufructuary rights,
restrictions, and encumbrances whatsoever; and (ii) is not a party to any
agreement, understanding or arrangement, direct or indirect (including without
limitation any marriage or pre-nuptial contract), relating to the shares or
capital of, or ownership interests in, F&W, including without limitation,
agreements, understandings or arrangements regarding voting or sale thereof. A
written approval of this Agreement and the transactions contemplated hereby,
signed by Frank's wife, is set forth in Schedule 3.2.
3.3 SUBSIDIARIES. Except as otherwise described in Schedule
3.3, F&W: (i) owns the shares, capital and other ownership interest in each
Subsidiary, in the amounts shown on Schedule 3.3, free and clear of all claims,
liens, options, agreements, restrictions, and encumbrances whatsoever; and (ii)
is not a party to any agreement, understanding or arrangement, direct or
indirect, relating to the shares or capital of, or ownership interests in, any
Subsidiary, including without limitation, agreements, understandings, or
arrangements regarding voting or sale thereof. Except for the Subsidiaries, BKF
and MC DOS, F&W owns: (A) no capital or shares of capital stock of any other
corporation, including any joint stock company, and (B) no other proprietary
interest in any company, partnership, trust or other entity. Schedule 3.3
contains a description of: (x) the nominal capital of each Subsidiary (the
"Subsidiary Capital"); and (y) the business of each Subsidiary.
3.4 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC. This Agreement
is a valid and binding agreement of ▇▇▇▇▇, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy or similar laws
affecting the enforcement of creditors' rights generally, and the availability
of equitable remedies. Except as described in Schedule 3.4, the execution and
delivery of this Agreement by ▇▇▇▇▇ does not, and the consummation of the
transactions contemplated hereby will not, constitute: (i) a breach or violation
of the articles of association or by-laws (if any) of F&W or any Subsidiary;
(ii) a violation of any law, regulation, judgment, order, License (hereinafter
defined) or
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decree applicable to ▇▇▇▇▇, F&W or any Subsidiary; or (iii) a default under any
of the terms, conditions or provisions of (or an act or omission that would give
rise to any right of termination, cancellation or acceleration under) any
material note, bond, mortgage, lease, indenture, agreement or obligation to
which F&W, any Subsidiary, or ▇▇▇▇▇ is a party, pursuant to which F&W or any
Subsidiary otherwise receives benefits, or to which any of the properties of F&W
or any Subsidiary is subject.
3.5 FINANCIAL STATEMENTS.
(a) ▇▇▇▇▇ has delivered to CHS the audited
consolidated Balance Sheets of F&W as of December 31, 1995 and 1994, and the
audited Statements of Income and Cash Flows for the two fiscal years ended
December 31, 1995, in draft form (the "Audited Financial Statements"), the
unaudited Balance Sheet of F&W as of July 31, 1996, and the unaudited Statements
of Income and Cash Flows for the seven months ended July 31, 1996. The Balance
Sheet of F&W as of July 31, 1996 is hereinafter referred to as the "1996 F&W
Balance Sheet". At least 10 days prior to Closing, ▇▇▇▇▇ shall deliver final
Audited Financial Statements, certified by F&W's independent auditors, and such
statements shall not differ materially, in form or substance, from the draft
Audited Financial Statements delivered prior to the date hereof. The financial
statements described in this subsection (a), and any financial statements to be
delivered under subsection (c) below, are referred to collectively as the "F&W
Financial Statements".
(b) Except as described in Schedule 3.5, the
F&W Financial Statements have been and will be prepared in accordance with U.S.
generally accepted accounting principles ("GAAP"), applied on a consistent
basis, and fairly reflect in all material respects the financial condition of
F&W and each Subsidiary as at the dates thereof and the results of the
operations of F&W and each Subsidiary for the periods then ended; except that
the unaudited financial statements are subject to normal year-end adjustments
which are not expected to be material in amount or effect, and do not contain
all the disclosures required by GAAP.
(c) Until Closing, ▇▇▇▇▇ will furnish to CHS
unaudited interim financial statements of F&W and each Subsidiary for each month
subsequent to July 1996, as soon as practicable but in any event within thirty
(30) days after the close of each such month.
3.6 LIABILITIES. Except as disclosed in Schedule 3.6, neither
F&W nor any Subsidiary has any material debt, liability or obligation of any
kind, whether accrued, absolute, contingent or otherwise, except: (i) those
reflected on the 1996 F&W Balance
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Sheet, including the notes thereto, and (ii) liabilities incurred in the
ordinary course of business since July 31, 1996, none of which have had or will
have a material adverse effect on the financial condition of F&W or such
Subsidiary.
3.7 ABSENCE OF CHANGES. Except as described in Schedule 3.7,
from July 31, 1996 to the date of this Agreement: (i) there has not been any
adverse change in the business, assets, liabilities, results of operation,
prospects or financial condition of F&W or any Subsidiary or in their
relationships with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which, singularly or in
the aggregate, have had or will have a material adverse effect on the business,
properties or financial condition of F&W and its Subsidiaries taken as a whole;
and (ii) the business of F&W and each Subsidiary has been operated in the
ordinary course, consistent with past practice, and in accordance with the
covenants and limitations set forth in Section 5.1, as if such covenants and
limitations had been binding since July 31, 1996.
3.8 TITLE TO PROPERTIES. F&W and each Subsidiary have good and
marketable title to all of their properties and assets, real and personal,
including, but not limited to, those reflected in the 1996 F&W Balance Sheet
(except as since sold or otherwise disposed of in the ordinary course of
business, or as expressly provided for in this Agreement), free and clear of all
encumbrances, liens or charges of any kind or character except: (a) those
securing liabilities of F&W or any Subsidiary incurred in the ordinary course
(with respect to which no material default exists); (b) liens of 1996 real
estate and personal property taxes; and (c) imperfections of title and
encumbrances, if any, which, in the aggregate (i) are not substantial in amount,
(ii) do not detract from the value of the property subject thereto or impair the
operations of F&W or any Subsidiary, and (iii) do not have a material adverse
effect on the business, properties or assets of F&W or any Subsidiary.
3.9 COMPLIANCE WITH LAW. The business and activities of F&W
and each Subsidiary have at all times been conducted in accordance with its
articles of association and any applicable law, regulation, ordinance, order,
License, permit, rule, injunction or other restriction or ruling of any court or
administrative or governmental agency, ministry, or body, except where the
failure to do so would not result in a material adverse effect on F&W and the
Subsidiaries, taken as a whole.
3.10 TAXES. F&W and each Subsidiary have duly filed all
material federal, state, local and foreign tax returns and reports, and all
returns and reports of all other governmental units having
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jurisdiction with respect to taxes (including, without limitation, income tax or
VAT) imposed on them or on their income, properties, sales, franchises,
operations or employee benefit plans or trusts, all such returns were complete
and accurate when filed, and all taxes and assessments payable by F&W and by
each Subsidiary have been paid to the extent that such taxes have become due.
Except as described in Schedule 3.10, all taxes accrued or payable by F&W and by
each Subsidiary for all periods through July 31, 1996 have been paid in full, or
accrued and reflected in the F&W Financial Statements, whether or not due and
payable and whether or not disputed. F&W and each Subsidiary have withheld
proper and accurate amounts from their employees for all periods in full
compliance with the tax withholding provisions of applicable foreign, federal,
state and local tax law. Except as set forth in Schedule 3.10, there are not now
any examinations of the income tax returns of F&W or any Subsidiary pending, or
to the best of Frank's knowledge, any proposed deficiencies or assessments
against F&W or any Subsidiary of additional taxes of any kind. ▇▇▇▇▇ shall cause
F&W and each Subsidiary to duly and timely prepare and file all returns and
reports (which are due prior to the Closing Date) of all governmental units
having jurisdiction with respect to taxes (including, without limitation, income
tax or VAT) imposed on F&W or any Subsidiary or on their income, properties,
sales, franchises, operations or employee benefit plans or trusts, and all such
returns will be complete and accurate when filed.
3.11 REAL PROPERTIES. The real property owned by F&W and each
of its Subsidiaries (collectively the "Real Property") is listed on Schedule
3.11. Correct legal descriptions of each tract and building comprising the Real
Property have been delivered to CHS. The Real Property is free from any use or
occupancy restrictions, except those imposed by applicable zoning laws,
ordinances and regulations, and from all special taxes or assessments, except
those generally applicable to other properties in the tax districts in which the
Real Property is located. No options have been granted to others to purchase or
rent any interest in the Real Property, or any part thereof. F&W and its
Subsidiaries have the exclusive right of possession of each tract or building
comprising the Real Property. Neither F&W nor any Subsidiary has caused any work
or improvements to be performed upon or made to any of the Real Property for
which there remains outstanding any material payment obligation that would or
might serve as the basis for any lien.
3.12 LEASES OF REAL PROPERTY. All leases pursuant to which F&W
or any Subsidiary is lessee or lessor of any real property (the "F&W Leases")
are listed in Schedule 3.12 and are valid and enforceable in accordance with
their terms; there is not under any of such leases any material default or any
claimed
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material default by F&W or any Subsidiary or any event of default or event which
with notice or lapse of time, or both, would constitute a material default by
F&W or by any Subsidiary and in respect to which F&W or any Subsidiary has not
taken adequate steps to prevent a default on its part from occurring. The copies
of the F&W Leases heretofore furnished to CHS are true, correct and complete,
and such Leases have not been modified in any respect since the date they were
so furnished, and are in full force and effect in accordance with their terms.
F&W and each Subsidiary are lawfully in possession of all real properties of
which they are a lessee.
3.13 CONTINGENCIES. Except as disclosed in Schedule 3.13,
there are no actions, suits, claims or proceedings pending or, to the knowledge
of ▇▇▇▇▇, threatened against, by or affecting, F&W or any Subsidiary in any
court or before any arbitrator or governmental agency that may have a material
adverse effect on F&W or any Subsidiary or which could materially and adversely
affect the right or ability of ▇▇▇▇▇ to consummate the transactions contemplated
hereby. To the knowledge of ▇▇▇▇▇, there is no valid basis upon which any such
action, suit, claim or proceeding may be commenced or asserted against F&W or
any Subsidiary.
3.14 MATERIAL CONTRACTS. Schedule 3.14 contains a complete
list of all contracts of F&W and each Subsidiary which involve consideration in
excess of the equivalent of $100,000 or have a term of one year or more. ▇▇▇▇▇
has delivered to CHS a true, correct and complete copy of each of the written
contracts, and a summary of each oral contract, listed on Schedule 3.14. Except
as disclosed in Schedule 3.14: (i) F&W and each Subsidiary have performed all
material obligations to be performed by it under all such contracts, and is not
in material default thereof, and (ii) no condition exists or has occurred which
with the giving of notice or the lapse of time, or both, would constitute a
material default by F&W or any Subsidiary or accelerate the maturity of, or
otherwise modify, any such contract, and (iii) all such contracts are in full
force and effect. No material default by any other party to any of such
contracts is known or claimed by F&W or any Subsidiary to exist.
3.15 INSURANCE. Schedule 3.15 contains a complete list of all
policies of insurance presently maintained by F&W or any Subsidiary, all of
which are, and will be maintained through the Closing Date, in full force and
effect; and all premiums due thereon have been paid and F&W and each Subsidiary
have not received any notice of cancellation with respect thereto. F&W and each
Subsidiary have heretofore delivered to CHS or its representatives a true,
correct and complete copy of each such insurance policy.
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3.16 EMPLOYMENT AND LABOR MATTERS. Schedule 3.16 lists each
employee of F&W and each Subsidiary whose aggregate compensation (including
commission and bonus) for 1996 is expected to exceed $100,000, and sets forth
the compensation payable to each of them in 1996. Except as set forth in
Schedule 3.16, neither F&W nor any Subsidiary is a party to any collective
bargaining agreement (whether industry wide or on a company level) or agreement
of any kind with any union or labor organization. There has not been any attempt
by any union or other labor organization to organize any of F&W's or any
Subsidiary's employees at any time in the past five (5) years.
3.17 EMPLOYEE BENEFIT MATTERS.
(a) Except as disclosed in Schedule 3.17,
neither F&W nor any Subsidiary provides, nor is it obligated to provide,
directly or indirectly, any benefits for employees other than salaries, sales
commissions and bonuses, including any pension, profit sharing, stock option,
retirement, bonus, hospitalization, insurance, severance, vacation or other
employee benefits (including any housing or social fund contributions) under any
practice, agreement or understanding.
(b) Each employee benefit plan maintained by
or on behalf of F&W or any Subsidiary or any other party (including any
terminated pension plans) which covers or covered any employees or former
employees of F&W or any Subsidiary ("Employee Benefit Plan") is listed in
Schedule 3.17. F&W and each Subsidiary have delivered to CHS true and complete
copies of all such plans and any related documents. With respect to each such
plan: (i) no litigation, administrative or other proceeding or claim is pending,
threatened, or anticipated involving such plan; (ii) there are no outstanding
requests for information by participants or beneficiaries of such plan; and
(iii) such plan has been administered in compliance in all material respects
with all applicable laws and regulations.
(c) F&W and each Subsidiary have timely made
payment in full of all contributions to all of the Employee Benefit Plans which
F&W or any Subsidiary was obligated to make prior to the date hereof; and there
are no contributions declared or payable by F&W or any Subsidiary to any
Employee Benefit Plan which, as of the date hereof, have not been paid in full.
(d) F&W and each Subsidiary have complied
with all obligations with respect to any housing or social funds established by
F&W or any Subsidiary or required by law.
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3.18 POSSESSION OF FRANCHISES, LICENSES, ETC. Except as
described in Schedule 3.18, F&W and each Subsidiary: (i) possess all material
franchises, certificates, licenses, permits and other authorizations
(hereinafter collectively referred to as "Licenses") from governmental
authorities, political subdivisions or regulatory authorities that are necessary
for the ownership, maintenance and operation of its business in the manner
presently conducted; (ii) are not in violation of any provisions thereof; and
(iii) have maintained and amended, as necessary, all material Licenses and duly
completed all filings and notifications in connection therewith.
3.19 ENVIRONMENTAL MATTERS. Except as disclosed in Schedule
3.19: (i) neither F&W nor any Subsidiary is in violation, in any material
respect, of any law, regulation, order, permit, License or decree regulating
emissions into the environment and the proper disposal of materials; (ii) F&W
and each Subsidiary have received all permits and approvals with respect to
emissions into the environment and the proper collection, storage, transport,
distribution or disposal of materials required for the operation of its business
at present operating levels; and (iii) neither F&W nor any Subsidiary is liable
or responsible for any material clean up, fines, liability or expense arising
under any environmental law, regulation or order as a result of the disposal of
wastes or other materials in or on the property of F&W or any Subsidiary
(whether owned or leased), or in or on any other property, including property no
longer owned, leased or used by F&W or any Subsidiary.
3.20 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except
as set forth in Schedule 3.20, neither F&W nor any Subsidiary is, or since
December 31, 1994 has been, a party to any contract, loan, agreement, lease or
transaction, or any other commitment, which would be required to be disclosed by
F&W, pursuant to Item 404 of Regulation S-K, promulgated by the SEC (17 C.F.R.
section 229.404) ("Item 404"), assuming F&W were an issuer registered with the
SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934.
3.21 AUTHORITY TO CONDUCT BUSINESS; INTELLECTUAL PROPERTY
RIGHTS. F&W and its Subsidiaries have the means and rights to sell, offer for
sale and use the items and perform the services now being offered for sale,
sold, used or performed by them, without incurring any liability for license
fees or royalties or any claims of infringement of patents, trade secrets,
copyrights, trademark or service ▇▇▇▇ rights. Except as set forth in Schedule
3.21, neither F&W nor any of its Subsidiaries is a party, either as licensor or
licensee, to any license agreement for any patent, process, trade secret,
software, trademark, service ▇▇▇▇, trade name or copyright. All patents,
copyrights,
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trademarks, service marks, trade names, and applications therefor or
registrations thereof, owned or used by F&W and its Subsidiaries, are listed in
Schedule 3.21, and to the extent indicated thereon, have been duly registered
in, filed in or issued by the corresponding agency or office of the Federal
Republic of Germany. F&W and its Subsidiaries have: (i) the exclusive right to
use the name "▇▇▇▇▇ & ▇▇▇▇▇▇" in Germany, (ii) made all filings and publications
required to register and perfect such exclusive right, and (iii) complied with
all applicable laws relating to the filing or registration of "fictitious names"
or trade names.
3.22 INVENTORIES. The products, materials, supplies and parts
held by F&W and the Subsidiaries for their use or for sale to customers are
properly reflected and accounted for on the F&W Financial Statements in
accordance with GAAP.
3.23 RECEIVABLES. All notes receivable and accounts
receivable shown on the F&W Financial Statements are properly reflected and
accounted for in accordance with GAAP.
3.24 NET BOOK VALUE. The net book value of F&W, determined as
provided herein ("Net Book Value"), was no less than negative DM 10,700,000 as
of July 31, 1996, and shall be no less than such amount as of the Closing Date.
For purposes of this Agreement, "Net Book Value" means the net book value of F&W
determined in accordance with GAAP, but reduced by: (i) DM 8,500,000; and (ii)
any value shown on the books or financial statements of F&W for (A) F&W's
interest in MC DOS, BKF, or any non-cash proceeds received or to be received
from the sale thereof, (B) the deferred tax asset shown on the F&W Financial
Statements, and (C) any goodwill shown on the F&W Financial Statements. In
addition, Net Book Value shall be computed prior to giving effect to the CHS
Contribution.
3.25 FULL DISCLOSURE. No representation or warranty of ▇▇▇▇▇
contained in this Agreement, and none of the statements or information
concerning F&W or any Subsidiary contained in this Agreement, the Exhibits or
the Schedules, or in any other schedule, certificate or document provided to CHS
by or on behalf of F&W or ▇▇▇▇▇ contains or will contain any untrue statement of
a material fact nor will such representations, warranties, covenants or
statements taken as a whole omit a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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4. REPRESENTATIONS AND WARRANTIES OF CHS.
To induce ▇▇▇▇▇ to enter into this Agreement and to consummate
the transactions contemplated hereby, CHS represents and warrants to and
covenants with ▇▇▇▇▇ as follows:
4.1 ORGANIZATION. CHS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida with its
principal office in Miami, Florida. CHS and each of its subsidiaries is entitled
to own or lease its properties and to carry on its business as and in the places
where such business is now conducted, and CHS and each of its subsidiaries is
duly licensed and qualified in all jurisdictions where the character of the
property owned by it or the nature of the business transacted by it makes such
license or qualification necessary, except where such failure would not result
in a material adverse effect on CHS or its subsidiaries.
4.2 CAPITALIZATION AND RELATED MATTERS.
4.2.1 CHS has authorized capital stock
consisting of: (i) 5,000,000 shares of Preferred Stock, none of which are issued
or outstanding; and (ii) 100,000,000 shares of common stock, $.001 par value per
share, of which 12,174,073 common shares were issued and outstanding as of June
30, 1996. The CHS Shares to be issued to ▇▇▇▇▇ will be, as of the Closing Date,
duly and validly authorized and issued, and fully paid and non-assessable, and
will be issued to ▇▇▇▇▇ free of all encumbrances, claims and liens whatsoever.
No shares of CHS Common Stock are held as treasury stock.
4.2.2 Except as disclosed in the SEC Documents,
there are not outstanding any securities convertible into capital stock of CHS,
or any of its subsidiaries, or any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any such capital stock, except for employee stock options
issued in the ordinary course of business since June 6, 1996. Neither CHS nor
any of its subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any of its shares or capital.
4.3 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by CHS,
and this Agreement is a valid and binding agreement of CHS, enforceable against
CHS in accordance with its terms, except as such enforcement may be limited by
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bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies. The execution and
delivery of this Agreement by CHS does not, and the consummation of the
transactions contemplated hereby will not, constitute: (i) a breach or violation
of the charter or by-laws of CHS; (ii) a violation of any law, regulation,
judgment, order, license, or decree applicable to CHS or any of its
subsidiaries; or (iii) a default under any of the terms, conditions or
provisions of (or an act or omission that would give rise to any right of
termination, cancellation or acceleration under) any material note, bond,
mortgage, lease, indenture, agreement or obligation to which CHS or any of its
subsidiaries is a party, pursuant to which any of them otherwise receive
benefits, or by which any of their properties may be bound.
4.4 FINANCIAL STATEMENTS. CHS has delivered to Seller the
consolidated audited Balance Sheets of CHS as at December 31, 1995 and 1994, the
unaudited Balance Sheet of CHS as at September 30, 1996, the consolidated
audited Statements of Income and Cash Flows for the two fiscal years ended
December 31, 1995, and the unaudited consolidated statements of Income and Cash
Flows for the nine months ended September 30, 1996 (collectively, the "CHS
Financial Statements"). The CHS Financial Statements have been prepared in
accordance with GAAP, applied on a consistent basis, and fairly reflect in all
material respects the consolidated financial condition of CHS and its
subsidiaries as at the dates thereof and the consolidated results of CHS's
operations for the periods then ended; except that the unaudited financial
statements are subject to normal year-end adjustments which are not expected to
be material in amount or effect, and do not contain all the disclosures required
by GAAP.
4.5 SEC DOCUMENTS. The SEC Documents were timely filed with
the SEC, and on the dates filed (or the effective date, in the case of the
Prospectus): (i) complied in all material respects with the requirements of the
1933 Act and the Securities and Exchange Act of 1934 (the "1934 Act") and the
rules promulgated thereunder; and (ii) did not contain any untrue statement of a
material fact or omit a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 LIABILITIES. Neither CHS nor any of its subsidiaries has
any material debt, liability or obligation of any kind, whether accrued,
absolute, contingent or otherwise, except (i) those reflected on the CHS
Financial Statements, including the notes thereto; (ii) liabilities incurred in
the ordinary course of business since September 30, 1996, none of which have had
or will have a material adverse effect on the financial condition of CHS
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and its subsidiaries taken as a whole; and (iii) liabilities arising in
connection with CHS' acquisition of the European and Latin American business of
Merisel, Inc. (the "Merisel Acquisition") .
4.7 CONTINGENCIES. There are no actions, suits, claims or
proceedings pending or, to the knowledge of CHS' management, threatened against,
by or affecting CHS or any of its subsidiaries in any court or before any
arbitrator or governmental agency which could have a material adverse effect on
CHS and its subsidiaries taken as a whole or which could materially and
adversely affect the right or ability of CHS to consummate the transactions
contemplated hereby.
4.8 FULL DISCLOSURE. No representation or warranty of CHS
contained in this Agreement, and none of the statements or information
concerning CHS contained in this Agreement, the Exhibits or the Schedules, or in
any other certificate, schedule or document provided to ▇▇▇▇▇ by or on behalf of
CHS, contains or will contain any untrue statement of a material fact nor will
such representations, warranties, covenants or statements taken as a whole omit
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.9 ABSENCE OF CHANGES. Except as described in the SEC
Documents, from September 30, 1996 to the date of this Agreement, the business
of CHS and each Subsidiary has been operated in the ordinary course, consistent
with past practice, and there has not been any adverse change in the business,
assets, liabilities, results of operation, prospects or financial condition of
CHS or any of its subsidiaries or in their relationships with suppliers,
customers, employees, lessors or others, other than: (i) changes in the ordinary
course of business, none of which, singularly or in the aggregate, have had or
will have a material adverse effect on the business, properties or financial
condition of CHS and its subsidiaries taken as a whole; and (ii) changes in
connection with the Merisel Acquisition.
4.10 ENVIRONMENTAL MATTERS. Except as disclosed in the SEC
Documents: (i) neither CHS nor any of its subsidiaries is in violation, in any
material respect, of any law, regulation, order, permit, License or decree
regulating emissions into the environment and the proper disposal of
materials;(ii) CHS and its subsidiaries have received all permits and approvals
with respect to emissions into the environment and the proper collection,
storage, transport, distribution or disposal of materials required for the
operation of its business at present operating levels; and (iii) neither CHS nor
any of its subsidiaries is liable or responsible for any material
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clean up, fines, liability or expense arising under any environmental law,
regulation or order as a result of the disposal of wastes or other materials in
or on the property of CHS or any of its subsidiaries (whether owned or leased),
or in or on any other property, including property no longer owned, leased or
used by CHS or any of its subsidiaries.
4.11 TAXES. CHS and each of its subsidiaries have duly filed
all material federal, state, local and foreign tax returns and reports, and all
returns and reports of all other governmental units having jurisdiction with
respect to taxes (including, without limitation, income tax or VAT) imposed on
them or on their income, properties, sales, franchises, operations or employee
benefit plans or trusts, all such returns were complete and accurate when filed,
and all taxes and assessments payable by CHS and by each of its subsidiaries
have been paid to the extent that such taxes have become due. All taxes accrued
or payable by CHS and by each of its subsidiaries for all periods through
September 30, 1996 have been paid in full, or accrued and reflected in the CHS
Financial Statements, whether or not due and payable and whether or not
disputed. CHS and each of its subsidiaries have withheld proper and accurate
amounts from their employees or all periods in full compliance with the tax
withholding provisions of applicable foreign, federal, state and local tax law.
There are not now any examinations of the income tax returns of CHS or any of
its subsidiaries pending, or to the best of CHS' knowledge any proposed
deficiencies or assessments against CHS or any of its subsidiaries of additional
taxes of any kind. CHS shall cause itself and each of its subsidiaries to duly
and timely prepare and file all returns and reports (which are due prior to the
Closing Date) of all governmental units having jurisdiction with respect to
taxes (including, without limitation, income tax or VAT) imposed on CHS or any
of its subsidiaries or on their income, properties, sales, franchises,
operations or employee benefit plans or trusts, and all such returns will be
complete and accurate when filed.
4.12 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except
as set forth in Schedule 4.12, neither CHS nor any of its subsidiaries is, or
since December 31, 1994 has been, a party to any contract, loan, agreement,
lease or transaction, or any other commitment, which is required to be disclosed
pursuant to Item 404 and which has not been disclosed in the Prospectus.
5. CONDUCT OF BUSINESS PENDING CLOSING.
▇▇▇▇▇ covenants and agrees that between the date hereof and
the Closing Date:
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5.1 BUSINESS IN THE ORDINARY COURSE. The business of F&W and
each Subsidiary shall be conducted only in the ordinary course, without the
creation of any additional indebtedness for borrowed money, provided that F&W
and each Subsidiary may continue to draw on its existing lines of credit in a
manner consistent with its past practice. Without limiting the generality of the
foregoing:
(a) ▇▇▇▇▇ shall use his best efforts to
preserve F&W's and each Subsidiary's business organization, to keep available
the services of F&W's and each Subsidiary's employees, to preserve the goodwill
of the suppliers, customers and others having business relations with F&W and
any Subsidiary after the Closing Date on terms satisfactory to CHS; and
(b) Neither F&W nor any Subsidiary shall
pledge, sell or otherwise transfer any of its assets, except for sales of
inventory in the ordinary course of business.
5.2 NO MATERIAL CHANGES. Neither F&W nor any Subsidiary shall
materially alter any of its organization, capitalization, or financial
structure, practices or operations. Without limiting the generality of the
foregoing:
(a) No change shall be made in the articles
of association or by-laws (if any) of F&W or any Subsidiary;
(b) No change shall be made in the capital
of F&W or any Subsidiary or the number of shares of F&W or any Subsidiary;
(c) Neither F&W nor any Subsidiary shall
issue or grant any right or option to purchase or otherwise acquire any of its
capital, stock or shares or other securities;
(d) No dividend or other distribution or
payment shall be declared or made with respect to any of the capital, stock or
shares of F&W or any Subsidiary, and neither F&W nor any Subsidiary shall,
directly or indirectly, redeem, purchase or otherwise acquire any of its
respective capital, stock or shares; and
(e) No change shall be made affecting the
banking arrangements of F&W or any Subsidiary, except as set forth in Sections
7.5 and 2.8.
5.3 COMPENSATION. No increase shall be made in the
compensation or employee benefits payable or to become payable to any director,
officer, employee or agent of F&W or any Subsidiary, and no bonus or
profit-share payment or other arrangement (whether
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current or deferred) shall be made to or with any such director, officer,
employee or agent, except in the ordinary course of business and consistent with
prior practices.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligations of the parties to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing, of each of the following conditions; any or all of which may be waived
in whole or in part by the joint agreement of CHS and ▇▇▇▇▇:
6.1 ABSENCE OF ACTIONS. No action or proceeding shall have
been brought or threatened before any court or administrative agency to prevent
the consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving CHS or any of its subsidiaries, ▇▇▇▇▇, F&W or any Subsidiary when
considered in light of the effect of the within transactions) shall constitute a
violation of law or give rise to material liability on the part of ▇▇▇▇▇, F&W,
CHS or any of their subsidiaries.
6.2 CONSENTS. The parties shall have received from any
suppliers, lessors, lenders, lien holders or governmental authorities (including
U.S. antitrust and German competition law authorities), bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including the consents listed on Schedule 6.2.
7. CONDITIONS TO OBLIGATIONS OF CHS.
All obligations of CHS to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part by CHS:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of ▇▇▇▇▇ contained in this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
▇▇▇▇▇ in connection with the transactions contemplated by this Agreement shall
be true, correct and complete in all material respects as of the date when made
and shall be deemed to be made again at and as of the Closing Date and shall be
true, correct and complete at and as of such time in all material respects.
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7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. ▇▇▇▇▇ shall
have performed and complied with all material agreements and conditions required
by this Agreement to be performed or complied with by him prior to or on the
Closing Date.
7.3 ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse
change in the financial condition, operations, activities or business of F&W and
its Subsidiaries, taken as a whole, shall have occurred, no substantial part of
the assets of F&W and its Subsidiaries, taken as a whole, not substantially
covered by insurance shall have been destroyed due to fire or other casualty,
and no event shall have occurred which has had or will have a material adverse
effect on the business, prospects, properties or financial condition of F&W and
its Subsidiaries taken as a whole.
7.4 CERTIFICATE OF ▇▇▇▇▇. ▇▇▇▇▇ shall have executed and
delivered, or caused to be executed and delivered, to CHS one or more
certificates, dated the Closing Date, certifying in such detail as CHS may
reasonably request to the fulfillment and satisfaction of the conditions
specified in this Section 7 as well as Section 6.
7.5 CREDIT ARRANGEMENTS. The financial institutions listed on
Schedule 7.5 shall have: (i) approved the Stock Exchange contemplated hereby;
and (ii) agreed to maintain F&W's loans, lines of credit and credit arrangements
(collectively "Loans") in effect after Closing, without any change thereto
which, in CHS' reasonable opinion, would be material and adverse to F&W or CHS;
provided, however, that a requirement that CHS guarantee such Loans shall not be
considered a material adverse change for purposes of this subsection.
8. CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇.
All of the obligations of ▇▇▇▇▇ to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part, by ▇▇▇▇▇:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of CHS in
connection with the transactions contemplated by this Agreement shall be true,
correct and complete in all material respects when made and shall be deemed to
be made again at and as of the Closing Date and shall be true,
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correct and complete at and as of such time in all material respects.
8.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. CHS shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
8.3 ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse
change in the financial condition, operations, activities or business of CHS and
its subsidiaries, taken as a whole, shall have occurred, no substantial part of
the assets of CHS and its subsidiaries, taken as a whole, shall have been
destroyed due to fire or other casualty, and no event shall have occurred which
has had, or will have a material adverse effect on the business, properties or
financial condition of CHS and its subsidiaries, taken as a whole.
8.4 CERTIFICATE. CHS shall have delivered to ▇▇▇▇▇ a
certificate, executed by an executive officer and dated the Closing Date,
certifying in such detail as counsel for ▇▇▇▇▇ ▇▇▇ reasonably request to the
fulfillment and satisfaction of the conditions specified in this Section 8 as
well as Section 6.
8.5 COMTRAD AGREEMENT. On the date hereof, but effective as of
the Closing Date, Comtrad, Inc. and Comtrad Holdings, Inc. (collectively
"Comtrad") shall enter into an agreement with ▇▇▇▇▇, in the form of Schedule
8.5, under the terms of which Comtrad will agree to: (i) vote all their shares
in CHS to elect ▇▇▇▇▇ to CHS' Board of Directors, in accordance with the terms
of such agreement; and (ii) cause certain of Frank's CHS Shares to be registered
under the 1933 Act, if and when Comtrad's Common Stock is registered, and on the
same terms.
9. INDEMNITY.
9.1 INDEMNIFICATION BY ▇▇▇▇▇. Subject to Section 9.5, ▇▇▇▇▇
(the "Indemnitor") shall defend, indemnify and hold harmless CHS, its direct and
indirect parent corporations, subsidiaries (including F&W, after Closing) and
affiliates, their officers, directors, employees and agents (collectively, the
"Indemnitees") against and in respect of any and all loss, damage, liability,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement (collectively, "Indemnified Losses"), suffered or incurred by any
Indemnitee by reason of, or arising out of:
(1) any misrepresentation, breach of
warranty or breach or nonfulfillment of any agreement of ▇▇▇▇▇ contained in this
Agreement or in any certificate, schedule, instrument or
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document delivered to CHS by or on behalf of ▇▇▇▇▇ or F&W or any Subsidiary
pursuant to the provisions of this Agreement; and
(2) any obligations and liabilities of MC
DOS or BKF, of any nature whatsoever (including tax liability, penalties and
interest), whether accrued, absolute, contingent or otherwise; and
(3) any liabilities of F&W or any Subsidiary
of any nature whatsoever (including tax liability, penalties and interest),
whether accrued, absolute, contingent or otherwise, arising or occurring between
the date hereof and the Closing Date, except for liabilities arising in the
ordinary course of business, none of which shall have a material adverse effect
on F&W and its Subsidiaries taken as a whole.
9.2 INDEMNIFICATION BY CHS. Subject to Section 9.5, CHS (the
"Indemnitor") shall defend, indemnify and hold harmless ▇▇▇▇▇ and his successors
(collectively, the "Indemnitees") against and in respect of any and all
Indemnified Losses, suffered or incurred by any Indemnitee by reason of or
arising out of:
(1) any misrepresentation, breach of
warranty, or breach or non-fulfillment of any material agreement of CHS
contained in this Agreement or in any certificate, schedule, instrument or
document delivered by CHS to ▇▇▇▇▇ pursuant to the provisions of this Agreement;
and
(2) any liabilities of CHS or any subsidiary
of any nature whatsoever (including tax liability, penalties and interest),
whether accrued, absolute, contingent or otherwise, arising or occurring between
the date hereof and the Closing Date, except for: (i) liabilities arising in the
ordinary course of business, none of which shall have a material adverse effect
on CHS and its subsidiaries taken as a whole; and (ii) liabilities arising in
connection with the Merisel Acquisition.
9.3 DEFENSE OF CLAIMS.
(a) Should any claim or action by a third
party arise after the Closing Date for which an Indemnitor is liable under the
terms of this Agreement, the Indemnitee shall notify Indemnitor within ten (10)
days after such claim or action arises and is known to Indemnitee, and shall
give the Indemnitor a reasonable opportunity to participate in any proceedings
and to settle or defend any such claim or action. The expenses of all
proceedings, contests or lawsuits with respect to such claims or actions shall
be borne by the Indemnitor. If the Indemnitor wishes to assume the defense of
such claim or action, the Indemnitor shall
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give written notice to the Indemnitees within ten (10) days after notice from
the Indemnitees of such claim or action, and the Indemnitor shall thereafter
assume the defense of any such claim or action, through counsel reasonably
satisfactory to the Indemnitees, provided that Indemnitees may participate in
such defense at their own expense.
(b) If the Indemnitor shall not assume the
defense of, or if after so assuming it shall fail to defend, any such claim or
action, the Indemnitees may defend against any such claim or action in such
manner as they may deem appropriate and the Indemnitees may settle such claim or
action on such terms as they may deem appropriate but subject to the
Indemnitor's approval, such approval not to be unreasonably withheld; provided,
however, that any such settlement shall be deemed approved by the Indemnitor if
the Indemnitor fails to object thereto, by written notice to the Indemnitees,
within fifteen (15) days after the Indemnitor's receipt of a written summary of
such settlement. The Indemnitor shall promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, incurred by the Indemnitees in
connection with the defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered
against any of the Indemnitees in any action covered by the indemnification
hereunder, or any lien attaches to any of the assets of any of the Indemnitees,
the Indemnitor shall immediately upon such entry or attachment pay such judgment
in full or discharge such lien unless, at the expense and direction of the
Indemnitor, an appeal is taken under which the execution of the judgment or
satisfaction of the lien is stayed. If and when a final judgment is rendered in
any such action, the Indemnitor shall forthwith pay such judgment or discharge
such lien before any of the Indemnitees is compelled to do so.
9.4 WAIVER. The failure of any Indemnitee to give any notice
or to take any action hereunder shall not be deemed a waiver of any of the
rights of such Indemnitee hereunder, except to the extent that Indemnitor is
actually prejudiced by such failure.
9.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
to the contrary contained in this Agreement, no party shall be responsible
hereunder for any Indemnified Loss unless the Indemnitee shall have provided
such party with written notice containing a reasonable description of the claim,
action or circumstances giving rise to such Indemnified Loss within eighteen
(18) months after the Closing Date (the "Indemnity Notice Period").
9.5.1 CAPS ON LOSSES. Frank's aggregate
liability after Closing for Indemnified Losses shall not exceed DM 2,000,000,
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and CHS' aggregate liability after Closing for Indemnified Losses shall not
exceed DM 2,000,000.
9.5.2 PAYMENT FOR INDEMNIFIED LOSSES.
(a) All indemnity claims
against either Indemnitor by any Indemnitee after Closing shall be satisfied
promptly after resolution by the delivery to the Indemnitee of CHS Common Stock,
having a value equal to the Indemnified Loss in question. If ▇▇▇▇▇ is prohibited
by U.S. securities law or otherwise from delivering CHS Common Stock to an
Indemnitee, then ▇▇▇▇▇ ▇▇▇ satisfy any claims against him by delivery to CHS of
CHS Common Stock, and CHS shall provide to the Indemnitee an equal amount of
consideration in the form of CHS Common Stock or otherwise. For purposes of this
Section 9.5, each share of CHS Common Stock shall be deemed to have a value
equal to the average closing price of one share of CHS Common Stock as reported
by the Nasdaq National Stock Market, computed during the thirty (30) day period
ending on the trading day immediately preceding the date such shares of CHS
Common Stock are delivered to the Indemnitee.
(b) In order to insure that
there are sufficient CHS Shares available to satisfy Indemnified Losses after
Closing, ▇▇▇▇▇ shall not directly or indirectly, at any time during the
Indemnity Notice Period, sell, pledge, or otherwise transfer a number of the CHS
Shares having an aggregate value of DM 2,000,000 (the "Restricted Shares"), and
if an indemnity claim is timely filed during such period, CHS Shares having an
aggregate value equal to the amount of such claim shall remain subject to the
foregoing restriction until such claim is finally resolved. The certificates
evidencing the Restricted Shares shall be legended to reflect the foregoing
restriction. The restrictions imposed herein shall be in addition to any other
resale restrictions under applicable securities laws.
9.5.3 NO CONSEQUENTIAL DAMAGES; CONVERSION. For
purposes of determining the amount of any Indemnified Losses incurred by any
party, (i) no Indemnified Loss shall be deemed to have been sustained by any
party to the extent of any lost profits, or consequential or special damages,
incurred by such party; and (ii) the conversion rate into or from U.S. dollars
shall be at the closing exchange rate published in The Wall Street Journal (U.S.
edition) as of the last business day immediately preceding the date the
Indemnified Loss is paid to the Indemnitee.
10. TERMINATION.
10.1 TERMINATION. This Agreement may be terminated at
any time on or prior to the Closing:
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(a) By mutual consent of CHS and ▇▇▇▇▇; or
(b) At the election of CHS if: (i) ▇▇▇▇▇ has
breached or failed to perform or comply with any of its
representations, warranties, covenants or obligations under
this Agreement; or (ii) any of the conditions precedent set
forth in Sections 2, 6 or 7 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been
consummated within five (5) months from the date hereof; or
(c) At the election of ▇▇▇▇▇ if: (i) CHS has
breached or failed to perform or comply with any of its
representations, warranties, covenants or obligations under
this Agreement; or (ii) any of the conditions precedent set
forth in Sections 2, 6 or 8 is not satisfied as and when
required by this Agreement; or (iii) if the Closing has not
been consummated within five (5) months from the date hereof.
10.2 MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("Termination Notice") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("Terminating Party") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of twenty (20) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the twentieth (20th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (i) its obligations under Sections 2.4 and
2.5; or (ii) liability for its breach of any representation, warranty or
covenant contained herein, or its failure to comply with the terms and
conditions of this Agreement or to perform its obligations hereunder.
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11. MISCELLANEOUS.
11.1 NOTICES.
(a) All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person or by
facsimile transmission, or upon the expiration of seven (7) days after the date
sent, if sent by federal express (or similar overnight courier service) to the
parties at the following addresses:
(i) If to ▇▇▇▇▇:
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o ▇▇▇▇▇ & ▇▇▇▇▇▇ Computer GmbH
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Germany
Telecopier: (▇▇-▇▇▇) ▇▇▇▇-▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
One Prudential Plaza
Suite 3500
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇. ▇. ▇▇▇▇▇▇▇▇
Rechtsanwaelte
Schindhelm pp.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Telecopier: (▇▇-▇▇▇) ▇▇-▇▇-▇▇▇
(ii) If to CHS:
CHS Electronics, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Toll, CFO
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇, P.A.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇. ▇▇▇▇ ▇▇▇▇▇
Curschmann ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Telecopier: (▇▇-▇▇) ▇▇-▇▇▇-▇▇
(b) Notices may also be given in any other
manner permitted by law, effective upon actual receipt. Any party may change the
address to which notices, requests, demands or other communications to such
party shall be delivered or mailed by giving notice thereof to the other parties
hereto in the manner provided herein.
11.2 EXCLUSIVE REMEDY; SURVIVAL. After Closing, the sole and
exclusive remedy of the parties for misrepresentations, breaches of warranty or
default of any party in the performance of the agreements and obligations of
such party hereunder, or to recover any Indemnified Loss, shall be the
obligations of the parties contained in Section 9. The representations,
warranties, agreements and indemnifications of the parties contained in this
Agreement or in any writing delivered pursuant to the provisions of this
Agreement shall survive any investigation heretofore or hereafter made by the
parties, and the consummation of the transactions contemplated herein and shall
continue in full force and effect after the Closing, subject to the limitations
of Section 9.5.
11.3 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. All Exhibits and
Schedules hereto shall be deemed a part of this Agreement. If this Agreement is
terminated pursuant to Section 10.1, the other agreements included as Exhibits
also shall terminate. This Agreement shall not be altered or amended except by
an instrument in writing signed by or on behalf of all of the parties hereto.
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11.4 RULES OF INTERPRETATION. No ambiguity in any provision
hereof shall be construed against a party by reason of the fact it was drafted
by such party or its counsel. For purposes of this Agreement: (i) "herein",
"hereby", "hereunder", "herewith", "hereafter" and "hereinafter" refer to this
Agreement in its entirety, and not to any particular subsection or paragraph;
(ii) all references to a "Section", "Schedule" or "Exhibit" are to a Section of
this Agreement or to an Exhibit or Schedule attached hereto or made a part
hereof; (iii) accounting terms used but not defined shall have the respective
meanings given to them under GAAP; and (iv) the words "include," "includes" and
"including" are deemed to be followed by the phrase "without limitation".
Although this Agreement was executed December 19, 1986, it will be effective on
and as of December 6, 1996, the date the CHS Board of Directors approved the
Agreement.
11.5 GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the Federal Republic of Germany, except that matters relating to the issuance,
sale or resale of the CHS Shares shall be governed by the laws of Florida and
the United States. Any dispute, controversy or question of interpretation
arising under, out of, in connection with or in relation to this Agreement or
any amendments hereof, or any breach or default hereunder, shall be submitted
to, and determined and settled by, arbitration, in Hamburg, Federal Republic of
Germany, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, including the International Arbitration Rules. Any
award rendered therein shall be final and binding on the parties thereto, and
judgment may be entered thereon in any court having jurisdiction thereof. Each
of the parties hereby irrevocably submits to the jurisdiction of any arbitration
panel sitting in Hamburg, Federal Republic of Germany, and waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any arbitration at such location.
11.6 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors; provided,
however, that no party hereto may assign this Agreement or any rights hereunder,
in whole or in part.
11.7 PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable.
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If any terms of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof shall constitute their agreement with
respect to the subject matter hereof and all such remaining terms shall remain
in full force and effect. To the extent legally permissible, any illegal,
invalid or unenforceable provision of this Agreement shall be replaced by a
valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
11.8 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party which is entitled to the benefit thereof, but
only if such waiver is evidenced by a writing signed by such party. No failure
on the part of a party hereto to exercise, and no delay in exercising, any
right, power or remedy created hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy by any such
party preclude any other future exercise thereof or the exercise of any other
right, power or remedy. No waiver by any party hereto of any breach of or
default in any term or condition of this Agreement shall constitute a waiver of
or assent to any succeeding breach of or default in the same or any other term
or condition hereof.
11.9 HEADINGS. The headings as to contents of particular
paragraphs of this Agreement are inserted for convenience only and shall not be
construed as a part of this Agreement or as a limitation on the scope of any
terms or provisions of this Agreement.
11.10 EXPENSES. Except as otherwise expressly provided herein,
all legal and other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by CHS or ▇▇▇▇▇
as each party incurs such expenses. ▇▇▇▇▇ shall pay all income tax, corporation
tax, and similar taxes imposed on ▇▇▇▇▇ in connection with the transactions
contemplated hereby. ▇▇▇▇▇ and CHS shall share equally (i) the costs of having
this Agreement certified by a notary at such place as may be mutually agreed
upon by CHS and ▇▇▇▇▇, including any later certifications which may become
necessary; and (ii) the government filing fees of complying with any antitrust
law approvals, and the costs of any counsel engaged jointly by the parties to
analyze such approvals or assist the parties therewith. F&W shall not pay or be
charged for any cost incurred by or for the benefit of ▇▇▇▇▇ in connection with
this Agreement or the transactions contemplated hereby: (i) F&W shall pay all
fees and expenses of its auditors in preparing the Financial Statements required
hereby; (ii) ▇▇▇▇▇ shall pay the first $100,000 in professional fees charged by
his legal and financial advisors in
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connection with this Agreement and the transactions contemplated hereby; and
(iii) F&W shall pay any excess over $100,000 in professional fees charged by
Frank's financial and legal advisors in connection with this Agreement and the
transactions contemplated hereby.
11.11 FINDER'S FEES. CHS represents to ▇▇▇▇▇ that no broker,
agent, finder or other party has been retained by it in connection with the
transactions contemplated hereby and that no other fee or commission has been
agreed by CHS to be paid for or on account of the transactions contemplated
hereby. ▇▇▇▇▇ represents to CHS that no broker, agent, finder or other party has
been retained by ▇▇▇▇▇ or F&W in connection with the transactions contemplated
hereby and that no other fee or commission has been agreed by ▇▇▇▇▇ or F&W to be
paid for or on account of the transactions contemplated hereby.
11.12 GENDER. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed by their duly authorized officers as of the
date first above written.
CHS ELECTRONICS, INC.
By:/s/ MARC ▇.▇. ▇▇▇▇▇▇▇
-----------------------
Name: MARC ▇.▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT A - F&W CAPITAL
NOMINAL VALUE OF SHARES
1. DM 1,020,000
2. 30,000
3. 831,600
4. 30,000
5. 188,400
6. 3,548,400
7. 351,600
8. 438,000
9. 1,062,000
10. 1,000,000
11. 8,500,000
-------------
Total DM 17,000,000
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