ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made this 9th day of February, 2001, by,
between and among OSAGE SYSTEMS GROUP, INC., a Delaware corporation ("Osage"),
and its wholly owned subsidiaries, OSAGE COMPUTER GROUP, INC., a Delaware
corporation ("Osage Computer"), SOLSOURCE COMPUTERS, INC., a California
corporation ("SolSource"), ▇.▇. ▇▇▇▇▇, INC., a Texas corporation ("▇▇ ▇▇▇▇▇"),
OPEN SYSTEM TECHNOLOGIES, INC., a Delaware corporation ("OST"), OPEN BUSINESS
SYSTEMS, INC., an Illinois corporation ("OBS"), OSAGE SYSTEMS GROUP MINNESOTA,
INC., a Minnesota corporation ("OSGM"), OSAGE iXi, Inc., a Delaware corporation
("Osage iXi") (Osage, Osage Computer, SolSource, ▇▇ ▇▇▇▇▇, OST, OBS, OSGM and
Osage iXi also referred to individually as "Seller" and collectively as
"Sellers"), ▇▇▇▇▇▇▇ COMPUTER RESOURCES, INC., a Delaware corporation ("▇▇▇▇▇▇▇")
and ▇▇▇▇▇▇▇ SELECT INTEGRATION SOLUTIONS, INC., a Delaware corporation ("PSIS")
(▇▇▇▇▇▇▇ and PSIS also referred to individually as "Purchaser" and collectively
as "Purchasers").
WHEREAS, Osage, through its operating subsidiaries, markets a broad range of
integration information technology products and professional consulting services
throughout the United States;
WHEREAS, Osage, through its operating subsidiaries, is now organized into two
strategic business units, Osage Consulting Services and Osage Systems
Integration;
WHEREAS, ▇▇▇▇▇▇▇ is in the business of marketing and selling a broad range of
microcomputers and related processes, including equipment selection, procurement
and configuration;
WHEREAS, PSIS is a wholly owned subsidiary of ▇▇▇▇▇▇▇ and is a single source
provider of integrated desktop management and network services, including life
cycle services, Internet working services and user support services;
WHEREAS, ▇▇▇▇▇▇▇ desires to purchase certain of the assets of Sellers used in
its Systems Integration Business that relate to the selling of integrated
information technology products ("Business No. 1"), and PSIS desires to purchase
certain of the assets of Sellers related to various services provided by Sellers
to the customers of the Systems Integration Business and certain assets relating
to various services provided by Sellers to the customers of its professional
consulting services business ("Business No. 2"), and Sellers desire to sell such
assets free and clear of all liens, claims and encumbrances, in accordance with
Section 363(f) of the Bankruptcy Code; and
WHEREAS, the Sellers will, within six (6) days after the execution of this
Agreement, file with, and seek approval of this Agreement by, the Bankruptcy
Court (defined herein), in a case(s) commenced by a voluntary petition(s) for
relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the District of Arizona (the
"Bankruptcy Court"), to be jointly administered as In Re: Osage Systems Group,
---------------------------
Inc., et al (the "Bankruptcy Case");
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NOW THEREFORE, in consideration of the above premises and the mutual promises,
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1.
TERMS
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1.1 Agreement.
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Each Seller agrees to sell and convey to ▇▇▇▇▇▇▇ the assets set forth in
Section 1.2 owned by such entity. Each Seller agrees to sell and convey to
PSIS the assets set forth in Section 1.3 owned by such entity. ▇▇▇▇▇▇▇
agrees to purchase the assets set forth in Section 1.2, and PSIS agrees to
purchase the assets set forth in Section 1.3. The agreements of ▇▇▇▇▇▇▇ and
PSIS and each Seller are expressly conditioned upon the terms, conditions,
covenants, representations and warranties as hereinafter set forth,
including the approval of the Bankruptcy Court.
1.2 Assets to be Sold by Each Seller and Purchased by ▇▇▇▇▇▇▇
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At the Closing (hereinafter defined) of this Agreement, ▇▇▇▇▇▇▇ shall
purchase and each Seller shall sell all the assets of such Seller used in
Business No. 1 except for assets to be acquired by PSIS pursuant to Section
1.3 and Excluded Assets (hereinafter defined). Such assets ("Purchased
Assets No. 1") shall include, but not be limited to:
(a) The inventory of Sellers related to committed transactions with
various customers of Sellers, to be listed on a schedule supplied by
the Sellers not less than two business days prior to the Closing and
agreed to by ▇▇▇▇▇▇▇ not less than one business day prior to the
Closing (the "Committed Inventory");
(b) Furniture, fixtures and other fixed assets (other than leasehold
improvements) the net book value of which is reflected on Exhibit A
attached to this Agreement, subject to changes in the ordinary course
of business prior to the Closing (the "Fixed Assets");
(c) Leasehold improvements of Sellers at locations as to which ▇▇▇▇▇▇▇
assumes a lease pursuant to Section 1.5 of this Agreement;
(d) A vendor receivable from Sun Microsystems Corporation relating to
market development funds in the amount of Three Hundred Ninety-Five
Thousand Two Hundred Twenty-Two Dollars ($395,222.00) as of November
30, 2000, as shown on the books of Sun Microsystems Corporation as of
the Closing Date and reflecting increases or decreases for operations
in the ordinary course of business from November 30, 2000 to the
Closing Date (the "Vendor Receivable");
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(e) Intangible assets of Sellers which are used in Business No. 1,
including, without limitation, various contract rights and agreements,
customer lists and records and related information, supplier
agreements, service marks and the right to use the corporate and trade
name of or used by any Seller, or any derivative thereof, all or a
part of the corporate or trade name and any Internet domain names, to
be selected by ▇▇▇▇▇▇▇;
(f) Any telephone numbers used in Business No. 1 of Sellers, to be
selected by ▇▇▇▇▇▇▇.
1.3 Assets to be Sold by Each Seller and Purchased by PSIS
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At the Closing of this Agreement, PSIS shall purchase and each Seller shall
sell certain assets of Sellers used in Business No. 1 as described in this
section and all the assets of such Seller used in Business No. 2 except for
Excluded Assets. Such assets ("Purchased Assets No. 2") shall include, but
not be limited to:
(a) Certain computer software, licenses and rights and similar items used
in the marketing of Business No. 1 and Business No. 2 of Sellers, to
be selected by PSIS;
(b) Certain intangible assets of Sellers, to be selected by PSIS, which
are used in Business ▇▇. ▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇, including without
limitation, various contract rights and agreements, customer lists and
records and related information, supplier agreements and related
information, consulting agreements, service marks, and the right to
use the corporate and trade name of or used by any Seller, or any
derivative thereof, all or a part of the corporate or trade name;
(c) Any telephone numbers used in Business No. 2, to be selected by
▇▇▇▇▇▇▇;
(d) Certain service contracts relating to Business No. 1 which are set
forth in Exhibit B attached hereto (the "Assumed Service Contracts");
and
(e) Certain maintenance contracts relating to Business No. 1 and Business
No. 2 subject to review thereof and acceptance by PSIS and for which
satisfactory agreements have been reached with MRE Systems, Inc.,
d/b/a GE Access, relating thereto, provided that the assumption and
assignment of such maintenance contracts is authorized by the
Bankruptcy Court.
1.4 Excluded Assets.
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The excluded assets are set forth on Exhibit C attached hereto (the
"Excluded Assets").
1.5 Lease Agreements.
-----------------
Sellers individually or jointly, are the lessees under certain lease
agreements covering the real and tangible personal properties described in
Exhibit D.
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No later than fifteen (15) days before the expiration of any deadline to
assume or reject leases established by the order of the Bankruptcy Court on
the motion of the Sellers referred to in Section 7.2(f), ▇▇▇▇▇▇▇ and/or
PSIS shall designate those lease agreements from Exhibit D which it chooses
to assume (the "Assumed Leases"). Neither ▇▇▇▇▇▇▇ nor PSIS shall have any
liability or obligation with respect to any lease agreement not so
designated. With respect to the Assumed Leases, Sellers shall promptly file
with the Bankruptcy Court the necessary and appropriate motion pursuant to
Section 365 of the Bankruptcy Code to assume and assign to ▇▇▇▇▇▇▇ and/or
PSIS the Assumed Leases. Any such assumption and assignment to ▇▇▇▇▇▇▇
and/or PSIS shall be effective as of the date of entry of an order of the
Bankruptcy Court approving such assignment and assumption (the "Lease
Assumption Date"). To the extent necessary, ▇▇▇▇▇▇▇ and/or PSIS shall pay
any cure amounts owing under the Assumed Leases as set forth in Section 2.2
herein.
On or promptly after the Lease Assumption Date, subject to the entry of the
Bankruptcy Court Order, Seller and ▇▇▇▇▇▇▇ or PSIS shall execute necessary
documentation for the assignment of the Assumed Leases and all of such
Seller's right and interest thereunder to ▇▇▇▇▇▇▇ and/or PSIS, as agreed
upon by the parties, and shall assign all its respective rights and
interest in the Assumed Leases to ▇▇▇▇▇▇▇ and/or PSIS, as applicable.
▇▇▇▇▇▇▇ and/or PSIS, as applicable, shall indemnify and hold each Seller
harmless from any liability with respect to the Assumed Leases occurring
after the Lease Assumption Date which is assumed by such party.
Sellers retain the right to seek in the Bankruptcy Case the assumption or
rejection of any of the leases described in Exhibit D which are not Assumed
Leases.
The assignment to and assumption by ▇▇▇▇▇▇▇ of the Assumed Leases as
provided in this Section is not a condition precedent to the obligation of
the Seller to sell or ▇▇▇▇▇▇▇ to purchase the Purchased Assets No. 1 and
the Purchased Assets No. 2 as provided in this Agreement.
1.6 Other Executory Contracts.
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(a) If any assets to be acquired by ▇▇▇▇▇▇▇ pursuant to Sections 1.2 and
1.3 constitute executory contracts and any Seller is in default under
any of such executory contracts, PSIS shall pay all cure amounts owing
under such executory contracts upon earlier of the Closing Date or
entry of an order by the Bankruptcy Court authorizing the assumption
and assignment of the such executory contracts, which amounts shall be
an offset against the amount due under the Promissory Note delivered
in payment of the purchase price in accordance with Section 3.2(a).
(b) Sellers retain the right to assume or reject in the Bankruptcy Case
any executory contract(s) (as defined in Bankruptcy Code Sec.365) that
are not assumed by ▇▇▇▇▇▇▇ and/or PSIS.
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1.7 Instruments of Transfer.
-------------------------
Except as otherwise provided herein, subject to the entry of the Bankruptcy
Court Order, at Closing each Seller will deliver to ▇▇▇▇▇▇▇ and PSIS,
respectively, such bills of sale, endorsements, assignments and other good
and sufficient instruments of transfer and assignment as shall be effective
to vest in ▇▇▇▇▇▇▇ and PSIS, as applicable, good title and interest in and
to Purchased Assets No. 1 and Purchased Assets No. 2, respectively. At or
after the Closing, and without further consideration, each Seller will
execute and deliver to ▇▇▇▇▇▇▇ and PSIS, as applicable, such further
instruments of conveyance and transfer and take such other action as
▇▇▇▇▇▇▇ and/or PSIS may reasonably request in order to more effectively
convey and transfer to ▇▇▇▇▇▇▇ and/or PSIS, as applicable, any of the
Purchased Assets No. 1 and/or Purchased Assets No. 2 or for aiding and
assisting and collecting and reducing to possession and exercising rights
with respect thereto. In addition to the foregoing, each Seller will
deliver to ▇▇▇▇▇▇▇ and PSIS, as applicable, the originals or copies of all
such Sellers books, records and other data relating to Purchased Assets No.
1 and Purchased Assets No. 2, respectively, and simultaneously with such
delivery, each Seller shall take all such acts as may be necessary to put
▇▇▇▇▇▇▇ in actual possession and operating control of Purchased Assets No.
1 and put PSIS in actual possession and operating control of Purchased
Assets No. 2.
2.
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ASSUMPTION OF LIABILITIES
--------------------------
2.1 Committed Inventory.
--------------------
▇▇▇▇▇▇▇ will assume, as of the Closing Date, the rights and obligations of
Sellers under certain purchase contracts for the Committed Inventory but
only to the extent the corresponding benefits and obligations therefrom are
assigned to and assumed by ▇▇▇▇▇▇▇ pursuant to approval of the Bankruptcy
Court.
2.2 Assumed Leases.
---------------
▇▇▇▇▇▇▇ will assume, as of the Lease Assumption Date, the rights and
obligations of Sellers under the Assumed Leases but only to the extent the
corresponding benefits and obligations therefrom are assigned to and
assumed by ▇▇▇▇▇▇▇ pursuant to approval of the Bankruptcy Court. If and to
the extent that any Seller is in default under any Assumed Leases, ▇▇▇▇▇▇▇
shall pay on the Lease Assumption Date all cure amounts owing under the
Assumed Leases and any amount so paid by ▇▇▇▇▇▇▇ shall be an offset against
the amount due under the Promissory Note delivered in payment of the
purchase price in accordance with Section 3.2(a).
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2.3 Assumption of Service Contracts.
-----------------------------------
PSIS will assume, as of the Closing Date, the rights and obligations of
Sellers under the Assumed Service Contracts, but only to the extent the
corresponding benefits and obligations therefrom are assigned to and
assumed by PSIS pursuant to approval of the Bankruptcy Court. If and to the
extent that any Seller is in default under any of the Assumed Service
Contracts, PSIS shall pay all cure amounts owing under the Assumed Service
Contracts upon earlier of the Closing Date or entry of an order by the
Bankruptcy Court authorizing the assumption and assignment of the Assumed
Service Contracts, which amounts shall be an offset against the amount due
under the Promissory Note delivered in payment of the purchase price in
accordance with Section 3.2(a).
2.4 Assumption of Multi-Year Maintenance Agreements. PSIS will assume, as
-------------------------------------------------
of the Closing Date, the rights and obligations of Sellers under any
Multi-Year Maintenance Agreement that PSIS elects to acquire pursuant to
Section 1.3(e).
2.5 Excluded Liabilities.
----------------------
Notwithstanding anything in this Agreement to the contrary, ▇▇▇▇▇▇▇ and
PSIS shall not assume or become responsible for any claim, liability or
obligation of any nature whatsoever, whether known or unknown, accrued,
absolute, contingent or otherwise (a "Liability") of any of the Sellers
except as set forth in Sections 1.6, 2.1, 2.3 and 2.4. Without limiting the
generality of the foregoing, the following are included among the
Liabilities of any of the Sellers which ▇▇▇▇▇▇▇ and PSIS shall not assume
or become responsible for:
(a) all Liabilities for any taxes whether deferred or which have accrued
or may accrue or become due and payable by any of the Sellers either
prior to, on or after the Closing Date, including, without limitation,
all taxes and fees of a similar nature arising from the sale and
transfer of Purchased Assets No. 1 and Purchased Assets No. 2 to
▇▇▇▇▇▇▇ and PSIS, respectively, other than sales and transfer taxes
that are imposed on the buyer according to applicable law;
(b) all Liabilities and obligations to directors, officers, employees or
agents of any of the Sellers including, without limitation, all
Liabilities and obligations for wages, salary, bonuses, commissions,
vacation or severance pay, profit sharing or pension benefits, and all
Liabilities and obligations arising under any bonus, commission,
salary or compensation plans or arrangements, whether accruing prior
to, on or after the Closing Date;
(c) all Liabilities and obligations with respect to unemployment
compensation claims and workmen's compensation claims and claims for
race, age and sex discrimination or sexual harassment or for unfair
labor practice based on or arising from occurrences, circumstances or
events, or exposure to conditions, existing or occurring prior to the
Closing Date and for which any claim may be asserted by any of the
Sellers' employees, prior to, on or after the Closing Date;
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(d) all Liabilities of any of the Sellers to third parties for personal
injury or damage to property based on or arising from occurrences,
circumstances or events, or exposure to conditions, existing or
occurring prior to the Closing Date and for which any claim may be
asserted by any third party prior to, on or after the Closing Date;
(e) all Liabilities and obligations of any of the Sellers arising under or
by virtue of federal or state environmental laws based on or arising
from occurrences, circumstances or events, or exposure to conditions,
existing or occurring prior to the Closing Date and for which any
claim may be asserted prior to, on or after the Closing Date;
(f) all Liabilities of any of the Sellers including any costs of
attorneys' fees incurred in connection therewith, for litigation,
claims, demands, or governmental proceedings arising from occurrences,
circumstances or events, or exposure to conditions occurring or
existing prior to the Closing Date;
(g) all Liabilities based on any theory of liability or product warranty
with respect to any product manufactured or sold prior to the Closing
Date and for which any claim may be asserted by any third party, prior
to, on or after the Closing Date;
(h) all attorneys' fees, accountants' or auditors' fees, and other costs
and expenses incurred by any of the Sellers in connection with the
negotiation, preparation and performance of this Agreement or any of
the transactions contemplated hereby;
(i) all Liabilities of any of the Sellers in connection with the Excluded
Assets;
(j) any Liabilities of any of the Sellers with respect to any options,
warrants, agreements or convertible or other rights to acquire shares
of its capital stock of any class and/or of its membership interests
of any class, respectively;
(k) any Liabilities of any of the Sellers incurred incident to any
indemnification for breach of any representations, warranties,
covenants, or other agreements made by any of the Sellers under any of
the asset purchase, stock, reorganization, or other legal
transaction(s) set forth in Exhibit E;
(l) any Liabilities of any of the Sellers with respect to any loans or
advances made by any Seller;
(m) all other debts, Liabilities, obligations, contracts, and commitments
(whether direct or indirect, known or unknown, contingent or fixed,
liquidated or unliquidated, and whether now or hereinafter rising)
arising out of or relating to the ownership, operation or use of any
Purchased Assets No. 1 and/or Purchased Assets No. 2 on or prior to
the Closing Date or the conduct of the Business No. 1 of the Sellers
and/or Business No. 2 of the Sellers prior to the Closing Date, except
only for the liabilities and obligations to be assumed or paid,
performed or discharged by ▇▇▇▇▇▇▇ and/or PSIS as set forth in
Sections 1.6, 2.1, 2.2, 2.3 and 2.4.
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3.
PURCHASE PRICE
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3.1 Amount of Purchase Price. The purchase price for the Purchased Assets
--------------------------
No. 1 and the Purchased Assets No. 2 to be acquired by ▇▇▇▇▇▇▇ and PSIS
shall be the sum of:
(a) the net book value of the Fixed Assets as of the Closing Date (which
amount was $1,355,706 as of December 31, 2000 and will be increased by
acquisitions or decreased by dispositions, depreciation and
amortization of Fixed Assets in the ordinary course of business prior
to the Closing Date);
(b) the amount of the Vendor Receivable as of the Closing Date;
(c) the value of the Committed Inventory determined by its cost as of the
Closing Date;
(d) $1,000,000.00, to be allocated between Business No.1 and Business No.
2 as agreed by the parties.
The purchase price to be paid to the Sellers hereunder by ▇▇▇▇▇▇▇ and PSIS,
as applicable, shall be allocated as set forth on Exhibit F attached
hereto. Each Seller and ▇▇▇▇▇▇▇ and PSIS agree that each shall act in a
manner consistent with such allocation in (a) filing Internal Revenue Form
8594; and (b) in paying sales and other transfer taxes in connection with
the purchase and sale of assets pursuant to this Agreement. To the extent
that any transactions contemplated herein are not exempt from sales and
other transfer taxes pursuant to Section 1146(c) of the Bankruptcy Code,
▇▇▇▇▇▇▇ and PSIS shall pay such sales and other transfer taxes, and any
such costs will not be deducted from the purchase price to be paid to the
Sellers hereunder.
3.2 Payment of Purchase Price. The purchase price shall be payable to
----------------------------
Sellers or to its creditors as may be directed by the Bankruptcy Court by
▇▇▇▇▇▇▇ and PSIS, as applicable, in the following manner:
(a) A promissory note in the principal amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), which shall be due within ninety (90)
days of the Closing and shall bear interest at the prime rate of Chase
Manhattan Bank, substantially in the form attached hereto as Exhibit
G. The Note will be subject to an offset determined by a formula to be
set forth in the Note relating to the voluntary termination of
employment by 43 key employees, to be identified on a list
countersigned by ▇▇▇▇▇▇▇, PSIS and the Seller, during such ninety day
period, along with any cure payments that ▇▇▇▇▇▇▇ or PSIS may be
required to pay pursuant to the provisions of Sections 1.6, 2.2 or
2.3;
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(b) the balance of the purchase price in cash by wire transfer and
immediately available funds on the Closing Date.
4.
COVENANT NOT TO COMPETE AGREEMENTS
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4.1 Covenant Not to Compete Agreements of Sellers.
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At Closing, each Seller shall enter into Covenant Not to Compete Agreements
with ▇▇▇▇▇▇▇ and PSIS, substantially in the forms attached hereto and made
a part hereof as Exhibits H and I, respectively.
5.
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Each Seller hereby represents and warrants to ▇▇▇▇▇▇▇ and PSIS as follows:
5.1 Organization.
------------
Each Seller is a corporation validly existing and in good standing under
the laws of the State of its incorporation. Each Seller has all requisite
power and authority to carry on Business No. 1 and Business No. 2, as
applicable, as it is now being conducted, subject to the provisions of any
order of the Bankruptcy Court.
5.2 Authority.
---------
Subject only to approval by the Bankruptcy Court, each Seller has the
corporate power and authority to perform this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly authorized by each Seller's Board of Directors.
5.3 Title to Properties and Conditions.
--------------------------------------
Each Seller has good and marketable title to the Purchased Assets No. 1 and
Purchased Assets No. 2 being sold hereunder. When sold in accordance with
the Bankruptcy Court Order, the Purchased Assets No. 1 and Purchased Assets
No. 2 will not be subject to any claims, liens, interests, mortgages,
charges or other encumbrances arising through the Sellers. The Sellers have
not entered into any prior agreement to sell or transfer the Purchased
Assets No. 1 or Purchased Assets No. 2. Subject to any provisions of the
Bankruptcy Court Order, the assets purchased pursuant to this Agreement are
9
sold "As Is", "Where Is" and with all faults. Each Seller warrants only
that title conveyed is good and transfer rightful. This warranty is made by
the Sellers in lieu of all other warranties, express or implied.
5.4 Brokers and Finders.
---------------------
None of the Sellers have employed any broker, agent or finder or incurred
any liability for any brokerage fees, agent commission or finder's fees in
connection with the transaction contemplated hereby for which ▇▇▇▇▇▇▇ or
PSIS or any third party shall have any liability.
6.
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ hereby represents and warrants to the Sellers that the following
statements are true and correct as of the date hereof.
6.1 Organization, Good Standing and Power of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ is a
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corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has full corporate power and lawful
authority to execute, deliver and perform this Agreement and the execution,
delivery and performance of this Agreement and the transaction contemplated
hereby will be, on or before the date referred to in Sections 8.3 and 8.4
of this Agreement, duly authorized by ▇▇▇▇▇▇▇'▇ Board of Directors and its
senior lender, Deutsche Financial Services Corporation. This Agreement is a
valid and binding obligation of ▇▇▇▇▇▇▇, enforceable in accordance with its
terms except that such enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws.
6.2 Brokers and Finders.
---------------------
▇▇▇▇▇▇▇ has not employed any broker, agent or finder or incurred any
liability for any brokerage fees, agent commission or finder's fees in
connection with the transaction contemplated hereby for which any Seller or
any third party shall have any liability.
6.3 Organization, Good Standing and Power of PSIS. PSIS is a corporation
------------------------------------------------
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power and lawful authority to
execute, deliver and perform this Agreement and the execution, delivery and
performance of this Agreement and the transaction contemplated hereby will
be, on or before the date referred to in Sections 8.3 and 8.4 of this
Agreement, duly authorized by PSIS's Board of Directors and its senior
lender, Deutsche Financial Services Corporation. This Agreement is a valid
and binding obligation of PSIS, enforceable in accordance with its terms
except that such enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws.
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6.4 Brokers and Finders.
---------------------
PSIS has not employed any broker, agent or finder or incurred any liability
for any brokerage fees, agent commission or finder's fees in connection
with the transactions contemplated hereby for which any Seller or any third
party shall have any liability.
7.
CERTAIN UNDERSTANDINGS AND AGREEMENTS
-------------------------------------
7.1 Disposition of Assets. From the date hereof to the Closing Date, except
---------------------
as may be authorized by the Bankruptcy Court, none of Purchased Assets No.
1 or Purchased Assets No. 2 will be sold, conveyed or otherwise disposed of
by any Seller without ▇▇▇▇▇▇▇'▇ or PSIS's prior written approval of the
terms and conditions of such sale, other than the sale of inventory and
other assets in the ordinary course of business of any Seller.
7.2 Motion to the Bankruptcy Court.
----------------------------------
Promptly after the commencement of the Bankruptcy Case, the Sellers shall
file with the Bankruptcy Court a motion for orders (a) authorizing the sale
of the Sellers' assets as provided herein free and clear of all liens
pursuant to Section 363(f) of the Bankruptcy Code, (b) authorizing the
Sellers, as Chapter 11 debtors-in-possession (the "Debtors") to conduct an
auction to sell such assets to ▇▇▇▇▇▇▇ and PSIS or to any higher and better
bidder, (c) approving a break-up fee in the amount of $250,000 (the
"Break-Up Fee") and certain bidding procedures in such auction and sale
(including an initial minimum bid of $250,000 in excess of the purchase
price in Section 3.1 of this Agreement and subsequent bidding in increments
of $25,000, and a minimum good faith deposit of $500,000), and scheduling a
hearing and fixing the manner of sale and notice of such auction and sale,
(d) scheduling a preliminary hearing on shortened notice and fixing the
manner and extent of notice to consider the Break-Up Fee and bidding
procedures, (e) authorizing the assumption and assignment to ▇▇▇▇▇▇▇ of the
Assumed Service Contracts and any other executory contracts included in the
Purchased Assets ▇▇. ▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇, (▇) extending the
time to accept or reject leases of real or personal property of the Sellers
to a date not less than 120 days after the commencement of the Bankruptcy
Case and (g) granting such other relief as the Bankruptcy Court shall deem
appropriate.
7.3 Conduct of Business. Each Seller agrees that from the date hereto to
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the Closing Date, except as otherwise set forth in this Agreement or
permitted by the Bankruptcy Code, by any order of the Bankruptcy Court, or
to the extent consented to in writing by ▇▇▇▇▇▇▇ and PSIS, or as expressly
contemplated hereby, each Seller:
(a) will operate the Purchased Assets ▇▇. ▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ and Business No. 2 as presently operated consistent
with past practices, except for the filing of the Bankruptcy Case and
the 363(f) motion;
(b) will promptly advise ▇▇▇▇▇▇▇ and PSIS in writing of any material loss,
damage or destruction of or to the Purchased Assets No. 1 or Purchased
Assets No. 2;
11
(c) will not incur any indebtedness, liability or obligation (whether
absolute, approved, contingent or otherwise) in connection with the
Purchased Assets No. 1 or Purchased Assets No. 2 other than in the
ordinary course of business, or as may be authorized by the Bankruptcy
Court;
(d) except as may be authorized by the Bankruptcy Court, will not permit,
create or assume any mortgage, lien, pledge, charge or encumbrance
with respect to Purchased Assets No. 1 or Purchased Assets No. 2.
7.4 Access to Information. From the date hereof until Closing, each Seller
----------------------
shall make available or cause to be made available to the accountants,
attorneys or other representatives of ▇▇▇▇▇▇▇ and PSIS for examination
during normal business hours, upon reasonable requests, all properties,
assets, books of accounts, title papers, insurance policies, contracts,
leases, commitments, records and other documents of every character
relating to Business No. 1 and Business No. 2.
7.5 Collection of Accounts Receivable. Subject to authorization by the
------------------------------------
Bankruptcy Court, ▇▇▇▇▇▇▇ shall have the option to enter into a Service
Contract with the Sellers pursuant to which ▇▇▇▇▇▇▇ will collect for the
account of the Sellers the accounts receivable of the Sellers outstanding
as of the Closing Date.
7.6 Other Actions. From the date hereof until Closing, each Seller shall
--------------
not take any action which shall prevent the representations, warranties and
covenants of Sellers set forth herein from being true and correct at the
Closing.
7.7 Occupancy Pending Assumption of Leases. After the Closing and prior to
---------------------------------------
the Lease Assumption Date, the Sellers shall permit ▇▇▇▇▇▇▇ and PSIS to
occupy and use the real property described in Exhibit D to the extent
necessary for the use of the Purchased Assets No. 1 and the Purchased
Assets No. 2, provided that ▇▇▇▇▇▇▇ or PSIS pays all rent and other costs
of the use and occupancy of such premises.
8.
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
OF ▇▇▇▇▇▇▇ AND PSIS
-------------------
The obligation of ▇▇▇▇▇▇▇ and PSIS to consummate the transactions
contemplated hereby shall be subject to the following conditions:
8.1 ▇▇▇▇▇▇▇ and PSIS shall acquire all necessary permits from federal, state
and local agencies that are necessary to conduct business in the states of
Arizona, Texas, Florida, Illinois, and Minnesota.
8.2 ▇▇▇▇▇▇▇ and PSIS shall have completed their due diligence investigation of
the books and records of each Seller to their satisfaction. This condition
shall be deemed to have been waived by ▇▇▇▇▇▇▇ and PSIS unless ▇▇▇▇▇▇▇ and
12
PSIS notify the Sellers of their election to terminate this Agreement on or
before the 14th day after the commencement of the Bankruptcy Case.
8.3 ▇▇▇▇▇▇▇ and PSIS shall have obtained the consent of their primary lender,
Deutsche Financial Services Corporation, to the transaction. This condition
shall be deemed to have been waived by ▇▇▇▇▇▇▇ and PSIS unless ▇▇▇▇▇▇▇ and
PSIS notify the Sellers of their election to terminate this Agreement on or
before the 14th day after the commencement of the Bankruptcy Case.
8.4 The transactions shall have been approved by the Board of Directors of
▇▇▇▇▇▇▇ and PSIS, respectively. This condition shall be deemed to have been
waived by ▇▇▇▇▇▇▇ and PSIS unless ▇▇▇▇▇▇▇ and PSIS notify the Sellers of
their election to terminate this Agreement on or before the 14th day after
the commencement of the Bankruptcy Case.
8.5 ▇▇▇▇▇▇▇ and/or PSIS shall have entered into Employment Agreements with key
employees of Sellers identified by ▇▇▇▇▇▇▇ or PSIS (including, but not
limited to, certain system engineers and Java programmers that are
currently providing services to Sellers' consulting unit) on terms that are
mutually agreeable to such parties, subject in any event to the approval by
the Bankruptcy Court of the sale of the assets to ▇▇▇▇▇▇▇ and PSIS. This
condition shall be deemed to have been waived by ▇▇▇▇▇▇▇ and PSIS unless
▇▇▇▇▇▇▇ and PSIS notify the Sellers of their election to terminate this
Agreement on or before the 14th day after the commencement of the
Bankruptcy Case.
8.6 The representations and warranties of each Seller contained in this
Agreement shall be true and correct, in all material respects, as of the
Closing Date and each of the covenants, agreements and obligations to be
performed by each Seller on or before the Closing Date pursuant to the
terms hereof shall have been performed, in all material respects, on or
before the Closing Date.
8.7 Except for the filing of the Bankruptcy Case or as may be authorized by an
order of the Bankruptcy Court, no material loss, damage or destruction
shall have occurred to the Purchased Assets No. 1 or Purchased Assets No.
2, which loss, damage or destruction cannot reasonably be repaired within
ninety (90) days after the date of such loss, damage or destruction.
8.8 Except for the filing of the Bankruptcy Case or as may be authorized by an
order of the Bankruptcy Court, no action, suit or proceedings against any
of the parties hereto shall be issued or pending before any court or
governmental agency seeking to restrain or prohibit the transactions
contemplated by this Agreement.
8.9 A bid procedures order (the "Bid Procedures Order") shall have been entered
by the Bankruptcy Court within 20 days of execution of this Agreement,
unless otherwise agreed to by the parties, establishing such bid
procedures, granting such bid procedures, bidder protections, bidder
qualifications and appropriate Break-Up Fee and addressing such other
matters as such Sellers and ▇▇▇▇▇▇▇ and PSIS mutually agree upon,
including, but not limited to, reimbursement of ▇▇▇▇▇▇▇'▇ and PSIS's costs
13
not to exceed $250,000 (encompassed in the proposed Break-Up Fee) in the
event that ▇▇▇▇▇▇▇ and PSIS are not the successful bidders in any sale of
Purchased Assets No. 1 and Purchased Assets No. 2 conducted in the
Bankruptcy Case, an initial minimum bid of $250,000 in excess of the
purchase price in Section 3.1 and subsequent bidding in increments of
$25,000, and a minimum good faith deposit of $500,000.
8.10 Final Order of Bankruptcy Court.
-----------------------------------
The Bankruptcy Court shall have entered an order (the "Bankruptcy Court
Order") in form and substance satisfactory to ▇▇▇▇▇▇▇ and PSIS, authorizing
and directing each Seller to (a) sell Purchased Assets No. 1 and Purchased
Assets No. 2 to ▇▇▇▇▇▇▇ and PSIS, as applicable, free and clear of all
liens, claims, interests and encumbrances in accordance with Section 363(f)
of the Bankruptcy Court, and (b) to assign the Assumed Service Contracts to
▇▇▇▇▇▇▇ and PSIS, as applicable, in accordance with Section 365 of the
Bankruptcy Code. The Bankruptcy Court Order shall become a Final Order on
or before April 30, 2001, or such other date as is agreed to by the parties
in accordance with this Agreement. For purposes of this Agreement, a "Final
Order" shall mean an order or judgment of the Bankruptcy Court or other
court of competent jurisdiction (i) which has not been reversed, stayed,
modified or amended and as to which the time to appeal or seek review,
reconsideration or rehearing has expired and as to which no appeal,
petition for certiorari, or other proceedings for re-argument, review,
reconsideration or rehearing shall be pending or (ii) for which an appeal,
writ of certiorari, re-argument or rehearing thereof has been sought, and
----------
as to which such order was appealed, or certiorari, re-argument or
----------
rehearing shall have been denied and the time to take any further appeal,
petition for certiorarior move for re-argument or rehearing shall have
------------
expired, so that in the event of either (i) or (ii), such order or judgment
shall have become final and non-appealable in accordance with applicable
law; provided, however, that the possibility that a motion under Rules 59
-------------------
or 60 of the Federal Rules of Civil Procedure or any analogous rule under
the Bankruptcy Rules may be, but has not then been, filed with respect to
such order or judgment shall not cause such order or judgment not to be a
Final Order, and provided further that nothing herein will preclude the
---------------------------
Sellers and the Purchasers from closing in reliance upon the Bankruptcy
Court Order and Section 363(m) of the Bankruptcy Code, when and if they
agree to do so in their sole discretion, regardless of whether the
Bankruptcy Court Order has become a Final Order as heretofore described,
and so long as the Bankruptcy Court Order is in full force and effect and
has not been reversed, modified, or stayed.
8.11 The Bankruptcy Court shall have entered an order on the Sellers' motion
referred to in Section 7.2(f) of this Agreement extending the time for
assuming or rejecting leases to 120 days after the commencement of the
Bankruptcy Case.
8.12 The Bankruptcy Case shall have been commenced not later than six (6) days
after the execution and delivery of this Agreement.
14
8.13 Each Seller shall have delivered to ▇▇▇▇▇▇▇ and PSIS, as applicable, at or
before Closing, the following documents, all of which shall be in form and
substance reasonable acceptable to ▇▇▇▇▇▇▇ and PSIS and their counsel:
(a) Instruments of transfer required by Section 1.7;
(b) Copies of resolutions of the Board of Directors of each Seller and any
other necessary corporate actions, certified by the Secretary or
Assistance Secretary of each Seller, authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and attesting to the signatures of
the officers signing documents on behalf of each Seller;
(c) Each Seller shall have entered into the non-competition agreements as
set forth in Exhibits H and I; and
(d) Possession of Purchased Assets No. 1 and Purchased Assets No. 2 shall
be provided to ▇▇▇▇▇▇▇ and PSIS, as applicable.
9.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
----------------------------------------------
The obligations of each Seller to consummate the transactions contemplated
hereby shall be subject to the following conditions:
9.1 Each Seller will have obtained the consent of its senior lender, if
required, to the sale of the Purchased Assets No. 1 and Purchased Assets
No. 2 and all other consents and approvals of any third party whose consent
is required in connection with the transactions contemplated by this
Agreement.
9.2 The representations and warranties of ▇▇▇▇▇▇▇ and PSIS contained in this
Agreement shall be true and correct as of the Closing Date and each of the
covenants, agreements and obligations to be performed by ▇▇▇▇▇▇▇ and PSIS
on or before the Closing Date pursuant to the terms hereof shall have been
performed on or before the Closing Date.
9.3 Final Order of Bankruptcy Court. The Bankruptcy Court shall have
-----------------------------------
entered the Bankruptcy Court Order in form and substance satisfactory to
each Seller authorizing and directing each Seller to (a) sell Purchased
Assets No. 1 and Purchased Assets No. 2 to ▇▇▇▇▇▇▇ and PSIS, as applicable,
free and clear of all liens, claims, interests and encumbrances in
accordance with Section 363(f) of the Bankruptcy Code, and (b) to assign
the Assumed Service Contracts to ▇▇▇▇▇▇▇ and PSIS, as applicable, in
accordance with Section 365 of the Bankruptcy Code. The Bankruptcy Court
Order shall become a Final Order on or before April 30, 2001, or such other
date as is agreed to by the parties in accordance with this Agreement.
15
9.4 ▇▇▇▇▇▇▇ and PSIS, as applicable, shall have delivered to the Sellers at or
before Closing, the following documents, all of which shall be in form and
substance reasonably acceptable to the Sellers and their counsel:
(a) A certified or bank cashier's check or wire transfer for the aggregate
amount to be paid to Sellers or as otherwise directed by the
Bankruptcy Court at the Closing pursuant to Section 3.2(b);
(b) A promissory note made payable to Sellers as seat forth in Section
3.2(a);
(c) An Assumption of Liabilities Agreement under which ▇▇▇▇▇▇▇ and/or
PSIS, as applicable, assumes the contracts set forth in Section 1.6,
2.1, 2.2, 2.3 and 2.4; respectively;
(d) Copies of resolutions of the Board of Directors of ▇▇▇▇▇▇▇ and PSIS,
certified by the Secretary of ▇▇▇▇▇▇▇ and PSIS, respectively,
authorizing the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and
attesting to the signatures of the officers signing documents on
behalf of ▇▇▇▇▇▇▇ and PSIS.
10.
SURVIVAL OF AND RELIANCE UPON REPRESENTATIONS,
----------------------------------------------
WARRANTIES AND AGREEMENT; INDEMNIFICATION
-----------------------------------------
10.1 Survival of Representations and Warranties:
----------------------------------------------
The parties acknowledge and agree that all representations, warranties and
agreements contained in this Agreement or in any agreement, instrument,
exhibit, certificate, schedule or other document delivered in connection
herewith, shall survive the Closing and continue to be binding upon the
party giving such representation, warranty or agreement and shall be fully
enforceable to the extent provided for herein, at law or in equity, for a
period beginning on the Closing Date and ending 180 days thereafter, except
for the representations and warranties set forth in Sections 5.2, 5.3, 6.1
and 6.3, which shall survive the Closing Date and shall terminate in
accordance with the statute of limitations governing written contracts in
the State of Arizona, and Exhibits H and I, which shall terminate as
provided therein.
10.2 Indemnification by Sellers.
----------------------------
Sellers shall indemnify ▇▇▇▇▇▇▇ and PSIS against and hold them harmless
from:
(a) any and all loss, damage, liability or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation,
warranty, covenant, or obligation made or incurred by any Seller
16
herein or in any other agreement, instrument or document delivered by
or on behalf of any Seller pursuant to the provisions of the
Agreement;
(b) any imposition (including by operation of law) or attempted imposition
by a third party upon ▇▇▇▇▇▇▇ and/or PSIS of any liability of any
Seller which ▇▇▇▇▇▇▇ or PSIS has not specifically agreed to assume
pursuant to Sections 1.6, 2.1, 2.2, 2.3 or 2.4 of this Agreement;
(c) any and all costs and expenses (including reasonable legal and
accounting fees) related to any of the foregoing.
10.3 Indemnification by ▇▇▇▇▇▇▇ and/or PSIS.
-------------------------------------------
▇▇▇▇▇▇▇ and PSIS, as applicable, shall indemnify each Seller against and
hold them harmless from:
(a) any and all loss, damage, liability or deficiency resulting from or
arising out of ▇▇▇▇▇▇▇'▇ and PSIS's operations subsequent to the
Closing;
(b) any inaccuracy in or breach of any representation, warranty, covenant
or obligation made or incurred by ▇▇▇▇▇▇▇ and/or PSIS, as applicable
herein, or in any other agreement, instrument, or document delivered
by or on behalf of such party pursuant to the provisions of this
Agreement;
(c) any obligation of ▇▇▇▇▇▇▇ and/or PSIS emanating out of the assumption
of certain leases, service contracts, committed inventories or other
agreements as set forth in Sections 1.6, 2.1, 2.2, 2.3 and 2.4,
respectively; and
(d) any and all related costs and expenses (including reasonable legal and
accounting fees).
11.
DEFAULT AND TERMINATION
-----------------------
11.1 A party shall "default" under this Agreement if it makes any material
misrepresentation to the other party in connection with this Agreement, or
breaches or fails to perform any of its representations, warranties or
covenants contained in this Agreement.
11.2 If either party desires to terminate this Agreement because it believes the
other to be in default hereunder, the former party shall provide the other
with written notice specifying in reasonable detail the nature of such
default. If the default is not curable or has not been cured within ten
(10) days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the default is curable and the
party in default undertakes diligent, good faith efforts to cure the
default within such ten (10) day period and continues such efforts
thereafter), then the party giving such notice may terminate this Agreement
and/or exercise the remedies available to such party pursuant to this
17
Agreement, subject to the right of the other party to contest such action
though appropriate proceedings. Notwithstanding the foregoing, neither
party shall have any right to cure such party's wrongful failure to
consummate this transaction, as provided herein, on the Closing Date. The
remedy of terminating this Agreement in accordance with this Section shall
not be exclusive of any other rights which a party may have to terminate
this Agreement under any other provisions hereof, or of any other rights or
remedies which a party may otherwise have under this Agreement, or any
other agreement or instrument, all of which rights and remedies shall be
cumulative.
11.3 If a lawsuit is filed by ▇▇▇▇▇▇▇ or PSIS or any Seller pursuant to the
terms of this Section 11, the prevailing party in the litigation shall be
entitled to payment by the losing party of attorneys' fees, costs and other
expenses reasonably incurred by the prevailing party in filing and
prosecuting the lawsuit.
12.
THE CLOSING
-----------
12.1 Date, Time and Place of Closing.
------------------------------------
Closing of the sale and purchase of Purchased Assets No. 1 and Purchases
Assets No. 2 (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇'▇
and PSIS's counsel, ▇▇▇▇▇▇▇▇▇ & Dreidame Co., L.P.A., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, on the first Business Day which is at
least seven (7) days after the Bankruptcy Court Order has become a Final
Order, or at such other time or place as may be mutually agreed to in
writing by ▇▇▇▇▇▇▇ and PSIS and Sellers and as permitted in Section 8.10
(the "Closing Date").
13.
MISCELLANEOUS
-------------
13.1 Except to the extent otherwise specifically provided herein or in the Bid
Procedures Order or the Bankruptcy Court Order, ▇▇▇▇▇▇▇ and/or PSIS, as
applicable, shall pay all of the expenses incident to the transactions
contemplated by this Agreement that are incurred by ▇▇▇▇▇▇▇ and/or PSIS or
their representatives and each Seller shall pay all of the expenses
incident to the transactions contemplated by this Agreement that are
incurred by each Seller or its respective representatives. ▇▇▇▇▇▇▇ and/or
PSIS shall pay all sales, transfer, intangible and similar taxes, and all
filing of recording fees, if any, in connection with the transactions
contemplated by this Agreement. To the extent that any transactions
contemplated herein are not exempt from sales and other transfer taxes
pursuant to Section 1146(c) of the Bankruptcy Code, ▇▇▇▇▇▇▇ and PSIS shall
pay such sales and other transfer taxes.
18
13.2 Except as otherwise expressly agreed herein, each of the parties shall pay
its own costs and expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation all legal
and accounting fees.
13.3 This Agreement, the construction of this Agreement, all rights and
obligations between the parties to this Agreement, and any and all claims
arising out of or relating to the subject matter of this Agreement
(including all tort claims), shall be governed by the laws of the State of
Arizona, without regard to its conflicts of law principles. Any litigation
or other legal proceeding of any kind based upon or in any way related to
this Agreement, its subject matter, or the rights or obligations of the
parties to this Agreement, shall be brought exclusively in an appropriate
court of competent jurisdiction (state or federal) located in Maricopa
County, Arizona (if the action is brought in state court) or in the
District of Arizona (if the action is brought in federal court). Any action
brought in such courts shall not be transferred or removed to any other
state or federal court. The parties consent to the exercise of jurisdiction
over them by the above-named courts (including, but not limited to, the
Bankruptcy Court in and for the District of Arizona) as their freely
negotiated choice of forum for all actions subject to this forum selection
clause.
13.4 This Agreement shall not be assignable by any Seller without the prior
written consent of ▇▇▇▇▇▇▇ or PSIS, or by ▇▇▇▇▇▇▇ or PSIS without the prior
written consent of each Seller, provided, however, that ▇▇▇▇▇▇▇ or PSIS may
-------- ------- ----
assign this Agreement without any Seller's consent to a subsidiary or
affiliate of ▇▇▇▇▇▇▇ or PSIS. Regardless if any such assignment shall
occur, ▇▇▇▇▇▇▇ and/or PSIS, as applicable, shall remain liable and
responsible for the performance of all of ▇▇▇▇▇▇▇'▇ and/or PSIS's
obligations, as applicable, under this Agreement.
13.5 Each party acknowledges and agrees that no employee, officer, agent or
representative or the other party has the authority to make any
representations, statements or promises in addition to or in any way
different than those contained in this Agreement, and that it is not
entering into this Agreement in reliance upon any representation, statement
or promise of the other party except as expressly stated herein.
13.6 This Agreement shall be binding upon, and inure to the benefit of, ▇▇▇▇▇▇▇,
PSIS and each Seller, and their respective successors and permitted
assigns.
13.7 Neither Sellers nor ▇▇▇▇▇▇▇ or PSIS shall make any public announcements
concerning this transaction without prior written consent of the other
parties hereto, provided that the parties shall issue a mutually agreeable
press release regarding any of the transactions contemplated by this
Agreement, unless compelled by judicial or administrative process or by
other requirements of law, or unless the Sellers and/or ▇▇▇▇▇▇▇ or PSIS
determines that such announcement is advisable under applicable securities
laws, in which event reasonable prior notice of any such disclosure shall
be given to the other party.
13.8 This Agreement constitutes the entire agreement and understanding between
the parties and supersedes any prior written or oral understandings between
them respecting the subject matter hereof. This Agreement may be amended or
19
modified only in a writing signed by ▇▇▇▇▇▇▇, PSIS and each Seller that
specifically refers to this Agreement.
13.9 All notices, consents or approvals required hereunder will be in writing
and will be deemed to have been received by a party hereto if delivered
personally to such party, or sent by facsimile transmission (followed by
written confirmation), or by overnight courier service, or by certified or
registered mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or to such other address as any
party may give to the other in writing for such purpose:
To Pomeroy at: Pomeroy Computer Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To PSIS at: Pomeroy Select Integration Solutions, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
▇▇▇▇▇▇▇▇▇ & Dreidame
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Sellers at: Osage Systems Group, Inc., et al
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇&▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, LLP
Renaissance ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
13.10 All such communications, if personally delivered, will be conclusively
deemed to have been received by a party hereto and to be effective when so
delivered, or if sent by facsimile transmission, on the day on which
transmitted, or if sent by overnight courier service, on the day after
deposit thereof with such service, or if sent by certified or registered
mail, on the third business day after the day on which deposited in the
mail.
20
13.11 The invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of any of the
remaining terms or provisions hereof.
13.12 Each party has been represented by its own counsel in connection with the
negotiation and preparation of this Agreement and, consequently, each party
hereby waives the application of any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the
party whose counsel drafted that provision.
13.13 Time shall be of the essence in this Agreement and the performance of each
and every provision hereof.
13.14 This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
13.15 Any of the terms and conditions of this Agreement may be waived at any
time and from time to time in writing by the party entitled to the benefit
thereof without affecting any other terms and conditions of this Agreement.
Any waiver of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
13.16 Each Seller shall be permitted to retain copies of books and records
relating to Purchased Assets No. 1 and/or Purchased Assets No. 2 and shall
have access to all original copies of records so delivered to ▇▇▇▇▇▇▇ and
PSIS at reasonable times, for any reasonable business purpose, for a period
of six (6) years after the Closing.
21
IN WITNESS WHEREOF, the parties have entered into this ASSET PURCHASE AGREEMENT
as of the day and year first above written.
▇▇▇▇▇▇▇ COMPUTER RESOURCES, INC.
By: ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇ SELECT INTEGRATION
SOLUTIONS, INC.
By: ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Executive Officer and President
OSAGE SYSTEMS GROUP, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
OSAGE COMPUTER GROUP, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
SOLSOURCE COMPUTERS, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
▇.▇. ▇▇▇▇▇, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
OPEN SYSTEM TECHNOLOGIES, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
22
OPEN BUSINESS SYSTEMS, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
OSAGE SYSTEMS GROUP MINNESOTA, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
OSAGE iXi, INC.
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
EXHIBIT A
FIXED ASSETS
[To be faxed to working group]
1
EXHIBIT B
ASSUMED SERVICE CONTRACTS
ORDER #
--------
2487
2814
160
758
2565
07-995
07-252
1822
07-383
07-436
07-631
1215
414
07-640
1991
07-91
07-931
07-482
07-452
07-250
2865
433
1
EXHIBIT C
EXCLUDED ASSETS
i. Seller's cash, cash equivalents, bank
accounts, marketable securities;
ii. Seller's accounts receivable and vendor
receivables (other than the Sun Microsystems
vendor receivable);
iii. All of Seller's inventory (other than the
Committed Inventory);
iv. Seller's corporate records to the extent
such records relate to each Seller as a
corporate entity, including but not
limited to, Seller's Articles of Incorporation,
regulations, shareholder records, corporate
minute books and other corporate and tax
records;
v. Any insurance policy or policies maintained
by any Seller covering Business No. 1 or
Business No. 2 insuring the assets and property
associated therewith against losses and risks;
vi. All of Seller's claims or causes of action
vested in Seller pursuant to Sections 544,
545, 547, 548 and 549 of the Bankruptcy
Code and all remedies available under Bankruptcy
Code Section 550 relating to monetary
payments or other transfers made during the
applicable statutory period;
vii. Rights of any Seller arising out of the Asset
Purchase Agreement;
viii.All contract rights of any Seller associated
with contracts which are not assumed by
▇▇▇▇▇▇▇ or PSIS;
ix. All life insurance owned by any Seller;
1
x. All federal, state and local tax refunds of
Sellers, whether arising now or at any
time thereafter;
xi. Any and all insurance claims of any Seller,
including but not limited to, any and all
claims for business interruption and stop
loss;
xii. Any of the Purchase Price being transferred
hereunder;
xiii.All rights, title and interest in the proprietary
software known as "Vertex";
xiv. Any furniture, fixtures or other assets which
are not specifically being purchased by
▇▇▇▇▇▇▇ or PSIS pursuant to Sections
1.2 or 1.3;
xv. Analysts Inc. Service Agreement;
xvi. Seller's pre-paid expenses and deferred income taxes; and
xvii."Other Assets" as shown on the balance sheet of the Seller as of
December 31, 2000.
2
EXHIBIT D
REAL PROPERTY LOCATIONS
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇ #▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1
EXHIBIT E
LIST OF CERTAIN TRANSACTIONS
The acquisition by the Sellers of the following:
Leveraged Solutions, Inc.
Solsource Computers, Inc.
▇.▇. ▇▇▇▇▇, Inc.
Open System Technologies, Inc.
Open Business Systems, Inc.
Electronic Commerce Network Solutions Corporation
IntraNet Solutions, Inc.
PR Acquisition Corp.
Pacific Rim Entertainment, Inc.
Osage Computer Group, Inc.
2
EXHIBIT F
ALLOCATION OF PURCHASE PRICE
Asset Purchase Price
----- ---------------
Vendor Receivable Net Book Value as of the Closing Date
as shown on books of Sun
Microsystems Corporation
Committed Inventory Net Book Value as of the Closing Date
Equipment, Furniture and Fixtures Net Book Value as of the
Closing Date
Leasehold Improvements Net Book Value as of the Closing
Date
Other Assets Net Book Value as of the Closing Date
Good Will Remainder of Purchase Price
1
EXHIBIT G
FORM OF PROMISSORY NOTE
$250,000.00 Cincinnati, Ohio
(to be adjusted as hereinafter set forth) February _____, 2001
1. FOR VALUE RECEIVED, ▇▇▇▇▇▇▇ COMPUTER RESOURCES, INC., a Delaware
corporation (hereinafter, together with its successors in title and assigns,
called the "Borrower") does hereby absolutely and unconditionally promise to pay
to the order of OSAGE SYSTEMS GROUP, INC., a Delaware corporation ("Lender"),
the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) (as may be adjusted
in the manner hereinafter set forth), together with interest on the outstanding
principal balance from the date hereof, at the rate specified below.
2. The initial face amount of this note, Two Hundred Fifty Thousand Dollars
($250,000.00), shall be adjusted by any amounts that Borrower, or its wholly
owned subsidiary, ▇▇▇▇▇▇▇ Select Integration Solutions, Inc., may be required to
pay pursuant to the provisions of Sections 1.6, 2.2 or 2.3 of the Asset Purchase
Agreement. In addition, the face amount of such note shall be reduced by
Fifteen Thousand Dollars ($15,000.00) (but not below zero) for each of the
executive and upper management employees of Lender designated on a list to be
countersigned by ▇▇▇▇▇▇▇, PSIS and the Lender, (the "Management List") and shall
be reduced by Seven Thousand Five Hundred Dollars ($7,500.00) (but not below
zero) for each of the other employees of Lender, designated on a list to be
countersigned by ▇▇▇▇▇▇▇, PSIS and the Lender (the "Non-Management Employee
List"), who were hired by Borrower upon the closing of the Asset Purchase
Agreement, if he or she shall leave the employment of Borrower or its wholly
owned subsidiary, ▇▇▇▇▇▇▇ Select Integration Solutions, Inc. within ninety (90)
days of the Closing Date. Provided said offset shall not be applicable for an
employee in the event the employment of such individual is terminated because of
the death or disability of said individual during said ninety (90) day period,
or in the event that the employment of said individual's should be terminated
prior to the expiration of such ninety (90) day period without cause. The
Management List and the Non-Management Employee List shall be kept confidential
except to the extent that an order of the Bankruptcy Court or other applicable
law requires disclosure thereof.
3. Interest shall accrue at the prime rate of Chase Manhattan Bank as of the
date of Closing. Interest on the unpaid principal balance of the Note and the
entire principal balance shall be due and payable ninety (90) days from Closing.
4. All payments received hereunder shall be applied first to interest and
then to principal.
5. Upon the occurrence of an Event of Default, the entire principal amount
outstanding under this Note, and accrued interest thereon, shall at once become
due and payable, at the option of the Lender and the Lender shall have the
1
remedies set forth in the Asset Purchase Documents. During the continuance of
any Event of Default, all principal evidenced by this Note (whether for
principal or otherwise) shall (to the extent permitted by applicable law) bear
interest at the annual rate of twelve percent (12%). The unpaid interest
accrued during the continuation of any Event of Default on the indebtedness
evidenced by this Note (whether for principal or otherwise) in accordance with
the foregoing terms of this paragraph shall become and be absolutely due and
payable by the Borrower to the Lender hereof on demand by the Lender of this
Note at any time. Interest will continue to accrue on all indebtedness
evidenced hereby until the Event of Default shall be cured or otherwise
remedied.
6. This Note is issued pursuant and subject to the terms and conditions of
the Asset Purchase Agreement. This Note is subject to all terms and conditions
set forth in the Asset Purchase Documents, including, but not limited to, terms
of default and rights of acceleration, if any. Any holder of this Note is
subject to all claims and defenses which the Borrower could pursue against
Lender under the Asset Purchase Agreement.
7. When this Note becomes due, by acceleration or otherwise, the Lender may,
at its option, demand, ▇▇▇ for, collect or make any compromise or settlement it
deems desirable with reference to property held as security herefor. The
failure to exercise any option, to declare the maturity hereof, or to exercise
any other rights under any of the covenants or conditions contained in the Asset
Purchase Documents shall not be taken or deemed to be a waiver of the right to
exercise such option or to declare such maturity after any subsequent violation
of any such covenants or conditions. All remedies provided for herein upon any
default by the Borrower shall be cumulative and not exclusive.
8. Notwithstanding the above, pursuant to the Asset Purchase Agreement,
Lender made certain representations, warranties, covenants and agreements with
and to the Borrower. Lender agrees that if the Borrower is entitled to
indemnification from the Lender under the Asset Purchase Agreement or any other
of the Asset Purchase Documents, the amount of such indemnification due from
Lender may be set off against the amounts payable hereunder if permitted under
the Asset Purchase Agreement, being first applied to interest and the
withholding all or any part of payment due hereunder as a result of such a set
off shall not be considered an Event of Default hereunder. Lender agrees that
the amount to which the Borrower may be entitled to recover from Lender shall
not be limited by either the amount paid or due to be paid to Lender hereunder
or by the terms of this Note but shall be governed by the terms of the Asset
Purchase Documents.
9. The provisions of this Note and the obligations of the Borrower hereunder
shall in all respects be governed by and interpreted and determined in
accordance with the internal laws of the State of Delaware.
10. The Borrower hereby unconditionally and irrevocably waives notice of
acceptance, presentment, notice of nonpayment (except as provided herein),
protest, notice of protest, suit and all other conditions precedent in
connection with the delivery, acceptance, collection and/or enforcement of this
Note.
11. Should all or any part of the indebtedness represented by this Note be
collected by action in law, or in bankruptcy, insolvency, receivership or other
court proceedings, or should this Note be placed in the hands of attorneys for
collection after the occurrence of an Event of Default, the Borrower hereby
promises to pay to the Lender of this Note, upon demand by the Lender hereof at
any time, in addition to principal and all (if any) other amounts payable on or
in respect of this Note or the indebtedness evidenced hereby, all court costs
and reasonable attorneys' fees and all other reasonable collection charges and
expenses incurred or sustained by the Lender of this Note.
12. If for any circumstances whatsoever, the fulfillment of any provision of
this Note involves transcending the limit of validity prescribed by any
applicable usury statute or any other applicable law with regard to obligations
of like character and amount, then the obligation to be fulfilled will be
reduced to the limit of such validity as provided in such statute of law, so
that in no event shall any exaction of interest be possible under this Note in
excess of the limit of such validity. In no event shall the Borrower be bound
to pay interest of more than the legal limit for the use, forbearance or
detention of money, and the right to demand any such excess is hereby expressly
waived by the Lender.
13. No delay or omission of the holder of this Note to exercise any right or
power arising from any default shall impair any such right or power or be
considered to be a waiver of any such default or any acquiescence therein, nor
shall the action or non-action of the holder in case of default on the part of
the Borrower impair any right or power resulting therefrom.
14. As used herein, the following terms shall have the following meanings,
respectively:
(a) "Asset Purchase Agreement" - The Asset Purchase Agreement by and
between the Borrower and the Lender dated February _____, 2001.
(b) "Asset Purchase Documents" - The Asset Purchase Agreement and all
Exhibits thereto (except for any employment agreements and all noncompetition
agreements, other than the one provided by Lender) by and between the parties to
the Asset Purchase Agreement.
(c) "Event of Default" -
(i) The failure of Borrower to make any payment of principal or
interest due under this Note for a period of ten (10) days after receipt of
written notice from the Lender to the Borrower that such installment has not
been paid.
WITNESSES: BORROWER
▇▇▇▇▇▇▇ Computer Resources, Inc.
_____________________________
By: _____________________________
_____________________________ Its: ____________________________
EXHIBIT H
FORM OF ▇▇▇▇▇▇▇ NON-COMPETITION AGREEMENT
THIS AGREEMENT made and entered into this _____ day of _______________, 2001, by
and between OSAGE SYSTEMS GROUP, INC., a Delaware corporation (hereinafter
referred to as "Seller") and ▇▇▇▇▇▇▇ COMPUTER RESOURCES, INC., a Delaware
corporation (hereinafter referred to as "Purchaser").
WHEREAS, Seller, through its operating subsidiaries, markets a broad range of
integrated information technology products and professional consulting services
throughout the United States; and
WHEREAS, simultaneously with the execution of this Agreement, Seller and
Purchaser have entered into an Asset Purchase Agreement ("Asset Purchase
Agreement") whereby Seller has sold to Purchaser certain assets of Seller
relating to the selling of integrated information technology products; and
WHEREAS, the Purchaser would not have entered into the Asset Purchase Agreement
with Seller without the consent of Seller to enter into this Covenant Not to
Compete Agreement; and
WHEREAS, pursuant to Section 4 of said Asset Purchase Agreement, Seller agreed
to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and in consideration of the execution and closing of the Asset
Purchase Agreement, the parties hereto agree as follows:
1. In consideration of the payments to be made by Purchaser to Seller for its
assets, Seller covenants and agrees that for a period equal to five (5)
years from the closing of the Asset Purchase Agreement of even date, Seller
will not, or with any other person, corporation or entity, directly or
indirectly, by stock or other ownership, investment, management, employment
or otherwise, or in any relation-ship whatsoever:
(a) Solicit, divert or take away or attempt to solicit, divert or take
away, any of the business, clients, customers or patronage of
Purchaser or any affiliate or subsidiary thereof relating to the
Business of Purchaser, as defined below; or
(b) Attempt to seek or cause any clients or customers of Purchaser or any
such affiliate or subsidiary relating thereto to refrain from
continuing their patronage of the Business of Purchaser; or
(c) Engage in the Business of Purchaser in any state in which Purchaser or
its subsidiaries transact business during the term of this Agreement.
1
A list of the states in which Purchaser and its subsidiaries currently
transact business is attached hereto as Exhibit A; or
(d) Knowingly employ or engage, or attempt to employ or engage, in any
capacity, any person in the employ of the Purchaser or any affiliate
or subsidiary.
(e) In addition, nothing in this Agreement shall prohibit Seller from
engaging in any activities incident to the collection of any and all
of its vendor and accounts receivables being retained by it, from the
selling of any inventory or other assets being retained by it, nor
from the sale or other disposition of any other assets being retained
by it or any of its subsidiaries.
For purposes of this Section, the "Business of Purchaser" shall mean any
person, corporation, partnership or other legal entity engaged, directly or
indirectly, through subsidiaries or affiliates, in the following line of
business:
(i) Distributing of computer hardware, software, peripheral devices, and
related products and services to other entities or persons engaged in
any manner in the business of the distribution, sale, resale or
servicing, whether at the wholesale or retail level, or leasing or
renting, of computer hardware, software, peripheral devices or related
products;
(ii) Sale or servicing, whether at the wholesale or retail level, or
leasing or renting, of computer hardware, software, peripheral devices
or related products;
(iii) Sale, servicing, consulting or supporting of microcomputer products,
microcomputer support solutions and computer integration products,
peripheral devices and related products and the sale of networking
services; and
(iv) Any other business activity which can reasonably be determined to be
competitive with the principal business activity being engaged in by
Purchaser or any of its subsidiaries.
Seller has carefully read all the terms and conditions of this Paragraph 1
and has given careful consideration to the covenants and restrictions
imposed upon Seller herein, and agrees that the same are necessary for the
reasonable and proper protection of Seller's Business acquired by Purchaser
and have been separately bargained for and agrees that Purchaser has been
induced to enter into the Asset Purchase Agreement and pay the
consideration described in Paragraph 2 by the representation of Seller that
it will abide by and be bound by each of the covenants and restrictions
herein; and Seller agrees that Purchaser is entitled to injunctive relief
in the event of any breach of any covenant or restriction contained herein
in addition to all other remedies provided by law or equity. Seller hereby
acknowledges that each and every one of said covenants and restrictions is
reasonable with respect to the subject matter, the length of time and
geographic area embraced therein, and agrees that irrespective of when or
2
in what manner this agreement may be terminated, said covenants and
restrictions shall be operative during the full period or periods
hereinbefore mentioned and throughout the area hereinbefore described.
The parties acknowledge that this Agreement, which Agreement is ancillary
to the main thrust of the Asset Purchase Agreement, is being entered into
to protect the legitimate business interests of Purchaser, including, but
not limited to, (i) trade secrets; (ii) valuable confidential business or
professional information that otherwise does not qualify as trade secrets;
(iii) substantial relationships with specific prospective or existing
customers or clients; (iv) client or customer good will associated with an
on-going business by way of trade name, trademark, or service ▇▇▇▇, a
specific geographic location, or a specific marketing or trade area; and
(v) extraordinary or specialized training. In the event that any provision
or portion of Paragraph 1 shall for any reason be held invalid or
unenforceable, it is agreed that the same shall not affect the validity or
enforceability of any other provision of Paragraph 1 of this Agreement, but
the remaining pro-visions of Paragraph 1 of this Agreement shall continue
in force and effect; and that if such invalidity or unenforceability is due
to the reasonableness of the line of business, time or geographical area
covered by certain covenants and restrictions contained in Paragraph 1,
said covenants and restrictions shall nevertheless be effective for such
line of business, period of time and for such area as may be deter-mined by
arbitration or by a Court of competent jurisdiction to be reasonable.
2. The consideration for Seller's covenant not to compete shall be One Dollar
($1.00) and other valuable consideration, including the consideration paid
by the Purchaser to Seller pursuant to an Asset Purchase Agreement to which
Seller and Purchaser are parties of even date herewith.
3. The terms and conditions of this Agreement shall be binding upon the Seller
and Purchaser, and their successors and assigns.
4. This Agreement shall be construed in accordance with and governed by the
laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
SELLER:
------
OSAGE SYSTEMS GROUP, INC.
By: _____________________________________
3
EXHIBIT I
FORM OF PSIS NON-COMPETITION AGREEMENT
THIS AGREEMENT made and entered into this _____ day of _______________, 2001, by
and between OSAGE SYSTEMS GROUP, INC., a Delaware corporation (hereinafter
referred to as "Seller") and ▇▇▇▇▇▇▇ SELECT INTEGRATION SOLUTIONS, INC., a
Delaware corporation (hereinafter referred to as "Purchaser").
WHEREAS, Seller, through its operating subsidiaries, markets a broad range of
integrated information technology products and professional consulting services
throughout the United States; and
WHEREAS, simultaneously with the execution of this Agreement, Seller and
Purchaser have entered into an Asset Purchase Agreement ("Asset Purchase
Agreement") whereby Seller has sold to Purchaser certain assets of Seller
relating to the selling of integrated information technology products; and
WHEREAS, the Purchaser would not have entered into the Asset Purchase Agreement
with Seller without the consent of Seller to enter into this Covenant Not to
Compete Agreement; and
WHEREAS, pursuant to Section 4 of said Asset Purchase Agreement, Seller agreed
to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and in consideration of the execution and closing of the Asset
Purchase Agreement, the parties hereto agree as follows:
1. In consideration of the payments to be made by Purchaser to Seller for its
assets, Seller covenants and agrees that for a period equal to five (5)
years from the closing of the Asset Purchase Agreement of even date, Seller
will not, or with any other person, corporation or entity, directly or
indirectly, by stock or other ownership, investment, management, employment
or otherwise, or in any relation-ship whatsoever:
(a) Solicit, divert or take away or attempt to solicit, divert or take
away, any of the business, clients, customers or patronage of
Purchaser or any affiliate or subsidiary thereof relating to the
Business of Purchaser, as defined below; or
(b) Attempt to seek or cause any clients or customers of Purchaser or any
such affiliate or subsidiary relating thereto to refrain from
continuing their patronage of the Business of Purchaser; or
(c) Engage in the Business of Purchaser in any state in which Purchaser or
its subsidiaries transact business during the term of this Agreement.
A list of the states in which Purchaser and its subsidiaries currently
transact business is attached hereto as Exhibit A; or
1
(d) Knowingly employ or engage, or attempt to employ or engage, in any
capacity, any person in the employ of the Purchaser or any affiliate
or subsidiary.
(e) In addition, nothing in this Agreement shall prohibit Seller from
engaging in any activities incident to the collection of any and all
of its vendor and accounts receivables being retained by it, from the
selling of any inventory or other assets being retained by it, nor
from the sale or other disposition of any other assets being retained
by it or any of its subsidiaries.
For purposes of this Section, the "Business of Purchaser" shall mean any
person, corporation, partnership or other legal entity engaged, directly or
indirectly, through subsidiaries or affiliates, in the following line of
business:
(i) Distributing of computer hardware, software, peripheral devices, and
related products and services to other entities or persons engaged in
any manner in the business of the distribution, sale, resale or
servicing, whether at the wholesale or retail level, or leasing or
renting, of computer hardware, software, peripheral devices or related
products;
(ii) Sale or servicing, whether at the wholesale or retail level, or
leasing or renting, of computer hardware, software, peripheral devices
or related products;
(iii) Sale, servicing, consulting or supporting of microcomputer products,
microcomputer support solutions and computer integration products,
peripheral devices and related products and the sale of networking
services; and
(iv) Any other business activity which can reasonably be determined to be
competitive with the principal business activity being engaged in by
Purchaser or any of its subsidiaries.
Seller has carefully read all the terms and conditions of this Paragraph 1
and has given careful consideration to the covenants and restrictions
imposed upon Seller herein, and agrees that the same are necessary for the
reasonable and proper protection of Seller's Business acquired by Purchaser
and have been separately bargained for and agrees that Purchaser has been
induced to enter into the Asset Purchase Agreement and pay the
consideration described in Paragraph 2 by the representation of Seller that
it will abide by and be bound by each of the covenants and restrictions
herein; and Seller agrees that Purchaser is entitled to injunctive relief
in the event of any breach of any covenant or restriction contained herein
in addition to all other remedies provided by law or equity. Seller hereby
acknowledges that each and every one of said covenants and restrictions is
reasonable with respect to the subject matter, the length of time and
geographic area embraced therein, and agrees that irrespective of when or
in what manner this agreement may be terminated, said covenants and
restrictions shall be operative during the full period or periods
hereinbefore mentioned and throughout the area hereinbefore described.
2
The parties acknowledge that this Agreement, which Agreement is ancillary
to the main thrust of the Asset Purchase Agreement, is being entered into
to protect the legitimate business interests of Purchaser, including, but
not limited to, (i) trade secrets; (ii) valuable confidential business or
professional information that otherwise does not qualify as trade secrets;
(iii) substantial relationships with specific prospective or existing
customers or clients; (iv) client or customer good will associated with an
on-going business by way of trade name, trademark, or service ▇▇▇▇, a
specific geographic location, or a specific marketing or trade area; and
(v) extraordinary or specialized training. In the event that any provision
or portion of Paragraph 1 shall for any reason be held invalid or
unenforceable, it is agreed that the same shall not affect the validity or
enforceability of any other provision of Paragraph 1 of this Agreement, but
the remaining pro-visions of Paragraph 1 of this Agreement shall continue
in force and effect; and that if such invalidity or unenforceability is due
to the reasonableness of the line of business, time or geographical area
covered by certain covenants and restrictions contained in Paragraph 1,
said covenants and restrictions shall nevertheless be effective for such
line of business, period of time and for such area as may be deter-mined by
arbitration or by a Court of competent jurisdiction to be reasonable.
2. The consideration for Seller's covenant not to compete shall be One Dollar
($1.00) and other valuable consideration, including the consideration paid
by the Purchaser to Seller pursuant to an Asset Purchase Agreement to which
Seller and Purchaser are parties of even date herewith.
3. The terms and conditions of this Agreement shall be binding upon the Seller
and Purchaser, and their successors and assigns.
4. This Agreement shall be construed in accordance with and governed by the
laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
SELLER:
OSAGE SYSTEMS GROUP, INC.
By: _____________________________________
3