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Exhibit 10.10
STOCK PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
This Stock Purchase Agreement (the "Agreement") is made effective as of January
1, 1998 by and between ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ AND ▇▇▇▇▇ ▇▇▇ FAMILY TRUST, ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇ AND ▇▇▇▇▇ ▇▇, hereinafter collectively referred to as "SELLER" and
WAREFORCE ONE INCORPORATED a successor in interest of Wareforce, Inc.,
hereinafter referred to as "BUYER"
WHEREAS, SELLER is the owner and holder of all of the outstanding stock of C.Y.
INVESTMENTS, INC., hereinafter referred to as "CY". CY is currently doing
business as Impres Technology, MicroAge Computer Center, and Advanced Optical
Distribution; and
WHEREAS, SELLER is desirous of selling to BUYER, and BUYER is desirous of
purchasing from SELLER all of the shares of the capital stock of C.Y.
INVESTMENTS, INC. (the "CY Stock") upon the terms and conditions and for the
consideration hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
ARTICLE 1.
PURCHASE
Section 1.1 For the purchase price and on the terms and subject to the
conditions set forth in this Agreement, SELLER hereby sells, assigns, transfers,
and delivers to BUYER, and BUYER hereby purchases from SELLER, all of his right,
title and interest in and to the CY Stock now owned by him, consisting of all of
the shares of CY common stock as determined at closing.
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ARTICLE 2.
PURCHASE PRICE
Section 2.1 The purchase price to be paid by BUYER to SELLER for all of the
shares of CY Stock is THREE MILLION DOLLARS ($3,000,000.00) if escrow is closed
on or before August 31, 1998, and the purchase price is THREE MILLION AND FIFTY
THOUSAND DOLLARS ($3,050,000) if escrow is closed between September 1 and 15,
1998.
Section 2.2 Payment. The payment of the foregoing amount shall be made as
follows:
(a) The purchase price shall be paid in full by wire transfer, payable
to SELLER on the date of Closing per the SELLER'S wire transfer instructions.
(b) Basis of purchase price. SELLER has provided to BUYER a copy of
CY's unaudited financial statements for the year ended December 31, 1997, which
contains (i) a Reviewed balance sheet, (ii) a Reviewed statement of income, and
(iii) a Reviewed statement of cash flows (collectively the "Financial
Statements"). The purchase price set forth in this letter of intent is based on
the parties' assumption that CY's Financial Statements for the year ended
December 31, 1997, fairly represent CY's financial condition at the at time and
the results of its operations for that period after taking into consideration
certain potential accounting adjustments to that Financial Statements, including
any possible adjustments to the ending inventory for the year ended December 31,
1997. BUYER acknowledges that it has been informed of certain potential
accounting adjustments to the Financial Statements, including any possible
adjustments to the ending inventory for the year ended December 31, 1997.
(c) The purchase price is meant to fully represent the price to be
paid. Therefore, SELLER shall not be entitled to receive any of the net profit
earned by CY for the period from January 1, 1998 to the date of closing nor
shall SELLER be entitled to receive any tax refund for the year 1997, subject to
the terms of Sections 10.1(a) and 11.11(b) of this Agreement . Likewise, BUYER
shall not receive any adjustment to the purchase
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price as a result of any accounting adjustments made to CY's Financial
Statements for the year ended December 31, 1997. BUYER agrees to assume any and
all liabilities of CY with the exception of liability describe in Section
10.1(a) of this Agreement.
(d) Sale of Stock. The purchase price is based on BUYER'S promise and
warranty not to elect to treat the stock purchase as assets acquisition under
Section 338 of the Internal Revenue Code.
ARTICLE 3.
OTHER AGREEMENTS
Section 3.1 CY's Employee Retirement Plan. BUYER shall assume the responsibility
to continue CY's employee retirement plan after closing, or to combine CY's plan
with BUYER'S existing employee retirement plan.
Section 3.2 Financial Statements. It is hereby acknowledged by BUYER that
unaudited statements of income and retained earnings of CY for the fiscal years
ending December 31, 1997, along with the corporate tax returns as well as all
supporting documents have already been tendered to BUYER for its review.
Section 3.3 Documents and Information. It is hereby acknowledged by BUYER that
it has been given full access to CY's business books and records for
examination, and that it has been given reasonable opportunity to inspect CY's
business premises and inventories.
Section 3.4 Document Retention. For a period of five (5) years following the
Closing Date, BUYER shall retain all material corporate books, records,
financial statements, ledgers and other documentation of CY.
Section 3.5 ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ agrees to sign management letters and the like,
which are agreeable to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, as requested by BUYER and BUYER'S
auditors concerning audited financial statements for periods prior to the
Closing provided
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that such financial statements are prepared in accordance with the generally
accepted accounting principles.
ARTICLE 4.
WARRANTIES OF SELLER
Section 4.1 SELLER hereby warrants, represents, and covenants to BUYER as of the
Closing Date, and this Agreement is made in reliance on the following, each of
which is deemed to be a separate covenant, representation, and warranty:
(a) Ownership of Stock. As of the date of closing, SELLER collectively
owns, beneficially and of record, free and clear of all liens, pledges, charges,
claims, equities, restrictions, or encumbrances, the shares of CY Stock, and has
the full right, power and authority to sell, transfer, and deliver to BUYER, in
accordance with this Agreement, the Stock, free and clear of all liens, pledges,
charges, claims, equities, restrictions, and encumbrances. The sale by SELLER of
the Stock does not constitute a breach or violation of, or default under, any
will, deed or trust, agreement, or other instrument by which either of them is
bound.
(b) Liens Created by Sale. The execution and carrying out of the
provisions of this Agreement and compliance with the provisions hereof by SELLER
will not violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions, or provisions of, or constitute a
default under, or result in the creation of, any lien, charge, or encumbrance
upon any of the properties or assets of CY pursuant to the Articles of
Incorporation, By-Laws, or any indenture, mortgage, deed of trust, agreement or
other instrument to which CY is a party or by which it is bound or affected.
(c) Duly Organized. C.Y. INVESTMENTS, INC., is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California, and has its principal place of business at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
#▇,
▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. A copy of the Articles of Incorporation and all amendments
thereto, and a copy of the By-Laws, have been delivered to BUYER prior to the
Closing and shall be complete and correct as of said date. To the best of SELLER
knowledge, CY is not qualified in any other jurisdiction than California.
(d) Authorized Capital. CY has an authorized capital of one million
(1,000,000) shares of common stock, $1.00 par value, of which four hundred and
ten thousand (410,000) shares are validly issued and outstanding, fully paid and
non-assessable, all of which are held by SELLER. Both ▇▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇ ▇▇
own stock options in CY which options will be exercised prior to Closing and the
stock will be subject to this Agreement. There are no other outstanding stock
options or warrants with respect to, or privileges or rights to purchase or
subscribe for, any capital stock of, obligations or securities issued by CY
convertible into or exchangeable for shares of capital stock of CY, agreements
provided for or relating to any other options, warrants, purchase rights,
privileges, convertible obligations, or securities to which CY is a party, or
any other agreements by CY to issue, sell, or acquire any of its capital stock.
(e) Officers and Directors. The following constitute all of the present
officers and directors of CY: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, President, Chairman of the Board
and Secretary; ▇▇▇▇▇▇ ▇▇▇, Vice-President and Director; and ▇▇▇▇▇ ▇▇▇▇, Chief
Financial Officer.
(f) Statement. To the best of SELLER'S knowledge, CY has delivered to
BUYER a true and complete list, as of the date hereof and, showing:
(i) The current compensation and payroll information for CY
for the present fiscal year;
(ii) The name of each bank in which CY has an account and the
names of all persons authorized to draw thereon;
(iii) The names of all persons, if any, holding tax or other
powers of attorney from CY and a summary
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statement of the terms thereof;
(iv) The patents, trademarks, trade names, copyrights or other
intangible assets of CY;
(v) All labor and employment agreements, or other similar
agreements, including (without limitation) any collective bargaining
agreement, to which CY is a party or affected thereby; and
(vi) All employee benefit plans (as defined in Section 3(3) of
ERISA) and any stock option, stock bonus, stock ownership or stock
purchase plan, any cash bonus or other incentive program, any
split-dollar or corporate-owned life insurance program or special
welfare benefit program reserved for a select group of officers or
employees (including the plan documents and all amendments, the related
trust documents, insurance policies, contracts and other authorizing
documents, employee booklets, summary plan descriptions, summaries of
material modifications and any other material employee communications).
(g) To the best of SELLER'S knowledge, SELLER represents and warrants
that it knows of no undisclosed liabilities of CY incurred outside the ordinary
course of business for which BUYER will become responsible upon closing. BUYER
is aware of an audit of CY's 1996 corporate income tax return by the Internal
Revenue Service (the "IRS Audit") as well as a potential dispute with Novell
(the "Novell Dispute") over licenses sold by CY in the past years. See Sections
2.2(c), 10.1(a) and 11.11(b) for treatment and indemnity of undisclosed
liabilities.
(h) Acts by CY. To the best of SELLER'S knowledge, since the signing of
the letter of intent on May 26, 1998, CY has not:
(i) Incurred any obligation or liability, absolute or
contingent, known or unknown, except current liabilities incurred in
the ordinary course of business;
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(ii) Discharged or satisfied any lien or encumbrance, or paid
any obligation or liability, absolute or contingent, other than current
liabilities;
(iii) Declared or paid any dividends, made any payment or
distribution of any kind to shareholders, or purchased or redeemed or
otherwise acquired any shares of capital stock, except there was a
dividend distribution to the shareholders in the total amount of
$10,000 on May 11, 1998;
(iv) Mortgaged, pledged, or subjected to lien, charge, or
other encumbrance, any of its assets, tangible or intangible;
(v) Sold or transferred any of its tangible assets, or
canceled any debts or claims, except in the ordinary course of
business;
(vi) Sold, assigned, transferred, or granted licenses or
rights in any patents, trademarks, trade names, copyrights, or other
intangible assets;
(vii) Engaged in any transactions affecting its business or
properties not in the ordinary course of business, or waived any rights
of substantial value;
(viii) Made or authorized any change in its outstanding stock
except the exercise of the stock options by ▇▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇ ▇▇, or
in its Articles of Incorporation or By-Laws;
(ix) Granted or agreed to grant any increase in compensation
to, or paid or agreed to pay any bonus to, any of its directors,
officers, employees or agents not in the ordinary course of business;
(x) Suffered any damage, destruction, or loss
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(whether or not covered by insurance) materially and adversely
affecting its properties or business, or of any item carried in its
property account at more than FIFTY THOUSAND DOLLARS ($50,000.00); or
(xi) Experienced any labor trouble, or any event or condition
of any character, materially and adversely affecting its business or
properties.
(i) Change in Business. To the best of SELLER'S knowledge, since the
Financial Statements dated December 31, 1997, there have been no material
changes in the assets, liabilities, business, or condition of CY other than
changes in the ordinary course of business, which changes have not adversely
affected its business, properties, prospects, or condition.
(j) Contracts. To the best of SELLER'S knowledge, since the signing of
the letter of intent on May 26, 1998, CY is not a party to any written or oral
contract not made in the ordinary course of business:
(i) Contract for the employment of any officer or individual
employee;
(ii) Contract with any labor union;
(iii) Contract continuing over a period of more than one year
from the date hereof;
(iv) Contract not terminable on thirty (30) days' notice or
less without liability on the part of CY;
(v) Lease;
(vi) Bonus, pension, profit-sharing, retirement, stock
purchase, stock option, hospitalization, insurance, or similar plan or
practice, formal or informal, in effect with respect to its employees
or others, with the exception of an amendment to deferred compensation
agreement with SELLER'S controller Eddy Law; or
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(k) Obligations. CY has performed all obligations required to be
performed by it to date, and is not in default under any contract, agreement,
lease, commitment, indenture, mortgage, deed of trust, or other document to
which it is a party.
(l) Taxes. To the best of SELLER'S knowledge, CY has filed all federal
and state tax returns which are required to be filed, and has paid all taxes
which have become due pursuant to such returns or pursuant to any assessment
received by CY. To the best of SELLER'S knowledge, CY's tax returns, including
amendments to date, have been prepared without misrepresentation and are
complete and accurate in all material respects. BUYER is aware of the fact that
CY is currently under an IRS audit of CY's 1996 corporate income tax return.
(m) Restrictions on Operations. To the best of SELLER'S knowledge,
except for its five (5) real property leases, respectively, for the business
premises located at (1) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (CY's headquarters), (2) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (CY's satellite office), (3) ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (CY's satellite office), (4) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (CY's warehouse), and (5) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (sublet to Battery Technology, Inc.), CY is not a party to any
contract or agreement, or subject to any charter or other corporate restriction,
which materially and adversely affects, or with the giving of notice or the
passage of time would affect, its business, property, assets, operations, or
conditions, financial or otherwise.
(n) Compliance With Laws. To the best of SELLER'S knowledge, CY has
complied with, and is complying with, all applicable laws, orders, rules, and
regulations promulgated by any federal, state, municipal, or other governmental
authority relating to the operation and conduct of the property and business of
CY, and there are no material violations of any such law, order, rule, or
regulation existing or threatened. CY has not received any notices of violation
of any applicable zoning
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regulation or order, or other law, order, regulation, or requirement relating to
the operation of its business or to its properties.
(o) Litigation. To the best of SELLER'S knowledge, there are no
actions, suits, claims, proceedings, investigations, or litigation pending, or
to the knowledge of CY threatened against or affecting CY, at law or in equity
or admiralty, or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, except as to small claims court matters and a current IRS tax audit
which is pending. CY is not in default with respect to any order, writ,
injunction, or decree of any court or federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign. BUYER acknowledges that it has been informed of a potential
claim by SELLER against GTSI, Inc., for interference with SELLER'S contract with
the U.S. Navy.
(p) Title to Assets. To the best of SELLER'S knowledge, CY has good and
sufficient title in and to all of the assets listed on the Financial Statements
or acquired by it after such date, other than inventories sold or otherwise
disposed of in the ordinary course of business subsequent to such date; and such
assets are in each case free and clear of all mortgages, liens, charges,
encumbrances, equities, pledges, conditional sales agreements, or claims of any
nature whatsoever, except as stated in the Financial Statements and CY's books
and records.
(q) Condition of Assets. To the best of SELLER'S knowledge, the assets
of CY are in good operating condition and repair, and conform with all
applicable ordinances, regulations, zoning and other laws.
(r) Inventories. To the best of SELLER'S knowledge, all data, documents
and materials and all access necessary to conduct a physical inventory of CY
have been provided to BUYER.
(s) Insurance. To the best of SELLER'S knowledge, CY is not in default
under any policies of fire, liability, and
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other forms of insurance held by CY and material to its business. All insurance
policies maintained by CY are in full force and effect, and CY has received no
notice or other indication from any insurer or agent of any intent to cancel or
not renew any of such insurance policies.
(t) Labor Matters. To the best of SELLER'S knowledge, none of the
facilities or operations of CY has been the subject of any strike, work
stoppage, boycott, union organizational effort, unfair labor practice charge or
employment discrimination charge; and, to the knowledge of CY, no such action is
threatened.
(u) Permits. To the best of SELLER'S knowledge, CY holds all permits,
licenses, franchises, certificates and authorizations that are required by any
governmental agency to permit it to conduct its business as conducted now or as
previously conducted by it, and all such permits, licenses, franchises,
certificates and authorizations are valid and in full force and effect and will
remain so upon consummation of the transaction contemplated by this Agreement.
No suspension, cancellation or termination of any of such permits, licenses,
franchises, certificates and authorizations is threatened or imminent.
(v) No Brokers or Finders. Except for ▇▇▇▇▇▇ ▇▇▇▇ ASSOCIATES which has
been retained by SELLER to act as SELLER'S financial consultant with respect to
the transaction contemplated by this Agreement, no agent, broker, finder, or
investment or commercial banker, or other person or firm engaged by or acting on
behalf of SELLER in connection with the negotiation, execution or performance of
this Agreement or the transaction contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee as a result of this
Agreement or such transaction.
(w) Minute Books. The minute books of CY accurately reflect all actions
and proceedings taken to date by the shareholders and Board of Directors of CY,
and such minute books contain true and complete copies of the charter documents
and By-
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Laws of CY and all related amendments.
(x) No Termination of Business Relationship. To the best of SELLER'S
knowledge, since May 26, 1998, no individual, partnership, joint venture,
corporation, trust, organization or government with which CY has a business
relationship relative to its business that is material to that business, taken
as a whole, has given notice of any intention to cancel or otherwise terminate
such business relationship with CY, with the exception that the U.S. Navy has
recently canceled one contract with SELLER.
(y) Conflicts; Consents and Approvals; No Violation or Default. To the
best of SELLER'S knowledge, the consummation by SELLER of the transaction
contemplated hereby as of the closing date will not: (a) conflict with or result
in any breach of any provisions of the Articles of Incorporation or By-Laws or
other charter documents of CY; (b) require any consent, approval, authorization
or permit of, or filing with or notification to, any third party, except that
MicroAge Computer Centers, Inc., CY and Wareforce have signed an agreement
consenting to this transaction; (c) to CY'S knowledge, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to SELLER OR CY,
which violation would have a material adverse effect on CY or its business taken
as a whole; or (d) result in a default (or any event which, with the giving of
notice or the passage of time, or both would constitute a default) under any of
the terms, conditions or provisions of any permit, license, franchise,
certificate or authorization or any contract
(z) Disclosures. To the best of SELLER'S knowledge, no representation
or warranty contained herein, and no statement made in any certificate or
schedule furnished in connection with or attached to this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary to make any such representation, warranty, or statement not misleading
to a prospective purchaser of all of the capital stock of CY .
(aa) No Other Negotiations Pending. SELLER represents
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and warrants that they are not negotiating with any other party for the sale of
their stock in CY and have not entered into any understanding, whether binding
or not, relative, thereto, and agree that before July 10, 1998, SELLER will not
negotiate for the sale of or offer to sell CY's business to any other party.
(bb) Employee benefit plans.
(i) Each CY employee pension benefit plan (within the meaning
of Section 3(2) of ERISA) which is a tax-qualified pension,
profit-sharing or stock bonus plan under Section 401 of the Internal
Revenue Code (the "Code") (a "Qualified Plan") has been determined by
the Internal Revenue Service to qualify under Section 401 of the Code,
and the trusts created thereunder have been determined to be exempt
from tax pursuant to the provisions of Section 501 of the Code, and
nothing has occurred which would cause the loss of such qualification
or tax-exempt status. Each Qualified Plan has been operated and
administered in all respects in accordance with its terms and the
applicable provisions of ERISA, the Code and other applicable legal and
regulatory requirements. Each Qualified Plan has at all times been
properly and fully funded; there is no accumulated funding deficiency
under Section 412 of the Code; and CY and any other entity that,
together with CY, is treated as a single employer under Section 414(b),
414(c), 414(m) or 414(o) of the Code (an "ERISA Affiliate") have no
outstanding liabilities under Title IV of ERISA.
(ii) Neither CY nor any ERISA Affiliate is a party to, nor has
made any contribution to or otherwise incurred any obligation under,
any multi-employer plan (within the meaning of Section 3(37)(A) of
ERISA), any multiple employer plan (as described under Section 4064 of
ERISA) or any other single-employer plan (within the meaning of Section
3(41) of ERISA) under Title IV of ERISA. There are no "reportable
events" under Section 4043 of ERISA with respect to any Qualified
Plans, and CY does not have any outstanding liability under Section
4971 or 4977 of the Code.
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(iii) No civil penalties have been assessed pursuant to
Section 409 or 502(i) of ERISA, nor have any taxes been incurred
pursuant to Section 4975 or 4979 of the Code, with respect to
transactions involving any Qualified Plan. To the knowledge of CY there
has been no breach of any fiduciary duties owed pursuant to the
provisions of Part 4 of Title I of ERISA to the participants in any
Qualified Plan, and there are no pending claims to, by or on behalf of
any of the Qualified Plans, by any participants or beneficiaries
covered under any such Qualified Plan, or otherwise involving any such
Qualified Plan (other than routine claims for benefits).
(iv) No amounts payable under any of the CY plans will fail to
be deductible for Federal income tax purposes pursuant to Section 280G
of the Code.
(v) Except as previously disclosed by CY to BUYER, the
completion of the transactions contemplated by this Agreement will not
entitle any current or former employee or officer of CY or any ERISA
Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or accelerate
the time of payment or vesting, or increase the amount of compensation
due any such employee or officer.
ARTICLE 5.
WARRANTIES OF BUYER
Section 5.1 BUYER hereby warrants, represents, and covenants to SELLER as of the
date hereof and the Closing Date, and this Agreement is made in reliance on the
following, each of which is deemed to be a separate representation and warranty:
(a) Authorization to Purchase. BUYER is a duly organized and existing
corporation under the laws of the State of California, has all of the corporate
powers and authority necessary to carry on the business it now conducts, and has
the
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power and authority to purchase all of the CY Stock from SELLER on the terms,
conditions, and for the purchase price set forth herein as well as all
additional provisions contained herein incident to this Agreement.
(b) No consent, approval, or authorization of, or declaration, filing,
or registration with, any United States federal or state governmental or
regulatory authority is required to be made or obtained by BUYER in connection
with the execution, delivery, and performance of this agreement and the
consummation of the transactions contemplated by this agreement.
(c) Sale of Stock. The purchase price is based on BUYER'S promise and
warranty not to elect to treat the stock purchase as assets acquisition under
Section 338 of the Internal Revenue Code.
(d) Inspection of Premises and Location. BUYER has had ample
opportunity to inspect the on-site premises of CY as well as the general
neighborhood of the location and warrants that such premises and location are
acceptable to it.
(e) Consents. BUYER shall have obtained all necessary governmental
consents, waivers and approvals to the transaction contemplated hereunder, and
have reported to the California Department of Corporations' the sale of
securities contemplated hereunder as required by California Code of Regulations
Sections 260.141.11 and 260.141.12.
ARTICLE 6.
ESCROW AND SURVIVAL OF WARRANTIES
Section 6.1 Time and Place of Closing. The purchase and sale described in this
Agreement shall be consummated at a closing (the "Closing") scheduled to occur
at 11:00 a.m. Pacific Daylight Saving Time on August 28, 1998, called "the
Closing Date," at Golden Escrow, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at another time or location mutually agreeable to the parties.
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Section 6.2 Escrow. On July 31, 1998, BUYER has made a nonrefundable payment of
$250,000 to SELLER ("Nonrefundable Payment"). On or about July 31, 1998, BUYER
has deposited One Hundred Thousand Dollars ($100,000.00) as ▇▇▇▇▇▇▇ money (the
"▇▇▇▇▇▇▇ Money Deposit"), to be held in strict joint order escrow (the "Escrow")
by Golden Escrow, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Escrow Company"). Escrow shall be opened by delivery of a fully-executed copy
of the letter of intent dated May 26, 1998, whereupon the letter of intent, with
subsequent amendments, and this Agreement shall constitute escrow instructions
to the Escrow Company. SELLER and BUYER agree to execute such additional
instructions as Escrow Company may require, in form reasonably satisfactory to
BUYER and SELLER; provided that if there is any conflict between the provisions
of this Agreement and such additional instructions, this Agreement shall
control. If escrow is closed on or before August 31, 1998, the Nonrefundable
Payment and ▇▇▇▇▇▇▇ Money Deposit herein shall be treated as credits to the
Purchase Price. If escrow is closed between September 1 and 15, 1998, the
Purchase Price shall increase from $3,000,000 to $3,050,000, and the
Nonrefundable Payment and ▇▇▇▇▇▇▇ Money Deposit herein shall be treated as
credits to the Purchase Price. If escrow is not closed on or before September
15, 1998, then the Escrow Company shall disburse the ▇▇▇▇▇▇▇ Money Deposit to
SELLER, and the parties agree to promptly notify the Escrow Company in writing
upon any termination of this Agreement as to which party is entitled to the
▇▇▇▇▇▇▇ Money Deposit. Any interest earned on the ▇▇▇▇▇▇▇ Money Deposit shall be
the sole property of the party entitled to the ▇▇▇▇▇▇▇ Money Deposit pursuant to
the terms of this Agreement.
Section 6.3 Due Diligence Period.
(a) BUYER shall complete due diligence on or before June 25, 1998, by
delivering to SELLER by facsimile a written notice of completion of due
diligence. BUYER'S failure to complete due diligence within the 30-day period
shall constitute BUYER'S default. At BUYER'S default, SELLER may terminate this
17
letter of intent and any agreement entered into on the basis of this letter of
intent, and seek remedies as set forth in Article 7 herein.
(b) BUYER shall retain the services of a "Big 6" accounting firm of
BUYER'S choice to conduct the due diligence audit of the books and records of CY
for the purpose of verifying the financial information contained in CY's
unaudited financial statements for the year ended December 31, 1997. BUYER
acknowledges that is has been informed of certain potential accounting
adjustments to the Financial Statements, including and possible adjustments to
the ending inventory for the year ended December 31, 1997.
(c) The accountants for both BUYER and SELLER shall meet on or before
May 30, 1998. SELLER shall provide BUYER and its representatives full access to
CY's books, records and information concerning its business and financial
condition and any of CY's personnel that would enable BUYER and BUYER'S
attorney's, accountant, etc., to fully investigate the financial condition of
CY's business.
(d) All information gather from such due diligence shall be maintained
in confidence by BUYER and its representatives. BUYER, and on behalf of its
agents and representatives, agrees to be bound by the terms of the
confidentiality agreement, dated April 24, 1998 which was signed by BUYER and
CY. All of the terms of the confidentiality agreement are incorporated herein by
reference.
Section 6.4. Duties of Parties Prior to Closing.
(a) CY's business will be conducted in the ordinary course consistent
with previous practices.
(b) SELLER represents and warrants that they are not negotiating with
any other party for the sale of their stock in CY and have not entered into any
understanding, whether binding or not, relative thereto, and agree that for a
period between May 26, 1998, and September 15, 1998, SELLER will not negotiate
for
18
the sale of or offer to sell CY's business to any other party.
Section 6.5 Escrow Closing. It is the intent of both BUYER AND SELLER that the
purchase shall be completed on or before September 15, 1998. BUYER'S failure to
complete the purchase on or before September 15, 1998 shall constitute BUYER'S
default. At BUYER'S default, SELLER may terminate this Agreement, and seek
remedies as set forth in Article 7 herein.
Section 6.6 Obligations at Closing.
(a) Documents from SELLER. SELLER shall deliver to Escrow Company at
least one (1) business days before Closing the following executed documents in
form and content acceptable to Purchaser;
(i) CY's corporate resolution approving the sale of all of the
common stock of C.Y. Investment, Inc., to BUYER.
(ii) Resignations by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ as
officers and directors of CY, effective as of the Closing date.
(iii) Seller's stock certificates representing 100% of the CY
common stock duly endorsed for immediate transfer to BUYER.
(iv) CY Personal Property. CY's property keys, pass codes,
security service codes, calling cards, and cooperate in new bank
signature card with new officers of C. Y. INVESTMENTS, INC.
(v) Affidavits. Affidavit(s) stating that (1) SELLER is not a
foreign person or entity; and (2) such other affidavits as Escrow
Company may reasonably require.
(vi) Authority. Such evidence or documents as may be
reasonably required by BUYER or the Escrow Company evidencing the
status and capacity of SELLER and the authority of the person or
persons who are executing the
19
various documents on behalf of SELLER in connection with the sale of CY
Stock, including corporate resolutions.
(vii) Closing Statement. Signed copies of a closing statement
prepared by the parties or by Escrow.
(b) Documents from BUYER. BUYER shall deliver at least one (1) business
day before Closing the following executed documents in form or content
acceptable to SELLER:
(i) Closing Statement. Signed copies of a closing statement
prepared by the parties or by Escrow.
(ii) Authority. Such evidence or documents as may be
reasonably required by SELLER or the Escrow Company evidencing the
status and capacity of BUYER and the authority of the person or persons
who are executing the various documents on behalf of BUYER in
connection with the acquisition of CY Stock, including corporate
resolutions.
(iii) BUYER'S corporate resolution approving the acquisition
of all of the common stock of C.Y. Investment, Inc., approving the
assumption of any and all of the CY's liabilities as reflected in CY's
books and records (with the exception of the potential liability
arising from the IRS audit of CY's 1996 corporate income tax return and
from the inquiry by Novell, Inc.), and authorizing ▇▇. ▇▇▇▇▇▇▇▇ to sign
the Stock Purchase Agreement And Escrow Instructions.
(iv) Release of all of the SELLER's personal guaranties
provided as security for CY's indebtedness, including but not limited
to, loans from financial institutions, lines of credit from financing
companies, extension of credit from vendors and commercial leases.
BUYER shall provide letters from all entities who have received
personal guaranties from SELLER showing that the credit or loan
extended to CY has been fully paid and terminated as of the date of
closing, and that SELLER's personal guaranties either have already been
released or will be released in the near future. SELLER's obligation to
effectuate the release of SELLER's personal guaranties
20
extends beyond the closing date, until all such personal guaranties
have been released. Escrow will not be closed unless Buyer has produced
documents from Congress Financial Corporation (Western) showing the
remittance of funds to completely pay off the account balance of the
obligations owed by C.Y. Investment, Inc., to the following companies:
(1) Deutsche Financial Services
(2) IBM Credit Corporation
(3) MicroAge Computer Stores, Inc. (Pinacor)
(4) Far East National Bank
(5) AT&T Commercial Finance Corporation
(6) ITT Commercial Finance Corp.
(7) Finova Capital Corp.
(v) Acknowledgment. BUYER'S acknowledgment that it has been
provided a copy of all of the documents referred to in this Agreement,
and that it has been given reasonable opportunity to inspect CY's books
and records, and to inspect CY's business premises including CY's
inventories.
(vi) Other Documents. Such other documents required by this
Agreement and/or which the Escrow Company may reasonably require.
(c) Payment. The Purchase Price, subject to any credits for
Nonrefundable Payment and ▇▇▇▇▇▇▇ Money Deposit, shall be paid in cash, by wire
transferred funds or by any other means as may be required by Escrow.
(d) Resignations. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ shall have submitted
their resignations as officers and directors in writing to CY, effective as of
the Closing date. CY shall not incur any cost or expense in connection with, or
as a result of, the termination of employment of such officers and directors,
including, but not limited to, severance benefits.
(e) SELLER will pay at the Closing, from the proceeds
21
of the funds they receive pursuant to Section 2.2, the consulting or finder's
fee payable to ▇▇▇▇▇▇ ▇▇▇▇ ASSOCIATES. Each party hereto represents, warrants,
and agrees that all negotiations relative to this Agreement have been carried on
by him, her or its responsible officer, or his, her or its representative,
directly with the other party without the intervention of any person. Other than
▇▇▇▇▇▇ ▇▇▇▇ ASSOCIATES, no intermediary or broker brought about this sale on
his, her or its behalf. Each party will indemnify and hold the other party
harmless from any and all claims, suits, and actions for brokerage or other
commissions, and from and against all expenses of any character, including
reasonably attorney's fees incurred by the other by reason of any claim by any
person or broker claiming to have been engaged by, or on behalf of, the
indemnifying party,
(f) Expenses.
(i) Each party agrees to pay the legal and other fees and
expenses incurred by it with respect to this transaction, whether or
not the Closing occurs.
(ii) BUYER shall pay for the escrow and closing costs of
Progressive Escrow, and SELLER shall pay for the escrow and closing
costs of Golden Escrow.
Section 6.7 Survival of Warranties. If the transaction herein is consummated,
the warranties, representations, and covenants of BUYER and SELLER shall survive
the execution of this Agreement for one (1) year from the Closing date;
provided, however, that CY's warranties, representations and covenants set forth
in Sections 4.1(h) and 4.1(n) hereof, insofar as they relate to taxes of any
kind whatsoever, shall survive until the expiration of the applicable statute(s)
of limitation, or extensions thereof. No extension of any such statute of
limitation may be made by the statement or conduct of BUYER without the express
prior written permission of SELLER insofar as said extension relates to any of
the warranties, representations and covenants set forth in Sections 4.1(h) and
4.1(n) hereof which relate to taxes of any kind whatsoever.
22
ARTICLE 7.
REMEDIES ON DEFAULT
(a) SELLER'S DEFAULTS: BUYER'S REMEDIES. IN THE EVENT SELLER BREACHES
THIS AGREEMENT AND REFUSES TO COMPLETE THE SALE OF THE STOCK TO BUYER AS HEREIN
PROVIDED, THEN BUYER SHALL AS ITS SOLE REMEDY BE ENTITLED EITHER TO RECOVER ITS
▇▇▇▇▇▇▇ MONEY DEPOSIT IN ESCROW OR TO SPECIFIC PERFORMANCE.
/s/ CC /s/ OR
----------------- -----------------
SELLER'S INITIALS BUYER'S INITIALS
(b) BUYER'S DEFAULT: SELLER'S REMEDIES. SELLER AND BUYER EXPRESSLY
ACKNOWLEDGE AND AGREE THT IF BUYER FAILS TO PURCHASE THE STOCK IN ACCORDANCE
WITH THIS AGREEMENT, BUYER SHALL BE IN DEFAULT OF THIS AGREEMENT AND SELLER
SHALL BE MATERIALLY DAMAGED. SELLER AND BUYER AGREE IT WOULD BE IMPRACTICABLE
AND EXTREMELY DIFFICULT AT THIS TIME TO ESTIMATE THE AMOUNT OF THE DAMAGE.
SELLER AND BUYER FURTHER AGREE, AFTER NEGOTIATIONS, THAT THE AMOUNTS OF THE
NONREFUNDABLE PAYMENT OF $250,000 AND THE ▇▇▇▇▇▇▇ MONEY DEPOSIT OF $100,000
DEPOSITED BY BUYER IN ESCROW, TOGETHER WITH INTEREST, CONSTITUTE THEIR BEST
ESTIMATE, BASED ON ALL RELEVANT FACTS, OF THE AMOUNT OF SELLER'S DAMAGE IN THE
EVENT OF BUYER'S DEFAULT. ACCORDINGLY, SELLER AND BUYER AGREE THAT IN THE EVENT
OF DEFAULT BY BUYER, THE NONREFUNDABLE PAYMENT AND THE ▇▇▇▇▇▇▇ MONEY DEPOSIT,
TOGETHER WITH THE INTEREST, SHALL CONSTITUTE LIQUIDATED DAMAGES, AND ESCROW IS
HEREBY INSTRUCTED BY SELLER AND BUYER TO DELIVER THE ▇▇▇▇▇▇▇ MONEY DEPOSIT,
TOGETHER WITH INTEREST, TO SELLER. THE LIQUIDATED DAMAGES SHALL CONSTITUTE
SELLER'S REMEDY FOR BUYER'S DEFAULT. IN ADDITION, IN THE EVENT OF BUYER'S
DEFAULT, SELLER OR CY SHALL HAVE RIGHT TO SEEK DAMAGES FOR BUYER'S BREACH OF
THIS CONFIDENTIALITY AGREEMENT DATED APRIL 24, 1998.
/s/ CC /s/ OR
----------------- -----------------
SELLER'S INITIALS BUYER'S INITIALS
23
ARTICLE 8.
COVENANT NOT TO COMPETE
Section 8.1 Covenant. SELLER agrees that it, he or she will not, directly or
indirectly, own, join, control, or participate in the ownership, or control of,
any electronic sale business under any name similar to the name of CY, Impres
Technology, or Advanced Optical Distribution or which competes in any similar
business in the Los Angeles County and Orange County, California for a period of
two years from the date hereof, unless such SELLER obtains the prior written
consent of BUYER. BUYER hereby consents to ▇▇▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇ FAMILY
TRUST's ownership of 1/3 interest in the common stock of Protec Investment, Inc.
dba MicroAge Computer Center, a California corporation, and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇'▇
serving as Protec's secretary and ▇▇▇▇▇ ▇▇▇'▇ serving as Protec's director.
BUYER further consents to ▇▇▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇ FAMILY TRUST's ownership of
1/3 interest in the common stock of Able Micro Systems Corp. dba KIS Computer, a
California corporation, and ▇▇▇▇▇ ▇▇▇'▇ serving as the secretary and director of
Able Micro Systems Corp. BUYER further consents to ▇▇▇▇▇▇ ▇▇▇'▇ ownership of 1/3
interest in the common stock of Able Micro Systems Corp. dba KIS Computer, a
California corporation, and ▇▇▇▇▇▇ ▇▇▇'▇ serving as the treasurer and director
of Able Micro Systems Corp.
Section 8.2 Injunctive Relief. SELLER agrees that the remedy at law for any
breach by any of them of any provision of this article will be inadequate and
that, in addition to any other remedies it may have, BUYER shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damage to either CY or to BUYER.
24
ARTICLE 9.
TERMINATION OF OBLIGATIONS
Section 9.1 Right to Terminate Agreement. The parties agree that the only rights
to cancel this agreement are:
(a) BUYER has the right to cancel this Agreement upon the discovery,
prior to the closing, of a material instance of fraud on the part of the SELLER.
In the case of such discover of fraud, the BUYER may cancel this Agreement by
giving written notice of cancellation to SELLER, with no liability by BUYER to
either SELLER or ▇▇▇▇▇▇ ▇▇▇▇ ASSOCIATES, INC., and
(b) SELLER has the right to cancel this Agreement in the event that
BUYER fails to complete due diligence within the period called for in section
6.3 or that BUYER fails to close escrow within the period called for in Section
6.5 of this Agreement.
ARTICLE 10.
INDEMNIFICATION AND REMEDIES
Section 10.1 Obligation to Indemnify.
(a) SELLER jointly and severally agree to indemnify and hold harmless
BUYER and its directors, officers, employees, affiliates, agents and assigns
(each, a "BUYER Party") from and against any and all losses of any such parties
as a result of a material instance of fraud on the part of SELLER.
(i) BUYER is aware of an Internal Revenue Service audit of
CY's 1996 corporate income tax return (the "IRS Tax Audit") as well as
a potential dispute with Novell over licenses sold by CY in the past
years (the "Novell Dispute"). SELLER agrees to fully defend, indemnify
and hold BUYER harmless for any liability on the part of BUYER due to
either the current IRS Tax Audit or the Novell Dispute. SELLER's
indemnification is limited to BUYER's net loss, if any, arising from
the payment of any IRS adjustments of CY's 1996 corporate income tax
return as a result of the current IRS Tax Audit and the Novell payment.
The term
25
"net loss" is defined as actual payments made by BUYER to the IRS or
Novell with respect to the current IRS Tax Audit and Novell dispute
after deducting or taking into account any tax benefits (arising from
tax deductions, credits, or net operating loss carry-back or
carry-forward, etc.) to BUYER as a result of such payments by BUYER to
the IRS or Novell.
(ii) BUYER agrees that BUYER shall, at BUYER's costs, handle
the IRS Tax Audit. The costs paid for by BUYER shall be those such as
normal internal costs of accounting, legal, etc. if however BUYER is
required to engage any outside services [accounting, legal, etc.] to
handle the current IRS Tax Audit, the costs of such engagements will be
borne solely by SELLER and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ shall have prior approval on
the selection of outside services. However, BUYER must notify
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ if the IRS proposes any tax adjustments arising out of
the current IRS Tax Audit, by which time ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ shall appoint
SELLER's representative, at SELLER's costs, to negotiate a settlement
or litigate the IRS Controversy. BUYER must obtain the written consent
of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ prior to any settlement or litigation of the current
IRS Tax Audit. BUYER shall fully cooperate with SELLER in all respects
as to the current IRS Tax Audit.
(iii) ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ shall appoint SELLER's representative,
at SELLER's costs, to handle, settle or litigate the Novell dispute.
BUYER must obtain the written consent of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ prior as to
any settlement or litigation of the Novell dispute. BUYER shall fully
cooperate with SELLER in all respects as to the Novell Dispute.
(b) BUYER agrees to indemnify and hold harmless SELLER from and against
any and all losses of any such parties as a result of, or based upon or arising
from (i) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by BUYER under this
Agreement, or (ii) the conduct of the business of CY after the Closing Date.
Section 10.2 Certain Indemnification Procedures.
26
(a) If and whenever a party to this Agreement (the "Indemnified Party")
shall claim indemnification under Section 10.1, it shall send written notice of
the same to the other party (the "Indemnifying Party") at such person's address
set forth in Section 11.2 hereto (a "Notice of Claim"). Any such claim shall be
made prior to the termination of the survival period applicable to the
representations and warranties as provided in Section 6.7 hereof. A Notice of
Claim hereunder (which in the case of third party claims shall be delivered
promptly after the Indemnified Party receives actual notice of such third party
claim) shall state the basis for such claim supported by relevant information
and documentation with respect thereto and the total amount claimed, and if such
claim is based upon an action, proceeding or claim by a third party, offer the
Indemnifying Party the right to participate in (but not control) the defense of
such action, proceeding or claim at the Indemnifying Party's own expense insofar
as such action, proceeding or claim is the basis on which indemnity is sought.
(b) Within thirty (30) days after receipt of a Notice of Claim, the
Indemnifying Party shall give written notice to the Indemnified Party as to
whether it objects to or acquiesces in the claim, in whole or in part (the
"Claim Response"). If the Indemnifying Party acquiesces to the claim, in whole
or in part, it shall state its acquiescence, or the extent thereof, in the Claim
Response and shall pay the claim in whole, or that part to which it acquiesces,
within such thirty (30) day period. If the Indemnifying Party objects to the
claim, in whole or in part, within such thirty (30) day period, its Claim
Response shall set forth with reasonable particularity the grounds, amount of,
and basis upon which the claim is disputed. If the Indemnifying Party fails to
object to the claim, in whole or in part, within thirty (30) days after receipt
of the Notice of Claim, it shall pay the same in whole, or that portion of the
claim to which it failed to object, within ten (10) days after the expiration of
such thirty (30) day period.
(c) In the event the Indemnifying Party disputes the whole or a portion
of a claim as set forth in this Section 10.2, the Indemnifying and Indemnified
Parties shall meet within five
27
(5) days of the Indemnifying Party's delivery of the Claim Response and attempt
in good faith to resolve the dispute without third party intervention. The
parties shall have ten (10) days in which to resolve their dispute. If the
parties cannot resolve their dispute within such ten (10) day period, then
either the Indemnifying or the Indemnified Party may demand arbitration of the
matter as set forth in Section 11.10 below.
(d) Notwithstanding any other term or provision of this Agreement, the
Indemnifying Party shall not be liable to the Indemnified Party for any claims
based upon breaches of any warranty, representation, or covenant set forth
herein, unless any such claim exceeds TWELVE THOUSAND FIVE HUNDRED DOLLARS
($12,500) or such breaches exceed in the aggregate an amount equal to
TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
Section 10.3 Right to Cure. Prior to any party making a claim for monetary
damages under this Agreement, timely and adequate notice of an alleged breach
must be provided in writing to the other parties, concomitant with a thirty (30)
day period for the party alleged to have breached the Agreement to investigate
the claim and to cure it.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Nonassignability. Neither this Agreement, nor any interest herein,
shall be assignable by BUYER without the prior written consent of SELLER.
Section 11.2 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be sent by first-class mail, postage prepaid,
deposited in the United States mail in
California, and if intended for SELLER, shall be given to SELLER and shall be
addressed in advance of Closing:
28
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
c/o BATTERY TECHNOLOGY, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If intended for WAREFORCE, shall be addressed to:
▇▇▇ ▇▇▇▇▇▇▇▇
General Counsel
WAREFORCE, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any party hereto, by written notice to each of the other parties, may change the
address for notices to be sent to him or her.
Section 11.3 Governing Law. All questions with respect to the construction of
this Agreement, and the rights and liabilities of the parties hereto, shall be
governed by the laws of the State of California.
Section 11.4 Inurement. Subject to the restrictions against assignment as herein
contained, this Agreement shall inure to the benefit of, and shall be binding
upon, the assigns, successors in interest, personal representatives, estates,
heirs, and legatees of each of the parties hereto.
Section 11.5 Confidentiality and Public Announcements. Confidentiality is of
paramount importance to the parties. The parties hereby incorporate by reference
all of the terms and conditions of the Confidentiality Agreement executed by CY
and BUYER dated April 24, 1998, as if fully set forth herein.
Section 11.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
shall be deemed to constitute the same Agreement.
Section 11.7 Severability. If and to the extent that any provision (or any part
thereof) of this Agreement is held to be invalid, illegal or unenforceable, such
holding shall in no way
29
affect the validity, legality or enforceability of the remainder of this
Agreement.
Section 11.8 Entire Agreement. This Agreement contains the entire agreement of
the parties hereto, and supersedes any prior written or oral agreements between
them concerning the subject matter contained herein. There are no
representations, agreements, arrangements, or understandings, oral or written,
between and among the parties hereto, relating to the subject matter contained
in this Agreement, which are not fully expressed herein.
Section 11.9 Best Efforts: Further Assurances . Both before and after the
Closing, each party will use its reasonable best efforts to cause all conditions
to its obligations under this Agreement to be timely satisfied and to perform
and fulfill all obligations on its part to be performed and fulfilled under this
Agreement, to the end that the transaction contemplated by this Agreement shall
be effected substantially in accordance with its terms as soon as reasonably
practicable. The parties shall cooperate with each other in such actions and in
securing requisite Approvals. Each party shall execute and deliver both before
and after the Closing such further certificates, agreements and other documents
and take such other actions as may be necessary or appropriate to consummate or
implement the transaction contemplated hereby or to evidence such events or
matters.
Section 11.10 Arbitration. Any controversy of claim arising out of or relating
to this Agreement, or the making, performance, or interpretation of it, shall be
settled by binding arbitration in the City of Los Angeles, State of California,
under the then existing Commercial Arbitration
30
Rules of the American Arbitration Association and judgment on the arbitration
award may be entered in any court having jurisdiction over the subject matter of
the controversy. The arbitrator or arbitrators selected shall be persons
experienced in negotiating, making and consummating acquisition agreements. The
American Arbitration Association shall be asked to appoint one arbitrator to
rule on the matter, such appointment to be in accordance with Commercial
Arbitration Rules of the American Arbitration Association then in effect. Each
party to the dispute shall contribute equally to the payment of the arbitrator's
fees, including administrative fees of the American Arbitration Association.
However, upon the arbitrator's decision, the party against whom such decision is
made shall pay the other side's expenses, including attorneys' fees and the
arbitrator's fees. Judgment on any award rendered by the arbitrator may be
entered by any court of competent jurisdiction.
Section 11. 11 Purchase Price Adjustments.
(a) All payments made by any party to this Agreement after the Closing
Date with respect to amounts due hereunder, including payments made under
Article 10, shall be treated by the parties as adjustments to the purchase price
specified in Article 2 and shall be in lieu of escrow or holdback arrangements
otherwise contemplated by the parties.
(b) All payments made by SELLER to BUYER to cover the liabilities
arising from Section 10.1(a) of this Agreement, including the IRS Audit and
Novell inquiry, after the Closing Date shall be treated by the parties as
adjustments to the purchase price specified in Article 2 and shall be in lieu of
escrow or holdback arrangements otherwise contemplated by the parties. SELLER
may agree among themselves to set aside a portion of the purchase price in a
separate escrow account to cover such liabilities; the set-aside funds shall be
treated by the parties as adjustments to the purchase price, and will only be
considered as income to SELLER upon distribution of such funds to SELLER.
IN WITNESS WHEREOF, the parties hereto intending legally to be bound hereby,
have each caused this Agreement to be duly executed as of this 28th day of
August, 1998, at Los Angeles, California.
31
"SELLER"
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, representing
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇
Family Trust, ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇ ▇▇
"BUYER"
WAREFORCE ONE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, President