Exhibit 2.1
ASSET PURCHASE AGREEMENT
dated as of
May 10, 1999
by and between
COMPUCOM SYSTEMS, INC.
and
ENTEX INFORMATION SERVICES, INC.
TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS.................................................1
1.1 Terms Defined in this Article....................................1
1.2 Other Definitions................................................5
1.3 Accounting Terms.................................................6
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS..............................6
2.1 Purchase and Sale of Purchased Assets............................6
2.2 Consideration....................................................8
2.3 Time and Place of the Closing....................................9
2.4 Deliveries at the Closing........................................9
2.5 Open and In-Transit Purchase Orders.............................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.........................12
3.1 Organization and Qualification..................................12
3.2 Authority.......................................................12
3.3 Consents and Approvals; No Violation............................13
3.4 Financial Statements............................................13
3.5 Absence of Certain Changes; Conduct of Business.................14
3.6 Fixed Assets....................................................14
3.7 Contracts and Commitments.......................................14
3.8 Title to Purchased Assets; Mason Ohio Property Lease............16
3.9 Intentionally Omitted...........................................17
3.10 Customers and Suppliers.........................................17
3.11 Intentionally Omitted...........................................18
3.12 Litigation......................................................18
3.13 Compliance with Laws............................................18
3.14 Permits.........................................................18
3.15 Taxes...........................................................18
3.16 Employees; Employee Benefit Plans; ERISA........................19
3.17 Labor Matters...................................................20
3.18 Environmental Matters...........................................22
3.19 Intentionally Omitted...........................................23
3.20 Insurance.......................................................23
3.21 Warranties and Warranty Claims..................................23
3.22 Certifications..................................................23
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3.23 Brokers and Finders.............................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPUCOM........................24
4.1 Organization and Qualification..................................24
4.2 Authority.......................................................24
4.3 Consents and Approvals; No Violation............................24
ARTICLE V COVENANTS PENDING CLOSING..........................................25
5.1 Conduct of Business Pending the Closing.........................25
5.2 Cooperation.....................................................26
5.3 No Solicitation.................................................26
5.4 Access to Information...........................................27
5.5 Consummation of Transaction, Consents, Approvals and
Filings.......................................................27
5.6 Supplements to Schedules........................................27
5.7 Confidentiality.................................................27
5.8 Tax Elections...................................................28
ARTICLE VI CONDITIONS........................................................28
6.1 Conditions to Each Party's Obligations to Effect
the Transactions Contemplated Hereby..........................28
6.2 Conditions to Obligations of Seller to Effect
the Transactions Contemplated Hereby..........................28
6.3 Conditions to Obligations of CompuCom to Effect
the Transactions Contemplated Hereby..........................29
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................29
7.1 Termination.....................................................29
7.2 Effect of Termination...........................................30
7.3 Fees and Expenses...............................................30
ARTICLE VIII INDEMNIFICATION.................................................31
8.1 Survival; Right to Indemnification Not Affected
by Knowledge..................................................31
8.2 Indemnification by Seller.......................................31
8.3 Indemnification by CompuCom.....................................32
8.4 Procedures Relating to Indemnification..........................32
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8.5 Limitations on Liability........................................33
ARTICLE IX OTHER POST CLOSING COVENANTS AND AGREEMENTS.......................34
9.1 Accounts Receivable.............................................34
9.2 Transfer Taxes; Certain Real Estate Costs.......................34
9.3 Further Assurances..............................................34
9.4 Allocation of Purchase Price....................................35
9.5 Retained Liabilities............................................35
9.6 Certain Liabilities; Prorations.................................35
9.7 Cooperation Regarding Financial Statements......................36
9.8 CompuCom Not a Successor........................................36
9.9 Records Retention...............................................36
9.10 Marketing Development Obligations...............................37
9.11 Returns.........................................................37
9.12. Plan Account Records............................................37
ARTICLE X EMPLOYEE AND LABOR MATTERS.........................................38
10.1 Employment......................................................38
10.2 Benefit Plans; Coverage.........................................38
10.3 Past Service Credit.............................................39
10.4 Accrued Vacation................................................39
10.5 401(k) Plan.....................................................39
10.6 Medical and Dental..............................................40
10.7 Long Term Disability............................................42
10.8 WARN Act........................................................42
10.9 Life Insurance and Accidental Death and Dismemberment...........42
10.10 Employee Withholding and Reporting..............................42
10.11 Cooperation.....................................................43
10.12 Workers' Compensation...........................................43
ARTICLE XI GENERAL PROVISIONS................................................43
11.1 Amendment.......................................................43
11.2 Waiver..........................................................43
11.3 Notices.........................................................44
11.4 Interpretation..................................................45
11.5 Entire Agreement; No Third-Party Beneficiaries..................45
11.6 Counterparts....................................................45
11.7 Assignment......................................................45
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11.8 Severability....................................................45
11.9 Dispute Resolution..............................................45
11.10 Other Remedies..................................................47
11.11 Governing Law...................................................47
11.12 Public Announcements............................................47
11.13 Attorneys' Fees.................................................47
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EXHIBITS
Exhibit A Form of ▇▇▇▇ of Sale
Exhibit B Form of Instruments of Assignment and Assumption
Exhibit C Form of Non-Competition and Referral Agreement
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Sublease
Exhibit F Form of Letter Agreement Regarding Mason Ohio
Property
SCHEDULES
Schedule 1.1 Intellectual Property
Schedule 2.1(a)(iii) Fixed Assets
Schedule 2.1(a)(iv) Owned Real Estate
Schedule 2.1(a)(v) Assumed Contracts
Schedule 2.1(a)(vii) Books and Records to Be Delivered to CompuCom at
Closing
Schedule 2.2(a) Inventory Procedures, Valuation and Adjustments
Schedule 2.4(a)(vii) Matters to Be Covered in Opinion of Counsel of
CompuCom
Schedule 2.4(b)(viii) Matters to Be Covered in Opinion(s) of Counsel of
Seller
Schedule 2.5 Open and In-Transit Purchase Orders
Schedule 3.3 Consents and Approvals
Schedule 3.5(a) Conduct out of the Ordinary Course
Schedule 3.5(b) Disposal of Assets out of the Ordinary Course
Schedule 3.7(a) Contracts
Schedule 3.7(b) Contracts - Exceptions
Schedule 3.8(a) Certain Permitted Liens
Schedule 3.8(b) Lease; Lease Exception
Schedule 3.8(c) Owned Real Estate Compliance Exception
Schedule 3.10 Customers and Suppliers
Schedule 3.12 Litigation
Schedule 3.14 Permits
Schedule 3.15 Taxes
Schedule 3.16 Employees
Schedule 3.17 Labor Matters
Schedule 3.18 Environmental Matters
Schedule 3.21 Warranties
Schedule 6.3(c) Terminated Contracts
Schedule 9.1 Accounts Receivable Management
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Schedule 9.11(A) Vendor Returns Procedures
Schedule 9.11(B) Customer Returns Procedures
Schedule 10.1(A) Active Employees
Schedule 10.1(B) Inactive Employees
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 10, 1999, by and between CompuCom
Systems, Inc., a corporation organized under the laws of the state of Delaware
("CompuCom"), and ENTEX Information Services, Inc., a corporation organized
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under the laws of the State of Delaware ("Seller").
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WHEREAS, Seller or subsidiaries of Seller own the Purchased Assets (as
hereinafter defined);
WHEREAS, Seller wishes to sell or cause such subsidiaries to sell, as the
case may be, to CompuCom, and CompuCom wishes to purchase from Seller and such
subsidiaries, as the case may be, all of the Purchased Assets, and, with respect
to obligations thereunder after the closing, to assume the Assumed Contracts (as
hereinafter defined), in each case, upon the terms and subject to the conditions
contained in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intending to be legally bound hereby,
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Terms Defined in this Article. For purposes of this Agreement, the
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following terms shall have the following meanings:
"Affiliate" shall mean, as to any specified Person, any other Person that
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directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such specified Person. For the
purpose of this definition, "control," when used with respect to any specified
Person, means the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Agreement" shall mean this Agreement, including the exhibits and schedules
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attached hereto and incorporated herein by reference.
"Business" shall mean all of the business and operations currently
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conducted by the Technology Acquisition Services or "TAS" division of Seller.
"CAC" shall mean the Customer Account Center of the Business, which is
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located at Mason, Ohio.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
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regulations of the Internal Revenue Service thereunder, as amended.
"Contract" shall mean any contract or agreement relating to the Business to
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which Seller is a party or by which Seller or any of the Purchased Assets may be
bound or subject, excluding customer orders for products and Seller orders for
inventory.
"Employees" shall mean all employees of Seller whose services are used
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primarily by or in connection with the Business including employees on leave of
absence, short and long term disability, layoff status with recall rights and
part time employees.
"Environmental Claim" shall mean any claim, action or written notice by any
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Person alleging potential liability under any applicable Environmental Law on
the part of Seller or the Real Estate Sub (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence in, or release into, the
environment at or prior to the Closing Date, of Materials of Environmental
Concern at any location utilized by Seller in the Business, whether or not owned
or operated by Seller or (b) any violation or alleged violation of any
Environmental Law (i) by Seller at any location utilized in the Business at or
prior to the Closing Date or (ii) by Real Estate Sub at the Owned Real Estate at
or prior to the Closing Date.
"Environmental Law" shall mean all laws and regulations of any Governmental
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Entity relating to (a) pollution or (b) protection of employee health or (c) the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Excluded Assets" shall mean all assets of Seller other than the Purchased
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Assets.
"GAAP" shall mean United States generally accepted accounting principles.
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"Governmental Entity" shall mean any court, administrative agency or
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commission or other governmental authority or instrumentality, whether domestic
(local, state or federal) or foreign.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
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1976, as amended.
"Intellectual Property" shall mean the intellectual property rights set
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forth on Schedule 1.1 hereto.
"Knowledge of Seller" means the actual knowledge of one or more of the
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following persons: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇.
"Liabilities" shall mean liabilities and obligations, secured or unsecured,
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whether absolute, accrued, contingent or otherwise, whether known or unknown and
whether or not due.
"Lien" shall mean any lien, mortgage, deed of trust, deed to secure debt,
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pledge, assignment, security interest, purchase money security interest,
vendor's lien, charge, claim, levy, purchase option, call, right of first
refusal, preemptive or similar right of a third party or other encumbrance of
any kind, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
lien or security interest and any filing of or agreement to file a financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Losses" shall mean losses, Liabilities, claims, damages and expenses
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(including reasonable legal fees and expenses); provided that Losses shall not
include (i) any punitive or exemplary damages, except to the extent related to a
Third Party Claim or (ii) any losses to the extent resulting from any action
taken or omitted to be taken by the indemnified party, its Affiliates or any
employee, agent, representative or contractor thereof.
"Material Adverse Effect" shall mean a material adverse effect (or any
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development which could reasonably be expected to have a material adverse
effect) on the business, assets, condition (financial or otherwise), results of
operations or prospects of the Business or on the ability of Seller to satisfy
its obligations hereunder, other than effects relating to or arising from (i)
public announcement of the terms, provisions or existence of this Agreement,
(ii) economic conditions generally, excluding, however, the occurrence of a
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banking moratorium or other calamity or crisis the effect of which on financial
markets is such as to cause CompuCom's lenders not to fund the financing
required by CompuCom to consummate
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the transactions provided for in this Agreement or (iii) events or circumstances
that affect the Business in the same manner and to the same extent as other
businesses in the industry generally.
"Materials of Environmental Concern" shall mean all chemicals, pollutants,
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contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products regulated under any applicable Environmental Law.
"Permits" shall mean all permits, certificates, consents, approvals,
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authorizations, orders, licenses, variances and franchises issued or granted by
any Governmental Entity.
"Person" shall mean any individual, corporation, partnership, limited
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liability partnership, limited liability company, joint venture, association,
joint stock company, trust, unincorporated organization, Governmental Entity or
any other entity.
"Retained Liabilities" shall mean any and all Liabilities of Seller and
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Real Estate Sub other than (i) Liabilities of Seller relating to or arising out
of (a) the ownership after the Closing of the Purchased Assets, or (b) the
operation after the Closing of the Business, (ii) Liabilities of Seller under
the Assumed Contracts (other than those relating to the provision of services)
and Liabilities of Seller referred to in Section 2.2(iv), in each case with
respect to obligations to be performed after the Closing, (iii) Liabilities of
Seller under customer orders for products not shipped prior to the Closing
(other than Seller's ▇▇▇▇-and-hold orders), (iv) Liabilities of Seller to
configure and ship product under Seller's ▇▇▇▇-and-hold orders and (v)
Liabilities of Seller under Seller orders for inventory not received prior to
the Closing. Retained Liabilities shall include, without limitation, all Taxes
pertaining to the ownership of the Purchased Assets or operation of the Business
prior to the Closing, any Year 2000 Problems or warranty Liabilities relating to
products sold by Seller prior to the Closing, any liabilities of Real Estate Sub
relating to or arising out of the ownership and use of the Owned Real Estate by
Real Estate Sub prior to the Closing and any Environmental Claim.
"SEC" shall mean the Securities and Exchange Commission.
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"Taxes" shall mean all taxes, however denominated, including any interest,
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penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, value added taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other govern-
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mental charges, and other obligations of the same or of a similar nature to any
of the foregoing, and the term "Tax" means any one of the foregoing Taxes.
"Taxing Authority" shall mean the Internal Revenue Service and any other
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Governmental Entity responsible for administration and collection of Taxes.
"Tax Returns" shall mean all tax returns, declarations, statements,
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reports, schedules, forms and information returns of any Governmental Entity,
and any amended Tax Returns, relating to Taxes.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification Act
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of 1988, as amended.
"Year 2000 Problem" shall mean the inability of computers to properly
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recognize date sensitive information when the year changes to 2000.
1.2 Other Definitions. For purposes of this Agreement, the following
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terms are defined in the following Sections of this Agreement:
Term Defined in Section
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Active Employees 10.1
Additional CompuCom Documents 4.2
Additional Seller Documents 3.2
Aggregate Price 9.4
Allocation Schedule 9.4
Association 11.9(c)
Assumed Contracts 2.1(a)(v)
Balance Sheet 3.4(a)
▇▇▇▇ of Sale 2.4(a)(i)
Business Records 9.9(a)
CERCLA 3.18(d)
Closing 2.3
Closing Date 2.3
CompuCom's 401(k) Plan 10.5
Confidentiality Agreement 5.7
Continued Employees 10.1
Deed 2.4(a)(viii)
Enforceability Exceptions 3.2
ERISA Affiliate 3.16(a)
Fixed Assets 2.1(a)(iii)
Former Employees 10.1
Inactive Employees 10.1
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Instrument of Assignment and Assumption 2.4(a)(ii)
Inventories 2.1(a)(i)
Lease 3.8(b)
Mason Letter Agreement 2.4(a)(vi)
Mason Ohio Property 2.4(a)(v)
Non-Competition and Referral Agreement 2.4(a)(iii)
Notice Date 11.9(a)
Nonexempt Continued Employees 10.4
Ohio Properties 3.15(g)
Owned Real Estate 2.1(a)(iii)
PCBs 3.18(d)
Permitted Liens 3.8(a)
Plans 3.16(a)
Pre-Closing Disability 10.7
Purchase Price 2.2
Purchased Assets 2.1(a)
Real Estate Sub 2.1(a)(iv)
Seller's DCA 10.6(c)
Seller's FSA 10.6(c)
Seller's 401(k) Plan 10.5
Sublease 2.4(a)(v)
Termination Date 7.1(b)
Third Party Claim 8.4
Title Company 2.4(b)(xii)
Transition Services Agreement 2.4(a)(iv)
1.3 Accounting Terms. All accounting terms not specifically defined in this
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Agreement shall have the meanings given to them under GAAP, unless this
Agreement expressly provides to the contrary.
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 Purchase and Sale of Purchased Assets. (a) Upon the terms and subject
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to the satisfaction of the conditions contained in this Agreement, at the
Closing, Seller will sell, convey, transfer, assign and deliver to CompuCom (or,
in the case of the Owned Real Estate and the Intellectual Property, cause a
subsidiary to sell, convey, transfer, assign and deliver to CompuCom), and
CompuCom will purchase the following (collectively, the "Purchased Assets"):
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(i) all inventories of products held for sale or lease or under
customer orders for purchase and carried on the inventory of Seller (other
than under a "YO" designation) as of 12:01 a.m. on the Closing Date (A) at
the Erlanger, Kentucky Distribution Center, (B) at GTE's offices located at
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and (C) at Boeing's offices
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Inventories");
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(ii) all Intellectual Property;
(iii) the fixed assets of Seller located at Seller's Erlanger,
Kentucky facility and at the CAC and laptop and desktop computers assigned
to the Continued Employees, including, without limitation, the assets that
are listed on Schedule 2.1(a)(iii) (collectively, the "Fixed Assets");
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(iv) the land located in Erlanger, Kentucky described in Schedule
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2.1(a)(iv) owned by Seller's subsidiary Erlanger Land Co., Inc. (the "Real
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Estate Sub"), together with all buildings, improvements and fixtures
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located thereon (the "Owned Real Estate");
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(v) all rights (other than rights relating to the provision of
services) under Contracts, including, without limitation, those listed on
Schedule 2.1(a)(v) (collectively, the "Assumed Contracts"), other than
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(A) receivables relating to products shipped prior to the Closing, (B)
rights to receive payments from vendors or manufacturers (x) under price
protection or special pricing arrangements with respect to products sold
prior to the Closing Date and (y) under vendor marketing development fund,
coop and rebate programs to the extent deemed to be payable to Seller under
the terms of Section 9.10 and (C) rights under Contracts with vendors or
manufacturers of products for resale;
(vi) all rights under customer orders in effect on the Closing Date
for products (other than receivables relating to products sold by Seller
prior to the Closing), all rights relating to the sale of products in
connection with the Liabilities assumed pursuant to Section 2.2(iv), all
rights under Seller orders for inventory and all customer lists and
customer files of the Business; and
(vii) the books and records relating to the Business and Purchased
Assets listed on Schedule 2.1(a)(vii), and the right to have access to and
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copy all remaining books and records relating to the Business and Purchased
Assets as specified in Section 9.9.
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In the event that CompuCom is unable to locate any of the Fixed Assets after
Closing, the exclusive remedy of CompuCom for any claim in respect thereof shall
be pursuant to the indemnification provisions of Section 8.2.
(b) Seller agrees to take commercially reasonable actions to enforce, at
the request and expense of CompuCom, any covenants or other provisions in favor
of, or for the benefit of, Seller contained in any contract between Seller and
any of the Former Employees of the Business, or any consultant or agent of
Seller, that limits the freedom of such Employee, consultant or agent to
disclose information or to compete after the Closing with CompuCom in the
Business.
(c) Notwithstanding anything to the contrary contained in this Agreement,
to the extent that the sale, conveyance, transfer, assignment or delivery or
attempted sale, conveyance, transfer, assignment or delivery to CompuCom of any
Purchased Assets (including any Assumed Contract) is prohibited by any
applicable law or would require any governmental or third-party authorizations,
approvals, consents or waivers and such authorizations, approvals, consents or
waivers shall not have been obtained prior to the Closing, this Agreement shall
not constitute a sale, conveyance, transfer, assignment or delivery, or an
attempted sale, conveyance, transfer, assignment or delivery, thereof, if any of
the foregoing would constitute a breach of applicable law or the rights of any
third party. Following the Closing, the parties shall use their commercially
reasonable efforts, and shall cooperate with each other, to obtain promptly such
authorizations, approvals, consents or waivers; provided, however, that neither
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Seller nor CompuCom nor any of their respective Affiliates shall be required to
pay any consideration therefor, other than filing, recordation or similar fees
payable to any Governmental Entity, which fees shall be shared equally by Seller
and CompuCom. Pending or in the absence of such authorization, approval, consent
or waiver, the parties shall cooperate with each other in any reasonable and
lawful arrangements to provide to CompuCom the benefits and liabilities of use
of such Purchased Assets. If such authorization, approval, consent or waiver for
the sale, conveyance, transfer, assignment or delivery of any such Purchased
Assets is obtained, Seller shall promptly convey, transfer, assign and deliver,
or cause to be conveyed, transferred, assigned and delivered, such Purchased
Assets to CompuCom.
2.2 Consideration. Upon the terms and subject to the satisfaction of the
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conditions contained in this Agreement, in full consideration for the sale of
the Purchased Assets and the deliveries required to be made by Seller pursuant
to Section 2.4, at the Closing, CompuCom (i) will assume all Liabilities of
Seller under the Assumed Contracts (excluding any obligations under such
Contracts that are Retained Liabilities), (ii) will assume all Liabilities of
Seller under customer orders for products not shipped prior to the Closing,
(iii) will assume all Liabilities of Seller under Seller purchase orders for
inventory received after 12:01 A.M. on the Closing Date, (iv) will assume all
Liabilities of Seller under contracts to sell products, (v) will deliver the
documents, instruments and writings required to be delivered
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by CompuCom pursuant to Section 2.4(a) and (vi) will pay the Purchase Price by
wire transfer of immediately available funds to one or more bank accounts in the
United States, which accounts shall be designated in writing by Seller not less
than two business days prior to the Closing Date. Subject to the prorations
required under Section 9.6, the "Purchase Price" will be the sum of the
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following:
(a) $94,897,612.00, which represents the value of the Inventories
established in accordance with the terms and procedures of Schedule 2.2(a);
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plus
(b) $4,814,200.69 for the Fixed Assets; plus
(c) $7,500,000 for the Owned Real Estate; plus
(d) $1.00 for the Intellectual Property; plus
(e) $30,000,000.
CompuCom and Seller agree to pay to each other the commissions and fees
computed in accordance with the provisions relating to commissions and referral
fees of Exhibits D, E and F to the Non-Competition and Referral Agreement.
2.3 Time and Place of the Closing. Upon the terms and subject to the
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satisfaction of the conditions contained in this Agreement, the Closing of the
transactions contemplated by this Agreement (the "Closing") shall take place on
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May 10, 1999 at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place, date or time as the parties may
mutually agree in writing. The date and time at which the Closing actually
occurs is hereinafter referred to as the "Closing Date." The parties agree that
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the Closing shall be effective as of the Closing Date, it being understood that
payment of the Purchase Price will occur on May 11, 1999.
2.4 Deliveries at the Closing. At the Closing:
-------------------------
(a) CompuCom will deliver to Seller:
(i) a duly executed counterpart of the ▇▇▇▇ of sale in substantially
the form attached as Exhibit A (the "▇▇▇▇ of Sale");
--------- ------------
(ii) a duly executed counterpart of instruments of assignment and
assumption in substantially the form attached as Exhibit B (the "Instruments
--------- -----------
of Assignment and Assumption");
----------------------------
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(iii) a duly executed counterpart of the noncompetition, referral and
non-disclosure agreement in substantially the form attached as Exhibit C (the
---------
"Non-Competition and Referral Agreement");
--------------------------------------
(iv) a duly executed counterpart of the transition services agreement in
substantially the form attached as Exhibit D (the "Transition Services
--------- -------------------
Agreement");
---------
(v) a duly executed counterpart of the sublease of the Corporate Account
Center office space located in Mason, Ohio (the "Mason Ohio Property") in
-------------------
substantially the form attached as Exhibit E (the "Sublease");
--------- --------
(vi) a duly executed counterpart of the letter agreement relating to the
Mason Ohio Property in substantially the form attached as Exhibit F (the
"Mason Letter Agreement"); ---------
----------------------
(vii) an opinion or opinions of counsel to CompuCom, dated the Closing
Date, in a form reasonably satisfactory to Seller with respect to the matters
set forth in Schedule 2.4(a)(vii);
--------------------
(viii) a deed in substantially the form attached as Exhibit G with respect
---------
to the Owned Real Estate, duly executed by CompuCom (the "Deed"); and
----
(ix) all other documents, instruments and writings required to be
delivered by CompuCom at or prior to the Closing Date pursuant to this
Agreement.
Simultaneously with the consummation of the transfer, Seller will place CompuCom
in possession and enjoyment of all Purchased Assets or the rights thereto.
(b) Seller will deliver or cause to be delivered to CompuCom:
(i) a duly executed counterpart of the ▇▇▇▇ of Sale;
(ii) a duly executed counterpart of the Instruments of Assignment and
Assumption;
(iii) a duly executed counterpart of the Non-Competition and Referral
Agreement;
(iv) a duly executed counterpart of the Transition Services Agreement;
(v) a duly executed counterpart of the Sublease;
-10-
(vi) an estoppel certificate from the landlord under the Lease relating to
the Mason Ohio Property in form and substance reasonably satisfactory to
CompuCom and its counsel; provided, however, that Seller shall in no event be
-------- -------
obligated to deliver or cause to be delivered such estoppel certificate so
long as Seller shall have used reasonable efforts (it being understood that
such efforts shall in no event require Seller to commence any litigation or
offer or grant any accommodation (financial or otherwise) to such landlord)
to obtain such estoppel certificate and, notwithstanding such efforts, such
landlord shall have failed to deliver to Seller such estoppel certificate;
(vii) valid and binding consents of all Persons, if any, whose consent or
approval for consummation of the transactions contemplated by this Agreement
has been received;
(viii) an opinion or opinions of counsel to Seller, dated the Closing Date,
in a form reasonably satisfactory to CompuCom with respect to the matters set
forth in Schedule 2.4(b)(viii);
---------------------
(ix) evidence satisfactory to CompuCom and its counsel of the release of
all Liens on the Purchased Assets except for Permitted Liens;
(x) the books and records relating to the Business and the Purchased
Assets listed on Schedule 2.1(a)(vii);
--------------------
(xi) a duly executed counterpart of the ▇▇▇▇▇ Letter Agreement;
(xii) a commitment for an ALTA (1992) Extended Coverage Owner's Policy
issued by First American Title Insurance Company (the "Title Company") dated
-------------
the Closing Date, marked and executed by an authorized representative of the
Title Company, showing marketable fee simple title to the Owned Real Estate
in Real Estate Sub and otherwise in form and substance reasonably acceptable
to CompuCom;
(xiii) a current completion or "as-built" survey for the Owned Real Estate
and the improvements located thereon, in such form as shall be required by
the Title Company to omit the so-called standard survey exceptions from the
title insurance commitment issued at Closing, and certified in a manner
reasonably satisfactory to CompuCom and as otherwise required by the Title
Company;
(xiv) a duly executed affidavit stating Real Estate Sub's United States
taxpayer identification number and that Real Estate Sub is not a foreign
person, pursuant to Treasury Regulation Section 1.1445-2(b);
(xv) the Deed duly executed by Real Estate Sub;
-11-
(xvi) documentation transferring the Intellectual Property; and
(xvii) a duly executed counterpart of all other documents, instruments and
writings required to be delivered by Seller at or prior to the Closing Date
pursuant to this Agreement.
2.5 Open and In-Transit Purchase Orders. Open and in-transit purchase
-----------------------------------
orders shall be handled as described in Schedule 2.5.
------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to CompuCom as follows:
3.1 Organization and Qualification. Seller is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to own, lease and operate its
properties (including the Purchased Assets) and to carry on its business as it
is now being conducted. Seller is duly qualified or licensed to do business and
in good standing in each jurisdiction in which properties owned, leased or
operated by it, and included in the Purchased Assets, or the nature of the
Business makes such qualification necessary, except where failure to be so
qualified or licensed or in good standing would not reasonably be expected to
result in a Material Adverse Effect. Seller has delivered to CompuCom complete
and accurate copies of the certificate of incorporation and bylaws of Seller as
amended to the date of this Agreement.
3.2 Authority. Seller has all requisite power and authority, corporate or
---------
otherwise, to execute and deliver this Agreement and the other agreements,
documents and instruments to be executed and delivered by Seller pursuant hereto
(the "Additional Seller Documents") and to consummate the transactions
---------------------------
contemplated hereby and thereby. The execution and delivery by Seller of this
Agreement and the Additional Seller Documents and the consummation by Seller of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate or other necessary action on the part of
Seller, and no other proceedings, corporate or otherwise, on the part of Seller
or its shareholders is necessary to authorize the execution and delivery by
Seller of this Agreement and the Additional Seller Documents and the
consummation by Seller of the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by Seller, and,
assuming the due authorization, execution and delivery hereof by CompuCom,
constitutes a valid and binding agreement of Seller, enforceable against Seller,
in accordance with its terms, subject as to enforcement (i) to bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights
-12-
generally, and (ii) to general principles of equity, regardless of whether
enforcement is considered in a proceeding in equity or at law (the
"Enforceability Exceptions").
3.3 Consents and Approvals; No Violation. None of the execution and
------------------------------------
delivery by Seller of this Agreement or of any of the Additional Seller
Documents, the consummation by Seller of the transactions contemplated hereby or
thereby or compliance by Seller with any of the provisions hereof or thereof
will (a) conflict with or result in a breach of any provision of the certificate
of incorporation or bylaws of Seller, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except for any filings required under the HSR Act and informational
filings under the Exchange Act, (c) except as set forth in Schedule 3.3, require
------------
the consent or approval of any Person (other than a Governmental Entity) or
violate or conflict with, or result in a breach of any provision of, constitute
a default (or an event which with notice or lapse of time or both would become a
default) or give to any third party any right of termination, cancellation,
amendment or acceleration under, or result in the creation of a Lien on any of
the Purchased Assets under, any of the terms, conditions or provisions of any
Assumed Contract, or (d) violate or conflict with any order, writ, injunction,
decree, statute, rule or regulation applicable to Seller or the Business.
3.4 Financial Statements. (a) Seller has delivered to CompuCom: (i) audited
--------------------
balance sheets of Seller as at its fiscal year end in each of fiscal years 1996
and 1997, and the related audited statements of operations, stockholders' equity
(deficit) and cash flows for each of the fiscal years then ended, together with
the report thereon of KPMG LLP, independent certified public accountants, (ii) a
balance sheet of Seller at June 28, 1998 (including the notes thereto, the
"Balance Sheet"), and the related statements of operations, stockholders' equity
-------------
(deficit) and cash flows for the fiscal year then ended, together with the
report thereon of KPMG LLP, independent certified public accountants, and (iii)
an unaudited balance sheet of Seller at December 27, 1998 and the related
unaudited statements of operations, stockholders' equity (deficit) and cash
flows for the six months then ended, including in each case the notes thereto.
Such financial statements fairly present the financial condition and the results
of operations and cash flows of Seller as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP,
subject, in the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Balance Sheet). The
financial statements referred to in this Section 3.4(a) reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements.
(b) Seller has delivered to CompuCom: (i) a profit and loss statement of
the Business for the fiscal quarters ended September 28, 1997 through
December 27, 1998; (ii) a
-13-
product margin analysis of the Business for the fiscal quarters ended September
28, 1997 through December 27, 1998; (iii) a summary accounts receivable aging of
the Business for each month-end from December 1997 through March 1999; (iv) a
listing of "YO" inventory of the Business as of the date hereof; and (v) a
perpetual inventory listing and inventory valuation analysis for the Erlanger,
Kentucky Distribution Center as of May 10, 1999 by class code. The information
referred to in this Section 3.4(b) is true and correct in all material respects.
(c) Seller has delivered to CompuCom: (i) a statement of the revenues of
the Business for the fiscal quarter ended March 28, 1999; (ii) a preliminary
estimated product margin analysis of the Business for the fiscal quarter ended
March 28, 1999; and (iii) a summary accounts receivable aging of the Business at
March 28, 1999. The information referred to in this Section 3.4(c) is, to the
Knowledge of Seller, true and correct in all material respects, subject to
adjustment in connection with the closing of Seller's books as of and for the
fiscal quarter ended March 28, 1999.
3.5 Absence of Certain Changes; Conduct of Business. (a) Except as set
-----------------------------------------------
forth in Schedule 3.5(a) or as reflected in the financial statements referred to
---------------
in Section 3.4, since June 28, 1998, the Business has been conducted only in the
ordinary course, consistent with past practice, and there has not occurred or
arisen any event, individually or in the aggregate, having, or which, insofar as
reasonably can be foreseen, in the future is likely to have, a Material Adverse
Effect.
(b) Except as set forth in Schedule 3.5(b) or as reflected in the financial
---------------
statements referred to in Section 3.4, since June 28, 1998, Seller has not (i)
disposed of any material assets related to or used in the Business other than in
the ordinary course of business, (ii) suffered any extraordinary losses or any
damage, destruction or other casualty losses with respect to the Purchased
Assets or (iii) waived any rights of substantial value relating to the Purchased
Assets.
3.6 Fixed Assets. The list of Fixed Assets on Schedule 2.1(a)(iii) was
--------------------
prepared from Seller's fixed asset subledger and, to the Knowledge of Seller, is
accurate in all material respects and, in the case of tangible individual Fixed
Assets with a net book value exceeding $10,000, was confirmed by a physical
count.
3.7 Contracts and Commitments. (a) Schedule 3.7(a) sets forth a complete
------------------------- ---------------
and accurate list of each Contract:
(i) pursuant to which Seller realized net product revenues in excess of
$1,000,000 during the twelve months ended March 28, 1999;
-14-
(ii) pursuant to which Seller purchased for re-sale to customers of the
Business products having a cost to Seller in excess of $10,000,000 during the
twelve months ended March 28, 1999;
(iii) which is an Assumed Contract requiring annual payments in excess of
$50,000 and pursuant to which Seller leases any of the assets used by Seller
to operate the Business;
(iv) that contains covenants or other provisions that will limit the
freedom of CompuCom, upon acquisition of the Purchased Assets, to compete in
any line of business or with any Person or in any area;
(v) pursuant to which Seller licenses (either as a licensor or licensee),
obtains or possesses any rights with respect to, or that otherwise relates
to, the Intellectual Property;
(vi) evidencing or relating to any Lien on the Purchased Assets which will
be in effect immediately following the Closing; or
(vii) evidencing or relating to any employment, bonus, commission,
severance, non-compete or confidentiality agreement with or for the benefit
of any of the Continued Employees.
(b) Except as set forth in Schedule 3.7(b), Seller has delivered to
CompuCom a complete and accurate copy (redacted as to any services provisions
thereof) of each Contract described in subsection (a) above (or, in the case of
confidentiality agreements, the standard form thereof). Except as set forth in
Schedule 3.7(b) or as would not have a Material Adverse Effect, to the Knowledge
---------------
of Seller, each of the Assumed Contracts listed in Schedule 3.7(a) is in full
---------------
force and effect and constitutes a legal, valid and binding obligation of each
other Person that is a party thereto, enforceable against Seller and such other
Person in accordance with its terms, subject to the Enforceability Exceptions.
Except as set forth in Schedule 3.7(b), or as would not have a Material Adverse
---------------
Effect or as could result from consummation of the transactions contemplated by
this Agreement as described on Schedule 3.3, to the Knowledge of Seller no event
------------
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation or breach of, or
give Seller or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any such Assumed Contract. There are no outstanding rights
to renegotiate any material amounts paid or payable to Seller under Assumed
Contracts set forth on Schedule 3.7(a) with any Person and no such Person has
---------------
made written demand for such renegotiation.
-15-
(c) With respect to any Contract listed in response to Section 3.7(a)(ii),
Seller represents that it does not have any other material agreements or
arrangements, whether written or oral, with the vendors or manufacturers parties
to such Contract relating to marketing development funds, price protection,
stock balancing arrangements, volume incentives and rebates, permitted returns,
repurchase arrangements or similar arrangements that are not contained in the
applicable Contract listed on Schedule 3.7.
------------
3.8 Title to Purchased Assets; Mason Ohio Property Lease. (a) Seller owns
----------------------------------------------------
or has the right to use all the Purchased Assets free and clear of all Liens
except (i) mechanics', carriers', workmen's, repairmen's or other like liens
arising or incurred in the ordinary course of business which are not yet
delinquent or the validity of which are being contested in good faith by
appropriate proceedings, (ii) liens arising under equipment leases with third
parties entered into in the ordinary course of business, (iii) liens for taxes,
assessments and other governmental charges which are not yet delinquent, (iv)
easements, rights-of-way, restrictions or minor defects or irregularities in
title, whether or not of public record, which do not, individually or in the
aggregate, materially impair the continued use and operation of the assets to
which they relate in the operation of the Business, (v) those arising out of
acts done or suffered to be done by, and judgments against, CompuCom and those
claiming by, through or under CompuCom, (vi) liens, security interests or
encumbrances that have been placed by any developer, landlord or other third
party on property over which Seller has easement rights and subordination or
similar agreements relating thereto, (vii) the liens listed in Schedule 3.8(a)
---------------
(collectively, "Permitted Liens"), (viii) liens under existing mortgages which
---------------
will be discharged as to the Owned Real Estate from the proceeds Seller receives
from CompuCom at Closing and (ix) liens under existing financing agreements
which will be discharged as to the Inventory. At Closing Seller shall convey, or
cause to be conveyed, to CompuCom good and valid title to all the Purchased
Assets free and clear of any Lien other than Permitted Liens.
(b) Schedule 3.8(b) contains a complete and accurate list of the documents
--------------
constituting the lease of the Mason Ohio Property (which includes all amendments
thereto) (the "Lease"), true copies of which documents have previously been
-----
delivered to CompuCom. Except as set forth in Schedule 3.8(b), (i) the Lease is
---------------
in full force and effect, constitutes a legal, valid and binding obligation of
Seller and, to the Knowledge of Seller, each other Person that is a party
thereto, and is enforceable against Seller and, to the Knowledge of Seller, such
other Person in accordance with its terms, subject to the Enforceability
Exceptions, (ii) Seller may enter into the Sublease with CompuCom and, upon
consummation of the transactions contemplated by this Agreement the Lease will,
at Closing, be in full force and effect, (iii) Seller has not received any
written notice from the lessor under the Lease of the termination thereof, (iv)
there is no default (including any failure by Seller to make timely payments to
the lessor in accordance with the terms of such Lease) or event which, with
notice or lapse of time, or both, would constitute a default on the part of
Seller (nor, to the Knowledge of Seller, on the part of any other party
thereto), and (v) Seller will transfer to CompuCom at Closing,
-16-
good and valid title to the leasehold estate granted to CompuCom under the
Sublease in the premises demised thereunder free and clear of any Lien, except
for Permitted Liens.
(c) The Owned Real Estate has sufficient access to public roads and is
supplied with sufficient utilities to permit the operation of the Business as it
is currently conducted on such Owned Real Estate. Neither Seller nor Real Estate
Sub has received any written notice of termination of such access or utilities.
Except as set forth in Schedule 3.8(c), to the Knowledge of Seller, the Owned
---------------
Real Estate (including buildings and improvements) and Seller's occupancy,
operation and use thereof conform to all applicable subdivisions, building
codes, health, safety, setback and zoning ordinances, and other laws,
regulations and requirements applicable to the current occupancy, use and
operation thereof, except where the failure to so comply would not interfere in
any material respect with the present occupancy, operation or use of the Owned
Real Estate in connection with the Business. Neither Seller nor Real Estate Sub
has received any written notice of any violation of any law, ordinance, rule or
regulation referred to above, or any written notice of the existence of any
condemnation or eminent domain proceeding with respect to the Owned Real Estate.
The Owned Real Estate has no leases, subleases, licenses, concessions or other
agreements, written or oral granting to any party other than Seller or holders
of Permitted Liens of the type described in clauses (iv), (v), (vi) and (vii) of
the definition thereof the right of use or occupancy of any portion of the Owned
Real Estate. There are no options or rights of first refusal to purchase any of
the Owned Real Estate or any portion thereof or interest therein. There are no
parties other than Seller in possession of the Owned Real Estate other than
holders of Permitted Liens of the type described in clauses (iv), (v), (vi) and
(vii) of the definition thereof.
3.9 Intentionally Omitted.
---------------------
3.10 Customers and Suppliers. Schedule 3.10 sets forth (a) a list of each
----------------------- -------------
customer of the Business from which Seller realized net product revenues in
excess of $1,000,000 during the twelve months ended March 28, 1999, showing the
total net product revenues of Seller attributable to each such customer during
such twelve month period and further showing a breakdown of such revenues by
products and configuration; and (b) a list of each supplier to the Business of
products for resale to which Seller made payments aggregating $10,000,000 or
more during the twelve months ended March 28, 1999, showing the total
expenditures by Seller with respect to each such Person during such twelve month
period. Except to the extent set forth in Schedule 3.10, since March 28, 1999,
-------------
there has not been any adverse change in the business relationship of Seller
with any customer or supplier named in Schedule 3.10 which would reasonably be
-------------
expected to have a Material Adverse Effect, and none of such customers or
suppliers has notified Seller in writing or otherwise that it has canceled or
terminated, or threatened in writing to cancel or terminate, its relationship
with Seller where such cancellation or termination would reasonably be expected
to have a Material Ad-
-17-
verse Effect nor, to the Knowledge of Seller, has there been any dispute with
any such customers or suppliers which would reasonably be expected to have a
Material Adverse Effect.
3.11 Intentionally Omitted.
---------------------
3.12 Litigation. Except as set forth in Schedule 3.12, or as would not
---------- -------------
interfere in any material respect with the consummation of the transactions
contemplated by this Agreement, there is no claim, suit, action or proceeding
pending or, to the Knowledge of Seller after due inquiry, threatened against
Seller relating to the Business or the Purchased Assets (and Seller is not aware
of any basis for any such claim, suit, action or proceeding), nor is there any
judgment, decree, order, injunction, writ or ruling of any Governmental Entity
or any arbitrator outstanding against Seller that relates to the Business or the
Purchased Assets.
3.13 Compliance with Laws. The Business has not been and is not now being
--------------------
conducted in violation in any material respect with any applicable law, statute,
ordinance, rule, regulation, judgment, ruling, order, writ, injunction or decree
of any Governmental Entity.
3.14 Permits. Schedule 3.14 contains a complete and accurate list of all
------- -------------
Permits necessary for the operation of the Business, except for those Permits
which may be reasonably obtained by CompuCom without material cost or delay.
Seller has all Permits required by law or governmental regulations from all
applicable Governmental Entities that are necessary to operate the Business as
presently conducted and, Seller is not in default under, or in violation of or
noncompliance with, any of such Permits, except where the failure to have any
such Permit, or being in default under, or in violation of or noncompliance with
any of such Permits, would not reasonably be expected to have a Material Adverse
Effect.
3.15 Taxes. Except as set forth in Schedule 3.15:
----- -------------
(a) No audit, assessments of Taxes, other examination by any Taxing
Authority, proceeding or appeal of such proceeding relating to Taxes is in
progress, pending or to the Knowledge of Seller threatened, with respect to
any Tax Returns filed by, or Taxes due from, Seller that includes Taxes with
respect to the Business. No claim has ever been made in writing by a Taxing
Authority in a jurisdiction where the Seller or the Real Estate Sub does not
file Tax Returns that either entity is or may be subject to taxation by that
jurisdiction.
(b) There are no Liens for Taxes (other than for current Taxes not yet due
and payable or the validity of which are being contested in good faith by
appropriate proceedings) upon the Purchased Assets.
-18-
(c) None of the Purchased Assets is property which is required to be
treated as being owned by any other person pursuant to the so-called "safe
harbor lease" provisions of former section 168(f)(8) of the Code.
(d) None of the Purchased Assets directly or indirectly secures any debt,
the interest on which is tax-exempt in Section 103(a) of the Code.
(e) None of the Purchased Assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(f) The Seller is not a "foreign person" (as that term is defined in
Section 1445 of the Code).
(g) The items of tangible personal property included in Purchased Assets
that are located in the State of Ohio (the "Ohio Properties") are included in
---------------
Schedule 2.1(a)(iii) and are identified on such schedule as being located in the
--------------------
State of Ohio. The Ohio Properties were obtained by the Seller, through purchase
or otherwise, for the Seller's own use in Ohio and have previously been subject
to Ohio's taxing jurisdiction on its sale or use.
3.16 Employees; Employee Benefit Plans; ERISA. (a) Seller has delivered to
----------------------------------------
CompuCom a complete and accurate list as of March 1999 of each Employee and such
Employee's (i) hire date, (ii) title or position, (iii) current wage or salary
rate, and (iv) accrued vacation pay and rate of accrual thereof. Schedule 3.16
-------------
contains a complete and accurate list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Seller or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with Seller would be deemed a
---------------
"single employer" within the meaning of section 4001(a)(15) of ERISA, for the
benefit of any Employee or former employee of the Business (the "Plans"). None
-----
of the Plans is subject to Title IV of ERISA.
(b) With respect to each of the Plans, Seller has heretofore delivered or
made available to CompuCom complete and accurate copies of each of the following
documents, as applicable:
(i) the Plan (including all amendments thereto);
(ii) the latest annual report, if required under ERISA, with respect to
each such Plan;
-19-
(iii) the latest actuarial report, if required under ERISA, with respect to
each such Plan;
(iv) the most recent summary plan description, together with each summary
of material modifications issued with respect to such summary plan
description, required under ERISA with respect to such Plan; and
(v) if the Plan is funded through a trust or any other funding vehicle, a
copy of the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof.
(c) Except as set forth in Schedule 3.16, with respect to the Business:
-------------
(i) Neither Seller nor any of its ERISA Affiliates, nor any of the Plans,
nor any trust created thereunder, nor any trustee or administrator thereof
has engaged in a transaction or has taken or failed to take any action in
connection with which CompuCom could be subject to a material Tax imposed
pursuant to Section 4980B of the Code;
(ii) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including ERISA and the Code;
and
(iii) Each of the Plans that is intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service to the effect that such Plan so
qualifies and, to the Knowledge of Seller, no event has occurred and no
condition exists which could reasonably be expected to result in the
revocation of any such determination.
3.17 Labor Matters. (a) Except as set forth in Schedule 3.17, with respect
------------- -------------
to the Business:
(i) there is no labor strike, dispute, slowdown, work stoppage or lockout
actually pending or, to the Knowledge of Seller, threatened against or
affecting the Business which would reasonably be expected to have a Material
Adverse Effect;
(ii) Seller is not a party to any collective bargaining agreement with any
labor union applicable to Employees;
(iii) none of the Employees is represented by any labor union and, to the
Knowledge of Seller, no union organizing activities are ongoing with respect
to Employees engaged in the Business;
-20-
(iv) except as would not reasonably be expected to have a Material
Adverse Effect, Seller has at all times been in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or
regulation;
(v) except as would not reasonably be expected to have a Material
Adverse Effect, there is no unfair labor practice charge or complaint against
Seller pending or, to the Knowledge of Seller, threatened before the National
Labor Relations Board or any similar state, local or foreign agency with
respect to Employees ;
(vi) except as would not reasonably be expected to have a Material
Adverse Effect, there is no grievance or arbitration proceeding arising out
of any collective bargaining agreement or other grievance procedure relating
to Seller;
(vii) except as would not reasonably be expected to have a Material
Adverse Effect, to the Knowledge of Seller, no charges relating to any
Employees or former employee of Seller engaged in the Business are pending
before the Equal Employment Opportunity Commission or any other corresponding
state, local or foreign agency;
(viii) no federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws has threatened in writing to conduct
an investigation with respect to or relating to Seller and, to the Knowledge
of Seller, no such investigation is in progress which would reasonably be
expected to have a Material Adverse Effect;
(ix) to the Knowledge of Seller, there are no wage and hour claims filed
against Seller with the United States Department of Labor or any correspond-
ing state, local or foreign agency which would reasonably be expected to have
a Material Adverse Effect;
(x) there are no pending charges, complaints or citations relating to
Seller with respect to Employees which would reasonably be expected to have a
Material Adverse Effect and, to the Knowledge of Seller, neither the
Occupational Safety and Health Administration nor any corresponding
Governmental Entity has threatened to file any charge, complaint or citation;
(xi) to the Knowledge of Seller, there is no pending investigation of, or
complaint pending against, Seller by the Office of Federal Contract
Compliance Programs or any corresponding state, local or foreign agency which
would reasonably be expected to have a Material Adverse Effect;
-21-
(xii) there are no complaints, controversies, lawsuits or other
proceedings pending against Seller brought on behalf of any applicant for
employment, any Employee or any former Employee of Seller engaged in the
Business or classes of the foregoing, alleging breach of any express or
implied contract of employment, any law, or regulation governing employment
or the termination thereof or other discriminatory, wrongful or tortious
conduct in connect on with the employment relationship which would reasonably
be expected to have a Material Adverse Effect; and
(xiii) neither the execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement violates any employment,
non-competition, confidentiality or any other contract or agreement with any
present or former Employees, contractors, or consultants of Seller which
would reasonably be expected to have a Material Adverse Effect.
(b) None of the Employees or former employees of Seller engaged in the
Business at each of the Erlanger, Kentucky Distribution Center or the CAC has
suffered or will suffer an "employment loss" (as defined in the WARN Act) during
the 90-day period prior to the Closing Date.
3.18 Environmental Matters. Except as set forth in Schedule 3.18 or, in
--------------------- -------------
the case of clauses (a), (b) and (c), as would not reasonably be expected to
have a Material Adverse Effect:
(a) Seller and Real Estate Sub, as applicable, are in compliance with
applicable Environmental Laws relating to the Business and the Purchased
Assets, which compliance includes, but is not limited to, the possession by
Seller or Real Estate Sub, as applicable, of all Permits required to operate
the Business under applicable Environmental Laws and compliance with the
terms and conditions thereof. Neither Seller nor Real Estate Sub has received
any written communication that alleges that Seller or Real Estate Sub, as
applicable, is not in compliance with all applicable Environmental Laws
relating to the Business and the Purchased Assets. All Permits currently held
by Seller or Real Estate Sub, as applicable, pursuant to the Environmental
Laws relating to the Business and the Purchased Assets are identified in
Schedule 3.18.
-------------
(b) There is no Environmental Claim pending or, to the Knowledge of
Seller, threatened against Seller or Real Estate Sub or, to the Knowledge of
Seller, pending or threatened against any Person whose liability for any
Environmental Claim Seller or Real Estate Sub has retained or assumed either
by contract or assignment.
(c) There are no releases or disposals of any Material of Environmental
Concern that would reasonably be expected to result in any Environmental
Claim against Seller or Real Estate Sub or against any Person whose liability
for any Environmental
-22-
Claim Seller or Real Estate Sub has retained or assumed either by contract or
other agreement, in each case relating to the Business and the Purchased
Assets.
(d) Without in any way limiting the generality of the foregoing, (i)
neither the Owned Real Estate nor the Mason Ohio Property is (x) listed on
the National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or (y) listed
------
in the Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or (z) to the
Knowledge of Seller, included in any comparable published lists maintained by
any Governmental Entity pursuant to any Environmental Law, (ii) neither
Seller nor Real Estate Sub has used, installed or removed any underground
storage tanks, and to the Knowledge of Seller there are no underground
storage tanks now or previously present, at the Owned Real Estate or the
Mason Ohio Property, and (iii) except as set forth in Schedule 3.18, to the
-------------
Knowledge of Seller, there is no asbestos contained in or forming part of any
building, building component, structure or office space located on the Owned
Real Estate or on the Mason Ohio Property, and no polychlorinated biphenyls
("PCBs") or PCB containing items are used or stored at the Owned Real Estate
or the Mason Ohio Property.
3.19 Intentionally Omitted.
---------------------
3.20 Insurance. Seller has heretofore delivered or made available to
---------
CompuCom a complete and accurate list of all policies or binders of fire,
liability, product liability, worker's compensation, vehicular and other
insurance bonds that insure the Purchased Assets or the operations of the
Business, copies of which have been furnished to CompuCom. Such policies include
all policies that are required in connection with the current operation of the
Business by applicable laws or regulations or by the terms of any Contract.
3.21 Warranties and Warranty Claims. Schedule 3.21 lists and accurately
------------------------------ -------------
summarizes all product warranties made by or on behalf of Seller which deviate
from the applicable vendor or manufacturer warranties (except for deviations
which only extend the applicable vendor or manufacturer warranty by not more
than 90 days) with respect to sales of products to the twenty largest customers
of the Business during the twelve months ended March 28, 1999 in terms of net
product revenues.
3.22 Certifications. The Erlanger, Kentucky Distribution Center operated
--------------
on the Owned Real Estate has received, and continues to maintain and perform in
accordance with, ISO 9001 certification. Seller has received and maintains
certification for channel assembly programs from each of IBM, Compaq and Hewlet-
Packard.
3.23 Brokers and Finders. Neither Seller nor any of its directors,
-------------------
officers, shareholders or Employees has employed any broker or finder or
incurred any liability for any
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financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement for which
CompuCom could be liable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPUCOM
CompuCom represents and warrants to Seller as follows:
4.1 Organization and Qualification. CompuCom is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the state of
Delaware and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted.
4.2 Authority. CompuCom has all requisite power and authority, corporate
---------
and otherwise, to execute and deliver this Agreement and the other agreements,
documents and instruments to be executed and delivered by CompuCom pursuant
hereto (the "Additional CompuCom Documents") and to consummate the transactions
-----------------------------
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Additional CompuCom Documents by CompuCom, and the consummation by
CompuCom of the transactions contemplated hereby and thereby, have been duly and
validly authorized by all necessary corporate or other necessary action on the
part of CompuCom, and no other proceedings, corporate and otherwise, on the part
of CompuCom or its shareholders are necessary to authorize the execution and
delivery of this Agreement and the Additional CompuCom Documents by CompuCom and
the consummation by CompuCom of the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by
CompuCom and, assuming the due authorization, execution and delivery hereof by
Seller, constitutes a valid and binding agreement of CompuCom enforceable
against CompuCom in accordance with its terms, subject as to enforcement to the
Enforceability Exceptions.
4.3 Consents and Approvals; No Violation. The execution and delivery by
------------------------------------
CompuCom of this Agreement or of any of the Additional CompuCom Documents, the
consummation by CompuCom of the transactions contemplated hereby or thereby and
compliance by CompuCom with any of the provisions hereof or thereof will not (i)
conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of CompuCom, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except for any filings required under the HSR Act and for those which,
if not obtained, individually or in the aggregate, would not have a material
adverse effect on the business, assets, condition (financial or otherwise),
results of operations or prospects, of CompuCom and would not materially impair
CompuCom's ability to consummate the transactions contemplated by this
Agreement, (iii) result in a default (or an event
-24-
which with notice or lapse of time or both would become a default) or give to
any third party any right of termination, cancellation, amendment or
acceleration under, or result in the creation of a Lien on any of the assets of
CompuCom pursuant to, any note, license, agreement, or other instrument or
obligation to which CompuCom is a party or by which CompuCom or any of its
assets may be bound or affected which would have a material adverse effect on
CompuCom, or (iv) violate or conflict with any order, writ, injunction, decree,
statute, rule or regulation applicable to CompuCom or any of its properties or
assets.
ARTICLE V
COVENANTS PENDING CLOSING
5.1 Conduct of Business Pending the Closing. (a) From the date hereof
---------------------------------------
through the Closing Date, except as may be expressly permitted or contemplated
by this Agreement or as otherwise agreed to in writing by CompuCom, Seller shall
cause the Business to be conducted in the usual, regular and ordinary course of
business, consistent with past practice, and shall use all commercially
reasonable efforts to preserve intact the Business, keep available the services
of Employees and preserve its relationships with customers, suppliers,
licensees, licensors, distributors, agents and others having business dealings
with the Business. Without limiting the generality of the foregoing, without the
prior written consent of CompuCom, during the period from the date hereof to the
Closing Date, Seller shall not, with respect to the Business or the Purchased
Assets, as the case may be:
(i) acquire or agree to acquire any assets that are material,
individually or in the aggregate, to the Business (excluding Inventory
purchased in the ordinary course of business);
(ii) sell (including by sale-leaseback), lease, transfer, license (whether
on an exclusive or non-exclusive basis), mortgage or otherwise encumber or
subject to any Lien (except a Permitted Lien) any Purchased Assets or
interests therein, other than in the ordinary course of business and
consistent with past practice;
(iii) except as set forth in the capital budget, undertake or commit to
make any capital expenditure in excess of $100,000;
(iv) adopt, enter into or amend or become obligated under any new profit
sharing, stock option, pension, retirement, deferred compensation plan,
agreement or trust for the benefit of any Employee or Former Employee;
(v) enter into any Contract that contains any provision that, solely as a
result of the consummation of the transactions contemplated by this
Agreement, would
-25-
(assuming that the other party's consent or approval is not obtained, to the
extent required) result in any penalty, additional payments or forfeiture
that would be payable or sufferable by CompuCom at or after the Closing Date;
(vi) enter into or amend any employment, severance, special pay agreement
with respect to termination of employment or other similar agreements with
any Employee;
(vii) take any action that would, or could reasonably be expected to,
result in (A) any of the representations and warranties of Seller set forth
in this Agreement that are qualified as to materially becoming untrue, (B)
any of such representations and warranties that are not so qualified becoming
untrue in any material respect or (C) any of the conditions set forth in
Article VI not being satisfied; or
(viii) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Seller shall promptly advise CompuCom of any change or event having,
or which, insofar as can reasonably be foreseen, would have, a Material Adverse
Effect.
5.2 Cooperation. Subject to compliance with applicable law, from the date
-----------
hereof through the Closing Date, Seller shall upon reasonable prior notice from
CompuCom confer on a regular and frequent basis with one or more representatives
of CompuCom to report operational matters of materiality and the general status
of ongoing operations of the Business.
5.3 No Solicitation. From the date hereof through the Closing Date, Seller
---------------
will not, and Seller will cause its officers, directors, stockholders, members,
partners, employees and agents not to, directly or indirectly, solicit or
negotiate with, or provide any nonpublic information relating to Seller or
afford access to the properties, books or records of Seller to any third party
that may be considering an acquisition of the Purchased Assets or a substantial
portion thereof, or otherwise cooperate in any way with or assist or participate
in, or facilitate or encourage any attempt by any Person to do or seek any of
the foregoing. Seller will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Seller shall immediately notify
CompuCom (a) after receipt of any offer or indication that any Person is
considering making an offer for any such acquisition, which notice shall include
the terms and conditions of such offer or indication, and (b) upon receipt of
any request for nonpublic information relating to Seller or for access to the
properties, books or records of Seller from any Person that may be considering
any such acquisition.
-26-
5.4 Access to Information. Upon reasonable notice from CompuCom, Seller
---------------------
shall afford to CompuCom and its officers, directors, employees, accountants,
counsel, financial advisors and other representatives, access during normal
business hours throughout the period prior to the Closing Date to all of the
properties, books and records relating to the Business or the Purchased Assets
and, during such period, Seller shall furnish promptly to CompuCom all
information concerning the Business and the Purchased Assets as CompuCom may
reasonably request.
5.5 Consummation of Transaction, Consents, Approvals and Filings. Each of
------------------------------------------------------------
the parties hereto shall use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using
reasonable efforts to obtain all necessary or appropriate waivers, consents and
approvals and effecting all necessary registrations and filings, including all
filings that are necessary under the HSR Act. CompuCom shall make or cause to be
made all filings and submissions under laws and regulations applicable to
CompuCom, if any, as may be required for the consummation of the transactions
contemplated by this Agreement. Seller shall make or cause to be made all such
other filings and submissions under laws and regulations applicable to Seller,
if any, as may be required for the consummation of the transactions contemplated
by this Agreement. CompuCom, on the one hand, and Seller, on the other, shall
coordinate and cooperate in exchanging such information and shall provide
reasonable assistance as may be requested by either of them in connection with
the filings and submissions contemplated by this Section.
5.6 Supplements to Schedules. From time to time prior to the Closing Date,
------------------------
Seller shall supplement or amend the Schedules referred to herein with respect
to any material matter arising after the date hereof that, if existing or
occurring at the date hereof, would have been required to be set forth or
described in such Schedules. Prior to Closing Seller shall provide to CompuCom,
as of a date that is within two days prior to the Closing Date, updated
Schedules. If any such supplement or amendment shall include any matter which
would result in a failure to satisfy the condition set forth in Section 6.3(a)
and is unacceptable to CompuCom, CompuCom may deem the condition set forth in
Section 6.3(a) not to be satisfied; provided, however, that if CompuCom
nonetheless determines to effect the Closing, such supplement or amendment to
such Schedules shall not be taken into consideration for purposes of determining
whether any Person is entitled to indemnification pursuant to Article VIII.
5.7 Confidentiality. The terms and conditions of the Confidentiality
---------------
Agreement dated September 1, 1998, between CompuCom and Seller (the
"Confidentiality Agreement") shall remain in full force and effect and shall
apply to this Agreement.
-27-
5.8 Tax Elections. No new elections with respect to Taxes, or any changes
-------------
in current elections with respect to Taxes, affecting the Purchased Assets shall
be made without the prior consent of CompuCom.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligations to Effect the Transactions
-----------------------------------------------------------------
Contemplated Hereby. The respective obligations of each party to effect the
-------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) No temporary restraining order, preliminary or permanent injunction or
other order or decree by any court of competent jurisdiction which prevents
the consummation of the transactions contemplated hereby or imposes material
conditions with respect thereto shall have been issued and remain in affect
(each party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted);
(b) No action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any Governmental Entity which would prevent the
consummation of the transactions contemplated by this Agreement or imposes
material conditions with respect thereto;
(c) All consents and approvals of all Governmental Entities legally
required for the consummation of the transactions contemplated by this
Agreement shall have been obtained and be in effect at the Closing Date; and
(d) The waiting period under the HSR Act with respect to the transactions
contemplated by this Agreement shall have expired.
6.2 Conditions to Obligations of Seller to Effect the Transactions
--------------------------------------------------------------
Contemplated Hereby. The obligations of Seller to effect the transactions
-------------------
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions: CompuCom shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and the representations and warranties of CompuCom
contained in this Agreement shall be true and correct in all material respects
(if not qualified by materiality) and true and correct (if so qualified) on and
as of the date of this Agreement and at and as of the Closing Date as if made at
and as of the Closing Date, except to the extent that any such representation or
warranty expressly relates to another
-28-
date (in which case, as of such date) and Seller shall have received a
certificate signed on behalf of CompuCom by one of its officers, to such effect.
6.3 Conditions to Obligations of CompuCom to Effect the Transactions
----------------------------------------------------------------
Contemplated Hereby. The obligations of CompuCom to effect the transactions
-------------------
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
(a) Seller shall have performed all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects (if not qualified by materiality)
and true and correct (if so qualified) on and as of the date of this
Agreement and at and as of the Closing Date as if made at and as of the
Closing Date, except to the extent that any such representation or warranty
expressly relates to another date (in which case, as of such date) and
CompuCom shall have received a certificate signed on behalf of Seller by one
of its officers, to such effect;
(b) Since December 27, 1998, there shall not have occurred any material
adverse change in the Business or the Purchased Assets which cannot be
eliminated or corrected prior to the Termination Date or any matters which
have had or reasonably would have a Material Adverse Effect on the Business
or the Purchased Assets which cannot be eliminated or corrected prior to the
Termination Date; and
(c) Seller shall have provided evidence to CompuCom to its satisfaction of
the termination as of the Closing Date of the Contracts listed on
Schedule 6.3(c).
---------------
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Closing Date:
(a) by the mutual written consent of CompuCom and Seller;
(b) by CompuCom or Seller if (i) the Closing Date shall not have occurred
on or before June 1, 1999 (the "Termination Date"); (ii) any Governmental
----------------
Entity, the consent of which is a condition to the obligations of each party
hereto to consummate the transactions contemplated hereby, shall have
determined not to grant its consent (or imposes material conditions with
respect thereto); or (iii) any court of competent
-29-
jurisdiction in the United States or any state shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and
such order, judgment or decree shall have become final and nonappealable;
(c) by CompuCom if (i) there has been a material breach by Seller of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten business days following receipt by
Seller of notice of such breach, or (ii) the condition listed in Section
6.3(c) shall not be capable of being satisfied on or prior to the Termination
Date; or
(d) by Seller if there has been a material breach by CompuCom of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten business days following receipt by
CompuCom of notice of such breach;
provided, that the right to terminate this Agreement (i) under Section 7.1(b)(i)
--------
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing Date to occur on or before such date and (ii) under Section 7.1(c)(i)
and Section 7.1(d) shall not be available to any party who at such time is in
material breach of any representation, warranty, covenant or agreement set forth
in this Agreement.
7.2 Effect of Termination. In the event of termination of this Agreement by
---------------------
either CompuCom or Seller as provided in Section 7.1, this Agreement shall
forthwith become void (except as set forth in Section 5.7, this Section 7.2,
Section 7.3 and Article XI, which shall survive the termination) and there shall
be no liability on the part of CompuCom or Seller except for any breach of any
of their obligations under such Sections or Article. Notwithstanding the
foregoing, no party hereto shall be relieved from liability for any material
breach of this Agreement.
7.3 Fees and Expenses. Whether or not the transactions contemplated by this
-----------------
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
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ARTICLE VIII
INDEMNIFICATION
8.1 Survival; Right to Indemnification Not Affected by Knowledge. All
------------------------------------------------------------
representations, warranties, covenants and obligations in this Agreement, the
schedules and the certificates delivered pursuant to this Agreement will survive
the Closing; provided that (i) the representations and warranties set forth in
--------
Article III (other than those representations and warranties set forth in
Sections 3.1, 3.2, 3.3, 3.8, 3.15, 4.1, 4.2 and 4.3) or in any certificate,
instrument or other document delivered hereunder shall terminate twelve months
after the Closing Date, (ii) the covenants and agreements set forth in this
Agreement (other than those set forth in this Article VIII and in Articles IX, X
and XI) shall terminate twelve months after the Closing Date and (iii) the
representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.8, 3.15,
4.1, 4.2 and 4.3 shall survive until the expiration of the applicable statute of
limitations with respect thereto. The right to indemnification, payment of
damages or other remedy based on such representations, warranties, covenants and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of, or compliance with, any
such representation, warranty, covenant or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of damages or other remedy based on such
representations, warranties, covenants and obligations. In the event that any
matter which constitutes a breach of a representation or warranty of this
Agreement also constitutes a matter which is a Retained Liability, the
limitations on survival contained in this Section 8.1 shall not be deemed to be
a restriction on CompuCom's ability to make a claim under this Article VIII for
any Retained Liability.
8.2 Indemnification by Seller. Seller shall indemnify CompuCom, its
-------------------------
Affiliates and each of their respective officers, directors, employees and
agents against and hold them harmless from any Losses suffered or incurred by
any such indemnified person arising from, relating to or otherwise in respect of
(a) all Retained Liabilities; (b) any breach of, or inaccuracy in, any
representation or warranty of Seller in this Agreement or any certificate,
instrument or other document delivered pursuant hereto or in connection herewith
(it being agreed and acknowledged by the parties that for the sole purpose of
the right to indemnification pursuant to this Section 8.2, the representations
and warranties of Seller contained herein shall not be deemed qualified by any
references herein to materiality generally or to whether or not any such breach
or inaccuracy results or may result in a Material Adverse Effect); (c) any
breach of any covenant of Seller contained in this Agreement; and (d) any
failure to comply with any applicable bulk sales or other similar laws relating
to the protection of creditors relating to the sale of the Purchased Assets.
Notwithstanding the foregoing, Seller shall only
-31-
be liable with respect to claims under clause (b), (i) if those claims are made
prior to termination of the related representation or warranty set forth in the
proviso to the first sentence of Section 8.1 and (ii) if the aggregate of all
Losses under clause (b) exceeds $500,000, in which case, Seller shall indemnify
CompuCom for all such Losses up to $25,000,000.
8.3 Indemnification by CompuCom. CompuCom shall indemnify Seller, its
---------------------------
Affiliates and each of their respective officers, directors, employees and
agents against and hold them harmless from any Losses suffered or incurred by
any such indemnified person arising from, relating to or otherwise in respect of
(a) all Purchased Assets to the extent such Losses relate to an occurrence after
the Closing Date (excluding any Retained Liabilities); (b) any breach of, or
inaccuracy in, any representation or warranty of CompuCom contained in this
Agreement or any certificate, instrument or other document delivered pursuant
hereto or in connection herewith (it being agreed and acknowledged by the
parties that for the sole purpose of Seller's right to indemnification pursuant
to Section 8.3, the representations and warranties of CompuCom contained herein
shall not be deemed qualified by any references herein to materiality generally
or to whether or not any such breach or inaccuracy results or may result in a
material adverse effect to CompuCom); and (c) any breach of any covenant of
CompuCom contained in this Agreement. Notwithstanding the foregoing, CompuCom
shall only be liable with respect to claims under clause (b), (i) if those
claims are made prior to the termination of the related representation or
warranty set forth in the proviso to the first sentence of Section 8.1 and (ii)
if the aggregate of all losses under clause (b) exceeds $500,000, in which case,
CompuCom shall indemnify Seller for all such Losses up to $25,000,000.
8.4 Procedures Relating to Indemnification. (a) Each Person to be
--------------------------------------
indemnified pursuant to Section 8.2 or 8.3 agrees to give prompt notice to the
indemnifying party of the assertion of any claim or the commencement of any
suit, action or proceeding brought against it or sought to be collected by a
third party from such indemnified Person (each a "Third Party Claim"), in
-----------------
respect of which indemnity may be sought by such indemnified Person under
Section 8.2 or 8.3; provided that the omission so to promptly notify the
--------
indemnifying party with respect to a Third Party Claim brought against or sought
to be collected from such indemnified Person will not relieve the indemnifying
party from any liability which it may have to such indemnified Person under
Section 8.2 or 8.3 except to the extent that such failure has materially
prejudiced such indemnifying party with respect to the defense of such Third
Party Claim. The indemnifying Person shall have the right to control the defense
of any such Third Party Claim; provided, however, that the indemnified party
-------- -------
shall have the right to control the defense of a Third Party Claim if such
indemnified party shall have provided written notice to the indemnifying Person
that such Third Party Claim is an insured event under any policy of insurance
then maintained by the indemnified party in which event the indemnifying Person
shall have the right to participate in (but not control) the defense of such
Third Party Claim and to retain its own counsel in connection therewith, but the
fees and expenses of any such counsel for the indemnifying Person shall be borne
by the indemnifying
-32-
Person. Except as otherwise provided herein, the indemnified party shall have
the right to participate in (but not control) the defense of any Third Party
Claim and to retain its own counsel in connection therewith, but the fees and
expenses of any such counsel for the indemnified party shall be borne by the
indemnified party. The indemnifying party shall be liable for all Losses arising
out of any settlement of any Third Party Claim. Neither party shall (i) settle
any Third Party Claim without the consent of the other party, which consent
shall not be unreasonably withheld, provided, that no such consent shall be
--------
required if the Third Party Claim involves a settlement for money damages only,
which the indemnifying party agrees to pay, or (ii) without the prior written
consent of the other party effect any settlement of any pending or threatened
proceeding in respect of which such other party is, or with reasonable
foreseeability could have been, a party and indemnity could have been sought
hereunder by such other party for a Third Party Claim brought against or sought
to be collected from such other party, unless such settlement includes an
unconditional release of such other party from all liability arising out of such
proceeding (provided that, whether or not such a release is required to be
--------
obtained, the indemnifying party shall remain liable to such indemnified Person
in accordance with Section 8.2 or 8.3 in the event that a Third Party Claim is
subsequently brought against or sought to be collected from such indemnified
Person). The indemnification required by Section 8.2 or 8.3, as the case may be,
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills with reasonable documentation
are received or Losses are actually incurred.
(b) In the event any indemnified Person should have a claim against any
indemnifying party under Section 8.2 or 8.3 that does not involve a Third Party
Claim being asserted against or sought to be collected from such indemnified
person, the indemnified Person shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any indemnified
Person so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified Person under
Section 8.2 or 8.3 except to the extent that the indemnifying party demonstrates
that it has been materially prejudiced by such failure. If the indemnifying
party has disputed its liability with respect to such claim, the indemnifying
party and the indemnified Person agree to proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved in accordance with Section 11.9.
8.5 Limitations on Liability. Any payment by an indemnifying party shall
------------------------
be reduced by the amount of insurance proceeds recovered from any Person with
respect thereto, net of any insurance premium or future increase in such premium
that becomes payable as a result of the indemnified Person filing the claim in
respect of which such insurance proceeds were paid. If any indemnified party may
have the right to recover Losses from a third party in addition to the
indemnifying party, the indemnified party will first use all commercially
reasonable efforts to recover from such third party and, to the extent not
recovered from such third party, shall assign such right to the indemnifying
party and shall reasonably
-33-
cooperate (at the expense of the indemnifying party) in pursuing any rights
against such third party. The indemnification provided under this Article VIII
shall be the sole remedy for breaches or violations of this Agreement or
documents, agreements and instruments contemplated hereby, except for claims of
fraud or intentional misrepresentation.
ARTICLE IX
OTHER POST CLOSING COVENANTS AND AGREEMENTS
9.1 Accounts Receivable. The accounts receivable with respect to the
-------------------
Business shall be handled in accordance with the terms and procedures set forth
on Schedule 9.1. The accounts receivable with respect to the Business as of
------------
Closing shall be the property of Seller. CompuCom shall promptly transfer and
deliver to Seller any cash or other property received by CompuCom after Closing
in respect of any accounts receivable relating to the period prior to the
Closing, and Seller shall promptly transfer and deliver to CompuCom any cash or
other property received by Seller after Closing in respect of any accounts
receivable relating to the period after the Closing.
9.2 Transfer Taxes; Certain Real Estate Costs. (a) Seller and CompuCom
-----------------------------------------
shall each pay one-half of any Liability for any transfer, sales, use, real
estate transfer, recording or similar taxes (including any interest, penalties
and/or additions to tax and any audit or litigation costs or expenses) resulting
from, or attributable or related to, the sale, transfer or assignment to
CompuCom of any of the Purchased Assets pursuant to this Agreement. The parties
shall cooperate in obtaining any available exemptions from the foregoing. Any
party being audited as contemplated by this Section 9.2(a) shall promptly notify
the other party and the parties shall cooperate with each other in connection
with any such audit.
(b) CompuCom shall pay all premiums, recording fees, costs and expenses
relating to any and all title insurance policies insuring title to the Owned
Real Estate and surveys in respect of the Owned Real Estate. CompuCom shall pay
for all recording and filing fees or charges payable with respect to any
financing documents entered into by reason of CompuCom's financing of the
transactions contemplated by this Agreement.
9.3 Further Assurances. In case at any time after the Closing Date any
------------------
further action is necessary or desirable to transfer any of the Purchased Assets
to CompuCom or otherwise to carry out the purposes of this Agreement, the proper
officers and directors of CompuCom and Seller shall execute such further
documents (including assignments, acknowledgments and consents and other
instruments of transfer) and shall take such further action. If at any time
after the Closing Date CompuCom needs the cooperation of Seller or its employees
in connection with any litigation, audit, dispute with a customer or vendor or
employee or former employee or otherwise, Seller will cooperate with CompuCom,
and use its
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best efforts to cause its employees to cooperate with CompuCom in connection
therewith. If at any time after the Closing Date Seller needs the cooperation of
CompuCom or its employees in connection with any litigation, audit, dispute with
a customer or vendor or employee or former employee or otherwise, CompuCom will
cooperate with Seller, and use its best efforts to cause its employees to
cooperate with Seller in connection therewith.
9.4 Allocation of Purchase Price. The Purchase Price and the other
----------------------------
consideration for the Purchased Assets (the "Aggregate Price") will be allocated
---------------
in accordance with Section 2.2. Subsequent to the Closing, Seller and CompuCom
shall cooperate in the preparation of an agreed joint schedule (the "Allocation
----------
Schedule") allocating the Aggregate Price among the Purchased Assets in the
--------
manner required by section 1060 of the Code and the regulations thereunder.
Seller and CompuCom each agrees to provide the other promptly with any other
information required to complete the Allocation Schedule and to endeavor to
complete the Allocation Schedule within five months following the Closing Date.
CompuCom and Seller shall each timely (and in no event later than six months
following the Closing Date) complete a Form 8594, Asset Acquisition Statement,
consistent with such mutually agreed Allocation Schedule, shall provide such
form to the other and shall file a copy of such form with its federal income tax
return for the period that includes the Closing Date. CompuCom and Seller each
further agrees (i) not to take any position for any Tax purpose inconsistent
with the Form 8594 filed by such party, except to the extent required by law,
and (ii) to file all Tax Returns consistent with such Form 8594, except to the
extent required by law.
9.5 Retained Liabilities. Seller will pay or otherwise adequately provide
--------------------
for the satisfaction of all of the Retained Liabilities as and when the same
shall become due and payable.
9.6 Certain Liabilities; Prorations. (a) All unpaid utility costs
-------------------------------
(including, without limitation, charges for electricity, water, sewage, fuel
oil, gas and telephone usage) incurred on or before the Closing Date at the
Owned Real Estate or the Mason Ohio Property, and all unpaid ad valorem and
property Taxes pertaining thereto incurred prior to Closing shall be pro rated
as of the Closing Date between CompuCom and Seller (determined according to the
actual use thereof by Seller to Closing or, if not so determinable, according to
the number of days of use made by Seller to Closing), and CompuCom shall assume
the obligation to pay such costs and Taxes (net of any prepaid amounts in the
aggregate as of the Closing) relating to the period prior to Closing in
accordance with the procedures set forth in Section 9.6(b) (net of any prepaid
amounts in the aggregate as of the Closing). All payments relating to periods
both before and after Closing made or to be made under any Assumed Contracts
shall be similarly prorated as of Closing. Seller shall reimburse CompuCom for
any payments made by CompuCom that relate to the period prior to Closing in
accordance with the procedures set forth in Section 9.6(b). CompuCom shall
reimburse Seller for any payments made by Seller that relate to the period on or
after the Closing Date. All such pay-
-35-
ments to be made after Closing under the Assumed Contracts for periods after the
Closing Date shall be paid by CompuCom as and when the same become due.
(b) Prior to the Closing, Seller shall furnish CompuCom with an estimated
accounting showing in reasonable detail the prorations to be made under Section
9.6(a). If Seller or CompuCom shall owe any obligation to the other as a result
of such prorations, the Purchase Price shall be adjusted to reflect such
prorations. With respect to any prorated amounts that were estimated at Closing,
promptly after the actual amount is determined, CompuCom shall furnish Seller
with an accounting showing in reasonable detail the actual proration of such
amounts, and any net amount due shall be paid by the party owing such amount to
the other within ten days after such final accounting is delivered by CompuCom.
9.7 Cooperation Regarding Financial Statements. In connection with any
------------------------------------------
filings to be made by CompuCom under the Securities Act of 1933, as amended, or
the Exchange Act with respect to or as a result of the transactions contemplated
by this Agreement, Seller shall (i) use commercially reasonable efforts to
provide to CompuCom the financial and other information and documents pertaining
to the Business that CompuCom will be required by applicable SEC rules and
regulations to be included in its filings, (ii) use commercially reasonable
efforts to cause the accountants for Seller to deliver such consents and reports
in and provide access to files and work papers in connection therewith as
CompuCom may reasonably request and (iii) generally use commercially reasonable
efforts to cooperate with CompuCom in connection therewith.
9.8 CompuCom Not a Successor. None of the parties hereto intends that
------------------------
CompuCom, or any of its Affiliates, shall be deemed to be a successor to Seller.
9.9 Records Retention. (a) CompuCom and Seller agree that so long as any
-----------------
books, records and files (the "Business Records") retained by Seller relating to
----------------
the Business, or the Business Records of Seller delivered to the control of
CompuCom pursuant to this Agreement, remain in existence and available, each
party at its expense shall have the right upon prior notice to inspect and to
make copies of the same at any time during business hours for any proper
purpose. Each party shall undertake reasonable measures (i) to preserve in good
order to the extent required by law the Business Records of Seller retained by
each party, respectively, and (ii) to not destroy or allow the destruction of
any such Business Records without first offering in writing to deliver them to
the other party.
(b) Seller and CompuCom shall (i) each provide the other, and CompuCom
shall cause Real Estate Sub to provide Seller, with such assistance as may
reasonably be requested by any of them in connection with the preparation of any
Tax Return, audit or other examination by any Taxing Authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each retain and
provide the other, and CompuCom shall cause Real Estate Sub to retain and
provide Seller, with any records or other information which may be
-36-
relevant to such Tax Return, for audit or examination, proceeding or
determination, and (iii) each provide the other with any final determination of
any such audit or examination, proceeding or determination that affects any
amount required to be shown on any Tax Return of the other for any period.
Without limiting the generality of the foregoing, CompuCom shall retain, and
shall cause Real Estate Sub to retain, and Seller shall retain, until the
applicable statutes of limitation (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information which would be relevant to such returns for all tax periods or
portions thereof ending before or including the Closing Date and shall not
destroy or otherwise dispose of any such records without first offering in
writing to deliver them to the other party.
9.10 Marketing Development Obligations. All marketing development funds,
---------------------------------
coop payments and rebates which are payable to Seller as of the Closing upon
request without further performance of any obligations for the benefit of the
applicable vendor or manufacturer by CompuCom after the Closing shall belong to
the Seller. CompuCom agrees to pay in cash to Seller that portion of any
marketing development funds, coop payments, and rebates received by CompuCom and
the value of any utilized credits or discounts that benefit CompuCom, pursuant
to any program under which the calculation of the amount received by or
benefiting CompuCom took into account the purchase or sale, as the case may be,
of a product by Seller or the performance of any other obligation by Seller for
the benefit of the applicable vendor or manufacturer, which reflects the
relative contribution of such purchases, sales or performance, as the case may
be, to the payment or benefit received by CompuCom. CompuCom and Seller shall
use their respective reasonable efforts to cause vendors and manufacturers with
marketing development fund, coop and rebate programs under which Seller has
purchase, sale or performance credits as of the Closing to transfer such credits
to CompuCom. CompuCom will provide Seller and soon as practicable following
June 30, 1999 an accounting of amounts, if any, due Seller under this Section
9.10. If Seller should receive after Closing any marketing development funds,
coop payments or rebates which are payable to CompuCom, Seller agrees to
promptly remit them to CompuCom.
9.11 Returns. After the Closing, outstanding vendor returns and pending
-------
vendor returns shall be handled in accordance with the terms and procedures set
forth in Schedule 9.11(A). After the Closing, customer returns shall be handled
----------------
in accordance with the terms and procedures set forth in Schedule 9.11(B).
----------------
9.12 Plan Account Records. Seller shall deliver, or cause to be delivered,
--------------------
to CompuCom plan account records for the Seller's 401(k) Plan in respect of
Continued Employees whose completeness and accuracy is such that they will not
cause CompuCom to incur material additional expense in connection with the asset
transfer provided for in Section 10.5 hereof.
-37-
ARTICLE X
EMPLOYEE AND LABOR MATTERS
10.1 Employment. Effective as of the Closing, CompuCom shall offer to
----------
employ each Employee listed on Schedule 10.1(A) who is actively at work on the
----------------
Closing Date ("Active Employees"), and CompuCom shall offer to employ any
----------------
Employee listed on Schedule 10.1(A) or Schedule 10.1(B) who is not actively at
---------------- ----------------
work on the Closing Date due to leave of absence, short-term disability leave
(including those individuals who are absent due to illness or injury for a
period of less than five days), military leave or layoff with recall rights or
reemployment rights under the Family and Medical Leave Act or any other
applicable law (collectively, "Inactive Employees") upon the conclusion of their
------------------
leave or layoff, so long as such individual returns to active employment within
the period during which the individual has a protected right of recall or
reemployment under applicable law. For purposes hereof, any Employee listed on
Schedule 10.1(A) who is not actively at work on the Closing Date due to a
----------------
short-term absence (including due to vacation, holiday, jury duty or bereavement
leave) in accordance with applicable policies of Seller shall be deemed to be an
Active Employee. CompuCom's offer of employment shall be at the same base salary
and at a substantially similar position as in effect on the Closing Date. For
purposes of this Article X, Active Employees who immediately following the
Closing become employed by CompuCom and Inactive Employees, to the extent that
they become employed by CompuCom, shall be referred to herein collectively as
"Continued Employees." For purposes hereof, an employee of Seller who has
-------------------
terminated employment for any reason (including retirement and long-term
disability) on or prior to the Closing shall be referred to herein as a "Former
------
Employee" to the extent such employee is not a Continued Employee. Except as
--------
herein specifically provided, Seller shall be liable for all employment claims,
benefit claims and obligations in respect of Continued Employees, Former
Employees, and their respective eligible dependents and beneficiaries, that
arise prior to or on the Closing Date. Except as specifically provided herein,
CompuCom shall be liable for employment claims, benefit claims and obligations
in respect of only Continued Employees, and their respective dependents and
beneficiaries, that arise after the Closing Date; provided, however, that
-----------------
CompuCom shall not be liable for any such employment claims, benefit claims or
obligations that arise or are payable with respect to Inactive Employees prior
to the date such Inactive Employees become employed by CompuCom, or any such
employment claims, benefit claims or obligations with respect to any Inactive
Employees who do not become employed by CompuCom in accordance with this Section
10.1, all of which employment claims, benefit claims and obligations shall
remain with the Seller.
10.2 Benefit Plans; Coverage. Subject to the provisions of this Article X,
-----------------------
CompuCom shall offer coverage under CompuCom's benefit plans and arrange-
-38-
ments to Continued Employees in accordance with the terms and conditions of such
plans and arrangements and at a level which is substantially similar to the
coverage and benefit opportunities offered under such plans to comparable
CompuCom employees.
10.3 Past Service Credit. In administering any employee benefit plans and
-------------------
any fringe benefit plans, including vacation programs and policies, for the
Continued Employees on or after the Closing Date, CompuCom will grant full
credit to each Continued Employee for all service of such Continued Employee
with Seller or its Subsidiaries for purposes of vesting and eligibility for
which such service was recognized by Seller under its comparable employee
benefit plans and arrangements.
10.4 Accrued Vacation. CompuCom and its Affiliates shall honor all unused
----------------
vacation accrued by Continued Employees who are not exempt from the overtime
provisions of the Fair Labor Standards Act ("Nonexempt Continued Employees") as
-----------------------------
of the Closing Date under the respective programs and policies of Seller and its
Subsidiaries which were applicable to such Nonexempt Continued Employees
immediately prior to the Closing Date. Any such unused vacation of such
Nonexempt Continued Employees shall be administered by CompuCom and may be taken
by such Nonexempt Continued Employees only, in accordance with CompuCom's
vacation programs and policies.
10.5 401(k) Plan. Each Continued Employee eligible to participate in the
-----------
Entex 401(k) Retirement Savings Plan ("Seller's 401(k) Plan") as of the Closing
--------------------
shall become eligible to participate in the CompuCom Systems, Inc. 401(k)
Matched Savings Plan ("CompuCom's 401(k) Plan") in accordance with the terms of
----------------------
CompuCom's 401(k) Plan. Continued Employees shall receive credit for all service
with Seller and its Affiliates for purposes of eligibility and vesting under
CompuCom's 401(k) Plan. Effective as of the Closing Date, each Continued
Employee shall cease active participation in Seller's 401(k) Plan.
As soon as practical following the Closing Date, assets of the Seller's
401(k) Plan equal to the aggregate account balances of the Continued Employees
under the Seller's 401(k) Plan shall be transferred to CompuCom's 401(k) Plan;
provided, however, that Seller shall not be obligated to effect the plan asset
--------- -------
transfer provided for herein prior to its receipt from CompuCom of either (i) a
current favorable Internal Revenue Service determination letter regarding the
tax-qualified status of CompuCom's 401(k) Plan or (ii) an opinion, in form and
substance satisfactory to Seller, from CompuCom's counsel that the CompuCom's
401(k) Plan, in form, satisfies the tax qualification requirements of Sections
401(a) and 401(k) of the Code. The transfer to CompuCom's 401(k) Plan shall be
made in cash or notes evidencing plan loans to Continued Employees, and any
outstanding balances of plan loans to Continued Employees shall be transferred
with the underlying accounts. The account balances of the Continued Employees
shall be valued as of the date on which their transfer is made, which value
shall include the earnings, gains and losses, appreciation and depreciation of
the investment funds in which the accounts are invested through the date on
which the transfer is made.
-39-
Pending the transfer of assets to CompuCom's 401(k) Plan, Seller will make
distributions to Continued Employees on the basis of their employment status
with CompuCom (i.e., shall treat a separation from CompuCom's service as if it
---
were a separation from Seller's service). In addition, pending the transfer of
assets to CompuCom's 401(k) Plan, Continued Employees shall have the ability to
direct the investment of their accounts under Seller's 401(k) Plan and receive
plan loans from Seller's 401(k) Plan, in each case in the same manner as other
participants in Seller's 401(k) Plan. Except in the case of any such loan with
respect to which (a) applicable law requires a new employee and/or spousal
consent for such withholding, and (b) the Continued Employee and/or his or her
spouse refuse to provide such required consent, Loans from Seller's 401(k) Plan
to Continued Employees which are outstanding during the period from the Closing
Date through the date of transfer of assets to CompuCom's 401(k) Plan (or such
other, earlier date as shall be mutually agreed to by Seller and CompuCom) shall
be serviced by having CompuCom make applicable payroll deductions which shall be
forwarded to Fidelity Institutional Retirement Service Company, as plan
administrator, for payment to Seller's 401(k) Plan.
Effective on the date of the transfer of assets of Seller's 401(k) Plan to
CompuCom's 401(k) Plan, (i) CompuCom and CompuCom's 401(k) Plan shall assume all
liabilities to pay benefits in connection with the transferred assets, and (ii)
Seller and Seller's 401(k) Plan shall have no further liability to pay benefits
with respect to the assets and liabilities that are transferred. The parties
agree that the transfers described in this Section 10.5 shall be made in
accordance with Section 414(1) of the Code.
CompuCom and Seller agree that, except to the extent that such matter is
determined otherwise by an applicable administrative ruling or generally
applicable guidance of the Internal Revenue Service or the Treasury Department
or a final "determination" (within the meaning of Section 1313(a) of the Code),
both CompuCom and Seller shall, for purposes of determining the consequences of
the transactions contemplated by this Agreement with respect to both CompuCom's
401(k) Plan's and Seller's 401(k) Plan's participation, nondiscrimination, and
average deferral percentage testing (Sections 410(b), 401(a)(4), 401(a)(17),
401(k), 414(q), and 414(s) of the Code), treat the Continued Employees in the
same way as they would any other employees who might have terminated employment
with Seller in 1999 and, also in 1999, commenced employment with CompuCom and
satisfied the eligibility requirements of CompuCom's 401(k) Plan by virtue of
service actually performed for CompuCom.
10.6 Medical and Dental. (a) Seller shall be responsible in accordance with
------------------
its applicable medical and dental plans for all medical and dental claims for
expenses incurred prior to the Closing Date by Continued Employees and their
dependents. Reimbursement of Continued Employees and their dependents for such
medical and dental expenses shall be determined in accordance with the terms of
Seller's medical and dental programs as
-40-
then in effect. Seller shall terminate coverage of Continued Employees and their
dependents effective for claims for medical and dental expenses incurred on and
after the Closing Date. CompuCom shall be responsible in accordance with its
applicable medical and dental plans for all medical and dental claims made by
Continued Employees and their dependents for expenses incurred on and after the
Closing Date. Reimbursement of Continued Employees for such medical and dental
expenses shall be determined in accordance with the terms of CompuCom's medical
and dental programs. For purposes of this Section 10.6, a medical or dental
claim otherwise covered under Seller's or CompuCom's applicable medical or
dental plan shall be deemed incurred when the services giving rise to the claim
are rendered (regardless of when such claim is billed by the service provider or
filed by the Continued Employee). No waiting period or exclusion from coverage
of any pre-existing medical condition shall apply to any such Continued
Employee's (or eligible dependent's) participation in CompuCom's applicable
medical or dental plans on and after the Closing Date; provided, however, that
with respect to any Continued Employee (or eligible dependent) who is subject to
a waiting period or exclusion from coverage of any pre-existing medical
condition under any of Seller's applicable medical or dental plans as of the
Closing Date, such Continued Employee (or eligible dependent) shall continue to
be subject to such a waiting period or exclusion from coverage to the extent
required by CompuCom's applicable medical or dental plans, but shall receive
full credit under CompuCom's applicable welfare benefits plan for the time
during which they have been subject to the exclusion from coverage of any
pre-existing medical condition under any of Seller's medical or dental plans as
of the Closing Date. All charges and expenses of such Continued Employees and
their eligible dependents which were applied to the deductible and out-of-pocket
maximums under Seller's medical or dental plans during the plan year of Seller
in which the Closing Date falls shall be credited toward any deductible and
out-of-pocket maximum applicable in the plan year of CompuCom in which the
Closing Date falls. Notwithstanding anything to the contrary in this Section
10.6(a), all rights, obligations and duties with respect to Seller's flexible
spending arrangements shall be governed by Section 10.6(c).
(b) Seller shall be responsible for any continuation of group health
coverage required under Section 4980B of the Code or Sections 601 through 608 of
ERISA with respect to any Former Employee or any "qualified beneficiary" (as
defined in Section 4980B of the Code) of any such employee who incurs a
"qualifying event" (as defined in Section 4980B of the Code) prior to, on, or
after, the Closing Date. CompuCom shall be responsible solely for continuation
of group health coverage required under Section 4980B of the Code or Sections
601 through 608 of ERISA with respect to any Continued Employee or any
"qualified beneficiary" (as defined in Section 4980B of the Code) of any such
employee who incurs a "qualifying event" (as defined in Section 4980B of the
Code) after the Closing Date.
(c) CompuCom shall, effective as of the Closing, allow Continued Employees
to participate in its flexible spending account and dependent care assistance
plans by (i) hon-
-41-
oring all elections made by Continued Employees under Seller's flexible spending
account plan ("Seller's FSA") and Seller's dependent care assistance plan
------------
("Seller's DCA") in respect of the year in which the Closing Date occurs and
------------
(ii) giving credit thereunder for all unused amounts credited in respect of each
Continued Employee as of the Closing Date under Seller's FSA and Seller's DCA;
provided, however, that CompuCom's covenant in this paragraph is contingent upon
-------- -------
receipt from Seller, Seller's FSA or Seller's DCA of the unused credit amounts
in each Continued Employee's accounts in Seller's FSA and Seller's DCA, after
netting of credit and debit amounts in different individual Seller FSA and
Seller DCA accounts.
10.7 Long Term Disability. Except as provided in the following sentence,
--------------------
Seller shall continue to be responsible in accordance with its applicable
long-term disability plans, for all long-term disability income benefits payable
to (a) Inactive Employees who are not actively employed on the Closing Date due
to a short-term disability or other illness or injury and who thereafter become
eligible under Seller's applicable long-term disability plans without an
intervening return to active employment and (b) Former Employees who, as of the
Closing, are on a long-term disability leave (a "Pre-Closing Disability") for
----------------------
the duration of such Pre-Closing Disability (including for periods following the
Closing). Solely with respect to any disability of any Continued Employee
incurred on or after the Closing Date, the terms of any otherwise applicable
CompuCom long-term disability plan shall apply to such Continued Employee.
10.8 WARN Act. CompuCom agrees to provide any required notice under the
--------
WARN Act, and any similar statute, and otherwise to comply with any such statute
with respect to any "plant closing" or "mass layoff" (as defined in the WARN
Act) or similar event affecting Employees listed on Schedule 10.1A and occurring
--------------
on or after the Closing. Seller agrees to provide any required notice under the
WARN Act, and any similar statute, and otherwise to comply with any such statute
with respect to any "plant closing" or "mass layoff" (as defined in the WARN
Act) or similar event affecting Employees not listed on Schedule 10.1A and
--------------
occurring on or after the Closing.
10.9 Life Insurance and Accidental Death and Dismemberment. CompuCom shall
-----------------------------------------------------
be responsible for all life insurance and accidental death and dismemberment
insurance coverage of Continued Employees and their dependents for claims
incurred by such employees or their dependents on and after the Closing Date in
accordance with the terms of any applicable CompuCom death benefit or accidental
death or dismemberment plans or life insurance policies. Seller shall be
responsible for all claims incurred prior to the Closing Date in respect of
Former Employees and Continued Employees.
10.10 Employee Withholding and Reporting. As to all Continuing Employees,
----------------------------------
CompuCom and Seller agree that they will follow the "standard procedure" set
forth in Section 4 of Rev. Proc. 96-60 promulgated by the Internal Revenue
Service with respect to reporting of wages and other compensation. CompuCom
agrees to furnish Seller's Forms W-2
-42-
to Continued Employees to the extent such Forms W-2 are timely forwarded by
Seller to CompuCom. In accordance with Section 4 of Rev. Proc. 96-60, CompuCom
will obtain new Forms W-4 from Continued Employees. CompuCom agrees that,
pursuant to Section 3121(a)(1) of the Code, for purposes of determining whether
it has paid compensation to Continuing Employees equal to the contribution and
benefit base (as determined under Section 230 of the Social Security Act) during
the calendar year which includes the Closing Date, any compensation paid to such
Continuing Employees by Seller during such calendar year prior to the Closing
Date shall be considered as having been paid by CompuCom.
10.11 Cooperation. The parties agree to furnish each other with such
-----------
information concerning employees and employee benefit plans, and to take all
such other action, as is necessary and appropriate to effect the transactions
contemplated by Article X of this Agreement.
10.12 Workers' Compensation. All Former or Continued Employees who are
---------------------
currently receiving workers' compensation benefits shall continue to receive
workers' compensation benefits under Seller's workers' compensation insurance
policy after the Closing Date (to the extent they continue to be eligible for
workers' compensation benefits), except to the extent of any benefits payable in
respect of a new event or occurrence after the Closing Date.
ARTICLE XI
GENERAL PROVISIONS
11.1 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties hereto.
11.2 Waiver. The failure of any party hereto to comply with any
------
representation, warranty, covenant or agreement contained in this Agreement may
be waived only by a written instrument signed by the party granting such waiver.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty, covenant or
agreement contained in this Agreement and no failure by any party to take any
action with respect to any breach of this Agreement or default by any other
party shall constitute a waiver of such party's right to enforce any provision
hereof or to take any such action. The waiver by any party hereto of a breach of
any provision hereunder shall not operate as a waiver of any prior or subsequent
breach of the same or any other provision hereunder.
-43-
11.3 Notices. Any notices or other communications required or permitted
-------
hereunder shall be in writing and shall be deemed duly given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(c) the expiration of five business days after the day when mailed by certified
or registered mail, postage prepaid, addressed to the parties at the following
addresses (or at such other address as the parties hereto shall specify by like
notice):
If to Seller, to:
ENTEX Information Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
with a copy (which shall not constitute notice to ENTEX Information
Services, Inc.) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to CompuCom, to:
CompuCom Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
and Chief Financial Officer
with a copy (which shall not constitute notice to CompuCom) to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
11.4 Interpretation. The table of contents and headings contained in this
--------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When ever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
11.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
----------------------------------------------
including the documents referred to herein, and the Confidentiality Agreement
(a) constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except as otherwise provided in Article
VIII is not intended to confer upon any Person other than the parties any rights
or remedies.
11.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
11.7 Assignment. Neither this Agreement nor any of the rights, interests or
----------
obligations under this Agreement shall be assigned, in whole or in part by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that CompuCom may assign, in its sole
discretion any of or all its rights, interests and obligations under this
Agreement to any of its direct or indirect wholly owned subsidiaries, but any
such assignment shall not release CompuCom from its obligations under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns.
11.8 Severability. If any provision of this Agreement shall be held
------------
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
11.9 Dispute Resolution.
------------------
(a) Good-Faith Negotiations. If any dispute arises under this Agreement
-----------------------
that is not settled promptly in the ordinary course of business, the parties
shall seek to resolve any such dispute between them, first, by negotiating
promptly with each other in good faith in face-to-face negotiations. These
face-to-face negotiations shall be conducted by the respec-
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tive designated senior management representative of each party. If the parties
are unable to resolve the dispute between them through these face-to-face
negotiations, within 20 business days (or such period as the parties shall
otherwise agree) following the date of notification (the "Notice Date") by one
-----------
party to the other of the existence of such dispute, then any such disputes
shall be resolved in the following manner.
(b) Mediation. The parties shall endeavor to resolve any dispute arising
---------
out of or relating to this Agreement by mediation under the CPR Mediation
Procedures for Business Disputes. Unless otherwise agreed, the parties will
select a mediator from the CPR Panels of Neutrals and shall notify CPR to
initiate the selection process.
(c) Binding Arbitration. Any action, suit or proceeding or related series
-------------------
of actions, suits or proceedings where the amount in controversy as to at least
one party, exclusive of interest and costs, does not exceed $2,000,000, arising
out of or relating to this Agreement or any other agreement executed in
connection herewith (other than the Non-Competition and Referral Agreement) or
the breach, termination or validity thereof which has not been resolved by
mediation as provided herein within 90 days of the Notice Date, shall be
submitted to binding arbitration under the then current Commercial Arbitration
Rules of the American Arbitration Association (the "Association") strictly in
-----------
accordance with the terms of this Agreement and the substantive law of the State
of Delaware including law in respect of any statute of limitations. The
arbitration shall be conducted at the Association's regional office located in
New York, New York by three arbitrators, at least one of whom shall be
knowledgeable in business acquisitions one of whom shall be an attorney and one
of whom shall be a member of a "Big Five" accounting firm familiar with
businesses engaged in selling personal computer hardware, software and
peripherals and information technology services to large businesses. The
arbitrators are not empowered to award damages in excess of compensating damages
and each party hereby irrevocably waives any right to recover such damages with
respect to any such dispute. Judgment upon the arbitrators' award may be entered
and enforced in any court of competent jurisdiction.
(d) Litigation. Each party shall have the right to litigate any action,
----------
suit or proceeding or related series of actions, suits or proceedings where the
amount in controversy as to at least one party, exclusive of interest and costs,
is more than $2,000,000 arising out of or relating to this Agreement or any
other agreement executed in connection herewith or the breach, termination or
validity thereof which has not been resolved by mediation as provided herein
within 90 days of the Notice Date.
(e) Retention of Equitable Rights. Neither party shall be precluded hereby
-----------------------------
from securing equitable remedies in courts of any jurisdiction, including, but
not limited to, temporary restraining orders and preliminary injunctions to
protect its rights and interests but equitable relief shall not be sought as a
means to avoid or stay arbitration.
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(f) Performance Pending Resolution of Disputes. Each party is required to
------------------------------------------
continue to perform its obligations under this contract pending final resolution
of any dispute arising out of or relating to this contract, unless to do so
would be impossible or impracticable under the circumstances.
11.10 Other Remedies. Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
11.11 Governing Law. This Agreement shall be construed, interpreted and
-------------
governed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
11.12 Public Announcements. The parties shall consult with each other prior
--------------------
to issuing any press release or making any public announcement with respect to
this Agreement, or the transactions contemplated hereby (including the financial
terms hereunder), and shall not issue any such press release or public
announcement prior to such consultation or to which the other party shall
reasonably object, except as may be required by law or judicial process.
11.13 Attorneys' Fees. If any litigation, arbitration or other proceeding
---------------
is brought to enforce or interpret any provision of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
expenses from the other party, which fees and expenses shall be in addition to
any other relief which may be awarded.
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IN WITNESS WHEREOF, CompuCom and Seller have caused this Agreement to be
signed by their respective officers thereunto duly authorized in each case as of
the date first written above.
COMPUCOM SYSTEMS, INC.
By: /s/ Lazane ▇. ▇▇▇▇▇
-----------------------------------
Name: Lazane ▇. ▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
ENTEX INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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SCHEDULE 2.4(a)(vii)
MATTERS TO BE COVERED IN
OPINION OF COUNSEL OF COMPUCOM
The opinion of counsel to be given pursuant to Section 2.4(a)(vii) by
counsel for CompuCom shall cover the following matters:
(a) CompuCom is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware.
(b) CompuCom has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as now
being conducted.
(c) CompuCom has all requisite corporate power to execute and deliver, and
perform its obligations under, the Asset Purchase Agreement, the ▇▇▇▇ of Sale,
the Instrument of Assignment and Assumption, the Non-Competition and Referral
Agreement, the Transition Services Agreement, the Sublease and the ▇▇▇▇▇ Letter
Agreement (collectively, the "CompuCom Documents"); the CompuCom Documents have
------------------
been duly authorized, executed and delivered by CompuCom and constitute legal,
valid and binding obligations of CompuCom enforceable against it in accordance
with their respective terms except as such enforceability may be subject to (i)
any applicable bankruptcy, insolvency, reorganization or other laws relating to
or affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and all necessary corporate action on the part of CompuCom
required to be taken to authorize the execution and delivery by CompuCom of the
CompuCom Documents, the performance of CompuCom's obligations under the CompuCom
Documents and the consummation of the transactions contemplated thereby has been
taken.
(d) The execution and delivery by CompuCom of the CompuCom Documents, the
performance by CompuCom of the terms and provisions thereof, and the
consummation of the transactions contemplated thereby, will not (i) conflict
with or result in any violation of any provision of CompuCom's Certificate of
Incorporation or Bylaws, each as amended to the date hereof, (ii) to such
counsel's knowledge, conflict with, result in any violation or breach of,
constitute a default under, give rise to any right of termination or
acceleration (with or without notice or the lapse of time or both) pursuant to,
or result in being declared void or voidable, any term or provision of any note,
bond, mortgage, indenture, lease, license, contract or other instrument to which
CompuCom is a party or by which any of its properties or assets are or may be
bound, (iii) to such counsel's knowledge, conflict with or result in any
violation of, any order to which CompuCom is a party.
(e) To such counsel's knowledge, there is no action, suit, inquiry, formal
or informal complaint, investigation or other proceeding that is pending or
threatened involving CompuCom or its property or assets, at law or in equity, in
or before any Governmental Entity.
SCHEDULE 2.4(b)(viii)
MATTERS TO BE COVERED IN
OPINION(S) OF COUNSEL OF SELLER
The opinion or opinions of counsel to be given pursuant to Section
2.4(b)(viii) by counsel for Seller shall cover the following matters:
(a) Each of Seller and Real Estate Sub has been duly organized and is
validly existing in good standing as a corporation under the laws of the State
of Delaware.
(b) Each of Seller and Real Estate Sub has all requisite corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as now being conducted.
(c) Seller has all requisite corporate power and authority to execute and
deliver, and perform its obligations under, the Asset Purchase Agreement, the
▇▇▇▇ of Sale, the Instrument of Assignment and Assumption, the Non-Competition
and Referral Agreement, the Transition Services Agreement, the Sublease and the
▇▇▇▇▇ Letter Agreement (collectively, the "Seller Documents"); each of the
Seller Documents has been duly and validly authorized by Seller and (assuming
the due authorization, execution and delivery thereof by CompuCom) constitutes a
valid and legally binding agreement of Seller, enforceable against Seller in
accordance with its terms except that (a) the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (b) such counsel
expresses no opinion herein as to the applicability of, or compliance with,
Section 271 of the General Corporation Law of the State of Delaware with respect
to the transactions contemplated by the Seller Documents.
(d) The execution and delivery by Seller of the Seller Documents, the
performance by Seller of the respective terms and provisions thereof and the
consummation of the transactions contemplated thereby will not (i) conflict with
or result in any violation of any provision of Seller's Certificate of
Incorporation or Bylaws, each as amended to the date hereof, (ii) assuming that
Seller and Real Estate Sub receive consideration at least equal to the fair
market value of the Purchased Assets and the proceeds from the sale of the
Purchased Assets are applied in compliance with Section 4.09 of the Indenture
dated as of July 29, 1998 (the "Indenture") among Seller, the Guarantors named
therein and Marine Midland Bank, as Trustee, except as set forth on Schedule 3.3
to the Asset Purchase Agreement, to such counsel's knowledge, conflict with or
result in any violation or breach of, constitute a default under, give rise to
any right of termination or acceleration (with or without notice or the lapse of
time or both) pursuant to, or result in being declared void or voidable, any
term or provision of any note, bond, mortgage, indenture, lease, license,
Contract or other instrument to which
Seller is a party or by which any of the Purchased Assets are or may be bound,
which conflict, violation, default, termination, acceleration or voidance could
reasonably be expected to have a Material Adverse Effect or (iii) to such
counsel's knowledge, conflict with or result in any violation of any order of
any Governmental Entity to which Seller is a party or by which the Purchased
Assets are or may be bound, which conflict or violation could reasonably be
expected to have a Material Adverse Effect; provided that such counsel expresses
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no opinion as to the applicability to the transactions contemplated by the
Seller Documents, or compliance with (A) Section 271 of the General Corporation
Law of the State of Delaware, (B) Section 5.01 of the Indenture, or (C) Section
10.01 of Part 2, General Provisions, of the Indenture dated as of March 18,
1987, as supplemented on November 13, 1991, August 6, 1993 and December 15,
1994, between Businessland, Inc. and Security Pacific National Bank, as Trustee.
(e) Real Estate Sub has all requisite corporate power and authority to
execute and deliver, and perform its obligations under, the Deed.
(f) The Deed has been duly and validly authorized by Real Estate Sub and
(assuming the due authorization, execution and delivery thereof by CompuCom)
constitutes a valid and legally binding agreement of Real Estate Sub,
enforceable against Real Estate Sub in accordance with its terms except that the
enforcement thereof may be subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(g) The execution and delivery by Real Estate Sub of the Deed, the
performance by Real Estate Sub of the terms and provisions thereof and the
consummation of the transactions contemplated thereby will not (i) conflict with
or result in any violation of any provision of Real Estate Sub's Certificate of
Incorporation or Bylaws, each as amended to the date hereof, (ii) except as set
forth on Schedule 3.3 to the Asset Purchase Agreement, to such counsel's
knowledge, conflict with or result in any violation or breach of, constitute a
default under, give rise to any right of termination or acceleration (with or
without notice or lapse of time or both) pursuant to, or result in being
declared void or violable, any term or provision of any note, bond, mortgage,
indenture, lease, license, contract or other instrument to which Real Estate Sub
is a party or by which any of the Purchased Assets of Real Estate Sub are or may
be bound, which conflict, violation, default, termination, acceleration or
voidance could reasonably be expected to have a Material Adverse Effect or
(iii) to such counsel's knowledge, conflict with or result in any violation of
any order of any Governmental Entity to which Real Estate Sub is a party or by
which the Purchased Assets of Real Estate Sub are or may be bound, which
conflict or violation could reasonably be expected to have a Material Adverse
Effect; provided that such counsel expresses no opinion herein as to the
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applicability to the
transactions contemplated by the Seller Documents of, or compliance with,
Section 5.01 of the Indenture.
(h) To the best of such counsel's knowledge, there is no action, suit,
inquiry, complaint, investigation or other proceeding that is pending or
threatened against Seller or the Purchased Assets, at law or in equity, in or
before any Governmental Entity which could reasonably be expected to have a
Material Adverse Effect.