CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the _____ day
of _____________, 1999 by and between Xxxxxxx Computer Resources, Inc., a
Delaware corporation ("PCR"), Global Combined Technologies, Inc., an Oklahoma
corporation ("Global"), Pomeroy Computer Resources, of South Carolina, Inc., a
South Carolina corporation ("PCRSC") and Xxxxxxx Select Integration Solutions,
Inc, a Delaware corporation ("PSIS").
Background
A. Global and PCRSC are wholly owned subsidiaries of PCR.
B. On December 14, 1998, PCR formed PSIS for the purpose of operating
independently PCR's, Global's and PCRSC's respective portions of their
businesses consisting of the integrated desktop management and network services
business including life cycle services, internetworking services, end-user
support services and such other services as PSIS now or hereafter offers (the
"Business").
C. Prior to the date of this Agreement, the Business had been conducted
by PCR, Global and PCRSC as a part of their respective business operations.
D. PSIS intends to effect an initial public offering of shares of Class A
common stock of PSIS (the "Offering").
E. PCR, Global and PCRSC desire to contribute and transfer to PSIS and
PSIS desires to accept and receive, certain of the assets and assume certain of
the liabilities of PCR, Global and PCRSC that are necessary to enable PSIS to
own and operate the Business (the "Contribution") and to facilitate the
Offering.
F. In consideration for the Contribution, PCR, Global and PCRSC shall
receive ten million (10,000,000) shares of Class B common stock of PSIS in
the following proportions: PCR - 9,300,000, Global - 400,000, and PCRSC -
300,000. It is anticipated that Global and PCRSC shall transfer all of their
respective interests in Class B common shares to PCR prior to or upon the
effectiveness of the Offering.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants contained in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Assigned Contracts" has the meaning ascribed thereto in Section
3 hereof.
(b) "Business Day" means any calendar day which is not a Saturday,
Sunday or public holiday under the laws of the Commonwealth of Kentucky.
(c) "Contract" means any written or oral contract, agreement,
commitment, lease, license, consulting agreement, supply contract, repair
contract, distribution agreement, purchase order, technology and know-how
agreement, instrument or any other contractual commitment that is binding on any
Person or its property.
(d) "GAAP" means generally accepted accounting principles in effect
in the United States consistently applied throughout the periods involved.
(e) "Governmental Entity" means any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
(f) "Liability" means any direct or indirect liability, loss, damage,
cost, expense, contingent liability, loss contingency, indebtedness, obligation,
responsibility, claim, deficiency (including deferred income tax and other net
tax deficiencies), guaranty or endorsement of or by any person, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, and any other items which, in accordance
with GAAP, would be classified as a Liability.
(g) "Lien" means any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, right or title retention agreement, voting
trust agreement, interest, equity, option, lien, right of first refusal, charge
or other restrictions or limitations of any nature whatsoever (whether
consensual, statutory or otherwise).
(h) "Person" means an individual, a sole proprietorship, a
corporation, a partnership, a joint venture, an association, a trust, or any
other entity or organization, including a government or a political subdivision,
agency or instrumentality thereof.
(i) "Prospectus" means the form of prospectus contained in PSIS's
Registration Statement on Form S-1 to be filed with the Securities and Exchange
Commission and used in connection with the Offering, a complete draft of which,
dated December 31, 1998, each of the parties acknowledge they have received
prior to the execution hereof.
-2-
(j) "Required Consents" means any and all licenses, waivers, consents
or approvals of or from any Governmental Entity, including the expiration of any
periods of time under statutory and regulatory notice provisions without action
on the part of any Governmental Entity, and any and all approvals, consents or
waivers from other parties to leases, licenses, franchises, permits, indentures,
Contracts and other instruments necessary to consummate the transactions
contemplated hereby.
2. CONTRIBUTIONS OF ASSETS BY PCR, GLOBAL AND PCRSC. Subject to the terms
and conditions contained herein, each of PCR, Global and PCRSC hereby
contribute, transfer and convey to PSIS, free and clear of all Liens (other than
Permitted Liens listed in Schedule B), all of the assets of PCR, Global and
PCRSC which comprise the Business including those listed on Schedule A attached
hereto (including but not limited to any assets relating to PCR's CommTec
Division) (collectively, the "Contributed Assets").
3. ASSIGNMENT OF CONTRACTS AND CONTRACT RIGHTS. PCR, Global and PCRSC
hereby assign, transfer and deliver to PSIS all of their respective rights,
title and interest in and to all, or the portion pertaining to the Business,
of the Contracts and contract rights pertaining to the Business as identified
on Schedule C hereto (the "Assigned Contracts") and PSIS hereby accepts the
Assigned Contracts and agrees to perform and comply with such Assigned
Contracts as if PSIS were the original signatory thereunder.
4. ASSUMPTION OF LIABILITIES. PSIS hereby assumes only those debts,
liabilities and obligations of PCR, Global and PCRSC listed on Schedule D
attached hereto (the "PCR/Global/PCRSC Assumed Liabilities"). Except as set
forth on Schedule D, PSIS does not and will not otherwise acquire, discharge,
assume, or become responsible for any debts, liabilities or obligations of
PCR, Global or PCRSC. PCR, Global and PCRSC agree to pay and satisfy when
due their respective liabilities and obligations not assumed by PSIS, which,
if not paid or satisfied, could result in a liability to PSIS which is not
being expressly assumed by PSIS. To the extent a Contributed Asset is subject
to a Lien that is not a PCR/Global/PCRSC Assumed Liability, each of PCR,
Global and PCRSC, as applicable, expressly acknowledges that it is retaining
such Liability and agrees to pay and discharge such Liability as the same
shall become due.
5. EMPLOYEES. PSIS shall offer employment to those employees listed in
Schedule E (the "PSIS Employees") and, simultaneously with the hiring of PSIS
Employees by PSIS, PCR, Global and PCRSC shall terminate the employment of
their respective PSIS Employees who accept employment with PSIS. PSIS shall
honor the amount of accrued vacation time for each employee who accepts
employment with PSIS. For purposes of employee benefit plans in effect as of
the date of this Agreement, any provisions requiring years of service with PSIS,
vesting or similar provisions shall include in the calculation of such time
periods the time served by the employee for PCR, Global or PCRSC. PCR, Global
and PCRSC each agree to pay to the PSIS Employees the full
-3-
amount of all salaries, bonuses and other employee compensation earned by the
PSIS Employees through January 5, 1999.
6. REPRESENTATIONS AND WARRANTIES.
(a) PCR, Global and PCRSC, as applicable, represent and warrant to
PSIS as follows:
(1) CORPORATE POWER AND AUTHORITY. Each of PCR, Global and PCRSC
has the requisite power and authority to execute, deliver, and perform their
respective obligations under, this Agreement and to contribute, transfer and
convey to PSIS the Contributed Assets. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action (corporate or otherwise) on
the part of each of PCR, Global and PCRSC. This Agreement constitutes the legal,
valid and binding obligation of each of PCR, Global and PCRSC, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
(2) VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (a) violate, breach or
contravene any of the terms, conditions or provisions of the Certificate or
Articles of Incorporation or Bylaws of PCR, Global or PCRSC, (b) violate, or
constitute a default under, any material Contract by which such entity or its
property is bound (except for the consent of PCR's primary lender, Deutsche
Financial Services Corporation, which consent has been obtained and except as
set forth on Schedule F), or (c) violate any material provision of law.
(3) TITLE TO CONTRIBUTED ASSETS. Each of PCR, Global and PCRSC
is in possession of and has good, valid and marketable title to, or has valid
leasehold interests in or valid rights under contract to use, all of the
Contributed Assets in which it has interest and each of PCR, Global and PCRSC,
has such title, interests or rights to all of the Contributed Assets that are
being contributed by each such entity. All of the Contributed Assets are free
and clear of all Liens, other than Permitted Liens. All tangible personal
property comprising Contributed Assets is in good operating condition (ordinary
wear and tear excepted) and will be usable by PSIS for its intended purposes.
(4) ACCOUNTS RECEIVABLE. The accounts receivable that are
included in the Contributed Assets (the "Accounts Receivable") constitute valid
receivables, have arisen in the ordinary course of business consistent with past
practices, are collectible (net of any bad debt reserve determined in accordance
with GAAP) and are not subject to any setoff or counterclaim. No part of the
Accounts Receivable is contingent upon performance by PCR, Global or PCRSC, as
applicable, or any other party of any obligation, and no agreements for
deductions or discounts have been made with respect to any part of such
-4-
Accounts Receivable. To the knowledge of each of PCR, Global and PCRSC, the
Accounts Receivable are collectible in the ordinary course of business.
(5) VENDOR RECEIVABLES. The vendor receivables that are
included in the Contributed Assets (the "Vendor Receivables") constitute valid
receivables, have arisen in the ordinary course of business consistent with past
practices, are collectible (net of any bad debt reserve determined in accordance
with GAAP) and are not subject to any setoff or counterclaim. No part of the
Vendor Receivables is contingent upon performance by PCR, Global or PCRSC, as
applicable, or any other party of any obligation, and no agreements for
deductions or discounts have been made with respect to any part of such Vendor
Receivables. To the knowledge of each of PCR, Global and PCRSC, the Vendor
Receivables are collectible in the ordinary course of business.
(6) BUSINESS. Upon consummation of this Agreement, PSIS shall
be the sole and exclusive owner of the Business, the Contributed Assets received
by PSIS from PCR, Global and PCRSC are all of the assets necessary to operate
the Business as described in the Prospectus.
(7) FURTHER COVENANTS AND ASSURANCES.
(a) Each of PCR, Global and PCRSC, as applicable, further
agrees that (i) with respect to the contracts listed in Part I of Schedule F, it
will obtain the consents prior to the effective date of the Offering and (ii)
with respect to the contracts listed in Part II of Schedule F, or any other
Contract or contract rights pertaining to the Business which is not assigned to
PSIS for any reason, if one or more of any such Contract or contract rights are
unable to be assigned or transferred to PSIS, it will take all actions necessary
or desirable to ensure that the economic benefits of each of the Contracts and
contract rights will be realized by PSIS. Nothing herein shall be construed to
limit in any way the right of PCR, Global or PCRSC to exhaust any and all
remedies any of them have or may have to enforce their respective rights against
any third party under or relating to the contracts listed in Part II of Schedule
F.
(b) Each of PCR, Global and PCRSC, as applicable, further
agrees that, at any time or from time to time after the effectuation of this
Contribution Agreement, it will, upon the request of PSIS, and at the
contributing party's expense, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged or delivered, all such further
reasonable acts, assignments, transfers, powers of attorney or assurances as may
be required in order to further transfer, assign, grant, assure and confirm to
PSIS, or to aid and assist in the collection or granting of possession by PSIS
of any of the Contributed Assets or to vest in PSIS good and marketable title to
the Contributed Assets.
(8) REQUIRED CONSENTS. All Required Consents have been obtained
unless the failure to obtain one or more Required Consents would not be material
-5-
and except for (i) contracts under which PCR, Global and/or PCRSC has a right
to subcontract without the consent of the other party or parties to the
contract), and (ii) those set forth on Schedule F.
(b) PSIS represents and warrants to PCR, Global and PCRSC as follows:
(1) CORPORATE POWER AND AUTHORITY. PSIS has the requisite power
and authority to execute, deliver and perform this Agreement and to accept
the Contributed Assets. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action (corporate or otherwise) on the
part of PSIS. This Agreement constitutes the legal, valid and binding
obligation of PSIS, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally.
(2) VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (a) violate, breach or
contravene any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of PSIS, (b) violate, or constitute a default under, any
material Contract by which such entity or its property is bound, or (c) violate
any material provision of law.
7. COVENANT NOT TO COMPETE. As an inducement for PSIS to enter into this
Contribution Agreement with PCR, Global and PCRSC, each of PCR, Global and
PCRSC covenant and agree that for a period equal to the later of (i) two (2)
years from the closing of this Contribution Agreement or, (ii) one (1) year
after the termination of an Administrative Services and Marketing Agreement
by and between PCR and PSIS, of even date, neither PCR, Global nor PCRSC will
engage in any activities which compete with the Business including, without
limitation, the provision of integrated desktop management or network
services except with respect to specific business opportunities which were
offered to PSIS in accordance with its right of first refusal under the
Administrative Services and Marketing Agreement and were declined by PSIS as
provided therein. PSIS covenants and agrees for such period not to engage
in any activities which compete with the business of marketing and selling a
broad range of microcomputers and related products including equipment
selection, procurement and configuration except with respect to specific
business opportunities which were offered to PCR in accordance with its right
of first refusal under the Administrative Services and Marketing Agreement
and were declined by PCR as provided therein .
8. INDEMNIFICATION.
(a) For a period of three years from the date of this Agreement, each
of PCR, Global and PCRSC, their respective transferees, successors and assigns,
agree to reimburse and indemnify and hold PSIS, its transferees, successors and
assigns, harmless
-6-
against any and all damage, expense (including legal fees), loss, demand, claim,
cost, liability, judgment or deficiency resulting from any misrepresentations,
breach of any of the representations or warranties or nonfulfillment of any
covenant or agreement on the part of any of them to be performed under this
Agreement, or resulting from any liability, damage or expense incurred by PSIS
from any judgment, settlement, cost or expense of defending any lawsuits or
claims against any of them, or resulting from creditors of any of PCR, Global or
PCRSC making claims against PSIS. In addition, for a period of three years
from the date of this Agreement, each of PCR, Global and PCRSC, their respective
transferees, successors and assigns, jointly and severally agree to reimburse
and indemnify and hold PSIS, its transferees, successors and assigns, harmless
against any and all damage, expense (including legal fees), loss, demand, claim,
cost, liability or judgment with respect to any of their respective obligations
or liabilities, contingent or otherwise, not expressly assumed herein by PSIS.
(b) For a period of three years from the date of this Agreement,
PSIS, its transferees, successors and assigns, agree to reimburse and indemnify
and hold each of PCR, Global and PCRSC and their respective transferees,
successors and assigns, harmless against any and all damage, expense (including
legal fees), loss, demand, claim, cost, liability, judgment or deficiency
resulting from any misrepresentations, breach of any of the representations or
warranties or nonfulfillment of any covenant or agreement on the part of PSIS to
be performed under this Agreement, or resulting from any liability, damage or
expense incurred by any of them from any judgment, settlement, cost or expense
of defending any lawsuits or claims against PSIS, or resulting from creditors of
PSIS making claims against any of them. In addition, for a period of three
years from the date of this Agreement, PSIS, its transferees, successors and
assigns, agree to reimburse and indemnify and hold each of PCR, Global and PCRSC
and their respective transferees, successors and assigns, harmless against any
and all damage, expense (including legal fees), loss, demand, claim, cost,
liability or judgment with respect to any of PSIS' obligations or liabilities,
contingent or otherwise, not expressly assumed herein by PCR, Global or PCRSC.
(c) Notwithstanding the foregoing, for a period of their respective
agreements not to compete as provided in Section 7 and one year thereafter, each
of PCR, Global and PCRSC, their respective transferees, successors and assigns,
agree to reimburse and indemnify and hold PSIS harmless against any and all
damage, expense (including legal fees), loss, demand, claim, cost, liability,
judgment or deficiency resulting from any breach of the agreement not to compete
as provided in Section 7 on the part of any of them.
(d) At the time that PSIS shall suffer any loss or damage which is to
be indemnified pursuant to this Section 8, PCR, Global, and PCRSC, upon written
notice from PSIS, shall promptly pay to PSIS the aggregate amount of the loss or
damage. The amount of the loss or damage shall include all amounts paid by PSIS
together with costs and reasonable attorneys' fees and expenses. In the event
that PSIS is not paid by one
-7-
or more of them within thirty days after receipt of written notice, then PSIS
shall also be entitled to collect from any of PCR, Global, or PCRSC all of the
attorneys' fees and costs incurred by PSIS in connection with obtaining payment
of the loss or damage from them, whether or not a suit is filed or other legal
proceeding is initiated by PSIS.
(e) At the time that any of PCR, Global or PCRSC shall suffer any
loss or damage which is to be indemnified pursuant to this Section 8, PSIS, upon
written notice from PCR, Global or PCRSC, shall promptly pay to PCR, Global or
PCRSC, as the case may be, the aggregate amount of the loss or damage. The
amount of the loss or damage shall include all amounts paid by PCR, Global or
PCRSC, as the case may be, together with costs and reasonable attorneys' fees
and expenses. In the event that PCR, Global or PCRSC, as the case may be, is
not paid by PSIS within thirty days after receipt of written notice, then PCR,
Global or PCRSC, as the case may be, shall also be entitled to collect from PSIS
all of the attorneys' fees and costs incurred by PCR, Global or PCRSC, as the
case may be, in connection with obtaining payment of the loss or damage from
PSIS, whether or not a suit is filed or other legal proceeding is initiated by
PCR, Global or PCRSC as the case may be.
9. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by
either party hereto to any other person without the consent of the other
party hereto.
(b) NO THIRD-PARTY BENEFICIARIES. Nothing expressed or implied in
this Agreement shall be construed to give any person or entity other than the
parties hereto any legal or equitable rights hereunder.
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof.
(d) AMENDMENT. This Agreement may not be amended except by an
instrument signed by the parties hereto.
(e) WAIVERS. Either party hereto may (i) extend the time for the
performance of any of the obligations or other act of the other party or (ii)
waive compliance with any of the agreements contained herein. No waiver of any
term shall be construed as a subsequent waiver of the same term, or a waiver of
any other term, of this Agreement. The failure of any party to assert any of its
rights hereunder will not constitute a waiver of any such rights.
(f) SEVERABILITY. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, such
provision shall be
-8-
deemed severable and all other provisions of this Agreement shall nevertheless
remain in full force and effect.
(g) HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(h) NOTICES. All notices given in connection with this Agreement
shall be in writing. Service of such notices shall be deemed complete (i) if
hand delivered, on the date of delivery, (ii) if by mail, on the fourth business
day following the day of deposit in the United States mail, by certified or
registered mail, first-class postage prepaid, (iii) if sent by FedEx or
equivalent courier service, on the next business day, or (iv) if by telecopier,
upon receipt by the sender of written confirmation of successful transmission.
Such notices shall be addressed to the parties at the following addresses or at
such other address for a party as shall be specified by like notice (except that
notices of change of address shall be effective upon receipt):
If to PCR, Global or PCRSC:
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
If to Pomeroy Select Integration Solutions, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: President
Telecopier:
(i) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Kentucky , without giving
effect to the principles of conflict of laws thereof.
(j) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
but one and the same instrument.
-9-
IN WITNESS WHEREOF, the parties to this Contribution Agreement have caused
this Agreement to be duly executed as of the date first written above.
XXXXXXX COMPUTER RESOURCES, INC.
By:
---------------------------------
Name:
Title:
GLOBAL COMBINED TECHNOLOGIES,
INC.
By:
---------------------------------
Name:
Title:
POMEROY COMPUTER RESOURCES OF SOUTH CAROLINA,
INC.
By:
---------------------------------
Name:
Title:
XXXXXXX SELECT INTEGRATION
SOLUTIONS, INC.
By:
---------------------------------
Name:
Title:
-10-
LIST OF SCHEDULES
Schedule A Contributed Assets
Annex A-1 Accounts Receivable
Annex A-2 Vendor Receivables
Annex A-3 Other Receivables
Annex A-4 Other Tangible Assets
Annex A-5 Intangible Assets
Schedule B Permitted Liens
Schedule C Assigned Contracts
Schedule D Assumed Liabilities
Schedule E Employees
Schedule F Exceptions to Required Consents
-11-
