Exhibit 2.1
ASSET PURCHASE AGREEMENT
Dated July 1, 1997
among
GE Capital Information Technology Solutions
Acquisition Corp.,
a Delaware corporation,
The Future Now, Inc.,
an Ohio corporation,
XLSource, Inc.,
an Arkansas corporation,
E-C Computer Technical Services, Inc.,
a Texas corporation,
RCK Computers, Inc.,
a Texas corporation
and
Intelligent Electronics, Inc.,
a Pennsylvania corporation
TABLE OF CONTENTS
Page
ARTICLE I
Definitions 1
ARTICLE II
Purchase and Sale of Assets 2
Section 2.01 Purchase of Assets 2
Section 2.02 Assumption of Liabilities 2
ARTICLE III
Purchase Price 2
Section 3.01 Purchase Price 2
ARTICLE IV
Closing 4
Section 4.01 The Closing Date 4
Section 4.02 Certificates, Instruments of Transfer, Etc. 4
ARTICLE V
Representations and Warranties 6
Section 5.01 Representations and Warranties of Sellers and
Shareholder 6
(a) Organization, Good Standing and Capitalization 6
(b) Stock Ownership 7
(c) Corporate Authorization 7
(d) Purchased Assets; Business 7
(e) Litigation 9
(f) No Conflict 10
(g) No Other Agreements to Sell Assets or Business 10
(h) Articles of Incorporation and By-laws 11
(i) Financial Statements 11
(j) Absence of Undisclosed Liabilities and Obligations 12
(k) Tax Matters 12
(l) No Brokers 12
(m) Employee Benefit Information 13
(n) Environmental Compliance 15
(o) Insurance 17
(p) Intangible Assets; Confidentiality Agreements 17
(q) Employees 17
(r) Compliance with Laws 18
(s) Transactions with Certain Persons 18
(t) Clients; Relationship with Accounts 19
(u) Absence of Certain Changes or Events 19
(v) Disclosure 21
(w) Delivery of Updated Exhibits 21
(x) Officers and Directors with Knowledge 21
Section 5.02 Representations and Warranties of Buyer 21
(a) Organization and Good Standing of Buyer 22
(b) Corporate Authorization 22
(c) No Conflict 22
(d) No Brokers 23
(e) Litigation 23
(f) XLC Common Customer. 23
Section 5.03 Representations and Warranties of XLConnect 23
ARTICLE VI
Conditions Precedent to Obligations of Buyer and Sellers 23
Section 6.01 Conditions Precedent to Obligations of Buyer 23
(a) Representations and Warranties True at the Closing Date 23
(b) Compliance with Covenants 24
(c) Delivery of Closing Documents 24
(d) Opinion of Sellers' and Shareholder's Counsel 24
(e) Approvals and Consents 25
(f) Litigation 26
(g) No Material Adverse Change 26
(h) No Change in Law 26
(i) Telephone and Fax Numbers 26
(j) Escrow Agreement; Transition Services Agreement 26
(k) Liens and Encumbrances 26
(l) ▇▇▇ ▇▇▇ ▇▇
(▇) ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
(▇) Satisfactory Phase I 27
(o) Delivery of Revised and Updated Exhibits 27
(p) Revenues of Business 27
(q) Provision of Product and Services 27
(r) XLConnect Oracle Service Agreement 27
Section 6.02 Conditions to Obligations Of Sellers and
Shareholder 27
(a) Representations and Warranties True at the Closing Date 28
(b) Compliance with Covenants 28
(c) Delivery of Closing Documents 28
(d) Opinion of Buyer's Counsel 28
(e) Consideration 29
(f) No Change in Law 29
(g) Litigation 29
(h) HSR Act 29
(i) Approvals and Consents 30
(j) Escrow Agreement; Transition Services Agreement. 30
(k) Provision of Product and Services. 30
(l) Consent of Shareholder's Shareholders. 30
(m) XLC Common Customers. 30
ARTICLE VII
Documents to be Delivered on Closing Date 30
Section 7.01 Documents to be Delivered by Shareholder and
Sellers on Closing Date 30
(a) Conditions Precedent 30
(b) Officer's Certificates 30
(c) Bills of Sale 30
(d) Assignment Agreement, Escrow Agreement and Transition
Services Agreement 31
(e) Resolutions of the Sellers and the Shareholder 31
(f) Incumbency Certificate of the Sellers and the
Shareholder 31
(g) Organizational Documents 31
(h) Good Standing; Qualification to Do Business 31
(i) Further Instruments 32
Section 7.02 Documents to be Delivered by Buyer on Closing Date 32
(a) Conditions Precedent 32
(b) Officer's Certificate 32
(c) Other Documents 32
(d) Further Instruments 32
ARTICLE VIII
Further Covenants and Agreements
of Sellers, Shareholder and Buyer 32
Section 8.01 Further Covenants and Agreements of Shareholder
and Sellers. 32
(a) Conduct of Business Pending Closing 32
(b) Access to the Business 34
(c) Corporate Name 34
(d) Changes in Representations and Warranties 34
(e) Further Assurances 34
(f) No Mergers, Consolidations, Sales of Assets, Etc. of
any Seller 35
(g) Minimum Net Worth of Shareholder 35
(h) Financial Statements 36
(i) Taxes 36
(j) Telephone and Facsimile Numbers 36
(k) Revised Exhibits Listing Assigned Agreements, Inventory,
Receivables and Fixed Assets 36
(l) Certain Rights Under Indemnity Agreement 37
(m) Sale of Fixed Assets at Other Sites 37
Section 8.02 Consents to Assignments; Permits 37
Section 8.03 Survival of Representations, Warranties, Etc. 38
Section 8.04 Allocations of Purchase Price 40
Section 8.05 Resolution of Disputes 41
Section 8.06 Inspection of Records 41
Section 8.07 Non-Competition; Non-Solicitation 42
Section 8.08 Shareholder Guarantees 45
Section 8.09 Mutual Cooperation 45
Section 8.10 Collection of Receivables 45
Section 8.11 Seller Employee Benefits and Employment 46
Section 8.12 ▇▇▇▇▇▇ Micro Inc. Agreement 47
Section 8.13 Obligation to Transfer all Account Knowledge 48
Section 8.14 XLC Common Customers 48
Section 8.15 XLConnect Service Agreement 48
ARTICLE IX
Miscellaneous 49
Section 9.01 Expenses 49
Section 9.02 Termination of Agreement 49
Section 9.03 Effect of Termination 50
Section 9.04 Benefit; Assignment 50
Section 9.05 Governing Law 50
Section 9.06 Breach; Failure of Condition 50
Section 9.07 Notices, Etc. 51
Section 9.08 Headings 52
Section 9.09 Counterparts 52
Section 9.10 Entire Agreement 52
Section 9.11 Waiver; Amendment; Modification 52
Section 9.12 Severability 53
Section 9.13 Press Releases 53
Section 9.14 HSR Filing 53
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated July 1, 1997 (this
"Agreement") is by and among GE Capital Information Technology Solutions
Acquisition Corp., a Delaware corporation ("Buyer"), The Future Now, Inc.,
an Ohio corporation, XLSource, Inc., an Arkansas corporation, E-C Computer
Technical Services, Inc., a Texas corporation, RCK Computers, Inc., a Texas
corporation (The Future Now, Inc., XLSource, Inc., E-C Computer Technical
Services, Inc. and RCK Computers, Inc. are each a "Seller" and,
collectively, the "Sellers") and Intelligent Electronics, Inc., a
Pennsylvania corporation and, directly or indirectly, the sole shareholder
of Sellers ("Shareholder").
WHEREAS, Sellers are in the business of reselling microcomputer
and technology products in the United States; and
WHEREAS, Sellers desire to sell their business of reselling
microcomputer and technology products conducted in and from the Acquired
Sites and the Other Sites; and
WHEREAS, Sellers intend to retain their business of reselling
microcomputer and technology products conducted in and from the Retained
Sites; and
WHEREAS, Sellers desire to sell and Buyer desires to purchase
from Seller, certain properties, rights and assets of Sellers as described
herein, for the consideration provided herein; and
WHEREAS, Shareholder, directly or indirectly, is the sole owner
and holder of all of the shares of capital stock of Sellers;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the representations, warranties, conditions
and promises hereinafter contained, Sellers, Shareholder and Buyer hereby
represent, warrant and agree as follows:
ARTICLE I
---------
Definitions
-----------
For the purposes hereof, capitalized terms used herein shall have
the respective meanings assigned to them in Attachment A or elsewhere
herein. References in this Agreement to Sections, subsections, paragraphs,
clauses, Attachments and Exhibits are to Sections, subsections, paragraphs,
clauses, Attachments and Exhibits in or to this Agreement unless otherwise
indicated.
ARTICLE II
----------
Purchase and Sale of Assets
---------------------------
Section II.01 Purchase of Assets. In reliance on the
representations, warranties and covenants contained herein and subject to
the terms and conditions hereof, on the Closing Date, Sellers will (i)
assign to Buyer (in the case of the Leases, by instruments of transfer
suitable for recording) all of Sellers' right, title and interest under the
Assigned Agreements and (ii) sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase from Sellers, each of the other Purchased
Assets by bills of sale or other appropriate instruments of transfer and
XLConnect will sell, convey, assign, transfer and deliver to Buyer, and
Buyer will purchase from XLConnect, all of XLConnect's right, title and
interest under the Power by the Hour Agreements and related Purchased
Assets, by appropriate instruments of transfer.
Section II.02 Assumption of Liabilities. In reliance on the
representations, warranties and covenants contained herein and subject to
the terms and conditions hereof, on the Closing Date, Buyer shall assume
the Assumed Liabilities. Buyer shall not assume any of the Excluded
Liabilities.
ARTICLE III
--------------
Purchase Price
--------------
Section III.01 Purchase Price. (a) The purchase price to be
paid by Buyer for the Purchased Assets and the assumption of the
obligations of Sellers under the Assigned Agreements and the assumption of
the Assumed Liabilities (the "Purchase Price") shall be an amount equal to
the sum of $93,841,000.00 (Ninety Three Million Eight Hundred and Forty-One
Thousand Dollars), the sum of the Net Assets Acquired as of May 3, 1997 as
set forth on Exhibit 3.01(a)(1), and $42,275,000.00 (Forty-Two Million Two
Hundred and Seventy-Five Dollars) (the "Closing Payment"), as adjusted
pursuant to Section 3.01(c) with such Purchase Price plus, the purchase
price of any Fixed Assets acquired in accordance with Section 8.01(m). All
payments in respect of the Purchase Price shall be allocated in accordance
with the allocation of the Purchase Price as set forth on Exhibit
3.01(a)(2).
(b) Payment of Purchase Price. On the Closing Date, payment of
the Purchase Price shall be made by Buyer as follows:
(i) $126,116,000.00 (One Hundred Twenty-Six Million Five
Hundred Thousand Dollars) (the "Direct Payment") shall be paid by Buyer by
wire transfer of immediately available funds to such single account as may
be designated by Sellers;
(ii) $10,000,000 of immediately available funds shall be
deposited by Buyer (the "Escrow Deposit") in accordance with the terms and
conditions of an escrow agreement substantially in the form of Exhibit A-2
(the "Escrow Agreement") among Buyer, XLSource and the Escrow Agent.
(c) Post-Closing Adjustment to Closing Payment. (i) Not more
than forty-five (45) days following the Closing Date, XLSource shall
deliver to Buyer the unaudited combined statement of assets and liabilities
of the Business as of the Closing Date (the "Closing Date Balance Sheet").
The Closing Date Balance Sheet shall (x) fairly present the combined
financial position of the Business as of the close of business on the
Closing Date in accordance with generally accepted accounting principles
applied on a consistent basis with those used in the preparation of the
February 1 Balance Sheet as adjusted as set forth on Exhibit 3.01(a)(1),
(y) include line items (including the constituent components thereof)
consistent with those in the February 1 Balance Sheet as adjusted as set
forth on Exhibit 3.01(a)(1) and (z) be subject to adjustment as set forth
on Exhibit 3.01(c). A physical count of the Inventory shall be conducted
jointly by Buyer and Sellers immediately prior to the Closing Date (the
"Closing Date Physical Count").
(ii) Within thirty (30) days after receipt of the Closing Date
Balance Sheet, Buyer shall communicate in writing to XLSource any objection
or disagreement that it may have to such statements and adjustments which
communication shall state with reasonable specificity the basis for such
objection or disagreement (an "Objection"). Buyer may not assert an
Objection with respect to (i) collectability of Receivables or (ii)
Inventory, except based on a disparity between the Closing Date Physical
Count and Sellers' inventory as reflected in its financial records as of
the Closing Date. XLSource shall have five (5) days after receipt of an
Objection in which to respond in writing to such Objection. If, after five
(5) days following such five (5) day period, Buyer and XLSource have not
resolved the matter in dispute, such matter shall be submitted to Deloitte
& Touche LLP (or any other independent certified public accountants, as
Buyer and XLSource may agree) for determination. Such determination shall
be made within thirty (30) days after such matter was submitted (the "Final
Determination") and shall be final, binding on and not appealable by Buyer,
Sellers and Shareholder. The cost of such accountants shall be paid one-
half by Buyer and one-half by Sellers.
(iii) Within two (2) business days after the earliest of (A)
Buyer's written acceptance of the Closing Date Balance Sheet as prepared by
Sellers or failure to communicate an Objection within the time provided in
Section 3.01(c)(ii), (B) Buyer and XLSource's resolution of any dispute
respecting the Closing Date Balance Sheet by mutual agreement or (C) Buyer
and XLSource's receipt of the Final Determination, Sellers and Shareholder,
jointly and severally, agree to repay to Buyer (or, if such amount is
negative, Buyer agrees to pay to Sellers) an amount equal to (x) the Net
Assets Acquired as of May 3, 1997 as set forth on Exhibit 3.01(a)(1) minus
(y) the Net Assets Acquired as of the Closing Date (the "Post-Closing
Adjustment"). Such repayment by Sellers and Shareholder or payment by
Buyer, as applicable, shall be made by check, subject to collection, or if
the amount of such payment exceeds $50,000, by wire transfer, in either
case, delivered to the party entitled to receive such payment. If such
payment shall be made to Buyer, it shall be made pursuant to the terms of
the Escrow Agreement out of funds contained in the Escrow Account, or if
such funds are insufficient, any remaining balance after payment of such
funds shall be paid by Sellers and Shareholder. If such payment shall be
made to Sellers, it shall be allocated among Sellers in accordance with the
allocation of the Purchase Price as set forth on Exhibit 3.01(a)(2);
provided, that Buyer shall not be obligated to make payment to more than
one account.
ARTICLE IV
----------
Closing
-------
Section IV.01 The Closing Date. The closing of the purchase and
sale of the Purchased Assets and the assumption of the obligations of
Sellers under the Assigned Agreements and the assumption of the Assumed
Liabilities (the "Closing") shall take place at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m.
New York time, on July 15, 1997 or such other time, date or place as
Sellers, Shareholder and Buyer may mutually agree (the "Closing Date").
Section IV.02 Certificates, Instruments of Transfer, Etc.
(a) Sellers and XLConnect agree that the sale and transfer of the
Purchased Assets shall be made by the Assignment Agreement, bills of sale
and other instruments of transfer acceptable to Buyer on the one hand and
Sellers or XLConnect, on the other hand, as applicable. Sellers and Buyer
agree to use reasonable efforts to minimize any sales, use, transfer and
similar transaction taxes and other transaction costs, provided that such
efforts shall not expose either party to any additional cost or risk.
Sellers and Shareholder jointly and severally agree to pay such taxes, if
any.
(b) Unless XLSource has repurchased such Receivables as provided
in Section 8.10, from and after the Closing Date, Buyer shall have the
right and the authority to collect for its own account all Receivables
which shall be transferred to Buyer as provided herein and to endorse with
the name of Sellers (or Shareholder, if applicable) any checks received on
account of such Receivables. Unless XLSource has repurchased such
Receivables as provided in Section 8.10, from and after the Closing Date,
Sellers and Shareholder will, promptly following receipt thereof, transfer
and deliver to Buyer any cash or other property that it may receive in
respect of such Receivables and until so transferred and delivered the same
shall be deemed to be held in trust for Buyer. Unless XLSource has
repurchased such Receivables as provided in Section 8.10, from and after
the Closing Date, Buyer shall also have the right to compromise, settle and
obtain the release of all claims and liabilities related to the Assigned
Agreements; provided, however, any claim for indemnification by Buyer
pursuant to Section 8.03 with respect to any such release shall require
compliance with the indemnification procedures as set forth in Section 8.03
and the foregoing acknowledgment shall not in any manner release Buyer from
any obligations under said Section 8.03. From and after the Closing Date,
Buyer shall have the right to open all mail and packages and receive all
communications and deliveries addressed to Shareholder or Sellers at the
Acquired Sites. Buyer will promptly deliver or cause to be delivered to
Shareholder all such opened mail and packages, and received communications
and deliveries addressed to Shareholder or Sellers at the Acquired Sites
which does not pertain to the Business. Sellers and Shareholder will
promptly deliver or cause to be delivered to Buyer any mail, packages,
communications or deliveries made to the Other Sites on and after the
Closing Date and related to the Business.
(c) Buyer agrees to assume the Assumed Liabilities by delivery
of the Assignment Agreement.
(d) XLConnect, Sellers and Shareholder agree that, at any time
and from time to time after the Closing Date, they will, upon request and
at Buyer's expense, execute, acknowledge and deliver, all such further
reasonable deeds, assignments, transfers and conveyances as may be required
for the better assigning, transferring, granting and conveying to Buyer of
any of the Purchased Assets.
(e) Buyer agrees that, at any time and from time to time after
the Closing Date, it will, upon request and at the Sellers' or XLConnect's
expense, execute, acknowledge and deliver, or cause to be executed,
acknowledged or delivered, all such further reasonable assumptions as may
be required for the better confirming to Sellers or XLConnect, as
applicable, the assumption by Buyer of the Assumed Liabilities.
ARTICLE V
---------
Representations and Warranties
------------------------------
Section V.01 Representations and Warranties of Sellers and
Shareholder. Sellers and Shareholder, jointly and severally, represent and
warrant to Buyer all of the following except as and to the extent expressly
disclosed in Exhibits to this Agreement, with reference to the
corresponding paragraph of this Section 5.01 to which each disclosure
relates:
(a) Organization, Good Standing and Capitalization. Shareholder
and each Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state or commonwealth listed below:
The Future Now, Inc. Ohio
XLSource, Inc. Arkansas
E-C Computer Technical Services, Inc. Texas
RCK Computers, Inc. Texas
Intelligent Electronics, Inc. Pennsylvania
Shareholder and each Seller has all requisite corporate power to carry on
its business as it is now being conducted, and is duly qualified to do
business as a foreign corporation in each jurisdiction where failure to
qualify would have a material adverse effect on the Business. Sellers have
no subsidiaries, except that (i) XLSource, Inc is a wholly-owned subsidiary
of The Future Now, Inc., (ii) XLSource owns eighty percent (80%) of the
issued and outstanding shares of capital stock of XLConnect Solutions, Inc.
and (iii) XLConnect owns all of the issued and outstanding shares of
capital stock of XLConnect Services, Inc. and XLConnect Systems, Inc.
(b) Stock Ownership. Except as set forth in Exhibit 5.01(b),
Shareholder is the beneficial and record owner of all of the shares of
capital stock of The Future Now, Inc., E-C Computer Technical Services,
Inc. and RCK Computers, Inc. and The Future Now, Inc. is the beneficial and
record owner of all of the shares of capital stock of XLSource, in each
case, free and clear of any Encumbrance of any nature whatsoever.
(c) Corporate Authorization. The execution, delivery and
performance by Shareholder and each Seller of this Agreement, the Escrow
Agreement, the Assignment Agreement, and the bills of sale, assignments and
other instruments of transfer referred to in this Agreement to which it is
a party have been authorized and approved by all requisite corporate action
on the part of Shareholder and each Seller, and no other corporate approval
or authorization (including, without limitation, by the shareholders of
Shareholder or each Seller) is required on the part of Shareholder or each
Seller, any trustee, or any other person by law or otherwise in order to
make this Agreement, the Escrow Agreement, the Assignment Agreement, the
Transition Services Agreement and the bills of sale, assignments and other
instruments of transfer referred to in this Agreement and constitute the
valid, binding and enforceable obligations of Shareholder and each Seller
(subject to the execution and delivery of such agreements (other than this
Agreement) and to the receipt of required consents to assignments of the
Assigned Agreements) except as enforcement thereof may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights in general or by general principles of equity.
(d) Purchased Assets; Business. The Purchased Assets constitute
all of the assets of Shareholder and Sellers used by Shareholder and
Sellers in the conduct of the Business at the Acquired Sites and certain of
such assets used at the Other Sites (subject to Section 8.02), but
excluding the Excluded Intangibles. True and complete copies of the
Assigned Agreements have been furnished to Buyer.
(1) Neither Sellers nor Shareholder is in default (and
no event or circumstance exists which, with notice or lapse of time or
both, would constitute a default by Sellers or Shareholder) in any material
respect under any of the Assigned Agreements and, to the best knowledge of
Sellers and Shareholder, no other party to the Assigned Agreements is in
default with such agreements. Each Assigned Agreement is in full force and
effect. Sellers and Shareholder have the right to assign the Assigned
Agreements to which each is a party, subject to restrictions on assignment
contained in the Assigned Agreements and indicated on
Exhibit 5.01(d)(1)(A), and neither Sellers nor Shareholder has otherwise
assigned, pledged or encumbered its interest in the Assigned Agreements to
which it is a party except for the assignment of the Services Portions
thereof to XLConnect. No obligation of Sellers or Shareholder under any
Assigned Agreement is in excess of the normal, ordinary and usual
requirements of Shareholder or Sellers or at other than an arms-length
price. Except as set forth on Exhibit 5.01(d)(1)(A), no Assigned Agreement
obligates Sellers or Shareholder to sell or deliver any product or service
at a price (after taking into account vendor rebates and other vendor
funds) which does not cover the cost together with Sellers' customary
profit margin for such product or service in the light of the amount of
product or service provided and the type of customer involved.
Exhibit 5.01(d)(2) sets forth a backorder report for the Business. None of
the Assigned Agreements contains any agreement, understanding, or
relationship arising out of or relating to Sellers' status as a "small
business concern," a "minority-owned business concern" or other similar
status.
(2) Sellers' interest in each Acquired Site is a valid
and subsisting leasehold interest in each such Acquired Site pursuant to
the applicable Lease, and each such Lease affords the tenant thereunder the
legal right to occupy such Acquired Site as of the Closing Date in
accordance with the terms thereof. The Leases are valid and enforceable by
Sellers or Shareholder, and Sellers or Shareholder believe that at the time
each Lease was executed the rentals payable by the tenant under each Lease
were fair market value rentals for the property subject thereto. Sellers
and Shareholder have performed all the obligations required to be performed
by them under the Leases and possess and quietly enjoy the premises under
the Leases. Neither Sellers nor Shareholder has received notice of any
pending or threatened condemnation proceedings relating to all or any
portion of the property or premises that are the subject of the Leases and,
so far as known to Sellers and Shareholder, there are no such pending or
threatened proceedings. The structures, tangible properties and equipment
owned, operated or leased by Sellers or Shareholder in connection with the
Business are used and useable by Sellers in the present conduct of the
Business.
(3) No real property is owned by Sellers or Shareholder
in the Business as presently conducted.
(4) Sellers have good, indefeasible and marketable title
to the Inventory, Receivables, Fixed Assets and Customer Data, which at
Closing will be free and clear of all Encumbrances, other than Encumbrances
arising out of Assumed Liabilities. The Receivables constitute valid
claims against the account debtors with respect thereto. Except for
Inventory that is being configured and assembled for customer use and
Inventory owned by E-C Computer Technical Services, Inc. and RCK Computers,
Inc., the Inventory is new, unused, undamaged, unopened product in its
original packaging and treated by the manufacturer thereof as its current
product and valued in the Sellers' inventory records at the lower of
Sellers' cost and the manufacturers' or distributors' current pricing
levels, as the case may be, in each case subject to applicable reserves.
Inventory on the Closing Date will be determined on the basis of the
Inventory physically located at the Acquired Sites and the Other Sites (or
in transit or storage) at such time and not on the basis of accounting
records. Inventory shall not include property, products, fixtures and
equipment used in the day-to-day operation of the Business or any of the
Other Property.
(5) Exhibit 5.01(d)(5) lists the Acquired Sites and the
Other Sites and lists the Inventory, Receivables and Other Property as of
May 3, 1997, located at or attributable to each such Acquired Site or Other
Site, as the case may be. All Purchased Assets are located at the Acquired
Sites and the Other Sites.
(6) Each of the Assumed Liabilities has been incurred by
Shareholder or Seller in the ordinary course of business and will be
properly accrued on the Closing Date Balance Sheet in accordance with GAAP.
(e) Litigation. Except as set forth on Exhibit 5.01(e), there
is no litigation, action, suit, tax audit, proceeding or investigation
pending or, to Shareholder's or Sellers' Knowledge, threatened with respect
to the Business, any of the Purchased Assets or any of the transactions
contemplated hereby before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, or any other entity, which, if adversely determined, could
have a material adverse impact upon (i) the Purchased Assets taken as a
whole or (ii) the conduct by Buyer after the Closing Date of a business at
the Acquired Sites or in the geographic area in which the Other Sites are
located substantially similar to the Business. Neither Sellers nor
Shareholder is in default with respect to any order, writ, injunction or
decree of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality which, if
not cured, could have a material adverse impact upon (i) the Purchased
Assets taken as a whole or (ii) the conduct by Buyer after the Closing Date
of a business at the Acquired Sites or in the geographic area in which the
Other Sites are located substantially similar to the Business of Sellers.
(f) No Conflict. Except as set forth on Exhibit 5.01(f), the
execution by Shareholder and Sellers of this Agreement, the Escrow
Agreement, the Assignment Agreement, and the bills of sale, assignments and
other instruments of transfer referred to in this Agreement, in each case,
to which each such person or entity is or will be a party, compliance by
Shareholders and Sellers with the provisions of this Agreement and the
other such agreements to which each such person or entity will be a party
and the consummation by Shareholder and Sellers of the transactions
contemplated hereby or thereby (i) will not violate in any material respect
any provision of applicable law to which Shareholder or Sellers are
subject, (ii) will not conflict with any provision of the Articles of
Incorporation or By-laws of Shareholder or Sellers, (iii) will not conflict
with or constitute a default (or with notice or lapse of time or both,
constitute a default) under, or result in the termination of, or accelerate
the performance required by any of the terms, conditions or provisions of
any contract, agreement or other instrument binding on Sellers or
Shareholder, (iv) will not result in the creation of any Encumbrance upon
any of the Purchased Assets, (v) do not require the consent or approval of,
or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
except for compliance with the requirements of the HSR Act and any filings
under state laws required in connection with the conveyance of the
Receivables and vehicles, and (vi) do not violate any order, writ,
injunction, decree, arbitral award, statute, rule or regulation applicable
to either Shareholder or Sellers, to any of the Purchased Assets or to the
Business, violation of which could have a material adverse impact upon
Buyer or the conduct by Buyer after the Closing Date of a business
substantially similar to the Business.
(g) No Other Agreements to Sell Assets or Business. Except for
this Agreement, neither Sellers nor Shareholder has any legal obligation,
absolute or contingent, to any other person or firm to sell the assets used
in the Business (other than sales in the ordinary course of business), to
issue or sell any capital stock or any security convertible into or
exchangeable for capital stock of any Seller or to effect any merger,
consolidation or other reorganization of any Seller or to enter into any
agreement with respect thereto.
(h) Articles of Incorporation and By-laws. Sellers have
delivered to Buyer copies of Shareholder's and Sellers' Articles of
Incorporation and By-laws (certified as of the date hereof by its
respective corporate secretary), which copies are complete and correct as
of the date hereof.
(i) Financial Statements. (a) Sellers have delivered to Buyer
true and complete copies of the following balance sheets and related
statements of income: (i) for XLSource - balance sheets as of February 1,
1997 and related income statement for the fiscal year ended February 1,
1997, all of which are unaudited; (ii) for RCK Computers, Inc. - balance
sheet as of October 31, 1996 and related income statement for the ten
months ended October 31, 1996, which have been audited by Price Waterhouse
LLP and balance sheet as of May 3, 1997 and related income statement for
the period beginning December 31, 1996 and ending May 3, 1997, which are
unaudited; (iii) for E-C Computer Technical Services, Inc. - balance sheet
as of September 30, 1996 and related income statement for the nine months
ended September 30, 1996, which have been audited by Price Waterhouse LLP
and balance sheet as of May 3, 1997 and related income statement for the
period beginning October 23, 1996 and ending May 3, 1997, which are
unaudited; and (iv) unaudited monthly financial statements of Sellers for
each month ending after February 1, 1997 and prior to the date hereof and
for the quarter ended May 3, 1997, each of which annual and monthly
statements has been prepared in accordance with GAAP applied on a
consistent basis (in the case of the monthly financial statements, subject
to year end adjustments) and presents fairly the financial position of the
Sellers and the results of the operations of the Sellers as of its date and
for the fiscal year or period to which such statement pertains, subject to
the exceptions set forth on Exhibit 5.01(i).
(b) Sellers have delivered to Buyer true and complete copies of
a combined and combining statement of assets and liabilities of the
Business as of February 1, 1997 and May 3, 1997 and combined and combining
statements of revenue and expenses of the Business for each of the five
fiscal quarters ended February 3, 1996 through May 3, 1997, each of which
combined and combining statements has been prepared in accordance with GAAP
applied on a consistent basis, subject to exceptions as set forth on
Exhibit 5.01(i), and presents fairly the financial position of the Business
and the revenues and expenses of the Business as of its date and for the
period ended to which such statement pertains, as the case may be.
(j) Absence of Undisclosed Liabilities and Obligations. Except
as disclosed in Sellers' February 1, 1997 ("February 1 Balance Sheet Date")
combined statement of assets and liabilities ("February 1 Balance Sheet")
and liabilities incurred since the February 1 Balance Sheet Date and either
set forth on Exhibit 3.01(a)(1) or incurred in the ordinary course of
business consistent with past practices after February 1, 1997, which
liabilities, if not discharged prior to the Closing Date, will appear on
the Closing Date Balance Sheet, to the extent required by generally
accepted accounting principles consistently applied, except as disclosed on
Exhibit 3.01(a)(1) and 5.01(i) neither Sellers nor the Business has any
liabilities or obligations (whether accrued, absolute, contingent or
otherwise) of a nature required to be reflected in a balance sheet of
Sellers or the Business prepared in accordance with GAAP or disclosed in
the notes thereto, including, without limitation, any Taxes due or to
become due.
(k) Tax Matters. Shareholder and Sellers and any Affiliates of
Shareholder and Sellers have: (i) correctly prepared and timely filed
(including any applicable extension periods) all returns, declarations,
reports, estimates, information returns and statements ("Returns") required
to be filed or sent by or with respect to the Business in respect of any
Taxes; (ii) timely and properly paid all Taxes that are due and payable;
(iii) established on its books and records reserves that are adequate for
the payment of all Taxes not yet due and payable; and (iv) complied with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has timely and properly withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws. There
are no liens for Taxes upon the assets of Sellers or Shareholder with
respect to the Business except liens for Taxes not yet due. Neither
Shareholder nor Sellers is a party to any agreement providing for the
allocation, sharing or indemnification of Taxes with respect to the
Business, except the Tax Allocation Agreement among Shareholder, XLSource,
The Future Now, Inc. and certain other subsidiaries of Shareholder and
Sellers effective as of January 29, 1995 and Buyer shall have no rights or
obligations under or with respect to such agreement.
(l) No Brokers. Neither Shareholder nor Sellers has made
contact or had any dealings with or entered into, and will not enter into,
any agreement, arrangement or understanding with any broker, leasing agent,
finder or similar person or entity with respect to this Agreement and the
transactions contemplated hereby which will result in the obligation of
Buyer to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
(m) Employee Benefit Information. (a) Exhibit 5.01(m) contains
an accurate and complete list of all Sellers Benefit Plan. None of
Shareholder, Sellers or any Subsidiary or ERISA Affiliate of either is or
ever has been obligated to make contributions to a "multiemployer plan", as
defined in Section 3(37) of ERISA, or to a benefit plan subject to Title IV
of ERISA. There is no amount or payment arising from or in connection with
any Sellers Benefit Plan with respect to which Buyer is or will be liable
to any Person, including, but not limited to, any Governmental Entity, any
employee of Shareholder, Sellers, or any of their respective ERISA
Affiliates. No individual is a party to an Employment Contract pertaining
to the Business that will be effective on the Closing Date.
(b) (i) Each Employee Pension Benefit Plan listed on Exhibit
5.01(m) that is intended to be qualified under Section 401 of the Code has
received a favorable determination letter from the Internal Revenue Service
with respect to the most recent plan restatement and, to Shareholder's
knowledge, nothing has occurred with respect to such Employee Pension
Benefit Plan that could cause the loss of such qualification or exemption
or the imposition of any material liability, penalty or tax under ERISA or
the Code; (ii) all contributions required to have been made under any
Employee Pension Benefit Plan to any funds or trusts established thereunder
or in connection therewith have been made by the due date thereof
(including any valid extensions) and no lien in favor of any such Employee
Pension Benefit Plan has been imposed under Section 412(n) of the Code or
Section 302(f) of ERISA; (iii) a true, correct, and complete copy of each
of the following documents has been made available to or delivered to Buyer
by Shareholder with respect to each Sellers Benefit Plan that covers any
Sellers Employee: (A) plan document and amendments thereto, if any, and
(B) summary plan description or written description; (iv) neither
Shareholder, Sellers, nor any Subsidiary or ERISA Affiliate of either has
incurred any outstanding liability under Sections 4041, 4042 or 4062 of
ERISA; (v) none of Shareholder or Sellers maintains retiree life insurance
or retiree health plans which are "welfare benefit plans" within the
meaning of Section 3(1) of ERISA and which provide for continuing benefits
or coverage for any participant or any beneficiary of a participant after
such participant's termination of employment where such participant was an
employee of Sellers or any of its Subsidiaries; (vi) neither Shareholder
nor Sellers nor any Subsidiary or ERISA Affiliate of either or any
organization to which any of them is a successor or parent corporation,
within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction described in Section 4069 of ERISA; (vii) Sellers has not, and
prior to the Closing Date will not have, suffered a "plant closing" or
"mass layoff" with respect to the Business within the meaning of WARN and
Shareholder and Sellers will provide Buyer, upon request, with such
information as shall be necessary for Buyer to determine its potential WARN
liability; (viii) all Sellers Benefit Plans have been maintained, in all
material respects, in accordance with their terms and with all provisions
of ERISA (including rules and regulations thereunder) and other applicable
law, neither Shareholder, Sellers or any Subsidiary of either nor any
"party in interest" or "disqualified person" with respect to Sellers
Benefit Plans has engaged in a "prohibited transaction" within the meaning
of Section 4975 of the Code or Title I, Part 4 of ERISA, and each of
Shareholder, Sellers and each Subsidiary or ERISA Affiliate of either has
substantially and in good faith complied with the notice and continuation
requirements of COBRA and the regulations thereunder; (ix) except as
provided in Section 8.11, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(A) result in any payment (including, but not limited to, severance,
unemployment compensation, golden parachute or other payments) becoming due
to any Company Personnel listed on Exhibit 5.01(q)(1) under any Sellers'
Benefit Plan or otherwise, (B) increase any benefits otherwise payable
under any Sellers Benefit Plan or (C) result in the acceleration of the
time of payment or vesting of any such benefits; (x) Sellers are not liable
for any obligations to any employees of Sellers who retired or terminated
employment on or prior to the Closing; (xi) no Transferred Employee is
covered by a long-term incentive plan; (xii) none of Shareholder, Sellers
or any of their Subsidiaries has any contract, plan or commitment, whether
legally binding or not, to create any additional Sellers Benefit Plan or to
modify any existing Sellers Benefit Plan.
(c) (i) None of the Sellers Employees listed on Exhibit
5.01(q)(1) nor any other employee of Sellers is represented in his or her
capacity as an employee of Shareholder or Sellers by any labor
organization; (ii) neither Sellers nor Shareholder, with respect to any
Sellers Employee listed on Exhibit 5.01(q)(1) has recognized any labor
organization nor has any labor organization been elected as the collective
bargaining agent of any of such employees, nor has Sellers or Shareholder,
with respect to any of the Sellers Employees listed on Exhibit 5.01(q)(1),
entered into any collective bargaining agreement or union contract
recognizing any labor organization as the bargaining agent of any of its
employees; (iii) there is no union organization activity involving any of
the Sellers Employees listed on Exhibit 5.01(q)(1), pending or threatened,
nor has there ever been union representation involving any of the Sellers
Employees listed on Exhibit 5.01(q)(1); (iv) there is no picketing, pending
or threatened, and there are no strikes, slowdowns, work stoppages, other
job actions, lockouts, arbitrations, grievances or other labor disputes
involving any of the Sellers Employees listed on Exhibit 5.01(q)(1),
pending or threatened; (v) Sellers are in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is
not engaged in any unfair labor practice; (vi) Sellers have not been
notified of any unfair labor practice charge or complaint against Sellers
pending or to the knowledge of Sellers and Shareholder, no such charge or
complaint is threatened before the National Labor Relations Board, any
state labor relations board or any court or tribunal; and (vii) except as
set forth on Exhibit 5.01(q)(1), Sellers have not been notified of any
charge or claim filed at or with the Equal Employment Opportunity
Commission, any state agency having similar jurisdiction or any court or
tribunal, actually pending and, to the knowledge of Sellers and
Shareholder, no such charge or claim is threatened against Sellers in
connection with the operation of the Business.
(n) Environmental Compliance. (i) Neither Sellers nor
Shareholder has been notified that Sellers or Shareholder is, and neither
Sellers nor Shareholder knows of or suspects that Sellers or Shareholder
is, in violation, or alleged to be in violation, of any Environmental Laws
which would have a material adverse effect on the Business.
(ii) Neither Sellers nor Shareholder has received a
notice, complaint, order, directive, claim or citation from any third
party, including, without limitation, any Federal, state or local
governmental authority with respect to the Business, (A) that any Hazardous
Materials which Sellers or Shareholder has generated, stored, transported
or disposed of has been released at any site at which a Federal, state or
local agency has conducted or has ordered that any person conduct a
remedial investigation, removal or other response action pursuant to any
Environmental Law or has named Sellers or Shareholder as a potentially
responsible party; or (B) that Seller or Shareholder is or shall be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising
out of any third party's incurrence of costs, expenses, losses or damages
of any kind whatsoever in connection with the release of Hazardous
Materials.
(iii) (A) to the Knowledge of Sellers and Shareholder, no
portion of the Acquired Sites has been used for the handling, processing,
storage or disposal of Hazardous Materials except in accordance with
applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Materials is located on any portion of any
Acquired Site; (B) in the course of any activities with respect to the
Business conducted by Sellers or Shareholder or operators of Sellers' or
Shareholder's properties, no Hazardous Materials have been generated or are
being used on the Acquired Sites except in accordance with applicable
Environmental Laws; (C) to the Knowledge of Sellers and Shareholder, there
have been no releases (i.e., any past or present releasing, spilling,
leaking, leaching, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened releases of
Hazardous Materials on, upon, into or from the Acquired Sites, which
releases would have a material adverse effect on the value of any of the
property or adjacent properties or the environment; and (D) in addition,
any Hazardous Materials that have been generated or stored on any of the
Acquired Sites have been transported off site only by carriers having the
authorization of the Environmental Protection Agency or any other competent
Federal, state or municipal authority and treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities have
been and are, to the best of Sellers' and Shareholder's Knowledge,
operating in compliance with such permits and applicable Environmental
Laws.
(iv) The execution, delivery and performance of this
Agreement and the other agreements and instruments referred to or
contemplated herein to which Sellers or Shareholder is or will be a party,
and the transfer of the Purchased Assets by Sellers to Buyer, are not
subject to any Environmental Laws which condition, restrict or prohibit the
sale, lease or other transfer of property or operations.
(v) Sellers and Shareholder have provided to Buyer all
environmentally related audits, studies, reports, analyses (including soil
and groundwater analyses), and results of investigations that have been
performed with respect to the Acquired Sites.
(vi) There is not now nor, to the knowledge of the Sellers
and Shareholder, has there been located at any of the Acquired Sites
asbestos containing material or equipment containing polychlorinated
biphenyls.
(vii) Sellers currently hold, and at all times have held,
all required federal, state, and municipal permits, licenses, certificates
and approvals necessary for the Acquired Sites ("Environmental Permits").
Neither Sellers nor Shareholder has been notified by any relevant
governmental authority that any Environmental Permits will be modified,
suspended, cancelled or revoked, or cannot be renewed in the ordinary
course of business or that Sellers or Shareholder is a potentially
responsible party under any Environmental Laws.
(o) Insurance. Sellers maintain and have in full force and
effect the insurance policies described in Exhibit 5.01(o) covering the
Purchased Assets and the Business. Copies of the insurance policies
covering the Purchased Assets and the Business have been provided to Buyer.
(p) Intangible Assets; Confidentiality Agreements. (1) The
Intellectual Properties listed on Exhibit 5.01(d)(1)(D) are all those used
or being developed for use in the Business or necessary for the conduct of
the Business other than the Excluded Intangible Assets and other than those
which are individually and in the aggregate not material to the operations
of the Business. Other than as disclosed in Exhibit 5.01(d)(1)(D), Sellers
own all Intellectual Properties listed on Exhibit 5.01(d)(1)(D) hereto.
Neither Sellers nor Shareholder have sent or otherwise communicated to any
other person any notice, charge, claim or assertion of, or has any
knowledge of, any present, impending or threatened infringement by such
other person of any Intellectual Properties, by such other person.
(2) Exhibit 5.01(p)(2) contains a complete and correct
identification of all confidentiality agreements currently in effect to
which Shareholder or Sellers is a party as of the date of this Agreement
which relate to the Business, other than customary confidentiality
provisions in the Assigned Agreements or in reseller agreements that are
not Assigned Agreements.
(q) Employees. Exhibit 5.01(q)(1) sets forth the name,
location, title, date of employment, salary, bonus (and any changes in
salary or bonus since February 1, 1997) of each Sellers Employee as of May
3, 1997. Exhibit 5.01(q)(2) sets forth (a) the name of each Sellers
Employee who was employed by any Seller on February 1, 1997 and who is
employed by XLConnect on the date hereof, (b) each person who was employed
by XLConnect on February 1, 1997 and who is a Sellers Employee on the date
hereof and (c) each Sellers Employee who has left the employ of Sellers
since February 1, 1997. Except as described on Exhibit 5.01(q)(1), no
Sellers Employee is a party to a confidentiality agreement or non-
competition agreement with Sellers, Shareholder or any of their respective
Affiliates (including, without limitation, XLConnect). To the Knowledge of
Sellers and Shareholder, since May 3, 1997 no Sellers Employee has provided
notice to Shareholder or Sellers of his or her intention to terminate his
or her relationship with Sellers. Neither Shareholder nor Sellers has
Knowledge of any plan of any Sellers Employee to do so. Exhibit 5.01(q)(3)
sets forth the head count for Sellers Employees by function and name as of
February 1, 1997 and May 3, 1997.
(r) Compliance with Laws. Shareholder and Sellers have complied
in all material respects with all applicable statutes, regulations, orders,
ordinances and other laws of the United States of America, all state, local
and foreign governments and other governmental bodies and authorities, and
agencies of any of the foregoing relating to the Business to which they are
subject and any undertakings of Shareholder or Sellers to any of the
foregoing. Neither Shareholder nor any Seller has received any notice to
the effect that, or otherwise been advised that, it is not in compliance
with any of such statutes, regulations and orders, ordinances, other laws
or undertakings, and neither Sellers nor Shareholder has any reason to
anticipate that any presently existing circumstances are likely to result
in violations of any such regulations which could, in any one case or in
the aggregate, cause a material loss to Sellers or otherwise have a
material adverse effect on the Business. To Sellers' Knowledge, there is
not presently pending any proceeding, hearing or investigation with respect
to the adoption of amendments or modifications to existing laws or
ordinances, regulations or restrictions which, if adopted, would materially
adversely affect the Business.
(s) Transactions with Certain Persons. Except as set forth on
Exhibit 5.01(s), no executive officer or director or employee of Sellers or
Shareholder or, to the Knowledge of Sellers or Shareholder, a member of
such persons' immediate family is presently a party to any transaction with
Sellers relating to the Business, including, without limitation, any
contract, agreement or other arrangement (i) providing for the furnishing
of services by, (ii) providing for the rental of real or personal property
from, or (iii) otherwise requiring payments to (other than services as
officers, directors or employees) any such person or corporation,
partnership, trust or other entity in which any such person has a
substantial interest as a shareholder, officer, director, trustee or
partner.
(t) Clients; Relationship with Accounts. No client, customer or
supplier of Sellers has provided written notice to Sellers of its intention
to terminate its relationship with Sellers or to substantially reduce the
amount of business it provides to Sellers. Neither Sellers nor Shareholder
has Knowledge of any plan of any client, customer or supplier to do so.
Attached hereto as Exhibit 5.01(t) is a true, complete and accurate list of
Sellers' twenty largest accounts with respect to the Business (in terms of
net revenues) during the twelve (12) month period ending on February 1,
1997.
(u) Absence of Certain Changes or Events. Except as set forth
on Exhibit 5.01(u) or as disclosed in the May 3 Balance Sheet, since
February 1, 1997, there has not been any:
(i) change in the financial condition, assets, liabilities,
earnings or business of Sellers, except for changes which have been in the
ordinary course of business and which have not, individually or in the
aggregate, been materially adverse to the Business;
(ii) change in the number of shares of capital stock of any
Seller issued and outstanding or any declaration, setting aside, or payment
of any dividend or other distribution (whether in cash, securities,
property or otherwise) in respect of any Seller's capital stock;
(iii) (A) increase in the compensation payable or to become
payable by any Seller to any Sellers Employee, (B) any bonus, incentive
compensation, service award or other like benefit, granted, made or
accrued, contingently or otherwise, to or to the credit of any Sellers
Employee, or (C) any employee welfare, pension, retirement, profit-sharing
or similar payment or arrangement (whether or not subject to ERISA) made or
agreed to by any Seller except pursuant to the existing plans and
arrangements described in Exhibit 5.01(m) hereto;
(iv) significant labor trouble, or any material controversies or
material unsettled grievances threatened between any Seller and any Company
Personnel or a collective bargaining organization representing or seeking
to represent Company Personnel;
(v) addition to or modification or amendment of the Sellers
Benefit Plan other than (A) contributions made for the fiscal year ended
February 1, 1997 in accordance with the normal practices of Sellers and
Shareholder or (B) the extension of coverage to other Company Personnel who
became eligible after February 1, 1997;
(vi) mortgage, pledge or subjection to any Encumbrance of any of
Seller's or Shareholder's assets used in the Business, except the lien of
Taxes not yet due and payable;
(vii) sale, assignment or transfer of any assets of Sellers or
Shareholder that are material, singly or in the aggregate, to the Business
other than in the ordinary course;
(viii) waiver of any rights of substantial value to Sellers or
Shareholder with respect to the Business whether or not in the ordinary
course of business;
(ix) cancellation or termination by Sellers or Shareholder of
any contract, agreement or other instrument material to the Business to
which Sellers or Shareholder is or was a party;
(x) liability incurred by Sellers or Shareholder with respect to
the Business except liabilities incurred in the ordinary course of
business;
(xi) capital expenditure or the execution of any lease providing
for annual payments with respect to any aspect of the Business or any
incurring of liability therefor in the aggregate in excess of $250,000 or
in excess of $100,000 with respect to any single lease or expenditure;
(xii) borrowing of money by Sellers or Shareholder with respect
to the Business or guaranteeing of any indebtedness of others with respect
to the Business except in the ordinary course of the Business;
(xiii) lending of any money or otherwise pledging the credit of
Sellers with respect to the Business;
(xiv) failure to conduct the Business in the ordinary course;
(xv) change in the method of accounting or accounting practice
of Sellers or Shareholder with respect to the Business;
(xvi) except as set forth in Exhibit 5.01(q)(2), loss of
services of any Sellers Employee;
(xvii) cancellation by any supplier, customer or contractor
which is material to the Business;
(xviii) extraordinary item of loss (as defined in Opinion No. 30
of the Accounting Principles Board of the American Institute of Certified
Public Accountants); or
(xix) agreement by Sellers or Shareholder to do any of the
foregoing.
(v) Disclosure. The representations of Sellers and Shareholder
in this Agreement or in any Exhibit hereto, do not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements included therein or herein, in the light of
the circumstances in which they are made, not misleading.
(w) Delivery of Updated Exhibits. Not less than five (5)
business days prior to the Closing Date, Sellers shall have the right to
deliver to Buyer a certificate (the "Sellers Update Exhibits") disclosing
therein any events which have occurred (other than as the result of a
breach by Sellers or Shareholder of their respective covenants and
undertakings made herein) after the date hereof which render untrue and
incorrect any of the representations and warranties made by Sellers and
Shareholder herein and the specific Exhibit to which such update relates
and the disclosure contained in such Sellers Update Exhibits shall be
deemed to qualify and supplement the representation or warranty to which
such disclosure relates, subject in any event to Buyer's right to terminate
this Agreement in accordance with Section 9.02(b).
(x) Officers and Directors with Knowledge. The persons listed
on Schedule A are all those charged with principal operating responsibility
by Shareholder and Sellers for the matters that are the subject of the
representations and covenants contained in this Agreement.
Section V.02 Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Sellers and Shareholder all of the
following except and as to the extent expressly disclosed in Exhibits to
this Agreement, with reference to the corresponding paragraph of this
Section 5.02 to which each disclosure relates:
(a) Organization and Good Standing of Buyer. Buyer is duly
organized and validly existing under the laws of the State of Delaware, and
has all requisite corporate power to carry on its business as it is now
being conducted.
(b) Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement, the Escrow Agreement, the
Transition Services Agreement and the Assignment Agreement have been duly
and validly authorized and approved by all necessary action on behalf of
Buyer, and Buyer has the power and authority to execute, deliver and
perform this Agreement and to consummate the transactions hereby
contemplated, and no other corporate or stockholder approval or
authorization is required of Buyer by law or otherwise in order to make
this Agreement, the Escrow Agreement, the Transition Services Agreement and
the Assignment Agreement the valid and binding obligations of Buyer (except
any approval required under the HSR Act) enforceable against Buyer in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights in general or by general principles of equity.
(c) No Conflict. The execution, delivery and performance by
Buyer of this Agreement, the Escrow Agreement, the Transition Services
Agreement and the Assignment Agreement, compliance by Buyer with the
provisions of this Agreement and the consummation by Buyer of the
transactions contemplated hereby (i) will not violate in any material
respect any provision of applicable law to which Buyer is subject (except
pursuant to the requirements of the HSR Act), (ii) will not conflict with
any provision of the Certificate of Incorporation or By-laws of Buyer or
conflict with or constitute a default (or with notice or lapse of time or
both, constitute a default) under, or result in the termination of, or
accelerate the performance required by any of the terms, conditions or
provisions of any contract, agreement or other instrument binding on Buyer,
which conflict, default, termination or acceleration would have a material
adverse impact upon Buyer, (iii) except for compliance with the
requirements of the HSR Act, does not require the consent or approval of,
or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
and (iv) does not violate any order, writ, injunction, decree, arbitral
award, statute, rule or regulation applicable to Buyer, violation of which
would have a material adverse impact upon Shareholder or Sellers.
(d) No Brokers. Buyer has not made contact or had any dealings
with or entered into, and will not enter into, any agreement, arrangement
or understanding with any broker, leasing agent, finder or similar person
or entity with respect to this Agreement and the transactions contemplated
hereby which will result in the obligation of Shareholder or Sellers to pay
any finder's fee, brokerage commission or similar payment in connection
with the transactions contemplated hereby.
(e) Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against
or affecting, Buyer before any court or arbitrator or any governmental
body, agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the Closing.
(f) XLC Common Customer. On the Closing Date, each XLC Common
Customer will be a customer to which Buyer and/or any GECITS Entities,
collectively, provided Computer Services with an aggregate invoice amount
of $25,000 or more in 1996 or in the first six months of 1997 on an
annualized basis.
Section V.03 Representations and Warranties of XLConnect.
XLConnect hereby represents and warrants to Buyer that it (a) has duly
authorized, executed and delivered this Agreement, (b) has good,
indefeasible and marketable title to the Power by the Hour Agreements and
the Purchased Assets related thereto and (c) the revenues for the first
quarter of 1997 with respect to the agreement referred to in item 19A of
Exhibit 5.01(d)(1)(A) were not less than $168,000.
ARTICLE VI
----------
Conditions Precedent to Obligations of Buyer and Sellers
--------------------------------------------------------
Section VI.01 Conditions Precedent to Obligations of Buyer. The
obligation of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, or the waiver by Buyer, on
or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True at the Closing Date.
The representations and warranties of Sellers and Shareholder contained in
this Agreement shall be deemed to have been made again at and as of the
Closing Date and shall then be true and correct, subject to Sellers Update
Exhibits as set forth in Section 5.01(w).
(b) Compliance with Covenants. All the terms, covenants,
agreements and conditions of this Agreement to be complied with and
performed by Sellers and Shareholder on or prior to the Closing Date shall
have been duly complied with and performed in all material respects.
(c) Delivery of Closing Documents. Sellers and Shareholder
shall have delivered to Buyer on or prior to the Closing Date all the
documents required to be delivered pursuant to Section 7.01.
(d) Opinion of Sellers' and Shareholder's Counsel. Buyer shall
have received an opinion of Pepper, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel to
Sellers and Shareholder, and opinions of Ohio counsel, Arkansas counsel and
Texas counsel to Sellers and Shareholders, each dated the Closing Date and
addressed to Buyer, in form and substance satisfactory to Buyer, to the
effect that:
(i) Shareholder and each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, and has the corporate power to carry on its
business as it is then being conducted;
(ii) Shareholder is the owner of record of all of the
capital stock of each Seller except that The Future Now, Inc. is the owner
of record of all of the capital stock of XLSource.
(iii) Shareholder and each Seller has full corporate
power and authority to enter into this Agreement, the Assignment Agreement,
the Escrow Agreement, the Transition Services Agreement and the bills of
sale, assignments and other instruments of transfer referred to in this
Agreement to which it is a party and to consummate the transactions
contemplated hereby, and all corporate and other proceedings required to be
taken by or on the part of Shareholder and each Seller to authorize it to
enter into this Agreement, the Assignment Agreement, the Escrow Agreement,
the Transition Services Agreement and the bills of sale, assignments and
other instruments of transfer referred to in this Agreement and to
consummate the transactions contemplated hereby have been duly and properly
taken;
(iv) This Agreement, the Escrow Agreement, the
Assignment Agreement, the Transition Services Agreement, the bills of sale,
assignments and other instruments of transfer delivered by Shareholder and
Sellers pursuant to Section 7.01 to which Shareholder or Sellers is or are
a party have been duly executed and delivered by Shareholder or Sellers, as
appropriate, and each constitutes a legal, valid and binding obligation of
Shareholder and Sellers, as the case may be, enforceable in accordance with
its respective terms;
(v) The execution, delivery and performance by
Shareholder and Sellers of the agreements and instruments referred to in
paragraph (iv) above to which Sellers or Shareholder is a party, (A) will
not conflict with or violate any provision of any applicable law, rule or
regulation or any order, writ, injunction or decree known to such counsel,
(B) will not conflict with any provision of the Articles of Incorporation
or By-laws of Sellers or Shareholder and, to the actual knowledge of such
counsel, will not conflict with or result in the breach of any term or
provision of, or constitute a default under, or result in the creation of
any lien, charge or encumbrance upon any of the Purchased Assets pursuant
to, any indenture, mortgage, lease, agreement or other instrument to which
Sellers or Shareholder is a party or by which it is bound and (C) except
for compliance with the requirements of the HSR Act, do not require the
consent or approval of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality; and
(vi) To the knowledge of such counsel, there is no
action, suit or proceeding pending or threatened in any Federal, state,
municipal or other court, agency or other governmental body seeking to
restrain or prohibit the consummation of the transactions contemplated
hereby, except as described in such opinion;
and as to such other matters as Buyer may reasonably request. Such opinion
may be limited by its terms to the laws of the United States of America and
the Commonwealth of Pennsylvania and the States of Ohio, Arkansas and Texas
and may be given subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and be limited to the extent
that enforcement may be affected by the availability of equitable remedies
or the applicability of principles of equity.
(e) Approvals and Consents. Sellers and Shareholder shall have
obtained all requisite approvals and consents from governmental or
regulatory bodies or agencies, whether Federal, state or local. Consents
to assignment of the Assigned Agreements shall have been obtained by
Shareholder and/or Sellers if and to the extent required by the terms of
such Assigned Agreement. Sellers shall obtain a certificate from the
landlord with respect to each Lease to the effect (i) that such Lease has
not been amended, modified or supplemented and is in full force and effect
on the Closing Date, (ii) the date to which payments under such Lease have
been made, (iii) that there is no default or event which, with notice or
the passing of time, would constitute a default under such Lease and (iv)
that there are no setoffs, defenses or counterclaims against enforcement of
the obligations to be performed under such Lease in favor of the party
executing such consent.
(f) Litigation. As of the Closing Date, there shall not be in
effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to prohibit or restrain the
consummation of the transactions contemplated by this Agreement.
(g) No Material Adverse Change. Since February 1, 1997 there
shall not have been any material adverse change in the business, assets or
financial condition of the Business.
(h) No Change in Law. There shall not have been any action, or
any statute enacted, by any government or agency thereof which would render
the parties unable to consummate the transactions contemplated herein or
make the transactions contemplated herein illegal, prohibit or restrict the
consummation of the transactions contemplated herein. In the case of
failure of the condition set forth in this Section 6.01(h), Buyer shall
deliver to Sellers and Shareholder an opinion of counsel to such effect.
(i) Telephone and Fax Numbers. Sellers shall have delivered to
Buyer a letter from Sellers addressed to Sellers' telephone companies
instructing such companies to transfer Sellers' telephone and fax numbers
relating to the Business at the Acquired Sites to Buyer.
(j) Escrow Agreement; Transition Services Agreement. On the
Closing Date, Sellers shall have duly executed and delivered to Buyer the
Escrow Agreement and Sellers and Shareholder shall have duly executed and
delivered to Buyer the Transition Services Agreement.
(k) Liens and Encumbrances. All Encumbrances on the Purchased
Assets shall have been released and executed instruments of release and
termination statements satisfactory to Buyer shall have been delivered to
Buyer.
(l) HSR Act. Any applicable waiting period under HSR Act shall
have expired or been terminated.
(m) Closing Date Physical Count. The Closing Date Physical
Count shall be made in accordance with GAAP.
(n) Satisfactory Phase I. The Phase I environmental review
undertaken on behalf of the Buyer shall be satisfactory to Buyer with
respect to the Acquired Sites and shall be completed as soon as reasonably
practicable following the date hereof.
(o) Delivery of Revised and Updated Exhibits. Not more than ten
(10) business days nor less than five (5) business days prior to the
Closing Date, XLSource shall deliver to Buyer copies of the revised
Exhibits required by Section 8.01(k), which revised Exhibits shall not
reflect any changes which identify a breach by Shareholder or any Seller of
any covenant contained in this Agreement, which are not consistent with the
past practices of the Business. Any Sellers Updated Exhibits delivered
pursuant to Section 5.01(w) shall be reasonably satisfactory to Buyer.
(p) Revenues of Business. The gross revenues of the Business
for the three fiscal month period ended on the last day of the fiscal month
immediately preceding the Closing Date shall be not less than $115,000,000.
(q) Provision of Product and Services. XLConnect shall have
entered into an agreement with Buyer or another GECITS Entity with respect
to the provision of product and services in the geographic areas in which
the Acquired Sites and the Other Sites are located.
(r) XLConnect Oracle Service Agreement. XLConnect shall have
entered into a service agreement with Buyer or another GECITS Entity,
reasonably satisfactory to Buyer or such GECITS Entity, for a term of up to
six months with up to two three-month extensions, to provide management
services with respect to the Oracle software referred to in item 5 of
Exhibit 5.01(d)(1)(D) on a cost plus margin basis. All payments under such
service agreement shall be prepaid on the Closing Date in an amount to be
agreed by Buyer and XLConnect.
Section VI.02 Conditions to Obligations Of Sellers and
Shareholder. The obligations of Sellers and Shareholder to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment, or the waiver by Sellers and Shareholder, on or prior to the
Closing Date, of the following conditions:
(a) Representations and Warranties True at the Closing Date.
The representations and warranties of Buyer contained in this Agreement
shall be deemed to have been made again at and as of the Closing Date and
shall then be true and correct.
(b) Compliance with Covenants. All the terms, covenants,
agreements and conditions of this Agreement to be complied with and
performed by Buyer on or prior to the Closing Date shall have been duly
complied with and performed in all material respects.
(c) Delivery of Closing Documents. Buyer shall have delivered
to Shareholder and Sellers on or prior to the Closing Date all the
documents required to be delivered pursuant to Section 7.02.
(d) Opinion of Buyer's Counsel. Sellers and Shareholder shall
have received an opinion or opinions of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, counsel for Buyer
dated the Closing Date and addressed to Seller and Shareholder, to the
effect that:
(i) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(ii) Buyer has full corporate power and authority to
enter into this Agreement, the Escrow Agreement, the Transition Services
Agreement and the Assignment Agreement and to consummate the transactions
contemplated hereby, and all corporate and other proceedings required to be
taken by or on the part of Buyer to authorize it to enter into this
Agreement, the Escrow Agreement, the Transition Services Agreement and the
Assignment Agreement and to consummate the transactions contemplated hereby
have been duly and properly taken;
(iii) Each of this Agreement, the Escrow Agreement, the
Transition Services Agreement and the Assignment Agreement has been duly
executed and delivered by Buyer and each such agreement constitutes a
legal, valid and binding obligation of Buyer, enforceable in accordance
with its terms;
(iv) The execution, delivery and performance by Buyer of
the instruments and agreements referred to in paragraphs (iii) above, (A)
will not conflict with or violate any provision of any applicable law, rule
or regulation or any order, writ, injunction or decree known to such
counsel, (B) will not conflict with any provision of the Certificate of
Incorporation or By-laws of Buyer and, to the actual knowledge of such
counsel, will not conflict with or result in a breach of any term or
provision of, or constitute a default under, any indenture, mortgage,
lease, agreement or other instrument to which Buyer is a party or by which
it is bound, and (C) do not require the consent or approval of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality; and
(v) To the knowledge of such counsel, there is no
action, suit or proceeding pending or threatened in any Federal, state,
municipal or other court, agency or other governmental body seeking to
restrain or prohibit the consummation of the transactions contemplated
hereby, except as described in such opinion.
Such opinion may be limited to the laws of the State of New York and the
General Corporation Law of the State of Delaware and such opinion may be
given subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of
creditors' rights generally and be limited to the extent that enforcement
may be affected by the availability of equitable remedies or the
applicability of principles of equity.
(e) Consideration. The Direct Payment shall have been paid to
Seller and the Escrow Deposit shall have been paid to the Escrow Agent, in
each case, in accordance with Section 3.01 and Buyer shall have executed
and delivered to Seller the Assignment Agreement.
(f) No Change in Law. There shall not have been any action, or
any statute enacted, by any government or agency thereof which would render
the parties unable to consummate the transactions contemplated herein or
make the transactions contemplated herein illegal, prohibit or restrict the
consummation of the transactions contemplated herein. In the case of
failure of the condition set forth in this Section 6.02(f), Seller and
Shareholder shall deliver to Buyer an opinion of counsel to such effect.
(g) Litigation. As of the Closing Date, there shall not be in
effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to prohibit or restrain the
transactions contemplated by this Agreement.
(h) HSR Act. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
(i) Approvals and Consents. Sellers and Shareholder shall have
obtained all requisite approvals and consents from governmental or
regulatory bodies or agencies, whether Federal, state or local. Sellers
and Shareholder shall have obtained all requisite consents from each entity
providing financing for the Business, the consent of which is necessary to
deliver the Purchased Assets to Buyer free and clear of all Encumbrances.
(j) Escrow Agreement; Transition Services Agreement. On the
Closing Date, Buyer shall have duly executed and delivered to Sellers the
Escrow Agreement and Buyer shall have duly executed and delivered to
Sellers and Shareholder the Transition Services Agreement.
(k) Provision of Product and Services. XLConnect shall have
entered into an agreement with Buyer or another GECITS Entity with respect
to the provision of product and services in the geographic areas in which
the Acquired Sites and the Other Sites are located.
(l) Consent of Shareholder's Shareholders. If the RND Closing
Date shall have occurred prior to the Closing Date, Shareholder shall have
obtained all requisite approvals of its shareholders to the transactions
contemplated by this Agreement.
(m) XLC Common Customers. Buyer's list of XLC Common Customers
shall be reasonably satisfactory to XLSource.
ARTICLE VII
-----------
Documents to be Delivered on Closing Date
-----------------------------------------
Section VII.01 Documents to be Delivered by Shareholder and
Sellers on Closing Date. On the Closing Date, Shareholder and Sellers
shall deliver to Buyer, in form and substance satisfactory to Buyer and its
counsel:
(a) Conditions Precedent. The documents, agreements and
instruments referred to in Section 6.01 as conditions precedent to the
obligations of Buyer.
(b) Officer's Certificates. Certificates signed by the
President or Vice President of Shareholder and the President of each Seller
with respect to the matters referred to in Section 6.01(a) and (b).
(c) Bills of Sale. Bills of sale duly executed by the Sellers
conveying the Purchased Assets at the Closing Date.
(d) Assignment Agreement, Escrow Agreement and Transition
Services Agreement. The Assignment Agreement and the Transition Services
Agreement duly executed by Sellers and Shareholder and the Escrow Agreement
duly executed by Sellers and Escrow Agent.
(e) Resolutions of the Sellers and the Shareholder. A true
and complete copy, certified by the Secretary or an Assistant Secretary of
each of the Sellers and the Shareholder, of the resolutions duly and
validly adopted by the Board of Directors of each Seller and the
Shareholder evidencing its authorization of the execution and delivery of
this Agreement and the other agreements to be executed by the Sellers and
the Shareholder, as applicable, as contemplated hereby and the consummation
of the transactions contemplated hereby.
(f) Incumbency Certificate of the Sellers and the
Shareholder. A certificate of the Secretary or an Assistant Secretary of
each Seller and the Shareholder certifying the names and signatures of the
officers of each Seller and the Shareholder, as applicable, authorized to
sign this Agreement and the other documents to be delivered hereunder.
(g) Organizational Documents. A copy of (i) the Articles of
Incorporation, as amended (or similar organizational documents), of each
Seller and the Shareholder certified by the Secretary or Department of
State of the state or commonwealth of incorporation of such Seller and the
Shareholder, respectively, as of a date not earlier than three (3) business
days prior to the Closing Date and accompanied by a certificate of the
Secretary or Assistant Secretary of each Seller and the Shareholder, dated
as of the Closing Date, stating that no amendments have been made to such
Articles of Incorporation since such date and (ii) the By-laws of each
Seller and the Shareholder, certified by the Secretary or Assistant
Secretary of each such entity.
(h) Good Standing; Qualification to Do Business. The Buyer
shall have received a good standing certificate from the Secretary or
Department of State of (i) each jurisdiction in which any Sellers or the
Shareholder is incorporated or organized, and (ii) each other jurisdiction
in which the Sellers or Shareholder is conducting the Business requiring it
to qualify in such jurisdiction, in each case dated as of a date not
earlier than three (3) Business Days prior to the Closing Date and
accompanied by bring-down telegrams or facsimiles (to the extent available
in the relevant jurisdictions) dated the Closing Date.
(i) Further Instruments. Such further instruments of
assignment, conveyance or transfer or other instruments covering the
Purchased Assets or any part thereof, and such further instruments with
respect to the transactions contemplated hereby, as Buyer may reasonably
request.
Section VII.02 Documents to be Delivered by Buyer on Closing
Date. On the Closing Date, Buyer shall deliver to Sellers and Shareholder
in form and substance satisfactory to Shareholder and Sellers and their
counsel:
(a) Conditions Precedent. The payments, documents, agreements
and instruments referred to in Section 6.02 as conditions precedent to the
obligations of Shareholder and Sellers.
(b) Officer's Certificate. A certificate signed by the
President or a Vice President of Buyer with respect to the matters referred
to in Section 6.02(a) and (b).
(c) Other Documents. The Assignment Agreement, the Transition
Services Agreement and the Escrow Agreement, each duly executed by Buyer.
(d) Further Instruments. Such further instruments with respect
to the transactions contemplated hereby, including instruments of
assumption, as Sellers may reasonably request.
ARTICLE VIII
------------
Further Covenants and Agreements
of Sellers, Shareholder and Buyer
---------------------------------
Section VIII.01 Further Covenants and Agreements of Shareholder
and Sellers. Shareholder and Sellers agree that:
(a) Conduct of Business Pending Closing. From the date of this
Agreement to the Closing Date, Shareholder and Sellers:
(i) will maintain the Purchased Assets and not remove
any Purchased Assets from the Acquired Sites or the Other Sites except in
the ordinary course of business;
(ii) will perform their obligations under the Assigned
Agreements;
(iii) will conduct the Business only in the ordinary
course;
(iv) will not (A) fail to comply in any material respect
with any laws, ordinances, regulations or other governmental restrictions
applicable in any respect to the Business or any of the Purchased Assets,
(B) grant any powers of attorney to act for the Business after the Closing
Date, (C) mortgage or pledge or otherwise encumber any of the Purchased
Assets except in the ordinary course of business consistent with past
practices and pursuant to agreements in existence on the date hereof,
copies of which have been provided to Buyer, (D) cancel or terminate any
contract, agreement or other instrument material to the Business, other
than contracts, agreements and other instruments which are not to be
assigned to Buyer unless Shareholder or Sellers is otherwise obligated to
maintain them in effect or are necessary for the conduct of the Business,
(E) engage in or enter into any material transaction with respect to the
Business of any nature not expressly provided for herein, (F) pay any
dividend or make any other distribution or payment to the Shareholder or
Sellers, (G) amend, modify or supplement any Employment Contract listed on
Exhibit 5.01(q)(1) (H) issue any additional shares of capital stock of the
Sellers or any options, rights or warrants exchangeable for or convertible
into any shares of capital stock of the Sellers or (I) establish, create or
participate in any new Sellers Benefit Plan or any new Employee Pension
Benefit Plan (or amend or modify any existing Sellers Benefit Plan or
Employee Pension Benefit Plan, except for immaterial amendments or
modifications to any Sellers Benefit Plan or Employee Pension Benefit Plan
which covers employees of Shareholder or its Subsidiaries other than
Sellers Employees) which, if entered into, created or established prior to
the date of this Agreement, would be required to be listed (or, in the case
of modifications and amendments, pertains to a Sellers Benefit Plan or
Employee Pension Plan which is presently listed) on an Exhibit to this
Agreement;
(v) (A) take such action as may reasonably be necessary
to preserve the Purchased Assets, (B) maintain inventory of the kinds and
in the quantities maintained in the ordinary course of the Business, (C)
maintain its books and records in a manner consistent with past practices
and promptly advise Buyer in writing of any material adverse change in the
condition (financial or otherwise) of the Purchased Assets or the Business
of Seller and (D) use its reasonable commercial efforts to preserve the
organization of the Business intact and continue its operations at its
present levels, to keep available to Buyer the services of Company
Personnel and to preserve the goodwill of the suppliers, customers,
creditors and others having business relations with Sellers or Shareholder
in connection with the Business; and
(vi) without the prior written consent of Buyer, permit
any Sellers Employees as of May 3, 1997 to be hired by XLConnect.
(b) Access to the Business. (i) Sellers and Shareholder shall,
from the date hereof up to and including the Closing Date, permit Buyer and
Buyer's attorneys, accountants, agents and representatives full access to
the books, records, business and assets of Sellers and Shareholder with
respect to the Business at any reasonable time and in any reasonable manner
on reasonable advance notice and in a manner that does not interrupt
Seller's business. Buyer shall have the right to meet with customers and
suppliers of Shareholder and Sellers with respect to the Business and
Sellers and Shareholder will give Buyer full cooperation with respect
thereto. Buyer will cooperate and consult with Seller and Shareholder in
arranging any meetings with such customers and suppliers.
(c) Corporate Name. From and after the Closing, Sellers shall
possess to the extent permitted by law, to the exclusion of Buyer, all
rights to the name XLSource and any variants or derivatives of the
foregoing name, and Buyer shall not have any rights whatsoever to the use
of such name or any formatives, variants or derivatives of such name;
provided, however, that Buyer may use such name during a transition period
of 45 days following the Closing Date.
(d) Changes in Representations and Warranties. Between the date
of this Agreement and the Closing Date, Shareholder shall not and neither
Sellers nor Shareholder shall permit Sellers to, enter into any
transaction, take any action, or by inaction, permit an event to occur,
which would result in any of the representations and warranties of Sellers
or Shareholder herein contained not being true and correct at and as of
(i) the time immediately following the occurrence of such transaction or
event or (ii) the Closing Date. Sellers and Shareholder shall promptly
give written notice to Buyer upon becoming aware of (A) any fact which, if
known on the date hereof, would have been required to be set forth or
disclosed pursuant to this Agreement, and (B) any impending or threatened
breach in any material respect of any of the representations and warranties
contained in this Agreement and with respect to the latter shall use all
reasonable efforts to remedy same.
(e) Further Assurances. Sellers and Shareholder will cooperate
fully with Buyer in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, from and
after the Closing Date, from time to time, at Buyer's request and without
further consideration, Sellers and Shareholder will execute and deliver
such other instruments, including powers of attorney, and take such other
action as Buyer may reasonably request to more effectively put Buyer in
possession and operating control of all or any part of the Purchased Assets
or Acquired Sites.
(f) No Mergers, Consolidations, Sales of Assets, Etc. of any
Seller. Until the earlier of the consummation of the transactions
contemplated by the Agreement or the termination date provided for in
Section 9.02 below, neither any Seller nor Shareholder will, directly or
indirectly, solicit any inquiries or proposals or enter into or continue
any discussions, negotiations or agreements relating to the sale or
exchange of the capital stock of any Seller, the merger of any Seller with,
or the direct or indirect acquisition or disposition of all or any part of
the Purchased Assets otherwise than in the ordinary course of the business
of a Seller or Shareholder to or from, any person other than Buyer or its
Affiliates or provide any assistance or any information to or otherwise
cooperate with any person in connection with any such inquiry, proposal or
transaction.
(g) Minimum Net Worth of Shareholder. From the Closing Date to
and including the date of repurchase of uncollected Receivables pursuant to
Section 8.10, Shareholder will maintain a Net Worth not less than
$80,000,000 and will not make any distributions, dividends or other
payments to the holders of its common shares and thereafter so long as
Shareholder shall have any obligations under this Agreement, Shareholder
will maintain a Net Worth equal to or greater than $50,000,000 (the
"Minimum Net Worth") on a consolidated basis and will not sell, lease,
transfer or otherwise dispose of all or substantially all of its assets or
consolidate with or merge with or into any Person or permit any Person to
merge with or into it, except that the Shareholder may sell all or
substantially all of its assets to, or consolidate with or merge with or
into, any other corporation, or permit another corporation to merge with or
into it; provided that:
(i) such successor or purchasing corporation (if such
corporation shall not be the Shareholder) shall be a corporation
incorporated within Canada or the United States of America;
(ii) the obligations of the Shareholder under this
Agreement (including, without limitation, the obligation to maintain a
Minimum Net Worth as provided in this Section 8.01(g)) shall be expressly
and effectively assumed by such successor or purchasing corporation (if
such corporation shall not be the Shareholder); and
(iii) after giving effect to such sale, consolidation or
merger, the Net Worth of such successor or purchasing corporation shall be
equal to or greater than the Minimum Net Worth.
(h) Financial Statements. Sellers shall deliver to Buyer,
promptly upon their becoming available but not later than thirty (30) days
following the end of each applicable month, copies of monthly statements of
assets and liabilities and revenues and expenses for the Business for each
of the months and quarters ending after May 3, 1997 and prior to the
Closing, which statements will be prepared in accordance with GAAP applied
on a consistent basis and will present fairly the financial position of the
Business and the results of operations of the Business as of its date
except as described in Exhibit 3.01(a)(1).
(i) Taxes. Sellers and Shareholder shall take all actions and
shall file all estimates or reports related to the state Tax requirements
of the State in which any Acquired Site or Other Site is located to ensure
that Buyer (i) shall not be liable under the laws of such State for the
payment of any Taxes as a result of the consummation of the transactions
contemplated by this Agreement and (ii) to the extent possible, will not be
required to withhold any portion of the Purchase Price.
(j) Telephone and Facsimile Numbers. Shareholder and Seller
shall have delivered to Buyer letters from Shareholder and Seller addressed
to Seller's telephone companies instructing such companies to transfer to
Buyer the telephone and fax numbers of Seller and Shareholder relating to
the Business at the Acquired Sites. Shareholder and Seller will direct all
calls made to the Other Sites and relating to the Business to Buyer at the
telephone numbers provided by Buyer for such purpose.
(k) Revised Exhibits Listing Assigned Agreements, Inventory,
Receivables and Fixed Assets; Employees. On or prior to the Closing Date
Sellers and Shareholder shall amend each of Exhibit 5.01(d)(1)(A), Exhibit
5.01(d)(1)(B), Exhibit 5.01(d)(1)(C), Exhibit 5.01(d)(1)(E), Exhibit
5.01(d)(1)(F), Exhibit 5.01(d)(1)(G) and Exhibit 5.01(d)(3) by delivering
to Buyer a revised copy of such Exhibit as of a date not more than ten (10)
business days nor less than five (5) business days prior to the Closing
Date, together with a copy of each Assigned Agreement included on such
amended Exhibit that is not listed on Exhibit 5.01(d)(1)(A) attached
hereto. Each such amended Exhibit shall be reasonably satisfactory to
Buyer. Following delivery of such amended Exhibits, such amended Exhibits
shall replace for all purposes of this Agreement the like numbered Exhibit
attached hereto. On and as of the date ten (10) days prior to the Closing
Date, Sellers and Shareholder shall deliver to Buyer a list of the changes
in the Sellers Employees since May 3, 1997.
(l) Certain Rights Under Indemnity Agreement. From and after
the Closing Date, Shareholder and XLConnect shall treat Buyer and its
successors and assigns with respect to the Business as IE Companies within
the meaning of and for all purposes under the Indemnification Agreement
dated October 22, 1996 by and between Shareholder and XLConnect and Buyer
and its successors and assigns shall be entitled to all rights and benefits
provided by such Indemnification Agreement.
(m) Sale of Fixed Assets at Other Sites. Shareholder and
Sellers hereby agree to sell to Buyer on the Closing Date all or such
portion of the Fixed Assets located at the Other Sites as Buyer, in its
sole discretion, determines to purchase. The purchase price for such Fixed
Assets shall be the net book value thereof as set forth on Shareholder's or
Sellers' books and records and shall be paid by Buyer on the Closing Date.
Section VIII.02 Consents to Assignments; Permits. Anything in
this Agreement or the bills of sale notwithstanding, to the extent that any
Assigned Agreement to be sold, assigned, transferred or conveyed to Buyer,
or any claim, right or benefit arising thereunder or resulting therefrom
(the "Interests"), is not capable of being sold, assigned, transferred or
conveyed without the approval, consent or waiver of the other party
thereto, or any third person (including a government or governmental unit),
or if such sale, assignment, transfer or conveyance or attempted
assignment, transfer or conveyance would constitute a breach thereof or a
violation of any law, decree, order, regulation or other governmental
edict, except as expressly otherwise provided herein, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof. After the Closing,
until any Interest has been validly and effectively assigned to Buyer, (i)
prior to the date two years following the Closing Date, Shareholder and
Sellers, as the case may be, shall hold such Interest for the benefit of
Buyer and Buyer shall be entitled to receive all benefits under such
Interest and shall be responsible for the obligations under such Interest
to the extent relating to the benefits received, and (ii) any such Interest
shall, notwithstanding the failure to receive any approval, consent or
waiver (but so long as the same shall not constitute a violation of law),
be deemed to be assigned, transferred or conveyed to Buyer if (x) written
notice of such assignment, transfer or conveyance is given to the other
party to such Interest on or before the Closing Date and (y) the other
party to such Interest does not, within three months after the Closing,
object to such assignment, transfer or conveyance or acts in a manner
inconsistent with such assignment, transfer or conveyance.
Section VIII.03 Survival of Representations, Warranties, Etc.
(a) All covenants and agreements of the parties made in this Agreement or
provided herein shall survive the Closing Date without limit, unless
otherwise specifically provided herein. All representations and warranties
of the parties made in this Agreement or as provided herein shall survive
the Closing Date and for a period ending on May 3, 1999, notwithstanding
any investigation at any time made by or on behalf of the other party;
provided, however, that the representations and warranties relating to any
Tax and any environmental matter shall survive until six months after the
applicable statute of limitations (or any extension thereof) has expired
(as the case may be, the applicable "Survival Period"); and provided,
further, that, any representation or warranty which is the subject of a
claim or dispute asserted prior to the expiration of the Survival Period
shall survive with respect to such claim or dispute until final resolution
thereof. All claims for indemnity hereunder shall be made in writing, and
shall state with reasonable specificity the matter for which
indemnification is sought.
(b) Shareholder's and Sellers' Agreement to Indemnify.
Shareholder and Sellers, jointly and severally, hereby agree to indemnify
and hold Buyer and its shareholders and their officers and directors
harmless from and against any and all claims, liabilities, losses, damages
or injuries, together with costs and expenses, including reasonable legal
fees, arising out of or resulting from (i) any incorrectness or
incompleteness in the representations and warranties made by Shareholder,
XLConnect or Sellers in this Agreement, (ii) any breach in any material
respect by Shareholder or Sellers, unless waived, of any covenant or
agreement of Shareholder or Sellers contained in or arising out of this
Agreement, (iii) the Business conducted by Sellers, or otherwise in
connection with the Purchased Assets or the Assumed Liabilities, prior to
the Closing Date other than obligations in respect of Assumed Liabilities
which are due, in accordance with their terms, after the Closing Date or
included on the Closing Date Balance Sheet, (iv) any failure by Buyer,
Shareholder or Sellers to comply with the bulk sales laws of any
jurisdiction except to the extent the claim is predicated on payment of an
Assumed Liability after the Closing Date and the failure of Buyer to pay
such Assumed Liability, (v) any and all actions, suits, proceedings,
claims, demands, assessments and judgments incidental to the foregoing or
the enforcement of such indemnification and (vi) all Environmental
Liabilities and Costs.
In addition to the foregoing provisions of this Section 8.03(b)
and without limiting the generality of such provisions, Seller and
Shareholder, jointly and severally, agree to fully indemnify and hold
harmless Buyer and its affiliates and stockholders, officers and directors
of any of the foregoing against and in respect of and, on demand, will
reimburse Buyer and its affiliates for: (a) any and all liability
whatsoever, and however imposed (including any claim asserted against or
deficiency assessed against or collected from or paid by Buyer or any
affiliates thereof), in respect of any Taxes of Sellers (or any
predecessors of Sellers) and Shareholder for any and all periods through
the period ending on the Closing Date, without regard to whether or not the
existence of such liability would constitute a breach of a representation
or warranty made by Sellers or Shareholder hereunder and (b) any and all
liabilities of Sellers existing on, or arising under or relating to
activities or transactions of Sellers other than the Assumed Liabilities.
(c) Buyer's Agreement to Indemnify. Buyer hereby agrees to
indemnify and hold Shareholder, Sellers and Sellers' and Shareholder's
officers and directors harmless from and against any and all claims, lia-
bilities, losses, damages or injuries, together with costs and expenses,
including reasonable legal fees, arising out of or resulting from (i) any
incorrectness or incompleteness in the representations and warranties made
by Buyer in this Agreement, (ii) any breach in any material respect by
Buyer, unless waived, of any covenant or agreement of Buyer contained in or
arising out of this Agreement (iii) the business conducted by Buyer at the
Acquired Sites, or otherwise in connection with the Purchased Assets on or
after the Closing Date and (iv) the Assumed Liabilities other than
obligations in respect of Assumed Liabilities which are due, in accordance
with their terms, on or before the Closing Date and are not included on the
Closing Date Balance Sheet.
(d) Claims. Each party shall retain its own counsel and defend
itself, subject to being reimbursed by the indemnifying party for
reasonable attorneys' fees and expenses pursuant to this Section 8.03. The
indemnified party agrees to promptly give the indemnifying party written
notice of any claim, demand, action, suit, proceeding or discovery of fact
upon which the indemnified party intends to base a claim for
indemnification ("Claim") under this Section 8.03. The indemnifying party
shall have the right to participate jointly with the indemnified party in
the indemnified party's defense of any Claim. If the indemnifying party
shall take over the responsibility for the defense of any Claim, the
indemnifying party's obligation to reimburse the indemnified party's
reasonable attorney's fees and expenses shall cease so long as the
indemnifying party is not in default in its obligations under this Section
8.03(d) with respect to such Claim. With respect to any issue involved in
any such Claim, as to which the indemnifying party shall have acknowledged
in writing the obligation to indemnify the indemnified party hereunder, the
indemnifying party shall have the sole right to defend, settle or otherwise
dispose of such Claim, on such terms as the indemnifying party, in its sole
discretion, shall deem appropriate; provided that such terms do not result
in any expense to the indemnified party. In addition, the parties agree to
cooperate in any defense or settlement and to give each other full access
to all information relevant thereto.
(e) Remedies. Any claim by Buyer hereunder may be satisfied
from amounts held pursuant to the Escrow Agreement. Nothing herein shall
preclude the assertion by Buyer, Sellers or Shareholder, as applicable, of
any rights or remedies available to them at law or equity (including, but
not limited to, any right of set-off) in respect of the foregoing
agreements of indemnity. Sellers and Shareholder acknowledge that
irreparable damage would result if the provisions of Sections 8.01(b), (d)
and (h) were not complied with in accordance with their respective specific
terms. Accordingly, Sellers and Shareholder agree that Buyer shall have
the right, in addition to any other rights or remedies it may have, to
injunctive relief, in respect of any failure on the part of Sellers or
Shareholder to comply with provisions of Sections 8.01(b), (d) or (h).
(f) Limitation on Indemnity Obligations. The respective
obligations of Sellers and Shareholder under Section 8.03(b) and of Buyer
under Section 8.03(c) each shall be limited to an aggregate amount equal to
the Purchase Price. Neither Sellers nor Shareholder nor Buyer shall make
any Claim unless the aggregate amount of Claims by such party exceeds
$100,000; provided, however, that any party making Claims hereunder for an
amount in excess of $100,000 shall be entitled to indemnification with
respect to the entire amount of its Claims.
Section VIII.04 Allocations of Purchase Price. After the
Closing, Buyer shall provide to Shareholder copies of Internal Revenue
Service Form 8594 and any required exhibits thereto with Buyer's proposed
allocation of the purchase price among the Purchased Assets. Such
allocation shall be based on the fair market value of each Purchased Asset
at Closing and otherwise in a manner consistent with Section 1060 of the
Code and the regulations thereunder. Within 30 days after the receipt of
such Form 8594, Shareholder shall propose to Buyer any changes to such Form
8594 or shall indicate its concurrence therewith. The failure by
Shareholder to propose any changes within such 30 days shall be deemed to
be an indication of Shareholder's concurrence with such form as proposed by
Buyer. Buyer and Shareholder shall endeavor in good faith to resolve any
differences with respect to the items on Form 8594. Notwithstanding the
foregoing, if Buyer and Shareholder are unable to resolve such differences,
then such differences shall be resolved in accordance with Section 8.05.
Each of Sellers, Buyer and Shareholder hereby covenants and agrees that it
will not take, and will cause each of its subsidiaries not to take, a
position on any foreign, Federal, state or local tax return that is in any
way inconsistent with the allocation made pursuant to this Section 8.04,
unless advised by counsel that its failure to take such inconsistent
position would result in it violating applicable law or incurring
penalties.
Section VIII.05 Resolution of Disputes. Buyer and Shareholder
shall promptly seek to resolve any dispute arising under Section 8.04 of
this Agreement. If Buyer and Shareholder are unable to resolve any such
dispute, Buyer and Shareholder will select an accounting firm (if the
dispute relates to accounting issues) and/or an independent appraisal firm
(if the dispute is one of valuation) mutually acceptable to them to resolve
any remaining disputes. If Buyer and Shareholder are unable to agree on
the choice of an accounting firm and/or an appraisal firm, they will select
a nationally recognized accounting firm or appraisal firm by lot (after
excluding their respective regular outside accounting firms and/or
appraisal firms). Buyer and Shareholder will share equally the fees and
expenses of the accounting firm and/or appraisal firm designated to resolve
outstanding disputes. Buyer, Sellers and Shareholder shall be bound by the
determinations of such accounting firm and/or appraisal firm.
Section VIII.06 Inspection of Records. Sellers and Shareholder
agree, prior to the Closing Date and for the two year period following the
Closing Date, to allow representatives of the Buyer reasonable opportunity
from time to time during normal business hours to inspect and make copies
of the books of account and other records of Sellers which pertain to the
Business and which are not transferred to Buyer hereunder. Sellers and
Shareholder further agree, prior to the Closing Date and for the two year
period following the Closing Date, to cooperate with Buyer's accountants,
counsel and other agents and representatives, and to provide access to the
Seller's records with respect to the Business and to use reasonable
commercial efforts to provide access to the records of the Seller's
independent auditors with respect to the Business (including, without
limitation, all financial and accounting books, workpapers and any
consolidating and other worksheets of its independent auditors) and to
promote the cooperation by its personnel, counsel and independent auditors,
for the purpose of preparing audited financial statements of Sellers for
the annual periods ending February 1, 1997 and each of the two preceding
fiscal years. Buyer shall be solely responsible for the costs and expenses
associated therewith.
Section VIII.07 Non-Competition; Non-Solicitation. (a) Seller
and Shareholder. (i) From and after the Closing Date to and including one
year following the Closing Date, neither Sellers nor Shareholder or any
Affiliate thereof (including, without limitation, XLConnect), will sell,
directly or indirectly, any computer product to any XLS Transferred
Customer unless such customer is a Common XLS Transferred Customer;
provided, however, that Sellers, Shareholder and any such Affiliate will
only sell computer product to a Common XLS Transferred Customer at the
locations (which shall not include the geographic areas in which any
Acquired Site or Other Site is located), in the categories and to the
extent (which shall not limit purchase volumes or aggregate revenues) being
provided (or the subject of a successful bid to provide which was
outstanding on the Closing Date) by Sellers as of the Closing Date to such
Common XLS Transferred Customer. During such one year period XLConnect
either (x) will purchase all computer product required by XLConnect for any
XLS Transferred Customer unless such customer is a Common XLS Transferred
Customer and such purchase is for the location, in the category and to the
extent being provided by Sellers as of the Closing Date to such Common XLS
Transferred Customer, from or (y) will refer all such customers that
require computer product for an application to, Buyer or another GECITS
Entity. During such one year period, neither Sellers nor Shareholder nor
any Affiliate thereof (including, without limitation, XLConnect) shall
provide Computer Services (A) to any customer listed on Exhibit 8.07(a),
(B) to any customer that is a party to the Power by the Hour Agreements
other than (i) ▇▇▇▇▇▇ Chemical, Inc. and (ii) network integration and
applications services and (C) in connection with the agreement listed in
item 19A of Exhibit 5.01(d)(1)(A); provided, however, that they shall not
provide power by the hour services to ▇▇▇▇▇▇ Chemical Inc. Sellers,
Shareholder and XLConnect understand that in connection with the
negotiations leading up to the entering into of this Agreement, each has
received, and that pursuant to this Agreement, each will receive,
confidential and proprietary information of Buyer and its Affiliates,
including, without limitation, customer lists and other trade secrets.
(ii) From and after the date hereof to and including the date
one year following the Closing Date, neither Sellers, Shareholder or any
Affiliate thereof (including, without limitation, XLConnect) will, unless
acting with the express written consent of Buyer, directly or indirectly,
employ or offer employment to any (x) person who was employed by
Shareholder or, any Seller in connection with the Business, Buyer or
Buyer's Affiliates or (y) any person who otherwise performed services on a
regular basis for Shareholder or any Seller in connection with the
Business, Buyer or Buyer's Affiliates, in the case of (x) or (y) during the
12 months immediately preceding the date of this Agreement; provided,
however, that after the Closing Date Sellers or Shareholder (a) may hire
any Sellers Employee that is not a Transferred Employee and (b) may
continue to employ any person employed by Shareholder, any Seller or any
Affiliate thereof (including, without limitation, XLConnect) at the Closing
Date who is not employed in connection with the Business.
(b) Buyer. (i) From and after the Closing Date to and
including the date one year following the Closing Date, neither Buyer nor
the GECITS Entities will provide, directly or indirectly, Computer Services
to any XLS Transferred/XLC Customer other than to customers that are
parties to the Power by the Hour Agreements or listed on Exhibit 8.07(a)
unless such customer is an XLC Common Customer; provided, however, that
Buyer and the GECITS Entities will only provide Computer Services to an XLC
Common Customer at the locations, in the categories and to the extent
(which shall not limit purchase volumes or aggregate revenues) being
provided (or the subject of a successful bid to provide which was
outstanding on the Closing Date) by Buyer or a GECITS Entity as of the
Closing Date or acquired by Buyer or a GECITS Entity after the Closing Date
and to XLC Common Customers in locations where Shareholder, Sellers or
XLConnect do not provide Computer Services immediately following the
Closing Date. During such one year period, Buyer shall and shall cause the
GECITS Entities to refer all XLS Transferred/XLC Customers that request
Computer Services to XLConnect unless Buyer or the GECITS Entities are
permitted to provide Computer Services to such customers in accordance with
this Section 8.07(b)(i). Buyer understands that in connection with the
negotiations leading up to the entering into of this Agreement, it has
received, and that pursuant to this Agreement, will receive, confidential
and proprietary information of Shareholder, Sellers and XLConnect,
including, without limitation, customer lists and other trade secrets.
(ii) From and after the date hereof to and including the date
one year following the Closing Date, Buyer will not and will cause the
GECITS Entities not to, unless acting with the express written consent of
Shareholder, directly or indirectly, (A) employ or offer employment to any
person who was employed by Shareholder, any Seller or XLConnect at any time
between the date hereof and the Closing Date unless such person is a
Transferred Employee, a Sellers Employee or any person who otherwise
performed services on a regular basis for the Business or in connection
with the Transition Services Agreement or (B) solicit to accept employment
with Buyer or any GECITS Entity any other employee of any Seller,
Shareholder or XLConnect after the Closing Date.
(c) (i) Each party acknowledges that the restrictions contained
in this Section 8.07 hereof are reasonable and necessary to protect the
legitimate interests of each party to this Agreement and that each party
would not have entered into this Agreement in the absence of such
restrictions. Each party also acknowledges that any breach by it of
Section 8.07 hereof will cause continuing and irreparable injury to the
other party for which monetary damages would not be an adequate remedy.
Each party agrees that it shall not, in any action or proceeding to enforce
any of the provisions of this Agreement, assert the claim or defense that
an adequate remedy at law exists. In the event of such breach by a party
hereto, the other party shall have the right to enforce the provisions of
Section 8.07 of this Agreement by seeking injunctive or other relief in any
court, without a requirement that a bond be posted, and this Agreement
shall not in any way limit remedies of law or in equity otherwise available
to the other party.
(ii) The one year periods contained in this Section 8.07 shall
not include, and shall be deemed extended by, any time required for
litigation to enforce the relevant covenants; provided, that the party
seeking to enforce such covenant is successful on the merits in any such
litigation; and provided, further, that such period shall only be extended
to include the time required for litigation if such litigation is commenced
by the filing of an action against a party hereto prior to the expiration
of the unextended period. The "time required for litigation" is herein
defined to mean the period of time from the earlier of a party's first
breach as determined by such litigation or settlement thereof of such
covenants or service of process upon such party through the earlier of the
settlement of or the expiration of all appeals related to such litigation.
Section VIII.08 Shareholder Guarantees. Buyer will use
commercially reasonable efforts to assist Shareholder in obtaining releases
in full from its obligations under and pursuant to the liabilities,
agreements and guarantees set forth in Exhibit 8.08.
Section VIII.09 Mutual Cooperation. The parties hereto will
cooperate with each other, and will use all commercially reasonable efforts
to cause the fulfillment of the conditions to the parties' obligations
hereunder and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third party,
whether private or governmental, required in connection with the
transactions contemplated by this Agreement.
Section VIII.10 Collection of Receivables. (a) Buyer shall use
its commercially reasonable efforts to collect the Receivables acquired by
Buyer on the Closing Date. Buyer shall allocate all amounts collected with
respect to such Receivables to the earliest invoices outstanding for a
particular customer except where a particular customer identifies an amount
to a particular invoice or an invoice issued by a GECITS Entity. Any
Receivables acquired by Buyer on the Closing Date that remain uncollected
on the date one hundred twenty (120) days following the Closing Date may be
assigned by Buyer to XLSource on or before the date 150 days following the
Closing Date. XLSource shall pay Buyer, in immediately available funds on
the date of such assignment, an amount equal to the sum of the outstanding
amount of such Receivables so assigned and any accrued and unpaid Costs of
Carry.
(b) Shareholder and Sellers, jointly and severally, agree to
reimburse Buyer monthly in advance for Buyer's cost to carry the
uncollected Receivables acquired by Buyer on the Closing Date at a rate
equal to 6.5% per annum on the average monthly outstanding uncollected
balance of such Receivables (the "Costs of Carry"). On the Closing Date,
Shareholder and Sellers shall pay Buyer an amount equal to one month's Cost
of Carry at such rate on outstanding uncollected Receivables balance on the
Closing Date. On the last day of the month immediately following the month
in which the Closing Date occurs, and on the last day of each succeeding
month, Buyer shall calculate the difference between (i) the Costs of Carry
for the next succeeding month with respect to the outstanding uncollected
Receivables balance on such date less (ii) an amount equal to one-half of
the sum of the outstanding uncollected Receivables balance on the first day
(or, in the case of the first such month, on the Closing Date) and the last
day of such month multiplied by 6.5% and divided by twelve. If such
difference is a negative number, Buyer shall pay such amount to XLSource.
If such difference is a positive number, Shareholder and Sellers shall pay
such amount to Buyer. Shareholder's and Sellers' obligation to pay Costs
of Carry shall immediately terminate as of the date Buyer permanently
retains any uncollected Receivables acquired by Buyer on the Closing Date,
either voluntarily or due to the expiration of the period during which
Buyer may assign such Receivables to XLSource as set forth above in Section
8.10(a) and after payment of any accrued and unpaid Costs of Carry.
(c) XLSource may, at any time, repurchase the uncollected
Receivables acquired by Buyer on the Closing Date for a purchase price
equal to the sum of the outstanding amount of such Receivables and any
accrued and unpaid Costs of Carry. Subject to Section 8.10(a), XLSource
shall give Buyer at least thirty (30) business days notice of its intent to
repurchase such uncollected Receivables. On the date of such repurchase,
Buyer shall assign such Receivables to XLSource.
Section 8.11 Seller Employee Benefits and Employment. (a) Buyer
will provide Sellers and Shareholder with a list of the proposed
Transferred Employees at least five (5) days prior to the Closing Date.
All Company Personnel who are not Transferred Employees shall remain
employees of Shareholder or any of its Affiliates, unless otherwise
terminated by Shareholder, Sellers or any of their Affiliates. Shareholder
shall retain liability and responsibility for any benefits with respect to
such employees. Sellers and Shareholders shall be and remain responsible
for all payments under the Retention Agreements with ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
(b) Effective as of the Closing, the active participation of
any Transferred Employee in any Sellers Benefit Plan will terminate and no
further benefits shall accrue under any Seller Benefit Plan with respect to
any Transferred Employee or any beneficiary of any Transferred Employee.
No provision of this Section 8.01(m) shall create any right in any
Transferred Employee or in his or her beneficiaries. Shareholder or
Sellers shall cause each Sellers Benefit Plan which is a "pension plan"
within the meaning of Section 3(2) of ERISA, or any successor plan thereto,
to be amended to provide full vesting for Transferred Employees. Buyer or
any of its Affiliates shall recognize prior service with Shareholder,
Seller or any of their subsidiaries to the extent recognized under the
Shareholder's corresponding plans for such Transferred Employees prior to
the Closing as service with Buyer or any of its Affiliates in connection
with (1) any welfare benefit plan for purposes of any waiting period and
eligibility purposes and application of preexisting conditions exclusions
and credit for prior payment in the same calendar year toward deductibles
and out-of-pocket limits, and (2) any pension plan for purposes of
eligibility and vesting only in which such Transferred Employees elect to
participate and which is available by Buyer or any of its Affiliate
following the Closing.
(c) Neither Buyer or Sellers shall assume any obligations
under or with respect to any Sellers Benefit Plan.
(d) Shareholder and its respective Affiliates shall retain
all liability and be responsible for, and shall indemnify and hold Buyer
harmless from and against any direct and indirect costs, claims,
liabilities or losses with respect to (i) Sellers Benefit Plans with
respect to employment by Shareholder, Sellers or any of their subsidiaries
prior to the Closing, (ii) any retiree medical benefits provided under any
Sellers Benefit Plan, (iii) any former employees of Shareholder, Sellers or
any of their subsidiaries other than Transferred Employees, including, but
not limited to, post-employment benefits and (iv) any costs arising in
connection with the severance of any employees of Shareholder, Sellers or
any of their subsidiaries prior to the Closing, including, but not limited
to, costs arising under or with respect to WARN, not as a result of actions
taken by Buyer or any of its Affiliates.
(e) Buyer's obligation to provide any benefit package to the
Transferred Employees as set forth in this Section 8.11 is subject to the
approval of the GE Pension Board.
Section 8.12 ▇▇▇▇▇▇ Micro Inc. Agreement. On the later of the
RND Closing Date, and the Closing Date, Buyer or another GECITS Entity
shall execute and deliver a Resale Agreement with ▇▇▇▇▇▇ Micro Inc. in
substantially the form previously provided to XLSource and Shareholder and
XLSource shall execute and deliver an amendment to that certain Volume
Purchase Agreement dated as of April 29, 1997 by and between Shareholder,
XLSource and ▇▇▇▇▇▇ Micro Inc. in substantially the form previously
provided to Buyer, in each case, subject to such completions, corrections
and other nonsubstantive modifications as may be mutually agreed and to the
execution and delivery thereof by ▇▇▇▇▇▇ Micro Inc. of each of such
agreements. If the RND Closing Date does not occur on or before September
1, 1997, at the written request of Shareholder and upon a demonstration by
Shareholder (which demonstration shall be reasonably satisfactory to Buyer)
that Shareholder's ability to provide all or any portion of the product to
be acquired from ▇▇▇▇▇▇ Micro, Inc. pursuant to such Resale Agreement is
substantially equivalent to that of ▇▇▇▇▇▇ Micro Inc., Buyer will utilize
Shareholder among its tier one integrators.
Section 8.13 Obligation to Transfer all Account Knowledge. (a)
Each of Shareholder, Sellers and XLConnect hereby agree and agree to use
their best efforts to cause each of their Affiliates to use its Best
Efforts to Transfer all Account Knowledge with respect to the accounts
listed on Exhibit 8.13 to Buyer. Each of Shareholder, Sellers and
XLConnect acknowledge that irreparable damage would result to Buyer if the
provisions of this Section 8.13 were not complied with in accordance with
their respective terms and that the amount of such damage is not easily
quantifiable. Accordingly, each of Shareholder and Sellers agree that if
the obligations of Seller, Shareholder and XLConnect under this Section
8.13 are not performed with respect to any account listed on Exhibit 8.13
within six months following the Closing Date, Shareholder and Sellers,
jointly and severally, shall pay to Buyer an amount equal to $1,000,000
(One Million Dollars) as liquidated damages with respect to each such
account, and none of Sellers, Shareholders or XLConnect shall have any
other liability to Buyer for any breach of this Section 8.13.
(b) Buyer acknowledges and agrees that the obligations of
Shareholder, Sellers and XLConnect under this Section 8.13 do not
constitute a guarantee of the amount of future revenues that Buyer will
realize from any of the accounts listed on Exhibit 8.13.
Section 8.14 XLC Common Customers. As soon as practicable
following the date hereof, Buyer shall provide to XLSource a list of the
XLC Common Customers.
Section 8.15 XLConnect Service Agreement. On the Closing Date
XLConnect will enter into a service agreement with Buyer or another GECITS
Entity pursuant to which XLConnect will agree to provide management
services in a manner and to an extent reasonably consistent with past
practices as reasonably required by Buyer or such other GECITS Entity with
respect to the agreement referred to in item 19A of Exhibit 5.01(d)(1)(A).
XLConnect will provide such services for a period ending six months
following the Closing Date unless extended by mutual agreement. Thirty
days prior to the end of the term of such service agreement, XLConnect will
use its best efforts to assist Buyer or such GECITS Entity in employing
those of the XLConnect employees providing the services under such service
agreement that XLConnect and Buyer or such GECITS Entity mutually agree may
be employed by Buyer or such GECITS Entity. If the agreement referred to
in such item 19A is terminated prior to the date six months following the
Closing Date or if as renegotiated is not acceptable to Buyer, XLConnect
will refund to Buyer an amount calculated in accordance with Exhibit 8.15.
ARTICLE IX
----------
Miscellaneous
-------------
Section IX.01 Expenses. Regardless of whether the transactions
contemplated hereby are consummated, each of the several parties hereto
shall bear the fees and expenses relating to its compliance with the
various provisions of this Agreement and its covenants to be performed
hereunder, and each of such parties shall pay all expenses (including legal
fees and expenses) incurred by it in connection with this Agreement and the
transactions contemplated hereby.
Section IX.02 Termination of Agreement. This Agreement may be
terminated at any time prior to Closing:
(a) by mutual written consent of Buyer, Sellers and
Shareholder;
(b) by either Buyer or Sellers and Shareholder if any of the
representations or warranties of the other party contained herein shall be
inaccurate or untrue in any material respect;
(c) by either Buyer or Sellers and Shareholder if any
obligation, term or condition to be performed, kept or observed by such
other party hereunder has not been performed, kept or observed in any
material respect at or prior to the time specified in this Agreement;
(d) by either Buyer or Sellers and Shareholder if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the transactions contemplated by this
Agreement shall have become final and non-appealable;
(e) by either Buyer or Sellers and Shareholder, if not then
in material breach of any of its obligations hereunder, if the Closing has
not occurred by August 2, 1997;
(f) by Buyer, if not then in material breach of any of its
obligations hereunder, within five (5) business days after delivery by
Sellers of the Sellers Update Exhibits to the extent such Sellers Update
Exhibits disclose any items which in the Buyer's reasonable judgement,
would have a material adverse effect on the operations, assets, properties,
rights or condition (financial or otherwise) of the Business compared to
that existing on the date hereof;
(g) by Sellers and Shareholder if ▇▇▇▇▇▇ Micro Inc. shall not
have entered into an amendment to the Stock Purchase Agreement dated as of
April 29, 1997 among ▇▇▇▇▇▇ Micro Inc., Shareholder and XLSource in a form
reasonably satisfactory to Shareholder and XLSource on or before July 4,
1997.
Section IX.03 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 9.02, all obligations of
the parties hereunder shall terminate without any liability of any party to
another party; provided, however, that if this Agreement is terminated
under the provisions of Section 9.02(b) or (c) by reason of the breach of
an obligation, term or condition to be performed, kept or observed by one
party, the provisions of this Section 9.03 shall not relieve such breaching
party of liability for such breach.
Section IX.04 Benefit; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and not to any other person. This
Agreement shall not be assigned by any party hereto without the written
consent of each of the other parties hereto, except that (a) the rights and
obligations of Buyer may be assigned to any wholly-owned subsidiary of
Buyer or any entity under common control with Buyer, but no such transfer
shall relieve Buyer of its obligations hereunder, and (b) the rights and
obligations of Buyer may be assigned in connection with the dissolution of
Buyer or the merger of Buyer into or sale by Buyer of substantially all its
assets and business to a third party if the successor shall have assumed
all the obligations of the dissolving, merging or selling entity (but, in
the case of a sale of substantially all the assets, without relieving Buyer
of its obligations hereunder).
Section IX.05 Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the
Commonwealth of Pennsylvania.
Section IX.06 Breach; Failure of Condition. If either party
shall believe at any time prior to the Closing Date that any other party
has breached any representation, warranty, covenant or agreement contained
in this Agreement, or that any condition to the Closing is not reasonably
likely to be satisfied, such party shall promptly so inform such other
party specifying the breach or condition concerned, and such other party
shall have a reasonable opportunity to correct such breach or cause such
condition to be satisfied, but failure to so notify shall not release the
other party from its obligations hereunder.
Section IX.07 Notices, Etc. All notices, requests, demands and
other communications hereunder shall be in writing and shall be delivered
in person or by courier, telegraphed, telexed or by facsimile transmission
or mailed by certified or registered mail first-class, postage prepaid:
If to Sellers, Shareholder or XLConnect:
Intelligent Electronics, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
3000 Two ▇▇▇▇▇ Square
Eighteenth and ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
GE Information Technology Solutions Acquisition Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President - Business Development
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
E. ▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice, request, demand or other communication hereunder shall be
deemed to have been duly given or made and to have become effective (a) if
delivered by hand, at the time of receipt thereof, (b) if sent by
telegraph, telex or facsimile transmission, at the time of the dispatch
thereof, if dispatched during normal business hours in the state of
receipt, or otherwise at the opening of business on the following business
day in the state of receipt and (c) if sent by registered or certified
first class mail, postage prepaid, upon receipt.
Any party may, by written notice to the other, change the address
to which notices to such party are to be delivered or mailed.
Section IX.08 Headings. The headings of the articles, sections
and paragraphs contained in this Agreement are inserted for convenience
only and in no way modify the meanings of such articles, sections and
paragraphs.
Section IX.09 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
This Agreement shall become effective when one or more counterparts have
been signed by each of the parties hereto and delivered to the other
parties.
Section IX.10 Entire Agreement. This Agreement and the other
agreements referred to herein and entered into in connection herewith set
forth the entire agreement and understanding of the parties in respect of
the transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof
including all such agreements, arrangements and understandings between
Sellers, Shareholder and Buyer, except for that certain confidentiality
agreement dated April 1, 1997 by and between Shareholder and GE Capital
Information Technology Solutions, Inc.
Section IX.11 Waiver; Amendment; Modification. Any party to
this Agreement may, by written agreement (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies or breaches in the representations and
warranties of the other parties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) waive compliance with
any of the agreements or conditions of the other party contained herein.
Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or
a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a
waiver of any of such rights. This Agreement may be amended or modified
only by a written agreement executed by the parties hereto or by their
successors and assigns.
Section IX.12 Severability. To the extent that any provision of
this Agreement shall be invalid or unenforceable, it shall be considered
deleted herefrom and the remainder of such provision and of this Agreement
shall be unaffected and shall continue in full force and effect. In
furtherance and not in limitation of the foregoing, if the duration or
geographic extent of, or business activity covered by, any provision of
this Agreement shall be in excess of that which is enforceable under
applicable law, then such provision shall be construed to cover only that
duration, extent or activities which may be validly and enforceably
covered.
Section IX.13 Press Releases. Neither Sellers, Shareholder nor
Buyer shall issue any press releases or make any public announcements of
any of the transactions contemplated by this Agreement except as may be
mutually agreed to in writing by Sellers, Shareholder and Buyer; provided,
however, that notwithstanding the foregoing, Sellers, Shareholder and Buyer
shall be permitted to make such disclosures to the public or governmental
authorities as their respective counsel shall deem necessary to maintain
compliance with, or to prevent violation of, applicable laws, rules and
regulations.
Section IX.14 HSR Filing. As promptly as practicable, and in
any event no later than five business days following the date hereof,
Buyer, Shareholder and Sellers shall make any filing required pursuant to
the HSR Act. Buyer, Shareholder and Sellers shall promptly and diligently
provide any additional information required or reasonably requested in
order to comply with the requirements of the HSR Act.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
GE INFORMATION TECHNOLOGY SOLUTIONS ACQUISITION
CORP., as Buyer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman of the Board and President
THE FUTURE NOW, INC.,
as Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Secretary and Treasurer
XLSOURCE, INC.,
as Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Secretary and Treasurer
E-C COMPUTER TECHNICAL SERVICES, INC.,
as Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Secretary and Treasurer
RCK COMPUTERS, INC.,
as Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
INTELLIGENT ELECTRONICS, INC., as Shareholder
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
XLCONNECT SOLUTIONS, INC., XLCONNECT
SERVICES, INC. and XLCONNECT SYSTEMS,
INC., each hereby agrees to and
accepts its obligations under Section 2.01,
Section 4.02, Section 8.01(a)(vi), Section 8.07(a),
Section 8.13 and Section 8.15 hereof and makes
the representation made in Section 5.03 hereof.
XLCONNECT SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
XLCONNECT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
XLCONNECT SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
GE CAPITAL INFORMATION TECHNOLOGY
SOLUTIONS, INC. hereby guarantees the
obligations of Buyer and the GECITS
Entities pursuant to Section 8.07(b).
GE CAPITAL INFORMATION TECHNOLOGY
SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
Attachment A
------------
DEFINITIONS
-----------
"Acquired Sites" shall mean: (i) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇; (ii) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; (iii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇▇▇; (iv) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇; (v) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and (vi) ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Agreement" shall mean this Asset Purchase Agreement.
"Affiliate" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise.
"Assigned Agreements" shall mean (i) the Leases, (ii) Article 5
of the Agreement and Plan of Merger, dated as of December 23, 1996, by and
among Shareholder and Voyage (Waco) Acquisition Corporation and RCK
Computers, Inc. and G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M. ▇▇▇▇▇ ▇▇▇▇▇▇▇, F. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇ Short, (iii) Non-Compete and Confidentiality
Agreement dated December 23, 1996 by G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for the benefit of
Shareholder and its subsidiaries, (iv) Non-Compete and Confidentiality
Agreement dated December 23, 1996 by M. ▇▇▇▇▇ ▇▇▇▇▇▇▇ for the benefit of
Shareholder and its subsidiaries, (v) Non-Compete and Confidentiality
Agreement dated December 23, 1996 by F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ for the benefit
of Shareholder and its subsidiaries, (vi) Non-Compete and Confidentiality
Agreement dated December 23, 1996 by ▇. ▇▇▇▇▇ Short for the benefit of
Shareholder and its subsidiaries, (vii) Article 5 of the Agreement and Plan
of Merger, dated as of October 23, 1996, by and among Shareholder, Voyage
(Texas) Acquisition Corporation, E-C Computer Technical Services, Inc. and
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇, (viii) Non-
Compete and Confidentiality Agreement dated October 23, 1996 by ▇▇▇▇▇
▇▇▇▇▇▇▇ for the benefit of Shareholder and its subsidiaries, (ix) Non-
Compete and Confidentiality Agreement dated October 23, 1996 by ▇▇▇▇▇ ▇▇▇▇▇
for the benefit of Shareholder and its subsidiaries, (x) Non-Compete and
Confidentiality Agreement dated October 23, 1996 by ▇▇▇▇▇▇▇ ▇▇▇▇▇ for the
benefit of Shareholder and its subsidiaries, (xi) Non-Compete and
Confidentiality Agreement dated October 23, 1996 by ▇▇▇▇▇▇ ▇▇▇▇ for the
benefit of Shareholder and its subsidiaries and (xiii) all business
agreements, leases, contracts, documents and instruments of the Sellers
described on Exhibit 5.01(d)(1)(A), which relate to the Business of Sellers
and any renewals, extensions, amendments or modifications thereof;
provided, however, in the case of agreements with customers other than the
Power by the Hour Agreements, such agreements constitute Assigned
Agreements solely to the extent of the provisions thereof that are not
Service Portions. The description of each such agreement includes the name
and date of, and the parties to, each such agreement, a brief description
of the subject matter thereof and indicates whether any consent is required
for the assignment of such agreement by Sellers to Buyer, as contemplated
by the Agreement.
"Assignment Agreement" shall mean an assignment and assumption
agreement between Buyer, Sellers and XLConnect in substantially the form of
Exhibit A-1.
"Assumed Liabilities" shall be limited to (a) the trade payables
of E-C Computer Technical Services, Inc. and RCK Computers, Inc. and the
accrued employee expenses with respect to Transferred Employees, in each
case as reflected on the Closing Date Balance Sheet, (b) obligations
arising under the Leases becoming due after the Closing Date and (c)
obligations under the Assigned Agreements becoming due after the Closing
Date or reflected on the Closing Date Balance Sheet.
"Best Efforts to Transfer All Account Knowledge" shall mean the
taking of all actions reasonably requested by Buyer to transfer to Buyer
all customer account information (written or unwritten) for the customers
listed on Exhibit 8.13 with respect to the Business. Such actions shall
include but shall not be limited to (a) attending and engaging in
meaningful discussion at meetings between representatives of Buyer and the
GECITS Entities at mutually satisfactory times and locations and the
appropriate representatives of Shareholder, Seller, XLConnect and their
Affiliates, employees and, to the extent within the reasonable control of
Shareholder, Sellers or XLConnect, independent contractors who have
customer knowledge or contact with the customers listed on Exhibit 8.13,
which meetings shall be held weekly during the first three months following
the Closing Date and as reasonably requested by Buyer thereafter (notice of
all meetings will be given to the President of XLConnect and to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, attention ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, but failure to give
such notice shall not affect any obligation of Shareholder, Sellers or
XLConnect other than the obligation to attend the meeting for which notice
is not given), (b) providing written reports to Buyer with respect to such
customer account information, (c) using reasonable commercial efforts to
arrange and attending meetings with the customers listed on Exhibit 8.13
and representatives of Buyer and the GECITS Entities and (d) generally
acting as an advocate of Buyer with respect to the Business from the
customers listed on Exhibit 8.13. Customer account information shall not
include information of XLConnect which relates to its Computer Services
business and not to the Business or information of Sellers and Shareholders
which relates to Sellers business at the Retained Sites and not to the
Business.
"Business" shall mean the Sellers' business of reselling
microcomputer and technology products conducted at the Acquired Sites and
the Other Sites prior to the Closing Date and the Power by the Hour
Agreements. The term Business shall not include Sellers' business of
reselling microcomputer and technology products conducted at the Retained
Sites.
"Claim" shall have the meaning set forth in Section 8.03(d).
"Closing" shall have the meaning provided in Section 4.01 of the
Agreement.
"Closing Date" shall have the meaning provided in Section 4.01 of
the Agreement.
"Closing Date Balance Sheet" shall have the meaning provided in
Section 3.01(c) of the Agreement.
"Closing Date Physical Count" shall have the meaning provided in
Section 3.01(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended
and the regulations promulgated thereunder.
"Company Personnel" shall mean current or former employees,
officers, directors, or consultants of Sellers.
"Common XLS Transferred Customer" shall refer to any XLS
Transferred Customer to whom Sellers or Shareholder sells computer products
from the Retained Sites and who is listed on Exhibit 8.07(e).
"Computer Services" shall mean systems integration and
internetworking of hardware and software (including consulting and design),
training and learning services, remote systems or network management
services, applications help-desk services, applications development
services and combined installation, moving, adding and changing (IMAC)
services that require on-site personnel. "Computer Services" shall not
mean (a) pre-delivery or pre-installation configuration of hardware and
software, (b) warranty and out-of-warranty repair and break and fix
services for hardware and services customers provided on a dispatch basis
or by two or less persons on site who do not provide more than a de minimis
amount of IMAC, (c) non-applications help desk services, (d) remote site
disaster recovery services or (e) any other services that Buyer or its
assigns is required to provide pursuant to the Assigned Agreements.
"Costs of Carry" shall have the meaning provided in Section
8.10(b).
"Customer Data" shall mean Sellers' and Shareholder's lists of
customers and clients of the Business as set forth on Exhibit 5.01(d)(1)(B)
and all records regarding such customers and clients.
"Direct Payment" shall have the meaning provided in Section
3.01(b) of the Agreement.
"Employee Pension Benefit Plan" shall have the meaning ascribed
to such term by Section 3(2) of ERISA.
"Employment Contracts" shall mean all employment contracts,
consulting agreements and collective bargaining agreements with respect to
employees employed in the Business.
"Encumbrance" shall mean any security interest, mortgage, option,
financing lease, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or otherwise), charge against or interest in
property to secure payment of a debt or performance of an obligation or any
other priority or preferential arrangement to secure a debt or the
performance of an obligation (including the filing or recording of any
financing statement or similar instrument under the UCC or similar statute)
of any kind or nature whatsoever.
"Environmental Laws" shall mean all Federal, state or local
judgments, decrees, orders, laws, licenses, ordinances, rules or
regulations pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and Recovery Act
(42 U.S.C. Section 1801 et seq.) ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601 et seq.) ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, the Federal Clean Water Act (33 U.S.C. Section 1251 et seq.)
("▇▇▇▇"), the Federal Clean Air Act (33 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 7401 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.).
"Environmental Liabilities and Costs" shall mean all Losses,
whether direct or indirect, known or unknown, current or potential, past,
present or future, imposed by, and under or pursuant to Environmental Laws,
including, without limitation, all Losses related to remedial actions, and
all fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of, or otherwise in respect of (a) the
ownership or operation of the Business or Leases or any other real
properties, assets, equipment or facilities, by the Shareholder, any
Seller, or any of their respective predecessors or Affiliates, (b) the
environmental conditions existing on the Closing Date on, under, above, or
about any property subject to Leases or any other real properties, assets,
equipment or facilities currently or previously owned, leased or operated
by the Shareholder, any Seller, or any of their respective predecessors or
Affiliates, and (c) expenditures necessary to cause any property subject to
Leases or any aspect of the Business to be in compliance with any and all
requirements of Environmental Laws as of the Closing Date, including,
without limitation, all environmental permits issued under or pursuant to
such Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which are or have ever been under common control, or
which are or have been treated as a single employer, with Sellers under
Section 414(b), (c), (m), or (o) of the Code.
"Escrow Agent" shall mean Chase Manhattan Bank.
"Escrow Agreement" shall have the meaning provided in Section
3.01(b) of the Agreement.
"Escrow Account" shall mean the escrow account set up pursuant to
the Escrow Agreement.
"Escrow Deposit" shall have the meaning provided in Section
3.01(b) of the Agreement.
"Excluded Assets" shall mean all assets of Sellers and
Shareholder other than the Purchased Assets.
"Excluded Intangibles" shall mean the name "XLSource, Inc.", the
name "The Future Now, Inc., the pending trademark registration for
"XLSource," the registered trademark "The Future Now" and the Oracle
software license.
"Excluded Liabilities" shall mean all claims, liabilities and
obligations of Shareholder and Sellers relating to the Business (other than
the Assumed Liabilities) and shall include, without limitation:
(a) all claims, liabilities and obligations of Shareholder or
Sellers whether or not reflected on the Closing Date Balance Sheet that are
not Assumed Liabilities;
(b) claims, liabilities and obligations of Sellers or
Shareholder under this Agreement;
(c) claims, liabilities and obligations of Sellers or
Shareholder in respect of Taxes and in respect of any violations of
Environmental Laws;
(d) claims, liabilities and obligations of Sellers or
Shareholder in respect of litigation disclosed in Exhibit 5.01(e) or
otherwise affecting the Business and related to or arising out of the
operation of the Business prior to the Closing Date and liabilities and
obligations listed in Exhibit 8.08;
(e) fees and expenses of Sellers or Shareholder in connection
with the negotiation of or consummation of the transactions contemplated by
this Agreement; and
(f) claims, liabilities and obligations of Sellers under any
Sellers Benefit Plan and any Employment Contracts; and
(g) all outstanding obligations for money borrowed or guarantees
thereof of the Sellers or the Shareholder with respect to the Business,
including, but not limited to, those set forth on Exhibit 8.08, in each
case, in the amounts and to the extent reflected on Sellers' and
Shareholder's respective books on the Closing Date.
"February 1 Balance Sheet" shall have the meaning provided in
Section 5.01(j) of the Agreement.
"February 1 Balance Sheet Date" shall have the meaning provided
in Section 5.01(j) of the Agreement.
"Fixed Assets" shall mean the fixtures, equipment, leasehold
improvements, security systems, telephone systems, display stands,
furniture and similar furnishings (a) located at the Acquired Sites or at
holding areas for the Acquired Sites, in each case, as listed on Exhibit
5.01(d)(1)(C) and (b) located at the Other Sites or at holding areas for
the Other Sites and purchased by Buyer in accordance with Section 8.01(m).
"GAAP" shall mean generally accepted accounting principles, as
presently in effect in the United States.
"GECITS" shall mean GE Capital Information Technology Solutions,
Inc.
"GECITS Entities" shall mean GECITS and its direct and indirect
subsidiaries.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Hazardous Material" shall mean any and all hazardous wastes,
that in any physical state, might represent danger to the environmental
balance because of their corrosive, toxic, venomous, reactive, explosive,
flammable, biological or irritate conditions, such as: (a) any petroleum
or petroleum products, flammable explosives, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation, transformers or other equipment that contain dielectric
fluid containing levels of polychlorinated biphenyl, and radon gas; (b) any
chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances",
"hazardous wastes", "toxic substances", "toxic pollutants", or words of
similar import, under any applicable Environmental Laws; and (c) any other
chemical, material, substance, or waste, exposure to which is now or
hereafter prohibited, limited or regulated by any Environmental Law or by
any Federal, state or municipal authority.
"Intangibles" shall mean the Intellectual Properties, all
goodwill and all other general intangibles of Sellers or Shareholder used
in the Business described on Exhibit 5.01(d)(1)(D).
"Intellectual Properties" shall mean all patents of any
description and pending applications therefor, all registrations of
trademarks and of other marks, all registrations of trade names, assumed
names, service marks, logos, labels or other trade rights, all pending
applications for any such registrations, all copyright registrations and
pending applications therefor, all other copyrights, trademarks and other
marks, trade names, assumed names, service marks, logos, jingles, program
rights, non-governmental licenses, computer programs and slogans, and all
other inventions and designs, whether or not patentable, described on
Exhibit 5.01(d)(1)(D).
"Inventory" shall mean all products physically held or in transit
for sale or lease and service parts and components (in each case without
regard to physical location) in the ordinary course of the Business, listed
on Exhibit 5.01(d)(1)(E).
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean the actual knowledge of the directors and
officers and management personnel of Sellers and Shareholder identified on
Schedule A.
"Leases" shall mean the leases described on Exhibit 5.01(d)(4)
pursuant to which Sellers or Shareholder, as lessee, leases the Acquired
Sites.
"Lien" shall mean any liens, mortgages, judgments, pledges,
charges, claims, attachments, adverse interests, security interests
(including financial leases), rights to possession or custody, bailments,
trespasses, liabilities and other encumbrances.
"Net Assets Acquired" shall mean, at any date, the net book value
of the Purchased Assets less the aggregate amount of the Assumed
Liabilities and the amount of cash and cash equivalents other than ▇▇▇▇▇
Cash, in each case as set forth in the unaudited combined balance sheet of
the Business as of such date.
"Net Worth" shall mean, at any date, the sum of the net value of
the Shareholder's or its successor's assets less the aggregate amount of
the Shareholder's or its successor's, as applicable, liabilities, in each
case as set forth on the balance sheet of the Shareholder or its successor
as of such date.
"Other Property" shall mean the Customer Data, Fixed Assets,
telephone numbers and fax numbers for the Acquired Sites and ▇▇▇▇▇ Cash
described on Exhibit 5.01(d)(1)(F).
"Other Sites" shall mean the locations from which the Business is
presently conducted at: (i) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇;
(ii) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇; (iii) ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; (iv) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; (v) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; (vi)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; (vii) ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; (viii) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; (ix) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇; (x)
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇; (xi) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; (xii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(xiii) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; (xiv) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and (xv) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"PBGC" shall refer to the Pension Benefit Guaranty Corporation
established under Section 4002 of ERISA, or any entity succeeding to any or
all of its functions.
"Person" shall mean an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"▇▇▇▇▇ Cash" shall mean all cash on hand at the Acquired Sites
and the Other Sites at the opening of business on the Closing Date.
"Post-Closing Adjustment" shall have the meaning provided in
Section 3.01(c) of the Agreement.
"Power by the Hour Agreements" shall mean (i) the Agreement for
Procurement of Services between General Electric Aircraft Engines and
XLConnect effective as of January 1, 1997, (ii) the Master Purchase
Agreement between ▇▇▇▇▇▇ Chemical, Inc. and XLConnect dated July 19, 1996
and (iii) the agreement with Fluor ▇▇▇▇▇▇ with respect to life cycle
management services as set forth in correspondence between ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. and ▇▇▇▇ ▇▇▇▇▇▇ dated March 6, 1997.
"Purchase Price" shall have the meaning provided in Section
3.01(a) of the Agreement.
"Purchased Assets" shall mean the Inventory, Receivables,
Intellectual Properties, Other Property, rights under the Assigned
Agreements and all other assets set forth or which should, in accordance
with GAAP, be set forth on an unaudited combined statement of assets and
liabilities of the Business as of the Closing Date; provided, however, that
Purchased Assets shall not include (i) any Sellers' Benefit Plan or
Employment Contracts, (ii) any tax assets and (iii) Excluded Intangibles.
"RND Closing Date" shall mean the "Closing Date" as such term is
used in the Stock Purchase Agreement dated as of April 29, 1997 among
▇▇▇▇▇▇ Micro Inc., Shareholder and XLSource.
"Receivables" shall mean all of the outstanding accounts
receivable without regard to any reserves with respect to the Business
listed on Exhibit 5.01(d)(1)(G), or arising from the lease or sale of goods
or for services rendered in the Business, including receivables relating to
contra-payable balances in the payable accounts for the Business and
receivables attributable to manufacturers' and other vendors' reimbursement
policies, but shall not include receivables due from Sellers Employees,
Sellers or Shareholder.
"Retained Sites" shall mean: (i) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇; (ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, (iii) ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, (iv) ▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇'▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ and (v) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇.
"Returns" shall have the meaning provided in Section 5.01(k) of
the Agreement.
"Sellers Benefit Plan" shall refer to all Employee Benefit Plans
and all other employee benefit arrangements or payroll practices,
including, but not limited to, severance pay, sick leave, vacation pay,
salary continuation for disability, scholarship programs, stock option or
restricted stock plans maintained by Shareholder, Sellers or any Subsidiary
or ERISA Affiliate of either (whether formal or informal, whether for the
benefit of a single individual or for more than one individual and whether
for the benefit of current or former employees or their beneficiaries) on
behalf of Sellers, its Subsidiaries or any Company Personnel to which or
under which or pursuant to which Shareholder, Sellers or any Subsidiaries
or any ERISA Affiliate of either has contributed or is obligated to make
contributions on behalf of Seller, any of its Subsidiaries or any Company
Personnel.
"Sellers Employee" shall refer to any active employee on the
payroll of Shareholder or any of its Affiliates who devotes substantially
all of his or her working time to the performance of services in
furtherance of the Business as of February 1, 1997 or thereafter through
and including the Closing Date.
"Services Portions" shall mean those provisions of agreements
listed on Exhibit 5.01(d)(1)(A) (other than those entered into by E-C
Computer Technical Services, Inc. and RCK Computers, Inc.) with respect to
providing information technology services in the following areas:
(i) internetworking (the consulting, design, implementation and
integration of local area networks and wide area networks;
(ii) applications development (the customization and adaptation of
proven software as well as training and education to support
applications and internetworking solutions);
(iii) telecommunications (including data, video and voice
transmission); and
(iv) managed services (such as technology selection and deployment
services, combined installation, moving, adding and changing
services (IMAC), which include configuration of hardware and
software components at client sites, in warranty and out-of-
warranty break and fix services, help desk, network management
and asset management services.
"Subsidiary" means any corporation of which the shares of stock
having a majority of the general voting power in electing the board of
directors are, at the time as of which any determination is being made,
owned by XLSource either directly or indirectly through one or more
Subsidiaries.
"Survival Period" shall have the meaning provided in Section
8.03(a) of the Agreement.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance,
stamp, occupation, property or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign) upon Sellers or any affiliate
thereof.
"Transferred Employee" shall refer to any Sellers Employee listed
on Exhibit 5.01(q)(3) that is hired by Buyer or its Affiliates as of the
Closing.
"Transition Services Agreement" shall mean the Transition
Services Agreement with respect to the matters described in Exhibit A-3.
"WARN" shall refer to the Workers Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq., and any comparable state or
local laws and regulations.
"XLS Transferred/XLC Customer" shall refer to any XLS Transferred
Customer that is also a customer to whom XLConnect provides Computer
Services with revenues in excess of $25,000 or more in 1996 or in the first
six months of 1997 on an annualized basis and is listed on Exhibit 8.07(d).
"XLConnect" shall mean XLConnect Solutions, Inc., a Pennsylvania
corporation, and each of its affiliates and subsidiaries other than the
Shareholder, The Future Now, Inc. and XLSource.
"XLC Common Customer" shall refer to any customer who is both an
XLS Transferred/XLC Customer and a customer to whom any GECITS Entities
provides Computer Services with revenues in excess of $25,000 or more in
1996 or in the first six months of 1997 on an annualized basis and is
listed on Exhibit 8.07(f).
"XLS Transferred Customer" shall refer to any customer to whom
Sellers or Shareholder is selling computer products in the Business as of
the Closing Date and is listed on Exhibit 8.07(c).
"XLSource" shall mean XLSource, Inc.
* * *
ATTACHMENTS
Attachment A. Definitions
* * *
EXHIBITS
Exhibit A-1 Assignment Agreement
Exhibit A-2 Form of Escrow Agreement
Exhibit A-3 Form of Transitional Services Agreement
* * *
DISCLOSURE EXHIBITS
Exhibit 3.01(a)(1) Schedule of Net Assets Acquired as of May 3, 1997
Exhibit 3.01(a)(2) Allocation of Purchase Price Among Sellers
Exhibit 3.01(c) Closing Date Balance Sheet Adjustments
Exhibit 5.01(b) Stock Ownership
Exhibit 5.01(d)(1)(A) Assigned Agreements
Exhibit 5.01(d)(1)(B) Customer Data
Exhibit 5.01(d)(1)(C) Fixed Assets
Exhibit 5.01(d)(1)(D) Intangibles
Exhibit 5.01(d)(1)(E) Inventory
Exhibit 5.01(d)(1)(F) Other Property
Exhibit 5.01(d)(1)(G) Receivables
Exhibit 5.01(d)(2) Backorder Report for the Business
Exhibit 5.01(d)(4) Leases
Exhibit 5.01(d)(5) Description of the Business
Exhibit 5.01(e) Litigation
Exhibit 5.01(f) Conflicts with Law or Agreements
Exhibit 5.01(i) Exceptions to GAAP
Exhibit 5.01(m) Sellers' Benefit Plans
Exhibit 5.01(o) Insurance Policies
Exhibit 5.01(p)(2) Sellers' Confidentiality Agreements
Exhibit 5.01(q)(1) Sellers' Employees
Exhibit 5.01(q)(2) XLConnect/XLSource Employee Changes
Exhibit 5.01(q)(3) Sellers' Employees by Name and Function as of
February 1, 1997 and May 3, 1997
Exhibit 5.01(s) Related Party Transactions
Exhibit 5.01(t) Twenty Largest Clients
Exhibit 5.01(u) Certain Changes and Events since February 1, 1997
Exhibit 8.07(a) E-C Computer Technical Services, Inc. and RCK
Computers, Inc. and Certain Other Customers
Exhibit 8.07(c) XLS Transferred Customers
Exhibit 8.07(d) XLS Transferred Customers that are XLC Customers
Exhibit 8.07(e) Common XLS Transferred Customers
Exhibit 8.07(f) XLC Common Customers
Exhibit 8.08 Shareholder Guarantees
Exhibit 8.13 Best Efforts Accounts
Exhibit 8.15 Early Termination Calculation