ASSET PURCHASE AGREEMENT
by and among
INFOTEL, INC.,
XXXX X. XXXXXX
and
MIDWEST MICRO CORP.
and
Global DirectMail Corp
September 12, 1997
TABLE OF CONTENTS
Page
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ARTICLE 1. PURCHASE AND SALE.................................................................1
SECTION 1.1. PURCHASE OF ASSETS; EXCLUDED ASSETS..........................................1
SECTION 1.2. ASSUMPTION OF LIABILITIES....................................................7
SECTION 1.3. EXCLUDED LIABILITIES.........................................................8
SECTION 1.4. CLOSING DATE.................................................................9
ARTICLE 2. CONSIDERATION....................................................................10
SECTION 2.1. CONSIDERATION...............................................................10
SECTION 2.2. PAYMENT OF CONSIDERATION....................................................10
SECTION 2.3. DEFINITIONS.................................................................10
SECTION 2.4. CLOSING CONSIDERATION; ADJUSTMENT...........................................12
SECTION 2.5. CONTINGENT CONSIDERATION....................................................15
SECTION 2.6. ALLOCATION OF PURCHASE PRICE FOR TAX PURPOSES...............................20
SECTION 2.7. ADJUSTMENTS FOR CERTAIN EXPENSES............................................20
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.................22
SECTION 3.1. AUTHORIZATION; ORGANIZATION; STANDING.......................................22
SECTION 3.2. CONTRAVENTION; CONSENTS AND APPROVALS.......................................23
SECTION 3.3. FINANCIAL STATEMENTS........................................................24
SECTION 3.4. REAL PROPERTY AND REAL PROPERTY LEASES......................................25
SECTION 3.5. PERSONAL PROPERTY; LIENS....................................................26
SECTION 3.6. UNDISCLOSED LIABILITIES.....................................................26
SECTION 3.7. OCCURRENCES AFTER THE INTERIM FINANCIAL STATEMENT...........................27
SECTION 3.8. TAX MATTERS.................................................................30
SECTION 3.9. INSURANCE...................................................................31
SECTION 3.10. ACCOUNTS RECEIVABLE........................................................32
SECTION 3.11. INTELLECTUAL PROPERTY......................................................32
SECTION 3.12. LITIGATION.................................................................34
SECTION 3.13. COMPLIANCE WITH APPLICABLE LAWS; PERMITS...................................34
SECTION 3.14. MAILING AND CUSTOMER LISTS.................................................34
SECTION 3.15. EMPLOYEE COMPENSATION......................................................35
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SECTION 3.16. LABOR MATTERS..............................................................35
SECTION 3.17. AGREEMENTS AND OTHER RIGHTS................................................36
SECTION 3.18. EMPLOYEE BENEFIT PLANS.....................................................38
SECTION 3.19. ENVIRONMENTAL..............................................................40
SECTION 3.20. SUPPLIERS..................................................................41
SECTION 3.21. INVENTORY..................................................................42
SECTION 3.22. GLOBAL DOCUMENTS...........................................................42
SECTION 3.23. INVESTMENT INTENT..........................................................42
SECTION 3.24. FINDERS' FEE...............................................................44
SECTION 3.25. BULK SALES.................................................................44
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND GLOBAL.......................44
SECTION 4.1. AUTHORIZATION; ORGANIZATION; STANDING.......................................44
SECTION 4.2. CONTRAVENTION; CONSENTS AND APPROVALS.......................................45
SECTION 4.3. GLOBAL STOCK................................................................46
SECTION 4.4. FINDERS' FEE................................................................46
SECTION 4.5. ABSENCE OF MATERIAL ADVERSE CHANGE..........................................46
SECTION 4.6. COMPUTATION OF PURCHASER'S EARNINGS.........................................47
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ARTICLE 5. COVENANTS OF THE SELLER..........................................................47
SECTION 5.1. CONDUCT OF THE BUSINESS.....................................................47
SECTION 5.2. INVESTIGATIONS..............................................................49
SECTION 5.3. PRE-CLOSING MAINTENANCE OF INSURANCE........................................49
SECTION 5.4. NOTIFICATION OF CERTAIN MATTERS.............................................49
SECTION 5.5. CONSENTS....................................................................50
SECTION 5.6. COVENANT NOT TO COMPETE.....................................................50
SECTION 5.7. EXCLUSIVITY; PRESS RELEASES.................................................51
SECTION 5.8. NON-DISCLOSURE..............................................................52
SECTION 5.9. ACKNOWLEDGMENT; SEVERABILITY................................................54
SECTION 5.10. EXCLUDED LIABILITIES.......................................................54
SECTION 5.11. TRANSFER TAXES.............................................................54
SECTION 5.12. CASH.......................................................................55
SECTION 5.13. CUSTOMER AND MAILING LISTS.................................................55
ARTICLE 6. ADDITIONAL COVENANTS.............................................................56
SECTION 6.1. BOOKS AND RECORDS...........................................................56
SECTION 6.2. EMPLOYEES...................................................................56
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SECTION 6.3. FINANCIAL STATEMENTS........................................................57
SECTION 6.4. POWER OF ATTORNEY...........................................................58
SECTION 6.5. TITLE INSURANCE.............................................................59
SECTION 6.6. CLOSING CONDITIONS..........................................................60
SECTION 6.7. RULE 144....................................................................60
SECTION 6.8. LISTING OF GLOBAL STOCK.....................................................60
SECTION 6.9. 401(K) PLAN.................................................................60
ARTICLE 7. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND GLOBAL.......................61
SECTION 7.1. BRING DOWN OF REPRESENTATIONS AND PERFORMANCE OF AGREEMENTS.................61
SECTION 7.2. MATERIAL ADVERSE CHANGE.....................................................61
SECTION 7.3. CONSENTS....................................................................62
SECTION 7.4. HSR APPROVAL................................................................62
SECTION 7.5. REAL PROPERTY...............................................................62
SECTION 7.6. EMPLOYMENT AGREEMENTS.......................................................63
SECTION 7.7. NO INJUNCTION, ETC..........................................................63
SECTION 7.8. ESCROW AGREEMENT............................................................63
SECTION 7.9. XXXX OF SALE................................................................63
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SECTION 7.10. ASSIGNMENT AND ASSUMPTION AGREEMENT........................................64
SECTION 7.11. OPINION OF SELLER'S COUNSEL................................................64
SECTION 7.12. CHANGE OF NAME.............................................................64
SECTION 7.13. SECRETARY'S CERTIFICATE....................................................64
SECTION 7.14. VEHICLES...................................................................64
SECTION 7.15. TRADEMARK ASSIGNMENT.......................................................65
SECTION 7.16. CUSTOMER AND MAILING LISTS.................................................65
SECTION 7.17. SPECIAL INCENTIVE PLAN.....................................................65
SECTION 7.18. DELIVERY OF ASSETS.........................................................65
SECTION 7.19. RELEASE OF LIENS...........................................................65
SECTION 7.20. ADDITIONAL DOCUMENTS.......................................................66
ARTICLE 8. CONDITIONS TO THE SELLER'S AND THE SHAREHOLDER'S OBLIGATIONS.....................66
SECTION 8.1. BRING DOWN OF REPRESENTATIONS AND PERFORMANCE OF AGREEMENTS.................66
SECTION 8.2. NO INJUNCTION, ETC..........................................................66
SECTION 8.3. PAYMENT.....................................................................67
SECTION 8.4. ASSIGNMENT AND ASSUMPTION AGREEMENT.........................................67
SECTION 8.5. ESCROW AGREEMENT............................................................67
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SECTION 8.6. CONVEYANCE OF REAL PROPERTY.................................................67
SECTION 8.7. OPINION OF PURCHASER'S COUNSEL..............................................67
SECTION 8.8. PIGGYBACK REGISTRATION RIGHTS AGREEMENT.....................................67
SECTION 8.9. SECRETARY'S CERTIFICATE.....................................................68
SECTION 8.10. HSR APPROVAL...............................................................68
SECTION 8.11. MATERIAL ADVERSE CHANGE....................................................68
SECTION 8.12. ADDITIONAL DOCUMENTS.......................................................68
ARTICLE 9. INDEMNIFICATION..................................................................69
SECTION 9.1. SELLER'S AND SHAREHOLDER'S INDEMNIFICATION..................................69
SECTION 9.2. PURCHASER'S AND GLOBAL'S INDEMNITY..........................................69
SECTION 9.3. NOTICE......................................................................70
SECTION 9.4. PROCEDURAL MATTERS..........................................................71
SECTION 9.5. SURVIVAL; OFF-SET...........................................................72
SECTION 9.6. LIMITATIONS.................................................................73
SECTION 9.7. NON-EXCLUSIVE REMEDY........................................................74
SECTION 9.8. TAX BENEFIT/INSURANCE PROCEEDS..............................................74
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ARTICLE 10. TERMINATION OF AGREEMENT........................................................75
SECTION 10.1. TERMINATION................................................................75
SECTION 10.2. EFFECT OF TERMINATION......................................................76
ARTICLE 11. MISCELLANEOUS...................................................................77
SECTION 11.1. GOVERNING LAW; JURISDICTION................................................77
SECTION 11.2. HEADINGS AND CAPTIONS......................................................77
SECTION 11.3. COUNTERPARTS...............................................................77
SECTION 11.4. ENTIRE AGREEMENT...........................................................77
SECTION 11.5. ASSIGNMENT.................................................................77
SECTION 11.6. SEPARABILITY...............................................................78
SECTION 11.7. NOTICES....................................................................78
SECTION 11.8. COSTS......................................................................79
SECTION 11.9. WAIVER.....................................................................79
SECTION 11.10. EXHIBITS AND SCHEDULES....................................................79
SECTION 11.11. AMENDMENT.................................................................79
SECTION 11.12. FURTHER ASSURANCES........................................................80
SECTION 11.13. SERVICE...................................................................80
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SECTION 11.14. PROJECTIONS...............................................................80
SECTION 11.15. CONSTRUCTION..............................................................80
ix
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of September
12, 1997, by and among Midwest Micro Corp. (the "Purchaser"), a Delaware
corporation, with an address at 00 Xxxxxx Xxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxx Xxxx
00000, Global DirectMail Corp ("Global"), a Delaware corporation, with an
address at 00 Xxxxxx Xxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxx Xxxx 00000, and Infotel,
Inc. (the "Seller"), an Ohio corporation, with an address at 0000 X. Xxxxx Xxxxx
00, Xxxxxxxx, Xxxx 00000, and Xxxx X. Xxxxxx ("Shareholder"), President, Chief
Executive Officer and majority shareholder of the Seller, with an address at
00000 Xxxx Xxxx, Xx. Xxxxx, Xxxx 00000.
RECITALS
1. The Seller is engaged in the business of manufacturing custom
configured IBM compatible personal computers, as well as the direct marketing of
brand name and private label computers and computer related products (the
"Business").
2. The Purchaser is a wholly-owned subsidiary of Global.
3. The Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, substantially
all of the property and assets of the Seller comprising the
Business, on the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE AND SALE
Section 1.1. Purchase of Assets; Excluded Assets.
(a) On the terms and subject to the conditions set forth herein, on the
Closing Date (as defined in Section 1.4 hereof), the Seller shall (subject to
Section 1.1(b) hereof) sell, transfer,
convey, assign and deliver to the Purchaser, and the Purchaser shall (subject to
Section 1.1(b) hereof) purchase, acquire and accept, free and clear of all
claims, liens, mortgages or deeds of trust, security interests, pledges,
charges, restrictions, covenants, reservations, easements, rights of way, or
other encumbrances whatsoever (collectively "Liens"), except for the Real
Property Permitted Exceptions (as defined in Section 3.4(a)), all of the
properties and assets of every kind, nature and description, real, personal or
mixed, tangible or intangible, owned by the Seller in the operation of the
Business, and wherever situated, owned, possessed or held by the Seller on the
Closing Date (collectively, the "Assets"). Without limiting the generality of
the foregoing, the Assets shall include the following:
(i) All fixed assets, equipment, vehicles, machinery, tools,
furniture, office equipment, computer systems and other tangible
personal property owned by the Seller in the conduct of the Business
(the "Tangible Property");
(ii) All the patents, trademarks, service marks, trade names,
copyrights, (in any case whether registered or unregistered), including,
but not limited to, the name "Infotel" and "Midwest Micro", and all
applications and registrations in connection with any of the foregoing,
and all drawings, product specifications, discoveries, trade secrets,
research and development information, manufacturing methods or designs,
technical data, engineering and software documentation, market reports,
promotional and marketing material, product surveys, distribution
methods, formulae, processes, test procedures, technical reports,
methods, know-how and proprietary rights and interests, if any, whether
or not patentable or which are under development, owned by the Seller,
including, but not limited to, the items set forth on Schedule 3.11
hereto (the "Intellectual Property");
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(iii) The contracts, agreements, licenses and personal
property leases set forth on Schedule 3.17 and those existing on the
date hereof entered into by the Seller in connection with the operation
(in the ordinary course consistent with past practice) of the Business
and those entered into by the Seller in connection with the operation
(in the ordinary course consistent with past practice) of the Business
from the date hereof through the Closing Date (except to the extent such
items are also set forth on Schedule 1.1(b) hereto and, accordingly, are
Excluded Assets and Excluded Liabilities, as hereinafter defined) (the
foregoing, together with the Real Property Leases (as hereinafter
defined) are collectively referred to as, the "Contracts");
(iv) All supplier information, data bases and lists;
(v) All books and records, including, but not limited to,
maintenance, warranty, repair, operating and production records
(collectively "Books and Records") and personnel records of any employee
hired by the Purchaser pursuant to Section 6.2 hereof (the "Personnel
Records" and together with the Books and Records, the "Acquired
Records"), and materials, supplies, forms, invoices and purchase order
forms which are owned, used or held for use in the conduct of the
Business;
(vi) All Federal, state and municipal and other permits,
approvals, franchises, licenses, authorizations, consents and
registrations owned and/or used in the operation of the Business and
ownership of the Real Property, including, but not limited to, the items
set forth on Schedule 3.13 hereto (the "Permits");
(vii) All inventory, including, but not limited to, inventory
on consignment, samples, inventory in transit, raw materials, work in
process and finished goods of the Seller, wherever situated and existing
on the Closing Date,
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including, but not limited to, the items set forth on Schedule 3.21
hereto (the "Inventory") (except to the extent disposed of in the
ordinary course of the conduct of the Business consistent with past
practice);
(viii) All accounts receivable arising in connection with the
operation of the Business (the "Accounts Receivable");
(ix) All cash and cash equivalents;
(x) All security deposits and other pre-paid expenses arising
in connection with the operation of the Business;
(xi) All customer information, records, lists, data bases and
mailing lists of the Seller, including, but not limited to, the items
set forth on Schedule 3.14 hereto;
(xii) All real property owned by the Seller in the operation
of the Business (the "Premises") and all buildings and structures
located thereon, including all right, title and interest, if any, of
Seller in and to (a)(i) any land lying in the bed of any
publicly-dedicated street, road or avenue, opened or proposed, in front
of or adjoining the Premises, to the center line thereof, (ii) any award
to be made in lieu thereof, and (iii) any award hereafter made for
damage to the premises by reason of the change of grade of any street
and Seller shall execute and deliver to Purchaser at the Closing (as
hereinafter defined), or thereafter, on demand, expressly on a
non-recourse basis, all proper instruments for the conveyance of such
title and the assignment and collection of any such award; (b) all
strips and gores, if any, abutting or adjoining the Premises; (c) all
easements, bridges, rights of way, licenses, privileges, hereditaments
and appurtenances, if any, as part of or inuring to the benefit of the
Premises; and (d) all
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of Seller's right, title and interest in and to all original
reproducible copies (sepia) of plans and specifications, drawings,
specifications, surveys, engineering, inspection or similar reports and
other technical descriptions relating to the Premises, including, but
not limited to, the real property described on Schedule 3.4(a) hereto
(the "Real Property");
(xiii) The real property leases existing on the date hereof
entered into by the Seller in connection with the operation (in the
ordinary course consistent with past practice) of the Business and those
entered into by the Seller in connection with the operation (in the
ordinary course of business consistent with past practice) of the
Business from the date hereof through the Closing Date, including, but
not limited to the leases set forth on Schedule 3.4(b) hereto (the "Real
Property Leases");
(xiv) All phone numbers and telecopy numbers and rights
thereto utilized in connection with the Business;
(xv) All internet web sites and domain names utilized in
connection with the Business;
(xvi) All claims arising in connection with insurance policies
covering the Assets and the proceeds thereof; and
(xvii) All goodwill and other intangible assets, owned, used
or held for use by the Seller in the conduct of the Business.
(b) Notwithstanding anything herein to the contrary, on the Closing
Date, the Seller is not selling to the Purchaser, and the Purchaser is not
purchasing nor assuming, as applicable, from the Seller (i) any contract, order,
payable, commitment, obligation, agreement, lease, or undertaking, whether oral
or written, of the Seller set forth on Schedule 1.1(b) hereto; (ii) all
5
rights of Seller under this Agreement; (iii) all books, records and other assets
of Seller relating to corporate level activities, including, without limitation,
those relating to filings with the Internal Revenue Service and those relating
to accounting and tax functions; (iv) any corporate minute books, stock ledgers
and other corporate books and records of Seller; and (v) all federal, state and
local income tax refunds due to Seller (collectively, the "Excluded Assets").
(c) Subject to the Purchaser's rights under Article 7, any property or
asset of the Seller otherwise constituting an Asset and any contract, lease or
other instrument, document or agreement to be assigned or otherwise transferred
to the Purchaser hereunder, the assignment or other transfer, or the attempted
assignment or other transfer of which would be invalid or ineffective or would
constitute a breach or default of an agreement or commitment to which the Seller
is a party or is bound, unless the consent or approval of another person or
entity to such assignment or other transfer shall have first been obtained,
shall not be assigned or otherwise transferred under this Agreement (and shall
not be deemed an Assumed Liability (as hereinafter defined) unless and until
such consents and approvals are obtained), and the provisions of this Agreement
shall not constitute an attempt to assign or transfer, unless and until such
consents shall have been obtained; provided that, until such consents or
approvals shall have been obtained, such property, asset, contract, lease or
other instrument, document or agreement, or the net proceeds thereof, shall be
held and/or received by the Seller for the benefit and account of the Purchaser
and the Seller shall, at the Purchaser's expense, cooperate with the Purchaser
in obtaining the net benefits flowing from ownership of such property, asset,
contract, lease or other instrument, document or agreement and shall execute
6
and deliver to the Purchaser such documents and instruments as shall be
reasonably necessary to obtain for the Purchaser such net benefits.
Section 1.2. Assumption of Liabilities.
(a) From and after the Closing Date, the Purchaser shall assume, and
agrees to pay, perform and discharge, as and when due, only the following
liabilities of the Seller (collectively, the "Assumed Liabilities"):
(i) all liabilities of the Seller set forth on the Seller's
June 30, 1997 Balance Sheet (but excluding any liabilities set forth in
the Notes thereto that are not also set forth on such Balance Sheet),
annexed hereto as Schedule 1.2(a)(i);
(ii) subject to Section 1.2(a)(iv) below with respect to
Warranty Claims, obligations arising, from and after the Closing Date,
under or in connection with the Contracts;
(iii) liabilities and obligations arising under or in
connection with the liabilities set forth on the Balance Sheet annexed
hereto as Schedule 1.2(a)(i) which arise between July 1, 1997 and the
Closing Date, out of the operation of the Business, in the ordinary
course of the Business consistent with past practice; provided, however,
that with respect to the categories of liabilities set forth on such
Balance Sheet, the following shall apply: (a) "accounts payable" shall
exclude the legal, accounting, professional fees and other fees and
expenses incurred in connection with the negotiation, execution and
closing of the transactions contemplated hereby; (b) "other taxes" shall
exclude income and franchise taxes; and (c) "Other" shall include only
such liabilities as are set forth on the Seller's June 30, 1997 Trial
Balance Sheet to be delivered by the Seller at the Closing; and
7
(iv) all liabilities and obligations of the Seller relating to
or arising out of product warranty claims and customer complaints or
disputes and returns ("Warranty Claims") concerning allegedly defective,
incomplete or non-conforming goods, products, services or other
performance furnished or delivered by the Seller at any time prior to
the Closing, in an aggregate amount not to exceed the reserves set forth
on the Closing Balance Sheet (as hereinafter defined).
(b) Notwithstanding Section 1.2(a) above to the contrary, the Purchaser
shall be entitled to assert all rights, remedies and defenses that either the
Seller or the Purchaser may have with respect to the performance of such
obligations; and provided further, that the Purchaser shall have the right to
contest, with third parties, in good faith any of the Assumed Liabilities.
Section 1.3. Excluded Liabilities.
Notwithstanding any provision of this Agreement to the contrary, it is
understood and agreed that, except for the Assumed Liabilities, neither the
Purchaser nor Global shall assume, and shall not be responsible to pay, any
debts, liabilities, obligations, contracts, leases, commitments or other
undertakings of the Seller, known or unknown, contingent or otherwise, as each
of the foregoing shall exist on the Closing Date or as the foregoing shall exist
after the Closing Date by reason of the Seller's acts or omissions prior to, on
or after the Closing Date, including, but not limited to, liabilities of the
following types, all of which shall remain the sole liability and responsibility
of the Seller (collectively, the "Excluded Liabilities"): (i) liabilities
arising out of the relationship between the Seller and its employees, including,
but not limited to, liabilities pursuant to any employment agreement (oral or
written), liabilities for payroll, payroll withholding taxes, unfunded pension
liabilities,
8
liabilities under health and welfare plans, liabilities in connection with
employment discrimination or sexual harassment and employment termination
liabilities, and any interest and penalties related to any of the foregoing;
(ii) Taxes (as defined in Section 3.8 hereof) arising out of the operation of
the Business and/or payable by the Seller; (iii) tort liabilities, including,
but not limited to, liabilities arising from the sale or use of the Seller's
products; (iv) product warranty and return liabilities, except as set forth in
Section 1.2(a)(iv); (v) claims arising out of any Environmental Laws (as defined
in Section 3.19 hereof); (vi) litigation, whether disclosed or undisclosed,
including, but not limited to, the litigation set forth on Schedule 3.12 annexed
hereto; (vii) any undisclosed liabilities; (viii) liabilities pursuant to any
contract, order, payable, commitment, obligation, agreement, lease or
undertaking set forth on Schedule 1.1(b) hereto; (ix) liabilities or litigation
arising out of any infringement action or claim, or threatened action or claim,
involving the Intellectual Property, arising prior to the Closing Date or due to
acts or omissions of the Seller prior to the Closing Date, or any liabilities or
litigation commenced or threatened against the Seller by a third party involving
the Seller's infringement of such third party's rights with respect to patents,
trademarks, tradenames, copyrights or other intellectual property, in any case,
including, but not limited to, the actions or threatened actions set forth on
Schedule 3.11 hereto; or (x) liabilities expressly not assumed by the Purchaser
pursuant to the provisions of this Agreement.
Section 1.4. Closing Date.
The closing (the "Closing") of the transactions contemplated hereby
shall be held at the offices of the Purchaser, or such other place as may be
mutually acceptable to the parties, within 3 days of the satisfaction or waiver,
in writing, of all of the conditions to closing set
9
forth at Article 7 and Article 8 hereof, or such other date as may be mutually
acceptable to the parties, subject, in any case, to the provisions of Article 10
hereof (the "Closing Date").
ARTICLE 2.
CONSIDERATION
Section 2.1. Consideration.
The aggregate purchase price (the "Purchase Price") to be received by
the Seller shall consist of the "Closing Consideration" as determined in
accordance with Section 2.4 hereof and the "Total Contingent Consideration" as
determined in accordance with Section 2.5 hereof.
Section 2.2. Payment of Consideration.
The manner and time of payment of the Closing Consideration shall be as
provided in Section 2.4 hereof and the manner and time of payment of the Total
Contingent Consideration shall be as provided in Section 2.5 hereof.
Section 2.3. Definitions.
As used in this Article 2, and elsewhere in this Agreement, the
following terms shall have the following respective meanings:
(a) "Global Stock" shall mean the common stock of Global.
(b) "Purchaser's Earnings" shall mean the net income, computed on an
accrual basis, of the Purchaser arising solely out of the operation of the
Business acquired by the Purchaser from the Seller for the relevant period
determined in accordance with United States generally accepted accounting
principles ("USGAAP"), consistently applied in accordance with the past
practices of Global, prior to any accrual for, or payment of, any federal, state
or local taxes measured by such net income, provided, however, and
notwithstanding that the same may not
10
be in accordance with USGAAP, for purposes of this Agreement, "Purchaser's
Earnings" shall not include:
(i) the legal, accounting and other professional fees and
expenses incurred in connection with the negotiation and closing of the
transactions contemplated hereunder;
(ii) the amortization of goodwill arising out of the
transactions contemplated hereunder;
(iii) any change in depreciation attributable to any write-up
or write-down of the Assets;
(iv) intercompany charges between the Purchaser and Global, or
any affiliate of Global, that are not charged on a reasonable basis
consistent with other pro rata charges that Global charges its other
subsidiaries;
(v) interest expense incurred by the Purchaser and/or Global
attributable solely to the purchase of the Assets; and
(vi) any reserves or adjustments to reserves that are not
consistent with past custom and practice of Global and its subsidiaries.
(c) "Seller's Earnings" shall mean $2,875,689 (representing the Seller's
Earnings for the period January 1, 1997 through and including June 30, 1997 as
reflected on the Seller's June 30, 1997 Income Statement) plus the net income of
the Seller from July 1, 1997 through but excluding the Closing Date (the
"Interim Period"), computed on an accrual basis, determined in accordance with
USGAAP, consistently applied in accordance with the past practice of the Seller,
prior to any accrual for, or payment of, any federal, state or local taxes
measured by such net income; provided, however, and notwithstanding that the
same may not
11
be in accordance with USGAAP or the past practice of the Seller, for purposes of
this Agreement, "Seller's Earnings" for the Interim Period shall reflect those
adjustments set forth on Schedule 2.3(c) hereto.
Section 2.4. Closing Consideration; Adjustment.
(a) The Closing Consideration shall be $40,000,000 in cash and 375,000
shares of Global Stock which shall be payable on the Closing Date to the Seller
by the Purchaser and Global, jointly and severally, as follows: (i) $40,000,000,
in cash, by wire transfer to an account designated, in writing, by the Seller;
and (ii) 375,000 shares of Global Stock, in the aggregate (the "Closing Date
Stock"), minus the Escrow Stock (as defined below).
(b) On the Closing Date, the Purchaser shall deposit with Xxxxxx, Xxxxxx
& Xxxxxx, as escrow agent, 225,000 shares of the Closing Date Stock (the "Escrow
Stock"), for purposes of satisfying the indemnification obligations of the
Seller and the Shareholder pursuant to Section 9.1 hereof. The Escrow Stock
shall be held in escrow and released pursuant to the terms of the Escrow
Agreement annexed hereto as Exhibit A.
(c) As soon as practicable, but in no event later than thirty (30) days
following the Closing Date, the Seller shall deliver to the Purchaser a balance
sheet of the Seller as of the close of business on the Closing Date, together
with appropriate footnotes (the "Closing Balance Sheet"). The Closing Balance
Sheet shall present accurately the financial condition of the Seller as of the
time immediately prior to the Closing on the Closing Date in conformity with
USGAAP, consistently applied in accordance with the past practice of Seller, and
shall be prepared in a manner that permits determination of the Adjusted Net
Assets (as hereinafter defined). The Purchaser shall provide the Seller's
auditors with access, during normal business hours on prior notice, to the
Premises and all workpapers, records and personnel
12
reasonably necessary for the Seller to prepare and finalize the Closing Balance
Sheet. The Seller will provide to the Purchaser access to all workpapers,
records and personnel reasonably necessary for the Purchaser to verify the
Closing Balance Sheet. If, within 30 calendar days after the date of the
Seller's delivery of the Closing Balance Sheet, the Purchaser shall have any
disagreement with respect thereto, the Purchaser will give written notice to the
Seller within such 30-calendar day period, specifying such disagreement and the
Purchaser's basis therefor. The failure by the Purchaser to express its
disagreement within such 30-calendar day period will constitute the Purchaser's
acceptance of the Closing Balance Sheet as delivered by the Seller and the
Adjusted Net Assets reflected therein shall constitute the "Final Adjusted Net
Assets" for purposes of this Section. For purposes of this Agreement, Adjusted
Net Assets shall mean the difference between (i) the aggregate assets of the
Seller excluding the Excluded Assets and (ii) the aggregate liabilities of the
Seller excluding the Excluded Liabilities, in each case as reflected in the
Closing Balance Sheet. If the Purchaser and the Seller are unable to resolve any
disagreement between them within 30 calendar days after the Purchaser gives
notice of such disagreement, the items in dispute (collectively, the "Disputed
Closing Date Items") will promptly, but in any event by the end of such 30 day
period be referred for determination to a "big-six" accounting firm to be
selected jointly by Purchaser and the Seller (the "Accountants"). If the parties
cannot agree on the selection of a "big six" accounting firm by the end of such
30-day period, the accountants for the Purchaser and the accountants for the
Seller shall jointly, within 15 days thereafter, select a "big six" accounting
firm to which Disputed Closing Date Items will be referred and such accounting
firm shall be the Accountants for purposes of this Section. The Accountants
shall, within 30 calendar days of the date on which a Disputed Closing Date Item
has been referred to them for
13
determination, (a) make a determination only as to each of the Disputed Closing
Date Items, and any other items that may be affected by the resolution of the
Disputed Closing Date Items and otherwise shall have no authority to review and
make a determination with respect to any item which has not been submitted by
the parties hereto for determination by the Accountants and (b) based on the
items not in dispute and on the Accountants' determination of the Disputed
Closing Date Items, calculate the resultant Adjusted Net Assets (the "Final
Adjusted Net Assets") which determination and calculation will be (i) in
writing, (ii) promptly furnished to each of the parties hereto after the
Disputed Closing Date Items have been referred to the Accountants, (iii) made in
accordance with this Agreement and (iv) conclusive and binding upon each of the
parties hereto. In connection with their determination of the Disputed Closing
Date Items, the Accountants will be entitled to review the workpapers, trial
balances and similar materials prepared by Seller in connection with the
preparation of the Closing Balance Sheet, and any books and records related
thereto. The fees and expenses of the Accountants will be shared equally by the
Purchaser and the Seller.
(d) Following the Closing Date, the Purchase Price shall be increased or
decreased, on a dollar for dollar basis, to the extent the Final Adjusted Net
Assets on the Closing Date, exceeds or is less than, as applicable, $15,166,057,
representing the net assets of the Seller, as of June 30, 1997, as set forth in
the Interim Financial Statement (annexed hereto as Schedule 1.2(a)(i)). The
shortfall or the excess, as applicable, shall be paid to the Purchaser or the
Seller, as applicable, in cash, within three (3) business days of the
determination of the Final Adjusted Net Assets and, if not paid when due, shall
bear interest at the rate of 8.5% per annum, from the due date until paid in
full.
14
Section 2.5. Contingent Consideration.
(a) The Seller shall also be entitled, as applicable, to receive, and
Global and the Purchaser, jointly and severally, shall pay to the Seller, as
"Contingent Consideration", an aggregate of up to $12,000,000 (the "Total
Contingent Consideration") in cash, by wire transfer to an account designated by
the Seller, as applicable, contingent upon the Purchaser achieving certain
financial performance targets as follows:
(i) If the sum of the Seller's Earnings and the Purchaser's
Earnings for the 1997 calendar year equals at least $8,300,000 but is
less than $9,200,000, the Seller shall receive $1,500,000 in the
aggregate. If the sum of the Seller's Earnings and the Purchaser's
Earnings for the 1997 calendar year equals or exceeds $9,200,000, the
Seller shall receive $4,000,000 in the aggregate.
(ii) An amount equal to $9,000,000 less that portion of the
Total Contingent Consideration paid to the Seller with respect to
calendar year 1997, if any (the "1998 Available Balance") shall be
available for payment with respect to calendar year 1998 as indicated
below.
(iii) If the Purchaser's Earnings for the 1998 calendar year
is less than $10,000,000, then none of the 1998 Available Balance shall
be paid to the Seller.
(iv) If the Purchaser's Earnings for the 1998 calendar year
equal $10,000,000 or more the Seller shall receive 25% of the 1998
Available Balance plus an additional 1% of the 1998 Available Balance
for each $26,667.00 of Purchaser's Earnings for 1998 exceeding
$10,000,000 to a maximum of 100% of the 1998 Available Balance. All
fractional percentages will be rounded up to the next percentage. (For
example, if $4,000,000 of the Total Contingent Consideration has
15
been paid with respect to the 1997 calendar year, the 1998 Available
Balance would be $5,000,000. Accordingly, if in 1998, the Purchaser's
Earnings are $11,000,000 ($1 million more than $10 million), the Seller
would receive 63% of the 1998 Available Balance (25% + 38% [$1,000,0000
divided by $26,667.00 = 37.4990]) which equals $3,150,000).
(v) To the extent the Purchaser's Earnings for the 1998
calendar year exceed $12,000,000 ("Excess 1998 Earnings"), such Excess
1998 Earnings will be added to Purchaser's Earnings for the 1999
calendar year for the purpose of calculating the contingent payment for
1999 as described below.
(vi) An amount equal to $12,000,000 less that portion of the
Total Contingent Consideration paid to the Seller with respect to
calendar years 1997 and 1998, if any (the "1999 Available Balance")
shall be available for payment with respect to calendar year 1999 as
indicated below.
(vii) If the sum of the Purchaser's Earnings for the 1999
calendar year and the Excess 1998 Earnings, if any, is less than
$12,000,000, then none of the 1999 Available Balance shall be paid to
the Seller.
(viii) If the sum of the Purchaser's Earnings for the 1999
calendar year and the Excess 1998 Earnings, if any, equals $12,000,000
or more the Seller shall receive 25% of the 1999 Available Balance plus
an additional 1% of the 1999 Available Balance for each $40,000.00 of
such sum exceeding $12,000,000 to a maximum of 100% of the 1999
Available Balance. All fractional percentages will be rounded up to the
next percentage. (For example, if $4,000,000 of the Total Contingent
Consideration was paid with respect to the 1997 calendar year and
16
$3,150,000 was paid with respect to the 1998 calendar year, the 1999
Available Balance would be $4,850,000. Accordingly, if in 1999, the
Purchaser's Earnings are $13,000,000 ($1 million more than $12 million)
and there were no Excess 1998 Earnings, the Seller would receive 50% of
the 1999 Available Balance (25% + 25% [$1,000,0000 divided by $40,000.00
= 25]) which equals $2,425,000. Over the three year period $9,575,000 of
the Total Contingent Consideration of $12,000,000 would have been paid.)
(ix) Any part of the Total Contingent Consideration not paid
for calendar years 1997, 1998 or 1999 is forfeited and the obligations
of the Purchaser and Global with respect thereto shall terminate.
(b) The Contingent Consideration shall be paid by Global to the Seller,
if applicable, within 30 days following the determination of the Purchaser's
Earnings and the Seller's Earnings, as applicable, as provided in Section 2.5(c)
and (d) hereof.
(c) As soon as practicable following the close of each of the first
three calendar quarters during each of the 1998 and 1999 calendar years, the
Purchaser shall deliver to the Seller a reasonably detailed calculation of the
Purchaser's Earnings as of the end of such period, prepared by the Purchaser's
internal accountants. Such information shall be deemed preliminary and not final
and shall be delivered for information purposes only and no party shall be
estopped from adopting a position contrary to such information as a result of
its preparation of the information or the receipt of such information. As soon
as practicable but in no event later than sixty (60) calendar days after the
expiration of each of the 1997, 1998 and 1999 calendar years, the Purchaser
shall deliver to the Seller a reasonably detailed calculation of the Purchaser's
Earnings for such calendar year (the "Report"), prepared by the
17
Purchaser's internal accountants. The Purchaser shall provide to the Seller
access to all workpapers, records and personnel reasonably necessary for the
Seller to verify the Report. If, within 30 calendar days after the date of
Purchaser's delivery of the Report, the Seller shall have any disagreement with
respect thereto, then the Seller shall give written notice to Purchaser within
such 30-calendar day period, specifying such disagreement and the Seller's basis
therefor. The failure by the Seller to express its disagreement within such
30-calendar day period will constitute Seller's acceptance of the Report and the
calculation of the Purchaser's Earnings reflected therein. If Purchaser and the
Seller are unable to resolve any disagreement between them within 30 calendar
days after the Seller gives notice of such disagreement, the items in dispute
(collectively, the "Disputed Items") will promptly, but in any event by the end
of such 30 day period be referred for determination to the Accountants. The
Accountants shall, within 30 calendar days of the date on which a Disputed Item
has been referred to them for determination, (a) make a determination only as to
each of the Disputed Items and any other items that may be affected by the
resolution of the Disputed Items and otherwise shall have no authority to review
and make a determination with respect to any item which has not been submitted
by the parties hereto for determination by the Accountants and (b) based on the
items not in dispute and on the Accountants' determination of the Disputed
Items, calculate the resultant Purchaser's Earnings which determination and
calculation will be (i) in writing, (ii) promptly furnished to each of the
parties hereto after the Disputed Items have been referred to the Accountants,
(iii) made in accordance with this Agreement and (iv) conclusive and binding
upon each of the parties hereto. In connection with their determination of the
Disputed Items, the Accountants will be entitled to review the workpapers, trial
balances and similar materials prepared by Purchaser in connection with the
18
preparation of the Report, and any books and records related thereto. The fees
and expenses of the Accountants will be shared equally by the Purchaser and the
Seller.
(d) As soon as practicable but in no event later than sixty (60)
calendar days after the expiration of the 1997 calendar year, the Seller shall
deliver to the Purchaser a reasonably detailed calculation of the Seller's
Earnings for the Interim Period (the "Seller's Report"), prepared by the
Seller's internal accountants. The Seller shall provide to the Purchaser access
to all workpapers, records and personnel reasonably necessary for the Purchaser
to verify the Seller's Report. If, within 30 calendar days after the date of the
Seller's delivery of the Seller's Report, the Purchaser shall have any
disagreement with respect thereto, then the Purchaser shall give written notice
to the Seller within such 30-calendar day period, specifying such disagreement
and the Purchaser's basis therefor. The failure by the Purchaser to express its
disagreement within such 30-calendar day period will constitute Purchaser's
acceptance of the Seller's Report and the calculation of the Seller's Earnings
reflected therein. If Purchaser and the Seller are unable to resolve any
disagreement between them within 30 calendar days after the Purchaser gives
notice of such disagreement, the items in dispute (collectively, the "Seller
Disputed Items") will promptly, but in any event by the end of such 30 day
period be referred for determination to the Accountants. The Accountants shall,
within 30 calendar days of the date on which a Seller Disputed Item has been
referred to them for determination, (a) make a determination only as to each of
the Seller Disputed Items and any other items that may be affected by the
resolution of the Seller Disputed Items and shall otherwise have no authority to
review and make a determination with respect to any item which has not been
submitted by the parties hereto for determination by the Accountants and (b)
based on the items not in dispute and on the Accountants' determination of the
Seller
19
Disputed Items, calculate the resultant Seller's Earnings which determination
and calculation will be (i) in writing, (ii) promptly furnished to each of the
parties hereto after the Seller Disputed Items have been referred to the
Accountants, (iii) made in accordance with this Agreement and (iv) conclusive
and binding upon each of the parties hereto. In connection with their
determination of the Seller Disputed Items, the Accountants will be entitled to
review the workpapers, trial balances and similar materials prepared by the
Seller in connection with the preparation of the Seller's Report, and any books
and records related thereto. The fees and expenses of the Accountants will be
shared equally by the Purchaser and the Seller.
Section 2.6. Allocation of Purchase Price for Tax Purposes.
The parties agree that the consideration for the sale of the Assets
shall be allocated, for federal, state and local tax reporting purposes only,
among the Assets as set forth on Schedule 2.6, to be prepared and delivered on
or prior to the Closing Date. The Seller and the Purchaser acknowledge that such
allocation has been arrived at based upon their negotiations and shall be used
by them solely for all federal, state and local tax reporting purposes, and they
shall not take any position inconsistent thereunder. On the Closing Date, the
Purchaser and the Seller shall execute Internal Revenue Form 8594 which form
shall be binding on the Purchaser and the Seller and shall be filed with the
income tax returns of the Purchaser and the Seller.
Section 2.7. Adjustments for Certain Expenses.
(a) The following items are to be apportioned as of midnight immediately
preceding the Closing Date:
20
(i) Real estate and any personal property taxes and/or other
taxes on the basis provided in Section 2.7(b) below;
(ii) Water and sewer charges and rents on the basis of the
fiscal year for which assessed as determined by the latest available
xxxxxxxx, unless the meters are read on the Closing Date or the billing
thereof is switched to Purchaser as of the Closing Date, in which event
such charges and rents shall not be apportioned;
(iii) Utilities, including, without limitation, steam,
electricity and gas (and any sales taxes thereon), on the basis of the
most recently issued bills therefor, unless the meters are read on the
Closing Date or the billing thereof is switched to Purchaser on the
Closing Date, in which event such utilities shall not be apportioned;
(iv) Fuel based on a reading by Seller's fuel dealer at the
price paid therefor by Seller (including all applicable sales taxes);
(v) Fees for transferable licenses and permits, if any; and
(vi) Fees for any service contracts assigned to Purchaser.
(b) Except as otherwise provided in this Agreement, the apportionments
shall be made in accordance with the customary practice of real estate attorneys
in the county where the Real Property is located.
(c) Any errors in calculations or apportionments shall be corrected or
adjusted as soon as practicable after the Closing. The provisions of this
Section 2.7 shall survive the Closing.
21
ARTICLE 3.
REPRESENTATIONS AND
WARRANTIES OF THE SELLER AND THE SHAREHOLDER
The Seller and the Shareholder, jointly and severally, hereby represent
and warrant to, and agree with, the Purchaser and Global as follows:
Section 3.1. Authorization; Organization; Standing.
The Seller and the Shareholder have the power and authority to enter
into this Agreement and each other agreement contemplated to be executed by the
Seller and the Shareholder in connection herewith (the "Seller/Shareholder
Related Documents") and to carry out the transactions contemplated hereby and
thereby, and this Agreement and each of the Seller/Shareholder Related Documents
constitutes the legal, valid and binding obligation of the Seller and the
Shareholder, enforceable in accordance with their terms. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio. The Seller has the corporate power and authority to own
and lease its properties and to carry on its business as now conducted. The
Seller is duly qualified, admitted or otherwise authorized to transact the
Business, and is in good standing, as a foreign corporation, in each
jurisdiction set forth on Schedule 3.1 hereto, such jurisdictions constituting
all of the jurisdictions in which the conduct or nature of the Business or the
ownership or leasing of the Assets requires it to be so qualified, admitted or
otherwise authorized and where the failure to be so qualified would have a
material adverse effect on the Business or the Assets. The execution, delivery
and performance by the Seller of this Agreement and each of the
Seller/Shareholder Related Documents and the transactions contemplated hereby
and thereby have been duly authorized by the Seller's shareholders and board of
directors and no further corporate action is required to be taken by the Seller
in order to consummate the transactions
22
contemplated by this Agreement. No further action is required to be taken by the
Shareholder in order to execute this Agreement or to consummate the transactions
contemplated by this Agreement.
Section 3.2. Contravention; Consents and Approvals.
(a) The execution, delivery and performance of this Agreement and the
Seller/Shareholder Related Documents by the Seller and the Shareholder and the
consummation of the transactions contemplated hereby and thereby by the Seller
and the Shareholder will not result in a breach of the terms or conditions of,
or constitute a default under or violate or give any third party the right to
accelerate any obligation under: (i) any material provision of any law,
regulation or ordinance, except as set forth on Schedule 3.2 hereto, (ii) the
Articles of Incorporation or Code of Regulations of the Seller, (iii) except as
set forth on Schedule 3.2 hereto, any Material Contract (as hereinafter
defined), to which the Seller or the Shareholder is a party or by which their
properties or assets are or may be bound, (iv) any material judgment, order,
writ, injunction or decree of any court, administrative agency or governmental
body, or (v) any Certificate of Occupancy, restrictive covenant or agreement
which shall affect the Real Property.
(b) Except as set forth in Schedule 3.2 hereto, and except for any
notices, authorizations, consents or approvals which the failure to obtain,
individually or in the aggregate, will not materially adversely affect the
transfer of the Assets to Purchaser or the operation of the Business by the
Purchaser, the execution and delivery of this Agreement and the
Seller/Shareholder Related Documents by the Seller and the Shareholder do not,
and the consummation of the transactions contemplated hereby and thereby by the
Seller and the
23
Shareholder will not, require any filing, action, notice, authorization, consent
or approval of any person, entity or governmental body.
Section 3.3. Financial Statements.
Annexed hereto as Schedule 3.3 are true and complete copies of (a) the
audited balance sheets of Seller at December 31, 1994, December 31, 1995 and
December 31, 1996 and the related statements of income, retained earnings, and
cash flow for the fiscal years then ended, certified by Seller's auditors; and
(b) unaudited balance sheet of Seller at June 30, 1997 and related statements of
income and cash flow for the period then ended (collectively, the "Financial
Statements"), all of which have been prepared in accordance with USGAAP (except
that the Interim Financial Statement does not contain footnotes as required in
accordance with generally accepted accounting principles) consistently applied
throughout the periods involved and have been prepared from and in accordance
with the books and records of the Seller. Subject, in the case of the Interim
Financial Statement (as defined below), to normal and recurring year-end
adjustments made in accordance with USGAAP consistent with the past practices of
the Seller, none of which will be material, individually or in the aggregate,
such Financial Statements, including the related notes, fairly present the
financial position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Seller at the dates indicated and such statements of
income, retained earnings and cash flow fairly present the results of
operations, cash flow and changes in shareholders equity of Seller for the
periods indicated. References in this Agreement to the "Interim Financial
Statement" shall mean the balance sheet of the Seller as of June 30, 1997.
24
Section 3.4. Real Property and Real Property Leases.
(a) Schedule 3.4(a) hereto sets forth the description contained in the
deed pursuant to which Seller holds title of all real property owned by the
Seller and utilized by the Seller in the operation of the Business. The Seller
owns the Real Property free and clear of all Liens other than the Real Property
Permitted Exceptions. As used herein, the term "Real Property Permitted
Exceptions" shall mean (i) all liens for real estate taxes and assessments which
are not due and payable; (ii) all easements, rights-of-way, covenants,
conditions, restrictions, reservations, licenses, agreements and other matters
of record shown on Commonwealth Land Title Insurance Company Certificate Number
SLT 12510; (iii) all matters that would be disclosed by an accurate survey or
inspection of the Real Property; (iv) any existing mortgage against the Real
Property (which in any case will be released by the Seller's lender prior to or
at the Closing and will not be a Real Property Permitted Exception in the
Seller's deed), and (v) all zoning, building and other laws, ordinances and
regulations. The Real Property has been constructed in all material respects in
accordance with all applicable land use, zoning and building codes and
ordinances of any and all governmental authorities having jurisdiction thereover
at the time of said construction, and are legal and conforming in their present
form and use in all material respects. Seller has valid and subsisting
Certificates of Occupancy for the Real Property as it presently exists. Except
as set forth on Schedule 3.4(a), Seller has not received, and has no knowledge
of, any notification from any city, county, state or federal authority having
jurisdiction over the Real Property, or of any utility providing service
requiring any work to be done to, or affecting the use, operation and/or
occupancy of the Real Property or any portion thereof.
25
(b) Schedule 3.4(b) hereto sets forth a true, accurate and complete
description of the Real Property Leases (including locations and rentals paid).
The Seller has neither assigned its interest in or under any Real Property Lease
nor further subleased the property demised thereby. Each of the Real Property
Leases is a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms. Neither the Seller nor, to the
Seller's or Shareholder's knowledge, any other party hereto is in default under
the Real Property Leases.
Section 3.5. Personal Property; Liens.
The Seller has delivered to the Purchaser a true, accurate and complete
description of the Tangible Property, having an original cost in excess of
$500.00, of the Seller as of August 31, 1997. The Seller has good, valid and
marketable title to, or valid and enforceable leasehold interests in, the
Tangible Property and all other property and assets (other than the Real
Property and the Excluded Assets), whether personal or mixed, tangible or
intangible (collectively with the Tangible Property, the "Personal Property")
owned or utilized by the Seller in the operation of the Business, free and clear
of all Liens, except Liens set forth on Schedule 3.5 hereto. On the Closing, the
Seller shall transfer, assign and sell to the Purchaser the Personal Property,
free and clear of all Liens. All of the Personal Property that is tangible
(including that under lease) of the Seller is in all material respects in good
condition and repair, ordinary wear and tear excepted. The Personal Property and
the Real Property constitute all the assets necessary for the Purchaser to
continue to operate the Business.
Section 3.6. Undisclosed Liabilities.
There is no liability, indebtedness, claim, expense, commitment or
obligation, whether accrued, absolute, known or unknown, fixed or unfixed,
asserted or unasserted, contingent or
26
otherwise, whether oral or written (collectively, "Liabilities") relating to the
Seller or the Assets other than:
(a) Liabilities disclosed or provided for in the Interim Financial
Statement;
(b) Liabilities incurred in the ordinary course of the Business
consistent with past custom and practice since the date of the Interim Financial
Statement, none of which, individually or in the aggregate, is or is expected to
be materially adverse to the condition (financial or otherwise), of the Assets,
results of operations, business or prospects of the Seller;
(c) Liabilities disclosed in this Agreement and the Schedules referred
to in this Agreement; and
(d) Liabilities under the Contracts (none of which arises from a breach
or default thereunder).
Section 3.7. Occurrences after the Interim Financial Statement.
Since the date of the Interim Financial Statement, except as set forth
on Schedule 3.7 hereto, there has been no material adverse change in the
condition (financial or otherwise) of the Assets, results of operations,
business or, to the Seller's or the Shareholder's knowledge, prospects of the
Seller. Without limiting anything contained in this Agreement, since the date of
the Interim Financial Statement, and except as set forth on Schedule 3.7, there
has not been:
(a) any material adverse change in the condition (financial or
otherwise), Assets, Liabilities, operations, customer contracts or other
customer arrangements, management personnel, xxxxxxxx, revenues, earnings,
business or, to the Seller's or the Shareholder's knowledge, prospects of the
Seller;
27
(b) any Liability incurred by the Seller (except liabilities incurred in
the ordinary course of the Business consistent with past custom and practice
since the date of the Interim Financial Statement, none of which, individually
or in the aggregate, is or is expected to be materially adverse to the condition
(financial or otherwise), of the Assets, results of operations, business or, to
the Seller's or the Shareholder's knowledge, prospects of the Seller);
(c) any payment, discharge or satisfaction of any claim or obligation of
the Seller, except in the ordinary course of business and consistent with past
practice;
(d) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Seller or any
direct or indirect redemption, purchase or other acquisition of any such shares;
(e) any issuance or sale, or any contract entered into for the issuance
or sale, of any shares of capital stock or securities convertible into or
exercisable for shares of capital stock of the Seller;
(f) any sale, assignment, pledge, encumbrance, transfer or other
disposition of any of the Assets, except as contemplated by this Agreement and
except for sales of Inventory in the ordinary course of the Business consistent
with past practice and dispositions of Tangible Property in the ordinary course
of the Business consistent with past practice (none of such dispositions,
individually or in the aggregate, being material to the Business);
(g) any creation of any Lien on any of the Assets;
(h) any creation, incurrence, guarantee or assumption of any debt or
obligation for borrowed money;
28
(i) any material write-up of the value of any asset of the Seller or any
material write-down of any liabilities or any portion thereof;
(j) any cancellation of any debts or claims or any amendment,
termination (except through performance in the ordinary course of the Seller's
Business) or waiver of any rights of material value to the Seller;
(k) any capital expenditure or commitment or addition to property, plant
or equipment of the Seller, individually or in the aggregate, in excess of
$10,000;
(l) any general increase in the compensation of employees of the Seller
(including any increase pursuant to any bonus, pension, profit-sharing or other
benefit or compensation plan, policy or arrangement or commitment), or any
increase in any such compensation or bonus payable to any officer, shareholder,
director, consultant or agent of the Seller having an annual salary or
remuneration in excess of $40,000;
(m) any material damage, destruction or loss (whether or not covered by
insurance) affecting the Assets or the Seller;
(n) any change in the independent public accountants of the Seller or in
the accounting methods or accounting practices followed by the Seller or any
change in depreciation or amortization policies or rates;
(o) any software licensing agreement entered into, other than in the
ordinary course of business, and which is disclosed on Schedule 3.17 hereto;
(p) any agreement or action entered into or taken, other than in the
ordinary course of the Seller's Business consistent with past practice, none of
which, individually or in the aggregate, is materially adverse to the condition
(financial or otherwise) of the Assets, results
29
of operations, business or, to the Seller's or the Shareholder's knowledge,
prospects of the Seller; or
(q) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing items (a) through (p).
Section 3.8. Tax Matters.
(a) The Seller has timely filed when due all Tax Returns (defined below)
that it was required to file. All Taxes (defined below) of the Seller (whether
or not shown on any Tax Return) which have become due, or will become due, at
any time on or prior to and including the Closing Date have been or will on the
Closing Date be, duly paid or adequately reserved for (in accordance with
generally accepted principles consistent with past practice). Such Tax Returns
are true, complete and correct and were made on a proper basis. Except as set
forth on Schedule 3.8, the Seller has not executed or filed with the Internal
Revenue Service or any other taxing authority, or is currently the beneficiary
of, any agreement or other document abating, extending or having the effect of
abating or extending the period for assessment or collection of, or waiving any
statute of limitations in respect of, any Taxes. Except as set forth on Schedule
3.8 hereto, there are no Tax audits or investigations pending or, to the
knowledge of the Seller or the Shareholder, threatened with respect to the
Seller. Except as set forth on Schedule 3.8 hereto, there is no Tax deficiency
proposed or, to the knowledge of the Seller or the Shareholder, threatened
against the Seller and there has not been any question or issue raised by any
taxing authority in connection with the Seller's Tax Returns. No person
currently holds, with respect to Tax Returns filed, powers of attorney from the
Seller.
(b) No claim has been made by an authority in a jurisdiction where the
Seller does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no
30
Liens on any of the Assets that arose in connection with any failure (or alleged
failure) to pay any Tax.
(c) The following terms used in this Agreement shall have the following
meanings:
(i) "Tax" means any federal, state, local, or foreign income,
unincorporated business, gross receipts, license, payroll, employment,
excise, severance, occupation, premium, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property,
water, sewer, assessment for improvements, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum
or estimated tax, including any interest, penalty, or addition thereto,
whether disputed or not.
(ii) "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
Section 3.9. Insurance.
The Seller maintains insurance which includes coverage of the type and
in amounts customarily carried by persons conducting business similar to that of
the Seller and adequate to insure the value of the Assets. The casualty
insurance for the Real Property is "replacement value" insurance. Such policies
of insurance are valid and enforceable in accordance with their terms, are in
full force and effect and are underwritten by financially reputable insurance
companies. The Seller has not done or failed to do or misrepresented anything
which has or might render any such policies of insurance void or voidable.
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Section 3.10. Accounts Receivable.
All the Accounts Receivable arising prior to the date of the Interim
Financial Statement are properly reflected in the Interim Financial Statement,
arose in the ordinary course of business consistent with past custom and
practice, are not subject to defenses, counterclaims or setoffs, and, except for
the bad debt reserve provided for in the Interim Financial Statement (which is
in all respects adequate and proper in accordance with USGAAP applied on a
consistent basis) are collectible. All Accounts Receivable arising since the
date of the Interim Financial Statement, arose in the ordinary course of
business consistent with past custom and practice are not subject to defenses,
counterclaims or setoffs and are collectible, except for the bad debt reserve to
be reflected in the Closing Balance Sheet. The Purchaser agrees to use
commercially reasonable efforts (but without any requirement to initiate
litigation) to collect the Accounts Receivable. To the extent the Purchaser is
indemnified hereunder for any uncollectible Accounts Receivable, the Purchaser
shall, promptly following receipt of the indemnification with respect thereto,
reassign such uncollected Accounts Receivables to the Seller and the Seller
shall be permitted to attempt to collect same.
Section 3.11. Intellectual Property.
(a) Schedule 3.11 hereto sets forth a true, accurate and complete list
of all patents, trademarks, service marks, trade names (in any case whether
registered or unregistered), registered copyrights, and all licenses,
applications and registrations in connection with the foregoing owned or
utilized by the Seller and a description of the Seller's right of ownership or
use thereof (the "Scheduled Intellectual Property"). The Seller is the sole and
exclusive owner of all the Scheduled Intellectual Property (except that, in the
case of licenses, other
32
persons may hold similar licenses) and except as to matters listed on Schedule
3.11, and has, except as set forth on Schedule 3.11 hereto, sole and exclusive
rights to the use thereof or the material covered thereby in connection with the
services or products in respect of which they are being used or are proposed to
be used. The Seller is the owner of all the Intellectual Property not
constituting the Scheduled Intellectual Property and has the right to the use
thereof or the material covered thereby in connection with the services or
products in respect of which they are being used or are proposed to be used. The
Intellectual Property is free and clear of any Lien and, except as set forth on
Schedule 3.11, no consent of third parties is required for the use thereof by
the Purchaser upon completion of the transactions contemplated hereby.
(b) Except as set forth on Schedule 3.11, no claims have been asserted
by any person or entity to the ownership or use of any of the Intellectual
Property or challenging or questioning the validity or effectiveness of any such
Intellectual Property, and, to the knowledge of Seller and Shareholder, and
except as to matters listed on Schedule 3.11, there is no valid basis for any
such claim. Except as set forth on Schedule 3.11, the Seller has not received
any notices of, nor is it aware of any facts which would give rise to any
infringement or misappropriation by the Seller, or any third party with respect
to the Intellectual Property. To the knowledge of the Seller and the
Shareholder, the use of the Intellectual Property by the Seller has not and does
not infringe on the rights of any person or entity other than disclosed on
Schedule 3.11. There is no pending or, to the knowledge of the Seller or the
Shareholder, threatened claim, nor has it been alleged, that the Seller is
engaged in any infringement other than as disclosed on Schedule 3.11.
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Section 3.12. Litigation.
Except as set forth in Schedule 3.12, there is no legal, administrative,
arbitration or other proceeding or governmental investigation pending or, to the
knowledge of the Seller or the Shareholder, threatened against or affecting the
Seller, the Assets or the transactions contemplated hereby. Except as set forth
in Schedule 3.12 hereto, the Seller is not subject to, nor is there outstanding,
any judgment, award, order, writ, injunction or decree of any court,
administrative agency, governmental body or arbitration tribunal with respect to
the Seller or the Assets which, individually or in the aggregate, exceeds
$5,000.
Section 3.13. Compliance with Applicable Laws; Permits.
The Seller is not in material violation or breach of, and the business
and operations of the Seller comply in all material respects with, all governing
federal, state, local or foreign laws, regulations and ordinances (collectively
"Laws"). Without limiting the generality of the foregoing, the Seller has not
received notice of the violation or breach of any Laws. Schedule 3.13 hereto
sets forth a true, accurate and complete description of the Permits. The Permits
set forth in Schedule 3.13 hereto are the only Permits which individually or in
the aggregate, are necessary to the conduct of the Business and all of such
Permits are in full force and effect. The Seller has not received notice, and,
there is no reason to believe, that any appropriate authority intends to cancel,
terminate or amend any of such Permits or that valid grounds for such
cancellation or termination currently exist.
Section 3.14. Mailing and Customer Lists.
At the Closing, the Seller shall provide Global and the Purchaser with
true, accurate and complete copies of all customer lists and mailing lists
utilized by Seller. Schedule 3.14 hereto sets forth (a) the number of the
customers of the Seller who have purchased products or services
34
from the Seller within (i) the prior twelve (12) month period, and (ii) the
prior twenty-four (24) month period and (b) the number of names on the customer
lists and records and mailing lists owned by the Seller. Except as set forth on
Schedule 3.14 hereto, the Seller has not, directly or indirectly, within the
one-year period immediately preceding the Closing Date, leased, rented,
licensed, disclosed or otherwise disposed of its customer lists and records or
mailing lists to any person or entity engaged in the Business, directly or
indirectly. No more than 5% of the names and entities on each customer list and
record and mailing list are duplicative. The Seller is the sole and exclusive
owner of such customer lists and records and mailing lists and no other person
or entity has an ownership or other proprietary interest therein, or right to
the use thereof and, from and after the Closing Date, the Purchaser shall have
the sole and exclusive ownership and right thereto. None of the information
contained in such customer lists and mailing lists violates or infringes upon
the patent, tradename, trademark, copyright, symbol, trade secret or other
proprietary rights of any other party.
Section 3.15. Employee Compensation.
On or prior to the Closing Date, the Seller shall provide the Purchaser
with a true, accurate and complete list of all persons employed or utilized by
the Seller in the operation of the Business, together with a statement as to the
compensation, commissions or bonuses or benefits currently payable to, or on
behalf of, each such person for services rendered during the current year, all
as of the Closing Date.
Section 3.16. Labor Matters.
(a) There are no collective bargaining agreements in effect with respect
to the Seller. Except as set forth on Schedule 3.16, there is no unfair labor
practice complaint against the Seller with respect to any employee of the Seller
pending or, to the knowledge of the Seller or
35
the Shareholder, threatened before the National Labor Relations Board or any
federal, state, local or foreign agency. There is no strike, labor dispute,
slowdown or work stoppage, grievance or unfair dismissal proceeding, or
arbitration proceeding or representative question or, other organizational
effort pending or, to the knowledge of the Seller or the Shareholder, threatened
against or affecting the Seller. The Seller has no agreement, commitment or
understanding, whether formal or informal, with any union representing workers
of the Seller regarding the sale of the assets of the Business.
(b) Each employee of the Business hired on or after May 1, 1987, and who
actually commenced such employment on or after November 6, 1986, (i) was hired
in compliance with the Immigration Reform and Control Act of 1986 and the rules
and regulations thereunder ("IRCA") and (ii) the Seller has complied with all
recordkeeping and other regulatory requirements under IRCA.
Section 3.17. Agreements and Other Rights.
(a) Schedule 3.17 hereto sets forth a true, accurate and complete list
of each agreement, commitment or arrangement, arising out of the operation of
the Business, whether oral or written, and all amendments thereto, relating to
any: (1) agreement, commitment or arrangement for the sale, lease or sublease of
the Real Property; (2) note, debenture, bond, letter of credit agreement, loan
agreement or other contract or commitment for the borrowing or lending of money
or agreement or arrangement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other person; (3) agreement, commitment
or arrangement for the purchase, rental or leasing by the Seller of materials,
supplies, services, machinery or equipment providing for payment by the Seller
of more than $10,000, under each such agreement, commitment or arrangement,
other than pursuant to purchase orders
36
placed in the ordinary course of the Seller's business consistent with past
practices; (4) agreement, commitment or arrangement for the sale, rental,
leasing, licensing or distribution of (i) the Business's products, services,
other than pursuant to purchase orders placed in the ordinary course of the
Business consistent with Seller's past practices, or (ii) the Intellectual
Property; (5) agreement, commitment or arrangement for any capital expenditure
or leasehold improvement providing for payment of $10,000 or more in each
instance; (6) agreement, commitment or arrangement which contains any covenant
on the part of any of the Seller or any of its officers, employees and
consultants not to compete in a certain geographic area, during a certain time
period, in a certain business or otherwise restricts the use of confidential
information used in the Business; (7) written agreement, contract or commitment
with any employee, agent or consultant and any oral agreement, contract or
commitment with any employee, agent or consultant that is not "at will"
(collectively, the "Material Contracts").
(b) The Seller has delivered to the Purchaser true, accurate and
complete copies of each of the Material Contracts. All Contracts have been duly
authorized and delivered by the Seller, are in full force and effect and
constitute the valid and binding obligations of the Seller enforceable in
accordance with their respective terms against the Seller. As to the Material
Contracts, except as set forth on Schedule 3.17, (1) there are no existing
breaches or defaults by Seller, and to Seller's and Shareholder's knowledge, by
any other party thereunder, and (2) no event, act or omission has or, as a
result of the consummation of the transactions contemplated hereby or the
Seller/Shareholder Related Documents, will occur which (with or without notice,
lapse of time or the happening or occurrence of any other event) would result in
a material default thereunder, give cause for termination thereof or permit the
acceleration of any obligation thereunder.
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Section 3.18. Employee Benefit Plans.
(a) Schedule 3.18 hereto sets forth a list of each "employee benefit
plan" as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and every other retirement or
deferred compensation plan, incentive compensation plan, stock plan,
unemployment compensation plan, vacation pay, severance pay, bonus or benefit
arrangement, insurance or hospitalization program or other fringe benefit
arrangements for any employee, officer, director, consultant or agent, whether
oral or written, which is maintained, administered or contributed to by the
Seller or for which the Seller has any existing or contingent liability for
benefits, in each case as it relates to an employee of the Seller. Such benefit
plans shall include any such plans that are subject to the laws of the United
States and/or any other jurisdiction and are hereinafter collectively referred
to as the "Benefit Plans."
(b) Except as set forth on Schedule 3.18, no Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan"). No "accumulated funding deficiency," as defined in
Section 412 of the Internal Revenue Code (the "Code"), has been incurred with
respect to any Pension Plan, whether or not waived. No "reportable event,"
within the meaning of Section 4043 of ERISA, and no event described in Section
4041, 4042, 4062, 4063 or 4064 of ERISA has occurred in connection with any
Benefit Plan. No condition exists and no event has occurred that could
constitute grounds for termination (other than at the option of the Seller) of
any Benefit Plan. The Seller has not incurred any liability under Title IV of
ERISA arising in connection with the termination of any plan covered or
previously covered by Title IV of ERISA which covers any employees of the
Seller. Except as set forth on Schedule 3.18, or as otherwise disclosed in the
Interim
38
Financial Statement, there are no unfunded liabilities for benefits under any
Benefit Plan that is not fully insured. No "prohibited transaction" as defined
in Section 406 of ERISA and Section 4975 of the Code has occurred with respect
to any Benefit Plan or any other employee benefit plan or arrangement covering
any employee of the Seller which is covered by Title I of ERISA, excluding
transactions effected pursuant to a statutory or administrative exemption.
(c) Each Benefit Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to the date hereof and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Each Benefit Plan has
been maintained in substantial compliance with its terms and the requirements
prescribed by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Code or the laws of any other jurisdiction, which
are applicable to such Benefit Plans. There are no actions, suits or claims
(other than routine claims for benefits) pending or to Seller's or the
Shareholder's knowledge threatened involving any Benefit Plans or the assets of
any Benefit Plan, and neither the Seller nor the Shareholder has knowledge of
any facts that exist which could give rise to any such actions, suits or claims.
(d) Except as set forth on Schedule 3.18, there has been no amendment
to, interpretation or announcement (whether written or not) by the Seller
relating to, or change in employee participation or coverage under, any Benefit
Plan which would increase materially the expense of maintaining such Benefit
Plan above the level of the expense incurred in respect thereof for the current
fiscal year.
(e) Except as set forth on Schedule 3.18, the Seller has not taken any
action that could be deemed to trigger any, and the purchase and sale of the
Assets and the assumption of the
39
Assumed Liabilities hereunder and the consummation of the transactions
contemplated hereby will not be deemed to trigger any, severance or change in
control or other benefits under any of such Benefit Plans.
Section 3.19. Environmental.
(a) The Seller has obtained all Permits which are required in connection
with the conduct of the Seller under all federal, state and local rules,
regulations and laws (collectively "Environmental Laws") relating to pollution
or protection of the environment, including Environmental Laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
groundwater, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
(b) The Seller is in material compliance in the conduct of the Business
with all Environmental Laws and is also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder.
(c) Neither the Seller nor the Shareholder is aware of, nor has the
Seller received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent compliance or continued compliance with the
Environmental Laws or any regulations, code, plan, order, decree,
40
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste, whether related to the
Business, or affecting the Real Property from on-site or off-site sources.
(d) There is no, and, since August 31, 1992, there has not been any,
civil, criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation, or proceeding pending or
to the knowledge of the Seller or the Shareholder, threatened against the Seller
in connection with the conduct of the Business relating in any way to the
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
Section 3.20. Suppliers.
Schedule 3.20 hereto sets forth a true, accurate and complete list of
the top thirty (30) suppliers of materials or services with respect to the
business and operations of the Seller (by purchase amount for the twelve month
period ended August 31, 1997). Except as set forth on Schedule 3.20, none of the
top fifty (50) suppliers (by purchase amount for the twelve (12) month period
ended prior to the Closing Date) has advised the Seller within the past year
that it will or may stop or decrease the rate of supply, materials, products or
services to the Seller.
41
Section 3.21. Inventory.
Schedule 3.21 hereto sets forth a true, accurate and complete list of
the Inventory, as of August 31, 1997, by SKU, categorized by Seller's Sales
Analysis Group. The Inventory reflected in the Interim Financial Statement and
on the books and records of the Seller, and acquired or created since the date
of the Interim Financial Statement: (a) was acquired and has been maintained in
the ordinary course of the Business consistent with past custom and practice;
(b) consists or consisted of items of a quality and quantity usable and saleable
in the ordinary course of the Business consistent with past custom and practice
of the Seller; and (c) has been reflected on the books and records of the Seller
at the lower of cost or market value, in accordance with USGAAP.
Section 3.22. Global Documents.
Global has distributed to the Seller and the Shareholder, and the
Seller and the Shareholder have had an opportunity to review, prior to the
execution and delivery of this Agreement, Global's Form 10-K for the year ended
December 31, 1996, Form 10-Q for the quarter ended March 31, 1997, Form 10-Q for
the quarter ended June 30, 1997, the Proxy Statement for the 1997 Annual Meeting
of Stockholders, the Final Prospectuses dated June 26, 1995 and March 20, 1996,
and the Annual Report to Shareholders for the year ended December 31, 1996, each
as filed by Global with the Securities and Exchange Commission, together with
any amendments thereto.
Section 3.23. Investment Intent.
(a) All shares of Global Stock to be acquired by the Seller pursuant to
this Agreement are being acquired by the Seller solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof other than in compliance with federal and
42
state securities laws. The Seller acknowledges that the shares of Global Stock
delivered to or to be delivered to the Seller hereunder have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any state or other jurisdiction, and that all such shares of
Global Stock bear a legend in substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT WITH
RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER THE SECURITIES
ACT, OR THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) The Shareholder understands that the shares of Global Stock being
offered pursuant to this Agreement are being offered privately by Global
pursuant to the private placement exemption provided in Section 4(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder by the
Securities and Exchange Commission. The Seller is an "Accredited Investor" as
such term is defined in Regulation D. The Seller shall be permitted to transfer
the shares of Global Stock issued to the Seller hereunder to the current (as of
the date hereof) shareholders of the Seller and to the current (as of the date
hereof) participants in the Seller's 1996 Special Incentive Plan; provided,
however, that each such transfer is made pursuant to a private placement
exemption under the Securities Act, in accordance with all applicable securities
laws, rules and regulations, including but not limited to, obtaining appropriate
investment representations from such transferees, and each such
43
transferee to which any of the Escrow Stock has been transferred shall have
executed a counterpart of the Escrow Agreement and shall have agreed to be bound
by the terms thereof.
Section 3.24. Finders' Fee.
Except for Carleton, McCreary, Xxxxxx & Co. (the "Broker"), there is no
investment banker, broker, finder or other intermediary which has been retained
by, or is authorized to act on behalf of, the Seller who is or might be entitled
to any fee or commission from the Purchaser or Global upon the consummation of
the transactions contemplated by this Agreement. The Seller shall be solely
responsible for the payment of all fees of the Broker.
Section 3.25. Bulk Sales.
The State of Ohio does not have any Bulk Sales Law or substantially
similar law applicable to creditors rights in connection with the sale of all or
substantially all of the assets of a business or entity. Neither the Seller, the
Purchaser, Global nor the transactions contemplated hereby are subject to, or
must comply with, any such law.
ARTICLE 4.
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER AND GLOBAL
The Purchaser and Global hereby, jointly and severally, represent and
warrant to, and agree with, the Seller as follows:
Section 4.1. Authorization; Organization; Standing.
The Purchaser and Global each have the power and authority to enter into
this Agreement and each other agreement contemplated to be executed by the
Purchaser and Global, as applicable, in connection herewith (the "Purchaser
Related Agreements"), and to carry out the transactions contemplated hereby and
thereby and this Agreement and each of the Purchaser Related Agreements
constitutes the legal, valid and binding obligation of the
44
Purchaser and Global, as applicable, enforceable in accordance with its terms.
The Purchaser and Global are each corporations duly organized, validly existing
and in good standing under the laws of the State of Delaware. The total
authorized capital stock of Global consists of 150,000,000 shares of Common
Stock, par value $0.01 per share, of which 37,857,284 shares are outstanding and
25,000,000 shares of Preferred Stock, of which 0 shares are outstanding. The
total authorized capital stock of the Purchaser consists of 1,500 shares of
Common Stock, no par value. The outstanding shares of capital stock of the
Purchaser consist of 100 shares of common stock, all of the which are owned by
Global. All of such issued and outstanding shares have been duly authorized and
validly issued. The Purchaser and Global each have the corporate power and
authority to own and lease their properties and to carry on their business as
now conducted. The execution, delivery and performance by the Purchaser and
Global, as applicable, of this Agreement and each of the Purchaser Related
Agreements and the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Purchaser and
Global.
Section 4.2. Contravention; Consents and Approvals.
Except for filings and/or approvals under applicable securities laws and
filings required to be made pursuant to the Xxxx-Xxxxx-Xxxxxx Anti-trust
Improvements Act of 1976 ("HSR") (the "Global Consents"), no further filing,
action, consent or approval of any person, entity or governmental body is
required by the Purchaser or Global for the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby by the
Purchaser or Global. Subject to obtaining the Global Consents, the execution and
delivery of this Agreement by the Purchaser and Global and the consummation of
the transactions contemplated hereby by the Purchaser and Global will not result
in a breach of the terms or
45
conditions of, or constitute a default under, or violate, (a) any material
provision of any law, regulation or ordinance, (b) the Articles of Incorporation
or By-laws of Global or the Purchaser, (c) except as set forth on Schedule 4.2
hereto, any agreement, lease, mortgage or other instrument or undertaking, oral
or written, to which the Purchaser or Global is a party or by which their
properties or assets are or may be bound or affected, or (d) any material
judgment, order, writ, injunction or decree of any court, administrative agency
or governmental body.
Section 4.3. Global Stock.
All of the shares of Global Common Stock to be issued to the Seller as
contemplated by this Agreement will, upon delivery, be duly authorized and
validly issued, fully paid and non-assessable, free and clear of all Liens
(except as contemplated by this Agreement) and, based upon the accuracy of the
Seller's investment representation, issued in compliance with federal and state
securities laws.
Section 4.4. Finders' Fee.
There is no investment banker, broker, finder or other intermediary
which has been retained by, or is authorized to act on behalf of, the Purchaser
or Global or any of their affiliates who might be entitled to any fee or
commission from the Seller or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
Section 4.5. Absence of Material Adverse Change.
Except as set forth on Schedule 4.5, since June 30, 1997, there has been
no material adverse change in the condition (financial or otherwise), results of
operations, or business of Global.
46
Section 4.6. Computation of Purchaser's Earnings.
To the best knowledge of Global and the Purchaser, the calculation of
Purchaser's Earnings in accordance with the past practice of Global should not
be materially different than the calculation of such earnings in accordance with
the past practices of the Seller, in accordance with USGAAP, except that, the
parties acknowledge and agree that the Purchaser's Earnings shall be adjusted as
provided in this Agreement, whether or not such adjustments may be deemed
material.
ARTICLE 5.
COVENANTS OF THE SELLER
The Seller and the Shareholder, jointly and severally, covenant and
agree that:
Section 5.1. Conduct of the Business.
From the date hereof until the Closing Date, the Seller shall conduct
the Business in the ordinary course consistent with past practice and will
preserve the business, operations and goodwill of the Seller and the
relationships with third parties, including, but not limited to, its
relationship with customers and suppliers, and utilize its reasonable commercial
efforts to keep available and retain all present employees of the Seller.
Without the prior written consent of the Purchaser, from the date hereof until
the Closing Date, the Seller shall not do any of the following acts:
(a) Except as required by plans disclosed to Purchaser, (1) grant or
pay any bonus, severance or termination pay or increase in compensation, bonus
or other benefits payable to, or (2) enter into or amend any employment
agreement or Benefit Plan with, any of the officers, employees, consultants or
agents of the Seller;
47
(b) except as contemplated hereby, sell, lease, rent, license, dispose
of, mortgage, transfer pledge or subject to Liens, any of the Assets (except for
sales of Inventory in the ordinary course of business consistent with past
custom and practice and dispositions of Tangible Property in the ordinary course
of business consistent with past custom and practice, none of such dispositions,
individually or in the aggregate, being material to the Business);
(c) merge or consolidate with, or agree to merge or consolidate with,
or purchase or agree to purchase, all or substantially all of the assets of, or
otherwise acquire, any corporation, partnership or other business organization;
(d) engage in any transactions, or make any commitment or enter into
any contract, affecting the Business or the Assets not in the ordinary course of
business consistent with past custom and practice;
(e) make any material capital expenditure (or series of related capital
expenditures);
(f) enter into any agreement or commitment with respect to the
Scheduled Intellectual Property or any agreement or commitment, that is,
individually or in the aggregate, material to the Business, with respect to the
Intellectual Property that does not constitute Scheduled Intellectual Property;
(g) amend, modify, terminate (except through performance in the
ordinary course of the Seller's business) or otherwise relinquish any rights in
connection with any of the Contracts;
(h) adopt any change in its accounting methods or practices;
(i) otherwise take any of the actions set forth in Section 3.7 hereof
(except that the Seller may authorize and pay dividends as set forth on Schedule
3.7 hereto);
48
(j) dispose of any cash except in the ordinary course of the Business
consistent with past practice;
(k) enter into any software licensing agreement or commitment, except
shrink-wrap licensing agreements with respect to off-the-shelf programs; or
(l) agree, whether or not in writing, to do any of the foregoing.
Section 5.2. Investigations.
The Seller shall, upon prior notice, afford to Global and its
representatives free and full access during regular business hours to all of the
books, records, contracts, documents, personnel and properties of the Seller.
The Seller will use its reasonable commercial efforts to cause the employees,
accountants, attorneys and other representatives of the Seller to cooperate
fully with Global and to make full disclosure to Global of all material facts
affecting the business properties and financial condition of the Seller, as
Global shall reasonably request.
Section 5.3. Pre-Closing Maintenance of Insurance.
From the date hereof through the Closing Date, the Seller shall
maintain in force (including necessary renewals thereof) all insurance policies.
Section 5.4. Notification of Certain Matters.
The Seller shall give prompt notice to the Purchaser of the occurrence,
or failure to occur, of any event which occurrence or failure would be likely to
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any respect any time from the date hereof to the Closing
Date and Seller will deliver to the Purchaser, as soon as possible after the
Seller becomes aware thereof, but not later than at the Closing, such
information as is necessary to update the information set forth in the Schedules
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hereto, so that such Schedules will be true, accurate and correct as of the
Closing Date as if then made (except that Schedules that speak as of a specified
date may continue to speak as of such date); provided that the foregoing shall
not be deemed to permit any transaction not otherwise permitted by this
Agreement or to constitute a waiver by the Purchaser or Global of any
misrepresentation or breach by the Seller or the Shareholder of any agreement,
covenant, representation or warranty made herein, when made.
Section 5.5. Consents.
The Seller shall use reasonable commercial efforts to obtain all
consents, approvals and waivers of third parties or authorities, including, but
not limited to, those set forth in Schedule 3.2 hereto, required to be obtained
pursuant to this Agreement on or prior to the Closing.
Section 5.6. Covenant Not to Compete.
For the period beginning on the Closing Date and for a period of four
(4) years thereafter (the "Non-Compete Period"), neither the Seller nor the
Shareholder nor any business corporation, partnership or entity controlled by
the Seller or the Shareholder will, (i) directly or indirectly compete, anywhere
in the United States (the "Territory"), directly or indirectly, as an officer,
director, shareholder, partner, investor, agent, employee or otherwise, as
applicable, with Global or any of its affiliates in the business or activities
in which the Seller is engaged (the "Seller's Business") or in which Global and
its affiliates are engaged on the Closing Date (the "Global Business"); (ii)
directly or indirectly, as an officer, director, shareholder, partner, investor,
agent, employee or otherwise, as applicable, of any other person or entity,
contact or approach any person or business, wherever located, for the purpose of
competing with the Seller's Business or the Global Business, in the Territory;
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(iii) participate as an officer, director, shareholder, partner, investor,
agent, employee or otherwise, as applicable, or have any other direct or
indirect financial interest in, any enterprise which engages in the Seller's
Business or the Global Business except for investments up to two percent (2%) of
the capital stock of any corporation (other than the capital stock of Global as
to which this Section 5.6(iii) shall not apply), required to file reports
pursuant to the Securities Exchange Act of 1934; or (iv) hire, solicit or
encourage to leave the employment of Global, Purchaser or any of their
respective affiliates, any employee or agent of Global or Purchaser or any of
their respective affiliates.
Section 5.7. Exclusivity; Press Releases.
The Seller and the Shareholder agree that the Purchaser shall have the
exclusive right through the Closing Date (or the earlier termination of this
Agreement pursuant to Article 10 hereof), to consummate the transactions
contemplated herein, and during such exclusive period, neither the Seller nor
the Shareholder (nor their agents, consultants or representatives) shall
solicit, encourage or initiate any discussions with, or provide any information
to, or accept any other offer from, any corporation, partnership, person or
entity or group (a "Third Party") respecting a merger, consolidation, sale of
all or substantially all of the assets or capital stock of the Seller, or other
acquisition or business combination involving the Seller, other than as
contemplated by this Agreement. No party hereto shall issue any press release or
other public statement with respect to the transactions contemplated hereby
without the prior consent of the other; provided, however, that Global and the
Purchaser shall issue such press releases or other public statements without the
prior consent of the Seller or the Shareholder, if, in the sole opinion of
Global, such is or may be required pursuant to applicable law. In such event,
Global shall provide the Seller with prior notice thereof.
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Section 5.8. Non-Disclosure.
(a) Until the Closing Date, and thereafter, and, if the Closing shall
not occur for any reason whatsoever, from and after the date hereof, and except
as the Purchaser may agree to and as may otherwise be required, in the opinion
of counsel to the Seller, to be disclosed pursuant to applicable Federal, state
or local laws, neither the Seller nor any of its officers, directors,
shareholders, successors, assigns or affiliates will, directly or indirectly,
communicate or make available to anyone other than to those of the Seller's
directors, affiliates, officers, employees, agents, and advisors who require
such material for the purpose of evaluating and consummating the transaction
described herein and negotiating this Agreement, any trade secret or other
proprietary or confidential information with respect to the Purchaser or Global,
or any of their affiliates, including, without limitation, all information
acquired by the Purchaser as a result of the transactions contemplated by this
Agreement (the "Acquired Confidential Information"), the present products,
services, designs or styles, inventions, improvements, know-how, processes,
customers, suppliers, methods of operation, marketing or distribution, systems,
procedures, policies or methods of manufacture of the Purchaser or Global
(collectively, "Purchaser's Confidential Information"); provided, however, that
Purchaser's Confidential Information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
the Seller) or, except with respect to the Acquired Confidential Information,
becomes available to the Seller or the Shareholder on a non-confidential basis
from a source other than the Purchaser, Global or their representatives or
agents, provided that such source is not bound by a confidentiality agreement
with the Purchaser, Global, their representatives or agents. If the Closing does
not occur for any reason whatsoever, all documents, copies thereof and notes or
memorandum
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documents containing such information shall promptly, upon request by the
Purchaser, thereafter be returned to the Purchaser.
(b) Until the Closing Date and, if the Closing shall not occur for any
reason whatsoever, from and after the date of termination of the Agreement, and
except as the Seller may agree to and as may otherwise be required, in the
opinion of counsel to the Purchaser or Global, to be disclosed pursuant to
applicable Federal, state or local laws, neither Global nor the Purchaser nor
any of their officers, directors, shareholders, successors, assigns or
affiliates will, directly or indirectly, communicate or make available to anyone
other than to those of their directors, affiliates, officers, employees, agents,
and advisors who require such material for the purpose of evaluating and
consummating the transaction described herein and negotiating this Agreement,
any trade secret or other proprietary or confidential information with respect
to the Seller, or any of its affiliates, including, without limitation, the
present products, services, designs or styles, inventions, improvements,
know-how, processes, customers, suppliers, methods of operation, marketing or
distribution, systems, procedures, policies or methods of manufacture of the
Seller (collectively, "Seller's Confidential Information"); provided, however,
that Seller's Confidential Information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
the Purchaser or Global) or becomes available to the Purchaser or Global on a
non-confidential basis from a source other than the Seller or its
representatives or agents, provided that such source is not bound by a
confidentiality agreement with the Seller, its representatives or agents. If the
Closing does not occur for any reason whatsoever, all documents, copies thereof
and notes or memorandum documents containing such information shall promptly,
upon request by the Seller, thereafter be returned to the Seller.
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Section 5.9. Acknowledgment; Severability.
The parties acknowledge that the restrictions contained in Sections
5.6, 5.7 and 5.8 are reasonable and necessary to protect the business and
interests of the parties, as applicable, and that any violation of these
restrictions will cause substantial and irreparable injury to the non-breaching
party. Therefore, the parties agree that the non-breaching party shall be
entitled, in addition to any other remedies, to preliminary and permanent
injunctive relief to secure specific performance, and to prevent a breach or
threatened breach, of Sections 5.6, 5.7 and 5.8. The restrictions set forth
herein shall be construed as independent covenants, and the existence of any
claim or cause of action against the non-breaching party, whether predicated
upon this Agreement or otherwise, shall not constitute a defense to the
enforcement of the restrictions contained in Sections 5.6, 5.7 and 5.8. In the
event that the provisions of Sections 5.6, 5.7 and 5.8 should ever be deemed to
exceed the time or geographic limitations or any other limitations permitted
under applicable laws, then such provisions shall be deemed reformed to the
maximum extent permitted by applicable laws.
Section 5.10. Excluded Liabilities.
The Seller agrees to pay, perform and discharge the Excluded
Liabilities, as and when due; provided that the Seller shall be entitled to
assert all rights, remedies and defenses that either the Seller or the Purchaser
may have with respect to the performance of such obligations and; provided
further, that the Seller shall have the right to contest in good faith any of
the Excluded Liabilities.
Section 5.11. Transfer Taxes.
The Purchaser shall be responsible for, and shall promptly pay when due,
all sales taxes assessed or payable in connection with the transfer and sale of
the Assets (but excluding
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the Real Property). The Seller shall be responsible for, and shall promptly pay
when due, all real property transfer taxes assessed or payable in connection
with the transfer and sale of the Real Property.
Section 5.12. Cash.
On the Closing Date, the Assets consisting of cash shall be wire
transferred from the Seller's account(s) to account(s) designated by the
Purchaser minus an amount necessary for purposes of covering outstanding checks
issued by the Seller prior to the Closing Date. The Seller agrees to reimburse
the Purchaser for those outstanding checks of the Seller issued prior to the
Closing Date which are not presented for collection within three (3) months of
the issue date of such check.
Section 5.13. Customer and Mailing Lists.
On or prior to the Closing Date, the Seller shall submit its customer
lists and mailing lists to List Maintenance Inc. for purposes of determining the
percentage of duplicative entries therein and merging and consolidating such
lists, as applicable. On or prior to the Closing Date, the Seller shall provide
the Purchaser with the written results of the forgoing (which shall indicate the
percentage of duplicative entries on each customer list and mailing list),
certified by List Maintenance Inc. The cost of the foregoing shall be paid by
the Seller only if the results indicate duplicative entries of more than five
(5%) percent, otherwise the cost shall be paid by the Purchaser.
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ARTICLE 6.
ADDITIONAL COVENANTS
Section 6.1. Books and Records.
Until the expiration of three (3) years from the Closing Date, with
respect to the Acquired Books and Records, the Purchaser will retain and, as the
Seller may reasonably request, permit the Seller at its expense on prior written
notice during normal business hours (but at such time as shall be acceptable to
the Purchaser in its sole discretion) to inspect and copy the Acquired Books and
Records for purposes of preparing its tax returns; paying, assessing or
contesting any of the Excluded Liabilities; or responding to any audit or
informational request regarding its tax returns or any judicial proceeding in
which it is a party; provided that such inspection and copying does not
interfere with the operations of the Purchaser. At any time after the third
(3rd) anniversary of the Closing Date, the Purchaser shall be permitted to
destroy such books and records; provided, however, that, subject to the
limitations set forth in the first sentence hereof, the Shareholder shall be
permitted to retain such books and records the Purchaser intends to destroy if
the Shareholder notifies the Purchaser of same prior to the expiration of the
third (3rd ) anniversary of the Closing Date.
Section 6.2. Employees.
(a) Without limiting the provisions of Section 1.2 hereof, it is
understood and agreed that, except for the Purchaser's agreement to employ Xxxx
X. Xxxxxx, Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxxxxxx pursuant
to an Employment Agreement substantially in the form annexed hereto as Exhibit
B, the Purchaser shall not be required to offer employment to any or all of the
employees of the Seller, but, on or prior to the Closing Date, the Purchaser
shall determine which, if any, of the employees of the Seller, in its sole
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discretion, it may offer employment to. Nothing in this Agreement shall be
deemed to require the Purchaser to retain any of the employees for any period of
time or at any particular compensation rate or in any particular position,
except pursuant to the Employment Agreements.
(b) To the extent that the Purchaser employs any of the employees of
the Seller, the Purchaser shall give to such employees credit for periods of
service with the Seller, in accordance with the employee benefit plans
maintained by the Purchaser.
(c) With respect to employees of the Seller that are hired by the
Purchaser ("Transferred Employees"), Seller shall transfer to the Purchaser any
records relating to withholding and payment of income and unemployment Taxes
(federal, state and local) and FICA Taxes with respect to wages paid to the
Transferred Employees by the Seller during 1997 (including, without limitation,
Forms W-4, Employee's Withholding Allowance Certificates)
Section 6.3. Financial Statements.
Seller shall provide Global, within 30 days after Global's written
request therefor, with such financial statements relating to the Business as may
be required by Global pursuant to the Securities Act and The Securities Exchange
Act of 1934 (the "Exchange Act"), in connection with the preparation and filing
of any registration statement or periodic report by Global pursuant to the
Securities Act and the Exchange Act. The cost of preparing any such financial
statements shall be shared equally by Global and the Seller; provided, however,
that such cost to the Seller shall not, in any event, exceed $10,000 in the
aggregate.
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Section 6.4. Power of Attorney.
From and after the Closing Date, the Seller agrees to transfer or
deliver to the Purchaser, from time to time and promptly upon receipt thereof,
any cash or other property or assets that the Seller may receive after the date
hereof relating to the Assets, including, without limitation, accounts
receivable or other payments of any nature whatsoever for performance of
services rendered by or on behalf of the Seller, including, without limitation,
in respect of any claims, contracts, leases, licenses, permits, authorizations,
arrangements or commitments of any kind or character which are included in the
Assets or any other item included in the Assets. The Seller hereby constitutes
and appoints the Purchaser, its successors and assigns, the true and lawful
attorney or attorneys of the Seller, with full power of substitution, having
full right and authority, in the name of the Seller or otherwise, and for the
benefit of the Purchaser, its affiliates, successors and assigns: to collect and
obtain for the account of the Purchaser any and all claims, contracts, leases,
licenses, permits, authorizations, arrangements or commitments included in the
Assets of any kind or character and any other items included in the Assets,
including without limitation any amounts payable as interest in respect thereof.
The Seller hereby declares that the foregoing powers shall be coupled with an
interest and shall be irrevocable by it or by its subsequent dissolution or in
any manner or for any reason. From and after the Closing Date, the Purchaser may
retain for its own account any amounts collected pursuant to the foregoing
powers including any amounts payable as interest in respect thereof. Without
limiting the foregoing, from and after the Closing Date, pursuant hereto, the
Purchaser shall have the right and authority to endorse the name of the Seller
on any check or any other evidence of indebtedness received by the Purchaser on
account of the Assets.
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Section 6.5. Title Insurance.
The Purchaser shall order a title insurance commitment from a company
licensed to do business in the State of Ohio (the "Title Insurer"), indicating
the current status of legal title to the Real Property. The Purchaser's
obligations hereunder shall be conditioned upon the Title Insurer's ability to
issue a policy of fee title insurance in the amount of the allocation for the
Real Property set forth in Schedule 3.4(a) hereto, insuring the Purchaser's fee
title interest in the Real Property, free and clear of any Liens other than the
Real Property Permitted Exceptions (which as to the Real Property Permitted
Exceptions set forth in clauses (ii) and (iii) of Section 3.4(a) shall mean only
those matters which will not materially reduce the value of the Real Property or
which will not materially impair the ability of the Purchaser to use the same in
the conduct of the Business). The Purchaser may also obtain (and if obtained
provide to the Seller a copy of) an "as built" title survey certified to
Purchaser, Seller, Global and the Title Insurer indicating the description of
the Real Property and otherwise in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by ALTA and
ACSM in 1992, and including scale, date, North arrow, legend, easements with
recording data, encroachments, original surveyors signature and seal, any field
notes, the area of land, vicinity sketch of the nearest intersection, locations
of all buildings from boundaries, paved parking area and number of spaces, and
other characteristics of surveys of commercial real estate in the local area.
The cost of the title insurance commitment (including title search and
examination fees), the title policy, survey and legal description shall be
shared equally by the Purchaser and Seller. Notwithstanding the foregoing, in no
event shall the Seller be required to pay any portion of the cost of (a)
endorsements to or special coverage under the title policy that the Purchaser
desires to obtain
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or (b) the title insurance commitment (including title search and examination
fees), survey or legal description, if the Closing shall not occur by reason of
the Purchaser's default hereunder or if this Agreement shall be terminated by
the Purchaser by reason of the failure to satisfy any of the Purchaser's
conditions hereunder. With respect to the matters described in clauses (a) and
(b) above, Purchaser shall pay all such costs.
Section 6.6. Closing Conditions.
Each of the parties hereto, as applicable, shall use commercially
reasonable efforts to satisfy the conditions to the other party's obligation to
close required to be performed or satisfied by such party, as applicable.
Section 6.7. Rule 144.
From the Closing Date, until the expiration of two years thereafter,
Global shall satisfy the current information requirements of Rule 144.
Section 6.8. Listing of Global Stock.
Global shall use commercially reasonable efforts, subject to applicable
rules and regulations, to cause the Closing Date Stock to be listed on the New
York Stock Exchange.
Section 6.9. 401(k) Plan.
On or prior to the Closing Date, the Seller agrees that the Seller's
401(k) Plan shall be terminated with respect to the employees hired by the
Purchaser and the Purchaser shall establish a separate plan for the benefit of
any employees of the Seller hired by the Purchaser on or after the Closing Date
on such terms and conditions as the Purchaser shall determine. The employees of
the Seller who are hired by the Purchaser shall be given the opportunity to roll
their accounts under the Seller's 401(k) plan into the 401(k) plan established
by the Purchaser.
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ARTICLE 7.
CONDITIONS TO THE
OBLIGATIONS OF THE PURCHASER AND GLOBAL
The obligations of the Purchaser and Global under this Agreement shall
be subject to the following conditions which may be waived in whole or in part
by the Purchaser and Global at their election:
Section 7.1. Bring Down of Representations and Performance of Agreements.
Each of the representations and warranties made by the Seller and the
Shareholder in this Agreement that are qualified as to materiality shall be true
and correct in all respects on the Closing Date as if made on the Closing Date,
as modified in accordance with Section 5.4 and each of the representations and
warranties made by the Seller and the Shareholder in this Agreement that are not
qualified as to materiality shall be true and correct in all material respects
on the Closing Date as if made on the Closing Date, as modified in accordance
with Section 5.4. All obligations required to be performed by the Seller and the
Shareholder on or prior to the Closing Date shall have been performed in all
material respects and the Purchaser and Global shall have received a
Certificate, dated the Closing Date, signed by a duly authorized officer of the
Seller and the Shareholder certifying to the foregoing.
Section 7.2. Material Adverse Change.
Except as disclosed in Schedule 3.7 (as of the date hereof only), since
the date of the Interim Financial Statement, there shall not have been, and on
the Closing Date shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in, any material adverse
change in the condition (financial or otherwise), Assets, results of operations
or business of the Seller.
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Section 7.3. Consents.
All material filings, approvals, authorizations and consents set forth
in Schedule 3.2 hereto shall have been obtained and the Purchaser and Global
shall have been furnished with appropriate evidence, reasonably satisfactory to
it, of the granting of such approvals, authorizations and consents. For purposes
hereof, all filings, approvals, authorizations and consents with respect to the
Intellectual Property licenses (except shrink-wrap licenses for off-the-shelf,
retail software programs), software licenses, Real Property Leases and the
vendor agreements set forth on Schedule 7.3 hereto shall be deemed material.
Section 7.4. HSR Approval.
The waiting period required pursuant to HSR shall have expired or the
parties shall have received early termination of the waiting period.
Section 7.5. Real Property.
The Seller shall have executed and delivered a Limited Warranty Deed
(the "Deed") for the Real Property wherein the Limited Warranty Covenants of the
Seller shall be subject to the Real Property Permitted Exceptions; together with
all required tax returns and checks for the relevant taxing authority, the
customary owner's affidavit as to mechanics' and materialmen's liens and parties
in possession required by the Title Insurer as a condition to its deletion of
the standard exceptions relating to such liens and possession from the title
policy, an IRS 1099 form, and a FIRPTA affidavit, and other documentation
normally given by sellers of real property in Miami County, Ohio.
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Section 7.6. Employment Agreements.
Xxxx X. Xxxxxx, Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxxxxxxxx shall have executed and delivered an Employment Agreement
substantially in the form annexed hereto as Exhibit B.
Section 7.7. No Injunction, etc.
No action, suit or proceeding shall have been instituted by any person
or entity, or threatened by any governmental agency or body, before a court or
governmental body, to restrain, prevent, delay or restructure the transactions
contemplated by this Agreement or which seeks other relief with respect to any
of such transactions. On the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court of governmental agency or
body in effect which restrains or prohibits the consummation of this Agreement.
Section 7.8. Escrow Agreement.
The Seller and the Shareholder, shall have executed and delivered to
the Purchaser and Global the Escrow Agreement in the form annexed hereto as
Exhibit A and the Escrow Stock shall have been delivered to the Escrow Agent.
Section 7.9. Xxxx of Sale.
The Seller shall have executed and delivered to the Purchaser the Xxxx
of Sale in the form annexed hereto as Exhibit C.
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Section 7.10. Assignment and Assumption Agreement.
The Seller shall have executed and delivered to the Purchaser the
Assignment and Assumption Agreement in the form annexed hereto as Exhibit D.
Section 7.11. Opinion of Seller's Counsel.
The Seller shall have delivered to the Purchaser the opinion of
Xxxxxxxx Xxxx & Xxxxx LLP, counsel to the Seller and the Shareholder, in form
and substance reasonably satisfactory to Global as to the matters set forth at
Sections 3.1 and 3.2 hereof. Such opinion may contain appropriate qualifications
as to the knowledge of such counsel with respect to Section 3.2.
Section 7.12. Change of Name.
The Purchaser shall have received an Amendment (in form suitable for
filing and duly executed by an authorized officer of the Seller) to the Articles
of Incorporation of the Seller changing its name to a name other than "Infotel"
or any variant thereof.
Section 7.13. Secretary's Certificate.
The Purchaser shall have received a certificate duly executed by the
Secretary or Assistant Secretary of the Seller, certifying as to the resolutions
adopted by the board of directors and the shareholders of the Seller approving
the execution of this Agreement and each of the Seller/Shareholder Related
Documents and the consummation of the transactions contemplated hereby and
thereby, together with copies of such resolutions.
Section 7.14. Vehicles.
The Purchaser shall have received title certificates, duly executed by
the Seller, to each of the vehicles set forth on Schedule 3.5(a) hereto or
otherwise constituting the Assets (together with any other transfer forms
necessary to transfer title to such vehicles).
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Section 7.15. Trademark Assignment.
The Seller shall have executed and delivered to the Purchaser an
Assignment of Patents and Trademarks in form and substance suitable for filing
with the U.S. Patent and Trademark Office and reasonably satisfactory to the
Purchaser.
Section 7.16. Customer and Mailing Lists.
No more than five (5%) percent of the names and entities on each
customer list and record or mailing list shall be duplicative. The Seller shall
have delivered to the Purchaser a true, accurate and complete copy of all
customer lists and records and mailing lists.
Section 7.17. Special Incentive Plan.
Xxxx X. Xxxxxxx, Global, the Purchaser and the Seller shall have
entered into an agreement substantially in the form annexed hereto as Exhibit E
with respect to the Infotel, Inc. 1996 Special Incentive Plan.
Section 7.18. Delivery of Assets.
The Seller shall have delivered the Assets to the Purchaser at the
Premises or as otherwise specifically provided for herein.
Section 7.19. Release of Liens.
The Seller shall have provided the Purchaser with such documentation as
shall be reasonably acceptable to the Purchaser, terminating the security
interest and Liens set forth on Schedule 3.5 with respect to the Assets,
including, without limitation, UCC-3 financing statements.
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Section 7.20. Additional Documents.
The Seller shall have executed and delivered to the Purchaser such
other instruments as shall be necessary or desirable in the opinion of the
Purchaser to sell, transfer and assign the Assets to the Purchaser.
ARTICLE 8.
CONDITIONS TO THE SELLER'S AND THE SHAREHOLDER'S OBLIGATIONS
The obligations of the Seller and the Shareholder under this Agreement
shall be subject to the following conditions, which may be waived in whole or in
part by the Seller at its election:
Section 8.1. Bring Down of Representations and Performance of Agreements.
Each of the representations and warranties made by the Purchaser and
Global in this Agreement that are qualified as to materiality shall be true and
correct in all respects on the Closing Date as if made on the Closing Date and
each of the representations and warranties made by the Seller and the
Shareholder in this Agreement that are not qualified as to materiality shall be
true and correct in all material respects on the Closing Date as if made on the
Closing Date. All obligations required to be performed by the Purchaser and
Global on or prior to the Closing Date shall have been performed in all material
respects, and the Seller shall have received a certificate of a duly authorized
officer of the Purchaser and Global, dated the Closing Date, certifying to the
foregoing.
Section 8.2. No Injunction, etc.
No action, suit or proceeding shall have been instituted by any person
or entity, or threatened by any governmental agency or body, before a court or
governmental body, to restrain or prevent the carrying out of the transactions
contemplated by this Agreement or
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which seeks other relief with respect to any of such transactions. On the
Closing Date, there shall be no injunction, restraining order or decree of any
nature of any court or governmental agency or body in effect which restrains or
prohibits the consummation of this Agreement.
Section 8.3. Payment.
The Closing Consideration shall have been paid and/or delivered, as
applicable, to the Seller and the Escrow Agent, as applicable, as provided in
Section 2.4 hereof.
Section 8.4. Assignment and Assumption Agreement.
The Purchaser shall have executed and delivered to the Seller the
Assignment and Assumption Agreement in the form annexed hereto as Exhibit D.
Section 8.5. Escrow Agreement.
The Purchaser, Global and the Escrow Agent shall have executed and
delivered to the Seller the Escrow Agreement in the form annexed hereto as
Exhibit A and the Escrow Stock shall have been delivered to the Escrow Agent.
Section 8.6. Conveyance of Real Property.
The Purchaser shall have delivered the documentation normally given by
purchasers of real property in Miami County, Ohio with respect to the Real
Property.
Section 8.7. Opinion of Purchaser's Counsel.
The Purchaser shall have delivered to the Seller the opinion of Xxxx
Xxxx, Esq., general counsel to Global and the Purchaser, in form and substance
reasonably satisfactory to the Seller and the Shareholder as to the matters set
forth at Sections 4.1, 4.2 and 4.3.
Section 8.8. Piggyback Registration Rights Agreement.
Global shall have executed and delivered to the Seller a Piggyback
Registration Rights Agreement in accordance with the terms set forth on Exhibit
F annexed hereto.
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Section 8.9. Secretary's Certificate.
The Seller shall have received a certificate duly executed by the
Secretary or the Assistant Secretary of the Purchaser and Global, certifying as
to the resolutions adopted by the board of directors and shareholders of the
Purchaser and Global approving the execution of this Agreement and each of the
Purchaser Related Agreements and the consummation of the transactions
contemplated hereby and thereby, together with copies of such resolutions.
Section 8.10. HSR Approval.
The waiting period required pursuant to HSR shall have expired or the
parties shall have received early termination of the waiting period.
Section 8.11. Material Adverse Change.
Except as disclosed on Schedule 4.5 (as of the date hereof only), since
June 30, 1997, there shall not have been, and on the Closing Date there shall
not be in existence, any event, condition or state of facts which could
reasonably be expected to result in, any material adverse change in the
condition (financial or otherwise) results of operations or business of Global.
Section 8.12. Additional Documents.
The Purchaser and Global shall have executed and delivered to the
Seller such other instruments as shall be necessary in the reasonable opinion of
the Seller to consummate the transactions contemplated hereby.
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ARTICLE 9.
INDEMNIFICATION
Section 9.1. Seller's and Shareholder's Indemnification.
The Seller and the Shareholder, jointly and severally, hereby agree to
defend, indemnify and hold harmless the Purchaser, Global and each of their
affiliates, successors and assigns, shareholders, officers, directors and
employees, from and against any liabilities or obligations, damages, losses,
claims, encumbrances, costs or expenses (including reasonable attorneys' fees)
of any nature, whether absolute, contingent or otherwise, and whether arising at
law or in equity (any or all of the foregoing herein referred to as a "Loss"),
to the extent that a Loss (or actions in respect thereof) arises out of or is
based upon (i) any misrepresentation or breach of any of the representations and
warranties made by the Seller and/or the Shareholder in this Agreement or in any
certificate, schedule, exhibit or other document made or delivered by or on
behalf of the Seller and/or the Shareholder pursuant to this Agreement,
including, but not limited to, the Deed; or (ii) the breach of any of the
covenants or agreements of the Seller and the Shareholder contained in this
Agreement or in any certificate, schedule, exhibit or other document made or
delivered by or on behalf of the Seller and/or the Shareholder pursuant to this
Agreement, including, but not limited to, the Deed; or (iii) any of the Excluded
Liabilities; or (iv) the conduct of the Seller's business prior to the Closing
Date (except to the extent arising out of the Assumed Liabilities).
Section 9.2. Purchaser's and Global's Indemnity.
The Purchaser and Global, jointly and severally, hereby agree to
defend, indemnify and hold harmless the Seller and its affiliates, successors
and assigns, shareholders, officers, directors and employees, from and against
any Loss to the extent that such Loss (or actions in
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respect thereof) arises out of or is based upon (i) any misrepresentation or
breach of any of the representations and warranties made by the Purchaser and/or
Global in this Agreement or in any certificate, schedule, exhibit or other
document made or delivered by or on behalf of the Purchaser and/or Global
pursuant to this Agreement; or (ii) any breach of any of the covenants or
agreements of the Purchaser and/or Global contained in this Agreement or in any
certificate, schedule, exhibit or other document made or delivered by or on
behalf of the Purchaser or Global pursuant to this Agreement; or (iii) any of
the Assumed Liabilities; or (iv) the conduct of the Purchaser's business on and
following the Closing Date (except to the extent caused by any matter for which
the Purchaser and/or Global is entitled to be indemnified for hereunder); or (v)
the transactions contemplated hereby, and/or the Seller's failure to give any
notice in connection therewith, constituting a violation of the United States
Worker Adjustment and Retraining Notification Act, if applicable.
Section 9.3. Notice.
No claim for indemnification hereunder shall be valid unless notice of
the matter which may give rise to such claim is given in writing by the person
or entity entitled to indemnification (the "Indemnitee") to the person against
whom indemnification is sought (the "Indemnitor") as soon as reasonably
practicable after such Indemnitee becomes aware of such claim, provided that the
failure to notify the Indemnitor shall not relieve the Indemnitor from any
liability which it may have to the Indemnitee unless Indemnitor shall be
irreparably prejudiced by such failure. Such notice shall state that the
Indemnitor is required to indemnify the Indemnitee for a Loss and shall specify
or estimate, as the case may be, the amount of Loss and the relevant details
thereof to the extent available. If, within 30 calendar days of receipt of such
notice, the Indemnitor has not notified the Indemnitee that it objects to
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such claimed Loss, then the Indemnitor shall be deemed to have waived any
objections to such claimed Loss. Nothing in the Escrow Agreement is intended to
limit or supersede the provisions hereof.
Section 9.4. Procedural Matters.
(a) The Indemnitor shall have the right to defend, through counsel
reasonably satisfactory to the Indemnitee, at the Indemnitor's expense, any
action which may be brought in connection with all indemnifiable matters subject
to this Article 9 (a "Third Party Action") by providing Indemnitee with written
notice thereof within 30 calendar days of receiving the notice described in
Section 9.3 hereof. The Indemnitor shall not, however, without the prior written
consent of the Indemnitee, (i) consent to the entry of any judgment against the
Indemnitee, (ii) enter into any settlement or compromise of any action for other
than monetary damages, or (iii) enter into any settlement or compromise of any
action for monetary damages which does not include, as an unconditional term
thereof, the giving by the claimant or plaintiff to the Indemnitee of a release,
in form and substance satisfactory to the Indemnitee, from all liability in
respect of such action. If the Indemnitee desires to participate in such defense
or settlement, it may do so at its sole cost and expense.
(b) Notwithstanding Section 9.4(a), if the Indemnitor elects not to
defend the Indemnitee against such action whether by not giving the Indemnitee
timely notice as provided above or otherwise, then the Indemnitee shall have the
right to defend, compromise and settle such action on such terms as the
Indemnitee in its sole discretion may determine, without the prior consent of
the Indemnitor, and the Indemnitor shall continue bound to indemnify the
Indemnitee, and shall remain fully liable for any such result or settlement made
by the Indemnitee, in accordance with the terms of this Article; provided,
however, that any
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settlement or compromise of such action, as a condition precedent thereto, must
include a release from the claimant or plaintiff to the Indemnitors in form and
substance reasonably satisfactory to the Indemnitor from all liability in
respect of such action.
Section 9.5. Survival; Off-Set.
The representations, warranties and covenants contained in this
Agreement shall survive the execution of this Agreement and the closing of the
transactions contemplated by this Agreement until March 31, 2000; provided,
however, that any representations, warranties or covenants contained herein
which specifically set forth longer or shorter time periods of effectiveness,
shall survive for the periods indicated therein and provided further that the
representations and warranties set forth at Sections 3.1, the second sentence of
3.4(a), and the second sentence of 3.5 and 3.8, and the warranties contained in
the Deed, shall survive the Closing Date without limitations with respect
thereto. If any claim for indemnity has been timely made but has not been
resolved by the parties prior to the expiration of the applicable time period of
survival then, and in such event, such claim shall survive until finally
resolved. In addition to the rights and remedies available pursuant to the
Escrow Agreement (which may be pursued at any time, and from time,
simultaneously or separately), Global, the Purchaser and the Indemnified Parties
shall be entitled to off-set the amount to which they may be indemnified
hereunder from any amounts due to the Seller pursuant to this Agreement,
including, but not limited to the Total Contingent Consideration, or any
document delivered in connection herewith, in the event of, and to the extent
that, the Escrow Stock then remaining in escrow (valued as provided in the
Escrow Agreement) is less than the amount of the unresolved claims that Global,
the Purchaser and the Indemnified Parties have made against the Escrow Stock.
Seller may elect to satisfy its indemnification obligations pursuant
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to this Article 9 in the form of cash, provided that the Seller sets forth such
election in the Objection Notice (as defined in the Escrow Agreement) and pays
such amount, by certified check, to the Indemnified Party within five (5) days
after resolution of the claim.
Section 9.6. Limitations.
(a) Notwithstanding anything else to the contrary contained herein,
neither the Purchaser nor Global shall be entitled to assert any claim for
indemnification pursuant to Section 9.1 hereof unless and until such time as the
Losses, in the aggregate, with respect to breaches of representations and
warranties only (subject to Section 9.6(b) below) exceed $250,000 (the
"Basket"), at which time all claims for Losses may be asserted commencing with
the first dollar of such Losses. In addition, the indemnification obligations of
the Seller and the Shareholder hereunder, with respect to breaches of
representations and warranties only (subject to Section 9.6(b) below) shall not
exceed twenty-five percent (25%) of the Purchase Price (the "Cap").
(b) Notwithstanding anything contained herein to the contrary, it is
understood and agreed that the Basket and Cap shall not apply to the
indemnification obligations of the Seller and the Shareholder set forth at
Section 9.1(ii), (iii) or (iv) hereof or to the indemnification obligations of
the Seller and the Shareholder set forth at Section 9.1(i) if the
misrepresentation or breach of representation arises out of the intentional,
knowing or fraudulent acts or omissions of the Seller or the Shareholder.
(c) Notwithstanding Section 1.2(a)(iv) hereto, all Warranty Claims
shall be referred to the Purchaser for processing and handling and the Purchaser
agrees to do so in accordance with the terms of the applicable warranty and
return policies, and in accordance with commercially reasonable practices,
whether or not such Warranty Claims exceed the reserve
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set forth on the Closing Balance Sheet. Notwithstanding the foregoing, it is
understood and agreed that any Warranty Claims which exceed the reserves set
forth on the Closing Balance Sheet (the "Excess Warranty Claims") are Excluded
Liabilities and subject to the indemnification provisions of this Article 9.
Notwithstanding the foregoing, to the extent that any Excess Warranty Claims are
incurred, the Seller shall have the option of either reimbursing the Purchaser
for such Excess Warranty Claims, as incurred from time to time (within thirty
(30) days of the Purchaser providing the Seller with notice of such Excess
Warranty Claims) or notifying the Purchaser (within ten (10) days of the
Seller's receipt of notice of the Excess Warranty Claims) to apply such Excess
Warranty Claims against the Basket. It is understood and agreed that any Excess
Warranty Claims shall not be subject to the Cap.
Section 9.7. Non-Exclusive Remedy.
The parties hereto acknowledge and agree that the indemnity provided in
this Article 9 shall be the sole and exclusive remedy of the parties except that
nothing contained in this Article 9 shall impair or derogate any statutory,
equitable or common law right or remedy any party may have for Losses arising
out of fraud or similar causes of action involving intentional
misrepresentations.
Section 9.8. Tax Benefit/Insurance Proceeds.
Indemnification with respect to a Loss shall be net of the tax benefit
to the person asserting a right to indemnification under this Article 9, but
after giving effect to any tax which shall be required to be paid on such
indemnification payment by the Indemnified Party or the entity receiving such
payment attributable to a Loss. In addition, in determining the amount of Loss
for which an Indemnified Party is entitled, the Loss shall be reduced by any
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insurance proceeds which are paid to such Indemnified Party with respect to the
Loss for which indemnification is sought. If the Seller pays the Purchaser or
Global a payment which satisfied the Seller's obligations under this Article 9
with regard to a Loss for which the Purchaser and/or Global was entitled to
indemnification in accordance with Article 9 and, after such payment by the
Seller, the Purchaser and/or Global receives insurance proceeds in payment of
the same Loss, the Purchaser and/or Global will reimburse the Seller for the
amount the Seller has paid up to, but not exceeding, the insurance proceeds
received.
ARTICLE 10.
TERMINATION OF AGREEMENT
Section 10.1. Termination.
This Agreement and the transactions contemplated hereby and thereby may
be terminated at any time prior to the Closing Date:
(a) by mutual written agreement of Global and the Seller;
(b) by Global or the Seller, by providing the other with written notice
thereof, if the Closing shall not have occurred by October 31, 1997, or such
other date as may be agreed to by the parties hereto in writing, if such
notifying party is ready, willing and able to consummate the transactions
contemplated by this Agreement and all of the conditions to the other party's
obligation to close as set forth in Article 7 or 8, as applicable, shall have
been satisfied and the other party fails to consummate the transactions
contemplated by this Agreement for any reason whatsoever; or
(c) by the Seller, on the one hand, and Global, on the other hand, in the event
the other makes a material misrepresentation under this Agreement or breaches a
material covenant or agreement under this Agreement (which misrepresentation or
breach either cannot
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be cured or is not cured within five (5) days following receipt of written
notice thereof), but such non-misrepresenting or non-breaching party's election
to terminate shall not limit, waive or prejudice such party's remedies as
provided herein or at law or in equity; or
(d) by the Seller, on the one hand, and Global, on the other hand, if
the Closing shall not have occurred by October 31, 1997, or such other date as
may be agreed to by the parties hereto in writing, due to the non-fulfillment of
a condition precedent to such party's obligations to close as set forth at
Article 7 or 8 hereof, as applicable (through no fault or breach by the
terminating party).
Section 10.2. Effect of Termination.
In the event this Agreement is terminated as provided in Section 10.1,
this Agreement shall become void and be of no further force and effect and no
party hereto shall have any further liability to any other party hereto, except
that Sections 5.8, 5.9, Article 9 and Article 10 hereof shall survive and
continue in full force and effect notwithstanding termination and except further
that the termination of this Agreement shall not limit, waive or prejudice the
remedies available to any party, at law or in equity, for any wilful breach of
this Agreement by any other party, and, in the event of termination by any party
pursuant to Section 10.1(b), (c) or (d) hereof, as a result of wilful breach of
this Agreement by the other party, the terminating party shall be entitled to
recover, from the breaching party, the terminating party's costs and expenses,
including reasonable attorneys fees, in connection with the preparation,
negotiation and execution of this Agreement.
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ARTICLE 11.
MISCELLANEOUS
Section 11.1. Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to conflicts of law).
Section 11.2. Headings and Captions.
The headings and captions contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
Section 11.3. Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original but all of which together shall constitute but one and
the same instrument.
Section 11.4. Entire Agreement.
This Agreement, including all Exhibits and Schedules hereto and
thereto, constitutes the entire understanding among the parties with respect to
the subject matter hereof and the representations contained herein and therein
and in the Deed are the only representations made by the parties hereto.
Section 11.5. Assignment.
This Agreement shall not be assignable by any party hereto without the
written consent of all parties hereto; provided, however, that the Purchaser
and/or Global may assign this Agreement, or rights and benefits hereunder, to
any affiliate of Global; provided that such assignment shall not release the
Purchaser and Global of their obligations hereunder. The obligations of the
parties hereunder shall be binding upon the successors and assigns of the
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parties hereto, whether by merger, consolidation or otherwise, and the parties
shall cause any such successor and assign to assume the obligations hereunder.
Section 11.6. Separability.
If any section, subsection or provision, is held invalid, the remainder
of this Agreement and the application of such section, subsection or provision
to persons or circumstances other than those to which it is held invalid shall
not be affected thereby.
Section 11.7. Notices.
All notices, consents or other communications required or permitted to
be given by any party hereunder shall be in writing and shall be given by
personal delivery, facsimile transmission or by overnight courier, postage
prepaid, as follows:
If to the Purchaser or Global:
Global DirectMail Corp
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Fax #: (000) 000-0000
Attn: Xxxxxxx Xxxxx, Chairman and Chief Executive Officer
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxx
XXX Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Fax #: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
If to the Seller or Shareholder:
Xx. Xxxx Xxxxxx
00000 Xxxx Xxxx
Xx. Xxxxx, XX 00000
(No Fax # exists)
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with a copy to:
Xxxxxxxx Xxxx & Xxxxx LLP
0000 Xxxxxxxxxx Xxxxx, XX
Xxxxxx, Xxxx 00000
Fax #: (000) 000-0000
Attention: J. Xxxxxxx Xxxx, Esq.
Such notice, consent or communication shall be deemed delivered on (i) the next
business day following delivery to an overnight courier, (ii) the date of
personal delivery or (iii) the date of telecopy (provided the appropriate answer
back is received) thereof.
Section 11.8. Costs.
Except as otherwise provided herein, each party will pay its own costs
and expenses involved in carrying out the transactions contemplated by this
Agreement, including, but not limited to, the fees required in connection with
any HSR filing.
Section 11.9. Waiver.
Waiver of any term, provision or condition of this Agreement shall not
be construed to be a waiver of any other term, provision or condition. Failure
or delay by the parties to require performance of any provision of this
Agreement will not affect or impair such party's right to require full
performance of such provision at any time thereafter.
Section 11.10. Exhibits and Schedules.
The Exhibits and Schedules are part of this Agreement as if set forth
fully herein.
Section 11.11. Amendment.
This Agreement may not be amended except by an instrument in writing
signed by all of the parties hereto.
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Section 11.12. Further Assurances.
Subject to the terms and conditions of this Agreement, each of the
parties hereto will use all reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable, under applicable laws and regulations or otherwise, to fulfill its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement.
Section 11.13. Service
The parties hereto irrevocably consent to the service of any and all
process in any such action or proceeding by delivery of copies of such process
at the address and in the manner specified in Section 11.7.
Section 11.14. Projections.
Global and the Purchaser acknowledge that any projections or forecasts
furnished by the Seller to Global and/or the Purchaser are estimates only, and
they recognize that actual results may differ from the projected results.
Section 11.15. Construction.
Should any of the provisions of this Agreement or any agreement
executed in connection herewith, require interpretation, it is agreed that the
court or arbitrator interpreting or construing the same shall not apply a
presumption that any provision shall be more strictly construed against one
party by reason of the rule of construction that a document is to be construed
more strictly against the party who itself or through its agent prepared the
same, it being agreed that all parties and their respective agents have
participated in the preparation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
GLOBAL DIRECTMAIL CORP
By: XXXXXXX XXXXX
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chairman and Chief Executive Officer
MIDWEST MICRO CORP.
By: XXXXXXX XXXXX
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
INFOTEL, INC.
By: XXXX X. XXXXXX
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and CEO
XXXX X. XXXXXX
-------------------------------------------
Xxxx X. Xxxxxx
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Asset Purchase Agreement
dated as of September 12, 1997
by and among
Infotel, Inc., Xxxx X. Xxxxxx, Midwest Micro Corp. and
Global DirectMail Corp
Exhibits
Exhibit A Escrow Agreement
Exhibit B Employment Agreement
Exhibit C Xxxx of Sale
Exhibit D Assignment and Assumption Agreement
Exhibit E Amendment to Incentive Plan
Exhibit F Piggyback Registration Rights Agreement
Schedules
Schedule l.l(b) Excluded Assets; Excluded Liabilities
Schedule 1.2(a)(i) June 30, 1997 Balance Sheet
Schedule 1.2(a)(iii) Trial Balance Sheet
Schedule 2.3(c) Adjustments to Seller's Earnings
Schedule 2.6 Allocation of Purchase Price (to be delivered on or prior to
the Closing)
Schedule 3.1 Authorization, Organization, Standing
Schedule 3.2 Filings, Approvals, Authorizations and Consents
Schedule 3.3 Financial Statements
Schedule 3.4(a) Real Property
Schedule 3.4(b) Real Property Leases
Schedule 3.5 Liens
Schedule 3.7 Occurrences after the Interim Financial Statement
Schedule 3.8 Tax
Schedule 3.11 Intellectual Property
Schedule 3.12 Litigation
Schedule 3.13 Permits
Schedule 3.14 Customer Lists
Schedule 3.16 Labor Matters
Schedule 3.17 Description of each agreement, commitment or
arrangement
Schedule 3.18 List of each Employment Benefit Plan
Schedule 3.20 List of Suppliers
Schedule 3.21 Inventory
Schedule 4.2 Purchaser's Consents
Schedule 4.5 Material Adverse Changes of Global
Schedule 7.3 Material Vendor Agreements
